Rex Chainbelt Inc. v. Borg-Warner Corporation, 71-1596

• Citation: 477 F.2d 481
• Decision Date: 26 April 1973
• Docket Number: No. 71-1596,71-1597.,71-1596
• Parties: REX CHAINBELT INC., Plaintiff-Appellee, v. BORG-WARNER CORPORATION, Defendant-Appellant. REX CHAINBELT INC., Plaintiff-Appellee, v. CARMAN INDUSTRIES, INC., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

477 F.2d 481 (1973)

REX CHAINBELT INC., Plaintiff-Appellee, v. BORG-WARNER CORPORATION, Defendant-Appellant.

REX CHAINBELT INC., Plaintiff-Appellee, v. CARMAN INDUSTRIES, INC., Defendant-Appellant.

Nos. 71-1596, 71-1597.

United States Court of Appeals, Seventh Circuit.

Argued September 28, 1972.

Decided April 26, 1973.

Rehearing Denied May 18, 1973.

Thomas F. McWilliams, Malcolm S. Bradway, Chicago, Ill., Basil H. Lorch, Jr., New Albany, Ind., for defendants-appellants.

Albert H. Pendleton, Ralph E. Church, Jr., Chicago, Ill., for plaintiff-appellee.

Before SWYGERT, Chief Judge, HASTINGS, Senior Circuit Judge, and CUMMINGS, Circuit Judge.

HASTINGS, Senior Circuit Judge.

On October 5, 1965, George D. Dumbaugh filed a patent application, Serial No. 493,197. Patent No. 3,251,457 issued to him on May 17, 1966.¹ The Dumbaugh patent has been described as being generally directed to "the varying of the feed rates of vibratory conveyors by varying the voltage applied to a squirrel cage type of motor which drives the feeder or conveyor."² Alvin G. Westerman applied for a patent on October 26, 1965. His application bears Serial No. 505,284.³ Pursuant to 35 U.S.C.A. § 135, the Commissioner of Patents determined that the Westerman application interfered with the Dumbaugh patent and, on November 21, 1966, gave the requisite notice to the parties.

Pursuant to Rule 205(a) of the Rules of Practice in Patent Cases, 37 C. F.R. § 1.205(a) (1972), Title 35, U.S.C. A., Westerman, the applicant party, amended his application by copying verbatim the eight apparatus and four method claims of Dumbaugh, the patentee party, and adding them to his own application. The copied claims were designated as the counts of Interference No. 95,710,⁴ which was referred to the Board of Patent Interferences (Board) for resolution. The Board is the tribunal within the Patent Office charged by Congress with the exclusive responsibility for determining "the question of priority of invention." 35 U.S.C.A. § 135. Because Dumbaugh's application had been filed prior to Westerman's, Dumbaugh was the senior party before the Board. In the interference proceedings, therefore, it was incumbent on Westerman, as the junior party, to prove his priority of invention by a preponderance of the evidence. Sanford v. Kepner, 3 Cir., 195 F.2d 387, 389 (1952), aff'd, 344 U.S. 13, 73 S.Ct. 75, 97 L.Ed.12. The Board's decision of April 30, 1970, awarded priority to Dumbaugh.

Plaintiff then brought the instant action in the district court under 35 U.S. C.A. § 146 to review the Board's award. The court on April 20, 1971,⁵ upon the record made before the Board and a small amount of additional testimony adduced by plaintiff in the district court, set aside all the Board's findings and awarded priority of invention to Westerman. We reverse the judgment of the district court.

I.

We are faced with the threshold question of whether the district court applied the correct standard of review. An action under § 146 is of a hybrid nature. It has one element of a trial de novo in that either party is permitted to introduce evidence which was not before the Board.⁶ Nevertheless, it is clear under the controlling case of Morgan v. Daniels, 153 U.S. 120, 14 S. Ct. 772, 38 L.Ed. 657 (1894), that a § 146 action is essentially of an appellate character and that the scope of review is quite narrow:

"Upon principle and authority, therefore, it must be laid down as a rule that, where the question decided in the patent office is one between contesting parties as to priority of invention, the decision there made must be accepted as controlling upon that question of fact in any subsequent suit between the same parties, unless the contrary is established by testimony which in character and amount carries thorough conviction." Id. at 125, 14 S.Ct. at 773 (emphasis added).

In 1916, Circuit Judge Mack, speaking for our court in Gold v. Gold, 7 Cir., 237 F. 84, set forth a standard of review for district courts to follow in these cases which, with only the modifications made necessary by intervening amendments to the statute,⁷ has continuing vitality:

"The final decision in the interference proceedings, while not conclusive, is nevertheless of the utmost importance. The Court of Appeals of the District of Columbia acts therein as the highest patent tribunal; like the Patent Office officials, its members acquire a wide experience in these intricate questions, the solution of which demands expert knowledge and training. Moreover, unlike the ex parte grant of patents, interference proceedings are contested between parties in interest, and, while conducted by administrative officials, are quasi judicial in their nature.

"The District Court, in this statutory proceeding to review the decree rendered in a contested case by a court acting as the final expert administrative governmental department, exercises a jurisdiction somewhat analogous to, though broader than, that exercised by a court of equity on a bill to set aside a judgment at law — broader, in that the evidence may go to the merits of the original controversy; but, though a re-examination of the evidence is not precluded, the court must be thoroughly convinced that it furnishes no substantial support whatever for the decree before the conclusions reached by the Court of Appeals of the District of Columbia will be overturned.

"And while this seems obvious enough, when the re-examination involves merely a weighing of the evidence and a consideration of the credibility of witnesses, as in the ordinary priority of invention cases, it is equally true when questions peculiar to the patent law, such as the construction and scope of the patent application, are involved. For it is just such questions that the administrative tribunal is pre-eminently qualified to solve. Even then, of course, the court is not absolved from the duty of examination; but, unless it be perfectly clear that the final expert administrative body, the Court of Appeals, erred, relief should not be granted * * *." Id. at 86.

It is plain from the district court's memorandum opinion of May 5, 1971, that it did not apply the proper criterion. After finding that it had jurisdiction over the parties and of the subject matter of the action, the court said: "The plaintiff has maintained its burden of proof of the essential elements and alleged facts of the complaint by a preponderance of the evidence * * *." We find no basis for accepting plaintiff's contention that the district court meant this statement to apply only to the ten "formal" paragraphs of the complaint, but not to the eleventh paragraph which alleged that the Board's award had been erroneous. The district court's decision cannot stand, therefore, unless as we apply the "thorough conviction" test laid down in Morgan v. Daniels, it appears to us that the district court reached the correct result despite its use of the wrong standard.

II.

It has long been accepted that the question of priority of invention is the only matter within the competence of the Board of Patent Interferences. See Ferree v. Shephard, 384 F.2d 1019, 55 C.C.P.A. 848 (1967). This restriction of the Board's jurisdiction does not, however, prevent it from determining certain matters "ancillary"⁸ to the basic question of priority. The Board's decision on the ancillary question of Westerman's right to make the counts of the interference was one of the independent grounds for its award. Dumbaugh raised the question initially during the usual motion period by moving to dissolve the interference.⁹ The Primary Examiner denied Dumbaugh's motion, holding that Westerman's disclosure "comprehends within its confines the AC squirrel cage motor." In so doing, however, the Primary Examiner applied the wrong rule of law. As the Board correctly pointed out in its opinion, "a sufficient basis to support the copied claims is provided only if the specification is so worded that the necessary and only reasonable construction to be given the disclosure by one skilled in the art is one which will lend clear support to the claim" (emphasis in original). The question is not whether the applicant party's application can be read to include the particular device of the patent, but whether it necessarily discloses the device. Gubelmann v. Gang, C.C.P.A., 408 F.2d 758, 766 (1969); Dreyfus v. Sternau, 357 F.2d 411, 415, 53 C.C.P.A. 1050 (1966); Jepson v. Coleman, 314 F. 2d 533, 536, 50 C.C.P.A. 1051 (1963); Crome v. Morrogh, 239 F.2d 390, 392, 44 C.C.P.A. 704 (1956).

Measuring the Westerman application by this criterion, the Board concluded that it failed to disclose as a necessary element the use of an A.C. squirrel cage induction motor. Rather, the Board found that the application might also be read to teach the use of a wound rotor motor — the other type of A.C. induction motor. Plaintiff expended most of its energies before the district court attempting to refute the Board's conclusion by evidence of the character and amount required by Morgan v. Daniels. Thus, it sought to demonstrate by the testimony of experts that the phrase "ordinary induction motor," which appeared in the Westerman application, would be read by one skilled in the art to signify a squirrel cage motor to the exclusion of any other type. Furthermore, plaintiff contended and attempted to prove that the symbol employed in the drawings accompanying the Westerman application disclosed a squirrel cage motor to the exclusion of any other type.

With respect to the meaning of "ordinary induction motor," plaintiff's expert witnesses asserted that squirrel cage motors are ordinary in the sense that they are the induction motors most usually encountered by manufacturers who employ induction motors in the course of their business. Defendants' experts testified that wound rotor motors are also ordinary in the sense that they are common, simple and relatively uncomplicated. On cross-examination, neither side's...