570 F.2d 355 (1st Cir. 1977), 77-1133, Scully Signal Co. v. Electronics Corp. of America

Docket Nº:77-1133 and 77-1144.
Citation:570 F.2d 355
Party Name:196 U.S.P.Q. 657 SCULLY SIGNAL COMPANY, Plaintiff, Appellant, v. ELECTRONICS CORPORATION OF AMERICA, Defendant, Appellee. SCULLY SIGNAL COMPANY, Plaintiff, Appellee, v. ELECTRONICS CORPORATION OF AMERICA, Defendant, Appellant.
Case Date:December 29, 1977
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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Page 355

570 F.2d 355 (1st Cir. 1977)

196 U.S.P.Q. 657

SCULLY SIGNAL COMPANY, Plaintiff, Appellant,

v.

ELECTRONICS CORPORATION OF AMERICA, Defendant, Appellee.

SCULLY SIGNAL COMPANY, Plaintiff, Appellee,

v.

ELECTRONICS CORPORATION OF AMERICA, Defendant, Appellant.

Nos. 77-1133 and 77-1144.

United States Court of Appeals, First Circuit

December 29, 1977

Argued June 1, 1977.

Robert H. Rines, Boston, Mass., with whom Rines & Rines, Boston, Mass., was on brief, for Scully Signal Co.

Charles E. Pfund, Boston, Mass., with whom Dike, Bronstein, Roberts, Cushman & Pfund, Sewall P. Bronstein, and David G.

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Conlin, Boston, Mass., were on brief, for Electronics Corp. of America.

Before COFFIN, Chief Judge, LAY, Circuit Judge, [*] CAMPBELL, Circuit Judge.

LEVIN H. CAMPBELL, Circuit Judge.

This suit for infringement of a 1957 patent was brought in 1968 by Scully Signal Co. (Scully), the assignee of the patent and its licensor. Electronics Corporation of America (ECA), the defendant, alleged both noninfringement and invalidity. The patent expired before trial, leaving only damages at issue. The case was tried in December, 1975 and January, 1976, and at the end of the presentation of evidence ECA moved to amend its pleadings to allege fraud against the Patent Office by Scully because of a failure to reveal allegedly anticipatory patents, which in turn would entitle ECA to damages. The district court held that ECA had infringed the disputed patent, and went on to hold that the patent had not been anticipated within the meaning of 35 U.S.C. § 102 1 but was invalid for obviousness under 35 U.S.C. § 103. Denying ECA's motion to amend the pleadings, the court awarded attorneys fees to the plaintiff because of "exceptional" conduct on the part of ECA.

On appeal, Scully vigorously challenges the district court's determination of obviousness, accusing the court of substituting hindsight for a proper assessment of the level of ordinary skill in the pertinent art at the time of the supposed invention. ECA in a cross appeal seeks to overturn the district court's denial of its motion to amend the pleadings, although it does not appeal the award of attorneys fees to Scully.

Obviousness under 35 U.S.C. § 103

The patent in question, No. 2,798,214, W. G. Rowell, Checking Technique and System ("Rowell '214"), describes a technique designed to incorporate " fail-safe" features into machines or systems whose unsafe failure would present dangerous consequences. The technique combines a monitoring system, a failure simulator, and a self-checking circuit that will activate an alarm and take corrective measures whenever either the unsafe condition appears or the checking system itself breaks down. As the word "fail-safe" implies, the system is designed to shut off the machine it regulates whenever anything goes wrong, even if the machine itself is operating as intended.

Rowell assigned the patent to his employer, Scully, which in turn sought licensees to manufacture devices applying the patented system. In particular Scully offered nonexclusive licenses to ECA and Minneapolis-Honeywell Regulator Co. (Honeywell), the principal manufacturers of burner control devices. While the patent does not show a burner monitor application, the district court found that a use "would be obvious to anyone minimally skilled in the art," and this is not disputed. After satisfying itself as to the validity of the patent, Honeywell took a license in 1960. The license was limited to

"(t)he field of flame detection in which a flame sensing means is arranged to detect the presence or absence of flame, provided the flame sensing means is connected to the input of an electrical amplifier having a feedback in the form of a relay controlling a chopper switch means or other chopper member disposed at or before the input of the amplifier for controlling the feedback so that the relay normally is caused to repetitively cycle upon the flame sensing means detecting a flame or detecting the absence of flame, as the case may be, there being a further

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switch means controlled by the relay to alternately and repetitively connect a capacitor to a source of energy to charge the capacitor and then to connect the charged capacitor to an electrical device (load) normally to maintain the electrical device (load) continuously energized only so long as the relay continues to cycle."

A diagram used by the district court, which we attach as Appendix A, illustrates this description more clearly. When the detector (5) picks up the light, an amplifier (6) transmits the signal to relay coil (7). When so charged, the relay coil holds the relay arm (8) in place with contact (9), which completes a circuit between the battery terminals (Bk) (B-), a storage capacitor (11), and a resistor (12) that regulates the current. When the interrupter (3) blocks the light, relay (7) receives no charge, the first circuit is broken as arm (8) drops to contact (10), and a new circuit is formed between the capacitor (11), the resistor (12), and the load relay (14). A small capacitor (13) draws off some of the current from this circuit. As long as current flows through it, the load relay (14) holds the arm (15) to contact (16), which may be a ground or some other circuit, signalling all is well. If current were to stop passing through the load relay (14), however, the arm (15) would drop to contact (17), setting off the alarm (18) and cutting off oil to the burner.

Current passes through the load relay (14), holding off the alarm, as long as a proper cycle between the two circuits is maintained. The continual charging occurs because the capacitors (11) and (13) each have the property of storing and dispensing current, depending on whether a stronger power source is attached to the circuit. When the light is on, capacitor (11) is storing energy from the battery (Bk) (B-), and capacitor (13) is giving off current to the load relay (14). When the light is off, capacitor (11) is giving off current to charge the load relay (14) and associated capacitor (13). Because each capacitor has only a limited storage capacity, however, each must be recharged continually by alternate completion of the two circuits. The choice of the components determines the proper rate for the cycle. Although the diagram does not show it, the solenoid (1) that operates the shutter (3), which in turn controls the alternating periods of light and darkness that trigger the respective circuits, can itself be hooked into one of the circuits so that it may respond to the cycle it controls. This "feedback" feature was mentioned in the patent, although the invention was meant to be used with or without this modification, and incorporated into the Honeywell license.

ECA refused Scully's offer of a license, citing the added cost of installing the self-checking system in burner monitors already on the market. In 1967, however, ECA brought on to the market its own self-checking burner monitor, the Fireye UVP-4S. The ECA device differed in material respects from that sold by Honeywell only in that it relied on an independent timer for the flame-interrupting shutter rather than on feedback.

Scully's licensing arrangement with Honeywell continued until its expiration in 1975, Honeywell's payments totalling over $400,000 during the fifteen year period. It is notable that in 1954 Honeywell itself drew Scully's attention to the two patents which ECA alleges Scully fraudulently concealed from the Patent Office, and thereafter accepted a license notwithstanding its awareness of them.

At trial the district court considered several patents which were alleged to anticipate Rowell '214. These included No. 2,659,880, A.E. Dodd, Apparatus for Detecting Recurrent Circuit Operation (Dodd); No. 2,605,334, C.H...

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