Maxon Premix Burner Co., Inc. v. Eclipse Fuel Eng. Co., 71-1756 and 71-1757.

• Decision Date: 18 September 1972
• Docket Number: No. 71-1756 and 71-1757.,71-1756 and 71-1757.
• Citation: 471 F.2d 308
• Parties: MAXON PREMIX BURNER COMPANY, INC., Plaintiff-Appellee, v. ECLIPSE FUEL ENGINEERING CO., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

471 F.2d 308 (1972)

MAXON PREMIX BURNER COMPANY, INC., Plaintiff-Appellee, v. ECLIPSE FUEL ENGINEERING CO., Defendant-Appellant.

Nos. 71-1756 and 71-1757.

United States Court of Appeals, Seventh Circuit.

Argued June 9, 1972.

Decided September 18, 1972.

As Amended on Denial of Rehearing and Rehearing November 1, 1972.

Certiorari Denied February 20, 1973.

COPYRIGHT MATERIAL OMITTED

Granger A. Cook, Jr., James P. Hume, David A. Anderson, Chicago, Ill., for Maxon Premix Burner.

Norman H. Gerlach, Chicago, Ill., Louis Robertson, Arlington Heights, Ill., for Eclipse Fuel Engineering.

Before SPRECHER, Circuit Judge, DURFEE, Senior Judge,^* and ESCHBACH, District Judge.^**

As Amended on Denial of Rehearing and Rehearing En Banc November 1, 1972.

Certiorari Denied February 20, 1973. See 93 S.Ct. 1365.

SPRECHER, Circuit Judge.

Eclipse Fuel Engineering Company appeals from a district court decision enjoining Eclipse from infringement of a patent owned by Maxon Premix Burner Company, Inc. Maxon cross-appeals, challenging a finding of non-infringement by a prototype burner developed by Eclipse in 1963.

Maxon and Eclipse are engaged in the business of selling industrial gas burners. For many years the parties to this appeal competed in production and sales of line burners used for heating moving air by direct contact with a gas flame. Operation of these burners revealed that improvement was needed in several respects. The operative range of a single burner was so limited that multiple burners were necessary to increase the maximum firing rate and the "turn-down" ratio of the burner arrangement.¹ The installation of multiple burners required duplicate auxiliary equipment and a complicated control system. The firing ratio in a multiple burner system was not smooth and continuous and heat distribution was not of a uniform pattern.

In 1955, Maxon began a development engineering project which culminated in a line burner which operated without the disadvantages described above. The new burner was patented and immediately enjoyed commercial success. This suit resulted from attempts by Eclipse to copy Maxon's successful innovation.

Maxon's improved burner was patented in 1962 under U.S. Patent No. 3,051,464. In 1964, reissue Patent No. Re 25,626, the subject patent in suit, was granted. The reissue patent included additional claims but the claims held infringed were all included in the original patent. The district court held claims 3, 7, 8 and 10 infringed by Eclipse's AH, RAH, AHO, TAH, TAHR and DAH burner assemblies, AH-D and RAH-D units, and AH-DS and AHDP systems.

The parties agree that claim 3 is representative of the patent claims held infringed. Claim 3 is for a "high turndown ratio gas burner for operation in and for heating a low-pressure air stream flowing forward past the burner at a velocity of the order of 1500 to 4000 feet per minute" and comprising in combination:

(1) "a variable low-rate burner for variable low-rate combustion of combustible air-gas mixtures independently of air from the passing air stream and operable over a substantial turn-down range when supplied at various rates with combustible air-gas mixtures;"

(2) a "shielding wall . . . connected to said burner body and extending forward in laterally spaced relation from opposite sides of said variable low-rate burner, said wall means defining in front of said variable low-rate burner a shielded zone in which said variable low-rate combustion can take place independently of and shielded from the passing air stream and in which at higher combustion rates fuel gas can flow forwardly from said gas port means;"

(3) "mixing plates extending obliquely forward and outward from said shielding walls in widely divergent relation and defining at the front thereof a forwardly widening mixing space in open receptive communication with said shielded zone and having an open discharge at its forward end, said mixing plates being arranged for exposure to the air stream and for shielding said mixing space therefrom, . . ."²

Eclipse urges several grounds for reversal of the district court judgment. It argues that the court erred in refusing to make a finding on patent validity, in finding infringement of the patent in question, and in refusing to hold that Maxon was estopped from bringing this suit on the basis of long term knowledge of and acquiescence in defendant's actions. We are unable to agree with these contentions.

I.

Eclipse insists that the district court judgment cannot stand because the decision did not include an affirmative finding of patent validity.³ Maxon argues that Eclipse waived its right to contest validity through a prior consent judgment between the two parties and through its concession during trial that validity was not in issue.

The earlier consent judgment followed suit by Maxon in 1962 charging infringement of the original patent by a prior Eclipse burner. This litigation concluded with a settlement agreement in which Eclipse acknowledged validity of U.S. Patent No. 3,051,464 and agreed not to manufacture or sell any burner covered by the patent claims. Following this agreement, Eclipse discontinued production of the burner involved in that litigation and introduced the burner now held to infringe reissue patent No. Re 25,626. As noted above, the claims held to be infringed by the reissue patent are identical to those in the original patent.

Eclipse argues that the prior consent judgment does not preclude it from challenging validity in this action under Lear, Inc. v. Adkins, 395 U.S. 653, 89 S. Ct. 1902, 23 L.Ed.2d 610 (1969) and Business Forms Finishing Service, Inc. v. Carson, 452 F.2d 70 (7th Cir. 1971). Lear held that a licensee was not estopped from challenging the validity of a patent notwithstanding the licensing agreement. Business Forms held that the rationale of Lear required that a party be permitted to challenge validity even though a prior consent decree had held the patent in question valid but not infringed. The consent decree involving the patent claims in this action held the patent valid and infringed. We need not decide whether the distinctions between the two cases can justify a difference in treatment because we believe Eclipse effectively waived any rights it might otherwise have to challenge the validity of Maxon's patent through its actions during the course of the trial.

The trial court's decision in this case, following a lengthy trial, was entered on July 2, 1971. Lear, Inc. v. Adkins, supra, was decided on June 16, 1969. Yet Eclipse did not raise the issue of patent validity with respect to the claims found to be infringed until August 9, 1971, when it filed a post-trial motion in the district court. Prior to this belated action, counsel for Eclipse had stated, during trial, that they admitted "that the issue of validity so far as the original claim is concerned is not here in issue." Eclipse also conceded in the stipulated facts submitted prior to trial that if any of the claims here in issue were held to be infringed, the patent would be enforceable against the defendant.

A properly issued patent is presumed to be valid and the burden of proving invalidity rests upon the person challenging validity. 35 U.S.C. § 282. In this case, the failure to offer proof on the question of validity, particularly when coupled with statements admitting the validity of the patent claims, precluded Eclipse from belatedly attempting to contest validity after the trial was over.⁴ A contrary determination would disregard the statutory requirement, enabling a defendant in an action for infringement to avoid its burden of proving invalidity during the initial trial. The result would be either to force the plaintiff to prove affirmatively the validity of the patent in question or to give the defendant what would amount to a second chance to prove its non-liability to the patentee if the ruling on infringement went against it. Although public policy encourages tests of patent validity, see Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 344-345, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971), public policy also favors conservation of judicial time and limitations on expensive litigation. Id. at 334-349, 91 S.Ct. 1434, 28 L.Ed.2d 788. None of these policies would be served by a ruling which permitted a party to contest validity only when the close of the trial revealed that it had lost on the issue of infringement. We conclude that the district court was correct in ruling that Eclipse waived its right to contest validity regarding the claims held to be infringed by the trial court.

II.

Eclipse contends that Maxon's claim is barred by laches. Eclipse began manufacture of the burners in suit in 1963. Maxon gave Eclipse notice of infringement on October 12, 1967. This suit was filed on January 23, 1968. Eclipse argues that it was entitled to rely on Maxon's "acquiescence" during the intervening period, and that its reliance cost it a quarter of a million dollars in production costs. Acquiescence is predicated on Maxon's knowledge of the Eclipse burners now charged to infringe Maxon's patent.

The district court rejected Eclipse's argument for two reasons. First, it held that Maxon had a policy of one infringement suit at a time and that Maxon was involved in two such suits from 1962 until 1967. Second, it found that Eclipse's own conduct had prevented Maxon from obtaining complete knowledge of the construction of the accused assemblies until the period of February to May, 1966. In March, 1963, and again on July 20, 1965, counsel for Eclipse sent Maxon's counsel drawings of the purported AH burners. In each case, the drawings were for burners having mixing plates with uniformly sized openings and not the non-uniform apertures present in the actual Eclipse burners and required by the Maxon patent. The district court found that Maxon did not purchase an Eclipse burner until January, 1966, at...