Becton, Dickinson and Company, Plaintiff-appellant-cross Appellee, v. Sherwood Medical Industries Inc., Defendant-appellee-cross Appellant, 516 F.2d 514 (5th Cir. 1975)

In the midst of today's turbulent world, we have before us two prominent medical supply firms Becton, Dickinson and Company (B-D) and Sherwood Medical Industries, Inc. (Sherwood) controverting who has the right to manufacture and sell the most efficient system of blood letting. Shortly after World War II, B-D patented a device, the Vacutainer, which partially solved the problem of taking multiple blood¹  samples without risking blood coagulation, or having to puncture the body walls more than once.²  Recently, both B-D and Sherwood marketed devices advertised as solving the last piece of the problem. On appeal, B-D hopes to preserve the patent-monopoly recently lost by the combination of its Vacutainer patent's expiration and the rulings below that (i) its latest devices are not validly patented, and (ii) even if they are, Sherwood's device does not infringe those patents. After carefully reviewing the record, we find ourselves in agreement with the District Court's result, except insofar as it found B-D chargeable with conduct amounting to fraud on the Patent Office.³  The uphsot is that Russo-Halligan, No. 3,494,352, and Nehring, No. 3,469,572, are held to be invalid.

The essential feature of B-D's Vacutainer system is the receptacle which holds the collecting tube. Each collecting tube⁴  is partially evacuated, and sealed with a rubber-like stopper. A double needle-ended cannula⁵  is affixed in, and passes through the end of the holder which is slightly bigger than the collecting tube. Thus, the holder serves as a guide, so one end of the needle can penetrate the patient's blood vein, while the other penetrates the rubber stopper of the tube. The combination of the patient's blood pressure and the tube's partial vacuum causes blood to be drawn into the sampler tube. The collecting tube's stopper is self-sealing so that, when the tube is withdrawn from the holder, no blood is lost from it.

A second sample can be obtained by inserting a second collecting tube in the holder until its stopper is fully penetrated by the "rear" end of the cannula. A second body-penetration is avoided.

Of course, the flaw in the operation was long known the patient's blood pressure causes the blood to spill from the cannula while no collecting container is attached. While no serious physical consequences are likely to result from the loss of blood, the significantly detrimental psychological effects are obvious. A number of means for preventing spillage were tried. These need not be related in detail, except to say they proved unsatisfactory either because (i) too costly, (ii) too unreliable, (iii) to awkward for use by relatively unskilled technicians, or (iv) too complex for one person to operate.

All three devices involved in this suit avoid those objections. All three incorporate valve means which are "automatic" in the sense the blood flow is stemmed by the operator's removing the collecting tube from the rear needle further manipulation is not required. Further, the construction of each is inexpensive enough to permit their being discarded after one use. B-D holds patents on two of these, Russo-Halligan⁶  and Nehring⁷  devices. Sherwood manufactures and sells the third, the "M-214", which is not patented.

Thus, the state is set for the classical patent-battle: B-D sues Sherwood for infringing its patents, Sherwood (i) denies, asserting that both patents are invalid (for a multitude of different reasons) or not infringed, and (ii) counterclaims for attorneys' fees⁸  and antitrust⁹  treble damages.¹⁰ 

Too Many Cooks

Russo-Halligan Falls

Patent-monopoly protection is designed to reward the creativeness deemed by the Founding Fathers to be of value to the Republic, U.S.Const. art. I, § 8, cl. 8. As a corollary, the rule is patent protection may not issue in favor of persons not responsible for the creation of advances otherwise qualifying for the specified protection. Iowa State University Research Foundation v. Sperry Rand Corp., 1971, 4 Cir., 444 F.2d 406; 35 U.S.C.A. §§ 102(f), 256. B-D conceded on oral argument that the Russo-Halligan patent cannot be sustained if the District Court was correct in sustaining Sherwood's contention that half the team (namely Russo) did not participate in conceiving the invention.

Before we resolve that question, we turn to B-D's argument it is entitled, because of the issued patent, to a presumption of joint inventorship which may only be overcome by a quantum of evidence greater (though we are not told how much greater) than a mere preponderance of the evidence. We think it is clear B-D is entitled to a presumption of joint inventorship, as a part of the general presumption of the patent's validity as a whole. Simply introducing the patent establishes a prima facie case in favor of B-D.

We decline to pass on the accuracy of B-D's contention beyond that, however, because we think the evidence before the Trial Court was such that it was entitled to reach its conclusion upon any standard B-D could be taken as asserting.¹¹  Briefly, the Court had three evidentiary touchstones for its conclusion. First, depositions of both Russo and Halligan in which each explained the project's development. Second, a free-hand drawing¹²  Halligan made in 1964 about a year before Russo was employed by B-D, and explained in Halligan's deposition. Third, the technological background and experience of each as reflected in these depositions.

It is apparent from examining Halligan's drawing and the portion of his deposition explaining it, that the essential mechanical means had been conceived when the drawing was made. His deposition shows that his experience with blood sampling devices was substantial that he was familiar with the problem that had to be overcome, acquainted with earlier efforts to overcome it, and most important, regularly concerned with doing so. On the other hand, Russo's involvement was limited to depicting Halligan's idea. His background includes a Bachelor of Arts Degree in Industrial Design from the Rhode Island School of Design and pre-B-D experience limited primarily to toy design. Though both men were asked to identify specific contributions made by either one to the sampler's development beyond those shown by the drawing to be already extant neither was able to do so. In short, viewing all these things together, we are left with the firm and definite impression that the Trial Court had ample basis, for concluding as a fact that Halligan invented the device both he and Russo patented.¹³ 

Adam(s) Started It All

Nehring Falls

The Sherwood M-214 needle is nearly identical to the Nehring device.¹⁴  Therefore, it is necessary to analyze Sherwood's contention that because of the prior art reflected by earlier patents that one skilled in constructing blood sampling devices could, with the exercise of merely mechanical skills, have constructed the Nehring device.

In particular, Sherwood cites Adams, No. 2,847,995.¹⁵  Responding, B-D argues (i) Adams (a B-D employee) never intended the sleeve device to do anything but protect the sterility of a needle to be used in transfusion, (ii) Adams depended on internal corrugations for resiliency corrugations containing air and, therefore, presenting the danger of air embolism in the context of blood sampling (as opposed to transfusion) and (iii) it could not be obvious to use the Adams device in the Vacutainer system, because no one ever did.

The resolution of these arguments requires examination of what is "obvious". It is probably safe to say the difference between obvious and non-obvious advances is whether "creative", as opposed to "mechanical", skills were required to make them. But we have found from reading cases cited in the briefs and from our independent research this proposition is often really just a statement of the problem, not a reason why.

We suspect the immense difficulty stems from a combination of two sources, (i) the two concepts are not really mutually exclusive a skilled mechanic can be creative and a creation can be mechanical and (ii) those ultimately called upon to make the decision, Judges such as ourselves, are almost never "skilled in the art" and must rely on expert testimony which, as in this case, is often conflicting as to what is "obvious" and what is not.

The District Court concluded¹⁶  Nehring would be obvious, in the light of Adams to anyone skilled in the art. After comparing the two devices¹⁷  and examining the relevant testimony, we are satisfied there is no error in the District Court's conclusion, whether assayed as a matter of law, Samuelson v. Bethlehem Steel Co., 5 Cir., 1963,323 F.2d 944, cert. denied, 1964, 376 U.S. 938, 84 S. Ct. 793, 11 L. Ed. 2d 659, of fact, or law and fact, Gaddis v. Calgon Corp., 5 Cir., 1975, 506 F.2d 880.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Given the Adams "sheath" we are satisfied the Nehring and M-214 concept was before the relevant world. A less cumbersome sheath than that shown in Adams was certainly desirable, but the advance which resulted in one's being available is largely creditable to the Shell Chemical Company which developed a material both naturally resilient and self-sealing. With that material available Sherwood began to manufacture the M-214. Before too long B-D also abandoned the Nehring side port design in favor of one similar to the M-214.

In short, we agree with the District Court that once Adams disclosed the sheath and the proposition it had potential utility as a retractable sealant,¹⁸  the creative process was essentially complete. Later material advances permitted improvement, but material substitution is a non-patentable, mechanical operation. To B-D's contentions that (i) there is "creation" just in substituting the Adams transfusion sheath into a sampling device, and (ii) the delay between the Adams and Nehring patents refute Sherwood's argument the first made the second "obvious", the record shows that employees of both companies did conceive remarkably similar devices¹⁹  before Nehring developed his. In Any event, we do not find B-D's arguments sufficiently persuasive.

Nehring being invalid we need not assay the District Court's holding of non-infringement by M-214.

Unfair Dealing with the Patent Office

Although during oral argument, Sherwood expressly disclaimed any assertion B-D engaged in intentional fraud before the Patent Office, it argues strenuously that B-D engaged in "other inequitable conduct" having the effect of voiding ab initio any protection here asserted under either Russo-Halligan or Nehring. Because of our holdings on the patent validity issues, it is only necessary to consider this point insofar as it bears on the contention that B-D commits an antitrust violation by bringing this (or any) suit on those patents.

Precision Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co., 1945, 324 U.S. 806, 65 S. Ct. 993, 89 L. Ed. 1381, which states the policy behind Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 1965, 382 U.S. 172, 86 S. Ct. 347, 15 L. Ed. 2d 247, appears to admit of this possibility,²⁰  but it is the rule in this Circuit that an antitrust action may be made out only upon showing the patentee intentionally defrauded the Patent Office. Beckman Instruments, Inc. v. Chemtronics, Inc., 5 Cir., 1970, 428 F.2d 555, cert. denied, 1970, 400 U.S. 956, 91 S. Ct. 353, 27 L. Ed. 2d 264.

But counsels responsible unwillingness to charge fraud or the trial court's failure to use such a conclusory term or its equivalent synonyms does not necessarily end the matter.

Four Oaths Fair Or Foul?

Sherwood did assert "Four False Oaths" in connection with the Russo-Halligan application. First, Russo's oath he was the sole inventor, made when the application was originally filed. Second, Russo and Halligan's joint oath in a Verified Statement of Facts supporting conversion from a sole to a joint application, that the sole application resulted from Russo's erroneously informing the patent attorneys he was the sole inventor. (See note 6). Third, the joint oath, in a Supplemental Verified Statement of Facts that Halligan's contribution was first discovered March 15, 1968. Fourth, the joint oath that Russo and Halligan were co-inventors.

Obviously on our holding of non-inventorship by Russo, the First and Fourth Oaths turn out to be erroneous. To establish that, however, is a long way from finding fraud or equivalent bad conduct by whatever milder name called. Indeed in patent prosecution this can be a fairly routine course of events witness the efficient procedure for amending inventorship authorized by 35 U.S.C.A. § 116 and implemented by Rule 45 of the Patent Office. It was not until long after the issuance of the patents that it was finally determined that Halligan was the sole inventor and, therefore, the application could not have been properly amended by any procedure. And this came about only after the penetrating pretrial discovery so indigenous to patent cases at the hands of advocates having "the antlike persistence of (patent) solicitors", Lyon v. Boh, S.D.N.Y., 1924, 1 F.2d 48, 50.

One who seeks an antitrust remedy for wrongful assertion of a void patent carries a heavy burden of proof, United States v. American Bell Telephone Co., 1897, 167 U.S. 224, 17 S. Ct. 809, 42 L. Ed. 144; Edward Valves, Inc. v. Cameron Iron Works, Inc., 5 Cir., 286 F.2d 933, cert. denied, 1961, 368 U.S. 833, 82 S. Ct. 55, 7 L. Ed. 2d 34. See, Tresansky, Inventorship Determination, 56 J.Pat.Off.Soc. 551 (1974). Compare William R. Thropp & Sons Co. v. DeLaski & Thropp Circular Woven Tire Co., 3 Cir., 1915,226 F. 941, with Agawam Co. v. Gordan, 1869, 7 Wall. 583, 74 U.S. 583,19 L. Ed. 177. And even after the Trial Court's finding the last bell was not rung until our deliverance which, despite its awesome finality, came only after careful weighing of the appealing arguments pro and con before us.²¹ 

Sherwood has not carried that burden as to Oath First and Fourth.

The Second Oath²²  was the statement that Russo, (1) due to his lack of knowledge of patent laws, and with no intent to deceive, (2) "informed his attorneys prior to the patent application preparation that the invention was his sole invention . . ." and that (3) this was discovered for the first time in a developmental meeting.

With the full file wrapper available for public use on the issuance of the patent, pretrial discovery in the patent suit naturally led to Russo. On his deposition he stated in effect that he had not told the patent attorneys that he was the sole inventor. However, the record does reveal without substantial contradiction that Russo put together, wrote and submitted in his name the papers submitted to the patent attorney which precipitated the drafting of the initial patent application.

Here again, much as with Oath First and Fourth, considering the heavy burden²³  on avoidance for misconduct, there is a vast difference between that which is false and that which is incorrect even positively incorrect or inaccurate. The verified statement was obviously prepared by experienced solicitors whose professional life depends on continued integrity in the eyes of the corps of patent examiners and those in the hierarchical review above them. There is nothing in this record which would have permitted the Trial Judge to conclude that this was a conscious misstatement by them for the patentees, or, more important, on the part of the then joint patentees or, equally important, on the part of responsible executives of B-D, who was shown to be the assignee.

Oath Third appears to present more difficulties but this disappears when considered with the absence of any showning of known, deliberate, conscious misstatement as in the case of Oath Second. This came about in view of the generalized statement (see Oath Second, part (3), above) that the joint inventorship was discovered for the first time at a developmental meeting. Under Rule 45(c) of the Patent Office, an application to include joint inventors must be made with diligence. Since no time was revealed in the initial supplemental statement, the Patent Office called for a specific showing.²⁴  In response to this the Second Supplemental Statement was filed on November 21, 1968 which specified that "it was discovered for the first time during developmental meetings on Friday March 15, 1968."

Well, as often the case as discovery reproves its necessity over the old time sporting system, this also turned out to be wrong. The deposition of Halligan revealed that in about August 1967 he learned that an application had been filed in Russo's name alone. In perhaps the understatement of the year Halligan's reaction was described as "totally annoyed". A B-D executive, Vice-President George Keller,²⁵  assured him that corrective action would be taken. Then followed the initial supplemental statement of May 29, 1968.

As with Oath Second, there is no indication by examination or probing into the minds of Russo or Halligan or any other responsible person in B-D that there was any conscious misrepresentation of a significant fact. Falsity for these purposes and under the prevailing burden²⁶  calls for more than inaccuracy, or, say in the cases of Russo and Halligan the subscribing affiants, imputed knowledge that in the exercise of prudence they ought to have known that what was stated was wrong.

We do not assay the merits of the diligence issue and recognize that in the race for priority stop watch precision may frequently be decisive not only on rights of others at home and abroad and in the administrative processing of patents within the impenetrable bowels of the patent office whose walls and personnel guard more secrets than, say, the vaunted CIA.²⁷ 

But unlike Beckman in which we exact high standards of moral conduct in treating with the Patent Office, there is no showing that these factors led B-D or its responsible solicitors to a conscious effort to state March 1968 rather than, as subsequently learned, August 1967 as the date against which diligence not actual joint inventorship was the only issue at stake.

The determination turns on these facts, not the characterization put on them by Joseph Schimmel, ironically referred to as a "fraud expert" notwithstanding his eminent qualifications which we would be the last to disparage, but whose "expert testimony" takes us to the brink yea even in a patent case which for added measure threw in the several times taken deposition of Examiner Majestic.Art Thou Citing Prior Art?

Our analysis of B-D's alleged failure to disclose the most pertinent prior art to the Patent Office is similar. This failure is asserted in connection with both Russo-Halligan and Nehring, and the failure to cite Adams²⁸  and some discarded material²⁹  in its glacial progress through the Patent Office.

Fair dealing, which is back of Beckman, is not a mechanical mandate that every patent ultimately cited by the Examiner in issuing the patent or, more so, by the unlimited industry or counsel in a years-later infringement suit in which every writing, periodical, or patent, foreign or domestic, is dredged up as prior art, must be cited in the application. It is again a matter of judgment in the light of accepted practices by and with the Patent Office in using good, not bad, faith in citing art thought to be of sufficient relevance.

The failure to cite these items of prior art does not rise to the level of unfair, bad faith dealing.³⁰ 

What we hold puts an end to the antitrust claim against B-D.³¹  With it goes the "extraordinary" factor so that the allowance of attorneys' fees is reversed.

As to the remainder of the case, however, we affirm the District Court's judgment that both patents in this suit are invalid because (i) Russo was improperly joined as an inventor in Patent No. 3,494,352, and (ii) Nehring's Patent No. 3,469,572 would have been obvious to one skilled in the art.

Affirmed in part; reversed in part.