Jeddeloh Brothers Sweed Mills, Inc. v. Coe Manufacturing Co.

• Decision Date: 03 March 1967
• Docket Number: No. 20662.,20662.
• Citation: 375 F.2d 85
• Parties: JEDDELOH BROTHERS SWEED MILLS, INC., a corporation, Otto Jeddeloh, Fred Jeddeloh, Appellants and Cross-Appellees, v. COE MANUFACTURING COMPANY, a corporation, Appellee and Cross-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

375 F.2d 85 (1967)

JEDDELOH BROTHERS SWEED MILLS, INC., a corporation, Otto Jeddeloh, Fred Jeddeloh, Appellants and Cross-Appellees, v. COE MANUFACTURING COMPANY, a corporation, Appellee and Cross-Appellant.

No. 20662.

United States Court of Appeals Ninth Circuit.

March 3, 1967.

J. Pierre Kolisch, M. H. Hartwell, Jr., Jon M. Dickinson, of Kolisch & Hartwell, Portland, Or., for appellants and cross-appellees.

Kenneth S. Klarquist, of Buckhorn, Blore, Klarquist & Sparkman, Gunther F. Krause, of Krause, Lindsay & Nahstoll, Portland, Or., James T. Hoffmann, of Hoffmann & Yount, Cleveland, Ohio, for appellee and cross-appellant.

Before HAMLEY and KOELSCH, Circuit Judges, and WALSH, District Judge.

HAMLEY, Circuit Judge:

This suit involves the validity and infringement of claims 3, 5, 7 and 17 of Reissue No. 24,638 of Parker Patent No. 2,649,182, owned by plaintiff Coe Manufacturing Company (Coe). References hereinafter to the Parker patent pertain only to claims 3, 5, 7 and 17 of that patent. This is a combination patent describing an apparatus for feeding veneer into a multiple-deck conveyor-type veneer dryer.

The defendants are Jeddeloh Brothers Sweed Mills, Inc., manufacturer and seller of the accused apparatus, and Fred and Otto Jeddeloh, president and vice-president respectively, and major stockholders, of Jeddeloh Brothers. The defendants are collectively referred to herein as Jeddeloh.

The district court found and concluded that claims 3, 5, 7, and 17 of the Parker patent are valid and that claim 17 is infringed by Jeddeloh. A judgment was entered to this effect, awarding single damages and granting injunctive relief. Defendants appeal and plaintiff cross appeals. This is the second time that this cause has reached this court. See Coe Manufacturing Company v. Jeddeloh Brothers Sweed Mills, Inc. et al., 9 Cir., 306 F.2d 455.¹

Jeddeloh contends, on its appeal, that: (1) the Parker patent is invalid for failure to meet the requirements of a patentable invention; (2) the Parker patent was invalidly reissued under the language of the reissue statute; (3) defendants did not infringe the Parker patent; (4) Coe is estopped to assert the patent claim which was held to be infringed; (5) the individual defendants are not personally liable for infringement damages; and (6) the amount of damages has been incorrectly determined.

Coe argues, on its cross appeal, that: (1) in addition to the claim held to be infringed, other claims of the Parker patent were also infringed; (2) interest on the damages awarded to Coe was improperly computed; and (3) exemplary damages and attorneys' fees should have been awarded for Jeddeloh's wilful infringement of the Parker patent.

We hold that the Parker patent is invalid and therefore, without reaching the other issues raised on the appeal and cross appeal, reverse with directions to dismiss the action.

As the Supreme Court recently stated in Graham, et al. v. John Deere Co. of Kansas City, et al., 383 U.S. 1, 12, 86 S.Ct. 684, 15 L.Ed.2d 545, patentability is dependent upon three explicit conditions: novelty and utility as defined in 35 U.S.C. žž 101, 102 (1964), and nonobviousness, as defined in 35 U.S.C. ž 103 (1964). The district court, in its findings, held that the Parker reissue patent met all three of these tests.²

Jeddeloh questions the trial court's determination that the subject matter of the Parker reissue patent is novel and nonobvious, and advances additional reasons why the patent should be declared invalid.

We turn to the question of nonobviousness under the test of section 103.³ Since the district court entered its judgment on May 21, 1965, the Supreme Court has announced two decisions dealing with the essential condition of nonobviousness. See Graham, et al. v. John Deere Co. of Kansas City, et al., 383 U.S. 1, 86 S.Ct. 684, and United States v. Adams, et al., 383 U.S. 39, 86 S.Ct. 708, 15 L.Ed.2d 572, both announced on February 21, 1966. The general considerations which the Patent Office and courts should take into account in determining whether a claimed invention is nonobvious are discussed in Graham.

The entire tenor of the Graham decision is that there should be strict observance of all three explicit conditions precedent to the issuance of a patent, namely novelty, utility and nonobviousness, with special emphasis being placed on the latter.⁴ The Court pointed out that Art. I, ž 8, cl. 8 of the Constitution, from which the federal patent power is derived, is both a grant of power and a limitation. The limitation is that the patent power shall be used only to promote advances in the "useful arts."

In Graham, the Court held that innovation, advancement, and things which add to the sum of useful knowledge are inherent requisites of a patent system subject to such a limitation. This is the standard expressed in the Constitution, said the Court, and it is the duty of the Commissioner of Patents and of the courts in the administration of the patent system to give effect to this constitutional standard by appropriate application, in each case, of the statutory scheme of Congress.

Reviewing the pertinent judicial and legislative history, the Supreme Court said, in Graham, that the test of nonobviousness, which first found statutory expression in section 103, was not intended to lower the level of patentability as previously determined. Instead, it was intended to codify existing judicial precedents and to promote uniformity and definiteness by focusing attention upon nonobviousness rather than the less definite "invention" language of Hotchkiss v. Greenwood, 11 How. 248, 52 U.S. 248, 13 L.Ed. 683, and succeeding cases.

In Graham, the Supreme Court particularized the factual inquiries to be pursued in providing a basis for a legal conclusion as to whether the subject matter of the claimed invention was obvious or nonobvious within the meaning of section 103. The Court stated:

"Under ž 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented. As indicia of obviousness or nonobviousness, these inquiries may have relevancy." (383 U.S. at 17-18, 86 S.Ct. at 694.)

The principles of patentability, as summarized above, are to be applied with special strictness in determining the patentability of combination patents. In Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 151, 152, 71 S.Ct. 127, 95 L.Ed. 162, the Court said that the concept of invention is inherently elusive when applied to a combination of old elements. The Court pointed out that the conjunction of known elements must contribute something, and that only when the whole in some way exceeds the sum of its parts is the accumulation of old devices patentable.⁵

With these guiding principles in mind, we turn to the question of whether the Parker reissue patent, describing an apparatus for feeding green veneer into a multiple-deck veneer dryer, is invalid for nonobviousness. For the purpose of discussing that question we will assume, as the trial court held, that the Parker reissue patent is for a combination of old elements, that the combination shown is new as compared to other combinations disclosed by the prior art,⁶ and that the Parker patent is primarily an apparatus for handling sheets of veneer.⁷

It is the practice in the Pacific Northwest plywood industry to cut or peel thin veneer from a log in long sheets. These are then cut into sheets or panels of irregular size and stacked in piles according to size, grade and thickness. Such veneer contains large amounts of moisture which must be removed prior to making the veneer into plywood. Removal of this moisture is accomplished by passing the veneer through long, heated dryers having four or more tiered conveyor decks upon which single thicknesses of the veneer are carried through the dryers.

Before the original Parker patent was applied for, stacks of veneer were positioned in front of a dryer. The veneer sheets were then pulled off the stacks by hand, one at a time, and lifted and pushed into the individual decks of the dryer. During the feeding of a dryer by hand, the sheets of veneer were sometimes broken or damaged and frequently the dryers were not kept completely full.

Green or undried veneer sheets are dissimilar to manufactured sheet products such as plasterboard, paper and sheet-metal, in that green veneer varies in quality, length, width, thickness, flexibility and flatness. Green veneer also has a tendency to curl. Because of these characteristics, green veneer is difficult to handle, particularly with a mechanical apparatus. Nevertheless, as early as 1936, Coe undertook to develop such an apparatus. Coe has been the leading manufacturer of equipment for plywood mills for many years, and has also manufactured dryers, conveyors and other sheet-handling equipment for the plaster-board and fibreboard industry.

From 1939 to 1941, Coe designed and constructed three different apparatuses for feeding veneer into a dryer. None of them performed satisfactorily, and all were scrapped after trial periods. In 1948, C. E. Parker, then a design engineer for Coe, but who died prior to the trial, developed the asserted invention described in the patent in suit. The Parker patent shows a preferred and an alternative embodiment.

The preferred embodiment of the patent is described in claims 3, 5 and 7,⁸ and contains nine principal features: (1) a normally open pair of driven infeed pinch rolls between which the leading ends of the top layer of veneer...