Hartness Intern. Inc. v. Simplimatic Engineering Co.
| Decision Date | 12 May 1987 |
| Docket Number | Nos. 86-1037,86-1086,s. 86-1037 |
| Citation | 819 F.2d 1100,2 USPQ2d 1826 |
| Parties | HARTNESS INTERNATIONAL, INC., Appellee/Cross-Appellant, v. SIMPLIMATIC ENGINEERING CO., Appellant/Cross-Appellee. Appeal |
| Court | U.S. Court of Appeals — Federal Circuit |
Harold James, James & Franklin, New York City, argued, for appellant/cross-appellee.
Julian W. Dority, Dority & Manning, P.A., Greenville, S.C., argued, for appellee/cross-appellant. Also on the brief, was David T. Petty, Jr., Kizer, Phillips & Petty, Lynchburg, Va.
Before FRIEDMAN, DAVIS, and SMITH, Circuit Judges.
In this case, Hartness International, Inc. (Hartness International), sued Simplimatic Engineering Co. (Simplimatic) for infringement of two patents, No. 3,788,034 ('034) and No. 3,911,647 ('647), both relating to devices used to load bottles into cartons. The United States District Court for the Western District of Virginia held: 1 (1) the '034 patent was not procured by inequitable conduct and it remains enforceable; (2) claims 1, 2, and 7-11 of the '034 patent are not invalid for obviousness, but claim 3 (dependent on claim 1) of the '034 patent is invalid because it lacks novelty; (3) the '647 The district court's holding that claim 3 of the '034 patent is invalid is reversed. In all other respects, the final judgment of the district court is affirmed.
patent is invalid because of obviousness-type double patenting; (4) claims 1, 2, and 7-11 of the '034 patent are infringed by Simplimatic; and (5) damages in the amount of $491,259 must be paid by Simplimatic to Hartness International.
The following issues are presented on appeal:
1. Whether the district court erred in holding that the '034 patent was enforceable because Simplimatic had failed to prove by clear and convincing evidence that Hartness International procured the patent by inequitable conduct;
2. Whether the district court erred in holding that claims 1, 2, and 7-11 of the '034 patent are valid, but that claim 3 (dependent on claim 1) of the '034 patent is invalid;
3. Whether the district court erred in holding that the '647 patent is invalid because of obviousness-type double patenting;
4. Whether the district court clearly erred in holding that claims 7-11 of the '034 patent were infringed; and
5. Whether the district court abused its discretion in awarding damages based on Hartness International's proved actual lost profits on fingers, but expressed in terms of a 70 percent royalty on Simplimatic's gross sales price for fingers.
Hartness International's patents relate to a process known as "drop packing," whereby the bottles are dropped from a conveyor belt into cartons below . A "grid set" is used with "fingers" (usually four) to engage each bottle as it is dropped. The fingers guide the bottle into the cardboard carton, and the fingers also help to open and position the carton.
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE
In the prior art, thin flexible fingers made of spring steel were used to guide the bottles into the carton. The thin flexible fingers were commonly "side-positioned," that is, one finger was positioned on each of the four sides of the bottle compartment. The prior art also included "corner-positioning," where one finger was positioned in each of the four corners of the compartment . The thin flexible fingers worked tolerably well when new, but they wore out quickly, were difficult to replace, and permitted substantial breakage of the glass bottles.
thickness of the rigid fingers, the Hartness brothers used corner-positioning to take advantage of the space between the bottle and the corner of the compartment . The '034 patent describes in detail how the rigid fingers are mounted in the grid set, using a pivot point, a retaining ring, and a spring to enable the fingers to move as required . The '034 patent also claims metal "wings" which form a right angle at the rear of each finger . The purpose of the right angle wings is "to square up the carton compartment so it would be of the appropriate shape to receive a bottle."
The '647 patent claims a finger similar to the one disclosed in the '034 patent . The primary improvement in the '647 finger is an arcuate (curved) inner surface to conform to the shape of the bottle. The '647 finger also has other improvements over the '034 finger, including an extension of the right angle wings from top to bottom to better engage the corner of the compartment.
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE
The Hartness brothers were so pleased with the invention claimed in the '034 patent that they left the bottling business, formed Hartness International, and began to manufacture and sell case-packers with the patented grid sets and fingers. Hartness International also sold the fingers separately from the grid sets. The grid sets and fingers claimed in the '034 patent were a tremendous commercial success.
Simplimatic bought a number of the Hartness International fingers and used them, with some modifications, in its own manufacture and sale of 4-finger grid sets and of packing machines. Simplimatic also developed a 2-finger grid set, entirely of its own manufacture, for packaging widemouthed jars.
The district court made the following determinations in its July 30, 1984, opinion:
1. Simplimatic's 4-finger structure infringes claims 1, 2, 7, 8, 9, 10, and 11 of the '034 patent.
2. Claim 3 of the '034 patent is invalid.
3. Simplimatic's 2-finger structure does not infringe any of the '034 claims.
4. The '647 patent is invalid.
The district court referred the case to a special master (master) for the determination of compensatory damages, as well as punitive damages and attorney fees, if any, to be awarded for the infringement of the '034 patent. The master appointed an independent accounting firm to determine the amount of lost profits.
After an evidentiary hearing, the master determined that Simplimatic's infringement had not been willful, and he did not award punitive damages. However, the master found the case to be "exceptional," justifying the award of attorney fees to Hartness International. The master also determined that Simplimatic should reimburse Hartness International for the part of the accountants' fee previously paid by Hartness. Thus, the master determined that Hartness International was entitled to the following recovery from Simplimatic:
Lost Profits on Grid Sets $342,253
Prejudgement Interest 2 on Lost Profits
on Grid Sets 56,516
Lost Profits on Fingers Not Used in
Grid Sets 158,637
Attorney Fees and Expenses Through
April 30, 1985 81,880
Reimbursement--Accounting Fees 11,000
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Total Due Hartness International by
Simplimatic as of April 30, 1985 $650,286
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The master also found that Simplimatic was liable for payment of $4,170 for additional accounting services.
In its February 5, 1986, opinion, the district court reviewed several exceptions made by the parties to the master's report. The February 5, 1986, judgment entered by the district court reflects two main changes from the master's report. First, the district court held that Hartness International was not entitled to attorney fees because, in the absence of a finding of willful infringement, there was no other basis in the record for a finding of an exceptional case. Second, the court held that the master erred in awarding $158,637 in proved actual lost profits on the fingers, because Hartness International was bound by its earlier position that it was entitled only to a 70 percent royalty on the fingers. The district court lowered the damages on fingers to $81,490, calculated in terms of a 70 percent royalty on Simplimatic's gross sales price for fingers. The district court affirmed the special master's award of lost profits on the grid sets of $342,253.
Thus, the district court entered judgment that Hartness International shall recover from Simplimatic:
Total of grid damage of $342,743 (sic
should be $342,253) and finger
damage of $81,490 (plus post
judgment interest) $423,743
Prejudgment interest 56,516
Reimbursement--accounting fees 11,000
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Total due Hartness International by
Simplimatic as of April 30, 1985 $491,259
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The district court also directed Simplimatic to pay certain fees directly to the special master and to the accounting firm. The district court further entered an injunction against Simplimatic from further infringement. Finally, the district court stayed the judgment pending appeal, conditioned upon Simplimatic's posting of an appropriate bond.
Simplimatic alleges error in the district court's holding that Simplimatic had failed to prove by clear and...
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