Petition — Struthers Patent Corp. v. Nestle Co.

Supreme Court brief1983

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IN THE

Supreme Court of the

OCTOBER TERM, 1983

a <a

STRUTHERS PATENT CORPORATION,

STRUTHERS WELLS CORPORATION and

STRUTHERS SCIENTIFIC & INTERNATIONAL CORPORATION,

Petitioners,

—against-

THE NESTLE COMPANY, INC.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Appendix Pages A-1 — A-508

SIDNEY R. BRESNICK

Counsel of Record for Petitioners

330 Madison Avenue

New York, New York 10017

(212) 986-8686

Of Counsel:

Puitip T. SHANNON

TERESE R. COHEN

Pennie & Edmonds

New York, New York

QUESTIONS PRESENTED

1. Where the District Court has granted an unprecedented

summary judgment of invalidity with respect to ten United

States patents by adopting the arguments of counsel for the

moving party with respect to the meaning of the patents and

prior art and rejecting the sharply divergent views thereof given

by a patentee and expert in uncontroverted opposing affidavits,

and the Court of Appeals has affirmed without opinion, have

the limits of established summary judgment procedure been so

seriously exceeded as to call for the exercise by this Court of its

supervisory power under Rule 17.1(a) of the Supreme Court

Rules to forbid such encroachments on the right of trial by jury?

2. May acourt, on motions for summary judgment of invalid-

ity of ten patents, after deciding that no expert testimony was

required to understand the technology involved, choose to

disbelieve and disregard the uncontroverted sworn statements .

of a patentee and expert and make its own contrary determina-

tions with respect to the nature and scope of the patents, the

prior art and the level of skill in the art, and hold the patents

invalid as being directed to obvious and unpatentable subject

matter?

3. May a court, on a motion for summary judgment, dispense

with inquiring into the evidentiary facts relating to tne level of

ordinary skill in the art on the grounds that the descriptions of

the processes and apparatus in ten patents were readily under-

standable to it and employed concepts with which it was famil-

iar?

4. (a) May a sale of apparatus for performing freeze concen-

tration properly be held under 35 U.S.C. § 102(b) to invalidate

a process patent claiming a unitary process for freeze concentra-

tion combined with freeze drying?

(b) May a sale of apparatus for performing freeze concen-

tration properly be held under 35 U.S.C. § 102(b) to invalidate

PAGE

a patent claiming a system of apparatus for freeze concentration

combined with freeze drying?

STATEMENT PURSUANT TO

SUPREME COURT RULES 28 AND 28.1

The parties to the proceedings are those listed in the caption.

see

TABLE OF CONTENTS

PAGE

RR TUNES 5 ets tse io css eae eee i

Statement Pursuant to Supreme Court Rules 28 and

eB ax hacinuinas cadedaes praisusarcs teehee caniee eet aese: ii

Ne IRS Soncuesaschsconecaciceerabeedclacinen es iii

en i I ics th arin cacantdcaedascnienssascathese iv

NE COND as nissxsciscctucsiveduatucs teascmpacerateds l

DO a5 55 at. 0a eis vada s Sencendentoord Manctaasee tiie sa 1

Constitutional Provisions and Statutes Involved....... 2

I Ws os cp ccnsriccinass « -canscseSvnnneenes 3

History of The Struthers FreCon System .............. 6

BT re ie NE oo nin cec sen etnvincen tas 6

5. TD MR FN FI is occaiessisirsccdesmcuices 7

3. Struthers Contracts With General Foods............ 8

Tein Peace PO adi cscvonsaccccasavdstsssecueess y

Reasons for Granting the Writ......................0008 10

I. Certiorari Should Be Granted To Establish The

Limits Beyond Which Summary Judgment May

Not Be Substituted For A Trial ....................... 1]

II. Certiorari Should Be Granted To Prevent An

Unprecedented And Unwarranted Extension Of

The “On Sale” Bar Under 35 U.S.C. § 102(b)....... 15

1. Muller ‘007 and ‘522 Patents...............ccccccceees 15

2. The Reimus Dewaxing Patents ....................... 18

IN os iucns ce pdawksaeceideitien kato ieiee 24

TABLE OF AUTHORITIES

Adickes v. §. H. Kress & Co., 398 U.S. 144 (1970)....

Aro Mfg. Co. v. Convertible Top Replacement Co.,

365 U.S. 336 (1961) reh. den 365 U.S. 890 (1961) ..

B.B. Chemical Co. v. Ellis, 117 F.2d 829 (1st Cir.

1941); aff'd. 314 U.S. 405 (1942) ............cc cece cess

DeLong Corporation v. Raymond International Inc.,

622 F.2d 1135 (Grd Cir. 1060) .......ccccccsccsscevcees

Deepsouth Packing Co. v. Laitram Corp., 406 U.S.

518 (1972), reh. den. 409 U.S. 902 (1972)............

Federal Laboratories, Inc. v. Barringer Research

Limited, 696 F.2d 271 (3rd Cir. 1982)................

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

Orthopedic Equip. Co. v. All Orthopedic

Appliances, Inc., 707 F.2d 1376 (Fed. Cir. 1983) ..

Plax Corporation v. Precision Extruders, 239 F.2d

ME SED iva std ahapckcsnyuncccensenevadexcenxes

Poller v. Columbia Broadcasting System, Inc., 368

Fst ME ev enuchp has vad vs VASA naa yb secasnanceLenee

Red Cross Manufacturing Corp. v. Toro Sales Co..,

GR FS BEDS 7 Cie. BOTS) i. ciececcccesssscccsces.

Sartor vy. Arkansas Natural Gas Corp., 321 U.S. 620

(1944), reh den. 322 U.S. 767 (1944) ..............08.

Struthers Scientific & Int. Corp. v. General Foods

Corp., 314 F.Supp. 313 (D. Del. 1970)..............

Tomalewski v. State Farm Life Ins. Co., 494 F.2d

IN So Cagis doe ea cox cannnnes

United States v. Diebold, Inc., 369 U.S. 654, 655

PAGE

RULES

Rule 17. 1(a) of the Supreme Court Rules............... 3, 23

Rule 17.1(c) of the Supreme Court Rules............... 6

Rule 54(b), Fed. Rules Civ. Proc, 9c eeeeec sees 10

Rule 56(c) Fed. Rules Civ. Proc. ..............ccccceeees 2,5, 15

OTHER CITATIONS

eng IE vs sce caacudcacd seuneonceomteemenne 2

Betas MEE oes dccecnaecuuscceubanaearghanes 2, 4, 5, 6, 8, 10,

11, 15, 16, 18, 19, 20, 23

. oie oe >) re Sebicawuwdencioants 2, 3, 10, 12, 13, 14

er aeate Oe OE banca ne dcnkhecsieben nas Such cate oka 4, 10

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

STRUTHERS PATENT CORPORATION,

STRUTHERS WELLS CORPORATION and

STRUTHERS SCIENTIFIC & INTERNATIONAL CORPORATION,

Petitioners,

—against-

THE NESTLE COMPANY, INC.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

OPINIONS BELOW

The opinion of the District Court for the District of New

Jersey is reported in 558 F.Supp. 747. It is also reproduced in

the Appendix at A31 through A508.* The Judgment Order of

the Court of Appeals has not yet been reported. It appears at

Al.

JURISDICTION

The judgment of the Court of Appeals was entered on March

28, 1983. A timely petition for rehearing in bane (A509) was

filed by Petitioners on April 11, 1983 and denied by the Court

* Appendix to this Petition for a Writ of Certiorari so indicated herein.

in an order entered on April 25, 1983 (A3). The jurisdiction of

this Court is invoked pursuant to 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISIONS AND

STATUTES INVOLVED

(a) The federal statutory provisions involved, in pertinent

part, are:

Title 35, United States Code

§ 102. Conditions for patentability; novelty and loss

of right to patent

A person shall be entitled to a patent unless—

* * *

(b) the invention was patented or described in a

printed publication in this or a foreign country, more

than one year prior to the date of the application for

patent in the United States, or

* ba dl

§ 103. Conditions for patentability; nonobvious sub-

ject matter

A patent may not be obtained though the invention

is not identically disclosed or described as set forth in

section 102 of this title, if the differences between the

subject matter sought to be patented and the prior art

are such that the subject matter as a whole would

have been obvious at the time the invention was made

to a person having ordinary skill in the art to which

said subject matter pertains. Patentability shall not be

negatived by the manner in which the invention was

made.

(b) Rule 56(c) of the Federal Rules of Civil Proce-

dure, which provides:

The motion shall be served at last 10 days before

the time fixed for the hearing. The adverse party prior

to the day of hearing may serve opposing affidavits.

The judgment sought shall be rendered forthwith if

the pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to

a judgment as a matter of law. A summary judgment,

interlocutory in Character, may be rendered on the

issue of liability alone although there is a genuine

issue as to the amount of damages.

STATEMENT OF THE CASE

This is a suit for patent infringement in which Petitioners,

Struthers Patent Corporation, Struthers Wells Corporation and

Struthers Scientific & International Corporation (“Struthers”),

have charged Respondent, The Nestle Company, Inc. (“Nes-

tle”), with infringement of ten United States patents relating to

processes and apparatus for freeze concentration useful in the

manufacture of instant coffee. *

The District Court, in an unprecedented and startling deci-

sion, held all ten patents invalid on motions by Respondent for

summary judgment. ** What makes the decision so unusual, and

calls for this Court to exercise its supervisory power under Rule

17. l(a) of the Supreme Court Rules, is not the number of

patents involved, but the number of facts which the District

Court found were not in issue despite affidavits of Petitioners’

expert to the contrary.

The patents contain forty-nine claims (each an individual in-

vention); the claims were invalidated on at least three separate

grounds, obviousness (35 U.S.C. § 103), prior sale or offer for

* The patents in suit are reproduced in the appendix at A 684-723.

** The patents were grouped into four groups and a separate motion was

brought for each group.

sale (U.S.C. § 102(b)), and insufficiency of disclosure (35 U.S.C.

§ 112). In most cases, multiple grounds for invalidity were cited.

The issues relating to prior sale turned on a determination of

such questions as whether the inventions were completed at the

time of the alleged sales and whether apparatus sold for freeze

concentration was intended to be combined with apparatus for

freeze drying, which was not sold. The issues of obviousness

were determined by the District Court without the aid of expert

testimony and in direct contradiction to the sworn statements of

Petitioners’ expert in opposition to the motions.

And all of these factual determinations were made by the

District Court without the aid of any testimony or discovery in

this case on the part of the moving party, Nestle. All of the

documentary evidence was taken from other, earlier cases be-

tween Struthers and General Foods Corporation (“General

Foods”).* Nestle offered no affidavits other than those of its

counsel and the District Court chose to accept the arguments of

Nestle’s counsel and reject the opposing sworn statements of

Struthers’ expert and patentee, Neophytos Ganiaris.

Furthermore, the District Court judged Ganiaris’ credibility

on the basis of a reading of the bare affidavits and found him to

have sworn falsely (A399). Ganiaris was not given the opportu-

nity to be heard in open court and did not have his deposition

taken on the statements made in his affidavits. The basis for the

District Court's judgment with respect to credibility was a com-

parison of Ganiaris’ sworn statements with largely unexplained

documentation from the Struthers-General Foods cases.

The patents themselves are commercially substantial. At the

time the lawsuit was commenced, Struthers had sold two freeze

concentration plants to General Foods, two plants to a coffee

company in Germany and a plant to a company in Brazil (A540-

541). General Foods had also paid $1,400,000 to Struthers for a

fully paid license under six of the patents in settlement of a

lawsuits between them.

* General Foods Corporation y. Struthers Scientific © Int. Corp. and

Struthers Wells Corporation, Civil Action Nos. 3566, 3665 and 3666, U.S

District Court for the District of Delaware

The Court of Appeals has sanctioned the judgment of the

District Court, and adopted it as the law in the Third Circuit.

No clue was given by the Court of Appeals, which affirmed

without opinion, as to why it has chosen, at this time, to ignore

such precedent in that Circuit as Tomalewski v. State Farm Life

Ins. Co., 494 F.2d 882, 884 (3rd Cir. 1974), which held that

summary judgment was a “drastic remedy” which “may not be

granted where there is the slightest doubt as to the facts,” or its

recent decision in Federal Laboratories, Inc. v. Barringer Re-

search Limited, 696 F.2d 271, 274 (3rd Cir. 1982) which held

that a court “is [not] . . . at liberty to disbelieve the good faith

statements of experts contained in depositions and presented by

the non-moving party.”*

This Court has been asked to grant a writ of certiorari to the

Court of Appeals for the Third Circuit because the result reached

below is dangerous and far exceeds the limits of summary judg-

ment procedure. If allowed to stand, it could encourage other

courts to adopt the practice of the courts below to cut off a

litigant’s right to trial by jury. This Court has admonished the

lower courts that summary judgment is authorized under Rule

56, Fed. Rules Civ. Proc. “only where the moving party is

entitled to judgment as a matter of law, where it is quite clear

what the truth is, . . . [and where] no genuine issue remains for

trial . . . [for] the purpose of the rule is not to cut litigants off

from their right of trial by jury if they really have issues to try.”

Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464,

467 (1962), citing Sartor v. Arkansas Natural Gas Corp., 321

U.S. 620, 627 (1944).

This case also presents a subsidiary, but precedentially impor-

tant question with respect to whether a sale of apparatus which

is capable of performing only one major part of a unitary process

comprising two major parts, may properly be held to constitute

a prior sale or offer for sale of the patented process under 35

U.S.C. § 102(b). The District Court held in the affirmative. It

also held that a sale of such apparatus could constitute a § 102(b)

sale of the entire apparatus required for performing the com-

* Emphasis is added unless otherwise noted.

plete process. These determinations have gone far beyond the

present state of the law on the subject of the “on sale” bar under

§ 102(b). The cases hold that a patent covering a process is not

infringed by the manufacture of a machine used in the process.

B.B. Chemical Co. v. Ellis, 117 F.2d 829, 833-834 (1st Cir.

1941); affd. 314 U.S. 495 (1942). Furthermore, for purposes of

§ 102(b), the sale of apparatus must be considered for what it is,

not for what it may be combined with. Aro Mfg. Co. v. Con-

vertible Top Replacement Co., 365 U.S. 336, 344-345 (1961).

Thus, the Court is presented here with questions which are

important both with respect to the administration of justice

under the Federal Rules of Civil Procedure relating to summary

judgment and to the proper scope of the “on sale” provision of

35 U.S.C. § 102(b), which should be settled by this Court

pursuant to Rule 17.1(c) of the Supreme Court Rules.

History of The Struthers FreCon System

1. Early Work at Struthers

The history of the development of the patented inventions

and of the relationship between Struthers and General Foods

and the lawsuits between them is significant because all of the

evidence on which the District Court granted summary judg-

ment of invalidity was taken from the files of the Struthers-

General Foods lawsuits and submitted by Nestle in its motions

as exhibits to the affidavits of counsel.

Struthers Wells Corporation, parent of the Struthers compa-

nies herein, is a manufacturer of crystallizers and other process

equipment for the chemical, petroleum and electrical utilities

industries (A538). In 1958, it began to apply its know-how in

controlled crystallization to the broad field of ice crystallization

(A539) and was later awarded United States government con-

tracts to carry out work on freeze desalination of water (A65).

In 1962, Struthers initiated studies at its Warren, Pennsylva-

nia laboratory to determine whether its ice crystallization pro-

cesses could be used for food product and beverage applications.

Orange juice, vinegar, apple juice, tea and coffee extract were

freeze concentrated in the laboratory using an ice crystallization

process for various food companies including General Foods and

Nestle (A540),

In late 1963, General Foods expressed an interest in the

process for use both in its BirdsEye Division for concentrating

orange juice and by its Maxwell House Division for concentrat-

ing coffee extract. BirdsEye Division asked if Struthers could

demonstrate the process in an operating plant of significant size,

rather than on the laboratory scale then available in Warren.

Struthers designed and assembled a demonstration freeze

concentration plant which it mounted on a railroad flat car so

that it could be moved from place to place. The activities con-

cerning General Foods’ use of the mobile plant are of signifi-

cance because the District Court below relied upon them as

establishing the invalidity of a number of the patents in suit. It

did so on the basis of unexplained documents from this period.

2. The Mobile FreCon Plant

The mobile freeze concentration (FreCon) plant was shipped

for the first time in early April, 1964 to General Foods’ BirdsEve

plant at Winter Haven, Florida for testing on orange juice.

While it was there and after testing had begun on orange juice,

persons at General Foods’ Maxwell House Division at Hoboken,

New Jersey and White Plains, New York, requested that test

runs also be made on coffee extract. Coffee extract prepared by

General t vods was shipped in a refrigerated railroad car to

Winter Haven from Tampa, Florida and was successfully con-

centrated in the mobile plant although much difficulty was

encountered ai the time with foam and insoluble precipitates

(wax).

When wax was encountered in connection with the mobile

plant at Winter Haven, in May, 1964, a stop-gap measure used

at the time was to pass the extract through a crude filter consist-

ing of layers of cheesecloth.

The District Court held that the removal of wax at that time

by filtering it through cheesecloth demonstrated the simplicity

and obviousness of the dewaxing process and constituted a prior

offer for sale, sale and use of the (Reimus, et al.) patents relating

to dewaxing and prior offer for sale and sale of the (Muller)

patents for freeze concentration under 35 U.S.C. § 102(b). The

Court also held that it proved the falsity of Ganiaris’ affidavit, in

which he stated that “prior to January, 1965, General Foods did

not even appreciate that a dewaxing operation was necessary.”

(A399). This judgment of credibility was not only improper

under the rules for summary judgment but the District Court

was wrong in so holding as the facts show.

3. Struthers Contracts With General Foods

From early January, 1964, in a separate but parallel develop-

ment to its mobile plant activities, Struthers’ personnel were

engaged in designing a freeze concentration system for installa-

tion by the Maxwell House Division of General Foods at Ho-

boken, New Jersey. General Foods entered into a contract with

Struthers, on August 12, 1964, for the purchase of freeze con-

centration equipment. The contract provided for testing and

development work on freeze concentration of coffee and for non-

disclosure and ownership of developments made in the course

of the work performed under the contract.

The fact that the freeze concentration process was in a devel-

opmental state at the time in question, should have raised

serious doubts in the mind of the District Court with respect to

whether they were, in fact, completed as required for a deter-

mination of invalidity under 35 U.S.C. § 102(b). If Petitioners

had been given an opportunity to present evidence of this type

at trial, there might have been a different outcome below. It is

for that very reason that courts have been, and should be,

reluctant to grant summary judgment where there is the si:zht-

est question as to the facts.

Equipment for the construction of the freeze concentration

plant began to arrive at Hoboken in about November or early

December, 1964 and the plant was started up shortly thereafter,

in January, 1965 (A 675-683). When coffee extract was fed to the

system for the first time on February 4, 1965, a number of

operating difficulties arose including excessive foaming and wax

formation which caused plugging of the centrifuges used in the

system (A 677-678). Dewaxing equipment was installed for the

first time at Hoboken in early March, 1965 and by late March

or early April, 1965.

The testing and development work performed by Struthers in

connection with the use of the mobile FreCon plant at Winter

Haven, Florida for BirdsEye Division and in the construction

and development of freeze concentration systems for Maxwell

House at Hoboken pursuant to the contract of August 12, 1964

and a later contract of September 30, 1965, led to several related

lawsuits between Struthers and General Foods in which Struth-

ers charged General Foods with infringement of six of its pat-

ents, misappropriation of trade secrets and other unfair practices.

These lawsuits continued unabated from 1968 to 1972 when the

parties entered into a settlement agreement pursuant to which

General Foods took a fully paid license under the patents.

The numerous and interrelated facts with respect to Struth-

ers’ development of freeze concentration processes and appara-

tus, the testing and building of such systems for General Foods

and the prior art and the work of the inventors and others in the

field, are the facts on which the summary judgment motions

rest. They are disclosed in the discovery documents and depo-

sitions taken by the parties in the General Foods lawsuits and

were appended to the affidavits of counsel for Nestle and argued

in the motions for summary judgment.

Although these numerous facts were subject to interpretation,

and although they were of paramount importance herein, no

testimony was taken, in this case, to explain them. This Court

held in Adickes v. S.H. Kress & Co., 398 U.S. 144, 176 (1970)

that “[T]he advantages of a trial before a live jury with live

witnesses, and all the possibilities of considering the human

factors, should not be eliminated by substituting trial by affida-

vit and the sterile bareness of summary judgment.”

The Proceedings Below

Struthers Patent Corporation commenced the present action

against Nestle on April 13, 1972. It charged Nestle with in-

fringement of ten United States patents, including the six pat-

ents which it had previously asserted against General Foods,

and made a demand for a jury trial.

Nestle responded by alleging invalidity and noninfringement

of Petitioners’ patents and included counterclaims for a declara-

tory judgment with respect to such allegations and for unfair

competition.* Struthers Wells Corporation and Struthers Sci-

entific & International Corporation were added by Nestle as

defendants on the counterclaims.

The District Court held that the case presented no genuine

issues of fact and granted summary judgment against Petitioners

on the grounds that the patents were obvious (35 U.S.C. § 103),

had been sold or offered for sale more than one year prior to

their filing date (35 U.S.C. § 102(b)), and failed to contain a full,

clear and exact description of the subject matter claimed (35

U.S.C. § 112) (A31-508).

The Court of Appeals heard ora] argument on March 1, 1983.

On March 28, 1983, the Court of Appeals affirmed the judgment

of the District Court without opinion (Al). A petition for rehear-

ing in banc was denied by the Court of Appeals on April 25,

1983 (A3).

REASONS FOR GRANTING THE WRIT

The District Court, with the sanction of the Court of Appeals,

has far exceeded the limits of summary judgment procedure and

has preempted Petitioners’ right of trial by jury. It has set a

precedent which, if allowed to stand, will seriously erode the

right of litigants to a trial and create confusion with respect to

the “on sale” bar under 35 U.S.C. § 102(b).

The District Court:

1. resolved numerous issues of material fact: it did so by first

deciding that no expert testimony was required to understand

* The counterclaim for unfair competition has not been advanced beyond

the pleading stage and remains to be discovered and tried after final adjudica-

tion of the instant Rule 54(b), Fed. Rules Civ. Proc., appeal.

the patents and then, on the basis of its own analysis of the

patented inventions, the level of skill in the art, and the nature

and scope of the prior art, holding that the patents are directed

to obvious and unpatentable subject matter;

2. held six of the patents invalid for prior sale or offer for sale

under 35 U.S.C. § 102(b) based on documents which were

unexplained by any testimony and controverted by affidavits

which Struthers submitted in opposition to the motion; in this

regard the Court misapplied the law with respect to the “on

sale” defense by holding that a sale of apparatus which was not

capable by itself of performing a substantial and necessary part

of the patented process may constitute an invalidating prior sale

under § 102(b); and

3. judged the credibility of a witness whose affidavits were

submitted in opposition to the motions for summary judgment.

In doing so, the District Court chose to disregard a substantial

and critical portion of the evidence submitted by Struthers on

such determinative issues as the “on sale” defense, the nature

and scope of the patented inventions and of the prior art. As a

result, the District Court failed to heed this Court's instruction

that “On summary judgment the inferences to be drawn from

the underlying facts contained in such materials [affidavits,

exhibits, depositions submitted below] must be viewed in the

light most favorable to the party opposing the motion.” United

States v. Diebold, Inc., 369 U.S. 654, 655 (1962).

I. Certiorari Should Be Granted To Establish The Limits

Beyond Which Summary Judgment May Not Be

Substituted For A Trial

By deciding as complicated and involved a case as this on

summary judgment, the District Court had to make certain

factual findings or assumptions on which to support the overall

decision. It did so by first deciding that no expert testimony was

required to understand the subject matter of the patents and

prior art:

“I have concluded, however, that this is a case where

the opinion of experts is not necessary, and that I can

and should decide the § 103 issue on the basis of the

undisputed facts which are in the record. The tech-

nology involved is not complex. We are not dealing

with difficult chemical, physical, mathematical or

electronic concepts or devices. Rather, the patents

involved (the ‘007 and ‘522 patents and also the other

eight patents in suit) are readily understandable and

concern processes and devices which employ familiar

concepts”. (A191)

Having decided that it understood the technology involved

and was capable of making the determinations required by this

Court in Graham v. John Deere & Co., 383 U.S. 1 (1966), the

District Court resolved the factual inquiries mandated by that

case,

“As an examination of the prior art record discloses,

this subject matter is a well ploughed field. For dec-

ades patents have been filed, articles written, and

research and development undertaken in every phase

of freeze concentration processes and equipment. The

same record discloses that the skill in the art by this

late date is very high. Not only is the skill in the art

high, the subject matter is relatively simple, easily

understandable by a person having limited or no tech-

nical background in this field.” (A52-53)

Under 35 U.S.C. § 103, Congress set out a practical test of

patentability in the form of three factual inquiries, the third of

which entails resolving the level of ordinary skill in the pertinent

art.

Since the decision of this Court in Graham v. John Deere &

Co., supra, the circuit courts have recognized that the deter-

mination of the level of skill in the art to which the subject

matter of the patent in suit pertains involves several factual

elements. The Court of Appeals for the Federal Circuit lists six

factors which may be relevant in ascertaining the level of ordi-

nary skill in the art as follows*:

* Orthopedic Equip. Co. v. All Orthopedic Appliances, Inc., 707 F.2d 1376,

1382 (Fed. Cir. 1983),

(1) The educational level of the inventor; (2) the

various prior art approaches employed to solve the

problem; (3) the types of problems encountered in the

prior art; (4) the rapidity with which innovations were

made in the field of the patent in suit; (5) the sophis-

tication of the technology involved in the field; and

(6) the educational background of those actively work-

ing in the field.

Nowhere in the prolix opinion of the District Court were any

of the foregoing factors utilized to ascertain whether a genuine

issue of fact existed with respect to the level of ordinary skill in

the art of freeze concentrating comestible liquids. The Court's

response to petitioners’ strenuous argument that the third fac-

tual inquiry could not be made without the assistance of expert

testimony; that it had done so in the form of an affidavit of

Ganiaris; that respondent Nestle had submitted nothing in op-

position; and that even if Nestle did submit opposing affidavits

on the subject to contradict Ganiaris’ sworn statements, factual

issues would persist precluding summary judgment, was that

Petitioners’ points did not present an obstacle to summary judg-

ment because “. . . this is a case where the opinions of experts

is not necessary and. . . I can and should decide the § 103 issue

on the basis of the undisputed facts which are in the record”

(A191). In other words, the District Court resolved the ordinary

level of skill in the art by completely disregarding the Petition-

ers affidavit evidence on the matter and deciding the issue for

itself based on its bare reading of the prior art patents and other

references.

In thus dispensing with the third factual inquiry promulgated

by the Congress and mandated by this Court, the District Court

committed basic error that should not be allowed to stand to

confound future patent litigations. Petitioners submit that the

procedure which the District Court followed is not only an

aberration of long accepted principles of summary judgment but

also of the fundamental approach to an analysis of patent validity

set out in the patent statutes and mandated by this Court for

determining the non-obviousness or obviousness of a United

States patent. This is a case which truly warrants the attention

of this Court for the grave reason that a District Court should

not be permitted to disregard good faith affidavits submitted in

opposition to a motion for summary judgment, especially where

such affidavits are directed to the level of skill in the art, the

affiant is a person skilled in the art and the District Court is not

such a person. Federal Laboratories, Inc. v. Barringer Re-

search, Ltd., supra.

A practical, cogent and compelling demonstration of the need

for expert assistance in understanding and evaluating the pat-

ents in suit and prior art in this case is to be found in the

decision of Judge Latchum in Struthers Scientific & Int. Corp.

v. General Foods Corp., 314 F.Supp. 313, 315 (D. Del. 1970),

where the court held on a motion for summary judgment involv-

ing three of the same patents in suit here (patent Nos. 3,381,302;

3,404,007; and 3,449, 129):

... “Were this Court skilled in the art it might be

a simple matter to answer the questions required by

the John Deere case, but this Court frankly admits

that it lacks that special knowledge which would per-

mit it to read the patents in suit so understandably,

in terms of obviousness to a man of ordinary skill in

the art, on the basis of the present record. This deter-

mination must await a fuller treatment of these con-

ditions by expert testimony, now lacking in the present

record,” Struthers Scientific & Int. Corp. v. General

Foods Corp., 314 F.Supp. 313, 315 (D. Del. 1970)

It is inexplicable to Petitioners why three of the patents in

suit could be understood without difficulty by the District Court

below, but not by the District Court in Delaware. It reflects,

however, in practical application, the dangers inherent in the

unrestricted use of summary judgment procedure. By making

determinations, which it should not otherwise have made with-

out explanatory testimony, the District Court below was able to

hold the patents invalid for obviousness under 35 U.S. § 103

while the District Court in Delaware was not.

It is apparent that if the decision below is left undisturbed,

the district courts and courts of appeal will have been given a

substantial and stunning precedent with which to foreclose a

litigant’s right of trial by jury.

This Court has cautioned against such a result in Poller v.

Columbia Broadcasting, supra:

“This rule [Rule 56(c), Fed. Rules Civ. Proc.] author-

izes summary judgment ‘only where the moving party

is entitled to judgment as a matter of law, where it is

quite clear what the truth is ... [and where] no

genuine issue remains for trial . . . [for] the purpose

of the rule is not to cut litigants off from their right to

trial by jury if they really have issues to try.’ ” [Citing

Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620,

627 (1944)).

II. Certiorari Should Be Granted To Prevent An

Unprecedented And Unwarranted Extension Of The “On

Sale” Bar Under 35 U.S.C. § 102(b)

The District Court summarily held six of the ten patents in

suit invalid on the grounds that their subject matter had been

sold or placed on sale more than one year prior to the respective

filing dates of the applications that led to such patents. Petition-

ers contend that such holding constitutes an unwarranted exten-

sion of the strictures of § 102(b) and error as a matter of law.

1. Muller '007 and ’522 Patents

The Muller patents, No. 3,404,007 (A 716) and No. 3,495,522

(A 720), claim a process and apparatus, respectively, for the

freeze concentration of coffee extract in combination with a

freeze drying step. The applications for these patents were held

entitled to a filing date of January 25, 1966. In terms of prior

sale under 35 U.S.C. § 102(b), the critical date for these patents

is January 28, 1965 (A224).

The District Court accepted as true and the Circuit Court

affirmed that the only sale by Struthers to General Foods prior

to the critical date was the Struthers-General Foods contract of

August 12, 1964 (A226-227). The District Court also accepted as

true that the contract did not provide for the sale of any freeze

drying apparatus, process, technology or know-how (4226-227).

The District Court held that Struthers had made offers for

sale of freeze concentration processes and equipment prior to

the critical date with the “expectation” that it would be used by

the purchaser in conjunction with a freeze drying step (A227).

The District Court held and the Third Circuit affirmed that this

constituted a § 102(b) statutory bar to patentability (JA 145).

An essential inquiry in connection with the “on sale” bar

under § 102(b) relates to the degree of identity required be-

tween that which is placed on sale and the patented invention.

Although exact identity between the two is not required, there

must exist at least substantial identity between them.

In DeLong Corporation v. Raymond International, Inc., 622

F.2d 1135, 1141 (3rd Cir. 1980), the Court held:

“In order to sustain a finding of invalidity under the

‘on sale’ bar of 35 U.S.C. § 102(b), it must be shown

that the alleged invalidating sale was of a device sub-

stantially identical to that claimed under the terms of

the patent. See Red Cross Manufacturing Corp. v.

Toro Sales Co., 525 F.2d 1135 (7th Cir. 1975).”

The Red Cross case, supra, at 1141-42, cited in DeLong,

supra, sets forth the test for substantial identity:

. a necessary determination must be whether

the item placed ‘on sale’ sufficiently embodied the

invention described in the patent in suit to invoke the

bar of § 102(b). . . . Exact identity is not required as

long as the invention is essentially completed at the

time of the invalidating sale... .”

= * x

“In order for the ‘on sale’ bar to apply, the patent

claims at issue must describe the invention offered for

A sale of the FreCon apparatus would not, by itself, constitute

a § 102(b) sale of the process patent because it does not have

sufficient identity with the invention claimed in the patent to

infringe.

The First Circuit, in B.B. Chemical Co. v. Ellis, 117 F.2d

829, 833-34 (1st Cir. 1941), affd. 314 U.S. 395 (1942), held that

a patent covering a process is not infringed by the manufacture

of a machine for use in the process:

“.. . The manufacture of the machine by the defen-

dants is not an infringement of the plaintiff's process

patent... . ‘So distinctively [sic] and separate in the

patent law are process and apparatus for utilizing such

process that where, after a patent for a process by one

invention, a second inventor might patent a novel

apparatus for utilizing the process. . . . It will there-

fore be evident that the test of process infringement is

not the similarity of apparatus, but rather whether

the apparatus, no matter what its form, utilizes the

process... .”

In Plax Corporation v. Precision Extruders, 239 F.2d 792,

795 (3rd Cir. 1957), the Third Circuit agreed that the “test of

infringement of a process patent is whether the . . . machine

employs every essential of the patented method.” The freeze

concentration apparatus sold by Struthers is incapable of per-

forming freeze drying. It cannot infringe the patented process

for freeze concentration in combination with freeze drying. It

lacks sufficient identity to the claimed invention to constitute a

§ 102(b) sale thereof.

In Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518,

528 (1972), reh. den. 409 U.S. 902 (1972), the Court held:

“.. . that ‘a combination patent protects only against

the operable assembly of the whole and not the man-

ufacture of its parts.”

The District Court held that the combination of freeze con-

centration apparatus and freeze drying apparatus was “the es-

sence of the alleged ... inventions” (JA 144). But Struthers

never sold freeze drying apparatus to anyone.

This Court, in Aro Mfg. Co. v. Covertible Top Replacement

Co., 365 U.S. 336, 344-45 (1961), held:

“... if anything is settled in the patent law, it is

that the combination patent covers only the totality of

the elements in the claim and that no element, sepa-

rately viewed, is within the grant. See the Mercoid

cases, supra, 320 U.S., at 667; 320 U.S., at 684. The

basic fallacy in respondent's position is that it re-

quires the ascribing to one element of the patented

combination the status of patented invention in itself.

Yet this Court had made it clear in the two Mercoid

cases that there is no legally recognizable or protected

‘essential’ element, ‘gist’ or ‘heart’ of the invention in

a combination patent... .”

Since Struthers did not sell to General Foods the complete

apparatus claimed in the ‘422 patent, and since the entire pro-

cess claimed in the ‘007 patent could not have been performed

by the FreCon apparatus alone, it could not have made a § 102(b)

sale of the inventions claimed in these patents to General Foods

at any time.

2. The Reimus Dewaxing Patents

The Reimus et al. patents (U.S. patents Nos. 3,381,302:

3,449,129: 3,632,353; and 3,474,723) relate to the removal of

insoluble precipitate materials (wax) which form in coffee extract

when it is cooled or allowed to stand for various periods of time.

These materials, when present in the extract, interfere with the

process of removal of ice crystals during freeze concentration.

The problem is that “continued exposure to low temperature

will also cause the formation of a non-waxy particulate precipi-

tate. This particulate precipitate forms after the formation of

insoluble tars, waxes and gums . . . exposure to low tempera-

tures sufficient to cause this particulate precipitate should be

avoided because it is tantamount to degradation of the coffee

extract. The resulting concentrated product. . . is not as satis-

factory to the consumer... .” Thus, if one were merely to

precipitate material from coffee extract without regard to tem-

perature or holding time, the resultant coffee product would be

unsaleable.

The District Court held that the processes and apparatus

claimed in the Reimus patents were placed on sale, sold and

used in May, 1964 when Struthers was demonstrating its FreCon

mobile plant to General Foods in Winter Haven, Florida. The

Court held it had become “obvious [at that time] that it was

necessary to remove the tars which plugged the centrifuge

during the freeze concentration process” (A400). The removal of

waxy materials was accomplished by pouring the coffee extract

through cheesecloth to filter it before freeze concentrating.

As the District Court said:

“The question becomes whether the indisputable

facts as to the devising and use of dewaxing proce-

dures in May, 1964, when Struthers was demonstrat-

ing its FreCon unit, and General Foods’ subsequent

(pre-December 2, 1964) decision to use such proce-

dures in connection with the freeze concentration

equipment purchased from Struthers, is an invalidat-

ing sale or use under § 102(b). . . .” (A401)

The District Court decided that the dewaxing inventions were

“very simple and obvious” and held that they were offered for

sale, sold or used during the test runs at Winter Haven in May,

1964. The Court notes in its opinion “how easily” the problem

was solved at that time:

“I have concluded, however, that the entire subject

matter of the Reimus patents involves very simple

(and I later find obvious) concepts. The skill in the

applicable art is very high. (Note how easily the per-

sons working on the ‘FreCon’ unit in May, 1964, were

able to solve the problem of gummy, waxy concentra-

tion clogging the centrifuge during the freeze concen-

tration process.) There can be no doubt that one

skilled in the art (and also one having only negligible

skill in the art) can adjust the various factors of tem-

perature, concentration of extract, and holding time

to obtain concentrated coffee extract having the de-

sired flavor.” (A407-408)

This Court, in Poller v. Columbia Broadcasting, supra, has

held at page 473:

“We believe that summary procedures should be

used sparingly in complex antitrust litigation where

motive and intent play leading roles, the proof is

largely in the hands of the alleged conspirators, and

hostile witnesses thicken the plot. It is only when the

witnesses are present and subject to cross-examina-

tion that their credibility and the weight to be given

their testimony can be appraised. Trial by affidavit is

no substitute for trial by jury which so long has been

the hallmark of ‘even handed justice.’ ”

Similar issues relating to motive and intent are present with

respect to the holding of invalidity of the Reimus et al. patents

for prior sale or offer for sale under 35 U.S.C. § 102(b). The

questions relating to whether these patented inventions were in

fact placed on sale are questions of fact which were decided by

the District Court in the affirmative. But the District Court

decided these fact questions after holding that the statements

contained in the affidavits of Petitioners’ patentee and expert

witness, Ganiaris, were untrue. To hold that Mr. Ganiaris swore

falsely in his affidavits is, at the least, unfair considering he had

never been cross-examined by Nestle with respect to the affi-

davits nor was he ever given the opportunity to testify on the

subject in open court. The District Court judged Ganiaris’ cred-

ibility on the basis of documents taken from the Struthers-

General Foods lawsuits as interpreted and described by counsel

for Nestle (A383-384, A399). If Ganiaris had been given an

opportunity to testify at trial, the outcome might have been

different because his first-hand observations of what took place

during the time period in question were much more relevant to

the issues than the arguments of Nestle’s counsel.

In his affidavit Mr. Ganiaris said that “prior to January, 1965,

General Foods did not even appreciate that a dewaxing opera-

tion was necessary” (A633). The District Court found this state-

ment to be “patently false” (A399). The Court based this finding

on Struthers’ activities at Winter Haven in May, 1964 when

coffee extract was filtered through cheesecloth; on Struthers’

answer to General Foods’ Interrogatory 6 in which that incident

was described; and on a memorandum of Martin Gottesman, a

General Foods employee, dated September 23, 1964, more than

a year after the event, describing the necessity of prefiltering

coffee extract in the Struthers mobile unit (A401-403).

It was plainly improper for the District Court to assess as false

Ganiaris’ statement on so subjective a matter as what General

Foods “appreciated.” Ganiaris was Struthers’ project engineer

in connection with the design, construction and operation of the

freeze concentration plant which it built for Maxwell House at

Hoboken, New Jersey. He was in a position to know whether

General Foods truly “appreciated” the necessity for a dewaxing

operation. The facts, contrary to the holding of the District

Court, support Mr. Ganiaris and demonstrate that General Foods

indeed did not fully “appreciate” the necessity for a dewaxing

step prior to January, 1965.

Ganiaris knew that dewaxing equipment was not included in

the freeze concentration plant which Struthers designed and

built for General Foods pursuant to the contract of August 12,

1964 (A633). It was not until after the plant was started up in

January, 1965 that the full extent of the problem with wax

became appreciated (A633). The first recognition of this problem

in a real sense occurred in February, 1965 when runs on coffee

extract were commenced and it was not until at least March of

that year that it was corrected.

The Struthers mobile FreCon plant had no dewaxing facili-

ties. If the wax problem was “appreciated” by General Foods

before January, 1965 why was it not included in the contract, or

at least in the FreCon plant installed at Hoboken?

A memorandum from Ganiaris to Struthers’ employee, J.G.

Muller, dated February 15, 1965 entitled “Subject: Maxwell

House FreCon Unit,” (A 675) reflects that the initial freeze

concentration test runs on sugar solutions were satisfactory to

Maxwell House management through the week of January 24.

It was not until later that the wax problem arose as the following

records show:

“ .. The first stage was operated for 2 hours on

Feb. 4 with coffee extract. The unit was shut-down

due to foam and wax.

On February 5, a 4-hour run was made and the first

stage was shut-down due to the failure of one flexible

connection on the crystallizer. However, a thick layer

of wax was observed on the centrifuge screen. There

was not any problem with foam. . . .

5. Week of 2/7—24 hour Day

a) On February 8 and 9, several attempts were

made to operate the first stage with coffee extract.

However, continuous operation for more than 30 min-

utes was impossible due to wax.

At a meeting held on 2/10, SSI and MH engineers

decided on the following:

* ™ *

2. Dewax a large quantity of extract and operate

the system on a close-cycle until the permanent de-

waxing equipment is installed.

3. Initiate laboratory test on wax by MH-Research

Division.

» * *

4. SSI will design the dewaxing equipment on the

basis of the laboratory data.

5. Install all dewaxing equipment by the first week

of March.

* * *

Conclusions and Recommendations

* - *

3. Wax in the Extract: This problem did not receive

the proper attention from either organization, MH or

SSI. Unless the two companies clarify their position

with respect to the following points, further delays

will occur... .”

It is apparent from the Ganiaris memorandum that the dewax-

ing problem persisted despite continued efforts to effect a solu-

tion for at least nine months after the time that the District

Court held that it was so “easily” solved and sold to General

Foods in May, 1964. The problem with wax continued at Gen-

eral Foods at least until] February, 1965 when Ganiaris noted

that “This problem did not receive the proper attention from

either organization, MH [Maxwell House] or SSI.” The infer-

ence favorable to Struthers to be drawn from this fact, is that

the invention was not completed at the time of the alleged sale

and, therefore, not sold under 35 U S.C. § 102(b) at the time.

Thus, the District Court not only grossly exceeded the proper

limits of summary judgment procedure by drawing factual infer-

ences in favor of the moving party, it compounded its error by

judging Ganiaris’ credibility on the basis of its reading of the

documentary exhibits submitted in connection with the mo-

tions. The District Court should not have been permitted to do

this. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).

Therefore, the Court of Appeals’ adoption of the opinion below

requires the exercise by this Court of its supervisory power

under Rule 17.1(a) of the Supreme Court Rules to prevent

further impermissible distortions of summary judgment practice

in the federal courts.

CONCLUSION

It is respectfully requested that a writ of certiorari issue to

review the judgment of the United States Court of Appeals for

the Third Circuit.

Respectfully submitted,

SIDNEY R. BRESNICK

Counsel of Record for Petitioners

330 Madison Avenue

New York, New York 10017

(212) 986-8686

Of Counsel:

PHILIP T. SHANNON

TERESE R. COHEN

Pennie & Edmonds

New York, New York

TABLE OF CONTENTS

Judgment Order of James Hunter, III,

Circuit Judge, dated March 28, 1983

Sur Petition for Rehearing, dated

April 25, 1983

Final Order of Judge Debevoise,

dated May 6, 1982, United States

District Judge

Opinion of Judge Debevoise, United

States District Judge

Appellants' Petition for Rehearing

In Banc

Affidavit in Opposition to Nestle's

Motion for Partial Summary Judgment

(Group I)

Affidavit in Opposition to Nestle's

Motion for Partial Summary Judgment

(Group III)

Affidavit in Opposition to Nestle's

Motion for Partial Summary Judgment

(Group III)

Affidavit in Opposition to Nestle's

Motion for Partial Summary Judgment

(Group IV)

Supplemental Affidavit in Opposition

to Nestle's Motion for Partial

Summary Judgment (Group I)

A-535

A-578

A-605

A-635

A-661

TABLE OF CONTENTS (Cont'd)

PAGE

Supplemental Affidavit in Opposition

to Nestle's Motion for Partial

Summary Judgment (Group II) A-665

Supplemental Affidavit in Opposition

to Nestle's Motion for Partial

Summary Judgment (Group IV) A-671

Struthers Scientific and International

Corporation Memorandum

Subject: Maxwell House FreCon Unit A-675

Patent Appendix (Bound in Separate

Volume) A-684

A-l

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 82-5355

STRUTHERS PATENT CORPORATION, a

corporation organized and existing

under the laws of the State of Texas

Vv.

NESTLE COMPANY, Inc., a corporation

Organized and existing under the laws

of the State of New York

Vv.

STRUTHERS WELLS CORPORATION and STRUTHERS

SCIENTIFIC AND INTERNATIONAL

CORPORATION,

Defendants on Counterclaim

Struthers Patent Corporation, Struthers

Wells Corporation, and Stfuthers

Scientific & International

Corporation,

Appellants

Appeal from the United States

District Court for the District

of New Jersey - Trenton

(D.C. Civil Action No. 663-72)

District Judge:

Honorable Dickinson R. Debevoise

Argued March l, 1983

Before HUNTER, WEIS and BECKER,

Circuit Judges

A-2

JUDGMENT ORDER

After consideration of all

contentions raised by appellant, it is

ADJUDGED AND ORDERED that the

judgment of the district court be and is

hereby affirmed. See opinion of

Dickinson R. Debevoise, United States

District Judge, Civil Action No. 663-72,

Joint Appendix Vol. I, A-4l, et seq., ___

F.Supp. ___.

Costs taxed against appellant.

BY THE COURT,

s/James Hunter, III

JAMES HUNTER, III, Circuit Judge

Attest:

s/Sally Mrvos_

Sally Mrvos, Clerk

Dated: March 28, 1983

A-3

UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

No. 82-5355

STRUTHERS PATENT CORPORATION, a

corporation organized and existing

under the laws of the State of Texas

NESTLE COMPANY, INC., a corporation

Organized and existina under the laws

of the State of New York

STRUTHERS WELLS CORPORATION and STRUTHERS

SCIENTIFIC AND INTERNATIONAL

CORPORATION,

Defendants on Counterclaim

Struthers Patent Corporation, Struthers

Wells Corporation, and Struthers

Scientific & International

Corporation,

Appellants

SUR PETITION FOR REHEARING

Present SEITZ, Chief Judge,

ALDISERT, ADAMS, GIBBONS, HUNTER

WEIS, GARTH, HIGGINBOTHAM, SLOVITER,

BECKER, Circuit Judges

The petition for rehearing filed by

STRUTHERS PATENT CORPORATION, STRUTHERS

WELLS CORPORATION, and STRUTHERS

SCIENTIFIC & INTERNATIONAL CORPORATION

in the above entitled case having been

submitted to the judges who participated

in the decision of this court and to all

the other available circuit judges of the

circuit in regular active service, and no

judge who concurred in the decisicn

having asked for rehearing, and a

majority of the circuit judges of the

circuit in regular active service not

having voted for rehearing by the court

in banc, the petition for rehearing is

denied.

By the Court,

s/James Hunter

Judge

Dated: April 25, 1983

A-5

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

STRUTHERS PATENT

CORPORATION,

Plaintiff,

Vv. Judge Debevoise

THE NESTLE COMPANY, INC.,: Civil Action

No. 663-72.

Defendant, :

Vv. :

STRUTHERS WELLS :

CORPORATION, and

STRUTHERS SCIENTIFIC

INTERNATIONAL

CORPORATION :

Additional Defendants:

on Counterclaim.

FINAL ORDER

(RULE 54(b), F.R.CIV.P.)

Defendant ("Nestle") having moved the

Court pursuant to Rule 37, F.R.Civ.P.,

for an order imposing sanctions against

the plaintiff and the defendants on

counterclaim (collectively, "Struthers" )

A-6

for the alleged destruction of relevant

documents; the Court having referred said

motion to a Special Master for

supervision of discovery, an evidentiary

hearing, and preparation of a report and

recommendations thereon; the Special

Master having recommended that the motion

be denied; Struthers having moved the

Court to confirm the Special Master's

report and to deny Nestle's motion for

Sanctions; and Nestle having filed

objections to the Special Master's report

and recommendations; and

Nestle having by a series of four

motions moved the Court pursuant to Rule

56, F.R.Civ.P., for summary judgment of

invalidity and or unenforceability of

each of the ten patents asserted against

it in this action; and Struthers having

filed papers in opposition thereto; and

The Court having considered each of

the aforesaid motions, the records made

A-7

by the respective parties before the

Court and before the Special Master, and

the briefs, affidavits and other

submissions made in connection therewith,

and having heard oral argument thereon;

and having on October 13, 1981 filed its

written opinion deciding each of the said

motions; and

Nestle having thereafter made

application pursuant to Title 35, United

States Code, Section 285, that this

action be determined to be exceptional

within the meaning of said statutory

provision, and that its reasonable

attorney fees and disbursements be

awarded to Nestle; and further

application for an order to vacate the

recommendations of the Special Master and

to reconsider the denial of discovery

Sanctions; and

The Court having denied each of the

said two applications on April 5, 1982,

A-8

for reasons expressed in the opinions

read into the record on that date;

IT IS ORDERED AND ADJUDGED:

l. The Court has jurisdiction of the

parties and of the subject matter of this

action.

2. The report and recommendations of

the Special Master on Nestle's sanctions

motion are adopted, modified and/or

rejected to the extent and in the manner

set forth in the Court's opinions filed

October 13, 1981, and read into the

record on April 5, 1982 (on reconsidera-

tion).

3.(a) Nestle's motion for summary

judgment as to Muller United States

Letters Patent 3,404,007 is granted, and

said Letters Patent are declared to be

invalid and void as to each claim thereof

A-9

by reason of obviousness in view of the

prior art, 35 U.S.C. §103; and by reason

of prior offer for sale, sale and use, 35

U.S.C. §102(b); and as to claim 5 because

it claims merely the product of an old

and known process.

(b) WNestle's motion as to Patent

3,404,007 is denied as to the asserted

grounds that Struthers is collaterally

estopped to relitigate the prior

determination of unpatentability of the

subject matter claimed in the patent;

that the patent fails to comply with the

requirements of 35 U.S.C. §112; by reason

of Struthers' withholding of material

information from the Patent Office; and

as to claim 5 that Struthers'

acquiescence in the examiner's rejection

of the product-by-process claim in the

"Muller II" application (Serial No.

738,776) constituted a cancellation,

Surrender and abandonment of the claim;

A-10

determine whether Patent 3,404,007 is

invalid by reason of anticipation by

prior patents or publications, 35 U.S.C.

§102(b); or whether, if the process is

assumed to be new, claim 5 of said patent

is invalid on the grounds that the

product is not patentably different from

freeze dried soluble coffee described in

the prior art, or by reason of failure to

comply with Patent Office regulations.

4.(a) Nestle's motion for summary

judgment as to Muller United States

Letters Patent 3,495,522 is granted, and

said Letters Patent are declared to be

invalid and void as to each claim thereof

by reason of obviousness in view of the

prior art, 35 U.S.C. §103; and by reason

of prior offer for sale, sale and use, 35

U.S.C. §102(b).

(b) Nestle's motion as to Patent

A-11

3,495,522 is denied as to the asserted

grounds of late claiming, and by reason

of Struthers' withholding of material

information from the Patent Office.

determine whether Patent 3,495,522 is

invalid by reason of anticipation by

prior patents or publications, 35 U.S.C.

§102(b); or double patenting and

extension of the monopoly of Patent

3,404,007,

5.(a) Nestle's motion for summary

judgment as to Ganiaris United States

Letters Patent 3,531,295 is granted, and

said Letters Patent are declared to be

invalid and void as to each claim thereof

by reason of obviousness in view of the

prior art, 35 U.S.C. §103; and by reason

of failure to comply with the

requirements of 35 U.S.C. §112.

A-12

(b) Nestle's motion as to Patent

3,531,295 is denied as to the asserted

Grounds that the application upon which

the patent issued became abandoned by

operation of law; that the patent is

invalid under 35 U.S.C. §102(f); that the

patent is invalid by reason of prior

offer for sale, sale and use, 35 U.S.C.

§102(b); and by reason of Struthers'

withholding of material information from

the Patent Office.

determine whether Patent 3,531,295 is

invalid by reason of anticipation by

prior patents or publications, 35 U.S.C.

§102(b); or whether the patent is invalid

under 35 U.S.C. §102(d).

6.(a) Nestle's motion for summary

judgment as to Ganiaris United States

Letters Patent 3,620,034 is granted, and

said Letters Patent are declared to be

A-13

invalid and void as to each claim thereof

by reason of obviousness in view of the

prior art, 35 U.S.C. §103.

(b) Nestle's motion as to Patent

3,620,034 is denied as to the asserted

grounds that the application upon which

the patent issued became abandoned by

operation of law; that the patent is

invalid by reason of prior offer for

sale, sale and use, 35 U.S.C. §102(b);

for failure to comply with the

requirements of 35 U.S.C. §112; and by

reason of Struthers' withholding of

material information from the Patent

Office.

determine whether Patent 3,620,034 is

invalid by reason of anticipation by

prior patents or publications, 35 U.S.C.

§102(b); or whether the patent is invalid

by reason of double patenting.

A-14

7.(a) Nestle's motion for summary

judgment as to Reimus. et al. United

States Letters Patent 3,381,302 is

granted, and said Letters Patent are

declared to be invalid and void as to

each claim thereof by reason of

obviousness in view of the prior art, 35

U.S.C. §103; and by reason of prior offer

for sale, sale and use, 35 U.S.C. §102(b).

(b) Nestle's motion as to Patent

3,381,302 is denied as to the asserted

grounds that Struthers failed to

prosecute the application for patent in

the manner required by law; that the

application upon which the patent issued

became abandoned by operation of law;

that the patent fails to comply with the

requirements of 35 U.S.C. §112; and by

reason of Struthers' withholding of

material information from the Patent

Office.

A-15

determine whether Patent 3,381,302 is

invalid by reason of anticipation by

prior art patents or publications, 35

U.S.C. §102(b).

8.(a) Nestle's motion for summary

judgment as to Reimus et al. United

States Letters Patent 3,449,129 is

Granted, and said Letters Patent are

declared to be invalid and void as to

each claim thereof by reason of

obviousness in view of the prior art, 35

U.S.C. §103; by reason of prior offer for

sale, sale and use, 35 U.S.C. §102(b) ;

and because the patent claims subject

matter given up during prosecution of the

application for Patent 3,381,302.

(6b) Nestle's motion as to Patent

3,449,129 is denied as to the asserted

grounds that Struthers failed to

prosecute the application for patent in

A-16

the manner required by law; that the

application upon which the patent issued

became abandoned by operation of law;

that the patent fails to comply with the

requirements of 35 U.S.C. §112; that the

patent is invalid for want of a legally

adequate oath or declaration; and by

reason of Struthers' withholding of

material information from the Patent

Office.

determine whether Patent 3,449,129 is

invalid by reason of anticipation by

prior art patents or publications, 35

U.S.C. §102(b); or whether the patent is

invalid by reason of double patenting.

9.(a) Nestle's motion for summary

judgment as to Reimus et al. United

States Letters Patent 3,632,353 is

granted, and said Letters Patent are

declared to be invalid and void as to

A-17

each claim thereof by reason of

obviousness in view of the prior art, 35

U.S.C. §103; by reason of prior offer for

sale, sale and use, 35 U.S.C. §102(b);

and because the patent claims subject

matter given up during prosecution of the

application for Patent 3,381,302.

(b) Nestle's motion as to Patent

3,632,353 is denied as to the asserted

grounds that Struthers failed to

prosecute the application for patent in

the manner required by law; that the

application upon which the patent issued

became abandoned by operation of law;

that the patent fails to comply with the

requirements of 35 U.S.C. §112; that the

patent is invalid for want of a legally

adequate oath or declaration; and by

reason of Struthers' withholding of

material information from the Patent

Office.

A-18

determine whether Patent 3,632,353 is

invalid by reason of anticipation by

prior art patents or publications, 35

U.S.C. §102(b); or whether the patent is

invalid by reason of ‘:.uble patenting.

10.(a) Nestle's motion for summary

judgment as to Reimus et al. United

States Letters Patent 3,474,723 is

granted, and said Letters Patent are

declared to be invalid and void as to

each claim thereof by reason of

obviousness in view of the prior art, 35

U.S.C. §103; and by reason of prior offer

for sale, sale and use, 35 U.S.C. §102(b).

(b) Nestle's motion as to Patent

3,474,723 is denied as to the asserted

grounds that Struthers failed to

prosecute the application for patent in

the manner required by law; that the

application upon which the patent issued

A-19

became abandoned by operation of law;

that the patent fails to comply with the

requirements of 35 U.S.C. §112; that the

patent is invalid for want of a legally

adequate oath or declaration; and by

reason of Struthers' withholding of

material information from the Patent

Office.

determine whether Patent 3,474,723 is

invalid by reason of anticipation by

prior art patents or publications, 35

U.S.C. §102(b); or whether the patent is

invalid by reason of double patenting.

ll. (a) Nestle's motion for summary

judgment as to Howell United States

Letters Patent 3,367,126 is granted, and

said Letters Patent are declared to be

invalid and void as to each claim thereof

by reason of obviousness in view of the

prior art, 35 U.S.C. §103.

A-20

(b) Nestle's motion as to Patent

3,367,126 is denied as to the asserted

grounds that the patent fails to comply

with the requirements of 35 U.S.C. §112;

that the patent is invalid by reason of

prior offer for sale, sale and use, 35

U.S.C. §102(b); and by reason of

Struthers' withholding of material

information from the Patent Office,

determine whether Patent 3,367,126 is

invalid by reason of anticipation by

prior art patents or publications, 35

U.S.C. §102(b).

12.(a) Nestle's motion for summary

judgment as to Ganiaris United States

Letters Patent 3,636,722 is granted, and

said Letters Patent are declared to be

invalid and void as to each claim thereof

by reason of failure to comply with the

requirements of 35 U.S.C. §112; and

A-21

because the subject matter was first

patented by Struthers ina foreign

country prior to the date of the

application for patent in this country on

an application for patent filed more than

twelve months before the filing of the

application for patent in this country,

35 U.S.C. §102(d).

(b) Nestle's motion as to Patent

3,636,722 is denied as to the asserted

grounds that Struthers is collaterally

estopped to relitigate the prior

determination of unpatentability of the

subject matter claimed in the patent; and

by reason of Struthers' withholding of

material information from the Patent

Office,

determine whether Patent 3,636,722 is

invalid by reason of anticipation by

prior art patents and publications, 35

U.S.C. §102(b); or obviousness in view of

A-22

the prior art, 35 U.S.C. §103; or prior

offer for sale, sale and use, 35 U.S.C.

§102(b),.

13. Plaintiff shall take nothing of

defendant, and shall have no recovery on

its complaint in this action.

14. The complaint in this action is

hereby dismissed.

15. The first count of Nestle's

counterclaim is hereby sustained,

16. This action is determined not to

be exceptional within the meaning of

Title 35, United States Code, Section

285, and Nestle's application for an

award of its reasonable attorney fees and

disbursements is denied, for reasons

expressed in the Court's opinion read

into the record on April 5, 1982.

A-23

17. Nestle shall be allowed costs of

this action which shall be taxed when and

in the event it ultimately prevails.

IT IS FURTHER ORDERED AND ADJUDGED:

18. The Court having determined that

there is no just reason for delay, it is

directed that this judgment be entered as

a final judgment pursuant to Rule 54(b),

F.R.Civ.P. In so directing, the Court

has taken account of the following

factors and considerations, inter alia:

A. The complaint in this action

alleges that the ten Struthers patents

identified therein, and dealt with

hereinabove, are valid and infringed.

The first count of the counterclaim seeks

a declaratory judgment that the same ten

patents are invalid and not infringed.

A-24

B. The Court has determined all ten

patents to be invalid, thus disposing of

the issues raised by the complaint, which

is accordingly dismissed. That

determination likewise disposes of the

issues raised by the first count of the

counterclaim (as a matter of law an

invalid patent cannot be infringed), upon

which Nestle shall have judgment, and the

first count is accordingly sustained.

C. The patent issues presented by

the complaint and by the first count of

the counterclaim arise exclusively under

federal law (Title 28, United States

Code, Sections 1338(a), 2201 and 2202).

By contrast, the non-patent issues

involved in the second count of the

counterclaim remaining for future

determination arise in part under state

law. The second count of the

A-25

counterclaim is for unfair competition,

including malicious abuse of process.

D. The Court has jurisdiction of the

second count under Title 28, United

States Code, Section 1338(b) and over the

parties thereto. The second count is not

facially defective, frivolous or

otherwise legally insufficient.

E. Only the plaintiff and the

defendant are parties to the complaint

and the first count of the

counterclaims. Two other parties (both

related to the plaintiff) have been

joined as additional parties on the

second count of the counterclaims. In

1973 the Court (per Lacey, J.) in denying

motions by the additional parties to

dismiss determined that the Court does

have jurisdiction of their persons and

that the second count does state a claim

A-26

upon which relief can be granted. In

1976 the Court (per Meanor, J.) permitted

the additional parties to file a

responsive pleading and to demand trial

by jury of the second count.

F. An action for malicious abuse of

process cannot be heard until the prior

action has terminated favorably to the

party asserting such abuse. As the

Court's 1973 opinion recognizes, however,

under Rule 18(b), F.R.Civ.P., such a

claim may as a matter of pleading be

asserted as a counterclaim before

termination of the prior action.

G. The unfair competition and

malicious abuse of process issues

remaining for determination are separate

and distinct from the patent issues which

have been determined by this Court. As

noted above, additional parties are

A-27

involved on those of the former issues

raised by the second count of the

counterclaims. Moreover, the Court's

jurisdiction to determine the malicious

abuse of process aspect of the second

count depends on Nestle's having

prevailed on some or all of the patent

issues dealt with in this order. Entry

of final judgment on the patent issues

would not prevent the remaining

non-patent issues in the case from being

prepared for trial, as to which discovery

is required.

H. The issues remaining for

determination, as well as the scope of

proof as to the remaining issues, will be

materially affected by appellate

affirmance, reversal or modification of

this order. As one example, should the

determination of invalidity of one or

more of the ten patents be set aside on

A-28

appeal, that matter would have to be

determined before proceeding to the

issues raised by the second count. As

another example, should it be determined

On appeal that Nestle is entitled to

relief on its sanctions motion, e.g.,

that designated facts pertinent to the

second count be taken as established for

purposes of the action in accordance with

Nestle's claim, or that Struthers not be

permitted to oppose designated claims,

the shape and content of future

proceedings could be markedly affected.

I. It is accordingly concluded to be

evident that appellate review at this

juncture will both facilitate and render

more orderly the future proceedings in

this action. Such review will also

minimize the risk of subsequent retrial

and reduce the potential burden on both

the trial and appellate Courts. Such

A-29

review would not be mooted by any future

development in the trial Court, and the

Court has concluded that its

determination of the issues decided

herein would not be changed by later

developments in the trial Court relating

to the disposition of the remaining

issues to be tried, viz., those raised by

the second count of the counterclaim.

Neither would the appellate Court be

required to decide a second time any

legal issues relating to already

adjudicated claims. The Court has also

determined that the second count of the

counterclaim poses no possibility of a

set-off because no judgment was awarded

plaintiff on the complaint.

J. The Court has therefore concluded

that there is no just reason for delaying

entry of final judgment as to the issues

determined herein; and that judicial

A-30

economy, sound judicial administration,

and the speedy determination of this

action, which has pended for more than 10

years, are best served by the entry of a

judgment pursuant to F.R.Civ.P. 54(b).

s/Dickinson R. Debevoise _

DICKINSON R. DEBEVOISE

United States District Judge

Dated: May 6, 1982

A-31

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

STRUTHERS PATENT :

CORPORATION,

Plaintiff, Civil Action

: No. 663-72.

Vv. :

THY= NESTLE COMPANY, INC.,: OPINION

Defendant, :

Vv. H

STRUTHERS WELLS :

CORPORATION, et al.,

Additional Defendants

on Counterclaim.

DEBEVOISE, District Judge.

Appearances:

Waldron Kraemer, Esquire

Kasen & Kraemer, P.C.

1180 Raymond Boulevard

Newark, New Jersey 07102

(Attorneys for Struthers)

Michael Lesch, Esquire

Richard M. Goldstein,

Esquire

Adam Gilbert, Esquire

Shea & Gould, Esquires

330 Madison Avenue

New York City,

New York 10017

(Attorneys for Struthers)

A-32

Jay M. Cantor, Esquire

(D.C. Bar)

(Of Counsel, for Struthers)

William Drucker, Esquire

630 Fifth Avenue

New York City, .

New York 10020

(Attorney for Struthers)

Ralph N. Del Deo, Esquire

Crummy, Del Deo, Dolan &

Purcell, Esquires

Gateway I

Newark, New Jersey 07102

(Attorneys for Nestle)

William H. Vogt, III,

Esquire

Paul E. O'Donnell, Jr.,

Esquire

Charles M,. Caruso,

Esquire

Marcus J. Millet,

Esquire

Vogt & O'Donnell, Esquires

707 Westchester Avenue

White Plains,

New York 10605

(Attorneys for Nestle)

A-33

TABLE OF CONTENTS

Introduction

Background

General Comments about the

Summary Judgment Motions

I. The Special Master's Report

The Destroyed Documents

Struthers' Knowledge of

Impending Litigation

Relationship of the

Documents to the Issues

Present Availability of the

Destroyed Documents

Sanctions to be Imposed

II. The Muller Patents

Description of the Patents

1. Muller '007 Patent

2. Muller '522 Patent

Prosecution of the Muller

Applications

1. The Muller I

Application (the

‘007 Patent)

A-123

Cc.

A-34

The Petition to

Accelerate

The Examiner's

First Action

The Examiner's

Second Action

The Interview

with the Examiner

2. The Muller II

Application

3. The

The Examiner's

First Action

The Product-by-

Process Claim

The Double

Patenting Rejection

The Prior Art

Re jection

Muller II =- The

Decision of the

Board of Appeals

Muller III

Application (the '522

Patent)

The CCPA Clinton Decision

Prior Sale - Nestle's and

Struthers' Contentions

l. Facts Relied upon by

Nestle

A-125

A-128

A-133

A-135

A-141

A-143

A-146

A-147

A-148

A-149

A-153

A-155

A-160

A-35

2. Facts Relied upon by

Struthers

Invalidity over the Prior

Art

l. Presumption of

Validity

2. Summary Judgment

Standards

3. ‘007 Patent Prior Art

4. Differences between

the Prior Art and the

‘007 Claims

5. The '522 Patent

Invalidity by reason of

Prior Sale

Conclusion

A-174

A-178

A-187

A-195

A-200

A-216

A-222

A-231

III. The Ganiaris '295 and ‘034 Patents

Description of the Patents

l. The Ganiaris '295

Patent

2. The Ganiaris '034

Patent

Prosecution of the Ganiaris

Applications

l. The Ganiaris I

Application

2. The Ganiaris II

Application

A-36

3. The Ganiaris III

Application (the '295

Patent)

4. The Ganiaris IV

Application (the

‘034 Patent)

Prior Sale =- Nestle's and

Struthers' Contentions

l. Facts Relied upon by

Nestle

2. Facts Relied upon by

Struthers

Abandonment of the '295

Patent

Invalidity of the '295

Patent under § 112

Invalidity of the '295

Patent over the Prior Art -

Obviousness

1. Applicable '295 Filing

Date

2. Prior Art

Invalidity of the '295 Patent

under § 102(d)

Invalidity of the '034

Patent over the Prior Art -

Obviousness

1. Applicable Filing Date

a. Ganiaris I and II

Filing Dates

A-251

A-258

A-265

A-268

A-269

A-278

A-283

A-288

A-301

A-306

A- 306

A-308

A-37

b. The British

Application Filing

Date

2. Prior Art

Invalidity of the '034

Patent under § 112

Conclusion

IV. The Reimus Patents

Description of the Patents

1. Reimus '302 Patent

2. Reimus '129 Patent

3. Reimus '353 Patent

4. Reimus '723 Patent

A- 316

A-317

A-326

A-329

A-330

A-333

A- 333

A-336

A-339

A-342

Prosecution of the Reimus Applications

l. The Reimus I Application

(the '302 Patent)

2. The Reimus II

Application (the '129

Patent)

3. The Reimus III

Application (the '353

Patent)

4. The Reimus IV

Application (the '723

Patent)

Prior Sale - Nestle's and

Struthers' Contentions

A-345

A-358

A-361

A-371

A-375

A-38

1. Facts Relied upon by

Struthers

2. Facts Relied upon by

Nestle

Abandonment of the Four

Reimus Applications

Invalidity of the '129 and

‘353 Patents for Claiming

Subject Matter Previously

Given Up

Invalidity by Reason of

Prior Sale

Invalidity under § 112

Invalidity of the Reimus

Patents over Prior Art -

Obviousness

Invalidity for Withholding

Information

Conclusion

V. The '126 and '722 Patents

Description of the Patents

1. The Howell '126 Patent

2. The Ganiaris '722

Patent

Prosecution of the

Applications

1. The Howell Application

(the '126 Patent)

A-375

A-376

A-384

A- 386

A- 398

A-405

A-409

A-419

A-421

A-422

A-424

A-428

A-432

A-39

2. The Abandoned Ganiaris

A Application (Serial

No. 651,451)

3. The Ganiaris B

Application (the

'722 Patent)

Prior Sale - Nestle's and

Struthers' Contentions

l. Nestle's Initial

Submission

2. Struthers' Initial

Re sponse

3. Nestle's Reply

4. Struthers' Surrebuttal

Invalidity of the '126

Patent under § 112

Invalidity of the '126

Patent over the Prior Art -

Obviousness

Invalidity of the '126

Patent by Reason of Prior

Sale

Invalidity of '722 Patent

under § 112

Invalidity of the '722

Patent over the Prior

Art - Obviousness

1. Ganiaris A Filing Date

2. British Application

Filing Date

A-436

A-448

A-458

A-461

A-463

A-465

A-468

A-472

A-482

A-484

A-492

A-493

A-499

A-40

3. Invalidity of the

'722 Patent under

§ 102(d)

4. Invalidity of the

'722 Patent under

§ 102(b)

Invalidity of the '722

Patent by Reason of

Prior Sale

Conclusion

Appendix A

A-501

A-503

A-505

A-506

A-41

INTRODUCTION

Plaintiff, Struthers Patent

Corporation, filed its complaint on April

13, 1972, alleging that defendant, The

Nestle Company, Inc., was infringing ten

Struthers patents by its manufacture and

sale of soluble coffee. Nestle denied

infringement and asserts that each of the

patents is invalid and unenforceable.

Nestle filed a counterclaim seeking, in

one Count, a declaratory judgment of

invalidity and unenforceability of each

of the ten patents and asserting, ina

second Count, a claim alleging unfair

competition. Nestle joined as

defendants on the counterclaim two

corporations which are affiliated with

plaintiff -- Struthers Wells Corporation

and Struthers Scientific and

International Corporation. The three

affiliated corporations will be referred

to collectively as "Struthers".

A-42

The case has had a protracted

pretrial history. Two matters are now

ripe for disposition: (i) Struthers'

motion to confirm the report and

recommendation of a special master

concerning sactions to be imposed by

reason of Struthers' destruction of

relevant documents prior to institution

of this action, and (ii) Nestle's motions

for summary judgment of invalidity and/or

unenforceability of the ten patents in

Suit.

For the reasons which are set forth

in Parts I through V of this opinion, the

findings of the special master will be

adopted in part, modified in part, and

rejected in part, but his recommendation

that no sanctions be imposed will be

adopted; Nestle's motions for summary

judgment of invalidity of the ten patents

will be granted.

A-43

A. BACKGROUND

Struthers is in the business of

licensing and selling technical

information and know-how. It owns the

ten patents in suit, which deal generally

with freeze concentration in the

manufacture of instant or soluble coffee

and certain other food products. Nestle

is the world's largest seller of soluble

coffee.

In simple terms, freeze concentration

of coffee extract (derived by brewing

coffee from coffee beans) involves

removing water from the extract by

chilling the extract sufficiently to form

ice particles and then removing the ice

particles, leaving a more concentrated

solution. After the concentration stage

the concentrated solution may be dried by

various means to form the powder or

granules constituting the soluble

coffee. Nestle uses a freeze drying

A-44

process but denies that it freeze

concentrates coffee. For the most part

the patents in suit contemplate that the

freeze concentration processes described

therein either will be or may be followed

by freeze drying.

Events pertinent to the pending

motion took place as early as the

mid-1960's. At that time Struthers

entered into a contractual relationship

with General Foods Corporation to assist

General Foods in developing equipment for

the freeze concentration of coffee

extract. During the course of that

relationship Struthers disclosed and sold

or offered to sell to General Foods

various processes and items of equipment

relating to freeze concentration,

According to General Foods it did not

find the processes or equipment useful in

its business and it terminated its

relationship with Struthers.

A-45

Thereafter extensive litigation

between General Foods and Struthers took

place, most of which ultimately was

consolidated in the United States

District Court in Delaware. Struthers

charged General Foods with infringement

of six of the ten patents at issue in the

present action. Each party charged the

other with theft of trade secrets and

know-how. After extensive discovery and

other pretrial proceediiigs the parties

settled, signing a settlement agreement

On February 9, 1972.

After February 9 and prior to April

13, 1972, when the present action was

filed, Struthers collected and destroyed

a very substantial part of the documents

and depositions which it had assembled in

the course of the General Foods case.

This document destruction is the subject

of Nestle's motion for sanctions and the

special master's report and

A-46

recommendation recommending against

sanctions.

Nestle filed four motions for summary

judgment, each directed to two or more of

the ten patents in issue. Four days of

hearings on those motions were held. I

ruled against Nestle from the bench on

certain grounds which it advanced, and I

reserved decision on the remaining

grounds. Parts II through V of this

opinion deal with the remaining grounds.

B. General Comments about the

Summary Judgment Motions

Summary judgment of invalidity of a

patent is not common. Nevertheless I

have concluded that summary judgment of

invalidity of each of the ten patents at

suit is required in this case.

Nestle filed in support of its

summary judgment motions a very extensive

record. This record consists of the file

A-47

wrappers of the proceedings in the Patent

Office relating to each of the ten

patents in suit and to certain other

applications pertinent to these patents.

It consists of documents produced by

Struthers to Nestle in this action. It

consists of Struthers' answers to

interrogatories and deposition testimony

of Struthers' officers and employees in

this case and in the Struthers/General

Foods litigation. It consists of a vast

array of prior art, including earlier

patents, articles and texts.

Each of the four summary judgment

motions was accompanied by three volumes

of exhibits, i.e., a volume containing

the file wrapper of the patents which

were the subject of the motion, a volume

containing documents produced by

Struthers to Nestle, and a volume of

prior art documents. Exhibits referred

to in Parts II through V of this opinion

A-48

will be found in the pertinent volume

relating to the particular motion under

discussion. The factual data contained

in this material can hardly be disputed,

consisting as it does of official records

of the Patent Office, Struthers' own

statements, and prior art which has not

been challenaged.

In addition, each party filed

affidavits. Struthers' affidavits were

designed to demonstrate that there are

genuine issues of material fact which

preclude summary judgment.

So vast is the record submitted in

support of the summary judgment motion

that it is a temptation to concluse that,

amidst it all, genuine issues of material

fact must exist. However, the trial of

this case would impose such a heavy

burden upon the parties and upon the

resources of the Court, particularly as a

jury has been requested, that I concluded

A-49

that every effort had to be made at this

time to comb the record and to determine

if such issues do, in fact, exist. This

is what I attempted to do, and the

necessity to describe for the record the

results of this inquiry is the cause of

this regrettably (but I think

necessarily) long opinion.

Each of Nestle's motions advances six

Or more grounds why summary judgment of

invalidity and/or unenforceability should

be granted. I have ruled that as to

certain of those grounds the motions

should be denied as a matter of law, and

that, as to certain others of those

grounds, the motions should be denied

because as to those grounds there are

genuine issues of material facts. I have

ruled that each of the ten patents is

invalid as a matter of law on one or more

grounds. As to each patent except one

(the Ganiaris 3,636,722 patent) one

A-50

ground of invalidity is obviousness over

the prior art, 35 U.S.C. § 103. (The

question of obviousness was not reached

in the case of the '722 patent, as I

concluded that it is invalid on two other

grounds.) I did not believe it necessary

in the case of any of the patents to

determine whether they were also invalid

because they were previously described in

a patent or other publication, 35 U.S.C.

§ 102(b), and there were certain other

grounds advanced by Nestle upon which I

did not rule.

For the purpose of the § 103

contentions it was necessary to make the

factual inquiries mandated by Graham v.

John Deere Co., 383 U.S. 1 (1966): (i)

determining the scope and content of the

prior art; (ii) ascertaining the

differences between the prior art and the

claims in the patents at issue; and

(iii) determining if the differences are

A-51

such that the claimed subject matter

would have been obvious at the time the

invention was made to a person having

ordinary skill in the art.

The scope and content of the prior

art is set forth in great detail in the

record and can hardly be disputed.

Similarly, the differences between the

prior art and the claims in the patents

at issue can be readily ascertained by a

simple comparison. Struthers has argued

strenuously, however, that there is a

factual issue as to what was the ordinary

skill in the art and as to whether the

differences between the prior art and the

Claims in the patents at issue would have

been obvious to a person having such

skill. Struthers contends that these

questions cannot be resolved without the

testimony of experts in the face of

affidavits of Struthers' employee,

Neophytos Ganiaris, asserting an absence

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of obviousness. I will deal with this

contention in more detail in Parts II

throuqh V of this opinion. Some general

observations, however, might be helpful

at this point.

""e subject matter of the art

involved in the present case is freeze

concentration and freeze drying in the

manufacture of powdered soluble food

products. Although coffee is the

principal food product under discussion,

the same principles and techniques apply

to certain other food products as well.

As an examination of the prior art

record discloses, this subject matter is

a well ploughed field. For decades

patentents have been filed, articles

written, and research and development

undertaken in every phase of freeze

concentration process and equipment. The

same record discloses that the skill in

the art by this late date is very high.

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Not only is the skill in the art high,

the subject matter is relatively simple,

easily understandable by a person having

limited or no technical background in

this field.

After reviewing the entire record

applicable to all ten patents I concluded

that it can be determined that there is

no genuine issue of fact that the various

changes and alleged improvements which

Struthers has introduced into the prior

art either are no more than cosmetic

differences without any patentable

significance or else, if they can be seen

as improvements, are such as would have

been obvious to one skilled in the art.

The basis for this conclusion is

described in some detail in Parts II

through V and should be apparent from a

comparison of the prior art and the

Claims at issue. The situation here is

Similar to that which prevailed in C-Thru

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Products, Inc. v. Uniflex, Inc., 397

F.2d 952, 955 (2d Cir. 1968).

Appellant now stresses: that in patent

cases summary judgment is often

inappropriate by reason of the

necessity to inquire into the scope

and content of the prior art, the

differences between the prior art and

the claims at issue, and the level of

ordinary skill in the art... In

many cases involving a question of

patent validity such inquiry involves

consideration of technical questions

which are often best understood with

the aid of expert testimony. But in

this case, as Judge Bartels pointed

out (Appellants' appendix, p. 6a),

the prior art and the patent claims

are not complex and are easily

understandable without expert aid.

This is one case where it truly would

be ‘an absurd waste of time and

effort' to deny summary judgment.

Three other matters should be

mentioned by way of introduction.

Nestle urges that by reason of

Struthers' misconduct in procecuting

various of the patents involved in this

case, at the very least Struthers should

be denied the benefit of the presumption

of validity accorded by 35 U.S,C. § 282.

As will be described in some detail in

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Parts II through V, Struthers

persistently violated Patent Office rules

when prosecuting the applications

leading to these patents. This resulted

in major voids in the Patent Office

records, often making it impossible to

determine why an examiner acted as he

did. For example, often one cannot tell

from the file wrapper why an examiner who

had found a claim to be invalid over the

prior art reversed himself. More

disturbing, though less frequent, are the

Situations in which Struthers changed its

factual position. From time to time,

both in proceedings before the Patent

Office and during the course of this

litigation, Struthers simply changed its

factual statements when expedient to do

so. I deal with this more extensively,

particularly in Part II. If this were

the trial of the case, it might well be

that the presumption of validity would be

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affected. However, for the purpose of

the summary judgment motions I have

assumed that Struthers is entitled to the

full benefit of the presumption.

Another point which might be noted

preliminarily is the fact that I am being

asked to grant a summary judgment of

invalidity of ten patents which, prior to

their issuance, were reviewed and

ultimately approved by a number of

different patent examiners, each an

expert in the field of patents. I think,

however, that after reviewing all the

prior art relating to all ten of the

patents, and after reviewing all of the

patents them selves, I am ina better

position to evaluate the validity issues

than were the examiners.

I have had the benefit of being able

to review all of the patents, all of the

file wrappers, and all of the prior art

at the same time. These patents are

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intimately related to each other, and the

prior art of one is frequently prior art

of another. My conclusion of obviousness

of one patent was fortified and confirmed

as I moved on to each succeeding patent

and its prior art.

None of the patent examiners had the

opportunity to view these patents and the

prior art in a unified presentation.

Much of the prior art was never before

them. In the case of some of the

applications a number of examiners were

assigned, none seeing the application

through from start to finish. A candid

statement by William A. Drucker, patent

counsel and an officer of Struthers,

describes the pressures under which these

patent examiners worked:

What often happens -- this is what I

want to explain -- examiners are

under a production quota, and they

are concerned with disposition of

cases, and part of their system is to

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make proposals to patent attorneys

saying, ‘If you will make the

following changes, I think I can see

my way to allowing this language and

letting the case get off my desk.'

Sometimes the proposal of the

examiner on its face is quite

acceptable. Sometimes it requires

some conversation before final

version is agreed upon. This is, I

might say, or usually it happens on a

Friday or it used to at the time

these cases we are concerned with

because examiners had weekly quotas

for disposal of cases. That was the

normal natural working in the Patent

Office, at least in the coffee arts.

I can't comment now on every single

art, but in the part dealing with

food and coffee a lot of the

examiners at that time were under

such high pressure from the

Commissioner's Office to get rid of

cases, to avoid an appeal if at all

possible. In fact were under

positive instructions to issue

patents as opposed to rejecting them.

(Transcript of Hearing, June 16,

1981, at 18.)

Given all this, it is neither

surprising nor an adverse reflection on

the examiners that in the unusual

circumstances of this case I find myself

in a better position to determine certain

issues of validity than they were.

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There is one final point I wish to

make before turning to the individual

motions. I am more confident in my

conclusions by reason of the fact that

each party has been represented by

extraordinarily able counsel. Each legal

issue has been briefed and argued

exhaustively. Each side has probed the

record and has, I am sure, discovered and

impressed upon me every fact or

circumstance supporting its position. In

writing this opinion I have drawn

extensively upon the briefs of both

sides. For example, I have treated

Nestle's accounts of the prosecution of

the pertinent patent applications as

proposed findings of undisputed facts

and, after checking them against the

record, have modified and (as modified)

adopted them.

I turn now to the five pending

motions.

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I. The Special Master's Report

In December, 1975 Nestle filed a

motion pursuant to Fed.R.Civ.P. 37

seeking sanctions against Struthers for

an alleged destruction by Struthers just

prior to the institution of this action

of a very substantial quantity of

documents relevant to the issues in this

action.

These documents were voluminous in

nature and were assembled during the

cuurse of the litigation between

Struthers and General Foods Corporation.

In that action Struthers asserted against

General Foods six of the ten patents

which it now asserts against Nestle.

Judge Meanor, to whom the case was

then assigned, reviewed the papers which

Nestle submitted in support of its motion

for sanctions on account of the document

destruction, and he heard argument on the

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motion. As set forth in his opinion

filed September 15, 1976, he concluded

that he was "unable to determine from the

written record what documents were

destroyed or how they related to the

issues in this action". Further, on the

record before him, he was unable to

"determine the appropriateness of the

many forms of sanctions sought by

Nestle". He reserved decision until a

hearing could be conducted.

In order that resolution of the

document destruction issues would not

delay prosecution of the other phases of

this case I appointed The Honorable

Harold R. Tyler, Jr., a former United

States District Court Judge, Special

Master to supervise discovery, conduct

hearings, and file a report containing

his findings of fact, conclusions of law,

and recommendations with respect to the

document destruction charge. Inaguiry

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into the following factual and legal

questions was to be made: (i)

identification, with as much specificity

as possible, of the documents which were

destroyed; (ii) the relationship of those

documents to the issues in the present

action; (iii) the extent to which such

documents can now be obtained from other

sources; (iv) whether Struthers knew or

should have known at the time it caused

the destruction of the documents that

litigation against Nestle on the patents

at issue was a distinct possibility, and

(v) whether, in the light of the

circumstances disclosed by the factual

inquiry, sanctions should be imposed upon

Struthers and, if so, what the sanctions

should be.

By pretrial order #2 Judge Tyler was

appointed Special Master. Thereafter

very extensive work was performed by the

Special Master and the parties with

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respect to the document destruction phase

of the case. Had it not been for’ the

efforts of the Special Master, it would

have been impossible for me to have

proceeded with the discovery and summary

judgment phases of the case.

On June 8, 1981 the Special Master

filed his report and recomme ndations,

which concluded that no sanctions should

be imposed upon Struthers. Struthers

filed a motion to confirm the Special

Master's report and to deny Nestle's

motion for sanctions. Nestle filed

objections to the report and

recommendation. A hearing on the motion

and objections was held on September 10,

1981. Most of the grounds of Nestle's

objections are addressed in this Part I.

In view of my conclusions set forth below

it is unnecessary to address the

remaining grounds.

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A. The Destroyed Documents

During the course of the General

Foods litigation Mr. Drucker, patent

counsel and an officer of Struthers, was

in general charge of assembling and

controlling documents. He arranged for

all Struthers' documents pertaining to

freeze concentration to be assembled and

sent, ultimately, to the Texas law firm

representing Struthers in that

litigation, Fulbright and Jaworski. Mr.

Drucker retained in his own custody the

files relating to the processing of the

pertinent patent applications. Through

the discovery process in the General

Foods litigation depositions were

acquired and thousands of documents

produced. Struthers kept these documents

in Houston and copies were kept by Mr.

Drucker in New York City, by John G.

Muller, a Vice President of one of the

Struthers companies, in Washington, D.C.,

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and by Struthers' Delaware counsel in

Wilmington, Delaware. In addition, the

Fulbright firm sent to Westheimer

Transfer & Storage Co., Inc., for

storage, certain documents which included

those known as the Office of Saline Water

("OSW") documents. These were documents

relating to work carried out by Struthers

for the Office of Saline Water, United

States Department of the Interior.

A protective order was entered in the

Delaware Federal District Court in the

General Foods litigation covering some,

but by no means all, of the depositions

and documents produced by General Foods.

It provided, in part:

2. At the conclusion of this

litigation, all information received

by any party from an opposing party

and designated as secret, or

determined to be secret by Court

order, shall be deposited by the

party then in possession of it ina

secure place, still subject to the

terms oF this order, protected from

access by any person other than a

person authorized to see it by the

A-66

terms of this order, or the terms of

some subsequent Court order.

(Emphasis added.)

On February 9, 1972 Struthers and

General Foods signed an agreement

terminating their litigation.

At Mr. Drucker's instructions, some

OSW documents had been destroyed at the

Westheimer warehouse on January 12,

1972. Struthers can give no explanation

of this destruction, which took place

just prior to a court-ordered document

inspection by General Foods of the OSW

documents. The remaining documents

stored at Westheimer were destroyed on

March 7, 1972, pursuant to Mr. Drucker's

instructions.

On February 14 or 15, 1972 (less than

a week after the Struthers-General Foods

settlement agreement was signed) Mr.

Drucker ordered that all the General

Foods litigation documents be shipped to

Houston for destruction. The exact dates

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when the destruction of the documents in

Houston took place (except for the

documents destroyed on January 12 and

March 7, 1972 in the Westheimer

warehouse) is not known precisely. Many

were probably destroyed in late February

and early March, 1972. Some must have

been destroyed in or after May, 1972,

when Struthers' Delaware attorneys

shipped documents to Houston in response

to Mr. Drucker's instructions.

On March 6, 1972, Mr. Muller burned

the documents under his control in

Washington, D.C. Struthers' Delaware

counsel destroyed certain of the

documents in their control in February,

1972 and, as mentioned above, shipped

others to Houston in May, 1972

Mr. Drucker's files contained

documents underlying or pertaining to the

patents in suit in the present case or

relating to freeze concentration. This

A-68

included documents relating to the

prosecution and the file history of

abandoned, pending and issued

applications. These were destroyed,

according to Struthers, as a "routine

housekeeping practice" and "began in the

early 1960s and continued subsequent to

April 13, 1972" (the date when Struthers

filed its complaint against Nestle).

The Special Master found that this

document destruction program resulted in

the destruction of the following

categories of documents:

l. Copies of transcripts of

depositions of General Foods personnel.

2. Copies of exhibits marked during

the depositions of General Foods

personnel.

3. Copies of documents, which copies

were produced to Struthers by General

Foods in the course of discovery.

4. All copies of the OSW records

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except copies of government contracts and

a North American Aviation contract.

5. Copies of Struthers'

correspondence and related materials

pertaining to customers or potential

customers of Struthers for a period

during the mid-1960s.

6. Materials in the files of

Struthers designated as "privileged" in

relation to the litigation with General

Foods.

7. Copies of documents in the files

of Struthers relating to the prosecution

and file history of some or all of the

freeze concentration patents here in suit.

This finding requires a modification

to reflect two events which occurred

during the proceedings before the Special

Master.

Shortly before the March 21, 1981

hearing before the Special Master,

A-70

Struthers reported that "portions" of its

customer correspondence in the mid-1960s

had been discovered. Thus at least part

of the customer records previously

reported to have been destroyed evidently

were not destroyed and, very belatediy,

have been produced. The day before the

hearing before the Speoial Master Nestle

was informed that the original index

cards of documents from the

Struthers-General Foods litigation were

in existence and in the possession of

Struthers' counsel. Early in this

litigation Struthers denied the existence

of such a list. With these

modifications, the findings of the

Special Master as to the documents which

were destroyed are supported by the

record and will be adopted.

B. Struthers' Knowledge of Impending

Litigation

The Special Master found that "the

A-71

record does not indicate when Struthers

decided to institute suit against Nestle,

nor does it establish who, acting on

behalf of Struthers, made that decision.

The complaint herein was filed April 13,

1972." This is a correct finding.

In addition, however, I believe it

necessary to determine whether Struthers

knew or should have known at the time it

caused the destruction of the documents

that litigation against Nestle on the

patents at issue was a distinct

possibility. The Special Master did not

make a specific finding on this point,

but the record leaves no question as to

what the answer to this question must be.

Struthers' proposed Contentions of

Fact filed with the Special Master

conceded that "After the settlement of

the General Foods litigation, Struthers

knew or should have known that litigation

against Nestle on the patents at issue in

A-72

its present action against Nestle was

contemplated."

A recital of Struthers' position on

this issue is pertinent, because it bears

upon Struthers' motives when destroying

the documents and it bears upon its good

faith in the present proceedings.

In 1976, in opposition to Nestle's

motion for sanctions, Struthers filed an

affidavit of Mr. Drucker which stated in

part:

10. I also want to emphasize that at

the time the documents were destroyed

Struthers had not turned its

attention to preparation for

litigation with Nestle and indeed was

not prepared for litigation with

anyone. I was not at that time aware

of any plan by Struthers to conduct

further litigation nor have I

Subsequently become aware that such a

plan was in existence at that time.

ll. * * * Struthers has not

concealed from Nestle any information

appropriate to the matters in dispute

in the present litigation. From the

beginning of the present litigation

until this time there has been

absolutely no document destruction on

A-73

behalf of Struthers. Indeed, no

document destruction occurred from

the moment that litigation between

Struthers and Nestle was contemplated

by Struthers. [Emphasis in original.)

In its Interrogatory 81l(a) (C) (xii)

Nestle had requested Struthers to

identify "memoranda of counsel, diary and

timebook entries of counsel and employees

of respondents, bills and statements of

counsel", etc. In its answers (which

list William Drucker, James Weiler and

Dudley Dobie (of the Fulbright firm) of

counsel), Struthers responded:

Objection is made to identification

of memoranda of counsel, diary and

timebook entries of counsel and bills

and statements of counsel on the

basis of privilege. However without

waiving the foregoing objection,

there are no such documents relating,

pertaining, referring to or bearing

upon the foregoing. In addition,

there are no other documents of the

nature requested. (Emphasis added.)

Nestle also served further document

requests (Nos. 7-9) relating to

destruction, to which Struthers replied:

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"there are no documents relating to the

solicitation or giving of advice

concerning document destruction,"

Discovery of the Fulbright firm's

time sheets in the proceedings before the

Special Master disclosed that Mr.

Drucker's statements and the answers to

these interrogatories were not true.

It will be recalled that the

Struthers-General Foods settlement

agreement was signed on February 9, 1972

and that Mr. Drucker issued the document

destruction orders on February 14 or 15,

1972. The Fulbright records show that on

February 1l, 1972, Mr. Drucker entered

into discussions with the Fulbright firm

regarding the disposition of documents

and institution of new legal

proceedings. The Fulbright and Jaworski

time record of Dudley R. Dobie dated

February 11, 1972, reads as follows:

Conf. T. Clark re document retention;

A-75

T/T W.A. Drucker re doc. disposition

and new litigation; continue review

of files for storage. (Chargeable

Hours Card No. 000037; Tab. 18.)

Mr. Dobie testified that the new

litigation mentioned in his card referred

to either Nestle or Coca-Cola (Dobie Tr.,

p. 192.)

During February, 1972 letters

proposing non-exclusive licenses were

sent over the signature of Struthers'

litigation counsel, Mr. Weiler, to Nestle

and several other companies in the

soluble coffee industry. Those letters

were dated February 15, 1972, the very

time when Mr. Drucker issued his

instructions for the destruction of

documents.

Again, on February 22, 1972, Mr.

Dobie had another telephone conversation

with Mr. Drucker regarding the Nestle

matter. His Time Card of that date reads

as follows:

A-76

T/T Drucker re Nestle matter and re

storage of files. (Fulbright and

Jaworski Chargeable Hours Card No.

000002, Tab. 19.)

On February 23, 1972 -- the same date

on which the order of dismissal was

filed in the Delaware District Court

terminating the Struthers/General Foods

litigation -- Mr. Drucker had further

discussions with the Fulbright lawyers

regarding the Nestle litigation. Mr.

Dobie's Time Card for February 23, 1972

reads as follows:

T/T Richards re entry of Order of

Dismissal; T/T W.A. Drucker re Nestle

litigation; review Rule 60

requirements re Court's jurisdiction

after judgment; investigate

jurisdiction re Nestle litigation.

(Fulbright and Jaworski Chargeable

Hours Card No. 000001, Tab. 20;

emphasis added.)

On the same date Mr. Drucker also

conferred with James F. Weiler, the

partner in charge of the litigation.

Weiler's Time Card for February 23, 1972

A-77

reads:

Confer Drucker re bringing suit

against Nestle in Houston; drafting

Complaint and venue questions; confer

Dobie re same, (Fulbright and

Jaworski Chargeable Hours Card No.

000161, Tab. 21; emphasis added.)

Confronted with these records,

Struthers had little choice but to

concede that at the time it caused the

destruction of the documents it knew or

should have known that litigation against

Nestle on the patents at issue was a

distinct possibility. The Special

Master's report will be modified to

include a finding to the effect that

Struthers had actual knowledge that such

litigation was a distinct possibility at

the time of its destruction of documents

in and after February, 1972. Further,

there will be included a finding that

during the course of the present

litigation Struthers sought to conceal

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the fact that it had such knowledge

until, during the proceedings before the

Special Master, it was confronted with

records from its former attorneys' files

-- which demonstrated that Struthers'

original contentions in this regard were

untrue.

C. Relationship of the Documents

to the Issues

The Special Master did not make

findings as to the relationship of the

destroyed documents to the issues in the

present action, perhaps because it is so

obvious that each category of destroyed

documents (with the possible exception of

the OSW documents) was likely to contain

relevant information or material which

might lead to relevant information.

The General Foods litigation in which

the destroyed documents were assembled

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included a number of separate actions,

the claims in which were eventually dealt

with in the district court action in

Delaware. Struthers filed actions in

Texas charging that General Foods was

infrinaing certain of Struthers'

patents. General Foods began a

declaratory judgment action with respect

to the patents in Delaware and thereafter

the Texas actions were transferred

there. As additional patents were issued

to Struthers, additional infringement

actions were filed by Struthers in

Delaware. Ultimately, six patents (all

in suit in the instant action) were in

suit in Delaware. In addition, Struthers

filed an action in the New York State

courts alleging theft of trade secrets by

General Foods. General Foods' amended

complaint in Delaware also contained a

count alleging unfair competition by

reason of Struthers' wrongful

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misappropriation of General Foods'

confidential information and Struthers'

use of that information to obtain the

Muller '007 patent (see Part II of this

opinion) and the Reimus '302 dewaxing

patent (see Part IV of this opinion).

The relationship of the unfair

competition and patent claims was

discussed in General Foods Corp. v.

Struthers Scientific and International

Corp., 297 F. Supp. 271 (D. Del. 1969).

The six patents asserted against

General Foods are among the ten patents

which are the subject of this suit and of

Nestle's summary judgment motion. They

are dealt with in this opinion as rollows:

Part II - Both patents in this group,

viz., Muller 3,404,007 and Muller

3,495,522, were in suit in Delaware.

Part III - Ganiaris 3,531,295 and

Ganiaris 3,620,034 were not in suit

in Delaware. Their disclosure of

washing the ice to recover coffee

solids is, however, included in the

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claims of other of the patents which

were in suit.

Part IV - Reimus 3,381,302, Reimus

3,449,129 and Reimus 3,474,723 were

in suit in Delaware. The fourth

Reimus patent (3,632,353) purports to

derive from the same applications.

Part V - Of the two hollow agitator

shaft patents, Howell 3,367,126 was

in suit in Delaware; Ganiaris

3,636,722 was not.

In Documentary Requests Nos. 1-6 in

the present action Nestle asked for all

documents and other products of discovery

in the General Foods-Struthers

litigation. Concluding that this was a

proper subject of discovery, Judge Lacey,

who was then handling this case, entered

an order on February 15, 1973 which

provided, in part:

That Defendant's [Nestle's] motion to

compel Respondents [all three

Struthers companies] to produce for

inspection and copying all documents

which are the subject of Defendant's

first documentary request (Nos. 1-6)

is hereby GRANTED, except insofar as

such documents have been produced or

marked as Defendant's Deposition

A-82

Exhibits in this litigation.

Having heard Nestle's summary

judgment motions before addressing the

document destruction issues, I am able to

evaluate the relationship between the

destroyed documents and major issues in

the case. There can be no question that

Judge Lacey correctly concluded that the

documents generated in the earlier

litigation are pertinent to the present

case.

Given the fact that six of the ten

patents involved in the present action

were the subject of the earlier action,

and that the present and former actions

involve similar claims and defenses,

transcripts of the depositions of General

Foods personnel, copies of exhibits

marked during those depositions, and

copies of documents produced to Struthers

by General Foods in the earlier

litigation must be highly relevant in the

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present action. Among other things, they

would bear upon the validity of

Struthers’ patents under paragraphs (a),

(b), (f£) and (g) of 35 U.S.C. § 102 and

under 35 U.S.C. § 103.

There is a dispute between the

parties as to the relevance of the OSW

documents which involved a development

program for freeze desalination of water

which Struthers had undertaken for the

United States government. Nestle

contends that freeze concentration and

desalination are essentially the same

process and therefore Struthers' work on

desalination would bear upon its freeze

concentration efforts. Struthers, on the

other hand, urges that the processes are

essentially different and that the OSW

documents produced in the General Foods

action related to issues unrelated to

patent validity. There is insufficient

evidence in the record to make a finding

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on the relevance of these documents in

the present litigation, but, of course,

destruction of the documents compounds

the difficulty of making such a

determination.

The Special Master recited Struthers'

rationale for destroying its

correspondence and related materials

pertaining to customers or potential

customers for the period during the

mid-1960s: "Struthers made the decision

to destroy these documents because of

their age and because of the view of

Struthers' counsel, at the time of

destruction, that such documents were

wholly irrelevant to any litigation with

Nestle or any other company."

The conclusion of Struthers' counsel

in this regard (if, indeed, he did so

conclude) was unjustified. As the

summary judgment motions in this case

amply demonstrate, an important basis for

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attacking the validity of Struthers'

patents is that the subject matter

Claimed in the patents was offered for

sale or sold more than one year prior to

the applications therefor, 35 U.S.C. §

102(b). Correspondence with customers

during the mid-1960s, a period one year

Or more prior to the applications for the

patents now in litigation, had potential

relevance to the on sale defense. It is

inconceivable that Struthers' counsel, an

experienced patent attorney who had only

recently wrestled with this issue in the

General Foods litigation, would not have

appreciated the significance of this kind

of document.

Whether or not the materials in the

files of Struthers designated as

"privileged" in the General Foods

litigation is discoverable in the present

action, they are in all likelihood

relevant to the issues now before the

A-86

Court. Given the substantial overlap of

the patents involved in the present and

former case and the similarity of the

patent claims and defenses, much of the

"privileged" materials, like the General

Foods case deposition transcripts,

exhibits and documents, must bear upon

the issues in this case.

The documents in Struthers' files

relating to the prosecution and file

history of some or all of the freeze

concentration patents now in suit also

had a potential relevance in the present

case. It became evident during the

review of the papers in support of

Nestle's motions for summary judgment

(papers which were not available to the

Special Master) that there are major

deficiencies and gaps in the Patent

Office files of the prosecution of the

pertinent patent applications. This will

be developed more fully in Parts II

A-87

through V of this opinion. Suffice it to

say at this point that it is quite likely

that Struthers' files would have filled

these gaps and helped explain or amplify

questions relating to the prosecution of

the patents. Thus, the destroyed files

were also potentially relevant to the

issues in this case.

Inasmuch as the Special Master made

no findings as to the relevance of the

destroyed documents to the issues in the

present case, his report and

recommendation will be modified to

include the factual findings contained in

this section C.

D. Present Availability of the

Destroyed Documents

The Special Master's findings with

respect to the present availability of

the destroyed documents appear at

different places in his report and

recommendation, quite often in connection

A-88

with his discussion of other issues. I

shall discuss them as they apply to each

category of documents destroyed. There

is one general observation in the report

which is incorrect.

At page 11 of the report it is

stated: "That deposition [of General

Foods Delaware counsel] reveals that the

Connolly firm has copies of all or

virtually all of the materials destroyed

by or at the direction of Struthers in

1972." The following discussion of the

present availability of the documents

will show that the conclusion is too

broad.

Turning now to the present

availability of the seven categories of

documents:

The Special Master found (at pp. 8,9)

that "Copies of the transcripts of

depositions of General Foods personnel,

together with the exhibits thereto, are

A-89

still in existence and in the possession

of Messrs. Connolly, Bove & Lodge of

Wilmington, Delaware, attorneys for

General Foods. The same law firm also is

currently in possession of copies of

documents which were produced by General

Foods to Struthers in the course of the

General Foods litigation." This finding

is amply supported by the deposition

testimony of Paul Crawford taken during

discovery undertaken in connection with

the proceedings before the Special Master.

The Special Master also found that

"the originals of [the documents which

were produced by General Foods to

Struthers] appear to be still in the

possession of General Foods". fThis

finding has some support in the record in

the form of deposition testimony of

Michael J. Quillinan, General Foods'

Manager of Patent Litigation, given in

October, 1972. However, according to

A-90

that testimony, the original documents,

contained in five five-drawer filing

cabinets, are not assembled in one

place. The documents probably had been

returned to the places from which they

had come. In the words of Mr.

Quillinan: "The simplest way would be to

simply return to the corporate arms that

provided these documents, the various

haystacks there of that existed. And I

am not sure that even today [October,

1972] such haystacks exist. They may be

in the form of hay. Where and what

degree they are stacked, I really cannot

say."

Thus it is highly probable that the

original documents were still in the

possession of General Foods at the start

of the Struthers litigation against

Nestle. However, it also appears that

they had been scattered throughout

General Foods' corporate departments. It

A-91

had required strenuous discovery efforts

on Struthers' part to obtain production

of those documents in the earlier

litigation. That work, in all

likelihood, would have had to have been

repeated by Nestle if it sought to obtain

the documents from General Foods. Its

task would have been complicated by the

fact that General Foods is not a party to

the present litigation.

However, it appears, as the Special

Master found, that the first three

categories of documents are available in

that they are in the possession of

General Foods' Delaware counsel and that,

at least in October, 1972, General Foods

had the original category 3 documents

scattered throughout the corporation's

offices,

As to the availability of the

remaining four categories of documents,

the Special Master made the additional

A-92

finding that the items referred to in

categories 4, 5, 6 and 7 above “were in

fact received from Struthers by General

Foods". From this it might be inferred

that the documents were therefore

available in the files of General Foods'

counsel. The finding on which this

inference is based is clearly erroneous,

at least as to categories 4, 6 and 7.

The finding will not be adopted.

As to category 4, some of the OSW

records were destroyed on January 2, 1972

before General Foods' inspection, and it

is not known whether General Foods made

copies of the balance of the OSW records

which were inspected by General Foods and

which Struthers subsequently destroyed.

At page 9 of his report and

recommendation the Special Master wrote:

"I note that there is some evidence that

the originals of the OSW records may

still be in the possession of the United

A-93

States Government." This observation can

only be applicable to OSW documents which

were generated by or submitted to the

United States government. It cannot be

applicable to Struthers' internal

documents relating to the OSW project.

Further, according to evidence

submitted by Nestle long after the

Special Master had filed his report and

recommendation, the government's copies

of the OSW documents were disposed of

even before Struthers destroyed its

copies in 1972.

As to category 5, it may well be that

General Foods did receive copies of

Struthers' customer correspondence,

although discovery in connection with the

document destruction proceeding raises a

question as to whether it received all

such documents. It now seems likely that

most of the customer records have finally

been located through Nestle's discovery

A-94

efforts during the proceeding before the

Special Master.

As to category 6, pursuant to the

order of the Delaware district court,

General Foods received copies of a

portion of the documents as to which

Struthers claimed a privilege. It did

not receive those which were not ordered

to be produced. The Special Master

recognized this fact and he may have

intended to limit the overly broad

language appearing on page 6 of his

report by the observation appearing on

page 9 to the effect that "copies of

some, at least, of the Struthers files

designated 'privileged' in the litigation

with General Foods are currently to be

found in the offices of Messrs. Connolly,

Bove and Lodge" (emphasis added).

As to category 7, General Foods did

not receive Mr. Drucker's prosecution and

file history. As found by the Special

A-95

Master, it did receive very substantial

documentation relating to freeze

concentration, including laboratory note

books, data sheets, weekly reports, etc.,

as listed in the footnote commencing on

page 6 of the Special Master's report.

To the extent that General Foods' counsel

did not receive the Struthers'

"privileged" documents (category 65) and

the documents in the Struthers

prosecution files (category 7) these

destroyed documents were and remain

unavailable in the present litigation.

Therefore, the Special Master's

findings as to the present availability

of copies or originals of the destroyed

documents will be adopted, modified and

rejected to the extent indicated in this

section D.

E. Sanctions to be Imposed

The Special Master recommended that

no sanctions be imposed upon Struthers

A-96

for the destruction of the documents.

His recommendation was based upon his

findings concerning the matters discussed

in sections A through D above, and it was

based upon certain other factual findings.

The Special Master found that

Struthers' motices for destroying the

documents were proper, namely:

1. " . . . when the decision was

made by Mr. Drucker on behalf of

Struthers in February, 1972 to destroy

documents, that decision was in large

measure motivated by the existence of a

protective order entered in the General

Foods litigation or or about April 24,

1969 .\s «* [Pe 7)-

2. "Counsel for Struthers knew that

originals or copies of some or all of the

documents were in the possession or

control of General Foods; they also

believed that it would be impossible to

reach an agreement with General Foods

regarding the disposition of all these

documents." (pg. 8).

3. "The proof indicates that

Struthers and its counsel were motivated

to destroy some of the OSW records

because they perceived no need to

continue storage, particularly since, in

their view, copies or originals of all

these documents were on file with the

United States government." (p. 8).

A-97

4. "As to the files of

correspondence and related materials

pertaining to Struthers' potential

customers in the mid-1960's, Struthers

made the decision to destroy these

documents because of their age and

because of the view of Struthers'

counsel, at the time of the destruction,

that such documents were wholly

irrelevant to any litigation or any other

company."

Nestle urges rather

substantial'reasons to reject these

findings.

As to the finding that the

destruction of the documents was

occasioned by the existence of the

protective order, Nestle notes: (i)

Struthers' action constituted a violation

of that order, which required that upon

termination of the litigation the

documents subject thereto be kept "in a

secure place", (ii) Struthers'

destruction of its own documents could

not possibly have been occasioned by the

existence of the protective order which

was designed to protect General Foods'

A-98

documents, and (iii) even as to the

depositions of General Foods' personnel

and even as to the General Foods'

documents, only a portion were subject to

the protective order.

As to the finding that counsel for

Struthers knew that some or all of the

documents were in the possession or

control of General Foods, Nestle notes: _

(i) clearly not all the documents were in

the possession or control of General

Foods or its counsel (and I have so found

in an earlier section of this opinion),

and (ii) since Struthers had no

discussions with General Foods concerning

preservation of documents, Struthers had

no basis for relying on General Foods to

preserve indefinitely documents which

might be relevant in a new litigation to

which it was not a party.

As to the finding that Struthers

destroyed the OSW documents to avoid the

A-99

burdens of storage and because copies or

originals were on file with the

government, Nestle notes: (i) the

so-called "burden" of storing the OSW

documents was a $7.50 per month storage

bill of Westheimer Transfer & Storage

Co., Inc. and (ii) internal Struthers OSW

documents would not have been on file

with the government (and I have so found

in an earlier section of this opinion).

As to the finding that Struthers

destroyed its customer records because of

their age and lack of relevance, Nestle

notes the high degree of relevance of

such documents in connection with the

Oon-sale defense. (I have found, in

Section C, that it is inconceivable that

Struthers' counsel would not have

appreciated the significance of this kind

of document.)

Were I to make a finding on the

evidence which was before the Special

A-100

Master as to Struthers' motives in

destroying the documents, my finding

would differ from his. The reasons

Struthers advances smack to me of

after-the-fact rationalizations. I note

the significance of Struthers' vigorous

denials, early in this litigation, that

suit against Nestle was contemplated when

the documents were destroyed, and the

reversal of this position only when

confronted in the document destruction

proceeding with records which

demonstrated conclusively that Struthers

and its attorneys were discussing

document destruction and suit against

Nestle at the very same time. This

indicates to me that Struthers knew

perfectly well that it should not have

destroyed the documents when suit against

Nestle was contemplated.

Nevertheless, in some measure this

finding rests upon credibility

A-101

evaluations, and the Special Master heard

certain pertinent testimony on this

issue. I conclude, therefore, that the

finding as to Struthers' motivation is

not clearly erroneous.

Another finding on which the Special

Master based his recommendation was that

"the instant mofion was filed in December

1975 but not brought on by Nestle for

argument and decision by this Court until

1980". This statement is clearly

erroneous, but for understandable

reasons. The Special Master could not be

expected to have a familiarity with the

involved procedural history of this

case. Nestle brought on the sanctions

motion in December, 1975, as the Special

Master observed. It was heard and argued

before Judge Meanor, who wrote an opinion

disposing of that and other motions. He

concluded that he could not decide the

sanctions motion without an evidential

A-102

hearing. Thereafter, the case was

assigned to different judges and the

delay in scheduling the evidential

hearing and resolving the motion was

attributable to the inability of the

Court to reach the matter, not Nestle's

dilatoriness.

The Special Master further found that

"not until the spring of 1981 did counsel

for Nestle make any effort to obtain

existing copies of the documents in

question from General Foods or its

attorneys".

In October, 1972, Nestle took the

deposition of General Foods' Manager of

Patent Litigation, Mr. Quillinan, and

sought to ascertain the whereabouts of

General Foods' copies of all the

documentation generated in its case

against Struthers. At that time Mr.

Quillinan testified, as noted above, that

the haystacks of documents had been

A-103

redistributed throughout the corporations

and "may be in the form of hay".

Nestle's attorney then asked if General

Foods' counsel had possession of the

documents General Foods produced to

Struthers. Mr. Quillinan said, "I really

don't know." General Foods' patent

counsel, who were present, did not

disclose that they had in their

possession a complete set of such

documents. Nestle did not learn of this

fact until such counsel were deposed in

connection with the proceeding before the

Special Master.

Again, I might have reached a

different conclusion, but the Special

Master's finding that if Nestle really

wanted the documents it would have gone

after General Foods and its counsel more

aggressively, is not clearly erroneous

and will be adopted.

The Special Master found that "the

A-104

belated motion for sanctions was finally

pressed in 1980 more to obtain some

tactical advantage over Struthers than to

achieve true discovery". I have noted

above that the motion was pressed in 1975

and that the five-year delay is

attributable to problems which confronted

the Court and not to Nestle's inaction.

It may well be that Nestle has been

primarily interested in the tactical

advantages which it could derive from the

document destruction caper rather than in

the wish to obtain additional discovery,

and the Special Master's finding in this

regard will be adopted.

On the basis of the findings of the

Special Master as adopted, modified and

rejected by me, I will adopt his

sanctions recommendation, although for

somewhat different reasons from those set

forth in nis report and recommendation.

I do not think there is any basis for

A-105

imposing sanctions for violating Judge

Lacey's order to produce. Long before he

had entered that order Struthers had

destroyed the documents. It was unable

to comply and, therefore, cannot be held

to have willfully violated the order.

The issue is whether Struthers should

be penalized for destroying the documents

in 1972 under the circumstances of this

case.

I conclude that the destruction of

the documents was clearly improper. It

is immaterial, in arriving at this

conclusion, that Struthers thought that

the destruction was a convenient way to

handle the Delaware district court's

protective order or that it sought relief

from the burden of storing the documents

or that it thought other parties or

counsel or the government would have

originals or copies of the documents.

Similarly, it is immaterial, in arriving

A-106

at this conclusion, that Nestle, once

having learned of the event, exploited it

to the full as a matter of litigation

tactics, perhaps thereby seeking to

divert the Court from the substantive

issues in the case. All that may affect

the ultimate relief to be accorded. It

does not in any way cure the essential

wrongness of what Struthers did.

Struthers had in its possession a

vast collection of documents which had

been gathered through great effort in an

earlier litigation. It was contemplating

new litigation involving substantially

the same subject matter and issues as

were involved in the litigation in which

the documents had been assembled. It

knew that a substantial portion of the

documents would be relevant in the

litigation about to be instituted. Yet

it nevertheless destroyed those

documents. As a result, some became

A-107

forever unavailable; many would have to

be acquired once again through the long

and difficult process of discovery,

imposing on the Court and litigants

unnecessary, heavy burdens, of which

these sanction proceedings are but a

part. Regardless of its avowed reasons

for the destruction (which the Special

Master found to be genuine reasons),

Struthers' actions in 1972 were highly

improper.

The applicable rule is set forth in

Bowmar Instrument Corp. v. Texas

Instruments, Inc., 25 Fed.R.Serv. 2d 423,

427 (N.D. Ind. 1977):

The proper inquiry here is whether

defendant, with knowledge that this

lawsuit would be filed, wilfully

destroyed documents which it knew or

should have known would constitute

evidence relevant to this case.

Struthers' conduct clearly comes

within these criteria. In February and

March, 1972 Struthers had in its

A-108

possession vast quantities of documents.

It was actively planning to institute a

complex patent action against Nestle. It

knew that the documents included material

relevant to the issues which would be

involved in that action. Yet, on the eve

of filing its complaint, Struthers

embarked upon an extensive program to

assemble and then destroy these

documents, thus placing itself in a

position where it could not comply with

future discovery requests of the parties

or orders of the Court with respect to

those documents. It makes no difference

what other reasons Struthers had for

destroying those documents; its actions

in the circumstances which prevailed in

1972 constituted wilfull destruction of

documents in anticipation of litigation.

Had this conduct resulted in

demonstrable injury to Nestle, there is

no question in my mind that whatever

A-109

Sanctions as would be necessary to undo

the harm would be in order, National

Hockey League v. Metropolitan Hockey

Club, Inc., 427 U.S. 639 (1976). I have

concluded, however, in conformity with

the recommendation of the Special Master,

that Nestle has not been harmed in its

defense on the substantive issues in this

case.

In Parts II through V of this opinion

I set forth my reasons for granting

Nestle's motions for summary judgment of

invalidity of the ten patents in suit.

Even without the destroyed documents

Nestle has been able to assemble a

comprehensive record with respect to

these patents sufficient to demonstrate

that there is no genuine issue of

material fact as to their invalidity.

Access to the destroyed documents might

have provided a few more nails to drive

into the coffin, but even without those

A-110

documents Nestle secured sufficient nails

to inter decently the ten patents in suit.

So, in the last analysis, Nestle's

ability to meet the substantive issues in

the case has not been impaired

Significantly by the destruction of the

documents. The necessity to pursue the

matter has imposed a very heavy,

unnecessary burden on the litigants and

upon the Court. The appointment of the

Special Master was required in order to

ease the Court's burden and to make it

possible for the Court to deal with

discovery and substantive matters.

Nestle urges that these burdens, which

flowed from the document destruction,

require that attorneys' fees and other

costs incurred by Nestle as a result of

the document destruction proceedings be

assessed against Struthers. This would

be a reasonable sanction in some

circumstances. However, in the course of

A-111

the present case Nestle's own conduct

when discovery was sought from it has

been far from exemplary. At every

Opportunity it sought to delay and

obstruct necessary discovery. It evaded

and even violated orders of the Court.

It, too, has cast unnecessary burdens on

the litigants and the Court. Under the

circumstances each party should bear its

own attorneys' fees and costs incurred in

the document destruction proceedings.

An order will be entered which will

recite simply that the report and

recommendations of the Special Master are

adopted, modified and rejected in the

manner set forth in this opinion.

II. The Muller Patents

Nestle moved for summary judgment of

invalidity and/or unenforceability of

Muller patents 3,404,007 (the '007

patent) and 3,495,522 (the '522 patent)

on the following grounds:

A-112

l. Struthers (Muller's assignee) is

collaterally estopped to relitigate the

final judgment of unpatentability entered

by the Patent Office Board of Appeals in

the essentially identical Muller

application Serial No. 738,776 (the

Muller II application discussed below),

from which no appeal was taken.

1. In support of its collateral estoppel

argument Nestle contended that the

subject matter of the Muller II

application was patentably

undistinguishable from the subject matter

of the '007 patent. That being the case,

Nestle further contended, the final

judgment of unpatentability of the Patent

Office Board of Appeals collaterally

estops Struthers from relitigating the

validity of the '007 patent. At the time

I rendered my oral opinion, on June 2,

(Footnote #1, cont.,)

1981, I was not prepared to rule whether

there was a material issue of fact as to

whether the differences between the

Muller II claims and the '007 claims are

merely obvious variations of an invention

disclosed in the '007 patent or whether

they are of a patentable nature. I held,

however, that on equitable grounds it

would not be appropriate to apply

collateral estoppel effect to the

judgment of the Board of Appeals since it

was unlikely that Struthers considered

A-113

(Footnote #1 cont.,)

itself to be litigating the validity of

the '007 patent in the proceeding before

the Board of Appeals, Blonder-Tongue

Laboratories, Inc. v. University of

Illinois Foundation, 402 U.S. 313

(1971). I therefore denied summary

judgment on collateral estoppel grounds.

2. The Muller patents are invalid

over the prior art, including prior art

not considered by the Patent Office

before granting the Muller patents in

suit.

3. All claims of the '007 patent are

invalid for failure to comply with the

requirements of 35 U.S.C. § 112.7

2. Nestle contended that the ‘007 patent

fails to comply with the first paragraph

of 35 U.S.C. § 112 in that it does not

contain a description in such terms as to

enable any person skilled in the art to

make and use the invention and it does

not set forth the best mode contemplated

by the inventor of carrying out his

invention. Nestle also contended that

the '007 patent fails to comply with the

requirements of the second paragraph of

§ 112 in that the claims do not

particularly point out and distinctly

Claim the subject matter which the

appicant regards as his invention. In my

A-114

(Footnote #2 cont.,)

June 2, 1981 oral opinion I denied the

motion for summary judgment on this

ground for the reason that these highly

technical arguments posed factual

questions which I did not wish to resolve

without a hearing, cf., Struthers

Scientific and International Corp. v.

General Foods Corp., 314 F. Supp. 313 (D.

Del. 1970).

Upon further reflection and after

hearing argument and reviewing the record

in connection with the motions for

summary judgment as to validity of the

remaining eight patents involved in this

suit, I have concluded that denial of

Nestle's motion on § 112 grounds was

correct. However, I believe the proper

reason is not that upon which I relied at

the conclusion of the argument on the two

Muller patents. Rather, the level of

skill in the art (freeze concentration

and freeze drying of powdered soluble

food products) is so high, the § 112

standards Nestle seeks to impose are

"unduly parsimonious". I would now find

that the '007 patent meets the

requirements of § 112. Rengo Co. Ltd. v.

Molins Machine Company, Inc., Docket Nos.

80-2556 & 80-2557 (3d Cir. July 20, 1981).

4. (a) The '522 patent is invalid

because the apparatus subject matter it

Claims was abandoned.

(b) The '522 patent is invalid

because it claims only an aggregation of

A-115

those elements perform only the functions

and operations theretofore performed in

Similar combinations of the prior art.

for double patenting and extension of the

monopoly of the '007 patent.

(d) The '522 patent is invalid

by reason of late claiming.?

5. The Muller patents are invalid by

reason of prior offer for sale, sale and

use of the subject matter they claim.

6. The Muller patents are invalid

and unenforceable by reason of Struthers'

withholding from the Patent Office of

information material to the patentability

3. In my oral opinion of June 2, 1981, I

denied Nestle's motion for summary

judgment of invalidity and/or

unenforceability of the '522 patent on

the ground of late claiming.

A-116

of the subject matter claimed in the

patents.*

After the hearing on the Group I

motion I reserved decision on grounds 2,

4(a), (b) and (c), and 5. This opinion

concerns itself with those grounds,

A. Description of the Patents

1. Muller '007 Patent

The Muller '007 patent is for a

"Freeze dried coffee process and

product", The abstract of the disclosure

recites that "A process is provided for

making concentrated coffee or tea in dry

form by freeze concentration of an

4. In my June 2, 1981 oral opinion I

denied Nestle's motion for summary

judgment with respect to the '007 and

'522 patents for Struthers' alleged

witholding from the Patent Office of

information material to the patentability

of the subject matter claimed in the

patents. I had concluded that facts

material to that issue were in dispute.

De Long Corp. v. Raymond Intern., Inc.,

622 F.2d 1135 (3rd Cir. 1980): Digital

Equipment Corp. v. Diamond, 654 F. 2d 701

(lst Cir. 1981)

A-117

aqueous beverage extract in which solids

are recovered from the ice crystals and

the concentrated extract is freeze dried.”

The specifications recited that the

invention relates to a process for the

preparation of powdered soluble food

products generally but is particularly

applicable to the preparation of powdered

or soluble coffee and tea. "Soluble or

‘powdered' coffee has been prepared by

first extracting coffee beans with hot

water and subsequently dehydrating the

extract by spray drying under either

vacuum or slightly elevated pressure

conditions. This process has met with

vast commercial success, but the flavor

of the soluble coffee leaves much to be

desired. Volatile taste and flavor

elements of the coffee are lost through

evaporation, and more oxidation takes

place also because of the elevated

temperatures and pressure of air. The

A-118

resulting soluble product is, therefore,

never as good as the extract from which

it is prepared."

The specification noted how this loss

of flavor had been dealt with in the

past: "To improve the flavor of the

soluble coffee, it has been often

proposed to remove substantial amounts of

the water in the extract by partially

freezing the extract and separating the

resulting pure ice crystals from the

concentrated extract." This constituted

a freeze concentration step. There

followed a drying step, as to which, the

specification noted, "This process of

partial freezing is then followed by a

complete dehydration under vacuum

conditions. In this way the coffee loses

less of the volatile components by virtue

of the fact that the extract is subject

to vacuum conditions for shorter periods

of time." But, nevertheless, during the

A-119

conventional method of drying the

concentrated extract "much of the flavor

components of the foffee which are

volatile flash off along with the water

and must somehow be replaced in the

coffee powder. Even this replacement of

the coffee aroma elements into the coffee

powder produces a product which is not

truly comparable to freshly brewed

coffee." In essence, the '007 patent

solves the problem of loss of flavor by

instituting, after the freeze

concentration step, a freeze drying step.

The patent has five claims, the first

four claiming variants of the freeze

concentration-freeze drying process and

the fifth claiming the product produced

by claim 1. The claims read:

I claim:

1. A process for the preparation of

a dehydrated coffee beverage product

which is readily soluble in cold

A-120

water, said process comprising:

(a) preparing an aqueous coffee

extract containing about 10 to 30

percent by weight of dissolved solids;

(b) subjecting said extract to

concentration by partial freezing to

form ice crystals and a more

concentrated extract containing about

30 to about 50 percent by weight of

solids;

extract from said ice crystals by

centrifugation; and

(a) subjecting said more concentrated

extract to relatively complete

dehydration by freezing the extract

to a solid mass and freeze drying to

a moisture content of about 1 to 5

percent at temperatures between about

0° to --50C.

2. The process according to claim l

in which the ice is washed in step

step (b).

3. The process according to claim l

in which the ice is washed in step

step (a).

4. The process according to claim l

in which the ice is washed in step

spray dried.

5. The product produced by the

process of claim l.

A-121

2. Muller '522 Patent

The Muller '522 patent is for a

"Beverage Apparatus". The abstract of

the disclosure reads: "A system of

apparatus for dehydrating coffee and tea

is disclosed in which a freeze

concentration device includes an integral

agitator device and an ice separating

centrifuge which is connected to a freeze

drying device which removes moisture from

the freeze concentrated product under

vacuum by sublimation and heat." This

patent (which was applied for 2-1/2 years

after the application of the '007

process-product patent) claims as an

invention an apparatus which accomplishes

the process claimed in the '007 patent,

namely, an apparatus which dehydrates

coffee, tea or other powdered soluble

food products through freeze

concentration followed by freeze drying.

Its three claims read as follows:

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What is claimed is:

l. A system of apparatus for

preparing a dehydrated coffee or tea

beverage product from an aqueous

liquid, the extract, comprising:

(a) concentrating means for partially

freezing the liquid extract to form

ice therein by indirect exchange of

heat across a tubular heat exchange

surface between the extract and a

circulating refrigerant;

(b) means coacting with concentrating

means (a) for agitating extract and

removing ice from said tubular heat

exchange surface;

ice formed in the extract from said

liquid extract,

(ad) freezing means for freezing the

extract;

(e) means for removing moisture under

vacuum from frozen extract by

sublimation; and

(£) heat source means coacting with

vacuum means for heating and drying

the frozen extract.

2. The apparatus of claim 1

including means coacting with the

centrifuge means (c) for washing ice

separated from the extract.

3. The apparatus of claim 2

including means coacting with the

centrifuge means (c) for recovering

solids from washings.

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B. Prosecution of the Muller Applications

The history of three pertinent Muller

applications for patents, all of which

were owned and prosecuted by Struthers,

provides indisputable data which bears

upon the resolution of the pending motion.

The first application (Muller I;

Serial No. 523,574; Ex. 1) resulted in

the '007 patent here in suit; the second

application (Muller II; Serial No.

738,776; Ex. 2) became abandoned by

reason of Struthers' failure to appeal

the final Patent Office determination of

unpatentability entered by the PTO Board

of Appeals; the third application (Muller

III; Serial No. 829,613; Ex. 3) resulted

in the '522 patent here in suit,

l. The Muller I Application

(the ‘007 Patent)

In January, 1966 Struthers filed the

Muller I patent application in the name

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of its employee, John G. Muller, for a

process of preparing soluble powdered

coffee or tea. That process is

summarized in the abstract of the

disclosure quoted above and appearing in

Column 1 of the '007 patent, which issued

on that application.

The '007 patent calls for conjoining

two processes - freeze concentration and

freeze drying. The specification of the

'007 patent sets forth one publication

and twenty patents which describe

"yarious processes for freeze

concentration" (Col. 3, lines 59-68), as

well as two publications and twenty-nine

patents which describe "freeze drying

processes and equipment" (Col. 4, lines

5-17). Yet another publication and eight

patents are set forth as describing

"various methods of preparing coffee

extracts which may be employed in the

process of this invention (Col. 2, line

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66 to Col. 3, line 4).

The file wrapper of the '007 patent

contains the officially certified written

record of the proceedings before the

Patent Office which resulted in the

allowance of the Muller I application and

its issuance as the '007 patent.

a. The Petition to Accelerate

After the Muller I application was

filed, but prior to any official action

by the patent examiner, William Drucker,

Esquire, president of the plaintiff and

an officer of each counter claim

defendant, filed on April 24, 1967 (Ex.

l, p. 20) a request that examination of

the application be accelerated, and he

concurrently submitted two prior art

references, assertedly developed ina

Search of the prior art. Mr. Drucker

represented that the two prior art

patents -- neither of which is mentioned

in the specification of the '007 patent

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-- were "deemed most closely related to

the subject matter encompassed by the

claims".

The first reference is one of a

number of patents to Earl Flosdorf, No.

2,471,677, granted in 1949 (Prior Art

Book Tab G). Mrs Drucker distinguished

the Flosdorf '677 patent from Muller's

alleged invention by asserting that

Flosdorf '677

is limited to the treatment of orange

juice, whereas the present invention

is concerned with preserving the

flavor in coffee and tea.

(Ex. 1, pp. 20-21.)

The petition did not call attention

to another of Flosdorf's patents, No.

2,509,681 (Tab H) issued in 1950, even

though the application for the latter

patent is referred to in Flosdorf '677

(Tab G, Col. 1, lines 9-10). Flosdorf

‘681 was recognized later in the

proceedings to have an important bearing

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on patentability of the '007 subject

matter.

The other prior art reference cited

in the Muller I petition, a 1935 Krause

British patent (Tab Q), was acknowledged

by Mr. Drucker to relate to freeze

concentration of coffee, but he

distinguished it as thereafter employing

"hot spray [drying] or drum drying". In

connection with distinguishing Krause,

Mr. Drucker stated the "essence" of

Muller's invention:

It is the essence of the present

invention to start with a suitable

concentrate, as does Krause, but

thereafter to subject it only to a

cold desication [sic] so as to avoid

the volatilization of delicate flavor

substances which would be lost in

spray or drum drying * * *

(Ex. l, p. 21.)

Thus, none of the "most closely

related" art which Struthers brought

to the examiner's attention described

freeze concentration of coffee

followed by freeze drying.

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b. The Examiner's First Action

Shortly after the petition was filed,

a first official action, dated June 6,

1967, was mailed to Mr. Drucker by the

patent examiner, Maurice W. Greenstein

(Ex. 1, p. 28). See 37 C.F.R. §§

104-107. The examiner had found the

Flosdorf '681 patent, and with one

exception, which is not pertinent for

present purposes, he rejected all of the

Muller application claims "as fully met

by" that patent.

The 1950 Flosdorf '681 patent

describes freeze drying of fruit juices

and aqueous extracts "such as coffee

extract" (e.g., Tab H, Col. 1, line 3;

Col. 2, lime 3; Col. 8, lines 4 and 9).

Flosdorf teaches that the juice or

extract should be "preconcentrated" by

appropriate means before freezing and

freeze drying, as by

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subjecting the material to partial

freezing with formation of a mixture

of ice and concentrate and separating

the concentrate from the ice, as by

centrifuging.

(Tab H, Col. 2, lines 17-20.)

The quoted teaching describes freeze

concentration, The '007 patent uses

like terminology; see Col. 2, lines 1-6.

Flosdorf '681 thus expressly teaches

the conjoined processes of freeze

concentration followed by freeze drying

of coffee extract. Flosdorf '681 also

teaches freeze concentrating coffee

extract to within the range (30% to 50%

solids) set forth in the Muller '007

patent claims:

With coffee extracts,

preconcentration to a solids content

of about 50% gives optimum results in

the practice of the invention, from

the standpoint of quality of product

and cost.

(Tab H, Col. 8, lines 9-12.)

The examiner rejected the Muller

claims as having been anticipated by

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Flosdorf, relying on 35 U.S.C. § 102(b).

The examiner's first action also made

a separate and additional rejection of

all the application claims over other

art, viz., the 1942 Irwin patent

2,292,447 (Tab D) or the 1956 Colton

patent 2,751,687 (Tab J), in view of the

1947 Noyes patent 2,416,945 (Tab F) and

(as to tea) the 1958 Cortez patent

2,852,388 (Tab K). Irwin and Colton, the

primary references in this rejection,

were cited as showing preparation of

soluble coffee by freeze drying coffee

extract, which can be preconcentrated by

any conventional method. Noyes was cited

to show that freeze concentration is one

of those conventional methods. The

examiner stated:

Consequently, to concentrate the

extracts of the primary reference/[

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