Atlas Chemical Industries, Inc. v. Moraine Products, Inc.

• Decision Date: 27 October 1972
• Docket Number: Civ. A. No. 35222.
• Citation: 350 F. Supp. 353
• Parties: ATLAS CHEMICAL INDUSTRIES, INC., Plaintiff, v. MORAINE PRODUCTS, INC., Defendant.
• Court: U.S. District Court — Western District of Michigan

350 F. Supp. 353

ATLAS CHEMICAL INDUSTRIES, INC., Plaintiff, v. MORAINE PRODUCTS, INC., Defendant.

Civ. A. No. 35222.

United States District Court, E. D. Michigan, S. D.

October 27, 1972.

Miller, Canfield, Paddock & Stone, Detroit, Mich., for plaintiff.

Cullen, Settle, Sloman & Cantor, Detroit, Mich., Allen H. Gerstein and Alvin D. Shulman, Merriam, Marshall, Shapiro & Klose, Chicago, Ill., for defendant.

MEMORANDUM OPINION AND ORDER

JOINER, District Judge.

This is an action filed by the licensee of a Patent No. 3,422,189 to declare the patent invalid. The plaintiff claims by motion for summary judgment that the alleged invention was in public use more than one year prior to the date the patent application was filed. 35 U.S.C.A. Section 102(b). The defendant has filed a motion to dismiss based on the plaintiff's alleged fraud on the court and unclean hands, fraud on the patent office, and public injury caused by plaintiff's conduct in concealing information pertaining to prior use. As an alternative to dismissal, defendant asks that the plaintiff be ordered to pay the defendant's expenses and attorney fees incurred from the time the plaintiff began concealing information material to the patentability of the patent application. This would include the expenses incurred in the prosecution of the patent application, the prosecution of the interference proceedings and the expenses of the patent litigation both here and in Chicago where the defendant is prosecuting an infringement suit. The motion is based on the concealment from the defendant by the plaintiff of information material to the patentability of the invention, including the issue of prior use, the subject of plaintiff's motion for summary judgment.

Both parties have treated the defendant's motions as motions for summary judgment, Federal Rules of Civil Procedure 12(b), and have called the court's attention to facts established by affidavits and depositions.

The issues before the court pursuant to Rule 56 of the Federal Rules of Civil Procedure are these.

Were the activities of the plaintiff Atlas and its predecessor as related to the defendant, the patent office and the court of the kind and character to require dismissal of this suit to declare invalid the patent?

If the answer is negative, was the invention "in public use or on sale in this country, more than one year prior to the date of the application for the patent?"

If the answer is affirmative, were the activities of the plaintiff Atlas and its predecessor as related to the defendant, the patent office and the court of the kind and character to require the plaintiff to reimburse the defendant for costs and expenses and other damage?

There is no dispute about the facts. All facts have been developed in discovery, and the depositions and affidavits disclose no genuine issue as to any material fact. Summary judgment on all matters is an appropriate remedy.

The patent in this suit (Rider patent) was issued January 14, 1969 on an application which was first filed on January 2, 1959. The patent is entitled "Method and Compositions for the Treatment of Gastrointestinal Disorders". The patent claims relate solely to the method of treating flatulency (gas) symptoms in humans with a specific antifoam composition. The claims do not cover the composition per se because that product had been marketed commercially as "Antifoam A" by the Dow Corning Corporation and had been used as an antifoaming agent since 1946. The prior use relied upon by the plaintiff in its motion for summary judgment is the use of Antifoam A, the specific antifoaming agent employed by the patentee Rider in his work. The record is without dispute that during the summer and fall of 1957 a druggist named Bergstein in Midland, Michigan, marketed Antifoam A prepared by the Dow Corning Corporation as a method of treating intestinal gas in humans. It indicates without dispute that prescriptions for this product were filled, sold and the product was used by patients in Midland prior to January 2, 1958.

The druggist Bergstein's use of the compound was not experimental. The utility had been established. The product was prescribed by physicians, sold by Bergstein and used by patients to treat real physical disorders. Even if this use was experimental in the sense that Bergstein was collecting data on the results, it was a real use and would not fall within the class of experiments determined by New Jersey Wood Paving Company v. American Nicholson Pavement Company, 97 U.S. 126, 24 L.Ed. 1000 (1878), to be an exception to the effect of prior public use. Clearly under New Jersey Wood Paving Company (supra) and Monolith-Portland Midwest Co. v. Kaiser Aluminum, 267 F.Supp. 726 (1967), only experimentation by the patentee is an exception to the claim of prior public use. Magnetics, Inc. v. Arnold Engineering Co., 438 F.2d 72 (7th Cir. 1971). Only experimentation by the patentee supports a policy of encouraging thorough research rather than incomplete and premature disclosure. Use of the patented product by others, such as Bergstein's use, is not an experiment in the eyes of the law, it being by one not related in any way to the patentee. The record, however, is clear beyond any doubt that Bergstein's use was not experimental.

This court also finds that there is no genuine dispute about the identity of the substance used by Bergstein and the patentee. Although the product sold by Bergstein and prescribed by the doctors and used by patients is variously called Soxane and antifoam by different people and even by the same people, there is no doubt that the product was Dow Corning Antifoam A and that it contained MPS (methylpolysiloxane) and finely divided silica. The product was the same as that used by Doctor Rider. The use involved prescription, sale and ingestion by patients. The use was by the public, true a limited public in Midland, Michigan, but available for wider distribution and use. Simmons v. Hansen, 117 F.2d 49 (8th Cir. 1941).

Public use and sale more than one year prior to the application for the patent is established without dispute. Minnesota Mining and Manufacturing Co. v. Kent Industries, Inc., 409 F.2d 99 (6th Cir. 1969); Hautow v. Kearney & Trecker Corporation, 191 F.Supp. 430 (E.D.Mich.1961).

Defendant, however, contends in his motion to dismiss, treated by the parties and by the court as a motion for summary judgment, that the court cannot grant a summary judgment for the plaintiff declaring the patent invalid on such a record because of the wrongdoing on the part of the plaintiff, and that the plaintiff's claim should be dismissed. To dismiss this lawsuit which directly raises the question that the patent is not valid, would simply mean that this court or some court would face the same problem at a subsequent time in an infringement suit or a suit to recover royalties under the contract. This case has been in this court since the summer of 1970. A vast record has been made. All of the facts have been exposed. It would not be in the interest of the public, the parties or judicial administration to order a dismissal on this ground. It is clear that an invalid patent cannot be validated by estoppel or misconduct. Heath v. Frankel, 153 F.2d 369 (9th Cir. 1946); W. E. Plechaty Co. v. Heckett Engineering, 145 F.Supp. 805 (N.D.Ohio 1956). A strong public policy militating against such nondeserving legal monopolies dictates this result. See Lear v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1969); Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971).

Defendant also contends that if the case is not dismissed and if summary judgment for the plaintiff is granted, the court should, in exercise of its equity jurisdiction, order the plaintiff to pay to the defendant expenses and attorney fees incurred from and after the time of the plaintiff's wrongdoing and other damages.

The background of the controversy is this. Some time in 1958 Dr. Rider became convinced that an old and known composition MPS with finely divided silica (Dow Antifoam A) could be used with safety and efficacy to relieve flatulence in humans. Stuart Pharmaceutical, later acquired by Atlas, was interested in marketing such a product. Dr. Rider made no attempt to patent his discovery until after his meetings with Stuart. Shortly afterwards Stuart indicated to Dr. Rider that a patent application should be filed. After the application was filed, a contract was entered into between Rider, Moraine (the organization set up to market the Rider patent) and Stuart, wherein the Rider patent was assigned to Stuart, and Stuart agreed to pay a 5% royalty, whether or not a U.S. patent was obtained. Shortly thereafter Stuart introduced products containing the item.

At about the same time, a representative of Plough, Inc., notified Stuart that a person by the name of Feinstone had filed an application for a patent which Plough believed covered the products marketed by Stuart, and that a patent would soon be issued on that application. After review of the matter, Stuart concluded that the patents were not of the same product, the Plough patent being for the use of MPS alone, whereas the Rider patent called for the use of MPS and finely divided silica. This was called to the attention of Moraine. Stuart was now confronted with having to pay royalty to both Moraine and Plough.

During 1960, a patent was issued to William C. May and assigned to Dow Corning. The May patent was directed to the use of MPS and finely divided silica, the same as the Rider patent application. Interference action was initiated which Rider won. Dow indicated to Stuart that it had no intention of enforcing the May patent because of its interest in selling the raw material to any company making the products in the treatment of flatulence.

Faced with the obligation of paying two royalties, to...