Petition for Writ of Certiorari — Crown Machine & Tool Co. v. D & S Industries, Inc.

B. The Subject Matter of the Patents in Suit:

Foam Cup Manufacture. ,

Patent 3,125,780 is concerned with an apparatus and

Patent 3,162,705 with a method for molding one-time-use,

throw away, disposable, inexpensive cups from foam poly-

styrene beads. The resulting cups are referred to in the

trade as foam cups. Patent 3;125,780 resulted from a di-

vision of+3,162,705 with both originating in an application

filed October 1, 1957. That application is the first disclos-

ure anywhere of a method and, apparatus for producing’

thin wall cups from foam polystyrene beads, —

a e

, (REASONS FOR ALLOWANCE OF THE WRIT.

\ -°. A.Reasons: -The Presumption of Validity (35 U. 8. C.

Ses 982) Should Not Be Ignored.

Patent 3,162,705 was allowed by the Patent ( Iffice Board

of Appeals over a Jeffery reference. The Calif Ynia Dis-

‘triet Court held 3,162,705 invalid over the same. Jeffery

reference, even though the Defendant did not notice the

Jeffery reference under 35.U. 8. C. 982, did not ‘rely

upon the Jeffery reference, did not argue the unpatenta-

bility of.either 3,162,705 or 3,125,780 over the Jeffery refer-

_ enge, me | did not urge that the Board of Appeals in the

Patent Office erred in granting the patent over the Jeffery

t .. reference. As to'the Jeffery reference, the Defendant made

no effort whatsoev rer—absolutely none—to rebut the statu- /

Cs presumption of validity that te aces enjoy under ~

3a,U. S. C. 282.

The California District Court ignored the validity pre-

sumption and flatly overruled the Patent Office Board of

Appeals on the Jeffery reference without any evidence

from the defendant to rebut the correctness of the Board’s'

decision. °

—

ee:

s

\

es : 5

The question of whether or not the presumption. 6# va-

lidity had been overcome by clear and convincing evidence

is not raised here. The sufficiency of the evidence was not

in issue since there was no evidence.

According to Mumm vy. Decker & Sons, 301 U. 8. 168

(1937), the defendant’s burden in rebutting the presump-

tion under 35 U.S.C. 282 is ‘‘a heavy one’’ and ‘‘every

reasonable doubt should be resolved against him.’’ Surely

thé presumption of validity means something. But here

nothing.

B. Reasons: To Determine Infringement, This Court’s

Decision in Graver Tank Co. v. Linde Air Products

Co., 339 U. S. 605 (1949), Requires a Threshold Deter-

mination of Whether or Not the Claims of the Asserted

‘Patent Read on the Accused Structure.

In Graver Tank this Court established that in deter-

mining patent infr ‘ingmént a threshold determination must

be made as to whether or not the claims of the patent read

on the accused device. .

“‘Tn determining w hether an acctised device or com-

position infringes a valid patent, resort. must be had

‘in the first instance to the words of the elaim.’’ (p.

‘607.)

_,After that determination is made, the Court should then go

into anciHary questions, if necessary, such as file wrapper

estoppel, equivaleficy,,the prior art, ete. But those matters

can only be tmauiret into after an initial determination

has been made as to whether the claims read.

Here the Arizona Court refused to ‘apply the claims of'

the patent in suit to the accused device. © Rather, the

Arizona Court approached infringement on a two step

basis, first,-a piece-by-piece comparison of the aecused

machine with a multitude of prior art reférences, and,,

second, a piece-by-piece differentiation between the ac-

) ;

6

cused machine and the particular machine shown in the

patents in suit. If the infringement test applied by the

Arizona Court is proper, then few if any patents would .

ever be or could be held infringed: The two step er 0

ment test derived by the Arizona Court is completely |

unique. There is no basis for it in any decisions of this

ourt.

C. Reasons: The Award of Attorneys’ Fees in the Cali- .

fornia Case Is a Penalty for the Patentee’s Compliance

With the Rules of Practice in Patent Cases Resulting

Inherent Conflict Between 35 U.S.C. 285 and

Rules 117, 118-and 124 ‘of the Rules of Practice in

Patent Cases. (37 Code of Federal Regulations §§ 1.117,

1.118 and 1.124.)

The California Court awarded the Defendant $35,000 i in

attorneys’ fees under 35 U.S. C. 285:

‘‘The Court, considering the evidence Lesieteve

discussed, finds that the action can be said to have

- been brought in bad faith; that it is an exceptional case

within the meaning of 35 U.S. C. $ 285; and, that:

reasonable attorney fees should be awarded to the pre-

-vailing party.”’

The Court based its award on the prosecution of Crown’s

780 and ’705 applications before the Patent Office with

the finding that:

‘‘Crown intended to and did enlarge the scope of

its °705 and ’780 patent applications while they were

pending before the United States Patent Office for the

purpose of appropriating the ‘positive pressure’ im-

provement for loading the mold cavity—an improve-

ment developed by persons other than Crown. * * *

Since the illegal enlargement by Crown of its ’705

and ’780 patent applications has been the keystone of

this suit, Crown should pay Sutherland its attorneys’

fees as contemplated by 35 U. S. C. 285.’’

7

-

The ‘‘illegal enlargement’’ referred to involves the cancel-

lation of a portion of the specification while the application

was pending, and its subsequent verbatim reinsertion

while the application was still pending, as authorized by

Rule 124 of the Patent Office Rules. |

A patent applicant’ s conduct is legal when it is within

the Rules of Practice in Patent {‘ases, in the establishments

of those rules by the Commissioner of Patents is specifically

authorized by 35 U.S. C. 6—Duties of Commissioner:

«The Commissioner * * * may * * * establish regu-

lations, not inconsistent with law, for the conduct of

proceedings in the Patent Office. ’? (Emphasis added. -},

Rule 117 (37 C. F. R. $1. 117), as duly established by.

the Commissioner, reads: é

‘‘ Amendment and revision required. The specifica-

tion, claims and drawing must be amended and revised

' when required, to correct inaccuracies of description

and definition or unnecessary prolixity, and to secure

correspondence “between the claims, the specification

and the drawing.’’ in,

— Rule 118 (37 C, F. R. 8}. eaiiaces as duly established “3 the

Commissioner, reads:

‘¢ Amendment of disclosure. In original applications,

all amendments of the drawings or specifications, and

all additions thereto, must conform to at least one of

them as it was at the time of the filing of the applica-

tion. Matter not found in either, involving a departure

from or an addition to the original disclosure, cannot.

be added to the application even though supported by

a suppleméntal oath, and can be shown. or claimed

only in a separate application.’’

Rule 124 (37 C. F. R. § 1.124), as duly established by the

Commissioner, reads: | |

“« Amendment of amendments. When an amendatory

eae

clause is to be amended, it should be wholly rewritten

- and the original insertion canceled, so that no inter-

- jineations or deletions shall appear in the clause as

finally presented. Matter canceled ny amendment can

‘be reinstated only by a subsequent amendment present-

ing the canceled matter as a new imsertion.”” (Em-

phasis added.) a am

Here, the patent applicant’s conduct was in complete

- accord with these rvles and the California Court~ did

not hold otherwise. Further, the California Court did not

point to any rule of the Patent Office that the patent ap-

plicant violated in the prosecution of its patents.

_ To then characterize such conduct as ‘‘illegal’’ as a basis

for an award of attorneys’ fees ‘ander 35 U.S. C. 285°

renders Rules 117, 118 and 124 illegal in some respects.

Either the patent applicant cannot delete a portion of his

original specification during the pendency of his applica-

tion, as presently authorized by Rule 117, or once having

deleted it, he cannot reinsert -it during the pendency of the

application, as presently authorized by Rule 124, without

engaging in ‘‘illegal’’ conduct. The California Court did

not find that this patent applicant violated Rule 118 by

inserting ‘‘new matter’’ in the application, which is strictly

prohibited by this rule.’ Hence, the holding of ‘‘illegal’’

conduct before the Patent Office inherently makes either

Rules 117, 118 %r 124, or all of them, illegal.

We emphasize that this present patentee did not insert

any new matter in his pending application.

“av

Ba a

.

9

CONCLUSION.

The statutory presumption of validity under 35 U. S. C.

“382 should in no event be ignored and in any event should

not be abolished without some evidence to the contrary.

Here, there was no evidence to the contrary—not a scin-

tilla. The California Court placed itself directly opposed

to the statutory presumption of, validity arising from the

patents’ issuance by the Patent Office Board of Appeals

without any evidence to substantiate or justify its action.

The affirmance thereof on a per curiam basis by the Ninth

Cireuit is in clear conflict with this Court’s holding in

Mumm and with the other Cireuits..

The infringement test originated by the Arizona Court,

as affirmed per curiam, leads to an impossible standard and

one directly in conflict with this Court’s holding in Graver.

The award of attorneys’ fees under 35. U. 8S. C. 285 by

the California Court renders either Rule 117, 118 or 124

of the Patent Office Rules illegal. and, unless clarified by

this Court, will upset standards and practices before -

U. S. Patent Office of long standing.

" Respectfully submitted,

Aurrep H. PLyer, JR.,

Howarp T. Markey,

Parker, CarTER & Matxey,

8 South Michigan Avenue,

Chicago, Illinois 60603,

Attorneys for Petitioner.

_

APPENDIX A.’ rc

aes

iw Unirep States Court or APPEALS ~

é For the Ninth Circuit.

Crown, MacuineE & Toot Co.,a Corporation, ) P

Plaintiff -A eseewoies and Cross-Appellee, ,

; vs. Nos. 22,189

D&S Inpvusrrirs, Inc. (formerly Thompson 22,189-A

Industries,.Inc.),

° Defendant-A ppellee and Cross-A ppellant. | -

, Appeal from the United States District Court ¢

-for. the District of Arizona ;

Crown MaAcHINE at). Co.,a Corporation, }

sishaclace ppellant and-Cross-A ppeliee,

US. | Nos. 23,006

‘KVP- Surmua.axe PAPER CoMPANY, a | Cor- - 23,007

\ poration,

Defendant-Appellee and Cross-Appellant. ) / oe

Appeal from the United States District Court

for the Northern District of California

[February 13, 1969]

| e

‘Before: Hamrzy and Carrer, Cireuit Judges, and.

McNicuots, District Judge.*

*The Honorable Ray MeNichols, United States District Judge

_ for the District of Idaho, sitting by designation. a

*

,A2

Per Curiam: s

The: first of the two above-entitled causes arose in the

United States District Court for the District of Arizona

(Phoenix case). The second arose in the United States

District Court for the N orthern District of California (San

Francisco case). Both cases relate to the asserted ‘appro-

priation by. Thompson Industries, Inc. (Thompson) of a

number of Mventions alfegedly eovered by patents issued

to Crqyn Machine & Tool Co. (Crown).

The inventions in controversy were-machines for, and

. methods of, manufacturing molded polystyrene cups for

holding hot liquid. ThompSon made and sold machines

assertedly covered by a license agreement entered into by |

Crown and binding on Thompson, which machines allegedly

infringed Crown’s appliance and method patents.

The Phoenix case was brought by Crown under 28

_ U.S. C. § 1332 (1964), charging defendant Thompson with

failure to pay royalties under an assigned patent license

contract. Thompson has since been succeeded by D & S

Industries, Inc., but for convenience we will refer to

Thompson instead of its successor, Thompson denied lia-

bility for royalties, and counterclaimed for a declaratory .

judgment that no royalties were due and that machines

manufactured by Thompson do not infringe Crown patents

2,951,260 (260), 3,125,780 (780), or 3,162,705 (705), and that .

each such patent is invalid. Thompson also asked for

treble damages in the sum of $750,000 for asserted. viola-

tion of the antitrust laws.

The Phoenix hig te ried without a jury. In an

opinion filed on May 25, 1967, and reported in 270 F. Supp.

271, the district court held that no royalties on cups from

Thompson machines were due Crown under the license

agreement, that the Thompson machines did not infringe

any of the Crown patents, and that Crown did not violate

‘\

A3 :

the antitrust laws. The Phoenix aati did not reach the

question of. validity-of the patents. . A decree was entered

disntissing Crown ’s claims and Thompson’s counterclaims

pertaining to validity of the patents and violation of the -

antitrust laws. The decree contains.a declaration that the |

.Thompson machine does jot infringe any. of -the Crown

patents. Crown appealed and Thompson cross-appealed.

In the San Francisco case, brought under 28 U. S. C..

§ 1338 (1964), Crown charged defendant KV P-Sutherland

Paper Company (KVP), a purchaser and user of Thomp-

son machines, with infringement of claim 12 of Crown’s

260 patent, claims 1 and 3 of Crown’s 780 patent, and the

single claim of Crown’s 705 patent. KVP filed an answer

denying the critical allegations of the. complaint and affirm-

atively alleging. that. the Crown patents are invalid,’ that

Crown has misused the patents in a mantier which violatés

the antitrust laws, and that Crown comes to court with *

unclean hands. KVP. also counterclaimed for injunctive

relief, an accounting, unspecified treble damages for viola-

tion of the antitrust laws, and for reasonable attorneys’ ~

fees under 15 U.S. C. $15 (1964) and 35'U. S.C. $285 |

(1964). : } .

The San Francisco ease was also tried without a.jury. In_

decisions filed September 26, 1967, April 4, 1968,-and April :

29, 1968, reported in ........ a Supp. ......... , the district court

held that claims 1 and’3 of Crown’s 780 patent and the.

single claim-of the 705 patent were invalid, that claim 12

of the 260 patent. was valid but not infringed, that Crown

had tiot violated the antitrust laws, and KVP was awarded

attorneys’ fees in the amount of $35,000, under 35 U.S. ¢.

§ 285, A judgment was entered dismissing Crown’s com-

* plaint and KVP’s, counterclaim under the antitrust laws,

and awarding KVP attorneys’ fees in the indicated amount.

‘Crown appealed and -KVP cross-appealed,

The opinions and judgments in the two district court

8 ae " A4 a ee e .

\ ites

cases were filed following the entry of detailed findings of

fact and conclusions of law. In their respective opinions,

_ the two district courts discussed ghe various issues in depth

and dealt*at length with both th’ facts and the relevant”

principles of law. . >

Our review of the: same issues convinces us that in districi

courts reached the right results fer:the: right reasons, and,

that a restatement, in extenso, of these reasons in this opin-

ion would serve no useful, purpose: ai we hold .

as follows ::

1. The determination of the district ssaik in, the

Phoenix suit that Thompson is not liable to Crown for .

“royalties with regard to the manufacture and use of

hompson machines, is sustained for the reasons

2. The determination of the district court in the

stated in Crown’ Machine & Tool Co. v. D & S Industries,

Ine., 270 F. Supp. 271, 276. ve f

¢

San Francisco’ suit that Crown patents 705 and 780 ”

. are invalid for obviousness, is sustained for the reasons

"stated in Crown Maehine & Tool Co. v. KVP-Suther- :

land Paper Company, ........... EF’. Supp. ........... (* Tr. 68,80) -

3. If this court.is mistaken in “sustaining the deter-

mination of the district court in the San Francisco.

suit that Crown patents 705 and 780 are invalid, then.

the determination of the district court in the Phoenix

suit that the Thompson. fhachines do not infringe those

patents, i is sustained for the reasons: stated in 270 F.

Supp. at 277-278.

4. The determination of the district court in the

San Francisco suit that claim 12 of Crown patent 260,

if broadly read, is invalid for obviousness, but if

_. narrowly read, is valid, is sustained. for the reasons

stated in Crown Machine & Tool Co. v. K VP-Suther-

land Company, .......... F. Supp. . (Tr. 87-89).

4

® 4

a.

‘ a?

Ad

.* The determination of the district eéurt in the San

Francisco suit that if claim 12 of Crown’s 260 patent

is narrowly read and thereby valid, it is not infringed ~

by the Thompson. ‘machines, is sustained for the reasons -

, Stated in Crown Machine qs Tool Co. v. KV P- Suther-

land Paper Company, «...... F. Sapp, ——: (Tr. 92)

6.. The determination -of the district courts in both

suits that Crown is not liable to defendants under the’

antitrust laws is sustained for the reasons stated in

the two reported district court decisions referred to

above, 270 F. Supp. at 278-280, and ......... F. Supp. at

acacia 6 (Tr. 97) «

7. The determination of the district court in | the

‘San Franciseo suit, awar ding KVP attorneys’ fees in

the surh, of $35, 000, is sustained for the reasons stated

| es F. Supp i cactaaah . (Tr. 98, 122, 123) °

The jodgments are affirmed on the appeals and cross-

_ appeals for the reasons appre herein. »

#3 : =

%

—

,

- AG .

7 0 '

APPENDIX B.

Unrtep States District Court

District of Arizona. “

’ ‘ ; s

Crown Macuine & Toot Co.,

‘Plaintiff-C i ali ite Std ; ae

vs. i ° ; ,

‘ivil 4942-PHX.

D &S Iyxvvustrizs, Ixc. (formerly if , “lh

Thompson Industries, Ine.), ,

Defendant-Counter-Plamttf. } .

i) ae

OPINION. ,

Kitkenny, Judge:

This is a suit by Crown Machine & Tool Co. (Crown), °

against Thompson Industries, Inc. (Thompson), whose

corporate title is now D & S Industries, Inc., for an ac-

counting of royalties aHeged to be due from defendant

under an assigned patent license agreement. Defendant

_counterclaimed, first for declaratory relief, and second for

damages under the antitrust laws." Thédlitigation i is cen-

tered around disposable drinking cups manufactured from

expandable polystyrene beads, which, in turn, draws into

focus the~scope, utility and operating:-effect of certain -

‘ \ patents owpeg by,Crown. Expandable polystyrene beads

became “generally available in Ameri¢a in 1954. These

beads are small plastic particles.impregnated with an ex-

_ panding agent, Upon eating within a closed mold the

ae) ody i Fs

a

; +, ge ey pe

beads expand and fuse together in a solid light weight

plastic article which has the shape of the mold.

Crown, in 1956, decided to manufacture this type of

drinking eup, and by December 12, 1957, was distributing

the product which was produced by its molding machines.

As a result*of this experiment, Crown applied for and

became the owner of United States Patent 3,162,705 (705),

whith describes a ‘‘ Method for Making Plastic Containers”?

and United States Patent 2,951,260 (260), which contayps

a detailed analysis of a ‘‘Molding Mechanism.and Heating

Arrangement’’. The 705 Patent was granted December 22,

1964, as the result of an application made on October 30,

_ 1956. The 260 Patent issued ‘September 6, 1960, was

originally applied for on October 1, 1957. Crown is also

-the owner of United States Patent 3,125,780 (780), which

* Was granted March 24, 1964. That _patent describes, an

‘*Apparatus and Method for Making Plastic Containers.”?

To commercially exploit the process, Crown entered into

negotiations with Champion Papers, Ine. ( Champion) and,

on July 7, 1958, granted to Champion an exclusive license, ’

whereby the latter could use throughout the United States

(with the exception of Texas, Oklahoma and Louisiana)

~ the subject matter disclosed in a group of patent appli-

‘eations, which included the then pending applications for —

the 260 and 705 Patents. On September 5, 1958, Crown

sold Champion the first of several cup molding machines.

of the type described in the 260 Patent, and Champion

_ began production soon thereafter.

‘Thompson first entered the picture in late 1959, after

observing one of Crown’s cups in Phoenix. It became

interested in the product and, after encouragement from

the Koppers Company of Pittsburgh, a supplier of expand-

able polystyrene beads, developed a molding machine which

would produce drinking cups.

Crown continued to produce and sell foam cups on its

e

- machines, for the three-state market exempted from Cham-

pion’s license until April of 1960, at’ which time it séld

~ its remainmg eyp business to. Champion. Champion then. -

. began designing a new machine for molding cups: from — |

’ expandable polystyrene beads. The development of this

‘‘Champion machine’’ resulted in a patent application by

Champion ‘on February 1, 1963, which was honored on

August 24, 1965, by the issuance of U. S. Patent 3 ee

(734). a

By late 1961, Thompson and Magi- Cup icine of

California, with which it had merged, posed a serious

-eompetitive threat to Crown and Champion. On De-

cember 15, 1961, a Champion vice- president, wrote Det-

weiler, President of Crown, expressing the former’ S con-

cern about increasing competition.

On July 6, 1962, Crown wrote six concerns, including

Thompson, identical letters referring to its 260 Patent,

asserting possible infringement. In the ensuing exchange

of correspondence between Crown and Thompson, Thomp-

son denied infringement and Crown demanded an inspec-

tion of the Thompson machines.

Rather than abating, competition in the foam sitvetdanee

cup industry increased after the warnings sent hy Crown

in July, and by *the fall of 1962 Champion’s dominant

position in the industry had declined to the point where

it had less than 50% of the total sales volume.. Under the

62 Crown-Champion license agreement, Crown had the re-

sponsibility to-enforee the patent rights, and Champion

became. quite forceful in its demands that more suits be

instituted.” On October 22, 1962, a Champion officer wrote

Crown’s president demanding the commencement of an

infringement suit against Thompson, among others.

In October of 1962, Crown’s coynsel received a detailed

description of the Thompson molding machine, and in Janu- |

. o.

¢

ae

AQ

ary of 1963 a Crown representative inspected one of the

Thompson machines. _ Conferences between Crown and

Thompson proved futile, as. Thompson insisted its machines

did not*infringe on the former’s patents.

On August 2, 1963, Champion sold Crown a portion of its

polystyrene cup business, and .at the same time these two

concerns entered into a revised license agreement. By the

terms of this agreement, Champion was given the. non-ex¢lu-

sive right to use Crown patent rights in the production of

cups and containers from expandable plastic materials, and

to make and use machines for their manufacture, for a

royalty of 2% of the net sales of cups and containers.

The royalty obligation, however, extended only to cups

and containers covered by claims on any patent among the

‘*Crown patent rights’’, and to, those made on any machine

or by any method covered by claims among the ‘*Crewn

patent rights.’’? Of particular importance to this suit is

Section 10 of the agreement, which gave Champion the

right to assign or transfer its non-exclusive license in con-

nection with the disposal of its business related to the

production of cups and containers from éxpandable plas- .

ties:

‘“(HamptIon and its subsidiaries shall also have the,

right to dispose of its business related to the manufac-

ture, use, or sale of cups and containers from expand-

able plastics under the ‘Crown patent *rights’ and

‘Campion patent rights’ including all or substantially

all of the assets of “such business, and in connection

therewith Cuamrton shall lave the right to assign or

transfer this license, except that as to said assignee or

transferee the license shall be non-transferable, pro-

vided that Cuampton ‘transfers to such party at least a

substantial portion of its facilities for said manufac-

ture.’’

°

Shortly after the above agreement was executed, Thomp- ;

son became interested in acquiring a plant in the Eastern

Alo ™~

United States, and began negotiations with Shield-Ware,

Inc., a Champion subsidiary with production facilities in

New Jersey. Subsequently, Shield-Ware sold substantially

all its assets related to the production of cups and contain-

ers from expandable plastics to Thompson on September

9th. In connection with this sale, Champion executed a

formal assignment to Thompson of its rights under the

above section. i° é

After Thompson had operated the facility, ‘formerly

owned by Shield-Ware, for one month, it: tendered Crown

a royalty check for the cups produced on the Champion ma-

chines which were purchased with the plant, in accordance

with Champion’s contract with Crown. Crown refused the

tender, stating that it considered Thompson. obligated,

under its assignment from Champion, to pay royalties on

the production of all its plants and on any Thompson ma-

chines placed: in the New Jersey ‘plant. When Thompson

refused to pay royalties on any production other than that

from the Champion machines, Crown filed this suit?

IssvuEs.

The specifie issues upon which the Court took evidence

are as follows:

I. Is Crown entitled to an accounting for royalties on

net sales of foam cups manufactured by Thompson on its

>

‘‘Champion’’ and ‘‘Thompson’’ machines under the pro- |

visions of the license agreement?

(a) Is Thompson a licensee ‘of Crown with regard

to its manufacture and use of T ompsqn 1 ‘machines? ;

(b) Does claim 12 of the 26 is ves cover defend-

ant’s Thompson machines? ng

(ec) Do claims 1 and 3 of the 780 Patent, or either

of them, cover defendant’s Thompson machines?

A Sia

a:

All

(d) Does the claim of the 705 Patent cover the

method used in operation of defendant’ s Thompson

machines ?

(ec) Is Crown entitled to enforce the license agree-

ment against Thompson?

II. Has Crown violated the antitrust laws of the United

‘States, specifically 15 U. S. C. §§ 1 and 2, in its obtaining

of and its use of thé licensed patents?

(a) By its licensing of. any or all of the patents

‘upon which it seeks to recover royalties in the com-

plaint; or a 3

(b) By its prosecution in the U.S. Patent Office of

any of the applications which matured info the 260,

780 and. 705 Patents; or f |

(c) By brifiging action in several Federal Courts

for the enforcement of any of the above patente?

IIT. Is Thompson entitled to a declaratory judempnt

that none of the claims of the 260, 780 and 705 Patents

cover the Thompson machines and that no royalties are duc

and payable to Crown on account of production of foam

cups on such machines or on account of the manufacture

and use of Thompson machines? »

Crown argues that by becoming its: licensee after being

charged with infringement, Thompson intended to submjt

‘its own machines to the Crown license. I disagree. Crown.

in: July of 1962, did charge Thompson, and others, with

infringement, but Thompson denies! infringement then, and:

~ has not ‘changed its position. At no time did Thompsor ~~

desire or request a license to manufacture or operate its

_ own machines. | |

By February of 1963, Champion had lost nearly $1,-

500,000.00 on its foamed ‘cup venture, and the company was

anxious to terminate that line. Champion realized, how-

¥

eo

A12

ever, that it could not effectuate a sale of its plant and ma-

chinery if the buyer would not receive a license to operate

the equipment and, as a result, its contract with Crown

was revised August 2, 1963, to provide that the right to

operate the molding machines would transfer along with

the sale of substantially all its related assets. At this time,

Champion had no rights or obligations on any cup molding

machines other than its Champion machinés. Accordingly,

when' Thompson agreed to pay royalties ‘‘in the place of

Champion’’ it only assumed an obligation with regard to

the 15 Champion machines. |

Clearly, Thompson intended to become a licensee only as

to the Champion machines. Prior to the purchase of assets, #

it vigorously denied all claims of infringement and, rather

than seeking a license, almost dared Crown to bring suit.

The evidence is: clear that this position was not changed

at the time of the purchase of Champion’s plant, and that

Thompson intended-to become a: licensee only insofar as

the 15 Champion machines it purchased.

To conclude that Thompson and Champion did not intend

that Thompson become a Crown licensee, except for the

limited purpose of operating the 15 Champion machines,

does not, in itself, mean that no royalties are due Crown

for,the cups produced by the Thompson machines. Section —

6(a) of the revised licensing agreement? executed by Crown

and Champion on August 2, 1963, is pertinent ‘and con-

trolling on this issue. So even though Thompson did not

intend to become a Crown licensee with regard to the use

2. ‘CHAMPION shall have no obligation hereunder to report net

sales or to pay royalties to Crown except as to cups and coritainers

made and sold by CHAMPION or its subsidiaries which are covered

by a claim of any issued patent in said ‘Crown patent rights’ or

which are made by CHAMPION on any machine or by any method

covered by a claim of any issued patent | in said ‘Crown patent ©

rights’ and ‘CHAMPION patent rights’, which claim or claims have

not been held invalid by any Court of satan Ss —— by a

judgment which has become final.’’

Al3 |

a

of Thompson machines, by assuming the obligations of this vA

agreement ‘‘in the place of Champion’’ it would still te

liable to Crown for royalties on<its machines, if those ma-

chines are covered by any of the claims of Crown’s patents.

Consequently, we must scrutinize the claims and their re-

lationship to the Thompson machines. - :

Two principJes must be applied to the scope, utility and

operating effect of the Crown patents. One holds that the

patents 1 in question are.to be construed in light of the prior

art. Prior to trial, I held that since Crown’s claim was

one for the recovery of royalties under a specific: license,

‘Thompson would be precluded by cases such as Sbitea-Del

Mac, Inc. v. Milius. Shoe Co., 145 F. 2d 389 (8th Cir. 1944)

from raising dan issue of patent invalidity by way of de- |

fense. Although,Thompson may not.contest the validity

of the patents, it ean contend that the pyior art in this field

requires that Crown’s patent claims be given a construction

which/would eliminate the Thompson machines. from their

coverage. ye

The license itself states that it is to be construed under

- Texas law. The only case from that jurisdiction near this

point is Penn v. Garabed Gulbenkian, 243 S. W. 2d 220

(Tex. Civ. App. 1951). There the Court, without address-

ing itself to the question of prior art, held that the worth-

lessness of a patent could‘be a defense to a claim for

royalties. In my view, the better reasoned cases in other

; jurisdictions, hold that a defendant such as, Thompson can

look to prior art to prove non-coverage.

In Casco Products Corp. v. Sinko Tool & Mfg. Co.. 116

F. 2d 119 (7th Cir. 1940), cert. denied 312 U. S. 693 (1941),

‘ the Cireuit held that while the defendant in a suit for spe-

cific performance of-a license contract could not rely on

prior art to invalidate a patent, it could prove thatits own

product was within the prior art and thus not an infringe-

ment of the licensed patent. In Garland v. Remington,

-?; :

a licensee, for

~naught.’’ (At

Al4

137 F. Supp. 622 (S. D. N. Y. 1956), the defendant in an

action to recover royalties under a license agreement was

allowed to resort to prior art to establish non-coverage.

- The Court concluded that ‘‘. . prior art may be. used, by

e purpose of construing the claims of a.

patent, even though such evidence may reduce the patent to

7624.) Krantz v. Van Dette, 165 F. Sulpp.

776 (N. D. Ohio E. D. 1958), aff’d. per curtam, 272 F. 2d 709

(6th Cir. 1959); Baldwin’*,Rubber Co. v. Paine & Williams

Co., 107 F. 2d 350 (6th Cir. 1939), cert. denied 309 U. S. 676

(1950) ; Kessel v. Vidrio Products Corp., 113 F. 2d 381 (7th

Cir. 1940), cert. demed 311 U. S. 703 (1940) and Plastic

Contact Lens Co. v. Butterfield, 366 F. 2d 338 (9th Cir.

1966), support this view.

The other principle to be applied i is that the Be claims

are. to be construed in the light of the specifications, and

, that they are to be read together in order to ascertain the

scope of the invention.- United States v. Adams, 383 UA.

39 at 49 (1966) ; Westinghouse v. Boyden Power Brake Co..

170 U. 8. 537 at 568 (1898) ; Grant v. Koppl, 99: F. 2d 106

at 110 (9th Cir. 1938) ; Kemart Corp. v. Printing Arts Re-

search Laboratories, 201 F. 2d 624 at 629 (9th Cir. 1953) ;

Morpul; Ine. v. Mayo Knitting Mill, Inc., 265 N. C. 257,443

S. E. 2d [07 (1965).

While I leave to my specific findings the precise deggil

of the prior art; here it should be mentioned that in 1955

and 1956, those engaged in plastic fabrication had molded

a variety of articles from ‘‘prefoamed’’ or ‘‘preexpanded’”’

polystyrene beads. ‘These prefoamed beads were partially

expanded before being charged into a molding cavity. Sev-

eral of the early molders used a technique called ‘‘blow

filling’’, to transport the extremely light weight prefoamed

beads into the cavity. ‘‘Blow filling’’ included conveying

prefoamed beads in a stream of air, introducing the cém-

bined bead and air stream into a molding cavity and ex-

Soe ‘A15 ; .

hausting and conveying air from the cavity, usually through

au loosely clamped mold parting: line.. Strangely enough,

the technique was. quite similar to the early foundry prac-

tice of blowi ing sand into core molding cavities. It can be

safely said that by September, 1957, ‘‘blow filling’’ of mold-

ing cavities with prefoamed beads in fast cycle pfoduction.

machines was a well known technique and had been de-

ser ibed 1 in many trade publications.

Illustrative of. the prior art is the, molding machine

placed in commercial production about August 15, 1955, by

‘William L. Parsons at the Bachman Machitie & Tool Co...

a molding machine placed ‘in commercial production on

January 9, 1956, by Robinson. Industries, Inc., another

molding machine placed in commercial use in May, 1956, by

Donald Stevens and still another apparatus placed in com-

mercial use on August 16, 1956, by Victor Bird at LaDella

Plastics. - All of these machines used some type of a

_*blower’’ to inject the beads into the mold. -

i}

CLAIM 12 OF Parenr 2,951, 260.

S Plaintiff contends that this claim covers the defendant

Thompson’s machines. I disagree. My ‘specific findings

disclose that the Thompson machine does not‘use this pat- |

> ent’s (1) peripheral’outlet ; or (2) its abutting surfaces; or.

(3) its cavity element open at both ends; or (4) its sources

of air pressure differential. For other reasons stated in

the specific findings, I find that this patent does not cover

. the Thompson machine.

* Cuarms 1 anp 3 or Patent 3,125,780.

_ Here, again, I must find ‘against Crown’s. contentions.

> My specific findings demonstrate, that the Thompson ma- -

‘chine does not employ Crown’s method of filling the mold- :

ing cavity. The type of pressure applied to the inlet on the

: » Al6 | aes :

respective machines is readily distinguishable, as shown

by:my specific findings.. Moreover, the method of heating

used by Crown under claim number 3 is not used by the

Thompson. maehine. aes a

Py ° ¥

SINGLE Cuan or PaTENT 3, 162, 705.

Clearly, the’ Thompson machine , introduces air - jenn

_ pressure through a passage at the center of the cup eavity,

while the Specifications of the 705 Patent employs a

vacuuin to the circumference of the cup cavity. On this

contention, we must keep in mind that the mere suggestion

of_a process not, disclosed, is not a disclosure of* a process.

_Consequently, Crown cannot use the suggestion of positive

“pressure to the inlet or gate opening to construe its claims. °

- Craftint Mfg. Co. v, Baker, 94 F. 2d 369 (9th Cir. 19389.

The exact distinetions hetworin this patent and the Thomp-

son machine are enumerated with exactness iY my findings.

In general, I would “find that the Crown patents under :

serutiny should not be construed to cover*the Thompson

machines. - Consequently, no royalties are due Crow ht On:

cups manufactured under the Thompson machine.

©

e *"e

4 ra

>

a

7

5

_ eover threefold t

suit, including a reasonable attorney’s fee.”’ ¢

Al] - ae

ANTITRUST COUNTERCLAIM. °¢

Thompson believes that Crown has used the patents m

» question, the licenses under them, and the suits based upon

_ them, in such a way as to violate 15 U. S. €..§ 2? and asks

relief under 15'U. S. C. $§15* and 9 net

In-support of .its counterclaim, Thompson argues: ( 1)

that Crown obtained the 705 and 780 Patents by fraud on

the Patent Office, inasmuch as it had actual knowledge that

the process defipéd inthe 705 method had been publicly

used by Thompson, mare than one year prior to the time .

that it presented it to the Patent Office, and that it. had

actual knowledge that Claims 1 and 8 of the 780. Patent had

been publicly sold and used more than one year prior t

the time. that it’ presented it to the Patent Office; (2) that

Crown, without actual knowledge of the structures of com-

peting concerns, attempted¢o éoerce competitors into recog-: |

nizing the validity of the 260 Patent; (3) that Crowat-’

tempted to coerce acceptance of licenses under the patents

in question here by the use of threatening letters charging

infringement, and by the nse of unwarranted patent in-.

fringement actions; (4) that Crown,did ‘not bring the in-

fringement actions for its sole benefit, but for the benefit

8..15.U.8.6.§2° © Saree ———

s

. **Every person who shall mono 1ze, DRattempt to monopolize,

or combine or conspire with afiy other }erson or persons, to

monopolize any part of the trade or commerce among the. several’

States, or with foreign nations, shall de. deemed guilty of a mis-

demeanor, ....”’

“4. 15 U.S.C. § 15.

‘‘ Any person who shall be injured in his business or property by

reason of. anything

damages by him sustained, and ‘the cost of

“na

do. 15 U.S.C. § 26. re “oe

“‘Any person, firm, corporation or association shall be entitled

to sue for and have injunctive relief, . . . against ‘threatened loss or

damage by a violation of the antitrust laws... .’’- :

sS < * 7 ow

forbidden in the antitrust laws . . ; Shall re- -

. 9 Me Me | 4

of it and its licensees; (5) that Crown, knowing that one

or’more of its patent claims were * invalid, entered into

multiple patent licenses with concerns GhroGhout the

«United States; whereby those concerns were enjdinued from

| contesting the validity of the -licensed patents; (6) that

~Croyn based its royalty on the production of foamed cups,

‘although it had no patent on such cupg but merely on the

ayachines which produced them} and (7) that Crown util- > ~~

ized a massive program of citing its patents and patent ap- \ i

plications to the industry and demanding inspection of

> cz

competitive developments of others, in order to be able to

hand tailor its pending patent application so as to seem

- to cover the intervetiing and independent developments of

_ its competitors, | . ‘

While it is a general rule that a licensee cannot Attack

“the validity of patents under which fie’ is licensed, Sola

Elec. Co. v. Jefferson Co., 317 U.S. 173 (1942) #MacGregor

“vy. Westinghouse €g., 329 U. S. 402 (1947); Bowers Mfg.

Co., Inc. v. AlL-Steel Equipment, Inc., 275 F. Ba 809 (9th

Cir. 1960), I believe a licensee can challenge the validity of «

the patent where the owner is using the patent to unreapon- ~

ably restrain competition in interstate commerce.: Nach-

‘man Spring-Filled Corp. v. Kay Mfg. Co., 139 F. 2d 731 (2d

Cir. 1943) ; Autometic Radio Co. v. Hazeltine, 339 U. S. 827,

836 (1950). :

At the outset, a trier of the facts on charges such as

these, must recognize the delicate balance between the

antitrust laws condemnation of unlawful attempts to

monopolize, and the constitutionally guaranteed privilege

of a patentee to enjoy a limited ae for a limited ;

time.

Obviously, there is nothing inherently. evil, nor aniawfal,

for a patentee to crown himself with the rewards of his

invention “by securing a royalty on the machiné’s output.

To one with limited capital, this is probably the most logi-

; +

>

A19

cal and sensilfle approach. In any event, there is nothing

unlawful or illegal about-such conduct. The several patent

infringement actions prosecuted by Crown are viewed with

terror by Thompson. In a recent case, in which the record

presented far more sinister conduct and actions by the

patents owner, I was soundly criticized for.condemning the

owner, The case was reversed. Plastic Contact Len’s Co.

v. Butterfield, supra. :

I must start with the premise that patents are prima

facie valid.® If the patentee believes the patent is valid, he

normally cannot be charged with bad faith or knowledge

of invalidity. Kemart Corp. v. Printing Arts Research

Laboratories, supra. The actions against Magi-Cup, Heno-

‘lite, @utherland, T. I. Plasties and Apollo were instituted

after, what appears to be, a reasonable investigation into

the details of the equipment used by the respective con-

cerns.” Clearly, a patentee is privileged to inquire of

another as to the details of equipment used, in order to

determine whether there is an infringement in fact, Ameri-

can Needle Co. vy. Schuessler Knitting Mills, 150 USPQ 174

(N. D. Ilk KE. D. 1966). Furthermore, there is nothing

illegal about a provision in a license agreement whereby

the licertse@agyees not to contest the validity of the patent.

United States v. Harvey Steel Co., 196 U. S. 310 (1905), I

find that 'Thompson‘has failed to carry its burden in estab-

lishing a lack of good faith on the part of Crown. For

that matter, I feel that Crown, in good faith, felt that its

patents were being infringed and that the controlling fac-

tor- behind Crown’s conduct was its own well being, rather

than ill will or deplorahle conduct. Evgn though none of

its actions-~in the Courts were successful, that fact would

not indicate that they were wholly groundless, coercive or

unfair. Plastic Contact Lens Co. vy. Butterfield, supra, p.

345. Psa ¢ |

a as

6. 35, U.S.C. § 282, fst

“eee

To be emphasized is the fact that both plaintiff and the

defendant, by order of the Court, presented findings in~

support of their-respective theories. These findings are

supported by citations to the record and were extensively

empkpyed by me in deciding the-respective issues. The

parties will observe that I have heavily relied on the find-

ings and ‘conclusions proposed by the defendant on the

issues with reference to the scope, utility and operating

effect of the patents owned by Crown. Likewise, I have.

heavily relied on the findings proposed by the. plaintiff

in denying relief to’ defendant under,the antitrust laws.

The use of the meticulous language of an expert is almost

indispensable in the formulation of a proper finding in a

patent case, which involves tevthnical and highly complex

problems, such as here presented. In such a ease, the aid

of the language + a specialist.is not only suggested, but

is highly desirable. Vincent v. Suni-Citrus Products Co.,

215 F. 2d 305, 310-11 (Sth Cir. 1954); Deyfrus v. Panama

Canal Co., 298 F. 2d .733 (5th Cir. 1962). Even, in non-

patent cases, the Ninth Circuit approves the practice of a

trial judge looking to findings prepared by counsel. Moli-

‘tor v. American President Lines, Ltd., 343 F. 2d 217 (9th

Cir. 1965) ; Glens Falls Ins. Co. v. Satréé, 320 F. 2d 92 (9th

Cir. 1963). . ;

My findings are in favor of the defendant and against the

plaintiff on plaintiff’s claim and in favor of the plaintiff

and against the defendant on the defendant’s antitrust

claim.

A decree shall bé entered dismissing plaintiff’s claim

and defendant’s-counterelaim. Thompson is entitled toa

declaratory judgment that the manufacture, use-or sale

ofits machines by it, or its assigns} does not constitute an

ee .

infringement of Patents 2,951,260, 3,125,780 and 3,162,705,

or any claim of these patents. The Couirt find it unneces-

sary to pass on the validity of such patents or the claims

thereof. My formal findings are ‘filed concurrently with °

this opinion. F

Dated this 23rd day of May, 1967.

a > : - Jonny F. Kirkeyxy,

| District Judge.

A22

Unirep States District Court

District of Arizona.

‘Crown Macuine & Toot Co.,

Plaintiff,

vs.

. Civil No. 4942-PHX. —

D & S Inpustriss, Inc., ‘(formerl =

Thompson induStiies, Inc.),

/ Defendant. }

.

FINDINGS OF FACT AND CONCLUSIONS OF LAW.

° At the trial of this cause, the plaintiff and defendant

introduced evidence in support of their respéttive con-

tentions, as outlined in the opinion of the Court heretofore

made and filed in this cause. At the conclusion of the trial,

the Court directed each party to submit proposed findings pee

and conclusions. After an exhaustive study and analysis

of the entire record, including the findings and conclusions

_ proposed by plaintiff and defendant, I find that the great

weight .of substantial evidence supports the defendant’s

_ contentions on the plaintiff’s claim and the plaintiff’s, con-

tentions on the defendant’s antitrust claim. In order to

present a more readable and intelligent result, the findings

of fact and conclusions of law are, in some instances, inter-

woven. Now based on the evidence in this cause, I“make |

the following findings of fact and conclusions of law.

4

A23

FINDINGS OF FACT.

nod

wo

; we oie. mer Jurispictidn,

ee? as y

Plaintif£,Cro vn Machine & Tool Co. (Crown), is a cor- |

poration of the state of, Texas. Defendant, Thompson

Industries, €nec., now by change of name D&S Industries,

Ine. (Thompson), is a corporation of the state of Arizona.

ZL

=

.

2.

Plaintiff's complaint ‘for royalties. under .an assigned

patent license agreement is wholly between citizens of dif-

ferent states and the amount in controversy exceeds $10,-

000.00 exclusive of interest and costs.

~ 3.

Defendant's first counterclaim arises out of the trans-

action which is the subject matter of the cause of action

asserted by plaintiff and, further, ptesents an actual con-

troversy which arises under the lawé of the United States

relating to declaratory judgments and. to patents,

4. My d ws

The second counterclaim of defendant also arises out

of ‘the transaction which is the subject matter of the eanse

of action asserted by plaintiff and, further, arises under

the antitrust laws of the United States.

—

A24

Historica,’ BACKGROUND.

5.

Crown is the owner of U. 'S. letters patent No. : 2,951,260.

issued on September 6, 1960 and of patent No. 3,125,780

and patent’ No. 3,162,705 issued on March 24, 1964 and De-

cember 22, 1964, respectively, after this lawsuit was filed.

' The first two patents, Nos, 2,951,260 and 3,125,780, relate

to machines for molding articles from expandafle poly-

styrene beads and the third patent, No. 3,162,705, relates

to a method for molding articles from expandable poly-

styrene beads. Only claim 12 of patent 2,951,260; claims

1 and 3 of patent 3,125,780; and the single claim of patent

3,162,705, are here involved. e

-

6.

The litigation does not involve any patent covering the

articles, themselves, which are molded from the expandable

polystyrene beads. Expandable polystyrene beads became —

| generally available in this county in 1954 when the Kop- -

pers Company. of, Pittsburgh, Pennsylvania introduced the

new product atid sequently tried to develop markets

for its use. These beads are small plasti€ particles im-

pregnated with an expanding agent. Upon heating within

a closed mold the beads expand and fuse together into a

solid lightweight plastic article which has the shape of the

mold. By September of 1957, ‘blow filling’’ of molding

cavities with prefoamed beads in fast cycle production

machines was a well-known technique and had been de-

scribed in the trade publications.

7.

About October 15, 1955, William L.. Parsons at Brock-

man Machine & Tool Co~had placed in commercial produc-

A25

tion a molding machine for making. speaker enclosures

from prefoamed beads.* Parsons blew the beads into the.

molding cavity from a funnel-bottomed can. Application

‘ of a positive air pressure to the can conveyed the beads

through a small central inlet into the top of the molding

cavity. Conveying air escaped from the cavity to atmos-

phere through a loose full 360° mold parting line. » After

the molding -eavity had been filled with beads, Parsons

manually inserted a plug into the inlet and applied heat

to form his-speakey enclosure. es

) ae 4

: : 8.

As early as January 9, 1956 Robinson Industries, Ine.

placed in commercial production a molding machine for |

~

* making’ insulating enclosures: for air conditioning units’

from prefoamed polystyrene beads. | In that machine the

- prefoamPd beads were conveyed into the molding cavity

by use of a Whitlock hopper loader, which is a form of air —

aspirator. The conveying air’and beads were blown into

the mold eavity through an inlet at the top of the. cavity |

element. The conveying air eseapsed through the loose ¢

through small steam vents. After the molding cavity ‘had

been filled, a. plug was manually inserted-‘into the inlet and

the enclosure was forwred by application of heat to fhe

molding éavity. ) yee ? =

9.

4 In May, 1956 Donald Stevens,placed in commercial'use a

f *: eas “e ° ‘ . . :

‘molding machine for making minnow buckets from pre-

foamed polystyrene beads. Stevens blew. beads into his

molding cavity with a home-made aspirator which applied

a positive pressure to a central inlet at the top of the mold-

ing cavity. The conveying air escaped around a. loose

360° ‘parting line. After the mold had been filled with

= ‘

‘e;

mold parting line around its entire periphery as well as

a oe | A2G

beads, “a plug was manually inserted into the inlet to the

cavity element. Stevens then applied heat to the molding

cavity to<form his minnow bucket.

10.

By pores 16, 1956 Victor Byrd at La Della Plasties

placed in commercial. use apparatus and a méthod foP

making float rings for minnow buckets frong prefoamed

polystyrene beads. Byrd also blew the beads into the

molding cavity by application of a positive pressure to a

small inlet opening in the cavity clement. The conveying

air escaped through the entire periphery of a loosely

clamped parting line. When the mold was filled, Byrd

manually inserted a plug into the mold inlet and heated the

mold in an oven to form his float ring.

:; 11.

On October 30, 1956 James M.-Harrison and Robert F.

. -Smucker, employees of Crown, filed in the U. S. Patent

Office, application serial No. 619,259 which later matured

into patent 3,162,705. The application disclosed in Figs. 1

and 2 of the drawings a first embodiment of a molding

machine w ‘hich defined a molding cavity betweeh a porous

core and a porous cavity element. This molding machine

"used a vacuum applied through the interior of ‘the porous

core to draw prefoamed beads into the molding cavity

through a small port in the cavity element. This port was

opened to admit beads and was closed, during the heat-

ing portion of the molding cycle, hy a reciprocable solid

plunger. The application described a second embodiment

of \ molding machine which had impervious core and cavity

elenjents and also used vacuum applied through a porous

_stripper ring'to draw beads into the molding,cavity. It too

had a small port in the cavity element to admit beads to

be

Rye

eee Ss J,

the molding eavity which was opened and closed by a re-

ciprocable solid plunger. This second embodiment was not

illustrated in the application drawings. The application, -

when filed, also suggested:

_ ‘While we have stated that loading the cavity is

done by vacuum, it might be more accurate to say that

loading is done by the creation of a pressure differen-

tial. For example we might apply a positive pressure *

to the inlet’ or gate opening and blow the prefoamed

beads into the mold... . .”’ 3

The application, however, did riot disclose any mechanism

or describe any method for ‘‘applyizig a positive pressure

to the inlet or gate opening.”’ to blow prefoamed beads into

the mold:

>

12. Pete

’ The application, as filed, did not include ‘any| method

claim which recited a, step for ‘‘applying an air/pressure

differential?’ to the molding cavity as is now recited in the:

single method claii of the issued 3,162,705 patent. But, it

did include a method claim which recited ‘‘applying a

vacuum to draw”’ beads into the molding cavity (applica-

tion claim 6). Application claim 11 for a molding machine, |

as filed, recited as one element ‘‘means for applying a pres-

sure differential to the cavity to convey /beads into the:

cavity’’, but, as shown in finding 15 that claim was amended

on October 17, 1957: to recite ‘‘means for applying a vacuum:

to the cavity to draw the beads into the cavity.”’

13.-

‘ @ ¥ ,

“Plaintiff through testimony of several witnesses en-

, Neavored to show inyention of the subject matter of appli-

cation 619,259 before its October 30, 1956 filing date.. The

testimony was not corroborated by an¥ relevant documents

or physical “evidence. This Court finds the evidence does

>

2.

sft

periment

“ commerejal production. Crown then commencéd work on

A283.” 3

not establish any date of invention of that subject matter

before the application filing date.-The proofs do, however; |

tend to show that Crown’at some time, completed an ex-

1 molding machine which Crown never placed in

improved machines which-it placed in gommercial produc-

tion in December of 1957 to: make cups from prefoamed |

beads. /These production machines used a slide valve to

transfer héads from an offset’hopper té the molding-eav ity.

The cavity clement was felly open at both ends: Standoff

pins, during the fill part of the molding eyele, slightls sep-

arated the core from-the cavity element to form a periph-

eral outlet At thé cup lip through which a vacuum &¥*w

prefoamed beads into the: molding cavity*%The standoff

‘pins then retracted to completely close the peripheral out-

let while the beads were heated to form the cup.

14,

o a

Crown patented this production machine on the applica-

“tien of James M. Harrison. and Robert KE. Smucker, em-

ployees. of “Crown, filed, on ‘October 1, 1957, in the U.S.

Patent Office as serial No. 687,394 which later matured into

patent: 2,951, 260. This application: discloséd a molding ma-

chine which had a slide valve to transfer. beads from: an

offset hopper to the molding ‘cavity. The cav ity. element

was fully open at both ends. Standoff pins, only during the

fill part of the molding cycle, slightly ‘separated the core

from the cavity element to form a peripheral outlet at the |

cup lip through which a vacuum drew préfoamed beads

into the molding cavity. ‘The applicafion nowhere used or.

defined. the term ‘‘soutce of air pressure differential’

which is now found in claim 12 of the issued 2,951 ,260 pat-

-ent.: The application nowhere disclosed or suggested any-,

thing about “blow filling?’ or the application of a positive

pressure to an ‘‘inlet or gate opening’’ to blow heads into

ng

“

the molding cavity. This Court finds the description, _draw-

Ings and claims, as filed, contemplated only vacuum to draw

beads into the molding cavity. The closest to patent ¢lajm

123 4n-the application, as filed, was application claim 7 for.

“a molding machine which included as one element a ‘‘vac-

“uum source for drawing heads’? into. the molding cavity and

as another clement ‘‘means for slightly, separating the abut-

ting surfages .,. . so that the vacuum. source will be coim-

municated to the cavity to draw beads into the cavity”’.

eR

q

dl

i5.

\ ‘Shortly. after filing applieation serial No. 687,394 cover-

ing its new production machine, Crown on October 17, 1957

deliberately, and not by mistake or inadvertence, also lim-

' .ited its earlier appli¢ation serial No. 619,259 to molding ma-

chines using only vacuum to fill the molding cavity. . Crown

deleted all references to. ‘*pressure differentfal”? and to

eenranes of.a ‘“nositive pressure to\ the inlet ‘or gate

opening’*. The language quoted in findinh 11 Wwe as ¢ cancelled

“ aayl “Sate replaced it With.two new paragraphs which em-

phasized the importance of using vacuum to draw heads

into the molding cavity. At the same time Crown ‘substi-:

“tuted in application claim 11 “means for applying a yvae-

uum to the cavity to draw the’ beads into the cavity”’ for

the earlier’ recitation of ‘‘means -for applying a pressure

“differential to the cavity to convey beads into the eavity’’.

By these anges the written description and drawings of

* this —— like application serial No. 687,394, only

disclosed and the claims only defined the use of vacuum to

. draw-beads into the molding cavity.

,

~

.

-

Sy

~~ On July 7,.1958 Crown granted an isive license to

oe ( aampion Paper and Biber a now by change of

2

a

hee

= * ™

ee

A350

name Champion Papers, Inc. (hereinafter called Cham-

pion), to use the subject matter disclosed~in a group of

“pending patent applications, including the foregoing two

applications serial Nos. 619,259 and 687,394. This license

required Champion to purchase all of its cup molding ma-

chines from Crown and was not assignable by Champion

* ‘without the written consent of Crown. '

; ‘ | <3 Q

| 1%. |

On September 5, 1958 Crown sold to Champion the first

of several of its production -cup molding machines of the

. type deseribed in application 687,394. These machines used

a slide valve to transfer beads from an offset hopper to the

‘molding cavity and had standoff pins that, during thé filling

part of the molding cycle, formed a peripheral outlet at the

cup lip between the core and cavity elements through which

a vacuum was applied to draw beads into the molding cav-

ity.

18. heaegccdi | @

‘ 7 7,

Champion commenced productioryof cups made from pre-

foamed polystyrene beads in the fall of 1958. The evidence

shows*that until March of 1960 Crown and Champion were

‘the only producers of these foam cups in this country.

Both manufactured all of their cups on slide-valve vacuum

.. type machines, like that shown in the Crown 687,394 appli-

cation, now patent 2,951,260. -

19.

S

Starting in March of 1960, competitive foam cups hav-

ing superior qualitigs began to appear on the market., The

| first were re by. Bridges Plasties Products, Inc.

nac chines which loaded pre-

. foamed beads into the’ molding cavity by a combination of

vacuum and ‘‘blow’’ filling Devers Hutchings and others

‘

, ey

‘ A31°.

+"

developed these machines independently and withoi knowl-

edge of Crown cup molding machines or of the Gro. 1 pate

ents or patent applications here i in, suit.

~-

a ™ 20.

Sometime earlier in November of December, 1959, Dar-

row and Stanley Thompson who. then operated Thompson

Plasties, the predecessor ‘of defendant, observed a Crown

manufactured foam.cup and determiped that cups might be

another product which Thompson Plastiés could make from

expandable polysty rene beads, Stanley “Thompson then

commenced design of machines for manufacturing | cups.

Thompson Plastics. had its first cup Machines in commer-

cial production and sold cups by November 10, 1960. De-

fendant subsequently since August, 1962° Manufactured and *

sold and has contiflued to use a large number of these ma-’

chines (calléd Thompson machines) in its production of

foam cups. | 7 a

; 21.

The Thompson cup molding machines which were placed

in production in 1960 are substantially ¢he same, for pur-

pose8 of this litigation, as those upon which Crown in its

“complaint seeks the -payment of roy alties. The Court

finds that these machines were independently dev eloped by

Stanley» Thompson without any knowledge of Crown cup

molding machines or of the Crown patents or patent ap-

plications here in suit. The Thompson machine uses a

‘*blow filling’? technique to blow prefoamed beads into a

cup molding cavity which is defined between impervious

gore and cavity elements. The core and cav ity elements

ever completely close the molding cavity, but Maintain a

small permanent opening around the periphery of the cup

lip which is open to atmosphere. The cavity element has

a small port at the center of the bottom of the cup which is -

Lt Fl ns

x”

A32 a ees

opened and closed by a hollow -yeciprocable plunger. To

fill the mold, a high velocity. jet of air emitted from the

. center of this plunger entrains prefoamed beads from a

supply pipe and blows the entrained beads and conveying

air through the port into the molding cavity. The eonvey-

ing air escapes from the molding cavity through the perma-

nent opening around the periphery of the cup lip. The

Thompson machine does not use vacuum to draw beads into

the molding cavity and it does not apply a positive pres-

sure to the mold inlet to convey beads into the molding

‘cavity. It does not have a cavity element which is com-

pletely open at both ends nor does it tise standoff pins to

intermittently separate the core and cavity elements for

filling. . . 7

- * 92, ak

In October, 1960, James A. Young and the Sanigard Man-.

ufacturing Company also commenced production of foam

cups using a cup machine which had been independently ~

developed hy Young without knowledge of the Crown cup

machines or any of the Crown patents or applications here

in swt. The Young cup machine also-used a ‘‘blow filling’’

technique to load prefoamed heads into the molding cavity.

23. as -

In order to stay competitive with the foam cups prodiced

by Thompson, Sanigard, Bridges and others, Champion |

obtained a modification of its license agreement with Crown

in September of 1961 to enable it to buy cup machines from

~manufacturers—other than Crown or to design and con-

struct improved cup machines for itself. In the fall of

1961 Champion commenced design ang construction of its

‘own cup molding machine which fe in commercial

production in the fall of 1962. These Champion designed

machines are called ‘‘Champion machines”’ in this litiga-

4

-

A330 :

«%

- tion. They had standoff means to slightly separate the

Score and cavity elements during filling; they blew pre-

foamed beads into a molding cavity formed between the

slightly separated mold parts; and they had air stripping

-means to blow formed cups off the core. :

n 7 24.

On January 3, 1961 Crown amended application 619,259

and for the first time claimed (application claim 29) a

method which included the step of ‘applying an air pres-

sure differential’’ to convey beads into the molding cavity

as is now recited in the claim of ' patent 3,162,705. The

drawings and written description, however, continued to

disclose only machines and .& method: which used -vacuum

' to draw beads into the molding ¢avity. The application

did not then include the language,

“While we have stated that loading the cavity is done

by vacuum, it might be more accurate to say that load-

ing is done by the creation of a pressure differential.

-, For example, we might apply a positive pressure t

_ the inlefer gate opening and blow the prefoamed beads |

Ing ll’ | . fr

whi s now found in the issued patent 3,162,705. Not

until August of 1964 did Crown add these two sentences,

that had been cancelled on October 17, 1957.

25. ‘

* On April 19, 1962 James M: Harrison and Robert E.

Smucker, as a division of their}earlier application serial

No. 619,259, filed application serial No. 191,662 which later

_ Matured into patent 3,125,780. The application drawings

were identical to those of the earlier parent application

‘and disclosed a first embodiment of a molding machine

‘ which defined a molding cavity between a porous core and

a

Adt

a porous cavity element. This molding machine used a

vacuum applied through the interior of -the porous core

to draw prefoamed beads into the’ molding cavity through

a small port in the cavity element. This port was opened

to admit beads and was closed during the heating portion —

of the molding cycle by a reciprocable solid plunger. The

application described a second embodiment of a molding

machine which had impervious core and cavity elements

and also used vacuum applied through a’ porous stripper _

ring to draw beads into the molding cavity. It too had a

small port in the cavity element to admit beads to the

lmolding eavity which was operied and closed by a reciproca-

ble solid plunger. This-second embodiment with a porous

stripper ring was not illustrated in the application draw-

in The application, as filed, nowhere disclosed or sug-

gested anything about ‘*hlow filling’’ or the application of

‘‘a positive pressure to an inlet or gate opening.’’ Appli-

eation claim 3 was the closest to issued patent claims 1

and 3 now in suit. It included all elements of patent claim |

1 except os

‘‘means for creating an air pressure differential

through the cavity to convey the beads from the supply

passage to the top edge of the cup as defined by the

cavity, including means for applying a positive air

pressure to the supply passage for blowing the pre-

foamed beads into the mold.”’ °

26.

On January -3, 1963 representatives of Crown inspected

Thompson molding machine and as a consequence of

this inspection Crown on January 14, 1963 amended appli-

cation 191,662 by adding for the first time the two claim

elements .

‘‘means for creating ‘an air pressure differential

through the cavity to convey the beads from the supply

2

f

A35

passage to the top edge of the cup as defined by the |

cavity, including means for applying a positive air

pressure to the supply passage for blowing the pre-

foamed beads into the mold. ... .” a

which now appear in issued patent claim 1. Crown at the:

same time added |

> “While we have stated that loading the cavity is done

by vacuum, it might be more accurate to say that load-

ing is done by the creation of a pressure differential.

For example, we might apply a positive pressure to

the inlet or gate opening and~blow the prefoamed

beads into the mold... .”

to the written description. Not until June 6, 1963 did

Crown first describe and show in the drawings the simple

air pipe, a porous stripper ring anda vacuum source ap-

plied to that porous stripper ring which now are included

in the 3,125,780 patent, <2 |

27.

Having lost almost $1,500,000.00 in its foam eup opera-

tions through February of. 1963, Champion decided to ;

terminate that pertion of its businéss. It started negotia-

tions with Crown to further modify the Crown-Champion

license agreement so that with a sale of its cup molding

_ business Champion could also transfer a right to operate

its cup molding. machines. These negotiations resulted in

a revised Crown-Champion license agreement dated August’

2, 1963 which forms the basis for plaintiff’s present claim -

for royalties. On the same date, Champion sold to Crown »

part of its cup molding business including what remain >d

of the slide valve vacuum type cup molding machines which

it had purchased from Crown. —

The revised license agreement granted a non-exclusive

massa ee Champion under a group of Crown patents and

patent applications, including patent 2,951,260 and applica-

‘tions serial nos. 619,259 and 191,662 ‘‘to use machines for

the manufacture of cups’’.. Significantly, the agreement

granted no license: to sell cup machines. The license pro-

vided for payment to Crown of a royalty of 2% on the net

sales of cups and containers sold by Champion which were

made by any machine or method covered by an issued

patent claim. Champion conceded that alt of the cup ma-_.

chines which it had purchased from Crow? and which it

had developed itself were ‘‘within one or more: of the

claims’’ of patent 2,951,260. Champion did not, however,

coneede . thay, any other macliines were within those claims.

The license was not generally assignable, but did provide

that Champion could assign its license with Crown. upon

the transfer of ‘‘at least a substantial portion of its facili-

ties’’ for the manufacture and sale of foam cups.

99; : s

n ‘August 30, 1963 to obtain nalnatnetari ing facilities i in

_ East, Thompson aniceied the remaining assets of

the Champion foam cup business, including fifteen ‘‘ Cham-

pion”’ city: thachines which it added te the large number of

Thompson machines it them ad in operation elsewhere.

As part of the contract of sale Thompson was ‘‘to receive

an assignment of a License Agreement enabling it to oper-

ate such assets’’ and the revised Cyown- -Champion license

agreement of: August 2, 1963 was attached as an exhibit

to the contract of sale. As of the date of sale Champion

had remaining only its own Champion designed cup ma-

chines. Champion did not have and never. had owned or

operated a ‘‘Thompson’’ cup machine. The purpose of the

7

‘

a

A37 3

assignment from Champion of the Crown-Champion license

agreement, as expressed in the contract of sale; was to

enable Thompson to operate the Champion machines which

it had acquired. ape, |

30.

As part of the-sale on September 9, 1963, Thompson and

Champion entered into the ‘“‘Assignment’*. by virtue of

which Crown here seeks royalties from Thompson on cup

production from all of its Thompson machines. . By this

‘* Assignment”? Champion trangferred to Thompson all of

its right, title’ and interest in the August:2, 1963 Crewn-

Champion license and Thompson assumed and agreed to he

bound by. the terms and conditions of the agreement ‘in

‘ ,

the place of eg a

31.

Although Crown in July of 1962 had charged Thompson,

along with others in the foam eup industry, with infringe-

ment 6f the Crown 39951,260 patent, Thonipson has ton-

tintously denied that its Thompson machines infringe any

, Crown patents. Thompson was advised by patent counsel

that it needed no license from Crown to operate Thompson

machines. The evidence shows that Thompson.at no time

desired, negotiated or requested a license from Crown

under its patents in order to manufacture, use or sel] its

- , - « a

-Thompson cup machines. These facts do, not present’ a

situation where, following a charge of patent infringement,

the accused infringer requests and obtains a license under

the patent which he is accused of infringing. There is no

evidence that Thompson ever sought a licchse from- Crown:

to. operate its Thompson cup molding machines. Indeed,

Crown admitted at: the time that Thompson ‘‘is gaining

confidence: in their defense. of our potential action against

them..* : . ‘ Pers Seas

.

32.

-

Plaintiff contends that the assignment of- rights and

assumption of the obligations 6f Champion under. the

Crown-Champion license agreement has given defendant

‘a license under the Crown: ‘patents to operate its Thompson

machines and that-it must pay to Crown royalties on the .

production of its Thompson cup machines, as well as on

the production of its Champion machines. Defendant, oh.

the other hand, admits it owes royalties on Champion ma-’

chine cup production, but contends that it has no license

to operate Thompson machines ; that even if it has a license,

the’ Thompson machines are not .‘‘covered by a claim’? of

-any issued Crown patent; and that, as a consequence, it

must pay royalties: only on the-production of ‘Champion

machines. Defendant tendered:-those royalties, which. Crowhi

refused. Defendant has never tendered royalties on its

Thompson machine’ pr oduction.

CONSTRUCTION OF ‘‘ ASSIGNMENT”’.

. 33.

‘The September 9, 1963 ‘*Assignment’’ is somewhat am-:

‘biguous. The Court finds from all of the evidence that

the rights: assigned by Champion and the obligation to pay

“ posutios, which was assumed by Thompson, relate only -

to the transferred “‘Champion’’ machines. and not to

“Thompson” cup machines. By its terms. the Crown-

Champion agreement did not .grant a license to sell cup

‘maeltines, but only a license to build and to operate them.

‘By. its terms the Crow n-Champion license was assignable

f only with a transfer of all cup machines then owned /by

Champion. At the time of transfer, Champion had’ no

Thompson machines. | It had remaining only its Champion

machines. Champion and ‘Thompson both. intended the

‘‘Assignthent”’, as part of the sale of Champion assets,

-

>

o

A39

_ to be a transfer of the right to operate Champion machines

, and nothing more. On and after August 30, 1963, Cham-

pion had no rights to operate and no obligation to pay

royalties on funy machines except its Champion machines,

arid’ hence could transfer none. The corresponding as-

sumption by Thompson to. pay royalties ‘‘in the place of

Champion’’ related only to Champion machines because

they were all. upon. which Champion then had @ny. obli-—

gation to’ pay royalties. iY a gs ie em ae ans

aes pee 3 -

The Crown-Champion license by the express terms of

paragraph 6 provides that royalties are payable only on

cups which are made ‘‘on any machine or by any method >, °

covered -by a claim of any issued patent.’ The parties ~

disagree upon what the claims in suit do cover. This dis-

“pute centers upon the method and mean- for introducing

prefoamed beads into the molding cavity.

@

35.

The 2,951,260 patent disclosure, its prosecution history

and prior art in existence more than one year before Oc-

tober 1, 1957, require that claim 12 must be limited to -

molding apparatus which has (1) a eavity element com-

‘pletely ‘‘open at both ends”’, (2) a ‘‘source of air pres-

sure differential’? which is a vacuum applied through an

‘intermittently formed ‘peripheral outlet’? to draw beads’

into the molding cavity, ang (3) ‘‘abutting surfaces”?

which are moved apart byA(4) *“power means’’ to form the

‘‘peripheral outlet’? through which the vacuum communi-

cates with the molding cavity. during fill :portién of the 44

molding cycle and which are then closed in abutment by

*‘power means”’ during ‘the balance of the molding ‘cycle.

so

om

on

9

?

represented ‘by Crown to he “drawn. along the lines” of .

« Se x ‘

4 i is nen “

A40

@ off te ~. . . ; te

qf ZSPN ee

: ‘Patent 2,951,260 discloses only a molding .cavity with a 2.

we, ty .

‘“‘ecompletely open top’’ and the patentees state this feature

is one object of the patented machine. The same patentees

previously, having built thesmachine shown in application

619,259 which had a -avity ‘element closed_at. one end and

except for a small central inlet port, pr oclaimed™in_the

2,951,260 patent that the completély- open top, molding™

“eavity was the first in which it. had been “possible. to sue-

cessfully fill and heat the thin walls “of the mold.’’? The -

molding machine of this—patent Was purposely designed

‘with a completely open top molding cavity because of de-

ficiencies in expandable beads then on the market.

ing and scope, ese are git rmined: tins om the speci-

fication, and dratings of the patent. They disclose only

a vacuum applied through a peripheral. outlet at the cup ‘

_ lip to draw beads into the mold. The. patentees state that

‘uye of | racuum’’ for filling the mold is an’ objeet_of the

patented machine and throughout the patent they empha-

size the impor tance of vacuum filling. Application claim 19,

which, as later amended, issued as patent claim 123 was

allowed claim 7’’.. Application claim 7 recited ‘‘a vacuum

seurce for drawing beads” into the mold. Thus, ‘‘source

f air. pressure differential’? @an only be construed as a

oF

souree of vacuum. — pe aes eat

ee ee. See rf

, - . a ©

Similarly, patent 2 2,951,¢ 260 discloses ‘‘abutting surfaces”’ :

at the ae lip which htormitteritly. open to communicate gag ©

~ - 9 .

c Dee

/ She Me “

| ; 4 .

*

«and ‘power means’ to ibs and. close it.

-

°

i aad

t

* the vacuum ite the ae and then close to complete

“. ~lines of allowed claim : dale Like’ -cint

°

‘

*.

= the molding cavity’wall. The disclosed ‘per ipheral outlet”’

is in being ‘only when the standoff pins: open thie abutting

surfaces as the slide valve moves over the open top molding

avity. The'disclosed ‘power: means’? includes the essen-

andoff pins which open and close the peripheral-outlet

in timed Telation to movement of the slide valve. Original’ ”

application claim defined the standoff pills as one element

of the machine. FoHawing itS allow ance, Crown repre-

“sented to the Patent: Officethat new application claim 19,

Which matured into patent claiNN2, was “drawn along the

in Mare general terms the ‘standoff pin

Pi ‘fort ming the peripheral outlet. Later,

“power means’? to create the peripheral outlet 4 m claim

19‘but the Patent Office refused to dllow the claim ‘or the

stated reason that. it ‘would then include a.continuously oj

» per ipher al outlet. The Patent Office required the patentees >

to concisely define the- relationship between the slide valve,

- power means to operate the slide valve and the nevihersl:

outlet. ‘In response, ‘Crown, amended the ‘‘power means’?

\as-power means

ol

S

7, claim 19, defined ©

rown omitted —

» Si

clement to the form of the issued ctaini.” As ’a consequence,

this’ claim must be ‘construed’ to include an. ‘intermittently

opened and not a continu isly épen=* per ipheral outlet’’

~

/

ee oe 39.

© e Ss

The Thonipson machine,. on the, other “hand, does not

have a*gavity element completely “open at both ends”’,

but, haS a cavity element which is closed-at one end except

for a’small céntral inlet port. Fhese’ two cavity elements

are not equivalent as shown by, the ‘patentees’ admjgsion

that the open top cavity was an object of the patented

‘mechanism and was the first ‘‘to successfully fill and heat

the thin walls. 6f the rhold.’’ Smucker patent 2,828,509

¢ . oil P

A42 sis | a

discloses and fully justifies the closed-end eavity element _

used in the Thompson machine. .

40. aed 4

The Thompson machine does not use a vacuum applied>

- through an intermittenly open*‘ peripheral outlet’’ at the

cup lip to draw beads into the molding cavity, but, rather,

it uses a ‘‘blow filling’? means to aspirate beads in an air

stream through the smaH inlet port at the opposite end

of the molding cavity and exhaust the conveying air to

atmosphere through the continuously open peripheral out-

let at the cup lip. The Court finds that the Thompson

_ “blow filling’? means is fully justified by the public use

of similar air aspiration molding devices by Parsons, Rob-

inson, Stevens and La Della Plastics more than one year

<

before October 1, 1957. _ -3 ee ne

41.

.e ;

The Thompson machine does not have ‘‘abufting sur-

faces’? which ‘‘power means’? move apart to form a

‘*peripheral outlet’’ and to communicate the vacuum with

the moldin® cavity during fill and which ‘“‘power means”? .

close to complete the molding cavity when the slide valve

is closed. Instead, Thompson machines have a.continu-

ously open peripheral outlet through which bead convey-

ing air under positive pressure is ejected to atmosphere;

and Thompson employs abutfing surfaces which are con-

tinually in abutment regardless of whether the plunger

valve is open or closed. . The loosely clampedor cracked

parting line in the Parsons, Steveng; Robinson and La

Della devices was an intermittently open peripheral, outlet

used more than one year before October 1, 1957. The con-

tinuously open peripheral outlet of the Thompson machine

is fully justified by French patent 1,149,898. There is no

evidence that~a continuously open peripheral outlet was

i

Bass: of the molding cavity.

nor

&

Me

A43

known or used as_an equivalent for a peripheral outlet |

re opened by standoff pins. © 4

42,

The Thompson machine does not have any elerhent-cor-

responding to or equivalent to the ‘‘power means’’ which

operate standoff pins inthe patent structure to open and

close the peripheral outlet in timed relation to the slide

valve and which disengage the abutting surfaces during

Bone eae

In addition to the elements specifically mentioned in

the previous three findings, each and every other element

of claim 12 of patent 2,951, 260, which finds response. in

the Thompson: machine, is fully justified by prior art in

public use or described in a written publication more than

one year before October 1, 1967.

44,

The Thompson machine, therefore, does not employ the

- combination of mechanical elements, or their equivalents, !

which are defined, by claim 12 of patent 2,951;260’as it

must be construed. Each of the claim elements which the .

Thompson machine does use is clearly shown in n the prior

art in evidence.

—45. ; dh

The 3,162,705 patent disclosure, its prosecution history, -

and the prior art require that its claim must be limited

to a method (1). which employs an ‘‘air préssure differ-

ential’? which is a vacuum and (2) which particularly

applies the vacuum through the 360° periphery of the cup

cavity, — as through the interior of the porous core or

Yeas

A444

3 through a porous te ok ring extending around tw ful

periphery of the cup lip.

The method now defined jn the elsim of patent 3,162,705

vas not claimed in applic tion 19, 259 as filed on October, ;

30, 1956. That subject. matter was first claimed on Jan-

uary 3, 1961,,after the Thompson qmachine had been placed ,

in commercial use.

47.

Patent 3,162,705 discloses in the specification and draw-

ings one molding method in which a vacuum is applied to -

the interiorof a porous core element:to draw beads into

the molding cavity. The specification also describes another .

- method in which a vacuum is applied to a porous stripper

ring. fee se round the full periphery’ of the eup lip. —

Both methods apply_vacuum through the full 360° cireum-

ferential extent of the cup molding cavity ang not at a

single point on the axis of the cavity. Although the aporr:

fication, as filed, stated

‘‘While we have stated that loading the cavity is done

by vacuum, it might be more accurate to say that load-

ing is done by the creation of a pressure differential.

For example, we might apply a positive pressure to

the inlet or gate opening ‘and blow the—prefoamed ——-~~

beads into the mold”?

no inoekdbetinns or way of applying a positive presstfre is

disclosed in the patent. Crown, cancelled the quoted

‘sentences on October 17, 1957 and replaced them-with a

full paravraph which emphasized the importance of using

vacuum tg load the molding cavity. ;

3 e °

°

*. -A45

¢ ra Se «d

48. | ee

Apiiiention 619, 259, as filed, claimed onl: a method

* wich included. ‘the step of ‘‘applying a vacuum to draw

* es the prefoamed beads into the cavity’’ (application claim 6).

On October 17, 1957 Crown added application claim 19

which. defined a method including the step of ‘fapplying

a vacuum to draw # Sp oepesege uantity of the pressed

- prefoamed beads into a mold . - Alaims 6 and 19: were

eancelled ahd subsequently on | January, 8, 1961 ‘Crown. .™

added application claims 29 and 30 which for the first time

recited the ‘‘air pressure differential’’. feature of the single :

Aes issued patent claim. The Patent Office rejected both new

claims and for purposes of appeal on “April 12, 1961 Crown

added application claim 31 which is substantially like the

method claim of the issued patent. Crown characterized

. this claim as calling for ‘‘an’ air pressure differential, ap-

plied at the top of the cup and extending through the full

360° circumference of the cup’’. Following an adverse:

‘ruling by the Board of Appeals, upon rehearing. Crown

obtained allowance of this claim. The Board of Appeals

cane ae construed the filling step of the claim as involving the

‘‘specific mode of utilization of vacuum (air pressure dif-

ferential), ‘through the full 360 degree circumferential

extent of the cup cavity, and in a direction from the top

F of the cup [mold cavity] to the bottom . . 2? At the time

. of allowance. the only disclosure of mold filling in the

patent specification and drawing was by application of a

_______—_vaeuum-either-through a a porous core element or through

a porous stripper ring at the cup lip. This Court finds

that the Board of Appeals in allowing this claim, construed

the term ‘air pressure differential’’, which at the time

appeared nowhere else in the application, as a vacuum

and as a vacuum which was particularly applied ‘‘through

the full 360 degree circumferential extent of the cup cav-

¢

A46

fos. : : ,

ity’? in order to distinguish it over Jeffer Ly patent’ Re.

20,460-upon which the same Board had previously pees

that claim.

oe : A

* The reinsertion in August, 1964 of two sentences pre- -

f viously’ cancelled: from the application on Oetober 17, —

. namely

‘3 ‘‘While we ak. stated that loading the svi: is done

by vacuum, it might be more accurate to say that load-

ing is done by the creation of a } pressure differential.

For example, we might apply a positive pressure to

the inlet or gate opening and blow the prefoamed

beads into the-mold.”’

does not affect this siceaetii because Crown repre-

sented to the Patent Office that’ the addition was, merely

“eg torial’’. This representation, madé long after this

suit had been filed and after the Board of Appeals had

. construed the claim in a particular way, estops Crown now

to urge that these two sentences support a claim construc-

tion which defines anything but a vacuum. This Court spe-

cifically finds that these two sentences in the context of

the remaining patent disclosure are, at best, an invitation

to experiment. | They are insufficient to support a construc-

tion of the step of ‘‘applying an air pressure differential,

“through the full 360° circumferential extent of the eup

cavity . . 2? in the 3,162,705 patent” @laim which would

~ eover the ‘Thompeon ‘thlow filling’? method. The: expert

testimony shows that the terms ‘‘air pressure differential”?

and ‘‘positive pressure to the inlet or gate opening’’ have

no significance in the Thompson method.

50.

The Thompson machine, on the other hand,,does not use.

‘ @ vaetum/to draw beads into the molding cavity. Instead,

: ir

AAT

s

the Thompson fili mechanism aspirates the prefoamed

heads by a high velocity jet of air and blows them into the

- molding cavity. This Court finds. that it need not resolve

‘the conflict in expert testimony as to whether the one.is

the equivalent of the other. because Parsons, more than one

year before October 30, 1956 .aspirated prefoamed beads:

and blew them into his molding cavity.. Parsons fully

justifies the Thompson filling method.

en

The Thompson machine also does not apply its convey-

ing air ‘‘through’’ the full 360° circumferential ‘extent of

‘ the cup cavity. Instead Thompson, applies the conveying”

air and beads through a small inlet port at the center of

the top (bottom ‘of the-cup) or axis of the molding cavity:

This aspect of the Thompson method also finds full re-

‘Sponse in the Parsons molding method and is justified by it. /

e-, e

= ae

The evidence without dispute shows that as of October

30, 1956, a ‘‘blow filling’’ step was not: known or used as

an equivalent to a vacuum filling step in either of the two

forms disclosed in the 3,162,705 patent. This Court spe-" ~

cifically finds that the “blow filling’’ step of the Thompson: .

machine does not operate in substantially the same way to

fill molding cavities.as do the.two forms of vacuum filling +

disclosed in the 3,162,705 patent. The Thompson ‘‘blow

filling’’ method depends upon the kinetic energy of a high

velocity air jet to entrain and impel beads into the molding

cavity. Test data in evidence demonstrates that the pres-

sure at the ‘‘mold inlet or gate opening’’ is negative or a

vacuum, and the pressure at the mold outlet is atmospheric.

The vacuum filling methods disclosed in the 3,162,705 pat-

ent depend upon a differential between the pressure at the

+&

\

«=

“

A48 of

ed

mold inlet and a lower pressure ‘at the far end or the in-

_ terior wall of the molding eavity to draw beads into it.

The pressure at the mold “inlet or gate opening”’ is at-

mospheric and the pressure at the mold outlet is negative

or a,vacuum. The pressure relation of the one method ae

the reverse of the other.

1, Whew

D3. 3 7 : meer

The Thompson: machine does not ise the critical method

step defined in the\claim “of patent 3 162, 705 or its equiva-

lent. Thompson uses a ‘‘blow filling’? method which was

not even known in its specific form and was fully justified

in its generic form by thie prior art in evidence.

4.

eo

me

The molding machine now defined in‘claims 1 and 3 of.

patent 3,125,780 also was not claimed in application 619,259

as filed on October 30; 1956, nor-was it claimed in the divi-

sional application 191,662 filed April 19, 1962. The claimed

subject matter was first presented to the Patent Office on

January 14, 1963 in applicatgon claim 5, more than one

year after the Thompson machine had been placed in

public use and‘after plaintiff had inspected a Thompson

machine in El Paso, Texas. ss

55.

Patent claim 3 depends upon patent claim 1. It’recites

impervious core and cavity elements in addition to the

strugture defined in patent claim 1. The invention, if any,

in patent claim: 1 and, hence, in dependent patent claim 3,

resides. in the two elements. These two elements were

presented for the first time on January 14, 1963 in appli-

t

cation “ckaim 5 which was dependent upon earlier applica-

tion claim 3 that had all of the other issued claim language.

; ~ : :

4

4

° &

e

Beaks ecg SS ee

Application claim 3 was rejected by- the Patent Office ‘‘as

unpatentabte” over Kelly patent 2,773,284 which disclosed

all of the issued claim elefhenis except the above two ele.”

AK

ments. e

; eG, ee re

The 3,125,780 patent disclosure, itd prosecution history

and the prior art require that the two critical elements of

claims 1 and 3 must be construed as (1) means.for t, eating

an air pressure differential which include means for draw-

ing a vacuum on the cup molding cavity through a porous

stripper ring or through a porous core and (2) means for

applying a positive pressure at the small inlet port in the

cavity element through which the beads are drawn..,

; 4

57. eS

The only ‘‘means-for creating an air pressure differen-

tial’’ dittlosed i application 619,259, from which patent

3,125,780: derivéd, were a vacuum applied to the-interior

of-a porous core element as shownGi the drawings and

specification and a vacuum applied through a porous strip-

per ring at the cup lip as described in the specification. The

wpochiiantien did suggest that

‘«‘While we have stated that loading the cavity i is daw:

by vacuum, it might be more aecurate to’say that load-

ing is done by the creation of_a pressure differential.

For example, we might apply a positive pressure to

the inlet or gate opening and blow the prefoamed beads

into the mold. Ree

. The drawings and snceitndticn disclosed no structure by

which such a positive pressure could be applied to the

‘‘mold inlet or gate opening’”’. On October 17, 1957 Crown

cancelled the quoted language and at the same time modi-

fied application claim 11 which had recited ‘‘means for ap-

plying a pressure differential’’. to read ‘‘means for apply-

¥

on

i o

ing a vacuum’’. Crown subsequently Qn. Apr il 19, 1962 °

filed divisional application 191,662 also without the quoted

| language in the specification. Its drawings and specifica-

tion, as filed, were identical | to the drawings’ and specifica-

‘tion in application 619,259,as it existed on April 19, 1962.

ce

4

| 58. x :

The only claim in. the divisional application, as filed,.

which had any reference to any form of air pressure differ-

ential (application claim 4) defirfed the porous stripper

ring embodiment in the following elements:

‘means for app ing an air pressure differential

through the cavifY to load the cavity with foamable.—.

-material, the air being exhausted’ through the pores of! |

- the stripper ring’ so ype py flews \

from the small end of the cavity toward the ‘strippe

ring at the ca end’’., + ‘ e

9. is “se yf

Then, after inspection of Thompson machines, Cr ow on

January 14, 1963 added the paragraph concerning/positive ;

pressure at the ‘‘inlet or gate. opening’’ which it-had pre-.

viously cancelled from the parent application in 1957 and .

added the two critica ifi application claim 5,

Crown represented to the Patent Officd that this pafagraph

had been inadvertently omitted from the divisional appli-

cation when prepared. But this Court finds that the para-

graph had no continuity in any application—that para-

graph had more than five years earlier been cancelled from

the parent application. /

: 60.

..» The,Patent Office found the specification not to be suf-

" \ficient to support the new elements in application claim 5°

because it,did not illustrate every feature of the invention

Loans ee an

| sg ‘LP - 2

c

defined in the new claims. As.a /consequence on June 6,

1963:Crown for the first time added the simple air pipe 94,

vacuum source) 88, passage . 90, channel 92 and indicated

; the porous nature of the stripper ring on the patent draw- ° -

.ings. Crown also addéd to the specification appropriate |

language describing these additions. This Court confirms

the Patent Office and finds that the embodiment: deseribed

in the divisional application which draws a vacuum thr ough:

: the porous core dees not support patent claims 1 1 and 3 of

patent 3,125,780. The other embodiment deseribed in the

application which has a vacuum’: applied through a’ porousg *

stripper lla does not fully support the critical two ae ee

~ elements of patent clainys 1 and 3. Neither has means for

~ applying a positive air pressure. Only by the addition of”

« «the simple air pipe to the drawi ings avd. its” ‘accompanying

“description i in the specification is there,sufficient 3

- in this application to support patent claims 1 and. 3

——_— effect theggr st disclosure of the two newly claimed eleme ts

= 7 afso was first fully sresented to the Patent Office more

: than one year after the ‘Ehompson caesar had heen ~

i placed i in public use. co ‘ue : le

~~ ee ms ; 61. -

.

| - Construing the critical means clenients in in view of this

: disclosure, they must include a simple air pipe or other.

means Which applies a positive pressure to the “inlet or .

gate opening” and a vacuum _drawn—through a porous

3 stripper ring or core;or their equivalent. ee ee.

ee #2, "

The. Thompson machine doés not draw a vacuum through’ »

ee ae a porous stripper ring or por ous core. Thompson does not

use vacuum or a simple air pipe. Instead, the Thompson

fill mechanism is an.air aspirator including a hollow re-

‘eiprocable plunger which emits‘a high velocity air jet from

o

Ad2

7 oe

a central air passage. No evidence shows that this struc-

ture was even known until its development by Thompson.

The expert testimony, particularly the undisputed tests of

defendant’s expert, establish that there is a negative pres-

sure at what would be the ‘‘inlet or gate opening’’ of the

Thorttpson machine and, not a positive pressure. Thus, the

Thompson aspirator fill mechanism does not use substan-

tially the same meaiis,or operate in substantially the same

way to fill molding cavities as does the combination ‘of

vacumm and simple air pipe belatedly disclosed in the

8,125,780 ‘patent. The ‘Thompson aspirator was not .a

known equivalent of the patented means.

$3. =

The Thompson’ aspirator was placed in publie use by

Thompson more than one year before full disclosure to the

Patent Office of the mechanism now defined in claims 1

and 3 of patent 3,125,780.

a

All of the elements of the Thompson machine find justi-

fication in the prior art in evidence. Kelly patent 2,773,284

~ and Smuacker patent 2,828,509 teach the general structure

and the Parsons, Robinson, Stevehs and La Della public

use devices justify the Fhompese air aspirator fill mech-

anism.

QD. e | ae

The Thompson machine, therefore, doesgnot use the criti-

cal two elements of claims 1 and 3 of patent 3,125,780, or

their equivalent’ The machine.elements which the Thomp-

son machine does use are fully justified by the prior art

in evidence,

_machines for molding foam cups and

A538

Antitrust CounrercLarM.

66.

>

Continuously, since August, 1962, Thompson and Crown

have been competitors in the mannpfacture and sale of

since August :2, 1963

they, havelbeen competitors in the manufacture and sale of

foam cups! made from expandable polystyrene beads,

i

nt ; é

alere / .

67.

*

Crown has not*sought to coerce other foam cup manufac-

turers into-accepting licenses under the "780, °705 or °260

Patents, or any of them, by the use

ment and/or unwarranted infringement suits.

‘ 68.

Crown did not institute suit on the "780, °705 and ’260

Patents, or any of them, until after it had actual knowledge

of the structure that the accused infringer was using.

can enh » 69. °

@own has not notified any competitors of infringement

without ‘rgasonable knowledge of the machine structure

that the competitor was using. | !

-

70.

(gown has proceeded in good faith in asserting its

patents in various infringement suits and has no knowl-

edge nor can it be charged with knowledge of invalidity of

the ’780, 705 and ’260 Patents, or any’ of them, if they

are invalid.

of notices of infringe-. -

4

**Reresereres

*s

CONCLUSIONS OF LAW.

Based on the foregoing findings of fact, the Court enters

herein its conclusions of law as follows:

- LICENSE CONTROVERSY.

1.

The written assignment ot rights by Champion and

assumption of obligations by Thompson is ambiguous and,

therefore, collateral evidence may be considered to deter-

mine the true intentions of the signatory parties and a

. proper construction of the written document.

2.

Properly construed the ‘‘ Assignment’’ could not and did

‘not transfer a license to Thompson, to manufacture or use

its independently developed ‘‘Thompson’’ cup molding

machines and Thompson did not assume any obligation to

pay royalties on them. The ‘‘ Assignment’ relates only to

the transferred ‘*Champion’’ machines. - , os

3.

Thompson is not a licensee of Crown with respect to its

manufacture or use of the ‘*Thompson’”’ cup machines. It

is a licensee only with respect to its use of the ‘‘Champion

cup machines’’. eee

4, , a

Defendant, even if it were a licensee by assignment, is

not estopped to show that its Thompson machines and the

method used by them are not. covered by any properly

construed claims of the Crown patents.

on A595

» -

The claims can be no more broad than the iijventions ac-

to ascertaining the actual scope of the ‘he i invention.

p tually made..." } }

nee /

. c i : ' 3 Z gan

The fact that claims/18 of patent 2,951,260, which is

dependent upon claim 12 in suit, recites that the ‘‘periph-

eral “outlet”? includes ‘‘means: for separating the molding

parts when the core is initially inserted in the cavity ele-

ment’’ cannot require a construction of the ‘‘peripheral -

outlet’’ element of claim 12 which is broad enough to. in-

‘clude the permanently open outlet of the Thompson ma-

‘chine. No matter what claim language is used, thie doctrine

of claim differentiation cannot broaden claim 12 to cover

more than the actual invention made by the paténtees.

ww

NS cen

All claims in suit*rre combination claims and U. S. Code,

Title 35, See. 112 limits those elements in the claims which

are expressed as a ‘‘means or step for performing a speci-

. fied function’’, to the corresponding structure or acts which

are disclosed in the respective patent specification or equiv-

alents-of those structures or acts. ?

8.

To be an equivalent, one structure or method must ob- .

tain substantially the same result as the patented structure

or method by operating in substantially the same way or

_ by using substantially the'same means to obtain the result. -

The equivalence or the interchangeability of the one for

the other must be known.

. ———f-" &

’A56 “i

Where the patentees have obtained issuance. of a weg

claim only by accepting limitations imposed by the Paten

Office, they are estopped to construe that claim in a manner

more broad than the scope placed upon it in the Patent

Office.

° : ~~

-

10.

The-Crown patent claims may liot be so broadly con-

strued that they ‘eover, prior art. Defendant, even if it

were a licensee by assignment, is not estopped to show

that. its Thompson machines are fully just}fied by pr ior

art devices and methods in public use, on sale, or described

in printed publigations more than one year before the filing:

date of plaintiff’s applications for patent or by prior art -

devices and methods known or used. by others ini this —

country or patented or described in printed publications —

before the date of plaintiff’s invention of the. patented

subject matter. Included in such prior art are devices and

- methods disclosed in patent applications filed prior to the

invention of the plaintiff’s patented subject matter,

‘U1.

Applying these principles, this Court concludes as a

matter of law that claim 12 of patent 2,951,260 must be

limited to molding apparatus which has (1) a cavity ele-

ment completely open at both ends, (2) a source of air

pressure differential which is a vacuum applied through

an intermittently formed peripheral outlet to draw beads

td

into the molding cavity and) (3) abutting surfaces which | ,

are moved apart by (4) power means to form the peripheral

outlet through which the vacuum communicates with the

molding cavity during a fill portion of the molding cycle.

and which are then closed in abutment by power means

Ant '

during the balance of the molding eycle; that the single

claim of patent 3,162,705 must be limited to a method-(t)-——-—--

which employs an air pressure differential which is a

vacuum and (2) which particularly applies the. vacuum

through the 360° periphery of the cup eavity; such as

through the interior of a porous core or.through a porous

stripper ring extending .around the full periphery of the

cup lip; and that claims 1 and 3 of patent 3,125,780 must

be construed to include (1)-means for creating an air

pressure differential’ which has means for drawing a

vacuum on the eup molding cavity through a porous strip-

“per ring or through a porous core and (2) means for ap-

plying a positive pressure at the small inlet port in the

eavity clement through which the beads are drawn.

ee 12.

As & matter of law Yhis 1 Cotart concludes that the Thomp-

son ‘‘blow ‘filled’? molding machine is not the equivalent.

of the molding machines defined in claim 12 of patent .

5.951 ,260 or in claims 1 or 3 of patent 3,125,780; and that

the Thompson ‘blow filling”? method is not the equivalent

of the vacuum filling method defined in the claim of patent,” .

8,162,705.

cw

13.

2 ,

Properly construed, none of claim 12 of patent 2,951,260;

claims-1 and 3 of patent 3 ,125,780; or the claim of patent-

3,162;705 ‘covers defendant’s Thompson machine or the

method used in operation of defendant’ s Thompson ma-

chine. © iN, ‘

: ta.

_ No royalties are due or seis to Crowis by defendant

on account of production of foam eups on Thompson ma,

chines or on account’ of its manufacture or use of Thomp-

son machines. renee os

, Aos

ANTITRUST COUNTERCLAIM.

15.

Crown aa not violated the antitrust laws of the United

States in its obtaining of the licensed patents. —

16. |

Crown has not violated the antitrust laws of the United —

States. in its licensing of any or all of the licensed patents.

17. oo ®

Crown has not violated the antitrust laws of the United —

States in the prosecution of the applications in the United

States Patent Office which matured into ats licensed *

patents.

18.

Crown has not violated the antitrust laws of the United

States in its litigation brought in several Federal Courts

for the enforcement’ef any of the licensed patents. _

A decree shall be entered in conformity with my opinion

and these findings and conclusions.

Dated this 23rd day of May, 1967.

25%

ed

Joun F. KI,tkenny, | as

District Judge. !

eagenns C.

~-

(Gani) Original Filed Ba 26 ras U: S.. Dist.

Court San Francisco. :

~

Unrrep Srates Disrricr Court

Northern District of California.

Jy

Crown Macuine & TooKCo,, pe

a corporation, i ; s

- Plaintiff, Soar

: ” 7 8 No,'42994

wet f\

’ KVP-SurHer.anp Paper Company,

a corporation, '

*

- ° “

~

\

~ MEMORANDUM OF DECISION.

. $

Defendant. -

7

Swe IGERT, J.

This is a patent infringement action te ought ‘by plaintiff

Crown Machine & Tool Co., (hereinafter ‘‘Crown’’) against

defendant KVP-Sutherland Co., (hereinafter **Suther-

land’’)., Defendant Sutherland has counterelaimed for

‘violation of the antitrust laws. Jurisdiction of the patent

action is founded upon 62 Stat. 931 (1948), 28 U. S.-C:

§ 1338 (1964). F Daee

The case is presently before the Court after a trial of .

the issues and extensive post-trial briefing. The Court

has also-had the benefit of its extensive and fairly well de-

A60

tailed notes made during the trial of the case. The extent

of the transcript, the exhibits, the briefs and these trial

notes account for the lengtk of the submission ‘period.

Crown is the-ewner of U. S. Patent Nos. 2,951,260 (here- J

inafter ’260), 3,125,780: (hereinafter ’780) and 3,162,705 °°

(hereinafter ’705) relating to apparatus and method for

~ making plttstic containers from expandable polystyrene

beads. The complaint charges that defendant Sutherland’s ©

use of so-called ‘‘Thompson Machines?’ to make cups from

. expandable polystyrene beads infringes its 260, ’780 and

"705 patents. ce 3

The claims in issue herein are the single claim of the ’705

patent, claims 1 and 3 of the 780 patent, and -claims 12

of the ’260 patent. | : ee

‘The issues in the ease -~are: (1) Is the sole claim.of = —:.

' Crown’s 7705 patent valid in law?; (2) Are claims 1 and 3

of Crown’s ’780 patent valid in law?; (3) Is claim 12 of

Crown’s ’260 patent valid in law?; (4) Are any of. the

foregoing claims infringed by the Thompson Machine?,

and (5) Has Crown viglated the antitrust laws of the

United States in its obtaining of and/or its use of the

-°780, ’705 and ’260 patents?

_ In order to adequately deal with these issues it is first

necessary that the background and history of the patents

and polystyrene foam cup art be covered.

I. BAcKGRoUND AND. HIstTorY OF THE Patess AND ) Poty-

STYRENE Foam Cup Art.

Expandable polystyrene is a lightweight thermoplaatie

~ matérial impregnated With a ‘‘foaming’’ or ‘‘blowing’’

agent which is activated by heat. This material is marketed

in the form of tiny beads (resembling ‘sugar) and: when

heated the foaming or blowing agent causes the beads to

A61

\

_ expand uniformly in’ all directions to as much as thirty

times their originaP size. Upon heating within .a. closed

' mold the beads expand aind*fus¢ together into a so-called

‘‘foam’’ in the shape of the mold. Such foams ‘have the

‘ properties of toughness, high strength-to-weight ratio, low

thermal conductivity and low water absorption.* Hot drink

cups, ice, chests, buckets and Christmas decorations are

just a few of the many items made of this matérial.

“eBadische Anilin. & Soda-Fabrik AG, a German company,

originated expandable polystyrene in the early nineteen

fifties and is ‘the owner of a number of United States pat-

ents on its proeess of manufacture and on the production

of articles-(foams) therefrom. (See Pit. Ex. No. 62.) None ~

of these patents, however, are the subject matter of this

infringement: suit.

On March 1, 1954, the Koppers Co., Inc., mre the fir:

| public announcement in the United States of ‘‘expandable

‘polystyrene’. From that date until the spring of 1960

Koppers marketed an expandable polystyrene bead desig-

nated F-40 which had a relatively wide bead size distribu-

tion range, to wit: the beads varied i in ‘‘average diameter

- from 5 to 3.0 millimeters.”’ (Def. Ex. No. V-4.)

_In the spring of 1960 Koppers came out with a special

grade of high quality expandable polystyrene bead desig-

nated F-40-C which, unlike F-40, was. of a standardized

uniform bead size. Since then, F-40-C has been the type

_, Of bead material used by manufacturers of foam cups.

From 1954 until the early nineteen sixties, Mr. Edwin

— * Edberg was in charge of Koppers’ expandable poly-

styrene bead market development program. In that ca-

pacity Mr. Edberg gave many talks before trade associa-

tions and wrote a number of articles about -expandable

polystyrene beads—their properties, applications and

methods of making the ‘‘foams’’ therefrom. In an ar-

\ : - @ H

A62 :

ticle appearing in thesMarch 1955 issue of The Rubber and °

{ae Age Mr. ‘Edberg wrote ‘that these beads ‘may be

xpanded in heated molds into a variety of. shapes and

siZes in. just one operation.’? Mr. Edberg gave three

. “Direct introduction of dry steam into the mold cavity’?

_ ‘or ‘**steam heated molds’? or ‘*hot-air heated -molds.”?

The latter two methods were recommended where the thick-

ness of the molded’ article was to be less than one inch.

. For “thin-vertical’’ sections it was recommended that the

beads be partially expanded (using dry heat such as infra-

-_..__. methods for A&ting and expanding the beads in the molds: :

red bulbs or strip heaters) dutside of the mold prior to .

their being introduced’ in the mold (Def. Ex. No. V-5).

In a paper presented at the Packaging’ Conference of

the American Management Association at the Palmer

\ _, House, Chicago, April 18-20, 1955, and later printed in —

No. 46 of Packaging ‘Series, Mr. Edberg stated :

“The molding operation consists ‘of the following

simple steps: ~Se

1. -Charge a measured amount of expandable poly-

styrene to the mold to obtain the’ desired density. .

2. Close’ the mold and apply heat (usually dry

sieam) until the beads are ‘expanded.

' <3. Remove the source: ‘of. heat. and cool the mold.

4. Open the ‘mold’ and remove foamed article.’”

(Def. Ex. No. ‘V-4.).

°

Other. articles by Edberg subsequently appeared in the

January 1956 issue of Refrigerating Engineering (Def.

_ Ex. No. V-3f< the March 1957 issue of Refrigerating Engi-,

neering (Def. Ex. No. V-2) and the September 1957 issue

_ of Modern Plastics Eycyclopedia (Def. Ex. No. V-1)—all

giving information on the means for molding ‘‘foams”’

from expandable polystyrene beads. | —

4

During the early days (1955-56) of expandable poly-

styrene beads a number of. people were engaged in the

: af

>

*%

+

e

a

A63

commercial production of various “foam?” articles.: ‘About

October 1955 William L. Parsons commercially produced

foam hi-fi ‘speaker enclosures. from a molding machine*of 4 —

> the type shown in Def. ‘Kx. No, F-H; in January 1956

Robinson Industriés placed in commercial prodyction a

molding machine of the type shown in Def. Ex. No. G-H .

} for making foam enclosuies for air conditioning units;

‘around May 195@ Donald Stevens molded for commercial

use foamminnow buckets.on a fmdlding machine of the

type sliown in Def. Hx. No. H-H; and-in August. 1956

La Della Plastics placed. in commercial use apparatus

shown in Def. Ex. No. I-H for molding foam float rings.

The aforesaid four molding mac! hines were all very

simple slow-cycle, mayually operated devices wherein a

predetermined amount of beads were either dumped or

blown (via an air, stream) into a mold. cavity through: an

inlet port, the, port was then manually plugged and’ the

mold heated. After cooling the mold was manually: cracked

and. the foam article removed. The thickness of these

_ various. articles varied” from x” to 1*ineh. The time to

manufacture tkéin ranged’ from 4 to 7 minutes.

@

In 1955 piaintiff Crown was in the businéss of making

. , and selling. plastic injection-molding\ machines and solid

‘hand when containing a hot liquid.

(as opposed to foam) plastic cups for the vending industry.

These solid’ plastic cups had the disadvantage of high

thermal eonductivity, making them too. hot to hold by the

ee Se

In 1955 Crown ufdertook a development program to

_ develop an automatic molding machine which would pro-

duce a thin-walled ‘(in the order of .060 inches wall thick-—

ness), hot drink cup. from expandable polystyrene beads.

Sometime during 1955 or, 1956 Crown built’ its first’ foam

cup maghine. “The evidence is in dispute as to the date'of -

the fir&t production of foam cups upon “tae machine. Based

Fane wv." Me: “hy.

'

2 a:

A64

upon the development of this machine, James M. Harrison

‘and Robert E. Smucker, employees of Crown and develop-

ers of this machine, filed U. S. Patent Office application

serial No. 619,259fon October 30, 1956, for improvements

in ‘‘Apparatus and Metltod for Making Plastie Contain-

ers’’. On May 1, 1958, the Patent Office Examiner required

Crown to make what is termed a ‘‘division’’ between the

method claims and the apparatus claims in the application |

a and prosecute the ‘application on one or the other type

; of claims. Crown elected to prosecute application serial ~

No. 619,259 on the method claims and to-file a new applica-

‘* tion containing the apparatus claims. On’.December 22,

1264, U. S. Patent No. 3,162,705 issued on this application

with one claim for ¢@Method of Making Plastic Contain-

ers’? (See Plt. Ex. No. 15).

.On April 1

tion serial No

1962, Harrison and Smucker filed applica-

“491,662 with the Patent’ “Office. Phis appli-

cation contaj with modifications, the non-elected ap-

leah 2 ‘paratus celal a the application serial No. 619,259 filed

- on Ocfober 30, 1956. On March 24, 1964, this application

matured into U. S. Patent No. 3,125,780 containing four

claims (See Plt.- Ex. No. 11).

According to Crown, imerder to successfully eis this:

first cup machine whiclf it-developed ‘and upon which the’

‘’705 and ’780 patents were based, it was necessary to screen

the Koppers’. F-40 ter beads and remove

larger than a ¢é : Ited’ in as much bead

‘ material being thrown away per cup as, wag used —for~

making aecup. Accordi dingly, this maghine was discarded .

~ and never used to commercially manufacture ‘foam cups.

To solve the problem of the low grade smatérial being

supplied by Koppers during the fifties, Crown developed a_

second type of cup molding machine which solved this

-

~~~ problem and went inf commercial production on December

< . . : \ .

fa ; EP Se eee

A65

12, 1957. Based upon the development of this second ma-

chine, Harrison and Smuceker filed on October 1, 1957, U.S.

Patent Office application No. 687,394 for improvements in

‘*Molding Mechanism and Heating Arrangement’? which,

- on September 6, 1960, issued into U.S. Patent No.

2,951,260 containing thirteen claims. (See Plt. Ex. No. 7.)

Crown manufactured 300 of these ’260 ty pe machines

and from December 12, 1957, until March 1960 all foam

cups produced in the country were made on these machines

by either Crown or ‘its. exclusive licensee Champion Papers,

Ine. (hereinafter ‘‘Champion”’). a

At approximately the time ‘that Koppers introduced its

high quality standardized expandable polystyrene bead ©

F-40-C (March 1960) the first foam cups in competition

with the Crown foam cups began to appear 6n the market.

The first competitors were Bridges Plastie Products, Inc.,

of Los Angeles, California, and James A. Young of the San

Francisco Bay: Area. Bridges sold its first: cups in March

1960 and Young ins August 1960. Since then, numerous

others, both licensed and unlicensed by Crown, lave en-

tered the foam cup manufacturing business,

. Late in 1959 Darrow and Stanley Thompson of. Thomp-

son Industries, Ine. (hereinafter ‘‘Thompson’’) observed a

Crown manufactured foam cup and decided that foam cups

might be a product their company could make. Thompson

then commenced to design a machine for manufacturing

* such cups and on November 10, 1960, Thompson produced

its first commercial foam cups. Thereafter Thompson

began the production and sale of its foam cup production

machines (hereinafter referred to as the ‘*Thompson

Machine’’). and in January, 1963, Thompson sold several

of them to defendant Sutherland, In August, 1963, Suther-

land commenced the manufacture: of foam cups on the

_ .Phompson Machines in Santa Clara, California, ,

A66 "

On March 24, 1964, Crown commenced this suit against .

Sutherland. This is but one of many suits which Crown

shas commenced sagainst purchasers and users of the

Thompson Machines as ‘well: as against users of other

_ types of machines (including Bridges and- Young hereto-

fore mentioned) and against Thompson Industries, Inc.

Only this*suit and the one against Thompson has been

tried. On May 23, 1967, the United States District Court

for the District of Arizona found that the ’260, ’780 and

705 Crown patents were not infringed by the Thompson

Machines and that Crown had not Molated the antitrust

laws in its obtaining of and/or use of the foregoiag patents.

See Crown Machine & Tool Co. v. D&S Industries, Inc.,

Civil No. 4942-PHX. Due to the particular nature of the _

Arizona suit against Thompson the Court there held, prior

to tria!, that defendant Thompson could not raise the

issue of patent invalidity. Ibid. at p. 8.

' After the emergence of foam cup competition in 1960 the

260 type molding machine was, according to correspond-

ence between Crown and its exclusive licensee Champion,

_ not able to meet the competition (See Def. Ex. No. B-D).

In September, 1961,,@hampion demanded and obtained a

modification of its original license agreement which enabled

it to buy. molding machines from manufacturers other than

Crown or to develop its own machines if Crown was unable

to furnish machines of comparable or better efficiency than

bhe competition’s (See Def. Ex. No. F-D). Champion then

designed and constructed its own cup molding machine

which it. placed in commercial production 1 in the fall of 1962

(Def. Ex. No. G- D). .In 1963 Champion ‘relinquished its

‘exclusive license and since then, Crown has itself manu-

factured cups and has licensed others to manufacture foam

‘eups on its patented machines. e

Subsequent to 1963 Crown developed and manufactured

a model P cup molding machine which Sutherland contends

=

A67

"is a copy of the Thompson Machine. The ’260 type machine

is no longer being manufactured or used by Crown.

Finally, the growth of the foam cup industry is evidenced:

by the approximately one billion foam cups sold in 1963,

the approximately 1.7 billion foam eups sold in 1964 and

the September, 1963, formation of-the Foam ( ‘up Manu-

facturers Division of the Society of the Plastics Industries.

IL Tur 3,162,705 Patent.

; The ’705 patent (Plt. Ex. No. 10} relates to a method

for making thin-walled containers from expandable plastie

beads. The- patent contains the following sole claim:

‘‘A method of forming a cup shaped article having a

relatively thin wall. section from light weight, low

density, finely divided beads of a foamable plastic ma-

terial, such as polystyretie beads containing a foaming

agent, such as butane or the like, including the steps

of defining a cup shaped molding favity with a thin _

wall section, supplying the relatively light weight,

- finely divided beads freely and on a demand fill basis

to the bottom of the cup, applying an air pressure

differential, through the full 360 degree circumferen-

tial extent of the cup eavity, and in a direction from

the bottom of the ¢up’ to the top se that the beads

will be accelerated into the cavity and will move into

the most remote portions of the cup cavity from the

point of initial supply, closing the point of initial’

supply of the cup cavity, and thereafter heating the

beads in the cavity to their full foaming temperature

to thereby cause the beads to individually unite, one

with the other, arid to glaze the outer surface of the

thus formed article due to the internal pressure devel-

oped in the expanding beads.’” 7

Figures 1 and 2 of the ’705 patent are shown in Ap-

pendices I and II, attached to this Memorandum.

The claim of the ’705 patent first calls for the step of

A68

“defining a cup “shaped molding cavity w vith a thin wall

section’’. As shown in Appendix II and described in the

specification, this cup shaped molding cavity 70 is defined

by the core element 40 and the cavity element 38.

The claim next calls for ‘‘supplying the relatively light

weight, finely divided beads freely and on a demand fill

basis to the bottom of the eup.’’? As provided in Appendices

I and I, and disclosed in the specification, a hopper 22

containing the beads is connected through the central pas-

sage 28 and inlet opening 52 to the bottom of the cup

-eavity. The plunger 32 opens and closes the, inlet opening

02. When the plunger 32 is in the raised position beads.

flow into the mold cay ity 70. The ‘specification provides

no definition of the words ‘demand fill basis’’ or meaning

thereof, although it does state that “during loading, pre-

foamed beads te supplied until the mold cavity is-sub-

stantially filled.’’ (Plt. Ex. No. 15, col. 5, Il. 35-37.)

The claim next calls for ‘‘applying an air pressure differ-

ential, through the full 360 degree circumferential extent

of the cup eavity, and in a direction from the bottom of the

-eup to the top so that the beads will be accelerated into the

cavity and will move into the most remote portions of

the cup cavity from the point éf arr ae dps The

specification and drawings denote omly one embodiment

for accomplishing this: A vacuum 76 (Appendix I) |is

connected to the bead source 28 for sucking the beads into

the mold cavity 70 via the connections 77 and 75, chamber

ee 4 (Appendix II), porous core element_40, mold cavity 70

and inlet opening 52. The specification suggests two other

general means for loading the cavity but no structure is

g ow in the drawings. The specification suggests applying :

a vacuum to the strippen ring 68 (Appendix II) or apply-

ing a positive pressure to the inlet opening 52 and blowing

the beads .into the mold cavity. Furthey,” no definition

or meaning of the words ‘‘through the full 360 degreecir-

7

AG9:

cumferential extent of the cup cavity’? is given in the

Specification.

The claim next ealls for ‘‘closing ‘the point of initial

supply of the cup cavity’. As shown in. Appendices. [ |

and II and decribed in the specification, this is accom-

plished by the lowering of plunger 32 into the inlet open-

ing 52.

The claim finally calls for ‘heating the beads in the

cavity to their full foaming temperature to thereby cause

| _ the’ beads to individually unite, one with the other, and

;

to glaze the outer surface of the thus formed sitio due

to the internal pressure developed i in the expanding beads.’’

According to the specification and drawings this is ac-

complished by hot air or steam from source 74 (Appendix

I) being drawn by vacuum 76 through connections-73 and

72 into chamber X (Appendix -I1), through the porous

cavity element 38 into the mold cavity 70 (containing the

beads), thence through the porous core element 40 into

chamer Y and through connections 75 and 77 (Appendix

I) to heat exchanger 86. The specification suggests another

method of heating the beads but no corresponding” strue-

ture is given in the drawings, to-wit: disposing a dielectric '

assembly around the cavity element 38 to instantaneously

heat the beads in the mold cavity 70.

B. Prosecution History in:the Patent Office.

Referring new to the file wrapper ‘(Ptt. Ex. No. 44) of -

the 705 patent it discloses that the initial application filed

on October 30, 1956, contained 18 claims, of which ten were

4nethod claims antl eight apparatus claims. The broadest

method claim in this initial application was ¢laim No. 1

and it claimed the process of forming an‘article from finely

divided foamable plastic material by (1) prefoaming the

“raw beads by heating them, (2) pressing the prefoamed_

—

A70

beads so that all of the prefoamed béads will be no larger

than a predetermined size, (3) supplying a predetermined

quantity ‘of the pressed, prefoamed beads to a mold, (4)

heating the beads and (5) removing the finished article

trom the mold (Plt. kx. No. 44, p. 12). ,

In the first action by the Patent Office all the claims were

rejected. The method claims were rejected as unpatentable

because nine of the claims (Nos. 1-7, 9, 10) were met by

the British patent in view of the’ Wiss, et al., patent and

the O'Neill patent. The other method claim (No. 8) was

rejected for being obvious in view of the cited references.

In response to the above action of the Patent Office, Har-

rison and Smuceker filed an amendment on October 17, 1957,

cancelling seven of the method claims (Nos. 2-5, 7, 9, 10),

amending the other three (Nos. 1, 6, 8) Sng adding a new

method claim (No. 19). All the amended method elaims

except No. 1, now contained the additional lintitation of

supplying a predetermined quantity of the pressed, pre-

foamed beads into the mold by ‘‘applying a vacuum’’. In

the accompanying remarks applicants. conceded that pre- —

foaming was old but that ‘‘In none of the references of

‘record do we find any mention of loading a thin walled,

somewhat elongated type cavity by drawing prefoamed

-beads into the cavity with a vacuum.. Nor do we find any

mention of preliminarily sizing the prefoamed beads by

rolling, pressing or otherwise, so they will net stick or jam

in the thin space in the eavity’’ (Plt. Ex. No. 44, p. 29).

In this same response the following language in the spec-

ification was cancelled:. ‘‘While we have stated that load-

ing the cavity is done by vacuum, it might be more accurate

to say that loading is done by the creation of a pressure

differential. For example, we might apply a positive pres-

sure to the inlet or gate opening and blow the prefoamed

beads into the mold.”’ : ee

at ee Ae fed |

a /

A71 oh

Accordingly, at this stage of the prosecution, applicants

urged that the patentability of their invention fested on

the features: (1) vacuum means of loading the heads into

the mold cavity and (2) preliminary sizing of the pre-

foamed beads so that beads larger than/a pr edetermined |

-size are not used in the molding process

In the second action taken by the Patent Office, dated .

May 1, 1958, the Examiner required applicants to make the

heretofore mentioned ‘division’? between the method

claims and the apparatus claims so as to restrict the appli-

cation to‘one or the other type of claims.

‘On September 8, 1958, applicants filed their election. tog

proscente the application on the waists claims.

In the third action taken by the: Pitent Office, dated Jan-

uary 30, 1959, all claims were rejected as indefinite and -

application ‘claims 1, 6 and 8 were rejected as unpatentable

_over the Koppers booklet in view of Glaxner, et al., and

Jeffery patents. In this regard the Examiner adel

‘‘The Koppers booklet shows pre-expanding poly-

styrene heads, placing said pre-expanded beads in a

mold cavity, and heating said bead filled cavity to ex-

pand and unite said beads into the desired final prod-

uct. There appears to be no invention in compressing

the pre-expanded beads to reduce their volume for in-

sertion into‘a mold cavity with closely spaced walls in

view of Glaxner et al. who shows in column 1, lines 36-

44, that compression may be used for reduction of the.

volume ‘of pellets. In addition there appears to be no

invention in using a vacuum to draw said beads into

gi mold cavity in view of Jeffery who shows on pagé

2, column 2, lines 46-75, the use of a vacuum for filling

mold with granular material.’’ (Plt. Ex. No. 44, p.

36.) onary ‘ : :

Ju reply, applicants filed an amendment, dated July 28; —

1959, wherein they cancelled all the foregoing claims (Nos.

1, 6, 8,°19) and in their place, submitted two new claims

s é 3 S

r

AT2

(Nos. 27, 28). Neither of the two new claims’ méntioned

any particular nmiethod of suppl lying the beads to the mold> |

cavity (e.g., applying a vacuum). Applicants in thei re-

marks emphasized the problem of preliminary sizing of the

pr ‘efoamed beadings and that this problem ‘‘is totally for-

eign to the Koppers Booklet.’’ (Plt. Ex. No. 44, p. 39.) No

mention was made+in the remarks of the previously men-

tioned problem of loading the cavity with a vacuum or the’

Examiner’s previous citation of the Je¥fery: patent as teach-

ing the use of a vacuum to fill a mold eavity to be old.

Thus; at this stage of the prosecution applicants relied

entirely upon the preliminary sizing of the prefgamed

beads as their exclusive patentable difference over the

prior art. oa ;

In the four th action by the Patent Office,. dated, February

15,. 1960, the Examiner rejected the two new claims (Nos.

27, 28) ‘‘as unpatentable over the Koppers booklet in view

of common practice shown by either Ratner or Gates, et al.

To merely reduce the size of the prefoamed pellets in

order that they may be enterable intohe giv en mold cavity,

if prefoamifg resulted in-the pellets being oversize, would

not amount to invention in view of the secondary refereuces _

since no new and unobvious results have been show (sic

(Pit Mx. No. 44, p. 40.) The Examiper also informed ap-

plicants that final action on their application w vould he taken

in the next Patent Office action.

Tn response thereto, Harrison and Smucker on ‘July 20,

1960, requested the Examiner to reconsider his rejection of

claims 27 and 28 on the ground that ‘‘the Examiner has not

found art showing or suggesting or otherwise anticipating”

the idea of preliminarily sizing prefoamed beads before

pri ehengorgh to a molding cavity meres thin walls.’

(PI\t EXNNo. 44, p. 44.)

Thus, after four Patent Office = and faced’ with &

> -

AZ3 ©

final actign by the Examiner, applicants rested the patent-

ability of their device exclusively on thestep of sched

arily sizing the prefoamed beads.

Howeve ‘ver, six. months later, but prior to any action™hy the

Patent. Office, Harrison ik Smucker filed on January 3,

1961, a supplementary amendment cancelling claims 28 and

29 and adding two new claims in their stead (Nos. 29, 30).

_ Both of these two claims lacked any mention of the recently

emphasized step of sizing the prefoamed beads.' Rather,

they emphasized the metliod of supplying the beads to the |

mold cavity, to-wit: ‘‘applying an air pressure differen-

tial to the cup cavity in a direction from the up bottom to

the down upper lip of the eup cayity so that’ the beads will 7

he accelerated down into the eup cavity and packed into the —

thin wall section’? (No, 29) and ‘‘applying the air pressure

differential to and through the full. 360° circumferential

extent, of the down upper lip of the cup cavity to insure

frat the most remote portions of the cup cavity from the

point of ipitial supply will be filled with beads.’’ (No. 30.)

(Pit. Ex, No. 44, pp. 45-46.) No amendnient was made to

the specification explaining the meaning of this new claim

language quoted above. - | 3 .

In their accompanying remarks applicants argued that

the patentability of thei» process now lay in the-‘‘idea of °

disposing a cup shaped cavity upside down, and then sup-

plying finely divided, lightweight beads to the up bottom . -

aud insuring filling of the most remoté portions of the

cavity meaning the down upper lip—by the use of an air

pressure ‘differential. ’? (Plt. Ex. No. 44, p. 47.) ;

In the fifth action by the Patent Office, dated February |

3, 1961, the Examiner rejected claims 29 and 30.as unpat-

1. In this regard it will be recalled that in Mareh, 1960, Koppers

introduced 4 special grade of high quality expandable polystyrene

bead designated F-40-C whieh eliminated the.necessity of having to.

Size the prefoamed beads prior to introducing them to. the mold

‘cavity.

a

AT74 Bs

entable over the Koppers booklet in view. of the Jeffery

patent, stating: ‘‘Jeffery shows intr oducing a lightweight

' granular mater ial into a mold cavity by a pressure differ-

ential.. There appears to be no invention in introdacing

the pre-expanded beads of the Koppers booklet into.the

mold cavity. by using a pressure differential in view of

-* Jeffery.’’ (Plt. bx. No. 44, p. 49.) . The Kxaminer made

_the rejection final.

After a personal inferv iew with the Examiner, applicants

filed on April 12, 1961, an amendment cancelling. claims

29 and 30 and submitting, claim 31 which, in essence, com-

bined the‘two claims. Applicants. stated that this, amend-

-"ment was for the purpose of placing-the application in

: better condition for appeal if ‘Allowance of the-claim was

°

not granted. - eee

- Claim 31 was rejected on April 18, 196), by the Examiner’ ~

‘but,entered for purpose of taking an appral. On, August

4,.1961, applicants filed, a notice of. appeal. — iy “

On appeal, applicants again stressed “the method used |

to load the molding cavity arguing that Jeffery does not

teach the step of “applying an air pressure differ ential,

through the fulk 360°: circumferential extent .of the. cup

cavity, and in a direction, fromthe top. of the cup to the.

bottom so- ‘that, the beads will be acceler ated into the cavity

and will move into the most remote portions of the cup

cavity from the ae at initial supply.’’ sai Ex. No. 44,

p. 64.) ~ ; ant

sOn October 31, 1968, the Board of. Appeals affirmed the

- decision of the Examiner stating, “The feature upon which

patentability is predicated’ is the application of suction |

to draw. the material into the mold cavity as specified in

‘the claim’’; that Jeffery discloses the application -of .a

‘vacuum “thr ough an annular passage which extends through ;

the full 360° cacumferential extent of his mold cavity”? —

? =

as Ree oe ; FEE

b, (0.

to draw material into-the mold pavity ‘atid “that the place

of application ofthe vacuum would depend upon the Shape :

of the cavity and — ‘be pbvious.”’ (Pit. Ex. hic 44,, sak

“4. ). ; ‘ ‘

‘On November 21, 1963, applicants filed a Petition for.

Regotisideration, upon the ground that the Board misin- es

- terpreted the Jeffery patent ‘in that Jeffery uses a quick

‘vacuum: fo move: a. moist material while applicants: use -

‘air pressure differential to set up.an airstream to a thin

wall, molding: cavity with the airstream being the’ meditwn —

fort moving light, foam, polystyrene beads into the furthest

recessesof_a thin wall cavity—something =e clearly

‘did not contemplate.’” (Pit. Ex. No. 44, p. 79.) -

On August 4, 1964, the = of Appéals reversed et

. stating: «:

‘The petition pienants a cogent ar rent as ‘to the

Pe character of the material treated in the Jeffer y patent.

atta Taking into account the specifie material treated by

* ~_ Jeffer¥, ie.,’a relatively moist powdered material,

... and considering appellants’ purpose and specific, mode

“€ co of utilization of vacuum (air pressure differential),

i ‘through the full 360 degree circumferential extent of .

a the cup eavity, and in a direction from the top of the

ae cup mold cavity] to the bottom * * *.’ we believe

that we should depart from our decision and reverse

the a of the — claim. * (Pit. Ex. NO. 44,

* pp. 80-81.) . :

Thereafter, on August 21, 1964, certain amendments to :

the specifications and claim 31 were submitted to the Ex-

aminer’ by applicants and -allowed as°‘‘editorial amend- |

* ments’ in accordance with Rule 312 of the Patent Office.

One so-called editorial amendment was the_re- insertion

f two sentences (‘While we have stated that loading fhe

“ cavity is done by vacuum, it, might be more acturate to say

that loading*is done by’ the creation re pr petal differ-_

~~,

i

2

o

A76

ential. For example, we might apply a positive pressure

to the inlet or gate opening and.blow the prefoamed beads

into the mold’’) in the specificatio® which applicants had

- deleted from™ theirs original | aang in their first re-

. sponse of October ‘17, 199722 ry

Claim 31 is now thé sole claim of the 705: patent and

its validity and ‘tafringyment are two of the igstics in this ©

action. gt. ie

’ 4 5 ” + a 7 “ -

. oC z Prior Art. %. i

Only tweed the wany prior art referees cited by the

Patent Office Exantt ner in the prosecution of the ’705 pat-

‘ent need to be considered herein: Koppers Booklet, ‘* Dylite-

_Expandable-Polystyrene”’ (1954) (Def. Hx. Nos, 1-18 and

Jeffery U. S. Patent-Re. 20,460 (1937) (Def. Ex. No. l). P

The Koppers Bog@klet shows the profess of making articles |

from lightweight low density, fin ly div ided heads of a

foamable plastic maéerial codtalihine a foaming agent by ~

(1) supplying the relatively lightweight, finely divided

beads freely to a mold cayity, (2), heating the heads to

aml and fuse them together int Sw porous mass of the

shape of the -mold éavity, (3) cooling the mold and foamed —

article and (4) removing the article - om the mold (Def.

Ex, Nos.-1-18, p. 19). *

In Jeffery a vacuum is: used to draw a uniform fine dust

with approximately 10% nfoisture. info a molding cavity,

__Jeffery states that one of the purposes of ‘this vacuum is >

‘to evacuate the cavity, so thi¥ ‘the powder -is mov ‘ed into

the cavity quickly, uniformly and in a more dense condi-

tion than would result from merely pouring the powder

into the container.’’ (Def. Kix. I, p. 6, Il. 51-53.) There-

°

es + ee -—-- e——- —.

2. It isto be noted that ‘this identieat amendment ‘ was filed w ith

the United States Patent Office on January 16, 1963, in the prosecu-

tion of the application for the '780 patent—a year and a half prior

to the above editorial. amendment. .

*

A77

after, the mold in Jeffery. is closed and a higher vacuum

is applied to ‘‘remove the air and gases from the powder,

.so that the compressed blank will have the entrapped gas

therein eliminated as far as possible.’’ ‘ ,

In addition to the foregoing, defendant cites and vplaces

great emphasis upon the alleged ‘prior uses ‘of Parsons

who manufactured foam hi-fi speaker enclosures, Robinson

Industries which made foam enclosures for air condition-

ing units, Stevens whe made foam minnow buckets and La

Della Plastics which manufactured foam float rings. How-

ever, as heretofore mentioned these devices were slow-,

cycle; manually operated, molding machines whose molded

articles were quite ‘thick. In the opinion of the Court

these prior public uses are not closely in point on the

question of patent validity.

D. Patent Validity.

The 1952 Patent Act sets forth three eonditions of

“pateiitabitity: Utility (35 U. S. C. $101), Novelty (35

U.S. SG, § 102) and Nonobviousness* (35 U. S. C. $103).

We assume that the prior art does not disclose the process

claimed in plaintiff’s ’705 patent and concern ours@ves

' directly with the question of whether the. ‘705 claim meets

the test of nonobviousness, to-wit:

‘*A patent may not be obtained though the invention

is not identically disclosed ‘or described as set forth

*. in section 102 of this title, if the differences hetween

the subject matter sought to be patented and the prior

art are such that the subject matter as a whole would

haye been obvious at the time the invention was made

to a person having ordinary skill im the art to which

said subjagt matter pertains. Patentability shall ‘not

be negatived by the manner in which the rereys was

made.’’ 66 Stat. 798 (1952), 35 U. S. C. $103 (1964).

x. Phe

¢> ? ra hs

AZS

In applying this test, the Court in the recent ease of

Graham v. John Deere Co., 383 U. S. 1, 17 (1966) said:

‘Under § 103, the scope and content of the prior art

are to be determined; differences between the prior

art and the claims at issue are to be ascertained; and

the level of ordinary skill in the pertinent art resolved.

Against this background, the obviousness or nonob-

viousness of the subject. matter is determined. ‘Such

secondary considerations as commercial success, long

felt but unsolved needs, failure of otlters, cte., might

be_utilized to give light to the circumstances surround-.

ing the origin of the subject matter sought to be pat-

ented. As indicia of obviousness or nonobviousness,

these inquiries may have relevancy.’’

2

Regarding the claims at — the Court in John Deere.

admonished, at page 33, that:

re ae Invention. i is constr ued not only | in the light-of |

the claims, but also with reference to the file wrapper

or prosecution history-in the Patent Office. ... Claims

“~ as allowed must be read and interpreted with refer-

ence to rejected ones dni! to the.state of the prior art;

and claims that have been narrowed in order to obtain |

the issuance of a patent by distinguishing the prior

-art cannot be sustained to gover that w hich was pre-

viously by limitation eliminated from the patent. sy

us Turning to the sole claim of the ’705 patent \we have

seen from ifs file wrapper history that from thre re the

: Examiner. first cited the Jeffery, patent in the Patent, Office

action of January, 30, 1959, until January 3, 1961, Harrison

and Smucker did not urge the step of loading the mold

cavity by applying an air pressure differential, but, in-

stead, relied entirely upon the step of preliminary sizing

the prefoamed beads as the exclttsive patentable difference

in their method or process over the prior-art. Apparently,

at ‘this time, the applicants agreed with the Examiner that

“there 1 was **no invention in using a vacuum to draw said

beads into the- mold cavity in view of Jeffery.”’ (Plt. Ex.

~

A79

No. 44, p. 36.) In addition, applicant’s position at this .

time would be consistent with the commercial realities. of

the foam cup business, wherein, according to Crown, their

main problem in making commercial use of the machine

first developed (disclosed:in the ’705 and ’780 patents)

was the sizing of the beads from low quality material being

supplied by Koppers. After Koppers introduced its high

quality F-40-C bead, there was no sizing problem, and

everybody then got into the foam cup business.

Tlius, it is crystal clear tliat when Crown abandoned.

the foregoing line of argument on January’ 3, 1961, and

thereafter concentrated on the step of supplying beads by

an air pressure differential, it was a result of Koppers’

introduction of the F'-40-C bead which eliminated the pr ob-

lem of sizing.

Turning to the step upon which the~Board of Appeals:

allowed the claim, we have seen_from the file wrapper

history that initially the Board affirmed the decision of

the Examiner finding that ‘‘the application of suction to

draw the material into the mold cavity’? was taught by:

Jeffery and that the ‘‘place of application of the vacuum

would depend upon the shape of the cavity and would be

obvious.’’ (Plt. Ex. No. 44, p. 74.) 2 | |

The Board reversed itself based upon the specifie material

_ treated by Jeffery. (a relatively moist powdered material)

_vis a vis plaintiff’s dry, lightweight particles and the pur-

‘pose and specific mode of utilization of vacuum (air pres--

sure differential) by plaintiff. This Court is at a loss to

explain the Roard’s allowance on the basis of the above

distinction.* Whether a vacuum is used to move a fine

dust withsapproximafely 10%. moisture into.a mold cavity

or used to move dry lightweight particles into a mold cavity

=

3. In Graham vy. John Deere Co. supra at 18, the Court said,

‘*We have observed a notorious difference between the standards

applied by the Patent Office and by the courts.’ ai ~~

es ! . eat So eerily

ee ee ' ae

is a distinction without a difference.* , Vacuums are used

for moving many different types of materials and a mere

change of. usage is not the sort. of nonobvious difference

upon which a patent may be obtained.

The Board, however, also reversed itself upon the specific

mode of utilization of vacuum by Harrison and Smucker’s

705 claim vis-a-vis Jeffery. Previously the Board had

held in affirming the Examiner that the application of the

. 5 . # . bd =

vacuum ‘‘would depend upon the shape of the cavity and

would be obvious.’’ .

f The language of the claim on this point, ‘‘applying an

air pressure differential, through the full 360° circumferen-

tial extent of the cup cavity, and in a direction from: the

bottom of the cup to the top so that the beads will be ac-

celerated into the cavity’? was (as to the italicized. por-

tion) added for’ the first time on January 3, 1961, without »

any amendment to the spevification in aid of explanation.

What this language means in terms of a specific mode of

utilization of air pressure differential to fill the mold cavity

is unclear. The Board of Appeals in allowmg this lan- |

‘euage did not specify what This unique mode of applying

air pressure differential was, but merely quoted the lan-

guage of the claim. ;

Plaintiff. claims this language covers blowing the beads

into the mold ‘cavity or sucking: them in by. drawing a

vacuum either through.the stripper ring 68 (Appendix IT)

or through the porous walls and top of the core element 40.

In effect, plaintiff seeks to use this unclear language to

cover any and.all means whereby an air pressure differen-

tial transfers the polystyrene beads to all portions. of its

4. In this regard it appears that the beads are supplied with

moistyre when the mold cavity is 8 ge by dielectric means. The

specifications of the ’260 patent sugge8t spraying or otherwise coat-

ing the beads with a jet of water prior to loading them into the

mold when. using nacniae heating. (Pit. Ex. No. 7, col. 7, Il.

23-26.

4

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4

cavity by means of a vacuum to be old.

Nor can this claim be restricted to any particular em- -

‘bodiment disclosed in the > pecification. of applying air

pressure-differential. The specific embodiment in the spe-

cification providing (without corresponding structure in

the drawings) that the mold cavity be loaded by applying

a positive pressure at the inlet to the mold cavity and

blowing the beads therein is obvious in light of all, the other

steps of the process claimed (which are met by the Kop®

pers booklet.)®

« » The embodiments of applying a vacuum through the

stripper ring 68 or through the porous core element 40 are

~ eup shaped cavity. (See plaintiff’s propesed finding No.

00). ‘This. plaintiff cannot do. Jeffery shows loading a

4

obvious means (in view of JeYery) of vacuum’ loading.

plaintiff’s particular mold cavity. The drawing of the vac-

uum through the stripper ring 68 would be obvious to one

_ skilledsin the art since it is the area furthest from the

point of initial supply of beads (inlet opening 52) and,

pe therefore, the most logical place for insuring that the mold

cavity be completely filled. The pulling of the vacuum

through the porous walls of the core element 40 would also

be ob¥ious, to a person having ordinary skill in the art

since ae ig are supposed to completely surround said

element and be molded thereon. Naturally, the applieation

of vacuum to all portions of the core element: would accom-

fe) ,

plish this. ‘

The fact that all portions and recesses of plaintiff ’s

5. It is to be noted that this positive pressure embodiment was

never before the “Board of Appeals but added subsequent to the

appeal as an editorial amendment. Had this embodiment been

before them it might have: impressed them that there was nothing

unique about loading plaintiff’s mold cavity. Furthermore, had

this embodiment been before the Examiner prior to the taking of

the appeal, pertinent prior art might iiave been cited showing hlow-

filling to be old. :

ans |) beads, not of the ap

A82 ‘

thin-walled mold cavity can be successfully loaded by a

vacuum (applied through either the stripper ring 68° or

the core element 40 or by merely blowing the beads in at

the inlet opening 52) clearly shows that there is no special

problem associated with supplying, plaintiff’s thin-walled

mold cavity with beads as they so str enuously urged dur- |

ing the latter period of the prosecution of their ’705 appli-

cation. -*

In support of patentability plaintiff Crown cites the fail-

ure of others to produce a thin-walled.foam cup during

the fifties, the commercial success of its foam,cup and the —

fact that it and its exclusive licensee Champion were the

sole commercial producers of foam cups from eer?

1957 until March 1960..

However, Crown’s commercial success was not due to

the foam cup machine disclo#ed in the 705 and ’780 ‘pat-

ents, but rather to the development of the ’260 type ma+

chine which-solved the problem, according Crown, of

the low grade polystyrene bead material being Supplied.

by Koppers during the fifties. The foam eup machine dis-

closed in the ’705 and ’780 patents was discarded and never:

used commercially. _ | :

~ The fact that after Koppers solved its materials prob-

lem/ everyone jumped into the foam cup manufacturing —

Fusiness would tend to refute the patehtability of the proc- :

ess Claim of the ’704 patent’ since the problem was .one of

sizing the beads prior to Koppers’ introduction of the

ication of. any air_pressure

differential to load .the mold cavity(which was the sole

feature’ upon which .patentability of the aim was

‘predicated and allowed by the Board of Appeals). |

Except for the step of applying an air pressure differ-

ential, the Koppers booklet (Def. Ex. No. I) teaches all the

other steps of the. ’705 method claim. Plaintiff, however,

sas he

claims that these other steps of its °705 claim are not met

by the teachings of the Koppers booklet. (See plaintiff's

Kx. No. 51-A). This plaintiff cannot now do. ‘ {Claims

that have been narrowed in order to obtain the issuance of

a patent by distinguishing the prior art cannot ‘be sus-

ained to cover that which was previously by limitation

hninated from the patent.”’ Graham v. John Deere. Co.

at-33. ae as we have seen from the file, Ww Snead

In view of th’foregoing it is the conclusioyt of this Const |

that the sole claim of the °705 pvent m-tivalid upon the

ground that.it fails to meet: the test of nonobviousness as

- .specified in 35 U. S. C. § 103. :

IT. THe 3,125,780 Patent. -

he A, Description,

The '78apatent (PH. Ex. No. 11) relates to an apparatus

for making foamed cups from a plastic material containing

a foaming or blowing’ agent. While the patent contains

four claims, only claims 1 and 3 are at issue in this action. -

Claim 1 provides: :

“In a molding mechanism for forming plastic articles,

such as ‘drinking cups and the like, from foamable

plastic material, a base, a frame supported ¢ on the base,

meid parts thereon defining a cup-shaped molding cav-

ity including a cavity element and a core element, a

source of supply on the frame adapted to supply foani:

able plastic material to the cavity, a supply -p passage

between the souree of supply anit the eav ity communi-

eating with the cavity. generally -in' the center of: the

small end of the cup as “defined iy the cavity, a valve’

for controlling the supply passage including a movable

plunger generally aligned with the axis of the cavity |

‘and having a | diameter less than the ate of. the

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bottom of the cup, the plunger being movable between. .

‘a withdrawn. position to allow foamable material to flow

through the supply passage into the cavity and an

' extended position in which the plunger closes the supply

passage and the face of the pliiger completes the bot-

tom of the cup as defined by the cavity, means for

creating an air pressure differential through the cavity

to convey the beads from the supply passage to the top

edge of the cup as defined by the cavity, including

means for applying a positive,air pressure to the sup-

ply passage for blowing the prefogmed: beads into the,

molding cavity, and means for heating the cavity to

foam and unite the fogmable mater les into a finished

article.’ |

Claim B} pr ee

‘‘The structure of claim 1 further characterized in that

the cavity and core elements that make up the molding —

cavity are impervious so that the air stream caused by

, the means for creating an air pressure differential

flows through the cavity betw een and generally parallel .- -

to the opposed faces of: the elements... “i

Figures 1 and.2 of the ’780 patent are ‘reproduced i:

\ Appendices III and IV, attached to this Memorandum.

These drawings are ‘almost identical with: the drawings. of |

the ’705 patent except.for two additions: ‘the °705 patent.

ei drawings (Appendices I and IT) do not contain the ‘air

pipe 94 seen in Appendices III and IV, ffor the vacuum

88 connected to sisted ring*68 seen in Appendix IV.

Claim 1 of. the '’780 patent calls for a “base”? and ‘‘a

frame supported on the base.’? As désertbed in the speci-

fication the base-is denoted with the number 12 (Appendix

III) and the frame with number 10. *

Claim 1 next calls for ‘‘mold parts thereon defining a

cup shaped molding cavity including, a cavity element ‘and

a core element.’’ As shown in Appendix IV and described

in the specification the mold cavity 70 is defined by the »

cavity element 38 and the core element 40.

“os

Series ASD ; | ea

Claim 1 nextyCalls for ‘‘a-source of fsupply on the

- frame adapted, to supply foamable plastic material to the

the cavity and an extended post

eavity.’’ As described in. the. specification this source of |

supply ! is hopper 22: (Appendix III).

.

Claim 1 also” calls for ‘‘a supply passage’ between the

source of supply and the cavity~communicating with the

cavity getier: ally in the center of. the small end ‘ofthe cup ~ 3

as defined by the cavity?’ As seen in Appéndix IV and

described by the specification, the supply passage. 28 con- .

nects the source of supply 22 with the mold cavity 7Q at

- a point (inlet opening 52) just above the center of ‘the ;

top surface of | the core element. 46. (i.e., center of the small

end of the cup as defined by the ¢ wavity. 70).

The claim next ealls for “‘a Valve for controlling - the.

supply passage including a movable plunger generally

aligned with the axis of the cavity and havi ing: a diameter

less than the diameter of the bottom of the eup, the plunger

being - “movable between a withdrawn position to allow

foamable material to flow throu @ supply passage into

ion in which the plunger

closes. the ‘supply passage and .the face of the plunger

completes the bottom of the cup as defined by. the cavity.”

The specification describes this valve as plunger-32-which

is raised and lowered by air cylinder 30. When plunger 32

is raised (the withdrawn position) prefoamed beads flow

through inlet opening 52 into the cavity and after a pre-—

determined time the supply passage’ 28 is closed by the

lowering of the plunger 32 into inlet opening 52.° It is

noted in Appendix IV that in the lowered position the

plunger 32. completes the top of the cavity element 38 (i.e. ~

the bottom of the cup as defined by the cavity).

Clair 1 next calls for ‘‘means for creating an air pres:

sure “differential through the ‘cavity to convey the beads °

from the supply passage to the top edge of the cup as

at

: ee oe :

defined by the cavity, including means for applying a

ate positive air pressure to the supply passage for blowing *

the preformed beads into the molding eavity.’’? The spec-

ification and drawings provide three ‘different émbodi-

~ments for creating an air pressure differential to convey

the beads from the supply passage 28 td the mold cavity =~

70, to-wit: (1) A vaeuum 76 (Appendix III) is connected’ _ .

to the bead source via the connection 77 and 75, chamber. Y, _

(Appendix IV), poreus core element’ 40, mold cavity 70,.

and inlet opening 52; (2) The. cavity element 38. and core .

element 40 are impervious and the vacuum 88 (Appendix

« IV) is connected to the supply passage 28 via the passage

90, chamiel 9 92; porous strippey ring 68, mold “cavity 70 and

- inlet opening 52; and (3) a positive air pressure blows the

beads into the mold cavity 70 by. mkans of the air pipe 94

which directs; ‘a jet of air at-the inlet Opening 52.

id

- Finally, claim 1 calls’ for ‘‘means for heating the cavity «

to _ and unite the foamable material. into a finished

article.’’?, The specification describes two embodiments ‘for

accomplishiife the hearing: (1) Hot:air or steam is drawn’

’ _ from source 74 (Appendix TIT) by vacuum .76 through con- |

nections. 73. and 72 into chamber X (Appendix IV), thence 2

through the porous éavity clement 38 into the mold cavity e

70, thence through. the porous core ‘element 38, into cham- |

. ber Y and then through éonnections 75 and. 77. to heat ex-_

- changer 86 (Appendix TIT) and (2) disposing a‘ dielectric

assembly around the cavity element-38 to instantaneously <

heat the prefoam 1 beads in the. mold ‘cavity 70.. No strife-

* ture is given in the drawings for accomplishing this latter

‘method of heating. as =

Claim 3 is dependent upon claim 1 and calla for the .

eh additional limitation, ¢that the cavity:and core elements

that make up¢he molding cavity are impervious so that the

[| », air stream caused by the means for creating an air pressure

© differential flows through the cavity between—and gen- 6

*

per

erally parallel to the opposed asin of the elements. ‘ap: This

claim merely limits ihe“embod: ments: for creating any air)

pressure differential, heretofor e discussed, so ‘that, Ge.

~ embodiment wherein a vacuum is applied to the porous core*

element is ‘excluded. We on et

0B. Pr ostcution History in ty Palen Office.

As previoysly noted, (lis application serial No 4912662,

filed on April 19, 1962, is adivision ofsapplication serial

, No. .619,259, filed on ‘October 30, 1956. In reviewing “the

Ale Wrapper history” of the 780 patent (Pit. Ex.‘No. 43) it

will first be necessary to’ examine the file wrapper of the

705 patent (Pit. Ex. No. 44) from the time of filing until

the Examiner required a ‘division’? on May i |: See

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