Appendix — In re Wilco Marsh Buggies & Draglines, Inc.
Supreme Court brief1984
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In re Wilco Marsh Buggies & Draglines, Inc.,
John M. Wilson, Sr., Dean R. Wilson,
and Robert Je Wilson, Jr.,,
Petitioners.
ON PETITION FOR ISSUANCE OF WRIT OF
APPENDIX.
ON BEHALF OF
ete ates
CASE NO.
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM 1983
In re Wilco Marsh Buggies & Draglines, Inc.,
John M. Wilson, Sr., Dean R. Wilson,
and Robert J. Wilson, Jr.,
Petitioners.
ON PETITION FOR ISSUANCE OF WRIT OF MANDAMUS AND PRO-
HIBITION TO REQUIRE THE JUDGES OF THE COURT OF APPEALS
FOR THE FIFTH CIRCUIT TO STAY WITHIN THE CONFINES OF
THEIR APPELLATE JURISDICTION AND TRANSFER APPEAL NO.
82-3619 TO THE COURT OF APPEALS FOR THE FEDERAL CIRCUIT
APPENDIX
ON BEHALF OF PETITIONERS
Ned L. Conley
Jeffrey W. Tayon
Allied Bank Plaza
Houston, Texas 77002
(713) 237-3195
Counsel for Petitioners
OF COUNSEL:
Butler & Binion
Allied Bank Plaza
Houston, Texas 77002
(713) 237-3111
TABLE OF CONTENTS
Unpublished opinion of the United
States Court of Appeals for the
Fifth Circuit dated September 2,
1983 denying Petitioner's Motion
To Transfer Appeal No. 82-3619 To
The United States Court of Appeals
for the Federal Circuit eeeseoeeeeeeeeeeeeeeeneeeenene
Petitioner's Motion to Transfer
and Stay Pending Transfer to the
United States Court of Appeals for
the Federal Circuit ..ccccccccccccccccccccccccccecs
Kori et al‘s Memorandum in Opposition
to Motion to Transfer and Stay Pending
Transfer to United States Court of
Appeals for the Federal Circuit ..ceseseeeeesesees
Petitioner's Reply to Appellees’
Opposition to Appellants’ Motion
to Transfer to United States Court
of Appeals for the Federal Circuit ....+eses-seeee
Kori Corp. v. Wilco Marsh Buggies &
Draglines, Inc., 561 F. Supp.
cae a. 1961) eeeeeeeeeeeeneeeneaeeeeeeneeneeeeeeeneneeee
Kori Corp. v. Wilco Marsh Buggies &
Draglines Inc., 708 F.2d Tet (5th
Cir. 1983)
oe
Reply Brief for Defendants/Appellants
in Appeal No. 82-3619 Before the
United States Court of Appeals for
the Fifth Circuit e@eeeeoeeeaeeoeaeeoeaeeeeaeeeeeeeeeeeaeeee
Senate Report (Judiciary Committee)
No. 97-275 to accompany the Federal
Courts Improvement Act of 1982,
P.L. 97-164 eeeeeceaeoevoeee ee eee eevee eeeeeeeeeeeeeaeeeee
11
27
39
62
68
97
10.
ll.
12.
13.
House of Representatives Report
(Judiciary Committee) No. 97-312
to accompany Federal Courts Improve-
ment Act of 1982, PP- 1-52 eeeeeeeeeeeeeeeeeeeeees
Hearing before the Subcommittee
on Courts, Civil Liberties, and the
Administration of Justice of the
Committee on the Judiciary, House of
Representatives, May 4, 1978, cover,
PP. 372-390 eeeeeeeeeeeeereeeeeeeeeeeeeeeeeeeeeeeee
Catanzano v. Hart Electronics sik
Appeal No. - , Unp shed Slip
Opinion of the United States Court
of Appeals for the Federal Circuit ....ceeeececees
Letters Patent 3,842,785 eeeeoeeoeeeeeeeeeeeeneeeeeenee
Statutes and Rules in ISSUC ..cccceseessecessseses
137
189
209
216
223
gas DO NOT PUBLISH
IN THE UNITED STATES COURT OF APPEALSU.S. COURT OF APPEALS
‘
_ FOR THE PIPTH CIRCUIT FILED -
SEP - 2 1983
sai baitinaianed GILBERT E GANUCHEAU
ee CLERK
KORI CORPORATION, ET AL.,
Plaintiffs-Appellees,
versus
WILCO MARSH BUGGIES AND DRAGLINES,
INC., ET AL.,
Defendants-Appellants.
Appeal from the United States District Court for the
Eastern District of Louisiana
Before RUBIN, GARWOOD, and JOLLY, Circuit Judges.
BY THE COURT:
IT IS ORDERED that appellants' motion to transfer and stay
pending transfer to the United States Court of Appeals for the
Federal Circuit and transmit the record back to the United States
District Court for the Eastern District of Louisiana is DENIED.
The present appeal, in this patent infringement litigation,
is from the August 30, 1982 judgment of the district court
awarding damages and attorneys' fees in the accounting phase of
the action, trial on the accounting and amount of attorneys’ fees
issues having taken place during April 1982. Defendants~-
appellants' timely motion for new trial having been overruled on
sr» |
a
i aa. Pe
October 12, 1982, those parties filed their notice of appeal on
October 13, 1982, and subsequently filed the record, and on March
15, 1983, their appellants’ brief, in this Court. On July 28,
1983, after appellees’ brief was filed with this Court,
appellants filed their instant motion seeking transfer of this
appeal to the United States Court of Appeals for the Federal
Circuit. Appellees oppose the motion.
The trial in the district court of this case was bifurcated,
as it is in many patent cases, with the court first trying the
issues of the validity and infringement of the patent, and
thereafter the accounting issues. The trial on the validity and
infringement issues was held in February 1981, and on December
ll, 1981 the court gave judgment for plaintiffs-appellees holding
the patent valid and infringed by defendants-appellants,
enjpining defendants-appellants from infringing the patent,
ordering that plaintiffs-appellees were entitled to an accounting
from defendants-appellants for “all damages suffered by them as a
result of the infringement by the defendants" and to costs and
attorneys’ fees, and providing that "[a] hearing shall be set at
a later date to determine the question of damages, costs, and
attorneys’ fees." This judgment also dismissed defendants'
counterclaim, based on alleged antitrust violations (no trial was
held on the counterclaim, as it was apparently conceded to be
dependent on defendants' claims that the patent was invalid or
not infringed, and the counterclaim had been separated out for
trial just us had the accounting issues). On December 24, 1981
. -
ate eee. t >
defendants-appellants gave timely notice of appeal to this Court
from the December 11, 1981 judgment, and, after all parties filed
briefs with this Court, the case was orally argued in March 1983
and on June 27, 1983 this Court affirmed the district court's
December uu, 1981 judgment. Kori Corporation v. Wilco Marsh
Buggies And Draglines, Inc.,708 F.2d 151 (5th Cir. 1983). In
August 1983, motion for rehearing in that proceeding was
overruled and the mandate issued.
Public Law 97-164, 97th Congress, approved by the President
April 2, 1982, among other things, created the United States
Court of Appeals for the Federal Circuit and provided, by
enacting 28 U.S.C. § 1295, that it "shall have exclusive
jurisdiction--(1) of an appeal from a final decision of a
district court of the United States ... if the jurisdiction of
that court was based, in whole or in part, on section 1338 of
this title ... ." Section 1338(a) of 28 U.S.C. gives United
States district courts original jurisdiction, inter alia, “of any
civil action arising under any Act of Congress relating to
patents ... ." Prior to Public Law 97-164, 28 U.S.C. § 1292(a)
provided for interlocutory appeals to courts of appeals from
orders granting or refusing injunctions, appointing receivers,
certain orders in admiralty cases, and, by its pragraph (4), from
"judgments in civil actions for patent infringement which are
final except for accounting.” Pu Law 97-164 repealed
paragraph (4) of section 1292(a), and adde@ to section 1292 a new
subsection (d) giving the Court of Appeals for the Federal
-
ed
Circuit jurisdiction of appeals from certain interlocutory orders
of the Court of International Trade and the United States Claims
Court, and a new subsection (c) providing:
"(c) The United States Court of Appeals
for the Federal Circuit shall have exclusive
jurisdiction--
"(1) of an a al from an
interlocutory order or decree described
in subsection (a) of this section in any
case over which the court would have
jurisdiction of an appeal under section
1295 of this title; and
"(2) of an appeal from a judgment
in a civil action for patent
infringement which would otherwise be
appealable to the United States Court of
Appeals for the Federal Circuit and is
final except for an accounting."
Public Law 97-164 likewise amended 28 U.S.C. § 1291,
granting courts of appeals jurisdiction of appeals "from all
final decisions of the district courts of the United States,” so
as to except the Court of Appeals for the Federal Circuit from
this grant of jurisdiction and to provide that such Court's
jurisdiction "shall be limited to the jurisdiction described in
sections 1292(c) and (d) and 1295 of this title.” Public Law
97-164 also amended 28 U.S.C. § 1294, providing, inter alia, that
appeals “from reviewable decisions of" a district court “shall be
taken... to the court of appeals for the circuit embracing the
district," by adding to section 1294 the language, “Except as
provided in sections 1292(c), 1292(d) and 1295 of this title."
Section 1631 of 28 U.S.C. was likewise enacted by Public Law
97-164, and provides that under certain circumstances a court in
—_
cua
which "there is a want of jurisdiction" may transfer the “action
or appeal" to any other court in which “he "action or appeal
could have been brought at the time it was filed or noticed."
Section 402 of Public Law 97-164 states that “[ujnless
otherwise specified, the provisions of this Act shall take effect
on October 1, 1982." Section 403(e) of the Act provides:
*(e) Any case in which a notice of
appeal has been filed in a district court of
the United States prior to the effective date
of this Act shall be decided by the court of
appeals to which the appeal was taken."
Not surprisingly, we have found no decision or legislative
history which is helpful in resolving the problem before us.*
Undeniably, a difficult and close question is presented. We
conclude that "case" as used in section 403(e) of Public Law
97-164 refers to the case, or judicial unit, pending in the
district court, and that in this instance there was but one such
case, namely, Civil Action No. 79-3636 in the United States
District Court for the Eastern District of Louisiana. Notice of
appeal in that case, which brought forward for appellate review
the controlling issues of patent validity and infringement by
defendants-appellants, was filed in December 1981, well before
the effective date of Public Law 97-164, and those issues have
*Appellants cite Groves v. General Insurance Corp., 381 F.2d
517 (10th Cir. 1967), anc Prigetee va New York Litt 28. Co., 270
F.2d 198 (6th Cir. 1959), ne : y relevant,
each case dealing solely with the caoethen of a notice of appeal,
and neither case involving any disputed question concerning which
appellate court had jurisdiction or the transfer of an appeal
from one appellate court to another.
—_ =)
been resolved by this Court's prior opinion herein. We observe
that in the present appeal appellants’ contentions appear to
involve, inter alia, questions of the scope of the infringement
as applied to various products, thus potentially implicating the
scope of our prior decision herein. Up until this point all
parties obviously proceeded on the assumption that this Court had
jurisdiction and that the accounting “tail" did not wag the
dog. We believe that assumption was correct. Appellants’ motion
is DENIED.
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
KORI CORPORATION ©
AND HUEY J. RIVET
VERSUS
APPEAL NO. 82-3619
WILCO MARSH BUGGIES AND
DRAGLINES, INC., JOHN M.
WILSON, SR., DEAN R. WILSON,
AND ROBERT J. WILSON, JR.
MOTION TO TRANSFER AND STAY PENDING TRANSFER
TO UNITED STATES COURT OF APPEALS FOR THE
& FEDERAL CIRCUIT AND TRANSMIT RECORD BACK
TO THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF LOUISIANA
NOW COME APPELLANTS and file this Motion to Transfer and
Stay Pending Transfer to United States Court of Appeals for
the Federal Circuit and Transmit Record Back to the United
States District Court for the Eastern District of Louisiana
and would show the Court as follows:
(1) This Motion pertains to an appeal from the United
ca States District Court for the Eastern District of Louisiana
that entered judgment in Civil Action No. 79-3636 for damages
for patent infringement against Appellants. A notice of
appeal was timely filed on October 12, 1982, and this appeal
was docketed with the United States Court of Appeals for the
Fifth Circuit.
(2) In due course, Appellants’ main brief was prepared
and filed by Appellants’ former counsel, Nathan Greenberg.
Appellants have recently retained new counsel, viz, Ned
L. Conley of Butler & Binion, Allied Bank Plaza, Houston,
Texas, to represent them in the remainder of this appeal.
An appearance of counsel was transmitted to the Court on
Friday, July 22, 1983.
(3) On october 1, 1982, the effective date of 28 USC
§1295, a new federal circuit court of appeals was created
called The United States Court of Appeals for the Federal
Circuit (hereinafter the "CAFC") and was given "exclusive
jurisdiction... of an appeal from a final decision of a
district court of the United States... if the jurisdiction of
that court was based, in whole or in part, on section 1338
(of Title 28)." See 28 USC §1295. Section 1338 of Title
28 gives original and exclusive jurisdiction of all civil
actions arising under any Act of Congress relating to patents
to the United States district courts.
(4) Contrary to Rule 3(c) of the Federal Rules of
Appellate Procedure, Appellants’ Notice of appeal erroneously
indicated that appeal was being taken to the United States
Court of Appeals for the Fifth Circuit instead of the CAFC.
(5) Under 28 USC §1295, as of October 12, 1982, when the
notice of appeal was filed, the CAFC had exclusive jurisdiction
over this appeal.
(6) Because the Fifth Circuit does not have jurisdiction,
Appellants respectfully request, pursuant to 28 USC §1631, that
this case be transferred to the CAFC. See Graves vs. General
Insurance Corp., 381 F.2d 517 (10th Cir. 1967); Trivette v.
New York Life Ins. Co., 270 F.2d 198 (6th Cir. 1959).
(7) Under Rule ll(a)(4) of the Rules of the CAFC,
the record of the district court proceedings is to be retained
8
nie vu 4 ST Doe i
ai, » ue : eet ee | a eo oe xs ante he.
a. oe
an a a ee
_- . —_——_
by the district court unless ordered by the CAFC. Further,
Rule 12 of the CAFC requires that a separate appendix be
prepared for transmission to the CAFC which includes all
evidence which the parties wish to draw to the attention
of the Court. Accordingly, Appellants request that the record
on appeal held by the United States Court of Appeals for the
Fifth Circuit be tranferred back to the United States District
Court for the Eastern District of Louisiana so that Appellants
may comply with the Rules of the CAFC and prepare an appendix
for transmittal to the CAFC.
(8) Having regard for the requirements imposed and the
exicusive jurisdiction held by the CAFC, Appellants respectfully
request that all further proceedings involving this appeal be
stayed pending transfer to the CAFC.
Respectfully submitted,
e BUTLER & BINION
Ned L. Con
Allied Bank Plaza
Houston, Texas 77002
(713) 237-3195
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the
foregoing Motion to Transfer and Stay Pending Transfer to
United States Court of Appeals for the Federal Circuit and
Transmit Record Back to the United States District Court of
- €or the Eastern District of Louisiana has been forwarded
first class mai}, to all counsel of record, on this the oe
day of , 1983.
.
Oe
gate.
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Rie. 9
5 pecs ;
PM ib toe hE in ot ee
F eee te oe eee a : : ‘
co eee Saga eo
6s
IN THE UNITED STATES COURT OF APPEALS
- POR THE FIFTH CIRCUIT
KORI CORPORATION . 8
AND HUEY J. RIVET §
)
VERSUS §
§ APPEAL NO. 82-3619
WILCO MARSH BUGGIES AND §
DRAGLINES, INC., JOHN M. §
WILSON, SR., DEAN R. WILSON, §
AND ROBERT J. WILSON, JR. §
ORDER
Having considered Appellants’ Motion to Transfer and Stay
Pending Transfer to United States Court of Appeals for the
Federai Circuit and Transmit Record Back to the United States
District Court for the Eastern District of Louisiana and all sub-
missions of the serthes, IT IS HEREBY ORDERED:
(1) that this appeal and all briefs on file be trans-
ferred to the United States Court of Appeals for the Federal
Circuit; |
(2) that the record in this appeal be transmitted back
to the United States District Court for the Eastern District
of Louisiana; and
(3) that all further proceedings in this appeal be
stayed pending further action by the United States Court of
Appeals for the Federal Circuit.
Clerk, United states Court of
Appeals for the Fifth Circuit
10
ce _
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‘we * Se ONT ae
SNe ae
<. ee a ee
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3 ieee oe ; oe a. ee ——- ow eke “ie betes i «<3 5
SP er ‘ = ae “a ‘Motion. to. transfer. and it: SE
. > Ersieter “of appeal No. 82-3619 from the Pifth Circuit Se
- med tes the Court: of Appeals for . the Federal Circuit | =
(CAPCY's
demonstrate eet oe eppeliants! coquase is illogical and
, See ad 2 > woe? ‘ -
unadvisable. ic ae a . ee ah
SE eee “The: ‘Jurisdiction. Statement: on Page VIII of appellees*.
@rcies filed on July 22, 1983 adequately addressed the issue raised
by appellants in their Motion to Transfer (See Exhibit A
ir Ha e- . °*e :
MEER oye: er 4 ‘ © ‘
; “as Aes. m2 : ee a ec : ; : ee
attached ens kL, he 3 at NE mes ereta ts
“8 et RSF. — = “7g 7A : ; %. ie
ee ¥ a Batent Intebiieniiik puke was filed by Kori Corporation - :
o tx Fs. ,
» (Ror iy: and uey: J. Rivet against Wilco Marsh Buggies (Wilco) a : ee
- the: individual @efendants in September 1979. The matter came” to. 2 £3
trial ta February | 1981, at which time a week long trial was held on - ¥ =
the ices. of the validity and infringement of the Rivet patent
before Judge Robert FP. Collins of the Eastern District of
Louisiana. The accounting phase of- the Litigation was bifurcated
ae “3 Z ncaa u
11 (Sates
for trial at a later time. ta 0 beodaber 1981 Judge Collins issued
an —— oe the. ares, patent, —— and oe ant Saat.
% : z “§ S Deo ‘e
briefs, and orak arumeains oa Baar re = 2 e Zz
° ere ag ee ee ee ns neers bn Oe: i * Sane ees
and Tutele” ‘on March: 25 “1983. tt yes of: = ‘
3. ewth -. ee 545 tact Rees es
a considered: the voluminoas valiaity: ang: ee
- arguments- P of Bo he parties for severmi- a ethe— before res ate rir , cleoe nae
opinion on June: 27, 1983 upholding Judge Collins: ‘finding that the: 8
& Rivet patent was walid and infringed by the ‘appellants Wilco, ae ar
akon + ae
(See Appeal No. 82-3004 Docket Sheet, Exhibit BY” SEES a ra
The accounting phase of the litigation was proceeding
through the District Court during the time ‘that the validity and
infringement decision was being considered by the Pifth Circuit.
Wilco had moved Judge Collins in February, 1982 to stay the
accounting phase of the litigation pending the outcome of the Pifth
Circuit's decision on the validity and infringement issues. Judge
e Collins had ordered such a stay if Wilco posted a one million
3 dollar bond to secure the plaintiff's pending the outcome of the
Pifth Circuit's decision. Wilco did aot post the one rsillion
dollar bond and an accounting trial was éecordingly held in the
District Court during the first week of April 1982. Judge Collins
again considered the evidence for several months before issuing 2
decision on August 30, 1982 awarding a judgment of over one million
'@ollars to Kori as compensation for Wilco's infringement. It is
this one million dollar judgment awarded in the accounting case
oe Peoudiethetreactd-cnes pee A ee
ieclte 1 GS $129 as the vas Fin “r Soe ¥ ae Bee RS zi
cng in ‘eentvedietingtion to 28 U.S.C. $1331, ‘cited. ry the “appellants. ‘Seog
* was: filed? on March Se: 1983, recited 24 5 Re. ce $1938 a
- a oy
. ° - <n .*
7 ew te ee eee eee oe ee ——-) = ~
. po oe
The attorney. for the appellants filed a “notice of appeal * c,” Si
with the Clerk's office ‘on October “18,; 1982. (See. sepest. Noe, epee fae
20H -af> = $F: &. ee ‘- :
Docket sheet, Exhibit cy. the "appeLiantar ‘pe
re ree a
° tent tee: Gis: rere
~% ‘> MS
eK . ts: song act
(fon, "eho Court s- Juriedictioi: overs thin’ a ; cans F- Be wie
? "1% x€- : 2 ie t Po arabe Mire; Se i, Se
‘ _
The appellees’ statement of jurisdiction: additionally advised: the. Srthed
Court that although 28 JU. $.Cc. §1295 states ‘that all patent appeals _ :
docketed after October 1, 1982 should be filed in the Court oft:
Appeals for the Pederal Circuit, that the Clerk of the CAFC had
advised the appellees that an exception exists for accounting
trials if an appellate court already has jurisdiction over the -
validity and infringement phase of the litigation. Although there. .
were no decided cases or statutory support for such a position, the
appellees decided not to challenge the appellants’ choice of the i:
Pifth Circuit since it seemed a reasonable and logical place. for’: a
the case to be heard. The judges of the Pifth Circuit had already” Pg
reviewed the voluminous and complex record of this patent case, and’:
therefore possessed a superior familiarity with the facts of this
case.
An understanding and familiarity with the validity and
infringement phase of this litigation is essential to a just
resolution of the accounting issues on appeal. As can be seen from
reviewing the parties’ accounting appeal briefs, the major issues
in this case include whether to award the entire market value of
the: machines a3 damages; whether profits or royalties are the
xy ‘appropriate measure of damages; and whether the deliberate copying
Be “s- at. To ee at .
aes BY ‘wWilicos of: the. Rivet machine helps. justify the award of double
cee) tee
| damages; 6 attorneys* fees in this case. A resolution of the
an tot.
Bice Sucker value issue depends upon the Court finding that the-
ot ues toe
~~ patented Rivet structure iapacts the economic value to the .
—_—— oo - —_—— ~~
mapaiah we %° pommel
BTN : amphibious. craft used by Kori, and an enderetanding of this sesue bd
Fy can only. come from an intimate familiarity with the details of. the
"machine! S$ construction and operation. Whether to use profits or
| cepbbeion as a measure of damages depends in large part on whether
non-infringing substitutes are available for the Rivet craft, and
such an inquiry intimately involves the details of the prior art
patents and machines already considered by this Court in the
validity and infringement phase of the litigation.
: With regard to the issues of deliberate copying, double
® damages and attorneys fees, it is also necessary for the court to
be aware of the details of the prior art. A review of the prior
art will reveal that Wilco constructed a machine identical to the
Rivet craft, and that there were no others remotely similar. The
bad faith of Wilco in litigating the validity and infringement
portion of the litigation is also intimately connected with the
award of attorneys’ fees in the accounting appeal. For instance,
if an appeals court is familiar with the semantic facades erected
by the defendants in an attempt to excuse their infringement, the
award of attorneys' fees becomes not only reasonable but
14
tnevtealae, * "(wee exanple, Wilco argued at trial that the interior
of their pontoons was ‘Supported with Peat beams and not “I* beams,
the difference being that if yoo. turn: an s=heee sideways, it is an
-~ SES ttre
3 ¥E ite %: ag Hecke ae
Paper on et
<-~>.+?"
woes
s other’ account ing appeals
s a: eee
ree bys after’ = ‘Court’ of Appeals:
Pes PO.
vn ‘infringement. issues.
er tlw 7
.
+
we
- 2 tt. y
‘ case. of. first impression, and the puzzling precedent cited by .the
"appellant, [Graves Vv. General Insurance Corp., 381 F.2d 517 (10th
Cir. 196795 Trivette v. New York Life Insurance Company, 270 F.2d
‘38 (6th Cir. 1959)] is in no way controlling or apposite to this
matter. Both of these cases concerned notices of appeal which had
inadvertently named the wrong court in the caption or body of the
Notice of Appeal.
Since this is a case of first impression, the appellees
@ urge this Court to make a decision which is consistent with
Judicial economy. A panel of judges of this Court is already quite
familiar with the details of this complex case, and would be in a
position to deal with the accounting issues such more readily than
an uninitiated panel of the CAFC.
Purther, 28 U.S.C. 1292 states in part...
Interlocutory decisions
15
rt «.) ing cal ( “upon to apparently “Seclas” —
ins,
14
. :
(a) Except as snide in niidnenss (e)
and (4) of this section, the courts of
appeals shall have jurisdiction of =
fromi. « « es |
(c) The United States Court of Appeals
for the Federal Circuit shall. Save -
exclusive jurisdiction—. - ee o 2st
7 : — “3 SE: i Rs ”
i (2) of an appeal. from & : Judgmentéi. ee genie
a <>... @iwil action for e@ pateake iotringemene= Fe ee tiat a a. ess
“pot . which would otherwise be appealable tothe’ (7° 0:3) 27 ;
—:.» United States. Court: of: Appeals. for.: thes = i
“aS os Pederal Circuit. noes is final cera for aD he
» v2 accounting. . ’ aid rnb ORY = So en we Pe Se
oe me ee myer emme ee r ee » oe a ee ~oee Ce Tre - ES TT GT Se
‘ . “ « > ’ . ‘oo e . —-
=. on? wwe
@ result of a patent iatetusenaat, ‘validity aivlane previously argued
before the Fifth Circuit Court of Appeals,. (Judges DOLSEHs | Tuttle.
and Garwood), and affirmed. Plaintiffs suggest that the accounting
action is not within the jurisdiction of the CAFC given the fact
that the CAPC did not hear the patent ietriimensan, | validity
appeal. (See Stament of Jurisdiction P. VIII Appellee's Brief
Exhibit A).
Pinally, Rule 3 of the Pederal Rules of Appellate
a Procedure states in part. . .
+4 Appeal as of Right--How taken
Piling the Notice of Appeal. . . -Pailure Saat a
of an appellant to take any step [other
than the timely filing of a notice of
appeal] does not affect the validity of
the appeal, but is ground only for such
action as the court of appeals deems
appropriate, which may include dismissal
of the appeal...
16
Should the Pifth Circuit not have jurisdiction in this
case, the appeal is defective for failure to timely file the notice...
la
oo?
of appeal according to Pederal Rules of appellate Procedure Sal, 3%
and the appeal should be dismissed subject: te a motion: “shows
excusable neglect or good cause. Neither: excusable:“n negli
good cause can be shown herein.
statement - Exhibit D.) — EP
eee AS a purely practical matter, the. late. stage ae ,
>. aw -RMb& Be oo ee een
_ wore PE Tamtonn fob lon, SA
oh “this transfer is being urged should be considered... Both: the... =
appellees and the appellants have filed extensive briefs with the: °-
Pifth Circuit Court of Appeals presenting the pertinent case. law of
the Pifth Circuit. If jurisdiction of this case is now given to
the CAFC, both parties’ briefs will have to be extensively eodouts
thereby burdening the parties and the judicial system. A transfer
of this appeal would also further delay a final resolution of this
matter which has been pending in the Courts since 1979. This
attempt to transfer the appeal at this late stage of the
proceedings might be yet another instance of the tactics of delay
employed by the defendants that prompted Judge Collins to award
double damages and attorneys’ fees in this case. If the appellants
wanted this case heard by the CAFC, they should have filed there to
begin with instead of forcing the appellees to file briefs with the
Pifth Circuit before being ambushed with this last second tactic to
further delay a final resolution of these issues.
17
The Fifth Circuit Court of Appeals should recognize an
exception to 28 U.S.C. $1295 for patent appeals filed after October
1, 1982 which concern the accounting phase of extensive patent
a : litigation which has already been before the Fifth Circuit and for
= which briefs are now filed. This exception should be recognized
for purposes of judicial economy, sound public policy, and a prompt
ere
_s resolution oe the complex matters which have already been prolonged
=. for. too. many. years. in the. federal. courts.
@ Respectfully submitted,
KEATY & KEATY
Es
Thomas Ss. str :
1818 ITM Building
No. 2 Canal Street
New Orleans, Louisiana 70130
Telephone (504) 581-1706
18
STATEMENT OF JURISDICTION
This Court has juriediction of appeals from all final deci-
sions of the District Courts of the United States under 28 U.S.C.
$1291. It should be noted that this differs from the statement of
jurisdiction cited by the defendants, who rely on 28 U.S.C. §1331.
The statute cited hy the defendants grants jurisdiction to United
States District Courts over actione arising under the Constitution,
laws or treaties of the United States. Since 28 U.S.C. §1331 grants
jurisdiction to District Courts, it is not understood why the defen-
dants now cite it to support the Appellate Court's jurisdiction.
_ This appeal was docketed on October 18, 1982. 28 U.S.C.
$1295 states that all patent appeals docketed after October |,
1982 should be filed in the Court of Appeals for the Federal Circuit
(C.A.F.C.). However, the C.A.F.C. has advised the appelices that
an exception exists for accounting trials if an Appellate Court
already has jurisdiction over the validity and infringement phase
of the litigation. For that reason, the Court of Appeals for the
Federal Circuit has advised the appellees that the Fifth Circuit
Court of Appeals has jurisdiction over this accounting appeai.
This exception would make sense since the matter has been derid-
ed using Fifth Circuit law, and because the judges of the Fifth Cir-
cuit are intimately familiar with the case after having rendered the
related validity and infringement decision hetween the sume par-
ties in Kori v. Wilco Marsh Buggies & Draglines, et al, Appeal No.
82-3004, decision published June 27. 1983 affirming the validity
and infringement of the Rivet patent.
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
NO. 82-4619
i
KOR! CORPORATION, HUFY J. RIVET
AND LOUIS WOODSON
Plaintiffs- \ppellers,
versus
WILCO MARSIT BUGGIES AND DRAGLINES. INC =
JOHN M. WILSON, SR.. DEAN R. WILSON,
AND ROBERT J. WILSON, JR.
Defendants: Appellants
Appeal from the United States District Court for the
Eastern District of Louisiana
EXHIBIT A
RRIEF FOR APPELLEES
;, ety CunP., ET AL., -vs-
a Inc., ET AL.»
FCOMD, EXHIBITS AND BRIEF INFORMATION | Fiing
4. EXTENSION Fig. Motion for:
tm Puta Record or Cort. Lint _ i Record, Treva,
Record on Apes : No. of Vow. 9 Apoerdix
——— Suon. Record N6. of Vols. Apoellant’s Brief
Second Supp. Record Ne. of. Vols. Appel tant’s Brief
TA) ae Oger. Titus Clerg Cron Appetiant’s Briet P
—— Arends Om Cling aumefs
——___. Formur append! Record = Appellee? Briet. 'o 7 e
———_——_._ Adrrnntrenve Trrmscnpt ” = _ Agpelied’s thief * * ; . o
wating tat ea ASO pe Lt Apps tea’: Brief Vrc- . .
Brief for AppetemG@(M) it ai | i
——___. Bre! fer Appaiten: ° Reoty bt “ 32:0
Briel fer Cr. Agpatten L£AA2. Tehewl-..: i eer ; Yule -t
20782 wriet tor ncpetettP) Stine. ¢ :
———=— _Srief for Appeties ae
Brief for Cr. Appetice =
Repty Briad tor Appetient (M1)
7ez——
26782 -
Supe, Brie! tor AppeiteneSs (M)
Supp. Brief :or Appeiics
B2___ oun. noes of Apes! and Cork's
Sterermemt of Cocker Entries
————— Proers Tiara. trom Me No.
+e Order of DC Ext. Time to File Record
*° °
——_ ae" of OC Granting Appest i FP
—_ Atiedawt of Financial Stetus
CJA 20 Ind / Voucher Recd.
——— orce of Etection Rule ic)
———— Sebel tent: Om -enenian
——_ Ahitler ) Oe gnetion
er ao ae,
in
oO oe
Case Sub. wie Arg. C) ty Appetient C] by Appts
‘| € OPINION INFORMATION
. b: . .
Ovrreon Rendered : ¢ °,
Lie \attwnes = (
| i Reversed
| Aft, in Pe,
———— Loan! Hule 91d} Dwmasal Order
—~.. CJA 21 for Transenge
7. REHEARING INFORMATION
Mos. for Ext. ~ Ext. te:
Mot. for Ext. — Ext,
pon for Rehearing
)
L
; AppetiantS OC pcpince 1 reg, 0 en Gane
= Petitvon for Rehearwg
Y REVIEW CASES | Fiting: OC) Aspetien C) Acpetice Ces. En Sere
———— Penton for Rewew of Order { } of Respore of
Ci aime O rec oO Order Oenying Rehearing
——— _ 498 Kanon for Enforcement — NLRB L_ | Oimanting
—— Arner 10 Apghcanen ter Enforcement OC Osinien 39
—— Crow Avpbesnon tor Entorcerent 0 Order on Pevivien tor Reresring ss
Court of Acpests, Fittm Creut - Docket, Form 14 (Rev, 4/74)
Page J of 4 cogen
Sia al diel AD
—
tions’: ~ =
Sp -
won te ortor: — Pesporee Filed By Outre Grented | Cented Ow *
_ Merdernnus o
Cocker Apces! Out of Time
Reinstate Appes!
____> Hearing an Origine! Record
———eee Meering on Orig. Rec. & Typed Grief
ee Leave to PitG Typed Brief
— Leva to Fite Bria im Excam Pp fs
ern oe
Oremins by Appstinnt
Onis by Apo tee
Stay of Mandere =
BA Ligh, il aa Lhn af - beer 5 BOD ;
10
ER DOCKET ENTRIES CODE TO ENTRIES
82 | Plg. appellees’ letter dtd. 2722782 attaching] AAG - Armes
_.. _| copy of Judge Collins’ order oe AYIA aeeios CE = Clerk's Endorsement
_. —_| that it be made a ° ° sition & Ean Cortroom
aga - " SS <-€ntecCowwem *
a? ts’ motion ce hearing- yr
' = a cable te suan y: — Hancheerttren
=m 4. Ss 4 — Sem to Judges
32 g. a ees’ motion LL <-top
‘ORR te betel (SUBHIT TO SCREENING JUDGETLZ 47>-77 _ M == Mineo or Offast
22. {ric. appellants’ supplemental motion to advanch ° rar .
ear ng. . por os PT — Preiminary Type »
2 ' s — Sere ,
| } SS 9 Sen Section B - ,
82. i jonny | 8 — Sterne oy
GRANTED GFC ‘2 } T +«+%.\.Tyeed ; ,
tet ' WwW, —Wen Cowveem
: ae w 3
11. SUPREME FORMATION Ne.
Prepering Procesdings on Cartiorart
Preparing Supp. Procesdings on Cart.
Travers tring Orig. Extibie te $.C.
Order of $.C. ~ Ext. te
Notice of Fig. of Cort. Pet. on
Order ot $.c. CF) denies O Granta
PE Notice of Derwel of Pet. tor Rehearing.
=
POET REE RT IE LO ES EP FE ONES I Ie NE
a”
a aaMmniinattetg
* Dete Filis.: Proceedings
3/83 |Flg. appellant's letter dtd. 3/3/83 in response to questions asked
og _by the court during oral argument. (CE) e
: a 2/83 in response to questiqns asked by _,
the court during oral argument. (CE) aa
3/3/83. (3) o*
'27/83__|Plg. order DENYING appellees’ motion for reconsideration of
appellees’ motion for leave to file reply brief (HAP). hid
14/83. - Pil ltr. d . 7 <
| “request for re-hearing en banc" be eliminated in 1st paragraph of pan:
kre : & secctseane petition. (J)
2 22 —
“Ks if
Pat gan e >
. — S
ke x-8. oS
* me . 82 -
KORI CORP. ."vs- WILCO MARSH BUGGYS AND DRAGLINES
t recono,evers ao omer nronaa on] Fg % 4 EXTENSION Fig. Motion for: |
PatidtedteCe ia
: | DLZZE7EF mecorten Appest RE LA LS. rereoe.
Supe ABecord , No of Vou Transcript
Second Susp. Record Me. of Ve. Trerecrpt.
Third Supp. Me. of Vole... Aopekant s Bnet
: meen tf O8 OM on Aooetants Bret :
tree Of O8 OM One j
joe: Of £4098
= Record Excerpts-r- sn" Fon 1/4/83 To anne
Seon Cortied Last Lt£4f Acoetee 5 Breet
__. Briefing Notice teed. __L« “ —/e Aovelies + Bnet >
> Briet tor -
S__ Bitet tor Appetiant FARES new ~
ee Oriel for Appellant
Brief for Cr. Appetiert
‘ Bnet for Appesee ' }
. Briet tor Appetice ~ |S. CALENDAR INFORMATION
Bret tor Appe ties Sonstes
. Brief lor Cr. Appellee Sree ead
Reply Brel tor Appetiant PSP EA TIE se
Rerpenrersentes O8 OW DFO
Supp. tar Agpetant Case Cont'd tor Reassiggwnert
4 Supp. Grief for Appetes Case Reassigned for lft
ps hela | oe owoed
intervenor. Hearing Panet:
Rute 28()) etter—4ppefant Case
Argued [() by Appetart () by Appetiee —__
ee ee Case Sub. wioArg C)byAppetant (by Appetes|
6 OPINION INFORMATION
___. Opinion Rendered
a
Reversed
*; Aftd. in Pt PC. Cone. Spec.
Vacated Segnes On.
| Dierissed [| Fuse Oe. in
MISCELLANEOUS BIUNGS Fitirng:
-- Openion Withdrawn pointy
| I07T8782 Dup. Nonce of Appeal and Clerk's "
Staternent of Docket Entres z
Papers Trans. from Misc. No. 7. REHEARING INFORMATION
Order of OC Granting Appeal IFP
Affiaava of Financial Status Seimanitertineeten
0 senate rea ChAppetant ClAcpeiee OReg. 1) EnBare
Petition tor Rehearing
v= hte la nen 4 ClAppetant ClAgpetce C)Reg ()EnSene
Pettion tor Review of Order( ) of Response of
OMS MFERC OCC O Order Denying Reheanng
‘ Acphcaton tor Entorcernem—NLRB { ——wd Dissenting
<i Answer to Apphcation tor Entorcernent ——— [Opinion $9
Cross /pphcation for Entorcement 23 Bre 2 eal a al
si sriNe Saves Count Apna. Fan Costin * > BER? becca: a
8/10/83. Substitution o
counsel
9. OTHER DOCKET ENTRIES
7/28/83
10. JUDGMENT OR MANDATE INFORMATION
11. SUPREME COURT INFORMATION
a, etapa GENCE
Fig. & Entg Judgment
issg. Copy of Jdgt. to Bo & Creal.
Nonce of Appeal to S.C.
Preparing Proceedings on Cernorari
Prepanng Supp. Proceedings on Cert.
Mandate Stayed to
a. ae ee JOG. 85 Met. nad. to Clerk
Jegt as Mat Perssd. to Clerk
= C'srvssa! issd to Clerk
Transruting Ong. Exons to $.C.
Order of $.C.—Ext. to
Notice of Fig. of Cert. Pet. on
Orcerof S.C ()Demed () Gramed
ee MOCO OF Appeal Feid to Clerk
Exsrt:ts Reta to Clerk
___— Nonce of Demal of Pet. tor Reneanng
— Juagment ot S.C.
CERTIFICATE OF INTERESTED PERSONS
The undersigned counsel of record for appellants, Wilco
Marsh Buggies and Draglines, Inc., John M. Wilson, Sr., Dean
R. Wilson and Robert J. Wilson, Jr., certifies that the follow-
ing listed parties have an interest in the outcome of this case.
These representations are made in order that the Judges of this
Court may evaluate possible disqualification or recusal pur-
suant to Local Rule 13.6.1.
(1) Kori Corporation
Huey J. Rivet
Louis J. Woodson
Plaincirfs
(2) Wilco Marsh Buggies & Draiglines, Inc.
John M. Wilson, Sr.
Robert J. Wilson, Jr.
Sean R. wilson
Sefandancs
Se teksts SEsARD Ls ‘JAD ARGessasts
ral argumenc is rvaycesced due to the fact thac she issues
are of such sisnificance as =o Jeem such necessary.
STATEMENT OF JURISDICTION
This Honorable Court has iurisdiccion over this appeal pur-
-
swans to 23 U.S.C.Aas. Bhoee-
25
In the
Wnited States Court of Appeals
FOR THE FIFTH CIRCUIT ° a. a
Anns
NO. 823619
KORI CORPORATION AND
HUEY J. RIVET
versus
WILCO MARSH BUGGIES (ND DRACLINES, INC,
JOHN M. WILSON, SR. DEAN R WILSON,
AND ROBERT J. WILSON, JR.
\ppeilants
UPEAL FROM (1E USELED sPALes ils TUCT COURT
FOR THEE ss TERN GASi ich Ck LOUISIANA
LGD N, ffs Mt RT .) Coll rNS. jt DGE
ORIGINAL BIER ON PPT ALP OF
‘sl S{LCO MARSH Gf: fES Vf PR ACLINES, INC,
do 3 om JOHN M. AILS, SRL. DEAN R FILSON,
key ANU ROPERT J. FILSON, JR
Na " 4
iy NATHAN GREENBERG
“tas Greenberz & Dillan
: 4144 Secund Street
P. 2). Box 365
Gretna, Luwisiana 70054
346-6491
ATTORNEY FOR APPELLANTS
oT + om" 8, 26 ote "3 @& @
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
KORI CORPORATION §
and HUEY J. RIVET s
§
Vv. § APPEAL NO. 82-3619
§
WILCO MARSH BUGGIES AND §
DRAGLINES, INC., JOHN M. §
WILSON, SR., DEAN R. WILSON, 4
and ROBERT J. WILSON, JR. §
REPLY TO APPELLEES' OPPOSITION TO APPELLANTS '
MOTION TO TRANSFER AND STAY PENDING TRANSFER
Mi TO UNITED STATES COURT OF APPEALS FOR THE
FEDERAL CIRCUIT AND TRANSMIT RECORD BACK
TO THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF LOUISIANA
TO THE SAID HONORABLE COURT:
Now come Appellants and file this Reply to Appellees’
Opposition to Appellants’ Motion to Transfer and Stay Pending
Transfer to United States Court of Appeals for the Federal
Circuit and would show the Court as follows:
Appellees have made three ; statements in their
opposition which require a reply by Appellants. First, Appellees
suggest that 28 U.S.C. §1292(c) (2) deprives the United States
Court of Appeals for the Federal Circuit (hereinafter the "CAFC")
of jurisdiction over accounting or damages proceedings. Second
Appellees argue that Appellants have failed to timely file their
notice of appeal under Rule 3 of the Federal Rules of Appellate
27
Procedure (hereinafter "PRAP"). Finally, Appellees, apparently
aware of the weakness in the latter two arguments, ask this Court
to judicially engraft "an exception to 28 U.S.C. §1295 for patent
appeals filed after October 1, 1982 which concern the accounting
phase of extensive patent litigation..." As indicated below, |
each of Appellees’ statements is without merit, and, as requested
by Appellants, this appeal must be transferred to the CAFC.
I. THE CAFC HAS EXCLUSIVE JURISDICTION OVER APPEALS
FROM JUDGMENTS ENTERED BY DISTRICT COURTS IN PATENT ACCOUNTING
PROCEEDINGS.
Contrary to statements made by Appellees, 28 U.S.C.
§1292(c) (2) does not deprive the CAFC of its exclusive
jurisdiction over judgments entered by district courts in patent
infringement accounting proceedings. Prior to enactment of the
Federal Courts Improvement Act of 1982 (hereinafter the "1982
Act"), 28 U.S.C. §1292 provided for an interlocutory appeal from
a district court's judgment on the issues of patent validity and
infringement. The latter statute permitted an appeal to the
respective regional circuit court of appeals even though a final
judgment on all issues such as damages had not been entered.
This is the typical bifurcated patent proceeding: one
interlocutory decision is rendered on validity and infringement,
ee
and one final decision is rendered on damages. Both decisions
are appealable. Under the former law, the first was appealable
under 28 U.S.C. §1292 and the second under 28 U.S.C. §1291 to the
respective regional circuit court of appeals. After October 1,
1982, the effective date of the 1982 Act, the first is appealable
under 28 U.S.C. §1292(c)(2) and the second is appealable under 28
U.S.C. §1295 to the CAFC.
As such, 28 U.S.C. §1292(c)(2) was not intended to
eliminate jurisdiction of the CAFC over a4 final decision awarding
damages, but was intended to retain the bifurcated procedure then
in existence, and limit appeal over interlocutory decisions to
the CAFC. The legislative history accompanying passage of the
1982 Act, in pertinent part, ‘provides:
Section 125 - Section 1292 of title 28,
United States Code, currently gives
regional courts of appeals jurisdiction of
interlocutory orders of the district courts
concerning injunctions and of judgments in
civil actions for patent infringement which
are final except for an accounting. Section
125 of the Bill amends this section to give
the Court of Appeals of the Federal Circuit
jurisdiction of interlocutory appeals in
cases that will otherwise come to it on appeal.
Senate Report No. 97-275, 1982 U.S. Code Cong. & Ad. News 11, 28.
Accordingly, contrary to Appellees’ statements, the
only change effected by the 1982 Act in 28 U.S.C. §1292 was to
insure, rather than eliminate, exclusive jurisdiction in the CAFC
7
over all aspects of patent district court decisions.
II. APPELLANTS' NOTICE OF APPEAL WAS TIMELY FILED.
Appellees argue that if this Court is without
jurisdiction, then this appeal must be dismissed (subject to «a
motion showing excusable neglect or good cause) for failure to
file a timely notice of appeal with the CAFC. Appellants
disagree. FRAP Rule 3(a) provides, in pertinent part, that:
An appeal permitted by law as of
right from a district court to a court
of appeals shall be taken by filing a
notice of appeal with the clerk of the
district court within the time allowed
by Rule 4.
There is no question that this requirement was met by
Appellants. However, Appellants erroneously indicated, contrary
to FRAP Rule 3(c), that this appeal was to be taken to the Court
of Appeals for the Fifth Circuit, instead of the CAFC. Case law,
prior to enactment of the 1982 Act, provides that the failure to
indicate the proper court to which an appeal is to be taken is
not the type of defect that should result in dismissal of an
appeal. Instead, the appeal should be considered to have been
timely filed and then transferred to the correct court. In
Graves v. General Insurance Corp., 381 F.2d 517 (10th Cir. 1967),
the court determined that appellant's notice of appeal was
adequate although it specified that appeal was being taken to the
Supreme Court of New Mexico instead of the Tenth Circuit.
:
Appellant's notice of appeal in Trivette v. New York Life ins.
Co., 270 F.2d 198 (6th Cir. 1959) which specified that appeal was
being taken to the “Federal District Court of Appeals for the
Sixth Circuit" instead of correctly indicating that appeal was
being taken to the United States Court of Appeals for the Sixth
Circuit, did not affect the Sixth Circuit's jurisdiction.
Appellants submit that all jurisdictional requisites
were satisfied by timely filing the notice of appeal with the
clerk of the proper district court. The failure to indicate the
correct court of appeals should not be considered a
jurisdictional defect. This position is supported by Rule 1(b)
of the FRAP, which provides that the FRAP rules are not be
construed to limit the jurisdiction of the courts of appeals and
Rule 2, which provides that a court of appeals may suspend the
requirements of any rule, such as Rule 3({c), on application of
any party or on its own motion.
Further support for Appellants’ position is found in
the 1982 Act. On October 1, 1982, Section 301 of the 1982 Act
provided for enactment of a new statute, 28 U.S.C. §1631, which
provides:
Transfer to cure want of jurisdiction
Whenever a civil action is filed in a court
as defined in section 610 of this title or an
appeal, including a petition for review of
31
administrative action, is noticed for or
filed with such a court and that court finds
that there is a want of jurisdiction, the
court shall, if it is in the interest of
justice, transfer such action or appeal to
any other such court in which the action or
appeal could have been brought at the time
it was filed or noticed, and the action or
appeal shall proceed as if it had been filed
in or noticed for the court to which it is
transferred on the date upon which it was
actually filed in or noticed for the court
from which it is transferred.
Congress foresaw that problems might arise from the creation of
specialized federal courts such as the CAFC and provided a
vehicle for resolving these problems in the form of the latter
statute. This statute employed broad language to accomodate any
such problem. The Senate Committee Report explains:
TITLE III - JURISDICTION AND PROCEDURE
Transfer of Cases
In recent years much confusion has been
engendered by provisions of existing law that
leave unclear which of two or more federal
courts including courts at both the trial
and appellate level - have subject matter
jurisdiction over certain categories of
civil actions. The problem has been
particularly acute in the area of admini-
strative law where misfilings and dual
filings have become common place. The un-
certainty in some statutes regarding which
court has review authority creates an un-
necessary risk that a litigant may find
himself without a remedy because of a
lawyer's error or a technicality of
procedure.
Senate Report No. 97-275, 1982 U.S. Code Cong. & Ad. News ll, 21.
Id. at 30.
At present, the litigant's main
rotective device, absent an adequate
transfer statute, is the wasteful and
costly one of filing in two or more
courts at the same time. This puts
increased burdens on the courts as
well as on the parties.
Although most problems in this regard
relate to controversies involving the
district courts and the court of appeals,
there also have been cases involving the
Court of International Trade, and the
Temporary Emergency Court of Appeals.
Therefore, the language of Part A of Title
IIz= is broadly drafted to permit transfer
between any two federal courts.
Further, the jurisdictional section of the
CAFC should be read with section 301 of the
proposed legislation. This latter section
allows any Federal court which lacks juris-
diction over a matter to transfer the
complaint or appeal to a proper court, in
the same manner as if the complaint or appeal
had been filed in that court in the first
instance. This provision, therefore, will
allow the CAFC to transfer cases to the
proper circuit court, or vice versa.
Section 301. - Because of the complexity
of the Federal court system and of
special jurisdictional provisions, a
civil case may on occasion be mistakenly
filed in a court - either trial or appellate -
that does not have jurisdiction. By the time
the error is discovered, the statute of
limitations or a filing period may have ex-
pired. Moreover, additional expense is
occasioned by having to file the case anew
in the proper court.
Section 301 adds a new chapter to title 28
that would authorize the court in which a
case is improperly filed to transfer it to
a court where subject matter jurisdiction
is proper. The case would be treated by
the transferee court as though it had been
initially filed there on the date on
which it was filed in the transferor court. ~
The plaintiff will not have to pay any
additional filing fees. This provision is
broadly drafted to allow transfer between
any two Federal courts. Although most
problems of misfiling have occurred in the
district and circuit courts, others have
occurred in the Court of International
Trade and the Temporary Emergency Court of
Appeals. Some others may occur in the
Court of Appeals for the Federal Circuit.
The broadly drafted provisions of section
301 will help avoid all of these situations.
Id. at 40.
This is not a frivolous appeal. The trial court made
serious errors of law, as well as fact, which require reversal in
this case. Appellants' original counsel, Nathan Greenberg, was
not a patent attorney and apparently was not aware of the 1982
Act. Appellants’ present counsel is a patent attorney and has
closely reviewed the record and the trial court's opinion.
Serious errors of law abound. Appellants' rights should not be
affected by errors of previous counsel. The CAFC has exclusive
jurisdiction, and this appeal should be transferred - not
dismissed.
rit. THE CAFC HAS EXCLUSIVE JURISDICTION UNDER 28
U.S.C. §1295; THIS COURT SHOULD NOT RETAIN BY JUDICIAL FIAT
JURISDICTION THAT CONGRESS HAS VESTED WITH THE CAFC.
Appellees, recognizing the weakness inherent in their
earlier arguments, request that this Court extend its
jurisdiction beyond that allocated by Congress and judicially
create an exception to 28 U.S.C. §1295. However, Congress has
spoken and specifically directed that the CAFC take exclusive
jurisdiction of this appeal. Further, the legislative history
accompanying the creation of the CAFC cautions the Federal courts
against expanding their jurisdiction by judicial fiat and, in
pertinent part, provides:
Before discussing the court's jurisdiction,
it needs repetition here that the Federal
courts are courts of limited jurisdiction.
There is no presumption in favor of jurisdiction,
and the basis for jurisdiction always must
be affirmatively shown. It is not sufficient
that jurisdiction merely be inferred argu-
mentatively. See, e.g., Hanford v. Davies
163 U.S. 273 (1656). Thomas v. Board of
Trustees of Ohio State Univ., 195 U.5. 207
T1904).
28-29.
The Committee is concerned that the exclusive
jurisdiction over patent claims of the new
Federal Circuit not be manipulated. This
\“
measure is intended to aileviate the serious
problems of forum shopping among the
regional courts of appeals on patent claims
by investing exclusive jurisdiction in one
court of appeals. It is not intended to
create forum shopping opportunities between
the’Federal Circuit and the regional courts
of appeals on other claims. ;
Id. at 29-30.
The Committee intends for the jurisdictional
language to be construed in accordance
with the objectives of the Act and these
concerns.
Id. at 30.
Accordingly, this Court should strictly construe its
jurisdiction and transfer this appeal to the CAFC.
CONCLUSION
Congress has established a new court, the CAFC, and
granted that court exclusive jurisdiction over all patent
appeals. The CAFC was created to eliminate forum shopping and
bring about uniformity of decision in patent cases. Continued
decisions by regional circuit courts of appeals will defeat
Congress' purpose. The triggering event for the CAFC's
jurisdiction is the filing of a notice of appeal in a patent case
after October 1, 1982. Congress envisioned the possibility that
with specialized Federal courts, an appeal might be filed with
—~,
the wrong court and imate U.S.C. §1631 to resolve any such
problems. Pursuant to 28 U.S.C. §1631, this Court should
transfer this appeal to the CAFC.
WHEREFORE, PREMISES CONSIDERED, Appellants pray that
this Court grant Appellants’ Motion to Transfer and Stay Pending
Transfer to United States Court of Appeals for the Federal
Circuit and Transmit Record Back to the United States District
Court for the Eastern District of Louisiana.
e Respectfully submitted,
ae <7 A
Wed Ly Conley
BUTLER & BINION
Allied Bank Plaza
Houston, TX 77002
(713) 237-3195
ATTORNEYS IN CHARGE FOR
APPELLANTS
ee
CERTIFICATE OF SERVICE
The undersigned hereby certifies that 4 true and
correct copy of the foregoing REPLY TO APPELLEES' OPPOSITION TO
APPELLANTS' MOTION TO TRANSFER AND STAY PENDING TRANSFER TO
UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT AND
TRANSMIT RECORD BACK TO THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF LOUISIANA has been forwarded to attorney in
charge for Appellees, Mr. Thomas S. Keaty, Keaty & Keaty, 1818
laternational Trade Mart Building, 2 Canal Street, ee ae:
LA 70130, by first class mail, postage prepaid, this E-day of
August, 1983. ee
263/4333/P
SHA! NOISNOI:
— —
COOLL
512 561 FEDERAL SUPPLEMENT
APPENDIX I1]—Continued
contempt. Rather, out of deference to the
Legislature of the State of North Dakota,
and its financial responsibility to the people
of the State,
IT IS ORDERED that:
1. Plaintiffs shall receive interest on the
fees and expenses previously allowed
at the rate of 14% per annum from
the date of allowance until paid.
2 Plaintiffs shall receive as additional
allowable expenses, al] lawful interest
paid or incurred by their counsel to
loaning agencies for operational loans
made in an amount not exceeding the
principal sum, from the date of allow-
ance of the fees until payment of the
full debt.
IT IS FURTHER ORDERED that as pre-
vailing parties, Plaintiffs shall receive their
costs and attorneys fees in this contempt
tiffs shall be entitled to a writ of fieri
facias directed against the appropriate offi-
cers and for satisfaction of the amounts
KORI CORPORATION and Huey
J. Rivet
¥.
WILCO MARSH BUGGIES AND DRAG-
LINES, INC, John M. Wilson, Sr., Dean
R. Wilson, and Robert J. Wilson, Jr.
Civ. A. No. 79-3636.
United States District Court,
ED. Louisiana.
Dec. 11, 1981.
On Damages Aug. 30, 1982.
Plaintiffs brought an action alleging
infringement by defendants of patent No.
good-
id; (3) plaintiffs
damages for the lost profits on the infring-
.———
oe ee
KORI CORP. v. WILCO MARSH BUGGIES AND DRAGLINES 513
USCA. § 108. Belief by defendants of noninfringe-
ment or patent invalidity based upon care-
6. Patents = 26(1') less disregard of the facts is not good-faith
FE ge ti pearene es eS oe tat
A have willfully infringed. 35 U.S.CA.
separately in the prior art. re 4
6 Patents ¢=72(1) On Damages
:
<
-
~
>
f vo.
3 3 %
oa
Tt
xy
*
ts
* hae oe
invention by incorporating its imnovative machines sold by defendants for use outside eS |
concept and, albeit with some modification of the United States, measured by defend- ae
and change, performs substantially the ants’ profits on sale of the infringing units, ee <>
way to achieve substantially the same re- which defendants rented for a profit. 35 $$.
sult; “doctrine of equivalent” shields inven- USCA. § 271 Ed.
tor from such abuse. 35 USCA. § 271 15 facorest om39(2) ag &
%. Patents = 226.5 In patent infringement action, plain- Se a
Minor modification does not avoid in- tiffs were not entitled to prejudgment in- “3
fringement. 85 U.S.CA. § 271. terest in addition to lost profits damages in ree
10. Patents ¢=325.11(3) view of uncertainty as to the date when EF
Reasonable attorney's fees are awarded interest should begin to run. i=
in patent infringement actions only in ex- 85 USCA. § 271 rs
4
4
:
oe table ,
tiff’s patent. 85 U.S.CA. § 285. tiffs were entitled to attorney fees
IL. Patents ¢=317, 325.11(3) costs in the amount of $28,948. 356 U.S.CA.
Patent No, 3,842,785, entitled “amphib- § 271.
ious marsh craft,” was willfully infringed 17. Patents ¢=319(3)
by defendants where they copied essential In patent infringement action, plain-
a. fs Pp oa
Ne SAL NOIsnoi:
CO0L{
MEET: Peer we. -
or egtee & tw epee
“om
: « & wweteye i
cea te te lint ia le POA kh A LEED LEN EAR CLOTS, bb PEEL AI ES FFE Te a Re eed
- . . - eo”
514 561 FEDERAL SUPPLEMENT
consisting of doubling pecuniary damages
awarded for lost profits on sales and rentals
Thomas S. Keaty, New Orleans, La, for
plaintiff.
Nathan Greenberg, Gretna, La, for de-
fendants.
OPINION
ROBERT F. COLLINS, District Judge.
wholesale, retail, and use of the “Amphibi-
ous Marsh Craft” patented by Rivet U.S.
Letters Patent 3,342,785 (hereinafter
et "785 patent).
2
The complaint asks judgment of Seven
Million and no/100 Dollars ($7,000,000.00),
trebie damages and interest, attorneys’
Defendants answer, inter alia that:
(a) the patent in suit is invalid because it
was issued in violation of the requirements
of 35 U.S.C. §§ 101, 102s) and 102(b);
(b) defendants do not infringe the patent
in suit; and
(c) defendants did not obtain by unfair
(a) the patent in suit was fraudulently
procured in violation of 15 U.S.C. 1 et seq.;
(b) by attempting to assert rights under
an illegal patent, plaintiffs have violated
the anti-trust laws;
(c) the illegal actions of the plaintiffs
have damaged defendants in the amount of
$1,500,000.00, which defendants ask to be
trebled pursuant to the anti-trust laws; and
(d) the allegations of obtaining trade se-
crets by unfair business practices have li-
beled defendants and entitled them to dam-
ages in accordance with law.
5.
Trial by jury has been waived by plain-
tiffs and defendants.
Est
Ege
rR
wv? ‘ oh ad ‘yy Ase
. - - * * > s : ~
. > x : te ove : Nhe .
~ Soe Hts Se eeee A nts Mids a hlta aed ee oe «Tah agp om > 4) peat ne id 4 any tant Anahe aed be + bee 3s. Lt ak. tet. ch]
¢ ¥ —" dowel - sy 7 ae . bok ig ‘ v4 ard hy he "SEAN se Aly
_— hp teabe 0 daw baprar) &-4a abe opm > & “ea eter = ar Ogee > be 00 * sted $e whew ee + (sy ts rhs be MPs pa 4 ~4u Bl
quettngeeeumgnretthaghenth pane mee relete —~ ney a. aoa ~ Se nach teat at & ty 9 &: 7? 2 we « . tail Py Pe
—— oo 96 Oe wees one--+-pb- apie Doapietion ~ ts . -- a” “> . es SAG Gia
-- o—_s ee - o- —_ co —
——— © : J
< }
____,, ACLIED Bang p: -
gugzitize i gtgassazaey : :
side Tne if inh vit
(tel Hy ie 1 A ii e Alpe AT
HA Het HT He Hie i
litte ai athe tah nf
tee Hit ee fee HHUA ani lin 2
; =. f 6.4 fittppasa
ni i it i ii tt aca
: af B i rue ei ait it i
Lili ft li tH at é at it Fit
561 FEDERAL SUPPLEMENT
516
HH ih
Tea het a
if iif i Hu iiss iat Bal afhip
i: HY HAH UAH sank -THn Hie ii]
ULM LTH Pet
we! Uk
‘Hult Ht va “ti iit i il
ag Ls 3 i i ile 7 fh itis il,
Hill Hie Ln Hit Hn HE i
“WUSTON, TEXAS 77002
Se EL: E
ee ’ — Or eres
y > ist aii nll; oe bqsege He
as it ith ih if
jad Hl tid Hilt Na bit
ial ae Hea vat“ “Tn
i ils da é Hi ii Hy He Lan i
CMe Le ny mete Ina
ail { alt ily Hi ill
: eT it ih ial Veni, iH
a a at ile ning i ina
qiies etlne bay ah nH EB
; v« ‘
CN pe het Feet nef ape et ey + Op~ sadenggptincn bs
: scses Ne
A-—e 7 8
‘n+
~~
i
fi!
518 561 FEDERAL SUPPLEMENT
con
The Rivet invention is structurally superi-
or to the Reynolds marsh craft for three
ressom:
(a) vertical bulkheads spaced along the
length of the pontoons, adding to the rigidi-
ty of the pontoons and creating a plurality
The Patent Infringement
Robert J. Wilson, Sr., father of the three
iudividual defendants, was employed in ear-
ly 1974 by Rivet as a contract welder.
50.
As a contract welder for Rivet, Robert J.
pty e bas bene. , AF te | ye ea telnodea aa ges i Manse Stat tothe eter eS Tah he on ae et Spier Thea tp +
ern e Resale tah on 42 nib Naudh Adele va phos Bfrtechasre 7 eney t ye Ae oF 9 wo: Pegg Oe ower
3 mh ne eran Ss a YTS OS EY
e pote
y “ag? . “
. s- Te et carey se ee ewer. “ — ; p , .
e- nee) = oes ot ~ ~ even 7 . >" “ at, bxal oy
ee ee ee ee ee ee en - ‘- *@ «° . : ' wh, ote, a a vas ‘- ;
*
BUTLER @ BINION
ALLIED BANK p: -
>
ak |
519
he had Te
64.
Following the filing of this patent in-
nee
Boe al
Pertonne:
Peron me:
z
I
i
:
,
:
|
($1,000,000.00).
fered” Woolson a chance to buy him out for Bucyrus Erie
approximately One Million and no/100 Dol- Backhoe
F i
Hig Tipe pip te a
Hite, dial ately
Ad We yeep 3 ial $ ‘tant. 3.5
Miae ube fh it mi il
f SHITE its ey: HH lial 3% Wa
Nee ee TT me isi
+ atl ih i a EME 3 i le
it eee ia eat
ELLE TEL 8 2338 :
3 qipsteal [sii ify ved hit fe é visdaatt
§ a Het Ee | aids PHT HTL
Corp.,
i
:
f
i
é
i
:
E
"8
a
*
g
z
¢
z
ss
Calgon
1975).
:
:
:
L.Ed.2d 572 (1966); Gaddis v.
506 F.2d 880, 884 (Sth Cir.
ee Cee $5 U.S.C.
v
-— ~
13.
Company v.
[6] Anticipation is a technical defense
L.Ed.2d 784 which must meet strict standards Uniess
Co., 388 U.S. all the same elements are found in substan-
15 LEd2d 545 tially the same situation and united in the
195; Hughes Tool Ca. v.
Co., 437 F.2d 1106, 1108 (Sth
denied, 408 U.S. 918, 91 S.Ct
in a single prior art reference, there is no
at
Rand
8s
“
Let
BS.
v. Cole, ‘ame way to perform the identical function
y
Ine, 425 U.S.
47
Compan
:
He ‘EE
r’
a csage ,
oer (ee er om ~~
TT ee we
Lehh at rx : Sabres Seats ane 3S ?
; prey oi Teh a4 vaya
a ini
stead “
nae
Hil A
th
up
i a
; aii!
©
ha ee? hie >
by clear
psi es vem ae f m
of the patent in suit was anticipated by
Southern Implement
v. McLemore, 350 F.2d
silica a
143 U.S. 275, 284, 12 S.Ct. 444, 447, 96
artof LEd 154 (1802),
and
party hrm perry fod
‘
3nf
a
i HAR
jie AE
oe a ne ty i; yids
as ball J be Lae “y Ht a3 : F gale’
Het y [lnm pale Gli |
ed a viel: aie lini i
a5* EE “greases? af geet a
Ai HERE uel
: S°g<h = 4
A Hike HE co dl i i
he HHT HHH Tt alt
a ithe ctlaie eniined li SHG: i
TIOUSTON, TEXAS 7rog2
Site Hy id ii
THE ety [ aa Ha int
giksiy AT Petia aT iL: i; 1} i
HHP beet lieth ulin Hit
eat tee Tbe ae
TH so Gaga arin it i
tila Wis dy pty Gees fan
Tee Ee cEdef py it i
Wie if deg Wits utile
Hut it ; Yay at fish ays HERE
ee AR bet
i HEE Ht “is
OO ee ee me ~~ ae . , -. a ma :
TE eee cee
ey Re it ed tenes
i alse Wilh piel pe angi fps
ae wg
fi tH i li LATA il i
lestf 4333 dit H. Ht
3 mitih inp HIE ne Hs
fete oH :
cee
I; i : etl i Ht th
g Plies
TSA ns Hi
i
; Ha
eee ite laaietins |
ae : Hit : a Ht Halil si
é Th iti i {2 pie: Pe Stes
He He ile HE ale
Hi
(Cite as 061 F Supp. 512 (1981)
. y. WILCO MARSH BUGGIES AND DRAGLINES 525
. the plaintiffs
. WF ii
i : igi fas? plist
HA dtl He +H
ul Leer EHC ey wid Had HE
aT ALLE EE
rbriglasdad 3
: é 33 if Et Hi
Tau leet
Hi ig eal al ok
ltt eile all uUBtU EET ly
vc si ' ttle eee Mi i
iain ie pratt a
Hy ae +h al H | itt plat; HH Gt if ;
a Mista TRH lieth :
ap enat ; Tila “Bs Linh
WaT IHTHE ue Ny
as HAT THT Hh
WW
2
a Ris Aelillaty me thee, Sie?) ANS. ie Oe Ee ee ee ee ee
aoe
a
FAUY eR ELE
FA ear Ce
hee cintli RTH Fait i =
ST TH EET ee sft flit ra
aE 13 Hil i ih Hilt ud i Wel lift
: if Ut ial i Hi He ant iia a ce
itt Hetil Hedi tilt Ha
rage Hf a2 95% sta 1: spP iat Hat
tt nae i Ha al Wat lh Ltt HLH
na F it i atl th Hi iit HH
TES eff itt EE aii ii aa it
rat nell i ia it
ace ptang CAAT HF it Ht HH yal He u
aa bel Hie HI tt
abate Rett ie illh
“MOUSTON, TEXAS 77990
HOY Rene oe meme. rere te Bre) ~
“ee *. © @ es .
Aeon
Gye yt Geeadgat Jee’ ceaedgpa Aspege ape
GE ed lian In
it i i Ha it
adage: Mad hpdiyaee ag Hi i
alla HTH i ea titted eT Hl tH
HY Ht fiiit, Heer 3 He 225554 ib SBes TART
hte tT Ait di [ 153 afin it
Pattie ait Hipuuayeies
: ne HH lt Att i Hee aie A : it
Hi Ht
Tu HTH THEE eal ti
es cially hi: igeis Sipheqises hy 34 143
at tt | HH th Hi
ee a
#945 #3 HE 3
i Het ar HAE HEHE HH Lape rt
DUAL aciep genni ee
: THM itaGe LE ili F i
tl UE ATH HA yiel at at
Ce AIA et iH
sisseeL THE iit WT gan Puente UP
rt
5 PS
ak be |
E
. - |
he
me
Se
~
wy
3 cersaaessazine i 3 3 si4y + satay
TIRE an rit “tila
eee ain
Unda ee ape lint
at elbeenalli iy rte; aiyys aap
luli a niin
THI WT HEELS iia:
Tt i] i |
hie HA AH
Hair iF H Hyreisd] aya
Ht dc een I
ia
APPS HIM re Eo etre i hit
a i Hi a iui Hl
He HUET iti jreseletiael gayle it
Ee hds ip rf : HUET ili tlie REET
SHEET TET Reet Te :
: inital thay elit all ii il en ia i
alti ips HIRT prtaliay iat if i FBT Hi
fee an
AP cH (SEH HEH agar eaageeead Tes Le
59
HT Hal GIN
ued if ti lat
tt Ladi if if :
ih a Hh i tel i
hail na
i i Lat i
HH Ht ital eine i
Hi LEE HHRMA Et
a
of the Rivet machine can be imputed to the
stead eee ee oe
pea: caldera neh
it
fF nit
Cite as 551 F.Supp. $12 (1981)
to manufacture tiffs may recover directly against the do-
:
ial
H
AHH
KORI CORP. v. WILCO MARSH BUGGIES AND DRAGLINES 533
nile i
te il
gbesfatasg, dipdke 2, Gf 8
hee aul io Eady
sgh erie i | ae ee
: : f gp ljeite #3 i? | dad =}
ian ) us ede dja fll (lf
HHT LH ea a aget def
‘ iE > Are TH
iret foi 8 thifin
Hi BE ui,
te - + Ts 1 wil
HBET : rite
"HOUSTON, TEXAS 77090
feder-
edhe sem
in par-
ee
alism were directly
doctrine applied, and (2) diff
ARE
Fer pebeen st Gtutdd motica to
rae ager sorely ine pate!
oo
be
ties to state and federal suits did not
KORI CORP. v. WILCO MARSH BUGGIES & DRAGLINES 151
| Cite as 708 F.24 151 (1963)
[7,8] Because Fisch) succeeded in locat- :
ing the credit bureau and securing a copy of KORI CORPORATION and [luey J.
| the report in short order, the district court Rivet, et al, Plaintiffs-Appellees,
|
determined that. he could not have suffered -_
any actual damages. That does not end the :
inquiry before us. Even where no pecuni- WILCO MARSH BUGGIES AND bat
ary or out-of-pocket loss has been shown, _ DRAGLINES, INC, et al, |
the FCRA permits recovery for humiliation Defendants- appellants. 4s
and mental distress, Thompeon v. San Anto- No. 82-3004. ie,
alo Rotel Metant Seth. See FS ee ON CES Fame f
ports, Ine., 528 F.2d 829 (8th Cir.1976); see Fifth Cireuit. x
Evers v. Equifax, 650 F.2d 798 (Sth Cir. June 27, 1988. :
1981), as well as for injury to one’s reputa- ’ :
| tion and creditworthiness. Bryant v. TRW, ;
Plaintiffs brought action alleging in- eS
Inc., 689 F.2d 72 (Sth Cir.1982) (citing Rep- ,. : a
resentative Sullivan’s remarks, set forth at gy by defendants of patent No. x
* 116 Cong.Rec. 36570 (1970). Negligent °°42785, amphibious marsh is
noncompliance with the FCRA entities the ‘Taft snd. defendants counterclaimed
' consumer to an award of actual damages alleging that patent was invalid. The Unit-
and reasonable attorney's fees, 15 USC. .. ~e
noncompliance in additic District of Louisiana, Robert F. Collins, J., ;
voce dau Nakina Sie actnes aes 561 F.Supp. 512, entered judgment for ; a
| Section 1681n(2). See Bryant v. TRW; Plaintiffs, and defendants appealed. The ij
Thornton v. Equifax, 619 F.2d 700 (8th Seatakgpets, Bil, Cah Sates belt
Cir.), cert. denied, 449 U.S. 835, 101 S.Ct
, Fe ier a™ gies ie
tev athe freee Tar tery tine ae
s) ao Phe * A . =
." ?
| and Other Users of Consumer Credit informe- tian, 89 Banking LJ. 410, 423 (1971).
152 78 FEDERAL REPORTER, 2d SERIES
work in same way, there is no patent antici-
pation, 35 USCA § 102(a).
misied and has meaningful opportunity to
compere pertinent prior art. 35 USCA
§ 102. me
IL Patents ¢=26(1%)
g
R
rt
tips
ili
A
i
i
Hi
Bf
Kt
Ht
: H
Tust
gistic
‘heth-
parts.
ments
sepa-
effect
> eraft
rrying
rough
{ obvi-
vatent-
ide its
parent
iffered
w first
carry-
periods
nnova-
ious to
erefore
“®@
e which
rads for
wp-filled
ing sub-
jon and
but cos-
senberg.
ots
ty, New
‘
District
KORI CORP. v. WILCO MARSH BUGGIES & DRAGLINES
Cite as 708 F.24 181 (1985)
Before TUTTLE*, POLITZ and GAR-
WOOD, Circuit Judges.
POLITZ, Cireuit Judge: .. =
The discovery of oil and gas deposits be-
neath the marshes and swamps of the Gulf
South opened vast vistas, offered many op-
and called for a ‘host of new
stump-studded swamps,
and pressing need In 1974,
by defendants’ vehicle. We affirm.
Facts
unite!
al
eit
behsaiai :
cERRLETS §
cea
ayeete
:
<8 BF
Hid
aS
Hin
ele
Exe
3
5
of
a
.
[2-4] To be patentable, an invention
must be novel. 35 U.S.C. § 102 The de -
Yense of anticipation, derived principally —
Co., Inc., 578 F.2d 74 (5th Cir.), cert. denied,
440 U.S. 960, 99 S.Ct. 1508, 69 L.Ed2d 774
(1978). Indeed, “unless all of the same ele-
ments or their equivalents are found in .
substantially the same situation where they ©
do substantially the same work in the same ©
way, there is no anticipation.” Continental .
Oil Co. v: Cole, 684 F.2d 188, 195 (Sth Cir.)
(footnote omitted), cert. denied, 454 US.
830, 102 S.Ct. 124, 70 LEd2d 106 (1961).
[5] The district court found that Wilco
failed to establish the existence of any prior
art which disclosed all or substantially all of —
the elements claimed under the Rivet pat-
ent. Although Wilco argues that prior pub-
lie use involved vertical bulkheads, spaced ©
I-beams, and support blocks, there is no
that all three elements were
found together in any previous unit. Fur-
ther, many of the prior uses Wilco urges are
in fact found in somewhat similar but djs
tinct situations, such as airplane pontoons.
- negate novelty.
that the Rivet patent was anticipated in the
prior art
FaRGTTS SEE
ro
-
BES
#
"
FREaEE
HE SedE PEgHiTA
4
g
li
a
'
y disclosed, or that the Patent
Office failed to consider, relevant prior art
sufficient to cast doubt upon the patent's
validity.
2 Obviousness
patented and the prior art are such that the
invention “as a whole would have been ob-
3. Moreover, the record supports an inference
that one of these elements—Rivet's pontoon
structure—was itself unique and nonobvicus,
,
i ot
\ -
— To or >
ot Ste
wenbasns Hoek ED es ant eT AN INES
ui
a
fA
fi
i
HN
rineies
} te H
In Tue
United States Court of Appeals
For Tue Firrn Ciacuit
Appeac NO. 82-3619
Kori Corporation, Huey J. River
AND Lours Woopson,
Plaintiffs-Appellees,
Vv.
=
WiLco MarsH BUGGIES AND DRAGLINES, INC.,
Joun M. Witson, Sr., DEAN R. WILSON
AND Rosert J. WILSON, JR.,
Defendants-Appellants.
eee
REPLY BRIEF FOR DEFENDANTS/APPELLANTS
Nep L. Conley
JerFrey W. TAYON
BuTLer & BINION
Allied Bank Plaza
Houston, Texas 77002
(713) 237-3195
Attorneys for
' Defendants/Appellants
oo
68
Vi.
Vil.
Vill.
POPU cicscceccccesccoeeeeecceces
KORI, THE NON-EXCLUSIVE LICENSEE, |S
NOT ENTITLED TO JOIN IN THE
PROSECUTION OF THIS ACTION, SHARE
IN ANY DAMAGES OR ESTABLISH
—— BASED UPON LOST PROFITS TO
one, AND WOODSON ARE ENTITLED
ONLY TOA REASONABLE ROYALTY ......
DUE TO THE AVAILABILITY OF NON-
INFRINGING SUBSTITUTE PRODUCTS, A
“LOST PROFITS” THEOR”’ OF DAMAGES
CANNOT BE UTILIZED ..............000e00.
DAMAGES CANNOT BE COMPUTED BASED
UPON PROFITS GAINED BY THE
INFRINGER BUT ONLY PROFITS LOST BY
FOG PENI Cbd cbeeicccrdvcccccccss
THE AWARD OF EXEMPLARY DAMAGES
AND ATTORNEY FEES WAS NOT me
ey Sy ee eer
A. EXEMPLARY DAMAGES................
(1) ERRORS OF LAW ..................
(2) THE “WILLFULNESS”
DETERMINATION WAS BASED
UPON CLEARLY ERRONEOUS
POEAE SESS dbWebs csi venddecsovece
ek ee ae
THE INDIVIDUAL DEFENDANTS, THE
STOCKHOLDERS AND OFFICERS OF THE
CORPORATE DEFENDANT SHOULD NOT
HAVE BEEN FOUND PERSONALLY LIABLE
PRs OUI G00 ck Coduncccvecceccnccce
QC hon 65 sAseb Soa baccccccencccecs
69
LIST OF AUTHORITIES
PAGE
Agrashell, Inc. v. Hammons Products Co., 352 F.2d 443 (8th
Cir. ane bal ObROOs Velen bum nat bbb) 0O84sd bacdchases 6% 2,5
Aro Manu Co. v. Convertible Top Replacement Co.,
377 U a16 (1564 dpabwtheevekeCotaddeeenccboceeces 6, 11, 16
An One 1 v. Geo. W. Ashlock Co., 339 F.2d
Oth © DT cUstins atest Ridaddbvetvrccesss 1
Baumstimier v. Rankin, 677 F.2d 1061, 215 USPQ 575 (Sth
Coie SOA MOL thos chide Shas Ftsdabnks cwisedenads 6, 11, 15, 16
Besley-Welles . V. Balax, Inc., 291 F. Supp. 328, 160
USPQ 265 ( . Wis. 1968), aff'd, 421 F.2d t 809, 821, 164
USPQ 485 (7th Cir. 1980) cert. denied. 399 US. 911
[FUE oc canbb das anbbagebek beuewahtahcaveecsvccccec: 21
Birdsall v. Coolidge, 93 U.S. 64 (1876) ............200005. 13, 15
L. L. Brown Pi Co. v. Hydroiloid, Inc., 32 F. Supp. 857,
44 USPQ 655 (S.D. N.Y. 7959), afd, 118 F.2d 674 (2d
Ch Gre ienditesebbbcatheddwednesst seee phncnccecs 3,5
Coupe v. Royer, 155 U.S. $65 (1894) .......... yt ee een 6, 13
Creamer v. Bowers, 35 F. 206, (3d Cir. 1888) .............. 7
Crown Die & Tool Co. v. Nye Tool & Machine Works, 261
ele SEY 4 Ndso sos cade teecdsladesdnesaceeses s 2.5
Dangler v. Imperial Machine Co., 11 F.2d 945 (7th Cir.
Fees cc checedt taste athtaacitidlensicsbsccess 20, 21, 22
Ellipse Corp. v. Ford Motor Co., 461 F. Supp. 1354, 1379,
201 USPQ 455 (N.D. Ill. 1978), aff'd, 614 F.2d 775 (7th
Cir. 1979), cert. denied, 446 U.S. 939 (1980) ............ 7
Eltra . Vv. Basic, Inc., 599 F.2d 745, 202 USPQ 630 (6th
Cir. 1979), cert. denied, 444 US. 942 (1979) ............ 16
Foster v. American Machine & Foundry Co., 492 F.2d 1317,
1321, 182 USPQ | (2d Cir. 1974), cert. denied, 419 US.
SOD CO Caeser bees abcde md ebak kk cdvbeac cecces 6, 11
Gayler v. Wilder, 51 U.S. (10 How. 477 (1850) ............ 2.5
Pacific Corp. v. United States Plywood Corp., 243 F.
Dee, SE es FU BOO hone ccpcvececcvinvevsccvce. 11,13
Graham v. Jeffroy Mfg., Inc., 253 F.2d 72 (Sth Cir. 1958)... 11
Hughes Tool Co. v. F. W. Murphy Industries, Inc., 491 F.2d
923, 180 USPQ 353 (Sth Cir. 1973) ....................
Kori Corp. v. Wilco Marsh Buggies and Draglines, Inc., 561
F. Supp. 512 (E.D. La. 1981) ........ te 12, 13, 14, 16, 17, 19
70
Lear v. Adkins, 395 U.S. 653 (1969) .......... 60 eee eeees 22
Maloney-Crawford Tank Corp. v. Rocky Mountain Natural
Gas Co., Inc., 494 F.2d 401, 181 USPQ 617 (10th Cir.
i SPP er ee Se Oe PRP Re here 2
Mead Johnson & Co. V. Baby's Formula Service, Inc., 402
F.2d 19, 159 USPQ 328 (Sth Cir. 1968) ................. 19
Milgo Electronic Corp. v. United Business Communications,
Inc., 623 F.2d 645, 206 USPQ 481 (10th Cir.), cert. denied,
OGD UTA TE Gir has sakahios’ cvecde csctevcdvesesces 7, 8, 16
New England Fibre Blanket Co. v. Portland Tele , 61
F.2d 648, 15 USPC 217 (9h Cir. 1932), cert. ied, 289
US. TSS (IDS) «co sccccccccccccaccecgs ep SSesaccedurece 13
Overman Cushion Tire Co. v. aon Tire & Rubber Co..,
59 F.2d 998, 14 USPQ 104 (2d Cir. 1932)............... a,'3
Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., $75 F.2d
1152, 197 USPQ 762 (6th Cir. 1978) .......... 0.6 eeeee. 7,8, 11
Philadelphia Brief Case Co. v. Specialty Leather Products
Co., 145 F. Supp. 425, 111 USPQ 180 (D. N.J. 1956) ..... 3
The Pope Manufacturing Co. v. The yas! & Jeffrey
Manufacturing Co., et al., 144 U.S. 248 (1892) .......... 2
Powder Power Tool Corp. v. Powder Actuated Tool Co., 230
F.2d 409, 108 USPQ 155 (7th Cir. 1956)................ 21
Rawlings v. National Molasses Co., 394 F.2d 645, 158 USPQ
Pe Be Pe ee A ee eee
Schreyer v. Casco Products Corp., 97 F. Supp. 159, 88 USPQ
515 (D. Conn. 1951), aff'd as modified on other grounds,
190 F.2d 921, 90 USPQ 271 (2d Cir. 1951, cert. denied,
S50 URE. DER COs cc ea cd hen Glow een eek easc tees. 21
Seymour v. McCormick, 57 U.S. (16 How.) 480 (1853) ..... 14
Switzer Brothers, Inc. v. Byrne, 242 F.2d 909 (6th Cir. 1957) 3,5
Trio Process Corp. v. L. Goldstein's Sons, Inc., $33 F.2d 126,
189 USPQ 561 (3d Cir. 1976), cert. denied 449 US. 882
CUED vis banc cached bap aen ti eB ons > Veda tideeOhs © 6wps cs 6, 11,15
Union Carbide Corp. v. Graver Tank & Manufacturing Co.,
Bee Fae GSS CH Fh id ee KESANE Lash a Reic cess. 15
Waterman Vv. MacKenzie, 138 U.S. 252 (1890) ............. 2.4
Western Electric Co. v. Pacent Reproducer Corp., 42 F.2d
005, 5 UBPD 19S CIR Cik. TORE) oct ccc ce cncwesteeyenn 3, 5
71
ed Se
e-
=o - -——- --
iv
PAGE
Wisconsin Alumni Research Foundation v. Vitamin
Technologists, Inc., 41 F. Supp. 857, 51 USPQ 345 (S.D.
Cal. 1941), d, 146 F.2d 941, 63 USPQ 262 (9th Cir.
1945), cert. ed, SOS Ue BIO (IDES) oon ccccccccccce 21
Zegers v. Zegers, Inc., 458 F.2d 726, 173 USPC 385 (7th
Gir.) cert denied, 409 U.S. 878 (1972).................. 7, 11,12
Statutes and Rules
Per, MI WA Salo a ciss dc Volek Vow! bob od cnece 5
ep I ER Fh Fold She dviks woelck voce cece ces. 4
ee PEs noo canes bi. bo ldSecie ieech coi. 4
ee EN CEE es on oe ee 11,12
thine cg i, a ee ee 13
Fed. R. Civ. P. Eph TY RAI, act Sia ie SORE ee gaa 19
72
In THE
Wnited States Court of Appeals
For THe FirtH Circuit
APPEAL No. 82-3619
Kori Corporation, Huey J. River
AND Louis WOODSON,
ot Plaintiffs-Appellees,
vs.
WiLco MarsH BuGGiEs AND DRAGLINES, INC.,
JOHN M. WiLson, Sr., DEAN R. WILSON
AND ROBERT J. WILSON, JR.,
Defendants-Appellants.
DEFENDANTS’/APPELLANTS’ REPLY BRIEF
L
S INTRODUCTION
At the outset, Defendants-Appellants (hereinafter De-
fendants) wish to inform the Court that new counsel, viz, Ned L.
Conley of Butler & Binion, Allied Bank Plaza, Houston, Texas,
has replaced Mr. Nathan Greenberg. Mr. Greenberg was the
author of Defendants’ main brief. Mr. Conley is the author of
Defendants’ reply brief and will present oral argument to the
Court.
This reply brief will focus on six major errors made by the
trial court. First, because Plaintiff Kori Corporation (hereinafter
“Kori™) is a non-exclusive licensee, Kori is not entitled to join as
73
* .
2
a Plaintiff to prosecute this action, share in any damages or
establish damages based upon lost profits to itself. Second,
because Plaintiffs-Appellees (hereinafter Plaintiffs) Huey J.
Rivet (the patentee and holder of a one-half undivided interest in
the patent; hereinafter “Rivet”) and Louis Woodson (the
assignee of a one-half interest and the exclusive licensee under
the °785 patent’ in issue; hereinafter “Woodson”™) derive their
revenues from licensing and not manufacturing, the measure of
their damages is a reasonable royalty. Third, due to the availa-
bility of non-infringing substitute products, a “lost profits” the-
ory of damages cannot be utilized. Fourth, the trial court
improperly determined Plaintiffs’ damages by an analysis of
profits gained by the infringer instead of profits lost by the Plain-
tiffs. Fifth, the award of exemplary damages and attorney fees
was not justified. Finally, the individual Defendants, the
stockholders and officers of the corporate-Defendant, should not
have been found personally liable for damages.
Il.
KORI, THE NON-EXCLUSIVE LICENSEE,
IS NOT ENTITLED TO JOIN IN THE
PROSECUTION OF THIS ACTION,
SHARE IN ANY DAMAGES OR ESTABLISH
DAMAGES BASED UPON LOST PROFITS TO ITSELF
The facts are not in dispute. Rivet is the patentee. Woodson is
the exclusive licensee and assignee of an undivided one-half
‘United States Patent No. 3,842,785, issued October 22, 1974; this
patent is included as the first entry in the accompanying oe
which is also entitled “Supplemental Record
appendix was in contemplation of the transfer of te
appeal to the United States Court of Appeals for the Federal Cir-
cuit. An initial volume of “Record Excerpts” was filed with the
Defendants’ main brief to the Fifth Circuit containing the docket
sheet and judgment appealed from as required by Local Rule 30.1.
All reference to the appendix will be by uss of the letter “A”.
74
3
interest in the Rivet patent. Kori is a mere non-exclusive licen-
see. See Trial Court Opinion Findings of Fact 6-8, 561 F. Supp.
at 514-15. Yet the trial court’s determination of damages is
entirely based on Kori’s damages, and not those of Rivet and
Woodson.’ These findings were proposed by Plaintiffs (see docu-
ment number 127, Plaintiffs’ Proposed Findings of Fact and
Conclusions of Law). This was reversible error as a matter of
law.
It is a matter of hornbook patent law that a non-exclusive
licensee is not permitted to join as a plaintiff in a patent infringe-
ment suit, is not permitted to share in any assessed damages and,
as a consequence, is not permitted to establish damages based
upon lost profits to itself. Crown Die & Tool Co. v. Nye Tool &
Machine Works, 261 U.S. 25 (1923) (patent statutes are juris-
dictional and only the patentee, assignee or grantee may sue for
infringement); The Pope Manufacturing Co. v. The Gormully
& Jeffrey Manufacturing Co., et al, 144 U.S. 248 (1892) (reaf-
firming and quoting extensively from Gayler v. Wilder, infra,
and Waterman v. MacKenzie); Waterman v. MacKenzie, 138
U.S. 252 (1890) (a non-exclusive licensee has no title in the
patent and no right to sue for its infringement); Gayler v.
Wilder, 51 U.S. (10 How.) 477 (1850) (only the patentee or his
assignee may sue for infringement); Maloney-Crawford Tank
Corp. v. Rocky Mountain Natural Gas Co., Inc., 494 F.2d 401,
181 USPQ 617 (10th Cir. 1974) (one must have title or grant to
title to bring a patent infringement action); Rawlings v.
National Molasses Co., 394 F.2d 645, 158 USPQ 14 (9th Cir.
1968) (the owner of something less than the right to exclude
? In its opinion on damages, entered eight months later, the trial court
indicated that Rivet had granted an exclusive license to Woodson
and Kori. 561 F. Supp. at 524. Because of the previous Finding, and
since it is impossible for each of two entities to be exclusive licensees
in the same geographic area, this must be considered a mere slip of
the pen, and not a finding of the trial court. Otaerwise, it would be
necessary to remand for a determination of Kori's status.
75
aS. eer ae
4
others, viz, a non-exclusive licensee, may not sue for patent
infringement); Agrashell, Inc. v. Hammons Products Co., 352
F.2d 443 (8th Cir. 1965) (regardless of any contractual agree-
ments between the parties, ownership of the patent is requisite to
the right to sue for infringement and is jurisdictional); Switzer
Brothers, Inc. v. Byrne, 242 F.2d 909 (6th Cir. 1957) (court has
no jurisdiction over a suit brought by a mere licensee); Overman
Cushion Tire Co. v. Goodyear Tire & Rubber Co., 59 F.2d 998,
14 USPQ 104 (2d Cir. 1932) (a sole licensee is not necessarily
an exclusive licensee and a non-exclusive licensee has no right to
sue and cannot share in damages); Western Electric Co. v.
Pacent Reproducer Corp., 42 F.2d 116, 5 USPQ 105 (2d Cir.
1930) (non-exclusive licensee can neither sue along nor join with
the patent owner in an infringement suit); Philadelphia Brief
Case Co. v. Specialty Leather Products Co., 145 F. Supp. 425,
111 USPQ 180 (D. N.J. 1956) (non-exclusive licensee has no
proprietary interest and regardless of any contractual rights,
cannot sue on the patent at all); L. L. Brown Paper Co. v.
Hydroiloid, Inc., 32 F. Supp. 857, 44 USPQ 655 (S.D. N.Y.
1939), aff'd, 118 F.2d 674 (2d Cir. 1941) (non-exclusive license
is merely a right not to be sued and non-exclusive licensee has no
right to sue).
Title 35, in pertinent part, provides:
§ 281. Remedy for Infringement of Patent.
A patentee shall have remedy by civil action for infringe-
ment of his patent (emphasis supplied).
1100. Definitions.
d. The word “patentee” includes not only the patentee
to whom the patent was issued but also the successors in
title to the patentee.
The “successors in title to the patentee” refer to the three types
of assignees envisioned by the assignment provisions of Title 35.
See 35 USC § 261. As explained by the Supreme Court in
76
nated aia ae,
5
Waterman Vv. MacKenzie, supra, a successor in title may be one
of three assignees: first, an assignee of the whole patent compris-
ing the exclusive right to make, use and sell throughout the
entire United States; second, an undivided part or share of that
exclusive right; or third, the exclusive right within and
throughout a specified part of the United States. Any transfer
short of one of these is a non-exclusive license giving the licensee
no title in the patent and no ri sue for infringement. /d.
Instead, a non-exclusive li simply a contractual right not
to be sued by the patentee or his successors in title-for patent
infringement. Overman Cushion Tire Co. v. Goodyear Tire &
Rubber Co., supra at 1000 (a non-exclusive licensee has merely
the right of being protected from actions for infringement);
Western Electric Co. v. Pacent Proproducer Co., supra at 118
(non-exclusive license is merely a contractual privilege against a
suit for infringement); L. L. Brown Paper Co. v. Hydroiloid,
Inc., supra at 868 (a non-exclusive license is merely the right not
to be sued). Finally, the right to exclude others from making,
using or selling the patented invention (See 35 USC § 154) was
unknown to the common law. All such rights and limitations on
those rights are created and determined by Federal statute. As
such, the trial court’s jurisdiction to hear a patent infringement
suit is closely prescribed by statute, and the court is without
jurisdiction to hear any patent infringement claim filed by a non-
exclusive licensee. Crown Die & Tool Co. v. Nye Tool &
Machine Works, supra at 34, 39-41; Gayler v. Wilder, supra at
494; Agrashell, Inc. v. Hammons Products Co., supra at 447;
Switzer Brothers, Inc. v. Byrne, supra at 913.
Accordingly, Kori was not a proper party plaintiff to the
infringerient action, and the trial court had no jurisdiction to
consider any claim by or alleged damage to Kori. As stated by
the Court of Appeals for the Second Circuit, “Practice of the
invention by others may indeed cause [Kori, the non-exclusive
6
licensee,] pecuniary loss, but it does him no legal injury.” West-
ern Electric Co. v. Pacent Reproducer Corp., supra at 118. Asa
result, damages must be assessed by analysis of the injury to the
patentee, Rivet, and his successor in title, Woodson.
Il.
RIVET AND WOODSON ARE ENTITLED
ONLY TO A REASONABLE ROYALTY
Rivet, as the patentee and owner of an undivided one-half
interest in the patent, and Woodson, as the exclusive licensee
and owner of the other undivided one-half interest in the patent,
clearly have the right to sue for patent infringement. However,
any award of damages must be based on the actual injury to
them. Aro Manufacturing Co. v. Convertible Top Replacement
Co., 377 US. 476, 504-08 (1964) (the patentee is entitled to
“general damages, that is, any damages the complainant can
prove, not less than a reasonable royalty . . .”) (hereinafter “Aro
II"). Coupe v. Royer, 155 U.S. 565, 582 (1894) (at law, the
patentee is entitled to recover, as damages, the loss he has suf-
fered). Rivet and Woodson do not manufacture or sell the
patented pontoons. Instead, Kori performs these functions as a
non-exclusive licensee. Any damage caused by Defendants’
infringement to Rivet and Woodson is, therefore, caused by a
loss of royalty revenue. It is axiomatic in the field of patent law
that a patent owner or exclusive licensee who does not manufac-
ture or sell the patented apparatus is not entitled to damages
based upon a “lost profits” theory, but is entitled only to a
reasonable royalty. Baumstimler v. Rankin, 677 F.2d 1061,
1072, 215 USPQ 575 (Sth Cir. 1982) (because Baumstimier, the
patentee, did not exploit the patented invention — but rather it
was informally exploited by a non-exclusive licensee — Baum-
stimler had no lost profits); Trio Process Corp. v. L. Goldstein's
Sons, Inc., $33 F.2d 126, 129, 189 USPQ 561 (3d Cir. 1976),
cert. denied, 449 U.S. 882 (1980) (because Trio was not
engaged in the patented metal reclaiming business, the only
78
7
damage Trio suffered was a loss of royalty revenue); Foster v.
American Machine & Foundry Co., 492 F.2d 1317, 1321, 182
USPQ | (2d Cir. 1974), cert. denied, 419 US 833 (1974)
(because the patentee, a patent attorney by trade, did not exploit
the patented invention by either manufacturing and sales or
licenses, he was only entitled to a reasonable royalty); Zegers v.
Zegers, Inc., 458 F.2d 726, 730, 173 USPQ 385 (7th Cir.), cert.
denied, 409 U.S. 878 (1972) (if the patentee does not manufac-
ture or sell, then his damages are based upon a reasonable
royalty); Creamer v. Bowers, 35 F. 206, 207 (3d Cir. 1888) (a
patentce’s damages are determined by the use he makes of the
patented invention); Ellipse Corp. v. Ford Motor Co., 461 F.
Supp. 1354, 1379, 201 USPQ 455 (N.D. Ill. 1978), aff'd, 614
F.2d 775 (7th Cir. 1979), cert. denied, 446 U.S. 939 (1980)
(where the patent holder does not exploit the patent, the only
pecuniary loss suffered is the loss of royalties).
A corollary to this general principle is the rule that to estab-
lish lost sales as a basis for “lost profit” damages, the complain-
ant has the burden of proving that it had the manufacturing and
marketing capability to meet the demand for the sales lost to the
infringer. Milgo Electronic Corp. v. United Business Communi-
cations, Inc., 623 F.2d 645, 663, 206 USPQ 481 (10th Cir.),
cert. denied, 449 U.S. 1066 (1980); Panduit Corp. v. Stahlin
Bros. Fibre Works, Inc., 575 F.2d 1152, 1156, 197 USPQ 762
(6th Cir. 1978) (Opinion by Chief Judge Markey of the then
Court of Customs and Patent Appeals, sitting by designation).
As indicated, it is undisputed that Rivet and Woodson do not
have this capability. The trial court based its award of damages
on a “profits” theory’ due to the pecuniary loss felt by Kori and
* See Sections |V and V, infra, for a further explanation of why the
“profits” theory em by the trial court was erroneous as a
matter of law.
79
ee
not as a result of the loss of royalty revenue to Rivet and Wood-
son. On authority of the latter cases, this was reversible error as
a matter of law.
Accordingly, as indicated above and in the previous section,
any award of damages must be based on the injury caused to
those who have a right to sue and not to those who are not
proper parties to the action, such as the non-exclusive licensee,
Kori. Because Rivet and Woodson do not receive “profits” from
the manufacture or sale of the patented pontoons, any damage
award to them must be based on their actual injury, a loss of
royalty revenue. As a result, the trial court's decision must be
reversed, and this case remanded for~-a determination of a
reasonable royalty.
IV. 7°
DUE TO THE AVAILABILITY OF
NON-INFRINGING SUBSTITUTE PRODUCTS, A
“LOST PROFITS” THEORY OF DAMAGES
CANNOT BE UTILIZED
If this Court should decide to make new law and determine
the damage to Rivet and Woodson by analyzing the pecuniary
loss to Kori and applying a “lost profits” theory of damages, the
trial court’s decision must, nonetheless, be reversed and
remanded for a determination of a reasonable royalty. The law is
not in dispute. It is well established, as recited by the trial court,
that if non-infringing substitute products are available, a “lost
profits” theory of damages cannot be employed. Milgo Elec-
tronic V. United Business Communications, Inc., supra at 663;
Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., supra at 1156
(opinion by Chief Judge Markey sitting by designation listing
four facts which must be established to entitle complainant to
“lost profits”); Hughes Tool Co. v. F. W. Murphy Industries,
Inc., 491 F.2d 923, 929-30, 180 USPQ 363 (Sth Cir. 1973).
However, the trial court's finding that non-infringing substitute
products were not available is clearly erroneous.
. 9
Contrary to the findings of the trial court, the machinery built
by Quality Industries of Thibodaux, Louisiana (hereinafter
“Quality”) was considered by the buyer of the machines to be an
acceptable substitute for machinery manufactured and sold by
Kori under the Rivet "785 patent. There is no question that the
Quality machinery is non-infringing. The only question raised is
whether the Quality machinery is an acceptable substitute. On
this score, the trial court stated:
There has been no evidence, however, of the specifications
or the working capability of the Quality units. The only
evidence of the capability of the products built by Quality is
a vaguely worded and self-serving sales brochure. (See
Wilco Exhibits 3 and 3a). It is not_even clear whether Qual-
ity was marketing a comparable swamp machine during the
period of infringement at issue in this case. . . . The evidence
indicates that McDermott ‘was interested in
machines patented under the Rivet "785 patent from plain-
tiff Kori because these were the only machines capable of
operating effectively in the jungle swamp of Nigeria.
McDermott then became concerned that Kori might not be
able to make timely delivery of the machines.... As a
result of this concern about the timeliness of delivery,
McDermott decided to purchase machinery from the
defendant infringer, Wilco. Regardless of whether
McDermott’s fears were well founded, the fact remains that
when McDermott sought a substitute for the patented Kori
product, it turned not to Quality or some other manufac-
turer of marsh craft, but to the infringer, Wilco. Thus, from
a buyer’s perspective, the only acceptable substitute for the
patented Kori machines were the infringing machines.
561 F. Supp. at 526.
The trial court, apparently, has overlooked substantial
credible, unimpeached testimony and documentary evidence
which directly contradicts the latter statements. Regarding
availability and comparability of the Qualit, machinery, the
trial court only acknowledged Quality’s sales brochure and
a=. = a ennai Sabine ie al
.
sees emda bee - ee
= -<
=
10
apparently overlooked the testimony of Jules Dornier, III, Qual-
ity’s project development engineer (A. 31-45). Mr. Dornier testi-
fied that, like the Rivet machine, the Quality pontoons had
bulkheads, but differed by their use of longitudinal instead of
transverse “I” beams and did not employ plastic support blocks.
Further, the Quality pontoons were constructed in accordance
with the Reynolds patent and depending on the expected
environment of use, i.c., p or marsh, were reinforced along
the bottoms and sides (A.) 36-40). Further, Mr. Dornier testified
t was offered for sale by Quality dur-
in 1979 and 1980 (A. 38). As such, the
latter findings by the frial court were clearly erroneous.
Regarding the purchases, ‘McDermott not only
contacted Wilco and Kori, but also contacted Quality when
assembling bids for the purchase of amphibious machinery for
use in Nigeria (See Exhibit 30 dated January 11, 1980; A. 46).
Quality, like Kori, could not meet McDermott’s deadline and for
this reason, McDermott chose Wilco (A. 41). The important
fact is, of course, that Quality was in direct competition with
Kori and offered a non-infringing substitute acceptable to
McDermott. Further, a few months later, McDermott purchased
Quality machinery — in competition with Kori — when
McDermott’s deadlines could be met. One such purchase by
McDermott was from Ronald Adams, Contractor, Inc. (herein-
after “Adams”). In July of 1980, Adams provided an amphibi-
ous dragline which utilized a pontoon substructure manufac-
tured by Quality (A. 48-52). Additional competitive equipment
was obtained from Quality and others by McDermott as indi-
cated in related correspondence and purchase orders (A. 53-62).
Thus, non-infringing substitutes acceptable to McDermott were
not only available to, but were actually purchased by
McDermott. As such, the trial court's finding that McDermott
looked only to Kori and Wilco for the machinery in issue was
clearly erroneous.
| ae
Accordingly, the trial court's finding that there was no non-
infringing substitute for the Kori machinery was clearly errone-
ous. Therefore, this Court must reverse the trial court’s decision
and remand this case for determination of a reasonable royalty.
Vv.
DAMAGES CANNOT BE COMPUTED BASED UPON
PROFITS GAINED BY THE INFRINGER
BUT ONLY PROFITS LOST BY THE COMPLAINANT
Even if a “lost profits” theory of damages is available in this
case, the trial court erroneously awarded the infringers’ “gained
profits” instead of the complainants’ “lost profits.” Having found
that Plaintiffs were entitled to profits lost on infringing sales, the
court was misled by a statement in an old Fifth Circuit decision
that the infringer’s profits may be the measure of the damages
suffered (see Graham v. Jeffroy Mfg., Inc., 253 F.2d 72, 74 (Sth
Cir. 1958), cited by the trial court at 561 F. Supp. 527-528).
Several years later, the Supreme Court, in Aro //, supra,
made it clear that defendant's profits are not recoverable as
such, but only plaintiffs damages.‘ 377 U.S. at 505-506. In a
recent case, the Fifth Circuit cited this holding and stated:
The measure of recovery is not the infringer's profit, but
those profits lost to the patentee.
Baumstimler v. Rankin, supra, 677 F.2d at 1071 (1982). Other
Courts of Appeals concur. See, ¢.g., Zegers v. Zegers, Inc.,
supra, 458 F.2d at 727-729 (7th Cir. 1972); Atlas-Pacific Eng'g
Co. v. Geo. W. Ashlock Co., 339 F.2d 288, 290 (9th Cir. 1964);
Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., supra 575
F.2d at 1156 (6th Cir.); Trio Process Corp. v. L. Goldstein's
‘ This interpretation of 35 U.S.C. § 284 results from the 1946 amend-
ment to that section and was fully explained by the Supreme Court
in Aro /!, supra, at 504-08, and exhaustively analyzed in ny 4
Pacific Corp. v. United States Plywood Corp., 243 F. Supp ,
515-46 (S.D. N.Y. 1965).
83
WE. - .
el Eo ee
12
Sons, Inc., supra, $33 F.2d at 129 (3d Cir.), and Foster v. Amer-
ican Machine & Foundry Co., supra, 492 F.2d at 1320-21 (2d
Cir.).
These courts indicate that the infringer’s profits may consti-
tute evidence of plaintiff's damages, but emphasize that the stat-
ute does not authorize award of defendant's profits as such, or
the use of verbal gymnastics to obtain the practical equivalent of
aHowing recovery of the profits themselves. See, e.g., Zegers,
supra, 458 F.2d at 727, fn. 3.
The trial court in this case did exactly that, justifying its
award of Defendant Wilco’s profits only on the basis that they
“constitute a reasonable approximation of the damages suffered
by plaintiffs.” 561 F. Supp. at 528. The court made no findings
whatsoever to support this conclusion. Accordingly, even assum-
ing Kori’s “lost profits” can be the basis for an award of
damages under § 284," the trial court, as a matter of law, errone-
ously awarded the infringers’ profits gained instead of the com-
plainants’ profits lost.
As a result, this case, under any theory, must be reversed and
remanded for a proper determination of damages.
VL
THE AWARD OF EXEMPLARY DAMAGES AND
ATTORNEY FEES WAS NOT JUSTIFIED
Upon remand, the trial court should be instructed that neither
an award of exemplary damages nor attorney fees is appropriate
in this case. The relevant statutes in Title 35 which pertain to
exemplary damages and attorney fees, in pertinent part, are as
follows:
§ 284. Damages
When the damages are not found by a jury, the court
shall assess them. In either event, the court may increase
* See Sections II, III and IV, supra, for an explanation of why Kori's
a ee ee ee
case.
13
the damages up to three times the amount found or
assessed.
§ 285. Attorney Fees
The court in exceptional cases may award reasonable
attorney fees to the prevailing party.
A. EXEMPLARY DAMAGES
The trial court determined Defendants’— the infring-
ers’ — profits and then awarded these infringer profits to Plain-
tiffs. In addition, the trial court determined that Defendants’
infringement was willful (561 F. Supp. at 519, $22 and 532) and
doubled the amount awarded as infringer profits. In so doing, the
trial court committed errors of law and madé a clearly erroneous
finding of fact.
(1) Errors of Law.
As indicated previously (See Section V, supra), the trial court
erred by computing damages based upon the infringers’ “gained
profits” instead of the complainants’ “lost profits” This error was
compounded by the trial court when it doubled the award of the
infringers’ profits as an award of exemplary damages. 561 F.
Supp. at 532-33. An award of infringers’ profits is made in
equity; these are not a measure of damages.* Section 284, as well
as all predecessor statutes providing for exemplary damages,
permit the trial court to increase actual damages proven at
law — not the infringers’ profits accounted for in equity. Bird-
sall v. Coolidge, supra at 69-70, New England Fibre Blanket
Co. v. Portland Telegram, 61 F.2d 648, 651, 15 USPQ 217 (9th
Cir. 1932), cert. denied, 289 U.S. 752 (1933); Georgia-Pacific
Corp. v. United States Plywood Corp., supra at 519 (complain-
ant’s argument seeking trebling of the infringer’s profits “would
* All of the cases cited in Section V, supra, recite this principle. For a
further explanation of this dichotomy, see Coupe v. Royer, 155 U.S.
565, 582 (1894) and Birdsall v. Coolidge. 93 U.S. 64, 69-71
(1876).
|
|
|
|
|
a ~—
14
be a far reaching innovation, for none of the statutes permitted
trebling of infringer’s profits.”). As a result, the trial court erred
as a matter of law by computing and awarding exemplary
damages utilizing the infringers’ (Defendants’) profits.
Beyond this fundamental error, the trial court also erred by
considering certain “factors” other than the alleged “willful-
ness” of the Defendants. Exemplary damages, as provided by the
statute, are a means of punishing an infringer for its willful
disregard of another’s rights. The only factors which the trial
court need consider in determining the amount, if any, of exem-
plary damages to be awarded are the facts which bear on the
conclusion of willfulness and the infringer’s ability to pay.
The purpose of exemplary damages is, of course, to punish,
but not economically destroy the infringer.
In the presént case, the trial court also considered the follow-
ing additional factors: first, that the award of the infringers’
profits were, due to Plaintiffs’ failures in proof, not sufficient to
fully compensate Plaintiffs; second, that the trial court was
unable to compute prejudgment interest; and third, that sales of
infringing devices for domestic use (for which Plaintiffs
expressly waived redress against these Defendants) have also
damaged Plaintiffs and Defendants should be held responsible
for those sales.’ 561 F. Supp. at 533. Consideration of these
additional factors was an error of law.
Appellants’ position is simple. Exemplary damages are meant
to be punitive — not compensatory. Seymour v. McCormick, 57
U.S. (16 How.) 480, 488-89 (1853) (“It is true, where the injury
is wanton or malicious, a jury may inflict vindictive or exemplary
damages, not to recompense the plaintiff, but to punish the
defendants.”) Plaintiffs had the burden of proving their actual
Oe i ee and users of those domes-
tically sold nes is presently resently pending in the same United States
a Court for the of Louisiana, Cause No.
82-224
15
damages. Although damages need not be ascertained with
absolute certainty, they must not be based on conjecture. The
test has been variously stated. The Fifth Circuit has indicated
that complainant “must demonstrate with ‘reasonable
probability’ the portion of [the] infringing sales it would have
made.” Baumstimler v. Rankin, supra at 1072. The Third Cir-
cuit has held that “actual damages must be calculated, not
imagined, and an arithmetical calculation cannot be made
without certain data on which to make it.” Trio Process Corp. v.
L. Goldstein's Sons, Inc., supra at 130. The Supreme Court has
gone so far as to say “that the damages shall be the result of the
injury alleged and proved, and that the amount awarded shall be
precisely commensurate with the injury suffered, neither more
nor less ..... ” Birdsall v. Coolidge, supra at 65. It would be an
anomaly at best to require the complainants to prove their actual
damages in the latter fashion and then permit the trial court to
increase those proven damages under the guise of making an
exemplary damage award based upon the speculative factors
announced by the trial court and set out above. See Union
Carbide Corp. v. Graver Tank & Manufacturing Co., 282 F.2d
653, 673-75 (7th Cir. 1960) (reversing arbitrary increase in
damages by trial court that awarded increase on basis of cost of
undefined “expenses” to plaintiff and value of undetermined
“profits” and increased “standing among manufacturers” to
defendants).
Further, regarding the domestic sales of other alleged infring-
ing devices as to which the Plaintiffs waived damages, 561 F.
Supp. at 533, the trial court was without jurisdiction to consider
damages arising from these alleged infringements, and
Defendants have been denied due process by not being permitted
to be heard on those issues. Also, those alleged infringements are
the subject of a separate suit for patent infringement, and it is
axiomatic that there can be but one recovery from joint tort-
feasors. Aro //, supra at 502-04.
87
16
Accordingly, the burden of proving the level of actual
damages was on Plaintiffs, and the trial court should not be
permitted to willy-nilly increase an award of actual damages
under the guise of awarding exemplary damages.
Finally, as indicated above, the purpose of exemplary
damages is to punish but not to economically destroy the willful
infringer. As a result of the award of exemplary damages in this
case, Defendants have been forced into bankruptcy. It was an
error of law for the trial court to impose an award of exemplary
damages that would have this effect.
2. The “Willfulness” Determination Was Based Upon Clearly
Erroneous Facts.
To justify the imposition of exemplary damages, the trial
court must find facts to support a conclusion that the infringe-
ment was willful and wanton. Baumstimiler v. Rankin, supra at
1073. If the issues of validity and infringement are open to
honest doubt and litigated in good faith (/d.; Eltra Corp. v.
Basic, Inc., 599 F.2d 745, 757-58, 202 USPQ 630 (6th Cir.),
cert. denied, 444 US 942 (1979), or if the infringer relied upon
advice of counsel that the patent was not valid or not infringed
(Milgo Electronic Corp. v. United Business Communications,
Inc., supra at 666), or if the infringer is familiar with the prior
art and maintains a reasonable doubt regarding validity or
infringement (Baumstimier v. Rankin, supra at 1073), then it is
an abuse of the trial court’s discretion to conclude that the
infringement was willful and impose exemplary damages.
The trial court stated:
There has been no testimony in this case demonstrating that
the defendants sought the advice of a qualified patent
atigpeey before infringing upon the Rivet °785 patent. The
evi before the Court indicates that the defendants
willfully and deliberately copied the Rivet ‘785 patent
without soliciting advice of counsel. The advice of a quali-
fied patent attorney was apparently only sought after
17
defendants had begun to manufacture infringer units and
after plaintiffs brought this suit to enforce the Rivet "785
patent. In the Court’s opinion, the defendants had decided
to market infringing machines without regard to authorita-
tive legal advice and with reckless disregard for plaintiffs’
rights under the Rivet "785 patent. Having failed to estab-
lish good faith reliance upon an authoritative opinion of
invalidity, the defendants’ deliberate and willful infringe-
ment of the Rivet "785 patent cannot be condoned. Given
these circumstances, the Court is inclined to exercise its
discretion in awarding exemplary damages.
561 F. Supp. at 532-33. The findings of fact set forth are clearly
erroneous.
Robert Wilson, Sr., as found by the trial court, was a contract
welder who initially worked for Kori and later worked as an
independent contractor for his three sons, the individual
Defendants. 561 F. Supp. at 518. Robert Wilson, Sr. had been
engaged in the fabrication and manufacture of marsh buggy
craft since 1950 and was well aware of prior art craft (A. 63-64).
Based upon their knowledge and an independent review of the
Kori patent, the individual Defendants determined that the
patent was invalid, and as early as September of 1977, informed
Plaintiffs of their belief of invalidity and that they were building
equipment identical to that of Plaintiff Kori. 561 F. Supp. at
519. Kori responded that the patent would be enforced;
nevertheless, more than two years passed before Plaintiffs sued
the Defendants for patent infringement on September 20, 1979.
Defendants immediately contacted an attorney, Mr. Nathan
Greenberg, who also informed them that, in his opinion, the
patent was invalid. After receiving Greenberg's opinion on
invalidity, the Defendants contracted with Marine Contractors,
Inc. through J. Ray McDermott for the sale of marsh buggy
craft utilizing the patented pontoons for use in Nigeria. See 561
F. Supp. at 526. These sales to McDermott are the only infring-
ing sales for which Plaintiffs sought damages and were all made
after receiving an opinion from counsel that the Kori patent was
18
invalid. Plaintiffs’ Exhibits 22 and 23 which comprise Green-
berg’s written opinion of invalidity dated January 8, 1980, which
was sent to Marine Contractors, and an indemnity agreement
executed on March 20, 1980 by Defendants based upon the
strength of Greenberg's opinion, are included in the appendix at
pages A. 65-85. All rentals of infringing craft by Defendants
which are in issue occurred between 1979 and 1981. Again, as
with the infringing sales, the infringing rentals in issue occurred
two years after Plaintiffs were on notice that Defendants were
infringing and believed the patent invalid, and double damages
were assessed based on rentals which were made after Green-
berg had given his opinion on invalidity.
In view of the reasonable belief possessed by Defendants of
the invalidity of the patent based upon their father’s knowledge
and their independent review of the patent, the confirmation by
counsel of the invalidity of the patent prior to the infringing
sales and rentals for which Plaintiffs seek damages, and the two
year delay by Plaintiffs in filing suit after receiving notice that
Defendants were infringing and believed the patent to be invalid,
Defendants submit that the tridl court abused its discretion by
imposing exemplary damages. Although Defendants may have
deliberately infringed, they did so openly and in the good faith
and reasonable belief as confirmed by counsel that the patent
was invalid. All cases cited above support, under similar facts, a
reversal of the imposition of exemplary damages by the trial
court. |
B. ATTORNEY FEES
The trial court based its award of attorney fees on the ground
that the Kori patent had been willfully infringed by Defendants.
561 F. Supp. at 532. For the same reasons set out above that an
award of exemplary damages based upon an erroneous
* Plaintiffs did not offer evidence as to how much, if any, of
eos rentals occurred prior to Greenberg's opinion of
invalidity.
19
determination of willfullness was an abuse of discretion, the trial
court's award of attorney fees was also in error.
VIL.
THE INDIVIDUAL DEFENDANTS,
THE STOCKHOLDERS AND OFFICERS OF THE
CORPORATE DEFENDANT SHOULD NOT HAVE BEEN
FOUND PERSONALLY LIABLE FOR DAMAGES
In October of 1980, Defendants filed a motion to dismiss the
individual Defendants on the basis that, if at all, the corporation,
but not the officers and stockholders, were liable. However, the
trial court concluded that the individual Defendants were jointly
liable for damages with the corporate Defendant-for inducing
infringement.’ 561 F. Supp. at 522, 534. From the trial court's
memorandum opinion (A. 86) denying the motion to dismiss, it
is apparent that the trial court, by citing with approval and quot-
ing from such cases as Mead Johnson & Co. v. Baby's Formula
Service, Inc., 402 F.2d 19, 23, 189 USPQ 328 (Sth Cir. 1968),
found the individual Defendants liable because they controlled
and directed the acts of the corporation as done by all corporate
officers. This is the crux of the legal dilemma. There is a split of
authority in the circuits. One line of cases sometimes followed by
the Fifth Circuit, as reflected in Mead Johnson & Co., takes the
view that patent infringement is a tort; all torts by definition can
only be committed by individuals; individuals are primarily
liable for all torts in which they participate, and the corporation
is liable secondarily through the doctrine of respondeat superior;
therefore, all officers or agents of a corporation who direct the
corporate activities which are ultimately held to constitute
patent infringement are primarily and jointly liable with the
corporation.
*The injunction, of course. runs against the corporation and the
officers. See, Fed. R. Civ. P. 65(d). The individual Defendants are
_ Mot contesting in this appeal the imposition of injunctive relief
against them.
91
20
The other line of cases, led by the Seventh Circuit, takes a
more reasoned and sensible approach. Under the Seventh Cir-
cuit rule, corporate officers and agents are not jointly liable with
the corporation for patent infringement unless they have acted
outside the scope of their official duties. In Dangler v. Imperial
Machine Co., 11 F.2d 945 (7th Cir. 1926), the Seventh Circuit
explained:
The weight of authority, it seems, denies such liability in
the ordinary case. That is to say, if the officers act merely as
officers, they are not liable jointly with the corporation. It is
only when the officers act outside the scope of their official
duties that they become liable.
ss ss ss ®
After due consideration of the various authorities, as well as
the reasons back of the two positions, we adhere to [our
previous position] and hold that, in the absence of some
special showing, the managing officers of a corporation are
not liable for the infringements of such corporation, though
committed under their general direction. The uncertainty
surrounding the questions of validity and infringement
make any other rule unduly harsh and oppressive
(emphasis added).
11 F.2d at 946-947. Regarding the case before it, the court
concluded:
. .. [T]he case is the usual one where a bona fide corpora-
tion embarked on a business which it found was covered by
numerous patents. A competing concern insisted that it had
a patent which covered one of its products. The [defendant
corporation] sought and secured the advice of reputable
counsel to the effect that its machine was not an infringe-
ment of the competitor’s patents. Relying on this advice, the
board of directors proceeded with the litigation and with the
business. This showing falls far short of establishing any
one of the situations for which the officer of the corporation
may be held liable for the infringements of the corporation.
Id. at 948.
21
This rule was reaffirmed and adhered to by the Seventh Cir-
cuit some thirty years later in Powder Power Tool Corp. v.
Powder Actuated Tool Co., 230 F.2d 409, 414, 108 USPQ 155
(7th Cir. 1956), in which defendant Klunk, Sr. was found not to
have exceeded his duties as an officer of the defendant corpora-
tion and, thus, was not personally liable for the company’s
infringement. Other courts have recognized the equities favoring
limited personal liability of corporate officers and directors set
forth in Dangler, and have proceeded to deny such liability.
Schreyer v. Casco Products Corp., 97 F. Supp. 159, 88 USPQ
515 (D. Conn. 1951), aff'd as modified on other grounds, 190
F.2d 921, 90 USPQ 271 (2d Cir. 1951, cert. denied, 342 U.S.
913 (1952); Besly-Welles Corp.-v. Balax, Inc., 291 F. Supp.
328, 160 USPQ 265 (E.D. Wis. 1968), aff'd, 421 F.2d 809, 821,
164 USPQ 485 (7th Cir. 1980), cert. denied, 399 U.S. 911
(1980); Wisconsin Alumni Research Foundation v. Vitamin
Technologists, Inc., 41 F. Supp. 857, 51 USPQ 345 (S.D. Cal.
1941), aff'd, 146 F.2d 941, 63 USPQ 262 (9th Cir. 1945), cert.
denied, 325 U.S. 876 (1945)."
In this case, there is no evidence and no finding that any of the
individual Defendants acted beyond the scope of their official
duties. As indicated in the previous section, the infringement in
issue was not willful, but occurred after consulting with counsel
and a studied review of the patent by one who was skilled and
knowledgeable in the state of the art. Further, the questions of
whether a patent is valid and infringed — -specially here where
the patent in issue is merely an improvement patent over closely
“ While recognizing that an injunction will run against the officers of
a corporation, Deller's Walker on Patents §500 (2nd Ed. 1965) dis-
tinguishes liability for damages and states:
An officer of a corporation is not personally liable for damages and
profits resulting from infringement unless he inflicted the wron
otherwise than through the usual relations between officer
corporation. Infringement officers of —— must be as
al before they can be held personally liable. [Footnotes
omitted.
93
ee eee os eee =
22
related prior art and had not been previously litigated — are
questions which cannot be affirmatively answered or predicted
until the last avenue of appeal is exhausted. This uncertainty,
which every corporate officer or agent must face when deciding
whether to contest validity of a patent taken in light of the
inflexible and arbitrary rule which would automatically find that
person individually liable for infringement would have a chilling
effect on the incentive to contest patent validity which the
Supreme Court has directed, as a matter of policy, is to be
encouraged. Lear v. Adkins, 395 U.S. 653 (1969).
Accordingly, regarding the individual Defendants, this case
should be reversed and remanded for a determination of whether
the individual Defendants acted within the scope of their author-
ity. If so, then those Defendants should be dismissed from the
case at least insofar as an award of damages is concerned. This
Court should follow the lead of the Seventh Circuit and adopt
the reasoning of the Dangler opinion.
23
Vill.
CONCLUSION
This Court should reverse the trial court’s decision and
remand this case for a determination of a reasonable royalty. On
remand, the trial court should be instructed that an award of
exemplary damages and attorney fees is not justified and that
the individual Defendants cannot be found to be personally
liable absent findings of fact that these individuals acted beyond
the scope of their authority to infringe the patent in issue.
Respectfully submitted,
ee ee eee ewer reer eee eee
Nep L. CoNLEy
BuTLeR & BINION
Allied Bank Plaza
Houston, Texas 77002
(713) 237-3195
Attorney-in-Charge for
Defendants/Appellants
Of Counsel:
JEFFREY W. TAYON
BuTLer & BINION
Allied Bank Plaza
Houston, Texas 77002
(713) 237-3111
95
24
CERTIFICATE OF SERVICE
I hereby certify that two true and correct copies of the forego-
ing Appellants’ Reply Brief has been sent to all counsel of record
by first class mail on this .... day of August, 1983.
eee eee eee
Nep L. Conley
96
FEDERAL COURTS IMPROVEMENT ACT
P.L. 97-164
FEDERAL COURTS IMPROVEMENT ACT OF 1982
P.L. 97-164, see page 96 Stat. 25
House Report (Judiciary Committee) No. 97-312,
Nov. 4, 1981 [To accompany H.R. 4482]
Senate Report (Judiciary Committee) No. 97-275
Nov. 18, 1981 [To accompany 8. 1700]
Cong. Record Vol. 127 (1981)
Cong. Record Vol. 128 (1982)
DATES OF CONSIDERATION AND PASSAGE
House November 18, 1981; March 9, 1982
* Senate December 8, 1981; March 22, 1982
The House bill was passed in lieu of the Senate bill after amending its
language to contain much of the text of the Senate bill.
The Senate Report is set out.
SENATE REPORT NO. 97-275
(page 1)
ittee on i
(S. 1700) having considered the same, rts favorably thereon
with amendments ond sessmmends thet the i os emended do poms
Senate and House on a compromise amendment in the nature of a sub-
stitute to be offered by the Senate to the House bill, but which sub-
stantially reflected the contents of S. 1477. However, this version when
brought before the Senate was the subject of an attempt to add a con-
troversia] nongermane amendment the bill was withdrawn with-
In the 97th Congress, on January 5, 1981, Senator DeConcini intro-
duced S. 21, which embodied all of the provisions of S. 1477 as passed,
with a few minor On April 24 and May 18. 1981, hearings
concerning the were held by the Subcommittee on Courts,
at which time favorable testimony was received. On June 22, 1981,
the Subcommittee reported out an unintroduced committee print
substantively the same as S. 21. with a few technical On
June 20, 1961, the full Committee referred the unintroduced Commit-
tee print back to Subcommittee for additional technical amendments.
The Subcommittee on Courts considered the changes recommended
TITLE I-——TRIAL AND APPELLATE STRUCTURE FOR GOVERN MENT CLAIMS,
PATENTS, AXD OTHER MATTERS
Organization, structure and jurisdiction
FEDERAL COURTS IMPROVEMENT ACT
P.L. 97-164
(page 3)
Feder.: courts of appeals that is, it is not a new tier in the judicial
structure.
The Supreme Court now appears to be operating at—or close to—full
capacity; therefore, in the future the rt cannot be to
i uch ee ere eee Yet
ity of unsettled controversies in the law con-
- ¢ wears
t
a
ht
r-
.
et
G
I
mt
'
i
e
f
F
& geographical] basis.* The creation of the Court of
for the Federa] Circuit provides such a forum for
ily
ce age
Hi
il
ivy
;
iF
{
z
g28
of cases.‘
presently del F
ederal appellate court with jurisdiction that is defined in
subject matter rather than territory provides an institutional
structure which the Federal judicial system, as j
tuted, lacks. The committee has determined that an adk
has been made for nationwide subject matter jurisdiction in the areas
of patent and claims court It must be understood, however,
that it is not the committee’s judgment that broader subject matter
jurisdiction is intended for this court.
It must therefore be noted that any additional subject matter for the
United States Court of A Is for the Federa) Circuit will require
not only serious future evaluation, but new legislation.
the development of this legislation. the committee and
worked closely with the Departments of Justice and
judges of the Court of Claims and the Court
pedhcrg ng eg Bete of pared ng —eirenal— ago lr door ceo
f these iit aertloclert Chic! Judge Friedman
) courts, y to Chi u i
Sol te Chieti Winer’ tor thoie etineny’ ood ceimeoes to
understanding the impact of the proposal on their courts. The Com-
mittee is satisfied that the merger of these courts would, in fact.
duce significant improvements in the federal judicial] structure. Hear-
ing testimony supported this proposition. Chief Judge Friedman of
the Court of Claims testified at some length as to the substantia! bene-
fits that would result from the consolidation of these two courts into
i
J
“Redank the enaatinral single late entity th
+ new a een @ mer-
gor of theno evurts bas ennsidwable sdvantages in torme of ic effi-
a
States, Sep
the / Emergency of Public
on oe Iatehigeare Surveiiance Coart. $0 RL. 100 et soe
teed 53 Copy rat
oS
100
FEDERAL COURTS IMPROVEMENT ACT
P.L. 97-164
[page 5)
ciencies and economics. The Court of Claims and the Court of Customs
and Patent Appeals were historically _— at the time they were
created. and those courts have performed well with the cases that have
been to them th (ote ye of these two
courts reduces overlap ing Tunetiang and ides for more ficient
court edministratita | or enems d be savings through
the maintenance of one clerk's shana ieee.
he i et ee for the Federal Circuit
also provides a forum that wil rina] stability in the field
of patent law. Based on ie ovidaane th it had compiled, the Hruska Com-
mission singled out patent law as an area in which the application of
the law to the facts of a case often produces different outcomes in
different courtrooms in pb paces rs similar cases.’ ar, &
a Commission survey of practitioners, the patent bar indicated
uncertainty created ated by thet lack of national wer precedent was a signif-
icant prob and the Commission singled out patent law as an area
in which rig? pos forum-shopping is particularly acute.*
roposal to centralize patent appeals in a court
snot without cite, the fave rasa ly addressed in the i
held both earlier this year and duri Diaehs ites eaiaeioned
Seiten pen of the testimony, which an satemen ws pe be vce
urists, patent and representatives of ma
ex saped soe er eeagen seer by confirmed the
Hurska Commission that potent ons cases are yond lt Pr dicated
The testimony received by the committee also the basic ob-
jective of providing for uniformity of Seamed Berl cae: ae poo the
patent area. The committee found particularly persuasive the
mony of the users of the patent system. For example, Industrial Re Re-
search Institute is a private, non-profit corporation with a membership
of approximately 250 industrial companies that conduct a major por-
tion of the industria] research and deve t carried on in the
United States. It polled its membership found them overwhelm-
ingly in favor of centralizing patent appeals in a single court.’
creation of the Court of Appeals for the Federal Circuit will
produce desirable uniformity in this area of the law. Such ey
vill reduce the forum-shopping that is common to patent litigation.
The Hruska Commission’s patent Jaw consultants, James B. oo.
and Donald R. Dunner, concluded that forum-shopping on the seule
that occurs in patent law increases the cost of litigation and “demeans
the entire judicial process and the patent system as well.” * and wil
tem. Moreover, as the new court uniformity to this field
the number of appeals resulting from attempts to obtain different val.
ings on disputed legal points can be expected to decrease.
tereal Procedures’ Recommendations for Change, 18. 100-01, reprinted at @7 2D. 195.
atc oF a
Pe lpg Fa
sy ‘ne a bt S70. 90ch Cong. Hearings, (ntatement of
1§
101
cases. Rather, it wil] have a varied docket a broad range of
legal issues and types of cases. It will handle al] patent appeals, plus
government claims case and all other appellate matters that are now
a wide variety o
This rich docket assures that the work of the court will
be broad and diverse and not narrowly specialized. will
have no lack of exposure to a broad variety of lega! prob More-
over, the subject matter of the new court will be y mixed to
prevent an ] interest from dominating it.
It is important that the docket of the new court be not only varied
but also manageable. An analysis of the proposed workload discloses
The docketing of cases in the Court of Claims presents a confusing
statistical picture to the uninitiated. Some cases appear on the trial
CASELOAD IN THE COURT OF CUSTOMS AND PATENT APPLALS, FISCAL YEAR I9m]
Type of cme , Filet «6 Terminated
Total COPA canes _ i] iy
eT este Suetee. (etatements of Harry F. Manbeck and Desalé BR. Dunner.
Mz cele Cong. Meorings, (statement of Jedge Jen 0. Newman, March 30, 1979).
16
iy
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Repessitons ty antiete S55 Sages:
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17
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38
ta
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in the ee eee ore
provisions
Part C of title I contains sections concerning current service of cur-
rent j and Court of Claims commissioners, appointment of the
chief j of the United States Court of Ap for the Federal
Circuit, and TVA legal representation.
TITLE GOVERNANCE AND ADMINISTRATION
Title IT that our courts must be properly governed and
administered if the Is of fairness and eficiency in tho edministre-
tion of justice are to be achieved.
Chie} judge tenure
Under existing law, the chief of each Federal! court of appeals
or district court is the judge who is most senior in commission and
!
|
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P.L. 97-164
FEDERAL COURTS IMPROVEMENT ACT
ei 13 igee TUTE _ eB 3s
Ls ul iti i Agel fal i . f i
AO Peau ne Ha
Brit ait HEU E Hai H HH
ae ARE =
er ee sey TEL ; if: aie Ae i ii
E38 S883 53 a : Bs é
Bt Jinn ceadg teteld oe Gal
reaped UMS eR EE
FU HPL et dS
HOT PETA eget pete
LEGISLATIVE HISTORY
P.L. 97-164
(page 10)
tain service in a judicial capacity unless the employee is entitled to cer-
tain salary or annuity payments. Also the section states how certain
pension fund payments are to be handled by the Director of the Ad-
ministrative of the United States Courts and how thev are to be
treated for tax pu It is the clear intention of the Committee
that this section no substantive changes in the Federal Judicial
Section 207 requires the Administrative Office of the United States
Courts to pay a deposit into the civil service retirement fund for article
eee The Act ires the Administrative Office to deposit into the
d an amount sufficient to provide a full retirement annuity for
former Federa] judges who have f their lifetime salaries to ac-
of the United States to be assi temporarily to the position of
Administrative Assistant to the f Justice, Director of the Admin-
istrative Office of the United States Courts, or Director of the Federal
Center. Such service would be without additional compen-
i
g
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FEDERAL COURTS IMPROVEMENT ACT
P.L. 97-164
(page 11)
Publication of rules
Part F of title II amends T 131 of title 28 of the United States
Code by edding a new section ;
Paragraph ee eae oe re geoeening centint
the court.
of the business
(b) uires each court of to create an ad
comune -soseuainendationnte the’ Petee in formulating coe
of practice and of internal ie eS Se ide
fable essistanes to the jatees ia veloping sound rules and would
provide practitioners with useful information and « better under-
standing concerning the court’s business.
misfilings and dua) filings have become commonplace. The uncertainty
in autne shetuloh sheen which court has review authority creates
an unnecessary risk that a liti may find himself without a remedy
because of a lawyer's error or a technicality of procedure.
At t, the litigant’s main protective device, absent an adequate
r statute, is the wasteful and costly one of filing in two or more
courts at the same time. This puts increased burdens on the courts as
well as on the parties. d
Although most lems in this regard relate to controversies
involving the district courts and gp Pmrcdincbe there also have
been cases involving the Court of International Trade. and the Tem-
porary Eme Court of Appeals. Therefore, the language of Part
A of Title TI is broadly drafted to permit transfer between any two
federal courts.
Interest
Under current law, the interest rate on judgments in the Federal
courts is based on varying State laws and mently falls below the
conpennerery cost of money. Part B of title III sets a realistic and
jonally uniform rate of interest on judgments in the Federal courts
Cees weet be Sean Oe ee rate as determined by the
wulch anion SOE De a niin Woeeeioan ie neuen! actodiaet and
w exists lor a losi ttoa 5
accumulate eros Apa Regn thet award at the comarerelal sete
during the pendency of the appeal.
There are y no licable guidelines concerning
the award of prejudgment interest ederal courts. Yet such interest
may be essen order to compensate the plaintiff or to avoid unjust
enrichment of the defendant. For instance, a plaintiff who is unlaw-
TERee eRe S mater em ot
ee ee eee ee
LEGISLATIVE HISTORY
P.L. 97-164
(page 12)
fully deprived of the use of $20,000 in 1976 and who does not receive a
judgment until 1979, could maaan scm nyeatnatetele Soy seamen wg te |
investing the money at seven percent compounded interest. bi
provides that, where a de t knew of his liability, interest be
awarded oun tie petganint panes ae ee Sa ee
interest rate, where this is necessary to compensate the plaintiff. The
imposition of such interest would be left to the discretion of the dis-
Finally, the Committee took this rtunity to consolidate into
one statute the three provisions of Title 28 of the United States Code
dealing with the award of interest on judgments. Consequently the
provisions of this bill for prejudgment interest and a new interest ratc
ped ry, sep will apply uniformly to suits between private litigants
to suits against the government.
TITLE IV-——-MISCELLANEOUS PROVISIONS
Title IV contains three sections. The first section amends 28 U.S.C.
753 to allow the use of electronic sound recording, or other methods of
recording, in ee proceedings in addition to those methods which
mechanical means. The second section sets the general effective date
of the bill as sixty days after the enactment date. The third provision
addresses the issue of the effect of the bill on pending cases.
Secriox-Br-Secriox ANatrsis
TITLE I--U.S. COURT OF APPEALS FOR THE FEDERAL CIRCUIT AND UNITED
STATES CLAIMS COURT
Organization, structure, and jurisdiction
108
FEDERAL COURTS IMPROVEMENT ACT
[page B}
P.L. 97-164
uae 1
8 atl
d io ‘esl
que
: ties a
Neue Praaneedate
Ln
103 i
obey i
udges o
er
which
Court
is
171
vice
@ court
LY EP
Bt
iif
ys e 3
yaa 2s
ue
LEGISLATIVE HISTORY
P.L. 97-164
(page 14)
ie TURTLE GR
a Gil Gibb Geena &
fa itis Sarthe Tebi aa
ie As ay a
33 ven ee ieee Py | i § aA
Seen Paap
a ja Hite: eal
PRU ULArEA HATE
Ler ee 34 cH ae ad
ele Huet
for the Federal Cireur-
eS
ie
b3355
Sys
110
P.L. 97-164
FEDERAL COURTS IMPROVEMENT ACT
{| My AT MASA a
cra i Ee i ae ry
courts of appeals,
erence.
United
and appoin
re.
ref -
ook
w
paeeee, 90s
ars geen yr de
Circuit and the
Set ae
ion 415
j pate!
with the
ion 451
used in
the
the article
ds section
sana
tion
ensures tha
Director provi
new
of
Claims
with
open
from
(page 15]
from
of
judge
ich the
Court j
21
Court
amends
section
v
costae”
services
25
lll
similar to the
icial
28,
7
to
: all
oms and P’
retained
Paco’
t to
ederal Ci
rocedures
of the Judici
of ti
(a) (1)
re]
ws, The
lace where
the bill
and i
United
sections
deemed
take a
are
records
of «
in
Claims
y
Section wise
ure of a di
the
Court of
covered
Ne 5 af recges lace
EH ULTUE sie |
te ii it
—Section
which
the
The i
Federal Ci
ection 115.—Section 115
el
Circuit is structural]
as such, becomes
it
Le
i)
e
in
Hf
Ue
Hi
:
te
i
:
H
Fie
i
:
[
i
i
il
H
FFa
if
;
iL
ne
117.—Under existing law, suits in the Su Court and
of Claims are conducted and argued by the Attorney Gen-
1e Solicitor General, unless in a particular case the Attorne;
rects otherwise. See 28 U.S.C. 518(a). Section 117 of the
ill amende section 518(a) of title 28, United States Code, by deleting
ae
i
rez
Ss
¥
;
‘3
2
;
sé
‘
=
x
om
Fs
United States Claims Court, unless the Attorney General
otherwise.
Section 118.—Under current law. section 520 of title 28. United
of petitions in suite
ret
Appeals for the Federa] Circuit. Section 118(b) amends the section
heading of section 520 of title 28 to reflect this change. ,
Section 119.—Section 119(a) amends section 605 of title 28, United
States Code, to require approval of the budget estimate with respect
to the United States Court of Appeals for the Federal Circuit by that
court. This follows the pattern established for other courts of nation-
Section 119(b) is a technical. clarifying amendment adopted bv the
Committee to authorize that funds appropriated to the existing Court
of Customs and Patent Appeals and the Court of Claims for fiscal vear
1982 be made available for the new Court ot Anpeals for the Federal
Circuit and the new U.S. Claims Court. These funds are to be appor-
tioned among the new courts as determined by the Director of the
Administrative Office of the U.S. Courts in consultation with the Chief
Judges of the respective courts in a manner not inconsistent with Con-
iL db Te
ain if janie yaya:
| SIH Hut fle ila fates
rf Hl bls i 18 Be Pat ble ae 3 fi giles
Se ee ecuet ah Hike
iT fe y bitin TF Bute suies Wi as aay ath
ie any Fa itpas
BAT Bais raflas ite hae
HEE een i i bilabial
caer it uclaltle
Guin ae a8 aa: ip ile a ks
ee
LEGISLATIVE HISTORY
P.L. 97-164
[page 18]
Section 795 of title 28 concerns the appointment and duties of bailiffs
and for the Claims Court and is similar to existing law
concerning the Court of Claims.
peli ag reo yeagren a veges gponas of — Court ps"
ceedings is identical to existing law concerning reporting o
Court of Claims es
Section 797 of existing 28 U.S.C. relates to the recall of retired
commissioners of the Court of Claims. Recause the Court of Claims
is abolished. section 797 is repealed.
Section 122.—Section 122(a) of the Bill repeals em ed 53 of title
28 which, under existing law, concerns appointment duties of em-
ag techn gery and Patent —
ion 957 of title 28, United States C provides that certain
employees of the district court are not eligible for certain offices in the
IF ionation “(a)”.
Section 783.—Section 123 repeals sections 1255 and 1256 of title 28,
Court review of cases in the Court of Claims and the Court of Cus-
tome and Potent Apipeaie, Boviow of orn Tikes poeee pellate court
is covered by 28 U.S.C. 1254, which establishes me, <n for Su-
preme Court review of cases in the circuit courts of appeals.
jon 123 also amends the ansiysis at the beginning of chaptet
81 of title 28, United States Code, to conform with the repea of
regional courts of appeals of i
Gives regional courte of opPine injunctions and of jedgments in civil
actions for patent in which are except for an account-
114
FEDERAL COURTS IMPROVEMENT ACT
P.L. oi)
be inferred . “f- Hanford v. Davies,
163 U.S. 273° (1896). Thomas v. Board of Trustees of Ohio State
Unit., 195 U.S. 207°(1904). This caselaw isi in the Federal
Rules of Civil Procedure. Rule 8(s) (1 ires that a pleading
suiting Serch 0 duit tor oatibaaiale & thats on plain statement
ee eee iction to support it.
defendant in a civil proceeding may, at any time, assert a court’s
lack of jurisdiction over the subject matter. Dastiianieces, even though
the defendant has not so moved, Rule 12(h) (3), Federal Rules of
Civil Procedure, expressly provides that a court “shal dismiss the
action” “whenever it appears by suggestion of the parties or other-
wise that the court lacks jurisdiction of the subject matter.” What
this al] amounts to is that a court’s jurisdiction is not something that
¢.g., Eastport SS. Corporation v. United States, 178 Ct. Cl. 559, 372
F.2d 1 (1967 peggy cereals erp United States, 705
Ct. CL 741, 508 F.2d 817 (1974) ; United States v. Boe, 543 F.2d 151
(C.C.P.A. =) ; and tfredeen v. Banner, 598 F 2d 589 (C.C.P.A.
Court of Appeals for the Federal Circuit. However, the lan-
Snder 28 U.S.C. § 1358. This is e substantial requiremest. Immete
a
al inferential. and frivolous allegat
~~
j courts of appeals on other claims.
for example, Poinder of « patent claim in case whose
mere
vamen is antitrust shoul be permitted to avail a plaintiff of the
iction of the Federal Circuit in avoidance of traditional
of appeals. Federal District judges encouraged to use their au-
thority under the Federal a fe Civil Procedure, see Thelen 13(i),
6, 20(b), 42(b), 54(b), to ensure the integrity of the jurisdiction of |
a
involving substantia] antitrust issues from trivia] patent claims,
saleed to manigulats
counterclaims, cross-claims, or third party claims
appellate jurisdiction.
The Committee intends for the jurisdictional to be con
ir
;
> i
¢
;
a
5
é
F
:
uethee. the jalan ee ae een
section ° This
sw Todore’ conte Haaan adie EE aeee ataiaas te tonaseer
Ԥ Ge congue eee roper court, in the same manner as if r
ain
:
i
the com t or appeal had filed in that court in the fiirst in-
: stance. This provision, therefore, will allow the CAFC to transfer
Fs cases to the circuit court. or vice versa.
; Section 1995 establishes the jurisdiction of the United States Court
| of A for the Federal Circuit as follows :
ion (a) (1) of new section 1295 of title 28 gives the Court of
Appeals for Circuit jurisdiction of appeal in which
district court jurisdiction was based, in whole or in part, on section
that of district court decisions in cases invol copyrights
or and utes af Gn Ghes Lnoes ail enaiageto a eathe
Subsection (a) (2) of section 1295 of title 28 gives the Court of
Appeals for the Federal Circuit jurisdiction of any appeal from «
district court where the jurisdiction of the district court was based,
in whole or in part, on section 1346 of title 28, United States Code,
Sart St a ee ee eee eee ae chien le
tions 1346(e), , or 1346(e), or 1346(c) when the claim is
founded on an act of or & regulation for internal revenue,
end on sppeet 0 Guat See ee 1346(c) (Tort Claims
Act continue to go to regional courts of The Bill
saction 1346 te bring all other civil cases in the United
FEDERAL COURTS IMPROVEMENT ACT
Pil. 97-164
Bi g bry j 333d 3 HE in E24 pail He
1 ie i a je Hie ie ne inl: .
rf aE axis pupae 18 u H : i Ege suit - ult
HE Meer tr it ai SiN etal Si
ara Sebpdaenieg we ie SEeUE
sofa sitagubalbaseiars] aftil Sis] alereatea tails
ag | Ff #3 $5635 es rit 5 : a23 27 Ba H
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United States
7708(d) of
aria
8(g) (1)
‘
4
31
117
2345
Hi
of title 28
of the Con-
Circuit to review such
)
section 1295
in section 10(b
Subsection (c) of
4 Beass
itil
3
ate
14 £ $5.
rlluesety
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flies
ad +.
S83 te
BM Eee. mammal a —_—,- "~~ _—_—_— wa oO =
tease noted below. claims court
fg
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3 HE 3 THEE
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HLA
33
in
of arbi
be the
officials, to
go oe
lified
qua
+ rement a
by the contracti
aa
ward. The Commi
pete fair)
court tot
to com
the
for
y
ake care
me tee
SZegs
lie
a
lal
in
E
3
Hie
AHL
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HE
ttt
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ini
143 amends section 356
c) of title 2, United
B. the Federal Sal-
‘ofthe United Bene Ohne
it
1
dn
HM UnE ane Hey ra i
Weis Pie OS ae
Lael HG ie i
a
Bist BE ERAT
Pe Ett ae Be i au
tend ier SELES
ATE PL Fe a gait :
SEE pees tT His
3 ELE nat at
Heat en HE
affects the authority of the Tennessee Valley Authority to represent
itself by attorneys of its choosing.
TITLE TI—GOVERNANCE AND ADMINISTRATION OF THE FEDERAL COURTS
Chief judge tenure
:
i
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:
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5
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ible.
Phen seanillhdli ince ivghelen' dies ematsten 6 ision that
or viability in ¢ law of the circuit, section 204 amends 28
mmm = wen amauta, utente Titi tlt CEG
aserit Hie eszesgesenataays
is HH sis tis
ei i i an aie
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P 33" $2 4-0<% 328 eegtes
fi Headtliius aE Tue aH ie
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gf rai ii WEEE jel att
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Tk ii fisss
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Nik faa nie jut
—————e SE
LEGISLATIVE HISTORY
P.L. 97-164
{page 30)
TITLE II—JURISDICTION AND PROCEDURE
Transfer of cases
Section 301.—Because of the com of the Federal court
and of special] jurisdictional eatin = meget oh redetpennyegarent ym
filed in a court—either trial or ap not
Section 301 adds a new chapter to title 28 that would authorize the
court in which a case is improperly filed to transfer it to a court where
subject matter jurisdiction is . The case would be treated by the
Boston 508 -— Unies eorvent law, the inteenst sate granted on ude
ments d appeal is based on varying State laws and frequently
jw oh San a ee yee i, os ealely
may have an econom ve a judgment
in ender 00 selihn bile musnen and enememaiate ducers on ik ot the efter
ee — ——————————
iF; i ; titi HL AEE
: 8 ee
i: ha Uh ui ile
gee IE atonal
va Bt Te fe Fa
3] eR age Pe th Hue
aH fe
+ hie sue
aides Ha ini Ar
§
ie HB: Tate Nit
ee
3 299 983 83 ; j jit adel
: £33 373 g ie; of 7 ut
i A if Ee ea hel lal ul
: ; g - - Bis reat 23 it Bi y
Cae
BT fl ey alll aoe i Ht Hit
eT ea
al A i ell BAe THE fase
US.
significant regulatory
of rule XXVI of the
oS ee
In compliance with subsection 11 (b)
Rules of the Senate, the committee that no
im
8.
D.C., September £4, 1981.
, Garzert & Downs,
ashington,
(page 35)
Arrzror A
~
(4
Es
be
4
:
Forrreax, enome
E
Re RT at ie
she et ines i rei ibe ip i
fil at i
(hijp i UHI Pab
Hats if He Hae
Hi ati He 4 tt
Hage eal |
sell tates
ste ih atta bant
E* laa fats 333 bu His i
8 A ot | fil fiji s4as563
Bali PEE HH
AH iE fd Hey $: Hina
subg 3 ee (oul one 1: iE fal
in aul a HALE ihe
James B. Gascenetz.
join fully with Mr. Dunner in the views expressed
As a co-consultant with Mr. Dunner to the Hruska Commission, I
wish to note that I
in this letter.
Sincerely,
131
(page 37)
APPENDIX
Apuinistrative Orricz or U.S. Covrrs,
Washington, D.i., October 19, 1981.
Hon. Roazrr Doxz, \
Chairman, Subcommittee on Courts, Committee on\the Judiciary, US.
Senate, Washington, D.C.
Dear Mz. Cnammax: Mr. Velde has asked me to\respond to con-
pera on aay Sesame > Pattern een confusion o
patent and antitrust issues in casee which would be a
new ae hae ent ot Sena Se Se ©
. . . .
:
+ generalized context certain specific
pram. weeny ene ee te sheer yee embnge gm
er d with patent ften
FEDERAL COURTS IMPROVEMENT ACT
P.L. 97-164
mum achievement of a major of the bill, the provision of relia-
bility and uniformity in the to be applied in patent cases, would
require direction of the appeal in those cases to the Court of Appeals
in which issues of patent-misuse survive the trial
are rare. S. 1700 deals only with appeals.
Piegations Ghd any J tig geting p ion at the
upon to eliminate such issues at the trial stage. just as they do with
: - : beg, Farther
sive counterclaim the tiff, which counterclaim might not
involve any patent Such a gy te counterclaim might be
i court and at the same time solely as a matter of
ed ey ae ndyenapalhe ry nae orp eae
joinder, wing t patent case would be a tot ‘ourt
of A for Lie Pda Cheat aed takki othe cate aed be
a to the local circuit, would have aay ans
- line of distinction at the trial level. That
Wri James Weiize,
Legislative Affaire Officer.
~———eom — +
.
yw
i
:
!
é
;
;
i
SS ° Tt
es
he hho} My i dey ton
“se ‘eee
__
ee eee
em eee
OF ee 4
eure Ct
werd 377".
ack o “ok Z. «
- Aware ot at .
~ 9 nae Pie Boe wane y grt Tan | atta ae)
- - an ~ ve ™
-
<
.
ee a ee
LEGISLATIVE HISTORY
P.L. 97-164
{page 39)
ADDITICNAL VIEWS OF SENATOR PATRICK J. LEAHY
ON 8S. 1700
I su S. 1700 because I believe that patent law stands apart from
virt pos. Wyte BS ocadpes discipline both in its extreme focus on sci-
ence and its
The court of eppetls for the circuit will not solve any of the
substantive p with our patent laws, but it will go a long way to
i forum ing and reducing both the excessive cost and
inconsistency in patent
7? fa spring soowred gh reasonable likelihood of success.
I agree the concerns expressed about the precedent of es-
tablishing specialty courts, which in general would be very detrimen-
tal to our tradition sede tay tae om cam edhe rpc al
tor Baucus argued forcefully before this ittee that proposals for
immigration, and Hon. I would be dismayed if the re
igrati taxation. \ sm he proponents o
oe ee ee
Few phe ag~ any = pe ahora
mm re or is
.. uniqueness
litigation. In paten
E’aimost always dealing with claims ef innovation i
FEDERAL COURTS IMPROVEMENT ACT
P.L. 97-164 .
[page 40)
ADDITIONAL VIEWS OF SENATOR MAX BAUCUS ON
S. 1700—THE FEDERAL COURTS IMPROVEMENTS ACT
OF 1981
There are many portions of S. 1700 that I support and endorse as
needed improvements in our Federal judicial However, I can-
not support that portion of the legislation which would remove the
jurisdiction of all patent cases from the eleven Federal circuit court of
appeals. I believe this provision will undermine the status of existing
regional circuits, will lead to a proliferation of Federal specialty
courts and wil] not solve the problems it is designed to address in the
patent system.
Many of us in the Congress have been greatly disturbed by the grow-
or Begone: toward centralizing decisionmaking in Washington, D.C.
@: BP ortcthens neal Sain Segic- sce Avene ge
litigated in States, where the problems arise, rather than in the Dis-
trict of Columbia. Similarly, I believe that we must avoid centralized
specialty courts,
In 1975, the Hruska Commission addressed this issue in its final
report:
Giving a national court exclusive jurisdiction over appeals
in a category of cases now heard by the circuit courts would
tend to dilute or eliminate regiona) influence in the decision
of those cases. Our nation is not yet so homogenous that the
ee ee e+ eee ee ee
on owe ©
from consideration
s
5
e
&
s
5
B.
:
ce: ens
lar categories of cases would
i and
to
of .
also contract the breadth of experience knowledge which
Oo ee i bear on other cases; the
advantages of generalist judges diminish
as the judge's exposure to
;
is
:
iu
2
eo8e
ihe - 04
ices | - —s
LEGISLATIVE HISTORY
P.L. 97-164
ing a court not remove i ,
The Supreme non be patent ae in Sopessimesiir 1
Rare os aaa eee
have not resolved existing ambi in the law
The has not been the Supreme rt’s unwi to
es the appropriate Congresional response should be case,
. Se Congressional response should be cabetentive
rather than the issue on the new court.
wp peed cage wef dena ger na
a problem m anigus to patent low. ew Padi, Ds ag
shopping problems with a
Sie a ead ena! capo pi
attempt to rewrite venue laws in the patent area. Such
a much more appropriate and narrow response to
i
Hf
Finally, Public Law 96-517, which was enacted less than one year
will Patent and Trademark Office to reexamine an
issued patent. This is an important reform in our patent system. At
the time it was enacted, it was argued that each such ation would
dramatically increase the predictability and lower the expense of
as litigation. We ought to give this legislation time to work.
In conclusion, it is my view that some of presented by
the patent system can be addressed by means r than a specialize:|
it
if
consequences
is in the best interests of this country.
Both the American Bar Association and the American College of
Trial Lawyers have actively opposed that of S. 1700 that
pene 3 —— tent rhe jurisdiction the eleven spree
5 00 eae nn rection of with
tive areas of jurisdiction that a cae tea
97TH ConGRESS HOUSE OF REPRESENTATIVES Report
1st Session | No. 97-312
COURT OF APPEALS FOR THE FEDERAL CIRCUIT ACT OF
1981
Novesaser 4, 1981.—Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. Kasrenmeter, from the Committee on the Judiciary, submitted |
the following
REPORT
together with
DISSENTING VIEWS
(To accompany H.R. 4482)
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to yo. tees wen eee Se
Feder Grits enablh ¢ Unitd States Caine Cure and fo
e se caantene nile te report favorabl
the same,
on wi ae See ae ae tee Ein cneaeios
ap ae os
Strike out all after the enacting clause and insert in lieu thereof
the following:
That this Act may be cited as the “Court of Appeals for the Federal Circuit Act of
1981”.
TITLE I~UNITED STATES OF APPEALS FOR FEDERAL CIRCUIT
AND STATES CLAIMS
NUMBER AND COMPOSITION OF CIRCUITS
Sec. 101. Section 41 of title 28, United
cuit Court
. oj Agpesie Rasequnieation Ace See esas \
I I
ai qe Hy
: fil
7 ee Lae if
2 ete bj
3 id i Hib ath
| ERE ait
pan r ue
fd anil} snd ane ae
i i ale i
tig ae i a
Ha
: & Hit
HH
aaa UAT ag LG) aa)
He jut il taal ll | I Hh i ie it
tate ete a
eae a fet i ih
mee eran epee es re
jae ye Hv Hal ke the a
IH ait a ii ca ee
iit : 1 #
iE ial Ht net EabL te i ig :
—.
4
REPEAL OF PROVISIONS RELATING TO THE COURT OF CUSTOMS AND PATENT APPEALS |
Sec. 106. Chapter 9 of title 28, United States Code, and the item relating to
ter 9 in the chapter analysis of part | of such title, are repealed. ae
Sac. 107. Section 256(b) of title 28, United States Code, is amended by striking out
pectien TOSSES Gas Ge thee Dbowe Ciscegh, 1 ties seeien’ gue tneareng © tee
thereof “section 1292(dX1) of this title, the United States Court of Appeals for
the Federal may, in its discretion, consider the appeal”.
ASSIGNMENT OF JUDGES
108. (aX1) Subsection (b) of section 291 of title 28, United States Code, is re
(2) Subsection (c) of section 291 of such title is amended by striking out “(c)” and
inserting in lieu thereof “(b)”.
(>) Section 292(e) of title 28, 'Jnited States Code, is amended by striking out “the
Court of Claims, the Court of Customs and Patent Appeals or” and by striking out
i
“§ 293. Judges of the Court of International Trade”.
(3) The item relating to section 293 in the section analysis of chapter 13 of title
United States Code, is amended to read as follows: ”
“T38 Jedges of the Court of Lnternetional Trade.”
(4) Section 160(a) of title 28, United States Code, as that section will become effec
tire ge Agril 1, 1504, fs amended by ctriking out “sltley" and inserting in lien there
Sections at title 28, United is amended out
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REPEAL OF PROVISIONS RELATING TO THE COURT OF CUSTOMS AND PATENT APPEALS
Sec. 128. (a) Section 1926 of title 28, United States Code, is amended
Sac. 127. Chapter 98 of title 28, United States Code, and the item relating
ter 93 in the chapter analysis of part [V of such title, are repealed. “=
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