Alco Standard Corp. v. Tennessee Valley Authority

• Decision Date: 30 December 1986
• Docket Number: No. 85-2420,85-2420
• Citation: 808 F.2d 1490,1 USPQ 2d 1337
• Parties: ALCO STANDARD CORPORATION, an Ohio corporation, Appellee, v. TENNESSEE VALLEY AUTHORITY, a U.S. corporation, and Westinghouse Electric Corporation, a Pennsylvania corporation, Appellants. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1490

808 F.2d 1490

1 U.S.P.Q.2d 1337

ALCO STANDARD CORPORATION, an Ohio corporation, Appellee, v. TENNESSEE VALLEY AUTHORITY, a U.S. corporation, and Westinghouse Electric Corporation, a Pennsylvania corporation, Appellants.

Appeal No. 85-2420.

United States Court of Appeals Federal Circuit.

Dec. 30, 1986.

John F. Lynch, Arnold, White & Durkee, Houston, Texas, argued, for appellants. With him on the brief was Alan H. Gordon.

Gomer W. Walters, Haight, Hofeldt, Davis & Jambor, Chicago, Ill., argued, for appellee. With him on the brief were Rolf O. Stadheim and John W. Hofeldt.

Before FRIEDMAN, RICH and NIES, Circuit Judges.

FRIEDMAN, Circuit Judge.

This is an appeal from the judgment of the United States District Court for the Western District of Tennessee, 597 F.Supp. 133, in a patent infringement suit holding U.S. Patent No. 3,960,006 ('006 patent) valid and infringed. The case was tried to the court, which decided only the liability and not the damages issue. We affirm.

The plaintiff below and the appellee here is Alco Standard Corporation (Alco), which acted through its Commercial Machine Works division (Commercial). The nominal defendant below and an appellant here is the Tennessee Valley Authority (TVA). The defendant real party in interest is the third party defendant, and co-appellant here, Westinghouse Electric Corporation (Westinghouse), which performed services involving the patented invention for TVA and agreed to indemnify TVA for any damages arising from those services.

Prior to trial, the court dismissed Alco's patent infringement claims against Westinghouse. Alco Standard Corp. v. Tennessee Valley Authority, 448 F.Supp. 1175 (W.D.Tenn.1978). Westinghouse remained in the case, as the indemnitor of TVA, and has conducted the defense of this suit.

I Background

A. The '006 patent covers a method of and apparatus for inspecting turbine rotors in electrical generators by the use of ultrasonic waves to detect discontinuities within the rotors. Discontinuities are cracks, flaws, or impurities and may result when the rotors are made or may develop later with use. Turbine rotors are large cylindrical metal forgings which can be as long as 30 feet and weigh as much as 100 tons. In operation, they may rotate at speeds as high as 3600 revolutions per minute and reach temperatures of 1000? F. The high speeds and temperatures subject the rotor to stress, so that discontinuities in the turbine forging may cause it to fly apart.

As early as 1946, turbine rotor forgings were being inspected with ultrasonic tests. Such tests were performed from the outside of the forgings of newly manufactured rotors. In 1957, Westinghouse undertook a development program to improve its ultrasonic inspections. In 1959, Westinghouse discovered that General Electric Corporation was producing a new type of ultrasonic inspection, a boresonic testing device, that could be inserted into the bore of the rotor as distinguished from prior inspection devices that scanned only the outside of the rotor. Upon learning this, Westinghouse abandoned its development program, purchased the General Electric device and used it until 1972. The General Electric device, although providing for a bore inspection, could be used to inspect only newly manufactured rotors.

In the 1950's it became clear that a system for inspecting rotors that were not newly manufactured was needed because such rotors otherwise had to be removed from the turbine and shipped to the inspection site, causing costly delays. Apparently, General Electric solved this problem, and Westinghouse attempted to buy the new General Electric device in 1972. General Electric, however, refused to sell the new device, and therefore Westinghouse again began its own independent development program, this time to produce an onsite inspection device. Westinghouse's development of an onsite inspection device did not go as planned, and soon fell behind schedule.

Also during 1972, Mr. Smith, an employee of Commercial, conceived the idea of producing a new type of boresonic test apparatus. In December 1972, Westinghouse officials, including a Mr. Ronca, visited Commercial to discuss Commercial's idea for such an apparatus. At that meeting, Mr. Ronca stated that he thought that Commercial's concept was not feasible because Westinghouse's own research and development in that area had been unsuccessful. Despite Westinghouse's skepticism, Commercial contracted to have the boresonic unit constructed.

In January 1974, Commercial demonstrated its boresonic device to Westinghouse. Among those Westinghouse representatives in attendance was Mr. Ronca, who, after witnessing the demonstration, wrote that the "system represent[ed] a significant advancement in the field of boresonics...." Based on the Commercial demonstration, Westinghouse discontinued its research on boresonic devices and pursued the possibility of purchasing Commercial's device.

In mid-1974, a rotor in TVA's Gallatin steam plant exploded, causing substantial property damage and, luckily, no bodily injuries. Commercial inspected the remaining rotor at the Gallatin plant and discovered that it had a discontinuity similar to the one that caused the first rotor to explode. Subsequent remedial measures were taken to remove the discontinuity in the remaining rotor.

By October 1974, Westinghouse had abandoned its plan to purchase Commercial's boresonic units and had begun developing its own boresonic unit. It developed such a unit. Alco alleged that Westinghouse infringed the '006 patent by using the Westinghouse device in inspecting TVA rotors.

B. The invention the '006 patent covers was made by Robert Smith when he was an employee of Commercial. The patent issued on June 1, 1976, and was assigned to Alco.

In the present suit, Commercial alleged infringement of six claims of the '006 patent. Three of these are apparatus claims and the other three are method claims.

Claim one, the broadest apparatus claim, is directed to a device for detecting discontinuities in a turbine rotor. The device has a probe that is inserted into the bore of a turbine rotor. Attached to this probe is an indexing means that determines the position of the probe within the rotor. The probe, itself, contains at least two ultrasonic sources (called "transducers") that simultaneously can send ultrasonic signals into the rotor. Any signals sent into the rotor that are reflected back to the probe are picked up by an ultrasonic pickup and recorded in such a manner that the "existence, position, nature, size and shape of the flaws in the rotor" can be determined.

The method claims generally describe a method for determining flaws within turbine rotors that utilizes the device described in the apparatus claims.

The claims are discussed in greater detail later in this opinion.

C. In a lengthy opinion, the district court held that the '006 patent was valid and that Westinghouse had infringed the patent in using its own boresonic device to inspect TVA rotors. Specifically, the district court ruled that the Commercial invention was novel under 35 U.S.C. Sec. 102 and non-obvious under 35 U.S.C. Sec. 103. The court also thoroughly examined whether Commercial had complied with the enabling, description, and definiteness requirements of 35 U.S.C. Sec. 112 and found that it had. Regarding infringement, the district court found that the "Westinghouse device contain[ed] every element found in claims 1, 2, 3, 7, 8 and 10 of the 006 patent."

II Jurisdiction

Under 28 U.S.C. Sec. 1295(a)(1) (1982), we have jurisdiction over this appeal from the district court if its jurisdiction "was based, in whole or in part, on section 1338 of this title...." Section 1338(a) gives the The Tennessee Valley Authority Act of 1933 contains a specific provision dealing with patents. Section 831r of title 16 (1982) is captioned "Patents; access to Patent and Trademark Office and right to copy patents; compensation to patentees." It gives the Tennessee Valley Authority (TVA) access to the Patent and Trademark Office

district courts "jurisdiction of any civil action arising under any Act of Congress relating to patents...." The inquiry thus is whether the jurisdiction the district court exercised in this case was based upon an Act of Congress "relating to patents."

for the purpose of studying, ascertaining, and copying all methods, formulae, and scientific information (not including access to pending applications for patents) necessary to enable [TVA] to use and employ the most efficacious and economical process for ... any method of improving and cheapening the production of hydroelectric power.

It then provides that

any owner of a patent whose patent rights may have been thus in any way copied, used, infringed, or employed by the exercise of this authority by [TVA] shall have as the exclusive remedy a cause of action against [TVA] to be instituted and prosecuted on the equity side of the appropriate district court of the United States, for the recovery of reasonable compensation for such infringement.

The statute, in the second quoted passage, thus recognizes that the use by TVA of a patented invention constitutes infringement of the patent. Although the statute specifies that the patentee's "exclusive remedy" if its patent has been "thus ... infringed ..." is a civil suit against TVA on the equity side of the district court to recover "reasonable compensation for such infringement," that fact does not make the resulting suit any the less one for infringement of a patent. Thus, Sec. 831r specifies the conditions that govern the patentee's suit for infringement, while Sec. 1338(a) gives the district courts jurisdiction to hear that suit.

It would be anomalous if appeals in patent infringement suits against TVA were heard by the regional circuit, when all other appeals in patent infringement suits come to this court. (We have exclusive jurisdiction over appeals from the district courts...