Ucp International Company Ltd. v. Balsam Brands Inc. ( 2019 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
UCP INTERNATIONAL COMPANY LIMITED,
GLOBAL UNITED ENTERPRISES LIMITED,
Plaintiffs-Appellees
v.
BALSAM BRANDS INC., BALSAM
INTERNATIONAL UNLIMITED COMPANY,
Defendants-Appellants
______________________
2018-1256
______________________
Appeal from the United States District Court for the
Northern District of California in No. 3:16-cv-07255-WHO,
Judge William H. Orrick, III.
______________________
SEALED OPINION ISSUED: September 19, 2019
PUBLIC OPINION ISSUED: October 7, 2019 ∗
______________________
PATRICIA LYNN PEDEN, Burke, Williams & Sorensen,
LLP, Oakland, CA, argued for plaintiffs-appellees. Also
represented by BRYAN CHRISTOPHER SMITH, LeClairRyan,
∗ This opinion was originally filed under seal and has
been unsealed in full.
2 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
A Professional Corporation, Rochester, NY.
DEANNE MAYNARD, Morrison & Foerster LLP, Wash-
ington, DC, argued for defendants-appellants. Also repre-
sented by SETH W. LLOYD; ROSE S. LEE, Los Angeles, CA;
MICHAEL ALLEN JACOBS, San Francisco, CA; MARC N.
BERNSTEIN, The Business Litigation Group, P.C., San
Francisco, CA.
______________________
Before WALLACH, CLEVENGER, and TARANTO, Circuit
Judges.
CLEVENGER, Circuit Judge.
Appellees UCP International Company and Global
United Enterprises (collectively, “UCP”) sued Appellants
Balsam Brands Inc. and Balsam International Unlimited
(together, “Balsam”) in the U.S. District Court for the
Northern District of California seeking a declaratory judg-
ment of non-infringement of all claims of Balsam’s U.S. Pa-
tent Nos. 8,062,718 (“the ’718 patent”) and 8,993,077 (“the
’077 patent”) (collectively, “the Patents-in-Suit”). The Dis-
trict Court granted UCP’s motion for summary judgment,
holding that UCP’s product does not infringe, either liter-
ally or under the doctrine of equivalents, the Patents-in-
Suit. The district court thereafter entered final judgment
in favor of UCP and against Balsam. Balsam appeals from
that judgment. For the reasons set forth below, we vacate
the district court’s judgment and remand for proceedings
consistent with this opinion.
BACKGROUND
I
A
Balsam manufactures and sells invertible artificial
Christmas trees. It owns the rights to the Patents-in-Suit,
which were both issued to Bruce Schooley. The two patents
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 3
share the same specification and they bear the same title,
“Invertible Christmas Tree.” 1
The trees claimed by the Patents-in-Suit allow for eas-
ier set-up and storage from year to year because, unlike
previous artificial Christmas trees, the limbs of the pa-
tented trees remain attached during storage, and when the
tree is turned from the upside-down to the right-side-up
position, the limbs automatically deploy. The trees are also
easy to deploy and collapse because they have two trunk
portions, a first portion that remains fixed to the movable
stand, and a second portion that is connected to, and ro-
tates about, the fixed portion. The two trunk portions are
connected by what the patents refer to as a “pivot joint,”
which allows an individual to reconfigure the tree from a
collapsed to a deployed position “with a minimum of
strength or dexterity.” ’718 patent, col. 2 ll. 7–8, 21.
The specification describes the second trunk portion as
being “pivotably attached to the first trunk portion, at least
indirectly, through at least one pivot joint.” Id., col. 2 ll.
20–21. The “pivot joint” is “typically adjacent” to the upper
end of the first trunk portion. Id., col. 2 ll. 21–24. Further,
the second trunk portion is “pivotably attached . . . to the
first trunk portion” at a part of the second trunk portion
“between a first end and a second end of the second trunk
portion.” Id., col. 2 ll. 25–28. The pivot joint “allows at least
one second trunk portion to pivot substantially 180° from a
collapsed orientation . . . to a deployed orientation.” Id., col.
2 ll. 28–32.
Figures 18 through 21 of the Patents-in-Suit show dif-
ferent types of “pivot[s].” ’718 patent, col. 7 l. 51. The spec-
ification explains that the “pivot 36 can be as simple as a
1 Because the Patents-in-Suit share a common spec-
ification, we cite to only the ’718 patent for ease of reference
unless otherwise specified.
4 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
hole passing laterally through the fixed trunk 30 with an
axle 37 passing laterally through this hole.” Id., col. 7 ll.
31–33. However, while the axle and hole pivot joint, shown
below, “is perhaps the simplest embodiment for the pivot
36,” the specification explicitly allows for “other embodi-
ments . . . including those depicted in FIGS. 18-21.” Id.,
col. 7 ll. 49–52.
Id., Fig. 9.
Figures 18 and 19, reproduced below, “depict front and
top views of an alternate joint 136 with a bracket 138 pivot-
ably attached” to the fixed trunk portion and either pivot-
ably attached or fixed to the rotating trunk portion. Id.,
col. 7 ll. 52–56. The rotation of the second, rotating trunk
in Fig. 18 occurs “by first moving along arrow C’, then mov-
ing along arrow C”” to achieve 180° of rotation. Id., col. 7
ll. 57–59.
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 5
Id., Figs. 19 and 20.
Independent claim 1 of the ’718 patent is representa-
tive and recites:
A collapsible Christmas tree, comprising in combi-
nation:
a first trunk portion;
said first trunk portion having an elongate
form extending between an upper end and
a lower end, said upper end above said
lower end when said first trunk portion is
supported upon a floor;
a second trunk portion having an elongate
form between a first end and a second end;
said second trunk portion including a plu-
rality of limbs extending laterally there-
from;
a pivot joint coupling said first trunk por-
tion to said second trunk portion in a
6 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
manner allowing pivoting of said second
trunk portion relative to said first trunk
portion;
said pivot joint interfacing with said first
trunk portion at a location closer to said up-
per end than to said lower end; and
said pivot joint interfacing with said second
trunk portion at a location spaced from
both said first end and said second end of
said second trunk portion.
Id. col. 17 ll. 9–29 (emphasis added).
B
UCP also manufactures invertible artificial Christmas
trees (“the Accused Product”). UCP is a Chinese manufac-
turer based in Hong Kong. UCP formally sold its invertible
trees to Frontage Marketing, Inc. and Cinmar, LLC (collec-
tively, “Frontgate”), until Balsam sued Frontgate in the
district court, Balsam Brands Inc. v. Cinmar, LLC, No.
3:15-cv-04829-WHO (N.D. Cal.) (“the Frontgate Litiga-
tion”), and obtained a settlement resulting in a stipulated
dismissal of the suit. The relationship between UCP and
Frontgate did not continue after the suit was dismissed.
It is undisputed that the Accused Product also includes
a stationary trunk and a movable trunk that are connected
by a combination of a bracket, pins, and a slotted plate.
UCP obtained a patent covering its Accused Product, which
includes a figure, shown below, disclosing the slotted plate
inversion mechanism.
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 7
U.S. Patent No. 9,581,287, Fig. 1b.
II
In the Frontgate Litigation, Balsam sued Frontgate for
its alleged infringement of the same patents at issue in the
current appeal. The Frontgate Litigation also took place in
the same court and in front of the same judge as the action
below. Balsam argued that Frontgate infringed the Pa-
tents-in-Suit by selling the artificial Christmas tree manu-
factured by UCP. Frontgate is Balsam’s closest competitor
in the market for high-end artificial Christmas trees.
While Balsam was aware that UCP manufactured
Frontgate’s allegedly infringing trees, and that UCP
agreed to defend and indemnify Frontgate, Balsam chose
not to sue UCP.
After a claim construction hearing, the district court is-
sued a claim construction order (“the Frontgate Order”)
construing a number of limitations relating to the connec-
tion between the first and second trunks of the trees
claimed by the Patents-in-Suit. See Balsam Brands Inc. v.
Cinmar, LLC (Frontgate), No. 15-CV-04829-WHO, 2016
WL 8346172 (N.D. Cal. Sept. 1, 2016). The district court,
adopting a slightly modified version of Frontgate’s pro-
posed construction, construed “pivot joint” as “[a] joint al-
lowing pivoting of the second trunk relative to the first
trunk by a mechanical connection between the first trunk
and the second trunk from which the second trunk turns
8 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
on a fixed point, changing the angle between the first and
second trunk along their lengths.” Id. at *3. The district
court, again adopting a slightly modified version of
Frontgate’s construction, construed “pivoting” as “[t]urning
on a fixed point.” Id. at *10. Consistent with Balsam’s con-
struction, the district court construed “pivotably attached”
and “pivotably joined” as “[a]ttached and permitting pivot-
ing.” Id. at *11. The district court also adopted Frontgate’s
construction of “pivot joint element,” which construed the
term as “[a] pivot joint that is placed on a separate spacing
element to distance the pivot joint away from the end of the
second trunk.” Id. at *12. Rotating and rotation were con-
strued as “turning around a fixed point” because the dis-
trict court determined that the Patents-in-Suit used the
terms “pivot” and “rotate” interchangeably. Id. at *13.
Shortly after the Frontgate Order issued, Balsam and
Frontgate reached a settlement whereby Frontgate agreed
to stop purchasing artificial Christmas trees from UCP
(“the Agreement”). UCP was not part of the Agreement,
and, in fact, the Agreement explicitly stated that it did not
release UCP from liability for infringement. J.A. 441
(“[T]he above release does not apply to or release UCP (as
defined above to include its Affiliates), or its officers, direc-
tors, shareholders, or agents.”). The parties filed a joint
stipulation to dismiss the case as a result of the Agreement.
On December 20, 2016, the same day that the district
court dismissed Balsam’s suit against Frontgate pursuant
to the joint stipulation, UCP filed the declaratory judgment
action that is the subject of the current appeal, UCP Int’l
Co. Ltd. v. Balsam Brands Inc., No. 16-CV-07255-WHO
(N.D. Cal.). UCP sought a declaration of non-infringement
with respect to all claims of the Patents-in-Suit. Balsam
filed a motion to dismiss, claiming that there was no de-
claratory judgment jurisdiction because UCP’s complaint
did not allege that it was fearful of any legal action by Bal-
sam, nor did it allege that Balsam threatened to sue UCP.
In response, UCP amended its complaint, and Balsam filed
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 9
another motion to dismiss the amended complaint for the
same reasons articulated in its first motion to dismiss.
The district court denied Balsam’s motion because, de-
spite the fact that Balsam contended that it had no interest
in suing UCP, “Balsam’s representations and conduct con-
cerning whether it wants to sue UCP are not the measure
of Article III standing in a declaratory judgment case.”
UCP Int’l Co. Ltd. v. Balsam Brands Inc. (Balsam I), 252
F. Supp. 3d 828, 833 (N.D. Cal. 2017). Because the district
court found that “Balsam’s litigation against Frontgate
was an affirmative act by Balsam to enforce its patent
rights against alleged infringement by UCP’s Inversion
Tree,” and because UCP “demonstrated that it has already
engaged in, and plans to continue engaging in, activities
that Balsam has alleged infringe its Flip Tree patents,” the
district court found that UCP had declaratory judgment ju-
risdiction. Id. at 833–35.
Prior to summary judgment, the district court also de-
cided that it would use the same claim constructions en-
tered in its claim construction order in the Frontgate
Litigation. Neither party objected to the district court’s de-
cision. Instead, the parties disagreed over how the docu-
ments from the Frontgate Litigation would be imported
into UCP’s declaratory judgment action. The parties
reached an agreement to import specific documents from
the Frontgate Litigation, and submitted to the court a joint
stipulation to that effect.
Shortly thereafter, the parties submitted their sum-
mary judgment motions, and the district court granted
UCP’s motion for summary judgment of non-infringement.
As an initial matter, the district court rejected Balsam’s
argument that “collateral estoppel should not apply to the
Frontgate claim construction order.” UCP Int’l Co. Ltd. v.
Balsam Brands Inc. (Balsam II), No. 16-CV-07255-WHO,
2017 WL 5068568, at *3 (N.D. Cal. Nov. 3, 2017). It found
instead that, under Ninth Circuit law, collateral estoppel
10 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
would apply to the Frontgate Order, and Balsam was
therefore precluded from challenging the claim construc-
tions in that Order.
As part of its literal infringement analysis, the district
court addressed Balsam’s expert’s opinion that UCP’s slot-
ted plate design literally infringed the claimed pivot joint
because (1) “the movable trunk portion turns on a fixed cen-
ter on the slotted plate, and (2) the movable trunk portion
turns on either pin in the slotted plate, and each pin is fixed
relative to the movable trunk portion.” Id. at 4. The dis-
trict court did not credit that opinion because it “ignore[d]
the express language from the Frontgate order construing
‘pivot joint’ as ‘a mechanical connection . . . from which the
second trunk turns on a fixed point.’” Id. (quoting
Frontgate, 2016 WL 8346172 at *3). More specifically, the
district court found that Balsam’s expert’s opinion “ig-
nore[d] that the second trunk must be connected to the
fixed point,” and that “[i]f there is no connection between
the fixed point and the second trunk, it is impossible for the
trunk to ‘turn[] on a fixed point.’” Id. Because, according
to the district court, there was no connection between the
fixed center of the slotted plate and the second trunk in the
Accused Product, Balsam’s expert’s opinion on literal in-
fringement could not prevent granting summary judgment
in UCP’s favor.
The district court also rejected Balsam’s argument that
the Accused Product infringed the Patents-in-Suit under
the doctrine of equivalents. Therefore, the district court
granted UCP’s summary judgment motion of non-infringe-
ment.
Balsam now appeals from the district court’s decision
granting UCP’s summary judgment motion. We have ju-
risdiction to decide this appeal under 28 U.S.C.
§ 1295(a)(1).
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 11
DISCUSSION
We review a district court’s grant of summary judg-
ment under the law of the regional circuit, which, in this
case, is the Ninth Circuit. MAG Aerospace Indus., Inc. v.
B/E Aerospace, Inc., 816 F.3d 1374, 1376 (Fed. Cir. 2016).
“The Ninth Circuit reviews the grant of summary judg-
ment de novo.” Id.Four main issues are presented for our review. First,
Balsam argues that the district court lacked jurisdiction
over the suit because no controversy existed between the
parties when UCP filed its declaratory judgment action.
Second, Balsam contends that the district court erred in
applying collateral estoppel to the Frontgate Order. Third,
Balsam claims that, even if the Frontgate Order was bind-
ing, the district court either misapplied or improperly mod-
ified the constructions in that Order in its summary
judgment opinion. Forth, Balsam argues that the district
court erred in granting UCP’s motion for summary judg-
ment of non-infringement under the doctrine of equiva-
lents. We address each of those issues in turn below.
I
We first address the threshold question of whether the
district court had jurisdiction under the Declaratory Judg-
ment Act because, if it did not, there would be no need to
consider the merits of Balsam’s appeal. See Microchip
Tech. Inc. v. Chamberlain Grp., Inc., 441 F.3d 936, 938
(Fed. Cir. 2006) (vacating the district court’s grant of sum-
mary judgment and remanding with instructions to dis-
miss the case where the district court lacked jurisdiction
under the Declaratory Judgment Act to reach the merits of
the action). Federal Circuit law governs that inquiry when,
as here, the underlying merits of an action involve patent
infringement and/or validity. Minnesota Min. & Mfg. Co.
v. Norton Co., 929 F.2d 670, 672 (Fed. Cir. 1991). We re-
view de novo a district court’s jurisdictional determination
12 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
under the Declaratory Judgment Act. Vanguard Research,
Inc. v. PEAT, Inc., 304 F.3d 1249, 1254 (Fed. Cir. 2002).
The Declaratory Judgment Act provides that “[i]n a
case of actual controversy within its jurisdiction, . . . any
court of the United States, upon the filing of an appropriate
pleading, may declare the rights and other legal relations
of any interested party seeking such declaration, whether
or not further relief is or could be sought.” 28 U.S.C.
§ 2201(a). The purpose of the Declaratory Judgment Act,
as the Supreme Court has explained, is to ameliorate the
dilemma posed by “putting the challenger to the choice be-
tween abandoning his rights or risking prosecution.”
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 129
(2007). While there is no bright-line rule for whether a dis-
pute presents a case of actual controversy, the Supreme
Court’s decisions require:
[T]hat the dispute be “definite and concrete, touch-
ing the legal relations of the parties having adverse
legal interests”; and that it be “real and substan-
tial” and “admi[t] of specific relief through a decree
of a conclusive character, as distinguished from an
opinion advising what the law would be upon a hy-
pothetical state of facts.”
Id. at 127 (quoting Aetna Life Ins. Co. of Hartford, Conn. v.
Haworth, 300 U.S. 227, 240–41 (1937)). The Declaratory
Judgment Act thus allows a potential patent infringer to
bring suit before the patentee does when “the facts alleged,
under all the circumstances, show that there is a substan-
tial controversy, between parties having adverse legal in-
terests, of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.” Id. (quoting Mary-
land Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273
(1941)).
Applying the Supreme Court’s holding in MedImmune,
we have held that “declaratory judgment jurisdiction gen-
erally will not arise merely on the basis that a party learns
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 13
of the existence of a patent owned by another or even per-
ceives such a patent to pose a risk of infringement, without
some affirmative act by the patentee.” SanDisk Corp. v.
STMicroelectronics, Inc., 480 F.3d 1372, 1380–81 (Fed. Cir.
2007). Generally, an affirmative act by the patentee is
“conduct that can be reasonably inferred as demonstrating
intent to enforce a patent.” Hewlett–Packard Co. v. Accel-
eron LLC, 587 F.3d 1358, 1363 (Fed. Cir. 2009); see Asia
Vital Components Co. v. Asetek Danmark A/S, 837 F.3d
1249, 1253 (Fed. Cir. 2016) (same).
Balsam contends that the district court lacked jurisdic-
tion over UCP’s declaratory judgment action because Bal-
sam took no affirmative acts indicating that it intended to
enforce its patent rights against UCP. Balsam argues that
it never sued UCP, it never threatened to sue UCP, and it
had no intention of suing UCP. It argues additionally that
it never sent a notice letter, demanded royalties, or even
spoke to UCP prior to UCP’s declaratory judgment action.
Further, Balsam contends that, based on our precedent,
the Frontgate Litigation cannot evidence an intent by Bal-
sam to enforce its patent rights against UCP. According to
Balsam, the district court, therefore, erred in finding that
the Frontgate Litigation was enough to show an affirma-
tive act taken towards UCP.
UCP counters that, on numerous occasions during the
Frontgate Litigation, Balsam acted affirmatively in a way
that demonstrated Balsam’s intentions to enforce its pa-
tent rights, and in a way that implicated UCP as poten-
tially liable for infringement. UCP points to the fact that,
in the Frontgate Litigation, Balsam’s complaint identified
UCP’s trees as the accused product, it submitted interrog-
atory responses accusing UCP of making infringing trees,
and it submitted claim charts comparing its patented trees
to UCP’s trees. UCP also claims that Balsam represented
to both UCP’s counsel and the district court that it might
sue UCP. Moreover, UCP contends that Balsam expressly
14 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
left UCP out of its settlement agreement with Frontgate,
indicating that Balsam reserved the right to sue UCP.
We agree with UCP. We have previously affirmed a
district court’s determination that it had declaratory judg-
ment jurisdiction where a patent holder sued a declaratory
judgment plaintiff’s customers in a prior suit, and submit-
ted claim charts in that suit implying that the declaratory
judgment plaintiff could be liable for indirect infringement.
See Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 905
(Fed. Cir. 2014). In Microsoft, the claim charts cited to the
declaratory judgment plaintiff’s software to support the pa-
tent holder’s allegations of infringement by the declaratory
judgment plaintiff’s customers. Id. The claim charts also
cited to the declaratory judgment plaintiff’s user guides
and documentation for every claim limitation. Id. Because
providing instructions to use a product in an infringing
manner is evidence of the required mental state for induced
infringement, we held that there existed a substantial con-
troversy regarding whether the declaratory judgment
plaintiff induced infringement based on the patent holder’s
allegations of direct infringement. Id.The facts of this case are even stronger than those in
Microsoft because the claims at issue in this case are prod-
uct claims, not method claims. Balsam’s entire suit against
Frontgate was based on its sales of UCP’s trees. There was
therefore no need to infer UCP’s liability based on
Frontgate’s liability. In fact, Balsam admitted in its mo-
tion to dismiss for lack of subject matter jurisdiction that
accusing Frontgate’s trees of infringement necessarily
meant it was accusing UCP’s trees of infringement. J.A.
306 (“[B]y accusing Frontgate trees Balsam was neces-
sarily accusing UCP trees.”). Balsam’s claim charts in the
Frontgate Litigation demonstrated in detail how it be-
lieved UCP’s trees infringed its patents, see J.A. 493 (rec-
ognizing UCP as the manufacturer of all of the accused
trees cited in the claim charts), and its interrogatory re-
sponses stated that Frontgate “purchased and imported
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 15
the[] infringing trees from UCP.” J.A. 626. During the
Frontgate Litigation, Balsam also informed the district
court that it might find it necessary to add UCP as a de-
fendant in the infringement suit, see J.A. 766 (Case Mgmt.
Tr.) (“THE COURT: . . . You told me in the last case that
maybe you were going to bring UCP into it.”), and when
Balsam and Frontgate decided to settle the suit, the settle-
ment agreement explicitly excepted UCP from any waiver
of liability for infringement.
Balsam’s counterarguments are unpersuasive. Bal-
sam’s assertion that declaratory judgment jurisdiction can-
not lie here because Balsam never sued, threatened to sue,
or intended to sue UCP runs clearly counter to our prece-
dent. See Arris Grp., Inc. v. British Telecommunications
PLC, 639 F.3d 1368, 1379 (Fed. Cir. 2011) (holding that “an
express accusation [of infringement] is unnecessary”); Dan-
isco U.S. Inc. v. Novozymes A/S, 744 F.3d 1325, 1330 (Fed.
Cir. 2014) (“Article III does not mandate that the declara-
tory judgment defendant have threatened litigation or oth-
erwise taken action to enforce its rights before a justiciable
controversy can arise.”); SanDisk, 480 F.3d at 1382–83
(“We decline to hold that Jorgenson’s statement that ST
would not sue SanDisk eliminates the justiciable contro-
versy created by ST’s actions, because ST has engaged in a
course of conduct that shows a preparedness and willing-
ness to enforce its patent rights despite Jorgenson’s state-
ment.”).
Balsam’s reliance on our decision in Allied Mineral
Prod., Inc. v. Osmi, Inc., 870 F.3d 1337 (Fed. Cir. 2017) is
also misplaced. Balsam relies on Allied to support its ar-
gument that, without some form of communication be-
tween Balsam and UCP indicating that Balsam intended
to enforce its patent rights against UCP, UCP cannot use
the Frontgate Litigation to establish declaratory judgment
jurisdiction. In Allied, however, we found that the totality
of the circumstances did not support declaratory judgment
jurisdiction because the patentee had never directed any
16 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
actions toward the declaratory judgment plaintiff, and it
had never litigated or threated litigation in the U.S. on its
U.S. patent that was the subject of the declaratory judg-
ment action. 870 F.3d at 1339. The patentee brought suit
in Mexico, on its Mexican patent, against Mexican entities,
based on alleged infringement that occurred in Mexico. Id.
The declaratory judgment plaintiff, the American manu-
facturer of the allegedly infringing Mexican products,
claimed a controversy sufficient to confer declaratory judg-
ment jurisdiction based on an assumption that that the pa-
tentee would, at some point, probably decide to enforce its
U.S. patent in the U.S. court system against the manufac-
turer, an entity not related to the Mexican companies. Id.
at 1341. Given the particular facts presented, we found too
hypothetical that assumption, and thus there was no con-
troversy of sufficient immediacy and reality to establish de-
claratory judgment jurisdiction. Id.
Here, Balsam brought suit against Frontgate in a U.S.
district court on the same patents at issue in the declara-
tory judgment action. During that suit, Balsam also explic-
itly stated that it might find it necessary to sue UCP. As
we explained in Arris, jurisdiction does not turn on
whether the patentee specifically communicated with the
declaratory judgment plaintiff. See 639 F.3d at 1378(“[D]irect communication between a patentee and a declar-
atory plaintiff is not necessary to confer standing.”). In-
stead, the relevant inquiry is whether the patentee’s
actions “can be reasonably inferred as demonstrating in-
tent to enforce a patent.” Hewlett–Packard, 587 F.3d at
1363. Balsam’s conduct demonstrates that intent.
In the wake of MedImmune, we have also reiterated
that “the issue of whether there has been meaningful prep-
aration to conduct potentially infringing activity remains
an important element” to consider in a declaratory judg-
ment jurisdiction analysis. Cat Tech LLC v. TubeMaster,
Inc., 528 F.3d 871, 880 (Fed. Cir. 2008). “If a declaratory
judgment plaintiff has not taken significant, concrete steps
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 17
to conduct infringing activity, the dispute is neither ‘imme-
diate’ nor ‘real’” and thus an actual controversy between
the parties cannot exist for purposes of establishing declar-
atory judgment jurisdiction. Id.Balsam claims that UCP failed to demonstrate that it
was engaging in potentially infringing acts in the United
States when it filed suit against Balsam. According to Bal-
sam, UCP manufactures its trees in China, and when UCP
filed suit, it no longer had any U.S. sales or customers be-
cause its exclusive U.S. customer, Frontgate, stopped pur-
chasing UCP’s trees as part of the Agreement with Balsam.
Balsam further argues that, to the extent that UCP’s
amended complaint alleged preparations to begin selling
its artificial Christmas trees in the U.S. without Frontgate,
those allegations were both vague and incapable of sup-
porting jurisdiction at the time the action was filed. Bal-
sam claims that those allegations could not have been true
at the time of filing because UCP filed its declaratory
judgement action only a few hours after losing its sole U.S.
customer.
UCP argues in response that it was already engaging
in potentially infringing acts when it filed its declaratory
judgment complaint. UCP contends that the Frontgate Lit-
igation clearly demonstrated that UCP had already final-
ized the design of its trees and sold those trees in the U.S.
market. UCP claims that it also demonstrated its intention
to continue selling its trees to other U.S. customers besides
Frontgate. Thus, regardless of whether it was currently
making sales of its trees, UCP argues that it clearly showed
meaningful preparation to conduct potentially infringing
activity, which is all that is required.
Again, we agree with UCP. There is no requirement
that a declaratory judgment plaintiff actually sell its po-
tentially infringing products for jurisdiction to lie. See id.
at 881 (“[A] party need not have engaged in the actual man-
ufacture or sale of a potentially infringing product to obtain
18 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
a declaratory judgment of non-infringement.”). Thus, we
find unpersuasive Balsam’s argument that UCP cannot es-
tablish declaratory judgment jurisdiction because it is no
longer conducting infringing activity after the Agreement
with Frontgate.
We also find unpersuasive Balsam’s contention that
UCP failed to demonstrate that it was preparing to conduct
infringing activity after losing Frontgate as a customer. In
its amended declaratory judgment complaint, UCP stated
that it “intends to sell its inversion tree in the U.S., and is
in discussions with a potential customer who seeks to pur-
chase UCP’s inversion tree.” J.A. 222. It stated addition-
ally that it was “taking steps in preparation for making
direct sales into the U.S,” and that it “has an inventory of
inversion trees it is actively seeking to sell.” Id.; J.A. 227.
A declaration submitted by UCP’s Vice President of Pro-
duction Management supported those allegations. Con-
trary to Balsam’s arguments, those allegations properly
support UCP’s declaratory judgment jurisdiction.
This court has stated previously that “the proper focus
in determining jurisdiction are ‘the facts existing at the
time the complaint under consideration was filed.’” Prasco,
LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1337 (Fed.
Cir. 2008) (quoting GAF Bldg. Materials Corp. v. Elk Corp.,
90 F.3d 479, 483 (Fed. Cir. 1996)). The Supreme Court has
also said that “when a plaintiff files a complaint in federal
court and then voluntarily amends the complaint, courts
look to the amended complaint to determine jurisdiction.”
Rockwell Int’l Corp. v. United States, 549 U.S. 457, 473–74
(2007). It is true that “[l]ater events may not create juris-
diction where none existed at the time of filing,” Spectron-
ics Corp. v. H.B. Fuller Co., 940 F.2d 631, 635 (Fed. Cir.
1991), abrogated on other grounds by Liquid Dynamics
Corp. v. Vaughan Co., 355 F.3d 1361 (Fed. Cir. 2004), but,
as long as the facts alleged in an amended complaint did
not arise after filing, we may properly consider them in de-
termining jurisdiction.
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 19
There is no dispute that UCP was successfully selling
a relatively large volume of potentially infringing trees in
the U.S. prior to filing its declaratory judgment action.
There is, therefore, a strong inference that UCP had an in-
ventory of potentially infringing trees, as it alleges, and
that it had planned to sell that inventory, either directly or
through a distributor, into the U.S. at the time it filed its
declaratory judgment action. Regardless of the fact that it
lost Frontgate’s business shortly before filing its declara-
tory judgment action, there is no reason to believe that
UCP was not soliciting other customers or looking for ways
to sell its product directly in the U.S. There is no require-
ment that UCP allege more than it did to establish a con-
troversy for purposes of declaratory judgment jurisdiction.
See Arkema Inc. v. Honeywell Int’l, Inc., 706 F.3d 1351,
1358 (Fed. Cir. 2013 ) (holding that, where it was clear that
Arkema wished to sell its product, and manufacturers
wished to purchase that product, there was “no require-
ment that Arkema identify the particular manufacturers
that will purchase [Arkema’s product]” for purposes of es-
tablishing declaratory judgment jurisdiction).
Considering the totality of the circumstances, we agree
with the district court that there is a substantial contro-
versy of sufficient immediacy and reality to confer declara-
tory judgment jurisdiction.
II
Turning to the merits of Balsam’s appeal, Balsam first
contends that summary judgment of non-infringement
must be reversed because it is based on an incorrect claim
construction imported from the Frontgate Litigation. Ac-
cording to Balsam, the district court in the Frontgate Liti-
gation erred in construing “pivot joint” and “pivoting” to
require that the second trunk of the invertible Christmas
tree “turn on a fixed point.” Frontgate, 2016 WL 8346172at *3, *10. The district court below applied the construc-
tions from the Frontgate Order because it held that the
20 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
doctrine of collateral estoppel applied to that Order. Bal-
sam argues that, contrary to the district court’s conclusion,
the doctrine of collateral estoppel does not apply to the
Frontgate Order, and thus it should not be precluded from
challenging those constructions in its suit with UCP.
We find it unnecessary to address the parties’ argu-
ments regarding collateral estoppel because, for the rea-
sons discussed below, we find no error in the Frontgate
court’s constructions of the “pivot joint” and “pivoting”
terms. Thus, even if we disagreed with the district court
that collateral estoppel applied to the Frontgate Order, it
would not be a reason to reverse the district court’s judg-
ment.
“[C]laim construction must begin with the words of the
claims themselves.” Amgen Inc. v. Hoechst Marion Rous-
sel, Inc., 457 F.3d 1293, 1301 (Fed. Cir. 2006). “The words
used in the claims are interpreted in light of the intrinsic
evidence of record, including the written description, the
drawings, and the prosecution history . . . .” Teleflex, Inc.
v. Ficosa N. Am. Corp., 299 F.3d 1313, 1324 (Fed. Cir.
2002). To the extent the district court relied on intrinsic
evidence in construing the claim terms, we review the dis-
trict court’s analysis de novo. Teva Pharm. USA, Inc. v.
Sandoz, Inc., 135 S. Ct. 831, 841 (2015).
In addition to intrinsic evidence, district courts can
also look to extrinsic evidence in the form of expert testi-
mony to, among other things “provide background on the
technology at issue” or “establish that a particular term in
the patent or the prior art has a particular meaning in the
pertinent field.” Phillips v. AWH Corp., 415 F.3d 1303,
1318 (Fed. Cir. 2005). Extrinsic evidence is, however, gen-
erally viewed as less reliable than intrinsic evidence in de-
termining the proper construction of a claim term. Id. To
the extent the district court relied on extrinsic evidence to
construe the claims, we must review those factual determi-
nations for clear error. Teva Pharm., 135 S. Ct. at 838, 841.
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 21
In the Frontgate Order, the district court construed the
claim terms “pivot joint” and “pivoting,” among others. For
both terms, it adopted slightly modified versions of
Frontgate’s constructions. It construed “pivot joint” as “[a]
joint allowing pivoting of the second trunk relative to the
first trunk by a mechanical connection between the first
and the second trunk from which the second trunk turns
on a fixed point, changing the angle between the first trunk
and the second trunk along their lengths.” Frontgate, 2016
WL 8346172 at *3. It construed “pivoting” as “turning on
a fixed point.” Id. at *10. Both below and on appeal, Bal-
sam takes issue with the “on a fixed point” aspect of those
constructions. Balsam contends that the “on a fixed point”
limitation is not supported by the intrinsic evidence. In-
stead, Balsam argues that the intrinsic evidence describes
“pivoting” more broadly as the relative motion a pivot joint
permits between the first and second trunk. We disagree.
Neither Balsam nor its expert, Dr. McCarthy, dispute
that, to a person having ordinary skill in the art
(“PHOSITA”), the ordinary and customary meaning of piv-
oting requires movement around a roughly fixed point. See
Id. at *6 (“Balsam does not dispute that Frontgate’s posi-
tion on the ordinary and customary meaning of ‘pivot’ is
generally accurate.”); J.A. 3784 (McCarthy Deposition)
(“Q[:] Have you heard the fulcrum in a lever system also
called a pivot? A[:] Yes. . . . Q[:] So in a simple lever system,
the load travels in a circle around the fulcrum? A[:] In this
canonical representation, that would be roughly correct.”);
id. (“A[:] . . . pivoting around a point will describe a circular
path . . . .”); J.A. 3788 (McCarthy Deposition) (“A[:] . . . [a
PHOSITA] might understand ‘pivoting’ as in a canonical
sense of . . . it rotates -- something rotates around a shaft.”).
It argues instead that the Patents-in-Suit use the term in
a broader sense. None of Balsam’s citations to the intrinsic
evidence, however, undermine the presumption that
“pivot” and “pivoting” are used in the customary sense, and
there is no evidence that the patentee acted as his own
22 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
lexicographer when he used the terms “pivot” and “pivot-
ing.” See Prima Tek II, L.L.C. v. Polypap, S.A.R.L., 318
F.3d 1143, 1148 (Fed. Cir. 2003) (explaining that there is
generally a “heavy presumption in favor of the ordinary
meaning of claim language as understood by one of ordi-
nary skill in the art,” which can be overcome by the pa-
tentee’s lexicography only when the patentee “clearly set[s]
forth an explicit definition for a claim term”). In fact, in
every preferred embodiment in the specification “the first
and second trunk portions are attached in a way that al-
lows for motion on a fixed point,” as the district court cor-
rectly found. Frontgate, 2016 WL 8346172 at *10.
Balsam cites to its expert’s testimony to support its ar-
gument that the preferred embodiment shown in Figure 18
of the Patents-in-Suit discloses a pivot joint that allows for
both translational and rotational movement. According to
Dr. McCarthy, that means that the pivot joint in Figure 18
has multiple axes of rotation, demonstrating that the sec-
ond trunk is not limited to movement about any particular
fixed point. See J.A. 3023–25 (“[W]hen the body is trans-
lating (moving in space) at the same time it is rotating
(changing in orientation), . . . there is no stationary, i.e.
fixed, single axis of rotation . . . .”). Thus, Balsam contends
that requiring fixed-point rotational movement would read
the preferred embodiment shown in Figure 18 out of the
claims, a fact that puts the construction squarely at odds
with a fundamental canon of claim construction.
Balsam’s argument is unpersuasive. The Patents-in-
Suit allow for an indirect connection between the first and
second trunks. See ’718 patent, col. 2 ll. 19–21 (“[A]t least
one second trunk portion pivotably attached to the first
trunk portion, at least indirectly, through at least one pivot
joint.” (emphasis added)). The preferred embodiment
shown in Figure 18 discloses such an indirect connection.
That indirect connection between the first and second
trunks does not, however, undermine the district court’s
construction, regardless of whether it permits both
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 23
rotational and translational movement. The bracket that
indirectly couples the first and second trunks in Figure 18
is still attached to a fixed point at the top of the first, fixed
trunk. The movement of the second trunk relative to the
first trunk is accomplished, at least in part, by the bracket’s
motion at its point of attachment, i.e., the “fixed point.” See
’718 patent, col. 7 ll. 52–59 (describing the bracket as pivot-
ably attached to the fixed trunk portion, and as either fixed
or pivotably attached to the movable trunk). Therefore, in
Figure 18 “the first and second trunk portions are attached
in a way that allows motion on a fixed point,” satisfying the
district court’s claim construction. Frontgate, 2016 WL
8346172 at *10. Balsam’s expert testimony thus does noth-
ing to undermine the fact that the terms “pivot” and “piv-
oting” are used in their ordinary sense, as the district court
properly recognized in its construction.
III
Next, Balsam argues that, even if collateral estoppel
applied to the Frontgate Order, or we found no error in the
Frontgate constructions, summary judgment of non-in-
fringement must still be reversed because the district court
misapplied or erroneously modified its construction of the
“pivot” claim terms to require a direct connection between
the first and second trunks.
In its decision granting UCP’s motion for summary
judgment of non-infringement, the district court found Bal-
sam’s expert’s declaration unpersuasive, and therefore in-
capable of raising a genuine issue of material fact, because
it was “inconsistent with the express language and mean-
ing of the Frontgate Order.” Balsam II, 2017 WL 5068568at *4. According to the district court, “[b]y describing the
‘fixed center on the slotted plate’ as consistent with the re-
quired ‘fixed point’ of a ‘pivot joint,’ McCarthy ignore[d]
that the second trunk must be connected to the fixed point.”
Id. The district court explained that “[i]f there is no con-
nection between the fixed point and the second trunk, it is
24 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
impossible for the trunk to ‘turn[] on a fixed point.” Id. Be-
cause there was “no connection between the fixed center of
the slotted plate and the second trunk,” the district court
found that the Accused Product could not meet the “pivot
joint” limitation as it was construed in the Frontgate Or-
der. Id.By requiring that there be a connection between the
second trunk and the fixed point, and by finding that there
existed no connection in the accused device, Balsam argues
that the district court implicitly added a requirement to the
Frontgate construction that the second trunk be not just
connected to the fixed point, but directly connected to that
point. We agree.
In Dr. McCarthy’s declaration in support of Balsam’s
opposition to UCP’s motion for summary judgment, he
identified a fixed point on the first trunk of the Accused
Product to which a “slotted plate” is attached. J.A. 1142.
The second trunk is then attached to that slotted plate with
a “bracket” and “pins.” J.A. 1145. Thus, the second trunk
does appear to be connected to the fixed point, albeit indi-
rectly. The district court therefore must have required a
direct connection between the fixed point and the second
trunk in order to find, without further analysis, that there
existed “no connection between the fixed center of the slot-
ted plate and the second trunk.” Balsam II, 2017 WL
5068568 at *4.
UCP argues in response that the district court’s con-
struction of “pivot joint” always required a direct connec-
tion between the second trunk and the fixed point. UCP
supports its argument by pointing to Frontgate’s proposed
construction of “pivot joint,” which required “a mechanical
connection between the first trunk and the second trunk
from which the second trunk moves in a circle around a
fixed point.” Frontgate, 2016 WL 8346172 at *3. According
to UCP, the district court modified Frontgate’s proposed
construction to include the language “turns on a fixed
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 25
point” for the specific purpose of requiring a direct connec-
tion between the second trunk and the fixed point. It
claims therefore that the district court did not modify its
construction at the summary judgment stage, and because
collateral estoppel applies to the Frontgate Order, we
should not consider Balsam’s arguments on this point. The
record, however, does not support UCP’s argument.
Prior to issuing the Frontgate Order, the district court
issued a tentative claim construction ruling to focus the
parties’ arguments. Frontgate proposed the following con-
struction for “pivot joint”: “A joint allowing pivoting of the
second trunk relative to the first trunk by a mechanical
connection between the first trunk and the second trunk
from which the second trunk moves in a circle around a
fixed point.” Frontgate Litigation, ECF No. 106. The
court, tentatively adopting a slightly modified version of
Frontgate’s construction, construed the “pivot joint” term
as “[a] joint allowing turning of the second trunk relative
to the first trunk by a mechanical connection between the
first trunk and the second trunk from which the second
trunk moves around a fixed point, changing the angle be-
tween the first trunk and the second trunk along their
lengths.” Id.At the claim construction hearing, Frontgate took issue
with the district court’s decision to remove the phrase “in a
circle” from Frontgate’s proposed construction. Frontgate
argued that the “pivot joint” claims were “structural
claim[s]” that required “a physical pivot.” J.A. 3947. It
noted additionally that the “pivot joint” claims included a
“functional limitation” in that the “pivot joint” must “al-
low[] pivoting of the second trunk relative to the first
trunk.” J.A. 3949. According to Frontgate, “movement
around a fixed point when it’s pivoting is defined by a cir-
cle.” J.A. 3947. Thus, removing “in a circle” created a pos-
sible ambiguity, according to Frontgate, that the
movement of the two trunks relative to each other could
encompass movement other than pivoting. Frontgate
26 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
explained that the court did not need to include the phrase
“in a circle” so long as its construction indicated by some
other means that the two trunks were pivoting relative to
each other. Frontgate suggested that the phrase “on a fixed
point” alleviated the problem created by the district court’s
tentative construction because it would require an attach-
ment between the fixed point and the second trunk such
that the movement of the second trunk would be confined
to circular movement around the fixed point. The district
court adopted Frontgate’s suggestion in its final construc-
tion.
In the Frontgate Order, the district court recognized
that the patents’ specification described the invention as
including “at least one second trunk . . . portion pivotably
attached to the first trunk portion, at least indirectly,
through at least one pivot joint.” ’718 patent, col. 2 ll. 17–
21. The district court did not, however, find that the indi-
rect attachment disclosure undermined its proposed “on a
fixed point” construction because it said “nothing about the
sort of motion allowed by the pivot joint.” Frontgate, 2016
WL 8346172 at *10. According to the district court, even
in the case of an indirect attachment, the second trunk was
still “pivotably attached . . . through a pivot joint,” and thus
the trunks were still attached “in a way that allow[ed] for
motion on a fixed point,” as required by the district court’s
construction. Id.It is therefore clear that, in adopting a construction of
“pivot joint” that included “turn[ing] on a fixed point,” the
Frontgate court never intended that construction to limit
the type of attachment between the first and second trunks
to a direct attachment. Instead, based on the arguments
made during the claim construction hearing and the court’s
analysis in the Frontgate Order, it appears that the “on a
fixed point” language was adopted to ensure that the move-
ment at the “pivot joint” was restricted to pivoting, as op-
posed to other types of rotational movement. Because the
direct connection requirement was added to the
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 27
construction of “pivot joint” at summary judgment, collat-
eral estoppel—assuming without deciding that it applies to
the Frontgate Order—does not preclude Balsam from chal-
lenging that new requirement.
Now that we have determined that the district court
modified the original construction of “pivot joint” laid out
in the Frontgate Order, we must analyze whether the dis-
trict court committed error in adopting that modified con-
struction. We review a modification to a court’s prior
construction the same way we review the original construc-
tion: de novo. Exxon Chem. Patents, Inc. v. Lubrizol Corp.,
64 F.3d 1553, 1556 (Fed. Cir. 1995) (“No matter when or
how a judge performs the Markman task, on appeal we re-
view the issue of claim interpretation independently with-
out deference to the trial judge.”).
The intrinsic evidence here is dispositive. As the dis-
trict court itself recognized, the Patents-in-Suit’s specifica-
tion explicitly contemplates an indirect connection between
the first and second trunks. See ’718 patent, col. 2 ll. 17–
20 (“[T]he trunk includes at least two trunk portions in-
cluding a first trunk portion adapted to be supported above
a floor and at least one second trunk portion pivotably at-
tached to the first trunk portion, at least indirectly,
through at least one pivot joint.”); id. col. 7 ll. 52–56 (“FIGS.
18 and 19 depict . . . a bracket 138 pivotably attached to the
upper end 34 of the fixed trunk 30 and an end of the bracket
138 opposite the upper end 34 of the fixed trunk 30 either
fixed or pivotably attached to the rotating trunk.”). We
thus find error in the district court’s implicit direct connec-
tion requirement because it runs counter to the intrinsic
evidence.
As we mentioned above, the slotted plate and the pins
in the accused device appear to provide an indirect connec-
tion between the second trunk and a fixed point where the
slotted plate is fastened to the first trunk. We therefore
must vacate the district court’s finding of no literal
28 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
infringement and remand the case for a determination of
whether the Accused Product meets the “pivot” claim limi-
tations as those limitations were construed in the
Frontgate Order without the erroneous direct connection
modification added at summary judgment.
IV
Last, Balsam contends that the district court erred in
granting summary judgment of non-infringement under
the doctrine of equivalents. Balsam argues that it pre-
sented sufficient evidence from which a reasonable fact-
finder could find the “pivot” claim limitations met under
the doctrine of equivalents. Because we find error in the
district court’s modified construction of “pivot joint” at
summary judgment, and because it is not clear to us how
that error may have affected the court’s doctrine of equiva-
lent’s analysis, we must also vacate the district court’s find-
ing of no infringement under the doctrine of equivalents
and remand for proceedings consistent with this opinion.
CONCLUSION
For the reasons stated above, we hold that the district
court erred in its modified construction of “pivot joint” at
summary judgment. We therefore vacate the district
court’s determination that the Accused Product does not in-
fringe, either literally or under the doctrine of equivalents,
the asserted claims of the Patents-in-Suit. We remand the
case for proceedings consistent with this opinion.
VACATED AND REMANDED
COSTS
No costs.