Reply Brief — Block Drug Co. v. Hodosh

~ Supreme Court, US.

Y RFILED

, E. SPANIOL, JR,

IN THE * OEERK m

Supreme Court of the Unite

OcToBER TERM, 1987

BLOCK DRUG COMPANY, INC., BLOCK DRUG

CORPORATION AND DENTCO, INC.,

Petitioners,

VS.

MILTON HODOSH and RICHARDSON-VICKS, INC.,

Respondents.

REPLY BRIEF IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI TO THE

U.S. COURT OF APPEALS FOR THE

FEDERAL CIRCUIT

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

TABLE OF CONTENTS

Page

TABLE OF CASES, STATUTES AND OTHER

MeFi 5 So ck Reva kN ORa ss ee es iii

I. The Absence of a Final Judgment Does Not

Affect the Importance of Granting the Writ

to Review the Certified Question of Law.... l

II. Respondents’ Brief Does Not Overcome the

Special and Important Reasons for Granting

ha yn baas 6 oe eed eas ak aa4 3

III. The Federal Circuit Decision Would Permit

Patent Monopolies to be Expanded by Such

Commercial Techniques as Marketing and

ea cs ee one es a ee oe ke 5

I 06 5s ss 5a Kg aa ca 4 ER Ae ek 6

TABLE OF CASES, STATUTES

AND OTHER AUTHORITIES

B.B. Chemical Co. v. Ellis, 314 U.S. 495, 498

SSA Sines anna

Dawson Chemical Co. v. Rohm & Haas Co., 448

U.S. 176, 183, 184 n. 3, 185, 187 (1980) ......

Hodosh v. Block Drug, Co., 786 F.2d 1136, 1143

(Fed. Cir.), cert. denied, 107 S.Ct. 106 (1986) .

Leitch Mfg. Co. v. Barber Co., 302 U.S. 458

2 ning og dcx K ies S 9 s'0 bw x 0 ss

Rex Chainbelt, Inc. v. Harco Prods., Inc., 512

F.2d 993, 1002 (9th Cir.), cert. denied, 423

os ss ies densa bd d6 do 45 oo

Switzer Bros., Inc. v. Locklin, 297 F.2d 39 (7th

Cir. 1961), cert. denied, 369 U.S. 851 (1962) ..

STATUTES AND OTHER AUTHORITIES

PT Eee

ss facia nes cb'veses’

Federico, “Commentary on the New [1952] Patent

Act,” (Published in 35 U.S.C.A. Vol. 1 (1952)) .

Page

No. 87-1394

IN THE

Supreme Court of the United States

OcToBER TERM, 1987

BLOCK DRUG COMPANY, INC., BLOCK DRUG

CORPORATION AND DENTCO, INC.,

Petitioners,

vs.

MILTON HODOSH and RICHARDSON-VICKS, INC.,

3 Respondents.

REPLY BRIEF IN SUPPORT OF PETITION FOR A

WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FEDERAL CIRCUIT

I. THE ABSENCE OF A FINAL JUDGMENT DOES NOT

AFFECT THE IMPORTANCE OF GRANTING THE

WRIT TO REVIEW THE CERTIFIED QUESTION OF

LAW

In opposing the Petition, respondents urge (Resp. Br. p. 6)

that this Court should not grant the petition for certiorari

because there is no final judgment. However, the present case

raises a special and important question of law, which was

recognized by both the District Court by certifying the ques-

tion and the Court oi Appeals below by granting interlocutory

review of the certified question under 28 U.S.C. §1292(b).

Significantly, in Dawson Chemical Co. v. Rohm & Haas Co.,

448 U.S. 176 (1980), under similar procedural circumstances,

this Court granted certiorari prior to final judgment. Petitioners

in Dawson moved for summary judgment on the patent misuse

issue, arguing that Rohm & Haas misused its patent by gran-

ting the right to practice the patented method only to purchasers

of its propanil-containing composition. The District Court

granted partial summary judgment on the issue of patent misuse,

the Fifth Circuit reversed, and despite the denial of summary

judgment, this Court “granted certiorari, to forestall a possible

conflict in the lower courts and to resolve an issue of prime im-

portance in the administration of the patent law”, 448 U.S. at

185 (citations omitted), while noting that other issues “remain

for development on remand”. 448 U.S. at 184 n.3.

In this case, the reasons for granting certiorari on the misuse

issue are buttressed by the fact that the District Court recognized

the existence of “a controlling question of law as to which there

is substantial ground for difference of opinion and that an im-

mediate appeal . . . may materially advance the ultimate ter-

mination of the litigation.” (App. C-2). The District Court cer-

tified the question. The Court of Appeals for the Federal Cir-

cuit agreed, and permitted the appeal. None of the cases relied

on by respondents (Resp. Br. p. 6) as to interlocutory review by

this Court involved an instance where a district court and a court

of appeals, recognizing that a substantial legal issue existed, were

dealing with a certified legal question under 28 U.S.C. §1292(b).

The District Court, while denying summary judgment,

recognized (App. B-9 to B-13) the law of patent misuse, as

developed in the long line of decisions by this Court and deem-

ed the legal question of the focus in determining whether a pat-

ent monopoly can be expanded, to be of sufficient importance

to certify the question, so it could receive guidance at the ap-

pellate level. This Court should provide such guidance.

Il. RESPONDENTS’ BRIEF DOES NOT OVERCOME THE

SPECIAL AND IMPORTANT REASONS FOR

GRANTING THE WRIT

The reasons offered by respondents for denying the writ are

not persuasive. While respondents argue that Block sells

toothpaste, and not potassium nitrate alone (Resp. Br. p. 8), it

is undisputed that potassium nitrate, a staple, is the essential

ingredient of the toothpaste and the advance over the prior art

(Petition pp. 4, 5 and App. D-1). The toothpaste is unpatented.

It is only the potassium nitrate in a common paste or water or

other carrier which gives relief to hypersensitive teeth.

Respondents’ assertion (Resp. Br. p. 7, n 9) that the non-toxic

paste has something to do with the inventive concept has never

had any factual support, by affidavit, or otherwise. Not only

is this contrary to the teaching of the patent, (Petition pp. 4-6,

App. D-1l) but the toothpaste carrier is an old formula copied

from the prior art. Hodosh v. Block Drug Co., 786 F.2d 1136,

1143 (Fed. Cir.), cert. denied, 107 S.Ct. 106 (1986). *

Respondents’ “Counterstatement of the Question” which

asserts that one should address only “the material actually sold”

without looking further, would preclude a court from any

analysis of that material. It has already been determined that

the nature of the product is such that the potassium nitrate is

the essential ingredient which imparts any novelty to the method.

If it were simply “any ingredient”, there would have been no

basis for certification.

Respondents rely (Resp. Br. pp. 11, 12) on statements made

by Mr. PJ. Federico in his Commentary on the New (1952) Patent

Act. His comments regarding “the thing sold,” however, were

of a general nature, and simply repeated the statutory language.

Mr. Federico was not discussing the specific issue before this

Court, nor did he have before him the Dawson decision which

reiterated the importance of focusing on the “essential” ingredient.

(Petition p. ll)

Interestingly, RVI's Denquel toothpaste packaging refers to only one active

ingredient, ic. potassium nitrate (earlier advertising having designated the

potassium nitrate as the “patented, active ingredient”).

The misuse issue is not simply “the refusal to license Block”

(Resp. Br. p. 3) as respondents assert. It is misuse to grant licenses

only to RVI’s purchasers and thus tie the use of the patented

method to the purchase of unpatented materials, and to bring

a suit against another supplier of such materials. Leitch Mfg.

Co. v. Barber Asphalt, 302 U.S. 458 (1938); B.B. Chem. Co. v.

Ellis, 314 U.S. 495 (1942). All purchasers of toothpaste from RVI

receive a license to use the product, and whether anyone other

than Block has made an express request for a license (Resp. Br.

p. 8) is irrelevant. As stated in Rex Chainbelt, Inc. v. Harco

Prods., Inc., 512 F.2d 993, 1002 (9th Cir.), cert. denied 423 U.S.

831 (1975), if “no other licensing program [is] visibly available”

(other than with the implied license given with the sale of the

unpatented product), then misuse is established. 7

Moreover, respondents’ reliance on Switzer Bros., Inc. v.

Locklin, 297 F.2d 39 (7th Cir. 1961), cert. denied, 369 U.S. 851

(1962) (Resp. Br. p. 8) for the theory that licensing Block would

be misuse, is misplaced. In that case, an antitrust violation

resulted from tying a patent license to many things, including

the use of trademarks and the purchase of materials for the pro-

duction of all fluorescent devices, and Switzer’s misconstruc-

tion of 35 U.S.C. §271l(c) was not considered an excuse for its

far-reaching antitrust violations.

Respondents assert that the plain wording interpretation of

Section 271(c) is unambiguous. (Resp. Br. p. 9) To the contrary,

this Court in Dawson pointed out “the language of §271 is

generic and freighted with a meaning derived from the deci-

sional history that proceeded it.” Dawson, 448 U.S. at 187.

Respondents’ further assertion (Resp. Br. p. 16) that it would

be “a practical impossibility for RVI or Dr. Hodosh to monitor

direct infringement” is the same type of argument that was of-

fered unsuccessfully in B.B. Chemical Co. v. Ellis, 314 U.S. 495

(1942). This Court responded, 314 U.S. at 498:

It is without significance that, as petitioner con-

tends, it is not practicable to exploit the patent rights

by granting licenses because of the preferences of

manufacturers and of the methods by which petitioner

has found it convenient to conduct its business. 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.

Ill. THE FEDERAL CIRCUIT DECISION WOULD

PERMIY PATENT MONOPOLIES TO BE EXPANDED

BY SUCH COMMERCIAL TECHNIQUES AS

MARKETING AND PRICING

The Federal Circuit erroneously left it to the district court

to have the misuse issue decided by questions relating to

marketing and pricing. (App. B-14) Such a basis for determining

the scope of the patent monopoly is inconsistent with the long

line of cases on misuse, and with 35 U.S.C. §271(c), which states

that in order to qualify as a nonstaple the material must not

be “suitable for substantial noninfringing use”. The

staple/nonstaple determination should depend on the inherent

nature of a material.

The Federal Circuit’s decision, if left undisturbed, would

permit patentees to circumvent the limitations inherent in

method-of-use patents and, by marketing and pricing

techniques, obtain monopoly rights which the Patent Office

refused to grant. Such a result was clearly not intended by

Congress in enacting 35 U.S.C. §271. It is also contrary to

Dawson.

Respondents’ reading of the statute would constitute a

significant expansion of Dawson, and would be contrary to the

public policy set forth in the misuse cases decided by this Court.

As stated in the Petition, the Federal Circuit Decision is in

conflict with Dawson and other Supreme Court and Ninth

Circuit precedent on patent misuse.

CONCLUSION

For the reasons set forth above and in the Petition for a Writ

of Certiorari, such Writ should issue to the Court of Appeals

for the Federal Circuit.

Respectfully submitted,

MARVIN C. SOFFEN

Epwarp A. MEILMAN

OsSTROLENK, 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