General Motors Corp. v. Toyota Motor Co., Ltd.

• Decision Date: 18 May 1979
• Docket Number: Civ. No. C-3-76-28.
• Citation: 467 F. Supp. 1142
• Parties: GENERAL MOTORS CORPORATION, Plaintiff, v. TOYOTA MOTOR COMPANY, LTD., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

467 F. Supp. 1142

GENERAL MOTORS CORPORATION, Plaintiff, v. TOYOTA MOTOR COMPANY, LTD., et al., Defendants.

Civ. No. C-3-76-28.

United States District Court, S. D. Ohio, W. D.

February 1, 1979.

As Amended May 18, 1979.

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George E. Frost, General Motors Corp., Detroit, Mich., Gilbert N. Henderson, Biebel, French & Nauman, Dayton, Ohio, for plaintiff.

Hugh A. Chapin, Kenyon & Kenyon, Reilly, Carr & Chapin, New York City, Arthur D. Gray, New York City, Paul Winterhalter Pickrel, Schaeffer & Ebeling, Dayton, Ohio, for defendants.

FINDINGS OF FACT, OPINION AND CONCLUSIONS OF LAW

CARL B. RUBIN, District Judge.

This action was brought by General Motors Corporation (General Motors) against Toyota Motor Company, Ltd., Toyota Motor Sales Company, Ltd., and Toyota Mid-America Distributors, Inc. (Toyota) over claims five (5) through eight (8) of United States Patent 3,852,041 ('041 patent). General Motors contends that Toyota infringed the '041 patent. Toyota denies that allegation and, in the alternative, contends that the '041 patent is invalid, as well as unenforceable.

A trial on these issues was held in November and December, 1977. On the basis of the evidence adduced at that trial, this Court submits herewith findings of fact, opinion and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.

I FINDINGS OF FACT

A. General Background

1. A catalytic converter is a device which reduces the concentration of pollutants in car engine exhaust. It operates by subjecting engine exhaust to a chemical reaction before the exhaust is emitted from the tailpipe, rather than by modification of the engine. (R. 196-98)

2. There are two basic types of catalytic converters. A Monolithic Catalytic Converter consists of a ceramic block with a labyrinth of catalyst-coated channels throughout its length. Catalysis occurs by the passage of exhaust gas through these channels. By contrast, a Downflow Catalytic Converter, like the one described by the '041 patent, consists of an inlet chamber, an inner chamber in which catalyst-coated ceramic pellets are contained, and an outlet chamber. Catalysis occurs by the passage of exhaust gas into the inlet chamber, downward through the inner chamber, and out through the outlet chamber. (R. 192-95)

3. Initial interest in catalytic converters was regional and short-lived. The first converters were developed in the early sixties in response to California's stringent car emission standards. However, catalytic converter development ended in the middle of that decade because of converter failure from fuel contamination and structural deformity at high temperatures. (R. 207-08)

4. The spectre of national legislation requiring the cleansing of car exhaust and the introduction of unleaded gasoline as an automobile propellant rekindled interest in catalytic converters in the late sixties. Since it was known generally that a catalytic converter will operate efficiently only if an engine burns unleaded fuel, the automobile industry's switch to unleaded fuel in 1969 transformed catalytic converters into a viable means for achieving the proposed national emissions standards. Put simply, the proposed legislation set a goal and the decision to use unleaded fuel made catalytic converters a practical means of achieving that goal. (R. 199-200; 205-06. Exhibit 416 at H00021)

B. General Motors' Experience

1. General Motors is incorporated in Delaware and has its principal place of business in Michigan. It is the largest manufacturer of motor vehicles in the United States.

2. In late 1969, General Motors divided responsibility for development of a catalytic converter among three groups. Both a Catalyst Group and a Catalyst Container Group were created at General Motors' AC Spark Plug Division (AC Spark Plug). In addition, an Applications Group was created at General Motors' Oldsmobile Division. The first group was charged with identifying an appropriate metal to produce the catalytic reaction; the middle group was charged with developing a structure to contain the catalytic reaction; and the latter group was charged with placing the catalytic converters designed by AC Spark Plug on all General Motors' cars. (R. 207; 368-69)

3. The Container Group, in turn, divided-up responsibilities. The Product Engineering Section was responsible for converter design. By contrast, the Production Engineering Section was responsible for developing tools, machines, and facilities for efficiently manufacturing converters designed by the Product Engineering Section. (R. 368; 1222-24; 1390)

4. The skills of the people who worked in these sections were compatible with their job functions. Product Engineering staff members were mechanical engineers with extensive experience in the design of automotive parts. Alternatively, Production Engineering staff members were mechanical engineers who were familiar with efficient ways to manufacture automotive parts. (R. 1222-23)

5. The initial objective of the Container Group was development of a downflow "replaceable element" catalytic converter. Catalysts which had been utilized up to that time were short-lived. Accordingly, it was felt necessary to have a converter to which fresh catalyst could be added periodically. (R. 208-209; 370; 376. Exhibit 220)

6. This type of downflow converter displayed two irremediable problems. First, it consisted of too many parts to be manufactured economically. Second, it leaked. A converter requiring the periodic addition of new catalyst could not be totally welded together. Therefore, under high temperatures, exhaust gas tended to by-pass the converter wherever removable parts joined with other parts. (R. 208-09; 376; 380-81; 1224-27; 1391-93)

7. Because of these problems, the Container Group abandoned replaceable element converters in late June or early July, 1970. Instead, attention was focused on development of a converter without removable parts. Although a "unitized" converter could not be refilled with fresh catalyst, Container Group staff members hoped that its welded seams would prevent the leakage and high costs associated with the replaceable element converter. (R. 261-2; 380-81; 1227-37)

8. The Container Group did not start from scratch in developing unitized converters. In fact, two of these converters had been developed within the Container Group prior to abandonment of the replaceable element converter.

9. The first converter concept developed within the Container Group was the CM-474 sketch. It was conceived on March 26, 1970 by Albert J. Moore, a draftsman for the Product Engineering Section. Moore worked alone in this endeavor. (R. 376-380; 550-54; 1393; 1399; 1411. Exhibit 112)

10. The most distinctive feature of the CM-474 sketch was the upper catalyst retainer plate (catalyst housing). It had a downwardly concave semicircular extension and an upwardly concave semicircular extension. Consequently, when the upper catalyst retainer plate was placed between the top housing plate (outer wrap — upper) and the bottom housing plate (outer wrap — lower), the extensions created an inlet and outlet to the converter. (Exhibit 112)

11. Product Engineering staff members totally ignored the CM-474 sketch. Since the staff members still were concentrating their attention on development of a replaceable element converter in March and April, 1970, they apparently thought that the CM-474 sketch should not be pursued. In any event, Product Engineering never made a model of the CM-474 concept. (Finding No. B(7). R. 550-56; 1411)

12. The second concept developed within the Container Group prior to abandonment of the replaceable element converter, and the first one to be considered actively by the Container Group, was the CM-714 converter. According to a General Motors' Record of Invention it was conceived on June 18, 1970 solely by Andrew Banyas, a Production Engineering staff member, and by John Jalbing, a staff member of Product Engineering. However, Moore also should be given some credit for the CM-714 converter since it was derived from the CM-474 sketch. (R. 369; 381-82; 710-716; 1222; 1227-37; 1403-4; 1410. Exhibits 113 and 257)

13. Although the CM-714 converter was like the CM-474 sketch in its use of an extended catalyst retainer plate, there were several differences between the two designs. First of all, the CM-714 converter had four plates rather than six. Secondly, both the top and bottom housing plates of the CM-714 converter had two semicircular extensions rather than just one. Finally, the lower catalyst retainer plate in the CM-714 converter, rather than the upper catalyst retainer plate, had extensions into an inlet and outlet formed by the housing plates. (Exhibit 113)

14. The initial tests run on the CM-714 converter in August and September, 1970 produced mixed results. These tests showed that the CM-714 converter successfully reduced the concentration of pollutants in car exhaust and that the CM-714 converter presented very little resistance to exhaust gas flow. However, they also suggested that the CM-714 converter was not durable. The early CM-714 converters tended to balloon and to rupture at relatively low temperatures. (R. 389-96. Exhibit 138D)

15. Despite these disappointing results, the CM-714 converter was not abandoned. General Motors not only continued to perform tests with and on the CM-714 converter well into 1973, but also lauded the CM-714 converter on television and before an American Petroleum Institute meeting in September and November, 1970, respectively. (R. 396-97; 412-14. Exhibit 270)

16. The first type of supplemental experimentation initiated by General Motors was performed with the CM-714 converter, rather than on it. More particularly, the experimentation concerned converter placement, cooling loop...