Scaltech Inc v. RETEC/TETRA

• Decision Date: 23 October 2001
• Citation: 60 USPQ2d 1687,269 F.3d 1321
• Parties: (Fed. Cir. 2001) SCALTECH, INC., Plaintiff-Appellant, v. RETEC/TETRA, LLC., Defendant-Cross Appellant. 01-1005, -1009 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1321

269 F.3d 1321 (Fed. Cir. 2001)

SCALTECH, INC., Plaintiff-Appellant, v. RETEC/TETRA, LLC., Defendant-Cross Appellant.

01-1005, -1009

United States Court of Appeals for the Federal Circuit

DECIDED: October 23, 2001

Appealed from: United States District Court for the Southern District of Texas

Judge Kenneth M. Hoyt

[Copyrighted Material Omitted] Robert M. Hardy, Jr., of Houston, Texas, argued for plaintiff-appellant. Of counsel on the brief was Jeffrey W. Tayon, Conley, Rose & Tayon, P.C. Of counsel was Robert M. Gray, Conley, Rose & Tayon, P.C. of Houston, Texas.

David J. Brody, Hamilton, Brook, Smith & Reynolds, P.C., of Lexington, Massachusetts, argued for defendant-cross appellant. With him on the brief was Deirdre E. Sanders. Of counsel on the brief was Lawrence B. Schreve, Andrews & Kurth L.L.P., of Houston, Texas.

Before RADER, BRYSON and DYK, Circuit Judges.

DYK, Circuit Judge.

This case presents the question whether the claims of U.S. Patent No. 5,443,717 (the "'717 patent") are invalid under 35 U.S.C. § 102(b) because the claimed invention was offered for sale more than one year before the filing of the patent application. We affirm the district court's decision granting summary judgment of invalidity.

BACKGROUND

I.'717 Patent

Scaltech, Inc. ("Scaltech") is in the business of recycling industrial waste produced during the refining of petroleum products. Retec/Tetra, L.L.C. ("Retec") is in the business of producing delayed coker quench streams for use in producing coke. Their paths crossed when they both used waste products from the petroleum refinery process to produce coke.

Scaltech is the assignee of the '717 patent, entitled "Recycle of Waste Streams." The '717 patent issued on August 22, 1995, pursuant to the January 19, 1993, application of Robert M. Scalliet, et al. Mr. Scalliet is also the founder of Scaltech. Retec is the alleged infringer of the '717 patent.

The '717 patent describes a process for treating oil refinery waste by introducing the waste into the coking process, which oil refiners use to produce coke. '717 patent, col. 2, ll. 52-58. Coke is a porous solid or charcoal-like residue that is frequently burned as a fuel. However, this substance also plays an important role in successful disposal of refinery waste. The delayed coking process involves heating crude oil residue and subjecting it to specific process conditions in a coker drum. The final product, coke, is subsequently quenched or cooled by introducing an aqueous slurry of solids, or the quench stream, into the coker drum. Typical waste products that are successfully disposed of in the quench stream include oily sludges, slop oil emulsion solids, and dissolved air flotation ("DAF") float. Id., col. 3, ll. 36-43. DAF waste is of particular importance here.

In 1975, the Mobil Oil Company ("Mobil") developed a process to dispose of refinery waste by injecting it into the coke bed during the quench cycle. During the delayed coking process, the solid waste and any organic liquids become dispersed throughout the coke mass. The combustible portion of the sludge becomes part of the coke. Aptly named the Mobil Oil Sludge Conversion process, or the MOSC process, Mobil obtained U.S. Patent No. 3,917,564 (the "Meyers patent") on the process. After issuance of the Meyers patent, U.S. Patent Nos. 4,874,505 and 5,009,767 (collectively, the "Bartilucci patents") were issued to Mobil and described a treatment process similar to that of the Meyers patent, but which separated the refinery waste into two streams: high oil content and high water content. The Bartilucci patents teach the injection of the high oil content waste stream into the coker drum during the coking cycle, so that there will be sufficient heat to flash off the oily waste. The high water content stream should be introduced to the coker during the quench cycle. The process described in the Bartilucci patents allows the coker to process increased amounts of refinery waste. Although the Meyers and Bartilucci patents represent a significant step forward in disposing of refinery waste, there are still disadvantages to these processes, including a significant loss of oil because it is not removed before the coking process takes place and oily build-up in the coke drum. '717 patent, col. 2, ll. 21-26. The '717 patent attempts to solve both of these problems.

The '717 patent teaches a desirable technique for treating the waste stream, before it is introduced into the coker drum, using a centrifuge, such as a Guinnard DC-6 vertical disk centrifuge ("DC-6 centrifuge"), to separate the waste stream into organic (oil), aqueous, and solids fractions. Id., col. 5, ll. 38-55. This separation process is the first step in increasing the concentration of solids. If the solids portion contains too much water, the wet sediment can be further processed by filtering out additional water to increase the concentration of solids and produce the coker quench stream. Id. at ll. 58-61. The content of the quench stream after separation is approximately 5-35% by weight solids, less than 6% by weight mobile organics, and water. Id., col. 2, ll. 52-58. Before entering the coker drum, the quench stream frequently will enter a storage tank where uniformity of the stream is maintained. Id., col. 6, ll. 27-31. Lastly, the coker quench stream, consisting of a high solids concentration and a small particle size, and the primary quench stream are introduced into the coker drum. Id., col. 5, ll. 62-64.

One advantage of the '717 patent is that it enables processing of a significantly larger amount of waste. As the '717 patent teaches, increased quantities of refinery waste may be successfully disposed of in the quench stream of the coker unit when this stream has a high solids concentration, and the particle sizes of greater than 70% of the solids in the stream have been reduced to less than 15 microns. Id., col. 5, ll. 10-23. As the specification indicates, the separation and dewatering processes increase the concentration of solids. The specification further discusses the possibility of attrition (reduction of particle size) using either grinding mechanisms or a centrifuge. Id., col. 5, ll. 31-46.

Claims 1 and 6 are the only independent claims in the '717 patent. Claim 1 reads as follows:

1.In a process for producing delayed petroleum coke, wherein a liquid hydrocarbon feed stream is introduced into a delayed coking vessel under delayed coking conditions and the coke produced is quenched, the improvement comprising:

treating a waste stream containing water, organic compounds and solids so as to cause attrition of said solids to produce a delayed coker quench stream containing from about 5 to about 35% by weight solids, water and less than about 6% by weight mobile organics, said solids in said coker quench stream having a particle size distribution such that greater than about 70% of the total solids volume comprises solids having a particle size of less than about 15 microns; and introducing said coker quench stream into said coking vessel during quenching.

Id., col. 8, line 54 - col. 9, line 2.

Claim 6 reads:

6.A process for producing a delayed coker quench stream for use in producing delayed petroleum coke wherein a liquid hydrocarbon feed stream is introduced into a delayed coking vessel under delayed coking conditions and the coke produced is quenched comprising:

treating a waste stream containing water, organic compounds and solids so as to cause attrition of said solids to produce a delayed coker quench stream containing from about 5 to about 35% by weight solids, water and less than about 6% by weight mobile organics, said solids in said coker quench stream having a particle size distribution such that greater than about 70% of the total solids volume comprises solids having a particle size of less than about 15 microns.

Id., col. 9, line 16 - col. 10, line 8.

II. Scaltech's Activities Before the Critical Date

Retec challenged the validity of the claims of the '717 patent under the on sale bar rule.¹ A claimed invention is considered to be on sale within the meaning of § 102(b) if the claimed invention is offered for sale more than one year before the filing date of the patent application. Here, the critical date is January 19, 1992, which is one year before the filing date of the '717 patent application. The following facts are relevant to the on sale determination.

In 1987, Scaltech began treating refinery waste at Chevron. Chevron wished to dispose of its refinery waste by injecting it into the coking process, and it turned to Scaltech for advice on how to improve its disposal process. Mr. Scalliet, the named inventor of the '717 patent and the founder of Scaltech, suggested that excess oil in the waste might be clogging the coke pores and preventing effective disposal of all of Chevron's hazardous waste. Mr. Scalliet offered to use a DC-6 centrifuge to separate the oil from the waste and to provide loads of de-oiled waste to Chevron, so that Chevron could test Mr. Scalliet's theory, even though Scaltech was not going to participate in the testing. Following Scaltech's suggestions yielded positive results for Chevron.

After hearing from third parties about the success at Chevron, Scaltech attempted to duplicate the success on its own. Between 1988 and 1991, Scaltech offered to test the process at six different refineries. Its offers to two of the refineries, Chevron and Champlin Refining Company ("Champlin"), in particular, are alleged to create the on sale bar under § 102(b). In its March 30, 1988, proposal to Chevron and its November 18, 1988, proposal to Champlin, Scaltech offered to process all of the waste generated by the oil refining process including the small particle size, DAF float waste. Scaltech did not indicate that it would control the solids concentration in the quench stream or the particle size of the solid waste. However, the parties agree...