FMC Corp. v. Hennessy Industries, Inc.

• Decision Date: 30 December 1987
• Docket Number: Nos. 87-1268,87-1283,s. 87-1268
• Citation: 5 USPQ2d 1272,836 F.2d 521
• Parties: FMC CORPORATION and Vulcan Equipment Company, Ltd., Plaintiffs-Appellants, v. HENNESSY INDUSTRIES, INC., Defendant/Cross-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 521

836 F.2d 521

5 U.S.P.Q.2d 1272

FMC CORPORATION and Vulcan Equipment Company, Ltd. Plaintiffs-Appellants, v. HENNESSY INDUSTRIES, INC., Defendant/Cross-Appellant.

Nos. 87-1268, 87-1283.

United States Court of Appeals Federal Circuit.

Dec. 30, 1987.

Gerald D. Hosier, of Hosier & Sufrin, Chicago, Ill., argued for plaintiffs-appellants. With him on the brief was Richard B. Megley, of the FMC Corp., Chicago, Ill.

Theodore W. Anderson, of Neuman, Williams, Anderson & Olson, Chicago, Ill., argued for defendant/cross-appellant. With him on the brief were William J. Birmingham, Michael O. Warnecke and Hugh A. Abrams, of Neuman, Williams, Anderson & Olson, Chicago, Ill. Also on the brief were Thomas H. Morsch and Robert R. Watson, of Sidley & Austin, Chicago, Ill.

Before MARKEY, Chief Judge, RICH and MAYER, Circuit Judges.

MARKEY, Chief Judge.

FMC Corporation and Vulcan Equipment Company, Ltd. ("FMC") appeal from that part of a final judgment of the United States District Court for the Northern District of Illinois, 650 F.Supp. 688, 2 U.S.P.Q.2d 1479 (N.D.Ill.1986) (Moran, J.), denying FMC's claims for attorney fees. Hennessy Industries, Inc. ("Hennessy") cross-appeals from that part of the judgment holding its United States Patent No. 3,225,801 (Tabordon patent) invalid and its United States Patent No. 3,225,800 (Strang patent) and design Patent No. 243,551 (Wood patent) not infringed. We vacate that part of the judgment relating to inequitable conduct in the prosecution of the Wood patent, and affirm the judgment in all other respects.

I. Background

The introduction of safety rims and the advent of the tubeless tire increased the physical effort necessary to remove a tire from a wheel. Gradually, full-power tire changers with dual-power-sources replaced manual and semi-power single-power-source models. The three patents in suit relate to full-power, single-power-source changers. The Tabordon and Strang patents expired in 1983. The Wood design patent will expire in 1991. ¹

On November 11, 1979, FMC sued for a declaratory judgment that Hennessy's patents were invalid, unenforceable because of inequitable conduct, and not infringed by FMC's tire changers. FMC's complaint included claims of antitrust violation and unfair competition. Hennessy counterclaimed for infringement of each patent.

The district court separated the patent claims for trial. A bench trial began June 15, 1984. On February 26, 1987 the district court, "pursuant to Fed.R.Civ.P. 54(b)," directed entry of the following final judgment:

Tabordon U.S. Patent No. 3,255,801 is invalid, although not otherwise unenforceable; Strang et al. U.S. Patent No. 3,255,800, if valid, is enforceable but not infringed; Wood et al. U.S. Patent No. Des. 243,551 is valid and enforceable, but not infringed. Further, in view of the court's findings, all claims for damages and for attorneys' fees with respect to these two counts are denied. ²

The Order directing entry of judgment expressly adopted the court's December 30, 1986 Memorandum and Order as its findings of fact and conclusions of law. Fed.R.Civ.P. 52(a). Familiarity with that comprehensive Memorandum and Order is presumed. We need not, therefore, replicate the district court's excellent description of the facts and evidence.

II. Issues

(1) Whether the district court abused its discretion when it denied FMC's request for attorney fees. ³

(2) Whether the district court erred in declaring the Tabordon patent invalid under 35 U.S.C. Sec. 103. ⁴

(3) Whether the district court erred in finding the Strang and Wood patents not infringed.

III. Opinion

(1) Attorney Fees

FMC does not mention the district court's discretion, but says its request for attorney fees should have been granted because the "no inequitable conduct" conclusion cannot stand.

The Tabordon Patent

The materiality of the semi-power machine and prior sales of the full-power machine are not in serious dispute. Rather, the issue is whether, in all the circumstances, Hennessy can be charged with knowledge of the materiality of that information. FMC admits that the district court correctly recited the legal standards related to inequitable conduct, but then argues that the court misapplied those standards. That misapplication, says FMC, caused the court to ignore evidence which "compels" a conclusion of inequitable conduct.

Specifically, FMC alleges that the district court erred in: (1) evaluating the statutory bar "on sale" evidence; (2) failing to consider and properly weigh Hennessy's "litigation conduct" and "consistent practice" of inequitable conduct; (3) assessing the import of the Lowell letter; (4) concluding that circumstances known to attorney Wood before he filed the Tabordon application did not require additional inquiry; (5) stating that the issues in a 1965 interference and in the application for the Tabordon patent were different; (6) finding Tabordon's limited education caused his failure to recognize the "materiality" of his semi-power machine, when Tabordon knew it was related to his full-power machines; (7) concluding that attorney Binish did not prosecute the application for the Tabordon patent because he was "too busy;" (8) applying to the intent issue a subjective standard that made "mere denials not only controlling, but dispositive;" (9) failing to define or apply a reasonable person standard and ignoring circumstantial evidence of intent; (10) "virtually requir[ing] direct evidence of intent to overcome protestations of ignorance and innocence, deeming direct evidence necessary to prove 'culpability';" (11) engaging in "unwarranted presumptions and surmise" as to what certain actors might have done; and (12) holding Tabordon and Wood to no duty to inquire.

FMC's "kitchen sink" of duplicative and overlapping assertions does injustice to the considered opinion of the district court. Seizing upon isolated words and phrases in that opinion, FMC forgets that this court reviews judgments, not phrases in opinions. Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1540, 218 U.S.P.Q. 871, 880 (Fed.Cir.1983). Language in an opinion may in light of the record reflect error, but that is not true here. In sum, the conclusive scenario FMC erects around events that were over twenty years old when suit was filed is simply not supported by the record.

FMC argues, for example, that the district court applied an "on hand" test for determining the "on sale" question because it "failed to consider" the distribution agreement and other evidence of record. This court has held that failure to mention does not mean failure to consider when the evidence supplies support for the district court's determination. Medtronic Inc. v. Daig Corp., 789 F.2d 903, 906, 229 U.S.P.Q. 664, 667 (Fed.Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 402, 93 L.Ed.2d 355 (1986). Moreover, FMC impermissibly leaps to an assumption that an "on sale" finding would automatically establish inequitable conduct in this case.

FMC's argument that the district court "failed to consider" Hennessy's "litigation conduct" and "consistent practice" of inequitable conduct is equally meritless. Hennessy's resistance to discovery was not reprehensible "litigation conduct" in this case. See USM Corp. v. SPS Technologies, Inc., 694 F.2d 505, 508-10, 216 U.S.P.Q. 959, 962-63 (7th Cir.1982). Hennessy's "practice" with other applications is not relevant. As correctly stated by the district court, Hennessy did not assert the Foster patent against FMC and therefore "[FMC] can not use Foster to invoke an unclean hands defense to the entire judicial proceeding." 650 F.Supp. at 698, 2 USPQ2d at 1486. See SSIH Equip. S.A. v. United States Int'l Trade Comm'n, 718 F.2d 365, 378-79, 218 U.S.P.Q. 678, 689-90 (Fed.Cir.1983).

FMC has not shown the presence of clear error in the district court's findings that: (a) Tabordon did not recognize the relevance of the semi-power machine; and (b) that Tabordon and attorney Wood believed March 14, 1961 to be the earliest conceivable sale of the full-power machine. See Reactive Metals & Alloys Corp. v. ESM, Inc., 769 F.2d 1578, 1584, 226 U.S.P.Q. 821, 825 (Fed.Cir.1985) (inventor's awareness of facts establishing "on sale" bar outweighed by his misunderstanding and disregard of the significance of the facts). FMC says clear error occurred when the district court did not draw the inferences FMC would have us draw from the Lowell letter, the Continental Distributors agreement, the 1965 interference, Hennessy's "knowledge" of Tabordon's semi-power machine, the roles of Binish and others in prosecuting the application for the Tabordon patent, and the circumstances surrounding the filing of the application. We find, however, nothing in the record that would preclude the district court from drawing such inferences as may be encompassed in the findings it made. Thus, FMC has not shown any district court finding to have been clearly erroneous. As occurred in FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1417 (Fed.Cir.1987), FMC ignores rule 52(a) and misperceives the roles of fact and law in the judicial process. See Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 574-75, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985).

The district court's findings fully support the court's conclusion that FMC did not prove inequitable conduct by clear and convincing evidence. That FMC alleges inequitable conduct against a great number of people does not diminish the burden of proof which it must meet as to each of them. ⁵

Unable to show any finding to have been clearly erroneous, FMC centers its fire on what it calls the district court's "wholly subjective and unacceptably low legal standard" in evaluating intent. As evidence, FMC says the district court did not refer specifically to "gross negligence" in its opinion.

FMC correctly states that a determination of threshold intent may involve gross negligence as a factor. See J.P. Stevens & Co. v. Lex Tex Ltd., 747...