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Ziggity Systems, Inc. v. Val Watering Systems

Document Cited authorities 119 Cited in 21 Precedent Map Related
Vincent
Decision Date14 November 1990
Docket NumberCiv. A. No. 89-625.
Citation769 F. Supp. 752
PartiesZIGGITY SYSTEMS, INC. v. VAL WATERING SYSTEMS; Vallorbs Jewel Co, Inc.; Jeanette Steudler, in her capacity as executrix and representative of the estate of Frederick W. Steudler, Sr.; and Frederick W. Steudler, Jr.
CourtU.S. District Court — Eastern District of Pennsylvania

769 F. Supp. 752

ZIGGITY SYSTEMS, INC. v. VAL WATERING SYSTEMS; Vallorbs Jewel Co, Inc.; Jeanette Steudler, in her capacity as executrix and representative of the estate of Frederick W. Steudler, Sr.; and Frederick W. Steudler, Jr.

Civ. A. No. 89-625.

United States District Court, E.D. Pennsylvania.

September 27, 1990.

On Motion For Reconsideration November 14, 1990.

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John F. McNulty and Alex R. Sluzas, E. Arthur Thompson, Paul & Paul, Philadelphia, Pa., for defendants.

Wayne A. Graver, Lavin, Coleman, Finarelli & Gray, Philadelphia, Pa., David R. Melton, Ryan M. Fountain, Barnes & Thornburg, South Bend, Ind., for plaintiff.

FINDINGS OF FACT, DISCUSSION, CONCLUSIONS OF LAW, AND ORDER

HUYETT, District Judge. 

                                                 TABLE OF CONTENTS
                TABLE OF CONTENTS ...............................................................  762
                FINDINGS OF FACT ................................................................  763
                   I. Parties ...................................................................  763
                  II. Patents-in-Suit ...........................................................  763
                 III. Eldon Hostetler, The Inventor .............................................  764
                  IV. Development of the Ziggity Poultry Watering System ........................  765
                   V. Patent Infringement .......................................................  771
                  VI. Willful Infringement ......................................................  775
                 VII. Liability of the Defendants ...............................................  775
                VIII. Patent Validity ...........................................................  776
                      A. 35 U.S.C. § 103 (Obviousness) ..........................................  776
                      B. 35 U.S.C. § 102 (On Sale Bar) ..........................................  779
                      C. Inequitable Conduct ....................................................  780
                      D. 35 U.S.C. § 112 ........................................................  780
                      E. 35 U.S.C. § 132 (New Matter) ...........................................  781
                  IX. Damages ...................................................................  781
                   X. Breach of Contract Counterclaims ..........................................  782
                      A. The Settlement Agreement ...............................................  782
                      B. The Oral Agreement .....................................................  783
                DISCUSSION ......................................................................  783
                   I. Patent Infringement Analysis ..............................................  783
                      A. Scope of the Claims at Issue ...........................................  783
                         1. Scope of Claim 19 of the '345 patent ................................  784
                         2. Scope of the remaining claims at issue ..............................  785
                      B. Literal Infringement ...................................................  786
                         1. Literal infringement of Claim 19 ....................................  786
                         2. Literal infringement of the remaining claims ........................  789
                      C. Infringement Under the Doctrine of Equivalents .........................  790
                      D. Willful Infringement ...................................................  792
                      E. Liability of the Defendants ............................................  794
                         1. Val .................................................................  794
                         2. Vallorbs ............................................................  794
                         3. Individual defendants ...............................................  795
                  II. Patent Validity Analysis ..................................................  796
                      A. Invalidity Under 35 U.S.C. § 103 (Obviousness) .........................  797
                         1. Scope and content of the prior art ..................................  798
                         2. Level of ordinary skill in the art ..................................  799
                         3. Differences between the prior art and the claims at issue ...........  800
                         4. Secondary considerations ............................................  802
                         5. Conclusion with respect to the defense of obviousness ...............  807
                      B. Invalidity Under 35 U.S.C. § 102 (On Sale Bar) .........................  808
                      C. Invalidity Because of Inequitable Conduct ..............................  812
                         1. Ziggity drinker 2 ...................................................  812
                         2. Ziggity drinker 3 ...................................................  813
                         3. Ziggity's sale of "trigger action" drinkers to Cap-It-All in December
                              1978 ..............................................................  813
                         4. Ziggity's interrogatory answers and answer to request for production
                              of documents ......................................................  814
                         5. Dutch Search Report and the Boegli Patent ...........................  814
                         6. British Search Report and the Wilmot Patent .........................  815
                      D. Invalidity Under 35 U.S.C. § 112 .......................................  816
                      E. Invalidity Under 35 U.S.C. § 132 (New Matter) ..........................  818
                 III. Damages Analysis ..........................................................  819
                
                      A. Lost Profits ...........................................................  820
                         1. Lost profits as a result of lost sales ..............................  820
                         2. Lost profits as a result of price erosion ...........................  824
                      B. Reasonable Royalty .....................................................  824
                      C. Sales Base .............................................................  829
                      D. Prejudgment Interest ...................................................  830
                      E. Increased Damages ......................................................  831
                      F. Attorney Fees ..........................................................  832
                      G. Summary of Damages .....................................................  832
                  IV. Analysis of Breach of Contract Counterclaims ..............................  833
                      A. The Settlement Agreement ...............................................  833
                      B. The Oral Agreement .....................................................  835
                CONCLUSIONS OF LAW ..............................................................  837
                APPENDIX ........................................................................  839
FINDINGS OF FACT
I. PARTIES

1. Plaintiff Ziggity Systems, Inc. ("Ziggity") is a corporation organized and existing under the laws of the State of Indiana and has its principal place of business located at 12456 Industrial Parkway East, Middlebury, Indiana 46540. (Stipulated).

2. Defendant Val Products, Inc. ("Val") is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania and has its principal place of business located at 2599 Old Philadelphia Pike, Bird-in-Hand, Pennsylvania 17505. (Stipulated).

3. Defendant Vallorbs Jewell Company is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania and has its principal place of business located at 2599 Old Philadelphia Pike, Bird-in-Hand, Pennsylvania 17505. (Stipulated).

4. Defendant Frederick W. Steudler, Sr. (deceased) was an individual residing at 138 Musser Avenue, Lancaster, Pennsylvania 17603, and was an officer and director of both Val and Vallorbs. (Stipulated).

5. Defendant Jeanette Steudler, named in her capacity as Executrix for the Estate of Frederick W. Steudler, Sr., is an individual residing at 138 Musser Avenue, Lancaster, Pennsylvania 17603, and is an officer and director of both Val and Vallorbs. (Stipulated).

6. Defendant Frederick W. Steudler, Jr. is an individual residing at 311 Poplar Avenue, New Providence, Pennsylvania 17660, and is an officer and director of both Val and Vallorbs. (Stipulated).

II. PATENTS-IN-SUIT

7. The patents-in-suit are United States Letters Patent No. 4,637,345 ("the '345 patent") and United States Letters Patent No. 4,491,088 ("the '088 patent"). (Stipulated).

8. The '088 patent issued January 1, 1985 on Application Serial No. 520,099, filed April 10, 1981. The sole named inventor was Eldon Hostetler, Vice President of Ziggity. Application Serial No. 520,099 was a continuation of United States Patent Application Serial No. 113,607, filed January 21, 1980. United States Letters Patent No. 4,284,036 ("the '036 patent") issued on Application Serial No. 113,059 on August 18, 1981. That portion of the 17 year term of the '088 patent subsequent to August 18, 1998, the expiration date of the '036 patent, was disclaimed during the prosecution of Application Serial No. 520,099 in order to overcome the Examiner's rejection over the already-then issued '036 patent based on "double patenting." On April 16, 1985, reexamination of the '088 patent was requested. As a result of the reexamination proceeding in the United States Patent and Trademark Office, claims 1 and 2 of the '088 patent were cancelled, and new claims 3, 4, and 5 were added and issued on March 31, 1987 as Reexamination Certificate No. B1 4,491,088. (Stipulated).

9. The '345 patent issued January 20, 1987 on Application Serial No. 644,612, filed August 27, 1984. Application Serial No. 644,612 was a continuation of application Serial No. 520,099. (Stipulated).

10. Ziggity has alleged infringement of claims 1-13 and 19-24 of the '345 patent and claims 3-5 of the '088 patent. (Stipulated).

11. Claims 14-18 of the '345 patent are not at issue in this action. (Trial Transcript 2/16/90 at page 193, lines 5-8).

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