# Petition for Writ of Certiorari — Dura Corp. v. TWM Manufacturing Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_2259%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1986 - **Citation:** 479 U.S. 852 ## Text \ 86-145 No. Supreme Court, U.S. FILED 50s same a memes s- 2 4 IN THE Supreme Court of the An OCTOBER TERM, 1985 JOSEPH F. SPANIOL, JR. CLERK iten St i7z— <-> DURA CORPORATION and KIDDE, INC., ——V Petitioners, TWM MANUFACTURING COMPANY, INC., and TURNER QUICK-LIFT CORPORATION, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT ARTHUR D. GRAY One Broadway New York, New York 10004 (212) 425-7200 Counsel Of Counsel: FRANCIS T. CARR PHILIP G. HAMPTON, II KENYON & KENYON One Broadway New York, New York 10004 (212) 425-7200 for Petitioners shee OT QUESTIONS PRESENTED 1. Where a patented item and an unpatented staple article of commerce are marketed together, whether it is proper to include in a damage award for infringement of the patent covering only the patented item, an award also based on the value of the unpatented staple article? 2. Whether the United States Court of Appeals for the Federal Circuit has so liberalized the standards for awarding punitive damages for patent infringement as to chill the incen- tive for those most able to challenge potentially invalid patents? PARTIES TO PROCEEDINGS BELOW The petitioners in this action (and the defendants-appellants below) are: 1. Dura Corporation 2. Kidde, Inc. The respondents in this action (and the plaintiffs-appellees below) are: 1. TWM Manufacturing Company, Inc. 2. Turner Quick-Lift Corporation iil TABLE OF CONTENTS PAGE Ne ws nud vk wk eale bse ve eaens 2 ee ys ik ba es deat ecaeseeecs 3 Constitutional Provisions and Statutes Involved....... 3 es ocean seacesecacsecen 3 Reasons for Granting the Writ...................... 7 ee rk hci vicabecvesvsess 7 B. Damages Should Not Be Awarded On Unpatenied Staple Accessories Which Do Not Infringe The Patent And Are Easily Segregated From The I esters ccecesccccecan 9 EE ) 2. The Federal Circuit’s Application Of The En- tire Market Value Rule Is Inconsistent With The Staple Goods Test Of Dawson Chemical OS 10 C. The Federal Circuit Has Improperly Liberalized The Award of Punitive Damages In Patent Cases 12 isin wavicveveveses 17 Appendix A. Opinion Below of the United States Court of Appeals for the Federal Circuit. 229 U.S.P.Q. 525 Ne cpa ede sbrusees la B. Opinion of the United States District Court for the Eastern District of Michigan Dismissing The Complaint Based on Laches and Estoppel. 189 Seimeeen. ae ceeee, WEIR, 1975)... 2... 2c enne i3a iV . Opinion of the United States Court of Appeals for the Sixth Circuit Reversing the Dismissal of the Complaint for Laches and Estoppel. 592 F.2d 346 Se SPM bcc cca Rasa neh bs Lace hse b as nes . Opinion of the United States District Court for the Eastern District of Michigan Finding the Pat- ent-in-Suit To Be Valid and Infringed. 213 U.S.2O. 423 ED. WR. TOGE) oc cns vavececes . Opinion of the United States Court of Appeals for the Sixth Circuit Affirming the Validity and In- fringement Judgment. 722 F.2d 1261 (6th Cir. RRR GR Sis Ee mae Eee ae etre cae . Report of the Special Master Awarding $31,288,496.00 in Damages for Patent Infringe- a, Sere a ee ae ae ee . Transcript of the Oral Adoption of the Report of the Special Master by the United States District Court for the Eastern District of Michigan. Unre- eer errr rere Pr re rs ree . Order by Court of Appeais for the Federal Circuit denying Petition for Rehearing ................ PAGE 26a 33a 44a 64a 94a TABLE OF AUTHORITIES Cases PAGE American Original Corp. v. Jenkins Food Corp., 774 Pee re es es POO so a caw an daendecceens sen 13 Autographic Register Co. v. Sturgis Register Co., 110 ee fe SS ry rae ee ee 12 Baumstimler v. Rankin, 677 F.2d 1061 (Sth Cir. 1982).. 14 B.B. Chemical Co. v. Ellis, 314 U.S. 495 (1942)....... 11 Carbice Corp. of America v. American Patents Develop- ment Corp., 283 U.S. 27 (19351)... cc ccc csccccces 1] Central Soya Co. v. Geo. A. Hormel & Co., 723 F.2d eget ee | ee een 13, 16 Clark v. Wooster, 119 U.S. 322 (1886) ............... 15 CPG Products Corp. v. Pegasus Luggage, Inc., 776 F.2d Pe ee Me ORES yb kv oka oe CRW eA CPanel ocean 13 Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. TORUS So vias shane bee haa boeane cee nanae 10, 11 Deere & Co. v. International Harvester Co., 658 F.2d Fea? Greet Sat: EOE hick carck edu hoe os tae Wee 14 Deere & Co. v. International Harvester Co., 710 F.2d Fare Ges Ga BN 44-0 ak HEC ee weeks 7,9 Deyerle v. Wright Mfg. Co., 496 F.2d 45 (6th Cir. 1974) 14 Dickey-John Corp. v. International Tapetronics Corp., Te Dee Bee OU SD nv vc hha ee cundiduws 14 Eltra Corp. v. Basic Inc., 599 F.2d 745 (6th Cir.), cert. Genied, 444 U.S. Das CGTID oon cns cut vacucasvusve 14 Gaddis v. Calgon Corp., 506 F.2d 880 (Sth Cir. 1975) .. 14 General Motors Corp. v. Devex Corp., 461 U.S. 648 LODGE cas ova ote hak ewracthbeeee eee eee 15 vi Georgia-Pecific Corp. v. United States Plywood Corp., Bae ee, SOP Ca. 0a, Us EPOOD vn cerned sanscccacs Great Northern Corp. v. Davis Core & Pad Co., 782 Pe I: Gude SUES Gch chou neetscectesasenns Hammerquist v. Clarke’s Sheet Metal, Inc., 658 F.2d OME fis ia bie EM b ad EUKS OAKS BAS Henry v. A.B. Dick Co., 224 U.S. 1 (1912)........... H.K. Porter Co. v. Goodyear Tire & Rubber Co., 536 i So) 8 Te eee eee ere or Hughes Tool Co. v. Dresser Industries, Inc., unreported King Instrument Corp. v. Otari Corp., 767 F.2d 853 Me errr eerie ices eer e yee Kloster Speedsteel AB v. Stora Kopparbergs Bergslags AB, Nos. 85-2174, slip op. (Fed. Cir. 1986)......... Kori Corp. v. Wilco Marsh Buggies and Draglines, Inc., 761 F.2d 649 (Fed. Cir.), cert. denied, 106 S.Ct. 230 NG kas s VG kd OR RKA LASS AWEA WHE OER ESRD OE OX Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056 (Fed. ee Raed 6c drs KASAM ROM AARE RECARO OR Oe Lam, Inc. v. Johns-Manville Corp., 668 F.2d 462 (10th Cir.), cert. denied, 456 U.S. 1007 (1982)............ Lear, Inc. v. Adkins, 395 U.S. 653 (1969) ............ Leinoff v. Louis Milona & Sons, 726 F.2d 734 (Fed. Cir. Leitch Mfg. Co. v. Barber Co., 302 U.S. 458 (1938)... Maloney-Crawford Tank Corp. v. Sauder Tank Co., 511 oe 8 ft oe, oe Tere ee error Mercoid Corp. v. Mid-Continent Investment Co., 320 os % 8. rere ee rr rT eer Tre Corr se: err 13 13 13 14 15 13 11 14 1} a POO Cet it A sR On Vii Mercoid Corp. v. Minneapolis-Honeywell Regulator oe Re ee abet eae Milgo Electronic Corp. v. United Business Communica- tions Inc., 623 F.2d 645 (10th Cir.), cert. denied, 449 pe ES ie he as te ee a Sc Calwe Gx AM back Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488 | GN By Sees Gru Bape Np area eee ig ts Oe Motion Picture Patents Co. v. Universal Film Mfg. Co.., I a Norfin, Inc. v. International Business Machines Corp., ee eee ee ED i ices cennvecenseess Novo Industri A/S v. Travenol Laboratories, Inc., 677 See Re CP ee OU a a cacao s one avetkneés> Paper Converting Machine Co. v. Magna-Graphics Corp., 680 F.2d 483 (7th Cir. 1962) ................ Paper Converting Machine Co. v. Magna-Graphics Corp., 745 F.2d 11 (Fed. Cir. 1984)................ Paper Converting Machine Co. v. Magna-Graphics Corp., 785 F.2d 1013 (Fed Cir. 1986)............... Power Lift, Inc. v. Lang Tools, Inc., 774 F.2d 478 (Fed. 8 res er rrr er ere hn eee Radio Steel & Mfg. Co. v. MTD Products, Inc., 788 Pua Rae ns Ms Os cy ks ca une bins cecacad eas Ralston Purina Co. v. Far-Mar-Co., Inc., 772 F.2d 1570 a re rrr ree ee Rosemount, Inc. v. Beckman Instruments, Inc., 727 Fiat Pe es CR, SOEs 5 kk Kans pea Ad ade cb eu ees Saginaw Products Corp. v. Eastern Airlines, 615 F.2d RES MEE, CUE SSGhs Chew ew k 06s w seek eweResun PAGE Vill Saturn Mfg. Inc. v. Williams Patent Crusher & Pulver- izer Co., 713 F.2d 1347 (8th Cir. 1983) ............. S.C. Johnson & Son v. Carter-Wallace, Inc., 781 F.2d ey I nn ee ees Seymour v. McCormick, 57 U.S. (16 How.) 480 (1854) Shatterproof Glass Corp. v. Libbey-Owens Ford Co.., 758 F.2d 613 (Fed. Cir.), cert. dismissed, 106 S.Ct. 340 ee ee ea Se ee eu ces tab able Shiley, Inc. v. Bentley Laboratories, Inc., Appeal No. 85-2226 (Fed. Cir. June 16, 1986).................. Signode Corp. v. Weld-Loc Systems, Inc., 700 F.2d 1108 ee Ce ete Peck eee baa Ge un bee Smith International, Inc. v. Hughes Tool Co., 229 ae eRG FY Os MU I og Se Square Liner 360°, Inc. v. Chisum, 691 F.2d 362 (8th Se Seah tel ae SU peat ee tee ee ek State Industries, Inc. v. A.O. Smith Corp., 751 F.2d Se a ED kd cic cu wanes Saebba ve wen eke l Stickle v. Heublein, Inc., 716 F.2d 1550 (Fed. Cir. 1983) Topliff v. Topliff, 145 U.S. 156 (1892) ............... Trio Process Corp. v. L. Goldstein’s Sons, 612 F.2d 1353 (3rd Cir.), cert. denied, 449 U.S. 827 (1980) Underwater Devices Inc. v. Morrison-Knudsen Co., 717 im @t f | eo B . ee | Velo-Bind, Inc. v. Minnesota Mining & Mfg. Co., 647 SS kf. Fee | Eee rr re eae Wahl v. Carrier Mfg Co., 511 F.2d 209 (7th Cir. 1975) Western Electric Co. v. Stewart-Warner Corp., 631 F.2d Se ee ch cvs ehhh sch chk ee eerweee es PAGE 2, 13 14 14 — ix White v. Mar-Bel, Inc., 509 F.2d 287 (Sth Cir. 1975) ... Wilden Pump & Engineering Co. v. Pressed & Welded Products Co., 655 F.2d 984 (9th Cir. 1981) ......... Yarway Corp. v. Eur-Control USA, Inc., 775 F.2d 268 Yoder Bros. Inc. v. California-Florida Plant Corp., 537 F.2d 1347 (Sth Cir. 1976), cert. denied, 429 U.S. 1094 Se nk ke ee AKG CARAS REERERE RR OAERS CE BESS Periodicals Ghloz, Willful Infringement and “Magic Words”—The Effect of Opinions of Counsel on Awards of Increased Damages And Attorney Fees, 66 J. Pat. Off. Soc’y SP. on. Chae CRA ere k eRe Reha Rees acab’ Perry, The Surprising New Power of Patents, Fortune, fy ee OF 6B) eeeeeverreTec ee Tir err eee Statutes _ Lib tag Ps, eee ear res yr rey eye 3, 1 Oe Woes ee 0 os chs cae Uevauckeeces succes eeseees 13 14 16 2. iS ~s — IN THE Supreme Court of the United States OCTOBER TERM, 1985 pea ie DURA CORPORATION and KIDDE, INC., Petitioners, —Vvs.— TWM MANUFACTURING COMPANY, INC., and TURNER QUICK-LIFT CORPORATION, Respondents. — — PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT Petitioners, Dura Corporation and Kidde, Inc.' (hereinafter collectively referred to as “Dura”), respectfully pray that a Writ of Certiorari issue to review the judgment entered in favor of respondents, TWM Manufacturing Company, Inc. and Turner Quick-Lift Corp. (hereinafter collectively referred to as “TWM”) by the United States Court of Appeals for the Federal Circuit in its causes numbered 85-2153, 85-2237 and 85-2273. l Kidde, Inc. has interests in the following non-wholly owned subsidi- aries: Fenwal Controls of Japan, Ltd.; Nippon SSP Co. Ltd.; Artesa- nias Baja, S.A.; Walter Kidde Sales & Service Co.; Walter Kidde S.A. Industria E. Comercio. Dura has no subsidiaries. Opinions Below The opinion of the United States Court of Appeals for the Federal Circuit is reported at 229 U.S.P.Q. 525 (Fed. Cir. 1986) and reprinted in the Appendix to this Petition at la. The following other opinions have been issued in this case and are reprinted in the Appendix to this Petition at the pages indi- cated: Opinion of the United States District Court for the Eastern District of Michigan dismissing the complaint based on laches and estoppel. 189 U.S.P.Q. 274 (E.D. Mich. 1975), 13a. Opinion of the United States Court of Appeals for the Sixth Circuit reversing the dismissal of the complaint for laches and estoppel. 592 F.2d 346 (6th Cir. 1979), 26a. Opinion of the United States District Court for the Eastern District of Michigan finding the patent-in-suit to be valid and infringed. 213 U.S.PQ. 423 (E.D. Mich. 1981), 33a. Opinion of the United States Court of Appeals for the Sixth Circuit affirming the validity and infringement judgment. 722 F.2d 1261 (6th Cir. 1983), 44a. Report of the Special Master awarding $31,288,496.00 in damages for patent infringement. Unreported, 64a. Transcript of the oral adoption of the Report of the Special Master by the United States District Court for the Eastern District of Michigan. Unreported, 94a. Denial of Petition for Rehearing by the Court of Appeals for the Federal Circuit. Unreported, 97a. Jurisdiction The judgment of the Court of Appeals for the Federal Circuit was entered on Aprii 25, 1986, a timely petition for rehearing was filed on May 9, 1986 and denied on May 22, 1986 and this Petition for a Writ of Certiorari was filed within ninety (90) days of that denial. Jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1). Constitutional Provisions and Statutes Involved The case involves Section 284 of the Patent Act of 1952, 35 U.S.C. § 284 (1976), reprinted below. § 284. Damages Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the in- fringement but in no event less than a reasonable royalty for the use of the invention by the infringer, together with interest and costs as fixed by the court. When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances. Statement of the Case In this patent infringement case, original jurisdiction of which was premised on 28 U.S.C. § 1338(a), the Court of Appeals for the Federa! Circuit affirmed a damage award of $31,288,496.00. Of the more chan $31,000,000 awarded, only about $5,000,000 represents damages based on the sale of the 4 patented lift-axle suspension, the balance being made up of damages for the sale of unpatented parts, punitive damages and prejudgment interest. This petition will demonstrate that the Court of Appeals for the Federal Circuit has so liberalized the standards for determining damages in patent cases as to demand the intervention of this Court. The patent involved in this case covers a device called a lift-axle suspension. It is a spring-like device used on large trucks which causes an extra axle and set of wheels to be lowered in contact with the road when the truck is carrying a heavy load and causes the extra axle and wheels to be raised from the road when the truck is empty and does not need the additional support. The extra axle and wheels are ordinary, staple articles of commerce in no way specialiy adapted for the patented suspension. In fact, the inventor testified that he obtained the first axles and wheels which were used with his invention from a junkyard. When the patented suspension is marketed, the seller, often as a convenience to the customer and acting as a middleman, obtains the wheels and axle from an outside supplier and resells these unpatented staple wheels and axle to the customer to- gether with the suspension.’ In determining damages in this case, the Magistrate awarded TWM a royalty of thirty percent (30%) in certain years and TWM’s actual lost profits in other years where it could prove that its lost profits were higher than the thirty percent (30%) royalty. In making both calculations, the Magistrate included in the royalty and profit base, the value of the unpatented wheels and axles sold with the patented suspension. There is undisputed evidence that, for each sale, the cost of the unpatented wheels and axle is approximately the same as the cost of the patented suspension. Thus, the inclu- sion of these unpatented parts in the damage calculation effectively doubled the damage award.’ In short, TWM has 2 About 10% to 20% of the time the suspension is sold without the wheels and axles. 3 This wrong was then compounded when the damages were trebled. ee been awarded millions of dollars in damages because Dura sold the same staple wheels and axles with its suspension which the suspension’s inventor originally obtained from a junkyard. The Court of Appeals for the Federal Circuit justified the award of damages on these unpatented parts by relying on the “entire market value” rule. Quoting an earlier case of one of its predecessor courts, it stated: It is the “ ‘financial and marketing dependence on the patented item under standard marketing procedures’ which determines whether the non-patented features of a machine should be included in calculating compensation for infringement.” 229 U.S.P.Q. at 528 (citation omitted). This case is the latest in a line of cases from the Court of Appeals for the Federal Circuit which has awarded damages for unpatented parts simply because the unpatented parts happen to be marketed with the patented device. Under the rationale of the Court of Appeals for the Federal Circuit, almost anything which happens to be marketed with a patented invention is “market dependent” on the patent and should be included in the damage calculation, regardless of whether those unpatented parts have any technological dependence on the patented invention. Such improper utilization of the entire market value rule is contrary to the rationale of many of this Court’s decisions which restrict the extension of the patentee’s economic leverage to unpatented staple articles of commerce and is one way in which the Court of Appeals for the Federal Circuit is unjustly increasing the damage awards for patent infringement. A second liberalization undertaken by the Court of Appeals for the Federal Circuit is to considerably loosen the standards for the awarding of punitive damages. In this case, prior to the issuance of his patent, the patentee sent an unsolicited copy of a patent specification (without claims), under no obligation of secrecy, to Dura and a number of other manufacturers in an 6 attempt to interest them in marketing the lift-axle suspension described in the specification. More than one year later, Dura marketed a suspension which the District Court found to be similar to the suspension described in the patent specification. There was no proof that Dura had copied the patented suspen- sion. In fact, Dura proved that it had purchased its suspension from an outside designer. TWM theorized that Dura had conspired with the outside designer to copy the patented suspension, but could offer no proof to support its theory. To remedy TWM’s failure of proof, the District Court applied a copyright theory of liability to find Dura to be a willful infringer. The District Court held that because Dura had access to the unsolicited patent specification and because its Suspension was similar to the suspension described in the specification, that this “access plus similarity” equaled copy- ing. The District Court equated this imputed “copying” with willful infringement and awarded TWM_ more than $17,000,000 in enhanced damages on that basis. There was no showing that Dura acted in bad faith and there was no showing of actual copying. The Court of Appeals for the Federal Circuit affirmed the award, holding that since the “access plus similarity” finding was the law of the case, that was sufficient to uphold the award of treble damages, no further showing of bad faith being required. This is the latest example of the loose standards which the Court of Appeals for the Federal Circuit has been applying in upholding punitive damage awards against defen- dants in patent cases. Reasons for Granting the Writ A. Introduction In an overreaction to the large number of patents held invalid before its creation, the Court of Appeals for the Federal Circuit has gone out of its way to put teeth back into the patent laws. This Court may take judiciai notice of the fact a any eee = f that various articles have appeared in the public press com- menting on this propensity of the Federai Circuit. See, e.g. Perry, The Surprising New Power of Patents, Fortune, June 23, 1986 at 57: Since the Court of Appeals for the Federal Circuit was established in 1982 and was charged with handling all patent infringment appeals patents have more frequently been upheld, and the penalties imposed for infringing have become severe. One of the prime methods used by the Federal Circuit to accomplish this purpose has been to send a message to the District Courts to award substantial damages against patent infringers. And the District Courts have been listening. Re- cently, the size of damage awards in patent cases have been greatly in excess of those which preceded the creation of the Federal Circuit. In addition to the instant case, witness the following examples: $28 ,462,664—Deere & Co. v. International Harvester Co., 710 F.2d 1551 (Fed. Cir. 1983) $121,504,958—Hughes Tool Co. v. Dresser Industries, Inc., unreported. $44 ,248,137—Shiley, Inc. v. Bentley Laboratories, Inc., Appeal No. 85-2226 (Fed. Cir. June 16, 1986) $204,810,349—Smith International, inc. v. Hughes Tool Co., 229 U.S.P.Q. 81 (C.D. Cal. 1986) These awards prompted the same Fortune commentator to note, “What is really giving management the willies is the trend in damages.” [bid. The size of these awards is in part due to the fact that the Federal Circuit has liberalized the criteria for awarding patent damages in many areas. This petition presents two of those areas which have been particularly abused and which demand the intervention of this Court. If this Court does not intervene, and the Federal Circuit continues inspiring and supporting these huge awards, then defendants will be intimidated with threats of large damage awards and the incentive for challeng- ing suspect patents will be considerably chilled. A system where suspect patents go unchallenged is no better than a system where too many patents are invalidated. It is respectfully submitted that this petition should be granted to indicate to the Federal! Circuit and the district courts that it is imperative to maintain a proper balance within the patent system. B. Damages Should Not Be Awarded On Unpatented Staple Accessories Which Do Not Infringe The Patent And Are Easily Segregated From The Patented Invention 1. Introduction This case is the most recent in a line of cases where the Federal Circuit has affirmed the awarding of damages on unpatented parts. In Kori Corp. v. Wilco Marsh Buggies and Draglines, Inc., 761 F.2d 649, 656 (Fed. Cir., cert. denied, 106 S. Ct. 230 (1985), the Federal Circuit, in awarding damages on the entire value of a marsh craft even though the patent only related to part of the craft, looked solely to financial and marketing criteria, stating: Under the “entire market value rule” it is the “financial and marketing dependence on the patented item under standard marketing procedures” which determines whether the non-patented features of a machine should be included in calculating compensation for infringement. (Citations omitted). In Paper Converting Machine Co. v. Magna-Graphics Corp., 745 F.2d 11, 22-23 (Fed. Cir. 1984), the Court affirmed an award of damages on an entire toilet paper rewinding line consisting of several discrete machines even though the patent related to only one portion of one machine and the other ata rth i vel eee a 9 machines which made up the line clearly had separate uses. Again, the Court applied a market dependence test, stating: None of the auxiliary units here are integrated parts of the [patented] rewinder; rather they each have separate usage. Paper Converting therefore obviously cannot prevent the manufacture or sale of these auxiliary units. This fact, however, does not control our decision. The deciding factor, rather, is whether “[nJormally the patentee (or its licensee} can anticipate sale of such unpatented compo- nents as well as of the patented” ones. Cf. Deere & Co. v. International Harvester Co., 710 F.2d 1551, 1558-59 (Fed. Cir. 1983), where the entire market value rule was used as a justification to consider the value of sales of unpatented parts in arriving at a large royalty figure. Finally, in this case, the Court affirmed an award of damages based in part on the sale of unpatented wheels and axles. The only justification proffered by the Court for these awards is whether the patentee usually would sell the unpa- tented parts with the patented device. If the patentee usually sells the patented and unpatented parts together, the Federal Circuit awards damages for the unpatented parts on the theory that it is the patent which is giving the unpatented parts their value. By so applying the entire market value rule, the Federal Circuit has approved the anomalous result that damages for patent infringement are based upon non-patent marketing criteria. While the Federal Circuit admits that a patentee cannot prevent the manufacture or sale of unpatented parts,’ and therefore a patentee cannot condition the sale of the patented device upon the purchase of the unpatented parts, if customers, as a matter of convenience, buy the unpatented parts at the same time that they buy the patented device, the 4 See quoted passage from Paper Converting, supra. 5 See discussion of patent-antitrust cases, infra at 10-12. 10 Federal Circuit deems the unpatented parts to be so related to the patent as to require the payment of damages for their sale and use. It is respectfully submitted that the “entire market value” rule, as applied by the Federal Circuit, is inconsistent with other rules of law concerning unpatented parts announced by this Court and other courts of appeal and should not be permitted to be used in this manner to unduly increase damage awards in patent cases. 2. The Federal Circuit’s Application Of The Entire Market Value Rule Is Inconsistent With The Staple Goods Test Of Dawson Chemical Co. v. Rohm & Haas Co. In Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176 (1980), this Court held that a patentee of a method patent for the application of an unpatented herbicide could prevent the use or sale of that herbicide by others only if the herbicide was a non-staple article of commerce having no substantial non-infringing use. Conversely, if the herbicide was a staple article of commerce having substantial non-infringing uses, then anyone was free to deal in the herbicide, even if it was eventually used by a customer in an infringing manner. The result of the Federal Circuit’s resort to a market depen- dence analysis in its application of the entire market value rule conflicts with the basic premise underlying Dawson. Under the Federal Circuit’s analysis, the patentee is awarded damages on the sale of staple, unpatented parts, which under Dawson he cannot control, simply because, in the market, the patent helps the patentee to sell those unpatented parts. However, the theory that benefits to be realized from the sale of unpatented parts should inure to the patentee, merely because the patent helps to create the market for the unpatented parts, has been rejected by this Court in the Dawson patent-antitrust interface line of cases and it should be rejected in patent damage cases as well. The market dependence analysis of the Federal Circuit is identical to the rationale used in Henry v. A.B. Dick Co., 224 4 \ a ee a es ee 1! U.S. 1 (1912), to permit the patentee to control unpatented parts. In A.B. Dick the patentee of a printing machine was permitted to require purchasers of the machine to purchase unpatented staple items, such as ink and paper, from the patentee. The theory of the A.B. Dick Court, as explained by this Court in Dawson at 190 was: The [A.B. Dick] Court reasoned that the market for these supplies was created by the invention, and that sale of a license to use the patented product, like sale of other species of property, could be limited by whatever condi- tions the property owner wished to impose. This reasoning of A.B. Dick was subsequently rejected by this Court in a long line of cases which defined the bounds of the patent-antitrust interface as it applied to unpatented goods. Thus, in cases like Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917); Carbice Corp. of America v. American Patents Development Corp., 283 U.S. 27 (1931); Leitch Mfg. Co. v. Barber Co., 302 U.S. 458 (1938); Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488 (1942) and B.B. Chemical Co. v. Ellis, 314 U.S. 495 (1942), patent owners were forbidden from controlling the sale of unpatented staple parts or devices just because these parts or devices were used with a patented device. These cases reached their high-water mark in Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661 (1944), and Mercoid Corp. v. Minneapolis-Honeywell Regula- tor Co., 320 U.S. 680 (1944), which forbade the patent owner from controlling an unpatented part even though that part was not a staple and had no use other than to be used in a manner to infringe the patent. In reaction to the Mercoid cases, Congress passed § 271(d) of the Patent Act of 1952, which, as this Court held in Dawson, was intended to permit the patentee some control over unpatented parts if those parts were non- Staple articles of commerce having no substantial non-infring- ing use. Thus, this Court has drawn the patent-antitrust interface line as to what unpatented parts the patentee can legitimately 12 contro! berwear svank and nanstanle articles of commerce. The Federal Circuit’s application of the entire market value rule erodes that line by allowing the patentee to collect dam- ages for unpatented parts which are staple articles of com- merce having many non-infringing uses. The staple, non-staple distinction should be applied to patent damage cases in the same manner as it is applied in patent-antitrust cases. Indeed, other courts of appeal, in patent damage cases considered before the establishment of the Federal Circuit, have refused to award damages based on the use or sale of unpatented staple supplies. See, e.g., Signode Corp. v. Weld- Loc Systems, Inc., 700 F.2d 1108, 1113-14 (7th Cir. 1983); Velo-Bind, Inc. v. Minnesota Mining & Mfg. Co., 647 F.2d 965, 972-74 (9th Cir. 1981) and Autographic Register Co. v. Sturgis Register Co., 110 F.2d 883 (6th Cir. 1940). It is respectfully submitted that this Court should grant certiorari to consider whether the Federal Circuit’s approval of damage awards for the use and sale of unpatented parts conflicts in principle with decisions of this Court and therefore has led to an improper increase in damages for patent infringe- ment. C. The Federal Circuit Has Improperly Liberalized The Award Of Punitive Damages In Patent Cases The awarding of punitive damages in patent cases is gov- erned by 35 U.S.C. § 284 which provides in part: “ . the court may increase the damages up to three times the amount found or assessed.” In order to be entitled to punitive damages, the patentee must prove that the infringer acted in bad faith. As the Federal Circuit has stated in State Industries, Inc. v. A.O. Smith Corp., 751 F.2d 1226, 1237 (Fed. Cir. 1985) quoting Stickle v. Heublein, Inc., 716 F.2d 1550, 1565 (Fed. Cir. 1983): The Court must determine that the infringer acted in disregard of the patent, that is, that the infringer had no reasonable basis for believing it had a right to do the acts. a ve : IE le in pe ta i hey ae ae eee i ree eee ail 13 However, the Federal Circuit has only been paying lip service to its announced standard for the awarding of punitive dam- ages. Since the formation of the Federal Circuit in October, 1982, to date, not including this case, it has had the question of whether to award punitive damages against an infringer before it twenty (20) times. In thirteen (13) cases where punitive damages were awarded below, the Federal Circuit has affirmed ten (10) times® and reversed only three (3) times.’ In seven (7) cases where punitive damages were denied below, the Federal Circuit has reversed three (3) times® and sent the case back for consideration of punitive damages and has affirmed the denial four (4) times.” Thus, of twenty (20) punitive damage cases, the Federal Circuit has supported the awarding of punitive dam- ages against infringers thirteen (13) times, or almost two-thirds (2/3) of the time. 6 Paper Converting Machine Co. v. Magna-Graphics Corp., 785 F.2d 1013 (Fed. Cir. 1986); Great Northern Corp. v. Davis Core & Pad Co., 782 F.2d 159 (Fed. Cir. 1986); Ralston Purina Co. v. Far-Mar-Co., Inc., 772 F.2d 1570 (Fed. Cir. 1985); Power Lift, Inc. v. Lang Tools, Inc. , 774 F.2d 478 (Fed. Cir. 1985); Kori Corp. v. Wilco Marsh Buggies and Draglines, Inc., 761 F.2d 649 (Fed. Cir.), cert. denied, 106 S.Ct 230 (1985); Rosemount, inc. v. Beckman Instruments, Inc., 727 F.2d 1540 (Fed. Cir. 1984); Leinoff v. Louis Milona & Sons, 726 F.2d 734 (Fed. Cir. 1984); Central Soya Co. v. Geo. A. Hormel & Co., 723 F.2d 1573 (Fed. Cir. 1983); Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056 (Fed. Cir. 1973); Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed.Cir. 1983). 7 Yarway Corp. v. Eur-Control USA, Inc., 775 F.2d 268 (Fed. Cir. 1985); State Industries, Inc. v. A.O. Smith Corp., 751 F.2d 1226 (Fed. Cir. 1985); Stickle v. Heublein, Inc., 716 F.2d 1550 (Fed. Cir. 1983). 8 Kloster Speedsteel AB vy. Stora Kopparbergs Bergslags AB, Nos. 85-2174, slip. op. (Fed. Cir. 1986); S.C. Johnson & Son v. Carter. Wallace, Inc., 781 F.2d 198 (Fed. Cir. 1986); CPG Products Corp. v. Pegasus Luggage, Inc., 776 F.2d 1007 (Fed. Cir. 1985). 9 Radio Steel & Mfg. Co. v. MTD Products, Inc., 788 F.2d 1554 (Fed. Cir. 1986); American Original Corp. v. Jenkins Food Corp., 774 F.2d 459 (Fed. Cir. 1985); King Instrument Corp. v. Otari Corp., 767 F.2d 853 (Fed. Cir. 1985); Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 758 F.2d 613 (Fed. Cir.), cert. dismissed, 106 S. Ct. 340 (1985). 14 On the other hand, in a ten (10) year period, prior to the formation of the Federal Circuit, i.e., from October 1982 back to the beginning of 1972, the regional courts of appeal, which previously decided patent cases, had punitive damage questions presented twenty-three (23) times. In fifteen (15) cases where punitive damages were awarded below, the regional circuits affirmed nine (9) times’® and reversed six (6) times.'' In eight (8) cases where punitive damages were denied below, the regional courts of appeal reversed only once’ and sent the case back for consideration of punitive damages and affirmed the denial seven (7) times.'? Thus, of twenty-three (23) punitive damage cases, the regional courts of appeal supported the 10 Paper Converting Machine Co. v. Magna-Graphics Corp., 680 F.2d 483 (7th Cir. 1982); Dickey-John Corp. vy. International Tapetronics Corp., 710 F.2d 329 (7th Cir. 1983); Novo Industri A/S v. Travenol Laboratories, Inc., 677 F.2d 1202 (7th Cir. 1982); Lam, Inc. v. Johns-Manville Corp., 668 F.2d 462 (10th Cir.), cert. denied, 456 U.S. 1007 (1982); /1ammerquist v. Clarke’s Sheet Metal, Inc., 658 F.2d 1319 (9th Cir. 1981); Norsin, Inc. v. International Business Machines Corp., 625 F.2d 357 (10th Cir. 1980); Milgo Electronic Corp. v. United Business Communications Inc., 623 F.2d 645 (10th Cir.), cert. denied, 449 U.S. 1066 (1980); Trio Process Corp. v. L. Goldstein’s Sons, 612 F.2d 1353 (3rd Cir.), cert. denied, 449 U.S. 827 (1980); Deyerle v. Wright Mfg, Co., 496 F.2d 45 (6th Cir. 1974). 11 Baumstimler v. Rankin, 677 F.2d 1051 (Sth Cir. 1982); Wilden Pump & Engineering Co. v. Pressed & Welded Products Co., 655 F.2d 984 (9th Cir. 1981); Deere & Co. v. International Harvester Co., 658 F.2d 1137 (7th Cir. 1981); Eltra Corp. v. Basic Inc., 599 F.2d 745 (6th Cir.), cert. denied, 444 U.S. 942 (1979); Yoder Bros. Inc. v. California- Florida Plant Corp., 537 F.2d 1347 (Sth Cir. 1976), cert. denied, 429 U.S. 1094 (1977); Gaddis v. Calgon Corp., 506 F.2d 880 (Sth Cir. 1975). 12 Saturn Mfg. Inc. v. Williams Patent Crusher & Pulverizer Co., 713 F.2d 1347 (8th Cir. 1983). 13 Square Liner 360°, Inc. v. Chisum, 691 F.2d 362 (8th Cir. 1982); Western Electric Co. v. Stewart-Warner Corp., 631 F.2d 333 (4th Cir. 1980); Saginaw Products Corp. v. Eastern Airlines, 615 F.2d 1136 (6th Cir. 1980); H. K. Porter Co. v. Goodyear Tire & Rubber Co., 536 F.2d 1115 (6th Cir. 1976); Maloney-Crawford Tank Corp. v. Sauder Tank Co., Si1 F.2d 10 (10th Cir. 1975); Wahl v. Carrier Mfg. Co., 511 F.2d 209 (7th Cir. 1975); White v. Mar-Bel, Inc., 509 F.2d 287 (Sth Cir. 1975). Te ———— ee 15 awarding of punitive damages only ten (10) times, or less than one-half (1/2) the time. Petitioner submits that the rise in punitive damage awards in patent cases is a result of the Federal Circuit’s very liberal standards for judging the existence of willful infringement. While 35 U.S.C. § 284 provides authority for the Court to increase damages, it provides no guidelines as to the basis for such an increase. Thus, the grounds for awarding punitive damages in patent cases have been entirely judicially devel- oped, centering on whether or not the infringement has been willful. This jurisprudence has developed for almost one hun- dred years with no guidance from this Court and with very little guidance prior to that time.'* As a result of this lack of direction in the area of punitive damages, the Federal Circuit has had virtually a clean slate upon which to write. The fact that the Federal Circuit has had about the same number of punitive damage appeals in less than four (4) years as the regional courts of appeal had in the previous ten (10) years is evidence that the Federal Circuit has chosen to write upon its clean slate in a manner which treats patent infringement as a social evil rather than a business tort. However, unlike most other torts, patent infringement has a certain salutary purpose. It is frequently the only method by which invalid patents can be challenged in the courts. This Court has held that there is a public interest in making sure that those with the greatest interest to challenge invalid patents are free to do so. Lear, Inc. v. Adkins, 395 U.S. 653, 670 (1969). Other courts have recognized that unfair roadblocks should not be placed in the path of the challenge of potentially invalid patents. As stated in Georgia-Pacific Corp. v. United 14 See, Topliff v. Topliff, 145 U.S. 156 (1892); Clark v. Wooster, 119 U.S. 322 (1886); Seymour v. McCormick, 57 U.S. (16 How.) 480 (1854). While this Court considered 35 U.S.C. § 284 in General Motors Corp. v. Devex Corp., 461 U.S. 648 (1983), on the question of prejudgment interest, it specifically noted at p. 651, n. 3, that the question of punitive damages was not presented in that case. 16 States Plywood Corp., 243 F.Supp. 500, 539 n.38 (S.D.N.Y. 1965): Thus, overemphasis of the deterrent function of damages could well lead to a stultification of the only expedient method of testing the validity of a patent. The doctrine of punitive damages, as applied by the Federal Circuit, is just such a roadblock. If left unchecked, it will have a chilling effect on companies’ efforts to design around valid patents as well as on companies’ ability to mount challenges to invalid patents. The Federal Circuit has held that to avoid punitive damages a party has an affirmative duty to obtain advice of counsel before undertaking any activities which might constitute in- fringement of a patent of which it has knowledge. Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983). Thus, if a party proceeds with the manufacture and sale of a product, either without advice of counsel or with advice obtained after being charged with infringement, it is very likely that the Federal Circuit will hold that party subject to treble damages notwithstanding that the validity and in- fringement issues were litigated in goo.’ faith. The Federal Circuit has also attempted to set standards for the quality of the legal advice rendered. /d.; Central Soya Co. v. Geo. A. Hormel & Co., 723 F.2d 1573 (Fed. Cir. 1983) (Nichols concur- ring). Also, see generally, Ghloz, Willful Infringement And “Magic Words”—The Effect Of Opinions Of Counsel On Awards Of Increased Damages And Attorney Fees, 66 J.Pat.Off. Soc’y. 598 (1984). The Federal Circuit has also enlarged the framework of activities which will be deemed to constitute willful infringe- ment. Witness this case, where the finding of willful infringe- ment is based solely on a circumstantial evidence theory borrowed from the copyzight law. There was no proof that Dura acted in bad faith. In fact, in denying TWM’s application for attorneys fees, the District 17 Court specifically found that there was no bad faith to support such an award. Nevertheless, the District Court found, and the Federal Circuit affirmed, that the copyright theory of “access plus similarity” was sufficient to support the award of more than $17,000,000 in punitive damages. Neither court below explained why the same conduct of Dura which was insuffi- cient to support the award of $300,000 in requested attorneys fees, was sufficient to support the award of more than $17,000,000 in punitive damages. It is the propensity of the Federal Circuit to punish patent infringers which permits such anomalies. It is respectfully submitted that as a matter of policy, punitive darnages in patent cases should be reserved for those situations where there is objective evidence of bad faith, and such damages should not be awarded based merely on circum- stantial evidence or the timing of attorneys’ opinions. When good faith defenses are raised as to the validity or infringement of a patent, and are fairly litigated, punitive damages should not be awarded. This Court should grant certiorari in order to clarify the standards for the awarding of punitive damages in patent cases. Conclusion For the reasons stated above, this Court should grant cer- tiorari to review the judgment of the United States Court of Appeals for the Federal Circuit. Respectfully submitted, Arthur D. Gray ay KENYON & KENYON One Broadway Of Counsel: New York, New York 10004 Francis T. Carr (212) 425-7200 Philip G. Hampton, II Counsel for Petitioner APPENDIX Ons} =F , a = la Opinion Below of the United States Court of Appeals for the Federal Circuit UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT Appeal Nos. 85-2153, 85-2237 and 85-2273* - TWM MANUFACTURING CO., INC., Appellee/Cross-Appellants, —_—V.— DURA CORP. AND KIDDE, INC., Appellants/Cross-A ppellees. as DECIDED: April 25, 1986 —- Before MARKEY, Chief Judge, NICHOLS, Senior Circuit Judge, and SMITH, Circuit Judge. a os = This court consolidated the appeals on May 20, 1985. In Appeal No. 85-2237, TWM challenged the district court’s acceptance of papers on file as a formal Notice of Appeal. In Appeal No. 85-2273, Dura challenged the district court’s refusal to accept a formal Notice of Appeal filed out of time. TWM moved to dismiss this appeal No. 85-2153 for untimely filing of a Notice of Appeal. This court denied that motion in an order dated August 13, 1985. The issues raised in Appeal Nos. 85-2237 and 85-2273 having been necessarily disposed of in the court’s dismissal of that motion, Appeal Nos. 85-2237 and 85-2273 are dismissed as moot. MARKEY, Circuit Judge. Dura Corp. and Kidde, Inc. (Dura) appeal from a judgment of the United States District Court for the Eastern District of Michigan, adopting a report of a special master awarding TWM Manufacturing Co., Inc. (TWM) $31,288,496 in dam- ages for patent infringement. We affirm. Background U.S. Patent No. 3,285,621 (‘621 patent) issued on November 15, 1966 to Stephen Turner, Jr. The patented device is a “Wheeled Vehicle Suspension” enabling trucks to engage an additional axle and wheels to carry heavy loads. Turner as- signed the patent to TWM on August 28, 1969. On December 19, 1966, Turner charged Dura with infringing the ‘621 patent and tendered Dura a license. During negotia- tions, Dura said it believed the patent invalid. Negotiations ended on April 24, 1967. Dura did not hear from Turner again until his assignee, TWM, sued Dura on February 22, 1973. Prior Proceedings The district court granted Dura’s motion for summary judgment, holding TWM’s claim barred by laches and estop- pel. 189 USPQ 274 (E.D. Mich. 1975). On appeal, the Sixth Circuit reversed and remanded, holding that a genuine issue of material fact existed on whether Dura had engaged in egregi- ous conduct that might undermine its laches and estoppel defenses. 592 F.2d 346, 201 USPQ 433 (6th Cir. 1979). TWM had alleged that Dura “plagiarized” the claimed invention and harassed TWM by initiating or sponsoring third party litiga- tion challenging the patent. On remand, the district court found that: (1) Dura’s behav- ior was sO egregious as to defeat the laches defense; (2) the absence of affirmative misconduct by TWM defeated the estoppel defense; (3) Dura had willfully infringed, and (4) Dura’s “copying” was not such bad faith as to warrant attorney fees. The court upheld the patent. 213 USPQ 423 (E.D. Mich. 1981). 3a The district court entered judgment: reserving decision on enhanced damages; granting an immediate injunction against infringement; and ordering an immediate accounting. The accounting, but not the injunction, was stayed pending Dura’s appeal to the Sixth Circuit Court of Appeals. While that appeal was pending, the district court found Dura in criminai contempt of the injunction because it sold repair parts for its infringing suspensions. Dura appealed that finding to the Sixth Circuit Court of Appeals. The Sixth Circuit Court of Appeals: affirmed the rejection of the laches and estoppel defenses and the upholding of the patent; held that Dura had violated the injunction, but was not guilty of criminal contempt; and remanded for determination of damages. 722 F.2d 1261, 221 USPQ 25 (6th Cir. 1983). The speciai master held an evidentiary hearing on damages and rendered her report. The district court orally adopted that report in toto as not ciearly erroneous. See Fed. R. Civ. P. 53(e)(2). The Special Master’s Report The special master calculated compensatory damages as $8,511,596, the sum of: (1) a 30% royalty, and lost profits for the years proven ($6,465,714); (2) $100 for each sale made by TWM at prices forced lower by the infringement ($1,577,200); (3) special discounts by TWM on some sales to compete with Dura’s pricing practices ($468,682); and (4) $100 for each sale by Dura in TWM’s lost profit years, because TWM would have made those sales at a $100 higher price ($366,900). The special master trebled the damages and added prejudgment interest, arriving at the ultimate figure of $31,288,496. In this appeal, Dura does not contest the award of interest, but contests each calculation of damages by the special master as “grossly excessive.” Issue Whether the damages judgment appealed from rested on an abuse of discretion. 4a OPINION Standard of Review The methodology of assessing and computing damages un- der 35 U.S.C. § 284 is within the sound discretion of the district court. Yarway Corp. v. Eur-Control USA, Inc., 775 F.2d 268, 275, 227 USPQ 352, 357 (Fed. Cir. 1985); King Instrument Corp. v. Otari Corp., 767 F.2d 853, 863, 226 USPQ 402, 409 (Fed. Cir. 1985), cert. denied, 54 USLW 3556 (1986). Dura, as appellant, has the burden of convincing this court that the district court abused its discretion. Seattle Box Co. v. Industrial Crating and Packing, Inc., 756 F.2d 1574, 1581, 225 USPQ 357, 363 (Fed. Cir. 1985); Paper Converting Machine Co. v. Magna-Graphics Corp., 745 F.2d 11, 21, 223 USPQ 591, 598 (Fed. Cir. 1984). “Abuse of discretion may be es- tablished by showing that the district court either made an error of law, or a clear error of judgment, or made findings which were clearly erroneous.” Seattle Box Co., 756 F.2d at 1581, 225 USPQ at 363; see also American Original Corp. v. Jenkins Food Corp., 774 F.2d 459, 462-64, 227 USPQ 229, 300-02 (Fed. Cir. 1985). Reasonable Royalty 35 U.S.C. § 284 governs the award of damages for patent infringement. It provides: Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the in- fringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court. * * ” ~ The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances. For the years TWM could not establish its lost profits, TWM and Dura agreed that the district court should determine a Sa reasonable royalty based on a “hypothetical royalty resulting from arm’s length negotiations between a willing licensor and a willing licensee.” Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1078, 219 USPQ 679, 682 (Fed. Cir. 1983); see Tektronix, Inc. v. United States, 552 F.2d 343, 348-49, 193 USPQ 385, 390-392 (Ct. Cl. 1977), cert. denied, 439 U.S. 1048 (1978); Georgia-Pacific Corp. v. U. S. Plywood Corp., 318 F. Supp. 1116, 1120-22, 166 USPQ 235, 238-39 (S.D.N.Y. 1970), modified, 446 F.2d 295, 170 USPQ 369 (2d Cir.), cert. denied, 404 U.S. 870 (1971). The parties recognize that no established royalty exists in this case. The special master, citing Georgia-Pacific and Tektronix, used the so-called “analytical approach”, in which she sub- tracted the infringer’s usual or acceptable net profit from its anticipated net profit realized from sales of infringing devices. Relying principally on a memorandum written by “Dura’s top management” before the initial infringement, the special master found that Dura projected a gross profit averaging 52.7% from its infringing sales. From that figure, she sub- tracted overhead expenses to get an anticipated net profit in the range of 37% to 42%. Subtracting the industry standard net profit of 6.56% to 12.5% from that anticipated net profit range, she arrived at a 30% reasonable royalty. Dura says the special master erred as a matter of law in failing to analyze all factors delineated in Georgia-Pacific. Had she done so, says Dura, she would have found the “analytical approach” inapplicable. Unlike the situation in Georgia-Paci- fic, Dura argues, Turner had an unproven product he was desperate to license to a company like Dura with marketing and manufacturing expertise, and there was a market leader with an established non-infringing product. Dura contends that it was error for the special master to rely on Dura’s estimate of future profit in a purely speculative memorandum. Having reevaluated the Georgia-Pacific factors, Dura strenuously ar- gues that the 30% royalty was “exorbitant” and “totally at odds with the result indicated by the other factors.” Dura has cited nothing which would limit the district court’s discretion in choosing the analytical approach to determine a 6a reasonable royalty. Section 284 does not mandate how the district court must compute that figure, only that the figure compensate for the infringement. Aro Manufacturing Co. v. Convertible Top Replacement Co., 377 U.S. 476, 507, 141 USPQ 681, 694 (1964). In arguing against the district court’s application of the analytical approach, Dura deals mostly with events subsequent to its initial infringement. Although evidence of actual profits is generally admissable, 7rans-World Manufacturing Corp. v. Al Nyman & Sons, inc., 750 F.2d 1552, 1568, 224 USPQ 259, 269 (Fed. Cir. 1984), the district court here correctly focused on the date when the infringement began. Hanson, 718 F.2d at 1079, 219 USPQ at 682; Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F. 2d 1152, 1158, 197 USPQ 726, 731 (6th Cir. 1978). On appeal, an infringer cannot successfully argue that the district court abused its discretion in awarding a “high” royalty by simply substituting its own recomputation to arrive at a lower figure. See Paper Converting Machine Co., 745 F.2d at 21, 223 USPQ at 598-99. That argument does not show error, but merely indicates the damages an infringer-appellant would prefer to pay. That the district court might have viewed the infringer’s evidence more favorably is not a basis for reversal. See American Original Corp., 774 F.2d at 462-64, 227 USPQ at 300-02. Whether Dura’s computation was more accurate than that proffered by TWM’s experts was for the special master to decide. Dura’s pointing to facts that might have supported a lower royalty does not sustain its burden of showing that the district court abused its discretion in adopting the facts found by the special master. Nor does it establish that the master’s findings were clearly erroneous. Dura’s oversimplified argu- ment that the special master considered only one Georgia-Paci- fic factor will not withstand analysis in light of the master’s extensive report. The special master gave weight to the testimony of TWM’s witnesses, who said their computations were derived from the factors in Georgia-Pacific. On the other hand, Dura offered no 7a testimony from any of its present or former employees who were familiar with Dura or TWM. Dura has given no basis for this court to take the highly unusual step of rejecting credibility determinations of the special master. Moreover, Dura disregards the effect of the special master’s specific rejection of many of the “facts” Dura urges on appeal. For example, Dura insists that there existed non-infringing alternatives. However, the special master found that the a@b- sence of such alternatives was indicated by Dura’s: (1) failure to design its own device, despite the alleged availability of other suspensions now characterized by Dura as “acceptable”; (2) election to infringe, despite having expended only minimal sums when notified of infringement; (3) willful infringement; (4) failure to successfully market other allegedly “acceptable” designs; (5) violation of the 1981 injunction, and (6) with- drawal from the business after enforcement of the injunction. The special master’s notation that the Turner invention’s immediate commercial success, its satisfaction of a long-felt need, and the absence of a competing suspension possessing all its beneficial characteristics, were factors tending to support a 30% royalty, is supported in the record. The special master properly rejected Dura’s effort to down- play the significance of its pre-infringement internal memoran- dum, because it was more probative than profits realized shortly after the infringement, because Dura’s loss of its documents precluded TWM from showing lost profits, and because Dura used the figures in the memorandum in deciding whether to manufacture and market the infringing device. On appeal, this court may not exercise de novo review over the special master’s finding on Dura’s anticipated profit. That rule is unaffected by the basis for that finding, i.e., by whether it is based on testimony or on physical or documentary evi- dence. Anderson v. City of Bessemer, N.C., U.S. : 105 S.Ct. 1504, 1512 (1985). The special master thoroughly considered and weighed the Dura memorandum, and this court may not reweigh it. “Determining the weight and credibility of the evidence is the special province of the trier of fact.” 8a Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 856, 214 USPQ 1, 7 (1982). The special master properly resolved difficulty in determin- ing the royalty figure against Dura as an infringer which had lost its records. Gyromat Corp. v. Champion Spark Plug Co.., 735 F.2d 549, 554-55, 222 USPQ 4, 8 (Fed. Cir. 1984). She recognized that “any adverse consequences must rest on the infringer when the inability to ascertain lost profits is due to the infringer’s own failure to keep accurate or complete rec- ords.” Lam, Inc. v. Johns-Manville Corp., 7\8 F.2d 1056, 1065, 219 USPQ 670, 675 (Fed. Cir. 1983). Dura has not persuaded this court that a 30% royalty does not reflect what a willing licensor and licensee would have agreed to in 1967, based on the present record. That Turner might have agreed to a lesser royalty is of littie relevance, for to look only at the question would be to pretend that the infringement never happened. “It would also make an election to infringe a handy means for competitors to impose a ‘com- pulsory license’ policy upon every patent owner.” Panduit Corp., 575 F.2d at 1158, 197 USPQ at 731. The willing licensee/licensor approach must be flexibly applied as a “device in the aid of justice.” Cincinnati Car Co. v. New York Rapid Transit Corp. , 66 F.2d 592, 595, 19 USPQ 40, 43 (2d Cir. 1933). Entire Market Value Rule Dura argues that the special master erroneously included unpatented wheels and axles in the royalty base and in the lost profits award. Dura contests the applicability of the “entire market value” rule here because TWM did not manufacture the unpatented parts, but merely provided them as a “conven- ience to its customers.” We reject Dura’s argument that the inclusion of unpatented items in the royalty base or lost profits determination is dependent on who manufactures those items, or on whether they are supplied for “convenience”. The entire market value rule allows for the recovery of damages based on the value of an entire apparatus containing 9a several features, when the feature patented constitutes the basis for customer demand. See, e.g., King Instrument Corp. v. Otari Corp., 767 F.2d 853, 865, 226 USPQ 402, 410-11 (Fed. Cir. 1985), cert. denied, 106 S. Ct. 1197 (1986); Paper Convert- ing Machine Co., 745 F.2d at 22, 223 USPQ at 599 (Fed. Cir. 1984). It is the “ ‘financial and marketing dependence on the patented item under standard marketing procedures’ which determines whether the non-patented features of a machine should be included in calculating compensation for infringe- ment.” Kori Corp. v. Wilco Marsh Buggies and Draglines, Inc., 761 F.2d 649, 656, 225 USPQ 985, 989 (Fed. Cir.), cert. denied, 106 S. Ct. 230 (1985) (quoting Leesona Corp. v. United States, 599 F.2d 958, 974, 202 USPQ 424, 439 (Ct. Cl.), cert. denied, 444 U.S. 991 (1979)). In establishing lost profits, “[t]he deciding factor. . . is whether ‘[nJormally the patentee (or its licensee) can anticipate sale of such unpatented components as well as of the patented’ ones.” Paper Converting Machine Co., 745 F.2d at 23, 223 USPQ at 599 (quoting Tektronix, 552 F.2d at 351, 193 USPQ at 393). Where a hypothetical licensee would have anticipated an increase in sales of collateral unpatented items because of the patented device, the patentee should be compensated accord- ingly. Cf. Trans-World Manufacturing Co., 750 F.2d at 1568, 224 USPQ at 269-70 (increased sales of unpatented items may be relevant in determining reasonable royalty). That correla- tion was shown to exist in this case. Because Dura did not show how many, if any, of the patented devices were sold alone without wheels and axles, the special master could not have apportioned the infringing sales if such apportioning had been appropriate. The special master correctly included unpatented items in the royalty base. Having shown each of the elements for lost profits, TWM established that in all reasonable probability it would have made the sales that Dura made. The special master therefore correctly included the unpatented wheels and axles in her lost profits determination. 10a Lost Profits Dura says TWM should get no lost profits because it did not establish absence of acceptable non-infringing substitutes, which, says Dura, need not possess all the beneficial charac- teristics of the patented device. Alternatively, Dura says the concession of a TWM witness (that competition existed in 30% of the market) means there must have been non-infringing substitutes in at least that portion of the market. Dura’s arguments are without merit. As above indicated, the special master found many facts clearly establishing absence of acceptable substitutes. Dura has failed to show that any of the many findings on which the magistrate’s non-substitutes deter- mination was based was clearly erroneous. Mere existence of a competing device does not make that device an acceptable substitute. The special master committed no error in noting that none of the alleged substitutes had all beneficial characteristics of the patented device. See Central Soya Co. v. Geo. A. Hormel & Co., 723 F.2d 1573, 1579, 220 USPQ 490, 494 (Fed. Cir. 1983). That finding supported the determination that there were no acceptable substitutes. “A product lacking the advantages of that patented can hardly be termed a substitute ‘acceptable’ to the customer who wants those advantages.” Panduit Corp., 575 F.2d at 1162, 197 USPQ at 734. Moreover, Dura ignored those substitutes while it sold the patented invention and thus its acceptable substitute argument “must be viewed of limited influence.” /d. at 1162 n.9, 197 USPQ at 734 n.9. Dura has shown no error in the special master’s determina- tion that TWM is entitled to lost profits for the years its lost profits exceeded its reasonable royalty. Diminished Sales Prices and Special Discounts Dura argues that the special master should not have awarded TWM $100 for each TWM sale and Dura saie in the lost profit years 1976-1979 because that award was based on testimony which is “totally fallacious and contrary to other evidence in the case.” Dura argues tha‘ nothing in the record supports the lla finding that TWM could have sold its patented product for $100 more had Dura not infringed. The special master credited the testimony of TWM’s wit- nesses, Messrs. Wilkof and Van Denberg, who testified that Dura’s infringement caused TWM to keep its prices down $100 on the average. Dura presented no rebuttal witnesses to that testimony. When no contrary evidence exists in the record, bald assertions that the testimony is self serving and defies common sense cannot form a “basis on which this court could engage in the normally inappropriate process of substituting a contrary credibility determination for that of the district court.” Wind- surfing International, Inc. v. AMF Inc., 782 F.2d 995, 999, 228 USPQ 562, 565 (Fed. Cir. 1986). In addition to the $100 price reduction, substantial evidence supports the special master’s finding that TWM had to give special discounts to compete with Dura’s pricing practices. Dura’s argument that there was no correlation between the special discounts and its infringing activity is contrary to the record and must be rejected. in determining an award “adequate to compensate”, 35 USC § 284, there must be room to take into account the totality of the circumstances. The sale price and discount elements em- ployed here may be unusual. Their employment under the circumstances of this case, however, did not constitute an abuse of discretion. Because Dura has shown no evidence contradicting the special master’s findings concerning the $100 on each TWM sale, $100 on each Dura sale, and TWM’s special discounts, those awards must be affirmed. Enhanced Damages Dura concedes that the district court’s finding of willfull infringement is the law of the case. Dura contends, however, that absence of a finding of its “bad faith” precludes an award of enchanced damages for the willful infringement. This court reviews an award of enhanced damages under an abuse of discretion standard, See, e.g., Rosemont, Inc. v. 12a Beckman Instruments, Inc., 727 F.2d 1540, 1547-48, 221 USPQ 1, 8-9 (Fed. Cir. 1984), and has repreatedly affirmed enhanced awards based on findings of willfull infringement. See cases cited in S.C. Johnson & Son, Inc. v. Carter-Wallace, Inc., 781 F.2d 198, 200, 228 USPQ 367, 368 (Fed. Cir. 1986). Dura cites no law requiring a finding of “bad faith” before awarding increased damages for willful infringement. Nor has Dura shown an abuse of discretion in the district court’s response to Dura’s “bad faith” arguments after the remand. The treble damage award must be affirmed. Conclusion The judgment appealed from is affirmed in all respects. AFFIRMED 13a Opinion of the United States District Court for the Eastern District of Michigan Dismissing the Complaint Because of Laches and Estoppel DISTRICT COURT E. D. MICHIGAN, S. Div. No. 4-72852 Decided December 3, 1975 as TWM MANUFACTURING COMPANY, INC., et al. —_—V— DURA CORPORATION aoe KAESS, Chief Judge, This matter comes before the Court on the motion of the defendant, Dura Corporation (Dura), for summary judgment dismissing plaintiffs’ complaint for infringement of Turner U.S. Patent 3,285,621, on the basis of laches and estoppel. Defendant contends that plaintiffs’ unreasonable and inexcus- able delay in commencing suit after notice of infringement had been given resulted in prejudice to the defendant and that under the equitable doctrines indicated above, recovery should be barred. As in any motion of this type, the underlying facts and circumstances are extremely important to any analysis and determination of the issues presented. The Court has earlier, in an opinion and order denying defendant’s motion for sum- mary judgment, described the physical characteristics and functions of the Turner Patent. That process need not be repeated for purposes of the current motion. However, a brief chronology of relevant dates with respect to the relations between the parties is necessary and is as follows: DATE January 12, 1965 March 12, 1965 November 15, 1966 December 5, 1966 December 19, 1966 January 9, 1967 January 25, 1967 February 21, 1967 March 3, 1967 March 16, 1967 March 31, 1967 March 31, 1967 l4a EVENT Turner patent application, Serial No. 424,933 filed in the U.S. Patent Office by Williams and Kreske, attorneys for Turner. Copy of the Turner patent application sent by Turner attorney Michael Williams to Dura Cor- poration. Turner patent issued as No. 3,285,621. Dura Corporation advertises for sale in ‘‘Trans- port Topics’’ the 1400 series suspension, the accused device in this action. Turner attorney Kreske writes to Dura Corpora- tion under certified No. 900474 notifying Dura that ‘‘sale or use of such device appears to come within the scope of patent 3,285,621.’’ Soft copy of the Turner patent received by Dura Corporation, and notice of infringement ac- knowledged by attorney M.K. Murphy, patent counsel for Dura Corporation. The late Max Murphy, attorney writes memo- randum to Dura Management recommending accumulation of a reserve against possible liabil- ity in connection with the Turner and Kulyk patents. Turner attorney Kreske reminds the late Max Murphy that no further response has been re- ceived. The late Max Murphy acknowledges February 21 letter from Attorney Kreske. The late Max Murphy advised Attorney Kreske that the Turner patent appears to be invalid. The late Max Murphy writes to Dura Manage- ment that if Turner’s attorney does not reply within 60 to 90 days, then Dura should recon- sider the matter ‘‘with a view to eliminating the royalty reserve.’’ Turner’s Attorney Kreske writes to the late Max Murphy and disagrees with the effect of the prior uses referred to by Murphy. Kreske states: 15a DATE EVENT “*It may be that I misinterpret prior use to which you refer and if so, I can correct it. In any event, your comments are awaited since my client is pressing me to dispose of this matter.’’ (Emphasis added) April 5, 1967 The late Max Murphy writes to Attorney Kreske reaffirming his opinion of invalidity. April 24, 1967 Turner Attorney Kreske has final contact with the late Max Murphy by telephone. 1968 Dura Attorney Max Murphy dies. May 6, i970 An action styled Giurato v. Turner is filed by Anthony Giurato in Mahoning County Court of Common Pleas, No. 190635, alleging that Stephen Turner, Jr., was not the first and origi- nal inventor of the subject matter claimed in the Turner U.S. patent 3,285,621, but rather Turner had derived the idea from Giurato. January 6, 1972 Giurato v. Turner suit settled by mutual release and agreed judgment and payment of $7,500 from Turner to Giurato. February 22, 1973 TWM Manufacturing Company files complaint in the present action in the Eastern District of Kentucky. Plaintiff does not dispute the dates or the references made to contacts between the plaintiff and the defendant. Rather, as will be discussed infra, plaintiff disputes the relevance of the dates and the interpretations given to certain documents as they relate to laches and estoppel. The doctrine of laches, perhaps peculiar to patent litigation, has been defined succinctly in a recent decision of the Sixth Circuit Court of Appeals. As the Court noted in American Home Products Corp. v. Lockwood Mfg. Co., 483 F.2d 1120, 1122, 179 USPQ 196, 197 (6th Cir.), cert. denied 414 U.S. 1158, 180 USPQ 417 (1974): **Generally, laches requires that there be, in the light of all the existing circumstances, an unreasonable delay re- sulting in prejudice to the other party. Sobos!le v. United States Steel Corp., 359 F.2d 7, 12 (3rd Cir. 1966).’’ l6a See also Siemens Aktiengesellschaft v. Beitone Electronics Corp., 381 F.Supp. 57, 60, 184 USPQ 433, 435 (1974). The examination of laches in the instant case must then be a bifuracted one. Being continually cognizant of the surrounding circumstances, the Court must first determine whether or not there was an unreasonabie delay, and if so, whether the delay resulted in prejudice to the defendant. Answering each in the affirmative, the Court must then examine the situation as it relates to the defense of estoppel. Delay A review of the above chronicled events indicates that the patent of the plaintiffs issued November 15, 1966. Shortiy thereafter, on December 5, 1966, an advertisement for the alleged infringing device appeared in an edition of ‘‘Transport Topics.’’ Approximately two weeks later, counsel for Turner advised Dura, with reference to the advertisement, that: ““* * * the manufacture, sale, or use of such device appears to come within the scope of patent 3,285,621. On behalf of the owner of this patent, I have been instructed to advise that consideration will be given to all reasonable offers to purchase this patent or to a license thereunder.”’ Defendent refers to this communication as a formal notice of infringement, while plaintiff contends that it is no more than an offer to purchase or license. In support of its contention, plaintiff submits two other correspondences with other in- fringers, which it asserts are notices of infringement.' A review I 1 February 1967 CC: Turner A & A Welding Mingo Junction Ohio 43938 Gentlemen: It has come to the attention of my client that you may be interested in the manufacture and/or sale of auxiliary, lift axle suspensions of the type covered in United States Patnt No. 3,285,621. oN es tr lan A? 17a of these two letters, as well as an analysis of the letter sent to Dura, satisfies this Court that the letter of December 19, 1966, is indeed a notice of infringement. That communication not only solicits a purchase or possible licensing under the patent but also asserts that the product manufactured by the defen- dant infringes on the patent of Turner. Subsequent communi- cations disclose that Dura ultimately rejected the validity of the Turner Patent and, on that basis, advised counsel for Turner that they ‘‘would not be interested in purchasing this patent or taking a license under it.’’ This decision was made despite the Against the possibility that the foregoing is correct, I enclose a print of the patent and advise that the owner of such patent will give consideration to a license arrangement permitting manufacture and sale of such suspensions. Your early reply will be appreciated. Very truly yours Gerald H. Kreske GHK/el Encl Certified Mail No. 900414 - RRR 1 February 1967 CC: Turner Burnham Trailer Service Hanoverton, Ohio 44423 Gentlemen: I am advised that your company is installing auxiliary, lift axle suspensions that fall within the scope of United States Letters Patent 3,285,621, print of which is enclosed. The owner of this patent intends to enforce his right to prevent unauthorized manufacture, use, or sale, of devices falling within the scope thereof. If you wish to continue installation of these auxiliary axle suspen- sions, consideration will be given to a license arrangement permitting manufacture and sale of such suspensions. Your early reply is solicited. Very truly yours Gerald H. Kreske GHK/encl Certified Mail No. 900413 - RRR 18a fact that Dura had been informed by counsel for Turner that ‘‘my client is pressing me to dispose of this matter.’’ Com- munications between the two apparently terminated sometime in April, 1967. Thus, there is a period of approximately six years and two months between the initial notice of infringement to Dura and the commencement of this lawsuit on February 22, 1973. The interval between the break-off of negotiations and the lawsuit is approximately five years and ten months. The Court is aware of no precedent which declares at what point a delay becomes an unreasonable one. Rather, it appears that each situation must be evaluated individually on the facts and circumstances as they exist. Siemens, supra, at 60, 184 USPQ at 435; Baker Manufacturing Co. v. Whitewater Manufacturing Co., 430 F.2d 1008, 1011, 166 USPQ 463, 464-465 (7th cir. 1970), quoting, Westco-Chippewa Pump Co. v. Delaware Electric & Supply Co., 64 F.2d 185, 187, 17 USPQ 145, 147 (3d Cir. 1933); American Home Products Corp. v. Lockwood Mfg. Co., 173 USPQ 486, 497 (S.D. Chio 1972). In defense of the delay in this case, plaintiff offers two situations which can generally be described as falling under the heading of “other litigation.” The first relates to attempts by the patentee to enforce the patent against two alleged in- fringers who were producing locally. Reference has previously been made to letters sent to these parties. Negotiations lasted into 1967 and were settled prior to Court action. the second defense deals with litigation attacking the sole inventorship by Turner of the patent in question. This suit was initiated by one Anthony Giurato in Common Pleas Court in Ohio in May, 1970, and resolved December 21, 1971, by a settlement with the plaintiff. The judgment, entered and docketed on January 6, 1972, held that Turner was the sole inventor of U.S. Patent 3,285,621. The Court in American Home Products, supra, had occa- sion to deal at some length with the defense of ‘‘other litiga- tion.’’ There, the Court noted: ‘‘Ekco, however relies upon the generally accepted princi- ple that delay in suing an infringer is not legal delay in a 19a laches sense when the party asserting the patent is engaged in other litigation against other infringers. U.S. Mitis Co. v. Detroit Steel & Spring Co., 122 F. 863, 866 (6th Cir. 1903); Jenn-Air Corp. v. Penn Ventilator Co., 464 F.2d 48, 50, 174 USPQ 419, 420-421 (3rd Cir. 1972). This exception takes into account the fact that patent litigation is often unusually complex, lengthy and expensive. It is an equitable doctrine, and must be considered as one factor which would, in appropriate circumstances, negate a de- fense of laches. Therefore, we must assess the various factors which might tend to negate a claim of unreason- able delay and must consider all of the factors which contributed to this admittedly unique situation. * * * ‘*Although the ‘other litigation’ exception does permit a patent owner to sue multiple infringers consecutively, we are unable to find any authority for the proposition that the existence of ‘other litigation’ is a complete bar to the assertion of a laches defense. Although multiple litigation need not be maintained against multiple infringers, we see no reason why a patent owner need not at least assert to the other infringers its intention to bring a subsequent action at the termination of the presently pending ac- tion.’’ American Home Products, 483 F.2d 1120, at 1122-1123, 179 USPQ at 197-198. Thus, in this Circuit at least, other litigation is only one of many factors to be considered. For several reasons, the Court does not view those negotia- tions with alleged infringers as an excuse to the delay in bringing this action. First, the negotiations terminated in 1967, at least five full years before this action was commenced. Second, the negotiations never approached the status of litiga- tion, or the complexity, length or expense inherent therein. Plaintiff’s second defense, litigation involving an attack on the inventor’s title, presents a somewhat analogous yet distin- guishable situation from that usually encountered. Generally, 20a where other litigation is used as a defense to laches and estoppel, it refers to other infringement litigation in which the plaintiff is involved. Plaintiff here asserts that the intervening litigation, which required a resolution as to his title and ownership of the patent, operates as an absolute excuse for the delay. Plaintiff cites several cases which allegedly support this proposition. A review of those cases reveals that none declare such litigation to be an absolute defense and that each is distinguishable on its facts from the case at bar. In Maloney, v. Rocky Mountain Natural Gas, 494 F.2d 401, 181 USPQ 617 (10th Cir. 1974), the plaintiff’s assignor had not received title to the patents until just three years prior to the bringing of the action. Up to that point, title had been in the hands of another and subject to dispute. In the present case, plaintiff has always had title despite the Giurato challenge. Huntman Stabilizer Corp. v. Generai Motors, 53 F.Supp. 43, 59 USPQ 220 (D.C.N.J. 1943), involved a patent interference action in the Patent Office which delayed the issuance of the patents and which had been backed by the defendant in the infringement action. The delay in Taylor Engines, Inc. v. All Steel Engines, Inc. 192 F.2d 171, 92 USPQ 35 (9th Cir. 1951), was the result of a State Court action challenging title brought by the defen- dants in the infringement action. The defendant here was not a party to the state action against Turner. Berry v. Bohn Aluminum and Brass Co., 43 USPQ 133 (E.D. Mich. 1939), involved a delay due to a priority dispute which ultimately went to the Sixth Circuit Court of Appeals. There, however, plaintiff commenced suit against the defendant prior to the final resolution of the interference action. Here, the plaintiff waited in excess of one year after the termination of the litigation to initiate suit against Dura. Skinner v. Dow Chemi- cal Co., Inc., 85 USPQ 191 (E.D. Mich. 1950), again involved a situation where the plaintiff did not have title until shortly before bringing suit and where plaintiff’s assignor refused to bring suit against the infringers. Finally, plaintiff’s reliance on Jones v. Ceramco, 184 USPQ 75 (D.C. N.Y. 1974), appears misplaced inasmuch as the decision of the Court refusing to dismiss the infringement action on the basis of laches and 2la wsiuppel was reversed on reconsideration ‘vy the Court. Jones v. Ceramco, 387 F.Supp. 940, 184 USPQ 591. The Court in Siemens, supra, was confronted with a situa- tion much the same as that presented in the case at bar. There in defense of a similar motion, the plaintiff asserted excuse resulting from other patent infringement litigation, inventor- ship litigation, and the unsettled status of its German patent application. The length of the delay, from the time Siemens first learned of defendant's accused product until action was brought, was seven years. Considering the length of the delay and the verified excuses offered by the plaintiff, the Court nonetheless concluded that ‘‘piaintiff’s dereliction was both unreasonable and inexcusable and has not been adequately explained.’’ This Court is obliged to reach the same conclusion on the facts before it here. Plaintiff offers no excuse for the three-year hiatus prior to the inventorship litigation or for the fourteen months after the resolution of that dispute. At the very least, the plaintiff could have notified the defendant of the possibility of future litigation pending the outcome of the other suit. See: Advanced Hydraulics, Inc. v. Otis Elevator Co., 186 USPQ 1, 4 (7th Cir. 1975); Baker, supra, at 1015, 166 USPQ at 468; Siemens, supra, at 61, 184 USPQ at 435-436; American Home, supra, at 1123, 179 USPQ at 197-198; Min- nesota Mining & Mfg. Co. v. Berwick Industries, Inc. 373 F.Supp. 851, 867-868, 182 USPQ 1i1l, 121-123 (M.D. Pa. 1974). Plaintiff also contends that the time of the delay here involved is less than six years, inasmuch as there could be no infringement of the Turner Patent until the Dura device was installed on a truck. Apparently, counsel for plaintiff would now reverse his earlier position with respect to what parts make-up the combination which is the Turner Patent. Pre- viously, it was argued that the patent did not include a stable axle and wheeled vehicle frame since their inclusion would render the patent void for overclaiming. See page six of this Court’s decision of October 9, 1975. Counsel would now contend that only the truckers could be direct infringers thus implying that the truck and its assemblage are integral parts of 22a the Turner Patent. The Court rejects this argument out of hand. The time, for laches purposes, begins to run with the notice of infringement since December 19, 1966. American Home Products, 173 USPQ at 497; Baker, supra, at 1014, 166 USPQ at 467-468; Advanced Hydraulics, Inc., supra, at 3. The Court, therefore, concludes that the delay in this case, from the notice of infringement until the commencement of the action, was both unreasonable and not excused. Prejudice The Court is aided with respect to the issue of prejudice to the defendant by the presumption of damage which arises where the delay exceeds the applicable six-year statute of limitations. 35 U.S.C. § 286. As the Court noted in General Electric Co. v. Sciaky Bros., Inc., 304 F.2d 724, 727, 134 USPQ 55, 57-58 (6th Cir. 1962): “Where the unexplained delay exceeded the applicable period of the statute of limitations, injury to the defen- dant is presumed. In a patent infringement action equita- ble principles are applied. Equity will not aid those who have slept on their rights. The failure of General Electric to take action over the many years constituted laches. Whitman v. Walt Disney Productions, Inc. 263 F.2d 229, 120 USPQ 253 (CA 9); Smith v. Sinclair Refining Co., 257 F.2d 328, 118 USPQ 183 (CA 2); Gillons v. Shell Co. of California, 86 F.2d 600, 32 USPQ 1 (CA 9); Wood- manse & Hewitt Mfg. Co. v. Williams, 68 F. 489 (CA 6).” See also: Siemens, supra, at 61, 184 USPQ at 435-436; Con- tinental Coatings Corp. v. Metco, Inc., 464 F.2d 1375, 1378, 174 USPQ 423, 425-426 (7th Cir. 1972); American Home Products Corp., 173 USPQ at 497. This presumption of damage to the defendant has been sufficient to support a finding of laches, even absent a proof of actual damage. Continental Coatings, supra; Baker, supra. Even absent this presumption, the Court finds sufficient prejudice to the defendant, resulting from the delay, to support 23a port a finding of laches. Shortly after the notice of infringe- ment was received by Dura, Murphy, counsel for Dura, suggested that a reserve fund of four to five percent of the sales price be set aside in the event of potential future infringe- ment liability. This fund, whether contemplated or existing, was apparently abandoned by Dura when no response was forthcoming from Turner subsequent to Dura’s determination of the patent’s invalidity. Had Turner timely prosecuted an infringement action, after the notice of infringement had been given to Dura, the defendant would have had the option of continuing the royalty reserve. Plaintiff’s inaction thus resulted in detriment to the defendant. Further, other steps might have been taken by the defendant to either mitigate or avoid liability to the plaintiff. ‘*A number of avenues by which defendant could have protected itself would have been opened. Beltone could have brought a declaratory judgment action under 28 U.S.C. § 2201 if the delay in waiting for the termination of the German administrative and judicial proceedings would have been burdensoine. See, e.g., American Home Products Corp. v. Lockwood Mfg. Co., supra, 483 F.2d at 1123, 184 USPQ at 436. Notification also may have prompted Beltone to undertake an immediate reevalua- tion of its earlier conclusion that Siemens’ ‘invention’ was unpatentable and may have led defendant to modify its production plans for the hearing aids in question. Any subsequent decision by Beltone to proceed with its origi- nal models would have been made with full knowledge of the risk of litigation involving those products and the company could have taken steps to mitigate any losses attendant upon an adverse result in such a suit. Id. at 1124, 179 USPQ 198-199. See also Anchor Stove & Range Co. v. Montgomery Ward & Co., supra, 114 F.2d at 895, 47 USPQ at 329-330.’’ Siemens, supra, at 62, 184 USPQ at 436. See also: Rome Grader & M. Corp. v. J. D. Adams Mfg. Co., 135 F.2d 617, 619, 57 USPQ 442, 443-444 (7th Cir. 1943); 24a Briggs v. Wix Corp. 308 F.Supp. 162, 170, 163 USPQ 283, 289 (N.D. Ill. 1969). Westco-Chippewa Pump Co., supra, at 186, 17 USPQ at 145-146. Thus, defendant has been damaged not only by what it did in reliance on the inaction and apparent acquiescence of the plaintiff but also by what it might have done had the holders of the patent acted in a manner consistent with one whose rights were being violated by another. There having been an unreasonable delay, coupled with prejudice to the defendant, a conclusion of laches is appropri- ate. Estoppel While the underlying considerations are generally consistent, there is a distinction between laches and estoppel. As was indicated in Continental Coatings Corp., supra, at 1379, 174 USPQ at 426-427: ‘‘Although the distinction is sometimes overlooked or obscured, there is indeed an important difference between laches and estoppel. That difference is plainly identified in this Court’s opinion in George J. Meyer Mfg. Co. v. Miller Mfg. Co., 24 F.2d 505 (1928). In that case the Court held that the defense of estoppel, as well as laches, was available: ‘They not only knowingly sat by while appellee built up its large business in bottle washing machines, but, by their conduct, they encouraged the belief that such business would be unmolested. When the Loew Manufacturing Company charged appellee with in- fringing its Adams & Rice patent and then withdrew its claim, appellee had justification for enlarging its capital and extending its business.’ In later cases this circuit has consistently denied the patentee any relief if the evidence of unreasonable and _ unexcused delay also disclosed that the patentee’s conduct had encouraged the belief that the infringer’s business would be unmolested. In each such case the infringement et ke ee ee Pree rt be i eee FG iO CC OIE BE RG OT 25a notice was either withdrawn or followed by such a long period of inactivity as to justify an inference of abandon- ment. In some instances the Court failed expressly to mention the term estoppel, but in each case ali relief was denied the patentee.’’ (Citations omitted) See also: Minnesota Mining & Mfg. Co., supra, at 869, 182 USPQ at 123-124; Westco-Chippewa Pump Co., supra, at 186, 17 USPQ at 145-146. A careful review of the circumstances of this case as pre- viously brought out satisfies the Court that the plaintiff should be estopped from proceeding further with this action. The plaintiff clearly knew of the possible infringement of the defendant in late 1966. After defendant advised the plaintiff of its opinion of the invalidity of the Turner Patent, the plaintiff refrained from any action for a substantial period of time. The defendant was thus justified in proceeding on the supposition that the plaintiff had either acquiesced in its opinion of invalidity or that the plaintiff was abandong its position. It is also important to note that no notice was ever given Dura that plaintiff intended to enforce any possible claims against them. Finally, Dura was prejudiced by the delay. There being no genuine issue of material fact in dispute with respect to those facts necessary to a determination of the issues of laches and estoppel, summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, is appropriate. For the reasons set forth above, defendant’s motion for summary judgment be, and hereby is, granted. 26a Opinion of the United States Court of Appeals for the Sixth Circuit Reversing the Dismissal of the Complaint for Laches and Estoppel UNITED STATES COURT OF APPEALS SIXTH CIRCUIT Argued Oct. 17, 1978 Decided Feb. 16, 1979 No. 77-1118 ++ TWM MANUFACTURING CO., INC. and TURNER QUICK LIFT, Plaintiffs-Appellants, —_—V.— DURA CORPORATION, Defendant-A ppellee. on Before EDWARDS, Chief Judge, MERRITT, Circuii Judge, and LAWRENCE,”* District Judge. MERRITT, Circuit Judge. Plaintiff TWM, appeals from the entry of a summary judgment sustaining defenses based on the equitable doctrines of laches and estoppel in a patent infringement action. Plain- tiff contends (1) that defendant Dura’s infringement of the patent was deliberate and calculated, that the delay in bringing suit was in part caused by Dura, and that the balance of equities is sufficiently disputable to preclude summary judg- ment; and (2) that the district court erred in applying the ° The Honorable Alexander A. Lawrence, Judge of the United States District Court for the Southern District of Georgia, sitting by designation. 27a doctrine of estoppel to foreclose injunctive relief and the recovery of damages subsequent to the filing of the complaint. We hold that the district court erred in granting summary judgment on the grounds of laches and estoppel. Accordingly, we reverse and remand the case for trial. The patent (No. 3,285,621) was issued to Steven Turner, Jr. on November 15, 1966. He granted plaintiff an exclusive license. The infringement suit is about an inflatable air bag connected to heavy springs designed to lift and lower axles on truck trailers. The invention allows auxiliary wheels to be suspended above the road surface in order to avoid drag when a truck is carrying a light load and to be put in place on the road when carrying a heavy load. The infringement action was filed in February 1973, eight years after a patent application was filed and the invention was disclosed to the defendant by letter; just over six years after the patent was issued and formal notice was given to the defendant that its similar air bag suspension device infringed the patent; just under six years after the defendant expressly rejected the claim of infringement; three years after the filing of a suit against TWM by a third party challenging the Turner patent’s validity; and one year after that suit was settled. I. LACHES The only statute of limitations involving patent infringement suits merely limits the period of recovery of damages to six years, not a patentee’s right to maintain an action. Congress has provided that “every patent shall contain. . . a grant to the patentee . . . for the term of seventeen years . . . of the right to exclude others from making, using, or selling the invention.” 35 U.S.C. § 154 (1976). During this time, “a patentee shall have remedy by civil action for infringement.” 35 U.S.C. § 281 (1976). Courts may enforce patent rights by granting “injunctions in accordance with the principles of equity. . . on such terms as the court deems reasonable,” and by awarding “damages adequate to compensate for the in- fringement.” 35 U.S.C. §§ 283, 284 (1976). The statute of 28a limitations provides that “no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint. . ..” 35 U.S.C. § 286 (1976). Since the statute limits only the period for recovery of damages, courts employ the traditional, equitable doctrine of laches for determining the timeliness of infringement actions. Courts use the six year statutory period for damages, however, as a frame of reference for the application of the doctrine.’ This is consistent with normal equity practice which considers the passage of time equivalent tc a comparable statute of limitations as presumptive of laches.” Using the six-year statutory period for recovery found in 35 U.S.C. § 286, courts have established the principle in patent cases that delay in filing suit longer than six years after notice of infringement creates a presumption of laches.’ Such a delay is presumed to be unreasonable, and the defendant is presumed to have been prejudiced.* The plaintiff will be barred from seeking past damages by laches unless he can (1) rebut the presumption of prejudices; (2) rebut the presumption of un- reasonable delay by showing a good excuse for the delay;° or 1 General Electric Co. v. Sciaky Bros. Inc., 304 F.2d 724, 727 (6th Cir. 1962); Maloney-Crawford Tank Corp. v. Rocky Mountain Natural Gas Co., Inc., 494 F.2d 401, 403-04 (10th Cir. 1974); Whitman vy. Walt Disney Productions, Inc., 263 F.2d 229, 231 (9th Cir. 1958). 2 Note Developments in the Law—Statutes of Limitations, 63 Harv.L.Rev. 1177, 1184 (1950). 3. Maloney-Crawford Tank Corp. v. Rocky Mountain Natural Gas Co., supra note 1; Continental Coatings Corp. v. Metco, Inc., 464 F.2d 1375 (7th Cir. 1972) (opinion by Judge, now Mr. Justice Stevens). 4 General Electric Co. v. Sciaky Bros, supra note | at 727; Continental Coatings v. Metco, supra note 3 at 1378. S_ E.g., Maloney-Crawford Tank Corp. v. Rocky Mountain Natural Gas, supra note | at 404. 6 E.g., American Home Prod. Corp. v. Lockwood Mfg. Co., 483 F.2d 1120 at 1122-24 (6th Cir. 1973), cert. denied 414 U.S. 1158, 94 S.Ct. 917, 39 L.Ed.2d 110 (1974). 29a (3) show that the infringer has engaged in particularly egregi- ous conduct which would change the equities significantly in plaintiff’s favor.’ We must keep in mind, however, that laches is an equitable doctrine with its origin in the conscience of the chancellor, not in the common law rules of the King’s Bench or Court of Common Pleas. We agree with the district court’s finding of fact that the period of delay in this case began to run from the notice of infringement given to defendant on December 19, 1966, six years and two months before plaintiff brought this infringe- ment suit. The lower court was, therefore, correct in finding that a presumption of prejudice exists since the period of delay exceeds the comparable six-year statute of limitations. We also agree with the lower court’s opinion that the other litigation involving the same patent but a different adversary should not toll the running of the laches period or defeat the defense— with the qualifications outlined below concerning plaintiff’s claim that the defendant sponsored the other litigation for purposes of harassment. We, therefore, agree that the plaintiff has rebutted neither the presumption of prejudice nor the presumption of unreasonable delay. Our disagreement with the district court arises from the fact that plaintiff charges and has come forward with some evi- dence that the defendant has engaged in egregarious conduct. He has made some showing that defendant’s infringement was the result of deliberate, calculated plagiarism. Plaintiff offers proof which at trial may be found to support its position that the defendant, upon receiving information about the Turner invention in 1965, contrived with a consultant or employee to 7 Baker v. Simmons Co., 307 F.2d 458, 466 n.4 (Ist Cir. 1962); Potash Co. v. Int’! Minerals & Chem. Corp., 213 F.2d 153, 155 (10th Cir. 1954); Middletown v. Wiley, 195 F.2d 844, 847 (8th Cir. 1952); France Mfg. Co. v. Jefferson Electric Co., 106 F.2d 605, 609 (6th Cir. 1939), cert. denied 309 U.S. 657, 60 S.Ct. 471, 84 L.Ed. 1006 (1940); MY-T Fine Corp. v. Samuels, 69 F.2d 76, 77 (2d Cir. 1934). See also Holmberg v. Armbrecht, 327 U.S. 392, 396, 66 S.Ct. 582, 90 S.Ct. 743 (1946); Gruca v. United States Steel Corp.. 495 F.2d 1252, 1259-60 (3d Cir. 1974); Marcee v. United States, 455 F.2d 527, 197 Ct.Cl. 363 (1972). 30a copy the invention and, in fact, copied it. Plaintiff additionally offers proof that defendant initiated or sponsored the litigation by a third party challenging the validity of the Turner patent in order to harass plaintiff and to keep the patent’s validity in question while defendant developed and sold its competing product. If the plaintiff can prove these claims of plagiarism and harassment at trial, the equities would not favor defen- dant’s claim of laches.® Since the district court did not discuss or make findings on the issues of plagiarism and harassment, issues intimately tied to the question of infringement, we believe that the case should proceed to trial on the merits. If either of these issues is resolved against the defendant, the district court should not sustain the defense of laches. Only if both issues are resolved against the plaintiff should the district court sustain the de- fense. Il. ESTOPPEL Laches alone does not foreclose a plaintiff’s right in an infringement action to an injunction and damages after the filing of the suit. Only by proving the elements of estoppel may a defendant defeat such prospective relief.” To work an estop- pel, defendant must normally show, in addition to laches, that he was misled in some fashion by the plaintiff. The difference between laches and estoppel is well set out in the Seventh Circuit’s opinion in Advanced Hydraulics, Inc. v. Otis Eleva- tor Co., supra note 9, in which the late Mr. Justice Clark said: . . where “deferment of action to enforce claimed rights is prolonged and inexcusable and operates to defendant’s material prejudice”, laches is “an effectual bar” to recov- ery. [Citation omitted.] * * * * 8 See note 7 supra. 9 Advanced Hydraulics, Inc. v. Otis Elevator Co., 525 F.2d 477, 479-80 (7th Cir.), cert. denied, 423 U.S. 869, 96 S.Ct. 132, 46 L.Ed.2d 99 (1975); Continental Coatings v. Metco, supra note 3 at 1379-80. 3la Estoppei, on the other hand, . . . “arises only when one has so acted as to mislead another and the one thus misled had relied upon the action of the inducing party to his prejudice.” [Citation omitted.] Id. at 479-80. The elusive doctrine of equitable estoppel at least requires representations or conduct which justify an inference of abandonment of the patent claim or that the plaintiff has induced the infringer to believe that its “business would be unmolested.”'° For silence to work an estoppel, some evidence must exist to justify an inference that the silence was suffi- ciently misleading to amount to “bad faith.”"' We reverse the entry of summary judgment on the grounds of estoppel for three reasons. First, as we have already noted, plaintiff has raised the issue of defendant’s entitlement to the defense of laches due to the unresolved question of defendant’s alleged inequitable con- duct. If proven, this misconduct may also defeat defendant’s use of the equitable defense of estoppel.'? The district court must therefore weigh this conduct in balancing the equities on the question of defendant’s entitlement to this defense. Second, even if the defendant’s conduct does not bar its entitlement to the defense of estoppel, the district court must alter the standard by which it examines this defense. The lower court based its finding of estoppel on the fact that plaintiff had not objected to the alleged infringement for a substantial period of time. It said: The plaintiff clearly knew of the possible infringement of the defendant in late 1966. After defendant advised the plaintiff of its opinion of the invalidity of the Turner 10 Continental Coatings v. Metco, supra note 3 at 1380. 11 Cf. Walter Bledsoe & Co. v. Elkhorn Land Co., 219 F.2d 556, 559 (6th Cir. 1955) (Silence to work an estoppel in a suit for unpaid rents and royalties, must amount to bad faith). See also Note, Developments in the Law—Statutes of Limitations, 63 Harv.L.Rev. 1177, 1222-24 (1950). 12 See note 7 supra. 32a Patent, the plaintiff refrained from any action for a substantial period of time. The defendant was thus justi- fied in proceeding on the supposition that the plaintiff had either acquiesced in its opinion of invalidity or that the plaintiff was abandoning its position. (Emphasis added.) This is an inadequate basis for a finding of estoppel, since, as we have stated, estoppel requires more than mere silence. The record does not disclose, and the district court does not point to, any misrepresentations, affirmative acts of misconduct, or intentionally misleading silence by the plaintiff. Such findings are necessary in order to establish an estoppel.” Third, the district court was clearly erroneous in finding as an indisputable fact on summary judgment that the defendant was “justified in proceeding on the supposition that the plain- tiff had either acquiesced in its opinion of invalidity or that the plaintiff was abandoning its position.” The record before the district court on summary judgment, and now before us, suggests that the defendant attentively followed the course of the other litigation involving the Turner patent even if it did not sponsor it. The record suggests that the defendant was aware that plaintiff was defending its rights under the patent in the other litigation. If this is indeed the case, based on its knowledge of plaintiff’s position, defendant was not “justi- fied” in believing that “the plaintiff was abandoning its posi- tion.” We believe the facts on this question are sufficiently disputable as to render the entry of summary judgment inap- propriate. Accordingly, we reverse the district court’s entry of summary judgment and remand the case for trial on the merits of plaintiff’s claims. At trial, the district court should consider defendant’s equitable defenses according to the standards set forth in this opinion. Costs of appeal are taxed to appellee. 13 See notes 10, 11 supra. AS hie tos 33a Opinion of the United States District Court for the Eastern District of Michigan Finding the Patent-in-Suit To Be Valid and Infringed DISTRICT COURT E.D. MICHIGAN, S. DIV. No. 4-72852 Decided May 21, 1981 a TWM MANUFACTURING COMPANY, INC. —_—vV.— DURA CORPORATION as GILMORE, District Judge (orally). The court: All right, thank you, gentlemen, very much. It has been a long case and your findings have been most helpful to the Court. First of all, I want to state that the Court has not considered and will not consider the Defendant’s defense of abandonment claimed under 35 USC 102(c). The question of abandonment was not raised at any time during the trial, was not pleaded, and was raised for the first time in the Defendant’s Proposed Findings of Fact. Such a defense has never been pleaded, propounded or proposed, even though the case has been in this Court since late 1973 or early 1974, seven to eight years. The Court, therefore, is not considering in its disposition the defense of abandonment and will completely ignore it. The first issue to be decided is the validity of the patent, and I think I should address that, and then after I address that, address infringement, and then, if necessary, go on to estoppel and laches. 34a I appears to me clearly, starting off, that this patent is a valid p2tent, and the claims of the Defendant that it is obvious and does not comply with 35 USC 112 are without basis. The invention, in my opinion, is non-obvious, and the scope and the content of the prior art, all presented at trial, do not anticipate the Turner patent. This patent has the beauty of simplicity. It provides a leaf spring and an airbag, and by a very simple method. accomplishes the purpose of lifting and lowering the wheels in question. This had never been done in this way before. I think it is non-obvious to someone skilled in the art. In reaching this conclusion, I start with the basic proposition that a patent is presumed to be valid and the burden is on the party alleging invalidity. 35 USC 282. Defendant relies on 35 USC 103 and 35 USC 112 to invalidate the Turner patent. With reference to 35 USC 103, the section reads, in pertinent part, “A patent may not be obtained * * * if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.” In determining the existence of obviousness, this Court must look to the scope and content of the prior art and differences between the prior art and the claims at issue. Graham v. John Deere, 383 U.S. 1, 148 USPQ 459. I find no prior art that anticipates the Turner patent. Defendant has asserted that a combinetion of the patents to Kulyk, 3093388, Hoffmeister, 1622/19, and Edgington, 1388809, as allegedly rendering the Turner invention obvious. Kulyk has no place in the historical development of lift axles. It is a paper patent and although I agree that a paper patent can still be prior art, it is nonetheless a paper patent and represents nothing more than problems overcome by Turner. It is an add on to suspension springs with a torsion bar and the lifting mechanism is a torsion bar and coil springs. In the : ‘ i i : 4 ; } 35a Turner patent, the leaf springs serve the same function as a torsion bar, coil spring beam and shock absorber in the Kulyk patent. It is obvious that this patent, in my opinion, does not anticipate Turner in any way because, as I pointed out before, Turner has the beauty of efficiency and economy in getting a satisfactory result and satisfactory suspension. The next significant claim to prior art is Hoffmeister. I think it is clear that no one skilled in the suspension art would look to the dangerous contraption of Hoffmeister to solve any problem in the axle-suspension art. In fact, I think it is almost silly to suggest Hoffmeister is relevant prior art. Hoffmeister is a sledge device mounted under an automobile which used compressed air for moving the toboggan member of the slide to an operative position and springs for turning the toboggan member to an inoperative position. Underneath the vehicle, the compressed air control is used to move them to and from an operative position, and there is also a pair of opposed springs interposed between the toboggan member and the body. The purpose of this Rube Goldberg contraption was to lift an automobile in slippery weather and aid it in moving along in ice and snow. It has nothing to do with axle suspension nor has any function in the axle suspension art. The mere fact it has an airbag and opposing leaf springs do not in any way make it prior art for the instant case. The third claim is that Edgington is also prior art. This patent, a 1921 patent, is a patent that uses a leaf spring to raise and lower a road scraper to scrape dirt. It is a crude, nonaxle bearing road scraper that has nothing to do with the art of axle suspension. If one is to say that Edgington is prior art, then one would have to say that any device that uses a leaf spring in any way to raise and lower any other device is prior art and would invalidate the patent. That just is not true factually or legally. Edgington I do not think is prior art. Furthermore, the Turner patent claims do not recite an “old combination.” See 35 USC 112. The Turner patent enjoys a presumption of validity. No reasonable member of the public, much less one skilled in the art, would be left with the 36a impression from reading the Turner patent entitled “Wheeled Vehicle Suspension” that Turner intended anything else but a paient to lift axle suspensions. The recitation of the truck frame and primary axle do not mislead and are properly used to place the new suspension in its operative environment whereby the truck frame serves to aid in retaining the non-load bearing leaf spring in its unique upwardly biased mode and the primary axle allows the unique suspension to function as a lift axle. The Turner patent derives a large portion of its inventiveness from the unique way in which the combination of its parts function to produce new, unexpected and synergistic results. It does not recite old combinations, it is non-obvious. Some of the greatest things in this world arise from simplicity, and Turner has that beauty of simplicity and beauty of effective- ness. It is clearly, in my opinion, a valid patent. The next issue is whether Defendant’s device, the Dura 1400, infringes the patent. Dura’s own release, dated March 28, 1967, Plaintiff’s Exhibit 1A, Pages 394 to 395, state this of the Dura 1400 suspension, and this is Dura’s own language: “This is an air-suspended axle in which a steel leaf spring acts as a positive retracting force lifting the axle from the ground automatically when the air is off * * *” Continuing to the next paragraph, “With the air spring inflated to operating pressure, the axle is forced against the steel spring until the wheels are in proper contact with the road. This gives the load an air ride. But the steel spring, now a counter force against the air spring, as- sumes a shock absorbing, stabilizing, and tracking func- tion to improve the overall efficiency of the assemble. “Asa result * * * the Model 1400 can be used on truck chasis as pusher or tag, and also used for trailer applica- maf This description accurately describes the Dura 1400, its functions and its operations. It is also a totally accurate description of the functions and operation of the Turner a a 37a patent as recited in claims one to three of the Turner patent. Claims one and three of the Turner patent, read literally, cover the Dura 1400 suspension when installed on a truck according to Dura’s installation instructions. Every element, function and result recited in “laims one to three of the Turner patent is correspondingly found in Dura’s 1400 suspension when installed on a truck accord- ing to Dura’s installation instructions. The Dura 1400 suspension performs substantially the same function as the Turner in substantially the same way to obtain the same results. The claim of Defendant that the Dura 1400 doesn’t infringe because the airbag is not between the frame and axle is not significant in any way. The use of the two airbags on a pontoon instead of one directly over the axle is a functional equivalent to the use of one airbag between the axle and the frame. The two systems function exactly the same as described in the Turner claims. The lupi used in the Dura 1400 suspension securing the end of the leaf spring to the vehicle frame is within the meaning of the claims of the Turner patent, and the shackle used in the Turner patent and the lupi used in the Dura 1400 are functional equivalents and are merely design alternatives. Thus, it is clear that the use of airbags, two airbags on a pontoon, instead of one directly over the axle, is but a distinction without a difference. This Court concludes that there is no question but what there has been and is infringe- ment of the Turner patent by the Dura 1400 device, and the Court further finds that there was willful infringement after the issuance of the Turner patent because Dura was well aware of the existence of Turner, was well aware of what Turner did, was well aware of the practically identical nature of its Dura 1400 with the Turner patent. I therefore find willful infringe- ment after the issuance of the patent as a matter of fact and law. I also want to comment on one fact that no one has addressed in argument and one that has troubled me a great deal, and I think it is of great significance to note. That is that it was only on cross examination that it was brought out that 38a Mr. Gottschalk, Defendant’s expert, was associated with the Defendant’s firm during the pendency of this cause. On cross examination, it was pointed out that on October 27, 1975, while this case was pending, he was listed as of Counsel on Defendant’s lawfirm stationery, and he admitted on cross examination that during the pendency of this case, he was of counsel to the defendant. This raises serious questions in my mind as to whether he should have been permitted to testify at all because of the proscriptions in Disciplinary Rules 5-101 and 5-102 of the Code of Professional Responsibility. However, he did testify, and it was not until cross examination that the Court learned that he had once been associated with the lawfirm representing Defendants. Had this matter been brought to my attention earlier, | would have had an opportu- nity to determine whether I would permit Mr. Gottschalk to testify as the Defendant’s expert. So there was a clear potential violation of DR5-101 and DRS5-102 in having Mr. Gottschalk testify. 1 think this casts serious doubt upon the credibility of Mr. Gottschalk, and because of this, and because I was not informed of his relationship, I am discounting and finding much of Mr. Gottschalk’s testimony incredible. | have found that the patent is valid, I have found that there has been infringement, and I have found that there has been willful infringement on the part of the Defendant. That brings us now to the question of laches and estoppel, which must be disposed of in the handling of this matter. Now this matter has been to the Sixth Circuit in the case of TWM Manufacturing v. Dura Corporation, 592 F.2d 346, a 1979 case. The Sixth Circuit dealt with these issues on appeal. That Court held, first, with reference to laches, that Plaintiff would be barred from seeking past damages by laches unless he could (1) rebut the presumption of prejudice, (2) rebut the presumption of unreasonable delay by showing good excuse; or (3) show that the infringer had engaged in particularly egregious conduct which would change the equities signifi- cantly in Plaintiff’s favor. The Court, the Sixth Circuit, agreed with the District Court, my predecessor in this case, that the Plaintiff had not rebutted the presumption of prejudice nor the 39a presumption of unreasonable delay, but held that the trial court should make findings on allegations of plagiarism and harassment, which purportedly constituted the egregious con- duct on the part of the Defendant. The Sixth Circuit then held that if either of these issues, that is, plagiarism or harassment, is resolved against the Defendants, then the District Court should not sustain the defense of laches. But if both issues were resolved against the Plaintiff, the District Court should sustain the defense. Now Plaintiff claims that the Defendant, upon receiving information about the Turner invention in 1965, contrived with a consultant or employee to copy the invention, and in fact did copy it, and that the Defendant initiated or sponsored litiga- tion by a third party chaJlenging the validity of the Turner patent in order to harass and keep the patent’s validity in question while Defendant developed and sold its competing product. These are the claims of the egregious conduct that the Court of Appeals mentions. Now first, with reference to copying and plagiarism. | think the law is clear, and it has not really been disputed here — well, first I think the facts show clearly, and I so find, that while the Turner patent was pending, Mr. Turner sent the patent app! tion to Page & Page, which was part of Dura Corporatior that patent application was received by Dura Corporat was the subject of much conversation in Dura ( What happened to that patent application after seems to know. No witness was able to come courtroom and say what happened to the patent: was never acknowledged to Mr. Turner by Dura acknowledged that it was received. The witness Corporation say they have thoroughly searched they are unable to find it, and as I say, there this case as to what happened to that patent apy was sent to Page & Page. However, I think it is quite remarkable, ar coincidence, that in a time frame very close to the that patent application, that Dura came on the mar} Dura 1400, which I have already held infringes P 40a patent and willfully infringes the patent. It is true that Mr. McGee said they got that from Mr. Vardi and that Mr. McGee said that he never heard of Turner, but the fact remains that Turner’s patent was long afterward the—I mean the Vardi patent was long after the Turner patent. I think three years afterwards, and I think it is indeed a strange coincidence that the patent application would be sent to Dura, that Dura would never acknowledge it, that Dura would then commence manu- facturing and infringing a product, and after the product was patented, Dura continued with willful infringement. I think all of that is an odd series of circumstances and coincidences. Now I think the law is clear, and as I read it from several cases, including Graver Tank and Manufacturing v. Linde Air Products Company, 339 U.S. 605, 85 USPQ 328, and other copyright cases on the copying issue, that access plus similarity equais copying, and that the burden of proof, when that is shown, is upon the Defendant to show that there was no copying and no plagiarism. Now here I find as a matter of law that when there has been access, as here, in patent law, | find this, I find that when there is then similarity, or almost contemporaneously therewith with the proposed 14 patent invention. I find that the burden has then shifted to the Defendant to show that this was not copying and that this was indeed independently arrived at without reference to the Turner patent. I do not find the Defendant has carried that burden. I think he has failed to carry any burden on that. And so, I do think there was here plagiarism on the part of the Defendant, and I think that that plagiarism amounts to such egregious behavior as to get over the question of laches so that I do not even have to turn to the question of harassment. I think that there is sufficient evidence of plagiarism which is egregious in this case to hold that following the Sixth Circuit in TWM Manufacturing v. Dura Corporation, that the defense of laches may not be asserted, and therefore, there is no defense of laches that can be asserted in this case, and I hold that it is not properly in the case. That turns us then, if we may, to the question of harassment, and the Court of Appeals held, on the question of estopped, Page 350 of 592 F.2d, 201 USPQ at 436. 4la “The record does not disclose, and the District Court does not point to, any misrepresentations, affirmative acts of or intentionally misleading silence by the Plaintiff. Such findings are necessary in order to establish an estoppel.” Clearly in this case there is no evidence of affirmative acts of misconduct by the Plaintiff. There is no evidence whatever of intentionally misleading silence by the Plaintiff and there is no evidence of any misrepresentation by the Plaintiff. Plaintiff was an innocent entrepreneur in this case who | think was done in by the Defendant. Therefore, I find as a matter of law there is no estoppel. This being so, the Court having determined that the patent is valid, having determined that there has been infringement, having determined there has been willful infringement, having determined that there has been no laches and determined that there has been no estoppel, I hold that the Plaintiff is entitled to injunctive relief, and he may have an injunction from this day forward against infringement and manufacture of the Dura 1400, and he may have damages to be assessed. Now the question of whether I assess enhanced damages | am not going to rule on today. 35 USC 284 provides that, “When the damages are not fo [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_2259%3A1. Public record. Not legal advice.