Surface Technology, Inc. v. U.S. Intern. Trade Com'n

• Decision Date: 23 September 1986
• Docket Number: No. 85-1163,85-1163
• Parties: , 231 U.S.P.Q. 192, 4 Fed. Cir. (T) 156 SURFACE TECHNOLOGY, INC., Appellant, v. UNITED STATES INTERNATIONAL TRADE COMMISSION, Appellee, v. ELEKTROSCHMELZWERK KEMPTEN GmbH, et al., and W. Schlafhorst & Co., et al., Intervenors. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1336

801 F.2d 1336

8 ITRD 1235, 231 U.S.P.Q. 192, 4 Fed.

Cir. (T) 156

SURFACE TECHNOLOGY, INC., Appellant, v. UNITED STATES INTERNATIONAL TRADE COMMISSION, Appellee, v. ELEKTROSCHMELZWERK KEMPTEN GmbH, et al., and W. Schlafhorst

& Co., et al., Intervenors.

Appeal No. 85-1163.

United States Court of Appeals Federal Circuit.

Sept. 23, 1986.

Kenneth J. Burchfiel, Sughrue, Mion, Zinn, Macpeak & Seas, Washington, D.C., for appellant. On the brief for appellant were Sheldon I. Landsman and Thomas J. Macpeak, P.C., of Sughrue, Mion, Zinn, Macpeak & Seas and Italo H. Ablondi, F. David Foster and Sturgis M. Sobin, of Ablondi & Foster, P.C., Washington, D.C.

Judith M. Czako, Office of the Gen. Counsel, U.S. Intern. Trade Com'n, Washington, D.C., for appellee ITC. With her on the brief were Lyn M. Schlitt, Gen. Counsel and Michael P. Mabile, Asst. Gen. Counsel.

Donald D. Evenson, Barnes & Thornburg, Washington, D.C., for intervenor W. Schlafhorst & Co. With him on the brief was Ryan M. Fountain. Also on the brief were Dalbert U. Shefte, of Richards, Shefte & Pinckney, Charlotte, N.C. and Donald E. Knebel, Barnes & Thornburg, Indianapolis, Ind.

Herbert I. Cantor, Cantor & Lessler, of Bethesda, Md., for intervenor Elektroschmelzwerk Kempten GmbH. Also on the brief were Milton J. Wayne and Richard M. Goldberg, Burgess, Ryan & Wayne, of New York City.

Before SMITH, Circuit Judge, SKELTON, Senior Circuit Judge, and BISSELL, Circuit Judge.

EDWARD S. SMITH, Circuit Judge.

In this unfair competition case under 19 U.S.C. Sec. 1337 (1982) (section 337), appellant, Surface Technology, Inc. (Surface), appeals from the determination of the United States International Trade Commission (Commission), that there was no violation of section 337 because, on this record, method claims 2, 12, 13, and 14 of U.S. reissue patent 29,285 (the '285 patent) were invalid, and the remaining product claims were not infringed. We affirm.

The Claimed Invention

The '285 patent, which is assigned to Surface, relates to a method of forming a composite structure on an article by electroless plating containing polycrystalline diamonds and product claims to the resulting coated articles. ¹ There are 12 claims at issue, 8 product claims (claims 1, 3, 4, and 7-11) and 4 method claims (claims 2, 12, 13, and 14). Of the product and method claims only two, 7 and 12, do not specifically employ polycrystalline diamonds. In addition, all of the product claims require that the diamonds be secured within a metallic matrix by "substantial nucleation" or "nucleation bonding." "Nucleation bonding" is an expression coined by the inventors to describe the plating out of metal on the catalytic diamond surface itself as opposed to the encapsulating that occurs with other hard particles, such as natural diamonds. Product claims, 7, 10, and 11, and method claims, 12 and 14, require the employment of a "strike layer." A "strike layer" is an initial layer of metal plated onto the article prior to the co-deposition of diamonds and metals.

Background

The '285 patent is a reissue of U.S. patent No. 3,036,577 (the '577 patent), which issued on February 3, 1976, and was assigned to E.I. du Pont de Nemours & Company (DuPont). The '577 patent issued with five product claims, all including the limitation "nucleation bonding" and one method claim. The method claim had been canceled during prosecution. There was no explanation as to why it was included in the issued patent. On June 7, 1976, the inventors filed for reissue of the '577 patent to close the gap that existed in the prosecution history. The reissue application specified that reissue should be allowed because of the "erroneously and inadvertently cancelled Claim 2, corresponding to Claim 5 as filed, and, even though Claim 2 was ultimately issued." A particle size limitation was added to claim 2 and, on June 28, 1977, the '285 patent issued and was assigned to DuPont.

DuPont pioneered the composite diamond coating (CDC) industry. In addition to the '285 patent, DuPont discussed the CDC process with Elektroschmelzwerk Kempten GmbH (ESK), a European distributor of DuPont's patented synthetic polycrystalline diamonds. ESK declined DuPont's offer to sell its assets relating to the CDC business. In 1979, DuPont sold its CDC business to Surface and assigned it the related patents.

On December 3, 1981, ESK filed a request for reexamination of the '285 patent. In the reexamination proceeding, claims 1, 2, and 3 of the reissued '285 patent were amended to include the limitation "polycrystalline." Claims 4, 5, and 6 remained the same. New claims 7-14 were added with claims 7-12 directed to coated article products and claims 13 and 14 directed to a method for producing a composite structure.

On July 5, 1983, a reexamination certificate for the '285 patent, as amended, issued.

Proceedings Below

Surface filed a complaint with the Commission alleging violations by ESK, Barmer Barmag Maschinenfabrik A.G., FAG Kugelfischer Georg Schaefer & Co., Schubert & Salzer Maschinenfabrik A.G., and American Barmag Corporation (group I respondents) and W. Schlafhorst & Co. and American Schlafhorst Co., Inc. (group II respondents). ² The Commission investigated Surface's allegations of (1) infringement of claims 1-4 and 7-14 of the '285 patent; (2) infringement of claim 1 of U.S. patent No. 3,904,512; and (3) unreasonable restraint of trade with respect to warranty services for the imported products. ³ In the initial determination issued May 29, 1984, the administrative law judge (ALJ) held there was no violation of section 337 in the importation and sale of the CDC textile machinery under investigation; method claims 2, 12, 13, and 14 were invalid as obvious under 35 U.S.C. Sec. 103; the imported articles under investigation did not infringe the product claims, claims 1, 3, 4, and 7-11, of the '285 patent; and all other elements of a violation of section 337 existed. ⁴

Surface filed a petition with the Commission for review of the ALJ's determinations regarding invalidity and infringement. The group I and group II respondents filed contingent petitions for review. The Commission determined to review the issue of validity of the method claims of the '285 patent and affirmed the ALJ's initial determination that claims 2 and 12-14 are invalid. The Commission determined not to review the remainder of the initial determination (including the determination of noninfringement), except that the Commission expressly took no position regarding the ALJ's determinations of validity of the product claims and the issue of prevention of the establishment of an industry. Those portions of the initial determination that the Commission did not review became the determination of the Commission ⁵ with the exception of those issues upon which the Commission expressly took no position. Thus, the ALJ's determination of noninfringement became the determination of the Commission.

The Commission noted that the ALJ did not specifically discuss the question of the level of skill in the art. Surface argued that the failure to make a specific finding on this question was fatal to the conclusion of obviousness under 35 U.S.C. Sec. 103. In view of Surface's contentions, the Commission examined the record and reached its own conclusion that, on this record, method claims 2, 12, 13, and 14 of the '285 patent were invalid as obvious under 35 U.S.C. Sec. 103.

Issues

Two principal questions are raised on appeal: ⁶

(1) whether substantial evidence supports the Commission's findings underpinning its conclusion that claims 2, 12, 13, and 14 of the '285 patent are invalid under 35 U.S.C. Sec. 103; and

(2) whether substantial evidence supports the Commission's findings that claims 1, 3, 4, and 7-11 of the '285 patent are not infringed by certain CDC textile machinery components produced and/or sold by the group I and group II respondents.

Validity

Surface contends that the Commission was not presented with prior art more pertinent than that presented to the United States Patent and Trademark Office; thus, the statutory presumption of validity of claims 2 and 12-14 was not rebutted. Surface argues that the ALJ's initial determination completely missed the point; that several findings were not supported by substantial evidence; and that the ALJ disregarded the findings of fact in support of its position.

Surface asserts that the claims of the '285 patent have been subject to close scrutiny by the United States Patent and Trademark Office three times and therefore the presumption of validity is especially strong. Surface's insistence that the claims of the '285 patent have been examined three times when applied to the method claims is flawed. In the initial prosecution of the '577 patent, the method claims were rejected. Specifically, the 35 U.S.C. Sec. 103 rejection of amended claim 5 was maintained by the examiner until the claim was canceled by the applicant. Apparently, due to inadvertence by the United States Patent and Trademark Office, the method claim was printed in the issued '577 patent. A review of the reissue prosecution of the '285 patent shows that method claim 2 was amended to include a particle size range and the method claim was allowed without any additional prosecution of the claim.

The prosecution history of the reexamination proceeding of the '285 patent shows that method claim 2 was rejected as unpatentable under 35 U.S.C. Sec. 103. In order to overcome the rejection of all of the claims, applicant submitted affidavits of Konrad Parker, Marshall B. Peterson, Arthur Hughes Graham, and Nathan Feldstein. The section 103 rejection of claim 2 was sustained and additional prior art references were cited. Additional affidavits were submitted by Nathan Feldstein and Frederick N. Hubbell. Again, the section 103 rejection was sustained. Following an interview with the examiner, claim 2 was amended to include the limitation "polycrystalline" and all...