a Textbook Case Where a Combination of Familiar Elements According to Known Methods that Does No More Than Yield Predictable Results

Agrizap, Inc. v. Woodstream Corp., [2007-1415, -1421 ] (March 28, 2008) [MOORE, Bryson, Wolle] The Federal Circuit affirmed the denial of Woodstream's (JMOL) that it made no fraudulent misrepresentation, but reversed the denial of Woodstream's JMOL motion for invalidity for obviousness, and declined to reach the denial of Woodstream's JMOL for invalidity for anticipation, unenforceability for inquitable conduct, and Agrizap's JMOL for infringement.
BRIEF: Agrizap is the holder of the U.S. Patent No. 5,949,636 patent, which relates to a method and apparatus for electrocuting pests, such as gophers, rats, and the like. Woodstream approached Agrizap about marketing the Rat Zapper, the commercial embodiment of the ’636 patent. The two parties engaged in negotiations, signing a mutual confidentiality agreement that permitted either party to disclose certain secret and proprietary information for the purposes of assessing Woodstream’s interest in purchasing Agrizap’s products and forming a business relationship with Agrizap. Without Agrizap’s knowledge, Woodstream sent samples of the Rat Zapper to offshore Chinese manufacturers. Upon learning of Woodstream’s actions, Agrizap sought written assurance that Woodstream’s actions fell within the terms of their confidentiality agreement. Woodstrean responded but did not directly address the confidentiality agreement. This prompted Agrizap, to which Woodstrean responded referring to the confidentiality agreement. Woodstream decided that it would manufacture the the product itself, deciding to go through Agrizap in the short term to give Woodstream access to the technology."
At the end of negotiations, the parties established an oral marketing agreement whereby Agrizap would fulfill Woodstream’s purchase orders at a lower wholesale price. The products would still be named "Rat Zapper," but would use Woodstream’s Victor brand label. Woodstream agreed to distribute the Rat Zappers to large retail stores, such as Home Depot, Ace, and Lowe’s. Agrizap agreed not to compete with Woodstream in these venues. Woodstream later released its Electronic Mouse Trap (EMT) and Electronic Rat Trap (ERT). Upon learning of the ERT in 2004, Agrizap terminated its relationship with Woodstream, claiming that Woodstream purposely withheld information that it was using the Rat Zapper technology to develop its ERT. Agrizap further claimed that, as a result of its reliance on Woodstream’s statements, it suffered damages. But for stream’s misrepresentation, Agrizap would not have given Woodstream exclusive access to certain large retailers in the market, i.e., Home Depot and Ace Hardware, which allowed Woodstream to establish itself in those markets years earlier than it could have otherwise. Agrizap sued for fraudulent misrepresentation and patent infringement. Agrizap won on its fraudulent misrepresentation claim, and on infringement of one claim. The district court denied JMOL on the misrepresentation claim, but granted JMOL of no infringement.
The Federal Circuit found that Agrizap offered sufficient evidence of fraudulent misrepresentation and that the district court properly denied JMOL. Woodstream failed to show that Agrizap did not adequately prove (1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the reliance.
Regarding the Jury's determination of obviousness, the Federal Circuit said that when the jury is given an essentially black box verdict form—that is, a form that merely asks the jury to answer "yes" or "no" as to whether a claim is obvious, such as was done in this case3—we presume all factual disputes were resolved in favor of the verdict. The Federal Circuit noted that even though a special verdict asks a jury whether a patent claim is obvious provides more insight than one which simply asks whether the patent is invalid, the former still does not provide any detail into the specific fact findings made by the jury. The ultimate conclusion of obviousness is a question of law, and the Federal Circuit's duty is to ensure that the law has been correctly applied to the facts, and review de novo the conclusion on obviousness. During prosecution, Agrizap corrected inventorship of the patent, thereby disqualifying its earlier patent as prior art. However, this did not disqualify the commercial embodiment of that patent, the Gopher Zapper, from being considered as prior art. Considering this as prior art, the Federal Circuit found the claimed invention obvious.
The Federal Circuit observed that it was in the unusual position that the prior art before it was the same as before the PTO. The PTO’s rejection in light of this identical prior art was by no means dispositive of the issues that need to be resolved to determine the validity of the asserted claims. The PTO was never presented with the objective evidence of nonobviousness, including the commercial success of the Rat Zapper, copying by Woodstream, and a long felt need in the market for electronic rat traps, which was presented to the jury. However even presuming the jury found that the objective evidence of nonobviousness favored Agrizap, this evidence is insufficient to overcome the overwhelming strength of Woodstream’s prima facie case of obviousness. The Federal Circuit said it was "a textbook case of when the asserted claims involve a combination of familiar elements according to known methods that does no more than yield predictable results."