Kearney & Trecker Corp. v. Cincinnati Milacron Inc.

Decision Date01 September 1977
Docket Number76-1132,Nos. 76-1131,s. 76-1131
Citation195 U.S.P.Q. 402,562 F.2d 365
Parties, 1977-2 Trade Cases 61,611 KEARNEY & TRECKER CORPORATION, Plaintiff-Appellant-Cross-Appellee, v. CINCINNATI MILACRON INC., and Cincinnati Milacron Company, Defendants-Appellees-Cross-Appellants.
CourtU.S. Court of Appeals — Sixth Circuit

Thomas S. Calder, John M. Kunst, Jr., Cincinnati, Ohio, Lester S. Clemons, Quarles & Brady, Thomas W. Ehrmann, Thad F. Kryshak, Victor DeMarco, Robert J. Hoerner, Milwaukee, Wis., Jones, Day, Reavis & Pogue, Cleveland, Ohio, for plaintiff-appellant.

C. Jackson Cromer, Jeffrey P. Laycock, Gatch, Ritchie & Kleinmann, Cincinnati, Ohio, Wm. Marshall Lee, Robert C. Curfiss, Lee & Smith, and James P. Hume, Hume, Clement, Brinks, William, Olds & Cook, Ltd., Chicago, Ill., for defendants-appellees-cross-appellee.

Before CELEBREZZE and LIVELY, Circuit Judges, and SILER, * District judge.

LIVELY, Circuit Judge.

In this patent case the district court found that Kearney & Trecker (K&T) had practiced fraud on the Patent Office and had attempted to monopolize the domestic market for "multi-function machine tools with automatic tool changers." Though the district court found that one of the patents in litigation owned by K&T was valid and infringed by Cincinnati Milacron (Milacron), it was held to be unenforceable. The other patent was found to be invalid. Kearney & Trecker Corporation v. Cincinnati Milacron, Inc., 403 F.Supp. 1040 (S.D.Ohio 1975).

The present litigation began when Milacron filed a declaratory judgment action against K&T in the Southern District of Ohio on September 14, 1965 seeking a determination that two patents owned by K&T were invalid and that none of the claims of either patent had been infringed by Milacron. The patents in suit were both reissue patents Brainard, et al., No. Re.-Re. 25,737, 1 and Morgan, No. Re. 25,812. 2 The complaint also sought a declaration that none of the reissue claims of either patent was enforceable against Milacron by reason of intervening rights.

On September 20, 1965 K&T filed suit in the Northern District of Illinois, charging Milacron with infringement of four patents owned by K&T, including the Brainard and Morgan patents. Thereafter the Illinois case was transferred to the Southern District of Ohio, and it was consolidated with the pending action of Milacron v. K&T by stipulation. The order of consolidation, which was entered July 22, 1966, designated K&T plaintiff and the Milacron parties as defendants. Only the two patents challenged in the original Milacron suit are involved in this appeal.

Following extensive discovery proceedings Milacron was permitted to file an amended answer and counterclaim in which it alleged that both reissue patents were "unenforceable against defendants by reason of unclean hands and inequitable conduct on the part of the plaintiff in the procurement of said patents . . . ." The charges of unclean hands and inequitable conduct related, inter alia, to K&T's employment of a recently retired primary examiner in the Patent Office, T. Emmert Beall, to assist in the prosecution of the Brainard and Morgan reissue applications. It was also claimed that the Morgan patent was acquired from IBM by K&T with intent to monopolize commerce in "numerically controlled machinery centers with automatic tool changers, in violation of Section 2 of the Sherman Act and Section 7 of the Clayton Act . . . ." Milacron claimed injury to its business and property as a result of K&T's alleged monopolistic acts, consisting of the expense of preparing for and defending the infringement action with respect to patents "plaintiff (K&T) knew or had reason to know were illegally obtained and were invalid."

In its reply K&T admitted employing Beall and admitted his activities in connection with the Brainard and Morgan reissues, but denied any impropriety in the relationship. It also admitted purchasing the original Morgan patent from IBM and subsequently having it reissued, but denied violating the antitrust laws. While denying the charges of unclean hands and inequitable conduct, K&T admitted that claims 36-60 of the Brainard patent No. Re.-Re. 25,737 were unenforceable. These were claims that did not appear in the original Brainard patent, but sought to broaden its scope.

The "Beall connection" appears to have first come to the attention of K& T's competitors in the course of an infringement A violation of the proscriptions against conflict of interest to obtain a broadening reissue involves the same threat to the public interest as actual fraud practiced on the Patent Office. Id. at 595.

action which K&T brought against Giddings & Lewis in the Eastern District of Wisconsin. The details of Beall's employment by K&T and his involvement in obtaining the reissue Brainard and Morgan patents are set forth at length in an opinion of the Seventh Circuit, and will not be repeated here. See Kearney & Trecker Corporation v. Giddings & Lewis, Inc., 452 F.2d 579 (1971), cert. denied, 405 U.S. 1066, 92 S.Ct. 1500, 31 L.Ed.2d 796 (1972). Writing for a divided court, then Circuit Judge John Paul Stevens found Beall's conduct "indefensible," and held that conflict of interest rendered all reissue claims of Brainard unenforceable. 452 F.2d at 594. The court wrote:

Though K&T relinquished all claims obtained through the reissue and re-reissue of the Brainard patent, as it also did in the present case, the Seventh Circuit held that claims which were otherwise valid under the original application were also unenforceable. This holding was based on a finding that the invalidity of the reissue claims was not "without deceptive intention," and therefore maintenance of any action on the Brainard patent was prohibited by 35 U.S.C. § 288. 3 452 F.2d at 596. The court also concluded that it was "manifest" that the Morgan patent had been used to further K&T's purpose "to obtain a monopoly on the broad concept" recognized by the inventor, Brainard, at an earlier date, but not protected by the original patent issued to him in 1962. 452 F.2d at 595. The parties in the Giddings & Lewis case stipulated as to the relevant market 4 and the court of appeals held that the requirements for a finding of violation of Section 2 of the Sherman Act had been met. The case was remanded for a determination by the district court of whether Giddings & Lewis has sustained damages by reason of the antitrust violations.

In the present case the district court found that the Brainard claims which remained in dispute original claims 19, 20, 21 and 24 were valid and were infringed by Malacron. Though not concerned with identical claims, the district court and court of appeals had also found the original Brainard claims valid in the Giddings & Lewis case. The district court in the present case further held the only original Morgan claim in suit claim 10 was invalid as being overbroad and anticipated by Sulzer patent No. 2,363,208.


The patent claims and the machines produced by the various parties are fully described in the opinion of the district court in this case, and of the Court of Appeals for the Seventh Circuit. See 403 F.Supp. 1049-51; 452 F.2d 581-85. We turn to consideration of the district court's findings and conclusions with respect to validity of the Brainard claims in suit and Morgan claim 10, which are challenged by the parties, since validity of patents is a matter of public importance which should always be fully explored. Preformed Line Products Co. v. Fanner Manufacturing Co., 328 F.2d 265, 267 (6th Cir.), cert. denied, 379 U.S. 846, 85 S.Ct. 56, 13 L.Ed.2d 51 (1964).

Milacron argues in its cross-appeal that the original Brainard patent is invalid for anticipation and obviousness, and for fraud on the Patent Office in withholding the most pertinent prior art during prosecution of the patent. The district court considered these arguments and concluded that the Brainard patent met the statutory tests of patentability set forth in 35 U.S.C.

§§ 101, 102 and 103, and that no fraud tainted the proceedings which resulted in its issuance. Milacron next contends that the district court failed to follow controlling case law by holding that "it is not necessary to determine there is a 'synergistic effect,' whatever that is." Cases which have used the terms "synergistic effect" and "synergistic result" in referring to combination patents include Sakraida v. AG Pro, Inc., 425 U.S. 273, 282, 96 S.Ct. 1532, 47 L.Ed.2d 784 (1976); Anderson's-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57, 61, 90 S.Ct. 305, 24 L.Ed.2d 258 (1969); Philips Industries, Inc. v. State Stove & Mfg. Co., 522 F.2d 1137 (6th Cir. 1975), and Dickstein v. Seventy Corporation, 522 F.2d 1294 (6th Cir. 1975), cert. denied, 423 U.S. 1055, 96 S.Ct. 787, 46 L.Ed.2d 644 (1976). The synergistic test is met when a combination of elements produces an effect which is "greater than the sum of the several effects taken separately." Anderson's-Black Rock, supra, 396 U.S. at 61, 90 S.Ct. at 308. There must be an "impalpable something" in the combination itself which consists of previously known elements to pass the requirement of nonobviousness. Philips Industries, supra, 522 F.2d at 1141. Stated another way, there must be some "unusual or surprising result" from a combination of old elements. Dickstein, supra, 522 F.2d at 1299.

We conclude that the district court, while eschewing the word " synergistic," did apply the correct criteria in determining the issue of validity. The district court found that the Brainard device, which permitted preselection of the next tool while the previous tool is in use and the placing of the preselected tool into a position where it and the last used tool could be simultaneously interchanged, represented a "major technological advance." Though the mechanics of this operation were not new, the combination did produce a synergistic...

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