Robintech, Inc. v. Chemidus Wavin, Ltd.

• Decision Date: 11 April 1980
• Docket Number: Nos. 78-1906,78-1909,s. 78-1906
• Citation: 628 F.2d 142,202 U.S.App.D.C. 142
• Parties: , 205 U.S.P.Q. 873, 1980-2 Trade Cases 63,298 ROBINTECH, INC., a Delaware Corporation v. CHEMIDUS WAVIN, LIMITED, a British Corporation, Appellant. ROBINTECH, INC., a Delaware Corporation, Appellant, v. CHEMIDUS WAVIN, LIMITED, a British Corporation.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 142

628 F.2d 142

202 U.S.App.D.C. 142, 205 U.S.P.Q. 873,

1980-2 Trade Cases 63,298

ROBINTECH, INC., a Delaware Corporation v. CHEMIDUS WAVIN, LIMITED, a British Corporation, Appellant.

ROBINTECH, INC., a Delaware Corporation, Appellant, v. CHEMIDUS WAVIN, LIMITED, a British Corporation.

Nos. 78-1906, 78-1909.

United States Court of Appeals District of Columbia Circuit.

Argued Oct. 12, 1979.

Decided April 11, 1980.

Appeals from the United States District Court for the District of Columbia (D.C. Civil Action No. 76-613).

Laurence R. Brown, Washington, D. C., and A. Robert Theibault, Arlington, Va., for Chemidus Wavin, Ltd., appellant in No. 78-1906 and cross-appellee in No. 78-1909.

David S. Abrams, Washington, D. C., with whom Alfred N. Goodman and Mark S. Bicks, Washington, D. C., were on the brief, for Robintech, Inc., appellee in No. 78-1906 and cross-appellant in No. 78-1909.

Before LEVENTHAL ^* and WALD, Circuit Judges, and NICHOLS, ^** Judge for the United States Court of Claims.

Opinion for the Court filed by Judge NICHOLS.

Concurring opinion filed by Circuit Judge WALD.

NICHOLS, Judge:

This appeal brings for review the final judgment in a declaratory judgment action brought under 28 U.S.C. §§ 2201, 2202 by plaintiff Robintech, Inc. (hereinafter "Robintech") and counterclaim by defendant Chemidus Wavin, Ltd. (hereinafter "Chemidus"), wherein, following a nonjury trial and due deliberation, the United States District Court for the District of Columbia held defendant's U.S. Patent No. 3,484,900 (hereinafter "Sands-Broome patent") invalid and misused. Robintech, Inc. v. Chemidus Wavin, Ltd., 450 F.Supp. 823 (1978). The conclusion of invalidity was based on a finding of "obviousness" under 35 U.S.C. § 103. Robintech, Inc., supra at 834. The conclusion of misuse was based on the court's finding that clause 1(d) of the licensing agreement to which the Sands-Broome patent was subject, extended Chemidus' patent monopoly on an "apparatus and method" beyond its lawful scope in an attempt to control the distribution of unpatented pipe products of this method. Ibid. Consequently, the District Court denied Chemidus' counterclaim for patent royalties. Robintech, Inc., at 834. For procedural reasons, the District Court declined to determine whether a removal of clause 1(d) would purge misuse. Memorandum Order of July 5, 1978, Joint Appendix, Vol. A at 158.

The District Court also concluded as a matter of law that the delivery of certain technical information or "know-how" by Chemidus to Robintech would not purge a finding of misuse. Finally, the District Court denied Robintech's claim for damages for Chemidus' alleged failure to deliver the know-how, basing its denial upon Robintech's failure to show that it had paid Chemidus those royalties due it in return for the know-how. Ibid. at 835.

After careful consideration, we reach the following conclusions:

I. The District Court's finding of invalidity under 35 U.S.C. § 103 is affirmed.

II. The District Court committed no procedural error in determining patent misuse.

III. Whether removal of the offending clause from the license agreement purges the misuse, is a moot issue.

IV. The decision on patent misuse is correct on the merits.

V. The District Court's finding that the delivery of know-how by Chemidus to Robintech could not have purged misuse is affirmed.

VI. However, we remand to the District Court on the issue of compliance with the know-how provision (1(b)) of the license agreement for further deliberation in accordance with this opinion.

On December 23, 1969, the United States Patent Office issued Patent No. 3,484,900 in the name of David Harold Sands and Ronald Broome as joint inventors. The Sands-Broome patent covers an "apparatus and method" for forming a circumferential internal groove in a length of piping of tubular thermoplastic material. As we develop fully infra, the resulting pipe and pipe fittings are not themselves covered by the patent.

The Sands-Broome patent is assigned to Chemidus and is subject to a license agreement entered into on January 1, 1970, between Chemidus Plastics, Ltd. and Universal Pipe & Plastics, Inc., predecessors in interest of defendant and plaintiff, respectively. In general, the agreement provides that Chemidus shall grant to Universal "full but non-exclusive authority" to manufacture and market pipe and pipe fittings made by use of Chemidus' patents and related know-how, in return for which Universal agrees to pay fixed sums and royalties to Chemidus and to undertake various other duties in the way of sales promotion, quality control, patent defense and confidential treatment. More specifically, the license agreement provides under clause 1(b) that Chemidus would deliver certain know-how to the licensee:

Chemidus shall furnish to the Licensee within thirty days of receipt by Chemidus of the first payment hereinafter provided for all such information and technical knowledge as shall reasonably be necessary and desirable to enable the Licensee to make use of the know-how for the manufacture of the products in the territory.

Furthermore, clause 1(d) of the license agreement limits Robintech's ability to export the unpatented products, i. e., pipes and pipe fittings, of the patented method:

The Licensee shall be entitled to export the products outside the territory to any part of the world except Great Britain and any country in respect of which Chemidus shall have granted to any other party a license to manufacture the products. Chemidus shall from time to time advise the Licensee in writing of such countries in respect of which licenses and such notification shall be conclusive and binding upon Chemidus and the Licensee.

(The term "territory" is defined in clause 1(a) as being the United States and Puerto Rico). The "products" are those made with use of the patented invention.

During trial, Chemidus filed and served a motion to strike Robintech's claim that clause 1(d) and other clauses of the license agreement constituted patent misuse. Approximately two months following trial, the District Court issued a Memorandum Order on March 22, 1978. The District Court concluded that the export limitation in clause 1(d) of the license agreement constituted patent misuse, barring recovery. This Memorandum Order was incorporated in part into the District Court's full opinion in which it issued its Findings of Fact and Conclusions of Law. Robintech, Inc., supra at 834.

A discussion of each issue follows.

I. WHETHER CLAIMS 3-6 OF THE SANDS-BROOME PATENT WERE CORRECTLY HELD INVALID BY THE DISTRICT COURT UNDER

35 U.S.C. § 103.

In Robintech, Inc. v. Chemidus Wavin, Ltd., supra at 834, the District Court concluded, as a matter of law, that claims 3-6 of the Sands-Broome patent were invalid for "obviousness" under 35 U.S.C. § 103. Chemidus also relied on claims 7 and 10 below, and these two were held invalid, but the appeal is apparently limited to 3-6. For the reasons set forth in that opinion, which we adopt as ours, we affirm the District Court's conclusion of patent invalidity. Chemidus attacks the District Judge's reliance on absence of synergism, urging that synergism has been criticized as a test of validity of a combination patent. The Supreme Court, however, uses it in the recent case, Sakraida v. Ag Pro, Inc., 425 U.S. 273, 282, 96 S.Ct. 1532, 1537, 47 L.Ed.2d 784 (1976), which the District Judge relies on. He shows so much else in support of his decision, in his findings of fact and conclusions of law, that we could treat the synergism test as irrelevant and reach the same result.

II. WHETHER THE DISTRICT COURT, COMMITTED PROCEDURAL ERROR IN TREATING CHEMIDUS' MOTION TO STRIKE THE MISUSE

CLAIM AS A MOTION FOR PARTIAL JUDGMENT

UNDER RULE 54(b).

Chemidus argues that the District Court committed procedural error in treating Chemidus' motion to strike Robintech's patent misuse claim as a motion for partial judgment on the misuse issue under Rule 54(b). Chemidus submits that partial judgment on this claim was procedurally improper because Chemidus never had its day in court on this issue. Because the trial judge insisted upon deciding the misuse issue on his own suggestion as a matter of summary judgment after Chemidus made only a motion to strike, Chemidus claims it never got a fair chance to present full evidence on the merits on the misuse issue. Moreover, Chemidus argues that at trial, the judge opposed its development of defenses against the misuse claim.

In addition, Chemidus argues that partial judgment was procedurally defective because its motion to strike was submitted only to show that Robintech had not exercised its burden of proof on the misuse issue. Neither party, says Chemidus, asked the trial judge to consider the misuse issue as a matter of summary judgment. Chemidus states that under Fed.R.Civ.P. 56, a trial judge must ascertain what material facts are not in controversy or conflict when he decides an issue on summary judgment. This, says Chemidus, the trial judge failed to do.

After thorough consideration of Chemidus' claim that the District Court erred procedurally by treating Chemidus' motion to strike as a motion for partial judgment, we deny Chemidus' claim.

As to Chemidus' first argument that it never had its "day in court" on the misuse issue, our perusal of the pre-trial documents and trial transcript compels us to conclude that Chemidus did, indeed, have a chance to submit evidence on the misuse before the District Judge made his decision: (1) whether clause 1(d) of the license agreement constituted patent misuse first surfaced as an issue before the District Court in the Pre-Trial Order of November 30, 1977; thus, under Fed.R.Civ.P. 16, the issue of patent misuse was properly before the District Court and the parties at that time; (2) the trial transcript indicates at pages 336-339 that counsel for Robintech, on his cross-examination of Mr. John Morris Bunge, sought to...