Norfin, Inc. v. International Business Mach. Corp.

• Court: U.S. District Court — District of Colorado
• Citation: Norfin, Inc. v. International Business Mach. Corp., 453 F.Supp. 1072, 199 USPQ 57 (D. Colo. 1978)
• Decision Date: 13 June 1978
• Docket Number: Civ. A. No. 76-F-293.
• Parties: NORFIN, INCORPORATED, Plaintiff, v. INTERNATIONAL BUSINESS MACHINE CORPORATION, Defendant.

453 F. Supp. 1072

NORFIN, INCORPORATED, Plaintiff, v. INTERNATIONAL BUSINESS MACHINE CORPORATION, Defendant.

Civ. A. No. 76-F-293.

United States District Court, D. Colorado.

June 13, 1978.

James W. Buchanan, III, Hutchinson, Black, Hill, Buchanan & Cook, Boulder, Colo., Granger Cook, Jr., Cook, Wetzel & Egan Ltd., Chicago, Ill., for plaintiff.

Donald C. McKinlay, Holme, Roberts & Owen, Denver, Colo., William K. Kerr, Fish & Neave, New York City, for defendant.

MEMORANDUM OPINION AND ORDER

SHERMAN G. FINESILVER, District Judge.

In a jury trial Norfin, Incorporated Norfin prevailed on its claim of patent infringement against defendant, International Business Machine Corporation IBM. The patent item is a collator which is attached to a photocopy or other reproduction machine and automatically sorts and assembles into bins successive pages of text as they come off the duplication machine. In the action, plaintiff contends that its patent (number 3,414,254) was infringed by IBM when IBM marketed its own collator. Defendant IBM denies both validity of the patent and infringement.

The jury returned an unanimous special verdict in which it found that (1) defendant infringed plaintiff's patent, (2) the infringement was willful and deliberate, (3) plaintiff's patented device was not on sale or in public use more than one year prior to the date of the patent application, and (4) the patent claims would not have been obvious to a person having ordinary skill in the pertinent art. The question of damages was not before the jury in this bifurcated action. See Fed.R.Civ.P. 42(b).

We now rule on IBM's motions for judgment notwithstanding the verdict, or in the alternative, for a new trial. Errors alleged by IBM can be divided into three categories: (1) obviousness is an issue of law to be determined by the court not the jury; (2) the evidence presented does not support several special verdicts; and (3) certain of the court's instructions misstated the law.

The court denies the motions for judgment notwithstanding the verdict and the motions for a new trial.

I

Section 103 of Title 35, United States Code provides:

A patent may not be obtained . . . 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 said subject matter pertains. . .

Thus, a patent may not be obtained if the "invention" was obvious. A patent previously granted may be found to be invalid if it is determined that the invention was obvious. In patent infringement suits, obviousness is a traditional defense to the assertion of infringement.

At question here is whether the issue of obviousness is to be determined by the jury, by the court, or whether the determination is a shared responsibility. The question is of rising importance since, following the Supreme Court's decisions in Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966) and United States v. Adams, 383 U.S. 39, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966), there appears to be "a resurrection of jury trials in patent cases." Zarley, Jury Trial in Patent Litigation, 4 Patent L.Rev. 89 (1972) reprinted from 20 Drake U.L.Rev. 243 (1971).

The original patent act of 1790 provided for trial by jury when it reserved a plaintiff's recovery to "such damages as shall be assessed by a jury." Act of April 10, 1790, Ch. 7 § 4, 1 Stat. 109. Trial to a jury was the exclusive procedure (unless voluntarily waived) until 1819 when Congress allowed patent cases to be "tried in equity" by the court. Medlock, The Patent Jury Trial in Patent Trademark and Litigation Institute (Amer. Patent Law Assoc. 1978). Since that time jury trials in patent cases became infrequent and a body of case law developed predicated on the determination of all questions of fact and law by the court. The extent to which case law that developed as a result of trials to the court is translatable into jury instructions is at question here.

There is no disagreement between the parties that the ultimate question of patent validity is a question of law. Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966)¹; Hinde v. Hot Sulphur Springs, Colorado, 482 F.2d 829 (10th Cir. 1973); Admiral Corp. v. Zenith Radio Corp., 296 F.2d 708 (10th Cir. 1961). There is also no disagreement that to be valid a patent cannot be obvious. 35 U.S.C. § 103.² Nor is there any disagreement that the question of obviousness "lends itself to several basic factual inquiries," such as (1) the scope and content of the prior art, (2) the differences between the prior art and the claims at issue, and (3) the level of ordinary skill in the pertinent art. Graham, supra at 17; Tanks v. Reiter Indus., Inc., 545 F.2d 1276 (10th Cir. 1976); Halliburton Co. v. Dow Chemical Co., 514 F.2d 372 (10th Cir. 1975); Hinde, supra. The disagreement between the parties lies between the factual (that is, jury) inquiries involved and the legal conclusion concerning validity, i. e. is obviousness itself a matter of law or a matter of fact? Should obviousness itself, in addition to its factual underpinnings, be decided by the jury or reserved for decision by the court?

In this case the court informed the jury, through a series of instructions, of the factual inquiries required by them. (The main instruction in the series is attached as Appendix A to this opinion.) Thereafter, a special verdict form containing twelve questions was submitted to the jury. (The special verdict is attached as Appendix B.) In questions 10, 11 and 12 the jury was asked, and answered, as follows:

QUESTION NO. 10: Do you find by a preponderance of the evidence that the prior art which should have been considered on the issue of obviousness was not considered by the Patent Office during its examination of the application for the '254 patent?

ANSWER NO. 10: NO

QUESTION NO. 11: If you answer Yes to Question No. 10, then answer this question. If your answer to Question No. 10 is No, ignore this Question and answer Question No. 12.

Do you find by a preponderance of the evidence that the differences between the subject matter of each of the asserted patent claims (1, 2, 8, 9, and 10 of the '254 patent) and the prior art are such that the subject matter of such claims as a whole would have been obvious at the time of the '254 invention was made to a person having ordinary skill in the pertinent art? ANSWER NO. 11: no answer given

QUESTION NO. 12: Answer this question only if you answered No to Question No. 10.

Do you find by clear and convincing evidence that the differences between the subject matter of each of the asserted patent claims (1, 2, 8, 9, and 10 of the '254 patent) and the prior art are such that the subject matter of such claims as a whole would have been obvious at the time the '254 invention was made to a person having ordinary skill in the pertinent art?

ANSWER NO. 12: NO

IBM contends that the issue of obviousness is an issue of law and should not have been submitted to the jury. Accordingly, it is argued that special verdict questions 10, 11 and 12 were error and are grounds for a new trial. It is important to trace the path of law that supports or rejects IBM's contentions. In Sakraida v. Ag Pro, Inc., 425 U.S. 273, 280, 96 S.Ct. 1532, 1536, 47 L.Ed.2d 784 (1976) the Supreme Court appears to equate validity and obviousness:

The ultimate test of patent validity is one of law, Great A. & P. Tea Co. v. Supermarket Corp., 340 U.S. 147, 155, 71 S.Ct. 127, 131, 95 L.Ed. 162, 168, (1950), but a resolution of the obviousness issue necessarily entails several basic factual inquiries, Graham v. John Deere Co. (emphasis added)

Cases decided by the United States Court of Appeals for the Tenth Circuit since Sakraida have, in some instances, followed this juxtaposition of legal validity and obviousness. In Rutter v. Williams, 541 F.2d 878, 881 (10th Cir. 1976) it was noted that:

An appellate court is bound by the trial court's findings of fact relating to obviousness unless they are rejected under the clearly erroneous rule. . . . We are not bound by its conclusion of law that the Rutter device was not obvious to one skilled in the art. (emphasis added)

Similarly, in Tanks v. Reiter Industries, Inc., 545 F.2d 1276, 1279 (10th Cir. 1976) it was observed:

Our study of the record leads us to conclude that the trial court's several findings of fact relating to prior art and the subject matter of Reiter's claimed invention are not clearly erroneous, and further, that its conclusion that Reiter's claimed invention would be obvious to one possessed of ordinary skill in the art is under the circumstances legally correct. (emphasis added)

Thus, Sakraida, Rutter and Tanks, all involving non-jury trials, appear to treat obviousness as an ultimate issue of law which is founded on factual inquiries. These cases must be harmonized with Graham v. John Deere Co., supra which held that factual inquiries require an analysis of the prior art, the difference between the prior art and the claims in the patent and the level of ordinary skill in the pertinent art. In the case at bar, the court instructed the jury that they were to make those comparisons in their deliberations. In our special verdict form we sought only the results of those comparisons. The court did not inquire into the jury's deliberations concerning those factual inquiries.³

We cannot take literally case law which loosely equates obviousness with the legal question of validity. When specific attention has been directed to the legal or factual nature of obviousness, the Tenth Circuit Court of Appeals has held that obviousness is a factual question properly presented to the jury.

The Tenth Circuit has addressed the obviousness issue in a jury trial in only two cases since the Supreme Court's Graham v. John Deere decision. In Moore v. Shultz, 491...