917 F.2d 544 (Fed. Cir. 1990), 90-1148, Manville Sales Corp. v. Paramount Systems, Inc.

Docket Nº:90-1148, 90-1175.
Citation:917 F.2d 544
Party Name:16 U.S.P.Q.2d 1587 MANVILLE SALES CORPORATION, Plaintiff/Cross-Appellant, v. PARAMOUNT SYSTEMS, INC., Robert S. Butterworth and Anthony J. Disimone, Defendants-Appellants.
Case Date:October 23, 1990
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 544

917 F.2d 544 (Fed. Cir. 1990)

16 U.S.P.Q.2d 1587

MANVILLE SALES CORPORATION, Plaintiff/Cross-Appellant,

v.

PARAMOUNT SYSTEMS, INC., Robert S. Butterworth and Anthony

J. Disimone, Defendants-Appellants.

Nos. 90-1148, 90-1175.

United States Court of Appeals, Federal Circuit

October 23, 1990

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[Copyrighted Material Omitted]

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Ernie L. Brooks, Brooks & Kushman, Southfield, Mich., argued for plaintiff/cross-appellant. With him on the brief was Thomas A. Lewry.

Manny D. Pokotilow, Caesar, Rivise, Bernstein, Cohen & Pokotilow, Ltd., Philadelphia, Pa., argued for defendants-appellants. With him on the brief were Alan H. Bernstein and Max Goldman.

Before ARCHER, MICHEL, and CLEVENGER, Circuit Judges.

MICHEL, Circuit Judge.

Paramount Systems, Inc. (Paramount), Robert S. Butterworth, and Anthony J. DiSimone appeal the United States District Court for the Eastern District of Pennsylvania's September 7, 1989, judgment awarding Manville Sales Corporation (Manville) damages for infringement of U.S. Patent No. 3,847,333 (the '333 patent).

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Manville Sales Corp. v. Paramount Sys., Inc., 14 USPQ2d 1291, 1989 WL 104953 (E.D.Pa.1989). Appellants contend that the district court erred in holding that the '333 patent was not invalid because the court erroneously concluded that the invention was not on sale nor in public use prior to the section 102(b) bar date, February 5, 1972. Appellants also appeal the district court's order denying their Motion to Alter or Amend the Judgment, asserting that because of 28 U.S.C. Sec. 1498(a) (1988) the district court lacked subject matter jurisdiction to award damages for infringing sales that, it alleges, were made for or sold to the U.S. government. Manville Sales Corp. v. Paramount Sys., Inc., 14 USPQ2d 1299, 1301, 1989 WL 151198 (E.D.Pa.1989). Manville cross-appeals, challenging the amount of damages awarded. We affirm all appealed issues except we reverse as to personal liability of individual defendants.

BACKGROUND

In early 1971, a Manville division was awarded a subcontract to supply the luminaire assembly for a 150-foot tall, three-foot diameter lighting pole to be installed in the Fort Steele Rest Area along a highway near Rawlins, Wyoming. The assembly was installed, but failed in September, 1971.

Later that same month, Manville's research manager, Robert Zeller, conceived of a new self-centering luminaire assembly design capable of travelling readily up and down a pole, thereby providing reliable accessibility for maintenance to the luminaires. The invention had "iris" guide arms, whereas the prior art device installed in Wyoming had vertical guide arms. (See Figure 1.) The guide arms are intended to apply forces between the light pole and the luminaire support such that the assembly maintains a centered position while travelling up and down the pole. Otherwise, the luminaire assembly can get stuck high up the pole. By late October, Zeller had constructed a working model of the new design and had installed it on a test pole at Manville's R & D center in Ohio. [App. at 519-21.]

On October 29, 1971, after the new design proved operable on the test pole, Zeller sought permission from a Wyoming state official to try his new iris arm design as a substitute for the vertical guide arm device previously installed that had failed. With his request, Zeller sent a drawing that included a confidentiality notice. Wyoming law preserved the confidentiality of such drawings.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

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In response to Zeller's request, a Wyoming official conditionally approved payment for the new design subject to its performing satisfactorily, after installation.

The district court found that "contemporaneous 1971 documents and the testimony demonstrate that no one could have known at that time whether the new iris arm would work as intended at Fort Steele." Manville, 14 USPQ2d at 1293. Manville asserts that the new design's durability in weather conditions was unknown, and that Manville sought to install the new iris arm to test it under wind, cold and corrosive atmospheric conditions.

Zeller installed the iris arm device at the rest area in November 1971 when it was not yet open to the public. In March 1972, Zeller was notified by a Manville sales representative that supports that attach the luminaires to the ring (see Figure 1) had fallen off due to severe weather conditions. Zeller returned to Wyoming that month to fix the supports. After Zeller lowered the assembly, he concluded that the iris arms worked properly even after the Wyoming winter and despite the luminaire-to-ring support failure. On his way back to Ohio, Zeller stopped in Cheyenne and sought state approval for purchase of the iris arm device as fulfilling the original contract. In April 1972, Wyoming officials inspected the device and authorized payment. The rest area was opened to the public in June 1972.

Meanwhile, on February 7, 1972, Zeller had begun pursuing an iris arm design for two-foot diameter poles. Manville subsequently delayed shipments of lowering devices so that the new iris arms could be included. On March 10, 1972, Manville approved the iris arms for commercial use. Manville began notifying its sales staff of the decision to use the iris arms on March 15, 1972, and the iris arms first appeared in Manville's owners' manuals one week later. On April 20, 1972, Manville installed an iris

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arm in Nebraska. A patent application was filed on February 5, 1973, that later issued as the '333 patent.

In 1984, Anthony DiSimone, Paramount's corporate secretary, obtained a copy of a drawing of Manville's iris arm device that had been submitted to the Florida Department of Transportation. DiSimone sent the drawing to Robert Butterworth, Paramount's president. Butterworth gave the drawing to Ralph Bloom, a Paramount designer, for use in designing a self-centering raise/lower device that was later made and sold by Paramount.

Manville filed suit against Paramount on July 14, 1986, alleging infringement of the '333 patent. DiSimone and Butterworth were added as party-defendants on March 11, 1987. After a bench trial, the district court found direct infringement by Paramount, pursuant to 35 U.S.C. Sec. 271(a) (1988), and direct and induced infringement by DiSimone and Butterworth, pursuant to 35 U.S.C. Sec. 271(a) & (b). The court also concluded that the '333 patent was not invalid under 35 U.S.C. Sec. 102(b) due to an on sale or public use bar because Manville's Wyoming activities constituted experimental use. The court further concluded that the patent was not unenforceable due to inequitable conduct because intent to mislead or deceive the U.S. Patent and Trademark Office (PTO) was not proven. Accordingly, the court entered judgment against Appellants and awarded damages to Manville.

Appellants filed a Motion to Alter or Amend the Judgment, pursuant to Rules 52 and 59(e) of the Federal Rules of Civil Procedure. Appellants claimed that, because of 28 U.S.C. Sec. 1498(a) (1982), the district court lacked jurisdiction to award damages with respect to most of the infringing sales because those devices, it alleged, were made for or sold to the United States. The district court denied the motion.

Manville also filed a Motion to Amend the Judgment, pointing out that the district court had not made any findings on Manville's claim of reduced profits, as opposed to lost profits. The district court denied the motion in an October 17, 1989, order, stating that the "court was not convinced that the requested finding of fact was proved by the preponderance of the evidence." [App. at 2230.]

Appellants timely appealed and Manville timely filed a cross-appeal. The district court had jurisdiction under 28 U.S.C. Sec. 1338 (1982) and this court has jurisdiction pursuant to 28 U.S.C. Sec. 1295(a)(1) (1988).

ANALYSIS

I. On Sale and Public Use Statutory Bars

As the parties asserting that on sale and public use bars 1 apply to Manville's invention, Appellants must prove the existence of a bar by clear and convincing evidence. See Envirotech Corp. v. Westech Eng'g Inc., 904 F.2d 1571, 1574, 15 USPQ2d 1230, 1232 (Fed.Cir.1990); Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1266, 229 USPQ 805, 808 (Fed.Cir.1986), cert. denied, 479 U.S. 1030, 107 S.Ct. 875, 93 L.Ed.2d 829 (1987). Whether or not an invention was on sale or in public use within the meaning of section 102(b) is a question of law that this court reviews de novo; however, factual findings underlying the trial court's conclusion are subject to the clearly erroneous standard of review. See Envirotech, 904 F.2d at 1574, 15 USPQ2d at 1232; Moleculon, 793 F.2d at 1266, 229 USPQ at 808.

In order to determine whether an invention was on sale or in public use, we must consider how the totality of the circumstances comports with the policies underlying the on sale and public use bars. This approach is necessary because "the policies or purposes underlying the on sale bar, in effect, define it." Envirotech, 904 F.2d at 1574, 15 USPQ2d at 1232 (quoting RCA Corp v. Data General Corp., 887 F.2d 1056, 1062, 12 USPQ2d 1449, 1454

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(Fed.Cir.1989)). In King Instrument Corp. v. Otari Corp., 767 F.2d 853, 226 USPQ 402 (Fed.Cir.1985), cert. denied, 475 U.S. 1016, 106 S.Ct. 1197, 89 L.Ed.2d 312 (1986), we enumerated several of these underlying policies, including "discouraging the removal of inventions from the public domain which the public justifiably comes to believe are freely available," "prohibiting an extension of the period for...

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