Petition — Valtek, Inc. v. Control Components, Inc.

Supreme Court brief1980

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i MICHAEL ROD-UG JR., CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

VALTEK, INC. and ALPHA ENGINEERING CO.,

Petitioners,

CONTROL COMPONENTS, INC. and

RICHARD E. SELF,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

H. ROSS WORKMAN

2000 Beneficial Life Tower

36 South State Street

Salt Lake City, Utah 84111

Telephone: (801) 521-7751

Counsel of Record

B. R. PRAVEL

1177 West Loop South, 10th Floor

Houston, Texas 77027

EUGENE GRESSMAN

School of Law

University of North Carolina

Chapel Hill, North Carolina 27514

Attorneys for Petitioners

Questions Presented

1. Whether, in a jury trial proceeding to determine

the validity of a complex patent claim, the jury may be

allocated the function of determining by general verdict

the “ultimate question . . . of law” respecting validity in

terms of the non-obviousness standard expressed in 35

U.S.C. § 103, where

(a) the jury is not required to render any special

verdicts or findings as to the facts essential to the

“ultimate question’’ as to non-obviousness, although

the jury is instructed to “first make these [factual]

determinations” in reaching its general verdict, and

(b) the trial court at no point in the proceedings

makes any findings of fact regarding the “ultimate

question.”

2. Whether, in the absence of any fact findings by

the jury or trial court, there can be meaningful appellate

review of the jury’s general verdict on the “ultimate ques-

tion” of non-obviousness on the presumption that (a) the

necessary fact findings are “implicit’’ in the jury’s general

verdict of non-obviousness, and (b) the appellate court can

effectively review such “implicit” findings by use of the

substantial evidence test.

3. Whether, in a jury trial to determine the issue of

infringement of a patent claim, the jury may be allocated

the function of incorporating in its general verdict of in-

fringement a legal construction of the patent claim, where

the issue of infringement turns on such legal construction.

ill

TABLE OF CONTENTS

PAGE

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Citations To The Record And Opinion Below.................... 1

SIIIININ” ..<i:cnsoujatnitniicevesanlecksunigntdeatsinceasidionnsiatuaeiaatiadiaens 2

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SG COE HNO COO sncsnsccssscsenisnisenasnphtiesiniiealactntothans 2

REASONS FOR GRANTING THE WRIT:

I. The important procedural issues in this case

are present in every jury trial of a patent case.. 7

II. The decision below reflects the confusion in

the lower courts as to how and by whom is-

sues as to non-obviousness are to be decided

Sab Gh MMII SUR CRI sais pncnieenienctnneeeideneeni 8

A. The source of the confusion........................... 10

B. Confusion as to who applies the law.............. 10

C. Confusion as to who finds the facts.............. 13

D. Confusion as to role of appellate courts........ 13

TE, seicsicmenncysierinanounisnasnansdeeninenttiancenttiensniptejinmatinisimaase 18

APPENDIX A:

Opinion of the Court of Appeals.................22.22..22--2-- Al

APPENDIX B:

Judgment of the Court of Appeals............................ BL

; PREVIOUS PAGE WAS BLANK |

salecba

PAGE

APPENDIX C:

Court of Appeals’ Ruling on Petition

DP TI basics sivsniistoectoctnctccitesies a Cl

APPENDIX D:

District Court’s Charge to the Jury on the

Question of Non-obviousness..... .. ...........2...0.00----+-- D1

APPENDIX E:

TPOMSCTIDE OF PFOCCCINGS....—.-cccecccsccnseceessnccscsbecsenss Kl

TABLE OF AUTHORITIES

PAGE

Bentley v. Sunset House Distributing Corp., 359 F.2d

TR Ce: ROI saree etncsiescenciiaccntenapbctctenncteese cans 11

Celebrity, Inc. v. A & B Instrument Co., 573 F.2d 11

(10th Cir.), cert. denied, 439 U.S. 824 (1978).......... "ae

Control Components, Inc. v Valtek, Inc., 609 F.2d

Teo (its Cae: 1908) 1... 1, 5, 6, 8, 12, 13, 14, 16, 18

Control Components, Inc. v. Valtek, Inc., 616 F.2d

I SNe Tes re Pci baesak ansaid teccnahiaticinnebinttabeaienemstinidchien 2, 6

Dual Manufacturing é Engineering v. Burris Indus-

tries, 619 F.2d 660 (7th Cir. 1980)..........0..2.2....-.- 11, 12,17

Graham v. John Deere Co., 383 U.S. 1 (1966)....3, 7, 10, 11, 15

Great A & P Tea Co. v. Supermarket Corp., 340 U.S.

Sy, SNES, CNT IE Raat Se avn Cte ee 7,15

Kiva Corp v. Baker Oil Tools, Inc., 412 F.2d 546

(5th Cir.), cert. denied, 396 U.S. 927 (1969)............ 11

Layne-New York Co. v, Allied Asphalt Co., 501 F2d.

405 (3rd Cir. 1974), cert. denied, 421 U.S. 914

1) RAPS REARS Seon SALES SEY RPP a OO aa 11

Mercoid Corp. v. Mid-Continental Investment Co.,

I a SD i a ae a aales 15

Moore v. Shultz, 491 F.2d 294 (10th Cir. 1974), cert.

SI Te Se is I asian i caiinicensscescnsomnansenen 12

Nickola v. Peterson, 580 F.2d 898 (6th Cir. 1978),

cert. dented, 440 U.S. 961 (1979) ...2..-..22..-.--cceeceeeceeee 11

Norfin, Inc. v. International Business Machines Corp.,

453 F. Supp. 1072 (D. Colo. 1978)............2........1...-00-+ 8

Panther Pumps & Equipment Co. v. Hydrocraft, Inc.,

468 F.2d 225 (7th Cir. 1972), cert. denied, 411 U.S.

965 (1973) IE PRE CS EN. RR a 14, 15, 16

’%

PAGE

Pederson v. Stewart-Warner Corp., 536 F.2d 1179

(7th Cir. 1976), cert. denied, 429 U.S. 985 (1977)... 11

Robbins Co. v. Dresser Industries, Inc., 554 F.2d 1289

Se Sella IE EL oe Le a 11

Sakraida v. Ag Pro, Inc., 425 U.S. 273 (1976).......... 7, 11,15

Sperberg v. Goodyear Tire & Rubber Co., 519 F.2d

708 (6th Cir.), cert. denied, 423 U.S. 987 (1975)...... 12

Spound v. Mohasco Industries, Inc., 534 F.2d 404

(1st Cir.), cert. denied, 429 U.S. 866 (1976)............ 11

Swofford v. B & W, Inc., 395 F.2d 362 (5th Cir.),

cert. denied, 393 U.S. 935 (1968).......2... teens 11

Tights, Inc. v. Acme-McCrary Corp., 541 F.2d 1047

(4th Cir.), cert. denied, 429 U.S. 980 (1976)... 12, 14

White v. Mar-Bel, Inc., 509 F.2d 287 (5th Cir. 1975). 14

STATUTES AND RULES OF PROCEDURE.

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aa esdelanSeeestabeniabonton 10

CONSTITUTLONAL PROVISIONS.

Se I os cn secnsmeistamnmnnsiihitindeibasl 7,16

ee i I I Bis cniestcsnesenenentninigislioninbonnen 7

OTHER AUTHORITY

Annual Reports of the Director of the Administrative

Office of the U.S. District Courts, fiscal years

ESET EE EEOC, 8

IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

VALTEK, INC. and ALPHA ENGINEERING CO.,

Petitioners,

CONTROL COMPONENTS, INC. and

RICHARD E. SELF,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Petitioners, Valtek, Inc. and Alpha Engineering Com-

pany, pray that a writ of certiorari issue to review the

judgment and opinion of the United States Court of Appeals

for the Fifth Circuit entered in the above-entitled case

on January 9, 1980.

Citations To The Record And Opinion Below

The opinion of the Court of Appeals is reported at

609 F.2d 763 and is reproduced at Appendix A hereto.

The District Court did not render an opinion. Portions

of the record, including the District Court’s charge to the

jury on the issue of obviousness and the District Court’s

ruling on petitioners’ motion for judgment notwithstand-

ing the verdict, are printed in Appendices D and E hereto,

respectively.

Jurisdiction

The Court of Appeals entered its judgment, Appendix

B, on January 9, 1980, and denied a timely petition for

rehearing and petition for rehearing en banc on April 23,

1980, 616 F.2d 892, Appendix C. On July 11, 1980, Mr.

Justice Powell signed an order extending the time for

filing this petition for certiorari to and including Septem-

ber 20, 1980. The jurisdiction of the Court is invoked under

28 U.S.C. § 1254(1) (1970).

Statute Involved

The statute involved is United States Code, title 35,

§ 103 (1970), which provides in pertinent part:

§ 103. Conditions for patentability; non-obvious sub-

ject matter.

A patent may not be obtained .. . if the differ-

ences hetween the subject matter sought to be pate ited

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 such subject matter pertains.

Statement Of The Case

Petitioners Valtek, Inc. (“Valtek”) and Alpha Engin-

eering Co. (“Alpha”) manufacture and sell industrial con-

trol valves. In the District Court petitioners were alleged

to have infringed U.S. Patent No. 3,514,074 (the “ ’074

patent”) covering a type of control valve used to regulate

the flow of high pressure fluids.

The accounting and damages were severed and the

issues of validity and infringement were tried to a jury.

With respect to the issue of the 074 patent’s validity, one

of the questions the jury was asked to determine was

whether the patent was “non-obvious”’ within the meaning

of 35 U.S.C. § 103 and this Court’s interpretation of that

statutory standard in Graham v. John Deere Co., 383 U.S.

1 (1966).

The question of non-obviousness was hotly disputed

in a trial which consumed more than five weeks and included

approximately 200 documentary exhibits, 60 physical ex-

hibits and testimony from numerous witnesses, including

three fluid dynamics experts, three control valve experts,

several user experts and two patent experts.

During the course of the trial the parties met with the

trial judge in chambers, and petitioners requested the Dis-

trict Court to submit special interrogatories to the jury

eliciting its findings of fact on the factual inquiries iden-

tified by this Court in Graham as necessary predicates to

the conclusion of non-obviousness. The District Court re-

fused to consider submission of special interrogatories and

instead submitted to the jury the following general verdict

(App. D, p. D1):

The fourth question is this:

Are the differences between the subject matter

patented by the claims of the 074 patent and the

prior art such that the subject matter as a whole

would have been obvious to one of ordinary skill in

the valve art as of December 5, 1966? You will be

asked to answer separately as to each of Claims

7, 14 and 17 of the patent.

In making its determination on the question of non-

obviousness the jury was instructed that (App. D., pp.

D1-D2) :

In deciding whether any or all of Claims 7, 14 and

17 are obvious over the prior art, you must first make

these determinations :

(1) The scope and content of the prior art.

(2) From the scope and content of all the prior

art relative to each of Claims 7, 14 and 17,

what differences, if any, exist between the

prior art and the subject matter of each of

Claims 7, 14 and 17?

(3) What was the level of skill of a person of

ordinary skill in the valve art on or about

December 5, 1966?

As to each of claims 7, 14 and 17 the jury’s answer to

the above question was “No, the differences would not have

been obvious to one of ordinarv skill in the valve art.”

Transcript of Proceedings, October 18, 1978 at p. 5. The

jury also found that claim 17 was infringed.’ :

Following the jury’s verdict, petitioners Valtek and

Alpha moved for judgment notwithstanding the verdict.

One of the grounds asserted in petitioners’ motion was that

“the issue of obviousness under 35 USC 103 [sic] is a

question of law and is not a jury issue.” App. E, p. E6.

To which the District Court responded (App. E, p. E7):

If that would be the case, and if the Court is re-

quired to make a finding on it, the finding the Court

will make is consistent with the finding which the jury

has made.

In support of its position the District Court reasoned

that its review of the record had persuaded it (App. E, p. E6)

1. The jury returned a general verdict that claim 17 was infringed

without any indication of either the construction which it gave

claim 17 or the underlying factual determinations which it made

in arriving at that conclusion. Nor did the District Court con-

strue claim 17 as a matter of law, as requested in petitioners’

motion for judgment notwithstanding the verdict. The Court of

Appeals, acknowledging the correctness of petitioners’ position

that construction of the claim is a matter of law, assumed a par-

ticular construction of claim 17 for purposes of determining in-

fringement, and then proceeded to find substantial evidence to sup-

port that presumption. 609 F.2d at 769-70; App. A, pp. Al2-A13.

that there is substantial evidence to support the jury’s

findings. And the Court’s intention of entering this

judgment is not to make any independent findings of

its own, but simply to enter judgment on the basis of

the jury’s verdict.

Thus the jury was permitted to determine the question of

non-obviousness in a general verdict, and the District Court

upheld the jury’s verdict on the basis of what it assumed

were the jury’s findings of fact.

On appeal, a divided panel of the Court of Appeals

affirmed the District Court. The majority of the panel

was of the opinion that

The [District Court] did not err in submitting the

above question to the jury....

609 F.2d at 767; App. A, p. A7. The Court of Appeals

reasoned that findings on the factual underpinnings of the

legal conclusion of non-obviousness were “implicit” in the

jury’s general verdict. The Court of Appeals then pre-

sumed these “implicit” fact findings to have been resolved

favorably to the prevailing party and, based on its own

“independent review of the record” the Court of Appeals

found “substantial evidence” to support its presumption.

609 F.2d at 768; App. A, p. A9.

In a separate opinion concurring in part and dissenting

in part, Circuit Judge Rubin strongly criticized the ma-

jority’s use of “implicit” findings which “[escape] appellate

review save for analysis of the correctness of the jury

charge.” 609 F.2d at 775; App. A, pp. A21-A22. Judge

Rubin was of the view that “meaningful devotion to Graham

requires a different course, unique to patent litigation.”

609 F.2d at 775; App. A, p. A22.

So also Circuit Judge Brown, in an opinion joined by

three other circuit judges dissenting from the Court of

Appeals’ denial of the petition for rehearing en banc, ac-

knowledged the conflict between the decision below and

Graham. 616 F.2d at 892; App. C, p. C2.

Reasons For Granting The Writ

The reasons for granting certiorari in this case have

been cogently captured in Circuit Judge Brown’s dissent

from the denial of rehearing en banc. Speaking on behalf

of four of the twenty-four active Fifth Cireuit judges, he

wrote (616 F.2d at 892; App. C, p. C2):

This case is of exceptional importance because the

issues it presents arise in every jury trial of a patent

ease. Submitting the obviousness issue to a jury for

a general verdict, in the manner our previous decisions

permit, appears to me to be inconsistent with the

precept that “the ultimate question of patent validity

is one of law.” Graham v. John Deere Co., [383 U.S.

1, 17].

As further explained in Cireuit Judge Rubin’s partial

dissent from the panel’s opinion (609 F.2d at 775; App. A,

p. A22):

The basic issue before us is how we, as an appellate

court, review a general jury verdict that concludes

merely (and categorically) that the subject matter of

the patent was not obvious. My brethren, following

Mar-Bel, conclude that there are implicit factual find-

ings in the general verdict that are subject to review

based only on the substantial evidence test.

I think meaningful devotion to Graham requires

a different course, unique to patent litigation.

These “cert-worthy” sentiments expressed by Circuit

Judges Brown and Rubin need but slight elaboration in

this petition.

The important procedural issues in this case are

present in every iury trial of a patent case.

This case involves critical questions as to the role a

jury should play when called upon to assess patent validity

matters, which frequently engender “difficulties in apply-

ing the non-obviousness test.” Graham v. John Deere Co.,

383 U.S. at 18. The questions presented’ raise important

problems of judicial administration associated with the

use of juries in patent litigation. What is at stake is the

proper allocation of functions, when a jury is used in

patent cases, as among the jury, the trial court and the

appellate court.

The problems posed by this case find few equals in

the arena of federal judicial administration. And in a

real sense, those problems reflect some of the tensions and

difficulties developing between the Seventh Amendment’s

guarantee in civil jury trials that “no fact tried by a jury,

shall be otherwise re-examined in any Court of the United

States, than according to the rules of the common law”

and the constitutionally-rooted standard of patent validity

embodied in the Article I directive “[t]o promote the

Progress of Science.’* There is, of course, no inconsistency

between those two constitutional provisions. But there is

2. Question 3 raises an additional issue which, like questions 1 and

and 2, involves the question of whether a legal issue should be

submitted to a jury for determination by way of general verdict.

The Court of Appeals acknowledged that petitioners were correct

in their position that construction of the patent claim is a legal

issue. 609 F.2d at 769-70; App. A, pp. Al2-A13.

3. This Court has indicated many times that the federal patent system

is grounded in the patent provisions of Article I, Sec. 8, clause 8,

which establish a “standard” of patent validity that “may not be

ignored.” Graham v. John Deere Co., 383 U.S. 1, 6 (1966); Sa-

kraida v. Ag Pro, Inc., 425 U.S. 273, 279 (1976); Great A. & P.

Tea Co. v. Supermarket Corp., 340 U.S. 147, 154 (1950) (con-

curring opinion).

a seeming inability on the part of the lower federal courts,

as demonstrated by the decision below, to make a smooth

accommodation of those two constitutional provisions in

the context of patent jury trials.

These accommodation problems become more demand-

ing of solution as the use of juries becomes more prevalent

in patent litigation. “[FJollowing the Supreme Court’s

decisions in Graham v. John Deere Co., [383 U.S. 1}, and

United States v. Adams, [383 U.S. 39 (1966) ], there appears

to be a ‘resurrection of jury trials in patent cases.’’’* In-

deed, the sharply increasing use of juries in patent litiga-

tion is dramatically illustrated from the graph*® shown in

Figure 1. Thus, resolution of the questions presented is

destined to have a far-reaching impact on future patent

litigation.

Il.

The decision below reflects the confusion in the

lower courts as to how and by whom issues as to non-

obviousness are to be decided in a patent jury trial.

The opinion below attempts to plot the decisional course

to be followed in jury trials involving complex issues of

patentability and non-obviousness. The attempt is some-

thing less than satisfactory. In Circuit Judge Rubin’s

words, the approach suggested by the Fifth Circuit in this

ease “takes us a step further into the Serbonian bog that

threatens to engulf patent litigation.’’ 609 F.2d at 774;

App. A, p. A20.

4. Norfin, Inc. v. International Business Machines Corp., 453 F.

Supp. 1072, 1074 (D. Colo. 1978) (quoting from Zarley, Jury

Trial in Patent Litigation, 4 Patent L. Rev. 89 (1972)).

5. Based on statistics reported in the Annual Repor*s of the Di-

rector of the Administrative Office of the U.S. District Courts,

fiscal years 1969-1979, Table C-8.

4. %, %, %, %, By Sr, OH, Oy MH, My %, % %

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YEAR

FIGURE 1

The Fifth Circuit is not alone in the effort to identify

the proper role of juries in assessing the question of non-

obviousness under 35 U.S.C. § 103. Various other circuits

have joined in the search. But the search is producing only

confusion and conflict. The lower courts are not reaching

any consensus as to the proper division of decisional re-

sponsibilities in a ju~v trial involving the non-obvousness

standard of section 103.

A. The source of the confusion.

Much of the existing confusion as to the function of

juries in patent litigation stems from an effort to follow

the decisional precepts established by this Court in Graham

v. John Deere Co., 383 U.S. at 17-18. The difficulty is that

Graham was decided in the context of non-jury proceedings

involving issues of non-obviousness. Is it equally applicable

to jury proceedings?

Graham holds that while “the ultimate question of

patent validity is one of law,” the section 103 non-obvious-

ness standard “lends itself to several basic factual in-

quiries,” which the Court proceeds to detail. 383 U.S. at

17-18. It is simple enough, in a non-jury trial, for the trial

judge to both determine the “basic factual” underpinnings

and resolve the “ultimate question” of law. And under the

procedure provided by Rule 52(a), Fed. R. Civ. P., appel-

late review of such determinations poses no problems. But

add a jury to the patent validity proceeding and the clarity

of decisional functions seems to disappear, at least in the

eyes of the lower courts.

B. Confusion as to who applies the law.

The instant case begins with one of the confusing

anomalies developing in patent litigation. Graham holds that

the section 103 non-obviousness standard is one of the three

basic conditions of patent validity, and that “the ultimate

question of patent validity is one of law.” 383 U.S. at 17.

This Court’s decision in Sakraida v. Ag Pro, Inc., 425 U.S.

273, 280 (1976) is to the same effect. But here the jury was

asked merely to return a general verdict on the issue of

non-obviousness. It was not asked to answer any factual

interrogatories or return any special verdicts.

A majority of the circuits dealing with the problem

seem to read Graham to mean that the conclusion of non-

obviousness is itself a question of law since it is an integral

part of the “ultimate legal question’’ of patent validity.°

Consistent with that view, such courts will reserve for

themselves the function of applying the law, apart from

merely instructing the jury as to the law, in determining

non-obviousness. Much of the precedent in the Fifth Cir-

cuit has been to that effect,’ at least prior to the instant case.

If that proposition be accepted, can submission to the

jury of an “ultimate question” of non-obviousness be jus-

tified, particularly when the jury is not required to make

any of the factual determinations required under Graham?

And if the courts retain the function of making their own

determination of this ultimate question of law, as they

obviously do under this view of Graham, then what is left

6. Dual Manufacturing & Engineering v. Burris Industries, 619

F.2d 660 (7th Cir. 1980); Nickola v. Peterson, 580 F.2d 898 (6th

Cir. 1978), cert. denied, 440 U.S. 961 (1979); Robbins Co. v.

Dresser Industries, Inc., 554 F.2d 1289 (5th Cir. 1977) ; Pederson

v. Stewart-Warner Corp., 536 F.2d 1179 (7th Cir. 1976); cert.

denied, 429 U.S. 985 (1977); Swofford v. B & W, Inc. 395 F.2d

362 (5th Cir.), cert. denied, 393 U.S. 9385 (1968); Bentley v.

Sunset House Distributing Corp., 359 F.2d 140 (9th Cir. 1966) ;

see Spound v. Mohasco Industries, Inc., 534 F.2d 404 (1st Cir.),

cert. denied, 429 U.S. 886 (1976) ; Layne-New York Co. v. Allied

Asphalt Co., 501 F.2d 405 (3rd Cir. 1974), cert denied, 421 U.S.

914 (1975).

7. Robbins Co. v. Dresser Industries, Inc., 554 F.2d 1289 (5th Cir.

1977) ; Kiva Corp v. Baker Oil Tools, Inc., 412 F.2d 546 (5th

Cir.), cert. denied, 396 U.S. 927 (1969) ; Swofford v. B & W, Inc.,

395 F.2d. 362 (5th Cir.), cert denied, 393 U.S. 935 (1968).

of the jury’s function in such circumstances? What possible

contribution to the decisional process is given by a jury’s

general verdict on such an ultimate question of law? As

one circuit has recently observed, “[b]ecause only issues

of fact subsidiary to the legal question of obviousness are

within the province of the jury, ...a general verdict...

will ordinarily serve no purpose, because the court will still

have the responsibility of deciding obviousness.” Dwal Man-

ufacturing & Engineering v. Burris Industries, 619 F.2d

660, 667 (7th Cir. 1980).

Other courts have read Graham as treating non-obvi-

ousness as a mixed question of law and fact.’ Indeed, at

one point in the opinion below, the Fifth Circuit states that

“the validity issue involves mixed questions of fact and

law.” 609 F.2d 767; App. A, p. A8. Does that mean that

under this view of Graham some but not all of the jury’s

general verdict of non-obviousness escapes review under

the “substantial evidence” test? How does the litigant

determine which portion of the verdict is reviewable and

which is not?

At least one circuit court reads Graham as saying that

the only question of law is that of “patent validity” and

that this Court meant that “non-obviousness is itself a

factual question.’® On that reading of Graham. would a

general verdict by the jury as to non-obviousness he deemed

a finding of fact reviewable solely on a “substantial evi-

dence” basis? Would that finding preclude a reviewing

court from making its own conclusion as to non-obvious-

ness?

8. Tights, Inc. v. Acme-McCraru Corp., 541 F.2d 1047 (4th Cir.),

cert. denied, 429 U.S. 980 (1976); Sperberg v. Goodyear Tire &

Rubber Co., 519 F.2d 708 (6th Cir.), cert. denied, 423 U.S. 987

(1975).

9. Moore v. Shultz, 491 F.2d 294, 300 (10th Cir. 1974), cert. denied,

419 U.S. 930 (1974) ; accord, Celebrity, Inc. v. A & B Instrument

Co., 573 F.2d 11, 12 (10th Cir.), cert. denied, 439 U.S. 824 (1978).

C. Confusion as to who finds the facts.

The instant case illustrates still another procedural

anomaly that arises in the context of patent validity trials

when a jury is instructed to determine the ultimate question

of non-obviousness. Graham indicates that there are vari-

ous critical factual inquiries to be made prior to reaching

an ultimate conclusion as to non-obviousness. Why instruct

the jury about these factual predicates, expect the jury to

make its own secret findings of fact, and then direct the

jury to articulate only the ultimate legal conclusion? Such

procedure inevitably leads to a role reversal as between

jury and judge, since a reviewing court must then search

the record anew to determine the Graham factual predicates

if it is to review the jury’s legal conclusion.

The failure to insist that the jury perform its historic

fact finding role is compounded here by the failure of the

trial court to make its own findings of fact in response to

petitioners’ motion for judgment notwithstanding the ver-

dict. Circuit Judge Rubin suggests that the trial court’s

summary denial of petitioners’ motion provides some kind

of an answer to the urgent need for findings of fact in the

District Court. 609 F.2d at 775; App. A, p. A23. But the

summary denial of the motion is as enigmatic as the jury’s

general verdict of non-obviousness, Absent the entry of

any findings of fact in support of the District Court’s con-

clusion, the Court of Appeals is still forced to sit as an

ultimate trier of fact.

D. Confusion as to role of appellate courts.

The Court of Appeals here realized the need for more

in the way of findings ox fact than is evident on the face of

the general verdict. Since there were no express findings

the Court of Appeals turned to the ultimate legal question

and presumed that the necessary findings were “implicit”

in the jury’s general verdict. That presumption was in

turn predicated on the jury instructions which described

the factual predicates of non-obviousness.

There are lines of precedent to that effect in the Fourth,

Fifth and Seventh Circuits, which apparently rely on an

opinion written by Mr. Justice Stevens while serving on

the Seventh Circuit, Panther Pumps & Equipment Co. v.

Hydrocraft, Inc., 468 F.2d 225 (7th Cir. 1972), cert. denied,

411 U.S. 965 (1973).

The Fifth Circuit, as Judge Rubin’s opinion notes, has

not always followed Panther Pumps (609 F.2d at 774-75;

App. A, pp. A20-A21) :

In Swofford v. B €W, Inc. [395 F.2d 362, (Sth Cir.)

cert, denied, 393 U.S. 935 (1968) ], Judge Wisdom, im-

plementing Graham for a panel of this court, attempted

to provide a path to follow in determining the respec-

tive roles of judge and jury in deciding the obviousness

issue. Noting the inconsistent trails we had previously

followed, Swofford determined that obviousness is

itself a question of law for the judge to decide. .. .

The Supreme Court apparently takes the same

view of the obviousness issue, see Sakraida v. Ag Pro,

Inc., [425 U.S. 273 (1976)], and we have since at-

tempted consistently to adhere to the approach in

Swofford. See, e.g., Robbins Co. v. Dresser Industries,

Inc., 5 Cir. 1977, 554 F.2d 1289, 1290; Gaddis v. Calgon

Corp., 5 Cir. 1975, 506 F.2d 880, 884; Garret Corp v.

American Safety Flight Systems, Inc., 5 Cir. 1974,

502 F.2d 9, 14.

In White v. Mar-Bel, Inc., 5 Cir. 1975, 509 F.2d

287 .. .[w]e... adopted the view of the Seventh Cir-

cuit in [Panther Pumps], an opinion by Judge (now

Justice) Stevens.

10. The Seventh Circuit’s view in Panther Pumps was followed in

Tights, Inc. v. Acme-McCrary Corp., 541 F.2d 1047 (4th Cir.),

cert. denied, 429 U.S. 980 (1976) ; and in White v. Mar-Bel, Inc.,

509 F.2d 287 (5th Cir. 1975).

I respectfully submit that the path laid out in

Panther Pumps and followed in Mar-Bel does not and

cannot satisfy the Graham mandate.

Resort to the Panther Pumps presumption in the con-

text of patent litigation creates more questions than an-

swers. Panther Pumps sought to justify use of “implicit”

findings of fact in patent cases on the grounds that “ ‘the

rules governing trial of patent cases are no different than

in other types of civil litigation,’” and that the presump-

tion is properly used “in other cases tried to a jury.” 468

F.2d at 227-228 (quoting from Armour & Co. v. Wilson

& Co., 274 F.2d 143, 157 (7th Cir. 1960)).

But query whether findings of fact should be as readily

created by presumption in patent cases as in ordinary liti-

gation. In Graham, 383 U.S. at 18, this Court noted that

the difficulties in applying the non-obviousness test of sec-

tion 103 are comparable to those encountered daily by the

courts in such frames of reference as negligence and scien-

ter. But the Graham opinion also emphasized that there

must be no relaxation in the “strictness” with which the

constitutional “standard” of patent validity, including the

non-obviousness standard of section 103, is to be applied.

383 U.S. at 6 and 19. That strictness is particularly im-

portant when dealing, as in the instant case, with combin-

ation patent claims. Sakraida v. Ag Pro, Inc., 425 U.S. 273

(1976) ; Great A. & P. Tea Co. v. Supermarket Corp., 340

U.S. 147 (1950). Furthermore, the grant of a patent is

imbued with a public interest that is paramount whenever

the patent’s validity is called into question. Mercoid Corp.

v. Mid-Continent Investment Co., 320 U.S. 661, 665 (1944).

In short, there may well be a difference, a constitutional

difference, as well as a public interest difference, between

(a) procedures used in allocating decisional responsibility

between judge and jury when scrutinizing the validity of

a patent monopoly granted under the authority of the

Article I patent clause, and (b) procedures used to allo-

cate decisional responsibility between judge and jury when

reviewing the common law questions of negligence and

scienter. Should constitutionally-rooted standards of patent

validity be factually implemented by reference to “implicit”

or “phantom” findings of fact? Can strict adherence to

those constitutionally-rooted standards be had by following

procedures that may otherwise be appropriate in reviewing

questions that do not have the type of constitutional over-

tones that are attendant in patent validity cases?

In Panther Pumps it was said that the “task of giving

error-free instructions in a patent case may indeed be ex-

tremely difficult.”"* 468 F.2d at 228. That suggests that

instructions in patent cases may not be the fair equivalent

of carefully drawn interrogatories or special verdicts sub-

mitted to the jury. It seems incongruous to transfer the

appellate review test of “substantial evidence” from spe-

cific findings of fact based on carefully drafted special in-

terrogatories directed to the Graham inquiries to “implicit”

findings of fact based on broad-ranging and possibly error-

prone instructions. As Judge Rubin pointed out in the

decision below a general verdict by the jury on such broad-

ranging instructions “escapes appellate review save for

analysis of the correctness of the jury charge.” 609 F.2d

at 775; App. A, p. A21-A22.

Grounding appellate review of the Graham factual pred-

icates of patent validity on presumed or implicit findings

of fact reflected in the instructions presents additional prob-

lems for appellate courts. Under that procedure an appel-

lant is at a loss to know the specific thrust of the objections

he must make to any findings of fact and he must therefore

raise objections to all conceivable adverse findings. Appel-

11. “Presumably this is only one of the many reasons why members

of the Patent Bar have [in the past] wisely avoided jury trials

in patent litigation.” Panther Pumps at 228, n. 9.

late courts must respond in kind by engaging in a complete

and independent review of the entire record, as happened

here, to assess the substantiality of evidence in support of

all conceivable findings favoring the prevailing party. And

the appellate judges must do all that without benefit of

the “feel” for those implicit findings that only trial judges

acquire in overseeing the evidentiary development.

Such a wasteful use of the historic institutions of

appellate courts and juries produces incalculable harm to

both the system of justice and the rights of the parties

involved. Who can say how different might have been the

judgment of the trial and appellate courts in this case had

the jury been left to its rightful fact finding position?

Who can say with assurance, in a case as factually complex

as this one, that the patent monopoly granted these respond-

ents without benefit of any explanation of the controlling

facts found by either the judge or the jury (which respond-

ents demanded), is the result of fair and adequate adjudi-

cative procedures?

As stated by Circuit Judge Pell for the Seventh Circuit

sitting en banc, Dual Manufacturing & Engineering v.

Burris Industries, 619 F.2d 660, 667 (1980) (now pending

on petition for certiorari on other issues — No. 80-44):

Because only issues of fact subsidiary to the legal

question of obviousness are within the province of the

jury, its resolution of those issues of fact should or-

dinarily be articulated in special verdicts under Rule

49(a), Fed.R.Civ.P. The same result may be achieved

by special interrogatories returned with a general ver-

dict under Rule 49(b), a device primarily designed to

test the jury’s application of the law in reaching a

general verdict, see 5A J. Moore, Federal Practice

| 49.04 (2d ed. 1979). When the issue is obviousness

a general verdict, with or without answers to special

interrogatories, will ordinally serve no purpose, be-

eause the court will still have the responsibility of

- |

deciding obviousness. A general verdict, without more,

will of course give rise to the presumption that ma-

terial fact issues have been resolved in favor of the

prevailing party; but specific findings are more likely

to be useful than presumptions to a court exercising

its obligation to decide the ultimate issue of obvious-

ness.

To quote again from Circuit Judge Rubin’s opinion in

this case (609 F.2d at 775, App. A, p. A22) “meaningful

devotion to Graham requires a different course, unique to

patent litagation ... [i]n this area where decisional respon-

sibility is so clearly divided... .” The inability of the lower

courts to apply Graham's procedural guidelines to patent

jury trials fully warrants the use of this Court’s supervisory

powers. This Court should address the questions presented

to insure that the integrity of the adjudicative process in

patent jury trials is maintained.

Conclusion.

For all of the foreging reasons this petition for writ

of certiorari should be granted.

Respectfully submitted,

B. R. PRAVEL H. ROSS WORKMAN

1177 West Loop South, 10th Floor 2000 Beneficial Life Tower

Houston, Texas 77027 36 South State Street

Salt Lake City, Utah 84111

EUGENE GRESSMAN Telephone: (801) 521-7751

School of Law

University of North Caroline Counsel of Record

Chapel Hill, North Carolina 27514

Attorneys for Petitioners

APPENDIX A

CONTROL COMPONENTS, INC., and

Richard FE. Self, Plaintiffs-Appellees,

Vv.

VALTEK, INC. and Alpha Engineering Company

Defendants-Appellants.

No. 79-1626

Unrrep States Court or APPEALS

Firta Circuit

Jan. 9, 1980

Appeal from the United States District Court for the

Southern District of Texas.

Before FAY, RUBIN and HATCHETT, Circuit Judges.

JUDGE HATCHETT,

Cireuit Judge

Defendants, Valtek, Inc., (Valtek) and Alpha Engineer-

ing Co., (Alpha) appeal from a district court judgment

entered pursuant to a jury verdict finding that they in-

fringed various claims of a United States patent on fluid

control valves owned by Control Components, Ine. (CCI).

We affirm.

Industrial Setting

Valtek and CCI manufacture industrial control valves

used to regulate the flow of high pressure fluid in severe

service applications. Conventional valves are unable to

avoid two major problems associated with high pressure

fluid flows: internal damage when the fluid is a vaporiz-

able liquid and intense noise when the iluid is a gas.

Internal valve damage results from cavitation and

erosion. Cavitation is a two-stage phenomenon beginning

with the formation of vapor bubbles from a sudden reduc-

tion of pressure in a liquid flowing at high speed. The

second stage of the cavitation process is the collapse or

implosion of the vapor bubbles caused by deceleration of

the fluid and a corresponding increase in pressure above its

vapor point. Unable to exist at the higher pressure, the

bubbies collapse with explosive energy, tearing away the

interior surface of the valve. Erosion is the physical wear-

ing away of metal as a result of liquid flowing at high

velocity.

Severe noise accompanies the sonic and supersonic

velociy of the fluid stream in gas applications. The noise

can be so intense as to pose health problems for industry

workers.

The Patent

In December, 1966, plaintiff, Richard Self, applied

for a patent on an invention designed to minimize the in-

ternal damage associated with conventional control valves.

After testing the structure with a gas in 1967 and discov-

ering that the valve also moderated aerodynamic noise,

Self filed a continuation-in-part of the prior application in

May, 1968, now U.S. Patent 3,514,074 (THE PATENT),

which was granted May 26, 1970. CCI is the exclusive li-

censee of the patent.

The major objects of the invention as recited in the

patent are to “effect energy losses in high pressure flow-

ing fluids .. ., thus avoiding damage and erosion” and to

limit “fluid velocity’’ while “quietly effecting energy losses.”

The Structure

The patented valve utilizes a stack of annular disks

encircling a chamber in which a movable plug is lodged

(see Figure 1). On the face of each disk are a large num-

ber of angular turn inducing grooves that produce resis-

tance to fluid flow. A variety of possible configurations

for the passageway grooves are illustrated in Figures 2,

3, 3A, 4, and 5. When the disks are stacked one upon the

other, “individual passageway grooves”’ are enclosed be-

tween the abutting faces and impart frictional resistance

losses to the fluid as it flows through each groove. The po-

sition of the center plug may be varied causing fluid flow

through more or fewer of the individual grooves.

As described more particularly in the patent claims

which are the focus of this litigation, the device is:

l. . . . a rigid structure comprising a stack of

members having abutting faces enclosing therebetween

a plurality of individual passageway grooves angular

between inlet and outlet ends thereof to turn the fluid

and provide a substantially longer fluid flow length

than the distance between the inlet and the outlet ends

thereof, and each passageway groove having an ef-

fective long length to diameter ratio cooperating with

the angular turn-inducing configuration thereof to

impart high frictional resistance losses to fluid flow

therethrough; and means for compelling flow of the

fluid through said passageways whereby potential en-

ergy of the fluid will be dissipated and velocity of the

fluid will be controlled.

16. A device according to claim 1, having in combina-

tion, a valve housing having afluid passage of substan-

tial crosssectional flow area therethrough, said device

comprising an annular structure mounted in said

housing and across said passage to compel all fluid

flowing through said passage to travel therethrough,

and a valve plug movable in controlling relation re-

eiprocably within said annular structure.

17. A combination according to claim 16, in which

said annular structure comprises a stack of annular

disks having said passageways in their faces and ex-

tending between and having openings at the inner and

outer perimeters of the annular structure and adapted

to be selectively opened and closed by movement of

said plug in the annular structure.

The jury found that a valve manufactured by Valtek

and marketed by Alpha infringed claim 17 of the patent.

The Accused Device

The Valtek valve also consists of a stack of annular

disks surrounding an adjustable plug (see Figure 6). On

the face of the Valtek disks are concentric grooves (see

Figure 7). The grooves are cut successively deeper as they

approach the circumference of the disk (see Figure 8).

When the disks are stacked together they form a tooth-like

passage as depicted in the cross-section diagram of Figure

8. Fluid flows from the center chamber radially outward,

in a wave-like motion across the face of the disks. Promo-

tional material emphasizes that the valve solves the cavi-

tation problem because “pressure is reduced gradually

across the face of the disks without sharp pressure drop

typical of conventional [ valves].”

Case and Issues

Defendants appeal that portion of the judgment finding

claim 17 of the patent valid and infringed; they also appeal

that portion finding the intentional infringement of CCI’s

trademark, DRAG.

Defendants argue that: (1) claim 17 of the patent is

invalid; (2) the lower court erred in refusing to admit into

evidence statements made under oath by Richard Self and

patent office findings on obviousness; (3) if valid, claim

17 was not infringed; and (4) no substantial evidence

supports the finding of trademark infringement.

DISCUSSION OF THE ISSUES

I. Vatidity of the Patent.

A. Factors to be Considered,

A patent is invalid if the subject matter sought to be

patented would have been “obvious at the time the inven-

tion was made to a person having ordinary skill in the art

to which said subject matter pertains.”’ 35 U.S.C. § 103.

“While the ultimate question of patent validity is one of

law” the determination of obviousness “lends itself to sev-

eral hasie factual inquiries.’’ Graham v. John Deere Co.,

383 U.S. 1, 17, 86 S.Ct. 684, 694, 15 L.Ed.2d 545 (1966) ;

Swofford v. B & W, Inc., 395 F.2d 362 (5th Cir.), cert de-

nied, 393 U.S. 935, 89 S. Ct. 296, 21 L.Ed.2d 272 (1968) ;

Robbins Co. v. Dresser Industries Inc., 554 F.2d 1289 (5th

Cir. 1977). Factual questions properly resolved by the jury

include “the scope and content of the prior art . . . differ-

ences between the prior art and the claims at issue .

and the level of ordinary skill in the pertinent art .. . .”

Graham, 383 U.S. at 17, 86 S.Ct. at 694. Skepticism of

experts, commercial success, long felt but unsolved needs,

and the failure of others are relevant secondary considera-

tions. United States vr. Adams, 383 U.S. 39, 86 S.Ct. 708,

15 1..Ed.2d 572 (1966).

The court instructed the jury on the “primary factors

to consider”’ in supporting a “determination of the issue

of obviousness,” and submitted to the jury the following

question on the issue of validity:

Are the differences between the subject matter pat-

ented by the claims of the 074 patent and the prior art

such that the subject matter as a whole would have

1. The jury was charged as follows:

Your analysis for the determination of the issue of obviousness should

be based on all of the prior ari taken as a whole. You may consider the

inferences or teachings which one of ordinary skill in the art would draw

from the prior art before December 5, 1966.

In evaluating whether the subject matter as a whole would have been

obvious as of December 1966 to those of ordinary skill, the primary factors

to consider are the content of the prior art and the differences or similar-

ities between the 074 patent and the prior art and the level of skill of a

person of ordinary skill in the art. You may also, if you believe the evi-

dence warrants it, take into consideration the following secondary factors

to the extent that they may be found to cast some light on the circum-

stances:

(1) Whether the valve described by the 074 patent yielded a new

function or result not expected by those of ordinary skill in the art as

of December 5, 1966.

(2) Whether the nearest reference had disadvantages which would

naturally discourage the search for a new solution to problems of

cavitation and noise.

(3) The commercial success of the 074 patented device and whether

the commercial success, if any you find, was largely independent of

advertising or of government regulation, such that the success was

related to the merit of the 074 patented device, or whether the com-

mercial success was merely the result of advertising, sales promotion or

government regulation.

(4) The period during which the problem, if any, solved by the 074

patented device, remained unsolved after it was recognized as a

problem.

(5) Whether the 074 patent satisfied a long-felt need of those skilled

in the art to which the subject matter of the 074 patent pertained.

You are to determine the question of obviousness based on the percep-

tion of a person of ordinary skill in the art as of December 5, 1966—not

as of the level of knowledge at later dates. You must be cautious not to

decide this question in the light of hindsight—which is always better

than foresight.

been obvious to one of ordinary skill in the valve art

as of December 5, 1966?

A general verdict was entered with respect to claim 17

finding that “the differences would not have been obvious

to one of ordinary skill in the valve art.’’ No separate

special interrogatories were entered on the factual inquiries

underlying the obviousness question.

The court did not err in submitting the above question

to the jury. The interrogatory was not so broadly framed

as to leave the ultimate determination of obviousness to

the jury. As noted, in jury cases the question of patent

validity is to be determined by the judge “on the results

of factual inquiries” made by the jury. National Filters

Inc. v. Research Products Corp., 384 F.2d 516, 517 (5th

Cir. 1967) ; Cathodic Protection Service v. American Smelt-

ing and Refining Company, 594 F.2d 499 (5th Cir. 1979).

Under the court’s instructions, the jury was to base its

general verdict on the primary factors for consideration

outlined in the charge. These considerations were appro-

priate questions of fact for the jury under Graham.

B. Standard of Review.

In light of the charge, we think jury findings on the

factual underpinnings were implicit in the general verdict.

White v. Mar-Bel, Inc., 509 F.2d 287 (5th Cir. 1975). Under

these circumstances we will “presume that the disputed

matters of fact have been resolved favorably to the pre-

vailing party in accordance with the trial judge’s instruc-

tions.” Panther Pumps & Equipment Co., Inc. v. Hydro-

craft, Inc., 468 F.2d 225, 228 (7th Cir. 1972); see, Mar-Bel

at 290-91.2, We presume as to the nature of the findings,

2. This approach is most compelling in cases of this kind, where the patent

“is presumed valid [and] the burden of establishing its invalidity rests

with the party challenging the patent.” Cathodic Protection Service v.

American Smelting and Refining Co., 594 F.2d 499 (5th Cir. 1979); 35

U.S.C. § 282.

not as to their correctness. We are limited in the latter

analysis by the general proposition that jury findings on

disputed matters of fact will be upheld by the reviewing

court if substantial evidence exists to support them. Kiva

Corporation v. Baker Oil Tools, Inc., 412 F.2d 546 (5th

Cir. 1969); Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir.

1969).

As this court noted in Swofford, however, the validity

issue involves mixed questions of fact and law. Preliminary

factual determinations are made on the scope and content

of the prior art and on the differences between the prior

art and the claims at issue. The trial judge then determines

whether the improvement would have been obvious at the

time of the invention to a person having ordinary skill in

the art. This conclusion of law requires the application

of correct legal criteria to the factual determinations

made by the jury. Armour & Co. v. Wilson & Co., 274 F.2d

143 (7th Cir. 1960). The legal conclusion is “fully review-

able by the appellate court.” Monroe Auto Equipment Co. v.

Heckethorn Mfg. & Supply Co., 332 F.2d 406, 411 (6th Cir.

1964) ; Swofford at 368. Any difficulty, however, in apply-

ing legal criteria to findings of fact, is considerably dimin-

ished in cases where the jury has made implicit findings on

each underlying factual inquiry. See, Kiva Corporation.

If findings of fact on the scope of the prior art and the

uniqueness of the claim are supported by substantial evi-

dence, a legal conclusion consistent with those findings is

likely to follow. See, e. q., Kiva Corporation; Steelcase, Inc.

v. Delwood Furniture Co., Inc., 578 F.2d 74 (5th Cir. 1978) ;

Kaspar Wire Works, Inc. v. Leco Engineering & Machine,

Inc., 575 F.2d 530 (5th Cir. 1978).

“Full review” in this context amounts to an inquiry

whether the judge “correctly applies the law set out in

Graham.’ Swofford at 368; Kaspar at 543. Like the trial

court, we are aided in our inquiry by the jury’s findings

of fact. If supported by substantial evidence, these findings

are apt to strengthen the trial court’s legal conclusion. This

case is no exception. Our independent review of the record

discloses competent substantial evidence to support the

jury’s findings on the factual inquiries underlying the

determination of validity.

C. Scope and Content of the Prior Art.

Evidence was presented to show that prior to the

invention in 1966, no valve existed which solved both the

problems of noise and cavitation, nor had any valve been

able to use all fluids (gas, liquid, ete.) without damage. A

number of manufacturers and users, including the world’s

largest control valve manufacturer, had failed to develop

a valve which could solve both problems.

D. Differences Between the Prior Art and the Claims

at Issue.

Valtek contends that claim 17 is readable on certain

prior art references. These include the “Sempell R06”

publicztion and the Binkley, Schlegel, and Willmann pat-

ents.

Sempell RO6 is a German publication describing the

Sempell valve as having a stack of “annular resistance

disks,” each having “radially ground-in recesses which,

when stacked one upon the other, form high-resistance flow

channels.” The Binkley patent describes a valve for regu-

lating high velocity discharge of water at dams. To control

velocity through the valve, Binkley uses an annular struc-

ture that surrounds a valve plug which is actuated in a

piston-like fashion to permit fluid to enter into numerous

passageways created by the annular structure. The “pass-

ageways” are designed to decrease fluid velocity. Accord-

ing to Valtek, Binkley demonstrates that it has long been

known that “angular turn-inducing configurations” would

“impact high frictional resistence losses to fluid flow.” (Claim

A10

17 of the patent.) The Schlegel devise utilizes a set of disks,

each having concentric “projections” over which the fluid

flows. Fluid is repeatedly deflected at right angles by the

projections causing considerable pressure loss. The Will-

mann device is a valve used for emulsifying milk or other

fatty liquids. It includes a stack of annular disks through

which the fluid is compelled to flow. Each disk has on its

face a number of grooves which are said to correspond with

the “passageway grooves of the Self patent.”

CCI presented the following evidence to distinguish

these prior art references from the claims of the Self pat-

ent. The Sempell R06 valve was not designed to control

velocity. The purpose of separate disks in the Sempell

valve was to facilitate replacement of disks damaged from

the uncontrolled velocity, avoiding the necessity of replac-

ing the entire valve. The valve plug was designed to with-

stand high velocity whereas Self’s plug acts only to close

off passageways from which low velocity fluid flows. The

Sempell valve would easily clog with dirt, was subject to

excessive wear, and was withdrawn from the market in

1975. In the Binkley device, fluid flows over and around

the structure formed by the element, and not through pas-

sageways between abutting faces of annular disks. Binkley

is a variable resistor addressed to water noise only. In

Binkley, all passageways are simultaneously filled, where-

as the Self plug regulates water flow through selected disks.

The Schlegel device does not have a stack of disks with

abutting faces within the meaning of claim 17. Because

it has no control plug within the resistor, it is not a valve.

It does not have a plurality of passageways but one inlet

and one outlet per pair of disks. It is used only for gases.

It is a variable velocity device, not a constant velocity

device as the Self patent. The Willmann apparatus was

designed to homogenize milk and was used only in liquid

applications. It was one of the prior art references con-

All

sidered by the patent examiner prior to granting the Self

patent.

E. Secondary Factors.

Evidence was also before the jury showing: that the

Self valve was a tremendous commercial success; that com-

petitors were distressed over the widespread success of

the Self valve; that experts in the valve art were at first

skeptical over the claims of the inventor; that prior to the

invention experts in the art urged against the use of abrupt

turns which ultimately proved the solution to the problem;

and, that competitors viewed the Self valve as representing

an important advance in the art.

F. Conclusion.

In reaching their general verdict, the jury was able to

consider extensive and often conflicting evidence of a tech-

nical nature. Scientific testimony included that of the in-

ventor, three fluid dynamics experts, three control valve

experts, the designer of the Valtek valve, several user

experts, and two patent experts. Exhibits included flow

demonstrations in the courtroom, approximately 200 doc-

umentary exhibits, and approximately 60 physical exhibits.

We are satisfied on this record that the jury’s factual find-

ings are supported by substantial evidence,

We also conclude that the trial court correctly applied

the law set out in Graham to these factual findings to

determine that the improvement embodied in the patent

would not have been obvious to one skilled in the art at

the time of the invention.

Il. Evidentiary Rulings.

Defendants contend that the trial court erred in refus-

ing to admit statements made under oath to the patent

office by Richard Self, and written findings entered by the

Al2

patent examiner. We disagree. The trial court found that

the statements of Mr. Self were not in conflict with his

testimony and were therefore not available to impeach him.

The ruling was within the trial court’s discretion. United

States v. Hale, 422 U.S. 171, 95 S.Ct. 2133, 45 L.Ed.2d 99

(1975). The examiner’s report was a non-final agency ac-

tion which included the examiner’s opinion on the ultimate

issue of validity. The trial court did not abuse is discretion

in excluding the report on the basis of possible prejudice.

Perel v. Vanderford, 547 F.2d. 278 (Sth Cir. 1977); Fed.R.

Evid. 403.

Ill. Patent Infringement.

Defendants argue that as a matter of law claim 17 is

not infringed. First, it is argued that claim 17 is a depend-

ent claim which must be construed to include all the limita-

tions of claim 1. 35 U.S.C. § 112. The language “said pas-

sageways” in claim 17 must, therefore, be limited to the

meaning of “individual passageway grooves” as described

in claim 1. Because the Valtek disks do not have “passage-

way groves” but concentric teeth, there can be no infringe-

ment. Next, Valtek argues that the file history of the patent

and the prior art require a narrow construction of the

phrase “individual passageway grooves.”’ Because to uphold

its validity claim 17 had to be narrowly construed to avoid

the prior art, it cannot now be expanded by the doctrine

of equivalents to recapture what was previously disclaimed.

If the “individual passageway grooves” are read so broadly

as to include the Valtek disks, claim 17 is invalid as read-

able on the prior art Schlegel disks. See, e. g., Sterner

Lighting, Inc. v. Allied Electric Supply, Inc., 431 F.2d 539

(5th Cir. 1970). Finally, it is argued that changes made

in the patent file wrapper support the limited construction.

The passageway grooves language replaced the phrase

“streams of fluid” which was readable on the Wilson prior

art reference. The new language was chosen to avoid con-

Al3

flict with prior art closely corresponding to Valtek’s valve.

It cannot now form the basis for a finding of infringement

against Valtek. See, ec. g. Nationwide Chemical Corp v.

Wright, 584 F.2d 714 (5th Cir. 1978).

These arguments do not address the ultimate factual

question. Agreeing that claim 17 is a dependent claim

and that it must be construed with all the limitations upon

the phrase “individual passageway grooves” as argued

above, the question remains as to the proper meaning and

significance of the phrase. That is a factual issue to be

determined by the jury with reference to the specifications

in the patent, the disclosures of the prior art, and the tes-

timony of experts. National Filters, Inc. v, Research Pro-

ducts Corp., 384 F.2d 516 (5th Cir. 1967); Cameron Iron

Works v. Stekoll, 242 F.2d 17 (5th Cir. 1957) ; Graver Tank

and Manufacturing Co. v. Linde Air Products Co., 339

U.S. 605, 70 S.Ct. 854, 94 L.Ed. 1097 (1950).

After considering the extrinsic evidence, the jury re-

solved the factual dispute over the meaning of the phrase

against the defendants. We believe the judge properly

denied the defendants’ motion for judgment n, o. v. on this

issue. Extrinsic evidence in support of the jury’s findings

was “of such quality and weight that reasonable and fair-

minded men” might reach different cocnelusions. Boeing

Co. v. Shipman, 411 F.2d 365, 374 (5th Cir. 1969). The jury

verdict was properly left undisturbed.

IV. Trademark Infringement.

A trademark is infringed if use of the allegedly in-

fringing mark is likely to cause confusion or mistake, or to

deceive purchasers or users as to the source, endorsement,

affiliation or sponsorship of the product. 15 U.S. C. § 1114;

Roto-Rooter Corp v. O’Neal, 513 F.2d 44 (5th Cir. 1975).

“Proof of actual confusion is not necessary—likelihood of

confusion is the appropriate inquiry.” Id., at 45; Contin-

Al4

ental Motors Corp. v. Continental Aviation Corp., 375 F.2d

857 (5th Cir. 1967). Factors to be considered in determin-

ing likelihood of confusion include:

the type of trademark at issue; similarity of

design; similarity of product; identity of retail outlet

and purchasers; identity of advertising media utilized ;

defendant’s intent; and actual confusion. [/d., at 45.]

At the close of the evidence, the question of trademark

infringment was propounded to the jury with appropriate

instructions by the court.’ The jury responded with a writ-

ten verdict stating, “Yes, defendant’s use of ‘DRAGON

TOOTH’ is likely to cause confusion, or mistake or to

deceive.” The jury also found that “the trademark infringe-

ment was intentional.’’ The trial court concluded that

“there was substantial evidence to support the jury verdict.”

We agree and find no basis for disturbing the jury verdict

or the judge’s order denying judgment n. o, v. on this point.

3. The jury was charged as follows:

Plaintiffs’ trademark DRAG is infringed by defendants only if defend-

ants’ use of DRAGON TOOTH on their valve creates a likelihood of

confusion, mistake or deception as to source, as to endorsement, approval,

affiliation or as to sponsorship of the DRAG valves or DRAGON TOOTH

valves.

Likelihood of confusion, mistake or deception is determined by evalu-

ating a variety of factors including:

(1) similarity or disimilarity of the two marks in their entirety, as to

appearance, sound, connotation and commercial impression;

(2) similarity of product;

(3) whether the purchasers or users of the valves are same;

(4) the level of sophistication of the valve purchasers and users;

(5) the conditions under which sales of the valves are made including

their sales channels;

(6) whether the advertising media utilized are the same;

(7) defendants’ intent; and

(8) actual confusion, if any.

Ald

Accordingly, the final order and judgment of the trial

court is

AFFIRMED.

Appendix to follow.

APPENDIX

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a ag. I.

s7- A

~~ x ——

aN:

sate 2

aeF

L7- i

at R x4

Figure 2 Figure 3 ;

—.

39 ma cane .o/

NOTE: Italicized numbers are irrelevant to the

issues in this case.

Al7

APPENDIX—Continued

—_

NOTE: Italicized numbers are irrelevant to the issues

in this case.

A18

APPENDIX—Continued

Fig. 6

C) SPRING BUTTON

ADJUSTING SCREW PISTON STEM O-RING

ADJUSTING SCREW GASKET anos

ACTUATOR STEM BUSHING

CYLINDER

PISTON O-RING

ACTUATOR STEM LOCK NUT

YOKE O-RING

ACTUATOR STEM SPACER

ACTUATOR STEM BELLOWS

ee ; STEM CLAMP

alates GLANO FLANGE

CYLINDER RETAINING RING q ——

ACTUATOR STEMO-ING — | {: YOKE BOLTS

STROKE PLATE —— z YOKE

BONNET FLANGE ADAPTER p O UPPER PACKING

BONNET PACKING SPACER

LOWER STEM GUIDE once

BONNET FLANGE NUT

SLEEVE GASKET

PRESSURE BALANCE =

BONNET FLANGE STUO |

PRESSURE BALANCE SEAL _

BONNET GASKET

4 te °

HH ;

tt 1

pit ae

tT al

“

ee- .

SEAT RING GASKET DRAGON-TOOTH STACK

SEAT RING PLUG BODY

Al19

APPENDIX—Continued

A20

ALVIN B. RUBIN, Circuit Judge, concurring in part

and dissenting in part:

In discussing the validity of the patent, the majority

opinion demonstrates complete understanding of the issues.

Because I think the result my brethren reach is correct,

I concur. However, while the approach they take pursues

a line indicated by prior jurisprudence, I think it takes us

a step further into the Serbonian bog that threatens to

engulf patent litigation. A different method of trial appears

to me to be the only firm ground for traversing the terrain

of obviousness in a manner consistent with the Supreme

Court’s determination in Graham v. John Deere Co., 1966,

383 U.S. 1, 17, 86 S.Ct. 684, 694, 15 L.Ed.2d 545, 556, that

“the ultimate question of patent validity is one of law.”

Patent validity and nonobviousness are not separate

questions; validity embraces nonobviousness for it can be

established only by proving that indispensable ingredient.

In Swofford v. B & W, Inc., 5 Cir. 1968, 395 F.2d. 362, cert.

denied, 393 U.S. 935, 89 S.Ct. 296, 21 L.Ed. 272, Judge Wis-

dom, implementing Graham for a panel of this court,

attempted to provide a path to follow in determining the

respective roles of judge and jury in deciding the obvious-

ness issue. Noting the inconsistent trails we had previously

followed, Swofford determined that obviousness is itself

a question of law for the judge to decide. The decision is

reached in three steps. First, what was the prior art?—

a factual question, Second, what, if any, improvement has

the patentee made over the prior art? — a question of fact

that will usually turn on expert testimony. Third, would

the improvement have been obvious to one skilled in the

art?—a question of law, fully reviewable by the appellate

court.

The Supreme Court apparently takes the same view

of the obviousness issue, see Sakraida v. Ag Pro, Inc.,

A21

1976, 425 U.S. 273, 96 S.Ct. 1532, 47 L.Ed.2d 784; and we

have since attempted consistently to adhere to the approach

in Swofford. See, e. g., Robbins Co. v. Dresser Industries,

Inc., 5 Cir. 1977, 554 F.2d. 1289, 1290; Gaddis v. Calgon

Corp., 5 Cir. 1975, 506 F.2d 880, 884; Garret Corp v. Amer-

can Safety Flight Systems, Inc., 5 Cir. 1974, 502 F.2d 9, 14.

In White v. Mar-Bel, Inc., 5 Cir, 1975, 509 F.2d. 287,

we took another step on the Swofford course, stating:

[I)f the ultimate issue of validity depends on subsid-

iary fact questions, it is the court’s duty to instruct

the jury that it should return one verdict if the facts

are found one way and a different verdict if the facts

are found otherwise. In such event, as in other cases

tried to a jury, the reviewing court will presume that

the disputed matters of fact have been resolved fav-

orably to the prevailing party in accordance with the

trial judge’s instructions. (Emphasis supplied.)

Id. at 290-91. We thus adopted the view of the Seventh

Cireuit in Panther Pumps & Equipment Co. v. Hydrocraft,

Inc., 7 Cir. 1972, 468 F.2d 225, 228, cert. denied, 411 U.S.

965, 93 S.Ct. 2143, 36 L.Ed.2d 685, an opinion by Judge

(now Justice) Stevens.

I respectfully submit that the path laid out in Panther

Pumps and followed in Mar-Bel does not and cannot satis-

fy the Graham mandate. Both opinions rely on the thesis

that, because the judge may, in other civil jury cases, in-

struct the jury to render a general verdict, he may (or

should) also do so in patent validity cases. Under that view,

the problem in patent cases is merely to instruct the jury

adequately about the factual determinations that would

point one way or the other; an instruction perhaps more

complex than in other jury cases but different only in a

slight degree.

The verdict reached by the jury on such a charge es-

capes appellate review save for analysis of the correctness

A22

of the jury charge. Graham, I respectfully submit, com-

mands not only how and by whom issues are to be decided

at trial but how they are to be reviewed on appeal. The

basic issue before us is how we, as an appellate court, review

a general jury verdict that concludes merely (and categor-

ically) that the subject matter of the patent was not ob-

vious. My brethren, following Mar-Bel, conclude that there

are implicit factual findings in the general verdict that are

subject to review based only on the substantial evidence

test.

I think meaningful devotion to Graham requires a dif-

ferent course, unique to patent litigation. In this area where

decisional responsibility is so clearly divided, the methods

of reaching a decision must be more sharply defined; the

path to this end is to require jury verdicts on special inter-

rogatories, as permitted by Fed.R.Civ.P. 49(a). See gen-

erally Guidry v. Kem Manufacturing Co., 5 Cir. 1979, 598

F.2d 402. If we do not do so, the result will be that validity

will

effectively become a question for the jury, not one of

law for the judge. If every special verdict on validity

leads to implicit findings on non-obviousness, then the

trial court cannot review either the verdict or the

underlying findings unless the standard for judgment

notwithstanding the verdict is used,

Ropski, Constitutional and Procedural Aspects of the Use

of Juries in Patent Litigation, 58 J.Pat.Off.Soe’y 609, 685

(1976). Moreover that course has pragmatic difficulties: a

relatively minor error in the charge may require a lengthy

new trial. Submission on special interrogatories can avert

that. See Brown, Federal Special Verdicts: The Doubt

Eliminator, 1968, 44 F.R.D. 338.

Even if I thought Mar-Bel terra firma, I do not think

the judge followed its guidance here, The jury was ex-

plicitly instructed, “You are to determine the question of

A23

obviousness. . . .” This imperative was qualified merely by

identifying the underlying factual inquiries of the Graham

test as “factors to consider” when the jury was resolving

the question. The jury, not the judge, determined obvious-

ness; and not even the less than fully satisfactory Panther

Pumps procedure was followed. That case would at least

have required an instruction of the on-the-one-hand and

on-the-other-hand variety.

Appellants, however, do not challenge the instructions

to the jury. Their attack is levelled against the conclusion

that the patented invention was nonobvious. Because, in

addressing the motion for a judgment notwithstanding the

verdict, the district judge necessarily considered and re-

jected appellants’ contention that the invention was ob-

vious as a matter of law, and because, as my brethren ably

demonstrate, there is adequate evidence in the record to

support the conclusion of nonobviousness under the Graham

standard, I concur in the affrmance of the judgment that

the patent was valid and infringed. Moreover, in ruling on

the motion the district judge indicated that his conclusion

on the obviousness of the invention would not differ from

the jury verdict. In view of the district judge’s correct

statement of the Graham standard in his instructions to the

jury, and the substantial evidence of facts establishing non-

obviousness under that standard, I cannot conclude that

the district judge’s holding was erroneous as to either facts

or law. See Fed.R.Civ.P. 52(a); United States v. United

States Gypsum Co., 1948, 333 U.S. 364, 395, 68 S.Ct. 525,

542, 92 L.Ed. 746, 765; W.R.B. Corp. v. Geer, 5 Cir. 1963,

313 F.2d 750, 753, cert. denied, 1964, 379 U.S. 841, 85 S.Ct.

78, 13 L.Ed. 2d 47.

II.

Turning to the trademark issue, I cannot conclude

that the evidence shows any possibility of confusion by the

A24

customers for these devices. See Roto-Rooter Corp. v.

O’Neal, 5 Cir. 1975, 513 F.2d 44. That statement may sim-

ply reflect my personal perversity, for the jury apparently

found such a possibility, and the able trial judge and two

of my colleagues consider the evidence sufficient to war-

rant its verdict. The jury found that the trademark was

intentionally copied, and I not only consider this supported

by substantial evidence; I agree. The product was, how-

ever, as the majority show, sold only to sophisticated pur-

chasers.’ The valve controls are expensive advance-order

items, generally specially engineered for a particular ap-

plication. The marks themselves — DRAG and DRAGON-

TOOTH — are similar only in the use of the syllable

“drag’’. I do not find substantial evidence that the indus-

trial purchasing agents who were the real customers would

have been misled even had the imitator chosen the mark

Drag II in a deliberate effort to imitate. In this market,

there was neither real confusion nor likelihood of con-

fusion.

The evidence overwhelmingly suggests the opposite:

past purchasers of these valves were aware and future

purchasers likely would be equally aware of the exist-

ence of two valves, two manufacturers and two trademarks,

distinguishing between them with accuracy. No doubt Val-

tek’s use of the trademark DRAGONTOOTH aided in it

alerting the marketplace to the existence of competition to

the DRAG valve, as did its sales through the sales repre-

1. Tradmark infringement must rest upon a finding that the allegedly infring-

ing mark is likely to confuse the product’s “typical buyer”. Armstrong

Cork Co. v. World Carpets, Inc., 5 Cir. 1979, 597 F.2d 496, 500 n. 5;

Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 5 Cir. 1977,

549 F.2d 368, 389 n. 26. The evidence of the sophistication of the normal

purchaser and the care involved in the decisions leading to the purchase

of the product is the touchstone for determining the likelihood of confu-

sion. 3 R. Callmann, The Law of Unfair Competition, Trademarks and

Monopolies § 81.2 (3d ed. 1969).

A2d

sentative previously used by Control Components. But such

ploys to advise purchasers of the nature and availability

of one’s product are not the palming off of one’s goods as

those of a competitor required for trademark infringement.

See B. H. Bunn Co. v. AAA Replacement Parts Co., 5 Cir.

1971, 451 F.2d 1254, 1261. The evidence does not suffice to

demonstrate that the purchasers of these valves would be

led by Valtek’s trademark DRAGONTOOTH to purchase

the Valtek valve in the erroneous belief that it is actually

produced by Control Components. Valtek trades not on

the good will attached to its competitor’s trademark, but

on the market’s desire for the particular type of product

previously produced only by Control Components. The lat-

ter appropriation of the market is the essence of free com-

petition. If it has any limits, they are provided by the pat-

ent law. In my opinion the facts in the record and all rea-

sonable inferences from those facts can support only one

conclusion: there was no evidence of confusion among the

purchasers of these valves as tu the source of the Valtek

valve. See Boeing Co. v. Shipman, 5 Cir. 1969, 411 F.2d

365. I therefore respectfully dissent from that portion of

the court’s opinion upholding judgment of the trademark

infringement,

APPENDIX B

UNITED STATES COURT OF APPEALS

For THE FirrxH Circuit

No. 79-1626

D. C. Docket No. H-77-819

CONTROL COMPONENTS, INC., and

RICHARD E. SELF, Plaintiffs-Appellees,

Vv.

VALTEK, INC. and ALPHA ENGINEERING

COMPANY, Defendants-Appellants.

Appeal from the United States District Court for the

Southern District of Texas

Before FAY, RUBIN and HATCHETT, Circuit Judges.

JUDGMENT

This cause came on to be heard on the transcript of

the record from the United States District Court for the

Northern District of Texas, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment of

the said District Court in this cause be, and the same is

hereby, affirmed;

It is further ordered that plaintiff-appellants pay to

defendants-appellees, the costs on appeal to be taxed by

Clerk of this Court.

January 9, 1980

RUBIN, Circuit Judge, concurring in part

and dissenting in part.

ISSUED AS MANDATE: MAY 5, 1980

APPENDIX C

CONTROL COMPONENTS, INC. and

Richard E. Self, Plaintiffs-Appellees,

VALTEK, INC. and Alpha Engineering

Company, Defendants-Appellants.

No. 79-1626.

United States Court of Appeals,

Fifth Cireuit.

April 23, 1980.

Appeal from the United States District Court for

the Southern District of Texas;

FINIS E. COWAN, Judge.

ON PETITION FOR REHEARING AND

PETITION FOR REHEARING

EN BANC

(Opinion January &, 1980, 5 Cir., 1980),

609 F.2d 763) !

Before FAY, RUBIN and HATCHETT,

Circuit Judges.

PER CURIAM:

The Petition for Rehearing is DENIED and the Court

having been polled at the request of one of the members of

the Court and a majority of the Circuit Judges who are in

regular active service not having voted in favor of it, (Rule

* 35 Federal Rules of Appellate Procedure; Local Fifth Cir-

cuit Rule 16) the Petition for Rehearing En Banc is also

DENIED.

Before COLEMAN, Chief Judge, BROWN, AINS-

WORTH, GODBOLD, CHARLES CLARK, RONEY,

GEE, TJOFLAT, HILL, FAY, RUBIN, VANCE, KRA-

VITCH, FRANK M. JOHNSON, JR., GARZA HENDER-

SON, REAVLEY, POLITZ, HATCHETT, ANDERSON,

RANDALL, TATE, SAM D. JOHNSON and THOMAS A.

CLARK, Circuit Judges.

BROWN, Circuit Judge, with whom TJOFLAT, RU-

BIN and RANDALL, Circuit Judges, join, dissenting,

It may seem incongruous that a thing ordinarily

thought to be a procedural technicality should oceupy the

attention of the now 24 active Judges on this busy court

or impose a like burden on certiorari to the Supreme Court.

But this is much more than a question whether Special

Interrogatories F.R.Civ.P. 49(a) (or their form) are to be

used in preference to submission on a general verdict.

This case is of exceptional importance because the

issues it presents arise in every jury trial of a patent case.

Submitting the obviousness issue to a jury for a general

verdict, in the manner our previous decisions permit, ap-

pears to me to be inconsistent with the precept that “the

ultimate question of patent validity is one of law.” Graham

". John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545

(1966). I, therefore, respectfully, dissent from the refusal

to grant rehearing en banc.

APPENDIX D

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

CONTROL COMPONENTS, INC.

and RICHARD E. SELF,

Plaintiffs, CIVIL

v. ACTION

VALTEK, INC. and ALPHA No, H-71-619

ENGINEERING CO.,

Defendants.

. CHARGE TO THE JURY

QUESTION NUMBER 4

THE CHARGE ADDRESSED TO

OBVIOUSNESS

The fourth question is this:

Are the differences between the subject matter pat-

ented by the claims of the 074 patent and the prior art

such that the subject matter as a whole would have

been obvious to one of ordinary skill in the valve art

as of December 5, 19661

You will be asked to answer separately as to each of

Claims 7, 14 and 17 of the patent.

In deciding whether any or all of Claims 7, 14 and 17

are obvious over the prior art, you must first make these

determinations :

(1) The scope and content of the prior art.

(2) From the seope and content of all the prior art

relative to each of Claims 7, 14 and 17, what differ-

ences, if any, exist between the prior art and the

subject matter of each of Claims 7, 14 and 17?

(3) What was the level of skill of a person of or-

dinary skill in the valve art on or about Decem-

ber 5, 19667

Your analysis for the determination of the issue of

obviousness should be based on all of the prior art taken

as a whole. You may consider the inferences or teachings

which one of ordinary skill in the art would draw from

the prior art before December 5, 1966.

In evaluating whether the subject matter as a whole

would have been obvious as of December 1966 to those of

ordinary skill, the primary factors to consider are the con-

tent of the prior art and the differences or similarities

between the 074 patent and the prior art and the level of

skill of a person of ordinary skill in the art. You may also,

if you believe the evidence warrants it, take into consider-

ation the following secondary factors to the extent that

they may be found to cast some light on the circumstances:

(1) Whether the valve described by the 074 patent

yielded a new function or result not expected by

those of ordinary skill in the art as of December

5, 1966.

(2) Whether the nearest references had disadvantages

which would naturally discourage the search for a

new solution to problems of cavitation and noise.

(3) The commercial suecess of the 074 patented de-

vice and whether the commercial success, if any

you find, was largely independent of advertising

or of government regulation, such that the sue-

cess was related to the merit of the 074 patented

device, or whether the commercial success was

merely the result of advertising, sales promotion

or government regulation.

(4) The period during which the problem, if any,

solved by the 074 patented device, remained un-

solved after it was recognized as a problem.

(5) Whether the 074 patent satisfied a long-felt need

of those skilled in the art to which the subject

matter of the 074 patent pertains.

You are to determine the question of obviousness

based on the perception of a person of ordinary skill in the

art as of December 5, 1966 — not as of the level of know-

ledge at later dates. You must be cautious not to decide this

question in the light of hindsight —- which is always better

than foresight.

APPENDIX E

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

CONTROL COMPONENTS, INC.,

and RICHARD E. SELF,

Plaintiffs, CIVIL

v. ACTION

VALTEK, INC., and ALPHA No. H-77-819

ENGINEERING CO.,

Defendants.

BEFORE

HONORABLE FINIS E. COWAN,

DISTRICT JUDGE

Houston, Texas

March 6, 1979

TRANSCRIPT OF PROCEEDINGS

APPEARANCES

Mr. Tom Arnold of the law firm of Messrs. Arnold,

White & Durkee, 2100 Transco Tower, Houston, Texas; and

Mr. Roland T. Bryan and Mr. Paul L. Bollo of the law

firm of Messrs. Bryan & Bollo, Two Landmark Square,

Stamford, Connecticut; and Mr. Joseph M. Maguire of

The Babeock & Wileox Company, 161 E. 42nd Street, New

York, New York, appearing for the plaintiffs.

Mr. Bernarr Roe Pravel of the law firm of Pravel,

Gambrell, Hewitt, Kirk, Kimball & Dodge, 600 Jefferson,

°%>

Houston, Texas, and Mr. H. Ross Workman of the law

firm of Messrs. Fox, Edwards & Gardiner, 2000 Beneficial

Life Tower, Salt Lake City, Utah, appearing for the de-

fendants.

PROCEEDINGS

THE COURT: Let the record reflect that we are

going on the record in connection with Civil Action No.

H-17-819 and that counsel for all parties are here to dis-

cuss with the Court and make argument concerning the

form of a final order, a judgment decree relating to the

liability aspects of the case.

The Court has fixed upon a form of final judgment

which it intends to enter tomorrow, as soon as the secretary

ean type it up.

In addition to that, we have been discussing the form

of an order superseding the patent infringement injunction

in setting a supersedious bond.

The Court at this time has determined the type of order

that it is going to enter. It has not decided the amount of

the supersedious bond. Counsel for the parties indicate

that they wish to make a record concerning what we have

done today and the order that the Court contemplates en-

tering tomorrow. For that reason, we are going on the

record.

So you gentlemen representing the defendants please

go ahead and make the record that vou have indicated

you wish to make.

MR. WORKMAN: Just so the record will reflect,

the defendants have made a motion for NOV trademark

issues and have made argument in support thereof, and

I presume the Court has ruled on that matter.

THE COURT: That is right. The Court has indicated

an intention to overrule all defendants’ motions, and the

order which will be entered tomorrow actually does so.

MR. WORKMAN: And that included also the motion

for judgment and NOV on the obvious question of the

patent issue?

THE COURT: Right. Your understanding is correct.

MR. WORKMAN: Your Honor, also the defendants

have moved to add three short findings of fact on the trade-

mark issue. Has the Court made any ruling with respect

to the findings of fact?

THE COURT: Why don’t you dictate into the record

what those requested findings are. I think this record

would make more sense to the Appellate Court at this

point instead of going back and having to fish them out.

This way they would have before them the exact findings

that vou are requesting.

MR. BRYAN: I am Mr. Bryan. I thought the Court

said that you were not going to enter any findings except

this judgment.

THE COURT: That is correct, but I am letting him

make those findings.

MR. BRYAN: I am not sure the record reflects that.

THE COURT: Yes. He is going to dictate into the

record the findings he is going to request me to make. And

I would anticipate, in my mind, unless I change my mind,

I am going to decline to make them.

MR. WORKMAN: I will read these short findings.

Number 1: “The trademarked valves are expensive and

must be specifically engineered and designed for a particu-

lar application and they are brought only after numerous

meetings between the sales representatives and engineer-

ing staffs of both the manufacturers and the purchasers.”

THE COURT: TI am inclined to make the finding of

fact, however, I will state for the record that I think it is

established concisively as a matter of law. That is the case-———"’

I don’t think there is any dispute about that, and that is

the reason I would decline to make a finding of fact.

MR. WORKMAN: Number 2: “There is no evidence

that any purchaser of control valves has ever bought a

Dragon Tooth valve in the place it was manufactured or

sold by the manufacturer.”’

THE COURT: I disagree with that. I think there

was evidence of confusion, and so I will decline to make

that finding of fact.

MR. WORKMAN: And the third: Number 3: “Purch-

asers of the trademark valves have technical backgrounds

and are well educated and they are required to apply en-

gineering skills in selecting a particular valve prior to

purchase.”

THE COURT: Again, the Court has established that

that is as a matter of law and would decline to make a fac-

tual finding on it.

MR. WORKMAN: Thank you, your Honor.

MR. BRYAN: May I comment on that, Judge, just

for the record, for the plaintiff? I think that the record

shows that some purchasers may look at these things very

carefully, but the record also reflects that there are users

of such valves who may not look at them with such degree

of care, and that the record does show that users do call

for these things by their trademark names and there was

testimony to that effect. Certainly, that would be before

the Court on any appeal in this case.

Now, as to the degree of education and the degree of

scrutiny that are given by the people, I think there is not

conclusively shown that every sale is in that category.

The testimony of Mr. Bates was that some valves are

very small and can essentially be pulled off the shelf, and

they may or may not be subject to the same degree of

scrutiny by people of such education. Again, I think that

is a question of what is in the record, your Honor.

THE COURT: I think that is right. The Court’s

recollection on these matters that we have been discussing

now, while there may have been some difference in emphasis

among the various witnesses, that there was really no dif-

frence in the ultimate statement of fact of that that various

witnesses made.

MR. BRYAN: The point is, these were the things

that were submitted to the jury, under the instructions,

and the jury resolved whatever conflicts there are on the

point.

MR. WORKMAN: Just so the record is clear, the

defendants have moved that the trademark injunction be

stayed. And do we understand correctly — maybe the Court

ought to state its ruling with respect to that motion.

THE COURT: The Court has denied that motion on

the grounds that the jury’s findings with reference to the

trademark infringement issue are fully supported by the

record, and it would be inequitable to deny injunctive relief

on the trademark aspect of this case, in the Court’s judg-

ment.

MR. WORKMAN: And the record should reflect that

counsel has, in the course of the argument today, argued

that such a ruling will inevitably result in irreparable dam-

age to the defendants, particularly because it will require

the defendants to terminate the use of the trademark

immediately. And this termination of the use of the trade-

mark will cause immediate and irreparable damage.

Even in the event that the defandants should prevail

on appeal and because of the substantial expense and the

substantial necessary efforts that will be required to re-

instate the use of the trademark, after two vears of disuse

or two years of more disuse as a result of this order, the

defendants believe that they will, for all practical purposes,

have forever lost their rights to use the trademark and

forever lost their right of that good will.

THE COURT: The record will reflect that Mr. Work-

man did, in fact, and has, in fact, made that argument very

urgently and very persuasively, and the Court has re-

jected it.

MR. PRAVELL: I believe Mr. Workman has covered

all of these motions that are pending. I just want to be

sure that the record igs clear that the Court has denied

all of the defendants’ pending motions.

THE COURT: The record is, I hope, clear that the

Court has denied all of the denfendants’ pending motions.

Let the record also reflect that the Court’s decision in

entering this judgment is that the Court’s review of the

record has persuaded the Court, at least, that there is sub-

stantial evidence to support the jury’s findings. And the

Court’s intention of entering this judgment is not to make

any independent fiindings of its own, but simply to enter

judgment on the basis of the jury’s verdict.

It is the intention and hope of the Court that the

judginent that has been prepared and will be entered to-

morrow does in fact simply enter a judgment on the basis

of the jury’s findings.

MR. PRAVEL: May I reiterate one point that we

made in our motion with respect to the finding by the jury

of non-obviousness ?

THE COURT: Yes, sir.

MR. PRAVEL: And that is, as we have explained

to the Court prior to this time, and in our motion, we, the

defendants, regard, and I believe it is erystal clear, that

in the Fifth Cireuit the issue of obviousness under 35 USC

103 is a question of law and is not a jury issue. And that

under the Fifth Cireuit law, this is a factor which is an

issue which is properly before the Court and not for

the jury.

THE COURT: If that would be the case, and if the

Court is required to make a finding on it, the finding the

Court will make is consistent with the finding which the

jury has made.

Anything further, gentlemen?

MR. WORKMAN: Nothing further.

THE COURT: Mr. Bryan, did you have some kind

of record that vou wanted to make?

MR. BRYAN: The only one I wanted to make, your

Honor, is with respect to the patent injunctive suspension

or modification. The defendants do stipulate to the two-

year period, with respect to the infringement, about con-

tinuing infringement, as related in the order that the Court

has drafted for us as we are sitting here. But I do believe

that the ability to solicit new orders for delivery after the

two-year period should be limited to orders which can be

completed within the two-year period, otherwise they could

enter a group of orders which are not deliverable, say, for

seven years and in effect, by this order, get a compulsory

license for them.

MR. WORKMAN: I would like to speak to that.

THE COURT: Let me interrupt you a minute, Mr.

Bryan. How would you suggest or propose to that that

problem be dealt with?

MR. BRYAN: I would say under contract solicit

Dragon Tooth valves, which orders may be delivered

within the said two-year period.

THE COURT: Mr. Workman, do you want to be heard

in response to that?

MR. WORKMAN: Yes, sir. As Mr. Bryan well knows,

sometimes it take six months to a year to even make these

valves and that, in effect of that, is to, first of all, reduce

the time period into which the defendants would be able to

operate under this supersedious provision. But even more

importantly, the net effect of that is to preclude defendants

from making bids on any jobs for which they cannot guar-

antee delivery in this two-year period of time, and that is

going to be impossible. It is certainly outside of the control

of the defendants, how long it takes Exxon to process the

papers that are required and establish —

THE COURT: You do not have to argue any further.

I will decline Mr, Bryan’s request in that connection.

Does anybody have anything else that he wants to be

put on the record?

MR. BRYAN: We have none, your Honor.

REPORTER’S CERTIFICATE

I, Gina Bench, official court reporter for the United

States District Court for the Southern District of Texas,

appointed pursuant to the provisions of Title 28, United

States Code, Section 753, do hereby certify that the fore-

going is a true and correct transcript of the proceedings

had in the within-entitled and numbered cause on the date

hereinabove set forth. I do further certify that the fore-

going transcript has been prepared by me or under my

direction.

s/s GINA BENCH

Gina Bench

1917 Bank of the Southwest

Official Court Reporter

Houston, Texas 77002

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.