APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE.
Kalodner, Van Dusen and Weis, Circuit Judges.
VAN DUSEN, Circuit Judge.
This case involves a controversy over a charge of fraud on the Patent Office. The complexity derives not from the law but from the facts. To determine whether there has been fraud on the Patent Office, particularly in a case such as this, where the crux of the alleged fraud consists of an omission of data, a court must attempt to explain the subject matter of the claimed invention. We affirm in part and reverse in part. See page 611 below.
The patent involved in this litigation is No. 3,072,582, the "Frost" patent. General Tire & Rubber Company ("General"), the assignee of this patent, brought this action,*fn1 alleging that the Frost patent had been infringed by the defendants and seeking damages and injunctive relief. The defendants answered with a counterclaim under the antitrust laws and with, among several other defenses, a charge that General Tire committed fraud on the Patent Office. The district court determined that the fraud issue was separable from the other issues in the case.*fn2 After a trial of the fraud issue alone, the district judge held the Frost patent invalid, dismissed General's complaints, and ordered that General be enjoined from enforcing the patent against the defendants and their customers.*fn3 The district judge expressly determined that there was no just cause for delay and directed that final judgment be entered in accordance with F.R. Civ. P. 54(b).*fn4 General timely filed a notice of appeal. We have jurisdiction over this appeal under 28 U.S.C. § 1291 and 28 U.S.C. § 1292(a)(1), see W. L. Gore & Associates, Inc. v. Carlisle Corp., 529 F.2d 614, 617-18 (3d Cir. 1976).
The district judge's exhaustive and learned opinion recognized that the burden of proof in a patent fraud case is that the fraud must be proved clearly, unequivocally and convincingly. In finding that this demanding standard had been met in this case, the district judge stated:
"Since the evidence on which this Court is relying comes primarily from uncontested documents, the defendants have carried their burden of adducing clear and convincing proof."
The fact that the greater part of the evidence in this case consists of uncontested documents is insufficient, in and of itself, to meet the high burden of proof. Since we are in just as good a position as the district court to evaluate documentary evidence,*fn5 we have undertaken an independent and comprehensive review of this evidence. On the basis of this review, we agree with the district court that the burden of establishing the existence of fraud on the Patent Office has been met in this case.
The patent claims a method of making foamed polyether urethanes by using certain inert stable blowing agents*fn6 to produce at least part or all of the bubbles or porosity in the foam, and claims the product, foamed polyether urethane, so made. The chemistry involved in the creation of the polyether urethane foams was known prior to the Frost invention and was not the subject of this patent.
A polyether urethane is made by reacting a nonlinear slightly branched polyether glycol or polyol with a diisocyanate or by reacting a linear ether glycol with a mixture of di- and tri-isocyanates.*fn7 Prior to the invention disclosed in the Frost patent, foaming was customarily produced by using an excess of diisocyanate over that needed to help form the polyether urethane; the excess of diisocyanate would react with water in the mixture to produce carbon dioxide gas (CO) and to produce substituted urea by-products.*fn8 The CO produced by this reaction was the blowing agent. It was generated as soon as the ingredients were mixed. According to the Frost patent,
"One of the disadvantages of this uncontrollable release of gas is the formation of a solid crust on the top surface of the polyurethane foam . . . because there is loss of CO from the surface before the poly-urethane is strong enough to hold the CO as bubbles to provide cellular foam. The crust must be cut off before further use with great waste."
Patent No. 3,072,582, column 2, lines 17-24, App. at 989. Moreover, the substituted urea by-products generated by the CO forming reaction were reactive and "enter[ed] to some extent, the crosslinking reactions which produce[d] undesirable stiffness where flexible-type foam products [were] desired." Id. at lines 44-46. Another claimed disadvantage of the prior art was that the diisocyanate was very expensive; "the very substantial excess used to react with water to evolve carbon dioxide . . . represent[ed] an economic limitation." App. at 1001. Yet another problem with the diisocyanate and water method was that the polyether urethane would shrink upon setting.
The Frost blowing agents are easily liquified gases inert to the reactants and the polyether urethane. By carefully selecting the blowing agent, the behavior of the foaming process can be precisely controlled. Water and excess diisocyanate can be partly or completely replaced in the reaction, thus reducing the amount of substituted urea by-product. Using a Frost blowing agent results in less shrinkage, the elimination of the solid crust on the surface of the foam, the creation of a foam with more uniform characteristics, and, because the Freons often used as Frost blowing agents have excellent thermal insulation characteristics, the creation of an excellent insulating material. Polyether urethane foams can be made to be flexible or inflexible, with many gradations in between. A common use of inflexible foams is as insulation material, for instance in refrigerators. Flexible foams find common application as cushioning material, as in furniture.
I. Proceedings before the Patent Office
The claimed fraud on the Patent Office involves the failure of General to report to the patent examiner the results of certain work on flexible polyether urethane foams performed by two of General's employees, Braidich and Van Wagenen, particularly in light of some statements contained in an affidavit presented to the examiner by another General employee, Nicholas. The Nicholas affidavit reported results of experiments carried out by Nicholas with inflexible polyether urethane foams. The significance of these omissions cannot be evaluated outside of the context of the patent prosecution. This is so because a finding of fraud on the Patent Office depends on subsidiary findings that the omission or misrepresentation was material,*fn9 and that the patentee possessed the intent to defraud, or that "willfulness or recklessness indicating a disregard for his duty of frankness . . . ." Xerox Corp. v. Dennison Manufacturing Co., 322 F. Supp. 963, 969 (S.D. N.Y. 1971).
The story began on October 20, 1955, when the application of Charles B. Frost was received at the Patent Office. That application (Serial No. 541,823) (the "parent application") claimed a method of making polyester and polyether urethane ("polyurethane") foams utilizing as blowing agents easily liquified gases, preferably the halogen substituted lower molecular weight alkane gases,*fn10 inert to the other ingredients used. All of the examples provided in the application involved polyesters, but it was claimed that "all or part of the polyesters used in the examples may be substituted by polyethers." App. at 1015.
The following remarks appeared in an amendment to the application, filed December 11, 1957:
"The present invention is directed to unusually soft flexible cellular polyurethane elastomers and a process for producing the same.
"When a halogen substituted alkane gas is used as at least part of the blowing agent . . . the resulting material has better cushioning properties than a standard polyurethane foamed material made without the halogen substituted alkane gas."
App. at 1049a. On June 24, 1958, the patent examiner responded by rejecting all the claims, citing German Patent No. 860,109 ("Hochtlen," DX 5). That patent disclosed that blowing could be achieved in polyester urethanes by the use of "vaporizable solvents, which themselves do not react with the diisocyanates . . . ." App. at 1255a. In example 3 of the Hochtlen patent, methylene chloride was listed as one of the ingredients, presumably to serve as the "vaporizable solvent" referred to above. The examiner pointed out that methylene chloride was a halogen substituted alkane.
General attempted to distinguish Hochtlen on the grounds that the boiling point of methylene chloride was above the upper limit of the boiling point claimed in Frost. See App. at 1080a. On May 4, 1959, the examiner again rejected the application, citing Hochtlen, and he stated:
"It is not seen wherein the difference in boiling points is critical or patentable. Mere assertions as to superior or unpredictable results are of no weight in the ...