Aqua-Aerobic Systems, Inc. v. Five-Star Filtration, LLC et al

Filing 60

ORDER, denying Plaintff's request for an order of contempt. Signed by Judge Frederick J Martone on 4/27/12. (REW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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Five Star Filtration, LLC; Johnson
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Utilities, LLC,
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Defendants.
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Five Star Filtration, LLC,
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Counter Claimant,
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vs.
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Aqua-Aerobic Systems, Inc.,
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Counter Defendant.
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Aqua-Aerobic Systems, Inc.,
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No. CV-07-1251-PHX-FJM
ORDER

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On March 9, 2012, we ordered defendant Five Star Filtration, LLC, to show cause

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(doc. 53) why it should not be held in contempt of the Consent Judgment entered on April

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3, 2008 (doc. 38) (“Consent Judgment”). We now have before us Five Star’s response to the

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Order to Show Cause (doc. 57), and plaintiff’s reply (doc. 59).

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Aqua-Aerobic is the licensee of the ‘132 Patent, a cloth media wastewater filtration

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system. In 2007, Aqua-Aerobic filed a patent infringement action against Five Star, claiming

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that the manufacture and sale of its Five-Star Disk Filter System at the Pecan Creek

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Subdivision in Queen Creek, Arizona (“Pecan Creek”) violated the ‘132 Patent. The parties

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eventually entered into a settlement agreement pursuant to which Five Star acknowledged

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that it had “directly and/or indirectly infringed the ‘132 patent” through the use of the Five-

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Star Disk Filter System at Pecan Creek. Consent Judgment ¶ 5. As part of the settlement,

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Five Star agreed to modify the Five Star Disk Filter System (“Redesigned System”), by

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adding spacers to the backwash header so that “the backwash header and/or backwash shoe

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[of the Redesigned System] does not at any time come into contact with the cloth filter media

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(or pile threads of the cloth filter media) or in any way act mechanically upon the pile threads

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of the cloth filter media during operation.” Id. ¶ 6. Aqua-Aerobic agreed that “the

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Redesigned System, as represented by Five Star, does not infringe the ‘132 patent.” Id. ¶ 7.

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Now, four years later, Aqua-Aerobic seeks an order holding Five Star in contempt of

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the Consent Judgment for continuing to infringe the ‘132 patent. Aqua-Aerobic initially

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argued that, because of performance problems, Five Star abandoned the Redesigned System

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and returned to the original infringing system in violation of the Consent Judgment. Motion

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for OSC at 3, 5. However, in the face of substantial evidence that Five Star continues to use

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the Redesigned System at the Pecan Creek facility, Aqua-Aerobic now alleges that the

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Redesigned System itself infringes its patent because the backwash shoe comes into contact

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with the cloth filter.

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Contempt is a “severe remedy, and should not be resorted to where there is a fair

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ground of doubt as to the wrongfulness of the defendant’s conduct.” MAC Corp. of Am. v.

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Williams Patent Crusher & Pulverizer Co., 767 F.2d 882, 885 (Fed. Cir. 1985) (citing Cal.

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Aritificial Stone Paving Co. v. Molitor, 113 U.S. 609, 618, 5 S. Ct. 618, 622 (1885)). The

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party seeking to enforce an injunction must prove by clear and convincing evidence “both

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that the newly accused product is not more than colorably different from the product found

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to infringe and that the newly accused product actually infringes.” TiVo Inc. v. EchoStar

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Corp., 646 F.3d 869, 882 (Fed. Cir. 2011). “The primary question on contempt should be

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whether the newly accused product is so different from the product previously found to

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infringe that it raises a fair ground of doubt as to the wrongfulness of the defendant’s

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conduct.” Id. (quotation omitted). “Where one or more of those elements previously found

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to infringe has been modified, or removed, the court must make an inquiry into whether that
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modification is significant.” Id.

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We first conclude that Aqua-Aerobic has failed to establish by clear and convincing

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evidence that the Redesigned System is not more than colorably different from the original

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infringing product. During settlement negotiations, the parties agreed that Five Star’s

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original disk filter system infringed Aqua-Aerobic’s patent because the backwash shoe came

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into contact with the cloth filters. The parties agreed that to avoid infringement, Five Star

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would attach spacers or “feet” to the backwash shoe in order to prevent the shoe from coming

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into contact with the cloth filter. Aqua-Aerobic approved the proposed Redesigned System

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as non-infringing, and Five Star replaced the original infringing system with the Redesigned

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System. The newly installed spacers were a significant modification to the design and

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performance of the original filter system given that the agreed upon modification resolved

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the infringement lawsuit. Therefore, we conclude that there is more than a colorable

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difference between the original infringing product and the Redesigned System so as to raise

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a fair ground of doubt as to the wrongfulness of Five Star’s conduct. This conclusion alone

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precludes a finding of contempt.

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We also conclude, however, that Aqua-Aerobic has failed to show by clear and

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convincing evidence that the newly accused product actually infringes. We have before us

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directly competing evidence as to whether the cloth filter comes into contact with the

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backwash shoe during operation. This disputed issue of fact prevents Aqua-Aerobic from

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showing by clear and convincing evidence that the Redesigned System actually infringes the

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patent. Aqua-Aerobic has failed to satisfy its burden of proof for an order of contempt. Any

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infringement claims related to the Redesigned System must be presented in a new

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infringement action, where the burden of proof will be a preponderance of the evidence and

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Five Star can interpose its estoppel defense.

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IT IS ORDERED DENYING plaintiff’s request for an order of contempt.

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DATED this 27th day of April, 2012.

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