Santa Fe-Pomeroy, Inc. v. P & Z Co., Inc.
| Decision Date | 21 February 1978 |
| Docket Number | INC,75-2741,Nos. 75-2647,FE-POMERO,s. 75-2647 |
| Citation | 569 F.2d 1084,197 U.S.P.Q. 449 |
| Parties | , 1978-1 Trade Cases 61,918 SANTA, Plaintiff-Appellant and Cross-Appellee, v. P & Z COMPANY, INC., Dinwiddie Construction Company and Henry J. Degenkolb & Associates, Defendants-Appellees and Cross-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
John Thomas McCarthy (argued), William Michael Hynes (argued), of Townsend & Townsend, San Francisco, Cal., for defendants-appellees and cross-appellants.
Appeal from the United States District Court for the Northern District of California.
Before HUFSTEDLER and KENNEDY, Circuit Judges, and JAMESON, * District Judge.
Santa Fe-Pomeroy, Inc., assignee and owner of United States Patent No. 3,412,562, the Doughty Patent, instituted this action against the defendants for patent infringement. The defendants counterclaimed, alleging invalidity of the patent, patent misuse, and violation of the antitrust laws in the licensing of the patent. The district court held that the patent was invalid for obviousness under 35 U.S.C. § 103, 1 but that there was no patent misuse or violation of the antitrust laws by Santa Fe or its predecessor in interest, Ben C. Gerwick, Inc. Santa Fe has appealed from the judgment holding the patent invalid for obviousness. The defendants have cross-appealed from the holding that there was no patent misuse and no violation of the antitrust laws. We reverse the district court's holding that the patent was invalid and affirm its holding that there was no misuse of the patent or antitrust violation.
Santa Fe and defendant P & Z Company, Inc. are competing contractors in the building of subterranean foundations in the City of San Francisco. These subterranean foundations are used in the construction of high-rise buildings and subways. Defendant Dinwiddie Construction Company is a general contractor, and defendant Henry J. Degenkolb & Associates is a group of engineers. The inventor, Samuel Clifford Doughty, was chief engineer of Ben C. Gerwick, Inc., Santa Fe's predecessor in interest, and the patent in question was issued to Gerwick on Doughty's application.
A portion of the downtown area in the City of San Francisco is built upon soil which has filled in what was formerly the Yerba Buena Cove of San Francisco Bay. The fill soil comprises the remains of timber pile wharves, old, decayed ships, and eroded clay and sand washed into the bay from mining operations in the hills of the Sierras during the gold rush days. The soil conditions are highly unstable, with a high water table, making building construction extremely difficult. Excavation of foundations for new buildings can cause settling and subsidence of adjacent structures due to shifting soil and water. The problem is magnified because many of the existing structures in the area which are often considered to be architecturally noteworthy are built upon rather shallow foundations.
As the city grew, there was a need to construct larger, high-rise buildings in the downtown area, including the Yerba Buena Cove, but soil conditions often thwarted development. In 1963 the Bank of California decided to construct a new high-rise office adjacent to the historic Bank of California building. 2 To avoid expensive and risky underpinning of the old Bank, the architects required that there be no leakage or shifting of soil or water from under that structure during the excavation of the deep foundation and basement for the new building. Engineers had to find a means of constructing a strong and rigid, watertight, structural foundation wall prior to excavation.
Henry J. Degenkolb, president of defendant Degenkolb was the structural engineer responsible for designing the new Bank's foundation wall. He worked as a member of a group with Fred Pavlow, president of defendant P & Z, and William E. Moore, a partner in a soils engineering firm. They designed a secant type foundation wall, 3 consisting of a series of mutually intersecting circular, columnar, concrete piles. Vertical holes were to be drilled into the earth along the line of the foundation, at a distance slightly less than the hole diameter apart. Concrete would then be poured into those holes. Before the concrete completely hardened, new holes were to be drilled into the spaces between the old holes, cutting a groove into the previously poured columns. More concrete would be poured into the new holes to form a column which intersects with the previously poured columns on either side.
This method, the so-called "Degenkolb Scheme", however, was never employed. Ben C. Gerwick, of Ben C. Gerwick Inc., was interested in bidding on the foundation job for the new Bank, but he was convinced that the Degenkolb design would be difficult to execute because of the problem in aligning the columns so that they would be certain to intersect and overlap to form a rigid, watertight wall. Improper alignment could lead to soil and water leakage and possibly damage the old Bank. He assigned the task of designing an alternative method to Doughty, his chief engineer. After some time Doughty conceived the process which was eventually adopted and successfully employed by Gerwick in constructing the new Bank's foundation. On Doughty's application United States Letter Patent 3,412,562, entitled "Structural Wall and Method", was issued to Gerwick on November 26, 1968. 4
At the time the engineers were attempting to devise a foundation method for the Bank, another engineering group was seeking methods for constructing foundations and subterranean walls for the new Bay Area Rapid Transit District (BARTD) system. As with the Bank group, this group was confronted with the problem of treacherous soil conditions. William Armento, a civil engineer, was placed in charge of a study team of 10 to 12 engineers to survey existing subterranean foundation methods, analyze their applicability to BARTD needs and conditions, make recommendations and, if need be, develop new methods. Armento's team worked on this project over two years and produced two reports to make available to BARTD designers and engineers information about all available foundation wall technologies. The team also developed one new construction method which had never been employed before. Although the reports were quite comprehensive, neither report referred to any foundation process similar to that invented by Doughty and used by Gerwick at the Bank of California.
Armento's group learned of the Doughty process as it was being utilized at the Bank. Although Armento was initially skeptical, after the method was successfully employed on the Bank project, the BARTD team chose to adopt it as the required method of construction for one subway station and as an alternative method for several others. BARTD obtained a license to use the Doughty process and, subsequently, a number of BARTD stations were constructed with that process.
Use of the Doughty process was not limited to the Bank and BARTD projects. It was used on a number of new deep foundations in the Yerba Buena Cove area of the city and also used in constructing foundations in difficult soil conditions in Omaha, Nebraska and Baltimore, Maryland. 5
The Doughty patent comprises 10 claims. Claims 1-8 describe with slight variations the specific sequence of process steps employed to construct the foundation wall. Claims 9-10 describe the finished wall product which results from the process described in Claims 1-8. In general, the process may be described in six steps as follows:
(1) Vertical holes are drilled along the line of the intended wall and filled with driller's bentonite mud (slurry) 6 to seal the holes and support the sides of the hole to prevent collapse. The holes are spaced along the wall line at a distance which may vary depending upon soil conditions and other engineering considerations. In one preferred embodiment of the process, the holes would be spaced twice their width (or diameter) apart.
(2) Steel H beams are inserted into the holes with the flanges of the beams aligned so that they run parallel along the line of the intended wall.
(3) The soil between two of the H beams is excavated, preferably with a clamshell type bucket, to form a rectilinear trench as wide as the H beams between the parallel flanges of the beams. This trench is filled with slurry during excavation to support the trench walls and prevent collapse.
(4) After excavation to the desired depth is completed, the slurry in the trench is displaced by tremie concrete, 7 which is introduced into the trench at the bottom through a pipe from the surface. After the tremie concrete fills the trench it is allowed to harden.
(5) Steps 1-4 are repeated until a continuous foundation wall comprised of alternating rectilinear concrete slabs and H beams has been formed around the perimeter of the area to be excavated.
(6) The soil within the perimeter wall is then excavated to the desired depth.
Santa Fe claims that the Doughty foundation process has significant advantages over former methods such as that designed by Degenkolb, Moore, and Pavlow. Because the wall consists of rectilinear concrete slabs linked by steel H beams, as the soil is removed during excavation the lateral forces of the soil and water on the unexcavated side of the wall increase, pushing upon the concrete slabs and developing compressive, arch action which forces the edges of the slabs tightly into the flanges of the H beams. The lateral forces against the slab are transmitted by this arch action to the vertical steel members, increasing thereby the concrete slab's resistance to these lateral forces. 8
Certain benefits result from this arch action upon the rectilinear slabs. The tight locking of the concrete into the flanges of the H beams leads to a watertight seal between the concrete and steel and prevents water...
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