TRANSCO PRODUCTS v. PERFORMANCE CONTRACTING

• Decision Date: 12 May 1992
• Docket Number: No. 89 C 8001.,89 C 8001.
• Citation: 792 F. Supp. 594
• Parties: TRANSCO PRODUCTS INC., Plaintiff, v. PERFORMANCE CONTRACTING, INC. and Performance Contracting Group, Inc., Defendants.
• Court: U.S. District Court — Northern District of Illinois

792 F. Supp. 594

TRANSCO PRODUCTS INC., Plaintiff, v. PERFORMANCE CONTRACTING, INC. and Performance Contracting Group, Inc., Defendants.

No. 89 C 8001.

United States District Court, N.D. Illinois, E.D.

May 12, 1992.

COPYRIGHT MATERIAL OMITTED

Robert E. Wagner, Roger H. Stein, Richard C. Himelhoch, Wallenstein Wagner & Hattis, Chicago, Ill., for plaintiff.

John S. McCambridge, Charles S. Bergen, Darrell J. Graham, Grippe & Elden, Chicago, for defendants.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

In this patent infringement action, Transco Products Inc. ("Transco") sues Performance Contracting, Inc. and Performance Contracting Group, Inc. (collectively "Performance Contracting," treated as a singular noun), seeking a declaratory judgment of invalidity, noninfringement and unenforceability of United States Patent No. 4,009,735 (the "Pinsky patent") owned by Performance Contracting, and also charging Performance Contracting with infringement of Transco's United States Patent No. 3,941,159 (the "Toll patent"). Performance Contracting responds with the expected counterclaims, seeking a declaratory judgment of invalidity and unenforceability of the Toll patent and charging Transco with infringement of the Pinsky patent.

Performance Contracting now moves for summary judgment under Fed.R.Civ.P. ("Rule") 56 on the issues of invalidity and noninfringement of the Toll patent.¹ For the reasons stated in this memorandum opinion and order, Performance Contracting's motion is granted in part and denied in part.

Facts²

On October 2, 1974 Gordon Pinsky ("Pinsky") filed a continuation of his original October 24, 1973 application with the United States Patent Office covering a pipe insulation design. On March 1, 1977 the Pinsky "Thermal Insulation" patent issued, containing these four claims (D.Ex. C-1, col. 4, lines 7-28):

1. Readily removable and replaceable rewettable thermal insulation for use on vessels and piping within reactor containment areas of nuclear power plants comprising high temperature resistant mineral fiber or glass fiber encapsulated within rewettable, high temperature resistant, asbestos free glass cloth held in place with a plurality of spaced quick release and engage fasteners, wherein the glass cloth can withstand repeated wettings from spray systems with the reactor containment areas of nuclear power plants and wherein the fasteners are two woven nylon, hook and loop mating strips, wherein the glass cloth has a finish of a leachable, organic silicate carried in a fatty and mineral oil vehicle.

2. Thermal insulation according to claim 1 wherein the encapsulated fiber is a fine fiber and is in the form of tangled or felted mats.

3. Thermal insulation according to claim 2 wherein the mats are quilted.

4. Thermal insulation according to claim 1 wherein the strips comprise a hook strip covered with stiff little hooks and a loop strip covered with tiny, soft loops.

On October 31, 1974, about a year after Pinsky's original filing, Wolcott Toll ("Toll") filed a patent application for his own insulation design. On March 2, 1976 the Toll "Insulation Assembly for a Tubular Conduit Pipe" patent issued, containing these two claims (D.Ex. A col. 3, line 26 to col. 4, line 30):³

1. An insulation assembly for a tubular conduit pipe having an outer surface, the insulation assembly comprising:

1 a length of compressible insulation material having inside and outside surfaces and having first and second side edges;

2 a layer of moisture and vapor impervious fabric coextensive in length with the length of compressible insulation material, the fabric having inner and outer surfaces;

3 the layer of fabric being of a width exceeding that of the insulation material;

4 the layer of fabric having an interior end coincident with the first side edge of the insulation material, and having an exterior end which extends outwardly of the second side edge of the insulation material;

5 a strip of fastening material having a series of minute hook-like projections thereon fixedly secured to the inner surface of the fabric on said interior end thereof;

6 a strip of hirsute material fixedly secured to the outer surface of the fabric on said interior end thereof; and

7 the inside surface of the insulation material contacting the outer surface of the conduit pipe and being of a width from side-to-side such that its respective edges contact one another and the stripe of fastening material and hirsute material being radially aligned when the edges are in contact, said strips being adherent to one another.

2. The invention of claim 1, and:

a line of stitching extending through said fastening means having said hook-like projections and said exterior end of said fabric.

When Pinsky filed his application he was an employee of Owens-Corning Fiberglas ("Owens"). Pinsky is now employed by Performance Contracting, which purchased the Owens product line produced under the Pinsky patent in 1987 (D.Ex. C ("Pinsky Aff.") ¶ 1). In its current form, marketed under the trademark "Nukon,"⁴ Performance Contracting's product differs from the version depicted in the Pinsky patent in several details. For example, the hook and loop mating strips (Velcro) are placed longitudinally along the side edge of the insulation blanket rather than circumferentially (Pinsky Aff. ¶ 7, D.Exs. C-1, C-2, C-3), and the Nukon product now comes with an optional stainless steel jacket that is not the subject of any of the Pinsky patent claims (D.Ex. C-3 at 3).

In three letters dated February 13, March 8 and September 11, 1989 Performance Contracting notified Transco that it believed Transco was infringing the Pinsky patent (Complaint Exs. B, C, D). Transco then filed its October 25, 1989 declaratory judgment Complaint targeting the Pinsky patent. On November 13, 1989 Transco purchased the Toll patent (D.Ex. B. (Toll Dep.) 61-62, D.Ex. D) and then amended its Complaint on January 30, 1990 to include charges that Performance Contracting's Nukon product infringed the Toll patent.

As already stated, Performance Contracting's summary judgment motion seeks resolution of two issues:

1. whether the Toll patent is invalid under 35 U.S.C. § 102(g)⁵ because of the prior invention embodied in the Nukon product; and

2. whether the Nukon product infringes the Toll patent.

Those questions will be dealt with in turn.

Invalidity

Performance Contracting first argues that the Toll patent is invalid under Section 102(g) as anticipated, because the invention reduced to practice in the Nukon product and described in the Pinsky patent antedated the claimed invention shown in the Toll patent. Section 282 requires that patents be presumed valid, and Performance Contracting bears the burden of proving invalidity by clear and convincing evidence (Intel Corp. v. United States Int'l Trade Comm'n, 946 F.2d 821, 829 (Fed.Cir. 1991)). Performance Contracting has failed to meet that burden.

Section 102(g) provides:

A person shall be entitled to a patent unless —

* * * * * *

(g) before the applicant's invention thereof the invention was made in this country by another who had not abandoned, suppressed, or concealed it. In determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.

Relatedly, Section 282 reads in relevant part:

A patent shall be presumed valid. Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim. The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.

The following shall be defenses in any action involving the validity or infringement of a patent and shall be pleaded:

* * * * * *

(2) Invalidity of the patent or any claim in suit on any ground specified in part II of this title as a condition for patentability....

As with all types of Section 102 anticipation, establishing invalidity under Section 102(g) requires the prior reduction to practice of the same claimed invention (Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1379 (Fed.Cir.1986)). In other words, id.:

It is axiomatic that for prior art to anticipate under § 102 it has to meet every element of the claimed invention, and that such a determination is one of fact.

So when D.Mem. 12 says "that which will infringe if later, will anticipate, if earlier," that statement of the "classic test" of anticipation has been modified under the current statute. Instead, as Lewmar Marine, Inc. v. Barient, Inc., 827 F.2d 744, 747 (Fed.Cir.1987) (emphasis in original) has reframed the old adage:

That which would literally infringe if later in time anticipates if earlier than the date of invention.

Thus the Pinsky patent embodying the original Nukon product could not have anticipated the Toll patent, for it does not contain every element of that patent. As just one example of the differences (which are more thoroughly discussed in the next section of this opinion) it lacks Toll's claim 1 element 2: "a layer of moisture and vapor impervious fabric" (D.Ex. A col. 4, line 1). To the contrary, claim 1 of the Pinsky patent calls for "rewettable ... glass cloth" (D.Ex. C-1 col. 4, lines 11-12) — hence its embodiment in the Nukon product uses "fibrous glass fabric" (D.Ex. 3 at 3), which is not impervious (D. 12(m) and P. 12(n) ¶ 9). Nor is that difference a matter of mere happenstance, because as Pinsky Aff. ¶ 5 emphasizes:

The fiberglass cloth is woven so that it is porous. It is necessary for it to be porous. If it were not porous, then the NUKON® product would not pass the sump blockage requirements for nuclear

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