Barmag Barmer Maschinenfabrik AG v. Murata Machinery, Ltd.

• Citation: 221 USPQ 561,731 F.2d 831
• Decision Date: 26 March 1984
• Docket Number: No. 83-1112,83-1112
• Parties: BARMAG BARMER MASCHINENFABRIK AG, Appellant, v. MURATA MACHINERY, LTD., and Murata of America, Inc., Appellees. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 831

731 F.2d 831

221 U.S.P.Q. 561

BARMAG BARMER MASCHINENFABRIK AG, Appellant, v. MURATA MACHINERY, LTD., and Murata of America, Inc., Appellees.

Appeal No. 83-1112.

United States Court of Appeals, Federal Circuit.

March 26, 1984.

Charles B. Park, III, Charlotte, N.C., argued for appellant. With him on the brief were Joell T. Turner, James D. Myers, Charlotte, N.C., and Stuart Lubitz, Los Angeles, Cal.

Wayne Willenberg, Los Angeles, Cal., argued for appellees. With him on the brief was Stuart Lubitz, Los Angeles, Cal.

Before MILLER, Circuit Judge, COWEN, Senior Circuit Judge, and NIES, Circuit Judge.

NIES, Circuit Judge.

This appeal is from the judgment of the United States District Court for the Western District of North Carolina (McMillan, J.) ¹ holding U.S. Patent No. Re. 30,159, owned by Barmag Barmer Maschinenfabrik AG, invalid under 35 U.S.C. Sec. 102(b). Barmag, a West German corporation, had sued Murata Machinery, Ltd., a Japanese corporation, and its U.S. subsidiary (collectively "Murata"), charging the defendants with infringement in marketing certain textile processing machines asserted to be covered by the patent. The patent statute prohibits the grant of a patent for an invention which was "on sale" in the United States more than one year prior to the filing date of a U.S. patent application. ² On a motion by Murata for summary judgment, the court held that Barmag's patent was invalid under this statutory time bar.

Barmag asserts that summary judgment was improvidently granted because genuine issues of material fact remain to be tried, and that, in any event, the district court erred as a matter of law in its conclusion that the invention was "on sale" within the meaning of the statute before the critical date. Barmag's primary contention is that the invention had not yet been reduced to practice by that date and, thus, could not have been "on sale."

Our jurisdiction over this appeal is provided by 28 U.S.C. Sec. 1295(a)(1).

We find no merit in appellant's arguments and affirm the decision below.

Background

The invention in suit is directed to a machine for processing filament yarn. Synthetic yarn is manufactured from molten plastic material by an extrusion and stretching process which results in a smooth and straight rodlike filament. To add a texture more like natural fibers, filaments may be subjected to a crimping process, which requires twisting over heat, then cooling to set the crimps. The crimping process was at one time entirely separate from stretching (also known as "drawing") the filaments. However, the process was altered by the development of false-twist crimping machines, which utilize partially drawn yarn and are able to perform the final drawing and texturing steps at high speeds.

Prior to the development of the claimed apparatus, false-twist crimping machines were typically constructed with vertically oriented heating and cooling zones through which the yarn passed upwardly. The conventional wisdom throughout the industry was that quality draw texturing could only be accomplished at the desired high speed if the yarn was maintained in a substantially straight-line path through the heating and cooling zones.

To permit higher speed operation, the length of the heating zone of such machines had to be correspondingly increased in order for the yarn to reach the necessary temperature during processing. As a consequence, such machines became increasingly tall, reaching 17 or 18 feet, until they exceeded the ceiling height limitations in many existing plants. Manufacturers were faced with either relocating to new plants or modifying their facilities to accommodate the very tall machines.

Appellant Barmag is a leading manufacturer of false-twist crimping machines. Heiman Kubler is manager of research and development of false-twist equipment for Barmag and the inventor named in the patent in suit. Anticipating that height limitations would be a major problem to further increasing the speed of processing, Kubler, in 1973, suggested changing the machine's profile. Kubler's proposal was to rearrange the components of conventional false-twist crimping machines in an unconventional manner. His invention, which is claimed in Re. Patent No. 30,159, calls for an upwardly slanting heating zone, an acute turn in the yarn path between the heating and cooling zones, and a vertically oriented cooling zone. A German patent application on the angled arrangement was filed on July 5, 1975. The corresponding U.S. patent application was filed on June 30, 1976.

The activities of Barmag, which give rise to the specific issue of an "on sale" bar, concern negotiations conducted in the United States and Europe by Barmag and American Barmag, its U.S. subsidiary for sales and servicing, with a third party, the U.S. company, Burlington Industries, Inc. The negotiations occurred between January 1974 and June 30, 1975, and resulted in an order by Burlington for two machines on July 18, 1975. Proof of these activities was established principally through depositions of personnel of Barmag and Burlington taken by appellee Murata. At the conclusion of discovery, Murata moved for summary judgment. Barmag requested, and was granted, additional time to respond to the motion. A number of memoranda analyzing the record and the law were prepared for the court by both parties. After a hearing, Judge McMillan issued an opinion detailing the evidence of record and the legal standard for determining the existence of a statutory time bar to the patent. Finding no genuine issue of material fact, the court held that under the standard of the Court of Customs and Patent Appeals, as well as that of various circuits, the facts established that Barmag had engaged in sales activities of the patented machine in the United States before June 30, 1975, which invalidated the subject patent. Barmag challenges the court's judgment, requesting a remand for a jury trial.

I

In January 1974, Mr. de Haas of American Barmag, vice-president in charge of sales and service, met with certain personnel of Burlington Industries at the Burlington facilities in North Carolina. Mr. de Haas testified that during this meeting Burlington indicated that it needed approximately 90 to 95 false-twist machines over a three-year period but could not utilize standard Barmag machines because of their height. He conveyed this information to Barmag management in Europe.

The district court opinion sets out the following additional recitation of events:

At a meeting in Germany on December 3, 1974, Barmag presented Burlington with a proposal for a slanted heater machine which conformed to Burlington's height requirements. A technical diagram of the machine was forwarded to Burlington in High Point, North Carolina, on December 13, 1974. This slanted heater machine was also known as the "low profile" machine, and later called the "FK6-SS" or "FK6-L" machine.

At the December 3, 1974, meeting, Barmag agreed to construct a slanted heater machine for Burlington to evaluate in March or April of 1975. It was further agreed that if Burlington placed an order for the machines by early May, 1975, Barmag would deliver two full production machines in December 1975, followed by five such machines every month thereafter.

On December 18, 1974, a follow-up meeting was held at Burlington's facilities in Greensboro, North Carolina, to discuss the price of the machines. Present at that meeting were Harry de Haas, vice-president of sales for American Barmag; Edwin Robbins, vice-president of research and development of the Klopman textured woven division of Burlington; Theodore Lide, vice-president of manufacturing at Burlington; and Ralph Harwood of the purchasing department at Burlington.

Barmag completed construction of the machine in March 1975. Photographs of the machine were sent to Burlington in Greensboro in March, 1975.

A detailed quotation for the slanted heater machines was sent to Ralph Harwood, a purchasing agent at Burlington, on April 8, 1975. This quotation (Defendant's Exhibit 11) contains an eleven-page description of the machine, quantity (25 machines), price ($346,900 per machine), delivery and payment terms, and warranties and limitations. The quotation was sent under a cover letter signed by Harry de Haas, vice-president of sales at American Barmag.

On April 9, 1975, at a meeting at American Barmag in Charlotte, Burlington reconfirmed its intent to purchase Barmag's slanted heater machine. Another meeting was held in Greensboro on May 22, 1975, for further negotiations of the payment, delivery, warranty, and other terms of Burlington's purchase of Barmag's slanted heater equipment. (Harry de Haas, vice president of sales at American Barmag, testified that "this was not a technical meeting; this was a sales meeting that had to do with the price structure, the discounts, the time of deliveries, the warranties ... ironing out little details" (Dep. pp. 38-39).

Burlington personnel tested and evaluated Barmag's machine in Germany from June 2 through June 16, 1975. On June 13, 1975, another detailed quotation (Defendant's Exhibit 12) was sent to Theodore Lide, as director of purchasing at Burlington, from Harry de Haas, vice-president of sales at American Barmag. This quotation included various agreements on payment, time tables for delivery, 13 pages of specifications on the machine, estimated spare part usage, and life expectancy of the various parts. Lide considered the quotation to be a sales offer which would be binding on acceptance by Burlington (Dep. pp. 52-53).

On June 30, 1975, American Barmag placed an order with Barmag for two of the full production low-profile machines to be delivered to Burlington (Defendant's Exhibit 13), which was confirmed by a written purchase order from Burlington dated July 18, 1975 (Defendant's Exhibit 14). Construction of the first low-profile machine was completed in January, 1976; that machine was...