Amicus Curiae Brief — E. J. Co. v. Sandvik Aktiebolag

FEB 12 1998

Nn

No. 97-1177

In The

Supreme Court of the United States

October Term, 1997

€

E.J. COMPANY, VIRA HAYES

AND

ROBERT HAYES,

Petitioners,

SANDVIK AKTIEBOLAG,

Respondent.

¢

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Federal Circuit

of

MOTION FOR LEAVE TO FILE BRIEF OF

AMICUS CURIAE AND BRIEF OF AMICUS

CURIAE OF THE TOOL CRIB, INC. IN SUPPORT

OF E.J. COMPANY, VIRA HAYES AND

ROBERT HAYES, PETITIONERS

¢

BERNARD E. BERNSTEIN, Esq.*

W. TyLer CHASTAIN, Esq.

BERNSTEIN, STAIR & McApDAms

530 S. Gay Street, Suite 600

Knoxville, Tennessee 37901

(423) 546-8030

Attorneys for Amicus Curiae

The Tool Crib, Inc.

*Counsel of Record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

MOTION FOR LEAVE TO FILE

BRIEF AMICUS CURIAE

The Too! Crib, Inc., (“Tool Crib”), hereby respectfully

moves for leave to file the attached brief amicus curiae in

support of the Petitioners, E. J. Company, Vira Hayes and

Robert Hayes, Petition for Writ of Certiorari to the United

States Court of Appeals for the Federal Circuit. Peti-

tioners’ counsel has consented to the filing of the amicus

curiae brief. Following written request by Tool Crib,

counsel for the Respondents refused to grant Tool Crib

permission to file the amicus curiae brief stating that the

Respondent “does not believe that the Tool Crib’s inter-

est, if any, warrants submission of an amicus curiae brief

in this case.”

At issue before this Court is a threshold substantive

patent issue as to whether the repair and replacement of

an unpatented element of a patented product constitutes

a permissible repair or an impermissible reconstruction of

a patented product resulting in a patent infringement.

Tool Crib asserts that this motion is well founded. The

decision by the United States Court of Appeals for the

Federal Circuit (hereinafter “Federal Circuit”), in Sandvik

Aktiebolag v. E. J. Company, Vira Hayes and Robert Hayes,

121 F.3d 669 (Fed. Cir. 1997), reversing the grant of sum-

mary judgment rendered in favor of E.J. Company by the

United States District Court for the Eastern District of

Tennessee, reported at 930 F.Supp. 306 (E.D. Tenn. 1996),

directly conflicts with this Court’s opinion in Aro Mfg. v.

Convertible Top Replacement Co., 365 U.S. 336 (1961) (here-

inafter “Aro I”) and should be reversed.

This Motion for Leave to File the Amicus Curiae Brief

should be granted because Tool Crib has a succinct inter-

est in the reversal of the Federal Circuit decision and is

positioned to present arguments on this matter not

addressed by the Petitioners which will be of consider-

able help to the Court. Specifically, the Tool Crib wishes

to address the need for this Court to grant the Writ of

Certiorari and examine the substantive patent law issue

in order to restore a sense of certainty to the industrial

tool industry.

The issue presented for the Court’s consideration and

the resolution thereof directly impacts the economic for-

tunes and long-term business prospects of Tool Crib and

all other similarly situated industrial tool sellers and

repairers.

Tool Crib is a commercial seller of the various indus-

trial cutting tools, abrasives, gauges, coolants, and car-

bides, including the Sandvik Coromant drill which is at

issue in this action. Tool Crib markets and sells new

industrial tools to individuals and companies. In addi-

tion, Tool Crib both repairs industrial tools and sells

materials for repairing industrial tools.

The Respondent, Sandvik, manufacturers and sells

various drills and other industrial tools. The Sandvik

Coromant drill is composed of a shank and a drill tip. The

shank of the drill is patented. The drill tip is not covered

by any patent. The fact that the drill tip is not patented is

known by Tool Crib and others in the industry.

Tool Crib markets and represents to prospective pur-

chasers the qualities of industrial tools. The market for

industrial tools is competitive. Many different types of

I a x

tools are on the market. A prime consideration in the

purchase of industrial tools is the cost and useful life of

the tool. The objective of a purchaser of an industrial

cutting tool is to purchase a tool in which the drill tip, or

cutting edge, does not wear down after only limited use.

Nevertheless, it is inevitable that the cutting edge will

wear down and need to be repaired by retipping the

edge.

In selling the tools, Tool Crib must represent when a

drill tip can be repaired. Certainty has existed in the

industrial tool industry that if the drill tip is unpatented

that it can be repaired even if the shank of the cutting

device is patented. The drill tip of the Sandvik Coromant

drill is not immune to wearing down and is routinely

repaired provided that the patented shank of the drill is

not damaged and fully usable. In fact, retipping of the

drill tip of the Sandvik Coromant is regularly done with

the approval, consent and at the request of Sandvik.

Tool Crib is uniquely positioned to bring to the atten-

tion of the Court relevant matter concerning the far

reaching impact and the uncertainty caused in the indus-

trial tool business resulting from the Federal Circuit deci-

sion. Tool Crib is directly affected by any decision

altering the terms and conditions by which a manufac-

turer can preclude the repair of its product by extending

its patent coverage to unpatented elements. The substan-

tive doctrines of patent law must apply to all industry

participants equally.

Thus, contrary to the respondent’s position, Tool

Crib, as an industrial tool seller and repairer, has a real

interest in the determination of a significant threshold

patent issue of what constitutes permissible repair as

opposed to impermissible reconstruction. The decision by

the Federal Circuit overruling the Motion for Summary

Judgment granted by the United States District Court for

the Eastern District of Tennessee, places the rights of all

businesses engaged in the commercial sale and repair of

items capable of repair.

For the foregoing reasons, The Tool Crib, Inc.,

respectfully urges the Court to accept and file the

enclosed brief amicus curiae in support of the petitioners,

E.J. Company, Vira Hayes and Robert Hayes.

Respectfully submitted, this 12th day of February,

1998.

BeRNARD E. BeRNsTEIN, Esq.

W. Tyter CHAsTAIN, Esq.

Bernstein, Stair & McAdams

530 S. Gay Street, Suite 600

Knoxville, Tennessee 37902

(423) 546-8030

Attorneys for the Amicus Curiae,

The Tool Crib, Inc.

TABLE OF CONTENTS

Page

ee oe a eee rer: err 1

Introduction and Summary of Argument........... 3

POR + 6% 94:54 on 0a eo eh ee ee eae ea 6

I. THE DECISION OF THE FEDERAL CIRCUIT

DIRECTLY CONFLICTS PRIOR CASE LAW ON

THE REPAIR VERSUS REPLACEMENT ISSUE... 6

Il. THE DECISION BY THE FEDERAL CIRCUIT

BELOW UNDERMINES THE GOALS OF SUB-

SEAICEEV ES FURRMEUE GEBWY 3 60 ces tveeesecucsacen 13

Conclusion

Fo Re me re ae eer ene re oie unter as App. 1

TABLE OF AUTHORITIES

Page

CASES

Aro Mfg. v. Convertible Top Replacement Co., 365

J.D. SOO CIGGED ince sense en beeen passim

Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489

US. 160 (HGR ios cncccssnae ears eee eee 14, 16 |

Danka Corporation v. American Precision Co., 827

F.2a 7oo (Ped. Cin WRF)... cc ouasevareratereieees 16

Dawson Chemical Company v. Rohm & Haas Co., 448

US. 176 (SGC) os.cs ocd saeacncuewee cea 9, 10

Everpure, Inc. v. Cuno, Inc., 705 F. Supp. 725 (D.

Comisi. 19GB) 2... ccs 02060006 bebke eee en ee eee 9

Hewlett Packard Co. v. Repeat-O-Type Stencil Manu-

facturing, 123 F.3d 1445 (Fed. Cir. 1997)....11, 12, 13

Heyer v. Duplicator Manufacturing Co., 263 U.S. 100,

6@ S. Ct. SE (UGES)...s ic aacakd ccs eeeeee erase 16

Porter v. Farmers Supply Service, Inc., 790 F.2d 882

(Fed. Civ. 8966). icscevestiskeuneeeeuens Geneaaee 15

Sage Products v. Devon Industries, 45 F.3d 1575

(Fed. Civ. 199Gb «00sk0055500e5 ee 7, 9, 10

Sandvik Aktiebolag v. E.J]. Company, Vira Hayes and |

Robert Hayes, 121 F.3d 669 (Fed. Cir. 1997) ...1, 7, 10

Wilson v. Simpson, 9 How. 109, 13 L.Ed 66 (1850) .... 15

renner eee

INTEREST OF AMICUS CURIAE!

The Tool Crib, Inc., (“Tool Crib”), files this amicus

curiae brief in support of the petitioners, E.J. Company,

Vira Hayes and Robert Hayes (“E.J. Company”). Speci-

fically, Tool Crib supports E.J. Company’s position that

the decision rendered by the United States Court of

Appeals for the Federal Circuit (hereinafter “Federal Cir-

cuit”), in Sandvik Aktiebolag v. E.]. Company, Vira Hayes and

Robert Hayes, 121 F.3d 669 (Fed. Cir. 1997), reversing the

grant of summary judgment rendered in favor of E.J.

Company by the United States District Court for the

Eastern District of Tennessee, reported at 930 F.Supp. 306

(E.D. Tenn. 1996), directly conflicts with this Court's

opinion in Aro Mfg. v. Convertible Top Replacement Co., 365

U.S. 336 (1961) (hereinafter “Aro I”) and should be

reversed.

At issue before this Court is a threshold substantive

patent issue as to whether the repair and replacement of

an unpatented element of a patented product constitutes

a permissible repair or an impermissible reconstruction of

a patented product resulting in a patent infringement.

The issue presented for the Court’s consideration and

the resolution thereof directly impacts the economic for-

tunes and long-term business prospects of Tool Crib and

all other similarly situated industrial tool sellers and

repairers.

Tool Crib is a commercial retail seller of the various

industrial cutting tools, abrasives, gauges, coolants, and

! Amicus Brief Financed by The Tool Crib, Inc., a Tennessee

Corporation.

carbides. In addition, Tool Crib both repairs industrial

tools and sells materials to others to make such repairs.

Specifically, Tool Crib sells and repairs the Sandvik Coro-

mant drill and sells materials to others who repair this

drill.

Tool Crib markets and represents to prospective pur-

chasers the qualities of industrial tools. The market for

industrial tools is competitive. Many different types of

tools are on the market. A prime consideration in the

purchase of industrial tools is the cost and useful life of

the tool. The objective of a purchaser of an industrial

cutting tool is to purchase a tool in which the drill tip, or

cutting edge, does not wear down after only limited use.

Nevertheless, it is inevitable that the cutting edge will

wear down and need to be repaired by retipping the

edge.

In selling the tools, Tool Crib must represent when a

drill tip can be repaired. Certainty has existed in the

industrial tool industry that if the drill tip is unpatented

that it can be repaired even if the shank of the cutting

device is patented. The drill tip of the Sandvik Coromant

drill is not immune to wearing down and is routinely

repaired provided that the patented shank of the drill is

not damaged and fully usable. In fact, retipping of the

drill tip of the Sandvik Coromant is regularly done with

the approval, consent and at the request of Sandvik.

The Federal Circuit’s decision diverts from the stan-

dards of Aro I and creates uncertainty in the industrial

tool incustry as to the standards used in determining

when a repair of an unpatented element of a patented

product is permissible and when the repair is an unpat-

ented element may not be repaired. Tool Crib is directly

affected by any decision altering the terms and conditions

by which a manufacturer can preclude the repair of its

product by extending its patent coverage to unpatented

elements.

When the terms and conditions by which a manufac-

turer can preclude a repair of its product beyond the

protection of its patent, the Tool Crib is adversely

affected. The substantive doctrines of patent law must

apply to all industry participants equally.

Thus, based on the above, Tool Crib has an identifia-

ble interest in supporting the Writ of Certiorari filed by

E.j. Company seeking reversal of the decision rendered

by the Federal Circuit Court.

+

INTRODUCTION AND SUMMARY OF ARGUMENT

Tool Crib submits this amicus curiae brief on the

threshold patent issue of what constitutes permissible

repair of an unpatented element in a patented entity. The

decision by the court below contradicts the decision by

this Court in Aro I. Specifically, the decision by the Fed-

eral Circuit below:

(1) ignores and contradicts the long-standing

dictates established by this Court in Aro I;

(2) creates uncertainty in the industrial tool

industry by effectively expanding the

parameters for determining whether a

reconstruction of a patented entity has

occurred by relying on factors not pro-

nounced by this Court, including the intent

of the patentee;

(3) threatens to hinder the strongly competi-

tive and rapidly innovative fields of involv-

ing the sale and repair of industrial tools by

creating uncertainty as to the extent to

which repairs are permissible;

(4) unnecessarily interjects increased uncer-

tainty as to the extent to which an unpat-

ented part is deemed to be inherently

protected in a patented element; and,

(5) opens the door for manufacturers to

impose their superior economic strength on

commercial retailers and repairers to lessen

or eradicate the market for providing repair

services or products thereby adversely

affecting the buyer-user of the product.

This Court has previously resolved the issue of

“repair vs. reconstruction” in Aro I, as follows: ” . . . re-

construction of a patented entity, consisting of unpat-

ented elements, is limited to such a true reconstruction of

the entity as to ‘in fact make a new aarticle,’ after the

entity, viewed as a whole, has become spent.” Aro, 365

U.S. at 346 (citations omitted). This Court’s pronounce-

ment has been the controlling law on whether a patentee

could successfully prosecute an action for patent infringe-

ment against a purported repairer for impermissible

reconstruction of a patented entity when a repair was

made of an unpatented element of the patented entity.

The rule of Aro I creates safeguards and objective

guideposts for determining permissible repair from

impermissible reconstruction. Based on the Federal Cir-

cuit’s decision, numerous questions and uncertainty

exists as to whether the doctrine of “repair vs. reconstruc-

tion” as pronounced by this Court in Aro I is still fully

controlling. The decision finds an impermissible recon-

struction even though the test for finding such a recon-

struction under Aro I was not satisfied. This holding by

the court raises the specter that the decision in Aro I no

longer represents the substantive law on the issue of

“repair vs. reconstruction” but simply sets forth factors

that a court may consider when faced with this issue.

Due to its contravention and divergence from Aro I,

the decision creates both uncertainty in the repair indus-

try and other industry wide problems for entities, such as

Tool Crib, which repair non-patented parts of industrial

tools and sell materials used for such repairs. By contra-

dicting Aro I, the decision creates wide latitude for pat-

entees to institute actions for direct and, more

importantly, contributory patent infringement actions

against entities involved in the repairing of non-patented

items and selling materials used in the repairs which

under Aro I are considered to be frivolous.

Only through rigid application of the standards of

substantive patent law established in Aro I can certainty

exist in the repair industry as to what constitutes repair

as opposed to reconstruction. Interjecting the subjective

element of the intent of the patentee, as imposed by the

court, creates an opportunity for a patentee to effectively

extend its patent.

The decision by the court transcends the commercial

tool industry and is not limited in its effect to the specific

drill tip of the respondent. The substantive doctrines of

patent law must apply to all alleged reconstruction of

patented entities in the same way. Repairers of all pat-

ented items, whether machines or tools, must be treated

equally.

The decision by the court permanently alters the

framework by which a claim for impermissible recon-

struction of a patented entity is to be examined and

improperly includes the subjective intent of the patentee.

The decision by the court unquestionably contradicts this

Court’s pronouncements on the “repair vs. reconstruc-

tion” issue and should be reversed to conform with the

long-standing and established holdings of this Court in

Aro I and the prodigy of cases that have followed.

+

ARGUMENT

I. THE DECISION OF THE FEDERAL CIRCUIT

DIRECTLY CONFLICTS PRIOR CASE LAW ON

THE REPAIR VERSUS REPLACEMENT ISSUE.

This Court, in Aro I, firmly established the parame-

ters of substantive patent law for determining the issue of

whether the repair of an unpatented element of a pat-

ented entity constituted a permissible repair or impermis-

sible reconstruction. See, Aro I, 365 U.S. at 342-345. The

decision below finding an impermissible reconstruction

of an unpatented element contradicts this Court’s prior

holding in Aro I and the other cases decided thereafter.

The Federal Circuit has expressed its opinion that the

decision by this Court in Aro I constitutes “an expansive

view of conduct that constitutes permissible repair of a

patented combination of unpatented element.” Sandvik,

121 F.3d at 672; Sage Products v. Devon Industries, 45 F.3d

1575, 1578 (Fed. Cir. 1995). Regardless of the Federal

Circuit’s characterization of the standards for permissible

repairs, this Court’s holding in Aro I as to what consti-

tutes a permissible repair is not an expansive view but is

the substantive standard under applicable patent law.

The standards pronounced by this Court in Aro I are

used on a daily basis by entities engaged in the industrial

tool sale and repair business to determine whether a

particular unpatented part of a patented entity can be

repaired. Tool Crib operates in a segment of the economy

where certainty in the interpretation and understanding

as to the delineation of the extent of a patent on various

components of industrial tools is essential and is an issue

raised on a daily basis.

The competitive nature of the commercial industrial

tool industry requires Tool Crib, as a commercial retailer,

to market and sell industrial tools that have a long useful

life and/or are capable of being repaired so as to increase

the life of the tools. If uncertainty exists as to the possi-

bility of repairing an unpatented element, Tool Crib, as a

downstream seller, is significantly hindered in its ability

to sell new tools. In the course of its business, Tool Crib

must be able to determine the scope of any patent and

then rely on the language of the patent in order to repre-

sent to a potential purchaser that a commercial tool can

or cannot be repaired. If the determination as to the

extent of a patent is to be based on judicially created

factors on a case by case basis as advanced by the Federal

Circuit, uncertainty would exist as to whether an unpat-

ented element could be repaired until the close of any

litigation. Moreover, uncertainty would also exist as to

what representations could be made in the initial sell of

the industrial tool. Thus, without following the strict

guidelines of Aro I, Tool Crib could not engage in repairs

or sell materials to other repairers with any certainty as to

whether they were directly or indirectly infringing upon

a patent.

Whether the Federal Circuit considers this Court’s

holding in Aro I to be a “expansive view” is irrelevant.

The Federal Circuit’s description of this Court’s view of

permissible repair as “expansive”, does not grant to the

Federal Circuit an unfettered license to create its own

new standards for determining this issue whenever it

feels necessary. The standards promulgated by this Court

in determining what constitutes a permissible repair as

opposed to impermissible reconstruction are not open to

interpretation, limitation or modification by the Federal

Circuit but must be followed so as to uphold the substan-

tive patent laws applicable to all entities.

In analyzing the Federal Circuit’s decision reversing

the grant of summary judgment to E.J. Company, it is

clear that the Federal Circuit does not follow the guide-

lines of Aro I but rather seems to overrule them.

The teachings of Aro I provide that in dealing with

the “repair vs. reconstruction” issue that “[n]o element,

not itself separately patented, that constitutes one of the

elements of a combination patent is entitled to patent

monopoly, however essential it may be to the patented

combination and no matter how costly or difficult

replacement may be.” Aro I, 365 U.S. at 345.

—— =

In addition, in Aro I, this Court rejected the “heart of

the invention test” as the distinguishing factor in deter-

mining whether a repair was in fact an impermissible

reconstruction. Aro I, 365 U.S. at 344-45. In rejecting the

“heart of the invention test”, this Court held that a

replacement of a distinguishing part of the patented com-

bination does not amount to a reconstruction because a

patent covers a totality of the elements in a patented

combination. Id.; see also, Dawson Chemical Company v.

Rohm & Haas Co., 448 U.S. 176, 217 (1980) (this Court has

“eschewed the suggestion that the legal distinction

between ‘reconstruction’ and ‘repair’ should be affected

by the element of the combination that has been replaced

is ‘essential’ or ‘distinguishing’ part of the invention.”)

(citing Aro I, 365 U.S. 344); Sage Products, 45 F.3d at 1577

(“The size or relative importance of the replacement part

to the patented combination is not relevant when deter-

mining whether conduct constitutes repair or replace-

ment”); Everpure, Inc. v. Cuno, Inc., 705 F. Supp. 725 (D.

Conn. 1988) (In determining patent infringement under

the repair doctrine, courts do not distinguish between

repair and reconstruction merely because of the signifi-

cance of the cost to replace the repair item or because of

the duration of the item. Reconstruction only occurs

when a new article is made.)

The Federal Circuit did not find a reconstruction by

E.J. Company. At most, the Federal Circuit relied on the

“heart of the invention test” and extended patent protec-

tion to an unpatented element. The basic parameters of

the “repair vs. reconstruction” issue under Aro I were

ignored and court clearly stepped outside the bounds of

10

Aro I to find that the replacement of the drill tip by E.J.

Company constituted a reconstruction.

Moreover, the Federal Circuit focused on the follow-

ing impermissible factors: (1) whether the drill tip,

although unpatented, was essential to the patented com-

bination; (2) the cost of retipping the drill; (3) the diffi-

culty and time involved in retipping the drill; and (4)

whether the drill tip was the distinguishing part of the

patented combination, thus adopting an analysis under

the “heart of the invention test”.

Specifically, in its opinion, the court opined that

“there are a number of factors to consider in determining

whether a defendant has made a new aarticle, after the

device has become spent, including the nature of the

actions by the defendant, the nature of the device and

how it is designed (namely, whether one of the compo-

nents of the patent in combination has a shorter useful

life than the whole), whether a market has developed to

manufacture or service the part at issue and objective

evidence of the intent of the patentee.” Sandvik, 121 F.3d

at 673.

The factors relied upon by the court in holding that

E.J. Company reconstructed the patent are not supported

by any legal authority. The factors deemed relevant and

material by the Federal Circuit are restatements of the

eiements this Court found not to be relevant in Aro I. Aro

I, 365 U.S. at 344-45; see also, Dawson Chemical Company v.

Rohm & Haas Company, 448 U.S. at 217; Sage Products, 45

F.3d at 1577.

The decision below fails to make any finding that E.J.

Company reconstructed a patented entity, consisting of

11

unpatented elements and therefore actually made a new

article as required by Aro I. Aro, 365 U.S. at 346. In fact,

the Federal Circuit focused on the type of repairs per-

formed, the cost and time involved and whether the

patentee intended for the drill tip to be repaired. The only

conclusion to draw from the decision is that the elements

deemed not relevant by this Court were adopted by the

Federal Circuit contrary to the standards of Aro I. The

Federal Circuit therefore suggests that the Aro I standards

are not now mandatory when examining the issue of

whether an impermissible reconstruction has occurred.

Of all the unsubstantiated factors utilized by the

Federal Circuit, the factor that creates the greatest con-

cern is the Federal Circuit’s finding that an impermissible

reconstruction occurred because “no intent was evi-

denced by the patentee that would support E.J.’s argu-

ment that replacement of the tips is a repair”. Sandvik, 121

F.3d at 674. The finding by the Federal Circuit that Sand-

vik did not intend the drill tip to be repaired conflicts

with the business operations of Sandvik. As shown in

Appendix A hereto, Sandvik itself markets regrinding

software for its Coromant drill and encourages entities to

regrind the drill tips. See, Appendix A.

Further, the opinion of the Federal Circuit that the

patentee’s intent is an element for determining whether

an impermissible reconstruction occurred directly con-

flicts with Hewlett Packard Co. v. Repeat-O-Type Stencil

Manufacturing, 123 F.3d 1445 (Fed. Cir. 1997).

In Hewlett Packard, the patent holder averred that the

defendant infringed a patent by modifying the patented

ink jet cartridge to make the cartridges refillable. The

ee

12

plaintiff further asserted that removing the top of the ink

jet cartridge to make the patented ink jet cartridges refill-

able constituted impermissible reconstruction and a )

direct patent infringement. Hewlett Packard, 123 F.3d at |

1448-1451. The plaintiff petitioned the Federal Circuit to

adopt and hold that the determination between permiss-

ible repair and impermissible construction turns on the

intention of the patentee.

In refusing to adopt such an interpretation of patent

law under Aro I, the Federal Circuit opined:

The question is not whether the patentee at the

time of sale intended to limit a purchaser’s right

to modify the product. Rather the purchaser’s

freedom to repair or modify its own property is

overridden under the patent laws only by the

patentee’s right to exclude the purchaser from

making a new patented entity. Each case turns

on its own particular parts, but a seller’s intent,

unless embodied in an enforceable contract,

does not create a limitation on the right of a

purchaser to use, sell or modify a patented

product as long as a reconstruction of the pat-

ented product as long as reconstruction of the

patented combination is avoided. A non-

contractual intention is simply the seller’s hope

or wish, rather than an enforceable restriction.

Hewlett Packard, 123 F.3d at 1453.

q The holding of the Federal Circuit in Hewlett Packard

and the holding rendered by the Federal Circuit in this

matter cannot be reconciled. In the present case, the

Federal Circuit held that the intent of the patentee not to

have the drill tip repaired constituted the basis for deter-

mining that E.J. Company impermissibly reconstructed

13

the drill. Based upon the holding of Hewlett Packard, this

factor is irrelevant and should not even be examined by

the Court in determining whether an impermissible

reconstruction has occurred.

The decision rendered by the Federal Circuit is not

mandated by this Court’s previous holdings since Aro I.

The decision contradicts and conflicts with the long

standing principles of substantive patent law guiding

companies in the industrial tool business. By attacking

this Court’s decision in Aro I as an “expansive view” of

the repair versus reconstruction issue, a precedent is

established whereby other courts examining this issue

will be able to fashion finds not based on Aro I. This will

continually create uncertainty in the industrial tool

industry.

The decision below grants patentees rights in excess

of those granted under its patents. As such, the Writ of

Certiorari should be granted and the decision of the

Federal Circuit below should be reversed.

Il. THE D&: SION BY THE FEDERAL CIRCUIT

BELOW UNDERMINES THE GOALS OF SUB-

STANTIVE PATENT LAW.

The decision below is inconsistent with the uncerly-

ing rationale of the patent law. The general premise of

patent law is that the grant of a patent results in a quid

pro quo exchange between the patentee and the public at

large where each party receives a recognized benefit.

Specifically, substantive patent law provides inventors/

patentees with the power to exclude other inventors for a

limited number of years control over that which they

14

have invented in return for the inventors disclosing their

inventions to the public for their use, enjoyment or busi-

ness pursuits. See, Bonito Boats, Inc. v. Thunder Craft Boats,

Inc., 489 U.S. 141, 151 (1989). Should the decision of the

Federal Circuit below not be reversed, this decision will

sway the scale of the patent bargain providing patent

holders with control over more than they invented and

more than they disclosed, thus upsetting the “careful

balance between the need to promote innovation and the

imitation and refinement through imitation are both nec-

essary to the invention itself and the very lifeblood of a

competitive economy.” Bonito Boats, Inc., 489 U.S. at 146.

The decisions rendered by this Court have long rec-

ognized that uncertainty in substantive patent law sabo-

tages the goal of encouraging innovation and raises the

risk of experimentation by other inventors, business

owners or entrepreneurs engaged in innovation. Without

the certainty of substantive patent law establishing a

clear limitation to the extent of a patent, other inventors

seeking to explore the unpatented elements operate with-

out fair notice as to what areas in which they may oper-

ate. It forces the inventors to risk punishing litigation and

potential penalties. Patent law should allow businesses to

make decisions as to the direction of research, develop-

ment and services that they may offer and at the same

time to limit the scope of protection given to an inven-

tor’s design.

The decision rendered by the Federal Circuit in this

matter creates a real problem for the Tool Crib and others

who could possibly be faced with an action for contribu-

tory infringement under 35 U.S.C. § 271(c). Under the

teachings of Aro I, Tool Crib, as both the seller of carbide

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15

blank tips for the replacement of drill tips and as a

repairer, could ascertain whether its actions could be

considered contributory of patent infringement.

In selling carbide blank tips, Tool Crib and others do

not provide materials sufficient to create a new drill.

Given the decision by the Federal Circuit, the selling of

the materials used for the tipping would be deemed

contributory infringement if the patentee did not intend

for the unpatented element to be repaired. This creates

tremendous uncertainty in the industrial tool industry

that has been previously absent given the strict applica-

tion of the Aro I standards.

In Porter v. Farmers Supply Service, Inc., 790 F.2d 882

(Fed. Cir. 1986), Federal Circuit affirmed the District

Court of Delaware’s finding that a plaintiff, who sold a

tomato harvester which incorporated a patented header,

could not assert a contributory patent infringement claim

against the seller of replacement discs which were used to

repair the patented header. The Federal Circuit held that

a permissible repair occurred when replacement discs

were inserted to replace a spent disc because the repair

simply restored the machine to operating quality. Thus,

the seller of the replacement disc was not held liable for

contributory/indirect infringement.

This analysis that allows for the repair of an unpat-

ented element has been adopted by numerous courts

dealing with the applicability of allegedly direct and

contributory patent infringement. See, Wilson v. Simpson,

9 How. 109, 123, 13 L.Ed. 66 (1850) (“machines cutting

knives could be replaced without violating the patent;

purchaser is entitled to give duration to that which he

16

owns”); Heyer v. Duplicator Mfg. Company, 263 U.S. 100,

101, 44 S. Ct. 31, 32, 68 L.Ed. 189 (1923) (replacement of

gelatin bands in a patented copying machine did not

constitute reconstruction); Danka Corporation v. American

Precision Company, Inc., 827 F.2d 755, 759-60 (Fed. Cir.

1987) (replacement of component parts in patented heavy

truck clutch because of wear was not reconstruction).

The industrial tool repair industry would be signifi-

cantly hindered, if not completely eradicated, by the deci-

sion rendered by the Federal Circuit. Manufacturers, such

as Sandvik, could at any point take the position that they

did not intend for their product to be repaired enabling

them to assert a direct patent infringement claim. This

would effectively destroy the premise of a patent bargain.

The actions of repairers would be effectively stymied. The

patent bargain contemplates “the attractiveness of such a

bargain and its effectiveness in inducing creative effort

and disclosure of the results of that effort, depend almost

entirely on a back drop of free competition and exploita-

tion of unpatented designs and innovations.” Bonito

Boats, 489 U.S. at 151.

The decision by the Federal Circuit creates a wide

and unpredictable gap in the patent bargain, to the detri-

ment of the engineering and commercial business com-

munity, and therefore the public, by providing patent

holders with windfalls they could not have expected and

therefore did not rely on in choosing to disclose their

patented products.

17

CONCLUSION

The Federal Circuit has created confusion on the

“repair vs. reconstruction” issue and opened the door for

expansive litigation as to all retailers of materials for

carbide tips and other repair items and repairs in general.

The decision rendered by this Court in Aro I limited such

litigation. Based on the Federal Circuit decision an entity

such as Tool Crib can actually be brought in as a contribu-

tory infringer without having any knowledge as to what

constitutes a repair versus reconstruction.

As set forth by the Petitioners, if this matter is not

reversed, patent protection will extend to unpatented

parts of a patent combination. This creates considerable

confusion to entities such as Tool Crib who might be

dealing with the issue of repair and also in dealing with

commercial sales. The economic impact could eventually

stretch all the way down the line to consumers who will

be faced with a monopoly type situation in which the

manufacturer, such as Sandvik, can dictate when and

where it would allow any replacement or repair of its

items thus taking away a significant amount of business

from Tool Crib and related entities. As shown in Appen-

dix A hereto, Sandvik has in fact already started to

attempt to eliminate the repair industry.

18

WHEREFORE, based on the foregoing, Tool Crib,

respectfully prays that the Petition for Writ of Certiorari

should be granted and that the decision of the Federal

Circuit be reversed.

February 12, 1998

Respectfully submitted,

BERNARD E. BERNSTEIN, Esq.

W. Tyter CnastaIN, Esq.

BERNSTEIN, STAIR & McApams

530 S. Gay Street, Suite 600

Knoxville, Tennessee 37902

(423) 546-8030

Attorneys for the Amicus Curiae,

The Tool Crib, Inc.

App. 1

[LOGO] MARKETING MEMo

Number 97 - 28 September 11, 1997

Sandvik Coromant Delta Drill Regrinding Software

for Walter Helitronic Power Grinding Machines

Sandvik Coromant and Walter Grinder, Inc. have devel-

oped a software program to completely regrind the geom-

etry for the Sandvik Coromant Delta drill. Sandvik

Coromant has certified that the regrind from the software

program meets all specifications. This software was

developed to completely regrind the Sandvik Coromant

Delta geometry including the negative chamfer, or

K-land, as it is commonly called.

Associated Costs

This software program is acquired from Walter Grinder,

Inc. Any charges associated with the acquisition of the

program are the result of Walter Grinder, Inc. policies,

Sandvik Coromant’s role has been for development pur-

poses only. Walter Grinder, Inc. has sole responsibility for

after-market sales and service of the software.

For questions and inquiries, please contact Rick Martin,

Product Manager, Metalworking Machines, at Walter

Grinder, Inc. at 540-891-4214.

Approved vs. Authorized

If a grinding shop obtains and uses the approved Walter

grinding program, this does not certify the grinding shop

as an authorized grinding source. However, it does give

App. 2

the grinding shop the ability to correctly grind the Sand-

vik Coromant Delta drill. In order the become an autho-

rized grinding source, the grinding shop should contact

Sandvok Coromant Product Management in Fair Lawn.

Authorized Recoating Service

Sandvik Coromant has worked exclusively with Balzers

Tool Coating, Inc. in Elgin, Illinois, to duplicate the clean-

ing and coating processes used in manufacturing the

Sandvik Coromant Delta drill. For quality results, better

coating adhesion, and consistent performance, Balzers

Tool Coating, Inc. in Elgin, Illinois is Sandvik Coromant’s

authorized Recoating Service.