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Zoltek Corp. v. United States

United States Court of Appeals, Federal Circuit

February 19, 2016

ZOLTEK CORPORATION, Plaintiff-Appellant
UNITED STATES, Defendant-Appellee

Page 1303

Appeal from the United States Court of Federal Claims in No. 1:96-cv-00166-EJD, Judge Edward J. Damich.

DEAN A. MONCO, Wood, Phillips, Katz, Clark & Mortimer, Chicago, IL, argued for plaintiff-appellant. Also represented by JOHN S MORTIMER; MEREDITH MARTIN ADDY, Katten Muchin Rosenman LLP, Chicago, IL.

GARY LEE HAUSKEN, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., argued for defendant-appellee. Also represented by DAVID M. RUDDY, JOYCE R. BRANDA, JOHN FARGO.

Before NEWMAN, CLEVENGER, and MOORE, Circuit Judges.


Page 1304

[117 U.S.P.Q.2d 1867] Newman, Circuit Judge.

Zoltek Corporation seeks compensation from the United States for use, with the authorization and consent of the Departments of the Air Force and Navy, of the patented method of producing carbon fiber sheet products as claimed in United States Reissue Patent No. Re 34,162 issued January 19, 1993 (" the '162 patent" ). The '162 patent is a reissue of U.S. Patent No. 4,728,395, issued March 1, 1988 to inventor George Boyd and assigned to Mr. Boyd's employer Stackpole Fibers Company. The patent was acquired by Zoltek Corporation with its acquisition of Stackpole in 1988.

Litigation history

On March 25, 1996, Zoltek filed suit in the United States Court of Federal Claims (CFC) alleging that the process used to produce carbon fiber sheet materials for the B-2 Bomber and the F-22 Fighter Plane infringed the '162 patent. This is the third appeal in this action. The factual background is set forth in the prior opinions of the CFC and this court.

In the first appeal, this court answered a certified question to hold that the patentee has no cause of action against the United States when any step of the patented method is practiced outside of the United States, as for the F-22 Fighter. Zoltek Corporation v. United States, 442 F.3d 1345, 1353 (Fed. Cir. 2006) (Plager, J., dissenting) ( Zoltek I ).

On remand, the CFC granted Zoltek's request for leave to amend its complaint to substitute as defendant Lockheed Martin, the general contractor for the F-22 Fighter, and then granted Zoltek's motion to transfer the count relating to the F-22 Fighter to the United States District Court for the Northern District of Georgia, where it was " reasonably plausible" that the court had jurisdiction over an infringement suit against Lockheed. Zoltek Corporation v. United States 85 Fed.Cl. 409, 422 (2009). On Lockheed's motion, this aspect was certified for appeal.

The Federal Circuit then acted en banc (in part) and reversed its ruling in Zoltek I. This court recognized the liability of the United States for infringement by acts that are performed with its authorization and consent. 28 U.S.C. § 1498(a) (" Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture." ). By statute the contractor is immunized from liability. Id. (" use or manufacture ... by a contractor ... shall be construed as use or manufacture for the United States" ). This court dismissed Lockheed as a party, negated the proposed transfer to Georgia, and remanded to the Court of Federal Claims for inclusion of counts for infringement with respect to both the F-22 Fighter and the B-2 Bomber. Zoltek Corporation v. United States, 672 F.3d 1309, 1311 (Fed. Cir. 2012) ( en banc ) ( Zoltek II ).

On remand, the CFC separated trial of the issues of validity and infringement, and denied discovery as to infringement with respect to the F-22 Fighter. Zoltek sought mandamus from this court concerning these actions; the petition was denied. In re Zoltek Corporation, 526 Fed.Appx. 956, 957 (Fed. Cir. 2013) (non-precedential). Trial proceeded in the CFC, limited to validity. The government challenged the '162 patent under sections 101, 103, and 112 of Title 35. The CFC sustained patent eligibility under section 101; that ruling is not appealed.

[117 U.S.P.Q.2d 1868] At trial, each side presented an expert witness, Dr. Brian Sullivan for the government and Mr. Zsolt Rumy for Zoltek. The

Page 1305

CFC held the asserted claims invalid on the grounds of obviousness and inadequate written description. Zoltek Corporation v. United States, No. 96-166 C, 2014 WL 1279152 (Fed. Cl. Mar. 31, 2014) (" CFC Op." ). Zoltek appeals, arguing that the CFC applied incorrect laws of written description and obviousness, that the CFC did not apply the appropriate burdens and standards of proof, and that the CFC erred in its conclusions.

Zoltek also argues that the issues were improperly bifurcated. We conclude that in the circumstances of this case, taking note of the government's official invocation of state secret privilege, the CFC acted within its discretion in limiting trial initially to the issues of validity. However, as we next discuss, we conclude that the trial court erred in its judgment of patent invalidity.

The Boyd Invention

The '162 patent is directed to a method of manufacturing carbon fiber sheet products whose electrical resistivity is pre-selected and value-controlled by the described method. This method is based on Boyd's discovery of a non-linear relationship among the heat treatment conditions, partial carbonization, and surface resistivity[1] of sheet products.

The method as claimed in the reissue patent starts with a previously oxidized and stabilized carbonizable fiber, a product known in the prior art and commercially available. This oxidized fiber is then partially carbonized in accordance with the relationship discovered by Boyd, to produce a partially carbonized fiber whose sheet products have the desired pre-selected surface electrical resistance.

This method permits production of carbonized sheets of pre-selected and uniform electrical resistance, and thus uniform pre-selected insulating properties. The '162 specification states that theretofore carbon fiber sheets having specified surface electrical resistance were available only by including other materials, such as glass or aluminum filaments, with the carbonized fibers. '162 patent, col.1 ll.49-60.

Patent Figure 4 shows the foundation discovery of resistivity as a function of carbonizing temperature:

Page 1306

The lower curve represents the volume resistivity for single fibers at the carbonizing temperature, and upper curves A and B show surface resistivities for one half ounce per square yard and one ounce per square yard sheet products incorporating the designated partially carbonized fibers. The patent describes and exemplifies the preparation of fibers having the preselected partial carbonization, and the production of sheet products having the desired electrical properties. Id., col.4 ll.19-23 (" [T]he temperature-resistivity of the single carbonized fiber is translated into the preselected desired surface resistance of the resultant partially carbonized fiber sheet product produced with such fibers." ).

It is not disputed that the non-linear relationship shown in Figure 4, and its application to achieve the results described in the '162 patent, were not previously known. The government's expert, Dr. Sullivan, stated to be one of the nation's preeminent experts with a " thirty-year career in research and design relating to carbon fiber science," U.S. Br. 22, testified that his calculations pertaining to his reproduction of the Figure 4 curve were based on data that were not in the prior art and were selected retrospectively. No reference showed the relationship between volume or surface-resistivity of carbon fiber sheet products and treatment temperature of carbon fibers.

The CFC held claims 1-22 and 33-38 of the reissue patent invalid on two grounds, (1) that they did not meet the written description requirement, and (2) that the claimed invention would have been obvious to a person of ordinary skill in this field at the time of the invention.

[117 U.S.P.Q.2d 1869] I

Written Description

The claimed method is summarized in reissue claim 1, shown as in the reissue patent, with deletions from the original claim in brackets and additions in italics--for these changes are the basis of the CFC's ruling of invalidity on the ground of inadequate written description:

1. A method of manufacturing a plurality of different value controlled resistivity carbon fiber sheet products employing a carbonizable fiber starting

Page 1307

material; said method comprising [oxidizing and stabilizing the carbonizable fiber starting material at an elevated temperature of the order of 220 degrees Centigrade to effect molecular aromatic rearrangement of the fibers,] selectively partially carbonizing [the] previously oxidized and stabilized fiber starting material for a predetermined period in an oxygen free atmosphere within a furnace at [a] selected temperature values within a temperature range from 370 degrees Centigrade to about 1300 degrees Centigrade by soaking the stabilized fiber starting material at the selected temperature for the predetermined period of time to provide a [desired] preselected known volume electrical resistivity to the partially carbonized fibers corresponding to that volume electrical resistivity value required to provide the preselected desired surface resistance value for the finished sheet products, and thereafter processing the partially carbonized fibers into [desired electrical resistivity] homogeneous carbon fiber sheet products [having the form of non-woven paper or woven or knitted fabric sheet products] having the preselected desired surface electrical [resistivities] resistances.

The CFC held that the original patent did " not support the elimination of the oxidation and stabilization step" from the reissued claims, and that this rendered the claims " invalid for lack of written description." CFC Op. Id. at *20-21. The CFC explained that the reissue " impermissibly broadens the patented process by reducing the number of steps required for infringement." Id. at *21. The CFC stated that " although the step is found in the reissue patent, its elimination from the claimed process goes beyond the ...

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