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RODGARD CORP. & ESTATE OF MASON C. WINFIELD v. MIN

December 29, 1995

RODGARD CORPORATION and ESTATE OF MASON C. WINFIELD, Plaintiffs, -vs- MINER ENTERPRISES, INC. and DAVID G. ANDERSON, Defendants.


The opinion of the court was delivered by: ELFVIN

 Plaintiffs Rodgard Corporation ("Rodgard") and its erstwhile employee Winfield brought this action requesting either that United States Patent No. 4,198,037 ("The Patent") be corrected as a result of the defendants' failure to comply with the joint-inventorship provisions of 35 U.S.C. § 116 or that a certificate issue declaring Winfield -- who died December 16, 1992 -- to have been a joint inventor pursuant to 35 U.S.C. § 256 or that The Patent be declared invalid due to the defendant Anderson's intentional failure to name Winfield as a joint inventor pursuant to section 256. Fraud, misappropriation of a trade secret, breaches of fiduciary duties and of contract terms and unjust enrichment are also alleged. The defendants counterclaim that the plaintiffs breached the contract.

 This Court has authority to decide the patent questions pursuant to 28 U.S.C. §§ 1338 & 2201; jurisdiction to resolve the contract and remaining related disputes is provided by 28 U.S.C. §§ 1332(a) & 1367(a). A bench trial was conducted in 1992 after which this Court permitted the plaintiffs to serve and file an Amended Complaint to conform the pleading to the evidence which had been presented. Following a re-opening of discovery and further testimony taken in September of 1993, the parties submitted proposed findings of facts and conclusions of law and oral arguments were had. The following are this Court's Findings of Facts and Conclusions of Law and Order.

 The Patent, issued to defendant Anderson and assigned to defendant Miner Enterprises, Inc. ("Miner"), describes a method of using a copolymer polyester elastomer to make compression springs and certain resulting products utilizing such. (A material registered under the trade name of "Hytrel" was the only copolymer polyester elastomer specifically addressed during this litigation.) A compression spring itself is covered in The Patent's Claims 1-5 which describe methods by which Hytrel is annealed and compressed to form a compression spring pad produced thereby. *fn1" A typical spring as presented in this litigation is a solid device shaped like a large hockey puck -- or a holeless doughnut --, approximately four and one-half to five and one-half inches in diameter and one to several inches in height or thickness. Each of the two faces of such spring is attached to a relatively thin circular metal plate which is approximately six and one-half inches in diameter. Each plate has several holes located on or along equiangular radii, each hole having associated therewith protrusions extending a fraction of an inch perpendicularly from one face of the plate. The spring is mechanically bonded to the two plates. In simplified terms, the mechanical bond is achieved by pressing a plate onto each face of the spring with the protrusions facing into the spring with such force that they penetrate the spring and act as claws in grabbing the Hytrel. Further bonding strength is achieved by so increasing the pressure as to force the Hytrel through the holes (which have been made in and through each plate in the process of producing the protrusions) to the point that it extends and expands beyond the opposite or outer face of the plate, such so-extruded material thereafter assuming shapes like partial domes or mushrooms which further act to lock the plates in place. Such plates and bonding methods are also part of The Patent and of this dispute. The spring together with the attached metal plates form a compression spring unit and are covered by Claims 6-11 and 14-15 of The Patent. *fn2" Such compression spring units may be stacked together to form part of a shock-absorbing mechanism in railroad-car draft gears -- devices which absorb the energy which results from the impact between two railroad cars as they are being transported or coupled. The plaintiffs allege that Winfield provided a significant quantum of the crucial information for the patented method and participated in the conception of the springs, plates and combination units and therefore that The Patent should be corrected by adding Winfield as a named co-inventor pursuant to 35 U.S.C. § 256 or that The Patent should be declared invalid if the defendants are found to have, with deceptive intent, omitted naming Winfield as a co-inventor. Alternatively, the plaintiffs assert that the defendants do not adequately disclose in The Patent the best mode of mechanically bonding the Hytrel springs to metal plates thereby violating 35 U.S.C. § 112 and that The Patent therefore should be declared invalid. The plaintiffs also claim that the defendants breached the terms of the parties' agreements -- the first entered into in 1976 and signed by Anderson for Miner and by Winfield for Rodgard and the second entered into in 1977 and executed by Miner's president for Miner and signed by Winfield individually and on behalf of Rodgard --, that such agreements together with the parties' course of dealing and performance of the agreements created a confidential relationship which in turn imposed enhanced duties upon the defendants which enhanced duties were breached, that the defendants' conduct during the course of the parties' relationship was fraudulent in that they misappropriated or inappropriately divulged the plaintiffs' trade secrets, that as a result of such conduct the defendants were unjustly enriched and that the breaches entitle the plaintiffs to various alternative remedies ranging from compensatory and punitive damages to the imposition of a constructive trust over the proceeds held by Miner from the sales of the patented product. The defendants counterclaim that the plaintiffs breached the contract. Both sides seek attorney's fees.

 Rodgard is a corporation duly organized under the laws of New York; its principal place of business is and at all times relevant hereto has been Buffalo, N.Y. *fn3" Miner is a corporation duly organized under the laws of Delaware with its principal place of business in Illinois. Anderson was at all times relevant to this case an officer and employee of Miner and a resident of Indiana; Winfield was at all such times an employee of Rodgard.

 During the spring of 1976 Anderson, in the course of Miner's business, was experimenting with using Hytrel in compression spring units for spring-type draft gears. Joint Exhibit ("JX") 3. In May of 1976, E.I. DuPont de Nemours & Co. ("Dupont") (the bulk distributor of Hytrel) identified Winfield to Anderson as a person skilled in the use of Hytrel and recommended Rodgard as a potential commercial supplier of the fabricated springs to Miner. JX 2, Transcript page ("TR") 52. A July 12, 1976 meeting between Anderson and Winfield resulted in a "Protocol" prepared by Anderson and signed by him and by Winfield. *fn4" Such document refers to the "Miner-Rodgard development and relationship regarding 'Hytrel'", describes some of Rodgard's general manufacturing capabilities and specific experience with Hytrel and provides several paragraphs which outline a contract calling for Rodgard to set up a "melt-cast" system within its facility to fabricate Hytrel springs which would be bonded to plates furnished by Miner in exchange for which Miner would pay direct costs including those for tooling and material. The Protocol also indicates that, in consideration for Rodgard's disclosure of its manufacturing techniques, Rodgard would be given preferential (but non-exclusive) consideration to supply Miner's future domestic production needs and that such "information [would] not be used domestically to the detriment of Rodgard." Although Anderson clearly hedged at trial when he was asked whether such agreement was intended to mean that Rodgard's techniques were to be kept confidential, he unhesitatingly indicated that it did not give him the right to publish Rodgard's techniques in a patent. *fn5" In an internal memo, Anderson discussed the fact that Rodgard was

 
"well ahead of the industry in fabrication technique (this was confirmed by DuPont). Their costs and process control are substantially better than alternative processes. Rodgard is the only known firm in the world using this low cost system * * * . I suggest that all concerned maintain extreme confidence regarding this association and development as their techniques could easily be copied." Plaintiffs' Exhibit ("PX") 31.

 Shortly after their July meeting, Anderson and Winfield began to work closely together. *fn6" One of the problems Anderson had encountered during his work with Hytrel was the presence of "voids" in the Hytrel springs. *fn7" Anderson testified that, early in their association, Winfield had disclosed to him that voids in the Hytrel could be eliminated by a method of applying external pressure to it during its cooling. *fn8" Anderson incorporated this method of eliminating voids into the abstract of the disclosure section of his patent application. Such also comprised the subject matter of Claims 4, 5 and 6 in his application which he began to prepare as early as November 1976 (Defendants' Exhibit ("DX") 37) *fn9" and which was filed in December 1976 and showed Miner as the assignee. *fn10"

 During the several months immediately following their agreement, unsuccessful attempts were made to chemically bond Hytrel pads to metal plates. *fn11" The prospect of mechanically bonding the Hytrel springs to metal plates began to be seriously considered in approximately August, and the effort and time spent on such prospect thereafter increased. The evidence resolving the question who came up with the idea to mechanically (as opposed to chemically) bond the metal plates to the Hytrel material is completely conflicting. *fn12" However, there is no documentary corroboration and little credible independent testimonial corroboration of Winfield's claim of co-inventorship of the Hytrel-to-plates bonding, while there is documentation of the fact that, late in October 1976, Anderson was experimenting with different plate configurations that would better "capture" the pad. *fn13" Further evidence corroborating the defendants' position is that Rodgard manufactured the plates as specified by Anderson.

 In early January 1977 another agreement -- between Rodgard and Miner -- was executed. *fn14" This "Confidential Information Agreement" specified that Miner would provide internal company information to Rodgard on a confidential basis so as to enable Rodgard to decide whether it would undertake to manufacture components for Miner. The agreement indicated that Miner was to use "diligence and constant effort" to develop devices "for example, compression pads, fabricated by Rodgard." As a "consequence of Rodgard's contribution to the development of suitable compression pads," Miner promised to give Rodgard "primary consideration" as a supplier of said compression pads "in commercial quantities." Paragraph 3 provided that Miner and Rodgard would work exclusively with each other "during the research and development phase" until Miner had received approval from the American Association of Railroads in the form of an "Unconditional Certificate of Acceptance" so that the devices to "be manufactured by Miner, including the aforementioned compression pads" could be sold for commercial use. The parties further agreed to maintain the information "confidential and secret (whether made available before or after the date of this Agreement)." The agreement went on to provide that Miner could divulge such information to Miner's "authorized licensees abroad *** for possible use abroad." Paragraph 6 indicated that the agreement could be terminated by "mutual agreement." The last numbered paragraph provided that Rodgard would not use "such confidential information *** at any time" except as was provided in the agreement or in any subsequent agreement between the parties.

 During 1976 and 1977 different metal plate configurations were developed, fabricated and tested, and several mechanical stress tests were performed on the Hytrel compression springs and on units comprised of the combination of two metal plates bonded -- one on each side -- to a Hytrel spring. *fn15" In late 1976 one particular metal plate configuration with protrusions resembling wide "claws" was fabricated at Miner. *fn16" Such plate was eventually chosen by Anderson as one of two configurations to be mechanically bonded to a Hytrel disk to form a spring unit, and eight such units were stacked together and placed inside a draft gear and were subjected in March and April of 1977 to Miner's "one thousand impact test" to simulate approximately twenty years of device service; the draft gear containing the "claw" configuration successfully completed the test. *fn17" During that same period, Anderson documented that he had discussed the concept of "punching a hole" in the plate to produce a "significant tear" which would improve the strength of the bond. *fn18"

 The post-test analysis of prototype spring units made up of Hytrel bonded to two metal plates with claw-like protrusions led to the conclusion that such units were suitable for developmental production. *fn19" Mechanical bonding similar to the "claw" approach was considered acceptable and mechanical bonding was considered the superior bonding method. *fn20" In a letter from Winfield to Anderson dated May 9, 1977 Rodgard offered to supply Miner with "Hytrel pads, pressed, and mechanically affixed to steel plates" and represented that Rodgard would "fabricate the steel plates to" Miner's "design, as *** discussed." *fn21" In the months that followed, the relationship between Rodgard and Miner appeared non-adversarial; Miner on June 7, 1977 issued a purchase order for 2160 pilot production parts from Rodgard, shortly after which Rodgard began the delivery of such parts. *fn22" At that time, Anderson still was not yet certain of a precise plate configuration that would be commercially viable and of what method would be adopted for commercial production. *fn23" In early July of 1977, Miner received several plates from Rodgard with different attributes or characteristics, one of which was a plate whose holes had been punched without use of a prior pilot hole. *fn24" At Anderson's request Rodgard, on July 12, 1977, shipped two additional steel plates with holes punched without pilot holes -- i.e., with "jagged" edges. *fn25" On July 21, 1977 Anderson prepared an "invention record" for mechanical bond designs which he claimed to have conceived in March and which contained sketches made in May, June and July of metal plates considered for use in the Hytrel spring units. *fn26" Anderson spent one week at Rodgard in late July to experiment with mechanical bonding and press methods. *fn27" On July 31, 1977, after returning from Rodgard, Anderson noted that the "new extruded holes" in the plates worked quite well, and he began to experiment with the number of holes and their size and location. *fn28" In October 1977 plates substantially similar to those with jagged edges as previously shipped from Rodgard on July 12 were used successfully in tests to further evaluate the mechanical bonding system. *fn29" Such mechanical bonding system was intended for use in the pilot production run. *fn30" Miner determined that a continuation-in-part of the 1976 patent application should be filed incorporating the recent development of the metal plates and the bonding of Hytrel to such and the successful testing thereof performed through October 6th. On October 21 Anderson documented that chemical bonding approaches for use in the spring units developed for draft gears had been abandoned. *fn31"

 In December 1977 Anderson submitted the continuation-in-part *fn32" application which contained the same inventorship claims regarding the application of external pressure to a solidifying block of Hytrel to eliminate voids. *fn33" The only significant difference in the continuation-in-part from the original application was that methods of mechanical bonding were added as new claims. *fn34"

 In March 1979 Anderson indicated that he was not the inventor of his application's Claims 5-7 which set forth the technique of applying pressure to solidifying Hytrel in order to eliminate voids; he cancelled such claims. *fn35" However, Anderson allowed such technique to remain in the descriptive portion of The Patent. *fn36" The Patent issued on April 15, 1980 and designated Miner as the assignee. *fn37"

 Beginning in October of 1977 Rodgard produced parts for Miner for the pilot program and subsequently supplied parts to Miner in commercial quantities through 1983, for which Miner paid Rodgard $ 3,000,000. *fn38"

 In May of 1981 in-house counsel for Miner prepared a third agreement in the relevant portions of which Winfield, in exchange for $ 150,000 to be paid over five years, agreed to serve as a design and manufacturing consultant in the field of compression springs and specifically agreed to instruct and assist Miner "in setting up a manufacturing line for spring products." The agreement also required that all parties would keep secret all knowledge and information concerning the parties' "business, processes, apparatus, inventions, products, designs, researches, research programs, and formulae that were made known to each other as a result of" Rodgard's work on Miner's "designs or other assignments" unless the parties stipulated otherwise in writing; Miner also promised "to keep confidential [Rodgard's] information for five years" except with respect to "authorized Miner licensees outside [the] U.S.A." The agreement required Winfield "to transfer to Miner exclusive and sole rights to any invention, discovery, improvement, or innovation, existing or future, made alone or jointly with others, in connection with or related to services performed under this Agreement and specifically in connection with compression springs." *fn39"

 During the entire time Rodgard commercially manufactured metal plates for Miner, they were of the same basic configuration as those tested in October of 1977, *fn40" including "purposely torn punched holes." *fn41"

 In September 1981 Winfield received a copy of an internal Miner memo, mentioning a patent on "the ME-101 pad," the process for making same and the use of such in draft gears. *fn42" On May 28, 1982 Rodgard issued an invoice for work performed under the May 1981 contract which included a reference to "trial runs" of an "ME-101". *fn43" Pursuant to the terms of the 1981 agreement, Winfield instructed and assisted Miner in installing a complete manufacturing facility for ...


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