Lyle/Carlstrom Assoc. v. Manhattan Store Interiors

• Citation: 635 F. Supp. 1371
• Decision Date: 28 May 1986
• Docket Number: No. CV 85-4347.,CV 85-4347.
• Parties: LYLE/CARLSTROM ASSOCIATES, INC., Plaintiff, v. MANHATTAN STORE INTERIORS, INC. and Albert C. Winters, Defendants.
• Court: U.S. District Court — Eastern District of New York

635 F. Supp. 1371

LYLE/CARLSTROM ASSOCIATES, INC., Plaintiff, v. MANHATTAN STORE INTERIORS, INC. and Albert C. Winters, Defendants.

No. CV 85-4347.

United States District Court, E.D. New York.

May 28, 1986.

COPYRIGHT MATERIAL OMITTED

Edward H. Loveman, Melville, N.Y., for plaintiff.

Brumbaugh, Graves, Donohue & Raymond by Peter J. Phillips, James J. Maune and Robert Scheinfeld, New York City, for defendants.

MEMORANDUM AND ORDER

WEXLER, District Judge.

Plaintiff Lyle/Carlstrom Associates, Inc. (LCA) commenced this action against defendants Manhattan Stores Interiors, Inc. (MSI) and Albert Winters, seeking a declaratory judgment that defendants' United States Patent No. 4,223,966 (the '966 patent) is invalid.¹ 28 U.S.C. § 2201. MSI contends that the patent is valid and has asserted a counterclaim, alleging that LCA infringed the '966 patent. After joinder of issue, LCA moved for partial summary judgment on the issue of patent invalidity. Briefs and affidavits were submitted and the parties appeared for oral argument before the Court, at which time decision was reserved. For the reasons stated below, the Court concludes that the '966 patent is invalid and, therefore, LCA's motion for partial summary judgment is granted and defendant's counterclaim is dismissed.

BACKGROUND

A. The '966 Patent

Albert Winters, the patentee, has been the president of MSI since at least 1960, and on June 1, 1979, he assigned all of his rights in the '966 patent to MSI. He applied to the United States Patent and Trademark Office (PTO) and on September 23, 1980 Winters was issued United States Patent No. 4,223,966. The '966 patent, which contains six claims,² describes a free-standing, adjustable glass display case that can be readily assembled and disassembled. More specifically, the '966 patent consists of four glass plates that are joined at their edges to form a rectangular box. Two of the plates stand horizontally. The other two glass plates stand vertically. Each plate has two rows of holes extending along the side of the plate. The plates are held together at their edges by resilient, L-shaped clips. The arms of the clips are U-shaped and slide over the edge of the plate, holding the glass plates together by frictional engagement. The '966 patent provides for a vertical glass divider, also with two rows of holes from the top to bottom. The divider plate is secured to the two horizontal plates by a stiff plastic U-shaped clamp. The clamp fits over the edge of the divider and a screw is placed through one of the holes in the top or bottom plate and into the head of the clamp. By loosening and inserting the clamps through another pair of holes in the horizontal plates, the divider plate can be repositioned from side to side.

In a similar fashion, the '966 patent provides for glass shelves, which are parallel to the top and bottom plates and secured to the vertical plates by the same stiff plastic U-shaped clamps. As with the vertical divider plate, the clamps fit over the edge of the shelves and are held in place by screws placed through the row of holes in the vertical plates and into the head of the clamps. This allows the shelves to be readjusted up or down. The '966 patent also provides for U-shaped clamps with screws, so that two shelves can be placed at the same level. Furthermore, the entire case has a glass back plate, secured to the two horizontal and two vertical plates by the previously-mentioned L-shaped clips. The '966 patent also provides that these L-shaped clips can secure a second display case of similar design to the back plate of the first case. Finally, the '966 patent describes other frictionally engaging plastic clips with either two, three or four U-shaped arms to join various top, side, and back plates together.

B. The Reissue Application

In March 1984, MSI sought a re-issue patent. A disclosure statement was filed and on July 10, 1984, defendant's attorney conducted an interview with an examiner of the PTO. Five weeks later, on August 17, the PTO examiner called defendant's attorney to inform him that the re-issue application would be rejected in light of two British patents. Defendant's attorney requested an adjournment of the interview and one month later, on September 12, 1984, he notified the PTO that the re-issue application was being abandoned. The PTO never formally rejected the re-issue application although it is clear that if the re-issue application had not been abandoned, it would have been rejected by the PTO.

C. Infringement Litigation by MSI

In the course of this litigation, it has come to the Court's attention that MSI has commenced at least three lawsuits to enjoin infringement of the '966 patent. Two of the actions were settled and subsequently terminated. Neither action involved LCA. One of the settlement agreements is under seal. The other agreement, which has been attached to defendants' moving papers as an exhibit, indicates that a defendant in one of these lawsuits agreed not to make, sell, or display its own adjustable display case, unless the '966 patent is declared invalid. In the third action MSI sued LCA in the United States District Court for the Southern District of New York. LCA moved to dismiss for improper venue, but the action was discontinued by MSI before a decision was rendered.

D. Commercial Success and Copying

Defendants also allege that the '966 patent has met with extraordinary commercial success. In an affidavit, Winters states that MSI's sales in glass display cases increased ten-fold, from $500,000 to $5,000,000, following the introduction of a glass display case based on the '966 patent. Winters admits that separate records are not kept, but maintains that a large part of the increased volume is due to his invention. He states further that glass display cases based on the invention have attracted considerable customer interest and that MSI's competitors have changed their case design to copy MSI's glass display cases.

OBVIOUSNESS

LCA contends that the '966 patent is invalid as obvious under 35 U.S.C. § 103 when compared to prior art. LCA has moved for summary judgment on this issue. Aside from the other requirements of the statute, a patent is invalid "if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which the subject matter pertains." 35 U.S.C. § 103. In the landmark case of Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), the Supreme Court examined the background of 35 U.S.C. § 103 and outlined a four part inquiry to be followed when a patent is challenged for obviousness. The Court held that:

While the ultimate question of patent validity is one of law, (citation omitted), the § 103 condition, which is but one of three conditions, lends itself to several basic factual inquiries. Under § 103, the scope and content of the prior art are to be determined; the differences between the prior art and the claims at issue are to be ascertained; and the level of skill in the pertient art are to be resolved. Against this background, the obviousness or non-obviousness 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, these inquiries may have some relevancy.

383 U.S. at 17-18, 86 S.Ct. at 694. The Supreme Court has not deviated from this test. See Sakraida v. AG Pro, Inc., 425 U.S. 273, 96 S.Ct. 1532, 47 L.Ed.2d 784 (1976). The Graham Court did not expect that the question of "obviousness" would be an easy one to resolve or that results would be uniform, but suggested that this question was no more difficult than issues such as negligence or scienter. 383 U.S. at 18, 86 S.Ct. at 694. The lower federal courts have indeed made a substantial contribution to the question of obviousness, but the definition remains elusive and, in the words of Learned Hand, "misty enough." Reiner v. I. Leon Co., 285 F.2d 501, 504-05 (2d Cir.1960), cert. denied, 366 U.S. 929, 81 S.Ct. 1649, 6 L.Ed.2d 388 (1961).

A court may grant a motion for summary judgment if "there exists no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Rule 56, Fed.R.Civ.P.; American Manufacturers Mutual Insurance Company v. American Broadcasting-Paramount Theatres, 388 F.2d 272, 278-79 (2d Cir.1967). Despite a general reluctance to utilize summary judgment in patent cases, the Second Circuit has approved its use in certain circumstances. C-Thru Products v. Uniflex, Inc., 397 F.2d 952, 955 (2d Cir.1968). Since its creation, the Court of Appeals for the Federal Circuit has affirmed a number of lower court decisions declaring a patent invalid for obviousness on a motion for summary judgment. See, e.g., Cable Electric Products, Inc. v. Genmark, Inc., 770 F.2d 1015, 1028 (Fed.Cir.1985); Peterson Mfg. Co. v. Central Purchasing, Inc., 740 F.2d 1541, 1546 (Fed.Cir.1984); Barmag Barmer Maschinenfabrik AG v. Murata Machinery Ltd., 731 F.2d 831, 835-36 (Fed.Cir.1984); Union Carbide Corp. v. American Can Corp., 724 F.2d 1567, 1571 (Fed.Cir.1984); D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144, 1147 (Fed.Cir.1983), cert. denied, ___ U.S. ___, 106 S.Ct. 83, 88 L.Ed.2d 68 (1985); Chore-Time Equipment, Inc. v. Cumberland Corp., 713 F.2d 774, 778-79 (Fed.Cir.1983).

A. Disputed Factual Issues

In a motion for summary judgment, the moving party bears the burden of demonstrating the absence of all issues of material fact; the evidence is construed favorably to the non-moving party. United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). These rules apply equally in patent c...