United States. Congress. Senate. Committee on the.

The Industrial reorganization act. Hearings, Ninety-third Congress, first session [-Ninety-fourth Congress, first session], on S. 1167 (Volume pt. 7) online

. (page 120 of 140)
Online LibraryUnited States. Congress. Senate. Committee on theThe Industrial reorganization act. Hearings, Ninety-third Congress, first session [-Ninety-fourth Congress, first session], on S. 1167 (Volume pt. 7) → online text (page 120 of 140)
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court does not intend to inhibit technological changes which may alter the
definition of what today may be a separate product.

8. IBM is enjoined from adopting, implementing or carrying out predatory
pricing, leasing or other acts, practices or strategies with intent to obtain or
maintain an illegal monopoly in a relevant market for EDP peripheral equip-
ment plug compatible to its CPU's, or any relevant submarkets thereof, in viola-
tion of Section 2 of the Sherman Act.

9. The foregoing injunctions are intended to be effective only within the United
States. They and any changes, modifications or amendments thereof may be en-
forced, construed or considered only upon motion duly made by The Telex
Corporation, Telex Computer Products, Inc., or International Business Ma-
chines Corporation, or their successors in interest, and such motions shall be
made on at least twenty days' written notice.

10. International Business Machines Corporation shall have and recover from
Telex Corporation and Telex Computer Products Inc., the total sum of $21,913.-
776, made up as by the conclusions of law shown, together with attorneys'
fees for the adjudged copyright infringement in the sum of $3,000, and costs
in accordance with the stipulation heretofore made of record.

11. The Telex Corporation and Telex Computer Products, Inc., are enjoined
and required :

a. To return to IBM all IBM documents and all Telex documents containing
IBM confidential information which are in Telex's custody or under its control,
and to destroy all copies of Telex manuals under its control or in its custody
which infringe IBM copyrighted manuals.

b. To refrain from hiring or soliciting any IBM employee for a period of two
years without approval from the court.

c. To refrain from copying any IBM copyrighted materials.

d. To refrain from soliciting or using any IBM confidential or proprietary
information.

e. To refrain from assigning any former IBM employee employed now or in
the future by Telex to the development or manufacture of products functionally
equivalent or similar to those on which such employee worked at IBM for a
period of not less than two years following the termination of his employment
with IBM.

12. Notwithstanding the undetermined claims relating to foreign markets, the
court, pursuant to Rule 54(b) Fed. R. Civ. P., hereby determines that there is no
just cause for delay in the entry of this judgment, and the Clerk is hereby directed
to enter final judgment in accordance with the foregoing, subject to immediate
appeal. A stay of execution is hereby granted subject to disposition of defendant's
motion of September 2G, 1973, pursuant to Rule 62(d) of the Federal Rules of
Civil Procedure for an order suspending injunctive relief against defendant pend-
ing apiieal or, in the alternative, for an order requiring plaintiffs to provide secu-
rity in the amount deemed appropriate by the court, and subject to the disposition
of other motions, if any, for stay or supersedeas in connection with an appeal of
this judgment by any party.

13. Against the possibility that it should be determinetl that reserved claims
vdth reference to foreign markets are not sutficiently separate as to permit the
invocation of Rule 54(b), Fed. R. Civ. P., and tliat despite the provisions of 28
U.S.C. § 1292(a)(1) with reference to appeal of interlocutory injunctions, the
antitrust and trade secret damage awards herein otherwise would not be subject
to immediate appeal, the court hereby finds and states :



5794

That it is its opinion tliat all of the provisions of the foregoing orders and judg-
ment, including the question of antitrust and trade secret damages, as well as the
injunctions, involve controlling question of law as to which there is substantial
ground for differences of opinion, and that an immediate appeal from said orders
and the foregoing judgment as a whole, and each part thereof, may materially
advance the ultimate determination of this litigation ; that the reserved claim as
to foreign markets likely will involve questions concerning damages as well as
injunctions the same as, or similar to, those which would be decided in an ap-
pellate review of the foregoing judgment, and that unless and until all such
questions are decided on appeal from this judgment there likely would be great
extra expense and the expenditure of extended time and effort in discovery con-
cerning, and adjudication of, the foreign market claim much of which may be
rendered either more certain and expeditious, or needless, if the foregoing judg-
ment is reviewed in its entirety.

Dated this 9th day of November, 1973.

A. Sherman Christensen,

Senior United States District Judge

(Assigned).



District Court, D. Minnesota, Fourth Div.

Honeywell Inc. v. Sperry Rand Corporation et al.
No. 4-67 Civ. 138 Decided Oct. 19, 1973
PATENTS

1. Use and sale — Character of evidence to prove (§ 69.3)

In determining whether patentees' public use of invention was a nonexperi-
mental public use. standard is fair preponderance of the evidence, not clear and
satisfactory proof, clear and convincing proof, or proof beyond a reasonable
doubt.

2. Use and sale — Extent and character of use (§ 69.5)

Uses were not excused as experimental where they were not under inventors'
surveillance, and were not for purpose of enabling them to test machine and
ascertain whether it would answer purpose intended and to make such alterations
and improvements as experience demonstrates to be necessary.

3. Use and sale — In general (§ 69.1)

Burden of proof of exemption to public use bar, such as by reason of experi-
mentation essential to completion of making or perfecting of invention by or for
inventors, rests with patentees.

4. Applicants for patent — In general (§ 14.1)
Presumption from patent grant — Weight of (§ 55.9)

Patent is presumed to be valid and inventors named thei'ein are presumed to
be the true and actual inventors; alleged infringer has heavy burden to over-
come presumption ; to meet burden, it would have to be established that there
were other inventors of subject matter of each patent claim.

5. Interference — Originality of invention — In general (§41.551)

Work, experiments, and suggestions of others, not rising to level of invention,
in assisting inventors in carrying out conception do not entitle others to be
treated as inventors or co-inventors.

6. Interference — Originality of invention — In general (§ 41.551)

Failure of alleged inventor or co-inventor to make a claim of inventorship at
time named inventors were being publicized as the inventors is evidence permit-
ting the inference that assertions of inventorship or co-iuventorship are not
sustainable.

7. Patentability — Anticipation — Publications — In general (§ 51.2271)

Fact of publication of article is evidenced by certificate of copyright registra-
tion which states the date of publication.



5795

8. Specification — Sufficiency of disclosure (§ 62.7)

It is presumed that Patent Office reviewed patent application for sufficiency of
its description and that patent's disclosure is sufficient to teach one skilled in the
art how to practice the invention.

9. Specification — Sufficiency of disclosure (§ 62.7)

It is unnecessary that patent describe all possible embodiments of the invention.

10. Amendments to patent application — In general (§ 13.1)

Where applicant does not originally assert claims which are added later by
amendment and subject matter of such late claims is disclosed or in general use
and applicant stands by to await developments in the industry before asserting
them, there is an unreasonable delay and neglect on applicant's part rendering
late claims invalid.

11. Amendments to patent application — New matter (§ 13.5)

Where a late-filed amendment of specification is important enough to constitute
basis for alleged patentability, amendment constitutes new matter and cannot
in fact be a basis for patentability.

12. Amendments to patent application — In general (§ 13.1)

Patentee's long delay in adding broadened claims to application warrants
inference that claims were added as an afterthought and not as a logical develop-
ment of original application ; claims are invalid where their subject matter was
in public use more than year before they were first introduced.

13. Amendments to patent application — In general (§ 13.1)

Repeated entry into interferences, resulting in long delays incident to their
determination, affords no execuse for failure to assert broader claims at an
earlier date ; long delay in coming to the point with new and broader or different
claims strongly confirms that the final determination to do so was an exigent
afterthought, rather than a logical development of original application.

14. Amendments to patent application — In general (§ 13.1)

Applicant cannot enhirge pending application so as to embrace and include for
the first time the essential elements of an article, device, or structure which has
been in public use or on sale more than one year prior thereto.

15. Amendments to patent application — In general (§ 13.1)

Courts regard with disfavor attempts to enlarge scope of application once
filed, the effect of which would be to enable patentee to appropriate other inven-
tions made prior to such alteration, or to appropriate that which has, in the mean-
time, gone into public use.

16. Laches — As to patent applications (§ 44.15)

Deliberately extending expiration of patent monopoly is violation of Constitu-
tion and patent laws ; international delay by applicant invalidates patent ; how-
ever, applicant may avail himself of all provisions of patent statutes.

17. Presumption from patent grant — Weight of (§ 55.9)

Rebuttable presumption of validity under 35 U.S.C. 282 is not accorded much
weight.

18. Presumption from patent grant — Patent Office consideration of prior art

(§ 55.5)
Statutory presumption of validity is weakened, if not destroyed, where bars
to patentability raised in litigation are based on prior art or use not before
Patent Office.

19. Defenses— Fraud (§ 30.05)

One practical reason for requirement of absolute honesty and good faith
disclosure by applicant in ex parte Patent Office examination is that even an
innocent misrepresentation of facts destroys presumption of validity.

20. Patentability — Anticipation — Prior knowledge, use or sale (§ 51.223)

Public use bar is based on fiat of Congress that it is part of consideration for
a patent that public shall begin to enjoy the disclosure as soon as possible.

21. Use and sale — Euxtent and character of use (§ 69.5)

Use of invention by a person other than the inventor, not essential to comple-
tion of the making of the invention by the inventor, is a public use; fact that
invention is buried within a machine is irrelevant.



5796

22. Use and sale — Extent and character of use (§ 69.5)

Under limited conditions, where invention involves need for public use as the
only practical way to test value of invention and thereby peiTQit the making
of the invention to be completed, inventor may experiment in public as an excep-
tion to public use bar ; this exception does not apply where it is possible to experi-
ment in private ; it applies only where use is by inventor or persons under his
control for purpose of perfecting invention.

23. Affidavits — Anticipating references (§ 12.3)

Use and sale — Extent and character of use (§ 69.5)
Patentee's Eule 131 affidavit asserting completion of invention in United
States before filing date of application fixes the last possible date for experi-
mental u.se.

24. Use and sale — Extent and character of use (§ 69.5)

Where there is no question of inventor's determination of whether invention
worked or how it could be improved and where sole puii^ose of a demonstration
is to show new developments in equipment, which have been proved oi>erational,
to the public, such use is public, not experimental.

25. Use and sale — Extent and character of use (§ 69.5)

Where idea of machine has been conceived and conception carried into effect
by its construction, which machine is then used or capable of being used for
designed purpose, such use is no longer an experiment.

26. Use and Sale— Extent and Character of Use (§ 69.5)

Fact that machine was not ultimately perfected at time it was first in use does
not avoid a public use bar.

27. Patentability— Anticipation— Prior Knowledge, Use or Sale (§ 51.223)

Policy consideration behind public use doctrine is to stimulate reasonable dis-
closure of inventions.

28. Use and Sale— Extent and Character of Use (§ 69.5)

Single public use of patented machine more than year before patent application
is filed, even without profit to inventor, establishes a public use bar.

29. Use and Sale— Extent and Character of Use (§ 69.5)

Public demonstration of device to members of the public inclufling the press
gives rise to a compelling inference that demonstration was a public use and not
within experimental use exception.

30. Patentability— Anticipation— Prior Knowledge, Use or Sale (§ 51.223)

Complete identity of device in public use with device as claimed in patent is not
necessary to establish public use bar ; difference between devices must be a patent-
able one to avoid bar ; inventor cannot avoid bar by establishing that device, which
was installed and used, was imperfect.

31. Use and Sale— Sale (§ 69.8)

"On sale" does not mean an actual accomplished sale but merely activity by
ventor in a commercial exploitation of what he later asserts the power to monop-
olize ; express contract for construction of equipment embodying principles of
invention may constitute "on sale" despite fact that no structure has been
constructed ; moreover, device need not be actually delivered, but only be ready for
delivery ; also, a device imperfect in a mechanical sense may be "on sale" : further,
device may be "on sale" even if purchaser or offeree imposes a secrecy classifica-
tion on it.

32. Use and Sale— Character of Evidence To Prove (§ 69.3)

Prima facie showing that invention was "on sale" can be overcome only by un-
equivocal and convincing evidence to the contrary.

33. Applicants for Patent— In General (§ 14.1)

Patent applied for by one who is not the inventor is void whether taken out in
his name or name of his assignee.

34. Patentability— Evidence of— Solution by Several Parties (§ 51.465)

Utilization of ideas in device prior to time of alleged invention, whether or not
device was abandoned, is evidence that, when ideas are incorporated in a later
development along the same line, they do not amount to invention.



5797

35. Patentability — Anticipation — Publications — ^What is Publication (§ 51.2277)
Reproduction of a description of invention by any eopy-maliing technique ca-
pable of enabling wide dis.semiuation of multiple copies evidences sufficient ac-
cessibility by public so as to constitute a "printed publication" within meaning
of patent statute.

36. Patentability— Anticipation— Publications— In General (§ 51.2271)

Patent statute relating to printed publications is based upon public policy that,
once an invention has been made accessible to public through printed publication,
it cannot be withdrawn into a patent.

37. Patentability— Anticipation— Publications— What is Publication (§ 51.2277)

Description document qualifies as a printed publication even where only a sin-
gle typewritten copy is put on file in college library, because it is the expression
of intent that fruits of research be available to interested public that is determi-
native of fact of publication.

38. Patentability— Anticipation— Publications— What is Publication (§ 51.2277)

Distribution of small number of copies of a descriptive document to a limited
group skilled in the art, who are outside distributor's organization, is publication
within meaning of patent statute.

39. Laches — As to Patent Applications (§ 44.15)

Although not rendering patent invalid for deliberately extending expiration
of its monopoly, consequences of delay in issuance of patent due to six years
of inadequate preparation by patentee in interference litigation, and thereby the
proceedings before Patent Office, render patent unenforceable.

40. Amendments to Patent Application — In General (§ 13.1)

Intentional delay in prosecution of patent application to enable changes in
specification and claims so that work of other inventors might be covered renders
patent invalid.

41. Patent Grant— Intent of Patent Laws (§ 50.15)

►Since patent laws are founded on public policy to promote progress of science
and useful arts, public is a material party to, and should be considered in, every
application for patent ; moreover, arts and sciences will not be promoted by
encouraging inventors to withhold their invention, especially if they are brought
forward at a later time to defeat other inventors who have placed benefit of
their inventions within knowledge of public.

42. Defenses— Fraud (§ 30.05)

Applicant's misconduct before Patent Office, even if it was not material to
procurement of patent, renders patent unenforceable ; there is a line between
willful and intentional fraud which invalidates patent and inequitable conduct
which renders it unenforceable.

43. Misuse of Patents— In General (§ 45.01)

Claim for damages based on violation of antitrust laws because of willful and
intentional fraud on Patent Oflfice requires proof by clear and convincing
evidence.

44. Defenses— Fraud (§ 30.05)

Patent applicants and parties to Patent Office proceedings have uncompromis-
ing duty to report to Office fully and fairly all facts which may affect patent-
al)ility of invention ; public interest demands that all such facts be submitted
formally or infonnally to Office ; fraud in procurement of patent includes not only
intentional misrepresentations but also intentional concealment of material facts.

45. Defenses— Fraud (§ 30.05)

Although complete candor with and disclosure to Patent OflSce is required,
what should be disclosed to Office as possible sources of invention, prior art, or
derivation must in some degree be left to applicant's judgment and conscience.

46. Misuse of Patents— In General (§ 45.01)

To recover antitrust damages based on fraud in obtaining patent, plaintiff
must prove (1) willful and intentional fraud, (2) injury to business or property
caused by fraudulently procured patent, and (3) other elements necessary to
violation of section 2 of Sherman Act : good faith or honest mistake is a complete
defense : moreover, proof of fraud must l)e by clear, unequivocal, and convincing
evidence, a mere preponderance of evidence being insufficient.



S798

47. Misuse of Patents— In General (§ 45.01)

As part of action seeking antitrust damages based on fraud in obtaining pat-
ents, plaintiff has standing to assert claims based on defendant's ownership of
patents which defendant has not claimed to have been infringed by plaintiff
and on applications which defendant has not used as base for claim of royalties.

48. Use and Sale— Sale (§ 69.8)

Manufacturer put device on sale by turning it over to Government for accept-
ance testing.

49. P.Iisuse of Patents— In General (§ 45.01)

One who has not yet been charged with infringing a patent may have standing
as private attorney general to seek a declaration in antitrust action that it is
invalid or unenforceable.

50. Interference— In General (§ 41.01)
Misuse of Patents — In General (§ 45.01)

Settlements of patent interferences are to be encouraged unless in the process
the antitrust laws are violated and the public interest harmed.

51. Misuse of Patents — Exchange of Licenses or Patents (§ 45.25)

Nonexclusive patent cross-licensing in itself may be proper under antitrust
laws.

52. Misuse of patents — In general (§ 45.01)

In order to sustain a finding of patent misuse or a Sherman Act violation based
on discriminatory patent licensing, plaintiff must show at least (1) plaintiff took
a license, (2) royalty rate charged plaintiff and that charged a competitor were
unequal, (3) in all particulars relevant to equality of rates plaintiff and its
licensed competitor were similarly situated, and (4) royalties were an important
expense factor in production costs and discriminatory rate caused substantial
impairment of competition in relevant market.

53. Misuse of patents — Defense to suit (§ 45.15)

Any possible impropriety on patentee's part in making its license offers was
purged by placing of infringement action, with issue of appropriate royalties
or infringement damages, before court.

54. Infringement — ^Tests of — Comparison with claim (§ 39.803)

In determining whether accused device infringes patent, resort must be had in
the first instance to words of claim ; if accused matter falls clearly within claim,
infringement is made out.

Particular patents — Computer

3,120,606, Eckert and Mauchly, Electronic Numerical Integrator and Com-
puter, invalid.

Action by Honeywell, Inc. against Sperry Rand Corporation and Illinois Sci-
entific Developments, Inc., for violation of patent invalidity and noninfringe-
ment in which defendants, counterclaim for iKitent infringement. Judgment for
plaintiff in part and for defendant in part.

Henry Halladay, Minneapolis, Minn., and D. D. Allegretti, Chicago, 111., for

plaintiff.
Frank Claybourne, St. Paul, Minn., and H. Francis DeLone, Philadelphia, Pa.,

for defendants.

Larson, District Judge.
Findings of Fact, Conclusions of Law and Order for Judgment

0. Introduction

0.1 This ease is a consolidation of two actions which were commenced simul-
taneously on May 26, 1967 before this Court and the District Court for the Dis-
trict of Columbia :



5799

Honeywell, Inc. v. Sperry Rand Corporation, U.S. District Court for the
District of Minnesota. File No. 4-67 Civ, 13S (hereinafter the Minnesota
action).

Illinois Scientific Developments, Inc. v. Honeywell, Inc., U.S. District
Court for the District of Columbia, Civil Action No. 1373-67 (hereinafter
the District of Columbia action).
0.1.1. Honeywell, Inc. (hereinafter Honeywell or plaintiff) is a Delaware
corporation with its principal office and place of business in Minneapolis, Minne-
sota.

0.1.2. Sperry Rand Corporation (hereinafter SR) is a Delaware corporation
with its principal office and place of business in New York, New York, and is
authorized to do and does business in Minnesota.

0.1.3 Illinois Scientific Developments, Inc. (hereinafter ISD) is an Illinois
corporation with its principal office and place of business at that of SR. ISD is a
wholly owned subsidiary of SR.

0.1.4 Honeywell's Complaint in the Minnesota action as originally raised two
cause of action :

.1 Count One charged SR with violation of Section 2 of the Sherman Act
by reason of the maintenance and enforcement of an allegedly fraudulently
procured patent (the so-called "ENIAC patent"). The ENIAC patent was
alleged to have the exclusionary power to effectively dominate the entire
electronic data processing industry. Injunctive relief and damages were
sought.

.2 Count Two sought declaratory judgment of invalidity and unenforce-
ability of the ENIAC patent for the antitrust misconduct complained of in
Count One, and for failure to comply with the legal prerequisites of the
Patent Statute.
0.1.5. ISD's Complaint in the District of Columbia action charged infringement
by Honeywell of the ENIAC patent. Injunctive relief and damages were sought.
0.1.6 On March 5, 1968, the District of Columbia action was transferred to
the District of Minnesota and consolidated by order of Judge Nordbye on May 1,
1968, with the Minnesota action as a counterclaim by ISD, which was realigned
as a defendant.

0.1.7 on May 1, 1968, Honeywell filed its First Amended Complaint, in the
consolidated action, adding expanded allegations that SR and ISD's conduct
had violated Section 1 as well as Section 2 of the Sherman Act, and adding Count
Three charging that the acquisition of the ENIAC patent was a violation of
Section 7 of the Clayton Act.

0.1. S On August 29, 1969, Honeywell filed its Second Amended Complaint, add-
ing a paragraph 30A under which other patents and pending patent applications,
in addition to the ENIAC patent, were alleged to be subject to the same infirmi-
ties as those with respect to the ENIAC patent, and their procurement, licensing,



Online LibraryUnited States. Congress. Senate. Committee on theThe Industrial reorganization act. Hearings, Ninety-third Congress, first session [-Ninety-fourth Congress, first session], on S. 1167 (Volume pt. 7) → online text (page 120 of 140)