Atlantic Thermoplastics Co., Inc. v. Faytex Corp., s. 91-1076

• Decision Date: 14 August 1992
• Docket Number: 91-1095,Nos. 91-1076,s. 91-1076
• Citation: 23 USPQ2d 1801,974 F.2d 1279
• Parties: ATLANTIC THERMOPLASTICS CO., INC., James B. Sullivan and Richard B. Fox, Plaintiffs-Appellants, v. FAYTEX CORPORATION, Defendant/Cross-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1279

974 F.2d 1279

23 U.S.P.Q.2d 1801

ATLANTIC THERMOPLASTICS CO., INC., James B. Sullivan and Richard B. Fox, Plaintiffs-Appellants, v. FAYTEX CORPORATION, Defendant/Cross-Appellant.

Nos. 91-1076, 91-1095.

United States Court of Appeals Federal Circuit.

Aug. 14, 1992.

Appeal from the United States District Court for the District of Massachusetts; Edward F. Harrington, Judge.

Jack R. Pirozzolo, Willcox, Pirozzolo & McCarthy, Boston, Mass., argued, for plaintiffs-appellants.

With him on the brief, was Richard L. Binder.

Anthony M. Lorusso, Lorusso & Loud, Boston, Mass., argued, for defendant, cross-appellant. With him on the brief, was Thomas M. Sanders. Of counsel were John F. Bomster, Alder, Pollock & Sheehan, Inc., Providence, R.I. and George A. Loud, Arlington, Va.

Prior report: 970 F.2d 834.

ON REQUEST FOR REHEARING IN BANC

NIES, Chief Judge, dissenting from the denial of rehearing in banc.

Having requested that a poll of the active circuit judges be taken on whether the appeal should be reheard in banc, and a majority not so voting, I dissent from the denial of in banc consideration. I express no opinion on the merits.

RICH, Circuit Judge, dissenting from the denial of rehearing in banc.

I join the Chief Judge's request for and the opinions of Judges Lourie and Newman in support of in banc rehearing. The panel opinion herein was not handed down without objection. I was one of the objectors for three principal reasons. The panel has misapprehended its function as an arm of this court. It has violated a rule of this court which has existed since its creation. It has misconstrued the early Supreme Court opinions on which it relies to justify violation of the rule.

I wish to point out to the other members of this court and to the bar, if need be, just what the Atlantic panel, as Judge Newman calls it, has done. This is no casual slip in an opinion. The panel has gone on an unnecessary excursion beyond the needs of this case, to review, as it sees it, the entire field of product-by-process claims and lay down a universal rule applicable to all such claims in these words:

Thus [summarizing its view of case law], in both patentability actions before the CCPA and infringement actions before the Supreme Court or the regional circuits, the courts regarded the process language in product-by-process claims as limiting the claim.

....

In light of Supreme Court caselaw and the history of product-by-process claims, this court acknowledges that infringement analysis proceeds with reference to the patent claims. Thus, process terms in product-by-process claims serve as limitations in determining infringement.

No exceptions.

As Judge Lourie has succinctly pointed out, this whole excursion was unnecessary because the patentee admitted that claim 24, the product-by-process claim, was limited to the process. The claim read: "The molded innersole produced by the method of claim 1." There was, therefore, no occasion to review the law to determine how the claim should be construed. It was not an issue in the case. Nevertheless, for unexplained reasons, the panel devoted over 60% of its opinion (19 of 31 pages) to undertake a restatement of the law instead of simply deciding the case, which is its proper function. We are not here to provide restatements of the law. Such restatements should not be made without an opportunity for all affected parties to be heard from. The affected parties here are not the vendors of inner soles but largely the entire chemical industry, particularly the pharmaceutical manufacturers.

Judge Newman's opinion refers to the cost of producing a new drug. To this I would add a recent statement by Roger A. Brooks, an Assistant Vice President of the Pharmaceutical Manufacturers Association (PMA) made at the May 14, 1992, meeting of AIPLA (Bulletin, April-June 1992 p. 475). After pointing out that the more than 100 research-based members of PMA are highly dependent on intellectual property protection to provide the incentive to invest risk capital, Mr. Brooks said:

In the pharmaceutical industry, innovation comes at a premium cost. And R & D productivity is measured generally in terms of an individual's or nation's ability to develop what we call new chemical entities, or NCEs.

The cost of developing an NCE continues to rise each year. For example in 1976, the cost of moving an NCE from laboratory to market was $54 million. By 1990, this figure has risen nearly fivefold to over $230 million per NCE.

He then pointed out that "only one out of 5,000 or 10,000 compounds discovered ever make it to the market." This kind of innovative R & D is not going to be encouraged by the rule just laid down by the Atlantic panel.

The most egregious act of the Atlantic panel, however, is its defiant disregard, for the first time in this court's nearly ten-year history, of its rule that no precedent can be disregarded or overruled save by an in banc court, on the stated but feeble ground that the authors of the precedential opinion "ruled without reference to the Supreme Court's previous cases involving product claims with process limitations." The Atlantic panel continued:

A decision that fails to consider Supreme Court precedent does not control if the court [i.e. the Atlantic panel] determines that the prior panel [in the Scripps case] would have reached a different conclusion if it had considered controlling precedent.

This is not only insulting to the Scripps panel (Chief Judge Markey, Judge Newman and a visiting judge), it is mutiny. It is heresy. It is illegal.

It is interesting, indeed, to observe that three of the four judges currently dissenting from the failure to in banc this case are those who have spent their entire professional careers in the law procuring and litigating patents--and defending against them. Two of these judges had earlier careers as research chemists. Their patent work involved, beyond anything else, the writing, interpreting, and arguing about claims, around which the whole law of infringement revolves. It is more than a little bit possible that we have considered the Supreme Court cases on which the Atlantic panel relies, and more than once, which accounts for the fact that we do not agree with the Atlantic panel's interpretation of them. The extensive efforts of Judge Newman to explain what they are all about speak for all of us and I need not say more.

In concluding, I quote from the BNA PTC Journal report on this case their editorial comment (Vol. 44, p. 286):

PTCJ COMMENT: One might fairly inquire about the vitality of the Federal Circuit's "prior panel rule" in light of this ruling. The rationale in footnote 2 for not following Scripps cited another footnote from an Eleventh Circuit juvenile incarceration case (see Tucker v. Phyfer, 819 F.2d 1030, 1037, n. 7 (CA 11 1987) which in turn cited no authority. The precedential status of the Scripps ruling appears to have been clouded, but future panels may still be entitled to cite it since it is not expressly repudiated here. While the correction in this case involved overlooked Supreme Court precedent, the logic would seem to permit the invocation of other CCPA and CAFC precedent as well.

Res ipsa loquitur.

Fortunately, this court has another rule--as yet to be ignored by a panel, I believe--that where there are conflicting precedents, the earlier precedent controls. But the conflict should have been eliminated in banc to avoid confusion in the law.

NEWMAN, Circuit Judge, with whom RICH and LOURIE, Circuit Judges, join, dissenting from the court's denial of rehearing en banc.

Almost exactly ten years ago, the Federal Circuit was formed in order to eliminate inconsistent law among circuits in patent cases. It was expected that the Federal Circuit would produce an internally consistent body of law of national effect, so that technological industry could rely on its decisions, in turn benefitting technological innovation. It was surely not intended that different panels of the Federal Circuit would deliberately issue conflicting law.

Since differences of panel opinion are not impossible, the Federal Circuit adopted the usual en banc procedures for resolving internal conflicts. However, the panel in Atlantic Thermoplastics Co. v. Faytex Corporation Thus I respectfully dissent from the court's decision not to consider this issue en banc. I must dissent also from the Atlantic panel's reading of precedent, and from its policy-driven conclusion.

                70 F.2d 834, 23 USPQ2d 1481 (Fed.Cir.1992), having disagreed with a point of law in Scripps Clinic & Research Foundation v. Genentech, Inc., 927 F.2d 1565, 18 USPQ2d 1001 (Fed.Cir.1991), has refused to follow this procedure for conflict resolution.   Thus these overtly conflicting decisions will repose in the official reporters, I suppose some day to be resolved, but meanwhile to place this law in disarray.   This does not serve the public, or litigants, or trial judges, who are entitled to know how the Federal Circuit will interpret a certain class of product-by-process claims, without depending on the luck of the draw of the appellate panel
                

I The Claimed Inventions

In Scripps, supra, this court held that the "product-by-process" claims there at issue were properly interpreted as product claims, independent of how the product was made. The Scripps court followed the precedent of the Court of Customs and Patent Appeals and the Court of Claims, ¹ and is consistent with Supreme Court precedent. I shall discuss this precedent in some detail, for it illustrates the varieties of product/process claims, the different ways the law interprets them, and the inappropriateness of applying the interpretation of one class of claim to the facts of another class of claim.

The Scripps claims are of the class sometimes called "true" product-by-process claims, in that their patentability and validity depends on the novelty and unobviousness of the product, and it is immaterial...