Petition for Writ of Certiorari — Block Drug Co. v. Hodosh
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we 4 1 : Supreme Court, us.
Rf ~ LAO Y4 “Tre ey
FEB 19 1988
yOSEPH F. SPANIOL, up.
a IN THE
Supreme Court of the Anited
OcroBEer TERM, 1987
BLOCK DRUG COMPANY, INC., BLOCK DRUG
CORPORATION AND DENTCO, INC.,
Petitioners,
Vs .
MILTON HODOSH and RICHARDSON-VICKS, INC.,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
MarvINn C. SOFFEN
Epwarp A. MEILMAN
OsTROLENK, FABER, GERB & SOFFEN
260 Madison Avenue
New York, New York 10016
(212) 685-8470
JaMEs F.. Davis
ALAN M. GRIMALDI
Howrey & SIMON
- 1730 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
(202) 783-0800
Attorneys for Petitioners
QUESTIONS PRESENTED
1. Is the decision of the Court of Appeals for the Federal Cir-
cuit in giving a patentee the right to control a staple sold in an
ordinary carrier under §271(c) of the Patent Act (35 U.S.C.) an
improper extension of the patent monopoly and in conflict with
this Court’s interpretation of §271(c) and §271(d) in Dawson
Chemical Co. v. Rohm ¢ Haas Co., 448 U.S. 176, 213 (1980)
where it was concluded “[b]y enacting §§271(c) and (d), Con-
gress granted to patent holders a statutory right to control
nonstaple goods that are capable only of infringing use in a
patented invention, and that are essential to that invention’s ad-
vance over prior art.”
2. Is the decision of the Court of Appeals for the Federal Cir-
cuit, adopting a literal “plain wording” interpretation of §271(c)
in conflict with decisions of this Court prior to the enactment
of the section and in conflict with Dawson Chemical, 448 U.S.
at 187, where this Court stated that this section “is generic and
freighted with a meaning derived from the decisional history
that preceded it”.
3. Is the decision of the Court of Appeals for the Federal Cir-
cuit in conflict with the decision in Rex Chainbelt, Inc. v. Har-
co Prods., Inc., 512 F.2d 993, (9th Cir. 1975) cert. denied, 423
U.S. 831 (1975), where the Ninth Circuit held as a matter of
law that a staple article of commerce cannot become a nonstaple
by simply placing it in an ordinary carrier.
il
STATEMENT PURSUANT TO
SUPREME COURT RULES 21 AND 28.1
The parties in the proceeding before the U.S. Court of Ap-
peals for the Federal Circuit were as follows:
Defendant-Appellants'
1. Block Drug Company, Inc.
2. Block Drug Corporation
3. Dentco, Inc.
|
Plaintiff-Appellees
1. Milton Hodosh
2. Richardson-Vicks, Inc.
(owned by Proctor & Gamble, Inc.)
' Petitioner Block Drug Corporation and Petitioner Dentco, Inc. are wholly-
owned subsidiaries of Petitioner Block Drug Company, Inc.
Except as aforesaid, no petitioner has any parent company, subsidiary (ex-
cept wholly-owned subsidiaries) or affiliate within the meaning of Supreme
Court Rule 28.1
TABLE OF CONTENTS
Page
Cees PMEOENIED .....5......005005. i
I es day bh bw ke wae as ii
TABLE OF CASES AND OTHER
ee na vai kevas waa v
i a ics vad ee waren ees vii
a a. ads hin bee 8 ee kee os l
ce dk Ghee hada cash ake gee x 2
og Bs 4) Ea 2
STATEMENT OF THE CASE ................. 2
rere 2
m. Goeuee Ge Peocwemines ................... 3
I sb a cess eee ab ese ss 4
1. Potassium Nitrate is the Essential
Ingredient Used in the Hodosh Method
SERRE I ee ee 4
2. Claims to Compositions Containing
Potassium Nitrate Were Twice Rejected
as Unpatentable by the Patent Office . . . 5
3. Hodosh/RVI’s Attempt to Monopolize
Unpatented and Unpatentable
ee lg OSS ira ole xe v.05 6
REASONS FOR GRANTING THE WRIT....... 6
iv
Page
I. The Federal Circuit Decision is in Conflict
With This Court’s Dawson Decision .......
~l
A. Hodosh/RVI’s Activities Constitute A
Classic Case of Patent Misuse...........
B. This Court’s Decision in Dawson Requires
a Finding of Misuse in This Case ....... 10
C. By Failing to Follow Dawson, the
Federa! Circuit Has Improperly
Expanded a Patentee’s Monopoly to
Include Staple Articles Sold in Inert
ad tne Pepe so Me BPS meee ear eee 1]
Il. The Federal Circuit Decision is in Conflict
With Pre-1952 Supreme Court Precedent on
ie Bee a ake Pane eres 13
III. The Federal Circuit Decision is in Conflict
With The Ninth Circuit Decision Which
' Held That the Proper Focus of the
Staple/Nonstaple Determination is On the
rr ee ere ere 16
CPE, . econo Seana nbee ewe Pew eee ee 18
TABLE OF CASES, STATUTES & OTHER AUTHORITIES
Page
B.B. Chem. Co. v. Ellis, 314 U.S. 495 (1942).... 8-9, 13,
15
Carbice Corp. of Am. v. American Patents Dev.
on es er 8-9, 13,
15
Dawson Chemical Co. v. Rohm & Haas Co., 448
GS. TAG Ce os ck bob itise eee i, 7, 9-16,
i8
Dr. Salsbury’s Laboratories v. I.D. Russell Co.
Laboratories, 212 F.2d 414, 101 USPQ 137 (8th
CON. H's 52s oN Tea eae coe eee eee 16
Hodosh v. Block Drug Co., 226 USPQ 645
oR Ree ep eye nine 3
Hodosh v. Block Drug Co., 786 F.2d 1136 (Fed.
Cir. 1986), cert. denied, 107 S.Ct. 106 (1986) . 3, 5, 12
Hodosh v. Block Drug Co., 833 F.2d 1575 (Fed.
|: ee rr rr erie ee eee vii, 1, 4
I.D. Russell Co. v. Dr. Salsbury’s Laboratories,
198 F.2d 473, 94 USPQ 199 (8th Cir. 1952) ... 16
Leitch Mfg. Co. v. Barber Co., 302 U.S. 458
COT av scx nu tins edeesnle te ae ee eee 8, 13
Mercoid Corp. v. Mid-Continent Inv. Co., 320
CP OE ne sh re ee re ee 14-15
Mercoid Corp. v. Minneapolis-Honeywell
Regulator Co., 320 U.S. 680 (1944)........... 14-15
Morton Salt Co. v. G.S. Suppiger Co., 314 U.S.
OD CHD bhi x dds exc aee eee ee 8-9, 13
Motion Picture Patents Co. v. Universal Film
ify, Ce., 243 U.S. SOS (1087)... 6 ee ce aes. 8,13
vi
Page
Oxy Metal Indus. Corp. v. Quin-Tec, Inc., 216
USPQ 318 (E.D. Mich. 1982) ................ 16
Rex Chainbelt, Inc. v. Harco Prods., Inc., 512
F.2d 993, 185 (9th Cir. 1975) cert. denied 423
U.S. GBR GROUT onc i cccccccsdsevassyeueseuas i, 16-18
Sony Corp. of Am. v. Universal City Studios,
Ine., 464 U.S. 417 (BGBO) oo ce vditcccccwsccecne 7, 12-13
STATUTES & OTHER AUTHORITIES
$8 U.S.C. SIBBED ..... cc cccvccksdsbickneheaees 2
OB U.S.C. SIGBR 0. ccccccccccccsccesscuenunn vii, 2, 4
SB U.S.C... GISBRAD «oo 000s canse b vtnedinwestan 3
98 U.S.C. O871 vnc cccvcccvccccccesasacvotsaxes i, 2-3,
95 U.S.C. SGBE ... ccc ccccecesnsdsivssceeccsees 3
Oddi, Contributory Infringement/Patent Misuse:
Metaphysics and Metamorphosis, 44 U. Pitt. L.
Rev. 73, 73-87 (1982), reprinted in 15 Intell.
Prop. L. Rev. 155 (1983). .................-- 10, 15
Patent Law Codification and Revision, 1951:
Hearings on H.R. 3760 Before Subcomm. No. 3
of the House Comm. on the Judiciary, 82d
Cong., ist Sess. 153 (1G6]) . 2.0... ce ncecsess 15-16
S. Rep. No. 1979, 82d Cong. 2d Sess. 8, reprinted
in 1952 U.S. Code Cong. & Admin. News
SIDA, BOOB . co nn vccccunsdvctaccentgnseneree 15-16
vil
APPENDICES
APPENDIX A - Opinion of the United States
Court of Appeals for the Federal Circuit,
Hodosh v. Block Drug Co., 833 F.2d 1575.
Ps Ms SN a eve bh cou kuanes ms
APPENDIX B - Opinion Letter and Order of the
United States District Court for the District of
New Jersey, Hodosh v. Block Drug Co., 226
USPQ 645 (D.N.J. 1985) ............ =P
APPENDIX C - Opinion of United States District
Court for the District of New Jersey Granting
Certification Under 28 U.S.C. 1292 (b), Dated
3g rey
APPENDIX D - U.S. Patent #3,863,006 for
“Method for Desensitizing Teeth” Issued to Dr.
Milton Hodosh and Licensed to Richardson-
ees Rous cawinwe'.
Page
Al
Bl
Cl
D1
No.
IN THE
Supreme Court of the United States
OctroBeEerR TERM, 1987
BLOCK DRUG COMPANY, INC., BLOCK DRUG COR-
PORATION AND DENTCO, INC.,
Petitioners,
VS.
MILTON HODOSH and RICHARDSON-VICKS, INC.,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNIT’ ED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
Petitioners Block Drug Company, Inc., Block Drug Corpora-
tion, and Dentco, Inc., respectfully pray that a writ of certiorari
issue to review the order and opinion of the United States Court
of Appeals for the Federal Circuit entered in this proceeding
on November 25, 1987.
OPINIONS BELOW
The opinion of the Court of Appeals is reported at 833 F.2d
1575 (Fed. Cir. 1987), and is annexed hereto as Appendix A. The
opinion of the United States District Court for the District of
bo
New Jersey, not reported, is annexed hereto as Appendix B. The
opinion of the District Court granting certification under 28
U.S.C. 1292(b) is annexed hereto as Appendix C. The Patent in
Suit is annexed hereto as Appendix D.
JURISDICTION
The order and opinion of the United States Court of Appeals
for the Federal Circuit sought to be reviewed herein was entered
on November 25, 1987. The jurisdiction of this Supreme Court
is invoked under 28 U.S.C. §1254(1).
STATUTE INVOLVED
35 U.S.C. §§271(c) and (d), provides as follows:
(c) Whoever sells a component of a patented machine,
manufacture, combination or composition, or a material
or apparatus for use in practicing a patented process, con-
stituting a material part of the invention, knowing the same
to be especially made or especially adapted for use in an
infringement of such patent, and not a staple article or
commodity of commerce suitable for substantial nonin-
fringing use, shall be liable as a contributory infringer.
(d) No patent owner otherwise entitled to relief for in-
fringement or contributory infringement of a patent shall
be denied relief or deemed guilty of misuse or illegal ex-
tension of the patent right by reason of his having done
one or more of the following: (1) derived revenue from acts
which if performed by another without his consent would
constitute contributory infringement of the patent: (2)
licensed or authorized another to perform acts which if
performed without his consent would constitute contributory
infringement of the patent; (3) sought to enforce his patent
rights against infringement or contributory infringement.
STATEMENT OF THE CASE
A. Nature of the Case
This is a patent suit maintained by Milton Hodosh and his ex-
clusive licensee Richardson-Vicks, Inc. (“RVI”) alleging that
Block Drug Company, Inc. and its wholly owned subsidiaries,
Block Drug Corporation, and Dentco, Inc. (collectively “Block”)
are contributory infringers of U.S. Patent 3,863,006 entitled
“Method for Desensitizing Teeth.” A copy of the patent is an-
nexed hereto as Appendix D. The infringement charge is based
on Block’s sale of a toothpaste containing potassium nitrate
which may be used by purchasers to practice the patented
method. Federal jurisdiction is based on 28 U.S.C. §1338(a) and
under the Patent Laws of the United States, including 35 U.S.C.
§§271, 281.
B. Course of Proceedings
Block brought two summary judgment motions, one based
on invalidity of the patent-in-suit and the other based on
Hodosh/RVI’s misuse of the patent-in-suit. The patent misuse
motion was provoked by Hodosh/RVI’s refusal to license the
patented method unless the licensee also purchased RVI’s un-
patented toothpaste. Summary judgment of patent invalidity
was granted by the district court, thereby rendering moot the
misuse issue.? The Court of Appeals for the Federal Circuit re-
versed, holding that issues of fact existed for trial on the invalidity
issue. Hodosh v. Block Drug Co., 786 F.2d 1136, 1143, (Fed. Cir.
1986), cert. denied, 107 S.Ct. 106 (1986).
On remand, Block renewed its motion for summary judgment
as to patent misuse. The renewed motion was denied by the
district court in a Letter-Opinion and Order dated March 27,7
1987 (Appendix B). The district court recognized, however, that
“there is a question, under applicable law, as to whether the
proper focus of the Court in determining the misuse issue should
be on the potassium nitrate, or on the toothpaste containing
potassium nitrate”, and concluded that the motion involved a
controlling question of law as to which there is a substantial
* Although the misuse motion was dismissed on the ground that it was moot,
Judge Sarokin noted that the issue presented was a “fascinating question of
patent misuse” and that “the court need not and does not here address such
issue at all, let alone with the complexity which it deserves.” Hodosh v. Block
Drug Co., 226 USPQ 645, 656 (D.N.J. 1985).
ground for difference of opinion (Appendix C). Pursuant to 28
U.S.C. §§1292(b) and (c), the district court certified the ques-
tion and the Court of Appeals for the Federal Circuit granted
Block’s petition for interlocutory appeal.
On appeal, the Federal Circuit certified that “in determin-
ing the misuse issue presented in this case, the proper focus is
on Hodosh’s effort to control the toothpaste containing potassium
nitrate actually sold and not on the potassium nitrate ingredient
alone”. Hodosh v. Block Drug Co., 833 F.2d 1575, (Fed. Cir.
1987) (Appendix A).
C. Statement of Facts
1. Potassium Nitrate is the Essential Ingredient Used
in the Hodosh Method of Use Patent
The Hodosh patent (Appendix D) covers a method of using
potassium nitrate to desensitize teeth. The potassium nitrate is
applied to the teeth in any manner. Accordingly, claim 1 simp-
ly refers to potassium nitrate in dilute form:
1. The method of desensitizing hypersensitive dentine
and cementum by applying thereto an agent, the
essential ingredient of which is a nitrate of one of the
following alkali metals: potassium, lithium or sodium
said nitrate comprising between | percent and 20 per-
cent by weight of said agent. [Emphasis added. |
The remaining claims simply specify particular carriers or
diluents, such as “an aqueous solution” or “a nontoxic paste’,
and/or specific percentages of potassium nitrate in these diluents.
Claims 2, 4 and 6 are typical:
2. The method of claim 1 further characterized in that
said nitrate is potassium nitrate in an aqueous soiution.
4. The method of claim 1 further characterized in that
said nitrate is potassium nitrate mixed with a non-
toxic paste.
wn
6. The method of desensitizing hypersensitive dentin
and cementum by applying thereto an aqueous solu-
tion, the essential ingredient of which is potassium
nitrate, said potassium nitrate comprising between 1 %
by weight and saturation of said aqueous solution.
[Emphasis added. ]
It is the potassium nitrate alone which provides the necessary
relief to hypersensitive teeth and it is potassium nitrate which
is claimed as “the essential ingredient.” As explained in the pa-
tent specification, the potassium nitrate may be placed in any
common carrier or diluent and the particular carrier or diluent
chosen will not in any way affect its desensitization function.
[Appendix D at Col. 2, lines 7-11; Col. 2, lines 52-54; Col. 3,
lines 4-6].
The Federal Circuit has also previously recognized that it is
the desensitizing property of potassium nitrate, an admitted
staple, which is the invention or discovery of Dr. Hodosh and
that the particular paste or solution in which it is placed has
nothing to do with the inventive concept:
[I]t is entirely clear that Dr. Hodosh’s invention was
the discovery of an apparently superior desensitizing
agent and he never thought it was a toothpaste for-
mula. . . . It is apparent that Hodosh’s patent solicitor
merely adopted the prior art Rosenthal toothpaste for-
mula as a convenient example to illustrate the kind
of a paste in which the Hodosh desensitizer might be
used ....
786 F.2d at 1143 (emphasis in original).
2. Claims to Compositions Containing Potassium
Nitrate Were Twice Rejected as Unpatentable by
the Patent Office
Hodosh originally sought to obtain protection on the com-
position containing potassium nitrate, in addition to the method
claims. All of the composition claims, however, were rejected
by the Examiner and subsequently cancelled by Hodosh. Hodosh
also filed a continuation-in-part application containing com-
position claims similar to those in the original application. These
claims were also rejected by the Examiner and ultimately aban-
doned by Hodosh. Hodosh thus twice sought to patent the com-
positions per se, including specifically a nontoxic paste contain-
ing potassium nitrate, but finally acquiesced in the rejection of
those claims and abandoned them. (Appendix B at page 3 n.6
and at page 6)
3. Hodosh/RVI’s Attempt to Monopolize Un-
patented and Unpatentable Compositions
Hodosh/RVI refuse to license others to practice the method
of use of the Hodosh patent except by purchasing RVI’s un-
patented potassium nitrate toothpaste. RVI gives an implied
license only to those who purchase its Denquel product. No other
license has been granted by Hodosh or RVI. (Appendix A at page
3 n.3; Appendix B, page 4)
Block requested a license in order to compete with RVI in
the sale of the unpatented potassium nitrate toothpaste to con-
sumers wishing to practice the patented method. The license
request was refused by both Hodosh and RVI, indicating their
intent to maintain exclusive rights over the sale of the unpatented
potassium nitrate composition.
After its effort to obtain a license was rebuffed, Block entered
the market with its own versions of unpatented potassium nitrate
toothpastes which were sold under the trademarks Promise and
Sensodyne-F, thus challenging RVI’s claim to exclusivity over
the sale of unpatented and unpatentable products.
REASONS FOR GRANTING THE WRIT
The opinion of the Federal Circuit raises important issues con-
cerning the extent to which commerce in unpatented and un-
patentable articles may be restrained under a method-of-use
patent. The Federal Circuit decision significantly expands a
patentee’s monopoly by allowing the patentee to restrain com-
petition in unpatented staple articles which are sold in an inert
diluent. This decision is in conflict with long-standing Supreme
Court precedent and is also in conflict with a decision of the
Court of Appeals for the Ninth Circuit which is on “all fours”
with the present case. Indeed, the decision is in direct conflict
with this Court’s most recent pronouncement concerning this
issue when it reiterated “the critical importance of not allow-
ing the patentee to extend his monopoly beyond the limits of
his specific grant.” Sony Corp. of Am. v. Universal City Studios,
Inc., 464 U.S. 417, 441 (1984).
Section I below sets forth the law of patent misuse as estab-
lished by a long line of Supreme Court cases, the limited
“nonstaple” exception to patent misuse afforded under § §271(c)
and (d) and the Federal Circuit’s unwarranted expansion of that
exception in conflict with this Court’s decision in Dawson. Sec-
tion II deals with the refusal of the Federal Circuit to consider
the still-controlling Supreme Court decisions prior to the enact-
ment of §§271(c) and (d). Section III describes the conflict be-
tween the present decision and the decision of the Court of Ap-
peals for the Ninth Circuit.
I. The Federal Circuit Decision is in
Conflict With This Court’s Dawson Decision
A. Hodosh/RVI’s Activities Constitute
A Classic Case of Patent Misuse
Hodosh/RVI have offered no licenses, either to competing
sellers of potassium nitrate toothpaste or to consumers, except
the implied license that is granted with every purchase of RVI’s
Denquel product. Indeed, Hodosh/RVI refused Block’s good
faith offer to obtain a license for the benefit of consumers who
with to purchase the unpatented toothpaste from someone other
than RVI. Thus, every license granted under the Hodosh pa-
tent has been conditioned on or tied to the purchase of an un-
patented product from RVI. As a matter of law, these facts con-
stitute a classic tying arrangement which has been consistently
condemned by this Court as “patent misuse.”
The seminal case is Motion Picture Patents Co. v. Universal
Film Mfg. Co., 243 U.S. 502 (1917), where this Court denied
recovery to a patent holder which “derive[d] its profit, not from
the invention on which the law gives it a monopoly but from
the unpatented supplies with which it is used and which are
wholly without the scope of the patent monopoly.” Jd. at 517.
The misuse doctrine was again addressed in Carbice Corp.
of Am. v. American Patents Dev. Corp., 283 U.S. 27 (1931) where
this Court held that “[rJelief is denied because the [patentee]
is attempting, without sanction of law, to employ the patent
to secure a limited monopoly of unpatented material used in
applying the invention.” Jd. at 33-34. Similarly the patent misuse
doctrine was upheld in Leitch Mfg. Co. v. Barber Co., 302 US.
458 (1938), against the owner of a “method of use” patent. Jd.
at 463.
In Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488 (1942),
this Court set forth the equitable nature of the patent misuse
defense:
But the public policy which includes inventions within
the granted monopoly excludes from it all that is not
embraced in the invention. It equally forbids the use
of the patent to secure an exclusive right or limited
monopoly not granted by the Patent Office and which
is contrary to public policy to grant.
It is a principle of general application that courts,
and especially the courts of equity, may appropriate-
ly withhold their aid where the plaintiff is using the
right asserted contrary to the public interest.
Id. at 492. In a companion case to Morton Salt, this Court pro-
hibited recovery from parties charged with inducing infringe-
ment: “[I]n view of petitioner’s use of the patent as the means
of establishing a limited monopoly in its unpatented materials
. we hold that the maintenance of this suit to restrain any
form of infringement is contrary to public policy.” B.B. Chem.
Co. v. Ellis, 314 U.S. 495 (1942) (emphasis added).
Summarizing the substance of the above Supreme Court deci-
sions, which remain good law today,’ the following points are
evident:
(1) In each case, the result of the decision was to promote com-
petition in the sale of the unpatented product. Specifically, in
Carbice, the Court stated that the expansion of a patentee’s ex-
clusive rights to cover an unpatented material was unwarranted:
“(t]he very existence of such restrictions suggests that in [their]
absence a competing article of equal or better quality would
be offered at the same or at a lower price.” 283 U.S. at 32 n.2
and accompanying text. In the present case, Block merely wishes
to compete in the sale of the unpatented product and is willing
to obtain a nondiscriminatory license for the benefit of customers
who wish to purchase a competitive product. Hodosh/RVI, on
the other hand, refuse to consider any such arrangement and
instead seek to obtain a monopoly over the unpatented
toothpaste composition, a composition which has already been
twice denied patent protection by the Patent Office.
(2) In these Supreme Court cases, the conduct of the patentee
was controlling. Each defendant was charged with having
knowledge that the product it was selling to its customers was
being used to infringe the patent-in-suit. In some cases, the
defendant was also charged with active inducement. Misuse was
nevertheless found in every case. As made clear in Morton Salt
and B.B. Chemical, it was the inequitable conduct of the pa-
tent owner in attempting to extend its exclusive rights that was
of critical concern in rendering the patent unenforceable.
(3) This Court has made clear that although the most con-
venient way of exploiting a patent may be through the sale of
unpatented materials, this is irrelevant to a finding of patent
misuse. As stated in B.B. Chemical: “The patent monopoly is not
enlarged by reason of the fact that it would be more convenient
to the patentee to have it so, or because he cannot avail himself
of its benefits within the limits of the grant.” 314 U.S. at 498.
* See Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 213, (1980)
(Blackmun, J., majority) discussed infra on pages 10-16. See also 448 U.S. at
235 (White, J., dissenting).
10
As more fully set out in Section II, supra, the Federal Circuit
has discarded all of these principles as no longer binding prece-
dent and considered them effectively overruled sub silentio by
the enactment of §271(c).
B. This Court’s Decision in Dawson Requires
a Finding of Misuse in this Case
Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176 (1980)
is the most recent Supreme Court decision dealing squarely with
patent misuse and is this Court’s first decision interpreting 35
U.S.C. §§271(c) and (d) of the Patent Act of 1952 regarding the
scope and interaction of patent misuse and contributory
infringement.
In Dawson, the legislative history behind §§271l(c) and (d)
was reviewed and the Court determined that these subsections
provide a limited exception to the patent misuse doctrine where
an “essential’ nonstaple is involved.*
In Dawson, the Court held there was no patent misuse, but
only because the chemical involved, propanil, was a nonstaple
that (1) was capable only of infringing use and (2) was essential
to the invention’s advance over the prior art. 448 U.S. at 213.
Notably, the four dissenters would not have allowed this misuse
exception, but rather would have condemned the tying of even
non-staple items as patent miuse.°
Although recognizing an exception to patent misuse, it is clear
that no further expansion of rights to the patentee was intended.
This Court emphasized that contributory infringement has
* For an analysis of Dawson and the legislative history behind §271, see Oddi,
Contributory Infringement/Patent Misuse: Metaphysics and Metamorphosis,
44 U. Pitt. L. Rev. 73, 73-87 (1982), reprinted in 15 Intell. Prop. L. Rev. 155
(1983). For an analysis of the importance of the “essential” character of the
nonstaple, see Oddi, 44 U. Pitt. L. Rev. at 87-113.
*“The Court now refuses to apply this ‘patent misuse’ principle in the very
area in which such attempts to restrain competition are most likely to be suc-
cessful.” 448 U.S. at 223 (White, J. dissenting). “This is a classic case of patent
misuse.” 448 U.S. at 240 (Stevens, J. dissenting). Justices Brennan and Mar-
shall also dissented.
11
been given a “restrictive definition”, that nonstaple articles are
“narrowly” defined, and that a patentee has only “a limited
power to exclude others from competition in nonstaple goods.”
448 U.S. at 200, 201 (emphasis added).
Dawson is thus instructive for two reasons. First, this Court
went to great lengths to construct a very narrow exception to
patent misuse (and even so, only a bare majority joined in the
decision). Second, Dawson also emphasized the importance of
focusing on the “essential” aspect of the patented invention. The
Court concentrated on the chemical “propanil, the herbicidal
properties of which are essential to the advance on prior art.”
448 U.S. at 198-99. Notably, the patent claims in Dawson
specified use of propanil together with “an inert diluent.” Fur-
thermore, the defendants did hot sell propanil by itself, but
always in dilute form. Yet the Dawson court only referred to
propanil alone, the essential ingredient, ignoring the diluent en-
tirely for the purpose of analyzing the patent misuse issue.
C. By Failing to Follow Dawson, the Federal Circuit
Has Improperly Expanded a Patentee’s Monopo-
ly to Include Staple Articles Sold in Inert Diluents
The Federal Circuit ignored the teachings of Dawson that
the “essential” ingredient of the claimed invention is the impor-
tant consideration in a staple/nonstaple analysis. Instead, the
court referred to the potassium nitrate as a “mere” ingredient
of the toothpaste. (Appendix A, pages 6, 8 and 9) By failing to
acknowledge there was only one essential ingredient disclosed
in the Hodosh patent and only one alleged to constitute the ad-
vance over the state of the art, the Federal Circuit has given
an unwarranted expansion of Dawson, whereby a patentee now
exerts monopolistic control over unpatented and unpatentable
staple articles placed in an inert diluent.
In the present case, it is undisputed that potassium nitrate
is the essential ingredient of the claimed invention, i.e., the desen-
sitizing agent. The patent makes it crystal clear that potassium
nitrate is the only essential ingredient. It states that the same
12
desensitizing results are achieved regardless of the diluent used,
whether a paste, an aqueous solution or any other carrier.
The Federal Circuit itself had also determined in a prior deci-
sion that only the potassium nitrate is essential to the claimed
inventive concept. Comparing Hodosh’s toothpaste formula to
prior art desensitizing toothpaste products, it was concluded that
“Hodosh’s invention was the discovery of an apparently superior
desensitizing agent,” i.e., potassium nitrate. Hodosh, 786 F.2d
at 1143, (emphasis in original). The court further found that
“{Hodosh] never thought [his discovery] was a toothpaste for-
mula” and that the toothpaste formula was merely adopted “as
a convenient example.” Jd. at 1143.
Thus, the only significant factual distinction between the pre-
sent case and Dawson which the Federal Circuit refused to ad-
dress, is that potassium nitrate is an admitted essential staple
whereas propanil was an admitted essential nonstaple. Aside
from this, the two cases are on “all fours.”* Accordingly, the dif-
ference between potassium nitrate and propanil is of critical im-
portance and is determinative of the present case.
By not focusing on the essential ingredient, potassium nitrate,
and instead, by classifying it as a “mere” ingredient, the Federal
Circuit has now broadened a patentee’s monopoly to include
unpatented and unpatentable items. This interpretation of
§ §271(c) and (d) is a significant expansion of the narrow excep-
tion to the misuse doctrine set forth in Dawson, and would also
be contrary to the public policy set forth in long-standing
Supreme Court precedent and with pronouncements recently
made by this Court in Sony Corp. of Am. v. Universal City
Studios, Inc., 464 U.S. 417 (1984):
* Both patents cover “new use” methods. The “material” element in the
claimed method in each patent is the so-called “heart” of the invention or
“advance on prior art.” The patent owner and competitors both sell this ele-
ment along with an inert carrier and instructions for its use. Both patent
owners derive revenue from the sale of the unpatented element, grant licenses
for the use of the patented method only to its purchasers, and refuse to license
others.
a ee em
13
[A] finding of contributory infringement is normally
the functional equivalent of holding that the disputed
article is within the monopoly granted to the patentee.
For that reason, in contributory infringement cases
arising under the patent laws the Court has always
recognized the critical importance of not allowing the
patentee to extend his monopoly beyond the limits of
his specific grant.
See Id. at 441.
A writ of certiorari should issue to review the conflict between
the Federal Circuit's Order and Opinion and this Court's deci-
sion in Dawson.
Il. The Federal Circuit Decision is in
Conflict With Pre-1952 Supreme Court
- Precedent on Patent Misuse
During the appeal, Block referred to the extensive line of
Supreme Court cases dealing with patent miuse. This Court's
primary concern was the inequitable conduct of the patentee
preventing competition in unpatented products. Motion Picture,
243 U.S. 502, 519 (1917); Carbice, 283 U.S. 27, 214 (1931); Leitch,
302 U.S. 458, 463 (1938); Morton Salt, 314 U.S. 488, 992 (1942):
B.B. Chemical, 314 U.S. 495, 497-98 (1942). See discussion at
supra at page 8.
The Federal Circuit refused to consider these cases, stating
that they are unpersuasive because “the court spoke before the
advent of §271.”’ (Appendix A, page 9) The Federal Circuit ap-
parently considers that all patent misuse cases, decided by the
Supreme Court prior to 1952 were overruled sub silentio by the
Patent Act of 1952. This view, however, is totally unsupported
by the legislative history of the Act as reviewed in detail by this
* Section 271 was passed as part of the Patent Act of 1952.
14+
Court in Dawson. Indeed, Dawson made clear that most of the
pre-1952 decisions on patent misuse were still good law.’
The Federal Circuit further erred by adopting a mechanical
and superficial reading of §27l(c). The Federal Circuit stated
that the proper focus of the staple/nonstaple determination is
solely on the “thing sold,” without regard to whether the thing
sold contained but a single essential ingredient and without
regard to the teachings of the patent with respect to this issue.
The Federal Circuit’s so-called “plain wording” interpreta-
tion of the statute is in direct conflict with the Dawson deci-
sion, where this Court stated that “the languge of §271l(c) is
generic and freighted with a meaning derived from the deci-
sional history that preceded it.” Accordingly, the Federal Cir-
cuit’s mechanical and superficial interpretation of the statute,
as if the statute trad-been written on a clean slate, was error.
The Federal Circuit should have undertaken a careful, reasoned
review of the pre-1952 Supreme Court precedent to determine
the law and policy of the patent misuse doctrine codified in
§27l(c), as a necessary part of construing the statute.’
* Sections 27l{c) and (d) of the Patent Act were enacted in 1952 in reaction
to two controversial decisions of the Supreme Court which many in the pa-
tent community thought totally abolished the doctrine of contributory in-
fringement. Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661 (1944)
(Mercoid I); Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S.
680 (1944) (Mercoid II).
In Mercoid I, the Court held that any attempt by a patentee to control the
market for unpatented goods would constitute patent misuse, even if those
goods had no use outside of the patented invention, i.e. nonstaple goods. Mer-
coid II reinforced this broad pronouncement when it found misuse even though
the patentee offered licenses to the accused infringers.
In Dawson, this Court interpreted §271(c) and (d) as restoring the doctrines
of contributory infringement and patent misuse to the states in which they
existed prior to the Mercoid decisions. Dawson, 448 U.S. 176, 213 (1980)
(Blackmun, J., majority); see also, 448 U.S. at 235 (White, J., dissenting).
* This is especially so, in view of the fact that §27]1 is considered one of the
most complex provisions of the Patent Act:
(Footnote continued)
ll
15
Such a reasoned approach to deciding the staple/nonstaple
issue requires a court to analyze the nature of the product sold
in view of the teachings of the patent (in this case, that the “essen-
tial” ingredient is the desensitizing agent potassium nitrate), and
not in view of marketplace expedients.
This reasoned approach is commanded by decisions such as
Carbice, Morton Salt and B.B. Chemical. In Carbice, this Court
noted that the scope of a patentee’s exclusive rights “is not de-
pendent upon the peculiar function or character of the un-
patented material or on the way in which it is used.” 283 U.S.
at 33. In Morton Salt, 314 U.S. at 490, patent misuse was found
even though the salt tablets had a configuration rendering them
capable of convenient use in the patented machine. See also B.B.
Chemical, where this Court ruled that misuse cannot be avoided
simply based on the “preferences of manufacturers.” 314 U.S.
at 498.
The Federal Circuit also stated that “its plain meaning in-
terpretation of the statute” was in “complete agreement with
the legislative history behind §271”. That is not so. As related
in Dawson, the legislative history clearly establishes that Con-
gress enacted §271 for the express purpose of resinstating the
doctrine of contributory infringement as it had been developed
by decisions prior to Mercoid. The Senate Report accompanying
the legislation stated that §271(c) “is much more restricted than
many proponents of contributory infringement believe should
be the case.” S. Rep. No. 1979, 82d Cong. 2d Sess. 8, reprinted
[ §271(c)] has taken a good deal of educating, it is a difficult con-
cept to come to grips with. They call patent law the metaphysics
of the law, and I would say that this contributory infringement
business is the metaphysics of patent law. ... It is the meta
metaphysics, beyond the beyond, you might say.
Patent Law Codification and Revision, 1951: Hearings on H.R. 3760 Before
Subcomm. No. 3 of the House Comm. on the Judiciary, 82 Cong., Ist Sess.
153 (1951) [hereinafter cited as “]95] Hearings”). See also Oddi, Contributory
Infringement/Patent Misuse: Metaphysics and Metamorphosis, 44 U. Pitt. L.
Rev. 73, 74 (1982), reprinted in 15 Intell. Prop. L. Rev. 155, 156 (1983).
16
in 1952 U.S. Code Cong. & Admin. News 2394, 2402. Even one
of the most prominent proponents of the legislation, Giles S.
Rich (now a Judge with the Court of Appeals for the Federal
Circuit), cautioned against extending the doctrine of can-
tributory infringement too far, see Dawson, 448 U.S. at 208,
and stated:
Now, as to our solution, I think that if anything, it
is on the ultraconservative side. ... just from the
reading of [§27l(c)] it is evident that this is an ex-
ceedingly restrictive provision. [1951 Hearings at 153,
154]
Concluding his opening testimony at the 1951 Hearings, Judge
Rich added that “where there is a conflict, the misuse doctrine
must prevail because of the public interest inherently involved
in patent cases.” Dawson, 448 U.S. at 211.
A writ of certiorari should issue to review the decision of the
Federal Circuit to reject Supreme Court precedent decided prior
to enactment of the Patent Act of 1952.
III. The Federal Circuit Decision is in Conflict
With The Ninth Circuit Which Held That the
Proper Focus of the Staple/Nonstaple
Determination is On the Essential Ingredient
Courts have consistently looked to the essential ingredient of
the invention in making the staple/nonstaple determination and
have further consistently held that a staple does not lose its
characteristics as a staple by adding dilutive ingredients to it."
Rex Chainbelt is on “all fours” with the present case, yet was
disregarded by the Federal Circuit.
Dawson Chemical, 448 U.S. 176; Rex Chainbelt, Inc. v. Harco Products,
Inc., 512 F.2d 993 (9th Cir. 1975), cert. denied, 423 U.S. 831 (1975): Dr.
Salsbury’s Laboratories v. 1.D. Russell Co. Laboratories, 212 F.2d 414, (8th
Cir. 1954) (“Salsbury IT’); 1.D. Russell Co. v. Dr. Salsbury’s Laboratories, 198
F.2d 473, (8th Cir. 1952) (“Salsbury I’); Cf. Oxy Metal Indus. Corp. v. Quin-
Tec, Inc., 216 USPQ 318 (E.D. Mich. 1982) (proper focus is individual ingre-
dients, not the specific blend, since ingredients do not interact).
17
In Rex Chainbelt, a patent was obtained when the patentee
discovered the advantages of substituting epoxy resin for molten
zinc as the backing for a wearing plate on a rock crushing
machine. Claims 1-6 of the patent-in-suit in that case covered
the “two-element combination, namely a manganese steel wear-
ing part and a backing portion made of an epoxy resin formula-
tion with certain physical characteristics.” 512 F.2d at 997, (em-
phasis added).
Similar to the present case, the patent claimed the essential
ingredient (epoxy resin) with “an inert filler” (compare here to
potassium nitrate in a “nontoxic paste”) and the actual product
was sold in dilute form.” Yet, the court, in making the
staple/nonstaple determination, looked only to the essential in-
gredient of the invention, i.e., the epoxy resin, determined it to
be a staple, and held the patentee to have misused the patent.
Rex Chainbelt, 512 F.2d at 998, 1002. With respect to the ac-
tual product sold, the court explicitly stated:
There is ample evidence in the record to support the
district court’s finding that ‘Nordbak’ was a staple
commodity. It is well settled that the mere addition
of extenders to a staple article does not make the ar-
ticle nonstaple. . . . This is particularly true here since
the extenders are not ‘components’ of the invention.
The epoxy resin present in ‘Nordbak’ is the only com-
ponent of the patent at issue and that is a staple arti-
cle of commerce.
Id. at 1002 n.3, (emphasis added). Rex Chainbelt governs the
analysis to be applied in the present case. The proper focus is
potassium nitrate, the essential ingredient, and the particular
carrier used, in this case toothpaste, should be ignored since it
is unrelated to the inventive concept.
Consistent with the Ninth Circuit’s Rex Chainbelt decision,
the proper focus in making the staple/nonstaple determination
" “Nordbak [was] an unpatented combination of epoxy resin ‘extended’ by
several intert ‘fillers’. 512 F.2d at 998.
il
18
is on the essential ingredient of the invention. Courts have not
focused on the particular formulation of the actual product sold.
In Dawson, it was the propanil which was considered, not the
diluted herbicide actually sold. In Rex Chainbelt, it was epoxy
resin, not the epoxy resin extended by inert fillers.
Similarly, in the present case, it is potassium nitrate which
causes the desensitizing effect and it provides this function
whether placed in paste, solution, or any other commercially
convenient diluent or carrier. Accordingly, the proper focus in
making the staple/nonstaple determination should be on the
essential ingredient, potassium nitrate.
A writ of certiorari should issue to review the conflict between
the Federal Circuit’s Opinion and Order and the decision of the
Ninth Circuit in Rex Chainbelt.
CONCLUSION
For the foregoing reasons, a writ of certiorari should issue to
review the Order and Opinion of the United States Court of
Appeals for the Federal Circuit.
Respectfully submitted,
MarvIN C. SOFFEN
Epwarp A. MEILMAN
OsTROLENK, FABER, GERB & SOFFEN
260 Madison Avenue
New York, New York 10016
(212) 685-8470
James F. Davis
ALAN M. GRIMALDI
Howrey & SIMON
1730 Pennsylvania Avenue, N.W.
Washington D.C. 20006
(202) 783-0800
Attorneys for Petitioners
APPENDIX
A-|
Milton HODOSH and Richardson-Vicks,
Inc., Plaintiffs-Appellees,
Vv.
BLOCK DRUG COMPANY, INC., Block Drug Corp, and
Dentco, Inc., Defendants-Appellants.
No. 87-1376.
United States Court of Appeals,
Federal Circuit.
Nov. 25, 1987.
Holder of patent on method for desensitizing teeth with
toothpaste containing potassium nitrate brought action against
competitor for infringement, contributory infringement, and
induced infringement. The District Court granted competitor’s
motion for summary judgment of invalidity, and patent holder
appealed. The Court of Appeals, 786 F.2d 1136, reversed. On
remand, competitor renewed its motion for summary judgment
of patent misuse, and the United States District Court for the
District of New Jersey, Alfred J. Lechner, Jr., J., certified ques-
tion and granted competitor’s petition for interlocutory appeal.
The Court of Appeals, Markey, Chief Judge, held that proper
focus in determining misuse issue was on patent holder’s effort
to control toothpaste containing potassium nitrate rather than
on potassium nitrate alone.
Certified question answered.
Marvin C. Soffen, Ostrolenk, Faber, Gerb & Soffen, New York
City, argued for defendants-appellants, Block. With him on the
brief were Edward A. Meilman and Mark Garscia. Also on the
brief were James F. Davis and Alan M. Grimaldi, Howery &
Simon, Washington, D.C.
John O. Tramontine, Fish & Neave, New York City, argued
for plaintiffs-appellees. With him on the brief were W. Edward
Bailey and Norman H. Beamer. Also on the brief were Hugh
A. Chapin, Paul Lempel and William J. McNichol, Jr., Kenyon
& Kenyon, New York City.
A-2
Before MARKEY, Chief Judge, DAVIS, Circuit Judge, and
BALDWIN, Senior Circuit Judge.
MARKEY, Chief Judge.
Certified question from the United States District Court for
the District of New Jersey relating to a “staple article of com-
merce” inquiry arising in consideration of a motion for sum-
mary judgment of patent misuse.
I. Background
Milton Hodosh and exclusive licensee Richardson-Vicks
(Hodosh) sued Block Drug Company, Inc., Block Drug Corp.,
and Dentco, Inc. (Block) for patent infringement, contributory
infringement, and induced infringement of Hodosh’s U.S. Pat-
ent No. 3,863,006 (’006), entitled “Method for Desensitizing
Teeth.” Block filed motions for summary judgment of patent in-
validity and misuse. The trial court granted the motion for sum-
mary judgment of invalidity. This court reversed that judgment.
Hodosh v. Block Drug Co., 786 F.2d 1136, 229 USPQ 182 (Fed.
Cir.), cert. denied, — U.S. —, 107 S.Ct. 106, 93 L.Ed. 2d 55
(1986). Block renewed its motion for summary judgment of pa-
tent misuse. When the court decided that motion, Block asserted
that the motion involved a controlling question of law as to
which there is a substantial ground for difference of opinion.
The district court certified the question and this court granted
Block’s petition for interlocutory appeal. 28 U.S.C. § 1292(b),
(c) (1966 & Supp.1987).
The 006 patent discloses and claims a method for desensitizing
teeth with a composition containing an alkali metal nitrate’
Hodosh’s product claims were twice rejected and abandoned.
Independent claim 1 reads:
The method of desensitizing hypersensitive dentin
and cementum by applying thereto an agent, the
'‘ A complete discussion of the facts can be found in the district court’s opin-
ion on summary judgment of invalidity, 226 USPQ 645, 645-48, and in this
court’s opinion reversing that summary judgment, 786 F.2d at 1137-38, 229
USPQ at 182-83.
A-3
essential ingredient of which is a nitrate of one of the
following alkali metals: potassium, lithium or sodium
said nitrate comprising between | percent and 20 per-
cent by weight of said agent.
Claim 4, of particular importance here, reads:
The method of claim 1 further characterized in that
said nitrate is potassium nitrate mixed with a non-
toxie paste.
Hodosh sells “DENQUEL,” a toothpaste containing potassium
nitrate, thereby granting implied licenses to practice the patented
method to purchasers of that product. Block requested and was
denied a license under the patent.
Block asserts that Hodosh misuses the ‘006 patent by “tying”
a license to use the Hodosh method to the purchase of “un-
patented toothpaste.” Block does not allege that Hodosh has at-
tempted to control the sale of potassium nitrate per ser. There
is no dispute that purchasers of Block’s toothpastes “PROMISE”
or “SENSODYNE-F”™ directly infringe the 006 patent when they
use either of those toothpastes to desensitize teeth.‘
As noted in the district court’s Letter Opinion and Order, the
question comes on the focus of the staple/nonstaple inquiry.
Hodosh admits that potassium nitrate is a staple, but argues that
the relevant material is that which it sells, i.e., the toothpaste.
? “Denquel” is a registered trademark, Registration No. 1154376.
> Hodosh sells the mixture of potassium nitrate and nontoxic paste, with the
nitrate comprising between | percent and 20 percent of the paste, set forth
in claim 4, supra. Each purchaser of that product receives an implied license
to apply it to hypersensitive dentin and cementum for the purpose of desen-
sitizing them.
*“Promise” and “Sensodyne-F” are registered trademarks, Registration Nos.
1212077 and 1280417.
‘ The district court considered only contributory infringement. Hodosh’s claims
for infringement and induced infringement are, therefore, not before us.
A-4 -
Though it asserts misuse in relation to “unpatented toothpaste,”
Block argues that the relevant material is that which constitutes
the material part of the invention, or the alleged advance over
the prior art, i.e., the single ingredient potassium nitrate.°
II. Issue
Whether the proper focus in determining the misuse issue
should be on the potassium nitrate [an ingredient of the material
that is actually sold], or on the toothpaste containing the
potassium nitrate [the material that is actually sold].’
III. OPINION
A. The Patentee’s Actions
One form of contributory infringement is defined in 35 U.S.C.
§ 271(c) as:
Whoever sells ... a material ... for use in prac-
ticing a patented process, constituting a material part
of the invention, knowing the same to be especially
made or especially adapted for use in the infringe-
ment of such patent, and not a staple article or com-
modity of commerce suitable for substantial nonin-
fringing use, shall be liable as a contributory infringer.
35 U.S.C. § 271(d) provides that certain acts shall not con-
stitute patent misuse:
No patent owner otherwise entitled to relief for
infringement or contributory infringement shall be
denied relief or be deemed guilty of misuse or illegal
extension of the patent right by reason of his having
done one or more of the following: (1) derived revenue
* Hodosh’s argument that summary judgment of misuse would be inappropriate
because Block has not established the other elements of patent misuse, can-
not be raised here because it was not raised in the district court. See Fed. R.Civ.P.
’ The issue is the question as certified, with the bracketed wording added by
this court in its Order granting permission to appeal.
A-5
from acts which if performed by another without his
consent would constitute contributory infringement
of the patent; (3) sought to enforce his patent rights
against infringement or contributory infringement.
(1] The contributory infringement and misuse inquiries,
though obviously intertwined, require analysis of the actions
of different entities. In considering a plaintiffs claim of con-
tributory infringement under § 271(c), a court must review the
defendant’s acts. See Shumaker v. Gem Mfg. Co., 311 F.2d 273,
276, 136 USPQ 20, 22 (7th Cir.1962); Watson Packer, Inc. v.
Dresser Indus., Inc., 193 USPQ 552, 561 (N.D.Tex.1977). In con-
sidering a defense of patent misuse, a court must review the
plaintiffs actions in light of § 271(d). In dealing with misuse
here, analysis of Hodosh’s actions is required.
The misuse inquiry thus centers on the patentee and his ac-
tions. To determine whether exception (1) or (2) of § 271(d) ap-
plies, however, the patentee’s action is judged on whether “if
performed by another without his consent [that action] would
constitute contributory infringement.” Hodosh’s action at issue
here is its derivation of revenue from sales of nontoxic paste con-
taining potassium nitrate for use in desensitizing teeth.*
B. The Certified Question
Though the certified question arises in the context of a mo-
tion for summary judgment of misuse, the question, as above
indicated, implicates considerations of contributory infringe-
ment, and requires an answer to the staple/nonstaple inquiry.
[2] In determining whether Hodosh’s actions “if performed
by another” would constitute contributory infringement, the
district court, says Block, should have focused on the admittedly
staple potassium nitrate ingredient alone. That argument is
refuted by the language of § 27l(c), which deals with the
* Block does not assert that Hodosh committed a misuse when it “sought to
enforce his patent rights against infringement or contributory infringement.”
§ 271(d)(3).
A-6
material actually sold by the accused and the uses made of it
by its purchasers. Section 27l(c) requires examination of the
patented method only in determining whether the material the
accused actually sells constitutes a material part of the inven-
tion and is known by the accused to be especially made or
adapted for use in infringing the patent.’ Neither party here
“sells” potassium nitrate, and Block’s attempted limitation of
the staple/nonstaple inquiry to that mere ingredient would
eliminate the § 271(c) — mandated inquiries relating to whether
what was actually sold was a material part of the invention and
whether the seller knew that what was actually sold was especial-
ly made or adapted for use in infringement of the patent.
The legislative history of § 271(c) is in complete agreement
with reliance on the plain wording of the statute. In his Com-
mentary on the New [1952] Patent Act, 35 U.S.C.A. at 53 (1952),
P.J. Federico, one of the Act’s principal authors, emphasizes that
the focus of § 271(c) is on “the thing sold,” and in referring to
exclusion of staple products says: “[i]n addition the thing sold
must not be ‘a staple article or commodity of commerce suitable
for substantial noninfringing use. ” Jd. (emphasis added).” The
drafters of the section explicitly recognized that without pro-
tection from contributory infringers, owners of method patents,
like the owner here, would have no effective protection." Hear-
ings on H.R. 5988 Before the Subcomm. on Patents, Trademarks,
* Comparison of the patent claims to the actions of the purchaser is involved
in determining direct infringement, a prerequisite to contributory infringe-
ment. As noted, supra, there is no dispute here that purchasers using Block's
toothpastes to desensitize their teeth directly infringe the ‘006 patent.
” See also Hearings on H.R. 3760 Before Subcomm. No. 3 of the House Comm.
on the Judiciary, 82nd Cong., Ist Sess. 154-55 (1955)(testimony Mr. (now Judge)
Giles S. Rich, a principal author of the section, discussing how it would ap-
ply to the situation in Amalgamated Dental Co. v. William Getz Corp., 90
USPQ 339 (N.D.Ill. 1951)).
" At oral argument, counsel for Block answered the question, “How would
you if you owned this patent enforce it?”, saying Block would sue all the in-
dividual consumers practicing the patented invention. The impracticality and
undesirability of that approach underlies Congress’ provision of the con-
tributory infringement remedy in § 27l(c) and (d). For a full explanation
thereof, see Rich, Infringement Under Section 271 of the Patent Act of 1952,
21 GeoWash.L. Rev. 521 (1953).
A-7
and Copyrights of the House Comm. on the Judiciary, 80th
Cong., 2d Sess. 4, 5, 18 (1948); see Dawson Chem. Co. v. Rohm
& Haas, 448 U.S. 176, 221-23, 100 S.Ct. 2601, 2625-26; 65
L.Ed.2d 696, 206 USPQ 385, 407-08 (1980).
C. Block’s Arguments
Block would have this court conclude that, for § 271 purposes,
exclusing others from selling toothpaste with potassium nitrate
in it is not different from excluding others from selling either
potassium nitrate or pure toothpaste alone. We cannot accept
that proposal, for the combination may be quite different from
either ingredient alone and there are fact questions that at this
summary judgment stage must be resolved against the movant
Block. At trial, for example, the toothpaste containing potassium
nitrate may be shown to have been especially made and sold
for infringing use, and to have a far narrower range of nonin-
fringing uses (if any) than that of potassium nitrate or pure
toothpaste alone.”
Block’s principal reliance is on Dawson, supra. That reliance
is misplaced. The Court in Dawson concluded that the provi-
sions of § 271(d) confer upon the patentee a limited power to
exclude others from competition in nonstaple goods. “A patentee
may sell [or license another to sell] a nonstaple article. . .while
enjoining others from marketing that same good without his
authorization.” 448 U.S. at 201, 100 S.Ct. at 2616, 206 USPQ
at 399. Because Dawson had admitted that it sold a nonstaple
article having no substantial noninfringing uses, the Court af-
firmed the appellate court’s conclusion that Rohm & Haas had
not engaged in patent misuse, either in its method of selling pro-
panil, or in its refusal to license others to sell that commodity.
® Because they are fact questions for trial on remand, we do not decide those
questions here. Nor do we express an opinion on whether toothpaste contain-
ing potassium nitrate is a “material part of the invention” or is a “staple arti-
cle or commodity of commerce suitable for substantial noninfringing use,” or
on whether Block sells its toothpaste with knowledge that it is “especially made
or especially adapted for use in the infringement of such patent.” Similarly,
Block's speculation that its toothpaste might have “substantial” noninfring-
ing use on teeth that do not need desensitizing raises a fact question having
no place in this appeal.
A-8
Id. at 185-86, 202, 213-14, 100 S.Ct. at 2621-22, 206 USPQ at
392, 399, 404.
Contrary to Block’s protestations, the Court in Dawson did
not address any question of whether courts, when making the
staple/nonstaple determination, should look to the product ac-
tually sold or to a mere ingredient in that product. Similarly,
Block’s argument that the court in Dawson looked to the
“essence” or “essential” of the claimed invention when it refer-
red to “propanil” instead of “propanil mixed with an inert
diluent” is unfounded. Both parties sold the same product and
Dawson conceded that the product actually sold was a nonstaple
article. Hence, the Court had no need to, and did not answer
the question here certified.
Unable to make the charge directly, Block implies by its argu-
ment that Hodosh has somehow attempted to control the sale
of potassium nitrate, and refuses to entertain even the possibility
that Hodosh may be merely attempting to stop contributory in-
fringement of its patent. Similarly, Block’s attack on the grant
of a license to one manufacturer and the licenses implied by
law to purchasers carries an unstated but implied and inap-
propriate demand for a complusory license.
Block’s quoted phrases from numerous court opinions” are
unpersuasive on this appeal. In most of those cases, the materials
® Rex Chainbelt, Inc. v. Harco Prods., Inc., 512 F.2d 993, 185 USPQ 10 (9th
Cir.), cert. denied, 423 U.S. 831, 96 S.Ct. 52, 46 L.Ed.2d 49 (1975); Dr.
Salsbury’s Labs v. 1.D. Russell Co. Labs, 212 F.2d 414, 101 USPQ 137 (8th
Cir.1954)(Salsbury II); I.D. Russell Co. Labs v. Dr. Salsbury’s Labs, 198 F.2d
473, 94 USPQ 199, (9th Cir. 1952)(Salsbury I); Oxy Metal Indus. Corp. v.
Quintec, Inc., 216 USPQ 318 (E.D.Mich.1982); Sony Corp. v. Universal City
Studios, Inc., 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574, 220 USPQ 665
(1984); Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 92 S.Ct. 1700,
32 L.Ed.2d 273, 173 USPQ 769 (1972); Mercoid Corp. v. Mid-Continent Inv.
Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376, 60 USPQ 21 (1944)(Mercoid
I); Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 64
S.Ct. 278, 88 L.Ed. 396, 60 USPQ 30 (1944) (Mercoid II); B.B. Chem. Co.
v. Ellis, 314 U.S. 495, 62 S.Ct. 406, 86 L.Ed. 367, 52 USPQ 33 (1942); Morton
Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363, 52
USPQ 30 (1942); Leitch Mfg. Co. v. Barber Co., 302 U.S. 458, 58 S.Ct. 288,
82 L.Ed. 371, 36 USPQ 35 (1938); Carbice Corp. v. American Patents Dev.
(footnote continued)
0
A-9
actually sold were themselves found to be staples. In others, the
court spoke before the advent of § 271. In still others, the
material actually sold was found after trial to have had many
noninfringing uses. None involved the precise circumstances
before us and in none did the court indicate that under the cir-
cumstances of this case a court may answer the staple/nonstaple
question by focusing exclusively on an ingredient of the material
actually sold. In any event, if any of Block’s quoted phrases were
readable as establishing as a rule of law that courts must focus
only on a mere ingredient (rather than on the material or pro-
duct actually sold), such a rule would be in conflict with the
statute and could not, therefore, be followed in this court.
IV. CONCLUSION
The answer to the certified question is that in determining
the misuse issue presented in this case the proper focus is on
Hodosh’s effort to control the toothpaste containing potassium
nitrate actually sold and not on the potassium nitrat. ingredient
alone.
Corp., 283 U.S. 27, 51 S.Ct. 334, 75 L.Ed. 819, 8 USPQ 211 (1931); Motion
Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 37 S.Ct. 416,
61 L.Ed. &71 (1917).
B-]
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CHAMBERS OF U.S. POST OFFICE
ALFRED J. LECHNER, JR. © AND COURTHOUSE
JUDGE NEWARK, N.]J 07101
March 27, 1987
LETTER-OPINION AND ORDER
Not for Publication
ORIGINAL FILED WITH THE CLERK OF THE COURT
John O. Tramontine, Esq. Marvin S. Soffen, Esq.
Fish & Neave Ostrolenk, Faber, Gern
875 Third Avenue & Soffen
New York, New York 260 Madison Avenue
10022-6250 New York, New York 10016
Ronald Gould, Esq. Todd M. Sahner, Esq.
Shanley & Fisher Hannoch, Weisman
131 Madison Avenue 4 Becker Farm Road
CN-1979 Roseland, New Jersey 07065
Morristown, New Jersey
07960
Frederick L. Whitmer, Esq.
Pitney, Hardin, Kipp
& Szuck
163 Madison Avenue
CN 1945
Morristown, New Jersey
07960
Re: Milton Hodosh and Richardson-Vicks, Inc. v. Block
Drug Company, Inc., et all.
Civil Action No. 83-1110
Dear Counsel:
This patent suit is before the Court on a renewed motion by
defendants Block Drug Co., Inc., Block Drug Corp. and Dent-
co Inc. (collectively “Block” or “defendants”) for summary judg-
ment as to patent misuse. Defendants previously filed a motion
_
B-2
for summary judgment as to both patent misuse and patent in-
validity. Oral argument was heard by Judge Sarokin' who
granted summary judgment as to the invalidity issue, thereby
rendering moot the misuse issue.* On appeal, the United States
Court of Appeals for the Federal Circuit found issues of fact
to exist for trial on the question of patent invalidity and revers-
ed Judge Sarokin’s entry of summary judgment.’ Defendants
have renewed the instant motion for summary judgment as to
patent misuse on the ground that it is no longer moot. For the
reasons set forth below, defendants’ motion is denied.
Facts* and Procedural History
This suit was brought by co-plaintiffs Milton Hodosh
(“Hodosh”) and Richardson Vicks, Inc. (“R-V”) (collectively
“plaintiffs”) alleging that defendants are contributory infringers
of U.S. Patent 3,863,006 entitled “Method for Desensitizing
Teeth” (the “ 006 patent” or “patent in suit”). Hodosh is the
named inventor of the patent in suit and brought this action
on March 30, 1983. R-V is Hodosh’s exclusive licensee. Pursuant
to the ‘006 patent, R-V markets a toothpaste containing
potassium nitrate under the trademark DENQUEL.
The complaint, filed on October 1, 1983,‘ charged that defen-
dants infringed the ’006 patent (Complaint, filed October 11,
1983, ¢ 9) (the “Second Complaint”) and that defendants also
actively induced infringement of the 006 patent. (Second Com-
plaint, ¢ 9). The defendants, in their answer, have denied validity
and infringement and have alleged, inter alia, the patent in suit
is unenforceable because of patent misuse.
' The case was transferred to me pursuant to an Order dated July 29, 1986.
* Hodosh v. Block Drug Co., Inc., 226 U.S.P.Q. 645 (D.N.J. 1985).
* Hodosh v. Block Drug Co., Inc., 786 F. 2d 1136 (Fed. Cir. 1986).
*The facts concerning this matter are set forth in detail in the previous discus-
sion of the District Court, 226 U.S.P.Q. at 645 to 648 and by the Court of Ap-
peals, 786 F. 2d at 1137.
* The original complaint, filed March 30, 1983, was brought on behalf of
Hodosh only. By order, dated August 30, 1983, R-V was joined as in involun-
tary plaintiff. The October 11, 1983 complaint was filed by Hodosh and R-V
pursuant to a court order.
B-3
Defendants argue the patent in suit has been misused by plain-
tiffs who require the purchase of their unpatented product, the
dentrifice, for use with the patented method. Accordingly, defen-
dants argue plaintiffs seek to expand their monopoly and the
scope of the patented methods.
The ’006 patent relates to a method for desensitizing teeth
by treatment with a composition containing an alkali metal
nitrate, i.e., sodium, potassium or lithium nitrate. As ultimate-
ly approved, the patent was comprised of six claims;° The claims
are:
(1) The method of desensitizing hypersensitive den-
tin and cementum by applying thereto an agent,
the essential ingredient of which is a nitrate of
one of the following alkali metals: potassium,
lithium or sodium, said nitrate comprising be-
tween | percent and 20 percent by weight of said
agent.
(2) The method of claim 1 further characterized in
that said nitrate is potassium nitrate in an
aqueous solution.
(3) The method of claim 2 further characterized in
that said potassium nitrate comprises approx-
imately 5 percent (5%) by weight and satura-
tion of said aqueous solution.
(4) The method of claim 1 further characterized in
that said nitrate is potassium nitrate mixed with
a nontoxic paste.
(5) The method of claim 4 further characterized in
that said nitrate comprises approximately ten
percent (10%) by weight of said paste.
* Hodosh originally sought to obtain patent protection on the actual dentifice
product or composition containing potassium nitrate. The claims were rejected
by the patent examiner and subsequently cancelled by Hodosh. Hodosh then
filed a continuation-in-part application containing composition claims which
(footnote continued)
B-+
(6) The method of desensitizing hypersensitive den-
tin and cementum by applying thereto an
_ aqueous solution, the essential ingredient of
which is potassium nitrate said potassium nitrate
comprising between 1% by weight and satura-
tion of said aqueous solution.
(Aff. of Marvin C. Soffen, 7/9/84, Exh. 1; Memorandum in Sup-
port of Defendant’s Motion for Summary Judgment of Patent
Invalidity, Exh. A.) The claims do not cover any dentifice pro-
duct or composition for use with the method.’
Hodosh has granted an exclusive license to R-V, and R-V
licenses only purchasers of Denquel to practice the method
claimed in the 006 patent. Block’s requests for a license have
been refused by both Hodosh and R-V. (Soffen Affidavit, Exs.
6 and 7; Peters Affidavit, Exs. A, B and C.) Instead, the present
action for contributory infringement was brought, which ac-
tion seeks to enjoin Block from supplying certain of its products
to consumers who may or may not use such products to prac-
tice the patented method.
Defendants argue the products, the unpatented dentifices
(toothpastes), whether sold by plaintiff R-V (as DENQUEL) or
Block (as PROMISE OR SENSODYNE-F) act not only as a
desensitizing treatment for sensitive teeth, but also as an every-
day toothpaste, to clean the teeth, refresh the breath, and in
the case of the Block products PROMISE and SENSODYNE-F
also to apply a flouride treatment to the teeth. (Soffen Affidavit,
Exs. 8a, 8b and 8c).
was also rejected by the patent examiner and ultimately abandoned. (Soffen
Aff. Exhibits 2 and 3). After the claims to the dentifice product or composi-
tion were rejected by the Examiner, Hodosh acquiesed in the rejection and
settled for the “method of use” claims. (Id. at Ex. 3).
’ The term “process” as defined in 35 U.S.C. § 100, means process or method,
and includes “a new use of a known process, machine, manufacture, com-
position of matter, or material.” This statutory definition “making process,
art and method equivalent to each other is a codification of doctrines enun-
ciated in decisions of adjudicated cases.” 1 Lipscomb’s Walker on Patents, §
2:4 (1984) at 103. “The generic definition of a process is an operation per-
formed by rule to produce a result. Jd. at 104.
B-5
In this regard, Block argues the DENQUEL marketing
strategy is to establish the brand as an extremely effective
toothpaste to be used every day by adults for relieving problems
of sensitive teeth, as well as cleaning and other adult dental
needs. (Soffen Affidavit, Ex. 9). Block contends the products
of the two companies, R-V and Block, are thus similar and
beyond a limited use.
In opposition to Block’s motion for summary judgment bas-
ed on patent misuse, R-V submits Block cannot genually take
issue with its assertion that PROMISE and SENSODYNE-F and
DENQUEL, if it were not licensed, are “non-staples”. Plaintiffs
argue that PROMISE, SENSODYNE-F and DENQUEL are
non-staples because these products are uniquely suited for use
in treating persons with hypersensitive teeth in accordance with
Claims 1-4 of the patent in suit. R-V argues PROMISE,
SENSODYNE-F and DENQUEL are commercially unsuited for
use - and are not used - as a regular toothpaste for persons who
do not have hypersensitive teeth, or for any other non-infringing
use. In support of this contention, R-V cites to the following:
(1) DENQUEL is significantly more expensive than regular
toothpaste (Matt. ¢ 7; Aff. of Brisson Elmer); (2) DENQUEL
is not sold in large sizes (e.g. - “family” size) as regular toothpastes
(Matt. ¢ 8); (3) DENQUEL is distributed primarily through
drugstores, and placed in a relatively small section of shelf space
available for sensitive toothpaste products (Matt. § 9); and (4)
DENQUEL is promoted through the dental profession (Matt.
¢ 10).
Block agrees with R-V that the staple/non-staple issue is the
key to R-V’s allegations of contributory infringement. (Block
Reply Memorandum at 2). However, Block argues the ’006 pa-
tent states it is the potassium nitrate which is material, whether
used in an aqueous solution or in a toothpaste carrier. (Soffen
Affidavit, Ex. 1, Col. 2, Lns. 24-36).
In an attempt to further refine the court’s inquiry, R-V framed
the issue as: “. . . whether potassium nitrate combined with a
non-toxic paste as a sensitive teeth toothpaste is a staple or non-
staple. If it is a non-staple and if Block’s sale of that combined
B-6
product is an act of contributory infringement, then the specific
provisions of 35 U.S.C. § 271(d) mandate a finding of no misuse
and a denial of Block’s motion.” (October 2, 1984 letter to Judge
Sarokin from counsel to R-V).
The defendants submit, pursuant to General Rule 12 of the
local rules of this court, there does not exist a genuine issue as
to the following material facts:
1. The Patent and Trademark Office refused to grant
a patent covering a desensitizing dentifice composi-
tion or product containing potassium nitrate.
2. R-V and Block sell the unpatented dentifice con-
taining potassium nitrate which are displayed for
retail sale on shelves containing other dentifices.
3. Only purchasers of R-V’s unpatented dentifice
are licensed to use the patented method.
4. Block has requested a license from both R-V and
Hodosh.
5. R-V and Hodosh have refused to grant a license
to Block and have not granted a license under patent
in suit to anyone who does not purchase the R-V un-
patented dentifice.
6. The unpatented dentifice sold by both R-V and
Block may or may not be used to practice the claim
method.
Discussion
Patent Misuse
Patentees cannot exert any control over the staple goods used
in connection with their patented inventions, i.e. a party can-
not be held liable for contributory infringement based on the
sale of staple articles of commerce. Dawson Chemical Co. v.
Rohm ¢- Haas Co., 448 U.S. 175, 200-201 reh’g denied, 448 U.S.
B-7
917 (1980). In Dawson, the Court further determined that the
Congress intended 35 U.S.C. § 271(c) to narrowly define the class
of non-staple items. Jd. 448 U.S. at 200.
This principle was re-affirmed in Sony Corp. of Am. v.
Universal City Studios, Inc., 464 U.S. 417 reh’g denied, 465 U.S.
1112 (1984) where the ourt recognized the definition of a non-
staple article should be narrowly construed:
[I]n contributory infringement cases arising under the
patent laws the Court has always recognized the
critical importance of not allowing the patentee to
extend his monopoly beyond the limits of a specific
grant. These cases deny the patentee any right to con-
trol the distribution of unpatented articles unless they
are ‘unsuited for any commercial non-infringing use’.
Unless a commodity has ‘no use except through prac-
tice of the patented method, the patentee has no right
to claim that its distribution constitutes contributory
infringement. “To form the basis for contributory in-
fringement the item must be uniquely suited as a com-
ponent of the patented invention . . ’ ‘[A] sale of an
article which though adapted to an infringing use is
also adapted to other and lawful uses, is not enough
to make the seller a contributory infringer. Such a rule
would block the wheels of commerce.
Id. at 441 (citations omitted) (emphasis added).
Patent misuse occurs when a patentee ties the grant of pa-
tent rights to the purchase of an unpatented product. Leitch
Mfg. Co. v. Barber Co., 302 U.S. 458, 463 (1938). The Supreme
Court has consistently denied recovery for infringement to pa-
tent holders who misuse their patents by attempting to expand
their patent monopoly to unpatented materials used in connec-
tion with patented inventions. Motion Picture Patents Co. v.
Universal Film Mfg. Co., 243 U.S. 502 (1917); Carbice Corpora-
tion of America v. American Patents Development Corp., 283
U.S. 27 (1931); Leitch Manufacturing Co. v. Barber Co., 302
U.S. 458 (1938); Morton Salt Co. v. G.S. Suppiger Co., 314 U.S.
B-8
488 (1942), reh’g denied, 315 U.S. 826 (1942); B.B. Chemical Co.
v. Ellis, 314 U.S. 495 (1942). In the instant case, defendants con-
tend Hodosh has improperly expanded the ‘006 patent by only
granting licenses to the method patent to purchasers of Den-
quel, an unpatented composition. Block alleges this arrange-
ment constitutes a misuse of the method patent.
Title 35 U.S.C. § 271l(c) provides:
Whoever sells a component of a patented machine,
manufacture combination or composition, or a
material part of the invention, knowing the same to
Le especially made or especially adapted for use in
an infringement of such patent, and not a staple ar-
ticle or commodity of commerce suitable for substan-
tial noninfringing use, shall be liable as a contributory
infringer.
Plaintiffs in this case argue summary judgment as to patent
misuse is not appropriate and suggest the court
need only take notice of the following material fact
as to which there at least exists a genuine issue (R-V
submits that Block cannot genuinely take issue with
this fact):
Block’s products, Promise and Sensodyne-F
(and RVI’s product, Denquel, if it were not
licensed) are not staple articles or suitable for
substantial noninfringing use -- i.e., these pro-
ducts are nonstaples.
(Brief of R-V in Opposition at 2) (“Plaintiffs’ Brief”). Plaintiffs
contend these products are “uniquely suited” for the treatment
of hypersensitive teeth in accordance with claims 1 and 4 of the
patent in suit and are not commercially suited as a regular
toothpaste.
Defendants present the opposite argument: Promise,
Sensodyne-F and Denquel are suitable for substantial non-
infringing use. Defendants point out that despite Denquel’s claim
B-9
of being a “specialty product promoted exclusively as a ‘sensitive
teeth toothpaste’ ” (Matt Declaration, § 5), the package insert
for Denquel states, “You'll enjoy using Denquel as your regular
toothpaste!” (Defendants’ April 25, 1985 letter to Judge Sarokin,
at 3.)
Both sides have submitted affidavits to support their conflic-
ting positions. Plaintiffs contend their product “is uniquely suited
for use as a treatment for persons with hypersensitive teeth,”
(Declaration of Nicholas O. Matt,’ ¢ 5) (“Matt Declaration”)
and offer marketing data to bolster their argument. For exam-
ple, Denquel is priced significantly higher than toothpastes
marketed to the general public; Denquel is only sold in small
sizes, not in the larger “family” or “convenience” sizes; and Den-
quel is promoted primarily through the dental profession. (Matt
Declaration, 44 7, 8, 10.) Defendants take issue with these
assertions. :
Despite the existence of a factual dispute as to whether Pro-
mise, Sensodyne-F and Denquel are staple articles of commerce
suited for a substantial noninfringing use, see Sony Corp. of Am.
v. Universal City Studios, Inc., 467 U.S. at 441; Dawson
Chemical Co. v. Rohm ¢ Haas Co., 448 U.S. at 184, defendants
argue their summary judgment motion is not defeated. Instead,
defendants urge that in making the staple/nonstaple distinction
the court’s inquiry should not be directed to the toothpaste com-
position, but instead should focus on the potassium nitrate as
the material part of the invention, or the alleged advance over
the prior art. In this regard there is no dispute that potassium
nitrate as such is a staple article of commerce.°
Defendants point to cases wherein the court has focused on
the material part of the invention, not the actual composition
* Nicholas O. Matt is employed in the Vick International Europe (Africa Divi-
sion of R-V. He has held various marketing positions since joining R-V in 1973.
Mr. Matt’s responsibilities include supervision of the personnel responsible for
marketing Denquel.
* In plaintiffs’ October 2, 1984 letter to Judge Sarokin, it is admitted that
potassium nitrate is a staple. Again, at oral argument before this court plain-
tiffs’ counsel stated: “[i]t has been known for years, many, many years. In that
context it [potassium nitrate] is a staple, yes.”
B-10
sold, in making the nonstaple/staple distinction. For example,
in Rex Chainbelt Inc. v. Harco Products, Inc., 512 F. 2d 993
(9th Cir.), cert. denied 423 U.S. 831 (1975), a patent was ob-
tained when the patentee discovered the advantages of
substituting an epoxy material for molten zinc for backing of
the waring parts of gyrating crushing machines. Claims 1-6 of
the Rex Chainbelt patent in suit covered the two-element com-
bination of the waring part and the backing portion of an epoxy
resin with certain physical characteristics. Claim 7 added the
crusher to the earlier two elements, covering a three-element
combination. Id. at 997. The patent was challenged on a number
of grounds and following a trial on the merits the District Court
found, among other things: (1) the patent was void for ob-
viousness; (2) if the patent were valid, then defendant had ac-
tively induced others to infringe on the patent; (3) plaintiff's
sales of an unpatented staple commodity (epoxy resin) accom-
panied by an implied license to practice the patent constituted
a non de minimis tying arrangement; and, (4) that plaintiff's
tying arrangement constituted a misuse of its patent, making
the patent unenforceable. Id. at 995.
The decision was affirmed on appeal where the Ninth Cir-
cuit indicated “that any patentee who sells the patented item
only in conjunction with some other unpatented staple good
raises serious suspicions of tying behavior and misuse.” Jd. at
1002-1003. In addressing the validity of the patent, the court
focused on the epoxy resin, the alleged advance over the prior
art. The circuit court stated: “[t]here is ample evidence in the
record to support the district court’s finding that ‘Nordback’
[ plaintiff's commercial name for its epoxy resin formulation for
use as a crusher backing] was a staple commodity. It is well settl-
ed that the mere addition of extenders to a staple article does
not make the article nonstaple.” 512 F. 2d at 1002 n. 3 citing
Dr. Salsbury’s Laboratories v. I.D. Russell Co., 212 F. 2d 414
(8th Cir.), cert. denied, 348 U.S. 837 (1954).
The Supreme Court’s discussion of the staple/nonstaple
distinction in Dawson Chemical Co. v. Rohm & Haas Co., supra,
is instructive. At issue in Dawson was a patent on the method
B-1l
or process of applying the chemical compound known as pro-
panil to rice crops and other fields for herbicidal purposes (the
“R & H patent”). As is evident from the language of the R &
H patent,” the R & H patent described a method of applying
propanil so as to selectively inhibit the growth of weeds, yet not
harm the rice or other crop. 448 U.S. at 181.
The owners of the R & H patent initiated suit against a
manufacturer of propanil for selling the substance in containers
“on which [were] printed directions for application in aecor-
dance with the method claimed in the [R & H patent].” Jd. at
183. After being denied a license to practice the method recited
in the R & H patent, the defendant asserted the defense of pa-
tent misuse. The court found the accused not to have engaged
in patent misuse, concentrating on the chemical, “propanil, the
herbicidal properties of which are essential to the advance on
prior art ...”, id. at 199 and concluded that “propanil is a
nonstaple commodity which has no use except through prac-
tice of the [R & H] patented method.” Jd. (emphasis added).
Defendants urge the court’s discussion in Carbice Corpora-
tion of America v. American Patents Development Corporation,
supra, also sheds light on the instant dispute. In Carbice, suit
was brought by one manufacturer of solid carbon dioxide against
another manufacturer of solid carbon dioxide for patent infr-
ingement. The patent in suit covered neither a machine, method
nor a process for making the carbon dioxide, rather the patent
covered “a manufacture” for a package employing solid carbon
dioxide to protect and maintain ice cream and other perishable
foodstuffs during transportation. Jd. 283 U.S. at 29.
” |. “A method for selectively inhibiting growth of undesirable plants in an
area containing growing undesirable plants in an established crop, which com-
prises applying to said area 3, 4-dichloropropionanilide at a rate of applica-
tion which inhibits growth of said undesirable plants and which does not
adversely affect the growth of said established crop.”
2. “The method aceording to claim 1 wherein 3, 4-dichloropropionanilide
is applied in a composition comprising 3, 4-dichloropropionanilide and an
inert diluent therefor at a rate of between 0.5 and 6 pounds of 3,
4-dichloropropionanilide per acre.” 191 USPQ 691, 695 (SD Tex. 1976).
B-12
The plaintiff in Carbice did not seli or manufacture the
transportation package. Plaintiff simply manufactured the solid
carbon dioxide it called “dry ice.” Printed on plaintiff's invoice
included with its sales of the dry ice, however, was the follow-
ing warning:
The merchandise herein described is shipped upon the
following condition: That DrylIce shall not be used
except in DryIce Cabinets or other containers or ap-
paratus provided or approved by the DryIce Corpora-
tion of America [the exclusive licensee of American
Patents Development Corporation]; and that DryIce
Cabinets or other containers or apparatus provided
or approved by the DryIce Corporation of America
shall be refrigerated or used only with DrylIce. These
uses of DryIce are fully covered by our Basic Method
and Apparatus Patent No. 1,511,306. Granted October
14th, 1924, and other Patents Pending. Id. at 30.
The Carbice Court denied relief to plaintiff because it found
plaintiff to have wrongfully authorized use of its patented design
only to purchasers of the solid carbon dioxide. Although the
Court did not explicitly draw the staple/non-staple distinction"
it did so impliedly. The Court specifically found “[{t]hat [solid
carbon dioxide] and its properties as a refrigerant have been long
known to the public.” Jd. at 29.
Control over the supply of an unpatented material is
beyond the scope of the patentee’s monopoly; and this
limitation, inherent in the patent grant, is not depen-
dent upon the peculiar function or character of the
" Hodosh apparently challenges the persuasiveness of cases decided prior to
the 1952 enactment of the contributory infringement - misuse statute 35 U.S.C.
§ 27l(c) and (d) which codified the staple/nonstaple distinction. (See Plain-
tiffs November 14; 1986 letter to the court at 2.)
However, the propositions for which pre-1952 cases cited herein stand, were
not affected by the amendment to 35 U.S.C. § 271. Furthermore, the proposi-
tions have been reaffirmed and relied upon in subsequent cases such as Dawson.
B-13
unpatented material or on the way in which it is us-
ed. Relief is denied because [plaintiff] is attempting,
without sanction of law, to employ the patent to secure
a limtied monopoly of unpatented material used in
applying the invention.
Id. at 33-34. See also Leitch Manufacturing Co. and Barber Co.,
supra, (finding patent misuse in an attempt to condition prac-
tice of the patented method of curing concrete on pruchase of
bituminous emulsion, an unpatented staple article of commerce
used in the process); Morton Salt Co. v. G.S. Suppiger Co., supra,
(summary judgment granted against attempt to control the
market for unpatented salt tablets used in connection with a
patented machine for dispensing salt tablets); and B.B. Chemical
Co. v. Ellis, supra, (patent misuse precludes relief even where
infringement was actively induced). In these cases the courts
focused on the “tied” product, or the supposed advance over the
prior art, in concluding the patents in suit had been misued.
Plaintiffs, on the other hand, suggest the proper inquiry is
illustrated by Watson Packer, Inc. v. Dresser Industries, Inc.,
193 U.S.P.Q. 552 (N.D. Tex. 1977). In Watson Packer, the court
considered an infringement charge on a method patent cover-
ing a “step-by-step fluid spot valve control method of removing
sulphate scale from the well bore of a producing oil well.” Id.
at 554. Defendant countered with allegations of patent invalidity
and misuse. Id. at 555.
Discussing the staple-non-staple dichotomy, the court noted:
While each of these tools has substantial non-
infringing use individually, they have no substantial
use together other than to infringe the patent in suit.
Id. at 561 (emphasis added). The court focused on the combima-
tion of the method, rather than the individual tools. The tools
referred to include valves, packers and shear subs, each used
in the patented method. Applying the approach of the Watson
Packer court to the challenged toothpaste combination, plain-
tiffs suggest this court’s inquiry should involve the combination,
not the elements ot the combination.
B-14
Also cited is the decision in Plaintiffs also cite Shumaker v.
Gem Mfg. Co., 311 F. 2d 273 (1962). At issue in Shumaker was
a patent directed to a wind deflector attached to the rear cor-
ner post of an automobile to break up the vacuum formed dur-
ing forward movement of the vehicle. Jd. at 273. Plaintiff ac-
cused defendant of contributory infringement by selling pairs
of deflectors with the intent they be installed in an infringing
manner. Id. at 276. Defendant, however, claimed he was sell-
ing a staple article of commerce capable of substantial, non-
infringing uses such as on a boat windshield and singly or in
pairs on an automobile roof. Jd. at 275. Despite the other uses
for wind deflectors, the court enjoined defendant from “the prac-
tice of picturing the infringing use on its cartons, in its catalogs,
and in its instruction sheets, or of selling its product with direc-
tions for mounting it in an infringing manner.” Id. at 276.
Accordingly, questions arise as to whether these products are
used to any significant degree (if at all) as regular toothpaste
by persons who do not have sensitive teeth, and/or whether there
is any reasonable likelihood they will be so used. In sum, several
issues are presented, not the least of which is whether these pro-
ducts have a substantial use other than to infringe the patent’s
suit. Issues concerning marketing, pricing, etc. are relevant to
this determination. See Reynolds Metals Co. v. Aluminum Co.
of America, 457 F. Supp. 482, 509 (N.D. Ind. 1978), revd on
other grounds 609 F. 2d 1218 (7th Cir. 1979), cert. denied, 446
U.S. 989 (1980) (the “quality, quantity and efficiency of the sug-
gested uses are to be considered”); Bliss & Laughlin Industries.
Inc. v. Bil-Jax, Inc., 356 F. 2d 577 (N.D. Ohio 1972); Spee-Flo
Mfg. Corp. v. Gray Co., 255 F. Supp. 618 (S.D. Tex. 1964), affd
361 F. 2d 489 (5th Cir. 1966); Erie Resistor Corp. v. Solar Mfg.
Corp., 138 U.S.P.Q. 496 (S.D. Cal. 1963); United States Gyp-
sum Co. v. National Gypsum, 440 F. 2d 510, 516 (7th Cir.), cert.
denied, 403 U.S. 923, reh’g den., 404 F. 2d 875 (1971) (non-
infringing uses too insubstantial relative to the amount of the
accused product sold).
Summary Judgment
In order to prevail on a motion for summary judgment, the
moving party must establish that “there is no genuine issue as
B-15
to any material fact and that [it] is entitled to a judgment as
a matter of law.” Fed. R. Civ. P. 56(c). Once the moving party
has carried its burden under Rule 56, “its opponent must do
more than simply show that there is some metaphysical doubt
as to the material facts.” Matsushita Electric Industrial Co., Ltd.
v. Zenith Radio Corp., ___ U.S. ___., 89 L. Ed. 2d 538, 552
(1986) rev’g. 723 F. 2d 238 (3d Cir. 1983). The Supreme Court
recently explained that in evaluating the evidence presented,
“{ where the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party, there is no ‘ge-
nuine issue for trial.’ ” Matsushita, 89 L. Ed. 2d at 552. In mak-
ing this determination, all evidence submitted must be viewed
in a light most favorable to the party opposing the motion. Wahl
v. Rexnord, 624 F. 2d 1169, 1181 (3d Cir. 1980).
Applying this summary judgment standard to the issues now
before me, I find the relief should be denied. Although there
is no dispute that potassium nitrate is a staple article of com-
merce, as mentioned, issues include whether the concerning com-
bination of the potassium nitrate and toothpaste have a substan-
tial use other than to infringe the patent in suit. In this regard,
issue has been joined thereby preventing entry of judgment. Ac-
cordingly, for the reasons stated, the motion for summary judg-
ment is denied.
SO ORDERED, this 27th day of March, 1987.
/s/ Alfred J. Lechner, Jr.
ALFRED J. LECHNER, JR., U.S.D.J.
AJL:ks
ce: Theresa C. Heimall, Deputy Clerk
C-]
Shanley & Fisher, P.C.
131 Madison Avenue
Morristown, NJ 07960
(201) 285-1000
Fish & Neave
875 Third Avenue
New York, NY 10022
(212) 715-0600
Attorneys for Plaintiff Richardson-Vicks, Inc.
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
MILTON HODOSH and : Civil Action No. 83-1110
RICHARDSON-VICKS, INC. : Hon. Alfred J. Lechner, Jr.
Plaintiffs,
‘ ORDER
BLOCK DRUG COMPANY,
INC., BLOCK DRUG CORP. :
and DENTCO, INC.,
Defendants.
This matter being opened to the Court by defendants’ mo-
tion for certification under 28 U.S.C. 1293(b), and the Court
having considered the briefs filed by the parties with respect
to said motion, and other papers on file in this Court, and hav-
ing heard oral argument of counsel, and good cause being shown
therefor;
And the Court being of the opinion that there is a question,
under applicable law, as to whether the proper focus of the Court
in determining the misuse issue should be on the potassium
nitrate, or on the toothpaste containing potassium nitrate;
IT IS ORDERED AND ADJUDGED that this Court’s Order
dated March 27, 1987 denying defendants’ motion for summary
C-2
judgment as to patent misuse is amended to state that it involves
a controlling question of law as to which there is substantial
ground for difference of opinion and that an immediate appeal
of the Order may materially advance the ultimate termination
of the litigation; and
IT IS FURTHER ORDERED AND ADJUDGED that the
defendants shall have ten (10) days from the date of this Order
to petition the U.S. Court of Appeals for the Federal Circuit for
permission to bring the appeal.
Date: 5-5-87 /s/ Alfred J. Lechner, Jr.
Hon. Alfred J. Lechner, Jr.
United States District Judge
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