CAFC Reverses District Court Claim Construction in Fuel Tank Sensor Case

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential opinion on Monday that reversed and vacated in part a previous lower court ruling in a patent case related to fuel tank sensors.

In 2020, SSI Technologies filed a lawsuit against Dongguan Zhengyang Electronic Mechanical LTD (DZEM), alleging infringement of two patents that covered fuel tank sensor technology. SSI accused DZEM of producing systems to reduce emissions for diesel truck engines that infringed U.S. Patent Nos. 8,733,153 and 9,535,038.

In September 2021, a Wisconsin district court dismissed the patent infringement claims by SSI, as well as DZEM’s counterclaims that the patents were invalid.

In regard to the ‘038 patent, the CAFC vacated the district court’s summary judgment and its dismissal of the invalidity counterclaim. The Federal Circuit came to its decision by reversing the district court’s interpretation of the term “filter” with respect to the patent.

However, the circuit court affirmed the lower court’s ruling dismissing the patent infringement claim and DZEM’s invalidity counterclaims with respect to the ’153 patent. Additionally, the CAFC affirmed the lower court’s decision to grant summary judgment to SSI regarding DZEM’s tortious interference claims.

CAFC: District Court Got it Wrong on Construction of ‘Filter’

According to the CAFC, the district court’s ruling regarding the ‘038 patent hinged on its interpretation of the term “filter.” The district court sided with DZEM and adopted DZEM’s interpretation of “filter,” which also included the term “porous.”

But the CAFC disagreed with the district court, instead adopting SSI’s definition of “filter.” The appellate court explained that the district court’s analysis made it clear that “it understood the word ‘porous’ to require that the filter openings be smaller than a certain unspecified maximum size,” but the specification of the ‘038 patent contained no such requirement.

“Because the construction adopted by the district court could give rise to further disputes regarding the meaning of the word ‘porous’—a term that does not appear in the ’038 patent—we adopt SSI’s construction of the term ‘filter,’” said the CAFC.

The ‘153 Patent

However, with respect to the ‘153 patent, the CAFC agreed with the district court’s claim construction and found no genuine dispute of material fact regarding infringement of claim 1. The court thus affirmed the district court’s grant of summary judgment of non-infringement on that patent.

DZEM’s Counterclaims

DZEM also alleged that the district court erred in dismissing without prejudice its counterclaims of invalidity and accused SSI of tortious interference. The Wisconsin district court did not rule in favor of DZEM on any of the counterclaims.

The district court determined that it did not need to rule on the invalidity of the patents because DZEM did not face any potential future prosecution under either of the patents in the case.

While the CAFC agreed with the lower court on this point, since the ruling on the ‘038 patent was vacated, the court also vacated the dismissal of the invalidity counterclaim with respect to that patent.

DZEM’s tortious interference counterclaim stemmed from letters that SSI sent to multiple domestic and foreign companies notifying them of the company’s lawsuit against DZEM. DZEM claimed that some of the companies were DZEM customers.

The district court, applying the Noerr-Pennington Doctrine, found that SSI’s communications with these companies were protected because SSI has patent protection in the countries in question.. DZEM argued that the sham litigation exception to the doctrine applies to this case, thus making SSI’s communications not protected.

However, both the district court and the CAFC found no evidence that SSI’s claims were “objectively baseless.”

“DZEM was required to establish by clear and convincing evidence that SSI’s infringement suit was objectively baseless, but it failed to introduce any evidence of objective baselessness,” wrote the circuit court judges.

Ultimately, the court reversed the district court’s construction of “filter” and vacated the grant of summary judgment with respect to the ‘038 patent; affirmed the grant of summary judgment on the ‘153 patent and on the tortious interference counterclaim; vacated the dismissal of the invalidity counterclaim on the ‘038 patent and affirmed the dismissal of the invalidity counterclaim on the ‘153 patent.