Kahn v. Dynamics Corp. of America

• Decision Date: 21 April 1975
• Docket Number: No. 981,D,981
• Citation: 184 U.S.P.Q. 260,508 F.2d 939
• Parties: Leonard KAHN, Plaintiff-Appellant, v. DYNAMICS CORPORATION OF AMERICA, Defendant-Appellee. ocket 73-2848.
• Court: U.S. Court of Appeals — Second Circuit

Page 939

508 F.2d 939

184 U.S.P.Q. 260

Leonard KAHN, Plaintiff-Appellant, v. DYNAMICS CORPORATION OF AMERICA, Defendant-Appellee.

No. 981, Docket 73-2848.

United States Court of Appeals, Second Circuit.

Argued May 21, 1974.

Decided Dec. 10, 1974, As Modified On Denial of Rehearing

Jan. 9, 1975, Certiorari Denied April 21, 1975,

See 95 S.Ct. 1657.

Laurence B. Dodds, Great Neck, N.Y. (Joseph R. McPhee, Jr., and George Pollack, New York City, on the brief), for plaintiff-appellant.

Thomas M. Ferrill, Jr., and Allen V. Hazeltine, Blue Bell, Pa., for defendant-appellee.

Before SMITH and TIMBERS, Circuit Judges, and TYLER, District Judge. ¹

TYLER, District Judge.

Plaintiff Leonard R. Kahn sued Dynamics Corporation of America ('DCA'), charging that certain models of the 'REL' radio receiving systems, made and distributed by DCA, infringed Kahn's patent No. 3,030,503, issued on April 17, 1962 (hereinafter the '503 patent'). He appeals from the trial court's denial of his claims and assessment of liability on his part for attorneys' fees. Since we believe there is ample evidence to support the reasoning and judgment of the trial court, we affirm in all respects but remand the case for determination of the exact amount of attorneys' fees to be awarded to defendant.

After the trial, the district court entered judgment on the basis of an opinion holding that the Kahn patent was invalid in view of certain prior art, 35 U.S.C. 102 and 103; holding that the 503 patent was invalid because of Kahn's failure to disclose material facts and because he made material misrepresentations to the Patent Office; determining that claims 15 and 16 of the 503 patent were invalid because they were first asserted in and after August, 1961, more than one year after equipment identical to that charged to infringe had been on sale and distributed to customers; holding that plaintiff had failed to sustain his burden of proving infringement; dismissing the complaint with costs; and determining that, because the case is exceptional within the purview of 35 U.S.C. 285, defendant is entitled to recover attorneys' fees as part of its costs.

Kahn has asserted that his patent covers all diversity radio receiving systems wherein the outputs of the diversity receiving branches are combined linearly in phase by any circuit which causes the strength of the signal from each branch, at the point where the signals from all branches are combined, to be proportional to the square of the strength of the signal received by the antenna for that branch. The practical core of this patent dispute is that both the 503 patent and the devices manufactured by DCA are intended and designed to overcome the problem known even to laymen as 'fading' of radio signals.

As is commonly known, radio signals take many courses in traveling substantial distances from a transmitter to a receiver. While radio signals can, but rarely do, follow the earth's curvature, they usually travel upward away from earth and are refracted back to earth by the ionosphere. Indeed, radio waves may be refracted once, or they may bounce back and forth between the earth and the ionosphere several times before they reach a receiver. Thus, signals intercepted by the receiver system antenae may have traveled over widely different paths of unequal distances.

Radio signals are cyclical in nature; that is, they have crests, or positive phases, and troughs, or negative phases. Therefore, the crest of a portion of a signal traveling on one path may arrive at the same time as the trough of a portion of the same signal traveling on another path. Moreover, the relationship of the phases at the receiver may vary from 0 to 360 degrees, resulting in either a weakening or a strengthening of the signal when the portions are combined. In sum, continuous variations from a full reinforcement (0 degree or 360 degree phase relationship) to complete cancellation (180 degree phase relationship) result in what is called fading.

As the trial court also found, a radio signal does not occupy a single frequency but includes a band or range of frequencies. Each frequency is affected differently by the refractions from the ionosphere to the earth. As a consequence, the various signals within a frequency band may be affected differently so that the relationship among their strengths at the receiver is not the same as it was at the transmitter. This condition produces what is known as selective fading.

Kahn's 503 patent is intended to reduce these fading problems by making use of a diversity reception system for improving signal strength in relation to noise level. By this method, two or more receivers are simultaneously employed to receive signals transmitted over long distances. After linear amplification and demodulation, the signals are combined in phase and in proportion to the squares of the strengths of the incoming signals. Thus, should the incoming signals have relative amplitudes of three to two, they will be combined in a ratio of nine to four. The subject matter of the 503 patent amounts to a claimed improvement in the field of diversity receiving systems effected by utilizing two or more receivers in combination to overcome the effects of signal fading which may result in a low or virtually negligible signal reception in one or more of the multiple receivers.

The 503 patent was granted to Kahn on April 17, 1962, upon a continuation of Kahn's original application (No. 365,964) which was filed July 3, 1953, but abandoned on December 13, 1960, after continued disallowances by the Patent Office. Accompanying the continuation application was a letter setting forth arguments with respect to the so-called Oswald Patent (No. 2,219,749, issued October 29, 1940). The significance of this letter was that theretofore the Patent Office had consistently concluded that the teaching of the Oswald Patent clearly embraced the Kahn application. Indeed, on June 20, 1961, the continuation application of Kahn was again rejected as being substantially met or anticipated by Oswald. Indefatigable, Kahn and his counsel nevertheless filed an amendment in August, 1961, wherein they contended, inter alia, that the system described by Oswald could not work because of random phase variations of the signals to be combined. The last contention appears to have been largely responsible for finally persuading the Patent Office to issue a patent. But at trial Judge Tenney found the contention completely lacking in merit because the Oswald patent describes a system which would satisfactorily solve the random phase variation problem. In other words, the trial court accepted the testimony of defendant's experts which established that, by proceeding on the basis of the Oswald patent, a satisfactory diversity system using ratio square combination could be devised without undue difficulties caused by random phase inconsistency. The system contemplated would operate by reconditioning the reduced amplitude carrier of each receiving branch and by introducing each branch's reconditioned carrier into its second detector.

We believe that the testimony at trial amply supports the trial judge's conclusions on the teaching of Oswald and on other prior art in the field. We have little to add to the specific findings and reasoning of the trial court on this and other matters. Nevertheless, some of the evidence at trial and findings of the trial court will be explored to determine whether Kahn misled the Patent Office and proceeded in bad faith in other ways. Such actions would be sufficient to make this an 'exceptional case' within the meaning of 35 U.S.C. 285 and to support the trial judge's exercise of discretion under that statute in awarding attorneys' fees to the defendant.

As Judge Tenney recognized, the presumption of validity of a patent may be strengthened where the Patent Office has granted it with knowledge of relevant prior art, here most particularly the Oswald Patent. However, that presumption should not attach where there is evidence that the Patent Office has been misled as to the true import of prior art references. Cf. John Deere Co. v. Graham, 333 F.2d 529, 530 (8th Cir. 1964), aff'd, 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). The presumption has also been weakened in recent years by the fact that the Patent Office is too overworked to give adequate attention to patent applications and grants. See Ansul Company v. Uniroyal, Inc., 301 F.Supp. 273, at 280 (S.D.N.Y.1969), aff'd in relevant part, 448 F.2d 872 (2d Cir. 1971), cert. denied, 404 U.S. 1018, 92 S.Ct. 680, 30 L.Ed.2d 666 (1972); cf. Graham v. John Deere Co., 383 U.S. 1, 18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). Here on the basis of persuasive evidence, the trial court found that Kahn made no new contributions to the art but, at best, reworked and republicized information previously developed by others. Indeed, Judge Tenney found that some of the information Kahn used was obtained from publicly available works which he had encountered many years ago while working as an engineer for Crosby Laboratories.

The record clearly indicates that the Oswald Patent contains a full disclosure of the principle of ratio-squared combining in a diversity system. Moreover, the mode of operation and the circuitry...