Opinion
Civil No. 04-1075 ADM/AJB
May 27, 2004
David B. Potter, Esq., and Cyrus A. Morton, Esq., Oppenheimer Wolff Donnelly, LLP, Minneapolis, MN, and Larry Buckley, Toro Division Counsel, appeared for and on behalf of Plaintiff
John D. Bauersfeld, Esq., Kelly, Bauersfeld, Lowry Kelley, Woodland Hills, CA, Steven C. Schroer, Esq., Fitch, Even, Tabin Flannery, Boulder, CO, and Lora Esch Mitchell, Esq., Fredrikson Byron, P. A., Minneapolis, MN, appeared for and on behalf of Defendants.
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
On April 14, 2004, this matter came before the undersigned United States District Judge for oral argument on Plaintiff The Toro Company's ("Toro") Motion for a Preliminary Injunction [Docket No. 2]. Toro seeks to prohibit Defendants Rain Bird Corporation, Rain Bird Distribution Corporation, and Anthony Manufacturing Corporation (collectively, "Rain Bird") from marketing and selling their new WRS Series Wireless Rain Sensor ("WRS"). For the reasons set forth below, Toro's Motion is denied.
II. BACKGROUND
Toro and Rain Bird are dominant competitors in the commercial irrigation system business. Toro owns U.S. Patent No. 6,452,499 ("the `499 Patent"), which claims a wireless precipitation sensor system that deactivates a preprogrammed sprinkler system in the event of certain weather conditions, such as a specified amount of rain. See `499 Patent (Morton Aff. of 3/27/04 ("Morton Aff.") Ex. A). The invention contemplates a rain sensor mounted on a roof or similar structure, which expands upon contact with atmospheric moisture, thereby triggering a switch that signals a transmitter to send a wireless communication to a remote receiver. Id. col. 4:11. 49-53, figs. 2A, 2B. The receiver is connected to the controller of an automatic irrigation system, and the signal from the transmitter causes the controller to suspend the preprogrammed watering cycle. In the preferred embodiment, the sensor and the transmitter are housed together in a single structure. `499 Patent fig. 3A. However, another drawing and the attendant description confirm that the sensor "can be physically separated from [the] transmitter module" while still maintaining the electrical connection recited in the claims. Id. fig. 3D, col. 5:11. 6-7, cl. 1.The goal is to conserve natural and financial resources by preventing automatic sprinkler systems from emitting water when it is not needed or desired as the result of natural precipitation or other environmental conditions. As Toro concedes, this concept was well known and in practice prior to the invention of the `499 Patent. However, according to Toro, the `499 Patent is unique in its ability to wirelessly communicate with the irrigation system's program controller. Prior rain sensors were hardwired to the sprinkler controllers, and therefore required unattractive wiring and expensive and time-consuming installation. `499 Patent col. 1, 11. 59-62.
The claimed wireless environmental sensor was invented by Thomas Runge, Michael Runge and Bruce Downie ("Downie"). In 1997, Thomas Runge and Downie incorporated RD Engineering ("RD") to sell their product, and the three inventors filed a patent application on October 7, 1998. After multiple rejections on obviousness grounds and subsequent amendments, the `499 Patent issued on September 17, 2002. The focal claim one, states in relevant part:
Claims 2-7 depend from claim 1, and the only other independent claim, claim 8, essentially recites the limitations of claim 1 in slightly broader terms. See `499 Patent. Toro has asserted infringement of claims 1-6 and claim 8, but the crux of the parties dispute is based upon the elements of claim 1.
An atmospheric precipitation sensor system for deactivating the timed preprogrammed watering cycle of an irrigation system . . . said irrigation system including a controller responsive to control information for affecting the operation of the associated irrigation system, said atmospheric sensor system comprising:
a nonelectrical sensor designed for sensing atmospheric precipitation . . . said sensor including hygroscopic material . . .
a . . . transmitter for wirelessly transmitting signals;
an electrical switch connected mechanically to said hygroscopic material, and electrically to said transmitter . . . for enabling said transmitter to transmit signals indicative of said predetermined level of atmospheric precipitation being attained;
a remotely located receiver receptive of said wireless signals from said transmitter for converting the signals into electrical control information, for application to said controller of said irrigation system for affecting timed preprogrammed operation of said irrigation system. . . .
`499 Patent cl. 1.
RD's sale of the commercial embodiment of the invention, the Wireless RainSensor, was very successful, as evinced by the company's sales growth from $8,500 in 2000 to $2,200,000 in 2003. Downie Aff. of 4/9/04 ¶¶ 13-14. Toro obtained rights to the `499 Patent when it acquired RD in June 2003. It has filed an infringement action against Rain Bird, based on the recent launch of Rain Bird's new WRS wireless rain sensor. In the instant Motion, Toro requests a preliminary injunction to bar the distribution and sale of the WRS. Rain Bird concedes its product literally infringes the `499 Patent, but contends the patent is invalid and unenforceable.
III. DISCUSSION
To obtain the "drastic and extraordinary remedy" of a preliminary injunction, "the moving party must demonstrate a reasonable likelihood of success on the merits, irreparable harm in the absence of a preliminary injunction, a balance of hardships tipping in its favor, and the injunction's favorable impact on the public interest." Nat'l Steel Car. Ltd. v. Canadian Pac. Railway, Ltd., 357 F.3d 1319, 1324-25 (Fed. Cir. 2004) (internal quotation omitted). The key inquiry is the first factor, as "the movant is not entitled" to an injunction if that party fails to show probable success in the underlying dispute. Id. at 1325.
In order to establish a likelihood of success on the merits where, as here, infringement is conceded and the defendant has proffered evidence to raise a question as to the patent's validity, "the patentee must demonstrate that the invalidity defense lacks substantial merit." Nat'l Steel Car, 357 F.3d at 1334, 1326. At this juncture, Toro need not establish validity beyond question, but must present "a clear case supporting validity." Amazon.com. Inc. v. Barnesandnoble.com. Inc., 239 F.3d 1343, 1359 (Fed. Cir. 2001).
For purposes of a preliminary injunction motion, Rain Bird is not required to make out a case of actual invalidity, but rather must show the validity of `499 patent is vulnerable to attack. Amazon.com. Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1358-59 (Fed. Cir. 2001).
Patents are presumed valid. 35 U.S.C. § 282. Rain Bird argues three alternative theories of invalidity: anticipation under § 102(a); public use under § 102(b); and obviousness under § 103. Toro counters that these defenses are based on a misleading description of the prior art. Additionally, it contends these arguments were squarely before and addressed by the patent examiner and therefore cannot support the substantial showing of invalidity necessary at the preliminary injunction stage. See Nat'l Steel Car, 357 F.3d at 1326, 1334.
A. Section 102
A patent is invalid by reason of anticipation if a single prior art reference discloses every limitation of the claimed invention, such that the patent lacks novelty. Brown v. 3M, 265 F.3d 1349, 1351 (Fed. Cir. 2001). In addition to including all claim elements, the single prior reference must enable persons of ordinary skill in the field to make and use the invention. Bristol-Meyers Squibb Co. v. Ben Venue Labs., Inc., 246 F.3d 1368, 1374 (Fed. Cir. 2001). Section 102(b), a related anticipation defense to infringement, holds that a patent is invalid if "the invention was in public use . . . more than one year" prior to the date of the patent application. 35 U.S.C. § 102(b); see Netscape Communs. Corp. v. Konrad, 295 F.3d 1315, 1319-20 (Fed. Cir. 2002). Rain Bird argues the patented sensor system was known to its employees and in public use prior to the time of the invention, and that the `499 Patent is thus invalid.
Rain Bird has raised a substantial question of the validity of this patent. Citing its own prior art, Rain Bird argues that long before October 1997, it was practicing the technology recited in the `499 Patent with design and installation of its MAXICOM Central Control System ("MAXICOM"), a central irrigation control system, used in conjunction with the Hilton "MINI-CLIK" rain sensor. MAXICOM provides centralized control of multiple irrigation sites. Evelyn-Veere Decl. Ex. 2. It "utilizes a personal computer installed at a central location" that communicates with a series of Cluster Control Units ("CCU") in the field, which in turn are linked to individual remote "satellite controllers or devices" that are directly attached to irrigation valves and sensors. Id., ¶ 3, Ex. 2 at 3. It is designed to accommodate either hardwired or wireless connections between the central controllers, the CCUs and "the satellite controllers at each site." Id. Ex. 2 at 3, 5. It thus operates and manages watering cycles, and can be coupled with a weather sensor device to alter the irrigation program based upon environmental conditions, such as rain and temperature. Tullos Decl. ¶¶ 5, 9-12, Ex. 2 at 29, 34.
The MINI-CLIK rain sensor is a commercial embodiment of U.S. Patent No. 3,808,385 ("Klinefelter"), disclosing a moisture responsive hygroscopic actuator for initiating a sprinkler cycle. Downie Aff. Ex. 4. The Klinefelter invention was cited by the patent examiner and was distinguished by Toro in the `499 application as lacking an electrical switch and a wireless transmitter. Morton Aff. Ex. G Tab 19 at 6.
Rain Bird submits declarations of two employees with extensive experience in the irrigation business, asserting knowledge and public use of prior art combinations falling within the `499 Patent. To establish prior printed publication under § 102(a), Rain Bird references the MAXICOM operations guide, publicly disseminated in 1994, in which system applications are explained. In the chapter on Monitoring Schedules, the author of the guide specifically recommends use of the MINI-CLIK, a sensor that utilizes hygroscopic material, in connection with MAXICOM control capabilities to terminate the irrigation cycle in the event of rain. Tullos Decl. ¶¶ 10-12, Ex. 2 at 29. The declarant, George E. Tullos, a Division Manager and Central Control Specialist, further explains that in addition to writing the MAXICOM manual, prior to October 7, 1997, he personally observed many public MAXICOM/ MINI-CLIK installations, as well as a similar Toro wireless irrigation controller attached to a MINI-CLIK sensor at a Disney World resort park. Id. ¶¶ 20-23. By adding a hygroscopic rain sensor to the wireless control systems, Rain Bird submits that these configurations included a rain sensor mounted above ground, a transmitter (within the satellite control unit) that receives a signal from the sensor and sends a wireless communication to a receiver in the CCUs, which then "signal wirelessly to all . . . satellite units at the site to inhibit any and all irrigation activity during rain." Id. ¶¶ 16, 20-23. Thus, Rain Bird argues, all asserted claims of the `499 Patent were contained in a single prior reference and were in public use. See 35 U.S.C. § 102(a), (b); `499 Patent cls. 1-6, 8.
To further support anticipation and obviousness of the claimed subject matter, the principal designer of the MAXICOM software, states that he developed that system to be used with the MINI-CLIK and other environmental sensors, such that the satellite controller could receive a signal from the attached sensor and wirelessly transmit control data to the central controller, via the CCU, to suspend the programmed sprinkler cycle. Evelyn-Veere Decl. ¶¶ 6, 7. He further asserts that it would have been obvious to one of ordinary skill in the art to house a transmitter integrally with the sensor in the design of the accused WRS product. Id. ¶ 10.
Toro counters that in all these prior uses cited by Rain Bird of hygroscopic rain sensors and wireless control systems, the sensor was hardwired to the satellite controller. The `499 Patent's Description of Prior Art and Objects and Advantages emphasizes that a wireless link from sensor to controller was the critical point of the invention. See `499 Patent cols. 1, 2.
Although the parties do not directly address or advocate claim construction, and apparently do not dispute the meaning of the `499 Patent language, Rain Bird's arguments and Toro's response implicate issues regarding whether certain claim elements are necessarily distinct, or may perform multiple functions. The question becomes whether or not a satellite control unit, concededly part of the overall control function of Rain Bird's MAXICOM system, may simultaneously fulfill the transmitter element and be part of the controller of the affected irrigation arrangement.
Its attempt to reformulate terminology notwithstanding, Rain Bird does not contest that what it now characterizes as satellite "units" are satellite controllers that function as one component of the three-part MAXICOM control system, but also have individual control capability. See Evelyn-Veere Decl. Exs. 1, 2. Furthermore, it appears to accept Toro's general description of controller as "a means of controlling the watering cycles" of an automatic irrigation system, or, "the irrigation system's timer." `499 Patent col. 1: 1. 21; Amendment of 12/19/01 (Morton Aff. Ex. G Tab 16 at 3, 4).
In essence, Rain Bird argues that regardless of the meaning of "controller," the MAXICOM system, when connected to a atmospheric sensor, is an invalidating prior use. To substantiate this averment, Rain Bird has submitted a claim-by-claim analysis of how each relevant element of the `499 patent reads on the prior usage and publication of the wireless version of the MAXICOM system in conjunction with the MINI-CLIK sensor. Bauersfeld Aff. Ex. 8. The comparison is supported by the testimony of the two aforementioned employees who explain that the satellite controllers of the MAXICOM system contain transmitters that were connected electrically to the MINI-CLIK. Id.; `499 Patent cl. 1. The transmitters "transmit signals indicative of [a] predetermined level of atmospheric precipitation" to the "remotely located receiver" contained within the MAXICOM CCUs and central controller, which then can terminate "any present or programmed future operation" of the irrigation system it controls, as required by claim 1. Bauersfeld Aff. Ex. 8 at 3-4; `499 Patent cl. 1, 11. 49-63. The analysis provides a corresponding feature for each claim element, and includes the asserted dependant claims 2-6, and independent claim 8. Bauersfeld Aff. Ex. 8 at 2-6.
Toro does not attempt to refute this element-by-element comparison, but rather contends that the `499 Patent specifies that "it is the wireless link between an environmental sensor and control system that is unique" and that Rain Bird has not cited any single reference in the prior art that teaches a wireless link between a remote sensor and a controller, nor any public use of such a system. PL's Reply Mem. at 5 (citing `499 Patent col. 5:11. 55-57). It emphasizes that the `499 Patent claims a wireless "precipitation sensor system," not a wireless control system. Since the claims define the "receiver" as remote from the sensor and interfacing with the controller, "the wireless claimed communication link is within the `precipitation sensor system,' not within the `controller.'" PL's Reply Mem. at 6. Therefore, Toro argues, because Rain Bird relies on different components of the "controller" to transmit and receive the wireless communication, the MAXICOM/MINI-CLIK system cannot anticipate the RD invention.
Toro's entire argument centers on the practical nature and impact of the preferred embodiment and commercial use of the invention, as evidenced by the sensor's rapid commercial success and license solicitations. Toro does not address the application of the claim language to the purported anticipatory prior art, but rather reiterates that the MINI-CLIK and other prior sensors were always physically connected to the controller of the irrigation system, and thus the unique creation of a wireless link between the rain sensor and the sprinkler control was not known or in prior use. Its position essentially boils down to the assertion that the transmitter element and the irrigation system controller must be distinct, since the transmitter must communicate wirelessly with the remote receiver that interfaces with the controller. See `499 Patent cl. 1.
Though superficially appealing, close analysis of Toro's arguments reveal a significant omission. They ignore the claim language. The prosecution history and the patent specification stress that the key intention behind, and novelty of, the invention was the elimination of the wiring from the sensor to the control box. See e.g., `499 Patent figs. 2A-3C (fig. 3A showing preferred embodiment containing sensor and transmitter in one structure); Morton Aff. Ex. G Tab 19 at 4 (iterating that prior deactivation systems were wired). The inventors accomplished this wireless connection by housing a transmitter and sensor together, which sends wireless signals to the remote controller. `499 Patent col. 5:11. 55-58, figs. 2A-3C. Thus, in the commercial embodiment and the accused product, the sensor device contains the transmitter. However, the claims themselves do not require the transmitter and sensor be integrally housed, and therefore the wiring between the MINI-CLIK and the MAXICOM satellite controller appears to fulfill the requirement that the switch of the sensor be "connected . . . electrically to said transmitter." `499 Patent cl. 1: 11. 44-45; fig. 3D (showing hard wire between separated sensor and transmitter). Furthermore, claim 1 contains no prohibition against locating the transmitter within a satellite unit of the control system, but merely directs that the transmitter be remote from the receiver, as it is in the wireless version of the MAXICOM system. Id. cl. 1; Evelyn-Veere Decl. ¶¶ 3-4, Ex. 2 (describing and showing wireless communication between transmitter in the satellite controller and receiver in the CCU or central controller). In fact, the `499 specification counsels that "an irrigation system controller could be sold with transmitting and receiving units built-in to which a separately sold environmental sensor could be connected and still fall within the scope of this invention." Id. cl. 1: 11. 13-16.
The preliminary determinations herein do not resolve the merits of the underlying action, but evaluate the evidence of record to date for purposes of considering the parties' lesser burdens in the injunction context. See Amazon.com, 239 F.3d at 1359.
While RD's (now Toro's) wireless rain sensor was innovative and generated great interest in the industry, "it is the claims that define a patented invention," and thus it is the claims, not their embodiments, that govern the construction and anticipation analyses. Lockwood v. American Airlines, Inc., 107 F.3d 1565, 1570 (Fed. Cir. 1997); Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560, 1571 (Fed. Cir. 1988). Toro's failure to rebut Rain Bird's substantial evidence of anticipation of all key elements of claims 1-6 and 8 of the `499 Patent falls short of its burden at the preliminary injunction stage "to present a clear case supporting the validity of the patent in suit." Amazon.com. 239 F.3d at 1359. The requested injunctive relief must be denied.
Although Rain Bird's substantial evidence of anticipation is sufficient to defeat the instant Motion, its obviousness arguments bolster the conclusion that Toro has not established a probability of success on the merits of the infringement action and that an injunction should not be issued on the present record.
B. Section 103
A patent is invalid if the claimed subject matter would have been obvious to a person of ordinary skill in the field. 35 U.S.C. § 103(a). Invalidity based on obviousness is a question of law determined by the following underlying questions of fact: (1) the content of the prior art; (2) the differences between the claims and the prior art; (3) the level of ordinary skill in the art; and (4) objective evidence of nonobviousness. Nat'l Steel, 357 F.3d at 1334. To guard against assessment of obviousness with the benefit of hindsight, a defendant must show a motivation at the time of the invention to combine prior references. Id. at 1337 (citations omitted). Thus, a finding of obviousness based on a combination of prior art references requires "some suggestion, motivation, or teaching in the prior art that would have led a person of ordinary skill in the art to select the references and combine them in a way that would produce the claimed invention." Karsten Mfg. Corp. v. Cleveland Golf Co., 242 F.3d 1376, 1385 (Fed. Cir. 2001).
Rain Bird again proffers the declarations of two of its employees claiming they had knowledge of the substance of the `499 Patent as early as the 1980s and 1993, respectively, and that it would have been obvious to one of ordinary skill in the art to substitute a wireless link for the traditional hardwiring between the environmental sensor and the irrigation controller. See Evelyn-Veere Decl. ¶ 10; Tullos Decl. ¶ 4.
Toro asserts that Rain Bird's prior art combination to show obviousness-a hygroscopic precipitation sensor coupled with a wireless irrigation control system-was considered, but ultimately rejected by the patent examiner. Morton Aff. Ex. G Tabs 17, 20 (prosecution history rejection on basis of obviousness; Notice of Allowability of patent). Rain Bird's references, it argues, are therefore cumulative and insufficient to defeat the presumption of validity.
During the prosecution history, the applicants cited and the examiner assessed various prior patents related to irrigation control and water sensors, but these references did not include MAXICOM. See Morton Aff. Ex. G (`499 Patent file history). In response to the examiner's obviousness rejections based on the combination of the Klinefelter sensor with U.S. Patent No. 5,813,606 ("Ziff Patent") and other related prior art, the applicants argued that the Ziff Patent was directed only to watering activation, and that there was no suggestion in the prior art to wirelessly deactivate a sprinkler system's timer "based on a sensing of atmospheric moisture." Id. Tab 16 at 3-4 (emphasis in original); Tab 19 at 6. Additionally, in seeking reconsideration, the applicants questioned the examiner's ability to assume a substitution of wireless for wired communication would be obvious, asserting that the examiner would need to "specifically show a combination of prior art which suggests the use of wireless deactivation of an irrigation system's timed, preprogrammed watering cycle." Morton Aff. Ex. G Tab 19 at 4. Rain Bird thus argues its MAXICOM/MINI-CLIK combination is not cumulative to the references before the examiner and provides the specific example or "tangible manifestation" that the patentees asserted was lacking from the examiner's analysis. Id.
The Ziff reference teaches a "radio controlled sprinkler control system," including moisture sensors housed within transmitter units, which send a wireless activation signal upon the receipt of a specified moisture level. Ziff Patent (Morton Aff. Ex. I).
Toro's bald assertion that MAXICOM adds nothing to the scope of the references before the examiner fails to explicate how each feature of Rain Bird's MAXICOM/MINI-CLIK system is accounted for in the wireless irrigation control systems cited in the prosecution history. Accordingly, it has not shown the obviousness defense lacks substantial merit.
Toro asserts the huge success of RD and their wireless sensor, and the attractiveness of the product to the major players in the industry, including Rain Bird, clearly evinces non-obviousness and the desirability of the invention. See Downie Aff. of 4/9/04 ¶ 14 (recounting solicitations for licensing or acquisitions from virtually every major irrigation manufacturer), ¶ 11 (communication to RD from Rain Bird's product manager regarding potential business opportunity with wireless sensor). While these exchanges reveal a new and highly sought-after product, such market considerations are secondary and cannot override the plain language of the claims, which define and delineate the invention. See Richardson-Vicks. Inc. v. Upjohn Co., 122 F.3d 1476, 1484 (Fed. Cir. 1997); Constant, 848 F.2d at 1571.
Because Toro has not shown that Rain Bird's invalidity defenses lack substantial merit, it has not established a likelihood of success on the merits and the remaining injunctive relief considerations will not be discussed at length. See Nat'l Steel Car, 357 F.3d at 1325. However, Rain Bird's status as a successful company capable of satisfying a potential damage award also militates against finding irreparable harm. See Nutrition 21 v. United States, 930 F.2d 867, 871 (Fed. Cir. 1991). Without making a clear showing of validity and infringement, the patentee is not entitled to the rebuttable presumption of irreparable harm. Id.: see Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 973 (Fed. Cir. 1996). Thus, this factor supports denial of Toro's Motion as well. See Toro Co. v. White Consol. Indus., 920 F. Supp. 1008, 1020 (D. Minn. 1996) (denying PI motion based on lack of irreparable harm despite movant showing it was likely to succeed on the merits).