Reed Tool Co. v. Dresser Industries, Inc.
| Citation | 672 F.2d 523 |
| Decision Date | 08 April 1982 |
| Docket Number | No. 80-2170,80-2170 |
| Parties | REED TOOL COMPANY, Plaintiff-Appellant, v. DRESSER INDUSTRIES, INC. and Smith International, Inc., Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Vinson & Elkins, A. H. Evans, W. Ronald Robins, Houston, Tex., for plaintiff-appellant.
Arnold, White & Durkee, John F. Lynch, Houston, Tex., for Dresser Ind.
Christie, Parker & Hale, Andrew J. Belansky, Pasadena, Cal., for Smith Intern., Inc. Appeal from the United States District Court for the Southern District of Texas.
Before GARZA and RANDALL, Circuit Judges *.
Reed Tool Company ("Reed"), a Texas corporation primarily engaged in the business of manufacturing and selling rotary equipment, brought suit against two of its principal competitors, Dresser Industries, Inc. ("Dresser") and Smith International, Inc. ("Smith"), alleging infringement of United States Patent No. 3,495,668. 1
The patent in question relates to a three-cone rotary rock bit used to drill oil and gas wells. 2 At trial, the defendants denied infringement and alleged invalidity and unenforceability of the patent both on equitable and statutory grounds. The district court found the patent to be invalid under several theories, 3 and the other issues in the case, including infringement, were never reached. Because this court finds the patent invalid, we affirm the lower court's decision.
It is apparent after reviewing the district court's opinion that much time and effort was devoted to outlining both the facts of this case and the evolution of rotary rock bit design. 4 Rather than try to improve upon them, we instead incorporate them by reference and will discuss only those facts as are pertinent to our decision.
Three-cone rotary rock bits have been used to drill oil and gas wells for nearly half a century. The evidence at trial particularly focused on two types of three-cone bits-milled tooth bits and insert bits.
For many years, the principal type of rotary rock bits used in the drilling industry were milled tooth bits. The cutting structure of these bits consists of rows of elongated steel teeth which are integrally formed with the cutter. The outer surface of the teeth and of the cutter are carburized or "case hardened" to increase their wear resistance. The tooth type structure has the advantage of being comparatively strong, since the teeth are actually an integral part of the steel cutter from which they extend, and since the uncarburized steel core of each tooth lends ductility to the structure so that it can absorb shocks and shear forces encountered in drilling. Because hard and soft formations yield more easily to different drilling forces, the design of these milled tooth bits varied in accordance with the type of formation for which they were intended. Invariably, however, milled tooth bits employed cutter skew or offset in order to gouge and scrape away rock formations. 5
Prior to the introduction of insert bits, milled tooth bits were the workhorses in oil well drilling. Utilization of milled tooth bits over the years, however, indicated that such bits were less than ideal for drilling hard rock formations. No matter how well-designed they were, milled tooth bits were limited by the strength of the metal with which they were constructed. In drilling the hard rock formations, the carburized steel of which the bits were constructed ground down very quickly. In very hard rock formations, a milled tooth bit might drill for only a few feet, after which it would have to be pulled out of the hole and replaced. This was very expensive, not only in terms of the number of bits required for drilling a well, but also in terms of the time required for each "round trip" in which the drill string, often thousands of feet in length, would have to be removed from the hole and disconnected, joint by joint, so that the drill bit could be changed.
This problem was substantially eliminated by the introduction of the insert bit in the early 1950's. In contrast to the way milled tooth bits are manufactured, with portions of thick-walled cutters being machined away to create integrally-formed cutter teeth, insert bits are manufactured by boring sockets into the cutters, heating them up until the holes expanded, and then dropping in inserts of an extremely hard substance, tungsten carbide. When the sockets cooled, the holes would contract and the inserts would be permanently affixed in place. Although these inserts are much harder than the carburized steel from which the cutters are formed, they are also more brittle. For this reason, the early inserts were closely spaced and did not protrude far from the conical cutter. Moreover, the cutters were not skewed or offset; instead of gouging and scraping away at rock formations, drilling was accomplished by crushing the rock under the weight of heavy drill collars.
Because there was not as great a need for more wear-resistant teeth in soft and medium-density formation drilling, insert bits were not, at first, used to drill in these formations. Nevertheless, as time went on, the various characteristics which had been used to adapt milled tooth bits to softer formations were in turn incorporated into insert bits. Finally, in late 1967, appellant introduced the Reed SCM bit. 6 Designed to drill in medium-density formations, appellant claims it was the first commercially successful bit with extended inserts.
The lower court, however, invalidated the patent using several theories. 7 On this appeal, Reed claims that the Court below erred: (1) by ignoring the statutory presumption of validity normally attaching to patents which survive the scrutiny of the Patent Office, 35 U.S.C. § 282; (2) by concluding that the claims of the patent were invalid for obviousness, 35 U.S.C. § 103; (3) by finding the patent invalid due to lack of novelty, 35 U.S.C. § 102; and (4) by holding that the patent was invalid for lack of disclosure, 35 U.S.C. § 112. It is unnecessary, however, for this court to consider all of these contentions; support for any one of the latter three mandates affirmance of the result below irrespective of the soundness of the district court's reasoning as to the other two. Accordingly, we express no opinion on those issues not discussed.
Before a patent may be successfully challenged, the statutory presumption of validity must first be overcome. While it is true that 35 U.S.C. § 282 presumes all patents to be valid, 8 the presumption is not irrebuttable. It vanishes once the party attacking the patent demonstrates that the Patent Office failed to consider pertinent prior art at the time it made its evaluation. 9 In order to be successful, however, the evidence offered must be more than a preponderance. It must not be cumulative, and any existing doubts are to be resolved against the attacking party. 10
Although this burden is normally a difficult one to overcome, it is not insurmountable. In the instant case, appellees have demonstrated that the patent examiner had not considered: (1) prior art showing offset in an insert bit; (2) prior art showing offset in a bit having extended conical cutting elements; (3) evidence of the independent and simultaneous developments by others in the drill bit art; and (4) evidence to establish the steady progression in the rock bit art to adapt insert bits to softer formations by incorporating into insert bits accepted design concepts. Because these items go to the very heart of this case, it can be said that no error of law was made by the trial court as to the presumption of validity. The presumption in this case, therefore, must be regarded as non-existent.
The district court also found, inter alia, that the patent was invalid for obviousness under 35 U.S.C. § 103. Under § 103, a patent may not be issued
if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.
But while the ultimate question of patent validity is one of law, application of the nonobviousness test depends upon factual inquiries. Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966); Cathodic Protection Service v. American Smelting, 594 F.2d 499 (5th Cir. 1979), cert. denied, 444 U.S. 965, 100 S.Ct. 453, 62 L.Ed.2d 378 (1979); Steelcase, Inc. v. Delwood Furniture Co., Inc., 578 F.2d 74 (5th Cir. 1978), cert. denied, 440 U.S. 960, 99 S.Ct. 1503, 59 L.Ed.2d 774 (1979); Robbins Co. v. Dresser Industries, Inc., 554 F.2d 1289 (5th Cir. 1977); Johns-Manville Corp. v. Cement Asbestos Products Co., 428 F.2d 1381 (5th Cir. 1970). The factual inquiries are: (1) the scope and content of the prior art; (2) the differences between the prior art and the claims at issue; and (3) the level of ordinary skill in the art. Graham v. John Deere Co., 383 U.S. at 17, 86 S.Ct. at 693. 11
Reed's patent is conceded to be a "combination" patent; i.e., a patent involving a combination of elements found in prior art. While such patents have been upheld in the past, 12 the claims have been scrutinized Sakraida v. Ag Pro, Inc., 425 U.S. 273, 281, 96 S.Ct. 1532,...
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