Swift Agr. Chemicals Corp. v. Farmland Industries, Inc.

• Decision Date: 25 March 1982
• Docket Number: No. 80-2089,80-2089
• Citation: 674 F.2d 1351,213 USPQ 930
• Parties: SWIFT AGRICULTURAL CHEMICALS CORPORATION, a Delaware corporation, Plaintiff-Appellant, v. FARMLAND INDUSTRIES, INC., a Kansas corporation, and Farmers Chemical Company, a Kansas corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1351

674 F.2d 1351

213 U.S.P.Q. 930

SWIFT AGRICULTURAL CHEMICALS CORPORATION, a Delaware corporation, Plaintiff-Appellant, v. FARMLAND INDUSTRIES, INC., a Kansas corporation, and Farmers Chemical Company, a Kansas corporation Defendants-Appellees.

No. 80-2089.

United States Court of Appeals Tenth Circuit.

March 25, 1982.

John W. Hofeldt, Haight, Hofeldt, Davis & Jambor, Chicago, Ill. (Rolf O. Stadheim, Haight, Hofeldt, Davis & Jambor, Chicago, Ill., and John E. Wilkinson, Topeka, Kan., with him on the brief), for plaintiff-appellant.

Warren N. Williams, Schmidt, Johnson, Hovey & Williams, Kansas City, Mo. (John M. Collins, Schmidt, Johnson, Hovey & Williams, Joseph A. Crites, Kansas City, Mo., and J. Donald Lysaught, Kansas City, Kan., with him on the brief), for defendants-appellees.

Before HOLLOWAY and DOYLE, Circuit Judges, and KUNZIG. ^*

PER CURIAM.

The appeal herein is from a judgment entered by the United States District Court Judge of the District of Kansas which dismissed a complaint which charged patent infringement. This action was brought by Swift Agricultural Chemicals Corp. against Farmland Industries, Inc., the appellee herein, and Farmers Chemical Co., a subsidiary of the Farmland corporation. The charge was that Farmland willfully infringed the patent of Swift No. 3,464,808, which was referred to as the 808 or Kearns patent. This is a process patent which pertains to the production of liquid ammonium polyphosphate fertilizer from a wet process phosphoric acid.

The trial court ruled that the patent was invalid. The crucial question in the case is whether the trial court erred in its conclusion that the invention contained in the Kearns letter patent was invalid. A further contention is that the district court was in error in adjudicating invalid the claims other than those which were in issue. (There is a dispute as to whether these additional claims were in issue.) A third issue is whether the court erred in holding that Farmland avoided infringement based on its argument that (a) it used superphosphoric acid and (b) the residence time in the melt in its process is more than one second.

In support of its claim that the trial court reached out and adjudicated claims that were not in issue, it is pointed out that the post-trial submissions of Swift charged Farmland with willful infringement in claims 1, 2 and 4 only.

Our main concern is with the validity of the Kearns patent which discloses a method for making liquid ammonium polyphosphate fertilizer (referred to as APP.) The fertilizer contains substantial amounts of nitrogen and phosphorous, elements essential to plant nutrients. The fertilizers are often sold in solid granulated form. However, liquid fertilizers appear to be preferred because of the ease of application in soluble form and its ready availability to plants. But the liquid is not free of problems, as we will discuss.

APP, as the substance is commonly called, is ordinarily made by the combination of phosphoric acid with ammonia. What is referred to as the ordinary "wet process" or orthophosphoric ¹ acid is low in phosphorus pentoxide. The formula for this is P 2O 5. It tends to contain substantial amounts of impurities which occur in the phosphate rock from which the acid is made. These impurities are ordinarily in the form of iron and aluminum compounds and they tend to precipitate out of solution when the orthophosphoric acid is combined with the neutralizer, ammonia. These are the substances which combine to make the product. Thus, the APP is inclined to have gelatinous sludge-like precipitates which renders its use difficult. It clogs the fertilizer application equipment.

For a long time efforts have been made to prevent the creation of this gelatinous sludge from forming during the APP manufacturing process. The common solution is to combine purified furnace grade or highly concentrated wet process superphosphoric acid. This is created by heating wet process acid until enough molecular dehydration has taken place. This is characterized by high P 2O 5 contents, 70% or more, and the presence of a substantial percentage of phosphates in the polymerized form. Those phosphates sequester impurities in solution and form stable compounds that do not precipitate out of solution when the acid is neutralized with ammonia. One of the weaknesses of this approach is its high cost. Ordinarily wet process orthophosphoric acid is cheaper and so most efforts have been directed at the development of a commercial process capable of producing APP from such acid. The Kearns patent, which dates back to 1969, at which time it was granted to Tommy Carter Kearns, a former Swift employee, undertakes to disclose one such process.

There is no dearth of prior art. All of the patents describe a method which seeks to use the ingredients so as to avoid the sludge problem.

Discussion of Kearns Patent

The Kearns patent, which is the patent in suit, describes the use of a pipe shaped jet reactor for the purpose of mixing or combining the wet process orthophosphoric acid with ammonia at a high temperature, 450 degrees to 650 degrees F. The period of time for combining is less than one second, followed by a quenching with water to form a liquid APP fertilizer. Thus, the orthophosphoric acid utilized in this process contains 54%-68% P 2O 5. The process utilizes heat energy provided during the reaction for the purpose of simultaneously neutralizing and molecularly dehydrating the acid. At least 20% of the acids orthophosphates are converted to polyphosphates during the reaction and the resulting product has self-sequestered properties. The impurities present in the acid remain in solution in the APP instead of precipitating out in the form of gelatinous sludge.

This process has been employed by Swift since 1967. Its commercial success has not been extensive. The problems with the product limit its usefulness. Nevertheless, Swift has prevailed in at least one infringement action involving the Kearns patent. Its adversary was Usamex, Inc. See Swift Chemical Co. v. Usamex Fertilizers Co., Inc., 197 U.S.Q. 10 (E.D.La.1977) (Usamex I); Swift Chemical Co. v. Usamex Fertilizers Co., Inc., 490 F.Supp. 1343 (E.D.La.1980) (Usamex II), aff'd, 646 F.2d 1121 (5th Cir. 1981).

The time span in which the chemicals come together is disputed. Swift employs a steam residence ² calculation for determining the mixing time of the acid and ammonia and, as noted, calculates residence time at less than one second. Farmland measures the time that the APP melt ³ itself remains in the reactor, resulting in a melt residence time greater than three seconds.

The length of the trial was approximately eight days. At its completion the trial court ruled in favor of the defendants, concluding that the Kearns patent was neither valid nor infringed by Farmland. The opinion of the district judge is reported at 499 F.Supp. 1295 (D.Kan.1980).

On the subject of validity, the ruling of the trial court was that the patent was anticipated by prior art and that it was obvious. Before issuance of the Kearns patent several other inventors had patented or applied for patents in processes similar to the 808 patent. The court focused in particular on methods developed by Young, Getsinger and Lutz and Rubio.

The trial court also ruled that even if the Kearns patent were valid, the Farmland process did not infringe upon it because the process used by Farmland utilized superphosphoric acid (68% P 2O 5) instead of the wet process orthophosphoric acid 54%-68% P 2O 5 which was called for by the Kearns patent. Further, the court continued, the doctrine of file wrapper estoppel was capable of preventing Swift from claiming that a process involving superphosphoric acid infringed upon the Kearns process.

During patent prosecution Kearns had represented to the patent office that the process was distinguishable from the prior art because it utilized ordinary phosphoric rather than superphosphoric acid. To be noted is the fact that the Farmland process entails a residence time of more than one second. The court found Farmland's melt residence method for calculating residence time scientifically more valid than Swift's steam residence formula. Based on this difference there was no showing of infringement.

Swift has advanced five prior art processes which it seeks to distinguish from the Kearns method; these include the following: 1) Young, U.S. patent No. 3,044,851; 2) Lutz and Rubio, Patent Application Serial Number 352,764; 3) Hignett, U.S. Patent No. 3,171,733; 4) Bookey, U.S. Patent No. 3,375,063; and 5) Getsinger, U.S. Patent No. 3,382,059. These are briefly described below.

The two most relevant inventions to our inquiry are the Young patent and the Lutz and Rubio application. The latter failed to receive a patent; the patent office declared an interference and awarded the patent to Bookey. Lutz v. Bookey, 170 U.S.P.Q. 594 (Patent Board of Interference 1971).

The Young Patent, filed 6/9/61, patented 7/17/62

In February 1957 Dr. Young, a chemist with a Ph.D, was employed by the Union Oil Company. He had entered with a good many inventions to his credit. He personally made a sketch of APP reactor apparatus, which was in fact built and operated. This sketch depicts a continuous tubular pipe apparatus and method wherein ammonia and preheated merchant grade phosphoric acid are simultaneously injected into the pipe and produce APP by a simultaneous neutralization and molecular dehydration reaction; self-sequestering APP melt is then quenched with water to yield a self-sequestering liquid fertilizer product. In the Young process wet phosphoric acid is first heated in a pressurized tank to dehydrate and concentrate it. The acid is then cooled and reacted with ammonia to produce a self-sequestering liquid fertilizer.

The trial court found and concluded that the Young method anticipated the current patent even with Young's recital of two...