Opposition Brief — Hallco Manufacturing Co. v. Foster

No. 94-792

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1994

~ HALLCO MANUFACTURING. CO.. INC.

and OLOF A. HALLSTROM. Petitioners.

RAYMOND KEITH FOSTER, KEITH MFG. CO..,

INC. and KEITH SALES CO., Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

Delbert J. Barnard

Counsel of Record

Glenn D. Bellamy

BARNARD PAULY & BELLAMY P.S.

P.O. Box 58888

Seattle, WA 98138-1888

(206) 246-0568

Counsel for Respondents

November 30, 1994

c- —

i

QUESTIONS PRESENTED

Respondents (collectively "Foster") object to the questions

presented for review by Petitioners (collectively "Hallco") for

the reason that the questions are not supported by the record.

Foster believes that the questions should be as follows:

1. Whether a party requesting relief from judgment

under Rule 60(b), based on alleged fraud or other misconduct

of an adverse party, must prove the alleged fraud or other

misconduct by clear and convincing evidence?

2. Whether, with respect to a jury verdict that a party

"tried to willfully mislead the court and jury", based on an

interrogatory that did not include a "clear and convincing"

standard of proof, it is an abuse of discretion for a trial court

to hold that "the court cannot conclude that the jury made

this finding by clear and convincing evidence" and further

hold that the party alleging fraud has not shown by "clear

and convincing" evidence that the adverse party had

"willfully attempted to mislead the court and the jury"?

3. Whether a party whose patent is found to be invalid

for failure to disclose the "best mode" can seek a new trial

under Rule 60(b), limited to the "best mode" issue, based on

alleged fraud or misconduct of the adverse party with respect

to a trial exhibit having no relationship to the "best mode"

issue, without demonstrating that such party has a substantial

"best mode" case to present?

LIST OF ALL PARTIES

All parties to the proceeding are identified in the caption.

Pursuant to Supreme Court Rule 29.1, petitioners state there

are no parent or subsidiary companies to be listed.

iii

TABLE OF CONTENTS

QUESTIONS PRESENTED................___ i

eee PARTIES... 6... ss. li

timer CONTENTS...................... ili

TABLE OF AUTHORITIES ..............._. vi

I. STATEMENT OF THECASE ............___ l

I oe ooo ee. l

B. OMITTED MATERIAL _ te are ae ae l

SS 2

2. The Wilkens 1973 Trailer..........__. 6

3. Keith’s 1991 Affidavit. ........... 9

acces .s........... 10

5. Foster’s Trial Strategy........... 13

6. Hallco’s Trial A a 14

C BRSSTATEMENTS ................_. 16

l. No Prima Facie a ae 17

Ne eee 17

3. The "Shiny" Metal ............ 17

4. The "Milled Out" Portion ........__. 18

5. Sam Windsor’s DPS Ss ic 18

6. Alleged Misconduct ............__. 18

7. Interrogatory No.17............__. 18

8. Integrity Of The Judicial Tot ke 18

iv

II. SUMMARY OF ARGUMENT .............

[. AIRGAS 3 «8 840 Niis eR

A.

THERE ARE NO LEGAL ISSUES NEEDING

REF: 66454 bese hws os

FRAUD OR OTHER MISCONDUCT MUST BE

ESTABLISHED BY CLEAR AND

CONVINCING EVIDENCE . 0.02. ccce0.

IT WAS NOT AN ABUSE OF DISCRETION

FOR THE TRIAL COURT TO RULE THAT IT

COULD NOT CONCLUDE THAT THE JURY |

HAD FOUND THAT FOSTER "TRIED TO

WILLFULLY MISLEAD THE COURT AND

JURY" BY "CLEAR AND CONVINCING"

CVE he ie ee EE aes

IT WAS NOT AN ABUSE OF DISCRETION

FOR THE TRIAL COURT TO RULE THAT

HALLCO HAD NOT SHOWN BY "CLEAR

AND CONVINCING" EVIDENCE THAT

FOSTER HAD "WILLFULLY ATTEMPTED

TO MISLEAD THE COURT AND JURY" ..

IT WAS NOT AN ABUSE OF DISCRETION

FOR THE DISTRICT COURT TO RULE THAT

"THE TRIAL TACTICS AND STRATEGY OF

FOSTER DID NOT DENY HALLCO AN

OPPORTUNITY TO FULLY AND FAIRLY

PRESENT ITS CASE OR DEFENSES" ....

20

21

22

24

25

v

F. IN MAKING ITS RULINGS, THE TRIAL

COURT DID NOT IGNORE BUT RATHER

GAVE PROPER WEIGHT TO THE JURY’S

"YES" ANSWER TO INTERROGATORY NO.

G. HALLCO HAS NOT SHOWN THAT IT HAS A

“Sek Magee CARE So at CLE ie 27

SY: CAAA. ees Ee AAS 29

vi

TABLE OF AUTHORITIES

CASES

Addington v. Texas,

is hs ws wink 0.0 0 6 We ce aie 22

Amstar Corp. v. Envirotech Corp.,

Boo Bue be Cre. Ce. FFE) ow we ccc een 21

Atchinson v. Barrett,

SOR Fe ee ee GE, FRGT) nc icc ewcles 24-26

Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd.,

ae EE fib 5 blk noe OES BO ON 23

Bunch v. United States,

ge Bo eT +) re 21

Gallick v. Baltimore & Ohio R.R.,

ee es iis a kes bao On 23

In re M/V Peacock,

809 F.2d 1403 (9th Cir. 1987) ........... 21, 26

Jones v. Aero/Chem. Corp.,

921 Foe Bro Come Cee. 1990). gw oe ce cee 21

Richardson v. Suzuki Motor Co.,

868 F.2d 1226 (Fed. Cir. 1989).

« ot ow oan see Gb eeitn oh bolas 68 eee 23

Riley Hill General Contractors Inc. v. Tandy Corporation

303 Ove. 390; 737 P26 SOS (19ST) onc k ce ce es 21

Toner v. Lederle Laboratorie

828 F.2d 510 (9th Cir. 1987), cert. denied,

108 S.Ct. 1122 (1988) ..... POLS ee 23, 27

vii

RULES

Fe a oe kk so ove ove a i, 2, 19, 20, 26

> a re ae ll

OTHER

Restatements, Second, Judgments §70 ............ 28

ee

BO og re

=

A ee ee te

Sete. vege

1

I. STATEMENT OF THE CASE

A. OVERVIEW

Hallco has in its Petition both misstated and understated

the district court record. In Hallco’s "Questions Presented,"

the statements "there is uncontroverted prima facie evidence

that an adverse party willfully altered a key trial exhibit,"

"such misconduct affected the trial" and the "trial court

[gave] no weight to a jury verdict that an adverse party

willfully altered a key trial exhibit in an attempt to mislead

the court and jury" are not supported by the record. In its

Petition, Hallco makes no mention of the jury’s finding that

Foster proved "by clear and convincing evidence that the

1973 drive mechanism in the Wilkens 45-foot trailer move[d]

the slats in a 1-2-3 motion." References herein to "A" are to

the Joint Appendix of the present action on appeal before the

Court of Appeals for the Federal Circuit.

B. OMITTED MATERIAL FACTS

Following a five-week trial held in October and

November of 1992, a jury returned a verdict which included

"yes" answers to Interrogatories Nos. 13 and 15 which read:

Interrogatory No. 13: Did Foster prove by clear and

convincing evidence that Hallstrom failed to disclose the

best mode known to him when he filed the application

which became the ’760 patent, as to either claim 1 or

claim 4 of the ’760 patent? (A 1247)

Interrogatory No. 15: Did Foster prove by clear and

convincing evidence that the 1973 drive mechanism in

2

the Wilkens 45-foot trailer moved the slats in a 1-2-3

motion, and included a one-way mechanical coupling, in

the form of pull blocks on the push rods, for insuring

simultaneous movement of all slats in the conveying

direction? (A 1249)

and a "no" answer to Interrogatory No. 16 and a "yes"

answer to Interrogatory No. 17 which read:

Interrogatory No. 16: Do you find that Foster tried to

mislead the court in his 1991 affidavit, Defendant’s

exhibit 671, with respect to the 1973 45-foot Wilkens

drive unit? (A 1250)

Interrogatory No. 17: Do you find that Foster tried to

willfully mislead the court and jury with respect to the

drive unit, identified as plaintiff's exhibit 162, the drive

unit which Foster contends represents the 1973 45-foot

Wilkens drive unit? (A 1251)

The "yes" answer to Interrogatory No. 17 is what promoted

Hallco to file a motion for relief from judgment under Rule

60(b).

1. Best Mode. Foster’s "Best Mode" evidence was

for the most part the testimony of the patentee Olof A.

Hallstrom ("Hallstrom"). With respect to the "drive means"

disclosed in the ’760 patent, Hallstrom testified:

If I would consider this to be a machine drawing, a

drawing for production as opposed to a schematic

drawing, I would not do it this way, no. (A 1443)

* * * * *

The illustration of pin 30 there is simply a means of

connecting. It’s simply one of many means of

3

connecting. In actual practice, I believe most of these are

connected rigidly by one means or another. (A 1446)

Hallstrom testified that in actual practice the system

included a "push rod" about which he stated:

It is an extending arm which serves a dual purpose. It

helps to resist rotational forces upon the transverse drive

beam. It also provides for the placement [sic] of

abutment[s]. (A 1447)

In further regard to the disclosed pivot pin connections,

Hallstrom testified:

In actual practice a pivot pin was not used there. (A

1449)

[T]here was no point in it being pivotal. In fact, it would

be detrimental. Therefore, the connection was more of

a rigid nature. (A 1449)

[I]t’s desirable to reduce the tendency of the crossdrive

to roll... by having some of the rolling effect taken up

through a push rod and not being supported only by the

deck. (A 1450)

The ’760 patent includes the statements:

Another important object of this invention is to provide

a reciprocating conveyor of the class described in which

the fluid pressure drive system is formed of commercially

available components and therefore is of minimum cost.

(A 657)

* * * * *

—_—--

4

Moreover, the conveyor includes a fluid pressure drive

system composed of commercially available components.

The cost of manufacture, maintenance and repair thus is

reduced to a minimum. (A 660)

At trial, Hallstrom testified that the hydraulic cylinders

with check valves built into them, disclosed only

schematically in the ’760 patent, were not commercially

available. (A 1457-58) He further testified that it took him

a substantial time to develop a suitable check valve. (A 1458)

Prior to the filing of the ’760 application, Hallstrom

started using a hydraulic switching valve known as the Dupar

Dynamics "Walton" or "Rothrock" valve. (A 623-27, 670,

1636-43) This switching valve was not disclosed in the ’760

patent, but instead an air system valve was disclosed. With

respect to the air system valve, Hallstrom testified:

It worked up to the point that the operators would keep

their air systems to the trailer working properly. But if

there was not air pressure available then the system left

a little to be desired. (A 1454)

*_ * & *& *

There is also [a] question in my mind of the possibility

of an air leak developing in the system which could take

the air away from the air brakes of the vehicle and J got

concerned over the possibility of liability in the event

that brakes should fail. (A 1455)

Hallstrom was asked and he answered:

Q_ And so what did you do in response to that concern?

A We made this valving totally hydraulic so it operated

off of the oil hydraulic system.

5

Q Now, that’s a reference to the use of the Dupar

Dynamics valve which has also been referred to as

the Walton valve or the Rothrock valve?

A Yes (A 1455-56)

Hallstrom further stated:

The Rothrock valve was an internally hydraulical[ly]

activated valve which caused it to operate a little like a

wall switch that, [being] it’s one way or the other way;

and it’s a very desirable type of valve for our

application. (A 670)

Lee H. Jones, a Hallco dealer, testified that the air control

valves never worked and had to be replaced by the "hydraulic

switching valve", i.e. "a mechanical switching device that’s

all done in oil." (A 1259-63, 1433-36) Mr. Jones referred to

the hydraulic switching valve as "one great improvement." (A

1437)

In December of 1974, prior to the filing of the ’760

application in January of 1975, Hallstrom wrote a letter to a

prospective customer in which he stated:

We have now completed the major part of our R and D

and will soon be ready to market our product.

There are presently twenty (20) units working in a wide

variety of materials under all types of weather conditions,

From this experience we have developed a closed

hydraulic system free of external controls (electric, etc.).

( A 1674)

6

Based on this evidence, the jury found that Hallstrom had

not disclosed the "best mode". (A 476) Hallstrom did not

appeal the district court’s holding that claims 1 and 4 were

invalid for failure to disclose the best mode. There is no

connection between the "best mode” issue and PX 162, the

drive unit referred to in Interrogatory No. 17.

2. The Wilkens 1973 Trailer. At trial, four people

testified that in 1973 the drive mechanism in the Wilkens 45-

foot trailer moved the slats in a 1-2-3 motion and included a

one-way mechanical coupling in the form of pull blocks on

the push rods for insuring simultaneously movements of all

slats in the conveying direction. These people were

respondent Raymond Keith Foster ("Keith"), Art Wilkens,

Chuck Wilkens and Darryl Oakley.

Keith and Art Wilkens testified that prior to acquiring the

45-foot trailer, Art Wilkens had purchased from Keith a truck

which included an "inch" system conveyor. (A 1503, 1310-

11) Based on his experience with the "inch" conveyor, Art

Wilkens requested that the trailer be furnished with a longer

stroke conveyor. (A 1312-13) Keith passed this request on

to Hallstrom who then delivered the 1-2-3 drive unit (PX

162) to Keith. (A 1502-03) Keith installed the drive unit in

the trailer. Darryl Oakley, a South Dakota trucker, testified

that he was hired by Art Wilkens to pick up the trailer and

deliver it to Art Wilkens in Kansas. (A 1313) Darryl Oakley

first took the trailer to his home in South Dakota and used it

thirty-seven times before delivering it to Art Wilkens. (A

1398) During cross-examination Hallco’s attorney suggested

to Darryl Oakley that the conveyor was an "inch" system

conveyor. (A 1412-13) Darryl Oakley answered that he

knew nothing about the "inch" system conveyor; he was only

familiar with the 1-2-3 motion conveyor. (A 1413) Art

Wilkens and his son Chuck Wilkens testified that they both

7

used the trailer. (A 1316, 1370) After a while, they

experienced trouble caused by electrical control components

getting dirty. (A 1316) At times they had to manually

operate the control system. (A 1317-18, 1371-72) They did

this by detaching wires and tapping them on the trailer frame

to make the system operate. (A 1316-18, 1371-72) At trial,

Art Wilkens demonstrated this procedure with PX 162. (A

1333-35)

Keith testified that because of the problems experienced

by Art and Chuck Wilkens with the electrical control system,

he sought to develop a mechanical/hydraulic control system

that would duplicate the 1-2-3 motion. (A 1540-42) In the

latter part of 1973, Keith had Dupar Dynamics design for

him two mechanical/hydraulic systems for powering a

reciprocating slat conveyor, one in a 1-2-3 and the other in

a 1-2-3-4 motion. (A 561, 572, 1540-42) In early 1974,

Keith obtained a 1-2-3-4 system design from Paul Monroe,

a hydraulic design shop located in California. (A 1542) In

March of 1974, Keith bought a 1-2-3-4 contro! system from

Dupar Dynamics and installed it in a trailer which he had

built for the Three-Way Cattle Company. (A 382, 564-69,

1540-41) This system did not work properly. (A 1541) In

April of 1974, Foster made and installed a working drive

system that is presently in the Three-Way Cattle Company

trailer. (A 1541-52) At trial, Don Tonnagel and Richard

Lawson of Dupar Dynamics testified about their helping

Keith develop a mechanical/hydraulic control for 1-2-3 and

1-2-3-4 conveyors, starting in late 1973. (A 1290-1300, 1300-

04) Their testimony was supported by drawings of these

systems and purchase records of hydraulic components by

Keith from Dupar Dynamics. (A 559-72) A drawing of the

Paul Monroe 1-2-3-4 system design was also introduced at

trial. (A 573)

Regarding PX 162, during trial Keith was asked and he

answered:

Q

Q

A

Mr. Foster, with respect to this Exhibit 162 that

you ve been looking at. Did you make any. changes

in substance to the mechanism that causes the one,

two, three operation to occur?

No.

The changes were making cylinders unstick or

warped cylinders work and that sort of thing?

Stuck valves to become unstuck and limit switches

had to make contact where they were corroded.

You made reference to a Model T. If you were to in

1992 find an old Model T that had been sitting

around, would you have to do some cleaning up and

things with it to get it to work so you could show

someone how it works?

Yes, we would. In fact I did that many years ago.

That’s in effect what you did with this drive in front

of us?

That’s right. (A 1601-02)

Based on this evidence, the jury answered "yes" to

Interrogatory No. 15., i.e. found that Foster had proved by

clear and convincing evidence that the 1973 drive mechanism

in the Wilkens 45-foot trailer moved the slats in a 1-2-3

motion, etc. (A 1249, 523)

9

3. Keith’s 1991 Affidavit. In August of 1991,

Foster filed a motion for summary judgment in which he

contended inter alia that, "If claims 1 and 4 are construed

broadly enough to embrace the RF II conveyor, they would

also embrace the Wilkens ’73 trailer and thus be invalid."

This motion was supported by an affidavit from Keith in

which he described the 1-2-3 mode of operation of the

conveyor in the Wilkens trailer and made reference to

photographs and drawings of PX 162. (A 1675-93) Keith’s

affidavit was corroborated by affidavits from Art Wilkens,

Chuck Wilkens and Darryl Oakley. (A 1694-1702, 1714-16)

The district court found that there were questions of material

fact and for this reason denied the motion.

With respect to Keith’s affidavit, at trial Hallco’s attorney

questioned Keith and he answered:

Q Okay. So when you say Exhibit L, M, N, O, P are

photographs of the 1973 drive mechanism for the

conveyor in the Wilkens ’73 trailer, you were

referring to this drive mechanism, correct?

A That’s what I - - we thought so when we wrote this

up.

Q Okay. And you didn’t say anything in this [affidavit]

and you didn’t say anything until yesterday about the

fact that this was more or less an assemblage of parts

from other prior units?

A At one point, we started here with - - we had five

model T’s out in the back. We had to make some of

them run. And so the parts - - or some of them were

wrong on one and some wrong on another. I thought

10

we did a marvelous job of getting two of them to

run.

Q You did a marvelous job of getting one of them to

run in the one, two, three motion, but you never told

the Court and you never told anyone until yesterday

that this wasn’t the same unit, did you?

A It’s basically the same unit. Now, I told you there

was a mistake made by some of our men that they

lost some of the parts. At one time we took them

and cleaned. I told them to clean them up and steam

clean them, and some of the parts were lost. (A

1599-1600)

During redirect Keith was asked and he answered:

Q Now, the substance of your affidavit that you made,

the affidavit you’ve been questioned about, is that in

substance correct?

A The substance is correct. I’m not sure everything

about it is perfect, but in substance it’s correct. (A

1602)

Based on the testimony of Keith and the corroborating

testimony of Art Wilkens, Chuck Wilkens, Darryl Oakley,

Don Tonnagel and Richard Lawson, and the corroborating

exhibits, the jury answered "no" to Interrogatory No. 16, i.e.,

found that Foster did not try to mislead the court in his 1991

affidavit with respect to the 1973 45-foot Wilkens drive unit.

(A 1250, 523)

4. PX 162. Foster sought and obtained the court’s

permission to demonstrate PX 162 and some other prior art

11

devices to the court and jury. The demonstrations were held

in a rented building that was several blocks from the

courthouse. The time allotted for the demonstrations was

limited. Therefore, Foster first presented the testimony of

Art Wilkens who testified with respect to PX 162 and another

exhibit and demonstrated PX 162. (A 1324-35) Art Wilkens

also demonstrated how back in 1973 he detached a pair of

control wires and tapped them on the trailer frame to make

the drive unit work. (A 1333-34) Near the end of the day,

the district court judge requested that the parties finish taking

testimony in the courtroom. (A 1357-59) In response,

Hallco’s attorney asked the court for permission to ask Keith

some questions regarding PX 162 and another exhibit before

returning to the courtroom. (A 1358-59) The district court

granted his request. (A 1358) Thus, Keith was in effect

cross-examined with respect to PX 162 before he presented

direct testimony regarding these exhibits. It was during this

examination that Keith first testified that PX 162 had to be

restored in order to make it work. (A 1360-65) Later during

examination by his own attorney, Keith was asked and he

answered:

Q Yesterday you had some cross-examination in effect

on this before you had any direct questioning - - .

A Okay.

Q_ --about it. And it’s correct that it’s your testimony

that this unit or [a] unit basically similar, something

that had the working parts but maybe different

cylinder parts, was in that 1973 Wilkens trailer when

it was picked up by Mr. Oakley?

A Yes, sir. (A 1513)

CN EC a SURE ee STE ee

ee bey Oren. hh OF Ades ae ei bd te ee,

12

During questioning by Hallco’s attorney, Keith testified

that in order to make PX 162 work his workmen had to take

the drive unit apart and clean it and had to replace some of

the electrical components and a warped cylinder. (A 1360-65,

1601-02) The replacement cylinder was identical to the

original cylinder and it came from an old "inch" system drive

unit. (A 1506-09) Keith also testified that one of his

workmen reassembled PX 162 with angle iron base members

from one of the other drive units and the original base

members were lost. (A 1361-62) These base members were

identical to the original base members except for the

placement of some mounting holes. As previously stated,

Keith was asked by Foster’s attorney and he answered:

Q Mr. Foster, with respect to this Exhibit 162 that

you’ve been looking at. Did you make any changes

in substance to the mechanism that causes the one,

two, three operation to occur?

A No. (A 1601)

It has always been Keith’s position that when he obtained

PX 162 from Hallstrom back in 1973, it came with the 1-2-3

mode of operation. If PX 162 was changed from an "inch"

motion to a 1-2-3 motion, it was done by Hallstrom back in

1973.

As its last witness on the last day for taking testimony,

Hallco presented Hallstrom to testify with respect to PX 162.

(A 1083-1101) Hallstrom pointed out to the jury that a cam

plate had been removed from a control bar in PX 162 and

there was "shiny" metal where the cam plate had once been

attached. Hallstrom also made reference to a "milled out"

region in a guide member in PX 162. (A 1092-93) Hallstrom

suggested that this member belonged on DX 673, an "inch"

13

system drive unit and that a like member on DX 673 which

did not include a "milled out" portion belonged on PX 162.

(A 1091-92) Hallstrom did not say that he had actual

knowledge that Keith or someone else associated with Foster

had removed the cam from the control rod.

With respect to the main issue regarding PX 162, viz.

what was its mode of operation in 1973, the jury did not

. believe Hallstrom; it instead believed Keith. (A 1249, 523)

The jury found that Foster had by "clear and convincing

evidence established that the 1973 drive mechanism in the

Wilkens 45-foot trailer moved the slats in a 1-2-3 motion"

(Interrogatory No. 15). (A 1249, 523) The jury believed

Keith’s 1991 affidavit testimony that the slats in the Wilkens

trailer had a 1-2-3 motion in 1973 (Interrogatory No. 16). (A

1250, 523)

5. Foster’s Trial Strategy. Foster’s trial strategy

was to inform Hallco early as to the witnesses and exhibits

Foster would be using at trial with respect to all of the issues.

This was done in order to determine which issues would be

in dispute well before trial. Foster first put Hallco on notice

that Foster was going to be relying on PX 162 and the

testimony of Keith, Art Wilkens, Chuck Wilkens and Darry]

Oakley, back in August of 1991, when Foster filed its motion

for summary judgment. (A 27, items 271-73) In the Pretrial

Order, Foster defended Hallco’s charge of infringement by

contending inter alia:

(3) Claim 1 is invalid, if construed broadly enough to

cover the RF II conveyor because it would then also

embrace the prior art Marion conveyor that was

demonstrated in the January 1974 show, the prior art 45-

foot conveyor sold to Wilkens in 1973, the prior art

conveyor that was delivered by FOSTER to the Three-

Per Se

14

Way Cattle Co. in April of 1974, and the prior art

conveyor that was delivered by FOSTER to Howard Hay

Co. in April of 1974.

* * a * *

(6) Claim 4, if construed broadly enough to cover the

RF II conveyor, would be invalid because it would then

also embrace the prior art 45-foot conveyor sold to

Wilkens in 1973, the prior art Three-Way Cattle Co.

conveyor that was delivered by FOSTER to the Three-

Way Cattle Co. in April of 1974, and the prior art

conveyor that was delivered by FOSTER to Howard Hay

Co. in May of 1974.

(7) Claims 1 and 4 are invalid, if construed broadly

enough to cover the original conveyor sold to IMCO and

leased to Oakley in July of 1974, the prior art 45-foot

conveyor sold to Wilkens in 1973, and/or the replacement

conveyor that was built in 1974 and furnished to Oakley

in November or December of 1974, because

HALLSTROM would have failed to disclose the best

mode know to him at the time he filed the patent

application in January of 1975. (A 42, item 422)

6. Hallco’s Trial Strategy. In the Pretrial Order,

Hallco’s sole contentions regarding validity of the ’760 patent

were:

(2) The *760 patent is presumed valid, so Hallco

needs to make no showing as to validity or

enforceability. However, Foster is barred by the 1982

settlement from asserting invalidity or unenforceability.

(3) In the event Foster asserts invalidity of the ’760

patent, Hallstrom’s conception of the invention preceded

alleged prior art Foster is contending invalidates the 760

patent. (A 42, item 422)

15

In June of 1992, Hallstrom and Hallco’s attorney went to

Foster’s plant in Madras, Oregon and witnessed a

demonstration of PX 162 and two other drive units. (A 1619)

However, between August of 1991 and the start of trial

Hallco did not depose Keith, Art Wilkens, Chuck Wilkens or

Darryl Oakley, or take any other discovery with respect to

PX 162 or the Wilkens trailer.

During the last week of trial, Hallco’s attorney initiated

several discussions with the court with respect to the division

of the remaining testimony time between the parties. His

main concern was that he have the last two hours of time on

the last day of taking testimony in which to present final

rebuttal testimony. (A 1531) He did not at any time inform

the court that he needed additional time and he did not ask

for a continuance. To the contrary, he told the court, "I think

we’re moving along real well now." (A 1488) On the last

day of trial he stated to Foster’s attorney, "Why don’t you

have an extra half hour this afternoon . . . as long as I have

after 2 o’clock." (A 1531)

As previously stated, during the last two hours on the last

day for taking testimony, Hallco presented Hallstrom as a

witness with respect to PX 162. (A 1083-1101) During his

testimony Hallstrom made allegations that someone had

altered PX 162. Hallco’s attorney has since contended that

the alterations were the product of fraud or misconduct by

Keith.

On that last day of taking testimony, Hallstrom testified

that in June of 1992 he saw the "shiny" metal when he was

at Foster’s plant viewing operation of PX 162. (A 1619-20)

During trial, he was asked and he answered:

Q You never pointed it out at that time?

16

A_ I would have, but Pete shut me up. (A 1619-20)

"Pete" is Peter E. Heuser, Hallco’s attorney. In a trial

memorandum, Hallco stated that it did not make PX 162 an

issue in the Pretrial Order because Hallco assumed all along

that Foster had a reasonable explanation for the "shiny"

metal. (A 1850) :

Hallco did not present Interrogatories Nos. 16 and 17 to

the court until after the completion of testimony. (A 46, item

481)

C. MISSTATEMENTS

Key misstatements made in the Petition are:

1. There is uncontroverted prima facie evidence showing

"fraud" in the form of a wiliful alteration of PX 162 to

change its mode of operation,

2. Foster has not presented any explanation as to

removal of the cam plate, the presence of "shiny" metal, the

presence of a milled out portion in a guide member in PX

162, and Sam Windsor’s testimony that shortly before trial he

inspected "another drive unit" which operated in the 1-2-3

mode,

3. Hallco presented uncontroverted prima facie evidence

that misconduct by Foster affected Hallco’s presentation of its

case,

4. The trial court gave no weight to the jury’s "yes"

answer to Interrogatory No. 17, and

17

5. The trial court failed to address the affect of Foster’s

conduct on "the integrity of the judicial process."

In response:

1. No Prima Facie Showing. At trial, Hallstrom

contended that Keith had altered PX 162 shortly before trial,

to change its mode of operation, and in the process removed

a cam plate, leaving "shiny" metal where the cam plate had

been attached. Keith countered by stating that when he

received PX 162 from Hallstrom in 1973 it had a 1-2-3 mode

of operation. Keith’s testimony was corroborated by Art

Wilkens, Chuck Wilkens and Darryl Oakley, each of whom

had first hand knowledge of how PX 162 operated in 1973.

It is Foster’s position that if PX 162 is a modified "inch"

system drive unit, the modifications were made by Hallstrom

back in 1973, before the drive unit was delivered to Foster.

2. The Cam Plate. Foster agrees that a cam plate was

removed from a control bar in PX 162. However, Keith

testified that he did not remove the cam plate. It is Keith’s

position that the cam plate was removed back in 1973 before

the drive unit was delivered to Keith.

3. The "Shiny" Metal. It is undisputed, PX 162 was

restored and operated in August of 1991 and at that time

Foster took pictures of PX 162 in Operation that became

exhibits in Foster’s Motion for Summary Judgment. It is also

undisputed, PX 162 was demonstrated to Hallstrom and his

attorney in June of 1992. There is testimony by Foster that

PX 162 had been stored outside at times between August of

1991 and shortly before trial. There was no testimony by

anyone as to how the region of the control bar where a cam

plate had once been attached became "shiny" on the last day

of trial, only accusations by each side. However, Foster

testified that PX 162 was steam cleaned shortly before trial.

at

18

This could be why the region in question was "shiny" on the

last day of trial.

4. The "Milled Out" Portion. During his trial

testimony and since, Hallstrom has suggested that the

member which included the "milled out" portion had been

interchanged with a like member in DX 673. On page 5 of

its Petition, Hallco implies that the corresponding member in

DX 673 includes a "milled out” portion. This is not true.

The corresponding member in DX 673 does not include a

"milled out" portion.

5. Sam Windsor’s Testimony. Sam Windsor testified

that before trial he inspected a drive unit that operated in the

1-2-3 mode, the same as PX 162. Sam Windsor did not say

that the drive unit which he examined was a different drive

unit. PX 162 was the drive unit that was inspected by Sam

Windsor before trail.

6. Alleged Misconduct. There is evidence that Foster

cleaned and restored PX 162 before demonstrating it at trial.

There is evidence that Foster first demonstrated PX 162 and

then presented testimony by Keith as to what restoration had

to be done in order to make PX 162 workable. Based on all

of the evidence, the trial court ruled that Hallco had not

established misconduct by clear and convincing evidence.

7. Interrogatory No. 17. It is incorrect to say that the

trial court gave no weight to the jury’s "yes" answer to

Interrogatory No. 17. The trial court considered the "yes"

answer to Interrogatory No. 17 in light of the jury’s "yes"

answer to Interrogatory No. 15, the jury’s "no" answer to

Interrogatory No. 16, and the court’s own evaluation of the

evidence presented and the witness demeanor displayed

8. Integrity Of The Judicial Process. The district

court took Hallco’s motion for relief for what it was; a

desperation attempt by a losing party to reverse its loss. The

trial court’s ruling was a demonstration of "the integrity of

19

the judicial process." The district court thwarted an

unwarranted attack on a "honestly procured judgment."

Il. SUMMARY OF ARGUMENT

This is not an appropriate case for review on certiorari.

There are no issues or conflicts of federal law requiring

clarification or decision by this Court, and underlying factual

issues were resolved against Petitioner.

A party requesting relief from judgment under Rule

60(b), based on alleged fraud or other misconduct of an

adverse party, must prove the alleged fraud or other

misconduct by clear and convincing evidence. Hallco is not

contending that the burden of proof is less than "clear and

convincing" or that there is a conflict amongst the circuits as

to the burden of proof.

With respect to the jury verdict that Foster "tried to

willfully mislead the court and jury", it was not an abuse of

discretion for the trial court to hold that "the court cannot

conclude that the jury made this finding by clear and

convincing evidence." It was also not an abuse of discretion

for the trial court to decide the question and rule that Hallco

had not shown by "clear and convincing" evidence that Foster

had “willfully attempted to mislead the court and jury." The

trial court itself viewed the demonstration of PX 162 and

witnessed the demeanor of all the witnesses.

It was not an abuse of discretion for the district court to

rule that “the trial tactics and strategy of Foster did not deny

Hallco an opportunity to fully and fairly present its case or

defenses." The trial court was aware of Hallco’s failure to

take discovery as to PX 162 and was aware of Hallco’s trial

20

conduct including its failure to ask for more time or request

a continuance.

In making its rulings, the trial court did not ignore, but

in fact considered, the jury’s "yes" answer to Interrogatory

No. 17. The trial court also considered Hallco’s answers to

Interrogatories Nos. 15 an 16 and took a view of the case

which made the special interrogatories consistent.

Furthermore, Hallco is not entitled to relief from

judgment with respect to the "best mode issue because

Hallstrom has not attempted to show, and cannot show, the

it has a substantial case to present with respect to the "best

mode issue.”

Ill. ARGUMENT

A. THERE ARE NO LEGAL ISSUES NEEDING

RESOLUTION

As discussed above, the questions presented by Hallco are

based on premises that are not supported by the record. The

question of possible misconduct by Foster, and its affect on

the trial, were hotly contested issues. After considering all

of the evidence and argument presented by the parties,

including the demonstration of and testimony respecting PX

162, and its observing the demeanor of the witnesses as they

testified, the trial court ruled in favor of Foster as to

Interrogatory 17. In the process, the trial court considered

and gave proper weight to the jury’s "yes" answer to

Interrogatory No. 17.

The district court ruled, and the parties agreed, the

controlling law respecting Hallco’s motion for relief under

Rule 60(b) is the law of the United States Court of Appeals

21

for the Ninth Circuit. v. Envi , 823

F.2d 1538, 1550 (Fed. Cir. 1987). To receive relief under

Rule 60(b), "the moving party must establish that a judgment

was obtained by fraud, misrepresentation, or misconduct, and

that the conduct complained of prevented the moving party

from fully and fairly presenting the case."

Peacock, 809 F.2d 1403, 1404-5 (9th Cir. 1987). Hallco has

made no attempt to show that there is a conflict among the

circuits with respect to this two-prong test.

B. FRAUD OR OTHER MISCONDUCT MUST BE

ESTABLISHED BY CLEAR AND CONVINCIN G

EVIDENCE

In its decision denying Hallco’s motion for a new trial

and relief from judgment, the district court ruled:

Hallco must first establish the fraudulent act by clear and

convincing evidence. ; » 921

F.2d 875, 878-79 (9th Cir. 1990). In Jones, the Ninth

Circuit Court ruled that "under Rule 60(b)(3), the movant

must, (1) prove by clear and convincing evidence that the

verdict was obtained through fraud, misrepresentation, or

other misconduct", citing Bunch v. United States, 680

F.2d 1271, 1283 (9th Cir. 1982) which made the same

holding.

Oregon law is the same. In

303 Or. 390, 392, 737 P.2d

595, 597 (1987), the Oregon Supreme Court stated:

[w]e hold that the burden of persuasion for

common law deceit requires the proponent to

prove each of the elements of deceit by clear

and convincing evidence.

22

In its decision, the Oregon court discussed the origins and

meanings of "preponderance" and "clear and convincing"

evidence and it made reference to a statement by then Chief

Justice Warren Burger, in Addington v. Texas, 441 U.S. 418,

424 (1979), that one typical use of the "clear and convincing"

standard is in "civil cases involving allegations of fraud or

some other quasi-criminal wrongdoing.”

Hallco has made no attempt to show that there is a

conflict among the circuits regarding the burden of proof

issue or that the burden of proof should be something other

than "clear and convincing”.

C. IT WAS NOT AN ABUSE OF DISCRETION

FOR THE TRIAL COURT TO RULE THAT IT

COULD NOT CONCLUDE THAT THE JURY

HAD FOUND THAT FOSTER "TRIED TO

WILLFULLY MISLEAD THE COURT AND

JURY" BY "CLEAR AND CONVINCING"

EVIDENCE

Halico wrote Interrogatory No. 17 and is solely

responsible for it not including the "clear and convincing”

standard of proof. It was proper and not unreasonable for the

district court to rule that it could not say that the jury applied

the correct standard of proof. Whatever prompted the jury to

answer "yes" to Interrogatory No. 17, it did not make the

jury disbelieve either Foster’s 1991 affidavit testimony or the

evidence presented at trial which prompted the jury to answer

"no" to Interrogatory No. 16 and "yes" to Interrogatory No.

15. The court correctly recognized that the jury’s "clear and

convincing" finding, in its answer to Interrogatory No. 15,

constitutes a finding by the jury that the “tried to willfully

mislead" conduct, whatever it was, was not material to the

main fact question that the jury was asked to answer.

23

The Ninth Circuit requires trial and appellate courts to

seek reconciliation of apparently inconsistent verdicts:

"When faced with a claim that verdicts are inconsistent,

the court must search for a reasonable way to read the

verdicts as expressing a coherent view of the case, and

must exhaust this effort before it is free to disregard the

jury’s verdict and remand the case for a new trial."

T V. | ories, 828 F.2d 510, 512 (9th

Cir. 1987), cert. denied, 485 US. 942 (1988), citing

ick v i io R.R., 372 U.S. 108, 119

(1963), also see Ri y. Suzuki Motor Co., 868

F.2d 1226, 1228 (Fed. Cir. 1989).

"Where there is a view of the case that makes the jury’s

answers to special interrogatories consistent, they must be

resolved that way. For a search for one possible view of

the case which will make the jury’s finding inconsistent

results in a collision with the Seventh Amendment."

Atlanti f Stevedores, Inc. v. Ellerman Lines Ltd.,

369 U.S. 355, 364 (1962).

"But it is the duty of the courts to attempt to harmonize

the answers, if it is possible under a fair reading of them:

"Where there is a view of the case that makes the jury’s

answers to special interrogatories consistent, they must be

resolved that way." Gallick v. Baltimore & Ohio R.R.,

372 U.S. at 119, citing i vedores, Inc.

v. Ellerman Lines, Ltd., 369 U.S. at 364.

Quite clearly, the district court followed the mandate of

these courts and took a view of the case which made the

jury’s findings consistent.

24

D. IT WAS NOT AN ABUSE OF DISCRETION

FOR THE TRIAL COURT TO RULE THAT

HALLCO HAD NOT SHOWN BY "CLEAR AND

CONVINCING" EVIDENCE THAT FOSTER

HAD "WILLFULLY ATTEMPTED TO

MISLEAD THE COURT AND JURY"

Faced with Interrogatory No. 17, and its omission of the

“clear and convincing" standard, and the vagueness of "tried

to willfully mislead", the district court did the reasonable

thing. That was to independently decide the question

presented by Interrogatory No. 17, using the correct standard

of proof. The jury was not furnished with any instructions

as to the meaning of "willfully", “attempt” or "mislead" in

relationship to "fraud" or "misconduct." Ezch juror was left

to his or her own frame of reference as to what he or she

thought amounted to "tried to willfully mislead." On the

other hand, the district court judge had an understanding of

what amounts to legal misconduct. She was present

throughout the trial, she viewed the demonstration of PX 162,

including the "shiny" metal on PX 162, and viewed DX 673

and witnessed the demeanor of Keith, Art Wilkens, Chuck

Wilkens, Darryi Oakley, Don Tonnagel , Richard Lawson and

Hallstrom as they testified. Under all of the circumstances,

it was entirely reasonable for the trial court to rule that

Hallco had not shown by clear and convincing evidence that

Foster had intended to mislead the court and jury.

As stated by the Ninth Circuit in Atchinson v. Barrett,

246 F.2d 846 (9th Cir. 1957), a motion for relief of judgment

or for a new trial, based on an allegation of misconduct, "is

directed to the sound discretion of the trial court, and

particularly to the discretion of the trial judge who presided

in the litigation in which the judgment (now alleged as

25

fraudulent) was entered." Atchinson v. Barrett, 246 F.2d at

849 (citations omitted). The Atchinson court further stated:

The trial judge saw and heard the plaintiff; saw his

twitchings, what they were and what they were not, as

did the jury. He saw or heard the other matters relied on

by appellant; he felt the "climate" of the trial. The trial

judge found no fraud nor misrepresentation. The Court

of Appeals should not and will not substitute its judgment

for that of the trial court, nor reverse the lower court’s

determination save for an abuse of discretion. Atchinson

v. Barrett, 246 F.2d at 849.

Hallco has not attempted to show that there is a conflict

amongst the circuits regarding this "sound discretion of the

trial court" rule.

E. IT WAS NOT AN ABUSE OF DISCRETION

FOR THE DISTRICT COURT TO RULE THAT

"THE TRIAL TACTICS AND STRATEGY OF

FOSTER DID NOT DENY HALLCO AN

OPPORTUNITY TO FULLY AND FAIRLY

PRESENT ITS CASE OR DEFENSES"

The trial court was aware that Hallco had been informed

as early as August of 1991 of Foster’s position with respect

to PX 162 and that testimony would be coming from Keith,

Art Wilkens, Chuck Wilkens and Darryl Oakley with respect

to how PX 162 operated back in 1973. The trial court was

aware of the unused pretrial opportunities of Hallco (1) to

conduct discovery with respect to PX 162, (2) to make the

alleged alteration of PX 162 an issue in trial by, before trial,

adding this issue to the Pretrial Order, or (3) to take steps to

exclude PX 162 from the trial. Also, the trial judge was

present throughout the trial and was aware that Hallco did not

26

at any time ask for additional time to present testimony and

it did not at any time ask for a continuance. The trial court

was aware that Hallco’s attorney informed it that "I think

we’re moving along real well now", etc.

Under the Ninth Circuit rule set forth in M/V_ Peacock,

supra, because the trial court had found that Foster’s

judgment was not obtained by fraud, misrepresentation or

misconduct, it was not necessary for the court to find that

Hallco had not been prevented from fully and fairly

presenting its case. In any event, the court proceeded to

decide this issue. The trial court’s finding that "the trial

tactics and strategy of Foster did not deny Hallco an

opportunity to fully and fairly present its case or defenses" is

a ruling that is subject to the "sound discretion of the trial

court" rule set forth in Atkinson. Hallco has not attempted

to show that there is a conflict amongst the circuits regarding

this rule or that this rule should not be followed for some

other reason.

F. IN MAKING ITS RULINGS, THE TRIAL

COURT DID NOT IGNORE BUT RATHER

GAVE PROPER WEIGHT TO THE JURY’S

"YES" ANSWER TO INTERROGATORY NO.

17.

On page 11 of its Petition, Hallco states:

The question left completely unanswered, even by those

circuits which have established Rule 60(b)(3) guideposts,

is whether the presentation of uncontroverted prima facie

evidence demonstrating fraud or misconduct requires the

granting of a Rule 60(b) motion, or whether a court can,

in its discretion, completely ignore uncontroverted

evidence offered to prove fraud.

27

Firstly, this case does not involve "uncontroverted prima

facie evidence demonstrating fraud or misconduct. The

evidence argued by Hallco was controverted by Foster.

Interrogatory 17 was prepared by Hallco and was directed to

"tried" conduct. The jury was not asked to find and did not

find that Foster committed "fraud" or that Foster committed

"perjury", or that Foster "doctored" PX 162, or that Foster

"manufactured evidence", or that Foster "destroyed and/or

concealed evidence." The jury found that Foster did not try

to mislead the court in his 1991 affidavit which included

pictures of PX 162 and described PX 162 as having a 1-2-3

motion when he obtained it from Hallstrom in 1973 and

installed it in the Wilkens trailer. The jury found that Foster

proved by "clear and convincing" evidence that the 1973

drive in the Wilkens trailer moved the slats in a 1-2-3 mode

and included pull blocks on the push rods. Hallco first asked

the district court, then the federal circuit court, and now asks

this Court to completely ignore these findings by the jury.

Faced with the jury’s answers to Interrogatories Nos. 15, 16

and 17, the district court followed the rule in Toner and

"search[ed] for a reasonable way to read the verdicts as

expressing a coherent view of the case." Thus, it was

necessary for the district court to exercise its sound discretion

when it was forced to consider the jury’s "yes" answer to the

"tried" conduct of Interrogatory No. 17 in light of the jury’s

finding that Foster had by "clear and convincing" evidence

established that in 1973 the Wilkens conveyor moved the

Slats in a 1-2-3 mode and included pull blocks on the push

rods.

G. HALLCO HAS NOT SHOWN THAT IT HAS A

"BEST MODE" CASE.

Foster vehemently denies Hallco’s contention that Foster

changed the mode of operation of PX 162 and the trial court

28

found for Foster on this issue. But, in any event, there is no

connection between PX 162 and the reasons why the jury

found that Hallstrom had not disclosed the best mode.

In Restatements, Second, Judgments §70, at page 183, it

is stated:

Finally, the party seeking relief must demonstrate, before

being allowed to present his case, that he has a

substantial case to present. . ..

In its Petition, Hallco has made no attempt to establish that

it has a best mode case to present. In its Brief to the Federal

Circuit, Hallco stated:

[O]ther than Mr. Foster himself, the only live witness

testifying in support Foster’s best mode defense was

Darryl Oakley, who testified as to both best mode

(A1050-53) and mode of motion of the early Wilkens

trailer. (A1048-49)

This is a clear misstatement of the record. Foster's "best

mode" defense is based on the testimony of Hallstrom

discussed above starting on page 2 of this brief.

29

IV. CONCLUSION

Hallco’s Petition should be denied because the case

presents no issue appropriate for the court’s review, and

because the lower courts’ holdings are not in error.

Respectfully submitted,

DELBERT J. BARNARD

WA State Bar No. 00415

GLENN D. BELLAMY

WA State Bar No. 17626

BARNARD, PAULY

& BELLAMY, PS.

P.O. Box 58888

Seattle, WA 98138-1888

(206) 246-0568

Attorneys for Respondent

November 30, 1994