King Instrument Corp. v. Otari Corp.

King Instrument Corp. v. Otari Corp.

Opinion

 [***402]   [*855]  DAVIS, Circuit Judge.

King Instrument Corporation (King), the plaintiff below, charged Otari Corporation (Otari) with infringement of its U.S. Patent Nos. 3,637,153 ( '153) issued January 25, 1972, and 3,737,358 ('358) issued June 5, 1973. King [**2]  now appeals from final judgment by the United States District Court for the Northern District of California, following a bench trial, that held the '358 patent invalid because the invention claimed was found to be "on sale" under 35 U.S.C. § 102(b). We affirm.

Otari cross-appeals from the district court's holding that the '153 patent is valid and infringed, and that King is entitled to lost profits incurred from the sale of Otari's infringing devices in the amount of $2,282,935, and lost profits of $438,810 from the sale of  [***403]  "spare parts." We affirm as to the award based on the infringing devices, and vacate and remand as to the award based on spare parts. We also affirm the district court's determination that King is not entitled to increased damages relating to Otari's sale of infringing devices.

BACKGROUND

A. The King patents.

The patents at issue relate to an automated apparatus for loading magnetic (blank or pre-recorded audio or video) tape into closed cassettes. Before loading, a closed cassette consists of an outer plastic case containing two winding hubs (spools) and a short length of leader tape wound around each hub. After loading, the finished product [**3]  has a much longer length of magnetic supply ("use") tape which has been spliced to the leader tape. The patents claim an apparatus for automatically cutting, splicing, and winding magnetic use tape into closed cassettes.

The tape loading machine embodying the invention of the earlier '153 patent came to be known as the "swing arm" machine. For appreciation of the apparatus claims of the '153 patent we describe how the swing arm device works. A new cassette having a short length of leader tape with one end wound about one of the hubs and the other end connected to the other hub is mounted onto a holder in the machine. The leader tape is manually pulled out of the cassette,  [*856]  formed into a loop and then extended over two splicing heads. The start button is pressed setting off the following sequence of operations: first, a knife blade just above the splicing heads is thrust forward slitting the leader tape into two sections each of which is held in place by suction on the two respective splicing heads; as the blade returns to its position, the splicing head supporting one section of the leader tape pivots (swings) counterclockwise and is replaced by a third splicing head [**4]  supporting the magnetic use tape which pivots into a position that is contiguous with and abuts the stationary splicing head supporting the other section of leader tape; a splicing tape dispenser-applicator then pivots downward and splices one section of the leader tape to the magnetic use tape; the tape is wound at a fast rate onto the right hub to a predetermined length; thereafter, the knife is again activated, slitting the use tape, and all the splicing heads swing back to their original positions; the splicing tape dispenser-applicator then pivots downward to splice together the trailing end of the magnetic use tape and the abutting end of the leader tape; at this time, the operator may pull the spliced tape off the splicing heads and eject the cassette from the holder. Disclosed in the specification, but not specifically claimed, this automated operating sequence has been referred to as "cut, shift, splice - wind - cut, shift, splice."

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