IP Law Daily, PATENT—Fed. Cir.: Bed in a box patent dispute remanded for a third time, (Sep 22, 2022)

By Cheryl Beise, J.D.

Disputed evidence regarding a prior sale of competing bed product precluded summary judgment of invalidity.

The federal district court in Los Angeles erred by concluding that claims of a patent owned by Zinus, Inc., which was directed to a bed-in-a-box bed frame, as a matter of law was invalid under the on-sale bar, the U.S. Court of Appeals for the Federal Circuit has ruled. On remand, the district court was directed to resolve a very narrow factual dispute regarding whether the assembly instructions that were included with a third-party bed sold to the president of Zinus before the asserted patent’s critical date in fact applied to that third-party bed and whether they described all of the features claimed in the asserted patent. This was the third time the case had reached the Federal Circuit on the issue of invalidity of the patent at issue (Cap Export, LLC v. Zinus, Inc., September 22, 2022, Stoll, K.).

Zinus, Inc. is the assignee of U.S. Patent No. 8,931,123 (the ’123 patent), entitled “Assemblable mattress support whose components fit inside the headboard.” The patent is directed to a bed frame made up of components that can be packed into a zippered headboard compartment and shipped in a single box.

In 2016, Cap Export, LLC filed a declaratory judgment action against Zinus, alleging that the ’123 patent claims are invalid and not infringed. Zinus counterclaimed, alleging (among various state law counterclaims) that Cap Export infringed the ’123 patent claims. The district court granted summary judgment in Cap Export’s favor and dismissed all of Zinus’s counterclaims and third-party claims with prejudice. In January 2018, the Federal Circuit vacated the summary judgment ruling, pointing to three reversible errors in the district court’s invalidity analysis.

Following remand, the case ended with a summary judgment of non-invalidity, infringement damages of $1.1 million in favor of Zinus, and a permanent injunction against Cap Export and its CEO. However, after judgment was entered, Cap Export discovered evidence that Zinus’s president and testifying technical expert had made material misstatements about his knowledge of the prior art. Based on the false statements, the district court set aside the judgment. In May 2021, the Federal Circuit affirmed the district court’s decision to set aside the judgment, concluding that the patent holder’s president misrepresented his knowledge of highly material prior art relevant to the determination of validity. The case again was remanded.

Following remand, in June 2021, the district court concluded on summary judgment that the ’123 Patent is invalid under the on-sale bar based on a particular bed-in-a-box product—the “Mersin” bed—that was sold by third party Woody Furniture to Zinus’s then-president Colin Lawrie before the ’123 patent’s critical date. However, the assembly instructions that accompanied the Mersin bed sold to Mr. Lawrie on their face indicated that they were for a different product called the “Fusion” bed. The product disclosed in the Fusion bed assembly instructions satisfied every element of claim 1 of the ’123 patent. Zinus again appealed.

On appeal, Zinus argued that there was a factual dispute over whether the Fusion assembly instructions applied to the as-sold Mersin bed. Zinus cited testimony from its former Director of Marketing, Cyndi Hunting. Ms. Hunting testified that the instructions could have been placed in the Mersin box by mistake. Zinus also contended that the Mersin bed did not include the connector shown in step 6 of the assembly instructions, including a photo of the as-sold Mersin bed taken from an inspection report.

The Federal Circuit agreed with Zinus that there were genuine disputes of material fact regarding whether the Fusion bed and Mersin bed were the same structurally, whether the Fusion instructions described the structure of the as-sold Mersin bed, and what exactly the ambiguous photo of the Mersin bed depicted. Accordingly, summary judgment was improperly granted.

The appeals court noted that the district court erred in concluding that no reasonable jury could find that the Fusion instructions did not apply to the as-sold Mersin bed. To so conclude, the district court had to make factual inferences in Cap Export’s favor, the Federal Circuit observed. “For instance, the court inferred from the testimony of the third-party manufacturer’s marketing director, Ms. Anges Tan, that the PC001 factory code must apply to the Fusion bed, demonstrating that the Fusion and Mersin beds are the same. While a jury could infer this conclusion from Ms. Tan’s testimony, this was not the only inference one could reasonably draw “given the vague manner in which Ms. Tan testified,” the Federal Circuit said. The district court also ignored Ms. Hunting’s declaration, which contained factual assertions that tended to undermine the court’s factual conclusion that the Fusion assembly instructions applied to the Mersin bed. What exactly was depicted by the ambiguous photograph in the record also was a disputed factual question for the jury to consider.

Taking the record as whole, that some evidence supported a conclusion that the Fusion assembly instructions applied to the Mersin bed and some detracted from that conclusion. The Federal Circuit explained that the factual disputes related to a very targeted issue, e.g., whether the Fusion bed and the Mersin bed are in fact one and the same with respect to the features claimed in the ’123 patent. The appeals court noted that summary judgment may well be appropriate on remand if Cap Export is able to produce additional evidence to support its position.

The case is No. 21-2159.

Attorneys: David Beitchman (Beitchman & Zekian, PC) for Cap Export, LLC and Abraham Amouyal. Matthew Wolf (Arnold & Porter Kaye Scholer LLP) for Zinus, Inc.

Companies: Cap Export, LLC; Zinus, Inc.

Cases: Patent FedCirNews