Warren E. Burger: The first case on for argument in Number 445, Standard Industries Incorporated against Tigrett Industries. Mr. Bader you may proceed whenever you're ready.
Walton Bader: Thank Your Honor, may it please the Court. This case involves a patent license agreement which are centered into between the petitioner Standard Industries and the respondent Tigrett Industries. The agreement provided that Standard Industries was to pay in effect a royalty of 5% of the covered product sales price which is the way the contract read. And the contract provided also the usual warranty of title. The patent was in fact in the name of Tigrett Industries, but the assignment was a conditional one. The agreement of assignment between Tigrett Industries and the inventor, provided that the assignment would become absolutely void if Tigrett Industries made an assignment for the benefit of creditors. Now on December 29, 1964 after this contract had been entered into, the Tigrett Industries assigned a patent involved to a subsidiary of the petition and known as Jackson Furniture Company which company is not a party to this litigation. And that assignment provide that the Jackson Furniture Company, the purchaser agrees to abide by all the obligations terms and conditions of a semi herein Tigrett Industries Inc. as more specifically set forth in an agreement dated July 19, 1961 which was the original assignment that I've previously mentioned. Thereafter, on December 22 -- I'm sorry thereafter on April 26, 1965, Tigrett Industries did make an assignment for the benefit of creditors and it was the position of Standard Industries at that point that the agreement became absolutely void by recent of that fact. Standard Industries then failed to pay royalties in connection with the patent involved and a suite was brought. And there were various claims that were made by Tigrett Industries before the trial court. We don't have to go into those details. They sort reformation of a contract, sought royalties on every item that Jackson Furniture Corporation had made. But when the trial court got through, the trial court held that there were two items that was subject to royalties. One known is the play around, the other known is the golden converter. Insofar as the play around is concerned, Standard Industries does not contest the validity of that patent or the coverage with respect to the patent applicable to the play around. However, Standard Industry does contest any coverage with respect to the patent involving the golden convertible. And that is the issue which I am going to address myself to for a few months. It was conceded by the trial court and by the appellant court that the patent involved which is patent number 3,162,865 did not have any claim that specifically covered the structure. Because the claim of a patent, the broadest claim in the case required that they were had to be a pair of space openings in the base plate of the plate patent and that draw springs have to pass through this space openings. The trial court however held that regardless of the fact that the terms of the claim did not cover the structure. Nevertheless, by reason of an application and I believe a misapplication of the doctrine of a equivalence as the law presently stands at the present time that this patent still read on the golden convertible structure. Now I am not going to discuss in my argument whether -- in detail, whether or not the Court should announce a new doctrine with respect to the doctrine of equivalence?
Byron R. White: So what is the position?
Walton Bader: I support the position of the Attorney General Mr. Justice Stewart.
Byron R. White: Well the Attorney General is not a party to this case?
Walton Bader: No but he failed an amicus brief.
Byron R. White: Well how about you? You just adopt the --
Walton Bader: I adopt the position taken by the Attorney General in the amicus brief Mr. Justice Stewart and I also wish to address some other remarks in connection with this. Pointing out to the Court that the doctrine should be implicated because this doctrine is actually causing a break upon technology in the United States. The reason is this, normally when a competitor wishes to go into a field where a company has a dominating patent position. He will come to this patent accounts when he will say, “These are the dominating patents in the field. How can I avoid these patents?” And what the patent attorney normally does, he studies the claims of the patents involved and attempts -- and through the engineers of the company involved and technical personnel attempts to create structures which will avoid the patented claims and these is what produces technical progress because the man produces a structure which in many cases is superior to the patent structure.
Byron R. White: But do you think the courts are really free to reject the doctrine and the equivalence?
Walton Bader: I think so Mr. Justice Stewart for this reason. In the patent --
Byron R. White: Well you might ask Mr. Justice White down there, but -- I'm Mr. Justice White.
Walton Bader: I'm sorry, I'm sorry.
Byron R. White: That's all right. But, didn't Congress enact the new patent law in 1952?
Walton Bader: Yes Mr. Justice White.
Byron R. White: Just a couple years after the decision in this Court on equivalence?
Walton Bader: Yes Mr. Justice White. I submit to the Court that what the Court did was to abrogate the doctrine of equivalence for this reason. There are two ways that we can -- you can claim a structure. There is a what we call abstract claimology and there is concrete claimology and these things are different. For example, if I wish to claim two gears which are meshing to get. If I claim this concretely, I will say a pair of interconnected gears. Now that is the method that is used by the Germans in claiming patents and in setting forth claims, and the Germans give a very worrying doctrine of equipments to such a structure. That is a pair of gears would also cover a belt and a pulley. But in our patent law, in view of the provision of the Patent Act of 1952 which permitted claiming of means plus a function. I submit that Congress intended to permit abstract claims but with no doctrine of equivalence. That is --
Byron R. White: Well it certainly never mentioned at all. They certainly didn't make specially reject the doctrine of equivalence.
Walton Bader: No Mr. Justice White they didn't.
Byron R. White: They didn't even mention -- they didn't even mention the Graver case and any of the commentary or anything out?
Walton Bader: No they did not. I admit to the Court that they did not. This is basically the position that the petitioner is taking whether or not this petition -- this position will be sustained by the Court is of course something that --
Warren E. Burger: Well isn't it -- wouldn't be extraordinary if Congress intended to change something as recent as that, that something in the legislative history would not indicate that where addressing themselves to that end?
Walton Bader: Well in -- Mr. Justice Burger in Halliburton versus Walker, the Supreme Court specifically rejected claims drawn to means plus a function. And therefore with that decision on the books, it would be impossible to draw an abstract claim that would be held valid by the Court in view of the Halliburton case. And the Patent Act of 1952 when they put in the illustration that claims could be made by means plus a function. They did that in order to permit this type of abstract claim and I submit to the Court that since that now was no longer necessary to have a doctrine of equivalence in order to properly claim a subject matter that Congress by implication did say that the doctrine of equivalence no longer had any application. And that is the petition disposition on that matter. We don't have -- the case here does not have to bottom itself on that issue.
Potter Stewart: But that issue has never been raised or litigated or even mentioned until an amicus brief in this Court, am I wrong about that?
Walton Bader: That is correct Mr. Justice Stewart.
Potter Stewart: Thank you.
Walton Bader: The petitioner does submit that the doctrine of equivalence in this case was misapplied. This Court in the case of Graham against Deere which is the latest pronounced that I believe that this Court has made on the doctrine of equivalence has stated that where of a subject matter of a patent is narrowed that the doctrine of a equivalence likewise must be very narrowly applied. Furthermore, the doctrine of equivalence cannot be applied if there is what is called file wrapper estoppel in the case. That is if a patentee in order to obtain a patent, puts a limitation in his claims, he may not thereafter say that is a structure is infringing which does not utilize this limitation. And I submit that the file history of this case and the narrowness of the patent involved clearly indicates that the doctrine of a equivalence in this case has no application. I submit that for this reason. The invention -- and I will discuss the validity of the patent in a moment. If the patent is valid at all, it involves a very narrow structure of being able to pull two draw strings through a whole in a base plate from the top rather than being able to do the same thing from the bottom. That's the whole point of novelty in the case because there is a patent, a prior patent which is Adamson which shows the identical structure except that the draw strings are tightened from the bottom of the base plate instead of being tightened from the top of the base plate. Now with that simple little improvement which frankly is -- has less of a point of novelty that the improvement in the supermarket equipment case because draw strings are draw strings and draw strings are always pulled and netting tight and putting wholes in a base plate to pull draw strings through something that's always been done before. Two plus two when added together and they produce four. Secondly, in the original case, the patently attempted to get one claim which was extremely broad and a second claim which involved two space openings in the base plate. Now, we're only using one but this original claim called for two, I believe it was original claim for. That claim was rejected by the patent office on references. And the patentee then amendment the claim, to say two space openings in the base plate with draw strings passing through these openings and being connected at the top of the base plate for manipulation. Therefore, the patentee specifically obtained his claim by means of two space openings. He always requested from the patent office, two space openings and under those circumstances, the doctrine of equivalence has no application in view of the clear file wrapper estoppel in the case. We now come to the question of Lear against Adkins. Lear against Adkins were decided by this Court approximately 60 days after decision by the Sixth Circuit Court of Appeals affirming this case. Now at the time that this case was tried while the validity of the patent was in effect involved in view of the fact that there was a general denial of the -- of royalty liability on the part of the petitioner. The petitioner could not at that time contest the validity of the patent because the law in the Sixth Circuit at that time as set forth in the petitioner's brief was to the affect that a patentee, that a licensee could not contest the validity of the patent under which he was licensed but could only introduce prior add in order to attempt to limit the scope of the claims. Under these circumstances obviously since that was the law in the Sixth Circuit, there was nothing that the petitioner could do to contest the validity.
Byron R. White: Did this come out in the pretrial proceedings?
Walton Bader: No Mr. Justice White because --
Byron R. White: Did the District Court ever say anything about the estoppel doctrine?
Walton Bader: Yes, yes it's set forth specifically in the appendix Mr. Justice White, perhaps I can find it.
Byron R. White: We reaffirmed -- he reaffirmed, did he not that it would have done you know good to raise the validity point?
Walton Bader: Yes, yes. He said -- since both parties concede that the patentee -- that the petition, the licensee could not contest the validity of the patent under which he was licensed. Therefore, why am I attempting to introduce evidence with respect to certain prior add? And I said that I was attempting to do that in order to show -- in order to indicate the scope of the claims which we were permitted to do at that time. But what I couldn't do is put in anticipating prior add because that would have done me no good.
Potter Stewart: Why do you find that ruling or holding or colloquy by the district judge?
Walton Bader: Let me see if I can find it in the appendix. If the Court can indulge me for a moment, it appears on page 129 A-3 of the appendix, and it reads as follows. So the Court will know where we are going, we understand that the defendant concedes, they cannot attack the validity of the patents. That being true, what would be the relevance of a prior patent that perhaps anticipated the patent in suite here? And my reaction to that was scope of claims Your Honor. And Mr. Kalish, my learned brother said, we have no notice at all of anyway they want to narrow the scope of these claims and so on.
Hugo L. Black: Did you say 129 of your appendix?
Walton Bader: 129.3 Mr. Justice Douglas. It appears about -- it's right above the little notes saying 124. There's a 124 marginal note and it appears right above that.
William O. Douglas: I'm not sure that Justice Black heard your designation.
Walton Bader: Pardon me Mr. Justice Douglas.
William O. Douglas: I'm sure that Justice Black heard your -- the new name you've given me.
Walton Bader: I'm sorry, I'm sorry.
Warren E. Burger: Let me take your time. We'll understand what you're point is about the names.
Walton Bader: Thank you.
Warren E. Burger: Now, it's this center paragraph on 129 A-3 that you were relying?
Walton Bader: Yes Mr. Justice Burger. And before the decision of this Court in Lear against Adkins, that was the law and that was the solid law in the Sixth Circuit at the time too. There had been a recent decision of the Sixth Circuit approximately two months before this case was tried which said exactly that. That a licensee could not attack the validity of the patent under which he was licensed.
Speaker: 1914.
Walton Bader: Except, well the law -- the rule was clear with this exception. There was a provision that if there was an antitrust violation in the case, at that point, a licensee could attack the validity of the patent. Now, in this case strangely enough there were something that might be considered an antitrust violation in view of the fact that there was a provision which might have been construed to constitute a violation of law in that unpatented subject matter was charged because there was a provision with respect to the payment of royalties provided -- based upon the profits provided that they paid royalties that were less than the profits. However, that provision never came into effect, the provision may have been severable and under those circumstances, we didn't rely on it, and therefore we could not attack the validity.
John M. Harlan: But the point was the estoppel question specifically plus in this litigation isn't it? The reasons best known to yourself despite the uncertain scope of that doctrine before the leader despite what you've just said, 2044.
Walton Bader: No Mr. Justice, no. The point actually, we could not oppress it because the scope of the doctrine was than unless there was a clear antitrust violation, we could not press the scope of patent validity because of licensee estoppel. And the Sixth Circuit case that is cited in my brief actually sets this thing forth very, very clearly. The Sixth Circuit case was almost on all force without, and the Court specifically said there, you cannot contest the validity of the patent, that is the law.
John M. Harlan: That is the law 2131 in that case, avail and got up here.
Walton Bader: No. The petitioner did not, the situation is as set forth in the record and of course the petitioner is bound by his record. Basically that concludes my argument, now I would like to save my remaining time for rebuttal.
Warren E. Burger: Thank you Mr. Bader. Mr. Wallace.
Lawrence G. Wallace: The United States believes that this case does present the Court within an appropriate opportunity to correct a harmful basic incongruity in decisions under the patent law. The doctrine of equivalence which was applied by the courts below is not a statutory doctrine. It has never been provided for by Congress in the 1952 act or in any of the previous patent litigation or patent legislation. And indeed Congress did not in any of its revisions specifically address it self to the question of the continuing validity of this judicially created doctrine. Our submission is that although the doctrine may have one time had been appropriate. It is long since long before the 1952 revision been inconsistent with basic policies of the federal patent system as developed by Congress and by judicial decision. And that the doctrine should now be fundamentally revised in favor of the standard of infringement which is compatible with the statutory scheme. And it is appropriate for the Court to do this since Congress has never yet considered the doctrine. There's no reason to wait and see whether the Congress might to do so as the amicus brief of patent law association suggests --
Potter Stewart: Might not -- principles of due process of law perhaps indicate that the case in which to consider your argument is a case in which it's at least been brought up somewhere along the line in the course of a litigation?
Lawrence G. Wallace: Well at every stage of this litigation, the petitioner contended that because of the limitation in the claims, his play it could not be considered an infringement. And that the doctrine of equivalence could not be applied so as to hold that he was infringing a claim so limited.
Warren E. Burger: That's not your point overall wasn't it?
Lawrence G. Wallace: But that it really is a different articulation of the question whether or the doctrine of equivalence can appropriately be applied by the Courts to expand patent of appellees beyond the terms of their claims. I don't see that that is a different question.
John M. Harlan: Have you -- the Government can mean or come in 2502 United States in this proceeding --
Lawrence G. Wallace: We did not sir nor did we support the petition. It was only after the petition was granted the case came to our attention.
Speaker: (Inaudible) is unpatentable in view of the past art and this patent. Anything that's unpatentable is covered by the doctrine of equivalence?
Lawrence G. Wallace: Well that seems to be the tendency of the formulation in Graver Tank. It's difficult to know and predict.
Speaker: So there's no free area. See there, it can either be covered by a future patent or it's covered by the 2546.
Lawrence G. Wallace: Well in application, the Courts don't seem to go to that far with the doctrine. But it's difficult to put your finger on any principle which indicates how far along the path to that the Courts will go and applying the doctrine so long as a litigant is able to convince them that the allegedly infringing device accomplishes substantial in the same thing and substantially the same way as the patent and device even though the terms of the claim do not apply.
Speaker: Well is there some language about claims in the 52 act that is different than the language under which Graver was decided?
Lawrence G. Wallace: I don't believe that the claiming in requirement --
Speaker: Isn't that the language that you think is inconsistent with the doctrine of equivalence?
Lawrence G. Wallace: That's part of the language in addition to the reissue provisions and --
Speaker: Well is the claim language in the 52 act similar to what it was before identical?
Lawrence G. Wallace: It's identical. Our submission is the Graver Tank was wrongly decided not that Congress rejected it in the 1952 act. Congress --
Speaker: Do you think that Graver then just has to be overruled is in your position, according to your position?
Lawrence G. Wallace: That is bad as our submission. That is correct.
Speaker: Because there's nothing in the 52 act which --
Lawrence G. Wallace: Well there is the provision in the 52 act for the means claim. That was in innovation but we don't read that as meaning that Congress intended to overrule Graver Tank. That's quoted in footnote 12 of our brief.
Speaker: Well how about then -- how about Congress then intending to adapt Graver Tank? I didn't think that the -- do you think that the -- expressly stated otherwise, wasn't the act intended to cut it by existing law?
Lawrence G. Wallace: That is correct. But Congress did not devote specific attention to Graver Tank one way or the other.
Speaker: Well I know, but it intended cut it by existing law, didn't it? I mean what about on the infringement section? I never use to be in infringement section.
Lawrence G. Wallace: There is known infringement section, but it didn't refer to the equivalence doctrine or whatsoever.
Speaker: I know but it certainly -- do you think was intended to do to adapt the existing law about infringement of which equivalence was a major part.
Lawrence G. Wallace: We think it fair to say that Congress left this matter where it always was as a judicial matter. Congress did not give attention to this question and I don't think the judiciaries incapacitated from directing its own decisions.
Speaker: Are we going very often at the rules, that's very destructive.
Lawrence G. Wallace: But there was no statutory provision construed in Graver Tank. This is a judge made doctrine and always has been.
Speaker: But you have the rest under the statute?
Lawrence G. Wallace: Well there is a patent code that can be said as most areas of the law, but this standard of infringement has never been provided for by statute. I don't see how it can be attributed to Congress. As our view is if the doctrine of equivalence was devised by judges to deal with the problem of determining in infringement in historical setting which simply no longer obtain. It's an appropriate occasion for this Court to recognize that it has become outmoded.
Speaker: Do you take no position on the -- currently on the leader matter?
Lawrence G. Wallace: No we don't Your Honor. I'm authorized to speak only to this matter of the equivalence doctrine. It seemed to us to be the matter of general public importance in the case. With the Court's permission, I would like to summarize briefly the historical setting which gave rise to that doctrine since the description of it in our brief is somewhat over simplified and I commanded the Court's attention of comprehensive study of this history not cited in the briefs entitled evolution of the claims if you ask patents by Carol B. Lutz, published in three parts in volume 20 of the journal of the patent office society in 1938. While the doctrine of equivalence was first articulated by this Court in 1854 in 3025 it amounted to an elaboration of a general approach, the judges had been taken to the question at patent infringement from the earliest period. There was as the brief for the patent law association notes, no statutory requirement of claims in patent applications prior to the Patent Act of 1836, although the earlier statutes did require the patentee in a general way to distinguish his invention from all other things before now. And as a result of judicial interpretations of this general requirement claims began to be included in many patent applications. And the 1836 Act under which 3114 was decided codified this practice in its provision quoted in the amicus brief of the association requiring the applicant to particularly specify and point out the part improvement or combination which he claims as his invention or discovery. While claims where thereafter used in patent applications, they tended it first to be far mass definitive than the claims in modern patent practice. Often what was claimed was the concept or idea or principle in body in the invention even though that of course is not what is patentable and the claims tended to be drafted with references back to the specifications at critical points where specific definitive statements of what is claimed would be required today. Example can be found in the claims in this court decision in 3213 cited in our brief, volume 1 of Wallace. And other examples are sided Mr. Lutz. As the patent office and the Court's gradually began to apply more exacting requirements of claiming, the trend was reflected in the greater emphasis on distinctness and particularity in claiming included in the 1870 revision of the patent law and carried for with ever since that the important thing as we see it is that during this early period when patent application seldom included definitive claims to the extent that the Courts enforce the statutory requirement of the applicant distinguish the new from the old or the claiming requirement of the 1836 Act. That enforcement was confined to rulings on patent validity. The question of infringement was almost universally regarded as a question of fact to be decided by comparing the machines of the plaintiff and the defendant. The equivalence doctrine then was merely an elaboration of this general approach. The claiming requirement during this period was in effect treated as a technicality going only to the question of patent validity. The claims really couldn't serve to notify would be competitors of the scope of the monopoly that merely indicated to them whether valid patent existed. Of course the different view was sometimes expressed as it was by the dissenting justices in 3400 but it was not until 1877. Mr. Justice Bradley's opinion for the unanimous Court in Keystone Bridge 95 US that it was held that the claiming requirement is not under technicality and in deed the patentees are bound by their claims as the definition of their judicially enforceable monopolies. The Court's opinion there relied under reissue provisions of the patent law as well as on the claiming requirement and pointed out that it is in the patent office that the patentees “claim is\or is suppose to be examined, scrutinized, limited and made to conform to what he is entitled to.” They followed the many decisions discussed in our brief in which this Court has held the claim as the measure of the grant to be relied on as such by the patentee's competitors. And yet the equivalence doctrine which denies this and was build on a contrary premise has also been carried forward by a kind of a nurture which can preserve inconsistencies and the law as a matter of 3525. Cristor has been in a accommodation to the extent that the equivalence doctrine has been limited by the doctrine of file wrapper estoppel which prevents the patentee from asserting dominion over the area he renounced before the patent office by amending his claims to induce issuance of the patent. Our view is that this doctrine should be regarded not merely as a narrow principle of estoppel, but as one manifestation of the basic tenant of the Keystone Bridge opinion and of the patent system. That the only patent monopolies that are judicially enforceable are those defined by claims that have been approved by the patent office. Our proposal therefore is that the equivalence doctrine with its wide range of inquiry and unpredictability of result should now be rejected in favor of a standard of infringement which focuses on the claims in the light of their statutory function. One possibility of course would be a standard that would limit infringement to articles that come literally within the terms of the claim. The Court of Appeals from the Second Circuit once took that position by holding that under the logic of the patent system, the doctrine of equivalence can mean no more than that the language of the claim shall be generously construed. But it abandoned the position because of this Court's decision upholding the equivalence doctrine. This was explained by Judge Learned Hand in the Claude Neon Lights opinion discussed in our brief. We believe that the policies in logic of the patent system do not require a test originally verbalistic which would insolate the copying of inventions with only the most trivial or colorable deviation from the literal terms of the claims. We think the Court was correct in saying in the Graver Tank opinion that section approach would unduly exult form over substance even though we regard the holding rational of that decision as an unfortunate over reaction to this problem. What we urge is a test based on the substance of the claims, a test based on the substance of what the patent office passed on and approved as the definition of the legally warranted scope of the monopoly. This is not an entirely Novel proposal. We discovered in preparing for this argument that it basically similar approach was proposed in an article published in 1948, two years before the Graver Tank decision by one of this country's most thoughtful patent lawyers, Mr. William R. Woodward. The article is not cited in the briefs but its entitled the definiteness and particularity in patent claims and appears in 48 Michigan law review 755, after noting that the entire logic of the development of the patent system has been to limit the patent owner more and more to the terms that the claims. Mr. Woodward wrote the principal of 3908 can be reconciled with this development only “If one treats the so called doctrine of equivalence merely as a form of relief against the almost inevitable inadvertences involved in the formulation of patent claims. The relief must be applied only when the case is clear enough to establish strong equities in favor of the plaintiff and little or not in favor of the defendant or when the point is a mere technicality or so obvious for realistic appraisal that reissue proceedings would not be necessary for a full protection of the public and would be an unnecessary burden to impose on the patentee.” This expresses the general trust of the test we have proposed in terms of whether a revised claim which would literally cover the allegedly infringing article would have presented essentially the same case to the patent office would have presented no difference in the issues of novelty, utility and non-obviousness. So that a Court and would be competitors can conclude with assurance that the patent office did in substance approve a monopoly and the scope sought to be enforced. And vast the requiring reissue proceedings would be superfluous. By this we mean superfluous is not merely in the sense that the Court can predict what the resulted of reissue proceedings would have been, but superfluous because the Court has satisfied that they would have been nothing more for the patent office to decide. Under this standard, it seems to us that the expansion of the patent monopoly granted by the court's below in this case is the kind of expansion that should require her reissue proceeding and not be made by the Courts. The claim here was expressly limited to a play patent in which the base plate has “a pair of space openings” through which the draw strings are threaded. Petitioner threads the draw strings through a single opening in the base plate of his play patent. The claim could have been drafted so as to cover both situations either in the form of the means claim such as “said base plate having an aperture means through which the draw strings are threaded.” This is drafted in the consultation with the patent office I might add or by claiming that the base plate has “at least one opening” through which the draw strings are threaded. In deed, there's a means claim at the end of this very claim. The difference relates to a functional aspect of the invention about which it seems to us the Courts cannot confidently conclude that the more embracive claim would have presented no differences in the issues of novelty, utility and non-obviousness.
Potter Stewart: Are you familiar enough with the appendix to be able to express the view as to which of these various diagrams or pictures gives the best picture of this playpen?
Lawrence G. Wallace: Mr. Bader can.
Potter Stewart: To find these cases. It's always more helpful for me if I can see a picture.
Walton Bader: Page 118 A of the appendix, may it please the Court, has got two pictures right against that page number and I think that the first picture shows a view looking at the play pen from the front then there are two details of allege mechanisms are figures two and three which are not particularly significant. And then figure four which shows the bottom of the play pen with the draw strings pulling the netting tight and then figure 5 which shows the playpen in up position with the netting drawn tightly. I think that's probably best representation of a patent invention.
Potter Stewart: Thank you, I can see it.
Lawrence G. Wallace: And as to a nonfunctional aspect such as if the claim specified the color of the base plate for example and a context which this is obviously nonfunctional. It would be unreasonable for anyone to assume that the grant from the patent office is so arbitrary limited in the scope of the monopoly approved. Here however, we believe this kind of functional in difference does invoke the principle of the Keystone Bridge case that patentees are bound by the terms of their claim. So our submission is that amorphous nature of the equivalence doctrine along with what Judge Learned Hand referred to in Claude Neon Lights as the vacillation in this Court's decision attributable to an inconsistency and theory have resulted in regrettable uncertainty as to the permissible scope of competitive enterprise. This Court has recognized in cases discussed in our brief that an unwarranted zone of uncertainty as to the scope of patent monopolies can harmfully deprive the public of the benefits of legitimate competition. People will still clear in the zone of uncertainty, a familiar principle and decisions of this Court in many areas. We asked the Court to address itself to the inconsistency in precedent which is at the root of the present uncertainty in this area and to bring coherence to this aspect of the competitive economy by implementing congressional patent policy in the manner we have proposed. Thank you.
Warren E. Burger: Thank you Mr. Wallace, Mr. Kalish.
Ralph W. Kalish: May it please the Court. There is wild over lane patent law in this case such as file wrapper estoppel, licensee estoppel, doctrine of equivalence. When you take away the top, you have left simply the bare issue of one party attempting to get for nothing something they've bought and agreed to pay for and enjoyed. That's at the bottom of this case. The facts are not quite as simple and my brother Brader outlined. This is not a simple straightforward license agreement. This is a purchase of entire business, respondent Tigrett Industries sold its playpen business, children's furniture business to Standard Industries, the entire business, inventory, parts, anything else. A lump sum was paid down but in order to facilitate the operations of the purchaser, will allow to pay us it went and the agreement was the Tigrett would give petitioner a license on the golden convertible patent. And Standard would pay 2% to the seller, Tigrett Industries, the company for a period of five years on the toys or that this patent. That was a means and expedient whereby they could get some of the purchase price back and make it easier on the buyer. The other 3% was paid to John Burton Tigrett who was the original patent holder who had sold his patent to Tigrett Industries of 3% payment basis. So it was 2% for five years to the seller as consideration for the business. And 3% go to the original owner.
Potter Stewart: This was a furniture manufacturing business?
Ralph W. Kalish: Children's furniture Your Honor.
Potter Stewart: Children's furniture manufacturing business. The seller was in New York Company?
Ralph W. Kalish: Seller was a Jackson Tennessee Company.
Potter Stewart: But I thought the buyer was subject to the Tennessee.
Ralph W. Kalish: What the buyer did with the buyers New York firm is established a subsidy and Jackson Tennessee to take over the operations at this file. So Jackson Fringer Corporation was the subsidy and alter ego of the petitioner.
Potter Stewart: Of the buyer?
Ralph W. Kalish: Yes sir.
Potter Stewart: And the seller was also a Jackson Tennessee?
Ralph W. Kalish: Yes sir.
Potter Stewart: I see.
Ralph W. Kalish: So wrapping an environment of a business --
Potter Stewart: And then how much inventory for example?
Ralph W. Kalish: I believe Your Honor the contract reports of assets 42 (a) of the appendix call for $105,000.00 down payment in the balance fee and the royalties. So they estimated somewhere around the quarter of million before they got through.
Potter Stewart: And of that quarter million, how much was attributable to the patent or patent applications?
Ralph W. Kalish: This I do not know. I wasn't in negotiation that on how they figured this out.
Potter Stewart: Wasn't atomized?
Ralph W. Kalish: Wasn't atomized.
Warren E. Burger: What was that page in the appendix by the way?
Ralph W. Kalish: 54 (a) is the page for the purchaser of assets in your basic agreement between the buyer and the seller and clause 16 (c) relates to the particular patent before this Court's day.
Warren E. Burger: Is there any evidence in this record that segregates the -- or allocates the purchase price to the various phases that --
Ralph W. Kalish: No sir there was no -- I think what happened simply was that the negotiating party for the seller had estimated what their income indemnities various items in which they're granting a license and figure they get the same thing for the next five years. So 4924 in that particular environment, secondly and most crucial in this case is the fact that even though paragraph 16 (c) says that seller will grant a license to Standard, the seller did not in fact grant a license, but in fact assign the entire right title interest in the patent to the buyer. At page 76 (a) of the appendix is the document of assignment with respect to the golden convertible patent and the Court will see that Jackson Furniture Corporation was a purchaser. They were not a licensee. They took the entire right title and interest, entire bond of rights. So if the seller Tigrett Industries had nothing left except the whole or -- benefit obtaining a payment as the purchaser succeeded. So we're not dealing with a license. We're dealing with the sale. We have the situation here of the buyer coming before the Court and arguing that the very patent which it owns is invalid trying to appreciate and destroy its own property which you have four right too.
Potter Stewart: Well of course that is what Lear says that the prior licensee is entitled to do, isn't it?
Ralph W. Kalish: Yes sir, this -- if Lear relates to a license agreement Your Honor, not an assignment. In Lear, the plaintiff still owned the building and the -- Lear was simply a tenant. In this case, the building was sold completely outright. There wasn't where the purchaser was fully removed, so have a sale as suppose to a running situation. And I think that's a very important distinction for one reason that I know of no law which binds a purchaser from attacking the merchandise that whom we advice. In other words, that I not see where the assignee is barred, complaining that they got that merchandize. So we could have raised any issue we wanted to as to the validity for the court below as long as they owned the property so the estoppel document seemed pertaining in this case. Just passing lightly over this question of contract cancellation, I think it's a very minor part of this case if that much.
Warren E. Burger: Before you go on with to if I may interrupt to Mr. Kalish at least for me who have distinguished the Lear case rather so swiftly that I'm not sure I followed you.
Ralph W. Kalish: Sorry Your Honor certainly. As I understand the Lear case as I've read many times, I hope I understand it. The plaintiff was the owner of the patent, but granted a license or right to use to the defendant. Title remained in the plaintiff. The doctrine is always broad black rid of principle, staple as to a licensee's right to attack the patent which is license but under license 5243 only. Now in this case, we have an assignment.
Warren E. Burger: Well is that doctrine related to the old common law doctrine tenant to come out challenge to Landlords' title?
Ralph W. Kalish: It may 5258 beginnings Your Honor. That that the question of litigant go way beyond title in this case here, entitled could be one page if you attack title to a fact where it leave it all to many areas to such as prior art and other means attacking it. But in this case, there is no tenancy. They owned the patent. They bought it and this doctrine gave them all the rights, full title. They've owned this patent. It was in that assignment and not a license.
Speaker: 5324 Department of Trial does?
Ralph W. Kalish: Well Your Honor I could -- a misunderstanding but my brother Bader frankly made it --
Speaker: 5344 understand that there could be no issue of litigate in this case.
Ralph W. Kalish: Not to Miller. We're knowledge Your Honor because by brother Brader simply conceded before the trial even started. They couldn't attack the patent and that was it. I have no objection of that concession. I didn't say anything. I was just quietly conceding.
Speaker: 5410.
Ralph W. Kalish: Yes sir, there's nothing binding as far I can see.
Speaker: That no premier law would require the attack.
Ralph W. Kalish: I do not know of any law that binds a purchaser for attacking that merchandize that buys. If they have right to do it either could be failure consideration or something at that start here, but this is an assignment and not a license and Lear was a straight license.
Warren E. Burger: Well do suggest that this is much the same though -- at least in the litigation posture, it's much the same as though the inventory which passed under this assignment was subject to large lean for a bank loan and had not been disclosed and you would have had the right to challenge on that score?
Ralph W. Kalish: Yes sir. If there have been some warranty or something of that sort here, we couldn't give any better warranty 5502 patent office gave less as far as the patentee. But he had -- it was assigned to him and he had to pay for as he went.
Warren E. Burger: It was part of our problem up here now the failure to litigated this --
Ralph W. Kalish: Well this has been raised in this case because the Lear case was decided in June of last year, on May 21 of last year the Circuit Court of Appeals decided this case. So therefore I have assumed after this court accepted the petition on view of the holding in Lear and it wasn't until last fall that I realized that doctrine of equivalence could have been interjected and the Government form in their position. So the problem was that the defendant wants go back down and try validity again. And as using the Lear case, it's sort of a club. I feel it's improper for the reason I've announced the Court as being assignment, but on the -- from arguing those standpoint only or argument sake alone, let us assume the Court does not concede distinction in that point. I feel that the record below establishes that the defendant have the right to make many attacks upon the patent which it owns. The record and petitioner for certiorari makes certain reference as to colloquy between counsel, defendant's counsel and the Court relating to the other patent, that so called play around patent which there is now a concession of no issue of validity or infringement. However, when that patent before the District Court as the record shows the defendants were not reluctant to attempt to attack that patent upon the ground that it's set forth structure imbibing expired patent. The reference made to page 129 A-3 is also colloquy relating to the play around patent and not to go to convertible patent which shows that the defendant also knew that they had the right to come in and bring other patent before that Court to narrow the claims. It's a two well known experience which this Court remark upon the Lear case. Consequently, the defendants knew about this possibility to attacking the patent, which is before this Court today. Yet for some reason, the District Court, they raised non of these efforts, made no attack and that narrow the scope of the claims that happened before this Court are to bring an expired patents much says even other a squeak that there might have been some patent lurking somewhere which would invalidate this patent. We had no knowledge and you have no knowledge as of this today of any patents which invalidate the patent suit. You have never been informed of one yet. The Court was never even given a suggestion. There was no author of introduction of any evidence. And therefore, since the defendants knew they had many experience open to them and did not avail themselves out. As simply raised by the brief before this Court that there's a invalid patent waiting around or somewhere. They should not be allowed to drag us all the way back down again. Let them do what they fail to do the first time. They had their chance. And secondly, we iterate our view down on assignment there was no barred at all. Their own self-imposed concession was at the wrong pair. Going on to the other -- so therefore Your Honor we feel that the Lear versus Adkins decision is not applicable on the present instance and should not be anyways subverted or perverted to allow it to stretch in this situation or there has been an opportunity for the full day at Court and yet not availed out to raise the issue of validity. Going on to next point, which briefly relates this problem of contract cancellation we have never felt that this was earnestly urged by defendants. The sale was effective in December ‘64. The assignment to which I have alluded was dated December 22, 1964 and it was not until four months later, four months after Tigrett Industries had divested itself of its title didn't decide well but as assigned to the banks here in Jackson the right to collect our 2% override which we hope we're going to get and for the benefit of our creditors. In December 1966, 20 months after the assignment for the benefit of creditors, respondents are advised in a very informal oral manner outside the courtroom that their defenses they had no title no longer. Their title was completely expunged by virtue of this assignment. And therefore we had no right at all to collect the money because they had nothing to do. Nothing they could do about but they lost the patent. We were dumbfounded and yet you'll find nothing in the pleadings, which even suggest desperate offense. It was raised at the trial below but not brought to the attention of the party's until one year after institutional suit and consequently we think it understatement to call an after thought, to call a mere rationalization for not paying what they agreed to pay. Their argument is that as of the time of the assignment for benefit of creditors, the title to the patent ceased and they had lost the patent. Their view is if the underlying agreement were by John Burton Tigrett had assigned the patent to Tigrett Industries originally call for the fact that in the event in that agreement, the purchaser, not Tigrett Industries by name but the purchaser, if they made an assignment to the benefit of creditors, the license in one hand of that assignment and the other would be automatically cancelled. His position of the defendants that sends Tigrett Industries made this assignment for the benefit of creditors four months after they got -- after petitioner got title. The petitioner lost its rights, lost the title. The assignment at page 76 A of the appendix and my brother Bader add to the Court states that Jackson Furniture Company agrees to abide by all the obligations, terms and conditions of the seller as more specifically set forth in the agreement dated July 19, 1961 between John Burton Tigrett of Jackson custody of Tigrett Industries. We contend that this so called assignment for the benefit of creditors in an agreement was a condition which petitioner accepted and petitioner then stood in the shoes of its assignor and that clause then related only to petitioner and not to the assigning party who is no longer interested. Just as in corporate and contracts, an assignment of this type extinguishes the right of the assignor against the third party and substitutes a precisely similar one in the assignee.
Speaker: (Inaudible)
Ralph W. Kalish: Your honor I would -- be please to pass it. I just thought to better bring it up because it was -- they've have been arguing this thing right along.
Speaker: Is this in the brief?
Ralph W. Kalish: Yes sir, that's in the briefs.
Speaker: (Inaudible)
Ralph W. Kalish: Yes sir. It's in the briefs and raised. But I prefer to longer take time at this point, I don't think it's important -- the Courts merit and further rest on arguments in our brief length. I would like to direct your attention to the matter of doctrine equivalence. The District Court and the Court of Appeals both held the cue structure was the equivalent of that claim. At page 123 - 125 A, of the appendix there is a photograph of the accused structure which might be compared with the drawings on page 118 or 112 A of the appendix. There's only one difference. One opening against to the experts for both sides found they work the same way to do the same thing by the same means. The Circuit Court of Appeals said there was not a substantial difference. My brother Bader argues for a very strict construction and taking to its logical end would only be to subscribe to the view, which this Court denounced in the Graver case and that isn't only outright and forthright, duplication is a very rare and dull thing. We have simply the evasion of this patent by putting a single hole instead of two. Everything else is the same structurally and functionally. There was no evidence to the contrary with respect to the fundamentals of the equivalency. Therefore, we must address ourselves to the Government's view with which has overruled this doctrine and replace it by a new test. Firstly, it is our view that the Government is raising its own windmill or its own scarecrow. And it talks about --
Speaker: Get to that Mr. Kalish, may I just hereby correctly understand your position on the other point.
Ralph W. Kalish: Yes sir.
Speaker: It's this that the -- as I understand it, the patent was sold to Standard and part of the major or the purchase price included this 2% override?
Ralph W. Kalish: Yes sir.
Speaker: What about the 3%?
Ralph W. Kalish: 3% would be continued to be paid for the life of the patent, to John Burton Tigrett who was the original owner who assigned the Tigrett Industries and they're repaying him 3%.
Speaker: But your point is this was just a measure of the purchase price of the patent.
Ralph W. Kalish: As far as the respondent Tigrett Industries is concerned, 2% to them was part of the purchase price. The 3% to go to John Burton Tigrett was simply that the petitioner was going to adapt and accept the obligation, which the seller had to him.
Speaker: In another words they assumed the obligation that was on the inventor.
Ralph W. Kalish: On the 3% to the inventor --
Speaker: That's what I said.
Ralph W. Kalish: The 2% was override to them.
Speaker: But the whole business is all part of the purchase price of the patent that they bought, is that it?
Ralph W. Kalish: Yes sir.
Speaker: And therefore, you say there is no room here for the doctrine of licensee estoppel because this is not a licensee situation.
Ralph W. Kalish: In our position, yes sir, yeah.
Speaker: Therefore, I take it with a follow that these are five-year agreement as I recall about it.
Ralph W. Kalish: Yes sir but as far as the industry is concerned selling company --
Speaker: Well no matter what, I would suppose your position then will have to, would it?
Ralph W. Kalish: I'm sorry?
Speaker: Maybe I should ask you a question. Does this mean that no matter what happened to the patent, standard still for five years was obliged to pay on all of its sales of the cover items, 2% override and 3% to the original inventor? Do you say that whether or not the patent was invalid? That they bought something -- for which this is what they pay.
Ralph W. Kalish: You're right. The question then would seem to be Your Honor if I understand it is that whether or not the patent might have been held invalid by some manner or means in that period of time.
Speaker: Well I understood you, wouldn't your argument logically mean no matter what happened to the patent, valid or invalid that since they pay that extra hours for it, measured by 2%, 3% quarterly, they'd still have to continue for the five years --
Ralph W. Kalish: I don't see -- I can't take that position. No sir, Your Honor.
Speaker: All right.
Ralph W. Kalish: Who would know that for.
Speaker: Why, why not?
Ralph W. Kalish: Because it's wrong in terms of a place to a patent Your Honor. And therefore, I think that if that patent had been held invalid by a third party infringement action --
Speaker: Do you think that could be a failure consideration?
Ralph W. Kalish: We'll be hard put to -- on antitrust laws to ask them to pay on an invalid fund.
Speaker: Or why would then you -- and that's true even though this is an assignment.
Ralph W. Kalish: If the third party Your Honor had infringe his patent and suite had to be brought and say to the purchaser brought a suite for infringement and by virtue of that litigation that patent was held invalid prior to the termination of five-year period, then I would say in that case we could not expect them to pay us.
Speaker: Why not?
Ralph W. Kalish: Regrettably the contract is drawn in terms of -- accorded by the fact.
Speaker: Well then I don't understand you estoppel argument at all.
Ralph W. Kalish: To estoppel argument is based upon and base back to the defendant. In Lear versus Adkins the question was, was the licensee stopped?
Speaker: Oh, I know but if he had some third party suite -- in some of the third party suit that that was invalidated, you would say that the petitioner here would be excused from paying.
Ralph W. Kalish: By virtue of the way that contract is written, I'll have to say yes sir, otherwise you are going to file that antitrust laws.
Speaker: But you say nevertheless that he is stopped.
Ralph W. Kalish: He wasn't stopped at all.
Speaker: I know but you say he hasn't stopped.
Ralph W. Kalish: He has not stopped at all. I had no bar. I'm saying he had no bar, he could have raised decision below if he wanted to. In Lear versus Adkins you were concerned with the problem of the bar against the licensee. I say this part didn't affect him. He could have raised it and lay down below if he wanted too. There was no estoppel against him.
Speaker: Well you make a good argument -- you have had a good argument arguing for the result mixed in Lear, right across the board.
Ralph W. Kalish: Oh, I think that we had a -- that must have held him valid Your Honor because it have been appearance of some of the charge the way contract is granted.
Speaker: Well quite apart from the antitrust laws, I supposed this was a sale of a business of the assets of the business including as you say inventory and maybe I don't know what else, office equipment and a couple of patents and if the or any or all are in part of that -- those assets had turned out to be effective -- defective or not as represented quite apart from the antitrust laws. I'm supposed the installment purchaser would have had a claim against you to pay full purchase price quite apart from antitrust law. He could attack the validity -- the patent just as he could have attacked the --
Ralph W. Kalish: That's right.
Speaker: -- the integrity of the inventory.
Ralph W. Kalish: Right. There was no bar against him at all the time. In all difference, may I cite that lawyers not take part in this negotiation unfortunately. This contract have been written differently we're stock with. Getting back from the Government's position on doctrine of equivalence, they raise a scarecrow and he talked about the context of the general electric versus 7106 case in the universal oil products case starting up with some sort of a boggy if we had to be afraid off. Now in General electric, this Court held the claims to be absolutely invalid in that case because they were much too broad. The claim called led to a filament and limitation related to being made up of such large streams of such size and contour as to prevent sagging in 7137. That that must struck down because the public could not no where -- the line was drawn, so comprehensive was indefinite and similarly in the universal law of products case, this Court did recognize the doctrine of equivalence but held that the process provide upon was that which have been denied to the patentee. Those cases are not pertinent and they set up a very bad contacts within which the exist a doctrine of equivalence. The Government expresses extreme anxiety and fear that the Courts will expand this claims of patents, in such an extent that they'll trespass into areas which should be denied the patentee. What is this document actually get called as such a concern here today. It's a 116 years old. It's been an aid to the Courts for construing claims for the purpose of preventing a fraud, preventing a dissimulation. This doctrine is sort of a first class and the doctrine plain hands. This doctrine is designed to prevent a patentee from being a victim of verbalism as expressed in the Graver case. And it is applied not to capture something new in different but to avoid the accused structure of being nothing more than a mere colorable difference from mere inconsequential departure. To minimize as I believe Justice Black used in the dissent in the Graver case. These are not -- why is doctrine is not used to encompass large areas but colorable differences, colorable departures, inconsequential changes. They're designed to prevent as the Court stated in the unscrupulous copyist. Now there are many safeguards in this test, which perhaps may clarify the question that Justice White raised before. One test of course, the test of equivalency. It must do the same thing in the same way with the same results. So we have to have that as one guard, safeguard. Secondly, the file wrapper estoppel doctrine is used also as a safeguard. So if the doctrine applies in those areas only were file wrapper estoppel does not attach. File wrapper estoppels at the exact point of criticality, the exact point invention and therefore there can be no equivalency at that particular point. Thirdly, the claims must be definite. The claims cannot be so broad as to not guide the public as the General Electric case. Other cases cited in the Government's brief. But fourthly and most important is the fact that the equivalent structure must have been something known at the time of the patent are subject. It cannot be an inventive act. The Reece case in 1871 decided by this Court brought that out. In 1890, we have Professor Robinson and on patents brought the same point out that it must be known in the arts at the date of the patent. In the Graver case, this court made the same statement that the important factor is whether persons reasonably skilled in the art would have known of the interchangeability of the ingredient not contained in the patent with one that was. It have to be something known. If it became invention then it was of course beyond the doctrine of equivalence. This is also the notes since 1890 in textbooks. (Inaudible) brings that out. Now the Government in his brief at countless places states that the doctrine of equivalence prevents inventing around, prevents invention around. Now the use of the word invention can't be accidental. It's used too often. And what is invention? We presumed that invention is what this court held to be in the Graham case. It must be unobvious and therefore if it is unobvious, it cannot be in equivalent because in the equivalent has got to be obvious. Consequently this doctrine have nothing to do with defending others from being creative, from using ingenuity, and showing skills beyond the mechanical skills. In fact, it encourages all of these to do that. The Government's position would seem to be to more or less under the guys of competition in public policy to really be encouraging the free loaders, the commercial parasites, the uncreative, the parts. This case is an interesting case in itself because we have the purchaser depreciating the novelty of the very playpen which is selling to such an extent we're here today and yet it's saying it's not noble and appreciating it. As simple as that might be, consequently this doctrine is not designed to forestall technological advancement. How can anyone with the right mind say that putting one hole instead of two is a technological advance?
John M. Harlan: Can I ask you a question? What you have said in the previous part of your argument, you argued that the real problem does not here at all.
Ralph W. Kalish: For further -- I take that position Your Honor.
John M. Harlan: 7722
Ralph W. Kalish: I didn't think so, before the distant here. I just can't imagine the court or ruin this particular doctrine. I think the doctrine is vital.
John M. Harlan: Well, I'll ask a different question. (Inaudible)
Ralph W. Kalish: Well, in a standpoint Your Honor the District Court relied upon the Graver case in holding his principles and the Court of Appeals affirmed and used and noting the difference, the one hole or two holes said it was not a consequential difference which is typical language used in doctrine of Government cases.
Speaker: (Inaudible)
Ralph W. Kalish: Well, this is -- been hard for us to understand the Government raising these points, we felt that the Government has gone to full circle.
Speaker: Well, let's assume the patent is issued and someone thereafter trials for patent in the same area and it's denied on the ground that it was obvious from the previous patent and the prior, would that all -- would you therefore say that what the fellow was trying -- what the second man was trying to patent was the equivalent of the first patent?
Ralph W. Kalish: I think with the facts you've outlined that should be yes.
Speaker: So you're saying that's -- anything that's obvious from the prior art is covered by those prior art patents in the doctrine of equivalents.
Ralph W. Kalish: As I understand the doctrine --
Speaker: And this just have any free area. It's either -- if something's unpatentable it must be because it's covered by a prior patent.
Ralph W. Kalish: Well I think this is maybe one area of confusion Your Honor. The mere fact that the picture expedient, let's say the one hole against the two holes in this case here, you adopt the one hole. This is no. There is nothing very noble about that. So one hole, if it had an independent existence but one of the public, the once should put that in this context in the total overall patent structure than it is a new device. In other words just as in the Graver case, the mere fact that there was one silicate which is well known did not prevent the public from using that particular silicate. But when you substitute that silicate into the particular welding composition, the totality then brought about a new inventive option.
Sidney Neuman: -- Of the American Patent Law Association or the opportunity, which has been given to us to brief the questions, which are raised by this assault, which the Government has made upon the equivalence of the rule, which is now at least a 120 years old. I joined Mr. Kalish in saying that much of the position in fact a break deal of the position of the Government is a scarecrow type argument. The Government has generalized and the Government over simplifies in making these assertions as to what the equivalency rule means and what the Courts are doing as a result of a graver. There are three or four points which I would like to make at the outset which my way of thinking demonstrate the -- some of the basic fallacies in the Government's position. In the brief filed by the Government, there seems to be suggestion that the patent clause of the constitution has something to do with this matter of equivalency that the constitution requires specificity in claims. There is nothing in the constitutional clause, which relates to specificity in claims. Secondly, the Government has not in a very good historian as far as the genesis of the doctrine is concerned. The Government asserts that the Wynon's case was decided under a different statutory scheme, which did not require specificity in claiming. This is not so. The original Patent Act was the 1790 act. There were no claims required in the patents granted in the two or three period that that act was in effect. Then we had the Patent Act of 1793, which was -- came to an end in 1836 when the present statutory scheme came in to be. Now, between 1793 and 1836 we did not have in the statute any requirement for claims. In fact, we had it during that period what we call a registration system, not an examination system. The examination system came in to being in 1836. And the Act of 1836 contain language very much like the language which we now find in Section 112 about specificity in claims. And this is the reason that the problem or the debate came in the Wynon's case it was because of the fact that the 1836 statute required that the patentee particularly specify and point out what it was that he was claiming as his invention that you had the division in the Court at that time. You had the minority who felt just as Mr. Justice Black and Mr. Justice Douglas felt in the Graver case. That there should be a strict construction of the words of the statute and a strict construction of the terms employed in the claim. And then you had the majority of the Court in the Wynon's case which felt that there should be some room for construction, some liberality of construction and that the claim should receive a reasonable interpretation and this was what the debate was about in the Wynon's case. Do we have strict construction of patent claims or do we have a little broader construction, a little breadth as far as the terms of the claims are concerned. The other point which I would like to mention is the assertion that the Courts at the present time do not focus on the claims. Now we that are in the patent litigation practice know that we do focus on the claims and that the Courts do focus on the claims. Another fallacy in the Government's position is the assumption, which is made here that after the Court has found that a patent is valid or a claim in the patent is valid, it does not return to the claim in connection with the determination of the infringement issue. The Courts do not ignore the claims after they have found them invalid and instead when they do take up an equivalency determination they go back and they reconsider whether or not that claim is valid. In the light of the prior art in view of the scope and the construction which the Court is placing upon the claim. Your Honors are familiar I'm sure with the classical statement that was made in this Court many, many years ago, which is to this effect, that which infringes if later anticipates if earlier. Now, this means --
Warren E. Burger: I think we'll suspend at this time and go for lunch.
Sidney Neuman: Thank you sir.
Warren E. Burger: Continue --
Sidney Neuman: May it please the Court. When we recess, I was making the point about the rule of law which the Courts I believe never loose sight of namely that which infringes if later anticipates if earlier, I would like to come back to it. But I've decided that I would try and answer Mr. Justice White's question that he put to Mr. Kalish about the disallowance of a subsequently filed application upon the existing patent where the patent office refuses to grant the second patent on the ground that it is obvious in view of an earlier patent. What we have to keep in mind is that sometimes an element maybe both an equivalent and obvious. Sometimes it may be obvious but not an equivalent. Sometimes it may be an equivalent but not obvious. The point Mr. Justice White is this that in the examination of an application, the patent office is looking at the disclosures of the earlier patents. And the question of obviousness is determined on the basis of whether or not the new alleged claim subject matter is obvious or not obvious in the light of the disclosures of the prior act. The examiner does not get into the question of the claims of the references that he is relying upon. And equivalency comes in to play only when we are deciding the question of infringement of the literal language of a claim. Obviousness is a mater of path nobility in the light of the disclosures of the prior patents.
Speaker: So you are saying that there can be some nonpatentable obvious elements?
Sidney Neuman: Which are not and it's entirely possible sir that something which has been held to be obvious in view of an earlier patent could well be held to be in equivalent in a properly litigated situation.
Hugo L. Black: Are you not the right one to ask? Could you tell me briefly what was the discovery here?
Sidney Neuman: Sir I have not made any effort to get into the merits of this action which is before Your Honors. I have only prepared on this subject of equivalency, I was not in the case with Mr. Bader and Mr. Kalish and I am afraid I can't answer that question.
Hugo L. Black: I don't think either one of them mentioned what it was to get the idea of --
Sidney Neuman: That has something to do with the playpen and there is a claim, which relates to the structure of the playpen. And this is the question of infringement which was before the lower courts whether the accused playpen was an infringement of the claim of the respondent. The lower courts held that under the doctrine of equivalency that one of -- well first that I understand this that there was one structure which literally responded to the claim and then there was a second structure which did not literally respond but which the courts below held was an infringement under the doctrine of equivalency. Now on this matter of whether or not the courts presently are focusing on the claims, they are doing exactly that. They start out with the claims and they finish with the claims. As I said, they first determine whether the claim is valid. And then if there is an equivalency situation after they have decided that the accused structure is an equivalent and is reached by the claim under the doctrine, then the Court goes back and takes another look at the prior art to see whether or not the claim thus construed is valid in the light of the prior art. Now this is exactly what happened in the Sanitary Refrigerator Case. There you had exactly the same patent, the same accused structure. The records in the two cases were substantially the same, the record in the Seventh Circuit and the record in the Third Circuit. The Seventh Circuit found that the accused structure was an infringement under the doctrine of equivalency. The Third Circuit found that it was not. And one of the interesting thing about the opinion of the Third Circuit Court of Appeals is that that Court expressly pointed out that if they were to give the claim the breadth that the plaintiff was asking for that would be invalid in view of the prior art. This is why in the third circuit, no equivalency was found. Then the two cases came up here. This Court agreed with the Seventh Circuit and found that the two structure was an equivalent. Again, as showing the great concern which the courts always have for the validity of a patent. I would call attention to Smith versus Snow where this Court found the patent valid, found entirely different incubator to be an infringement of the Smith patent gave it a construction which made other prior art pertinent which had not been in that case and in the subsequent case. Smith versus Hall 301 US, this Court found the Smith patent invalid in view of this public use, which had not been in the first case. The point I'm making is that once you've given a construction to a claim then other prior art, other references become material to the broader scope which is being given to a claim. Now the Government also says that the doctrine has not been properly limited. We submit that it has within the time that has been available for research since I learned that I would take part in this argument. I've had two of my office associates checked the citations of the Graver case over a period of about 20 years. They had examined about 200 -- and I believe this is something that the Court be interested in. They examined about 220 citations of the Graver case. We found this and these are very rough figured that roughly a 128 cases of infringement were found where the doctrine was invoked and 91 cases were found where the doctrine was refused. Now this is approximately 56% to 44%. I submit that this shows that the Court had not gone over board in applying the doctrine of equivalency and this is particularly true in view of the fact that a recent report by Senator McQuillan headed the subcommittee on patents in the senate indicates that only about 28% of the patents being litigated are being upheld. So you've got 56% of 28% and it's a very small number of patents indeed that are getting the benefit of the doctrine of equivalency. Three major points that we make sir are these. There is no factual basis for the Government's extraordinary request. Second, we submit that there are no cogent reasons for rejecting as a matter of law. This rule of patent construction which has been so long applied by the court and third, that the Governments proposed alternative test is an impractical one and is incomprehensible unless it means what we think it means and in that event the Government's proposed test is the very same rule of equivalency which is now being applied by the Court. As to that first point, we submit that the assertions, which have been made about the effects of the equivalency ruler highly exaggerated a more fancy and imaginary that real, there is no evidence in this case Your Honors which submit the -- which support these assertions. First, that create an enterprise and technological progress are being hindered. There is no evidence to show that in event of efforts and commercial enterprises are being discouraged, that competitors are being prevented from seeking to invent their own that the doctrine has undermined the public interest in competitive technological advancement. There is absolutely nothing before this Court to support those factual assertions. We submit that this matter should be taken up by Congress. If anything is going to be done about the equivalency rule, the Congress is the fore important and not this Court.
Hugo L. Black: Is it. They found an active comment?
Sidney Neuman: Sir?
Speaker: Is the equivalent, doctrine of equivalent created by the Congress?
Sidney Neuman: No. But Your Honor we say that it has been adopted by Congress. There had been any number of patent statutes adopted since 1853 or 1854 and Congress, we feel has adopted and has embraced the doctrine of equivalency. It has been a part of the decisional law for a 120 years. The 1952 Code for the first time specified what the act of infringement consist of. The 1952 Code says that infringement shall consist of an invasion of the patented invention and the decision showed that the patented invention over the years has been the literal language of the claims with a reasonable interpretation. And this is what the patented invention means.
Speaker: Do you think that the ‘52 code has so much significance that it adopted every piece of statutory interpretation and every piece of decisional law prior to that time in places of any prior -- any decisions prior to that time beyond reach of this Court or any other court?
Sidney Neuman: I think that it was a general codification except insofar as Congress did something about the Mercoid rule and Congress did -- they wrote in this additional provision in section --
Speaker: 9833 of things that specifically did away with some prior decision.
Sidney Neuman: Well I think the Mercoid situation is one. And the other one is they tried to save broad means clauses in view of the Halliburton decision by providing that it was permissible to have a means clause on the understanding that it would be interpreted in the light of the specification. And would reach the specific embodiment of the specification and they went on to say and it's equivalents --
Speaker: Well, do you think then that Lear was out of bounce?
Sidney Neuman: I don't think so. And I'm not expressing any opinion.
Speaker: Well, I know but entirely aside from whether what you think of it on the merits. Do you think we over reached the power of the Courts in deciding Lear because in 1952 the Congress didn't express any disagreement with the licensee and stuff like that?
Sidney Neuman: Your Honor I think that you have the right to do what you did in Lear.
Speaker: Well, what's the difference between --
Sidney Neuman: Well the difference here is it is claimed sir that there are certain ill effects to this doctrine, which we challenge. There is -- and it is a matter for the investigative process of the Senate or a congressional committee namely whether or not people are being prevented from inventing their own. What I would like to --
Speaker: Why wouldn't those arguments be as applicable to the Lear decision?
Sidney Neuman: I don't think you had the same question there in Lear. Lear was simply a matter of whether or not the licensee was stopped to challenge the validity of the license source patent. And here we have a rule of construction, which the Courts have been applying to patents for a period of a 120 years and this Court time and time again has recognized that a patentees claims are to receive a liberal and a reasonable interpretation. I think there is a substantial difference between the matter that came before you in the Lear case and the attack, which is not being made by the Government upon the equivalency rule. What I wanted to say was that I had the privilege of being on President Johnson's patent commission. We solicited and received from all segments of this country criticisms and proposals for our consideration. And no one ask us to do anything at all about the equivalency rule which had been in effect for 100 and some odd years at that time and the matter now, the legislation is still before Senator McQuillan and we say that the legislation, which has come since our report. And we say that the Government should go back to Senator McQuillan and ask him to investigate this alleged impact -- the alleged impact of the equivalency rule upon the economy in this country.
Warren E. Burger: And take it what you're saying in part is that there isn't really a factual basis for some of the decisions, the Government has taken into exercise.
Sidney Neuman: We say they're highly exaggerated. The assertions as to the ill effects of this doctrine.
Warren E. Burger: Thank you Mr. Neuman.
Sidney Neuman: Thank you.
Warren E. Burger: Mr. Bader you have about eight minutes left for rebuttal.
Walton Bader: Mr. Chief Justice and may it please the Court. It has been called to my attention that there apparently is a feeling or maybe a feeling that the non-applicability of the doctrine of equivalence in this case was not raised below. It was raised below and raised very vigorous strictly below. It was the contention of the petitioner that first, the structure involved did not fall within the terms of the claims. Secondly, that the doctrine of equivalence had no applicability to this case because of file wrapper estoppel and number of other defenses. In the appendix page 44 A the Trial Court in deciding against the petitioner's contention had this to say. We are satisfied from the proof. However, as plaintiffs contend that the doctrine of equivalence is applicable here because the two structures worked in substantially the same way and with the same result. And then they slide the Graver case and the Great Lakes case. In the Court of Appeals decision where the question was raised again and where the petitioner urged that the doctrine of equivalence again had no application, the Court of Appeals said the fact that the playpen floor was adjusted up or down by strings running through the floor through one hole rather than two holes did not appear to him. Referring to the trial judge to represent a substantial difference, neither does it to us and again citing the Graver case. So there was no question that the non-applicability of the doctrine of equivalence was raised in this case and raised vigorously throughout the proceedings.
Hugo L. Black: What was the last page?
Walton Bader: That is the appendix, page 53 A-11. It is the second paragraph from the bottom. It is the second large paragraph where the Court of Appeals of the Sixth Circuit refers to the Graver case as well. Insofar as the question of the validity of the patent is concerned, the Court in its question to me this morning pointed out that we did not feel that we could raise the validity of the patent in view of the prior law of the Sixth Circuit. However, we denied in our answer that any royalties would do. And I think that whenever a patent comes before the Court where the validity does become an issue because the validity of this patent is an issue if the patent here is invalid there are no royalties payable based upon Lear against Adkins. Then I submit to the Court that the invalidity of the patent was raised even though it was not -- we did not have a full dressed trial on invalidity as we normally would do because of the prior law involved. Now, my learned brother Mr. Kalish made one rather inadvertent era in that he said that the paragraph of the agreement was paragraph 16 E -- yes, Mr. Kalish said paragraph 16 C but the paragraph actually is 16 E if it please the Court. 16 E refers to this particular patent involved at that time it is specified as an application number. The patent issued very shortly after that contract -- after the contract was signed. It does -- it is not a really immaterial distinction involved.
Speaker: What page is that?
Walton Bader: It is on the appendix, page 62 A and paragraph E says on patent application number 124668 dated July 16, 1961 which is actually the patent involved herein. Paragraph C covers 2790978 and that's the one that we are not contesting the validity up in this case. So that it is actually the E paragraph that we are concerned about.
Potter Stewart: That is identical language.
Walton Bader: Yes, it is identical language. I said the error is not immaterial rather but I though I just call it out on the Court's attention. I'm sure it was in advert --
Hugo L. Black: You say 63 A?
Walton Bader: It is paragraph number 16 E Mr. Justice.
Hugo L. Black: I mean what page?
Walton Bader: At page 62 A of the appendix. Now, the other situation I'd like to point out is that my learned adversary states that this was actually an assignment and not a contract. But if we look at the complaint, we see that the complaint doesn't sue us on the assignment. It sues us on the contract, paragraph three saying Tigrett Industries entered into a contract with Standard Industries, the aforesaid contract etcetera, etcetera.
Warren E. Burger: What difference does that makes to us now?
Walton Bader: It really doesn't, except --
Warren E. Burger: It isn't the license sought, his fine --
Walton Bader: It is a license and not an assignment Mr. Justice Burger.
Potter Stewart: The contract for sale, for sale of -- let's say --
Walton Bader: Yes. And in that contract the license provision is part of the contract and it really makes very little difference. We have a license provision that was put in. The provision involved says the following will be -- the following arrangement shall apply with respect to the infant division patent licenses. And therefore the mere fact that this license agreement is incorporated on the contract for the sale of asset, assets makes no difference. It still a patent license agreement that we're dealing with.
Warren E. Burger: Did the patent holder retain some residual interest in the patent?
Walton Bader: The patent owner had own the patent until subsequently he conditionally assigned it to our subsidiary Jackson Furniture Corporation who interestingly enough Mr. Justice Burger, is not a party to this litigation. Now, if in fact he wanted to sue on the assignment document involved, it would have been necessary for the respondent here to have sued a subsidiary Jackson Furniture Corporation. He chose not too. He chose to sue us on the contract. And under those circumstances, the fact that an assignment was made subsequently to our subsidiary would make no difference. Furthermore of course if in fact the assignment involved was made to a subsidiary, it was still made subject to the condition and therefore the condition involved having not been fulfilled by reason of the assignment made for the benefit of creditors, the entire assignment becomes void anyway and there is a failure of title involved. One other point I would like to say.
Speaker: May I ask you?
Walton Bader: Yes.
Speaker: Was the original arrangement between the inventor and the respondent here, was that a license?
Walton Bader: Yes Your Honor. There's no question about that?
Walton Bader: No question about that.
Speaker: And all that the licensee then assigned, are you saying to Standard of the petitioner was its license interest?
Walton Bader: No, it never assigned anything to Standard.
Speaker: Well are to -- whatever the subsidiary.
Walton Bader: It assigned the patent involved that was licensed to Jackson Furniture Corporations subject to an obligation on Jackson Furniture Corporation to pay royalties.
Speaker: Well, who owned the patent after the assignment?
Walton Bader: After the assignment the patent originally was owned by Jackson Furniture Corporation which is not a party to this litigation and as soon as Tigrett industry has made an assignment for the benefit of creditors we submit that the ownership of the patent then went back to Johnson Tigrett.
Speaker: I'm not concerned about that. What you told me is there was a license from the inventor to Tigrett.
Walton Bader: No, there was an assignment from the inventor to Tigrett.
Speaker: An assignment?
Walton Bader: An assignment from the inventor to Tigrett.
Speaker: So there's never actually been a formal license involved in this case at all?
Walton Bader: No. There was -- the license was from Tigrett to Standard, the plaintiff in this case. My time is up, can I continue?
Speaker: You can answer.
Walton Bader: The license agreement was made between Tigrett Industries and Standard Industries with respect to a patent. The patent involved was owned by a man by the name of John Burton Tigrett. Mr. John Burton Tigrett assigned the patent to Tigrett Industries, our licensor but with a condition in the assignment that the assignment would become void if Tigrett Industries made an assignment for the benefit of creditors.
Speaker: After that, did your subsidiary Jackson Furniture had get an assignment from Tigrett Industries --
Walton Bader: Yes, after that --
Speaker: After Tigrett Industries had made a license to Standard, you're telling is that right?
Walton Bader: That's correct.
Speaker: Then Tigrett Industries assigned the patent itself to your subsidiary.
Walton Bader: That is correct and there after Tigrett Industries made an assignment for the benefit of the creditors, those are the facts.
Warren E. Burger: Thank you Mr. Bader.
Walton Bader: May I thank the court for their indulgence, this is the first time I've argued before this Court. I'm sorry that I've been a little nervous.
Warren E. Burger: Not at all, you should not be, we don't want you to be. The case is submitted. Thank you gentlemen.