A.B. Chance Co. v. RTE Corp., s. 87-1584

• Decision Date: 23 August 1988
• Docket Number: Nos. 87-1584,87-1591,s. 87-1584
• Citation: 854 F.2d 1307,7 USPQ2d 1881
• Parties: A.B. CHANCE COMPANY, Plaintiff-Appellant, v. RTE CORPORATION, Defendant/Cross-Appellant. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1307

854 F.2d 1307

7 U.S.P.Q.2d 1881

A.B. CHANCE COMPANY, Plaintiff-Appellant, v. RTE CORPORATION, Defendant/Cross-Appellant.

Appeal Nos. 87-1584, 87-1591.

United States Court of Appeals, Federal Circuit.

Aug. 23, 1988.

Warren N. Williams, Schmidt, Johnson, Hovey & Williams, Kansas City, Mo., argued, for plaintiff-appellant. With him on the brief, was Jill D. Singer. Also on the brief, was James T. Ausmus, Ausmus, Ausmus & Beck, Centralia, Mo., of counsel.

James B. Blanchard, Willians Brinks Olds Hofer Gilson & Lione, Ltd., Chicago, Ill., argued, for defendant/cross-appellant. With him on the brief, was Richard A. Kaplan. Also on the brief, was James E. Lowe, Jr., RTE Corp., Brookfield, Wis., of counsel.

Before SMITH, BISSELL, and ARCHER, Circuit Judges.

ARCHER, Circuit Judge.

A.B. Chance Company (Chance) appeals from the July 23, 1987 judgment of the United States District Court for the Eastern District of Wisconsin granting RTE Corporation's (RTE) motion for summary judgment, vacating the court's Decision and Order of October 21, 1986 and holding U.S. Patent No. 4,083,028 ('028), assigned to Chance, invalid. RTE cross-appeals

from the denial of its motion requesting sanctions against Chance and an award of attorney fees. We reverse-in-part, vacate-in-part and remand.

Background

The '028 patent, entitled "Pad-Mounted Double-Fused Vacuum Switchgear," issued on April 4, 1978, from an application filed December 15, 1975. The '028 patent was assigned to Chance, a company in the business of supplying equipment to the electrical utility industry.

In a letter dated October 17, 1983, Chance charged RTE with infringement of claims 1-13 of the '028 patent (all the claims in the patent) and offered a license. When RTE declined the license offer and refused to discontinue its infringing activities, Chance filed a complaint in the district court alleging infringement of claims 5, 7 and 11-13 only. RTE counterclaimed for a declaratory judgment that claims 1-13 were invalid under 35 U.S.C. Secs. 102, 103 and 112 and alleged patent misuse, antitrust violations and laches. In subsequent pretrial submissions, RTE admitted infringement of claims 5, 7 and 11-13 and indicated that it was maintaining its assertion of invalidity based on section 102 and 103 defenses only. At the conclusion of the trial, the court issued a Decision and Order dated October 21, 1986 holding claims 1-13 not invalid and willfully infringed.

On January 27, 1987, RTE sought and was granted leave to conduct discovery with respect to "newly found evidence" regarding Chance's "on sale" activities. Thereafter, RTE filed a motion for an award of attorney fees and sanctions and for summary judgment, asserting that post-trial discovery established that Chance's representations regarding its sales activities were untrue, that Chance offered to sell the switchgear claimed in the '028 patent more than a year before the patent application was filed and that Chance violated its duty of candor to the United States Patent and Trademark Office (PTO) by failing to disclose material prior art consisting of Chance's own publications and commercial devices. Chance filed a "Motion for Leave to Submit Supplemental Findings of Fact and Conclusions of Law" as a rebuttal to RTE's motion. It argued that no "on sale" bar should arise because "the subject matter of the patent in suit was not completed and sufficiently tested prior to April of 1975."

Acting on RTE's motion, the court granted summary judgment, vacated its October 21, 1986 Decision and Order, and dismissed Chance's complaint. In its new Decision and Order dated July 23, 1987, the court found the '028 patent invalid under the "on sale" provisions of section 102(b) and, although stating that it was a "close case," the court denied RTE's request for attorney fees and sanctions.

The '028 patent is directed to pad-mounted, double-fused switchgear especially adapted for use in underground electrical distribution systems. The claimed switchgear includes a manually operable, oil-submerged vacuum switch element which is located in close proximity to a series-connected, oil-submerged current limiting fuse-expulsion fuse assembly. Claim 5, for example, is directed to a high voltage, double-fused switchgear apparatus comprising a tank containing a supply of a fluid dielectric material, a vacuum switch submerged in the fluid dielectric, a fuse assembly including a current limiting fuse and an oil expulsion fuse link within the fluid dielectric, and means for mounting the fuse assembly in relatively close proximity to the vacuum switch.

The idea of placing all of the switchgear components under oil in close proximity within a single compartment occurred to the inventors following discussions with a customer, Baltimore Gas & Electric (BG & E), in June of 1974. In September 1974, a Chance sales representative learned of the BG & E discussions and requested information and drawings relating to the switchgear to present to another customer, Gulf States Utilities (GSU). On December 6, 1974, Chance issued a written quotation to GSU for pad-mounted switchgear equipment. The quotation (No. 1MRM120674) contained a description of the switchgear Despite these transactions, in its application for the '028 patent and in its discovery responses, Chance stated that the first offer for sale of the claimed invention occurred on December 16, 1974 and that the first sale occurred on or about January 8, 1975. It is undisputed that Chance did not advise the examiner during prosecution of the '028 patent of the offer to GSU which occurred prior to the Sec. 102(b) bar date of December 15, 1974.

and set forth the quantity, catalog number (CLI-PW32-01), price, delivery and payment terms, and warranties and limitations. That same day, GSU issued an internal purchase requisition for thirteen of the units. On December 11, 1974, a GSU employee telephoned Chance's sales representative and placed a verbal order for thirteen switchgear units. The order was confirmed in a written purchase order which GSU submitted to Chance on December 16, 1974. Chance acknowledged the purchase order on January 20, 1975.

It is also undisputed that Chance did not advise the examiner of an under oil vacuum switchgear known as the PSI device which it commercialized in 1973 or of several printed publications describing a Chance transformer protection system known as the PAD-MATE system. Both the PSI device and the PAD-MATE system included some features of the claimed switchgear.

The Chance PSI device, a switchgear unit sold to Public Service of Indiana in 1973, included under oil vacuum switches which were electrically connected in series with air insulated full range current limiting fuses housed in a dry well. The PSI device did not have a partial range current limiting fuse and an oil expulsion fuse making up a withdrawable assembly under oil, as claimed in the '028 patent. ¹

The PAD-MATE publications included G.D. Allen, "The Chance Protection System For Pad Mounted Transformers;" V. Klemenok, "Overcurrent Protection For Pad-Mounted Transformers And The Chance Transformer Protection System," A.B. Chance Co. Bulletin 16-7401; and V. Klemenok, "Overcurrent Protection for RUD Transformers," IEEE Conference Record, 1974 Underground Transmission and Distribution Conference. These publications described a transformer protection system in which an RTE Bay-O-Net expulsion fuse was electrically connected to an oil immersible current limiting fuse.

Issues

1. Whether the district court erred in concluding on motion for summary judgment that the '028 patent was invalid because the invention claimed therein was on sale within the meaning of section 102(b) more than one year prior to the filing date of the '028 patent application.

2. Whether the district court erred in denying RTE's motion for sanctions and an award of attorney fees in view of Chance's conduct before the PTO and the court.

OPINION

A motion for summary judgment is properly granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56. See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986). The moving party bears the burden of demonstrating the absence of any genuine issue of material fact. SRI Int'l v. Matsushita Elec. Corp., 775 F.2d 1107, 1116, 227 USPQ 577, 581 (Fed.Cir.1985). In considering the motion, the district court must view the evidence in the light most favorable to the nonmovant and must draw all reasonable inferences in the nonmovant's favor. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). However, the nonmovant must do more than merely present some evidence on an issue it asserts is disputed. Sufficient evidence for a jury to return a verdict in favor of the nonmovant must be forthcoming. Avia Group Int'l, Inc. v. L.A. Gear California, Inc., 853 F.2d 1557, 1560 (Fed.Cir.1988). On appeal, this court must determine for itself whether the standards for summary judgment have been met; it is not bound by the district court's ruling that there were no material factual disputes requiring resolution. Armco, Inc. v. Cyclops Corp., 791 F.2d 147, 149, 229 USPQ 721, 723 (Fed.Cir.1986).

A. The "On Sale" Issue

An invention which was offered for sale in the United States more than one year before the filing date of the patent application is subject to the statutory...