Philip Morris, Inc. v. Brown & Williamson Tobacco Corp., Civ. A. No. 84-255-3-MAC.

• Court: United States District Courts. 11th Circuit. Middle District of Georgia
• Citation: 641 F. Supp. 1438
• Decision Date: 20 August 1986
• Parties: PHILIP MORRIS, INC., et al., Plaintiffs, v. BROWN & WILLIAMSON TOBACCO CORP., Defendant.
• Docket Number: Civ. A. No. 84-255-3-MAC.

641 F. Supp. 1438

PHILIP MORRIS, INC., et al., Plaintiffs,
v.
BROWN & WILLIAMSON TOBACCO CORP., Defendant.

Civ. A. No. 84-255-3-MAC.

United States District Court, M.D. Georgia, Macon Division.

August 20, 1986.

641 F. Supp. 1439

Cubbedge Snow, Jr., Martin, Snow, Grant & Napier, Macon, Ga., Albert E. Fey, W. Edward Bailey, Thomas L. Secrest, Denise L. Loring, Fish & Neave, New York City, James E. Schardt, Richmond, Va., David L. Rae, Montvale, N.J., for plaintiffs.

Bruce W. Baber, Frank C. Jones, Atlanta, Ga., Daniel H. Dane, New York City, Charles G. Lamb, Louisville, Ky., for defendant.

OWENS, Chief Judge:

On June 1, 1984, Philip Morris, Inc. and the BOC Group, Inc. brought suit in this court against Brown and Williamson Tobacco Corporation alleging infringement of United States Patent Re. 32,013 entitled "Expanding Tobacco" and United States Patent 32,014 entitled "Process for Expanding Tobacco." Plaintiffs also assert additional causes of action against defendant for breach of contract, unjust enrichment, and misappropriation of trade secrets. In answering plaintiffs' complaint,

641 F. Supp. 1440

Brown & Williamson denied infringement and raised the following affirmative defenses: invalidity under 35 U.S.C. ?? 102, 103, and 112; unenforceability due to inequitable conduct before the Patent and Trademark Office in procuring the patents; and numerous equitable defenses including laches, estoppel and unclean hands with respect to counts II, III and IV ?€” the contract claims. In addition, Brown & Williamson has counterclaimed for antitrust violations specifically alleging violations of sections 1, 2 and 4 of the Sherman Act, 15 U.S.C. ?? 1, 2 and 4, and sections 3, 4 and 16 of the Clayton Act, 15 U.S.C. ?? 14, 15 and 26. An injunction, accounting, treble damages, costs and attorney fees are sought by plaintiffs. Defendant in turn seeks a declaratory judgment that the patents in suit are invalid, unenforceable, and not infringed, an injunction, treble damages under 15 U.S.C. ? 15, costs and attorney fees. The case was tried before the court sitting without a jury on October 28 through November 8, 1985. This constitutes the court's findings of fact and conclusions of law¹ in accordance with Rule 52(a) of the Federal Rules of Civil Procedure

Findings of Fact

The Parties

1. Plaintiff Philip Morris Incorporated ("Philip Morris") is a Virginia corporation which is engaged in the business of processing, manufacturing and selling tobacco and tobacco products. Trial Vol. I at 74-75. In 1985, Philip Morris was the largest tobacco company in the United States. Trial Vol. II at 120.

2. Plaintiff the BOC Group, Inc. ("BOC") is a Delaware Corporation which is engaged in the business of producing and selling industrial gases. BOC was formerly known as Airco, Inc. and will be referred to herein by its present name unless the context or direct quotation dictates otherwise.

3. Defendant Brown & Williamson Tobacco Corporation ("B & W") is a Delaware corporation which has a place of business in Macon, Georgia. B & W is engaged in the business of processing, manufacturing and selling tobacco and tobacco products. Trial Vol. VII at 622-24. B & W is presently a wholly owned subsidiary of B.A.T. Industries PLC ("Industries"), a British corporation. Defendant's Exhibit 340C at 6; Trial Vol. VII at 664-65. Prior to June of 1979, B & W was a subsidiary of British-American Tobacco Company, Ltd. ("BATCO") which is the world's largest tobacco company. Defendant's exhibit 340C at 1-3; Trial Vol. I at 4; Vol. VII at 689. Industries is the parent corporation of B & W and BATCO and has been so at all times relevant to this action. Trial Vol. VIII at 751-53; Defendant's exhibit 340C.

The Patents in Suit

4. United States Patent Re. 32,013 (hereinafter the "'013 patent") entitled "Expanding Tobacco" was reissued by the United States Patent and Trademark Office ("PTO") on October 29, 1985, upon an application filed June 28, 1984. Plaintiffs' exhibit 1. The '013 patent is the invention of Roger Z. de la Burde and Patrick Aument and is assigned to Philip Morris, Inc. Id. The '013 patent is a reissue of United States Patent No. 4,340,073 (the "'073 patent") which issued on July 20, 1982, upon an application filed February 12, 1974. Plaintiffs' exhibit 38.

5. United States Patent Re. 32,014 (hereinafter the "'014 patent") entitled "Process for Expanding Tobacco" was reissued by the PTO on October 29, 1985, upon an application filed June 28, 1984. Plaintiffs' exhibit 1A. The '014 patent is the invention of Larry M. Sykes, Ray G. Snow, Roger Z. de la Burde, and Patrick E. Aument and is assigned to Philip Morris, Inc. Id. The '014 patent is a reissue of United States Patent No. 4,336,814 (the "'814 patent") which issued on June 29, 1982, on an application filed September 5, 1979. Plaintiffs'

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exhibit 39. The '014 patent is an improvement patent related to the original '073 patent and its reissued counterpart, the '013 patent. Plaintiffs' exhibit 1A, col. 3, lines 33-52

6. When green tobacco is cured it necessarily loses some of its original moisture content resulting in a collapse of the leaf's cell structures and a corresponding decrease in volume compared to the volume of the same batch of tobacco in its green state. Trial Vol. IV at 292-93; defendant's exhibit 349 at 1. The purpose of the inventions embodied in the patents in suit is to treat tobacco so as to expand its volume and make up for weight lost in the curing process, i.e., "return the leaf back to much of the physical science it was in in the green state." Trial Vol. III at 265; Vol. IV at 292-93; defendant's exhibit 349 at 1-2; defendant's exhibit 350 at 2, ? 8. Expanding the volume of tobacco is advantageous because it increases the filling power of tobacco enabling more cigarettes to be manufactured per pound of tobacco while achieving lower tar and nicotine levels than smoking product made of non-expanded tobacco. Trial Vol. IV at 293-94; plaintiffs' exhibit 1, col. 1, lines 18-25; defendant's exhibit 350 at 2, ? 8.

7. The invention of the '013 patent is a process for expanding tobacco utilizing liquid carbon dioxide (CO2) as the expansion agent. Plaintiffs' exhibit 1, col. 3, lines 57-58. The claims are directed toward a process, methods and apparatus for expanding tobacco using liquid carbon dioxide as the expansion agent. Id. at col. 12, line 48 ?€” col. 16. Carbon dioxide is a heavy colorless gas that does not exist as a liquid at ambient or atmospheric pressure. Trial Vol. I at 83-85; Vol. II at 161-64; Vol. IV at 285; Vol. XI at 1126. Carbon dioxide is a natural constituent of tobacco. Trial Vol. I at 91.

8. Claim 1, the broadest process claim of the '013 patent allegedly infringed, is representative and reads as follows:

1. A process for expanding tobacco comprising the steps of (1) contacting tobacco with liquid carbon dioxide under conditions such that the temperature of the tobacco is maintained at a level no lower than about -2? C. and such that substantially all of the liquid carbon dioxide is maintained in liquid form to impregnate the tobacco with the liquid carbon dioxide, (2) subjecting the liquid carbon dioxide-impregnated tobacco to conditions such that the liquid carbon dioxide is converted to solid carbon dioxide and (3) thereafter subjecting the solid carbon dioxide-containing tobacco to conditions whereby the solid carbon dioxide is vaporized to cause expansion of the tobacco.

Plaintiffs' exhibit 1, col. 12, lines 49-61.

9. Claims 1, 5, 16 and 17 of the '013 reissue patent are identical to their corresponding claims in the '073 patent. Compare plaintiffs' exhibit 1, col. 12-14 with plaintiffs' exhibit 38, col. 12-14. Claims 5 and 17 are directed toward apparatus for expanding tobacco, and claim 16 is directed toward a method of expanding tobacco. Plaintiffs' exhibit 1, col. 12-14.

10. The '014 reissue patent discloses and claims an improvement to the basic process of the '013 patent. Plaintiffs' exhibit 1A, col. 3, lines 33-52. One improvement consists of controlling the input moisture of the tobacco in the first step thereby enabling the process to operate at lower pressures than were originally considered optimal. Id. at col. 4, lines 44-68. An additional improvement consists of controlling the output moisture of the product recovered from the heating step so that the output moisture is preferably no higher than approximately 6%. Id. at col. 8, lines 59-68.

11. Claims 1 and 2 of the '014 patent are allegedly infringed and read as follows:

1. In the method of expanding tobacco which comprises the steps of (1) impregnating the tobacco with liquid carbon dioxide under conditions such that substantially all of the liquid carbon dioxide is maintained in liquid form so sic impregnate the tobacco with the liquid carbon dioxide, (2) subjecting the liquid carbon dioxide-impregnated tobacco to conditions such that the liquid carbon

641 F. Supp. 1442

dioxide is converted to solid carbon dioxide and (3) thereafter subjecting the solid carbon dioxide-containing tobacco to conditions whereby the solid carbon dioxide is vaporized to cause expansion of the tobacco, the improvement which comprises: (i) utilizing as the tobacco which is employed in step (1) a tobacco which has an OV content of from about 17 to about 30%, (ii) conducting the impregnation step under pressure in the range of from about 250 psia to about 450 psia, and (iii) conducting the third step in such a manner that the moisture content of the expanded tobacco obtained from the third step is no higher than about 6%.

2. The method of expanding tobacco of claim 1, wherein the impregnation step is conducted at a pressure of from about 350 psia to about 450 psia and the tobacco which is employed in step (1) has an initial OV content of from about 17 to about 25%.

Id. at col. 12, lines 65-68 ?€” col. 13, lines 1-20. Claims 1 and 2 of the '014 reissue patent are...