*1 Eighth Cir- agree generally with CORPORATION, Appellee, v. Science in States cuit United YARWAY Life (8th Cir.), Church, and the 636 F.2d v. Holmes, in v. Fifth Circuit United States USA, INC., and EUR-CONTROL Cir.), (5th scope as to the of a 614 F.2d Kalle, A.B., The summons be- under 7605. summons § Appellants. as to the church was all-inclusive fore us Appeal No. 85-739. accounts. records and part: in the court said Holmes Appeals, United States Court of - Federal Circuit. prong of the Powell test “The second by Congress pruned was back 3, 1985. Oct. churches, when regard .to examination (c) to 26 U.S.C. it added subsection inquiry provision That limits the

§ religious activities and books of

into of churches ‘to the extent neces-

account organization that the is a

sary’ to ensure the amount of

church and to determine necessary’ syn- owing. The ‘extent

tax certainly more restrictive than the

tax is

‘may language in the second be relevant’

tier of Powell.” The court United States v. Sci- Life (8th Cir.), Church,

ence

reached the same conclusion as the court It considered a summons

did Holmes.

very to the one here concerned and similar it asked for too much under

concluded 7605(c). The courts in v. United States

§ (7th Cir.), F.2d 1096

Dykema, 666 Coates, (9th 692 F.2d 629

United States

Cir.), placed concluded that 7605 had restriction on the

substantial examination analysis

of churches. The there used was

basically urges the same that the IRS here duty that the

which is to determine taxes books, requires

due all records and ac- otherwise,

counting and and this overrides restrictions, procedural, other than

the section. But as mentioned this for all purposes

practical nullifies the section purpose.

renders it without showing

Thus we hold that a finding by the trial

Government and necessary” lan-

court as to the “extent 7605(c)

guage required. This was of §

not done. enforcement is set aside in

The order of entirety. *2 Jr., Cushman, West, argued, K.

William Cushman, D.C., Washington, Darby & him on briefs were Sher- appellants. With T. Parrett and James Hosmer. man O. Vickery Allen E. and J. Trammell Ga., Post, Atlanta, Maines, Hansell & counsel. Jr., argued, Ferrill Logan, & W.

John Pa., appellee. Washington, Logan, Fort Ferrill, Thomas M. him on With brief Jr. BENNETT, Judge, NICH- Circuit

Before NIES, OLS, Judge, Cir- Circuit Senior Judge. cuit Judge. NICHOLS, Senior Circuit judgment from the appeal is an This Court for the District the United States Shoob, Georgia, pre- J. Northern District USA, Inc. holding that Eur-Control siding, Pat- (Eur-Control) infringed United States (the 3,524,592 patent), and that ’592 ent No. Kalle, (Kalle) in- A.B. induced patent was validity fringement. held The court further questioned. damages calculated based should be Eur-Con- Yarway’s profits, and that trol and Kalle had acted in agreed bad faith. Thus pay royalty Kalle a for each damages by one-half, the court enhanced in Nozzle it manufactured per- at a rate of 8 accordance price U.S.C. and al- cent of the at which could § recovery purchased lowed product fees under the from Kalle. In “exceptional practice Yarway provision, case” generally pur- 35 U.S.C. instead chased the Nozzles from Kalle for resale in the United provided States as by the con- *3 jurisdiction pursuant This court has to 28 tract terms. This device is sometimes judgment U.S.C. 1295. affirm called in the record the “DA-4” and is award, infringement and the lost widely sold Kalle outside the United damages and reverse the enhancement of States. The contract provides also fees award. We also vacate Yarway shall “inscribe all Nozzles a judgment and remand the court’s dismiss- reference to the applicable patent number” ing counterclaim, Kalle’s of contract breach phrase as well as the “produced under li- judgment dismissing but affirm the cense from By the terms [Eur-Control].” Georgia Deceptive Lanham Act and Trade contract, of the party either could termi- Practices Act counterclaims. agreement nate the if the other breached any of its terms “and remedy fails to such Background (90) breach ninety days within receipt after Relationship A. The the Parties of written notice to do so.” relationship parties to this In 1980 began marketing Eur-Control a complex case is somewhat and bears a Model in the United explanation brief Appellant here. Eur-Con- competition States in Yarway; in 1981 Georgia corporation engaged trol is a compete by continued to mar- equipment manufacture and sale of used in keting newly designed a DA-8 Model. power generating industry, including Yarway, claiming the DA-6 and DA-8 de- “desuperheaters” items known as superheaters infringe patent, the ’592 subject are the patent, the ’592 thereafter commenced charging suit Eur- superheated which are used to cool steam Control with and Kalle with in conduits. Kalle company is a Swedish infringement. inducement of that In so also involved in the manufacture of desu- (cid:127)doing, Yarway, licensee, placed itself perheating equipment. Both Eur-Control unusual, but not extraordinary, position and. Kalle are owned or controlled a claiming the United States owner parent common and thus Eur-Control is infringing patent. its own neither wholly-owned subsidiary a nor inde- B. The Patent pendent of Kalle. The ’592 cylindrical a discloses patent, ’592 entitled “Device device with a conical nozzle at one end and Introducing for Cooling Water Into a Con- plurality passages a through cylin- Steam,” duit Superheated for was issued to device, der wall. The desuperheater, a is defendant-appellant assignee Kalle as basically a provides valve which for a con- the inventor During pend- Gustafsson. medium, trolled cooling flow of a here wa- ency of the application, ’592 Kalle entered ter, superheated into steam. The water is into a Yarway, contract with provisions incorporated superheated steam, into the of which are gave relevant here. Kalle heat, thereby absorbs reduces the Yarway, subject to excep- certain narrow temperature. steam pertinent here, tions not right the exclusive manufacture, use, sell and distribute includes three claims. Claim throughout desuper- United States a illustrative. component

heater described the contract 1. A device introducing a con- “Nozzle,” as the appli- covered cooling trolled amount of water into a cation, as well as modifications or im- steam, conduit superheated compris- provements thereon. in turn cylinder having a a conical nozzle at end, plurality velocity one through a nozzles cylinder rear end of said provided through cylinder wall to connected actuating member, to an cylinder connect the interior to a swirling tangential water from said ve- high pressure source of water located locity passing nozzles directly through cylinder, velocity outside of said said noz- cylinder said and conical nozzle into said being spaced axially zles and directed steam. substantially tangentially cylindri- Also relevant to our review is Claim 3. cylinder, cal said pis- inner surface of a 3. A device as claimed in cylinder progres- ton movable to said wherein each velocity of said nozzles has sively expose said nozzles when relatively portion wide inlet position at the out- closing moved backwards from side nozzle, piston cylinder said said of said having conical restricted out- piston rod thereto extending cylinder. connected let at the inside of said *4 As described with patent’s point design, reference It is though with this not Figures claimed, 1 and that jacket 8 surrounds a the coolant water does not cylinder cylinder strike the containing a conical wall thus avoids nozzle 6. eroding it. The DA-6 and 8 differ in An space comprises annular a reservoir nozzles are not conical in sec- high pressure piston A steam. 11 is tion or as in claim and described backwardly able to cylin- move within the quite “tangentially” directed so though ap- der from the nozzle expose conical parently tangent. somewhat at a plurality “velocity nozzles” 15 which are C. The axially disposed History Prosecution radially cylinder functioning response wall. When to a course, Of as the district court was faced water, desuperheating demand for pis- infringement action, with an construction ton is one withdrawn to uncover or more of necessary, of the claims was and thus the nozzles;” the “velocity swirling water then prosecution history was and enters, flows inner on the walls of the is original application, relevant. The ’592 chambers, and forms conical curtain of independent which contained one and two droplets evaporate water claims, into the dependent rejected was under 35 steam. prior U.S.C. 103 in view art. §

Thereafter, thereof, applicant cancelled the claims and 2 and the combination of such claims, of three parts performs and added a new set the same function in sub- independent substantially stantially the new accomplish the same manner to original except claim 1 similar to the by the same result” as described “passages” changed the term patent. The court also found that as a “ports.” The examiner then issued a final competition using result of Eur-Control’s unpatentable the claims rejection, devices, infringing Yarway found it under “virtually impossible to sell the DA-4 desu- perheater [purchased under the contract] following The record shows that the final within the United States because of the inventor, Gustafsson, rejection appear- price advantage considerable se, ing pro participated an examiner’s products products USA had for its over the resulted in an examiner’s interview which Yarway purchased [Kalle] Although unnecessary amendment. Further, resale.” the court found that the detail, changes in discuss the amendment products “special at issue filled a niche” in examiner added text to we note that the the market so that each sale of an in- specification concerning the ac- “swirl fringing prevented device a sale Yar- tion” of the water and introduced the term way; the court therefore calculated Yar- “velocity nozzle” to both the claims and way’s percent based on 100 lost specification, replacing “port.” the term sales, percent reduced “to reflect provides also that the We note record sales made Eur-Control to customers participant from either to the ex- evidence Yarway.” either unknown or inaccessible to regarding aminer’s interview the rationale *5 changes for these or for the allowance of faith, regard With to bad the court found Appellants the claims. attached to a mo- infringement was a “deliberate record, reopen to tion for new find- attempt Yarway to circumvent the license inventor, ings, an affidavit of the but agreement.” The court then concluded properly ap- district court determined that infringement that there existed willful pellants good had not cause to established infringe- held that “in view of the willful reopen. As this affidavit was never admit- by [appellants], ment and the deliberate evidence, ted as this court cannot consider attempt improperly to the li- circumvent case, proof anything. any it as it agreement,” damage cense award was tells what the inventor said to the examin- multiplied by one and one-half. Final- er, thought, not what the examiner which ly, exceptional the court held is an “[t]his wisely left he to be determined from what meaning case within of 35 U.S.C. say he wrote and did. While it seems to 285” and awarded fees. § velocity nozzle of other than the claim 3 Subsequently, response appellants’ useless, configuration would be the affi- motion, aspects the court amended certain acquaintance perform- ant’s actual with the judgment. of its initial As relevant to this ance of the DA-6 and 8 is not shown and change appeal, the court refused to its find- inferentially was nonexistent. infringement, recognized on but Proceedings D. District Court existence of differences structure and performance patent The district court rendered an initial between the ’592 judgment following days judge four of trial and the accused devices. The trial stat- ed, however, argument. findings oral In its of fact and that he “remained convinced law, desuperheaters perform conclusions of found that the that the the court [accused] substantially devices sold of a the same function in Eur-Control “consist which, desuperheater speci- combination of as to their manner as the elements size, function, general shape, patent.” manner of fied in the ’592 The court also cooperation purpose, correspond judgment amended its initial to reflect its parts infringement described conclusion that was not willful, patent and called for claims 1 but the result of bad faith efforts licensee, Yarway agree- just plaintiff, license must set to circumvent puts damages, based on forth his title and therefore that title Enhancement of ment. 284, premised liberty in issue. “The defendant is at therefore 35 U.S.C. was deny plaintiff such a case to the title of the this bad faith. solely on by declaring longer that the license no ex- * * * ists, but this does not make it a suit Jurisdiction contract, upon the license or but it still parties ques Although the remains a suit for the of a here, always this court must con tioned it * * Id. patent this jurisdiction. We conclude sider subject jurisdic To determine matter jurisdiction as this case arises court has alleging patent infringe for a claim 1338(a), tion although under U.S.C. § ment, “the court must consider as a whole relationship, licensor to li parties’ that of (The the substance the claim addition to the censee, a contract. based language complaint, may of a also con actually Kalle and was between contract jurisdictional plead sider facts outside the Yarway, did not exist at the as Eur-Control Chemicals, ings.” Air Products and Inc. agreement. It is not clear time of Chemicals, Inc., Reichhold ever considered the district court whether (Fed.Cir. relationship of Eur-Control the contractual 1985). “[Wjhere complaint a non-frivolous from Kalle’s relation Yarway as distinct states a claim and seeks relief under the pleadings, licensee. In the ship with the laws, jurisdiction exclusive alleged Id. thereby contract, federal courts is established.” party to the and ac not a third Here, at 124. the rele cepting premise, this we will consider Yarway vant record indicates that purposes that Eur-Control’s jurisdictional the relief afforded laws seeks that of a relationship to be to a licensee under both stat and available party to a licensee. Neither has licensor and case As the substance of ute law. argued contrary appeal.) appellants’ claim arises under the Supreme this circuit Both the Court and laws, subject jurisdic the court has matter opportunity to consider the have had the *6 tion. premise patent-related dis- jurisdictional contracting parties, and putes between we Infringement fact that a the law is clear. The believe infringement in dispute contracting The district court found arises between motion, decision; necessarily upon appellants’ parties does not lead to the its initial judgment and of action is one the court reconsidered its conclusion that the cause the accused de arising than one un- remained convinced that under contract rather v. Per- perform the same function sub der the laws. vices Littlefield (21 Wall) 205, stantially the manner as indicated ry, 88 U.S. 22 L.Ed. 577 agreed although court that (1874), infringement patent, the Court held that an differences structure against patentee/in- a licensee there were some suit read the court’s fringer arising performance. We involves a suit under explanation, on its to be a presents judgment, and therefore a feder- based patent laws infringement on doc Id. 88 U.S. at 223. Similarly, judgment of based question. al Perkin-Elmer Pipe v. See equivalents. in Excelsior Wooden Co. trine Pacific Co., Computervision Corp., 732 F.2d Corp. 282, 291, 681, Bridge 22 185 U.S. S.Ct. 669, (Fed.Cir.), 888, 900, USPQ 684, (1902) where, 221 678 L.Ed. in determin- 46 910 — U.S.-, denied, 187, 105 S.Ct. cert. jurisdiction ing a federal court had whether (1984). 120, USPQ Ap alleg- L.Ed.2d 225 792 by a licensee 83 over a cause of action judgment as pellants if the li- attack the court’s be ing infringement by the licensor range of upon an ing premised had overbroad alleged censor that the license been wrapper of the abandoned, given the file recognized equivalents that a the Court 274 eign adopt incorrect construc- law. The district court did not

tion. conclude that there was no mis- infringement, We his view as to literal wrapper application estop- of the law of file may whatever weaknesses there be in this construction, pel and that or error of claim position may imputed not be to the differ- finding infringement is not ent view of the district court. judgment erroneous. We affirm the on . Mr. Clark testified on the nature infringement. wrapper file and the limitations added patentable prior on the make the claims We need not dwell court’s over the infringement applicable explanation as the art. We find Mr. Clark’s wrapper the file doctrines have been set forth this circuit be much more consist- fully objective ent an past supports reading and the record of the file wrapper appellants’. Although than the court’s result. The district court was specification concerning rules does mention a direct well aware basic flow water, equivalents. wrapper To determine we do not read the the doctrine of as limit- equivalency, the claims to cover based devices which the court had to assess whether the water flows on the inner wall claimed without ever device, touching cylinder plug all, invention and the accused or that literally infringe, perform application granted does not sub because it provided stantially the same function in substantial thus for the reduction of erosion. ly way give patented the same If the invention as same result. eliminates ero- sion, evidently any Manufacturing approach tangen- Tank & See Graver Co. v. Co., 605, 608, configuration tial Linde Air Products 339 U.S. would have a favorable 854, 856, (1950). 70 94 L.Ed. effect towards that S.Ct. 1097 end. appellants note here argued Appellants argue also the district throughout the court erred as it com erroneously construed the claims pared the accused devices to the commer accepting testimony Mr. Clark’s on the doc cial embodiment of the claimed invention. trine of claim differentiation. Mr. Clark’s error, Although this of course would see explanation of the doctrine of claim differ Corp. Corp.-Lewisys

Nestier v. Menasha corresponds entiation with the definition Division, 1576, 1579, tems 222 accepted by this court Kalman v. Kim USPQ 747, (Fed.Cir.1984), denied, 749 cert. 760, 770, berly-Clark Corp., 713 F.2d — -, 1756, U.S. 105 S.Ct. 84 L.Ed.2d (Fed.Cir.1983), denied, cert. (1985), argument appellants’ sup is not 465 U.S. 104 S.Ct. 79 L.Ed.2d ported by the record which contains much (1984): “[wjhere some expert testimony comparing the claims to narrow, claims broad and others argument accused devices. Such an narrow claim limitations cannot be read prevail. cannot invalidity into the broad whether to avoid *7 escape infringement.” district court was also well aware of or to As set forth the doctrine wrapper estoppel, previously, dependent of file claim 3 is a claim prevents patentee capturing velocity nozzle that describes with a wide through equivalents the doctrine of inlet and narrow outlet. Under the doc differentiation, which he acquire has surrendered to his trine of claim the narrow patent right. wrapper merely precludes reading The file' ex- claim 3 broad plained velocity to the trial as it 1 as limited to a court related claim nozzle with claim construction of doctrine a wide inlet and restricted outlet. The equivalents. particularly velocity in 1 The court was nozzle claim is nozzle that persuaded by expert testimony imparts velocity flowing of Mr. to substances patent through seeking produce Clark. We note Mr. Clark is a law- it. One an yer, engineer. equivalent might velocity not an In the manner not obtain a varie cases, patent that, ty ways. acceptance unusual he testified about of Our because questions patent wrapper, port of if file an outlet law as it were for- of the other

275 velocity way proving deemed an did not meet its burden of nozzle cannot be than a Pan- choice of the four forth in does not constrict our three factors set “equivalent,” Corp. duit v. Brothers Fibre Stahlin very The common much. equivalents of Works, Inc., 1152, 1156, 575 197 any narrow F.2d hose illustrates garden 726, (6th USPQ Cir.1978) (Markey, 729-30 will add some to a broader conduit outlet C.J.) approval by and cited with this court passing through the velocity liquid to a Soya Co. George Central v. A. Hormel district could and evi- conduit. Co., 1573, 1578, USPQ 490, 723 F.2d 220 & dently properly infer that the uniform did (Fed.Cir.1983). Having 494 considered the of the and 8 models outlets diameter detail, however, record we conclude that pur- enough to achieve the added legally sup- sufficient evidence did exist to desuperheaters. poses of those and, judge’s port findings in the ab- equivalents was es The doctrine clearly findings, factual sence erroneous “the impossible to make it tablished profits the lost affirm award. copyist unimportant unscrupulous to make general, the determination of changes and substitu insubstantial damages under 284 is left to the sound which, adding though in the tions judge of the trial discretion and will not be cop enough take the nothing, would be absent an disturbed abuse discretion. claim, hence outside the ied matter Heublein, Inc., 1550, Stickle F.2d 716 Tank & law.” Graver the reach of outside 1563, USPQ 377, (Fed.Cir.1983). 387 219 Co., 607, 70 Manufacturing 339 U.S. legal principles, however, Several set the revealing in this Particularly at 856. S.Ct. for the boundaries court’s discretion and Schoonover, testimony Mr. ease is the this court’s need not re review. We employee of involved former law, peat all these rules mention but by appel designing of the DA-8 sold only guide those our decision. testimony indi lants. Mr. Schoonover’s he cates that was aware proof of lost It is well settled that making attempted to avoid may need not be not be profits absolute but maintaining changes only minimal while profits proven to speculative; lost must be testimony indi function. The the same See, e.g., Paper probability. a reasonable attempted to take that Schoonover cates Converting Magna-Graph Machine v.Co. avoiding the DA-8 outside claims 591, 11, 22, USPQ Corp., 745 F.2d 223 ics “substantially language of tangential” Laboratories, (Fed.Cir.1984); Bio-Rad 598 ports far 1. Schoonover drilled his Corp., 739 F.2d Inc. v. Nicolet Instrument tangent than those of Yar ther off 604, 616, USPQ 654, (Fed.Cir.1984); 222 Competent testimony DA-4. indi way’s Murphy Indus Tool Co. v. Hughes G.W. cates, expect, as we should that Schoon Inc., tries, impart velocity, ports sufficient even over’s (5th Cir.1973). patentee’s It is the efficient minimal if in a less manner. Such prove by preponder therefore burden in changes are those to avoid which fail infringement, for” that “but ance fringement the doctrine because of holder would made the sales. no error of equivalents. We conclude that Bio-Rad, F.2d at at 663. infringe exists and that the law patentee, here the licen Specifically the ment is not erroneous. see, prove by presenting may (1) patented prod proof of demand for the Lost Profits market, (2) ability plaintiff’s uct *8 demand, (3) trial, market the absence Following court de- to meet the the the district substitutes, acceptable noninfringing proper damages were to be of termined that (4) computations prof Yarway a of lost profits by as and detailed on the lost based Soya, at 220 its. Central infringing sales. result of Eur-Control’s (citing Panduit, F.2d at damage USPQ 575 this at Appellants seek reversal of USPQ 729-30). Appellants at award, that Yar- specifically and contend inadequate that there is evidence at 599. argue Although the exact (4). (2), (3), profits regards precisely to factors and We amount of lost cannot be with fixed, disagree. principles “fundamental justice of re- quire throw the risk us to uncertain- (3), regard the With to factor ab ty upon wrongdoer the instead of the substitutes, noninfringing we need sence of injured party.” Id. point testimony Mr. only to the of Wood- Regarding element, the second the testimony that devices indicates field. demand, meet ability appel the market by for 25 the ’592 account covered argue Yarway lants did market, prove not desuperheater of the total percent by could meet the demand manufacture exists total mar that there within this but alone should Kalle providing discontinue “special a niche” or a mini-market ket the Yarway desuperheaters. with patent. desuperheaters by covered the ’592 appellants, disagree and Yarway sell to that Only Eur-Control and the evidence hold that as a does whole per the 25 market. Devices sold outside judge’s support finding Yarway the steam, desuperheat will but not cent ability did meet the market equal equivalent to the in Gustafsson demand. Thus, is this mini-market the rele vention. purposes determining market for vant The record indicates rele- several facts profits. Appellants’ argument that a issue, vant to this two of particu- which are percent precludes mere 25 market share noteworthy. First, larly spent finding acceptable of no is substitutes great money developing deal time and clearly unsupported light of this mini- specific market for cov- Instead, supports market. evidence by patent. ag- ered Yarway was finding noninfring court’s that there is no gressive business, in its both in the United ing acceptable spe substitute meet the and, States and abroad as evidenced this needs of this market. cific relevant lawsuit, aggressive protecting was Cf. Soya, 723 n. Central F.2d at 1579 particular these desuperheaters. market in (finding acceptable at 494 n. 4 Second, Yarway’s ability to meet market noninfringing prod other substitute where light demand must be considered in unique relationship ucts market were either inferior or and different). Kalle, The court’s testimony reduction shown of Mr. as Schoonover, from percent, sup formerly award 100 to 85 also of Eur-Control. ported testimony, explaining why corpo- When is a reflection of device, buyers ration license a then judge’s determination that some would put attempt essentially out desuperheaters might be aware of product, Yarway and Schoonover testified: purchase thus not from it. is a

This reasonable inference from the Well, you really have to understand evidence as a whole. makeup agreement of Eur-Control. The was made with Kalle as far as the desu- testimony provides sup- Woodfield’s also perheater agreement was concerned. (4), port for the the com- factor organization operating Each within [the putation profits. testimony pro- of lost U.S.A., parent], being Eur-Control [and vided basic for such an framework making Kalle], companies up the indi- profit based on award invoices of sales operating operate vidual units would figures. say We cannot evidence profit separate centers. was Each one insufficient, presented legally obviously interested in their respective the infringers therefore burden of bear the operating activities. persuading this errone- court of a [Emphasis supplied.] finding. They ous so. The have not done figures court is testimony revealing: district free to choose Schoonover’s extent, which to determine the amount of least Kalle to some Eur-Control and damages. Paper evidence, separately. 745 F.2d at act This eon- Converting, when

277 licensed, inappropriate to be an basis pre- that the contract the fact sidered with damages. enhancement of in the selling product Kalle from cludes Yarway, supports except to States United that enhancement of It is well-settled refuse would not that Kalle the inference in damages premised must on willful be in the desuperheaters Yarway the to sell fringement or .faith. Baumstimler v. bad If there previously. it had manner as same 1061, 1073, USPQ Rankin, 215 677 F.2d substitute, to do other- infringing Lam, were 575, (5th Cir.1982); 585 Inc. v. Johns-Manville spite its off its nose to to cut 462, 474-75, wise would be p., 213 Cor Cir.), face. 1061, (10th 1070-71 cert. de (1982). nied, 1007 Here the court 456 U.S. presents a a whole The evidence as held that there existed no will specifically company, Yar picture of a infringement, and thus we concern our ful market, acting way, aggressively only faith issue. here with the bad selves demand, a and meet attempting to create not as well that the court did We note desuper Yarway manufactures ing it. litigation upon premise its award vexatious Kalle, prudent; also it is heaters whenever tactics, but unacceptable or behavior entity, has reasonable business acting as a attempt around its appellants’ invent needs, and received its bar Yarway’s filled clearly recog patent. licensed The court in return. There is noth profit gained-for finding as its for a of bad nized this basis had Eur- to indicate that ing in the record premise a faith and realized that such setting infringed, this business not Control might well not be relevant to Therefore, changed. would statute. that could have judge’s the incen This court has indicated that on suffi demand is based the market met posi “design patents around” is a tive to clearly erroneous. and is not cient evidence patent system. As stated tive result of is affirmed. award Industries, Inc. v. A.O. Smith in State 1226, 418, F.2d Corp., 751 Damages and Enhanced (Fed.Cir.1985): Attorney’s Fees patent system is of a One of benefits appeal as to “de- “negative and Kalle incentive” its so-called products, competitor’s of en sign the court’s assessment around” well from bring- they patented, of attor thus damages and the award when hanced even fees, steady flow of innovations U.S.C. 284 and ney’s under 35 §§ discour- marketplace. It should Having considered the respectively. except damage awards issue, aged by punitive we must rationale on this court’s is so obnoxious in cases where conduct damages and enhancement of reverse the clearly to call for them. fees award. clearly attempt- appellant Eur-Control Here provide the authori- 284 and Sections patent and invent around the ed to act under its district court to ty for the the district court While court so found. discretion, review the above- and thus we in its belief may be correct only for an abuse awards mentioned a com- to license fundamentally Rosemont, Inc. v. Beckman unfair discretion. product or to manu- pany to distribute 1547-48, Instruments, Inc., 727 F.2d country and product in this facture USPQ 1, (Fed.Cir.1984). For these subsidiary in and through a come then scrutiny, appellate to withstand awards attempt introduce the same basical- exercise necessary that the it is item, contending ly in conflict with not be of discretion deviation, slight some patent authorizes find the Patent Act. We policies that such awards, we conclude Appendix for its see premise court’s district behavior, nonfrivolous coupled with a attempting when faith acted in bad appellants changed infringement by avoid attempt they had around to invent *10 design, sufficiently Yarway remedy “obnoxious” to cluded that not did its breach pat- proper after notice. purposes of the of the countervail one Where, case, par- the ent as this laws. quarrel We have no district contract, working ties are under a would reading agree court’s of the contract and logical expect provide them reme- to to agree- that Kalle could not terminate the contract, any dies for breach language paragraph ment under the of punitive aspects recourse to the more of 8(b). vacate We and remand the court’s damages tort is not needed. We hold that counterclaim, however, dismissal of the case, appellants’ this that of behavior possible damages consideration of for the infringement avoid and in- attempting to 8(b) We paragraph breach. do so as ad- they li- vent a had around only dresses termination of the contract censed, of a nature sufficient is not appear and does relevant to considera- damages premise of un- the enhancement availability damages tion of of for a Similarly, der 284. we con- 35 U.S.C. § breach. We direct the court reconsider excep- an clude that this cannot be deemed the claim as it relates claim for to a dam- tional Accord- case under U.S.C. 285. only, contract, ages based ingly, the award of fees and the evidence, applicable and the law. damages enhancement of award are re- PART, AFFIRMED IN REVERSED IN versed. PART, PART, IN AND VACATED RE- MANDED.

Counterclaims NIES, Judge, dissenting-in-part. Circuit Finally, appellants seek of the review respectfully trial court’s dismissal of certain counter- I majority dissent from the claims. We of the affirm dismissal affirmance court’s Georgia Deceptive Act and the district failed Lanham because court to make claims, perceive adequate findings pro- Act of fact failed Trade Practices we interpretation light vide no basis for claims in the of the such established prosecution history. facts. other re- spects, join I the majority. conclude, however, appel Claim of the ’592 reads as fol- lants’ breach of contract counterclaim must lows: parties’ be reconsidered. Provisions of A introducing device for a con- Yarway contract indicate that cooling amount of water trolled into a pat to inscribe a reference to the relevant steam, superheated compris- conduit ent number as well as a reference to the cylinder having conical nozzle (Eur-Control), license with EuroControl end, a plurality velocity one nozzles desuperheaters all marketed under the li provided through cylinder wall to cense. there Because was sufficient evi cylinder connect interior of the to a presented dence did not fulfill high pressure water source located responsibility, this contractual a breach of cylinder, velocity outside said said appears. contract claim being axially spaced nozzles directed court district dismissed the claim substantially tangentially cylindri- any because it found that Yar- breach cylinder, pis- cal inner surface of said way premised had cured. judge been cylinder progres- ton movable in said 8(b) upon paragraph this conclusion expose sively said nozzles when contract, which states “YARWAY or position closing backwards moved from a KALLE if may Agreement nozzle, terminate this piston having said conical said party the other breaches other terms rod piston extending connected thereto Agreement remedy of this and fails to such through cylinder the rear end of said (90) ninety days receipt member, breach within actuating after connected to an so;” swirling tangential written notice to do con- water from said ve- desuperheater 12. The passing directly through differs locity nozzles conical nozzle into said the DA-6 in that cylinder and said *11 [Emphasis through cylinder ports steam. the wall are di- added.] angle rected at an inclined toward the plurality notes that specification The “[a] discharge slightly nozzle and are moved through cylinder are wall passages of position ports from the in inward substantially axially and directed spaced they exactly tangent the DA-6 so are cylinder outside of the tangentially. At the cylinder. to the inner surface of the passages communicate with these wall ports, substantially are directed desuperheating pressure water high tangential to the inner surface of the source.” cylinder. notes that specification further “[a] desuperheat- 13. The DA-6 and DA-8 through cylin- passages plurality by ers manufactured and sold Eur-Con- ve- which are in the der wall form of axially trol USA consists of a combination of spaced as well as nozzles are locity which, size, function, uniformly disposed preferably elements as to their radially, line.” along imaginary general shape, cooperation helical an manner of purpose, correspond parts and ruled from the The trial court bench desuperheater described the ’592 follows: patent by and called for 1 and 2 Claims every element of I find each and thereof, and combination of such present in the Gustafsson disclo- one is performs parts the same function sub- DA-4 patent ’592and in the sure [sic] stantially accomplish the same manner to If no literal in the DA-8. there was and the same result as the combination of I the devices of infringement, find that desuperheater elements of the shown DA-4 and the DA-8 fall within [sic] patent and described the ‘592 equivalents for the reason the doctrine of called for Claims 1 and thereof. they perform substantially the same substantially way the same function 14. Claims 1 and 2 of the ’592 substantially the same result. achieve scope desuperheaters include within their type of the DA-6 and DA-8 manufac- findings The trial court’s written state as and sold Eur-Control USA. tured [Ci- follows: omitted, emphasis tations to the record The DA-6 manu- added.] factured, offered for sale and sold USA, comprises a defendant Eur-Control conclusion of law re- The trial court’s forming a cylinder central hollow swirl garding infringement is as follows: n having nozzle at the a conical chamber infringed has 2. Eur-Control USA end, discharge from which a conical Letters 2 of United States Claims spray ejected of water is into a steam 3,524,592 by the manufacture Patent plurality ports provided A line. desuperheat sale of its DA-6 and cylinder wall which con- ers. cylinder interior with a nect the to reconsider the Upon Kalle’s motion high pressure water external- source of stated as findings, the trial court’s order ports spaced ly cylinder. The follows: axially cylinder and direct water arguments, Despite defendants’ cylinder tangential to the inner into the that the adduced at Court finds evidence causing cylinder, the wa- surface of support that Claims trial does swirling path ter to toward follow include within 1 and of the ’592 discharge pis- A nozzle. movable conical scope desuperheaters of the DA-6 their ex- cylinder progressively ton within the type manufactured and sold and DA-8 from a ports as it is moved poses recog- The Court by Eur-Control USA. rate of flow position to control the closed in structure and nizes the differences through desuperheater. of water performance the ’592 between

the DA-6 and DA-8 devices but remains Daryl McCLARY, Appellant, C. DA-6 and convinced that the DA-8 desu- perheaters perform the same function in STATES, Appellee. The UNITED substantially the manner as the desuperheater specified in pat- Appeal No. 85-1957. ent. United States Court of Appeals, The above statements constitute the entire- Federal Circuit. ty of the trial court’s statements on in- *12 fringement. 17, 1985. Oct.

The trial court’s succession of statements

concerning infringement obfuscates the na- whether, It holding.

ture of its is unclear reconsideration,

after the trial court still infringement. Moreover,

finds literal

court’s various misstatements of the doc- equivalents

trine of test cast doubt majority’s conclusion dis- “[t]he

trict court was well aware the basic concerning

rules equiva- doctrine of importantly,

lents.” Most the de-

cisions contain below do not sufficient find-

ings upon holding which to review the Rather,

infringement. we have only the

conclusory statements set out above. prosecution history

view of the showing “ports”

amendment from to “velocity noz-

zles” before the examiner would allow the

claims, it cannot assumed that Eur-Con- “ports”

trol’s equivalents are the Indeed, “velocity nozzles.” pri- least “ports” ma significantly are different facie “velocity nozzles.” majority opinion interjects some evi-

dence by way garden of its own hose

example speculates and then about what However, trial court inferred. the trial expressed itself concern-

ing the relationship between the DA-6 and ports and the nozzles claimed.

Indeed, Eur-Control asserts that no evi-

dence was to establish equivalency, offered

while points testimony to certain However,

of its witnesses. following a trial,

bench we findings, review

scrutinize the sup- record evidence to

port findings. inferred findings

Because I believe are defi-

cient, I adequate would remand for find-

ings on issue.