Tenneco Chemicals, Inc. v. William T. Burnett & Co., Inc.

• Citation: 691 F.2d 658,216 U.S.P.Q. 846
• Decision Date: 03 March 1983
• Docket Number: No. 81-1504,81-1504
• Parties: , 11 Fed. R. Evid. Serv. 1495 TENNECO CHEMICALS, INC., Appellant, v. WILLIAM T. BURNETT & CO., INC., Appellee, and Reeves Brothers, Inc., Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 658

691 F.2d 658

216 U.S.P.Q. 846, 11 Fed. R. Evid. Serv. 1495

TENNECO CHEMICALS, INC., Appellant, v. WILLIAM T. BURNETT & CO., INC., Appellee, and Reeves Brothers, Inc., Appellee.

No. 81-1504.

United States Court of Appeals, Fourth Circuit.

Argued Feb. 2, 1982.

Decided Oct. 12, 1982.

Rehearing Denied Feb. 25, 1983.

As Amended March 3, 1983.

Caspar C. Schneider, Jr., New York City (Thomas E. Spath, Richard P. Ferrara, Peter H. Bucci, Davis Hoxie Faithfull & Hapgood, New York City, on brief), for appellant.

S. Leslie Misrock, New York City (Stanton T. Lawrence, III, Pennie & Edmonds, New York City, on brief), for appellee Reeves Brothers, Inc.

Alfred W. Breiner, Arlington, Va., for appellee Wm. T. Burnett & Co., Inc.

Before MURNAGHAN, ERVIN and CHAPMAN, Circuit Judges.

CHAPMAN, Circuit Judge:

Appellant Tenneco Chemicals, Inc. brought this action for infringement of its patents by appellees, Reeves Brothers, Inc., and William T. Burnett, Inc. Appellees counterclaimed seeking to declare Tenneco's patents invalid. The district court, at the close of Tenneco's case in chief, granted appellees' motion for involuntary dismissal on the merits, declaring two of the Tenneco patents invalid a third patent was held not infringed. We affirm in part and reverse and remand in part.

I

Prior to the development of the inventions involved in this case, polyurethane foam had been made in blocks. Liquid chemicals were poured into a rectangular container, where their interaction created a liquid foam which would rise, filling the container. The foam would be allowed to harden resulting in a block that resembled a loaf of bread. The blocks were placed on an axis and rotated against a blade. Thin sheets of foam would be peeled off which were used for carpet padding and garment linings. Because the blocks were not cylindrical, approximately 26% of each block was wasted. This 26% represents the portion of each block that had to be trimmed to obtain a cylindrical shape from which a continuous sheet of foam could be peeled. The patents involved in this case include one owned by Reeves with method and apparatus claims and one owned by Tenneco with apparatus claims, for making cylindrical foam blocks, and Tenneco's product patent for the cylindrical foam blocks themselves.

General Foam, Tenneco's predecessor in interest, developed the apparatus represented by patent # 3,296,658 (hereafter the '658 patent). On December 26, 1963 General Foam applied for a patent on the apparatus, method and product produced. The apparatus and method disclosed in this original application never satisfactorily produced cylinders of foam. ¹ After the application General Foam added a "weir" to the apparatus which apparently produced the desired product.

In April 1964, Reeves Bros. applied for a patent for an admittedly different apparatus and method which produced a similar product. In October 1964 General Foam filed a continuation-in-part of its 1963 application to cover the addition of the weir.

On January 10, 1967 Tenneco was issued the '658 patent, covering the apparatus in its 1963 application only. On June 13 of that same year, Reeves Bros. was issued patent # 3,325,573 (hereafter the '573 patent) covering its apparatus. General Foam, and later Tenneco, continued to seek issuance of a method and product patent by a series of continuations of its original December 1963 application.

In November 1969 Tenneco was issued patent # 3,476,845 (hereafter the '845 patent) for its method of production, based on its November 15, 1965 application which was a division of the October 1964 continuation-in-part of the 1963 application. Finally, and most importantly, Tenneco was issued on April 1, 1975, a product patent, # 3,874,988 (hereafter the '988 patent) for cylindrical foam blocks. It is this patent that Tenneco argues is infringed by the product produced by Reeves Bros. The '988 patent is also based on a division of the October 1964 continuation-in-part which was followed by four separate continuations, the last of which was filed on December 3, 1973. ² The '988 patent was issued on the December 3, 1973 application.

Conflict among the parties began in April 1975 when Burnett brought an action in the District Court for the Southern District of New York against Reeves Bros. and Tenneco seeking a declaration of invalidity of Tenneco's '658 apparatus patent, '845 method patent and Reeves Bros. '573 apparatus patent. Tenneco then filed an infringement suit against Burnett in Maryland. A third suit was then begun by Reeves Bros. against Tenneco in Maryland, alleging that its '573 patent was interfered with by Tenneco's '845 method patent. The claims in the Southern District of New York were transferred to the District of Maryland. Tenneco filed a counterclaim against Burnett in the transferred action for infringement of its '988 product patent, and filed suit in the Western District of North Carolina against Reeves Bros. for infringement. Reeves Bros. counterclaimed asserting infringement of the '573 patent and invalidity of the '988 patent. Burnett counterclaimed alleging invalidity and Sherman Act violations.

In January 1976 appellees settled their claims against each other. Reeves Bros. agreed to prosecute claims against Tenneco in exchange for $150,000 from Burnett and the granting of a license to Burnett under the '573 patent.

At trial in the District of Maryland the issues were limited to Burnett's infringement of the three Tenneco patents, Burnett's counterclaim as to the validity or non-infringement of those patents, and Reeves Bros.' counterclaim as to invalidity of the '988 patent, ³ which was transferred from the North Carolina court just prior to trial.

Reeves Bros.' attack on the validity of the Tenneco '658 and '988 patents was upheld by the district court. ⁴ Title 35 U.S.C. § 112 requires patent applications to disclose a sufficient description of the invention to "enable any person skilled in the art to which it pertains ... to make or use the same ...." This is commonly known as the requirement of operability. The '658 apparatus patent application was held invalid as containing an inoperable disclosure. The district court held that the statutory presumption of patent validity ⁵ does not embody a presumption of operability of the patent application. ⁶ Instead, the court, relying on Cotton de Bennetot v. Becker, 157 USPQ 62 (1967), declared that patent applications carry a presumption of operability which can be rebutted by a preponderance of the evidence. The court reasoned further that this presumption had been lost by Tenneco because it came forward with evidence and because Tenneco's counsel had expressly assumed the burden during the trial. Tenneco was, therefore, required to prove operability of the application. The court then held that the evidence presented by Tenneco was insufficient to establish operability and that the patent was, therefore, invalid.

Even assuming that a presumption of operability was applicable to the 1963 application, the court noted that such a presumption may be defeated by evidence from the plaintiff's case in chief. Field v. Knowles, 37 Cust. & Pat.App. 1121, 183 F.2d 593 (1950).

The '988 product patent was held obvious over three prior U. S. Patents and a prior British patent, and, therefore, invalid under 35 U.S.C. § 103. It was also held invalid as anticipated by Reeves' '573 patent under 35 U.S.C. § 102(e).

The district court correctly stated that Tenneco did not initially have the burden of proving non-obviousness because the statutory presumption of validity does embody a presumption that the patent is not obvious over prior art. The court concluded, however, that since it had attempted to prove non-obviousness, by presenting evidence that the four prior patents were based on inoperable applications, it had assumed the burden of proof on non-obviousness. Alternatively, the court concluded that an affidavit submitted to the patent examiner in connection with the December 1973 application was misleading and that the presumption of validity was, therefore, destroyed. Under either approach the district court required Tenneco to prove non-obviousness of the '988 patent over the four prior patents. The court concluded that Tenneco's proof of the inoperability ⁷ of prior art was insufficient to establish non-obviousness, even though this was the same proof that was before the patent examiner who issued the patent.

The district court also held the '988 patent invalid as anticipated by the Reeves '573 patent. The court held that the '988 patent was not entitled to the December 1963 filing date of the original application. Title 35 U.S.C. § 120 allows a patentee to obtain the benefit of an earlier-filed application if the earlier application contains sufficient disclosure to allow anyone skilled in the art to which it pertains to make and use the later invention as required by 35 U.S.C. § 112. In other words, the earlier application must be operable as to the later invention. Concluding that the presumption of validity does not embody the presumption that a patent relates back to an earlier application, the court held that Tenneco had failed to prove that the December 1963 application was operable to teach one reasonably skilled in the art to make and use '988 cylindrical foam blocks. Because the April 1964 application for the Reeves Bros. '573 patent predates any other application by Tenneco or its predecessor, the court held the '988 patent invalid under 35 U.S.C. § 102(e) as being described in the Reeves Bros. application.

II

The '658 apparatus patent

Issuance of a patent creates a presumption that it is operable. ⁸ Blohm &amp Voss AG v. Prudential-Grace Lines, Inc., 489 F.2d 231, 240 (4th Cir. 1973). The burden of proving inoperability is, therefore, on the party contesting validity, appellees here. The district court held, however, that the burden of proof on the operability issue had been...