DCT

1:24-cv-00910

Rheem Mfg Co v. Ao Smith Corp

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:24-cv-00910, N.D. Ga., 10/13/2023
  • Venue Allegations: Plaintiff Rheem alleges venue is proper in the Northern District of Georgia because a substantial part of the events giving rise to the claim occurred there, including Defendant A. O. Smith’s (AOS) communications threatening litigation directed to Rheem’s Atlanta-based personnel, and because AOS is subject to personal jurisdiction in the district through its sales and service network.
  • Core Dispute: This is a declaratory judgment action in which Plaintiff Rheem seeks a court declaration that its gas-fired water heaters do not infringe Defendant AOS's U.S. Patent No. 8,375,897.
  • Technical Context: The technology at issue relates to venting systems for gas-fired water heaters, specifically methods for interfacing a high-pressure power burner with a low-pressure natural convection vent.
  • Key Procedural History: The complaint details a prolonged dispute, including a prior, unserved lawsuit filed by AOS against Rheem in Delaware that was voluntarily dismissed. It also references a separate lawsuit where AOS successfully asserted the same patent against a third party, Bradford White Corp. During that prior litigation, AOS’s expert reportedly testified that Rheem’s products also infringed. Rheem’s complaint asserts that years of communications, an in-person meeting in Atlanta, and AOS's demands for a damages tolling agreement create an immediate controversy justifying a declaratory judgment action.

Case Timeline

Date Event
2001 Rheem's prior art "GN" water heaters allegedly introduced to market
2006-08-16 ’897 Patent Priority Date
2013-02-19 '897 Patent Issue Date
2018-03-16 AOS files suit against Bradford White Corp. over the '897 patent
2021-06-29 AOS files "Delaware Action" against Rheem over the '897 patent
2021-07-26 AOS voluntarily dismisses the Delaware Action without prejudice
2022-08-03 Federal Circuit affirms judgment against Bradford White Corp.
2023-09-07 In-person meeting between Rheem and AOS in Atlanta
2023-10-13 Rheem files this Complaint for Declaratory Judgment

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 8,375,897 - "Gas Water Heater"

  • Patent Identification: U.S. Patent No. 8,375,897, "Gas Water Heater", issued February 19, 2013.

The Invention Explained

  • Problem Addressed: The patent describes an approach to venting combustion gases from a water heater. The background of the patent is minimal, but the invention addresses the challenge of using a powerful, efficient "power burner," which forces exhaust out under positive pressure, with a standard, less expensive "natural convection" vent, which operates at atmospheric pressure ('897 Patent, col. 4:16-19).
  • The Patented Solution: The invention describes a method where a power burner forces combustion products through a flue. An "exhaust plenum" is placed between the end of the pressurized flue and the start of the natural convection vent. Within this plenum, the pressure of the hot gases is designed to drop to "near atmospheric pressure." This pressure drop "decouples" the high-pressure burner from the low-pressure vent, allowing the gases to then rise out through the vent "substantially entirely under the influence of natural convection" (Abstract; '897 Patent, col. 4:3-14).
  • Technical Importance: This method allows a manufacturer to pair a high-performance power burner with a standard "Category I" venting system, potentially avoiding the need for more complex and costly sealed venting configurations ('897 Patent, col. 4:16-19).

Key Claims at a Glance

  • The patent contains a single claim, independent Claim 1, which is a method claim asserted in the complaint (Compl. ¶ 66).
  • The essential steps of Claim 1 include:
    • providing a water heater with a burner, blower, and flue;
    • forcing products of combustion into the flue under positive pressure;
    • interposing an exhaust plenum between the flue and a natural convection vent;
    • dropping the pressure of the combustion products to near atmospheric pressure within the plenum;
    • permitting the products to rise out of the plenum and into the vent substantially entirely under the influence of natural convection; and
    • mixing ambient air with the combustion products as they flow into a draft hood, which is part of the vent construction.

III. The Accused Instrumentality

Product Identification

  • The complaint identifies "Rheem's gas-fired Universal Ultra Low NOx water heater products," particularly those with model numbers beginning with the prefix "GNU" (the "Rheem GNU Water Heaters") (Compl. ¶¶ 2-3). A photograph in the complaint shows a side-by-side comparison of an accused "GNU100-200" model and an allegedly prior art "GN100-200" model (Compl. p. 39).

Functionality and Market Context

  • The accused products are residential and commercial gas water heaters. Rheem contends that the operation of these heaters does not meet key limitations of the '897 patent's single claim (Compl. ¶ 6). Specifically, the complaint alleges that based on testing, the accused heaters maintain a positive pressure at the exit of the component AOS identifies as the "plenum," meaning the pressure does not drop to "near atmospheric" as required by the claim (Compl. ¶ 77). The complaint also alleges that its GNU products are sold through major retailers such as Home Depot, providing a screenshot of a store finder map as evidence of its sales activities within the district (Compl. p. 18).

IV. Analysis of Infringement Allegations

As this is a declaratory judgment action for non-infringement, the following table summarizes Rheem's stated reasons for not infringing the patent.

'897 Patent Non-Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Non-Infringing Functionality Complaint Citation Patent Citation
providing a water heater having a burner, a blower, and a flue The Rheem GNU Water Heaters allegedly do not have "a flue" as required by a proper construction of the term, which the complaint argues requires a "single, seamless tube" without certain weld joints. ¶¶72-74 col. 4:20-36
dropping the pressure of the products of combustion to near atmospheric pressure within the plenum Based on testing cited in the complaint, the accused heaters allegedly maintain a positive pressure at the exit of the relevant component, and therefore the pressure does not drop to "near atmospheric pressure." ¶¶75, 77-79 col. 4:5-8
permitting the products of combustion to rise out of the plenum and into the natural convection vent construction substantially entirely under the influence of natural convection Because the pressure allegedly remains positive, the exhaust of combustion products is not "without the influence of the power burner" and thus does not occur "substantially entirely under the influence of natural convection." ¶¶82-84 col. 4:8-12
  • Identified Points of Contention:
    • Scope Questions: The complaint raises a key claim construction dispute over the term "a flue." Rheem argues the patent's specification limits this term to a "single, seamless tube" that lacks "circumferential welded joints" (Compl. ¶¶ 73-74). The court's interpretation of whether this specific structural detail from the embodiment limits the broader claim term will be critical.
    • Technical Questions: A central factual dispute will concern the physical operation of the accused heaters. The complaint alleges that testing shows the pressure of combustion gases in the accused GNU heaters does not drop to "near atmospheric pressure" before exiting the "plenum" (Compl. ¶ 77). This sets up a direct conflict with the claim's requirements, which will likely depend on expert testimony and the results of technical testing. The complaint includes a visual aid comparing the accused GNU model to Rheem's allegedly prior art GN model, stating they are functionally and structurally the same (Compl. p. 39).

V. Key Claim Terms for Construction

  • The Term: "a flue"

  • Context and Importance: This term is central to one of Rheem's primary non-infringement arguments. If "a flue" is construed to require the specific "single, seamless tube" structure described in the patent's embodiment, and Rheem's product does not have this structure, it could be dispositive of non-infringement (Compl. ¶¶ 73-74).

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The claim itself uses the general term "a flue" without express structural limitations like "seamless." A party might argue that claim terms should be given their plain and ordinary meaning unless the patentee acts as their own lexicographer.
    • Evidence for a Narrower Interpretation: The specification states, "The flue tube 65 is formed from a single, seamless tube," and defines "seamless" as a tube with "no circumferential welded joints" ('897 Patent, col. 4:20-27). A party will argue this language demonstrates a clear intent to limit the scope of "a flue" to this specific structure, especially since the patent touts the fatigue-reduction benefits of this design ('897 Patent, col. 4:31-36).

  • The Term: "dropping the pressure... to near atmospheric pressure"

  • Context and Importance: This functional limitation is the core of the patented method and another pillar of Rheem's non-infringement case. The entire principle of "decoupling" the power burner from the natural convection vent rests on achieving this pressure drop. Whether the accused device performs this step is a fundamental technical question (Compl. ¶¶ 75, 78).

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: A party arguing for infringement might contend that "near atmospheric" does not require the pressure to be exactly zero (gauge) or negative, but merely low enough to allow natural buoyancy to become the dominant force, a functional rather than a strictly numerical definition.
    • Evidence for a Narrower Interpretation: A party arguing for non-infringement will point to language stating the goal is for products to exhaust "without the influence of the power burner" ('897 Patent, col. 4:16-18). They would argue any remaining positive pressure from the blower means the "near atmospheric" condition has not been met. The complaint notes this term was construed in the prior Bradford White litigation to mean "a pressure sufficient to allow the products of combustion to rise out of the plenum substantially entirely under the influence of natural convection" (Compl. ¶ 76), which frames the issue as a factual inquiry into the forces acting on the exhaust gas.

VI. Other Allegations

  • Indirect Infringement: This being a declaratory judgment action by the accused infringer, there are no formal counts for indirect infringement. However, the complaint notes that in prior actions and communications, AOS has accused Rheem of inducing infringement by "installers and/or users" of the Rheem GNU water heaters (Compl. ¶¶ 20-21, 68). The basis for this allegation appears to be that Rheem manufactures, sells, and provides instructions for a self-contained product that, when used as directed, would allegedly perform the patented method.
  • Willful Infringement: No allegation of willfulness is made by Rheem. The extensive history of communication detailed in the complaint, including AOS's prior lawsuit and expert reports, would almost certainly be used by AOS to support a claim of willful infringement if it were to file a counterclaim (Compl. ¶¶ 3-5, 50, 54-55).

VII. Analyst’s Conclusion: Key Questions for the Case

  1. A central issue will be one of claim construction: Does the term "a flue" in Claim 1 carry the specific limitations of being a "single, seamless tube" as described in the specification, or does it have a broader, more generic meaning? The outcome of this definitional dispute could determine infringement on its own.
  2. The case will feature a critical evidentiary and technical dispute: Does the pressure inside the accused Rheem heaters actually drop to "near atmospheric," thereby allowing exhaust "substantially entirely under the influence of natural convection"? This question will likely be decided by a "battle of the experts" presenting competing test data and analysis of the physical forces at play within the devices.
  3. A significant strategic question, framed by the complaint, is the link between infringement and validity. Rheem argues that its accused "GNU" products are materially identical to its "GN" product line, which it contends is invalidating prior art (Compl. ¶¶ 87-92). This raises a key issue for the court: if the accused products are found to infringe, does that same finding necessarily mean the patent is invalid in view of the earlier, nearly identical products?