Ryco, Inc. v. Ag-Bag Corp.
| Citation | 857 F.2d 1418,8 USPQ2d 1323 |
| Decision Date | 21 September 1988 |
| Docket Number | Nos. 87-1490,AG-BAG,87-1550,s. 87-1490 |
| Parties | RYCO, INC., Plaintiff/Counterdefendant/Appellant, v.CORPORATION, Defendant/Counterclaimant/Cross-Appellant, v. Kelly P. RYAN and Blair Manufacturing Company, Counterdefendants/Appellants, Richard H. Lee and David H. Rasmussen, Defendants. Appeal |
| Court | U.S. Court of Appeals — Federal Circuit |
William J. Stellman, of Pinehurst, N.C., argued for plaintiff/counterdefendant/appellant. With him on the brief were Timothy J. McReynolds and Steven J. Olson, Croker, Huck & McReynolds, McReynolds, P.C., of Omaha, Neb. Also on the brief were James R. Place and Scott H. Rasmussen, Breeling, Welling & Place, of Omaha, Neb.
Roger Tilbury, Tilbury/Rothman Building, of Portland, Or., argued for defendant/counterclaimant/cross-appellant.
Before RICH, NIES and MAYER, Circuit Judges.
These are cross-appeals from the May 15, 1987, judgment of the District Court for the District of Nebraska, as amended May 22, 1987, holding that the claims of patent No. 4,337,805 for "Agricultural Bag Loading Apparatus" ('805 patent), assigned to Ag-Bag Corporation, are not invalid, and that Ryco, Inc., Kelly P. Ryan, and Blair Manufacturing Company had infringed claims 1-10, 12-16, and 32-35 of the '805 patent. The district court awarded Ag-Bag $83,100.73 in damages as a reasonable royalty and denied Ag-Bag's claims for increased damages and attorney fees. We affirm in part, reverse in part, vacate in part, and remand.
In the 1970's, the Gebruder Eberhardt Company of Germany developed an in-the-field agricultural bagging machine for compressing silage into large air-tight plastic bags one hundred feet or more in length and eight feet in diameter. Eberhardt obtained two U.S. patents on its bagging machine, Nos. 3,687,061 ('061 patent) and 4,046,068 ('068 patent), both issued to Eggenmueller, et. al. Eberhardt then granted Midwest Silopress, Inc., of Sioux City, Iowa, a license under the patents.
Pursuant to its license, Midwest Silopress sold a bagging machine known as the "Silopress 401." The Silopress 401 (see Appendix) is powered by attaching a power takeoff (16) to a tractor. An oscillating feed table (2) at the intake forces silage toward a rotor (3) located in a stripper basket (6) between the intake and the discharge chamber. The rotor teeth (5) are arranged in a helical pattern similar to an opposed flight auger which when rotated causes the silage to move from the sides of the intake toward the center. The rotor then forces the silage through the discharge chamber and compresses it into a large plastic bag (9).
Both the bagging machine and the tractor move away from a backstop (10) placed at the back end of the bag as silage is The Silopress 401 had several design problems which became apparent after long-term use. For example, the helical arrangement of the rotor teeth caused power surges which resulted in uneven compression of the silage. The oscillating feed table contributed to the problem by causing the silage to surge into the rotor. The placement of the rotor within the stripping basket limited contact of silage with the rotor teeth and reduced the flow of silage through the machine. Also, the band brake was difficult to set accurately and would often cause the machine to skip, jump, or buck.
forced into it. To control the silage compression, the backstop is connected to the bagging machine by two cables (12) which run to two drums (13) on the machine. The cable drums are mounted on a shaft (14) and an adjustable band brake (18) is secured to one of the drums. The brake resists the movement of the machine and thus controls the silage pressure within the bag.
The '805 patent is directed to an improved agricultural bagging machine which eliminates the problems of the Silopress machine. The patent application was filed December 3, 1980, and the patent issued July 6, 1982, to David Rasmussen, Richard Lee, and William Johnson. Rasmussen, Lee, and Larry Inman were dealers for Midwest Silopress who later founded Ag-Bag.
Although the inventors made many changes to the Silopress machine, the bagging machine of the '805 patent differs from the Silopress in four primary respects:
1. Teeth--The rotor teeth are evenly distributed on the rotor shaft in groups of three or four in a "random pattern" instead of the helical arrangement of the Silopress. In Figure 5 of the patent (reproduced in the Appendix) the surface of the rotor shaft (52) is shown flat, illustrating the placement of the teeth (46) in groups (92) on the shaft in the preferred embodiment. This tooth arrangement, in which the leading edge of each group of teeth does not coincide with the leading edge of any other group, eliminates the power surges and uneven flow of silage associated with the Silopress. The even distribution of the teeth, albeit random, further insures that the movement of silage is approximately the same along the length of the shaft.
2. Stripper--The stripper basket of the Silopress is replaced by a comb (48) of curved prongs or "J-bars" (90) positioned on the discharge side of the rotor in such a way as to allow the rotor teeth (46) to pass between them. (See Figures 3 and 4 in the Appendix.) The improved stripper comb admits more feed to the rotor and thus increases the capacity of the bagging machine over the Silopress.
3. Feeder--A "beater bar" feeder turning in the same direction as the rotor is mounted in the intake instead of an oscillating feed table. The beater bar feeder shown in Figure 3 of the patent includes a horizontally mounted shaft (60) and a plurality of prongs or tines (62) made of angle iron and mounted generally perpendicular to the shaft. The beater bar feeder precompresses the silage to a slight degree and insures that an adequate supply of silage is always presented to the rotor teeth.
4. Brake--The band brake of the Silopress is replaced by a conventional automobile disc brake actuated by a manually operated hydraulic pump with a pressure sensor and dial. The disc brake eliminates the jerking and bucking which plagued the Silopress.
Independent claims 1, 15, 32, and 35 (see Appendix) are each directed to a bagging machine having one of the specific improvements. Dependent claims 2-10, 12-14, 16, 33, and 34 describe the features in more detail and in combination with the other improvements. No single claim of the '805 patent incorporates all four improvements.
Ryco filed a request for reexamination of the '805 patent in the Patent and Trademark Office on January 8, 1985. In the certificate of reexamination issued October 26, 1987, the patentability of all of the
claims asserted against Ryco (claims 1-10, 12-16, and 32-35) was confirmed. Of the remaining claims, one was cancelled and the rest were found patentable either in their original form or as amended.
Ag-Bag was formed in 1978 for the purpose of building the improved bagging machines of the '805 patent. Ag-Bag had no manufacturing facilities so Rasmussen contacted Kelly Ryan, president of Blair Manufacturing, who agreed to make the machines for Ag-Bag. Blair Manufacturing built the improved bagging machine, known as the "Ag-Bagger," from 1978 until 1984.
After the termination of the parties' relationship in 1984, Blair Manufacturing still had a number of bagging machines it had manufactured for Ag-Bag in its inventory. Blair Manufacturing repainted these machines and sold them under a different name.
Kelly Ryan formed Ryco, Inc., in 1984 to compete with Ag-Bag. From its inception, Ryco manufactured machines with parts and labor supplied by Blair Manufacturing. Ryco also leased its manufacturing facilities from Blair Manufacturing. The manufacturing facilities and employees of both Ryco and Blair Manufacturing were transferred to Kelly Ryan Equipment Company (not a party in this case) in 1986.
Ryco made both two-wheel and four-wheel bagging machines which it sold under the name "Big Bagger." Like the bagging machine of the '805 patent, Ryco's four-wheel machine has both a beater bar feeder and a hydraulic disc brake. The projections on the beater bar, however, are not perpendicular but are set at an angle to the shaft. The rotor teeth are arranged in groups of two in a helical pattern so that at least two groups of teeth engage the silage at the same time and the stripper bars are straight instead of curved.
The principal difference between Ryco's two-wheel and four-wheel bagging machines is that in its two-wheel machine, the beater bar is omitted. In its place, the two-wheel machine uses a reverse-flighted auger made of strips of metal welded to a shaft to distribute the silage and feed it to the rotor.
Ryco sued Ag-Bag for a declaratory judgment that the '805 patent and two related U.S. patents, Re. No. 31,810 ('810 patent) and No. 4,320,036 ('036 patent) are invalid. Ag-Bag counterclaimed against Ryco, Kelly Ryan, and Blair Manufacturing for direct infringement and inducing infringement of the '805 and '810 patents.
The district court held, inter alia, that Ryco had failed to establish by clear and convincing evidence that the claims of the '805 patent (except 17, 18, and 22 which were not considered) are invalid for obviousness under 35 U.S.C. Sec. 103. The court held, however, that all claims of the '810 patent are invalid under Sec. 103. The court did not address the validity of the '036 patent because the evidence presented no case or controversy on this issue.
On Ag-Bag's counterclaim for infringement, the district court found that Ryco's two-wheel and four-wheel bagging machines do not literally infringe the asserted claims of the '805 patent (claims 1-10, 12-16, and 32-35), but infringe under the doctrine of equivalents. The court found that Blair Manufacturing had literally infringed the claims of the...
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