Norfin, Inc. v. International Business MacHines Corporation

625 F.2d 357, 207 U.S.P.Q. (BNA) 737, 1980 U.S. App. LEXIS 15969
CourtCourt of Appeals for the Tenth Circuit
DecidedJuly 7, 1980
Docket78-1620
StatusPublished
Cited by19 cases

This text of 625 F.2d 357 (Norfin, Inc. v. International Business MacHines Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Norfin, Inc. v. International Business MacHines Corporation, 625 F.2d 357, 207 U.S.P.Q. (BNA) 737, 1980 U.S. App. LEXIS 15969 (10th Cir. 1980).

Opinion

BARRETT, Circuit Judge.

International Business Machines Corporation (IBM) appeals from an adverse judgment after a jury trial in a patent infringement action brought by Norfin, Inc. (Nor-fin) as assignee of United States Patent No. 3,414,254 (’254), a machine for automatically collating duplicate document pages.

In the early 1960’s, Norfin began manufacturing and marketing a machine capable of automatically collating duplicate copies as they came from a printing press or duplicating machine. This machine, commonly called a “collator”, was designed by Norfin’s chief engineer, Bernard Pearson, who obtained United States Patent No. 3,273,882 for the collator. This patent was assigned to Norfin. Inherent within the Pearson collator were a series of pivoting deflectors, which, when operative, deflected the sheets to be collated into a column of receiving bins. An indexing arrangement successively activated the deflectors so that each bin received a copy of the same page in proper sequence. The Pearson collators were successfully marketed by Norfin.

*359 In 1964, Willard Sauerbrey, then reproduction chief of the aerospace division of Boeing, was a Pearson collator user. Sauerbrey testified that the Pearson collator had a number of disadvantages, including: the wear and tear created by the metal on metal operation of the tripper bars and rollers located at every shelf location; the operation of the collator would “at times” create a “great deal of racket and noise” making it unfit for use in an office area; the wear and tear created a great deal of unreliability and caused “a lot of paper jamming”; and that “Usually at the deflector finger location is where it usually happened [jamming], so it created a great deal of operator dissatisfaction, wasted a lot of time, and there was a high maintenance factor associated with that design.” [R.Jt. App., Vol. I at p. A-101].

Part of Sauerbrey’s job at Boeing was to maintain contact with manufacturers of office equipment to try and influence the manufacture of equipment which would be more efficient and “would advance the state of the art for our needs”. Within this posture, Sauerbrey contacted Donald Snell-man, founder and president of Norfin, and related that Boeing required collators which were: reliable; required very little operator involvement; were very quiet and operable in office environment; rather inexpensive — less inexpensive than the multiple parts, the many moving parts incorporated in the previous designs.

On January 17,1966, a patent application was submitted for a “sheet collating device” by Snellman and Jack Keeler, a Norfin employee. A patent, United States Patent No. 3,414,254 (’254), the patent at issue herein, was issued on December 3, 1968, to Norfin, as assignee of the applicants. Inherent within the ’254 was a single deflector assembly moving from bin to bin instead of the series of pivoting deflectors utilized in the earlier Pearson collators. In answer to IBM’s interrogatories, Norfin acknowledged that the invention of ’254 was “conceived” by Snellman and Keeler prior to January 25,1964, and that, in arriving at the design of the ’254 patent, Norfin modified and improved on a collator design similar to that described in Pearson United States Patent 3,273,882. [R.Jt.App., Vol. I at p. A-714].

In December, 1964, more than one year prior to the filing of the Snellman-Keeler ’254 application, Norfin shipped to Lockheed Missiles and Space Company of Sunnyvale, California, a “collator, terminal, Nor-fin Model 26”. Norfin introduced four written exhibits relative to this shipment, which included: Exhibit 14A, a “Request to Purchase”, apparently a shipping order for the collator to Lockheed which indicates, inter alia, the collator was shipped for a “trial and loan clause”, the collator was shipped “LOAN-FOR TEST AND EVALUATION”, “consigned at No charge from December 7, 1964 thru January 7, 1965”; Exhibit 14B, a Collator Corporation (predecessor to Norfin) invoice which stated “(The above machine is being shipped on a memo billing for test and evaluation per Jim Murphy.)”; Exhibit 14C, a Lockheed “Receiving Memo” which acknowledged receipt of the collator at “No Charge” and stated “This order covers items or materials consigned to Lockheed for Trial or Loan at No Charge” and “Consignment in on (Trial/Loan), to be returned to Seller . . . Jan. 7, 1965, .”; Exhibit 14D, a Lockheed “Change Notice” which stated “Consignment on (Trial/Loan), to be returned to Seller on . January 25, 1965” and “REASON: To extend term through January 26, 1965”.

During 1968 IBM asked one of its engineers, Jesse Spears, to design a collator for proposed IBM copier, Model 7400. Spears worked extensively on a collator throughout 1968 and on October 8, 1969 filled out an “IBM Invention Disclosure” marked “IBM confidential” for a “collator for 7400 machine”. Spears’ designs were used as the basis for subsequent developmental work at IBM leading to the marketing in March, 1976, of the IBM Series III office copier and associated collator. (In its answers to Nor-fin’s interrogatories, IBM stated it first became aware of the ’254 patent on November 26, 1969.)

*360 Norfin filed its infringement action against IBM on March 16, 1976, alleging that IBM “has been and still is” infringing its ’254 Letters Patent by manufacturing, selling, and using collating devices (IBM Series III collator) embodying the patented invention and that such infringement “is willful and deliberate”.

By order of April 22, 1977 the district court directed the action bifurcated for separate trial on liability and damages. Thereafter, in a pretrial order, the parties agreed that the contested issues to be determined at the trial on liability would include:

(1) Whether United States patent 3,414,254 is valid and enforceable in law.
(2) Whether the subject matter of United States patent 3,414,254 was in public use or on sale in this country more than one year prior to January 17, 1966, including:
a. Whether the subject matter of the ’254 patent was in public use at Lockheed Missiles and Space Company, Inc. in Sunnyvale, California prior to January 17, 1965;
b. Whether the subject matter of the ’254 patent was offered for sale to Lockheed Missiles and Space Company, Inc. by Norfin prior to January 17, 1965.
(3) Whether the oaths of the patentees were false in that such oaths included statements that the subject matter had not been in public use or on sale more than one year prior to filing of the application of the ’254 patent.
(4) The differences between the prior art and the claims of the patent in suit relied on by plaintiff.
[R.Jt.App., Vol. I at p. A-5].

On March 28, 1978 a jury of six returned a special verdict in favor of Norfin, finding that: IBM infringed ’254; IBM’s infringement of ’254 was willful and deliberate; a Norfin collator shipped to Lockheed in December 1964 was used for Norfin’s experimental purposes; “a collator defined by any of claims ... of the ’254 Snellman Patent” was not in public use or on sale more than one year prior to January 17, 1966; and that the ’254 invention would not have been obvious to a person possessing ordinary skill in the pertinent art.

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Bluebook (online)
625 F.2d 357, 207 U.S.P.Q. (BNA) 737, 1980 U.S. App. LEXIS 15969, Counsel Stack Legal Research, https://law.counselstack.com/opinion/norfin-inc-v-international-business-machines-corporation-ca10-1980.