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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 9, 1995
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Honeywell Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-971 41-0415010
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
Honeywell Plaza
Minneapolis, Minnesota 55408
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (612) 951-1000
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS.
On January 9, 1995, Judge Mariana R. Pfaelzer of the U.S. District
Court in Los Angeles issued a Memorandum of Decision dated January 4, 1995,
reversing a $1.2 billion jury verdict rendered against the Registrant on August
31, 1993, in the previously reported patent infringement lawsuit brought against
the Registrant by Litton Systems, Inc. In her decision, Judge Pfaelzer found
that Litton's patent was unenforceable because it was obtained by inequitable
conduct, and invalid because it was an invention that would have been obvious
from combining existing processes. The trial for the antitrust claims of Litton
and the Registrant is scheduled to commence in November, 1995.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits
(99)(i) Memorandum of Decision dated
January 4, 1995 in the matter
of Litton Systems, Inc. v.
Honeywell Inc.
(99)(ii) Press release dated January 9, 1995
issued by the Registrant regarding
the aforementioned Memorandum
of Decision
Page 2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HONEYWELL INC.
By:/s/ William M. Hjerpe
------------------------------
William M. Hjerpe
Vice President and
Chief Financial Officer
Date: January 16, 1995
Page 3
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EXHIBIT INDEX
Page
Exhibit Number
- ------- ------
(99)(i) Memorandum of Decision dated
January 4, 1995 in the matter
of Litton Systems, Inc. v.
Honeywell Inc.
(99)(ii) Press release dated January 9, 1995
issued by the Registrant regarding
the aforementioned Memorandum
of Decision
Page 4
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EXHIBIT 99(i)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
LITTON SYSTEMS, INC. )
)
Plaintiff, ) CASE NOS. CV 90-93 MRP
) CV 90-4823 MRP
v. )
)
HONEYWELL INC., a Delaware ) MEMORANDUM OF DECISION
corporation, )
)
Defendant. )
)
- -----------------------------------
Litton Systems, Inc. ("Litton") sued Honeywell Inc. ("Honeywell") for
Honeywell's infringement of Litton's reissue patent number 32,849 ("the '849
reissue") which claims a method for fabricating multi-layer optical films.
After trial of the issues of validity and infringement, the jury found the
patent to be both valid and infringed and awarded Litton $1.2 billion in
damages.(1) The issue of Litton's inequitable conduct with respect to the '849
reissue was tried to the Court at the conclusion of the evidence on the issues
tried to the
____________________
1 The jury also found for Litton on its claims for intentional
interference with contractual relations and intentional interference with
prospective economic advantage and assessed the damages on each of those claims
at $1.2 billion.
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jury, and then submitted for decision. Following the jury's verdict, Honeywell
moved for judgment as a matter of law on all issues and for a new trial.
I.
FACTS
A. DEVELOPMENT OF THE CLAIMED INVENTION
Litton and Honeywell are the primary manufacturers of inertial navigation
systems for commercial aircraft in the United States. In recent years, one of
the key components of those systems has been the ring laser gyroscope--a device
which uses a laser to detect inertial rotation. A ring laser gyroscope operates
by directing two laser beams from the same point, one clockwise and the other
counterclockwise around a cavity by means of a series of mirrors. The device is
equipped with a photo-detector which monitors the behavior of the beams.
Because the beams start from the same location and travel at the same velocity,
if the device is not rotating through inertial space, the beams will be
reflected around the ring(2) to the starting point at exactly the same time.
However, if the device is rotating in inertial space, one of the light beams
reaches the photodetector earlier than the other. The difference in arrival
time of the two beams can be measured as a change in frequency and, in turn,
provides a precise measurement of the rotation of the device. From this
measurement, combined with the measurement of an accelerometer, a navigation
system can be designed to plot the motion of an aircraft. By using gyroscopes
coupled with accelerometers on
____________________
2 Although the word "ring" may imply that the cavity within which the
beams travel is circular, Honeywell's ring laser gyroscopes direct the beams
around a triangular cavity and Litton's around a rectangular cavity.
2
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three separate axes, a navigation system can determine the exact location and
heading of the aircraft on which it is placed.
The functioning of a ring laser gyroscope is essentially dependent upon the
quality of the mirrors used to direct the laser beams. To function in a ring
laser gyroscope, a mirror must be approximately 99.99% reflective. In
comparison, an ordinary bathroom mirror is only about 90% reflective.
These highly reflective mirrors are manufactured by depositing thin films
of alternating layers of high and low index of refraction material on a
substrate. Each layer has a thickness of approximately one quarter of a wave
length of the light desired to be reflected ("quarter wave layers").
Accordingly, very thin layers, in the range of about one hundred atoms thick,
are required for the mirror to function properly. The parties do not dispute
that this alternating high and low refractivity quarter wave stack construction
was well known in the optical art before the date of the filing of the
application for the original patent ("the '958 patent"). The '849 reissue
itself notes that quarter wave stacks and their design are explained in detail
in the Military Standardization Handbook entitled "Optical Design," which was
published in 1962.
During the early 1970s, the standard method for constructing high-quality
mirrors was by electron beam evaporation deposition. Electron beam evaporation
deposition operates by aiming a beam of electrons at a target material in a
vacuum chamber which causes the target material to heat until it evaporates.
Some of the evaporated material then collects in a layer on the substrate. By
alternating targets with a high and low index of refraction, a mirror can be
3
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created on the substrate. Electron beam evaporation deposition is a thermal
process which takes place at very high temperatures.
The electron beam method produces a mirror, but the method generally has
some disadvantages. The high temperature required for the process to be
performed can lead to crystallization and can also cause micro-explosions when
the electrons hit impurities or air pockets in the target material, thus
transferring impurities to the substrate. Likewise, the electron evaporation
technique tends to leave voids between the molecules of the mirror material
deposited on the substrate. Also, electron beam evaporation deposition is not
an atom-by-atom process and globs of target material can therefore be
transferred from the target to the substrate resulting in surface roughness.
Such voids, impurities, crystallization and surface roughness can result in
two problems with the operation of the ring laser gyroscope. First, the mirror
can become absorptive of the laser light causing decreased beam intensity within
the gyroscope. Second, impurities and surface roughness can increase a
phenomenon known as "back-scatter" in which the beam is not reflected perfectly
by the mirror and a portion of the beam turns backwards and combines with the
other beam, thereby altering the readings of the measurement device attached to
the gyroscope. Therefore, the more amorphous(3) a mirror layer is and the fewer
impurities it contains the better it will function as a ring laser gyroscope
mirror.
There is no dispute that the problems with electron beam evaporation
deposition were well known in the coating art in the early
____________________
3 In this context, an amorphous coating is a coating in which only very
small crystals, (less than 150 angstroms) are present.
4
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1970s. Likewise, there is no dispute that it was well known that a more
amorphous, less crystalline film, with less surface roughness or impurities
would produce a better laser mirror. For example, Thomas Hutchings
("Hutchings"), the head of Litton's mirror program, testified at his deposition
that it was obvious to him in 1974 or 1975 that an atom-by-atom deposition
technique would yield a better optical film. However, in 1974, films produced
by the less expensive electron beam evaporation technique were thought to be
good enough for commercial needs. Indeed, when Honeywell was awarded its
contract to supply The Boeing Company ("Boeing") with ring laser gyroscope
inertial guidance systems in 1977, the gyroscopes in those systems employed
electron beam mirrors.
Mirrors had also been formed by a method known as radio frequency ("RF")
sputtering.(4) RF sputtering employs two plates with argon gas between them. A
substrate to be coated is mounted on one plate and a target is mounted on the
other. Then an RF discharge between the plates ionizes the gas atoms and causes
then to move back and forth between the plates, striking off molecules from the
target and depositing them on the substrate. RF sputtering evidences problems
with crystallization, surface roughness, and contamination of the substrate by
the ionized gas atoms. During the early 1970s, substantial work with respect to
RF sputtering was done at a facility known as the Battelle Institute
("Battelle"). Litton investigated the use of the Battelle RF sputtering method
to make its ring laser
____________________
4 This process is not to be confused with the Honeywell radio frequency
process which is claimed to infringe the '849 reissue patent.
5
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gyroscope mirrors in the early 1970s, but ultimately rejected the method in
favor of ion beam sputter deposition.
Litton claims that Honeywell infringed the '849 reissue which claims a
method of making mirrors by the ion beam sputter method of deposition. Ion beam
sputter deposition operates by projecting a beam of ions through a vacuum to
strike a target composed of the material to be deposited. When the ions strike
the target, they act like microscopic cue balls, displacing individual atoms or
molecules which fly off, or "sputter" from the target. The substrate to be
coated is placed in the path of the displaced target atoms and some of the
displaced atoms and molecules strike the substrate and adhere to it. In this
way a thin coat of target material builds up on the substrate. Ion beam sputter
deposition has several advantages over both electron beam evaporation and RF
deposition. First, because ion beam sputter deposition is a process which is
carried on at a relatively low temperature, it allows films to be deposited on
temperature sensitive materials. Also, ion beam deposition tends to produce
more amorphous film with fewer impurities. Although both of these qualities
provide substantial benefits in the manufacture of high quality laser mirrors,
the ion beam sputter deposition technique is decidedly more expensive and slower
than electron beam evaporation or RF sputtering.
Although substantial work had been done in the ion beam sputter field as
early as the 1960s, both Litton and Honeywell continued to coat their mirrors by
the electron beam evaporation method until the mid-1970s. However, in about
1974, Litton began to experience early failure of its electron beam evaporation
coated mirrors, and it started an investigation of other methods of coating
mirrors. Around that time, Litton hired David Wei ("Wei"), who had previously
been
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involved with using ion beams to manufacture optical devices, and placed him in
charge of improving Litton's mirrors.
Wei reported to Hutchings, who was then the head of Litton's ring laser
gyroscope development team. Wei examined a number of different alternatives to
electron beam evaporation deposition, including RF deposition, chemical
evaporation deposition, and ion beam sputter deposition. As evidenced by a
series of internal Litton memoranda, Wei quickly came to the conclusion that ion
beam deposition would result in a better mirror. For example, Wei wrote in a
1975 memorandum to Hutchings that his conclusion was supported by substantial
work at Bell Telephone Laboratories.
About five years ago, several research groups in Bell Telephone
Laboratories released some exciting information. A well tailored beam of
ions has the capability to take off material with such high precision that
the machine was given the name "ion mill" or "ion lathe". The other R & D
laboratories quickly followed suit. Soon after, the milled-off material
was found capable of depositing on a substrate with a higher uniformity and
a higher speed than conventional sputtering. Moreover, the purity of the
deposit turned out to be much higher than the source, thus the process can
be used for chemical refinement. Today Bell Labs at Murray Hill alone has
about sixty ion beam machines experimenting various thin film and
miniatured gadgetry applications. The Bell Labs at other locations is
suspected to have just as many ion beam machines. THE APPLICATIONS IN
OPTICAL THIN FILMS HAVE BEEN ESPECIALLY REWARDING. Because of its
versatility, ion beam patent disclosures are said to be filed as much as
fifty a month by Bell Labs.
(Defendant's Exhibit 5236) (emphasis added). Wei's memorandum goes on to
conclude that the "[i]on beam machine has been given the highest emphasis since
my arrival at Litton BECAUSE OF ITS MATURITY IN THE R & D field and also because
of its reputation for novel applications by researcher [sic] in optical thin
films." ID. (emphasis added.)
In response to Wei's memoranda, Hutchings sent Wei to various commercial
vendors of ion beam sputter deposition equipment in an
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attempt to produce mirrors using the vendors' equipment. Wei went to
Commonwealth Scientific Corporation ("Commonwealth"), Veeco Instruments, Inc.
("Veeco"), Technics Inc. ("Technics"), and Ion Tech, Inc. ("Ion Tech"). Wei
asked each of the vendors to deposit optical thin films for him using the
vendor's commercial equipment.
Wei testified at trial that the use of ion beam deposition to make ring
laser gyroscope mirrors first occurred to him in October 1974 after he received
a paper which was given at the American Vacuum Society Convention in Anaheim,
California. According to Wei, this paper discussed the application of ion beam
technology for the manufacture of microelectronics. In particular, the paper
discussed the use of an ion source which Wei said was known as a Kaufman-type
ion source which emitted a broad ion beam.
Veeco and Technics, both commercial vendors of ion beam sputter deposition
equipment that used Kaufman type ion sources, had exhibition booths at the
Anaheim convention. Wei talked to a representative of Veeco named Don Murphy
and arranged to have Veeco deposit some sample coatings. In the next month,
Veeco provided Wei with two sample glass slides coated with a single layer of
titanium dioxide, but the result was opaque,(5) and Wei was dissatisfied with
it. Nonetheless, Wei sent two Litton mirror substrates to Dr. W. Laznovsky
("Laznovsky") at Veeco to be coated. Wei testified that Veeco never returned
the coated substrates.
At the convention in Anaheim, Wei also talked to Frank Bazzarre
("Bazzarre") of Technics. At Wei's request, Technics deposited cerium oxide on
a slide. Wei did not give Technics any instructions as to
____________________
5 Wei's notebook reports however, that the Veeco samples became
transparent after baking.
8
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how to deposit the layer on the slide other than to specify that cerium oxide
was to be used. Technics returned the sample in the spring of 1975 and Wei's
notes indicate that the sample was highly amorphous but showed a brownish color
indicating contamination. After receiving the sample from Technics, Wei
traveled to Technics' offices in Alexandria, Virginia. While there, Wei used
Technics' equipment to deposit multiple layer films with a high index material
of cerium oxide and a low index material of Corning 7059 glass. Although Wei
did the actual deposition work, Technics provided the equipment and instruction
for its use. Bazzarre demonstrated to Wei the method he had used to make the
cerium oxide sample and Wei used that method to deposit the films he made at
Technics. Over five days, Wei deposited two mirrors using alternating layers of
high and low index of refraction materials. Wei was able to use the equipment
easily by referring to an operation manual and he did not need to modify the
Technics equipment to produce the mirrors.(6)
The mirrors showed very low scatter but were not satisfactory because Wei
had not yet determined the proper timing to deposit the layers in a quarter wave
thickness. Also, the mirrors had some problems with absorption which Wei
attributed to material sputtered from the shutter and walls of Technics' vacuum
chamber. Despite the problems evidenced in the mirrors, it is not disputed that
Wei succeeded in producing an ion beam deposited mirror in only five days.
____________________
6 Wei testified that while he was at Technics, an individual named
Castellano from Bell Telephone Laboratories visited Technics and instructed Wei
on the best angle to maintain between the target and the beam for purposes of
deposition. Castellano also sent Wei an article that disclosed the use of a
Kaufman-type ion beam source for thin film deposition.
9
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In September 1975, Wei also went to Ion Tech, the company with which Dr.
Harold Kaufman ("Kaufman"), the inventor of the Kaufman ion source, was
associated. Ion Tech provided Wei with a slide coated with tantalum which
turned out to have good optical qualities. Wei later traveled to Ion Tech's
offices in Colorado where Dr. Paul Reader ("Reader") coated a layer of Corning
7059 glass on Corning 7059 glass. Wei also asked Commonwealth to deposit some
glass on glass samples.
Finally, after visiting all of the vendors, and either having the vendors
deposit coating for him or depositing coatings himself using the vendor's
equipment and instructions, Wei set up an ion beam sputter deposition chamber at
Litton. Wei bought the ion beam gun from Ion Tech and bought a variety of
vacuum equipment on the recommendation of Paul Schmidt of Bell Laboratories.
In September of 1976, Wei filed an invention disclosure with Litton's patent
attorneys. In the disclosure, Wei claimed a process for making dielectric
mirrors with four features: (1) use of ion beam sputtering as the mirror coating
method; (2) use of tantalum pentoxide as the high refractive index material; (3)
use of Corning 7059 glass as the low refractive index material; and (4) "special
design of oxygen leak finger for oxidation during the coating process." In the
application for the '958 patent which was later filed, none of these features
were claimed to be novel.
In late 1976, Wei left Litton to work for Xerox Corporation. Not long
before Wei's departure, Litton hired Anthony Louderback ("Louderback"), and
Louderback assumed Wei's duties after Wei left. At trial, Louderback described
his role as one of taking Wei's apparatus and refining it to make it usable in a
production mode. He testified that during the period between his arrival at
Litton and the
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filing of the patent application on the process, he and others at Litton
adjusted the target/substrate/ion gun geometry, and developed flow and pressure
parameters, a monitoring system for determining the thickness of the deposited
layers, and some associated gas flow hardware. He also testified that during
this time, a switch was made from tantalum pentoxide to titanium dioxide as the
high index of refraction material.
Louderback remained at Litton until 1981. He was employed by Litton at the
time of the prosecution of the original patent. However, he had already left
Litton to form his own mirror coating business by the time Litton applied for
the '849 reissue.
B. THE ORIGINAL PATENT AND ITS PROSECUTION HISTORY
Litton filed its original patent application for the claimed invention on
April 13, 1978. Wei and Louderback were designated as the inventors, and Litton
was the assignee. The patent attorneys appointed to prosecute the original
application were Warren C. Porter ("Porter"), Harold E. Gillmann ("Gillmann"),
Walter R. Thiel, and Alfred R Levine. Initially, Porter was responsible for the
prosecution of the patent. As part of the application, Litton submitted no
prior art, referring the examiner only to the Military Standardization
Handbook's explanation of quarter wave stacks and to Litton's own general
discussion of electron beam and RF deposition techniques. The application
contained ten claims, only one of which, claim 1, was an independent claim.
Claim 1 claimed:
A method of fabricating multiple layer optical films comprising:
bombarding targets obliquely WITH AN ION BEAM to deposit optical film
layers on a base whereby molecules of the target materials are sputtered
onto the base being coated with said film;
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performing the deposition of the optical layers inside of a vacuum
chamber;
controlling the atmosphere inside of the vacuum chamber to provide
sufficient gas to sustain the ion beam and the proper amount of oxygen to
accomplish proper stoichiometry of the thin films;
depositing multiple layers of different materials on the base by
varying the targets being bombarded by the ion beam.
(Exhibit 5593 at 20) (emphasis added).
On August 9, 1978, the examiner rejected all ten of the claims in the
original application as obvious in light of three prior art patents and one
article, all of which had been found by the examiner. In response to the
examiner's rejection, Litton amended its original claim one to include original
claim two which claimed "continuously rotating said base during the deposition
of said optical layers."(7) Litton's response was signed by its attorney,
Ernest L. Brown ("Brown"). Brown was at that time new to the application and
his amendment was accompanied by a power of attorney appointment notice signed
by Gillmann.
Brown argued that, "[i]nasmuch as none of the cited patents teaches nor
shows the continuously rotating of the base during the deposition of multiple
optical layers as claimed in applicants' amended claim 1 and claims dependent
therefrom, Claims l and 3 through 10 are now believed in condition for
allowance. . . ." (Exhibit 5593 at 34). The examiner accepted Brown's argument
and allowed the patent subject to one textual change and a change in the
drawing. He stated:
While rotation of the substrate in sputtering processes is known in the
prior art, it generally is applied when a mixed coating is to be formed via
sputtering simultaneously from two sources of different materials in order
to prevent localized deposition and to provide a homogeneous mixture.
____________________
7 This was not an element of Wei's original invention disclosure.
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Generally, rotation of the substrate is not indicated when sputtering from a
single target. Accordingly, the presence of such limitation in independent
claim 1 is considered to be unobvious.
(Exhibit 5593 at 38). The patent issued on March 6, 1979 ("the '958 patent").
The examiner was incorrect about the novelty of rotation.(8) In fact
numerous then existing prior art sources disclosed during the '849 reissue
proceedings and in this litigation show rotation of the substrate to obtain a
uniform coating in a process that includes only one sputtering source.
Moreover, both Wei and Louderback testified at trial that they knew at the time
of the application for the '958 patent that rotation of the substrate was old in
the art. Likewise, Hutchings testified that he knew that rotation was old in
the art in 1978.
C. THE PERIOD BETWEEN THE ORIGINAL PATENT AND THE REISSUE.
1. Louderback and Ojai Research
In 1981, approximately two years after the '958 patent issued, Louderback
left Litton to form his own optical coating company, Ojai Research, Inc. ("Ojai
Research"). At that time, Litton licensed Louderback to use the process claimed
by the '958 patent so long as he did not coat mirrors for ring laser gyroscopes
or for use with high powered lasers for anyone else but Litton. After some
initial difficulty, Louderback built two ion beam coating chambers at Ojai
Research. One was built according to Litton's design and contained some parts
originally purchased by Litton for use with its own chambers.
____________________
8 The examiner later reached that conclusion himself during the '849
reissue proceedings. (Exhibit 5594 at 75.)
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The other chamber Louderback built was constructed differently. The most
important difference was that this chamber was equipped with a sliding target
mechanism that permitted the deposition of gradient index films.(9) Litton's
films have a sharp distinction between the high and low index layers and there
is virtually no overlap between the two. Films made on Louderback's second
apparatus, rather than distinctly switching between the high and low index
layers, gradually shift between the layers and have an area that includes a
mixture of high and low index material. Films with this area of mixture between
the layers are known as gradient index films because the transition between the
materials is gradual rather than sharp. Louderback's apparatus achieved the
deposition of gradient index films by sliding a target holder which has the high
index target on one side and the low index target on the other so that for a
time a portion of both targets was in the beam. Additionally, when using the
gradient index process, Louderback never deposited a pure layer of the high
index material but always doped that material with a small percentage of the low
index material. The mixed layer, or graded interface was approximately ten
percent of the thickness of the layers.
Louderback eventually began to sell ring laser gyroscope mirrors to a number
of large companies, including Honeywell, using his gradient index process.
Louderback did not believe this process to be either infringing or in violation
of his license from Litton. Honeywell's first purchase of Louderback's mirrors
was in 1984.
____________________
9 There were other distinctions as well, such as the replacement of the
metal seals used on Litton's vacuum equipment with rubber seals.
14
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2. Honeywell's Capture of the Inertial Navigation Market and Litton's
Response.
Prior to the development of the ring laser gyroscope, aircraft
navigation systems were constructed using mechanical gyroscopes. During the
mechanical gyroscope period, Litton had a significant share of the commercial
airline inertial navigation market. However, when the technology shifted to the
ring laser gyroscope, Honeywell captured the major share of the commercial
market. Honeywell was awarded the contract to supply ring laser gyroscope
inertial navigation systems to Boeing in 1977. Since that time Honeywell has
entered into contracts to provide inertial navigation systems to Boeing for the
737-300, 757, 767, and 747-400; Airbus for the A-320, A-330, and A-340;
McDonnell Douglas for the MD-80 and MD-11; British Aerospace for the BAe 125-
1000; Gulfstream for the G-IV; Canadair for the Challenger 601-3A; and Daussault
for the Falcon 900. At the time of the initial contract with Boeing in 1977,
and for several years thereafter, Honeywell's ring laser gyroscopes used
electron beam deposited mirrors.
In 1983 or 1984 Boeing began experiencing early failure problems with the
Honeywell systems. Honeywell examined the failed systems and determined that at
least some of the failures were caused by degradation of the mirrors in the ring
laser gyroscopes. However, the parties dispute whether Honeywell was
experiencing a major problem with the performance of the gyroscopes. Litton
points to particular Honeywell internal documents that evidence a tone of
serious concern with regard to mirror problems. Honeywell responds with data
showing that their gyroscopes using electron beam deposited mirrors outperformed
Litton's systems using ion beam deposited mirrors.
15
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In any case, in 1985, Honeywell began using ion beam deposited mirrors. As
stated, Honeywell ordered its first mirrors from Louderback's company, Ojai
Research. Later, Honeywell continued to purchase mirrors from Ojai Research, as
well as from Louderback's other company, General Optics, Inc. Honeywell also
began to produce its own ion beam sputtered mirrors.
Litton never attempted to enforce the '958 patent, although it knew, as
early as June of 1986, that Honeywell and others were using ion beam processes
to manufacture ring laser gyroscope mirrors. Moreover, Litton did not assert
the '958 patent against Sunstrand Corporation ("Sunstrand") or Allied Signal
Corporation although it sued both for infringement of other ring laser gyroscope
patents in 1983.(10)
D. THE REISSUE PATENT AND ITS PROSECUTION HISTORY
On July 2, 1985, during the litigation with Sunstrand, Litton
applied to have the '958 patent reissued. Litton's application sought a
narrowing reissue that added the limitation of original claim two to
____________________
10 LITTON SYSTEMS, INC. V. SUNSTRAND, ET AL., No. CV 83-8420 SVW (C.D.
Cal. 1983), OP. DENYING LITTON'S MOTION FOR PRELIMINARY INJUNCTION, 750 F.2d 952
(Fed. Cir. 1984). In SUNSTRAND, Litton asserted ring laser gyroscope patents
including a claim for a mechanical mirror mount, a spring for use with a ring
laser gyroscope dither mechanism and a dithered rectangular ring laser gyroscope
mechanism. The SUNSTRAND case also included allegations arising out of the
departure of a group of Litton employees to form a company called Optec, which
later was acquired by Sunstrand. Included among the trade secret allegations
were claims that the defendants had stolen trade secret information regarding
Litton's coating chamber and mirror coating process including "a memorandum
dated February 11, 1981, entitled 'Mirror Coating Process' by Anthony
Louderback." [SUNSTRAND, Fourth Amended Complaint, October 15, 1986, at p. 26.]
Allied-Signal agreed to buy ring laser gyroscope technology from Sunstrand after
its purchase of Optec. Although Litton's trade secret claims against Sunstrand
and Allied-Signal included secrets related to the use of the mirror coating
technology claimed by the '958 patent, Litton did not assert infringement of the
patent as a ground for relief.
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the reissue's claim one. The limitation in question was that "said multiple
layer optical films [comprise] optical layers having different indices of
refraction." Litton stated in the reissue declaration that it had claimed more
than it had a right to claim in the '958 patent in light of twenty-two prior art
references, although it did not specify what the excess it had claimed was.(11)
Litton stated that it first learned of the impact of the cited prior art in
August 1984 upon completion of a review of these references by Litton's outside
counsel. However, the evidence is uncontroverted that nineteen of the
references(l2) were brought to Litton's attention substantially earlier in the
course of the prosecutions of foreign patent applications. Litton's counsel for
the reissue proceedings was Patrick Bright ("Bright") of Kendrick, Netter, &
Bennett, and he is the outside counsel who is said to have first discovered the
significance of the twenty-two references and recommended to Litton that it seek
reissue.
On August 30, 1985, approximately two months after it filed the reissue
application, Litton filed a patentability report that cited eighty-two pieces of
prior art without distinguishing which art was more or less material to the
claims made in the reissue application. For each of the eighty-two references,
Litton provided the examiner with a one or two sentence statement as to why the
reference did not teach Litton's invention. Included in the patentability
report were references to four pages of Veeco's 1977 product catalog and to a
1978 Commonwealth catalog. These companies were among the vendors that Wei
____________________
11 The reissue declaration was signed on behalf of Litton by J.
Nathanson, a Litton vice president of finance.
12 Foreign patents, an article, an abstract and a catalog.
17
<PAGE>
had visited while he was researching ion beam deposited mirrors. Regarding
those catalogs, the patentability report stated:
Applicants had seen catalogs similar to these before original U. S. Patent
4,142,958 issued, but inadvertently did not cite them. They appear to be
only of incidental interest because the references considered by the U. S.
Patent and Trademark office before the '958 patent issued are far more
material.
(Exhibit 5594 at 41). The 1977 and 1978 catalogs referred to both reveal
rotation of the substrate. Likewise, earlier Veeco and Commonwealth catalogs
that Litton did not furnish the examiner in the reissue proceeding reveal
substrate rotation. The claimed novelty of substrate rotation, of course, was
the argument that convinced the examiner to issue the '958 patent.
On October 21, 1985, Sunstrand filed a Protest Under 37 C.F.R. Section
1.291 to Litton's reissue application. In its protest, Sunstrand pointed out
that Litton had failed to specify the excess in the claims distinctly as
required by 37 C.F.R. Section 1.175(a)(3). Additionally, the Sunstrand protest
cited the examiner to an important 1975 article, entitled "Advances in Low
Energy Ion Beam Technology" by W. Laznovsky ("the Laznovsky article"), that
Litton had failed to include in its list of references. The Sunstrand protest
also highlighted for the examiner several references that Sunstrand felt had
been misrepresented or incompletely cited by Litton. Among those references
were French Patent 1,422,539, for which Litton provided an incomplete
translation, and a complete version of the 1977 Veeco catalog. Sunstrand
pointed out that although Litton had included pages 76-77 and 80-81 of the Veeco
catalog in its patentability report, it had omitted pages 78 and 79.
Importantly, the omitted
18
<PAGE>
pages cite to the Laznovsky article which Litton had failed to bring to the
examiner's attention.
On December 9, 1985, the examiner rejected all fourteen remaining claims as
obvious in light of five prior art patents and three articles. The Laznovsky
article which had been brought to the examiner's attention by Sunstrand was
among the group cited by the examiner, as was French Patent Publication
2,129,996 (U.S. equivalent Patent 3,925,187) ("the Bernard patent").
The reasons given by the examiner for his conclusion that the method was
obvious were (1) that laser mirrors comprising quarter wave stacks of layers of
materials of different indices of refraction were old; (2) Laznovsky teaches the
addition of oxygen to the vacuum chamber when depositing oxidic targets; and (3)
Bernard teaches that multiple layer coatings comprising different materials
sputtered from different targets may be formed by ion beam sputtering. The
examiner also specifically reconsidered and rejected his earlier finding
regarding the novelty of substrate rotation in light of Laznovsky.
The examiner also rejected the claims because the reissue declaration
failed to specify the excess in the claims in relation to each of the prior art
references or to point out how the amended claims sought to patentably
distinguish over each reference. Additionally, the examiner determined that the
reissue declaration failed to specify how the alleged errors occurred and how
the "inventors themselves" became aware of the errors, as well as the prior art.
The examiner also rejected claims 11 and 14-15 of the application under 35
U.S.C. Section 112(l) because the specification was not enabling for those
claims.
19
<PAGE>
Bright then had a telephone interview with the examiner, the content of
which is not detailed in the prosecution history, and likewise could not be
specifically ascertained at trial.(13) After the telephone interview, Litton
submitted a supplemental declaration which stated that Litton had become aware
of the prior art as a result of a consultation between Louderback and Litton's
outside counsel, but that Wei had refused to participate.
This supplemental declaration filed by Litton responded to the examiner's
obviousness rejection by arguing that neither the Bernard patent nor the
Laznovsky article disclosed the atmosphere controlling step or any method for
making optical films with alternating layers of materials with different indices
of refraction. The declaration then distinguished the remainder of the prior
art on the ground that it either did not disclose an ion beam deposition
process, did not disclose the atmosphere controlling step or did not explicitly
provide for alternating layers of optical film of different indices of
refraction. Litton's declaration also distinguished the Bernard patent from the
claimed invention on the ground that Bernard utilized a duoplasmatron ion beam
source and the claimed invention utilized a Kaufman-type ion beam source. (14)
Litton also submitted a declaration drafted by Bright for Louderback. The
Louderback declaration repeated the substance of the Litton declaration, but
emphasized the ion beam source distinction between the Bernard patent and the
claimed invention. At this same
____________________
13 At trial, Bright testified that he could not remember the content of
the conversation and that he had no documents or notes regarding it.
14 Laznovsky also discloses the use of a Kaufman type source.
20
<PAGE>
time, Hutchings also submitted a declaration which emphasized the importance of
the secondary considerations of long felt need and commercial success citing to
ENVIRONMENTAL DESIGNS, LTD. V. UNION OIL OF CAL., 713 F.2d 693, 697, 218
U.S.P.Q. 865, 869 (Fed. Cir. 1983).
In addition to the new declarations, Litton submitted an amendment
cancelling claims 11, 14, and 15 and adding new claims 16-29 which were based on
the specification of the patent. Along with that amendment, Litton made a
series of arguments against the examiner's obviousness rejection, emphasizing
the atmosphere controlling step, THE USE OF A KAUFMAN-TYPE ION BEAM SOURCE, and
the creation of multiple layer optical films, as well as the secondary
considerations involved.
In response to Litton's amendment, the examiner issued a final rejection of
all of Litton's claims on July 3, 1986. The examiner rejected the supplemental
reissue declaration because it again failed to specify the errors in the '958
patent that Litton claimed as the basis for seeking reissue. In particular, the
examiner rejected the declaration because it did not state whether the original
claim was invalid under 35 U.S.C. Section 102 or 103 or both in view of the
cited prior art references. The examiner rejected Litton's new claims 17 and 18
and 25 to 29 on grounds of indefiniteness due to Litton's use of the word
"substantially".
Most importantly, the examiner again rejected Litton's claims as obvious in
light of Bernard and Laznovsky and rejected all of Litton's new claims on that
ground as well. The examiner responded to Litton's arguments against
obviousness by pointing out that Litton's arguments attacked the references
individually, while the obviousness inquiry is
21
<PAGE>
directed to what the references collectively suggest to one possessing skill in
the art. The examiner stated:
In this instance the invention can be made merely by applying knowledge
clearly present in the prior art (IN RE SERNAKER, 217 U.S.P.Q. 1), because
as pointed out previously the prior art of record taught the following to
the art:
(1) The prior art cited by applicants and mentioned in the "Background of
the Invention" section of the original patent amply establishes that laser
mirrors comprising quarter wave stacks of layers of materials of different
refractive indices materials were known prior to the instant invention.
(2) Laznovsky teaches, commencing at page 52 thereof, that ion beam
sputtering using a rotating substrate may yield uniform films. Moreover,
Laznovsky at page 54 teaches that ion beam sputtering of certain oxidic
targets results in loss of oxygen, which must be compensated for by
addition of oxygen background gas to the atmosphere inside the vacuum
chamber. The features recited in instant claims 3 and 8 are also disclosed
by Laznovsky.
(3) French Patent Publication 2,129,996, cited by applicants (U.S.
Equivalent is Pat. No. 3,925,187 in the name of Bernard), teaches that
multiple layer coatings comprising different materials sputtered from
different targets may be formed by ion-beam sputtering (Bernard, Col. 1,
lines 38-51; col. 4, lines 1-18).
(Exhibit 5594 at 107). Therefore, the examiner concluded:
It thus would have been obvious, at the time the invention was made, to
fabricate the known multi-layer laser mirror stacks using the apparatus and
techniques of Laznovsky (including stoichiometry control of deposited films
by oxygen addition to the background gas, substrate rotation, pre-sputter
cleaning of the targets by ion bombardment, and target cooling), in view of
the clear teachings of Bernard pertaining to the use of multi-targeted ion-
beam sputtering apparatus for depositing multilayered films of differing
composition. Choice of suitable layer materials of higher and lower
refractive index clearly follows from the prior art and does not constitute
unobvious modification of the references.
In summary, it is the examiner's position that the invention described by
the instant claims merely recites an OBVIOUS
process for making high quality optical film stacks of known structure and
function, using a conventional WELL KNOWN APPARATUS, employing procedures
and/or precautions necessary for obtaining good quality films of desired
optical
22
<PAGE>
properties which were well known in the art at the time the invention was
made.
ID. at 108-109. The examiner also rejected Litton's Kaufman-type ion source
argument on the dual grounds that Kaufman-type ion sources were standard in the
art and that in any case the use of a Kaufman-type ion gun was revealed by
Laznovsky. The examiner also pointed out that in any event, Litton's claims
were not limited to the use of a Kaufman-type ion gun.
On September 9, 1986, Bright again spoke to the examiner by telephone. On
this occasion, Bright's partner Frederick Lorig ("Lorig") participated in the
call.(15) Also participating in the call was Dr. Phillip Baumeister
("Baumeister"), a technical expert retained by Litton. The examiner's record of
the conversation states only that no agreement was reached, and, at the trial,
Bright testified that he did not recall the substance of the conversation and he
retained no notes of it.
Following this telephone conversation, on December 12, 1986, Litton
submitted a new declaration in which it stated that the error that led to the
application reissue was that the limitations in original claim two needed to be
added to original claim one and that the reason for this error was that neither
Litton nor the inventors had known of either the Laznovsky article or the
Bernard patent. Litton also submitted an amendment to its claims deleting the
word "substantially" in response to the examiner's indefiniteness rejection.
The remarks attached to the amendment addressed the examiner's obviousness
rejection by pointing to three declarations
____________________
15 Lorig is lead trial counsel for Litton in this action.
23
<PAGE>
which, according to Litton, clearly demonstrated that the method was not
obvious. In the remarks, Litton also argued that there was no need to limit
claim one to a Kaufman-type ion source because any person skilled in the art
would know that a duoplasmatron could not be used to perform the claimed method
in making multiple layer optical films.
The first of the three declarations submitted by Litton was that of Dr.
Samuel Lu ("Lu") a former Honeywell employee who had since begun working for
Litton. Lu stated that Honeywell had not begun experimenting with ion beam
deposition until after Litton had used this method to make mirrors with high
reflectance and low back-scatter. Presumably, his declaration was intended to
show the secondary consideration of long felt need. Lu did not claim personal
knowledge as to the actual cause for Honeywell's experimentation with that
process, but rather, his declaration implied that if there had not been a long
felt need, Honeywell would not have been compelled to infringe Litton's
invention.
The second declaration was signed by Gerald Isaacson ("Isaacson") of Ion
Tech. Isaacson stated that Ion Tech does not sell duoplasmatrons and that, to
his knowledge, no one had ever used a duoplasmatron to deposit a multiple layer
optical film. Isaacson also testified that Litton was, to his knowledge, the
first Ion Tech customer to use the Kaufman gun for optical coatings. Isaacson's
declaration could have contributed little to the examiner's decision on
obviousness, but it did demonstrate that a limitation to exclude duoplasmatrons
as a source was required if the '849 reissue were to be allowed.
24
<PAGE>
The third, and most important declaration was signed by Baumeister.
Baumeister stated as one skilled in the optical coating art that the claimed
process was not obvious because (1) prior to Litton's use of the ion beam
sputtering method to make laser mirrors, NO ONE had employed this method to make
such mirrors; (2) Baumeister himself had never thought of using the ion beam
sputtering method; and (3) ion beam sputtered mirrors evidenced high
reflectivity and low back scatter, which were surprising results. The
Baumeister declaration made the argument that the Laznovsky article did not
teach multiple layer coatings and that the Bernard patent failed to teach
optical coatings or the use of a Kaufman-type ion beam gun. In essence, what
Baumeister told the examiner was that the results of making mirrors by ion beam
sputtering were surprising TO HIM, that a duoplasmatron would not produce such
results because it would be too slow and expensive, and that a Kaufman-type ion
source exactly like the ones described by Laznovsky and suggested to Wei by the
commercial vendors would be faster and less expensive in producing these
results. Baumeister established a long felt need for mirrors deposited by using
the ion beam source in the specification rather than a duoplasmatron.(16)
Baumeister convinced the examiner that he had been wrong in his rejection
of the application. The next communication in the prosecution history is a
record of a telephone conversation between
____________________
16 On the basis of this statement by Baumeister, Litton now also claims
that those skilled in the art would interpret claim one of the reissue
application to refer ONLY to an ion beam produced from a Kaufman-type ion beam
source because no one would have thought that a duoplasmatron would work.
25
<PAGE>
the examiner and Bright. With regard to that conversation, the examiner noted:
The examiner initiated the interview to inform applicant's attorney that
allowance of the application was possible if all the claims were limited to
Kaufman gun sources being used in the claimed process. Unless the claims
were so limited, the examiner indicated that 35 U.S.C. 112(a) rejection on
the basis that applicants were not claiming what they regarded as their
invention in view of their argument contained in page 22, no. 15 filed
12/16/86 would be made in the next office action on the merits. The paper
# 15 overcomes the other previously made objections. Other changes
necessary for consistency (if the above proposal is adopted) were
discussed. Mr. Bright indicated he would confer with his client and reply
in a few days.
(Exhibit 5594 at 205).17
Litton subsequently acquiesced in the examiner's position. In a summary
record of a telephone call dated March 12, 1987, the examiner reported that "Mr.
Bright agreed to cancel claims 16, 18, 21, and 24 and to incorporate a Kaufman
ion gun limitation in claim 1. Indefinite terms such as 'substantially' will be
deleted from the remaining claims. A supplemental oath concerning the remaining
claims will be prepared." A later record of a telephone interview explains that
Bright agreed to limit claim 13 to include only Kaufman type ion beam sources in
the same manner as claim 1. Litton submitted amended claims and declarations to
conform the application to Bright's telephone discussions with the examiner.
Finally, on June 25, 1987, the examiner allowed Litton's claims 1-10, 12-
13, 19-20, 20-23, and 25-29. The patent did not issue until January 31, 1989,
however, because the patent office pursued an extensive investigation into
inequitable conduct by Litton. In the interim period, allowance of the claims
was held in abeyance and
____________________
17 Page 22 of Paper No. 15 is the page on which the Baumeister
declaration begins its discussion on obviousness.
26
<PAGE>
Litton was required to respond to a series of inquiries concerning
representations and omissions in representations made by it to the patent
office. This investigation was eventually abandoned because a change in Patent
& Trademark Office ("PTO") procedure eliminated all investigations of
inequitable conduct by that office.
The reissue patent contains two independent claims and twenty dependent
claims. The two independent claims cover the following:
1. A method of fabricating multiple layer optical films, said multiple
layer optical films comprising optical layers having different indices of
refraction comprising:
bombarding targets obliquely with an ion beam produced by or derived
from a Kaufman-type ion beam source in a vacuum chamber to sputter
deposit a plurality of optical film layers on a base;
controlling the atmosphere inside the vacuum chamber to provide
sufficient gas to sustain the ion beam and the proper amount of oxygen
to accomplish proper stoichiometry of the thin films and:
depositing multiple layers of different materials on said base by
varying the targets being bombarded by the ion beam; and
continuously rotating said base during the deposition of said multiple
optical layers.
and:
18. A method of fabricating multiple layer optical films said multiple
layer optical films comprising at least two optical layers having different
indices of refraction, in alternating layers, comprising:
bombarding at least two targets having different indices of refraction
obliquely with an ion beam produced by or derived from a Kaufman type
ion beam source in a vacuum chamber to sputter deposit a plurality of
optical film layers comprising said material in alternating layers on
a base;
controlling the atmosphere inside of the vacuum chamber to provide
sufficient gas to sustain the ion beam and the proper amount of oxygen
to accomplish proper stoichiometry of the thin films;
27
<PAGE>
depositing multiple layers of said materials having different indices
of refraction on said base by varying the targets being bombarded by
the ion beam; and
continuously rotating said base during the deposition of said multiple
optical layers.
Dependent claim 3 claims the process of claim 1 plus using the ion beam to clean
the substrate. Claims 4 through 7, 9 through 12, and 14 through 16 claim the
process used to make a mirror with varying amounts of specificity, the most
specific being a quarter wave stack RLG mirror with titanium dioxide used as the
high index of refraction material and silicon dioxide used as the low index of
refraction material. Dependent claim 8 claims the method used in conjunction
with a cooling mechanism on the target. Dependent claim 9 claims the method
practiced using a low expansion ceramic substrate. Dependent claims 13 and 17
claim the method used to make a mirror controlled so that the mirror contains
reduced surface anomalies or impurities and is free of voids. Dependent claims
19 through 22 claim in varying language the use of the process claimed by claim
17 to produce a ring laser gyroscope mirror with reduced surface anomalies and
impurities and which is amorphous and free of voids.
E. LITTON'S INFRINGEMENT ACTION
Almost immediately after the reissue patent was granted, Litton sued
Honeywell and Louderback for infringement of the '849 reissue. Louderback
settled the lawsuit in September 1990. As part of the settlement, Louderback
agreed to give Litton an option to buy two of Louderback's coating chambers for
$750,000. Litton agreed to pay up to $100,000 of Louderback's attorney's fees
if Honeywell made claims against Louderback.
28
<PAGE>
As stated, the case against Honeywell resulted in a jury verdict for Litton.
Following the verdict, Honeywell filed a Renewed Motion for JMOL(18) and a
Motion for a New Trial. This Memorandum of Decision sets forth the rulings on
those motions, as well as findings and conclusions on Honeywell's defense that
the '849 reissue is unenforceable because it was procured by inequitable
conduct.
II.
ANALYSIS
A. OBVIOUSNESS
The ultimate conclusion as to whether a patent claim is obvious under 35
U.S.C. Section 103 is a question of law. GRAHAM V. JOHN DEERE, 383 U.S. 1, 17
(1966); PERKIN-ELMER CORP. V. COMPUTERVISION CORP., 732 F.2d 888, 894 (Fed.
Cir. 1984), CERT. DENIED, 469 U.S. 857 (1984). However, the resolution of this
legal question involves an analysis of the underlying factual issues outlined in
GRAHAM, which are: (1) the scope and content of the prior art; (2) the level of
ordinary skill in the art; (3) the differences between the claimed subject
matter and the prior art; and (4) where relevant, objective evidence of
nonobviousness such as long-felt need, commercial success, and failure of
others. Graham, 383 U.S. at 17-18 (1966); PERKIN-ELMER-CORP, 732 F.2d at 894.
The findings on these factual issues furnish the foundation for the conclusion
as to obviousness of the claimed subject matter as a whole. ASHLAND OIL, INC.
V. DELTA RESINS & REFRACTORIES, 776 F.2d 281, 291 (Fed. Cir. 1985), CERT.
DENIED, 475 U.S. 1017 (1986).
____________________
(18) Honeywell's Motions for Judgment as a Matter of Law filed at the
conclusion of the evidence were denied with the exception of the motion relating
to intervening rights.
29
<PAGE>
A patent is presumed valid and the burden of establishing invalidity as to
the claims of a patent rests upon the party asserting invalidity. 35 U.S.C.
Section 282. The presumption of validity is a procedural device which mandates
that the party asserting invalidity bear the burden of establishing a prima
facie case of obviousness under 35 U.S.C. Section 103. ASHLAND OIL , 776 F.2d
at 291. Once a prima facie case of obviousness has been established, the
patentee must go forward with rebuttal evidence showing nonobviousness. ID. at
291-92. The party asserting invalidity, however, always retains the burden of
persuasion on this issue and must establish each fact forming the foundation for
the ultimate conclusion of obviousness by clear and convincing evidence. ID.19
GRAHAM, and the Federal Circuit cases that have interpreted it, define the
requisite inquiries to be made in an obviousness analysis, although these
inquiries do not necessarily mandate issues for a jury. STRUCTURAL RUBBER PRODS.
V. PARK RUBBER CO., 749 F.2d 707, 721 (Fed. Cir. 1984). Rather, the evidence
in each particular case determines what facts, if any, are actually disputed.
ID. That the parties are in a heated dispute respecting obviousness is not
enough to raise a factual question. ID. If there are facts in dispute, however,
it is appropriate to submit the question of obviousness to a jury, so long as
the jury is given appropriate instructions. CONNELL V. SEARS ROEBUCK & CO., 722
F.2d 1542, 1547 (Fed. Cir. 1983). Submission of
____________________
19 The Court declines to accept Honeywell's invitation to disregard a
decade of Federal Circuit precedent and use a preponderance of the evidence
standard. However, the Court notes that although the UNDERLYING FACTS
supporting the obviousness conclusion must be established by clear and
convincing evidence, that evidentiary standard does not apply to the ultimate
legal conclusion of obviousness itself. NEWELL COMPANIES, INC. V. KENNEY MFG.
CO., 864 F.2d 757 (Fed. Cir. 1988), CERT. DENIED, 493 U.S. 814 (1989).
30
<PAGE>
the question of obviousness to a jury, however, does not preclude the grant of a
motion for JMOL. NEWELL COMPANIES, INC. V. KENNEY MFG. CO., 864 F.2d 757 (Fed.
Cir. 1988), CERT. DENIED, 493 U.S. 814 (1989), CITING, CONNELL, 722 F.2d at
1550.
A JMOL is proper when the evidence and any inferences therefrom viewed in
the light most favorable to the non-moving party permit only one reasonable
conclusion as to the verdict. SJOLAND V. MUSLAND, 847 F.2d 1573, 1576 (Fed.
Cir. 1988). In the evaluation of a motion for JMOL, the Court must accept the
factual findings to be inferred from a favorable jury verdict so long as they
are supported by something more than insubstantial evidence. NEWELL, 864 F.2d
at 765. It may not be presumed that the jury found facts on which there is no
evidence and the jury may not disregard probative admissions and undisputed
facts. ID. at 767. Moreover, although the Court must draw all inferences from
the facts in favor of the non-moving party, the requirement to draw favorable
inferences refers only to factual inferences and not to legal conclusions based
on an established set of facts even though all those facts do not favor that
conclusion. ID.
The Court has assessed Honeywell's motion for JMOL with appropriate regard
for the presumption of validity, as well as for the jury's findings on this
issue. Having done that, the undisputed facts require that the Court grant
Honeywell's motion for JMOL on the issue of obviousness. Each of the four
GRAHAM factual inquiries leads to the conclusion that the jury's verdict for
Litton on this issue was not supported by substantial evidence.
1. The Scope and Content of the Prior Art
The parties dispute the definition of the pertinent prior art for
purposes of the obviousness analysis. Litton argues that the
31
<PAGE>
pertinent art should be defined to be almost as narrow as the patent claims
themselves. Honeywell, of course, argues for a much broader definition. In
this regard, the Supreme Court has held that the pertinent art should be defined
with reference to the problem that the inventor is trying to solve. GRAHAM, 383
U.S. 1, 35 (in commenting on the GRAHAM companion case CALMAR V. COOK CHEMICAL
which involved a spray cap, the Supreme court said, "[t]he problems confronting
Scoggin and the insecticide industry were not insecticide problems, they were
mechanical closure problems."). The Federal Circuit has made similar statements.
See SHATTERPROOF GLASS V. LIBBEY-OWENS FORD CO., 758 F.2d 613, 620 (Fed. Cir.
1985), CERT. DISMISSED, 474 U.S. 976 (1985) ("The jury was correctly advised
first to look to the nature of the problem confronting the inventor. If the
reference is not within the field of the inventor's endeavor, one looks at
whether the field of the reference is reasonably pertinent to the problem the
inventor is trying to solve.")
The problem that Wei was trying to solve is identified in the patent
itself. Wei was seeking to reduce the optical characteristic of back-scatter
which is caused by "anomalies and surface roughness in the reflective surfaces
of the various layers of the quarter wave stack." (Exhibit 5593 at 5) Wei also
was looking for a way to develop a film which was amorphous and free of voids in
order to reduce the optical characteristics of both absorption and backscatter.
(Exhibit 5593 at 6) There is no dispute that reduced surface roughness, freedom
from voids and an amorphous composition of the film are desirable optical
characteristics, but they are not solely pertinent to the field of optics.
Rather, these characteristics are also sought by those depositing thin films for
use
32
<PAGE>
with microelectronics and semiconductor applications. The evidence is clear
with respect to this compatibility between the fields. Nearly all of the
references used in this case discuss BOTH optics and microelectronics. In
contrast, there is no evidence that the two fields were self-contained. Wei
himself testified that he first conceived the idea of using ion beam sputter
deposition to manufacture ring laser gyroscope mirrors after hearing a
presentation on the use of the process in semiconductor applications. The
narrowest possible definition of the pertinent art which could reasonably be
formulated is the precision thin-film deposition art.
The parties' arguments concerning the scope and definition of the pertinent
prior art are in fact largely inconsequential in resolving the issue of
obviousness. The two most important prior art references, the Laznovsky article
and the Bernard patent, were explicitly admitted by Litton to be prior art
during the prosecution of the '849 reissue. Litton stated in its reissue
declaration dated December 12, 1986 that its original patent was invalid in
light of Laznovsky and Bernard. Such a statement, made in the course of
prosecution, constitutes an admission that a reference is prior art for purposes
of a later obviousness analysis. APPLICATION OF NOMIYA, 509 F.2d 566 (C.C.P.A.
1975). Additionally, the use of quarter wave stacks of alternating high and low
index of refraction materials is stated to be old in the art in the patent
itself. A statement in a patent that something is in the prior art is binding
on the applicant and patentee for determinations of anticipation and
obviousness. CONSTANT V. ADVANCED MICRO-DEVICES, INC., 848 F.2d 1560, 1570 (Fed.
Cir. 1988), CERT. DENIED, 488 U.S. 892 (1988).
33
<PAGE>
Many other references cited by Honeywell and disputed by Litton are clearly
within the scope of the prior art even using the narrowest reasonable
interpretation. Although a number of these references lend significant weight
to the finding of obviousness, the Court confines its analysis to the few that
were emphasized as most pertinent by Honeywell. In addition to Bernard and
Laznovsky, Honeywell relies primarily upon catalogs issued by the various
vendors visited by Wei when he was researching the use of ion beam deposition to
make mirrors. That the catalogs are within the proper scope of the prior art is
not disputed and, indeed, these catalogs reveal the very ion beam thin film
deposition equipment that was used by Wei. Moreover, Wei has testified that he
actually visited these vendors and had them deposit films for him. In the
patentability report filed during the reissue proceeding, Litton stated that:
Applicants had seen catalogs similar to these before original U.S. Patent
4,142,958 issued, but inadvertently did not cite them.
The product catalogs are unquestionably within the scope of the prior art.
Section 103 requires that the obviousness of an invention be determined as
of the time the invention was made. 35 U.S.C. Section 103. However, the
interaction between section 103 and the section 102 statutory bars creates an
effective date for prior art pertinent to the obviousness analysis of one year
prior to the date on which the application was filed, even if the inventor can
show that he invented the claimed subject matter at an earlier date.
APPLICATION OF FOSTER, 343 F.2d 980, 989 (C.C.P.A. 1965), CERT. DENIED, 383 U.S.
966 (1966). Litton filed the application for the '958 patent on April 13, 1978.
34
<PAGE>
Consequently the critical date for the obviousness analysis is April 13, 1977.
The 1975 "Veeco's Vacuum Products" catalog and the 1975 Technics "Micro Ion
Mill" catalog were published prior to the critical date. Litton has made no
attempt to demonstrate that these references were not published on the date
marked on the publications themselves. Regarding the 1975 "Veeco's Microetch"
catalog, the question is less clear. The only date referred to in the document
is in the business reply mail portion of the catalog which customers were asked
to fill in and return. It contains a box to be checked, followed by the words:
"Please send me Veeco's complete Vacuum Products 1975 Catalog." Litton has not
tried to call the date of the catalog into question. Were the date referred to
in the document somewhat closer to the critical date, a question of fact might
be raised as to whether the "Veeco's Microetch" catalog was published before the
critical date. However, because the date referred to in the document is well
over one year prior to the critical date, and there is no evidence that the
publication was made later, the Court determines that no reasonable jury could
conclude that the reference was not published prior to that date. In contrast,
a question of fact exists as to whether the catalogs dated 1977 and 1978 were
published prior to the critical date. Accordingly, the Court will disregard
these catalogs for the purpose of this analysis.
The one reference that remains at issue is an article by J. H. Molitor
entitled "Ion Propulsion--Technology Spinoffs" that was published in connection
with an American Institute of Astronautics and Aeronautics ("AIAA")
International Electric Propulsion Conference held
35
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in Florida in November of 1976.(20) The date of this reference is not in
dispute. Furthermore, it was available to interested members of the public for
copying or republication with permission of the AIAA. Litton's position is that
the article is not properly within the scope of the prior art because it was
published in connection with a conference designed primarily for "rocket
scientists" rather than precision coating specialists. Thus, it is not
analogous art. As defined by the Federal circuit:
Analogous art is that which is relevant to a consideration of obviousness
under section 103. SEE IN RE SOVISH, 769 F.2d 738, 741, 226 U.S.P.Q. 771,
773 (Fed. Cir. 1985) . . . . Two criteria are relevant in determining
whether prior art is analogous: (1) whether the art is from the same field
of endeavor, regardless of the problem addressed, and (2) if the art is not
within the same field of endeavor, whether it is still reasonably pertinent
to the particular problem to be solved. IN RE CLAY, 966 F.2d 656, 658-59,
23 U.S.P.Q. 2d 1058, 1060 (Fed. Cir. 1992) (citations omitted).
WANG LABORATORIES, INC. V. TOSHIBA CORP., 993 F.2d 858, 864 (Fed. Cir. 1993) .
The ion beam source at issue here was originally developed for space
propulsion and many of the references admitted at trial that discuss the use of
the ion beam source for coating also discuss space propulsion. It therefore
would be reasonable, and indeed usual, for a person interested in the use of an
ion beam source for coating to examine the space propulsion literature. Wei
testified that he himself attended several sessions on space propulsion at the
Symposium of Ion Sources and Formation of Ion Beams in 1971 at Brookhaven
National Laboratory. In fact, Wei had a number of papers issued at AIAA
conferences in his possession at the time of the application.
____________________
20 This article (Exh. 5820) was offered in evidence by Litton.
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Likewise, Hutchings testified that he himself had delivered a paper at an AIAA
conference, and read the literature of the AIAA on a regular basis.
Courts tend to take an expansive view of what constitutes analogous prior
art. The concept is afforded wide latitude. DANN V. JOHNSTON, 425 U.S. 219,
228-29 (1976) (automatic data processing system for use in business organization
analogous to automatic data processing system for use in banks); GRAHAM, 383
U.S. at 35 (caps for liquid containers with pouring spouts equivalent to caps
for containers with spray caps); REVLON, INC. V. CARSON PRODS. CO., 803 F.2d
676, 678 (Fed. Cir. 1986), CERT. DENIED, 479 U.S. 1018 (1986) (holding
reference to dehairing animal hides analogous to invention relating to human
hair treatment); WEATHER ENG'G., CORP. OF AMERICA V. UNITED STATES, 614 F.2d 281
(Ct. Cl. 1980) (holding patents relating to airborne delivery and fusing systems
analogous to cloud seeding invention).
If the inquiry is focussed not on the field of endeavor, but rather on the
problem to be solved, it is apparent that scientists in the space propulsion
field commonly interact with those from the precision coating field in seeking
solutions to shared problems. What is most compelling, however, is that the
relevant portion of the Molitor article does not disclose a related technology
from another discipline, but rather suggests, in general terms, the very
application claimed by the '849 reissue. The Molitor article, under the heading
"Ion Beam Sputtering" describes ion beam sputtering used to create optical
mirrors for use with a laser. Far from disclosing an analogous application,
Molitor discloses the very application
37
<PAGE>
claimed by the '849 reissue, therefore bringing it squarely within the pertinent
art for purposes of the analysis of obviousness.
Although there are many more prior art references in the record which are
highly pertinent, the references discussed above are sufficient to furnish the
basis for this necessarily abbreviated analysis of the issue of obviousness.
2. Level of ordinary Skill in the Art
A person of ordinary skill in the precision coating art would have at
the least a bachelor's degree in the field of physics or engineering and would
also have some experience with vacuum deposition technology. In fact, the
record suggests that the level of skill in the art is substantially higher, with
Ph.D. level researchers being more usual. However, for this motion, the Court
assumes that the jury chose the lowest reasonable level of skill and will
conduct its obviousness analysis on that basis.
3. The Differences Between the Claimed Subject Matter and the Prior Art.
The Court's analysis of the differences between the claimed subject
matter and the prior art is made only with reference to the prior art discussed
above. The case for obviousness is too strong to require citation to additional
prior art to reinforce it.
a. The Laznovsky Article
This article by Laznovsky was published in the August 1975 issue
of Research and Development magazine under the title "Advances in Low Energy Ion
Beam Technology." The Laznovsky article reveals the use of a Kaufman-type ion
beam source in a vacuum chamber to bombard a target obliquely and sputter
deposit optical films, including silicon dioxide and titanium dioxide, on a
substrate.
38
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Laznovsky also discloses the rotation of the substrate and cooling of the
target, as well as cleaning of the substrate in the ion beam prior to
deposition.
Moreover, despite Litton's argument that Laznovsky does not disclose the
creation of multiple layer films, even a cursory reading of the article
demonstrates that it does. The article states "A modification of the fixture
shown in fig. six provides a choice of three targets that can be interchanged
without opening the bell jar." (Exhibit 5796 at 52).(21) The only conceivable
purpose to which the multiple targets could be put is the deposition of a
multiple layer film. Although Litton argued at trial that Laznovsky does not
teach multiple layer films, it was unable to offer any alternate explanation for
Laznovsky's provision of multiple targets. Also, Laznovsky reveals controlling
the gas inside the vacuum chamber to provide sufficient gas to sustain the ion
beam. Laznovsky likewise suggests that oxygen would have to be added to
compensate for oxygen loss when depositing titanium dioxide. This reference
teaches that oxygen can be added to the vacuum chamber to ensure proper
stoichiometry of the deposited film.
Finally, Laznovsky makes the suggestion that ion beam sputtering would
provide solutions to the problems faced by Litton in developing its process.
The article specifically suggests the ion beam deposition of optical mirrors and
states that films of alumina "3000 A thick show no signs of absorption and are
of interest as medium index optical coatings." ID. at 54. More generally, the
article suggests that ion beam sputtering results in reduced contamination of
the film,
____________________
21 Figure six is a diagram of the sputtering system described by the
article.
39
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less interference from background gas, a low temperature environment, and better
control of film thickness.
The difference between Laznovsky and the claimed method is slim indeed.
The only distinction that might be argued is that Laznovsky does not suggest the
deposition of a multiple layer optical film comprising layers having different
indices of refraction. However, such optical films are admitted to be old in
the art. Moreover, any multiple layer film made up of more than one material
NECESSARILY must be regarded as a multiple layer film with different indices of
refraction.(22) The only question then is whether it was obvious in 1978 to
apply the Laznovsky method to manufacture the multiple layer optical films
claimed by the '849 reissue.
b. The Bernard Patent
The Bernard patent issued in the United States on December 9,
1975 was based on an earlier French patent. The Bernard patent teaches the
sputter deposition of multiple layer films, including those used as optical
films, onto a rotating substrate by obliquely bombarding a target with an ion
beam. The Bernard patent also specifically addresses control of the atmosphere
inside the chamber to sustain the ion beam and the addition of oxygen into the
vacuum chamber to control the stoichiometry of oxides deposited using the
method. Bernard also teaches that ion beam deposition can produce a more
amorphous film which is free from voids and specifically states
____________________
22 Baumeister quibbled that certain rare earths have the same index of
refraction as one another and that theoretically a film could be manufactured of
two different materials that have the same index of refraction. However, this
statement does not create a MATERIAL issue of fact regarding the issue.
40
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that "[i]t is obvious that the manufacturing process by ion sputtering permits
eliminating many of the impurities." (Exhibit 5806 at 3:57).
The Bernard patent is distinguishable from the method claimed in the '849
reissue in that it discloses the use of a duoplasmatron rather than a Kaufman-
type ion beam source and it limits its specific discussion of the benefits of
the process to semiconductor applications.(23)
C. The Product Catalogs
Veeco's 1975 product catalogs disclose bombarding a target
obliquely with an ion beam produced by a Kaufman-type ion beam source in a
vacuum chamber to sputter deposit multiple layer films on a rotating substrate,
varying the targets being bombarded by the ion beam, cooling the targets, and
adding gas to sustain the ion beam. The catalogs also discuss the use of the
Veeco system to deposit various oxides, including titanium dioxide and silicon
dioxide and the use of the system to sputter deposit multiple layer optical
films. The catalogs further disclose sputter cleaning the substrate prior to
deposition.
The distinction between the claimed process and the process disclosed by
the Veeco catalogs is that the catalogs do not discuss the introduction of
oxygen to assure proper stoichiometry of oxidic films.
The 1975 Technics catalog is not necessary to the Court's analysis of
obviousness. Therefore, the Court will not discuss it
____________________
23 That the Bernard patent, which is aimed at the deposition of
semiconductor materials, concerns itself with creating a more amorphous film
with less surface roughness and freedom from voids provides additional proof
that the semiconductor field and the optical field were seeking the same
qualities in their coatings.
41
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further except to note that it reveals rotation of the substrate and that Wei
had the catalog while he was employed at Litton.
d. The Molitor Article
As stated, the Molitor article specifically suggests that a
Kaufman ion beam source can be substituted for a duoplasmatron for use in an ion
beam sputter deposition system. The article also states that the ion beam
process is useful in the optical component field and discusses the use of ion
beam etching for high-powered laser mirrors. Moreover, the Molitor article
states that laser mirrors can be built by ion beam sputter deposition and
specifies that a 24 layer quarter wave stack using alternating layers of
titanium dioxide and silicon dioxide can be deposited using an ion beam system
for use as "dielectric mirrors for liquid crystal light valves." Molitor, like
Laznovsky, refers the reader to Veeco's system and therefore, by necessity, to
the contents of the Veeco catalogs.(24)
Molitor is not a near anticipation of the '849 reissue. Rather, it makes a
number of specific suggestions that show that the process revealed by Laznovsky
and the Veeco catalogs can be used to create the very product described in the
'849 reissue.
4. Secondary Considerations
Evidence rising out of what are referred to as secondary
considerations must always, when present, be considered in making the
determination of obviousness. STRATOFLEX, INC. V. AEROQUIP CORP., 713 F.2d
1530, 1538 (Fed. Cir. 1983). This is true in every case where obviousness is
raised as an issue, not just when the claims remain in doubt after a review of
the prior art. ID. at 1538-39. Although
____________________
24 We always gave them catalogs and instructions.
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secondary considerations must always figure in the Court's obviousness analysis,
a nexus between the merits of the claimed invention and the evidence of
secondary considerations is required in order for the evidence to be accorded
substantial significance. CABLE ELEC. PRODS. V. GENMARK, INC., 770 F.2d 1015,
1026 (Fed. Cir. 1985). "Thus, the weight to be accorded evidence on secondary
considerations is to be carefully appraised in relation to the facts of the
actual case in which it is offered." ID. Objective evidence of nonobviousness
tends to fall into categories such as long felt need, commercial success,
failure of others, copying, and unexpected results. PERKIN-ELMER CORP. V.
COMPUTERVISION CORP., 732 F.2d 888, 894 (Fed. Cir. 1984), CERT. DENIED, 469
U.S. 857 (1984).
a. Long Felt But Unmet Need
The evidence does not support the conclusion that there was a
long felt, but unmet need for an ion beam laser mirror at the time the claimed
invention was made.(25) It likewise does not show that at the time of the
claimed invention, those in the field were in any way dissatisfied with the
performance of the existing electron beam laser mirrors whether used for ring
laser gyroscopes or otherwise. In fact, there is substantial evidence to the
contrary. Honeywell succeeded in capturing the majority of the commercial
market using electron beam mirrors and only later turned to an ion beam process.
Baumeister, Litton's own expert, testified:
No, we didn't seriously consider [making laser mirrors by ion beam
sputtering], and the reason was that we were still pushing electron beam
evaporation to its limits to see how well you can do with that and we were
still on the learning curve and making very good E-beam evaporative
mirrors.
____________________
25 That Hutchings was experimenting with ways to make improved laser
mirrors does not establish a long felt, but unmet need in 1978.
43
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Likewise, the record contains no evidence that the industry had tried and
persistently failed to make a better laser mirror prior to Litton's use of the
ion beam process. It was the economics involved in the development of the ring
laser gyroscope that created the need that existed for a better mirror, not the
persistent failure of the methods employed in the prior art. Baumeister's
testimony is illuminating:
Q: Do you believe, Dr. Baumeister, that it is generally accepted in the
art of optical scientists that in order to make a good optical film one
wishes to avoid the presence of voids?
. . .
A: Again what I am trying to state here is that the whole business is run
by the economics, and we were able to ship these mirrors to our parent
company down in Palo Alto, California that actually put these lasers
together and they lived [sic] to live with the voids in them, if that is
what they were, they lived [sic] to live with that and these mirrors had a
reasonable amount of scatter with them but still these argon lasers worked
fine in that environment there and so to make this general sweeping
statement is not very meaningful because I think it begs the economics of
it.
(Transcript at 6667:21-68:13). Hutchings, the director of Litton's ring laser
gyroscope program, agreed with Baumeister:
The characteristics of the multilayer thin film technology in the 1974 era
according to the coating people was very good, that is, the films did
virtually everything they needed at that time.
(Transcript at 454:11-14). Likewise, another of Litton's experts, Dr. Hans
Pulker, provided corroborated Hutchings' conclusion:
Well, I know that a lot of publications were done which recommended
sputtering for optical coatings. But it was always the problem of
economics. And the problem was always the time. Because most optical
products that were produced this way became too expensive. So it's --
sputtering is, in my opinion, only useful if the price for this product can
bear all these extreme costs you have.
(Transcript at 1109:6-12).
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Drawing all of the inferences in favor of Litton, the record does not
support a finding of long felt but unmet need. Rather the testimony of Litton's
own witnesses supports the contrary inference that the reason that optical
scientists had not turned to ion beam sputtering to deposit their mirrors was
that they were satisfied with existing technology and saw no particular reason
to explore a more expensive alternative. Continued experimentation taken by
itself does not require a conclusion of long felt but unmet need.
b. Commercial Success
Although it appears that ion beam mirrors have enjoyed
significant commercial success, success is not necessarily probative of
nonobviousness. The majority of the commercial success evidence presented by
Litton was based on HONEYWELL'S use of ion beam mirrors in the ring laser
gyroscopes in its already successful inertial guidance systems. There is no
showing that Honeywell's systems were commercially unsuccessful until it adopted
Litton's process for making ion beam mirrors.
Honeywell achieved dominance in the commercial inertial navigation market
PRIOR to employing the ion beam process to manufacture its mirrors. Honeywell's
superior navigation system, not its superior mirrors, brought about its success.
For commercial success of a product embodying a claimed invention to have true
relevance in an analysis of nonobviousness, that success must in some way have
been due to the nature of the claimed invention, as opposed to other economic
and commercial factors unrelated to the technical quality of the patented
subject matter. CABLE ELEC. PRODS., 770 F.2d at 1027.
45
<PAGE>
Litton has shown that (i) Litton uses ion beam coated mirrors; (ii)
Honeywell adopted the use of ion beam coated mirrors; and (iii) that Litton and
Honeywell comprise nearly the entire market for inertial navigation systems.
Litton argues that the ineluctable conclusion from those facts is that ion beam
coated mirrors are responsible for Litton and Honeywell's market domination.
However, those facts prove nothing more than that the parties dominant in the
market use ion beam mirrors, not that the use of the mirrors made them dominant.
Litton asked the jury to conclude that Honeywell would have lost its
existing market for ring laser gyroscope systems had it not adopted ion beam
mirrors. Litton then asked the jury to conclude further that Litton would have
taken the market lost by Honeywell, and the jury did so. The difficulty is that
the evidence does not support the conclusion that the entire inertial navigation
market turns on whether or not ring laser gyroscopes employ ion beam deposited
mirrors. Evidence to support a finding of this kind of nexus is wholly lacking.
c. Failure of Others
Litton has not shown that anyone else had repeatedly failed to
produce a mirror that would perform satisfactorily in a ring laser gyroscope.
There is evidence of continuous experimentation, but there is no evidence of
repeated failure. Rather, the evidence is that at the time the Litton process
was developed, the industry was having success with the electron beam process.
Honeywell's problems with its mirrors occurred long AFTER the date of the
invention, and they arose because collateral technological advances created a
need for better mirrors. At some point, the quality of the electron beam
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<PAGE>
deposited mirrors was no longer considered sufficient. However, evidence of a
need felt by Honeywell long after the '958 patent was granted is only marginally
relevant to the issue of obviousness.
d. Copying
Copying is Litton's strongest case, and it was established by
Honeywell's own executives. Litton showed that when Honeywell, several years
after Litton's invention was developed, determined that better laser mirrors
were required, it bought ion beam mirrors from Louderback rather than developing
its own process. The jury found copying and, as discussed below, there is
substantial evidence to support that finding. However, more than the mere fact
of copying by an accused infringer is needed to make these acts significant in a
determination of obviousness. CABLE ELEC., 770 F.2d at 1028. The Federal
Circuit has said:
Rather than supporting a conclusion of obviousness, copying could have
occurred out of a general lack of concern for patent property, in which
case it weighs neither for nor against the non-obviousness of a specific
patent. It may have occurred out of contempt for the specific patent in
question, only arguably demonstrating obviousness, or for the ability or
willingness of the patentee financially or otherwise to enforce the patent
right, which would call for deeper inquiry. Even widespread copying could
lead toward opposite conclusions, depending on the attitudes existing
toward patent property and the accepted practices in the industry in
question. It is simplistic to assert that copying per se should bolster
the validity of a patent.
ID. Here, Litton, by seeking reissue, has admitted that its '958 patent was
invalid. Additionally, the evidence is overwhelming that the industry as a
whole believed the '958 patent to be invalid even prior to Litton's application
for reissue.(26) Nevertheless, it was the
____________________
26 That Litton itself believed the '958 patent to be invalid is evidenced
not just by its application for reissue but also by its failure to assert the
'958 patent in the SUNSTRAND litigation. Honeywell's belief that the patent was
invalid is evidenced by an
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evidence of copying that caused the jury to find for Litton on the issue of
obviousness, and since there is substantial evidence to support it, this factor
should be accorded its due weight.
e. Unexpected Results
Despite Baumeister's declaration, there is no evidence that the
claimed method produced unexpected results.(27) Rather, the results of the
method claimed in the '849 patent are precisely those predicted or suggested by
the prior art. Litton's claim that the results of ion beam sputtering were
unexpectedly good is not supported by the record. The prior art is crowded with
references showing that ion beam sputtering would lead to a more amorphous film
which would be freer of voids and impurities.
5. THE LEGAL CONCLUSION REGARDING OBVIOUSNESS
Enroute to a conclusion with respect to obviousness, a court must not
stop until each relevant item of evidence has been fully considered and given
its appropriate weight. STRATOFLEX, 713 F.2d at 1539. Particularly relevant is
the examiner's original explanation that:
[i]t . . . would have been obvious, at the time the invention was made, to
fabricate the known multi-layer laser mirror stacks using the apparatus and
techniques of Laznovsky [and the] teachings of Bernard . . . .
[T]he invention described by the instant claims merely recites an OBVIOUS
process for making high quality optical film stacks of known structure and
function, using a
____________________
exhibit heavily relied upon by Litton. Honeywell engineer Richard Rostal wrote
in his diary at the time during which Honeywell was negotiating with Louderback,
"Litton patent not enforceable." (Exhibit 43 at 3608480).
27 Litton's exhibit 33 was offered as evidence of praise of the
invention, which is also a consideration in the determination of obviousness.
LIBBEY-OWENS-FORD CO. V. BOC GROUP, INC., 655 F. Supp. 897, 914 (D.N.J. 1987).
48
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conventional WELL KNOWN APPARATUS, employing procedures and/or precautions
necessary for obtaining good quality films of desired optical properties which
were well known in the art at the time the invention was made.
(Exhibit 5594 at 108-09).
Although the examiner eventually retreated from this position, he did so
only in reliance on Paper No. 15 which included the Baumeister declaration.
When he did so, the examiner was not aware of a number of uncontroverted facts
about the declaration and the circumstances surrounding its execution. He did
not know that Baumeister had never used ANY KIND of ion beam source to deposit
any sort of thin film. Nor was he aware that prior to signing his declaration,
Baumeister had read only the specific documents provided to him by Litton's
counsel, had done no independent investigation or research, and knew nothing
about what the claimed process could achieve other than what was written in the
'849 reissue application. Nor did the examiner know that before he signed his
declaration, Baumeister had not spoken to the inventors or read the Veeco
catalogs. Likewise, the examiner was not aware that Baumeister had done no
experiments to provide himself with a reasonable basis for the statements he
made about the unexpected results achieved by use of the process. The examiner
had complained that he had no data, but the examiner was not aware that
Baumeister had none either.
The examiner relied on Baumeister as a person reasonably skilled in the
art. Baumeister did not speak as such a person, but rather as an instrument to
assert, once again in a more impressive way, the arguments of Litton's counsel.
When these same arguments had been made before, the examiner had rejected them.
Apparently, he accepted
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<PAGE>
them from Baumeister because of his academic credentials and his purported skill
in the art. In this, he was misled.(28)
Of course, the examiner did not have before him Molitor's article that
specifically suggests that ion beam sputter deposition could be used to make
laser mirrors and 24-layer quarter wave stack optical mirrors. Nor did the
examiner have before him the suggestion in the Molitor article that a Kaufman-
type ion source could be substituted for the duoplasmatron. Molitor, although
not necessary to complete the already strong case of obviousness established by
the Laznovsky article and the Bernard patent, serves to cement the conclusion of
obviousness.
The examiner could not have known that Louderback believed, as he testified
at trial, that Laznovsky REVEALED EVERY ELEMENT of claim 1 of the '849 reissue.
The examiner did not know that Wei's process was essentially complete after just
one visit to Technics. Most significantly, the examiner did not have before him
the 1975 product catalogs. Litton did provide him with portions of a 1977 Veeco
catalog and a 1978 Commonwealth catalog. However, the examiner might have
discounted those references as being published after the critical date, being
unaware that the apparatus and the applications of that apparatus that were
described in those catalogs were, for the most part, also described in catalogs
published well before the critical date.
The process which is claimed in the '849 reissue is nothing more than an
obvious application of well-recognized and commercially available technology to
manufacture a known product. The Court,
_____________________
28 As Litton's own counsel repeatedly remarked at the trial, the reissue
patent was granted based on secondary considerations.
50
<PAGE>
construing every disputed fact in Litton's favor and drawing every inference
from each of those facts, finds, as a matter of law, that every claim of the
'849 reissue is obvious, and that, on this ground alone, Honeywell is entitled
to judgment as a matter of law.
B. INEQUITABLE CONDUCT
A patent, by its very nature, is affected with a public interest, and each
individual associated with the filing of an application has a duty of candor and
good faith in dealing with the PTO. Thus, the inventor, the attorney who
prepares or prosecutes the application, and all other individuals who are
involved in the substantive preparation or prosecution of the application are
subject to this duty. They each have an obligation to disclose to the PTO all
information known by them to be material to patentability. 37 C.F.R. Section
1.56. Failure to adhere to the duty of disclosure with intent to deceive the
examiner constitutes inequitable conduct and if inequitable conduct is found in
relation to one or more claims, the entire patent is rendered unenforceable.
KINGSDOWN MEDICAL CONSULTANTS, LTD. V. HOLLISTER INC., 863 F.2d 867, 874 (Fed.
Cir. 1988), CERT. DENIED, 490 U.S. 1067 (1989).
To prove inequitable conduct, a party challenging a patent must show both
that the information not disclosed to the examiner was material to the
determination of patentability AND that there was a failure to disclose with
intent to deceive the examiner. ID. Materiality and intent are factual issues
which the challenger must prove by clear and convincing evidence. J.P. STEVENS
& CO., INC. V. LEX TEX LTD., 747 F.2d 1553, 1562 (Fed. Cir. 1984), CERT.
DENIED, 474 U.S. 822 (1985). Although materiality and intent are factual
issues, because inequitable conduct is an equitable defense, the Court, rather
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than the jury, is required to resolve disputes regarding these issues. PARAGON
PODIATRY LAB. V. KLM LAB., INC., 984 F.2d 1182, 1190 (Fed. Cir. 1993).
Once the challenger of a patent establishes both materiality and intent,
the Court conducts a balancing test to determine whether the scales tilt to a
conclusion that inequitable conduct has occurred. J.P. STEVENS, 747 F.2d at
1560. Although the challenger has the burden of producing clear and convincing
evidence on both materiality and intent, when the Court weighs the evidence to
determine the existence of inequitable conduct, the more material the omission,
the less culpable the intent required, and vice versa. N.V. AKZO V. E. I. DU
PONT DE NEMOURS & CO., 810 F.2d 1148, 1153 (Fed. Cir. 1987).
1. THE ORIGINAL PATENT
Honeywell argues that Litton was guilty of inequitable conduct in
connection with the '958 patent and that this conduct renders the reissue
unenforceable. If inequitable conduct during the prosecution of the original
application is found, reissue is not available to obtain new claims to thereby
rehabilitate the patent. HEWLETT-PACKARD CO. V. BAUSCH & LOMB INC., 882 F.2d
1556, 1563 n.7 (Fed. Cir. 1989), CERT. DENIED, 493 U.S. 1076 (1990);
APPLICATION OF CLARK, 522 F.2d 623 (C.C.P.A. 1975). Specifically, Honeywell
charges that, although Litton obtained issuance of the '958 patent based on the
argument that rotation of the substrate was novel, Litton knew at the time that
rotation of the substrate was old.
a. Materiality
Information is material if a substantial likelihood exists that a
reasonable examiner would consider it important in deciding whether to allow the
patent to issue. FOX INDUS., INC. V.
52
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STUCTURAL PRESERVATION SYSTEMS, INC., 922 F.2d 801, 803 (Fed. Cir. 1990).
Although Litton submitted NO PRIOR ART in connection with its application
for the '958 patent, the examiner rejected Litton's original claims on the
ground that the prior art discovered by the examiner rendered the patent
obvious. To avoid the examiner's obviousness rejection, Litton proposed to
limit its independent claim 1 in the following manner:
and continuously rotating said base during the deposition of said multiple
optical layers.
(Exhibit 5593 at 31). In connection with its proposal, Litton argued through
its in-house attorney, Ernest L. Brown ("Brown"):
None of the references teaches nor shows a continuously rotating base
during the deposition of the multiple optical layers as described by the
applicants and claimed by the applicants in method claim 1 and hence in the
dependent claims 3 through 10. . . . Inasmuch as none of the cited patents
teaches nor shows the continuously rotating of the base during the
deposition of multiple optical layers as claimed in applicants' amended
claim 1 and claims dependent therefrom, claims 1 and 3 through 10 are now
believed in condition for allowance, and their allowance is respectfully
requested.
(Exhibit 5593 at 33-34). The examiner accepted Brown's statement regarding the
novelty of substrate rotation and allowed the claims, stating:
Generally, rotation of a substrate is not indicated when sputtering from a
single target. Accordingly, the presence of such limitation in independent
claim 1 is considered to be unobvious.
(Exhibit 5593 at 38).
Brown's statement to the examiner was unquestionably false. Since the
examiner obviously would have considered any information in Litton's possession
regarding substrate rotation important to his decision to allow the patent,
materiality is not in doubt.
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b. Intent
To prove intent to deceive, Honeywell must show, by clear and
convincing evidence, that the involved conduct, viewed in light of all the
evidence, including evidence indicative of good faith, was sufficiently culpable
to require a finding of intent to deceive. KINGSDOWN, 863 F.2d at 876. Simple
negligence, oversight, or erroneous judgment made in good faith, is never
sufficient to show inequitable conduct. J.P. STEVENS & CO., 747 F.2d at 1560.
"A party charging inequitable conduct may establish a PRIMA FACIE case by
showing an unexplained violation of the duty of candor." PARAGON, 984 F.2d at
1192. In a responsive denial, the patentee may show facts which demonstrate
that, under the particular circumstances as the applicant or his attorney then
perceived them, an inference of wrongful intent should not be drawn. ID.
The Federal Circuit has inferred intent where the applicant affirmatively
submitted misleading information under oath in a situation in which the examiner
is unable to investigate the facts. PARAGON, 984 F.2d at 1191 (granting summary
judgment with respect to inequitable conduct). That is precisely what happened
here. Litton admitted during the reissue proceeding that it had "seen" product
brochures similar to the 1977 Veeco catalog and the 1978 Commonwealth catalog
before the '958 patent issued. Those two catalogs, as well as the two 1975
Veeco catalogs, the 1975 Technics catalog, and the 1977 Commonwealth catalog,
each disclose rotation of the substrate. Wei testified at trial that he had the
1975 Technics catalog in his possession prior to the time the '849 reissue
application was filed. Product brochures such as these are not the sort of
information which could be uncovered in the examiner's own search and therefore,
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Litton's failure to disclose this information to the examiner made it more
difficult for him to avoid error in making his decisions. Moreover, because the
examiner had no knowledge that Wei had developed the invention by using
commercial equipment offered by various vendors, he would not have attached any
particular significance to the catalogs.
At trial, both inventors acknowledged that they knew at the time of the
prosecution of the '958 patent that rotation of the substrate was old. Wei also
testified that he was in possession of the 1975 Technics catalog that revealed
substrate rotation. Hutchings testified that substrates were rotated in coating
chambers in 1975 and well before that time. Yet the inventors and Hutchings
stood by while Brown convinced the examiner that the '958 patent should be
granted based on the novelty of substrate rotation. This evidence is sufficient
to establish a prima facie case of intent to mislead the examiner. PARAGON, 984
F.2d at 1192. Since the materiality of the misleading statement is
indisputable, Honeywell made a prima facie case of inequitable conduct.
Litton's response is that even if everyone else at Litton knew that substrate
rotation was old, Brown did not, and the knowledge of the inventors and
Hutchings cannot be imputed to him. Thus, the misrepresentation made by Brown
must be viewed as inadvertent.
When the prosecution began, the attorney in charge of the '958 application
was Porter. Porter left Litton and was replaced by Brown prior to Litton's
submission of its response to the examiner's first rejection of all of the
claims. It was Brown who prepared Litton's amendment filed on April 13, 1978,
which resulted in the issuance of the '958 patent. Brown's supervising
attorney, Gillmann, testified
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that he had nothing to do with the prosecution of the '958 patent because he was
busy with litigation. He also testified that although he generally supervised
both Porter and Brown, he did not do so with respect to the '958 application.
Wei testified that he took no part in the prosecution of the '958
application other than signing the inventor's oath and talking with Porter
regarding whether Wei's or Louderback's name should be listed first on the
patent. Louderback testified that he recalled talking to Porter and Gillmann
about the application but did not remember any of their conversations except one
in which he was asked to write out a statement of the best mode for the
invention. Louderback said that he did not recall reading the application prior
to signing the oath and that he had no recollection of reading the prosecution
history. He also did not remember ever talking to Brown. Hutchings testified
that he had nothing at all to do with the application or prosecution of the '958
patent.
There is nothing in the record to explain why an obviously false statement
was made to the examiner. In essence, Litton's position is that in preparing
Litton's response to the examiner's rejection, Brown did not talk to either
inventor, the Litton attorney who was supervising him, any Litton technical
personnel, or anyone else. Rather, using only the prior art found by the
examiner himself, Brown independently fashioned a successful, but innocently
mistaken, argument that substrate rotation distinguished the '958 invention from
the prior art. This argument that there may have been negligence involved in
the representations made to the examiner, even gross negligence, but no
intentional deception, is a hard one to accept. The signature of a patent
attorney on a paper submitted by him
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certifies that to the best of his knowledge, information, and belief, there is
good ground to support the paper. 37 C.F.R. Section 10.18(a). Brown had no
knowledge at all, and if one has a duty of candor, to make a statement without
any knowledge of whether it is true or false is to make a statement without good
ground.(29)
It is not necessary for an applicant or his attorney to make a prior art
search or to disclose prior art of which the applicant "should be" aware.
AMERICAN HOIST & DERRICK CO. V. SOWA & SONS, INC., 725 F.2d 1350, 1362 (Fed.
Cir. 1984), CERT. DENIED, 469 F.2d 821 (1984). Nonetheless, one should not be
able to cultivate ignorance in order to avoid knowledge of well known prior art.
FMC CORP. V. HENNESY INDUSTRIES, INC., 836 F.2d 521, 526 n. 6 (Fed. Cir. 1987).
Before making an argument to the examiner, Brown was obligated to assure himself
that he has SOME factual basis for his statement. But, Brown did nothing and
spoke to no one, not even the inventors, before making the argument about
substrate rotation. Even Litton's own patent law expert, Professor Gambrell
testified that:
Well, they certainly have an obligation to disclose material information,
as I described it, that might be useful to the examiner, but the question
of how much of an investigation they have to make is a very fuzzy area.
THEY CAN'T STICK THEIR HEAD IN THE SAND AND ACT LIKE THEY DON'T WANT TO
KNOW SOMETHING, but on the other hand, they don't have any obligation to
go out and make an investigation.
(Transcript at 3149:9-17) (emphasis added).(30)
____________________
29 Litton offered, but the Court did not admit in evidence what Litton
said was a dying declaration from Brown in which he stated that he had no
intention to mislead the examiner.
30 Litton argues that Professor Gambrell's testimony regarding the legal
duty of a patent attorney practicing before the patent office established facts
which Honeywell failed to refute and that therefore Litton's version of the
legal standard must prevail. That argument, of course, is completely meritless.
A patent law expert, even if allowed to testify by the court, cannot establish
propositions
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Brown appears to have stuck his head in the sand. He was not permitted to
do that, and NEITHER WERE THE INVENTORS. Litton is a major company with
substantial experience and expertise in the prosecution of patent applications.
In the words of Litton's President and Chief Executive officer:
We're not in banking, we're not in insurance, we're in manufacturing. But
if you go down a step further, our business is characterized, some of them,
by both of these parameters, some of them by one or the other. But usually
high capital investment and high intellectual property, lots of research
and development
The development time on our product -- and I'll just talk here in the Nav
Group but its also true if you go look at our oil services businesses --
can be in the tens of millions of dollars. And if you are going to make
those kinds of investments, it's absolutely requisite that you protect
yourself by having -- you know, effectively by having either patent
protection or the lead time or the trade secret and intellectual property
protection that you get. Otherwise it's impossible to make those kinds of
large investments and ever make a return on your investment. So we depend
on intellectual property protection in order to run our business.
(Transcript at 4314:13-4315:5).
With respect to a company such as the one described, it is difficult to credit
testimony that no one knew anything about the '958 patent except Brown, and that
he made an innocent mistake. Nevertheless, since there is arguably some doubt
about Brown's intent, the Court will accept Litton's version of the facts and
find that the '849 reissue is not unenforceable on the ground of inequitable
conduct in the prosecution of the '958 patent.
____________________
of law which the court must accept unless the opposing party refutes them.
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2. THE '849 REISSUE
In support of its contention that the '849 reissue was procured by
inequitable conduct, Honeywell points to a number of specific instances in its
prosecution, but does not attempt to tie the instances together to show an
overriding pattern of deception. However, in viewing the evidence of Litton's
conduct as a whole, the Court has concluded that it does support a finding of
intent to deceive the examiner regarding highly material issues.
The identities, if not the roles, of the various Litton counsel and
personnel are fairly clear. In June 1983, Litton, through Gillmann, appointed
George Netter, a former partner in the firm of Bright and Lorig, as an attorney
of record for the '958 patent. This appointment was made four years after the
'958 patent issued, but two years before the reissue application was filed.
Although Netter appears to have been involved in the decision to seek reissue of
the '958 patent, Netter testified that he remembered nothing about that subject.
Likewise, his role in the reissue cannot be ascertained because all of the
parties involved in the reissue testified that they remember nothing about what
Netter did. At his deposition, Netter did remember having seen both the 1977
Veeco catalog and the Laznovsky article, but his memory of this failed at the
time of trial.
In July 1985, in the reissue proceedings, Netter's partners, Patrick Bright
("Bright") and Elwood Kendrick ("Kendrick") were added as prosecuting attorneys.
Bright took charge of the prosecution of the patent from that point forward,
although the evidence shows that he was involved as early as 1984.(31) He
drafted all the written
____________________
31 Bright did the prior art review in August 1984 which led to Litton's
decision to seek reissue.
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materials provided to the examiner as a part of the prosecution of the '849
reissue. He also coordinated the production of materials from third parties for
use in the prosecution with one notable exception. He had no personal contact
with the Litton financial officers who signed the reissue declarations.
Gillmann, who played no other role in the reissue, procured their signatures.
Honeywell argues that its case of inequitable conduct is established by (1)
a misleading statement regarding catalogs similar to the 1977 Veeco catalog and
the 1978 Technics brochure in the patentability report; (2) the omission of
pages 79 and 80 of the 1977 Veeco catalog from the patentability report; (3) a
misleading statement regarding the date upon which Litton became aware of the
prior art cited in the first reissue declaration; (4) Litton's designation of an
uninformed financial officer who had absolutely no knowledge of the technology
or even of the truth or falsity of the declaration itself to sign the first
reissue declaration on its behalf; (5) Litton's submission of 82 prior art
references in an indistinguishable mass which were not highlighted or ordered by
importance in the "patentability report"; (6) misleading descriptions of the
references in the patentability report; (7) concealment of the Laznovsky
article; (8) misleading statements in the declaration of David Sadler ("Sadler")
filed by Litton in response to the examiner's rejection of Litton's claims as
obvious; (8) Sadler's lack of foundation for signing the declaration; (8)
misleading statements in the Louderback declaration; and (9) misleading
statements in the Baumeister declaration. Although Honeywell's brief argues
these allegations somewhat in chronological order, they are best understood
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if separated into two general categories: procurement of baseless declarations
and misrepresentation of prior art.
a. Procurement of Baseless Declarations
Honeywell claims that Litton, with deceptive intent, presented to
the examiner four declarations, the content of which was not supported by the
knowledge of the declarant. These are, in order of importance, the Baumeister
declaration, the Louderback declaration, the first reissue declaration, and a
later reissue declaration.
i. The Baumeister Declaration
As stated, the Baumeister declaration was a crucial part of
Paper No. 15 which convinced the examiner that the claims of the '849 reissue
should be allowed over his prior obviousness rejections. Baumeister's
declaration did not present any new facts or arguments to distinguish the
invention from the prior art, but rather provided the examiner with the
testimony of a man who was represented to be a person of great skill in the
pertinent art. Baumeister's testimony at trial proved beyond question that he
was not such a person.
Rather, despite his impressive credentials, Baumeister knew nothing about
the subject invention other than what Litton's attorneys told him and he had
read only the specific documents provided to him by them. Although he spoke
with authority on the subject of using duoplasmatrons for optical coating,
Baumeister testified at trial that he had never used a duoplasmatron and, in
fact, had never used any kind of ion source to deposit an optical coating.
Likewise, Baumeister's sole basis for the statements he made regarding the
claims in the patent was what he had read in the patent itself. Although
Baumeister was profoundly unqualified to make the statements
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in his declaration, and the arguments he made were identical to those already
made by Litton, the examiner reconsidered his prior rejections after considering
Baumeister's statements. Baumeister's statements were unquestionably material.
Baumeister's declaration stated:
I declare that all statements made herein of my own knowledge are true and
that all statements made on information and belief are believed to be true;
and further that these statements were made with the knowledge that willful
false statements and the like so made are punishable by fine or
imprisonment, or both, under section 1001 of Title 18 of the United States
Code and that such willful false statements may jeopardize the validity of
the application or any document or patent resulting therefrom.
(Exhibit 5594 at 149-50). Baumeister's declaration is not made on information
and belief, but rather, purports to be based on his own personal knowledge as
one skilled in the art. Because Baumeister had no such knowledge about
duoplasmatrons or indeed about any kind of ion beam coating, he could not have
known whether any of the statements that he made were true or not.(32) The
declaration sets forth at length Baumeister's learning and skill, omitting to
state that Baumeister had no experience with the technology claimed by the
patent.(33) This kind of deliberate artfulness supports a finding of an intent
to mislead
____________________
32 At least one of the statements made by Baumeister without any
qualification was in fact not true. He stated, "[i]n 1978, as today, no persons
skilled in the methods of forming MULTIPLE LAYER OPTICAL COATINGS would use the
duoplasmatron for the purposes disclosed in the '958 patent or for any other
purpose.." (Exhibit 5594 at 149). At trial, both Frank Bazzarre and Esther
Krikorian testified that they had made multiple layer optical films using
duoplasmatrons.
33 Such an omission would not support a finding of intent to deceive if
this were a pioneer patent because, in that case, no one would have used the
technology before. Here however, the technology used a commonly available
commercial apparatus. The inventors themselves had used such a commercial
apparatus in conceiving the invention.
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the examiner. PARAGON PODIATRY, 984 F.2d at 1191. Moreover, as in PARAGON
PODIATRY, the inference arises not simply from the materiality of the Baumeister
declaration, but from the affirmative act of submitting it, its misleading
character, and the inability of the examiner to investigate the facts. ID.
Litton argues that PARAGON PODIATRY is distinguishable because in that
case, the Federal Circuit found inequitable conduct in the misleading omission
of information regarding ownership interests in the applicant by experts who
artfully suggested in their declarations that they were disinterested. Litton
points out that Baumeister had no ownership interest in Litton and had consulted
for many other companies including Honeywell. However, it was not the ownership
interest held by the declarants in PARAGON PODIATRY that supported the finding
of inequitable conduct, but rather, the misleading character of the affidavit
itself. In PARAGON PODIATRY the Federal Circuit held the affidavits misleading
because "the natural consequence of these acts was to lead the examiner to
believe that the affiants were disinterested parties, and the patentees were
successful in that effort." PARAGON, 984 F.2d at 1191. Here, the natural
consequence of Litton's knowing submission of the Baumeister declaration was to
lead the examiner to believe that Baumeister, as one skilled in the art, knew
the results which could be obtained from Kaufman-type ion beam sources as
opposed to duoplasmatrons.
Such a showing requires that Litton produce SOME evidence that, under the
particular circumstances, as Litton's counsel, personnel or employees perceived
them, the Court should not draw an inference of wrongful intent. PARAGON, 984
F.2d at 1192. However, the Court is met with a virtually complete failure of
memory and a total lack of
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documents or notes except those as to which the attorney-client privilege is
asserted. As to these privileged documents or notes, Litton argues that the
Court must not draw an inference of intent to deceive from Litton's assertion of
the attorney-client privilege because to do so would deny its right to the
privilege. Honeywell, in response, argues that the attorney-client privilege is
inapplicable. Privilege, however, is not the issue here, and the Court need not
decide the validity of Litton's invocation of it.(34) Honeywell established a
prima facie case of intent to deceive. Litton has pointed to NOTHING that
refutes that showing. In fact, the record is astonishing in its complete lack
of evidence as to what transpired between Litton's counsel and the examiner in
the prosecution of the '849 reissue. The Court is left with no evidence to
weigh and no inferences to draw. SEE A. B. DICK CO. V. BURROUGHS CORP., 798
F.2d 1392, 1399-400 (Fed. Cir. 1986).
ii. The Louderback Declaration
The Louderback declaration is notable for its unsupported
statements regarding duoplasmatrons. Louderback testified at trial that he had
little knowledge about the capability of duoplasmatrons. However, because his
declaration is formulated not in absolute statements but in terms of
likelihoods, the
____________________
34 Litton's privilege argument was that because Litton sought the reissue
in CONTEMPLATION of asserting the reissued patent in the SUNSTRAND litigation,
any communications regarding the reissue were privileged because they would be
related to that litigation. Under Litton's argument, documents relating to any
reissue application would be unreachable due to attorney-client privilege so
long as there is an ongoing case in which the potential reissue patent MIGHT be
asserted. That clearly would be an inequitable result, particularly in a case,
such as this one, where the reissue patent never was asserted in the litigation
from which the privilege was claimed.
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misrepresentations in his declaration do not support a finding that Litton
committed inequitable conduct.
iii. The Nathanson and Sadler Declarations
Honeywell points to Litton's designation of two financial
officers, neither of whom knew anything at all about the patent or the
underlying technology, to sign Litton's reissue declarations. The initial
declaration, and several succeeding declarations were signed by a Litton Vice
President of Finance named Joel Nathanson ("Nathanson"). Nathanson testified
that he played no part in drafting the declaration, made no independent review
of the declaration, had no knowledge of the technology, did no investigation,
read no documents, did not understand the technical terms used in the claims and
specification, in particular the term "Kaufman-type source," and only asked
general, non-technical questions of the person who presented the declaration for
his signature. Despite signing an oath that all the statements made of his own
knowledge are true, Nathanson had NO KNOWLEDGE WHATSOEVER regarding whether the
material in any of the declarations he signed was true.
The version of 37 C.F.R. Section 1.56 which was in effect at the time that
Nathanson signed the declaration provided that an application may be stricken
from the files for inequitable conduct if a declaration made pursuant to 37
C.F.R. Section 1.63 is signed without review thereof by the person making the
declaration. 37 C.F.R. Section 1.56(c)(2). Section 1.63, in turn, describes the
kind of declaration or oath required as part of the application for a patent.
Nathanson knew nothing about the declaration he signed. Moreover, even if he
had read it, Nathanson had no basis for understanding the statements in the
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declaration he signed because he had no technical knowledge or experience in
this area.
In any case, section 1.63 itself requires that the declaration must state
that the person making the declaration "has reviewed and understands the
contents of the specification, including the claims, as amended by any amendment
specifically referred to in the oath or declaration." 37 C.F.R. Section 1.63.
Nathanson's testimony establishes that, whether or not he read the
specification, the claims, or the declaration, he did not understand them.
Bright testified that 37 C.F.R. Section 1.64 allows a corporate officer who
signs a reissue declaration in lieu of the inventors to do so on information and
belief provided by patent counsel. Section 1.64 does indeed allow parties to
sign a declaration upon information and belief if the inventor is dead, is
insane, or if the inventor refuses to participate in the application and the
application is accompanied by proof of the pertinent facts. Section 1.64 does
not, however, make any reference to a reissue application prepared by an
assignee. In any case, even if Nathanson were permitted to sign based on
information and belief, that does not negate the separate requirement of section
1.63 that he understand the contents of the specification and the claims.
A declaration by an informed person gives the examiner the benefit of the
participation in the application process of a person with first-hand knowledge
of the facts. Without the participation of such a person, the examiner is left
with only patent counsel.(35) To allow the declaration to be signed by a person
with no information at
____________________
35 Litton's strategy clearly denied the patent examiner any contact with
anyone other than Litton's outside patent counsel.
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all is to make the declaration requirement a meaningless formality. The
requirement of 37 C.F.R. Section 1.63 that a declarant understand what he is
signing is not obviated by the provision of 37 C.F.R. Section 1.172 that allows
an assignee to sign the oath for a narrowing reissue.
Nathanson's declaration makes a number of unqualified statements, including
that "Litton first learned of the impact of [the twenty-two cited prior art
references] upon completion, in August 1984, of a review thereof by Litton's
outside counsel. . . . " Honeywell argues that this statement is clearly false
because twenty of the twenty-two references had been brought to Litton's
attention by foreign patent offices between 1979 and 1983. Whether or not the
references called to Litton's attention in foreign prosecutions have
significance here, the statement does show why it was improper for Litton to
designate an uninformed corporate officer to review the application. If Litton
had chosen an informed person to sign the application, that person, with
knowledge of the foreign prosecutions, would have been required to substitute
less deceptive language in the declaration.
In addition to the Nathanson declaration, Litton's June 13, 1986
declaration filed in response to the examiner's obviousness rejection was signed
by Sadler, yet another uninformed corporate officer. Sadler testified that he
had never spoken with any informed person about the declaration, had never read
the patent, had no knowledge of the technology at issue, took no steps to
determine whether the statements made in the declaration were true, and read
none of the cited prior art. Like the Nathanson declaration, the Sadler
declaration makes a number of statements about which Sadler clearly had no
knowledge at all.
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Although the Court finds that the use of Nathanson and Sadler to sign
Litton's reissue declarations violates 37 C.F.R Section 1.63, that an applicant
violated a PTO rule or a provision of the Manual of Patent Examining Procedure,
does not in and of itself amount to inequitable conduct sufficient to render the
patent invalid. SEE NINTENDO OF AMERICA, INC. V. MAGNAVOX CO., 707 F. Supp. 717
(S.D.N.Y. 1989). The violation must be material and it must have been committed
with intent to deceive the examiner. Bright's explanation that he believed that
an uninformed officer could sign a declaration on information and belief from
the patent attorney must be viewed as credible. Thus, if Litton had done
nothing else but use Nathanson and Sadler to sign declarations, a finding of
intent to deceive would not be warranted. However, these declarations, when
taken together with all the other evidence of mistakes, omissions, studied
ignorance and deception, do have significance.
b. Misrepresentation of Prior Art
i. The Footnote about the Product Catalogs
Included in the 82 references cited in the patentability
report filed by Litton approximately two months after the inception of the
reissue prosecution were references to the 1978 Commonwealth catalog and to
parts of the 1977 Veeco catalog. The references to the catalogs were followed
by a footnote which stated:
Applicants had seen catalogs similar to these before original U.S. Patent
4,142,958 issued, but INADVERTENTLY did not cite them. They appear to be
only of INCIDENTAL interest because the references considered by the U.S.
Patent and Trademark Office before the '958 patent issued are far more
material.
(Exhibit 5594 at 41) (emphasis added). The statement in the footnote is
misleading in several respects. First, although the footnote
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claims that the catalogs "appear to be only of incidental interest," they each
teach rotation of the substrate. Thus, they clearly show that the sole basis
for granting the '958 patent was lacking. Moreover, the examiner, unlike
Litton's counsel, had no way of knowing that Wei had developed the invention by
utilizing the very equipment described in the catalogs, and thus would certainly
have found them to be of more than merely "incidental interest." ID.
Second, the footnote refers to Litton having seen "catalogs similar to
these before original U.S. Patent 4,142,958 issued." ID. The testimony at trial
is undisputed that Wei had the 1975 Technics catalog while at Litton. Likewise,
prior to the issuance of the '958 patent, Hutchings had three Technics catalogs
in his possession. Louderback and Hutchings also both testified to having seen
Veeco catalogs at Litton, although neither was able to identify which one.
While the 1975 Veeco catalogs and the 1975 Technics catalog each reveal rotation
of the substrate and are indisputably material prior art, the 1977 catalogs that
Litton cited, with the oblique comment regarding "catalogs similar to these,"
might have been disregarded by the examiner as published after the critical
date.
The catalogs, and the unnamed catalogs similar to them that had been in
Litton's possession, were highly material references which were, as Litton's
counsel well knew, of far more than merely incidental interest. They were among
the most material references that could have been furnished to the examiner.
Moreover, if Litton had "similar catalogs," a fact of which Litton's counsel was
obviously aware because they are said to have been reviewed, they should have
been provided to the examiner. The circumstances surrounding this
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artfully worded footnote in the patentability report lend weight to a finding of
deceptive intent.
Bright testified that he did not recall the basis for the statement in the
footnote except that he might have discussed the catalogs with Louderback.
Likewise, Bright did not recall whether he had ever asked anyone at Litton
whether they had any catalogs older than the ones cited in the patentability
report. Bright testified that, although he had never seen the catalogs that had
been in Litton's possession at the time of the original prosecution, he could
definitely state that they were less material than the art already before the
examiner.
He also stated that no one at Litton ever told him that the catalogs had
been "inadvertently not cited." The Court is therefore left to wonder why the
examiner was told that they were. The footnote must be given some weight in
this analysis.
ii. Withholding the Laznovsky article
That the Laznovsky article is a material reference is not in
serious dispute; nor is the fact that Laznovsky was cited to the examiner not by
Litton, but by Sunstrand. However, Litton argues that failure to cite Laznovsky
is not material because Laznovsky was ultimately brought to the examiner's
attention and was considered by him before he allowed the reissue patent.
Examiner reliance is not an element of inequitable conduct. DRISCOLL V. CEBALO,
731 F.2d 878, 885 (Fed. Cir. 1984). The Federal Circuit has specifically held
that it was inequitable conduct for an applicant knowingly to withhold a
material reference even though the examiner eventually discovered the withheld
reference and rejected certain claims based on the reference. A. B. DICK V.
BURROUGHS CORP., 798 F.2d 1392 (Fed. Cir. 1986).
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The question with regard to Laznovsky is whether anyone at Litton knew
about the article prior to the time that Sunstrand brought it to the examiner's
attention. There is evidence that Litton did have the article. First, at his
January 1988 deposition in the Sunstrand case, Louderback stated that he had
seen the Laznovsky article either when he was at Litton or before that time.
Six months later, in a declaration drafted by Bright for Louderback, Louderback
stated that he had first read the Laznovsky article in May or June 1986, after
the Sunstrand protest.(36) At trial, Louderback testified that he could not
remember when he had first seen the article.
The record shows that Wei had substantial contact with Veeco, which was
Laznovsky's company. In fact, Wei wrote to Laznovsky himself on December, 23,
1974 regarding some substrates he was sending to Veeco for coating. (Exhibit
5226). Wei testified at trial that, although he had written to Laznovsky, he
had no idea who Laznovsky was and only wrote the letter on the instructions of
Veeco's salesman, Don Murphy.
David Grant, a former manager in Litton's ring laser gyroscope division,
testified at his deposition that he had seen the Laznovsky article while he was
at Litton.. He later changed his testimony. If his deposition testimony is
correct, he must have seen the article prior to the filing date of the reissue
application because Grant left Litton in October of 1984.
The Laznovsky article was published in the August 1975 issue of R/D
magazine. Hutchings testified that although he currently had a
____________________
36 Louderback's declaration was filed in response to the Patent and
Trademark Office's second request for information in connection with the patent
office's internal investigation of Litton's inequitable conduct in connection
with the reissue.
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subscription to the magazine, he could not remember how long he had had it. He
also testified that shortly before this action was filed, most of Litton's
magazines were discarded, and he therefore had no way of knowing whether Litton
was ever in possession of the issue, and if so, when.
Bright testified that he did not know whether at any time he had tried to
determine whether anyone at Litton had ever been in possession of the article.
However, Netter testified at his deposition in 1992 that he had seen the
Laznovsky article approximately five years earlier in a file in his office.
In light of the lack of memory on the part of the Litton witnesses, the
most persuasive evidence that Litton knew about the Laznovsky article comes from
Litton's citation of the 1977 Veeco catalog. In the reissue declaration and
thereafter Litton cited only to pages 76 to 77 and 80 to 81 of this catalog.
Notably, ON PAGE 79, the 1977 catalog cites to the Laznovsky article. Litton
contends that it never had a complete copy of the 1977 Veeco catalog in its
possession, but rather that it only had the four pages it cited to the examiner.
The evidence shows otherwise.
Louderback testified that while he was at Litton he saw a Veeco catalog
that contained a reference to the Laznovsky article. At his deposition, he
testified that it was the 1977 catalog that he had seen. However, at trial he
could not identify the precise year of the catalog to which he had referred.
What is most telling, however, is that the xerox copy of Litton's original
internal French equivalent patent prosecution file shows ghosts of the missing
pages on top of the pages that were provided to the French patent office by
Litton. (Exhibit 1125). The conclusion is inescapable that Litton had the
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missing pages, if not the entire catalog, and that by removing the pages, Litton
intended to omit the Laznovsky article, which was the single most important
piece of prior art which existed. Moreover, in addition to the reference to
Laznovsky, the missing pages contain information with respect to both ion beam
etching and ion beam deposition using Veeco's apparatus.
The Court must infer from the facts that have been established that Litton
knew about the article and its significance both from the form in which the 1977
Veeco catalog was given to the examiner and from the evidence that persons at
Litton knew about the article prior to the filing of the reissue application.
Bright and Gillmann's testimony that they simply didn't notice that any pages
were missing does not avail Litton. The evidence overall is clear and
convincing that Litton knew about the Laznovsky article and intentionally failed
to cite it to the examiner. This amounts to a substantial violation of the duty
of candor, which by itself could support a finding of inequitable conduct.
iii. Placing the Most Relevant Art Among a Mass of Less Relevant
References
Honeywell argues that Litton's submission of the
undifferentiated list of eighty-two references in the patentability report rises
to the level of inequitable conduct because the examiner was forced to make his
way through a sea of marginally important references to find those which were
most pertinent. Some cases have held that it was inequitable conduct to bury
the most pertinent references within a large list of less pertinent references,
particularly if the circumstances are such that the examiner would not carefully
examine the art in the list. E.G. GOLDEN VALLEY MICROWAVE
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FOODS INC. V. WEAVER POPCORN CO. INC., 24 U.S.P.Q.2d (BNA) 1801, 1827 (N.D. Ind.
1992), AFF'D W'OUT OP., 11 F.3d 1072 (Fed Cir. 1993), CERT. DENIED, 114 S. Ct.
2136 (1994) ("it is . . . a violation of the duty of candor and fair dealing
with the Patent Office for an applicant or its attorney to disclose a pertinent
prior art patent reference to the examiner in such a way as to 'bury' it or its
disclosures in a series of disclosures of less relevant prior art references, so
that the examiner would be likely to ignore the entire list and permit the
application to issue."); PENN YAN BOATS, INC. V. SEA LARK BOATS, INC., 175
U.S.P.Q. (BNA) 260, 272 (S.D. Fla. 1972), AFF'D 178 U.S.P.Q. (BNA) 577 (5th Cir.
1973), CERT. DENIED, 414 U.S. 874 (1973) (applicant who submitted list citing
non-pertinent prior art patents while omitting most pertinent known prior art
patent mislead the examiner to an extent sufficient to justify a finding of
unenforceability).
Although the list of references in the patentability report is long and
contains some references that are less pertinent than others, the Court cannot
say that the submission of the list, in itself, supports a finding of
inequitable conduct. Bright's argument that he did not wish to mislead the
examiner by emphasizing some references at the expense of others that might be
interpreted by the examiner or a Court to be more pertinent is persuasive. A
patent attorney should be encouraged to err on the side of inclusion, thereby
providing as much prior art with an application as possible. There is no
evidence that the examiner had any trouble determining which references in the
patentability report were the most pertinent.(37) A finding of inequitable
conduct is not warranted on this ground.
____________________
37 He was fortunate in having the benefit of the Sunstrand protest
however.
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iv. Misleading Descriptions of the References in the
Patentability Report.
Honeywell contends that Litton mislead the examiner by de-
emphasizing the pertinence of the references cited in the patentability report.
However, the Court must disagree. It is the role of a patent attorney to make
arguments for patentability. Of course, a patent attorney may not make
arguments that are frivolous or completely unsupported, or which tend to deceive
the examiner, but where a reference is distinguished by a plausible argument,
the examiner is able to evaluate the arguments made and there is no reason to
fault counsel. AKZO N.V. V. U.S. INT'L TRADE COMM'N, 808 F.2d 1471, 1482 (Fed.
Cir. 1986), CERT. DENIED, 482 U.S. 909 (1987) ("The mere fact that Du Pont
attempted to distinguish the Blades process from the prior art does not
constitute a material omission or misrepresentation. The examiner was free to
reach his own conclusion regarding the Blades process based on the art in front
of him.").
Whatever their merit, Litton's arguments to distinguish the references
furnished to the examiner do not appear to be violations of the duty of candor.
c. The Reissue Prosecution as a Whole
The prosecution of the '849 reissue cannot have been just a
routine transaction to Litton. Rather, Litton decided to seek reissue of the
'958 patent while in the midst of a large ongoing trade secret case which
involved the claimed subject matter.(38) Litton itself argues that the
application for reissue was prompted by the existence of the Sunstrand
litigation. Additionally, at the time
____________________
38 Litton did not assert the '958 patent during that litigation because,
no doubt, it knew that it was invalid.
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Litton decided to seek reissue, Litton knew that Honeywell and others were
buying mirrors from Louderback, and this action was brought almost immediately
after the reissue was granted. Against a background of these undisputed facts,
Litton's story that it retained virtually no notes, documents or records
regarding the prosecution of the '849 reissue, and, furthermore, that its
witnesses, and its legal counsel in particular, have no recollection of any
communications concerning it is difficult to accept. In a company like Litton,
this particular reissue prosecution would not have been taken for granted.
After all, from Litton's point of view this was a "pioneer" patent. Litton's
claim that neither Litton nor its counsel retained any notes or records which
are not privileged is placed in doubt by the detailed and specific responses
given to the PTO's pointed inquiries concerning inequitable conduct as recently
as 1988. These inquiries were directed to what prior art had been known before
Litton made particular representations to the PTO, as well as the reasons for
the wording of certain representations. Moreover, because there was
dissatisfaction with the evasive answers to the first inquiries, the second
inquiries were specifically directed to particular individuals. Then, lack of
knowledge or failure of memory in answering the inquiries would have put the
application in serious jeopardy. Although responses to these inquiries
apparently did not satisfy the PTO, they are quite detailed and could hardly
have been prepared without some memory by someone at Litton of what occurred.
By contrast, at trial, the Litton witnesses had little, if any, memory of the
prosecution of the '849 reissue. No explanations, excuses or justifications
were offered to refute Honeywell's showing.
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In sum, the Court concludes that Litton intentionally presented baseless
declarations to the PTO, made misrepresentations to the PTO regarding the
product catalogs and failed to cite the Laznovsky article to the PTO in the
reissue proceeding. These facts, viewed against the background of the original
patent proceedings, furnish clear and convincing evidence of inequitable
conduct. The '849 reissue is unenforceable.
C. INFRINGEMENT
The jury found that Honeywell infringed the '849 reissue both literally and
under the doctrine of equivalents. The jury further found that the infringement
was willful. Although the Court concludes that the jury's finding of literal
infringement of the '849 reissue is not supported by the evidence, the evidence
does support a finding of infringement by Honeywell under the doctrine of
equivalents.
The determination of infringement requires a two-step analysis. First, the
claims, which define the invention by means of a series of limitations, must be
interpreted to determine their proper scope and meaning. Second, the accused
device must be compared to the claim language as interpreted. THE READ CORP. V.
PORTEC INC., 970 F.2d 816, 821 (Fed. Cir. 1992).
1. Claim Interpretation
Claim interpretation is a question of law. NORTH AMERICAN VACCINE,
INC. V. AMERICAN CYANAMIDE CO., 7 F.3d 1571, 1574 (Fed. Cir. 1993), CERT.
DENIED, 114 S. Ct. 1645 (1994). Nevertheless, where a claim is ambiguous and
its interpretation depends on the resolution of subsidiary facts which are
genuinely disputed, the resolution of these facts may be submitted to the jury
with proper instructions. MCGILL, INC. V. JOHN ZINC CO., 736 F.2d 666, 671-72.
If, however, there is no
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genuine factual dispute which requires resolution in order to interpret the
claims, but only arguments of the parties as to what the claims MEAN,
interpretation of the claims is a question of law. JOHNSON V. IVAC CORP., 885
F.2d 1574, 1579-80 (Fed. Cir. 1989). A claim is interpreted in light of the
specification, the prosecution history, the prior art and other claims. ID. The
focus of the inquiry with respect to claim language is on what one skilled in
the art would have understood the claim to mean at the time the application
containing the claim was originally filed. E.I. DUPONT DE NEMOURS & CO. V.
PHILLIPS PETROLEUM CO., 656 F. Supp. 1343, 1380, 138A (D. Del. 1987), AFF'D IN
PART, VACATED IN PART, REV'D IN PART, 849 F.2d 143 (Fed. Cir. 1988).
Here, the central claim interpretation dispute is with respect to the
meaning of the term "Kaufman-type ion beam source" which is a limitation
contained in each of the claims of the '849 reissue. Litton argues that the
term means "any broad beam gridded ion beam source," and that the dispute as to
its meaning is a factual one to be resolved by the jury. Honeywell's position
is that the term means a broad beam ion gun that has (1) a hot wire cathode; (2)
an anode; (3) magnets; and (4) grids, and that the meaning of the term is a
question of law. In light of the file history of the '849 reissue, there is no
ambiguity with respect to the term "Kaufman-type ion beam source," and there is
no GENUINE factual dispute concerning its meaning. The interpretation of the
term is a question of law, and the Court determines that Honeywell's
interpretation is correct.
The language of Claim 1 of the original '958 patent does not describe the
source of the ion beam which is used to bombard the target. However, when the
meaning of a claim term is in doubt, courts
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look to the specification for guidance. NORTH AMERICAN VACCINE 7 F.3d at 1576.
The specification in the '849 reissue is the same as that found in the '958
patent, and it states:
The ion beam gum [sic] 4 is a commercially available ion omitting
[sic] aparatus [sic] GENERALLY KNOWN IN THE ART AS A KAUFFMAN [SIC]
TYPE ION BEAM GUN. The gun's CATHODE 6 IS A THERMONIC [SIC] EMITTER,
I.E., IT EMITS ELECTRONS BY PASSING AN ELECTRIC CURRENT THROUGH IT
WHICH HEATS THE WIRE. The cathode 6 emits electrons which are
accelerated towards the ANODE 8. The electrons being accelerated from
the cathode to the anode strike argon atoms and in so doing dislodge
electrons from the argon. The results are positively charged argon
ions which are accelerated away from the anode and towards the GRIDS
12 and 14. PERMANENT BAR MAGNETS 10 attached to the anode introduce a
magnetic field into the area between the cathode and the anode which
cause the electrons traveling towards the anode to spiral. This
spiral motion effectively increases the distance which the electrons
travel in reaching the anode and thereby increases [sic] number of
collisions between electrons and argon atoms. (Emphasis added.)
(Exhibit 5594 at 9) Litton depicted this Kaufman-type ion beam source in Figure
1 of the '958 patent. The written specification and the drawing show that this
Kaufman-type ion beam source has: (1) a hot wire cathode; (2) an anode; (3)
magnets; and (4) multi-aperture grids. The same claim language, as well as the
same specification and drawing of the original '958 patent was used in the '849
reissue.
During the '849 reissue proceedings, in response to the examiner's
obviousness rejections, Litton argued that a duoplasmatron, which must
indisputably be included within the definition of a source for an "ion beam,"
could not be used to manufacture the high quality multi-layer optical films
described in the '849 reissue application, and that only a Kaufman-type ion beam
gun would produce the unexpected result. The examiner did not accept this
argument and remarked that:
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As for applicants' arguments based upon an alleged unexpected result
obtained by use of a Kauffmann [sic] type ion gun rather than a
duoplasmatron type ion gun, it is noted that most of the claims are not
limited to ANY PARTICULAR TYPE OF ION GUN; THUS APPLICANTS ARE ARGUING A
LIMITATION NOT IN THE CLAIMS. Moreover, Kauffmann [sic] type ion sources
are standard in the art; their use in ion beam sputtering apparatus
constitutes nothing unobivous [sic]. See e.g. Lanovsky at page 47, column
1. Lastly, applicants merely allege an unexpected result; NO COMPARATIVE
DATA ARE SUPPLIED.(39)
ID. at 109 (emphasis added). As discussed, the '849 reissue was only allowed
after Baumeister convinced the examiner that the unexpected result claimed could
only be obtained by using a Kaufman-type ion beam gun. In submitting
Baumeister's declaration, Litton said:
The Examiner interprets the claim as including a duoplasmatron which would
make the claimed method unworkable. For this reason, Applicants need not
add the words "Kaufman gun" or "Kaufman source" to claim 1 because claim 1
cannot properly be construed to refer to any other ion beam gun but the
Kaufman gun.
ID. at 131.
In Baumeister's declaration at paragraph 20, he stated unequivocally that:
Those skilled in the coating arts, in reading claims 1 and 3-10 of this
application for reissue, knowing that duoplasmatron sources are unworkable
for making multiple layer optical coatings of any kind, let alone the
multiple layer optical coatings referred to in claims 1 and 3-10, would
reasonably construe these claims to refer not to duoplasmatron sputtering
sources, BUT ONLY TO THE KAUFMAN-TYPE ION-BEAM GUNS REFERRED TO IN THE
SPECIFICATION OF THIS APPLICATION. Reading the claims as referring to a
duoplasmatron would not be a reasonable interpretation since one of
ordinary skill would know that a duoplasmatron is impractical for making
multiple layer optical films.
____________________
39 In paper No. 11, the examiner characterized what Litton was describing
as a "conventional well known apparatus."
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ID. at 149. There is no doubt that Baumeister's argument convinced the examiner
because the claims were then allowed, but ONLY IF the "Kaufman ion gun
limitation in claim 1" was incorporated in every claim. Looking at the file
history, it is difficult to argue that the term is in any way ambiguous. The
examiner was persuaded to allow the '849 reissue on the condition that Litton
amend each of the claims to include a limitation to the Kaufman-type ion beam
source in the specification.(40) The source described in the specification was
claimed to be the ONLY ion beam source that would produce the unexpected result
of high reflectivity and low back-scatter, and it was claims limited to this
type of ion beam source that were allowed. The Court agrees with Litton that
the Kaufman-type ion beam gun in the specification and drawing is gridded and
that it produces a broad beam. However, Litton never argued that ANY broad beam
gridded ion beam source would produce the unexpected result claimed. Although a
duoplasmatron has a narrow beam and a Kaufman-type ion beam gun has a broad
beam, there is not a single place in the extensive file history of the '849
reissue where Litton ever uses the term "broad beam gridded ion source," even
though, as Honeywell correctly points out, there are references in the file
history to a number of other broad beam ion sources. Baumeister argued the
result Litton had achieved was possible ONLY with the ion beam gun in the
specification. He did that because neither he nor Litton knew what results
could be achieved by the use of any ion beam sources other than duoplasmatrons
and the Kaufman-type ion beam gun in the specification. They had no
"comparative data."
____________________
40 The declaration was drafted by Litton's patent counsel and then,
according to Baumeister, negotiated with him.
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This is not a case where the Court is limiting the scope of the patent to
its preferred embodiment. MARTIN V. BARBER, 755 F.2d 1564, 1567 (Fed. Cir.
1985). This is a case in which Litton's patent counsel and its declarants chose
the particular words to convince the examiner that the unexpected result
obtained by Litton warranted the allowance of the claims.(41) Baumeister
represented that the claimed result could not be achieved by the use of a
duoplasmatron as contrasted with the result which could be achieved with the
Kaufman-type ion beam gun "in the specification." The inventor himself testified
that the claims in the '849 reissue were based on the result obtained by the use
of the ion beam gun in the specification. If Litton claimed all such ion
sources, so long as they were broad beam gridded sources, it could have easily
said so. However, the examiner might then have wanted to see some comparative
data. For excellent reasons, Litton did not claim all such sources, and the
mere argument that that is what Litton meant but did not say does not create a
doubt or ambiguity concerning the claims' language. "A patent applicant cannot
disclose and claim an invention narrowly, and then, in the course of an
infringement suit, argue effectively that the claims should be construed to
cover that which is neither described nor enabled in the patent." NORTH AMERICAN
VACCINE, 7 F.3d at 1577. Litton cannot be permitted to do that here.
Although the term "Kaufman-type ion beam source" is not generic in the
sense that it includes ANY broad beam gridded ion source, even with the Court's
narrower interpretation, there is substantial evidence to support a finding of
infringement by Honeywell. To
____________________
41 In his declaration, which is part of Paper No. 15, Gerald Isaacson
discusses ONLY the Ion Tech gun in the specifications.
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establish infringement, every limitation in a claim must be found in the accused
process exactly or by a substantial equivalent. JURGENS MCKASY, 927 F.2d 1552,
1560 (Fed. Cir. 1991). Honeywell's processes do not LITERALLY infringe the
'849 reissue, but the jury's finding that Honeywell infringed the '849 reissue
under the doctrine of equivalents must be upheld in part.
2. Literal infringement.
Literal infringement requires that, after comparing the accused
process with each claim allegedly infringed, each claim limitation in the
allegedly infringed process must be present in the accused process. HI-LIFE
PRODUCTS INC. V. AMERICAN NATIONAL WATER-MATTRESS CORP., 842 F.2d 323, 325 (Fed.
Cir. 1988). The jury was instructed to compare each of the limitations of the
allegedly infringed claims of the '849 reissue to the Honeywell processes, and
to determine if each of these limitations could be found in the accused
processes. The jury was given a set of questions to answer. In answer to
Question 2, the jury adopted Litton's interpretation of the term "multiple layer
optical films" and found that the term meant "any type of multiple layer optical
film including a graded index film structure." In answer to Question 3, the jury
adopted Litton's interpretation of the term "continuously rotating said base
during the deposition" and found that the term meant "any type of continuous
rotation of said base during the deposition, including Honeywell's planetary
substrate motion." The interpretation of these claim terms in Questions Nos. 2
and 3 raised factual issues which required resolution. Several sophisticated
experts on both sides testified as to the meaning of these two terms as they
would be understood by those skilled in the art, and there is substantial
evidence in support of
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these two findings. On the other hand, the jury was asked in Question 1 whether
the term "Kaufman-type ion beam source" meant "Honeywell's definition: "Only
that ion beam gun described in the specification section of Litton's patent,
which includes any ion beam gun with a hot wire cathode, an anode, magnets, and
multi-aperture grids," or Litton's definition: "Any broad-beam, multiapertured,
gridded ion beam source, which includes any hollow cathode gun and any radio
frequency gun," and it chose Litton's definition, one the Court finds to be in
error. Interpreting the term as the Court does, a "Kaufman-type ion beam
source," which is a limitation in every claim of the '849 reissue, is not
literally found in either Honeywell's process that employs a hollow cathode ion
beam source or its process that uses an RF ion beam source. The hollow cathode
employed in Honeywell's process does not have a hot wire. Further, as discussed
INFRA, the RF ion beam source does not have a cathode of any kind, and does not
work in substantially the same way as Litton's process. The evidence does not
support the jury's finding that either of these processes literally infringe the
claims of the '849 reissue.
3. Infringement under the Doctrine of Equivalents
In addition to finding that the claims of the '849 reissue were
literally infringed by Honeywell's processes, the jury found that these
processes also infringed the '849 reissue under the doctrine of equivalents.
This doctrine is "designed to protect a patentee from an infringer who
appropriates the invention but avoids the literal language of the claims . . .
." ATLAS POWDER CO. V. E.I. DU PONT DE NEMOURS & CO., 750 F.2d 1569, 1579 (Fed.
Cir. 1984). To this end, the doctrine permits a finding of infringement when
the accused process and the claimed invention are found to "perform
substantially the same
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function in substantially the same way to yield substantially the same result."
ID. Equivalence is a question of fact to be determined as of the time the
infringement takes place. Therefore, the fact that one skilled in the art would
not have known of the equivalent at the time the patent application was filed or
the patent was issued is not determinative with respect to the application of
the doctrine. ID. at 1581. Thus, "changing the patented invention with
advances developed subsequent to the patent could infringe under the doctrine of
equivalents." ID. Although "designing around" the patent does not necessarily
require that the patent be saved by invocation of the doctrine of equivalents,
the doctrine most often is applied in cases involving mere formal alterations or
improvements to the patented process or device. SEE, E.G., STANDARD HAVENS
PROD'S, INC. V. GENCOR INDUS., INC., 953 F.2d 1360, 1371 (Fed. Cir. 1991),
CERT. DENIED, 113 S. Ct. 60 (1992); CMI CO. V. METROPOLITAN ENTERS., INC., 534
F.2d 874 (10th Cir. 1976).
The applicable range of equivalents is dependent upon the nature of the
invention. The broadest protection under the doctrine of equivalents is
reserved for pioneer or generic patents which cover a function never before
performed, a wholly novel device, or one of such novelty and importance as to
mark a distinct step in an art's progress as distinguished from a mere
improvement or perfection of what had gone before. "Liberality is the keynote
of construction of a pioneer patent." 3 Rosenberg, PATENT LAW FUNDAMENTALS,
Section 17.07(l) at 17-95 (1994 rev.). However, a patent need not be a pioneer
patent to be entitled to a substantial range of equivalents. HUGHES AIRCRAFT
CO. V. UNITED STATES, 717 F.2d 1351, 1362 (Fed. Cir. 1983).
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In light of the history of the '849 reissue, it cannot seriously be argued
that it is a pioneer patent. It is in fact what the examiner continued to say
it was until he listened to Baumeister: "an obvious process . . . using a
conventional well known apparatus." Therefore, even assuming, as the Court must
for this discussion, that the '849 reissue is valid, this narrow patent cannot
be accorded the range of equivalents due a process never before performed or an
invention of novelty and importance. However, if it is valid, it should be
permitted a range of equivalents commensurate with its significance as an
invention unless prosecution history estoppel bars the application of the
doctrine of equivalents altogether.
a. Prosecution history estoppel
The doctrine of prosecution history estoppel "precludes a patent
holder in an infringement suit from obtaining a construction of a claim that
would effectively resurrect subject matter surrendered during the course of
proceedings in the Patent and Trademark Office." 4 Chisum, PATENTS Section
18.05(l) at 18-153 (1993). The doctrine is most often involved where the
applicant has specifically narrowed his claims by amendment or cancellation to
avoid prior art rejections by the examiner. Generally, estoppel is not involved
when the amendment is designed to remedy a Section 112 indefiniteness objection.
SEE MOELLER V. IONETICS, INC., 794 F.2d 653 (Fed. Cir. 1986). However, the
line to be drawn between the two types of amendment is not always a clear one.
As the court stated in LOCTITE CORP. V. ULTRASEAL. LTD., 781 F.2d 861 (Fed.
Cir. 1985):
HUGHES AIRCRAFT CO. V. U.S., 717 F.2d 1351, 1362, 219 USPQ 473, 481
(Fed. Cir. 1983), acknowledged the view of some courts 'that
virtually any amendment of the claims creates a "file wrapper
estoppel" effective to bar all resort to the
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doctrine of equivalents.' However, HUGHES 'reject[ed] that view as a
wooden application of estoppel, negating entirely the doctrine of
equivalents and limiting determination of the infringement issue to
consideration of literal infringement alone.' ID. The court
concluded:
Amendment of claims is a common practice in prosecution of patent
applications. No reason or warrant exists for limiting
application of the doctrine of equivalents to those comparatively
few claims allowed exactly as originally filed and never amended.
Amendments may be of different types and may serve different
functions. Depending on the nature and purpose of an amendment,
it may have a limiting effect within a spectrum ranging from
great to small to zero.
ID. Thus, whenever the doctrine is evoked, 'a close examination must
be made as to, not only what was surrendered, but also the reason for
such a surrender;' the fact that claims were narrowed 'does not always
mean that the doctrine of file history estoppel completely prohibits a
patentee from recapturing some of what was originally claimed.' BAYER
AKTIENGESELLSCHAFT V. DUPHAR INTERNAT'L RESEARCH, 738 F.2d 1237, 1243,
222 U.S.P.Q. 649, 653 (Fed. Cir. 1984).
Litton argues that the Supplemental Amendment filed on June 2, 1987 which
limited all of the claims in the '849 reissue to ion beams "produced or derived
from a Kaufman-type ion beam source" was only for the purpose of making explicit
what Litton had always viewed as implicit in the claims "in light of the
specification." (Exhibit 5594 at 240.) Contending that the amendment did not
give rise to an estoppel, Litton points out that the reissue declaration states
that the amendment was "necessary to make the claim read with sufficient
definiteness to satisfy 35 U.S.C. Section 112, second paragraph" as required by
the examiner. In response, Honeywell argues that since the file history
contains references to many other types of ion beam sources, by amending, Litton
limited itself to ONLY the ion beam source in the
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specification. Thus, Litton cannot now claim infringement by a process
employing an ion beam source that does not have, as the one in the specification
does, a hot wire cathode, an anode, a magnet and grids. It is Honeywell's
position that prosecution history estoppel precludes Litton from attempting to
broaden the claims by the application of the doctrine of equivalents to cover
Honeywell's hollow cathode or its RF ion source. Although the question is not
without some degree of doubt, the Court concludes that Litton is not estopped to
claim SOME range of equivalents.
The file history has been discussed. The essential question is whether
Litton surrendered anything in amending the claims, and, if so, what? At least
the one thing that is certain is that Litton surrendered duoplasmatron sources
to secure the allowance of its claims. Prior to the filing of Paper No. 15 and
the conversations with Litton's counsel and Baumeister that followed its
submission, the examiner had concluded that the claims should be rejected as
obvious. Paper No. 15 and the conversations that followed its filing overcame
the examiner's Section 103 rejection by convincing him that duoplasmatron
sources could not achieve the unexpected result obtained by the use of the
Kaufman-type ion beam source described in the specification.(42) Therefore, the
examiner agreed to allow the claims if they were amended to make clear that not
ALL ion beam sources were claimed, but only the Kaufman-type ion beam source.
Litton contends that it is clear from the reissue declaration that the amendment
was only to make explicit what was always implicit, and that if the examiner
didn't agree, he could have said so. However, the amendment was not only to
____________________
42 Duoplasmatrons would be too slow and expensive.
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satisfy Section 112(2)--if Litton had not agreed to limit the claims to the
Kaufman-type ion source, the prior rejection, based on obviousness, would have
been made final. Honeywell is correct that the examiner had before him
references to many other ion beam sources,(43) but the file history does not
indicate that these other sources were ever the subject of discussion with the
examiner--only duoplasmatron ion beam sources and the ion beam source in the
specification were specifically mentioned by the examiner in making his
determination. Baumeister's argument was based on the distinction to be drawn
between only these two sources. Thus, although Litton might now be estopped to
claim duoplasmatron sources, placing the examiner's actions in context, it is
arguable that Litton should not be estopped to claim some other ion beam sources
as equivalents. As stated, Honeywell's view is that Litton is estopped to claim
ANY range of equivalents, and Litton's view is that there is no estoppel at all.
In light of the substantive narrowing of the claims, there is no merit in
Litton's position. Moreover, whatever the merit in Honeywell's position may be,
the Court finds it unnecessary to determine the precise scope of the estoppel in
order to resolve the infringement issues now before the Court.(44)
____________________
43 As Honeywell points out, the prior art references describe not only
narrow beam duoplasmatrons, but also broad beam duoplasmatrons. The references
also include gridded broad beam Finkelstein sources, inductively coupled radio
frequency guns, colutron guns and the guns described in the Harper chapter
attached to Baumeister's declaration submitted to the examiner as part of Paper
No. 15.
44 The change from any source for "an ion beam" to a "Kaufman-type
source" for an ion beam was clearly a substantive one, and the original claim is
NOT identical to the amended claim.
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b. Application of the doctrine of equivalents
The finding of infringement by Honeywell's hollow cathode process
is supported by substantial evidence even accepting the Court's narrow
interpretation of the term "Kaufman-type ion beam source." Without resort to the
doctrine of equivalents, the hollow cathode source is a "Kaufman-type source"
despite its lack of a hot wire. Applying the doctrine of equivalents,
Honeywell's hollow cathode ion beam source performs substantially the same
function as the Kaufman-type ion-beam source in the specification of the '849
reissue, and it does so in substantially the same way even though it does not
have a hot wire cathode. Also, it yields substantially the same result. From
the testimony, the hollow cathode ion beam source is in fact merely a
modification or improvement of the Kaufman-type ion beam gun in the
specification. It improves the operation of the process in that it
substantially alleviates the maintenance problems involved in the use of the hot
wire. Thus, this source is either within the meaning of "Kaufman-type source"
as used in the claims, or within the narrowest range of equivalents which must
be accorded the '849 reissue. Thus, Honeywell's hollow cathode process
infringes the '849 reissue. On the other hand, substantial evidence does not
support the jury's finding of infringement under the doctrine of equivalents
with respect to Honeywell's process which employs an RF ion beam source.
The Kaufman-type ion beam source, having as its principal elements a hot
wire cathode, an anode, magnets and grids, is described in the specification
quoted above. Honeywell's RF ion beam source(45)
____________________
45 These sources date from the 1960s.
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consists of a cylindrical insulating discharge chamber around which is coiled an
RF oscillating discharge coil. A type of gas is introduced into the discharge
chamber as the source material for the ions. The oscillating RF energy that is
radiated from the coil propagates RF energy within the discharge chamber,
thereby energizing the electrons and ionizing the gas therein. The ions are
then accelerated and extracted from the chamber by multi-aperture grids. As can
be seen from the description, this source does not have a cathode at all. There
is no electron emitting element inside the discharge chamber. Rather, electrons
are excited inside the discharge chamber and ions thereby produced by induction
from the RF oscillating coil that encircles the insulating wall of the chambers.
Clearly, the RF ion beam source does not produce ions in the same way as the
"Kaufman-type ion beam source," although arguably it does produce a similar, but
much improved and less contaminated result. This source was in existence and
known to those skilled in the art at the time the application for the '958
patent was filed, a time long before the discussions that Litton and Baumeister
had with the examiner following the filing of Paper No. 15.
Although prosecution history estoppel may not altogether preclude Litton
from claiming infringement by processes using ion beam sources other than the
one described in the specification, the doctrine of equivalents cannot be
extended so far as to place Honeywell's RF ion beam process within the reach of
the '849 reissue. The '849 reissue is not a pioneer patent and it cannot be
broadened in this fashion. Honeywell did not infringe the '849 reissue by the
use of its RF ion beam process.
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D. Intervening Rights
On October 7, 1991, the Court granted Honeywell's Motion for Partial
Summary Judgment for an Order Finding that U.S. Patent 32,849 and U.S. Patent
4,142,958 Are Not Identical Pursuant to 35 U.S.C. Section 252. On November 7,
1991, the Court reconsidered and vacated its grant of Honeywell's Motion for
Partial Summary Judgment because it determined that there were triable issues of
fact regarding whether the '958 patent and the '849 reissue were identical
within the meaning of 35 U.S.C. Section 252. After hearing all of the evidence,
the Court determined that no reasonable jury could find that '958 patent and the
'849 reissue are identical within the meaning of 35 U.S.C. Section 252 and
granted part six of Honeywell's Motion for Judgment as a Matter of Law.
Accordingly, the Findings of Fact and Conclusions of Law filed on October 7,
1991 in conjunction with the Court's original order granting Honeywell's Motion
for Partial Summary Judgment and for an Order Finding that U.S. Patent 34,849
and U.S. Patent 4,142,958 are Not Identical Pursuant to 35 U.S.C. Section 252
are adopted by the Court and reinstated.
E. Supplemental State Law Claims
1. Intentional Interference with Contractual Relations
Litton claims that at the time Honeywell began buying mirrors from
Louderback and his company, Ojai Research (collectively "Louderback"), it
tortiously induced Louderback to violate his licensing agreement with Litton.
The jury found for Litton on this claim and assessed the damages at $1.2
billion. Honeywell now argues
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that the jury's verdict cannot be supported as a matter of law. The court is in
agreement with Honeywell.(46)
The elements of intentional interference with contractual relations are
"(l) a valid contract between the plaintiff and a third party; (2) the
defendant's knowledge of this contract; (3) the defendant's intentional acts
designed to induce a breach or disruption of the contractual relationship; and
(5) resulting damage." PACIFIC GAS & ELEC. V. BEAR STEARNS & CO., 50 Cal. 3d
1118, 1126, 270 Cal. Rptr. 1, 3-4 (1990).
To establish that Honeywell induced Louderback to breach his contract with
Litton, Litton must show either that Louderback actually breached the contract
or that his contractual relationship with Litton was disrupted by Honeywell in a
way that made Litton's performance of the contract more costly or burdensome.
PACIFIC GAS & ELEC., 270 Cal. Rptr. at 6-7. The April 1981 contract at issue
here licenses Louderback to use the '958 patent process and to sell products
manufactured by the process (Exhibit 1079 at 6, Section 2.1). As part of the
agreement Louderback agreed not to sell any products manufactured by the process
for end use in a laser inertial instrument to anyone other than Litton. By its
terms, the contract licensed Louderback to use both the '958 patent process and
Litton's "proprietary information."
Litton could not, of course, restrain Louderback from using technology in
the public domain. The Ninth Circuit has recognized
____________________
46 The Court finds no evidence in the record which would warrant
discussion of any liability of General Optic's for either of the state law
torts.
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that the theory of inducing breach of contract may not be used to assert an
invalid patent. It has stated:
If a patent holder can exact from another a promise not to infringe, and
thereby recover from one inducing the breach of that promise, in the
absence of a valid patent, the patent holder is afforded more protection
than the patent laws allow. The patent holder acquires this additional
protection 'merely because he . . . chose one remedy (inducement to breach
a contract not to infringe) rather than another (inducement to infringe) on
the same substantive issue.' Federal policy favoring free competition in
ideas not meriting patent protection cannot be so easily subverted.
MASSILLON-CLEVELAND-AKRON SIGN CO. V. GOLDEN STATE ADVERTISING CO., 444 F.2d
425, 428 (9th Cir. 1971), CERT. DENIED, 404 U.S. 873 (1971), QUOTING, KATZINGER
CO. V. CHICAGO METALLIC MFG. CO., 329 U.S. 394 (1947). Thus, to the extent
that the licensing agreement purported to restrict Louderback's use of the
process claimed by the '958 patent, Litton may not use the agreement as an
alternate route to enforcing that patent against Honeywell. The Court notes
that this would be the case even if the '849 reissue were valid because, as the
Court has previously ruled under the doctrine of intervening rights, Honeywell's
activity prior to the granting of the '849 reissue cannot give rise to
infringement liability.
The Ninth Circuit's decision in MASSILLON-CLEVELAND cannot, however,
completely shield Honeywell from liability for inducing Louderback to breach the
contract. The contract, by its terms, could be breached by Louderback not only
if he sold products made by the patented process to Honeywell to be used for a
purpose proscribed by the agreement, but also if Louderback used Litton's trade
secrets in manufacturing such products for such a purpose. The Supreme Court
has made clear that patent law does not preempt or invalidate trade secret law
and that contracts to license or protect trade secrets are not in
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conflict with the objectives of the patent law. KEWANEE OIL CO. V. BICRON
CORP., 416 U.S. 470 (1974). Thus, to the extent Honeywell induced Louderback to
use Litton's trade secrets in the manufacture of mirrors sold by Louderback to
Honeywell, Honeywell could be liable to Litton.
Nonetheless, Litton cannot prevail on its claim of interference with
contractual relations on the theory that trade secrets were improperly used
because there is a total absence of proof that Louderback ever actually used any
Litton trade secret in manufacturing a mirror for Honeywell. Likewise, the
record contains no evidence that Louderback ever revealed any trade secret to
Honeywell. Thus, the record does not show that Louderback ever actually
BREACHED the contract by using or revealing Litton's trade secrets.
It is uncontroverted that Louderback used a process DIFFERENT from
Litton's process when he made the mirrors for Honeywell. Much of the case
turned on whether that process, though different, nonetheless infringed Litton's
'849 reissue. However, the record contains NO EVIDENCE WHATSOEVER that
Louderback's new process made use of Litton's trade secrets. In fact, the
record does not even reveal what Litton contends its trade secrets were.
Litton had the burden of proving that Louderback used one or more of its
trade secrets in breach of the agreement. RICHARDSON V. SUZUKI MOTOR CO. LTD.,
868 F.2d 1226, 1243 (Fed. Cir. 1989), CERT. DENIED, 493 U.S. 853 (1989).
Litton did not meet the burden of proving that it had any trade secrets, and, if
so, what they were. Moreover, if it had trade secrets, Litton made no attempt
to prove which ones were actually used, what they were used for or when they
were used. Litton argues, however, that because Louderback entered into the
agreement in
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the first instance, his later and admittedly different process MUST have made
use of Litton's trade secrets. In effect, Litton argues that a showing of the
existence of a valid contract, together with sales by Louderback to Honeywell,
relieves it of the burden to show that Louderback did in fact breach the
contract.
The mere existence of an agreement not to use plaintiff's trade secrets
does not relieve plaintiff of the burden to prove that the defendant accused of
appropriating the trade secrets did in fact make use of them, AND that the use
was prohibited by the agreement. Were Litton suing Honeywell directly for trade
secret appropriation, it would have to prove that it had secrets and that
Honeywell used them in violation of Litton's rights. Likewise, if Litton were
suing Louderback for breach of the agreement on a trade secret theory, it would
have to show that Louderback breached the agreement by using or revealing a
trade secret belonging to Litton. A contract to restrict the use of trade
secrets cannot itself establish that trade secrets actually existed or that they
were infringed. SCOTT V. SNELLING & SNELLING, INC., 732 F. Supp. 1034, 1043
(N.D. Cal. 1990) ("Snelling's argument in reliance on contractual language begs
the question: before the Court can enforce the covenant restraining competition
in the franchise agreements on the basis of the use of trade secrets, it must
determine for itself whether the information actually used constitutes a trade
secret subject to judicial protection at all.").
Litton argues that because it brought an indirect claim against Honeywell,
instead of a direct claim against Louderback, it need not show that the contract
was breached. While a showing that the contract was actually breached is not
necessary to prevail in every case of interference with contractual relations,
in the absence of
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such a showing the plaintiff must show that the interference made the
plaintiff's performance more costly or burdensome. PACIFIC GAS & ELECTRIC, 270
Cal. Rptr. at 6-7. Litton has failed to make that showing. Because the '958
patent was invalid, the '849 reissue is subject to serious challenge, and Litton
has not shown the appropriation of any trade secret, Louderback may have done
nothing he was not otherwise entitled to do. He had every right to sell
products made by a process in the public domain to anybody he wished.
The record does not establish appropriation, and therefore it also does not
establish breach. If Louderback did not breach the contract, it is impossible
to discern how Litton was damaged. Litton does not argue that Honeywell caused
Louderback to cease selling mirrors to Litton or that Honeywell ever induced
Louderback to take any action which would disrupt Louderback's relationship with
Litton. In the absence of proof of a trade secret violation, the only damage
that Litton can point to is the cost of bringing this litigation. The cost of
litigation brought to assert the plaintiff's contractual rights, however, is not
the type of damage that can be recovered on the theory of an intentional
interference with contract. PACIFIC GAS & ELECTRIC, 270 Cal. Rptr. at 12.
Notably, even the broader tort of interference with prospective economic
advantage requires that the relationship between the prospectively contracting
parties actually be disrupted. PACIFIC GAS & ELECTRIC, 270 Cal. Rptr. at 6
n.8. How Litton's relationship with Louderback was disrupted by Honeywell's
action was never established on this record. The jury indicated its ultimate
conclusion on the verdict form when it wrote the words "Honeywell DID use
wrongful
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means" on it. However, those words cannot, in and of themselves, substitute for
proof of the elements of the tort.
Were the Court to accept Litton's intentional interference with contract
argument, the result would be to expand the scope of protection for trade
secrets beyond the permissible boundaries now set by existing law. Indeed, the
acceptance of Litton's argument would undermine California's statutory policy
against contracts in restraint of trade. California Business & Professions Code
section 16600 provides that, with certain exceptions, every contract by which
anyone is restrained from engaging in a lawful profession, trade, or business is
void. Cal. Bus. & Prof. Code Section 16600. Although section 16600 does not
invalidate contracts for the protection of trade secrets, it does render such
contracts unenforceable absent proof that the trade secret was actually used.
RIGGING INT'L MAINTENANCE CO. V. GWIN, 128 Cal. App. 3d 594, 614, 180 Cal.
Rptr. 451, 463 (1982). Were the Court to allow the enforcement of a restraint
on trade without proof that a trade secret was actually used, the Court would,
in effect, violate the proscription of section 16600. Honeywell's motion for
JMOL is granted as to this claim.
2. Intentional Interference with Prospective Economic Advantage
Litton contends that Honeywell intentionally interfered with Litton's
relationship with Boeing, McDonnell Douglas and Airbus.(47)
____________________
47 In its Third Amended Complaint, Litton did not allege interference
with the those contracts, but rather that Honeywell, through its German
subsidiary, Sondertechnik, intentionally interfered with a business relationship
between Litton and the German Air Force. Likewise, the pretrial conference
order makes no reference to the domestic customer interference argument made by
Litton. No evidence regarding either Sondertechnik or the German Air Force was
ever introduced and Honeywell now argues that Litton's claim for prospective
interference with economic advantage should be dismissed for failure of proof.
However, Honeywell agreed to jury instructions
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[T]he elements of intentional interference with prospective economic
advantage are (1) an economic relationship between the plaintiff and some
third person containing the probability of future economic benefit to the
plaintiff; (2) knowledge by the defendant of the existence of the
relationship; (3) intentional acts on the part of the defendant designed to
disrupt the relationship; (4) actual disruption of the relationship; and
(5) damages proximately caused by the acts of defendant.
ASIA INV. CO. V. BOROWSKI, 133 Cal. App. 3d 832, 840-41, 184 Cal. Rptr. 317,
323 (1982).
For the purpose of this analysis, the Court will assume that the jury could
have concluded that all of these elements were shown. That all of the elements
of the tort were shown does not end the inquiry, however, because Honeywell
cannot be liable for interference with Litton's prospective economic advantage
if it has established the affirmative defense of the privilege of free
competition. The California Supreme Court has said:
Perhaps the most significant privilege or justification for
interference with a prospective business advantage is free
competition. Ours is a competitive economy in which business entities
vie for economic advantage. In a sense, all vendees are potential
buyers of the products and services of all sellers in a given line,
and success goes to him who is able to induce potential customers not
to deal with a competitor. Thus, as Prosser states: 'So long as the
plaintiff's contractual relations are merely contemplated or
potential, it is considered to be in the interest of the
____________________
which asked the jury to decide whether Honeywell had interfered with Litton's
relationship between Boeing, McDonnell Douglas and Airbus and thus agreed that
the claim was in the case. Therefore, the Court will assess the jury's
conclusion on the merits.
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public that any competitor should be free to divert them to himself by all
fair and reasonable means (Prosser, Torts (4th ed. 1971) p. 954).
BUCKALOO V. JOHNSON, 14 Cal.3d 815, 828, 122 Cal. Rptr. 745, 752 (1975).
A competitor does not interfere with his competitors prospective advantage
if (1) the relation concerns a matter involved in the competition between the
actor and the other; (2) the actor does not employ wrongful means and his action
does not create or continue an unlawful restraint of trade; and (3) his purpose
is at least in part to advance his interest in competing with the other. A-MARK
COIN CO. V. GENERAL MILLS, INC., 148 Cal. App. 3d 312, 323, 195 Cal. Rptr.
859, 867 (1983)
Thus, in the absence of prohibition by statute, illegitimate means, or
some other unlawful element, a defendant seeking to increase his own
business may cut rates or prices, allow discounts or rebates, enter
into secret negotiations behind the plaintiff's back, refuse to deal
with him or threaten to discharge employees who do, or even refuse to
deal with third parties unless they cease dealing with the plaintiff,
all without incurring liability.
ID.
It is undisputed that Litton and Honeywell were competitors for the
business of Boeing, McDonnell Douglas and Airbus, and that Honeywell's purpose
in all of its actions was to advance its own economic interest in that
competition. Therefore, the only question is whether Honeywell used wrongful
means in obtaining the contracts with Boeing, Airbus, and McDonnell Douglas. As
stated, the jury found that Honeywell did use wrongful means in that it
willfully infringed Litton's patent. Since the Court has now concluded that the
'849
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reissue is both invalid and unenforceable, and there is no evidence in the
record that Honeywell engaged in any other unfair or illegal business practice
to gain the business of these aerospace manufacturers, Honeywell cannot be
liable on this theory.
Litton argues that the evidence supports a finding that Honeywell's motives
were bad. Illicit motives alone, however, cannot establish the tort unless the
defendant ACTUALLY COMMITS an unfair or illegal act. ID. Although there is
evidence in the record indicating that certain personnel at Honeywell may have
thought that Honeywell was using means which would subject it to a lawsuit, that
evidence does not prove that Honeywell ACTUALLY USED means which were wrongful.
Without such evidence, Litton cannot prevail.
Litton also argues that Honeywell committed antitrust violations that
establish the wrongful means necessary to defeat Honeywell's competitive
privilege. However, the jury was not instructed on antitrust law and the
parties did not try any antitrust issues. Litton may not now attempt to rely on
an antitrust claim that was not tried as a means of challenging Honeywell's
justification defense to the tort. The Court finds that, on the record
established at trial, Honeywell's actions with regard to sales to Boeing,
Airbus, and McDonnell Douglas are privileged as a matter of law. Accordingly,
Honeywell's Motion for JMOL is granted with respect to Litton's claim for
intentional interference with prospective economic advantage.
III.
HONEYWELL'S MOTION FOR A NEW TRIAL
Rule 50 of the Federal Rules of Civil Procedure requires that when a
district court grants a JMOL motion, "the court shall also rule
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on the motion for a new trial, if any, by determining if it should be granted if
the judgment is thereafter vacated or reversed, and shall specify the grounds
for granting or denying the motion for the new trial." Fed. R. Civ. P. 50(c).
Since Honeywell made a motion for a new trial, the Court is required to rule
conditionally on it.
To grant Honeywell's motion for a new trial, the Court must find that the
jury's verdict is contrary to the clear weight of the evidence, or is based on
evidence which is false, or that to grant the motion is necessary to prevent a
miscarriage of justice. RICHARDSON V. SUZUKI MOTOR CO., LTD., 868 F.2d 1226,
1245 (Fed. Cir. 1989), CERT. DENIED, 493 U.S. 853 (1989). That the court would
simply have reached a different verdict is not a sufficient ground for granting
a new trial motion. Likewise, doubts about the correctness of the jury's
verdict are not sufficient grounds for a new trial, but rather the trial court
must have a firm conviction that the jury has made a mistake. LANDES CONSTR.
CO., INC. V. ROYAL BANK OF CANADA, 833 F.2d 1365, 1372 (9th Cir. 1987).
However, in assessing a new trial motion, the Court may weigh the evidence and
the credibility of witnesses and may grant the motion even if the verdict is
supported by substantial evidence if to do so would prevent a miscarriage of
justice. ROY V. VOLKSWAGEN OF AMERICA, INC., 896 F.2d 1174, 1176 (9th Cir.
1990), CERT. DENIED, 500 U.S. 928 (1991). Moreover, in assessing a new trial
motion, the Court need not view the evidence in a light most favorable to the
non-moving party. LANDES CONSTR., 833 F.2d at 1371. A new trial may also be
granted when in its judgment, the trial court finds that the amount of
compensation awarded is excessive. HANSON V. SHELL OIL CO., 541 F.2d 1352, 1359
(9th Cir. 1976), CERT. DENIED, 429 U.S. 1074 (1977).
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The Ninth Circuit has pointed out that while the court's power to grant a
new trial, even though substantial evidence exists to support the verdict, is
clear, the discretion it should use in exercising that power is not. LANDES
CONSTR., 833 F.2d at 1371. The Ninth Circuit offers the following advice:
It may be doubted whether there is any verbal formula that will be of much
use to trial courts in passing on motions [for a new trial on grounds that
the verdict is against the clear weight of the evidence]. Necessarily all
such formulations are couched in broad and general terms that furnish no
unerring litmus for a particular case. On the one hand, the trial judge
does not sit to approve miscarriages of justice. His power to set aside
the verdict is supported by clear precedent at common law and, far from
being a denigration or usurpation of jury trial, has long been regarded as
an integral part of trial by jury as we know it. On the other hand, a
decent respect for the collective wisdom of the jury, and for the function
entrusted to it in our system, certainly suggests that in most cases the
judge should accept the findings of the jury, regardless of his own doubts
in the matter. Probably all that the judge can do is balance these
conflicting principles in light of the facts of the particular case. If,
having given full respect to the jury's findings, the judge on the entire
evidence is left with the definite and firm conviction that a mistake has
been committed, it is to be expected that he will grant a new trial.
LANDES CONSTR., 833 F.2d at 1371-72, QUOTING, 11 C. Wright & A. Miller, FEDERAL
PRACTICE AND PROCEDURE Section 2806 at 48-49 (1973).
Honeywell asserts that a new trial is necessary because the jury's damages
award was excessive and contrary to the clear weight of the evidence. Litton's
damages theory was based on a lost profits model. Upon a finding of
infringement of a valid patent, the patent laws require that a court shall award
damages adequate to compensate the patentee for infringement, but in no event
less than a reasonable royalty. 35 U.S.C. Section 284.
In determining patent damages, the profits lost by the patent owner in a
two-supplier market is a proper ground for granting relief.
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LAM, INC. V. JOHNS-MANVILLE CORP., 718 F.2d 1056, 1065 (Fed. Cir. 1983).
However, to be entitled to damages beyond a reasonable or established royalty, a
claimant must prove his actual damages, that is, his entitlement to lost
profits. WATER TECHNOLOGIES CORP. V. CALCO, LTD., 850 F.2d 660, 671 (Fed. Cir.
1988), CERT. DENIED, 488 U.S. 968 (1988). The patent owner must establish a
factual basis for causation -- that but for the infringer's improper acts, he
would have made greater sales, charged higher prices, or incurred lower
expenses. ID. While damages are to be proved, not presumed, a patent owner
need not demonstrate causation with certainty but need only demonstrate a
reasonable probability that it would have made some or all of the sales. ID.
To recover, as an element of patent damages, the profits that the patent
owner would have made absent infringement, the patent owner must prove (1)
demand for the patented product; (2) absence of noninfringing substitutes; (3)
its manufacturing and marketing ability to exploit the demand; and (4) the
amount of profit it would have made. KAUFMAN CO., INC. V. LANTECH, INC., 926
F.2d 1136, 1140-41 (Fed. Cir. 1991); PANDUIT CORN. V. STAHLIN BROS. FIBRE
WORKS, 575 F.2d 1152, 1156 (6th Cir. 1978). Part two of the PANDUIT test
embodies the idea that lost profits for all sales made by an infringer are
easier to obtain where there are only two suppliers in the market, the infringer
and the patent owner. WATER TECHNOLOGIES, 850 F.2d at 672.
In light of Federal Circuit precedent, the Court finds that Honeywell's
motion for a new trial must be granted based on the jury's damages award because
the weight of the evidence establishes that Litton has failed to meet its burden
on any of the four PANDUIT
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factors. The clear weight of the evidence shows that non-infringing substitutes
were available throughout the relevant period and that Litton could not have
supported the demands of the entire market. Likewise, the amount of the damages
is not supported by the weight of the evidence.
Litton's damages case is based on a study by Litton's economic expert
Almarin Phillips ("Phillips"), together with the same five or six documents that
Litton used to persuade the jury of its infringement claim, its nonobviousness
claim, and its state law claims.(48) The documents are only marginally relevant
to the question
____________________
48 Those documents are (1) a service letter sent out by Boeing recording
three instances in which Honeywell inertial reference units failed while in use
on Boeing aircraft (Exhibit 98); (2) an FAA airworthiness directive that
restricted the use of certain Boeing 737-300 aircraft equipped with Honeywell
inertial reference units (Exhibit 1084); (3) a Honeywell letter to Boeing that
states that Honeywell had a mirror problem in 1984, which it had corrected by
1989 by means of a "high-level mirror life improvement program" (Exhibit 96);
(4) a Honeywell document that describes Honeywell's early mirror pull program
(Exhibit 101); (5) an awards nomination letter in which a Honeywell scientist
stated that Louderback and Litton were responsible for the development of ion
beam mirrors (Exhibit 33); and (6) excerpts from the diary of Honeywell engineer
Richard Rostal that show that Honeywell was aware that Litton might sue at the
time it was negotiating to buy mirrors from Louderback, (Exhibit 43 at 3608480).
The Boeing service letter, which was issued in 1989, after Honeywell's adoption
of ion beam mirrors, describes a problem with DETECTION OF FAILURES rather than
failures themselves, and seems unrelated to mirror performance. The FAA
airworthiness directive is likewise directed to problems that were not mirror
related. Neither document discusses more than a few failures and therefore
neither is particularly probative of the overall reliability of Honeywell's
system. The Honeywell letter to Boeing supports the uncontroverted fact that
ion beam mirrors increase reliability, but does not refute the evidence that
even with electron beam mirrors, Honeywell's inertial guidance system was more
reliable than Litton's. The evidence relating to Honeywell's early pull program
does call Honeywell's reliability data into some question, but Honeywell has
shown that even taking the early pull program into account, its electron beam
reliability was higher than Litton's ion beam reliability. The awards letter is
simply not probative of the patentability of the Wei/Louderback process. It is
nothing more than unauthenticated opinion testimony and must be disregarded to
the extent that Litton used it for that purpose. The excerpts from the
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of whether Litton is entitled to lost profits, while the study is pure fantasy.
Phillips' study assumes that had Honeywell not begun using ion-beam
deposited mirrors, (1) Boeing would not have granted Honeywell the November 14,
1985 contract that made Honeywell's inertial navigation systems standard on
Boeing aircraft but would instead have given the contract to Litton; (2) Litton
would have been able to ramp up to meet the demand of the Boeing contract; (3)
the increased volume achieved by Litton would have allowed Litton to overcome
the substantial reliability problems of its own systems; and (4) because of the
increased reliability achieved by the volume of production facilitated by the
Boeing contract, Litton would have forced Honeywell out of the inertial
navigation market. The sum of those assumptions is what Phillips refers to as
the "but for" world.
The fundamental assumption underlying Litton's damage study is that an
inertial navigation system that employed electron-beam mirrors in its ring laser
gyroscopes would have been, at the time Honeywell was granted the 1985 Boeing
contract, unacceptably unreliable. The evidence presented at trial belies that
assumption. It is virtually uncontroverted that prior to Honeywell's use of ion
beam deposited mirrors, Honeywell's system substantially outperformed Litton's
ion beam system.(49) Both Phillips and Litton's damages witnesses admitted
____________________
Rostal diaries, although probative of willfulness, are not probative of
patentability, obviousness, or damages.
49 Litton has made the argument that because Honeywell had an early
removal system, its reliability data was not accurate. Both Litton and
Honeywell measure reliability in terms of "mean time between failure" ("MTBF")
and "mean time between removal" ("MTBR"). MTBF measures the amount of time, in
flight hours, the system is on the aircraft before it fails. MTBR measures the
amount of time the system is on the aircraft before it is removed for service.
Because
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that in the mid-1980s, Honeywell's performance exceeded Litton's. For example,
Phillips said:
Sir, I am not contesting that in the 1982, '83, '84, '85, '86, '87, period
that the measured performance of Honeywell's gyros was above the measured
performance of Litton's gyros through those years. That is no contest. It
was. . . . In the actual world I concede that [Honeywell's electron beam
performance was better than Litton's ion beam performance through 1987].
(Transcript at 8061: 8-16). Likewise, Marshall Mahler, the president of
Litton's Aero Product's Division, testified that in 1985, Honeywell's
reliability was better than Litton's. (Transcript at 3560: 18-25). Moreover,
the Litton documents that compare the performance of the Litton and Honeywell
systems uniformly show that Honeywell's system outperformed Litton's.
Litton's position was that its reliability would have improved when it
achieved the Boeing contract because it would have been able to increase
production significantly. That argument fails because each proposition relies
upon proof of the other. Litton cannot show that it would have obtained the
1985 Boeing contract without showing that its reliability was better than
Honeywell's. Likewise Litton cannot show that its reliability would have been
better than Honeywell's, without showing that it would have achieved the 1985
Boeing contract.
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some removals do not reveal that the device has failed, the MTBR figure is
always lower than the MTBF figure. Litton showed that there were some early
removals by Honeywell. Then Litton argued that Honeywell's early replacement
program unfairly raised its MTBF figure by removing still viable gyroscopes
prior to failure, thereby creating a situation in which the numbers show that
Honeywell's gyroscope never failed. This ARGUMENT, which is all it amounted to
because it was never made more specific, is insufficient to counter the actual
evidence in the case.
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Litton acknowledges that its own internal documents described Honeywell's
performance up until 1984 as "spectacular," but argued that Honeywell's mirror
problem would, absent infringement, have caused a dramatic crash in reliability
by the end of 1985. The argument proceeds that Boeing would then, of necessity,
have granted the 1985 contract to Litton, not Honeywell. Whatever the Honeywell
internal documents say about its reliability problems, these documents do not
compare Honeywell's performance with that of Litton, nor do they contain actual
reliability data sufficient to warrant the conclusion urged by Litton.
Because the record shows that the Litton system employing ion beam mirrors
was not as reliable as the Honeywell system employing electron beam mirrors, the
assumption that Litton would have been granted the 1985 Boeing contract is mere
speculation. Boeing was not buying mirrors, but was rather buying a complete
inertial navigation system. Both the inertial navigation system produced by
Litton and that produced by Honeywell were highly complex and contained many
elements other than mirrors, which could affect the system's reliability.(50)
Although Boeing was concerned about reliability, that concern was about the
reliability of the system as a whole, not simply mirror reliability. Honeywell
would have won the 1985 contract even without ion beam mirrors.(51)
____________________
50 For example, in 1986 Litton faced a laser intensity degradation
problem that it has called the "DCI problem," which Litton witnesses have
testified was not a mirror problem.
51 Moreover, Litton has not shown that, absent infringement, Litton could
have taken Honeywell's business with McDonnell Douglas. The uncontroverted
testimony in the record is that McDonnell Douglas bought Honeywell's system
because, following Honeywell's purchase of Sperry, Honeywell could offer an
entire integrated cockpit. Litton did not offer an integrated cockpit.
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That Honeywell's electron beam systems were chosen over Litton's prior to
Honeywell's adoption of ion beam mirrors supports that conclusion. Honeywell
won the contract to supply the inertial navigation system for the Boeing 767 and
757 in 1978 in competition against Litton's bid based on a mechanical gyroscope
system. Then, in 1982, Boeing chose Honeywell's system employing electron beam
mirrors over Litton's system for the 737-300. Litton chose not to bid on the
Boeing 777 contract. Likewise Honeywell's systems employing electron beam
mirrors prevailed over Litton's systems employing ion beam mirrors for the
Airbus A-320, the Gulf Stream GIV and the Canadair Challenger. The evidence is
overwhelming that, although ion beam mirrors do appear to provide a reliability
advantage, Honeywell's systems were more reliable overall than Litton's systems.
Another fundamental flaw in Litton's damages study is that it is based on
the assumption that Honeywell could not use ion beam sources to manufacture
mirrors in 1985. Rather, because the '958 patent was invalid and the claims of
the '849 reissue are materially different than those of the '958 patent, the
Court has previously ruled that under the doctrine of intervening rights,
Honeywell was free to use the claimed process until the date of reissue in 1989.
Honeywell's freedom to use the patented process until 1989 renders completely
groundless the assumption that Litton would necessarily have been awarded the
1985 Boeing contract.
Even if the Court were to overlook the other flaws in Litton's damages
analysis, Litton's analysis cannot pass the PANDUIT test. The first PANDUIT
factor is demand for the patented product. As to this factor, there is a total
absence of evidence that any airframe manufacturer ever had any desire to
purchase an inertial navigation
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system that used ring laser gyroscopes EQUIPPED WITH ION BEAM MIRRORS. There
is, however, substantial evidence of demand for a more reliable inertial
navigation system. Witnesses from Boeing testified that they would choose a
more reliable system over a less expensive system, but, again, the reliability
of the mirrors is but one element in the reliability of the system. The
overwhelming weight of the evidence is that Honeywell had the more reliable of
the two systems.
Likewise, Litton has failed to show the absence of noninfringing
alternatives. The success of Honeywell's system using electron beam mirrors
over Litton's system using ion beam mirrors proves that it is a non-infringing
alternative. Litton, however, argues that Honeywell's adoption of ion beam
mirrors shows conclusively that electron beam mirrors were not a non-infringing
alternative. However, that Honeywell chose to use ion beam mirrors does not
prove that electron beam mirrors are not an alternative because, as stated,
mirrors are not the product that was sold but rather are merely a component of
the system which was the product. A patentee can recover damages based on the
value of an entire apparatus containing several features where the patent-
related feature is the basis for customer demand. STATE INDUS., INC. V. MOR-FLO
INDUS., INC., 893 F.2d 1573, 1580 (Fed. Cir. 1989), CERT. DENIED, 493 U.S. 1022
(1990). Here, however, there is virtually no evidence that the patent-related
feature was the basis of customer demand.
Most telling, however, is that the substantial weight of the evidence
supports the conclusion that Litton would have been unable to meet the market
demand even if it had achieved the market domination it forecasts in its damage
study. Throughout the 1980s Litton could not keep up with demand even for its
limited portion of the market.
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In the mid to late 1980s, Litton was forced to abandon its efforts to compete in
the corporate jet market because it could not produce enough systems to satisfy
that market and maintain its commitment to Airbus. Litton was even unable to
produce enough gyroscopes in 1977 to perform a planned retrofit designed to
remedy Litton's "DCI problem." Moreover, a Litton internal document reveals that
in fiscal year 1987 Litton lost $3,854,000 in sales because of a shortage of
gyroscopes and projected that it would lose an additional $14,333,000 in fiscal
1988 because of continued shortage. (Exhibit 6512). Likewise, in May of 1986
Litton was unable to keep up with the demand for gyroscopes to replace field
failures. The shortage continued through at least August of 1986. (Exhibit
6410).
The Court cannot accept the proposition that while Litton could not keep up
its production to the extent necessary to maintain its limited share of the
market, Litton could have "ramped up" production to ten times that level if
Honeywell had not infringed. The involved argument that Litton would have
solved its production problems by maintaining responsibility for the systems in
its Guidance and Control Division in Woodland Hills, California, rather than
giving production responsibility to its Aero Products Division in Canada as it
actually did again invites the trier of fact to engage in a combination of
hindsight and speculation.(52) Whether Litton would have or could have changed
the whole organization of the company if Honeywell had not used mirrors
manufactured from ion beam sources is merely a matter of
____________________
52 Litton's Guidance and Control Division is largely responsible for
Litton's military navigation products while the Aero Products Division is
responsible for Litton's commercial navigation products. According to Litton,
the engineers with the ability to solve technical problems were at the Guidance
and Control Division.
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conjecture. Moreover, even if Litton had made such a change, one can only
speculate as to the effect that change would have had on Litton's other
production problems.
There is no evidentiary support for either the $1.9 billion that Litton
requested or the $1.2 billion that the jury awarded. Although the substantial
weight of the evidence might support a damages figure closer to one of those
suggested by Honeywell's experts, a remittitur will not cure what happened here.
Because it would be a substantial miscarriage of justice to allow the jury's
$1.2 billion award to stand, Honeywell's motion for a new trial is granted on
the issue of damages.
Honeywell also moves for a new trial on the ground that the Court
improperly admitted certain exhibits, and on the further ground that Litton's
counsel engaged in misconduct that was prejudicial to Honeywell. Honeywell's
motion for a new trial is denied on those grounds.
IV.
CONCLUSION
The Court finds that the '849 reissue is unenforceable on the ground that
it was procured by inequitable conduct. Additionally, although the Court
believes that jury verdicts should be upheld if consistent with a reasonable
interpretation of the evidence, Honeywell's renewed motion for JMOL is granted
because, viewing the evidence in the light most favorable to Litton, and drawing
all inferences from the evidence in that light as well, the '849 reissue is
invalid as obvious under 35 U.S.C. Section 103. Likewise, Honeywell's renewed
motion for JMOL is granted with respect to Litton's state law claims for
interference with contract and interference with
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prospective economic advantage. All of the other grounds urged by Honeywell in
its motion for a JMOL are denied. In the alternative, the Court grants
Honeywell's motion for a new trial on the issue of damages on the ground that
the jury's award is inconsistent with the clear weight of the evidence, and to
permit it to stand(53) would constitute a miscarriage of justice.
DATED: January 4, 1995
/S/ Mariana R. Pfaelzer
-------------------------------------
Mariana R. Pfaelzer
United States District Judge
____________________
53 The Court notes Litton's frequent references in its papers to colloquy
between the Court and Mr. Lorig in which the Court indicated that it might be
inclined to permit a jury verdict to stand. There is bound to be extended
colloquy between the court and counsel in a long and complex trial. However,
colloquy cannot create an estoppel to hear further argument.
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EXHIBIT 99 (ii)
For Immediate Release
Contact: Meta Gaertnier
Director of Public Relations
Honeywell Inc.
In Minneapolis
(612) 951-0773
JUDGE DECLARES LITTON PATENT INVALID
$1.2 BILLION VERDICT RENDERED VOID
LOS ANGELES, JAN. 9 -- Honeywell Inc. today said that it is delighted with
U.S. District Court Judge Mariana R. Pfaelzer's decision to invalidate a patent
held by Litton Systems Inc. covering a process to coat mirrors used in ring
laser gyroscopes. By declaring the patent invalid, the Court nullifies a $1.2
billion jury verdict returned on Aug. 31, 1993, in a patent infringement lawsuit
brought by Litton against Honeywell.
Subsequent to the jury trial, Judge Pfaelzer heard additional arguments on
a number of unresolved legal issues, including whether Litton's patent is valid.
In its decision, the Court found that Litton's patent was unenforceable
because it was obtained by inequitable conduct. The Court further decided that
the patent was invalid because it was "obvious" -- that is, that it was an
invention that would have been obvious from combining existing processes.
"The Court's decision is a clear and complete victory for Honeywell," said
Edward D. Grayson, Honeywell vice president and general counsel. "This ruling
validates our arguments during trial and supports our assertion that Honeywell
is a fair and lawful competitor."
The ring laser gyroscope is a device used for aircraft navigation.
Honeywell developed the RLG in the 1960s and is a leader in the inertial
guidance systems market.
Honeywell is a global controls company providing products, systems and
services that increase comfort, environmental protection, energy conservation,
productivity and safety in homes and buildings, industry, and aviation and
space. The company employs 51,000 people in 95 countries on six continents and
had 1993 sales of $6 billion.
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