Western Marine Electronics, Inc. v. Furuno Elec. Co., Ltd.

• Decision Date: 14 June 1985
• Docket Number: 84-617,Nos. 84-615,s. 84-615
• Citation: 764 F.2d 840,226 USPQ 334
• Parties: WESTERN MARINE ELECTRONICS, INC., Appellant/Cross-Appellee, v. FURUNO ELECTRIC CO., LTD., Appellee/Cross-Appellant. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 840

764 F.2d 840

226 U.S.P.Q. 334

WESTERN MARINE ELECTRONICS, INC., Appellant/Cross-Appellee, v. FURUNO ELECTRIC CO., LTD., Appellee/Cross-Appellant.

Appeal Nos. 84-615, 84-617.

United States Court of Appeals Federal Circuit.

June 14, 1985.

Granger Cook, Jr., Cook, Wetzel & Egan, Ltd., Chicago, Ill., argued, for appellant. With him on brief was Andrew C. Holcomb, Chicago, Ill.

Ernest M. Anderson, Eckhoff, Hoppe, Slick, Mitchell & Anderson, San Francisco, Cal., argued, for appellee. With him on brief was Bruce H. Johnsonbaugh, San Francisco, Cal.

Before MARKEY, Chief Judge, BALDWIN, Circuit Judge, and MILLER, Senior Circuit Judge. ^*

BALDWIN, Circuit Judge.

Western Marine Electronics, Inc. (Wesmar) appeals from an October 4, 1983 judgment of the United States District Court for the Western District of Washington holding claims 1, 14, 16, and 17 of U.S. Patent No. 3,553,638 (the Sublett patent) invalid under 35 U.S.C. Sec. 102(b) and not infringed by certain sonar devices manufactured by Furuno Electric Co., Ltd. (Furuno). Furuno cross-appeals from the district court's denial of an award of attorney fees. We affirm those parts of the district court's judgment holding the Sublett claims invalid and denying attorney fees. In view of our decision on invalidity, we do not reach the district court's non-infringement finding.

Background

The invention of the Sublett patent relates to gravity stabilized sonar devices used on fishing boats. A sonar device includes a drum-shaped acoustical transducer, which sends out short-duration and highly directional sound waves (analogous to a beam of light) which travel through the water and are reflected back from objects in the water, such as fish or other submerged objects. By knowing the direction that the transducer is facing when it detects this reflected sound or "echo", one can determine the location of the detected object. The direction of the transducer's One of the objects of the Sublett invention was to stabilize the transducer against the pitching and rolling motions of a ship. The sonar system is gravity stabilized by means of a pendulum suspension mechanism. The mechanism includes a rotatable frame with support arms extending from the frame which carry the transducer like a pendulum. The pendulous suspension allows the transducer to remain relatively stable despite the pitch and roll of a ship. In addition, the transducer may be rotated and tilted to alter the orientation of the transducer independently of the stabilizing suspension mechanism.

beam is defined by a vertical component which measures the angle of the beam with respect to a horizontal plane such as the surface of the water, referred to as the "tilt" angle, and by a horizontal component which measures the beam angle about a vertical axis such as the angle between 0 and 360 degrees around the vessel, referred to as the "scan" angle.

The inventor, Kenneth Sublett, who was chief engineer of Wesmar, conceived of the stabilized sonar in late 1967. The Sublett patent application was filed on June 19, 1969, and the patent issued on January 3, 1971. Claim 14 of the patent is reproduced in the Appendix. Claims 1, 16, and 17 are reexamination claims.

Sublett's conception was reached under intensive pressure from Wesmar's president, Bruce Blakey, who perceived a substantial need in the fishing industry for a sonar device which would be capable of the tilt and scan functions, but be unaffected by the pitch and roll of a vessel. Although the prior art disclosed equipment capable of stabilizing the transducer against pitch and roll, the equipment used motion sensing devices such as gyroscopes which were expensive and bulky. For this reason, the fishing industry had opted for unstabilized sonar devices. Two such devices were Wesmar's SS-100 and SS-200 sonar devices.

Wesmar's SS-300 sonar model embodies the Sublett invention. The SS-300 also includes a dual frequency feature which permits operation at low frequency (long range) and high frequency (short range), whereas the earlier SS-200 model operated at a high frequency and thus had a short range.

District Court Decision

In a judgment dated October 4, 1983, rendered after trial without a jury, and based upon a separately filed opinion and findings of fact and conclusions of law, the district court held the claims in suit invalid under 35 U.S.C. Sec. 102(b) ¹ on the ground that the Sublett invention was placed on sale more than one year prior to application for patent.

The court determined that prior to June 19, 1968 (the critical date, i.e., one year before the application filing date), Wesmar had placed the SS-300 sonar device on sale. Early in its discussion of the on sale issue, the district court noted that Wesmar had not been forthright in producing certain documents, and in light of other key documents produced by Furuno, Wesmar's non-production was suspicious. In addition, the court found that Wesmar's interrogatory answers relating to the on sale issue were "at best, slipshod and, at worst, deliberately misleading" and that certain interrogatories, answered falsely by Wesmar, were corrected "two years after the answers were served and only after [Furuno] obtained proof of their falsity."

Key documents relied on by the district court included:

1. production drawings, dated in February, March, and April 1968, showing parts critical to the stabilization function;

2. invoices and delivery receipts, dated January through May of 1968 and found in the possession of a machinist and a foundry 3. a June 5, 1968 letter from a Wesmar manager, Fenwick MacIntosh, to a customer stating in part:

showing the manufacture and delivery to Wesmar of parts necessary for Wesmar to construct the stabilized sonar devices;

Incidentally, the SS300 is now in production. Among other new features, this unit is equipped with stabilized sound dome and a 360 degree sweep. It is a dual-frequency unit providing long and short range; for search and then pinpointing the exact location of a school of fish. This unit will be in the price range of $9,000.00.

and,

4. a June 7, 1968 letter from Wesmar's president, Bruce Blakey, to Peter G. Schmidt, president of Marine Construction and Design Company (Marco), a distributor of Wesmar products in Peru, which provides in relevant part:

We have completed our pricing exercise on the SS300 and have established the f.o.b. Seattle selling price of $7,300. Marco's cost on this item is $4,830, and Marco's margin is therefore $2,470.

....

To accomplish introducing the unit in Peru, it is recommended that Marco switch the customer who has ordered (2) Model SS200's for installation prior to November 1, to the new Model SS300 unit. Delivery can be accomplished, we believe, within two weeks.

....

In conclusion, it is my opinion that from studying the John O'Neal reports, the Mel Souter report, attending the debriefing session with Marco and from our subsequent discussions with John that the trip was worthwhile. The technical points raised can be corrected easily, with the exception of range, of course. The fact that we now have the SS300 with its low frequency capability enhances our position in this regard. In my opinion, with aggressive action, we can now move to capture a fair share of the market.

The letter contains a handwritten notation "John--OK to buy one SS300 at SS200 price per PGS 11 June."

The court found that the Sublett invention, "insofar as the stabilization mechanism is concerned," was completed well prior to the critical date. From the documentary evidence, the court determined that the stabilization mechanism was made and in production by early June of 1968. An engineering model was built by mid-April of that year, parts for at least three additional stabilization mechanisms were ordered in May and delivered in June; and on June 12, Wesmar ordered six additional "yokes" (a critical part of the mechanism) from a foundry "Due ASAP." The court also found that Wesmar had an SS-300 permanently mounted on a test boat in Seattle for demonstrating the sonar to potential customers in the "summer" of 1968.

As to testing, the court found that Wesmar had ample time to field test the SS-300 prior to the critical date, and that the relative simplicity of the mechanism did not require in-depth testing to determine utility or functionality.

Although Wesmar contended that the June 7 letter proposes that the device be "evaluated" in Peru and that shipping documents and internal documents between Marco and Wesmar refer to the shipment of the SS-300 as being for experimental purposes, the court concluded that the documentary evidence and the testimony from the witnesses established that the transaction with Marco was not for experimental purposes. For example, the court found it significant that a Marco manager, Chuck Hart, who was the Marco employee most familiar with the transaction, testified that the Marco purchase of the SS-300 was not connected with any experimental purpose. From the testimony and the exhibits, the court found that the shipping documents referred to "experimentation" in order to avoid substantial Peruvian duty payments. The court also credited the deposition testimony of Wesmar's Mr. MacIntosh that he remembered seeing stabilized sonar devices being constructed at Wesmar The district court denied Furuno's request for attorney fees finding that the case was not "exceptional" for purposes of 35 U.S.C. Sec. 285. The court noted that Furuno had been compensated to some extent for Wesmar's discovery abuse by court-imposed monetary sanctions.

in April 1968 and had specifically installed stabilized devices in vessels in Canada during April, May, and June of 1968. As for the June 7 letter, the court found that it imposed no conditions of reporting, testing or any other condition that might restrict use or resale of the SS-300, and did no more than suggest market testing. Finally, the court found that any evaluation...