Pennwalt Corp. v. Akzona Inc.

• Decision Date: 22 August 1983
• Docket Number: Civ. A. No. 79-157.
• Citation: 570 F. Supp. 1097
• Parties: PENNWALT CORPORATION, Plaintiff, v. AKZONA INC. and Armak Co., Defendants.
• Court: U.S. District Court — District of Delaware

570 F. Supp. 1097

PENNWALT CORPORATION, Plaintiff, v. AKZONA INC. and Armak Co., Defendants.

Civ. A. No. 79-157.

United States District Court, D. Delaware.

August 22, 1983.

COPYRIGHT MATERIAL OMITTED

Robert K. Payson and Michael D. Goldman of Potter, Anderson & Corroon, Wilmington, Del., Arthur H. Seidel and Daniel A. Monaco of Seidel, Gonda & Goldhammer, P.C., Philadelphia, Pa., of counsel, for plaintiff.

John G. Mulford of Theisen, Lank, Mulford and Goldberg, P.A., Wilmington, Del., and Phillip M. Mayer of Leydig, Voit, Osann, Mayer & Holt, Ltd., Chicago, Ill., for defendants.

OPINION

LATCHUM, Chief Judge.

Pennwalt Corporation ("Pennwalt") commenced this patent suit on March 26, 1979 in which it seeks a declaratory judgment of invalidity and unenforceability of U.S. Patent No. 4,196,292 ("the '292" or "Nemeth patent") entitled "Stable Water Dispersions of Encapsulated Parathion," issued August 15, 1978 to Harold C. Nemeth. (Docket Item "D.I." 1.) The named defendants are Akzona, Inc. ("Akzona"), and its subsidiary Armak Co. ("Armak"). (Id.). The '292 patent is assigned to Akzona but the parties have agreed that Armak should be treated as the patent owner for purposes of this litigation. (D.I. 99, ¶ 1.) Armak has counterclaimed, charging that Pennwalt's agricultural insecticide trademarked "Penncap M"¹ infringes the '292 patent and in addition seeks substantial damages from Pennwalt for Penncap M sales over a six year period before the '292 patent issued based on three alternative theories: (a) breach of the 1963 Product Development Agreement ("PDA") entered into between the parties, (b) breach of implied contract to pay for the use of a trade secret, and (c) unjust enrichment for using confidential information. (D.I. 29.) Pennwalt does not contest infringement of the '292 patent (D.I. 99, ¶ 29), but has raised the defenses of the statute of limitations, laches, waiver and estoppel to Armak's counterclaim for breach of contract, breach of implied contract, and unjust enrichment. (D.I. 100 & 102.) The opposing parties seek attorneys' fees under 35 U.S.C. § 285. (D.I. 99, ¶ 1.)

The liability phase of this case was tried to the Court without a jury for nine days between February 18 and February 25, 1983. The parties have completed their post-trial briefing (D.I. 128, 129 & 130) and the case is ready for a decision on the liability issues.

Pennwalt specifically contends that the '292 patent is invalid for any one of the following reasons: (1) under 35 U.S.C. § 103 because the subject matter claimed in the '292 patent was obvious; (2) under 35 U.S.C. § 102(g) because the patented Nemeth invention was made in this country before Nemeth by a Pennwalt employee, Chester B. DeSavigny, who had not abandoned, suppressed or concealed it; (3) under 35 U.S.C. § 102(b) because the '292 invention was publicly used and on sale more than one year prior to the filing of the continuation-in-part Serial No. 457,152 ("the '152 application") on April 1, 1974, the first application complying with the requirements of 35 U.S.C. § 112, and because Nemeth is not entitled to the March 1, 1972 filing date of application Serial No. 230,935 ("the '935 application") under 35 U.S.C. § 120 in that the '935 application failed to set forth the "best mode" known to Nemeth and lacked an enabling disclosure as required by 35 U.S.C. § 112.

Finally, Pennwalt argues that the patent is unenforceable because it was procured by fraud upon the Patent Office in that: (1) Nemeth and Armak failed to advise the Patent Office that Pennwalt was making the claimed invention and selling it for more than a year before the filing date of the '152 application; (2) Nemeth falsely represented in the '935 application that he had conducted field tests prior to March 1, 1972; (3) Nemeth deliberately misidentified General Mills' experimental gums "X-383S" and "XG-458S" to the Patent Office as xanthan gum in the '935 application; (4) Nemeth concealed the fact that tragacanth gum "worked" in the '935 application; (5) Nemeth misrepresented that his invention was the result of a "long search" in the '152 application; and (6) Table IV of the '292 patent is the result of concealment and commingling of laboratory data and procedures.

I. VALIDITY

1. Earliest Filing Date

The '292 patent pertains to an insecticidal composition consisting essentially of a polymer-encapsulated insecticide suspended in an aqueous dispersion of xanthan gum (D.I. 99, ¶ 3.5). On its face, the '292 patent claims the benefit of the March 1, 1972 filing date of the '935 original grandparent application. (TX 201.)² Pennwalt contends that the '292 patent is not entitled to the March 1, 1972 filing date and the Court agrees.

35 U.S.C. § 120 allows a later-filed application, under specified circumstances, to claim the benefit of one or more earlier filed applications. It is well established that to come within the purview of § 120, (1) a later application must, among other things, disclose the same invention as has previously been disclosed in each prior application, and (2) each application must comply with 35 U.S.C. § 112. 35 U.S.C. § 120; see, e.g., Acme Highway Products Corp. v. D.S. Brown Co., 431 F.2d 1074, 1078 (6th Cir.1970), cert. denied, 401 U.S. 956, 94 S.Ct. 125, 38 L.Ed.2d 57 (1971); Bendix Corp. v. Balax, Inc., 421 F.2d 809, 816-17 (7th Cir.), cert. denied, 399 U.S. 911, 90 S.Ct. 2203, 26 L.Ed.2d 562 (1970), reh. denied, 414 U.S. 819, 94 S.Ct. 43, 38 L.Ed.2d 51 (1973); Chromalloy American Corp. v. Alloy Surfaces Co., 339 F.Supp. 859, 874 (D.Del.1972).

In the present case, the claims of the '292 patent are not entitled to the filing date of the grandparent application '935 of March 1, 1972, because they depend on entirely new matter added by the continuation-in-part ("C.I.P.") application '152 filed on April 1, 1974.

Claim 1, the broadest claim of the '292 patent, recites the following insecticidal composition (TX 201, Col. 14, line 52):

1. An insecticidal composition consisting essentially of an aqueous dispersion of:

(a) from about 1% to about 40% by weight of said composition of capsules of a member of the group consisting of a phosphoromonothioate and a phosphorodithioate insecticide encapsulated in a skin selected from the group consisting of a polyamide, a polyurea, and a mixed polyamide-polyurea cross-linked with a cross-linking agent selected from the group consisting of a polyalkylene polyamine and a polyfunctional isocyanate;

(b) from about 0.1% to about 0.5% by weight of said composition of a xanthan gum dispersant for said capsules; and

(c) balance water.

Succinctly stated, three distinct types of polymer encapsulated insecticides are claimed: polyamide capsule; polyurea capsule; and cross-linked polyamide-polyurea capsule.

However, the '935 application discloses only xanthan gum dispersions of polyamide -encapsulated insecticides (PX 900 "O"). Nowhere in the '935 file wrapper is there any reference of polyurea-encapsulated insecticides, nor is there mention of cross-linked polyamide-polyurea encapsulated insecticides (PX 900 "O"; Tr. 1466-73). Nowhere in the '935 application is there any teaching that isocyanates could be used to produce polyureas or polyamide-polyurea copolymers (PX 900 "O"; Tr. 1467). The sole teaching of the '935 application is directed to polyamide microcapsule suspensions (PX 2, pp. 4-6, 8).

The only specific polyamide taught in the '935 application is the reaction product of adipoyl chloride and lysine in the "Background of the Invention" (PX 2, p. 5). This reaction produces a linear, non-crossed-linked polyamide (Tr. 903).

Claim 1 of the '292 patent defines encapsulating polymers in a Markush group (TX 201, col. 14, line 57):

Encapsulated in a skin selected from a group consisting of a polyamide, a polyurea, and a mixed polyamide-polyurea cross-linked ....

The members of a Markush group are exclusive with respect to each other (Tr. 1470). The Manual of Patenting Examining Procedure ("MPEP") states that a Markush "type of claim is employed where there is no commonly accepted generic expression which is commensurate in scope with the field which the applicant desires to cover" (PX 1002), and this rule has been part of MPEP since at least 1964 (Tr. 1472). Nemeth, having included polyamide and polyamide-polyurea copolymers in a Markush group in the '292 claim, is now estopped from asserting in this litigation, that "polyamide" used in the '935 application is generic for cross-linked polyamide-polyurea. Indeed, there is no teaching in the '935 application that "polyamide" is used other than in its ordinary meaning to an organic chemist, which would be a plastic with long linear molecules. (Tr. 1467.)

Furthermore, there is no presumption of entitlement to the '935 filing date by the issuance of the '292 patent. The effective date of the C.I.P. claims (and the claims of the '292 patent) was never decided by the Patent Examiner. Under the MPEP, patent examiners do not ordinarily make such determinations, except in the case of "intervening art" or in case of an interference (PX 1001):

Unless the filing date of the earlier application is actually needed, for example, in the case of an interference or to overcome a reference, there is no need to make a determination as to whether the requirement of 35 U.S.C. 120, that the earlier application disclose the invention of the second application in the manner provided by the first paragraph of 35 U.S.C. 112, is met and whether a substantial portion or all of the earlier application is repeated in the second application in a continuation-in-part situation.

MPEP § 201.08 (1982 rev.)

While the above provision was added to the MPEP after the filing date of C.I.P. '152 application, it represents a codification of pre-existing Patent Office Practice (Tr. 1459). Thus the Examiner of the '292 patent never determined the effective filing date of the claims in that patent. The new matter added by the C.I.P. on...