Lamb-Weston, Inc. v. McCain Foods, Ltd. And McCain Foods, Inc.

78 F.3d 540, 37 U.S.P.Q. 2d (BNA) 1856, 1996 U.S. App. LEXIS 3518, 1996 WL 91627

• Court: Court of Appeals for the Federal Circuit
• Decided: February 29, 1996
• Docket: 93-1536, 94-1225
• Status: Published

Opinions

Opinion of the court filed PER CURIAM, dissenting opinion filed by Circuit Judge Pauline Newman.

PER CURIAM.

The United States District Court for the Eastern District of Washington held Lamb-Weston, Inc.’s U.S. Patent No. 4,937,084 (the ’084 patent) invalid and unenforceable. Because prior art renders the ’084 patent obvious, this court affirms the judgment on invalidity and vacates the judgment on inequitable conduct.

BACKGROUND

Lamb-Weston is a food processing company that sells frozen potato products. The defendants, McCain Foods companies (McCain), compete with Lamb-Weston in the frozen potato products industry. Both Lamb-Weston and McCain make partially fried (parfried) and frozen potato products. Fierce competition in the frozen potato products market spurs development of new products. This litigation centers around Lamb-Weston’s development of frozen, parfried lattice-shaped french fiies called “waffle fries.”

In October 1979, an independent inventor, Mr. Matsler, offered to confidentially disclose his waffle fry slicing apparatus to Lamb-Weston. In January 1980, Mr. Matsler demonstrated his slicing apparatus, but 98% of the waffle fry slices were unusable. Nevertheless, Lamb-Weston began negotiations with Mr. Matsler’s patent attorney to license the technology. Instead of contracting with Lamb-Weston, Mr. Matsler licensed his invention to a Lamb-Weston competitor, J.R. Simplot Company.

In December 1979, Mr. Matsler demonstrated his cutting machine to a J.R. Simplot representative. Mr. Matsler fried some of his potato slices and distributed them to customers at a local Dairy Queen Restaurant in Dallas, Oregon.

In February 1980, Lamb-Weston received a letter from Mr. Jayne, another inventor, offering to confidentially disclose his waffle fry cutting apparatus. In March 1980, Lamb-Weston evaluated Mr. Jayne’s machine, but found it unacceptable. Lamb-Weston terminated communications with Mr. Jayne. Lamb-Weston then began developing its own machine, starting with a commercial machine for making waffle-style potato chips and adapting it to make waffle fries.

Lamb-Weston started testing its waffle fries in 1980 and began selling them in late 1983 under the trademark “CrissCut.” In August 1983, Lamb-Weston filed a patent application in the United States Patent and Trademark Office (PTO) on the waffle-cut potato product, the slicing apparatus, and the process for making the product. The patent application had Serial No. 06/525,115 (the ’115 application).

The PTO initially rejected the application because it-encompassed more than one invention. 37 C.F.R. § 1.141 (1995). Lamb-Weston elected to proceed solely on the cutting apparatus claims, which issued as U.S. Patent No. 4,523,503 (the ’503 patent). This patent is not at issue in this case.

Lamb-Weston separated the process claims out of the ’115 application. The patent examiner initially rejected this divisional application, Serial No. 06/682,366 (the ’366 application), as obvious over references disclosed on the face of the patent, namely Canada Patent No. 898,057 (Starke), U.S. Patent No. 678,514 (Regnier), U.S. Patent No. 2,612,453 (Stahmer), U.S. Patent No. 2,767,752 (Stahmer II), U.S. Patent No. 1,937,049 (Toland, et ah), U.S. Patent No. 3,139,130 (Urschel), and U.S. Patent No. 1,506,166 (Boon). Boon discloses a method for preparing frozen, partially cooked french fries. The other references disclose waffle-shaped potato products and slicing apparatus. The examiner determined that one of ordinary skill in the art would have found it obvious to freeze the waffle-cut potato products disclosed in the other references as Boon suggests.

To escape this rejection, Lamb-Weston amended the ’366 application. Lamb-Weston emphasized that the prior art disclosed waffle-cut potato chips having a thickness of Jé inch or less, unlike the Lamb-Weston invention with a thickness of about % to inch. Despite the amendments, the examiner finally rejected the ’366 application on January 23,1986.

Lamb-Weston appealed the final rejection to the PTO Board of Patent Appeals and Interferences (Board). In January 1990, the Board reversed the examiner’s rejection. The ’366 application issued as the ’084 patent, the patent in dispute in this case.

The ’084 patent claims a parfried, frozen potato slice. Claims 1 through 4 of the ’084 patent read:

1. A parfried potato product, suitable for reconstitution by cooking, comprising:

a frozen, sliced potato section having a substantially ellipsoidal shape and a variable thickness, including a peak to peak thickness within the range of about % to l% inch;

the section including opposed first and second sides, each side having longitudinal ridges and grooves therebetween, the ridges and grooves of the first side extending angularly to the ridges and grooves of the second side;

the grooves of the first and second sides having a depth sufficient to intersect one another to form a grid of openings in the potato section;

the section, before reconstitution, having an oil content of about 6-20%, by weight, and a solids content of about 32-40%, by weight;

whereby the product, upon reconstitution by cooking, is characterized by very thin, crisp portions of locally increased oil flavor adjacent the openings, relatively thick portions defined by intersecting ridges having an internal mealy texture and strong potato flavor similar to thick-cut french fried potato strips, and portions of intermediate thickness whose characteristics are similar to french fried shoe string potato strips.

2. The product of claim 1 wherein the section has an oil content of about 16-20%, by weight, and a solids content of about 55-65%, by weight, after oil fry reconstitution at a temperature within the range of about 350° F to 360° F for about 135-165 seconds.

3. The product of claim 1 wherein the section has an oil content of about 16-20%, by weight, and a solids content of about 55-65%, by weight, after reconstitution, whereby the thickest portions of the product have characteristics akin to thick-cut french fried potato strips, thinnest portions have characteristics akin to potato chips and other portions have characteristics akin to french fried shoe string potato strips.

4. The product of claim 1 wherein the peak-to-peak thickness is about % inch.

In 1985, McCain began making and selling frozen, parfried waffle fries. Lamb-Weston sued McCain for patent infringement, trademark infringement, unfair competition, and trademark dilution. McCain counterclaimed for a declaratory judgment of patent invalidity and unenforceability, and for damages under the antitrust laws. McCain later withdrew the antitrust claims.

The district court decided the issues of infringement, enablement, indefiniteness, and inventorship in Lamb-Weston’s favor. The parties did not appeal these issues. The district court decided the trademark and unfair competition claims in McCain’s favor. The parties also did not appeal these issues.

During the district court proceedings, Lamb-Weston conceded that waffle-cut potato products were known since the early 1900s. The district court found that waffle fries were available at restaurants before Lamb-Weston developed its CrissCut fry. For example, as early as 1935 and 1936 the Gem Cafe in Plainsville, Texas served waffle fries as a staple item. In 1979, the Plaza Restaurant in Quincy, Illinois sold waffle fries. In 1981, General Slieing/Red Goat Disposers sold a commercial, electric slicing machine capable of slicing % inch thick waffle fry slices.

In addition, the district court examined U.S. Patent No. 3,397,993 (the Strong patent) and found it relevant to obviousness under 35 U.S.C. § 103 (1994). The Strong patent describes a parfry process where potato slices are steam-blanched, air-dried, parfried, and then frozen. Lamb-Weston, as well as other potato processing companies, uses the Strong patent parfry process to prepare frozen, par-fried french fries and reconstituted fries having all the textural limitations of the ’084 patent. The district court held that this process would have been familiar to a person of ordinary skill in the art at the time of Lamb-Weston’s waffle fry invention.

The district court, however, did not find that the prior waffle fry uses and sales in the 1930s, and the Strong patent process, provided the motivation to combine the waffle-cut potato chips with the known parfried potato technology. The district court said, however, that the Matsler and Jayne devices provided that motivation. The district court held the ’084 patent claims invalid as obvious in light of the Matsler and Jayne devices in combination with the prior parfried frozen potato technology, including the Strong patent. The district court also found Lamb-Weston’s ’084 patent unenforceable due to inequitable conduct. Lamb-Weston appeals obviousness and inequitable conduct determinations to this court.

STANDARD OF REVIEW

The ultimate determination of obviousness is a legal conclusion, resting on factual determinations under 35 U.S.C. § 103. In re Vaeck, 947 F.2d 488, 493, 20 USPQ2d 1438, 1442 (Fed.Cir.1991). This court reviews these factual underpinnings for clear error in light of the evidence. Id. Fed. R.Civ.P. 52(a).

OBVIOUSNESS

The district court held that the Matsler and Jayne slicing devices provided the motivation for a person of ordinary skill in the art to combine the known waffle-cut potato chips with the Strong patent process to produce frozen, parfried, and reconstituted waffle fries. Lamb-Weston, Inc. v. McCain Foods, Inc., 818 F.Supp. 1376, 1390 (E.D.Wash.1993). This court finds it unnecessary to examine the appropriateness of the Matsler and Jayne slicing devices as prior art, although protected under nondisclosure agreements, to provide this motivation to combine.

* We find it is the potato products resulting from these slicing devices, and not merely the devices themselves, that create the motivation to combine. Unlike the slicing apparatus, the potato products were not subject to confidentiality agreements. In addition to the prior art cited to the examiner during prosecution, the district court found that waffle fries were available at restaurants as early as 1935.

In an extraordinarily thorough and carefully reasoned opinion, the district court examined the prior art applicable to the ’084 patent:

The Examiner rejected the claims in the ’366 application under § 103, finding the claimed invention unpatentable over Starke, Regnier, Stahmer, Stahmer (I), Toland, et ah, and Urschel, when viewed in light of Boon.

Frozen, parfried french fries of various configurations and degrees of thickness were well known in the art at the time of the claimed invention. Major potato processors such as Lamb-Weston and McCain were producing frozen, parfried french fries in the thicknesses varying from less than a quarter of an inch to more than half of an inch. ... The two most common dry fry processes used by potato processors were taught by .the Strong and Chase patents.

It would have been obvious to one of ordinary skill in the art to take a prior art waffle-cut potato fry, cut it so that the peak to peak thickness falls within the standard % to % inch range for french fries, and apply a parfry process commonly used in the industry, in order to develop a frozen, parfried waffle-cut potato product suitable for reconstitution by finish frying.

Lamb-Weston, 818 F.Supp. at 1389-90.

The Matsler and Jayne waffle-shaped potato slices themselves were not subject to nondisclosure agreements. In fact, Matsler and a representative from J.R. Simplot distributed waffle-shaped potato fries at a Dairy Queen for a test. Jayne sent pictures of waffle-sliced potatoes from Ms macMne to manufacturers, including Lamb-Weston. These disclosures were not secret. Therefore, these disclosures fall within the terms of prior art defined by section 102(a) or section 102(g).

Although the district court should have found the motivation to combine without ex-amirnng the Matsler and Jayne devices, the district court reached the correct conclusion of obviousness. While the district court expressed the motivation to combine in terms of the Matsler and Jayne devices and section 102(f), the district court actually found a motivation for the claimed invention in reviewing the Matsler and Jayne potato product where it was lacking in the prior art references before the Board. Parfried potato products were well known in the prior art. However, no reference to a waffle-cut potato product of sufficient tMckness to merit par-frying, was before the Board. Because the references before the Board were thin like potato cMps, the Board did not conclude that one of ordinary skill m the art would have frozen a conventional potato chip and reconstituted it by frying. In contrast, the district court found that “[t]he correspondence exchanged between Matsler and Lamb-Weston indieate[d] that the device was intended to cut french fries and not potato chips.” Lamb-Weston, 818 F.Supp. 1376 at 1389. Even though the district court need not have found the motivation to combine in the Matsler and Jayne devices, any error was harmless because the district court reached the correct conclusion of obviousness.

Ample prior art suggests a motivation to cook potato products of various shapes usmg a parfry process. For example, the Strong patent describes a parfry process used on shoe-string french fries. The Matsler and Jayne potato products, however, supplied waffle-shaped potato products of the appropriate thickness for the known parfiy process. The motivation to combine arose, therefore, because the size and shape of Matsler and Jayne potato products suggested application of the parfry process to thicker products.

The motivation to parfry the Matsler and Jayne potato products in making the claimed invention derives from (1) the extensive prior art disclosing the desirability of parfrying potato products, and (2) the suitability of the Matsler and Jayne potato products for the parfry process. The evidence of prior use and sale of waffle fries and parfried potato products, in addition to the Matsler and Jayne potato slices, provides sufficient motivation to combine the known waffle-cut shape and the parfry cooking method of the Strong patent. TMs combination renders the ’084 patent obvious.

Because patented before Lamb-Weston’s invention, the references disclosed to the patent examiner were prior art under section 102(a) of title 35. Similarly, the knowledge and use of waffle fries in the 1930s occurred before the invention and are prior art under section 102(a). The potato products produced from the Matsler and Jayne slicing apparatus were not under nondisclosure agreements and therefore qualify as prior art under section 102(a). TMs court is not applying a new rule of obviousness in tMs case. These relevant references count collectively toward the teachings of prior art as a whole. EWP Corp. v. Reliance Universal Inc., 755 F.2d 898, 225 USPQ 20 (Fed.Cir.), cert. denied, 474 U.S. 843, 106 S.Ct. 131, 88 L.Ed.2d 108 (1985).

The prior art parfried potato product references and the knowledge and use of waffle-cut potato products of sufficient tMckness and shape suitable for parfrying, as exemplified by the Matsler and Jayne potato products and the waffle fries sold in the 1930s, provided the motivation to combine the waffle-cut shape with the parfiy process of the Strong Patent. The prior art suggests the desirability and the obviousness of such a combination. The claims of the ’084 patent are invalid as obvious.

UNENFORCEABILITY

This court need not reach the unenforeeability issue of the ’084 patent; it is thus vacated. Such a decision not to review unenforceability is not inconsistent with the Supreme Court’s mandate in Cardinal Chemical Co. v. Morton International, Inc., 508 U.S. 83, 113 S.Ct. 1967, 124 L.Ed.2d 1, 26 USPQ2d 1721 (1993). The question in that ease was “whether the affirmance by [this court] of a finding that a patent has not been infringed is a sufficient reason,” by itself, “for vacating a declaratory judgment holding the patent invalid.” Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1060, 35 USPQ2d 1139, 1144 (Fed.Cir.1995) (quoting Cardinal Chemical, 508 U.S. at 84-86, 113 S.Ct. at 1969). The Supreme Court’s decision in Cardinal Chemical is limited to the specific facts of that case. Specifically, an affirmance by this court of a finding of noninfringement is not, by itself, enough to vacate a declaratory judgment holding the patent invalid.

The Supreme Court specified that factors such as judicial economy may nevertheless support a determination not to review validity. Unlike the situation in Cardinal Chemical, however, this court has determined invalidity. It is merely unenforceability that is set aside. There is no risk that others will be subject to infringement suits in the future because Lamb-Weston’s ’084 patent is invalid. There is no need to secure this court’s determination regarding the unenforceability of an invalid patent.

This court affirms the invalidity judgment because the ’084 patent is obvious in light of the prior art. This court vacates the inequitable conduct claim because it is redundant under these circumstances.

COSTS

Each party shall bear its own costs.

AFFIRMED and VACATED.

This court need not reach the significant issue of whether section 102(f) of title 35 defines prior art for an obviousness determination under section 103 because, among other reasons, the Matsler and Jayne potato slices were separate from the machines that produced them and were not confidential. In any event, this court need not reach this issue. The dissent has provided certain citations of authority for the proposition that section 102(f) may not be used as prior art under section 103. However, the following contrary authorities should also be considered: 35 U.S.C. § 103 (1994) (“Subject matter developed by another person which qualifies as prior art only under subsection (f) or (g) of section 102 [shall not preclude patentability if owned by the same entity].") (emphasis added); 2 Donald S. Chisum, Patents, § 5.03 [3] (1994) ("However, it is now clear that section 102(e) (description in prior co-pending patent application that ripens into a patent), section 102(g) (prior invention), and seetion 102(f) (derivation from another) may also be relied upon to show obviousness.”) (emphasis added); Dale Elec. v. R.C.L. Elec., 488 F.2d 382, 386, 180 USPQ 225, 227 (1st Cir.1973) (Actual knowledge of invention by another makes references defined by 102(f) prior art for obviousness determinations.); New England Braiding Co. v. A.W. Chesterton Co., 970 F.2d 878, 883, 23 USPQ2d 1622, 1626 (Fed.Cir.1992) ("To invalidate a patent for derivation of invention, a party must demonstrate that the named inventor ... acquired knowledge of the claimed invention from another, or at least so much of the claimed invention as would have made it obvious to one of ordinary skill in the art."); 37 C.F.R. § 1.106(d) (1995) ("Subject matter which is developed by another person which qualifies as prior art only under 35 U.S.C. 102(f) or (g) may be used as prior art under 35 U.S.C. 103 against a claimed invention ...”).