Square Liner 360, Inc. v. Chisum

• Decision Date: 22 December 1982
• Docket Number: Nos. 81-2342,81-2396,s. 81-2342
• Citation: Square Liner 360, Inc. v. Chisum, 691 F.2d 362, 216 USPQ 666 (8th Cir. 1982)
• Parties: , 11 Fed. R. Evid. Serv. 1356 SQUARE LINER 360o, INC., Appellant/Cross Appellee, v. Finis Lavell CHISUM and Chief Industries, Inc., Appellees/Cross Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 362

691 F.2d 362

216 U.S.P.Q. 666, 11 Fed. R. Evid. Serv. 1356

SQUARE LINER 360o, INC., Appellant/Cross Appellee, v. Finis Lavell CHISUM and Chief Industries, Inc. Appellees/Cross Appellants.

Nos. 81-2342, 81-2396.

United States Court of Appeals Eighth Circuit.

Submitted June 14, 1982.

Decided Oct. 12, 1982.

Rehearing Denied Dec. 22, 1982.

Jan Stuurmans, Stuurmans & Kelly, P. A., Minneapolis, Minn., for appellant/cross-appellee.

Orrin M. Haugen, Haugen & Nikolai, Henry H. Feikema, Smith, Juster, Feikema, Malmon & Kaskvitz, Minneapolis, Minn., James Head, Head & Johnson, Tulsa, Okl., for appellees/cross-appellants.

Before MILLER, ^* Judge, ARNOLD, Circuit Judge, and STEVENS, ^** District Judge.

MILLER, Judge.

These appeals are from an action for declaratory judgment of patent invalidity by appellant-cross appellee Square Liner 360o, Inc. ("Square Liner") and a counterclaim by appellees-cross appellants Finis Lavell Chisum ("Chisum") and Chief Industries, Inc. ("Chief") for infringement of patent No. 3,630,066 (" '066") ¹ and patent No. 3,888,100 (" '100"). ² After a five-week jury trial, the '066 patent was found to be valid but not infringed, the '100 patent was found to be valid and infringed, and Chisum and Chief, ³ his exclusive licensee, were awarded $500,000 damages ($78,000 to Chisum and $422,000 to Chief). In a memorandum order, the trial court denied Square Liner's post trial motion for judgment NOV or a new trial with respect to the '100 patent, denied Chisum's motions for judgment NOV with respect to the '066 patent, treble damages, prejudgment interest, and attorneys' fees, and granted Chisum's motion for a permanent injunction against future infringement as follows:

IT IS HEREBY ORDERED:

Plaintiff Square Liner 360o, Inc., its officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them who receive actual notice of the Order by personal service or otherwise, are hereby restrained and enjoined from and after the date hereof and until the date of expiration of said United States Letters Patent, from directly or indirectly infringing said United States Letters Patent No. 3,888,100 by making, using, or selling, or causing to be made, used, or sold, automobile frame straightening devices having been found to be infringing, and any infringing equivalents thereof.

This injunction does not include any repairs that Square Liner 360o, Inc., may make in the ordinary course of business to machines previously sold by it for which defendants have obtained monetary relief.

We affirm on the validity and infringement issues, vacate the award of damages and the injunction, and remand for a new trial on damages.

BACKGROUND

The patents in suit relate to an automobile frame straightening machine. Chisum, the patentee, developed and built a frame straightening machine in 1967, which he used commercially in his Big Corner Body Shop in Anchorage. Also in 1967, Chisum sent a disclosure of a frame straightening machine to Kessler Sales Corporation, who then sent literature to 50 corporations seeking a manufacturer for the machine. No inquiries were forthcoming. On March 29, 1969, Chisum filed patent application No. 810,940, disclosing an invention comprising a platform with two treadways onto which a damaged vehicle may be driven; a vertically elongatable "pull tower" on a "pedestal" which is movable to a desired position relative to the vehicle; a chain or other "tension member" connected between the pull tower and the vehicle; and another tension member on the opposite side of the vehicle attaching the vehicle to the platform. In operation, the pull tower is vertically elongated, e.g., by means of a hydraulic ram. The chain, which is connected to the part of the vehicle to be pulled, runs from the vehicle to a pulley at the base of the pull tower, around the pulley, then vertically to the top of the pull tower. As the tower elongates, the chain is pulled, which, in turn, pulls on the part of the vehicle to which it is attached.

Chisum's first application contained both broad generic claims, not limited to embodiments having a pedestal, and species claims having a pedestal limitation. During prosecution of the application, the generic claims were rejected over prior art. Both the genus and the species claims were cancelled, and revised species claims were added as an amendment to avoid a nonart rejection under 35 U.S.C. § 112. Regarding the amendment adding the new species claims, Chisum remarked that "the contribution that applicant has made to the art is the pedestal .... The pedestal is the key to applicant's invention.... It is the pedestal which is noticeably absent from the patent references cited by the examiner." Shortly before this application matured into the '066 patent, Chisum on December 23, 1971, filed continuation-in-part ("CIP") application No. 211,527, with generic claims of similar breadth to those cancelled from the first application. The CIP also contained several drawings (figures 16 through 23B) illustrating different "treadways." The CIP application matured into the '100 patent on June 10, 1975, with 36 claims. Claims 1-20 are generic claims for an automobile frame straightening machine and do not require the presence of a pedestal. Claims 21-32 are directed to various embodiments of the treadway. Claims 33-36 pertain to the pull tower.

On August 30, 1976, Chisum filed reissue application No. 718,601, for reissuance of the '100 patent, cancelling treadway claims 21-32 (figures 16-23B) and corresponding text. In his reissue petition, Chisum declared:

(T)hat petitioner verily believes that the original patent is wholly or partially invalid for the following reasons:

.... (c) That all or a part of the subject matter illustrated in the drawings of FIGURES 16 throgh (sic ) 23B and the description and claims relating thereto, was in prior public use and on sale before December 23, 1970, that is, more than one year before the application date for Patent 3,888,100 (December 23, 1971);

....

(e) That your petitioner knew that the subject matter relating to FIGURES 16 through 23B were in public use more than one year prior to December 23, 1971, but was under the mistaken belief that since the application was to be a continuation-in-part of copending application No. 810,940 which was filed March 27, 1969 ... he was entitled to a patent on such subject matter and was mistakenly under the erroneous impression that such public use and sale did not bar him from securing a patent on the subject matter illustrated in drawing FIGURES 16 through 23B;

....

(h) That the inclusion of the subject matter relating to FIGURES 16 through 23B in (CIP) application No. 211,527 was by inadvertency and mistake in that your petitioner is not experienced in patent matters, nor the laws relating to the issuance of patents and particularly the laws relating to continuation-in-part applications, and that this subject matter was not included in application 211,527 for any willful, fraudulent or deceptive intent.

During contested reissue proceedings in which both Chisum and Square Liner participated, the examiner considered both old and new art, and held that the claims on appeal (1-2, 6, 9, 11-15, 18, 20, 33, 35-36) were patentable over that art. He also considered the Big Corner machine, which was commercially used more than one year before the parent application was filed, and the Kessler machine, disclosed by Chisum to Kessler Sales Corporation more than one year before the filing date of the parent application. As to these machines, he held that there was no anticipation of the claims under 35 U.S.C. § 102(b), because the machines did not have a vertically elongatable pull tower, and that even if the machines were prior art, the '100 and '066 claims would not have been obvious in view thereof.

During the reissue proceedings, Square Liner also raised the issue of fraud and inequitable conduct, alleging that Chisum's failure to disclose the Big Corner and Kessler machines to the Patent and Trademark Office ("PTO") during prosecution of the applications for the '066 and '100 patents constituted fraud on the PTO, as did the failure to disclose the prior public use and sale of the invention to which the treadway claims were directed. The PTO did not consider the fraud issue, but suspended proceedings on the reissue application pending the decision of the district court in this litigation.

At trial, the court granted Chisum's motions for a directed verdict on the issues of fraud and misconduct, late claiming, file wrapper estoppel, and recapture.

OPINION

I. VALIDITY OF THE '100 PATENT

A. Obviousness

In order to ascertain whether, in the words of 35 U.S.C. § 103, "the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains," it is necessary to analyze the claims of the '100 patent, for it is the claims that define the metes and bounds of the patentee's property right in his invention. Square Liner is charged with infringement of claims 1-2, 6, 9, 11-15, 18, 20, 33, 35-36. Claims 1 and 33 are independent claims and are the broadest claims on appeal. Claim 1 reads:

Apparatus for applying equal and opposite forces to a mechanical structure such as an automotive vehicle body or frame comprising:

a. a platform system;

b. means on said platform system for supporting said structure c. at least one vertical pull tower means pivotally connected about a vertical axis fixed to said platform system rotatably movable to a desired position relative to said structure;

d. means to vertically elongate said tower;

e. means to connect a tension member between said vertically elongate means and a first portion of said structure to apply a first force to said...