Trans-World Mfg. Corp. v. Al Nyman & Sons, Inc.

• Citation: 750 F.2d 1552,224 USPQ 259
• Decision Date: 20 December 1984
• Docket Number: TRANS-WORLD,Nos. 84-503,84-772,s. 84-503
• Parties: MANUFACTURING CORP., Appellee/Cross-Appellant, v. AL NYMAN & SONS, INC., and Al-Site Corporation, Appellants/Cross-Appellees. Appeal
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1552

750 F.2d 1552

224 U.S.P.Q. 259

TRANS-WORLD MANUFACTURING CORP., Appellee/Cross-Appellant, v. AL NYMAN & SONS, INC., and Al-Site Corporation,

Appellants/Cross-Appellees.

Appeal Nos. 84-503, 84-772.

United States Court of Appeals, Federal Circuit.

Dec. 20, 1984.

Peter T. Cobrin, Stempler & Cobrin, New York City, argued for appellants.

William L. Mentlik, Lerner, David, Lettenberg, Kumholz & Mentlik, Westfield, N.J., argued for appellee. With him on the brief were Roy H. Wepner, Westfield, N.J.

Harold Pezzner, Connolly, Bove, Lodge & Hutz, Wilmington, Del., of counsel.

Before FRIEDMAN, Circuit Judge, COWEN, Senior Circuit Judge, and NEWMAN, Circuit Judge.

FRIEDMAN, Circuit Judge.

These are cross-appeals from a judgment of the United States District Court for the District of Delaware, entered after a jury trial in a suit alleging, in part, infringement of two design patents covering display cases for eyeglasses. On cross-motions for judgment notwithstanding the verdict (NOV), the district court held that one patent was valid and infringed, enjoined further infringement of the patent, and granted a new trial on the issue of damages for that infringement. The district court dismissed the portion of the complaint alleging infringement of the other patent, on the ground that the invention there disclosed would have been obvious and had been obtained through inequitable conduct before the Patent Office. 219 USPQ 1059 (1983). We affirm the judgment except for one provision, on which we remand for modification.

I

A. Background.

Al Nyman & Sons, Inc., and its subsidiary Al-Site Corporation (collectively "Nyman"), import and distribute nonprescription eyeglasses, which are sold over the counter through five-and-ten-cent and discount stores. To facilitate sales, Nyman furnishes the selling stores, without charge, point-of-purchase display racks that hold the eyeglasses and from which they are sold. Nyman retains ownership of the racks.

Trans-World Manufacturing Corporation ("Trans-World") designs, manufactures, and sells point-of-purchase displays.

In 1978, Nyman asked Trans-World to design new display racks for it. The initial sketches that Trans-World made were unsatisfactory to Nyman, and Trans-World undertook to prepare additional ones. Trans-World developed two designs for display racks that were acceptable to Nyman. One of these designs was for a horizontal display rack and the other for a vertical chevron-shaped rack. These designs were embodied in the two patents here at issue: U.S. Design Patent No. 257,497 ('497 patent), covering the horizontal rack, and U.S. Design Patent No. 258,099 ('099 patent), covering the vertical rack. The listed inventors on both patents were Franklin and Dewees.

In October 1978, Nyman requested Trans-World to prepare models of both the horizontal and vertical displays. Trans-World delivered the models to Nyman in December 1978, and in January 1979, submitted to Nyman proposed prices for producing both displays. Nyman found the prices too high and arranged for other companies to manufacture the displays that Trans-World had developed.

On March 12, 1979, Trans-World filed two design patent applications directed to the two types of displays. The patents issued in November 1980 and February 1981, respectively. Each claimed "The ornamental design for an eyeglass holder substantially as shown and described." The designs in the two patents are reproduced below.

The '497 patent:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The '099 patent:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

In the horizontal rack ('497 patent), the eyeglasses are displayed in back-to-front rows, each individual eyeglass position having a rounded or scalloped bottom surface to hold the lens portion of each eyeglass frame. In the vertical rack ('099 patent), there are vertical rows of cavities in which individual eyeglasses are placed. The cavities in each of the four rows are inclined downwardly toward the center of the rack in a chevron configuration.

B. The Litigation.

In October 1981, Trans-World filed the present suit against Nyman. It alleged that Nyman had infringed both patents, had breached an express or implied contract not to allow others to manufacture the display racks Trans-World had designed, and had failed to pay for the models Trans-World had supplied. Trans-World sought damages and an injunction. Nyman's response was that both patents were invalid because the designs would have been obvious, that the '497 patent also was invalid because it was obtained through fraud on the Patent Office, and that the '099 patent also was invalid because the application was not filed by all the inventors.

Following a jury trial at which evidence was introduced on all issues, including (Although the interrogatories asked the jury to find whether each of the patents "was obvious," we interpret the inquiry as a shorthand phrase for the statutory standard (35 U.S.C. Sec. 103) whether the design claimed in the patent "would have been obvious." We shall use the statutory phrase in referring to the jury's determinations.)

damages, the jury returned answers to special interrogatories in which it found: (1) that the design of the '497 patent was not novel and was obvious; (2) that Trans-World intended to deceive the Patent and Trademark Office, or was grossly negligent, when it failed to disclose certain prior art during prosecution of the '497 application, and that this nondisclosure made it impossible for the patent examiner fairly to assess the application; and (3) that the design of the '099 patent was novel and unobvious, but that the patent was invalid because Morton Nyman and/or Arthur Marx (Nyman's advertising representative) were coinventors of the vertical display, and Trans-World deceptively intended not to disclose their coinventorship to the Patent and Trademark Office. Since the jury found both patents invalid, it did not reach the issues of infringement and damages.

Each party then moved for judgment notwithstanding the verdict (NOV) or for a new trial on those portions of the jury's verdict adverse to it, except that Nyman did not contest the jury's finding that the design of the '099 patent was novel. Trans-World also moved under Federal Rule of Civil Procedure 15(b) to amend its complaint to include the claim that Nyman had been unjustly enriched through the transaction at issue.

The court dealt with these motions in a lengthy opinion. The court denied the motion for judgment NOV or for a new trial with respect to the '497 patent. The court granted the motion for judgment NOV with respect to the jury's finding that Mr. Nyman and/or Mr. Marx were coinventors of the design of the '099 patent, but denied all other motions with respect to the validity of that patent. It also denied Trans-World's motion to amend the complaint. The details of these rulings are discussed later in this opinion.

The court thus upheld the jury's determination that the '497 patent was invalid, but overturned the determination that the '099 patent was invalid. The court further found that Nyman had infringed the '099 patent.

The court entered a judgment, final except for an accounting, that the '497 patent was "invalid, void and unenforceable," and that the '099 patent was valid and infringed. The court "permanently enjoined [Nyman] from making or selling eyeglass displays that come within the scope of [the '099 patent]," but did not enjoin use. It ordered a new trial to determine the damages from infringement of the '099 patent, but postponed such trial pending this appeal.

II. Validity of the '497 Patent

A. In its answer to interrogatory 2, rendered pursuant to instructions that Trans-World does not challenge, the jury concluded that the design of the '497 patent would have been obvious. (The jury also found that the design was not novel, but since Nyman did not attempt to support that finding, the court, without deciding the point, assumed that the finding was incorrect. 219 USPQ at 1065, n. 16. The parties have not discussed the finding of novelty, and apparently they do not deem the question still in the case. We therefore do not consider the issue.)

In denying judgment NOV on the obviousness issue, the district court "[a]fter a careful review of the record" concluded that the underlying jury findings upon which this conclusion rested were supported by substantial evidence and that those findings supported the jury's determination of obviousness. 219 USPQ at 1065. The jury findings thus upheld included both the jury's answers to more detailed interrogatories and the other findings necessary to support the conclusion of obviousness that were implicit in that conclusion and which the jury therefore was presumed to have made. Railroad Dynamics, Inc. v. A. Stucki Co., 727 F.2d We agree with the district court's conclusion on both the sufficiency of the evidence and the correctness of the legal determination of obviousness.

1506, 1516, 220 USPQ 929, 936 (Fed.Cir.1984).

Trans-World challenges the determination of obviousness on two grounds: (1) Nyman did not establish that a particular item upon which the jury relied--the so-called Pennsylvania Optical display, which was not before the Patent Office when it issued the patent--was prior art; and (2) the evidence did not support the jury's determination that, in light of the prior art, the design in the '497 patent would have been obvious to an industrial designer of ordinary skill.

(1) The Pennsylvania Optical display was a rack the Pennsylvania Optical Corporation sold in the United States. In its opinion denying judgment NOV, the district court noted that "James Kruska, a former employee of the Pennsylvania Optical Company, testified that from 1972 through 1975, literally thousands of the Pennsylvania Optical displays were sold in the United States. Kruska further presented photographs of these displays...