Appendix — National Business Systems, Inc. v. AM International, Inc.
Supreme Court brief1985
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84-1438 MAR 2D 1965
ALEXANDER STEvas,
No. CLERK
In THE
Supreme Court of the United States
OCTOBER TERM, 1984
NATIONAL BUSINESS SYSTEMS, INC., et al
Petitioners,
v.
AM INTERNATIONAL, INC., et al.,
Respondents.
APPENDIX I TO
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
EDWARD S. IRONS
1800 M Street, N.W.
Suite 1000 North
Washington, D.C. 20086
(202) 822-2939
Counsel for Petitioners
| SSE Ss SESS SS "SSCS
WILSON - Eras Printing Co.. Inc. - 7689-0096 - WASHINGTON. D.C. 20001
E
Pi
—
ye the hy
TABLE OF CONTENTS
APPENDIX A —Court of Appeals’ Opinion -...............
APPENDIX B —District Court’s Memorandum Opin-
ion
APPENDIX C —Court of Appeals’ Order Denying
Petition for Rehearing
Pree Peer r reer Pee eer es
APPENDIX D —Court of Appeals’ Order Denying
Appellants’ Motion to Correct Errors
and Denying Appellants’ Motion for
EATEN i iS ieee
APPENDIX E —Court of Appeals’ Order Amending
Rn cok LS ot ee eee
APPENDIX F —Court of Appeals’ Order Staying
Issuance of Mandate ..........
APPENDIX G —Court of Appeals’ Corrected Order
Staying Issuance of Mandate ............
APPENDIX H —Appellants’ Petition for Rehearing
with Suggestion for Rehearing En
RES EEO IES ESE eee ee
APPENDIX I —Appellants’ Motion to Correct Errors
in Opinion Filed September 20, 1984..
APPENDIX J —Appellants’ Motion for Sanctions ....
APPENDIX K —Memorandum in Support of Appel-
lants’ Motion for Sanctions .................
APPENDIX L —AM International’s Memorandum in
Opposition to Appellant’s Motion for
Sanctions
Oe eee Pe eee eee eee eee ee eee eee
APPENDIX M—Reply Memorandum in Support of
Appellants’ Motion for Sanctions ....
APPENDIX N —Appellees’ Memorandum in Opposi-
tion to Appellants’ Motion to Correct
Errors in Opinion
25a
66a
69a
Tla
73a
75a
95a
114a
115a
140a
148a
ii
TABLE OF CONTENTS—Continued
APPENDIX O —Defendants-Appellees’ Answer to
Appellants’ Petition for Rehearing
With Suggestion for Rehearing En
TO sisi i een eel
APPENDIX P —Petition for Rehearing of Appellants’
Motion for Sanctions with Sugges-
tion for Rehearing En Banc ..............
APPENDIX Q —Court of Appeals’ Order Denying
Petition for Rehearing of Appellants’
Motion for Sanctions and Denying
Appellees’ Motion to Reconsider Or-
der Staying Issuance of Mandate ......
APPENDIX R —Plaintiffs’ Supplemental Proposed
Fact Findings 245-249
APPENDIX S —Statutes and Rules _.............................
Page
164a
180a
la
APPENDIX A
IN THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
No. 82-2393
NATIONAL BUSINESS SYSTEMS, INC., et al.,
Plaintiffs-A ppellante,
V.
AM INTERNATIONAL, INC., e¢ al.,
Defendants-A ppellees.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 80 C 4915 & 81 C 6227—Nicholas J. Bua, Judge.
OPINION
Filed September 20, 1984
Before PELL and ESCHBACH, Circuit Judges, and JAME-
SON, Senior Dictrict Judge.*
JAMESON, District Judge. National Business Systems,
Ine. (NBS) appeals from those portions of the judgment
of the district court (1) holding claim 7 of AM Interna-
* Hon. William J. Jameson of the District of Montana, sitting by
designation.
2a
tional Inc.’s (A.M.) patent No. 3,272,120 valid and in-
fringed: ‘2) denying NBS costs and attorneys’ fees; and
(3) graucing an injunction against further infringement
of claim 7 by NBS.' We affirm and remand for a deter-
mination of damages.
I. Factual Background
This appeal concerns a single patent, No. 3,272,120,
(7120) entitled “Address Printing Machines with Roller
Platens,” issued to AM (as assignee of the inventor, D.W.
Johnson) on September 13, 1966 from an application filed
October 22, 1964.2 The patent was described by the dis-
trict court as follows:
The ’120 patent discloses and claims a data re-
_corder using a two platen roller, two stroke (forward-
return) method for imprinting forms from embossed
printing plates or cards, such as are used in credit
transactions in department stores and gas stations
and in finance institutions with bank cards. The
data recorder disclosed in the ’120 patent has a dual
1 Exclusive jurisdiction over patent appeals is now vested in the
United States Court of Appeals for the Federal Circuit, 28 U.S.C.
§ 1295(a) (1) (as amended April 2, 1982). The Federal Courts Im-
provement Act that amended section 1295, however, provided:
“any case in which notice of appeal has been filed in a district
court of the United States prior to the effective date of this Act
[October 1, 1982] shall be decided by the court of appeals to which
appeal was taken.” Federal Courts Improvement Act, Pub.L. No.
97-164, § 403(e), 96 Stat. 37, 58 (1982). The notice of appeal in this
case was filed before October 1, 1982, and therefore this court
properly acquired jurisdiction.
2 The validity of three other patents held by AM—No. 3,138,091
(091) 3,340,800 (’800) and 3,763,777 (’777), was also determined
by the district court. The court held claim 12 of the ’800 patent and
claims 1-3 of the ’777 patent invalid and claims 1 to 6 of the ’120
patent, claims 1-11 of the ’800 patent, and claims 4 and 5 of the
"177 patent not infringed. In a prior order the court held the ’091
patent valid but not infringed.
3a
platen roller arranged on a double eccentric shaft
constituting a platen assembly which allows for selec-
tive imprinting of characters from the embossed
plates or cards. A first platen roller is lowered and
imprints on the form the first portion of characters
as it rolls along the embossed plate or card, which
is on the bed of the data recorder, in a left-to-right
stroke of the platen carriage, which houses the platen
assembly and is operated by hand. The first platen
roller is then raised and a second platen roller is
lowered to imprint the remaining portion of the
characters as it rolls along the embossed plate or card
in a right-to-left return stroke.
The AM machine was designed to meet a particular de-
mand for an imprinter that could produce imprints on
carbon form sets sufficiently clear to be read accurately
by machine. The demand in part grew out of the Ameri-
can Bankers’ Association’s decision to adopt “magnetic
ink character recognition symbols” (MICR symbols) for
imprinting deposit slips, receipts, and other forms. As
the patent examiner remarked in 1966, “[a]lthough the
use of MICR characters has greatly increased the speed
and efficiency with which the imprinted forms can be
sorted, a considerable amount of difficulty has been en-
countered in the imprinting of the MICR characters on
the forms.” After listing recent improvements in the
design of imprinters and form sets, the examiner de-
scribed the principal object of the AM machine: “it is
the object of the present invention to further advance
current practices of imaging form sets with characters
having a high degree of clarity and outline accuracy
through the use of small data recorders.”
The ’120 patent listed seven claims, the last of which
was held to have been infringed. Claim 7 is described in
the patent:
7. A method of making an impression on a form set
from an embossed printing device which utilizes a
4a
carriage movable in opposite directions between a
first and second position and having a pair of roller
platens rotatably supported thereon, rolling one of
the platens in printing relation to one portion of the
printing device with the other platen in non-printing
relation to another portion of the printing device
when the carriage is moved in one direction, and
rolling the other platen in printing relation to the
other portion of the printing device with said one
platen in non-printing relation to said one portion
when the carriage is moved in the opposite direction.
Accompanying and illustrating the claims in the patent
were drawings showing “a preferred embodiment of the
present invention” as a “small data recorder” with its
carriage and platform holding a merchant plate and
customer card.
II. Proceedings Below
On April 27, 1978 AM initiated the proceedings leading
to this litigation when it applied for reissue of the ’120
patent pursuant to 35 U.S.C. § 251. The purpose of the
reissue proceeding is to correct inadvertent errors in the
original patent which may make it “wholly or partly in-
operative or invalid.” Jd. AM sought to amend its patent
by adding additional references to “prior art.” Prior art
references are important because the statutory presump-
tion of the patent’s validity, 35 U.S.C. § 282, “is ‘largely,
if not wholly, dissipated’ when the pertinent prior art is
not considered by the Patent Office.” Medical Laboratory
Automation v. Labcon, Inc., 670 F.2d 671, 674 (7th Cir.
1981) (quoting Chicago Rawhide Mfg. Co. v. Crane Pack-
ing Co., 523 F.2d 452, 458 (7th Cir. 1978), cert. denied,
423 U.S. 1091 (1976) ). Failure of the examiner to con-
sider pertinent prior art, then, leaves the patent open to
attack on numerous grounds such as “obviousness” (35
U.S.C. § 103), anticipation (35 U.S.C. §102(a)), and
fraud on the Patent Office (37 C.F.R. § 1.56).
A eee abe taal mete
se Ma
5a
On November 17, 1980, NBS filed a petition and pro-
test in the reissue proceeding, asking the Patent Office to
withdraw AM’s application and to strike it from the Pat-
ent Office files for violation of the duty of disclosure
required under 37 C.F.R. § 1.56. The patent examiner’s
initial opinion on February 12, 1981 noted that a prior
art patent No. 3,340,800 (’800), also assigned to AM,
“would clearly have been material and would have been
a most pertinent reference.” The examiner then con-
sidered the merits of the reissue application and rejected
all claims of the ’120 patent. ‘The examiner specifically re-
jected Claim 7 on two grounds: (1) “under 35 U.S.C. § 102
(a) as fully anticipated by Cox [patent No. 539,356]”;
and (2) “as being ‘on sale’ [under § 102(b)] more than
a year before the [October 22, 1964] filing date” of the
original 7120 patent application. AM appealed to the Pat-
ent Office Board of Appeals. At AM’s request the appeal
was suspended pending the outcome of this litigation.
While the reissue proceedings were still pending, appel-
lant NBS filed two complaints in federal district court.
In periinent part NBS sought a declaratory judgment
“for the purpose of resolving an actual controversy be-
tween the parties with respect to the validity, enforce-
ability and infringement by plaintiffs of each of AM’s
United States Patents 3,138,091; 3,272,120; 3,340,800;
3,763,777.” NBS also sought treble damages and attor-
neys’ fees under 35 U.S.C. ®§ 284 and 285 respectively.
AM counterclaimed against NBS, alleging the validity
and infringement of each of its four patents and similarly
requesting treble damages and attorneys’ fees. The trial
lasted eleven days, from April 13 to April 28, 1982.
On August 26, 1982, the district court issued a 49-page
memorandum opinion, with a careful analysis of the ex-
pert testimony, exhibits, and applicable law.’ The court
concluded, inter alia, that claim 7 of AM’s ’120 patent
3 See National Business Systems, Inc. v. Am. Intern. Inc., 546
F.Supp. 340 (N.D. Ill. 1982).
6a
was “valid and infringed by plaintiffs’ devices.” The court
enjoined NBS from further manufacture and sale of the
infringing imprinters and ordered an accounting “as to
the amount of damages suffered by AM by reason of
NBS’ infringement of Claim 7.” Based on this accounting,
the court ordered that “AM shall recover from Plaintiffs
the amount of these damages, not less than a reasonable
royalty.”
Observing that “this is a close case,” that “at any time
the validity and infringement of the three patents was
‘open to honest doubt,’ ” that “defendants have not proven
that plaintiffs acted in a bad faith belief that the patents
were invalid,” and that “defendants have not carried their
burden of proof as to willful infringement,” the court
denied both parties’ requests for treble damages and
attorneys’ fees.
Finally, in the same order, the court certified its judg-
ment for immediate appeal pursuant to Fed.R.Civ.P. 54
(b). NBS now appeals both the court’s judgment of
validity and infringement and its denial of attorneys’ fees
and costs.
III. Contentions on Appeal
Appellant NBS raises numerous issues on appeal which
are summarized in the following five contentions:
1. The district court was bound by the Patent Office’s
final rejection of the reissue application, and alter-
natively AM is “collaterally estopped to assert that
claim 7 is valid, having unsuccessfully contested
that issue in a fair proceeding before the [Patent
Office] ;”
2. Claim 7 is invalid for being obvious under 35 U.S.C.
§ 103.
8. Claim 7 is invalid, having been “anticipated” by
prior art under 35 U.S.C. § 102(a) and having been
“on sale” for more than a year as prohibited by 35
U.S.C. § 102 (b).
Se Neel Mh nih Wa kt Sl Tease le Ath
7a
4. The court erred in concluding that claim 7 was in-
fringed under the “doctrine of equivalents.”
5. The court erred in denying NBS attorneys’ fees and
costs provided for under 28 U.S.C. § 1927 and 35
U.S.C. § 285.
IV. Effect of Patent Office Reissue Decision
NBS contends that the Patent Office’s decision reject-
ing claim 7 in the reissue proceeding was entitled to a
“presumption of correctness” in the district court. This
presumption, NBS argues, shifted the burden to AM to
prove the decision was wrong. Alternatively, NBS ar-
gues that “[{i]ntertwined with the presumption” is the
doctrine of collateral estoppel which would prevent AM
from relitigating the same issues decided by the Patent
Office.
A patent is presumed valid. 35 U.S.C. § 282. This
court has held unequivocally that section 282 “places the
burden of persuasion on the party attacking the validity
of the patent. This burden remains upon the alleged in-
fringer throughout the [judicial] proceeding and is in
no sense dependent on the character of the proceedings
before the Patent Office... .” Chicago Rawhide Mfg, Co.
v. Crane Packing Co., 523 F.2d 452, 457-58 (7th Cir.
1975), cert. denied, 423 U.S. 1091 (1976).
In Johnson & Johnson v. Wallace A. Erickson & Co.,
627 F.2d 57 (7th Cir. 1980), we considered whether a
district court could compel a reissue proceeding as a
condition precedent to adjudication in the court. In
holding that the district court lacked the power to com-
pel a prior resort to the Patent Office, we first noted that
“the only authority competent to set a patent aside, or to
annul it, or to correct it for any reason whatever, is
vested in the Courts of the United States, and not in the
department which issued the patent,” quoting from Mc-
Cormick Harvester Co. v. Aultman, 169 U.S. 606, 609
saat
(1898) Id. at 59. We concluded that a prior reissue pro-
ceeding would have no effect on subsequent litigation
over the validity of a patent:
The doctrine of primary jurisdiction does not apply.
The validity of patents is “within the conventional
experience of judges... .” The question of the valid-
ity of any particular patent is a private issue be-
tween the patentee and alleged infringers, and nct a
public issue of industry-wide or regulatory concern.
Finally, the factual adjudications of the Patent Of-
fice, unlike most administrative factual adjudica-
tions, . . . are not conclusive if supported by sub-
stantial evidence on the record considered as a whole.
The ultimate question of patent validity is one of
law and not subject to the clearly erroneous stand-
ard of review. ... Thus, the compelled reissue pro-
ceedings would have no effect whatever on the ju-
627 F.2d at 61-62 (citations omitted, emphasis added) ;
see also Application of Hitchings, 342 F.2d 80, 82
(C.C.P.A. 1965) (even within the Patent Office “prin-
ciple of res judicata should not apply where the initial
decision is no more than an unappealed final rejection
of an examiner.”); cf. Mooney v. Brunswick Corp., 663
F.2d 724, 731 (7th Cir. 1931) (irregularities in reissve
proceeding diminished presumption of validity).
In the subsequent case of Singer Co. v. P. R. Mallory
& Co., Inc., 671 F.2d 282 (7th Cir. 1982), reversing an
order of the district court enjoining a patentee from
proceeding with its patent reissue application, we recog-
nized that the statutory procedure under 35 U.S.C. § 251
would “permit a review of prior art by an agency with
particular expertise in the area, and... provide a guide
to the patentee as to the advisability of continuing ex-
pensive infringement litigation.” Jd. at 236. On the
other hand, we also noted that a reissue of the patent
would not affect the substantive rights in the litigation
9a
of the party attacking the validity of the patent. “The
district court will still rule on... [the] prior art claims,
thus providing a remedy at law for any ‘incorrect’ find-
ings by the Patent Office.’’ Id. at 235.
The courts generally defer to the technical expertise
possessed by the Patent Office in originally issuing a
patent. This expertise and corresponding judicial def-
erence are the practical underpinnings of the statutory
presumption of validity surrounding patents. See Chi-
cago Rawhide Mfg. Co., 528 F.2d at 458; Parker v.
Motorola, Inc., 524 F.2d 518, 521 (5th Cir. 1975). But
less deference is appropriate for a patent office finding
of invalidity in a reissue proceeding because, as we
pointed out in Johnson & Johnson, patent validity is a
question of law reserved exclusively to the federal courts
in de novo proceedings. Here, special deference to the
Patent Office decision is particularly inappropriate be-
cause the patent had been in existence for over 11 years
and because the district court, having the benefit of ex-
tensive proof by expert testimony and demonstrative evi-
dence, issued a detailed, well-reasoned opinion. The de-
cision of the Patent Office in the reissue proceeding is
neither cloaked in a “presumption of correctness” inde-
pendent of the patent nor entitled to special deference
in a separate federal court adjudication of patent validity.
V. Validity of Claim 7
It is well established that “the ultimate question of
patent validity is one of law... .” Graham v. John Deere
Co., 383 U.S. 1, 17 (1966); Medical Laboratory Auto-
mation v. Labcon, Inc., 670 F.2d at 672. The Supreme
Court has made it equally clear, however, that the three
conditions of patent validity—novelty, utility (defined in
35 U.S.C. $§101 and 102), and “nonobviousness” (35
U.S.C. §103)—are legal issues which lend themselves
to critical factual inquiries. See Graham, 383 U.S. at
17.
10a
In Republic Industries Inc. v. Schlage Lock Co., 592
F.2d 963, 972-73 (7th Cir. 1979), and Dual Mfg. & En-
gineering, Inc. v. Burris Industries Inc., 619 F.2 i 660,
665 (7th Cir. en banc), cert. denied, 449 U.S. 870 (1980),
we summarized the extent of the presumption of valid-
ity of a patent, noting that the presumption is not con-
clusive, but merely places the burden of proof on the
party attacking the validity of the patent. We noted
further that the presumption does not exist against evi-
dence of prior art not before the Patent Office, and that
even one prior art reference not considered by the Patent
Office can suffice to overthrow the presumption.
Even though the presumption of validity is weakened
by the failure of the Patent Office to consider all per-
tinent art before issuing the patent, the “degree by which
it is weakened depends on a balancing of the pertinence
of the newly cited art with the pertinence of the art con-
sidered by the Patent Office.” Tee-Pak, Inc. v. St. Regis
Paper Company, 491 F.2d 1193, 1195 (6th Cir. 1974).
We now consider the various alleged claims of invalid-
ity in light of these principles.
A. Obviousness
NBS contends that claim 7 of the ’120 patent was “ob-
vious” in light of prior art patents ’800 and ’725. The
obviousness bar appears in 35 U.S.C. § 103:
A patent may not be obtained .. . if the differences
between the subject matter sought to be patented
and the prior art are such that the subject matter
as a whole would have been obvious at the time the
invention was made to a person having ordinary skill
in the art to which said subject matter pertains.
The Supreme Court has set out standards for applying
section 103 in Graham v. John Deere Co., 383 U.S. at 17:
Under § 103, the scope and content of the prior art
are to be determined; differences between the prior
art and the claims at issue are to be ascertained; and
the level of ordinary skill in the pertinent art re
solved. Against this background, the obviousness or
nonobviousness of the subject matter is determined.
This court has consistently followed the guidelines. See,
e.g., Dickey-John Corp. v. International Tapetronics Corp.,
710 F.2d 329 (7th Cir. 1983); Novo Industri A/S v.
Travenol Laboratories, Inc., 677 F.2d 1202, 1206 (7th Cir.
1982); Dual Mfg. & Engineering v. Burris Industries,
619 F.2d 660, 666 (7th Cir. 1980).
The district court similarly followed the Graham guide-
lines. First, the court determined the scope and content
of the prior art patents:
The patents referred to by [NBS’s expert] VanDer
Linden include Nos. 1,280,192; 1,941,667; 2,775,936;
3,018,725; 3,113,615; 3,340,800. All but one of these
patents discloses either a single platen roller operat-
ing in a single stroke method, tandum [sic] platen
rollers operating in a single stroke method, or two
platen rollers operating in a single stroke, idling
return method. The ’800 patent discloses a two platen
roller, multiple stroke imprinter.
Second, the court noted the differences between the
prior art and the claims at issue:
While certain elements of Claim 7 of the 7120 patent
were disclosed in the prior art, the prior art com-
bines none of these elements to produce the result
which makes the 7120 patent ‘istinctive: selective im-
printing by two platen rollers on opposite strokes.
546 F.Supp. at 352.
lla
Finally, although the district court made no specific
finding of the contemporaneous level of skill in the perti-
nent art, it is clear from the several references to that
guideline in the court’s opinion that it resolved the level
of ordinary skill in the art based on the expert testimony
12a
and the prior art itself. Moreover, at least one expert
testified that “[m]y designers would have had a very bad
time” simply combining the prior art to produce the dis-
puted invention. We are satisfied, therefore, that the
district court followed the approved procedure in its anal-
ysis of the obviousness issue.
The obviousness issue presents a very close question
in this case. Despite its conclusion that “Claim 7 of the
7120 patent would not have been obvious to one reason-
ably skilled in the art at the time the invention was
made,” the district court observed that the ’800 patent
is the “closest” prior art. It discloses a two roller machine
for selectively imprinting in four strokes: the first roller
on the first stroke; an idling return stroke; then the sec-
ond roller on the third stroke; and an idling return fourth
stroke. It is distinguished from the ’120 patent princi-
pally because it does not imprint in both directions, re-
quiring only two strokes. In light of the ’800 patent, it
would seem a logical improvement, if not an obvious one,
to have designed a machine to imprint on opposite strokes.*
We are persuaded, however, that the district court
reached the right conclusion for two reasons. First, we
are aware that a finding of obviousness might be the prod-
uct of impermissible hindsight, reached without a precise
appreciation of the contemporaneous level of skill in the
art. See Walt Disney Productions v. Fred A. Niles Com-
munications Center, Inc., 369 F.2d 230, 234 (7th Cir.
1966). Second, as Justice Stevens concluded in a similar
case while a member of this court:
*The NBS expert testified that it would have been “very, very
obvious” to combine the prior art to produce the device disclosed
in the ’120 patent. As we noted in Dual Mfg. & Engineering v.
Burris Industries, 619 F.2d at 666 n. 4, however, “we cannot treat
the witness as testifying as an expert witness on a disputed fac-
tual matter for he was giving an opinion on the ultimate legal
question for decision, that of obviousness.”
13a
[A]s we read the transcript of the testimony in this
case, we are impressed with the importance of having
live witnesses, subject to cross-examination, explain
the operation of physical exhibits in a way which
enables a district judge to understand what is before
him and to interrupt with proper questions when he
does not understand. ... The trial judge really is in
a better position to evaluate the obviousness issue
than we are... . In this court it is appellant’s burden
to persuade us that an intelligent district judge, who
has demonstrated a thorough understanding of the
relevant art, committed an error requiring reversal.
Chicago Rawhide Mfg. Co. v. Crane Packing Co., 528
F.2d at 460. In this case the district court’s opportunity
to base its conclusions on live testimony is critically im-
portant. In its discussion of the obviousness issue, the
district court made several important credibility assess-
ments, specifically crediting the testimony of AM’s expert
and rejecting that of NBS’s expert. Because we are
5 The testimony on which the district court relied consists of the
following exchange during the rebuttal testimony of John A. Maul,
AM’s sole expert witness, who for 22 years had worked as AM’s
engineer designing and developing imprinters:
Q. Now, during NBS’ defensive case, Mr. VanDerLinden
expressed his opinion that the subject matter of Claim 7 of
the Johnson patent was obvious based on the ’192 Duncan Pa-
tent, the 667 Eley Patent, the ’863 Hueber Patent, the 936
Curtis Patent, the '725 Maul Patent, the 516 Johnson Patent,
and the ’800 Gruver Patent. Do you agree with his position
or opinion?
A. No, Ido not.
Q. What is your opinion?
A. I find that there is no teaching how to put all of these
elements together and come up with the Johnson.
Q. You mean the Johnson method as set in Claim 7?
A. Yes.
Q. Are these patents considered collectively deficient in any
respect relative to Claim 7 of Johnson?
A. These patents considered collectively have no common
basis where one of the roller platens prints on the left right
stroke and the other prints on the right to left stroke.
14a
unable to make these credibility assessments, we agree
that “[t]he trial judge really is in a better position to
evaluate the obviousness issue than we are,” notwithstand-
ing that the issue is a legal question freely reviewable
by this court. Here, the district court credited ‘“defend-
ants’ expert testimony” and rejected “plaintiffs’ expert
testimony. Based on the prior art and the expert testi-
mony,” the court found “Claim 7 of the ’120 patent would
not have been obvious to one reasonably skilled in the art
at the time the invention was made.” 546 F.Supp. at
352-53. There is substantial evidence to support the
court’s findings of fact, and NBS has not convinced us
that the trial judge made an error of law in holding claim
7 “nonobvious”’.
B. Anticipation
As the district court observed, “[a]nticipation is a
strictly technical defense.” Jd. at 350 (citing Illinois Tool
Works, Inc. v. Sweetheart Plastics, Inc., 486 F.2d 1180,
1182-83 (7th Cir.), cert. denied, 403 U.S. 942 (1971)).
The defense of anticipation derives from the requirements
for novelty found in 35 U.S.C. § 102(a):
A person shall be entitled to a patent unless—
(a) the invention was known or used by others in
this country, or patented or described in a printed
publication in this or a foreign country, before the
invention thereof by the applicant for patent... .
In Saunders v. Air-Flo Co., 646 F.2d 1201 1203 (7th Cir.
1981), this court described the strict standards for an-
ticipation under section P02 (a) :
“A previous patent .. . anticipates a purported in-
vention only where, except for insubstantial differ-
ences, it contains all of the same elements operating
in the same fashion to/perform an identical function.”
(quoting Popeil Bros., Inc. v. Schick Electric, Inc., 494
F.2d 162, 164 (7th Cir. 1974) ).
15a
NBS contends, and the Patent Office concluded, that the
Cox Patent No. 539,356 “fully anticipated” claim 7 of the
’120 patent. The district court found that the Cox patent
“discloses a printing press and not a table-top imprinter
as embodied in Claim 7... . Although the Cox Patent
539,356 discloses two rollers capable of printing in op-
posite directions,” the court concluded, “. . . identification
of the device embodied in the Cox patent as a printing
press supports this court’s conclusion that there is no
identity of function between the two patents, and there-
fore no anticipation.” 546 F.Supp. at 350. NBS princi-
pally contends that the differing embodiment of the Cox
invention is “inconsequential” and furthermore is enccm-
passed by Claim 7 which “does not exclude the practice of
its ‘method’ with a ‘printing press’ nor limit such practice
to a ‘table-top imprinter’.”
We think appellant erroneously minimizes the distinc-
tion drawn by the district court between the Cox printing
press and the table-top imprinter. It is clear from the
testimony of both parties’ experts that the Cox device was
intended for printing an ink impression on a single sheet
of paper rather than imprinting from embossed plates
to a carbon form set. The same testimony discloses that
the rotation of the rollers on the Cox device differed from
those in the imprinter and that the “bed” of the printing
press moved during the printing process in contrast to the
stationary bed of the imprinter.® The district court cited
6 Roy VanDerLinder, appellant’s expert, was cross-examined con-
cerning the Cox patent as follows:
Q. Is there any such formset disclosed in the Cox patent?
A. I believe it is a piece of paper in the Cox patent.
Q. Itis not a formset, is that right, sir?
A. That’s correct.
Q. Then is it also correct that the Cox patent does not
disclose the method set forth in Claim 7 of the Johnson patent
and does not disclose the method which I have just recited
in my previous question?
[Continued }
16a
this testimony in its opinion and plainly relied on the
forege'ng differences between the two patents when it
distinguished the Cox device as a “printing press.” Con-
sidering this distinction, we can not conclude that the Cox
patent “contains all of the same elements operating in the
same fashion to perform an identical function” to the ’120
patent. See Saunder v. Air-Flo Co., 646 F.2d at 1203. The
district court correctly held that “there is no identity of
function between the two patents, and therefore no antici-
pation.”
6 [Continued ]
A. Yes.
Q. And looking at Figure 1, does it disclose a printing
press?
A. Yes.
Q. In the Cox Patent is there a disclosure of a single sheet
of paper as contrasted to a formset as we have just been
discussing?
A. Yes.
Q. In the Cox Patent is it a fact that a single sheet of paper
is printed on both sides as contrasted to imprinting one side
of a formset?
A. Yes.
Q. In the Cox Patent is it true that both the rollers and
the bed are moving, namely, the rollers are moving in one
direction and the bed moves in an opposite direction during
all printing activity?
A. Yes.
Q. Is it true that in the Cox patent that during all the
printing activities each of the rollers rotates in opposite direc-
tions as indicated by the arrows within the drawings? I’m
referring now to Figure—
A. Yes.
On redirect, VanDerLinden was asked whether he found “any
reason to criticize’ NBS’s contention that the Cox patent an-
ticipated the ’120 patent. The generality of the question and his
answer, “No, I do not,” did little to mitigate the damage of the
cross-examination or to enhance his credibility. The district court
justifiably relied heavily on the cross-examination testimony.
17a
D. “On Sale” Bar
NBS argues that claim 7 of the ’120 patent is invalid
because the invention it disclosed was “on sale” more than
one year before the date of the patent application. Title
35 U.S.C. § 102(b) provides in part:
A person shall be entitled to a patent unless—
(b) the invention was ... in public use or on sale
in this country, more than one year prior to the date
of the application for patent in the United States... .
We have held that “‘[o]n sale’ does not mean an actual
accomplished sale but activity by the inventor or his com-
pany in attempting to sell the patented idea.” Amphenol
Corp. v. General Time Corp., 397 F.2d 431, 433 (7th Cir.
1968) (quoted in Red Cross Mfg. v. Toro Sales Co., 525
F.2d 1135, 1189 (7th Cir. 1975)). In Red Cross we also
allocated the proper burden of proof between the parties:
When objection is asserted, the burden of establish-
ing that the patented product was “on sale” before
the critical date is on the objector. This burden must
be satisfied by clear and convincing evidence. Once
such activity has been successfully established, in-
validity may be avoided by showing that the sales
activity was “substantially for purposes of experi-
ment.” The burden of proving experimental purpose
rests with the inventor and must be met with “full,
unequivocal, and convincing” evidence.
525 F.2d at 1139-40 (citations omitted). Finally, the
Federal Circuit recently reviewed the proper test for de-
termining whether an activity was experimental. See TP
Laboratories v. Professional Positioners, Inc., 724 F.2d
965 (Fed. Cir. 1984). The court quoted at length from
City of Elizabeth v. American Nicholson Pavenent Co.,
97 U.S. 126 (1877) where the Supreme Court stated the
following general rule:
It is not public knowledge of his invention that
precludes the inventor from obtaining a patent for
it, but a public use or sale of it.
18a
Id. at 186. The Supreme Court then set out the follow-
ing general guidelines for applving the on sale provision:
When the subject of invention is a machine, it may
be tested and tried in a building, either with or with-
out closed doors. In either case, such use is not a
public use, within the meaning of the statute, so long
as the inventor is engaged, in good faith, in testing
its operation. He may see cause to alter it and im-
prove it or not. . . . So long as he does not volun-
tarily allow others to make and use it, and so long
as it is not on sale for general use, he keeps the in-
vention under his own control, and does not lose his
title to a patent.
Id. at 135.
In this case, the 7120 patent application was filed on
October 22, 1964. October 22, 1963, therefore, is the
critical date before which the invention could not be on
sale. The dispute here resolves into a single question: was
there clear and convincing evidence of “activity by the
inventor or his company in attempting to sell the patented
idea”? While the record on appeal again presents a close
question, we agree with the district court’s conclusion that
“plaintiffs have not satisfied their burden of proving com-
mercial activity of any kind with the requisite intention
to exploit the 7120 invention.” 546 F.Supp. at 354.
Four essential facts are undisputed: (1) in June of
1962 the American Association of Railroads (AAR) placed
an order with AM for certain imprinters, without specify-
ing imprinters embodying the ’120 invention; (2) in
August of 1963 the 7120 invention was still being tested
by AM engineers; (3) testing was largely completed when
the product was released for factory production on Sep-
tember 28, 1963;7 (4) the first actual sale of the machines
™The district court also found that “there is no evidence con-
clusive on whether the designed device was reduced to practice
and was capable of being produced.” The testimony of AM’s ex-
pert, however, establishes that the imprinter had been thoroughly
19a
to customers occurred sometime in late April or early
May, 1964. There is also evidence that prior to October
22, 1943 AM had tentatively assigned at least a wholesale
price to the imprinters. Absent from the record, however,
is any evidence that AM disclosed to AAR the ’120 inven-
tion or an imprinter embodying it. Before October 22
there is no evidence that AM even mentioned the model
of imprinters it intended to ship to AAR. In sum, the
evidence suggests an unusual circumstance where AM did
not offer or attempt to sell its invention prior to October
22, 1963 because it already had an existing general order
for imprinters. Evidence of AM’s unilateral decision to
fill the order with imprinters embodying the ’120 inven-
tion is insufficient to establish an attempt to sell without
some evidence of relevant communications with the cus-
tomer. See Red Cross Mfg. Corp. v. Toro Sales Co. 525
F.2d 1135, 1140-41 (7th Cir. 1975) (device displayed to
potential customer) ; Dart Industries v. E.i. DuPont De
Nemours & Co., 489 F.2d 1359, 13863 (7th Cir. 1973),
cert. denied, 417 U.S. 933 (1974) (device demonstrated
to numerous customers) ; Amphenol Corp. v. General Time
Corp., 397 F.2d 481, 436 (7th Cir. 1968) (device was
“placed ‘on sale’ by submitting a sample with a quoted
price to the customer’’). It is well established that “mere
existence of a sales contract is insufficient to establish a
placing ‘on sale’.” Hobbs v. A.E.C., 451 F.2d 849, 859
(5th Cir. 1971) ; see also Application of Dybel, 524 F.2d
1393, 1400 (C.C.P.A. 1975) (executory contract for sale
insufficient where there was no evidence that purchaser
knew how invention would perform) .®
tested and found operable prior to its release for factory produc-
tion. This is all that is required to show reduction to practice. See
CTS Corp. v. Piher int'l Corp., 593 F.2d 777, 779 (7th Cir. 1979).
Despite this clearly erroneous finding, the record provides suffi-
cient ground for affirming the district court’s ultimate conclusion
that the invention was not on sale.
8 We do not hold that the purchaser must have actual knowledge
of the invention for it to be on sale. See Application of Blaisdell,
242 F.2d 779, 783 (C.C.P.A. 1957). We merely state the obvious
20a
VI. Infringement—Doctrine of Equivalents
The district court found that “the NBS accused im-
printers do not ‘fall clearly within the claim,’ and there
is no literal infringement” of the ’120 patent. The court
then applied the doctrine of equivalents and held that “the
NBS imprinters are ‘the structual equivalent of the de-
vice described in’ Claim 7 of the ’120 patent, and ‘perform
. . . Substantially the same function, in substantially the
same way, to achieve the same results, even though...
[they] differ . . . in form or shape.’” Based on this
finding, the district court found that the NBS imprinters
infringed the ’120 patent. 546 F.Supp. at 349. NBS at-
tacks this finding as “rooted in a misconception of law”
which led the district court to erroneously confine its
inquiry to the language of claim 7. We disagree with
appellants’ characterization of the record and find no
“misconception of law” on the part of the district court.
The Supreme Court described the theory of the doctrine
of equivalents in Machine Co. v. Murphy, 97 U.S. 120,
125 (1878) : “if two devices do the same work in substan-
tially the same way, and accomplish substantially the same
result, they are the same, even though they differ in
name, form, or shape.” (quoted and approved in Graver
Mfg. Co. v. Linde Co., 339 U.S. 605, 608 (1950)). In
Graver Mfg. Co. v. Linde Co. the Court also made it clear
that:
A finding of equivalence is a determination of fact.
Proof can be made in any form: through testimony
of experts or others versed in the technology; by
documents, including texts and treatises; and, of
course, by the disclosures of the prior art. Like any
other issue of fact, final determination requires a
balancing of credibility, persuasiveness and weight of
evidence. It is to be decided by the trial court and
requirement that to place an invention on sale a manufacturer or-
dinarily must have some communication with its customers regard-
ing sale of the invention or the device that embodies it.
Zla
that court’s decision, under general principles of ap-
pellate review, should not be disturbed unless clearly
erroneous.
339 U.S. at 609-10. Finally the Court listed several fac-
tors that could influence a determination of equivalence:
Consideration must be given to the purpose for which
an ingredient is used in a patent, the qualities it has
when combined with the other ingredients, and the
function which it is intended to perform. An im-
portant factor is whether persons reasonably skilled
in the art would have known of the interchange-
ability of an ingredient not contained in the patent
with one that was.
Id. at 609.
The district court correctly followed the foregoing
guidelines in applying the doctrine of equivalents. The
court did limit its inquiry with respect to determining
literal infringement, but its finding of equivalence is prop-
erly based on expert testimony regarding the interchange-
ability of the “printing device” disclosed in claim 7 and
the two embossed plates used in the NBS imprinters.
The NBS imprinters print from one plate on the first
stroke and a second plate on the return stroke. NBS
argues that claim 7 is limited to imprinting “from differ-
ent portions of the same embossed printing device” on
opposite strokes. The court, however, specifically credited
the testimony of AM’s expert that “at tne time the ’120
invention was developed, up to the present, the imprinting
art has used printing device to mean a credit card and
station plate either separately or in combination.” Thus,
it is clear that claim 7 encompasses the variation prac-
ticed by NBS.°® The district court, tien, correctly held
® The Federal Circuit has noted that “an invention representing
only a modest advance over the prior art is given a more re-
stricted (narrower range) application of the doctrine [of equiva-
22a
that, despite minor variations, the NBS imprinters per-
formed the same function and achieved the same results
as the invention disclosed in claim 7.
VII. Attorneys’ Fees and Costs
The district court denied the NBS request for attorneys’
fees and costs attributable to the two patents found in-
valid. The court held that, “despite the weight of the prior
art, the issues of patent validity and infringement are
sufficiently debatable to counsel against an award of treble
damages and attorneys’ fees to plaintiffs under 15 U.S.C.
§ 285.” 546 F.Supp. at 364. The court repeatedly stressed
the “closeness” of the case, noting “that at any time the
validity and infringement of the three patents was ‘open
to honest doubt.’ ”” NBS attacks this conclusion and argues
principally that it is entitled to attorneys’ fees because
AM committed fraud on the Patent Office by violating its
duty under 37 C.F.R. § 1.56 to disclose material prior art.
Under 35 U.S.C. § 285 the district court “in exceptional
cases may award reasonable attorney fees to the prevail-
ing party.” We have consistently held that a refusal to
award costs and fees under 35 U.S.C. § 285 will not be
disturbed absent an abuse of discretion. See, ¢.g., Faulk-
ner v. Baldwin Piano & Organ Co., 561 F.2d 677, 685
(7th Cir. 1977), cert. denied, 485 U.S. 905 (1978); H. K.
Porter Co. v. Black & Decker Mfg. Co., 518 F.2d at 1177,
1178-79 (7th Cir. 1975). Further, we have restricted
awards under section 285 to “exceptional patent cases to
prevent gross injustice where fraud and wrongdoing are
clearly proved.” Faulkner v. Baldwin Piano & Organ Co.,
lents}.” Thomas & Betts Corp. v. Litton Systems, Inc., 720 F.2d
1572, 1580 (Fed. Cir. 1983). Granting that the '120 invention is
a “modest advance over prior art,” the question remains whether
the NBS variations are “the same as, or an equivalent of, the im-
provement claimed by the patentee.” Jd. There was substantial
evidence to support the district court’s finding that the NBS im-
printer was the equivalent of the '120 invention.
23a
561 F.2d at 685. Finally, we note the well-established rule
that “[f]raud must be proved by clear and convincing
evidence, and the party asserting it carries a heavy bur-
den.” Kansas Jack, Inc. v. Kuhn, 719 F.2d 1114, 1151
(Fed. Cir. 1983). To support a finding of fraud, the court
“must determine not only that the undisclosed art or in-
formation was material, but that the one charged with
nondisclosure knew or should have known of its ma-
teriality at the time.” Jd. at 1153.
In its opinion the district court considered in detail
each assertion of fraud and found that NBS had failed to
satisfy its heavy burden of proving deliberate misrepre-
sentations by “clear, unequivocal and convincing evi-
dence.” 546 F.Supp. at 354-55 (citing United States v.
American Bell Tel. Co., 167 U.S. 224, 251 (1897); Scott
Paper Co. v. Fort Howard Paper Co., 432 F.2d 1198,
1204 (7th Cir. 1970), cert. denied, 401 U.S. 913 (1971)).
NBS fails to cite any part of the record to contradict
this conclusion; particularly absent is evidence that AM
knew or should have known of the materiality of the omit-
ter prior art at the time of application. Under similar
circumstances we have emphasized that “the district court
was in the best possible position to assess attorneys’ fees
. . . if it deemed it suitable to do so.” Faulkner v. Bald-
win Piano & Organ Co., 561 F.2d at 685. Because NBS
has not convinced us that the district court abused its
discretion by refusing to award fees, we will not disturb
its decision.
VII. Conclusion
We conclude that the district court was not bound by
the findings of the Patent Office in the reissue proceed-
ing with respect to patent validity and that the court cor-
rectly found the facts and properly applied the law in
holding that claim 7 of the patent ’120 is valid. It is
neither obvious under 35 U.S.C. § 103, nor anticipated
under section 102(a), nor was it on sale under section
102(b) for more than a year before the original applica-
24a
tion. We conclude further that the district court properly
applied the doctrine of equivalents in finding that claim
7 was infringed by the NBS imprinter. The jucgment of
the district court is, therefore, affirmed and remanded for
a determination of damages pursuant to the district
court’s order of September, 1982.'°
AFFIRMED and REMANDED.
10 In its reply brief NBS argues cursorily that the district court
erred in issuing an injunction against further infringement. It now
appears this issue is moot in the absence of further proceedings
in the Patent Office. The patent was issued on September 13, 1966
for a 17 year term pursuant to 35 U.S.C. $154. The district court
issued the injunction on September 13, 1982 but simultaneously
stayed it pending this appeal. In the meantime, the patent expired
on September 13, 1983 and “the right to make, the right to sell,
and the right to use” the patented invention became “public prop-
erty.” Brulvtte v. Thys Co., 379 U.S. 29, 31 (1964).
25a
APPENDIX B
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
No. 80 C 4915
Hon. Nicholas J. Bua, Presiding
NATIONAL BUSINESS SYSTEMS, INC., et al.,
Plaintiffs,
Vv.
AM INTERNATIONAL, INC.,
Defendant.
No. 81 C 6227
Hon. Nicholas J. Bua, Presiding
NATIONAL BUSINESS SYSTEMS, INC., et al.,
Plaintiffs,
Vv.
AM INTERNATIONAL, INC., et al.,
Defendants.
MEMORANDUM OPINION
Filed August 26, 1982
This is a declaratory judgment action seeking to have
letters patent Nos. 3,272,120 (“120 patent”), 3,340,800
26a
(“800 patent”), and 3,763,777 (“777 patent”) held in-
valid, unenforceable and/or not infringed by the manu-
facture and sale of NBS imprinter Models 710 and 750
and of NBS imprinter Models 305 and 2025. The de-
fendants have counterclaimed alleging willful infringe-
ment of the same patents and imprinters. This action was
tried to the Court between April 13, 1982 and April 28,
1982.
I. General Description of the Patents
The ’120 patent discloses and claims a data recorder
using a two platen roller, two stroke (forward-return)
method for imprinting forms from embossed printing
plates or cards, such as are used in credit transactions in
department stores and gas stations and in finance insti-
tutions with bank cards. The data recorder disclosed in
the ’120 patent has a dual platen roller arranged on a
double eccentric shaft constituting a platen assembly which
allows for selective imprinting of characters from the
embossed plates or cards. A first platen roller is lowered
and imprints on the form the first portion of characters
as it rolls along the embossed plate or card, which is on
the bed of the data recorder, in a left-to-right stroke of
the platen carriage, which houses the platen assembly and
is operated by hand. The first platen roller is then raised
and a second platen roller is lowered to imprint the re-
maining portion of the characters as it rolls along the
embossed plate or card in a right-to-left return stroke.
The ’800 patent discloses and claims a data recorder
using a two-platen multiple (four) stroke method for se-
lective imprinting of paper from an embossed printing
device, such as is used in finance institutions for printing
checks. The data recorder disclosed in the ’800 patent has
a dual platen roller arranged on a double eccentric shaft
constituting a platen assembly which allows for high
quality imprinting of MICR characters (“Machine Ink
Character Recognition”) when printing checks in accord-
ance with American Bankers Association specifications
27a
for E-13B magnetic code. A first platen roller is lowered
and imprints only one row of characters, the MICR char-
acters, and then is raised for an idling return stroke.
The second platen roller is lowered and imprints other
than the one row of characters imprinted by the first
platen roller, and then is raised for an idling return
stroke.
The ’777 patent discloses and claims a two-platen roller,
two stroke method for imprinting forms from embossed
printing plates or cards, with independent means for ad-
justing the pressure applied by the two platen rollers.
The data recorder disclosed in the ’777 patent has two
platen rollers mounted on separate shafts swinging inde-
pendently, constituting a platen assembly which allows for
selective imprinting of characters from a plastic credit
card and a metal station or merchant plate. The first
platen roller is lowered and imprints from the metal sta-
tion or merchant plate in the right-to-left stroke. This
data recorder allows for each platen roller to print with
different pressure, which is desirable since one roller im-
prints from a plastic credit card and the second roller
imprints from a metal plate.
Patent No. 3,272,120 entitled “Address Printing Ma-
chines with Roller Platens” was issued on September 13,
1966, from an application filed October 22, 1964. It is
assigned to the Addressograph-Multigraph Company, pred-
ecessor (by change of name) to AM International (“AM’’)
in the name of Dean W. Johnson. An application for
reissue of the 7120 patent was filed on April 27, 1978,
which was to mature as reissue Patent No. 30,470. The
Patent Office rejected the 30,470 reissue application and
the continuation application, Serial No. 275,764, was
finally rejected on April 6, 1982. The rejection has been
appealed to the Board of Appeals, by a paper filed April
12, 1981.
Patent No. 3,340,800 entitled “Dual Roller Platens in
Address Printing Machines” was issued on September 12,
28a
1967, from a continuation application whose parent origi-
nal application was filed April 25, 1963. It is assigned to
Addressograph-Multigraph Company in the names of John
H. Gruver, Dean W. Johnson, and Lyle W. Seifried.
Patent No. 3,763,777 entitled “Independently Adjust-
able Multiple Data Recorder” was issued on October 9,
1973, from an application filed November 17, 1971. It is
assigned to Addressograph-Multigraph Company in the
name of Albert C. Brown.
Il. The Parties, Jurisdiction and Venue
The plaintiff, National Business Systems, Inc., a corpo-
ration of Ontario, Canada (NBS/Canada), has a princi-
pal office and place of business in Mississaugua, Ontario,
Canada.
Plaintiff, National Business Systems, Inc., a Delaware
corporation (NBS/U.S.), is a wholly-owned subsidiary of
NBS/Canada, having a principal office and place of busi-
ness in Elmsford, New York, and, in addition, a place of
business in Elk Grove Village, Illinois.
Plaintiff, Heinrich Marketing Inc., is a Colorado cor-
poration, having a place of business in Arvada, Colorado.
Plaintiff George Heinrich is an individual residing in
Arvada, Colorado, and is the sole owner of plaintiff
Heinrich Marketing, Inc.
The defendant, AM International, Inc., is a Delaware
corporation, having a principal place of business in Chi-
cago, Illinois.
Defendant, Bartizan Corporation, is a New York cor-
poration, having a principal place of business in Yonkers,
New York, and is doing business within this judicial
district.
Defendant, Lewis Hoff, is the president of the defend-
ant Bartizan Corporation, residing in New York, New
York.
29a
Jurisdiction exists by virtue of 28 U.S.C. § 1338(a)
and 35 U.S.C. § 281, and venue is proper in this judicial
district under 28 U.S.C. § 1891(c).
III. Accused NBS Imprinters
The following facts are undisputed regarding the ac-
cused NBS imprinter Models 710, 750, 305, and 2025:
1. Each of the accused models has two platen rollers.
2. The dimensions, including the width, of each of the
two platen roilers in the accused models are substantially
identical.
3. On the left-to-right stroke, the first platen roller of
the accused models imprints all of the lines of embossing
from a plastic credit card.
4. Most plastic credit cards have at least three lines
of embossed characters, only one line of which is in a
machine readable font.
5. On a return right-to-left stroke, the second platen
roller of the accused models imprints all of the lines of
embossing from a metal merchant plate.
IV. ’120 Patent Infringement
Plaintiffs contend that the ’120 patent is not infringed
by NBS accused imprinters under either A) literal in-
fringement or B) the doctrine of equivalents.
A. ’120—Literal Infringement
Plaintiffs argue no literal infringement by pointing out
that the accused NBS imprinters have platen rollers of
substantially the same width, whereas the drawings in
the ’120 patent show one narrow platen and one wide
platen in an assembly designed to selectively imprint
MICR characters, as specifically described in the specifica-
tions of the ’120 patent. Plaintiffs also argue, according
to the undisputed facts, that accused NBS imprinters use
30a
two embossed printing devices, namely a credit card and
a metal merchant plate, while Claim 7 of the ’120 patent
describes a singular embossed printing device.
Defendants contend that plaintiffs suggest an improper
reading of the 7120 patent’s Claim 7, which defendants
argue describes a device which can print more than one
line of MICR characters with one of the platen rollers,
and the claim mentions nothing about the width of the
rollers in the two platen roller assembly. In addition,
defendants point out that the reference to MICR charac-
ters in the specification explicitly mentions other types of
machine readable characters. Through their expert wit-
ness, John A. Maul, defendants also argue that embossed
printing “device” is used interchangeably with “devices”
(R 1472-73) and in the alternative such description does
not limit the operation or adaptability of the machine
described in Claim 7.
Plaintiffs’ argument is based on their assertion that
this Court must read the language of the claim in light
of the specification and the file wrapper, Graham v. John
Deere Co., 383 U.S. 1, 33 (1966) ; United States v. Adams,
383 U.S. 39, 48-49 (1966). This argument is erroneous
in the context of this case. The approach suggested by
plaintiffs is proper to define the scope of the patent only
when the claim itself is ambiguous. Deere & Co. v. In-
ternational Harvester Co., 658 F.2d 1137, 1141 (7th Cir.
1981). Since there is no ambiguity on the face of Claim
7 of the ’120 patent, defendants correctly argue that the
Court is to read the claim alone as the measure of the
invention. Aro Mfg. Co. v. Convertible Top Replacement
Co., 365 U.S. 336, 339 (1965); Laser Alignment, Inc., et
al. v. Woodruff & Sons, Inc., et al., 491 F.2d 866, 872
(7th Cir. 1974), cert. denied, 419 U.S. 874, (1974).
Claim 7 of the ’120 patent read alone defines the platen
roller assembly in the accused NBS imprinters and is in-
fringed with respect to the platen assembly. But, since
Claim 7 describes printing portions of the same printing
8la
device and the accused NBS imprinters imprint off two
printing devices, a credit card and a metal plate, the NBS
accused devices do not “fall clearly within the claim,” and
there is no literal infringement. Graver Tank & Mfg. Co.
v. Linde Air Products Co., 339 U.S. 605, 607 (1950).
B. Doctrine of Equivalents
Plaintiffs next argue that there can be no infringe-
ment under the doctrine of equivalents since the accused
NBS imprinters print the entirety of a credit card on one
stroke and entirety of the metal merchant plate on the
second return stroke. According to plaintiffs’ expert wit-
ness, Roy VanDerLinden, their platen roller assembly
does not need to selectively imprint portions of the same
printing device because it imprints OCR (Optical Char-
acter Recognition) characters which do not require selec-
tive imprinting to produce the high quality of impression
necessary for MICR characters (R 1009). Through Van
DerLinden’s testimony (R 1028) and the testimony of
plaintiffs’ other expert witness, David J. Williamowsky
(R 1265), plaintiffs argue that the accused NBS im-
printers: 1) do not use the invention embodied in Claim
7 of the ’120 patent, 2) are not used for the same purpose
as a device described in the ’120 patent, and 3) do not
achieve the same result as the ’120 patent device.
Defendants contend that the accused NBS imprinters
have an identity of means, operation and result with the
invention claimea in Claim 7 of the ’120 patent, and that
it is of no importance to the issue of infringement of the
"120 patent invention whether embossed information is
imprinted from one or more plates. Defendants also argue
that the 7120 patent invention applies to OCR as well as
MICR characters and that it benefits the imprinting of
both OCR and MICR characters.
The doctrine of equivalents is based on the premise that,
in order to find infringement it is not necessary that all
32a
possible embodiments of the invention be described or il-
lustrated in the patent claim. Thus, infringement is not
avoided where the alleged infringer varies the apparatus
described in the specification or illustrated in the draw-
ings. United States v. Adams, 383 U.S. at 49. Ellipse
Corp. v. Ford Motor Co., 452 F.2d 163, 167 (7th Cir.
1971), cert. den. 406 U.S. 948, reh. den. 409 U.S. 898
(1972), Toro Co. v. R.L. Nelson Corp., 524 F.Supp. 586,
590 (C.D. Ill. 1981). The policy behind the doctrine of
equivalents is the foundation on which a patent’s protec-
tion and value rest. As the Supreme Court has stated,
“ . . [T]o permit imiiation of a patented invention
which does not copy every literal detail would be to con-
vert the protection of the patent grant into a hollow and
useless thing.” Graver Mfg. Co. v. Linde Co., 339 U.S.
at 607.
Both Maul and VanDerLinden agree that the invention
disclosed in Claim 7 of the ’120 patent refers to the refine-
ment of a two platen roller method of selective imprinting
to a two stroke (forward-return) movement. According
to Maul’s testimon,y the adaptation of the ’120 invention
to a data recorder having two printing devices does not
sufficiently vary the identity and means of the ’120 inven-
tion to avoid infringement by equivalents (R 534). Maul
further testified that, at the time the ’120 invention was
developed, up to the present, the imprinting art has used
printing device to mean a credit card and station plate
either separately or in combination (R 1472-73). Plain-
tiffs’ experts offered no contrary evidence to Maul’s testi-
mony on the meaning of “printing device” in the imprint-
ing art. Additionally, Willamowsky’s direct testimony
that an embossed printing device means only one plate
(R 1266) is contradicted by his cross-examination testi-
mony, in which he admitted that the device in the ’120
patent drawings could print from two printing devices
together, namely a credit card and a station plate (R
1348).
33a
The difference between the “literal detail” of the singu-
lar embossed printing device in Claim 7 and the two
printing devices in the accused NBS imprinters is merely
one of claim phraseology. Such a comparison does not
address the question if identity of means, operation and
result which is necessary in determining infringement by
equivalents. Reese v. Elkhart Welding and Boiler Works,
Inc., 447 F.2d 517, 527 (7th Cir. 1971) ; Skirow v. Rob-
erts Colonial House, Inc., 361 F.2d 388, 391 (7th Cir.
1966). The Court rejects plaintiffs’ expert testimony, and
accepts defendants’ expert testimony to the effect that the
NBS imprinters are “the structural equivalent of the de-
vice described in” Claim 7 of the 7120 patent, and “per-
form ... substantially the same function, in substantially
the same way, to achieve the same results, even though
... [they] differ ...in form or shape.” Machine Co. v.
Murphy, 97 U.S. 120, 125 (1878); Reese v. Elkhart
Welding, 447 F.2d at 527. Defendants have carried their
burden of proof as to infringement.
V. ’120 Patent Validity
Plaintiffs attack the validity of the ’120 patent on five
grounds. They assert that the patent is: A) invalid for
anticipation under 35 U.S.C. § 102, B) invalid for ob-
viousness under 35 U.S.C. § 103, C) unenforceable under
35 U.S.C. §§ 112, 115, 116, D) invalid for “on sale” bar
under 35 U.S.C. §102(b) and, E) unenforceable for
fraud on the Patent Office under 37 C.F.R. § 1.56. De-
fendants assert that the ’120 patent is valid. Plaintiffs
bear the burden of proving invalidity and must overcome
by clear and convincing proof the presumption of validity
established by 35 U.S.C. § 282. Laser Alignment, Inc. v.
Woodruff & Sons, Inc., 491 F.2d at 871; Ashland Oil,
Inc., v. Delta Oil Products Corp., 212 USPQ 508, 513
(E.D. Wise. 1981).
A. 7120 Anticipation
The Patent Office rejected Claim 7 on the reissue appli-
cation for the ’120 patent as fully anticipated by the Cox
34a
Patent 539,356. Plaintiffs’ expert VanDerLinden found
no reason to criticize the Patent Office’s rejection of Claim
7. (R 1211). Nevertheless, VanDerLinden was unable to
identify any single patent with a filing date or a publica-
tion dated vrior to October 22, 1963 (one year prior to
the filing date of the ’120 patent) that discloses each and
every element or aspect of the method defined by Claim 7
of the ’120 patent (R 1146-47, 1150). In fact, VanDer
Linden’s cross-examination testimony indicates that the
Cox Patent 539,356 discloses a printing press and not a
table-top imprinter as embodied in Claim 7.
Despite VanDerLinden’s testimony, plaintiffs argue that
defendants are bound by the Patent Office determination
of Claim’s 7 invalidity, that their only recourse is to the
Court of Customs and Patent Appeals (35 U.S.C. § 141)
or the Circuit Court for the District of Columbia (35
U.S.C. § 145), and that this Court has no authority to
disturb the Patent Office determination. Defendants ar-
gue that the Patent Office determination is not binding,
and assert that VanDerLinden’s testimony compels this
Court to make its own finding of validity.
Anticipation is a strictly technical defense. Unless all
of the same elements are found in exactly the same situa-
tion and united in the same way to perform an identical
function, there is no anticipation. 35 U.S.C. § 102 (1976).
Illinois Tool Works, Inc. v. Sweetheart Plastics, Inc., 436
F.2d 1180, 1182-1183 (7th Cir. 1971), cert. denied 403
U.S. 942 (1971); Shelco, Inc. v. Dow Chemical Co., 466
F.2d 613, 614 (7th Cir. 1972), cert. denied, 409 U.S. 876
(1972). Although the Cox Patent 539,356 discloses two
rollers capable of printing in opposite directions, Van
DerLinden’s identification of the device embodied in the
Cox patent as a printing press supports this Court’s con-
clusion that there is no identity of function between the
two patents, and therefore no anticipation. This is so
even though the elements considered by themselves might
resemble the elements in the imprinter disclosed by Claim
35a
7 of the ’120 patert. Sargent-Welch Scientific Co. v.
J/B Industries, 496 F. Supp. 972, 976 (N.D. Ill. 1980).
Plaintiffs argue that the Court is bound by the Patent
Office’s finding of anticipation in the reissue application
proceedings for the ’120 patent. This Court disagrees
for two reasons. First, once a patent of invention has
been granted, the Patent Office has no authority to in-
validate the claims of the original patent in subsequent
reissue proceedings. The Patent and Trademark Office
does not regain power over the original patent’s validity
when a reissue patent is applied for. When a patent
has received the signature of the Secretary of the In-
terior, countersigned by the Commissioner of Patents,
and has had affixed to it the seal of the Patent Office,
it has passed beyond the control and jurisdiction of that
office, and is not subject to be revoked or cancelled by
the President, or any other officer of the Government.
United States v. Schurz, 102 U.S. 378 (1880), United
States v. Am. Bell Telephone Co., 128 U.S. 315, 363
(1888). “The only authority competent to set a patent
aside, or to annul it, or to correct it for any reason what-
ever, is vested in the courts of the United States, and
not in the department which issued the patent.” Mc-
Cormick Harvesting Machine Co. v. Aultman, 169 USS.
606, 609 (1898); Johnson & Johnson v. Wallace A.
Erickson & Co., 627 F.2d 57, 59 (7th Cir. 1980).
A second reason the Court is not bound by the Patent
Office’s findings is the fact that the time for surrender-
ing an original patent in reissue proceedings occurs
when the reissue patent is granted. There is no sur-
render of the original patent if the reissue patent is
rejected. Rather, the original patent stands as if no
application had ever been made for a reissue. Allen v.
Culp, 166 U.S. 501, 505 (1897); U.S. v. Marifarms, Inc.,
345 F. Supp. 858, 861 (D. Del. 1972). It is true that
the reissue statute as well as the Patent Office Rules
require surrender of the original patent before a reissue
36a
patent may be granted, 35 U.S.C. § 251; Rule 171, 37
C.F.R. § 1.171. However, 35 U.S.C. § 252, entitled “Ef-
fect of Reissue,” specifically states that the surrender of
the original patent does not take effect until the issuance
of the reissue patent. American Tel. & Tel. Co. v. Milgo
Electronic Corp., 416 F. Supp. 951 (S.D.N.Y. 1976).’
Plaintiffs have not satisfied their burden of clear and
convincing proof as to anticipation of Claim 7 of the “120
patent. Therefore, this Court finds that the ‘120 patent
was not anticipated.
B. ’120 Obviousness
The appropriate analysis for a determination of ob-
viousness has been described by the Supreme Court as
follows:
“Under § 103, the scope and content of the prior art
are to be determined; differences between the prior
art and the claims at issue are to be ascertained; and
the level of ordinary skill in the pertinent art re-
solved. Against this background, the obviousness or
non-obviousness of the subject matter is determined.
Such secondary considerations as commercial success,
long felt but unsolved needs, failure of others, etc.,
might be utilized to give light to the circumstances
surrounding the origin of the subject matter sought
to be patented.”
Graham v. John Deere Co., 383 U.S. at 17-18.
Plaintiffs argue obviousness on two grounds, neither of
which is accepted by the Court. First, according to plain-
tiffs’ expert VanDerLinden, it would have been “very,
1 For the same reasons that this Court does not accept plaintiffs’
claim that the Court is bound by the Patent Office's rejection of the
reissue application for the "120 patent, the Court refuses to accept
plaintiffs’ theory that the Patent Office’s findings create a presump-
tion of invalidity as to Claim 7 of the "120 patent.
87a
very obvious” to substitute the double eccentric platen
roller in the prior art ’800 patent (the same one that is
in issue in this action, p. 20, infra.) into the data recorder
embodied in the prior art Patent No. 3,018,725, which
discloses one platen roller imprinting in a left-to-right
stroke with an idling, raised return stroke (R 1210).
VanDerLinden testified that such a combination of the
’800 patent and the 725 patent would operate in the same
way producing the same results as the ’120 patent’s Claim
7. Second, plaintiffs offered other prior art patents which
they claimed would make the ’120 invention obvious to a
person of ordinary skill] in the art.
Defendants’ expert testified that his designers would
have had “a very bad time” trying to substitute the ’800
patent’s double eccentric platen roller into the device dis-
closed in the ’725 patent, and that he never thought of
making such a substitution at the time.
This Court begins with plaintiffs’ first ground for ob-
viousness: the combination of the ’800 and ’725 patents.
Obviousness under 35 U.S.C. § 103 is to be determined
“as of the time the invention was made.” Both parties’
experts, however, based their opinions of the obviousness
of the ’800/’725 combination on experience possessed as of
the time of the trial. This speculation as to the '120
patent invention’s similarity to a “particular combina-
tion of elements from prior patents” constituted an im-
proper use of hindsight as a test of obviousness. Holley v.
Outboard Marine Corp., 241 F. Supp. 657, 665 (N.D. III.
1964), aff'd. 345 F.2d 351 (7th Cir. 1965), cert. denied
383 U.S. 934, reh. denied 384 U.S. 914, 1966); Walt
Disney Productions v. Fred A. Niles Com. Ctr., Inc., 369
F.2d 230, 234 (7th Cir. 1966). Because the experts’ testi-
mony was based on hindsight, it is not to be considered by
this Court, and, as a result, the "120 patent retains its
presumption of validity under 35 U.S.C. § 282. The
strength of this presumption is weakened in this case,
however, where, of the seven prior art patents presented
38a
in plaintiffs’ analysis of obviousness, only one (No.
2,104,863) was considered by the Patent Office. The
presumption of validity does not exist against prior art
which was not considered by the Patent Office when the
patent was issued. Lee Blacksmith, Inc. v. Lindsay Bros.,
Inc., 605 F.2d 341, 342-343 (7th Cir. 1979).? Thus, the
six prior art patents not considered by the Patent Office
must be made a part of this Court’s obviousness analysis.
As a result, the Court now turns to plaintiffs’ second
ground for obviousness: the other prior art patents.
Based on expert witness VanDerLinden’s testimony,
plaintiffs argue that Claim 7 of the ’120 patent would
have been obvious to a person of ordinary skill in the art
at the time the invention was made. VanDerLinden based
his conclusion of obviousness on a “combination of the
teachings of all those patents.” (R 1173). The patents
referred to by VanDerLinden include Nos. 1,280,192;
1,941,667; 2,775,936; 3,018,725; 3,113,516; 3,340,800. All
but one of these patents discloses either a single platen
roller operating in a single stroke method, tandem platen
rollers operating in a single stroke method, or two platen
rollers operating in a single stroke, idling return method.
The ’800 patent discloses a two platen roller, multiple
stroke imprinter.
Defendant expert Maul testified that these prior art
patents provide no teaching for combining their various
elements to yield a device using two platen rollers print-
ing on opposite strokes from different portions of a
printing device as set forth in Claim 7 of the ’120 patent
(R 1425). Defendants offer the cross-examination testi-
2 It is, of course, true that the presumption of validity is strength-
ened where the prior are relied on by the party claiming invalidity
is the same as or no better than that considered and rejected by
the Patent Office. Tracor, Inc. v. Hewlett-Packard Co., 519 F.2d
1288, 1292 (7th Cir. 1975). That, however, is not this case.
39a
mony of VanDerLinden, where, defendants claim, it was
admitted that the ’800 patent, which is the closest prior
art patent, disclosed no teaching “of printing data with
two rollers on opposite strokes.” (R 1169).
It is well established in the Supreme Court and in the
Seventh Circuit that a combination of prior art elements
need not produce a synergistic effect in order for the
combination patent to be valid. Sakraida v. Ag Pro, Inc.,
425 U.S. 273, 282, reh. den. 426 U.S. 955 (1976), Re-
public Industries, Inc. v. Schlage Lock Co., 592, F.2d 963,
969 (7th Cir. 1979). Sakraida and Republic reaffirm as
the test of obviousness in combination patents the analy-
sis set forth in Graham v. John Deere, supra, p. 12. Re
garding combinations of prior art elements, the obvious-
ness test of § 103 does not turn on whether an invention
is equivalent to some element in the prior art, but rather
whether the difference between the prior art and the sub-
ject matter in question is a difference sufficient to render
the claimed subject matter unobvious to one skilled in
the applicable art. Dann v. Johnston, 425 U.S. 219, 228
(1976).
While certain elements of Claim 7 of the ’120 patent
were disclosed in the prior art, the prior art combines
none of these elements to produce the result which makes
the ’120 patent distinctive: selective imprinting by two
platen rollers on opposite strokes. This Court credits
defendants’ expert testimony which found no teaching of
the '120 invention and rejects plaintiffs’ expert testimony.
Based on the prior art and the expert testimony, this
Court finds Claim 7 of the ’120 patent would not have
been obvious to one reasonably skilled in the art at the
time the invention was made.’
*In light of this Court’s finding of unobviousness, it is unneces-
sary to address secondary considerations of commercial success,
long felt need or failure of others. See John......
40a
C. 85 U.S.C. §§ 112, 115 and 116
35 U.S.C. § 112 requires that in order to be valid,
patent claims must particularly point out and distinctly
claim the subject matter which the applicant regards as
his invention. Rockwell v. Midland-Ross Corporation, 438
F.2d 645, 653 (7th Cir. 1971). The purposes for the
precision requirements are to warn others skilled in the
art against infringement, and to enable them to benefit
from the teachings of the patent. Ellipse Corp. v. Ford
Motor Co., 452 F.2d at 170. Plaintiffs argue that Claim
7 of the 120 patent faiis to meet this requirement. This
Court disagrees.
Plaintiffs offered no testimony that Claim 7 of the 7120
patent is not understandable to one of ordinary skill in
the art. Rather than focusing on the precision of Claim
7, they merely assert that the patent’s specifications dis-
close a narrower scope of invention than does defendants’
interpretation of Claim 7 and that such inconsistent in-
terpretation reveals defendants’ failure to point out their
invention. This argument misses the point of § 112.
Therefore, it is insufficient to support a finding that the
precision requirements of that statute have been violated,
and to thus rebut the presumption of validity as to the
Patent Office’s findings. Furthermore, this Court finds
that defendants’ interpretation of Claim 7 of the ’120
patent necessary to find infringement is not inconsistent
with the scope of the subject matter which the defendants’
inventors regard as their invention, and, therefore, that
Claim 7 of the ’120 patent does not particularly point out
and distinctly claim the subject matter of the invention
under 35 U.S.C. § 112. Application of Cormany, 476 F.2d
998, 1000 (CCPA 1973).*
* It should be noted that, even if the Court were to find that the
defendants’ interpretation of Claim 7 were not sufficiently precise,
a serious question would remain as to the appropriateness of apply-
ing $112 in the manner suggested by plaintiff. Invalidity under
§ 112 is determined by the patentee’s conduct when drawing up the
Ala
Finally, the Court notes that plaintiffs erroneously
assert invalidity under 35 U.S.C. § 115 and 116 since the
inventor’s oath of the ’120 patent is included in the file
wrapper and no joint inventors were involved in the 7120
patent.
E. ’120 “On Sale” Bar
35 U.S.C. § 102(b) provides that a patent shall issue
unless “the invention . . . was on sale in this country,
more than one year prior to the date of the application
for patent in the United States.” “On sale” does not mean
an actual accomplished sale but activity by the inventor
or his company in attempting to sell the patented idea.
Amphenol Corp. v. General Time Corp., 397 F.2d 431, 433
(7th Cir. 1968). Armour Research Foundation v. C. K.
Williams & Co., 280 F.2d 499, 506 (7th Cir. 1960) cert.
denied 365 U.S. 811, reh. denied, 366 U.S. 941 (1961).
The policy underlying the “on sale” bar is to prevent an
inventor from holding back the secrets of his invention
from general public knowledge while at the same time
exploiting it commercially, thereby extending the duration
of his legal monopoly. Koehring Co. v. National Auto-
matice Tool Co., 362 F.2d 100, 103 (7th Cir. 1966). The
burden of establishing that the patented product was “on
sale” must be satisfied by clear and convincing evidence.
Minnesota Mining & Mfg. Co. v. Kent Industries, Inc.,
409 F.2d 99, 100 (6th Cir. 1969).
Plaintiffs, relying on deposition testimony, argue that
defendants’ in-house production and pricing documents
present a prima facie case of “on sale” bar because the
documents clearly show a commercial exploitation of a
product sufficiently similar if not identical, to the device
disclosed in Claim 7 of the ’120 patent. Plaintiffs rely
patent claims and is not properly applied to the patentee’s attempt
at an alleged overly broad interpretation of a patent’s claims. The
latter is protected against by the doctrines of file wrapper estoppel
and four corners interpretation of the claims and specifications of
the patent.
42a
chiefly on two of AM’s in-house documents, a “Request
For Estimate and Price Quotation,” dated March 5, 1963
(PX-12A), and a “Request For Production Release,”
dated August 20, 1963 (PX-12K). In cases in which com-
mercial exploitation has been established prior to the
critical date (one year prior to the date of the application
for patent), a necessary determination must be whether
the item placed “on sale” sufficiently embodied the inven-
tion described in the patent in suit to invoke the bar of
§ 102(b). Red Cross Mfg. Co. v. Toro Sales Co., 525 F.2d
1135, 1141 (7th Cir. 1975). Exact identity is not re-
quired as long as the invention is esseritially completed at
the time of the invalidating sale. Dart Industries, Inc. v.
E. I. DuPont DeNemours and Co., 489 F.2d 1359, 1365
(7th Cir. 1973) cert. denied 417 U.S. 933 (1974). While
the basic design of the two platen roller imprinter capable
of printing on opposite strokes is revealed in the defend-
ants’ production and pricing documents, there is no evi-
dence conclusive on whether the designed device was
reduced to practice and was capable of being produced.
It is for this reason that plaintiffs’ claim of on-sale bar is
rejected.
Under § 102(b), plaintiffs must establish that the al-
leged commercial exploitation occurred before October 22,
1963. Defendants rebutted plaintiffs’ case by producing
testimony from expert Maul (R 1486-1500) and witness
Wasson (R 1505-1515) to the effect that the device em-
bodied in Claim 7 of the ’120 patent was still in the
experimental and developmental stage in the critica] time
period. Specifically, defendants point to testing reports
dated January 10, 1963 and August 13, 1963 (PX-121
and PX-12J). Defendants also point to a report pre-
pared by R. L. Root, AM’s patent counsel who worked
on the 7120 patent application. (PX-12L). PX-12L dis-
closes that the “first batch” of machines (devices em-
bodied in Claim 7 of the ’120 patent) had been shipped
on an order for the Association of American Railroads.
43a
The document was dated May 25, 1964. The documents
demonstrate that modifications in the devices were being
made during the relevant time period. This fact makes
more onerous the burden of proving a reduction to prac-
tice, one of the requirements for “cn sale’ bar. CTS
Corp. v. Piher International Corp., 593 F.2d 777, 779
(7th Cir. 1979) cert. denied 444 U.S. 884 (1979). Plain-
tiffs have failed to carry their burden of clear and con-
vincing proof that the alleged ‘‘on sale” devices were suf-
ficiently complete and similar to the device embodied in
Claim 7 of the ’120 patent. While it is true that no
completed cale is required, Amphenol Corp. v. General
Time Corp., 397 F.2d at 433, plaintiffs have not satis-
fied their burden of proving commercial activity of any
kind with the requisite intention to exploit the ’120
invention.
F. °’120 Fraud
Plaintiffs claim that in procuring the ’120 patent, de
fendants committed fraud on the Patent Office in that
they 1) falsely attributed novelty to the dual-platen
roller assembly in the 7120 patent, 2) falsely attributed
inventorship, and 3) failed to disclose to the Patent
Office the prior art of the ’800 patent (and addressing
machine) and evidence of the alleged “on sale” bar. It
is this Court’s conclusion that these allegations are un-
supported by either the law or the facts.
A claim of fraud or inequitable conduct in soliciting
a patent must be based on “clear, unequivocal and con-
vincing” evidence and can be asserted only if there has
been a deliberate misrepresentation in the Patent Office.
United States v. American Bell Tel. Co., 167 U.S. 224,
251 (1897); Scott Paper Co .v. Fort Howard Paper Co.,
432 F.2d 1198, 1204 (7th Cir. 1970), cert. denied 401
U.S. 913 (1971). To provide fraud on the Patent Office,
one must establish that the applicant knowingly and will-
fully concealed information from that office, that the in-
formation was not known to the Patent Examiner, and
44a
that the information concealed was material. Columbia
Broadcasting System, Inc. v. Zenith Radio Corp., 391
F. Supp. 780, 791 (N.D. Ill. 1975) affd. 5387 F.2d 896
(7th Cir. 1976); Reynolds Metals Co. v. Aluminum Co.
of America, 457 F. Supp. 482, 500 (N.D. Ind. 1978),
rev'd on other grounds 609 F.2d 1218 (7th Cir. 1979),
cert. denied 446 U.S. 989 (1980). Plaintiff has failed to
meet its burden of proof.
Plaintiffs’ charge of false attribution of novelty is re-
jected in light of this Court’s finding that Claim 7 of the
"120 patent was non-obviousness. Similarly, plaintiffs’
claim of false attribution of inventorship is rejected. The
latter argument is conditioned on limiting the ’120 inven-
tion to printing only one row of MICR characters. This
Court has found, however, that the ’120 invention should
not be so limited. Additionally, palintiffs’ charge of fraud
for defendants’ alleged failure to disclose prior art of the
800 patent and its corresponding addressing machine and
of the prior art commercial Model TP addressing machine
is rejected in light of this Court’s finding that Claim 7
of the 7120 patent is non-obvious. This finding is sup-
ported by the rule that it is a permissible exercise of
patentee’s judgment to withhold prior art on his belief
that it would not affect the Examiner’s evaluation of the
pending application. CTS Corp. v. Piher International
Corp., 527 F.2d 95, 99-100 (7th Cir. 1975), cert. de-
nied 424 U.S. 978 (1976).
Finally, plaintiffs’ charge of fraud for failure to dis-
close evidence of the alleged “on sale” bar is rejected by
this Court’s finding that plaintiff failed to carry his bur-
den of proving “‘on sale” bar.
VI. ’800 Patent Infringement
Plaintiffs contend that the ’800 patent is not infringed
by NBS accused imprinters under either A) ilteral in-
fringement or B) the doctrine of equivalents. This Court
45a
concludes that the facts demonstrate neither literal in-
fringement nor infringement by equivalents.
A. ’800 Literal Infringement
Plaintiffs contend that no literal infringement of the
’800 patent exists on three grounds. First, they point
out that the accused NBS imprinters have platen rollers
of substantially the same width, whereas Claim 12 of the
’°800 patent discloses one narrow platen roller to “roll
along only said one row of characters, and a second
platen roller dimensioned and aligned to roll along other
than said one row of characters.” Plaintiffs point out
that the “said one row of characters” is described in
Claim 12 as containing “a series of machine recogniza-
tion characters requiring a high order of impression uni-
formity.” Second, accused NBS imprinters do not have
a platen roller which prints only one row of machine
recognization characters. Third, Claim 12 of the ’800
patent describes a singular embossed printing device.
Defendants contend that the device disclosed in Claim
12 of the ’800 patent is capable of printing more than
one row of characters, and also that embossed printing
“device” is used interchangeably with “devices.”
The disputed issue of the embossed printing device
mentioned in Claim 12 of the ‘800 patent is identical to
the issue of literal infringement regarding Claim 7 of
the ’120 patent. See p. 5, supra. The Court’s conclusion
is identical as well—the ’800 patent, like the ’120 patent,
is not literally infringed by the NBS accused imprinters.
B. Doctrine of Equivalents
Like their argument regarding literal infringement,
plaintiffs’ argument against a finding of infringement
under the doctrine of equivalents is the same as that
made with regard to Claim 7 of the ’120 patent. Through
their experts, plaintiffs assert that the accused NBS im-
46a
printers do not use the invention embodied in Claim 12
of the ’800 patent, are not used for the same purpose
as a device described in the ’800 patent, and do not
achieve the same result as the ’800 patent. Finally, piain-
tiffs argue that defendants are estopped from arguing
the doctrine of equivalents by the doctrine of file wrapper
estoppel.
Defendants contend that the accused NBS imprinters
have an identity of means, operation and result with the
invention claimed in Claim 12 of the ’800 patent, and
that it is of no importance to the issue of infringement
of the ’800 patent invention whether embossed informa-
tion is imprinted from one or more than one row of char-
acters with one of the platen rollers, that it applies to
OCR as well as MICR characters, and that it benefits the
imprinting of both OCR and MICR characters.
While infringement is not avoided by varying the ap-
paratus described in the specification or illustrated in the
drawinzs of a patent, United States v. Adams, 383 U.S.
at 49; Ellipse Corp. v. Ford Motor Co., 452 F.2d at 157;
Toro Co. v. R. L. Nelson Corp., 524 F. Supp. at 590;
infringement by equivalents requires a real identity of
means, operation and result between the accused products
and the allegedly infringed patent. Reese v. Elkhart
Welding, 447 F.2d at 527; Skirow v. Roberts Colonicl
House, Inc., 361 F.2d at 391. Defendants failed to dem-
onstrate the requisite identity. In fact, defendants’ ex-
pert Maul testified that he had never seen a device as
disclosed in Claim 12 of the ’800 patent print more than
one row of characters with one of the platen rollers (R
713-14). Further, Maul was unable to point to any pas-
sage in the ’800 patent specifications which supports his
testimony that the phrase “along only said one row of
characters” does not exclude rolling along other rows
of characters at the same time (R 753).
Unlike defendants, plaintiffs provided expert testimony
which fully supported their position. Plaintiffs’ experts
47a
testified that the accused NBS imprinters do not operate
under the same function nor for the same purpose as the
’800 invention. This Court found his testimony com-
pletely credible.
Additionally, plaintiffs correctly argue that defendants
are estopped from arguing a function or purpose of
Claim 12 of the ’800 patent which is greater in scope
than that which is claimed in the file wrapper of the
’800 patent. Thus, even if their expert’s testimony were
credible, which this Court does not find, defendants would
still be unable to invoke the doctrine of equivalents to its
full extent.
Under the doctrine of “file wrapper estoppel’, an ap-
plicant who has limited or modified a claim in order to
avoid its rejection by the Patent Office may not later
expand his claim by including the excluded matter, or its
equivalents, or by omitting the limitations. Ortho Phar-
maceutical Corp. v. American Hospital Supply Corp., 534
F.2d 89, 94 (7th Cir. 1976); Laser Alignment, Inc. v.
Woodruff & Sons, Inc., 491 F.2d at 875. Defendants are
estopped from arguing that the function of the ’800 in-
vention may be interpreted as its ability to print more
than one row of characters with one of the platen rollers.
Defendants offer this interpretation to support their as-
sertion that the purpose of the ’800 invention is not
solely to solve the problem of imprinting MICR char-
acters. It must be noted, however, that defendants’ ex-
pert Maul testified that the problem of imprinting MICR
characters was solved by the ’800 invention (R 739-40)
and plaintiffs’ expert Williamowsky testified that the
MICR problem cannot be divorced from the invention dis-
closed in Claim 12 of the ’800 patent (R 1262). This
Court believes that the latter is a proper characteriza-
tion of the file wrapper history of Claim 12 of the ’800
patent. Thus, defendants’ interpretation of the function
and purpose of the ’800 invention is rejected. Defend-
ants’ interpretation is tantamount to arguing infringe-
48a
ment under a claim (Claim 27) which was rejected in
the file wrapper history. This cannot be allowed. Claim
27 falls in the category of claims which have “been nar-
rowed in order to obtain the issuance of a patent by dis-
tinguishing the prior art. [Such claims] cannot be sus-
tained to cover that which was previously by limitation
eliminated from the patent.” Graham v. John Deere Co.,
383 U.S. at 33.
For the foregoing reasons, defendants have failed to
carry their burden of proof as to infringement.
VII. ’800 Patent Validity
Plaintiffs attack the validity of the ’800 patent on five
grounds. They argue that the patent is: A) invalid for
obviousness, C) unenforceable under §§ 112, 115 and 116,
D) invalid for “on sale” bar, and E) unenforceable for
fraud on the Patent Office. Defendants assert that the
800 patent is valid.
A. ’800 Anticipation
Plaintiffs’ expert VanDerLinden found the method dis-
closed in Claim 12 of the ’800 patent anticipated in each
of the Patents Nos. 1,280,192; 2,758,538; and 3,125,951.
However, VanDerLinden later testified that he was un-
able to identify any single patent with a filing date or a
publication date prior to Aprii 25, 1962 (one year prior
to the filing date of the ’800 patent) that discloses each
and every element or aspect of the method defined by
Claim 12 of the ’800 patent (R 1180-81).
As has already been stated, p. 10, supra., there is no
anticipation unless all of the same elements are found
in exactly the same situation and united in the same
way to perform an identical function. Jllinois Tool
Works, Inc. v. Sweetheart Plastics, Inc., supra; Shelco,
Inc. v. Dow Chemical Co., supra. The Lyman Patent No.
3,125,951, which embodies a device similar to the ’800
49a
invention, discloses a single segmented roller printing in
a single stroke, constituting a platen assembly which fails
to imprint with an impression quality as high as the ’800
invention. The ’192 patent and the 538 patent disclose
devices not as similar to the ’800 invention as the device
disclosed in the ’951 patent. In light of these facts and
of expert VanDerLinden’s contradicting testimony, this
Court concludes that plaintiffs have failed to carry their
burden of clear and convincing proof as to anticipation
of Claim 12 of the ’800 patent.
B. ’800 Obviousness
According to plaintiffs’ expert VanDerLinden, it would
have been obvious to one of ordinary skill in the art to
use independent strokes of two platen rollers, one of which
would take an impression along one row of characters
and the other along the remaining rows of characters
(R 1087). It is uncontested that the ’800 patent states
that the difference between it and the Patent No. 2,399,849
lies in the *800 platen assembly, which rolls the platen
parallel to, rather than perpendicular with, the char-
acters and allows for selective imprinting of one row of
MICR characters. Plaintiffs offer prior art Patents Nos.
1,280,192; 3,125,951; and 1,941,667 as teaching a combi-
nation of the ’800 patent’s elements in the method of
Claim 12 of the ’800 patent. The ’192 patent discloses
two platen rollers printing two single strokes in a for-
ward-return movement parallel to the two separate print-
ing devices. The ’951 patent discloses selective imprint-
ing of one row of MICR characters in a single stroke
parallel miovement by a narrow platen roller segmented
from a wide platen roller on a single roller. The ’667
patent discloses tandem platen rollers imprinting from
either two ser-~ate printing devices or two different parts
of the same pr.. ing device.
A finding of obviousness is appropriate when a Court
is presented with inventions that merely rearrange old
50a
elements in new combinations with each element per-
forming the same function it performed in the prior
art. Such a finding must be made even if the new com-
bination produces a more striking result than the old
elements would produce functioning individually. St.
Regis Paper Co. v. Bemis Co., Inc., 549 F.2d 833, 838
(7th Cir.) cert. denied 434 U.S. 833 (1977). While
Claim 12 of the ’800 patent discloses an improvement in
imprinting MICR characters with high quality impres-
sion, the ’800 invention uses an arrangement of elements
disclosed in prior art patents, albeit in a different com-
bination, to produce this improved result. In light of the
rule that combination patents are to be found unpatent-
able if “wanting in any unusual or surprising conse-
quences from the unification of the elements here con-
cerned.” A&P Tea Co. v. Supermarket Corp., 340 US.
147, 152 (1950) reh. denied 340 US. 918 (1951), this
Court feels that the evidence compels it to hold that the
’800 patent is invalid for obviousness.°
Additional support for this Court’s finding of obvious-
ness is provided by a detailed reading of the file wrapper
for the ’800 patent. The file wrapper history reveals that
originally the Patent Office was reluctant to allow the
claims of the ’800 patent in light of the ’951 patent.
Defendants were able to persuade the office to grant the
5 Defendants contend that none of the prior art patents presented
by plaintiffs teach the invention embodied in Claim 12 of the ’800
patent of selectively imprinting one row of MICR characters from
a single printing device in two separate strokes with two platen
rollers. They point out that the '192 patent does not teach the
imprinting of one row of characters with one platen roller in one
stroke and the remaining characters with the other platen roller in
a separate stroke from the same printing device. Additionally, the
951 patent utilized a single stroke rather than two separate strokes
for imprinting one row of MICR characters, and finally, the ’667
patent discloses tandem platen rollers as opposed to two platen
rollers mounted on a double eccentric shaft. Despite these distinc-
tions, the combined teachings of prior art Patents Nos. ’192, ’951,
’667 and ’849 render the ’800 patent invalid for obviousness.
5la
patent by pointing out that Claim 12 of the ’800 pat-
ent disclosed that its device selectively imprinted sep-
arate portions from the same printing device. Plaintiffs’
expert testimony, however, revealed that the ’667 patent,
which was not presented to nor considered by the Patent
Office, discloses imprinting of separate portions of the
same printing device. As has already been stated, pp.
13-14, supra., the presumption of validity does not ex-
ist against evidence of prior art not before the Patent
Office. Republic Industries, Inc. v. Schlage Lock Co., 592
F.2d at 972; The Allen Group v. Nu-Star, Inc., 575 F.2d
146 (7th Cir. 1978) (per curiam). In light of this and
in light of the testimony with regard to the ’667 patent,
this Court finds that Claim 12 of the ’800 patent would
have been obvious to one of ordinary skill in the art at
the time the invention was made.
C. 35 U.S.C. $§ 112, 115 and 116
Plaintiffs make identical arguments with regard to the
invalidity of Claim 12 of the ’800 patent under 35 U.S.C.
§ 112 as they made in reference to Claim 7 of the ’120
patent. See pp. 16-17, supra. Defendants rest on the
presumption of validity applied to Claim 12 of the ’800
patent, especially as to technical requirements considered
by the Patent Office. This Court’s comments regarding
the failure of disclosure alleged in Claim 7 of the ’120
patent are dispositive in the case of Claim 12 of the ’800
patent, which satisfies the requirement of precision set
forth in § 112. See pp. 16-17, supra.
Plaintiffs’ assertion of invalidity under 35 U.S.C. §§ 115
and 116 is unsupported by the file wrapper of the con-
tinuation application for the ’800 patent, which properly
contains the oath of the joint inventors and the joint
affidavit and petition for addition of inventors.
D. ’800 “On Sale” Bar
As was stated earlier, p. 17, supra, “on sale” bar re-
quires clear and convincing evidence of commercial ex-
52a
ploitation of a device, not identical to but complete and
similar to the device disclosed in Claim 12 of the ’800
patent. Plaintiffs present their prima facie case via depo-
sition testimony and defendant’s in-house documents.
Plaintiffs rely chiefly on an exhibit entitled “Status Re-
port—Transverse Platen Arrangement Model 1900-9100
Addressograph Machines,” dated April 2, 1962 (PX-11).°
Plaintiffs also rely on a document entitled “Advance Prod-
uct Data For The Transverse Platen,” dated May 29,
1962 (PX-56). The latter is used to identify the Model
1900 and 9100 Addressograph Machines referred to in
PX-11 as devices embodied in Claim 12 of the ’800 patent.
While evidence of commercial exploitation, rather than
a completed sale, is sufficient to establish a prima facie
case for “on sale” bar, Amphenol Corp. v. General Time
Corp., p. 17, supra., once such commercial activity has
been established, in validity may be avoided by showing
that the sales activity was “substantially for purposes of
experiment.” Smith awi Griggs Mfg. Co. v. Sprague, 123
U.S. 249, 256 (1887) ; Red Cross Mfg. Corp. v. Toro Sales
Co., 525 F.2d at 1139. The question of whether a use of
sales activity is for the purpose of experimentation is
one of the inventor’s intent. Red Cross Mfg. Corp. v.
Toro Sales Co., 525 F.2d at 1144; Solo Cup Co. v. Paper
Machinery Corp., 240 F. Supp. 126, 131 (E.D. Wis.
1965), modified on other grounds, 359 F.2d 754 (7th Cir.
1966). The interoffice correspondence dictated by B. L.
Meyers reveals the inventors’ intent to test the alleged
“on sale’ devices for eight weeks after their exhibition.
The prime purpose of the exhibition was to permit pros-
pective customer evaluation rather than to take orders
immediately and profit on the alleged “on sale” devices.
“(T]he placing of an invention ‘on saie’ for experimental
purposes to enable the inventor to determine whether the
invention is complete and functional does not place the
6 Under § 102(b), plaintiffs must establish that the commercial
exploitation occurred before April 25, 1962.
Eee eee ce Be
53a
invention ‘on sale’ within the meaning of the statute.”
Red Cross Mfg. Co. v. Toro Sales Co., 525 F.2d at 1144;
See also Dart Industries, Inc. v. E. I. DuPont De Nemours
and Co., 489 F.2d at 1366. This Court concludes that de-
fendants have successfully rebutted plaintiffs’ prima fcie
evidence of commercial exploitation, and holds that no
“on sale” bar may be found on these facts.
Even if this Court were to find that defendants had
failed to rebut plaintiffs’ prima facie case, it would never-
theless be compelled to find that plaintiffs had failed to
show by clear and convincing proof that the alleged “on
sale” devices were sufficiently complete and similar to che
device embodied in Claim 12 of the ’800 patent to justify
a finding of “on sale” bar. This is especially true in light
of the testing which took place eight weeks after the
exhibition. This testing extends past the critical date of
one year prior to the application date, see n.6, supra.
Also, PX-56 describing the alleged “on sale” devices is
dated after the critical date for “on sale” bar.
E. ’800 Fraud
Plaintiffs’ argument that defendants committed fraud
because they failed to disclose evidence of the alleged “on
sale” bar is obviated by this Court’s finding that no such
bar was shown. Additionally, plaintiffs did not establish
that the defendants knowingly and willfully concealed ma-
terial information from the Patent Office. Columbia
Broadcasting System, Inc. v. Zenith Radio Corp., supra.
Plaintiffs provided no support for their allegations of in-
equitable conduct, nor did they prove bad faith. Precision
Instrument Mfg. Co. v. Automotive Maintenance Ma-
chiney Co., supra. In sum, plaintiffs’ allegation of fraud
is completely without merit.
VII. ’777 Patent Infringement
Plaintiffs contend that the ’777 patent is not infringed
by NBS accused imprinters under either A) literal in-
fringement or B) the doctrine of equivalents.
54a
A. ’777 Literal Infringement
This Court finds no literal infringement of the ’777
patent because the accused NBS imprinters do not clearly
fall within Claims 1 and 2 of the ’777 patent. Graver
Tank & Mfg. Co. v. Linde Air Products Co., supra. Claims
1 and 2 of the ’777 patent read alone do not encompass a
two platen roller assembly in which the two rollers are
supported by a single support rod, as embodied in the _
accused NBS imprinters (R 1125). Claims 1 and 2 of the
177 patent also do not encompass a two platen roller
assembly in which one of the two separately supported -
platen rollers has an extension platen, as embodied in the
accused NBS imprinters. The Court is not persuaded by
defendants’ attempts to contradict these observations. In
fact, defendants’ expert Maul admitted that the support
for the platen assembly of the NBS accused imprinters
differs from that disclosed in Claims 1 and 2 of the ’777
patent (R 1377-78). On these facts, no literal infringe-
ment may be found.
B. Doctrine of Equivalents
Plaintiffs argue first that defendants cannot discharge
their burden of proving infringement since it is not pos-
sible to determine what subject matter is within the scope
of Claims 1-5 of the ’777 patent. Plaintiffs support this
assertion by alleging invalidity of Claims 1-5 of the ’777
patent under 35 U.S.C. § 112.: In the alternative, plain-
tiffs argue that even if it were possible to determine the
scope of Claims 1-5 of the ’777 patent, defendants are
estopped by the file wrapper history from claiming in-
fringement by equivalents. It is asserted that the doctrine
of file wrapper estoppel prevents defendants from claim-
ing that the ’777 invention embodies anything other than
two parallel platen support elements, thereby excluding
from infringement by equivalents the accused NBS im-
printers.
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In support of their assertion that the ’777 patent is
infringed under the doctrine of equivalents, defendants
contend, through Mr. Maul’s testimony, that the accused
NBS imprinters have identity of means in the support
yokes dangling from a single support rod and that their
operation from the single support rod is the same as from
the two rods embodied in Claims 1 and 2 of the ’777 pat-
ent (R 654, 676). It is asserted that the other accused
NBS imprinters which disclose yokes dangling from two
aligned support shafts produce the same function when
printing a credit card and a merchant plate, and that
there exists further identity of operation between the
yoke-stop assembly embodied in the accused NBS in.-
printers and that disclosed in Claims 1 and 2 of the ’777
patent (R 1378). Additionally, defendants contend that
the accused NBS imprinters have screws identical to those
embodied in Ciaim 3 of the ’777 patent which provide for
the separate and independent adjustment of the pressure
applied against the printing plate by each platen roller
(R676-79). Finally, defendants argue that the accused
NBS imprinters produce substantially the same imprint-
ing result as the device disclosed in Claims 1-3 of the ’777
patent.
As was stated earlier, p. 22, supra., infringement by
equivalents is not avoided by varying the apparatus de-
scribed in the specification or illustrated in the drawings
of the patent. United States v. Adams, supra, Ellipse
Corp. v. Ford Motor Co., supra., Toro Co. v. R. L. Nelson
Corp., supra. Plaintiffs must fail in their argument that
the absence of similar literal detail in the two platen
roller support rods in Claims 1 and 2 of the ’777 patent
and the accused NBS imprinters precludes infringement
by equivalents.
This Court is persuaded by the testimony of defendants’
expert which established identity of means, operation and
result between the ’777 invention and the accused NBS
imprinters. Reese v. Elkhart Welding and Boil Works,
56a
Inc., supra. Skirow v. Roberts Colonial House, Inc., supra.
Both experts Maul and VanDerLinden agree and this
Court finds that the significant element of the ’777 inven-
tion discloses the separate and independent means of ad-
justing the pressure of each platen roller (R 804-5, 1023).
.nis element is fully embodied by the accused NBS im-
printers.
Plaintiffs also attempt to argue the doctrine of file
wrapper estoppel. File wrapper estoppel traditionally pre-
cludes employing equivalents to enlarge patent claims to
include areas explicitly abandoned before the Patent
Office. See p. 23, supra. The claims made now were not
abandoned before the Patent Office, but rather were fully
part of the application as submitted. As © result, an
estoppel theory does not apply. Claims 1-3 of the ’777
patent cover the accused NBS imprinters and “may fairly
be called the equivalent of the ones described” in the
accused NBS imprinters. Laser Alignment, Inc. v. Wood-
ruff & Sons, Inc., 491 F.2d at 875, Dole Valve Co. v.
Perfection Bar Equipment, Inc., 298 F. Supp. 401, 406
(N.D. Ill 1968), aff'd 419 F.2d 968 (7th Cir. 1969).
For the foregoing reasons, this Court concludes that de-
fendants have carried their burden of proof as to infringe-
ment.
IX. 777 Patent Validity
Plaintiffs attack the validity of the ’777 patent on four
grounds. They argue that it is: A) invalid for obvious-
ness, B) unenforceable for failure of disclosure, C) un-
enforceable for fraud on the Patent Office, and D) un-
enforceable for failure to disclaim Claims 4 and 5
pursuant to 35 U.S.C. §§ 253 and 288.
A. 777 Obviousness
Based on the testimony of expert VanDerLinden, plain-
tiffs argue that a person of ordinary skill in the art at
the time the invention was made would have found it
57a
obvious to assemble an imprinter of the type disclosed
in Claims 1-3 of the ’777 patent. Plaintiffs argue that
Patent No. 3,410,207 discloses an automatic yoke-stop
asseanbly which activates an idling, raised return stroke
of a single platen roller, as embodied in Claims 1 and 2
of the ’777 patent and applied to the movement of the
first platen roller. Further, plaintiffs point out that the
’T77 patent itself mentions the ’120 patent as prior art
for a two platen roller, double stroke imprinter. Addi-
tionally, plaintiffs argue: 1) that Patent No. 3,556,007
discloses independently adjustable platen rollers; 2) that
Patent No. 3,661,080 discloses the concept of independ-
ently adjustable platen rollers placed parallel to each
other; and 3) that Patent No. 3,577,917 discloses a spring-
screw assembly for adjusting a single platen roller, which
is shifted from one printing path to another in a forward-
return, double stroke. Finally, plaintiffs’ expert VanDer
Linden testified that he observed the features of Claims
1-3 of the ’777 patent in combination in these various
prior art patents.
As established in the previous obviousness analyses, pp.
25-27, supra., a patent combining elements present in the
prior art is patentable only after close scrutiny reveals a
new or different function of the invention as a whole,
A&P Tea Co. v. Supermarket Corp., supra. The presump-
tion of validity attached to the combination patent may
only be overcome by prior art which teaches the patent’s
combination of elements. This Court is persuaded by
plaintiffs’ expert VanDerLinden’s testimony that the
teaching of the combination of the elements embodied in
Claims 1-3 of the ’777 patent could be found in the prior
art patents. His testimony regarding the ’777 invention
is not based on improper hindsight, but rather is based
on the prospective of “a hypothetical person” having all
of the prior art at hand and having ordinary skill in the
art at the time the invention was made. Popiel Brothers,
Inc. v. Schick Electric, Inc., 494 F.2d 162, 167 (7th Cir.
58a
1974), Gass v. Montgomery Ward, 387 F.2d 129, 130
(7th Cir. 1967).
VanDerLinden’s testimony is supported by evidence of
prior art patent (Patents Nos. ’007, ’207 and ’917) not
considered by the Patent Office when it issued the ’777
patent and hence unaffected by the patent’s presumption
of validity. See Blacksmith, Inc. v. Lindsay Bros., Inc.,
pp. 13-14, supra. While it is true that the ’080 patent
(the fourth prior art patent on which VanDerLinden’s
testimony was based) was considered insufficient by the
Patent Office to render the ’777 invention invalid because
the ’080 patent disclosed tandem platen rollers printing
at the same time, nene of the Patents Nos. ’007, ’207 or
’917 were considered by the Patent Office. This Court
accepts VanDerLinden’s characterization of the means
and operation of each of these prior art patents. The
Court is especially persuaded by testimony regarding the
917 patent, which discloses every element disclosed in
Claims 1-3 of the ’777 patent except the two platen rollers
situated side-by-side, which the preamble to the ’777 pat-
ent acknowledges as taught in the 7120 patent. In light
of the new prior art considered and the credible testimony
of plaintiffs’ expert, this Court finds the combination of
old elements embodied in Claims 1-3 of the ’777 patent
to be “the work of the skilled mechanic, not that of the
inventor.” Hotchkiss v. Greenwood, 52 U.S. 248, 266
(1851). Thus, plaintiffs have satisfied their burden of
proof as to obviousness.’
7 Defendants argue that: 1) the ’207 patent discloses no means
for adjusting pressure of the single platen roller; 2) the ’120 patent
discloses no independent means for adjusting pressure of each of
the two platen rollers; 3) the ’007 patent discioses a stationary
double platen roller with no independent means for supporting each
platen roller; 4) the ’080 patent discloses two tandem platen rollers
which print in one stroke; and 5) the ’917 patent discloses a single
platen roller which naturally has nothing to do with separate
means for supporting two platen rollers. Defendants further con-
tend that none of the prior art patents teach the combination of
59a
B. ’777 Failure of Disclosure
Plaintiffs argue that Claims 1, 2, 4 and 5 of the ’777
patent fail to recite the subject matter which the applicant
regarded as his invention and are therefore invalid under
the second paragraph of 35 U.S.C. § 112. Based on the
testimony of expert Williamowsky, plaintiffs assert that
defendants failed to provide antecedent definitions for the
terms used in Claim 1 of the ’777 patent and that the
"777 patent specifications do not clearly support Claims
1-5 of the ’777 patent (R 1289, 1291-1319). Additionally,
based on the testimony of expert VanDerLinden, plaintiffs
allege that Claims 1-5 of the ’777 patent fail to set forth
an enabling description of the ’777 invention as required
in the first paragraph of 35 U.S.C. § 112 (R 1021). Be-
cause this Court believes that plaintiffs have failed to
prove that defendants violated the requirements of 35
U.S.C. § 112, plaintiffs argument that the ’777 is invalid
for failure of disclosure is rejected.
As has already been stated, pp. 16-17, supra., 35 U.S.C.
§ 112 requires that in order to be valid, patent claims
must particularly point out and distinctly claim the sub-
ject which the applicant regards as his invention. Rock-
well v. Midland-Ross Corp., 438 F.2d at 653. Ambiguous,
indefinite and vague patent claims are void. Ellipse Corp.
v. Ford Motor Co., 452 F.2d at 170. Plaintiffs’ argument
that Claims 1, 2, 4 and 5 of the ’777 patent fail under the
second paragraph of § 112 to recite any means for adjust-
ing the printing pressure of any platen, independently or
otherwise, assumes that § 112 requires each claim to recite
every aspect of the claimed invention. There is no such
requirement, and Claim 3 of the ’777 patent is sufficient
to disclose the independent pressure 2djustment means
which inventor Brown regarded as his invention.
elements embodied in Claims 1-3 of the ’777 patent. Despite these
distinctions, the combined teachings of the prior art Patents Nos.
’207, ’007, 080, ’120 and ’917, render the ’777 patent invalid for
obviousness.
60a
Furthermore, the testimony of plaintiffs’ own expert
Williamowsky is rejected as improper hindsight not based
on the perspective of one of ordinary skill in the art at
the time the invention was made. As established in the
earlier analysis of § 112, the proper application of the
§ 112 precision requirement is at the time the patent
claims were written. In contrast, this Court is persuaded
by the testimony of defendants’ expert Maul to the effect
that a person of ordinary skiil in the art would, at the
time of the invention, find Claim 1 of the ’777 patent
understandable, see § 112 (first paragraph) ; Application
of Edwards, 568 F.2d 1349, 1852 (CCPA 1978) ; Applica-
tion of Hawkins, 486 F.2d 569, 574 (CCPA 1973). It is,
therefore, this Court’s conclusion that the § 112 precision
requirement is satisfied.
Plaintiffs also allege that the ’777 invention is non-
enabling. This Court accepts Maul’s testimony and Van
DerLinden’s cross-examination testimony which agree that
the pressure adjusting screws do affect an adjustment of
pressure on each platen roller independently. VanDer
Linden’s direct testimony as to plaintiffs non-enabling
argument is rejected as contradicted by his cross-examina-
tion testimony. The Patent Office twice rejected the claims
and drawings in the ’777 patent application under § 112
before allowing them, and such evidence in the file
wrapper history strengthens the presumption of validity
of Claims 1-3 of the ’777 patent. Plaintiffs have failed to
satisfy their burden of proof as to invalid’ty under § 112.
C.. °777 Fraud
Plaintiffs first argue that defendants acted fraudulently
when they did not. inform the Patent Office Examiner that
Claims 1-3 of the ’777 patent did not satisfy the second
paragraph of 35 U.S %. § 112. As with many of defend-
ants’ allegations of fraud, the latter is obviated by this
Court’s finding that Claims 1-3 fully satisfy the statutory
precision requirements.
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6la
Plaintiffs next argue that defendants acted fraudulently
in failing to disclose the ’007 prior art patent. In the
absence of clear and convincing proof of “wrongfulness,
willfulness, or bad faith,” Precision Instrument Mfg. Co.
v. Automotive Maintenance Machinery Co., 324 U.S. at
814-815, it is a permissible exercise of a patentee’s judg-
ment to withhold prior art which the patentee believes
would not affect the Examiner’s evaluation of the pending
application. CTS Corp. v. Piker Internationai Corp., 527
F.2d at 99-100. Plaintiffs have failed to offer clear and
convincing proof of bad faith by defendants in not dis-
closing the ’007 patent, and therefore plaintiffs have failed
to carry their burden of proof as to fraud.
D. °’777 Fraud for Failure to Disclaim
Plaintiffs argue that defendants engaged in inequitable
conduct amounting to fraud when they failed to disclaim
Claims 4 and 5 of the ’777 patent, which defendants re-
moved from their infringement claim prior to trial.
Plaintiffs argue that the failure to disclaim Claims 4 and
5 of the ’777 patent constituted improper conduct which
requires the Court to dismiss the defendants’ infringe-
ment action as to all the claims of the ’777 patent.
35 U.S.C. § 288 provides that:
“Whenever, without deceptive intention a claim of a
patent is invalid, an action may be maintained for
the infringement of a claim of the patent which may
be valid. The patentee shall recover no costs unless
a disclaimer of the invalid claim has been entered at
the Patent and Trademark Office before the com-
mencement of the suit.”
Based on this statutory provision, it has been held that
“invalidity of any part of a patent will dvfeat the entire
patent unless (1) the invalid portion was claimed through
inadvertence, accident, or mistake, and without any fraud-
ulent or deceptive intention, and (2) is disclaimed without
62a
unreasonable neglect or delay.” Strong v. General Electric
Co., 484 F.2d 1042, 1045 (5th Cir. 1970). It is on the
basis of this rule of law that plaintiffs argue that de-
fendants’ infringement action must be dismissed as to all
claims of the ’777 patent.
This Court rejects plaintiffs’ argument for two reasons.
First, Cle‘ms 4 and 5 of the ’777 patent are not in con-
troversy .n this case since uefendants have never made
a specific charge of infringement under them. Second,
dismissal of the action is not appropriate where, as here
plaintiffs have failed to prove bad faith or «*ceptive in-
tention on the part of defendants in procuring the patent
from the Patent Office.* In the abscence of clear and
convincing proof of bad faith, imperfect preparation in
failing to drop Claims 4 and 5 from dependants’ infringe-
ment suit does not require invalidation of the ’777 patent
under § 288.
Conclusion
Defendants have requested treble damages and attor-
neys’ fees pursuant to 35 U.S.C. §§ 284 and 285, alleging
willful infringement by plaintiffs. Because this is a close
case, and only one of defendants’ three patents has been
found to be valid and infringed, it must be said that at
any time the validity and infringement of the three pat-
ents was “open to honest doubt’ and that, as a result,
defendants have not proven that plaintiffs acted in a
bad faith belief that the patents were invalid. IJnterna-
tional Mfg. Co. v. Landon, Inc., 336 F.2d 723, 728 (9th
Cir. 1964) cert. denied 379 U.S. 988 (1965), Artmoore
Co. v. Dayless Mfg. Co., 208 F.2d 1, 5, cert. denied 347
U.S. 920 (1954) (7th Cir. 1953). Defendants admitted
the closeness of the technology in the art by citing a low
level of technological content in data recorders in their
8 Under § 288, the relevant question is whether bad faith or
deceptive intention were present at the time of procurement of the
patent from the Patent Office. Chromalloy American Corp. v. Alloy
Surfaces Co., 339 F. Supp. 859, 275 €D. Del. 1972).
63a
1980-84 growth plan. Additionally, defendants have not
carried their burden of proof as to willful infringement.
In light of the latter and in light of the closeness of this
ease, treble damages and attorneys’ fees will not be
awarded to defendants under 35 U.S.C. § 284 and 285.
Similarly, as to the two patents held invalid, despite the
weight of the prior art, the issues of patent validity and
infringement are sufficiently debatable to counsel against
an award of treble damages and attorneys’ fees to plain-
tiffs under 35 U.S.C. § 285. Ashland Oil, Inc. v. Delta
Oil Products Corp., —— F. Supp. , 212 USPQ at
523. See Wahl v. Carrier Mfg. Co., 511 F.2d 209, 214
(7th Cir. 1975).
In sum, it is hereby ordered that:
1. Claim 7 of U.S. Patent No. 3,272,120 to Johnson is
valid and infringed by plaintiffs’ accused devices.
2. Claim 12 of U.S. Patent No. 3,340,800 to Gruver
et al., and Claims 1-3 of U.S. Patent No. 3,763,777 to
Brown are invalid for obviousness under 35 U.S.C. § 103.
3. Plaintiffs’ and defendants’ requests for treble dam-
ages and attorneys’ fees under 35 U.S.C. § 285 and 35
U.S.C. § 284 and 285, respectively, are denied.
IT IS SO ORDERED.
/s/ Nicholas J. Bua
NICHOLAS J. BUA
Judge
United Siates District Court
Dated: August 26, 1982
64a
APPENDIX C
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Chicago, Illinois 60604
January 24, 1985
Before
Hon. WILBUR F. PELL, SR., Senior Circuit Judge
Hon. JESSE E. ESCHBACH, Circuit Judge’
Hon. WILLIAM J. JAMESON, Senior District Judge *
No. 82-2393
NATIONAL BUSINESS SYSTEMS, INC., et al.,
Plaintiffs-A ppellants,
vs.
AM INTERNATIONAL, INC., et al.,
Defendants-A ppellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division
No. 80 C 4915 & No. 81 C 6227
Nicholas J. Bua, Judge
ORDER
Dated January 24, 1985
*Senior District Judge William J. Jameson of the District of
Montana is sitting by designation.
65a
The appellant’s motion for leave to file response to
defendants-appellees’ answer to appellants’ petition for
rehearing is granted. The response which is 2t forth as
part of the motion is hereby deemed filed.
Having considered the petition for rehearing and sug-
gestion for rehearing en banc, the response thereto, and
the response to the response, no judge in active service
has rquested a vote thereon, and all of the judges on the
original panel have voted to deny a rehearing. Accord-
ingly,
IT IS ORDERED that the aforesaid petition for re-
hearing and suggestion for rehearing en banc be, and the
same is hereby DENIED.
66a
APPENDIX D
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Chicago, Illinois 60604
January 24, 1985
Before
Hon. WILBUR F. PELL, JR., Senior Circuit Judge
Hon. JESSE E. ESCHBACH, Circuit Judge
Hon. WILLIAM J. JAMESON, Senior District Judge *
a
No. 82-2393
NATIONAL BUSINESS SYSTEMS, INC., et al.,
Plaintiffs-Appellants,
vs.
AM INTERNATIONAL, INC., et al.,
Defendants-A ppellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division
Nos. 80 C 4915 & 81 C 6277
Nicholas J. Bua, Judge
ORDER
Dated January 24, 1985
* William J. Jameson, Senior District Judge for the District of
Montana, sitting by designation.
67a
The following motions and memoranda have been filed
by the respective parties subsequent to the filing of the
court’s opinion on September 20, 1984:
1.
10.
“APPELLANTS’ MOTION FOR SANCTIONS”
filed on November 5, 1984.
“MEMORANDUM IN SUPPORT OF APPEL-
LANTS’ MOTION FOR SANCTIONS” filed on
November 5, 1984.
“AM INTERNATIONAL’S MEMORANDUM
IN OPPOSITION TO APPELLANT’S MOTION
FOR SANCTIONS” and request for attorneys’
fees in responding to NBS motions, filed on No-
vember 9, 1984.
“REPLY MEMORANDUM IN SUPPORT OF
APPELLANTS’ MOTION FOR SANCTIONS”
filed on November 13, 1984.
“APPELLANTS’ MOTION TO CORRECT ER-
RORS IN OPINION FILED SEPTEMBER 20,
1984” filed on November 6, 1984.
“APPELLEES’ MEMORANDUM IN OPPO-
SITION TO APPELLANTS’ MOTION TO COR-
RECT ERRORS IN OPINION” filed November
23, 1984.
“BILL OF COSTS” filed on October 4, 1984, by
AM International.
“OBJECTION TO APPELLEE’S BILL OF
COSTS” filed on November 13, 1984, by NBS.
“AM’S REPLY TO NBS’ OBJECTION TO AP-
PELLEES’ BILL OF COST” filed on Novem-
ber, 14, 1984.
“APPELLANTS’ MOTION FOR LEAVE TO
FILE RESPONSE TO DEFENDANTS-APPEL-
LEES’ ANSWER TO APPELLANTS’ PETI-
68a
TION FOR REHEARING” filed on December 6,
1984,
11. “APPELLANTS’ FURTHER MOTION FOR
SANCTIONS” filed on December 4, 1984.
The court having considered all of the motions and
memoranda, and having entered a separate order correct-
ing four errors in the opinion,
IT IS ORDERED:
1. With the exception of the aforesaid order amending
the opinion, appellants’ motion to correct errors in the
opinion is denied.
2. Appellants’ Motions for Sanctions are denied.
3. Appellant’s Objection to Appellees’ Bill of Costs is
rejected, and costs as set forth in Appellees’ Bill of Costs
are awarded in full.
4. Appellees’ request for attorney fees in responding
to appellant’s motion is denied.
IT IS SO ORDERED.
69a
APPENDIX E
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Chicago, Illinois 60604
January 24, 1985
Before
Hon. WiLBuR F. PELL, JR., Senior Circuit Judge
Hon. JESSE E. ESCHBACH, Circuit Judge
Hon. WILLIAM J. JAMESON, Senior District Judge *
No. 82-2393 |
NATIONAL BUSINESS SYSTEMS, INC., et al.,
Plaintiffs-A ppellants,
vs.
AM INTERNATIONAL, INC., et al.,
Defendants-A ppellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division
Nos. 80 C 4915 & 81 C 6277
Nicholas J. Bua, Judge
ORDER
Dated January 24, 1985
* William J. Jameson, Senior District Judge for the District of
Montana, sitting by designation.
70a
IT IS ORDERED:
That the opinion in the above entitled cause be amended
as follows:
1. Footnote 2, page 2 of slip opinion, last line, substi-
tute “not infringed and dismissed the counterclaim based
upon it,” for “valid but not infringed.”
2. Page 3, lines 7-8 of first full paragraph, substitute
“As stated in the patent application,” for “As the patent
examiner remarked in 1966,”
3. Page 3, line 14 of first paragraph, substitute “pat-
ent” for “examiner”.
4. Page 6, under III Contentions on Appeal, Contention
No. 1, substitute “The Patent Office’s expertise in resolv-
ing issues and the attendant presumption of its correct
exercise are controlling,” for “The district court was
bound by the Patent Office’s final rejection of the reissue
application,”
IT IS SO ORDERED.
Tla
APPENDIX F
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Chicago, Illinois 60604
February 1, 1985
Before
Hon. WILBUR F. PELL, JR., Senior Circuit Judge
No. 82-2393
NATION BUSINESS SYSTEMS, INC.;
A Delaware Corporation, et al.,
Plaintiffs-A ppellants,
vs.
AM INTERNATIONAL, INC., A Delaware Corporation, BAR-
TIZAN CORPORATION, A New York Corporation and
LEWIS Horr, An Individual and President of Bartizan
Corp.
Defendants-A ppellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division
Nos. 80 C 4915 & 81 C 6277
Nicholas J. Bua, Judge
ORDER
Filed February 1, 1985
This matter comes before the court for its considera-
tion on the ‘APPELLANTS’ MOTION TO STAY MAN-
72a
DATE” filed herein on January 30, 1985, by counsel for
the plaintiffs-appellants.
On consideration thereof,
IT IS ORDERED that the mandate in this appeal shall
be STAYED to and including March 1, 1985, to permit
appellants to file a petition for certiorari in the U.S.
Supreme Court. Appellants are instructed to notify this
court of the filing of a petition for certiorari. Circuit
Rule 17.
IT IS FURTHER ORDERED that should a petition
not be filed by March i2, 1985, the mandate in this appeal
WILL ISSUE without further notice.
73a
APPENDIX G
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Chicago, Illinois 60604
Corrected February 8, 1985
Feb. 1, 1985.
Before
Hon WILBUR PELL, JR., Senior Circuit Judge
No. 82-2393
NATION BUSINESS SYSTEMS, INC.;
A Delaware Corporation, et al.,
Plaintiffs-A ppellants,
VS.
AM INTERNATIONAL, INC., A Delaware Corporation, BAR-
TIZAN CORPORATION, A New York Corporation and
LEWIS Horr, An Individual and President of Bartizan
Corp.
Defendants-A ppellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division
Nos. 80 C 4915 & 81 C 6277
Nicholas J. Bua, Judge
CORRECTED ORDER
Filed February 8, 1985
74a
This matter comes before the court for its considera-
tion of the “APPELLANTS’ MOTION TO STAY MAN-
DATE” filed herein on January 30, 1985, by counsel for
the plaintiffs-appellants.
On consideration thereof,
IT IS ORDERED that the mandate in this appeal shall
be STAYED to and including March 12, 1985, to permit
appellants to file a petition for certiorari in the U.S. Su-
preme Court. Appellants are instructed to notify this
court of the filing of a petition for certiorari. Circuit
Rule 17.
IT IS FURTHER ORDERED that should a petition
not be filed by March 12, 1985, the mandate in this appeal
WILL ISSUE without further notice.
75a
APPENDIX H
IM THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Appeal No. 82-2393
NATIONAL BUSINESS SYSTEMS, INC., et al.,
Plaintiffs-A ppellants
Vv.
AM INTERNATIONAL, INC., et al.,
Defendants-A ppellees
Appeal from the United States District Court for the
Northern District of [llinois, Eastern Division
APPELLANTS’ PETITION FOR REHEARING WITH
SUGGESTION FOR REHEARING EN BANC
Filed November 5, 1985
SUGGESTION FOR REHEARING EN BANC
Pursuant to F.R.A.P. 35 and 40 and Circuit Rule 16,
appellants National Business Systems, Inc. et al (NBS)
hereby petition for rehearing, in banc, because the panel’s
opinion effectively denies the very right of appeal by
(a) failing to decide properly raised issues, (b) decid-
ing issues that were not raised and are inappropriate,
(c) engaging in appellate fact-finding based on appel-
lees’ false and misleading brief, (d) otherwise departing
from the trial record and the district court’s fact find-
ings and (e) departing from controlling precedent by
making rulings that conflict with at least:
76a
(i) Roberts v. Sears, Roebuck & Co., 723 F.2d 1324
(7 Cir. 1983) and Kansas Jack, Inc. v. Kuhn, 719 F.2d
1144 (Fed. Cir. 1983) on the issue of whether courts, in
determining obviousness of a patent claim under 35
U.S.C. § 103 must consider all relevant evidence before
reaching a conclusion on that issue and must specifically
determine, rather than infer, the level of ordinary skill
in the pertinent art;
(ii) Roberts v. Sears, Roebuck & Co., supra on whether
the test of anticipation of a patent claim under 35 U.S.C.
§ 102(b) is “substantial identity” to be determined by
comparing the invention as defined by the patent claim
with the prior art;
(iii) Red Cross Mfg. Corp. v. Toro Sales Co., 525 F.2d
1135 (7 Cir. 1975), D.L. Auld Co. v. Chroma Graphics
Corp., 714 F.2d 1144 (Fed. Cir. 1983) 2 | Kinzenbaw v.
Deere & Co., 741 F.2d 383 (Fed. Cir. 1984) on whether
the “on sale” bar provision of 35 U.S.C. § 102(b) pre-
cludes an inventor from commercial exploitation of his
invention even though the invention be kept secret;
(iv) Lee Blacksmith, Inc. v. Lindsay Bros., Inc., 605
F.2d 340 (7 Cir. 1979), Envirotech Corp. v. Al George,
Inc., 730 F.2d 753 (Fed. Cir. 1984) and Caterpillar Trac-
tor Co. v. Borco S.p.A., 714 F.2d 1110 (Fed. Cir. 1988)
on whether a patent claim must be construed “in light of
the specification” United States v. Adams, 383 U.S. 39,
40 (1966) ;
(v) Elgen Mfg. Co. v. Ventfabrics, Inc., 314 F.2d 440
(7 Cir. 1963) on whether infringement by equivalents
must be determined in light of the inventive features
described in the specification;
(vi) Laser Alignment, Inc. v. Woodruff & Sons, Inc.,
491 F.2d 866 (7 Cir. 1973) on whether a method claim
may be construed to define an unrecited apparatus;
(vii) Miller Brewing Co. v. Jos. Schlitz Brewing Co.,
605 F.2d 990 (7 Cir. 1979) and Syntex Opthalmics, Inc.
77a
v. Novicky (Fed. Cir., October 3, 1984) on issue preclu-
sion;
(viii) Driscoll v. Cebalo, 731 F.2d 878 (Fed. Cir. 1984)
on whether a patent claim may be unenforceable because
infected by fraud consequert from concealment of prior
art that a reasonable examiner would have deemed ma-
terial in deciding whether to allow the claim, even though
the claim itself is deemed by a court to be valid (patent-
able) over the concealed prior art;
(ix) American Can Co. v. Crown Cork & Seal Co., 693
F.2d 653 (7 Cir. 1982), CMI Corp. v. Barber-Greene Co.,
683 F.2d 1061 (7 Cir. 1982) ; affg 214 USPQ 690 (N.D.
Ill. 1982) and CTS Corp. v. Piher International Corp.,
527 F.2d 95 (7 Cir. 1975) on the issue of whether a
party’s concealment of its own material prior art from
the Patent Office during the solicitation of a patent is
prima facie willful and deliberative, rendering independ-
ent proof of scienter unnecessary;
(x) Herman and MacLean v. Huddleston, —— USS.
——, 74 L.Ed.2d 548 (1983) on the issue of whether the
standard of proof for fraud on a government agency in
an ex parte proceeding is a preponderance of the evidence
rather than “clear and convincing” ;
(xi) Pullman-Standard v. Swint, 456 U.S. 273 (1982)
on whether an appellate court is without power to make
de novo fact findings and must remand to the district
court when it concludes essential fact findings have not
been made unless the record permits only one answer to
the fact question at issue; and
(xii) United States v. U.S. Gypsum Co., 333 U.S. 364,
395 (1948) on whether an appellate court must review
the entire evidence relative to a challenged trial court
fact finding to see if it “is left with the definite and
firm conviction that a mistake has been committed” in-
stead of merely assuring itself that there is “substantial
evidence” to support the finding.
78a
PETITION FOR REHEARING
NBS seeks rehearing, not mere reconsideration, and
nullification of a fatally flawed ruling. At stake is
whether the controlling precedent in this Court, the rules
and statutes which govern its operation, and the very
right of appeal can be decimated by a panel’s apparent
determination to affirm a district court at all cost.’
The panel opinion departs so far from this Court’s
normally high standard of performance in the discharge
of its duty to hear and determine appeals as to pose the
issue of whether NBS has even had an appeal. This
opinion evidences that the panel resolved not to be ham-
pered by controlling law, the trial record or the district
court’s fact findings in reaching its apparent goal of
affirmance. Repeatedly throughout the opinion, issues
raised by NBS are distorted to facilitate affirmance or
simply ignored. To avoid remand on several issues, the
panel has filled holes in the district court opinion with its
own de novo appellate fact findings which it had no
power to make—several of which, incredibly, derive not
from the trial record, but from false representations in
appellee AM’s brief. The points NBS made at oral hear-
ing are simply ignored—perhaps because the tape of
that hearing, inexplicably lost shortly afterward, still
cannot be found.
1 The panel may have been influenced by knowing ‘his to be the
last patent appeal, or neerly so, to reach the Court. After all, Judge
Eschbach, a member of the panel, had earlier joined with Judge
Posner in Roberts v. Sears, Roebuck & Co., 723 F.2d 1324, 1348 (7
Cir. 1983) to express his strong conviction, based on announcement
by the Federal Circuit in South Corp. v. United States, 690 F.2d
1368 (Fed. Cir. 1982) (in banc) that “it will not be bound by de-
cisions of other circuits” in the exercise of its now exclusive juris-
diction over patent appeals, that an unsound panel decision in this
Circuit in a patent appeal is “harmless” and without “weight as
precedent”, whereby “we cannot afford to waste judicial resources”
in its correction, Roberts, 734 F.2d at 1348.
79a
The resultant breakdown in the judicial system de-
nudes NBS, basically a Canadian corporation headquar-
tered in Toronto, of confidence in American legal in-
stitutions—and rightly so. Certainly if the appellate
courts fail to discharge their function, business people—
unable to depend upon their adherence to established
precedents and their conduct of proceedings in conform-
ity to controlling rules and statutes—cannot plan or func-
tion efficiently.
As the panel acknowledges, NBS argued in part that
the PTO final rejection of claim 7 is presumptively cor-
rect (Op. 7). To reject that contention, the panel found
it necessary to enunciate an incorrect de novo fact
finding:
Here, special deference to the Patent Office decision
is particularly inappropriate because .. . the dis-
trict court, having the benefit of extensive proof by
expert testimony and demonstrative evidence. .. .
(Op. 9)
This spurious fact finding—which the district court
did not make—was induced by the false assertion at
D.Br. 21 that “the trial court . . . had before it a far
more comprehensive and complete record than that before
the Examiner in the reissue proceeding”. The untruth of
this representation was exposed at P.Rep.Br. 2, n.5—
which the panel ignored—as follows:
Defendants’ bald assertion that “the trial court...
had before it a far more comprehensive and complete
record than that before the Examiner in the reissue
procedings”, (D.Br. 21), is unsupported. Defend-
ants do not controvert that they “relied upon essen-
tially the same evidence and arguments” (P.Br. 16)
in both tribunals. The record is clear that so much
of the “live testimony from expert witnesses” (D..r.
21) as relates to Cox added nothing to the PTO
record and afforded no “demeanor” or “credibility”
80a
questions for the trial court to resolve. “Expert”
testimony about on sale bar was not offered by either
party. No “in-court demonstrations” (D.Br. 21)
were pertinent to Cox or on sale bar issues. PTO
briefing was as comprehensive as in the district
court. See PX 5A and PX 5AA. (emphasis in origi-
nal; P.Rep.Br. 2, n.5)
NBS also argued that AM, having sought reissue under
35 U.S.C. § 251 of the identical ‘120 patent claims, in-
cluding claim 7, and received a final ruling of unpatenta-
ability (invalidity)? that became “immune as a prac-
tical matter to reversal or amendment” * when the ‘120
patent expired on September 13, 1983, should have been
precluded from seeking a further determination of validity
of the same claim 7 in the federal courts. This sound
argument that the Court was “bound” by what the Patent
Office had held. The panel adjudicated the latter straw
man issue,* but never dealt meaningfully with issue pre-
clusion, the only question NBS did advance.
The district court, to find claim 7 infringed, was con-
strained by the record to reject “[p]laintiff’s argument
. . . that this Court must read the language of the claim
in light of the specification and the file wrapper” (546
F.Supp. at 348) and incorrectly to hold instead that “the
2 As 35 U.S.C. § 282 makes clear, “unpatentability” and “invalid-
ity” are two labels for the same determination under 35 U.S.C.
§§ 102 and 103.
3 Miller Brewing Co. v. Jos. Schlitz Brewing Co., 605 F.2d 990, 996
(7 Cir. 1979); see also Syntex Ophthalmics, Inc. v. Novicky (Fed.
Cir., October 3, 1984), Slip Op. at 18-19, n.17 and C. Wright, Law
of Federal Courts, § 100A at 682 (4th Fd. 1983).
* Under the heading “Contentions on Appeal” the panel states
that NBS contended that “(t]he district court was bound by the
Patent Office’s final rejection. .. .” (Op. 6). Under the heading
“Conclusion” the panel states “[w]le conclude that the district
court was not bound by the findings of the Patent Office... .”
(Op. 28).
8la
Court is to read the claim alone as the measure of the
invention” (Jd.).5
If the panel had read claim 7 “in light of the [’120]
specification and the circumstances which surrounded the
[120] patent at its inception” as it should have,® it would
have understood that (i) for years before the alleged in-
vention was made, it was conventional to simultaneously
print all three lines of embossing, including an optical
character recognition (OCR) (account number) line from
plastic credit cards; (ii) with the advent of MICR, simul-
taneous printing proved infeasible because the influence
of the other lines of embossing rendered the imprint of
the MICR line insufficiently clear; (iii) that is the prob-
lem addressed by the ‘120 patent; and (v) that patent’s
purported solution to that problem is to print the MICR
line in isolation with a narrow platen.
5 The district court was so constrained because of its own find-
ings that (i) “the drawings in the ’120 patent show one narrow
platen and one wide platen in an assembly designed to selectively
imprint MICR characters [imprint MICR characters in isolation
from other lines of embossing on the card] as specifically described
in the specification of the ’120 patent” (546 F.Supp. at 348) and
(ii) on “undisputed” facts “regarding the accused NBS imprint-
er[s]”, that “[m]ost plastic credit cards have... only one line...
in a machine readable font” and that the NBS imprinters have
“ty. » platen rollers’, one of which “[o]n the left-to-right stroke .. .
imprints all of the lines of embossing from a plastic credit card”
(546 F.Supp. at 347; emphasis added).
6 “The terms of claims are best construed in light of the specifica-
tion and the circumstances [see P.Br. 4-10] which surround the
patent at its inception .. .”, Envirotech Corp. v. Al George, Inc.,
730 F.2d 753, 760 (Fed. Cir. 1984); Patent claims “must” be
construed “in light of the specification” United States v. Adams,
383 U.S. 39, 40. . .”, Caterpillar Tractor Co. v. Borco S.p.A., 714
F.2d 1110, 1116 (Fed. Cir. 1983). The identical holding also based
on United States v. Adams appears in Lee Blacksmith, Inc. v.
Lindsay Bros., Inc., 605 F.2d 340, 345 (7 Cir. 1979) where the
panel included Judge Pell, a member also of the present panel.
82a
This is the teaching of the ’120 patent specification
which states that the objective of producing acceptable
prints of MICR or OCR characters was achieved “[a]c-
cording to the present invention”
... by providing a data recorder for imprinting...
from a printing plate having two distinct groups of
embossed characters thereon. The data recorder is
provided with dual roller platens which are inde-
pendently operative to imprint one group of char-
ters with one of the platens when the platens are
moved in a first direction across the form, and to
imprint the other group of characters with the other
platen when the platens are moved in the opposite
direction across the form. In particular one of the
platens is arranged to come into printing relation
with a single line only of MICR type and to roll
therealong from end to end without reaching any
adjacent line of type.’ The uniformity of the pressure
thus applied . . . provides a clear, dense image of the
MICR type on the form, which image is free of
ragged outlines and has the degree of clarity and
sharpness required for automatic reading. (Col. 2 Il.
22-46) ®
Based on this teaching of the ’120 patent specification,
NBS argued, inter alia at P.Br. 38-39, that the NBS im-
printers cannot infringe because they do not use the claim
7As stressed at oral argument and in the concurrently filed
motion for sanctions, the emphasized key sentence is omitted from
the quotation of this passage at D.Br. 3.
8 After describing the operation of the imprinter shown in the
"120 patent drawings, the specification explains that the desired
... results are achieved through the use of a dual platen roller
assembly wherein the printing of the MICR character is ac-
complished by rolling line contact and under circumstances
such that the printing pressure on the embossed MICR char-
acters is not influenced by any parallel embossed lines on the
printing plate. (Col. 6, ll. 7-12; emphasis added)
83a
7 method invention—but instead print all lines of emboss-
ing simultaneously and print no single line in isolation.
The panel could not meet this argument. It therefore
resorted to distortion by a cropped quotation—
NBS argues that claim 7 is limited to imprinting
“from different portions of the same embossed print-
ing device” on opposite strokes. (Op. 21)
—omitting the key argument point that undercuts the
panel ruling.®
This incredible affirmance, based on a mischaracteriza-
tion of the argument NBS did make, is flatly inconsistent
with the only dispositive testimony in the record, ignored
by the district court and the panel. Thus, piaintiff’s
highly qualified patent expert Williamowsky, for 33 years
either an Examiner in the Patent Office or a member of
its Board of Appeals, cogently testified that:
®In context, the fragment of the NBS argument quoted by the
panel states:
The most cursory reference to the ’120 patent specification
makes clear that claim 7’s limitation to imprinting from differ-
ent portions * of the same * embossed printing device is essen-
tial * to the disclosed invention, because at the heart of the
problem addressed—i.e., makirg sharp, clear machine-readable
imprints of machine code information from a single credit card
also containing lines of ordinary embossing.®? In describing
how one group of machine code characters is imprinted in iso-
lation by a narrow platen moving in one direction and the re-
maining characters by a wider platen moving in the opposite
direction, the specification stresses that ... ‘ juotation from
7120 patent, Col. 2, 1. 41-46 omitted; * indicates emphasis in
original)
62... The contention of NBS is that the sole invention de-
scribed in the ’800 and ’120 patents is to imprint a machine
code line of . . . characters in isolation from other closely spaced
lines of embossing on a printed [sic printing] device ... and
that the accused imprinters do not so function and hence do
not infringe... (P.Br. 38-39)
84a
. . claim 7 “does not” properly include [the NBS
imprinters] within its scope”, either literally (R.
1265, 1. 6-1266, 1. 8) or under the doctrine of equiva-
lents “because then you would not be operating it for
the purposes of the patent” (R. 1267, ll. 17-25).
P.Br. 40-41; footnote omitted)
P.Br. 37 correctly cited Elgen Mfg. Co. v. Ventfabrics,
Inc., 314 F.2d 440, 448-444 (7 Cir. 1963) for its con-
trolling holding that:
. .. The test of infringement must be the use...
of the inventive features of the patent. . . What
constitutes equivalency must be determined against
the context of the patent...
To affirm, the panel ignores the Elgen rule to hold in-
consistently that the district court’s “finding of equivalence
is properly based on expert testimony regarding the in-
terchangeability of the printing device disclosed in claim
7 and the two embossed plates used in the NBS im-
printers” (Op. 21).
The Elgen test requires that equivalence be determined
by reading the claim against “the context of the patent”
—not, as the district court did, against expert testimony
purporting to construe a term in the claim wholly inde-
pendently of the patent specification.’®
In this Circuit, “the test [for anticipation] has been
one of substantial identity . . .,” to be determined by
comparing the invention as defined by the patent claim
with the prior art. Roberts, supra, 723 F.2d at 1332-
10 When the claim is so read, as NBS stressed at oral argument,
it becomes clear that the question of equivalency does not turn on
whether “printing device” in the claim must be one credit card or
can encompass several embossed plates, but instead hinges on the
construction of the terms “one portion of the printing device” and
“the other portion of the printing device” in the context of the
specification. So construed, either “one portion” or “the other por-
tion” must mean a single line portion as the specification requires.
85a
33.11 The panel did not compare the method defined by
claim 7 with the method described in the Cox patent, as
it should have.’?
The panel made no finding that there is a difference
between the claim 7 method and that of the Cox reference
—much less a finding that any such difference is “sub-
stantial’.
Instead, the panel made its own new findings of “dif-
ferences between the two patents” (Op. 16)—i.e., “be-
tween the Cox printing press and the table-top imprinter”
(Op. 15) described in the ‘120 patent drawings and
specification. Included among them are “that the Cox
device was intended for printing rather than imprinting“
(Op. 15; emphasis by the panel) which flies-in the face
of claim 7’s repeated references to “printing” and failure
to mention “imprinting” at all. Also relied on are machine
11“ *(T]t is sufficient if the general aspects are the same and the
difference in minor matters is only such as would suggest itself to
one of ordinary skill in the art’ ”. Ibid.
12The panel thus proceeded in a manner condemned by panel
member Judge Pell, when he wrote for the Court in Laser Align-
ment, Inc. v. Woodruff & Sons, Inc., 491 F.2d 866, 872 (7 Cir.
1973), to emphasize that a method claim may not be construed to
define an unmentioned apparatus:
We think that the district court placed undue emphasis on
the apparatus creating the collimated beam of light. The im-
portant point is that the use of a collimated beam of light is
a step in the Trice methods patent. The claims of a patent are
the measure of its grant... .
Here, the “important point” is that only opposite stroke print-
ing with a carriage having two rollers operating in opposite direc-
tions is defined by the steps of the method claim, which is silent
about the nature of the apparatus containing the carriage assem-
bly. Had the panel correctly read the claim as a process, by defini-
tion the function of a machine, it could not illogically have denied
“identity of function” in two devices that perform the same claimed
process steps, as it did (Op. 15).
86a
features not referred to in the claim or mentioned by the
district court (Op. 15).
To justify these de novo findings, the panel quoted from
the trial testimony at R. 1151, 1. 8-R. 1151, 1. 6 (see Op.
15-16 n.6, following the ellipsis )and then made a further
new and erroneous finding that:
The district court cited this testimony in its opinion
and plainly relied on the foregoing differences be-
tween the two patents when it distinguished the Cox
device as a “printing press”. ... (Op. 15-16)
The district court never cited “this testimony” in its
opinion on “’120 Anticipation” (546 F. Supp. at 350) or
elsewhere, and did not rely, “plainly” or otherwise, on
the differences” newly postulated in the panel opinion.”
The passage at Op. 15-16 under the “Anticipation”
heading (Op. 14) virtually paraphrases D.Br. 24-25 down
to the case citation at Op. 16. D.Br. 24-25, however,
flatly misrepresents (citing, inter alia, all of R. 1151-52)
that plaintiffs’ expert VanDerLinden and defendants’ ex-
pert Maul testified to “differences between the Cox patent
and claim 7” (D.Br. 24, 25) and that “[t]he trial court
found those differences to be substantial” (D.Br. 25).
The panel opinion repudiates “the basic requirement
that all evidence touching on the obviousness-nonobvious-
ness issue must be fully considered before a conclusion is
reached on that issue” Kansas Jack, Inc. v. Kuhn, 719
F.2d 1144, 1159 (Fec. Cir. 1983) and its focal corollary
that “under the obviousness test . . . the level of ordinar;
skill in the pertinent part must be determined. .. .”
13 The district court did cite but did not rely on VanDerLinden’s
testimony at R. 1150 (546 F. Supp. at 350), quoted by the panel
before the ellipsis in n.6, Op. 15. This testimony relates to the
only hint of “difference” between the claim 7 and Cox methods—i.e.,
that Cox prints on a piece of paper while claim 7 specifies a “form-
set” (i.e., paper form sheets interleaved with carbon). The PTO
held this to be “a distinction without a difference” (PX-5A, Part 3,
p. 1064). The district court made no contrary finding.
87a
Roberts, 723 F.2d at 1334, “by a consideration of all of
the evidence made available” Application of Palmer, 451
F.2d 1100, 1103 (CCPA 1971).
The district court made no findings concerning the
NBS contention that claim 7 is invalid under § 103 in
view of the Cox patent alone as the PTO had earlier
ruled. See P.Br. 23; P.Rep.Br. 11. In lieu of remanding
for the proper findings on this dispositive issue, Pullman-
Standard v. Swint, 456 U.S. 278, 291-292 (1982), the
panel ignores its existence.
The panel acknowledges that, contrary to Roberts
[T]he district court made no specific finding of the
contemporaneous level of skill in the pertinent art.
ee SEE ing
Saying that “the obviousness issue presents a very close
question in this case’, the panel confessed its inability
to make a proper conciusion on that legal issue “without
a precise appreciation of the contemporaneous level of
skill in the art” (Op. 12). Instead of remanding, guided
by the Roberts admonition that appellate courts do “not
sit to adjudicate de novo the factual issues underlying the
determination of obviousness’, 723 F.2d at 1335, the
panel made its own de novo finding.
Thus, adopting Judge Jameson’s dissent in Gettelman
Mfg., Inc. v. Lawn ’N Sport Power Mower Sales & Serv-
ice, Inc., 517 F.2d 1194, 1201 (7 Cir. 1975), never before
accepted by a panel of this Circuit, the panel inferred a
district court finding. It held:
fIt} is clear from the several references to that
guideline in the court’s opinion that it [tacitly] re-
14 And so puts the lie to the statement in AM’s brief that
The trial court made each of the findings that underlie the
ultimate legal determination of obviousness (App. 1la-1lda)
Graham v. John Deere Co., 383 U.S. 1, 17 (1966) [footnote
omitted }.
88a
solved the level of ordinary skill in the art based on
the expert testimony and the prior art itself... .
(Op. 11)"
But, the sole reference the the “level of skill” guideline
in the district’s court’s opinion is in the quotation from
Graham v. John Deere Co., 546 F.Supp. at 351. The
district court’s discussion of the “expert testimony and
the prior art itself’ is concerned only with the other
Graham guidelines: determining the scope and content
of the prior art and the differences between it and
claim 7.
Importantly evidencing that the district court did not
resolve the level of ordinary skill in the art, is its failure
to consider the testimony of John Bradford, called by
NBS only on that point '*“—to- the effect
. .. that he and his coworkers at Farrington made
imprinters in the late 1950’s that operated like the
accused NBS imprinter, supra pp. 4-6, 14.
(P.Br. 24-25)
15In his Gettelman dissent, Judge Jameson made the same de
novo inferential finding:
Implicit in the district court’s opinion is the finding that the
level of ordinary skill in the are was not so advanced that
Gettelman’s invention would have naturally occurred to a me-
chanic skilled in the art. (517 F.2d at 1201.)
The panel opinion here is also foursquare with Judge Jameson’s
Gettelman dissent in erroneously positing that the district court
must be affirmed if “[t]here is substantial evidence to support”
(Op. 13; 517 F.2d at 1202) its fact findings. It “is not the law”,
however, that a “finding . . . supported by substantial evidence can-
not be clearly erroneous” Wright and Miller, Federal Practice and
Procedure, Vol. 9, § 2585, p. 735 (1971). To determine whether a
finding is clearly erroneous, the court must, as the panel here did
not, review “the entire evidence” to see if it “is left with the definite
and firm conviction that a mistake has been committed” United
States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948).
16 As the NBS brief states “[t]o avoid invalidating claim 7 for
obviousness, the district court ignored [John] Bradford’s testi-
mony” (P.Br. 25).
89a
The panel also refuses to consider the dispositive evi-
dence that the stand-alone console type addressing ma-
chine of AM’s ’800 patent utilized four strokes only be-
cause, in that basically old machine, the platen must be
raised on the two “return” strokes to permit the cycling
of plates, paper and ribbon,’* whereas in the case of the
table top imprinter specifically described in the 7120
patent, there is no such “cycling”—and hence the in-
clusion of useless “return” strokes would have been
absurd. As AM’s expert Mault cogently put it in testi-
mony ignored by the panel:
Well, an operator using the [imprinter] machine,
there wouldn’t be any point in trying to have her
make four strokes when she could do it in two
strokes. (R. 822, ll. 10-12; App. I 6) (See P.Br.
26) #8
17 As stated at P.Br. 26, n.40:
[AM’s expert] Maul testified that “when the platen .. . was
incorporated into the 1900 machine [of the ’800 patent], it took
four strokes to get two passes, because that was the way the
machine was basically designed” (R. 821, 1. 3-822, 1. 18) (App.
15-6).
18 The panel mischaracterizes the record to state that AM’s expert
Maul “testified that ‘[m]y designers would have had a very bad
time’ simply combining the art to produce the disputed invention”
(Op. 11). Maul’s actual testimony is:
My [Maul’s] designers would have had a very bad time trying
to put cll the mechanism that’s shown [in the ’800 patent]
with that Gruver gear-driven platen into the Maul impri
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