Judges: Rader (author), Plager, Prost

[Appealed from C.D. Cal., Judge Feess]

In Intamin, Ltd. v. Magnetar Technologies, Corp., Nos. 05-1546, -1579 (Fed. Cir. Apr. 18, 2007), the Federal Circuit vacated part of the district court’s claim construction and reversed a grant of SJ of noninfringement, affirmed the district court’s decision to vacate a previous award of Rule 11 sanctions, and remanded the case to the district court for further proceedings.

Intamin, Ltd. (“Intamin”) owns U.S. Patent No. 6,062,350 (“the ’350 patent”) for a magnetic braking system used to stop amusement park rides such as roller coasters. Magnetic brakes create eddy currents when a conductor passes through a gap between two sets of magnets, resulting in magnetic friction that slows, and eventually stops, the ride. Intamin sued Magnetar Technologies, Corporation (“Magnetar”), alleging that Magnetar’s brakes infringe claim 1 of the ’350 patent.

Claim 1 of the ’350 patent requires “an intermediary disposed between adjacent pairs of said plurality of magnet elements.” Dependent claim 2 discloses the braking system of claim 1 “wherein said intermediary is non-magnetic.” The district court granted SJ of noninfringement after concluding that the term “intermediary” in claim 1 means a nonmagnetic member between the adjacent magnetic pairs and finding that the accused device lacked such an arrangement. Claim 1 also requires that a conductive rail be configured for attachment to a fixed device part and be adapted to extend the length of the fixed device part. The district court concluded that Magnetar’s brakes did not literally infringe the limitation requiring the conductive rail to “extend the length of the fixed device part” because Magnetar’s conductive rail does not run the entire length of the track to which it is attached.

Initially, the district court granted Rule 11 sanctions because it found that Intamin’s complaint was frivolous and filed for an improper purpose. Upon reconsideration, the district court vacated its finding that the complaint was frivolous and later vacated its decision to award Rule 11 sanctions altogether. Intamin appealed the district court’s grant of SJ of noninfringement and Magnetar cross-appealed the lower court’s decision to vacate the Rule 11 sanctions.

With regard to the limitation requiring an “intermediary,” the Federal Circuit, relying on Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005), concluded that the claim language itself does not require a nonmagnetic intermediary. It found that the claim language implied a broader meaning for “intermediary” in claim 1 and a narrower meaning in dependent claim 2. Even without relying on the doctrine of claim differentiation, the Court concluded that the overall context of claim 1 does not limit the broad language to nonmagnetic intermediaries. The Court found that the district court impermissibly seized upon the description of an embodiment with a “non-magnetic” intermediary in limiting the “intermediary” to nonmagnetic substances only.

Accordingly, the Federal Circuit vacated the district court’s construction of the term “intermediary” and remanded for determination of whether the ’350 patent limits the term “adjacent magnets of alternating polarity” to magnets of opposite polarity. The Federal Circuit also invited the district court to revisit its finding of noninfringement with the understanding that an “intermediary” may be magnetic.

With regard to the limitation requiring a “conductive rail being adapted to extend the length of the fixed device part,” Intamin argued that nothing required “length” to extend to the fixed part’s entire length. The Federal Circuit was not persuaded. It concluded that the verb “extend” suggests that the “length” reaches from one end to another. Further, the Court noted that the ’350 patent specification uses the term consistent with its meaning as a distance, and the context of the specification underscores the express statement in the claim that the rail extends the length of the fixed device part. Accordingly, the Court agreed with the district court that “length” meant entire length. The Court remanded to the district court for a determination of whether Magnetar’s brakes would infringe this limitation, either literally or under the DOE.

In reviewing the district court’s denial of Rule 11 sanctions against Intamin, the Court applied Ninth Circuit law, which provides that Rule 11 sanctions may be appropriate where a complaint is either frivolous or filed for an improper purpose. The Ninth Circuit defines a “frivolous” claim as one that is legally or factually baseless from an objective perspective and made without a reasonable and competent inquiry. Magnetar argued that Intamin’s prefiling investigation was insufficient because it did not obtain and physically open the metal casing on the magnets in Magnetar’s amusement ride braking system. The Federal Circuit concluded that the technology at issue in this case presented Intamin with “unreasonable obstacles” to any effort in obtaining a sample of Magnetar’s braking system and cutting open the casing. Accordingly, the Court concluded that the district court did not abuse its discretion in finding that Intamin’s prefiling inquiry was reasonable, based upon Intamin’s evaluation of the ’350 patent portfolio, analysis of the ’350 patent’s validity, determination of the scope of the ’350 patent’s claims, and expert analysis of infringement.