Studiengesellschaft Kohle Mbh, as Trustee for the Max-Planck-Institut Fur Kohlenforschung v. Eastman Kodak Company

Opinion Outline

I. Background

A. The Chemistry Involved

B. The Legal Principles

II. Laches & Estoppel

A. The Legal Background

B. Application to the Facts

III. The ’332 Patent

A. Estoppel

B. Scope of the ’332 Patent

IV. The ’792 Patent

A. Validity

1. Prior Art

2. Other Challenges

B. Infringement

Summary

Studiengesellschaft Kohle mbH (SGK) charged Eastman Kodak Company (Eastman) with infringement of patents obtained by Professor Karl Ziegler covering certain chemical catalysts useful in the polymerization of hydrocarbons. Acting as Trustee for the Max-Planck-Institut fiir Kohlenforschung, the predecessor in interest to the Ziegler patents, SGK accused Eastman of violating U.S. Letters Patent No. 3,113,115 (’115); No. 3,257,332 (’332); No. 3,231,515 (’515); No. 3,392,162 (’162); and No. 3,826,-792 (’792). The alleged infringement took place at Eastman’s Longview, Texas, plant, where Eastman used a special catalyst, known as its “409 catalyst” to produce polypropylene. SGK contends that Eastman’s process and catalyst employ the teachings of the listed patents, resulting in infringement. Although SGK initially sought an injunction against Kodak’s activity, it subsequently sought instead compensation for use by Kodak of SGK’s patented invention.

*1320 The patents cover catalysts and processes for polymerizing certain hydrocarbons. In essence the patents teach that by mixing certain organometal compounds, particularly an organoaluminum compound, with a compound of a metal of Group IVB, VB, or VIB of the Periodic System of Elements, such as a titanium salt, a polymerization catalyst would be produced that polymerized olefins much more effectively than was previously possible. SGK sought a broad reading to the patents and an equally large protection against the unlicensed use of the teachings of the patents.

Eastman’s 409 process employs a catalyst composed of lithium butyl (LiBu), aluminum triethyl (AlEt3), and hydrogen-reduced alpha titanium trichloride (H-6-TiCl3) at a temperature of 160° C. and a pressure of 71 atmospheres to produce polypropylene. SGK contended that this process was directly covered by the patents.

Eastman denied infringement, asserting that it uses additional components not specified in the patents under different conditions to produce a different product. Eastman further asserted that various claims of the patents were invalid because of existing prior art. Finally Eastman argued that SGK’s claims were barred by laches.

Prior to trial SGK sought to remove the ’115 patent from suit, and the claims based upon it were dismissed with prejudice. Following a two-week trial, the District Court allowed the taking and filing of post-trial depositions and the submission of additional exhibits. It subsequently accepted substantial post-trial briefs and heard lengthy oral argument from both sides. At the conclusion of these extensive proceedings, the Court found that Eastman had not infringed the remaining patents, held that certain claims of the ’792 patent were invalid, and concluded, alternatively, that SGK’s claims were barred by laches. Studiengesellschaft Kohle v. Eastman Kodak, 450 F.Supp. 1211 (E.D.Tex.1977).

Although four patents were at issue in the District Court’s opinion, SGK has appealed the trial court’s determination on only the ’332 and ’792 patents. SGK urges on appeal that the District Court erred (1) in finding the action barred by laches, (2) in failing to find infringement of the ’332 and ’792 patents, (3) in finding claims 22 to 32 of the ’792 patent anticipated by prior art, (4) in holding claims of the ’792 patent invalid for failure to comply with various statutory disclosure requirements, (5) in failing to dismiss defendant’s “unclean hands” and “inequitable conduct” defenses as not being properly pleaded and not properly before the Court, and (6) in arbitrarily and summarily ordering SGK to produce numerous documents previously held privileged by the Special Master.

After an extensive examination of the voluminous record, we find that the suit is not barred by laches, and we affirm the decision of the district court as to the infringement and reverse as to the validity issues. We dismiss SGK’s procedural objections as being without merit.

I. BACKGROUND

A. The Chemistry Involved

We must begin with a general discussion of the chemistry underlying the patents at issue. The basic principles of the relevant organic chemistry were described in considerable detail in Ziegler v. Phillips Petroleum Co., 483 F.2d 858 (5th Cir.), cert. denied, 414 U.S. 1079, 94 S.Ct. 597, 38 L.Ed.2d 485 (1973). We review them briefly here.

The simplest hydrocarbon molecule is a compound of one carbon atom and four hydrogen atoms and is commonly known as methane, represented by the chemical symbol CH4. Because the molecule is bonded together exclusively by single pairs of electrons, methane is known as a saturated hydrocarbon. 1 The carbon atom in methane may form single bonds with additional car *1321 bon atoms, forming other saturated hydrocarbons, such as ethane (C2H6), propane (Cs H8), and butane (C4H10). These molecules are called members of a homologous series.

Carbon atoms may also bond to each other in double bonds, producing unsaturated hydrocarbons. The simplest of these is ethylene (C2H4). 2 The addition of other carbon atoms by single bonds produces another homologous series whose members include propylene (C3H6) and butylene (C4H3). This unsaturated series is known as the olefin series or as ethylenically unsaturated hydrocarbons. The double bond connecting the adjacent carbon atoms is known as an unsaturated or olefinic bond. In ethylene the double bond must be at the end, but in higher members of the series the unsaturated bond may appear at other locations within the hydrocarbon chain.. Where the unsaturated bond occurs at the end of the hydrocarbon chain, the compound is called an alpha olefin. 3

The patents in suit claim to teach chemical processes and catalysts which produce synthetic polymers of hydrocarbons. These products are formed by causing hydrocarbon molecules to link together in long chains, called polymers. Thus a synthetic polymer may be produced by causing individual molecules of, say, ethylene to link together into one long chain, called polyethylene. In this case the smaller molecule, ethylene, is called a monomer. Polyethylene is, of course, the polymer. Similar polymers may be produced from other members of the olefin series. The linking of the monomers is termed a polymerization reaction, and the polymerization catalyst is that which causes the monomers to link together to form polymers. A catalyst is defined as a substance which affects the rate or course of a given chemical reaction in some manner without becoming a significant part of the reaction product. Normally, catalysts are used in relatively small amounts as compared with the reactants.

The patents at issue arise from the activities of Dr. Karl Ziegler, who was Director of the Max-Planck-Institut fiir Kohlenforschung. In 1953 Ziegler and three co-workers discovered that several combinations of an organo aluminum compound and a compound of a metal of Groups IVB, VB, or VIB of the Periodic System of Elements produced polymerization catalysts that polymerized ethylene much more effectively than was previously possible. The catalysts caused monomers to combine in a linear fashion, forming straight and not branched chains, without requiring the formation process to include high pressures or excessive temperatures. Although Ziegler experimented with a number of different compounds, the ones most relevant here are aluminum triethyl and a titanium chloride salt, particularly titanium tetrachloride.

The development of these various polymerization catalysts was recognized as a great scientific achievement, and Ziegler and his co-workers were awarded the Nobel Prize for their accomplishment. Following his initial success, Ziegler pursued a policy of actively patenting and licensing his new catalyst. In late 1953, he filed German applications Z3799, Z3862, and Z3882 which are the predecessors to the ’332 patent before us. In 1954 he filed additional German applications, Z4348, Z4375, Z4629. SGK relies in part on these to sustain the ’792 patent.

After his initial discovery, Ziegler continued his experiments with catalysts for a broad range of olefinic polymers. The news of Ziegler’s success with polyethylene prompted vigorous research by scientists around the world, as they and Ziegler *1322 worked on ways to improve the effectiveness of the catalysts and to polymerize higher members of the series. In Italy Professor Giulio Natta was contemporaneously working in polymer research. Using the catalyst Ziegler had developed, Natta succeeded in polymerizing propylene and in characterizing its stereostructure.

Ethylene is symmetrical and reacts readily to form long linear and uniform polymer chains. Propylene, on the other hand, because of the additional methyl group, is asymmetrical and can form different polymer structures — called stereostructures— depending upon the position the methyl group takes. If the methyl groups in a propylene polymer chain are oriented in a non-uniform or random way, the resulting polymer is soft, pliable, tacky, and amorphous; it is called “atactic.” When the methyl groups in the chain are oriented such that they appear repeatedly in the same relative position, the resulting polymer is hard, tough, and highly crystalline. Polypropylene of this “stereoregular” structure is called “isotactic.” A catalyst which polymerizes propylene in such a way that the regular “isotactic” stereostructure is preferentially formed is considered a “stereospecific” catalyst.

Natta further discovered that by using a compound of solid crystalline titanium trichloride in the “alpha” form, he was able to polymerize propylene to a polymer very rich in the highly crystalline “isotactic” structure. Because of his work in polymerizing propylene, Natta shared the Nobel Prize with Ziegler. Natta also pursued an active patenting policy.

Meanwhile, Eastman was at work on its own research, directed to developing catalysts that would make good yields of highly crystalline polypropylene of high molecular weight, in a solution process in which the temperature conditions were above 150° C. in order to dissolve the polymer in a hot solvent carrier. Eastman’s first commercial catalysts, known as its “402” catalysts, used an alkali metal compound, lithium aluminum hydride (LiAlH4), co-reacted with hydrogen-reduced alpha titanium trichloride (H-6-TÍCI3).

Although the 402 catalyst produced the product Eastman desired, Eastman sought a more economical catalyst for the manufacture of the same product. ■ This desire led to the development of the 409 catalyst which is the object of this suit. The 409 catalyst is prepared from the co-reaction of lithium butyl (LiBu), aluminum triethyl (AlEt3), and hydrogen reduced alpha titanium trichloride (H-b-TiCls) in a mol ratio of 0.3 to 0.3 to 1.0. The 409 catalyst received a plant trial on one of Eastman’s three production lines at the Longview plant during the period of April-June 1967. Thereafter, 409 replaced 402 on all production lines.

In April 1974 Eastman entered into a license agreement with Natta’s assignee, wherein Eastman received protection under all of Natta’s basic patents and applications in the polypropylene field.

B. The Legal Principles

The issues before us involve both questions of fact and questions of law. The issue of patent infringement is a question of fact, Ziegler v. Phillips Petroleum Co., 483 F.2d 858, 867 (5th Cir.) cert. denied, 414 U.S. 1079, 94 S.Ct. 597, 38 L.Ed.2d 485 (1973), while the ultimate question of patent validity is one of law, Bird Provision Co. v. Owens Country Sausage, Inc., 568 F.2d 369 (5th Cir. 1978). Even when the ultimate issue is a legal one, the conclusion of law must be based on the results of several factual inquiries. See, e. g., Graham v. John Deere Company of Kansas City, 383 U.S. 1, 17, 86 S.Ct. 684, 693, 15 L.Ed.2d 545 (1966); Control Components, Inc. v. Valtek Inc., 609 F.2d 763, 766 (5th Cir. 1980); Parker v. Motorola, Inc., 524 F.2d 518, 531 (5th Cir. 1975), cert. denied, 425 U.S. 975, 96 S.Ct. 2175, 48 L.Ed.2d 799 (1976).

When the questions involved are factual ones, our review of the District Court’s findings must be limited to the “clearly erroneous” standard of Rule 52(a). If the findings of fact are not clearly erroneous, the only issue on appeal is whether the legal conclusion drawn from those facts is correct. Cathodic Protection Service v. *1323 American Smelting and Refining Co., 594 F.2d 499, 506 (5th Cir. 1979), cert. denied, - U.S. -, 100 S.Ct. 453, 62 L.Ed.2d 378 (1979); Kaspar Wire Works, Inc. v. Leco Engineering & Machinery, Inc., 575 F.2d 530, 543 (5th Cir. 1978). Fred Whitaker Co. v. E. T. Barwick Industries, Inc., 551 F.2d 622, 627 (5th Cir. 1977); Parker v. Motorola, Inc., 524 F.2d 518, 531 (5th Cir. 1975), cert. denied, 425 U.S. 975, 96 S.Ct. 2175, 48 L.Ed.2d.799 (1976); Ziegler v. Phillips Petroleum Co., 483 F.2d at 867.

The Supreme Court has emphasized the deference due the findings of the trial court in complex cases, such as this one “where so much depends upon familiarity with specific scientific problems and principles not usually contained in the general storehouse of knowledge and experience.” Graver Tank & Manufacturing Co. v. Linde Air Products Co., 339 U.S. 605, 610, 70 S.Ct. 854, 857, 94 L.Ed. 1097 (1950). We have likewise noted that patent cases, because they so frequently contain conflicts in expert testimony, seem particularly suited for Rule 52(a)’s review limitations. Kaspar Wire Works, Inc. v. Leco Engineering & Machinery Inc., 575 F.2d at 543; Bird Provision Co. v. Owens Country Sausage, Inc., 568 F.2d at 372.

SGK seems to urge that we adopt a more rigorous standard of review because the trial judge “wholly failed to grasp the technology involved or the legal standards set forth in this Court’s earlier decision [in Phillips].” Brief at 3. Pointing to some of the judge’s remarks during the trial, SGK apparently contends that the judge had absolutely no understanding of the factual matters before him. This prompts SGK to assert that “this is one of those unfortunate cases where there was no ‘understanding analysis of the evidence’ or reasoned application of the law to the facts.” Brief at 5. SGK then urges that we apply the principles of Phillips to the evidence in the case before us.

We decline SGK’s invitation to consider the evidence de novo. The district judge’s decision did not come immediately upon the completion of the trial or without further help from counsel in understanding the evidence and the applicable law. Rather, the judge requested extensive post-trial briefs and summaries of the evidence, heard lengthy oral argument from both sides, and took the case under advisement for five months before issuing a lengthy and detailed opinion. Indeed, the final judgment came almost one year after the conclusion of the trial.

SGK also seems to question the trial court’s understanding because of the court’s heavy reliance upon the proposed findings Eastman submitted to the court. We note first that the District Court did not adopt Eastman’s findings verbatim. There was considerable reworking of Eastman’s proposed findings; some were omitted, while others were rearranged, reworded, or otherwise revised. These revisions indicate that the Court was working through the analysis on its own, but finding itself in agreement with Eastman’s position. There is absolutely nothing improper with this.

Second, we note that even if the Court had adopted Eastman’s proposed findings verbatim, that would not have been sufficient grounds for causing us to engage in a de novo review of the evidence. The clearly erroneous test applies whether the court drafts its own findings of fact or adopts the findings submitted by a party. Kaspar Wire Works, Inc. v. Leco Engineering & Machinery Co., 575 F.2d at 543; Fred Whitaker Co. v. E. T. Barwick Industries, Inc., 551 F.2d at 627 n. 12; Keystone Plastics, Inc. v. C & P Plastics, Inc., 506 F.2d 960, 962-63 (5th Cir. 1975); see also United States v. El Paso Natural Gas Co., 376 U.S. 651, 657, 84 S.Ct. 1044, 1047, 12 L.Ed.2d 12 (1964); Florida Board of Trustees of Internal Improvement Trust Fund v. Charley Toppino & Sons, Inc., 514 F.2d 700, 703 (5th Cir. 1975).

In view of the foregoing circumstances and case-law, we believe that the District Court performed its function adequately in its consideration of the evidence.

As we noted earlier, however, not all the issues in this case are purely factual. In determining whether a patent has been *1324 infringed, it is necessary for the court to construe the patent. The construction of a patent is a matter of law, and appellate courts are not bound by the limitations of Rule 52(a) when examining the District Court’s construction of the patent. Fred Whitaker Co. v. E. T. Barwick Industries, Inc., 551 F.2d at 629 n. 19; Ziegler v. Phillips Petroleum Co., 483 F.2d at 867; Harrington Manufacturing Co., Inc. v. White, 475 F.2d 788, 796 (5th Cir.) cert. denied, 414 U.S. 1040, 94 S.Ct. 542, 38 L.Ed.2d 331 (1973). Of course, factual findings may be employed in arriving at the patent’s proper construction.

After the court has articulated the scope of the patent by construing it, the court must then explore the infringement issues. In doing so, it may use two analytical techniques, literal infringement and the doctrine of equivalents. As the Supreme Court stated in Graver Tank & Manufacturing Co., Inc. v. Linde Air Products, 339 U.S. at 607, 70 S.Ct. at 855, “In determining whether an accused device or composition infringes a valid patent, resort must be had in the first instance to the words of the claim. If accused matter falls clearly within the claim, infringement is made out and that is the end of it.” See also Ziegler v. Phillips Petroleum Co., 483 F.2d at 868; Williams Bit & Tool Co. v. Christensen Diamond Products Co., 399 F.2d 628 (5th Cir. 1968). In considering literal infringement, the patent’s claims must be read in connection with patent’s specification and its file history, and the claims of patent cannot be given a construction broader than the teachings expressed in the patent. Marvin Glass & Associates v. Sears, Roebuck & Co., 448 F.2d 60, 62 (5th Cir. 1971); Kemart Corp. v. Printing Arts Research Laboratories, 201 F.2d 624 (9th Cir. 1953).

As we noted in Phillips, however, minor modifications in a patented invention are sufficient to put the item beyond the scope of literal infringement. In recognition of this fact, courts have developed the doctrine of equivalents to protect patentees from inventions that perform substantially the same function substantially the same way to obtain substantially the same result. Gaddis v. Calgon Corp., 506 F.2d 880, 887 (5th Cir. 1975); Ziegler v. Phillips Petroleum Co., 483 F.2d at 868; Phillips Petroleum Co. v. Sid Richardson Carbon & Gas Co., 416 F.2d 10, 11 (5th Cir. 1969); Texsteam Corp. v. Blanchard, 352 F.2d 983, 986 (5th Cir. 1965), cert. denied, 387 U.S. 936, 87 S.Ct. 2064, 18 L.Ed.2d 1000 (1967); Up-right Inc. v. Safway Products, Inc., 315 F.2d 23, 27 (5th Cir. 1963); Stewart- Warner Corp. v. Lone Star Gas Co., 195 F.2d 645, 648 (5th Cir. 1952).

Several factors guide the analysis of an infringement claim under the doctrine of equivalents. As the Supreme Court has observed, what constitutes equivalency “must be determined against the context of the patent, the prior art, and the particular circumstances of the case.” Graver Tank & Manufacturing Co., Inc. v. Linde Air Products, 339 U.S. at 609, 70 S.Ct. at 856. In examining the context of the patent itself, the patent claims must be construed in the light of the description and the real invention disclosed in the patent’s specifications and examples. The specific facets of the invention described in the patent are guides to objects covered by the patent, but they are not necessarily the exclusive description of the invention. See Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, 419, 28 S.Ct. 748, 751, 52 L.Ed. 1122 (1908); Ziegler v. Phillips Petroleum Co., 483 F.2d at 869 and cases cited therein. The nature of the invention itself affects the range of equivalents. A “pioneer” patent, which covers a function never performed before, receives a much broader protection than a patent which merely makes minor improvements upon existing technology. See cases cited in Ziegler v. Phillips Petroleum Co., 483 F.2d at 869-70. At the same time, the range of equivalents is limited by the patentee’s surrender or amendment of claims in response to demands of the patent examiner, so-called “file wrapper estoppel.” Ziegler v. Phillips Petroleum Co., 483 F.2d at 870; Williams Bit & Tool Co. v. Christensen Diamond Products Co., 399 F.2d at 633-34.

*1325 II. LACHES AND ESTOPPEL

A. The Legal Background

Eastman contends, and the District Court held, that SGK’s claims are barred by the equitable doctrines of laches and estoppel. Although this Circuit has had before it a multitude of patent cases, it appears that we have directly addressed these issues only once in the context of a patent, Shaffer v. Rector Well Equipment Co., 155 F.2d 344 (5th Cir. 1946). Consequently, we will look to the teachings of other circuits for additional guidance in this area.

At the outset we note that the only statute of limitations involving patent infringement suits merely limits the period of recovery of damages to six years. It does not expressly limit the patentee’s right to maintain an action. 35 U.S.C. § 286. 4 TWM Manufacturing Co., Inc. v. Dura Corp., 592 F.2d 346, 348 (6th Cir. 1979).

Laches and estoppel are equitable defenses whose appropriateness must be determined in each case under its particular factual situation. Advanced Hydraulics, Inc. v. Otis Elevator Co., 525 F.2d 477, 479 (7th Cir.) cert. denied, 423 U.S. 869, 96 S.Ct. 132, 46 L.Ed.2d 99 (1975); Potash Co. of America v. International Minerals & Chemical Corp., 213 F.2d 153, 155 (10th Cir. 1954); Shaffer v. Rector Well Equipment Co., 155 F.2d at 345. Whether the plaintiff should be barred by laches or estoppel is to be determined by the trial judge in the exercise of judicial discretion, and his findings will be reversed only if they are clearly erroneous. Baker Manufacturing Co. v. Whitewater Manufacturing Co., 430 F.2d 1008, 1009 (7th Cir. 1970) cert. denied, 401 U.S. 956, 91 S.Ct. 978, 28 L.Ed.2d 240 (1971); General Electric Co. v. Sciaky Brothers, Inc., 304 F.2d 724, 727 (6th Cir. 1962); Potash Co. of America v. International Minerals & Chemical Corp., 213 F.2d at 155.

Although laches and estoppel are related concepts, there is a clear distinction between the two. TWM Manufacturing Co., Inc. v. Dura Corp., 592 F.2d at 349-50; Advanced Hydraulics, Inc. v. Otis Elevator Co., 525 F.2d at 479; Continental Coatings Corp. v. Metco, Inc., 464 F.2d 1375, 1379 (7th Cir. 1972). The defense of laches may be invoked where the plaintiff has unreasonably and inexcusably delayed in prosecuting its rights and where that delay has resulted in material prejudice to the defendant. The effect of laches is merely to withhold damages for infringement which occurred prior to the filing of the suit. Advanced Hydraulics, Inc. v. Otis Elevator, 525 F.2d at 479; American Home Products Corp. v. Lockwood Manufacturing Co., 483 F.2d 1120, 1122 (6th Cir. 1973), cert. denied, 414 U.S. 1158, 94 S.Ct. 917, 39 L.Ed.2d 110 (1974); Shaffer v. Rector Well Equipment Co., 155 F.2d at 345.

Estoppel, on the other hand, “arises only when one has so acted as to mislead another and the one thus misled has relied upon the action of the inducing party to his prejudice.” Lebold v. Inland Steel Co., 125 F.2d 369, 375 (7th Cir. 1941); see also Advanced Hydraulics, Inc. v. Otis Elevator Co., 525 F.2d at 479; Armstrong v. Motorola, Inc., 374 F.2d 764 (7th Cir. 1967). Estoppel forecloses the patentee from enforcing his patent prospectively through an injunction or through damages for continuing infringement. Advanced Hydraulics, Inc. v. Otis Elevator Co., 525 F.2d at 479; Continental Coatings Corp. v. Metco, Inc., 464 F.2d at 1379; George J. Meyer Manufacturing Co. v. Miller Manufacturing Co., 24 F.2d 505, 507 (7th Cir. 1928).

*1326 In considering whether plaintiff’s delay in litigating his claim makes him guilty of laches, courts use the six-year statutory period for damages as a frame of reference, TWM Manufacturing Co., Inc. v. Dura Corp., 592 F.2d at 348; General Electric Co. v. Sciaky Brothers, Inc., 304 F.2d at 727; Whitman v. Walt Disney Productions, Inc., 263 F.2d 229, 231 (9th Cir. 1958); but laches may also bar a suit brought within the period specified by the corresponding statute of limitations. Whitman v. Walt Disney Productions, Inc., 263 F.2d at 232.

Mere delay in bringing suit is not, of itself, sufficient to constitute laches in a patent infringement action. MaloneyCrawford Tank Corp. v. Rocky Mountain Natural Gas Co., Inc., 494 F.2d 401, 403 (10th Cir. 1974); Jenn-Air Corp. v. Penn Ventilator Co., 464 F.2d 48, 50 (3rd Cir. 1972). Instead, two elements must be established: (1) that the delay was unreasonable or inexcusable; (2) that the defendant has suffered injury or prejudice as a result of the delay. Advanced Hydraulics, Inc. v. Otis Elevator Company, 525 F.2d at 479; Maloney-Crawford Tank Corp. v. Rocky Mountain Natural Gas Co., Inc., 494 F.2d at 403; American Home Products Corp. v. Lockwood Manufacturing Co., 483 F.2d at 1122; Jenn-Air Corp. v. Penn Ventilator Co., 464 F.2d at 50; Potash Co. of America v. International Minerals & Chemical Corp., 213 F.2d at 154; Shaffer v. Rector Well Equipment Co., 155 F.2d at 345;