Petition for Writ of Certiorari — Chas. S. Tanner Co. v. Air Products & Chemicals, Inc.

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—

84-653), __

he

No. OCT 29 1964

ALEXANDER L. STEVAS,

Supreme Court of the United Statre——

OCTOBER TERM, 1984

CHAS. S. TANNER CO. and

NATIONAL STARCH AND CHEMICAL

CORPORATION,

Petitioners,

v.

AIR PRODUCTS AND CHEMICALS, INC.,

Respondent.

ON WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

PETITION FOR CERTIORARI

GEOFFREY C. HAZARD, JR. HERBERT F. SCHWARTZ

New Haven, Connecticut 875 Third Avenue

New York, New York 10022

Tel.: (212) 715-0600

Attorneys for Petitioners

Of Counsel:

FIsH & NEAVE

875 Third Avenue

New York, New York 10022

Tel.: (212) 715-0600

October 23, 1984

QUESTION PRESENTED FOR REVIEW

May a District Court, relying on a local court rule and

practice, deny a litigant notice of and opportunity to meet an

opponent’s contentions, including a claim for more than $1

million in attorney fees, by requiring that both trial briefs and

post-trial submissions be received on an ex parte basis?

STATEMENT UNDER RULE 28.1

Pursuant to Rule 28.1 of this Court, petitioner National

Starch and Chemical Corporation states that it is a subsidiary of

National Starch & Chemical Holding Corporation, New York,

New York which is a subsidiary of Unilever N.V., a foreign

corporation, Rotterdam, The Netherlands. National Starch

and Chemical Corporation has no subsidiaries or affiliates.

~ BEST AVAILABLE COPY

TABLE OF CONTENTS

CONSTITUTIONAL PROVISION, RULES AND

I EE I cs rewecasccncectctisennvsacossavecesisessneseres

REASONS FOR GRANTING THE WRIT

A.

The District Court Improperly Departed From

The Accepted And Usual Course Of Judicial

Proceedings By Following Ex Parte Procedures

That Denied National Notice Of And An

Opportunity To Meet AP’s Contentions ...............

1. Despite The Complexity Of The Case,

Neither A Pretrial Order Nor Any Other

Exchange Of Contentions Delineated The

I SN NE SI a spacicctncnissiebeceschentnsceesnonvesbes

2. AP’s Trial Contentions Were Received On

An Ex Parte Basis In Violation Of The

Standards Of Federal Civil Justice ...............

The District Court’s Procedures Prejudiced

I hit ci dali dacephdgtbontnensuddsenouachaitbnnvennd

1. Attorney Fees Were Awarded During The

First Phase Of The Trial Although Nation-

al Was Not Fairly Apprised That The Issue

Was Then Before The Court.........................

2. The District Court’s Holdings Of Validity,

Enforceability And Infringement Are

Irreconcilable With The Facts......................

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TABLE OF AUTHORITIES

Cases

Alyeska Pipeline Co. v. Wilderness Society, 421

a ane USP UTED ns tinsancstneninecdes pammicinnbicadiieataiscvapaiioas

Arbrook, Inc. v. American Hospital Supply Co., 645

er i gE |) EE ne yee

Chicopee Manufacturing Corp. v. Kendall Com-

pany, 288 F.2d 719 (4 Cir. 1961) 0.0... eee

Cloud v. Standard Packaging Corporation, 376

ce © Seen ONT P sictebencecaseciectebeccolesionseceeianien

Continental Can Co. v. Anchor Hocking Glass

Ca, SEE Fae B25 C7 Gar. TIGR D icsctacitresncctesceces

C.P.C. v. Nosco Plastics, Inc., 719 F.2d 400 ( Fed.

AE Fe pans sak viake ic annccthoica boone ciphapiasbnankaehiauniaianioune

Deere & Co. v. International Harvester Co., 658

op Bip eg yg + SERUM ean ommnren

Fromson v. Advance Offset Plate, Inc., 720 F.2d

Fe Oe es I rtscenncbeinicenceanennenmninnnionas

General Electric Company v. Sciaky Bros., Inc., 415

i BE ane Tee Dee nae

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

La Buy v. Howes Leather Co., 352 U.S. 249 (1957)

McGill Inc. v. John Zink Co., 736 F.2d 666 (Fed.

ee IE sian paseinilnaesnstanansncencaeninecsn inland

Morgan v. United States, 304 U.S. 1 (1938) ...........

Nyyssonen v. Bendix Corp., 137 USPQ 853 (D.

Mass. 1963), affirmed 342 F.2d 531 (1 Cir.

Paeco, Inc. v. Applied Moldings, Inc., 562 F.2d 870

FOES. BOP TO ansnskatnsaciodipuidiinsnabieudinsuanacteeomaniianialeanions

Panduit Corp. v. All States Plastic Manufacturing

PAGE

17

iV

Co., Inc., No. 84-569, Slip Op. (Fed. Cir.

ET Sy UNIT seksi slic stiias nicsctaictaiadaaiinianatba

Petersen Mfg. Co. vy. Central Purchasing, Inc., 740

cme CER CEs Tals ROOD wicercnsniccnenssiseecoenbicnasn’

Photovest Corp. v. Fotomat Corp., 606 F.2d 704 (7

FM SPIT snc) chiniasaccntsonntiaielniepbhinceaiibdeenaceaababateitinetons

Price v. Inland Oil Co., 646 F.2d 90 (3 Cir. 198!)..

Rohm & Haas Co. v. Crystal Chemical Co., 736

A Et IED ctaccenin cnisiseanncahencicetdennetis

Rosemount, Inc. v. Beckman Instruments, Inc., 727

ee Se ea ees SP cicohiceescaninaapadennsicooiene

Saturn Mfg. v. Williams Patent Crusher & Pulver-

izer, 713 F.2d 1347 (8 Cir. 1983) 0.0... eee

Sundstrand Corp. v. Standard Kollsman Industries,

ae, Se I CF Ca FTI rcicacictetesisittncccn

Surowitz v. Hilton Hotels Corp., 383 US. 363

PE Ecnskckanintlicshissnsbceikisinidieial oukabnabiaiesneniabden acess

TWM Manufacturing Co., Inc. vy. Dura Corp., 213

USPQ 423 (E.D. Mich. 1981), affirmed in per-

tinent part 722 F.2d 1261 (6 Cir. 1983)...............

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

United States v. First Nat. Bank of Circle, 652

ee Ne 0 es BT ik adineisatnncicercsctnmescinenensannanas

United States v. Rosner, 485 F.2d 1213 (2 Cir.

Wardius v. Oregon, 412 U.S. 470 (1973)...

Western Elec. Co. v. Stewart-Warner Corp., 631

ee Is TE Niediertsncicisncnddssnsnendascodaaaonaas

Williams v. Florida, 399 U.S. 78 (1970).........:0:0000

PAGE

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n.7, 12, n.10,

13,n.11

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n.14

Other Authorities

United States Constitution

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United States Code

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Federal Rules of Civil Procedure

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Local Federal District Court Rules

ORDER RE: CIVIL CASES SET FOR

TRIAL IN SPECIAL OR REGULAR

TERMS OF COURT IN THE DISTRICT

OF SOUTH CAROLINA (D.S.C. July 7,

IN THE MATTER OF: RULE 16(b) FED-

ERAL RULES OF CIVIL PROCEDURE

(D.S.C. September 7, 1983) ...........:::ccceeeeees

Eastern District and Western District of Ar-

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Eastern District and Western District of Ar-

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PAGE

n.14, 16, 17

n.12

2,8

2-3, 10

n.12

n.10

PAGE

Southern District of Indiana Rule 21(f) .......... n.10

Eastern District of Michigan Rule 24(b) ......... n.10

District of Kansas Rule 20( c)......................0.... n.10

Code of Judicial Conduct For United States Judg-

es, 69 F.R.D. 273 (1976)

COORD, THEE ncctiesinttcintenensinctcabeiialatitambianiatatintaeiities 2, 3, 12

3 Moore’s Federal Practice 9 15.08{3] (2d ed.

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3 Moore's Federal Practice 4 16.14 (2d ed. 1948,

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No.

IN THE

Supreme Court of the United States

Octoser Term, 1984

CHAS. S. TANNER CO. and

NATIONAL STARCH AND CHEMICAL

CORPORATION,

Petitioners,

v.

AIR PRODUCTS AND CHEMICALS, INC.,

Respondent.

ON WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

POR THE FEDERAL CIRCUIT

PETITION FOR CERTIORARI

Petitioners Chas. S. Tanner Co. and National Starch and

Chemical Corporation (“National”)' pray that a writ of cer-

tiorari issue to review t.e judgment of the United States Court

of Appeals for the Federal Circuit holding Air Products’

(“AP’s”) patent no. 3,708,388 (“ ‘388 patent”) valid, enforce-

able and infringed and awarding AP attorney fees.

1“National” refers to both petitioners, Chas. S. Tanner Co. and

National Starch and Chemical Corporation.

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

Federal Circuit (A 1-6) is not reported. The opinion of the

United States District Court for the District of South Carolina

(A 7-84) is not reported in Federal Supplement. It is reported

unofficially at 219 USPQ 223.

JURISDICTION OF THIS COURT

The judgment of the Court of Appeals was entered on June

29, 1984. The Court of Appeals deniec National’s petition for

rehearing and suggestion for rehearing en banc on August 10,

1984. This petition was filed within 90 days thereafter. The

jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISION,

RULES AND CANON INVOLVED

Relevaht to this petition are the Fifth Amendment of the

United States Constitution, Rules 16(c)(5) and (e) and $2(a)

of the Federal Rules of Civil Procedure, local court rule entitled

ORDER RE: CIVIL CASES SET FOR TRIAL IN SPECIAL

OR REGULAR TERMS OF COURT IN THE DISTRICT OF

SOUTH CAROLINA (DS.C. July 7, 1964) and Canon 3,

A(4) of the Code of Judicial Conduct. Each of these is printed

in its entirety in the Appendix (A 100-105).

ORDER RE: CIVIL CASES SET FOR TRIAL IN SPE-

CIAL OR REGULAR TERMS OF COURT IN THE DIS-

TRICT OF SOUTH CAROLINA, reads in pertinent part:

“In view of the large number of civil cases pending in

the District, and in view of the fact that several special

terms of civil court have been set, and in order to expedite

the trial of such cases, all attorneys having civil cases set

for trial at any special or regular terms of court are hereby

directed to furnish to the Court a trial brief at least five (5)

days prior to the opening of the term of Court in which

such case is set for trial ....

* - *

. a

3

“(It is understood that the information required here-

in is for the sole use of the Court, and it is not expected that

copies will be furnished to opposing counsel. )

“July 7, 1964”

Rule 16(c)(5), F.R.Civ.P., whose pertinent part became

effective August |, 1983, reads:

“(c) Subjects to be Discussed at Pretrial Confer-

ences. ...

,

(5)... exchanging pretrial briefs... .’

Canon 3, A(4) of the Code of Judicial Conduct reads in

pertinent part:

“A judge should accord to every person who is legally

interested in a proceeding, or his lawyer, full right to be

heard according to law, and, except as authorized by law,

neither initiate nor consider ex parte or other commu-

nications concerning a pending or impending proceeding.”

STATEMENT OF THE CASE

This action was commenced in May 1979 in the United

States District Court for the District of South Carolina and

assigned to the Honorable G. Ross Anderson, Jr. The com-

plaint alleged that Chas. S. Tanner Co. (““Tanner’’) manufac-

tured, used and sold certain adhesives that infringed AP’s ’388

patent and violated AP’s trade secret rights. Jurisdiction was

based on 28 U.S.C. § 1338(a). National Starch and Chemical

Corporation acquired Tanner in 1980 and was added as a

defendant in 1981. In December 1981 the issues of alleged

damage to AP and alleged patent misuse were severed from the

patent and trade secrets liability issues and reserved for

subsequent trial. No reference was made to an issue of attorney

fees in the severance order.

4

On September 10, 1982, the District Court ordered that the

trial of the first phase of the case commence on November 29,

1982. There was no pretrial conference or similar pretrial

procedure. No pretrial order was entered delineating the issues

to be tried. On November 24, 1982, the parties exchanged lists

of exhibits. On November 26, 1982, pursuant to the local court

rule set forth above, the parties submitted trial briefs? to the

District Court on an ex parte basis. Neither side was given the

other’s brief. Neither party was informed of the identity of

witnesses to be called other than experts. The Court required

only that each evening a party identify witnesses to be called

the next day. Trial lasted 12 days and resulted in 3000 pages of

transcript and the admission of over 1350 exhibits. There were

no closing arguments. On December 15, 1982, the District

Court denied National’s request that it be permitted to see AP’s

post-trial submissions. There were no post-trial briefs. On

February 15, 1983, pursuant to the District Court’s order, both

parties submitted proposed findings of fact and conclusions of

law on an ex parte basis.

On May 3, 1983, the District Court issued an opinion

holding that the ’388 patent was valid, enforceable and in-

fringed but that National had not misappropriated AP’s trade

secrets. The District Court also held that the case was

“exceptional” within the meaning of 35 U.S.C. § 285 and on

this basis awarded AP attorney fees, subject to proof of their

amount. National subsequently moved under Rules 59(e) and

60(b), F.R.Civ.P., for deletion of the attorney fees award

because it had not been given notice that the issue of liability

for attorney fees was being tried in the first phase of the case

and had not introduced any evidence on the issue. The District

Court denied this motion on June 14, 1983.

National filed a timely appeal to the United States Court of

Appeals for the Federal Circuit. AP did not file a cross appeal.

On June 29, 1984, the Court of Appeals affirmed the District

Court decision. On August 10, 1984 the Court of Appeals

denied National’s petition for rehearing and rehearing en banc.

2 Petitioners use the terms “trial brief’ and “pretrial brief”

interchangeably in this petition.

a

REASONS FOR GRANTING THE WRIT

A. The District Court Improperly Departed From The Ac-

cepted And Usual Course Of Judicial Proceedings By

Following Ex Parte Procedures That Denied National

Notice Of And An Opportunity To Meet AP’s Contentions

The procedure followed by the District Court required ex

parte arguments by each party that were not disclosed to the

other party. National was thereby denied an opportunity to

meet arguments that had been made to the Court by its

adversary. This procedure is inconsistent with the rules and

practice of most other federal district courts, with the spirit and

now the letter of the Federal Rules of Civil Procedure, and with

the Code of Judicial Conduct and the Constitutional require-

ment of due process.

The matters at issue in the first phase of the bifurcated trial

were complex and substantial. They included National’s right

to make, and ultimately the public’s right to use, the adhesives

allegedly covered by the patent in suit, as well as National’s

potential liability for many millions of dollars in past damages.

As National discovered only upon reading the District Court’s

opinion, these issues also included that of liability for what may

amount to more than $1 million dollars in attorney fees.

While a District Court has discretion as to whether and

how to define the issues for trial, the ex parte procedure used in

this case was wholly improper. That procedure was baSed on a

rule of the District Court for the District of South/Carolina,

which contemplates that the trial briefs are to be suPmitted on

an ex parte basis. This expectation was enforce in this case

with an observation by the Court that an ‘exchange of pretrial

contentions would render them “totally useless”. The District

Court also required that post-trial submissions be ex parte,

apparently permissible in that District. The effect was equiva-

lent to permitting counse! to telephone the judge with an

argument that the other side never hears.

6

This matter is of general importance in the administration

of federal justice and warrants the exercise of the Court’s

supervisory authority over the federal court system. Pertinent

here is La Buy v. Howes Leather Co., 352 U.S. 249, 251 (1957),

in which this Court said:

“The importance of the question in the administration of

the Federal Rules of Civil Procedure, together with the

uncertainty existing on the issue among the Courts of

Appeals, led to our grant of a writ of certiorari.”

No other district court in the United States has a rule like that

of the District of South Carolina, although such a practice

concerning pretrial and post-trial submissions may occur in

other federal courts. Indeed, the rules and practice in most

federal courts are to the contrary. The Federai Rules of Civil

Procedure contemplate fair pretrial notice of the issues in

controversy. Moreover, Rule 16(c)(5), F.R.Civ.P., which

became effective on August 1, 1983, makes this principle

explicit by referring to “filing and exchanging pretrial briefs”

(emphasis supplied ).

A writ of certiorari should issue to correct the denial of fair

procedure in this case and to establish that the procedures

sanctioned by the District Court’s rule of court,? however

3 There was no normal exercise of the Court of Appeals’ super-

visory authority in this case. The Court of Appeals for the Federal

Circuit is a unique court with limited jurisdiction. See 28 U.S.C.

§ 1295. It has recognized that, because of these jurisdictional

limitations, it has no supervisory authority over the district courts. See

Petersen Mfg. Co. v. Central Purchasing, Inc., 740 F.2d 1541

(Fed.Cir. 1984); C.P.C. v. Nosco Plastics, Inc., 719 F.2d 400, 401

(Fed.Cir. 1983). Recognizing this limitation, the Court of Appeals

has recently stated that, to “minimiz[e] confusion and conflicts . . .

the Federal Circuit shall review procedural matters, that are not

unique to patent issues, under the law of the particular regional circuit

court where appeals from the district court would normally lie.”

Panduit Corp. v. All States Plastic Manufacturing Co., Inc., No. 84-

569, Slip Op. at 18-20 ( Fed.Cir. September 25, 1984). This lack of

supervisory authority might have contributed to the Court of Appeals’

failure to deal with the procedural errors of the District Court.

expedient they might seem, are impermissible in federal civil

justice. They deny a party the opportunity to meet the case

against it and deny the court the benefit of counterposed

presentation by counsel.

A premise of the adversary system is that a court will best

render justice if each party knows and can criticize its oppo-

nent’s positions. As this Court said in Williams v. Florida, 399

U.S. 78, 82 (1970):

“The adversary system of trial is hardly an end in itself; it

is not yet a poker game in which players enjoy an absolute

right always to conceal their cards until played” ( footnote

omitted ).

See also Wardius v. Oregon, 412 U.S. 470, 474 (1973).

The opposing party plainly has the strongest incentive to

expose the weaknesses of a protagonist’s contentions. See

United States v. Rosner, 485 F.2d 1213, 1230 (2 Cir. 1973).

The court cannot function properly if its rules preclude the

parties from making such responses.

The ex parte procedure followed by the District Court in

this case seriously prejudiced National in two major respects.

First, it resulted in a finding that National must pay attorney

fees to its adversary even though National never knew that this

issue of attorney fees was being tried. Second, the Court found

against National on the issues of patentability, enforceability

and infringement on the basis of arguments that National had

no knowledge of. On each of these issues National was denied

the opportunity to meet AP’s presentation. Thus it was denied

the protection afforded a litigant by the Constitution, the

Federal Rules of Civil Procedure, the Code of Judicial Conduct

and the standards of federal civil justice.

Obviously this Court cannot decide the merits of the issues

in question, but it can remand to the District Court to give

National the opportunity to be heard on these issues.

1. Despite The Complexity Of The Case, Neither A

Pretrial Order Nor Any Other Exchange Of Con-

tentions Delineated The Issues To Be Tried

Ordinarily, and almost always in a complex case, a civil

litigant in federal civil justice is apprised before trial of the

issues to be tried, its opponent’s contentions as to those issues,

and the proofs the opponent will offer. The central aim of the

Federal Rules of Civil Procedure is to fulfill this goal. See

Surowitz v. Hilton Hotels Corp., 383 U.S. 363, 373 (1966).

This was a case in which the issues of law and fact were

complex. The pleadings in this case were general. Discovery

was pervasive. Nevertheless, the District Court made no effort

before trial to frame the matters at issue. No statements of

contention were permitted before trial except those submitted

ex purte without disclosure to the other side. The post-trial

submissions were also ex parte.

There are various procedural devices to delineate issues to

be tried. For example, Rule 16(e), F.R.Civ.P., permits a court

to enter a pretrial order identifying the issues before it.4 Such an

order limits the proofs to those issues. See, e.g., United States v.

First Nat. Bank of Circle, 652 F.2d 882, 886 (9 Cir. 1981):

“( A] party need offer no proof at trial as to matters agreed

to in the order, nor may a party offer evidence or advance

theories at the trial which are not included in the order or

which contradict its terms. Disregard of these principles

would bring back the days of trial by ambush and

discourage timely preparation by the parties for trial”

(footnote omitted ).

4The Court of Appeals referred to a “pretrial stipulated order”

by the District Court (A 93-96) as meeting the notice requirement (A

5). This order was not a “pretrial order” in the understood sense of

that term. It was entered almost one full year before the com-

mencement of the trial. It controlled the scope of discovery and

severed and stayed the trial of “damages” and antitrust issues. It did

not specify the issues in dispute. In particular, the order did not

indicate whether attorney fees was a matter of liability or damages,

and therefore whether it would be tried in the first phase.

—~

Alternatively, the issues may be delineated by an exchange of

pretrial memoranda. See, e.g., Price v. Inland Oil Co., 646 F.2d

90, 95-96 (3 Cir. 1981). Another means of delineating issues is

to require amendment of the pleadings.5 See Rule 15,

F.R.Civ.P.; 3 Moore’s Federal Practice § 15.08[3] (2d ed.

1948, revised 1984). Another is to incorporate the parties’

contentions under Rule 33(b). See Sundstrand Corp. v.

Standard Kollsman Industries, Inc., 488 F.2d 807, 811-12 (7

Cir. 1973); 4A Moore’s Federal Practice § 33.17[2.-2] (2d ed.

1948, revised 1984).

National had the benefit of none of these protections.

Worse still, it had no way to know what issues AP was arguing

ex parte to the Court.

2. AP’s Trial Contentions Were Received On An Ex

Parte Basis In Violation Of The Standards Of Feder-

al Civil Justice

The District Court made it plain to the parties that no

exchange of contentions was to be permitted. In the course of

discussion of a request by National that post-trial submissions

be exchanged, the Court said (A 99):

“Do you know what that does to a trial brief? Renders it

totally useless if you let the other lawyers see—we have an

absolute policy among federal judiciary in this state.

Nobody except the law clerk sees your trial brief, nobody.

They aren’t even filed. They are just marked for the court.

The clerk’s office doesn’t even see them. We found that if

you trade trial briefs, you have a tendency to overstate,

gloss over and omit. If nobody sees it, you can be

somewhat forthright. That’s been our experience, and,

quite frankly, I think, if it were left up to me, I would

abolish the trial brief. All I think they are is to make

lawyers put in extra work, I’m not a believer in trial

briefs.”

The District Court’s position corresponds to a_ long-

standing order of the District of South Carolina that a pretrial

5 Here the only amended pleadings were general statemenis of

claim filed midway in the discovery stage.

10

brief “‘is for the sole use of the Court, and it is not expected that

copies will be furnished to opposing counsel.” ORDER RE:

CIVIL CASES SET FOR TRIAL IN SPECIAL OR REGU-

LAR TERMS OF COURT IN THE DISTRICT OF SOUTH

CAROLINA (D.S.C. July 7, 1964) (A 100-102).

This ex parte procedure is inconsistent with generally

recognized standards of federal civil practice. The rules of

many district courts are contrary to the South Carolina rule in

that they expressly mandate exchange of pretrial briefs. The

rules of many other district courts are silent on exchange of

pretrial briefs,? but experienced practitioners recognize that

exchange is contemplated under such circumstances.

€ The local court rules of the following districts require exchange

of pretrial briefs: D. Alaska; E.D. and W.D. Arkansas; C.D., E.D.,

N.D. and S.D. California; D. Connecticut; D. Hawaii; D. Idaho; S.D.

Indiana; D. Kansas; E.D. and M.D. Louisiana; D. Maine; E.D. and

W.D. Michigan; D. Minnesota; N.D. Mississippi; D. Montana; D.

Nebraska; D. New Hampshire; D. New Jersey; M.D. North Carolina;

D. North Dakota; M.D. Pennsylvania and W.D. and E.D. Tennessee.

7The local court rules of the following districts are silent

regarding exchange of pretrial briefs: M.D., S.D. and N.D. Alabama;

D. Arizona; D. Colorado; D. Delaware; D. District of Columbia; S.D.,

N.D. and M.D. Florida; M.D., S.D. and N.D. Georgia; S.D., N.D.

and C.D. Illinois; N.D. Indiana; N.D. and S.D. lowa; E.D. and W.D.

Kentucky; W.D. Louisiana; D. Maryland; D. Massachusetts; S.D.

Mississippi; W.D. and E.D. Missouri; D. Nevada; D. New Mexico;

S.D., E.D., N.D. and W.D. New York; E.D. and W.D. North

Carolina; S.D. and N.D. Ohio; N.D., W.D. and E.D. Oklahoma; D.

Oregon; W.D. and E.D. Pennsylvania; D. Puerto Rico; D. Rhode

Island; D. South Dakota; M.D. Tennessee; S.D., W.D., E.D. and N.D.

Texas; D. Utah; D. Vermont; E.D. and W.D. Virginia; E.D. and W.D.

Washington; N.D. and S.D. West Virginia; E.D. and W.D. Wisconsin

and D. Wyoming. Some of the district courts with local court rules

that are silent on the exchange of pretrial and post-trial submissions

do have rules which prohibit ex parte contacts with the court. See,

e.g., S.D. and N.D. Georgia and E.D. North Carolina. Otherwise,

there is nothing to restrain a court from prohibiting such an exchange

in these districts. See, e.g., Photovest Corp. v. Fotomat Corp., 606 F.2d

704, 708 & n.2 (7 Cir. 1979), discussed infra, pp. 12-13.

santana

11

Similarly with regard to exchange of post-trial submissions,

under the practice of the District of South Carolina such an

exchange of submissions may be prohibited, as it was in this

case. In this respect also the rules of many other district courts

are contrary in that they expressly mandate exchange of post-

trial submissions. However, many district court rules are silent

on this point.9

The practice in the Court below plainly and simply violates

the principles of due process. The point is stated in Morgan v.

United States, 304 U.S. 1, 18-20 (1938), in which this Court

vacated an order based on proposed findings submitted ex

parte:

“The right to a hearing embraces not only the right to

present evidence but also a reasonable opportunity to

know the claims of the opposing party and to meet them

* * *

8 The local court rules of the following districts require exchange

of post-trial proposed findings of fact and conclusions of law: D.

Alaska; D. Arizona; E.D. and W.D. Arkansas; S.D., C.D. and E.D.

California; D. Hawaii; M.D. and W.D. Louisiana; D. Montana; D.

Nevada; N.D. Ohio and E.D. Washington.

9The local court rules of the following districts are silent

regarding exchange of post-trial proposed findings of fact and con-

clusions of law: M.D., S.D. and N.D. Alabama; N.D. California; D.

Colorado; D. Connecticut; D. Delaware; D. District of Columbia;

S.D., N.D. and M.D. Florida; M.D., N.D. and S.D. Georgia; D.

Idaho; C.D., N.D. and S.D. Illinois; N.D. and S.D. Indiana; N.D. and

S.D. Iowa; D. Kansas; E.D. and W.D. Kentucky; E.D. Louisiana; D.

Maine; D. Maryland; D. Massachusetts; E.D. and W.D. Michigan; D.

Minnesota; N.D. and S.D. Mississippi; W.D. and E.D. Missouri; D.

Nebraska; D. New Jersey; D. New Mexico; S.D., E.D., N.D. and

W.D. New York; M.D., W.D. and E.D. North Carolina; D. North

Dakota; $.D. Ohio; N.D., W.D. and E.D. Oklahoma; D. Oregon;

E.D., M.D. and W.D. Pennsylvania; D. Puerto Rico; D. Rhode

Island; D. South Dakota; E.D., M.D. and W.D. Tennessee; S.D.,

W.D., N.D. and E.D. Texas; D. Utah; D. Vermont; E.D. and W.D.

Virginia; W.D. Washington; N.D. and S.D. West Virginia; E.D. and

W.D. Wisconsin and D. Wyoming.

12

“Congress, in requiring a ‘full hearing,’ had regard to

judicial standards,—not in any technical sense but with

respect to those fundamental requirements of fairness

which are of the essence of due process in a proceeding of

a judicial nature. If in an equity cause, a special master or

the trial judge permitted the plaintiff's attorney to formu-

late the findings upon the evidence, conferred ex parte with

the plaintiffs attorney regarding them, and then adopted

his proposals without affording an opportunity to his

opponent to know their contents and present objections,

there would be no hesitation in setting aside the report or

decree as having been made without a fair hearing. The

requirements of fairness are not exhausted in the taking or

consideration of evidence but extend to the concluding

parts of the procedure as well as to the beginning and

intermediate steps.”

This principle is expressed in the Code of Judicial Conduct,

adopted by the Judicial Conference in 1973 and which provides

in Canon 3, A(4):

““A judge should accord to every person who is legally

interested in a proceeding, or his lawyer, full right to be

heard according to law, and, except as authorized by law,

neither initiate nor consider ex parte or other commu-

nica*ions concerning a pending or impending proceeding.”

69 F.R.D. 273, 275 (1976).

The procedure followed by the District Court is also in

conflict with the rationale of the Court of Appeals for the

Seventh Circuit in Photovest Corp. v. Fotomat Corp., 606 F.2d

704 (7 Cir. 1979). The Court there held that even a delayed

exchange of pretrial briefs'° was repugnant to principles of fair

trial:

10 The local district court rule involved in Photovest was silent

concerning exchange of briefs. The Court of Appeals in Photovest

listed five districts, including the district from which the appeal was

taken, that failed to provide by rule for the exchange of trial briefs.

Photovest, 606 F.2d at 708 n.2, 709 n.4. Since the Photovest decision,

all but one of those districts have amended their rules to remedy this

failure. See E.D. and W.D. Arkansas Rules 3(i) and 13; S.D. Indiana

Rule 21(f); E.D. Michigan Rule 24(b); D. Kansas Rule 20(c). The

District of South Carolina seems to stand alone in expressly prohibit-

ing the exchange of trial briefs.

Lire PO ea he hoe an) i

13

““[ W]e are of the opinion that exchange of trial briefs at

the time they are filed with the court is sounder procedure,

being one more consistent with the elimination of

gamesmanship aspects of litigation and, indeed, with the

quest for truth, presumably the ultimate aim of adversarial

litigation. Any benefits that a delayed exchange may

provide are outweighed by the increased potential for

prejudice and by the added difficulties resulting from

postponing until after trial the curing of any real prejudice

caused by the trial briefs. The district court judge,

particularly in the case of a long and complex trial, who

has entertained incorrect concepts about some aspects of

the case during the course of the trial because of an ex

parte brief, is placed in the difficult position of returning to

a status quo ante position prior to engaging in the decisio-

nal process.” Photovest, 606 F.2d at 710."

Moreover, the rule and practice in South Carolina‘? con-

flicts with the language of recently adopted Rule 16(c)(5),

F.R.Civ.P. That rule, which became effective on August I,

1983, specifies that one of the subjects to be discussed at a

pretrial conference is a “schedule for filing and exchanging

11 The Court of Appeals in the instant case evidently failed to

understand what transpired in the District Court. This is manifest

from its misfounded reliance on Phoiovest for the proposition that the

failure to exchange pretrial briefs is not unfair (A 5). Photovest dealt

with the delayed exchange of pretrial briefs. The court in that case

found no violation of procedural fairness only because “‘the trial briefs

were to be exchanged after trial giving both parties an opportunity to

respond to any inaccuracies or misleading information before the

court rendered judgment.” Photovest, 606 F.2d at 710. In the instant

case exchange of contentions was also denied at the post-tria! stage.

12 The District Court for the District of South Carolina has

recently entered an order purporting to implement newly amended

Rule 16(b), F.R.Civ.P. See IN THE MATTER OF: RULE 16(b)

FEDERAL RULES OF CIVIL PROCEDURE (D.S.C. October 7,

1983). Although this order requires that the parties exchange

information regarding the substance and scope of the suit, the

District’s rule continues to prohibit exchange of pretrial briefs. There

is no indication the practice concerning post-trial submissions that was

followed in this case has been changed.

14

pretrial briefs.” The purpose of Rule 16(c)(5) is “the elimina-

tion of surprise at trial.” 3 Moore's Federal Practice J 16.14 (2d

ed. 1948, revised 1984). That purpose is frustrated by the

practice now obtaining in South Carolina.

The Court of Appeals in the instant case conceded that the

District Court's “practice concerning pretrial briefs may not be

the better one in this situation” (A 5). It indulged the error on

the ground that “National's trial counsel did not raise the

exchange-of-pretrial-briefs issue until after trial and then only

informally” (A 5). This is a serious equivocation. The local

rule of court prohibited preirial exchange of briefs, so that

asking for such an exchange would have been futile, and

perhaps impertinent. As for a post-trial exchange, counsel for

National made it plain to the District Court that it wanted

exchange of post-trial submissions. The District Court met

National’s request as follows (A 99):

“Mr. Flintoft: Your Honor, should those proposed

findings and conclusions be served on one another?

“The Court: No. No proposed findings. You don’t get

the benefit of his, he doesn’t get the benefit of yours.

“Mr. Flintoft: The reason I asked was that I was

surprised by the rule with respect to the pretrial briefs, and

I just thought I should ask on this as well. So it’s just

submitted to the Court, then?”

It is well-settled that a trial judge may not uncritically

adopt a party's proposed findings. See Nyyssonen v. Bendix

Corp., 137 USPQ 853, 853-54 (D.Mass. 1963), affirmed 342

F.2d 531 (1 Cir. 1965); Rosemount, Inc. v. Beckman In-

struments, Inc., 727 F.2d 1540, 1544 n.4 ( Fed. Cir. 1984). The

procedure below permitted adoption of prevailing party

proposals without even opportunity for criticism, and hence is

equally incompatible with proper procedure for making find-

ings. Chicopee Manufacturing Corp. vy. Kendall Company, 288

F.2d 719, 724-25 (4 Cir. 1961).

15

B. The District Court's Procedures Prejudiced National

National entered the trial of this case in the dark. It was

denied any specification of AP’s contentions about the issues of

validity, enforceability and infringement of the ‘388 patent. It

was unaware that the District Court would try the issue of AP’s

entitlement to attorney fees under 35 U.S.C. § 285."3

1. Attorney Fees Were Awarded During The First

Phase Of The Trial Although National Was Not

Fairly Apprised That The Issue Was Then Before

The Court

Barring exceptional circumstances, each party to a litiga-

tion bears its own attorney fees. Alpeska Pipeline Co. v.

Wilderness Society, 421 U.S. 240, 269 (1975). This policy

applies in patent cases, Roam & Haas Co. v. Crystal Chemical

Co., 736 F.2d 688, 692-93 (Fed.Cir. 1984), unless there are

“exceptional circumstances,” as provided in 35 U.S.C. § 285.

National did not know that the issue of “exceptional

circumstances” was being tried in the first phase of the trial.

There was no reference to that issue in the “pretrial stipulated

order™ referred to by the Court of Appeals (A 5). AP did not

adduce any direct testimony on this issue.'* The absence of a

935 U.S.C. § 285 reads:

“The court in exceptional cases may award reasonable

attorney fees to the prevailing party.”

% The District Court, in denying National's Rule 59(e) and

60(b) motion, said that the evidence to support its attorney fees

award was offered by National (A 89). That turned out to be

testimony by one witness directed to the issue that the alleged

infringement was not willful and wanton, characterized by the Court

as a “very narrow issue” (A 98). There is nothing at this place in the

trial transcript, or anywhere else in the papers made available to

National, which addresses the § 285 issue. Moreover, even assuming,

arguendo, that the issue of “willful and wanton infringement” was

tried and determined, any such determination does not mean that the

issue of attorney fees under § 285 was also being tried. See TWM

Manufacturing Co., Inc. v. Dura Corp., 213 USPQ 423, 428

(E.D.Mich. 1981), affirmed in pertinent part 722 F.2d 1261 (6 Cir.

1983); Saturn Mfg. v. Williams Patent Crusher & Pulverizer, 713 F.2d

1347, 1358 (8 Cir. 1983); General Electric Company v. Sciaky Bros.,

Inc., 415 F.2d 1068, 1077 (6 Cir. 1969).

16

pretrial order or similar pretrial procedure, and the District

Court’s prohibition of exchange of pretrial or post-trial submis-

sions, resulted in National’s learning of the § 285 issue only

when it read the decision awarding attorney fees. That

National was under prejudicial misapprehension is confirmed

by the fact that no reference to the § 285 issue appears in

National’s pretrial brief or post-trial submission. To this day

National has never seen AP’s pretrial and post-trial submis-

sions. It therefore does not know what arguments were

advanced by AP to persuade the District Court that attorney

fees should be awarded under § 285.

The District Court based its award of attorney fees on a

finding that “defendants never had a good faith belief that the

‘388 patent was invalid” (A 71). Regarding National’s good

faith belief, the District Court relied heavily on the proposition

that “no written opinion obtained by CST [Tanner] supporting

such advice on the validity of the ‘388 patent was ever

introduced into evidence” (A 71). The Court of Appeals

similarly relied on National's failure to introduce such opin-

ions.'5 This was grossly unjust. National in fact had opinions of

two different attorneys who had independently concluded that

the 388 patent was invalid or not infringed.'® Had National

known that the attorney fees question was at issue it would have

introduced these opinions. Inference from omission is fair only

if warning is given to be forthcoming with evidence.

1S Regarding the good faith issue, the Court of Appeals also

referred to National’s attempt to avoid infringing the ‘388 patent

(A 5). That attempt does not impugn National’s good faith. Any

reasonable businessman would try to avoid infringing so as to stay out

of a patent fight. See Deere & Co. v. International Harvester Co., 658

F.2d 1137, 1148 (7 Cir. 1981):

“IH’s conduct in attempting to avoid infringement by modi-

fication of its prototype 2nd defending the subsequent suit is

nothing if not the ‘ordinary’ patent case. No evidence of bad

faith conduct has been shown. The award of attorney’s fees is

not supported by the evidence and must be reversed.”

16 Counsel for Tanner on two occasions, counsel for National on

one occasion.

17

There is no authority supporting an award of attorney fees

under these circumstances. Indeed, all the authorities are to the

contrary. See, e.g., Western Elec. Co. v. Stewart-Warner Corp.,

631 F.2d 333, 337-38 (4 Cir. 1980); Comiunental Can Co. v.

Anchor Hocking Glass Corp., 362 F.2d 123, 128-29 (7 Cir.

1966).

2. The District Court’s Holdings Of Validity,

Enforceability And Infringement Are Irreconcilable

With The Facts

The prejudice to National from the District Court’s proce-

dures went far beyond the § 285 issue. National was denied

opportunity before trial to learn of and to criticize the positions

taken by AP with respect to the validity, enforceability and

infringement of the patent in suit. This resulted in findings by

the District Court that are irreconcilable with the undisputed

facts and in an imposition of liability on National that is

unsupported by the record.

We will not set forth all of the District Court’s significant

errors in this respect. One error concerning patent invalidity

illustrates the prejudice caused by the procedures.

It is fundamental that patent claims cannot be rewritten by

a court so as to keep them from “reading on” prior art that

would render them invalid. See Arbrook, Inc. v. American

Hospital Supply Co., 645 F.2d 273, 275-76 (5 Cir. 1981); Paeco,

Inc. v. Applied Moldings, Inc., 562 F.2d 870, 874 (3 Cir. 1977).

Yet this is precisely what was done in the present case. The

District Court found, apparently based on AP’s ex parte

submissions, that “[t]he ‘388 patent . . . claims only the type of

composition disclosed in example 8” of the ’388 patent (A 9).

It also made the related finding that claims of the ‘388 patent

exclude compositions containing surfactants (A 26-27, 36).17

However, AP’s 388 patent claims are broader than example 8.

Unlike example 6, they include compositions containing surf-

‘7 Surfactants are substances added to disperse the starting

materials in water before the final adhesive is made by polymeriza-

tion.,

18

actants. Therefore, on the basis of these findings, the District

Court improperly ignored invalidating prior art.18

National never saw any written exposition of AP’s position

in the District Court. Until it saw the District Court’s opinion,

National never knew that AP was urging a factually unsound

interpretation of its claims, one that was at odds with the

authorities (see n.18, supra). Hence, National never had the

opportunity to persuade the District Court to a contrary con-

clusion. The Court of Appeals made no independent review of

the District Court’s determination. It sustained the District

Court because “no clear error” appeared. But that was because

no fair opportunity was afforded to establish the error in these

findings.

18 Patent claims must be interpreted in light of the claim

language, the patent specification and the prosecution history. Gra-

ham v. John Deere Co., 383 U.S. 1, 33 (1966); United States v.

Adams, 383 U.S. 39, 48-49 (1966); McGill Inc. v. John Zink Co., 736

F.2d 666, 673-74 (Fed.Cir. 1984); Fromson v. Advance Offset Plate,

Inc., 720 F.2d 1565, 1569-70 (Fed.Cir. 1983). The claims of the ’388

patent require that the adhesive composition be made in the presence

of a protective colloid. The claims list two specific protective colloids,

polyvinyl alcohol (““PVOH”) and hydroxyethyl cellulose (“‘HEC”’).

The ’388 specification teaches the necessity of using surfactants.

Examples 1, 2, 3 and 5 of the patent specification disclose the use of

surfactants with HEC. The patent specification nowhere teaches that

HEC can be used without surfactants. Therefore, claim 1, which is

basic to all of the patent claims, and which calls for the presence of

either HEC or PVOH as a protective colloid, necessarily also requires

surfactants when HEC is used. The last thing AP did during the

seven-year prosecution of the application for the ‘388 patent was to

broaden claim 1 to specifically include HEC as an alternative to

PVOH as a protective colloid. When AP did this, it knew that HEC

required the use of surfactants, so that surfactants were necessarily

added to claim 1. This compels the conclusion that the claims are

invalid in view of an AP prior art patent no. 3,884,990 (“the ’990

patent”), which discloses a paint containing every element of the

claims of the ’388 patent, including the use of HEC as a protective

colloid along with surfactants.

sini “ea

19

The District Court found fact without the benefit of

argument, which the Court of Appeals affirmed without

substantive inquiry. The result is a failure of the judicial

process to reach an informed resolution of the controversy. See

Rule 52(a), F.R.Civ.P., and e.g., Cloud v. Standard Packaging

Corporation, 376 F.2d 384, 391 (7 Cir. 1967).

CONCLUSION

The District Court kept a litigant in the dark before, during

and after trial about the issues being decided by the Court and

the: contentions being propounded by the opposing party. This

procedure tainted every element of the District Court’s decision.

The Court of Appeals’ conclusory affirmance sanctioned a

practice that denied National elemental due process and con-

flicts with the practice of other districts, as well as decisions of

other federal courts of appeals and the policy of the Code of

Judicial Conduct and the Federal Rules of Civil Procedure.

A writ of certiorari should issue in the interest of procedu-

ral fairness and the integrity of federal civil justice.

Respectfully submitted,

GEOFFREY C. HAZARD, JR. HERBERT F. SCHWARTZ

New Haven, Connecticut 875 Third Avenue

New York, New York 10022

Tel.: (212) 715-0600

Attorneys for Petitioners

Of Counsel:

FisH & NEAVE

875 Third Avenue

New York, New York 10022

Tel.: (212) 715-0600

October 23, 1984