Eagle Iron Works v. Mclanahan Corporation, Appellant, 429 F.2d 1375 (3d Cir. 1970)

This is an appeal by the McLanahan Corporation of Hollidaysburg, Pennsylvania, from a judgment of the United States District Court for the Western District of Pennsylvania in favor of Eagle Iron Works [Eagle], a corporation of Des Moines, Iowa. The case involves a patent infringement suit instituted by Eagle against McLanahan under 28 U.S. C. §§ 1338(a) and 1400(b), alleging infringement of United States Letters Patent No. 3,160,321. McLanahan urges that the patent is invalid as obvious and that Eagle is estopped from claiming infringement because McLanahan acquired intervening rights as a result of a Certificate of Correction issued to Eagle and because of Eagle's inequitable conduct before the Patent Office in securing the Certificate. The case was tried without a jury and the District Judge held that the patent was valid; that McLanahan had infringed claims 1, 2, 3, 15 and 16, and that Eagle was not estopped from claiming infringement.

The patent in question is known commercially as "AUTOSPEC." It is an automated control system for a water scalping and sand classifying tank, a principal element in the apparatus of modern sand plants, which classifies sand and gravel by size and reblends them to given specifications. It was developed by Clement B. Cochran, an employee of Eagle, who began working on it in 1959. The first patent application was filed in 1961. Ultimately, the patent in suit, numbered 3,160,321, was issued on December 8, 1964 to Mr. Cochran, assignor to Eagle.¹ 

In general, sand is classified by size by introducing a slurry mixture of sand and water into a water scalping and sand classifying tank. The tank is an elongated V-shaped rectangular receptacle which allows the slurry to flow longitudinally into it. The coarser sand settles first nearest the feed end and progressively finer sand settles toward the other end. This settling occurs as a result of two forces: (1) the velocity of the slurry stream; and (2) gravity. Slimes and extremely fine particles are discharged at an overflow weir at the end opposite the introduction point.

In a conventional tank reblending was accomplished by a series of discharge stations located along the bottom of the tank. Each station discharged a different size sand. Discharge occurred when a sand level sensing device, such as a paddle on a rotating shaft, usually 14 to 18 inches above the bottom of the tank, determined an adequate accumulation of sand. When this occurred, the station opened and the sand flowed into a splitter box. Each splitter box (one for every station) had two or more discharge gates connected to separate flumes. If two different specifications were desired, a three-gate splitter box was used, two gates for products and one for waste. Each gate of the box was manually adjusted to give the desired proportion. The two proportions representing products were then passed into two separate flumes to form the two specification products. A typical arrangement was a three gate box where two gates were set for products, one cement and one concrete, and the third for waste. The structural and functional details of the operation of the conventional tank, as described above, were well known in the art at the time of the Cochran invention.

The primary problem with a conventional tank was that the size gradations fed into the tank could vary, creating a corresponding variation in the amounts available at each discharge station. This made it necessary to sample each product at frequent intervals to determine whether it was receiving a proper proportion of the various sizes of sand. If the proper proportion of one size was not being fed into the products, the gates had to be adjusted accordingly. Without constant sampling and readjusting, large build-ups of non-specification material resulted.

The Cochran invention eliminates the manual operation and the need for splitter boxes. It produces a continuous product despite changes in the input to the tank. To accomplish this, it employs a number of timers that measure the cumulative times of sand discharged from the individual outlets at the discharge stations. This cumulative timing mechanism is one of the essential features of the Cochran invention. Simply described, it is a system having three outlets with two discharge stations for products and one for waste, which operates as follows: When the predetermined amount of sand at any outlet is discharged, the timer "times out" and closes the valve. The excess material is diverted to either another product outlet at the discharge station or to a waste outlet. When all the outlets for a product "time out" the system resets itself.

Late in 1962, McLanahan, a competitor of Eagle in the manufacturing and sale of this type of machinery, undertook to develop an automatic system to control its sand classifying and water scalping tanks. Allegedly, this undertaking was totally independent of Eagle's work.²  McLanahan solicited the aid of Jordan Controls, a supplier of electrical control apparatus. McLanahan submitted to Jordan a set of specifications of the type of system it desired together with drawings pursuant to which and under McLanahan's direction Jordan designed a system which McLanahan incorporated in its tanks and sold under the name of "CARDO-MATIC." One of its sales was to Fayettville Sand and Gravel Inc., in Fayettville, North Carolina in March 1965. It is this system that Eagle alleged, and the District Judge found, infringed the Cochran invention.

Practically all of the facts involved in this litigation were stipulated by the parties. There is little contest as to McLanahan's infringement of the Cochran patent unless McLanahan prevails in its contention that the patent is void for obviousness, that the Certificate of Correction was invalidly issued or on its subsidiary assertions that it had intervening rights and that Eagle acted in bad faith in inducing the Patent Office to issue the Certificate of Correction.

McLanahan claims that the Cochran invention is invalid under 35 U.S.C. § 103 which states:

"A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made."

In Graham v. John Deere Co.,³  the Supreme Court outlined the applicable test in determining obviousness as follows:

"Under § 103, the scope and content of the prior art are to be determined, differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or non-obviousness of the subject matter is determined."⁴ 

In connection with this test, it is important to note that under 35 U.S.C. § 282, a patent is presumed valid and the burden of establishing invalidity is on the party claiming it.⁵ 

At trial, McLanahan introduced into evidence five patents as prior art which it argued proved that the Cochran invention was obvious in 1961.⁶  The five patents are: (1) Martin, No. 2,766,886, issued April 2, 1951; (2) Saxe, No. 2,760,634, issued December 18, 1951; (3) Simmons No. 3,012,156, issued March 13, 1957; (4) Nielson, No. 2,948,437, issued April 24, 1957 and (5) Lovette, No. 3,042,261, issued October 27, 1958.⁷ 

McLanahan contends that the District Judge's holding that Eagle's patent was valid and infringed was erroneous both in law and fact. Specifically it urged that his conclusions that the prior patents it introduced did not in fact constitute prior art in these proceedings were meaningless under a section 103 defense, having relevance only if a defense under section 102 had been asserted.⁸  Moreover, McLanahan asserts that although the District Judge recognized the criteria for obviousness of the subject matter of an issued patent laid down in Graham v. John Deere Co.,⁹  it made only summary conclusions that the subject matter of the patents was non obvious without meaningful findings of fact in support of such conclusions.

Of the three patents upon which McLanahan relied to prove obviousness, the Lovette patent dispenses rocks of varying size from different bins situated along a conveyor belt. The system depends on a constant supply of material in each bin. Unlike the Cochran invention, it does not control a varying output. More importantly, there is no cumulative time measuring control.¹⁰ 

The Simmons patent is a system designed to perform routine industrial plant operational functions. It does not specifically refer to sand but it is claimed to operate any machine of almost any nature. It is questionable whether it could be adapted to a tank which does not have a constant flow of all materials. Although Eagle's expert, Mr. Fischer, admitted that perhaps the Simmons patent could control a sand classifying tank he went on to state:

"Well, you would have to have a tank that — I am assuming that the scalping tank has the valve arrangements you were thinking of, electrically operated valves. But, you would have to add, you would also have to be sure that you had a sensing switch in the tank at each station. You would also have to get some timers.

"There is no provision in the Simmons patent for the timers that you would need. The type of timers that you would need. So you would have to get those.

"Then this device, I am sure, someway or other that in time you could make it work. Now, what I mean by that is that you could not make it decide how to operate the tank, but you could make the electrical connections through this device. It would be sort of a ridiculous use of it because there are something like 25 decision units.

"Then, of course, the big thing, the Simmons patent would not tell you, it would not tell you what you wanted to do because the Simmons patent is not related in any way to any scalping tank or any sand classifying tank. It is not related in any way to the timing and the obtaining of two products.

"The Simmons patent, you might just as well say that you could do this with electrical control circuits because that is all really the Simmons patent is, a bunch of electrical circuits. But, there are hundreds of other circuits you could use too. It sheds no light really on the problem." (Emphasis added.)

Finally, the Martin patent was not actually admitted into evidence because McLanahan failed to give Eagle the required notice of its intention to offer it, but testimony concerning it was accepted under Rule 43(c).¹¹  This patent is on a system for separating coal from slag and rock. It does use a sensing device and a valve system to release the coal. Importantly, however, it does not measure cumulative periods of time of discharge as does the Cochran system.

As stated previously, the essential feature of the Cochran invention was that it cumulatively measured the output of sand of different sizes from each of several discharge stations and closed the valves when the predetermined amount had been discharged thereby preventing non-specification build-ups. Because if incorporated a cumulative timing system, it was able to deal with varying inputs into the scalping tank. None of the three patents — Lovette, Simmons and Martin — introduced by McLanahan described a system that suggested or could accomplish this.

The opinion of the District Judge discloses that he considered (1) the scope and content of the prior art and (2) the differences between it and the patent in question substantially in conformity with the foregoing discussion. He analyzed the function of each of the three patents and how they differed in important aspects from the Cochran invention. Specifically, he observed:

"The Saxe and Nielson patents were considered by the Patent Office. The Lovette patent discloses a mixing apparatus for a sand and gravel aggregate plant. However, it lacks timing or other means for the measurement of flow. Likewise, the Simmons pattent does not utilize timing or other means to measure materials flowing at indeterminate intervals. The Martin patent lacks the cumulative timing devices of the Cochran patent. We are not satisfied that either Martin or Simmons, or Lovette constitute part of the prior art of the Cochran patent."

Thus, the District Judge satisfied the first and second criteria established in Graham v. John Deere Co.

As to the third criterion in Graham — the resolution of "the level of ordinary skill in the pertinent art" — McLanahan argues that the District Judge failed to meet that requirement. Thus the question is raised whether the District Judge found non obviousness of the Cochran patent from his own evaluation of the prior art rather than by determining it against the background of the level of ordinary skill in the art as prescribed in section 103.

At the trial McLanahan offered its engineer, Joseph G. Rigby, Jr. as a worker skilled in the art. He testified as to his familiarity with the prior art and the subject patent. He described the manner in which the scalping and sand classifying machines operated before and after the development of the AUTOSPEC and CARDOMATIC systems and to his contribution to the latter. Roy F. Rumbaugh, McLanahan's sales manager, also testified regarding the development of its CARDOMATIC system. Both witnesses were conceded to be skilled in the art.

Similarly, Eagle offered three witnesses — Weldon Arden Thalacker, its sales engineer; Robert B. Keeney, its engineer and Clement B. Cochran, its chief engineer and the inventor, all of whom described the state of the art before and after the Cochran invention. Additionally, expert witnesses for each of the respective parties — Don A. Fischer for Eagle, and Franklyn M. McCorkle for McLanahan¹²  — gave their opinions as to whether a worker skilled in the art would have found the Cochran invention obvious at the time it was conceived. Not unexpectedly, their testimony is in direct conflict.¹³  While no specific statement was adduced from any witness as to the level of skill of the art in 1959, the time of the invention, the general testimony of each witness amply manifested his knowledge of, and familiarity with, the state of the art at the time in question.

In his opinion the District Judge noted the testimony of the various witnesses above mentioned making him aware of the level of skill in the art described by them. It is true that in his opinion he followed a listing of the witnesses with the comment: "None of the witnesses was totally disinterested. The testimony of each party's witnesses supported its interest."¹⁴  This observation merely indicated that the District Judge was weighing the credibility of the witnesses, as was his province, and in no measure can be said to be an outright rejection of all of the testimony regarding the level of skill in the art. It is obvious that the District Judge in fact accredited Eagle's expert, Mr. Fischer, more heavily than McLanahan's expert, Mr. McCorkel.

The testimony to which we have adverted made quite clear the level of skill in the art. Any suggestion that the District Judge ignored it and determined the unobviousness of the Cochran patent solely from his own evaluation of the prior art, is far from convincing in the light of his specific reference to the issue of obviousness and his recital of witnesses in connection therewith. We are persuaded that in determining that the Cochran patent was not obvious he did so with the level of skill in the art as a background.

The thorough and exhaustive opinion of the District Judge demonstrated a comprehensive exposition of all of the issues presented. His particularization of section 103 and his frequent references to the issue of obviousness in his opinion show that he was completely aware of McLanahan's defense based thereon and leave unsubstantiated its charge that he directed his decision to section 102 rather than section 103. Although his reference to Graham's third criterion regarding the level of skill in the art and the necessity for determining obviousness in the prior art against a background of its resolution was sparse, a reading of the entire opinion reinforces the conviction that there was a full compliance with all criteria of Graham.

McLanahan's assertion that it found it a simple matter to duplicate the system is not a conclusive test of obviousness. Even if this suggests that the Cochran patent was simple, the simplicity of an invention is not a necessary bar to a patent.¹⁵  Similarly, that Mr. Cochran used devices already known, such as timers, does not invalidate his invention as long as he put them together in a manner heretofore unknown which was not obvious.¹⁶  The fact remains that Mr. Cochran was the first to develop a system which apparently solved many of the problems plaguing the efficient control of scalping tanks.¹⁷ 

The burden of proving invalidity is a heavy one,¹⁸  and McLanahan, on whom it rested,¹⁹  failed to meet this difficult task. We conclude that the District Judge's decision as to the non-obviousness of the Cochran invention was sufficient in both law and fact.

McLanahan contends that a Certificate of Correction issued to Eagle on March 1, 1966 rendered the patent unenforceable against it for three reasons, viz., that it enlarged the scope of certain of the patent claims; that McLanahan had acquired intervening rights by its sale of equipment incorporating the control system alleged to have infringed Claims 1 and 3 of the Cochran patent 3,160,321, as amended by the Certificate of Correction, more than a year prior to the application for the Certificate, and that the Patent Office was induced to issue it by the exercise of bad faith. The Certificate authorized the deletion of the word "first" from Claims 1 and 3 which McLanahan contends changed the system from a sequential to a simultaneous operation.²⁰  It is argued that prior to the Certificate the claims mentioned provided that the second product valve would not open until the first product valve "timed out." Since the system developed by McLanahan operates simultaneously, it is its position that prior to the issuance of the Certificate McLanahan did not infringe the patent.

The Certificate of Correction was issued pursuant to 35 U.S.C. § 255 which in pertinent part provides:

"Whenever a mistake of a clerical or typographical nature, or of a minor character, which was not the fault of the Patent Office, appears in a patent and a showing has been made that such mistake occurred in good faith, the Commissioner may * * * issue a certificate of correction, if the correction does not involve such changes in the patent as would constitute new matter or would require re-examination. Such patent, together with the certificate, shall have the same effect and operation in law on the trial of actions for causes thereafter arising as if the same had been originally issued in such corrected form."

The statute permits a minor error, when made in good faith, to be corrected. In effect, the correction is given retroactive application in order that intervening rights may not be alleged. It does not constitute a reissuance of the patent and does not authorize a broadening of claims. Where there is a change altering the scope of a patent, 35 U.S.C. § 252, regulating reissued patents, controls and under it intervening rights may be achieved.²¹ 

McLanahan insists that the Certificate of Correction was the equivalent of a reissuance of the Cochran Patent since it did not simply change a minor error but substantially changed the manner in which the system functioned. It asserts that before the Certificate of Correction the Cochran Patent envisioned a two product one waste system which was designed to operate by presetting the second product valve to zero and diverting material to waste until the predetermined amount was discharged at the first product valve. When it "timed out" the second product valve would then operate.

Eagle, on the other hand, urges that McLanahan's interpretation is without foundation because it would require each timer preset at zero to measure a discharge which could not occur because the zero setting would prevent the timer from allowing a discharge. It argues that the zero-setting theory was conceived by McLanahan's taking out of context statements made to the Patent Office by Eagle.²²  Eagle adds that it made no misrepresentation in requesting the Patent Office to permit the correction of its minor error.

Both the Patent Office and the District Judge agreed with Eagle that the deletion of the word "first" in Claims 1 and 3 was a minor correction which only clarified the obviously intended simultaneous operation of the invention.²³  That the Patent Office was aware of the alternative theory offered by McLanahan is apparent from McLanahan's attempt to block the issuance of the Certificate by its letter contesting Eagle's application for the Certificate.²⁴ 

An examination of the record confirms the opinion of the Patent Office and the District Judge that the Certificate of Correction was validly issued. Mr. Fischer's testimony makes it clear that McLanahan's reading of the claims prior to their correction is contrived.²⁵ 

McLanahan vehemently asserts that Mr. Cochran conceded that the uncorrected claims limited the invention to a sequential operation. A review of the cross-examination of Mr. Cochran, however, fails to support so restricted an interpretation of his testimony.²⁶  It is true that he conceded that it is possible to operate the system by presetting one group of timers at zero thereby performing a one product operation and this was in no wise denied by Eagle at any time during the litigation. However, such concession does not derogate from Mr. Cochran's positive testimony that a sequential operation was never intended or from Eagle's position that the advantages of the patent resided in the concept of a simultaneous operation.

Additional support for the argument that the machine was not intended to operate only sequentially is found in the fact that there is an absence of evidence suggesting that Eagle constructed a machine where the second product responds only to the timer of the first product. When the original Claims 1 and 3 are read in conjunction with the remaining claims and specifications, it is clear that it was never intended to describe only an operation in which one set of timers was fixed at zero. The logical reading of the claims as a whole reveals that they describe that which could operate as a single product system but that they also describe that which was primarily designed to function as a simultaneous two product system.

Since it is our conclusion that the District Judge correctly held that the Certificate of Correction did not change the scope of the patent and that it was validly issued pursuant to the statute, McLanahan's contention that it achieved intervening rights and its charge of bad faith on Eagle's part in dealing with the Patent Office in connection with its application for the Certificate of Correction must fall.

For the foregoing reasons the final judgment and order of the United States District Court for the Western District of Pennsylvania of February 27, 1969 adjudicating that the United States Letters Patent No. 3, 160, 321 is valid; that McLanahan infringed Claims 1, 2, 3, 15 and 16; that the Certificate of Correction was validly issued; that Eagle is entitled to a permanent injunction enjoining further infringement, an accounting for past infringement, costs, but not attorney's fees as provided therein, and the denial of McLanahan's counterclaim,²⁷  will be affirmed.

SEITZ, Circuit Judge (dissenting).

The majority adopts the district court's conclusion that the defendant failed to carry its burden of proving the Cochran invention was invalid because it was "obvious." 35 U.S.C. § 103. The essential contribution of the Cochran invention to the existing plan of the water scalping sand classifying tank was the replacement of manually set valves with valves controlled by cumulative electric timers. The Cochran system thus made the tank more capable of producing a uniform final product. However, this result was accomplished by utilizing electric timers, which had long been commercially available, and having them perform functions substantially similar to those which they discharged in other fields. Thus, I believe the district court erred in concluding that the Cochran invention would not have been obvious to one having ordinary skill in the pertinent art at the time the invention was made.