887 F.2d 1056 (Fed. Cir. 1989), 88-1571, RCA Corp. v. Data General Corp.

Docket Nº:88-1571, 88-1589.
Citation:887 F.2d 1056
Party Name:12 U.S.P.Q.2d 1449 RCA CORPORATION, Plaintiff-Appellant, v. DATA GENERAL CORPORATION, Defendant/Cross-Appellant.
Case Date:October 11, 1989
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1056

887 F.2d 1056 (Fed. Cir. 1989)

12 U.S.P.Q.2d 1449

RCA CORPORATION, Plaintiff-Appellant,

v.

DATA GENERAL CORPORATION, Defendant/Cross-Appellant.

Nos. 88-1571, 88-1589.

United States Court of Appeals, Federal Circuit

October 11, 1989

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William J. Gilbreth, of Fish & Neave, New York City, argued for plaintiff-appellant. Robert C. Morgan, Norman H. Beamer and Ron E. Shulman, of Fish & Neave, and Joseph A. Tate, of Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., of counsel.

Douglas E. Whitney, of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., argued for defendant/cross-appellant. Jack B. Blumenfeld and Mary B. Graham, of Morris, Nichols, Arsht & Tunnell, of counsel.

Before NIES and MAYER, Circuit Judges. 1

NIES, Circuit Judge.

RCA Corporation appeals from the final judgment of the United States District Court for the District of Delaware, RCA Corp. v. Data General Corp., 701 F.Supp. 456, 8 USPQ2d 1305 (D.Del.1988) (Farnan, J.), denying RCA any relief against Data General Corporation (DGC) in a suit for infringement of RCA's United States Patent No. 3,345,458 (Cole or '458 patent) and for rescission of a license agreement between the parties or for breach of contract damages. Each party challenges virtually every ruling of the district court unfavorable to it, including the denial of DGC's request for attorney fees.

Of the numerous issues presented to us for review, the issue of the on-sale bar is dispositive with respect to RCA's claim of patent infringement. We agree with the district court that DGC presented clear and convincing proof supporting the legal conclusion that the invention of claims 1-3 2 of

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the '458 patent, the claims in suit, were "on-sale" within the meaning of 35 U.S.C. 102(b) (1982), and, thus, we affirm its judgment that those claims are invalid. 3 We also affirm the court's judgment on RCA's contract claims and the denial of attorney fees to DGC.

I.

PATENT COUNT

Background

The invention involved in this case relates to a display system for computer generating alphanumeric characters on a standard raster scan television monitor. The Cole patent claims a system for decoding digital computer symbol codes representing a message and converting them using digital techniques into digital video signals. The district court in a detailed opinion fully sets out the technology relating to the claimed invention at issue. See RCA Corp. v. Data Gen. Corp., 701 F.Supp. 456, 8 USPQ2d 1305 (D.Del.1988). In a prior case involving the same patent, this court has also explained the technology. 4 Another detailed explanation is unnecessary for analysis of the on-sale issue.

The district court held that RCA's submission of a proposal on October 8, 1962, in response to a Request for Proposal put out by the Federal Aviation Administration (FAA) for character generation equipment for use in air traffic control centers, was a definite offer to sell the Cole invention. RCA's proposal was made more than one year prior to the filing date of the application for the Cole patent, the latter date being October 16, 1963. The court further held that the Cole invention had been reduced to practice prior to the FAA proposal. In view of these findings, the district court concluded that the Cole patent was invalid by reason of the statutory on-sale bar.

While rigorously disputed at trial, RCA no longer challenges that the Cole invention was reduced to practice prior to making its FAA proposal, although it attempts to equivocate by saying that it concedes reduction to practice only for purposes of this appeal. Because the district court resolved a major conflict on this issue which is critical to understanding the court's on-sale ruling, we will recount the circumstances underlying the district court's determination that the Cole invention was reduced to practice prior to October 1962.

In the previously mentioned prior litigation, RCA sued Hazeltine, Lear Siegler and Applied Digital Data Systems for infringement of the same Cole patent (the HLA litigation). During the HLA trial, RCA called Robert Clark, an engineer at RCA Canada, as a witness to establish that the Cole invention was commercially successful and feasible. In his testimony at the HLA trial and in Clark's first deposition in this case, Clark testified consistently that in connection with a demonstration to Air Canada in September 1962, he had reduced the Cole invention to practice. 5 In what

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the district court characterized as a "bewildering departure," Clark, at trial here, disavowed his prior recollection of the timetable of events and disavowed his testimony that reduction to practice of the Cole invention occurred before RCA's proposal to FAA. RCA Corp., 701 F.Supp. at 465, 8 USPQ2d at 1313. The district court found incredible Clark's changed testimony, which was "in stark contrast" to his earlier version of events. Id.

In the HLA litigation, while it was known that RCA submitted a bid to the FAA, apparently the exact date of the bid could not be ascertained with certainty. In particular, the RCA proposal document was not produced in that litigation and the possible on-sale bar was not apparent. While DGC asserts fraud in the nondisclosure, it suffices to say here only that, in this case, RCA did produce the actual document, which disclosed that the exact date of RCA's offer had been early enough to trigger the on-sale bar if it covered the Cole invention. The court found that it was only after production of this document that Clark's testimony regarding the date of reduction to practice of the Cole invention emerged as a potential liability, and that that possibility led to a "stunning about face" in Clark's testimony. RCA Corp., 701 F.Supp. at 466, 8 USPQ2d at 1313. The district court's assessment of which version of Clark's testimony to accept was well within its discretion, and its finding that the Cole invention had been reduced to practice before the FAA bid is well supported by Clark's original testimony and documents of record.

Requirements of the On-Sale Bar

As explained in UMC Electronics Co. v. United States, 816 F.2d 647, 656, 2 USPQ2d 1465, 1472 (Fed.Cir.1987), cert. denied, 484 U.S. 1025, 108 S.Ct. 748, 98 L.Ed.2d 761 (1988), determination that a patent is invalid by reason of being on-sale within the meaning of section 102(b) "does not lend itself to formulation into a set of precise requirements." However, to make a prima facie case, "the challenger has the burden of proving that there was a definite sale or offer to sell more than one year before the application for the subject patent, and that the subject matter of the sale or offer to sell fully anticipated the claimed invention or would have rendered the claimed invention obvious by its addition to the prior art. Cf. D.L. Auld [v. Chroma Graphics Corp.], 714 F.2d [1144] at 1150, 219 USPQ at 17 (102(b) only)." Id.

In this case, the district court found that the previously-mentioned proposal which RCA made to the FAA, was a definite offer to sell for commercial gain; that the offer was made more than one year before the application for the Cole patent; and that the Cole invention was offered therein. These findings led the district court to conclude that the Cole invention was on-sale within the meaning of section 102(b). RCA attacks the district court's conclusion on factual and legal grounds.

RCA's Offer to FAA

In August 1962, the FAA sent a Request for Proposal (RFP) and an Engineering Requirement (ER) for character generation equipment to ten companies. Contractors were to respond providing "all necessary qualified personnel, facilities, materials, equipment and services and ... design, develop, fabricate, test and furnish an alphanumeric and symbol generation equipment for use with rectilinear raster scan type of radar brights displays." On October 8, 1962, RCA submitted its proposal for "Character & Symbol Generation Equipment." The display system proposed, which was called the "RTGV" system, 6 was designed primarily by RCA engineer Walter Helbig of RCA's Data Systems Division in Van Nuys, California.

As an initial matter, we address RCA's challenge to the district court's finding that RCA's proposal to FAA offered the Cole invention. RCA argues that the proposal

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was for the different, more complex RTGV system, which literally is correct. However, for reasons given below, that fact does not preclude a finding that the Cole invention was being impermissibly commercialized by the offer of the more complex system.

The district court correctly found that "[t]hroughout HLA, RCA...

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