Appendix — Technograph, Inc. v. General Motors Corp.

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; : ) ie Sure Court, U.S,

84-1795 ial

No. 84- MAY 8 1985

™ a: i. STEWAS.

CLERK

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

Devex CoR?PORATION, ET AL.,

Petitioners,

Vv.

GeneraL Morors CoRPoRATION,

Respondent.

APPENDIX TO PETITION

FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Sripney BENDER

Jantne L. BENDER

1205 Franklin Avenue

Garden City, New York 11530

(516) 742-4250

Ropert K. Payson

350 Delaware Trust Building

Wilmington, Delaware 19899

(302) 658-6771

Counsel for Petitioners

BEST AVAILABLE COPY Gale

TABLE OF CONTENTS

PAGE

Opinion of the Third Circuit Court of Appeals

dated November 28, 1984, affirming the judgment

ee Rey CII io os wins no Foc ee I MKRd Koei es la

Order of the Third Circuit Court of Appeals amend-

ing Slip Opinion dated December 5, 1984........ \7a

Opinion of the District Court of Delaware as amended

August 22, 1983, on postjudgment interest ....... 19a

Order of the District Court of Delaware dated Sep-

tember 9, 1983, awarding postjudgment interest

16% and denying damages for delay in payment of

IE GIONY on 4.6.05 visewertsce ded pantera. 26a

Order of the District Court of Delaware dated August

ERED Oe aR Sa pera eer eg er ae wr 28a

Order of the Third Circuit Court of Appeals dated

June 30, 1982, granting Plaintiffs’ Motion requir-

ing payment of reasonable royalty and postjudg-

ee TUE Te Te eee ree ee 30a

PUNE Wkaeisa ste Kk woh CaO Eee KO Kee Rs 32a

Order of the District Court of Delaware dated July 8,

AONE pe Pc ee near eer mea eee a 35a

Order of the District Court of Delaware dated July 9,

PE Chae hu CRSA ew ONG cle uNeas cUbeenetuew ens 37a

Order of the District Court of Delaware dated Sep-

WOME SE GE hak 66 o4 od kesh ikee Ui ie elias 38a

Order of the District Court of Delaware dated Sep-

tember 28, 1982, to stay execution for postjudgment

“srry Peer ere Serr eee Te Tee Tee 40a

il TABLE OF CONTENTS

Order of the District Court of Delaware dated June

G, 1GRD ads vavisatsdavescutdanbaceeeeeeneeee

Order of the District Court of Delaware dated June

BR, BOS os ic cc anae cas end cuaen wees eee

Order of the District Court of Delaware dated June

DBD noice cc nvn ea seo eeu nsasa ae eee

Amended Judgment of the Third Circuit dated De-

ormaber 5, 1D . cncccnccnsantcanwebewseGaeemees

Order of the Third Circuit denying Rehearing dated

February £2, 9500 i. isk cadctnckcudnantaneeennen

Special Master’s report dated February 7, 1980, rec-

ommending that judgment be entered against Gen-

eral Motors in the amount of $5,731,455.80 plus

interest of $6,496,482.66, or a total of $12,227,938.46,

and denying a reasonable royalty for infringement

OR MOM-DUmGIeT CATES 6 an so 5 en ks edn ban eeen eens

Opinion of the Deiaware District Court (Wright,

S.J.) dated August 22, 1980, modifying the recom-

mendation of the Special Master and, inter alia,

awarding a reasonable royalty on bumpers in the

amount of $8,813,945.50, plus prejudgment interest

in the amount of $11,022, 854.97, totaling $19,836.-

800.47, totaling $19,836.800.47, and denying a reason-

able royalty for infringement on non-bumper parts

Final Judgment of the District Court of Delaware

Gnaee Coctaber 6, IGG0... osc kanessdvesnsseinenees

Opinion of the Third Circuit Court of Appeals

dated December 15, 1981, affirming the judgment

OF Ce TUTE COMES on 0 0c sncdswcnesi tenes

Judgment of the Third Circuit Court of Appeals

desea December 15, 1968 2 ovccscvccccsasesctuess

PAGE

42a

44a

46a

47a

49a

50a

TABLE OF CONTENTS

Denial of GM’s Petition for Rehearing En Banc

CS Oe eee

Denial of plaintiffs’ Petition for Rehearing to the

Panel dated January 13, 1982 .............scee0.

Opinion of the United States Supreme Court dated

May 24, 1983, affirming the award of pre-judgment

Citi Eka ehorencbar ae ncnecserwece

253a

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NOS. 83-1770, 83-1771,

83-1892, 84-5003, 84-50ll,

84-5139, and 84-5141

DEVEX CORPORATION, TECHNOGRAPH, INC.,

WILLIAM C. McCOY, THEODORE A.

TeGROTHENHUIS, FREDERICK B. ZIESENHEIM,

MARJORIE TeGROTENHUIS, WILLIAM C. McCOY, JR.,

and KATHERINE M. BASSETT,

Plaintiffs-Appellants, Cross-Appellees

Vv.

GENERAL MOTORS CORPORATION

Defendant-Appellee, Cross-Appellant

Appeal from the United States District Court

for the District of Delaware

D.C. Docket No. 3058

Submitted Under Third Circuit Rule 12(6)

September 13, 1984

Before: GIBBONS, GARTH, and ROSENN,

Circuit Judges

(Opinion Filed November 28, 1984)

ROBERT K. PAYSON, ESQUIRE

Potter, Anderson & Corroon

350 Delaware’ Trust Building

Wilmington, Delaware 19899

SIDNEY BENDER, ESQUIRE

AARON LEWITTES, ESQUIRE

JANINE L. BENDER, ESQUIRE

Leventritt, Lewittes & Bender

1205 Franklin Avenue

Garden City, New York 11530

Attorneys for Plaintiffs-

Appellants, Cross-Appellees

ARTHUR G. CONNOLLY. ESQUIRE

ARTHUR G. CONNOLLY. JR.. ESQ.

Connolly, Bove, Lodge & Hutz

i220 Market Building

Wilmington, Delaware 19899

Attorneys for Defendant-

Appellee, Cross-Appellant

OF COUNSEL:

William A. Scheutz, Esquire

General Motors Corporation

Detroit, Michigan 48232

George E. Frost, Esquire

Barnes, Kisselle, Raisch, Choate,

Whittemore & Hulbert

Birmingham, Michigan 480ll

OPINION OF THE COURT

ROSENN, Circuit Judge.

This appeal arising out of the final stages of a 28

year old lawsuit for patent infringement. involves

questions pertaining to postjudgment interest and

interest on costs. Defendant General Motors (GM) has

been ordered to pay plaintiffs (collectively referred to

hereafter as Devex) reasonable royalties in the amount

of approximately $8.8 million. prejudgment interest in

the amount of approximately Sll million. and

approximately S7 million in postjudgment interest.

Disputes remain over the rate at which postjudgment

interest should have been assessed: whether plaintiffs

should have been awarded interest on postjudgment

interest, and whether plaintiffs should have been

awarded interest on costs. We affirm.

I. Litigation History

Plaintiffs are the owners and licensees of Re-issue

Patent #24.017 (the Devex or Hendricks patent), which

covered a lubricating process used in the cold forming

of automobile parts under pressure, and which expired

in 1969.

The original complaint in this case was filed in

:956 in the Northern District of Illinois. That court held

in 1962 that the Devex patent was invalid. The United

States Court of Appeals for the Seventh Circuit

reversed and remanded to the district court. Devex

Corp. v. General Motors Corp., 321 F.2d 234 (7th Cir.

1963). cert. denied, 375 U.S. 971 (7th Cir. 1963). At that

juncture, GM successfully moved to have the case

transferred to Delaware. Devex Corp. v. General

Motors Corp.. 146 U.S.P.Q. 346 (N.D. Ill. 1965).

After an unsuccessful motion for summary

judgment by Devex, and the ensuing trial for patent

infringement. the United States District Court for the

District of Delaware ruled that General Motors had not

infringed Devex’s patent. 316 F.Supp. 1376 (D. Del.

1970). Devex appealed to this court. which reversed.

Devex Corp. v. General Motors Corp.. 467 F.2d 257 (3d

Cir. 1972). cert. denied. 4ll U.S. 973 (1973).

The district court ruled on the damages issue in

1980. basing its decision partly on the report of the

Special Master. Devex Corp. v. General Motors Corp..

494 F. Supp. 1369 (D. Del.1980). The court awarded

Devex a judgment of SI9,726,236.55. consisting of

$8,.813.945.40 in royalties and $10,912.291.15 in

prejudgment interest.' Postjudgment interest and

costs in an undetermined sum were also awarded. GM

appealed this determination to this court which

affirmed the holding of the district court. Devex Corp.

v. General Motors Corp., 667 F.2d 347 (3d Cir. 1981).

In response to petitions of GM and Devex, the

Supreme Court granted a writ of certiorari to GM on

the issue of the applicable standard for determining

whether prejudgment interest should be awarded. The

Court affirmed the award of prejudgment interest.

General Motors Corp. v. Devex Corp., 103 S.Ct. 2058

(1983).

While the parties were preparing for the Supreme

Court case, the plaintiffs obtained an order from this

court ordering GM to pay the amount of the

uncontested part of the judgment, royalties in the sum

of $8,813,945.40. GM paid this amount on July 7, 1982.

After the Supreme Court's decision, in June 1983. GM

paid $ll,022.854.97. the amount of the prejudgment

interest.

Two months later, the district court ruled that the

rate of postjudgment interest would be 16% per annum.

It ordered General Motors to pay the sum of

$7.170,344.39 in postjudgment interest on the original

SIS million judgment. Devex Corp. v. General Motors

Corp., Civ. Action No. 3058 (D. Dei. Sept. 9. 1983). GM

contended, however. as it does now, that the correct

rate of postjudgment interest was 6%. and paid

1. General Motors. in fact. paid $11.022.854.97 in

prejudgment interest pursuant to the court's order of an additional

$3.071.22 for each day after August 31. 1980. up to and including

the date of entry of judgment. Devex Corp. v. General Motors Corp..

569 F. Supp. 1354. 1365 n.i. (D. Del. 1983).

plaintiffs only $2.2 million approximately; the

remainder was paid into court pending the outcome of

this appeai. The district court also awarded plaintiffs

interest on their costs, but denied Devex’s motion for

“delay damages” -- interest on the postjudgment

interest.

GM appeals from the district court's ruling fixing

the rate of postjudgment interest at 16% and from its

award of interest on costs. Devex cross-appeals from

the court's denial of its motion for interest on the

_ postjudgment interest. |

Il. The Rate of Postjudgment Interest

GM argues that the district court erred in

awarding postjudgment interest at the rate of 16%. In

determining the rate under state law pursuant to 28

U.S.C. § 1961 (1976), the district court heid that, under

6 Delaware Code § 209l(a), the correct rate was 16% --

5% over the Federal Reserve discount rate. Devex Corp.

v. General Motors Corp., 569 F. Supp. at 1365-67.

Section 230l(a) provides:

Where there is no expressed contract rate, the legal

rate of interest shall be 5% over the Federal Reserve

discount rate including any surcharge as of the

time from which interest is due, provided that

where the time from which interest is due

predates April l8, 1980, the legal rate shall remain

as it was at that time.

Del. Cade Ann. tit. 6. § 230I(a) (Cum. Supp. 1982)

(emphasis added).

GM emphasizes that in the instant case the

complaint was filed in 1956, and damages amounting

to payment of a reasonable royalty were calculated as of

that date. Devex Corp. v. General Motors Corp., 667

F.2d at 363-364. Therefore, according to GM, the time

from which interest is due predates 1980. and the

district court should have applied the legal rate as it

was prior to 1980, which was 6%.”

In support of this contention, GM cites Delaware

cases and federal diversity cases decided under

Delaware law, which hold that, where damages are

calculated as of a time before April 18, 1980, the

prejudgment interest on those damages will be

calculated at 6%, and that the postjudgment interest

should be calculated at the same rate as the

prejudgment interest. Pack & Process, Inc. v. Nabisco,

Inc., Civ. 78-285, slip op. at 2-5 (D. Del. Sept. 18, 1984);

Helmut A. Papendick v. Robert Bosch GmbH, 562 Civ.

1977, letter op. at 3-5 (Del. Super. Ct. Aug. 4, 1981);

affirmed No. 238, 1981 (Del. Aug. 4, 1981); Rollins

Environmental Services, Inc. v. WSMW Industries,

Inc., 426 A.2d 1363, 1367 (Del. Super. Ct. 1980). The

district court found these cases to be inapposite,

because they involved prejudgment interest which had

been calculated at 6% according to Delaware law, and

reflected a policy of the Delaware courts that the same

rate be applied to prejudgment and postjudgment

interest, in order to avoid segmentation of interest. We

agree with the district court that the cases cited by GM

do not apply to the instant case where the prejudgment

interest was determined according to federal law, 35

U.S.C. 8 284.°

2. Del. Code Ann. tit. 6, § 230l(a) (1974) provided that “(tlhe

legal rate of interest for the loan or use of money . . . shall oe 6

percent per annum... .” The statute was amended to its current

form effective April 18, 1980.

3. 350U.S.C. § 284 (1982) provides for prejudgment interest in

patent cases: “Upon finding for the claimant the court shall award

the claimant damages adequate to compensate for the

infringement, but in no event less than a reasonable royalty . . .

together with interest and costs as fixed by the court.” The

Supreme Court held in General Motors v. Devex. 108 S.Ct. at 2062.

that the purpose of the statute was to afford patent owners

“complete compensation.”

28 U.S.C. § 1961 provides only that postjudgment

interest shall be calculated from the date of the entry of

the judgment, at the rate allowed by State law.”

(Emphasis added.) We interpret this statute literally,

and hold that the district court correctly borrowed

from Delaware law only its current interest rate of 16%.

But cf. Turner v. Japan Lines, Ltd., 702 F.2d 752.

757-58 (9th Cir. 1983) (court applied previous state

interest rate, according to Oregon precedents which

held that a change in the rate of statutory interest did

not apply to judgments entered before rate change.) -

This result best advances the policy underlying 28

U.S.C. § 1961: compensation of the wronged party for

loss of the use of money, in a changing economy where

changes in the state statutory interest rate reflect

changes in the value of the use of money.‘ We therefore

hold that the district court did not err in its

determination that the correct postjudgment interest

was 16% per annum.

Ill. Interest on Postjudgment Interest

We now turn to the questions of whether the

plaintiffs should have been awarded “delay damages” --

interest on postjudgment interest -- and whether

Delaware law or federal law applies to this

determination. Both GM and the district court

assumed that 28 U.S.C. § 1961 (1976) mandated the

application of state law on the issue of delay damages.

We disagree.

28 U.S.C. § 1961 provides:

Interest shall be allowed on any money judgment in

a Civil case recovered in a district court... . Such

interest shall be calculated from the date of the

entry of the judgment, at the rate allowed by State

law.

4. See generally Note. Interest on Judgments in the Federal

Courts, 64 Yale L.J. 1019. and cases cited therein.

28 U.S.C. § 1961 (1981) (amended 1982) (emphasis

added).*

There is federal authority for the proposition that

when a cause of action arises from a federal statute, the

question of whether interest may be allowed, as

distinguished from the rate, is governed solely by

federal law. See Dependahl v. Falstaff Brewing Co.,

653 F.2d 1208, 1219 (8th Cir), cert. denied 454 U.S. 968

(1981); Carpa v. Ward Foods, Inc., 567 F.2d 1316, 1321

(5th Cir. 1978), (overruled on other grounds, Copper

Liquor v. Adolph Coors Brewing Co., 701 F.2d 542 (Sth

Cir. in banc 1983)); Perkins v. Standard Oil of

California, 487 F.2d 672, 675 (9th Cir. 1973). But see

United States v. Hannon, 728 F.2d 142, 146 (2d Cir.

1984) (Newman, J., concurring). We therefore hold that

federal law determines whether Devex should be

allowed interest on the postjudgment interest awarded

by the district court in 1980 and computed in 1983.

With respect to delay damages -- or interest on

interest -- we note, as a preliminary matter, that under

normal circumstances, the United States rule would

have applied to GM's payments on the judgment it

owed Devex.® Under that rule, GM's July 7, 1982,

5. The current version of 28 U.S.C. $1961 provides that

postjudgment interest shall be calculated at a rate equal to the

coupon issue yield equivalent of the average auction price for the

last auction of fifty-two week United States treasury bills. Section

196l(b) provides that postjudgment interest be compounded

annually. 28 U.S.C. § 1961 (1982).

6. The United States rule. which providés that payments be

applied first to accrued interest and then to principal. has been

followed by the federal courts for almost a century and a half. See.

e.g.. Story v. Livingston, 38 U.S. (13 Pet.) 359. 371 (1839): Whiteside

v. Washington Loan & Trust Co.. 95 F.2d 83, 87 (D.C. Cir. 1937):

Gamble v. Wimberly. 44 F.2d 329. 331 (4th Cir. 1930): Ohio Savings

Bank & Trust Co. v. Willys Corp.. 8 F.2d 463. 466-68 (2d Cir. 1925):

Torosian v. National Capital Bank of Washington. 4ll F. Supp. 167.

172-175 (D.D.C. 1976).

payment of $8,813,945.40 would have been applied

first to the approximately $5 million of postjudgment

interest which had accrued since October 6, 1980. on

the S19,726,236.55 judgment, and second to the

$19,726.236.55 judgment itself. The remainder of that

judgment, approximately $16 million, would then have

accrued about $2 million in interest until June 6, 1983.

when GM made its second payment of SIl,022.854.97.

That payment would have been applied first to the

accrued interest, and then to the principal, leaving a

balance due Devex of more than $7 million. That

balance would, in turn, have accrued interest until

August 30, 1983, when GM complied with the district

court's order and made its third payment of

$7,170,344.

The United States rule provides, however, that

payments are applied first to interest and then to

principal, only “in the absence of a clearly expressed

intention [by the parties] to handle allocation some

other way.” Nat G. Harrison Overseas Corp. v.

American Barge Sun Coaster, 475 F.2d 504, 507 (5th

Cir. 1973). In the case at bar, the parties agreed, and

the court ordered, that GM's first payment would be

applied only to the royalty part of the judgment. Devex

Corp. v. General Motors Corp., Civil Action No. 3058

(D. Del. July 8, 1982) (order directing clerk to enter

satisfaction of the royalty part of the judgment). GM's

second payment was applied to the prejudgment

interest part of the judgment, rather than to the

postjudgment interest which had accrued between

July 7, 1982, and June 6, 1983, again pursuant to an

agreement made by the parties and order of the court.

Devex Corp. v. General Motors Corp.. Civil Action No.

3058 (D. Del. June 7, 19€3) (order directing clerk to

enter satisfaction of the prejudgment interest portion

of the judgment). Because it agreed to the allocation of

these payments to principal rather. than to interest,

10a

Devex is now precluded from the beneficial application

of the United States rule.’

On appeal. Devex argues that it is entitled to

interest on the postjudgment interest which accrued

between July 7, 1982, and August 30, 1983. The district

court refused to grant interest on the postjudgment

interest. because Delaware law forbids the

compounding of interest.®

7. The dissent asserts that the orders do not evidence the

kind of clearly expressed intention to deviate from the United

States. rule that was evident in Harrison Overseas. Dissenting

opinion at 3. However, the plaintiffs did sign the consent orders

directing the clerk to enter satisfaction of the royalty part of the

judgment and the prejudgment interest part of the judgment, thus

expressing a clear intention that the sums paid by General Motors

be credited to the principal sums owed. and not to the

postjudgment interest which had accrued thereon. Furthermore,

the application of the United States rule was never raised or briefed

by the plaintiffs.

The dissent notes that the district court had not yet

determined the rate of postjudgment interest as of the time the

consent orders were signed. Dissenting opinion at 3. In fact, the

district court's original order provided for postjudgment interest at

the rate allowed by state law. Devex Corp. v. General Motors

Corp., Civil Action No. 3058 (D. Del. Oct. 6. 1980) (final judgment

ordering payment of prejudgment interest, damages. postjudgment

interest. and costs). Thus. instead of agreeing to the terms of the

consent order entered by the district court. the plaintiffs could have

asked that General Motors’ payments be applied to this amount.

The dissent also presupposes that General Motors’ appeals

were primarily for delay. Dissenting opinion at 4. The issues raised

on appeal by General Motors regarding pre- and postjudgment

interest were genuine and not dilatory, and there is no reason to

punish General Motors for raising them.

8. The district court also denied interest on postjudgment

interest on the ground that “as of this time. the Court has not

ordered the payment of postjudgment interest.” Devex Corp. v.

General Motors Corp., 569 F. Supp. at 1368. The court apparently

overlooked its final judgment dated October 6. 1980. ordering

postjudgment interest at the rate allowed by state law. Devex Corp.

lla

Although we decide this issue under federal rather

than state law, we agree with the district court that

allowing interest on the postjudgment interest would

amount to the compounding of interest, which “as a

general rule, is not allowed to be computed on a debt.”

Cherokee Nation v. United States, 270 U.S. 4.6, 490

(1925). See also Brooklyn Bank v. O'Neil, 324 U.S.

697, 715 (1945).

In support of its contention that an award of

interest on postjudgment interest would not constitute

illegal compounding of interest, Devex cites cases in

which a judgment granted interest on an amount

resulting from an unsatisfied former judgment on

which interest had accrued. See, e.g., United States v.

Hannon, 728 F.2d at 145; Dorey v. Dorey, 609 F.2d

1128, 1133 (Sth Cir. 1980); Hellenic Lines Ltd. v. Gulf Oil

Corp., 359 F.2d 403, 404 (2d Cir. 1966). In the case at

bar, however, the postjudgment interest cannot be

considered an unsatisfied former judgment, because

the amount of the judgment itself was in dispute until

the Supreme Cour’ decision in May 1983, and the rate

of postjudgment inierest was not fixed until August

1983.

National Bank of the Commonwealth ov.

Mechanics National Bank, 94 U.S. 437 (1876), is not to

the contrary. In that case, ihe Court allowed interest on

an aggregate amount of unpaid installments of

interest. The Court found in that case that the original

claims for interest had been approved by the

Comptroller, and thus were the equivalent of a

judgment. Id. at 439-440. In the case at bar, the rate of

postjudgment interest was not determined finally until

August 1983, and the amount of principal was not even

determined until May 1983. Thus, the amount of

v. General Motors Corp.. Civil Action No. 3058 (D. Del. Oct. 6. 1980)

(final judgment ordering payment of prejudgment interest,

damages. postjudgment interest. and costs).

l2a

postjudgment interest cannot be said to have been a

liquidated amount equivalent to a judgment. Compare

Royal Indemnity Co. v. United States, 313 U.S. 289,

295-296 (1941) (interest allowed on liquidated amount

of unpaid interest); Martin v. The Star Publishing Co..,

107 A.2d 795, 796-797 (Del. Super. 1954), modified 126

A.2d 283 (Del. 1956) (interest allowed on delinquent

installments of interest which constitute liquidated

demands for payment wrongfully withheld).

Because we conclude that awarding interest on the

postjudgment interest would amount to the

compounding of interest, we hold that the district

court did not err in denying Devex's claim for “delay

damages.”

IV. Interest on Costs

GM contends that the district court erred in

awarding interest on costs. It argues that the court

should have followed the so-called “traditional rule”

that interest is not to be awarded on costs. Devex Corp.

v. General Motors Corp., Civ. Action No. 3058, slip. op.

at 9 (D. Del. Dec. 1, 1983). The various courts of appeals,

however, have in recent years approved awards of

interests on costs under section 1961 in a variety of

Situations. R.W.T. v. Dalton, 712 F.2d 1225, 1234-1235

(8th Cir.), cert. denied 104 S.Ct. 527 (1983): Copper

Liquor, Inc. v. Adolph Coors Brewing Co.. 701 F.2d at

543-545.° GM argues that these were public interest,

quasi-public interest, or private attorney general cases,

and therefore are distinguishable. The rationale

behind the modern trend toward awarding interest on

costs is unrelated to the type of case involved. It

9. Other circuits that have also approved awards of interest

on costs in: Mt. Hood Stages. Inc. v. Greyhound Corp.. 616 F.2d 394

(9th Cir.). cert. denied 449 U.S. 831 (1980): City of Detroit v.

Grinnell. 575 F.2d 1009 (2d Cir. 1977): Harris v. Chicago & Great

Western Railroad. 197 F.2d 829 (7th Cir. 1952).

13a

developed instead from an awareness of the rising cost

of money and of escalating and enormous costs in

complex litigation. In this case, the agreed costs

amount to $161,960.07. As the Fifth Circuit noted in

Copper Liquor:

The historical rule that costs do not bear interest,

like many court rules, antedates the modern

practice of applying economic and business

principles to judicial administration .... It

- developed at a time when interest rates were not so

high nor costs so large as both now are, and when,

therefore, the net effect of disallowance was

smaller.

Copper Liquor Inc. v. Adolph Coors Co., 701 F.2d at

544.

We agree with the Fifth Circuit that allowing

interest on costs better serves the purpose of awarding

this expense to the prevailing party by more nearly

compensating it for the litigation expenses. Id.

Therefore, we conclude that the district court did not

- err in awarding Devex interest on costs.

V. Conclusion

We hold that the district court did not err in

determining the rate of postjudgment interest to be

16%, in denying Devex interest in postjudgment

interest, and in awarding plaintiffs interest on costs.

Accordingly. the judgment of the district court will be

affirmed.

GIBBONS, Circuit Judge. dissenting:

I concur in the opinion of the Court insofar as it

affirms the district court's award of postjudgment

interest and the award of interest on costs. I would

l4a

reverse, however, the district court’s holding that

Devex is not entitled to collect interest on the

delinquent postjudgment and prejudgment interest

payments.

The United States rule, under which payments are

applied first to accrued interest and then to principal,

should govern this case unless the parties have “clearly

expressed [an] intention to handle allocation in some

other way.” Nat G. Harrison Overseas Corp. v.

American Barge Sun Coaster, 475 F.2d 504, 507 (5th

Cir. 1973). The majority infers such an agreement

from two court orders. That inference is not

supportable.

The majority's position overextends the holding of

Harrison Overseas. In Harrison Overseas, the fifth

circuit held that the United States rule did not apply to

a judgment on a note that clearly stated that each

payment would constitute 1/71 of the principal due,

and 1/71 of the interest due.' Id. The parties in

Harrison Overseas ciearly intended payments to be

applied ratably to interest and principal. No such clear

intention to avoid the United States rule is evidenced

here.

The majority's conclusion that the parties did not

intend the United States rule to apply is based on two

district court orders. On July 8, 1982. before the

postjudgment or prejudgment interest had been paid,

the district court directed the clerk to enter

satisfaction of the royalty portion of the judgment. On

June 7, 1983, before the postjudgment interest had

been paid, the district court directed the clerk to enter

satisfaction of the prejudgment interest portion of the

judgment.

- The agreement in Harrison Overseas provided that the total

interest due was “payable with each installment of principal.

payable in seventy-one (71) equal monthly installments... .~ 475

F.2d at 506 n.4.

15a

These orders do not evidence the kind of “clearly

expressed intention” to deviate from the United States

rule that was apparent in Harrison Overseas. A court

order, even if obtained by motion of the parties, is

fundamentally different from a freely negotiated

contract. Even if these orders could be viewed as an

agreement between the parties, there is no evidence

that the parties or the court considered the possibility

that the orders would later have an effect on interest

payments. In July 1982, when Devex moved for an

order directing General Motors to pay the reasonable

royalty portion of the judgment, the prejudgment

interest portion of the judgment was on appeal to the

Supreme Court, and the district court had not yet

determined the postjudgment interest rate. Since the

royalty award was the only uncontested part of the

judgment at that point, it was the only part that Devex

could collect immediately. The plaintiffs were

concerned only with collecting the royalty judgment

without undue delay. See, Transcript of July 2, 1982 at

14. The district court gave no indication of an

intention that this order relieve General Motors of

future interest payments. In fact, the court indicated

an intent to require General Motors to pay the

judgment immediately so that the plaintiffs, and not

Genera! Motors, would have the benefit of the use of the

money while the remainder of the judgment awaited

appeal. Tr. at 6. Thus neither the parties nor the court

evidenced a clear intention to avoid application of the

United States rule to the payments by Genera! Motors

on the judgment owed to Devex.

Finally, strong policy concerns militate against

extending the Harrison Overseas exception to the

circumstances of this case. The majority's holding

allows General Motors to delay payment of long-overdue

interest with impunity. if no interest is assessed,

General Motors simply has no incentive to pay the

judgments promptly. This appeai has allowed General

l6a

Motors to enjoy a further interest-free delay, during

which time plaintiffs are not being compensated for

the lost time-value of money due under the judgment in

their favor. By allowing General Motors the

interest-free use of delinquent payments, the court is

depleting plaintiffs’ real recovery as surely as if it had

simply reduced the amount of their award. It is,

moreover, rewarding General Motors for resorting to

this court on several occasions in the interest of delay.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

Sor the Third Circuit

i =

17a

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NOS. 83-1770. 83-1771, 83-1799, 83-1892,

84-5003, 84-50ll. 84-5139, 84-5140,

and 84-5]4i

DEVEX CORPORATION, TECHNOGRAPH,

INC., WILLIAM C. McCOY, THEODORE A.

TeGROTHENHUIS, FREDERICK B. ZIESENHEIM,

MARJORIE TeGROTENHUIS, WILLIAM C. McCOY, JR..

and KATHERINE M. BASSETT, |

Plaintiffs-Appellants. Cross-Appellees

GENERAL MOTORS CORPORATION

Defendant-Appellee, Cross-Appellant

Appeal from the United States District Court

for the District of Delaware

D.C. Docket No. 3058

Submitted Under Third Circuit Rule 12(6)

September 13. 1984

Before: GIBBONS, GARTH, and ROSENN,

Circuit Judges

(Opinion Filed November 28, 1984)

18a

ORDER AMENDING SLIP OPINION

The slip opinion in the above-entitled case be and

is hereby amended as follows:

Page 13. part V, add to the paragraph the following:

Each side to bear its own costs.

BY THE COURT:

/s/ Max Rosenn.

Circuit Judge

Dated: December 5. 1984

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

19a

Opinion of the District Court,

As Amended August 22, 1983

DEVEX CORPORATION, et

al., Plaintiffs,

Vv.

GENERAL MOTORS CORPORATION,

Defendant.

Civ. A. No. 3058

United States District Court,

D. of Delaware

Aug. &, 1983.

On Postjudgment Interest Aug. 22, 1983

As Amended Aug. 22, 1983.

OPINION

CALEB M. WRIGHT, Senioz# District Judge.

ON POSTJUDGMENT INTEREST

As it has so frequently in the past, this patent case once

again dernands the Court’s attention. After nearly twenty-

seven years of this litigation, one would think there would

be nothing left to decide. Important issues, however,

' remain to be resolved. On October 6, 1980, this Court

entered an Order in this action which provided, inter alia:

5. Defendant General Motors Corporation shall pay to

plaintiff:

(1) $8,813,945.50 plus pre-judgment interest in the

amount of $10,912.291.05 (which represents interest

through August 31, 1980) totalling $19,726,236.55;

plus pre-judgment interest of $3,071.22 for each day

thereafter up to and including the date of entry of this

judgment;

20a

(ii) plus post-judgment interest from the date of

entry of this judgment at the rate allowed by State law

as provided by 28 U.S.C. §1961.

All aspects of this Court’s Order.were affirmed on appeal.

See Devex Corp. v. General Motors Corp., 667 F.2d 347 (3d

Cir. 1981), aff’d., U.S. , 103 S.Ct. 2058, 76

L.Ed.2d 211 (1983). General Motors paid the royalty award

of $8,813,945.50 on July 7, 1982, and the pre-judgment

interest award of $11,022,854.97' on June 6, 1983. Con-

sequently, the Court must now resolve two issues. First,

the court must determine the proper rate of post-judgment

interest as provided for in Paragraph 5(ii) of the October

6, 1980 Order. Second, the Court must decide whether the

plaintiffs are entitled to damages for delay in the payinent

of post-judgment interest. These issues will be addressed

seriatim.

28 U.S.C. §1961 governs the rate of post-judgment

interest in this case. Section 1961 provides in relevant part:

Interest shall be allowed on any money judgment in a

civil case recovered in a district court. . . . Such interest

shall be calculated from the date of the entry of

judgment, at the rate allowed by State law.?

' This figure represents the final amount of pre-judgment

interest due pursuant to the Court’s Order of October 6, 1980.

2 On April 2, 1982, Congress amended 28 U.S.C. § 1961. The

amendment changes the basis for the rate of post-judgment

interest from ‘‘the rate allowed by State law’’ to the “‘rate equal

to the coupon issue yield equivalent (as determined by the

Secretary of the Treasury) of the average accepted auction price

for the last auction of fifty-two week United States Treasury

bills setited immediately prior to the date of the judgment.” Act

of April 2, 1982, Pub.L. No. 97-164, Sec. 302(a), 1982 U.S.Code

Cong. & Ad.News (96 Stat.) 55-6. The amendment, however,

does not impact upon this case because it did not take effect

until October 1, 1982, well after judgment was entered. See id.,

Sec. 402 at (96 Stat.) 57.

2la

Consequently, in resolving this matter the Court must

award post-judgment interest at the rate permitted by

Delaware law on the date judgment was entered, October

6, 1980.

The rate of interest allowed on judgments in Delaware

is the same as the “‘legal rate of interest’’ found in 6 Del.C.

§ 2301. Rollins Environmental Services, Inc. v. WSMW

Industries, Inc., 426 A.2d 1363, 1367 (Del.Super.Ct. 1980).

The amended 6 Del.C. § 2301(a), which became effective

on April 18, 1980, provides in relevant part:

Any lender may charge and collect from a borrower

interest at any rate agreed upon in writing ifot in

excess of 5% over the Federal Reserve discount rate

including any surcharge thereon, and judgments en-

tered after May 13, 1980, shall bear interest at the rate

in the contract sued upon. Where there is no expressed

contract rate, the legal rate of interest shall be 5% over

the Federal Reserve discount rate including any sur-

charge as of the time from which interest is due;

provided, that where the time from which interest is

due predates April 18, 1980, the legal rate shall

remain as it was at such time.

First, this case does not involve a contract which specifies

an interest rate. Applying the remainder of this statutory

provision; because judgment was entered on October 6,

1980, which is after April 18, 1980, the proviso is also

inapplicable. Consequently, it seems obvious to the Court

that 6 Del.C. § 2301(a) requires a post-judgment interest

rate at 5 percent above the Federal Reserve discount rate in

’ Delaware Courts of Equity may fix interest rates above the

legal rate found in 6 Del.C. § 2301 in the interests of fairness.

See Lynch v. Vickers Energy Corp., 429 A.2d 497, 506 (Del. 1981).

The plaintiff contends that as a patent court this Court is a

court of equity, and can apply a rate of interest greater than that

provided for in 6 Del.C. § 2301. The Court does not address this

contention, however, because 6 Del.C. § 2301 provides an ade-

quate rate of post-judgment interest in this case.

22a

existence on October 6, 1980. The Federal Reserve discount

rate on October 6, 1980 was 11 percent. Therefore, pursuant

to Section 2301(a), the rate of post-judgment interest in

this case must be set at 16 percent.

General Motors, however, contends that the rate of post-

judgment interest should be fixed at 6 percent, not 16

percent. General Motors bases its contention on the fact

that pre-judgment interest was awarded from 1956 in this

case, which is well before April 18, 1980. The “legal rate

of interest’’ on judgments prior to April 18, 1980, was 6

percent. See Rollins Environmental Services, Inc., 426

A.2d at 1366. General Motors cites to several Delaware

state court and federal court diversity cases which hold

that when pre-judgment interest is due before April 18,

1980, the rate of pre-judgment interest should be fixed at 6

percent. See, e.g., Oliver B. Cannon and Son, Inc. v.

Fidelity and Casualty Co. of New York, C.A. 79-129 (Dkt.

Item 210), Slip Op. at 2-4 (D.Del. June 8, 1982); Rollins

Environmental Services, Inc., 426 A.2d at 1368-69. These

cases further hold that if prejudgment interest is fixed at 6

percent because it was due before April 18, 1980, post-

judgment interest must also be fixed at 6 percent, even

though final judgment was entered after April 18, 1980.

Oliver B. Cannon and Son, Inc., Slip Op. at 4-5; Rollins

Environmental Services, Inc., 426 A.2d at 1368. The ration-

ale for these is that 6 Del.C. § 2301 has been construed not

to allow for the segmentation of the rate of interest based

upon the formal entry of judgment. See Papendick v.

Robert Bosch GmbH, 562-CA-1977, Slip Op. at 4 (Del.

Super.Ct. August 4, 1981), aff'd, No. 238 1981 (Del. March

11, 1982) (unreported opinion). General Motors in essence

contends that post-judgment interest should be set at 6

percent because pre-judgment interest was awarded from a

date prior to April 18, 1980. The Court cannot accept

General Motors argument.

The cases cited by General Motors are all state court

cases or federal diversity cases where the law governing the

23a

rate of both pre-judgment and post-judgment interest was

the law of Delaware. See, e.g., Oliver B. Cannon and Son,

Inc., Slip Op. at 1-2, 4-5. Pre-judgment interest in this

patent litigation was awarded in the Court’s discretion

solely as a matter of federal law pursuant to 35 U.S.C. §

284. See General Motors Corp. v. Devex Corp., 7.5.

, 103 S.Ct. 2058, 2060, 76 L.Ed.2d 211 (1983). Therefore,

the Court finds that the cases cited by General Motors are

inapposite. State law had absolutely no bearing on the

award of pre-judgment interest. The law of Delaware has

application in this case only on interest awarded after

October 16, 1980 pursuant to 28 U.S.C. § 1961. The fact

that pre-judgment interest was awarded as a matter of

federal law from a date prior to April 18, 1980, is com-

pletely irrelevant in determining what the rate of post-

judgment interest should be under 6 Del.C. § 2301 on a

judgment entered after April 18, 1980. Consequently, the

Court holds that the rate of post-judgment interest will be

16 percent.*

The Court now turns to the plaintiffs’ claim pertaining

to delay damages. The parties agree that post-judgment

interest runs on the $8,813,945.50 royalty award from

October 6, 1980, the date judgment was entered, to July

7, 1982, the date that General Motors paid the royalty

* Even assuming arguendo that the decisions cited by General

Motors were applicable to this case, the Court would still not

fix the rate of post-judgment interest at 6 percent. The cases

cited by General Motors hold that 6 Del.C. § 2301 does not

allow for the entation of the rate of interest based upon the

formal entry of judgment. See, e.g., Papendick, Slip Op. at 4. in

other words, these decisions “have held that the rate of post-

judgment interest should be the same as pre-judgment interest.”

Oliver B. Cannon. and Son, Inc., Slip Op. at 5. In this case,

pre-judgment interest was fixed at the Moody’s Average Corpo-

rate Bond Rate. Consequently, this rate, which was approxi-

mately 15 percent for the relevant time period, and not the 6

percent rate urged by General Motors, would be the proper rate

of post-judgment interest if the precedent cited by General

Motors was applicable to this case.

24a

award. The parties further agree that post-judgment inter-

est runs on the $11,022,824.97 pre-judgment interest award

from October 6, 1980, the date the judgment was entered,

to June 6, 1983, the date that General Motors paid the pre-

judgment interest. The plaintiffs, however, make other

claims for post-judgment interest that General Motors

does not agree to.

In addition to the post-judgment interest that the parties

agree upon, the plaintiffs claim they are entitied to

interest on the unpaid post-judgment interest that accrued

on the $8,813,945.50 royalty award from October 6, 1980,

the date of judgment, to July 7, 1982, the date of payment

of the royalty award. Similarly, the plaintiffs claim they

are entitled to interest on the unpaid post-judgment

interest that accrued on the $11,022,824.97 pre-judgment

interest award from October 6, 1980, the date of judgment,

to June 6, 1983, the date of payment of the pre-judgment

interest. The plaintiffs correctly point out that based upon

a 16 percent interest rate, approximately $2,000,000 in

post-judgment interest accrued on the $8,813,945.50 royalty

award from October 6, 1980 to July 7, 1982. The plaintiffs

seek 16 percent interest on this $2,000,000 from July 7,

1982, the date the plaintiffs claim this post-judgment

interest should have been paid, until the date it is actually

paid. The plaintiffs similarly point out that based upon a

16 percent interest rate, $4,701,474.05 in post-judgment

interest accrued on the pre-judgment interest award from

October 6, 1980 to June 6, 1983. The plaintiffs seek 16

percent interest on this $4,701,474.05 in post-judgment

interest from June 6, 1983, the date the plaintiffs claim

this post-judgment interest should have been paid, until

the date it is actually paid. The plaintiffs claim they are

entitled to this additional interest as ‘‘delay damages”

because General Motors wrongfuliy withheld payment of

post-judgment interest. The plaintiffs’ position is without

merit.

25a

As of this time, the Court has not ordered post-judgment

interest to be paid. Therefore, the plaintiffs are incorrect

when they maintain that post-judgment interest was due

on the royalty award and the pre-judgment interest award

on July 7, 1982 and June 6, 1983, respectively. Because the

Court has not yet ordered the payment of post-judgment

interest, General Motors has not delayed in the payment of

that interest. Consequently, there can be no ‘‘delay dama-

ges.”’ What the plaintiffs actually seek is interest on interest,

i.e., compound interest, which is not permitted under

Delaware law. See, e.g., Pack & Process, Inc. v. Nabisco,

Inc., C.A. No. 78-285, Slip Op. at 6-7 (D.Del. September

18, 1981) (and authorities cited therein). Therefore, the

plaintiffs claim ‘delay damages”’ will not be allowed.

The Court requests the parties to calculate the interest

due in accordance with this Opinion, and submit an

Order within five days from the date of entry of this

Opinion.

26a

Order of the District Court,

Dated September 9, 1983

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

DEVEX CORPORATION, et al.,

Plaintiffs,

GENERAL MOTORS CORPORATION,

Defendant.

Civil Action No. 3058

ORDER

This 9th day of September, 1983, for the reasons set

forth in this Court’s Opinion of August 22, 1983, and the

Court having heard the arguments of counsel on Septem-

ber 7, 1983, it is hereby ORDERED:

1. Postjudgment interest at the rate of 16% per annum is

awarded in favor of plainuffs and against General Motors

Corporation in the amount of $7,170,344.39.

2. Plaintiffs’ claim for damages for delay in the payment

of postjudgment interest is denied.

3. The Clerk of the Court shall instruct Delaware Trust

Company to forthwith transfer $2,204,880.90 (representing

$2,688,879.15 conceded to be owed to plaintiffs by General

Motors Corporation less $483,998.25 withheld by the Court

in connection with the claims of the TeGrotenhuis and

Ziesenheim plaintiffs for a share of the postjudgment

interest) of the funds and investments held by Delaware

Trust Company pursuant to this Court’s Order of August

30, 1983, to the Technograph-GM Fund Account at Dela-

ware Trust Company (Account No. 123-929-5).

27a

4. Delaware Trust Company shall advise this Court, by

letter, that it has complied with paragraph 3 of this Order.

5. The balance of the funds and investments held by

Delaware Trust Company pursuant to this Court’s Order

of August 30, 1983, shall continue to be held, invested, and

reinvested pursuant to that Order until further Order of

this Court to be entered after this Order becomes final by

expiration of the tume for appeal or until final determina-

tion of an appeal, if any.

6. The Court declines to enter this Order pursuant to

Fed.R.Civ.P. 54(b).

s/ Caleb M. Wright

Senior Judge

APPROVED AS TO FORM:

POTTER ANDERSON & CORROON

By /s/_ Robert K. Payson

Robert K. Payson

Attorneys for Technograph, Inc.

MORRIS, NICHOLS, ARSHT & TUNNELL

By /s/_ Dennis H. Hatch, Jr.

William H. Sudell, Jr.

Attorneys for TeGrotenhuis

and Ziesenheim Plaintiffs

CONNOLLY, BOVE, LODGE & HUTZ

By /s/_ A.G. Connolly Jr.

Arthur G. Connolly, Jr.

Attorneys for Defendant,

General Motors Corporation

28a

Order of the District Court,

Dated August 30, 1983

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

DEVEX CORPORATION, et al.,

Plaintiffs,

: V.

GENERAL MOTORS CORPORATION,

Defendant.

Civil Action No. 3058

ORDER

This 30th day of August, 1983, the Clerk of this Court

now having in his possession a check of General Motors

Corporation in the amount of $7,170,344.39 representing

postjudgment interest calculated in accordance with this

Court’s Opinion of August 22, 1983,

NOW, THEREFORE, IT IS ORDERED:

1. The Clerk of the Court shall endorse the aforesaid

check in the amount of $7,170,344.39 payable only to

Delaware Trust Company, and deliver the same to Robert

K. Payson, Esquire. The said Payson shall deliver said

check to Delaware Trust Company, together with a con-

formed copy of this Order.

2. Delaware Trust Company shall forthwith cause the

aforesaid check to clear the issuing bank and it shall

deposit the funds collected in an account to be opened in

the name of the ‘Clerk of the Court of the United States

District Court for the District of Delaware, Civil Action

No. 3058,”’ and such funds, to the fullest extent possible,

shall be invested in insured money market accounts or

29a

United States Treasury Bills, at the option of Robert K.

Payson, Esquire.

3. Delaware Trust Company shall advise this Court and

undersigned counsel, by letter, as to how the funds in the

account established pursuant to paragraph 2 hereof have

been invested and reinvested.

4. No distributions shall be made from the account

established pursuant to paragraph 2 hereof except upon

further order of this Court.

' 5. The entry of this Order is without prejudice to any

party’s right to appeal from the Order to be entered on

this Court’s Opinion dated August 22, 1983, or any party’s

arguments as to when, how, and how much of the

aforesaid funds shali be distributed.

/s/ Caleb M. Wright

Senior Judge

CONSENTED TO:

POTTER ANDERSON & CORROON

By /s/_ Robert K. Payson

Robert K. Payson

Attorneys for Plaintiffs

MORRIS, NICHOLS, ARSHT & TUNNELL

By /s/ William H. Sudell, Jr.

William H. Sudell, Jr.

Attorneys for TeGrotenhuis

and Ziesenheim Plaintiffs

CONNOLLY, BOVE, LODGE & HUTZ

By /8/_ Arthur G. Connolly Jr.

Arthur G. Connolly, Sr.

Attorneys for Defendant,

General Motors Corporation

30a

Order of the Third Circuit

Dated June 30, 1982

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

June 9, 1982

Nos. 80-2550/51

DEVEX CORPORATION, et al.,

VS.

GENERAL MOTORS CORPORATION

Devex Corp., et al., Appellants in No. 80-2550

General Motors Corporation, Appellant in No. 80-2551

(D.C. Civil No. 3058)

Present: GIBBONS and HUNTER, Circuit Judges; and

STERN, District Judge.*

1. Motion by plaintiffs-appellants that the Clerk be di-

rected to send down this Court’s judgment, in lieu of

formal mandate (a) affirming the District Court's

judgment in the amount of $8,813,945.50, constituting

the reasonable royalty award part of the Judgment, plus

postjudgment interest thereon from October 6, 1980,

the date of entry thereof, at the rate allowed by State law

as provided by 28 U.S.C. 1961, and (b) postponing

mandate as to the balance of the District Court’s final

judgmer pending Supreme Court review of pre-

judgment interest;

2. On June 8, 1982, Lester Taufen, Esquire, counsel for

appellee-cross-appellant, advised this office by tele-

phone that an opposition to above motion will be filed

on behalf of GMC;

in the above-entitled cases. Any answer which would be due

by June 17, 1982, will be forwarded upon receipt of same.

3la

Respectfully,

/s/ Sally Mrvos/mce

Sally Mrvos, Clerk

mmd

Enc.

The foregoing motion is granted. See Barnes v. United

States, No. 82-5095, 3d Cir., May 10, 1982.

By the Court,

‘S/ John J. Gibbons

Judge

Dated: June 30, 1982

*Sitting by designation

32a

Order of the District Court,

Dated July 7, 1982

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

DEVEX CORPORATION, et al.,

Plaintiffs,

GENERAL MOTORS CORPORATION,

Defendant.

Civil Action No. 3058

ORDER

This 7th day of July, 1982, the Clerk of this Court now

having in his possession a check in the amount of $8,813,-

945.50 from General Motors Corporation in partial satisfac-

tion of the Final Judgment in favor of the plaintiffs dated

October 6, 1980, in this case; and

The Court having determined that said fund should be

invested by Delaware Trust Company, Ninth and Market

Streets, Wilmington, Delaware, for this Court;

NOW, THEREFORE, IT IS ORDERED:

1. The Clerk of the Court shall endorse the aforesaid check

in the amount of $8,813,945.50 payable only to Delaware

Trust Company and deliver the same to Robert K. Payson,

Esquire. The said Payson shall deliver said check to Delaware

Trust Company, together with a conformed copy of this

Order.

2. Upon receipt of said fund, it shall be deposited in an

account to be opened in the name of “‘Clerk of the Court of

the United States District Court for the District of Delaware,

33a

Civil Action No. 3058” for the deposit of all moneys not

otherwise invested as directed by this Order.

3. Delaware Trust Company shall invest and reinvest to

the extent possible all of the moneys, including accrued

interest, in United States Treasury Bills in the name of the

Court or for the account of the Court, with a maturity date

no more than thirty (30) days, and to retain possession of all

such treasury bills and moneys subject to the further order of

this Court.

4. Delaware Trust Company shall collect thirty-five dollars

($35.00) as its fee for its initial purchase of treasury bills.

Delaware Trust Company shall be entitled to the same fee

($35.00) each time it reinvests in new treasury bills. The fees

shall be collected from moneys in the savings account that

are not invested in treasury bills. Delaware Trust Company

and Robert K. Payson shall determine from to time the

amount to be retained in said account and not invested in

treasury bills.

5. Upon each investment or reinvestment, Delaware Trust

Company shall inform this Court and undersigned counsel

by letter the amount invested in treasury bills and the

amount retained in the savings account.

/s/ Caleb M. Wright

United States District Court Judge

CONSENTED TO:

POTTER ANDERSON & CORROON

By ‘s/_ Robert K. Payson

Robert K. Payson

Attorneys for Plaintiffs

MORRIS, NICHOLS, ARSHT & TUNNELL

By /s/ William H. Sudell, Jr.

William H. Sudell, Jr.

Attorneys for Certain Plaintiffs

34a

CONNOLLY, BOVE & LODGE

By S/ Lester J. Taufen

Arthur G. Connolly, Sr.

Attorneys for Defendant,

General Motors Corporation

35a

Order of the District Court,

Dated July 8, 1982

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

DEVEX CORPORATION, et al.,

Plaintiffs,

GENERAL MOTORS CORPORATION,

Defendant.

Civil Action No. 3058

ORDER

This 8th day of July, 1982, the defendant General Motors

Corporation (‘“‘“GM’’) having paid $8,813,945.50 into the

Court and GM’s check for this amount having been deposited

into the Delaware Trust Company in accordance with the

July 7, 1982 Order of this Court; and

The aforesaid check having cleared the issuing bank on

July 8, 1982 so that these funds are now available for

investment by Delaware Trust Company;

NOW, THEREFORE, IT IS ORDERED:

1. The Clerk of this Court is directed to enter satisfaction

of the reasonable royalty portion of the judgment entered on

October 6, 1980 in this case against GM in the principal

amount of $8,813,945.50.

2. Post judgment interest at a rate to be determined will

accrue on the satisfied judgment in this case against GM

through, but not after, July 7, 1982.

36a

CONSENTED TO:

POTTER ANDERSON & CORROON

By /s/

Robert K. Payson

Attorneys for Plaintiffs

MORRIS, NICHOLS, ARSHT & TUNNELL

By /$/

William H. Sudell, Jr.

Attorneys for Certain Plaintiffs

CONNOLLY, BOVE & LODGE

By /s/ Arthur G. Connolly Sr.

Arthur G. Connolly, Sr.

Attorneys for Defendant,

General Motors Corporation

‘s/ Caleb M. Wright

United States District Court

Judge

37a

Order of the District Court,

Dated July 9, 1982

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

DEVEX CORPORATION, et al.,

Plaintiffs,

GENERAL MOTORS CORPORATION,

Defendant.

Civil Action No. 3058

PARTIAL SATISFACTION OF JUDGMENT

Defendant General Motors Corporation (‘‘“GM’’) having

complied with the July 7, 1982 Order of this Court by paying

into the Court and having deposited into the Delaware Trust

Co. the amount of $8,813,945.50; and

The aforesaid compliance having been stated in the July

8, 1982 Order of this Court;.

IT {S ORDERED that satisfaction of the reasonable

royalty portion of the judgment entered on October 6, 1980

against GM in the principal amount of $8,813,945.50 is

hereby entered.

Dated: 7/9/82 John R. McAllister, Jr., Clerk

By: /s/_ James J. Yacucci

Chief Deputy Clerk

38a

Order of the District Court,

Dated September 10, 1982

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

DEVEX CORPORATION, et al.,

Plaintiffs,

GENERAL MOTORS CORPORATION,

Defendant.

Civil Action No. 3058

ORDER

WHEREAS, on July 2, 1982, plaintiffs filed a motion

requesting, inter alia, that this Court determine the appro-

priate interest rate to be used in computing postjudgment

interest on the reasonable royalty judgment of $8,813,945.50;

and

WHEREAS, defendant objected to plaintiffs’ motion on

the ground, inter alia, that the requested relief was not

ripe for decision because of the issues in this case now

pending before the Supreme Court of the United States;

and

WHEREAS, the Court has considered the written sub-

, missions of the parties and the arguments of counsel with

| respect to defendant’s objection and has concluded that

the motion was prematurely filed.

NOW, THEREFORE, IT IS HEREBY ORDERED that

the Court will not now determine the issues raised in

plaintiffs’ motion.

/s/ Caleb R. Wright

Senior Judge

39a

Dated: September 10, 1982

Approved as to form.

/s/_ Robert K. Payson /s/_ Arthur G. Connolly, Sr.

Robert K. Payson Arthur G. Connolly

William H. Sudell Attorneys for Defendant

Attorneys for Plaintiffs

40a

Order of the District Court,

Dated September 28, 1982

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

_ DEVEX CORPORATION, et al.,

Plaintiffs,

Vv.

GENERAL MOTORS CORPORATION,

Defendant.

Civil Action No. 3058

ORDER TO STAY EXECUTION

WHEREAS, on September 10, 1982 the Court ruled that

it was premature to determine the rate of postsjudgment

interest at that time; and

WHEREAS, on September 22, 1982 plaintiffs (““Devex’’)

sought a writ of execution with instructions to levy on

defendant’s property in Delaware, and defendant (““GMC’’)

filed a motion to deny or vacate this proposed execution;

and

WHEREAS, the Court has considered the written submis-

sions and arguments of the parties and has concluded that

this case is not now in a proper posture for a writ of

execution, but that the parties should submit further briefs

on the issue of postjudgment interest.

NOW, THEREFORE, IT IS HEREBY ORDERED that

Devex’s proposed writ of execution herein shall be stayed,

and shall remain under seal, until further Order of the

Court after further briefing on the issue of postjudgment

interest.

/s/ Caleb M. Wright

Senior Judge

4la

Dated: September 28, 1982

APPROVED AS TO FORM:

POTTER ANDERSON & CORROON

By: s/_ Richard E. Poole

Richard E. Poole

Attorneys for Plaintiffs

MORRIS, NICHOLS, ARSHT & TUNNELL

By: s/ William H. Sudell, Jr.

William H. Sudell, Jr.

Attorneys for Certain Plaintiifs

CONNOLLY, BOVE & LODGE

By: s/ Arthur G. Connolly, Sr.

Arthur G. Connolly, Sr.

Attorneys for Defendant

42a

Order of the District Court,

Dated June 6, 1983

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

DEViEX CORPORATION, et al.,

Plaintiffs,

GENERAL MOTORS CORPORATION,

| Defendant.

Civil Action No. 3058

ORDER

This 6th day of June, 1983, the Clerk of this Court now

having in his possession a check in the amount of $11,022,854.97

from General Motors Corporation in partial satisfaction of

the Final Judgment in favor of the plaintiffs dated October

6, 1980, in this case; and

The Court having determined that said fund should be

held by Delaware Trust Company, Ninth and Market

Streets, Wilmington, Delaware, for this Court:

NOW, THEREFORE, IT IS ORDERED:

1. The Clerk of the Court shall endorse the aforesaid check

in the amount of $11,022,854.97 payable only to Delaware

Trust Company and deliver the same to Robert K. Payson,

Esquire. The said Payson shall deliver said check to Delaware

Trust Company, together with a conformed copy of this

Order. 3

2. Upon receipt of said fund, it shall be deposited in an

account to be opened in the name of “Clerk of the Court of

the United States District Court for the District of Delaware,

43a

Civil Action No. 3058’, subject to further Order of this

Court.

/s/_ Caleb M. Wright

United States District Court Judge

CONSENTED TO:

POTTER ANDERSON & CORROON

By /s/_ Robert K. Payson

Robert K. Payson :

Attorneys for Plaintiffs

MORRIS, NICHOLS, ARSHT & TUNNELL

By /s/_ William H. Sudell, Jr.

William H. Sudell, Jr.

Attorneys for Certain Plaintiffs

CONNOLLY, BOVE, LODGE & HUTZ

By /s/ Arthur G. Connolly Sr.

Arthur G. Connolly, Sr.

Attorneys for Defendant,

General Motors Corporation

44a

Order of the District Court,

Dated June 7, 1983

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

DEVEX CORPORATION, et al.,

Plaintiffs,

GENERAL MOTORS CORPORATION,

Defendant.

Civil Action No. 3058

ORDER

This 7th day of June, 1983, the defendant General Motors

Corporation (‘““GM’’) having paid $11,022,854.97 into the

Court and GM’s check for this amount having been deposited

into the Delaware Trust Company in accordance with the

June 6, 1983 Order of this Court; and

The aforesaid check having cieared the issuing bank on

June 6, 1983, so that such funds are now available to be held

by Delaware Trust Company for this Court;

NOW, THEREFORE, IT IS ORDERED:

1. The Clerk of this Court is directed to enter satisfaction

of the pre-judgment interest portion of the judgment entered

on October 6, 1980 in this case against GM in the principal

amount of $11,022,854.97.

2. All issues concerning post-judgment interest and costs

are hereby reserved for determination by this Court.

/s/ Caleb M. Wright

Senior Judge

45a

CONSENTED TO:

POTTER ANDERSON & CORROON

By /s/_ Robert K. Payson

Robert K. Payson

Attorneys for Plaintiffs

MORRIS, NICHOLS, ARSHT & TUNNELL

By /s/_ William H. Sudell, Jr.

William H. Sudell, Jr. -

Attorneys for Certain Plaintuffs

CONNOLLY, BOVE, LODGE & HUTZ

By /s/ Arthur G. Connolly Sr.

Arthur G. Connolly, Sr.

Attorneys for Defendant,

General Motors Corporation

46a

Order of the District Court,

Dated June 8, 1983

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

DEVEX CORPORATION, et al.,

Plainuffs,

< -®,

GENERAL MOTORS CORPORATION,

Defendant.

Civil Action No. 3058

PRE-JUDGMENT INTEREST SATISFACTION

OF JUDGMENT

Defendant General Motors Corporation (‘““GM’’) having

complied with the June 6, 1983 Order of this Court by

paying into the Court and having deposited into the

Delaware Trust Company the amount of $11,022,854.97;

and

The aforesaid compliance having been stated in the June

7, 1983 Order of this Court;

IT IS ORDERED that satisfaction of the pre-Judgment

interest portion of the Judgment entered on October 6, 1980

against GM in the principal amount of $11,022,854.97 is

hereby entered.

/s/ John R. McAllister, Jr.

John R. McAllister, Jr., Clerk

Dated: June 8, 1983

47a

Amended Judgment of the Third Circuit,

Dated December 5, 1984

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 83-1770, 83-1771, 83-1892, 84-5003

84-5011, 84-5139 and 84-5141

DEVEX CORPORATION, et al.,

Appellants, Cross-Appellees

VS.

GENERAL MOTORS CORPORATIGN,

Appellees, Cross-Appellant

(D.C. Civil No. 3058)

On APPEAL FROM THE UNITED STATES District CouRT

FOR THE ---------- DISTRICT OF DELAWARE

Present: GrispBons, GARTH and ROSENN, Circuit Judges

AMENDED JUDGMENT

This cause came on to be heard on the record from the

United States District Court for the ---------- District of

Delaware and was submitted under Third Circuit Rule 12(6)

on September 13, 1984.

On consideration whereof, it is now here ordered and

adjudged by this Court that the orders of the said District

Court, entered September 9, 1983, and Decernber |, 1983, be,

and the same are hereby affirmed. Each side to bear its own

costs.

ATTEST

/s/ Sally Mrvos

Clerk

December 5, 1984

48a

Certified as a true copy and issued in lieu

of a formal mandate on February 20, 1985.

Test: /s/ M. Elizabeth Ferguson

Chief Deputy Clerk, U.S. Court of

Appeals for the Third Circuit

49a

Order of the Third Circuit Denying Rehearing,

Dated February 12, 1985

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 83-1770/1, 83-1892, 84-5003

84-5011, 84-5139 and 84-5141

DEVEX CORPORATION, ET AL.,

Appellants/Czvoss-A ppellees

GENERAL MOTORS CORPORATION,

Appellees/Cross-A ppellants

(D.C. Civil No. 3058)

SUR PETITION FOR REHEARING

PRESENT: ALpISsERT, Chief Judge, GisBoNs, HUNTER,

WEIS, GARTH, SLOVITER, and BECKER, Circuit

Judges, ROSENN, Senior Circuit Judge.

The petition for rehearing filed by

appellants/cross-appellees, Devex Corportion, et al., in the

above-entitled case having been submitted to the judges who

participated in the decision of this court, and to all the other

available circuit judges of the circuit in regular active

service, and no judge who concurred in the decision having

asked for rehearing, and a majority of the circuit judges of

the circuit in regular active service not having voted for

rehearing by the court in banc, the petition for rehearing is

denied.

By the Court

oseeeeeeeeee eee eeeeeeeeeeee

DATED: February 12, 1985 Circuit Judge

IN THE UNITED STATES

DISTRICT COURT FOR THE

DISTRICT OF DELAWARE

DEVEX CORPORATION, ET AL.

Plaintiffs,

GENERAL Motors CORPORATION

Defendant.

REPORT OF SPECIAL MASTER

PURSUANT TO F.R.C.P. 53(e)

February 7, 1980

5la

TABLE OF CONTENTS

PAGE

I. PROCEDURAL BACKGROUND ...........

EE ee

B. Design of the Decision ..................

EES Te

ee vines cies a scccccsccsese

1. It is the Law of the Case that Each of the

Three Prior Trial Practices Infringe .....

2. It is the Law of the Case that Cleanability

in a Routine, Commercially Acceptable

Way Satisfies the “Cleanability” Require-

Eee

3. It is the Law of the Case that Lubricity Suf-

ficient to Achieve Effective Production

Satisfies the “Satisfactory Lubricity” Re-

quirement of the Patent ...............

B. Accused Practices Held to be Infringing .. . .

1. Accused Practices Which Must Be Held to

Infringe as the Result of the Law of the

Case (Bumper-Accused Practices 4, 5, 12,

13, 36, 48, 49, and 51; Non-Bumper-

Accused Practices 7, 9, 16, 17, 22, 25 (in

part), 26, 27, 28, 30, 31, 37, 38, 42, 47, 54,

SSE OE

2. TKPP is a Borax Equivalent, and the Use

of it by Defendant as a Borax Substitute in

Bumper Making Infringes (Accused Prac-

‘tices 6, 14, 50, 52, and 58) TSP is also a

I og ee aec es...

Ill.

C. Accused Practices Held to be Non-Infringing

1. Practices as to Which Little or No Clean-

ing was Required do not Infringe (Accused

Practices 2, 3, 10, 11, 15, 19, 20, 21, 25 (in

part), 33, 34, 35, 39, 40, 41, 44, and 45) ..

2. Practices in Which Borax Rinses were Used

as Neutralizers do not Infringe (Accused

Practices 1, 2, 8, 18, 20, 23, 24, 32, 34, 35,

= F £ e eeeree e rr rce

§. Practice in which a Trisodium Phosphate

Rinse was used as a Neutralizer does not

Infringe (Accused Practice 29) ..........

4. Practices Determined net to Involve the

Use of Borax (or (Equivalents) do not In-

fringe (Accused Practices 1, 8, and 46) ...

(a) Accused Practice 1 (After 1963)......

(b) Accused Practice8 ................

D. Explanation and Table .................

S.. Tira 8 8 se SS aides

B. Denial of Plaintiffs’ Claim to Multiple

Damages and Attorneys’ Fees.............

C. Standard to be Applied in Determining a

Vee erre eer eee

D. Resolution of Disputes as to Factors to be

Considered in Fixing a es Perl Perrer

By Se eed ee UG ace tibw os ic

53a

PAGE

2. The Usefulness of the Henricks Process in

OM Shady cacasacepecas

(a) Oldsmobile Bumpers .............

(b) Chevrolet Bumpers...............

(i) Chevrolet's Use of the Patented

(u) The Shape of the Chevrolet

Bumper Did Not. Make Essential

the Use of the Henricks Process . .

(Cp IIE ibs 6c be ddlis cscs.

(d) Cadillac Bumpers................

(e) Fisher Body — Elyria Bumper Parts .

3. The Usefulness of the Henricks Process in

the Making of Non-Bumper Extruded

Ni hicdes tik cae othe wa Foc Ske ke 6 os

(a) Chevrolet-Bay City...............

(b) Chevrolet-Buffalo................

(a) atom Miscwonsts..........22....5.

Se NE 5. ossn we oredenda ce

ee eo ioo'ein u's v'k'o es caw Ps be

(g) Dhenel Requiomem ................

(h) Fisher Body-Columbus............

6s ny a ecmce poe be Os

eR ee

ee 66 aaa asta en's aes welee oor »

(1) Saginaw Steering ................

4. Defendant Used Borax and TKPP in

Bumper-Making to Improve the Lubri-

cant, Not Because Those Substances Cost

Less than Soap.......6.--eeeeee cece

5. Declination to Treat as Controlling in

Fixing a Royalty Certain Transactions

Relied on by Defendant ........-.-.---

(a) The Transfers of Interest in the Pat-

ent in 1955 and 1965 .............

(b) The Value Put on the Patent by One

of the Owners for Estate Tax Purposes

(d) The Formea “License” ..........--

6. The Royalty Base .........----+--++-

7. The 1964 Offer to License ............

S. Senet... ov ckanvsasaeeees ns baeeedeavs

1. Plantiffs are Entitled to Prejudgment In-

terest on the Law as well as the Facts ....

2. The Interest Computation ............

G. Accounting ...........-seeeececcceeces

eeprrerrerrs yr

Peer eee

See 6 é@°6 @ 2 ER BEE OES CS, 8-8 AS SS SS

op wo NM

£.

6. SeOMATY «cee w ee cawesane

55a

I. PROCEDURAL BACKGROUND

A. History of the Case

In late 1956 and in 1957, plaintiffs filed lawsuits against

General Motors Corporation and Houdaille Industries, Inc..,

respectively, in the United States District Court for the North-

ern District of Illinois, claiming in both actions that defen-

dants had infringed Claim 4 of the Henricks Reissue Patent

No. 24,017. The patent had been reissued on June 7, 1955, on

Original Patent No. 2,588,234 dated March 4, 1952, as the

result of an application filed October 31, 1950. The patent

expired on March 4, 1969 (Princ. Doc.,* Tab 1, p. 1; Plain-

tiffs’ Br. on Acctg., p. 1; Defendant's Br., p. I-16; APTO,**

App. I, p. 2).

The Houdaille and General Motors actions were thereafter

consolidated (382 F.2d at 19). Following trial, by opinion

dated February 1, 1962, implemented by a final judgment

entered June 29, 1962, Claim 4 was held by the District Court

(through District Judge Edwin A. Robson) to be invalid and

void (Princ. Doc., Tab 2).

From the finding of invalidity, plaintiffs appealed. The

Court of Appeals reversed, Devex Corporation, et al. v.

General Motors Corporation, et al., 321 F.2d 234 (7th Cir.

1963), cert. den., 375 U.S. 971 (1964), adjudicating the

validity of Claim 4 of the Henricks patent.

After remand plaintiffs’ action against General Motors was

transferred to the District of Delaware. Devex Corporation v.

General Motors Corporation, 146 U.S.P.Q. 346 (N.D. Ill.

1965). Houdaille Industries remained as a defendant in the

* The reference is to a booklet entitled “Principal Documents on Ac-

_ counting” put together by defendant, and filed with plaintiffs’ concur-

rence.

** “APTO" refers to the Pretrial Order on Accounting.

56a

Chicago case (263 F.Supp. at 20). After discovery both sides

in the Houdaille case moved for summary judgment on the

issue of infringement. Plaintiffs prevailed. Devex Corpora-

tion, et al. v. Houdaille Industries, Inc., 148 U.S.P.Q. 74

(1965). The Court of Appeals again reversed, Devex Corpora-

tion v. Houdaille Industries, Inc., 382 F.2d 17 (7th Cir.

1967), concluding that summary judgment was inap-

propriate. Later the Devex-Houdaille controversies were

resolved by settlement (467 F.2d at 258).

Meantime, the Devex action against General Motors was

transferred to the District of Delaware and assigned to then

Chief (now Senior) Judge Caleb M. Wright. Plaintiffs moved

for summary judgment. In opposition to the motion General

Motors advanced a finely spun venue theory toward the pro-

position that it was not bound by the validity holding of the

Seventh Circuit in the Houdaille case. Rejecting this argu-

ment, the Court held that the Seventh Circuit's holding of the

validity of Claim 4 of the Henricks Reissue patent bound

General Motors. But, on the infringement question, the

Court (differing from the shortly-thereafter-reverseu ap-

proach of the Chicago District Court) held summary judg-

ment to be inappropriate. Devex Corperation, et al. v.

General Motors Corporation, 263 F.Supp. 17 (D. Del. 1967).

Validity having been resolved, and infringement not being

susceptible of summary disposition, a trial on the infringe-

ment issue was held before Judge Wright. The result was a

determination that defendant had not infringed the Henricks

patent.* Devex Corporation v. General Motors Corporation,

* Pre-trial skirmishes gave birth to two additional reported decisions:

Devex Corporation, et al. v. General Motors Corporation, 275 F.Supp.

$10 (D. Del. 1967), sustaining defendant's objections to plaintiffs’ over-

broad interrogatories, and Devex Corporatoin, et al. v. General Motors

Corporation, 285 F. Supp. 109 (D. Del. 1968), granting plaintiffs’ mo-

tion to amend their complaint so as to assert the doctrine of equivalents.

57a

$16 F.Supp. 1376 (D. Del. 1970). Plaintiffs appealed. And

the Court of Appeals reversed, concluding that the District

Court had erred as a matter of law in failing to find that

defendant had infringed the patent in suit. Devex Corpora-

tion, et al. v. General Motors Corporation, 467 F.2d 257 (3d

Cir. 1972), cert. den., 411 U.S. 973 (1973).

On remand, on March 15, 1974 Judge Wright appointed

the undersigned as special master to resolve the issues remain-

ing between the parties in the accounting phase of the litiga-

tion. Discovery proceeded, and included dozens of deposi-

tions, hundreds of interrogatories and answers, and thou-

sands of pages of document production. Where controversies

developed between the parties, they were resolved by the spe-

cial master. *

The trial began October 30, 1978, and concluded February

14, 1979. It consumed fifty-three trial days, and generated

hundreds of exhibits. The last brief, filed in accordance with

a schedule settled between the parties, was submitted August

15, 1979. Oral argument was held November 14, 1979.

And, seminally, this is the special master’s Report.**

* In the years since the order of reference, none of the special master's

decisions have been appealed. Hence, the Court will be looking at all

aspects of the accounting phase of the case with a fresh eye when it

reviews this Report.

** If there is a sigh in this sentence, it stems from the reminder of mor-

tality which the long duration of this controversy has produced. On

February 4, 1977, George Hibbens, Esquire, one of defendant's counsel,

passed away. Walter Blenko, Esquire, a principal advocate for plaintiffs,

expired in November, 1978. Although both sides continued to be

represented by counsel of the highest quality, the loss of these singularly

able, and gentlemanly lawyers, caused sadness to all involved in the case.

58a

B. Design of the Decision

The character of the controversies here is such that to

restrict the exposition of the decision-making process to

numbered paragraphs would be to leave it choppy and dis-

jointed. I have, therefore, elected to frame the decision in

narrative form, cf. Ass'n of Westinghouse Employees v.

Westinghouse Corp., 283 F.2d 93 (3d Cir. 1960), hoping that

this style will make for a smoother, and therefore, more

understandable flow.

Style to one side, my aim has been to produce a decision

which is understandable, subject to meaningful review, and

therefore likely to advance the final denouement of this

twenty-odd year old judicial drama. Toward that purpose a

strong effort has been made to fairly come to grips with the

major contentions advanced by each side. The record is

heavy. The parties’ post-trial presentations by themselves con-

sist of perhaps a thousand pages of brieis, proposed findings,

comments, and computations. While I have not explicitly

dealt with each of the very large number of contentions made

by the parties, most have been treated with in the decision and

none has been ignored in the deliberations leading to it.

Il. INFRINGEMENT

A. Law of the Case

1. It is the Law of the Case that Each of the Three

Prior Trial Practices Infringe

Plaintiffs accuse sixty-one separate practices which were

employed at various of General Motors, divisions as infringing

the patent in suit. Three of these practices were sub judice

before Judge Wright, and later before the Court of Appeals

for the Third Circuit in the earlier infringement cases. What

the Third Circuit decided provides controlling guidance on

59a

the infringement question here. Not atypically the parties are

at odds on the Third Circuit's adjudication.

The background of the “law of the case” controversy may

be described in this way. Claim 4 of the Henricks patent

teaches a process for the lubrication of metals before cold

forming, and covers:

“The process of working ferrous metal which com-

prises forming on the surface of the metal a

phosphate coating and superimposing thereon a

fixed film of a composition comprising of solid

meltable organic binding material containing

distributed therethrough a solid inorganic com-

pound meltable at a temperature below the melting

point of the ferrous metal phosphate of said coating

and having a hardness not exceeding 5 on the Mohs’

hardness scale, and thereafter deforming the

metal.” (Princ. Doc., Tab 1, p. 18.)

The “organic binding material” contemplated by the patent

is soap. The “inorganic compound” is borax, or some other

inorganic substance meeting the patent's claims and perform-

ing the same function as does the borax.

In holding the patent invalid, Judge Robson adverted to

the indefiniteness of Claim 4 in that it did not specify“ . . . the

amounts and proportions of the compounds ...” (Princ.

Doc., Tab 2, p. 260). One of the lubricants before Judge Rob-

son was Bonderlube (“BL”) 235, a material produced by a

company then known as Parker Rustproof Company. BL 235

is described by Juége Robson as containing about three per

cent borax (/Jd., p. 221).

The Seventh Circuit, in reversing Judge Robson and

validating the patent, held the absence of quantitative borax-

content measures not to be fatal. Devex Corporation v.

General Motors Corporation, 321 F.2d 234 (7th Cir. 1963). It

60a

reached this conclusion although the BL 235 lubricant had a

much smaller borax content (three per cent) than was sug-

gested by Example XIX (at least fifty-eight per cent borax

and boric acid), and Example XX (eighty-five per cent borax)

found at column 15 of the patent (Princ. Doc., Tab 1, p. 15).

When the General Motors case was transferred from I]-

linois to Delaware for trial on the infringement issue, three ac-

cused practices or processes were presented to Judge Wright

(APTO, App. I, p. 26). The first was used by Pontiac for the

formation of bumpers, and involved the use of phosphate over

Parker's BL 246, a lubricant with a fifteen per cent borax

content. The other two processes entailed the use of BL 235

(described as containing three per cent borax as Judge Rob-

son had earlier noted, along with two per cent sodium nitrite

and ninety-five per cent soap), and were employed in the

making of valve lifter plungers at defendant's Diesel Equip-

ment Division and the making of rocket parts at Pontiac (316

F.Supp. at 1380-1383). Judge Wright held that none of the

three processess infringed ($16 F.Supp. at 1390). The Court

of Appeals reversed (467 F.2d 257).

In its opinion the Third Circuit devoted specific attention

to the accused Pontiac BL 246 process. Defendant urges that

the reversal was restricted to that process, and that Judge

Wright's non-infrigement findings as to the two BL 235 prac-

tices were either left undisturbed, or that it was the intent of

the Third Circuit to keep the slate clean for fresh considera-

tion on remand as to the BL 235 practices. Plaintiffs argue

that all three practices were before the District Court, and

came before the Court of Appeals by their appeal of the judg-

ment below.

Thus is the issue joined. While only one of many issues be-

tween the parties, it is the first because its disposition will pro-

vide controlling guidance as to whether the many other BL

235 (and like-BL 235) processes accused here infringe.

6la

I conclude that plaintiffs are correct, and that the Court of

Appeals did adjudicate the infringement of the prior trial BL

235 processes. Most simply put, the Third Circuit had before

it a judgment which contained a finding of non-infringement

as to all three processes, and held “The judgment will be

reversed” (467 F.2d at 262). What was regarded by the trial

court to be non-infringing was therefore held by the Third

Circuit to be infringing.

Nothing in the Third Circuit's decision implies that the

Court wished to regard the BL 235 processes separately or dif-

ferently from BL 246 which undisputedly was found to be in-

fringing. For example, no distinctions between the two

lubricants are drawn by the decision, such as would support

the view that as to one the Court intended to reverse and as to

the other it did not. Further, while mainly discussing BL 246,

the Opinion in its very first sentence refers to the District

Court's holding as involving a process used by General Motors

to facilitate “... the fashioning of metal into automobile

bumpers and other manufacturers.” (Emphasis added. 467

F.2d at 257-258.) The only “other manufactures” before the

Court of Appeals were the two BL 235>processes.

While the discussion could stop at this point, the impor-

tance of the issue and the argumentative energy which defen-

dant has devoted to it have impelled a closer look at the ap-

pellate papers to assure that they are consistent with what ap-

pears to be clear adjudicating language in the Court of Ap-

peals Opinion. They are.

In its brief on appeal to the Third Circuit, defendant

repeatedly made reference to the BL 235 process. See e.g.,

General Motors brief at pages 11, 28, 31, and 34. Indeed, a

reading of defendant's brief inspires a sense of deja’ vu, since

defendant advanced in the Court of Appeals the same conten-

tions which it repeats now toward the point that its BL 235

processes did not infringe.

62a

Following the Third Circuit’s decisions, defendant filed a

petition for rehearing. One cannot read that petition without

acquiring the conviction that defendant itself knew the deci-

sion applied to both the BL 246 and BL 235 processes. Both

are explicitly referred to in the petition (see, e.g., Pet. For

Reh., pp. 4, 5, 6). And, tellingly, defendant, for reasons best

known to it, did not urge the Court to change, or as defendant

would suggest “clarify”, its decision to make it apply only to

the BL 246 process. To the contrary, cleaning tests on BL 235

samples were described, and defendant only urged the Court

to give the tests of defendant's witnesses “greater considera-

tion” (Id., p. 5). The Court was invited to recognize (as am I)

that the “no cleaning problem” provision in the pretrial order

cited in the opinion as “[t]he most important single item” (467

F.2d at 261) related to the Bl 246 process and not the Bi 235

process (Pet. for Reh., p. 6). The Court of Appeals declined

to in any way adjust its decision in response to defendant's im-

precations.

In its petition for certiorari to the United States Supreme

Cour: defendant made no distinction between the BL 246

process which it concedes the Third Circuit intended to hold

as infringing, and the BL 235 processes which it now says were

left open by the Court of Appeals’ decision. Again the petizion

dealt with all three processes. After describing the District

Court's findings with respect to the BL 235 and BL 246 accused

practices (Pet. for cert., p. 8, particularly fn. 23), defendant

characterized the holding of the Court of Appeals thusly:

“In effect, the Third Circuit ruled that where a proc-

ess patent is given limited validity by a holding based

solely on coaction not described in the claim, and to

which the claim is not limited, the patentee may

nevertheless enforce its patent monopoly against

other processes within the claim’s unspecific

language, even where such coaction has not been

shown to occur.” Jd., p. 10.

63a

The “other processes”, as to which the Third Circuit is sug-

gested to have erroneously ruled, appear from the context of

the petition for certiorari to be the accused BL 235 processes

as well as the BL 246 process. Nowhere in its petition did

defendant suggest that the only process passed on by the

Court of Appeals, and therefore subject to review by the

Supreme Court, was the BL 246 process.

Finally defendant did not apply for a special form of man-

date separating out the BL 235 uses from the BL 246 practice,

as was its right (FRAP 36, 41). The mandate as actually

entered “ ... reversed as to that portion of the said [District

Court] judgment which held that the defendant had not in-

fringed Claim 4 of the Reissue Patent No. 24,017, which

holding is the subject of the principal appeal herein .. .”

That defendant should not have moved for a special form

of mandate is consistent with what seems to me to beitsclear .

recognition that the Court of Appeals intended to hold all

three processes before it as infringing. The mandate as

entered puts the final nail in the coffin of defendant's law-of-

the-case argument.

But, argues defendant, there are nevertheless differences

between the characteristics of BL 235 and BL 246 which can

be taken into account now to hold the latter non-infringing

even though the Court of Appeals may have concluded other-

wise. I do not find that the cases on which defendant relies

support that conclusion.

Imperial Chemical Industries v. National Distillers and

Chemical Corp., 354 F.2d 459 (2d Cir. 1965), is cited by

defendant as “especially in point” toward the proposition that

there remains latitude to argue that the BL 235 prior trial

practice did not and does not infringe. In JCI, a trade secret

case, the trial court originally denied plaintiff a preliminary

injunction, and the Court of Appeals reversed and remanded.

See 342 F.2d 737 (2d Cir. 1965). On remand interlocutory

relief was again refused, this time because the trial court cor-

rected a finding which it had made prior to the first appeal.

Again plaintiff appealed. This time the Second Circuit

declined to reverse, and in so doing, it emphasized two factors

which are not present here. First, in JCJ the trial court itself

found it had been in error and corrected the error. In the case

at bar the Court of Appeals found the trial court in error, and

by its mandate of reversal the Court of Appeals corrected the

lower court's error. What defendant seeks in this case is for me

to in effect find the Third Circuit in error and reinstate Judge

Wright's findings. Neither JCJ nor any other authority per-

mits that result. Second, in JC/ the trial court's findings were

themselves only tentative because “ ... the findings of fact

made upon the motion for preliminary injunction are not

controlling ...” (354 F.2d at 463). See also, 1B Moore's

Federal Practice, { 404[10], p. 572. Here, in contrast, the

prior trial accused practices were sub judice before the Third

Circuit on appeal from definitive post-trial findings upon

which a final judgment on the infringement issue rested. The

Court of Appeals’ judgment, as to which certiorari was sought

and denied, was final with respect to all findings and conclu-

sions which were before the Court.

Defendant also relies upon Aro Manufacturing Co., Inc. v.

Convertible Top Replacement Co., Inc., 377 U.S. 476

(1964), which affirmed in part and reversed in part a decision

at 312 F.2d 52 (1st Cir. 1952). An earlier installment of the

Aro litigation (“Aro I”) (365 U.S. 336 (1961), reh. den., 365

U.S. 890 (1961)) had resulted in a holding that replacement

fabric auto convertible tops sold for use on vehicles manufac-

tured by General Motors, a licensee under the patent in suit,

were permissible “repair”. The Supreme Court concluded

that by purchasing and furnishing the replacement fabric,

GM customers and the manufacturer,. respectively, were not

direct or contributory infringers. In a subsequent Aro case

65a

(“Aro II"), the District Court interpreted the earlier Supreme

Court decision to mean that replacement fabrics for vehicles

produced by an unlicensed manufacturer (Ford) were similar-

ly immune from claim by the patentee. The Court of Appeals

concluded that the Supreme Court had intended its ex-

culpatory decision to apply only to vehicles which were

manufactured under license (312 F.2d 52). Or certiorari the

Supreme Court agreed (377 U.S. 476). Both Aro II opinions

‘ carefully review the logic and language of the Aro I decision,

leaving no doubt that the Supreme Court had intended to

limit that decision. Here, by contrast, logic and analysis com-

pel the conclusion that the Third Circuit did net intend to

limit its decision, but rather intended its reversal to apply to

all three alleged infringements which had been placed before

it for review.

Defendant also adverts to Standard Orl Company of

California v. United States, 429 U.S. 17 (1976). That case

held that the district court had the power to open a judgment

under F.R.C.P. 60(b) without seeking leave of the appellate

court which affirmed it. Neither the holding, nor the brief

discussion which supports it, have the slightest connection

with the law-of-the-case issue here.

The other cases cited, but not much discussed by defendant

are similarly unpersuasive.

The governing law-of-the-case principle is (quoting from

Re Sanford Ford & Tool Co., 160 U.S. 247, 255) as an-

nounced in Jn re Potts, 166 U.S. 263, 266 (1897):

“When a case has been once decided by this court

on appeal, and remanded to the circuit court,

whatever was before this court, and disposed of by

its decree, is considered as finally settled. The cir-

cuit court is bound by the decree as the law of the

case; and must carry it into execution according to

66a

the mandate. That court cannot vary it, or examine

it, for any other purpose than execution; or give any

other or further relief; or review it, even for ap-

parent error, upon any matter decided on appeal;

or intermeddle with it further than to settle so much

as has been remanded. ...”

The task on remand is to play the ball as it lies. There can

be no rolling over to give one side or the other a better shot.

Here that means acceptance by me as master of the no-

longer-disputable premise that the prior trial accused proc-

esses using BL 235 as well as BL 246 are infringing. It follows

as a matter of law that any other accused practices which

operate in substantially the same way as those prior trial prac-

tices, and which produce substantially the same results must

also be found to infringe. Flat Slab Patents Co. v. Turner, 285

F. 257, 273 (8th Cir. 1922). See, dealing with the analogously

applicable doctrine of equivalents, Graver Tank & Mfg. Co.

v. Linde Air Products Co., 339 U.S. 605, 608 (1950).

2. Itisthe Law of the Case that Cleanability ina

Routine, Commercially Acceptable Way

Satisfies the “Cleanability” Requirement of

the Patent

The decisions touching the patent require that the user

achieve “easy cleanability”. For the reasons which follow, I

find that this requirement is satisfied by any accused process

which permits cleaning to be done in a routine, commercially

acceptable way.

In its second review of the Henricks patent in the Houdaille

case, Devex Corporation v. Houdaille Industries, Inc., 382

F.2d 17 (7th Cir. 1967), the Seventh Circuit made it plain that

plaintiffs could not prove infringement based solely upon a

literal reading of Claim 4 of the patent. They had to prove, in

addition, that by following the Henricks’ teaching a “new and

67a.

unexpected result” ensued (383 F.2d at 23). But for this re-

quirement, the Court strongly implied, the patent would not

have survived attack since “ ... such a [literal] construction

would monopolize the whole broad field of metal forming

with any use of dry soap and borax over phosphate at any

temperature or pressure, regardless of results.” (Jbzd.)

Following the decision of the Seventh Circuit, Judge

Wright found that the BL 235 and BL 246 processes literally

tracked the teachings of Claim 4, but held that they did not

infringe because they did not achieve the new and unexpected

‘results promised by the patent as construed. In reversing, the

Third Circuit swept aside arguments as to how the results

were achieved, and held that it was sufficient for plaintiff to

prove that the accused process achieved “easy cleanability” in

conjunction with “satisfactory lubricity” (467 F.2d at 261).*

The Third Circuit in its decision further illuminated the

cleanability requirement by referring to a “no cleaning prob-

lem” stipulation as meeting the requirement in BL 246 Pon-

tiac bumper practice. The stipulation was a part of the pre-

trial order in the infringement case (APTO, App. I, p. 10).

Defendant has sought to limit it, believing that without the

stipulation it would have been exonerated of infringement.

But I think the “no cleaning problem” stipulation gave

away nothing. For what the stipulation meant, and what it

* Eutectic Corp. v. Metco, Inc., 579 F.2d 1 (2d Cir. 1978), involved

patents for a flame spray device designed to cause a self-bonding coat to

be affixed to metal surfaces. Citing the Third Circuit's Devex decision,

the Court held it of no legal consequence that the reactions giving rise to

the desired results were even different from those the patentee had

reported.

68a

was taken to mean, is that metal coated in the way taught by

the patent could be cleaned in a routine, commercially accept-

able way.

The record of the prior trial made it crystal clear that Pon-

tiac bumpers required multi-step post-forming preparation

prior to electroplating. See, e.g., the cleaning procedures

described in Judge Wright's decision (316 F.Supp. at 1381).

The Court of Appeals was not ignorant of this. The clear pur-

port of the Court of Appeals’ ruling is that the need for clean-

ing did not vitiate the application of the patent. To the con-

trary, it vitalized the patent so long as the cleaning could be

done in the regular course of production.

This conclusion is consistent with (what I have found to be)

the Third Circuit’s holding that BL 235 processes also in-

fringed. The prior trial valve lift plungers were cleaned after

forming in a drum washer with a mild acid spray for 2-3

minutes (316 F.Supp. at 1382) and the rocket parts were

cleaned in a strong alkaline cleaner (316 F.Supp. at 1389).

Again it was enough that cleaning could be accomplished in a

commercially routine way.

While finding it to be the law of the case that it is enough to

prove commercial cleanability (as in the prior trial bumper

use of BL 246 and non-bumper lubrication with BL 235) the

cleanability point should not be left without giving recogni-

tion to an argument which the defendant has strongly, and

not unpersuasively, urged. Defendant's argument can be

stated thusly: In sustaining the validity of the patent, the

Seventh Circuit found it advantageous, cieanability-wise, by

comparing the patent with the so-called “German process”

which involved a coating of soap-only over borax over the

workpiece accompanied by a long soaking period. It found

that the German process had a “serious defect in .. . that the

residual deposit was not water soluble and presented a dif-

ficult cleaning problem especially if the workpiece was to be

oe Ne

Reread

69a

electroplated” (321 F.2d at 236). The Seventh Circuit relied

upon plaintiffs’ argument that the “difficult cleaning prob-

lem” was ameliorated because the patented process formed

“amorphous glassy materials” and with the further result that

“the formation of insoluble organic materials is inhibited and

there is no cleaning problem” (Jd. at 236-237). The Seventh

Circuit emphasized this unexpected result in its opinion in the

second Devex case (382 F.2d at 22-23).

Defendant urges that in fact the selfsame water insoluble

substance produced by the German process is produced by the

accused BL 235-type processes. It submits that its items of

manufacture, particularly those produced by processes like

the prior trial BL 235 processes, are neither less nor more dif-

ficult to clean than was the case under the German process. It

urges that plaintiffs have failed to prove that the accused

borax-containing lubricants create more cleaning difficulties

than would have been the case were the borax omitted.

Defendant concludes, therefore, that these processes cannot

be held to infringe.

This is not a frivolous argument. It was evidently persuasive

to Judge Wright, whose decision finding non-infringement

cited evidence showing that zinc stearate (the difficult-to-

clean substance deposited by the German process) also ap-

_peared when defendant practiced the accused patented proc-

esses. E.g., Findings 12(a), (c), (d), (e), (f), (g), (hh), (i), Gj). (),

and 13 (316 F.Supp. at 1586-1389). And the argument was

again ably made to the Third Circuit in defendant's effort to

secure an affirmance of the District Court's non-infringement

findings. Indeed, an examination of its brief on appeal and its

motion for reargument makes it plain that the bulk of defen-

dant’s presentation on review was devoted to the proposition

that plaintiffs had not shown that the patented process

resulted in a cold-formed piece easier to clean that would

have resulted under the pre-patent German process.

70a

Were I writing on a clean slate I might (or might not) reach

the same conclusion as did Judge Wright. But I am not. The

Third Circuit has adjudicated (as I have found) that the prior

trial BL 246 and BL 235 processes infringe. By so finding, it

can only have intended to compare the success of the routine

(“simple and easy”) commercial cleaning steps used in the

prior GM trial practices with the “difficult cleaning problem”

postulated as the principal vice of the German process. It is

that comparison which the Court found was “(t]he relevant

comparison” (467 F.2d at 261).

To go at it a different way, defendant argued long and

hard to the Third Circuit that Judge Wright was correct in

holding that the prior trial practices (the BL 235 and BL 246

processes) produced the same water insoluble zinc stearate

formed in the German process. (E.g., Defendant's Brief to the

Third Circuit, pp. 30-32). The Court of Appeals found it un-

neccessary to assay the chemical correctness of defendant's

contention. Rather it emphasized that the accused practices

accomplished the needed cleaning job with no problem,

which I take to mean in a routine, commercial way. If it is

assumed that the German process could not be cleaned except

with extraordinary effort, the logic of this approach is self-

evident.

But logical or not, the zinc stearate battle fought before

Judge Wright and in the Third Circuit is now over. The

special master’s marching orders are to find as infringing

those practices which (in addition to the other patent re-

quirements) have the same routine, commercial cleanability

characteristics as the prior trial practices. And that is the ap-

proach which will be followed.

7la

3. Itis the Law of the Case that Lubricity Suffi-

cient to Achieve Effective Production Satis-

fies the “Satisfactory Lubricity” Require-

ment of the Patent

In addition to routine, commercial cleanability, the deci-

sions touching the patent require that the user achieve

“satisfactory lubricity” (e.g., 467 F.2d at 261).

At the trial of this cause the parties devoted a very large

amount of energy toward laboratory proofs of the effect of

borax and other inorganic substances on lubricity. Plaintiffs

offered as an expert Professor Ernest Rabinowicz, of the

Massachusetts Institute of Technology, toward the point that

in pin-on-metal tests the addition of borax and equivalents

tended to reduce the coefficient of friction of the steel to

which it was applied. Defendant supplied Professor Kenneth

Ludema, of the University of Michigan, whose laboratory

tests, using a somewhat different pin-on metal device,

generated results diverging by a large degree from those

reached by Dr. Rabinowicz.

Predictably, each side probes the tests of the other in an ef-

fort to expose the errors which led to what it sees as mistaken

conclusions. Plaintiffs assail the alleged inexperience of

defendant's personnel in preparing test samples, Dr.

Ludema'’s supposed failure to have checked his results for in-

ternal consistency or drift, the manner in which the cantilever

was attached to the Ludema machine, the manner in which

Ludema accounted for the stick-slip phenomenon, and out-

oi-control results statistically arguable as to some of Dr.

Ludema's tests. For its part, defendant attacks the

Rabinowicz friction machine, the top limit of 252°C. reached

by plaintiffs’ tests, the many allegedly subjective adjustments

Dr. Rabinowicz felt himself obliged to make to his test results,

the supposed lack of repeatability of the Rabinowicz results,

72a

the fact that the Rabinowicz tests were made with

foreknowledge of what was being tested rather than in the

blind, etc.

While the record does permit a decision on the question of

which set of lubricants was more slippery in the pin-on-metal

tests, in the context of the controversies here that is an un-

necessary exercise.* For if arguments among chemists were

thought by the Court of Appeals to be unimportant in the

cleanability context (467 F.2d at 261), they are of even less use

in resolving the issue of whether the accused practices achieve

satisfactory lubricity.

Judge Wright found from the record as a whole in the prior

infringement trial that “ ... defendant's processes are effec-

tive, beneficial and an improvement over earlier solutions to

their lubricating problems .. .” (316 F.Supp. at 1378). The

Court of Appeals observed that the record supported (“pro-

perly found”) this conclusion (467 F.2d at 260).

The central inquiry here is not which expert in the antisep-

tic environment of a laboratory would be most likely to ac-

curately predict whether a particular lubricant will or will not

achieve satisfactory lubricity. Lubrication tests in a

* In other phases of the case findings are made although not strictly

necessary to the conclusion reached so as to try to make a record which

will avoid the need for remand if there is found to be error in any par-

ticular. In the matter of the lubricity tests | should say that I am not in

doubt as to which of the two experts, by reason of experience and the

reasoning underlying his views, | would trust were I to embark on a com-

mercial venture in which laboratory information as to the slipperiness of

metal variously coated. But although a choice could be made between

the experts as to which set of tests to credit, it is clear that each was sin-

cere and forthcoming. and believed in the reliability of his experiments.

Under such circumstances it seems to me a gratuitously hurtful exercise

to resolve what I have concluded to be an immaterial controversy.

73a

laboratory are at best an imperfect barometer of what pro

duction experience is likely to show. It is how the lubricant

works in the production process that is the true test.* I find

that borax-containing lubricants would not have been used in

actual production if defendant did not believe they worked

satisfactorily.

Respecting this conclusion, defendant's references to in-

stances in which borax-containing lubricants did not work are

of interest:

“Pontiac tried Pennsalt Drawcote 1044 on its pro-

duction equipment. Tr 5018 (Herrmann); Def. Ex.

A-28-2. This lubricant contained 74 percent borax

and 25 percent sodium tallow soap. Def. Ex. A-25,

Pennsalt tab, p. 3. The work so lubricated was

broken in the test, and Pontiac did not use such

lubricant in production. Def. Proposed Finding Tr

D-5.

“A decade later, Pontiac had trouble with Great

Lakes Steel lubricated by Production Finishing with

* At oral argument, defendant's counsel stated: “As I read the Court of

Appeals decision at least, it seems to me that the Court is saying that if

you use it and don’t have troubles, that is satisfactory lubricity.” (Tr., p.

68 of oral argument held November 14, 1979.)

Plaintiffs put it most succinctly in their brief to the Third Circuit:

“The practical man in the shop doesn't care about theories, he looks to

results.” (DX A-22, Third Cir. Br., p. 19.) Defendant, after making its

criticisms of the Rabinowicz tests, made the point“ .. . that none of the

laboratory tests can do more than confirm production experience and

provide some indication of why production observations occurred.”

(Defendant's Comments on Plaintiffs’ Proposed Fact Findings 75-110. p.

28.) Both sides appear to agree that coefficient of friction, which was all

the laboratory tests were designed to measure, is not necessarily control-

ling in lubrication selection (Wojtowicz, Tr. Wee Herrmann, Tr.

5018).

74a

Bruko D-122 (PF888), then 50 percent borax, 45

percent sodium tallow soap. Def. Ex. A-25, Bruce

tab, pp. 2-3. The cure, as Pontiac found out, was to

get rid of the borax, which was done. The resultant

Bruko 27 soap-only lubricant worked fine and is still

in use. Tr 6108-17 (Kopchick); Def. Proposed Find-

ing No. D-4; Def. Ex. A-25, Bruce tab, pp. 1-2."

(Defendant's Comment on Piaintiffs’ Proposed Fact

Findings 75-110, p. 3.)

From this defendant urges that the inference be drawn that

borax in practice was an inferior lubricant. But the truth that

emerges from defendant's example is not that borax in a

lubricant made it universally less satisfactory. Rather it is that

borax in a lubricant on occasion was unsatisfactory. The

evidence shows that where borax-based lubricants were un-

satisfactory, they were replaced. The correlative truth must

be that where borax-containing lubricants were retained, or

were substituted for lubricants not containing borax, it was

because they did the job better. That is the inference toward

which the evidence propels me.

Accordingly, I find that it is the law of the case that borax-

based lubricants selected for and used in actual production

met the “satisfactory lubricity” requirement of the patent and

the Circuit Court decisions construing it.

B. Accused Practices Held to be Infringing

1. Accused Practices Which Must Be Held to

Infringe as the Result of the Law of the Case

(Bumper-Accused Practices 4, 5, 12, 13, 36,

48, 49, and 51; Non-Bumper-Accused Prac-

tices 7, 9, 16, 17, 22, 25 (in part), 26, 27, 28,

30, 31, 37, 38, 42, 47, 54, and 56)

th Pow,

75a

Those practices which respond literally to Claim 4 and

“achieve easy cleanability in conjunction with satisfactory

lubricity” (467 F.2d at 261) comparable to the prior trial

practices, must be held to infringe. On this basis I find as in-

fringing, in addition to the already adjudicated prior trial

bumper practice, the following bumper practices:

Accused Practices

4 and 5

Accused Practices

12 and 18

Accused Practice 36

Accused Practices

48, 49, and 51

Cadillac's use of BL 246, 247,

247A or 249 (all soap and borax)

during the 1959 and 1962 model

years and thereafter (APTO,

CAD:1)

Chevrolet Livonia's use of Kearns

3833 and Pennwalt 1047 (both

soap and borax) during the period

1958-1965 (APTO, CL:1)

Fisher Body's use of Bruko D-122,

Kearns DF-4800, or Pennwalt

Drawcote 1044 (all soap and bo-

rax) from 1957-1960 (APTO,

‘FBC:1)

Pontiac's use of BL 246 (the prior

trial lubricant but for bumper

parts) from 1955-1959, and BL

PTD 1239A and BL 249A (soap

and borax) from late 1958-1963

(APTO, P:2)

Without trying to describe them because they are nu-

merous, varied and fully detailed in the pretrial order, I find

that the following practices for the cold-forming of non-

bumper parts are literally within the Henricks claim, and

76a

produce the same combination of lubricity and cleanability

characteristic of the prior trial BL 235 valve lifter and rocket

practices: Accused Practice 7, APTO, CBC:1; Accused Prac-

tice 9, APTO, CD:1, Accused Practice 16, APTO, CP:1;

Accused Practice 17, APTO, CP:1;* Accused Practice 22,

APTO, DE:1; Accused Practice 25 (in part,** APTO, DP:1;

Accused Practice 26, APTO, DR:1; Accused Practice 27,

APTO, DR:1; Accused Practice 28, APTO, DR:1; Accused

Practice 30, APTO, DR:2; Accused Practice 31, APTO,

DR:2; Accused Practice 37, APTO, ID:1; Accused Practice

38, APTO, ID:1; Accused Practice 42, APTO, 0:1; Accused

Practice 47, APTO, P:1; Accused Practice 54, APTO.

SSG:1; Accused Practice 56, APTO, SSG:1.

2. TKPP isa Borax Equivalent, and the Use of

it by Defendant as a Borax Substitute in

Bumper Making Infringes (Accused prac-

tices 6, 14, 50, 52, and 53). TSP is also a

Borax Equivalent.

(a) TKPP :

By way of background, prior to the original infringement

trial defendant moved to amend its complaint, which

* Accused Practice 17 is included in a distinctive grouping by plaintiffs

because molybdenum disulfide was a part of the lubricating process,

although it is not claimed that use of that substance read on the patent. I

should note that, while convenient for some purposes, the view I take of

the infringement issues has been such as to make it inconvenient, and

sometimes confusing, to follow plaintiffs’ groupings. Hence I have at-

tended upon their suggested categorizations in the reaching of the

various decisions in this report, but do not separately advert to them in

the writing of it.

** Accused Practice 25 involved the production of piston rods, studs

and rings. For the reasons set forth at pages - , infra, the portion of

the practice devoted to the production of piston rods has been held to be

non-infringing. See particularly first footnote on page

77a

theretofore accused only borax-containing lubricants, to in-

clude non-borax equivalents. The amendment was allowed

by Judge Wright, Devex Corporation v. General Motors Cor-

poration, 285 F. Supp. 109 (D. Del. 1968), and a new com-

plaint charging infringement by the use of borax substitutes

was filed. See amended complaint, Princ. Doc., Tab 8d, 46.

The five accused bumper-making practices now to be con-

sidered involve the use of tetrapotassium pyrophosphate

(TKPP) in the soap-basea coating. In addition to the defenses

common to all charges (no proof of better lubricity,

cleanability, etc.), General Motors defends against the

“TKPP" charges with the contention that there is no infringe-

ment because the melting point of TKPP is, contrary to the

requirement of Claim 4, not “ . .. below the melting point of

the ferrous metal phosphate of said [the lubricant] coating.”

I view the question of whether the use of TKPP infringes to

be of substantial importance. TKPP came to be used in

bumper production, where I believe the Henricks invention

had its major utility. It was introduced after the patent was

held valid, in an attempt to avoid infringement by adding to

the then used soap composition an inorganic substitute for the

borax it previously contained.

The pattern is clear.

Accused Practice 6 came to be used at Cadillac in 1964 and

afterwards and involved the use of Bonderlube 201 or 202

(25% TKPP) over phosphate. It was the successor to Infring-

ing Practice 5 which involved Bonderlube 247 and 247A

(46-50% borax), or Bonderlube 249 (30% borax) (APTO,

CAD:1-5).

Accused Practice 14 substituted Bonderlube 200 or 200A

(20-25% TKPP) for the Kearns 3833 (45% borax) in Infring-

ing Practice 12 at Chevrolet Livonia. The change came in

early 1965 (APTO, CL:1-9).

78a

Accused Practices 50, 52 and 53 used Bonderlube 200,

200A, 201, or 202 for bumper making at Pontiac and were

the successors to a series of practices beginning with the prior

trial bumper practice and ending with Infringing Practice 51

which had used Bonderlube 249A (30% borax). The TKPP

use at Pontiac began with Accused Practice 52 about

September 1963 (APTO, P:1-3, 6-17).

There is no evidence that TKPP was used for any purpose

other than as an integral part of the soap lubricant applica-

tion. TKPP was put in as a borax substitute, to help the soap

do the job of efficiently lubricating the workpiece. That is

why the question of whether substitution of TKPP for borax

avoids infringement in the five accused processes under con-

sideration is of more than passing significance. If the use of

soap with TKPP were held not to infringe, defendant would

not only have defeated the attempt to charge the five accused

TKPP processes. It would have established that, at least by

late 1963, another non-infringing alternative was available in

the bumper area. On the other hand, if the use of TKPP as a

borax equivalent infringes, it will be deducible that defen-

dant could not readily avoid the patent's clairns despite its

recognition of their validity and its effort to find a non-

infringing alternative.

It may be thought the question of whether TKPP in defen-

dant’s use was meltable at below the melting point of the fer-

rous metal phosphate of the coating is susceptible of a quick,

easy answer to a scientific certainty. It has not proved to be so.

Like the lawyers for both sides who have asked them the ques-

’ tions, the well-credentialed scientists called by the parties

have differed on the melting point question.

For its part defendant points out that the handbook

melting point of “ferrous [metal] phosphate” adverted to in

the Henricks patent is 1050° C. (Princ. Doc., Tab 1, Col. 9,

Line 9 of Table 1). The handbook melting point of anhydrous

79a

TKPP is 1109° C.* Ergo, concludes defendant, TKPP is not

meltable below the melting point of the ferrous metal

phosphate, and its use does not preempt the patentee's rights.

Plaintiffs reply that despite what the handbooks:say about the

melting point of anhydrous TKPP, in practice the TKPP in

the coatings as applied by defendant would melt before the

ferrous metal phosphate.

I think plaintiffs have the better of the argument.

The patent does not speak of the melting point of ferrous

metal phosphate in a crucible. Claim 4 adverts to “the ferrous

metal phosphate of said coating.” Jn situ that would be close

* While anhydrous TKPP’s melting point is 1109° C. (Van Wazer, Tr.

4680-4681), hydrated TKPP has a handbook melting point of 180° C.

(Othmer, Tr. 766-768; DX A-20, p. 256). A distinguished expert witness

for plaintiff testified that the aqueous character of the coating recipe for

the application of the TKPP would cause it to become hydrated

(Othmer, Tr. 868, 869, 873-876). On the other side an expert witness for

defendant testified based on x-ray patterns that, despite the seeming

logic of the view of plaintiffs’ expert, in fact the TKPP in defendant's

coatings was not hydrated (Van Wazer, Tr. 4657-4670: DX A-24-4).

Plaintiffs counter that x-ray tests detect crystal structures (Van Wazer,

Tr. 4751-4752), but would be ineffective respecting the coatings here

since, plaintiffs say, they are amorphous (Friedberg, App. 4,

1637-1638). Indication of loss of water vapor at relatively low

temperatures in thermo-metric tests (DX A-31, p. 8; see also Van Wazer,

Tr. 4657-4670), tends to support plaintiffs. If the TKPP in the coating

were hydrated, the waters of hydration (or crystallization) would migrate

from the chemical at 180° C. (Gthmer, Tr. 766-768). Plaintiffs argue

that the melting point of the hydrated compound is the melting point of

the TKPP within the meaning of the patent. Its expert supported this

point of view (Othmer, Tr. 737-745), and so does the chemical hand-

book (DX A-20. p. 256). Whether the TKPP as applied was hydrated,

and whether the temperature level at which it would lose its waters of

hydration is its melting point, are questions I need not decide since. in

the view I take of it, plaintiffs must prevail even if the TKPP as applied

were anhydrous.

80a

to the melting point of the steel coated by the phosphate

(Othmer, Tr. 747, 793-812, 825-828; PX A-73a), or in the

area of 1525° C. (Friedberg, Tr. 2849-2964); PX A-74). It

follows from this that the TKPP in the coating, even if

anhydrous, would be meltable at a temperature below the fer-

rous metal phosphate of the coating (1109° C. vs. close to

1525° C.).

Experimentally, at the infringement trial plaintiffs’ expert,

Mr. Friedberg, had taken a blank which had been coated

with Bonderite 181X and Bonderlube 246 (15% borax) and

placed it in a furnace. The temperature in the furnace was

raised to 1000° C. He removed the blank from the furnace

and found that all of the soap and borax had disappeared but

the phosphate coating was still intact. From that test, Mr.

Friedberg concluded that the borax melted before any

melting of the phosphate including the zinc phosphate and

the ferrous phosphate of the coating (Friedberg, App., Vol.

4,* 1572-1575; PX-79).

A similar experiment was run by Friedberg for TKPP at the

accounting trial. Mr. Friedberg formed a phosphate coating

on a steel panel with Bonderite 114X and coated it with

Bonderlube 202, which was used in certain of the accused

practices and contains 24.8 percent TKPP. He placed the

panel on top of an aluminum plate provided with a ther-

mocouple and placed the aluminum plate on an electric hot

plate. He heated the assembly up to 382°C. At 93° C., the

lubricant coating was liquid and boiling. It turned brown at

149° C. At 288°C. it was a darker brown and at 382° C. it was

sort of bluish (Friedberg, Tr. 536-537, 545-546, 555-558, 562;

PX A-61b-1). From the liquification of the lubricant mix at

that temperature, Mr. Friedberg concluded that the TKPP in

* Refers to volume of appendix filed in the appeal to the Third Circuit.

8la

this system was completely meltable at 93° C. (200° F.). This

result is the same as the result which he had obtained for the

borax-containing lubricant that he tested for the infringe-

ment trial (Friedberg, Tr. 558, 562). Borax concededly fits

the patent’s melting point requirement.

Mr. Friedberg explained that when one mixes a first

chemical compound with a second chemical compound, or

with several compounds, the melting point of the pure

material is changed. The mixture has a new melting point

(Friedberg, Tr. 696-697). This is. consistent with the

testimony of defendant's expert witness, Dr. Van Wazer, who

explained mixtures using a chart of a TKPP and phosphorus

pentoxide mixture (DX A-24, Tab b). The melting point of

pure TKPP was given as 1109°C., but the melting point of the

mixture was lowered as various amounts of phosphorus pen-

toxide were added (Van Wazer, Tr. 4723-4725A).

I find plaintiffs’ explanations persuasive. Further, I note

that defendant did not introduce any evidence, apart from its

handbook melting points of pure anhydrous TKPP and fer-

rous metal phosphate, of the melting point of TKPP in the

coating itself. Nor did it offer experimental proof to show that

TKPP's “meltability” in the coating diverged materially from

the melting point of borax as both related to the melting point

of the ferrous metal phosphate.

In reaching this conclusion I have taken note that in their

case against Rockwell plaintiffs filed interrogatory answers

pegging the melting point of the ferrous metal phosphate of

the coating at 1050° C. (DX A-48, Item 14, P. 7 and DX A-2,

Item D-3, p. 4). Defendant argues that this is a wobble, and

that there has been other melting point vacillating by plain-

uffs. 1 agree, and had the issue been closer this might have

been enough to tilt the decision defendant's way. But, despite

plaintiffs’ positional trembles, it seems to me that the evidence

shows that once the ferrous metal phosphate was bonded to

82a

the workpiece its true melting point would be higher than the

1050° C. handbook melting point, and that, at the other end,

the melting point of the TKPP in mixture with soap would be

lower than the 1109° C. attributed as the melting point of the

pure anhydrous substance.

But, defendant argues, what the Seventh Circuit saw as the

“amorphous glass materials which contributed significantly to

the lubricating value of the [borax-containing] coating” (321

F.2d 237), are not shown to be duplicated in TKPP-con-

taining coating. While I agree that plaintiffs have not proved

that TKPP behaves to produce the same materials as did

borax, the Third Circuit recognized that variations were

possible, and permissible.

“Moreover, it may be that chemical reactions dif-

fered in degree, and perhaps in kind as well, in dif-

ferent applications of the Henricks process. . . . it is

not claimed that in every Henricks mix under every

temperature, chemical reaction and its products

will be identical.” (467 F.2d 261-262).

I conclude that the TKPP in Accused Practices 6, 14, 50,

52, and 53, as it existed in coating used by defendant, was

meltable at a point below the melting point of the ferrous

metal phosphate of said coating. The practices were used to

accomplish the same results as the accused and infringing

borax lubricated processes they replaced. That being so, and

since as I have found they literally read on the patent, they are

found to infringe.

(b) TSP

The use of Bonderlube 242, 242-O and 242-W, contain-

ing from 11 percent to 53 percent trisodium phosphate

(TSP) is charged by plaintiffs in Accused Practices 3, 11, 15,

and 45. The melting point controversy is about the same as

the argument about TKPP, and I resolve it the same way.

83a

Anhydrous TSP has a melting point of 1340° C. (Othmer,

Tr. 866). Waters of hydration begin to migrate from

hydrated TSP at 73.4° C., and this is its handbook melting

point (Othmer, Tr. 789-790; DX A-20, p. 275). The

Friedberg tests showed that the TSP in the coating system to

which it was experimentally applied melted at 82°C. — 93°

C., which was the same result he got for borax at the prior in-

fringement trial (Friedberg, Tr. 546-548, 562; PX A-61b-1).

Apart from its reliance on handbook references to the cruci-

ble melting point temperature of ferrous metal phosphate

and anhydrous TSP, defendant offered no evidence tending

to show that zn sttu the melting point of TSP was higher than

the melting point of the ferrous metal phosphate of the

coating. *

C. Accused Practices Held to be N on-Infringing

1. Practices as to Which Little or No Cleaning

was Required do not Infringe (Accused Prac-

tices 2, 3, 10, 11, 15, 19, 20, 21, 25 (in part),

33, 34, 35, 39, 40, 41, 44, and 45)

It has emerged as a central truth that, in general, high con-

tent (15% or more) borax or equivalent lubricants are used in

* While for completeness the literal sufficiency of TSP as an inorganic

substance with a melting point within the patent's claims is here found,

for reasons later explained none of the accused practices employing TSP

are found to infringe. This is because where TSP is part of the lubricant

(Accused Practices 3, 11, 15. and 45) cleanability is not shown (pp.

39-43, infra). And where as part of a rinse (Accused Practice 29), it is not

shown to contribute to lubricity or cleanability (pp. 44-51, enfra).

84a

bumper making with relatively light phosphate coatings, and

low borax content (less than 15%) lubricants are used on

heavy phosphate coatings in other manufactures.

In bumpers impeccable cleaning is required to allow for

unblemished plating. In processes where there is no plating,

the cleaning step is less important. The prior trial BL 246

bumper process exemplifies the careful cleaning needed for

bumper making (316 F. Supp. 1380-1382). The prior trial

rocket and valve lifter practices (Jd., at 1382-1389) illustrate

the much less rigorous cleaning required in many of the ac-

cused practices. As I have held, to give effect to the Third Cir-

cuit decision, accused practices in both categories must be

held to infringe.

But there are a number of practices accused by plaintiffs

which, unlike the prior trial practices, require either no clean-

ing or so little in the way of cleaning as to be insubstantial. In

such cases, cleaning as such is simply not a part of the process.

As to these, defendant argues that ease of cleaning is an ele-

ment vital to the life of the patent, and that there can be no

infringement without using that advantage.

I think defendant is correct. There can be little doubt that

if the patent validity battle before the Seventh Circuit had

been fought on ground involving processes requiring little or

no cleaning, the patent would have been invalidated. What

was found to be the happy confluence of cleanability and

lubricity saved the patent from a literal construction which

“ __ would monopolize the whole broad field of metal form-

ing with any use of a dry soap and borax over phosphate at

any temperature or pressure, regardless of the results” (382

F.2d at 23). The monopoly the Seventh Circuit sought to nar-

row would be broadly conferred were the patent extended to

include uses of soap and borax resulting in improved lubricity

85a

only. To say it another way, construing the patent to apply to

all borax-content coating achieving satisfactory lubricity,

regardless of whether ease of cleanability was utilized (or in-

deed achieved),* would be to allow plaintiffs to “monopolize

_ the whole broad field of metal forming” in a way that was

never intended.

For their part plaintiffs rely on the proposition that a user

of the substance of a patented invention will not avoid in-

fringement by failing to utilize all the benefits of the inven-

tion. While that is certainly the law, Hobbs v. Beach, 180

U.S. 383 (1901); Balaban v. Polyfoto Corp., 47 F.Supp. 472,

480 (D. Del. 1942), that proposition does not fit the facts here.

In the matter at bar, but for ease of cleaning, plaintiffs would

have no invention. This is not the case of a substitute

mechanism capturing the germ of the patented machine but

performing less than all of its functions. See, e.g., Hobbs v.

Beach, supra at 401. Here there would be no patent if only

satisfactory lubricity was the result. The invention is not soap

and borax over phosphate. It is soap and borax over phos-

phate producing the practical result of satisfactory lubricity

and cleanability.

Applying the finding that processes which involve little or

no cleaning do not infringe to the accused practices here, I

find as non-infringing Accused Practices 2, 15, 19, 20, 25 (in

* Whether those parts not actually cleaned could have been cleaned in

an easy commercial way is an open question. While plaintiffs offered

laboratory proof on the subject (Friedberg, Tr. 482-522), to accept those

proofs in place of actual production experience would be a departure

from the course followed in adjudicating lubricity.

86a

part,* 33-35,**, 39,*** 40, and 41, all of which require no

chemical cleaning (APTO, BM:5, CP:12, CT:5, DP:9-10,

FBC:1, 14-15, ID:10-11, NDH:4, 6).

I further find as non-infringing Accused Practices 3, 10,

11, 21, 44, and 45, which are heat-treated with the result that

any surface detritus would be removed, including even the

residue which it has been postulated would have been ieft had

the German process been employed (APTO, BM:6-8,

CDF:'-6, CTF:1-5, 0:27-31).****

A separate word should be said about the accused practices

involving TSP in the lubricant.

Although TSP has been found to qualify as an inorganic

substance falling literally within Claim 4 (pp. 37-38, supra),

its contribution to the cleanability claimed by the patent is

nil. TSP-containing Bonderlube 242-O was used to make axle -

shafts at Buick (Accused Practice $), and Oldsmobile (Accus-

* The portion of Accused Practice 25 involving the production of one-

inch piston rods required no cleaning (APTO, DP:9-10).

** Accused Practices 33, 34, and 35 involved cold heading window

regulator bearing studs and door lock striker pins, with oil being applied

along the line. The only cleaning done was by a vapor degreasing step,

with the door lock striker pins produced by Accused Practices $3 and 35

also requiring heat treating (APTO, FBC:1, FBC:14-15). Compare Ac-

cused Practice $2, which involved the application of oil during cold

forming, and therefore required degreasing, but which also utilized

prior trial cleaning steps (APTO,DE:6).

*** The accounting pretrial order is silent as to cleaning for Accused

Practice 39 (APTO, ID:10-11). Cleanability has not been proved.

**** In this same category is the production of Oldsmobile pin gears for

the 1961 model year. While not given an accused practice number, these

were made by a process which would appear to infringe if cleanability

were proved (APTO, 0:34-37, especially { 21).

87a

ed Practice 45), and rear wheel spindles at Chevrolet Detroit

Forge (Accused Practice 11) (APTO, BM:6-8, CTF:1-5,

O0:27-31). Bonderlube 242-W was used to make transmission

main shafts at Chevrolet Munsie (Accused Practice 15) (AP-

TO, CM:1-3). None of these practices was of the sort which,

like the prior trial valve lifter or rocket practices, required

cleaning, much less the careful pre-plating cleaning needed

for the prior trial Pontiac bumper practices.

The use of TSP to achieve lubricity only is instructive.

Although literally reading on the patent, as I have found it

does, to accord its use a patent monopoly would be to extend

the ambit of the patent beyond those uses in which the need

for commercial cleanability combines with satisfactory

lubricity to create the unexpected advantage the Courts of

Appeals have required. This contrasts with the use of TKPP

as a borax substitute in bumper making, which I have held

does infringe because such practices did require, and did -

achieve, commercial cleanability.

2. Practices in Which Borax Rinses were Used

as Neutralizers do not Infringe (Accused

Practices 1, 2, 8, 18, 20, 23, 24 32, 34, 35, 39,

43, 55, 57, and 58).*

Plaintiffs charge as infringing a number of processes where

borax was used in the rinse to which the metal blank was sub-

jected after phosphating but before the application of the

soapy lubricant. These practices, all differing from the prior

* It should be noted that of these accused practices five have been held

in the preceding non-infringing because not cleaned (Accused Practices

2, 20, 34, 35, and $9), and two will also be held non-infringing at pages

53-56 hereafter on factual grounds (Accused Practice | in part, and Ac-

cused Practice 8).

88a

trial practices where the borax was an integral part of the

lubricant, are as follows:

Accused Practice 1. Bonderlube 265 (soap only)

following a Parcolene 21 borax-containing rinse

(APTO, ACSP:1-2).

Accused Practices 2, 8, 18, 20, 23, 24, 32, 34, 35,

$9, 55, 57, and 58. Bonderlube 234 (soap only)

following Parcolene 21 or Stancote L borax-

containing rinses (APTO, BM:1, CBC:1, CP:1,

CT:1, DM:1, 5-7, DE:1, FBC:1, ID:1, SSG:1-5).

Accused Practice 43. The Oldsmobile usage of J&L

Steel in the period from January 1962 through

model year 1963, where MA88 borax-containing

rinse was allegedly used (APTO, O:1).

Plaintiffs argue that the use of a borax (or equivalent) rinse

infringes since it causes borax to be deposited on the

workpiece to be combined with the then-applied soap film

atop the phosphate on the workpiece. Splitting one step of a

process into two does not avoid infringement where the com-

bined steps and the original process are substantially identical

or equivalent in terms of function, manner and result.

Matherson-Selig Co. v. Carl Gorr Color Card Inc., 301

F.Supp. 336, 349 (N.D. Ill. 1967). Thus, plaintiffs say, the

purpose and effect of a borax-containing rinse is the same as if

borax were already combined in the soap.

Plaintiffs begin with the submission that borax-containing

rinse deposits borax on the workpiece (Othmer, Tr. 763-764;

Rabinowicz, Tr. 117-175; PX A-2i). While they offered no

credible quantitative proof as to amount of borax from the

rinse likely retained in the coating after the lubricant bath, I

am inclined to credit the testimony that at least some borax

stayed on the workpiece. Plaintiffs also point to Dr.

89a

Rabinowicz’ laboratory tests which they Say prove that borax

and TSP dipped workpieces are more slippery in pin-on-

metal tests than phosphate and soap coated blanks without

intermediate borax or TSP rinses (Rabinowicz, Tr. 117-178,

PX A-16; Rabinowicz, Tr. 208, PX A-25).

Again I need not resolve the conflict between Dr.

Rabinowicz’ tests and the varying laboratory results reached

by defendant's expert, Dr. Ludema. For, as the Third Circuit

found production experience superior to chemical disputa-

tion as to how the result occurred, so I, in applying the law of

the case, have decided to give controlling weight to in-

production lubricity and cleanability, rather than differing

laboratory predictions as to how particular lubricants might

be expected to behave on the cold-forming line. Applying the

same reasoning here, I find Accused Practices 1, 2, 8, 18, 20,

25, 24, 32, 34, 35, 39, 48, 55, 57, and 58 to be non-infringing.

Here is why.

(a) Put negatively, there was not a shred of evidence that

borax (or equivalent) rinses were employed for the purpose of

enhancing either the lubricity of the workpiece, or its post-

formation cleanabilty.

(b) The record as a whole demonstrates that the only pur-

pose of the borax in the accused rinse processes was to

neutralize acid carryover from the phosphate bath. The acid

liquid from the phosphate bath tends to remain on the work

and be carried over into the lubricant bath. The action of the

soap in the lubricant, as well as the life of the soap bach, is

adversely affected by such carryover (Gibson, Tr. 1727-1! 730).

“Rinsing techniques are quite necessary” (Henricks, Tr,

$721), since they neutralize the acid phosphate carried on the

work before the work reaches the soap bath (France, Tr.

7387-7368). This could be done by a vigorous water rinse

(Wojtowicz, Tr. 5738-5739).

90a

It can also be done by adding sodium hydroxide to the soap

bath from time to time so as to restore the pH of the soap bath

(Gibson, Tr. 1729-1731).

A chemical neutralizing rinse is another way to overcome

this problem (Henricks, Tr. 3721-3722). The chemical

neutralizer undergoes chemical reaction with the acid

phosphate ..arryover on the work and brings the pH or acidity

to a value similar to that of the soap bath, so that the lubri-

cant is not adversely affected by the carryover. This purpose

and action of neutralizer rinses is described in Parker

(Hooker) technica! papers and customer literature, as well as

in such literature of Amchem and other suppliers (e.g., DX

A-25, Parker tab hand pages 131-148; Pennwalt tab, page en-

titled “Fosrinse R-1”), and was the subject of testimony by

Messrs. Wojtowicz of Montgomery and Gehman of Amchem

(Gehman, Tr. 3990-3996; Wojtowicz, Tr. 5738-5739). Town-

send of Delco Remy likewise so testified (Townsend, Tr.

3878). This record testimony stands uncontradicted.

recognized by Henricks himself in Example XXXV of his

1950 patent application which discusses a cold-forming proc-

ess using zinc phosphate followed by a borax-containing rinse

(PX 3, p. 63). In the words of the example, after a zinc

phosphate coating the work “ ... was given first a cold run-

ning water rinse followed by a hot borax rinse of 14% to 2

ounces per gallon of borax to neutralize any actd residue.”

(Italics added. Jbid.) Henricks cancelled that example when

the patent examiner required that the specification be

shortened and limited to “such parts of it as are commen-

surate with claims that applicant will continue to prosecute”

(PX 3 at pp. 63, 106.) :

This disclaimer of Example XX XV as outside of the claims

was entirely consistent with the Henricks testimony that

9la

neutralizing rinses were old and well known, and not his in-

vention.

(d) Henricks’ understanding of the use of borax as a

neutralizer in withdrawn Example XXXV was not the pro-

duct of a flash insight. The use of neutralizing rinses, in-

cluding both borax and trisodium phosphate to overcome the

acid entrained on zinc phosphate rust-proofed treated work is

disclosed in U.S. Patent 2,120,212 (1938) (DX A-54).

Whether this, and other contended-for examples of prior art

are sufficient to avoid the extension of the patent to rinses is a

question of law with which I need not grapple, since it is ob-

vious that Henricks did not invent borax as a neutralizing

rinse, and did not claim to.

(e) The evidence is uniform to the point that defendant

thought it was using borax rinses to neutralize acidity, and not

to get added lubricity or cleanability. There are also good in-

dications that defendant did not in fact achieve better lubrici-

ty or cleanability from the use of burax rinses.

For example, Accused Practice 1 involved a heavy phos-

phate coating (Bonderite 181 X) with a soap (BL 265) coating

preceded by a borax (Parcolene 21) rinse. The practice ran

from 1959 to 1963. In 1968 defendant adopted Non-Accused

Practice A in which the berax neutralizing rinse was replaced

with a non-borax neutralizing rinse (APTO, ACSP:1-6).*

The non-accused practice continued from 1968 until the ex-

piration of the patent in 1969. Since there was no different

cleaning employed, it is inferable that the presence of absence

of borax in the rinse did not affect cleanability.

The same pattern appears with equal sharpness in the pro-

duction of universal joint bearing races and propeller shaft

ends at Chevrolet Parma. From 1957 to May 1963 a borax

* For finding as to changeover, see pages 54-55, infra.

92a

rinse was used after phosphating and then a highly boraxed

soap lubricant added (Accused Practice 17). From May 1963

to May 1964 the borax was taken from the lubricant but the

borax rinse retained (Accused Practice 18) (APTO, CP:1-9).

From May of 1964 onward the borax rinse was abandoned in

favor of a non-borax neutralizer (Non-Accused Practices K

and L) (APTO, CP:1). Neither the alleged lubricity nor

cleanability features of Henricks’ Claim 4 appear to have been

missed.

(f) The prior trial practice by Diesel Equipment Division of

making hydraulic valve lift plungers involved, it will be re-

membered, BL 235 which contained 3 percent borax and 2

per cent sodium nitrate. The prior trial Pontiac rocket prac-

tice involved the same lubricant. These were held to be non-

infringing by Judg> Wright and, for reasons previously ex-

pressed, must now be regarded as infringing as a result of the

Third Circuit's reversal. But both prior trial practices also in-

volved borax rinses (Parcolene 21 and 20, respectively)

(APTO, DE:1; P:1). As best as I can tell plaintiffs did not

urge this circumstance as an additional argument in favor ot

infringement, although such an argument might have been

expected had plaintiffs believed the function of the rinse was

to deposit more borax on the workpiece. The two referred-to

prior trial practices (borax rinse plus borax lubricant) were

not unique. See, e.g., Accused Practices 17, 40, 41, 47, 48,

49, and 56.

(g) If, as plaintiffs now suggest, accused rinse processes

had an effect of enhancing lubricity and cleanability by

dispensing more borax on the part being cold-formed, the

direct way to have accomplished that result would have been

to include a higher quantity of borax in the already borax-

containing lubricant. If borax in the rinse were supposed to

serve the same purpose as borax in the lubricant, the purpose

could be accomplished more easily (and probably more

93a

cheaply) without the rinse. The logic that the borax in the

rinse was aimed to do something other than what was ac-

complished by the borax in the lubricant seerns inescapable,

and entirely compatible with the rinse-as-a-neutralizer

testimony.

Accordingly, the practices in which borax was used as a

neutralizer in the rinse, are not infringing.

3. Practice in which a Trisodium Phosphate

Rinse was Used as a Neutralizer does not In-

fringe (Accused Practice 29)

Trisodium phosphate (TSP), found to be an equivalent in-

organic substance fitting within Claim 4,* was used in a

neutralizing rinse as part of Accused Practice 29. In that

practice numerous products were cold-formed at defendant's

Delco Remy division through the use of a trisodium phos-

phate rinse as an intermediate step after the metal was

phosphate coated and before the application of Montgomery

DF 1101 soap (APTO, DR:1-2).

The same reasoning for finding non-infringement of the

borax neutralizing rinses applies with equal force to the TSP

rinse in Accused Practice 29. Indeed, the function of the rinse

step as neutralizing the acidity of the phosphate undercoat

rather than as enhancing lubricity or cleanabilty is shown by

the shifting in and out of this practice to non-accused rinse

techniques. For example, the DC generator frame was one of

the parts made by Accused Practice 29. The frame was made

with the help of a TSP neutralizing rinse from November

1954 to August 1957. Both before TSP was used (1951-1954)

(APTO, DR:7) and later (after 1957), a water immersion was

* See pages 37-38, infra.

94a

substituted (Jd. ). The water immersion is Non-Accused Prac-

tice Y (APTO, DR:3, 12). The use of an intermediate water

rinse bracketed the use of TSP. The only purpose TSP could

have served was to avoid the pH problem in the soap bath.

Accused Practice 29 supports the conclusion that the

neutralizing rinses were not in design or result related to

lubricity or cleanability.

4. Practices Determined not to Involve the Use

- of Borax (or Equivalents) do not Infringe -

(Accused Practices 1, 8, and 46).

Considering the many years which have elapsed, the parties

have done a remarkable job in retrieving information respect-

ing the accused processes. The result was the formulation of

Appendix II to the Accounting Pretrial Order, containing

agreements as to the operation of the accused practices, their

duration, the materials used, parts produced, etc. The

assemblage of these materials saved weeks of additional testi-

mony and eliminated large areas of potential controversy. *

While the vast bulk of the processes were described by

agreement, a few disputes remain. Although they involve

* In their post-trial brief plaintiffs charge defendant with various acts of

bad faith, including assaults on its trial tactics. These are generally con-

sidered as part of the discussion of multiple damages at pages 66-70, im-

fra. In a specific way, however, I will here note that defendant merits a

major share of the credit for the formulation of Appendix II of the

pretrial order. Its counsel could have used their client’s economic muscle

to try to uncompromisingly put plaintiffs to their proof in every detail,

thus prolonging the case, and maximizing plaintiffs’ burden. Instead

defendant was flexible, cooperative and forthcoming. Its willingness to

pull the laboring oar in the formulation of the pretrial order was in this

spirit.

95a

almost entirely the question of whether borax rinses were

used, and such has been held in the preceding section to be

non-infringing, in the interest of completeness the disputes

will now be resolved.

(a) Accused Practice 1 (After 1963)

Accused Practice 1 charges the use by defendants begin-

ning in 1959 at its AC Spark Plug Division of a Parcolene 21

borax rinse to help cold form spark plug shells and shields

(APTO, ACSP:1). The rinse was applied by Braun Engi-

neering which precoated the steel. Plaintiffs contend that

Parcolene 21 rinse was continued after 1963. Defendant

argues that in 1963 Braun came to use Parcolene 24, a non-

borax rinse.

Neutralizing rinses of the sort represented by Accused

Practice 1 have already been found to be non-infringing. And

in another case it might be left at that, since that finding

moots the dispute. But here it seems right to tie up as many

potential loose ends as possible. Hence, I decide the question.

On defendant's side is direct testimony from Ross Perry,

formerly of Parker, who initiated the change at Braun from

Parcolene 21 to Parcolene 24 (Perry, Tr. 6590-6591,

6605-6618). Perry testified the change occurred in 1963

(Perry, Tr. 6630). See also, Tr. 6622-6624, DX A-27-2.

Against this plaintiffs cite an affidavit by Braun indicating

the use of a Parker “Borox” dip (PX A-267). The Braun at-

testation was based on information furnished by a then Braun

employee named Affeldt (PX A-435). Mr. Affeldt testified on

deposition that his memory at the time he made his affidavit

was that the rinse continued to be borax (PX A-436). Despite

this, relying on Parker sales summaries prepared for this

litigation (DX A-77-5; PX A-428), Braun changed its inter-

rogatory answer to eliminate the reference to a borax rinse.

96a

The original Parker records were destroyed in 1976. Although

there is evidence that the destruction was inadvertent (PX

A-428), plaintiffs argue that the circumstances are suspicious

and the destruction inexcusable.

Having considered both sides, I find that Braun ceased to

use Parcolene 21 in 1963. I do because, quite apart from the

Parker sales summaries, I give credit to Ross Perry, the

witness who so testified. *

(b) Accused Practice 8

As with Accused Practice 1, the parties are in controversy

respecting whether rinses did or did not contain borax. The

practice was employed at Chevrolet Bay City to form steering

knuckle parts and other miscellaneous parts. (Accused Prac-

tice 8 does involve one small claim of a direct borax-

containing lubricant.)* (PX A-20).

The argument about the content of the rinses again centers

on the reliability of the Parker sales summaries (DX A-77-5)

* In 1968 AC began to make its own spark plug shells. These shells were

coated identically to what I have found the post-1963 Braun process to

have been (Non-Accused Practice A, APTO, ACSP:1). It is undisputed

that Parcolene 24, not Parcolene 21 was used as the neutralizer (APTO,

ACSP:2). The change from Parcolene 21 to Parcolene 24 by Braun in

1963, and the continued use of Parcolene 24 by defendant in 1968, is

another example of the ability to shift from one neutralizing rinse to

another with no evident loss of lubricity or cleanability.

* Sixteen of the nineteen 1967-1969 invoices submitted by Youngstown

Sheet and Tube describe the coating Lansing applied as “zinc phosphate

coat with Bonderite 181X, neutralize with Parcolene 2! and lubricate

with Bonderlube 235 (5 minute min.) or equivalent”. The other three

state “zinc phosphate coat, neutralize and lubricate suitably for our

Boltmaker operation” (PX A-227E). BL 235 is one of the prior trial

borax-containing lubricants.

97a

balanced against plaintiffs’ showing that defendant's own

standard purchase orders at least arguably required a borax

neutralizer (APTO, CBC:11). Although agreeing with plain-

tiffs that the Parker summaries are somewhat tainted, there is

no reason to think they are faked. It seems to me that they are

better evidence than inferences to be drawn from purchase

order language. Hence, while the issue is close, defendant has

a little the better of it.

Accused Practice 46 charges the use by Oldsmobile of

precoated steel purchased by defendant from Jones and

Laughlin from about September 1968 through March 1969

(APTO, O:2). The question is the character of the coating.

It appears that from January 1962 through the 1963 model

year, defendant's Oldsmobile plant had gotten bumper steel

from Jones and Laughlin precoated on J&L's behalf by Preci-

sion Metal Coating Company. The coating process consisted

of phosphating the steel and lubricating it with DA 2481, a

Montgomery vegetable oil substance known as “Kold-Lube”

(DX A-51-11, pp. 8-9) and containing no inorganics. In bet-

ween the phosphating and lubricating, there was a borax

neutralizing rinse, MA-88. This is Accused Practice 43 (AP-

TO, O:13-14), which I have previously held to be non-

infringing along with the other rinses.

Beginning in September 1963 J&L began to do the

precoating itself. This is Accused Practice 46. As with Preci-

sion Products, the lubricant used by J&L was the without-

organics Kold-Lube (DX A-51-11, pp. 8-9). There is no direct

evidence that J&L thereafter used borax either in the lubri-

cant mix or as a rinse. There is weighty direct evidence to the

contrary. Witnesses Alexin, Butler, and Pomietto, each of

whom participated in and had knowledge of the J&L Sur-

faglaze coating operation, testified that no material other

98a

than the phosphate and the lubricant were introduced at any

point in the process (Alexin, Tr. 5274; Butler, Tr. 5327-5331;

Pomietto, Tr. 5340-5341, 5344-5346).

Plaintiffs’ strongest piece of evidence. to the point that

borax was used in the J&L coating comes from the testimony

of its expert Gavilovic. Dr. Gavilovic tested J&L samples run

in 1974 with the same coating technique it had used since

1963. Using electron microprobe (Gavilovic, Tr.* 953-954)

and ion microprobe (Id. at 955, 957) analytical techniques,

Dr. Gavilovic found boron in the samples (Tr. 1011-1013),

which finding is consistent with the presence of borax (/d. at

Tr. 1014-1015). Dr. Gavilovic’s finding of boron in the

samples I accept as fact. His conclusion that the boron

necessarily evidenced the addition by J&L of borax I do not.

Apart from the expert evidence which tends to undercut Dr.

Gavilovic’s conclusion (e.g., Evans, Tr. 4489-4492; Vergosen,

Tr. 4437), principally I am persuaded by the evidence of the

witnesses who had actual first-hand knowledge of the J&L

process, and who denied the use of borax in the lubricant or as

a rinse.

I am also moved to this conclusion by plaintiffs’ effort (P1.

Br. 61-63) to equate what is contended to be borax in the J&L

coating with the borax in BL 235, citing Gavilovic (Tr. 8911).

Thar J&L would have used the prior trial BL 235 lubricant to

precoat bumper steel is not likely. The prior trial practices,

using the relatively low borax BL 235 with heavy phosphate

coatings to cold-form parts not usually requiring plating, are

fairly typical of the use of that lubricant in the broader pat-

tern of accused nonbumper practices tried out before me. In

bumper making, by way of contrast, the pattern was to use a

higher borax (or equivalent lubricant) over light phosphate.

If J&L used BL 235 to coat the steel it was providing

Oldsmobile for bumper forming, it would be the only exam-

ple of that coating for that use in this case.

99a

I conclude Accused Practice 46 does not infringe. Plaintiffs

finally argue in the alternative as to Accused Practice 46 that

it be found that BL 200, 201, or 202 (soap and TKPP) was

used by J&L. if borax was not. This submission seems incon-

sistent with the Accounting Pretrial Order, in which plain-

tiffs, after J&L’s process description of Accused Practice 46,

stipulate that: “Plaintiffs do not accept the above representa-

tion of Jones & Laughlin and contend that borax was applied

to the steel after it was phosphate coated.” (Underlining add-

ed. APTO, O:16). But even were plaintiffs free to make a

contention it appears they did not reserve, the case for a

TKPP rinse at J&L is far weaker than the claim of a borax

rinse. The borax hypothesis, which I have rejected, at least

had behind it the testimony of a respected expert. The TKPP

alternative submission is utter speculation.

D. Explanation and Table

To make a punctuation mark between the segment of the

report (infringement) now concluded, and what follows

(damages), a table has been prepared collecting in a short

space the conclusions heretofore reached as to which prac-

tices (in addition to prior trial practices) infringe, which do

not, and why: ‘

LADLE

Non-Inf ringing Practices

Infringing Practices

100a

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103a

III. DAMAGES

A. Introduction

Plaintiffs claim that defendant's infringements warrant a

compensatory award of $121 million. They also request in-

terest which, were their compensatory damage claim fully

allowed, would amount to about $141 million. Finally plain-

tiffs seek treble the amount of the claimed damages (7.e., an

additional $242 million) together with attorneys’ fees of about

$1.5 million. Hence, plaintiffs reach for a recovery of about

one half billion dollars.

Not surprisingly, defendant dissents. It submits that as a

matter of law and fact plaintiffs’ recovery cannot include

multiple damages or attorneys’ fees. And it argues that even

were plaintiffs to have proved that each of the accused prac-

tices infringed, damages could be nec higher than $200,000.

Lastly, defendant disputes plaintiff's right to interest.

In resolving these not-insubstantial disagreements I have

opted first to decide the claims for multiple damages and

counsel fees. Next determined will be the standard to be ap-

plied in arriving at a reasonable royalty. Thereafter, the facts

relating to the usefulness of the Henricks process in bumper

making and the forming of non-bumper parts will be found,

and various of the parties’ damage-related arguments will be

resolved. Thus will the stage be set for the construction of

hypothetical negotiations leading to a “reasonable royalty.’

Which will leave only the legal question of plaintiffs’ entitle-

ment to prejudgment interest to be decided. At the end will

come the accounting.

104a

B. Denial of Plaintiffs’ Claim to Multiple

Damages and Attorneys’ Fees

Plaintiffs seek trebled damages under 35 U.S.C. § 284,

which provides that “the Court may increase the damages up

to three times the amount found or assessed.” This is a penalty

provision. It is discretionary, and applicable only if there is

egregious conduct by the defendant, such as conscious,

deliberate and willful appropriation of the patented inven-

tion without good faith belief of patent invalidity or non-

infringement, which makes out a gross case of unreasonable

conduct, and where the plaintiff has been blameless. Enter-

prise Mfg. Co. v. Shakespeare Co., 141 F.2d 916, 920-921

(6th Cir. 1944); General Motors v. Dailey, 93 F.2d 938, 942

(6th Cir. 1937); Sel-O-Rak Corp. v. Henry Hanger & Display

Fixture Corp., 159 F. Supp. 769, 777 (S.D. Fla. 1958), aff'd,

270 F.2d 635 (5th Cir. 1959); Wahl v. Carrier Mfg. Corp.,

511 F.2d 209, 214 (7th Cir. 1975). An award of multiple

damages typically requires willfulness by the infringer. W. L.

Gore & Associates, Inc. v. Carlisle Corporation, ___F . Supp.

____, Slip Opinion at p. 4 (D. Del. 7/26/79). Where the

question of validity is close, or novel, it has been held to be an

abuse of discretion to award treble damages. Yoder Bros.,

Inc., v. California-Florida Plant Corp., 537 F.2d 1347,

1383-1384 (5th Cir. 1976), cert. den., 429 U.S. 1094 (1977).

The statute at 35 U.S.C. § 285 provides that “[t}he court in

exceptional cases may award reasonable attorney fees to the

prevailing party.” The courts have confined attorney fee

awards to those cases where exemplary and punitive relief is

required because of bad faith, fraud, malice or similar un-

conscionable conduct. ADM Corp. v. Speedmaster Packag-

ing Corp., 525 F.2d 662, 664 (3d Cir. 1975); Uniflow

Manufacturing Co. v. King-Seeley Thermos Co., 428 F.2d

335 (6th Cir. 1970), cert. den., 400 U.S. 943 (1970). An

award is contraindicated in a hard and fairly fought case in-

105a

volving difficult and doubtful points of law. Prerce v. Allen B.

Du Mont Labs, Inc. , 297 F.2d 323, 329-30 (3d Cir. 1961). See

Dixie Cup Co. v. Paper Container Mfg. Co., 169 F.2d 645,

651 (7th Cir. 1948); W. L. Gore Associates v. Carlisle Cor-

poration, supra, at p. 14 of Slip Opinion.

The most obvious stumbling block to plaintiffs’ argument is

that two highly respected jurists have reached the selfsame

conclusions for which plaintiffs now accuse defendant of bad

faith. Judge Robson in 1963 held the patent invalid (Princ.

Doc., Tab 2). Judge Wright in 1970 held the patent had not

been infringed. 316 F.Supp. 1376 (D. Del. 1970). Although

both decisions were subsequently reversed, plaintiffs cannot

brush General Motors’ defense of its accused practices with

the paint of egregious unreasonableness without splashing the

same contumacious color on the decisions of these able

judges. Plaintiffs have cited no case in which a defendant

under such circumstances has been held to have acted in bad

faith or in reckless disregard of the patentee’s rights. This will

- not be the first. |

The view which I take, 7.e., that the prior court findings of

invalidity and non-infringement are incompatible with

charges that defendant was guilty of mala fides or reckless

wrongdoing, makes it unnecessary to consider in detail plain-

tiffs’ barrage of particularized misconduct allegations. None-

theless, I separately find that neither singly or in combination

do the charges as to defendant's behavior involve the quality

of misconduct required to sustain a multiple damages award

or to meet the possibly less stringent test for awarding at-

torneys’ fees.

For example, plaintiffs charge defendant with arrogance

for relying upon agreements from its lubricant suppliers in-

demnifying it against the risk of being adjudicated an in-

fringer. To the contrary, I find the willingness of suppliers to

give indemnifications in the circumstances here to support

106a

defendant's good faith in independently concluding that its

practices did not infringe.

Another signal of defendant's bad faith, say plaintiffs, is its

failure to have secured an opinion of outside counsel to but-

tress its own patent invalidity, non-infringement conclusions.

While there may be cases where the procuring of outside

counsel's opinion proved good faith, or its absence evidenced

willfulness, this case is not one of them. Defendant's in-house

patent attorneys have shown themselves to be eminently

knowledgeable and superbly well qualified in the field of their

expertise. Their views as to invalidity and non-infringement

were sufficien

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