Crown Machine & Tool Co. v. KV P-Sutherland Paper Co.

• Decision Date: 04 April 1968
• Docket Number: No. 42224.,42224.
• Court: U.S. District Court — Northern District of California
• Parties: CROWN MACHINE & TOOL CO., a corporation, Plaintiff, v. K V P-SUTHERLAND PAPER COMPANY, a corporation, Defendant.

297 F. Supp. 542

CROWN MACHINE & TOOL CO., a corporation, Plaintiff, v. K V P-SUTHERLAND PAPER COMPANY, a corporation, Defendant.

No. 42224.

United States District Court N. D. California.

September 26, 1967.

Supplemental Decision April 4, 1968.

Supplemental Order April 29, 1968.

James M. Naylor, San Francisco and Alfred H. Plyer, Jr. and Edward A. Haight, Chicago, for plaintiffs, Naylor & Neal; Parker, Carter & Markey; and Haight, Simmons & Hofeldt, of counsel.

Carl Hoppe and James F. Mitchell, San Francisco, for defendant; Eckhoff and Hoppe, San Francisco, of counsel.

MEMORANDUM OF DECISION

SWEIGERT, District Judge.

This is a patent infringement action brought by plaintiff Crown Machine & Tool Co., (hereinafter "Crown") against defendant KVP-Sutherland Co., (hereinafter "Sutherland"). Defendant Sutherland has counterclaimed for violation of the antitrust laws. Jurisdiction of the patent action is founded upon 62 Stat. 931 (1948), 28 U.S.C. § 1338 (1964).

The case is presently before the Court after a trial of the issues and extensive post-trial briefing. The Court has also had the benefit of its extensive and fairly well detailed notes made during the trial of the case. The extent of the transcript, the exhibits, the briefs and these trial notes account for the length of the submission period.

Crown is the owner of U. S. Patent Nos. 2,951,260 (hereinafter '260), 3,125,780 (hereinafter '780) and 3,162,705 (hereinafter '705) relating to apparatus and method for making plastic containers from expandable polystyrene beads. The complaint charges that defendant Sutherland's use of so-called "Thompson Machines" to make cups from expandable polystyrene beads infringes its '260, '780 and '705 patents.

The claims in issue herein are the single claim of the '705 patent, claims 1 and 3 of the '780 patent, and claim 12 of the '260 patent.

The issues in the case are: (1) Is the sole claim of Crown's '705 patent valid in law?; (2) Are claims 1 and 3 of Crown's '780 patent valid in law?; (3) Is claim 12 of Crown's '260 patent valid in law?; (4) Are any of the foregoing claims infringed by the Thompson Machine?, and (5) Has Crown violated the antitrust laws of the United States in its obtaining of and/or its use of the '780, '705 and '260 patents?

In order to adequately deal with these issues it is first necessary that the background and history of the patents and polystyrene foam cup art be covered.

I. BACKGROUND AND HISTORY OF THE PATENTS AND POLYSTYRENE FOAM CUP ART

Expandable polystyrene is a lightweight thermoplastic material impregnated with a "foaming" or "blowing" agent which is activated by heat. This material is marketed in the form of tiny beads (resembling sugar) and when heated the foaming or blowing agent causes the beads to expand uniformly in all directions to as much as thirty times their original size. Upon heating within a closed mold the beads expand and fuse together into a so-called "foam" in the shape of the mold. Such foams have the properties of toughness, high strength-to-weight ratio, low thermal conductivity and low water absorption. Hot drink cups, ice chests, buckets and Christmas decorations are just a few of the many items made of this material.

Badische Anilin & Soda-Fabrik AG, a German company, originated expandable polystyrene in the early nineteen fifties and is the owner of a number of United States patents on its process of manufacture and on the production of articles (foams) therefrom. (See Plt. Ex. No. 62). None of these patents, however, are the subject matter of this infringement suit.

On March 1, 1954, the Koppers Co., Inc., made the first public announcement in the United States of "expandable polystyrene". From that date until the spring of 1960 Koppers marketed an expandable polystyrene bead designated F-40 which had a relatively wide bead size distribution range, to wit: the beads varied in "average diameter from .5 to 3.0 millimeters." (Def. Ex. No. V- 4.)

In the spring of 1960 Koppers came out with a special grade of high quality expandable polystyrene bead designated F-40-C which, unlike F-40, was of a standardized uniform bead size. Since then, F-40-C has been the type of bead material used by manufacturers of foam cups.

From 1954 until the early nineteen sixties, Mr. Edwin A. Edberg was in charge of Koppers' expandable polystyrene bead market development program. In that capacity Mr. Edberg gave many talks before trade associations and wrote a number of articles about expandable polystyrene beads—their properties, applications and methods of making the "foams" therefrom. In an article appearing in the March 1955 issue of The Rubber and Plastics Age Mr. Edberg wrote that these beads "may be expanded in heated molds into a variety of shapes and sizes in just one operation." Mr. Edberg gave three methods for heating and expanding the beads in the molds: "Direct introduction of dry steam into the mold cavity" or "steam heated molds" or "hot-air heated molds". The latter two methods were recommended where the thickness of the molded article was to be less than one inch. For "thin-vertical" sections it was recommended that the beads be partially expanded (using dry heat such as infrared bulbs or strip heaters) outside of the mold prior to their being introduced in the mold. (Def. Ex. No. V-5.)

In a paper presented at the Packaging Conference of the American Management Association at the Palmer House, Chicago, April 18-20, 1955, and later printed in No. 46 of Packaging Series, Mr. Edberg stated:

"The molding operation consists of the following simple steps:

1. Charge a measured amount of expandable polystyrene to the mold to obtain the desired density.

2. Close the mold and apply heat (usually dry steam) until the beads are expanded.

3. Remove the source of heat and cool the mold.

4. Open the mold and remove foamed article." (Def. Ex. No. V-4).

Other articles by Edberg subsequently appeared in the January 1956 issue of Refrigerating Engineering (Def. Ex. No. V-3), the March 1957 issue of Refrigerating Engineering (Def. Ex. No. V-2) and the September 1957 issue of Modern Plastics Encyclopedia (Def. Ex. No. V-1)—all giving information on the means for molding "foams" from expandable polystyrene beads.

During the early days (1955-56) of expandable polystyrene beads a number of people were engaged in the commercial production of various "foam" articles. About October 1955 William L. Parsons commercially produced foam hi-fi speaker enclosures from a molding machine of the type shown in Def. Ex. No. F-H; in January 1956 Robinson Industries placed in commercial production a molding machine of the type shown in Def. Ex. No. G-H for making foam enclosures for air conditioning units; around May 1956 Donald Stevens molded for commercial use foam minnow buckets on a molding machine of the type shown in Def. Ex. No. H-H; and in August 1956 La Della Plastics placed in commercial use apparatus shown in Def. Ex. No. I-H for molding foam float rings.

The aforesaid four molding machines were all very simple slow-cycle, manually operated devices wherein a predetermined amount of beads were either dumped or blown (via an air stream) into a mold cavity through an inlet port, the port was then manually plugged and the mold heated. After cooling the mold was manually cracked and the foam article removed. The thickness of these various articles varied from 3/8 " to 1 inch. The time to manufacture them ranged from 4 to 7 minutes.

In 1955 plaintiff Crown was in the business of making and selling plastic injection-molding machines and solid (as opposed to foam) plastic cups for the vending industry. These solid plastic cups had the disadvantage of high thermal conductivity, making them too hot to hold by the hand when containing a hot liquid.

In 1955 Crown undertook a development program to develop an automatic molding machine which would produce a thin-walled (in the order of .060 inches wall thickness) hot drink cup from expandable polystyrene beads.

Sometime during 1955 or 1956 Crown build its first foam cup machine. The evidence is in dispute as to the date of the first production of foam cups upon this machine. Based upon the development of this machine, James M. Harrison and Robert E. Smucker, employees of Crown and developers of this machine, filed U.S. Patent Office application serial No. 619,259 on October 30, 1956, for improvements in "Apparatus and Method for Making Plastic Containers". On May 1, 1958, the Patent Office Examiner required Crown to make what is termed a "division" between the method claims and the apparatus claims in the application and prosecute the application on one or the other type of claims. Crown elected to prosecute application serial No. 619,259 on the method claims and to file a new application containing the apparatus claims. On December 22, 1964, U.S. Patent No. 3,162,705 issued on this application with one claim for "Method of Making Plastic Containers". (See Plt. Ex. No. 15.)

On April 19, 1962, Harrison and Smucker filed application serial No. 191,662 with the Patent Office. This application contained, with modifications, the non-elected apparatus claims of the application serial No. 619,259 filed on October 30, 1956. On March 24, 1964, this application matured into U.S. Patent No. 3,125,780 containing four claims. (See Plt. Ex. No. 11.)

According to Crown, in order to successfully operate this first cup machine which it developed and upon which the '705 and '780 patents were based, it was necessary to screen the Koppers' F-40 polystyrene beads and remove beads larger than a certain size. This resulted in as much bead material being thrown away per cup as was used for making a cup. Accordingly, this machine was discarded and never used to commercially manufacture foam cups.

To solve the problem of the low grade material being supplied by Koppers during the fifties, Crown developed a second type of cup molding machine which solved...