Randomex, Inc. v. Scopus Corp., s. 87-1295

• Citation: 849 F.2d 585,7 USPQ2d 1050
• Decision Date: 06 June 1988
• Docket Number: Nos. 87-1295,87-1345,s. 87-1295
• Parties: RANDOMEX, INC., Plaintiff-Appellant, v. SCOPUS CORP. and Dennis Haskamp, Defendants/Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 585

849 F.2d 585

7 U.S.P.Q.2d 1050

RANDOMEX, INC., Plaintiff-Appellant, v. SCOPUS CORP. and Dennis Haskamp, Defendants/Cross-Appellants.

Nos. 87-1295, 87-1345.

United States Court of Appeals, Federal Circuit.

June 6, 1988.

Vern Schooley, of Fulwider, Patton, Rieber, Lee & Utecht, Long Beach, Cal., argued for plaintiff-appellant. With him on the brief was Stephen J. Strauss, Long Beach, Cal. Also on the brief was Zachary R. Karol, Bingham, Dana & Gould, Boston, Mass.

Paul J. Hayes, of Weingarten, Schurgin, Gagnebin & Hayes, Boston, Mass., argued for defendants/cross-appellants. With him on the brief was Steven M. Bauer.

Before BISSELL, Circuit Judge, NICHOLS, Senior Circuit Judge, and MAYER, Circuit Judge.

BISSELL, Circuit Judge.

Randomex, Inc. appeals the final judgment of the district court dismissing Randomex's complaint because of the invalidity of United States Letters Patent No. 3,803,660 ('660) for failure to disclose the "best mode." See Randomex Inc. v. Scopus Corp., 2 USPQ2d 1622, 1627 (D.Mass.1987). Randomex also appeals a prior district court order setting aside a jury award of damages to Randomex, and ordering a new trial for damages under Federal Rule of Civil Procedure 59(a). Scopus Corp. and Dennis Haskamp (collectively Scopus) cross-appeal the district court's failure to hold the '660 patent unenforceable for patent misuse. We vacate the judgment dismissing the complaint, reverse the holding of invalidity of the '660 patent, and, having no jurisdiction on the damages issue or the

patent misuse issue, remand for proceedings consistent with this opinion.

BACKGROUND

Familiarity with the district court's opinion is assumed. In mainframe computers information is stored on magnetic disks, several of which are housed in a disk pack. A small particle of dust or dirt on a disk may cause physical damage to the disk or loss of data. Before Randomex's invention, only large, nonportable machines were available to clean disk packs. The disk packs had to be transported to the machine which was undesirable because the delicate disks could be damaged in transit. All types of these various cleaning systems used some type of cloth or brush in conjunction with a cleaning fluid. One of the nonportable cleaning machines used a 91% alcohol solution to clean the disks; another used diluted surgical detergent.

The '660 patent is directed to a portable apparatus for cleaning disk packs. A disk pack is removed from the computer and placed in the apparatus where brushes wipe the disks clean, whereupon a cleaning solution is sprayed on the brushes to remove the accumulated dirt. Although the cleaning solution is not claimed specifically in the '660 patent, it is needed to practice the invention. Thus, the patent disclosed:

[t]he cleaning solution employed should be of a type adequate to clean grease and oil from the disc surfaces, such as a 91 percent alcohol solution or a non-residue detergent solution such as Randomex Cleaner No. 50281.

Column 5, lines 49-53.

At first, Scopus was in the business of transporting disk packs to a facility where they were cleaned. When Randomex began to market its portable cleaner, Scopus purchased several and changed the way it did business. Instead of transporting the disk packs, it transported cleaners, cleaning the disk packs on its customers' premises, thereby greatly reducing costs. After experiencing some trouble with the reliability of the Randomex cleaners, Scopus discontinued buying the Randomex cleaners, built its own "ruggedized" version, and "reverse engineered" Randomex's cleaning solution by obtaining an analysis of it from a professional chemist.

Randomex sued Scopus for infringement of the '660 patent. At trial Scopus stipulated to infringement and the jury properly found the infringement willful. After the district court directed a verdict in Randomex's favor on several of Scopus' defenses, the jury returned a special verdict, Federal Rule of Civil Procedure 49(a), answering three of the questions submitted to it as follows:

I.

2. Was the patent's disclosure with respect to cleaning fluid so inadequate that a person skilled in the art who did not use plaintiff's named cleaner would have had to engage in an undue amount of experimentation,

a) To use the invention?

Yes No X

b) To find the best mode to use the invention?

Yes No X

[Hereinafter Q2 ]

II.

3. Did the applicants deliberately refrain from informing users of the invention of the best cleaner formula with the intent that, to a substantial extent, users would be led to purchase plaintiff's cleaner rather than to experiment themselves to find the best?

Yes X No

a) Was that a reasonable expectation?

Yes X No

[Hereinafter Q3 ]

III.

6.... [W]hat were [Randomex's] damages?

$1,566,000.00

[Hereinafter Q6 ]

Post trial activity flourished and, pursuant to its memoranda and orders of July 25, October 3, and December 4, 1986, the court On March 6, 1987, the district court issued another opinion in which it concluded that because Q3 , as opposed to Q2 , was a better indicator of whether the best mode requirement of 35 U.S.C. Sec. 112 p 1 (1982) had been fulfilled, the best mode of practicing the invention had not been disclosed in the '660 patent and the patent was invalid. Accordingly, the interlocutory judgment was vacated and final judgment was entered on March 20, 1987, dismissing the complaint because of the invalidity of the '660 patent.

entered, on December 22, 1986, an interlocutory judgment. It provided that (1) the claims 1-3 and 5-9 of the '660 patent were valid and enforceable, (2) Randomex had not misused the '660 patent, (3) the accused devices infringed the '660 patent, (4) Scopus was permanently enjoined from further manufacture, use or sale of any disk pack cleaner embodying the invention of the claims at issue, and (5) the court retained jurisdiction for the purpose of retrying the issue of damages.

ISSUES

1. Whether the district court erred in determining that the patent in suit fails to disclose the best mode for practicing the invention.

2. Whether the district court erred in granting a motion for new trial on the issue of damages and in concluding that the patent in suit was not unenforceable for patent misuse.

OPINION

I. Best Mode

A. The Law

"The specification ... shall set forth the best mode contemplated by the inventor of carrying out his invention." 35 U.S.C. Sec. 112 p 1. This disclosure requirement is directed to persons "of ordinary skill in the art at the time the application was filed." W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540, 1556-57, 220 USPQ 303, 316 (Fed.Cir.1983), cert. denied, 469 U.S. 851, 105 S.Ct. 172, 83 L.Ed.2d 107 (1984). "Because not complying with the best mode requirement amounts to concealing the preferred mode contemplated by the applicant at the time of filing, in order to find that the best mode requirement is not satisfied, it must be shown that the applicant knew of and concealed a better mode than he disclosed." Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1384-85, 231 USPQ 81, 94 (Fed.Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 1606-07, 94 L.Ed.2d 792 (1987). Although there may be a general reference in the patent to the best mode, "the quality of [that] disclosure may be so poor as to effectively result in concealment." Spectra-Physics, Inc. v. Coherent Inc., 827 F.2d 1524, 1536, 3 USPQ2d 1737, 1745 (Fed.Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 346, 98 L.Ed.2d 372 (1987).

B. The District Court Opinion

Considering the experience and eminence of the district court, its vacillations in this case are remarkable. In early July 1986, it posited the question:

Is it a misuse of the patent deliberately to omit the formula for the best use in order to achieve psychologically tie-in sales of plaintiff's unpatented product that would persuade even a sophisticated user to purchase from plaintiff even though, in fact, the user could have discovered the formula by reasonable experimentation? Put another way, while it is sometimes said that the duty of fairness is owed to the patent examiner, this is but a euphemism--the duty is owed to the public. The question is whether it is inconsistent with that duty to make deliberately limited disclosure in order to sell unpatentable products even though, by experimentation, the public could remedy the deficiency. The argument against it is that it is de minimis. The argument for it is that it was done deliberately--the court expressly asked that word of Mr. Ludka. In Minerals Separation, Ltd. v. Hyde, 242 U.S. 261 [37 S.Ct. 82, 61 L.Ed. 286] (1916), the Court stated that an applicant need only make reasonable disclosure, but there there was good reason why he did not do better. Here, there was only a bad reason.

Does this reflect back to mean failure to state best mode of use as matter of law or, at least, an inconsistency?

In its July 25, 1986 memorandum and order, the trial court answered the question in the negative by stating, "I find the patent not invalid for failure to disclose the best mode."

In its subsequent order and opinion on appeal here, the district court totally reversed itself. It held that although there were a number of non-residue detergent solutions on the market, "[i]t may be assumed that the inventor considered his own the best, but it is not 'set forth' by reference to Randomex Cleaner No. 50281." Randomex, 2 USPQ2d at 1623. The court opined that Randomex "kept secret [its solution formula] in order to sell the product to users of its device." Id. It concluded that "the fact that experimentation by obtaining a chemical analysis of plaintiff's Cleaner solution ... could reveal plaintiff's formula could not, as matter of law, satisfy the statutory requirement." Id. It based its conclusion on the following factors: (1) Randomex was under no obligation to make its fluid available for such reverse engineering; (2) there was nothing to keep...