Saturn Mfg., Inc. v. Williams Patent Crusher & Pulverizer Co.

• Decision Date: 27 July 1983
• Docket Number: 81-2442,Nos. 81-2390,s. 81-2390
• Citation: 219 USPQ 533,713 F.2d 1347
• Parties: , 13 Fed. R. Evid. Serv. 1892 SATURN MANUFACTURING, INC., Appellant/Cross-Appellee, v. WILLIAMS PATENT CRUSHER & PULVERIZER CO. and Robert M. Williams, Appellees/Cross-Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1347

713 F.2d 1347

219 U.S.P.Q. 533, 13 Fed. R. Evid. Serv. 1892

SATURN MANUFACTURING, INC., Appellant/Cross-Appellee, v. WILLIAMS PATENT CRUSHER & PULVERIZER CO. and Robert M Williams, Appellees/Cross-Appellants.

Nos. 81-2390, 81-2442.

United States Court of Appeals Eighth Circuit.

Submitted June 15, 1982.

Decided July 27, 1983.

Klarquist, Sparkman, Campbell, Leigh, Whinston & Dellett, James S. Leigh, Alexander C. Johnson, Jr., Portland, Or., Shepherd, Sandberg & Phoenix, Gerald D. Morris, St. Louis, Mo., for appellant/cross-appellee.

Gravely, Lieder & Woodruff, Frederick M. Woodruff, Lewis, Rice, Tucker, Allen &amp Chubb, Mark T. Keaney, St. Louis, Mo., for appellees/cross-appellants.

Before LAY, Chief Judge, JOHN R. GIBSON, Circuit Judge, and FAIRCHILD ^*, Senior Circuit Judge.

JOHN R. GIBSON, Circuit Judge.

An industrial shear-type shredder for pulverizing metal scrap, tire, and general refuse has spawned this controversy. Saturn Manufacturing, Inc. obtained a patent on the shredder in question and brought this action against Williams Patent Crusher & Pulverizer Company and Robert M. Williams claiming patent infringement and unfair competition concerning Saturn's shredder. The defendants counterclaimed for a declaratory judgment that the patent was invalid and not infringed. A jury returned a verdict for Saturn on the patent validity and infringement issues and found damages in the amount of $115,000. The jury specifically found that Claims 8 and 10 of the Saturn patent were nonobvious and infringed and that the infringement was willful or wanton. The jury found for Williams on the unfair competition claim. Williams appeals contending that the patent is invalid as a matter of law and that file wrapper estoppel applies. Saturn appeals contending that the trial court abused its discretion in denying increased damages, attorney fees, and prejudgment interest for the infringement. We affirm the district court with respect to the validity and infringement issues and the denial of attorney fees. We reverse and remand on the issues of increased damages and prejudgment interest.

Michael Culbertson and James Keller developed the Saturn shredder during 1974-75. A patent application was filed on August 6, 1975, and patent number 4,034,918 was issued for the Saturn shredder on July 12, 1977. As embodied in Claims 8 and 10, the shredder has a pair of counterrotating cutting shafts with disc-type cutters that are driven by a hydraulic radial piston motor through a gear train, which causes one cutter shaft to rotate at twice the speed of the other. To prevent jamming, a flow-reversing device reverses the cutting shafts for a predetermined time, after which the valve causes the cutter shafts to resume operation in their normal direction. ¹

The Williams Company is engaged in producing such equipment as crushers, pulverizers, shredders, and grinders, and was started about 110 years ago when a hammermill pulverizer was invented by the grandfather of Robert Williams, now President of the Williams Company. Before 1977, Williams had not had a shear-type shredder in its product line. In 1976 a sales engineer for Williams visited Saturn and reported to Robert Williams about the successful shear-type shredder being marketed by Saturn. Robert Williams went to the Saturn plant in Oregon and after his return attempted to get approval of his board of directors to enter into a relationship with Saturn. The board determined not to make such arrangement but a decision was made that Williams would attempt to design and build a similar type shredder. Robert Williams assigned Harold Groves, an engineer with the Williams Company, to develop such a shredder and furnished a brochure and photographs of the Saturn shredder to Groves together with a description of the working of the shredder as he had observed it. In September 1977 Williams marketed the Ripshear, a shredder remarkably similar in appearance and operation to the Saturn shredder.

This action was then commenced and tried to a jury over nine days. The jury returned a special verdict that Claims 8 and 10 ² of the Saturn patent were nonobvious and infringed, that Robert Williams had induced the infringement, and that the infringement and the inducement were willful or wanton. The jury also found Williams not liable for unfair competition. The jury assessed damages in favor of Saturn in the amount of $115,000. The district court entered judgment declaring Claims 8 and 10 of the Saturn patent to be valid, and awarding damages for infringement in the amount assessed by the jury. The court denied Saturn's request for increased damages, attorney fees, and prejudgment interest. This appeal followed.

I. Patent Validity

The validity of a patent is based on three elements--novelty, utility, and nonobviousness. Creative Cookware, Inc. v. Northland Aluminum Products, Inc., 678 F.2d 746, 747 (8th Cir.1982); see 35 U.S.C. §§ 101-103 (1976). Once issued, a patent is presumed valid, 35 U.S.C. § 282 (1976), and the challenging party has the heavy burden of proving invalidity by substantial evidence. Contico International, Inc. v. Rubbermaid Commercial Products, Inc., 665 F.2d 820, 822-23 (8th Cir.1981); Clark Equipment Co. v. Keller, 570 F.2d 778, 794-95 (8th Cir.), cert. denied, 439 U.S. 825, 99 S.Ct. 96, 58 L.Ed.2d 118 (1978). Williams does not contest novelty or utility. Rather, Williams contends that Claims 8 and 10 of Saturn's patent are invalid because, as a matter of law, the differences between these claims and the prior art are obvious to one skilled in the relevant art.

In Span-Deck, Inc. v. Fab-Con, Inc., 677 F.2d 1237, 1241 (8th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 318, 74 L.Ed.2d 294 (1982), we set forth the standards for determining obviousness as follows:

It is well settled that the question of obviousness is a question of law. See, e.g., Ralston Purina Co. v. General Foods Corp., 442 F.2d 389, 391 (8th Cir.1971). However, as has been often observed, the test for nonobviousness requires several underlying factual inquiries regarding: (1) scope and content of the prior art; (2) differences between the subject patent and the prior art; (3) the level of ordinary skill in the pertinent art at the time involved; and (4) certain secondary indicia of nonobviousness such as commercial success, long felt but unsolved needs, and failure of others. Graham v. John Deere Co., 383 U.S. 1, 17, 86 S.Ct. 684, 693, 15 L.Ed.2d 545 (1966); .... Because the question of nonobviousness involves both questions of law and fact, it is fundamental that the trial court must make the ultimate conclusion of law by applying the correct legal criteria to the factual determinations made by the jury. See Swofford v. B & W, Inc., 395 F.2d 362, 367-68 (5th Cir.), cert. denied, 393 U.S. 935, 89 S.Ct. 296, 21 L.Ed.2d 272 (1968).

Although a special verdict form was used in this case, one of the questions submitted to the jury was whether the differences between the patented subject matter and the prior art were nonobvious, to which the jury answered in the affirmative. Such an answer can be characterized in one of two different ways: either as a finding of what is a question of law, or as what amounts to little more than a general verdict. The jury was instructed as follows with respect to its deliberations on the question of nonobviousness:

In determining whether or not the invention of the Saturn patent was nonobvious, the primary considerations which you must determine, based upon the evidence you have heard, are as follows:

(i) What is the scope and content of the prior art?

(ii) What are the differences between the prior art and the claims of the Saturn patent which are here asserted by Saturn to be infringed?

(iii) What was the level of skill of a person of ordinary skill in the art of the claimed invention at the time the invention was made?

Our earlier decisions have encountered some difficulty in reviewing jury verdicts on the issue of nonobviousness. In Span-Deck Chief Judge Lay observed the differing views of the circuits on such jury findings, some courts upholding the findings if substantial evidence exists to support them, and others, because obviousness is a question of law, engaging in an independent analysis of the underlying facts. In Span-Deck Chief Judge Lay concluded that whichever test was used, the result would be the same. In a partial dissent Judge Woods ³ argued that the jury findings should be given greater weight. Judge Arnold in a concurring opinion argued that a case tried to a jury should be reviewed on appeal with the same deference given a jury verdict as in any other kind of case, but concurred in the opinion on the basis that no jury question was made out by the evidence. In Creative Cookware, Inc. v. Northland Aluminum Products, Inc., 678 F.2d 746 (8th Cir.1982), this court speaking through Judge Henley ruled that an attack on the sufficiency of the evidence supporting underlying factual findings on patent validity must be preserved by a motion for directed verdict. In discussing the effect of the jury verdict, Judge Henley stated:

Although, as stated, obviousness is a question of law, we do not think the trial court erred in submitting underlying fact issues to the jury. See E.I. du Pont de Nemours & Co. v. Berkley & Co., 620 F.2d [1247] at 1264; Control Components, Inc. v. Valtek, Inc., 609 F.2d 763, 767 (5th Cir.), cert. denied, 449 U.S. 1022, 101 S.Ct. 589, 66 L.Ed.2d 484 (1980). The jury was instructed that a finding of obviousness must be based on the relevant underlying fact inquiries, and we presume that the jury returned the special verdict on the basis of the instructions given. See E.I. du Pont de Nemours & Co. v. Berkley & Co., 620 F.2d at 1271 n. 44.

Creative Cookware, Inc. v. Northland Aluminum Products, Inc., 678 F.2d at 748 n. 4.

Judge Henley is here discussing a situation similar to this case where a finding of obviousness is...