Ansul Company v. Uniroyal, Inc.

Citation448 F.2d 872
Decision Date29 April 1971
Docket NumberNo. 686,687,34883.,Dockets 34876,686
PartiesThe ANSUL COMPANY et al., Plaintiffs-Appellants, v. UNIROYAL, INC., Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

COPYRIGHT MATERIAL OMITTED

John A. Diaz, New York City (Morgan, Finnegan, Durham & Pine, Warren H. Robert and David H. Pfeffer, New York City, on the brief), for plaintiffs-appellants.

Walter Barthold, New York City (Arthur, Dry, Kalish, Taylor & Wood, Bert J. Lewen, Martin J. Cohen and Steven H. Bazerman, New York City, on the brief), for defendant-appellee.

Before LUMBARD, Chief Judge, and FRIENDLY and KAUFMAN, Circuit Judges.

LUMBARD, Chief Judge:

In this patent case, plaintiffs and defendant both appeal from a judgment entered on December 3, 1969 in the Southern District of New York after two nonjury trials before Judge Mansfield. Plaintiff Ansul sued for a declaratory judgment of invalidity, noninfringement, and unenforceability of defendant Uniroyal's United States Patent No. 2,614,916 (the "916 patent"). Uniroyal counterclaimed for infringement of the same patent; and Ansul denied such infringement and interposed several affirmative defenses including Uniroyal's misuse of the patent through antitrust violations. The other plaintiffs were originally defendants in other actions for infringement of the same patent brought by Uniroyal in other districts. They intervened in the present action at the request of the trial court which enjoined Uniroyal's prosecution of the other suits against them. Two of those intervening plaintiffs — Daly-Herring and Louisville — joined Ansul in seeking treble damages from Uniroyal for the antitrust violations.

Judge Mansfield's decision on the patent questions, made after the first trial, is reported at 301 F.Supp. 273 (S.D.N.Y. 1969). Of the two claims of the patent in issue, he held claim 1 invalid for obviousness and claim 7 valid and infringed by plaintiffs. After the second trial, Judge Mansfield held, 306 F.Supp. 541 (S.D.N.Y.1969), that defendant Uniroyal had misused the patent through antitrust violations and was therefore barred from enforcing it. However, he dismissed, on varying grounds, the treble-damage claims of all three plaintiffs. We affirm the district court's judgment with the single exception that we allow plaintiff Louisville its treble-damage claim, on the basis of Zenith Radio Corp. v. Hazeltine Research, Inc. 401 U.S. 321, 334-343, 91 S.Ct. 795, 804-808, 28 L.Ed.2d 77 (decided Feb. 24, 1971).

The product involved in this case is an agricultural chemical commonly called "maleic hydrazide" (MH). It was discovered in 1894, but was not considered useful until 1947 when two of Uniroyal's employees found that, mixed with a wetting agent, it could inhibit the growth of certain plants without otherwise harming them. Uniroyal applied for a patent on the product in 1949; and in 1952, the Patent Office issued it patent 916, which expired in October 1969. The two claims of that patent at issue here are claim 1, the composition or product claim which describes the chemical composition itself, and claim 7, the method or use claim which describes how the product can be used to treat certain growing plants so as to alter their growth characteristics.

After Uniroyal's initial discovery of this use for maleic hydrazide, two chemists not connected with Uniroyal found that application of the composition to potatoes and onions prevented sprouting and that its application to tobacco plants prevented the formation of "suckers" — lateral branches which prevent the tobacco leaves from reaching their potential size and quality. The latter is by far the major commercial use of maleic hydrazide. Since the early 1950's Uniroyal has manufactured and sold the product under various names, principally "MH-30," a registered trademark. Until Ansul began making and selling the product in 1968 under the principal designation "Sucker Stuff," Uniroyal had a monopoly under patent 916.

Uniroyal's alleged misuse of its patent was established through evidence of its resale price maintenance program and its territorial restrictions on the resale of the product. Beginning in 1960, Uniroyal sold MH-30 to distributors, who in turn sold it to dealers, who sold it to farmers. Until 1969, Uniroyal published and distributed price lists for MH-30, on which it set forth suggested resale prices for both distributors and dealers. The trial court found that from 1960 through 1963, the defendant on a substantial number of occasions tried to and did enforce its suggested prices through various tactics including actual or threatened refusals to deal and certain policing measures such as tracing the MH-30 through identification on its containers. Although Uniroyal contended that no such enforcement measures were taken after 1963 and that all the effects of such measures had been dissipated by 1968, when Ansul began to infringe patent 916 by marketing its product, the trial court found to the contrary — that the effects of the price-fixing restraints remained until the patent expired in October 1969. The district court found Uniroyal's conduct to have been a per se violation of the Sherman Act and thus to constitute patent misuse barring its recovery for the plaintiffs' infringement.

Moreover, until 1969, Uniroyal assigned a certain geographical sales area to each of its distributors. The district court found that these assignments were understood as restrictions, that Uniroyal enforced them in the same way as it did its suggested resale prices, that these actions also constituted a per se violation of the antitrust laws, and that the effects of Uniroyal's restrictive conduct in this regard likewise endured until the patent expired and thus constituted patent misuse barring its recovery.

With respect to the treble-damage claims, Louisville and Daly-Herring — distributors with whom Uniroyal ceased dealing in 1963 and 1965 respectively — contended that they were terminated because they refused to abide by Uniroyal's unlawful restrictions and that they were thus damaged by Uniroyal's antitrust violations. Judge Mansfield rejected Louisville's claim on the basis of the statute of limitations, and Daly-Herring's claim on the basis that it had not met its burden of proving the unlawful reason for its termination. Ansul claimed that it was entitled to treble the expenses incurred by it in defending Uniroyal's suits against it and the various distributors indemnified by it, since those suits were allegedly in furtherance of the unlawful antitrust conspiracy. Judge Mansfield rejected this contention on the ground that Uniroyal instituted those suits in good faith.

With the one exception noted above, we affirm the district court's disposition, substantially for the reasons stated in Judge Mansfield's excellent opinions.

I. THE VALIDITY OF THE DISPUTED CLAIMS OF THE PATENT.
A. Claim 1.

Under 35 U.S.C. §§ 101 and 103, a claimed invention, in order to be patentable, must be new, useful, and not obvious to those having ordinary skill in the art involved. Judge Mansfield found that claim 1 of patent 916, the composition claim, did not fulfill these requirements.

Claim 1 describes the following composition:

"1. An agricultural chemical composition comprising material of the group consisting of maleic hydrazide and its salts, said composition containing a wetting agent."

Maleic hydrazide was described in the prior art as early as 1894. All that Uniroyal's chemists did in the late 1940's was to add a wetting agent; and according to the district court, wetting agents and their function were known long before that time. The court stated that maleic hydrazide and the wetting agent "were old elements well known to the prior art" and that "in combination, maleic hydrazide and a wetting agent each is limited to performing the same function which it always has performed independent of the other"; the wetting agent "does not, however, make the maleic hydrazide any more active. Thus it simply performs the same function that it would perform if used with any other chemical in solution." 301 F. Supp. at 282.

The trial court recognized that for a combination of known elements to be a patentable composition, "the conjunction or concert of known elements must contribute something; only when the whole in some way exceeds the sum of its parts is the accumulation of old devices patentable." Great A & P Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 130, 95 L. Ed. 162 (1950). See also Continental Can Co. v. Old Dominion Box Co., 393 F.2d 321, 326 (2d Cir. 1968). Here, Judge Mansfield felt, the mixture of maleic hydrazide with a wetting agent, claimed in claim 1, was merely an aggregation of two old substances each performing its separate function, and hence was not patentable as a new product.

Uniroyal's main challenge to the trial court's holding is that although maleic hydrazide was discovered in 1894, no use was suggested until its chemists mixed it with a wetting agent and found a use. This original thought and use, it is claimed, were not obvious under the prior art, as is shown by the fact that no one had found such treatment and use for half a century. Uniroyal seeks to distinguish A & P and Continental Can on the ground that in those cases the new combinations were indeed "accumulations of old devices" whose individual functions were well-known, whereas here, while the function of a wetting agent was known, the function of maleic hydrazide was not known until Uniroyal discovered it. Uniroyal argues that since this function of maleic hydrazide was not previously known, the function of the combination could not have been obvious.

Uniroyal's argument, however, goes to the function and use of the new composition, which is covered in claim 7, and not to the composition itself, which is the subject of claim 1. The...

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