DCT

1:23-cv-04688

Rheem Manufacturing Company v. A.O. Smith Corporation

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:23-cv-04688, N.D. Ga., 10/13/2023
  • Venue Allegations: Plaintiff Rheem alleges venue is proper in the Northern District of Georgia because Defendant A. O. Smith (AOS) is subject to personal jurisdiction there, and because a substantial part of the events giving rise to the dispute, including infringement allegations and meetings between the parties, occurred in the district.
  • Core Dispute: Plaintiff Rheem seeks a declaratory judgment that its gas-fired water heaters do not infringe Defendant AOS's patent related to a method for interfacing a power-vented heater with a natural convection vent system.
  • Technical Context: The technology addresses the challenge of retrofitting modern, high-efficiency, power-vented water heaters into buildings with existing, older-style natural draft venting systems.
  • Key Procedural History: This declaratory judgment action follows a prolonged dispute, including a prior lawsuit AOS filed against Rheem in 2021 and voluntarily dismissed. The complaint also notes that in separate litigation against a third party (Bradford White Corp.), AOS secured a judgment that the same patent-in-suit was valid and infringed. During that prior case, AOS’s expert witness testified that Rheem’s products also infringe. Rheem has strategically not included a claim for patent invalidity in this complaint, expressly to preserve its right to challenge the patent's validity before the Patent Trial and Appeal Board without risk of estoppel.

Case Timeline

Date Event
2001-01-01 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 lawsuit against Bradford White Corp. over the ’897 Patent
2020-08-17 AOS expert testifies in Bradford White case that Rheem's products infringe
2021-03-31 Delaware court finds Bradford White infringed the ’897 Patent
2021-06-29 AOS files "Delaware Action" against Rheem for infringement of the ’897 Patent
2021-07-26 AOS voluntarily dismisses the Delaware Action against Rheem
2022-08-03 Federal Circuit affirms judgment against Bradford White
2023-09-07 In-person meeting between Rheem and AOS in Atlanta regarding dispute
2023-10-13 Rheem files present declaratory judgment Complaint

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 (’897 Patent). (Compl. ¶1).

The Invention Explained

  • Problem Addressed: High-efficiency gas water heaters often use a power burner, which forces exhaust gases out under positive pressure. Many buildings, however, are equipped with older, "Category I" venting systems designed for atmospheric burners that rely on natural convection (the tendency of hot air to rise) to vent exhaust. The patent addresses the difficulty of connecting a modern, power-vented appliance to this type of existing infrastructure. (’897 Patent, col. 4:10-19).
  • The Patented Solution: The invention describes a method that uses an "exhaust plenum" as an intermediary component between the power-driven flue and the natural convection vent. Within this plenum, the velocity and pressure of the exhaust gases are designed to drop to "near atmospheric pressure." This "decouples" the flow from the influence of the power burner, allowing the exhaust to then rise into the natural vent "substantially entirely under the influence of natural convection," mimicking the behavior of a traditional atmospheric appliance. (’897 Patent, Abstract; col. 4:3-9).
  • Technical Importance: This method enables the installation of more energy-efficient water heaters using existing, less-expensive venting systems, potentially avoiding the need for costly and complex vent replacement. (Compl. ¶88).

Key Claims at a Glance

  • The complaint identifies the sole claim of the patent, independent method Claim 1, as the subject of the dispute. (Compl. ¶66).
  • The essential steps of Claim 1 are:
    • Providing a water heater with a burner, a blower, and a flue.
    • Forcing products of combustion into the flue under positive pressure with the blower.
    • 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 combustion products to rise out of the plenum into the natural vent "substantially entirely under the influence of natural convection."
    • The method further specifies that the natural vent includes a draft hood and involves mixing ambient air with the combustion products as they flow into the draft hood. (’897 Patent, col. 6:10-29).
  • The complaint does not mention any dependent claims, as the patent contains only one claim.

III. The Accused Instrumentality

Product Identification

  • Rheem's "Universal Ultra Low NOx" (GNU) line of gas water heaters, such as the GNU100-200 model. (Compl. ¶¶3, 91).

Functionality and Market Context

  • The accused products are high-efficiency, gas-fired water heaters. (Compl. ¶38). Rheem's central allegation in this declaratory judgment action is that its GNU water heaters operate in a fundamentally different way than the method claimed in the ’897 Patent. Specifically, Rheem contends that its GNU heaters maintain a positive pressure at the point of exhaust, rather than dropping the pressure to near atmospheric levels, and therefore do not rely on natural convection in the manner required by the claim. (Compl. ¶¶77-78, 82-84). The complaint also asserts that the accused GNU heaters are "materially the same" in structure and function as Rheem's older "GN" line of water heaters, which Rheem claims are prior art to the ’897 patent. (Compl. ¶¶6, 89-91). A side-by-side photograph of the prior art GN100-200 and accused GNU100-200 models is provided to illustrate this alleged similarity. (Compl. p. 39, "GN100-200" and "GNU100-200").

IV. Analysis of Infringement Allegations

The complaint seeks a declaratory judgment of non-infringement. The following table summarizes Rheem's primary arguments for why its accused method (the operation of its GNU water heaters) does not meet the limitations of Claim 1.

’897 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Non-Infringing Functionality (per Rheem) Complaint Citation Patent Citation
providing a water heater having... a flue The Rheem GNU Water Heaters do not have "a flue" as required by the patent, which Rheem argues must be a "single, seamless tube" without circumferential welds. ¶¶72-74 col. 4:20-27
dropping the pressure of the products of combustion to near atmospheric pressure within the plenum Based on testing, the Rheem GNU Water Heaters allegedly maintain a positive pressure at the exit of the structure AOS identifies as the plenum, and therefore the pressure does not drop to "near atmospheric." ¶¶77-78 col. 6:18-20
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 rise of combustion products is not "substantially entirely under the influence of natural convection" but remains under the influence of the power burner. ¶¶82-84 col. 6:21-24

Identified Points of Contention

  • Scope Questions: A primary dispute will be the definition of "a flue." The complaint alleges that based on the patent's specification, the term must be construed narrowly to mean a "single, seamless tube" without certain welds. (Compl. ¶73). The court will have to decide if this specific description limits the claim's scope or is merely a preferred embodiment. The complaint reinforces this point by referencing patent Figures 4-6, which depict various seamless flue tube configurations. (Compl. p. 31, Figs. 4-6).
  • Technical Questions: A central factual question is whether the pressure inside the accused GNU heaters actually drops to "near atmospheric pressure." Rheem alleges that its testing, and even AOS's own test data, shows the pressure remains positive. (Compl. ¶77). The resolution of this technical fact will be critical for determining infringement of multiple claim limitations.

V. Key Claim Terms for Construction

The Term: "a flue"

  • Context and Importance: Rheem’s non-infringement defense relies heavily on construing this term narrowly. If "a flue" is interpreted to mean any generic exhaust pipe, this defense may be weakened. Practitioners may focus on this term because the patent specification provides an explicit, and potentially limiting, definition.
  • Intrinsic Evidence for a Broader Interpretation: The claim itself simply recites "a flue" without the "single, seamless" modifier, which may suggest the patentee did not intend to limit the claim to that specific structure.
  • Intrinsic Evidence for a Narrower Interpretation: The specification states that the "flue tube 65 is formed from a single, seamless tube" and defines "seamless" as having "no circumferential welded joints." It further explains this construction "reduces the likelihood of fatigue failure." (’897 Patent, col. 4:20-36). Rheem argues this language defines the claimed term. (Compl. ¶73).

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

  • Context and Importance: This limitation is the functional core of the claimed invention, as it enables the "decoupling" of the powered and natural venting systems. Rheem alleges its products do not perform this step. (Compl. ¶78).
  • Intrinsic Evidence for a Broader Interpretation: Parties could argue that any measurable drop in pressure that facilitates venting qualifies, even if the resulting pressure is not precisely atmospheric.
  • Intrinsic Evidence for a Narrower Interpretation: The patent states that in the plenum, "the pressure of the products of combustion drops near or below atmospheric pressure, and the products of combustion are therefore able to rise...substantially entirely under the influence of natural convection." (’897 Patent, col. 4:5-9). This links "near atmospheric" directly to the functional outcome of enabling natural convection, a position adopted by the court in the prior Bradford White litigation. (Compl. ¶76).

VI. Other Allegations

  • Indirect Infringement: Rheem is seeking a declaration that it does not engage in indirect infringement. The complaint notes that AOS has previously accused Rheem of inducing infringement by installers and users of its GNU water heaters, alleging Rheem encourages and promotes an infringing use by selling the self-contained units. (Compl. ¶¶68, 70).
  • Willful Infringement: As this is a declaratory judgment action filed by Rheem, there is no allegation of willfulness against it. However, the complaint details a long history of communications, including AOS sending expert reports alleging infringement to Rheem. (Compl. ¶¶50, 55). This history suggests that should AOS file a counterclaim for infringement, it may have a basis to allege that any infringement by Rheem was willful.

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

  • A core issue will be one of definitional scope: Will the term "a flue," as used in Claim 1, be limited by the specification's detailed description of a "single, seamless tube," as Rheem argues, or will it be given a broader, more generic meaning? The outcome of this claim construction dispute could be dispositive.
  • The central evidentiary question will be one of technical operation: Does the pressure within the accused Rheem GNU water heaters drop to "near atmospheric," thereby enabling venting "substantially entirely under the influence of natural convection"? Or, as Rheem alleges, does the pressure remain positive, keeping the system under the influence of the power burner? This is a factual dispute that will likely require competing expert testimony and testing data.
  • A key strategic question revolves around the invalidity "squeeze": Rheem alleges its accused GNU products are functionally identical to its prior art GN products. This sets up a classic defense: if AOS's infringement theory is broad enough to read on the GNU heaters, it may also be broad enough to read on the prior art GN heaters, rendering the patent invalid. While Rheem has not formally countersued for invalidity, this argument will likely shadow the entire case.