Trio Process Corporation v. L. Goldstein's Sons, Inc.

• Decision Date: 22 May 1972
• Docket Number: No. 71-1295,71-1296.,71-1295
• Citation: 461 F.2d 66
• Parties: TRIO PROCESS CORPORATION, Appellant in No. 71-1295, v. L. GOLDSTEIN'S SONS, INC., Appellant in No. 71-1296.
• Court: U.S. Court of Appeals — Third Circuit

461 F.2d 66 (1972)

TRIO PROCESS CORPORATION, Appellant in No. 71-1295, v. L. GOLDSTEIN'S SONS, INC., Appellant in No. 71-1296.

Nos. 71-1295, 71-1296.

United States Court of Appeals, Third Circuit.

Argued March 24, 1972.

Decided May 22, 1972.

Thomas M. Ferrill, Jr., Blue Bell, Pa. (Roger Norman Coe, Philadelphia, Pa., on the brief), for Trio Process Corp.

Nelson E. Kimmelman, Necho & Kimmelman, Philadelphia, Pa., for L. Goldstein's Sons, Inc.

Before SEITZ, Chief Judge, and ADAMS and HUNTER, Circuit Judges.

OPINION OF THE COURT

ADAMS, Circuit Judge.

In this patent infringement case, we must first determine the validity of United States Patent No. 3,076,421, issued to Albert W. Spitz (Spitz) and owned by Trio Process Corp. (Trio), and then decide whether the district court's finding of willful infringement is correct.

The primary issue of validity is whether the process disclosed in the patent was obvious to a practitioner with ordinary skill in the appropriate art at the time the process was developed. The infringement issue can be resolved by determining whether Trio is precluded by "file-wrapper estoppel" from asserting the doctrine of equivalents to show infringement.

THE PATENT

The patent which forms the subject matter of this case teaches a process of removing organic insulation from scrap wire. The method basically consists of the following steps:

1. Igniting a pile of scrap wire and organic insulation;

2. Superimposing a bottomless combustion chamber over the ignited pile;

3. Admitting air at a limited rate to the ignited pile and simultaneously air-cooling the outside of the combustion chamber so that the temperature of the ignited pile remains below the melting point of the wire;

4. Passing the products of the combustion — smoke and hydrocarbon gases — through an afterburner, into which is added fuel and air, so that the smoke and gases will be substantially oxidized.

The device disclosed in the patent by which the process may be practiced consists of a portable, sheet-metal conical combustion chamber upon which a refractory-lined afterburner is superimposed.¹ Bunsen burners are suggested for introducing air and fuel into the afterburner chamber. A frame supports the afterburner. The frame also provides a point for attachment to a crane so that the furnace may be lifted, carried to the site of the scrap wire, and then lowered over such wire.

FACTUAL BACKGROUND

For the past several decades, there has been an increasing demand for nonferrous metals, including copper, for the electrical and other industries. To meet this demand, newly-mined metals are supplemented with metals reclaimed from scrap sources. Before scrap wire can be reclaimed, however, it is necessary to remove the insulation covering such wire.

Prior to the development of the method set forth in the Spitz patent, two procedures were utilized to remove insulation from scrap wire. One such method was to burn the wire in an open field. This procedure was inefficient and uneconomical as it required that the wire be raked back and forth to achieve proper burning, and did not provide satisfactory control over the oxidation and melting of the wire.² It also contributed to air pollution by releasing smoke and other gases into the atmosphere. The other process involved the rapid burning of scrap wire at high temperatures in forced draft, stationary furnaces. These fixed furnaces were expensive to build and difficult to use because the wire had to be prepared for burning and then transported to the furnaces. Moreover, the reclaimed metal would have to be removed from the furnace before it could become oxidized or melted. Both methods required substantial manpower for their effective utilization.

In late 1957, Spitz undertook an assignment from Franklin Smelting & Refining Company to develop an effective method of removing insulation from wire. Spitz investigated the procedures currently in use, devised a fixed furnace that could be charged from the top and unloaded from the bottom, and finally developed a concept converse to that previously employed, namely, the burning of the insulation in a portable furnace at a low temperature to be controlled by limiting the availability of air. Spitz's development had several advantages over the prior procedures: It reduced material handling costs, it diminished air pollution, and it efficiently produced No. 1 grade copper scrap inexpensively by a method which could be operated by relatively untrained personnel.

Spitz applied for a patent in October of 1958. The original application contained both apparatus and method claims. All of the claims were rejected by the examiner on the basis of prior art.³ In 1959, the application was amended, but the new claims were also rejected.⁴ The apparatus claims were amended in 1960, and new method claims were added to the application. Once more, the apparatus claims were disallowed on the basis of prior art, and the method claims were rejected as being misdescriptive⁵ in that they provided for superimposition of the furnace prior to ignition of the scrap, whereas the patent disclosure specified ignition before the furnace was lowered into place. After further amendment and abandonment of the apparatus claims, the patent containing method claims issued on February 5, 1963.

Early in 1959, L. Goldstein's Sons, Inc. (Goldstein) became aware of the Spitz method and tried to emulate it, probably because Goldstein found the other two methods of processing scrap wire, described at p. 68, supra, unsatisfactory. Goldstein hired first one, then another engineer to attempt to duplicate the Spitz process, but although these engineers observed the Spitz furnace in operation, they were unable to devise a similar procedure. One of the engineers recommended a wire-chopping process which was eventually adopted for the reclamation of aluminum wire.⁶ In November, 1959, Goldstein sought the opinion of a patent attorney as to the patentability of the Spitz furnace. The attorney advised that the furnace was not patentable. Goldstein did not seek an opinion as to the validity of the patent after its issuance in 1963.

In 1960, Goldstein obtained licenses from Trio to use Spitz's method to process scrap wire.⁷ Trio applied for and obtained on Goldstein's behalf appropriate permits from the City of Philadelphia. Spitz subsequently approached Goldstein in late 1964 and early 1965 to determine if it had any interest in additional furnaces. Goldstein stated that it had no interest, ostensibly because there was no room at its plant for the installation of additional furnaces. In actuality, Goldstein had engaged a metal fabricator to copy the Spitz furnace. Several of these copies were installed in Goldstein's Philadelphia facility,⁸ and one was sent to AMA Metal Corporation, which had been acquired by Goldstein. Spitz endeavored to obtain clarification of Goldstein's position, and when an unsatisfactory answer was received, Trio charged Goldstein with patent infringement. Although Trio offered licenses for the additional furnaces installed by Goldstein, the offer was refused and Goldstein terminated the license agreement.

In May, 1969, Trio filed suit against Goldstein for willful patent infringement, contributory infringement, and unfair competition. Goldstein's answer denied infringement and asserted as an affirmative defense that the patent was invalid under 35 U.S.C. §§ 101, 102, 103 and 112. After a trial without a jury, the patent was held to have been willfully infringed, but invalid as obvious under 35 U.S.C. § 103. The district court did not rule on the issue whether the patent was invalid under 35 U.S.C. § 112. Trio appealed from the holding of invalidity and Goldstein cross-appealed on the issue of infringement.

VALIDITY OF THE PATENT

We begin this discussion with the pole star proposition that a patent is presumed to be valid and that the burden of proof is on the party alleging invalidity.

Congress provided in 35 U.S.C. § 282 (1970), that: "A patent shall be presumed valid. * * * The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting it." And this Court has recognized that "* * * the burden of proving invalidity in the face of the presumption is a heavy one." Schmidinger v. Welsh, 383 F.2d 455, 462 n. 10 (3d Cir. 1967); cert. denied, 390 U.S. 946, 88 S.Ct. 1031, 19 L.Ed.2d 1134 (1968). Indeed, invalidity must be demonstrated by clear and convincing proof, Ever-Wear Inc., v. Weiboldt Stores, Inc., 427 F.2d 373 (7th Cir. 1970); General Foods Corp. v. Perk Foods Co., 419 F.2d 944 (7th Cir. 1969), cert. denied, 397 U.S. 1038, 90 S.Ct. 1537, 25 L.Ed.2d 649 (1970); Moon v. Cabot Shops, Inc., 270 F.2d 539 (9th Cir. 1959), cert. denied, 361 U.S. 965, 80 S.Ct. 596, 4 L.Ed.2d 546 (1960).

Because of the special public interest surrounding the issue of patent validity,⁹ we have carefully evaluated the record and the district court's findings and conclusions with the above stated precepts in mind.

A. Obviousness

As stated above, the district court held that the patent was invalid on the ground that the invention was "obvious." Section 103 provides, in pertinent part: "A patent may not be obtained * * * if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. * * *"

Although Section 103 was enacted in 1952, it was not until 1966 that the Supreme Court definitively construed it in a trilogy of cases. Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966); Calmar, Inc. (Colgate-Palmolive Co.) v. Cook Chemical Co., id.; United States v. Adams, 383 U.S. 39, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966). In Graham, the Supreme Court set forth the primary tests and secondary criteria for determining...