author: DEVINE, Chief Judge.

text:
    William L. KIRK, Individually and as Administrator of the Estate of Diane M. Kirk v. UNITED STATES of America.
    Civ. No. 83-212-D.
    United States District Court, D. New Hampshire.
    March 15, 1985.

      James R. Volker, Salem, Mass., for plaintiff.
    Bruce E. Kenna, U.S. Atty., Concord, N.H., for defendant.
   MEMORANDUM OPINION

DEVINE, Chief Judge.

Plaintiff William L. Kirk (“Kirk”) has brought a claim in this court pursuant to the Federal Tort Claims Act (“FTCA”), 28 U.S.C. §§ 1346(b), 2671-2680. Plaintiff, owner of a house rife with problems, seeks money damages, premising his claim on the Farmers Home Administration’s (“FmHA”) negligent supervision and inspection during the construction of the imperfect home. Defendant argues in response that plaintiff’s claim is barred by the applicable statute of limitations, that any negligence claim is without merit, and that its actions came within the ambit of a recognized exception to FTCA. As adduced from the evidence presented at trial, the relevant facts are as follows.

In April 1973 Charles Fitz (“Fitz”) applied for a Rural Housing Loan from the FmHA pursuant to Title V of the Housing Act of 1949, 42 U.S.C. § 1471, et seq., for the construction of a ranch-style home on a one-acre undeveloped lot located at 49 Long Hill Road in Dover, New Hampshire. FmHA, which is an agency of defendant, accepted Fitz’s application for a loan, and pursuant to regulations in effect at that time proceeded to assist Fitz in effectuating construction. These regulations, 7 C.F.R. § 1804, et seq. (1973), provided that the FmHA County Supervisor would approve the contractor selection and the construction contract, review plans and specifications for the building, approve any variances in construction plans, inspect the building construction, and determine if the construction complied with the conditions of the contract.

Fitz, with FmHA’s approval, contracted with Albert Estes (“Estes”) in April of 1973 to build a single-family home at 49 Long Hill Road. Estes met with FmHA’s Construction Supervisor William West (“West”) at that time to review and revise plans and specifications for the project. The design for the property’s septic system was supplied by Fitz after approval of the system design by State authorities. The plans and specifications for the home as well as the construction contract between Fitz and Estes were approved in April 1973 by FmHA’s Assistant County Supervisor Aaron Chadbourne. The construction contract granted FmHA the right to inspect and test all materials and workmanship as well as the right to reject any defective materials and workmanship.

Estes began construction at 49 Long Hill Road in June 1973 and completed work thereon in December 1973, the month Fitz took occupancy. West, in his capacity as FmHA’s Construction Supervisor, visited the site on at least seven occasions between July 20, 1973, and August 28, 1974, to ensure compliance with design specifications. In January and June 1974 West observed foundation cracks, and FmHA directed Estes to repair these structural imperfections. During construction Fitz had ordered several unapproved variances, including relocation of the septic system from one end of the property to another. Pursuant to his obligation under the construction contract, Fitz had loam and sand brought to the site by dump truck in order to grade and backfill the site. West issued his final report in August 1974 indicating that construction was in conformity with FmHA’s approved plans and specifications.

The FmHA file on the Fitz construction revealed that Fitz complained to FmHA in December 1974 about leakage and smell from the septic system. In February 1975 Estes agreed to open and repair the septic system. In February 1977 Fitz complained to FmHA about frost heaving and foundation cracking near the garage door and basement area. The foundation cracking was confirmed by FmHA officials in March 1977. The FmHA file does not reveal any further complaints. Fitz testified that Estes patched the foundation cracks and that he (Fitz) added six inches of fill to the leach field. Fitz did not experience any further problems with the foundation or the septic system during the years of his ownership. Neither did he experience problems with the electric circuitry or the water pump during his years of ownership. Fitz moved from the property in the summer of 1979.

Plaintiff became interested in purchasing the 49 Long Hill Road property in September 1979 after visiting the lot with realtor Larry Dubois. During that visit, plaintiff noticed that the foundation had been patched in several areas, a condition which the realtor attributed to settling. Plaintiff contacted FmHA at that time about obtaining mortgage financing for the 49 Long Hill Road property. In October 1979 plaintiff made an offer to buy the property for $40,500, an offer never submitted to Fitz by the Fischer Agency, the real estate firm selling the property for Fitz. FmHA approved plaintiff’s application for a loan in October 1979. Plaintiff again offered to purchase the property for $41,000, the offer this time going to Walter Fischer of the Fischer Agency on October 26, 1979. Fischer purportedly had purchased the property from Fitz pursuant to a guaranteed sale contract, although the actual transfer of title between Fitz and Fischer was not accomplished until November 14, 1979. Plaintiffs second offer was never submitted to Fitz. Plaintiff offered to purchase the property for a second time from Fischer (a third time overall) on November 28, 1979, for $41,000, an offer which was accepted. Plaintiff and his wife occupied the premises in December 1979 under a rental agreement with Fischer until the transfer of title and closing on January 18, 1980.

Prior to closing, plaintiff made three separate personal inspections of the premises. In addition to the September 1979 inspection with Larry Dubois, plaintiff inspected the premises a few days later with his wife and Larry Dubois, and then in early October 1979 he inspected the premises with his wife and her parents. These inspections were cursory walk-through visits designed to ensure that basic utilities and amenities were present and functional. Plaintiff did not have a professional appraisal or inspection of the property to ensure the structural integrity of the home prior to purchase.

The first two purchase and sale agreements signed by plaintiff in October 1979 referenced the seller’s obligation to update the plumbing, wiring, and heating system prior to the transfer of title. The third and last purchase and sale agreement was conditioned upon a functional septic system, with plaintiff accepting the responsibility of pumping out as well as inspecting the system prior to occupancy. While plaintiff did have the system pumped out, he did not endeavor to have it inspected. The last purchase and sale agreement also indicated that plaintiff accepted the house in its “as is” condition.

Plaintiff began to experience difficulties with the premises in June 1980 when he noticed that the ground around the leach field was wet and malodorous. In August 1980 the well pump failed. During the winter of 1980 and the spring of 1981 the foundation walls in the basement area developed serious cracks. Plaintiff hired Jack Wallace, a contractor, to repair the foundation walls in the fall of 1981. This • remedial work revealed the cause of the cracked foundation: inadequate footings and frostwall in violation of FmHA’s Minimum Property Standards (“MPS”), standards which had supposedly been achieved during the 1973 construction. Additional defects uncovered during the remedial work included inadequate insulation in the living room floor. According to Peter Rousseau, an excavation contractor, the septic system deficiencies were the result of inadequate depth of the system and a high water table.

Plaintiff first became aware of FmHA’s involvement in the original construction of the 49 Long Hill Road property in October 1979, but did not gain access to the FmHA files, specifically the Fitz file, until the summer of 1981. Kirk submitted a Claim for Damage to FmHA on May 3, 1982, which was denied on October 26, 1982. The instant action was filed with the Court on April 22, 1983.

Before the Court can reach the merits of the case, it must initially determine whether plaintiff has brought suit in a timely manner. Under FTCA, 28 U.S.C. §§ 1346(b), 2671-2680, a tort claim against the United States must be presented in writing to the appropriate federal agency within two years of the time such claim accrues, and if it is not so presented, it shall be forever barred. 28 U.S.C. § 2401(b). In determining when a claim accrues, the Court follows “the lex loci rule — the applicable law is the law of the state where the claim arose.” Hau v. United States, 575 F.2d 1000, 1002 (1st Cir.1978). Accordingly, the law of New Hampshire governs the issue of when plaintiff’s cause of action accrued. Girard v. United States, 455 F.Supp. 502, 503 (D.N.H.1978).

It is well established in New Hampshire that a cause of action sounding in tort accrues at the time damages occur. Premium Management, Inc. v. Walker, 648 F.2d 778 (1st Cir.1981), citing Roberts v. Richard & Sons, Inc., 113 N.H. 154, 156, 304 A.2d 364 (1973). There is, however, a “discovery rule” in New Hampshire which provides an exception to the general rule. EIMCO-BSP Services Co. v. Davison Con struction Co., 547 F.Supp. 57, 59 (D.N.H.1982). Under the discovery rule, a cause of action will not accrue “until the plaintiff discovers or in the exercise of reasonable diligence should have discovered not only that he was injured but also that his injury may have been caused by the defendant’s wrongful conduct.” Id,., quoting Brown v. Mary Hitchcock Memorial Hospital, 117 N.H. 739, 743, 378 A.2d 1138 (1977).

Application of the discovery rule to the facts presented in this case leads the Court to conclude that plaintiff presented his claim to FmHA within the requisite two years following the accrual of his cause of action. With respect to the defective septic system, plaintiff noticed effluent discharge and odor in proximity to the leach field for the first time in June 1980, five months after occupying the premises at 49 Long Hill Road. Similarly, plaintiff only noticed foundation and structural cracking in the winter of 1980, almost a year after occupying the premises. Further, the Court finds that the relationship between the deficient septic system, structural defects, and FmHA’s inspection of 'the premises at the time of construction in 1973 only became apparent to plaintiff after he reviewed the FmHA file on the Fitz property in the summer of 1981. It is at that time, under New Hampshire’s discovery rule, that plaintiff’s cause of action accrued with respect to the septic system and structural imperfections. Since plaintiff presented his claim within one year following accrual, May 22,1982, it is not time barred under 28 U.S.C. § 2401(b).

The Court finds that the nature of the defects and deficiencies associated with the property were such as not to be readily apparent to plaintiff during his views of the property in the fall of 1979. As latent defects, the Court is not convinced that even a professional appraisal would have uncovered the extent and severity of these defects in the fall of 1979. The FmHA appraisal performed at that time certainly did not uncover them. Moreover, neither of the two previous owners, Fitz or Fischer, informed plaintiff about potential problems with the property. In fact, the realtor showing the property to plaintiff attributed the patched cracks along the foundation observed by plaintiff in the fall of 1979 to simple settling of the foundation. Plaintiff did not have notice of the defects and their severity until discovered in June 1980 (septic system) and winter 1980 (foundation). Any inferences to be drawn from the three purchase and sale agreements signed by plaintiff cannot overcome this conclusion. However, even if plaintiff is presumed to have had notice of the defects prior to purchasing the property on January 18, 1980, the causal relationship between the defects and FmHA’s conduct was not apparent until the summer of 1981. While it is true that plaintiff knew in October 1979 of FmHA’s involvement in construction of the home at 49 Long Hill Road, he was not aware, nor in the exercise of reasonable diligence should he have been aware, of FmHA’s alleged wrongful conduct until he had the opportunity to review the Fitz file in the summer of 1981. As noted above, it was at this time that the cause of action accrued, and plaintiff’s claim was accordingly presented in a timely manner.

The Court next turns its attention to the merits of plaintiff’s allegation that FmHA negligently inspected and supervised construction of the 49 Long Hill Road property in 1973. In such a negligence action, plaintiff bears the burden of showing that defendant owed him a duty of care, that the duty was breached, and that the breach caused plaintiff’s harm. See W. Prosser, Handbook of the Law of Torts § 30 (4th ed. 1971).

The existence of a duty on the part of FmHA to supervise and inspect the construction of homes built pursuant to the Housing Act of 1949 was examined in Neal v. Bergland, 646 F.2d 1178 (6th Cir.1981), aff'd sub nom. Block v. Neal, 460 U.S. 289, 291, 103 S.Ct. 1089, 1091, 75 L.Ed.2d 67 (1983). The Sixth Circuit Court of Appeals in that case evaluated the claim of a plaintiff who purchased a prefabricated house constructed under a contract requiring conformity with FmHA approved plans, where FmHA had given plaintiff a direct rural housing loan in 1977 and post-construction defects materialized. The Sixth Circuit found that the Secretary of Agriculture and FmHA were charged with certain statutory and regulatory responsibilities under the Housing Act of 1949. The Secretary was authorized to extend financial and technical assistance through FmHA to eligible rural residents to enable them to obtain “decent, safe and sanitary housing”. 42 U.S.C. §§ 1471(a), 1472; see 7 C.F.R. § 1822.2 (1977). Buildings and repairs constructed with. FmHA funds were to be supervised and inspected as required by the Secretary, who was authorized to provide technical services such as building plans, specifications, construction supervision, and inspection. 42 U.S.C. § 1476(a); see 7 C.F.R. § 1822.7(a) (1977). FmHA through its supervisors was to inspect development work as frequently as necessary to assure that construction was in conformity with plans and specifications, 7 C.F.R. § 1804.-4(g)(3) (1977), and borrowers were to be supervised to assure protection of FmHA’s financial interest, 7 C.F.R. § 1802.74 (1977). After examining these provisions, the Sixth Circuit concluded that supervision and inspection of home construction served two purposes: the first, to achieve the objectives of the loan program by providing rural residents an opportunity for safe and decent housing, and the second, to protect the Government’s security interest. Neal v. Bergland, supra, 646 F.2d at 1181.

With respect to FmHA’s obligations, the Sixth Circuit held first that FmHA had no affirmative duty to inspect and supervise, id., recognizing simply that FmHA had been granted a right to inspect, and that such a right, without more, did not imply an obligation to inspect, id. According to the Sixth Circuit, none of the statutory provisions or regulations “include[d] a clearly defined obligation on the part of FmHA running to plaintiff to perform any supervisory function”, and thus no contractual obligation or duty existed on the part of FmHA to provide supervision or inspection during construction, id., citing Ramsey v. Farmers Home Administration, 443 F.Supp. 760 (E.D.Mo.1978); Adamsville Lumber Co., Inc., v. Rainey, 348 F.Supp. 373 (W.D.Tenn.1972); Forcum-Lannom, Inc. v. Berry, 344 F.Supp. 774 (W.D.Tenn.1972).

The Sixth Circuit in Neal v. Bergland, supra, did, however, conclude that FmHA had assumed a duty to inspect and supervise construction projects, and thus could be held liable for a breach of that duty in a tort action for negligent inspection. This conclusion was supported by the existence of regulations requiring inspection, 7 C.F.R. § 1804.4(g), and by the Good Samaritan doctrine, as embodied in Restatement (Second) of Torts § 323 (1965), which provides:

One who undertakes, gratuitiously or for consideration, to render services to another which he should recognize as necessary for the protection of the other’s person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking if
(a) his failure to exercise such care increases the risk of such harm, or
(b) the harm is suffered because of the other’s reliance upon the undertaking.

Id. at 1181-82. See, e.g., Park v. United States, 517 F.Supp. 970 (D.Or.1981) (FmHA was negligent in undertaking to perform its duty to inspect during rural housing construction).

In the case at bar, plaintiff’s predecessor in title, Fitz, the original owner of the property at 49 Long Hill Road, obtained a rural housing construction loan from FmHA in 1973. This loan was governed by statutory provisions and regulations almost identical to those evaluated in Neal v. Bergland, supra, and the Court finds the Sixth Circuit analysis in that case persuasive. The Court accordingly concludes that while no contractual obligation on the part of FmHA arose from the statutory and regulatory provisions existent in 1973, a duty to perform a non-negligent inspection did exist under New Hampshire’s Good Samaritan doctrine.

The Court has previously had occasion to reference this doctrine.

It is a basic principle of the applicable New Hampshire law that one who voluntarily undertakes to act may be liable to others for the negligent performance of the undertaking. Corson v. Liberty Mutual Insurance Company, 110 N.H. 210, 265 A.2d 315 (1970); Smith v. American Employers’ Insurance Company, 102 N.H. 530, 163 A.2d 564 (1960) (“Smith”); Pittsfield Cottonwear Manufacturing Co. v. Pittsfield Shoe Co., 71 N.H. 522, 53 A. 807 (1902); Restatement §§ 323, 324 A. ‘This liability extends to all who may fairly be said to come within the orbit of risk created by the actor’s negligence.” Smith, supra 102 N.H. at 533, 163 A.2d at 567.

Wise v. Kentucky Fried Chicken Corp., 555 F.Supp. 991, 995-96 (D.N.H.1983). See, e.g., Irving v. United States, 532 F.Supp. 840, 845 (D.N.H.1982) (with respect to Occupational Safety and Health Act inspections, “New Hampshire law does impose the ‘Good Samaritan duty’ that one who gratuitously undertakes to assist in the safety of plant operations by making inspections is liable to an injured employee for making negligent inspections which are causal of the injury to said employee”). Referenced in the Wise decision, the Court turns to Restatement (Second) of Torts § 324A (1965) for the embodiment of the Good Samaritan doctrine. This section of the Restatement provides:

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if
(a) his failure to exercise reasonable care increases the risk of such harm, or
(b) he has undertaken to perform a duty owed by the other to the third person, or
(c) the harm is suffered because of reliance of the other or the third person upon the undertaking.

Plaintiff’s burden in the instant action accordingly was to demonstrate by a preponderance of the evidence the following five elements under section 324A:

(1) that FmHA as defendant’s agent undertook, gratuitously or for consideration, to render services to Fitz in 1973;

(2) that the services so rendered were of a kind which FmHA should have recognized as necessary for the protection of plaintiff;

(3) that FmHA failed to exercise reasonable care in the performance of its undertaking;

(4) that the failure to exercise reasonable care resulted in harm to the plaintiff; and

(5) that FmHA’s failure to exercise such care (a) increased the risk of such harm, or (b) the undertaking was to perform a duty owed by Fitz to plaintiff, or (c) the harm was suffered because of the reliance of Fitz or plaintiff. See Jeffries v. United States, 477 F.2d 52, 56 (9th Cir.1973).

The first four elements under section 324A discussed above encompass the elements of duty, breach, and harm in the traditional negligence analysis. The fifth element, with its three provisional requirements, encompasses the final element in the traditional negligence analysis, proximate causation. See Blessing v. United States, 447 F.Supp. 1160, 1193 n. 51 (E.D.Pa.1978); DeJesus v. Liberty Mutual Ins. Co., 423 Pa. 198, 223 A.2d 849 (1966). The Court concludes that while plaintiff has carried his burden with respect to the first four enumerated elements, he has not made the requisite showing with respect to the fifth element, and defendant cannot therefore be held liable in this case.

The Court finds and rules, with respect to the first element under section 324A, that FmHA did gratuitously undertake to provide inspection and supervisory services to Fitz in 1973. This conclusion, as noted previously, is supported by Neal v. Bergland, supra, 646 F.2d 1178. With respect to the second element under section 324A, the Court concludes that the supervisory services rendered to Fitz were necessary for the protection of plaintiff. If FmHA negligently supervised construction at 49 Long Hill Road, thereby permitting the continuance of latent defects, subsequent owners of the property would be foreseeably impacted when the defects later became apparent. This foreseeability rationale applies with equal force to a subsequent owner who takes title one week after completion of construction or seven years after completion of construction. Both must be considered within the “orbit of risk” created by a negligent inspection. FmHA accordingly should have recognized that its supervisory services rendered to Fitz in 1973 were necessary for the protection of all subsequent owners from latent structural defects.

The Court further finds and rules with respect to the third element under section 324A, after evaluating the evidence presented at trial, that FmHA failed to exercise reasonable care in supervising and inspecting construction at 49 Long Hill Road. FmHA approved plans and specifications, as well as the construction contract for the property, which were sufficient to meet FmHA’s Minimum Property Standards. The foundation specifications and MPS for construction at 49 Long Hill Road permitted a minimum depth of excavation below finished grade of three feet, which would accommodate footings and frostwall. Siting the footings and frostwall at that depth would avoid frost upheaval and foundation cracking. West, the FmHA inspection supervisor, gave his approval to the finished construction in August 1974 — approval that signified compliance with the specifications and MPS. However, the cracked foundation and subsequent excavation of the property revealed deviations in the construction from the specifications and MPS. Specifically, there was no frost-wall beneath the garage doors, and the footings were not sunk to an adequate depth below grade. These inadequacies, according to Jack Wallace, who rebuilt the foundation in 1981, and Aaron Chadbourne, the FmHA County Supervisor who viewed the foundation in 1981, were responsible for the cracked foundation. This Court concludes therefore that FmHA’s inspections in 1973 were not carried out with reasonable care since they failed to reveal these deviations.

Similarly, the plans and specifications approved by FmHA in 1973 required six inches of insulation in the ceilings, with three to five inches of insulation in the walls and floors. During Wallace’s reconstruction of the garage foundation, the living room floor was exposed, revealing little or no insulation. The Court attributes this deviation from specifications to careless construction, thereby indicating FmHA’s failure to exercise reasonable care in supervision and inspection.

On the other hand, the Court is unwilling to find a failure to exercise reasonable care in supervision and inspection with respect to the 49 Long Hill Road septic system. This deficiency was the result of improperly placing the system on the lower portion of the property, contrary to the state-approved plan that sited the system at the upper portion of the property. This variance in placement worked out between Fitz and the contractor, Estes, was accomplished without FmHA approval. Moreover, the septic system design was approved by state authorities without FmHA involvement. Placement of the system at the lower portion of the property caused seepage problems since the system was sited at a depth inadequate to accommodate proper leaching, and the problem was exacerbated by a very high ground water level at that location on the property. Additionally, during the landscaping of the property in 1973, Fitz had several heavy vehicles, including a bulldozer, traversing the land. The Court finds that this vehicular activity caused some damage to the piping in the septic system. This damage to the piping, in conjunction with FmHA’s lack of involvement in designing and locating the system, leads the Court to find that FmHA did not fail to exercise reasonable care in supervising the construction of the septic system.

The Court next finds and rules with respect to the fourth element under section 324A that FmHA’s failure to exercise reasonable care did result in harm to plaintiff. The structural defects in the foundation and other deviations from the plans and specifications forced plaintiff to seek remedial construction work costing thousands of dollars.

The Court lastly finds and rules with respect to the fifth element under section 324A that plaintiff has not established any of the three provisional requirements, (a), (b), or (c), listed thereunder. With respect to subsection (a), plaintiff has not proven by a preponderance of the evidence that FmHA increased the risk of harm to plaintiff. The risk of harm to plaintiff arose through the' contractor's marginal and questionable workmanship, specifically as it related to the integrity of the foundation. Plaintiff did not present any evidence which would suggest that FmHA altered or recommended an alteration in the structural construction process which in any way increased the risk of harm. The risk of structural damage resulting from inadequate footings and lack of frostwall existed independently of any inspection, negligent inspection, or omission to inspect.

At best, defendant’s alleged conduct merely ‘permitted the continuation of an existing risk,’ an inadequate basis upon which to impose liability under section 324A(a). See Raymer v. United States, 660 F.2d 1136, 1143 (6th Cir.1981), cert. denied, 456 U.S. 944, 102 S.Ct. 2009, 72 L.Ed.2d 466 (1982); United Scottish Insurance Company v. United States, 614 F.2d 188, 194 (9th Cir.1980); Zabala Clemente v. United States, 567 F.2d 1140, 1145 (1st Cir.1978); Davis v. Liberty Mutual Insurance Company, 525 F.2d 1204, 1207 (5th Cir.1976). Plaintiff’s critical defect is his inability to identify ‘since of commission rather than omission____ Moreover, the comment to section 324A(a) makes clear that “increased risk” means some physical change to the environment or some other material alteration of circumstances.’ Patentas v. United States, 687 F.2d 707, 717 (3d Cir.1982).

Ricci v. Quality Bakers of America Cooperative, Inc., 556 F.Supp. 716, 720 (D.Del.1983) (no increased risk of harm to plaintiff injured by defective equipment after defendant’s alleged negligent safety inspection). The Court concludes that FmHA did not materially alter the construction process at 49 Long Hill Road in 1973 so as to increase the risk of harm to plaintiff within the meaning of subsection (a).

Similarly, with respect to subsection (b), plaintiff did not present any evidence which would lead the Court to believe that FmHA undertook to perform a duty owed by Fitz to plaintiff. In fact, the Court is hard-pressed to conceive of any duty which Fitz owed plaintiff at the time of construction in 1973. With respect to subsection (c), plaintiff did not present any evidence which would lead the Court to believe that Fitz or plaintiff detrimentally relied on FmHA’s inspection and supervision. Plaintiff testified without equivocation that he did not rely on FmHA’s 1973 inspection at the time of purchase of the property. Moreover, plaintiff did not present any evidence that Fitz relied on the FmHA inspection. Fitz in his testimony never alluded to any reliance on FmHA’s inspection and supervision.

In summary, the Court finds and rules that plaintiff brought his suit in a timely manner under FTCA, 28 U.S.C. §§ 1346(b), 2671-2680; that defendant’s agent, FmHA, did assume a duty under New Hampshire’s Good Samaritan doctrine to inspect and supervise construction at 49 Long Hill Road in 1973 with reasonable care; that FmHA did not exercise reasonable care in carrying out its duty; that proper inspection was necessary for the protection of plaintiff; that FmHA’s lack of reasonable care resulted in harm to plaintiff; but that defendant is not liable because neither plaintiff nor his predecessor in title detrimentally relied on FmHA’s inspection and because FmHA’s actions did not increase the risk of harm to plaintiff.

The foregoing shall comprise the findings and rulings of the Court pursuant to Rule 52(a), Fed.R.Civ.P. Any requests for findings and rulings submitted by the parties which are not hereinabove inferentially granted are herewith denied. The Clerk is directed to enter judgment for the defendant.

SO ORDERED.

      . The Court assumes, without deciding for purposes of this discussion, that FmHA’s activities were not subject to the discretionary function exception, 28 U.S.C. § 2680(a), to the Government’s waiver of sovereign immunity in FTCA, 28 U.S.C. § 2671, et seq.

      . The Court notes with considerable interest that the regulations found at 7 C.F.R. § 1804 were amended in 1980 to provide:
      (a) Responsibility for Inspection. The County Supervisor or District Director, accompanied by the borrower when practicable, will make final inspection of all development work and periodic inspections as appropriate to protect the security interest of the government.... The borrower will be responsible for making inspections necessary to protect the borrower’s interest. FmHA’s inspections are not to assure the borrower that the house is built in accordance with the plans and specifications. The inspections create or imply no duty or obligation to the particular borrower but are, rather, for the dual purposes of determining that FmHA has adequate security for its loan and enabling FmHA to determine that FmHA is working toward achieving the statutory goal of providing adequate housing____
      (b) Frequency of inspections____
      (5) The borrower should make enough periodic visits to the site to be familiar with the progress and performance of the work, in order to protect the borrower’s interest.
      7 C.F.R. § 1924.9(a), (b)(5). In at least two instances since 1980 where plaintiffs sought to hold FmHA liable for negligent inspection and supervision of site development, federal courts have found that these amended regulations render the Good Samaritan doctrine nugatory since they unequivocally indicate that it is the borrower’s responsibility to make site inspections in order to protect his or her interest. See Moody v. United States, 585 F.Supp. 286 (E.D.Tenn.1984); Cash v. United States, 571 F.Supp. 513 (N.D.Ga.1983).

      . This case was affirmed by the Supreme Court sub nom., Block v. Neal, 460 U.S. 289, 291, 103 S.Ct. 1089, 1091, 75 L.Ed.2d 67 (1983). The Government did not, however, seek review of the question whether the complaint stated a proper claim under the Good Samaritan doctrine, but instead argued solely that the claim was excluded by the FTCA's misrepresentation exception. The Supreme Court consequently did not review the Good Samaritan question. The Supreme Court held that, assuming a proper claim was asserted under that doctrine, such claim was not barred by the misrepresentation exception, finding that negligence was actionable since it was separate and independent of any misrepresentation that also may have been present.

      . 7 C.F.R. § 1822.2 (1973) provided that ”[t]he basic objectives of the Farmers Home Administration (FHA) in making section 502 loans are to assist farm owners ... and other rural residents ... who are or will be owners of land in rural areas to obtain decent, safe, and sanitary dwellings...." 7 C.F.R. § 1822.7(a) (1973) provided that "[sjupervision will be provided borrowers to the extent necessary to achieve the objective of the loan and to protect the interests of the Government.” 7 C.F.R. § 1804.4(g)(3) (1973), provided that FmHA’s supervisor “will inspect development work as frequently as necessary to assure that construction and land development conforms with the plans and specifications. ..." 7 C.F.R. § 1802.74 (1973) provided that borrowers would be supervised "to the extent necessary to assure ... protection of [FmHA’s] financial interest.”

      . It is well established that in FTCA cases federal courts apply "the law of the place where the act or omission occurred”, and here that rule requires application of the law of New Hampshire. See 28 U.S.C. § 1346(b); Zabala Clemente v. United States, 567 F.2d 1140, 1143 (1st Cir.1977), cert. denied, 435 U.S. 1006, 98 S.Ct. 1876, 56 L.Ed.2d 388 (1978).

      . Restatement (Second) of Torts § 323 (1965), employed by the court in Neal v. Bergland, supra, 646 F.2d 1178, and Restatement (Second) of Torts § 324A (1965) "are often cited together as expressions of the same basic principle." Canipe v. National Loss Control Service Corp., 736 F.2d 1055, 1059 n. 5 (5th Cir.1984), citing Blessing v. United States, 447 F.Supp. 1160, 1187 & n. 39, 1193 (E.D.Pa.1978).

      . These three provisional requirements under the fifth element are drawn directly from the text of Restatement (Second) of Torts §§ 324A(a), (b), and (c).


source: Caselaw Access Project

author: LONGOBARDI, District Judge.

license: Public Domain

text:
    The PROCTER & GAMBLE COMPANY, Plaintiff, v. NABISCO BRANDS, INC., Defendant. The PROCTER & GAMBLE COMPANY, Plaintiff, v. KEEBLER COMPANY, Defendant. The PROCTER & GAMBLE COMPANY, Plaintiff, v. FRITO-LAY, INC., Defendant.
    Civ. A. Nos. 84-333 LON to 84-335 LON.
    United States District Court, D. Delaware.
    March 20, 1985.

      Robert H. Richards, III, E. Norman Veasey, Jane R. Roth, of Richards, Layton & Finger, Wilmington, Del., Jerome G. Lee, Harry C. Marcus, John F. Sweeney, of Morgan, Finnegan, Pine, Foley & Lee, New York City, Julius P. Filcik, Rose Ann Dabek, Richard C. Witte, of The Procter & Gamble Co., Cincinnatti, Ohio, for plaintiff.
    Douglas E. Whitney, of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., Paul H. Heller, of Kenyon & Kenyon, New York City, for defendant, Nabisco Brands, Inc.
    Howard M. Handelman, Jeffrey M. Weiner, of Bayard, Handelman & Murdoch, Wilmington, Del., Daniel M. Riess, David Lesht, of Lockwood, Alex, FitzGibbon & Cummings, Chicago, 111., Craig S. Stevens, Walter S. Maker, of Keebler Co., Elmhurst, 111., for defendant, Keebler Co.
    James F. Burnett, of Potter, Anderson & Corroon, Wilmington, Del., Wayne M. Harding, Paul M. Janicke, Peter J. Shurn, III, Thomas A. Miller, of Arnold, White & Durkee, Houston, Tex., Steven R. May, Ronald R. Kránzow, Terry D. Dreyer, of Frito-Lay, Inc., Dallas, Tex., for defendant, Frito-Lay, Inc.
   OPINION

LONGOBARDI, District Judge.

The Plaintiff, The Procter & Gamble Company (“P & G”), brought these actions alleging patent infringement, inducement of patent infringement and unfair competition. The patent in question, Patent No. 4,455,333, was issued to P & G on June 19, 1984, for an invention entitled “Doughs and Cookies Providing Storage — Stable Texture Variability.” The patent covers a method of manufacturing ready-to-serve cookies which remain crispy on the outside and chewy on the inside for an extended shelf life. P & G markets these cookies under the Duncan Hines label.

P & G brought separate actions against each of the three Defendants. Nabisco Brands, Inc. (“Nabisco”), the Defendant in Civil Action No. 84-333, markets its own line of dual-textured cookies under the “Almost Home” and “Chewy Chips Ahoy” labels. Civil Action No. 84-334 was brought against Keebler Company (“Keebler”) which markets “Soft Batch” cookies while Civil Action No. 84-335 was brought against Frito-Lay, Inc. (“Frito-Lay”) for its “Grandma’s Rich.’n Chewy” cookies. Each of the Defendants has denied that P & G’s patent is valid or infringed by their products. Each of the Defendants has also denied P & G’s allegations of unfair competition and has counterclaimed alleging acts of unfair competition by P & G.

Currently before the Court are Defendants’ motions to dismiss the inducement of infringement claim and to consolidate the cases for somé purposes but to bifurcate the trial of certain other issues. The validity of P & G’s patent is at issue in all three actions and all parties agree that one consolidated trial should be held on the validity issue. Defendants have filed a joint motion urging that the infringement and unfair competition issues be not only tried separately from the validity issue but also individually as to each Defendant. P & G has urged that all three actions be consolidated and that one trial on the issues of validity, infringement and unfair competition be held. All parties have agreed that the liability phase of the lawsuits should be tried separately from the damages phase.

Defendants Frito-Lay and Keebler have also moved under Fed.R.Civ.P. 12(b)(6) to dismiss P & G’s inducement of infringement count for failure to state a claim. Defendant Nabisco has not filed a motion to dismiss on the same basis but has raised substantially the same issue as an affirmative defense. C.A. 84-333, Docket Item (“D.I.”) 18, p. 6.

I. MOTION TO DISMISS INDUCEMENT OF INFRINGEMENT COUNT

P & G charges that the Defendants induced retailers to infringe its patent in violation of 35 U.S.C. § 271(b) by selling large quantities of their cookies to retailers just before the patent issued with the “knowledge, belief or expectation” that a substantial portion of the cookies would be sold by the retailers after the patent issued. C.A. 84-333, D.I. 1, p. 4; C.A. 84-334, D.I. 1, pp. 4-5; C.A. 84-335, D.I. 1, pp. 4-5.

Defendants have moved to dismiss for several reasons. First, they argue that there can be no liability for inducement of infringement based on actions taken before the patent issued. Defendants also assert that liability for inducement of infringement requires knowledge that the actions would result in infringement of a patent and that mere knowledge of a pending patent application does not satisfy this requirement. Finally, they argue that P & G cannot simultaneously maintain actions for direct infringement and inducement of infringement.

Title 35, section 271 of the U.S.Code governs both direct infringement and inducement of infringement of a patent: “(a) Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent, (b) Whoever actively induces infringement of a patent shall be liable as an infringer.”

There can be no liability for inducement of infringement under section 271(b) unless an actual infringement in violation of section 271(a) is induced. Stukenborg v. Teledyne, Inc., 441 F.2d 1069, 1071-72 (9th Cir.1971); Warner and Swasey Company v. Held, 256 F.Supp. 303 (E.D.Wis.1966).

P & G claims that Defendants’ sales to retailers in the period before the patent issued induced infringing sales by the retailers after the patent issued. Although conceding that Defendants could not be liable for direct infringement based on their pre-issuance sales, P & G argues that the Defendants are liable for inducement of infringement.

Section 271(b) and section 271(c) codify the common law action for contributory infringement. S.Rep. No. 1979, 82nd Cong., 2d Sess., reprinted in 1952 U.S. Code Cong. & Ad.News 2394, 2421; Nordberg Mfg. Co. v. Jackson Vibrators, Inc., 153 U.S.P.Q. 777, 783 (N.D.Ill.1967), rev’d on other grounds, 393 F.2d 192 (7th Cir.1968); 4 Chisum on Patents § 17.04[1] at 17.45. Section 271(c), which imposes liability for contributory infringement by sale of a component of an infringing device, explicitly requires knowledge that the component is “especially made or especially adapted for use in infringement” of a patent. The United States Supreme Court has interpreted section 271(c) to require knowledge by the contributory infringer “that the combination for which his component was especially designed was both patented and infringing.” Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 488, 84 S.Ct. 1526, 1533, 12 L.Ed.2d 457 (1964).

Although section 271(b) does not explicitly require knowledge, most courts and commentators have concluded that liability can be imposed only for knowing and intentional inducement of infringement. Sims v. Western Steel Co., 551 F.2d 811, 817 (10th Cir.1977); Knapp-Monarch Co. v. Casco Products Corp., 342 F.2d 622, 626-27 (7th Cir.1965); Electronized Chemicals Corp. v. Rad-Mat, Incorporated, 288 F.Supp. 781, 784 (D.Md.1968) (dictum); Nordberg Mfg. Co. v. Jackson Vibrators, Inc., 153 U.S.P.Q. at 784; 4 Chisum on Patents § 17.04[1] at 17.46; Miller, Some Views on the Law of Patent Infringement by Inducement, 53 J.Pat.Off.Soc. 86, 119 (1971); contra, Hauni Werke Koerber & Co., KG. v. Molins Ltd., 183 U.S.P.Q. 168, 171 (E.D.Va.1974) (dictum). Liability under section 271(b) requires a state of mind at least as culpable as is required for liability under section 271(c). Nordberg, 153 U.S.P.Q. at 784; Electronized Chemicals, 288 F.Supp. at 784; 4 Chisum on Patents § 17.04 at 17-47; See also, Sims v. Western Steel Co., 551 F.2d at 817 (inducer must be in the nature of an accessory before the fact to the infringement).

On the other hand, mere knowledge that an application for a patent is pending is not sufficient to constitute the knowing and intentional inducement required for a violation of section 271(b). Such a conclusion would be tantamount to extending the period of monopoly based on speculation because there would be no definite knowledge that a patent will issue and what the claims parameters of the patent will be. To merely state the premise by force of logic establishes the absence of the knowledge and intention required for liability.

Defendants argue that even if they had the requisite knowledge and intent, section 271(b) does not apply to actions taken before the patent issues. Although a number of courts have alluded to this issue, there is little direct authority. The Court must, therefore, examine the language of the statute, its legislative history and the purposes behind it in an attempt to discern its meaning.

Section 271(a) specifically imposes geographic and temporal limits on liability for direct infringement. Liability for infringement, for example, is limited to acts occurring “within the United States” and they must occur “during the term of the patent.” On the other hand, sections 271(b) and 271(c) do not contain such restrictions. As a consequence, in section 271(b) cases, courts have readily ignored the geographic limitations of section 271(a) and have imposed liability for acts of inducement occurring outside the United States provided they result in a direct infringement within the United States. Honeywell, Inc. v. Metz Apparatewerke, 509 F.2d 1137, 1141 (7th Cir.1975); Engineered Sports Products v. Brunswick Corp., 362 F.Supp. 722, 727 (D.Utah 1973); Hauni Werke Koerber & Co., KG. v. Molins Ltd., 183 U.S.P.Q. at 170. The decisions suggest what has already been alluded to in previous parts of this opinion; that is, that under section 271(b) there can be no violation unless and until there is a direct infringement. It is the direct infringement which ripens the cause of action of section 271(b) and, without an act of direct infringement, there can be no liability for inducement of infringement. They also suggest that there is a real difference in the omission as to geographic limitations between section 271(a) and section 271(b). Considering the nature of the violation of section 271(b) and the willingness of the courts to disregard national boundaries under section 271(b), it would be most difficult to argue that temporal limitations do apply. In fact, logic suggests that having met the necessary burden of proof, why should one not be liable for inducement of a direct infringement regardless of the time and place of the acts of inducement so long as a viable direct infringement results. It is too much to suggest that the differences in section 271(a) and section 271(b) are mere Congressional oversights.

The legislative history of section 271(b) clearly indicates that it was intended to codify the common law on contributory infringement. S.Rep. No. 1979, 82nd Cong., 2d Sess., reprinted in 1952 U.S.Code Cong. & Ad.News 2394, 2421; Hautau v. Kearney & Trecker Corporation, 179 F.Supp. 490, 492 (E.D.Mich.1959); Weyerhaeuser Timber Company v. Bostitch, Inc., 178 F.Supp. 757, 760 (D.R.I.1959). The doctrine of contributory infringement was developed by the courts long before section 271 was enacted in 1952. Most commonly, it was applied where a patent covered a combination or process. Competitors of the patentee could profit from his invention but avoid liability for direct infringement by selling all but one element of the combination. The buyer would then assemble the final product. While the patentee could always sue the buyer for direct infringement, this was often impractical because the product was sold to thousands of consumers. Note, Section 271(b) of the Patent Act of 1952: Confusion Codified, 66 Yale L.J. 132 (1956); Roberts, Contributory Infringement of Patent Rights, 12 Harv.L.Rev. 35, 39-40 (1898); Alabastine Co. v. Payne, 27 F. 559 (C.C.N.D.N.Y.1886). Contributory infringement was a broad equitable doctrine designed to cover activities which did not constitute direct infringement but which intentionally contributed to a direct infringement. Roberts, 12 Harv.L. Rev. at 44.

P & G alleges that Defendants, knowing that the grant of a patent was imminent, “flooded the market with infringing products with the knowledge, belief or expectation that.a substantial portion if not all of said cookies would be the subject of infringing retail sales to the public after the patent issued.” D.I. 1, pp. 4-5. As a practical matter, P & G cannot bring an action against thousands of retailers. This is particularly true because these same retailers are the customers for P & G’s own products. This case involves the same risk of harm to the patentee as the cases which applied the common law doctrine of contributory infringement. The Defendants have allegedly evaded an action for direct infringement by rushing shipments to retailers and Plaintiff has no practical remedy for the direct infringement. The doctrine of contributory infringement was developed to protect against these very acts. Under the circumstances, the legislative intent to codify the common law rule will best be effectuated by allowing this count to remain.

Such a conclusion is not without some support in reported cases. Several other courts have concluded that liability for inducement under section 271(b) can be based on pre-issuance activities. Jones v. Radio Corporation of America, 131 F.Supp. 82, 84 (S.D.N.Y.1955); Weyerhaeuser Timber Company v. Bostitch, Inc., 178 F.Supp. at 760 (dictum); Hauni Werke Koerber & Co., KG. v. Molins Ltd., 183 U.S.P.Q. at 170 (dictum). Keebler, however, argues that these cases are inconsistent with the reasoning of the Supreme Court in Brulotte v. Thys Co., 379 U.S. 29, 85 S.Ct. 176, 13 L.Ed.2d 99 (1964). In Brulotte, the Court held that licenses for a patented machine which required royalty payments to continue after the patent expired constituted patent misuse. The Court declared that there was a strong public policy against continuing patent rights beyond the seventeen year term of the patent.

Brulotte is distinguishable from this case. In Brulotte, royalties were collected for use after the patent expired. In this case, although the activities giving rise to liability took place before the patent was issued, damages will be based only on direct infringement during the term of the patent. Thus, the effect is not to extend the monopoly of the patent beyond its seventeen year term but, rather, this construction of the statute protects the patent holder from those acts of infringement occurring during the term of the patent for which he would otherwise have no practical remedy.

Finally, the Court sees no merit to Defendants’ contention that P & G cannot simultaneously maintain an action for direct infringement and inducement of infringement. The cases cited by Defendants deal with attempts to bring an action for inducement of infringement based on the same items for which Plaintiff could have brought an action for direct infringement. Self v. Fisher Controls, Co., Inc., 566 F.2d 62 (9th Cir.1977); Gould-National Batteries, Inc. v. Sonotone Corp., 130 U.S.P.Q. 26 (N.D.Ill.1961). The only reason for bringing an inducement action in those cases was to obtain venue in a district in which no acts of direct infringement were committed. Here, however, Plaintiffs could not bring an action for direct infringement based on pre-issuance sales. The fact that they have brought a direct infringement action for cookies sold after the patent issued is not a reason to deprive them of a remedy for pre-issuance activities culminating in a direct infringement within the seventeen year period of the patent.

One commentator, after reviewing the case law on pre-issuance activity resulting in liability under section 271(b), has formulated the rule as follows: “(1) acts of inducement committed prior to the issuance of a patent are actionable under section 271(b) only when they proximately and intentionally result in actual direct infringement after the issue date, and (2) damages awarded under section 271(b) are always measured from the issue date of the patent.” Miller, 53 J.Pat.Off.Soc. at 119. The Court believes that such a standard is not sufficiently broad because it has no reference to the element of knowledge.

On the other hand, if the Plaintiff could prove that Defendants knew that a patent would issue and that its claims would cover Defendants’ products, then there is "no reason why a defendant could or should escape liability for inducement of infringement. The burden of proof is undoubtedly great but the purpose in granting monopoly power can only be fostered by providing this kind of protection.

Under such a claim, time, naturally, will be a factor to be considered in the attenuation of the basis for liability. There is no mathematical formula or fixed temporal limit which could be applied mechanically to determine liability. Rather, the application of this theory of liability under section 271(b) contemplates a factual resolution of the issues of knowledge and intent and the establishment of some causal connection between those issues and the actual infringement alleged to have been induced.

In considering a Rule 12(b)(6) motion to dismiss, the Court must accept all well-pleaded allegations of the complaint as true. Cruz v. Beto, 405 U.S. 319, 92 S.Ct. 1079, 31 L.Ed.2d 263 (1972); Leeward Petroleum, Ltd. v. Mene Grande Oil Co., 415 F.Supp. 158 (D.Del.1976). Plaintiff is entitled to the benefit of all reasonable factual inferences and the motion to dismiss will be granted only if it appears certain that no relief could be granted under any set of facts which could be proven. D.P. Enterprises v. Bucks County Community College, 725 F.2d 943, 944 (3d Cir.1984). Based on the foregoing analysis, the Court concludes that Plaintiff’s allegations of inducement to infringe allege a violation of section 271(b) which Defendants will be required to defend.

The Defendant, Frito-Lay, by letter dated February 21, 1985, cites The Standard Oil Company v. Nippon Skokubai Kagaku Kogyo Co., Ltd., 754 F.2d 345 (Fed.Cir.1985), for the proposition that pre-patent acts of inducement cannot provide a basis for liability under section 271(b). A cursory review of some language of the opinion could lead one to hastily conclude that Standard Oil is very pertinent to the case at hand. After analysis, however, it is apparent that the opinion refers to fixing a time at which inducement-to-infringement acts commences the running of the applicable statute of limitations. The opinion does not decide whether liability could attach to pre-patent acts of inducement that result in direct infringement during the patent period. Admittedly, the Court speaks of no “liability” based on later acts. On the core issue of whether the inducement to infringement acts occurred within the applicable statute of limitations, the Court made it clear that “liability” refers to fixing the time when the statute of limitations begins to run not to the question of when acts of inducement to infringe become viable violations of section 271(b). Under these circumstances, Standard Oil is of little help to the Defendant, Frito-Lay.

II. DEFENDANTS’ MOTION TO CONSOLIDATE AND BIFURCATE

Defendants cite two major deficiencies to support their claim that P & G’s patent is invalid: lack of novelty in violation of 35 U.S.C. § 102 (“the section 102 claims”) and obviousness in violation of 35 U.S.C. § 103 (“the section 103 claims”). All parties agree that it would be wasteful and duplicative to try every issue in all the cases separately for each Defendant. Defendants propose two alternative methods for avoiding this duplication. One alternative is to hold one consolidated trial for all three Defendants covering all of the invalidity claims. The infringement and unfair competition claims would be bifurcated from the invalidity claims and a separate trial on these issues would be held for each Defendant. Defendants’ second alternative would additionally bifurcate the trial on the invalidity claims. First, a trial would be held on the section 102 claims followed, if necessary, by a trial on the section 103 claims.

P & G agrees that the trial on the invalidity claims should be consolidated but argues that the infringement and unfair competition claims should not be bifurcated. Instead, P & G proposes one consolidated trial on the invalidity, infringement and unfair competition claims against all three Defendants. All parties agree that the liability phase of the infringement claim should be bifurcated from the damages phase.

Bifurcation is governed by Rule 42(b) of the Federal Rules of Civil Procedure:

(b) Separate Trials. The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims, or issues, always preserving inviolate the right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of the United States.

The decision to bifurcate a trial is committed to the informed discretion of the trial judge based on the particular facts and circumstances of. each case. Lis v. Robert Packer Hospital, 579 F.2d 819, 824 (3d Cir.), cert. denied, 439 U.S. 955, 99 S.Ct. 354, 58 L.Ed.2d 346 (1978). In Akzona v. E.I. DuPont de Nemours & Co., 607 F.Supp. 227, 232 (D.Del.1984), this Court outlined the factors to be considered in ruling on a motion to bifurcate. The Court must weigh the potential for confusion, delay, prejudice or additional expense resulting from the grant or denial of the motion. Bifurcation may be advisable if the case contains a large number of dissimilar or complex issues, if the trial of one issue is likely to be much shorter than the others or if the determination of the issues in the first trial may eliminate the need for a second trial. Conversely, bifurcation will often be inadvisable if there would be á substantial overlap between the issues to be proved at both trials.

If Defendants succeed in demonstrating that P & G’s patent is invalid, there would be no need for a trial on infringement. However, the significance of this factor is weakened by Defendants’ failure to demonstrate that a trial on infringement would be either long or complex. Based on the current record, Defendants have failed to demonstrate that there are substantial and complicated issues incident to the defense of the infringement action. In response to an interrogatory from P & G requesting the basis for their claim of noninfringement, Defendants merely stated that an invalid patent cannot be infringed. Defendants have thus done little to counter P & G’s argument on the insignificance of the infringement trial.

Further, the infringement trial, regardless of which side prevailed, would not eliminate the need for a trial on the unfair competition claims. P & G’s unfair competition claims are based on allegations that Defendants wrongfully obtained trade secrets covering efficient methods of producing cookies. These claims do not depend on the validity of the patent.

The Court must also consider whether the issues involved are so complex that confusion or prejudice is likely if they are tried together. As all parties have noted, P & G’s patent covers simple baking techniques, not high technology. The infringement claims involve a straightforward comparison between the claims in the patent and the formulation of the Defendants' cookies. While Defendants have made much of the fact that thirteen different types of cookies are involved, most appear to be quite similar to each other. P & G has stipulated that it will rely on the same six claims in its patent for each of the Defendants’ cookies. Correspondence of Jan. 4, 1985, from Plaintiff’s counsel. Finally, the unfair competition claims involve simple acts of industrial espionage allegedly committed by Defendants’ employees. The Court accordingly finds that there is little danger of confusion if a single trial is held on all issues.

Defendants cite two potential sources of prejudice if a single trial is held on all issues. First, they argue that proof of facts of unfair competition by one Defendant may stigmatize the other Defendants. Second, the Defendants are all competitors of each other and they are concerned that their trade secrets might be exposed to their co-defendants during a consolidated trial on infringement.

If this were a jury trial, Defendants’ concern about being unfairly stigmatized might be well-founded. However, this will be a non-jury trial. Acts of malfeasance by one Defendant will not prejudice the Court against the other Defendants. The Court is also sensitive to Defendants’ need to protect their trade secrets but is confident that this can be dealt with through an appropriate protective order.

The Court must also consider the overlap in the proofs required on the issues of validity and infringement. Both issues require the construction of P & G’s patent claims. See, Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1582, 1583 (Fed.Cir.1983). P & G’s evidence on the commercial success of its product is relevant both to the issue of obviousness under section 103 and to the issue of infringement. Graham v. John Deere Co., 383 U.S. 1, 17, 86 S.Ct. 684, 693, 15 L.Ed.2d 545 (1966); Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538-39 (Fed.Cir.1983). If bifurcation were granted, many of the same witnesses would be required to testify at both trials.

Finally, the Court must consider the potential for delay if separate trials are granted. Generally, “a single trial ... tends to lessen the delay, expense, and inconvenience to all concerned.” 5 J. Moore, Moore’s Federal Practice § 42.03[1] at 42-37 to 42-38 (2d ed. 1982). However, Defendants argue that delay would be minimal because discovery would proceed on all issues even if bifurcation were granted. Therefore, if P & G prevailed on the validity issue, the infringement trial could begin quickly.

Defendants’ argument is unrealistic. In a case of this magnitude, the party which loses the validity trial will undoubtedly appeal. This alone is likely to delay the infringement trial by several months. Additionally, there would be further delays if a trial were necessary because of the need to accommodate the schedules of the Court and the parties. This process might have to be repeated twice if Defendants’ alternative motion to bifurcate the section 102 and section 103 invalidity claims were adopted.

The Court, therefore, concludes that the facts and circumstances of this case indicate that a consolidated trial of the patent validity, infringement and unfair competition claims against all three Defendants would best promote the efficient and expeditious resolution of these claims. This conclusion is bolstered by the decisions of other courts faced with similar circumstances. See, Magnavox Co. v. APF Electronics, Inc., 496 F.Supp. 29 (N.D.Ill.1980); Boots Aircraft Nut Corp. v. Kaynar Manufacturing Co., 188 F.Supp. 126 (E.D.N.Y.1960). See also, Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d at 1582-83; Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d at 1540-41 (Fed.Cir.1983). Defendants’ motion for consolidation and bifurcation will, therefore, be denied and Plaintiff’s motion for consolidation will be granted. As all parties have agreed, the damages phase of the infringement trial will be bifurcated for later trial if necessary.

      . P & G’s original complaint also contained a count alleging "threatened patent infringement.” This count was later dropped by stipulation. C.A. 84-334, Docket Item (“D.I.") 19.

      . 35 U.S.C. § 271(c) provides as follows:
      (c) Whoever sells a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.