J.P. Stevens & Co., Inc. v. Lex Tex Ltd., Inc.

Decision Date09 November 1984
Docket NumberNos. 84-754,s. 84-754
Citation747 F.2d 1553,223 USPQ 1089
PartiesJ.P. STEVENS & CO., INC., Badische Corporation, and Burlington Industries, Inc., Appellants/Cross-Appellees, v. LEX TEX LTD., INC., Appellee/Cross-Appellant. Appealto 84-761.
CourtU.S. Court of Appeals — Federal Circuit

D. Dennis Allegretti, Chicago, Ill., argued for appellant/cross-appellee Burlington; Robert C. Ryan and Mark T. Banner, Chicago, Ill., William K. West, Jr. and James T. Hosmer, Washington, D.C., Richard D. Elliott, Greensboro, N.C., of counsel.

David Rabin, Greensboro, N.C., and Stuart I. Friedman, New York City, for appellant Badische Corp.

Francis T. Carr, New York City, argued for appellant/cross-appellee J.P. Stevens. With him on the brief were Robert D. Fier and James Galbraith, New York City.

Michael T. Frimer, New York City, of counsel.

Stuart I. Friedman, New York City, argued for appellant/cross-appellee Badische.

James L. Armstrong, III and James W. Crabtree, Charlotte, N.C., argued for appellee/cross-appellant.

Robert C. Miller, Arlington, Va., was on the brief for appellee/cross-appellant.

Before MARKEY, Chief Judge, and DAVIS, MILLER, SMITH, and NIES, Circuit Judges.

MARKEY, Chief Judge.

Appeal from a final judgment of the District Court for the Southern District of Florida holding infringed, not invalid, and not unenforceable product claims 24, 26-27, and 31 of U.S. Patent No. 3,091,912 ('912 patent), issued on June 4, 1963 to Messrs. Stoddard and Seem, ultimately assigned to Lex Tex Ltd., Inc. (Lex Tex), and now expired. Burlington, Stevens, and Badische (Burlington) appeal those parts of the judgment holding that the claims were not invalid under 35 U.S.C. Secs. 102 and 103, that Lex Tex purged itself of misuse as of May 31, 1977, and that the claims were not unenforceable due to fraud on the Patent and Trademark Office (PTO). Lex Tex cross-appeals, arguing that its misuse purge occurred earlier than May 31, 1977. We reverse the portion of the final judgment holding that the claims in suit were not unenforceable.

A. History of the Litigation

This appeal evolved from litigation starting in 1969, involving at least six patents and fifty accused infringers in the yarn treating industry. In 1974, the district court for the Southern District of Florida, in which the cases had been consolidated, granted summary judgment against Lex Tex on the basis of its misuse of the '912 patent and other patents in licensing. 398 F.Supp. 31, 182 USPQ 523, mod., 541 F.2d 1127, 192 USPQ 241 (5th Cir.1976), cert. denied, 433 U.S. 910, 97 S.Ct. 2976, 53 L.Ed.2d 1094 (1977).

Lex Tex sued Burlington, alleging purge of misuse and infringement after the purge. The cases were transferred to the Southern District of Florida, where separate trials were held in this order: (1) without a jury, on the purge issue, resulting in The judgment on the equitable defenses was accompanied by written findings and conclusions, in which the district court determined that Stoddard and Seem (the '912 applicants) knew of and did not disclose during prosecution (1957 through 1963) British Patent No. 710,082 to Weiss (Weiss) and Italian Patent No. 531,481 to DaGasso (DaGasso). The court further determined, however, that there was no clear and convincing evidence of materiality or intent and, hence, no fraud on the PTO. 1

a judgment that purge was achieved as of May 31, 1977; (2) with a jury, on the validity issue under Secs. 102 and 103, resulting in a hung jury; (3) without a jury, on the equitable defenses of "fraud on the PTO", laches and estoppel, resulting in a judgment for Lex Tex; (4) with a jury, on the validity issue under 35 U.S.C. Secs. 102 and 103, resulting in a judgment for Lex Tex; and (5) with a jury, on damages, resulting in an award to Lex Tex of nearly $8.8 million, plus interest.

B. The '912 Patent

The '912 patent relates to reprocessing "torque stretch yarns", produced by twisting a multifilament yarn, heat setting the twist, and reverse twisting. Production of torque stretch yarns was the subject of three basic "single heater" patents involved in earlier phases of the litigation.

Torque stretch yarns possess certain properties that the processes claimed in the '912 patent were designed to improve by simultaneously applying heat and tension to the yarn in whatever correlation is required to produce desired effects. Different correlations produce different effects. Process claim 1 reads:

1. The method of processing multifilament "torque stretch yarn" whose stretch characteristics have been set at a given temperature comprising the steps of continuously advancing the yarn, controlling the degree of tension in said travelling yarn in at least one portion of its continuous travel, said tension being below the breaking tension of the structural elements of the yarn, heating said yarn during said portion of its continuous travel to a temperature not substantially greater than said given temperature and correlating the controlled tension and the heat imparted to said yarn with the tensile force necessary to extend the yarn to the limit of its stretch characteristics and the tensile force necessary to extend the yarn to the yield point of the structural elements of the yarn to thereby control the physical characteristics in the reprocessed yarn.

Other process claims specify the correlating criteria, add the step of controlling tension in a second portion of the yarn's travel, or add a process of making torque stretch yarn from multifilament yarn before performing the process set forth in claim 1. The process claims were originally in suit but were withdrawn after the Board opinion in a PTO reissue proceeding, discussed infra, determined that most of them do not avoid the prior art.

The yarns produced by the processes of the '912 patent are asserted to have uniform characteristics throughout their length. Moreover, the tendency of torque stretch yarn randomly to "pigtail", i.e., the tendency of groups of opposed spiralled formations to twist about themselves, is described as lessened. Product claims 24, 26, 27, and 31, the only claims in suit, cover the yarn produced by the foregoing processes, though not couched in product by process terminology. Claim 24 reads:

24. A processed "torque stretch yarn" characterized by uniform reorientation of the structural elements of the yarn components to thereby exhibit substantial uniformity throughout its length in its latent and manifest physical characteristics of shape, luster, cross-sectional area, texture, dimensional stability, torque, resilience, residual shrinkage, stretch, recovery from stretch, and elasticity, said yarn having substantially balanced Claim 26 is identical to claim 24 except that the bulk is "high" instead of "moderate" and the filaments "infrequently tend to ... pigtail when relaxed". Claim 27 is identical to claim 24 except that the bulk is "high". Claim 31 reads:

torque and moderate bulk and a plurality of individual filaments manifesting a plurality of partially spiralled formations of opposed direction which remain separate from one another without tending to twist upon themselves or pigtail when relaxed, said formations being yarn-set.

31. A reprocessed torque stretch yarn having in at least a portion of its length a filament have substantially regular opposed partially spiralled formation, the spirals of said filament being less than one convolution.

C. Weiss and DaGasso Patents

The Weiss patent teaches that undesirable characteristics of stretch yarn made by a prior twist-heat set-untwist batch method can be lessened by stretching the yarn from 10% to 70% and steaming it in the stretched state for up to 30 minutes. The Weiss patent discloses a batch process, as opposed to the continuous process of the '912 patent. The Weiss patent had counterparts in a number of foreign countries, including the United States (U.S. Patent No. 2,765,505, issued on October 16, 1956).

DaGasso teaches subjecting yarn made by a continuous twist-heat set-untwist method to a second continuous process involving heat treatment followed by a drawing action. The parties agree and the district court found that during heat treatment the yarn is under positive tension.

D. Prosecution History of the '912 Patent

The application that resulted in the '912 patent ('912 application) was filed on April 19, 1957, with process claims 1-23, product claims 24-29, and apparatus claims 30-32, to which a fourth apparatus claim 33 was added by amendment before the examiner's first Office Action. Pursuant to a restriction requirement in the first Office Action, apparatus claims 30-33 became claims 1-4 of Continuation-In-Part (CIP) application 682,724, filed September 9, 1957 and issued on February 19, 1963, as U.S. Patent No. 3,077,724 ('724 patent). The specification of application 682,724 ('724 application) is essentially identical to that of the '912 application.

In the second Office Action on the '912 application, claims 1-23 and 25-29 were indicated as allowable. Only product claim 24 (subsequently issued) was rejected as unpatentable, on U.S. Patent No. 2,411,132 to Hawthorne. Subsequent office actions involved rejections of added product claim 37 (subsequently issued as claim 31) on U.S. Patent No. 2,564,245 to Billion and, later, on U.S. Patent No. 2,909,028 to Comer et al., and of added product claim 35 (subsequently issued claim 30) on U.S. Patent No. 2,211,211 to Finlayson in view of Belgian Patent No. 545,983 to Chavanoz.

E. Reissue Proceeding

After trial of the purge issue, but before the first trial on the validity issue, the district court issued an order: requiring Lex Tex to file application for reissue of the '912 patent in the PTO; permitting Lex Tex to modify the reissue oath to preserve its position in the litigation; instructing the PTO "to use the expedited new reissue procedure"; and permitting defendants to participate in the PTO proceedings. 2


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