STAMICARBON, NV v. Escambia Chemical Corporation

• Decision Date: 21 July 1970
• Docket Number: No. 27596.,27596.
• Citation: 430 F.2d 920
• Parties: STAMICARBON, N. V., Plaintiff-Appellee, v. ESCAMBIA CHEMICAL CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

430 F.2d 920 (1970)

STAMICARBON, N. V., Plaintiff-Appellee, v. ESCAMBIA CHEMICAL CORPORATION, Defendant-Appellant.

No. 27596.

United States Court of Appeals, Fifth Circuit.

July 21, 1970.

COPYRIGHT MATERIAL OMITTED

Mark Hulsey, Jr., Jacksonville, Fla., Pennie, Edmonds, Morton, Taylor & Adams, Stanton T. Lawrence, Jr., Charles J. Brown, New York City, Glickstein Crenshaw, Glickstein, Hulsey & Fay, Jacksonville, Fla., for appellant.

Victor Cawthon, A. Frank O'Kelley, Tallahassee, Fla., Cushman, Darby & Cushman, John W. Malley, Carl G. Love, George M. Sirilla, Donald J. Bird, Washington, D. C., Keen, O'Kelley & Spitz, Tallahassee, Fla., of counsel, for appellee.

Before GEWIN, GODBOLD and CLARK, Circuit Judges.

CLARK, Circuit Judge.

Stamicarbon brought suit for patent infringement and an accounting against Escambia. Escambia defended by attacking the validity of the patent on the bases of obviousness and anticipation. After a lengthy and extensive trial to the court, the district judge found the patent both valid and infringed and reserved decision on the matter of an accounting. Escambia appeals, contending (1) the district court applied an incorrect standard of proof, (2) the court's findings are clearly erroneous, (3) one of its witnesses was improperly impeached, and (4) the appeal should be dismissed because it appealed from an order which is not appealable. Finding no reversable error in the findings and conclusions of the district court, we affirm.

I. BACKGROUND.¹

Although the date of the patent in suit is April 15, 1953, the story of this case begins almost twenty years before — in the mid-thirties when a young engineer, Joseph P. M. van Waes, developed a process for manufacturing urea in stainless steel containers which, for all practical purposes, solved the attendant problem of corrosion which had previously plagued the use of such otherwise most desirable equipment. The chief ingredient of the van Waes process was oxygen. When a measured amount of oxygen was introduced in the equipment in which urea was manufactured, it reacted with the stainless steel containers to form a protective film of oxide on the container walls, thus preventing — or very substantially retarding — corrosion. Because of the intervention of World War II and for various other reasons, the van Waes process was not immediately exploited. In fact, it remained unused until about 1948 when Companie Nerlandaise de L'Asote (CNA) sold the pilot plant developed by van Waes to the Dutch State Mines (DSM), the parent of Stamicarbon. The urea manufacturing plant was reassembled, and van Waes, who was then working for DSM, was called upon for advice and assistance in making the plant operational and in bringing stainless equipment corrosion under practical control. Finally, in 1953 it occurred to someone that van Waes' process might be patentable. Consequently an application for a patent was filed in The Netherlands on April 15, 1953. The United States application was filed April 9, 1954, and the subject Letters Patent No. 2,727,069 were granted van Waes on December 13, 1955. Van Waes subsequently assigned this patent to Stamicarbon.

The significance of the van Waes process is manifest. Urea was first synthesized in the early 1800's. It was originally used for the production of certain plastics. In recent years demand has multiplied as it has become important in the fertilizer industry and as a component in certain animal feed. The raw materials of urea basically are carbon dioxide and ammonia. During the process of synthesizing urea, a highly corrosive substance, ammonium carbamate is necessarily produced. Before the van Waes process was developed, urea had to be manufactured in corrosion-resistant vessels that were lined with either silver or lead, neither of which provided a satisfactory solution to the corrosion problem. Both forms of lined vessels were economically and structurally unsatisfactory. The van Waes process permitted the use of cheaper and lighter stainless steel.

Escambia's plant, which is the cause of this suit, is located in Pace, Florida, and was constructed and designed by Chemical Construction Company. It went into operation in January 1962. Assuming the validity of the patent, there is no serious question but that the Escambia process as originally constructed and used does in fact infringe.²

II. THE ERRONEOUS STANDARD OF PROOF.

The first ground for reversal advanced by Escambia is that the district court applied an erroneous standard of proof in making its findings in the instant case. Here the attack principally centers upon Conclusion 3, which reads:

"The aforesaid patent in suit is entitled to the presumption of validity under 35 U.S.C. § 282, and the proof offered to overcome this presumption of validity must be such as to prove invalidity beyond a reasonable doubt."

Escambia develops two salients in this assault — (1) the conclusion erroneously imposes a standard of proof "beyond a reasonable doubt", and (2) equally wrongly, it requires proof of invalidity — a question of law to which no standard of proof is appropriate.

We consider first the challenged requirement: "to prove invalidity". In Graham v. John Deere Company, 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), the Supreme Court discussed for the first time the enactment of 35 U.S.C.A. § 103 (1954) which was added to the patent law in 1952. It ruled that Section 103 codifies the requirement of "invention" imposed by the court in a line of cases beginning with Hotchkiss v. Greenwood, 11 How. (52 U.S.) 248, 13 L.Ed. 683 (1851). Section 103 speaks of the concept in terms of "obviousness" rather than "invention". Graham establishes these procedures by which obviousness is determined:

"Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or non-obviousness of the subject matter is determined." 383 U.S. at 17, 86 S. Ct. at 693.

Thus obviousness is a question of law determined against the factual background of the state of the prior art and the claimed improvement on it. See Anderson's Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57, 90 S.Ct. 305, 24 L.Ed.2d 258 (1969); Johns-Manville Corp. v. Cement Asbestos Products Co., 428 F.2d 1381 (5th Cir. 1970); Swofford v. B & W, Inc., 395 F.2d 362 (5th Cir. 1968), cert. denied 393 U.S. 935, 89 S.Ct. 296, 21 L.Ed.2d 272 (1968), reh. denied 393 U.S. 1060, 89 S.Ct. 677, 21 L.Ed.2d 703 (1969). Technically read, Conclusion 3 quoted above could be said to set down a standard of proof for a question of law, but this semantic sortie will not carry the point for Escambia. In the first place, numerous cases of this and other courts have loosely spoken in terms of "proving" or "disproving" the validity of a patent. See e. g. Fairchild v. Poe, 259 F.2d 329 (5th Cir. 1958); Harman v. Scott, 90 F.Supp. 486 (S.D. Ohio 1950), aff'd 195 F.2d 916 (6th Cir. 1952), cert. denied 343 U.S. 965, 72 S.Ct. 1059, 96 L.Ed. 1362 (1952); Grand Union Co. v. Kingston Mfg. Co., 292 F. Supp. 483 (D.N.H.1968); Consolidated Car Heating Co. v. Chrome-Gold Alloys Corp., 109 F.Supp. 652 (N.D.N.Y.1952); Galion Iron Works & Mfg. Co. v. Buffalo-Springfield Roller Co., 108 F.Supp. 811 (S.D.Ohio 1952). There is another answer. In the broad overall context of its opinion the court's wording here is no more than elliptical. Under the more facile and practical construction to which this conclusion is entitled, the words "the facts which establish" should be understood to come between "prove" and "invalidity." Because what is dealt with is such an integrated question of fact-made law anyway, we cannot say it constituted reversible error for the court to couch its conclusion in terms of proving patent invalidity.

The other prong of Escambia's attack on Conclusion 3 takes aim upon the civil suit stranger — proof "beyond a reasonable doubt." In evaluating the validity of this thrust we need to consider two other conclusions which also refer to the standard of proof. Conclusion 23 states:

"Evidence of simultaneous work by others on solutions to the problem similar to that devised by the inventor of the patent in suit must be clear and convincing if offered as evidence of obviousness under 35 U.S.C. § 103."

And Conclusion 29 states:

"The proof and evidence offered established that the patent in suit has been infringed by Defendant, and is insufficient to overcome the presumption of validity of the patent to which it is entitled under 35 U.S.C. § 282. The defenses of `obviousness,\' `on sale\' and lack of invention presented by Defendant are not sustained by the evidence."

Although Conclusion 3 deals with the presumption of validity in general, whereas Conclusion 23 treats with the narrower issue of an anticipation defense, there seems no reason why a different standard should be applied. Cf. Metal Arts Co. v. Fuller Co., 389 F.2d 319 (5th Cir. 1968). We understand the parties to this case to agree that the requisite standard of proof which must be met to overcome the presumption of validity is "clear and convincing evidence."

The courts have not been nearly so unanimous, indeed it may well be said the authorities are in a morass of conflict. We have collected only a few examples from the numerous cases which have dealt with the quantum of proof required to overcome the presumption of validity. But they are sufficient to show that some speak in terms of a preponderance of the evidence, e. g. Thomson Industries, Inc. v. Nippon Thompson Co., 298 F.Supp. 466 (E.D.N.Y.1968); Application of Lurelle Guild, 204 F.2d 700, 40 CCPA 996 (1954); some use clear and convincing evidence, e. g. Rooted Hair, Inc. v. Ideal Toy Corp., 329 F.2d 761 (2d Cir. 1964); Century Industries, Inc. v. Wiebloldt Stores, Inc., 263 F.2d 934 (7th Cir. 1959), cert. denied ...