# Petition — Lahman Manufacturing Co. v. Farmhand, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1978
- **Citation:** 436 U.S. 913

## Text

FILED
} APR 6 1978

MICHAEL RODAK, JR., CLERK |
IN THE be infringed in (1)
the result attained; (2) the means of attaining that result;
and (3) the manner in which its different parts operate and
cooperate to produce that result.

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455 F.2d, at 611, 173 USPQ at 2-3. (Citations omitted. )

Applying these tests to the facts in this case, it is the con-
clusion of this court that the Lahman haystack movers
infringe claims 10 and 11 of United States Patent No.
3,298,550. Defendants’ contention that the Lahman mover
lacks the first drive means of element (h) of claim 10 cannot
be accepted. Defendants’ evidence shows that in normal op-
eration of the Lahman mover a tractor or other means of
conveyance is essential. This is the essence of the first drive
means. To argue that the trailer-type mover does not use a
first drive means in the loading operations is to ignore the
realities of the situation. The evidence shows that the Lah-
man mover is sold to be used with a tractor or other convey-
ance. The operator’s manual for the Lahman mover discloses
the cooperative arrangement between the first drive means
conveyance and the trailer loader during the loading opera-
tion. This court finds that the Lahman mover in operation
has the first drive means and cooperative speed relationship
of element (h) of claim 10 of the Schiltz patent. It is con-
cluded that the Lahman mover literally infringes claims 10
and 11 of the Schiltz patent, No. 3,298,550.

Even if no literal infringement were found, the Lahman
mover must still be found to infringe the Schiltz patent under
the doctrine of equivalents. Graver Tank & Mfg. Co. v.
Linde Air Products Co., 339 U.S. 605, 85 USPQ 328
(1950). Defendants do not argue that the Lahman mover
differs from the Schiltz invention in the means used and the
results attained. Their argument centers on the way the
various parts function to attain the result. This was the same
argument advanced in Farmhand, Inc. v. Craven, 455 F.2d
609, 173 USPQ 1 (8th Cir. 1972). This court finds the
reasoning of the decision in that case applicable here. De-

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fendants argue that element (h) of claim 10 is unnecessary
to the Lahman machine. This court finds that this conten-
tion misreads the claims of the patent in suit. The Lahman
haystack mover, as actually operated, makes full use of the
first drive means and speed relationship disclosed in claim
10(h). Defendants’ witness Mr. Eggleston, who owns and
operates a Lahman chain-type mover, testified on cross ex-
amination that in the loading process the conveyance is
driven backward to push the trailer under the haystack, and
that the speed relationship between the rearward movement
of the conveyance and the forward movement of the convey:
ing chains was approximately equal. This court has also ex-
amined films of the operation of these devices, and attended
a demonstration of their use. After considering all the evi-
dence, this court finds that the Lahman haystack mover does
the same work, in substantially the same way, to achieve the
same result, as the Schiltz mover. It must be concluded,
therefore, that the Lahman chain-type haystack mover in-
fringes United States Patent No. 3,298,550.

The foregoing memorandum decision constitutes the
court’s findings of fact and conclusions of law pursuant to
Rule 52 of the Rules of Civil Procedure.

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APPENDIX—B

[597]
Court of Appeals, Eighth Circuit

Farmhand, Inc.

v. Lahman Manufacturing Company, Inc. et al.
No. 77-1072 Decided Jan. 11, 1978

As amended Jan. 20, 1978
PATENTS

1. Infringement—Substitution of equivalents—In general
(§39.751)

Equivalency test in Eighth Circuit entails making deter-
mination that accused device is substantially identical with
one alleged to be infringed in result attained, means of at-
taining that result, and manner in which its different parts
operate and cooper ite to produce that result.

2. Patentability—In general (§51.01)
Pleading and practice in courts—Burden of proof—
Validity (§53.138)
Presumption from patent grant—Weight of (§55.9)
Essentials of patentability are invention or discovery, use-
fulness, and novelty; patent is presumptively valid and bur-

den of proving invalidity of patent by at least substantial evi-
dence is on party who asserts it.

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3. Defenses—In General (§30.01)

Presumption from patent grant—In general (§55.1)

35 U.S.C. 282 specifies that patent is presumptively valid
and sets out defenses generally available in patent infringe-
ment suits, which are non-infringement, lack of responsibility
for infringement or unenforceability, invalidity of patent or
of any particular claim in suit on any ground specified in
Part II of Patent Act as condition of patentability, invalidity
of patent or claim for noncompliance with 35 U.S.C. 112 or

251, and any other fact or act made defense under Patent
Act.

Particular patents—Haystack Transporting

3,298,550, Schiltz, Haystack Transporting Device, claims
10 and 11 infringed.

Appeal from District Court for District of South Dakota,
Nichol, Ch. J.; 192 USPQ 749.

Actions by Farmhand, Inc., against Lahman Manufactur-
ing Company, Inc., and Robert Anderson, doing business as
Platte Implement, for patent infringement, in which de-
fendants counterclaim for declaratory judgment of patent
invalidity and for violation of antitrust laws, and by Lahman
Manufacturing Company, Inc., against Boyd D. Schiltz
(third-party defendant) for violation of antitrust laws. From
judgment for plaintiff, defendants appeal. Affirmed.

Kenneth D. Siegfried, and Schroeder, Siegfried, Ryan &
Vidas, both of Minneapolis, Minn., and Joe L. Maynes,

and Maynes, Tonner & Maynes, both of Aberdeen, S.D.,
for appellants,

y

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John D. Gould, Alan G. Carlson, and Merchant, Gould,
Smith, Edell, Welter & Schmidt, P.A., all of Minneapolis,
Minn., for appellee.

Before Bright, Webster, and Henley, Circuit Judges.
Henley, Circuit Judge.

[598] This patent infringement suit is before us on
appeal from the United States District Court for the District
of South Dakota.

Plaintiff, Farmhand, Inc., is a Delaware corporation with
its principal place of business in Hopkins, Minnesota. Plain-
tiff is engaged in the business of manufacturing and selling
farm implements and is the owner by assignment of United
States Letters Patent No. 3,298,550 issued in 1967 to Boyd
D. Schiltz. The patent describes and covers a device where-
by large haystacks can be loaded on trailers or trucks, trans-
ported to a desired destination, and then unloaded by the
use of a chain type hoisting apparatus.

Defendant, Lahman Manufacturing Company, Inc., is a
South Dakota corporation with its principal place of busi-
ness in Heckla, South Dakota. Like plaintiff, it is engaged
also in the manufacture of farm implements, including a
stack moving device which plaintiff contends infringes the
Schiltz patent.

The other defendant, Robert Anderson, is an individual
who does business as Platte Implement in Platte, South Da-
kota. During the suit period he sold allegedly infringing
machines which he had purchased from Lahman.

Claiming that the Lahman machine infringed Claims 10
and 11 of its patent, plaintiff commenced this action against
Lahman and Anderson in 1972. The defendants answered
and filed counterclaims against plaintiff seeking a declara-

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tory judgment to the effect that the patent in suit is invalid
and seeking damages for alleged violations of the federal
antitrust laws, 15 U.S.C. §§1-15. A third party complaint
was also filed against the inventor, Schiltz. In due course
the antitrust claims of the defendants against plaintiff and
Schiltz were severed from the plaintiff's patent infringement
claims and were ultimately dismissed summarily. The sev-
ered claims are not involved in this appeal.

In its complaint Farmhand sought injunctive relief and
treble damages, together with an attorney’s fees and costs.
It appears that by agreement determination of the amount
of damages, if any, sustained by plaintiff was postponed
pending the district court’s decision on the underlying issues
of patent validity and infringement.

The case was the subject of a bench trial of eighteen days
duration which was conducted by Chief District Judge Fred
J. Nichol. On September 27, 1976 Judge Nichol filed a
memorandum opinion incorporating his findings of fact and
conclusions of law. Farmhand, Inc. v. Lahman Mfg. Co.,
192 USPQ 749 (1976). The district court found that Claims
10 and 11 of the patent in suit were valid and infringed, and
that plaintiff was entitled to injunctive relief and to damages.
However, no determination has yet been made as to the
amount of damages that plaintiff should recover. The district
court found that the case was not an “exceptional” one and
denied plaintiff's claim for an attorney’s fee. See 35 U.S.C.
§285. Plaintiff does not complain of that ruling.

Plaintiff's device was put on the market in 1963. Prior to
that time persons who had occasion mechanically to move
haystacks from one place to another did so by lashing the
stacks to tiltable truck or trailer beds by means of cables and
winches. A stack would then be transported to its destination

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by truck or by tractor and would be unloaded by retilting the
bed or trailer and releasing the stack therefrom’.

Plaintiff's device also makes use of tiltable beds or trailers
which are part of or connected with trucks or trailers. How-
ever, plaintiff's device differs substantially from the old cable
type movers. In Farmhand, Inc. v. Craven. 455 F.2d 609,
173 USPQ 1 (8th Cir. 1972), the court described plain-
tiff’s device as follows:

Plaintiff's device employs six roller chain belts run-
ning lengthwise in beams’on an elongated truck or trail-
er bed. As the truck is backed into a haystack the load
carrying surface is slightly inclined and the roller chains
serve as a conveyor pulling the haystack onto the load
surface. ...

The operation of plaintiff's device was described by Judge
Nichol in this case as follows:

... To load a haystack with the device, the mover is
backed up to a [599] haystack, the bed is tilted,
and the mover is started back under the stack. At this
point the rearward motion of the truck or tractor and
the forward motion of the chains on the bed act in con-
cert to lift the stack onto the bed as the bed simultane-
ously moves further under the stack. Unloading the
mover requires a mere reversal of this process. .. .

1See Farmhand, Inc. v. Craven, 455 F.2d 609, 173 USPQ 1 (8th Cir.
1972). That suit was brought against Russell O. Craven of South
Dakota, a leading producer of cable-type movers. Plaintiff claimed
that Craven had infringed Claim 10(h) of the Schiltz patent. The
defendant conceded the validity of the patent but denied infringement.
Ee aeons gerne a ee et See ae. Y, Soanen,
324 F.Supp. , 169 USPQ 811 (D. So. Dak. 1971). The judgment
of this district court was reversed by this court which was of the view
that infringement had been shown.

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192 USPQ at 754.

One significant feature of plaintiff's mover is that the for-
ward movement of the chain conveyor is at approximately
the same speed as that of the backward motion of the bed as
it is being pushed under the stack to be moved. See discus-
sion in Farmhand, Inc. vy. Craven, supra.”

There is no question that plaintiff's chain-type mover is
superior to the old cable-type movers in a number of ways.
The cable-type movers were slow and relatively inefficient;
some of the necessary operations had to be performed man-
ually and required the operator to dismount from his truck
or tractor which could be particularly burdensome in bad
weather; and the cable-type movers presented some safety
hazards. After pointing out some of the disadvantages of the
cable-type mover, the district court went on to say:

The chain-type mover, it is conceded, has numerous
advantages over the cable-type. In operating a chain-
type mover the operator need not leave the cab of his
truck or tractor during loading or unloading. The
chain-type mover eliminates the necessity of manual
operations . . . The operation of the chain-type mover
is much quicker than that of the cable-type, and en-
ables an operator to load and unload more stacks in a
given period of time.

192 USPQ at 754.

While conceding that plaintiff's device is a useful one and
is an improvement over the cable-type stack movers that
have been described, the defendants contended in the dis-
trict court and contend here that the patent in suit is invalid
or that, if valid, it has not been infringed.

2Claims 10 and 11 of the Schiltz patent are set out in full in the district
court's opinion and will not be copied here.

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It is not our function to try this case de novo. We are re-
quired to accept the factual findings of the district court
unless clearly erroneous, Fed. R. Civ. P. 52(a), and if the
district court applied correct standards of law to the accept-
able facts of the case, its judgment must be affirmed.

From our consideration of the record, we are satisfied
that the factual findings of the district court are adequately
supported by the evidence, and that the district court did not
err in applying the law to the facts. Accordingly, we affirm
the district court’s judgment and do so principally on the
basis of the opinion of Judge Nichol which we consider to
be detailed, painstaking and well reasoned.

Looking first at the issue of infringement, plaintiff
claimed that the defendants had infringed Claim 10(h) and
Claim 11 of the patent, and it seems to have been conceded
that if Claim 10(h) had been infringed Claim 11 had also
been infringed.

[1] Citing the tests of infringement laid down in Graver
Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605,
607, 85 USPQ 328, 330 (1950), and in Farmhand, Inc. v.
Craven, supra, 455 F.2d at 611, 173 USPQ 2-3, the district
court found that the claims in question had been infringed
by equivalent if not literally. In Farmhand, supra, 455 F.2d
at 611, 173 USPQ 2-3, we said:

... Applying the equivalency test in this circuit entails
making the determination that, “ ‘the infringing device
must be substantially identical with the one alleged to
be infringed in (1) the result attained; (2) the means
of attaining that result; and (3) the manner in which
its different parts operate and cooperate to produce that
result.’ ” Montgomery Ward & Co. v. Clair, 123 F.2d
878, 881, 51 USPQ 499, 502-503 (8 Cir. 1941). See

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Ralston Purina Co. v. General Foods Corp., 442 F.2d
389, 393, 170 USPQ 202, 205 (8 Cir. 1971); General
Bronze Corp. v. Cupples Products Corp., 189 F.2d
154, 159, 89 USPQ 355, 358-359 (8 Cir. 1951).

We agree that the district court correctly made the three-
fold determination in question.

It is clear from the opinion of the district court that it
viewed the issue of patent validity as much more serious than
the issue of infringement. And the great bulk of the opinion
is devoted to a discussion of the various aspects of the valid-
ity issue.

[2] At the outset the district judge recognized that the
essentials of patentability are invention or discovery, useful-
ness and novelty. 35 U.S.C. $101. It was also [600] rec-
ognized that a patent is presumptively valid, and that the
burden of proving invalidity of a patent by at least substan-
tial evidence is upon the party who asserts it. 35 U.S.C.
§282; Woodstream Corp. v. Herter’s Inc., 446 F.2d 1143,
1149-50, 170 USPQ 380, 384-385 (8th Cir. 1971); L. & A.
Products, Inc. v. Britt Tech Corp., 365 F.2d 83, 86, 150
USPQ 770, 772-773 (8th Cir. 1966).

[3] Section 282 of Title 35 not only specifies that a
patent is presumptively valid, it also sets out the defenses
that are generally available in suits for patent infringement.
Those defenses are: (1) Non-infringement, lack of responsi-
bility for infringement, or unenforceability; (2) invalidity
oi the patent or of any particular claim in suit on any ground
specified in Part II of the Patent Act as a condition of pat-
entability; (3) invalidity of the patent or claim for non-
compliance with §112 or §251 and (4) any other fact or
act made a defense under the Act. .

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Basically, the position of the defendants is that the
Schiltz patent does not meet the conditions of patentability
set out in 35 U.S.C. §102(a) and (g) since the invention
was anticipated by the prior art; that the condition set out in
$103 was not met because the invention was “obvious” in the
light of the prior art; and that the specification of the patent
application did not set out the best mode for the carrying
out of the invention as required by §112. It is further con-
tended that the patent is invalid or unenforceable because
of acts or omissions of the applicant in the prosecution of the
application before the Patent Office. And still another con-
tention is that the patentee was not the true inventor of the
patented device.

All of these contentions, and perhaps others, were con-
sidered in detail by Judge Nichol and were rejected by him.
We can add nothing of substance to what he has said. We
agree with counsel for plaintiff that the questions before the
trial court were essentially factual, that the findings of the
trial judge iave adequate evidentiary support, and that he
divined correctly the governing legal principles.

The judgment of the district court is affirmed, and the
case is remanded for a determination of the amount of dam-
ages to which plaintiff is entitled.

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APPENDIX H

UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

Nos. 76-1918 and 76-2009

Clark Equipment Company and Clark Equipment, A.G.,

Appellants-Appellees,
vs.
Louis J. Keller and Cyril N. Keller,
Appellees-Appellants.

Appeals from the United States District Court
for the District of North Dakota

Submitted: August 31, 1977
Filed: February 17, 1978

Before GIBSON, Chief Judge, HEANEY and WEBSTER,
Circuit Judges.

GIBSON, Chief Judge.

The two consolidated cases underlying the present ap-
peal and cross-appeal arise out of a patent license con-
tract whereunder Louis and Cyril Keller, residents of
North Dakota, granted exclusive licenses on three inter-

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related patents to Clark Equipment Company, a corpora-
tion incorporated under the laws of Delaware and with its
principal place of business in Michigan. In a similar li-
cense agreement, the Kellers granted to Clark Equipment
A.G. (CEAG), a Swiss corporation which [S. 2] is a
wholly owned subsidiary of Clark, an exclusive license un-
der certain foreign patents corresponding to the licensed
patents in the agreement with Clark. The patents involved
relate to self-propelled, three and four-wheel skid steer
loader vehicles manufactured by Clark in Gwinner, North
Dakota. Patent 3,151,503 (503 patent) is a mechanical pat-
ent entitled “transmission system”; Patent 3,231,117 (117
patent) is a mechanical patent entitled “tractor vehicle and
drive therefor”; Patent 195,254 (254 patent) is a design
patent entitled “self-propelled loader.”
Civil Action 4875

In October 1972, Clark filed a civil action against the
Kellers pursuant to 28 U.S.C. §§2201 and 2202, seeking
a declaration of the rights and obligations of the parties
under their license agreement and alleging that because
the three patents forming the subject matter of the license
were invalid, the license contract was unenforceable. This
declaratory judgment action, which was filed in the West-
ern District of Michigan, was transferred to the District
of North Dakota in August 1973. In September 1973, the
Kellers filed an answer and counterclaim. The counter-
claim was for royalties allegedly due from Clark under its
license agreement with the Kellers and under certain non-
exclusive sublicense contracts between Clark and others.
In their counterclaim, the Kellers also alleged that Clark

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or its predecessor in interest, the Melroe Company, had
been negligent in failing to comply with the requirements
of 35 U.S.C. §102(b) by neglecting to file a patent ap-
plication on the 117 patent within the one-year period
after the invention had been in public use or on sale.

In response to this negligence claim, Clark filed a third-
party complaint against the law firm of Williamson, Bains
and [S.3] Moore as third-party defendant. Clark alleged
tnat if there had been negligence in the filing of the applica-
tion for the 117 patent, it had been that of the third-party
defendant, who had represented Louis Keller and Clifford
Melroe, the joint inventors of the mechanism underlying
the 117 patent, and who had had a professional obligation
to investigate the facts and see that the application was
timely filed. The cases presently before this court ‘do not
include issues of negligence or possible liability for late
filing of the 117 patent application, for on April 29, 1974,
the District Court’ ordered that Clark’s third-party com-
plaint and that portion of the Keller’s counterclaim per-
taining to these issues be tried separately from and after
the present declaratory judgment action was tried.

Civil Action 4839

On July 25, 1973, the Kellers filed a separate action
against Clark in the District of North Dakota. This action,
which embodied the allegations in the answer and counter-
claim for royalties due filed in Civil Action 4875, named
CEAG as an additional defendant. The complaint alleged
that, pursuant to a license agreement with the Kellers,
CEAG was an exclusive licensee under certain foreign pa-

1The Honorable Paul Benson, Chief Judge, United States District Court
for the District of North Dakota.

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tents corresponding to the licensed patents in the agree-
ment with Clark, and that CEAG had failed to account
for and pay royalties due therevnder. Jurisdiction was
based upon diversity of citizenship. This action was con-
solidated with Civil Action 4875 on December 21, 1973.

Consolidated Actions

CEAG responded to the complaint in Civil Action 4837
[S. 4] with motions to dismiss in which it alleged lack of
in personam jurisdiction, absence of proper service of pro-
cess and failure of proper jurisdictional amount. The Dis-
trict Court denied these motions, Keller v. Clark Equip-
ment Co., 367 F. Supp. 1350 (D.N.D. 1973); CEAG re-
asserted its jurisdictional defenses in its answer.

On July 18, 1974, the District Court ordered a separate
trial on the issue of the validity of the three patents. The
trial on this severed issue ran for some 33 days in early
1975. The 30-volume trial transcript includes the testi-
mony of 46 witnesses; 546 exhibits were also introduced
into evidence. Following the trial, the district judge filed a
lengthy, unpublished memorandum opinion in which he
ruled that the 503 and 254 patents were valid, and that
the 117 patent was invalid. Clark appeals the judgment of
the District Court on all three patents; the Kellers cross-
appeal on the 117 patent. CEAG appeals from the Dis-
trict Court’s rulings on its jurisdictional allegations and
defenses.

Jurisdictional Issues

Before addressing the merits of the patent issues raised
on this appeal and cross-appeal, we will consider CEAG’s

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jurisdictional contentions. The District Court initially. re-
jected CEAG’s jurisdictional defenses in a memorandum
opinion directed solely to this issue and entered prior to
trial. Keller v. Clark Equipment Co., 367 F. Supp. 1350
(D.N.D. 1973). CEAG has continued to assert a lack of
in personam jurisdiction. In its lengthy memorandum
opinion on the patent validity issues of this case, the Dis-
trict Court did not re-analyze CEAG’s jurisdictional [S. 5]
assertions. It simply took note of their continuing nature
and cited its previous opinion denying CEAu s jurisdiction-
ally based motion to dismiss.

In its initial consideration of CEAG’s motion to dismiss,
the District Court made the following findings of fact and
inferences therefrom relative to jurisdiction over CEAG.
CEAG, a corporation organized under the laws of Switz-
erland, is a wholly owned subsidiary of Clark, a Delaware
corporation doing business in North Dakota. The present
case concerns separate manufacturing licenses between
Clark and the Kellers, who are residents of North Dakota,
and CEAG and the Kellers. Each agreement was executed
on May 19, 1971. The Clark-Keller agreement was sub-
scribed by J. Becket (sic), as vice-president of Clark
Equipment Company. The CEAG-Keller agreement was
also signed by J. Becket (sic), this time in the capacity of
vice-president of CEAG. Both agreements give Clark’s
Buchanan, Michigan, address for purposes of notice to the
licensee and provide for continuing royalty payments to be
made to the Kellers, residents of North Dakota. In the
instant case, service on CEAG was inade pursuant to Fed.
R. Civ. P. 4(d)(7) by serving the summons and complaint
on an officer of Clark at its Melroe Division in Gwinner,
North Dakota. CEAG maintains a liaison engineering

A-62

employee at the Melroe Division of Clark in North Da-
kota.

It can be reasonably inferred that CEAG became aware
of the patents through its close association with the Mel-
roe Division of Clark. Moreover, the factual situation here
supports the inference that CEAG, or someone from Clark
acting on behalf of CEAG, contacted the Kellers in North
Dakota about the foreign patents, in contemplation of se-
curing a European arrangement analogous to Clark’s
American arrangement exploiting the domestic patents in
question. Irrefragably, [S. 6] CEAG sought out the
Kellers in North Dakota, and the Clark-Keller and CEAG-
Keller licensing agreements were handled by Clark’s coun-
sel for both Clark and CEAG. In this transaction, it clearly
appears that Clark was acting for and on behalf of its whol-
ly owned subsidiary, CEAG, and that the same individual
signed both agreements on behalf of Clark and CEAG.

We have reviewed the record as a whole, giving par-
ticular attention to the documents from which the bulk
of the District Court’s jurisdictional findings and infer-
ences are derived, and we can find no basis for rejecting
these findings as clearly erroneous.’ Moreover, we believe
that they provide adequate support for the District Court's
conclusions that CEAG had “minimum contacts” with
North Dakota, which rendered in personam jurisdiction
proper, and that even though CEAG itself was not doing
business in North Dakota, CEAG and Clark were inex-

2CEAG takes particular exception to the District Court's finding that
CEAG had a liaison officer at the Melroe Division of Clark ua
Gwinner, North Dakota. We do not believe that this finding has been
shown to be clearly erroneous. Moreover, we note if i
assumed that there was no liaison officer in North Dakota, there
mains adequate factual support in the record for the District Court's

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tricably involved with the Kellers in the negotiations and
execution of the patenting licensing agreements.

CEAG attacks the District Court’s jurisdictional con-
clusion on several bases. We have considered its conten-
tions in light of the District Court’s careful analysis of this
issue and find them to be without merit. Presence by the
[S. 7] defendant in the forum state is*not a jurisdictional
prerequisite. McGee v. International Life Insurance Co.,
355 U.S. 220 222-23 (1957); Electro-Craft Corp. v. Max-
well Electronics Corp., 417 F. 2d 365, 369 (8th Cir. 1969).
It is only necessary that the defendant have sufficient mini-
mum contacts with the forum state so that requiring it to
defend itself there will not offend traditional notions of
fair play and substantial justice. International Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945); Aaron Ferer &
Sons Co. v. Atlas Scrap Iron & Metal Co., 558 F. 2d 450,
454 (8th Cir. 1977). The District Court found that service
had been made in compliance with the law of North Da-
kota* and that there were minimum contacts between
CEAG and North Dakota in CEAG’s licensing agreement
with the Kellers, who are residents of North Dakota, and in
its extremely close relationship to its parent corporation,
Clark, which did business in North Dakota. The District
Court did not consider the mere existence of a parent-sub-
sidiary relationship adequate to establish minimum con-
tacts with North Dakota. This relationship was merely one
of several factors which added up to the requisite mini-
mum contacts for in personam jurisdiction. We find neither

A-64

factual nor legal error in the District Court’s disposition
of CEAG’s jurisdictional defenses and agree that there is
in personam jurisdiction over CEAG.

Patent Issues

The complexity of this case compels individual analysis
[S. 8] of each patent. Certain facts are common to all
three patents, however, and we believe that their recitation
here will provide an appropriate general introduction to the
purposes and nuances of the individual patents.

The Kellers originally granted an exclusive license on
the three patents at issue here to Melroe Manufacturing
Company (Melroe) in 1964. In 1969, Clark acquired Mel-
roe and succeeded to its rights under the license agree-
ment with the Kellers. In 1971, Clark and the Kellers en-
tered into a new licensing agreement which superseded the
1964 Melroe-Keller agreement and which contained a
clause based upon Lear v. Adkins, 395 U.S. 653 (1969),
specifically permitting Clark to challenge the validity and
scope of the licensed patents.

The three patents in dispute in this litigation have been
involved in two previous lawsuits. In the first action, which
was filed and concluded before Clark acquired Melroe, the
Kellers and Melroe sued Universal Manufacturing Company
(Universal) in the Eastern District of Virginia for infringe-
ment of the 503, 117 and 254 patents. This suit was set-
tled out of court. Pursuant to a stipulation containing an
acknowledgment of the validity of the three patents, a
consent decree and judgment were entered. By this settle-
ment, Universal took a sub-license from Melroe on the
three patents and agreed to pay royalties to Melroe. J. I.

A-65

Case Company subsequently purchased Universal and ac-
quired its rights under the Melroe-Universal license agree-
ment. .

In 1968, these patents engendered a second round of
litigation, when Owantonna Manufacturing Company
(Owantonna) sued Melroe and Cyril Keller in the District
of Minnesota [S. 9] in an effort to have the 503,117
and 254 patents declared invalid.‘ Clark was substituted as
party defendant after its acquisition of Melroe in 1969. This
suit also ended in a settlement which incorporated an
agreement whereby Owantonna was granted a sub-license
by Clark on the three patents.

503 patent

Louis Keller and his brother Cyril operated a general re-
pair and blacksmith shop in Rothsay, Minnesota, during
the 1950’s. In 1954, the Kellers became acquainted with
Eddie Velo, a local grain and turkey farmer. In the early
summer of 1956, Velo discussed with the Kellers the prob-
lems he had experienced in having manure accretions re-
moved from his turkey barns. The barns had to be cleaned
by hand, because their structure precluded the use of any
mechanical loaders or tractors then available to Velo. Velo
wanted to mechanize the cleaning process, and he envi-
sioned a light, highly maneuverable loader vehicle as a
desirable means of doing so. He described to the Kellers
the type of machine which he felt would be necessary,
citing as an example an Owantonna windrower he had
once owned, which, he believed, had had a separate re-

*See Owantonna Mfg. Co., Inc. v. Melroe Co., Gaus en i Titiow:
_— 1969), which pertains to the preliminary

A-66

verse and forward belt drive on each side and a caster
wheel arrangement in the rear.

After conteiplating the Velo barn cleaning problem
during the summer of 1956, the Kellers presented a free-
hand sketch of a loader to Velo. Pursuant to an under-
standing [S. 10] that Velo would pay for materials and
compensate them for out-of-pocket costs and some of their
labor, the Kellers began building a self-propelled loader in
late October 1959. Because of their elementary design meth-
ods, the Kellers invented as they built. The Velo loader,
which took approximately three months to complete and
was delivered to Velo in February 1957, incorporated a
rear-mounted engine, a belt drive to two forward driving
wheels, and a single free-castering rear wheel. In March
1957, Velo paid the Kellers $1,349.00 as compensation
for parts, material and some of the labor that went into
building the loader.

The relationship between the Kellers and Velo was one
in which the Kellers were kept closely advised of the load-
er’s performance and were allowed unlimited access to the
machine. Between February 1957 and the summer of
1958, the Kellers modified and improved the Velo loader,
which manifested certain operational problems. The most
serious problem concerned the loader’s belt drive. The
shifting of the loader’s idier lever created friction and heat
which caused the drive belts on each side of the loader
to stretch. The stretching resulted in a loss of driving pow-
er in both forward and reverse. When the belt on one side
alone stretched, the loader would drive only im circles.
These problems prompted the Kellers to develop a clutch
system that would eliminate the belt drive. During the
spring of 1958, they constructed a test plate resembling

A-67

the side plate of the Velo loader. Upon this plate, they be-
gan to develop the clutch assembly which ultimately be-
came the transmission system covered by the 503 patent.
Around the end of July 1958, the cam-actuated clutch
drive mechanism recited in cach of the four claims of the
503 patent was installed in the Velo loader. The cam-
actuated clutch drive provided [S. 11] more positive,
responsive and reliable steering, starting and stopping con-
trol.

Prior to December 1, 1957, the critical date under 35
U.S,C. §102(b)° with respect to the 503 patent, the Kellers
built no other loaders. In January or February 1958, they
built several loaders equipped with the belt drive used in
the original Velo loader rather than the cam-actuated
clutch drive assembly covered by the 503 patent. Three
of these loaders were delivered to Jenoff, Inc. of Fergus
Falls, Minnesota, in the spring of 1958, but the record
contains no evidence that the Kellers were in contact with
Jenoff about their loader prior to December 1, 1957.

The application for the 503 patent was filed on De-
cember 11, 1958. The 503 paient, entitled “transmission
system”, contains four independent claims, each of which
is specifically directed to a particular cam-actuated clutch
drive mechanism having independently rotatable propul-
sion wheels which may be independently actuated by the
drive mechanism for driving the vehicle backward or for-
ward and for steering it. The 503 patent, which is a me-
chanical patent of 17 years’ duration, was granted to the
Kellers by the Patent Office on October 6, 1964. The Dis-
trict Court sustained the validity of the 503 patent.

A-68

[S. 12] In arguing on appeal that the trial court erred
in holding the 503 patent valid, Clark impugns the correct-
ness of essentially every step in the exhaustive factual and
legal analysis made by the District Court. We will address
Clark’s contentions seriatim, after briefly introducing the
basic tenets of patent law that must be applied to deter-
mine the validity of all three of the patents at issue here.

In order to be patentable, an invention must be useful,
novel and nonobvious. The utility of the inventions pa-
tented here is not in question; the parties contest only the
issues of novelty, or compliance with the patent require-
ments of §102(b), and nonobviousness. The standards for
determining whether an invention possesses novelty are set
forth in 35 U.S.C. §102. For the purposes of this first in-
quiry, we are concerned only with that aspect of 35 U.S.C.
§102(b) which precludes patentability where an invention
has been in public use or on sale in this country more than
one year prior to the date of the application for patent in
the United States.

Insofar as the requirement of nonobviousness is con-
cerned, 35 U.S.C. §103 sets forth the standard for deter-
mining whether the subject matter of an invention is non-
obvious.

A patent may not be obtained though the invention
is not identically disclosed or described as set forth
in section 102 of this title, if the differences between
the subject matter sought to be patented and the prior
art are such that the subject matter as a whole would
have been obvious at the time the invention was
made to a person having ordinary skill in the art to
which said subject matter pertains. Patentability shall

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not be [S. 13} negatived by the manner in which
the invention was made.

35 U.S.C. §103. The Supreme Court has fleshed out the
skeletal framework of §103 by providing guidelines for
making an analysis of nonobviousness.

Under §103, the scope and content of the prior art
are to be determined; differences between the prior
art and the claims at issue are to be ascertained; and
the level of ordinary skill in the pertinent art resolved.
Against this background, the obviousness or non-ob-
viousness of the subject matter is determined. Such
secondary considerations as commercial success, long
felt but unsolved needs, failure of others, etc., might
be utilized to give light to the circumstances sur-
rounding the origin of the subject matter sought to
be patented. As indicia of obviousness or nonobvi-
ousness, these inquiries may have relevancy.

Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966).
Clearly, the test for nonobviousness requires basic factual
as well as legal inquiries, Graham v. John Deere Co.,
supra at 17, and is one that must be resolved upon a case-
by-case analysis. Woodstream Corp. v. Herter’s, Inc., 446
F, 2d 1143, 1150 (8th Cir. 1971).

(1) scope of patent claims

The 503 patent is entitled “transmission system”. Clark
contends that the District Court misconstrued the scope of
the claims of the 503 patent by limiting them to a trans-
mission system only and ignoring their integral relation-
ship to a vehicle. A mere reading of the District Court’s

A-70

[S. 14] construction of the scope of the 503 patent claims
belies this contention.

The 503 patent contains four independent claims.
Each claim is specifically directed to a particular cam
actuated clutch drive mechanism for a self propelled
vehicle having independently rotatable propulsion
wheels which may be independently actuated by the
aforesaid drive mechanism for driving the vehicle for-
ward and backward, and for steering it.

Clark Equipment Co. v. Keller, Nos. 4875 and 4839, slip
op. at 11 (D.N.D. Sept. 23, 1976). The District Court, in
delineating the scope of the claims of the 503 patent, ex-
plicitly recognized that the basic purpose of the cam-ac-
tuated clutch transmission system was the steering and
driving of a vehicle. Thus, the claims of the 503 patent
were in fact construed just as appellant Clark argues they
should have been, and Clark’s contention requires no fur-
ther consideration.

(2) exclusion of Velo loader from prior art

In order to make a determination of obviousness under
35 U.S.C. §103, there must be a consideration of the dif-
ferences between the invention and the prior art. Clark
contends that the District Court erroneously excluded the
Velo loader from the prior art and, therefore, made an
incorrect obviousness analysis on the 503 patent. The basis
of Clark’s contention is the premise that the Velo loader
was prior art under §103 because it was in public use or
on sale prior to December 1, 1957, the statutory bar date

A-71

under §102 for the 503 patent.* The trial court held that
[S. 15] the Velo loader was neither on sale nor in public
use prior to December 1, 1957, and that its use prior to that
date was experimental.’ Upon a thorough review of the
record, we are convinced that the trial court applied appro-
priate legal principles to reach these conclusions, and that
they are based upon correct findings of fact.

Moreover, even if the trial court erred in determining
that the Velo loader was not prior art, this error leaves
its obviousness analysis unvitiated, for despite its finding
that the Velo loader was experimental, the trial court went
on to assume arguendo that the Velo loader was prior art
and to analyze the obviousness of the 503 patent from
that standpoint. The belt-driven Velo loader, which was
not disclosed as prior art to the Patent Office, did not con-
tain the cam-actuated clutch mechanism on which all four
of the claims of the 503 patent were allowed. The trial
court found:

Even if the original Velo loader as it existed prior to
the critical date of [S. 16] December 1, 1957, is
considered prior art to the 503 patent as having been
in public use or on sale for more than one year before
the 503 application was filed, this loader is no better

*On appeal, soe Dae aay yee S> sepmaas Gat Si pe.
ported ic use or on-sale activity rendered 503 patent invalid
under § 102(b); it argues only that these activities caused the Velo
is obvious: it relies on § 102(6 for a deflation of prior art applicable

A-72

prior art than the Loyd patent cited and relied upon by
the Examiner, with respect to the particular clutch
drive arrangement for a vehicle in combination with
the cam actuation mechanism on which all four
claims of the 503 patent were allowed. There are
more of the elements in Loyd in the combination
set forth in the claims of the 503 patent ** * than
there are in the Keller Velo loader * * *.

Clark Equipment Co. v. Keller, supra at 19. Clark does
not challenge the correctness of this finding;* nor does our
independent review of the record reveal any reason to be-
lieve that it is incorrect.

(3) exclusion of White patent from prior art

The White patent, which was not cited by the Patent Of-
fice, describes a windrower with a “steering structure for
farm implements and the like.” At trial and on appeal,
Clark has intimated that this was the machine mentioned
by Eddie Velo to the Kellers in the summer of 1956. On
this basis, Clark contends that the White patent was
prior art for the 503 patent and that the trial court erred
in refusing to consider the White patent as prior art in its
analysis of the obviousness of the 503 patent.

This contention is unconvincing for several reasons.
[S. 17] First, we note that its basis, the testimony of
Eddie Velo, is equivocal, for Velo could not testify with
certainty that the windrower he mentioned to the Kellers
was the machime described by the White patent. Even if we
assume an identity between the White patent and the wind-

5Indeed, Clark does not even acknowledge the existence of this finding,
which directly contradicts its contention that the trial court erred by
failing to consider the Velo loader as prior art for the 503 patent.

A-73

rower with which Velo was acquainted, however, we can
perceive no error in the trial court’s exclusion of the White
patent from the prior art or, indeed, a basis for any other
disposition of this issue. It appears that Clark did not
choose to argue to the trial court that the White patent
was prior art for the 503 patent. No evidence whatso-
ever was submitted by Clark at trial to show how the
White patent, alone or in combination with any other pa-
tents, might be relied upon as prior art.

The District Court held that the Velo loader did not
incorporate the claimed features of the 503 patent and was
no better prior art than the Loyd patent cited and relied
on by the Patent Examiner. It concluded that the relevancy
of the White patent, which was at best a possible fore-
runner of the Velo loader, was limited, because the White
patent was more significant to the belt drive of the original
Velo loader than to the cam-actuated clutch drive of the
503 patent. We can find no error in the trial court’s dis-
position of this issue.

(4) differences between prior art and claims of the 503
patent

Graham v. John Deere Co., 333 U.S. 1 (1966), requires
that in making an obviousness analysis under §103, the
trial court determine the scope and content of the prior
art, ascertain the differences between the prior art and the
claims at issue and resolve the level of ordinary skill in
[S. 18] the pertinent art. On appeal Clark alleges, in whol-
ly conclusory fashion, that the trial court failed to ascertain
the differences between the prior art and the claims of the
503 patent. This contention flies in the face of the trial
court’s careful examination of the claims of the 503 patent

A-74

vis-a-vis the Schreck, Hellwarth and Loyd patents, which
were the primary prior art patents relied on by the Patent
Office, and the Velo loader, which was assumed to be
applicable prior art for the purposes of an obviousness
analysis. Based on this examination,” the trial court con-
cluded:

Assuming arguendo that the Velo loader is prior art,
the deficiencies in that loader were easily recognized
by both the Kellers and Velo. The most significant
problem involved the heating, and subsequent ex-
panding and slippage of the belts which resulted in
the Itss of driving and steering control. Installation of
clutches was a solution, but there existed a gap in the
teaching of the prior art—Hellwarth and Schreck—
as to how to install clutches in such a way to be able
to actuate them to maintain steering and forward and
reverse control in a smooth [S. 19] and effective
manner from the operator’s compartment. The Keiler’s
conceived a new clutch drive mechanism which proved
to be highly effective and commercially successful.
The solution by the Kellers was not readily obvious
to one having ordinary skill in the pertinent art.

*We consider that a repetition of the detailed findi underlying the
differences ascertained by the district judge would serve no useful
purpose here. In order, however, to give some indication of the care-
ful and painstaking character of his analysis oo ae

set forth a mere part of his findings on the Schreck patent. Dis-
orict Court found, inter alia, that the Schreck patent disclosed
propelled dolly which is controlled by an operator walking in front of
the dolly. As disclosed by the drawings of the Schreck patent, steer-
ng ane Sones Se Gee Eee © ae ae Se
a rotatable gripping handle 61. A linkage bar 63 connected to handle
61 servers to move a link bar for actuation of a ae Sa units
* * * through crank arms * * * connected to the opposite ends of
link 51.” Clark Equipment Co. v. Keller, supra, slip op. at 17. We note
that the findings which we have just cited r a mere fraction
of the District Court’s exhaustive analysis the prior art.

A-75

Clark Equipment Co. v. Keller, supra, slip op. at 28. We
believe that the trial court complied with the requirements
of Graham v. John Deere Co., supra, by ascertaining the
differences between the prior art and the claims of the
503 patent.

(5) synergistic effect of claimed transmission system

Clark argues that because the 503 patent is simply a
combination of old elements, the trial court had an obliga-
tion to determine whether this combination acted to pro-
duce a synergistic or unexpected effect. Clark’s allegation
of error is based upon two premises, viz that a synergism
analysis was required and that the District Court failed
to meet this requirement. Because we find that the Dis-
trict Court did in fact give adequate consideration to the
effect of the combination of elements in the 503 patent,
we need not address the question of whether or not a syn-
ergism analysis was mandatory on the facts here. In pass-
ing, we do note, however, major differences between the
basicness and simplicity of the old elements combined in
the cases cited as controlling by Clark and the more com-
plex elements of the 503 patent.” Moreover, it appears
that hindsight [S. 20] alone persuaded Clark of the ne-
cessity for a synergism analysis, for Clark first made men-
tion of this issue only in a post-trial reply brief, after failing
to raise any synergism claim at or before trial.

*Sakraida v. Ag Pro, Inc., 425 U.S. 273 (1976), involved an invention
for the cleaning of barns by means of flushing water down an
inclined surface. In Anderson’s-Black Rock, Inc. v. Pavement Salvage
Co., Inc., 396 U.S. 57 (1969), the invention consisted of hanging a
radiant burner on the side of a paving machine. The invention in-
volved in Great Atlantic & Pacific Tea Co. v. Supermarket Equip-
ment Corp., 340 U.S. 147 (1950), was nothing more than a U-shaped
frame capable of sliding items along a counter top.

A-76

The District Court’s memorandum opinion does not
contain an explicit analysis of synergism. In light of
Clark’s failure to raise a synergism argument prior to or
during trial, we find this lack of explicit reference by the
District Court unsurprising. In the patent law context,
“synergism” has no talismanic power; synergism is merely
one indication of nonobviousness. What is required, when
a synergism analysis is appropriate, is simply a determina-
tion that the combination of elements in a patent produces
“an effect greater than the sum of the several effects taken
separately.” Anderson’s-Black Rock, Inc., v. Pavement
Salvage Co., 396 U.S. 57, 61 (1969). A careful reading
of the District Court’s opinion reveals that determinations
of the novelty and unexpectedness of the combinative ef-
fect of the elements of the 503 patent underlie the District
Court’s entire analysis of obviousness under §103. Form
would triumph over substance were we to hold this analy-
sis inadequate for lack of specific reference to synergism,
particularly in view of Clark’s failure to place the issue of
synergistic effect into issue prior to or during trial.

(6) obviousness of the 503 patent

Nonobviousness is one condition of patent validity; the
subject matter sought to be patented must not be obvious
to a person having ordinary skill in the pertinent art. 35
U.S.C. §103. While the question of obviousness vel non is,
like the ultimate question of patent validity, a matter of
law rather than fact, Flour City Architectural Metals v.
Alpana [S.21] Aluminum Products, Inc., 454 F. 2d 98,
106 (8th Cir. 1972), the obviousness condition imposed by
§103 is one which “lends itself to several basic factual in-
quiries.” Graham v. John Deere Co., supra at 17. The basic

}

A-77

factual inquiries required under §103 include a determina-
tion of the scope and content of the prior art, an ascertain-
ment of the differences between the prior art and the claims
at issue and a resolution of the level of ordinary skill in
the pertinent art. Graham v. John Deere Co., supra at 17.
The District Court made the factual findings required by
Graham v. John Deere Co., and nothing Clark has urged
on appeal convinces us that these findings are incorrect
or lack support in the record.

The court held that the 503 patent met the nonobvious-
ness requirement of §103. Clark raises two primary chal-
lenges to this conclusion of nonobviousness: first, that the
503 patent constitutes only an obvious improvement over
the Velo loader combined with the Schreck and Hellwarth
patents and, secondly, that the 503 patent constitutes only
an obvious improvement over the White patent combined
with the Schreck and Hellwarth patents. We conclude that
the District Court was correct in its determination of the
relevant prior art and in its rejection of Clark’s contentions
that the 503 patent was obvious in light of the original
Velt loader taken in combination with the Loyd, Schreck,
Hellwarth and White patents.

Assuming arguendo that the Velo loader was prior art,
the District Court found that it did not contain the claims
unique to the 503 patent and that it was no better prior
art than the Loyd patent cited and relied upon by the
Patent Examiner. The court also found that the White pa-
tent was more relevant as prior art to the belt-driven
Velo loader [S.22] than to the 503 patent and that the
most pertinent prior art consisted of the Schreck and Hell-
worth patents, which were cited, considered and rejected
by the Patent Office. On this basis, the court concluded that

A-78

Clark had failed to prove by substantial evidence how the
prior art could be combined to meet the claimed structure
of the 503 patent without hindsight.’ We have previously
rejected Clark’s piecemeal attacks made on the basis of
the trial court’s obviousness determination. A careful re-
view of the record convinces us that the District Court’s
conclusion that the 503 patent constitutes more than a
merely obvious improvement over the relevant prior art is
entirely correct. |

(7) candor to the Patent Office

Clark contends that the Kellers’ failure to disclose the
Velo loader as prior art to the Patent Office constituted a
lack of candor that necessitates invalidation of the 503
patent. A patent applicant has an uncompromising duty
toward the Patent Office to disclose all pertinent facts.
However, a party seeking to establish fraud on the Patent
Office because of a failure of full disclosure bears a heavy
burden of persuasion: fraud on the Patent Office must be
proved by clear, convincing and substantial evidence. Nor-
ton v. Curtiss, 433 F. 2d 779, 797 (C.C.P.A. 1970).

The trial court rejected Clark’s contention that the
[S. 23] Kellers’ nondisclosure of the Velo loader to the Pa-
tent Office constituted a breach of the duty of full disclo-
sure. The court held that because there is no duty on a pa-
tent applicant to disclose prior use where there is a bona
fide basis for believing the use was experimental, the Kel-
lers had no duty to disclose the experimental Velo loader.

114 patent which has survived the scrutiny of the Patent Office is pre-
sumed to be valid. and one attacking validity on the basis of obvious-
ness carries the burden of proof on this issue. Woodstream Corp. v.
Herter’s, Inc., 446 F.2d 1143, 1149 (8th Cir. 1971).

A-79

Moreover, even assuming the Velo loader to be prior art,
the court had previously found that it was nonanticipatory.
Thus, the Velo loader was of such a nature that even if it
had been disclosed to the Patent Office, it would not have
had an impact on the issuance of the patent. Tate En-
gineering, Inc. v. United States, 477 F. 2d 1336, 1345
(Ct. Cl. 1973). Accordingly, nondisclosure of the Velo
loader did not constitute a breach of the duty of disclo-
sure.

We have previously expressed our agreement with the
trial court’s findings that the Velo loader was experimental
or, if considered prior art, was nonanticipatory of the 503
patent. These findings support the conclusion that the
Kellers breached no duty of disclosure to the Patent Of-
fice. At trial, Clark failed to prove a breach of the duty of
uncompromising disclosure to the Patent Office; on ap-
peal, Clark has failed to demonstrate that the trial court
erred in rejecting its unproved allegation of fraud.

117 patent

In May 1959, the Kellers and Melroe Manufacturing
Company (Melroe) entered into an agreement whereby
Melroe acquired an exclusive license under the 503 pa-
tent. In 1959 and 1960, Melroe manufactured and sold
several loader models, the M-60, M-200 and M-400, all
of which were equipped with the transmission drive system
covered by the 503 patent.” These loaders [S. 24] did not
prove to be especially profitable, and Melroe contemplated

loader had been modified by the addition of a rear axle and two
drive wheels, thus producing a four-wheel power driven skid

A-80

leaving the loader market. Louis Keller insisted that Mel-
roe try to experiment with new loaders and, due at least
partially to his insistence, Melroe decided to experiment
rather than abandon the loader field. During the course of
this experimentation in 1961, four prototypical preproduc-
tion loaders, designated M-440’s, were built and the ma-
chine incorporating the elements of the 117 patent was
developed. Because the 18 claims of the 117 patent, en-
titled “tractor vehicle and drive therefor”, were reduced to
practice during the development of the four M-440 proto-
types, the individual histories of these machines bear con-
sideration. Application for the 117 patent was filed on
October 23, 1962, thus making October 23, 1961, the
critical statutory bar date. A mechanical patent of 17
years’ duration was granted to Louis Keller and Clifford
Melroe on January 15, 1966.

The first preproduction machine, known as the Clyde
Olson loader, was finished no later than the end of Febru-
ary 1961. Although it differed somewhat from earlier
models, it was equipped with slide cam type clutch actu-
ators identical to those employed in its predecessors. The
Clyde Olson loader, which contained few, if any, elements
of the 18 claims of the 117 patent, was never put into
production.

Between the date of completion of the Clyde Olson _[S.
25] machine and May 1961, a second prototype was con-
structed. This loader, known as the Gravel Pit loader, was
tested extensively by Louis Keller and employees of Melroe
in a gravel pit near Gwinner, North Dakota, as well as at
the home of Cyril Keller in Rothsay, Minnesota. The Grav-
el Pit loader differed from the Clyde Olson machine in sev-
eral major aspects, but not in clutch design. It contained

A-81

cam type clutch actuators and did not embody all of the
elements of the 117 patent.

A third prototype was completed sometime after July
4, 1961, and probably before August 1, 1961. This proto-
type contained improvements on some of the weaknesses
revealed during the gravel pit testing of the third proto-
type. This testing had made it clear to Louis Keller that
there were serious limitations to the tapered clutch design.
In particular, the slide cam actuators tended to stick, which
would cause the machine to cant or jerk unexpectedly, in
a manner dangerous to the operator. Furthermore, the
clutches would oil can” and the side plates bow, causing
the clutches to slip. Nevertheless, the third prototype re-
tained the cam type clutch actuators characteristic of its
predecessors and, thus, did not reduce to practice the es-
sential elements of the 18 claims of the 117 patent.

Louis Keller and Clifford Melroe subsequently conceived
of and developed a threaded rotary actuator clutch, de-
signed to avoid the aforesaid problems experienced
with the slide [S. 25] cam type clutch. This threaded
rotary actuator clutch was placed into the fourth prototype,
a white loader with flat clutch plates known as the Cy Kel-
ler demo. Because of the flat clutch plates, there was diffi-
culty in obtaining good clutch power transmission. The
clutches tended to slip and could not be solidly engaged.
Bench tests revealed that these problems were caused by
the oil canning of the flat clutch plates. A new dome-
shaped clutch plate was subsequently designed to avoid
the oil canning problem. To provide for lubrication of the

130i] ing occurs when ied to a clutch
i
the center of the bottom of a round oil can.

A-82

clutch linings, the design was also changed to provide oil
pickup slots on the input clutch, intended to pick up oil
thrown about inside the gear case by the chains.

After a period of testing, the decision was made to pro-
duce a new loader line, which was given the same M-440
designation that had been used for its prototypes. The
M-440, which was to be white, a color considered appeal-
ing to the fertilizer industry, was equipped with a threaded
rotary actuator clutch design. Production on the M-440,
for which the trade name “Bobcat” was adopted, began
in December 1961. The fourth prototype was built to
check out the final production tooling for the M-440. It
was the first machine to incorporate all of the elements
of the threaded clutch actuator eventually put into the
M-440. It also represented the first embodiment of all of
the elements of the 18 claims of the 117 patent and, ac-
cordingly, the date of its construction is crucial. Unfortu-
nately, the large amount of evidence submitted to date the
construction of the fourth prototype is contradictory. After
carefully analyzing all of the evidence on this point, the
trial court found that the most credible evidence estab-
lished that the date of construction had been near the end
of the [S. 27] third quarter of 1961. The critical statu-
tory bar date under 35 U.S.C. §102(b) is October 23, 1961.

Melroe engaged in commercial promotion of the M-440
before actual production of the new loader line began,”

“There was conflicting testimony as to whether a white Melroe loader
was exhibited at the Minnesota State Fair between August 26 and
4, 1961. The wil jal domes Sh SS Se
sive and insufficient to support a finding that a white Melroe loader
was on display at the Fair. He concl that “Melroe intended to
display a 440 loader at the Fair, but for some reason did not.”
There was also evidence showing that a news release advertising
the M-440 Bobcat was distributed to a large number of trade publica-

A-83

and in some instances negotiations for sales also preceded
production. In retrospect, the rapidity with which the M-
440 began to sell may be viewed as an early and accurate
indicator of the remarkable commercial success which this
loader line has enjoyed. On the other hand, however, the
early fruition of the M-440 sales campaign has redounded
to the detriment of the holders of the 117 patent. The M-
440 loader was offered for sale to both Farmers Union
Central Exchange and Midland Cooperatives prior to Oc-
tober 23, 1961, and orders for future delivery were taken
from those two companies prior to October 23, 1961. On
this basis, that a machine incorporating the elements of
the 117 patent had been on sale prior to the statutory bar
date of §102(b), the District Court held the 117 patent in-
valid. This invalidity under §102(b) [S.28] was the sole
ground for the holding that the 117 patent was invalid; all
other alleged bases for invalidity were considered and re-
jected by the District Court.

The District Court’s ruling that the 117 patent was in-
valid under §102(b) is challenged on appeal by the Kel-
lers. Moreover, Clark, which acquired Melroe in 1969
and succeeded to its rights under the license agreement
with the Kellers, attacks the District Court’s rejection of
the additional and alternative grounds of invalidity it has
proposed. We will first address the contentions raised by
the Kellers and then turn to the more numerous conten-
tions of Clark.

tions and within a few da

ys of the critical bar date of
October 23, 1961. The news release was dated October 20, and a
newspaper October 26 contained an almost verbatim

A-84

(1) offer for sale of machine embodying all elements of
the 117 patent prior to the statutory bar date

The Kellers present a tripartite challenge to the District
Court’s holding that a machine incorporating the elements
of the 117 patent was on sale prior to October 23, 1961,
the statutory bar date for that patent under 35 U.S.C.
§102(b). They argue that this conclusion is not supported
by the evidence; that it is not supported by the trial court’s
findings; and that it is predicated upon a misconception
and misapplicatiou of Dart Industries, Inc. v. E. I. Du
Pont De Nemours & Co., 489 F. 24 1359 (7th Cir. 1973),
cert. denied, 417 U.S. 933 (1974).

The parties introduced a vast amount of evidence on
the 117 patent. The complex and often contradictory na-
ture of this evidence is reflected in the trial court’s lengthy
memorandum opinion, which contains 151 findings of
fact relative to the 117 patent alone. In contending that
the trial court’s holding, that there were invalidating sales
[S. 29] of a machine incorporating the elements of the
117 patent, is not supported by the evidence, the Kellers
point out that Clark bore the burden of proof, Woodstream
Corp. v. Herter’s, Inc., 446 F. 2d 1143, 1149 (8th Cir.
1971); they denigrate the adequacy of almost every piece
of evidence relied upon by the District Court and point to
evidence which, they contend, should have been relied up-
on instead.

We have reviewed the record in light of each of the
Kellers’ specific allegations of lack of evidentiary support.
This review convinces us that the trial judge made an ex-
haustive analysis of the mountainous evidence submitted
on the 117 patent and that his conclusion that a machine
incorporating all the elements of the 117 patent was of-

A-85

fered for sale prior to October 23, 1961, is adequately sup-
ported by the evidence. It would serve no useful purpose
to recite and refute each separate allegation of eviden-
tiary insufficiency urged by the Kellers; the record, which
we have read with care, contains more than adequate evi-
dence to support the District Court’s conclusion that “the
440 loader was offered for sale to Farmers Union Central
Exchange and Midland Cooperatives prior to the October
23, 1961, §102(b) statutory bar date, and that orders for
future delivery were taken from those two companies prior
to October 23, 1961.” We deem it sufficient here simply
to point out some of the more salient evidence supportive
of this conclusion.

Melroe actively promoted the M-440 Bobcat not only
prior to the commencement of production in December
1961, but at some time extremely near the statutory bar
date. While this evidence alone is insufficient to establish
that the M-440 was offered for sale prior to October 23,
itis [S. 30] available to buttress the circumstantial evi-
dence of sales activity found in the record. Insofar as the
sales involving Farmers Union Central Exchange (Farmers
Union) are concerned, a partial list of the evidence in-
cludes: Melroe’s demonstration of a white loader to repre-
sentatives of Farmers Union some time prior to October
4, 1961; a Melroe purchase order dated October 3, 1961,
for three M-440 loaders with fertilizer buckets at $2,750
each; a Farmers Union purchase order dated October 4,
1961, for three M-440 loaders with fertilizer buckets at
$2,750 each; a Melroe invoice with an acknowledgment
date of October 4, 1961, for three M-440 loaders with
fertilizer scoops at $2,750 each; and a bill of lading
showing delivery of one 440 S.P. loader with fertilizer

A-86

scoop to Farmers Union on January 4, 1962. The au-
thenticity of these documents was established at trial.
Moreover, the Kellers submitted no evidence rebutting or
explaining these documents. Accordingly, the trial court
chose to infer that the M-440 loader was offered for sale to
Farmers Union prior to October 23, 1961. In our review of
the record, we have examined the documentary and other
evidence underlying this inference and are convinced that
the trial court’s inference and conclusion are fully sup-
ported by the record.

Insofar as the sales involving Midland Cooperatives are
concerned, a partial list of the evidence contained in the
record includes: a Melroe purchase order dated Septem-
ber 23, 1961, for nine M-440 loaders with fertilizer buckets
for future delivery to different locations; and seven Melroe
invoices, each of which bears an acknowledgment date of
September 30, 1961, covering the sale of seven M-440
loaders with fertilizer scoops to Midland Cooperatives for
delivery to different locations. The trial court considered
this [S.31] evidence in light of the testimony of former
employees of Midland Cooperatives and Melroe on the pro-
cedures followed by Melroe in processing orders, and made
the inference that the sales involved were processed prior to
September 30, 1961. Our own review of these documents
and the record as a whole convinces us that the trial court’s
inference was reasonable” and that its conclusion that

18The Kellers argue that Clark was not entitled to inferences that offers
of sale were made prior to the critical date. In its memorandum
opinion, the trial court clearly explained that its inferences of sales
activity were based upon ific sale documents. In an action tried
without a jury, inferences drawn from documents or undisputed facts
shall not be set aside unless they are clearly erroneous. United States
v. U.S. Gypsum Co., 333 U.S. 364, 394 (1948); Birdwell v. Hazelwood
School Dist., 491 F.2d 490, 494 (8th Cir. 1974). Moreover, when
conflicting inferences may be drawn from the evidence, a reviewing

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the M-440 loader was offered for sale to Midland Coop-

eratives prior to October 23, 1961, is supported by the
evidence.

[S. 32] The Kellers also argue that “the trial court’s
conclusion that a machine having all the patented features
of the 117 patent was offered for sale prior to the critical
date is not supported by the trial court’s findings.” In sup-
port of this contention, the Kellers refer specifically to only
two of the trial court’s 151 findings of fact on the 117 pa-
tent, which they characterize as inconclusive. Notably, they
do not argue that these or any other findings of fact are
clearly erroneous. We can find no merit in this contention.

The trial judge’s findings of fact support his conclusion
and have not been shown to be clearly erroneous.

A patent is invalid under 35 U.S.C. §102(b) if the sub-
ject matter of the invention has been on sale or in public
use more than one year prior to the filing of the patent
application. The District Court held that a machine em-
bodying the elements of the 117 patent had been on sale

court is not at liberty to disturb a reasonable inference ma
trial court unless it is definitely and firmly convinced that ah &
has been made. A. L. B. Theatre Corp. v. Loew’s Inc., 355 F.2d 495
(7th Cir. 1966). Finally, on al the evidence, including the infer-
a reasonably drawn rom, must be viewed in the light most
avorable to the prevailing party. Imperial ~‘as. & Indem. Co. v. Car-
olina Cas. Ins. Co., 402 F.2d 41, 44 (8 . Cir. 1968). We have re-
viewed the trial court's inferences of sales activity prior to October
23, 1961; we find them to be reasonable and not clearly erroneous.
In challenging the inferences drawn by the trial court, the Kellers
also argue that because of certain past behavior, Clark was not en-
titled to beneficial inferences from the evidence. After a careful
analysis of Clark’s past behavior, in particular, its failure to preserve
yes or records in its possession possibly relating to this issue,
~ District Court, ‘with some hesitation,” gave Clark the benefit of
i erences of sales activity. The Kellers have cited no authority which
suggests that the District Court erred in deciding to draw inferences
roy to a es supports the inferences drawn by
District Court we can find no error i decision
inferences favorable to Clark. sites pet

A-88

prior to the statutory bar date. In discussing its conclu-
sion that the §102(b) bar applied, the District Court

stated:

It is not necessary that the “patented product” be on
hand in commercial quantities for it to be “on sale”
within the meaning of §102(b). In fact, it is only nec-
essary the invention be “essentially” completed at the
time of the invalidating sale. Exact identity between
the product sold and the product described in the
patent application is not required. Dart Industries,
Inc. v. E. 1. Du Pont De Nemours and Co., 489 F.
2d 1359, 1364-65 (7th Cir. 1973), cert. denied,
417 U.S. 933 (1974).

Clark Equipment Co. v. Keller, supra, slip op. at 56. The
Kellers contend that the District Court’s conclusion is in-
correct because it is based upon a misapplication of Dart
Industries, supra. The crux of this contention appears to be
that the District Court relied upon Dart [S. 33] Indus-
tries to avoid the identity requirement of §102(b). We are
unable to agree.

It is undisputed that the M-440 included all of the fea-
tures of all of the claims of the 117 patent. The final
prototype preceding production of the M-440 was the
fourth prototype, which contained all of the elements of
the threaded rotary clutch actuator concept. The trial
court found that the fourth prototype was constructed dur-
ing the third quarter of 1961, that is, prior to October 23.
M-440 loaders were offered for sale to both Farmers
Union and Midland Cooperatives prior to October 23.
This evidence fully supports the District Court’s conclusion
that a machine embodying all of the elements of the 117

A-89

patent was on sale prior to the statutory bar date. We can
find no legal error in this conclusion. The identity require-
ment of §102(b) was met, and Dart Industries, which is
merely interpretive of §102(b), was not misapplied.

(2) standard of proof

Under 35 U.S.C. §282, a patent which has survived
the scrutiny of the Patent Office carries a presumption of
validity, and a party objecting to the validity of a patent
bears the burden of establishing invalidity. Woodstream
(Corp. v. Herter’s Inc., 446 F. 2d 1143, 1149 (8th Cir.
1971). The District Court required Clark to adduce sub-
stantial evidence of patent invalidity to rebut the presump-
tion of validity. The Kellers contend that substantial evi-
dence is an improper and overly lenient standard of proof.
They argue that the District Court should have required
Clark to establish patent invalidity by clear and convinc-
in evidence and that Clark did not adduce clear [S. 34]
and convincing evidence of invalidity and. therefore, failed
to meet the appropriate standard of proof.

Although courts have differed over the precise quantum
of proof necessary to overcome the presumption of patent
validity, Woodstream Corp. v. Herter’s, Inc., supra at 1149
n. 4, there is general agreement that the burden is a heavy
one. In recent years, several circuits have defined the bur-
den of establishing patent invalidity as one which must
be satisfied by clear and convincing evidence.” This cir-
cuit, however, has defined the standard of proof in terms

16See, e.g., Aluminum Co. of America v. Amerola Products Corp., 552
F.2d 1020, 1024 (3d Cir. 1977); Chicago Rawhide Mfg. Co. v. Crane
Packing Co., 523 F.2d 452, 458 (Sth Cir. 1975), cert. denied, 423
U.S. 1091 (1976); Minnesota Mining & Mfg. Co. v. Kent Indus., Inc.,
409 F.2d 99, 100 (6th Cir. 1969).

A-90

of substantial evidence. Woodstream Corp. v. Herter’s,
Inc., supra at 1149 n.4; L & A Products, Inc. v. Britt
Tech Corp., 365 F. 2d 83, 86 (8th Cir. 1966).

In requiring Clark to present substantial evidence in
order to establish patent invalidity, the District Court was
simply requiring the quantum of proof used in this circuit
in patent cases. We cannot say that the District Court erred
by imposing the standard of proof current in this circuit
rather than substituting a standard used elsewhere. Ap-
plying the substantial evidence standard, the District Court
deemed Clark’s evidence of sales activities prior to the
statutory bar date to be sufficient to establish the inva-
lidity of the 117 patent under 35 U.S.C. §102(b). As we
have previously indicated, we find this conclusion [S. 35]
to be amply supported both by the evidence and the trial
court’s findings. Moreover, it was based upon a correct in-
terpretation of the controlling law, including the standard
of proof.”

Clark’s alternative contentions on the invalidity of the 117
patent

Clark convinced the District Court that the 117 patent
was invalid under §102(b) because of sales activity prior
to October 23, 1961, the statutory bar date. Clark also
challenged the validity of the 117 patent on the ground
that it was obvious and did not, therefore, conform to the
requirement of nonobviousness imposed by 35 U.S.C.

17Clear and convincing evidence and substantial evidence are not stan-
dards which lend themselves to precise definition or quantification
and we will not attempt to identify and quantify any degree of vari-
ance which may distinguish them. We simply note that both are heavy
burdens of proof and though there is a difference in the standards,
we have no doubi that the proof which was considered adequate un-
der the substantial evidence standard here would also suffice under
the clear and convincing evidence test.

A-9]

$103.° Under the guidelines of Graham v. John Deere
Co., supra, the District Court made an exhaustive analy-
sis of the obviousness issue and ultimately concluded that
the 18 claims of the 117 patent were nonobvious within
the meaning of 35 U.S.C. §103. Clark now challenges this
determination and raises various miscellaneous claims of
error. We will first address these miscellaneous conten-
tions, which derive in large part from the trial court’s
§$102(b) analysis [S.36] discussed above.

(1) demonstration at the Minnesota State Fair

There was conflicting testimony on the question of
whether a white Melroe loader was demonstrated at the
Minnesota State Fair between August 26 and September
4, 1961. The trial judge considered this evidence to be
inconclusive and insufficient to support a finding that a
Melroe loader was on display at the Fair. He found that
Melroe had intended to display a loader at the Fair, but
that it had not done so. Clark characterizes this finding
as clearly erroneous and, in support of this characteriza-
tion, cites the evidence favorable to a finding that a loader
was on display.

Upon a review of the evidence submitted on this point,
we are in full agreement with the trial judge’s assessment
that a loader was displayed at the Fair. We consider his
finding of non-display eminently correct. Moreover,
even if we assume this finding to be erroneous, we are
unable to discern how Clark could have been prejudiced

Although the invalidity issue was decided in Clark’s favor, the issue
of nonobviousness remains live in regard to the Kellers’ claim for
negligence against Clark and its predecessor, Melroe, for failure to
make a timely application for the 117 patent and in regard to Clark’s
third-party claim against the law firm of Williamson, Bains and
Moore. These claims remain with the District Court for resolution.

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thereby. The trial court ruled in favor of Clark by holding
the 117 patent invalid under §102(b) on the basis of sales
activity prior to the statutory bar date. A finding that
a Melroe loader was on display at the Fair would simply
have provided cumulative evidence of this invalidating ac-

tivity.

(2) exclusion of two Midland Cooperatives purchase or-
ders

One of the bases for the trial court’s conclusion that
the 117 paient was invalid under §102(b) was the finding
that the M-440 loaders had been offered for sale to Mid-
land [S. 37] Cooperatives prior to the statutory bar date.
Two documents offered by Clark to prove sales activity with
Midland Cooperatives were excluded from evidence for
lack of adequate foundation showing them to be business
records prepared in the normal course of business. Clark
contends that this exclusion was erroneous and that it re-
veals that the trial court imposed abnormally stringent evi-
dentiary requirements upon Clark.

We can find no error in this exclusion. Moreover, we are
unable to discern that this ruling had any prejudicial ef-
fect whatsoever upon Clark, which prevailed upon the very
issue to which these excluded documents were directed.
Finally, the record is devoid of support for the contention
that in this or any other evidentiary ruling, improper evi-
dentiary requirements were imposed upon either party.

(3) exclusion of interrogatories and answers from Uni-
versal lawsuit

Clark attempted to introduce into evidence an exhibit
containing discovery material from the lawsuit against

A-93

Universal which had been settled by Clark’s predecessor
Melroe by way of a sublicense agreement with Universal.
This exhibit consisted of interrogatories directed to repre-
sentatives of Melroe and to the Kellers, and their an-
swers thereto. In opposition to the introduction of this ex-
hibit, the Kellers asserted that the Universal lawsuit had
been controlled by Melroe’s attorney; they testified that
although they had signed the interrogatory answers un-
der oath, they were never given or shown copies of the
questions to which these answers pertained. The District
Court excluded this exhibit from evidence, but permitted
Clark to use the interrogatories and answers on cross-ex-
amination of the Kellers for impeachment [S. 38] pur-
poses. Clark contends that this limitation was erroneous.

We need not decide whether this exclusion was errone-
ous, for we are convinced that it it was error, it was harm-
less. Clark engaged in extensive cross-examination of the
Kellers, during which it was allowed to use the interroga-
tories and answers for impeachment. Moreover, Clark was
successful in obtaining a ruling of invalidity on the 117
patent, to which this proffered exhibit apparently per-
tained. Under these circumstances, we do not believe that
Clark has asserted, nor does our review of the record show,
any prejudice flowing from the exclusion of this exhibit
from the evidence.

(4) obviousness of the 117 patent

At trial, Clark challenged the 117 patent not only on
the basis of invalidating activity under 35 U.S.C. §102(b),
but also on the hesis of obviousness as that term is defined
by 35 U.S.C. $103. We have already expressed our agree-

A-94

ment with the District Court’s determination that the 117
patent was rendered invalid by sales activity prior to the
statutory bar date imposed by 35 U.S.C. §102(b). Clark
argues that the District Court erred in not finding the 117
patent invalid on the additional ground of obviousness un-
der §103 and asks that we remedy this purported error.
Clark attacks the District Court’s ruling that the 117 pa-
tent was nonobvious on three grounds. It alleges that the
District Court failed to determine the scope and content
of the prior art; that it failed to ascertain the differences
between the prior art and the claims of the 117 patent;
and that it erred in failing to find the subject matter of the
117 patent to be an obvious improvement over the prior
art.
[S. 39] A perusal of these alleged errors could easily
create the impression that the District Court chose not to
consider the obviousness of the 117 patent because of its
conclusion that this patent was invalid on other grounds.
Nothing, however, could be farther from the truth. While
Clark conceded that the 117 patent was nonobvious on the
basis of the prior art cited to the Patent Office, it asserted
that there was “pertinent prior non-cited art” upon which
the 117 patent was merely an obvious improvement. The
detailed consideration given by the District Court to this al-
legedly pertinent non-cited prior art, which included pre-
production loaders used as demonstrators, the M-400
loader and a number of patents, is reflected in 23 findings
of fact and a lengthy legal analysis. Adhering to the guide-
lines of Graham v. John Deere Co., supra, the District
Court determined the scope and content of the prior art
asserted by Clark, ascertained the differences between this
prior art and the claims of the 117 patent and determined

A-95

the level of ordinary skill in the small loader art. The Dis-
trict Court found that Clark had failed to show how the
non-cited art was more pertinent than the prior art cited
by the Patent Office. In view of Clark’s admission that,
based solely on the cited art, the Patent Office was correct
in allowing the 117 patent, the District Court concluded
that Clark had failed to prove that the 117 patent was
invalid under 35 U.S.C. §103.

We have carefully considered each of Clark’s attacks
on the District Court’s obviousness analysis of the 117
patent and find merit in none of them. The District Court
made the findings of fact required by Graham v. John
Deere Co., supra, and nothing Clark has urged on appeal
convinces us that these findings are not correct and fully
supported [S. 40] by the record. Moreover, the District
Court’s conclusion of nonobviousness reflects both a praise-

worthy understanding and proper application of the con-
trolling law.

(5) indefiniteness of 117 patent

Under 35 U.S.C. §111, a patent application must in-
clude a specification of the patent. The requirements of

this specification are set forth, as follows, in 35 U.S.C.
$112:

The specification shall contain a written description
of the invention, and of the manner and process of
making and using it, in such full, clear, concise,
and exact terms as to enable any person skilled in the

art to which it pertains * * * to make and use the
same * * *,

Clark contends that the omission from the specification
for the 117 patent of any mention of the weight distribu-

A-96

tion of the wheels of the loader rendered the 117 patent
application deficient under §112. When the vehicle de-
scribed by the 117 patent is fully loaded, 70% of the
weight is on the two front wheels and 30% on the two
rear wheels. The opposite is true in an unloaded condi-
tion: 70% of the weight is on the rear wheels and 30%
on the fronnt wheels.

There is some dispute as to who introduced the weight
distribution issue at trial and what significance was attrib-
uted to it by the District Court.” In any event, [S. 41] the
District Court’s brief discussion of the weight distribution of
the patented loader occurred in its analysis of the obvious-
ness of the 117 patent.” In response to Clark’s allegation
that the 117 patent was merely an obvious improvement
over the M-400, the weight distribution of the patented
loader was discussed. This aspect of the loader was hard-
ly a surprise to Clark, which had touted the 70%-30%
weight distribution in its own promotional literature. Nev-
ertheless, Clark, which was also familiar with the patent

19Clark alleges that at trial, the Kellers “for the first time in the history
of this patent, asserted that the key element in the 117 patent was the
fact that there was a 70%-30% weight distribution on the wheels
of the loader depending on whether vehicle was fully loaded or
unloaded.” Clark also alleges that this weight distribution was labeled
by the trial court as a critical element of the 117 patent. The Kellers
respond that they have never asserted that the 70% -30% weight dis-
tribution is a key element and that Clark is attempting to mislead
this court by stating that the trial court labeled the 70%-30%
weight distribution as a critical element of the 117 patent.

20[n its obviousness analysis, the District Court found the 70%-30%
weight distribution to be a functional advantage inherent in the
structure defined in claims 10-15 and 18 of the 117 patent and ab-
sent in the M-400. The patent specification recites the structural
features which provide this functional advantage and we do not con-
sider that the patent application was defective under § 112 for fail-
ure to describe this inherent functional advantage. Under these cir-
cumstances, it was proper for the District Court to consider the
weight distribution of the patented loader in determining the obvious-
ness of the patent.

A-97

application and thus aware that it did not mention the
70%-30% weight distribution, chose not to attack the
117 patent at trial on the basis of an inadequate specifi-
cation under §112. It now voices this challenge to the 117
patent for the first time on appeal. Under the circum-
stances, we are hardly predisposed to excuse Clark’s fail-
ure to raise this contention at trial, especially in light of
the fact that [S.42] Clark has already succeeded in in-
validating the 117 patent on other grounds. Nevertheless,
because this contention lends itself to summary disposition,
we will consider it now.

The District Court found that although the 70%-30%
weight distribution is not expressly stated in the specifica-
tion of the 117 patent, the features set forth in claims
10-15 and 18 do recite the structural features which pro-
vide this inherent condition. Thus, the weight distribution
of the patented loader is inherent in the structural features
recited in claims 10-15 and 18. A patent specification
must be expressed in terms that will enable a person
skilled in the art to which it pertains to make or use the
invention. Were a person skilled in the loader art to con-
struct a loader as described in the specification of the 117
patent with materials normally used for such construction,
so as to include the elements of claims 10-15 and 18, the
resulting structure would possess the 70%-30% weight
distribution. Thus, the specification for the 117 patent
is not deficient under §112.

254 patent

On July 25, 1962, Louis Keller, Cyril Keller and Clif-
ford Melroe applied for a patent on “the ornamental de-
sign for a self-propelled loader.” This patent, the 254 pa-

A-98

tent, was issued on May 21, 1963;” it is a design patent
covering [S. 43] the machine mechanically patented in
the 117 patent.” The District Court sustained the validity
of the 254 patent.

On appeal, Clark has presented numerous arguments in
favor of reversing the District Court’s holding that the 254
patent is valid. Because we conclude that the 254 patent
did not comport with the novelty requirement of 35 U.S.C.
$171, we believe that a recitation and discussion of Clark’s
remaining allegations of error would be superfluous. Suf-
fice it to say that we have scrutinized each of these other
allegations of error and find them to be without merit.”

35 U.S.C. §171 provides that a person who invents any
new, original and ornamental design for an article of man-
ufacture may obtain a patent therefor, so long as the other
[S. 44] conditions and requirements of Title 35 have been
met. It follows, under an integration of the various require-

21The record is somewhat unclear as to the duration of this design
t. Counsel for Clark stated at oral argument that the 254 patent

had been issued for a fourteen-year period. Based on that figure, the
254 patent would have expired on May 21, 1977.

22The history of the development of the machine which underlies both
the 117 mechanical patent and the 254 design patent has been set
forth at length in our analysis of the 117 patent and will not be re-
peated here.

23We note that our determination that the 254 patent is not novel, when
considered in light of the M-400 loader, does no vitiate the trial
court’s conclusion that the Kellers acted in good faith in the prose-
cution of the 254 design patent. Even if the M-400 is assumed to be
better prior art than the 506 patent, which was considered by the
Patent Office, we do not believe that Clark has shown that the
Kellers’ nondisclosure of the M-400 constituted an act of wilful bad
faith manifesting an intent to mislead the Patent Office. The Kellers
apparently considered the M-400 nothing more than a hybrid version
of the earlier Melroe loaders covered by the 506 design patent, which
was cited as prior art. Although we disagree with their appraisal
of the M-400, the record does not provide support for the conclusion
that their decision not to disclose the M-400 to the Patent Office
was motivated by bad faith. Clark has not proved by clear, convincing
and substantial evidence that the Kellers failed to act in good faith
in the prosecution of the 254 patent.

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ments for patentability set forth in Title 35, that in order to
be valid, a design patent must be new, original, ornamental
nonobvious and the result of invention. In determining the
validity of a design patent, it is the appearance of the
article taken as a whole which must meet the statutory re-
quirements, for “the thing invented or produced, for which
a patent is given, is that which gives a peculiar or dis-
tinctive appearance to the manufacture, or article to which
it may be applied * * *.” Gorham Co. v. White, 81 U.S.
(14 Wall.) 511, 525 (1871). Schnadig Corp. v. Gaines
Manufacturing Co., Inc., 494 F. 2d 383, 389 (6th Cir.
1974); Hadco Products, Inc. v. Walter Kidde & Co., 462
F, 2d 1265, 1269 (3d Cir.), cert. denied, 409 U.S. 1023
(1972).

The tests by which the appearance of a design patent
must be judged vary according to the particular statutory
requirement for patentability which is at issue. The ob-
viousness of a design patent is determined by an analysis
under the general requirements of 35 U.S.C. §103, tailored
to fit the design situation: the differences between the de-
sign patent and the prior art must not be obvious to a
designer with ordinary skill in the art. The novelty of a
design patent, on the other hand, is tested by determining
the impact of the design upon an ordinary observer. A
design patent is novel when the “average observer takes
the new design for a different, and not a modified already
existing design.” Thabet Manufacturing Co. v. Kool Vent
Metal Awning Corp., 226 F. 2d 207, 212 (6th Cir. 1955).
This is the prevailing and now well-settled test for the
novelty of a design patent. See, e.g., Schnadig Corp. v.
Gaines Manufacturing Co., Inc., supra at 389; Rains v.
Cascade [S. 45] Industries, Inc., 402 F. 2d 241, 247

A-100

(3d Cir. 1968); Hygienic Specialties Co. v. H. G. Salzman,
Inc., 302 F. 2d 614, 617 (2d Cir. 1962); Application of
Bartlett, 300 F. 2d 942, 943 (C.C.P.A. 1962).

At trial, Clark contended that the 254 design patent
lacked novelty when viewed against the M-400 loader; it
argued that the M-400 loader design was so similar in
overall configuration to the design of the 254 patent that
the ordinary observer could not distinguish them. The
District Court made the finding that there was no substan-
tial evidence that an ordinary observer could not readily
distinguish between the M-400 and the subsequent Bob-
cat loader covered by the 254 patent. Clark’s novelty chal-
lenge to the 254 patent was rejected in the following terse
conclusion:

The test of the “ordinary observer” may be relevant
to determine novelty with respect to design; however,
there is no substantial evidence in this record that
ordinary observers could not readily distinguish be-
tween the M-400 and the subsequent BOBCAT
loader covered by the 254 patent. The Court refers
specifically to the sparse testimony of witnesses Steen-
hoven and Van Winkle.

Clark Equipment Co. v. Keller, supra, slip op. at 79.

Although various pictures and drawings of the M-400
[S. 46] loader and Bobcat loader covered by the 254 pa-
tent were introduced at trial, there was little testimony ad-

The sole prior art considered by the Patent Office was the 506 design
patent, a patent on the machine mechanically patented by the 503
patent. While the District Court held that the M-400 was no better
prior art for the 254 design patent than was the cited 506 patent,
it to consider the validity of the 254 t
from the viewpoint that the M-400 was prior art. We will follow
the same analytic approach.

A-101

duced that could be deemed applicable to the issue of the
impact of the appearances of these loaders on the ordinary
observer.” While we agree with the District Court that the
testimony on the issue of the visual impact of these loaders
was “sparse,” we are unable to agree either with the find-
ing that the record was devoid of substantial evidence pro-
bative of this point or the statement that the ordinary ob-
server test “may” be relevant to a determination of novelty.
The impact of the design upon an ordinary observer “may”
not be relevant in determining novelty; as we have pre-
viously noted, it is the test for the novelty of a design pa-
tent. Moreover, when this test is applied to the record here,
it compels the conclusion that the 254 patent is not novel.

In emphasizing the minimal quantity of testimony on
this issue, the trial court clearly chose to base its conclu-
sion of novelty upon the documentary evidence illustrating
the designs of the M-400 and 254 patent. The documents
depicting the M-400 and Bobcat loaders are as available
to this court as they were to the trial court and it is our
[S. 47] prerogative to interpret these exhibits ourselves.
American Infra-Red Radiant Co. v. Lambert Industries,
Inc., 360 F. 2d 977, 988 (8th Cir.) cert. denied, 385 U.S.
920 (1966). We have reviewed and compared this docu-
mentary evidence with care, and we are convinced that the

25The testimony of Steenhoven and Van Winkle related to a transac
tion between the two in which Steenhoven painted an M-400 loader
white, the standard color for Bobcat loaders, and sold it to Van
Winkle as a used Bobcat. While we would hesitate to consider this
transaction definitive evidence that the ordinary observer could not
distinguish the M-400 from the 254 design, it can certainly be viewed
as providing support for such a conclusion. Moreover, the fact that
testimony on this transaction is “sparse” and that the record is not
replete with evidence of actual episodes of confusion on the part of
ordinary observers hardly detracts from the cogency of the docu-
— ~ illustrating the similarity of the designs of the two

A-102

trial court erred in finding that the differences between
the M-400 and Bobcat loaders were sufficient to establish
the novelty of the 254 patent. The differences between the
two designs, cited by the District Court in support of its
finding, involve structural details; when the overall visual
impact, which is the appropriate reference for design pa-
tents, is considered, the striking similarity of the designs
of the M-400 and 254 patent becomes clear. Both are
compact four-wheel front-end loaders with boom arms
pivoted on supports adjacent to the rear and extending
down at a low angle in the front.

While “we do not say that six eyes are necessarily apt
to reach a more accurate assessment than are two,” Frito-
Lay, Inc. v. So Good Potato Chip Co., 540 F. 2d 927,
931 (8th Cir. 1976), our observation of the documentary
evidence depicting the designs of the M-400 loader and
the 254 patent convinces us that an average observer
would not view the design of the 254 patent as anything
more than a modification of the M-400.

Accordingly, we conclude that the 254 patent did not
meet the requirement of novelty posited by 35 U.S.C. §171.
This is our sole disagreement with the District Court’s
analysis of the 254 patent and it is on this basis alone that
we hold the 254 patent invalid.

The judgment of the District Court on the 503 and 117
patents is affirmed; the judgment on the 254 patent is
[S. 48] reversed.

A true copy.
Attest:
Clerk, U.S. Court of Appeals, Eighth Circuit.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_0716%3A1. Public record. Not legal advice.