Studiengesellschaft Kohle, M.B.H. v. Shell Oil Co.

• Citation: 42 USPQ2d 1674,112 F.3d 1561
• Decision Date: 05 May 1997
• Docket Number: No. 96-1079,96-1079
• Parties: , 42 U.S.P.Q.2d 1674 STUDIENGESELLSCHAFT KOHLE, M.B.H., Plaintiff-Appellant, v. SHELL OIL COMPANY, Defendant/Cross-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1561

112 F.3d 1561

65 USLW 2753, 42 U.S.P.Q.2d 1674

STUDIENGESELLSCHAFT KOHLE, M.B.H., Plaintiff-Appellant, v. SHELL OIL COMPANY, Defendant/Cross-Appellant.

No. 96-1079.

United States Court of Appeals, Federal Circuit.

May 5, 1997.

Rehearing Denied; Suggestion for Rehearing In Banc

Declined June 27, 1997.

Nathanial D. Kramer, Sprung Horn Kramer & Woods, Tarrytown, NY, argued, for plaintiff-appellant. With him on the brief was Arnold Sprung.

John D. Norris, Arnold, White & Durkee, of Houston, TX, argued, for defendant/cross-appellant. With him on the brief were John D. Norris and Russell L. Sandidge. Of counsel on the brief were A.M.T. Finch, Jr. and Dean F. Vance, Shell Oil Company, Houston, TX.

Before RADER, SCHALL, and BRYSON, Circuit Judges.

RADER, Circuit Judge,

The United States District Court for the Southern District of Texas determined that claims 1-6 and 14 of U.S. Patent No. 4,125,698 ('698 patent) are invalid, and that infringement of claim 13 by Shell Oil Company's (Shell) polypropylene operations and infringement of claims 7, 9-12, and 15 by Shell's polybutylene operations were not properly before the court. Studiengesellschaft Kohle m.b.H. (SGK), the owner of the '698 patent, appeals these decisions. Further, the district court certified the following question under 28 U.S.C. § 1292(b) (1994):

Where the Court has found the relevant patent claims invalid, may the Licensor recover damages for breach of contract for past royalties due on processes allegedly covered by such claims, from the date of the alleged breach until the date that the Licensee first challenged validity of the claims?

Because an applicant cannot combine multiple prior applications to obtain an earlier filing date for an individual claim, this court affirms the district court's invalidity holding. Because infringement involving claim 13 and Shell's polybutylene operations was properly before the district court, this court reverses and remands. Finally, this court answers the certified question in the affirmative.

I.

SGK is the licensing arm of a famous, non-profit research and educational organization in Germany--the Max-Planck Institute for Coal Research. The '698 patent is part of a family of patents filed by Professor Karl Ziegler, a Nobel laureate and past director of the Max-Planck Institute, and various co- inventors. Ziegler and his co-workers initially discovered that combinations of reducing agents (most notably organoaluminum compounds) and heavy metal compounds would polymerize ethylene to form high molecular plastics. Ziegler extended this discovery to the polymerization of higher members of the ethylene series, such as propylene and butene. Ziegler, et al. filed the 770,484 application, which matured into the '698 patent, on October 29, 1958.

In another case, this court categorized the '698 patent as a continuation-in-part (CIP) because it was not limited to a single parent application. See Studiengesellschaft Kohle mbH v. Northern Petrochemical Co., 784 F.2d 351, 352, 228 USPQ 837, 838 (Fed.Cir.1986). The 770,484 CIP application, which was filed on October 29, 1958, combined Ziegler's 482,412 application, filed January 17, 1955, with his 514,068 application, filed June 8, 1955. On December 6, 1955, over a year before the filing of the 770,484 application, Belgian Patent No. 538,782 (the Belgian Patent) issued. Claims 1-6 and 14 of the '698 patent, both parties agree, cover a process disclosed in the Belgian Patent.

Shell and SGK first entered into an agreement involving the Ziegler family of patents in 1974. Under that agreement, SGK licensed Shell to polymerize propylene under the Ziegler patents. When the '698 patent issued in 1978, the 1974 agreement already authorized Shell to practice the claimed process. In 1987, after several disputes over this license, Shell and SGK renegotiated the license only with regard to the '698 patent. The new terms provided Shell a paid-up license to produce 450 million pounds of polypropylene per year, with a 1.5% running royalty on any polypropylene sales in excess of 450 million pounds. Further, the amended agreement obligated Shell to give a yearly accounting of its entire polypropylene production. In that yearly accounting, Shell was to "specify the amount of Polypropylene produced which it considers as falling outside of the license and ... provide SGK, in confidence, with sufficient information to allow SGK to independently evaluate whether or not said production is, in fact, outside of the scope of the license."

In 1987, Shell also began producing polypropylene by an alleged new process in Seadrift, Texas (the Seadrift Process). Because Shell contended that the '698 patent did not cover the Seadrift Process, Shell did not pay royalties on polypropylene produced by that process. Moreover, in its yearly accountings to SGK, Shell did not disclose its production of polypropylene by the Seadrift Process.

Ultimately, SGK terminated Shell's license and brought an action for unpaid royalties from 1987 through 1993. Additionally, SGK set forth claims for infringement of the '698 patent for the period 1993 through 1995. Shell moved for summary judgment of invalidity of claims 1-6 and 14 of the '698 patent based on anticipation by the Belgium patent. SGK responded by arguing that the '698 patent is not anticipated because it is entitled to an earlier filing date than the Belgian patent. To arrive at this earlier filing date, SGK relied on 35 U.S.C. § 120 (1994) to combine the disclosures of the two earlier patent applications (the 482,412 application and the 514,068 application).

The district court held that section 120 does not permit the combination of two earlier disclosures to acquire an earlier filing date, because "an earlier application must comply with the requirements of § 112 for each claim that seeks the benefit of the filing date of that earlier application." As none of the parent applications alone describes the invention recited in claims 1-6 and 14 of the '698 patent, the district court held that these claims were only entitled to the filing date of the continuation-in-part application (October 29, 1958). Thus, the district court determined that the Belgian Patent anticipated claims 1-6 and 14 of the '698 patent, and, therefore, granted summary judgment of invalidity under 35 U.S.C. § 102(b).

The district court further ruled that the only matter remaining before it was SGK's claim for royalties under the parties' license. In that regard, the district court held that a licensor could recover damages for breach of a license agreement where the validity of the underlying patent was not challenged until after the breach occurred. The district court certified the question of whether the invalidity determination on claims 1-6 and 14 would affect plaintiff's claim for unpaid royalties for the period before Shell challenged the validity of the patent.

II.

On appeal, SGK contends that the district court erred in concluding that the disclosures of two earlier filed applications cannot be combined to acquire an earlier filing date under 35 U.S.C. § 120, and in granting summary judgment of invalidity based on that ruling. This court reviews issues of statutory interpretation de novo. See In re Carlson, 983 F.2d 1032, 1035, 25 USPQ2d 1207, 1209 (Fed.Cir.1992). Additionally, this court reviews a grant of summary judgment de novo. See Winner Int'l Corp. v. Wolo Mfg. Corp., 905 F.2d 375, 376, 15 USPQ2d 1076, 1077 (Fed.Cir.1990).

Section 120 sets forth the requirements for a patent application to receive the benefit of the earlier filing date from a prior application:

An application for patent for an invention disclosed in the manner provided by the first paragraph of section 112 of this title in an application previously filed in the United States ... which is filed by an inventor or inventors named in the previously filed application shall have the same effect, as to such invention, as though filed on the date of the prior application ... if it contains or is amended to contain a specific reference to the earlier filed application.

35 U.S.C. § 120. To qualify for an earlier filing date, section 120 requires, inter alia, that the earlier-filed U.S. patent application contain a disclosure which complies with 35 U.S.C. § 112, p 1 (1994) for each claim in the newly filed application. Thus, this benefit only applies to claims that recite subject matter adequately described in an earlier application, and does not extend to claims with subject matter outside the description in the earlier application. See Waldemar Link, GmbH & Co. v. Osteonics Corp., 32 F.3d 556, 558-59, 31 USPQ2d 1855, 1857 (Fed.Cir.1994). In other words, a claim complies with 35 U.S.C. § 120 and acquires an earlier filing date if, and only if, it could have been added to an earlier application without introducing new matter. See Mendenhall v. Cedarapids, Inc., 5 F.3d 1557, 1566, 28 USPQ2d 1081, 1088-89 (Fed.Cir.1993).

Under 35 U.S.C. § 112, p 1, and consequently under 35 U.S.C. § 120 as well, an applicant must "convey with reasonable clarity to those skilled in the art that, as of the filing date sought, he or she was in possession of the invention." Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1563-64, 19 USPQ2d 1111, 1117 (Fed.Cir.1991). An applicant cannot show possession of an invention based upon a combination of several distinct previous applications unless he shows that one of the applications discloses the invention. See Application of Scheiber, 587 F.2d 59, 199 USPQ 782, 785 (CCPA 1978) (Baldwin, J., concurring). In other words, a claim that relies upon a combination of previously-filed applications is not to be entitled to an earlier filing date because the applicant has not demonstrated possession of the complete invention at the time of an earlier application. Id. 199 U.S.P.Q. at 785 ("[A]ppellant is asking [the court] to make the decision that various bits of his claimed invention...