BWB Controls, Inc. v. US Industries, Inc.

• Decision Date: 26 August 1985
• Docket Number: Civ. A. No. 82-3914.
• Citation: 626 F. Supp. 1553
• Court: U.S. District Court — Eastern District of Louisiana
• Parties: B.W.B. CONTROLS, INC. v. U.S. INDUSTRIES, INC. and Axelson, Inc.

626 F. Supp. 1553

B.W.B. CONTROLS, INC. v. U.S. INDUSTRIES, INC. and Axelson, Inc.

Civ. A. No. 82-3914.

United States District Court, E.D. Louisiana.

August 26, 1985.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

George Bode, Gregory Smith, New Orleans, La., for plaintiff.

Dando Cellini, McGlinchey, Stafford, Mintz, Cellini & Lang, New Orleans, La., John Feather, Jonathan Jobe, Hubbard, Thurman, Turner & Tucker, Dallas, Tex., for defendant.

JURISDICTION

MENTZ, District Judge.

Jurisdiction is not in dispute and is established under the federal patent laws, 35 U.S.C. § 1 et seq. and under 28 U.S.C. §§ 1338 and 1400. The parties to this proceeding have agreed to bifurcate the issues of liability and damages for purposes of trial. This opinion addresses the liability phase of this litigation.

BACKGROUND

This is a patent infringement suit involving a pilot relay valve installed in the safety systems of oil and gas pipelines. In view of the inherent dangers of transporting oil and gas under high pressure through a flow pipeline, the U.S. Government requires that all factors be monitored very carefully, and that the flow of oil and gas in the pipeline be blocked, should a problem be sensed in the system. The safety system controls the flow of oil and gas from the well and stops the flow of oil and gas (i.e. closes in or shuts in the system) when the pressure of the oil and/or gas in the pipeline increases or decreases to an unacceptable level. Once the flow of the oil and/or gas in the pipeline has stopped (i.e. once the well is shut-in), safety regulations require that the system must be manually placed back into operation rather than automatically resuming operation. The safety system here includes high and low pressure sensors, a relay valve, and an actuator valve. The relay valve controls the opening and closing of the flow of the pipeline through the actuator valve which in turn is connected to a gate which either allows or blocks the flow of gas and/or oil in the pipeline. See Appendix # 2.

For many years, the "state of art" relay valve was an unpatented relay valve which incorporated the "external lockout" mechanism. The Axelson, Inc. (Axelson) "CRBBM" pilot relay valve is an example of this type of relay. See Appendix # 2. This type of relay was referred to as an external lockout relay because of a metal pin contained in a metal body or housing that extruded from the side of the body of the relay. Several problems were encountered with the "external lockout" valve: the pin would rust or "freeze" due to the corrosive offshore environment, the pin, in its position extruding from the body of the relay, might break off, or crew members would position the pin in such a manner so as to by-pass the manual reset feature of the relay, making the relay an automatic relay. B.W.B. Controls, Inc. (BWB) also sold a "BD" pilot relay valve incorporating the external lockout mechanism. See Appendix # 1, Glossary of Terms.

In early 1973, Gerald F. Theriot and Frank M. Hoofnagle, employees of BWB, developed an improved pilot relay valve (the type H relay), having an "internal" lockout feature, which functioned without the use of the external pin of the previous "CRBBM' type valve. Plaintiff, BWB, also manufactured a type E relay, incorporating the internal lockout mechanism, with a spring-assisted piston, allowing the relay to shift more quickly to the closed position, and a Type EH relay which incorporated features of both the E relay and the H relay.

On September 6, 1973, BWB, with Theriot and Hoofnagle named as inventors, applied for a patent, herein referred to as the '484 patent, covering this internal lockout relay valve. This patent subsequently issued on April 15, 1975. In September 1974, the Axelson Type I relay valve was developed, and in November and December of 1974, preparations were made for production of this valve by defendant Axelson. The evidence at trial showed that Axelson emergency ordered a BWB internal lockout relay valve on November 15, 1974. In January 1975, the Axelson Type I relay was released for production.

On April 14, 1975, the day before the patent on the '484 patent issued, Theriot and Hoofnagle applied for a patent on a "Pneumatic Relay" as a continuation of the '484 patent. On June 15, 1975, this second patent issued as the '050 patent and was assigned to BWB. BWB contends that the '050 patent is a valid continuation patent and accordingly is entitled to the filing date of the parent patent, i.e., September 6, 1973.

Before the institution of the present proceeding, BWB had made contact with defendant Axelson. On July 10, 1975, BWB wrote Axelson, informing defendant of the issuance of the '484 patent. In 1976 BWB wrote Axelson again, asking whether the defendant was interested in licensing. An exchange of correspondence took place which resulted on February 25, 1977, in the demonstration in Lafayette, Louisiana of Axelson's Type I relay valve. At this time, BWB's president, Ned Bergeron, and its patent attorney, Robert Dickerson, became convinced that the Type I valve did in fact infringe upon both the '484 and '050 patents. Axelson took the position that its valve did not infringe. Although Axelson discontinued the production of the Axelson Type II valve in 1979, the Type I relay is still in production. Both Type I and II valves incorporate the internal lockout feature similar to the patented BWB valves.

MOTIONS

This Court previously ruled on a Motion for Summary Judgment, filed by defendants, U.S. Industries, Inc., (USI) and Axelson, based on laches and estoppel. The Court GRANTED defendants' motion for summary judgment as to laches and DENIED defendants' motion as it related to estoppel. Although defendants reurged the defense of estoppel at trial, essentially no new or additional evidence has been brought to the Court's attention on these issues, and the Court sees no reason to change its previous ruling.

FINDINGS OF FACT

1. Plaintiff, B.W.B. Controls, Inc. (hereinafter referred to as BWB) is a corporation organized under the laws of Louisiana, having its principal place of business in Houma, Louisiana. BWB is in the business

of repairing and installing safety systems on offshore platforms, and the production of certain relay valves that are used in these offshore safety systems.

2. Ned Bergeron, George Warren and Mike Brian incorporated BWB in 1972.

3. BWB is the owner of two U.S. Patents, Nos. 3,877,484 and 3,963,050, (hereinafter referred to respectively as the '484 and the '050 patents) covering a pilot operated relay valve. These types of valves are also referred to as pneumatic relay valves, pilot relay valves, pilot valves, control valves or relay valves.

4. Defendant, U.S. Industries, Inc. (hereinafter referred to as USI) is a corporation organized under the laws of New York, having its principal place of business in New York, New York.

5. Defendant Axelson, Inc. (hereinafter referred to as Axelson) is a corporation organized under the laws of Delaware, having its principal place of business in Longview, Texas. Axelson is a wholly owned subsidiary of USI. Among other products, Axelson manufactures a pneumatic relay valve, the Axelson Type 1 relay, which BWB alleges infringes on their '484 and '050 patents.

6. Pilot relay valves are utilized on oil and gas production rig safety systems to automatically shutdown the flow of gas or oil from the well when an abnormal situation develops.

7. Pilot relay valves used in a production rig safety system must, by U.S. Government Regulations, be of a manual reset type. This means that once the flow of oil and gas has been shut down, the system must not be able to automatically return to operation. A worker must manually put the system back into operation.

8. The requirement that the relay valve be manually reopened is met by the use of a lock-out feature in the pilot relay valve.

9. Since at least as early as 1960 and perhaps much earlier, the state of the art lockout feature was the unpatented "external lockout" mechanism as exemplified by the Axelson "CRBBM" pilot relay valve.

10. Between at least as early as 1960, and continuing until 1973, all relay pilot valves, including the Axelson Type "CRBBM", Proflow, Inc.'s Type "E" relay, and in 1972, the BWB Type "BD" pilot relay, incorporated the external lockout mechanism. This type of external lockout relay was the industry standard.

11. Functionally, the external lockout mechanism was mounted to the exterior wall of the pilot relay valve. The lockout mechanism was composed of a metal pin and metal body which housed the pin. The pin within the body of the lockout mechanism moved through a port or hole in the wall of the relay (by means of spring pressure) to engage a slot in the piston wall of the relay once the piston had shifted downward into the closed position. In this situation, the piston could not re-shift to the open position if pilot pressure resumed until the external pin was manually pulled out (disengaging the pin from the slot in the piston).

12. There is a small metal perpendicular bar located near the outside tip of the mechanical lockout pin. The pin can be rotated so that the small perpendicular bar sits in either one of two slots or grooves located on the body housing the pin. Placing the small perpendicular bar in the shallow slot allows the relay to operate as an automatic relay, i.e., once closed, the relay can return into operation without being manually reset. This is possible because when the small perpendicular bar is in the shallow slot or groove, the pin does not engage the slot in the piston when the relay closes. The deep slot allows the relay to function as a manual reset relay. When the small perpendicular bar of the mechanical lockout pin is in the deep slot, the pin is able to engage the slot in the piston wall of the relay, when the relay shifts to the closed position.

13. For the fifteen (15) or more years that the...