Armco, Inc. v. Republic Steel Corp.

• Decision Date: 19 May 1983
• Docket Number: No. 82-3070,82-3070
• Citation: 707 F.2d 886
• Parties: ARMCO, INC., Plaintiff-Appellee, v. REPUBLIC STEEL CORPORATION, Whitaker & Merrell Co., Watson Podiak & Associates, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 886

707 F.2d 886

219 U.S.P.Q. 397

ARMCO, INC., Plaintiff-Appellee, v. REPUBLIC STEEL CORPORATION, Whitaker & Merrell Co., Watson Podiak & Associates, Inc., Defendants-Appellants.

No. 82-3070.

United States Court of Appeals Sixth Circuit.

Argued March 25, 1983.

Decided May 19, 1983.

R. Joseph Parker, Cincinnati, Ohio, Walter J. Blenko, Jr. (argued), Buell, Blenko, Ziesenheim & Beck, Pittsburgh, Pa., for defendants-appellants.

Albert E. Strasser (argued), Cincinnati, Ohio, for plaintiff-appellee.

Before KENNEDY and JONES, Circuit Judges, and BERTELSMAN, District Judge. ^*

NATHANIEL R. JONES, Circuit Judge.

Defendant-appellant, Republic Steel Corporation, ¹ appeals from an order of the district court entering judgment in favor of the plaintiff-appellee, Armco, Inc., in this action for patent infringement. Specifically, the district court found that an Armco-owned patent was valid, that that patent had been infringed by Republic and that $140 per ton of structural steel is a reasonable royalty to be paid for the use of the patented design. The appellant claims that the district court erred in making each of these findings. We disagree.

I.

Republic and Armco are competitive producers of steel and steel products. These products are generally produced for use by the construction industry in the United States. Both manufacture and sell sectional plate structures fabricated from curved corrugated steel plates which are bolted together to form flexible, tubular and arch-shaped structures. These structures are generally used as underpasses for roads and railroads, tunnels, waterways, and bridge replacements. In this case, Armco claims that Republic violated its patent number 3,508,406 (known as the "Fisher patent") which is a patent for an oversized, long-span corrugated steel arch structure.

It is undisputed that these types of steel arches and structures have been used in the steel and construction industry for many years. Until the late 1960s, the maximum width of these structures did not exceed 25 to 30 feet. Armco claims that the problem addressed by the Fisher patent in suit arose because of the ever-increasing demand for structures with larger cross-sectional dimensions. The design set out in the Fisher patent allows for the use of flexible steel arch structures which span up to 50 feet. A key feature of the Fisher invention is the use of thrust beams or buttress means which are affixed to the exterior surface of the corrugated steel plates at the juncture between the flexible steel wall and the flexible top arch of the structure. These beams extend longitudinally along the surface of the structure and are primarily load-spreading devices that enable the builder to properly backfill and compact the supporting soil at certain critical locations against the surface of the steel structure. These beams also provide lateral support for the structure, stiffen the structure along its length and reinforce the steel plates in the areas most susceptible to buckling. These thrust beams employed in the Fisher patent are concave.

The operation of the special thrust beams and other elements in the design of the patent enabled the structures to be built on a much greater scale than had previously been known. Armco introduced its new design under the trademark "Super-Span". To date, Armco has marketed over 1,400 such structures throughout the world. In 1972, Armco adopted a licensing policy pursuant to which it would license any interested party, including competitors, to erect and install the patented structures, subject to the payment of a royalty of $140 per ton, based upon the number of tons of steel used in each licensed structure. The same royalty rate is used today. A notice was published in the official gazette of the United States Patent Office of June 27, 1972, advising the public that the Fisher patent was available for licensing.

Some time after the introduction of Armco's Super-Span, Republic marketed a competitive structure, called the "Maxi-Span". Republic's Maxi-Span is also a long span arch structure, capable of installation up to 50 feet in width. Republic's structure has buttress means which it calls "compaction wings." These are made from curved steel plates and are attached to the steel structure at approximately the same position that the thrust beams patented by Armco are attached to the Super-Span. When attached, the compaction wings form a triangle jutting from the side of the steel structure with horizontal and vertical concave surfaces. These wings serve approximately the same purpose as do Armco's thrust beams, in approximately the same manner.

There is no doubt that Republic was aware of the Fisher patent within months after it was initially issued, i.e., years before the Maxi-Span was introduced. In 1973, Armco advised Republic that it considered Republic's Maxi-Span design to be an infringement of the Fisher patent, and that Armco would be willing to license Republic under that patent. Between 1974 and 1977, Armco and Republic carried on periodic discussions concerning the granting of a license to Republic for the manufacture of its Maxi-Span structures, all the while Republic continuing to market the Maxi-Span. The parties were unable to agree upon mutually satisfactory terms, and this suit for infringement was instituted in 1978. Republic responded, claiming that the Fisher patent was actually invalid; that even if valid, it had not been infringed by Republic; that even if valid and infringed, Armco was barred by the doctrine of laches and estoppel from bringing suit against Republic; and that even if valid, infringed, and timely, Armco's royalty rate of $140 per ton of steel was unreasonable.

The district court considered all these issues in turn. In a 20-page opinion setting out extensive findings of fact and conclusions of law, the district court determined that the patent was a valid innovation, that Republic's Maxi-Span structure did infringe upon that patent, and that the $140 royalty rate was a reasonable one. This appeal followed.

II.

As Judge Peck noted in a recent decision for this Court, "In patent litigation, separating matters of fact from matters of law for purposes of appellate review is about as easy as unscrambling eggs." General Motors Corp. v. Toyota Motor Co., Ltd., 667 F.2d 504, 505 (6th Cir.1981). There is no doubt that the ultimate question of patent validity is one of law. See e.g., Graham v. John Deere Company, 383 U.S. 1, 17-18, 86 S.Ct. 684, 693-94, 15 L.Ed.2d 545 (1966). In addition, the various determinations regarding the elements of validity are legal conclusions. See General Motors Corp. v. Toyota Motor Co., Ltd., supra. However, this Court has repeatedly emphasized that the underlying factual determinations which lead to those ultimate conclusions are to be subject to the clearly erroneous standard of review under Federal Rule of Civil Procedure 52(a). Only where the facts as found or the law as applied do not then support the legal conclusion reached by the trial court may this Court overturn the district court determinations based on a finding of mere error. American Seating Co. v. National Seating Co., 586 F.2d 611, 619 (6th Cir.1978), cert. denied, 441 U.S. 907, 99 S.Ct. 1999, 60 L.Ed.2d 377 (1979).

The standard of review with regard to the determination of infringement and with regard to the reasonableness of the royalty charges is not nearly so complicated. Both are factual determinations, subject to the clearly erroneous standard of review.

Patent Validity

There are three legal requisites to a valid patent: utility, novelty, and nonobviousness. General Motors Corp. v. Toyota Motor Co., Ltd., supra. The utility of a 50-foot span composite arch structure is uncontested in the present case. Republic alleges, however, that the patent is neither novel nor nonobvious, and is therefore invalid under the relevant provisions of the patent law. 35 U.S.C. Secs. 102, 103. The burden is on Republic to establish these assertions by clear and convincing evidence, in the face of a presumption to the contrary which arises from the issuance of the patent. General Motors Corp. v. Toyota Motor Co., Ltd., supra. See also Blonder-Tongue Laboratories v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971).

Under 35 U.S.C. Sec. 102, novelty does not exist if the patented device has been anticipated by a prior device. That is, novelty is lacking if all the elements of the patent, or their equivalents are found in a single prior art structure where they do substantially the same work in the same way. See Tee-Pak, Inc. v. St. Regis Paper Co., 491 F.2d 1193 (6th Cir.1974). The district court considered each of the patents representing the prior art which Republic claims "anticipated" the design of the Fisher patent within the meaning of Sec. 102. The district court concluded:

The scope and content of the prior art does not encompass load-spreading thrust beams. We cannot find that all of the elements of the Fisher patent 406 or their equivalent are found in a single prior art patent or prior structure wherein the elements do substantially the same work in substantially the same way. There is a distinct and practical difference between the patent invention of Christopher Fisher, which made it possible for the first time to build large-span, flexible steel structures using heavy equipment in the critical backfilling process, and anything disclosed by the prior art.

Upon review of the Radcliffe, Trumbull, Hereford and Kaiser patents, ² we are convinced that the district court did not err in finding that the design contemplated by the Fisher patent was a novel and useful addition to the state of the art. There appears to be nothing in those patents which would have taught one how to structure or install the kind of wide-span arch structure which, because of the Fisher patent's innovations, is in use today.

Under 35 U.S.C....