United States v. Marifarms, Inc.

• Decision Date: 13 July 1972
• Docket Number: Civ. A. No. 4305,4306.
• Citation: 345 F. Supp. 858
• Court: U.S. District Court — District of Delaware
• Parties: UNITED STATES of America, Plaintiff, v. MARIFARMS, INC. and Mitsutake Miyamura, Defendants. UNITED STATES of America, Plaintiff, v. MARIFARMS, INC. and Motosaku Fujinaga, Defendants.

345 F. Supp. 858

UNITED STATES of America, Plaintiff, v. MARIFARMS, INC. and Mitsutake Miyamura, Defendants.

UNITED STATES of America, Plaintiff, v. MARIFARMS, INC. and Motosaku Fujinaga, Defendants.

Civ. A. Nos. 4305, 4306.

United States District Court, D. Delaware.

July 13, 1972.

F. L. Peter Stone, U. S. Atty., Wilmington, Del., L. Patrick Gray, III, Asst. Atty. Gen., and A. David Spevack, Atty., Dept. of Justice, Washington, D. C., of counsel, for plaintiff.

Edmund D. Lyons and Henry N. Herndon, Jr., of Morris, James, Hitchens & Williams, Wilmington, Del., and Robert B. Washburn, of Woodcock, Washburn, Kurtz & Mackiewicz, Philadelphia, Pa., of counsel, for defendants.

OPINION

LATCHUM, District Judge.

These two actions, brought by the United States on January 5, 1972, seek orders canceling two United States Patents and decreeing the same to be unenforceable and void ab initio.¹ The patents, which relate to methods for the artificial cultivation of shrimp, are U.S. Patent No. 3,473,509 ("'509 patent") granted on October 21, 1969 upon an application filed on March 6, 1967 in which Mitsutake Miyamura ("Miyamura") was named as the inventor and U.S. Patent No. 3,477,406 ("'406 patent") granted on November 11, 1969 on an application filed on June 29, 1967 which named Motosaku Fujinaga ("Fujinaga") as the inventor. Marifarms, Incorporated ("Marifarms") is the owner of both patents by virtue of direct and mesne assignments by the inventors. Each complaint charges (1) that the respective inventors made untrue statements in the Declaration accompanying their respective applications, (2) that the untrue statements resulted either in a fraud upon the Patent Office or a mutual mistake of fact² which prevented the Patent Office from giving proper consideration to the applications against the prevailing statutory standards, (3) that the fraud or mistake in fact was caused by the applicants' failure to disclose to the Patent Office a number of pertinent references which had been published in Japan and were in the public domain for more than a year prior to filing the applications, and (4) that such references were either authored by the applicants or were directly known to them although prepared by others at the time they signed the Declarations stating that they did not know or believe that the methods described and claimed in the applications were ever patented or described in any printed publication in any country more than one year prior to filing the applications.

On November 8, 1971 before the complaints were filed, the Government wrote to Marifarms enclosing copies of the complaints and advising that they would be filed on January 5, 1972 to cancel the patents unless Marifarms before that date filed Disclaimers in accordance with the second paragraph of 35 U.S.C. § 253, dedicating to the public the terminal portions of the terms of the two patents. Shortly after receipt of this letter, Marifarms' patent attorneys obtained from the Government translations of some of the references cited in the complaints. After studying these references, Marifarms' attorneys concluded that none of the claims in the patents were anticipated or disclosed by any of the publications cited in the complaints and so informed the Government by letter of December 27, 1971. Marifarms' attorneys also requested an opportunity to discuss the matter personally with the Government's attorneys before the complaints were filed to determine whether the Government disagreed with their opinion. Without further contact with Marifarms, the Government filed these actions on January 5, 1972.

On February 4, 1972, Marifarms filed in the Patent Office reissue application No. 224,354 based on the '509 patent and reissue application No. 224,350 based on the '406 patent. These reissue applications contained all the claims of the original patents, clarified an alleged ambiguity in Claim 10 of the '406 patent and added another claim to the '509 patent. The reissue applications also set forth all the references and publications cited by the Government in the complaints. On February 14, 1972, at Marifarms' request, its attorneys met with the Government's attorneys with a view to seeking an amicable disposition of the controversy. Marifarms was requested to submit its proposal to the Government by letter and this was done on March 1, 1972. Marifarms proposed (A) to request the Patent Office to expedite the reissue applications, to make a record of all prior art which came to Marifarms' or the Government's attention, and to provide the Government with all documents going to and received from the Patent Office in connection with the reissue applications, (B) if final rejection were rendered by the Patent Office holding all claims of the patents to be unpatentable and if no appeals were taken, Marifarms would proceed to dedicate the patents to the public, and (C) if some claims were held to be unpatentable and others were allowed, Marifarms would pay the final fee, let such applications issue and surrender the original patents. After further correspondence, the Government on March 23, 1972 advised Marifarms that its proposal for resolving the controversy was unacceptable.

Thereafter Marifarms moved to stay the present actions pending the outcome of the Patent Office proceedings on the reissue applications, and the Government moved to enjoin Marifarms from further prosecution of the reissue applications in the Patent Office. These two motions are now before the Court for determination.

1. Marifarms' Motion To Stay

In arguing for a stay of these actions pending the outcome of the Patent Office proceedings on the reissue applications, Marifarms contends that the thrust of the complaints simply come down to the question whether the patents would have issued had the Patent Examiner been apprised of the references and publications cited by the Government in the complaints. Thus, it says that since all the new references have now been cited in the reissue applications, this Court, in the interest of judicial and financial economy, should await the expert determination by the Patent Office whether the new references bar the claims in whole or in part because such a decision might possibly resolve the controversy entirely or substantially narrow the issues before the Court. While this argument bears a surface appearance of reasonableness, it can not be accepted.

First, Marifarms misconceives the import of the complaints. They not only charge that the prior publications constituted a statutory bar to the issuance of the patents, but, more importantly, that the patents were obtained by actions which transgressed equitable standards of conduct because the applicants knowingly failed to disclose material facts which misled the Patent Office into granting the patents. Based upon these allegations of inequitable conduct, the Government claims that the patents should be annulled ab initio. It has long been settled that a patent, once granted, can be canceled for fraud in its inducement only by a suit in equity brought in a United States District Court by the United States. United States v. American Bell Telephone Co., 128 U.S. 315, 368, 370, 9 S.Ct. 90, 32 L.Ed. 450 (1888); United States v. American Bell Telephone Co., 159 U.S. 548, 555, 16 S. Ct. 69, 40 L.Ed. 255 (1895). The underpinning for this rule is that a patent is a contract between the inventor and the Government. The consideration supporting the contract is the inventor's public disclosure of his invention in return for the Government's grant of an exclusive monopoly for a stated period of time. Thus, if a fraud is perpetrated in procuring the monopoly, the Government not only has...