source: Caselaw Access Project

author: KUNZIG, Judge: NICHOLS, Judge

license: Public Domain

text:
    Rose Marie PORTER et al. v. The UNITED STATES.
    No. 111-73.
    United States Court of Claims.
    May 15, 1974.

      John P. Meade, Washington, D. C., attorney of record for plaintiffs.
    Gerald L. Schrader, Washington, D. C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant.
    Before CO WEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
   KUNZIG, Judge:

The court is confronted in this case with a jurisdictional question of first impression: is the United States subject to suit (1) for alleged breach of a contract negotiated by officials serving in the capacity of administrators for the United States Pacific Islands Trust Territory, or (2) for an alleged taking of property arising from actions by such officials pursuant to that contract? We conclude that the court lacks jurisdiction over either of these claims. Accordingly, we dismiss the petition.

Plaintiffs are sixteen named shareholders in Transpacific Lines, Inc. (Transpacific), a corporation chartered by the Government of the Trust Territory of the Pacific Islands (Trust Territory). Their suit for recovery of financial losses incurred by their enterprise derives from the following factual background.

On March 18, 1968, the Office of the Trust Territory High Commissioner issued a press release headlined “Trust Territory Invites Shipping Proposals.” The release stated in part:

The Government of the Trust Territory of the Pacific Islands is seeking proposals for a 10-year sea transportation contract. In addition to providing direct service from the U.S. west coast the contractor would be called upon to service the Trust Territory’s six scattered districts * * *. The Territory is administered by the United States under a United Nations trusteeship agreement.

Subsequently, a “Solicitation for Proposals for Trust Territory of the Pacific Islands Sea Transportation Services” was issued. This directed interested parties to submit proposals to the High Commissioner of the Territory, together with a copy to the Director of the Office of Territories, United States Department of the Interior (Interior), by May 15, 1968. Timely proposals were received at these offices from Marine Chartering Company (Marine), a California corporation, and several other enterprises. In July 1968, Robert E. Vaughn, Deputy Assistant Secretary of the Interior, invited representatives of bidding parties to meet with a review panel at Interior to discuss the proposals. Following this meeting, attended by Marine’s president, the panel concluded Marine had presented the best proposal.

Negotiations resulted in an agreement entered into on August 1, 1968. The agreement’s preamble recited that it was “by and between the Government of the Trust Territory * * * and Marine Chartering Company, Inc.” The signature block again identified the contracting parties as the Trust Territory government and Marine.

By article XVIII of the agreement, Marine was required to transfer and assign the agreement within six months to Micronesia Interoeeans Line, Inc. (MILI), which was to be organized and capitalized by Marine with substantial participation by citizens of the Trust Territory. The article also provided that, during the contract’s tenure, “the Carrier shall operate the Vessels under the flag of the Trust Territory * * On August 8, 1968, articles of incorporation were filed for MILI with the Registrar of Corporations in Saipan. MILI’s principal office and place of business were listed as Saipan. The agreement was thereupon transferred and assigned to MILI.

On September 22, 1971, Barclays Bank of San Francisco informed the Trust Territory government that MILI would not be extending a $500,000 letter of credit which it had opened in the Trust Territory government’s favor, and that the letter would expire in two days. The Trust Territory was already concerned with numerous other alleged performance deficiencies on MILI’s part, and on September 29, 1971 notified the corporation of its intention to terminate for default as authorized by article XX of the agreement.

After meetings between the president of Marine, which still owned substantial shares of MILI, and the Trust Territory attorney general, an agreement was signed by the Territory’s High Commissioner and by representatives of MILL The agreement inter alia withdrew notice of default, suspended article XXVI (which required Marine to furnish a $500,000 performance bond), and set up a trust for certain MILI shares held by Marine.

On October 20, 1971, Marine, MILI and the Trust Territory attorney general became parties to a “Trust Agreement” by which the attorney general was designated trustee of the 210,000 class B shares in MILI owned by Marine. A complete divestment of Marine’s stock in MILI, in consideration of the Trust Territory government withdrawing its notice of cancellation of the 1968 contract, was then accomplished. Subsequent to plaintiffs’ filing of -petition on March 30, 1973, on the breach and unconstitutional taking issues raised above, the corporate name of MILI was changed to Transpacific.

Defendant has moved for summary judgment on both issues. For the reasons which follow, we grant the motion on both issues.

The Breach Claim

As a forum for claims against the Federal Government, a necessary antecedent to our jurisdiction is a waiver by the Government of its sovereign immunity from suit. National State Bank of Newark v. United States, 357 F.2d 704, 706, 174 Ct.Cl. 872, 876 (1966). In our general jurisdictional statute, 28 U. S.C. § 1491 (Supp. II, 1972), Congress has waived the immunity of the United States in á host of actions, including those based upon express or implied contracts.

Plaintiffs invoke this jurisdictional statute by asserting their claim arises from a contract, either express or implied, with the United States. Defendant counters that plaintiffs fail to state a claim within the court’s jurisdiction since no privity of contract exists between Transpacific and the United States. We agree with defendant.

The analysis which follows deals with the relevant questions of (1) whether defendant is an express party to the subject, written contract; (2) whether defendant is a principal to the subject, written contract; (3) whether an implied contract exists between the parties.

Plaintiffs’ claim is purportedly based upon the contract for sea transportation services of August 1, 1968. The United States, however, was not a party to that agreement. As recited in the preamble to the contract and again in the signature block, the parties to the agreement were the Trust Territory government and Transpacific (as successor to Marine) .

Since defendant was not a named party contracting with Transpacific, the court can have jurisdiction over this claim only if, as a matter of law, the Trust Territory government was an agency or instrumentality of the United States acting within the scope of its authority in entering into the disputed agreement and thereby binding defendant as a principal to it. D. R. Smalley & Sons, Inc. v. United States, 372 F.2d 505, 178 Ct.Cl. 593, cert. denied, 389 U.S. 835, 88 S.Ct. 45, 19 L.Ed. 2d 97 (1967); Housing Corp. of America v. United States, 468 F.2d 922, 199 Ct.Cl. 705 (1972); Raymond Constructors of Africa, Ltd. v. United States, 411 F.2d 1227, 188 Ct.Cl. 147 (1969). Under such circumstances, the Federal Government would be considered to have waived its sovereign immunity from suit on this contract. National State Bank of Newark v. United States, supra, 357 F.2d at 706, 174 Ct.Cl. at 876-877.

It is therefore necessary to examine the exact nature of the relationship between the Trust Territory government and the United States. This relationship traces to World War II, when the islands of Micronesia came under United States military control with the defeat of Japan, which had held a mandate over the islands under the League of Nations. The establishment of the United Nations (U.N.) and its Trusteeship Council, with jurisdiction over non-self-governing territories, resulted in the execution of trusteeship agreements between the U. N. and those signatory powers in de facto possession of such territories. One such agreement, ratified by the Security Council on April 2, 1947, and approved by Congressional joint resolution on July 18, 1947, designated the United States as the “administering authority” over the Pacific Islands Trust Territory. 61 Stat. 3301, T.I.A.S. No. 1665, 8 U.N. T.S. 189.

This “bi-lateral contract” with the Security Council represented a means for the United States to reconcile its new strategic interests in the Pacific with its announced policy against self-aggrandizement as a result of the war. Trusteeship served as a workable alternative to the military departments’ urgings for outright annexation of the former Japanese mandate. Note, A. Macrostudy of Micronesia: The Ending of a Trusteeship, 18 N.Y.L.F. 139, 144 (1972).

Article 3 of the trusteeship agreement provided:

The administering authority shall have full powers of administration, legislation, and jurisdiction over the territory subject to the provisions of this agreement, and may apply to the trust territory, subject to any modifications which the administering authority may consider desirable, such of the laws of the United States as it may deem appropriate to local conditions and requirements.

Under article 4, however, the United States was obligated to discharge its trustee duties “in accordance with the Charter of the United Nations, and the provisions of this agreement,” and to apply the objectives of the trusteeship system in this effort. See U.N. Charter arts. 75-77, 82-84. Thest broad goals include to “foster the development of such political institutions as are suited to the trust territory” and to “promote the economic advancement and self-sufficiency of the inhabitants.” Trusteeship Agreement, art. 6, 61 Stat. 3302. Toward this end, the State Department publishes an annual report to the U.N. and U.N. observers have been allowed to conduct periodic inspections of the islands.

In entering the trusteeship agreement, the United States made clear that it did not consider its role of trustee to encompass the highest form of political authority over’ the islands, i. e., sovereignty. 16 Dep’t ■ State Bull. 416, 417 (1947). This unilateral disavowal of sovereignty is in accord with the accepted view of the status of the trust territories under international law. As concluded by one leading authority:

there seems to be general concurrence with respect to the present trust territories, as there was with respect to the mandated territories, that wherever sovereignty does rest it is not in the administering power.

Sayre, Legal Problems Arising from the United Nations Trusteeship System, 42 Am.J.Int’l L. 263, 271 (1948).

In undertaking administration of the trusteeship, Congress, by the Act of June 30, 1954, as amended, 48 U.S.C. § 1681 (1970), directed:

(a) Until Congress shall further provide for the government of the Trust Territory for the Pacific. Islands, all executive, legislative, and judicial authority necessary for the civil administration of the Trust Territory shall continue to be vested in such person or persons and shall be exercised in such manner and through such agency as the President of the United States may direct and authorize.

Prior to 1962, responsibility for administration of the islands was divided between Interior and the Department of the Navy. Effective July 1, 1962, the President, by Executive Order 11021, 27 Fed.Reg. 4409, redelegated his authority for civil administration of the Territory to the Secretary of the Interi- or to

take such actions as may be necessary and appropriate to carry out the obligations assumed by the United States as the administering authority of the trust territory under the terms of the trusteeship agreement and under the Charter of the United Nations [emphasis added].

Pursuant to these obligations, the Secretary established in 1967 a Trust Territory government which included legislative, judicial, and executive branches, with the High Commissioner as chief executive of the Territory. Secretarial Order No. 2918, Dec. 27, 1968, 34 Fed. Reg. 157. The Secretary also reserved to himself or his delegate the power and authority to contract, “on behalf of the Trust Territory,” for the purchase, charter, maintenance and operation of aircraft and surface vessels in the islands. Secretarial Order No. 2902, Nov. 15, 1967, 32 Fed.Reg. 16058.

While the United States has retained direct control in certain fields, such as foreign affairs, the daily administration of the islands has largely shifted into the hands of the local government. The Territory operates under its own comprehensive legal code. Inhabitants of the islands are citizens of the Territory, not of the United States.

Plaintiffs have failed to cite one case to support their view that the Trust Territory acts in an agency capacity on behalf of the United States. The case law reveals that the concept of sovereignty as concerns American outlying territories is a pliable one for purposes of resolving domestic jurisdictional disputes; it must be applied in the context of specific statutory terminology and legal doctrine. See Kawananakoa v. Polyblank, 205 U.S. 349, 353-354, 27 S.Ct. 526, 51 L.Ed. 834 (1907); Hooven & Allison Co. v. Evatt, 324 U.S. 652, 677-679, 65 S.Ct. 870, 89 L.Ed. 1252, rehearing denied, 325 U.S. 892, 65 S.Ct. 1198, 89 L.Ed. 2004 (1945); Harris v. Boreham, 233 F.2d 110, 113-114 (3d Cir. 1956); Alig v. Trust Territory, 3 TTR 603, 609-10, 615 (1967). In the framework of several statutory schemes, however, the courts have consistently held the Trust Territory to be either a “foreign country” or something other than a “federal agency.” Callas v. United States, 253 F.2d 838, 841-842 (2d Cir. 1958) (Federal Tort Claims Act not applicable to Trust Territory); People of Saipan v. Department of the Interior, 356 F.Supp. 645, 648 (D.Haw.1973) (Administrative Procedure' Act and National Environmental Protection Act not applicable); Brunell v. United States, 77 F.Supp. 68, 72 (S.D.N.Y.1948) (Federal Tort Claims Act not applicable).

While the jurisdictional issue at hand turns on privity of contract rather than statutory construction, the Trust Territory precedents urge persuasively that the Territory government is not an agency of the United States for contract purposes. This conclusion finds authority in an opinion letter of the Comptroller General of the United States. In his opinion B-131569 of June 11, 1957, the Comptroller General held that the Trust Territory government could not utilize federal transportation request to defray official travel expenses of its employees since “none of the territorial governments, including the Government of the Trust Territory, are regarded as Federal agencies or instrumentalities.” Nor is this result affected by the fact that the salaries of the High Commissioner and his subordinates are paid from federal funds. The important point here is that their positions were established as offices of the Trust Territory, not of the United States. Harris v. Boreham, supra at 115-116. See also Dudley v. Commissioner, 258 F.2d 182, 188 (3d Cir. 1958).

Moreover, the facts as a whole do not support the assertion that the Trust Territory was “doing work of the [United States] government” in entering the contract in dispute. National State Bank of Newark v. United States, supra, 357 F.2d at 707-708, 174 Ct.Cl. at 877-879. The contract solicitation in the instant case made it clear that the successful bidder would accept an offer by the Trust Territory government, operating as a foreign country outside the sovereignty of the United States. Compare Escote Manufacturing Co. v. United States, 169 F.Supp. 483, 488, 144 Ct.Cl. 452, 458-459 (1959).

Plaintiffs forcefully argue that the contract was actually negotiated in part at Interior and that de facto control by defendant of Trust Territory officials, and hence of the contract’s performance, was maintained through the pervasive authority of the Secretary of the Interi- or, especially as regards shipping services for the islands. Nevertheless, the “whole bundle of controls” here described is insufficient to establish defendant’s liability under the contract. Woodbury v. United States, 364 F.2d 993, 1000, 1004, 176 Ct.Cl. 838, 851-852, 858-859 (1966). The court has refused to recognize defendant as a liable principal in other cases involving more direct forms of control over the contract’s perormance. Housing Corp. of America v. United States, supra, 468 F.2d at 924, 199 Ct.Cl. at 710; D. R. Smalley & Sons, Inc. v. United States, supra, 372 F.2d at 508, 178 Ct.Cl. at 598.

In the case of Best v. United States, 292 F.2d 274, 154 Ct.Cl. 827 (1961), involving a situation analogous to that at hand, the court refused to find a contract binding on defendant. There, the U. S. Army in occupied Germany invited bids for a construction project, awarded the work to the lowest responsive bidder, imposed a provision for liquidated damages for late completion, and provided an appeal procedure for performances disputes.

But the Army did not intend to make a contract which would obligate the United States, it repeatedly warned the plaintiff that it was not doing so, and it would have had no authority to do so if it had tried. The United States Army in Germany, in the relation involved in this case, was an agency of the Allied High Commission for Germany, an international body with no capacity to sue or be sued [emphasis added].

292 F.2d at 278-279, 154 Ct.Cl. at 836. We believe defendant’s case is even stronger here since the contract solicitation made clear at the outset that the Trust Territory, not defendant, was the offering party.

Had plaintiffs wished to obligate defendant in the disputed undertaking, they should have sought a different drafting of the agreement. At this stage, they have failed to carry their burden of convincing the court to widen the obligation under an integrated document defendant deliberately chose not to sign. Compare Woodbury v. United States, supra, 364 F.2d at 999, 1000, 176 Ct.Cl. at 850, 852, with Raymond Constructors of Africa, Ltd. v. United States, supra, 411 F.2d at 1237, 188 Ct.Cl. 161 at 165-166. Because defendant was not a party to the agreement and the Trust Territory is not an agency or instrumentality of the United States, no express contract within the court’s jurisdiction is found.

Nor many an implied contract be inferred from the circumstances at hand. The general rule in government contract law is that a contract implied in fact is one

founded upon a meeting of minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding.

Baltimore & Ohio R.R. v. United States, 261 U.S. 592, 597, 43 S.Ct. 425, 426, 67 L.Ed. 816 (1923); Algonac Manufacturing Co. v. United States, 428 F.2d 1241, 1255, 192 Ct.Cl. 649, 673-674 (1970).

Here, there can have been no meeting of minds between the United States and plaintiffs with regard to a contractual undertaking since the responsible officers dealing with Transpacific were acting on behalf of the Trust Territory government, not the United States. This should have been clear to Transpacific, not only from the solicitation for orders, but from Secretarial Order No. 2902, 32 Fed.Reg. 16058, as amended, 33 Fed.Reg. 18201, which expressly delegated authority to the High Commissioner and the Director of the Office of Territories to contract for shipping services “on behalf of the Trust Territory of the Pacific Islands” [emphasis added]. As a matter of law, Transpacific had constructive, if not actual, notice of the nature of this delegation of authority, since it was published in the Federal Register. Federal Register Act, 49 Stat. 502, 44 U.S.C. § 1507 (1970); Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 384-385, 68 S. Ct. 1, 92 L.Ed. 10 (1947).

Thus, any representation by an official of either Interior or the Trust Territory that he was acting on behalf of the United States was outside his scope of authority and the United States is not bound by such act or representation. See Federal Crop Insurance Corp. v. Merrill, supra at 384; Housing Corp. of America v. United States, supra 468 F.2d at 925, 199 Ct.Cl. at 711. Compare Thomson v. United States, 357 F. 2d 683, 688-689, 174 Ct.Cl. 780, 790-791 (1966). The totality of circumstances at bar does not warrant the court concluding that the “legal equivalent of mutual consent” existed between the parties with regard to the undertaking in dispute. See J. C. Pitman & Sons, Inc. v. United States, 317 F.2d 366, 368, 161 Ct.Cl. 701, 705 (1963).

In summary, defendant is not an express party or a principal to the subject, written contract. Nor does an implied contract exist between the parties.

In an effort to salvage their petition, plaintiffs assert that this court’s determination that it lacks jurisdiction would leave plaintiffs without a forum in which to seek relief on the present claim. While such a result could not in itself affect this court’s jurisdiction, which is statutorily defined, Kyer v. United States, 369 F.2d 714, 719, 177 Ct.Cl. 747, 754 (1966), cert. denied, 387 U. S. 929, 87 S.Ct. 2050, 18 L.Ed.2d 990 (1967) , we cannot fail to observe that since September 1967 the Trust Territory government has granted “exclusive jurisdiction” to the trial division of the Territory’s High Court for claims against the Territory government founded upon “any express or implied contract with the Government of the Trust Territory * * I Code of the Trust Territory of the Pacific Islands, § 251(1) (b) (Steincipher ed. 1970); Rivera v. Trust Territory, 4 TTR 140 (1968) . Under this provision, plaintiffs would clearly have a cause of action in Trust Territory court for the present claim.

The Taking Claim

Plaintiffs’ second basis for recovery is that their private property was taken for public use by the United States through its appointees, agents, and employees without the just compensation required by the Fifth Amendment. Plaintiffs allege that certain representatives of the Trust Territory government, including its attorney general and the chief of its transportation division, coerced the president of Marine to agree to the establishment of a trust, consisting of Marine’s shares in Transpacific, by threatening to cancel Transpacific’s contract with the Trust Territory for default. Plaintiffs claim that the creation of this trust effectively vested control of Transpacific in the Trust Territory government.

Defendant asserts that the Trust Territory is a foreign state and that it is an elemental principle of constitutional law that the Constitution does not extend even to territories or possessions of the United States until Congress passes an enabling act to that effect, which here has not been done. Fleming v. Page, 50 U.S. (9 How.,) 603, 13 L.Ed. 276 (1850); Hooven & Allison Co. v. Evatt, supra.

While we hold for defendant on this issue, we reject its constitutional assertions as overly rigid. The just compensation clause of the Fifth Amendment has, in fact, been applied to takings of property located outside the United States, even in the absence of Congressional extension of the Constitution to such foreign soil. Seery v. United States, 127 F.Supp. 601, 130 Ct.Cl. 481 (1955); Turney v. United States, 115 FiSupp. 457, 126 Ct.Cl. 202 (1953); Fleming v. United States, 352 F.2d 533, 173 Ct.Cl. 426 (1965).

A key element of these precedents, however, is that each concerned an alleged taking by the United States, regardless of where the property was located. Thus, in the present case, just as plaintiffs had to demonstrate that the United States was directly or indirectly contracting with plaintiffs in their breach claim supra, here they must show the United States carried out the alleged taking of property. This they have failed to do.

Plaintiffs’ taking claims focus only on the actions of Trust Territory officials, specifically the islands’ attorney general and chief of the transportation division. As explained in detail supra, these officials were without authority to act on behalf of the United States. In the analogous case of Standard-Vacuum Oil Co. v. United States, 153 F.Supp. 465, 139 Ct.Cl. 113, cert. denied, 355 U. S. 893, 78 S.Ct. 266, 2 L.Ed.2d 191 (1957), the court concluded that no unconstitutional taking, as a result of General Douglas MacArthur’s actions in occupied Japan, had been alleged since the Supreme Commander had acted on behalf of the Allied Powers there, not of the United States.

Plaintiffs’ argument finds its strongest support in the Turney precedent. That case involved an embargo by the independent government of the Philippines against removal from the Philippines of plaintiff’s property until such time as plaintiff agreed to return certain of the property to the United States. Because the Manila government’s action was prompted by “irresistable pressure” from the United States, the court held an unconstitutional taking by defendant had occurred. 115 F.Supp. at 463-464, 126 Ct.Cl. at 214. Defendant’s affirmative efforts, in part through the medium of the Philippines government, to regain the disputed property was well documented in that case. The more nebulous forms of United States influence within the Trust Territory government on which plaintiffs here rely, on the other hand, are insufficient to make defendant constructively responsible for the taking alleged. See Best v. United States, supra, 292 F.2d at 279, 154 Ct.Cl. at 836; D. R. Smalley & Sons, Inc. v. United States, supra, 372 F.2d at 508, 178 Ct.Cl. at 599.

This result is not inconsistent with our acceptance of jurisdiction in the case of Fleming v. United States, supra, since the taking of property in the Trust Territory there complained of was by the United States Navy, undisputedly acting on behalf of defendant. We must conclude that the present petition fails to allege action by defendant necessary to make out an unconstitutional taking claim within our jurisdiction. As with regard to their contract claim, it seems that, if plaintiffs have any remedy for the alleged confiscation of their corporate assets, it is through civil action against the Trust Territory government for unliquidated damages in the trial division of the Territory High Court. I Code of the Trust Territory of the Pacific Islands, § 251(l)(b) (Steincipher ed. 1970).

In summary, plaintiffs have failed to describe a claim, either for breach of contract or unconstitutional taking, within the jurisdiction of this court. Accordingly, defendant’s motion for summary judgment is granted and the petition is dismissed.

NICHOLS, Judge

(concurring):

I join in the opinion and judgment of the court. I had difficulty with this case and at the outset would not have decided it in the way the majority chooses. I come out now on defendant’s side but it may be helpful to state the reasons why.

There is no doubt in my mind that under the United Nations trusteeship the Congress could have created a Trust Territory government that was, in fact and law, .just another agency of the Federal government. Had it done so, a contract such as we have here, made as this was made, and dealing with the subject this does, could have been enforced in this court, and we could have considered and adjudicated the alleged taking also. On the other hand there is no reason deriving from the source of its legislative power, the trusteeship agreement with the U.N., why the Congress could not have set up the same kind of territorial sovereign it has traditionally set up for civil rule of territories brought under its wing in more usual ways. Our national traditions oppose the former alternative favor the latter. Nornal attributes of such territorial governments are that they do not contract or expropriate property as agents of the United States, but on their own behalf, and to enforce their liabilities, their own consent to be sued, not that of the United States must be obtained. Porto Rico v. Rosaly, y Castillo, 227 U.S. 270, 33 S.Ct. 352, 57 L.Ed.2d 507 (1913).

The enabling legislation, 48 U.S.C. § 1681, reads on its face to set up not a typical territorial government but a simple dictatorship. The President can govern the Trust Territory in any way he pleases. The first tier delegation of authority to the Secretary of the Interi- or in E.O. 11021 is equally broad and sweeping. Only in the' second tier, the Secretary’s Departmental Order No. 2918, does the structure of a territorial government take form.

As I understand it the Royal charters setting up the American colonies in the 17th and 18th centuries did not require participation by Parliament. In our system, under our Constitution, chartering territorial governments have traditionally required the participation of the Congress. Art. IV, Sec. 3 of the Constitution seems to visualize this. The differences in the situation of a citizen or subject that depend on whether he is directly ruled from Washington, or by a territorial government, are enormous. I seriously question whether it is possible to confer the character of a territorial government upon a body of United States Government officials, with all its formidable consequences, without the participation of Congress. It would follow that language in a second tier delegation, purporting to do this, would at least fail to have the important implied and collateral results that occur when Congress itself speaks. The agency would remain an agency despite the Secretary’s efforts to make it a territorial sovereign. Its contracts would be contracts of the United States.

The Congress has, however, enacted that the High Commissioner, provided for in Part II, Sec. 1 of Departmental Order No. 2918, shall be appointed by the President and confirmed by the Senate. Public Law 90-16, § 2, 81 Stat. 15, 48 U.S.C. § 1681a. The legislative history recites enough of the governmental setup under the High Commissioner to show that it all came under the scrutiny of Congress at that time (1967) and was apparently approved except for the modification indicated. Senate Report No. 62 and Conf.Rep.No.208, 90th Cong., 1st Sess., 1 U.S.Code Cong. & Administrative News, p. 1158 and ff. (1967). The following permanent code sections also hang pendant upon the structure the Secretary fashioned. I conclude that the purported territorial government can no longer be considered an executive creation pure and simple. This way of Congressional backing into the founding of a civil government no doubt has its explanation in the legitimate interests of the State and Navy Departments in the area, as recognized by E.O. 11021. The plaintiffs herein do not come to grips with the concept of a territorial sovereign in operation here, and do not show clearly how they can recover if a territorial sovereign was in existence and was the ostensible contracting party.

For all these reasons, my initial amazement at the bald text of 48 U.S.C. § 1681 has much abated and I am now prepared to agree that the involved contract was not made by an agency of the United States. The other conclusions of the court are inescapable.

      . The Trust Territory is comprised of 2,141 islands covering an area of approximately 3,000,000 square miles in the southwest Pacific. Three island chains — the Marianas, Marshalls, and Carolines — make up the region of over 92,000 inhabitants popularly referred to as Micronesia. Administratively, the territory is divided into six districts, with a capital at Saipan in the Mariana chain.

      . The parties’ briefs present a less than clear-cut scenario of the specifics of plaintiffs’ claims. Because the present posture of the case does not require the court to reach the merits, however, we do not pause over this shortcoming.

      . Defendant also alleges that the court lacks jurisdiction because the subject matter of the claim arises from a treaty, 28 U.S.C. § 1502 (1970), and that plaintiffs lack standing to bring a “derivative” suit since their corporation is the real party in interest. Ot. Cl. Rule 61(a). See Algonac Manufacturing Co. v. United States, 428 F.2d 1241, 1249, 192 Ct.Cl. 649, 662 (1970). Because of the basis on which we grant defendant’s motion for summary judgment, we find it unnecessary to reach these issues.

      . Though by no means a settled point, the most persuasive view on this question is that sovereignty rests in the people of Micronesia and is held in trust for them by the administering power. Cf. Neely v. Henkel, 180 U.S. 109, 120, 21 S.Ct. 302, 45 L.Ed. 448 (1901); Cobb v. United States, 191 F.2d 604, 608 (9th Cir.), cert. denied, 342 U.S. 913, 72 S.Ct. 360, 96 L.Ed. 683 (1952).

      . We presume that plaintiff alleges an implied-in-jaci contract since the court lacks jurisdiction over contracts implied in law. Merritt v. United States, 267 U.S. 338, 341, 45 S.Ct. 278, 69 L.Ed. 643 (1925); Putnam Mills Corp. v. United States, 479 F.2d 1334, 1337 n. 3, 202 Ct.Cl. 1, 8 n. 3 (1973).


author: RICH, Judge. MILLER, Judge

text:
    Herbert H. SILVESTRI and David A. Johnson, Appellants, v. Norman H. GRANT and Harvey E. Alburn, Appellees.
    Patent Appeal No. 8978.
    United States Court of Customs and Patent Appeals.
    May 9, 1974.
    Rehearing Denied Sept. 12, 1974.

      Robert H. Berdo, Washington, D. C., Richard H. Brink, Syracuse, N. Y., attorneys of record, for appellants; Roylance, Abrams, Berdo & Kaul, Washington, D. C., of counsel.
    Ellsworth H. Mosher, Arlington, Va., Vito Victor Bellino, New York City, attorneys of record, for appellees.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE, and MILLER, Judges.
   RICH, Judge.

This appeal is from the decision of the Patent Office Board of Patent Interferences awarding priority to appellee, the senior party, Grant et al. (hereinafter Grant). We reverse.

The sole count corresponds to claim 1 of Grant’s patent, on which he is involved in this interference. Appellants, Silvestri et al. (hereinafter Silvestri), provoked this interference by filing an application after the issuance of the Grant patent, alleged to be a continuation-in-part of an earlier application.

Silvestri took testimony and introduced documentary evidence to prove conception of the invention and its actual reduction to practice prior to Grant’s filing date. Grant also took testimony and introduced exhibits. This was done, however, to rebut Silvestri’s evidence rather than to prove a date of invention earlier than Grant’s filing date. Accordingly, Grant is restricted to his December 26, 1962, filing date as his date of invention and that is the date Silvestri must overcome.

The count reads:

A new crystalline form of D-6-(2amino-2-phenyl-aeetamido) penicillanic acid characterized by being substantially free of water in the chemically bound state, having a molecular weight of about 349, having an infrared spectrograph as disclosed in Fig. 1 of the drawings, and possessing substantially greater storage stability than hydrated crystalline D-6-(2-amino-2-phenyl-acetamido) penicillanic acid.

D-6- (2-amino-2-phenyl-acetamido) penicillanic acid is an antibiotic generically known as “ampicillin.” Both parties agree that a form of ampicillin was known to the prior art. However, it contained from 2.5 to 10% by weight of water, lacked storage stability, and the process by which it was obtained was too expensive to be commercially feasible. The count distinguishes from that prior art form of ampicillin.

In the Grant patent, the prior art form of ampicillin is referred to as “ampicillin A” whereas the form defined by the count is designated “ampicillin B.” Silvestri’s application uses the terms “Form I” and “Form II,” respectively, to designate the same forms of ampicillin.

The board held Silvestri was not entitled to rely on his earlier-filed application as a constructive reduction to practice because it did not disclose the subject matter of the count and also held he had not sustained his burden of proving beyond a reasonable doubt either conception or actual reduction to practice of the invention prior to Grant’s filing date.

The Decision of the Board

The board held that Silvestri had not conceived or actually reduced the invention to practice before Grant’s filing date and its opinion suggests that the ampicillin of the count had not been prepared prior to December 26, 1962, in the laboratories of Bristol Myers Co. (Bristol), the assignee of the Silvestri application. However, even more important to its decision was the board’s conclusion that at the time the invention was alleged to have been made by Silvestri, there was no contemporaneous recognition that the new form of ampicillin defined by the count had been made. In this regard, the board made the following observations:

* * * we have examined the entire testimony taken on behalf of Silvestri * * * and fail to find any evidence or [sic, of?] recognition or conception of the invention of the count prior to December 26, 1962, the record date of Grant. * * *
* * * * * *
* * * since Silvestri had no conception of the invention of the count prior to Grant’s record date, on this ground alone, Silvestri cannot prevail in this proceeding and we so hold.

The board was obviously motivated to some extent to reach this conclusion because of the nature of the circumstances which led to the preparation and filing of the Silvestri application. It appears that Mr. Brink, counsel who prepared the Silvestri application, became aware of the Grant patent shortly after its issuance and began an investigation to determine whether the compound of the count had been prepared at Bristol. In response to interrogatories, Brink made the following statement, quoted in the board opinion, regarding his investigation:

The investigation included discussing with David A. Johnson the subject matter of the invention claimed in U. S. Patent No. 3,144,445 and determining from him that anhydrous a-aminobenzylpenicillin possessing considerably greater storage stability than previously known hydrated a-aminobenzylpenicillin had been prepared early in 1962 by a process which he and Herbert H. Silvestri had invented, which process is described in U. S. Patent No. 3,180,862. I obtained, either from Dr. Johnson or someone else in the pilot plant, the run data for making * * * anhydrous D-(-)a-aminobenzylpenicillin. I then obtained the infrared curve for this lot from someone in the Control Group and stability data for this lot from someone in the Product Development Group. Mr. Joseph Bomstein examined the infrared tracing for [this] lot * * * and compared it to the infrared tracing contained in Figure 1 of U. S. Patent 3,144,445 and confirmed the fact that they were substantially identical.

In view of these circumstances the board drew the following negative inference relative to appellant’s recognition of the invention:

In conclusion, although not necessarily dispositive of the issues before us, in our opinion, it seems that the appearance of the involved Grant patent on the scene was the spur that led to or catalyzed the filing of the involved Silvestri application.

Also before the board was the question of whether Silvestri abandoned, suppressed or concealed the invention within the meaning of 35 U.S.C. § 102(g). However, in view of its determination that Silvestri had not reduced the invention to practice, the board did not reach that issue.

OPINION

The ampicillin of the count is a new form of an otherwise old composition. It is now well settled that in such a case there is no conception or reduction to practice where there has been no recognition or appreciation of the existence of the new form. Heard v. Burton, 333 F.2d 239, 51 CCPA 1502 (1964); and Langer v. Kaufmann, 59 CCPA 1261, 465 F.2d 915 (1972).

The evidence in both of the above cases established that the appellants had actually obtained the novel subject matter at a date earlier than the dates of invention accorded their opponents. However, in each instance the evidence also established that this success was not recognized until a later date. Absent a contemporaneous recognition that the new form had been obtained, and, in Heard, absent a recognition that it had been used in the claimed process, we held that there had not been conception or reduction to practice.

The rule applied in Heard and Langer is consistent with the principle of patent law that an accidental and unappreciated duplication of an invention does not defeat the patent right of one who, though later in time, was the first to recognize that which constitutes the inventive subject matter. See Eibel Process Co. v. Minnesota and Ontario Paper Co., 261 U.S. 45, 66, 43 S.Ct. 322, 67 L.Ed. 523 (1923). In the context of Heard and Langer, therefore, until they recognized their accomplishment, the preparation of the new form by each of the appellants remained in the accidental and unappreciated category. A fortiori, no right to a patent arose prior to such recognition.

The effect of these cases is that an inventor of a new form of an old composition cannot be accorded a date of invention earlier than the date when he recognizes the existence of the new form. Accordingly, the principal issue before us now is whether the evidence establishes beyond a reasonable doubt that, prior to Grant’s filing date, Silvestri not only actually prepared Form II, but also appreciated that a new form of ampicillin had been obtained. We think it does.

The record establishes that a great deal of work was done in the pilot plant at Bristol on an improved procedure for making “P50”, the code name at Bristol for any and all forms of ampicillin. This procedure is summarized in a memorandum, Silvestri Exhibit (SE) 5, dated April 2, 1962, that was prepared by Dr. David A. Johnson, named as a coinventor with Silvestri, who was head of the Chemical Development Laboratories at Bristol. SE 5 itself contains no reference to a product differing from the ampicillin previously prepared at Bristol. However, Johnson testified on cross-examination that he and Silvestri came to realize that a different form of ampicillin could be obtained by this process from the results of, among other things, infrared analysis" and water assays. When pressed regarding when this awareness arose, he testified that he thought it was in April of 1962.

It was the practice at Bristol to assign code numbers to the lots of ampicillin prepared. The code uses the designation “12 CD” followed by a number specific to each individual lot. For each lot a standard form was prepared, known as a “dog eared card,” on which the results of a variety of analytical determinations made on the sample were recorded. Among the analyses performed were infrared, water assays, and storage stability tests. There were, in fact, two storage stability tests. One of these was a chemical test known as an “iodometric assay,” the other was a biological test which involved subjecting the bacterium Staph, aureus to the ampicillin to determine if it was killed. Both tests were standard methods used by the pharmaceutical industry to determine the stability of penicillin and related antibiotics. Ampicillin is a penicillin-type antibiotic.

The Record Establishes that Form II Ampicillin Was Prepared at Bristol Prior to December 26, 1972

Of particular interest on the question whether Form II ampicillin was actually made at Bristol are pilot plant lots 12 CD 57, 12 CD 61, 12 CD 71, 12 CD 82, 12 CD 100, 12 CD 106, 12 CD 107, and 12 CD 131 (also designated K 2035 ).

Between April 4, 1962, and September 24, 1962, these lots were analyzed for their water content. The results ranged from 0.3% water, in the case of 12 CD 100, to 1.8%, for 12 CD 82, as determined by what is referred to as the “Karl Fischer” method. Although this method is a standard analytical technique, it cannot distinguish between chemically bound water, a property exhibited by hydrates, and water present as an impurity. Nevertheless, whether this water is bound or not, samples which exhibit from 0.3% to 1.8% of water are “substantially free of water in the chemically bound state,” as called for by the count.

These same lots were also subjected to infrared analyses before December 26, 1962. The spectrographs obtained were examined by Bristol’s expert in infrared spectroscopy, Joseph Bomstein. Testifying as an expert, he stated that the spectrograph of each lot was essentially the same as that of Figure 1 of the Silvestri application. It is pertinent to note here that no challenge has been made to the substantial identity of this spectrograph with that of Figure 1 of the Grant patent.

No challenge has been made regarding Bomstein’s qualification as an expert and no rebuttal to his testimony was offered by Grant. We note that the board was critical of Bomstein’s testimony on the ground that it came after the issuance of Grant’s patent. That criticism would, of course, be relevant if the testimony were relied upon to show that Silvestri had appreciated in 1962 that a new form of ampicillin had been made. However, Bomstein’s testimony is used only to establish that Silvestri had obtained the new form of ampicillin before December 26, 1962. Accordingly, we accept this testimony as establishing that the ampicillin obtained by Silvestri and that of the count have the same spectrograph.

We believe that the results of the water assays and infrared analyses establish beyond a reasonable doubt that Silvestri had actually prepared a form of ampieillin corresponding to that obtained by Grant and thus to the count. In reaching this conclusion, we do not disregard the fact that the count also requires that the ampieillin possesses greater storage-stability than hydrated ampieillin and have a molecular weight of about 349. However, we regard these as inherent properties of Form II ampieillin which add nothing to the count definition beyond that determined by the water content and infrared spectrograph. In our view, these latter properties are sufficient to fully identify the new form of ampieillin. See footnote 8 of In re Ruschig, 343 F.2d 965, 52 CCPA 1238 (1965).

The Record Establishes That Silvestri Recognized and Appreciated That A New Form of Ampieillin Had Been Obtained

Although we have concluded that Silvestri had actually prepared Form II ampieillin before December 26, 1962, there still remains the question whether, before that date, he recognized and appreciated that a new form of ampieillin had been obtained.

In Heard v. Burton, supra, the count involved was directed to a process which required “a catalyst comprising platinum on eta alumina.” Prior to the date of invention alleged by Heard,- the existence of eta alumina had not been reported in the prior art although the evidence established that Heard’s research had resulted in the preparation of eta alumina. Nevertheless, the court denied Heard his alleged date of invention. We said:

We agree with appellant that it is irrelevant that Heard never referred to or appreciated the support material to be eto-alumina or to contain eia-alumina by that name. Nor do we interpret the board’s opinion as so requiring. However, we consider it fatal to appellant’s case that not until after appellees’ filing date did Heard recognize that his “ammonia-aged” catalyst, as appellees put it, “contained any different form of alumina at all!”
We point out, as does appellees’ brief, that the count calls for a particular form of alumina and we think that appellant’s failure to recognize that he had produced a new form, regardless of what he called it, is indicative that he never conceived the invention prior to appellees’ filing date.

The quoted passage sets forth the standard by which we evaluate Silvestres evidence. This standard does not require that Silvestri establish that he recognized the invention in the same terms as those recited in the count. The invention is not the language of the count but the subject matter thereby defined. Silvestri must establish that he recognized and appreciated as a new form, a compound corresponding to the compound defined by the count.

As pointed out above, his coinventor Johnson testified that he and Silvestri became aware that a new form of ampicillin was produced from the results of infrared analyses and water assays done on samples made according to the procedure set forth in SE 5. He thought this awareness came in April of 1962. We now look to the record for confirmation of this fact.

The evidence shows that ampieillin (or P50) was being manufactured at Bristol and that routine analyses, including infrared and water assays, were obtained from lots prepared in the pilot plant. All the infrared spectrographs for the lots of ampieillin previously enumerated, except 12 CD 106 and 12 CD 107, were obtained by a single employee, David A. Hull, at Bristol. With respect to the spectrograph for lot 12 CD 57, on April 7, 1962, he made entries in the infrared master log (SE 36) and his own notebook (SE 37). The notation in the master log reads:

12 CD 57 (P50) different xyl [crystal] form.
The notation in the notebook reads: 12 CD 57 (P50) conforms, 2nd crystalline form, bands much sharper than normal P50.

He testified that these notations represent conclusions drawn from comparison of the spectrograph of 12 CD 57 and that of the standard.

The dog-eared card for lot 12 CD 71 (SE 33) bears the following entry relative to the infrared spectrograph:

By I.R. [infrared] this sample looks different crystallographically from most other P50’s. (A) Second Poly-morph? (B) More Amorphous?”

This entry was in the handwriting of John P. Messerly, Director of Quality Control at Bristol. He testified that the entry was based on conclusions reached by Bomstein. Bomstein confirmed this. It was thought that these entries were made on April 22, 1962, and the record establishes that they could not have been made later than May 29,1962.

The infrared spectrographs for lots 12 CD 106 and 12 CD 107 were obtained by Mr. Ithamar E. Poliak. Mr. Poliak worked under Mr. Bomstein during the period when the invention was alleged to have been made. His notebook, SE 40, contains the following entry, dated July 5,1962, relative to these lots:

All confirm Form two of P50.

Poliak also entered the notation “Form II” on the corresponding dogeared cards. His explanation of the meaning of these entries was that Bomstein had told him that there were two forms of ampicillin and had given him samples of lots 12 CD 106 and 12 CD 107 for a determination of which form they were. He further testified that he made the identification entered in his notebook by comparing their spectrographs.

At about the same time these infrared spectrographs were being studied, stability tests were being run on the pilot plant lots. The results of these tests were such that Mr. Frank H. Buckwalter, Director of Product Development at Bristol, was moved to send a memorandum (SE 6) to Johnson in which he pointed out that lots of ampicillin which were essentially anhydrous, including lots 12 CD 57 and 12 CD 71, have good stability.

This evidence confirms Johnson’s testimony that prior to December 26, 1962, it was realized that a new form of anhydrous ampicillin having improved stability had been obtained. Any weakness in the evidence, as discussed to this point, that might suggest a reasonable doubt is removed by the fact that on November 5, 1962, Bristol sought promulgation of regulations for a new form of ampicillin from the Food and Drug Administration (FDA) in order that they might market it. Included with the request (SE 47) was a product specification (SE 46) setting forth a description of the new drug which corresponds to that of the lots which we have held correspond to subject matter defined by the count. Certificates of analyses of individual lots of this new form were also included with the request. One of these (SE 44) is for lot K 2035, one of the lots enumerated above, which is an actual lot of Form II ampicillin.

The board’s opinion is critical of the testimony of those who obtained the infrared spectrographs for the reason that they could not say of their own knowledge what the reference spectrographs were. But this is not a fatal weakness in appellant’s case. As we have already stressed, the critical question is whether there was contemporaneous recognition and appreciation of the new form of ampicillin. The testimony of these persons establishes that there was recognition and appreciation, even though identification of a given lot of ampicillin as Form I or Form II could not be made from an infrared spectrograph without resort to comparison with a standard.

The board also criticized appellants’ water assays for the reason that they imply no recognition that the lots were “substantially free of water in the chemically bound state,” as called for by the count. However, the language of the count is but one way to define the new form and certainly not a unique definition. Our opinion in Heard v. Burton, supra, makes it clear that the recognition and appreciation of a new form need not be in the same terms as the count. In our view, appellants have established that they were able to recognize the new form by its infrared spectrograph and lower water content. Any claim they might have-written, based on this or other information specific to Form II, would still define the same subject matter as the count even though in different terms.

Appellee Grant criticizes the evidence related to the request for certification made to the FDA on the ground that the testimony of Dr. Harold A. Frediani, the official requesting the certification, indicates that Bristol was actually trying to have certified a trihydrate form of ampicillin. This is not an accurate characterization of that testimony. In fact, Dr. Frediani testified that they sought to have the anhydrous form certified, but later amended the certification request to specify the trihydrate for the reason that, as he recalled, “a [another] new form was developed in our laboratory in the production area, which was the trihydrate, and a comparison of the two [Form II and the trihydrate] indicated there was a certain advantage to the trihydrate over the anhydrous.”

The Record Establishes That The New Form Had Utility

Before the board, Silvestri argued that no testing of the new form to show utility would be required because utility would be obvious. In the alternative, it was argued that the tests done to determine stability which involved subjecting the bacterium Staph, aureus to the ampicillin proved utility.

With regard to the first argument by Silvestri, the board commented:

The count in the instant case is directed to a new compound. We note, in spite of the fact that Silvestri urges in the brief that the utility of the purported compound was obvious, several lots were tested at Bristol against Staphylococcus aureus. We find no evidence in the Silvestri record to indicate that these tests were unnecessary.

We disagree with the board’s position on several points and conclude that utility would have been obvious. In the first place, Form II is not a new compound but a new form of an old one, i. e., ampicillin. There is no reason to believe that the crystal structure and absence or presence of bound water would affect the pharmacological properties of ampicillin. Furthermore, the tests in question were run to demonstrate shelf stability of specific lots. Nevertheless utility can be inferred from these tests because a harmful bacterium was killed even though the tests were not run for that purpose.

The board also concluded that the stability tests did not establish utility for the reason that:

Of course, even if the tests were a success, as we have seen supra, the product tested therein was not established to be the product of the count, but rather P50.

The error in this conclusion by the board is apparent from our opinion, as it is our view that the product tested was the product of the count. Accordingly, we must regard these tests as actually establishing that Form II has a utility, even were we to agree that its utility was not obvious.

Silvestri Did Not Abandon, Suppress, Or Conceal the Invention

Since we are satisfied that Silvestri has proven beyond a reasonable doubt an actual reduction to practice of the invention no later than November 5, 1962, the date of the request to the FDA, we must now address the question whether that invention was abandoned, suppressed, or concealed within the meaning of 35 U.S.C. § 102(g). We have noted above that the board did not reach this issue. Although we would find it useful to have the board’s views on this point, we do not feel this is one of those cases in which a remand to the board is necessary. Cf. Myers v. Feigelman, 59 CCPA 834, 455 F.2d 596 (1972) and Langer v. Kaufman, supra.

We do not doubt that Silvestri was moved to file the application by knowledge of the Grant patent. However, this fact alone is not sufficient to establish abandonment, suppression, or concealment of the invention. See Brokaw v. Vogel, 57 CCPA 1296, 429 F.2d 476 (1970).

Although Grant alleges generally that the invention was abandoned, suppressed, or concealed by Silvestri, his argument is in fact an attempt to demonstrate abandonment. Without more evidence to the contrary, the fact that Silvestri sought FDA registration of the new form, even though the request was later amended, shows there was no attempt to suppress or conceal the invention. The principal reliance by Grant is on Silvestri’s delay in filing and the fact that his application was made as a result of the issuance of the Grant patent. Although these facts in certain contexts might be some evidence of abandonment they are not enough in themselves to establish a prima facie case.

Furthermore, the record shows that stability tests were being run on lots of Form II until at least 1966. While tests done after the issuance of the Grant patent might be said to have been done merely to preserve the appearance of non-abandonment, SE 43, a record of stability tests, shows that a biological assay was done on lot 12 CD 61 on April 21, 1964, and the same test was performed on lot 12 CD 100 on July 10, 1964, just one month prior to the issuance of the Grant patent. This activity is certainly evidence of continued interest in Form II ampicillin at Bristol and clearly negatives abandonment.

The burden of proving abandonment, suppression, or concealment is on the party alleging it. Gallagher v. Smith, 206 F.2d 939, 41 CCPA 734 (1953). In our view the evidence is not sufficient to sustain appellee’s burden on that contention.

For the foregoing reasons, the decision of the board is reversed.

Reversed.

MILLER, Judge

(concurring).

The decisive question in this case is whether appellants have sustained their burden of proving beyond a reasonable doubt that before December 26, 1962, they recognized that they had obtained Form II ampicillin. That they had actually obtained it, as the majority finds, is amply supported by the record, including Bomstein’s unrebutted testimony that the spectrograph of each of various lots, particularly K2035, was the same as Figure 1 of appellants’ application.

Appellees have attached great significance to the Rule 131 affidavit (included in the file wrapper of the Form III patent, 3,472,841, assigned to Bristol-Myers) asserting actual reduction to practice of Form III ampicillin prior to December 26, 1962. The affidavit is significant, as appellees point out, in showing that the contemporary, recorded statements of Hull, Messerly, and Poliak, and the testimony of Dr. Johnson are ambiguous in that these distinguish a form of ampicillin from Form I, but do not differentiate between Form II and Form III. However, the affidavit is also significant in that the accompanying spectrograph for lot 12CD149 contains a notation “Form III.” The date “11/23/62” in the “CD Book” (appellants’ exhibit 24) is that on which the number 12CD149 was assigned. Thus, on or after November 23, 1962, but prior to the critical date of December 26, 1962, there was recognition of Form III. If there were recognition of Form III, there had to be recognition of Form II.

      . Patent 3,144,445, issued August 11, 1964, on an application, serial No. 247,394, filed December 26, 1962, assigned to American Home Products Corporation.

      . Serial No. 408,191, filed November 2, 1964.

      . Serial No. 233,943, filed October 29, 1962, now U. S. Patent 3,180,862, issued April 27, 1965, assigned to Bristol-Myers Co.

      . Silvestri’s Notice of Appeal alleges that the board erred on this point. However, we deem that this allegation was abandoned as a basis for reversing the board since it was not discussed in the main brief. In the reply brief it is stated that “the sole reason Appellants are not pressing their reliance upon the disclosure of their earlier application is in order to simplify the issues involved in this appeal.”

      . This is the burden of proof which must be met by Silvestri, whose earliest application disclosing the invention was filed after the issuance to Grant of a patent claiming the invention. Paivinen v. Sands, 399 F.2d 697, 55 CCPA 1502 (1968) and Paivinen v. Sands, 339 F.2d 217, 52 CCPA 906 (1964).

      . In Heard, the count defined a process using a novel form of alumina. In Langer, the count was directed to a novel form of a titanium chloride-aluminum chloride complex.

      . The record establishes that in addition to Forms I and II at least two other forms of ampicillin are known. Both of. these are the subject of patents assigned to Bristol. One of these is a trihydrate. The other is yet another anhydrous form free of bound water.

      . The “CD” numbers are assigned for purposes of the Chemical Development Laboratory. K 2035 is the “Bristol Control Number” for Lot 12 CD 131, which was given this number as it was intended that it be used as a standard against which other lots of ampicillin were to be compared.

      . The Grant patent contains the following statement:
      This new compound [referring to ampicillin B] is characterized by the fact that it has very little, if any, water, up to no more than 2.5%.
      The upper limit stated in the Silvestri application and found in the analysis of the pilot plant lots is 1.8%.

      . There is evidence in the record which esi stable. :ablishes that the lots in question were storage


author: BALDWIN, Judge.

text:
    Mitchell Stanley BLICHARZ and Gerald James Jackson, Jr., Appellants, v. Henry M. HAYS, Appellee.
    Patent Appeal No. 9116.
    United States Court of Customs and Patent Appeals.
    May 9, 1974.
    Marcus B. Finnegan, Brian G. Brunsvoid, Finnegan, Henderson, Farabow & Garrett, Washington, D. C., attorneys of record, for appellants.
    George J. Harding, 3rd, Smith, Harding, Earley & Follmer, Philadelphia, Pa., attorney of record, for appellee.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.
   BALDWIN, Judge.

Blicharz and Jackson (Blicharz) appeal from that portion of the decision of the Board of Patent Interferences which awarded priority of count 1 of interference No. 96,557 to Hays, the senior party.

The Subject Matter

The count in issue reads (paragraphing added):

1. Granulation method, which comprises uniformly mixing substantially dry particles of a physiologically active material adapted to be ingested and being damaged at elevated temperatures with substantially dry particles of a physiologically inactive and physiologically compatible thermoplastic material which softens at a temperature below the temperature at which said physiologically active material is damaged,
heating the thus formed mixture to above the softening temperature of said thermoplastic material and below the temperature at which said physiologically active material is damaged so as to cause agglomeration of the particles of physiologically active material with the particles of the thermoplastic material and thereby forming powdered agglomerates,
and cooling the resulting agglomerates to a temperature below the softening point of said thermoplastic material so as to form a granulate which can be directly pressed into tablets wherein said particles of active material and said particles of thermoplastic material are mixed throughout the steps of heating and cooling.

The recited method requires simultaneously granulating the physiologically active material (increasing the size of the initially very small particles) and coating it with the thermoplastic material. Consequently, it is sometimes referred to as a “one-step” process to distinguish it from a prior art technique in which the active material was first granulated and then coated with wax.

The Record

Hays took no testimony, but relied on his July 1, 1963 filing date. Blicharz took testimony and introduced evidence to prove prior actual reduction to practice. The testimony includes that of the co-inventors, Blicharz and Jackson. During the pertinent period, Blicharz worked at Lederle Laboratories of American Cyanamid on the development of an improvement on a process for making Lederle’s line of “Sequels” products, which would release a medicament or active ingredient over a period of time after being ingested. Jackson was Blicharz’s group leader. Also testifying was Weidenheimer, who was head of the Pharmaceutical Product Development Section in which Blicharz and Jackson worked. Other witnesses were Tiesler, Weidenheimer’s immediate superior, and Butensky, a co-worker of Blicharz and Jackson.

The principal exhibits include pages from Blicharz’s laboratory notebook, which had not been signed or witnessed, certain reports referring to the Sequels work, and a “Record of Invention” which had been submitted to the patent departriient of American Cyanamid by March 5, 1963.

For an actual reduction to practice, Blicharz particularly relies upon an experiment recorded as “D” on page 88 of his notebook dated December 7, 1962, although many related experiments are also reported therein. The notebook describes experiment D as involving mixing 800 grams of ferrous fumarate powder and 200 grams of glyceryl monosterate (Arlacel 161), placing them in an 8-inch coating pan, and heating them with a 250-watt infrared lamp. After 15 minutes of heating, Blicharz noted that the contents “looked good” and that the temperature was 64° C. He cooled and dumped the contents and found that a layer containing the original mixture had formed at the bottom of the pan. He then returned the removed material to the pan and heated it for 20 minutes at a temperature of 66° C, cooled and removed the contents again, screened out the undersized and oversized particles, and sent the material to the assay department of Lederle for analysis. The results of the assay, subsequently recorded in the notebook, showed what Blicharz testified was an excellent release rate and very good iron potency. He further considered the yield of appropriate size particles to be satisfactory “to demonstrate that we had a workable process.” He showed the particles to others, including the co-inventor Jackson, and they decided to scale up the test and try the process with other active ingredients. The further tests do not require any particular description here.

Weidenheimer recalled a previous test (described in Blicharz’s notebook on page 84) where Blicharz sprayed a wax solution- on dry powdered ferrous fumarate to form what appeared to be a satisfactory granulate. The inventors and Weidenheimer felt that better results, including avoiding the use of an expensive solvent in the wax spray solution, could be obtained by starting with a dry mix. He testified that he witnessed the first experiment using dry powdered active material ánd dry powdered wax. During cross examination, he stated that he knew that he observed experiments C (an experiment similar to D, but on a smaller scale, run just prior to D) and D, reported on page 88 of Blicharz’s notebook, since he had previously asked Blicharz to inform him when the experiment using dry powders was to be run.

The Board Decision

The board held that the Blicharz record failed to establish an actual reduction to practice prior to Hays’ July 1, 1963 date, setting forth several conclusions of law to support that view. It concluded first that there was nothing in the record to evince a conviction of success in the process at Cyanamid prior to the filing of the application in 1965. The board remarked that “the record is devoid of any comment by management after January 1963 relative to the Blicharz experiments.” Largely on that basis, it held that “what we are dealing with here is an abandoned experiment.” The board also commented that Weidenheimer, whom Blicharz principally relied upon for corroboration of the work performed in Experiment D, purportedly witnessed, in whole or in part, many other experiments conducted by Blicharz after the claimed date of December 7, 1962. It considered it “nothing short of phenomenal” that Weidenheimer, testifying from memory nearly eight years later, could distinguish Experiment D from all the others. Finally, the board expressly rejected the corroborating testimony of Weidenheimer relative to Experiment D as “unreliable since it is based solely on testimony based on his memory in 1970 as to events occurring in 1962; Weidenheimer kept no contemporaneous diary of events occurring in 1962 but his testimony is dependent wholly on his memory refreshed by examining the contemporaneous notebook pages of Blicharz, the inventor, which notebook had not been signed by Weidenheimer, as a witness or otherwise.”

Opinion

We are convinced from the record as a whole that Experiment D reported on page 88 of Blicharz’s notebook for December 7, 1962, was performed as described with the results set forth. While it is clearly established that the notebook was assigned to Blicharz, the pages are unsigned and not witnessed. This notebook alone is not sufficient to corroborate his detailed testimony concerning the single step process of Experiment D. However, we find significant corroborative evidence in the “Record of Invention” and the subsequently filed patent application, wherein Examples 1 of both are substantially identical to Experiment D as reported in the notebook and the figures for the assay report on release rate and iron potency correspond exactly on the three documents. As to the “Record of Invention,” Weidenheimer identified his initials and those of his superior Tiesler thereon, along with the date 2/15/63, evidencing approval by two of Blicharz’s superiors as of that date.

Contrary to the position of the board and arguments of appellee, we find the Weidenheimer testimony to constitute significant corroboration in other respects also. Weidenheimer’s testimony that he observed Experiments C and D described on page 88 is clearly believable under the circumstances of record. Weidenheimer knew about the favorable results of his subordinate Blicharz’s attempt at spraying wax in a solvent onto the powdered ferrous fumerate and granulating with heat. Being eager to simplify that process and avoid the need for the solent, Weidenheimer had discussed with Blicharz the desirability of the proposed experiment using dry materials. He had asked Blicharz to advise him when the experiment was to be run, and had expressly been so advised by Blicharz before Experiment D was performed. Moreover, Weidenheimer testified that he witnessed the entire run from beginning to end. Having left the employ of Cyanamid several years before the time he testified, he was a disinterested witness.

A charge by Hays, that Weidenheimer did not know other than through Blicharz that the materials used in Experiment D corresponded to the requirements of the count, does not indicate any significant defect in corroboration in this case. Weidenheimer saw the materials in the coating pan and was familiar with them. He was familiar with ferrous fumerate, Arlacel 161, and beeswax as standard materials used in the “Sequels” manufacturing process and in the laboratory; furthermore, they were previously used in the spray process on which Experiment D was intended to be an improvement. Weidenheimer had no reason to doubt that the materials used were what Blicharz told him they were and Blicharz had no reason to mislead Weidenheimer as to what they were. As in Patterson v. Hauck, 341 F.2d 131, 52 CCPA 987 (1965), the question presented is whether a “simple process, using known materials, was or was not practiced.”

Hays further urges that the granulate Blicharz made does not meet the count because it was not proven useful for making a tablet for sustained release of the physiologically active material. He bases the need for sustained release characteristics on the fact that the work of Blicharz was primarily in connection with a research program to improve Lederle’s sustained release “Sequels” products. To support a sustained release requirement, Hays relies largely on Harding v. Steingiser, 318 F.2d 748, 51 CCPA 701 (1963). That was a split decision of this court where two judges joined in an opinion affirming the Board of Patent Interferences which found there was no actual reduction to practice, a third judge concurred in the result only, and the other two judges wrote dissenting opinions. However, all of the opinions accepted the proposition that “where an interference count does not specify any particular use, evidence proving substantial utility for any purpose is sufficient to establish reduction to practice.” The majority opinion and that of one dissenter cited Blicke v. Treves, 241 F.2d 718, 44 CCPA 753 (1957) for that proposition. The difference in conclusions arose from the application of that proposition to the proofs.

In the present case, the count does not specify any sustained release properties for the granulate to be formed, and we do not think that a showing of any particular sustained release properties for the Blicharz granulate is required. We find the record to provide adequate evidence that one skilled in the art would consider the granulate in question useful for making drugs in the form of tablets not having any particular sustained release properties. The Blicharz “Record of Invention” stated that “the techniques can be used to produce granules which can be subsequently tabletted or encapsulated which do not have sustained release properties.” The Lowry and Wurtz patent, from which the count was derived, describes the invention primarily without regard to producing a product having sustained release properties. The specification of that patent includes only a brief suggestion that “[l]arger amounts of thermoplastic material may be used as binder where it is desired to produce sustained release tablets.” Furthermore, Hays has disclosed no sustained release data in his application — a circumstance that leaves him in a poor position to urge that a strict criterion be applied in interpreting the Blicharz reduction to practice proofs on this point.

The recent case of Knapp v. Anderson, 477 F.2d 588 (Cust. & Pat.App.1973), also relied upon by Hays, does not conflict with our view that no particular sustained release properties are required for a reduction to practice of the count here. That case also cited Blicke v. Treves, supra, as recognizing that proof of substantial utility for any purpose is sufficient to establish actual reduction to practice of counts which do not specify any particular use. However, the appellants in Knapp were held not to have established an actual reduction to practice of certain amine additives since the only utility contemplated for the additives had not been sufficiently demonstrated. The present facts are distinguishable from those of Knapp inasmuch as the record establishes that the granulate of Blicharz also has a substantial utility for making drugs in the form of tablets not having any particular sustained release properties, which utility has been sufficiently demonstrated.

The final basic consideration is whether Blicharz reduced to practice a method that provided “a granulate which can be directly pressed into tablets.” We do not find corroborated evidence that the granulate from Blicharz Experiment D was actually pressed into tablets although granulates from other similar experiments apparently were. However, the product of the recited method is the granulate, not tablets made therefrom, and the method was reduced to practice if it is proved that the granulate could be so pressed. Weidenheimer who witnessed the entire Experiment D on notebook page 88 testified:

Q. 302. Did he form granules that could have been pressed into tablets?
A. Yes, they could have been used for this purpose.

Weidenheimer further testified that, other than a slowing of the release rate, there was no problem of tableting the granulates produced by the one-step process of Blicharz. Butensky, a coworker of Blicharz not shown by the record to have testified either to witnessing Experiment D or examining its product, was asked whether the “agglomerates” resulting from other unidentified experiments by Blicharz could have been pressed into tablets. He replied that he did not know, but that it was possible they could have been so pressed. As a possible source of difficulty he noted that some of the agglomerates “might have been too large.”

Considering the evidence as a whole, we are satisfied that a person skilled in the art would have known that the granulate of Experiment D could have been directly pressed into tablets. In connection with the standard to be used in evaluating the evidence of Blicharz on this point, it is of interest that Hays’ application discloses that the granulates (or agglomerates) produced by his process are milled in a comminuting machine before they are pressed into tablets. A party in interference relying on his application for a constructive reduction to practice is not in a favorable position to urge that his opponent’s proofs of actual reduction to practice must show a greater utility than the specification relied on discloses. See Blicke v. Treves, supra. Butensky’s feeling that possibly some of the granulates or agglomerates produced by Blicharz’s experiments might be too large for tableting does not detract from the specific testimony of Weidenheimer, one skilled in the art who actually saw the granulates and was satisfied that they could be tableted.

Although we have already reached the conclusion that Blicharz’s work connected with Experiment D did amount to an actual reduction to practice on December 7, 1962, we feel compelled to specifically reject the board’s finding that the Blicharz work amounted to an abandoned experiment. The board seems to have based that finding on the view that the record is devoid of any comment on the Blicharz work by management after January 1963. However, we find that a conviction of success in the invention was demonstrated by the fact that the “Record of Invention” was promptly prepared, authorized by both Weidenheimer and his superior Tiesler, and submitted to the patent department of Cyanamid by March 5, 1963. It is true that there was nearly a two year delay in filing the application, but Weidenheimer explained that was “[b]e-cause our patent attorneys were swamped then.” The actual reduction to practice was accomplished before Hays’ date so no issue of diligence toward a reduction to practice is involved. Likewise, the question of abandonment, suppression or concealment under 35 U.S.C. § 102(g) of an invention already reduced to practice was not raised here and is not before us, even though an express rejection by the board of “the Hays charge of ‘spurring’ ” indicates that matter was argued below.

Hays renews a request that Blicharz be restricted to his filing date under Rule 223(c) on the grounds that the alleged first written description and drawing of the invention set out in his preliminary statement do not actually disclose the invention of the count. The board, having previously denied the request, found no reason to discuss it in its priority opinion. We find no error in the board’s handling of the request.

The decision of the board is reversed.

Reversed.

      . The involved Blicharz application is serial No. 687,070, filed November 30, 1967, as a continuation of serial No. 432,288, filed February 12, 1965. Hays is involved through application serial No. 292,062, filed July 1, 1963. Count 1 was copied, along with four other counts dependent thereon which were also awarded to Hays, from Lowry and Wurtz patent No. 3,308,217, granted March 7, 1967, on an application filed February 9, 1965. Before final hearing, judgment adverse to Lowry and Wurtz was entered for failure to take testimony.

      . See Rimbach v. Wanmaker, 362 F.2d 561, 53 CCPA 1552 (1966) for a discussion of tbe Harding case and a reiteration of the principle advanced in Blicke.


author: HASTIE, Judge.

text:
    Arthur O. KLEIN, and all other persons similarly situated, Plaintiffs-Appellants, v. BERKELEY BUILDING ASSOCIATES et al., Defendants-Appellees.
    No. 2-11.
    Temporary Emergency Court of Appeals,
    March 29, 1974.
    Rehearing Denied April 29, 1974.
    Sheldon V. Burman, New York City, for plaintiffs-appellants.
    Stephen Schlakman, Wien, Lane & Malkin, New York City, for defendantsappéllees. '
    Before HASTIE, ANDERSON and HASTINGS, Judges.
    ORDER OF AFFIRMANCE UNDER RULE 28
   HASTIE, Judge.

The court having considered the record, briefs and oral arguments on this appeal and having found no reversible error in the decision of the District Court, the judgment is affirmed.