Reply Brief — Chas. S. Tanner Co. v. Air Products & Chemicals, Inc.

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No. 84-652"

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JAN 4 1585

* cee,NDER L STEVAS,

4 ALEAANL soa

t ClLerd

In THE

+

Supreme Court of the United States

October Term, 1984

CHAS. S. TANNER CO. and

NATIONAL STARCH AND CHEMICAL

CORPORATION,

Petitioners,

Vv.

AIR PRODUCTS AND CHEMICALS, INC.,

Respondent.

ON WRIT OF CERTIORARI TO

fHE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

REPLY BRIEF IN SUPPORT

OF

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

January 4, 1985

IV.

TABLE OF CONTENTS

INTRODUCTIC

PEO ace raag seed Uhedpalansesansaaseaocabasatiukvuscsatanhs

Ap’Ss BRIEF CONFIRMS THAT THIS COURT SHOULD

EXERCISE

Ce

Its SUPERVISORY POWER IN’ THIS

THE QUESTION PRESENTED For’ Review. Is

PROPERLY

CONCLUSION

oe eS 65 Ty eee

PAGE

|

TABLE OF AUTHORITIES

Cases

Burton v. G.A.C. Finance Co., 525 F.2d 961 (5 Cir.

Deere & Co. vy. International Harvester Co., 658 F.2d

I cas os phaueuseuanniccaeocssecces

Frederic P. Wiedersum Assoc. v. Nat. Homes Const., 540

ne caupenaccseechavunsacs

Freifield v. Hennessy, 353 F.2d 97 (3 Cir. 1965) .0.00000......

Glasser v. United States, 315 U.S. 60 (1942)...

Gomes v. Williams, 420 F.2d 1364 (10 Cir. 1970) ...........

Haller v. Robbins, 409 F.2d 857 (1 Cir. 1969) ..0.000000.0..

Los Angeles Brush Corp. v. James, 272 U.S. 701 (1927).

McCarthy v. United States, 394 U.S. 459 (1969) 0.00.00...

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

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

a a coe ichenteepiionnds Wnetereaesierenunne

Rinehart v. Brewer, 561 F.2d 126 (8 Cir. 1977) 0.0.00...

Sheppard Federal Credit Union vy. Palmer, 408 F.2d

os shunicens cand vaudhensneaneseoedbeseds

Thiel v. Southern Pacific Co., 328 U.S. 217 (1946) .........

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

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

OP ERE FACIE, FID DP iccccrscnccscnscesencncescncctenne

Uniied States Ex Rel. Ross v. Franzen, 668 F.2d 933 (7

eee To swanuinuperenanvakiceieccévensane

U.S. Lines v. Federal Maritime Commission, 584 F.2d

I I su niudvesaunusauayeasdvensanawenceanuve

Watkins v. Grover, 508 F.2d 920 (9 Cir. 1974) oo...

Other Authorities

United States Code

cok di scseacl<astesuccsesreasncesceuuaves

Federal Rules of Civil Procedure

Tee ucutunbacke

cca caaiowaccans sce Saaiunboniaaa auaus

Rule 46

PAG

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.4n.1

No. 84-652

IN THE

Supreme Court of the United States

October Term, 1984

Cuas. S. TANNER Co. and

NATIONAL STARCH AND CHEMICAL

CORPORATION,

Petitioners,

Vv.

AIR PRODUCTS AND CHEMICALS, INC.,

Respondent.

ON WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

REPLY BRIEF IN SUPPORT

OF PETITION FOR CERTIORARI

I. INTRODUCTION

AP has failed to come to grips with the reasons for

granting certiorari in this case. All written submissions, 1.e.,

trial briefs and post-trial proposed findings of fact and con-

clusions of law were ex parte. AP does not dispute that

reception of ex parte submissions, by the District Court conflicts

with the practice in most other district courts, with the law of

federal procedure and with the letter of the Code of Judicial

Conduct. AP defends the procedure below as (a) sanctioned

by the Federal Rules of Civil Procedure and, (b) not an

infringement of National’s mght to adequate notice and

opportunity to be heard. AP cites no authority in point. Its

brief therefore only highlights the significance of the instant

petition for the integrity of federal civil justice.

AP asserts that the question presented is not properly

before this Court because National made no proper objection in

the trial Court, and was in any event not prejudiced by the trial

Court’s procedures. But the record shows that National’s trial

counsel sought exchange of trial and post-trial submissions and

was surprised by the local rule and practice which precluded

such exchanges (Petition 9-14). National therefore did not

surrender the right that is the subject of the writ sought in this

Court.

AP also argues that the demand for attorney fees in its

complaint gave National adequate notice of that claim’s being

at issue in the trial. It contends that the predicate for this claim

is found in Paragraph 9 of the complaint, which alleges that the

infringement was “deliberate and willful”. But the predicate

for an award of attorney fees is not “deliberate and willful”

conduct as such; it is an “exceptional case”, which may or may

not coincide with the infringement being “deliberate and

wiliful” (Petition 15). The “exceptional case” issue under

§ 285 was not identified as an issue to be tried in the bifurcated

liability trial. National never knew the issue was to be tried.

National’s introduction of some evidence on the issue of

“deliberate and willful” infringement therefore does not, as AP

argues, indicate that National understood that the attorney fees

issue was at stake. And even though some evidence was

admitted on “deliberate and willful” infringement, the District

Court’s extensive opinion does not contain a single finding on

this issue (A 7-84).

AP has also failed to come to grips with the injustice that is

likely to occur—-and which did occur here—when a party

asserting a patent or other property right is permitted to submit

ex parte arguments to the court. AP does not dispute that, in

order to avoid prior art introduced at trial that would invalidate

the claims of the °388 patent, it rewrote those patent claims in

its ex parte submissions by “reading” limitations into those

claims ( Petition 17-18). AP also does not dispute that National

never knew what AP’s rewritten claims were until the District

Court issued its opinion.

ill. AP’S BRIEF CONFIRMS THAT THIS COURT

SHOULD EXERCISE ITS SUPERVISORY POWER IN

THIS CASE

AP urges that the ex parte procedure below is sanctioned

by F.R.Civ.P. Rules 5(a) and 16(c)(5) (Opposition 10-12).

That erroneous reading of these two rules confirms the impor-

tance of granting certiorari in this case. As this Court has said

in McCarthy v. United States, 394 U.S. 459, 463 (1969):

“Because of the importance of the proper construction

of Rule 11 to the administration of criminal law in the

federal courts, and because of a conflict in the courts of

appeals over the effect of a district court’s failure to follow

the provisions of the Rule, we granted certiorari” ( foot-

notes omitted ).

Accord, e.g.. Thiel v. Southern Pacific Co., 328 U.S. 217, 225

(1946): Los Angeles Brush Corp. v. James, 272 U.S. 701.

706-07 (1927).

AP criticizes National for deliberately omitting “material

portions” of F.R.Civ.P. Rule 16(c)(5) (Opposition +1). AP

asserts that these portions leave it “to the consideration of the

parties and to the discretion of the trial court” whether briefs

submitted to the trial Court should be exchanged ( Opposition

11). This is simply not so. Rule 16(¢j)(5) makes it dis-

cretionary whether briefs are to be submitted at all. Once the

court decides to have trial briefs, the plain language and

purpose of the rule calls for “exchanging” them—not submit-

ting them ex parte ( Petition 13-14).

AP misreads Photovest Corp. vy. Fotomat Corp., 606 F.2d

704 (7 Cir. 1979), as supporting its interpretation of Rule 5(a).

Photovest held that delay in exchange of trial submissions was

4

not prejudicial in those circumstances because “| t}he procedure

in the present case clearly provided for service on all parties

since it always contemplated exchange at the close of trial.” 606

F.2d at 709 (emphasis supplied). Photovest ( Petition 12-13),

which struck down a local rule permitting delayed exchange of

trial briefs in favor of immediate exchange, plainly supports the

result National seeks here.'

AP attempts io distinguish Morgan v. United States, 304

U.S. 1 (1938) (Opposition 13). Morgan, as quoted on pages

11-12 of the petition, speaks for itself.

The evils of ex parte communications have been noted in

many other cases. See, e.g.. U.S. Lines v. Federal Maritime

Commission, 584 F.2d 519, 542 (D.C. Cir. 1978):

“Moreover, even if the detailed contents of the ex parte

contacts were revealed by the agency on judicial review,

we would still be deprived of the benefit of an adversarial

discussion among the parties. Our cases, discussed earlier

with respect to blind references, make clear the critical role

of adversarial comment in ensuring proper functioning of

agency decisionmaking and effective judicial review. Such

comment serves not only to clarify the issues and positions

being considered at the agency level, but also to ensure

that factual questions underlying the agency's decision are

not raised, by necessity, for the first time on judicial

”

review.

Rinehart v. Brewer, 561 F.2d 126, 132 (8 Cir. 1977):

“Judge Brannon’s undisclosed ex parte inquiry con-

stituted improper conduct which denied Rinehart his due

process right to a disinterested and impartial tribunal. See

ABA Standards Relating to The Function of the Trial

Judge § 1.6 (Approved Draft, 1972); Code of Juicial

Conduct, Canon 3A(4) ( Final Draft, 1972).”

’ See in this connection Burton v. G.A.C. Finance Co., $25 F.2d 961

(5 Cir. 1976), in which the court held that failure to serve a counsel's

letter to the court violated F.R.Civ.P. Rule S(a)

5

Haller v. Robbins, 409 F.2d 857, 861 & n.4 (1 Cir. 1969):

“This [ex parte communication] is not merely a matter of

ethics [see Canon 3, ABA Canons of Professional Ethics:

Canon 17, A.B.A. Canons of Judicial Ethics], it is part of a

defendant's right to due process and effective representa-

tion” ( brackets, second instance, n.4 in original ).

Il. THE QUESTION PRESENTED FOR REVIEW IS

PROPERLY BEFORE THIS COURT

AP says that National waived its objection because it

“assented to the local briefing practices” and “agreed to submit

proposed findings of fact and conclusions of law which were not

to be exchanged” ( Opposition 3). That is not true (see Petition

14).2

In the first place, the ex parte submissions were prescribed

by local rule and practice. Court and counsel fully recognized

the existence of that rule and practice. It therefore was

unnecessary and would have been inappropriate for National to

say more than ut did to the trial Court. F.R.Civ.P. Rule 46

states:

“(1 }t is sufficient that a party... makes known to the court

the action which he desires the court to take... .”

In the second place, as said in United States Ex Rel. Ross

v. Franzen, 668 F.2d 933, 941 (7 Cir. 1982):

“The waiver © a constitutional right must be ‘an

intentional relinquishment or abandonment of a known

right.” Johnson v. Zerbst, supra, 304 U.S. at 464, 58 S.Ct.

at 1023; see also Brookhart, supra, 384 US. at 4, 86 S.Ct. at

1247. The mere failure of counsel to object to a court

ruling, which follows on the heels of counsel's express

indication of an intent not to surrender the right in

question, clearly does not rise to this high standard,

2 The authontes which AP relies on (Opposition 6), relating to

arguments raised on appeal for the first ume, are simply inapplicable

here.

6

particularly since * “courts indulge every reasonable pre-

sumption against waiver” of fundamental constitutional

rights.” Johnson, supra, 304 US. at 464, 58 S.Ct. 1023

(citation omitted ).”

Accord Glasser v. United States, 315 U.S. 60, 71 (1942).

In any event, the issue raised by the present petition ts

sufficiently important to warrant review. Even if there is a

question whether a proper objection was made, the matter at

issue is fundamental error. As said in Freifield v. Hennessy, 353

F.2d 97, 99 (3 Cir. 1965):

“The defendant argues that since the plaintiff inter-

posed no objection to the court's instructions he may not

now complain of error therein. This argument ts in accord

with the general rule which ts subject to exception. Hormel!

v. Helvering, 312 U.S. 552, 557, 558, 61 S.Ct. 719, 85

L.Ed. 1037 (1941); Mazer v. Lipschutz, 327 F.2d 42, 52

(3rd Cir. 1964); McNello v. John B. Kelly, Inc., 283 F.2d

96, 101, 102 (3rd Cir. 1960); Callwood v. Callwood, 233

F.2d 784, 788 (3rd Cir. 1956). Where it is apparent on the

face of the record that counsel failed to object to a

fundamental and highly prejudicial error, and this failure

may have resulted in a miscarriage of justice, the error

must be noticed and rectified. Ibid. This exception to the

general rule is applicable to the instant case.”

Accord, e.g., Frederic P. Wiedersum Assoc. v. Nat. Homes

Const., 540 F.2d 62, 66 (2 Cir. 1976): Watkins v. Grover, 5O8

F.2d 920, 921 (9 Cir. 1974): Gomes v. Williams, 420 F.2d 1364,

1367 (10 Cir. 1970); Sheppard Federal Credit Union v. Palmer,

408 F.2d 1369, 1371 (5C, 1969).

AP’s final argument is that National “specifically offered

evidence on the very issue it now says it did not know was being

tried” (Opposition 5). Even assuming arguendo that “deliber-

ate and willful” infringement was at issue in the liability trial, as

AP urges, that did not put attorney fees into issue. The

standard for “deliberate and willful” infringement is different

from that of “exceptional case” for attorney fees. 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), cited in National’s petition ( Petition 15) states this

point clearly:

“In this case I have found willful infringement. I have

certainly found misconduct as a matter of fact and law by

Dura Corporation and its agents. However, | am not

prepared to say that I can go as far to say that there has

been bad faith action, that the Dura Corporation has acted

in such bad faith as to authorize attorneys’ fees, so I do not

think the standard of 35 USC 284 [sic] as set forth in

Deyerle v. Wright Manufacturing Company has been met.

This does not mean, however, that I cannot consider

enhanced damages because as | read the law, the standard

for enhanced damages up to treble damages is not as

stringent a standard as the standard which is set forth for

the granting of the actual attorney fees” (emphasis supp-

lied ).

Deere & Co. vy. International Harvester Co., 658 F.2d 1137,

1147-48 (7 Cir. 1981) (Petition 16), explicates the point:

“Section 285 provides that an award of attorney’s fees may

be made in exceptional cases. The purpose of the award is

to prevent the gross injustice of having a prevailing party

bear the cost of litigation in a suit where the conduct of the

losing party is clearly inequitable. Stanford Research Co.

v. Eberhard Faber Pen and Pencil Co., 379 F.2d 512 (7th

Cir. 1967). This court has interpreted the statutory

language to require ‘an unambiguous showing of extraor-

dinary misconduct.” Airtex Corp. v. Shelley Radiant Ceiling

Co., 536 F.2d 145, 155 (7th Cir. 1976). Examples of

conduct held to be extraordinary include repeated failure

to respond to discovery requests, L. F. Strassheim Co. v.

Gold Medal Folding Furniture Co., 477 F.2d 818 (7th Cir.

1973), fraud on the patent office, Shelco, Inc. v. Dow

Chemical Co., 466 F.2d 613 (7th Cir.), cert. denied, 409

U.S. 876, 93 S.Ct. 125, 34 L.Ed.2d 129 (1972), and

unclean hands in obtaining the patent, Timely Products

Corp. v. Arron, 523 F.2d 288 (2d Cir. 1975)” (footnote

omitted ).

National still does not know what arguments were pre-

sented to the trial Court to persuade it to award AP attorney

fees which may amount to more than $1 million. Together with

the fact that the trial Court found against National on the issues

of patentability, enforceability, and infringement on arguments

that National never had the opportunity to meet, it is manifest

that National suffered from the ex parte communications of

which it complains.

IV. CONCLUSION

AP’s brief confirms that a writ of certiorari should issue.

Respectfully submitted,

GEOFFREY C. HAZARD, JR. HERBERT F. SCHWARTZ

New Haven, Connecticut 875 Third Avenue

New York, New York 10022

Tel.: (212) 715-9600

Attorneys for Petitioners

Of Counsel:

FisH & NEAVE

875 Third Avenue

New York, New York 10022

Tel.: (212) 715-0600

January 4, 1985