U.S. Gypsum Co. v. National Gypsum Co.

• Decision Date: 11 January 1996
• Docket Number: No. 95-1254,95-1254
• Citation: 37 USPQ2d 1388,74 F.3d 1209
• Parties: UNITED STATES GYPSUM COMPANY, Plaintiff-Appellant, v. NATIONAL GYPSUM COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1209

74 F.3d 1209

37 U.S.P.Q.2d 1388

UNITED STATES GYPSUM COMPANY, Plaintiff-Appellant, v. NATIONAL GYPSUM COMPANY, Defendant-Appellee.

No. 95-1254.

United States Court of Appeals Federal Circuit.

Jan. 11, 1996.

Rehearing Denied Feb. 27, 1996.

Donald E. Egan, Cook, Egan, McFarron & Manzo, Ltd., of Chicago, Illinois, argued for plaintiff-appellant. With him on the brief were Mark J. Murphy and John M. Lorenzen.

Allen H. Gerstein, Marshall, O'Toole, Gerstein, Murray & Borun, of Chicago, Illinois, argued for defendant-appellee. With him on the brief were Douglass C. Hochstetler and Anthony Nimmo.

Before LOURIE, CLEVENGER, and SCHALL, Circuit Judges.

LOURIE, Circuit Judge.

United States Gypsum Company ("USG") appeals from the decision of the United States District Court for the Northern District of Illinois granting summary judgment of patent invalidity in favor of National Gypsum Company ("National"). ¹ Because the court did not err in granting summary judgment, we affirm.

BACKGROUND

Joint compounds are adhesives used in the construction of building walls and ceilings to fill and coat the joints between adjacent gypsum wallboards. The patent in suit, U.S. Patent 4,454,267, assigned to USG, is directed to a lightweight joint compound.

In 1978, Terrance L. Williams, a USG employee, conceived the idea of making a lightweight joint compound containing silicone-treated expanded perlite. ² He began his research efforts by preparing a joint compound containing a silicone-treated expanded perlite which had been made by a fellow USG employee, Michael L. Bolind. The joint compound made with Bolind's perlite "worked satisfactorily"; however, it was somewhat heavier than desired and exhibited cracking when applied to a surface. In 1981, Williams experimented with a type of silicone-treated expanded perlite sold by Silbrico Corporation under the name Sil-32. However, Sil-32 perlite contained grit, which required screening to prevent "scratching" on the surface of a joint compound. Williams also investigated combinations of perlites with a lightweight filler known as Q-Cel microspheres. The resulting joint compounds had unacceptable properties.

A breakthrough in Williams' research efforts occurred in early 1982 when Silbrico Corporation sent Williams a sample of silicone-treated expanded perlite designated as Sil-42. Williams did not know the chemical composition of Sil-42 perlite or its method of manufacture because Silbrico viewed that information as proprietary. He discovered, however, that because Sil-42 perlite was made almost entirely (99%) of particles - 100 mesh in size or smaller, it did not have to be screened before use in a joint compound. ³ That was a major advantage over the Sil-32 perlite with which Williams had previously experimented. In addition, Williams found that Sil-42 perlite eliminated the coarse look of other lightweight fillers, resisted breakdown under vacuum treatment, and yielded a joint compound that was lightweight, easy to sand, and exhibited good non-cracking and adhesion properties. He tested various grades of Sil-42 perlites supplied to him by Silbrico and ultimately selected a particular grade of the material. ⁴

When it became apparent to USG that Williams had developed a lightweight joint compound having good application properties without the need to screen the perlite, USG decided to sell a joint compound containing Sil-42 perlite. Concurrently, USG's patent attorney began preparing a patent application covering the invention. He asked Williams to forward a description of his best formulation for inclusion in the application; all the formulations that Williams sent to the attorney listed Sil-42 perlite as a component. Sometime before the patent application was filed, however, a USG executive instructed the attorney to omit from the application any reference to Sil-42 or Silbrico Corporation. Subsequently, when the application was filed on December 20, 1982, it did not refer to Sil-42 either by chemical formula, method of manufacture, trade name, or supplier. The '267 patent issued in June 1984. ⁵

USG sued National for infringement of the '267 patent. National denied the allegation of infringement and moved for summary judgment, arguing that the patent was invalid for failure to disclose the best mode of practicing the claimed invention. The district court determined, first, that there was no genuine dispute that Williams had a best mode of practicing the invention. In particular, the court determined that at the time the patent application was filed Williams preferred Sil-42 silicone-treated expanded perlite because it did not have to be screened before use and it improved the joint compound's quality and performance characteristics. The court further determined that the '267 specification did not inform those of ordinary skill in the art how to make (or otherwise obtain) Sil-42 perlite, an essential component of Williams' preferred formulation. Accordingly, the court granted summary judgment that the patent was invalid for failure to satisfy the best mode requirement of 35 U.S.C. Sec. 112 (1988). This appeal followed.

DISCUSSION

Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Johnston v. IVAC Corp., 885 F.2d 1574, 1576-77, 12 USPQ2d 1382, 1383 (Fed.Cir.1989). Thus, summary judgment may be granted when no "reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In determining whether there is a genuine issue of material fact, the evidence must be viewed in the light most favorable to the party opposing the motion, with doubts resolved in favor of the nonmovant. Transmatic, Inc. v. Gulton Indus., Inc., 53 F.3d 1270, 1274, 35 USPQ2d 1035, 1038 (Fed.Cir.1995). We review a district court's grant of summary judgment de novo. Conroy v. Reebok Int'l., Ltd., 14 F.3d 1570, 1575, 29 USPQ2d 1373, 1377 (Fed.Cir.1994).

Validity--Best Mode

Patents are, by statute, presumed to be valid. 35 U.S.C. Sec. 282 (1988). National thus has the burden of establishing by clear and convincing evidence that the '267 patent is invalid. Transco Prods. Inc. v. Performance Contracting, Inc., 38 F.3d 551, 560, 32 USPQ2d 1077, 1084 (Fed.Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1102, 130 L.Ed.2d 1069 (1995).

35 U.S.C. Sec. 112 p 1 provides, in relevant part, that the specification "shall set forth the best mode contemplated by the inventor of carrying out his invention." 35 U.S.C. Sec. 112. Determining whether a patent complies with the best mode requirement involves two underlying factual inquiries. First, it must be determined whether, at the time the patent application was filed, the inventor had a best mode of practicing the claimed invention. Chemcast Corp. v. Arco Indus. Corp., 913 F.2d 923, 927-28, 16 USPQ2d 1033, 1036 (Fed.Cir.1990). This inquiry is wholly subjective and addresses whether the inventor must disclose any facts in addition to those sufficient for enablement. Id. at 928, 16 USPQ2d at 1036. Second, if the inventor had a best mode of practicing the claimed invention, it must be determined whether the specification adequately disclosed what the inventor contemplated as the best mode so that those having ordinary skill in the art could practice it. Id. at 928, 16 USPQ2d at 1036-37. The latter question "is largely an objective inquiry that depends upon the scope of the claimed invention and the level of skill in the art." Id. at 928, 16 USPQ2d at 1037.

On appeal, USG contends that Williams believed that any of three silicone-treated expanded perlites (Bolind's perlite, Sil-32, and Sil-42) would perform equally well in a joint compound and thus that Williams did not have a best mode of practicing the invention. National responds that the district court correctly concluded that there was no genuine dispute that Williams believed that Sil-42 perlite represented a substantially better material than the other silicone-treated expanded perlites with which he had experimented. We agree with National. National brought forward clear and convincing evidence that Williams believed that Sil-42 perlite was the best material for use in the invention. To begin with, Williams knew that Sil-42 perlite did not have to be screened before use in a joint compound and that this was a significant advantage over other silicone-treated expanded perlites. Moreover, the record shows that Williams believed that Sil-42 perlite eliminated the coarse look of other lightweight fillers, resisted breakdown under vacuum better than Sil-32, and yielded a lightweight joint compound having improved application properties.

Williams' testimony before the district court fully supported the court's conclusion that Williams had a best mode of practicing the claimed invention. Williams admitted during multiple depositions, that he considered Sil-42 perlite to be the best material for use in the invention. Similarly, he stated in an affidavit that "[a]t the time the application was filed, I considered a perlite supplied by Silbrico under the name Sil-42 or USG 42 to be the best commercially available perlite for use in the [claimed] lightweight joint compounds." His affidavit did not suggest, as USG contends, that Williams equally preferred Sil-32, Bolind's perlite, and Sil-42. On the contrary, the affidavit stated that "the joint compound made with [unscreened] Sil-32 was not acceptable." Likewise, the affidavit stated that Bolind's perlite yielded a joint compound that "worked satisfactorily"; it did not state that Bolind's perlite worked as well as Sil-42 perlite.

USG argues, alternatively, that Williams did prefer Sil-42 perlite, but only for purposes of developing a commercial product, and that Williams selected Sil-42 perlite only because it was available in large quantities....