Petition for Writ of Certiorari — Cryo-Trans, Inc. v. General American Transportation Corp.

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Supreme Court, U.S.

FILED

961098 JAN 7 1997

No. POrIce Or THE CLERK

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1996

CRYO-TRANS, INC.,

Petitioner,

GENERAL AMERICAN TRANSPORTATION CORPORATION,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

Of Counsel: DONALD R. DUNNER

(Counsel of Record)

JAMES P. DONOHUE HERBERT H. MINTZ

BRUCE A. KASER HOWARD A. KWON

MILLER, NASH, WIENER, FINNEGAN, HENDERSON, FARABOW,

‘HAGER & CARLSEN LLP GARRETT & DUNNER, LLP

4440 Two Union Streeet 1300 I Street, N.W.

Seattle, Washington 98101-2352 Washington, D.C. 20005-3315

(206) 622-8484 (202) 408-4000

Counsel for Petitioner

January, 1997 Cryo-Trans, Incorporated

PRESS OF BYRON S. ADAMS # WASHINGTON, D.C. # 1-800-347-8208

QUESTION PRESENTED

In Markman v. Westview Instruments, this Court recognized

that the construction of a patent claim presents a mixed question

of fact and law for the trial judge. Is the U.S. Court of Appeals

for the Federal Circuit correct in its practice of according no

deference to the underlying fact findings upon which the trial

judge’s claim construction in a patent infringement action is

based?

PARTIES TO THE PROCEEDING

The parties to the proceedings in the United States Court of

Appeals for the Federal Circuit were Petitioner Cryo-Trans, Inc.

and Respondent General American Transportation Corporation.

Cryo-Trans, Inc. does not have any parent companies or

subsidiaries.

ili

TABLE OF CONTENTS

Page

wh py By ck iy y ore i

PARTIES TO THE PROCEEDING ............. ii

eye Cys 6 44 5 | > Se Vv

ee ee 1

SE ee ee ee 2

FEDERAL RULE INVOLVED ...............-.- 2

STATEMENT OF THE CASE ...............-; 3

1. The Cryo-Trans Invention .............. 4

2. GATC’s Accused Railcar .............. 7

3. District Court Proceedings ............. 8

4. The Federal Circuit’s Decision .......... 11

REASONS FOR GRANTING THE PETITION ..... 14

I. The Petition Raises an Important Issue ..... 14

II. The Federal Circuit’s Practice Is in Conflict

with Supreme Court Precedent ..........-. 17

Ee a 23

APPENDIX:

Opinions of the United States Court of Appeals for the

Federal Circuit (Aug. 14, 1996). ........... la

Memorandum Opinion and Order of the United States

District Court (July 14, 1995) ...........- 18a

Memorandum Opinion and Order of the United States

District Court Supplementing Findings and Judgment

CO. Re BE ae bie ae ee ee 67a

Order of the United States Court of Appeals Denying

Petition for Rehearing and Suggestion for Rehearing

A ee CE... FO Se icv eter eae wae 77a

TABLE OF AUTHORITIES

Page

Cases:

Anderson v. City of Bessemer City, 470 U.S. 564

CRU L x aia: 3 > 0p ee ce moe eee 19

Baumgartner v. United States, 322 U.S. 665 (1944) ... 20

Cooter & Gell v. Hartmarx Corp., 496 U.S. 384

SR nk ee Ok eo eee 18, 21

Elf Atochem North Am. Inc. v. Libbey-Owens Ford Co., 37

U.S.P.Q. 2d 1065 (D. Del: 1995) .......+-4-- 16

Exxon Chem. Patents, Inc. v. Lubrizol Corp., 64 F.3d

1553 (Fed. Cir. 1995), cert. denied, 116 S. Ct. 2554

COND ei ae dh eee ee ee eee ees 15

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. , 72

26 O57 Ce, Ea, BR) ik 6 ne tea cess 15

First Options of Chicago, Inc. v. Kaplan, 115 S. Ct. 1920

CON 5h hers His ae 18, 20, 22

Gasperini v. Center for Humanities, Inc., 116 S. Ct.

et CE 6 6 a RK KOE eS ees 17, 19

Hoechst Celanese Corp. v. BP Chem. Ltd., 78 F.3d 1575

(Fed. Cir.), cert. denied, 65 U.S.L.W. 3265 (U.S.

SO sib erence ok oe ee 15

Huang v. Autoshade, Inc., CV 92 6487 RJK (C.D. Cal.

Sis. 39: GH os ewe ee ae eee ee 14

(Table of Authorities continued)

Page

Loral Fairchild Corp. v. Victor Co. of Japan, 906 F. Supp.

Tee GE Es EE vk Cea ee ee ee 14

Lucas-Aerospace, Ltd. v. Unison Indus., L.P., 890 F.

ae. SEP CED. EOE. ISGOY «0 0.0 eb ease 0 ke 4 16

Markman v. Westview Instruments, Inc., 517 U.S. _, 116

eR 0). | ee ree passim

Markman v. Westview Instruments, Inc., 52 F.3d 967

(Fed. Cir. 1995) (in banc), aff'd, 116 S. Ct. 1384

CTSPOP ccc tcc cue eweeraseeker cna passim

Metautllics Sys. Co. v. Cooper, No. 96-1290 (Fed. Cir.

IOOV. 15, ISFG) nc cere scncvteopes tees 17

Miller v. Fenton, 474 U.S. 104 (1985) .......... 17, 21

Moll v. Northern Telecom, Inc., No. 94-5451 (E.D. Pa.

BZ; FOGG) on on 0 66 6 ie bee Ces 14

Ornelas v. United States, 116 S. Ct. 1657 (1996) . . 18, 19, 22

Salve Regina College v. Russell, 499 U.S. 225 (1991). . 18, 22

United Carbon Co. v. Binney Co., 317 U.S. 228 (1942) .. 19

Wainwright v. Sykes, 433 U.S. 72 (1977)... ...... 17

Weiner v. NEC Elec., Inc., No. 96-1052 (Fed. Cir. Dec.

O.TGGR) nick ck wih ec cbstttmawia heen 17

Vil

(Table of Authorities continued)

Page

Winans v. Denmead, 56 U.S. (15 How.) 330 (1853) . . 21, 22

Statutes and Rules:

: Li Cokl By”: | narra Reka Sea ee 2

28. U.S.C. $8 1292(c), 1295 2... cee ecw cee 3

i ie a a | rer eee a 2, 4, 9, Ze

Miscellanecus:

Steven Alan Childress & Martha S. Davis, Federal

Standards of Review (2d ed. 1992) .....-.-.-+-- 20

S att AR ae ait ae AE Acti nei tb. Cab tis ae what Blasidecins Sk

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1996

No. 96-

CRYO-TRANS, INC.,

Petitioner,

GENERAL AMERICAN TRANSPORTATION CORPORATION,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioner Cryo-Trans, Inc. respectfully petitions this

Court to grant a writ of certiorari to review the judgment of

the United States Court of Appeals for the Federal Circuit.

OPINIONS BELOW

The opinions of the court of appeals, Appendix (“App.”)

la-17a, are reported at 93 F.3d 766. The opinions of the

district court, App. 18a-76a, are reported at 893 F. Supp. 774

~ and 897 F. Supp. 1121.

JURISDICTION

The judgment of the court of appeals was entered on

August 14, 1996. App. la. A timely petition for rehearing

and a suggestion for rehearing en banc was filed by Cryo-

Trans on August 27, 1996, and was denied on October 10,

1996. App. 77a. The jurisdiction of this Court is invoked

under 28 U.S.C. § 1254(1).

FEDERAL RULE INVOLVED

Rule 52 of the Federal Rules of Civil Procedure provides

in part:

(a) Effect. In all actions tried upon the facts without

a jury or with an advisory jury, the court shall find

specially and state separately its conclusions of law

thereon, and judgment shali be entered pursuant to

Rule 58; and in granting or refusing interlocutory

injunctions the court shall similarly set forth the

findings of fact and conclusions of law which

constitute the grounds of its action. Requests for

findings are not necessary for purposes of review.

Findings of fact, whether based on oral or

documentary evidence, shall not be set aside unless

clearly erroneous, and due regard shall be given to

the opportunity of the trial court to judge of the

credibility of the witnesses. The findings of a

master, to the extent that the court adopts them, shail

be considered as the findings of the court. It will be

sufficient if the findings of fact and conclusions of

law are stated orally and recorded in open court

following the close of the evidence or appear in an

opinion or memorandum of decision filed by the

court. Findings of fact and conclusions of law are

necessary on decisions of motions under Rule 12 or

56 or any other motion except as provided in

subdivision (c) of this rule.

STATEMENT OF THE CASE

Last Term, this Court ruled that the meaning of terms

used in a patent claim is exclusively for a judge, not a jury, to

decide. Markman v. Westview Instruments, Inc., 517 US.

__, 116 S. Ct. 1384 (1996). The Court thus resolved an

issue of crucial importance to patent litigants by removing any

uncertainty as to the respective roles of the trial judge and

jury in patent infringement actions. But the Court left open

the equally pivotal and unsettled question regarding the

deference owed by the U.S. Court of Appeals for the Federal

Circuit in reviewing the trial judge’s claim construction on

appeal.’ This case squarely raises that fundamental issue.

Importantly, the Markman Court indicated that patent

claim construction presents a mixed question of law and fact.

Under Rule 52(a) of the Federal Rules of Civil Procedure and

Court precedent, such mixed questions presume some

deference to underlying trial court findings of fact. The

Federal Circuit, however, treats claim construction as a pure

question of law, routinely according no deference to any

district court determinations bound up in the claim

interpretation analysis. That position and the absence of any

clear direction from this Court on the proper standard of

appellate review regarding claim construction has produced

1 The Federal Circuit possesses exclusive jurisdiction over appeals from

judgments in civil actions for patent infringement. 28 U.S.C. §§ 1292(c),

1295. The proper appropriation of judicial duties as between the appellate

court and trial judge in the critical claim construction area is unique to

patent litigation, and since the Federal Circuit has exclusive jurisdiction

over appeals in patent cases, issues relating to patent claim construction

cannot be the subject of inter-circuit conflict.

palpable concern at the district court level, where patent

infringement trials are administered throughout the nation.

This case focuses on the respective juridical

responsibilities of the trial court and the court of appeals

under the Markman regime. Whereas the trial judge here

made various fact determinations in interpreting the claims to

cover the accused infringing equipment, a divided panel of the

Federal Circuit exceeded its appellate authority by rejecting

the trial judge’s claim construction without affording any

apparent consideration to the trial judge’s view of the

evidence giving rise to that construction. Rather than accord

proper deference to those findings as prescribed by Fed. R.

Civ. P. 52(a), the majority independently reached a different

interpretation that is inconsistent with the factual record

developed at trial.

This case represents one of the latest in a line of post-

Markman cases in which the Federal Circuit has routinely

usurped the role of the district courts in patent infringement

disputes through misapplication of the de novo standard of

review. As a result, the court of appeals has for all practical

purposes supplanted the district courts as the court of first

instance on claim interpretation, typically a central issue in

patent litigation. Without correction and clarification by this

Court, the Federal Circuit’s misapplication of its de novo

authority will continue to dilute the fundamental role of the

district courts in patent infringement actions.

1. The Cryo-Trans Invention

A substantial portion of frozen food products shipped

throughout the United States is carried via the nation’s rail

Fe ee SE TUNES eh ee eee NEN! eS NS Ok 6 ae

system. (A1604).’ In the 1970’s, the frozen-food industry

grew increasingly concerned about the continued ability of the

aging fleet of mechanically-refrigerated railcars to transport

frozen food products over long distances. By the 1980’s, the

decline in the supply and reliability of mechanical refrigerator

cars posed a significant threat to the industry’s ability to meet

growing demand. (A1424, 1608, 2561-72). To improve and

preserve their long-haul transportation capabilities, frozen

food producers and shippers initiated development of a

“cryogenic” railcar, refrigerated by liquid carbon dioxide

(“CO,"), as an alternative to existing mechanical refrigerator

cars. (A1522, 4482-95).

Between 1980-85, an industry-sponsored cryogenic

railcar research project, under the direction of Mr. Ralph P.

Hill, the eventual inventor of the Cryo-Trans patent in suit,

produced several experimental railcars using various methods

of cryogenic refrigeration. (A1428-29, 2561-63, 2576-89).

The earliest prototypes utilized an overhead manifold at the

ceiling of the car to spray liquid CO, directly on top of the

load of frozen food products to form a covering of CO, snow.

(A1429-30, 4655). Direct contact of solid CO, with the

cargo, however, caused over-freezing of the products near the

top of the load and did not allow the entire load to remain

consistently frozen during the entire trip. (A1431).

In 1983, the project team designed a new prototype

railcar that employed an overhead bunker to store CO, snow

above the cargo load with openings, or vents, to allow cold

CO, gas sublimating from the snow to drop down and cool the

7 “(A ” citations are to the record Appendix filed in the court of

appeals.

load.? (A4659, 4664-65). Burlington Northern Railroad, a

project team participant, produced 75 railcars incorporating

the new bunker design. (A1453, 4566-67). But while the

Burlington Northern bunker design avoided the problems

associated with direct-contact refrigeration, it left “hot spots”

resulting in the undesirable thawing of frozen products.

(A1449-50, 3914). Due to the hot-spot problem, the

Burlington Northern cars were never accepted in the

marketplace, the cars ultimately were taken out of service,

and the industry research project terminated in March 1985.

(A1449-50, 1453, 3914).

Mr. Hili, however, did not give up. During the summer

of 1985, he conceived of a cryogenic railcar design that

effectively eliminated the hot-spot problems experienced by

the Burlington Northern cars. (A1454, 3914-15, 3936-42).

Mr. Hill’s cryogenic refrigeration system included the use of

vents situated around the ceiling bunker, as well as corrugated

side and end walls, providing an even flow of sublimated CO,

gas to the cargo area and keeping the entire load frozen.

(A1465-66, 3936-37). Mr. Marvin H. Weiner, who became

intimately familiar with the problems plaguing earlier

cryogenic railcar prototypes as the owner of a storage facility

receiving long-haul frozen-food shipments, saw in Mr. Hill’s

system the prospect of a commercially viable cryogenic

railcar. (A1610, 1611-13). Mr. Weiner established Cryo-

Trans, which ultimately developed and commercialized the

invention. He assisted Mr. Hill in building a prototype of the

cryogenic car, designated the “CRYX 1000,” which debuted

in March 1986. (A1312). The CRYX 1000 was tested and

refined, and it proved to be the first truly successful cryogenic

railcar.

CO, gas is 52% heavier than air. App. 28a.

The Cryo-Trans patent on Mr. Hill’s cryogenic

refrigeration system (U.S. Patent 4,704,876, referred to as

“the ’876 patent”) was issued by the U.S. Patent and

Trademark Office in 1987. (A2548-57). The °876 patent

discloses Mr. Hill’s concept of a railcar refrigerated by CO,

snow held in a compartment that runs along the length of the

car above the cargo area and contains openings, or vents,

adjacent the side and end walls of the car to allow sublimation

and proper distribution of CO, gas around the frozen food

load. (A1465-66, 2554-56). The effective flow of the cold

CO, gas around the load keeps the frozen food refrigerated,

even on long cross-country journeys.

The CRYX 1000 was so well accepted in the marketplace

that by 1989-90, Cryo-Trans had produced a total of 222 cars

under lease with frozen food producers and shippers.

(A5439). The trial court found that “food processors who

leased Cryo-Trans’ cars were able to ship their product at a

transportation cost that was considerably lower than the cost

of using the older, mechanical cars.” App. 47a-48a. The

court concluded that the Hill railcar design was an innovative,

patentable improvement, id. at 56a-58a, and the Federal

Circuit affirmed the validity of the ’876 patent, id. at 12a.

2. GATC’s Accused Railcar

In late 1990, respondent General American

Transportation Corporation (“GATC”) manufactured a

prototype cryogenic railcar, known as the “GARX 68000,”

by copying the Cryo-Trans CRYX 1000. (A1690-95, 1754-

56, 3246). The prototype was subsequently modified to make

GATC’s production car, styled the “Arcticar.” The

modification consisted of simply blocking the openings closest

to the end walls of the car. (A1879-80). GATC argued that

with this change, the Arcticar did not have openings

“adjacent” the end walls as specified in the °876 patent

Lean

claims, even though the nearly 68-foot railcar still had

openings located less than three feet from the end walls that

provided the same cooling effect. GATC took orders for the

Arcticar railcar beginning in early 1991.

3. District Court Proceedings

On March 1, 1991, GATC filed an action in the United

States District Court for the Northern District of Illinois

seeking a declaratory judgment that the °876 patent is invalid,

unenforceable, and not infringed by GATC’s Arcticar railcar.

(A89-90). | Cryo-Trans counterclaimed against GATC,

alleging that GATC infringed and actively induced

infringement of claims 1, 2, and 3 of the ’876 patent. (A102-

104).

Prior to trial, GATC stipulated that the GARX 68000

literally infringed the °876 patent. (A1314). In addition,

GATC stipulated that the “only significant change made to the

GARX 68000 in April 1981 relative to claims 1, 2, and 3 of

the Hill ’876 patent was the elimination of two ceiling bunker

vents on each of the end walls of the railcar. (A1315).

Thus, the issue of infringement turned on whether GATC’s

modified railcar, the Arcticar, still met the claimed

requirement of having “a plurality of openings” located

“adjacent each of [the] side walls and end walls for permitting

the flow of sublimated carbon dioxide gas.” (A2556

{emphasis added]).

GATC did not dispute at trial that the Arcticar contained

each and every element of claim 1 of the ’876 patent except

that it contended there were no bunker vents “adjacent” to the

end walls. Specifically, GATC argued that because the vents

* The number of ceiling vents so removed represented only four out of

a total of 53. (A4478).

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nearest to the end wall of the Arcticar are nearly three feet

away, they are not “adjacent” to the end walls within the

meaning of the claim.

The parties presented their cases to the district court in a

ten-day bench trial, during which the court received testimony

and documentary evidence relating to the issue of claim

construction. App. 19a. Relying on the Federal Circuit’s

decision in Marknan v. Westview Instruments, Inc. , 52 F.3d 967

(Fed. Cir. 1995) (in banc), aff'd, 116 S. Ct. 1384 (1996), the

trial court recognized that the “construction of a patent claim is

a matter of law which can be determined by a review of all

relevant evidence including the patent's prosecution history and

extrinsic evidence regarding the true meaning of the language

employed in the patent.” App. 52a. Accordingly, in its

Memorandum Opinion and Order under Fed. R. Civ. P. 52(a),

the trial court made abundantly clear that its express “Findings

of Fact and Conclusions of Law .. . are based upon

consideration of all the admissible evidence as well as this

Court’s own assessment of the credibility of the trial witnesses.”

Id. at 20a.

The court relied on various sources of extrinsic evidence

to provide a factual basis for interpreting “adjacent” as used

in the patent claims and for determining whether the Arcticar

has openings “adjacent” the end walls. Significantly, in

addition to numerous technical documents and photographs

detailing the structure of the accused Arcticar and a physical

embodiment of the 876 patent (i.e., the production version of

the CRYX 1000 railcar), the trial judge “conducted a site visit

to personally inspect and view the railcars at issue.” Jd. at

19a.

The trial judge also considered the sworn testimony of

Mr. George Gerstman, called as an expert in patent law, Mr.

Lewis Tyree, a technical expert, and Mr. Hill himself. Mr.

Gerstman noted that the ’876 patent did not provide any

indication that the term “adjacent” should be given any

meaning other than its ordinary meaning. Citing Webster’s

Third New International Dictionary (Defendant’s Exhibit

134), Mr. Gerstman testified that the ordinary meaning of the

term “adjacent” is “not far off.” (A1898). He maintained

that the endmost vents in the Arcticar, located less than three

feet from the end walls of a 67 foot, 8 inch car (1.e., less than

5% of the total length of the car), should be considered

“adjacent” within the ordinary meaning of the term as it is

used in the ’876 patent. (A1897).

Mr. Gerstman’s view was strongly confirmed by Mr.

Tyree and Mr. Hill. Mr. Tyree testified that the Arcticar

“bunker vents which are three feet from the end wall of the

car are sufficiently adjacent to provide, and will provide, a

flow of sublimating CO, between the end walls and the load

within the compartment both during the charging process and

in-transit sublimation.” (A3926). Mr. Tyree’s testimony was

uncontested at trial. Similarly, Mr. Hill explained that his

invention operated by using “vents around the top of the

[ceiling] bunker at the walls to allow vapor and cold air to

flow downward through channels” on the walls and that the

endmost vents in the Arcticar performed that precise function

in relation to the end walls. (A1465-66).°

In view of the evidence adduced at trial, the district court

found that the “term ‘adjacent’ as used in patents means not

necessarily at but nearby or near,” App. 43a, and concluded,

likewise, that the term “as used in the ’876 Patent means ‘not

far off,’” id. at 52a. Moreover, the court determined that

° For that matter, GATC conceded that the Arcticar does not work any

differently than its admittedly infringing prototype in the way the load is

cooled. App. 50a.

AI ii ani 4 EU

“the purpose of the bunker vents of the ’876 Patent is to

facilitate the passage of sublimating CO, along the

corrugations making up the walls of the car” and that the

“Arcticar’s bunker vents are close enough to provide the same

function.” Jd. at 52a-53a. Thus, the district court ruled that

“[g]iven the proximity of the Arcticar bunker vents to the end

walls, the Arcticar literally infringes the ’876 Patent.” Jd. at

53a.

4. The Federal Circuit’s Decision

On appeal, a split panel of the Federal Circuit reversed

the district court’s finding of infringement on the ground that

the court had misconstrued the claims at issue. In articulating

the applicable standard of review, the majority pronounced

that “[c]laim construction is a question of law, reviewed de

novo on appeal.” Jd. at 6a. Under its view of de novo

review, the Federal Circuit majority rejected the district

court’s claim interpretation, adopting instead a contrary

construction of the claims based on its own reading of the

patent. The Federal Circuit majority confined itself

exclusively to the “intrinsic” evidence, i.e., the claim

language and the specification of the ’876 patent,’ gave no

apparent consideration to the “extrinsic” evidence which

informed the trial judge, and undertook to interpret the claim

° The trial court also held that the Arcticar infringed the ’876 patent

under the doctrine of equivalents, App. 53a, and that the patent is valid

and enforceable, id. at 56a, 58a, 61a. The court awarded Cryo-Trans

$9,705,172 in damages and permanently enjoined GATC from further

infringement of the ’876 patent. Jd. at 64a. The damages award was later

modified to $8,983,440. Id. at 73a.

” The majority acknowledged that the ’876 patent’s prosecution history

“is brief and not helpful to resolving the meaning of the disputed claim

language.” App. 8a.

anew, without according any deference to the trial court’s

findings of fact based on evaluation of all the evidence.

Relying heavily on its interpretation of the patent

specification, the majority concluded that the phrase

“openings . . . adjacent each of said side walls and end walls”

in Claim 1 refers to

structurally distinct openings that are provided

adjacent to each of the railcar’s four walls. Each

opening is “adjacent” to only one wall, the nearest

one to which it directs the downward flow of CO,

gas. Thus, an opening “adjacent” to a side wall

cannot also be an opening “adjacent” to an end wall.

The patent does not contemplate the openings

performing double duty in this manner. We

therefore reject the district court’s claim

construction, which was inconsistent with the

specification and drawings and rendered superfluous

the claim requirement for openings adjacent to the

end walls.” [App. 8a].

In reaching that conclusion, the Federal Circuit ignored the

fact findings that compelled the trial judge’s construction of

the claims. Whereas the trial judge had found that the GATC

Arcticar meets the claimed requirement of openings

“adjacent” the end walls in view of its findings that the

Arcticar includes openings that are physically located near to

the end walls and achieve the disclosed purpose of effectively

refrigerating the entire frozen food load, the Federal Circuit

majority concluded that there are no openings in the Arcticar

“adjacent” the end walls because the specification appeared to

indicate that “the openings were all closest to and thus

‘adjacent’ to the side walls.” Id.

i Nl AB aE

won a ee a a ek in eee ae Eee ee Pee eed

Circuit Judge Mayer, dissenting, was clearly critical of

the majority’s approach as rejecting the lower court’s claim

analysis without deferring properly to its assessment of the

evidence. He accepted the ordinary meaning of “adjacent”

found by the trial judge, stating that: “[T]he term ‘adjacent’

as used in the ’876 patent means ‘not far off.’” Jd. at 13a.

Moreover, he considered the majority’s “citations to the claim

language and specification to support a meaning other than the

ordinary meaning of ‘adjacent’ [to be] misplaced.”* Jd. In so

concluding, Circuit Judge Mayer reasoned that

[t]his court’s de novo claim construction would

necessarily prevent a finding of infringement

whenever a vent is nearer a side wall than an end

wall. This cannot be. For example, a vent only an

inch away from an end wall will not be considered

“adjacent” to the end wall as long as the vent is less

than an inch from a side wall. Given the dimensions

at issue, surely a vent such a short distance from an

end wall is “adjacent” to that wall and must be

infringing. The difference between this hypothetical

and our case is only a matter of degree. The vent

here was only 33 inches from the wall of a railcar

which is 812 inches long. The district court is in a

much better position to evaluate this matter of

degree. [App. 13a-14a (emphasis added)].

Cryo-Trans filed a petition for rehearing and a suggestion

for rehearing en banc, which the court of appeals denied on

October 10, 1995. App. 77a.

* As an untenable consequence of the majority’s claim interpretation, the

prototype of Mr. Hill’s invention (i.e., the original CRYX 1000) does not

fall within the scope of the patent, notwithstanding that GATC had earlier

admitted that “there is element-for-element correspondence between claims

1-3 of the 876 patent” and the prototype. (A5489).

’ |

REASONS FOR GRANTING THE PETITION

I. The Petition Raises an Important Issue

This petition should be granted because it raises an issue

(i) of importance to the administration of justice, (ii) that

regularly affects patent enforcement litigation, (iii) that is the

subject of concern and criticism on the part of district court i

judges, and (iv) is of vital interest to patent litigants. The

issue concerns the propriety of the Federal Circuit’s practice |

of routinely according no deference to the lower ccurt’s

findings of fact underlying the construction of patent claims

pursuant to Markman v. Westview Instruments, Inc., 116 S.

Ct. 1384 (1996). This appellate practice eliminates the fact-

finding role of the trial court, escalates the cost of patent

litigation by heightening the necessity of appeal, and

misallocates judicial resources in deciding the all-important

question of claim construction.

More particularly, patent claim construction is a critical

aspect of patent enforcement litigation. “[T}o decide what the

claims mean is nearly always to decide the case.” Markman, |

52 F.3d at 989 (Mayer, J., concurring in the judgment).

While Markman clarified that the task of construing the

meaning of terms in patent claims in the first instance falls to

the trial judge,” the Court left unresolved the follow-on issue

of whether the Federal Circuit must give any deference to

district court findings on underlying or subsidiary facts that

* In the Markman regime, claim construction is now regularly being

decided by trial judges in bench trials or in so-called “Markman hearings.”

See e.g., Loral Fairchild Corp. v. Victor Co. of Japan, 906 F. Supp. 798

(E.D.N.Y. 1995); Moll v. Northern Telecom, Inc., No. 94-5451 (E.D. Pa.

Jan. 2, 1996) (reprinted at 1996 U.S. Dist LEXIS 175); Huang v.

Autoshade, Inc., CY 92 6487 RJK (C.D. Cal. Nov. 13, 1996) (reprinted

at 1996 U.S. Dist. LEXIS 17055).

might arise in construing the claims, particularly where the

trial judge is the only fact finder.’° There is a strong and

immediate public interest in addressing this issue because it

directly affects how the Federal Circuit is to review a district

court’s claim construction on appeal. 52 F.3d at 989 (Mayer,

J., concurring).

The Federal Circuit majority in Markman held that claim

construction is purely a matter of law, reviewed de novo on

appeal, and considered that there are no underlying or

subsidiary findings of fact as to which deference must be

given. 52 F.3d at 976-79. Accordingly, the court of appeals

now routinely accords no deference to any aspect of the trial

judge’s claim construction determination and will continue to

do so in the absence of Supreme Court review. As the court

made clear in Exxon Chem. Patents, Inc. v. Lubrizol Corp.,

64 F.3d 1553, 1556 (Fed. Cir. 1995), cert. denied, 116 S. Ct.

2554 (1996), “[nJo matter when or how a judge performs the

Markman task, on appeal we review the issue of claim

interpretation independently without deference to the trial

judge.” See also Hoechst Celanese Corp. v. BP Chem. Ltd.,

78 F.3d 1575, 1578 (Fed. Cir.) (under Markman the Federal

Circuit decides “disputed questions of claim interpretation

without deference to the trier of fact”), cert. denied, 65

U.S.L.W. 3265 (U.S. 1996); Festo Corp. v. Shoketsu Kinzoku

Kogyo Kabushiki Co. , 72 F.3d 857, 863 (Fed. Cir. 1995) (the

Federal Circuit engages in “independent determination of the

construction of claims, as a matter of law, unencumbered by

the trial process”). The court of appeals followed that routine

practice in the instant case.

° Cf. 116 S. Ct. at 1393 n.10 (“Because we conclude that our precedent

supports classifying the question [of claim construction] as one for the

court, we need not decide ... the extent to which the Seventh Amendment

can be said to have crystallized a law/fact distinction.”).

The Federal Circuit’s “no deference” approach has

engendered contention in the trial court-appellate court

relationship. District court judges have expressed concern

that the standard of review employed by the court of appeals

has effectively rendered the fact finding in which they

regularly engage in construing patent claims a pointless

exercise, thus diminishing their roie in patent infringement

actions. In Lucas-Aerospace, Ltd. v. Unison Indus., L.P.,

890 F. Supp. 329 (D. Del. 1995), District Judge Schwartz

criticized as unrealistic the Federal Circuit’s disinclination to

acknowledge that trial courts make factual findings based on

extrinsic evidence as a vital and integral part of the claim

interpretation process:

If those possessed of a higher commission wish to rely

on a cold written record and engage in de novo review

of all claim constructions, that is their privilege. But

when the Federal Circuit Court of Appeals states that

the trial court does not do something that the trial court

does and must do to perform [its] judicial function, that

court knowingly enters a land of sophistry and fiction.

{Id. at 333-34 n.7.]

See also Elf Atochem North Am. Inc. v. Libbey-Owens Ford

Co., 37 U.S.P.Q.2d 1065, 1074-75 (D. Del. 1995) (District

Judge McKelvie positing that the Federal Circuit’s de novo

review of claim construction will upset the ability of trial

courts to efficiently administer patent trials). The acute

concern and criticism of district court judges strongly signals

the need for this Court’s supervision and review of the

Federal Circuit’s claim construction practice.

In addition, the Federal Circuit’s implementation of de

novo review is a burden on judicial efficiency and is unfair to

litigants who invest heavily in the district court’s trial process

of receiving evidence and assessing claim construction, only

to have the decision ignored by the appellate court. Rather

than fulfilling our legal system’s commitment to the trial as

the “main event,” Wainwright v. Sykes, 433 U.S. 72, 90

(1977), the Federal Circuit has elevated the appeal to the

principal arena for resolving all aspecis of claim construction.

And given the decisive role of claim interpretation, parties

must now look to the appellate forum in most patent cases,

markedly increasing the already high cost of patent litigation,

and diminishing the prospects for settlements at the district

court level.

For these reasons, it is evident that the Federal Circuit’s

claim construction practice presents an important issue

affecting efficient and economical judicial procedure in patent

infringement litigation and the public interest that is on par

with, if not greater than, the claim construction issue

presented by the Markman case.

II. The Federal Circuit’s Practice Is in Conflict with

Supreme Court Precedent

In Markman, this Court recognized that claim

construction presents a mixed issue that “falls somewhere

between a pristine legal standard and a simple historical fact.”

Id. at 1395 (quoting Miller v. Fenton, 474 U.S. 104, 114

(1985)); see also Gasperini v. Center for Humanities, Inc ,

116 S. Ct. 2211, 2227 (1996) (Stevens, J., dissenting)

(recognizing Markman as involving a mixed question of law

and fact).'' Acknowledging that neither history nor precedent

'' Thus, contrary to the prevailing view at the Federal Circuit, this Court

did not hold claim construction to be a pure question of law. Markman has

been interpreted by a minority of Federal Circuit judges as treating patent

claim construction as a mixed question of fact and law. Metaullics Sys. Co.

v. Cooper, No. 96-1290 (Fed. Cir. Nov. 15, 1996) (Mayer, J.); Weiner v.

NEC Elec., Inc., No. 96-1052 (Fed. Cir. Dec. 6, 1996) (Rader, J.).

provide “clear answers” regarding the factual and legal nature

of claim construction in patent infringement litigation, the

Court examined functional considerations in allocating that

“mongrel practice” as between judge and jury. 116 S. Ct. at

1390, 1393. This functional analysis applies as well in

determining the respective roles of the trial court and the

court of appeals in the claim construction process.

Specifically, the Court has held that “deferential review

of mixed questions of law and fact is warranted when it

appears that the district court is ‘better positioned’ than the

appellate court to decide the issue in question or that probing

appellate scrutiny will not contribute to the clarity of

legaldoctrine.” Salve Regina College v. Russell, 499 U.S.

225, 233 (1991). Furthermore, “the reviewing attitude that

a court of appeals takes toward a district court decision should

depend upon the respective institutional advantages of trial

and appellate courts.” First Options of Chicago, Inc. v.

Kaplan, 115 S. Ct. 1920, 1926 (1995) (citation and internal

quotes omitted).

In the case of patent trials, the trial judge, as the principal

receiver and evaluator of the evidence, is better positioned to

assess.the meaning of terms used in patent claims than is the

court of appeals. See Cooter & Gell v. Hartmarx Corp. , 496

U.S. 384, 402 (1990) (“Familiar with the issues and the

litigants, the district court is better situated than the court of

appeals to marshal the pertinent facts and apply the fact-

dependent legal standard.”); see also Ornelas v. United

States, 116 S. Ct. 1657, 1664 (Scalia, J., dissenting) (“An

appellate court never has the benefit of the district court’s

intimate familiarity with the details of the case--nor the full

benefit of its hearing of the live testimony.”). Indeed, a trial

judge often will take live testimony from technical and legal

experts as well as the inventor, and assess the credibility and

demeanor of those witnesses. This Court has recognized the

probative value of the inventor’s testimony in understanding

the meaning of claims defining his or her invention. See

United Carbon Co. v. Binney Co., 317 U.S. 228, 233 (1942)

(“The clearest exposition of the significance which the terms

employed in the claims had for those skilled in the art was

given by the testimony of . . . one of the patentees.”). The

trial judge is also likely to draw factual inferences from

“physical or documentary evidence or . . . other facts” in the

course of reaching its determination. See Anderson v. City of

Bessemer City, 470 U.S. 564, 574 (1985). Here, the trial

court not only had testimony and documentary evidence, but

actually was able to visit the railcars at issue.

By contrast, the ability of the court of appeals to

determine what a patent claim means is hindered by the

inherently limited nature of the appellate record. “Appellate

briefs and fifteen minutes per side of attorney argument are

not designed for de novo findings of disputed technologic

questions.” Markman, 52 F.3d at 999 (Newman, J.,

dissenting). Moreover, “[dJuplication of the trial judge’s

efforts on appeal would very likely contribute only negligibly

to the accuracy of fact determination at a huge cost in

diversion of judicial resources.” Anderson, 470 U.S. at 575.

In view of the institutional limits of appellate courts, the

Court has recognized that independent review of mixed

questions still requires the reviewing court to “take care both

to review findings of historical fact only for clear error and to

give due weight to inferences drawn from those facts by [trial]

judges.” Ornelas v. United States, 116 S. Ct. 1657, 1663

(1996); see also Gasperini, 116 S. Ct. at 2227 (Stevens, J.,

dissenting) (“mixed questions require courts to construe all

record inferences in favor of the fact finder’s decision and

then to determine whether, on the facts as found below, the

legal standard has been met”).

Contrary to the Federal Circuit’s practice, absent clear

error, it is the trial court that determines the facts in mixed

fact/law questions. Such deference to the trial court,

however, does not preclude independent appellate review.

See Baumgartner v. United States, 322 U.S. 665, 671 (1944).

Consistent with Supreme Court precedent, mixed questions of

law and fact warrant independent or “de novo” review

without sacrificing the deference properly due the findings of

the trial court underlying its claim construction. Under the de

novo standard, appellate review “should proceed like review

of any other district court decision,” i.e., by exercising

plenary review over the trial court’s legal conclusions and

accepting findings of fact that are not clearly erroneous.

Kaplan, 115 S. Ct. at 1926; see also Markman, 52 F.2d at

991 (Mayer, J., concurring) (noting that “any facts found in

the course of interpreting the claims must be subject to the

same standard by which we review any other factual

determinations: for clear error in facts found by a court”).

This bifurcated or split review permits the court of appeals to

freely review legal conclusions but at the same time allows

appropriate deference on questions for which its position is

inferior. 1 Steven Alan Childress and Martha S. Davis,

Federal Standards of Review § 2.19 (2d ed. 1992).

The Federal Circuit’s routine practice of denying

deference even to underlying facts in claim construction, such

as the ordinary meanings of technical terms, is contrary to this

Court’s announced principle of deferring on fact findings in

mixed questions of fact and law. It essentially obliterates the

trial court’s role in claim construction along with the types of

evidentiary evaluation in which district court judges, as

opposed to appellate court judges, regularly engage. Hence,

the Federal Circuit’s practice plainly obstructs the proper

allocation of judicial resources that the Court’s principle of

deference in mixed fact/law questions seeks to secure.

a Te av

This case exemplifies the consequence of the Federal

Circuit’s failure to accord due deference to trial court findings

of fact. While the Court has “long noted the difficulty of

distinguishing between legal and factual issues,” it also has

long recognized that patent claim construction lends itself to

a number of basic factual inquiries, viz., (i) what is the

structure or device, described by the patentee, as embodying

his invention; (ii) what mode of operation is introduced and

employed by this structure or device; (iii) what result is

attained by means of this mode of operation; and (iv) does the

specification of claim cover the described mode of operation

by which the result is attained? Winans v. Denmead, 56 U.S.

(15 How.) 330, 338-39 (1853).

These are factors that the trial court here examined en

route to its interpretation of the term “adjacent” in the context

of the patent claim language. The trial judge made specific

findings regarding the structure described in the patent, the

mode of operation it embodied, and the practical result

obtained in light of the claim language, specification and

draWings of the 876 patent itself, as well as extrinsic evidence,

including the testimony of witnesses and his own personal

inspection of a physical embodiment of the claimed railcar.

For example, the trial court found that the ordinary

meaning of “adjacent” is “not far off.” The court also found

that by being “adjacent” or “not far off” from the walls of the

railcar, the claimed openings or vents facilitated the passage of

sublimating CO, gas along the walls and into the cargo area.

The court determined in view of such findings that the endmost

openings in the accused GATC Arcticar are physically near

Cooter, 496 U.S. at 401; see also Miller, 474 U.S. at 113 (“the

appropriate methodology for distinguishing questions of fact from

questions of law has been, to say the least, elusive.”).

enough to the end walls to provide the function required by the

patent claims, and thus are “adjacent” to the end walls.

Under Rule 52(a) and this Court’s precedent, including

Markman, Salve Regina, Ornelas, and Kaplan, the Federal

Circuit was bound to review the trial court’s Winans fact

findings for clear error. But by starting afresh to make its own

claim construction without any deference accorded to the trial

judge’s findings, the Federal Circuit reached the result that the

endmost openings in the accused Arcticar cannot be adjacent to

the end walls as a matter of law, even though they achieve what

the patent claim requires and sit less than three feet from the

end walls of a railcar nearly 68 feet long. Had the appellate

court given due deference to the district court’s underlying

findings of fact, it should have, and likely would have,

affirmed the finding of infringement. See App. 13a-14a.

Virtually all patent infringement cases, like the one at

issue here, involve claim construction, decided in the first

instance by the district court judge. Until this Court

undertakes review of the proper role of the court of appeals

on the issue of claim construction, the Federal Circuit will

continue to render worthless the substantial investment by

litigants and the trial judge in effectuating the Markman

mandate, essentially taking on to itself the entire analytical

claim construction process of finding facts and drawing the

legal conclusion thereon. Petitioner respectfully submits that

this is an inefficient and unfair procedure for resolving the

critical issue in patent infringement and is contrary to the

proper appellate authority that the Federal Circuit should

exercise under this Court’s precedent. This case affords the

Court a timely opportunity to clarify the correct appellate

review standard applicable to a trial judge’s claim

construction--an issue conspicuously left open in Markman.

Ee a ee

CONC

LUSION

For the reasons stated above, the petition for a writ of

certiorari should be granted.

Of Counsel:

JAMES P. DONOHUE

BRUCE A. KASER

MILLER, NASH, WIENER,

HAGER & CARLSEN LLP

4440 Two Union Streeet

Seattle, Washington 98101-2352

(206) 622-8484

January, 1997

Respectfully submitted,

DONALD R. DUNNER

(Counsel of Record)

HERBERT H. MINTZ

HOWARD A. KWON

FINNEGAN, HENDERSON, FARABOW,

GARRETT & DUNNER, LLP

1300 I Street, N.W.

Washington, D.C. 20005-3315

(202) 408-4000

Counsel for Petitioner

Cryo-Trans, Incorporated

APPENDIX

United States Court of Appeals for the

Federal Circuit

No. 95-1531

GENERAL AMERICAN TRANSPORTATION CORPORATION

Plaintiff-Appellant,

CRYO-TRANS, INCORPORATED,

Defendant-Appellee.

Aug. 14, 1996

Rehearing Denied; Suggestion for Rehearing In Banc Declined

Oct. 10, 1996

Competitor brought declaratory judgment action against

patentee, seeking declaration that its cryogenic refrigerated

railcar did not infringe patent, and patentee filed infringement

counterclaim. The United States District Court for the

Northern District of Illinois, Ruben Castillo, J., 893 F.Supp.

774, ruled that patent was valid and that competitor’s railcar

was infringing. Competitor appealed. The Court of Appeals,

Lourie, Circuit Judge, held that: (1) competitor’s cryogenic

railcar with carbon dioxide vent openings at ends of sidewalls

did not infringe patent claiming vent openings “adjacent” to

sidewalls and end walls, and (2) competitor’s railcar did not

infringe patent under doctrine of equivalents.

Affirmed in part and reversed in part.

Mayer, Circuit Judge, filed dissenting opinion.

Kenneth J. Jurek, McDermott, Will & Emery, Chicago,

Illinois, argued, for plaintiff-appellant. With him on the brief

was Rosanne J. Faraci.

Bruce A. Kaser, Miller, Nash, Wiener, Hager & Carlsen,

Seattle, Washington, argued, for defendant-appellee. With him

on the brief was James P. Donohue.

Before MAYER, LOURIE, and SCHALL, Circuit Judges.

LOURIE, Circuit Judge.

General American Transportation Corp. (“GATC”) appeals

from the judgment of the United States District Court for the

Northern District of Illinois in which the court held GATC liable

for patent infringement, awarded Cryo-Trans, Inc. $8,983,440

in damages, and entered a permanent injunction against GATC.

General Am. Transp. Corp. v. Cryo-Trans, Inc., 897 F.Supp.

1121 (N.D.I.1995); General Am. Transp. Corp. v. Cryo-Trans,

Inc., 893 F.Supp. 774 (N.D.I.1995). Because the court

correctly held that the patent was net proved invalid, but

misconstrued the claims and clearly erred in finding

infringement, we affirm in part and reverse in part.

BACKGROUND

Cryo-Trans is the assignee of U.S. Patent 4,704,876, which

concerns a “cryogenic” railcar for transporting frozen foods.

Cryogenic railcars use inexpensive carbon dioxide (CO,) as the

refrigerant. Conventional refrigerated railcars, on the other

hand, employ mechanical refrigeration systems that consume

fossil fuels and thus are more expensive to cperate.

The cryogenic railcar disclosed in the ’876 patent has an

insulated compartment (32) extending lengthwise along the top

of the car. A system is provided for filling the compartment

‘ Pisiniticahs ail >

with solid carbon dioxide “snow” by injecting liquid CO, into

the compartment under high pressure. The bottom of the

compartment contains openings (66) adjacent to each of the car’s

side walls (16, 18) and end walls (20, 22). In operation, the

compartment is first filled with CO, snow and then the frozen

food products are loaded into the cargo area (26). During

transit, the CO, snow gradually sublimates as CO ,gas, which

flows through the compartment’s openings (66) and moves

downward along the side walls and end walls, enveloping and

cooling the load. Each of the four walls has corrugated channels

to facilitate the flow of the CO, gas down that particular wall.

Figure 1 of the patent illustrates the railcar:

FIG! =

‘3 a 2 Py

eo ; l *o6, « = a

aoe a ree

; / ‘ ; n i ae ~

H 1 @ - —,

: mi. j

BY Te 1

PGA

Claim 1 is representative of the asserted claims. It reads,

with emphasis on the language in dispute, as follows:

1. In a container adapted to be maintained in a refrigerated

condition from the sublimation of carbon dioxide snow(,] the

combination comprising: a storage area defined by a floor, a pair

of opposed side walls, a pair of opposed end walls, and a ceiling

means; an insulated roof positioned above said ceiling means and

defining therewith a compartment for supporting a supply of

carbon dioxide snow, said compartment extending substantially

the full length of said storage area; means in said compartment

for forming carbon dioxide snow and means for connecting said

carbon dioxide snow forming means to a supply of liquid carbon

dioxide; a plurality of openings through said ceiling means

adjacent [sic] each of said side walls and end walls for

permitting the flow of sublimated carbon dioxide gas from said

compartment; each of said walls being corrugated to define a

plurality of channels therein open-sided toward the interior of the

container whereby said carbon dioxide gas may flow from said

openings in said ceiling means downwardly through said

channels between said walls and a product load disposed in said

container toward said floor.

Numerous cryogenic railcars were known before the

invention at issue here. The “AFFX 2000” railcar, for example,

which was built and publicly used in 1983, embodied all the

elements of claim 1 except that its compartment for holding CO,

snow had openings adjacent to only one side wall and it had no

openings adjacent to the end walls. U.K. Patent 399,678, issued

to Kurth in 1933, disclosed a cryogenic railcar in which a

compartment for holding solid CO, had openings adjacent to

both side walls, but again had no openings adjacent to the end

walls. It also had no corrugated walls or system for forming

CO, snow using liquid CO, .

GATC manufactured a cryogenic railcar that included a

compartment for holding CO, snow. The bottom of the

compartment had a row of openings provided lengthwise along

its center and two rows of openings adjacent to the car’s

opposite side walls. The openings adjacent to the side walls

were each three inches from the nearest side wall, and the

endmost of such openings were three feet from the nearest end

wall. The endmost center row openings were six feet from the

nearest end wall. The drawing below illustrates the arrangement

of openings in GATC’s railcar compartment:

Side Wall

= ° re) rs} C rs} re) o|

oe O ° re) re) ° ° O

olo_—s fo O ° lo ° O o |

Side Wall

In March 1991, after Cryo-Trans threatened to assert the

876 patent against GATC, GATC sued Cryo-Trans seeking,

inter alia, a declaratory judgment that the patent was invalid,

unenforceable, and not infringed. GATC argued that it did not

infringe because the bottom of the compartment in its railcar

lacked openings adjacent to the car’s end walls, as required by

the claims. Cryo- Trans counterclaimed for infringement of

claims 1-3.

The district court conducted a bench trial in May 1995. At

the conclusion of the trial, the court, relying on a dictionary

definition, construed the term “adjacent” in the claims to mean

“not far off” or “not necessarily at but nearby or near.” The

court then found that the endmost openings adjacent to the side

walls in GATC’s railcar compartment were “not far” from the

car’s end walls and functioned as openings adjacent to the end

walls. Thus, the court found that GATC had infringed the

claims, both literally and under the doctrine of equivalents. It

rejected GATC’s invalidity and unenforceability claims. The

court accordingly awarded Cryo-Trans $8,983,440 in damages

and entered a permanent injunction.

GATC appeals, challenging the district court’s findings that

the °876 patent was infringed and not proved invalid. GATC

does not appeal the court’s decision rejecting GATC’s

unenforceability claim.

DISCUSSION

A. Infringement

Determining whether a patent claim has been infringed

requires a two-step analysis: “First, the claim must be properly

construed to determine its scope and meaning. Second, the

claim as properly construed must be compared to the accused

device or process.” Carroll Touch, Inc. v. Electro Mechanical

Sys., Inc., 15 F.3d 1573, 1576, 27 USPQ2d 1836, 1839

(Fed.Cir.1993). Claim construction is a question of law,

reviewed de novo on appeal. Markman v. Westview Instruments,

Inc. , 52 F.3d 967, 979, 34 USPQ2d 1321, 1329 (Fed.Cir. 1995)

(in banc), aff'd, __. U.S.____ , 116 S.Ct. 1384, 134 L.Ed.2d

577 (1996). The application of the claim to the accused device

is a question of fact, reviewed for clear error. Mannesmann

Demag Corp. v. Engineered Metal Prods. Co. , 793 F.2d 1279,

1282, 230 USPQ 45, 46 (Fed.Cir. 1986).

GATC argues that the district court misconstrued the claim

language “openings through said ceiling means adjacent to each

of said side walls and end walls,” which led to a clearly

erroneous finding of infringement. We agree. As explained

below, the district court incorrectly held that openings

“adjacent” to the side walls could also be considered to be

openings “adjacent” to the end walls. That error led to a clearly

erroneous finding of infringement. |

To ascertain the meaning of the claims, we consider the

claim language, the specification, and the prosecution history.

Markman, 52 F.3d at 979, 34 USPQ2d at 1329. Here, the claim,

language itself distinguishes between the openings that are

adjacent to the side walls and those that are adjacent to the end

walls. Specifically, the claims require “openings ... adjacent

each of said side walls and end walls,” which suggests that the

openings adjacent to the side walls are structurally distinct from

the openings adjacent to the end walls. The district court’s claim

construction obliterated that distinction.

In addition, the patent specification distinguishes between

the openings that are adjacent to the side walls and those that are

adjacent to the end wails. It states, in the “Summary of the

Invention” section, that “[tJhe bottom of the compartment is

provided with openings alorig each side and end wall of the car

through which sublimating carbon dioxide gas may escape.”

Col. 2, ll. 22-25 (emphasis added). Similarly, the “Detailed

Description of the Invention” portion of the specification states:

The bottom wall 40 of the compartment 32 is provided

with a plurality of openings 66 along each of the side

walls 16, 18 and along each end wall 20, 22 of the car

and which openings are preferably slanted toward the

adjacent wall. These openings are provided for the

flow of carbon dioxide gas sublimating from the snow

contained within the compartment 32 and which gas

may then flow downwardly along the adjacent wall

through the sinusoidal passageways defined thereby.

The openings on opposite walls preferably are offset

with respect to each other.

Col. 3, ll. 41-51 (emphasis added). This arrangement of

openings is said to yield an advantage: “[BJecause the cold

carbon dioxide gas is flowing downwardly on each of the

opposite sides and on the ends of the car and in direct contact

with the bottom of the load, all parts of the load will be

maintained at a desirably low temperature.” Col. 5, ll. 59-64

~ (emphasis added). Figure 1, to which the detailed description

refers, depicts separate openings (66) adjacent to each of the side

and end walls. Carbon dioxide gas is shown exiting each

opening and travelling down the nearest wall.

Thus, the specification and drawings teach that the openings

are provided along all four walls, and that each opening directs

the flow of CO, gas down a particular, “adjacent” wall, i.e., the

nearest wall. This is not just the preferred embodiment of the

invention; it is the only one described. Nothing in the claim

language, specification, or drawings suggests that any of the

dedicated side or end wall openings may be eliminated, or that

an opening may be “adjacent” tw more than one wall. The

prosecution history is brief and not helpful to resolving the

meaning of the disputed claim language.

Under these circumstances, we construe the phrase

“openings ... adjacent each of said side walls and end walls” as

referring to structurally distinct openings that are provided

adjacent to each of the railcar’s four walls. Each opening is

“adjacent” to only one wall, the nearest one to which it directs

the downward flow of CO, gas. Thus, an opening “adjacent” to

a side wall cannot also be an opening “adjacent” to an end wall.

The patent does not contemplate the openings performing double

duty in this manner. We therefore reject the district court’s

claim construction, which was inconsistent with the specification

and drawings and rendered superfluous the claim requirement for

openings adjacent to the end walls.

In GATC’s railcar, the openings were all closest to and thus

“adjacent” to the side walls. The endmost openings are in fact

twelve times the distance to the end w2!ls compared with their

distance to the side walls. The car lacked “a plurality of

openings ... adjacent each of said ... end walls,” as required by

the properly construed claims. We therefore hold that the

district court clearly erred in finding literal infringement of claim

1 and dependent claims 2-3. See Johnston v. IVAC Corp., 885

F.2d 1574, 1580, 12 USPQ2d 1382, 1386 (Fed.Cir.1989)

(“Where a claim does not read on an accused device exactly,

there can be no literal infringement.”); Mannesmann Demag

Corp., 793 F.2d at 1282, 230 USPQ at 46 (literal infringement

requires that every element of the patent claim be met).

Furthermore, the district court’s finding of infringement

under the doctrine of equivalents was also clearly erroneous, for

two reasons. First, the finding violated the principle that the

doctrine may not be used to expand the scope of the patentee’s

right to exclude so as to encompass the prior art. E.g., Key

Mfg. Group, Inc. v. Microdot, Inc., 925 F.2d 1444, 1449, 17

USPQ2d 1806, 1810 (Fed.Cir.1991). Here, the AFFX 2002

railcar had all the elements of claim 1 except that its

compartment for holding CO, snow had openings adjacent to

only one side wall and it had no openings adjacent to the end

walls. This design was known to be deficient because “hot

spots” (areas of thawing) tended to form in the cargo area

opposite the side where the CO, gas was introduced. Clearly

those of ordinary skill in the art would have known that

insufficient CO, gas was reaching this area. Thus, it would have

been obvious to more uniformly cool the entire cargo area by

providing openings along both side walls. The Kurth patent, in

fact, disclosed a cryogenic railcar in which the compartment for

holding the solid CO, had openings adjacent to both side walls.

The AFFX 2002 and Kurth railcars were in the same field of

endeavor as the claimed invention and were properly combinable

prior art. The Kurth patent was not before the PTO during the

prosecution of the ’876 patent.

We are therefore convinced that the prior art fairly

suggested a cryogenic railcar having the combination of features

10a

present in GATC’s railcar, including a compartment having

openings adjacent to both of the car’s side walls. Thus, since

allowing the claims to encompass GATC’s car would cause the

claims to cover subject matter obvious over the prior art, the car

cannot be held to infringe the ’876 patent under the doctrine of

equivalents. See Wilson Sporting Goods Co. v. David Geoffrey

& Assocs., 904 F.2d 677, 14 USPQ2d 1942 (Fed.Cir.), cert.

denied, 498 U.S. 992, 111 S.Ct. 537, 112 L.Ed.2d 547 (1990).

As we stated in Wilson Sporting Goods:

[A] patentee should not be able to obtain, under the

doctrine of equivalents, coverage which he could not

lawfully have obtained from the PTO by literal claims.

The doctrine of equivalents exists to prevent a fraud on

a patent, not to give a patentee something which he

could not lawfully have obtained from the PTO had he

tried. Thus, since prior art always limits what an

inventor could have claimed, it limits the range of

permissible equivalents of a claim.

Id. at 684, 904 F.2d 677, 14 USPQ2d at 1948 (citation omitted);

see also Stewart-Warner Corp. v. City of Pontiac, Michigan, 767

F.2d 1563, 1572, 226 USPQ 676, 682 (Fed.Cir.1985) (there can

be no infringement under the doctrine when “the asserted range

[of equivalents] would encompass the prior art at the very point

at which the ... claims distinguish from that prior art”).

Second, the district court’s finding of infringement under the

doctrine of equivalents was clearly erroneous because “[t}here

can be no infringement as a matter of law if a claim limitation is

totally missing from the accused device.” London v. Carson

Pirie Scott & Co., 946 F.2d 1534, 1539, 20 USPQ2d 1456,

1459 (Fed.Cir.1991). GATC’s railcar had no openings adjacent

to the end walls, as required by the claims, nor did GATC

substitute an equivalent structure. Cryo-Trans argues that its

expert testified that “the end-most vents of the center row will

a ill RM

lla

provide a substitute for any ceiling vents eliminated by GATC.”

We disagree with Cryo-Trans that each of the endmost center

row openings, located six feet from the nearest end wall, was

equivalent to a “plurality” of openings adjacent to the end walls.

They are much further from the end walls than the endmost

openings in the side walls, which we have held do not satisfy the

claim limitation. Thus, because the accused device lacked an

equivalent to “a plurality of openings ... adjacent each of said ...

end walls,” there was no infringement under the doctrine of

equivalents. See London, 946 F.2d at 1539, 20 USPQ2d at

1459; Pennwalt Corp. v. Durand- Wayland, Inc., 833 F.2d 931,

937, 4 USPQ2d 1737, 1741 (Fed.Cir. 1987) (in banc) (“A device

that does not satisfy [a] limitation at least equivalently does not

function in substantially the same way as the claimed

invention.”), cert. denied, 485 U.S. 961, 108 S.Ct. 1226, 99

L.Ed.2d 426 (1988); Perkin- Elmer Corp. v. Westinghouse

Elec. Corp., 822 F.2d 1528, 1532, 3 USPQ2d 1321, 1324

(Fed.Cir.1987) (courts may not “convert a multi-limitation claim

to one of [fewer] limitations to support a finding of

equivalency”).

Accordingly, we reverse the district court’s findings of

literal infringement and infringement under the doctrine of

equivalents.

B. Validity

GATC argues that “[iJf the district court’s claim

construction is correct, then the ’876 Patent is invalid” under 35

U.S.C. §§ 102 and 103. GATC contends, inter alia, that if

claim 1 were construed to cover a railcar that had no openings

adjacent to the end walls, the combination of the AFFX 2002

railcar with the Kurth patent would render the claim invalid for

obviousness.

12a

We have agreed with GATC, however, that the district

court’s claim construction was not correct. Thus, its obviousness

argument directed to that claim construction is no longer

pertinent. GATC has not argued or established that the prior art

would have rendered obvious a cryogenic railcar having a

compartment that included openings adjacent to all four walls, as

required by the properly construed claims. We decline to

speculate whether it would have been obvious to those of

ordinary skill in the art to modify the AFFX 2002/Kurth railcar

by adding openings adjacent to the end walls. Thus, the district

court did not clearly err in concluding that GATC did not prove

invalidity by clear and convincing evidence.

We have considered the parties’ remaining arguments but

find them either unpersuasive or unnecessary for resolution of

the appeal. Among these arguments is GATC’s claim of prior

invention by James Moe and Tom Maxwell. Moreover, in view

of our conclusion concerning infringement, we must vacate the

award of damages and the permanent injunction. GATC’s

arguments concerning the correctness of the damages award are

therefore moot.

CONCLUSION

The district court erred as a matter of law in construing the

claims and clearly erred in finding infringement. Accordingly,

the court’s decision finding infringement, awarding damages,

and entering a permanent injunction is reversed. Its conclusion

concerning validity is affirmed.

COSTS

No costs.

AFFIRMED-IN-PART AND REVERSED-IN-PART.

13a

MAYER, Circuit Judge, dissenting.

The district court correctly construed the only claim

limitation in dispute: “[T]he term ‘adjacent’ as used in the ’876

patent means ‘not far off.’” The court then found that the

Openings nearest the end walls of General American

Transportation Corporation's (GATC) accused railcar were

“adjacent” to those walls and therefore literally infringed the

Claim. I see no error in claim construction or in the finding of

infringement.

Claim limitations “will be given their ordinary meaning,

unless it appears that the inventor used them differently.” ZMI/

Corp. v. Cardiac Resuscitator Corp., 844 F.2d 1576, 1579

(Fed.Cir.1988). This court’s citations to the claim language and

specification to support a meaning other than the ordinary

meaning of “adjacent” are misplaced. The claims do require

Openings adjacent to both end walls and side walls, but they do

not define how close to the wall those openings must be to be

considered adjacent. Nor do the claims require an opening to be

closer to one wall than another to be considered adjacent to a

particular wall. The only hint that an opening should be

configured in a specific manner comes in a discussion of the

inventor's preferred embodiment. Although we construe claims

in light of the specification, we do not import the specification

wholesale into the claims. Intervet Am., Inc. v. Kee-Vet Lab.,

Inc., 887 F.2d 1050, 1053, 12 USPQ2d 1474, 1476

(Fed.Cir.1989). It is improper to read the inventor’s preferred

arrangement as a claim limitation here.

This court’s de novo claim construction would necessarily

prevent a finding of infringement whenever a vent is nearer a

side wall than an end wall. This cannot be. For example, a vent

only an inch away from an end wall will not be considered

“adjacent” to the end wall as long as the vent is less than an inch

from a side wall. Given the dimensions at issue, surely a vent

l4a

such a short distance from an end wall is “adjacent” to that wall

and must be infringing. The difference between this hypothetical

and our case is only a matter of degree. The vent here was only

33 inches from the end wall of a railcar which is 812 inches

long. The district court is in a much better position to evaluate

this matter of degree.

The district court also correctly concluded that the claims

were not obvious over the cited prior art, which it considered to

include U.S. Patent No. 4,593,536 to Fink and Habel, the

AFFX 2002 cryogenic railcar and variants thereof, U.S. Patent

No. 3,561,226 to Rubin, and British Patent No. 399,678 to

Kurth. It looked at the invention as whole and explicitly refused

to “usfe] the patent or invention at issue as a guide to combine

bits and pieces of earlier designs and then reach a conclusion of

obviousness.” See Lindemann Maschinenfabrik GMBH vy.

American Hoist & Derrick Co., 730 F.2d 1452, 1462, 221

USPQ 481, 488 (Fed.Cir.1984) (“[T]he question is whether

there is something in the prior art as a whole to suggest the

desirability, and thus the obviousness, of making the

combination.”). The court concluded that “[tj]here is no clear

suggestion of combining different pieces of prior art to produce

the invention claimed by the ’876 Patent unless the patent is

improperly used as a guide to make the combination.” Again,

I find no error in the district court’s analysis of the prior art or

in its finding that there was no motivation to combine the cited

references. It was mindful that “[c]are must be taken to avoid

hindsight reconstruction by using ‘the patent in suit as a guide

through the maze of prior art references, combining the right

references in the right way so as to achieve the result of the

claims in suit.’” Grain Processing Corp. v. American

Maize-Prods. Co., 840 F.2d 902, 907, 5 USPQ2d 1788, 1792

(Fed.Cir.1988) (citing Orthopedic Equip. Co. v. United States,

702 F.2d 1005, 1012, 217 USPQ 193, 199 (Fed.Cir.1983)).

15a

This court relies principally on a combination of the AFFX

2002 railcar, which admittedly disclosed many of the elements

of the ’876 patent claim, and the Kurth patent, which disclosed

openings in a dry ice bunker adjacent to both side walls of a

railcar. This combination requires the precise measure of

hindsight that the district court refused to supply. The evidence

at trial showed that no one really understood the gas flow

cooling mechanism of the AFFX 2002 cryogenic design. The

Fink patent, which is based on the AFFX 2002, disclosed a

system in which CO, gas supposedly exited the overhead

bunker, flowed by convection down one side of the car, traveled

underneath the load in the car, and then recirculated back up the

other side of the car. If that were true, a second row of vents on

the opposite side of the car would not only have been

unnecessary, but likely would have been detrimental to the

cooling convection flow that was thought to exist. There was

thus no motivation to include the Kurth patent which disclosed

openings on the opposite side walls of a railcar bunker.

The 1933 Kurth patent also is directed to the loading and

cradling of pre-made dry ice. There is no indication that “CO,

snow” which subsequently sublimates is ever created in the

bunker shown in Kurth, and the testimony at trial was that Kurth

disclosed a “cold plate” bunker which simply provides a large

cold surface for cooling the air in the lading compartment below.

The extremely small number of vents disclosed in Kurth was

unlikely to provide an adequate cooling mechanism for the

sublimation of a bank of “CO, snow.” Given this testimony, I

believe the district court could readily conclude that Kurth

operated in a fundamentally different way from the other

cryogenic cars cited as prior art. Without motivation to combine

Kurth, the only reference which disclosed openings on both sides

of a bunker, with the AFFX 2002, whose method of heat

transfer was at best uncertain, GATC failed to prove by clear

and convincing evidence that the ’876 patent is obvious.

16a

—-

The district court’s analysis is bolstered by the secondary

considerations of nonobviousness. The court found that

Cryo-Trans’ “’876 patent design has been accepted by the

industry” and that it enjoys a high degree of commercial

success. It also found that “[t]he ’876 patent design solved a

long felt transportation problem for frozen food processors, who

were searching for a viable solution since 1980 to the poor

economic and maintenance viability problem of old railroad

mechanical cars.”

The district court further found that in late 1990, GATC

became aware of Cryo-Trans’ commercially successful

cryogenic railcar patent, and “decided it had to promptly get into

the cryogenic railcar market and copy Cryo-Trans’ high cube

car.” To this end, GATC obtained a copy of the original

drawings of the Cryo-Trans car from the company which

manufactured the railcar shell, and then moved the shell to a

second manufacturer which completed the interior of the car

along with identical cars that were being completed for

Cryo-Trans.

GATC admitted that its original prototype infringed the ’876

patent. After Cryo-Trans filed this suit, GATC merely blocked

off several of the openings closest to the ends of its cars. At

trial, one of GATC’s own engineers admitted that the accused

device did not work any differently than the admittedly

infringing first prototype. The trial court was surely correct

when it concluded that “GATC copied the design of the

Cryo-Trans high cube car after the commercial viability of the

technology was proven by Cryo-Trans.” None of these findings

are Clearly erroneous.

The district court did not err in holding that the ’876 patent

“represents a significant improvement from the relevant prior art

and is not obvious from a review of the relevant prior art.”

Eschewing the aid of hindsight to combine the cited references,

17a

and with appropriate deference to the district court’s factual

findings, I would affirm the judgment in its entirety.

18a

United States District Court,

N.D. Illinois, Eastern Division

No. 91 C 1305

GENERAL AMERICAN TRANSPORTATION CORPORATION

Plaintiff,

Vv.

CRYO-TRANS, INCORPORATED,

Defendant.

CRYO-TRANS, INCORPORATED,

Counterclaim-Plaintiff,

GENERAL AMERICAN TRANSPORTATION CORPORATION

Counterclaim-Defendant.

July 14, 1995

Competitor brought declaratory judgment action against

patentee, seeking declaration that its cryogenic refrigerated

railcar did not infringe patent, and patentee filed infringement

counterclaim. The District Court, Castillo, J., held that: (1)

competitor’s railcar infringed both literally and under doctrine of

equivalents; (2) patent was not obvious in light of prior art; (3)

patent was not invalid on grounds of inequitable conduct; (4)

patentee was entitled to damage award of $9,705,172,

19a

representing lost profits, price erosion and prejudgment interest;

and (5) infringement of patent was not willful and case was not

exceptional, so as to warrant award of attorneys’ fees in favor of

patentee.

Judgment accordingly.

Scott William Petersen, Thomas Irving Ross, Randall

Thomas Erickson, Hill, Steadman & Simpson, Chicago, IL, for

plaintiff General American Transp. Corp.

James P. Donohue, Bruce A. Kaser, Miller, Nash, Wiener,

Hager & Carlsen, Seattle, WA, Kenneth E. Rechtoris, Carol

Ann Genis, Bell, Boyd & Lloyd, Chicago, [L, for defendant

Cryo-Trans, Inc.

MEMORANDUM OPINION AND ORDER

CASTILLO, District Judge.

Due to the continued fast pace of American life, the

production of frozen food products has continually expanded

during the last decade. Yet, because railroad carriers had not

replaced aging mechanical refrigeration cars since the early

1970's, the American transportation system explored the

feasibility of using liquid carbon dioxide (“COQ,”) to create

cryogenic railcar systems which could economically transport

frozen food products. These developments led to the lispute in

this case.

Beginning on May 1, 1995 and continuing through May 10,

1995, this Court held a bench trial on this matter. During this

patent trial, this Court has been called upon to decide questions

of patent validity and infringement concerning competing

cryogenic refrigerated railcars. During the trial, the Court

received testimony and documentary evidence and conducted a

site visit to personally inspect and view the railcars at issue in

this case. Thereafter, the Court considered the written post-trial

20a

submissions filed by each party. The Court hereby enters the

following Findings of Fact and Conclusions of Law, which in

contrast to its prior order in this matter, are based upon

consideration of all the admissible evidence as well as this

Court’s own assessment of the credibility of the trial witnesses.

To the extent, if any, that the Findings of Fact as stated may be

deemed Conclusions of Law, they shall be considered

Conclusions of Law. Similarly, to the extent that matters

expressed as Conclusions of Law may be deemed Findings of

Fact, they shall also be considered Findings of Fact.

FINDINGS OF FACT

1. This case involves a patent dispute between General

American Transportation Corporation and Cryo-Trans Inc.

2. Plaintiff General American Transportation Corporation

(“GATC”) is a corporation organized under the laws of New

York, with its principal place of business in Chicago, Illinois.

3. Defendant Cryo-Trans, Inc. (“Cryo-Trans”) is a

corporation organized under the laws of Maryland, with its

principal place of business in Mt. Airy, Maryland.

4. GATC’s claim is an action for declaratory judgment,

pursuant to 28 U.S.C. § 2201, with respect to the enforceability

of United States Patent 4,704,876 (“the ’876 Patent”) against a

cryogenic railcar produced and marketed by GATC. (Pl.’s Ex.

A).

5. The ’876 Patent is owned by Cryo-Trans which has

counterclaimed for patent infringement pursuant to 35 U.S.C. §

281. Figure 1 of the ’876 Patent is heréby incorporated into this

opinion as Appendix A. (Pl.’s Ex. A).

6. Venue in this case is proper under 28 U.S.C. §§ 1391

and 1400(b) and jurisdiction is proper under 28 U.S.C. § 1338.

2la

7. On March 1, 1991, GATC filed a four-count complaint

against Cryo-Trans seeking a declaratory judgment that the ’876

Patent, issued to Mr. Ralph P. Hill on November 10, 1987, and

entitled “Cryogenic Refrigeration System” , is invalid, void and

unenforceable, and further that the °876 Patent is not infringed

by GATC’s cryogenic refrigerated boxcar design, presently

commercialized in the United States under the tradename

“Arcticar”. The complaint also sought a preliminary injunction

enjoining Cryo-Trans from threatening patent infringement and

other related litigation against actual and prospective users of

GATC Arcticar boxcars. The extensive procedural history of

this case includes a five-day hearing held before Magistrate

Judge Rosemond in July, 1991, on the parties’ cross-motions for

preliminary injunction. On August 12, 1994, Magistrate Judge

Rosemond issued a formal Report and Recommendation which

found in favor of GATC with respect to the issues raised before

him in the parties’ cross-motions for preliminary injunction.

8. This Court adopted the recommended findings in the

Magistrate Judge’s Report in a Memorandum Opinion dated

December 20, 1994, which granted a preliminary injunction in

favor of GATC, except that this Court rejected, as premature,

Magistrate Judge Rosemond’s recommendation that GATC’s

motion for attorney fees under 35 U.S.C. § 285 be granted. The

Court’s December 20, 1994 order expressly indicated that this

Court had not made any final determinations on the merits of this

case.

9. GATC has been in the business of leasing railcars to the

railroad industry for approximately 80 years, and for many years

with respect to the business of manufacturing and leasing

mechanically refrigerated railcars. In late 1990, GATC

introduced a prototype mnon-mechanical, cryogenically

refrigerated railcar using a bunker-style design. This prototype

cryogenic railcar was designated the GARX 68000, and was

22a

built under the supervision of Mr. Erling Mowatt- Larssen,

GATC’s Director of Engineering. The GARX 68000 was built

and used only for demonstration and marketing purposes to

solicit orders from frozen food shippers for the company’s

anticipated production of a cryogenically refrigerated railcar |

called the “Arcticar.” The prototype railcar has never been, and i

is not, available for lease by customers. |

10. Around April of 1991, the GARX 68000 was modified

several times to become the GATX production car design styled

the “Arcticar.” Thereafter, in November of 1991 GATC

obtained United States Patent 5,168,717 which incorporated the

modified design. Figure 1 from this patent is hereby incorporated

into this opinion as Appendix B. (Def.’s Ex. 228). The primary

modification was the blocking up of the openings in the bunker

floor adjacent the end walls. As a result, the Arcticar production

railcar has no openings adjacent the end walls of the car. In

early 1991, GATC obtained its first order for Arcticar railcars.

11. Cryo-Trans is the owner by assignment of the ’876

Patent. (Def.’s Ex. 139). In 1985, Mr. Marvin H. Weiner

formed a sole proprietorship named “Cryo- Trans” for the

purpose of developing a business involving the leasing of

cryogenically refrigerated railcars. Cryo-Trans was incorporated

to form Cryo- Trans, Inc. in 1987. Mr. Weiner is the chief

executive officer and president of Cryo-Trans, Inc. Cryo-Trans’

cryogenically refrigerated railcars are referred to as CRYX

railcars. Mr. Weiner is also the president of Mt. Airy Cold

Storage (“Mt. Airy”), a frozen food storage facility used by

frozen food processors which is located in Mt. Airy, Maryland.

a es a i

12. The declared inventor of the ’876 Patent is Mr. Ralph

P. Hill. Mr. Hill has not obtained other patents. (Tr. 118, 122).

23a

13. At all relevant times prior to his retirement in 1988, Mr.

Hill was vice president of distribution at Lamb-Weston, Inc. in

Portland, Oregon. (Stip. No. 5). He was also a past chairman

and long-time member of the American Frozen Food Institute’s

Physical Distribution Council. Mr. Hill is credited with having

made many outstanding contributions in rail transportation of

frozen foods.

14. A critical issue facing the frozen food industry in the

1980’s was the availability of mechanical refrigerator cars owned

by the nation’s railroads. The then-current policy of the railroads

was not to replace aging mechanically refrigerated railcars as

they became unserviceable. The frozen food industry’s

dependence on mechanical refrigerator cars for long-haul

movement was expected to be compounded by the continuing

escalation of diesel fuel prices which would preclude long-haul

truck movement and make the industry even more dependent on

the railroads. Finding an alternative to the use of mechanical

refrigerator cars had been a high priority matter for the

American Frozen Food Institute Distribution Council and

Transportation Committee since at least 1982.

15. The American Frozen Food Institute (“AFFI”) and the

International Association of Refrigerated Warehouses (“IARW”)

through the Refrigeration Research Foundation jointly formed a

cryogenic railcar research and development task force

(AFFI-IAWR Refrigerated Railcar Task Force) to explore the

feasibility of using total loss refrigerants, such as liquid CO, to

ensure an adequate transportation system for the expected

growth of the frozen food industry. The United States

Department of Agriculture provided the scientific monitoring and

evaluation for the test shipments. Additionally, there was

substantial resource involvement by the Burlington Northern

Railroad.

24a

16. Recognizing that the supply of mechanically refrigerated

Car Research Project. The project involved development of

prototype railcars that relied on CO, , rather than mechanical

systems, to provide refrigeration. Hill was a leading force

behind the project.

17. Mr. Hill first initiated the Cryogenic Rail Car Research

Project under the joint sponsorship of the AFFI and LARW, and

later through a separately incorporated organization called the

American Frozen Food Cryogenic Association for Rail Car

Research—better known as AFFCAR-—which was a non-profit

shipper’s association formed to purchase refrigerated railcars

with which the AFFI cryogenic research and development task

force could experiment. Hill was chairman and leader of

AFFCAR throughout its existence. Throughout the Cryogenic

Rail Car Research Project, Mr. Hill championed the need for

research, raised funds, supervised the design, engineering and

testing of prototype railcars, and kept the frozen food industry

informed of the progress of the research. In 1985, he was

recognized by the frozen food industry for his work in

championing the need for cryogenic research, raising funds to

build prototype cars, supervising design work, and engineering

and testing prototype cars. (Def.’s Exs. 14, 22, 23, 30, 47, 233

q 28, 234 PP 17-18, 235 PP 15, 16, 21).

18. During 1980-1985, AFFCAR and/or Burlington

Northern built a number of prototype cryogenic cars which were

identified as the BNFE 3, AFFX 2001, AFFX 2002 and AFFX

2003 during the trial.

19. The AFFI task force decided that an insulated railcar

loaded with frozen food and given an initial charge of cryogen

would most likely be a technically and economically feasible

cooling system. A series of test shipments were conducted over

a one year period to determine the feasibility of using CO, as an

25a

alternative refrigeration source for railcar shipments of frozen

foods. The Burlington Northern Railroad donated its modified

mechanical refrigerator test car (“the BNFE 3”) to be used in the

AFFI cryogenic railcar project study. The BNFE 3 was a

refrigerated railcar originally built as a meat car in 1966, and

rebuilt with under-the-floor air delivery and a truck- type

nosemount mechanical refrigeration unit in 1976. It was

modified for CO, snow refrigeration in June of 1980. Seven

shipments of various frozen commodities in the summer and fall

of 1980 and the winter and spring of 1981 were made. The

mechanical unit was not used during the testing. Upon

evaluation of the test data from the BNFE 3 test shipments, the

cryogenic railcar research task force concluded that the

cryogenic refrigeration concept warranted further testing and

consideration.

20. Ralph Hill, James Fink, Eddie Barron, LeRoy Couture

and Biil McCollister were principally involved in the

reconstruction of the BNFE 3 railcar in 1980. (Tr. 72). The

BNFE 3 was a converted mechanical refrigeration car, which

utilized an overhead rectangular manifold at the ceiling of the car

to spray CO, directly on the load. It utilized a single loading of

CO, at the place of embarkation. (Tr. 71-72). The BNFE 3 car

proved that CO, had applications for use in transportation of

frozen food, but had drawbacks which did not allow the entire

load to remain consistently frozen during the entire trip. (Tr.

73).

21. With promising results from the BNFE 3 test

shipments, the task force proceeded to plan and design the

construction of a prototype cryogenic railcar with an on-board

CO, temperature control system with no mechanical or electric

parts; thus, eliminating costly mechanical diesel powered

refrigeration. Construction of the prototype car—the AFFX

2001-—was completed in January of 1983.

26a

22. The AFFX 2001 car was built for AFFCAR as an

attempted improvement over the BNFE 3 car. The AFFX 2001

utilized tanks of liquid CO, beneath the floor of the loading area

to carry a supply of CO, on the railcar as well as a computer to

sense temperature changes and to direct release of CO, snow on

the load. (Tr. 81).

23. The salient features of the “AFFX 2001—Prototype Car

Design” were as follows:

The car is equipped with a liquid carbon dioxide

refrigeration tank system. The system stores liquid

carbon dioxide under pressure at zero degrees

Fahrenheit in a series of interconnected aluminum

storage tanks placed lengthwise to the car beneath the

car’s aluminum floor. The tank system not only

provides in transit storage for liquid carbon dioxide,

but also acts as a barrier to heat entering the car and

functions as a giant cold plate to keep the load frozen.

An initial blanket of carbon dioxide snow is deposited

in the air on top and around the load prior to departure

from the loading warehouse. While in transit, the load

receives additional charges of snow triggered by a

thermostatically controlled temperature sensor in the

ceiling of the car above the air and load. Operation of

the refrigeration system requires only pneumatic power

provided by the pressure of the liquid carbon dioxide.

No electrical nor diesel power is needed. The prototype

car is the largest and best insulated refrigerator car ever

built. The car utilizes state of the art compressed

polyurethane foam in place insulation placed behind

interior fiberglass roof and wall panels with specially

designed deep corrugated channels to allow the free

flow of carbon monoxide gas over and around the load

of frozen food. The exterior of the car is painted with

Pee ee RT ee

27a

a high gloss reflective acrylic white paint specially

formulized to maximize reflection of radiant-heat from

the sun to provide an exterior surface that can easily be

cleaned.

The prototype car has a capacity of 4,904 cubic feet,

compared with the 4,050 cubic feet capacity of existing

mechanical cars. The overall exterior length of the car

is nearly 65 feet. The interior length is 58 feet.

As evident from the above-quoted description, the AFFX 2001

was equipped with an under-the-floor liquid CO, cooling system,

corrugated paneling on the side walls, and a piping system with

which to inject liquid CO, directly on top of the cargo to form

CO, snow. The AFFX 2001 proved impractical because of the

extra weight of the car from the storage tanks of liquid CO, and

because the computers, which controlled the release of CO,

while in transit, were subject to breakdown due to the difficulties

of the rail environment. (Tr. 83).

24. Mr. Hill was part of a group of people who helped to

design the AFFX 2001. Other persons involved in designing the

AFFX 2001 included Messrs. Fink, Habel, Couture and

Jenkins.

25. One of the problems with the AFFX 2001 Cryogenic

Prototype Railcar Design was that direct contact of solid CO,

with the frozen cargo caused over- freezing of the frozen food

product near the top of the shipments. The solution to the

problem was to put a bunker between the cargo and the solid

CO, . Accordingly, in a subsequent phase of the task force’s

cryogenic railcar research, the Burlington Northern Railroad

modified two existing large cube mechanical refrigerator cars

with the Rubin Carbonaire Plate CO, Snow Bunker System. The

two cas were called the AFFX 2002 and the AFFX 2003, and

operated as follows:

28a

These cars are equipped with a snow bunker which

consists of a sheet metal chamber across the interior

ceiling of the car. Liquid CO, is charged under

pressure to supply lines accessible from either side of

the A end (end opposite the brake wheel end) to the

overhead bunker. As the liquid CO, is charged into the

non-pressurized atmosphere in the bunker, it converts

to snow which accumulates in the bunker under the

entire ceiling of the car. The under surface of the

bunker, which is the interior ceiling of the car, is

insulated to control the sublimation (melting) of the

snow and prevents extreme cold air from reaching the

product in the car. As the CO, sublimates, the cold air

drops down the side walls and around the load. (CO,

is 52% heavier than air.)

The AFFX 2002, which evolved over a two year period, utilized

an overhead bunker to store the CO, snow after charging. (Tr.

856). The idea of using an overhead bunker was a result of

collective discussions between Bill McCollister, James Fink,

LeRoy Couture and Ralph Hill. (Def.’s Ex. 233 ¢ 18, Tr. 90).

The Burlington Northern took the AFFX 2002 and the

AFFX 2003 back after the AFFCAR project and put both cars

in their fleet, and built 75 additional such cars in the remaining

part of 1985—after March of that year.

26. The AFFX 2002 was an experimental car. (Tr. 866).

It went on two test runs before ratification (Tr. 838-39; Barron

Dep. at 30-31). The AFFX 2002 design showed that an

overhead bunker might be a useful innovation. Nevertheless, the

AFFX 2002 still needed improvement. Improvement was made

to the design of the exhaust vents and floors which were

incorporated into the AFFX 2002 for subsequent test runs and

into the AFFX 2003, which was identical to the AFFX 2002,

except for its overall length. (Tr. 435; Def.’s Ex. 233 ¢ 15;

29a

Habel Dep. at 145-46; Barron Dep. at 21). Mr. Fink was

principally responsible for the design of the AFFX 2002. (Tr.

163).

27. The cryogenically refrigerated railcar designated AFFX

2002 was built by employees of the Burlington Northern in

June-July of 1983. Burlington Northern sold the railcar to

AFFCAR after its completion. (Tr. 165, 437). This railcar was

used to transport frozen food product from the State of

Washington to an unloading site near Kansas City, Kansas, in

the summer of 1983. Ralph Hill was familiar with the AFFX

2002 railcar construction. (Stip. No. 2). He witnessed the

loading, testing, and unloading of the AFFX 2002 in 1983 and

understood its construction. (/d.). Ralph Hill publicly asserted

that the technology was available for anyone in the trade to use.

(Pl.’s Ex. HH).

28. The AFFX 2002 was a converted mechanical

refrigerator car having corrugated side and end walls, aluminum

floor racks, corner floor drains used as cargo area vents, and an

overhead bunker. (Pl.’s Exs. DF; DF(A). The bunker had

screened vents along one side and alternating CO, nozzles

penetrating into the duct. (Pl.’s Exs. DF, DF(A), EO). The

bottom wall of the air duct was insulated. (Pl.’s Ex. EO). The

CO, nozzles were connected to a CO, manifold pipe running the

length of the car and connectable to an outside source of liquid

CO,. (Pl.’s Ex. DF, DF(A)). The aluminum floor racks were

of a herringbone coustruction with spaced apart slats running

obliquely transversely and supported by lengthwise stringers to

support the load. (Pl.’s Ex. DF; DF(A)). The stringers formed

a plurality of parallel lengthwise channels for allowing CO, gas

to flow beneath the cargo. A center rail between the floor racks

would make it difficult for CO, gas to flow side to side under the

floor. (Pl.’s Exs. DF(A), DX; Tr. 821-822, 826, 859-860).

— Ra i oo

30a

29. When the AFFX 2002 railcar was initially charged with

CO, , the doors were kept ajar to relieve pressure. (Def.’s Ex.

233 ¢ 16, Barron Dep. at 32- 33). Although the drain vents at

each of the corners of the AFFX 2002 railcar were kept open

during the charging phase, most of the pressure was relieved

through the open door. (Tr. 867, 1071-72; Barron Dep. at

32-34). If the door was not kept open, the roof of the car was in

jeopardy of being blown off because the drain vents were not

sufficient to relieve the pressure. (Ir. 446- 47).

30. There is a dispute as to how the sublimated CO, gas

would flow in the AFFX 2002. Many of the people involved in

developing the AFFX 2002, including Messrs. Hill, Couture,

Habel and Barron, believed that its CO, gas would drop down

the sidewall nearest the bunker toward the aluminum floor racks,

pass through the gaps between the slots on the aluminum floor

racks beneath the load, and then go up on the opposite sidewall

of the car and over the top of the load. (Tr. 87-88; Def.’s. Ex.

233 ¢ 14; Tr. 445; Habel Dep. at 148; Barron Dep. at 18).

Mr. Fink, who also was involved in the design of the AFFX

2002, however, believed that the gas would flow on top of the

load and go down both sidewalls. (Tr. 849). This theory of gas

flow is contrary to what is claimed as the gas flow in the Fink

and Habel Patent. (Pl’s. Ex DF; Tr. 858). While GATC’s

in-court demonstration was of interest in trying to determine

through the use of a simulated model how the AFFX 2002

actually may have worked, (Pl.’s Ex. HK), it is not entitled to

much weight because it does not answer the question of how the

relevant persons in the art believed the AFFX 2002 worked

during the relevant time period.

31. Mr. Hill was involved in providing input and design

assistance for the BNFE 3, the AFFX 2001, and the AFFX

2002/2003 cars. (Tr. 22, 84, 90, 418-20, 425-26). The

development of a successful cryogenic railcar was very much an

3la

evolutionary process involving trial and error. Mr. Hill was the

only person who was aware of everything that was going on in

connection with AFFCAR activities. He was the only person

actively involved in the development phase of each and every

prototype car developed by AFFCAR. (Def.’s Ex. 234).

32. Each of the prototypes developed by AFFCAR and/or

Burlington Northern had problems. However, by 1985,

Burlington Northern began to commercialize the AFFX

2002/2003 design and built 75 railcars incorporating the AFFX

2003 design. Burlington Northern indicated to the industry that

it was going to seek a patent. As a result, AFFCAR disbanded

in March 1985. (Tr. 92-93).

33. At the time AFFCAR disbanded in March of 1985, Mr.

Hill and his employer Lamb-Weston knew that there were

problems with the AFFX 2002/2003 design. In particular, it

was generally known that the car had hot spots along the

sidewall opposite the bunker vents, were, resulting in the

thawing of frozen product by the time it reached the east coast.

Therefore, Lamb-Weston instructed Mr. Hill to continue

working on the development of a successful cryogenic car. (Tr.

95-96).

34. Burlington Northern patented the AFFX 2002/2003

design. The patent issued as U.S. Patent No. 4,593,536 to two

Burlington Northern employees, James K. Fink and David H.

Habel (“Fink and Habel Patent”). (Pl.’s Ex. CQ; Tr. 92- 93).

The Fink and Habel Patent specifically disclosed that “[w]hen

the refrigerant flakes sublimate in the bunker, the vapor flows

from the bunker out the screen mesh, down the channel of the

first sidewall, across the air flow channel and up the channel of

the second sidewall, all by convection.” (Pi.’s Ex. CQ).

Ultimately, Burlington Northern refurbished 75 cars utilizing a

modified AFFX 2002/2003 design. These cars were not

effective because they suffered from hot spots on the sidewall.

32a

As a result, the Burlington Northern cars were never accepted in

the marketplace, and ultimately were taken out of service.

(Def.’s Ex. 233 ¢¢ 14-21).

35. The design that ultimately led to the °876 Patent was

conceived by Mr. Hill during the summer of 1985. (Tr. 96;

Def.’s Ex. 233 ¢ 22). During the summer of 1985, Mr. Hill

spoke often to Mr. Jenkins, a fellow employee at Lamb-Weston,

about how a CO, car should be designed. (Tr. 733-734). Mr.

Hill often pulled out pieces of paper and made sketches. During

the summer of 1985, Mr. Hill described a potential design for a

CO, car to Mr. Jenkins which included a false ceiling created by

the use of a bunker. (Tr. 737). During this same time period,

Mr. Hill also described this idea to a Mr. LeRoy Couture, a

marketing manager with the Burlington Northern. (Def.’s Ex.

233 ¢ 13). Mr. Hill’s idea included use of vents along both

sides of the ceiling bunker, as well as the use of corrugated walls

on the end walls and the side walls and flooring of the car. (Tr.

754). (Def.’s Ex. 235). Mr. Jenkins also saw Mr. Hill with

blueprints regarding this design. (/d.; Tr. 747-49). Blueprints,

which reflected Mr. Hill’s design, were prepared by

Lamb-Weston’s engineering draftsman during the summer of

1985. (Tr. 96).

36. Mr. Hill’s employer, Lamb-Weston, was not interested

in manufacturing railcars. It was interested in having someone

else make them for Lamb-Weston’s use. (Tr. 266).

37. Mr. Weiner knew Mr. Hill because of the business

relationship between Mt. Airy and Lamb-Weston. Mr. Weiner

was familiar with the Burlington Northern cryogenic railcars

because they had been off-loaded at Mt. Airy. Because of this,

he also knew that the Burlington Northern cars—AFFX 2001 and

2002 (which were the AFFCAR prototypes)—had “hot spots”

resulting in a thawing of frozen food product by the time the cars

reached Mt. Airy. (Tr. 252).

33a

38. Mr. Weiner recognized the commercial potential of

cryogenic railcars as a replacement to mechanical cars. Mr.

Weiner and Mr. Hill agreed to work together to build a new

prototype cryogenic railcar. Mr. Weiner agreed to fund the

construction of a new prototype. (Tr. 253-54).

39. Mr. Weiner and Mr. Hill acquired and modified one of

the AFFCAR prototypes, the AFFX 2001, into a new design.

However, because the previously used construction facilities

were no longer available, Messrs. Weiner and Hill had to find

another party to do the modification work they desired. (Tr.

254).

40. Mr. Hill first met James S. Moe of C.V. Engineering in

October of 1985. (Tr. 99; Stip. No. 3). At all relevant times,

the company was commonly referred to simply as Cryo-Van, a

company principally operated by James S. Moe and Tom

Maxwell. Mr. Hill’s initial meeting with Mr. Moe led him to

believe that Cryo-Van had the capability of modifying the AFFX

2001 into his new design because Cryo-Van had the capability to

manufacture fiberglass which was an important component of the

new design. (Tr. 100-101).

41. In late 1984, James Moe, with the assistance of Tom

Maxwell, designed and developed a cryogenically refrigerated

“all purpose container” for the transport of frozen fish. Mr.

Moe is a natural mechanic with cryogenic experience. His real

expertise is in design and finding creative practical solutions to

mechanical problems. The container included a bunker (or tray)

extending the full length and width of the container to serve as

a false ceiling above the fish cargo and upon which solid carbon

dioxide was placed. The bunker served the same purpose as all

bunkers holding refrigerants such as solid carbon dioxide,

to-wit: to prevent direct contact of the refrigerant with the cargo

below and, thus, avoiding overfreezing of the top of the load.

Cryo-Van’s bunker was formed with vent openings along the

34a

side walls of the container to permit sublimated carbon dioxide

gas to flow naturally down from the bunker to the cargo below.

42. In October of 1985, Mr. Hill sent blueprints of his

design and of the original railcar which was to be converted into

the new design (the AFFX 2001), to Cryo-Van. (Tr. 100). Mr.

Moe ultimately threw away the blueprints sent to him by Mr.

Hill. (Tr. 903). After receiving blueprints from Mr. Hill, C.V.

Engineering submitted a bid to Mr. Hill in the amount of

$22,150 by letter dated October 29, 1985. (Def.’s Ex. 21).

This letter specifically acknowledges receipt of the blueprints

from Mr. Hill and itemizes in detail the various changes

requested by Mr. Hill for modification of the AFFX 2001 into

the new design which ultimately became known as the CRYX

1000. (Jd.) Mr. Moe acknowledged that Mr. Hill’s prior

designs included a bunker-type compartment. (Pl’s Ex. HP at

690).

43. Cryo-Van converted the AFFX 2001 to the CRYX

1000. Althowgh who actually designed the CRYX 1000 is not

without some controversy, the evidence indicates that it is more

likely than not that Mr. Hill principally designed the CRYX

1000.

44. The October 29, 1985 letter from Cryo-Van to Ralph

Hill, while he was at Lamb Weston, Inc., confirms that the

blueprints were sent to Cryo-Van by Mr. Hill. The first

paragraph of the letter reads in pertinent part as follows:

I [Tom Maxwell, General Manager of Cryo-Van] also

thank you [Ralph Hill] very much for your prompt

arrangement for expediting your blueprints on above

The Court specifically finds by a preponderance of the trial

evidence that it is more likely than not that this language referred

to blueprints of Mr. Hill’s design.

35a

45. The second full paragraph of the October 29, 1985 letter

reads in pertinent part as follows:

Pursuant to our recent discussion on refurbished rail

car # 2001 to Bfujnker type rail car, we would like to

offer you our proposal after carefully review [ing] your

blue-prints as follows:

* * *£©* * *€ *

y To remove existing end wall skins and install

a vent from plenums to upper extremity of the end

walls,

3. To make up and install a plenum at each end

of the All-Air floor to connect to the vent to

relieve the flash gas from the car at floor level,

this imsures that all the gas is used for cooling

before being emitted to the outside,

* * * & * *

5. To install Fluted fiberglass panels on the end

walls,

6. To install bunker system designed and built

by C.V. System Engineering, Inc.

A To install a single centered CO, manifold

designed and built by C.V. System Engineering,

Inc. with load, test and bleed controls under the

car at one end.

* * * *€* *€ * -

10. To remove the existing floor, tanks and grid

work that now make up floor, —

11. To build up from the sub-floor to the base for

the All-Air floor,

36a

12. To install an All-Air floor.

Although Cryo-Van helped to improve the original Hiil design,

this letter does not, contrary to GATC’s position, indicate that

Cryo-Van principally invented the CRYX 1000. Messrs. Moe

and Maxwell used Mr. Hill’s blueprints and the shell of the

AFFX 2001 railcar to complete the construction of the CRYX

1000.

46. A December 10, 1985 letter from Mr. Marvin H.

Weiner to Mr. M. Tom Maxwell, General Manager of C.V.

System Engineering, Inc., states as follows:

Dear Tom:

You should by now have received AFFX 2001

(hereinafter referred to as CRYX 1000) for

refurbishment. . . .

The body of this letter contains the following paragraph:

It is also my understanding from Ralph [Hill] that he

has discussed the matter of patent searches, clearances

and indemnification with you. Indemnification should

be for Lamb-Wesion, Ralph and myself personally,

Cryo- Trans and Mt. Airy Cold Storage.

Based on the ultimate performance of CRYX 1000, we

see this as the forerunner of mutually exciting times for

all of us. :

At the time of this letter, Messrs. Hill and Weiner were

concerned that Cryo- Van’s liquid CO, bunker-style refrigeration

system might be alleged to infringe the Rubin Carbonaire Plate

CO, Snow Bunker System. (Pl.’s Ex. HP at 749). In the Rubin

Patent [U.S. Letters Pat. No. 3,561,266], carbon dioxide gas

was expanded within containers [bunkers] at the top of the

vehicle storage area so as to form a deposit of snow within the

37a

containers. (Pl.’s Ex. AL). The snow provided a cold surface on

the bottom of the containers to cool the circulating air within the

vehicle. In addition, in one embodiment, a single vent was

provided in each container to permit carbon dioxide gas to flow

into the storage area. In another embodiment, the carbon dioxide

gas was vented to the atmosphere outside of the container.

There were concerns over a possible patent suit by Burlington

Northern. (Def.’s Ex. 39). These concerns ultimately led to a

proposed Patent License Agreement between Cryo-Trans and

Burlington Northern. (Def.’s Exs. 27, 29, 35, 36; Pl.’s Ex. HP

at 745). Cryo-Trans also entered into a Patent License

Agreement with the owner of the Rubin Patent. (Tr. 259-264;

Def.’s Ex. 48). Given this background, Messrs. Weiner and

Hill’s desire to obtain a “hold harmless” indemnification from

Cryo- Van was understandable.

47. Cryo-Trans’ request for “hold harmless” indemnifi-

cation was accepted by Cryo-Van by letter dated December 12,

1985. In closing, the letter stated the following:

Regarding a patent, our attorney of Washington, D.C.

indicated there is no such patent [that] was applied [for

in] recent year[s], however, as you understand, we are

going to apply our concept as patent as soon as

possible.

In this letter Messrs. Moe and Maxwell never claimed that they

were the principal designers of the CRYX 1000. If they had

been, it is extremely unlikely that they would have agreed to Mr.

Weiner’s “hold harmless” request without some reciprocal

business consideration.

48. A February 4, 1986 letter written by Cryo-Van to Mr.

Weiner upon the completion of the CRYX 1000 also makes no

claim that Cryo-Van had designed the CRYX 1000. Instead,

38a

this letter merely refers to the “refurbishment of your CRYX

1000". (Def.’s Ex. 28).

49. Mr. Moe has no credible documentation which clearly

and convincingly indicates that he conceived of the invention

defined in the ’876 Patent prior to the time the invention was

conceived by Mr. Hill. The earliest documentation that Mr.

Moe has which allegedly supports any claim of inventorship by

him is a sketch of a CO, container having a manifold and

exhaust system, which was sealed and mailed on December 17,

1985--after Mr. Moe had met Messrs. Hill and Weiner. (P1.’s

Ex. AK). The documentation submitted by GATC as evidence

that Mr. Moe was the true inventor does not clearly contradict

Mr. Hill’s claim of inventorship. This Court specifically finds

that the testimony of Messrs. Hill and Weiner about the

development and invention of the ’876 Patent was corroborated

by admissible evidence and that Mr. Moe’s testimony concerning

the same issue was not. Unlike Mr. Hill, Mr. Moe had no

historical involvement in the development of cryogenically

refrigerated railcars. Mr. Moe had no experience with railcars

or with CO, manifold systems prior to building the CRYX 1000

for Cryo-Trans.

50. From 1983 to 1988, Mr. David Burgener served as

Food Program Manager and/or Director of Applications for the

Cardox Corporation. This position gave him engineering and

marketing responsibilities with respect to the use of solid or

liquid carbon dioxide for the refrigeration of food supplies. As

part of the management of Cardox Corporation, Mr. Burgener

was aware that a committee of the American Frozen Food

Institute was exploring the feasibility of non-mechanical,

cryogenic refrigeration for food shipments on railcars, and that

Cardox was being solicited as a supplier of the liquid carbon

dioxide to be used im such cryogenically refrigerated railcars.

Cardox was at that time, and long has been, in the business of

39a

selling solid or liquid carbon dioxide for use in refrigeration

systems.

51. In March of 1986, Mr. Burgener witnessed the maiden

voyage and unloading of the CRYX 1000 at the Mt. Airy Cold

Storage warehouse in Mt. Airy, Maryland. The unloading of the

CRYX 1000 occurred on March 14, 1986 at Cryo-Trans’ Mt.

Airy Cold Storage warehouse in Mt. Airy, Maryland. At the

unloading were representatives from Mt. Airy Cold Storage,

Lamb-Weston, Liquid Air-Cardox, and the Burlington Northern

Railroad. The unloading was also not a secret event. All who

attended were there at the invitation of defendant Cryo-Trans’

chief executive officer, Mr. Weiner and/or Mr. Hill.

52. A July 2, 1986 letter from Mr. Weiner to Mr. Hill,

which significantly predates this controversy and resulting

litigation, also documents that Mr. Hill was the inventor of the

CRYX 1001 design. (Def.’s Ex. 38).

53. On August 12, 1986, Ralph Hill, while still a

Lamb-Weston employee, filed a patent application for the

cryogenic refrigeration system at issue. The Hill patent

application was prepared by Lamb-Weston’s attorney, Kenneth

Klarquist. (Stip. No. 8). He did not have a copy of the original

design blueprints in his file. He did have a copy of a sketch of

the railcar reflecting changes to be made at Mells Cargo from the

original CRYX 1000, which he could use to describe the best

mode of the patented invention. (Klarquist Dep. at 103; Tr.

546).

54. Kenneth Klarquist, received, but did not disclose to the

Patent Office, the Kurth British Patent 399,678 (Stip. No. 10;

Pl.’s Ex. CR) (“the Kurth Patent”). Klarquist received the

Kurth Patent and other prior art patents from Mr. David

Abrams, who was Mr. Weiner’s patent attorney. (Stip. No. 9).

Klarquist indicated that his usual practice was that he would, in

40a

fact, have received such materials, and supplemented the

disclosure already made to the Patent Office if he believed it was

appropriate. (Klarquist Dep. at 63, 66-68).

55. The Kurth Patent (P1.’s Ex. CR) discloses a cryogenic

refrigerated railcar with an overhead solid carbon dioxide bunker

system having a plurality of openings arranged along the side

walls for downward flow into the cargo area of sublimated CO,

gas. (Pl.’s Ex. CR; Tr. 582, 599).

56. On or about December 2,-1986, the Patent and

Trademark Office of the United States Department of Commerce

rejected Mr. Hill’s patent application stating:

The following. . . quotation of 35 U.S.C. 103. .

. [is] the basis for all obvious rejections set forth in this

Office:

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.

Subject matter developed by another person,

which qualifies as prior art only under subsection

(f) and (g) of section 102 of this title, shall not

preclude patentability under this section where the

subject matter and the claimed invention were, at

the time the invention was made, owned by the

same person or subject to an obligation of

assignment to the same person.

a eI MT Te MS eT ee

4la

Claims 1-6 are rejected under 35 U.S.C. 103 as being

unpatentable over Fink et al or Cryogenic Rail Car in view of

Hall. It would [be] obvious to modify either Fink et al or

Cryogenic Rail Car to arrange the CO, flow within the wall

channels for sinuous flow as taught in Hall Fig. 7. (Pl.’s Ex. 2).

To obtain reconsideration of this denial, Hill amended Claims 1

and 6 of the Application to stress the corrugated nature of the

containers’ walls. (Pl.’s Ex. 2).

57. On November 10, 1987, Hill’s application was granted,

and the ’876 Patent was issued. The ’876 Patent states that “it

is an object of the invention to provide a railcar construction

utilizing carbon dioxide snow as the refrigerant wherein all the

contents of the car will be maintained within desirable

temperature limits during shipment.” (Def.’s Ex. 200). The

invention relates to a refrigeration system for vehicles, and more

particularly to the construction of storage compartments for

utilizing carbon dioxide as a refrigerant in transporting products

by vehicles such as trucks, trailers, railcars and the like. In

April of 1990, Cryo-Trans acquired the °876 Patent from

Lamb-Weston. (Def.’s Ex. 142).

58. Mr. Hill testified he last saw the original blueprints at

Lamb-Weston. (Tr. 124). During the proceedings in this case,

Mr. Hill was unable to produce the original blueprints that led to

the °876 Patent. In 1988, after Mr. Hill’s departure,

Lamb-Weston was sold to Con-Agra, Inc. Thereafter Lamb-

Weston’s headquarters were moved from Portland, Oregon to

Pasco, Washington and a substantial number of business records

from Lamb-Weston were discarded. (Stip. No. 27). The

original blueprints may have been discarded by Lamb-Weston.

59. Claim 1 of the ’876 Patent is an independent claim from

which the other claims-claims 2 through 3—depend:

42a

Claim 1. In a container adapted to be maintained in a

refrigerated condition from the sublimation of carbon

dioxide snow the combination comprising:

a storage area defined by a floor, a pair of opposed

side walls, a pair of opposed end walls, and a

ceiling means

an insulated roof positioned above said ceiling

means and defining therewith a compartment for

supporting a supply of carbon dioxide snow, said

compartment extending substantially the full length

of said car;

means in said compartment for forming carbon

dioxide snow and means for connecting said

carbon dioxide snow forming means to a supply of

liquid carbon dioxide;

a plurality of openings through said ceiling means

adjacent each of said side walls and end walls for

permitting the flow of sublimated carbon dioxide

gas from said compartment;

each of said walls being corrugated to define a

plurality of channels therein open-sided toward the

interior of the container whereby said carbon

dioxide gas may flow from said openings in said

ceiling means downwardly through said channels

between said walls and a product load disposed in

said container toward said floor.

Claims 2 and 3 of the patent incorporate all of the limitations of

claim 1.

In addition to that which is recited in claim 1, claim 2 calls

for the “ceiling”, or bunker floor, to be insulated to resist heat

transfer therethrough:

43a

Claim 2. The container of claim 1 wherein said ceiling

means comprises a layer of insulation to inhibit the

transfer of heat through said ceiling means from said

storage area.

In addition to the limitations of claim 1, claim 3 states that

the floor of the container is formed with a plurality of open top

channels extending from one end wall to the other:

Claim 3. The container of claim 1 wherein said

floor is defined by a plurality load supporting

elements defining open top floor channels ‘

extending substantially from one end wall to the

other.

60. Immediately prior to trial, Cryo-Trans limited its claim

for infringement of the ’876 Patent to any of Claims 1, 2 and 3.

(Final Pretrial Order: Waiver of Claims).

61. The term “adjacent” as used in patents means not

necessarily at but nearby or near. (Tr. 539).

62. On November 8, 1977, United States Letters Patent,

No. 4,057,367 was issued to Mr. James S. Moe, and Messrs.

Marvin B. Carter and Ray L. Carter for their invention of a

“Combined Rotary-Reciprocating Piston Compressor,” to- wit:

“[a] compact but high volume displacement, relatively noiseless

and vibration free compressor for refrigeration gas or the like

combining a rotary drive input with six cylinders and three

reciprocating pistons within a rotor housed in a stator.” (Pl.’s

Ex. AY).

63. On August 9, 1988, United States Letters Patent, No.

4,761,969 issued to Mr. James. S. Moe for the invention of “[a]

non-mechanical refrigeration system particularly for use in a

large insulated container such as a truck or railroad car for

maintaining perishables at a desired low temperature during

‘a i

shipment. A cryogenic material such as liquid CO, is used in a

plurality of modes to permit or prevent exposure of the

foodstuffs to CO, vapors.” (Pl.’s Ex. AZ).

64. Mr. Moe never sought to patent an invention exactly

like the *876 Patent and his attorney never challenged the

issuance of the ’876 Patent to Mr. Hill.

65. The cryogenic refrigeration system covered by the ’876

Patent at issue in this case, is essentially

[a] railcar refrigerated by carbon dioxide snow [with a]

compartment at top for containing a supply of such

snow. Openings are provided along each side and end

wall for escape of carbon dioxide gas from [the]

compartment so it can flow down along each side of

load and envelop same. Floor of car is formed with

longitudinal channels with manifolds at ends of car to

cause flow of gas toward one end along side walls and

then through interior channels to discharge opening at

opposite end.

66. Columns 1 and 2 of the specification text of the ’876

Patent make reference to and distinguish the subject invention

from such prior art as-the Fink patent, which refers to a

bunker-style cryogenically refrigerated railcar, and the AFFX

2001 railcar. As concerns the AFFX 2001 railcar, the ’876

Patent notes as a problem the direct deposit of carbon dioxide

snow on the cargo load, causing overfreezing at exposed parts of

the load. The Fink patent is acknowledged to disclose a bunker

to contain carbon dioxide snow out of contact with the load, but

is reported to not be effective in enveloping the load with cold

carbon dioxide gas since the openings in the bunker floor are

only along one side wall of the car. (Pl.’s Ex. A).

67. The specification text and drawings of the ’876 Patent

describe a railcar refrigerated by carbon dioxide snow which is

45a

deposited in a compartment or bunker beneath the roof of the

railcar and overlying the cargo area of the railcar. The use of

carbon dioxide as a refrigerant and the use of a bunker to hold

carbon dioxide snow is all part of and taught by the prior art.

Openings are provided along each side and end wall of the

bunker floor through which sublimating carbon dioxide gas

escapes from the bunker to flow down along the side walls and

end walls of the car, enveloping the cargo. The use of openings

in the ceiling of or in a bunker beneath the roof of a container to

allow carbon dioxide gas to escape to and envelop the cargo

below is all part of and taught by the prior art.

Each of the cargo area walls is formed with sinuous

channels to permit the flow of the carbon dioxide gas towards

the floor beneath the cargo. The use of channeled or corrugated

wails to permit the flow of the carbon dioxide gas towards the

floor beneath the cargo, and the use of sinuous channels for this

purpose is all part of and taught by the prior art.

The floor of the car is formed with open top lengthwise

channels to receive the carbon dioxide gas and conduct it to one

end of the car containing a discharge vent communicating with

the atmosphere exterior to the railcar. The use of all-air flooring,

including the use of open top lengthwise channels to receive the

carbon dioxide gas, was all part of and taught by the prior art.

68. But for the lack of a “compartment” the third clause of

claim 1, to-wit:

means in said compartment for forming carbon dioxide

snow and means for connecting said carbon dioxide

snow forming means to a supply of liquid carbon

dioxide Would read on the AFFX 2001 railcar.

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69. The °876 Patent specification describes the invention

arrangement as effecting a flow of cold carbon dioxide gas from

the bunker area to envelop the cargo load in the car.

“... because the cold carbon dioxide gas is flowing

downwardly on each of the opposite sides and on the

ends of the car and in direct contact with the bottom of

the load, all parts of the load will be maintained at a

desirably low temperature to preserve the quality of the

product shipment.”

70. Because of concerns Mr. Weiner had about C.V.

Engineering’s ability to quickly construct further CRYX 1000

cars, the CRYX 1000 was sent to Mells Cargo, Inc. (“Mells”)

in Sacramento, California, an established business with extensive

experience in working with railcars. (Tr. 105).

71. Melis rebuilt the CRYX 1000 bunker system and other

components of the car. After Mells rebuilt the CRYX 1000,

Weiner contracted with Mells to retrofit the first 150 used cars

of Cryo-Trans “C” plate fleet. (Tr. 267-68).

72. The original CRYX 1000 included vertical ducts, which

served as exhaust vents, which were designed by C.V.

Engineering. These ducts were not included in the ’876 Patent

and were removed at Mells. Mells also rebuilt the flooring in

the CRYX 1000. (Tr. 106).

73. Mr. Weiner personally borrowed $8.5 million in order

to purchase used mechanical cars and rebuild them into the first

150 cars of Cryo-Trans’ “C” plate fleet. (Tr. 267). Thereafter,

Mr. Weiner incorporated Cryo-Trans and began entering into

leasing agreements with Lamb-Weston and other food

processors. While mass construction of the CRYX 1000 was

underway, problems developed relating to its manifold pressure

which caused the roofs of the railcars to be ruptured.

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Cryo-Trans spent close to $1 million working out these problems

to improve the CRYX 1000. (Tr. 269-70).

74. During the ’876 Patent Application, Lamb-Weston’s

patent attorney described the Mells’ modified version of the

CRYX 1000 to the patent examiner. (Tr. 546).

75. Shortly after Cryo-Trans began construction of its “C”

plate fleet, Mr. Weiner conceived of an improved “high cube”

version of Mr. Hill’s design. Instead of being limited by the size

of the “C” plate shell, Mr. Weiner’s high cube design optimized

interior car dimensions to fit the size of the boxes used as

product packaging by various food processors.

76. Commencing in the Spring of 1987, Mr. Weiner

approached Gunderson, Inc. (“Gunderson”) in Portland, Oregon

to arrange for the production of a prototype high cube car.

Gunderson’s engineering department, working in conjunction

with Mr. Weiner, developed a comprehensive set of blueprints

for the car which Gunderson labeled the “Weinermobile”.

(Def.’s Ex. 85; Tr. 274).

77. Gunderson built the shell of the high cube car in the Fall

of 1987. The car was then moved to Mells where the CO,

bunker system and walls were installed in accordance with Hill’s

design, as well as other structures. The car also included a

customized “high profile” plug door designed specifically for

Cryo-Trans by Youngstown Door Company in Ohio. (Tr. 284).

78. After two years of testing, Cryo-Trans was able to lease

fifty high cube production cars in 1989 or early 1990. (Tr.

276-79). By that time, Cryo-Trans had increased its “C” plate

fleet to a total of 222 cars which were under lease.

79. The food processors who leased Cryo-Trans’ cars were

able to ship their product at a transportation cost that was

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considerably lower than the cost of using the older, mechanical

cars. (Tr. 285-86).

80. Lewis Tyree was an inventor who was active in

AFFCAR and who was paid to work on inventions to increase

the use of CO, . It was in his financial interest to come up with

an invention similar to the 876 Patent. He did not. (Def.’s Ex.

224 { 33). The same financial incentive applied to David

Burgener yet he also did not invent the ’876 Patent. (Tr. 988).

81. Burlington Northern had an interest in building a CO,

railcar that worked. Burlington Northern did not conceive of the

°876 Patent design. Instead, it built 75 CO, railcars employing

the Fink and Habel Patent design, which were not effective.

82. GATC has over 61,000 cars of all types under lease.

(Tr. 353). In late 1990, GATC decided it had to promptly get

into the cryogenic railcar market and copy Cryo-Trans’ high

cube car. (Def.’s Ex. 226, Tr. 334-36, 398).

83. GATC recognized it needed the °876 Patent to get

involved in the marketplace and tried to hire Mr. Hill. (Tr.

375-77; Def.’s Ex. 223).

84. GATC had Gunderson make a shell identical to the

Cryo-Trans high cube car. Gunderson also provided GATC with

a set of engineering drawings it had originally made for Weiner

and Cryo-Trans. (Def.’s Exs. 127, 131, 133; Tr. 467-69).

85. GATC then moved the shell from Gunderson’s to Melis

for completion of the interior. The GATC car was completed by

Mells along with the identical cars Mells was completing for

Cryo-Trans. (Tr. 392).

86. GATC spent $130,000 to have a prototype copy of

Cryo-Trans’ railcar built as a tag-along order to the Cryo-Trans

cars being built. (Tr. 338).

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87. The prototype railcar GARX 68000 was originally

produced with openings in the bunker floor adjacent the end walls

of the car. In April, 1991, after this lawsuit was filed, GATC

blocked up these end wall openings before commencing

production of the Arcticar railcar design. From its first

demonstration run in December 1990 to April 1991, GATC

admits the GARX 68000 car literally infringed claims 1, 2, and 3

of the Hill °876 Patent, if valid and enforceable. (Stip. No. 25).

88. The Arcticar is cryogenically refrigerated with carbon

dioxide snow deposited in a bunker area beneath the roof of the

car. The source of the snow is a manifold pipe mounted along

the roof and length of the car, and connected to a source of

liquid carbon dioxide for charging the bunker. The floor of the

bunker area serves as the ceiling to the cargo area beneath. The

walls of the Arcticar in the cargo area are formed with

corrugated, open channels extending from the bunker floor to the

floor of the car.

89. The bunker floor vent opening arrangement in the

Arcticar is as shown in Plaintiff's Exhibit CG. The bunker floor

is provided with openings along both side walls (which are

disposed 6 inches from the side wails and no closer to any end

wall than 3 feet) and a row of openings along the center line of

the bunker floor (which are disposed 4 1/2 feet from each side

wall and no closer than 6 feet from an end wall). The vent

Opening arrangement in the Arcticar bunker floor provides a

cooling flow which, in the form of sublimated carbon dioxide

gas, passes from the bunker area down along both side wails of

the railcar and also through the center line openings into a

dispersement chamber on top of the load. The gas deposited into

the central dispersement chamber on top of the load radiates over

the top of the load to permeate through the load and/or spread

out over the top of the load to pass down along the side or end

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of the load wherever a pressure differential occurs

accommodating such a flow.

90. The only significant change made to the GARX 68000 in

its transformation into the Arcticar, relative to claims 1, 2 and 3

of the Hill ’876 Patent, was the elimination of the ceiling bunker

vents on each of the end walls of the railcar. (Stip. No. 26).

91. In designing the Arcticar production railcar, GATC was

cognizant of the 876 Patent and eliminated end wall vents on the

bunker floor system precisely to avoid infringement of the °876

Patent. (Tr. 521-22).

92. Mr. Mowatt-Larssen, GATC’s engineer, admitted that

the Arcticar does not work any differently than the first GATC

prototype in the way the load is cooled. (Tr. 486).

93. The Court’s own observation and inspection of the

Arcticar disclosed that it did not work any differently than the

Cryo-Trans high cube car.

94. GATC copied the design of the Cryo-Trans high cube

car after the commercial viability of the technology was proven

by Cryo-Trans.

95. There is no perceptible market difference between the

Cryo-Trans railcar and the Arcticar. (Tr. 341, 360-61; Def.’s

Ex. 186).

96. Prior to the introduction of the Arcticar production

railcar, GATC sought and obtained the advice of outside patent

counsel concerning its possible infringement of the ’876 Patent.

In a written opinion dated November 16, 1990, GATC was

advised by outside patent counsel that its Arcticar production

railcar design did not infringe the *876 Patent. (Tr. 512-18;

Pl.’s Ex. HI).

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97. GATC has produced and leased approximately 80

Arcticar railcars. (Sup. No. 16).

98. At the time of trial GATC also had orders for 100 more

Arcticar railcars. (Tr. 360).

99. The ’876 Patent design has enjoyed a high degree of

commercial success, not only from the standpoint of reducing

transportation costs for food processors, but also from the

standpoint of making Cryo-Trans a profitable leasing company.

The ’876 Patent design has been accepted by the industry. (Tr.

371; Def.’s Ex. 223). This was the main reason GATC decided

to enter the market.

100. The °876 Patent design solved a long felt

transportation problem for frozen food processors, who were

searching for a viable solution since 1980 to the poor economic

and maintenance viability of old railroad mechanical cars. This

is especially true in view of our planet’s confirmed

environmental and related climate problems which have led to

new record hot temperatures throughout our country during the

last several years.

CONCLUSIONS OF LAW

1. Cryo-Trans has the burden of proving by a

preponderance of the evidence that GATC’s Arcticar falls within

the scope of Claim 1 of the *876 Patent. Lemelson v. United

States, 752 F.2d 1538, 1547 (Fed.Cir.1985). Literal

infringement is found when the accused device embodies all the

elements of the claimed invention. Mannesmann Demag Corp.

v. Engineered Metal Prods. Co., 793 F.2d 1279, 1282

(Fed.Cir.1986), Texas Instruments Inc. v. United States Int’l

Trade Comm’n, 988 F.2d 1165, 1171 (Fed.Cir.1993). If the

Arcticar is found to have at least each and every feature specified

in Claim 1, then the claim is literally infringed. Read Corp. v.

Portec, Inc., 970 F.2d 816, 821 (Fed.Cir.1992). Even if all of

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the features of the Claim are not literally present, under the

“doctrine of equivalents”, infringement may be found if the

Arcticar performs substantially the same function, im

substantially the same way, to achieve substantially the same

result as the subject matter of the claim. Jd. at 821; Black &

Decker, Inc. v. Hoover Serv. Ctr., 886 F.2d 1285, 1293-94

(Fed.Cir. 1989).

2. The construction of a patent claim is a matter of law

which can be determined by a review of all relevant evidence

regarding the true meaning of the language employed in the

patent. Markman v. Westview Instruments, Inc. , 52 F.3d 967,

977-79 (Fed.Cir.1995). It is undisputed that GATC’s production

version of the Arcticar has each and every element of Claim 1 of

the ’876 Patent except bunker vents “adjacent” to the end walls.

(Trial Stip. No. 17). In the Arcticar, the vents nearest each end

wall are 2 feet, 9 inches away (Tr. 480). The Arcticar has an

interior length of 67 feet, 8 inches, which is identical to the

Cryo-Trans car. (Trial Sup. No. 21; Tr. 279-280). Its end-

most bunker vents are less than five percent of the distance

measured from end to end of the car. Because the terms of a

Claim “will be given their ordinary meaning, unless it appears

that the inventor used them differently” this Court finds on the

basis of all of the relevant evidence that the term “adjacent” as

used in the °876 Patent means “not far off’. (Ex. 134; Tr.

539). See ZMI Corp. v. Cardiac Resuscitator Corp., 844 F.2d

1576, 1579 (Fed.Cir.1988). Since the vents nearest the end

walls of the Arcticar are “not far off”, this Court finds the

Arcticar within the scope of the meaning of “adjacent” as used

in Claim 1.

3. The purpose of the bunker vents of the °876 Patent is to

facilitate the passage of sublimating CO, along the corrugations

making up the walls of the car. The Arcticar’s bunker vents are

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close enough to provide the same function. Given the proximity

of the Arcticar bunker vents to the end walls, ihe Arcticar

literally infringes the °876 Patent.

4. Based on the Court’s careful review of all the admissible

evidence as well as its personal observation of the two cryogenic

railcars, the Court finds that the GATC ARCTICAR is simply

a copy of the Cryo-Trans car. The Court’s own physical

inspection of the Cryo-Trans and Arcticar disclosed that both

Cars operate in essentially the same manner. The Arcticar

performs substantially the same function, in substantially the

same way, to achieve substantially the same result as the

invention defined in the °876 Patent. (Tr. 540-45, 1084; Def.’s

Ex. 234 4 25, Appendices A & B). Thus, Cryo-Trans has

carried its burden of proof of establishing that the Arcticar

infringes Claim 1 of the ’876 Patent under the doctrine of

equivalents. Graver Tank & Mfg. Co. v. Linde Air Prods. Co.,

339 U.S. 605, 70 S.Ct. 854, 94 L.Ed. 1097 (1950).

5. The ARCTICAR has an insulated bunker floor which is

the same as the subject matter specified in Claim 2 of the ’876

Patent. Claim 2 is therefore literally infringed.

6. The ARCTICAR has a plurality of floor ribs or slats

which are the same thing as the subject matter specified in Claim

3 of the ’876 Patent. Claim 3 is therefore literally infringed.

7. Cryo-Trans has satisfied its burden of proof in

establishing by a preponderance of evidence that the GATC

ARCTICAR literally infringes Claims 1, 2 and 3 of the 876

Patent. Alternatively, Cryo-Trans has established that the

GATC ARCTICAR infringes the ’876 Patent under the doctrine

of equivalents.

8. A patent is presumed valid, 35 U.S.C. § 282. The

presumption of validity afforded by § 282 places the burden of

persuasion by clear and convincing evidence, upon the party

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asserting invalidity. SSIH Equip. S.A. v. United States Int’l

Trade Comm’n, 718 F.2d 365, 375 (Fed.Cir.1983).

9. When all the various terms of a patent claim read directly

on an item of prior art, then the prior art “anticipates” the claim

and the patent claim is invalid under 35 U.S.C. § 102.

10. When a party asserts that prior use or knowledge of an

item by others is prior art, it must be shown that the use was of

a complete and operable product that was reduced to practice.

See 1 Chisum, Patents, § 305 [2], at 3-80; Medtronic, Inc. v.

Daig Corp., 611 F.Supp. 1498, 227 U.S.P.Q. 509, 515

(D.Minn.1985), aff'd, 789 F.2d 903 (Fed.Cir.), cert. denied,

479 U.S. 931, 107 S.Ct. 402, 93 L.Ed.2d 355 (1986). Once the

earlier invention has been sufficiently tested to demonstrate that

it will work for its intended purpose, the earlier invention is

considered reduced to practice. Atlantic Thermoplastics Co.,

Inc. v. Faytex Corp., 5 F.3d 1477, 1480 (Fed.Cir.1993).

11. In order to be patentable an invention must not be

obvious to a person of ordinary skill in the art at the time the

invention was made. Graham v. John Deere Co. , 383 U.S. 1, 86

S.Ct. 684, 15 L.Ed.2d 545 (1966). Pursuant to 35 U.S.C. § 103,

a patent claim is invalid 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 pertains. In determining obviousness,

the person of ordinary skill in the art is pictured as working in

his shop with the prior art hanging on the walls around him.

Union Carbide Corp. v. American Can Co., 724 F.2d 1567,

1576 (Fed.Cir.1984). The obviousness test seeks to determine

whether the hypothetical person of ordinary skill in the relevant

art, familiar with all that the relevant art discloses and

reasonably suggests, would find the claimed invention obvious.

In re Sovish, 769 F.2d 738, 742 (Fed.Cir.1985).

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12. In this case, a person of ordinary skill in the art is an

individual having a college degree or equivalent experience in

the field of cryogenic refrigeration design and who is

mechanically inclined and familiar with refrigerated transport

design. These persons are Messrs. David Burgener, Ralph Hill,

Erling Mowatt-Larssen, Tom Maxwell, Mel McCracken and

James S. Moe.

13. The issue of obviousness under § 103 is a question of

law based on the Court’s factual determinations. Graham v.

John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545

(1966). The Court must usually determine the scope and content

of the relevant prior art, the difference between the prior art and

the claimed subject matter, the level of ordinary skill in the

pertinent field of endeavor and any objective evidence of

nonobviousness. Graham, 383 U.S. at 18, 86 S.Ct. at 694.

14. Invalidation of a patent claim under § 103 requires a

determination that it would have been obvious to combine prior

art existing at the time the invention was made to produce the

claimed subject matter. 35 U.S.C. § 103; Uniroyal, Inc. v.

Rudkin-Wiley Corp., 837 F.2d 1044, 1050-51 (Fed.Cir.), cert.

denied, 488 U.S. 825, 109 S.Ct. 75, 102 L.Ed.2d 51 (1988).

Courts are expressly prohibited from using the patent or

invention at issue as a guide to combine bits and pieces of earlier

designs and then reach a conclusion of obviousness. The

decisionmaker must forget what he or she has been taught about

the claimed invention and cast the mind back to the time the

invention was made. W.L. Gore & Assocs., Inc. v. Garlock,

Inc., 721 F.2d 1540, 1552-1553 (Fed.Cir.1983), cert. denied,

469 U.S. 851, 105 S.Ct. 172, 83 L.Ed.2d 107 (1984).

15. The question of obviousness should not be decided by

reference through hindsight by using the asserted claim as a

guide through a maze of prior art references which combine the

right references in the right ways so as to achieve the result of

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the invention, as defined by the asserted claim. Monday morning

quarterbacking is quite improper when resolving the question of

nonobviousness in a court of law. Orthopedic Equip. Co. v.

United States, 702 F.2d 1005 (Fed.Cir.1983).

16. A showing of commercial success of the patented

invention is objective evidence of nonobviousness. Bio-Rad

Lab., Inc. v. Nicolet Instrument Corp. , 739 F.2d 604, 611-12

(Fed.Cir.), cert. denied, 469 U.S. 1038, 105 S.Ct. 516, 83

L.Ed.2d 405 (1984). Another form of objective evidence of

nonobviousness is that the patented invention filled a long felt

need in the pertinent industry. Kansas Jack, Inc. v. Kuhn, 719

F.2d 1144, 1150 (Fed.Cir.1983). Copying or adoption of the

patented invention by others is also objective evidence of

nonobviousness. Diversitech Corp. v. Century Steps, Inc., 850

F.2d 675, 679 (Fed.Cir.1988). Finally, recognition and praise

of the invention is objective evidence of nonobviousness. W.L.

Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540, 1555-56

(Fed.Cir. 1983), cert. denied, 469 U.S. 851, 105 S.Ct. 172, 83

L.Ed.2d 107 (1984).

17. GATC has alleged that the ’876 Patent is invalid

because its subject matter was known, used, or invented by

another. Given the Court’s factual findings, GATC has failed to

establish, by clear and convincing evidence, that this is the case.

The CRYX 1000 does not anticipate the 876 Patent under 35

U.S.C.§102 because the principal design of the CRYX 1000 was

conceived of by Mr. Hill. This Court expressly concludes that

GATC has failed to establish that the ’876 Patent is invalid under

any of the other applicable statutes relating to inventorship. Jn

re Yates, 663 F.2d 1054 (C.C.P.A.1981): Novo Industri A/S v.

Travenol Lab., Inc., 677 F.2d 1202 (7th Cir. 1982).

18. GATC has also alleged that the ’876 Patent is invalid

under 35 U.S.C. § 103 because its claims would have been

“obvious”. Obviousness is a question of law. Graham v. John

Deere Co., 383 U.S. at 15, 86 S.Ct. at 692. Having considered

the various factors mandated by Graham v. John Deere, and

based on the Court’s findings of fact this Court expressly finds

that GATC has not met its burden of proving invalidity, by clear

and convincing evidence, under 35 U.S.C. § 103.

19. The relevant scope and content of prior art in this case

includes the Fink and Habel Patent, which is the closest prior

art. The Fink and Habel Patent discloses a cryogenic railcar

with a bunker with vents only on one side. (Pl’s Ex. DF; Tr.

555, 1007, Def.’s Ex. 234 ¢ 22). The Fink and Habel Patent,

which relates to the AFFX 2002, was disclosed to the patent

examiner by Mr. Hill’s attorney. The next most pertinent art,

which was also disclosed to the patent examiner, is the

Cryogenic Railcar Report which describes the various prototype

railcars developed by AFFCAR, including the AFFX 2002.

(Def.’s Ex. 18). The Rubin Patent, which involves two

containers in a vehicle transport with ceiling vents on both sides

is also relevant prior art. (Pl’s Ex» AC). This ‘patent was also

reviewed by the patent examiner. The Kurth British Patent,

which discloses a bunker floor which allows sublimated gas from

solid CO, to pass through apertures in the bunker floor down

into a cargo area is also relevant prior art. (Pl’s Ex. CR). The

’°876 Patent represents a significant improvement from the

relevant prior art and is not obvious from a review of the

relevaut prior art. (Def.’s Ex. 234). No single item of prior art

discloses the same thing or anticipates the invention specified by

the ’876 Patent claims.

20. There is no clear suggestion of combining different

pieces of prior art to produce the invention claimed by the ’876

Patent unless the patent is improperly used as a guide to make

the combination.

21. The ’876 Patent discloses a new approach to in-transit

cooling. It uses a pre-deep freezing form of cooling because it

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substantially pre-deep-freezes the most exposed portion of the

load during the time the bunker is being charged with CO, snow

through an adequate distribution of vents provided from the

bunker area.

22. The Court specifically finds that the °876 Patent, as

improperly copied by GATC, has had considerable commercial

success in the marketplace and has served to satisfy a long felt

need in the art. All of these factors, along with the failure of

other persons of ordinary skill in the art to make the invention,

has served to convince this Court that the *876 Patent is not

invalid because its claims would have been “obvious”. Graham

v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545

(1966); Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530

(Fed.Cir.1983); Perkin-Elmer Corp. v. Computervision Corp.,

732 F.2d 888 (Fed.Cir.), cert. denied, 469 U.S. 857, 105 S.Ct.

187, 83 L.Ed.2d 120 (1984). 7%

23. Every applicant for a patent has a duty of candor and

good faith in its dealing with the Patent Office and the Examiner

handling his application. This means that the applicant and his

or her lawyer must not intentionally withhold or misrepresent

material information concerning the invention, as defined by the

asserted claim. A breach of this duty is inequitable conduct and

renders the patent unenforceable.

24. Inequitable conduct before the Patent Office arises from

failure to disclose material information, or submission of false

material information with an intent to deceive the Patent Office.

FMC Corp. v. Manitowoc Co. , 835 F.2d 1411 (Fed.Cir. 1987).

To show that Cryo-Trans is guilty of inequitable conduct because

of its “failure to disclose” prior art GATC must offer clear and

convincing proof of (1) prior art or information that is material;

(2) knowledge chargeable to Hill of that prior art or information

and of its materiality; and (3) that Hill’s failure to disclose the

art or information resulted from an intent to mislead the Patent

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Office. Jd. at 1415; Hewlett-Packard Co. v. Bausch & Lomb

Inc., 882 F.2d 1556, 1562 (Fed.Cir.1989), cert. denied, 493

U.S. 1076, 110 S.Ct. 1125, 107 L.Ed.2d 1031 (1980);

Kingsdown Medical Consultants, Ltd. v. Hollister Inc. , 863 F.2d

867 (Fed.Cir.1988), cert. denied, 490 U.S. 1067, 109 S.Ct.

2068, 104 L.Ed.2d 633 (1989). To satisfy the “intent to

deceive” element of inequitable conduct, “the involved conduct,

viewed in light of all the evidence, including evidence indicative

of good faith, must indicate sufficient culpability to require a

finding of intent to deceive.” Paragon Podiatry Lab., Inc. v.

KLM Lab., Inc., 984 F.2d 1182, 1189 (Fed.Cir. 1993).

25. “Inequitable conduct” is not, or should not be, a magic

incantation to be asserted against every patentee. Nor is that

allegation established upon a mere showing that art or

_information having some degree of materiality was not

disclosed. FMC Corp. v. Manitowoc Co., Inc., 835 F.2d 1411,

1415 (Fed.Cir.1987). A patent applicant is under no obligation

to disclose “all pertinent prior art or other pertinent information

of which he is aware.” Digital Equip. Corp. v. Diamond, 653

F.2d 701, 716 (1st Cir.1981). The two controlling factors are

the materiality of the information and the intent of the action. Jd.

26. In evaluating “inequitable conduct” the knowledge and

actions of a patent applicant’s attorneys are chargeable to the

applicant. Argus Chem. Corp. v. Fibre Glass-Evercoat Co., 759

F.2d 10, 14-15 (Fed.Cir.), cert. denied, 474 U.S. 903, 106

S.Ct. 231, 88 L.Ed.2d 230 (1985).

27. The Kurth Patent qualifies as a prior art publication

pursuant to 35 U.S.C. § 102(b). Mr. Hill’s failure to disclose

the Kurth Patent was material because there was a substantial

likelihood that a reasonable examiner would have considered it

important in deciding whether to issue the patent-in- suit. J.P.

Stevens & Co. v. Lex Tex, Lid., 747 F.2d 1553 (Fed.Cir.1984),

cert. denied, 474 U.S. 822, 106 S.Ct. 73, 88 L.Ed.2d 60 (1985).

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28. There must be an element of bad faith or total

recklessness to find fraud or inequitable conduct. Digital Equip.

Corp. v. Diamond, 653 F.2d 701 (1st Cir.1981); Norton v.

Curtiss, 433 F.2d 779, 795-96 (C.C.P.A.1970). See also

Tegtmeyer, Fraud on the Patent and Trademark Office Under

Rule 56, 58 J. Pat. [ & Trademark] Off. Soc’y. 550, 561 (1976).

29. To establish fraud on the Patent Office a substantial

degree of “wrongfulness” is required to be shown. Applicants

for patents do not engage in fraudulent conduct when they make

“honest mistakes in judgment” concerning the information

material to consideration of their applications, nor does some

slight deviation from the requisite standard of care suffice as

fraud. Digital Equip. Corp. v. Diamond, 653 F.2d 701, 715 (1st

Cir.1981).

30. A fraud finding also requires that the withheld

information meet a rather high standard of materiality.

“Materiality” has generally been interpreted to mean that if the

Patent Office had been aware of the complete or true facts, the

challenged claims would not have been allowed. Norton v.

Curtiss, 433 F.2d 779, 794-95 (C.C.P.A.1970). To establish

fraud, the nondisclosed information must be such as to have a

likely effect on the scupe of allowable claims or the issuance of

the patent. It is not enough that the information be simply

“relevant” in some general sense to the subject matter of the

claimed invention, or even to the invention’s patentability.

Digital Equip. Corp. v. Diamond, 653 F.2d 701, 716 (ist

Cir.1981). To satisfy the intent to deceive element of inequitable

conduct, “the involved conduct, viewed in light of all the

evidence, including evidence indicative of good faith, must

indicate sufficient culpability to require a finding of intent to

deceive.” Kingsdown Medical Consultants, Ltd. v. Hollister Inc. ,

863 F.2d 867, 876 (Fed.Cir.1988), cert. denied, 490 U.S. 1067,

109 S.Ct. 2068, 104 L.Ed.2d 633 (1989).

6la

31. GATC has not shown by clear and convincing evidence

that the °876 Patent is unenforceable because of fraud on the

Patent Office. There is no evidence indicating intent to mislead

the Patent Office in connection with obtaining allowance of the

°876 Patent. At best the evidence tends to indicate that Mr.

Hill’s counsel negligently failed to present certain relevant prior

art to the Patent Office. The Court can not conclude that the

totality of the circumstances establishes an intent to mislead or

deceive the Patent Office by clear and convincing evidence.

32. Mr. Hill’s Patent Application, which attached the

Cryogenic Railcar Report, sufficiently disclosed relevant prior

art. (Def.’s Exs. 1, 2). Although the better practice would have

been for Mr. Klarquist to have disclosed the Kurth Patent, this

prior art was not intentionally hidden from the Patent Office.

Because the materiality of the Kurth Patent is open to some

debate because it did not contain a manifold system for

manufacturing CO, snow, the Court does not find its materiality

to be high enough to establish fraud on the Patent Office given

the dearth of evidence regarding Mr. Hill’s intent to deceive.

33. Mr. Hill was represented by Lamb-Weston’s patent

attorney during his patent application because at the time he

applied for the °876 Patent he was a Lamb-Weston employee.

There is no evidence to indicate that Mr. Hill, Mr. Klarquist or

Lamb-Weston had any motivation to deceive the Patent Office.

To the contrary, the evidence shows that Mr. Hill and Mr.

Klarquist both acted in good faith throughout the patent

application process.

34. The patent laws provide that Cryo-Trans shall be

awarded damages adequate to compensate for any infringement

that is proven with “reasonable certainty”. Damages are

compensation for all loses suffered as a result of the

infringement. Adequate compensation should return Cryo-Trans

to the position it would have occupied had there been no

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infringement. However, Cryo-Trans is not entitled to speculative

damages which, although possible, are wholly remote or left to

conjecture and/or guess.

35. Lost profits may be in the form of diverted sales,

eroded prices, or increased expenses. Cryo-Trans must establish

causation between its claimed lost profits and the infringement.

A factual basis for the causation is that “but for” the

infringement, Cryo-Trans would have made the sales that the

infringer made, charged higher prices, and/or incurred lower

expenses. In order to show that Cryo-Trans would have made

the sales defendant made, plaintiff must show that: (1) there was

a demand for the patented product; (2) plaintiff had the ability to

meet the market demand; and (3) there were no acceptable

non-infringing substitutes or alternatives.

36. “Price erosion” occurs when a plaintiff is forced to

lower prices due to the presence in the market of the defendant’s

infringing product. Cryo-Trans’ price erosion losses can include

projected future losses which are sufficiently established by a

preponderance of the evidence.

37. At the time of trial, Cryo-Trans sought total damages of

$51,626,166 which represent treble damages of $17,208,722 in

actual damages. Cryo-Trans seeks trebled damages based on the

asserted willfulness of GATC’s conduct.

38. The parties have agreed that the proper method of

assessing damages in this case is the lost profits analysis. (Tr.

1142).

39. The total lost profits to Cryo-Trans for leases entered

into by GATC are $8,920,732. (Tr. 656; Supp. 6/15/95

Declaration of Aron Levko). Cryo-Trans has also suffered price

erosion for a lease it executed in December of 1994 in the total

amount of $562,157 (Tr. 660, 1144; Supp. 6/15/95 Declaration

of Aron Levko). The Court specifically rejects some of the

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damage calculations made by GATC’s expert, Mr. Sims, as

being unduly conservative and unreasonable. (Pl.’s Ex. HT).

40. With the elimination of GATC from the market, the

Cryo-Trans cars will become the most economical way to

transport frozen foods. (Tr. 768-69). Because of this fact, as

well as the Court’s injunction against GATC’s further use of all

of its infringing cryogenic railcars, this Court finds that Cryo-

Trans’ additional price erosion damages of $7,926,250 for

further price erosion on its potential future leases is speculative

and unsupported by a preponderance of the evidence.

41. Prejudgment interest, at a rate of 7.54%, as the parties

have agreed, is appropriate. Therefore, the Court awards

prejudgment interest of $222,283. (Supp. 6/15/95 Declaration

of Aron Levko).

42. Total damages suffered as a result of the infringement

by GATC consisting of lost profits, price erosion and

prejudgment interest amount to $9,705,172.

43. After careful consideration of all the relevant facts in

this case, including GATC’s prior art defense and the opinion

letters it received from its counsel prior to its production of the

Arcticar, the Court has concluded that GATC’s infringement of

the 876 Patent was not willful and that this case is not an

exceptional case which warrants an award of attorneys’ fees in

favor of Cryo-Trans. 35 U.S.C. § 284; Interspiro USA, Inc. v.

Figgie Int’l, Inc., 18 F.3d 927, 933-34 (Fed.Cir.1994); Read

Corp. v. Portec, Inc. , 970 F.2d 816, 829 (Fed.Cir.1992); Avia

Group Int’l, Inc. v. L.A. Gear California, Inc. , 853 F.2d 1557,

1567 (Fed.Cir. 1988).

44. In accordance with this opinion, the Clerk of the Court

is directed to enter judgment in favor of defendant Cryo-Trans

on plaintiff GATC’s claim for declaratory judgment pursuant to

28 U.S.C. § 2201 with respect to the enforceability of the °876

64a

Patent. The Clerk of the Court is also directed to enter

judgment in the amount of $9,705,172 in favor of defendant

Cryo-Trans with respect to its counterclaim for infringement of

claims 1, 2 and 3 of the ’876 Patent pursuant to 35 U.S.C. §

281. Pursuant to this judgment, GATC is hereby permanently

enjoined from any further infringement of the ’876 Patent as of

August 1, 1995--the date that was used for the calculation of

Cryo-Trans’ damages.

65a

APPENDIX A

U.S. Patent Nov. 10, 1987 Skeet! of 3 4,704,876

Se A AAT CR eee

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66a

APPENDIX B

U.S. Patent Dec. 8, 1992 Sheet 1 of 9 5,168,717

FIG. 1

00001420

67a

United States District Court,

N.D. dlinois, Eastern Division

No. 91 C 1305

GENERAL AMERICAN TRANSPORTATION CORPORATION

Plaintiff,

CRYO-TRANS, INCORPORATED,

Defendant.

CRYO-TRANS, INCORPORATED,

Counterclaim-Plaintiff,

GENERAL AMERICAN TRANSPORTATION CORPORATION

Counterclaim-Defendant.

Sept. 1, 1995

Following entry of judgment in action for infringement of

a patent for a cryogenic refrigerated rail car, 893 F.Supp. 774,

alleged infringer failed motion to amend and supplement court’s

findings and judgment. The District Court, Castillo, J., held

that: (1) lost profit damages award was required to be modified,

and (2) injunction permanently enjoining further infringement not

only prohibited manufacture, use or sale of specific refrigerated

68a

car which court found to be infringing, but also prohibited

“colorable” variation of patent.

Ordered accordingly.

Kenneth J. Jurek, Rosanne J. Faraci, Michele Odorizzi,

Damian Gilmary Wasserbauer, Mayer, Brown & Platt, Chicago,

IL, Scott William Petersen, Thomas Irving Ross, Randall

Thomas Erickson, Hill, Steadman & Simpson, Chicago, IL, for

plaintiff.

Kenneth E. Rec):toris, Carol Ann Genis, Bell, Boyd &

Lloyd, Chicago, IL, James P. Donohue, Bruce A. Kaser,

Miller, Nash, Wiener, Hager & Carlsen, Seattle, WA, David S.

Abrams, Mark S. Bicks, Darle M. Short, Roylance, Abrams,

Berdo and Goodman, Washington, DC, for defendant.

MEMORANDUM OPINION AND ORDER

CASTILLO, District Judge.

Currently pending before this Court is a motion by plaintiff

General American Transportation Corporation (“GATC”),

pursuant to Fed.R.Civ.P. 52(b) and 59(e) to amend and

supplement the Court’s findings and judgment of July 14, 1995.

Specifically, GATC’s motion seeks to have this Court address

three discrete area’s of this Court’s Memorandum Opinion: (1)

to clarify and/or amend the Court’s findings with respect to

amount of damages awarded to Cryo- Trans, Incorporated

(“Cryo-Trans”) on the basis of GATC’s patent infringement; (2)

to amend the language concerning the form and scope of the

permanent injunction order entered by the Court; and (3) to

make additional findings with respect to relevant prior art and

GATC’s claim of inequitable conduct. GATC’s motion is

granted, in part, and denied, in part, as fully set forth in this

opinion. The Court will address each of the three subjects of the

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pending motion in the order addressed by GATC. Lastly, this

opinion will also address the Bill of Costs sought by Cryo-Trans.

The Damages Awarded to Cryo-Trans

This Court awarded Cryo-Trans total lost profit damages of

$8,920,732 (7/14/95 Mem.Op.439). GATC complains that this

award should be reduced because this Court also enjoin

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