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 127 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 127 of 140)
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11.9.2.3 BTL assured SR that inactivity liy SR pending such negotiations would
not be urged by BTL to constitute unjustified delay or laches.

11.9.2.4 For example, on Novembei- 12, 19.59. Towsend asked McNamara, "^'ice
President and General Counsel of defendants, how negotiations were pro-
gressing, because he and Pugh agreed that Judge Daw.son "* * * may take some
drastic action" in setting the case for trial. On November 19, 1959, ]\IcNaniara
requested Townsend to "hold this in abeyance pending our present negotiations
with AVestern Electric on an overall license in disignated fields including the



5833

data processing field." In a follow-up letter dated November 20, 1959, Towsoud
expressed his understanding of McNaniara'.s instructions as follows:

"I note that you wish to hold this matter in abeyance pending your present
negotiations with Western Electric.

•'This wili put me in a position to deal with Mr. Pough if he calls again."

11.9.2.5 By March, 1960, HR's coun.sel, Townsend, advised the court that :

.1 pre-trial preparations have not yet been completed ;

.2 BTL has not yet commenced its discovery ;

.3 discussion of a possil)le settlement still continues between the parties:

.4 it is impossible to say when the ca.se will actually be ready for trial ; and

.5 p're-trial heariiigs would be premature at this time in view thereof.

11.10 Despite six years of madequate preparation, a District Court must force
a trial.

11.10.1 Judge Dawson wrote to coun.sel about the status of the case on March
14, lOfiO and held pretrial conferences on July 1, 1900, December 2, 1960, June
12, 1961 and June 30, 1961.

11.10.2 On July 1, 19(;0, Judge Daw.son held a pretrial conference:

"The Court : * * * i called this conference because this case was filed in this
court almo.st five years ago. It is one of the oldest cases untried in this court,
and I want to know where we are going, how soon we are going to be ready for
trial and what we have to do to get ready for trial in this case.

■'* * * I want to find out where we go from here because this is the sort of
thing that creates the criticism in Washington of this court. When a case is
dragging around for five years and dues not go to trial, they say the court is
not doing its work.

"* * * I think by November 1, if you put the pressure on, you can have
everything done. By then this case will have been in this court about five years.
So I think in five years' time any depositions can have been taken. As a matter
of fact, if this was anything other than one of these involved patent cases, I
would dismiss it right now for lack of prosecution, because no case should be
instituted and then require a five-year wait before it is ready for trial."

11.10.3 Judge Dawson was "a very competent judge" who was '"proue to getting
his cases tried."

11.11 The kind of trial resorted to in desperation by counsel and the court
produced a clearly incorrect result.

11.11.1 About September 27, 1961, the parties entered into a cross-license agree-
ment dated as of July 1. 1961. Thereafter, on November 1, 1961, tlie parties filed
with the court a stipulation and order narrowing issues for submission of
evidence through documents.

11.11.1.1 On November 1, 1961, Judge Dawson approved a stipulation and
order for a simplified procedure "(i»n the interest of simplifying and expedit-
ing the trial of the above civil action, to lessen the amount of work and the
expense recjuired in the presentation of proof and to materially shorten the court
time re(]uired * * *"

11.11.1.2 The November 1. 1961 stipulation and order provided for testimony to
be sul»mitted in the form of affidavits, depositions, or oral testimony as" the
parties might elect. Each party was given the right to crossexamine bv deposi-
tion any affiants of the other party.

11.11.2 On March 6. 1962, a one-day trial was held. The trial constituted an
oral submission l)y counsel of stipulated documentary evidence.

11.11.3 Judge Dawson handed down his decision in favor of SR on September
6. im2. Sperry Rand Corp. v. Bell Telephone Labs., Inc., 208 F. Supn. 598 135
USPQ254 ( S.D.N. Y. 1962). i i , «»

n.11.4 The Court of Appeals dismissed RTL's appeal as moot in May 1963
Sperry Rand Corp v. Bell Telephone Labs., Inc., 317 F.2d 491, 137 USPQ 497 (26.
Cir. 1963).

11.12 A one or two month trial in the spring of 1962 would have po.ssible elim-
inated a nine montli trial in 1971 and 1972.

11.12.1 Judge Dawson stated that through this stipulation and order at
November 1. 1962. "* * * what was originally predicted to be a trial of several
months' duration was reduced to a single day * * *. Through the commendable
efforts of both parties the issues in this action have been greatly simplified."

11.1.3 In contrast is the speed with which a substantial number of lawyers
acted in 1963 in filing the amendments and the apparent repeated pressure on
the Patent Office in 1963 to issue the patent.



5834

11.13.1 During a six-month period in 1962 and 1963, fifteen of Sperry Rand's
in-hon.se attorneys spent over 2,000 hours preparing the May 20, 1963 amend-
ment to the EXIAC application.

11.13.1.1 After the Court of Appeals' dismissal in May 1963, SR promptly
proceeded with amendments and examiner interviews in tlie Patent Office in con-
nection with the ENIAC patent application.

11.13.1.2 SR received the Patent OflSce's Notice of Allowance of the ENIAC
patent on December 20, 1963.

11.13.1.3 SR"s counsel paid the necessary final fee on that same day although
six mouths was automatically allowed for such payment in 1963-64.

11.13.1.4 The ENIAC patent is.sued on February 4, 1964.

11.13.2 The effort applied to that single amendment is about as much as
Sperry Rand's chief trial counsel for the SR v. BTL case, Townsend, had de-
voted to the case over the six years of its pendency.

11.14 On the record as a whole (but with reluctance) I find that there was no
undue delay in the proceedings before the Patent Office or the District Court.

11.14.1 SR did not exceed any time limits provided either by court order, rule,
or statute.

11.14.2 There was no intentional delay in the prosecution of the case of Sperry
Rand Corp. v. Bell Telephone Labs.

11.14.3 There was no intentional delay in the issuance of the ENIAC patent.

11.14.4 A party seeking a right under the patent statues may avail himself of
all their provisions and courts may not deny him the benefit of a single one.

11.14.5 Honeywell has not met its burden of establishing that there was undue
delay in the issuance of the ENIAC ]»atent or that there was any improper con-
vduct on the part of SR or its counsel which caused undue delay.

! 12. Validity

12.1 A patent shall be presumed to be valid.

12.1.1 This presumption is a statutory one which may be overcome so that a
patent is rendered invalid or unenforceable or both.

[17] .1 The rebuttable presumption of validity which attaches to a patent
because of 35 U.S.C. § 282 is "a faint one" because Patent Office examination is
not adversary and the public is not heard.

.2 The presumption of validity is not accorded great weight in the more recent
decisions of the Supreme Court, notwithstanding its positive assertion in the case
of Radio Corporation of America v. Radio Engineering Laboratories, Inc.

.3 The presumption may not be used to transmute the products of mechanical
skill into patentable inventions, since it is as much the duty of the court to pro-
tect the public against having to pay tribute to a patentee who is not in any true
sense an inventor or discoverer, as to protect the patent rights of one who is a
real inventor.

[18] .4 The presumption is greatly weakened, if not destroyed, where bars to
patentability raised in litigation are based on prior art or use which were not
before the Patent Office Examiner.

[19] .5 One practical reason for the requirement of absolute honesty and good
faith disclosure by an applicant in ex parte Patent OflBce examination is that even
an innocent misrepresentation of facts destroys the presumption of validity.

.6 How strong this presumption may be is debatable in view of the multiplicity
of patents issued (over three million by 19(>4), and the high proportion held in-
valid when litigated (only one held valid in the 8th Circuit since the Supreme
Court's decision in Graham v. John Deere, 1906).

.7 AVhile the patent grant still gives rise to a presumption of validity, the ef-
fective force of that presumption has been substantially weakened l>y the plethora
of decisions recognizing "the notorious difference" between the loose standards
applied by patent examiners in approving patented unpatentables, and the stand-
ards applied by the courts in dispatching patents issued thereunder.

12.2 Plaintiff has overcome the presumption of validity by substantial evidence
which is clear and convincing.

12.2.1 SR and ISD assert a broad scope for the ENIAC patent :

.1 "No data processing machine of any consequence * * * in the United States
today is being made that does not make use of inventions covered by this patent."

.2 The subject matter of the ENIAC patent is "the invention of the Automatic
Electronic Digital Computer."

12.2.2 The substantial, clear and convincing evidence in this case establishes
that the entirety of this broad subject matter of the EXIAC patent is not validly



5835

patentable. Patentability lias not been created, and the absolute bars to patent-
ability have not been overcome by the ingenuity of expression and the variety of
technical language found among the 148 different claims of the ENIAC patent.

12.2.3 The machine disclosed and claimed in the E3«'IAC patent, and embodying
the invention of the patent, was in public use in this country more than one year
prior to the filing of the ENIAC patent application, and the ENIAC patent is
thereby invalid.

.1 A patent is statutorily barred and, hence invalid, if the invention was in
piiblic use in the United States more than one year prior to the date of the ap-
plication.

[20] .2 The public use bar is based on a fiat of Congress that it is part of tiie
consideration for a patent that the public shall begin to enjoy the disclosure as
soon as possible.

[21] .3 The use of an invention by a person other than the inventor, not
essential to the completion of the making of the invention by the inventor, is a
public use, and the fact that the invention is buried within a machine is irrelevant.

[22] .4 Under limited conditions, where the invention involves the need for
public use as the only practical way to test the value of the invention and thereby
permit the making of the invention to he completed, the inventor may experi-
ment in public as a special exception to the public use bar.

..J The experimental exception to public use is a narrow one, and it does not
apply in a situation where it is possible to conduct the experiment in private, with-
out the need for public use.

.6 The narrow experimental use exception to the public use bar only lifts the
one year statutory rule where the use is by the inventor or persons under his con-
trol for the purpo.se of perfecting the invention.

[23] .7 A patentee's Patent Office Rule 131 aflSdavit which asserts a comple-
tion of the invention in the United States before the filing date of the application
fixes the last possible date for "experimental" use.

[24] .8 Where there is no question involved of the inventor's determination of
whether the invention worked or how it could be improved, and, as well, where the
sole puriJOse of a demonstration is to show new developments in e(iuipment, which
have been proved operational, to the public, such use is public, is in bar of a patent
and cannot be forgiven as an experiment.

[25] .9 Where the idea of a machine has been conceived and the conception
carried into effect by its construction, which machine is then used or capable of
being used for the purjjose for which designed, such use is no longer an
experiment.

.10 An inventor may not enjoy the best of the two possible worlds of secrecy
and legal monopoly : he may not be permitted to use a period of alleged "experi-
mentation" as a competitive tool.

[26] .11 That a device, in public xise. is capable of Improvement can be said
in every case there are few, if any, machines which are not susceptible of
further development and improvement ; the fact that a machine has not been
ultimately perfected at the time it was first in use does not avoid a public use bar.

[27] .12 The policy consideration behind the ••public use" doctrine is to
stimulate seasonable disclosure of inventions.

[28] A single public use of a patented machine more than a year before
application for patent is filed, even without any profit to the inventor, is sufficient
to establish a public use bar.

[29] .13 Where a device is publicly demonstrated to members of the public
including the press, a compelling inference arises that the demonstration was a
public use, was not within the experimental use exception and is a statutory
bar to a patent if the demonstration occurred more than one year before an
application on the device was filed.

[30] .14 Complete identity of the device in public use with the device as
claimed in a patent is not necessary to establish a public use bar. The difference
between the device used and that patented must be a patentable one to avoid the
bar and an inventor cannot relieve himself from the barring consequences of a
public use merely by establishing that the device, installed and used, was
imperfect.

12.2.4 The machine disclosed and claimed in the ENIAC patent, and embody-
ing the invention of the patent, was on sale in this country more than one year
prior to the filing of the ENIAC patent appplication, and the ENIAC patent is
theretiy invalid.



5836

.1 A patent shall be barred if the invention was on sale in the rnited States
more than one year prior to the date of the application for patent in the United
States.

[31] .2 "On sale" does not mean an actual accomplished sale but merely
activity by the inventor in a commercial exploitation of what he later asserts
the power to monopolize.

.3 An express contract for the construction of equipment embodying the prin-
ciples of the invention covered by a patent may constitute "on sale"' despite the
fact that no structure has yet beeu constructed.

.4 For a specific device to be "on sale", it is not necessary that an actual delivery
of that device be made but only that the device be ready for delivery.

.5 The placing "on sale" of an invention bars all claims to that invention even
though the invention may have been imperfect in a mechanical sense at the time.

.(j The "on .sale" provision is not limited to a sale free from secrecy, and
security classification imposed by the purchaser or offeree does nut toll the opera-
tion of the bar.

[32] .7 A prima facie showing that an invention was "on sale" can be over-
come only by unequivocal and convincing evidence to the contrary.

12.2.-5 Eckert and Mauchly did not themselves first invent "the automatic
electronic digital computer," which SR and ISD contend to be subject matter of
the ENIAC patent, but instead derived that broad subject matter from Dr. John
W. Atanasoff, and the ENIAC patent is thereby invalid.

.1 An application for patent shall be made by the inventor, and shall include
an oath in .support of the claim of inventorship.

[33] .2 A patent which is applied for by one v.ho is not the inventor, is
unauthorized by law and void, and whether taken out in the name of the aiii^li-
cant or of an assignee of his, confers no rights as against the public.

.3 The public grants the patent to the first inventor only ; and a patent which
credits anyone else with the invention confers no rights against the pulilic and
does not authorize the purported patentee to tax the industry for that which was
actually contributed to the advancement of the arts by the conception of another.

[34] .4 The utilization of ideas in a device prior to the time of the alleged
invention, whether or not the device was subsequently abandoned, is evidence
that when those ideas are incorporated in a later development along the .same
line, they do not amount to invention.

12.2.6 The inventive siiliject matter of "the automatic electronic digital com-
puter."' which SR and ISD contend to be the subject matter of the ENIAC patent,
is either anticipated by or obvious in view of the printed publication in this
country more than one year prior to the filing of the EXIAC iiatent application
of the von Neumann Fir.st Draft of a Report on the EDVAC, and the ENIAC
patent is therelty invalid.

.1 A patent shall be barred if the invention was described in a printed puldica-
tion in this or a foreign coimtry, either before the invention thereof by the
applicant or more than one year prior to the date of the application for patent
in the United States.

[35] .2 The reproduction of a description of an invention by any copy-making
technique capable of enabling wide dissemination of multiple copies evidences
sufficient accessibility by the public so as to constitute a "printed publication"
within the meaning of the statute.

[36] .3 Tlie statute is based upon the public policy that once an invention has
been made accessible to the public through printed pul^li'^'ation, it cannot tiiere-
after be withdrawn into a legally sanctioned patent monopoly.

[37] J A descriptive document qualifies as a printed publication even wliere
only a single typewritten copy i'-; put on file in the library of a college, because
it is the evi)ression of an intent that the fruits of research be available to those
of flie nublic wlio l)ave an interest in the subjetc matter that is determinative
of tb'> fact of j)ublif'ation.

[38] .5 Distribution of a small number of copies of a descriptive document
to a limited group of indiviflnals skilled in the art. who are out-ide the distribu-
tor's organization, is publication witliui th^ meaning of the statute.

.6 A Tiatent may not be obtair.ed thougli the invention is not identically
di^^'iosed or dpscribed in the jirior art. if the differences between the suliject
matter sought to be patented and the prior art are such that the subject matter
as n wi'ole would have been obvious to a person having ordinary skill in the
art to which the subject matter pertains.



5837

12.2.7 Each of the 17 EXIAC patent claims representatively asserted in this
suit by the counterclaim of ISD is further and specifically invalid on a claim-by-
claim basis :

.1 The suljject matter set forth in each of the 17 I'epresentative claims (S. !).
30, 52, 55, 5(j, 57, (55, W, 75, 78. 83, SO, 88, 109, 122 and l-:!2j was in the public
use in this country more than one year before the hling of the EXiAC application.

.2 The subject matter set forth in each of the 17 representative claims
was on sale in this country more than a year before the filing of the EXIAG
application.

.3 Eckert and Mauchly did not themselves invent the subject matter set forth
in at least claims 88 and 90 but instead derived knowledge of that subject matter
from John V. Atanasoff.

A Claims 83, 86 and 88 are anticipated by U. S. patent Xo. 2,624,507 issued to
Byron Phelps.

.5 Claims 8, 9. 52. 65, 83. 88, 109 and 122 containing the word "pulse," and
Claim 36 containing the fully equivalent word "impulse," were improperly
broadened in September 1963 to cover a new and previously unexpressed inven-
tion for the purpose and with the effect of encompassing subject matter already
in the public domain, and are invalid for late claiming.

.6 Claims 8, 9. 52, 55, 56, 57. 65, 69, 75 and 78 are each anticipated )>y the printed
publication in this country more than one year prior to the tiling of the EXIAC
patent application of the von Xeumann First Draft of a Report of the EDVAC.

12.3 I rtnd and conclude that the EXIAC is invalid and unenforceable.

12.3.1 See Findings 1. 2. 3, 7 and 10 above as establishing invalidity.

[39] 12.3.2 Although not made a basis for a finding of undue delay such
as to render the EXIAC patent invalid for deliberately extending the expii-ation
of a monopoly, the inherent consecjuences of delay in issuance due to six years ol
inadequate preparation by SR and its counsel in the SR v. BTL ease, and thereby
the proceedings before the I'taent Office as set out at Finding 11 above, render the
EXIAC patent unenforceable.

[40] .1 Where many i>ersons were at work in the same field and had made
advances in the art, and where the applicant learns of such work and is aware
that his original claims migh.t not cover the real advance made by bis competitors
an intentional delay in the prosecution of the patent to enable later changes in
the specification and claims so that the work of the other inventors might be
covered, renders the patent invalid.

[41] .2 The patent laws are fcunided on pubMc policy to promote the progress
of science and the useful arts. The public, therefore, is a most material party to,
and should be duly considered in, every application for a patent, securing to the
individual a monopoly for a limited time, in consideration for the teaching of the
results of the exercise of Ids genius and skill. Ru.t the arts and sciences will
certainly not be promoted by giving encouragement to inventors to withhold
and conceal their inventions to a time when they may use and apply them to
their own exclusive advantage, irrespective of the public benefit, and certainly
not if the inventor is allowed to conceal his invention to be brought forward in
some later time to thwart and defeat other inventors who have placed the benefit
of their inventions within the reach and knowledge of the piilili'-'.

12.3 3 Although not made a Imsis for a tindin.sr of willful and intentional fraud,
tlie various dei-elictions of Eckert and Mauchly and their counsel before the
Patent Office, as set out at Finding 13 below, render the EXIAC patent unenforce-
able.

[421 .1 Whether the applicant's nnsconduct was material in the procurement
of the v>atent is of no conseciuencp. If the confluct of the applicant is repreheiisilile,
it matters not tl'at it was really unnecessary, and the patent is unenforcealile.

.2 There is a line between willful and intentional fraud which will invalidate a
patent and inequitable conduct wln.-li will r^uder it unenforceable: incuitable
conduct on the part of an applicant in obtaining a patent is sufficient to dissuade
a court of equity from rendering aid in enforcing it.

13. Fraud on Patent Office

[43] 13.1 The c'aini for damages based on claimed violatinns of the antitrust
laws be'^ause of wi'lful and intentional fraud on the Patent Office requires pr( of
by c'ear and convincing evidence.

13.2 Paten<^ proceedin.e-s are 'argely ex parte in nature.

13.2.1 The Patent Act provides :

40-927—7.5 64



5838

The Commissioner shall cause an examination to be made of the application
and the alleged new invention ; and if on such examination it appears that the
applicant is entitled to a patent under the law, the Commissioner shall issue a
patent therefor.

Applications for patents shall be kept in confidence by the Patent Office and no
information concerning the same shall be given without authority of the applicant
ov owner unless necessary to carry out the provisions of any Act of Congress
or in such special circumstances as may be determined by the Commissioner.

l:!.3 This has long been an unfortunate situation and should be remedied.

13.3.1 The Patent Reform Act of 11)73, introduced on March 22, 1973. by Sen-
ator Phillip A. Hart (D-Mich. ) of the Patents, Trademarks and Copyrights
>Subcommittee of the Senate Judiciary Committee, would eliminate ex parte
prosecution. In his floor remarks introducing this legislation. Senator Hart said :

The bill recognizes that the patent monopoly grant is a carefully delineated
privilege designed to serve the public interest in promoting the progress of
science and useful arts and not an unlimited license to the recipient. Let me
highlight some of the significant features of the bill.

First, the Patent Office would be made independent divorcing it from the
interests of the Commerce Department.

Second, secret ex parte sessions wherein interested parties and a patent
examiner decide tlie patentability of an idea would be replaced with public
adversary hearings.

Tlnrd. a Public Counsel would be installed in the Patent Office — ^to argue for
the public interest and to make the Office itself simply judge instead of both judge
and advocate.



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 127 of 140)