National Steel Car v. Canadian Pacific Ry.

• Citation: 254 F.Supp.2d 527
• Decision Date: 06 January 2003
• Docket Number: No. CIV.A. 02-6877.,CIV.A. 02-6877.
• Parties: NATIONAL STEEL CAR, LTD., Plaintiff v. CANADIAN PACIFIC RAILWAY, LTD., Canadian Pacific Railway Co., 3942503 Canada, Inc., Delaware & Hudson Railway Company, Inc., Defendants
• Court: U.S. District Court — Eastern District of Pennsylvania

254 F.Supp.2d 527

NATIONAL STEEL CAR, LTD., Plaintiff v. CANADIAN PACIFIC RAILWAY, LTD., Canadian Pacific Railway Co., 3942503 Canada, Inc., Delaware & Hudson Railway Company, Inc., Defendants

No. CIV.A. 02-6877.

United States District Court, E.D. Pennsylvania.

January 6, 2003.

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MEMORANDUM AND ORDER

MCLAUGHLIN, Distric Judge.

                TABLE OF CONTENTS
                INTRODUCTION.............................................................533
                FINDINGS OF FACT.........................................................533
                I.   The Parties.........................................................533
                II.   Issuance/Reissuance of the '575 Patent..... .......................534
                III. Dropped Deck Center Beam Flat Cars..................................535
                IV. CPR's Purchase of Dropped Deck Center Beam Cars .....................536
                V.   Greenbrier's Indemnification of CPR.................................539
                VI. CPR's Use of Dropped Deck Center Beam Cars...........................539
                VII. Ownership of Dropped Deck Center Beam Cars..........................540
                VIII. CPR's Receipt of the Accused Rail Cars.............................540
                IX. Impact on NSC of Not Receiving the CPR Contract......................541
                

                X. '575 Patent ..............................................................542&gt
                    A. Overview............................................................542
                    B. Claims..............................................................543
                    C. Prosecution History...................................................545
                XI. Udstad '020 Patent........................................................547
                XII. Other Patents and Drawings...............................................548
                     A. Wagner '031 Patent...................................................548
                     B. Adler'028 Patent.....................................................548
                     C. Miller'399 Patent.....................................................549
                     D. Yang'821 Patent.....................................................549
                     E. Miller'676 Patent.....................................................549
                     F. Baker'887 Patent.....................................................550
                     G. Harris'041 Patent....................................................550
                     H. Harris'175 Patent....................................................551
                     I. Lund Drawing .......................................................551
                     J.   Pritchard Disclosure..................................................552
                     K.   Saxton '085 Patent....................................................553
                CONCLUSIONS OF LAW AND ADDITIONAL FINDINGS OF FACT...............553
                I. Likelihood of Success on the Merits.........................................554
                   A. Infringement.........................................................554
                     1. Do the Accused Rail Cars Infringe the '575 Patent?....................554
                     2. Section 272 Defense...............................................555
                       a. History of Section 272 .........................................555
                       b. Cases Interpreting Section 272..................................555
                       c. Does Section 272 Apply to the Present Case?.....................556
                         (1) Are the Accused Rail Cars Used in a Vehicle of Another
                             Country?................................................556
                         (2) Are the Accused Rail Cars Temporarily Present in the
                             United States?...........................................556
                         (3) Are the Accused Rail Cars Used Exclusively for the
                             Needs of the Train?.......................................557
                         (4) Are the Accused Rail Cars Sold in the United States?.........557
                    B. Validity .............................................................557
                       1. Claim Construction................................................558
                          a. Flat Car.....................................................559
                          b. Bulkhead ....................................................559
                          c. Center Beam.................................................560
                          d. Floor........................................................560
                          e. Side Sill Transition Means......................................561
                       2. Anticipation......................................................561
                       3. Obviousness......................................................563
                          a. Scope and Content of Prior Art.................................564
                          b. Level of Ordinary Skill.........................................565
                          c. Differences Between '575 Patent and Prior Art....................565
                            (1) Were the Asserted Claims Obvious in Light of the Udstad
                               '020 Patent, the Wagner '031 Patent, and the Miller'399
                                Patent? ..........................................566
                            (2) Did the Patent Examiner Consider Prior Art with Elements
                                Similar to Those Found in the Udstad '020 Patent
                                the Wagner '031 Patent, and the Miller '399 Patent?.....567
                          d. Secondary Considerations......................................570
                       4. Use of Expert Testimony and Animation/Illustrations..................571
                     C. Enforceability........................................................572
                

                II.   Irreparable Harm .................573
                III. Balance of Hardships ..............575
                IV. Public Interest....................576
                V.   The Bond to be Posted by NSC......577
                CONCLUSION.........................   .577
                

INTRODUCTION

National Steel Car ("NSC"), a manufacturer of rail cars, is suing Canadian Pacific Railway ("CPR"), a Canadian railroad, and three affiliated companies for patent infringement. The accused product is a dropped deck center beam flat car that is used for hauling lumber. CPR has entered into a contract to purchase the accused rail cars from Greenbrier, one of NSC's competitors, for use in the United States. NSC claims that the accused rail cars infringe its United States Patent Number 4,951,575 ("the '575 Patent").

Before the Court is the plaintiffs motion for a preliminary injunction. The Court held an evidentiary hearing on December 11 and 12, 2002. CPR concedes that the asserted claim limitations of the '575 Patent read on the accused rail cars. CPR argues that it is not guilty of infringement, however, because the accused rail cars will be only temporarily in the United States. The defendants also claim that the '575 Patent is invalid because of anticipation and obviousness, and unenforceable because it was fraudulently revived. The Court finds that these defenses lack substantial merit and will grant the preliminary injunction.

Pursuant to Federal Rule of Civil Procedure 52(a), the Court's findings of fact and conclusions of law are set forth below. For ease of reference, certain findings of fact, including findings relevant to the Court's invalidity analysis, are included under the appropriate headings in the Court's Conclusions of Law and Additional Findings of Fact section. Any other conclusion of law that should be construed as a finding of fact is hereby adopted as such.

FINDINGS OF FACT

I.The Parties

1. The plaintiff, National Steel Car, Ltd. ("NSC"), is a Canadian corporation that has manufactured railroad cars since 1912. It is a private corporation that employs approximately 800 people. Examples of some of the cars that NSC builds are flat cars, boxcars in various configurations, cargo cars, coil steel cars, and hopper cars in a number of different configurations. Tr. I, at 109, 111; PI. Mot. Ex. B, at ¶¶ 14, 17.¹ 2. NSC sells its rail cars in North America. NSC sells rail cars to class one railroads such as Union Pacific, Burlington Northern, Fort Worth, CSX, and Norfolk Southern. NSC also sells rail cars' to a number of leasing companies such as TTX, GE Capital, GATX, CIT, and First Union. Additionally, NSC sells rail cars to Canadian railroads such as Canadian National Railway, CPR, and BC Rail. Tr. I, at 109-110.

3. Canadian Pacific Railway, Ltd., is a holding company. Canadian Pacific Railway Company conducts most of CPR's business. 3942503 Canada is a wholly owned subsidiary of CPR. The Delaware and Hudson Railway Company is a railway in the United States owned by Canadian Pacific Railway. Unless otherwise noted, "Canadian Pacific Railway" or "CPR" refers to all of the defendants collectively.

4. CPR owns rail lines in Canada. It owns and operates trains, that run on these railroads. It does not manufacture rail cars. It buys rail cars for its trains from rail car manufacturers. In the past, it has been a large customer of NSC's. PI. Mot. Ex. B, ¶ 5.

5. The Greenbrier Companies ("Greenbrier") is a United States company that makes rail cars. Greenbrier produces rail cars at its Gunderson facility in Portland, Oregon and its TrentonWorks facility in Nova Scotia, Canada. Greenbrier is a competitor of NSC's. PI. Mot. Ex. B, at H 2; PI. Reply Ex. 16; PI. Reply Ex. 42, at 2.

II. Issuance/Reissuance of the '575 Patent

6. On August 28, 1990, Danilo A. Dominguez and James F. Flores were issued United States Patent No. 4,951,575 ("the '575 Patent"). This patent was for a depressed center beam flat car designed to haul large loads of lumber. PI. Mot. Ex. A.

7. After being issued the patent, Mr. Dominguez and Mr. Flores attempted to commercialize it by marketing it to some rail car manufacturing companies including Gunderson. Def. Opp. Ex. 9, at 164; Def. Opp. Ex. 10, at 62.

8. Mr. Flores stopped his attempts to commercialize the '575 Patent between a year and a year and a half after the patent was issued. Mr. Dominguez ceased his attempts to commercialize the patent by 1993. Def. Opp. Ex. 10, at 189-90; Def. Opp. Ex. 10, at 63.

9. From 1992 to 2000, Mr. Dominguez ran a manufacturing facility in Texas. He was working six or seven days a week and up to...