Petition — Reynolds Metals Co. v. Aluminum Co. of America

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Supreme Court, Us a7

FILED

APR 25 1980

IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1979

no. _€9-162]

REYNOLDS METALS COMPANY, Petitioner,

Vv.

ALUMINUM COMPANY OF AMERICA, AND

NATIONAL CAN CORPORATION, Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

REYNOLDS METALS COMPANY

Petitioner

JOHN W. MALLEY

WILLIAM T. BULLINGER

SHERMAN O. PARRETT

CUSHMAN, Darsy & CUSHMAN

1801 K Street, N.W.

Washington, D.C. 20006

Phone: (202) 861-3000

Of Counsel

JOHN F. C. GLENN

REYNOLDS METALS COMPANY

6601 West Broad Street

Richmond, Virgina 2326?

Attorneys for Reynolds Metals

Company

PRESS OF BYRON S. ADAMS PRINTING, INC., WASHINGTON, D.C.

TABLE OF CONTENTS

PAGE

OPINIONS AND PETITIONER’S APPENDIX BELOW ...... |

oe eg, EE EES RC 2

eee eee 2

CONSTITUTIONAL, STATUTORY, AND REGULATORY

Nd celts vec cces 3

CONCISE STATEMENT OF THE CASE................ 5

ee 8

There Has Been An Alarming Decline Of In-

) novation And Industrial Productivity In The

I oi Se ee ee ol. 9

: The Power And Responsibility To Promote In-

j novation Resides Lastly With This Court...... 9

i The Bylund Patents Embody Substantial In-

‘ novation Which Was Copied By Respondents

{ And Adopted By The Whole Industry ........ 10

4 The Court Of Appeals Failed To Follow Its

Appellate Review Function.................. 1]

Ce oc apesenc 13

There Is An Alarming Decline Of Innovation

OES or ee 13

The Innovation And The Advance In The Art

Made By The Bylund Inventions Was Over-

ee Re i a ie ks 17

Alcoa Copied The Bylund Inventions As Soon

As It Heard Of Them And Publicly Claimed

BO NIE SE ana as ey 19

There Is Public Perception Of A Trend Of Ex-

cessive Hostility To Patents In The Circuit

Courts Of Appeal Which Will Be Intensified

By The Present Decision

Table of Contents Continued

PAGE

The Failure Of The Court Of Appeals To Even

Mention The Massingill-Grigorenko Patent,

3,509,754 Suggests Some Serious Misunderstan-

ding Of The Real Issues Of This Case ........ 22

The Beverage Can Program Of Metal Flo Was

Experimental And Was Abandoned As A

EMSS ola ce Sie NSS COTES Sub tho 26

The Decision Of The Court Of Appeals Is

Anomalous In Stating That Metal Flo Was An

Anticipation When The Trial Court, The Pa-

tent Office, And Those In The Industry

MPMI G NS 5s tke o 0 CARL ee ks 29

The Court Of Appeals Improperly Engaged In

A De Novo Redetermination Of Facts ........ 30

Rule 52(a) Of The Federal Rules Of Civil Pro-

cedure Recognizes An Important Distinction

Between Trial And Appellate Courts Which

The Seventh Circuit Has Ignored............. 31

Disregard By Appellate Courts Of Rule 52(a)

Encourages Litigation And Expensive Appeals. 33

The Seventh Circuit’s Application Of 35

U.S.C. 102 Is In Conflict With The Intent Of

The Statute And In Conflict With The Other

CR SCA Lid pedeouas Seas oies s Oereie bee 34

Anomalous Patent Validity Decisions, With

Their Divorcement From Reality, Destroy The

Faith Of Innovators, Potential Innovators And

ESO RW cpt atk tay oR ray Mn Le aa 37

tS” SRY aos Res BS ARR Toe Ret ale Ae MPT RR Tee 38

ili

TABLE OF AUTHORITIES

CASES PAGE

Canron, Inc. v. Plasser American Corp., ____ F.2d

—___., 203 U.S.P.Q. 641 (4th Cir. 1979) ....... 36

Coffin v. Ogden, 85 U.S. 120 (1874) ............. 28

Graham v. John Deere, Co., 383 U.S. 1, 6 (1966).. 10

35, 38, 39

In Re Hughes, 345 F.2d 184 (C.C.P.A. 1965)...... 35

Jones v. Vefo, Inc. ___ F.2d ___, 204 U.S.P.Q.

ee CY EPPO coos eas Stee ka tee Cabewls 36

Ling-Temco-Vought, Inc. v. Kollsman Instrument

Corp., 372 F.2d 263 (2nd Cir. 1967).......... 36

Lyon v. Bausch & Lomb Optical Co., 224 F.2d 530,

FE: SANs SORES SON 55 5 ca EE Aik tbee sos 28

Paeco, Inc. v. Applied Moldings, Inc., 562 F.2d

ED Gas MEME o ore Sais b doce ce eneies 36

Pendergrass v. New York Life Ins. Co., 181 F.2d

Soe Cte a BO acs Ska eae oh cee hs 33

Reynolds v. Whitin Mach. Works, 167 F.2d 78, 83

Se Sy SO ie ha as HES CKR HORE ew 27

Schroeder v. Owens-Corning Fiberglass Corp., 514

F.2d 901, 904 (Sth Cir. 1978) oe eee 36

Shanklin Corp. v. Springfield Photo Mount

Co.,521 F.2d 609, 619 (Ist Cir. 1975)......... 36

Tights, Inc. v. Acme-McCrary Corp., 541 F.2d

1047, 1055-1056 (4th Cir. 1976) .............. 36

Trio Process Corp. v. L. Goldstein’s Sons, Inc.,

F.2d , 204 U.S.P.Q. 881, 888,

ne Cane ae COs se Avis boas bach ee. 33

United States v. Adams, 383 U.S. 39 (1966)..... 10, 28

United States v. Yellow Cab Co., 338 U.S. 338

_ERRENSEREEIN Gch a npiry tiara na ag repo us Or 32

Zenith Radio Corp. v. Hazeltine Research, Inc.,

Soo st. BOO, 229 CSG ao ieee Sooo ees 31

Table of Authcrities Continued

STATUTES: PAGE

Constitution, Art. I, Section 8 ...... a. 32:9%41. 87. BB

Bo We PE hss cokes eels 3, 4, 6, 11, 28, 34, 35, 36

BP Mees UE cavers avubbrolstretebie te 4, 6, 35

Rule 52(a), Federal Rules of Civil Procedure ...... =

4, 11, 31, 32, 38

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1979

i ne Fa

REYNOLDS METALS COMPANY, Petitioner,

Vv.

ALUMINUM COMPANY OF AMERICA, AND

NATIONAL CAN CORPORATION, Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Petitioner Reynolds Metals Company (hereinafter

“‘Reynolds’’) prays that a writ of certiorari issue to

review the judgment and opinion rendered on November

13, 1979, rehearing denied January 17, 1980, by the

United States Court of Appeals for the Seventh Circuit!

in consolidated cases numbers, 78-1909 and 78-1910,

reversing the judgment of the United States District

Court for the Northern District of Indiana? finding peti- :

tioner’s two patents valid.

OPINIONS AND PETITIONER’S APPENDIX

BELOW

The opinion of the Court of Appeals is reported at

609 F.2d 1218 and is reproduced in the Appendix to this

petition, pages la-Sa. The Findings of Fact, Conclusions

' Swygert and Bauer, Circuit Judges, and Grady, District Judge,

opinion by Judge Bauer.

* Allen Sharp, District Judge.

of Law, Opinion and Judgment of the District Court is

reported at 457 F. Supp. 482, and is reproduced in the

Appendix to this petition, pages 6a-62a. References to

petitioner’s Appendix below are designated ‘‘RMA’’, a

copy of which has been certified to this Court. Em-

phasis throughout is by petitioner unless stated other-

wise.

JURISDICTION

A timely filed petition for rehearing and suggestion

that rehearing be in banc was denied by the Court of

Appeals on January 17, 1980. This petition for a writ of

certiorari was filed within ninety days of that date. The

jurisdiction of this Court is invoked under 28 U.S.C.

Section 1254(1).

QUESTIONS PRESENTED

There being an urgent need in the public inverest to

halt the decline of innovation and indus’: al productivity

in the United States and to restore the incentive for in-

novation provided in Art. I, Sec. 8, Clause 8 of the

Constitution and the patent statutes, the questions

presented are:

1. Is there a trend of undue judicial hostility to

patents on the part of the Circuit Courts of Appeal

when they consider the effect of prior art on patent

validity, especially as evidenced by the recent trend of

overruling favorable patent validity decisions of trial

courts on the basis of de novo independent redetermina-

tion of facts by the Courts of Appeal in violation of

Rule 52(a), F.R.C.P.?

2. Is the faith of existing and prospective innovators

and investors in the patent rewards for innovation

granted under our Constitution decreased by such de

novo reviews and is copying of inventions and an excess

of expensive patent litigation and appeals thereby en-

couraged?

3. Did the Seventh Circuit Court of Appeals, in ig-

noring facts as found by the trial judge in this case and

substituting its own independent fact finding without

discussion of the trial judge’s decision or the evidence

and in total disregard for Rule 52(a), F.R.C.P., so far

depart from its assigned judicial role as to call for an

exercise of this Court’s power of supervision?

4. Did the Seventh Circuit Court of Appeals, in

holding petitioner’s two patents invalid as anticipated

under 35 U.S.C. 102 on the basis of prior work which

had been found by the trial court to be significantly dif-

ferent from the patent claims, improperly apply 35

U.S.C. 102 in contravention of its own terms, contrary

to the actual evidence about that prior work from those

working in the industry, and in contravention of the in-

tent, purpose and standard of Article I, Section 8 of the

Constitution, which the patent laws are intended to im-

plement?

CONSTITUTIONAL, STATUTORY, AND

REGULATORY PROVISIONS INVOLVED

Article I, Section 8 of the Constitution, in here per-

tinent part provides:

“The Congress shall have Power***

* * *

To promote the progress of science and useful arts,

by securing for limited times to authors and inven-

tors the exclusive right to their respective writings

and discoveries;—’’

“

Title 35, United States Code, Section 102, in here

pertinent part provides:

‘A person shall be entitled to a patent unless—

(a) the invention was known or used by others in

this country, or patented or described in a printed

publication in this or a foreign country, before the

invention thereof by the applicant for patent, or

(b) the invention was patented or described in a

printed publication in this or a foreign country or

in public use or on sale in this country, more than

one year prior to the date of the application for pa-

tent in the United States...

* * *

(g) before the applicant’s invention thereof the in-

vention was made in this country by another who

had not abandoned, suppressed or concealed it.

Title 35, United States Code, Section 103, provides:

‘“‘A patent may not be obtained though the inven-

tion 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 in-

vention was made to a person having ordinary skill

in the art to which said subject matter pertains.

Patentability shall not be negatived by the manner

in which the invention was made.”’

Rule 52(a) of the Federal Rule of Civil Procedure,

in here pertinent part provides:

‘‘Findings of fact shall not be set aside unless clear-

ly erroneous, and due regard shall be given to the

opportunity of the trial court to judge of the

credibility of the witnesses.”’

CONCISE STATEMENT OF THE CASE

Petitioner Reynolds is the owner of two patents

relating to aluminum cans and processes for making

cans from certain aluminum alloy sheet invented by Lin-

ton D. Bylund, a metallurgist working for Reynolds.

The conception and development of these inventions is

detailed in the trial court’s opinion at pages 9a-17a. The

patent applications, their prosecution, and the patent

claims are detailed in the trial court’s Opinion at pages

17a-22a.

For several years prior to filing his applications,

Bylund had worked on developing an aluminum can

that would be competitive in the industry with steel

cans. He found that when certain aluminum alloy sheet

was made into aluminum cans without the traditional

costly intermediate thermal treatments or anneals, great

amounts of material and energy were saved.

The Bylund inventions were the first practical extra

high strength light weight aluminum cans which were

made without any thermal treatments, from the cold

rolling operations through the high speed can making

operations. The time necessary to make aluminum sheet

for cans was reduced by over 40 hours. Costly in-

termediate anneals were eliminated. The weight of the

can was sharply reduced. An entire industry grew using

the Bylund inventions in making billions of these cans

per year where none were made before.

Respondents Alcoa and National abandoned their

own efforts to make a competitive new aluminum can

and copied the Bylund inventions. Alcoa’s sales of

aluminum alloy sheet for drawing and ironing into cans

using the Bylund inventions then went from zero prior

to 1967 to 235,000,000 pounds in 1974. Alcoa saved ap-

proximately one cent for every pound of aluminum pro-

cessed by using the Bylund inventions. Alcoa heralded

the use of the new high strength aluminum sheet as a

major achievement, something that standard textbooks

said could not be done. Alcoa filed and received its own

patent which emphasized that the use of high strength

aluminum sheet without any intermediate heat

treatments was a new and unobvious invention, but

Alcoa did not contend that it had made this invention

before Bylund. No one at trial testified that the Bylund

invention was obvious. In fact, the technical manager

for all of Alcoa’s aluminum mills candidly testified at

trial that the Bylund invention was something that peo-

ple skilled in the art thought could not be done. See the

trial court’s findings at 27a to 29a.

Discovery in this case exceeded three years. Hun-

dreds of thousands of documents were examined and the

testimony of 51 witnesses was taken. Over 2,500 exhibits

were marked by the’ parties. The trial extended from

April 3 to April 20, 1978. On April 25, 1978, the trial

court held one full day of oral argument by all parties.

By invitation of the trial court, the parties submitted

over 400 pages of briefs and over 1,000 proposed fin-

dings of fact and conclusions of law.

After careful consideration of all of the above,

Judge Sharp rendered a decision on June 6, 1978, con-

sisting of 50 pages containing 37 pages of findings of

fact and 63 conclusions of law (pages 6a to 62a). Judge

Sharp found, as facts, that Linton Bylund of Reynolds

had made outstanding and patentable inventions and

that Alcoa (with National) had willfully appropriated

these inventions and had infringed the Bylund patents.

He found that these inventions were not anticipated

under 35 U.S.C. 102 nor obvious under 35 U.S.C. 103

and that the patents were enforceable (pages 47a to

53a).

Tet pe eae, ee Eat eae

Alcoa and National cited five instances of alleged

prior knowledge by others and two publications as

rendering the patents in suit invalid. Included therein

was the work of Metal Flo and its patent covering same

to Massingill and Grigorenko. The trial court found as a

fact that insofar as this work related to beverage cans it

was incomplete, experimental, and abandoned, (pages

30a, 32a) and that all of this work, whether beverage

canS or the large containers called sonobuoys, was the

Same as the Massingill patent which was an unconven-

tional process involving heat and vibrations and had

been rejected as not being anticipatory by the Patent Of-

fice, (page 33a). The trial court concluded that the

Massingill patent does in fact involve annealing, (page

4la). The trial court specifically found that this Metal

Flo process was significantly different from the patents

in suit (page 58a).

On appeal, the Seventh Circuit Court of Appeals

rendered a very short opinion, (pages la to Sa), stating

that, from its own review of the evidence, it was per-

suaded that the Bylund patents were the same as the

work of Metal Flo (page < .). The Court of Appeals held

that Metal Flo had drawn and ironed certain aluminum

containers without thermal treatment (page 4a). These

statements by the Court of Appeals are contrary to the

unnaminous views about Metal Flo of those actually

working in the industry, and directly opposite to the

holdings of the Patent Office and the trial court concer-

ning Metal Flo. The trial court found it to be a fact that

the Metal Flo process did involve heat and annealing in

drawing and ironing, and that the Bylund patent claims

exclude any such thermal treatments. On petition for

rehearing and rehearing in banc, the decision was

adhered to. This timely filed petition followed.

SUMMARY OF PETITION

This petition pleads the cause of innovation and the

urgent need for support from this Court to promote the

progress of the useful arts as set down in the Constitu-

tion. This petition is concerned with the real need to en-

courage innovative contributions and to recognize them

when they occur, as in this case. It is essential to such

encouragement and recognition that due regard be given

to the expertise of the Patent Office and of trial courts

when patents are allowed and sustained on the facts as

developed in a trial. Courts of Appeal simply must be

confined to their judicial role of appellate review of the

decision below, not a de novo treatment of the case, if

innovation is to survive and flourish.

American industry, if it is to be encouraged to in-

novate, has to have a patent system where innovative

advances are judged impartially and fairly, by defined

procedures, so that there is faith in the courts’ abilities

to properly decide such cases. Unnecessary and costly

time consuming litigation now threatens our system of

patent incentives because of the failure of Courts of Ap-

peal to limit their judicial role to the well defined ap-

pellate review for clear error in the trial courts’ findings.

Courts of Appeal are simply announcing their own fin-

dings of fact, arrived at without the safeguards against

error that an in depth trial of the facts provides.

In order for invention incentives to be effective, in-

dustry has to have the assurance and expectation that

patents will not be struck down on the very art con-

sidered and rejected as not being anticipatory by the Pa-

tent Office and the trial court, as well as by the industry

as a whole, and particularly prior art rejected by those

very persons actually working in the art at the time the

inventions were made. In the present case, the Court of

Appeals made de novo findings directly contrary to all

of the testimony of those working in the industry.

There has been an Alarming Decline of Innovation

and Industrial Productivity in the United States

There has been an alarming decline in innovation

and advances in the useful arts in the United States dur- |

ing at least the past decade. This decline has adversely

affected the productivity of United States industry,

which damages our economy and, as a further result,

will weaken us militarily. This has been noted as ex-

tremely serious by industrial leaders, government agen-

cies and the President. Recommendations for remedial

action have been forthcoming from all these sources. A

central theme to all the recommendations is that innova-

tion and industrial productivity of United States in-

dustry will flourish only if there is an incentive provided

that justifies the risks and investments involved.

The long standing incentive for innovation and in-

vestment in innovation in this country is our patent

system. The original Constitution itself, with the ap-

proval of such farsighted men as Madison and Jeffer-

son, provided for this incentive by the granting of

patents to promote the progress of the useful arts, Arti-

cle I, Section 8, clause 8. :

- The Power and Responsibility to Promote Innovation

Resides Lastly with this Court

The guardian of the Constitutional incentive for in-

novation as it is implemented by the Statutes is the

Supreme Court of the United States. This Court has

held that there is a standard of patentability expressed in

the Constitution, as explained by this Court in Graham

v. John Deere Co., 383 U.S. 1, 6 (1966) as follows:

‘*. . .Innovation, advancement, and things which

add to the sum of useful! knowledge are inherent re-

quisites in a patent system which by constitutional

command musi ‘promote the Progress of . . .useful

Arts.’ This is the standard expressed in the Con-

stitution and it may not be ignored.’’

While the Constitutional standard has most often

been mentioned in recent years when our Courts of Ap-

peals have struck down patents, that Constitutional

standard should apply with equal force to uphold the

validity of worthwhile patents on advances which have

significantly improved industrial machines and pro-

cesses, see United States v. Adams, 383 U.S. 39 (1966).

The Bylund Patents Embody Substantial Innovation

which was Copied by Respondents and

Adopted by the Whole Industry

The truly impressive advances which the inventions

of the present patents in suit brought to the industry ap-

pear in detail in the trial court’s opinion in seventeen

numbered paragraphs as well as in more general terms,

(see pages 27a to 29a). These advances are of the kind

saving energy and materials, which are of critical impor-

tance to our country today.

Specifically, the inventions eliminate the need for

great quantities of heat energy previously used, save

substantial time in carrying out the process, and reduce

the amount of aluminum necessary to make a satisfac-

tory can. Furthermore, these aluminum cans are now

being recycled. Conservation of all of these things is

vital to this nation, now threatened with materia! and

energy shortages.

This case involves an innovation which has not only

been successful and of wide commercial significance, but

one which has supplanted all other competing processes

in the manufacture of aluminum beverage cans. Com-

petition has been enhanced by making aluminum cans

cost competitive with steel cans, and by offering non-

exclusive licenses at a low royalty rate to the entire in-

dustry. The decision of the trial court painstakingly

analyzes the evidence and shows that all of the statutory

requirements for patentability—utility, novelty and

unobviousness have been met. Further, the trial court’s

decision and the evidence on which it is based show that

the Constitutional ‘‘standard’’ of invention has been

met, in that the progress of the useful arts of making

beverage cans has been materially advanced.

The Court of Appeals Failed to Follow Its Appellate

Review Function

We submit that this case was incorrectly decided by

the Court of Appeals through its disregard of Rule

52(a), Federal Rules of Civil Procedure, and through its

misapplication of Section 102 of the patent statutes.

More importantly, we earnestly believe that the decision

of the Court of Appeals is a disavowal and contradic-

tion of Article I, Section 8, Clause 8 of the Constitu-

tion, and of the patent statutes implementing that Con-

stitutional provision, in that it discourages the progress

of the useful arts.

The framers of the Constitution thought it impor-

tant to include a provision for patents in the Constitu-

tion. Their reasoning appears in the Constitutional pro-

vision itself—they intended patents to be an incentive

* Alcan Aluminum Corporation sought, after the trial court’s

decision, and was granted a license by Reynolds.

“to promote the progress of .. .useful arts.’’ The

wisdom of that provision has served our country well

over much of its history but the Constitutional purpose

has become endangered in recent years.

The Courts of Appeal have become increasingly un-

willing to recognize patents as valid, to an alarming

degree. This predisposition to hold patents invalid has

even caused the Courts of Appeal to disregard our

judicial system’s distinction between trial and appellate

courts, and to engage in de novo redetermination of the

facts themselves, in order to find patents invalid.

We submit that this trend on the part of the Courts

of Appeal has weakened the faith of innovators, poten-

tial innovators and investors in the patent rewards for

innovation, and that it has already caused an alarming

decline in innovation in this country in recent years.

Moreover, we submit that this trend encourages

those who wish to manufacture something, to copy

rather than to try to innovate. There is no risk of failure

involved in simply copying the proven advances made by

others and no investment of time and research is

necessary. If called to account for the copying, expen-

sive patent litigation has been an all too easy way out.

Especially in view of the trend in the Courts of Appeal

to retry patent cases by redetermining the facts, appeals

by infringers are encouraged regardless of their merit.

This adds to the burden of cases that must be dealt with

by the courts.

Only the intervention of this Court and the applica-

tion of its powers of supervision can insure that the

Courts of Appeal do apply the proper standards, and

that patents are restored to their Constitutional role of

promoting progress in science and the useful arts.

ARGUMENT

There is an Alarming Decline of Innovation in the

United States

Today, it is well known and a subject ‘of much

comment and great concern that innovation in the

United States is on the decline and has been, during at

least the last decade. This decline has adversely affected

U.S. industry and productivity, and has been noted as

extremely serious by industrial leaders, governmental

agencies, the Congress, and by the President.

For example, a recent newspaper editorial under the

heading ‘‘Invention in America’’ noted:

*‘Although America’s technological leadership

has diminished in the past decade, the effect of the

slippage has been subtle—a competitive advantage

to a Japanese industry here, a German firm there.

U.S. primacy has continued, yet the share of

U.S. patents granted to foreign residents more than

doubled in a recent 15-year period. And the U.S.

patent balance declined almost 47 percent between

1966 and 1975, while Japanese patenting, since

1970, increased more thc « 100 percent in every ma-

jor industrial category. The situation seems to be

worsening.

* * *

American innovation will flourish in a climate

where daring is rewarded, where competition is in-

tense, where risk does not discourage investment in

the future—.’’ (Washington Star, Wednesday

November 7, 1979).

As another example, a recent article entitled

*‘The Breakdown of U.S. Innovation’’ noted:

me dy Innovation creates jobs, boosts productivity,

and contributes to export and a strong, healthy

balance of trade. Above all, innovation generates

economic momentum and helps guarantee American

preeminence in a world where powe: and progress

are often measured in terms of technological

achievement.

+ * *

Yet from boardroom to research lab, there is a

growing sense that something has happened to

American innovation. Some say it is in rapid

decline.

* * *

Morse‘ goes on to warn that new high technology

growth companies are no longer being formed ‘in

sufficient numbers to provide the jobs and technical

products for export which will be needed in the

decades ahead.’ That would mean less economic

growth, fewer jobs, a loss of foreign markets,

greater import competition in domestic markets,

and finally, of course, a potentially devastating rise

in trade deficits.’’ (Business Week, February 16,

1976 at page 56).

Senator Lloyd M. Bentsen, Chairman of the Joint

Economic Committee, recently stated on the subject of

the decline of productivity in the United States:

‘*You see, what’s happening here in this country is

that we’re no longer competitive with the Japanese

and the Germans on many of our products. Let me

give you an example. Of the 22 major modern blast

furnaces in the world, 14 of them are in Japan.

None is in the United States. We just have to put

more modern tools in the hands of our working

people, or we can’t compete.’’ (NBC’s Meet the

Press, March 2, 1980).

‘Richard S. Morse, Senior Lecturer at the Massachusetts In-

stitute of Technology.

J. Peter Grace, Chairman of W.R. Grace & Com-

pany, a $5 billion a year conglomerate which was found-

ed by his grandfather states:

“I’m not optimistic about the U.S. however, until

we solve our problems.

The whole damn American steel business is non-

competitive with many foreign producers. So are

some other industries. They don’t have the incentive

to modernize.

* * *

Great countries are built by people who take

chances and have the incentive to invest in

something unusual.’’ (Time Magazine, February 4,

1980 at page 72).

The Chairman of E.I. duPont Nemours and Com-

pany recently stated:

**. ..To put it simply, the economic health of an

industrialized nation such as ours is bound to the

innovation process.

* * *

. .In the U.S., more than in the Nations with

which we compete technologically, judicial attitudes

and legal procedures cast a cloud over patents. Peo-

ple know that litigation is an all-too-easy way out,

if only they are willing to endure the costs.

* * *

. .. The point I want to make is that the judicial

system reflects an overall climate within our society

that is in many ways hostile to innovation and

technical creativity.’’ (Patent and Trademark In-

stitute of Canada, Vol 5, August 1979).

Culminating a study of several years by the various

departments of the government, the President reported

on October 31, 1979 on the subject of ‘‘Industrial In-

novation Initiatives’’‘

‘‘Other industrial countries, recognizing the im-

portance of innovation, are extending their com-

petitive advantage through industrial policies, pro-

grams. To respond to this challenge to our economy

and the competitive position of U.S. industry, the

review developed policy options intended to foster

the Nation’s entrepreneurial spirit for the decades

ahead.’’ 452 P.T.C.J. at F-1 (1979).

As recently stated by Karyl Luck, Dean of The

Graduate School, Patent Resources _ Institute,

Washington, D.C.:

‘* | .the patent system was essential for the long

historical and almost exponential growth in inven-

tion and innovation, in the United States.

Presidents Washington, Adams and Jefferson, who

were instrumental in the founding of the U.S. pa-

tent system and its practical implementation from

the outset, were not dedicated to the progress of

science and the useful arts as an _ abstract,

philosophical end in itself. Rather, the ultimate

result they sought was the increased productivity

and mercantile development that society derives as a

consequence of invention and innovation. The pa-

tent system, constitutional in foundation and

statutorily enacted in 1790, has provided a major

incentive for individual inventors and large and

small corporation alike, as well as their investors, to

commit the time, money insights and energy needed

to create new means for improving man’s material

condition.’’ Graduate School Bulletin (1980).

It is reasonable to fear that a hurried and unstudied

decision destroying the patent reward for this inventor

Bylund and his company Reynolds, after the patents had

been upheld by the trial judge, following many days of

trial, will tend in the years ahead to discourage rather

than promote progress of the useful arts as intended by

Article I, Section 8, Clause 8 of our Constitution.

United States industry needs very badly to have the

kind of support for inventions which improves produc-

tion machinery. Such support was provided by the

careful analysis of the facts and the opinion of the trial

judge in the instant case.

The Innovation and the Advance in the Art Made by

the Bylund Inventions Was Overwhelming

In the last decade, when the decline in innovation

and productivity in the United States commenced to

become apparent, production in accordance with inven-

tions of the patents in suit was a notable step in the

more traditional American direction. No one has denied

that these inventions were of great importance to the

can making industry.

In addition to changing the conventional method of

aluminum beverage can making by the elimination of all

heat of annealing and stress relieving while rolling the

sheet, and drawing and ironing the can (page 26a), the

inventions resulted in the following events and industrial

advances over the prior art, as specifically found by the

trial court (pages 28a-29a):

1. aluminum D&I [draw and iron] cans were

made competitive with TFS [tin free steel] in

the industry;

2. ‘The draw and iron method swept the industry

free of all other methods;

a H19 temper D&I [draw and iron] sheet swept

the industry free of all other tempers;

4. The draw and iron aluminum can rose from

nothing in the industry to capture over 50 per-

cent of the market by 1976;

Alcoa sales of H19 [extra hard temper] D&l

[draw and iron] stock rose from the 10,000

pounds ordered by Reynolds, which was the

whole of Alcoa’s 1967 sales, to 8 million

pounds in 1970, to 235 million pounds in

1974;

Alcoa’s sales of ‘‘O’’ [soft] temper D&I [draw

and iron] stock fell from 21 million pounds to

less than a million pounds over the period of

1970 to 1974;

National’s business in aluminum cans went

from zero in 1967 to being the leading

manufacturer by 1974;

costly intermediate anneals were eliminated;

only Bylund solved the problem of the struggle

with TFS [tin free steel] in the industry;

only Bylund was able to satisfy the need in the

industry for an aluminum can to compete with

TFS [tin free steel];

all of the industry failed to beat TFS [tin free

steel] with the impact method or with high

strength alloys in ‘‘O’’ [soft] temper;

the weight of the aluminum can was drastical-

ly reduced;

costly intermediate handling of coils and

storage was eliminated;

unexpectedly, tool life was found to be better

with H19 [extra hard] temper than with ‘‘O”’

[soft] temper sheet;

Alcoa heralded use of H19 [extra hard] D&I

[draw and iron] stock as a major achievement;

Alcoa filed and received a patent which em-

phasized that the use of H19 [extra hard]

temper in drawing and ironing without any an-

nner nk patina sane art hema tlnd enone Snr St

tN tea tes = ON

neals or heat treatments was an unobvious in-

vention;*

17. National [defendant, National Can Co.] laud-

ed its can in its advertising as the ‘‘dynamic

new can’’.

The Bylund inventions were truly a substantial and in-

novative contribution to the useful arts.

Alcoa Copied the Bylund Inventions As Soon As It

Heard of Them And Publicly Claimed Credit For

Them

Before the Bylund inventions of the patents in suit,

the entire industry used aluminum sheet in heat softened

tempers in making the drawn and ironed cans (23a).

This sheet had received the customary heat treatments to

soften it. The Alcoa specifications for sheet to be used

for drawn and ironed cans called for the ‘‘O’’ or heat

softened temper (24a), which Alcoa regularly manufac-

tured (33a).

As to the Metal Flo process, Alcoa had known

about it for years (33a). Alcoa had concluded that the

heat in the Metal Flo process was one of its significant

features (RMA 555).

But immediately after Reynolds placed an order

with Alcoa in July of 1967 for 10,000 Ibs. of H19 (extra

hard) sheet, revealing that it was for use in drawing and

ironing cans, Alcoa at once decided to discontinue use

of the ‘‘O”’ (heat softened) sheet in making its cans, and

to copy Reynolds in the use of the H19 (extra hard)

temper metal in drawing and ironing the cans. Mr.

Close, the Chairman of Alcoa, Scomplimented the

* The trial court noted in its opinion (31a) that counsel for Alcoa

disavowed any claim whatsoever at trial that someone at Alcoa in-

vented the claimed subject matter prior to Bylund.

Alcoa technician who performed the copy work with the

words ‘‘Congratulations, I didn’t think you could get

there with the Drawn Iron process’’ (25a). Mr. Close

immediately shut down Alcoa’s operations using the im-

pact method of making aluminum cans, on which it had

spent millions of dollars, and urged its customers to

change to the extra hard sheet and the draw and iron

method without heat. Alcoa regarded the Bylund inven-

tions as a ‘“‘major move’’ in the market, one which

would enable aluminum cans to ‘‘leap-frog’’ into a

preferred position (25a). All of the above was found as

fact by the trial court (25a), and it is not challenged.

This is understandable, for Alcoa’s own full page adver-

tisement in Package Engineering for October, 1968

heralded the Bylund inventions, but while claiming

credit to Alcoa, in the following language (RMA 1):

“In new developmental and experimental work,

Alcoa research and development groups are perfor-

ming operations with H19 temper rigid container

sheet that standard metalworking text and hana-

books say cannot be done. H19 rigid container

sheet is blanked and drawn without intermediate

anneals to form seamless can bodies.”’’

This paragraph, authored by Alcoa, which knew the

prior art, including the Metal Flo process, is but one of

the Alcoa admissions that Bylund made great inventions

that experts said could not be done, and that Alcoa

adopted and was claiming as its own development.

This accomplishment of the inventions was also ad-

mitted by Alcoa’s own expert Nielsen at the trial. As to

his testimony the trial court found (29a):

“‘Mr. Nielsen candidly admitted at trial that the

Bylund invention was something that people skilled

in the art thought could not be done and that such

people would have been impressed.”

a ala stl, Vie en vide

There Is Public Perception of A Trend of Excessive

Hostility to Patents In The Circuit Courts of

Appeal Which Will Be Intensified By The Pre-

sent Decision

Clearly, patents mean nothing by way of an incen-

tive to innovation, unless they are enforceable in the

courts. However, there is a perception by the public that

there is a growing trend of hostility to patents in the

Courts of Appeal. Consider, for example, that for the

five years 1925-1929, of all the patents ruled on by the

Courts of Appeal that only 33.4% were held invalid.* In

contrast, the Patent Office reports that for the five years

1968-1972, 69% of the utility patents ruled on by the

Courts of Appeal were held to be invalid.’ And the

situation is not improving. For the five years 1973-1977,

the invalidity holdings increased to 72%.

During the 1968-1972 period the trial courts only

held 35% of the utility patents they ruled on invalid.

For the five years 1973-1977, the figure for the trial

courts was 48% invalid. Some commentators have sug-

gested that on a statistical basis, it would be expected

that 50% of litigated patents would be held valid and

50% invalid since such figures would generally accord

with disputable matters of all kinds brought to court.’

The figures do at least tend to show that the trial courts

are more in accord with even handed treatment of pa-

tent validity than the Courts of Appeal. There is, in any

event, a public perception of hostility on the part of the

* Federico, ‘‘Adjudicated Patents 1948-1954’, 38 JPOS 233

(April 1956), which also reported on adjudication from 1925-1954.

” BNA Patent, Trademark & Copyright Journal, No. 455, Nov.

22, 1979, page D-1.

* Honorable Howard T. Markey, ‘‘The Status of the U.S.

Patent—System Sans Myth, San Fiction,’? 59 JPOS 164 (March,

1977).

Courts of Appeal, witness the comments by DuPont’s

chairman, supra at page 15.

We submit that decisions like that in the present

case are responsible for this perception of hostility. In

the instant case the Court of Appeals simply substituted

its erroneous views of the facts, unaided by the

testimony before the trial judge, and unaided by the ex-

pertise of the Patent Office or the expertise acquired by

the trial judge during a long trial. The statements by the

Court of Appeals about Metal Flo are contrary to the

views of the very people working in this art, who had

known of Metal Flo, and are contrary to the views of

the Patent Office about the nature of the Metal Flo pro-

cess. We submit that this kind of treatment tends to

discourage innovation and goes contra to the purpose of

Art. I, Sec. 8, clause 8 of our Constitution.

The Failure of the Court of Appeals to Even Men-

tion the Massingill-Grigorenko Patent

3,509,754 Suggests Some Serious Misunderstan-

ding of The Real Issues of This case

Out of the many defenses presented by respondents,

the Court of Appeals picked out just one, the ‘“‘work of

the Metal Flo Corporation’’ and declared petitioners’

Bylund patents to be ‘‘anticipated’’ by this work, i.e.,

the same as the Bylund inventions. However, the Court

of Appeals decision does not even consider the many

and detailed findings of the trial court, including those

very findings which dealt with the best evidence of the

Metal Flo work, the Massingill-Grigorenko Patent

3,509,754 of May 5, 1970 (RMA 484-506).

First, the patentee Grigorenko testified that the

Oe eS eee

per ee

Metal Flo process and that of the Massingill-Grigorenko

patent were one and the same (RMA 1153-1154):

““Q. Okay. The Metal Flo process is disclosed in

your United States patent. Is that correct? As

you know it?

A. That is correct.’’

Second, the trial court found that the Massingill

patent discloses even more than the Metal Flo work and

that it was not an anticipation or the same as Bylund’s

invention (50a).

Among the further findings of the trial court which

dealt with the Metal Flo work, as described in great

detail in its Massingill-Grigorenko patent was the

following (32a):

“This work was also incomplete, experimental

and abandoned. [Gardner Dep. Tr. 123-124]. The

cans were not successful and were never filled and

tested. Mr. Gardner testified that the Metal Flo

process for beer cans was ‘not mechanically or

technically sound, that approach, and the thing just

kind of died a writhing, agonizing death’ [Gardner

Dep. Tr. 125]. Further, the Metal Flo process is in

the Massingill patent and was considered and re-.

jected by the Patent Office [Grigorenko Dep. Tr.

78, 85].

The Massingill-Grigorenko patent which is assigned

on its face to Metal Flo Corp. is not even referred to in

the Court of Appeals’ decision, even though it was part

of the trial court’s consideration and was deemed to be

the best description of the Metal Flo work by the

testimony of those familiar with the subject. The trial

court did consider and make further findings including

consideration of the Massingill-Grigorenko patent as

follows (33a):

_ “‘Massingill is an unconventional drawing opera-

tion involving telescopic punches, heat, vibrations,

uninterrupted continuous movement of metal, and

was rejected by the Patent Office. Everyone re-

Jected it for cans. Alcoa had a copy of the applica-

tion in 1964. It certainly did not teach Alcoa to

stop annealing the coils’ it was supplying to Coors

in 1966 and 1967.”’

The Court of Appeals overlooked the careful con-

sideration and findings of the trial court and the impor-

tant explanation in the Massingill-Grigorenko patent.

Respondents did not present any witness at the trial to

testify about the Metal Flo work. Additionally, Mr.

Bylund, who the trial court found highly credible,

testified that his inventions were significantly different

than Metal Flo (RMA 834-846).

The Massingill-Grigorenko patent was of interest to

all concerned in its relation to the Metal Flo process.

Alcoa was also interested in the patent and the Metal

Flo work at an early date and rejected it for cans. The

trial court noted that it involved heat-annealing in its

finding (41a):

‘“‘A marked up copy of the Massingill patent was

found in Mr. McBride’s files of Alcoa (2392). On

this document (page 2) there appears the notation

‘‘O” temper tensile and yield Strength greater than

H19 value’ [McBride Dep. Tr. 687], contrasting Ex-

ample 4 involving ‘O’ temper and Example 6 in-

volving ‘H19’ temper of Massingill. Thus, it is quite

reasonable to conclude that Massingill does in fact

involve some annealing when the ‘O’ temper pro-

perties exceed those of ‘H19’,’ ”’

” Meaning the coils of cold rolled

formed. ed sheet from which the cans were

Ln NE i hit So ton nk 48 (as

The trial court further noted that the Patent Office

had considered the Massingill-Grigorenko patent with

relation to the Metal Flo process, as follows (42a):

*‘_-The Patent Office did consider the Massingill

patent which is the Metal Flo process. Under such

circumstances, the presumption of validity over

Massingill and the Metal Flo process is enhanc-

ed,—’’.

The Court of Appeals failed to recognize this presump-

tion of validity over the Metal Flo process and the

Massingill-Grigorenko patent.

The trial court found that the Metal Flo process

had never been fully understood and was incomplete

and abandoned to the extent it related to beverage cans

(48a):

“‘The Metal Flo process and cans made thereby are

not an anticipation of the Bylund patents here in

suit because that process has never been fully

understood, was only an incomplete experiment that

was later abandoned to the extent that it related to

beverage can manufacture.”’

The trial court also mentioned that the Massingill-

Grigorenko patent had been considered by the Patent

Office when it was determined that the petitioner’s

Bylund patents were not anticipated, finding that (50a):

**The Massingill patent discloses even more than the

Metal Flo experimental beverage can program,

which was abandoned, and the latter program

would have had no impact whatsoever on the is-

suance of the Bylund patents, since the Massingill

patent was considered by the Patent Office which

determined the Bylund patents were neither an-

ticipated nor rendered obvious thereby.’’

annealing in their drawing and ironing and that the

claims here at issue in the Bylund patents exclude the in-

tervention of such thermal treatments. Thus, the state-

ment by the Court of Appeals that Metal Flo sold

sonobuoys which it had made by drawing and ironing

“‘without annealing or thermal treatment?’ is totally con-

trary to the fact, contrary to what was found by the

trial court, contrary to what was found by the Patent

Office and contrary to what was published and what

was believed by the industry.

The Beverage Can Program of Metal Flo Was Ex-

perimental and Was Abandoned as a Disaster

The Massingill-Grigorenko patent on the Metal Flo

process itself speaks to the possibility of using the Metal

Flo process to make beverage cans, and, in time, Metal

Flo did do some experimental work as to making

beverage cans by the Metal Flo process.

As to the trial court characterizing Metal Flo’s

work concerning beverage cans as ‘incomplete, ex-

perimental and abandoned’’, no characterization was

ever more accurate. The experimental beverage can pro-

gram of Metal Flo was a joint venture with and funded

by Jones & Laughlin Steel (J&L). Mr. Gardner of J&L

testified that Metal Flo’s activities as to beer cans were

an ‘‘abandoned experiment’? (RMA 1115-1118). As for

the experimental beer can R&D program with J&L, both

Grigorenko of Metal Flo and Gardner agreed that all

reports were marked ‘‘Confidential’’ and that they were

“not something for the public’’ (RMA 1155, RMA

1106-1107). Some of the cans were filled with water by

J&L, but Metal Flo did not fill and test any cans (RMA

1156-57).

The last program on experimental cans that Metal

Flo did with J&L was called a failure, ‘‘the whole can

collapsed like an accordion’? (RMA 1158). No one ever

became interested in using the Metal Flo process to

make commercial aluminum can bodies (RMA 1124).

Mr. Gardner testified that the Metal Flo method of

making multiple beverage cans, which is disclosed in the

Massingill and Grigorenko patent, was ‘‘not mechanical-

ly or technically sound, that approach, and the thing

just kind of died a writhing, agonizing death’? (RMA

1120). Mr. Gardner further testified it wasn’t just that it

couldn’t compete, ‘‘No, it was a prototype machine

which was wrong from the start’? (RMA 1120). Mr.

Gardner further testified that Metal Flo had tried to in-

terest Continental Can and National Can in a can

machine (RMA 1102) to no avail. He specifically

testified that J&L ‘‘abandoned”’ the project in order not

to commit ‘‘commercial suicide’? (RMA 1118-1119).

Metal Flo tried to interest various other companies

in using its process for making beverage cans, but they,

like J&L, rejected it. Alcoa concluded that the Metal

Flo process for beverage cans ‘‘doesn’t have a chance’’

(RMA 560). Reynolds had a ‘‘complete lack of interest

in Metal Flo’? (RMA 1362-1363), after the Metal Flo

visit to Reynolds referred to in the Court of Appeals

opinion (4a).

The Metal Flo process for beverage cans was ex-

perimental, never successful and long dead and aban-

doned until it was resurrected by respondents for pur-

poses of this lawsuit. As stated in Reynolds v. Whitin

Mach. Works, 167 F.2d 78, 84 (4th Cir. 1948):

‘*, . .Patents for useful inventions ought not be in-

validated and held for naught because of such ex-

cursions into the boneyard of failures and abandon-

ed experiments.’’

Here, the trial court found specifically that the

Metal Flo process was not an anticipation or the same

as Bylund’s inventions because it was only ‘‘an in-

complete experiment that was later abandoned to the ex-

tent that it related to beverage can manufacture’ (42a,

48a), citing inter alia Coffin v. Ogden, 85 U.S. 120

(1874); United States v. Adams, 383 U.S. 39 (1966); and

Lyon v. Bausch & Lomb Optical Co., 224 F.2d at 534)

(ed Cir. 1955). Metal Flo does Clearly fall into the same

category of prior abandoned efforts that was involved in

Lyon v. Bausch & Lomb, supra. As Judge Learned

Hand observed in that case (224 F.2d at 534):

“‘He did indeed test it out to his Satisfaction; and

when he had done so, he concluded it would not do

what he was after. It did not produce a more

‘rugged’ film and he gave it up. It was in effect an

abandonment; it did more than fail to advance the

art; it put the process among those efforts that are

proved useless. All the reasons that have made the

courts refuse to treat experimental users as anticipa-

tions, apply even more convincingly; it is not alone

that such activities are not evidence of anticipation,

they are evidence against.’’

Not only does the case law preclude holding aban-

doned experiments to be anticipations, the statute itself

excludes such abandoned activities from consideration.

Section 102(g) of 35 U.S.C. expressly provides:

‘‘A person shall be entitled to a patent unless...

* * *

(g). . .before the applicant’s invention thereof the

invention was made in this country by another who

had not abandoned, suppressed or concealed it.’’

Abandoned, unsuccessful experiments add nothing

to the fund of human knowledge and advance the useful

Pe he ee ae ee ite 208 NS

arts not one whit. By statute and case law they cannot,

and by common sense they should not, be held up as

anticipations of complete, successful and enduring ad-

vances in the useful arts.

The Decision of the Court of Appeals is Anomalous

in Stating that Metal Flo was an Anticipation

when the Trial Court, the Patent Office, and

Those in the Industry Disagreed

In stating, as it did, that Metal Flo did not involve

heat or annealing during drawing and ironing, the Court

of Appeals found a fact not only contrary to what the

trial court found, but also contrary to what the Patent

Office found and contrary to what was testified to at

trial. Moreover, the Court of Appeals’ statement is con-

trary to what is shown in documents and depositions of

the technical personnel of the parties here and others in-

vestigating Metal Flo, contrary to what the Metal Flo

Massingill-Grigorenko patent itself says, and contrary to

what one of the inventors of the Metal Flo process

testified. :

Published trade literature disclosed that the Metal

Flo process involved heat on the order of 500°F and was

actually a warm drawing operation (RMA 481-482). The

Massingill-Grigorenko patent itself disclosed the genera-

tion and retention of heat (RMA 492-493). The patent

expressly provided that heat was necessary to the perfor-

mance of the Metal Flo machinery (RMA 496), and Mr.

Grigorenko, one of the inventors of the Metal Flo pro-

cess, so testified (RMA 1143).

Alcoa’s Chief Engineer, Mr. Rieke, studied the

Metal Flo process and the Metal Flo patent in 1964 and

concluded (RMA 555):

‘The heat generated as the material is formed un-

doubtedly has a definite bearing on the ability of

this method to proceed through the series of reduc-

tion.”’

Mr. Gardner, of Jones and Laughlin Steel, testified

about the heat in the Metal Flo process and that there

was a “‘vast difference’? between it and conventional

drawing (RMA 1104). Mr. Held of Jones and Laughlin

Steel wrote (RMA 1109):

**, . .the cans are drawn warm rather than cold, as

in conventional drawing. The exact temperature dif-

ference is unknown, although it certainly exists.’’

Dr. Brick, a scientist at Continental Can, also wrote

that the Metal Flo process involved heat (RMA 1127).

Mr. Bylund, whom the trial court found to be

“‘highly credible’’, testified at trial that it appeared to

him from the disclosures of the Massingill-Grigorenko

Metal Flo patent that heat was Causing a stress relieving

effect in the metal of Example 6 (sonobuoy from 3003

H19) at the high cold work level, so that there was no

work hardening taking place (RMA 835).

The Court Of Appeals Improperly Engaged In A De

Novo Redetermination Of Facts

That the Court of Appeals did engage in a de novo

redetermination of facts in this case is clear from their

decision itself. The decision States at the outset that,

“From our review of the evidence, we are persuaded

that everything by the Bylund patents were fully disclos-

ed in the prior art, particularly the work of the Metal

Flo Corporation’’ (3a).

The Court of Appeals’ decision totally ignored the

trial court’s findings and did so without referring to

them at all. In its treatment of the sole defense it dealt

with, the Court of Appeals simply stated that a com-

Nei eS Sith naa Nia, SAR eis eR a crt a htt dial et “the tame

pany called Metal Flo had sold containers which it had

made ‘‘without annealing or thermal treatment’’, at a

time earlier than petitioner’s invention (page 4a), and

Suggested that the trial court had ‘‘disregarded the

evidence of Metal Flo’s work,’’ (4a).

Simply reading the trail court’s opinion shows that

there was not any ‘‘disregard’’ of Metal Flo’s work. To

the contrary, the decision is replete with consideration

of and findings regarding Metal Flo’s work, the nature

of the Metal Flo process, and the teachings of the

Massingill-Grigorenko patent which covered the Metal

Flo process. The Court of Appeals simply

““disregarded”’ those findings and substituted its own er-

roneous independently derived views, which views are

directly contrary to the whole industry.

Rule 52(a) Of The Federal Rules Of Civil Procedure

Recognizes An Important Distinction Between

Trial And Appellate Courts Which The Seventh

Circuit Has Ignored

The distinction between trial and appellate courts in

our judicial system is basic. Courts of Appeal simply do

not have the time or the opportunities to evaluate

evidence and develop an expertise in the same manner as

trial courts who hear the testimony in a trial of several

weeks. That distinction is recognized and implemented

in Rule 52 of the Federal Rules of Civil Procedure as to

the respect to be accorded findings made by the trier of

fact. The distinctions have also been clearly enunciated

by this Court, see Zenith Radio Corp. v. Hazeltine

Research, Inc., 395 U.S. 100, 123 (1969), wherein this

Court stated:

‘‘In applying the clearly erroneous standards to the

findings of the district court sitting without a jury,

appellate courts must constantly have in mind that

their function is not to decide factual issues de

novo. The authority of an appellate court, when

reviewing the findings of a judge as well as those of

a jury, is circumscribed by the deference it must

give to decisions of the trier of the fact, who is

usually in a superior position to appraise and weigh

the evidence.”’

See also United States v. Yellow Cab Co., 338 U.S. 338

(1949).

In the present case, trial of this action before Judge

Sharp took 15 full trial days. During trial, the live

testimony of ten witnesses was taken. Not only was the

inventor Bylund deposed by respondents for over thirty

days prior to trial, he was cross-examined for almost

three full days at trial. Over 1800 exhibits were received

into evidence. After the trial ended, Judge Sharp held

one full day of oral argument by all parties. By invita-

tion of the court, the parties submitted more than 400

pages of briefs and more than 1000 proposed findings of

fact. Judge Sharp’s decision, we submit, painstakingly

analyzes the evidence and shows the reason for his fii;-

dings and conclusions.

The Court of Appeals did not review the lower

court decision, but has rather proceeded de novo on its

own as if there had not been a trial or Patent Office

proceedings, both of which considered and rejected

Metal Flo. And the Court of Appeals de novo ap-

proach, conducted without benefit of the insight and

knowledge provided by a trial, has resulted in a decision

filled with factual inaccuracies which arrives at a conclu-

sion that can only be described as divorced from reality.

We submit that the purpose of Rule 52(a) is precisely to

prevent such a de novo, inadequate ‘‘new trial’’ as to

the facts.

Disregard By Appellate Courts of Rule 52(a) En-

courages Litigation And Expensive Appeals

Professor Charles Alan Wright'® discussed the ef-

fect of the erosion of Rule 52(a) by appellate courts

quoting with approval the statement in Pendergrass v.

New York Life Ins. Co., 181 F.2d 138 (8th Cir. 1950):

“‘The entire responsibility for deciding doubtful fact

questions in a nonjury case should be, and we think

it is, that of the district court. The existence of any

doubt as to whether the trial court or this Court is

the ultimate trier of fact issues in nonjury cases is,

we think, detrimental to the orderly administration

of justice, impairs the confidence of litigants and

the public in the decisions of the district courts, and

multiplies the number of appeals in such cases.’’

At least some appellate judges today also view with

alarm the increasing tendency of appellate courts to find

the facts for themselves. Judge Aldisert, in Trio Process

Corp. v. L. Goldstein’s Sons, Inc., ____ F.2d ;

204 U.S.P.Q. 881, 888, 889 (3rd Cir. 1980), in a dissen-

ting opinion, stated:

“*, . .instead of sniping at the facts by contriving ar-

tificial legal precepts, we have invaded the district

courtroom and set ourselves up as a rump fact-find-

ing authority. Because there is neither reason nor

empowerment for this action, I dissent.

My colleagues in the majority, I regret to say, have

now tossed the Anglo-American tradition of ap-

pellate review to the. four winds. They claim a new

prerogative as an appellate court that goes beyond

even Professor Wright’s concerns in 1957; they have

simply found the facts that are to their liking.

* * *

'° The Doubtful Omniscience of Appellate Courts, 41 Minnesota

Law Review 751 (1957).

To the extent an appellate court strays from its

traditional role of reviewing the choice, interpreta-

tion, and application of legal precepts, and un-

necessarily intrudes upon the rights and privileges

of the trial courts, there is a corresponding impair-

ment in the confidence of litigants and the public in

the decisions of the trial courts, and a broadcast of

an unwarranted belief that appellate courts are bet-

ter qualified than trial judges to decide what justice

requires. I believe the court’s decision today does

precisely that.”’

We also view with alarm the tendency of appellate

courts to find facts for themselves. We sugest it fre-

quently leads to incorrect, anomalous results, as here,

and is responsible for the public perception of hostility

to patents by the Courts of Appeal. Moreover, it en-

courages appeals by a losing party seeking to gain in the

Court of Appeals a de novo redetermination of the

facts.

The Seventh Circuit’s Application Of 35 U.S.C. 102

Is In Conflict With The Intent Of The Statute

‘And In Conflict With The Other Circuits

The sole stated ground for the Court of Appeals’

reversal of Judge Sharp’s decision was the statement by

the Court that Metal Flo was an ‘“‘anticipation’’ of or

the same as the Bylund patent claims under 35 U.S.C.

102. In so doing, the Court of Appeals improperly ap-

plied Section 102. The Court of Appeals clearly ~

overlooked the trial court’s finding that Metal Flo in-

volved heat and annealing during drawing and ironing

and that the Bylund patent claims are substantially dif-

ferent in that there are no such thermal treatments. Such

differences go to the very substance of the inventions of

the patent claims and, in a proper decision, would im-

mediately preclude application of Section 102 of the Pa-

tent Statutes.

atk rset

ate Se

Section 102 deals with situations where there are no

differences between the prior art and the patent claims,

where there is identity. Section 103 deals by its own

terms with the situation where there are differences.

Thus the introductory portion of Section 103 provides

‘‘A patent may not be obtained though the invention is

not identically disclosed or described as set forth in Sec-

tion 102 of this title. . .”’ The language used by the

Court of Appeals about differences'' that would sug-

gest themselves to one of ordinary skill in the art, states

criteria appropriate to evaluations of nonobviousness of

Section 103, not anticipation under 102. There is a

material difference between 35 U.S.C. 102 and 103 as to

the issues arising under the two sections and the relevant

evidence appropriate to the two sections. Jn re Hughes,

345 F.2d 184 (C.C.P.A. 1965). The tests and inquiries to

be made under Section 103 have been set out in detail,

Graham v. John Deere Co., 383 U.S. 1 (1966), with the

thought that (383 U.S. at 18):

‘‘We believe that strict observance of the re-

quirements laid down here will result in that unifor-

mity and definiteness which Congress called for in

the 1952 Act.”’

Here, the Seventh Circuit did not observe the re-

quirements laid down in Graham. Despite the trial

court’s painstaking and detailed adherence to the

Graham guidance and criteria, the Court of Appeals

does not even mention Section 103 or the Graham case.

Indeed, the Seventh Circuit totally ignores all the

evidence presented below and trial court’s findings

thereon relative to nonobviousness under Section 103.

'' Concentration by the Court of Appeals on dimensional dif-

ferences between the patent claims and Metal Flo illustrate the

Court’s de novo approach. Those dimensional differences are not

relied on or even mentioned in the trial court’s opinion.

This decision of the Seventh Circuit, applying as it

does Section 102 despite differences between the prior

art and the patent claims, is in conflict with the rule in

and decisions of the other circuits. In the Ninth Circuit,

for example, anticipation under Section 102 is correctly

recognized as a technical defense that is not satisfied

unless al! of the same elements are found in a single

prior art reference in exacty the same situation and

united in the same way to perform an identical function.

Jones v. Vefo, Inc., F.2d , 204 U.S.P.Q.

535 (9th Cir. 1979). This rule is consistently applied in

the Ninth Circuit, see Schroeder v. Owens-Corning

Fiberglas Corp., 514 F.2d 901, 904 (9th Cir. 1975),

wherein the court stated:

‘*‘We cannot harmonize the court’s finding, that the

relevant prior art references were not identical to

the composite of the ’459 patent, with its conclu-

sion of law rendering the latter invalid as an-

ticipated. Anticipation is a technical defense which

must meet strict standards.”’

Other circuits (save the Seventh) also apply the

same rule. The rule in the Fourth Circuit, see Canron,

Inc. v. Plasser American Corp., F.2d

203 U.S.P.Q. 641 (4th Cir. 1979) is as follows:

‘*‘We recognize that there is no anticipation unless

all of the same elements are found in the same

situation and united in the same way to perform an

identical function.”’

See also, Tights, Inc. vy. Acme-McCrary Corp., 541

F.2d 1047, 1055-1056 (4th Cir. 1976); Ling-Temco-

Vought, Inc. v. Kollsman Instrument Corp., 372 F.2d

263, (2d Cir. 1967); Shanklin Corp. v. Springfield Photo

Mount Co., 521 F.2d 609, 619 (ist Cir. 1975) Paeco,

Inc. v. Applied Moldings, Inc. 562 F.2d 870 (3rd Cir.

1977).

Anomalous Patent Validity Decisions, With Their

Divorcement from Reality, Destroy The Faith

Of Innovators, Potential Innovators And In-

vestors

If patents are not enforceable in the courts, they are

worthless as any kind of incentive to innovation. If

Courts of Appeal do not or will not properly decide pa-

tent cases under the Constitution, the patent statutes

and judicial precedent, on the facts as developed in a

trial, then no patent, regardless of the merit of the in-

vention, has value.

Dr. Chester Carlson, inventor of xerography, spoke

to the incentive that patents provide when he was

awarded the ‘‘Inventor of the Year’’ award in 1964. He

stated:

‘“‘The time scale of invention is a long one. Results

do not come quickly. Inventive developments have

to be measured in decades rather than years. It

takes patience to stay with an idea through such a

long period. In my case I am sure I would not have

done so if it were not for the hope for eventual

regard through the incentives offered by the Patent

System’’. 47 J.P.O.S. 288 (1965)

In the present case, there is a good bit of irony

which reflects, we suggest, the departure from the Con-

stitutional intent that our patent system is experiencing.

Here, the Bylund inventions succeeded in the Patent Of-

fice and in industry. They swept the industry free of all

other approaches to aluminum beverage can manufac-

ture, saving enormous quantities of energy and

materials.

The magnitude of the Bylund advance in the art

will be understood upon consideration that, as of 1976,

the industry production of aluminum drawn and ironed

cans using the invention of petitioner’s patents in suit

was 20,900,000,000 cans or more than 50,000,000 (fifty

million) cans per day (RMA 268-269). By this time we

estimate that close to 100 billion more have been pro-

duced.

The Court of Appeals struck the patents down

without even a passing consideration of the trial court’s

findings or the evidence on which they were based. The

Court of Appeals simply found the facts that were to

their liking, and we believe a manifest injustice resulted.

We believe such injustices will spread if the Courts of

Appeal do not adhere to the admonitions of the

Supreme Court in respect to Federal Rule 52(a), or

follow the instructions laid down by this Court for pa-

tent cases in the Graham case, 383 U.S. 1, 12-19.

CONCLUSION

The Bylund inventions have succeeded in the Patent

Office and in industry. The Bylund inventions swept the

industry free of all other metal tempers and methods

and were copied by defendants. In spite of their

availability under license, for a very nominal royalty,

they were copied and appropriated by a company

(Alcoa) that had, itself, secured its initial success as the

Pittsburgh Reduction Co. by reason of its own patent

on the early Hall invention on the reduction of

aluminum. Charles C. Carr who was Director of Public

Relations of Alcoa some years ago wrote in his book

ALCOA--An American Enterprise, at page 60 (1952):

‘*Hall is likewise indebted to the American patent

system for protecting his right to his invention.

Under the patent law, the Pittsburgh Reduction

Company, the owner of the patent was given for a

term of seventeen years, the ‘exclusive right to

make, use and vend the invention’. These were im-

portant rights, vital to the young business. The

pioneers would never have ventured their $20,000 of

capital for a pilot plant without the virtual certainty

that the Hall patent, already applied for, would be

issued in due course. The patent was granted, and

the period until it expired gave the Pittsburgh

Reduction Company a good opportunity to develop

the process commercially and become established in

the manufacture of aluminum.’’

Thus, from the Hall invention and the patent which

protected it, came the largest aluminum company in the

whole world—yet now a willful infringer of Bylund’s

patents—who, with National, ‘‘have chosen to follow

the path found by Reynolds rather than another path or

one they themselves forged by their own efforts.’’ (60a).

In this old Alcoa case the hope of protection by the Hall

patent caused the investment of twenty thousand

dollars, and from this came the building of the largest

aluminum company in the world.

In the Graham case (383 U.S. 1) the Supreme Court

instructed the federal courts how to deal with patent

cases. If the sensible, thoughtful procedure there set

forth is not complied with, and if the Court of Appeals

just runs over the patent lightly and gets a subjective im-

pression upon which to base an opinion, then we hardly

need to have a district court, for what it has said after

days of trial, as in this case, seems to have meant

nothing, although the Supreme Court in its instructions

of the Graham case meant that it should mean a whole

lot. If invalidity is the popular answer to most all patent

appeals, the Court of Appeals merely has to get on the

bandwagon and join the parade. But that does not face

the danger that the United States finds itself in today.

We need innovation. We need new production, we need

iii

new tools, we need to save energy and time in order to

catch up with our competitors in the world.

After careful study of this case, we, as counsel,

respectfully suggest that the Court here should consider

what harm is being done to the public and to the nation,

by this kind of treatment from the Court of Appeals, to

an invention of immense importance which has revolu-

tionized the production of aluminum cans, saved energy,

saved aluminum and saved time. We have laws which

were intended to stimulate invention and innovation.

These are the Constitution, the patent laws and a large

body of judicial precedent which, while requiring inven-

tions to meet high standards, did operate to protect im-

portant inventions.

Things went well under these laws for many years,

as patents were fairly upheld and the United States

became the leader in the industrial world. Then we slow-

ed down and it has become easier for competitors to

just copy what the innovator had done and bear the ex-

penses of the lawsuit. As Senator Bentsen pointed out,

we are behind and that we have got to tool up our in-

dustry to even compete. Decisions such as the Court of

Appeals here, encourage copying and imitation of in-

novation, see Levitt, Innovative Imitation, Harv. Bus.

Rev. Sept.-Oct. (1966).

The Bylund inventions taught the industry to do it

better, cheaper, faster, with no heat, less energy, and

less metal. The Bylund inventions succeeded, patents

were granted and they were upheld after an extensive

trial and long consideration by the trial court.

Not only the petitioner, but the public and the

United States in these critical days will be dealt another

10W in its efforts to overcome the decline of production

and innovation in our country, if petitioner’s earned

Constitutional reward is arbitrarily taken from it.

Of Counsel

JOHN F. C. GLENN

REYNOLDS METALS COM-

PANY

6601 West Broad Street

Richmond, Virginia 23262

Attorneys for Reynolds

Metals Company

Respectfully submitted,

REYNOLDS METALS COm-

PANY

Petitioner

JOHN W. MALLEY

WILLIAM T. BULLINGER

SHERMAN QO. PARRETT

CUSHMAN, DARBY &

CUSHMAN

1801 K Street, N.W.

Washington, D.C. 20006

Phone: (202) 861-3000

APPENDIX

IN THE

UNITED STATES COURT OF APPEALS |

FOR THE SEVENTH CIRCUIT |

Nos. 78-1909 and 78-1910

REYNOLDS METALS ComPANY, Plaintiff-Appellee,

ALUMINUM COMPANY OF AMERICA, a corporation, and

NATIONAL CAN CORPORATION, a corporation,

Defendants-Appellants.

Appeals from the United States District Court for the

Northern District of Indiana, South Bend Division.

No. S-CV-74-172—Allen Sharp, Judge.

OPINION

ARGUED JANUARY 16, 1979—DEcIDED NOVEMBER 13, 1979

Before SwyGErT and Bauer, Circuit Judges, and GrRapy,

District Judge.'

Metals Company charged Alcoa and National Can with infr-

ingement of U.S. Patents 3,691,972 and 3,814,590. These

patents—known as the ‘‘Bylund’’ patents—deal with the

manufacture of twelve ounce aluminum cans for beer and

soft drinks. The lower court awarded judgment to Reynolds,

and Alcoa and National Can now appeal.

BAuER, Circuit Judge. In this civil action, the Reynolds

To understand fully the issues presented in this appeal,

we must first define some key concepts in the manufacturing

of aluminum cans. The process of fabricating aluminum sheet

involves the casting of molten aluminum into an ingot, which

is then squeezed between rollers to reduce the thickness of the

metal. This rolling process is repeated as often as is necessary

, ‘The Honorable John F. Grady of the United States District

Court for the Northern District of Illinois is sitting by designation.

_ 3

to achieve the desired thickness, and is commonly referred to

as ‘“‘working’’ the metal. If the rolling of the aluminum is

done at a high temperature, it is known as ‘“‘hot working,”’

and if it is done at room temperature, it is known as ‘‘cold

working.’’ When the gauge of the aluminum is reduced by

‘‘cold working,’’ the strength of the metal increases, and it is

said to be ‘‘work-hardened.’’ The strength of work-hardened

aluminum can be reduced, however, by ‘‘annealing’’—that is,

by heating it to a temperature at or above the recrystallization

temperature.

Alloys of aluminum are generally designated by four

digit numbers which identify the principal alloying elements

and permissible percentage ranges in the alloy. Two common

alloys which were well-known (and commercially available)

for years prior to the patent at issue are ‘‘3003’’ and ‘‘3004.”’

The principal alloying elements in these two types are

manganese (from 1.0 and 1.5%) and iron (up to 0.7%). 3004

also includes magnesium from 0.8 to 1.3%.

The temper of aluminum sheet is conventionally

designated by letters and numbers which follow the alloy

designation. Work-hardened aluminum is identified by the

letter ‘‘H.’’ The first digit following the letter indicates

whether or not the metal has received any heat treatment:

‘*1’? indicates that the metal has been work-hardened only;

‘**2”” indicates that the metal has been work-hardened and

partially annealed; and ‘‘3’’ indicates that the metal has been

work hardened and. fully annealed. The second digit

designates the amount of work-hardening, with ‘‘8’’ represen-

ting ‘‘full hard,’’ ‘‘4’’ representing ‘‘half hard,’’ and so on.

Accordingly, ‘*3004-H18’’ is 3004 alloy which has been cold

worked to full hard condition. It should also be noted that

H-18 temper is defined only by a minimum specified

strength—there is no maximum and thus no range. If the

minimum strength is raised slightly, the temper is known as

H-19, but it is necessary to roll metal through H-18 temper to

reach H-19 temper.

Finally, the actual manufacture of containers from

aluminum sheet involves two processes. The first—so-called

‘‘drawing’’—transforms a. flat sheet of aluminum into a

three-dimensional shape without appreciable change in the

thickness of the aluminum. The _ second—so-called

‘tironing’’—forces the cup through a die in order to form a

deeper container with a thinner sidewall.

The crucial issue in this appeal is whether the Bylund

patents are invalid for lack of novelty under 35 U.S.C. §102.’

In essence, the patents are asserted to cover the manufacture

of beverage cans by drawing and ironing ‘‘highly cold work-

ed’’ aluminum alloys, e.g. 3004-H19. The lower court iden-

tified two significant differences between the patents and the

prior art:

(1) _ the elimination of annealing or stress relieving in

making D&I aluminum cans; and

(2) selecting alloying elements of sufficient ductility

and strength to cold roll and draw iron the

aluminum sheet into a can body without thermal

treatments.

Reynolds Metals Co. v. Aluminum Co. of America, 457

F.Supp. 482, 495 (N.D. Ind. 1978).

From our review of the evidence, however, we are per-

suaded that everything claimed by the Bylund patents were

? 35 U.S.C. §102 provides in pertinent part:

A person shall be entitled to a patent unless—

(a) the invention was known or used by others in this coun-

try, or patented or described in a printed publication in this or

a foreign country, before the invention thereof by the applicant

for patent, or

(b) the invention was patented or described in a printed

publication in this or a foreign country or 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... .’’

EE A RR

fully disclosed in the prior art, particularly the work of the

Metal Flo Corporation. The evidence shows that prior to the

Bylund patent, Metal Flo had drawn and ironed aluminum

cans without annealing from highly cold worked material,

having selected alloying elements with sufficient ductility and

strength to be cold rolled drawn and ironed into a can body

without thermal treatment. In particular, Metal Flo sold

several thousand containers (sonobuoy housings) which it had

manufactured by drawing and ironing 3003-H19 aluminum

alloy without annealing or thermal treatment. In addition,

Metal Flo manufactured and delivered to Reynolds drawn and

iron twelve ounce beer cans made from various Reynolds-

supplied alloys, including 3004 in tempers up to H-18.

The district court disregarded the evidence of Metal Flo’s

work, apparently on the grounds that Metal Flo had never

developed a commercial success in beer cans. The court thus

characterized Metal Flo’s work as ‘‘incomplete, experimental

and abandoned.’’ 457 F.Supp. at 482. The unrebutted

evidence shows, however, that Metal Flo did indeed operate

commercially as to products such as the sonobuoy housings.

And while it is true, as Reynolds argues, that this commercial

use of the process involved products other than beer cans, the

process is nevertheless anticipatory, for the differences are in

dimension only. As this court stated in Popeil Bros., Inc. v.

Shick Electric, Inc., 494 F.2d 162, 165 (7th Cir. 1975):

The issue of anticipation by prior art is not determined

by insubstantial distinctions between a purported inven-

tion and prior art. A purported invention is anticipated

by prior art ‘if the general aspects are the same and the

difference in minor matters is only such as would suggest

itself to one of ordinary skill in the art.’

In our view, the dimensional differences between Metal Flo’s

work and the Bylund patents would indeed suggest themselves

to one of the ordinary skill in the art.

Finally, we note that we find no significance in Metal

Flo’s subsequent financial difficulties, its unconventional or

antiquated equipment, and its inability to achieve a high rate

of production. All of these matters, it seems to us, are im-

material to the patent claims at issue in this case.

We must therefore conclude that the district court rever-

sibly erred in failing to invalidate the Bylund patents for lack

of novelty under 35 U.S.C. §102. The judgment of the

district court is REVERSED.

A true Copy:

Teste:

Clerk of the United States

Court of Appeals for the

Seventh Circuit

United States District Court

Northern District of Indiana

South Bend Division

No. S 74-172

REYNOLDS METALS COMPANY, a Corporation, Plaintiff

ALUMINUM COMPANY OF AMERICA a Corporation, Defendant

and

NATIONAL CAN CORPORATION, a Corporation, Defendant

FINDINGS OF FACT

CONCLUSIONS OF LAW

OPINION

JUDGMENT

This Court has determined to include all of the above

items in this one document in the interest of clearly stating in

one place the factual conclusions and the legal reasons

therefor in this protracted and hotly contested case.

This case was tried to the Court without a jury during

fifteen trial days by most able and experienced counsel. The

Court heard extended oral argument for one full day and has

entertained and carefully considered briefs and proposed fin-

dings and conclusions.

This shall constitute the findings of fact and conclusions

of law as required by Rule 52 of the Federal Rules of Civil

Procedure.

Plaintiff Reynolds Metals Company (hereinafter

‘*Reynolds’’) is a Corporation of the State of Delaware and is

a resident of and has its principal place of business in

Henrico County, Virginia, Henrico County, Richmond,

Virginia, and is the owner and assignee of the United States

Letters Patent No. 3,691,972 entitled ‘‘Aluminous Metal Ar-

ticles and Method’’ which issued on September 19, 1972 in

the name of Linton D. Bylund (hereinafter the ‘972 Bylund

patent) and United States Letters Patent No. 3,814,590 entitl-

ed ‘‘Aluminous Metals Articles and Aluminum Base Alloys’’

which issued on June 4, 1974 in the name of Linton D.

Bylund (hereinafter the ‘590 Bylund patent).

Defendant, Aluminum Company of America (hereinafter

‘*Alcoa’’), is a corporation of the State of Pennsylvania and

has a regular and established place of business at South Bend,

Indiana, within this district.

Defendant, National Can Corporation (hereinafter

‘*National’’), is a corporation of the State of Delaware, and

has a regular and established place of business at LaPorte, In-

diana, also within this district.

This action arises under the patent laws of United States

Title 35, United States Code, and including Sections 271 and

281 et seq.

Jurisdiction is conferred on this Court by Title 28 of

United States Code, Section 1338 and is conceded by counsel

for the parties.'

The acts complained of have been committed, inter alia,

in the Northern District of Indiana and venue is proper under

Title 28, United States Code, Section 1400(b).

The ‘972 Bylund patent relates to aluminum foil and

other articles including drawn and ironed can bodies produc-

ed from aluminum base alloys containing up to 2.5% iron

and which have a low work hardening rate above 75% reduc-

tion and/or which exhibit sufficient ductility at cold work

levels to permit cold working to the extent of at least 90%

without the necessity of annealing or stress relieving [PRM

2066].? The Bylund patent was based on an application Serial

No. 889,790, filed in the United States Patent Office on July

' See Section A. of the Pretrial Order filed on March 29, 1978.

? The designation ‘‘PRM’’ refers to Plaintiff’s Trial Exhibit

numbers.

9, 1970, which application was a division of application Serial

No. 712,314, filed on January 16, 1968, now United States

Patent No. 3,571,910, which application was a division of

Serial No. 660,132 which was a continuation-in-part of a now

abandoned application Serial No. 573,776, filed in the United

States Patent Office on August 8, 1966 and which was in turn

a continuation-in-part of a now abandoned application Serial

No. 379,782, filed in the Patent Office on July 2, 1964.

The ‘590 Bylund patent was based on a United States pa-

tent application, Serial No. 234,780, filed in the United States

Patent Office on March 15, 1972, which is a division of ap-

plication, Serial No. 889,790, filed in the Patent Office on

July 9, 1970, now United States Patent No. 3,691,972, which

was a division of application Serial No. 712,314, filed in the

United States Patent Office on January 16, 1968, now United

States Patent No. 3,571,910, which was a division of United

States patent application Serial No. 660,132, filed in the

United States Patent Office on August 11, 1967, now Patent

No. 3,397,044, which was a continuation-in-part of a now

abandoned United States patent application Serial No.

379,782, filed in the United States Patent Office on July 2,

1964.

Defendants have answered the second amended com-

plaint and have denied all allegations concerning the infringe-

ment of the patents in suit and have also denied the validity

of and enforceability of the patents in suit.

Defendant Alcoa has counterclaimed under the patent

laws for declaratory judgment of non-infringement, invalidity

and non-enforceability, as to each of the patents in suit and

has further alleged that Reynolds’ assertion and utilization of

the patents in suit are violations of the laws of the United

. States and are contrary to the public policy of the United

States. Reynolds has denied these allegations.

Defendant National has counterclaimed under the patent

laws that the patents in suit are invalid, not infringed, and

have been misused and are unenforceable. Defendant Na-

——

tional has also counterclaimed under the antitrust laws alleg-

ing that Reynolds has sought to monopolize trade and com-

merce on drawn and ironed cans and unpatented aluminum

sheet, a stable article of commerce. Reynolds has denied these

allegations.

The chronology of Bylund Inventions and patent applica-

tions filed in the United States Patent Office has been provid-

ed to the court in graphic form. The Court now adopts the

same and incorporates same here as evidenced by the attached

appendix A.

The inventor of the patents in suit, Linton D. Bylund, is

a metallurgist who has been working for Reynolds Metals

since 1946. He testified and was cross-examined for three or

more days at the trial. To the extent that it matters this Court

finds Mr. Bylund to be highly credible. During long and

vigorous cross-examination by most adroit counsel Mr.

Bylund’s credibility remained intact. Between 1946 and 1951,

Bylund worked as a metallurgist for various Reynolds plants;-

and in 1951 was transferred to the Metallurgical Engineering

Division in Richmond, Virginia [Tr. 468-470] This Division is

a small department, never numbering more than five or six

metallurgists, and serves in a corporate staff function.

In 1962, Mr. Bylund was spending the majority of his

time working on metallurgical aspects of light gauge

aluminum foil. The sales people at Reynolds had asked the

Metallurgical Engineering Division to see what could be done

by way of making a stronger ‘‘Reynolds Wrap’’, the

household aluminum foil being made and sold by Reynolds.

Bylund got the idea that an aluminum-iron type alloy might

provide just such a stronger foil, and proceeded to have one

made to try out the idea. [Tr. 475] The particular alloy he

proposed was one called MD79. In experiments with this

MD79 it was found that it did not result in any significant in-

crease in the strength of the foil. However, Bylund noted

10a

something very unusual and very interesting about this MD79

alloy. As it was rolled down to very light foil gauges, it was

found that the MD79 did not work harden normally, and in-

deed had a zero work hardening rate at high cold work levels

around 90% reduction. [Tr. 486]

By April of 1964 Mr. Bylund had discovered that this

unusual behavior of the work hardening characteristics of

MD79 could be exploited so as to result in more economical

foil production. Specifically, he discovered that the MD79

could be rolled down to very thin foil gauge; without resor-

ting to the conventional annealing heat treatments that had

been used previously to periodically soften aluminum as it

was being rolled. A patent application directed to the use of

the MD79 for foil was filed in July, 1964 [PRM 2056]. This

patent application contained drawings illustrating the unusual

zero work hardening rate of the MD79 alloy. As Mr. Bylund

testified, and as is apparent from his subsequent actions, his

work in the foil area instilled in him a keen interest in the

behavior of aluminum alloys at high cold work levels. [Tr.

509-513]

During 1964-1965, Bylund’s department at Reynolds had

also begun to get somewhat involved in the metallurgical pro-

blems that the Reynolds Can Division was having in manufac-

turing drawn and ironed cans. The Can Division was ex-

periencing low efficiencies in that some of the aluminum alloy

sheet received from the Reynolds’ rolling mills ran very well

in the draw and iron presses and some did not. Work was go-

ing forward to isolate and correct the variables in the

aluminum sheet that led to the variable performance. Mr.

Bylund, along with other members of the Metallurgical

Engineering Division, was involved in this work to the extent

of serving as liaison between the Reynolds Can Division and

the rolling mills that were fabricating the aluminum sheet,

and trying to bring in ideas that might help the situation. [Tr.

496-498] The aluminum alloy sheet being used by Reynolds

for draw and iron cans.at that time was 3004 in a temper

known as H320. This temper designation means that the

lla

aluminum sheet was subjected to two furnace heat treat-

ments, an annealing furnace treatment during cold rolling and

a stress relieving furnace treatment after cold rolling, in order

to soften it, i.e., remove the work hardening that occurred

during cold rolling. The material was thus of a low cold work

level as used for drawing and ironing.

In talking to the people in the Can Division in early

1965, Bylund was continually urging that they investigate

work hardening rates at high cold work levels in the draw and

iron process. [Tr. 507-513; PRM 1086] Bylund was thus pro-

posing this in writing to Ed Maeder of Reynolds’ Can Divi-

sion in March of 1965 as a way of helping produce drawn

and ironed cans with lower cost practices if they could get rid

of the heat treatments. Mr. Bylund testified that at that point

in time Mr. Maeder and others in the Reynolds Can Division

just did not seem interested in his concept. [Tr. 507-513]

In September of 1965, Reynolds appointed a new Direc-

tor of Metallurgical Engineering, this being a Mr. John Lar-

son. Mr. Larson came from a production background; in

fact, he came from being plant manager of one of Reynolds’

rolling mills. One of the primary assignments given Mr. Lar-

son by Reynolds’ top management was to do something

about the problems the Can Division was having, so as to im-

prove the general economic outlook of that division.

As regards Reynolds’ can program, Mr. Larson had two

concerns. One was improving the fabricating practices used to

make the sheet from which the cans were drawn and ironed.

so as to have more consistent and better qualities for the

severe draw and iron operation. Secondly, Mr. Larson being

a production man, and having a production man’s concern

with making a product and selling it at a profit, he was con-

cerned about the basic economics of the can Reynolds was

making and selling.

Reynolds did have on-going programs at that time aimed

at a lighter weight can using very highly alloyed aluminum

sheet. Such sheet gets its strength through alloying. It still was

12a

the practice to give such sheet the heat treatment prior to the

draw and iron operation. These high strength alloys were

primarily programs of the Reynolds Research Division,

known as MRD, which stands for Metallurgical Research

Division.

While the entire Metallurgical Engineering Division under

Mr. Larson’s guidance was looking at and trying to help solve

some of the problems of variability in the sheet material thai

was being used by Reynolds for drawing and ironing, Mr.

Larson specifically assigned one of his own men, Mr. Bylund,

to spend the major portion of his time looking into the whole

draw and iron process and seeing what could be done about

the economics. Mr. Larson secured the Can Division’s ap-

proval for Mr. Bylund to have access to the draw and iron

press at the Can Development Center (CDC).

Mr. Bylund’s keen interest in .he concept of using highly

cold worked materials, which stemmed from his work in con-

nection with rolling foil, prompted him to take some sheets

of the MD79 foil alloy that he had evolved, and which had

been fabricated without any of the conventionally mandated

special furnace heat treatments to soften it, and to try draw-

ing and ironing a can out of this highly cold worked material.

[Tr. 517] To his surprise, this aluminum alloy sheet that had

not received any of the special softening heat treatments

formed into a very good looking can on a conventional draw

and iron press of the type that Reynolds was using in its can

plants. [Tr. 519-520].

This was highly significant—and Bylund knew it. He

knew that this foil alloy did not have enough alloying

elements in it, such as manganese, magnesium, etc., to make

a draw and iron can of suitable commercial strength, even in

its highly cold worked condition. He was astute enough,

however, to realize that something surprising and very signifi-

cant had occurred. He realized that ‘‘the door was open’’ to

the possibility of using a_higher—alloyedaluminum sheet

without giving the aluminum sheet the traditionally required

13a

heating or softening treatments in the furnace prior to making

a drawn and ironed can therefrom. [Tr. 520]. His concept

was that aluminum alloy sheet which had a low work harden-

ing rate could be rolled without any of the traditional in-

tervening heat treatments during or following cold rolling to

soften it and would still withstand the severe drawing and

ironing in a conventional draw and iron press without any

thermal treatments. The potential savings were truly enor-

mous.

The first thing Mr. Bylund had to do was find out which

types of aluminum alloys in a highly cold worked temper

would act this way. Therefore, with Mr. Larson’s blessing, he

embarked on a program to develop this concept to a full

commercial reality. Bylund’s initial approach in this develop-

ment work was to use aluminum alloys in highly cold worked

condition for drawing and ironing into cans, with the

aluminum alloys being selected on the basis of their known

ability to be rolled down in cold rolling mills to over 90%

cold worked condition for drawing and ironing into cans,

with the aluminum alloys being selected on the basis of their

known ability to be rolled down in cold rolling mills to over

90% cold working reduction without splitting or tearing

apart. [PRM 2090; Tr. 521-523]. Thus in addition to the

specially evolved foil alloy (known as MD79) from which the

first drawn and ironed cans were made from highly cold

worked material, Mr. Bylund’s initial work, as shown in his

report dated February 1, 1966, comprehended making cans

from an alloy registered with the Aluminum Association

under the number 1235, as well as a series of stronger

registered alloys, such as 3003, 3005, and 3004. [PRM 2090].

In August of 1966, a second patent application was filed

in Mr. Bylund’s name, which was a continuation-in-part of

the earlier 1964 application on MD79 foil. [PRM 2057]. It

repeated the earlier disclosure and drawings of MD79 foil,

and added new disclosure on a wider range of iron content

for MD79 and that highly cold worked MD79 that had not

received any of the conventional thermal softening treatments

14a

could be drawn and ironed into cans, also without any in-

tervening thermal treatments.

Meanwhile, Mr. Bylund’s further work on his concept of

using highly cold worked aluminum alloy sheet for drawing

and ironing without any thermal treatments was going for-

ward toward a commercial reality. During 1966 and 1967 this

work entailed not only working with the iron-containing com-

mon aluminum alloys such as 3003, 3005 and 3004 that are

registered with the Aluminum Association, but also creating

and modifyirg alloys, all in an effort to find the best com-

mercial form for utilization of the concept. One of the areas

that Bylund was pursuing as far as creating new alloys was

adding manganese and magnesium to an MD79 type alloy to

strengthen it. Various versions of such an alloy, which was

called MD112, were experimented with throughout 1966 and

1967 in addition to the common, registered alloys.

In May of 1966 and again in December of 1966, Mr.

Bylund issued additional progress statements on his investiga-

tions of drawing and ironing cans from a variety of alloys in

the highly cold worked H19 temper, some being high in iron,

i.e, MD112, and others being registered alloys having

somewhat lower iron limits, i.e., 3003, 3005, 1100. [PRM

2108, 2132].

At this time Mr. Bylund was still primarily interested in

using a high iron content alloy in an H19 temper for draw

and iron can stock. One reason for his preferring iron is that

it is intrinsically a cheaper alloying element than is manganese

or magnesium. Additionally, a high-iron content alloy would

be beneficial from the standpoint of recycling aluminum. [Tr.

1346-1348]. In recycling aluminum, the recycled aluminum in-

evitably ends up containing a higher percentage of iron than

it did before it was recycled. This is due to the unavoidable

inclusion of some iron impurities in aluminum products

gathered for recycling. If the aluminum was used for i.e. can

stock in a high iron content alioy it will be more tolerant of

the use of this recycled aluminum.

15a

In keeping with the preference for a high-iron alloy, it

was decided to try a production evaluation of the MD112

high iron alloy for drawing and ironing can bodies.

Bylund prevailed upon the Can Division of Reynolds to

allow a commercial production evaluation run of drawn and

ironed cans at Reynolds’ White Bear Lake plant made from

sheet in accordance with Bylund’s work. The sheet had not

received any anneals, stress reliefs or any other softening heat

treatments. This commercial production evaluation run was

carried out in February of 1967 and in excess of 130,000 can

bodies were drawn and ironed from this material on commer-

cial equipment, operating at commercial speeds. [PRM 2145].

These over 130,000 can bodies were later filled with Hamm’s

beer and performed satisfactorily. [PRM 2146]. At this point

in time it was clear that Mr. Bylund’s concept of utilizing

aluminum alloy sheet that had not received any of the soften-

ing heat treatments during or after cold rolling was not only

technically feasible from the standpoint of being able to do it

in a laboratory but was also commercially feasible from the

standpoint of running smoothly on conventional existing

equipment at commercial speeds and efficiencies.

Mr. Bylund’s experiments with drawing and ironing a

variety of alloys in H19 temper were meanwhile continuing. It

should be recalled that Bylund’s February 1, 1966 report had

suggested that future work include an evaluation of drawing

and ironing can bodies from 3004-H19. On April 13, 1967,

Mr. Bylund did successfully draw and iron cans from

3004-H19. Mr. Bylund had enough 3004-H19 to make 24 cans

and cups, and some of the drawn and ironed can bodies were

subjected to buckling tests. [PRM 2160]. The test results were

very encouraging because they showed that the can bodies

made from 2004-H19 were able to stand an internal pressure

on the order of 130psi, as opposed to around 90psi for

MD112-H19 or 3004-H320. This implies the possibility of be-

ing able to form drawn and ironed cans from 3004-H19 in a

thinner gauge than had been previously utilized, which

portended great economic savings in the form of being able

to make a lighter draw and iron can.

l6a

In April of 1967, Mr. Bylund again discussed the pro-

_gram of alloy investigation for potential D and I base stocks

with Mr. Larson of Reynolds Metals’ Metallurgical Engineer-

ing Department and with Mr. Gidley, the Can Division

metallurgist. They jointly agreed on the direction the program

should take, as reflected in a report prepared by Mr. Gidley

on April 19, 1967. [PRM 2160]. That report recommended

that Reynolds Metals:

‘‘1) Continue the MD-112 evaluations as originally

planned, but accept this alloy as the lower limit.

2) Initiate a program to further evaluate 3004 in the

H-19 temper. Determine whether or not this alloy

represents the upper limit.

3) Select an intermediate alloy and evaluate its

capabilities.”’

During the week of August 3-11, 1967, Reynolds Metals

evaluated at its Equipment Center the various alloys under

consideration for D and I stock, which included MD112-H19

and 3004-H19. The results of this evaluation are contained in

a report written by Mr. Gidley on September 7, 1967 [PRM

2179]. Over 100,000 3004-H19 cans were made during this

period and were later filled and seamed by bottlers.

By the end August, 1967, Mr. Bylund’s MD112 type

alloy and the 3004 type alloy were the only two alloy systems

that were under active consideration by Reynolds’ Can Divi-

sion for commercial application of Mr. Bylund’s concept.

When aluminum sheet made in accordance with these alloy

systems is drawn and iron into can bodies with the aluminum

sheet not having received any anneals or thermal treatments

so that it remains in a highly cold worked condition, drawn

and ironed cans made from each of these alloy types perform

satisfactorily. Both alloys contain enough alloying elements to

provide adequate strength and both have enough iron to pro-

vide a die polishing effect on the draw and iron tooling.

Cans made from the MD112 type alloy systems are a lit-

tle bit cheaper in that the basic alloy itself is a little bit

17a

cheaper than 3004. On the other hand, cans made from the

3004 type alloy system provide a little more strength in the

finished can than those made from MDi12. [PRM 2197]. The

Can Division of Reynolds opted in 1968 to produce cans

commercially from a 3004 type alloy system in highly cold

worked condition and to discontinue considering MD112 for

commercial draw and iron considerations. A 3004 type H19

alloy is still used today by Reynolds.

In the midst of the first large scale production evalua-

tions of 3004-H19 (and the third for the MD112-H19) that

were taking place during early August, 1967, the third Bylund

patent application was filed. This was application Serial No.

660,132 filed on August 11, 1967, which was filed as a

continuation-in-part of the earlier second application which

had been filed in August of 1966. This third application

repeated the drawings and disclosure of the earlier applica-

tions relating to the unusual work hardening rate of the

MD79 Aluminum-Iron alloy in foil applications, and also to

the use of the MD79 alloy in highly cold worked conditions,

for forming drawn and ironed can bodies without any anneals

or thermal treatments. In addition, this third patent applica-

tion contained a broad, additional disclosure and claims

relating to the basic concept of Bylund of cold rolling any of

a variety of aluminum alloys into sheet and then drawing and

ironing the sheet into a can body with the cold rolling and

drawing and ironing operations being performed without the ©

intervention of a thermal treatment. Thus, the application

provided [PRM 2058, page 15] that:

‘In accordance with the invention, and in keeping with

the foregoing considerations, it has been found that

aluminous metal of various types may be subjected to a

fabricating operation which involves the steps of:

(a) hot rolling the metal to a hot line gage suitable for

single or multi-stand cold rolling, such as between about

0.100’’ and about 0.250’’;

(b) rolling the metal from hot line gage in one or more

cold rolling passes into coilable sheet stock of a thickness

on the order of 10-20% of the hot line gage;

18a

such as by drawing and ironing to effect a further reduc-

tion of about 65% (the total cold working reduction

from hot line gage being in excess of 90%);

(d) performing the cold rolling and forming operations

without the use of a thermal treatment at any thickness

of the metal below about 0.100’’, the metal being work-

hardened in the course of such operations and still re-

taining sufficient ductility for finishing steps such as

necking or flanging of can bodies.’’

Claims were also presented in this application to a method in-

volving the above steps without any alloy limitations other

than that they have a low work hardening rate in the region

above 75% reduction and sufficient ductility at high cold

work levels to permit cold working to the extent of at least

90% without the necessity of annealing or stress relieving the

metal. These were presented as original Claims 30-39 [PRM

2058, pp. 28-31]. These claims are the ones that ultimately

issued as Claims 1-10 of the ‘972 patent in suit with some

minor amendments by way of thickness limitations and speci-

fying forming a hollow article.

The 660,132 application also contained additional specific

disclosure of and claims to the new MD112 type of alloy,

containing not only iron but manganese and magnesium as

well. Thus the specification provided [PRM 2058, p. 16]:

‘It has also been discovered that the beneficial effects of

relatively high iron content in the essentially binary

aluminum—iron alloys previously mentioned, particularly

in reducing the work hardening rate, are applicable with

respect to alloys containing additional alloying elements

such as magnesium, manganese, or both.

* * *

In accordance with this alloy aspect of the present inven-

tion, typical alloy systems are... ”’

In addition, specific examples 11-17 were contained in the

third patent application, these being examples of different

MD112 type alloys of varying percentages of iron, magnesium

19a

and manganese. These MD112 type alloys were specifically

claimed in original claims 22-28, with the limits of their alloy-

ing constituents being there delineated.

The 660,132 application as filed contained claims directed

to:

(1) Aluminum foil made from the various high iron

content alloys [Claims 1-4]

(2) A wrought aluminum article made from the

various high iron content alloys [Claims 5-12];

(3) A method of making wrought aluminous metal ar-

ticles from the highly cold worked high iron con-

tent alloys without any annealing or thermal

treatments [Claims 13-21; Claim 20 specifically

relates to drawing and ironing can bodies]

(4) The novel high iron content alloys themselves

{Claims 22-28]

(5) A drawn and ironed can body made from a highly

cold worked aluminum alloy including iron

[without specifying a percentage] as an alloying

element [Claim 29]

(6) The method of making articles from any

aluminum alloy including cold rolling the

aluminum to a greater then 75% reduction and

then conducting a forming operation including im-

parting additional cold working to the extent of at

least 90%, all without any thermal treatments.

[Claims 30-39; Claims 34-39 related specifically to

drawing and ironing can bodies from highly cold

worked aluminum sheet.]

When ite Patent Officer Examiner considered the ap-

plication Serial No. 660,132, he determined that there was

more than one separate and distinct invention being claimed,

and accordingly, as provided by Patent Office practice, he

issued a requirement for restriction between Group I claims

pertaining to wrought articles and alloys [Claims 1-12 and

22-29] and Group II claims pertaining to a method of making

wrought articles [Claims 13-21 and 30-39].

20a

As a result of the restriction requirement Claims 13-21

and 30-39 [the method claims] were cancelled from this ap-

plication and were refiled in the dividional application Serial

No. 712,314 on January 16, 1968 [PRM 2059]. The remaining

claims in application Serial No. 660,132 were meanwhile

allowed and issued in Patent No. 3,397,044 on August 13,

1968.

The divisional application Serial No. 712,314 thus con-

tained all method claims, with the claims falling roughly into

two groups. One group of claims (13-21) are directed to alloy-

ing aluminum including adding iron within a specified percen-

tage rcnge and cold rolling, with some of this group of claims

specifying drawing and ironing. The other major group of

claims (30-39) were not restricted to any particular kinds of

alloys but rather related broadly to a method involving cold

rolling aluminum sheet to specified reductions [with no an-

nealing] and drawing and ironing can bodies therefrom. This

application also was made subject to a requirement for

restriction by the Patent Office. The broad method claims not

restricted to any particular alloy were cancelled from this ap-

plication and refiled in a further divisional application Serial

No. 889,790 on July 9, 1970. The remaining claims in Serial

No. 712,314, which pertained to specific high iron alloys,

were allowed and issued as Patent No. 3,571,910 on March

23, 1971.

The divisional application Serial No. 889,790 [PRM

2060] was filed on July 9, 1970 with the non-elected method

claims of the earlier application [along with five other new

method claims' directed to the same invention]. A _pre-

examination amendment filed May 10, 1971 [PRM 2060, page

34] added seven article claims directed to a drawn and ironed

can body made from an aluminum alloy containing

0.75-2.5% iron. Again, there was a further requirement bet-

ween the broad method claims, unrestricted to any particular

> These claims issued as Claims 11-15 of the ’972 patent and do

not contain any alloy limitations.

2la

alloy, and the article claims directed to drawn and ironed can

bodies made from the particular novel alloys containing

.75-2.5% iron. The Examiner full well appreciated that the

broad method claims were not restricted to any of the par-

ticular novel high iron containing alloys which had been

disclosed and claimed. In his requirement for restriction

[PRM 2060, page 44] the Examiner noted that:

‘‘The method of fabricating recited in the Claims 1-15

could be used in making can bodies having a different

composition than that claimed in Group Ii. For example

the metal might contain 4% iron.”’

Thus, the Examiner was fully aware that the broad method

claims were not restricted to using any of the specifically

disclosed novel high iron content alloys.

In response to the requirement for restriction in applica-

tion Serial No. 889,790 [PRM 2060], the article claims

directed to a drawn and ironed can body made from an

aluminum alloy were cancelled from this application and refil-

ed in a further divisional application Serial No. 234,780 on

March 15, 1972 [PRM 2061]. The broad method claims in

Serial No. 889,790 were allowed and issued in Patent

3,691,972 on September 19, 1972. This is one of the patents

in suit in this litigation.

The claims in the further divisional application Serial No.

234,780 to a drawn and ironed can body made from an

aluminum alloy having particular alloying elements and being

cold worked to specified degrees, were amended on August

22, 1973. Whereas the previous claims had specified the

aluminum alloys of the drawn and ironed can body as having

0.75-2.5% iron and had characterized the alloy as exhibiting

sufficient ductility to permit cold working to the extent of at

least 90% without the necessity of annealing or stress reliev-

ing, the amended claims positively recited the wall of the

drawn and ironed can body as being cold worked to the ex-

tent of at least 90% and characterized the aluminous alloy as

containing ‘‘up to 2.5% iron in an amount sufficient to pre-

22a

vent die pick-up from interfering with the drawing and iron-

ing operations.’’ The language ‘‘up to 2.5% iron’’ was not

any new matter. That language appears in the Abstract of the

Disclosure of the Application Serial No. 660,132 [PRM 2058,

p.1], which was filed on August 11, 1967.

These amended claims were presented as claims of the

type that issued as Claim 26 of Patent No. 3,397,044 [PRM

2058], issued August 13, 1968. That Claim 26 simply specifies

the presence of iron as an alloying element, without specify-

ing any particular percentages. Thus, Claim 26 in the 1968

‘044 is broader than the claims presented in the August 22,

1973 amendment and which issued as Claims 1-6 of the ‘590

patent. This was pointed out to the Patent Office [PRM

2061, p. 30]. Method claims were also presented claiming the

method of making the articles. With respect to the method

claims (which issue as Claims 7-13 of ‘590 patent) Bylund’s

attorney explained as follows: [PRM 2061, p. 40-41}:

‘‘Thus, for example, the claims of 3,691,972 have no

alloy limitations; and the claims of 3,571,910 are directed

to methods involving essentially binary Al-Fe alloys (see

claims 8 and 9 of that patent as to can making aspects).

With respect to alloy aspects of the present invention,

claims [1-13] are intended to be broad enough to cover

making drawn and ironed can bodies from work harden-

ed sheet of various standard aluminum base alloys in-

cluding 3004, an alloy which has been widely used for

cans, but previously either not for drawing and ironing,

i.e. only for making seamed containers, or for drawing

and ironing either in 0-temper or intermediate tempers of

the type normally obtained by stress relieving the cold

rolled sheet’’.

Because of the similarity, and to obviate a rejection on the

basis of double patenting, a terminal disclaimer was entered

in this application, disclaiming that portion of the term of the

patent to issue which would have extended beyond the expira-

tion date of Patent No. 3,397,044. This patent is also one of

the patents in suit in this litigation.

23a

In this trial evidence of ex parte tests which were made

during its course was offered and admitted. Notwithstanding

their receipt into evidence this Court takes a very dim view of

same and does not here deem them as helpful or relevant.

This view is apparently shared by others. See Illinois Tool

Works, Inc. v. Foster Grant Co., 547 F.2d 1300 (7th Cir.

1976), and Popeil Brothers v. Schick Electric, Inc., 356 F.

Supp. 240 (N.D. Ill. 1972).

Under Graham v. John Deere Co., 383 U.S. 1,17,15

L.Ed. 2d 545, 556 (1966), the following basic factual inquiries

are to be resolved:

1. Scope and Content of Prior Art

The articles, patents and trade literature published at the

time the inventions here were made all suggested going soft in

conventional drawing and ironing. Additionally the activities

of those in the trade all supported going to soft tempers.

Alcoa activity published its claim to being the first to draw

and iron H19 temper sheet without an intermediate anneal

prior to this lawsuit.

2. Level of Ordinary Skill

Since the ‘‘level of ordinary skill’’ in a particular art has

not usually been defined in writing, the usual way of deter-

mining such level is by referring to the subjective reaction of

a person thoroughly familiar with the particular art and, if

possible, one who practiced the art at the crucial time in

question, Malsbary Mfg. Co. v. Ald. Inc., 447 F.2d 809, 17!

U.S.P.Q. 7 (7th Cir. 1971).

The persons of ordinary skill in drawing and ironing

aluminum alloy sheet for beer and beverage cans at the time

the Bylund inventions were made included persons from

Reynolds, Alcoa and National, as well as from Kaiser, CCC,

American Can Co., and Coors. Their background included

24a

people actually making D&I aluminum cans; those in packag-

ing development; and those in related managerial roles. There

were also several people who possessed more than ordinary

skill in the art as they held patents relating to the field. These

would include Mr. Maeder and Mr. Sandor for Reynolds;

and Mr. Close, Mr. O’Brien, Mr. Lake, Mr. Dunn, Dr.

Anderson, and Mr. McBride for Alcoa.

Mr. Larson testified that the Reynolds’ Can Division

wanted softer alloys. Mr. Larson thought that flange anneal-

ing would allow high strength alloys in soft tempers to be us-

ed. He realized after learning of the Bylund inventions that

the way to go was to use all of the strength from cold roll-

ing—which was free—and then add just enough alloying

elements for strength, without adding too much so that a can

could not be formed. Mr. Maeder believed that H32 was the

highest temper that the D&I process could tolerate. He was a

patentee and a person of more than ordinary skill in the art.

So was Mr. Sandor, who suggested using certain high strength

alloys and stress relieving them. Mr. Gidley, Mr.

Householder, Mr. Shockley, and Mr. Burleson all went along

with H32 temper. All testified to the effect that they were

surprised when they learned from Bylund that H19 tempers

could be used.

At Alcoa, the plan was to use high strength alloys (PRM

2527) in ‘‘O”? tempers (PRM 2533). When this decision was

made Dr. Anderson, Mr. Blake, Mr. Schaffer and Mr.

Wolff, among others, participated in, and Mr. O’Brien and

Mr. Lake were informed of, the alloy selections. None of

these persons suggested using H19 tempers. Mr. Lake, also a

patentee, on May 12, 1967, had in fact informed CCC that

the present specification for D&I cans was 3004-0 and that

higher strength magnesium alloys were expected to be more

attractive (PRM 2674), which would be 5056 and 5082 in ‘‘0”’

temper (PRM 2533). Dr. Anderson, Mr. O’Brien, and Mr.

Lake all hold United States patents and are persons of more

than ordinary skill in the art. The program went forward with

the high strength ‘‘0’’ temper alloys (PRM 2533). Mr. Wolff,

= Si a te &

25a

was by June 27, 1967, to do the first phase of the project and

make cups from the ‘‘0’’ temper alloys selected (PRM 2547).

His work order is dated July 7, 1967 (PRM 2630). Actually,

Alcoa was heavily into impacting as the best way to go (PRM

3187).

It was after Reynolds’ order from Alcoa of 10,000

pounds of 3004-H19 for D and I in July of 1967, that Mr.

O’Brien had the first sample prototype cans made at Alcoa

from 3004-H19 (albeit with the aid of a torch). The record

shows what the reaction was of the people of ordinary (and

extraordinary) skills in the art of Alcoa.

Mr. Close, an inventor himself of aluminum can (PRM

2624), reported to Mr. O’Brien ‘‘Congratulations, I didn’t

think you could get there with the Drawn Iron process’’

(O’Brien Dep. Tr. 162). Mr. Close immediately shut down

Alcoa’s impact operations (PRM 2555) upon which Alcoa

had spent millions of dollars (O’Brien Dep. Tr. 144). Mr.

Dunn of Alcoa later claimed as an integral and important

part of an invention of his in a patent application first filed

in September of 1969 the use of H19 temper without heat

treatments during drawing and ironing, and received patents

(see PRM 2063 and 2064). Indeed, in prosecuting these Dunn

patents the Patent Office was told that the prior art taught

away from using H19 without heat treatments for drawing

and ironing (PRM 2063 amendment of February 2, 1973).

Mr. Sands, who confirmed the Reynolds Order for 3004-H19

D&I can stock (PRM 2831), regarded the use of H19 temper

for D&I as a ‘‘major move’’ (PRM 2559 & 2560), one which

enabled aluminum cans to leap-frog into a preferred position

(Sands Dep. Tr. 85). Mr. O’Brien hailed it as the ‘‘first ‘ma-

jor step’’’, and recommended that Alcoa ‘‘immediately ac-

celerate’’ the Alcoa development program (PRM 2550).

It is interesting to note that by August 10, 1967, even

before Alcoa had made any of its prototype 3004-H19 cans,

that Alcoa was pushing Coors to try H19 (PRM 2180). By

August 25, 1967, Mr. Sands advised Mr. O’Brien in connec-

26a

tion with O’Brien’s August 17, 1967 letter reporting that pro-

totype 3004-H19 cans had been made to “‘strike while the

iron is hot’? and produce 20,000 cans (PRM 2554), and by

September 13, 1967, Mr. Sands needed two Alcoa cans filled

with beer to ‘‘tip’? CCC and American Can Co. (PRM 2555).

As seen from the above, those persons having a level of

ordinary or above ordinary skill all had knowledge of

aluminum drawn and ironed cans and included metallurgists

(e.g., Gidley, Larson, Sandor, Householder, McBride &

Peak), tooling and machinery persons (e.g., Maeder, Gidley,

Dunn and unnamed persons at Coors and Kaiser), scientists

(e.g., Dr. Anderson, Dr. Dedrick), aluminum sheet mill peo-

ple (e.g., Larson, Nielsen) and aluminum packaging people

(e.g., Sands, O’Brien, Lake, Gidley, Maeder). But only Mr.

Bylund discovered that a D&I can could be made without in-

termediate anneals.

3. Differences Between The Prior Art and The Claims in

Issue

There exists two principal and substantial differences bet-

ween Mr. Bylund’s inventions and the prior art:

(1) The elimination of annealing or stress relieving in

the process of making drawn and_ ironed

aluminum cans from the beginning of cold rolling

through the ironing operation; and;

(2) The making of aluminum alloy sheet by selecting

the amount of alloy elements to achieve sufficient

ductility and strength to be able to cold roll and

draw and iron same into a can body without ther-

mal treatments.

The claims of the 3,691,972 patent (PRM 2066) are all con-

cerned with the method of making can bodies (Claims 1-15)

and the claims of the 3,814,590 patent (PRM 2067) here in

issue, are all concernéd with can bodies (Claims 1, 2, 5 & 6)

and the methods of making the can bodies (Claims 7-13). The

differences recited above are defined in these claims and are

27a

disclosed the specification in columns 7 and 8 of the

3,691,972 patent (PRM 2066), and in columns 6, 7 and 8 of

the 3,814,590 patent (PRM 2067).

4. The Nonobviousness of the Subject Matter As A

Whole At The Time The Inventions Were Made

Because of The Differences Between The Prior Art

and The Subject Matter

The inventions in issue are nonobvious because Mr.

Bylund went opposite to the direction the art was going at

that time in two significant respects:

(1) The art was going to high strength alloys in ‘‘O”’

temper to gain strength, whereas Bylund was going

to H19 temper sheet;

(2) The art was going to higher alloy content to

achieve strength, whereas Bylund was going to

temper to achieve strength with alloying ~ontent

being whatever was necessary to make a satisfac-

tory can.

History shows that the Bylund approach was correct and

the prior art approach was not. The conclusion of nonob-

viousness is buttressed by the evidence relative to the secon-

dary tests to be considered as set forth in Graham v. John

Deere Co., 383 U.S. 1, and repeated in Trio Process Corp. v.

L. Goldstein Sons, Inc., 461 F.2d 66 (3rd Cir. 1972), cert.

den. 409 U.S. 997 (1972). These tests include the commercial

success of the aluminum industry with draw and iron cans

utilizing highly cold worked aluminum sheet without anneals

or heat treatments, filling the long-felt and acutely-felt need

of making a light weight aluminum can to compete with TFS

cans, and the failure of others to develop the invention or

solve the problem, although they had all the incentives in the

world to do so. There is also the copying of the Bylund in-

vention, coupled with defendants’ public praise of and claim-

ing credit for the invention, and Alcoa’s filing of a patent ap-

28a

plication claiming what Bylund had done as an integral and

unobvious part of an Alcoa invention.

The list of advantages and secondary considerations of

the Bylund inventions over the prior art includes:

(1) Aluminum D&I cans were made competitive with

TFS in the industry;

(2) The draw and iron method swept the industry free

of all other methods;

(3) H19 temper D&I sheet swept the industry free of

all other tempers;

(4) The draw and iron aluminum can rose from

nothing in the industry to capture over 50 percent

of the market by 1976;

(5) Alcoa sales of H19 D&I stock rose from the

10,000 pounds ordered by Reynolds, which was

the whole of Alcoa’s 1967 sales, to 8 million

pounds in 1970, to 235 million pounds in 1974;

(6) Alcoa’s sales of ‘‘O”’ temper D&I stock fell from

21 million pounds to less than a million pounds

over the period of 1970 to 1974;

(7) National’s business in aluminum cans went from

zero to 1967 to being the leading manufacturer by

1974;

(8) costly intermediate anneals were eliminated;

(9) only Bylund solved the problem of the struggle

with TFS in the industry;

(10) only Bylund was able to satisfy the need in the in-

dustry for an aluminum can to compete with TFS;

(11) all of the industry failed to beat TFS with the im-

pact method or with high strength alloys in ‘‘O”’

temper;

(12) the weight of the aluminum can was drastically

reduced;

(13) costly intermediate handling of coils and storage

was eliminated;

ait

29a

(14) unexpectedly, tool life was found to be better with

H19 temper than with ‘‘O’’ temper sheet;

(15) Alcoa heralded use of H19 D&I stock as a major

achievement;

(16) Alcoa filed and received a patent which emphasiz-

ed that the use of H19 in drawing and ironing

without any anneals or heat treatments was an

unobvious invention;

(17) National lauded its can in its advertising as the

*‘dynamic new can’’.

Courts have recognized an infringer’s praise of the

patented invention in its advertising as significant on the

question of unobviousness. See, for example, AMP Inc. v.

Molex Prod. Co., 329 F. Supp. 1364, 1371, 170 U.S.P.Q. 2,

7 (N.D. Ill. 1971); W.R. Grace & Co. v. Park Mfg. Co., 378

F. Supp. 976, 979, 181 U.S.P.Q. 490, 493 (E.D. Ill. 1974);

and Tracor, Inc. v. Hewlett-Packard Co., 182 U.S.P.Q. 340,

359 (N.D. Ill. 1974), affirmed 519 F.2d 1288 (7th Cir. 1975).

Not a single person having ordinary skill in the art

testified at trial that the Bylund invention was obvious at the

time it was made, see National Dairy Prod. Corp. v. Borden

Co., 394 F.2d 887, 890, 157 U.S.P.Q. 227, 229-230 (7th Cir.

1968). Mr. Nielsen candidly admitted at trial that the Bylund

invention was something that people skilled in the art thought

could not be done and that such people would have been im-

pressed. The patents in suit satisfy all the statutory and case

law indicia of significant and unobvious invention, and

should be upheld. A recent comment by Judge William C.

Conner is pointedly relevant:

*““When the evidence establishes that a number of persons

skilled in the art, having access to all the necessary means

and facilities, actually attempted over a_ substantial

period of time to solve a problem and were unable to do

so, I simply don’t see how a court, merely on the basis

of hindsight, can say that the solution was obvious to

such persons at the very time they were searching vainly

for it.”’ American Patent Law Association Bulletin,

October-November 1977, pp. 618-627

30a

Defendants cite five instances of alleged prior knowledge

by others and two alleged anticipatory publications as render-

ing the patents in suit invalid (DPT Br. p. 7-8). Under the ap-

plicable law these defenses are insufficient under 35 U.S.C.

102(a), (b), and 103.

Defendants have failed to show that the claimed inven-

tions were publicly known by others before Bylund, as re-

quired under 35 U.S.C. 103(a), Gayler v. Wilder, 51 U.S.

477, 13 L.Ed. 504 (1850); Soundscriber Corp. v. United

States, 360 F.2d 954 (Ct. Cl. 1966); Connecticut Valley Enter-

prises, Inc. v. United States, 348 F.2d 949 (Ct. Cl. 1965); In

re Borst, 345 F.2d 851 (CCPA 1965). The evidence cited by

defendants merely shows instances of non-public letters or

memorandums or incomplete experimental can bodies of

uncertain origin and material of Reynolds, Alcoa, or Metal

Flo which fail to show the claimed inventions were in prior

use by others, see Jilinois Tool Works, Inc. v. Continental

Can Co., 397 F.2d 517, 519-520 (7th Cir. 1968); and Jilinois

Tool Works, Inc. v. Solo Cup Co., 461 F.2d 265, 270 (7th

Cir. 1972). These instances were experimental, incomplete and

long forgotten and abandoned when defendants attempted to

make a drawn and iron can (PRM 2533 & 2996). The

evidence showed that Bylund acted independently and was

without knowledge of these alleged instances when he made

his inventions.

5. Prior Knowledge By Reynolds

As to Reynolds, defendants argue that in 1964 Reynolds

had drawn and ironed cans, on production type tooling, from

a 3004 type alloy that had been cold reduced up to 75 percent

(DF 89), citing a single document (DA 2614). This is an inter-

nal private Reynolds document which expressly states an ‘‘ex-

perimental’’ 3004 ‘‘type’’ alloy was drawn and iron. It does

not disclose Mr. Bylund’s inventions of cold working in ex-

cess of 90 percent. The document concludes, ‘‘The problem

of forming the flanges ....remains to be evaluated.’’ No

further work was done. This work was clearly incomplete and

3la

also abandoned. Mr. Bylund testified that he did not know

about it. (Tr. 897 & 898). Internal experimental work, in-

complete on its face, which fails to disclose the invention,

and which never went forward and concerning which no

witness is called, is not prior knowledge which could an-

ticipate the Bylund’s inventions, Illinois Tool Works, Inc. v.

Continental Can Co., 397 F.2d 517, 519-520 (7th Cir. 1968).

It added nothing to the useful arts and fails as a defense.

6. Prior Knowledge by Alcoa

Counsel for Alcoa disavowed any claim whatsoever at

trial that someone at Alcoa invented the claimed subject mat-

ter prior to Bylund (see e.g., Tr. 48):

[Alcoa Counsel]: This isn’t a priority contest between

Reynolds and Alcoa, your Honor, although they’re try-

ing to make it so, as much as Reynolds would like to

make it so.

THE Court: It’s not a race to the Patent Office?

[Alcoa Counsel]: No...

Notwithstanding the above, the defense is without

substance when examined on its merit. Alcoa’s work was in-

complete, experimental, using partially annealed temper sheet,

which didn’t meet the Bylund inventions, and which was

‘‘dropped’”’ in favor of impact according to Alcoa’s own

employee (Quade Dep. T. 13-14) and resurrected solely for

this law suit. Alcoa actually picked up discarded cups out of

the scrap heap for this defense (Quade Dep. Tr. 94-95 and

99-100):

““Q. I believe you indicated that the cups had been

thrown out or scrapped and you got an inquiry

from Alcoa counsel; is that right?

A. Yes, sir.

Q. And then you sent a technician out to pick them

out of the scrap?

A. Yes, sir.’” (Quade Dep. Tr. 99-100)

32a

As stated in Reynolds v. Whitin Mach. Works, 167 F.2d

78, 83 (4th Cir. 1948):

**.. .Patents for useful inventions ought not be in-

validated and held for naught because of such excursions

into the boneyard of failures and abandoned ex-

periments.”’

7. Prior Knowledge by Metal Flo

This work was also incomplete, experimental and aban-

doned. (Gardner Dep. Tr. 123-124). The cans were not suc-

cessful and were never filled and tested. Mr. Gardner testified

that the Metal Flo process for beer cans was ‘‘not

mechanically or technically sound, that approach, and the

thing just kind of died a writhing, agonizing death’’ (Gardner

Dep. Tr. 125). Further, the Metal Flo process is in the Mass-

ingill patent and was considered and rejected by the Patent

Office (Grigorenko Dep. Tr. 78, 85).

8. Prior Knowledge from Metal Flo Meeting

Knowledge from the Metal Flo meeting rises no higher

than item (3) above. Only about 45 minutes were spent with

Metal Flo at the meeting (Brown Dep. Tr. 59-60) as it later

learned that the Metal Flo process for beer cans was a

‘*disaster’’ (Reynolds Dep. Tr. 38-39). Further, Mr. Maeder,

in 1974, wrote that Reynolds was the first to draw and iron

H19 temper sheet (PRM 2234). In any event, neither Bylund

nor Palmer, his attorney, knew about Metal Flo (Tr. 681, 904

and 1086 and Palmer Dep. Tr. 178).

9. The Prior Art of D&I Cans from 3004-0 and 3004-H32

Defendants argue that ‘‘no conceptual problem’’ was in-

volved in going from ‘‘0’’ to H32 temper and that therefore

there would be ‘‘no conceptual problem’”’ to go to H19 (DPT

Br. 12).

This is hindsight reasoning by defendants, properly con-

demned by the Supreme Court in Graham v. John Deere Co.,

33a

383 U.S. 1, 15 L.Ed.2d 545 (1966). The evidence overwhelm-

ingly shows that conceptually the whole art, including the

parties here, were hamstrung into thinking that softness was

the way to go. Bylund alone went to super hard tempers.

More specifically, the Reynolds’ Can Division itself

thought you had to go soft. When metal didn’t work they

sent it back to McCook to anneal it (Tr. 137-39). After an-

nealing, the metal worked, which taught the Reynolds Can

Division to go soft. National, in early 1968, thought ‘‘0”’

temper was ‘“‘ideal’” (PRM 2996). Alcoa was taking H19

temper metal and annealing to ‘‘0’’ temper for Coors. When

Alcoa began experimenting it went to high strength alloys in

“0” temper PRM 2533). Earlier, Kaiser was in soft tempers.

Truly there was a conceptual problem in going to harder

tempers. Alcoa heralded H19 as a great advancement (PRM

2011) and filed for a patent on using H19 temper metal

without any thermal treatment during drawing and ironing

(PRM 2013).

Defendants also cite (DPT Br. 8) two patents as ‘‘an-

ticipations’’, Massingill No. 3,509,752 and Sandor No.

3,345,159. Under the law of the Seventh Circuit, these

references do not disclose all of the elements of the claimed

inventions, see, e.g., Illinois Tool Works, Inc. v. CCC, Inc.,

397 F.2d 517, 518 (7th Cir. 1968).

10. The Massingill Patent

Massingill is an unconventional drawing operation in-

volving telescopic punches, heat, vibrations, uninterrupted

continuous movement of metal, and was rejected by the Pa-

tent Office. Everyone rejected it for cans. Alcoa had a copy

of the application in 1964. It certainly did not teach Alcoa to

stop annealing the coils it was supplying to Coors.in 1966 and

1967.

34a

11. The Sandor Patent

This patent, owned by Reynolds, relates to high strength

alloys which are stress relieved, two significant differences

compared to Bylund’s inventions. The Sandor patent did not

teach Reynolds to go to H19 temper material.

The documents, insofar as they are internal company

memos which are not put into practice, are not anticipations,

Bolkcom vy. Carborundum Co. 523 F.2d 492, 499 (6th Cir.

1975), cert. den. 48 L. Ed. 2d 194 (1976). Both the work at

ACC and at Metal Flo was considered confidential (PRM

2536 [ACC] and Gardner Dep. Tr. 95-96 [Metal Flo’). As

stated in Worthington v. Southern New Jersey Newspapers,

Inc., 323 F. Supp. 443, 464 (D. N.J. 1970), ‘‘the knowledge

relied upon must be accessible to the public.” In Wor-

thington, as here, reliance was placed on drawings and the

like in company files and some experimental work not accessi-

ble to the public. Also, in Worthington, as here, reliance was

placed on deposition testimony which failed to show exactly

what was built, under what circumstances, and the accessibili-

ty to it.

Defendants have also alleged certain activities of Kaiser

Aluminum as an anticipation of the Bylund patents (Findings

DF94-100). They are not. Kaiser first became involved in

drawing and ironing cans in the late 1950’s, later abandoning

all work as of about 1960. In fact, Mr. Reynolds testified that

when Kaiser closed down its operations, Kaiser called

Reynolds, indicating they were closing down and had some

talented people [Reynolds Dep. Tr. 27]. Kaiser said ‘‘the men

are going to be out on the street and if you are going to be in

the can business, here’s a good opportunity to hire them’’

{Reynolds Dep. Tr. 27]. Reynolds then hired Mr. Maeder and

Mr. McAlpin [Reynolds Dep. Tr. 27].

Kaiser’s commercial activites in drawn and ironed cans

never amounted to very much. Their only production of

drawn and ironed cans was using 3003 in the dead soft

temper [Meyer Dep. Tr.42]. This only continued for

35a

something less than a year [Henrickson Dep. Tr. 26-28].

There is some evidence that Kaiser made drawn cans in

tempers up to H18, but the drawing operation in forming

those cans did not involve any additional cold reduction

[Meyer Dep. Tr. 41]. The material for the drawn cans, fur-

thermore, was coated prior to forming, with the coating

operation involving a heating operation. (Coating is an an-

nealing operation which improves the formability of the sheet

(PRM 2525, 2970, 2971). The drawn cans Kaiser furnished

Mallory Air Force Base were formed from coated sheet

{Henrickson Dep. Tr. 38-39].

Kaiser did, back in the late 1950’s and up into 1960, have

a desire to go to the use of higher tempers than ‘‘0’’ in the

drawing and ironing cans, and conducted some experimental

work. This experimental work involved a differential anneal-

ing Operation on the can circles that were to be drawn and

ironed. In this, the outer edges of the circular blank were

heat treated to soften the metal that would end up being iron-

ed to make the sidewall [Meyer Dep. Tr. 46; Henrickson Dep.

Tr. 57; PRM 3166]. Thus the differential annealing work

reflects the conventional thinking in the art that ‘‘softer is

better’.

Kaiser did a technical study during the first half of 1966

as to how it might be possible to make a lighter weight drawn

and ironed can. The Kaiser conclusion was to use high

strength, high magnesium alloys in the “‘0’’ temper, or at

most H32 temper [PRM 3160]. Thus Kaiser’s solution to

making a light weight can was the very same wrong road

chosen by Alcoa when it considered the question in 1966.

Kaiser did not find out the H19 material could be drawn

and ironed into can bodies without any intermediate anneals

until the fall of 1967 [PRM 3158]. This was after Reynolds’

activities were made known to Kaiser through Coors. [PRM

3161].

Although Kaiser did not itself go back into the aluminum

D and I can business until November, 1968 [PRM 3165;

36a

Henrickson Dep. Tr. 32-33], Kaiser had been previously sup-

plying D and I can sheet to others, including Coors. As of

1964 Kaiser’s recommendations to National Can as to the best

method of making beer cans was the use of 3004 in ‘‘0”’

temper or 3003 in ‘‘0’’ temper in a draw and iron operation

[PRM 3164]. Even as late as January, 1969, Kaiser was using

3004-H32 for draw and iron, with work regarding H19 said to

be in the experimental stage [PRM 3014]. It will be recalled

that Mr. Maeder, who had worked for Kaiser in its initial

draw and iron program, had been the one to choose H32

temper. Mr. Maeder had later indicted to Mr. Larson at

Reynolds that H32 had been chosen because Mr. Maeder felt

that was as hard as you could go [Tr. 129]. Later, after

Bylund’s work, Mr. Maeder, of course, found out differently,

and freely wrote in 1974 that the breakthrough of drawing

and ironing H19 metal without anneals or thermal treatments

was a Reynolds’ accomplishment [PRM 2234].

Defendants have also urged that ‘‘there is no significant

difference between H18 and H19 for purposes of draw and

iron fabrication’’. That is not correct. As Mr. Bylund

testified, in making H18 at can stock gages you would have

an anneal part way through the cold rolling [Tr. 707], which

is not true for H19. Also, at the H18 gauge you’re at a point

where the metal structure has not yet changed into that which

is characteristic of the high-cold work region above 75%.

Above 75% reduction the metal structure is fragmented, and

all these particles influence the behavior of the metal [Tr.

707]. There are thus significant differences between H18 and

H19 for drawing and ironing. Further, Mr. Nielsen testified

that in making aluminum sheet to can stock gage in H18

temper, you would cold roll part way, then anneal, and finish

the cold rolling to 75% [Tr. 2061-2062]. This is an expensive

process [PRM 2298]. Further, it would not be consistent with

the concept of H19, which Mr. Nielsen indicated to be doing

all the cold rolling from hot line gage to finish gage, without

any anneals or thermal treatments [Tr. 1609-1610].

37a

IV.

There has been much talk of fraud in this case. (Alcoa

has taken a “‘softer’’ approach than National on this subject.)

Patent cases including charges that a patent was procured

through fraud are not new to this Circuit and as the Seventh

Circuit noted in Armour & Co. v. Wilson & Co. 274 F.2d

143, 148 (7th Cir. 1960):

“It is easy to make charges of fraud, but the law

rightfully insists that before legal rights may be based

upon such charges, they must be established by clear and

convincing evidence.’’ (my emphasis)

See also U.S. v. American Bell Telephone Co., 167 U.S. 224,

251 (1897); Scott. Paper Co. v. Ford Howard Paper Co., 432

F.2d 1198, 1204 (7th Cir. 1970), cert. den. 401 U.S. 913

(1971).

The burden of proving fraud by clear and convincing

evidence is similarly the law of other circuits. Carter-Wallace,

Inc. y. Davis-Edwards Pharmacal Corp., 443 F.2d, 867, 169

USPQ 625 (2d Cir. 1971); Barr Rubber Products Co. v. Sun

Rubber Co., 425 F.2d 1114, 165 USPQ 429 (2d Cir. 1970);

Xerox Corp. v. Dennison Mfg. Co., 322 F. Supp. 963, 168

USPQ 700 (S.D. N.Y. 1971); In Re Multidistrict Litigation

Involving Frost Patent, 540 F.2d 601, 191 USPQ 241 (3d Cir.

1976); Kearney & Trecker Corp. v. Cincinnati Milacron, Inc.,

562 F.2d 365, 195 USPQ 402, 406 (6th Cir. 1977); The Na-

tional Rolled Thread Die Co. v. E. W. Ferry Screw Products,

Inc., 541 F.2d 593, 192 USPQ 358, 363 (6th Cir. 1976); and

Pfizer, Inc. v. International Rectifier Corp., 538 F.2d 180,

190 USPQ 273, 278-279 (8th Cir. 1976).

The law clearly requires that the alleged fraudulent acts

must have been carried out knowingly and willfully with an

intent to deceive, that the information was not known to the

patent examiner, and that the information concealed was

material to the prosecution of the patent application, Colum-

bia Broadcast System, Inc. v. Zenith Radio Corp., 391 F.

Supp. 780, 791 (N.D. Ill. E.D. 1975). Accord, Pfizer v. IRC,

38a

supra; Parker v. Motorola, 524 F.2d 518, 535, (Sth Cir.

1975).

Defendants argue, in effect, that there is an absolute du-

ty to disclose matters that Mr. Bylund and his attorney, Mr.

Palmer, were not even aware of because defendants argue

these matters may be relevant. Such is not the law, as noted

in Pfizer v. IRC, supra, at 186, because this would:

“impose an unworkable standard of conduct upon the

patent applicant and expands the inequitable conduct

defense beyond legitimate limits.’’

Citing from Judge Mansfields’s decision in Xerox Corp. v.

Dennison Mfg. Co., 322 F. Supp. 963, 968, (S.D. N.Y.

1971), the court in Pfizer saw there were good reasons for re-

jecting such a broad standard:

“‘To deny enforcement as a matter of law merely because

of an innocent or good faith non-disclosure would go

beyond what is necessary to protect the public against the

improvement granting of a monopoly. Such a standard

could also have the harmful effect of forcing a patent

solicitor to flood the Patent Office in each case with a

mass Of data of doubtful materiality rather than take the

risk that an inventor might later be denied the fruits of

his monopoly because of failure to reveal some fact later

magnified out of proportion by an infringer seeking to

escape the reach of the patent by combing the inventor’s

files under our liberal pretrail discovery procedures and

dredging up new-found ‘facts’.’’

This Circuit through Judge, now Mr. Justice, Stevens has

determined that it is permissible to exercise one’s judgment in

the citation of art especially where there was an improbability

the art in question would effect the Examiner’s evaluation of

the pending application, C7S Corporation v. Piher Interna-

tional Corp., 527 F.2d 95, 99-100 (7th Cir. 1975). See also,

Wen Prod. Inc. v. Portable Elec. Tools, Inc., 367 F.2d 764,

767 (7th Cir. 1966), where it held that there was no unclean

hands on the part of the patentee for a failure to disclose a

prior art patent that did not embody the inventions defined

39a

by the claims in suit. Accord, Feed Service Corp. v. Kent

Feeds, Inc., 528 F.2d 756, 762-763 (7th Cir. 1976).

The duty to disclose was considered in Illinois Tool

Works, Inc. v. Solo Cup Co., 179 USPQ 322, 370-371 (D.C.

N.D. Ill. E.D. 1973) where the question involved inoperable,

unacceptable prior articles. In reaching the conclusion there

was no duty to disclose such items, even if knowledge of

them was available, the court considered the items were not

prior art since they were discarded as unacceptable.

There is also no duty to disclose to the Patent Office any

prior use to which there is a bona fide basis for believing the

use was experimental, Clark Equip. Co. v. Keller, 197 USPQ

83, 122 (D.N.D. 1976), aff’d 197 USPQ 209, 218 (8th Cir.

1978). Likewise, there is no duty to disclose to the Patent Of-

fice non-anticipatory prior art, Scott Paper v. Fort Howard

Paper, 432 F.2d 1198, 1204, 1205, 167 USPQ 4, 9, 10 (7th

Cir. 1970); Duff-Norton Co. v. Ratcliff, 362 F.2d 551, 553

150 USPQ 166 (9th Cir. 1966); Clark Equip: y. Keller, supra:

Defendants argue (DPT Br. p. 29) that the following

“‘highly relevant’’ information was ‘‘known’’ to Reynolds and

was not disclosed to the Patent Office:

(a) the internal MRD letter (DA 2614);

(b) the Metal Flo meeting (DA 228); and

Item (a) and (b) were not known to either Bylund or Palmer,

his attornery (Tr. 681, 683, 897, 904, 1086 & 1321; Palmer

Dep. Tr. 179, 181, 183 & 259). Item (c) was, of course,

known to both but clearly not even considered relevant

because it involved a thermal treatment of 380-385°F for 8

hours (DA 2609, Col. 2, lines 39-40). Further, the Sandor

alloy, as Mr. Larson testified, was considered a failure (Tr.

223).

40a

As stated in Schnadig Corp. v. Gaines Mfg. Co., 494

F.2d 383, 393 (6th Cir. 1974):

“The evaluation of prior art as it bears on the paten-

tability of an invention is a matter of good faith judg-

ment. As long as the patent applicant fulfills his ‘uncom-

promising duty’ of good faith and conducts the prosecu-

tion with utmost candor, making a frank and truthful

disclosure, he is not required to ‘list out the full spec-

trum of his knowledge to establish [his] bona fides.’ Eli

Lilly & Co., Inc. v. Generix Drug Sales, Inc., 460 F.2d

1096, 1102-1103 (Sth Cir. 1971).”’

Here Mr. Palmer testified as follows (Palmer Dep. Tr. 258):

“BY MR. BLENKO:

Q. Mr. Palmer, returning to your activities while you

were with Reynolds, did you recognize that in

dealing with the Patent Office, an attorney has an

uncompromising duty of candor and good faith

toward the Patent Office?

A. Yes. Since that, has become the accepted standard,

yes.

Q. And you followed it at all times that you were

with Reynolds?

A. I tried to.”

As to Metal Flo, Mr. Palmer testified (Palmer Dep. Tr. 179,

181, 183 & 259):

““Q. Mr. Palmer, I am going to hand you the docu-

ment that has just been marked as Exhibit DA-

228-A and ask you whether you have ever seen

that document before?

A. I don’t recall that I have ever seen this before, no.

~ * .

Q. Is it fair to say that your knowledge with respect

to Metal Flo was limited to that which was set

forth in the Massingill patent cited as a reference

during the prosecution?

A. As far as I can recall, that is the case.

4la

* * *

Q. Were you aware of any relationship of any kind

between Reynolds Metals Company and Metal Flo

Corporation in the period prior to August 8,1966?

A. I dou’t know whether I was aware of any or not. I

don't recall any at the moment.

Q. You. have no knowledge of any?

A. No.

* * %*

Q. Do you recall any discussion or statement to you

regarding a visit by Reynolds personnel to Metal

Flo near Jackson, Michigan in August of 1965?

A. I believe the first time I became aware of that type

of subject matter was after this suit was filed.’’

A marked up copy of the Massingill patent was found in

Mr. McBride’s files of Alcoa (PRM 2392). On this document

(page 2) there appears the notation ‘‘0’’ temper tensile and

yield strength greater than H19 value” (McBride Dep. Tr.

687), contrasting Example 4 involving ‘‘0’’ temper and Exam-

ple 6 involving ‘‘H19’’ temper of Massingill. Thus, it is quite

reasonable to conclude that Massingill does in fact involve

some annealing when the ‘‘0’’ temper properties exceed those

of ‘‘H19’’. Further, Alcoa’s files contained a comparison of

H19 draw and iron properties with those in Massingill. The

difference in properties using H19 properties is truly striking:

The D&I side wall was 45.3 ksi whereas the Massingill side

wall was 30 ksi. In other words, the D&I H19 can had over

50 percent higher properties than the Massingill container

(PRM 2024). This also suggests annealing.

All Mr. Palmer did was to suggest to the Patent Ex-

aminer that some anneal occurred. The Patent Examiner was

free to, and did, evaluate the Massingill patent to his own

satisfaction. Here, as in Mueller Brass Co. v. Reading Ind.,

Inc., 352 F. Supp. 1357 (E.D. Pa. 1972), we have merely ‘‘an

argument put forth for the evaluation of the expert examiner,

42a

not a fraudulent statement of fact’? and ‘‘the exhibits were

there for the examiner’s independent scrutiny’? 352 F. Supp.

at 1380.

Defendants have failed to show that Reynolds intended

to deceive the Patent Office as to any information or that it

purposefully withheld any material information from the Pa-

tent Office. The Patent Office did consider the Massingill pa-

tent which is the Metal Flo process. Under such cir-

cumstances, the presumption of validity over Massingill and

the Metal Flo process is enhanced, University of Illinois

Foundation v. Block Drug Co., 241 F.2d 6, 112 USPQ 204

(7th Cir. 1957); and Lewyt Corp. v. Health-Mor, Inc., 181

F.2d 855, 857 (7th Cir. 1950).

Defendants argue they are entitled to attorney fees based

on their allegations of fraud. Defendants’ failure to prove any

fraud is also fatal to their e:gument for attorney fees. Under

35 U.S.C. 285, defendants must show that this case is ‘‘ex-

ceptional’’, that is, there is some wrong doing or fraud. As

the Seventh Circuit Court recently stated in H. K. Porter Co.

v. Black & Decker Mfg. Co., 518 F.2d 1177, 1178, 1179 (7th

Cir. 1975):

““However, such attorney’s fees are only awarded in our

Circuit in exceptional cases ‘to prevent gross injustice

and where fraud and wrongdoing are clearly proved.’

Technograph Printed Circuits Ltd. v. Methode Elec-

tronics, Inc. 484 F.2d 905, 909 (7th Cir. 1973).”’

Accord, Faulkner v. Baldwin Piano & Organ Co., 561 F.2d

677, 685 (7th Cir. 1977).

Further, defendants have not shown that Reynolds

believed its patents invalid to support an award of attorney

fees, see Indiana Gen’l Corp. v. Krystinel Corp., 421 F.2d

1023 (2d Cir. 1970). To the contrary, the testimony shows

that Reynolds believed its patents valid and that there were

no inaccuracies in the representations made to the Patent Of-

43a

fice (Reynolds Dep. Tr. 73 & Glenn Dep. Tr. 118), and still

do. Mr. Reynolds testified (Reynolds Dep. Tr. 73):

*Q. Why did you bring suit against Alcoa if you

know?

A. I suppose and I know that we think we have a

valid patent and we have paid Alcoa for many

patents that they have without a suit on anything.

We think we have got a valid patent and that’s

why we brought suit.

* * *

A. As I recall we went to outside counsel as well as

our own and everything, they came to me and said

this, we think we have a valid patent and we

should sue, and that is roughly all I can

remember. . .

Only National specifically pled an antitrust claim under

Section 2 of the Sherman Act. Any claim under that section

and Walker Process Equip. v. Food Mach. Chem. Corp., 382

U.S. 172, 15 L. Ed 2d 247 (1965), must, include proof of:

l. A knowing, willful and intentional act of

misrepresentation to the Patent Office, including

Omissions.

: The misrepresentation must be material so that the

patent would not have issued but for the

misrepresentation.

3. The misrepresentation must be such that the Pa-

tent Office relied on it and this reliance must be

reasonable and without error.

4. The patent holder must have practiced the fraud

or attempted to enforce the patent monopoly.

$. The patent holder must be shown to have

monopolized, or attempted to monopolize trade or

commerce among the several states, 15 U.S.C. 2.

44a

As stated in Walker Process, supra:

‘“‘To establish monopolization or attempt to monopolize

a part of trade or commerce under §2 of the Sherman

Act, it would then be necessary to appraise the exclu-

sionary power of the illegal patent claim in terms of the

relevant market for the product involved. Without a

definition of that market there is no way to measure

Food Machinery’s ability to lessen or destroy competi-

tion. It may be that the device—knee-action swing dif-

fusers—use in sewage treatment systems does not com-

prise a relevant market. There may be effective

substitutes for the device which do not infringe the pa-

tent. This is a matter of proof, as is the amount of

damages suffered by Walker.’’ 383 U.S. at 177-178)

National has failed to prove any of elements 1 to 4

above, as shown supra. The Patent Office independently con-

sidered the Massingill patent and the Metal Flo process. There

was no Obligation to disclose experimental work or failures,

even if Bylund and Palmer knew of them. This result is just

because such information’ would not bar a patent. The an-

titrust claim fails in its inception, see e.g., Forbo Design

Corp. v. Raytheon Co., 390 F. Supp. 794, 190 USPQ 70 (D.

Mass. 1975), aff’d 532 F.2d 758 (ist Cir. 1976).

As for item 5, National has failed to show either the rele-

vant market or the ‘‘exclusionary power’’ in the market re-

quired under Walker. As recently stated in Tapeswitch Corp.

v. Recora Co., 196 USPQ 348, 351 (N.D. Ill. 1977), the other

elements of a Section 2 case include:

**. . .The definition of the relevant market is a necessary

element in the proof of a monopolization claim. United

States v. Grinnell Corp., 384 U.S. 563 (1966), as well as

an attempted monopolization claim. Tire Sales Corpora-

tion v. Cities Service Oil Company, 410 F. Supp. 1222

(N.D. Ill. 1976). One aspect of the relevant market which

must be made out is the product market. The classic

definition of a product market is found in the case of

United States v. E. I. duPont de Nemours & Co., 351

U.S. 377 (1956). There the Court stated that

45a

‘In considering what is the relevant market for determin-

ing control of price and competition, no more definite

rule can be declared than that commodities reasonably

interchangeable by consumers for the same purposes

make up that ‘“‘part of the trade or commerce,’”’

= ange of which may be illegal.’ 351 U.S. at

Finding that Recora had failed to define the size of the rele-

vant market or show plaintiff’s share therein, the Court held

that the Section 2 claim failed, as a matter of law.

The same situation exists in this suit. National has

presented no evidence showing what constitutes the relevant

market from the standpoint of the commodities or individuals

involved. Nor has National shown the shares and

shareholders in this undefined market.

_ Alcoa is admittedly the largest producer of H19

aluminum D&I can stock sheet and National is the largest

producer of cans (PRM 2011B). National has not presented

any evidence in this litigation that would even permit an ap-

praisal of Reynolds ability to obtain some type of monopoly

control in view of the dominance of the defendants. Kearney

& Trecker Corp. v. Giddings & Lewis, Inc., 452 F.2d 579,

598 (7th Cir. 1971). In Kearney the parties stipulated the rele-

vant market, 452 F.2d at 597. National has also not presented

any evidence of intent to exclude competition.

National alleges that it has no viable alternative but to

infringe the patent. However, National also claims to employ

only the Massingill approach and the Metal Flo process. Were

that so, National has an alternative approach from that defin-

ed by the patents in suit. Reynolds makes no claim to the

Metal Flo process using telescopic punches, vibrations, and

retained heat. National, however, does not use that process.

However, the record shows that defendants copied the

Reynolds inventions rather than pursuing a path of their own.

Accordingly, it cannot be said that requesting a reasonable

royaity for defendants’ use of Reynolds’ inventions is other

46a

than lawful and reasonable. Further, as shown _ infra,

Reynolds does not request an injunction against either Na-

tional or Alcoa. Clearly, Reynolds has no intent to exclude

lawful competition. Mr. Reynolds testified to just the op-

posite. (Reynolds Dept. Tr. p. 59). Likewise, in appraising

the character of Reynolds’ activity, it cannot be said to have

been wrongful nor characterized as predatory.

There also is no evidence which establishes Reynolds’

capacity to monopolize some yet undefined market, an intent

to acquire the power to exclude competition from a signifi-

cant share of that elusive market, nor the use of predatory

means therefor.

Lastly, National has failed to show an injury. As stated

in Kearney v. Giddings, Inc., 452 F.2d at 599:

“*...tO recover damages [defendant must also

demonstrate that plaintiff’s conduct injured (him) in his

business or property. 15 U.S.C. §15”’

National offered no evidence or testimony showing that

their business or property has been injured in any way as a

result of this litigation. In short, National has not met the

burden of proof, which is upon them, as to any antitrust

claim.

VI.

On the basis of the foregoing, the Court reaches the

following conclusions:

1. In every patent case there is a presumption the patent

in suit is valid. The burden of establishing invalidity rests on

the defendant. 35 U.S.C.A. 282. Helms Products v. Lake

Shore Mfg. Co., 227 F.2d 677, 680 (7th Cir. 1955); Copease

Mfg. Co. v. American Photocopy Equipment Co., 298 F.2d

772, 777 (7th Cir. 1961).

2. When the prior art put forward by defendents has

already been considered are rejected by the Patent Office, the

presumption of patent validity is entitled to greater weight.

47a

The burden of overcoming this presumption rests heavily on

defendants and they have failed to provide a clear and cogent

showing of invalidity. Reese v. Elkhart Welding & Boiler

Work, Inc., 447 F.2d 517, 526 (7th Cir 1971); illinois Tool

Works, Inc. v. CCC. Inc., 397 F.2d 517, 519 (7th Cir. 1968).

3. The 1952 Patent Act, 35 U.S.C. §§1-293, sets out the

conditions of patentability in three sections indicating that

patentability is dependent upon three explicit conditions:

novelt

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