Refac Intern. Ltd. v. IBM

• Decision Date: 01 July 1988
• Docket Number: Civ. A. No. 85-2020.
• Citation: 689 F. Supp. 422
• Parties: REFAC INTERNATIONAL LTD., Plaintiff, v. IBM, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

689 F. Supp. 422

REFAC INTERNATIONAL LTD., Plaintiff, v. IBM, et al., Defendants.

Civ. A. No. 85-2020.

United States District Court, D. New Jersey.

July 1, 1988.

Richard T. Laughlin, Judson A. Parsons, Jr., Laughlin, Markensohn, Lagani & Pegg, P.C., Morristown, N.J., Philip Sperber, President, Refac Intern. Ltd., New York City, for plaintiff.

D. Peter Hochberg, D. Peter Hochberg Co., L.P.A., Cleveland, Ohio, Roy H. Wepner, Lerner, David, Littenberg, Krumholz & Mentlik, Westfield, N.J., for Diebold, Inc. Harold E. Meier, Gardere & Wynne, Dallas, Tex., John B. Lavecchia, Michael P. Murphy, Connell, Foley & Geiser, Roseland, N.J., for Olivetti USA, Inc. (Docutel).

Alan J. Hruska, Edward Hayum, Cravath, Swaine & Moore, New York City, Edward A. Zunz, Jr., Peter McDonough, Riker, Danzig, Scherer, Hyland & Perretti, Morristown, N.J., for IBM Corp.

Jonathan A. Marshall, Frank E. Morris, Maria McCormack, Pennie & Edmonds, New York City, Edward Dauber, Greenberg, Dauber & Epstein, Newark, N.J., for Manufacturers Hanover Trust Co.

Charles W. Bradley, Steven D. Glazer, Lawrence B. Goodwin, Davis Hoxie Faithfull & Hapgood, New York City, Richard D. Catenacci, John B. Lavecchia, Connell, Foley & Geiser, Roseland, N.J., for NCR Corp.

Ronald Santucci, David Kane, Kane, Dalsimer, Sullivan, Kurucz, Levy, Eisele and Richard, New York City, Roger Toner, Kuttner, Toner & DiBenedetto, Roseland, N.J., for Fujitsu.

Susan Lesinski, Dorsey & Whitney, New York City, for A.O. Smith Corp.

Robert C. Kahrl, Jones, Day, Reavis & Pogue, Cleveland, Ohio, Roger A. Lowenstein, Dickson, Creighton & Lowenstein, P.A., Hoboken, N.J., for TRW.

AMENDED OPINION

POLITAN, District Judge.

This case comes before this Court on a motion for summary judgment by the defendants, IBM et al. They allege that the patent at issue, the Cook patent # 3,612,687, is invalid because it fails to comply with 35 U.S.C. § 112¹, and 35 U.S. C. § 101-103. Additionally, defendants claim unenforceability of both the Cook and Nissman (patent # 3,609,690) patents, on the grounds that both patents fail to particularly point out and distinctly claim what the inventors regard as their invention.² Defendants also allege that the Cook patent should fail because it does not set forth the "best mode"; that there was anticipation of the Cook patent; and finally, that both the Cook and Nissman patents were procured by inequitable means.

For the reasons stated below, this Court grants summary judgment in favor of the defendants, holding the Cook patent invalid on its face under 35 U.S.C. § 112 for lack of adequate description which "particularly" points out the subject matter of the claim, and for failure to set forth the "best mode".

Background of the Case

This action was commenced by Refac International Ltd. (Refac) on April 29, 1985. Refac owns the patent at issue by agreement with Holobeam, Inc., a company owned by Mr. Cook, the patentee. Holobeam owns a 40% stake in the outcome of this litigation.

The patent in suit concerns a design for comparing a secret code word known by a cardholder with information encoded on a credit card thereby giving the cardholder access to credit or cash. The secret code word is assigned to the cardholder when the card is issued to him. (See Figure 1 below.) In the patent application, a four character code word is used. (16)

The card is encoded using a process of passing light through a fiber optic bundle, formed by weaving a plurality of fibers in a "random" fashion, and imprinting a pattern of black dots on the card itself. The imprinting process is illustrated in Figure 2 below.

Light passes from the source 38 through a mask 28 to the fiber optic bundle 20. The mask 28 is divided into four quadrants, marked 1, 2, 3 and 4, and each quadrant is divided into four sections marked a, b, c and d. The quadrants of the mask correspond to the four characters on the card. Each quadrant has three opaque sections and one transparent section, e.g., 30, 32, 34 and 36. The sections which are transparent will ultimately be translated into different characters. For example, in the illustration, the code word will be a, b, c and d. According to the patent, in a four character code word, 256 code words would be available to be assigned to customers.

Once a card has been received, the holder may use it at any location where there is a card reader. (See Figure 3 below). The cardholder hands his card (10) to a clerk who inserts it into the card reader. Once inserted, optic fibers in the card reader convey the light and dark spots on the card to a display. (50) At the same time, the cardholder tells the clerk his code word, and the clerk dials the code word in by rotating wheels of the card reader, 72, 74, 76 and 78. Light from source (98) passes through lens (100) and four transparencies (88) on each of the wheels, to present a light/dark pattern of squares on the mirror (96). This pattern is similarly sensed by 16 optic fibers, to produce a light-dark display in display blocks (92). If the patterns in blocks 50 and 92 match, the cardholder is verified as the owner and cash is given or credit is extended.

COPYRIGHT MATERIAL OMITTED

The issue involved in this litigation is the process used for encoding the card. The patent specifies that the card is encoded in a "random" manner. There are, however, two methods for generating random numbers, random with replacement and random without replacement. This is the precise issue upon which plaintiff's patent is either upheld or invalidated.

The difference between the two systems requires a brief explanation. Imagine a hat filled with marbles, each marble having imprinted on its face one number, and each marble in the hat having a different number. In a random with replacement system, a marble would be picked, its number noted, and then the marble would be replaced, to possibly be drawn again. This method would be repeated until the desired quantity of numbers had been picked. In a random without replacement system, a marble, once picked, would not be returned to the hat. Each pick would be discrete and a different number would be picked each time. (In a random with replacement system, there exists the possibility that the same number would be picked over and over because the marble is replaced after every pick.) Once the desired number of marbles had been chosen, the amount of marbles remaining in the hat would be the original number decreased by the number of picks.

The application of the random systems described above to the patent sub judice is that the patent asserts that the card is encoded in a "random" fashion. The plaintiff alleges that the system presented is random with replacement because otherwise the "system would be no system at all." The defendants assert that the system as presented is not clear, and therefore it must fail for lack of particularity and failure to specify the best mode as required under § 112. As proof of their contention, the parties look both to the patent application, and the conflicting testimony of Mr. Cook. Additionally, plaintiff's rely on the affidavit of a Dr. Hammer.

Standard for Review

Summary judgment is granted when there is no genuine issue of material fact and a party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A Court uses a single set of principles in deciding whether to grant summary judgment; "the rules do not change simply because the case involves patent law". Aid Pack Inc. v. Beecham Inc., 641 F.Supp. 692, 694 (D.Mass.,1986), aff'd, 826 F.2d 1071 (Fed.Cir.1987). Although most suits involving patent invalidity involve such complex factual issues that they are unsuitable for summary judgment, there are some cases that do lend themselves to summary judgment. Chore-time Equipment Inc. v. Cumberland Corp., 713 F.2d 774, 778 (Fed.Cir.1983). Issues of fact are not created simply by or through the use of expert opinion, and therefore, expert opinion does not, in itself, bar the use of summary judgment. Lyle/Carlstrom Assoc. v. Manhattan Store Industries, 635 F.Supp. 1371 (E.D.N.Y.1986), aff'd., 824 F.2d 977 (Fed.Cir.1987). Claim construction, likewise, does not preclude the granting of a summary judgment, as it is generally considered an issue of law rather than one of fact. Molinaro v. Fannon/Courier Corp., 745 F.2d 651, 654 (Fed.Cir.1984).

In the case at bar, this Court is convinced that there is nothing in the subject matter before it that cannot be decided from a reading of the patent and the deposition testimony. Therefore, after a careful consideration of everything presented and the issues involved in this case, this Court rules that summary judgment is an appropriate remedy.

35 U.S.C. § 112

35 U.S.C § 112 contains the specific requirements for a written description in a patent application. The patent application must contain "the manner and process of making and using" the invention "in such full, clear, concise and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention". (Emphasis added). This Court holds that the Cook patent does not meet these requirements because neither the actual invention nor the best mode is adequately described in the patent specification.

"Skilled in the Art"

While § 112 specifies that a person "skilled in the art" may be used to interpret how to make or use the patent, the section does not require the use of experts to explain every patent application. Rather, the burden is on the Court to ascertain whether it needs "expert testimony or other extrinsic evidence to explain ... the application of complicated patent descriptions to the subject matter of the patent." Messing v. Quiltmaster Corp., 159 F.Supp. 181, 184 (D.N.J.1958).

This Court holds that the interpretation of patent claims only requires an expert when...