451 F.2d 849 (5th Cir. 1971), 30159, Hobbs v. United States, Atomic Energy Commission

Docket Nº:30159.
Citation:451 F.2d 849, 171 U.S.P.Q. 713
Party Name:James C. HOBBS, Petitioner, v. UNITED STATES of America, ATOMIC ENERGY COMMISSION, Respondent.
Case Date:October 28, 1971
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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451 F.2d 849 (5th Cir. 1971)

171 U.S.P.Q. 713

James C. HOBBS, Petitioner,

v.

UNITED STATES of America, ATOMIC ENERGY COMMISSION, Respondent.

No. 30159.

United States Court of Appeals, Fifth Circuit.

October 28, 1971

         Rehearing Denied Dec. 20, 1971.

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         William D. Ruckelshaus, Asst. Atty. Gen., Robert V. Zener, Atty., Dept. of Justice, Washington, D. C., Joseph F. Hennessey, Roland A. Anderson, Asst. Gen. Counsel, John A. Horan, Atomic Energy Comm., John N. Mitchell, Atty. Gen., Morton Hollander, Chief, Appellate Section, Dept. of Justice, Alan S. Rosenthal, Atty., Dept. of Justice, Washington, D. C., for the United States.

         Before WISDOM, BELL, and AINSWORTH, Circuit Judges.

         WISDOM, Circuit Judge:

         This appeal concerns a claim against the government for just compensation for the Atomic Energy Commission's allegedly unlawful taking of James C. Hobbs's rights in certain inventions essential to the production of The Bomb. The matter is before this Court for the second time.

         The gas involved in the production of fissionable material had never before been producd in quantity. It was highly corrosive. It had to be handled at subatmospheric pressure. Its mixture with moist air or grease would render it highly dangerous. The valves required had to be leakproof. Each valve of the thousands used on miles of pipe had to meet the unheard-of test of resisting leakage of air sufficient to increase the pressure in the pipe a micron of mercury, equivalent to one atmosphere increase in over eighty years. No known valve was suitable for Oak Ridge. James C. Hobbs had the inventive ability to design valves that proved to be suitable. They were vital to the war effort and may have greater value in developing peaceful uses for nuclear fission.

         I. The Facts

         On December 14, 1942, the federal government contracted with M. W. Kellogg Company for Kellogg to design and build a plant at Oak Ridge, Tennessee, for the production of fissionable material for the world's first nuclear weapons. The government entered into a similar contract with Kellex Corporation, a subsidiary incorporated for purposes of the contract. On June 25, 1943, the United States contracted with Crane Company for Crane to manufacture valves and fittings required for the gaseous diffusion plant under the direction and supervision of Kellex.

         James C. Hobbs, a mechanical engineer who had several inventions to his credit, agreed to work for Kellex as a part-time general consultant on September 9, 1943. Although Kellex's contract with the government required it to assign rights to all patentable discoveries over to the government and to secure patent waiver forms from all employees, Hobbs, at the time of his initial employment, and repeatedly thereafter, refused to waive or assign any patent rights he might have. The government was so informed on March 3, 1945.

         Although the exact urgency of the situation existing at Oak Ridge in the fall of 1943 is unclear, it appears that development of a gate valve (G valve) was essential to the completion of the project. At a conference held in Chicago on November 4-6, 1943, Hobbs first submitted a design for the G valve. He was soon given full responsibility on behalf of Kellex for the work on the development of special valves to be used at Oak Ridge including the G valve and instrument valve (H valve). The design for the G valve was eventually frozen about January 1, 1944, and the design for the H valve was approved sometime during June 1944. Hobbs developed both in cooperation with the employees of Crane.

         On February 15, 1945, Hobbs filed an application for a patent on the G valve. After prolonged negotiations between Hobbs and the Patent Office, the Office

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issued Hobbs Patent No. 2,520,364 on August 29, 1950. On March 26, 1946, Hobbs filed an application for a patent on the H valve. The Patent Office issued Patent No. 2,617,621 on this valve on November 11, 1952.

         The Oak Ridge plant was equipped with over five thousand G valves and over 51,000 H valves made by Crane. Three additions were later made to the Oak Ridge plant and additional plants were built at Paducah, Kentucky and Portsmouth, Ohio. A version of the G valve furnished by M. L. Bayard Company and the Linde Company was employed in the new plants. A version of the H valve for use in the new plant was furnished by Hoke Incorporated and Fulton-Sylphon Control Division of Robert-shaw-Fulton Controls Company. G valves purchases from Crane amounted to $6 million and H valve purchases $500,000. $19 million worth of Bayard and Linde G valves and $300,000 worth of Hoke and Fulton-Sylphon H valves were purchased between 1949 and 1955.

         II. The Proceedings

         The present proceedings were commenced on October 9, 1956, when Hobbs filed an application with the Patent Compensation Board of the Atomic Energy Commission for compensation under the Atomic Energy Act of 1946, 42 U.S.C. § 1801 et seq. (1952 ed.), 60 Stat. 755 et seq. (1946), seeking compensation for the alleged taking and use by the government of the valves described in the G valve and H valve patents issued to Hobbs. The Board denied compensation and the Commission refused review. In re Hobbs, 136 U.S.P.Q. 489 (1963). The Board held "that the inventions of Applicant [Hobbs] were made under such circumstances and conditions as would give to the Government, through its contract with the Kellex Corporation, shop rights." Id. at 496-497. This Court reversed the Commission and remanded the case. Hobbs v. United States, 5 Cir. 1967, 376 F.2d 488. The Board held additional hearings, and again denied compensation. In re Hobbs, 165 U.S.P.Q. 99 (1970). The Commission adopted the opinion of the Board. The Board's opinion contains 108 separate findings of fact, some self-contradictory both as to the standards applied and the results reached. Its "Conclusions of Law", however, are succinctly stated:

1. The Hobbs Patent No. 2,520,364 is invalid in view of the prior art.

2. Claims 1, 2, 3, 4 and 6 of the Hobbs Patent No. 2,617,621 are invalid in view of the prior art. Claims 5 and 7 of that patent distinguish the prior art but are not infringed.

3. The Hobbs Patent No. 2,617,621 is invalid in view of the statutory bar of "public use".

4. Applicant, J. C. Hobbs, is the sole inventor of the subject matter claimed in Claims 4, 6 and 8 of Patent No. 2,520,364.

5. Applicant, J. C. Hobbs, is not the sole inventor of the subject matter described by the claims of Patent No. 2,617,621.

6. Claims 4 and 6 of Patent No. 2,520,364 are not infringed by the valves supplied by the M. L. Bayard Company nor by the valves supplied by the Linde Company.

7. Any just compensation which the Applicant may be entitled to receive shall be determined by evaluating the Applicant's contribution and deducting therefrom the cost of the Government of materials used and work done by those other persons who were engaged in the effort which resulted in the development of the invention used by the Government for which use just compensation is sought.

8. The Government did not acquire equitable rights in all valves related to the Hobbs Patents Nos. 2,520,364 and 2,617,621 by reason of Hobbs's employment and relationship to the Government.

9. The Government did not acquire the right to use valves purchased by the Government prior to Hobbs's assertion of a claim against the United States.

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10. No valid basis for the grant of just compensation under either the Atomic Energy Act of 1946 or the Atomic Energy Act of 1954 has been proven.

Id. at 145. Hobbs's petition for review is before this Court under Section 189 (b) of the Atomic Energy Act of 1954, 42 U.S.C. § 2239(b), directing review in accordance with 28 U.S.C. §§ 2341-2352 and 5 U.S.C. §§ 701-706.

         III. The Law-The Atomic Energy Act of 1946

         Although the case is here for review under the 1954 Act, the substance of Hobbs's claims is governed by the 1946 Act. 1 Hobbs v. United States, 5 Cir., 1967, 376 F.2d 488. See also N. V. Philips' Gloeilampenfabrieken v. Atomic Energy Commission, 1963, 114 U.S.App. D.C. 400, 316 F.2d 401; Anderson v. United States Atomic Energy Commission, 7 Cir. 1963, 313 F.2d 313. The key provisions of the 1946 Act drastically limited the patentability of inventions used in the production of atomic energy:

Sec. 11. (a) Production and Military Utilization.

(1) No patent shall hereafter be granted for any invention or discovery which is useful solely in the production of fissionable material or in the utilization of fissionable material or atomic energy for a military weapon. Any patent granted for any such invention or discovery is hereby revoked, and just compensation shall be made therefor.

(2) No patent hereafter granted shall confer any rights with respect to any invention or discovery to the extent that such invention or discovery is used in the production of fissionable material or in the utilization of fissionable material or atomic energy for a military weapon. Any rights conferred by any patent heretofore granted for any invention or discovery are hereby revoked to the extent that such invention or discovery is so used and just compensation shall be made therefor.

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(b) Use of Inventions for Research. -No patent hereafter granted shall confer any rights with respect to any invention or discovery to the extent that such invention or discovery is used in the conduct of research or development activities in the fields specified in section 3. Any rights conferred by any patent heretofore granted for any invention or discovery are hereby revoked to the extent that such invention or discovery is so used, and just compensation shall be made...

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