Full opinion text
MEMORANDUM OF DECISION STEPHENS, District Judge. This cause came on regularly for trial before the Honorable Albert Lee Stephens, Jr., Judge presiding, sitting without a jury. Oral and documentary evidence was introduced by the parties and after oral argument, the Court ordered the cause submitted. JURISDICTION AND PARTIES Federal jurisdiction is invoked on the ground of diversity of citizenship and an amount in controversy, exclusive of interest and costs, of more than $3,000.00. [This action was filed prior to the effective date of 28 U.S.C. § 1332(b), as amended July 25, 1958.] There is no doubt that the amount in controversy was and now is in excess of $10,000. Jurisdiction as to the Sixth Cause of Action [patent infringement] is invoked under 28 U.S.C. § 1338. This is an action by Monolith Portland Midwest Company, a Nevada corporation, against Kaiser Aluminum & Chemical Corporation, a Delaware corporation, Kaiser Aluminum & Chemical Sales, Inc., a California corporation, and three Kaiser employees — George C. Davis, Palmer Ford and Pete Olive. [Palmer Ford is no longer employed by either of the defendant Kaiser companies.] On June 6, 1958, when the original complaint was filed, George C. Davis was a resident of California, Pete Olive was a resident of Washington, and Palmer Ford was a resident of California. Plaintiff is a cement company. It owns and operates a cement plant at Laramie, Wyoming. Monolith Portland Cement Company [hereinafter called “Monolith”] which owns all of plaintiff’s common stock, also owns and operates a cement plant in the Tehachapi Valley at Monolith, California, about 125 miles north of Los Angeles. Plaintiff and Monolith are joint venturers with respect to exploitation of the invention that is the subject of this action. Both companies maintain their executive offices at 643 South Olive Street, Los Angeles, California. The defendant Pete Olive was never served with process and has never answered or formally pleaded herein. Plaintiff has contended that because of his contacts with the litigation, Olive has submitted to the jurisdiction of this Court. The Court ruled against this contention, and the action was therefore ordered dismissed as to Pete Olive without prejudice. INTRODUCTION In the first five counts, plaintiff claims a right to damages or compensation from defendants upon several legal theories. The sixth cause of action is for patent infringement which will be treated separately later. But other than patent infringement, plaintiff’s chief reliance is upon the theory that plaintiff is entitled to damages for breach of confidence. The law on this subject is usually associated with trade secrets. A brief exposition will help to identify the issues of fact which are about to be discussed. The case turns upon the facts rather than upon fine points of law. Plaintiff has preferred to use the term “valuable information” in place of the term “trade secret.” The Court has adopted the use of plaintiff’s terminology to avoid the impression that the plaintiff and the Court are not talking about the same thing. If the plaintiff’s claim were established, then, independent of plaintiff’s claim of patent infringement, an award of damages resulting from that breach would be proper. Engelhard Industries, Inc. v. Research Instrumental Corp., 324 F.2d 347 (9th Cir., 1963). The principle of law urged by plaintiff is stated in Sections 757, 758 and 759 of the Restatement of the Law of Torts. A trade secret may consist of a device or compilation of information used in one's business which gives him an advantage over competitors who do not know or use it. Generally it relates to the production of goods. It may be a device or process which is clearly anticipated in the prior art or it may be a mechanical improvement that a good mechanic can make. Futurecraft Corp. v. Clary Corp., 205 Cal.App.2d 279, 23 Cal.Rptr. 198 (1962); Sarkes Tarzian, Inc. v. Audio Devices, Inc., 166 F.Supp. 250, 258 (S.D.Cal., 1958). A trade secret need not reach the stature of an invention. Hoeltke v. C. M. Kemp Mfg. Co., 80 F.2d 912, 922 (4th Cir., 1935) cert. den. 298 U.S. 673, 56 S.Ct. 938, 80 L.Ed. 1395 (1936); Atlantic Wool Combing Co. v. Norfolk Mill, Inc., 357 F.2d 866 (1st Cir., 1966). In the latter case, Judge Hastie cites with approval Restatement of the Law of Torts, § 757, Comment b: " * * * Novelty and invention are not requisite for a trade secret as they are for patentability. * * * The protection is merely against breach of faith and reprehensible means of learning another’s secret. For this limited protection it is not appropriate to require also the kind of novelty and invention which is a requisite of patent-ability. * * * ” Although novelty in the patent sense is not a prerequisite for protection as a trade secret, the law requires substantial novelty. Berry v. Glidden Co., 92 F.Supp. 909, 912 (S.D.N.Y., 1950), and cases cited therein. “If the rule were not so restricted it is obvious that by disclosing an idea under delusions of confidence, the person making the disclosure could thereafter prevent the confidante (sic) from subsequently making use of it, even though the idea was well-known prior to the date of the disclosure and open to the use of all others in the world.” Smoley v. New Jersey Zinc Co., 24 F.Supp. 294, 300 (D.N.J., 1938) Aff’d., 3 Cir., 106 F.2d 314. It must at least be novel to the person receiving the disclosure. If the elements of the formula or pattern are known to him prior to the disclosure, he cannot be restrained from using the same or compelled to account for any past use. Berry v. Glidden Co., supra. A disclosure in confidence of a process which lacks the essential of novelty will defeat the allegation of an implied agreement to refrain from its use and plaintiff has the burden of establishing novelty. Smoley v. New Jersey Zinc Co., supra. “[T]he word ‘disclosures’ itself implies that the things referred to were secret, concealed or unknown prior to the time of their revelation.” American Potato Dryers v. Peters, 184 F.2d 165, 172 (4th Cir., 1950). Lueddecke v. Chevrolet Motor Co., 70 F.2d 345 (8th Cir., 1934). In the latter case, the Court determined that if there was no novelty in plaintiff’s suggested idea, it was one “to the use of which the defendant had an equal right with [plaintiff].” Matters of public knowledge or of general knowledge in an industry are not secret. Some of the factors which may be considered in determining whether some particular information that has been given is a trade secret are: The extent to which the information is known outside the particular business, the extent of measures taken to guard the secrecy of the information, the value of the information to the one who discloses and to his competitors, the amount of effort or money expended in developing the information, and the ease or difficulty with which the information might be properly acquired or duplicated by others. Mycalex Corporation of America v. Pemco Corporation, 64 F.Supp. 420 (D.Md., 1946); Restatement of the Law of Torts, Comment, Section 757. “At best, a trade secret protects only during the period when others working in the same field do not, in the ordinary course of their work, make the same discovery. Even in pure science where the problem situation is much more diffuse than in industrial research or development, there are many well authenticated cases of simultaneous discovery by persons or groups who and whose works were completely unknown to one another. * * * When it comes to a trade secret in manufacturing there is greater likelihood of simultaneous discovery: * * * This, * * * may result in parallelisms of action which may be fortuitous, because they are inherent in the problem and in its solution, and not the result of conscious copying or imitation.” Sarkes Tarzian, Inc. v. Audio Devices, Inc., 166 F.Supp. 250, 279. The Restatement of the Law of Torts, § 757, sets forth the general rule of liability in a case such as the instant one where a breach of confidence is charged: “§ 757. Liability for Disclosure or Use of Another’s Trade Secret — General Principle. “One who discloses or uses another’s trade secret, without a privilege to do so, is liable to the other if “(a) he discovered the secret by improper means, or “ (b) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him, or “(c) * * * “(d) he learned the secret with notice of the facts that it was a secret and that its disclosure was made to him by mistake.” In the comment which follows the rationale behind this rule is stated: “It is the employment of improper means to procure the trade secret, rather than the mere copying or use, which is the basis of the liability under the rule in this Section. * * * One who discovers another’s trade secret properly, as, for example, * * * by independent invention * * * is free to disclose it or use it in his own business without liability to the owner.” The confidence does not arise if the recipient has no notice of the confidential character of the disclosure. “But no particular form of notice is required. The question is simply whether in the circumstances [the recipient] knows or should know that the information is [the discloser’s] trade secret and that its disclosure is made in confidence.” Comment on Clause (b). Lueddecke v. Chevrolet Motor Co., supra. Thus, one may not impose upon another, by a gratuitous and unilateral act a confidential relationship. Official Airlines Sched. Inform. Serv. v. Eastern Air Lines, 333 F.2d 672 (5th Cir., 1964), discussing analogous principle of disclosure of literary property. The principle is analogous to the contract theory requiring a reasonable “meeting of the minds” on essentials embodied in the contract. There is no need for an express promise of trust with respect to the information disclosed. Heyman v. Ar. Winarick, Inc., 325 F.2d 584 (2d Cir., 1963); Speedry Chemical Products, Inc. v. Carter’s Ink Company, 306 F.2d 328 (2d Cir., 1962); Trenton Industries v. A. E. Petersen Mfg. Co., 165 F.Supp. 523 (S.D.Cal., 1958); Hoeltke v. C. M. Kemp Mfg. Co., supra, cited with approval in Filter Corporation v. Amen Atiyeh, 216 F.2d 443 (9th Cir., 1954). The elements of a cause of action based on the facts of the present suit are: (1) that there was a disclosure in confidence; (2) that the disclosure was of something novel; and (3) that the defendant appropriated the information disclosed to its own use. Schreyer v. Casco Products Corp., 97 F.Supp. 159 (D.Conn., 1951) Mitchell Novelty Co. v. United Mfg. Co., 199 F.2d 462 (7th Cir., 1952) and cases cited therein; Official Airlines Sched. Inform. Serv. v. Eastern Air Lines, supra; Trenton Industries v. A. E. Petersen Mfg. Co., supra. Whether or not there exists an atmosphere of confidentiality will depend upon the circumstances under which the parties’ relationship was established and maintained. The question of fact to be determined is what the parties understood to be their relationship and the circumstances which might give rise to such an implied understanding. Kamin v. Kuhnau, 232 Or. 139, 374 P.2d 912 (1962). An important factor may be whether the information disclosed has such value that it may reasonably be implied that the recipient of the information is not privileged to use it for his own profit. Or, the disclosure may have been entrusted for a limited purpose only, thus giving rise to a strong implication that any other use would violate the true intent of the parties. Atlantic Wool Combing Company v. Norfolk Mills, Inc., 357 F.2d 866 (1st Cir., 1966); Servo Corporation of America v. General Electric Company, 337 F.2d 716 (4th Cir., 1964); McKinzie v. Cline, 197 Or. 184, 252 P.2d 564 (1953), relied upon in Radiator Specialty Company v. Micek, 327 F.2d 554 (9th Cir., 1964); Smith v. Dravo Corp., 203 F.2d 369 (7th Cir., 1953). Promiscuous disclosures, or a simultaneous or prior disclosure to others, may defeat one’s claim of confidentiality. Northup v. Reish, 200 F.2d 924 (7th Cir., 1953); Smith v. Dravo Corp., supra. One of the most frequently appearing citations on this issue is taken from DuPont de Nemours Powder Co. v. Masland, 244 U.S. 100, 37 S.Ct.. 575, 61 L.Ed. 1016 (1917), wherein Justice Holmes states: “* * * Whether the plaintiffs have any valuable secret or not the defendant knows the facts, whatever they are, through a special confidence that he accepted. The property may be denied, but the confidence cannot be. Therefore the starting point for the present matter is not property or due process of law, but that the defendant stood in confidential relations with the plaintiffs, or one of them.” (37 S.Ct. 575 at page 576) The first phrase of the statement must, of course, be read in context of the motion for preliminary injunction which was before the Court. Having recognized that what was claimed to be a secret was communicated in confidence, the Court maintained the status quo ante until the cause could be determined upon its merits. See McGraw-Edison Co. v. Central Transformer Corp., 308 F.2d 70, 74 (8th Cir., 1962). There is little need to carefully distinguish between plaintiff and Monolith. The agents and employees of both companies figure prominently in the picture and the two companies are joint venturers in the exploitation of the patent in suit. A distinction is made when it seems to be reasonably necessary. The principal defendants are named Kaiser companies and it is generally unnecessary to draw a distinction between the defendants, including the individuals, or between the two companies. Sometimes a distinction is noted. The term Kaiser has been used to denote both defendant companies. Kaiser manufactures and sells bricks which are used to line the inside of steel-shelled cement kilns to protect the steel from heat and abrasion. One such product is now sold under the trade name Unitab. Plaintiff claims that the information necessary to develop the Unitab was the subject of a confidential disclosure from plaintiff to defendants. The Unitab is a conventional basic refractory brick with a piece of cardboard glued to one end and an L-shaped steel plate covering part of the top of the brick and extending down one side to within a half inch of the bottom of the brick. The L plate is glued on. The steel plate is called a shim and since it does not extend to the bottom of the brick, it is .called a short shim. Plaintiff claims that leaving the one-half inch space between the end of the steel plate and the bottom of the brick is the employment of information confided by plaintiff to Kaiser. Plaintiff claims compensation from Kaiser on the ground that otherwise Kaiser will be unjustly enriched and damages from Kaiser for disclosure of plaintiff’s valuable information to the world. Plaintiff also claims that the Unitab is an infringement of a patent obtained by an employee, Anderson, and assigned to plaintiff. The case, therefore, divides itself into two parts, the non-patent counts and the patent count. An explanation of the operation of a cement kiln in the making of Portland cement is a preliminary to any discussion of either part. A patent issued to Thomas A. Edison in 1905 is a convenient starting place for explanation of the cement process and references to later patents in this field traces the development of knowledge in the art and industry. One leg of plaintiff’s case is a misinterpretation of the disclosures of certain of the early patents, notably those of Heuer and Longaere. Plaintiff asserts that these patents teach that the spacer plates used between the bricks must be in full contact with the shell of the kiln. These patents teach exactly the opposite, that it is not necessary for the spacer plates to contact the shell. Plaintiff reasons that the burning zone in the cement kiln is the higher temperature installation referred to by these inventors for which they recommend that the plate contact the shell. The discussion on this subject will demonstrate plaintiff’s error. Industry’s knowledge and practice in the use of shims prior to the time of plaintiff’s first claimed disclosure is next discussed. The confidential disclosures are claimed to have been made from time to time through Kaiser salesmen, but three conferences are chiefly relied upon. Each is discussed in turn. Exactly what information is claimed to have been disclosed is not easy to define or pin down. Kaiser’s claims that plaintiff had no such information to disclose and that Kaiser already knew as much about the subject as plaintiff and sufficient to develop the Unitab are at issue. Part of the information which plaintiff communicated to defendants is that by the use of its short radial shim, plaintiff had increased production and lining life. Kaiser contends that this was a knowing misrepresentation of fact. Plaintiff contends that what was known about the radial shim was applicable to the kind employed by the Unitab. Kaiser denies this. Even assuming the communication of the information, Kaiser’s position is that there was nothing confidential about it. Kaiser admitted in a letter that certain information was confidential. Plaintiff construes this instrument as little short of a confession of 'judgment. It was written at a time when the parties were engaged in discussions concerning a license from plaintiff to Kaiser to practice plaintiff’s invention. The patent had not yet issued and Kaiser had not been shown either the application or a disclosure of its contents. Kaiser contends that the negotiations were at arm’s length, rather than confidential and that in context the letter referred only to plaintiff’s radial short shims, which are not used by Kaiser. After the greatest care in consideration of the voluminous record and great quantity of exhibits, the Court’s view of the evidence is opposed to the position taken by plaintiff in almost every instance. The length and detail of this Memorandum of Decision is to avoid misunderstanding as to the Court’s position and to make plain the supporting reasons. THE PROCESS OF MAKING' PORTLAND CEMENT This case revolves around the process of making Portland cement. This product may be made from many different materials which are abundantly available. The chemistry of the process varies with the material used and also with the properties desired of the finished product. The mechanical processing of the raw materials into the finished product is basically the same for all materials and finished products, rf There are two processes known respectively as the dry process and the wet process. A description of the wet process will furnish sufficient background for discussion of the factual issues before the Court. The raw materials are crushed or ground to predetermined fineness and uniformity. Water is added until the mixture is of the desired consistency. This mixture is then referred to as slurry or feed. The slurry is introduced into the upper end of an inclined, rotating tube, which is the kiln. As the tube is rotated, the slurry makes its way to the lower end. In the course of passing down the tube, the slurry is heated by means of hot gases passing from the lower to the upper end. The hot gases drive off the water in the slurry and eventually what passes from the lower end of the tube or kiln is sintered clinkers. These are then ground to a fine powder which is the principal ingredient in the finished product, the familiar sack of Portland cement. Rotary cement kilns were at one time approximately five feet in diameter and sixty feet long. The patent art which is in evidence shows that on October 24, 1905, Patent No. 802,631 was issued to the great and well-known inventor, Thomas A. Edison. The patent describes apparatus for burning Portland-cement clinker. This patent describes the huge rotary cement kiln -which is the machine used today in manufacturing cement. Mr. Edison pointed out that he had dis covered that the proportion of diameter to length of a rotary cement kiln should be one foot of diameter to twenty-seven feet of length, rather than the formerly accepted ratio of one to twelve. He recommended that diameters should be increased to not less than five and one-half feet. He learned by experiment and taught in his patent that the amount of the load (slurry) bears a definite .relation to the internal diameter of the kiln and that “it may be considered as axiomatic in this art that the greater the load that can be carried in a kiln of a definite size, the greater will be the economy.” He recommended increasing the length of kilns to one hundred and fifty feet. He did not consider it practical under then existing conditions to substantially increase this length, owing to the great expense which would thereby be involved. Edison spoke of the dry process which differs from the wet process in that dry material, rather than wet slurry, is introduced into the kiln. Even the dry material contains considerable moisture which must be driven off. The greater ease of handling, mixing and preparing materials in the form of slurry no doubt accounts for great popularity of the wet process even though this necessitates a longer exposure to heat to eliminate the additional moisture and, hence, requires a longer kiln. These principles won acceptance in the cement industry, which, undaunted by the great expense involved, constructed mammoth rotary cement kilns eight, ten, twelve and fifteen feet in diameter and up to five hundred feet in length. The slurry undergoes chemical and physical changes as it passes down the length of the kiln which makes it convenient to divide the kiln into zones in which these changes take place. The slurry is first dried in the Drying Zone, where temperatures rise to as much as 1800° F. It then passes through the Intermediate Zone, where temperatures may rise to 2400° F. In the Intermediate Zone it goes through a calcining process and then enters the Burning Zone, the maximum temperature of which is between 2600° and 2900° F. The Burning Zone in a kiln with a diameter of twelve feet is likely to be approximately 60 feet long. A short Cooling Zone follows the Burning Zone and the load, now reduced to clinker and slightly cooled, passes out of the kiln. The upper end of the kiln where the slurry is introduced is sometimes called the wet end and the other is sometimes called the hot, dry or discharge end. The heat required is supplied by a flame which enters the discharge end. The flame usually burns powdered coal, oil or gas. Despite the simplicity of basic concept, the bulk of the machinery and the heat required introduce problems in practice. The rotating tube through which the load must pass is made of steel and lined with bricks. The steel tube is the kiln’s shell and the bricks constitute part of the lining. This lawsuit is chiefly concerned with the lining of the Burning Zone where the greatest heat is applied. Of course, a balance must be maintained which is well expressed by inventor Edison in the specifications of his patent in the following manner: “It may be stated axiomatically that the burning of Portland-cement clinker should be characterized by the perfect combustion of the minimum relative amount of fuel in the presence of the maximum relative amount of cement material for a sufficient time to result in the complete clinkering of the latter.” After the lining has been installed and the kiln is heated sufficiently, the slurry is introduced and when it reaches the Hot Zone, it forms a coating on the bricks several inches to even a foot or more in thickness. Mr. Edison had observed that when the cement material has reached a heat to make it somewhat plastic and sticky, it forms a coating several inches in thickness. This coating adheres to the bricks and becomes a part of the lining over which the load passes in the process of sintering and forming clinker. The surface of the coating exposed to the fire is hotter than the surface of the bricks to which the coating adheres. The coating insulates the bricks from the highest temperatures and protects them from abrasion and heat. The coating is constantly being burned or melted off and at the same time reforming to maintain a rather constant thickness. If the coating is lost in part or in its entirety, the bricks deteriorate rapidly where exposed until additional coating is acquired or the exposed lining fails and must be replaced. Sometimes a lining can be repaired by patching, but eventually every lining must be replaced. Once a kiln is placed in operation, it is run continuously for as long as possible. Sometimes the chemical content of the slurry is changed during the operation of the kiln to meet the demands for cement of different characteristics. Such a change usually requires a modification of the operation of the kiln such as a different speed of rotation or an adjustment of the flame to change the burning temperature to achieve as nearly perfect sintering of the product as possible to make the clinker as nearly perfect as possible. Sometimes it is necessary to shut the kiln down for repairs or because raw materials are not available or because there is no immediate demand for more of its product. Changes in burning temperatures or cooling of the kiln in a shut-down will subject the lining to destructive stresses due to the expansion and contraction which accompanies such temperature changes. While perfect sintering of a load of one chemical composition may require adjustments in the operation of a kiln which has been processing a load of a different chemical composition, the temperature required for sintering is approximately 1500° C. or 2732° F. as pointed out by Josef Berlek in the specification of Patent No. 2,148,054 which was issued to him on February 21, 1939. In the year 1905, Mr. Edison pointed out that the rate of progression of heat from the periphery to the center of a partiallyclinkered ball or other mass is practically fixed and is but slightly altered by raising the temperature to which the mass is subjected and that it is necessary to allow sufficient time at the sintering temperature for the process to be complete. He further observed that by increasing the time during which the material is subjected to clinkering temperature, better results are secured, even if the temperature is actually somewhat reduced from the temperatures which had been applied when the material was exposed for a shorter time in shorter clinkering zones than he recommended. He also observed that a slow but gradual increase in temperature of the load permits the reactions to take place slowly so that when the material reaches the combustion zone a comparatively slight increase in temperature is necessary to clinker the same. These observations have generally been borne out even though the temperatures to which he referred were lower than 2732° F. and improved chemical mixes used later required a slightly higher sintering temperature. But the temperature at which cement clinker is formed is fixed by the compositions used within known limits. Higher temperatures produce a molten mass rather than clinker. Leopold Tschirky of General Refractories Company presented a paper before the Technical Committees of the Portland Cement Association at Bethlehem, Pennsylvania on September 19, 1944. (See Exhibit BX.) Mr. Tschirky noted that in the early days of the rotary cement kiln, temperatures rarely exceeded 2400° F. but he conducted experiments with modern materials which sintered perfectly at 2800° F., which he considered a high temperature. This is not far from the sintering temperature of 2732° F. observed by Berlek. In Exhibit 585, which is a report to plaintiff of certain experiments conducted at plaintiff’s request, an explanation of the manufacture of clinker is tendered by expert witnesses Robert H. Bogue and Ira C. Bechtold. Both were called to testify by plaintiff and explained the processing of raw materials into cement clinker. They say that at about 2350° F. the first appearance of liquid in the material occurs. This is the temperature of the lowest melting eutectic. When materials of certain composition are together in the presence of heat, they react chemically and form a substance which melts at a temperature which is lower than the temperature which would be required to melt the individual substances when not in the presence of each other. The new substance which melts is known as eutectic. When additional heat is applied to the material forming the eutectic, the temperature of the material remains constant until all of the liquid of that eutectic composition is formed that the composition of the mixture makes possible. Thereafter, the addition of more heat will cause the formation of a second eutectic which again remains constant during the formation of the second eutectic composition. This sequence is repeated up to the highest temperatures encountered. The process proceeds very slowly with the chemical changes which are necessary for sintering taking place in the various successive eutectics until the increase in the temperature of the load approaches 2500° to 2700° F. At that temperature an exothermic reaction commences. This is a reaction in which heat is given off from the reacting mixture, resulting in a sudden glow as the components interact and raise their internal temperatures by 200° to 400° F. The ignition temperature of the exothermic reaction must be maintained until the exothermic reaction is complete in order to complete the sinter and produce perfect clinker. During this last reaction the temperature of the sinter is considerably above the temperature of the coating which is the part of the lining supporting the load. The way the necessary heat is supplied to the load was described by Bogue and Bechtold and other witnesses. The hot gases supply some heat to the load by radiation and convection from both the flame and the lining, the top layer of which is the coating. This radiation heats the surface of the load but the bulk of it is below the surface and receives most of its heat from the lining as the rotating kiln passes beneath the load turning it in a manner which may be likened to the mixing action of the familiar rotary cement mixer. Since the load is in the trough of the cylinderical kiln, being drawn up only slightly by the rotation, any given point of the innermost portion of the lining, the coating, is exposed to the flame from the time its passes from under the load through the rotation until it again passes under the load. During this period it takes on heat increasing in temperature as much as 400° F., but still 200° to 400° F. lower than the temperature reached in the exothermic reaction, and then surrenders it to the load as it passes beneath. So the coating of the lining contributes most of the heat acquired by the load. It is apparent that where proper clinker has been produced, the process above described has taken place whether it was understood in those terms or not. THE REFRACTORIES WHICH LINE THE KILN The lining of the kiln described by Edison consisted of bricks of fire clay placed over a layer of asbestos. His purpose in employing the asbestos was to reduce radiation through the shell and offer a yielding backing for the fire bricks. Fire brick linings had a short life and the industry soon turned to other refractories, the principal composition of which was alumina. Although an improvement, the search for better linings continued both by improvement of the quality of alumina refractories and by the development of a refractory brick known as a basic brick because of its chemical composition. By chemical contrast, the alumina refractory is an acid brick. Basic bricks differ from acid bricks in certain of their physcial characteristics. They are more conductive of heat, or to state it conversely, they are less insulating than acid bricks. They are more refractory than acid bricks. This means that they are more resistant to abrasion and they can successfully withstand exposure to higher temperatures. The ability to withstand exposure to higher temperatures than acid bricks in a cement kiln is partly due to the physical and partly due to the chemical characteristics of the basic brick. Various materials which are chemically basic may be used to form basic bricks. Which material is best suited to a particular application depends upon the conditions surrounding such application or perhaps even upon individual preference. They are supplied in two forms, burned and unburned. The bricks are formed in a mold under great pressure. After being formed, they may be supplied to the cement manufacturer without further processing, in which case they are referred to as unburned. On the other hand, they may be formed and then fired before being supplied to the cement manufacturer, in which case they are known as burned brick. When unburned brick are installed in the cement kiln, the heat of the cement kiln fires the brick, resulting in what is ultimately a lining of burned brick. When an unburned brick is fired it contracts or shrinks to a certain extent and after undergoing this change, expands in response to the application of heat and contracts when the heat is withdrawn. Whether acid or basic bricks are used depends upon the conditions which exist in any particular kiln. Acid bricks are preferred by cement manufacturers in certain applications, but the use of basic brick in the burning zone has grown until the use of this form of refractory predominates in the cement industry, although it has not entirely replaced the acid refractory. The relatively greater expansion and contraction characteristic of basic brick presented a special problem in practice. When the refractory lining is installed in the kiln, the bricks employed may be one of various shapes and sizes, the choice of which depends upon many factors of kiln operation or even personal preference of the operator. They are also installed in various ways, but understanding of one form of construction will be sufficiently illustrative. This form of construction employs bricks placed in circumferential rings in the kiln, one ring following another until the entire shell of the burning zone is covered by bricks. The portion of the brick resting on the shell is wider than the portion facing the interior of the kiln by an amount necessary to turn the circle. The part of the brick against the shell is called the cold face and the portion facing the interior is called the hot face because it faces the fire. Each brick is therefore slightly pie-shaped and each supports the other as they are rotated. Provision must be made for the expansion of the brick as they are heated. This is accomplished by placing a metal plate between each brick in the ring. Longitudinal expansion of the series of rings is provided for by placing combustible material between the rings. The practice is to place a cardboard spacer on the end of each brick to separate it from the brick in the next ring. Steel plates have generally been used between the bricks in the ring. A certain number of combustible spacers are also added in the ring for expansion. The ring is tightened by driving a few additional steel plates into the ring after the bricks have been initially laid up. The use of spacer plates is. as old as the use of basic refractories in rotary cement kilns. The plates are called shims. As the kiln is heated, the combustible spacers burn out, the bricks expand and the steel plates fill the space between the brick. The plates then oxidize for a certain distance from the hot face, one to two and one-half inches. When this oxidation takes place, the oxidized portion of the shim is no longer metallic. The resulting ferrous oxide or iron oxide combines with a portion of the adjacent refractory in such a way as to weld or knit the wall into a unitary structure or monolith. The reaction which creates the material forming the weld takes place at approximately 2300° F. When the reaction is complete, this substance will not slag or melt until the temperature is increased beyond the maximum temperature encountered in cement kilns. While minute fractures in the brick occur as a consequence of expansion due to heat, the oxide bond tends to hold them in place. These effects were noted by Morlock in his Patent No. 2,125,192, which was issued July 26, 1938, and by Griffith in his Patent No. 2,192,642, issued March 5, 1940. The formation of the iron oxide and a resultant bond between the bricks were noted by Berlek in Patent No. 2,148,054, issued February 21, 1939, and by Heuer in Patent No. 2,154,813, issued April 18, 1939. Heuer also noted that in use, as the refractory wears away from whatever cause, more and more of the metal shim will oxidize and continue to supply the bonding action which results in a monolithic structure. The metallic portion of the shim continues to be separated from the hot face of the brick by the oxide or the material resulting from action of oxide and brick, regardless of the thickness of the lining at any particular time. This is well supported by other evidence adduced in this action, including both testimony and cross-sections of used basic linings which show the oxide bond extending from the hot face, the partially oxidized shim, and finally what remains of the metallic shim nearer the cold face. TEACHINGS OF PATENTS RELATING TO ROTARY KILN LININGS In 1941 two patents were issued and assigned by the inventors to General Refractories Company. One stated purpose was to restrict heat transfer from the lining to the shell while retaining the benefits of oxidizable metallic shims which result in the formation of the monolithic structure attainable through the use of basic brick and steel shims. It will be recalled that in 1905 Edison recognized the value of insulating the lining from the shell to prevent heat loss and suggested an intervening layer of asbestos between his fire clay brick and the shell. With the use of basic brick which conducts heat more rapidly than acid refractories, the greater importance of this objective is apparent. Edison valued the cushioning effect of the asbestos which would permit his fire clay brick to move. By contrast, if the value of the monolithic structure attained by basic brick and steel shims was to be retained, the movement of the basic brick was to be avoided because movement would result in breaking the joints between the basic brick. Heuer in Patent No. 2,230,141, issued January 28, 1941, proposed to furnish insulation for the basic brick by means of a composite brick composed of acid brick in contact with the shell supporting an attached basic brick with its hot face exposed to the fire with an attached metallic shim which would extend over one of the side faces of the basic portion of the composite article. The shim would be out of contact with the shell. Heuer explains that linings having an insulating layer of acid brick one inch to two and one-half inches thick laid against the shell over which is positioned a basic brick lining with metal shims were used successfully. In such an installation the shims would not contact the shell. These linings were of short life due to a shifting of the layers with respect to each other resulting in crushing of the softer acid brick layer and loss of lateral support for the basic brick. His composite brick avoids this hazard by furnishing solid columnar support. Heuer states that the rotary kiln lining which is his invention is intended for cement kilns, but also for calcining kilns used in the preparation of ores, building materials and the like. Kilns used for calcining in the preparation of ores do not take on a coating as do cement kilns. The hot face of the refractory is not protected in such kilns while the hot face of a refractory in a cement kiln is protected by the coating which takes the brunt of the abrasion and the heat. The hot face of the refractory in the cement kiln is therefore not subjected to the full heat of the kiln, while those used for calcining ores are fully exposed. Compared to the temperatures of the hot face of the refractory in a cement kiln, the temperatures endured by the coating in the same kiln are high. Moreover, the temperatures of ore calcining kilns operating without a coating are themselves very high in relation to the highest temperatures to which a cement kiln coating is subjected. An example of kilns operating at very high temperatures compared with cement kilns are kilns used in the production of magnesia which operate at temperatures as high as 3300° F. See Exhibit 73 and the top of page 5 of Exhibit 68. The evidence also indicates that the magnesite kilns at Cape May, New Jersey, operated at temperatures of 3050° F. In Austrian Patent No. 148,268, published January 11, 1937, the temperatures in cement kilns are compared with the temperatures to which refractory linings employed in other uses are subjected. The following observation is material to the subject of very high temperatures : “In metallurgical processes, such as steel production, where very high temperatures occur, a melting or sintering of the bonding agents between the brick, and sometimes even a slagging of the brick, takes place, producing a strong bond. The temperatures prevailing in cement kilns, however, are insufficient to produce a slagging together of the brick or a melting of the bonding agents, which explains the lower resistance of the lining.” The bonding agents referred to were identified, including among them steel shims placed between the brick with reference to which the following comment was made: “All these bonding agents melt or sinter at the temperatures which, for example, are reached in steel making, whereas they are not heated to melting or sintering at the temperatures which occur in cement kilns.” Heuer states that where very high temperatures are used with his composite refractory article it may be necessary to keep the rear end of the spacer plate in contact with the metallic shell to sufficiently cool the spacer plate by conduction of heat and prevent the unoxidized rear portion from melting out. Read in context with the remainder of the specifications, the very high temperatures referred to are not those encountered in a rotary cement kiln, but those encountered in the other uses in which he proposes his composite refractory article should be employed. He is addressing himself to those skilled in the relevant art to whom it is a well known fact that the temperatures required and employed in the sintering of cement clinker are relatively fixed. The suggested composite refractory without the shim extending to the shell is a design expressly intended to be used in burning zones of cement kilns and to face their required temperatures. When the inventor, who has suggested other applications for his invention, refers to very high temperatures, he means very high temperatures in comparison to those normally encountered in cement kilns. In other words, he refers to temperatures encountered in rotary kilns used for purposes requiring very high temperatures compared to the temperatures encountered in cement kilns. With practically the same objectives in mind as those which motivated Heuer, Longacre proposed to construct a lining made from legged bricks which would reduce conductivity of heat to the shell by exposing less surface of the cold face of the brick to contact with the shell, and also providing space for insulating inserts, if desired. He was granted Patent No. 2,230,142 on January 28, 1941. When basic bricks of the suggested construction are used, he recommends a metal spacer plate for the same reasons, that such plates had theretofore been used, but only extending toward the cold face to where the legs commenced. He notes: “From the standpoint of reducing heat losses, it is preferable to terminate the spacer plate * * * above the legs * * * and thus avoiding metal to metal contact between the spacer plate and the metallic shell. This has the disadvantage, however, that cooling of the spacer plate by heat conduction is restricted. For higher temperature installations, it is desirable to have metal to metal contact between the metallic spacer plate and the shell to prevent melting out of theunoxidized portion of the metallic spacer plate.” The same observation as made with, respect to Heuer’s suggestion concerning-“higher temperature installations” is equally applicable to the quoted reference to higher temperature installations. It is important to note that the proposed metal to metal contact is in effect a legged shim which restricts the metal to metal contact of the plate with the shell to only a small portion of the cold face of the shim. On February 11, 1941, a patent was granted to Geistler numbered 2,231,498. The inventor recognized the value and function of shims placed between basic bricks in rotary kilns and the resultant tendency to form a monolithic structure. However, he further observed that a solid plate oxidizes during slow heating up of the furnace at temperatures far below the melting point of the metal and that this is accompanied by an increase in volume of material between the bricks over the original thickness of the plate. This, he says, causes a considerable increase in stresses to which the bricks .are subjected. Geistler also notes that perforated iron sheets are known but that these, too, furnish sufficient expansion when oxidation occurs to subject the brick to undesirable stresses. He proposes wire mesh as a suitable so:ution and points out that sufficient oxidation occurs to create a monolithic structure when the kiln is heated. He claims all of the benefits of the steel plate without certain specified disadvantages. The netting oxidizes for a distance from the hot face and the rest remains practically unaffected until, as the brick becomes thinner by use, the oxidized portion works down the wire net shim toward the cold face of the brick. It is worthy of note at this point that such a shim has no substantial metal to metal contact with the steel shell. The argument which is made on behalf of plaintiff that Heuer ’141 or Longacre ’142 taught by implication or otherwise that if a conventional basic brick should be used in a rotary cement kiln, a full metal plate should be used with metal to metal contact in order to achieve or promote the oxidation of the shim from the hot face and the accomplishment of the monolithic structure effect, is entirely fallacious. On the contrary, the teaching is that there is no need for such a shim to be in contact with the shell in a cement kiln. In making this fallacious argument, the pertinent language of the patents is not quoted in full. The purpose for extending the shim to the shell for higher temperature installations is stated in the patents to be to prevent the unoxidized rear portion from melting out. As already observed, such a purpose is inapplicable to cement kilns because temperatures high enough to melt out this portion of the shim are not achieved in rotary cement kilns. The paper (Exhibit BX) of Mr. Tschirky of General Refractories Company, which was read in 1944 before the Technical Committees of the Portland Cement Association, pointed out that in 1939 a section ten feet six inches long in the hottest portion of a cement kiln was lined with refractory articles which he described. From the description, this portion of the lining was composed of Longacre ’142 brick with shims which stopped where the legs began. For convenience in referring to various patents, sometimes only the last three numbers of the patent are noted. He states that this lining was found to take on protective coating just as readily as an uninsulated lining and just as good a coating. The insulated portion of the lining performed satisfactorily in every respect and had a life of 655 actual operating days, the same as the life of the uninsulated sections. The outside shell temperatures were measured in the areas carrying the insulated portion of the lining and compared with the temperatures measured on the outside shell of an uninsulated lining. The insulated lining ran on the average 100° F. cooler than the uninsulated one. Tschirky also reported on two lining installations of what he considered an improved product. His description matched the composite article described in Heuer ’141. The first did not last long, due to unrelated causes, but the second gave a good account of itself, lasting 392 actual operating days. Further development at that time was inhibited by the advent of World War II. The importance of this report is that it is a part of the literature of the cement industry, free for all concerned to evaluate. Among those who were familiar with its contents were two witnesses at this trial, Woodward of Southwestern Portland Cement Company, who saw the article between 1946 and 1948, and Bogue, who was present when the paper was originally read. Tschirky is a well respected and widely recognized authority in the refractories and cement manufacturing industries. In 1948, Woodward saw a basic brick lining installed at Southwestern Portland Cement Company using Onival perforated shims. These shims had holes in them along the cold edge as big as a half dollar. This configuration of shim reduces the amount of metal which could conduct heat to the shell and therefore restricts the conduction of heat to the shell by the shim. This particular form of heat transfer restriction by means of the shim was commercially available and commercially used in 1948. At this point in the development of rotary cement kilns, patents had been granted teaching that it was desirable to restrict the transfer of heat from the lining to the shell and employing shims which either did not touch the shell or were designed so that so little of the metal touched the shell that the result was practically the same. Furthermore, there was other respectable authority for the proposition that linings so constructed were successful. DEFENDANT KAISER’S KNOWLEDGE OF KILN LINING ART The extent of Kaiser’s knowledge in 1953 of the design, operation and lining of rotary cement kilns is evidenced by the fact that in the ten years Kaiser Aluminum and Chemical Corporation had been manufacturing refractories for the cement industry, it had achieved a substantial success and commanded a substantial portion of the market for rotary cement kiln refractories. A related Kaiser company manufactured Portland cement and its knowledge and experience were freely available to the defendant Kaiser companies. It is further evidenced by the advice which was offered to its customers in the form of instructions on the use of its products and particularly regarding the lining of rotary cement kilns with its product. With particular reference to the issues of this case, there is evidence consisting of a Kaiser interoffice memorandum dated February 14, 1944, Exhibit BW and also marked 101, on the subject of “Changes in rotary kiln brick shapes to reduce temperature of rotary kiln shell.” This memorandum commences, “Rotary kilns at the cement plant lined with milpitas brick are operating with a higher exterior shell temperature than usual. This condition is not desirable.” Attached were various drawings illustrating all suggested changes from various sources available as of that date. Among other drawings is one labeled, “Heuer Patent 2,230,141,” and another labeled, “Longacre Patent 2,230,142.” Plaintiff argues that this drawing relative to Heuer shows a full shim touching the shell. Since the drawing does not closely conform to any of the figures shown in the referenced patent, it is impossible to tell whether it was intended to indicate a full shim or one which extended only to the insulating portion of the Heuer composite article. Suffice it to say that the memorandum indicates that Kaiser personnel examined both of the patents referred to concerning a solution to the problem at hand. In the early months of 1953, Miss Lloyd, a patent agent and full-time employee of Kaiser, studied both of these patents in preparation of the Wilkins patent which was filed March 27, 1953. Persons skilled in the art and patent attorneys skilled in the examination of patents and charged with the duty of reviewing and preparing patents in the same field could hardly overlook or fail to understand tne teachings and significance of these patents, including: 1. That it was desirable to restrict the transfer of heat to the shell, a fact already recognized independently, 2. That a shim extending to the shell was not necessary for successful operation ; and 3. That leaving a space between the shim and the shell would aid in inhibiting such transfer of heat to the shell. THE FUNCTION OF METAL SHIMS In 1953 Kaiser had not tried to install a lining with a shim which did not have contact with the shell. It had the teachings of the Heuer and Longacre patents, but no experience or demonstration as to the validity of the teachings. Neither did the plaintiff. Kaiser’s practice at this time was to offer written kiln construction advice to its customers. The drawings accompanying the text showed full shims placed between each brick in the ring and resting against the shell. Kaiser’s salesmen would sometimes be present and offer similar advice. There is no doubt but that a lining constructed as suggested would result in full shims with their cold edges in metal to metal contact with the shell. Some of Kaiser’s personnel told customers that there was an advantage to having the shims rest upon the shell in that the shim would drain heat from the hot face of the brick, thereby cooling the hot face and that this aided in obtaining and retaining the coating, or at least that longer kiln lining life was promoted by conduction of heat through the shims to the shell. Although the term is somewhat misleading, this idea has been referred to in this lawsuit as “cooling the coating.” Witnesses from plaintiff’s organization told of discussing this concept. None of the Kaiser literature which was distributed to customers contained any reference to this theory by the term, “cooling the coating,” or otherwise. The cooling the coating idea may have had its origin with the use of alumina refractories. In the presence of heat and the materials which are to be formed into cement clinkers, which materials are basic in character, alumina refractories are fluxed and a slag is formed on the hot face of the alumina brick at tempei atures below those required for sintering the material. When this occurs a coating commences to form and as it grows in thickness, it protects the hot face of the refractory from the heat of the furnace to the extent that the temperature at the hot face of the brick is lower than the temperature required to cause slagging. If the temperatures of the kiln subsequently rise to the point where the heat which penetrates the coating is sufficient to again cause slagging at the hot face of the brick, the bond between the brick and the coating weakens by becoming liquified and there is danger of losing the coating. It is then necessary to reduce the temperature and cool the coating to bring a stop to the slagging by reducing the temperature at the juncture of coating and hot face of the brick to prevent the coating from slipping off. If the temperature is not reduced, slagging will continue until the bricks become so thin that they are cooled by loss of heat through the shell, stopping the slagging and permitting a coating to reform. Basic brick are not fluxed by the cement material sufficiently to slag at even the highest temperatures employed in a cement kiln. The coating is formed anyway, sometimes aided by the presence or application of iron or iron particles or iron oxide, which in the presence of heat causes a sticky substance to appear on the hot face of the basic brick and promote formation of a coating. As soon as the coating forms, it provides insulation. The point of junction between the coating and the hot face of the refractory is cooler than the surface of the coating due to the insulating feature of the coating itself. While there is no danger of slagging the basic refractory at temperatures attained in a cement kiln, it has been asserted that the sticky substance which originally caused the cement material to adhere to the nrick to commence the formation of a coating might again liquefy and cause loss of the lining. The evidence indicates that this substance may be a liquefied form of iron oxide or eutectic formed by the cement materials during the clinkering process. Basic brick may lose their coating, but generally from causes such as severe fracturing of the hot face of the brick and spalling, a dropping away of the fractured particles, which weakens or destroys the bond between the coating and brick. Some fracturing of the brick always occurs under normal conditions, but at an acceptable rate, permitting the particles to be absorbed into the coating without endangering the bond between the brick and the coating. Fracturing of the hot face is caused by the pressures and stresses which occur as the bricks expand against each other. As already explained, avoidance of spalling is attempted by the use of iron shims which oxidize and form a substance which binds the bricks together and prevents the fractured particles from falling or crumbling away. After the shim has oxidized for some distance (two inches, for example) down from the hot face, the greater conductivity of metal as compared with refractory is not available at the hot face of the brick where the lining attaches. It therefore seems that the remaining metallic shim acquires its heat from the adjacent refractory bricks and what heat is transferred to the shell by metal-to-metal contact between shim and shell and lost by radiation has come from an area of the bricks substantially below the point of junction between the coating and the hot face of the bricks. This would serve to cool the bricks in general rather than the hot face in particular. The heat loss would represent a lack of efficiency in the insulation of the total basic refractory lining. Shims are not generally used with alumina brick for many complex reasons, the simplest of which is that the monolithic bonding effect does not occur due to the chemistry of such a refractory. Mr. Woodward, Superintendent of Southwestern Portland Cement Company at Victorville, California, had in mind that the thermal conductivity of a lining which results in radiating heat to the shell is a composite thing consisting of thermal conductivity of the brick and the conductivity of the shim which touches the shell. He testified that when his company was using the full flat shim which touched the shell, the theory was advanced by a number of people that such conductivity served a useful purpose. The hot face of the brick would be cooler and this would have a favorable influence upon the life of the lining. This theory was discussed with nearly every salesman who called upon them. He explained that there are quite a number of things that happen in the kiln that no one for sure quite understands. The theory referred to was one of the prevalent theories. Mr. Oberg, the General Superintendent of Operations at Monolith, testified that at the time that the first Kaiser basic lining was installed at Monolith in 1947, he understood that the full shim would serve two functions; one would be to fuse the brick and the other to conduct heat to the shell to promote the formation and solidification of the eutectic elements of the clinker and thereby provide the initial requirements for building up the coating. This was a positive heat transfer function. He had an understanding that heat was being dissipated throu