ADM Corp. v. Speedmaster Packaging Corp.

• Decision Date: 07 November 1974
• Docket Number: Civ. A. No. 551-68.
• Citation: 384 F. Supp. 1325
• Parties: ADM CORPORATION, Plaintiff, v. SPEEDMASTER PACKAGING CORPORATION et al., Defendants, v. Armando D. MOTA et al., Third-Party Defendants.
• Court: U.S. District Court — District of New Jersey

384 F. Supp. 1325

ADM CORPORATION, Plaintiff, v. SPEEDMASTER PACKAGING CORPORATION et al., Defendants, v. Armando D. MOTA et al., Third-Party Defendants.

Civ. A. No. 551-68.

United States District Court, D. New Jersey.

October 18, 1974.

As Amended November 7, 1974.

COPYRIGHT MATERIAL OMITTED

Popper, Bain, Bobis, Gilfillan & Rhodes, Newark, N. J., for plaintiff and third-party defendants, by John N. Bain, and John G. Gilfillan, III, Newark, N. J.

Shanley & Fisher, Newark, N. J., for defendants Speedmaster and Dennison, by Frank L. Bate, Newark, N. J.

Pennie, Edmonds, Morton, Taylor & Adams, New York City, of counsel for defendant Speedmaster, by James G. Foley and Philip T. Shannon, New York City.

Thomas F. Curry, Framingham, Mass., for Dennison Mfg. Co., defendant.

OPINION

STERN, District Judge.

This is a declaratory judgment action under 28 U.S.C. §§ 2201 and 2202 brought by the Plaintiff ADM Corporation,¹ a New Jersey corporation having its principal place of business in Clifton, New Jersey (hereinafter ADM), against Defendant Speedmaster Packaging Corporation, a New York corporation having its principal place of business in Fairfield, Connecticut (hereinafter Speedmaster), alleging invalidity and non-infringement of the claims of U.S. Patent No. 3,339,826 for a split back shipping envelope² (hereinafter split back envelope). Defendant Speedmaster counterclaimed against ADM for infringement of the patent and brought a third-party complaint against the Third-Party Defendants Armando D. Mota (hereinafter Mota) and Frederick C. Osborne (hereinafter Osborne), both residents of New Jersey, and officers and directors of ADM, charging them with infringement. An actual controversy exists between the parties and jurisdiction and venue exist under 28 U.S. C. § 1338(a) and the patent laws of the United States, 35 U.S.C. §§ 271, 281 and 285.

The Plaintiff ADM and the Third-Party Defendants Mota and Osborne have also charged the Defendant Speedmaster with malicious abuse of process for both charging them with infringement of the patent in suit and for asserting it against them in the market-place with knowledge that the patent was invalid, and seek counsel fees herein as damages therefor. Plaintiff and Third-Party Defendants have also charged Co-defendant Dennison Manufacturing Company, a Nevada corporation having its principal place of business in Framingham, Massachusetts (hereinafter Dennison), with malicious abuse of process for having charged them with infringement of the patent in suit previously in this action, and for asserting it against them in the market-place knowing that the patent was invalid, seeking counsel fees as damages therefor, jointly and severally with Defendant Speedmaster.

Plaintiff and Third-Party Defendants have also charged the Co-defendant Dennison with breach of a certain Stipulation and Order entered herein on December 20, 1968 ordering Co-defendant Dennison, inter alia, to discontinue advertising that it had any exclusive rights under the patent in suit as a condition precedent to Plaintiff's voluntary dismissal of its complaint against Dennison for declaratory judgment of patent invalidity and non-infringement.³ However, during trial, Plaintiff and Third-Party Defendants stipulated and agreed with Co-defendant Dennison, with the Court's consent, to dismiss their complaint for breach of the Stipulation and Order with prejudice and without costs for other liability to them.

The Co-defendant Dennison voluntarily rejoined this action on September 14, 1970, after having entered into an exclusive patent license with Speedmaster on August 7, 1969, charging Plaintiff with infringement of the patent in suit; nevertheless, in November 1971, Dennison substituted its exclusive license for a non-exclusive license and on May 16, 1972, Dennison, by its own motion, voluntarily dismissed its counterclaim against Plaintiff ADM and its Third-Party complaint against Mota and Osborne with prejudice and without costs.

The Plaintiff ADM has also charged both of the Defendants, Speedmaster and Dennison, with violation of the anti-trust laws of the United States. However, trial on this complaint has been reserved for a later date. Additionally, the Co-defendant Dennison has charged Plaintiff and Third-Party Defendants with unfair competition based upon the Plaintiff and Third-Party Defendants having charged the Co-defendant Dennison with malicious abuse of process and anti-trust violations as hereinabove set forth. This matter has also been reserved for trial at a later date.

The controversy which was brought to trial is solely that of patent validity and infringement and the related counts of malicious abuse of process. ADM asserts three distinct theories which assail the validity of the patent in suit. They are: (1) the claims of the patent are invalid pursuant to 35 U.S.C. § 102 by reason of prior invention of Richard Gurewitz; (2) the claims of the patent are invalid pursuant to 35 U.S.C. § 102 by reason of offers of sale of envelopes identical to the patent to Dennison more than one year before the filing of the application for the patent; and (3) the claims of the patent are invalid pursuant to 35 U.S.C. § 103 because the subject matter was obvious to one skilled in the art.

The first line of attack on the Beskind patent is three-pronged, alleging that the patent in suit is invalid because of anticipation under 35 U.S.C. § 102(a), (b) and (g).

These claims are predicated upon the testimony of Richard Gurewitz, a former employee of Central Bag and Supply Co. of Los Angeles, California (hereinafter Central Bag), and the deposition of Manley R. Spina, a present employee of that firm, to the effect that they manufactured and sold C-1 and C-2 type bags more than one year before Beskind first applied for his patent on August 26, 1966, and that they manufactured and sold these bags in late 1964 and early 1965, before Beskind claims to have invented his bag (C-6).

It had been stipulated at trial between the parties that the C-1 and C-2 type envelopes are without patentable distinction from the C-6 envelope (a model of the patent in suit) and that if the testimony of Gurewitz were in fact believed, the Beskind invention, C-6, would be anticipated (Tr. 1293-1294; 1394; 1554-1555).

Title 35 U.S.C. Section 102 provides:

A person shall be entitled to a patent unless —

(a) the invention was known or used by others in this country * * *, before the invention thereof by the applicant for patent . . . or

. . . . . .

(g) before the applicant's invention thereof the invention was made in this country by another who had not abandoned, suppressed, or concealed it . . .

ADM claims that inasmuch as Central Bag developed and sold its C-1 and C-2 bags in 1964 and 1965, and that "shortly before March 22, 1965," is the earliest date that Beskind claims to have first invented his C-6 bag, and that inasmuch as there is no patentable distinction between any of these bags, the Beskind patent was invalid for anticipation under subsections (a) and (g) of 35 U.S.C. § 102.

35 U.S.C. § 102(b) prohibits the issuance of a patent when "the invention was * * * in public use or on sale in this country, more than one year prior to the date of application for the patent."

The Beskind patent application was dated August 26, 1966. ADM claims that inasmuch as Central Bag's C-1 and C-2 envelopes were in both public use and sale by September of 1964, in the case of C-2, and June of 1965 in the case of C-1, that these bags anticipated the patent application by more than one year and the patent which issued is therefore invalid under 102(b).

Thus, if Gurewitz and Spina are believed there is anticipation under 102(a), 102(b) and 102(g) (Tr. 1552-1554).

There is, of course, a presumption of validity in favor of a patent, lawful on its face, issued by the Patent Office. 35 U.S.C. § 282. In the face of this statutory presumption, courts have placed a heavy burden on those who seek to demonstrate invalidity. Some courts have stated that ". . . invalidity must be demonstrated by clear and convincing proof citing cases," Trio Process Corporation v. L. Goldstein's Sons, Inc., 461 F.2d 66, 70 (3rd Cir. 1972), while at other times the burden has to be stated in terms beyond mere "clear and convincing" evidence, and has been held to require the proof to be "beyond a reasonable doubt": "the defense of prior use is one that an alleged infringer, although free to raise, has the burden of persuasion. This burden is a heavy one, having been described by this Court as necessitating evidence that `must be so strong as to remove all reasonable doubt thereof.' citing cases." Jones Knitting Corporation v. Morgan, 361 F.2d 451, 455 (3rd Cir. 1966).⁴

ADM claims to have met its heavy burden through the testimony of Gurewitz, as corroborated by the Spina deposition as to the prior development, use and sale of the C-1 and C-2 type bags by Central Bag. ADM points to the fact that there was no contradictory testimony to theirs offered at the trial, and that these witnesses, that is, Gurewitz and Spina, who have never met or known anyone in interest in this lawsuit, have no motive to lie and, since uncontradicted, must be believed.

The Court disagrees. The mere fact that one testifies to a prior "public use" of a patented item, and that no witness is thereafter called to contradict his testimony, does not in and of itself require the Court to believe him. Jones Knitting Corporation v. Morgan, supra. On the contrary, no matter what burden of proof the Court applies, whether "clear and convincing" or "beyond a reasonable doubt," the cases are legion in requiring courts to closely scrutinize oral testimony of such "prior use" when the oral testimony is uncorroborated by documents, or by such objective circumstances as would corroborate the claim:

. . . The fact that plaintiffs seek to carry their burden of prior public use solely on the basis of oral

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