Minnesota Min. and Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc., 91-1428

• Decision Date: 30 September 1992
• Docket Number: No. 91-1428,91-1428
• Citation: 976 F.2d 1559,24 USPQ2d 1321
• Parties: , 24 U.S.P.Q.2d 1321 MINNESOTA MINING AND MANUFACTURING COMPANY, Plaintiff-Appellee, v. JOHNSON & JOHNSON ORTHOPAEDICS, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1559

976 F.2d 1559

61 USLW 2236, 24 U.S.P.Q.2d 1321

MINNESOTA MINING AND MANUFACTURING COMPANY, Plaintiff-Appellee, v. JOHNSON & JOHNSON ORTHOPAEDICS, INC., Defendant-Appellant.

No. 91-1428.

United States Court of Appeals Federal Circuit.

Sept. 30, 1992.

Rehearing Denied; Suggestion for

Rehearing In Banc Declined

Nov. 30, 1992.

Frank P. Porcelli, Fish & Richardson, Boston, Mass., argued for plaintiff-appellee. With him on the brief were Gregory A. Madera, Robert C. Nabinger and Mark J. Hebert. Also on the brief were David C. Forsberg, Karen D. McDaniel, Kathleen E. DiGiorno, Briggs & Morgan, St. Paul, Minnesota and Carolyn A. Bates and Terryl K. Qualey, 3M Co., St. Paul, Minn., of counsel.

Stephen B. Judlowe, Hopgood, Calimafde, Kalil, Blaustein & Judlowe, New York City, argued for defendant-appellant. With him on the brief were David F. Dobbins and Harman A. Grossman, Patterson, Belknap, Webb & Tyler, New York City. Also on the brief was Eric I. Harris, Johnson & Johnson, New Brunswick, N.J., of counsel.

Before RICH, Circuit Judge, SMITH, Senior Circuit Judge, and RADER, Circuit Judge.

RICH, Circuit Judge.

Johnson & Johnson Orthopaedics, Inc. (JJO) appeals from the judgment of the United States District Court for the District of Minnesota, Fourth Division, Civil Action No. 4-86-359, holding JJO liable for infringement of claims 1-4 and 8 of U.S. Patent No. 4,502,479, issued to Garwood et al. in 1985 (the Garwood patent); willful infringement of claim 1 of U.S. Patent No. 4,609,578, issued to Reed in 1986 (the Reed patent); willful infringement of claims 12 and 17 of U.S. Patent No. 4,667,661, issued to Scholz et al. in 1987 (the Scholz patent); and willful infringement of claims 3, 4, 10, 11, 12, 18, 21 and 43 of U.S. Patent No. 4,774,937, issued to Scholz et al. in 1988 (the Scholz II patent). The patents relate to orthopedic casting tapes and, more specifically, to resin based casting systems which have replaced plaster casts. The district court awarded Minnesota Mining And Manufacturing Co. (3M) damages of $53,636,348 and prejudgment interest in the amount of $9,525,000 and also awarded double damages based on JJO's willful infringement. We affirm.

I. BACKGROUND

A. The District Court Opinion

This case originally involved four U.S. patents and was tried before a Special Master, Janice M. Symchych (the Master). The lawsuit was filed by 3M against JJO alleging willful infringement of the four above-mentioned patents, misappropriation of trade secrets, theft, and receipt of stolen property. JJO counterclaimed for violation of antitrust laws and a declaratory judgment of patent invalidity and unenforceability on the four patents, as well as damages for fraudulent procurement and claims under Minnesota law for fraud, unfair competition and deceptive trade practices.

The trial lasted thirty-four days, involved the testimony of 32 witnesses and over one thousand evidentiary exhibits, and resulted in 435 findings of fact and 86 conclusions of law made by the Master. The Master's findings of fact/conclusions of law, and memorandum opinion are set forth at Minnesota Mining And Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc., Civil Action No. 4-86-359, 1991 WL 441901, 1991 U.S. Dist. LEXIS 11451 (D.Minn.-Fourth Div. April 30, 1991) and 1991 U.S. Dist. LEXIS 14823 (D.Minn.-Fourth Div. April 30, 1991), respectively. The Master's decision was reviewed by the district court in connection with the parties' motions related to the Master's report. These motions included JJO's opposition to the Master's report.

The district court subsequently issued an opinion dated July 26, 1991, 1991 WL 340579, based on the Master's findings of fact, conclusions of law, and memorandum opinion holding that the Garwood, Reed, Scholz and Scholz II patents are valid and enforceable, and that JJO infringed claims of all four patents. All of JJO's counterclaims were dismissed with prejudice. Damages and interest as above stated were awarded. Finally, the district court enjoined JJO from continued infringement of the patents in suit.

Since the district court adopted the Master's findings, we refer to the district court's findings in this opinion as the Master's findings.

On appeal, JJO challenges the Master's findings that: (1) the Scholz and Garwood patents are valid and infringed; (2) there was no inequitable conduct committed by 3M during the prosecution of the Scholz and Reed patent applications before the U.S. Patent and Trademark Office (PTO); (4) JJO willfully infringed the Scholz and Reed patents; and (5) 3M was entitled to the award of damages amounting to $53,636,348 (before doubling).

B. General Technology

The inventions involved in this case relate to synthetic orthopedic casting tapes which have replaced plaster of paris bandages which had been the preferred means used to immobilize broken or fractured bones for over a century. Plaster casting tapes are activated by dipping and squeezing them in water which causes them to become creamy and smooth. In this state, the bandages can easily be rubbed and smoothed in order to shape the cast around the area of a broken or fractured bone. The bandages are then allowed to harden to form a solid cast.

Plaster of Paris casts were originally preferred because they are easy to apply and mold around broken limbs. However, plaster casts suffer from several drawbacks because they are slow to harden, heavy, relatively nonporous, do not allow the skin to "breathe," and readily break down when exposed to water.

During the 1970s several attempts were made in the casting field to develop a synthetic casting product that would retain the advantages of plaster (i.e., its slipperiness and smoothability) while overcoming its drawbacks by being lightweight, porous, quick to harden, and water resistant. Two main components were involved in these developments. The first was a substrate or backing which comes in the form of a knitted or woven fabric (i.e., a scrim) cut into narrow strips or tapes; the second was a resin which is coated on or impregnated in the substrate and hardens after it is activated.

Three major players in the synthetic casting industry--3M, JJO, and Cutter Biomedical (Cutter), a U.S. subsidiary of Bayer A.G. (Bayer), a German Chemical Company--evolved in the market, each hoping to develop a synthetic cast that would replace plaster of paris as the industry standard. Ultimately, 3M and JJO became the industry leaders, obtaining a combined market share of about 70-90% from 1985 to 1991. However, based on the Garwood, Reed, Scholz, and Scholz II inventions, 3M emerged as the undisputed industry leader, controlling approximately half the market from 1985 to 1991. With each new invention, 3M introduced a new casting product. JJO would then copy the product and introduce a corresponding competitive casting product. The level of competition rose to the point where, in November, 1985, JJO obtained trade secrets stolen from 3M by Philip Stegora, a 3M chemist. These were samples of 3M's slippery resin product disclosed in the Scholz and Scholz II patents, which had not yet issued. JJO analyzed the samples and later filed a patent application based on technology culled therefrom.

C. The Garwood Patent

The Garwood patent discloses an improved orthopedic casting material, invented by Dr. Donald C. Garwood and Dr. Shiraz A. Kathiriya, which is strong, lightweight, porous, and quick curing. The material is obtained by combining knit fiberglass fabric from 0.020-0.045 of an inch thick and having 20-200 mesh openings per square inch with a water-curable polyurethane prepolymer resin described in U.S. Patent No. 4,376,438, issued March 15, 1983 to Straube et al. (the Straube patent).

D. The Reed Patent

The Reed patent discloses a method for obtaining an improved resin coated casting tape, invented by Dr. Katherine Reed, which is comprised of a knitted fiberglass fabric that is heat-set essentially without tension (i.e., in a relaxed state) in order to retain a substantial portion of its extensibility or stretchability (i.e., at least 20 percent in the lengthwise direction prior to curing) while eliminating or preventing frayed ends on the fabric which become sharp and needle-like when the resin hardens. The patent claims both a method and apparatus.

Dr. Reed discovered that if fiberglass is heat set in a relaxed state, a fabric is obtained which retains a substantial amount of its extensibility and will be free of frayed ends when cut. Prior to this discovery, persons in the casting art were forced to choose between a fabric having one or the other, but not both features.

E. The Scholz Patent

The Scholz patent discloses a curable resin coated sheet (i.e., such as casting tape) which includes an additive lubricant at a major surface of the sheet, present in an amount sufficient to reduce the kinetic coefficient of friction (KCOF) of the casting tape to less than about 1.2. The patent sets forth a test for determining the KCOF of a casting tape.

Dr. Reed and Dr. Matthew Scholz discovered that including lubricants in the resin reduces the tackiness or stickiness of the casting tape surface by making the resin slippery. In this state, the cast can be rubbed and smoothed during the application process. In addition, although the resin was slippery the casting tape layers retained their ability to bond together (i.e., the layers do not delaminate).

II. DISCUSSION

A. The Scholz Patent

1. Anticipation

JJO alleges that claims 12 and 17 of the Scholz patent are anticipated by a number of prior art commercial casting tape products and U.S. and Japanese patents. Claims 12 and 17, read:

12. An article comprising a curable resin-coated sheet having a lubricant at a major surface of the coated sheet, wherein said lubricant comprises an additive which is a mixture of any of the compositions selected from the group consisting of a surfactant, a polymer comprised of a plurality of...