CERTAIN STEEL ROD TREATING APPARATUS AND COMPONENTS THEREOF Investigation No. 337-TA-97 USITC PUBLICATION 1210 JANUARY 1982 United States International Trade Commission / Washington, D.C. 20436 UNITED STATES INTERNATIONAL TRADE COMMISSION COMMISSIONERS Bill Alberger, Chairman Michael J. Calhoun, Vice Chairman Paula Stern Alfred E. Eckes Eugene J. Frank Kenneth R. Mason, Secretary to the Commission Address all communications to Office of the Secretary United States International Trade Commission Washington, D.C. 20436 UNITED STATES INTERNATIONAL TRADE COMMISSION Washington, D.C. 20436 ) In the Matter of ) ) Investigation No. 337-TA-97 CERTAIN STEEL ROD TREATING ) APPARATUS AND COMPONENTS THEREOF ) ) COMMISSION ACTION AND ORDER Introduction The United States International Trade Commission has concluded its investigation under section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337, of alleged unfair methods of competition and unfair acts in the unauthorized importation of certain steel rod treating apparatus and components thereof into the United States or in their sale by the owner, importer, consignee or agent of either, the alleged effect or tendency of which is to destroy or substantially injure an industry, efficiently and economically operated, in the United States. The Commission's investigation concerned allegations that certain steel rod treating apparatus imported or sold by respondents Korf Industrie and Handel, GmbH., Korf Engineering, GmbH, Korf Industries, Inc., Ashlow Ltd., Ashlow Corp., Georgetown Steel Corp., Mr. Willy Korf, and Mr. Johann Heinrich Rohde, are covered by certain claims of U.S. Letter Patent 3,390,871 (hereinafter '871 patent). The '871 patent is owned by complainant Morgan Construction Co. of Worcester, Massachusetts. This Action and Order provides for the final disposition of investigation No. 337-TA-97 by the Commission. It is based upon the Commission's determination, made in public session at the Commission meeting of December 1, 1981, that there is a violation of section 337. Action Having reviewed the record in this investigation and the recommended determination of the presiding officer, the Commission, on December 1, 1981, determined that-- 1. There is a violation of section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337) in the importation or sale of certain steel rod treating apparatus and components thereof which infringe U.S. Letters Patent 3,390,871, the effect or tendency of which is to substantially injure an industry, efficiently and economically operated, in the United States; 2. The appropriate remedy for such violation of section 337 is an exclusion order, pursuant to subsection (d) of section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337(d)), excluding from importation steel rod treating apparatus and components thereof which infringe claim 1 of U.S. Letters Patent 3,390,871 and which are manufactured by or on behalf of respondents Korf Industrie and Handel, GmbH, Korf Engineering, GmbH, Korf Industries, Inc., Ashlow Ltd., Ashlow Corp., Mr. Willy Korf and/or Mr. Johann Heinrich Rohde, or any successor, assignee, parent company, affiliated person, subsidiary, or related business entity of the above-named parties respondent, or which are sought to be imported by Georgetown Steel Corporation, for the reminder of the term of the '871 patent, except under license by the patent owner; 3. The public-interest factors enumerated in subsection (d) of section 337 of the Tariff Act of 1930 do not preclude the issuance of an exclusion order in this investigation; 4. The bond provided for in subsection (g)(3) of section 337 of the Tariff Act of 1930 during the period this matter is before the President shall be in the amount of 100 percent of the entered value of the imported articles. Order Accordingly, it is hereby ORDERED THAT: 1. Steel rod treating apparatus and components thereof which infringe claim 1 of U.S. Letters Patent 3,390,871 which are manufactured by or on behalf of respondents Korf Industrie and Handel, GmbH, Korf Engineering, GmbH, Korf Industries, Inc., Ashlow Ltd., Ashlow Corp., Georgetown Steel Corp., Mr. Willy Korf and/or Mr. Johann Heinrich Rohde, or any successor, assignee, parent company, affiliated person, subsidiary, or related business entity of the above-named parties respondent or which are sought to be imported by Georgetown Steel Corporation are hereby excluded for the remainder of the term of the '871 patent except under license from the owner of said patent; 2. The articles to be excluded from entry into the United States shall be entitled to entry under bond in the amount of 100 percent of the entered value of the imported articles from the day after this order is received by the President pursuant to subsection (g) of section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337(g)) until such time as the President notifies the Commission that he approves or disapproves this action, but, in any event, not later than 60 days after the date of receipt; 3. The Secretary shall publish notice of this Action and Order in the Federal Register; 4. The Secretary shall serve a copy of this Action and Order and the Commission opinion in support thereof upon each party of record to this investigation and upon the Department of Health and Human Services, the Department of Justice, the Federal Trade Commission, and the Secretary of the Treasury. Kenneth R. Mason Secretary Issued: December 10, 1981 TABLE OF CONTENTS PAGE COMMISSION OPINION Inti:oiuction 1 Background 1 I. Background of the Invention 5 II. 35 U.S.C. § 103 8 III. The '871 Patent 13 IV. The Prior Art 16 1. Edwards, U.S. Letters Patent 1,295,139 16 2. The Roebling's Trenton Plant and the Lewis Patent lq 3. O'Brien and the Sparrows Point Facility 26 4. Crum and Cleaner's Hangar 78 5. The German Patentshrift 30 6. Non-Obviousness of the Subject Matter as a Whole 30 7. Secondary Considerations 37 V. Inventorship 40 VI. Written Description Requirement 42 VII. Enforceability 43 VII. Infringement of the '871 Patent 51 IX. Injury 57 1. Domestic Industry 57 2. Effect or Tendency to Cause Substantial Injury 60 X. Remedy 63 XI. Public Interest 65 XII. Bonding 67 Conclusion 6q Appendix A - U.S. Letters Patent 3,390,871 Appendix B - Commission Memorandum Opinion, Motions Nos. 97-28, 97-30 UNITED STATES INTERNATIONAL TRADE COMMISSION Washington, D.C. ) In the Matter of ) ) Investigation No. 337-TA-97 CERTAIN STEEL ROD TREATING APPARATUS ) AND COMPONENTS THEREOF ) ) Introduction This opinion concerns our final determination in investigation No. 337-TA-97, Certain Steel Rod Treating Apparatus and Components Thereof. This investigation relates to alleged unfair acts and unfair methods of competition in the sale for importation of a steel rod treating apparatus. The accused steel rod treating apparatus is allegedly covered by the claims of U.S. Letters Patent 3,390,871. We determine that there is a violation of section 337 in the importation or sale of the accused apparatus, that the appropriate remedy is an exclusion order directed at the named parties respondent, that the public interest does not preclude issuance of an exclusion order and that the appropriate bond is 100 percent of the entered value of the article. Background Complainant Morgan Construction Company is a manufacturer of steel mills and steel mill equipment and has its principal place of business in Worcester, Massachusetts. Morgan is the holder by assignment of U.S. Letters . Patent 3,390,871. Respondents are a group of interrelated corporations and individuals, located in England, Germany and the United States, who are engaged in various 1 2 enterprises related to the steel industry and are sometimes collectively referred to as the "Korf Group." Respondent Mr. Willy Korf is a German national, and owns a controlling stock interest in a West German holding company, Korf Industrie and Handel, GmbH, K.G. (KIH). KIH in turn controls Korf Engineering, GmbH, a German company engaged in the design and engineering of steel mills. Respondent Korf Industries, Inc. (KII), a Delaware corporation, also controlled by KIH, provides various services to Korf interests in the United States. Respondent Ashlow Limited (Ashlow Ltd.), is by respondents' admission the manufacturer of the accused apparatus (Motion No. 97-1) and has its principal place of business in Rotherham, England, where it engineers and sells steel rolling mill equipment. Ashlow is a joint venture of Bridon, Ltd., a British company, and KE, with the latter exercising majority control. Respondent Ashlow Corporation, with its principal place of business in Reading, Pennsylvania, is a wholly owned subsidiary of Ashlow Ltd. and serves as Ashlow's sales representative in the United States. Respondent Georgetown Steel Corporation (GSC), the purchaser of the subject apparatus, has its principal place of business in Georgetown, South Carolina, where it operates a steel rod mill. GSC is a wholly owned subsidiary of KII. Respondent Korf is a member of the Board of Directors of GSC and KII. Respondent Mr. Johann Heinrich Rohde is the chairman of the board of Ashlow Ltd., the manufacturer of the subject apparatus, and a member of the GSC board. Morgan initiated this investigation on December 17, 1980, by filing a complaint seeking temporary and permanent relief under section 337. The complaint alleged that KIH, KE, Ashlow Steel & Engineering Co., Ltd. (AS&E),