## Facts

- ACS Hospital Systems, Inc. owned U.S. Patent No. 4,183,057 covering a hospital rental television system using a key-operated switch, an override switch, and an indicator light showing the set had been rented.
- The claims contemplated that a key operator could place the key switch in an “off” position to prevent operation, and a viewer could temporarily enable operation by actuating an override mechanism accompanied by an indicator signal.
- Montefiore Hospital and Wells National Services Corporation used a hospital television rental system that ACS alleged infringed the patent.
- Defendants relied on prior art involving rental and coin-operated television systems and asserted that override switches and indicators were well known.
- The district court held the patent invalid as obvious under 35 U.S.C. § 103, found no infringement, and denied defendants’ request for attorney’s fees.
- ACS appealed the invalidity and noninfringement rulings; defendants cross-appealed the denial of attorney’s fees.

## Issues

1. Whether the district court correctly held the patent invalid for obviousness under 35 U.S.C. § 103.
2. Whether the accused system infringed the asserted claims, literally or under the doctrine of equivalents.
3. Whether defendants were entitled to attorney’s fees as an “exceptional case” under 35 U.S.C. § 285.

## Decision

- The court reversed the judgment of invalidity for obviousness.
- The court affirmed the judgment of noninfringement.
- The court affirmed the denial of attorney’s fees to defendants.

## Legal Principles

- Obviousness under § 103 requires a claim-focused analysis applying the Graham factual inquiries; generalized findings that certain features were common in the art are insufficient without showing why the specific claimed combination would have been obvious.
- A party asserting invalidity must prove obviousness by clear and convincing evidence.
- Infringement requires proof that the accused device meets each claim limitation (or its equivalent); material differences in claimed operation (including required “latching” behavior of an override mechanism) support noninfringement.
- Validity and infringement are separate determinations; a patent may be valid yet not infringed.
- Attorney’s fees under § 285 are discretionary and require proof the case is “exceptional”; prevailing on the merits alone does not mandate a fee award absent factors such as bad faith or litigation misconduct.

## Conclusion

The Federal Circuit held that defendants failed to prove the hospital rental television patent obvious under § 103, but affirmed that the accused system did not infringe the properly construed claims and that the case was not exceptional for purposes of awarding attorney’s fees under § 285.


ACS Hosp. Sys., Inc. v. Montefiore Hosp., 732 F.2d 1572 (Fed. Cir. 1984)