Envirotech Corp. v. Westech Engineering Inc., 89-1596

• Decision Date: 05 June 1990
• Docket Number: No. 89-1596,89-1596
• Parties: ENVIROTECH CORPORATION d/b/a Eimco Process Equipment Company, Plaintiff-Appellant, v. WESTECH ENGINEERING INCORPORATED, James V. Larsen and Lowell L. Palm, Defendants-Appellees. Federal Circuit
• Court: U.S. Court of Appeals — Federal Circuit

Page 1571

904 F.2d 1571

15 U.S.P.Q.2d 1230

ENVIROTECH CORPORATION d/b/a Eimco Process Equipment

Company, Plaintiff-Appellant, v. WESTECH ENGINEERING INCORPORATED, James V. Larsen and Lowell

L. Palm, Defendants-Appellees.

No. 89-1596.

United States Court of Appeals,Federal Circuit.

June 5, 1990.

Rehearing Denied July 2, 1990.

Suggestion for Rehearing In Banc Declined Aug. 28, 1990.

Gordon L. Roberts, Parsons, Behle & Latimer, Salt Lake City, Utah, argued for plaintiff-appellant. With him on the brief were Raymond J. Etcheverry, David G Earl D. Tanner, Sr., Tanner, Bowen & Tanner, Salt Lake City, Utah, argued for defendants-appellees. With him on the brief was Richard F. Bojanowski, Salt Lake City, Utah.

Mangum, C. Kevin Speirs. Also on the brief were William S. Britt and Thomas J. Rossa, Trask, Britt & Rossa, Salt Lake City, Utah, of counsel.

Before ARCHER, MAYER and PLAGER, Circuit Judges.

OPINION

MAYER, Circuit Judge.

Envirotech Corporation appeals the judgment of the United States District Court for the District of Utah, 713 F.Supp. 372, 11 USPQ2d 1804 (1989), holding U.S. Patent No. 4,391,705 (Cook) invalid under 35 U.S.C. Sec. 102(b) (1982). We reverse and remand.

Background

The patented invention is a ballasted digester cover for use in wastewater treatment plants. Dubbed a "hydroballaster" by its inventors, Envirotech employees Lynn Cook and David Brown, the invention is a floating (as opposed to fixed) cover-type digester consisting of a circular steel top with cylindrical sidewalls that slide up and down telescopically inside a large cylindrical steel tank. The tank contains sewage sludge that, when digested by microorganisms, supplies a large volume of methane and other gases on which the cover "floats." Appropriately ballasting the lower rim of the cover enables it to maintain these gases at a predetermined and constant design pressure, making the gas available to fuel other components of the treatment facility.

Archimedes' Principle--that an object wholly or partially submerged in fluid is buoyed up by a force equal to the weight of the fluid displaced--dictates the ballast design of all floating cover digesters. The Cook invention implements this principle by attaching tub-shaped concrete blocks to the bottom of the cylindrical sidewalls of the floating cover. When submerged, these "hydroballast" blocks displace the same amount of sludge and therefore weigh the same as traditional, solid concrete blocks composed of an equal volume of concrete. Thus, because pressure is directly proportional to weight, the Cook invention achieves the same gas operating pressure as a traditionally ballasted digester when their respective ballasts are submerged. However, when a hydroballast block is emerged it outweighs an equal volume traditional block by the weight of the sludge filling the block cavity. Accordingly, the Cook invention can achieve a specified gas operating pressure using significantly less concrete than--or, conversely, attain a higher gas operating pressure using the same amount of concrete as--a cover ballasted only with traditional blocks when their respective ballasts are emerged.

It is principally the Cook invention's ability to attain a higher pressure differential between its submerged and emerged positions that makes it superior to a traditionally ballasted digester. Prior to the Cook invention, engineers using traditional ballast blocks resorted to various techniques to increase the achievable pressure differential. One technique was to construct the blocks of low-density concrete: the additional concrete volume necessary to equal the weight of an emerged, traditional density block displaced proportionately more sludge when submerged, thereby creating a larger weight differential between the emerged and submerged blocks and, thus, a larger pressure differential. A second technique, relevant here, combined traditional ballast blocks with an air-filled steel buoyancy ring. This technique allowed a higher pressure differential because of the increased buoyant force the ring provided when submerged.

Envirotech Corporation (Envirotech) is engaged in the design and sale of ballasted digester covers for use in municipal wastewater treatment plants. In response to a December 1979 invitation to bid on an addition to the Nine Springs Wastewater Treatment Plant in Madison, Wisconsin (Madison project), Envirotech submitted proposals for a digester cover to all general contractors bidding the mechanical portion of the project. In these February 21, 1980 proposals, Envirotech offered to provide for $205,000 a digester cover constructed in accordance with the plans and design specifications of the consulting engineer on the Madison project, CH2M-Hill (Hill). To achieve the desired gas operating pressure, the Hill design specified the use of traditional solid concrete ballast blocks together with an air-filled buoyancy ring constructed of steel.

For reasons not relevant here, Hill decided not to award the mechanical portion of the Madison project to any of the general contractor bidders. It instead scheduled a re-bid of this portion for May 8, 1980.

In the interim, Envirotech employees Cook and Brown conceived the hydroballaster invention and, in accordance with company policy, completed both an "invention record" and a "disclosure of invention." Both documents were stamped "confidential" and neither was sent outside the company. A May 6, 1980 letter from an Envirotech patent attorney to the inventors advised them of the receipt of their invention disclosure and said, "You mentioned that you were planning to bid and the bid would be the first offer for sale or public disclosure." Although Envirotech previously had described its idea for the hydroballaster to Hill in an April 9, 1980 meeting, it had kept the details of the design confidential. Two local concrete contractors in the Madison area were the only persons outside of Envirotech to know of the hydroballast block design: Envirotech had attached copies of a sketch of the blocks, marked "confidential," to April 28, 1980 letters seeking price quotations for block fabrication.

Sometime between May 5 and 8, 1980, Envirotech submitted its second proposal for the Madison project (the May 8 proposal) to all general contractors re-bidding the mechanical portion of the project. The proposal offered a "digester gas holder cover"--three times referencing the Hill specifications contained in the contract documents--for $134,000. When at the May 8 bid opening Hooper Construction Corporation (Hooper) appeared as the lowest responsive bidder, it accepted Envirotech's proposal.

Subsequently, on May 30, 1980, Envirotech disclosed a detailed description of its hydroballaster to Hill as part of a required pre-award submittal. Envirotech acknowledged that it had "suggested" its innovative approach to Hill "during the formative stages of this job" but now included as part of the submittal both a description and detailed drawings of the hydroballaster: how it would operate and be constructed as well as the advantages it possessed over the Hill design.

Before the consulting engineer Hill decided whether to approve Envirotech's proposed design substitution, Hooper placed a purchase order with an Envirotech salesman on June 24, 1980. The order required Envirotech to furnish a digester cover "in accordance with proposal # 45-0379"--the May 8 proposal--"and spec. section 11385"--the section of the contract documents specifying the Hill design. On August 25, 1980, Hooper sent a confirmation of this purchase order to Envirotech and again specified that Envirotech must "[f]urnish in strict accordance with the attached Section 11385 of the Specifications and Plan Sheet[ ] D-S-17 [showing the Hill design] ... one complete digester gasholder cover...." Hill did not approve Envirotech's proposed substitution of its hydroballaster until September 17, 1980; not until October 6, 1980 did Envirotech apprise Hooper that it would furnish a hydroballaster instead of a Hill-designed digester cover.

Cook and Brown applied for a patent on the hydroballaster on May 29, 1981. They subsequently assigned the invention and application to Envirotech which, as the owner of the Cook patent, brought suit for patent infringement against Westech Engineering Incorporated (Westech) in 1986. In a motion for partial summary judgment Westech asserted the patent was invalid because of an on sale bar. After hearing argument and with the consent of the parties, the court held an evidentiary hearing.

Based on that hearing, the court invalidated the patent. It held that "Envirotech's May 8th bid and proposal to sell the cover violated the statutory bar of 35 U.S.C. Sec. 102(b) in that the invention was 'on sale' in this country more than one year before the application for a patent was filed." 713 F.Supp. at 377, 11 USPQ2d at 1808. The court based this holding on the three ancillary conclusions that "[n]o later than May 8, 1980, Envirotech placed on sale its ballasting digester cover, which embodies the entire invention set out in the Cook patent, by bidding and proposing to sell it to Hooper for $134,000"; that the invention had been "sufficiently reduced to practice to be commercially marketable" by May 8; and that the May 8th bid was made primarily for commercial rather than experimental purposes. Id., 713 F.Supp. at 377, 11 USPQ2d at 1807-08. Envirotech appeals.

Discussion

The party asserting the on sale bar must prove by "clear and convincing evidence," Buildex, Inc. v. Kason Industries, Inc., 849 F.2d 1461, 1463, 7 USPQ2d 1325, 1326-27 (Fed.Cir.1988), "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." UMC Electronics Co. v. United...