Petition for Writ of Certiorari — Bendix Corp. v. Balax, Inc.

FILE COPY

JUN @ 1970

pS

|

IN THE

Supreme Court of the Gnited States

Ocroser Term, 1969.

Nc 1654

THE BENDIX CORPORATION anp SELLEW

CORPORATION,

Petitioners,

vs,

BALAX, INC. anv JOHN M. VAN VLEET,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT.

Howarp T. Markey,

Dante, C. McKacuray,

Parker, Carter & Markey,

8 South Michigan Avenue,

Chicago, Illinois 60603,

Attorneys for Petitioners.

‘THE GUNTHORP-WARREN PRINTING COMPANY, CHICAGO

tt © | i —_— 2. 4. 2 SS he ee ae 8 6 ee oe,

INDEX.

PAGE

(iTaTIONS TO OPIN‘TONS BELOW...........-.200ceceeee 1

JurIsDICTION BEES APPEARS AT ys ON ee PR 2

Tue QuEsTIONS PRESENTED FOR REVIEW............... 2

Tue Statutes INVOLVED IN THE CASE................-. 2

STATEMENT OF THE Case AND Facts Materia To Con-

SIDERATION OF THE QUESTIONS PRESENTED............ 3

eI dicen dindesercebavecesss 3

B. The Patents in Suit Relate to Swaging Taps

and Their Method of Use................... 4

C. Both Patents in Suit Have Been Found to Be

EE eR riauds bane eNGba hae 6 waseek ees 5

D. Validity of the Reissue Patent.............. 5

KE. Validity of the ’755 Patent.................. 5

Reasons FoR ALLOWANCE OF THE WRIT................ 6

A. Reasons: The Court of Appeals Erred in

Adopting a New Rule of Law Which Requires

Reference to Unprinted and Unpublished Ma-

terial to Determine What Is Patented by a

German Petty Patent...................... 6

B. Reasons: The Court of Appeals Denied Pe-

titioner Due Process When It Applied a Dif-

ferent Test to Determine the Effective Date

of a Method Patent Than It Did to Determine

the Adequacy of a Public Disclosure......... 9

ND on vs Can coin poe w hae ous bee Re keke ey sees 12

APPENDIX:

Appendix A—Opinion of the Seventh Circuit

Courtef Appeals... .......c0e000. Al

Appendix B—Opinion of the United States Dis-

ND WEE. ork bbc ns vebivavekae’s A25

ii

TABLE OF AUTHORITIES.

Cases.

Bros Incorporated v. W. E. Grace Manufacturing

Company, 351 F. 2d 208, 213 (5 Cir. 1965).......... 10

Martin v. Hunter’s Lessee, 1 Wheat. 304, 4 L. ed. 97

(WM oii ee 9

McCullough Tool Company v. Well Surveys, Inc., 343

P. Oa Sat, TS (20 Oly, 19GB)... co ec ccccccc eee 10

Permutit v. Wadham, 13 F. 2d 454 (6 Cir. 1926)....... 6,8

Reeves Bros., Inc. v. U. S. Laminating Corp., 417 F. 2d

869 (2 Cir. 1969)...... based eed trate dhewh are He ka cd s

Rich Products Corporation v. Mitchell Foods, Inc., 357

F. 2d 176, 180 (2 Cir. 1966)........................ y

Wee i ook cidecasd rockets ck 2

35 U.S. C. 102(b)...........000008, 2, 5, 6, 7, 8, 9, 10, 11, 12

I gos us ps eden ck sce cca sc ae 2, 8, 9, 10, 11

I vans ccetasntis. dip ieee 3, 10

IN THE

Supreme Court of the Anited States

Octroser TERM, 1969. .

As chi bestecoehiae

THE BENDIX CORPORATION anp SELLEW

CORPORATION,

Petitioners,

vs.

BALAX, INC. anv JOHN M. VAN VLEET,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT.

Petitioners, The Bendix Corporation and Sellew Corpo-

ration, pray that a writ of certiorari issue to review the

judgment of the United States Court of Appeals for the

Seventh Circuit which held Welles Patents Re. 24,572 and

3,050,755 invalid.

CITATIONS TO OPINIONS BELOW.

The opinion of the Court of Appeals, and the opinion

entered by the District Court are printed respectively in

Appendices A and B of this petition, pages Al through A61

hereof. The opinion of the Court of Appeals is reported at

164 USPQ 485. The opinion of the District Court is

reported at 291 F. Supp. 328.

2

JURISDICTION.

The judgment of the Court of Appeals was entered on

January 30, 1970; rehearing denied March 9, 1970.

The jurisdiction of this Court is invoked under 28

U.S. C. 1254(1).

While review is admittedly discretionary, it is believed

that this Petition should be granted under Rule 19 of this

Court since the ‘‘Court of Appeals ... has decided im-

portant questions of federal law which have not been, but

should be, settled by this Court.’’

THE QUESTIONS PRESENTED FUR REVIEW.

This is a patent case, and the Court is requested to

review the following questions:

1. May the specification and drawings of a third party

German Gebrauchsmuster—the entire unpublished petty

patent—he used to defeat a U. S. patent where the statute

and all court decisions have limited its use to what is

specifically recited in its claims.

2. Does a patentee’s later public disclosure invalidate

his patent based on an earlier identical disclosure to the

Patent Office.

THE STATUTES INVOLVED IN THE CASE.

35 U. S. C. 102(b). Conditions for patentability: novelty

and loss of right to patent.

‘‘A person shall be entitled to a patent unless * * * the

invention was patented or described in a printed publica-

tion in this or a foreign country or in public use or on sale

in this country, more than one year prior to the date of

the application for patent in the United States. * * *”?

35 U. S. C. 112. Specification.

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3

“The specification shall contain a written description of

the invention, and of the manner and process of making

and using it, in such full, clear, concise, and exact terms as

to enable any person skilled in the art to which it pertains,

or with which it is most nearly connected, to make and use

the same, and shall set forth the best mode contemplated

by the inventor of carrying out his invention.”’

35 U. S. C. 120. Benefit of earlier filing date in the

United States.

‘‘An application for patent for an invention disclosed in

the manner provided by the first paragraph of section 112

of this title in an application previously filed in the United

States by the same inventor shall have the same effect, as

to such invention, as though filed on the date of the prior

application, if filed before the patenting or abandonment of

or termination of proceedings on the first application or on

an application similarly entitled to the benefit of the filing

date of the first application and if it contains or is amended

to contain a specific reference to the earlier filed applica-

tion * & #99

STATEMENT OF THE CASE AND FACTS MATERIAL TO

CONSIDERATION OF THE QUESTIONS PRESENTED.

A. Proceedings Below.

Patent Re. 24,572 for ‘‘Fluteless Swaging Tap’’ was

granted on December 2, 1958. Patent 3,050,755 for

“Method of Forming Threads by Applying Sliding Pres-

sure’? was granted on August 28, 1962. Action for infringe-

ment was instituted in the United States District Court for

the Eastern District of Wisconsin and on October 1, 1968

Patent Re. 24,572 was declared valid and infringed and

Patent 3,050,755 was declared invalid, but infringed if

valid.

Appeal was taken to the Court of Appeals for the

Fe ey See SERIES ET

ate on Pb ba mat

LPO ee ee erro

‘ ——

4

Seventh Circuit. On January 30, 1970 that Court affirmed

the invalidity of Patent 3,050,755 and the infringement of

both patents, but reversed as to the validity of Patent Re.

24,572,

Petition for rehearing was denied by the Court of Ap.

peals on March 9, 1970.

B. The Patents in Suit Relate to Swaging Taps and Their

Method of Use.

A tap is a tool used to form threads on the cylindrical

inner surface of a hole. A swaging tap forms threads by

deforming the metal and displacing it into the form of the

desired thread. A swaging tap, which forms no chips, is

to be distinguished from a cutting tap which forms threads

by cutting away the metal with cutting teeth. The swaging

method is more economical and easier to perform than the

cutting method. Swaging taps have a longer life than cut-

ting taps. They produce no metal chips. The costly and

time consuming inspection and cleaning of the work after

the job is completed is thus eliminated.

As stated by the Court of Appeals ‘‘this tap has a shank

and a threaded section. The threaded section has a cylin-

drical portion where the threads are substantially the same

diameter and a tapered end portion where the threads are

of reduced diameter. The threads have high spots or lobes

with relieved areas in between these high spots. It is the

lobes that do the actual swaging work, since the relieved

areas are out of contact with the material being formed.

When used, the tool is rotated into a hole and the lobes

force their way through the hole. The displaced metal

takes the shape of the tap threads.

“The method of the ’755 patent is performed when the

tool of the reissue patent is used in the prescribed manner.

The method claims describe the application of pressure

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5

from the tap threads and the movement of the metal as it

conforms its shape to that of the tap thread.” (A3)

¢. Both Patents in Suit Have Beeu Found To Be Infringed.

Both the District Court and the Court of Appeals found

that both patents in suit were infringed by the defendants’

| tap.

D. Validity of the Reissue Patent.

German Petty Patent 1,455,626, the GM, was issued in

1939. Unlike most patents, a GM is not printed and hence

it is not a printed publication. Only what is patented by

the GM can be used as prior art. The District Court in

finding the reissue patent valid determined what was

patented by the GM by reference to its claim. The Court

of Appeals in reversing the District Court determined what

was patented by reference to the entire unpublished GM.

E. Validity of the '755 Patent.

In April 1956 the application which subsequently re-

sulted in the reissue patent was filed in the U. S. Patent

Office. This application disclosed a swaging tap and how

to use it. Both the Court of Appeals and the District Court

found that when the tap is used in the manner described in

the April 1956 application, such tap will inherently prac-

tice the method claimed in the ’755 patent, the application

for which was a continuation in part of the April 1956

application.

In June 1956 plaintiff provided the swaging tap of its

April 1956 application to its customers and instructed them

in the use of the tap as described in such application.

Both the District Court and the Court of Appeals deter-

mined that the June 1956 disclosure of the tap and how to

use it invalidated the ’755 patent under 35 U. S. C. 102(b).

- ——

REASONS FOR ALLOWANCE OF THE WRIT.

A. REASONS: The Court of Appeals Erred in Adopting

a New Rule of Law Which Requires Reference to

Unprinted and Unpublished Material to Determine

What Is Patented by a German Petty Patent.

The Court of Appeals at page 7 of its opinion (A8) found

that ‘‘the claims [of the Gebrauchsmuster or German petty

patent, hereinafter GM] leave unclear exactly what the

‘shape, disposition and arrangement’ of the patented article

is meant to be.’’ Nevertheless, the court concluded that the

GM anticipated petitioner’s reissue patent and, therefore,

found the reissue patent invalid. To reach this result the

court announced a new rule of law at pages 5-6 of its

opinion (A6) that ‘‘ We conclude that the specifications of a

GM may be resorted to for the purpose of clarifying the

meaning of the language used in the claims, but may not be

resorted to for the purpose of adding completely new

material to that which is disclosed by the claim.’

Section 102(b) of the United States Patent Code limits

the material which may be considered by our courts in

determining whether a U. S. patent has been anticipated

by prior art abroad, to inventions **patented or described

in a printed publication.”’ {Emphasis added.] There is no

dispute that if a GM is a patent at all, only its claims

measure ‘‘the thing patented.’"* Permutit vy. Wadham,

13 F. 2d 454 (6 Cir. 1926). It is also undisputed that the

claims, specifications and drawings of a GM are not printed

or published. If what is patented is not disclosed by the

claims, because of a lack of fullness or clarity, ambiguity,

* The Seventh Circuit correctly recognized that a German petty

patent *‘. . . is not a printed publication.”’ Petitioner suggests

that since the invention disclosed in its claims is not ‘‘ patented

- in a printed publication,” the rule that the claims of GM’s

may be accepted as prior art is inconsistent with Section 102(b).

7

or other defect in draftsmanship, Section 102(b) prohibits

any reliance upon unprinted or unpublished material to

remedy the defect. To do so requires reading into the

statute words which are plainly not there, as the Court of

Appeals has done.

The Seventh Circuit correctly states at page 6 (A7) that

the question to be answered in this case is ‘‘What is ‘pat-

ented’?’’ Its new rule would require the courts to refer

to the unprinted and unpublished specifications and draw-

ings of GM’s ‘‘to determine what it is that the claims

‘patent’ but not to add to what they patent.’’ [Emphasis

in opinion.] At page 7 of its opinion (A8), the court ac-

knowledged that ‘‘it is plainly necessary in this case to re-

sort to the specifications to determine what is ‘patented’ by

the claims,’’ and at pages 9-10 (A10, 11) relies upon unex-

plained drawings. Petitioner urges that its new rule would

require courts in future cases where GM’s are at issue as

prior art to make an independent evaluation of the claims

and the unpublished specifications and drawings in GM’s to

determine ‘‘What is ‘patented’?’’ Its new rule would

introduce ambiguity with respect to the permissible use

and effect of German petty patents in such proceedings,

and is contrary to the established rule that the claims made

and accepted in GM’s measure ‘‘the thing patented.”’

The Seventh Circuit justifies its reliance on the unprinted

and unpublished specifications and drawing in the GM by

explaining at page 7 of its opinion (A8) that it is ‘*plainly

possible to take such resort without increasing the scope

of what is patented by the claims.’’ While it may be

possible to do so where the claims are sufficiently full,

clear, concise and exact to determine what is patented, if

the claims are ‘‘unclear’’ as the Seventh Circuit found here,

reference to and reliance upon unpublished specifications

and unexplained drawings to determine what is ‘patented’

- aT

8

nevessarily enlarges ‘‘the scope of what is patented’ be.

yond that which is revealed in the claims.

Section 102(b) clearly limits the material which can be

considered by our courts in determining whether a U, §,

patent has been anticipated by prior art abroad. It igs

the prerogative of the Congress and not the courts to

amend Section 102(b), if changes are deemed necessary

to allow a broader effect to be given foreign patents. This

is precisely in accord with the rule as established by the

Sixth Circuit in Permutit v. Wadham, supra where the court

stated:

‘‘Several Gebrauchsmuster are relied upon. Clearly

these are not publications. That they are ‘patents’ at

all has been denied . . . but, if they are, their antici-

patory effect is confined to the claim, for that is the

thing ‘patented’. . .’’

And by the Second Circuit in Reeves Bros., Inc. v. U. S.

Laminating Corp., 417 F. 2d 869 (1969).

The proposed new rule of the Seventh Circuit conflicts

with the holding of Reeves Bros., Inc. v. U. 8S. Laminating

Corp., 282 F. Supp. 118, 134-36 (E. D. N. Y. 1968) which

stands for the proposition that the unprinted specifications

of a German petty patent cannot be relied upon to show

anticipation of a U.S, patent. The Court of Appeals con-

strues the Reeves case as calling for ‘‘neither an absolute

rule that GM specifications may never be resorted to, nor

an absolute rule that they may always be resorted to in

interpreting claims.’’ (A6) Petitioner urges that, as a prac-

tical matter, the adoption of the Seventh Circuit rule would

mean that reference to the unpublished specifications and

drawings of a GM would be required in many cases to de-

termine what is ‘patented’ by the claims in a GM, and that

since this is clearly prohibited by Section 102(b), the rule of

the Second and Sixth Circuits is correct.

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9

Undoubtedly, the proposed new rule of the Seventh

Circuit is a major change in the field of patent law. The

overriding public interest in creating clarity in this already

complex area of our law suggests that this Court should

speak with finality on this issue. As to judicial matters,

that power is committed to the Supreme Court. Martin v.

Hunter’s Lessee, 1 Wheat. 304, 4 L. ed. 97 (1816). If the

proposed rule of the Seventh Circuit is allowed to stand,

petitioner suggests that no litigant or potential litigant

will be able to predict with any degree of certainty the

judicial effect as prior art which will be given to a GM

in a patent dispute in the federal courts of the United

States. Where a court of appeals has rendered a decision

in conflict with the decision of another court of appeals in

the same matter, or has decided an important question of

federal law which should be settled by this court, Rule 19

of the Rules of this Court states that a petition for

certiorari may be granted. This is such a case.

B. REASONS: The Court of Appeals Denied Petitioner

Due Process When It Applied a Different Test to

Determine the Effective Date of a Method Patent Than

It Did to Determine the Adequacy of a Public Dis-

closure.

The application which resulted in the granting of peti-

tioner’s method patent was filed on July 23, 1958. Several

years earlier, petitioner supplied its customers with the

taps covered by the method patent, as well as with instruc-

tions as to how the taps shonld be used. Petitioner con-

cedes that its method patent is invalid as a result of such

public disclosure under Section 102(b) of our Patent laws,

unless the patent is entitled under Section 112 to the filing

date of an earlier related product patent application which

preceded the public disclosure. The disclosure made to its

' —_—7

10

customers in June of 1956 was essentially the same dis-

closure made by the petitioner in its product patent appli-

cation filed on April 3, 1956.

Under Section 102(b), the test is that if a public dis.

closure is sufficient to enable a man skilled in the art to

practice the invention, it will invalidate a later-filed patent,

Rich Products Corporation v. Mitchell Foods, Inc., 357 F. 24

176, 180 (2 Cir. 1966); Bros Incorporated v. W. E. Grace

Manufacturing Company, 351 F. 2d 208, 213 (5 Cir. 1965) ;

and McCullough Tool Company v. Well Surveys, Inc., 343

F, 2d 381, 398 (10 Cir. 1965). As a result of the fact that

Section 120 incorporates by reference the disclosure test

of Section 112, the same test must be used to determine

whether an invention shall have the benefit of the date

of an earlier patent application:

“‘The specifications shall contain a written description

of the invention, and of the manner and process of

making and using it, in such full, clear, concise, and

exact terms as to enable any person skilled in the art

to which it pertains, or with which it is most nearly

connected, to make and use the same, and shall set

forth the best mode contemplated by the inventor of

carrying out his invention.’’? [Emphasis added. ]

There is no dispute that in June of 1956, petitioner sup-

plied its customers with the swaging taps covered by its

earlier April patent application and told them how to use

them. The Court of Appeals found at page 13 of its opinion

(A15) that the April application ‘contained essentially a

description of how the tap was to be used rather than a de-

scription of a method of forming threads.’’ But neither did

petitioner supply its customers with ‘‘a description of a

method of forming threads,’’ for it was the product they

needed and instructions as to how to use it, rather than a

detailed description of how the taps would form the metal

threads. Accordingly, essentially the same disclosure was

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=

11

made to petitioner’s customers in June of 1956 as was made

in petitioner’s patent application of April 3, 1956.

The question presented here, therefore, is whether the

same disclosure can be found sufficient to make a patent

invalid under Section 102(b) and insufficient under Section

112 to permit petitioners to have the benefit of an accele-

rated filing date. The answer is that the statutory test

under both Sections is the same and that, therefore, due

process of the law requires that the same test be applied

under both Sections. If the public disclosure in June would

invalidate petitioner’s July 1958 patent application under

Section 102(b), the same disclosure made in its April 3,

1956, application must accelerate the effective date of its

later application. The Court of Appeals erred in not so

finding.

Petitioner urges (1) that the same test for the adequacy

of a disclosure must be applied under both Sections 102(b)

and 112; (2) that under such test its method patent has the

benefit of the earlier filing date of its product patent appli-

cation and is valid; and, (3) that the Court of Appeals

must have erroneously applied different tests under these

Sections to conclude that the disclosure to petitioner’s

customers was sufficient to invalidate the method patent

and that essentially the same disclosure made in petitioner’s

earlier patent application was insufficient to accelerate the

effective date of its method patent.

12

CONCLUSION.

The Court of Appeals’ use of unpublished material to

enlarge the patented subject matter of a Germany petty

patent, an unjustified and unintended broadened interpreta-

tion of 35 U. S. C. 102(b), is directly in conflict with the

established rules of other circuits.

When two statutory sections of the patent laws have the

same test as to the adequacy of a disclosure, the same dis-

closure should have the same effect under either statutory

provision. The failure of the Seventh Circuit to apply

the same test in each instance denied petitioner due proc-

ess of law.

It is respectfully requested that this Petition be granted.

Respectfully submitted,

Howarp T. Markey,

Danie, C. McEacuray,

Parker, Carter & Markey,

8 South Michigan Avenue,

Chicago, Illinois 60603,

Attorneys for Petitioners.

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Al

APPENDIX A.

In THE Unitep States Court OF APPEALS

For the Seventh Circuit.

September Term, 1969—September Session, 1969

ES ee ee Cae Se ee

Nos. 17343, 17344 i

Tae Benpix CorPoRATION, a corpo-

ration of Delaware, and SELLEW

Corporation, a corporation of

Illinois,

Plaintiffs-Appellees | Ap Pea 1 from the

(Cross-Appellants), United States Dis-

> trict Court for the

Eastern District of

Wisconsin.

ee Ry

vs.

Batax, Inc., a corporation of Wis-

consin, and Joun M. Van VLEET,

an individual,

Defendants-A ppellants, i

(Cross-Appellees). 4

EPIL DMT

Gn es

January 30, 1970.

Sao ree

Before CastLe, Chief Judge, Hastines, Senior Circuit

Judge, and Farrcuixp, Circuit Judge.

Hastincs, Senior Circuit Judge. Plaintiff’s predecessor

brought this action charging defendants with infringement

of three of its patents and with appropriation of its trade

secrets. Defendants counterclaimed charging plaintiff with

violations of the antitrust laws.

EDU RY SEAR TN ON te ae

PRES

—

A2

The original plaintiff was Besly-Welles Corporation, an

Illinois corporation. After this suit was commenced its

assets were acquired by Bendix Corporation of Delaware.

Its business is now operated as a division of Bendix. The

defendants are Balax, Inc., a Wisconsin corporation, and

John M. Van Vleet, Balax’s founder and president, a resi-

dent of Wisconsin.

Before trial, plaintiff withdrew its patent No. 2,991,491,

admitting its invalidity due to plaintiff’s own prior public

use. The trial court held plaintiff’s Patent Re. 24,572 valid

and infringed; it held plaintiff’s Pa‘ent No. 3,050,755 in-

fringed but invalid for prior public use by plaintiff; it dis-

missed that portion of the complaint charging defendants

with appropriation of plaintiff’s trade secrets; it dismissed

defendant Van Vleet as an individual defendant; it denied

plaintiff’s request for treble damages and attorneys’ fees;

and it dismissed defendants’ antitrust counterclaim.

In No. 17343, defendants appeal from those parts of

the judgment herein holding Patent Re. 24,572 valid and

infringed and denying relief to defendants on their counter-

claim charging plaintiff with violations of the antitrust

laws. Affirmatively, defendants seek an award of attor-

neys’ fees, a decree finding plaintiff in violation of the

Sherman Act and a remand to determine damages allegedly

suffered by defendants.

In No. 17344, plaintiff appeals from those parts of the

judgment herein holding its Patent No. 3,050,755 invalid;

dismissing that part of the complaint charging defendants

with appropriation of its trade secrets; dismissing Van

Vleet as an individual defendant; and denying plaintiff’s

request for treble damages and attorneys’ fees.

The two remaining patents involved in’ this litigation

both relate to a device known as a fluteless swaging tap.

Patent Re. 24,572, hereinafter referred to as the reissue

—

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A3

patent, covers the tool itself. Patent 3,050,755, hereinafter

referred to as the ’755 or method patent, covers the method

performed by the tool.

A tap is a tool used to form threads on the cylindrical

imer surface of a hole. A swaging tap forms threads

by deforming the metal and displacing it into the form

of the desired thread. A swaging tap, which forms no

chips, is to be distinguished from a cutting tap which

forms threads by cutting away the metal with cutting

teeth. The swaging method is said to be more economical

and easier to perform than the cutting method. Swaging

taps have a longer life than cutting taps. They produce

no metal chips. The costly and time consumming inspec-

tion and cleaning of the work after the job is completed is

thus eliminated.

As found by the trial court, Patent Re. 24,572 is a reissue

of U. S. Patent No. 2,807,813. This tap has a shank and

a threaded section. The threaded section has a cylindrical

portion where the threads are substantially the same diam-

eter and a tapered end portion where the threads are of

reduced diameter. The threads have high spots or lobes

with relieved areas in between these high spots. It is the

lobes that do the actual swaging work since the relieved

areas are out of contact with the material being formed.

When used, the tool is rotated into a hole and the lobes

force their way through the hole. The displaced metal

takes the shape of the tap threads.

The method of the ’755 patent is performed when the

tool of the reissue patent is used in the prescribed manner.

The method claims describe the application of pressure

from the tap threads and the movement of the metal as

it conforms its shape to that of the tap thread.

t

i

f

Katee Rorteaseen

PRIS Se

RRP Get mor aenteRTy

ee Pea

LAGER

A4

Patent Re. 24,572—Vauorry.

Defendants urge several reasons for the invalidity of the

reissue patent. Their first contention is that it is antici-

pated by the 1939 German Gebrauchsmuster Patent

1,455,626 (GM). Section 102(b) of Title 35, U. S. C. A.

provides: ‘‘A person shall be entitled to a patent unless—

* * * (b) the invention was patented or described in a

printed publication in this or a foreign country or in

public use or on sale in this country, more than one year

prior to the date of the application for patent in the

United States * * *.”

A GM is clearly a patent within the meaning of this

section, but it is not a printed publication. American Infra-

Red Radiant Co. v. Lambert Industries, Inc., 8 Cir., 360 F.

2d 977, 991-94, cert. denied, 385 U. S. 920 (1966) ; Permutit

Co. v. Wadham, 6 Cir., 13 F. 2d 454, 458 (1926); Reeves

Bros., Inc. v. United States Laminating Corp., 282 F. Supp.

118, 134-36 (E. D. N. Y. 1968); Permutit Co. v. Graver

Corp., 37 F. 2d 385, 390 (N. D. IIL. 1930), aff’d on other

grounds, 7 Cir., 43 F. 2d 898, 902 (1930), aff’d 284 U. §.

52 (1931) ; and Safety Gas Lighter Co. v. Fischer Bros. &

Corwin, 236 F. 955, 962 (D. N. J. 1916), aff ’d, 3 Cir., 247

F. 1005 (1918).

1. A number of the opinions above cited ably set forth the

nature of a Gebrauchsmuster. The latest such effort is that of

Judge Bartel in Reeves Bros., supra at 134-35: ‘‘[A] Gebrauchs-

muster is registered under the German law after an application

filed in the German Patent Office. If the application meets the

requirements of form and content, the GM is issued without any

novelty search and is accompanied by the publication of an official

notice in the German Official Gazette that it has been so issued.

There is no requirement of nonobviousness in order to obtain a

GM, and its purpose is to enable the applicant to obtain a speedy

protection for a new article and if desirable, to concurrently seek

a regular patent, a procedure which would consume much more

time. After registration the specifications and claims become avail-

able to the public and anyone has free and open access to the same.

wa

Ad

On this basis, all parties agree that only that which is

“patented’’ by a GM may be considered as prior art under

Section 102(b), supra. Subject matter which is ancillary

to, but not a part of, the patented subject matter may not

be considered. The district court so held. The disagree-

ment between the parties concerns the method of determin-

ing what is ‘‘patented’’ by the Gebrauchsmuster in ques-

tion.

The trial court held that a GM ‘‘patents’’ only that which

is disclosed by the bare words of its claims. It relied on

language in Reeves, supra, in holding that it is never per-

missible to look to the specifications of a GM in construing

its claims. The Reeves court had said: ‘‘* * * for anticipa-

tion purposes under Section 102 a GM * * * is a reference

only for what is patented, i.e., for what it claims and not

for what is disclosed in its specifications.’’ 282 F. Supp.

at 136.

Defendants maintain that the claims of a GM are to be

construed in light of its specifications and seek to distin-

guish Reeves. They note that in Reeves a GM was cited as

a reference against a process patent and that a GM is by

definition a patent only on an article and never on a

process. From this they conclude the Reeves court ignored

the specifications only because they referred to a process.

However, the Reeves court clearly recognized that an

The GM was not a printed publication at any time and is referred

to as a utility model. It is limited to a maximum of six years

instead of eighteen years, covers only articles and never can cover

processes as such, and grants to the inventor the exclusive right to

prevent others from making, using or selling his article and also

to recover damages for any infringement. * * *

“By a directive issued to its examiners in 1965, the United

States Patent Office resolved certain prior inconsistent practices

as to the treatment of GMs and stated that GMs may be con-

sidered as patents for anticipation purposes within the purview of

Section 102. Official Gazette of the United States Patent Office.

Nov. 2, 1965, Vol. 820, No. 1.’’ (Footnote omitted.)

A6

article patent may in some cases anticipate a process. Such

would be the case where ‘‘a process in one patent can

produce only one article and that article is definitely

covered by what is claimed in another patent [e.g., in an

earlier GM] * * *. [B]Jut this alone may not be sufficient

to treat the article patent as an anticipation of the process

patent, if many processes are described in the article

patent while only one specific process is described in the

process patent.’’ 282 F. Supp. at 136-37.

The patent in suit in Reeves claimed a method of lami-

nating a sheet of plastic foam to a sheet of fabric by the

application of heat from a gas flame. The GM cited against

it claimed a fabric lined foam material with the fabric

bonded directly to the foam. The specifications of the GM

described the process by which the article could be made

indicating the application of heat from heated rollers, hot

gas, infrared light, or high frequency current.

When the language of Reeves is read in light of these

facts, it is clear to us that it calls for neither an absolute

rule that GM specifications may never be resorted to, nor

an absolute rule that they may always be resorted to in

interpreting the claims. Rather, it is consistent with our

own judgment as to the correct rule. We conclude that the

specifications of a GM may be resorted to for the purpose

of clarifying the meaning of the language used in the

claims, but may not be résorted to for the purpose of add-

ing completely new material to that which is disclosed by

the claims.

For example, in Reeves the GM claims disclosed an

article which could have been produced by several proc-

esses. The court had held that in such a case the article

patent could not anticipate any one of those processes when

cited against a patent specifically claiming one of them.

Therefore, resort to the specifications there to learn in

what manner the claimed article was actually produced

AZ

would have added wholly new matter to the claims. With-

out the specifications, the Reeves claims could anticipate

no process, but with them, the claims would anticipate a

process as well as an article. Reeves was thus a particu-

larly clear case of specifications adding new matter to

what was ‘‘patented’’ by the claims, rather than simply

giving meaning to the words of the claims for the purpose

of determining what was ‘‘natented’’ by them.

Each ease will, of course, turn on its own facts. In each

case the question will be ‘‘ What is ‘patented’?’’ The speci-

fications of the GM may be resorted to if necessary to

clarify the meaning of the words of the claim—to deter-

mine what it is that the claims ‘‘patent’’ but not to add to

what they patent.

Thus, the double question here is whether resort to the

specifications is necessary to determine what is patented

and whether such resort may be taken without increasing

the scope of what is patented.

The claims of the GM cited against the reissue patent

in suit are:

‘<1, Thread pressing tap for the chipless produc-

tion of inner threads, characterized in that the thread

tap (a) provided with a continuous, é.e., uninterrupted

thread along the circumference of its thread cross sec-

tion (b, ¢, d) is undulatingly formed over its entire

length or partly, and, consequently, has continuous or

interrupted depressions (f, f’, f”) extending longi-

tudinally axially, as well as spirally axially or other-

wise, which though they recede with respect to the

outer circumference (g, 2, &”), nevertheless have the

thread extend over their circumferential surface in the

profiling of the thread to be cut and otherwise along

the circumference of the tap.

“9. Thread pressing tap for the chipless produc-

tion of inner threads in accordance with claim 1,

characterized by the shape, disposition and arrange-

ment reflected by the drawing and the specification.”’

PRT ICEL YPN NOR IRD, ay "

PEL EER LG IEE SIE NCE NOTE LLG LOPE OLE LONE MEI CELE LEGGY LE GE LILI ETE IE AS TIT

aca Bs se, — alent

A8

These claims make clear that what is patented is a

swaging tap, i.c., a ‘‘tap for the chipless production of

inner threads.’’ They also make clear that the patented

tap is of a particular form and shape—one ‘characterized

by the shape, disposition and arrangement reflected by the

drawing and the specification.’’ However, by this cross

reference, the words of the claims leave unclear exactly

what the ‘‘shape, disposition and arrangement”’ of the

patented article is meant to be. Thus, it is plainly neces-

sary in this case to resort to the specifications to deter-

mine what is ‘‘patented’’ by the claims.

It is just as plainly possible to take such resort without

increasing the scope of what is patented by the claims. The

claims clearly profess to patent a particular article of a

particular shape, disposition and arrangement. They also

clearly indicate how such particular shape, disposition and

arrangement is to be determined. Claim 2 is an obvious

incorporation by reference and makes the specifications

and drawings as much a part of the claim as if they were

reproduced verbatim in the claim. Without such an incor-

poration, Claim 2 would be meaningless.

The trial court completely disregarded Claim 2. It

reasoned that to give it any effect would undermine its

conclusion as to the proper construction of a Gebrauchs-

muster: ‘‘Claim 1 is the only real claim of the GM. Claim

2 incorporates by cross reference ‘the shape, disposition

and arrangement reflected by the drawing and the speci-

fication.’ However, to allow such a cross reference would

defeat the limited use which this court has concluded must

be made of the GM.”’

We do not agree that allowing the obviously intended

cross reference to the specifications here defeats the limi-

tations to which Gebrauchsmusters are admittedly subject.

We allow such cross reference not to increase the scope of

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_—

A9

what is patented by the Gebrauchsmuster claims but only

to accomplish the task at hand of determining what it is

that those claims patent.

The use of GM specifications which we here find proper

is fully supported by the German practice. Under that

practice, while claims are frequently used, they are not

required, and the entire specification will be construed in

determining what is patented. The advisory explanations

accompanying the German Regulations regarding ‘‘the

application for Gebrauchsmuster”’ provide:

‘Indication of Novelty.

According to sec. 2 paragraph 2 of the statute, the

application must specify ‘what purpose of work, or

utility, the new form or device is intended to serve.’

Since this indication is of importance for the range of

the legal protection corresponding with the recording,

applicant will do well in many cases, even tho the

law does not prescribe the setting of a protection

claim, to summarize separately from the description,

in the type of construction of a patent claim, the

legally protectable characteristics of the model.’’

Patents and Gebrauchsmuster in International Law,

Emerson Stringham, Pacot Publications, Madison,

Wisconsin, 1935, p. 248.

Stringham comments:

‘*Seope of protection involves much the same prob-

lems which arise everywhere in patent law. The

German statute requires no claim for Gebrauchs-

muster. The tendency, during a decade or so, of the

Reichsgericht to hold itself not bound by the statutory

claim of the long-term patent, finds freer play with

Gebrauchsmuster; * * *.’’ Id. at 255.

Having concluded that what is patented by Gebrauchs-

muster Patent 1,455,626 should have been determined by

construing its claims in the light of its specifications

rather than on the bare words of the claims, it becomes

Al0

necessary to determine whether that patent, properly con-

strued, does anticipate, and thus invalidate, plaintiff's

Patent Re. 24,572 in suit.

Plaintiff’s expert testified, and the district court found,

that on its construction of the GM, the GM lacked several

elements claimed by plaintiff’s reissue patent. The first

element found wanting was a ‘‘continuous thread * * * of

substantially equal depth taken in all planes intersecting

the axis of said tool longitudinally thereof * * *.” This

element is clearly present when the claims of the GM are

read in light of the specifications and drawings. Claim 1

of the GM calls for ‘‘a continuous, i.e., uninterrupted

thread along the circumference of [the tap’s] thread cross

section (b, c, d) * * *,’’ and specifically notes that the

thread continues through the ‘‘depressions (f, Py, &)"

the tool which ‘‘have the thread extend over their circum-

ferential surface in the profiling of the thread to be

cut * * *.”” The GM specifications note that the entire

thread shaft is ‘‘continuously covered with a thread which,

as far as its profile and its pitch are concerned, is equiva-

lent to the thread to be cut.’? Figure 3 of the GM drawing,

reproduced below clearly shows a uniform tooth depth.

fives vue se

a

-d

Two further elements the trial court found wanting in

the GM relate to the tapered end portion of plaintiff’s tap.

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a

All

One element describes the tapered portion and the second

element provides for a continuous thread between the

tapered portion and the cylindrical portion of the tap.

Once again, these elements are clearly disclosed by the

GM, properly construed. Claim 1 of the GM calls for an

‘“‘yninterrupted thread along the circumference of [the

tap’s] thread cross section Aa ***.” Fee required

reference to ‘‘(b, c, d)’’ on the GM drawings shows that

the thread cross section of the GM is indeed tapered and

confirms that the thread is continuous between the tapered

and the cylindrical portions of the thread cross section.

Plaintiff does not contest the fact that these two elements

are contained in the GM if reference may be had to the

specifications and drawings.

The final element found wanting in the GM by the trial

court relates to making the tap of appropriate size for the

drilled hole it is going to tap, ‘‘the extreme pitch diameter

of the thread on the cylindrical portion being generally of

the order of the diameter of the cylindrical surface to be

threaded.’? What this means is’ that the tap should not be

used in a hole the size of the maximum crest diameter

since it would not form any threads nor should it be used

in a hole as small as the root diameter since there would be

no space for the metal displaced from the walls of the hole

to flow; rather it should be used in a hole about midway

between the two. The GM drawing, Fig. 4, shows a pitch

diameter slightly larger than the hole to be tapped, but

appears to be ‘‘of the order of the diameter of the hole.’’

In any event, the GM specification contemplates that the

pitch diameter be adequate so that metal may be displaced

inwardly. Furthermore, we think it would be obvious to

one using such a tap that it would have to be used in a

hole small enough to allow the swaging lobes to come in

eontact with the metal to be swaged and large enough to

permit a space between the inner surface of the metal and

—e

Al2

the root of the tap into which excess metal can be dis-

placed as the thread is formed.

Thus we conclude that all claims of the plaintiff’s re.

issue patent can be found in the Gebrauchsmuster Patent

1,455,626 which was issued more than one year prior to

plaintiff’s application for its patent. We hold that the

claims of plaintiff’s Patent Re. 24,572 are invalid because

of anticipation by the 1939 GM.

The district court also erred in concluding that the

reissue patent was not invalid for obviousness in view of

the prior art under 35 U. S. C. A. § 103.2 This error re.

sulted from the court’s error of law as to the interpreta-

tion of the Gebrauchsmuster. Consistent with its interpre-

tation of the GM for purposes of anticipation, it held that

only the claims of the GM could be referred to on the

obviousness issue. We have held that, on the facts of this

case, the specifications as well as the claims are part of the

prior art. In view of this prior art, we hold that the reissue

patent is also invalid under Section 103.

Defendants urged several other grounds for the in-

validity of the reissue patent in the trial court. All were

rejected. Among these grounds were contentions that the

reissue patent was anticipated by certain German litera-

ture and by various sales of taps in this country and that

the reissue was obvious in light of the prior art taught by

2. ‘*§103. Conditions for patentability; non-obvious subject

matter

**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 between the subject matter sought

to be patented and the prior art are such that the subject

matter as a whole would have been obvious at the time the

invention was made to a person having ordinary skill in the

art to which said subject matter pertains. Patentability shall

not be negatived by the manner in which the invention was

made.’

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Al3

such literature and earlier tools. Since we have concluded

that the reissue patent is invalid under the GM prior art,

we need not reach these other contentions.

Patent Re. 24,572—INFRINGEMENT.

Since we have concluded that the reissue patent is

invalid, it follows that the district court’s determination

that defendants’ tap infringes it must be reversed. An

invalid patent cannot be infringed. Scovill Mfg. Co. v.

Goldblatt Bros., Inc., 7 Cir., 362 F. 2d 777, 781 and cases

cited therein.

We note, however, that had we found the reissue patent

valid, the finding of infringement would have been affirmed.

The district court found infringement under the doctrine

of equivalents. Graver Tank & Mfg. Co., Inc. v. Linde

Air Products Co., 339 U. S. 605 (1950). The find-

ing of equivalency is one of fact and will not be set

aside unless clearly erroneous within the meaning of

Rule 52(a), Federal Rules of Civil Procedure. Graver

Tank, supra at 609-10. We conclude that the finding here

is supported by the record and defendants do not seriously

contend that it is not.

However, defendants maintain that there is a file

wrapper estoppel in the instant case which precludes the

application of the doctrine of equivalency. The district

court concluded there was no such estoppel here. It

appears to us that the court reviewed both relevant files

and applied the correct law in finding no estoppel. After

careful consideration, we are not persuaded by defendants’

contentions to the contrary.

; —

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Patent No. 3,050,755—Va.upiry.

The district court held plaintiff’s ’755 method patent

invalid for plaintiff’s own sales and the consequent public

use more than one year prior to the application for

patent. 35 U.S. C. A. § 102(b), supra. It found that when

plaintiff’s tap is used in the recommended manner, it

inherently practices the 755 method. Plaintiff’s taps were

on sale and in public use in June, 1956. The application

which resulted in the ’755 patent was not filed until July

23, 1958.

Plaintiff concedes that ‘‘the District Court’s holding of

invalidity of the ’755 patent because of such sales * * *

is correct, unless the ’755 patent is entitled to the April

3, 1956 filing date of the first filed swaging tap applica-

tion.’’ (Emphasis added.) It claims the earlier filing date

by virtue of 35 U. S. C. A. § 120° which provides that an

application for an invention shall have the benefit of the

filing date of an earlier application under certain cir-

cumstances.

To come within the purview of Section 120, the later

application must 1) disclose an invention disclosed in the

manner provided in 35 U. S. C. A. §112 in an earlier

application; 2) be by the same inventor; 3) be filed before

the patenting of the earlier application; and 4) contain

a specific reference to the earlier application. Technicon

3. ‘*§120. Benefit of earlier filing date in the United States

‘*An application for patent for an invention disclosed in

the manner provided by the first paragraph of section 112 of

this title in an application previously filed in the United

States by the same inventor shall have the same effect, as to

such invention, as though filed on the date of the prior appli-

eation, if filed before the patenting or abandonment of or

termination of proceedings on the first application or on an

application similarly entitled to the benefit of the filing date

of the first application and if it contains or is amended to

contain a specific reference to the earlier filed application.”

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aan

Al5

Instruments Corp. v. Coleman Instruments Corp., 7 Cir.,

385 F. 2d 391, 393 (1967).

The district court found the first condition was not satis-

fed in the instant case for the reason that the earlier

application did not disclose the invention in the manner

required by Section 112, which, in relevant part, pro-

vides: ‘‘The specification shall contain a written descrip-

tion of the invention, and of the manner and process

of making and using it, in such full, clear, concise, and

exact terms as to enable any person skilled in the art

to which it pertains, or with which it is most nearly con-

nected, to make and use the same, and shall set forth

the best mode contemplated by the inventor of carrying

out his invention.’’

The disclosure of the method invention in the first filed

swaging tap application of April, 1956, consisted of a

single paragraph which contained essentially a descrip-

tion of how the tap was to be used rather than a descrip-

tion of a method of forming threads. This method was

set out in detail for the first time in the 1958 method

patent application and covered seven paragraphs in addi-

tion to the one contained in the 1956 application. The

district court held that when these descriptions are com-

pared, ‘‘it becomes reasonably clear that the disclosure

of the original patent does not satisfy the requirements

of § 112.”’

Plaintiff, however, asserts that the earlier application

did disclose the method for the reason that ‘‘the mere

disclosure of a device which inherently performs a func-

tion in a patent application also by necessity discloses

that function * * *.’? It relies mainly on Technicon Instru-

ments Corp. v. Coleman Instruments, Inc., 255 F. Supp.

630. 640-41 (N. D. Ill. 1966), aff’d., 7 Cir., 385 F, 2d 391,

—

A16

393 (1967). Other cases cay be cited for this same general

proposition.‘

However, these cases do not support plaintiff’s conten.

tion that the ’755 patent is entitled to the filing date of

the first filed tap application. They deal with a basically

different situation. They are relevant when explanatory

material is added to a pending application to clarify the

invention claimed in such application. Typically they deal

with amendments to applications which have been rejected

under 35 U. S. C. A. $132.5 That section provides for

reexamination of applications after amendment but states:

‘*No amendment shall introduce new matter into the dis-

closure of the invention.’’

In essence, the issue under consideration in the instant

cease is whether there was adequate disclosure in the orig-

inal tool application to support the separate and distinct

method invention. Here plaintiff does not seek merely

the right to clarify overly broad or ambiguous claims.

4. Weller Mfg. Co. v. Wen Products, Inc., 7 Cir., 231 F. 2d

795, 799 (1956); Binks Mfg. Co. v. Ransburg Electro-Coating

Corp., 7 Cir., 281 F. 2d 252, 257 (1960) : Illinois Tool Works, Ine.

v. Continental Can Company, Inc., 273 F. Supp. 94, 101-04, aff’d,

7 Cir., 397 F. 2d 517, 520 (1968) ; Oelbaum v. Lovable Co., 211

F. Supp. 594, 602 (S. D. N. Y. 1962); Baldwin-Lima-Hamilton

Corp. v. Tatnall Measuring Systems Co., 169 F. Sapp. 1, 21 (E. D.

Pa. 1958) ; Interchemical Corp. v. Watson, 145 F. Supp. 179, 182,

aff’d, D. C. Cir., 251 F. 2d 390 (1958). See also Marconi Wireless

Co. v. United States, 320 U. S. 1, 34 (1942). But cf. Schriber-

Schroth Co. v. Cleveland Trust Co., 305 U. S. 47, 58-59 (1938).

5. ‘*§ 132. Notice of rejection; reexamination

‘Whenever, on examination, any claim for a patent is re-

jected, or any objection or requirement made, the Commis-

sioner shall notify the applicant thereof, stating the reasons

for such rejection, or objection or requirement, together with

such information and reference as may be useful in judging

of the propriety of continuing the prosecution of his applica-

tion ; and if after receiving such notice, the applicant persists

in his claim for a patent, with or without amendment, the

application shall be reexamined. No amendment shall intro-

duce new matter into the disclosure of the invention.’’

Al7

Rather, it seeks to use the concept of ‘‘inherent disclosure’’

in a manner which will result in extending its monopoly

beyond the limits of the originally claimed invention.

We conclude, under the record before us, that the in-

herent disclosure relied upon by plaintiff is not adequate

to meet the disclosure requirements of Section 112, supra.

It necessarily follows that the requirements of Section

120, supra, have not been met.

Accordingly, we hold the finding of the district court

that plaintiff’s method patent is not entitled to the April,

1956, filing date of the first filed swaging tap application

is not clearly erroneous. We hold that plaintiff’s Patent

No. 3,050,755 is invalid by reason of its prior public use

and plaintiff’s sales in June, 1956.

Parent No. 3,050,755—INFRINGEMENT.

Again we note that an invalid patent cannot be infringed

and hold the invalid method patent is for that reason not

infringed by defendants’ tap. Scovill Mfg., supra.

However, if the method patent were valid, defendants’

tap would infringe. The district court so held applying

the doctrine of equivalency. As stated above, the finding

of equivalency is one of fact and our review is limited

by Rule 52(a), Federal Rules of Civil Procedure.

Claims 1 and 2 of the method patent describe a tap

capable of applying pressure at ‘‘pressure areas * * *

equally circumferentially spaced’’ on the cylindrical sur-

face being swaged. The district court rejected defendants’

contention that since their tap is incapable of applying

such pressure, it cannot infringe. The court concluded

that the only reason for this was the presence on defend-

ants’ tap of a groove which caused its lobes to be unequally

spaced. This, the court found, made no difference in the

operation of defendants’ tap which would prevent it from

A18 |

infringing plaintiff’s method patent. This conclusion js

amply supported by testimony of plaintiff’s expert which

the court found uncontradicted by any testimony offered

by defendants.

In the trial court, defendants further urged that Claims

1 and 3 require a tap whose threads along the whole

of the cylindrical section apply equal pressure intensity

as that applied by the last pressure area on the tapered

lead section of the tap. They assert their tap is incapable

of applying pressure in this manner since only the first

lobe of its cylindrical section does any work.

The district court held that defendants were incorrectly

interpreting the language of the claim. It held that when

the claims were read in light of the specifications, they

meant ‘‘that the pressure areas in the cylindrical section

are equal in size and in pressure-applying ability as the

last lobe on the tapered section * * * not * * * that all

the threads on the cylindrical section actually apply the

same pressure as the last lobe on the tapered section.”

We agree that this is the correct interpretation of the

claim language. When the claims of the method patent

are so interpreted, the court’s finding of infringement by

equivalency is not clearly erroneous.

DEFENDANTS’ CoUNTERCLAIM—ALLEGED ANTITRUST

VIOLATIONS.

Defendants’ counterclaim to plaintiff’s infringement suit

charges two violations of federal antitrust laws. First,

defendants contend that plaintiff violated Section 2 of

the Sherman Act by ‘‘illegal procurement and enforce-

ment of patents.’? They rely upon Walker Process Equip-

ment, Inc. v. Food Machinery & Chemical Corp., 382 U. 8S.

172 (1965). That reliance is misplaced in this case. Walker

decided a purely legal issue, as the following passages

from the opinion indicate:

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-

A19

‘‘We have concluded that the enforcement of a

patent procured by fraud on the Patent Office may

be violative of §2 of the Sherman Act provided the

other elements necessary to a §2 case are present.

(id. at 174.)

+

‘“ As the case reaches us, the allegations * * * as to

the fraud practiced * * * [by the patentee] * * * are

taken as true. (Id. at 174-75.)

+

«<* * * Tt must be remembered that we deal only

with a special class of patents, i.e., those procured

by intentional fraud. (Jd. at 176.)

*

* ” * *

«* * * [The patentee’s] good faith would furnish

a complete defense. This includes an honest mistake

as to the effect of prior installation upon patentability

—so-called ‘technical fraud.’ ’’ (Id. at 177.)

Thus to prevail here, defendants must prove, what was

assumed as true in Walker, that any misstatements by

plaintiff in its patent applications were the products

of intentional fraud and not good faith mistake. See

generally, Antitrust Developments—1955-1968—S upple-

ment to Report of the Attorney General’s National Com-

mittee to Study the Antitrust Laws, 1955, pp. 167-69 (1968).

The district court specifically found that defendants had

not met their burden of proving fraud on the patent office

by clear and convincing evidence as required in Armour &

Co. v. Wilson & Co., 7 Cir., 274 F. 2d 143, 148 (1960). Our

examination of the record leads us to conclude that such

finding is not clearly erroneous and thus we accept it.

Accordingly, the conclusion of the district court that this

claim of antitrust violation is without merit should be

approved.

Defendants next urge that even if all of plaintiff’s

patents were valid, plaintiff would be guilty of violations

——

A20

of Sections 1 and 2 of the Sherman Act for the reason

that they have misused their patents to extend the patent

monopoly beyond the scope permitted by the Constitution

and the Congress.

It is clear that the patent monopoly is one strictly

limited and that contracts and agreements extending its

scope may violate federal antitrust laws. United States

v. Univis Lens Co., Inc., 316 U. S. 241, 250 (1942). As

stated by the Supreme Court, United States v. Masonite

Corp., 316 U. S. 265, 277 (1942): ‘‘The owner of a patent

cannot extend his statutory grant by contract or agree-

ment. A patent affords no immunity for a monopoly not

fairly or plainly within the grant. * * * [I]t will not do

to say that, since the patentee has the power to refuse a

license, he has the lesser power to license on his own

conditions.’’

Defendants assert that plaintiff has ‘‘blanketed’’ 75%

of the swaging tap market and ‘‘smothered most competi-

tion’? by means of sales and licensing agreements with

its competitors. The licensing agreements give competitors

the right to make and sell swaging taps. The sales agree-

ments give other competitors the right to buy taps and

to become licensees at their option. Each agreement con-

tains irrevocable convenants binding the purchaser or

licensee never to contest the validity of plaintiff’s patents,

even if the agreement is terminated. Defendants contend

that this network effectively excludes them from 75%

of the swaging tap market because no swaging tap user

bound not to contest the validity of plaintiff’s taps can

afford to risk the possibility of an infringement suit by

buying swaging taps from defendants.

The district court found no merit in this claim saying,

inter alia, ‘‘* * * there has been no sufficient showing of

an illegal combination to restrain trade. By dint of its

valid patent Re. 24,572, the plaintiffs were entitled to the

_

A21

limited protection afforded under the patent laws. This

included the right to license others to manufacture the

patented tap. It is inappropriate to denominate this con-

duct as ‘conspiratory’ or ‘monopolistic’.’”’

In this rather summary fashion the trial court brushed

aside the charge that plaintiff had violated Sections 1 and

9 of the Sherman Act, finding that United States v. Mason-

ite Corp., 316 U. S. 265 (1942), was not applicable.

While it is true that a valid patent does afford some

‘‘Jimited protection,’’ including ‘‘the right to license others

to manufacture the patented tap,’’ this is no answer to

the thrust of defendants’ contention that the licensor may

not thereby forever preclude the licensee from challenging

the validity of the patent. By requiring such a condition

in the license or sales agreement, plaintiff may have

placed itself in the position of unlawfully exceeding the

protected area.

Further, subsequent to the judgment of the district

court under consideration here, the Supreme Court in

Lear, Inc. v. Adkins, 395 U. S. 653 (June 16, 1969), at

668-671 overruled the holding of Automatic Radio Manw-

facturing Co., Inc. v. Hazeltine Research, Inc., 339 am %

827, 836 (1950), insofar as it invoked a legally implied

estoppel to deny a licensee the right to challenge the

validity of his licensor’s patent in a suit for the collection

of royalties. The Court’s decision is rationalized almost

exclusively in terms of ‘‘the strong federal policy favor-

ing free competition in ideas which do not merit patent

protection.”’ Id. at 656.

The Court concluded that even a good-faith patentee-

licensor should not be given the benefit of the estoppel

doctrine since even in such cases the strong public policy

reflected in the ‘‘federal law [that] requires that all ideas

in general circulation be dedicated to the common good

A22

unless they are protected by a valid patent’’ overrides the

equities of the licensor. The Court said: ‘‘Surely the

equities of the licensor do not weigh very heavily when

they are balanced against the important public interest in

permitting full and free competition in the use of ideas

which are in reality a part of the public domain. Licensees

may often be the only individuals with enough economic

incentive to challenge the patentability of an inventor's

discovery. If they are muzzled, the public may continually

be required to pay tribute to would-be monopolists without

need or justification.’’ Id. at 670.

The Court then went on to hold that the licensee would

not be required to pay royalties accruing before an adjudi-

eation of invalidity even though that is what the express

contract of the parties provided. Again the Court found

such a result might frustrate federal policies favoring free

competition. Id. at 673-674.

From all this we can only conclude that the right to estop

licensees from challenging a patent is not part of the

“limited protection’’ afforded by the patent monopoly.

Furthermore, the reason is that it creates a danger of un-

warranted monopolization. Such danger may be even

greater here than in the usual licensee-estoppel case for the

reason that in the instant case the licensor sought to create

an irrevocable estoppel, not one merely extending during

the life of the licensee and sales agreements.

The parties did not address themselves to the relevance,

if any, of Lear in the present appeal, and, of course, it

could not have been considered by the district court. Under

these circumstances, we feel it should be first presented to

the trial court for its consideration.

In light of our holding that Patent Re. 24,572 is invalid

and the recent Supreme Court decision in Lear, we have

—s

eee a

Se ee

A23

concluded that the portion of the judgment below dismis-

sing defendants’ antitrust counterclaim should be vacated

and the case remanded for reconsideration of that issue.

Orner Issues.

In addition to its infringement claims, plaintiff also

charges defendants with appropriation of its trade secrets.

The district court carefully applied the governing Wiscon-

sin law to the unfair competition claim by reason of its

diversity jurisdiction. Erie R. R. v. Tompkins, 304 U. 8.

64 (1938). It concluded that while the information dis-

closed by plaintiff constituted trade secrets, no confidential

relationship existed between the parties. Such a relation-

ship is required to state a cause of action under Wisconsin

law. Abbott Laboratories v. Norse Chemical Corp., 33

Wis. 2d 445, 147 N. W. 2d 529 (1967).

The record fully supports this finding and the court’s

conclusion that plaintiff did not sustain its burden of prov-

ing defendants appropriated trade secrets. The court noted

plaintiff took no adequate precautions to protect its trade

secrets from the defendants whom it should have regarded

as potential competitors in the tap manufacturing business.

The court specifically found there was not sufficient testi-

mony to establish the existence of a joint venture which

plaintiff now urges as the basis for the required confidential

relationship. We agree and hold defendants are not liable

for appropriation of plaintiff’s trade secrets.

Plaintiff claims the trial court erred in dismissing Van

Vleet as an individual defendant and in denying its request

for treble damages and attorneys’ fees. Defendants, on

appeal, seek an award of their attorneys’ fees.

We have carefully considered these issues and the record

pertinent thereto and find that each of such claims is with-

ie,

A24

out merit. The trial court did not err in so ruling and we

do not find adequate grounds for making an award of at-

torneys’ fees to defendants.

In sum, on consideration of the foregoing, we conclude: |

In No. 17343, that part of the judgment of the district

court holding Patent Re. 24,572 to be valid and infringed

is reversed; that part of the judgment dismissing defend-

ants’ antitrust counterclaim is vacated and set aside and

this cause is ordered remanded to the district court for a

reconsideration of such counterclaim; and defendants’

claim for attorneys’ fees is denied.

In No. 17344, the judgment of the district court is

affirmed.

Reversep 1s Parr.

VacaTep 1x Part anp RemManpep.

AFFIRMED IN Part.

A25

APPENDIX B.

* © (Caption No. 64C-170) * °

OPINION.

The plaintiffs have charged the defendants with infringe-

ment of U. 8. Patents Re. 24,572 and 3,050,755. In addi-

tion, the defendants are charged with appropriation and

use of plaintiffs’ trade secrets. The original plaintiff

was Besly-Welles Corporation, an Illinois corporation. The

defendants are Balax, Inc., a Wisconsin corporation, and

John M. Van Vleet, an individual and a resident of Wis-

consin. The court has jurisdiction under the patent laws

of the United States.

After the suit was commenced, the assets of Besly-Welles

were acquired by the Bendix Corporation, and the name

was changed to Sellew Corporation. A new corporation,

Besly-Welles, was also organized under the laws of the

state of Delaware; all of the assets and patent of Sellew

were transferred to this new company. The court will

refer to the plaintiffs collectively as Besly.

The defendants have alleged, in addition to non-infringe-

ment of each patent, that both are invalid for several

reasons. The individual liability of Van Vleet is denied.

The defendants also have entered a counterclaim charging

the plaintiffs with violation of the antitrust laws.

Both patents in suit relate to a device known as a flute-

less swaging tap. The reissue patent (Re. 24,572) covers

the tool itself and the 3,050,755 patent is concerned with

the method performed by the tool. The tools involved in

this litigation are used to form internal threads in metal.

A common use would be to form the internal threads in a

—T

A26

nut so that a bolt may be inserted. Prior to the develop-

ment of the particular type of tool in suit, devices known

as cutting taps were used to carry out this function.

The cutting or fluted type of tap actually removes por-

tions of the metal to form the threads, whereas the taps

in suit ‘‘swage’’ or displace the metal surrounding the

hole into which the tap has been inserted. This method is

said to be more economical and easier to perform. The

taps have a longer life than cutting taps and there are

no metal chips to remove when the job is completed.

Patent Re. 24,572 is a reissue of U. S. Patent 2,807,813.

This tap has a shank and a threaded section. The threaded

section has a cylindrical portion where the threads are

substantially the same diameter and a tapered end portion

where the threads are of reduced diameter. The threads

have high spots or lobes with relieved areas in between

these high spots. It is the lobes that do the actual swaging

work since the relieved areas are out of contact with the

material being formed. When used, the tool is rotated

into a hole and the lobes force their way through the hole.

The displaced metal takes the shape of the tap threads.

The ’755 patent will also be referred to by the court as

the method patent. The method of this patent is performed

when the tool of the reissue patent is used in the pre-

scribed manner. The method claims describe the applica-

tion of pressure from the tap threads and the movement

of the metal as it conforms its shape to that of the tap

thread.

PRESUMPTION oF VALIDITY.

Every patent is presumed valid. The burden of estab-

lishing the invalidity of a patent rests with the party

asserting it. 35 U.S. C. § 282. This statutory presumption

‘tis only overcome by clear and cogent evidence of invalid-

A27

ity’. Ortman v. Maass, 391 F. 2d 677, 681 (7th Cir. 1968) ;

Leach v. Rockwood & Co., ........... eae (7th Cir. 1968).

This presumption of validity has been attributed to the

technical and legal expertise of the patent office. See

Technicon Instruments Corp. v. Coleman Instruments, Inc.,

955 F. Supp. 630 (N. D. Ill. 1966). However, this presump-

tion can be weakened by introduction of prior art which

was not before the patent office. Leach v. Badger North-

land, Inc., 385 F. 2d 193 (7th Cir. 1967) ; A R Ine. v. Electro-

Voice, Inc., 311 F. 2nd 508, 512 (7th Cir. 1962).

Is Patent Re. 24,572 Va.ip?

The defendants attack the validity of the reissue patent

under 35 U.S. C. § 102(b).

‘6§ 102. Conditions for patentability; novelty and

loss of right to patent.

A person shall be entitled to a patent unless—

(b) the invention was patented or described in a

printed publication in this or a foreign country or in

public use or on sale in this country, more than one

year prior to the date of the application for patent

in the United States, or .. .”’

The defendants have cited five prior references which

are alleged to be anticipatory under the above section :

1. Three are German references, and they concern a tap

produced by Ernst Reime. They are the Gebrauchsmuster

(hereinafter referred to as GM), the Klepzigs Anzeiger

and the Noris catalogue. It is claimed that the German

references are anticipatory because the invention was

patented and described in a printed publication in a for-

eign country.

2. The other two references are drawings and taps

produced from those drawings by Pratt & Whitney and

Detroit Tap & Tool. The defendants claim that the tools

A28

made by these two companies were in public use or on

sale more than one year prior to the application for the

reissue patent.

Anticipation must be shown by clear and convincing

evidence. The burden is on the party seeking to have the

patent declared invalid. Illinois Tool Works, Inc. v. Con-

tinental Can Company, 273 F. Supp. 94 (N. D. Ill. 1967),

affirmed at ........... F. 2d ......... (7th Cir. 1968). In the Illinois

Tool Works case, the trial court stated that the test of

anticipation is framed in terms of identity between the

prior device and the patented invention; that the dis-

closure in the prior art must be of a thing substantially

identical with the claimed invention. The defense of antici-

pation was considered in the recent cases of Shea v. Blaw-

Knox Co., 388 F. 2nd 761 (7th Cir. 1968) and Amphenol

Corporation v. General Time Corporation, —..... F. 2d

(7th Cir. 1968). In the latter case, the court said:

‘* As a rule, in order to have anticipation, all of the

elements of the patented device or their equivalents

must be found in a single prior device. Firestone v.

Aluminum Co. of America, 6 Cir. 1960, 285 F. 2nd 928,

930; Allied Wheel Products v. Rude, 6 Cir., 1953, 206

F. 2d 752, 760. But it is sufficient if the general aspects

are the same and the difference in minor matters is

only such as would suggest itself to one of ordinary

skill in the art. I Walker on Patents (Deller, 2d ed.)

§ 77 at page 363, citing Model Bottling Machinery Co.

v. Anheuser-Busch Brewing Assn., 8 Cir., 1911, 190

Fed. 573, 579, cert. den. 223 U. S. 732, 32 S. Ct. 528.”

In the Illinois Tool Works case, the district court stated

that it was not proper to combine various prior art refer-

ences with regard to the defense of anticipation. As that

court said on page 106:

‘‘A patent or publication ‘is to be measured as

anticipatory, not by what might be made out of it,

but by what it clearly and definitely discloses.’ ’’

an -. ace em -e55e 6a See 6 4Ee@ 6 -e—eame eer, OF re re

A29

The court will therefore consider each of the prior refer-

ences cited separately to see if any of them anticipates

the reissue patent’s subject matter.

The Gebrauchsmuster is a lesser type of German patent

issued for petty or useful models and designs. There is

no requirement of non-obviousness in order to obtain a

GM, and its purpose is to enable the applicant to obtain

speedy protection for a new article. After registration,

the specifications and claims become available to the public.

See Reeves Brothers, Inc. v. U. S. Laminating Corp., 157

USPQ 235 (E. D. N. Y. 1968). It has been stated that a GM

can be used as references as prior patents, but not as prior

printed publications. Manual of Patent Examining Pro-

cedure, § 901.05(b), 3rd ed. (Rev. Oct. 14, 1967). Since a

GM qualifies for anticipation only as a foreign patent, its

disclosure is limited to its claims, and its specifications

cannot be used. The Reeves court discusses several cases

in regard to the anticipatory effect of a GM and concludes

as follows on page 250:

‘‘116] The Court concludes that for anticipation pur-

poses under Section 102 a GM, which is a foreign

patent but not a printed publication, is a reference

only for what is patented, i.e., for what it claims and

not for what is disclosed in its specifications. This is

consistent with the language of Section 102(a) and (b)

which juxtaposes ‘patented * * * in a foreign country’

with the phrase ‘described in a printed publication in

*** 5 foreign country’. To permit the effect of such

a foreign patent to extend beyond what is actually

patented, would appear to indirectly effectuate a form

of use and knowledge in a foreign country which is

not statutorily allowable as an anticipatory reference

to an American patent.’’

For a contrary position the defendants cite the case of

American Infra-Red Radiant Co., Inc. v. Lambert Indus-

tries, Inc., 360 F. 2d 977 (8th Cir. 1966); there the court

; —

A30

used the GM as a reference for what was disclosed in

its specifications as well as its claims. However, in that

case, the GM was being used to invalidate a patent under

35 U. S. C. § 102(d) which relates to the invention having

been patented by the applicant in a foreign country

more than one year before filing for application in the

United States. The court stated that if an applicant can

use his foreign patent to obtain the benefit of an earlier

filing date to establish its priority under 35 U. S. C. § 119,

the applicant should also be subject to the disadvantages

imposed under §102(d). This court concludes that the

holding of the Infra-Red Court as regards use of a GM as

a prior reference is not applicable to the case at bar.

The Reime GM shall be used by this court only for what is

disclosed in its claims.

Claim 1 is the only real claim of the GM. Claim 2 incor-

porates by cross reference ‘‘the shape, disposition and

arrangement reflected by the drawing and the specifica-

tion.’” However, to allow such a cross reference would

defeat the limited use which this court has concluded must

be made of the GM.

Plaintiffs’ expert, Mr. Fishleigh, compared claim 5 of

the reissue patent with claim 1 of the GM. He testified

and illustrated by a chart (PX 195) that elements 1, 2, 1a

and 2 a of claim 5 are not found in the GM. The court con-

cludes that the test of substantial identity between the GM’s

subject matter and the subject matter of the reissue patent

has not been met by clear and convincing evidence.

The first of the German publications is the Noris cata-

logues. This was put out by Ernst Reime. In regard to its

disclosures, Mr. Fishleigh indicated with the same chart

(PX 195) that the above elements of claim 5 are also not

disclosed by the Noris catalogue.

The second German publication, the Klepzigs Anzeiger,

BLEED THROUGH POOR COPY

A31

contains an article about the Reime tap. Mr. Fishleigh

testified that it had exactly the same disclosures as the

Noris catalogue except for one element; he stated that

element 1a of claim 5 was disclosed. This says that the

pitch diameter of the thread on the cylindrical portion of

tool is generally the same as the hole size into which the

tool will be turned.

The defendants’ expert, Mr. Spangenberg, was of the

opinion that the foreign references did anticipate the sub-

ject matter of the reissue patent. However, his testimony

shows that he considered all three references together.

His position on each of the references separately is not

known.

The defendants also offered the testimony of Mr. Gartner,

an engineer for the Reime company, but the court is of

the opinion that his testimony goes more to the question

of obviousness under 35 U. S. C. § 103 than to the question

of anticipation. It does not satisfy the standard of antici-

pation but could be used for what a person ordinarily

skilled will be discussed later in this opinion.

The court concludes that the defendants have not met

their burden of proof in showing that the GM, the Klepzigs

Anzeiger or the Noris catalogue anticipate the subject

matter of the reissue patent.

The defendants also rely on alleged prior use or sale

of tools made by Pratt & Whitney and Detroit Tap as

being anticipation of the reissue patent. It is claimed that

both companies made and supplied swaging tools to Fisher

Body Division of General Motors in 1950. This is more

than one year prior to the application of the reissue patent

which is entitled to the application date of patent 2,807,813

of which it is a reissue. The application for the parent

patent was April 3, 1956.

In conjunction with the Pratt & Whitney tools, two

—

A32

documents are in evidence. These documents represent

the drawings from which the tools manufactured in 1950

were made (DX 100 and 101). Also, two physical exhibits

(DX 102 and 103) allegedly represent tools made by Pratt

& Whitney from these drawings. However, it is not clear

from this record that these two tools were actually made

in 1950.

Regarding Detroit Tap, there are eight drawings in

evidence (DX 264A, 265A, 266A, 267A, 268A, 269A, 270A

and 271A). There are no physical exhibits which represent

taps made by Detroit Tap in 1950, but the company at a

later date made a tap which it is claimed was made pur-

suant to the last drawing in the series of eight (physical

exhibit DX 272). This tap was supplied by Detroit Tap to

both parties. In~addition, plaintiffs’ expert testified that

he made taps pursuant to the above drawings (DX 100,

101 and 271A) and conducted experiments with them.

The plaintiffs characterize what Pratt & Whitney and

also Detroit Tap were doing in 1950 as experimental. They

maintain this because a relatively few orders of taps were

sent to Fisher Body. These taps did not work out, accord-

ing to the plaintiffs, and Fisher Body went back to using

cutting taps. The defendants argue that both concerns were

in the business of manufacturing and selling taps and that

they were not experimenting.

In my opinion, Fisher Body was experimenting with

swaging taps. The taps were sent to the ‘‘process develop-

ment department’? of Fisher Body by Pratt & Whitney

and Detroit Tap. They were supplied only over a ten month

period in 1950, and Detroit Tap furnished eight different

models. After this, Fisher Body went back to using cutting

taps.

While I believe that Fisher Body was experimenting

with swaging taps, it does not necessarily follow that what

BLEED THROUGH POOR COPY

_

A33

Pratt & Whitney and Detroit Tap were doing was also

experimental. Referring to subsection (b) of the statute,

the court in George R. Churchill v. American Buff Com-

pany, 365 F. 2d 129, 134 (7th Cir. 1966) stated :

‘‘A use involving public disclosure if not solely to

test the qualities of the invention, and for the purpose

of experiment, does not avoid the bar of the statute.”’

The court in Cloud v. Standard Packaging Corp., 376 F.

2d 384, 390 (7th Cir. 1967) defined public use as follows:

‘¢Except for purely experimental use, ‘Public use may

properly be defined as any utilization of the invention

by one other than the inventor where the user is under

no limitation, restriction or obligation of secrecy to

the inventor.’ ”’

A single public use is sufficient to render a patent invalid

and the burden is upon the one asserting invalidity by

prior public use to establish it by ‘‘clear, cogent and satis-

factory proof to remove all reasonable doubt.’’? McCullough

Tool Company v. Well Surveys, Inc., 343 F. 2d 381, 394

(10th Cir. 1965). See also Devex Corp. v. General Motors

Corp., 321 F. 2d 234 (7th Cir. 1963).

The defendants argue that the experimental use doctrine

applies only to the inventor and cite in support of this

position Monolith Portland Midwest Company v. Kaiser

Aluminum Corp., 267 F. Supp. 726, 785 (S. D. Calif. 1967).

The Monolith court stated that the doctrine ‘‘applies to

experiments conducted by the inventor to enable him to

perfect his inventions before applying for a patent.’’ How-

ever, this doctrine has been applied to those other than the

inventor. See Kraft Foods Company v. Walther Dairy

Products, 118 F. Supp. 1 (W. D. Wis. 1954).

I believe that the experimental use doctrine should be

applied to what both companies were doing. During the

course of their dealings with Fisher Body in 1950, Detroit

aw a

A34

Tap supplied them with eight different models of swaging

taps. Fisher Body apparently did not find that any

of the tools were suitable for their purposes since they

went back to cutting taps. The Pratt & Whitney orders

were characterized as experimental (although the defend-

ants state that this was to distinguish them from whole-

sale production). In addition, both of these concerns

now buy their swaging tap requirements from the parties

to this litigation. It is reasonable to conclude that both

Pratt & Whitney and Detroit Tap were attempting to

develop an operable swaging tap of commercial value.

They failed.

Furthermore, the evidence establishes that the taps of

both of these concerns do not measure up to the Besly tap.

Mr. Fishleigh made and tested taps corresponding to the

drawings of Pratt & Whitney and Detroit Tap. The results

of his tests indicate that the Pratt & Whitney tap required

two to three times the torque of the present Besly and

Balax taps. The Detroit Tap tools required three to four

times the torque. Mr. Van Vleet testified that five percent

difference in torque would be a difference he would be

proud to obtain. Also, the prior taps would not work in

stainless steel, which is a common material for swaging

tap operation. It was Mr. Fishleigh’s conclusion that the

taps made in accordance with the drawings were not suit-

able for commercial use.

The defendants have not established by clear and con-

vineing evidence that there was public use or sale under

§ 102(b).

As another attack on the validity of the reissue patent,

the defendants rely on 35 U.S. C. § 103:

‘¢§ 103. Conditions for patentability; non-obvious sub-

ject matter.

A patent may not be obtained though the invention

is not identically disclosed or described as set forth in

ar ococynt THOHICHnN POOR CORY

A35

section 102 of this title, if the differences between the

subject matter sought to be patented and the prior art

are such that the subject matter as a whole would have

been obvious at the time the invention was made to a

person having ordinary skill in the art to which said

subject matter pertains. Patentability shall not be

negatived by the manner in which the invention was

made.”’

Whereas § 102 is concerned with the novelty of the inven-

tion, § 103 offers a more practical test of patentability. The

determination of ‘‘non-obviousness’ is made after estab-

lishing the scope and content of the prior art, the differ-

ences between the prior art and the claims in issue, and

the level of ordinary skill in the pertinent art. Graham v.

John Deere of Kansas City, 383 U.S. 1, 12 (1966). This test

for obviousness has been applied in many recent decisions.

Ortman v. Maass, 391 F. 2d 677, 680 (7th Cir. 1968) ; Na-

tional Dairy Products Corp. v. Borden Co., 394 F. 2d 887,

889 (7th Cir. 1968) ; Amphenol Corporation v. General Time

Corporation, ......... ep (7th Cir. 1968); U.S. Gyp-

sum Co. v. National Gypsum Co., 387 F. 2d 799 (7th Cir.

1967); Technicon Instruments Corp. v. Coleman Instru-

ments, Inc., 255 F. Supp. 630 (N. D. Ill. 1966).

The court has determined that the references cited by

the defendants do not anticipate the reissue patent under

$102, but this does not preclude their use under 103.

Monroe Auto Equipment Company v. Heckethorn Manu-

facturing & Supply Company, 322 F. 2d 406 (6th Cir. 1964).

The defendants contend that the foreign references make

the plaintiffs’ tool obvious to one skilled in the art. For

example, they maintain that anyone with such skill who

looks at these references will see that the thread is of

uniform depth throughout the circumstances of the tap or

that the lead portion is tapered.

1

The Noris catalogue (DX 203) at fig. 305 shows a

“‘NORIS Machine taps ‘No Shaving’.’’ This tap is also

diseussed in the article in the Klepzigs Anzeiger and

shown in fig. 3 of that publication (DX 201 and the transla.

tion DX 202). When asked what the Noris drawing dis-

closed to a person skilled in the art, Mr. Gartner replied,

“‘Anybody who looks at this figure and knows anything

about how threads are made sees from this figure how it

operates.’’ (tr, 774).

The defendants further argue that for the tap to enter

the material to be threaded as is indicated in the above

references, the lead portion must be tapered. The defend-

ants say that this fact can be easily ascertained by simply

placing a straight-edge along the tap in the drawings. Mr.

Spangenberg, on cross-examination, admitted that the pub-

lications do not have any written description that the tap

has a tapered end section.

With regard to the GM and the issue of obviousness, it

is only the claims that can be referred to. As was stated

in the Reeves Case, supra, at page 251:

“*To treat the GM as a prior art reference under Sec-

tion 103 for all it discloses would render the claims re-

striction of Section 102 meaningless because such treat-

ment would accomplish indirectly what is proscribed

directly. The legislative history of Section 103 makes

clear that the term ‘prior art’ as used in that section

refers only to ‘what was known before as described in

section 102’... . Therefore, the GM can be treated as a

prior art reference under Section 103 only for what is

claimed therein.’’

The specificatione cannot be referred to, and, as was men-

tioned before, that is where Mr. Spangenberg targeted

most of his testimony.

The testimony of neither Mr. Spangenberg nor Mr. Gart-

ner convinces the court that the Besly patent is rendered

A37

invalid because the subject matter was allegedly obvious

under the claims of the GM or the two German publications.

In Copease Manufacturing Company v. American Photo-

copy Equipment Company, 298 F. 2d 772, 781 (7th Cir.

1961), the court stated:

«A novel combination of old elements which so coop-

erate as to produce a new and useful result or a sub-

stantial increase in efficiency is patentable.’’

One can overcome old elements by inventiveness. United

States v. Adams, 383 U. S. 39 (1966). It appears to the

court that Besly has added inventiveness to whatever was

disclosed in the Pratt & Whitney and Detroit Tap tools.

The defendants have not convinced this court that the prior

tools make the subject matter of the reissue patent obvious.

The commercial success of Besly tends to support the

position that something novel was added to achieve the

result they did. Nine prior arts were before the patent

office, and there is no evidence that they achieved the com-

mercial success that Besly ang Balax did. The lack of

commercial success of Pratt & Whitney and Detroit Tap

has already been discussed. The plaintiffs have presented

substantial evidence concerning the industrial acceptance

of their tap. Stephen Cowell, a tool representative of the

Ford Motor Company, stated that the Besly tap was new

and revolutionary. Testimony of various tap manufac-

turers was offered to illustrate the advantages that the

Besly swaging tap has over the cutting tap. The industrial

acceptance of the swaging tap also indicates the long-felt

need there was for a tap that functions more economically

and efficiently.

It has been held that commercial success bolsters the

validity of a patent. P & D Sales & Mfg. Company v.

Winter, 334 F. 2d 830 (7th Cir. 1964). However, success in

the market place is to be taken only as a secondary factor

A38

in evaluation of the patent’s validity. This is because

there may be factors other than the novelty or non-obvious-

ness of the invention which result in commercial success,

Dymo Industries, Inc. v. Com-Tech, Inc., 391 F. 2d 335

(7th Cir. 1968). The court is of the opinion that the

commercial success of the Besly tap helps to illustrate the

novelty, non-obviousness as well as the utility of the subject

matter of the reissue patent.

U. S. Parent No. 3,050,755 Is Ixvaum.

The defendants also challenge the validity of the method

patent under § 102(b). They contend that the method was

in public use for more than one year prior to the applica-

tion for this patent. The defendants say that the method

was in public use by means of sales to plaintiffs’ customers

which began June 13, 1956. The plaintiffs acknowledge

that this is when sales of the Besly tap began. They also

admit that the Besly tap will inherently practice the method

claims of the ’755 patent. Application for the method

patent was not made until July 23, 1958. Plaintiffs’ answer

to this contention of the defendants is that the method

claims were first disclosed in patent 2,807,813 and the °755

patent should have the benefit of the former’s filing date,

which was April 3, 1956. The plaintiffs attempt to show

that the initial disclosures in application for 2,807,813 were

carried over to °755.

35 U. S. C. § 120 reads as follows:

**120. Benefit of earlier filing date in the United

States

An application for patent for an invention disclosed

in the manner provided by the first paragraph of

section 112 of this title in an application previously

filed in the United States by the same inventor shall

have the same effect, as to such invention, as though

filed on the date of the prior application, if filed before

A39

the patenting or abandonment of or termination of

proceedings on the first application or on an applica-

tion similarly entitled to the benefit of the filing date

of the first application and if it contains or is amended

to contain a specific reference to the earlier filed

application.”’

This section gives a patent application the benefit of

an earlier filing date if three basic requirements are met:

1) co-pendency of application; 2) cross-reference to the

earlier application; and 3) continuity of disclosure. Illinois

Tool Works, Inc. v. Continental Can Company, 273 F.

Supp. 94 (N. D. Ill. 1967).

The plaintiffs present the following sequence: On April

3, 1956, application 575,733 was filed (this resulted in

patent 2,807,813). On September 26, 1957, application 686-

521 was filed and this application was co-pending with the

former application (686,521 was later abandoned). While

the second application was still pending, application 750,377

was filed on July 23, 1958 (this resulted in the ’755 patent).

The plaintiffs maintain that the entire disclosure of the

first application was carried over to the second which, in

turn, was carried over to the third.

The defendants’ position is that the first application,

575,733, contains tap claims only. They say that the first

disclosure of method claims was in the application for the

method patent. As concerns the second application, 686,521,

the defendants state that it initially did not contain method

claims, but that such claims were added at the same time

the method patent application was filed. They say that this

is after 686,521 had received final rejection and just before

it had been abandoned. The defendants base their position

on Mr. Spangenberg’s study of the pertinent applications

and file wrappers. (DX 425, 426 and 427 illustrate his con-

clusions).

A40

The threshold question is whether the 575,733 application

discloses the method claims. If it does not, then the method

patent is invalid because of prior public use under § 102(b).

As mentioned before, the tap disclosed in application 575,-

733 will inherently practice the method claims. The plain-

tiffs contend that the mere disclosure of a device which

inherently performs a function in a patent application also

by necessity discloses that function, and that the applica-

tion may be amended later to recite the function without

introducing prohibited new matter. Technicon Instruments

Corp. v. Coleman Instruments, Inc., 255 F. Supp. 630 (N. D.

Ill. 1966).

In addition to their contentions of no disclosure, the de-

fendants also maintain that the method claims are merely a

function of the tap itself and therefore cannot be patented.

The defendant in the case of Waxham v. Smith, 294 U.S. 20

(1935) argued a similar position, and the court said that a

method is not to be rejected as functional merely because

the specifications show a machine capable of using it. In

the case at bar, on two different occasions, as pointed out

by plaintiffs, the patent office said that the method claims

were to be separate from the claims regarding the tap itself.

The first of these occasions can be found in the 686,521

file wrapper (PX 108). On January 23, 1958, the patent

office made a final rejection of the application. In response

to that rejection, inventor Welles added claims 15 and 16,

which were method claims. On page 24 of the file wrapper

the patent office states the following with regard to the

newly added claims:

‘‘The newly proposed claims are drawn to a method

and therefore are to an invention distinct from and

independent of the invention previously claimed.

Therefore the claims and the amendment cannot be

considered by the examiner.’’

A41

On the other occasion, Mr. Welles, in his oath of May 28,

1958, during the prosecution of the reissue application (PX

68), stated that he intended the original patent to include

method claims because one aspect of his invention was the

material working method. The patent office, at page 27 of

the file wrapper, recognized that the method claims would

relate to a separate invention:

‘“The several inventions are distinct each from the

other because the method as defined by the claims of

Group II can be practised by an apparatus differing

materially from that defined by the claims of Group I.’’

These statements of the patent office indicate that the

method claims do indeed embody a separate and patent-

able invention from that of the tap claims. The method

should not be rejected as merely functional and therefore

unpatentable.

35 U. S. C. § 120 states that the invention must be dis-

closed in the manner provided for in the first paragraph of

£112, which reads as follows:

‘‘The specifications shall coritain a written description

of the invention, and of the manner and process of

making and using it, in such full, clear, concise, and

exact terms as to enable any person skilled in the art

to which it pertains, or with which it is most nearly

connected, to make and use the same, and shall set

forth the best mode contemplated by the inventor of

carrying out his invention.”

The following description as to how the tool described is to

be used is found in patent 2,807,813:

‘‘In practice, my improved form of fluteless tap is pref-

erably introduced in a previously bored hole 19 of a

workpiece indicated at 20, which hole is of substan-

tially the same diameter as the final pitch diameter of

the thread as indicated in Figures 1 and 5. The tap

is then rotated so as to screw it into the hole. The in-

ternal threads are formed by displacing the metal with

A42

a swaging action, as illustrated in an exaggerated dia-

grammatic manner in Figure 5. It has been demon-

strated that due to the novel form of the tap thread

with its radial relief, an interior thread may be pro-

duced in the work with greater ease, and with much less

torsional effort and generation of heat, than with a

tap of corresponding size without the radial relief

which characterizes my invention.’’

This language remains unchanged from that initially placed

in the application (see PX 70 at pages 3 and 4). The

method patent is known as the ‘‘method of forming threads

by applying sliding pressure.’’ When the description above

and the whole of the 2,807,813 patent are compared with

the method claims expressed in ’755, it becomes reasonably

clear that the disclosure of the original patent does not

satisfy the requirements of § 112.

Mr. Spangenberg in DX 430 points out portions of the

755 patent claims which are missing in previous applica-

tions. The patent office considered the method claims in

application 686,521 and in the application for the reissue

patent as independent of the invention claimed originally.

Granted, disclosures in specifications are not to read iden-

tically with claim language, but considering all the above

factors, it is difficult for the court to agree with the plain-

tiff’s position on the disclosures of the 2,807,813 patent.

The method patent cannot receive the earlier filing date

by virtue of the operation of §120. Sales of plaintiffs’

taps which would practice the method began June 13, 1956.

The first satisfactory disclosure of method claims appeared

more than one year after this, thus making the method in

public use more than one year prior to application for the

method patent. Therefore, I believe that the method patent

is invalid.

The court has determined that the German references do

not anticipate the tap under § 102(b). It is even clearer

Rt oc&n THRHIICGH POOR COPY

A43

that they do not anticipate the method. Likewise, it is the

opinion of this court that the tools made by Pratt &

Whitney and Detroit Tap do not anticipate the method.

Here, the lack of their efficient operability bears even

greater weight on the question of anticipation.

The court duplicates these findings on the question of

obviousness under $103. None of the prior references

relied on by the defendant establish by clear and convincing

evidence that the method patent should be invalid for lack

of non-obviousness.

Tue Bavax Tap Inrrinces Upon Tue Cuaims or Re. 24,572.

The basic test for patent infringement was set down in

Graver Tank & Mfg. Company, Inc. v. Linde Air Prod-

ucts Company, 339 U. S. 605 (1950). The court stated that

an accused device can infringe in two ways, either literally

by falling clearly within the words of the claim, or by the

doctrine of equivalents :

‘«. . . if two devices do the same work in substantially

the same way, and accomplish substantially the same

result, they are the same, even though they differ in

name, form or shape.’ ”’

Graver, supra at 608. See also Ortman v. Maass, 391 F. 2d

677, 682 (7th Cir. 1968).

In the instant case, the accused device does not fall

clearly within the words of the claim. Therefore, the plain-

tiffs must make out a case for infringement pursuant to

the doctrine of equivalents. Whether or not the accused

device infringes upon the patented tap centers around one

area of conflict—the Balax tool does not have a continuous

thread. Claim 5 of the reissue patent states that the de-

vice is ‘‘A fluteless thread forming tool for threading a

generally cylindrical surface, the tool having a cylindrical

portion with a continuous thread ...’’ The Balax tap does

A44

not have such a thread because of its axially extending

groove.

The plaintiffs state that the word ‘‘continuous”’ is in

the claims to distinguish a swaging tap from a cutting tap.

Cutting taps have flutes which provide a cutting edge and a

reservoir for chips from the metal being cut in addition to

providing a means for carrying lubricant to the working

area.

Mr. Fishleigh testified on the basis of his comparative

tests between the Besly and Balax tools that the latter’s

groove does not perform the first two functions of a flute

on a cutting tap; it does, however, perform the function of

carrying lubricant to the working area. It does not have

an effect on the working of the tap since it is found in the

relieved area of the tap. Mr. Fishleigh’s tests also negate

any alleged advantages of this groove. It does not lower

the torque nor does it prevent high pressure buildup un-

derneath the tap. Mr. Fishleigh’s test illustrates no dif-

ference in torque between the two taps and only a slight

pressure buildup differential. Mr. Fishleigh concluded

that the Balax tap does substantially the same work and

achieves substantially the same result as the Besly tap.

It is the conclusion of this court that the Balax tap is

the equivalent of the Besly tap; the groove’s presence

does not prevent infringement.

The doctrine of equivalents does not operate, however,

where there is file wrapper estoppel. This occurs where

the patentee in the course of prosecuting his application

inserts limitations to escape a prior art. Technicon Instru-

ments Corp. v. Coleman Instruments, Inc., 255 F. Supp.

630 (N. D. Ill. 1966). These limitations must be given

recognition when infringement is charged. Simmons Com-

pany v. A. Brandwein & Company, 250 F. 2d 440 (7th Cir.

1957). An invention is construed not only in light of the

claims, but also with reference to the file wrapper or

A45

prosecution history in the patent office. A narrowed claim

ean no longer cover what was previously eliminated.

Graham v. John Deere Company of Kansas City, 383 U. S.

(1966). See also Dixie Cup Company v. Paper Container

Mfg. Company, 169 F. 2d 645 (7th Cir. 1948).

The defendants claim that file wrapper estoppel should

apply to the word ‘‘eontinuous’’. They contend that this

limitation was added to overcome rejections based on prior

art. In addition, there is a conflict as to what is meant by

the following language of claim 5:

‘‘. the threaded end portion being a non-interrupted

continuation of the continuous thread on the cylindrical

portion.’’

The defendants interpret this as meaning that there must

be non-interrupted continuous threads on the threaded end

portion of the tap. The plaintiffs interpret this as mean-

ing that the end portion is threaded and is a continuation of

the cylindrical portion which is also threaded, i.e., there is

no interruption between the threads on the one and the

threads on the other. i

As concerns the word ‘‘continuous’’, the plaintiffs main-

tain that this word has always been in the claims of the

original and the reissue patent; that it was not put in to

overcome rejection based upon a prior art. An inspection

of the file wrapper of patent 2,807,813 (PX 70) shows

that this word has always been in the claims. Several

amendments were made before allowance was given to this

application, but none had to do with the threads’ continu-

ity. The attorney of record did, however, argue that the

device was distinguished from,some of the prior art be-

cause of its continuous thread. But these statements or

arguments of an attorney during the prosecution of the

patent application do not create file wrapper estoppel. This

is because the patentee did not have to add the word

‘continuous’? to his claims to overcome objections based

A46

on prior art. See University of Illinois Foundation y,

Block Drug Company, 133 F. Supp. 580 (E. D. Ill. 1955),

York Ice Machinery Corp. v. L. & K. Ice Corp., 6 F. Supp.

544 (S. D. N. Y. 1934).

In regard to the disputed claim language of claim 5, it

was added to the reissue claims after final rejection. The

attorney of record states that this amendatory change was

suggested by the examiner. (PX 68 at page 42.)

A study of the file wrapper of the reissue patent does

not show that any of the amendments, including the above,

that were made to overcome objections based on prior art,

involved the continuity of the thread or the fact that the

threaded end portion is a ‘‘non-interrupted continuation

of the continuous thread on the cylindrical portion.’’ The

rejections before final allowance were based on items such

as full thread depth on the tapered end portion, uniformity

of the thread depth on the cylindrical portion, and the

relationship of the diameter of the surface to be threaded

with the pitch diameter of the threads on the cylindrical

portion.

As to the meaning of the language in claim 5, it should

be noted that a patentee is his own lexicographer. The

terms he uses should be interpreted to read upon the

structure he describes in the patent. Canaan Products,

Ine. v. Edward Don & Company, 388 F. 2d 540 (7th Cir.

1968). The defendants take their interpretation because

certain prior art cited to the patent office, Barth No.

2,703,419 and De Lapotterie No. 1,676,482, showed an in-

terruption of threads in areas where no work was per-

formed. As mentioned above, the court does not conclude

that this language was added to overcome objections based

on prior art, including the Barth and De Lapotterie patents.

Since the defendants base their interpretation of the lan-

guage of claim 5 on the assumption that file wrapper

estoppel applies, their interpretation cannot be accepted.

A47

It is the conclusion of this court that the language of

claim 5 shall be given the interpretation the plaintiffs

place upon it. It is the further conclusion of this court

that the doctrine of file wrapper estoppel is not applicable

and therefore the claim language of the reissue patent does

not have to be strictly construed. In light of what has

been concluded by this court in regard to the doctrine of

equivalents, the Balax tap does infringe upon the subject

matter of the reissue patent.

Patent 3,050,755 Is InrrincEp By THE Batax Tap.

Even though the court has concluded that the method

patent is invalid, an evaluation will be made at to its

being infringed by the defendants’ tap.

There are two areas where the defendants try to dis-

tinguish the operation of their device from the method

claims. One is that the accused device does not have its

areas of pressure application equally spaced exactly 90

degrees apart. The other results from an interpretation

of the language of claims 1 and 3:

‘¢ the areas in the second series all being disposed

in the same helical path and being substantially the

same in size and pressure intensity and being sub-

siantially equal to the last such pressure area in the

first series.”’

The reason the high spots on the Balax tap are unequally

spaced is to make room for the groove. However, Mr.

Fishleigh opined that the unequal spacing makes no differ-

ence in the operation of the Balax tap as compared to the

Besly tap. Defendants’ expert has never used the accused

tap, and he could not contradict this finding. In fact, the

court is of the opinion that the defendants have not offered

any testimony that will dispute Mr. Fishleigh’s findings

on this point. It was the conclusion of this court that the

A48

presence of the groove did not prevent the accused tap

from infringing on the reissue claims. Since the only

reason there is unequal spacing of the lobes is to make

room for the groove, the court concludes that this unequal

spacing does not prevent the accused tap from operating

in a manner that infringes on the method claims.

As to the disputed language of claims 1 and 3, the defend-

ants interpret this as meaning that each of the threads on

the cylindrical portion of the tap is equal in pressure in-

tensity to the last pressure area on the lead section of the

tap. The defendants state that only the first lobe on the

cylindrical portion does any work and that it does less

work than the last thread on the tapered lead section. The

defendants assert that it is impossible for the successive

threads on the cylindrical portion to apply the same pres-

sure as the last thread on the lead portion since the cylin-

drical portion does no work.

The plaintiffs agree that the threads on the cylindrical

portion, except for the lobe on the first thread of that

section, do not do any work. As stated in column 2, lines

47-50 of the specifications of the method patent:

‘‘In a sense, the majority of the maximum area 13

{the cylindrical section] floats or rides through after

the work is done by the tapered portion 14, 15 and 16

and the first turn or so of the maximum area 13.”

The plaintiffs contend that the claim language means, in

light of the specification, that the pressure areas in the

cylindrical section are equal in size and in pressure-applying

ability as the last lobe on the tapered section. They say

that this does not mean that all the threads on the cylin-

drical section actually apply the same pressure as the last

lobe on the tapered section.

The defendants maintain that the claim language specifi-

BLEED THROUGH POOR COPY

A49

cally says that the threads on the cylindrical portion do in

fact apply the same pressure.

As stated earlier in reference to the Canaan case, supra,

a patentee is his own lexicographer, and the terms he uses

should be interpreted to read upon the structure he de-

scribes in the patent. Also, while the claims define the

invention, the specifications may be used to explain any

ambiguity in those claims. The claims are to be read in

light of the specifications, and both are to be read with a

view to ascertaining the invention. See Minnesota Mining

and Manufacturing Company v. Technical Tape Corp., 309

F. 2d 55 (7th Cir. 1962); Scherbatskoy v. United States

Steel Corp., 287 F. 2d 552 (7th Cir. 1961).

The defendants place an interpretation on the claim !an-

guage which they say results in a physical impossibility.

They say that since taps do not operate in this manner,

their tap does not; and therefore their tap does not in-

fringe upon the method claims. The court reads the claims

in light of the specifications. The specifications indicate

that only the first turn or so of- the threads on the cylin-

drical portion do any work. Therefore, when the claims

state that the areas in the second series are substantially

the same in size and pressure intensity to the last such

pressure area in the first series, this must mean that their

pressure-applying ability is the same, not the pressure

which they actually apply. To give this language a con-

trary meaning would not be in accord with the way the

specifications describe the method the tap uses.

In applying the doctrine of equivalents, I conclude that

the claims of the method patent find a response in the

method performed by the Balax tap.

SOLS

EP PORE EAN SS TART I Gi ease een “

. iia RES a oR SI Ss eg ab hh, ees dat met hte ae

PEELE LS

A50

Tuere Is No Wuurut axp Waxton Iyrnincemenr

sy THe Derexpants.

The plaintiffs have asked for treble damages and for

the awarding of reasonable attorneys fees. This is pro.

vided for in 35 U. S. C. §§ 284 and 285. For such and award

the court must find exceptional circumstances. The plain-

tiffs say such exceptional circumstances are present because

the defendants have willfully and wantonly infringed upon

the patents in suit. If infringement of this type is found,

the court, in its discretion, may award treble damages and

reasonable attorney fees. Union Carbide Corp. v. Graver

Tank & Mfg. Company, Inc., 282 F. 2d 653 (7th Cir. 1960) ;

Upjohn Company v. Italian Drugs Importing Company,

190 F. Supp. 361 (S. D. N. Y. 1961).

The court in the Upjohn Case states that such awards

are to be made sparingly and usually only where a clear

showing of deliberate infringement is made. The plaintiffs

cite the case of Maxon Premix Burner Company, Ine. v.

Mid-Continent Metal Products Company, 155 USPQ 434

(N. D. Til. 1967), for factors upon which a finding of an

absence of good faith on the part of the infringing defend-

ant can be made. In the Maxon Case, the court found that

the defendant had literally infringed upon the claims of

the patented device.

The plaintiffs point out that the reissue patent was

issued almost four years before the defendants’ swaging

taps appeared on the market in 1962. It is also a fact that

Mr. Van Vleet received certain information concerning the

plaintiffs’ taps in 1961. During that same year, Mr. Van

Vieet was negotiating for a licensing arrangement with

the plaintiffs (PX 143) so that he knew of the Besly patent.

On the other hand, the defendants point out that they

were relying on the advice of counsel and cite a letter from

——————————

A51

their attorney to plaintiffs’ attorney (DX 237). The plain-

tiffs take issue with the conclusion which the defendants

draw from this letter.

The court has found that the defendants’ accused device

infringes on both patents in suit, although the 755 patent

has been held to be invalid. The infringement was based

upon the doctrine of equivalents. The court is also of the

opinion that the issue of infringement was clearer to resolve

than the issue of validity. This is illustrated by the fact

that the court held the question to be sufficiently close

so that the secondary considerations of commercial success

were referred to.

The court in the Upjohn Case, supra, at page 367 said:

“There must be a deliberate purpose to infringe and

such purpose is not found where the validity of the

patent and any possible infringement is open to honest

doubt.”’

It is the court’s opinion that the defendants have been in

good faith in questioning the validity of the patents in suit.

Furthermore, the court does not-deem it bad faith for the

defendants to have manufactured and sold the accused

device which basically differed only in that it had a groove.

Since the court did not find file wrapper estoppel, a strict

construction was not put on the claim language referring

to a ‘“‘continuous”’ thread, but this does not mean that the

defendants were not acting reasonably in relying on this

language.

There is a gap between infringement and willful and

wanton infringement and the plaintiffs have not satisfac-

torily spanned this gap. I find that the plaintiffs have not

sustained their burden of proof in establishing the excep-

tional circumstances called for. Their request for treble

damages and reasonable attorneys fees under §§ 284 and

285 must be denied.

| reer ra:

A52

Have tae Derenpaxts Arproraiatep THE PLaIntirrs’

Trape Secrets?

In addition to their charges of infringement, the plain-

tiffs have alleged that the defendants have appropriated

Besly’s trade secrets. This issue of unfair competition is

based upon diversity of citizenship which exists in the

case at bar. State law is to be used in determining the

issue. Bliss v. Gotham Industries, Inc., 316 F. 2d 848 (9th

Cir. 1963); Smith v. Dravo Corp., 203 F. 2d (RPB) 369

(7th Cir. 1953); Solo Cup Company v. Paper Machinery

Corp., 240 F. Supp. 126 (E. D. Wis. 1965). According to the

doctrine of Erie R. R. v. Tompkins, 304 U. 8S. 64 (1938), the

state law upon which to base the plaintiffs’ right of re-

covery is the law of Wisconsin.

The Wisconsin law has recently been set down in Abbott

Laboratories v. Norse Chemical Corp., 33 Wis. 2d 445, 147

N. W. 2d 529 (1967). The Wisconsin court stated that they

believed that the Restatement of Law correctly stated the

general law of trade secrets. Referring to the Restatement,

the court found that two elements were essential in estab-

lishing a cause of action: an actual trade secret and breach

of confidence. Among the factors to be considered in de-

termining whether given information is a trade secret, the

court listed the following, at pages 463-64:

(a) The extent to which the information is known out-

side of his business ;

(b) the extent to which it is known by employees and

others involved in his business;

(c) the extent of measures taken by him to guard the

secrecy of the information;

(d) the value of the information to him and to his

competitors ;

A53

(e) the amount of effort or money expended by him in

developing the information ;

(f) the ease of difficulty with which the information

could be properly acquire or duplicated by others.

Both sides have set out in their briefs what they believe

the pertinent facts to be in resolving this issue. The plain-

tiffs contend that they supplied the defendants with con-

fdential information, and that the defendants put this

information to use; that this information enabled the de-

fendants to enter the swaging tap business by a shortcut.

The defendants, on the other hand, maintain that they

received no information from the plaintiffs which was con-

fidential, and that at no time did they use the information

that the plaintiffs supplied to them.

Have the plaintiffs satisfied the factors of the Abbott

Caset The court will examine the items enumerated in

that case:

(a) The information is not known to a great extent out-

side of Besly’s business. The .testimony indicates that

Besly supplied similar information only to its licensees.

Mr. Van Vleet testified that some of this information can

be found in “Standards and Dimensions for Taps and

Dies.”” (PX 176). But the testimony of one of plaintiffs’

engineers contradicts Mr. Van Vleet. This employee stated

that the information in the standards book does not apply

to swaging taps. (Tr. 524).

(b) The plaintiffs have not shown the extent to which

this information is known by its employees and others in-

volved in Besly’s business.

(c) Similarly, the plaintiffs have not demonstrated the

extent of any measures taken by them to guard the secrecy

of the information; they say, however, it is not the type of

information that they would divulge to a competitor.

a

(d) The testimony indicates that this information does

have value to Besly and its licensees. Plaintiffs claim that

it had great value to the defendants because the latter used

it as a shortcut to get into the swaging tap business. The

recérd shows that the defendants had not produced a

swaging tap before the visits to Besly. (Tr. 316). But the

evidence also shows that when the plaintiffs visited the

Balax plant in 1965, they found very little in common be-

tween the two operations. (Tr. 824).

(e) The testimony discloses that it took great effort to

develop the information. It was stated that it would take

one man working full time a year to develop identical in-

formation. (Tr. 522).

(f) This latter statement also applies to the difficulty

with which this information could be properly acquired or

developed by others.

Defendants contend that the plaintiffs did not supply

them with all the information which the latter claim was

furnished. Nevertheless, this court is of the opinion that

the information that was in fact supplied may properly be

characterized as an actual trade secret.

The next question to be answered is whether a confiden-

tial relationship existed between the parties. The plaintiffs

allege that they did not view Mr. Van Vleet as a competitor;

that he told them that he was only interested in manufac-

turing and leasing machines that could produce taps. Mr.

Van Vleet states that he conveyed the impression to Besly

that he was in the tap business.

Mr. Van Vleet believed that he could produce a tap

superior to the plaintiffs’. The tests made by the plaintiffs

at a later date disclosed that Mr. Van Vleet’s improve-

ments in regard to lead error did not actually alter the

tool’s operation. However, this does not warrant the con-

clusion that Mr. Van Vleet used the alleged improvement

——

BLEED THROUGH POOR COPY

A55

as a guise to get information out of Besly. The record does

not disclose any adequate precautions taken by Besly to

protect the secrecy of the information they were giving

Mr. Van Vleet; they say that the parties entered into a

‘joint venture’’, but there is not sufficient testimony to

establish this. At best, the record discloses that both

parties felt that they could help each other (PX 121).

It is the court’s opinion that the plaintiffs should have

regarded Mr. Van Vleet as a potential competitor. The

plaintiffs did not take reasonable precautions which would

prevent him from becoming a competitor if a satisfactory

arrangement could not be worked out with Besly. View-

ing Mr. Van Vleet as a potential competitor, the plaintiffs

should have taken steps to insure the confidentiality of

the information giver to him. The plaintiffs have failed

to demonstrate that a confidential relationship existed or

was contemplated by the parties. Therefore, the plaintiffs

have not sustained their burden of proof that the defend-

ants appropriated trade secrets.

Is tHe Company Presmpent Personatty LiaBLe FoR

INFRINGEMENT?

The plaintiffs seek to hold Mr. Van Vleet personally

liable for the infringement of the patents in suit. Balax

was incorporated in 1959, and Mr. Van Vleet has been

its president since then. Initially, Mr. Van Vleet was the

only stockholder, and at present he owns 63 percent of

the stock. (Tr. 268). Until 1964, there were only three

corporate officers of Balax. At that time, Mr. Dobrogowski

was employed by the board of directors. His duties are

similar to those of Mr. Van Vleet. (Tr. 292). This includes

engineering, design, research and development of products.

It was Mr. Van Vleet who designed the accused structure.

(Tr. 269). He was also the person who was in contact with

A56

the Besly people during the 1961 period whe) certain in-

formation was obtained from Besly. The plaintiffs contend

that the record supports a finding that Balax vas Mr. Van

Vleet’s alter ego.

The defendants state that Balax is a corpora‘ion in which

many people have money invested; that it is run by an

active board of directors; and that Mr. Van Vleet did not

take any of the management responsibility away from this

board.

The plaintiffs urge that every requirement o’ Rex Chain-

belt, Inc. v. General Kinematics Corp., 363 F. 2d 336 (7th

Cir. 1966), has been met for holding Mr. Va Vleet per-

sonally liable. That case did not purport to set out a list

of general requirements for finding personal jability; the

court simply listed factors which supported ‘hat finding.

It appears that some of those same factors can be found

in the instant case. However, the record in this case shows

that the board of directors does have a hand in the man-

agement of Balax. The corporation and Mr, Van Vleet

are not one and the same, even though because of his

majority stockholding and the relatively smal. size of the

organization, Mr. Van Vleet is a most integral cog.

I conclude that Mr. Van Vleet is not hiding behind

‘*the corporate veil’’. The record does not support a

finding that Mr. Van Vleet should be held personally liable

for the infringement of the patents in suit.

Dip THE PLarntirrs PERPETRATE A F'RavD

ON THE Patent Orrice?

One of the several defenses which the defendants inter-

posed in this lawsuit is that the plaintiffs cbtained the

patents by committing fraud on the patent ofice. This is

the ‘‘spectre of unclean hands’’ which Judge Swygert re-

ferred to in National Dairy Products Corp. v. Borden (o.,

A57

304 F. 2d 887, 891 (7th Cir. 1968). The defendants have

the burden of proving this by clear and convincing evi-

dence. Armour & Company v. Wilson & Company, 274

F. 2d 143, 148 (7th Cir. 1960).

The defendants claim that inventor Welles filed affidavits

with the patent office which, contrary to his knowledge,

claimed that the subject matter had not been in public use

or on sale more than one year prior to his applications.

The defendants contend that Welles knew of the German

publications, plus the Pratt & Whitney and Detroit Tap

sales at the time the reissue patent was applied for. In

regard to the °755 patent, the defendants claim that Mr.

Welles failed to inform the patent office of sales to Besly’s

customers more than one year prior to the date of the

application.

To support their contentions, the defendants cite the

testimony of Warren Olson, president of Besly. Mr. Olson

testified that about 1955-56, during the course of general

meetings, he heard about certain companies and about sales

to Fisher Body. These companies were Ernst Reime,

Pratt & Whitney and Detroit Tap. He states that he prob-

ably got this information from either Mr. Welles or

Mr. Addoms. The plaintiffs date such conversations around

October, 1958.

The court believes that Mr. Olson did indeed hear

something about these companies at the time he testified

that he did; however, his testimony is inconclusive as to

exactly what he heard, and even more inconclusive as to

what knowledge can be attributed to Mr. Welles during

this period. This is not clear and convincing evidence of

fraud on the patent office.

The court has also considered the evidence as to what

Mr. Olson told the patent office in his oath of July 23, 1959 ;

he there stated that the initial promotion of the tap in suit

| “7

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began in January, 1958, but that there were a few previous

sales incident to experimentation that were not significant,

(PX 72 at page 49). A chart of average sales was appended _

which shows no 1957 or 1956 sales.

The defendants have not persuaded the court by clear

and convincing evidence that the plaintiffs obtained the

755 patent by means of fraud. »

Are THE Puaintirrs Not Estoprep sy LacHes?

The defendants maintain that the plaintiffs are barred

by laches as regards their charges of patent infringement

and trade secret appropriation. The defendants contend

that it was almost two years after they were first notified

of the charges that plaintiffs brought suit.

On April 20, 1962, Besly charged defendants with patent

infringement (DX 234). The complaint in this action

was filed on June 17, 1964. However, on May 24, 1962,

Besly filed an infringement action against Jarvis Corpora-

tion (PX 9). Mr. Van Vleet learned about this suit which

involved the patents in the instant action in March or

April of 1963 (Tr. 1194).

In Armstrong v. Motorola, Inc., 374 F. 2d 764 (7th

Cir. 1967), the court noted that a suit pending to sustain

the validity of a patent is notice to all infringers of the

insistence by the patentee upon his claimed rights. The

defendant knew of the Jarvis lawsuit, and therefore they

should have known that Besly was insisting upon the

rights it claims from the patents in suit. The suit against

Jarvis was filed after Besly had notified the defendants in

the instant case of its charges of infringement.

Upon the facts of the case at bar, the plaintiffs are not

barred from maintaining this suit against the defendants.

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Have THE Puaintirrs VIOLATED THE Anti-Trust Laws?

The defendants have counterclaimed averring that the

plaintiffs have violated section 1 and 2 of the Sherman

Act. Treble damages are sought under section 4 of the

Clayton Act. In my opinion, this counterclaim may not

succeed because (1) there was no adequate proof of fraud

in procuring the patents in suit, (2) the plaintiffs are not

properly chargeable with illegal enforcement of their pat-

ents, and (3) there has been no sufficient showing of an

illegal combination to restrain trade.

By dint of its valid patent Re. 24,572, the plaintiffs were

entitled to the limited protection afforded under the patent

laws. This included the right to license others to manu-

facture the patented tap. It is inappropriate to denominate

this conduct as ‘‘conspiratory’’ or ‘‘monopolistic’’. U. S.

vy. Masonite, 316 U. S. 265 (1941) is not applicable.

In my opinion, there is no merit to the defendants’

counterclaim.

CoNncLUSION.

The foregoing opinion constitutes this court’s findings

of fact and conclusions of law in accordance with rule

52(a), Federal Rules of Civil Procedure.

Counsel for the plaintiffs are requested to prepare an

order in accordance with the foregoing opinion. Said order

may be presented to the court for signature but not before

the same has been in the hands of defendants’ counsel for

at least ten days.

Dated at Milwaukee, Wisconsin, this 9th day of Septem-

ber, 1968.

eR a SS oo Sh aS ed cA rare nee hater es rere ores ,

. SEE eee Ne RO eRe as pee nts BE a dt ik eh, es A Se ee

a aN ren este

CHT apie

/s/ Myron L. Gorpon,

U. S. District Judge.

A60

’

Unrtep Srates District Court

Eastern District of Wisconsin

* * (Caption—Case No. 64-C-170) * *

ORDER.

(Filed Oct. 1, 1968)

The above-entitled action having come on for trial

before the Court, and the Court having heard the testi-

mony and considered the exhibits and the briefs filed by

the parties, and having heard the oral arguments of

counsel following briefing, and the Court having issued

its opinion dated September 9, 1968, which opinion con-

stituted the Court’s findings of fact and conclusions of

law in accordance with Rule 52(a) of the Federal Rules

of Civil Procedure, and the Court being fully advised

in the premises;

It Is Hereby Ordered:

1. Claims 5, 6, and 7 of the Welles patent No. Re. 24,572

are valid in law, and defendant Balax, Inc., and all those

in privity with such company, except John M. Van Vleet,

are hereby held liable for infringement of said claims of

patent Re. 24,572.

2. Defendant Balax, Inc., and all those in privity with

such company, are hereby enjoined from further infringing

claims 5, 6, and 7 of Welles patent Re. 24,572.

3. Claims 1, 2, 3 and 4 of Welles patent 3,050,755 are

held invalid.

4. If claims 1, 2, 3 and 4 of Welles patent 3,050,755

are valid, they are held to have been infringed by de-

fendant Balax, Inc., and all those in privity with such

company, except defendant John M. Van Vleet.

BLEED THROUGH POOR COPY

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5. Counts 1 and 2 of the complaint of the plaintiff shall

be, and the same hereby are, dismissed on their merits

as to defendant John M. Van Vleet, and said Count 2

shall be, and the same hereby is, dismissed on its merits

as to defendant Balax, Inc.

6. Defendants’ amended counterclaim, first cause of

action, is sustained in part and dismissed in part in ac-

cordance with the foregoing. The remaining causes of

action of said amended counterclaim shall be, and the

same hereby are, dismissed on their merits.

7. Plaintiffs are hereby awarded costs and shall have

an accounting in order to determine the damages from

the infringement by the defendant Balax, Inc. of Welles

patent Re. 24,572.

Dated this 1st day of October, 1968.

/s/ Myron L. Gorpon,

United States District Judge.