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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1969
- **Citation:** 396 U.S. 824

## Text

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

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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

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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

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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 .
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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. »
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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-

¥

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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 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 ~~
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

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. '
; ‘ | “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, 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

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.
'

*%

+

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
|
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

eae

-

ASI
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

£
&
~

AS4+

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

: “specification the cavity and core elements abut at surfaces /

oo

sete! AIT ;
- bunenitilg
application claim ‘19 in a number of placés including that.
dealing with the peripheral. outlet. - | Py

On November 27, 1959, the Bcninas “idtoctnd claim 19 _
‘again for being’ inaccurate beeause ‘‘the’ relation between
the valve, power means to-operate’ said valve, and the
peripheral outlet is not clearly ang concisely set forth in-
accordance with that disclosed in the specification.’” ae ig 4

Ex. No. 42, p..47.), The Examiner in this action, however,
; @

\

oe

on grounds of inaccuracy.

S
rs

/A99- ae Rn, ey Rees os

ey
ey

did not cite any pr ior sit reféroness against claim Tas:
he had -in the, previous: ‘Patent Office Action. Thus at this”
stage of theproseeution, claim 19 was being rejected solely

e
On: March 30, 1960, after a personal interview with the
xaminer, applicants filed a response amending claim 19
ding a new, claim (No. 21), Sibnianddesk “ape cinins FS.

: claim 19. was. allowed along with claim 21.
Claim ‘19: issued Ts yatent claim 12—the sole claim of the
7260 patent in issue in“thisaction. 3 3 ha,

. ; C. Prior Art.

‘Application claim 19 was originally rejected by the, hx-’ rh
‘ammer as ‘‘unpatentable over _eithér Laraway ect,al or
~Smueker et al in-view of J effery. ” (Pit. Ex. No. 42, p. 40.)
.Of the various prior art references cited by-defendant in me
thes action these patents are, in the ,opinion of the ‘Court,,
the: ‘closest in point. ; fue.

- The Laraway, et al, patent (Def. By No. @2y" Shows
wciibk parts, including ii cavity, open nat the top; and a | |
core element ixisertable into one /end’ 20 ~~. 79
G1, 2. 36 | 78
. yy
= ed Ce
66 || 77 73 ‘83 4
bee 54 59
es |. | e
Tf Red | ae
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3,162,705 ©

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Dec. 22, 1964 R . SMUCKER ETAL "$162,705
METHOD FOR MAKING PLASTIC CONTAINERS
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_ APPARATUS\AND METHOD FOR MAKING PLASTIC CONTAINERS —

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3,125,780 ;

58

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Sept. 6, 1960 J. M. HARRISON eral © 2,951,260
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Defendani. | 2
MEMORANDUM OF DECISION. ee

-. This is a patent infringement action, brought by plaintiff

against the KVP-Sutherland Paper Company. The defend-
‘ ant Suthérland counterclafined, charging plaintiff with vio-
lation of the anti-trust Iaws. 3

On Septémber 26, 1967, this,Court filed its Memorandum
of Decision, containing the Hodinns of fact and na uncae 2 ,
of law herein. The Court held:

(1) That two of plaintiffs patent claims (the ’705 jd

780) were invalid on the ground that they failed to meet
the test of non-obviousness required by 35 U. S. C. ¢ 103.
(Memorandum of Decision pp. 24 and 35) ;

¥

7

A122 Sad

(2) That claim 12 of the '260 patent,: while: valid, was
not infringed by the Thompson Machine. (Memorandum ~
43) ; eae 3

(3) That defendant Sutherland failed to establish that
plaintiff violated the Sherman Act. (Memorandum “of De-
cision, p.-53) ; and

(4). That defendant Sutherland should be awarded its
reasonable attorney fees. (Memorandum of Decision’p. 54). -

The case.is presently before the Court on plaintiff” s mo-

‘tion ‘to ‘amend finding No. (4) above.

The Court has held that the real basis of Crow n’s action —
was ‘the ’705 and ’780 patents and particularly the ‘‘posi-

-.-tivevair pressure’’ or ‘‘blow’’ filling element théreof, and

“ © that this element of positive pressure was appropriated by

Crown from others and used to enlarge the scope of the .
705 and ’780 patent applications. Noting that such ac-

_ tivity has been condemned on numerous occasions, the

Court ‘stated (Memorandum of Decision, p. 54):

‘‘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 attorney
fees as contemplated by 25 U.S. C. 285.”

The cases cited in support of the Court’s holding that
the activity of enlarging the scope of one’s patent. with
information obtained from others i is improper, are Railway

* Co. v. Sayles, 97 U. S. 554, "563 (1878); and Muncie Gear

v. Outboard Co., 315 U. S. 759, 768. (1942). These cases

stand for the proposition that the law does not permit
enlargement of original patent applications by amendment
where the amendment adds new claims, not ‘within the
scope of the original application, which interfere with
other inventions that have entered the field in- the mean-
time. The Supreme Ys Court, in the Railway case, pp. 563-

564 stated : os

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* “Courts should regard with jealousy and disfavor any +
attempts to enlarge the scope of an application once
-. filed, or of a patent once granted, the effect of which

would be to enable the patentee to appropriate other
inventions made prior to such alteration.”?

Plaintiff contends that it had a duty to investigafe poten-
tially infringinig machines before threatening or actually
bringing infringement actions, and that, once information
was gained from such inspection, it was proper to amend
its existing claims, to cover new matter so long as the
amendments did not execed the scope of the « original patent.
disclosur es.

To support this argument, Crown states that it had a
duty, and a right to investigate possible infringement of
its ’260 patent which the Court held was valid. How ever,
the amendments held to be improper in the pending case all
relate to the °705 and ’780 patents, which the Court has
held invalid and which the Courf has further found to be
the.‘‘keystone of this suit. -

Plaintiff next contends’ ne ‘Cassuming that Crown’s
conduct in-obtaining the ’705 and 708 (sic) patents went
beyond the limits of propriety set by the Patent Office and
the courts, Crown’s conduct was still not sufficiently repre-
hensible to justify the award of attorney’s fees to the
defendant,”’ citing Nachtman v. Jones and Laughlin Steel
Corp., 134 F. Supp. 392 (D. C. Pa. 1955); and Chicopee
Manufacturing Corp. v. Kendall Co., 288 F. 2d ‘os (4th
Cir. 1961). |

However, in ew ct of ‘these cases is there any indication:
that the prevailing parties requested attorneys’ fees or
that any were granted. Further, both of the cases in-
volved such close questions of whether the patents in ques- |
tion were infringed that there could be little doubt that
the suits were reasonably brought. oe

e

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The standard to be applied in determining whether: attor-
ney fees should be awarded to the prevailing party is
whetlier there is’ a, showing of wiffairness or bad faith
in the conduct of the losing party, or any other equitable *

~ consideration of similar foree which makes it grossly unfair
at the winner of the lawsuit be left to bear the burden
of his.own counsel fées. Thus, where there has been -
no guch showing, the Ninth Circuit has reversed the Dis-
itt Court’s grant of attorney fees. Day-Brite Lighting v.
Ruby Lighting Corp., 191 F. 2d 521 (9th Cir. 1951). Gen-

- erally, whete the claim of a patent aperee is not
litigated in bad faith, an Award of attorney’s fees is error.
Park-in-Theatres v. Perkins, 190 F, 2d 137 (9th Cir. —

The Court, considering the ev idence heretofore dis-
cussed, finds, that the action can -be said to’ have been
brought ‘in bad faith; that it is an exceptional case a«jthin
the meaning of 35 U. S. C. § 285; and, that reasonable

attorney | fees should be awarded to the prevailing party. -

The motion to amend the Memorandum of Decision
with respect to attorney fees is denied. -,

Dated: April 4th, 1968. 3
Pe SWEIGERT, © Ae
. United States District Judge

Z oa |

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_0640%3A1. Public record. Not legal advice.