NDM Corp. v. Hayes Products, Inc.
| Decision Date | 16 March 1981 |
| Docket Number | No. 77-3900,77-3900 |
| Citation | 641 F.2d 1274 |
| Parties | NDM CORPORATION, Appellant, v. HAYES PRODUCTS, INC., and Joseph H. Johnson, Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
James R. Uhlir, Graybeal, Barnard & Uhlir, Seattle, Wash., argued for appellant; John O. Graybeal, Seattle, Wash., on brief.
Kenneth W. Vernon, Seattle, Wash., argued for appellees; Richard W. Seed, Seattle, Wash., on brief.
Appeal from the United States District Court for the Western District of Washington.
Before SKELTON, * GOODWIN and FERGUSON, Circuit Judges.
NDM Corporation appeals from a judgment in a patent infringement action that various claims of medical electrode patents which had been assigned to NDM were invalid for obviousness. We affirm.
NDM began, 1 in 1969, to develop medical electrodes for use in the electrocardiographic monitoring of heart patients. Initially, NDM attempted to manufacture a "dry" electrode that would be activated by moisture in the patient's skin, rather than by application of a "wet" electrode gel. These efforts proved unsuccessful and NDM subsequently decided to develop an improved "wet" electrode.
The first product of these efforts was U.S. Patent No. 3,696,807 ("the '807 patent"), filed on February 13, 1970, issued on October 10, 1972. In laymen's terms, the '807 medical electrode patent was a rigid, nonconductive electrode gel cup which had a snap fastener mounted in its base. An elastic sheet covered the cup. This elastic, when pressed against a patient's skin, would adhere, forming a seal. Because of this seal, electrolyte gel remained in the cup, rather than leaking and causing the electrode to become loose. The snap fastener provided conduction. Increased adhesion facilitated long-term cardiac monitoring. The '807 design was not "pre-gelled." Electrolyte gel had to be added to the electrode cup at the time it was applied to the patient.
NDM's next development was a "pre-gelled," "ready-to-use" electrode, U.S. Patent No. 3,701,346 ("The '346 patent"), filed on January 4, 1971. In addition to the elements of the '807 patent, the '346 patent had an absorbent pad prefilled with electrolyte gel. The attached pad, which remained out of the electrode cup during storage, compressed into the cup when the electrode was applied to a patient. This created a stable gel column between the patient's skin and the electrode's snap conductor, insuring accurate monitoring. The '346 patent also included a cover to protect the gel pad during storage.
The '346 patent enjoyed immediate and substantial commercial success. In the last quarter of 1970, NDM sold a quarter million of the ready-to-use electrodes. In 1973, NDM sold 18 million electrodes; by 1976, when this action was tried, NDM had annual sales of thirty million electrodes.
In 1973, NDM brought this action against Hayes Products for patent infringement. 2 Hayes Products counterclaimed, seeking a declaration that NDM's patents were invalid for obviousness.
The district court evaluated Hayes products' assertion of obviousness 3 under the criteria described in Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). It used ten references to define the scope and content of the relevant prior art. 4 Five of the references, 5 had not been before the patent examiners when the '807 and '346 patents were granted.
After reviewing all the references before it, the district court invalidated the patents on the grounds of obviousness. NDM appealed.
The Presumption of Validity.
Patents issued by the U.S. Patent Office are presumed valid. 35 U.S.C. § 282. This presumption dissipates, however, by a showing that pertinent prior art was not cited to the patent examiners. Hewlett-Packard Company v. Tel-Design, Inc., 460 F.2d 625, 628-629 (9th Cir. 1972); Ceco Corp. v. Bliss & Laughlin Industries, Inc., 557 F.2d 687, 691 (9th Cir. 1977). 6 Prior art is pertinent if it discloses something not disclosed by the other prior art; in other words, it may not be cumulative. Speed Shore Corp. v. Denda, 605 F.2d 469, 471 (9th Cir. 1979).
NDM argues that the trial court improperly denied its patents the benefit of the presumption. NDM concedes that five pieces of prior art were not considered by the patent examiners. It argues, however, that the "prior pertinent art not considered" exception should not invalidate the statutory presumption because four pieces of the prior art were not pertinent and the other was inadmissible. NDM's argument is not convincing.
As a preliminary matter, we note that the district court's failure to make an express finding that the statutory presumption had been overcome was not prejudicial error. Hewlett-Packard Company v. Tel-Design, Inc., supra, 460 F.2d at 628.
The district court correctly believed that the two British articles 7 describing a "Devices Electrode" were prior pertinent art not considered by the patent examiners. The Devices Electrode, described by the British Publications, had a snap fastener remote from the rim of the cup member of the electrode, projecting through and supported by the base of the cup member. 8 Yet, during the prosecution of the '807 patent, NDM's attorney stated the following to the examiner:
"... it is submitted that there is no teaching in ... (the) prior art of record that the snap fastner be remote from the mouth or rim of the cup member, or that the snap fastner project through and be supported by the base of the cup member." (Exh. A-5 p. 53).
Thus, these British articles, which appeared before the '807 patent was issued and were not before the patent examiners, were pertinent prior art. They were not cumulative in describing an electrode with a snap fastener remote from the rim.
Therefore, substantial evidence exists for the trial court to have denied NDM the benefit of the presumption. The presumption was overcome by prior pertinent art not before the patent examiners.
Obviousness.
Although obviousness is a legal determination, it is based on a three part factual test set forth 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 trial court must determine (1) the scope and content of the prior art, (2) ascertain the differences between the prior art and the claimed invention, and (3) measure their differences by the level of ordinary skill possessed by a person familiar with the pertinent art. Relevant subconsiderations include the commercial success of the invention, the extent to which it resolved long-felt needs, and the difficulty of the problem solved by the invention.
The factual findings underlying the "obviousness" determination are reviewed under the Rule 52(a) standard. Photo Electronics Corp. v. England, 581 F.2d 772, 776 (9th Cir. 1978). Unless the findings are clearly erroneous we must sustain them. The district court's factual findings support its conclusion that NDM's patent was obvious and are not clearly erroneous.
Scope and Content of the Prior Art.
Of the ten separate pieces of prior art before the district court, 9 five had not been before the patent examiners. 10 NDM contends that the Devices, Inc. electrode was improperly admitted as prior art. It argues that the electrode was inadmissible under 35 U.S.C. § 103 to show obviousness because it was not prior art within the meaning of 35 U.S.C. § 102. The Devices, Inc. electrode apparently was not "in public use or on sale in this country" as required by § 102(b). NDM argues that § 102 is the exclusive referent for ascertaining prior art under § 103.
We need not decide the very thorny question of the relationship between § 102 and § 103 and the extent to which prior art under one may serve as prior art under the other. 11 The trial court correctly admitted as prior art the British publications in which the Devices, Inc. electrode was described. 12 The district court did not need the electrode itself to compare the Devices, Inc.'s electrodes with NDM's electrodes. Therefor, the admission of the Devices, Inc. electrode as part of the prior art did not prejudice NDM.
The Level of Skill in the Art.
NDM does not contend that the district court's finding on this issue was clearly erroneous. We thus may move on to consider the heart of this lawsuit.
And in Finding of Fact 55, it found that
"Prior to the alleged invention of the '807 patent it was known to use a snap fastener having interfitting parts not only to serve as the conductor element of the electrode but to, at the same time, clamp various elements of the electrode together." (The Edmark and Berman patents in particular disclosed this.)
The court also cited the Devices, Inc. electrode description in the British publications in Finding of Fact 56 as disclosing the obviousness of a snap fastener. Substantial evidence permitted the court to find the patents obvious.
The British publications relating to the Devices, Inc. electrode disclose a (1) low-profile, non-conductive, relatively rigid, collapse-resistant cup having a base and a rim; 13 (2) a sheet means connected to the cup and surrounding the rim; 14 (3) a snap fastener projecting through the base of the cup and supported by the base of the cup remote from the rim; 15 and (4) a removable protective cover for the adhesive. 16 These four characteristics were claimed in...
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