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April 2, 1992

BRANDT, INC. Defendant.


The opinion of the court was delivered by: RANDALL R. RADER

Plaintiffs, Cummins-Allison Corporation and Ristvedt-Johnson, Inc., (Cummins) sued Brandt, Inc. for infringement of several patents. These patents described high-speed coin sorting machines. After a trial lasting ten days, a jury concluded that Brandt had infringed Cummins' three patents and had not shown the invalidity of the patents. Both Cummins and Brandt agreed to present to the court Brandt's assertion that inequitable conduct rendered Cummins' patents unenforceable. Because Brandt did not prove inequitable conduct in the prosecution of any patents-in-suit, this court rejects Brandt's defense.


 In 1988, Cummins filed a patent infringement suit against Brandt. Cummins charged that Brandt infringed six patents -- United States Patent Nos. 4,098,280; 4,234,003; 4,444,212; 4,531,531; 4,549,561; and 4,731,043. These patents describe high speed coin sorting machines.

 In July 1991, this court notified the parties to prepare for trial. Cummins moved to dismiss the '212, '531, and '561 patents from its complaint. Rather than welcoming a narrowing of the complaint, Brandt opposed this motion. This court permitted the parties to present arguments on Cummins' motion. Transcript of Proceedings (Tr.), Sept. 17, 1991, p. 2, and pp. 15-21. Brandt opposed the motion because it felt it could prove inequitable conduct in the prosecution of the '212, '531, and '561 patents. Furthermore, it asserted that inequitable conduct on these patents tainted the remaining patents -- the '280, '003, and '043 patents. On the basis of Brandt's allegation that it could prove that inequitable conduct on the '212, '531, and '561 patents tainted and rendered unenforceable the patents-in-suit, this court agreed to hear that evidence. The parties agreed to present the inequitable conduct issue to the court at the conclusion of the jury trial.

 Before trial, this court dismissed with prejudice Cummins' complaint that Brandt's accused device infringed the '212, '531, and '561 patents. Therefore, Cummins could not and did not present at trial any evidence about infringement of these patents. During trial, this court limited Cummins to evidence about Brandt's alleged infringement of the '280, '003, and '043 patents. In special verdicts, the jury determined that Brandt infringed each of the patents-in-suit. The jury also determined that Brandt had not proven the invalidity of the '280, '003, or '043 patents.

 At the conclusion of trial, the parties submitted to the court stipulated facts *fn1" and memoranda of law on the inequitable conduct allegations. The uncontested material facts on inequitable conduct focus on two events: a 1979 trade show where Cummins displayed a coin sorter and a 1982 business meeting between Cummins and the De La Rue Company about coin sorters.

 The 1979 Trade Show

 On May 20-23, 1979, Cummins exhibited a pre-production coin sorter at the American Bankers Association trade show in Anaheim, California. The high-speed coin sorter at the Anaheim trade show had a guide plate similar to the sorter head disclosed in the '280, '003, and '212 patents. Ristvedt-Johnson had filed the '280 and '003 patent applications long before this trade show.

 The trade show sorter also had mechanisms for deshingling coins. Shingling occurs when coins overlap and stack up under the guide plate. To sort effectively, a coin handling machine must align a single layer of coins against its outer edge.

 The '212 patent discloses means for deshingling coins. The patent describes a notch at the point where the rotating disc presses coins against the guide plate or sorter head. The notch ensures that coins slip in a single layer into the alignment area. Patent '212, col. 7, lines 1-6. A taper in the wall profile of the guide plate also separates shingled coins. The '531 and '561 patents -- dismissed before trial -- disclose ridges and recesses for deshingling coins similar to the notch and tapered walls in the '212 patent.

 The '043 patent -- one of the patents-in-suit -- also claimed tapered edges and recesses to deshingle coins. In prosecution of the '043 patent, Ristvedt-Johnson cited as prior art both the '212 and '531 patents, which disclosed, among other features, deshingling means.

 Cummins did not disclose the trade show sorter to the United States Patent and Trademark Office during prosecution of the '212, '531, '561, and '043 patents. The 1979 show antedates the filing dates of these patents by more than one year. Ristvedt-Johnson filed applications on the '212 in November 1980, the '531 in June 1983, the '561 in December 1984, and an original application on the '043 in December 1983. *fn2" Because filed in 1976 and 1978, the '280 and '003 are not subject to Brandt's allegations about the trade show.

 In March 1989, Cummins -- Ristvedt-Johnson's exclusive licensee -- disclaimed claims 1-7 and 9 of the '212 patent. Cummins conceded that those claims define coin sorter features that were in the 1979 trade show sorter. Claim 10, one of the two remaining claims, describes the coin deshingling means.

 De La Rue Meeting

 Pursuant to a confidentiality agreement, Cummins' officers met on July 1, 1982 with officers of De La Rue, an English corporation. The De La Rue company markets currency and coin handling equipment. Both companies wanted to explore the possibility of forming a business relationship to develop coin handling products.

 Each company came to the 1982 meeting intent upon presenting its own concept. De La Rue presented a coin packager; Cummins presented a coin counter and loader. Each concept applied very different solutions to the problem of handling coins. During the 1982 meeting, Cummins tried to demonstrate a coin counting and loading prototype. However, the demonstration did not work.

 Mr. Jones, Cummins' Chief Executive Officer, was a principal participant in the meeting with De La Rue. He testified at trial that Cummins wanted to persuade De La Rue that the coin counting and loading technology would mesh well with coin packaging technology. Cummins hoped to interest De La Rue in supplying funds to develop the coin counter and loader concept. Mr. Jones testified that Cummins did not intend to sell anything at the July 1982 meeting. Mr. Raterman, Cummins' Director of Engineering, described the results of the De La Rue meeting to Victor Ristvedt, one of the '043 inventors. In a July 8, 1982 letter, Mr. Raterman stated:

We presented the concept studies, a proposed mechanical design and discussion of the technology to DELARUE Representatives ...

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