484 F.2d 1237 (8th Cir. 1973), 72-1560, Acme Precision Products, Inc. v. American Alloys Corp.

Docket Nº:72-1560, 72-1585, 72-1595.
Citation:484 F.2d 1237, 179 U.S.P.Q. 453
Party Name:ACME PRECISION PRODUCTS, INC., and William F. Jobbins, Inc., Appellees, v. AMERICAN ALLOYS CORPORATION, Appellant.
Case Date:September 25, 1973
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 1237

484 F.2d 1237 (8th Cir. 1973)

179 U.S.P.Q. 453

ACME PRECISION PRODUCTS, INC., and William F. Jobbins, Inc., Appellees,

v.

AMERICAN ALLOYS CORPORATION, Appellant.

Nos. 72-1560, 72-1585, 72-1595.

United States Court of Appeals, Eighth Circuit.

Sept. 25, 1973

Submitted May 17, 1973.

Rehearings Denied Oct. 30, 1973.

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Thomas M. Scofield, Kansas City, Mo., for American Alloys.

Theodore R. Scott, Chicago, Ill., for Acme.

Veryl L. Riddle, St. Louis, Mo., for Jobbins.

Before MATTHES, Senior Circuit Judge, LAY and STEPHENSON, Circuit Judges.

LAY, Circuit Judge.

We are presented with cross appeals arising from a judgment on a counterclaim in favor of American Alloys Corporation based on alleged violations of the antitrust laws in the fraudulent procurement and enforcement of a patent pertaining to an aluminum-magnesium casting alloy, known in the trade as Almag 35.

The original action was commenced on December 22, 1962, by the owner of the patent, Acme Precision Products, Inc. (hereinafter Acme) and William F. Jobbins, Inc. (hereinafter Jobbins II), Acme's exclusive licensee, against the defendant American Alloys Corporation (hereinafter American Alloys), for patent infringement. In 1967 American Alloys counterclaimed, asserting that the patent had been procured by fraud upon the patent office and that the plaintiffs had continually sold the patented alloy, Almag 35, with knowledge of the fraudulent procurement. The defendant prayed for damages arising from an illegal monopoly in violation of Section 2 of the Sherman Anti-Trust Act, 15 U.S.C. § 2. See Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965). The district court found that the patent was invalid in view of the prior art and the doctrine of obviousness, and dismissed the complaint. Defendant's counterclaim was likewise dismissed since the court held there was no evidence that the plaintiffs were enforcing the patent with knowledge of fraudulent procurement. Acme Precision Products, Inc. v. American Alloys Corp., 347 F.Supp. 376 (W.D.Mo.1972). On appeal this court held the finding as to lack of knowledge clearly erroneous and reversed and remanded the case for a plenary trial. Acme Precision Products, Inc. v. American Alloys Corp., 422 F.2d 1395 (8th Cir. 1970).

We held that the knowledge of the plaintiffs as to the facts surrounding procurement of the patent was established as a matter of law. Id. at 1397. Similarly, in view of the interlocking structure and relationship of Acme and Jobbins II 1 and the role of C. V. Cooper, who until his death in 1960 served as President of Jobbins II, our prior decision held that the two corporations and

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their officers continued to enforce the patent with full knowledge of the events surrounding its issuance. Id. at 1398.

This court remanded the case to the district court with the remaining issues being (1) whether there was collusion in obtaining the Willmore '044 patent by concealing relevant facts as to the prior art and prior public use of the process from the patent office and (2) the existence of the other elements of a § 2 charge under the Sherman Act, i. e., the relevant market for the product involved, the dominant position of the party charged and damages, if any. Id. at 1400.

The district court found fraud in the procurement of the patent, as well as the fact of dominance by Acme and Jobbins II in a defined relevant market. However, the district court refused to award treble damages for lost sales since it found that American Alloys' loss of sales was not related to the alleged monoply or infringement suit. The court did award the defendant $75,260.51 trebled for attorneys' fees and costs in defending the infringement suit and $50,000.00 for attorneys' fees and costs for prosecution of the antitrust counterclaim. American Alloys, as the counter-claimant, appeals from the denial of damages based on the alleged loss of sales, and the original plaintiffs, Acme and Jobbins II, who procured and enforced the patent, crossappeal challenging the court's findings as to (1) proof of fraud, (2) the determination of the relevant market, (3) the dominance of plaintiffs in the market and (4) the award of attorneys' fees.

We find the district court erred in holding that the proof was sufficient to show that Acme and Jobbins II dominated a relevant market and thus monopolized or attempted to monopolize in violation of the antitrust laws. Thus, the trebling of the award for attorneys' fees and costs in defending the infringement suit and the award of attorneys' fees and costs for prosecution of the antitrust counterclaim were erroneous. We do find sufficient evidence to support the district court's finding that there was fraud in the procurement and enforcement of the patent. Under these circumstances, it was within the discretion of the district court to award untrebled attorneys' fees for the expense of defending the patent infringement suit under 35 U.S.C. § 285. 2 Thus, we sustain only the award of $75,260.51 for defense of the infringement suit.

FRAUD ON THE PATENT OFFICE

Although the district court made no specific findings relating to fraud it held that there was overwhelming evidence of fraud in the procurement of the patent. The court found that "the applicant concealed material facts as to prior art and commercial use" and made "deliberate misrepresentations . . . as to new art in limiting impurities." 347 F.Supp. at 378.

Upon examination of the record we find sufficient evidence to support the trial court's conclusions as to fraud. In summary, the record shows that: (1) the Willmore patent application for Almag 35 was granted only after its claims were amended to limit impurities to 0.45%; yet the record is undisputed that Cooper's Almag was sold commercially as early as 1946 with less than 0.45% impurities; (2) William McKnight of Jobbins I supervised both the Cooper and Willmore patent applications; the record shows that Willmore met with Cooper's attorney to discuss the two applications with the hope of "salvaging one or more of these applications"; (3) there was close similarity in the beryllium content of both alloys; it was agreed that Cooper was the inventor of Almag 35 with a beryllium

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content of .05% and above; yet Willmore's patent application for Almag 35 claimed beryllium ranges at least as high as .07%; (4) Cooper's alloy had the same tensile strength, elongation and ductility as Almag 35; (5) Wayne Martin, plaintiffs' expert witness, testified that Willmore's application inaccurately described the state of the prior art; (6) Cooper received a royalty from the Willmore patent. The close relationship of the parties, more fully detailed in our earlier opinion, 422 F.2d at 1397, when considered with all the facts and circumstances surrounding the issuance of the patent, wherein the examiner granted the letters solely because of Willmore's limitation on impurities, lends strong support to the trial court's findings that the patent was obtained and enforced with knowledge of fraud on...

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