For the first time in its 22-year history, the U.S. Court of Appeals for the Federal Circuit had an opportunity to address the scope of an obscure infringement defense known to as "temporary presence in the U.S." (35 U.S.C. § 272.) In doing so, it overturned the grant of a preliminary injunction. National Steel Car v. Canadian Pacific Railway, LTD., Case No. 03-1256 (Fed. Cir. Jan. 29, 2004).

Canadian Pacific Railway (CPR) is engaged in the shipping of lumber from Canada to various destinations in the United States. National Steel Car (NSC) is a manufacturer of railway cars especially designed to efficiently haul lumber. After NSC lost a large bid to supply CPR with railway cars, NSC sued CPR alleging infringement of NSC’s patent, which is directed to "a depressed center-beam flat car," a design that allows railway cars to carry a volumetrically larger load.

CPR conceded that the NSC patent claims read on its railway cars, but argued that because its railway cars were only "temporarily" present in the United States., under § 272, it was not liable for any act of infringement. CPR also argued that the `575 patent was invalid because it was obvious in view of the combination of two prior art references, the Wagner and Udstad patents. The district court did not agree and granted NSC’s preliminary injunction holding that CPR’s defenses lacked substantial merit. On appeal, the Federal Circuit reversed, finding merit in both defenses.

First, the Federal Circuit rejected the district court’s definition of "temporary" as used in § 272. The district court held that even though CPR’s cars started and finished their journey in Canada, they were not in the United States merely "temporarily" because in each trip the cars spent the majority of the time delivering cargo to U.S. destinations, and CPR received financial gains from
their presence. The Federal Circuit, while noting the statute was ambiguous with respect to the U.S. Congress’ intent in defining "temporary," rejected the district court’s definition, holding that "temporary" refers to "a purpose to enter the United States, engage in international commerce, and then depart."

As to CPR’s obviousness defense, the district court found that the combination of Wagner and Udstad contained all elements of the asserted claims of the `575 patent, but concluded that "there was no suggestion, teaching or motivation to combine Wagner and Udstad."

CPR had presented two documents, the "Lund drawing" and the "Prichard disclosure," arguing that each demonstrated the requisite motivation to combine. The Lund drawing was made by Mr. Lund, who possessed an associate degree in mechanical engineering. The "Prichard disclosure" comprised notes prepared by Mr. Prichard, a marketing manager for a railway car manufacturer. Lund had prepared the drawings when he tried to build a flat car with a center partition to haul lumber, but he never discussed with any engineers "whether the car in his drawings could be built." Prichard had discussed his idea for combining a center partition car with a depressed well car with a railway car manufacturer. The district court held that neither Lund nor Prichard had an engineering or rail car design background (and so were not persons of ordinary skill in the art) and neither disclosures "had been disseminated to a sufficiently broad public so as to give either the status of prior art reference." The Federal Circuit disagreed, noting that Lund’s or Prichard’s background does not disqualify their disclosures from being relevant to whether a motivation to combine was implicit in the knowledge of one of ordinary skill in the art, and the motivation to combine can equally be found in the "knowledge generally available to one of ordinary skill in the art."

In the view of the Federal Circuit, even if Lund’s and Prichard’s education was insufficient to qualify them as a person of ordinary skill in the art, their observations would still be probative of what a person of ordinary skill in the art would have considered obvious. More importantly, insofar as evidence of motivation to combine is concerned, the prior art status of the evidence is not a concern. Rather, the Federal Circuit noted, "public distribution is irrelevant" to whether evidence of motivation to combine may be found in the knowledge generally available to those skilled in the art."

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