Williams Gold Refining Co., Inc. v. Semi-Alloys, Inc.

• Decision Date: 28 June 1977
• Docket Number: Civ. No. 75-300.
• Citation: 434 F. Supp. 453
• Parties: WILLIAMS GOLD REFINING COMPANY, INCORPORATED, Plaintiff, v. SEMI-ALLOYS INCORPORATED, Defendant.
• Court: U.S. District Court — Western District of New York

434 F. Supp. 453

WILLIAMS GOLD REFINING COMPANY, INCORPORATED, Plaintiff, v. SEMI-ALLOYS INCORPORATED, Defendant.

Civ. No. 75-300.

United States District Court, W. D. New York.

June 28, 1977.

Edwin T. Bean, Jr., Christel & Bean, Buffalo, N. Y., for plaintiff.

Richard B. Passen, Jaeckle, Fleischmann & Mugel, Buffalo, N. Y., for defendant; Laurence B. Dodds, Fort Collins, Colo., of counsel.

MEMORANDUM AND ORDER

ELFVIN, District Judge.

Williams Gold Refining Company, Incorporated ("Williams") brings this action pursuant to 28 U.S.C. § 2201 for a declaratory judgment that United States Patent No. 3,823,468 ("Patent '468") owned by defendant Semi-Alloys Incorporated ("Semi-Alloys") is invalid or that, if valid, it is not infringed by plaintiff.

Defendant has moved pursuant to Fed.R. Civ.P. rule 56 for summary judgment on the ground that there is no justiciable controversy because plaintiff's fears of an infringement suit against it or one of its customers are unfounded. In the alternative, defendant moves pursuant to 28 U.S.C. § 1404(a) for a stay or transfer of this action to the Northern District of Texas. There is presently pending in that court a prior suit brought by Semi-Alloys against Metalized Ceramics Corporation ("MetCeram") wherein Semi-Alloys charges MetCeram with infringement of Patent '468. MetCeram is a company to which Williams supplies items allegedly covered by said patent.¹ Pending a decision on these motions, plaintiff moved for a preliminary enjoinder of the carrying forward of the Texas action.

Patent '468 covers a method of making hermetically sealed containers having within them semiconductor devices. The claimed method involves "fabricating an hermitically sic sealed container consisting of a body having a cavity for receiving a semi-conductor device and a conductive cover therefor, wherein a preformed ring of heat fusible material is superimposed on the cover in registry with its periphery, the ring is engaged with at least one pair of spaced electrodes, and a pulse of current is passed through the electrodes, the ring and the cover thereby producing an effective attachment between the ring and the cover adjacent each of the electrodes, the cover thereafter being assembled within the container body."² Because Patent '468 is a method patent, it is the series of steps comprising the process that is central and only a replication of every step in substantially the same operative order constitutes infringement. See, e. g., Engelhard Industries, Inc. v. Research Instrumental Corp., 324 F.2d 347 (9th Cir. 1963). However, infringement of a method patent does not require that the alleged infringer personally duplicate every step. One who actively induces or knowingly contributes to the infringement is liable. 35 U.S.C. § 271 declares what constitutes patent infringement and reads in pertinent part as follows:

"(a) Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent.

"(b) Whoever actively induces infringement of a patent shall be liable as an infringer.

"(c) Whoever sells * * * a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer."

None of the parties who are involved with the infringement of Patent '468 alleged herein personally practices every step of the method. The ultimate users of the cover and container assembly are the manufacturers of the semiconductor devices which are placed in the assembly. Each of these manufacturers establishes its own design specifications for its cover and container assemblies. Specifications include the dimensions of the cover and container, the composition of the solder ring and the number of "tacks" to be used in securing the solder ring to the cover. The semiconductor manufacturer then arranges with parts manufacturers to make the containers and covers to those specifications. Rather than dealing with separate sources for the containers and cover, some manufacturers purchase both from a single source. Such a source could produce both containers and covers, produce one of the items and subcontract out for the other or subcontract out both items. MetCeram produces its own containers and contracts with others, including Semi-Alloys or Williams, for the production of the covers with the fusible rings attached. Semi-Alloys also produces covers directly for the semiconductor manufacturers.

Because it is the semiconductor manufacturer's specifications which control the type of cover and container assembly produced, the most effective way for Semi-Alloys to stop infringement of its patent would be to sue the semiconductor manufacturers. Semi-Alloys allegedly is reluctant to do this because all such manufacturers order parts from Semi-Alloys and economic realities prevent Semi-Alloys from suing its major customers. Of the remaining possible infringers, Semi-Alloys has chosen to bring suit against MetCeram, a party which supplies the cover and container pairs to semiconductor manufacturers.

Semi-Alloys filed its suit against MetCeram June 4, 1975 and Williams, in response thereto, filed this action against Semi-Alloys July 23, 1975. Usually, the first-filed suit should have priority absent the showing of a balance of convenience favoring the later action or unless there are special circumstances justifying giving priority to the latter. William Gluckin & Co. v. Int'l Playtex Corp., 407 F.2d 177 (2d Cir. 1969). One such special circumstance is the so-called "customer-action" where the first-filed suit is against a customer of the putative infringer. Semi-Alloys argues that this is not such a situation inasmuch as Williams is a supplier of parts to MetCeram who is the manufacturer. Williams counters that it is the manufacturer and that MetCeram is the customer for Williams's covers.

The "heart" of the invention in Patent '468 is the method of attaching the ring to the cover, but I do not imply that said attachment is the measure of the invention. The claimed invention includes all of the assembly steps. Likewise, Semi-Alloys's argument that MetCeram's employees who design the covers and containers would have the greatest knowledge of the infringement of the patent is unpersuasive. Patent '468 is not a design patent; it is a method patent. The design of the cover and container is not the measure of the patent. As stated before, to infringe a method claimed in the patent there must be a replication of every step in substantially the same operative order. If the overall method falls outside the patent grant, no party in a multi-party chain of manufacturing can be held liable for infringement, no matter how similar the step in which that party participated is to a step in the patented method. Cf., Aro Mfg. Co. v. Convertible Top Co., 365 U.S. 336, 81 S.Ct. 599, 5 L.Ed.2d 592 (1961). Nevertheless, the preeminence of the construction of the cover and ring subassembly affects any decision involving equitable considerations.

Semi-Alloys's characterizations of MetCeram as the "manufacturer" and Williams as the "parts supplier" are misconceived. Williams is the manufacturer of the cover and ring subassembly for which MetCeram is...