# Petition — Struthers Patent Corp. v. Nestle Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_0135%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1983 - **Citation:** 464 U.S. 915 ## Text IN THE Supreme Court of the OCTOBER TERM, 1983 a ) 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. 2 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: (c) Motion and Proceedings Thereon. 3 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. 4 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 5 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. 6 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 8 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 9 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- 10 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. 1] 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 12 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), 13 (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 14 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 15 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 16 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 ee A sale of the FreCon apparatus would not, by itself, constitute a § 102(b) sale of the process patent because it does not have 17 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. 18 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- 19 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 20 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- 21 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. 99 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 * - * 23 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. 24 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 Ve NESTLE COMPANY, INC., a corporation Organized and existina under the laws of the State of New York Ve 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 A 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 (c) The Court does not at this time 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. (c) The Court does not at this time 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. (c) The Court does not at this time 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. (c) The Court does not at this time 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 (c) The Court does not at this time 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. (c) The Court does not at this time 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 (c) The Court does not at this time 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. (c) The Court does not at this time 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, (c) The Court does not at this time 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, (c) The Court does not at this time 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. D. d. 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 b. 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-160 F, G. 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-178 A-187 A-195 A-200 A-216 A-222 A-231 III. The Ganiaris '295 and ‘034 Patents A. 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-265 A-268 A-269 A-278 A-283 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 G. H. 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-424 A-428 A-432 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-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 A-52 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. A-53 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 A-54 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 A-55 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 A-56 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 A-57 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 A-58 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. A-59 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. A-60 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 A-61 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 A-62 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 A-63 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. A-64 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., A-65 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 A-67 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 A-69 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: A-74 "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 A-78 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 A-79 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 A-80 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 A-81 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 A-83 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 A-84 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 A-85 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 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_0135%3A1. Public record. Not legal advice.