Universal Oil Products Co. v. Winkler-Koch E. Co.

• Decision Date: 27 April 1934
• Docket Number: No. 716,895.,716
• Citation: 6 F. Supp. 763
• Parties: UNIVERSAL OIL PRODUCTS CO. v. WINKLER-KOCH ENGINEERING CO. et al.
• Court: U.S. District Court — District of Delaware

6 F. Supp. 763

UNIVERSAL OIL PRODUCTS CO. v. WINKLER-KOCH ENGINEERING CO. et al.

Nos. 716, 895.

District Court, D. Delaware.

April 27, 1934.

Thomas G. Haight, of Jersey City, N. J., Charles M. Thomas (of Bacon & Thomas) and William F. Hall, both of Washington, D. C., and Hugh M. Morris, of Wilmington, Del., for plaintiff.

Arthur C. Denison (of Baker, Hostetler, Sidlo & Patterson), of Cleveland, Ohio, and J. Bernhard Thiess, Robert Lewis Ames, and Thorley von Holst (of Jones, Addington, Ames & Seibold), all of Chicago, Ill., and Arthur G. Logan, of Wilmington, Del., for defendant.

NIELDS, District Judge.

This suit charges defendants with infringement of two process patents for the production of gasoline by cracking cheap petroleum oil. Patent No. 1,392,629 was granted in 1921 to Carbon Petroleum Dubbs and thereupon assigned to the plaintiff. The other patent, No. 1,537,593, was granted in 1925 to the plaintiff upon an application filed in 1920 by Gustav Egloff. All claims of both patents are in suit except claim 6 of the Dubbs patent.

The defenses are noninfringement and invalidity. Stated more specifically, the defense of invalidity is: The Dubbs patent is invalid for lack of disclosure, the Egloff patent is invalid for lack of utility, and both patents are invalid for lack of patentable novelty over the prior art.

For a number of years plaintiff has been engaged in promoting the use by refiners, in this country and abroad, of the "Dubbs process" for cracking heavy petroleum oils for the production of gasoline. It owns a number of patents, including the two patents in suit, although many of them are not practiced in the Dubbs process. That process is bottomed upon the Dubbs patent in suit. In the decade before 1931 plaintiff received in royalties under licenses of the Dubbs process $33,500,000. Root Refining Company, hereinafter referred to as defendant, is engaged in the business of refining petroleum at Eldorado, Ark. The other defendant was never served with process.

In the early days of refining crude petroleum, gasoline was obtained by distillation. The operation consisted in gradually increasing the temperature of the oil and driving off a part in the form of vapor. The vapors were then condensed and a separation effected by directing the condensate of one volatility into one vessel, and a portion of a lower volatility into another vessel and so on. This operation was essentially a nonchemical one.

The use of combustion engines in motor vehicles created a great demand for gasoline. That demand would have exhausted the available petroleum deposits within the span of a life unless a large additional supply of gasoline could be obtained. Chemists for several generations had studied the production of gasoline by cracking. "Cracking" is the decomposition of petroleum by heat and pressure, with the consequent breaking up of the molecules and the production of both lighter and heavier hydrocarbons. Gasoline is a lighter hydrocarbon produced by this chemical action. Many patents had issued for processes and apparatus to crack petroleum. The first commercially successful process of cracking to produce gasoline was invented by Dr. Burton and used by the Standard Oil Company of Indiana in 1913. Shortly after the advent of the Burton process, it was improved by the invention of Clark.

At the time plaintiff entered the field with the Dubbs process, the most effective process in commercial use for producing gasoline by cracking was the Burton-Clark process. The features characterizing this process were: (1) Raising the oil to the cracking temperature by passing it through tubes located in a furnace. (2) Receiving the discharge in an unheated but insulated chamber where the vapors liberate themselves from the liquid and pass overhead to a condenser. (3) A condensing action whereby the heavier vapors are liquefied into a reflux condensate and the passing of the vapors which are not condensed to a final condenser. (4) Passing of the liquid from the final condenser to a receiver. (5) Returning the reflux condensate and the fresh charge to the heating tubes. (6) The maintenance of a pressure of approximately 95 pounds per square inch.

The Burton-Clark process is a liquidvapor phase process. There is always a very substantial quantity of liquid in the heating zone. In this process, as well as in earlier processes, the accumulation of carbon upon the heating tubes or chambers of the still was rapid and required the shutting down of the still after it had been "on stream" for a very short period. The carbon formed on the inner surfaces of the heating tubes and the heat became localized in the tubes and increased the temperature thereof to a point where their tensile strength was insufficient to withstand the high pressure. The appearance of red spots was a danger signal, and the still was shut down, the contents discharged and the parts thoroughly cleaned before an attempt was made to bring the still again "on stream." Moreover, these stills were confined to the cracking of light oils. The cracking of crude oil would have been out of the question. The normal operating cycle of the Burton-Clark still was 72 hours, of which 36 hours was the "on stream" period and the balance of the cycle was used in cleaning the still and bringing it "on stream." The monthly output was about 4,000 barrels, with a gasoline yield of from 30 to 33 per cent.

In 1919 the Dubbs process embodying the invention of the Dubbs patent in suit was given an experimental demonstration at Independence, Kan., by the plaintiff. Dubbs was in charge of the work. In February of that year the operation was witnessed by Daniel Pyzel in charge of the Royal Dutch Shell group of refineries. The following month Dubbs applied for his patent. In December of that year Pyzel obtained a license for his companies from plaintiff. Pyzel testified that the so-called "clean circulation" of the Dubbs patent was the primary object in obtaining the license. Prior to this demonstration the Dutch Shell group operated under the Trumble patents. After seeing the Dubbs operation, Pyzel testified his companies had been proceeding on the "wrong track," because in the Trumble process a very substantial part of the dirty residuum was returned to the heating coil.

In the summer of 1919 the operation of the Dubbs still at Independence was witnessed by 21 refinery representatives. These observers were familiar with the Burton and Burton-Clark type of still. The "on stream" period of the Dubbs still in this demonstration was 800 per cent. longer than it had been possible to obtain in any other gasoline cracking process. The explanation of the length of the run was the employment of the "clean circulation" feature of the Dubbs process.

The Standard Oil Company of California also recognized the superiority of this process. It had used the Burton and Burton-Clark types of still for cracking the heavy California oils, but found them unsatisfactory. That company maintained a development department of 200 men at a yearly cost of a million dollars in a vain effort to develop a successful cracking process. It sent one of its engineers to a plant of the Shell Company to observe the operation of a Dubbs unit. Upon receiving the report of the engineer, Hanna, vice president of the California Company, wrote to his superior officers, inter alia:

"In studying over these reports, it would seem to me that we have picked up the following:

"First: Cleanliness is next to godliness. * * *

"Sixth: That if the maximum degree of cleanliness is maintained, higher furnace efficiency can be attained."

In 1925, the California Company obtained a license from the plaintiff and installed 15 Dubbs plants in California. For the oil processed to June 30, 1930, it paid to the plaintiff royalties in excess of $2,300,000.

The apparatus disclosed in the Dubbs patent comprises five important parts: (1) Tubes called "cracking tubes" in a furnace through which a mixture of fresh charging stock and reflux condensate is continuously flowing as a stream with enough liquid oil to wash the tubes and prevent the deposit of carbon. Here the oil is raised to the maximum temperature in the process and is cracked to a considerable extent. (2) An insulated and unheated chamber, or chamber heated only enough to offset heat radiation, wherein the vapors separate from the liquid oil and pass up and out to a partial condenser. From the bottom of this chamber the liquid residue is discharged from the system. (3) A settling chamber or dephlegmator where the lighter fractions of vapor pass on to the final condenser and the heavier fractions are condensed and return as a condensate to the cracking tubes. (4) A final condenser. (5) A high pressure pump forcing fresh charging stock into the cracking tubes.

The process disclosed in the Dubbs patent is characterized by the following features: (1) The passage of oil in a stream through cracking tubes where its temperature is raised to the maximum and cracking occurs without substantial separation of the generated vapors from the liquid. The vapors generated in the cracking tubes are homogeneously disbursed in the liquid oil and pass with the liquid as a stream through the tubes whereby carbon deposits are prevented. (2) The discharge of the heated stream from the cracking tubes into the separating chamber where cracking is continued and the vapors free themselves from the liquid and pass up and out of the top. (3) Subjecting the vapors from the separating chamber to condensation in a dephlegmator. The lighter vapors pass on to another condenser and are finally drawn off as gasoline. The heavier fractions are returned as a clean condensate to the cracking tubes. (4) Continuously withdrawing this condensate, called "reflux," and mixing it with a fresh charge of oil. (5) Withdrawing permanently from the system the residue accumulating in the separating chamber. (6) Imposing the...