The Evolution of the Cryogenic Railcar

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The following is based on the testimony, exhibits, depositions, and stipulations of the law suit, "General American Transportation Corporation, Plaintiff vs. Cryo-Trans, Incorporated, Defendant; 893 F. Supp. 774; 1995."

(Read the complete GATX vs. Cryo-Trans law suit at Justia Law)

The Need

A critical issue facing the frozen food industry in the 1980's was the availability of mechanical refrigerator cars owned by the nation's railroads. The then-current policy of the railroads was not to replace aging mechanically refrigerated rail cars as they became unserviceable. The frozen food industry's dependence on mechanical refrigerator cars for long-haul movement was expected to be compounded by the continuing escalation of diesel fuel prices which would preclude long-haul truck movement and make the industry even more dependent on the railroads. Finding an alternative to the use of mechanical refrigerator cars had been a high priority matter for the American Frozen Food Institute Distribution Council and Transportation Committee since at least 1982.

The American Frozen Food Institute (AFFI) and the International Association of Refrigerated Warehouses (IARW) through the Refrigeration Research Foundation jointly formed a cryogenic railcar research and development task force (AFFI-IAWR Refrigerated Railcar Task Force) to explore the feasibility of using total loss refrigerants, such as liquid CO2 to ensure an adequate transportation system for the expected growth of the frozen food industry. The United States Department of Agriculture provided the scientific monitoring and evaluation for the test shipments. Additionally, there was substantial resource involvement by the Burlington Northern Railroad.

Recognizing that the supply of mechanically refrigerated cars was steadily declining, Ralph Hill initiated the Cryogenic Rail Car Research Project. The project involved development of prototype rail cars that relied on CO2, rather than mechanical systems, to provide refrigeration. Hill was a leading force behind the project.

Mr. Hill first initiated the Cryogenic Rail Car Research Project under the joint sponsorship of the AFFI and IARW, and later through a separately incorporated organization called the American Frozen Food Cryogenic Association for Rail Car Research better known as AFFCAR which was a non-profit shipper's association formed to purchase refrigerated rail cars with which the AFFI cryogenic research and development task force could experiment. Hill was chairman and leader of AFFCAR throughout its existence. Throughout the Cryogenic Rail Car Research Project, Mr. Hill championed the need for research, raised funds, supervised the design, engineering and testing of prototype rail cars, and kept the frozen food industry informed of the progress of the research. In 1985, he was recognized by the frozen food industry for his work in championing the need for cryogenic research, raising funds to build prototype cars, supervising design work, and engineering and testing prototype cars.

During 1980-1985, AFFCAR and Burlington Northern built a number of prototype cryogenic cars which were identified as the BNFE 3, AFFX 2001, AFFX 2002 and AFFX 2003 during the trial.

The AFFI task force decided that an insulated railcar loaded with frozen food and given an initial charge of cryogen would most likely be a technically and economically feasible cooling system. A series of test shipments were conducted over a one year period to determine the feasibility of using CO2 as an alternative refrigeration source for railcar shipments of frozen foods.

The Prototypes

BNFE 3 (1980)

The Burlington Northern Railroad donated its modified mechanical refrigerator test car (BNFE 3) to be used in the AFFI cryogenic railcar project study. The BNFE 3 was a refrigerated railcar originally built as a meat car in 1966, and rebuilt with under-the-floor air delivery and a truck-type nose-mount mechanical refrigeration unit in 1976. It was modified for CO2 snow refrigeration in June of 1980. Seven shipments of various frozen commodities in the summer and fall of 1980 and the winter and spring of 1981 were made. The mechanical unit was not used during the testing. Upon evaluation of the test data from the BNFE 3 test shipments, the cryogenic railcar research task force concluded that the cryogenic refrigeration concept warranted further testing and consideration.

Ralph Hill, James Fink, Eddie Barron, LeRoy Couture and Bill McCollister were principally involved in the reconstruction of the BNFE 3 railcar in 1980. The BNFE 3 was a converted mechanical refrigeration car, which utilized an overhead rectangular manifold at the ceiling of the car to spray CO2 directly on the load. It utilized a single loading of CO2 at the place of embarkation. The BNFE 3 car proved that CO2 had applications for use in transportation of frozen food, but had drawbacks which did not allow the entire load to remain consistently frozen during the entire trip.

AFFX 2001 (1983)

With promising results from the BNFE 3 test shipments, the task force proceeded to plan and design the construction of a prototype cryogenic railcar with an on-board CO2 temperature control system with no mechanical or electric parts; thus, eliminating costly mechanical diesel powered refrigeration. Construction of the prototype car the AFFX 2001 was completed in January of 1983.

The AFFX 2001 car was built for AFFCAR as an attempted improvement over the BNFE 3 car. The AFFX 2001 utilized tanks of liquid CO2 beneath the floor of the loading area to carry a supply of CO2 on the railcar as well as a computer to sense temperature changes and to direct release of CO2 snow on the load.

The notable features of the "AFFX 2001 Prototype Car Design" were as follows:

The prototype car had a capacity of 4,904 cubic feet, compared with the 4,050 cubic feet capacity of existing mechanical cars. The overall exterior length of the car was nearly 65 feet. The interior length was 58 feet.

As evident from the description, the AFFX 2001 was equipped with an under-the-floor liquid CO2 cooling system, corrugated paneling on the side walls, and a piping system with which to inject liquid CO2 directly on top of the cargo to form CO2 snow. The AFFX 2001 proved impractical because of the extra weight of the car from the storage tanks of liquid CO2 and because the computers, which controlled the release of CO2 while in transit, were subject to breakdown due to the difficulties of the rail environment.

Mr. Hill was part of a group of people who helped to design the AFFX 2001. Other persons involved in designing the AFFX 2001 included Messrs. Fink, Habel, Couture and Jenkins.

AFFX 2002 and 2003 (1983-1985)

One of the problems with the AFFX 2001 Cryogenic Prototype Railcar Design was that direct contact of solid CO2 with the frozen cargo caused over-freezing of the frozen food product near the top of the shipments. The solution to the problem was to put a bunker between the cargo and the solid CO2. Accordingly, in a subsequent phase of the task force's cryogenic railcar research, the Burlington Northern Railroad modified two existing large cube mechanical refrigerator cars with the Rubin Carbonaire Plate CO2 Snow Bunker System. The two cars were called the AFFX 2002 and the AFFX 2003.

AFFX 2002 and AFFX 2003 were equipped with a snow bunker which consists of a sheet metal chamber across the interior ceiling of the car. Liquid CO2 was charged under pressure to supply lines accessible from either side of the A end (end opposite the brake wheel end) to the overhead bunker. As the liquid CO2 was charged into the non-pressurized atmosphere in the bunker, it converted to snow which accumulated in the bunker under the entire ceiling of the car. The under surface of the bunker, which was the interior ceiling of the car, was insulated to control the sublimation (melting) of the snow and prevented extreme cold air from reaching the product in the car directly. As the CO2 sublimates, the cold air drops down the side walls and around the load. (CO2 is 52 percent heavier than air.)

The AFFX 2002, which evolved over a two year period, utilized an overhead bunker to store the CO2 snow after charging. The idea of using an overhead bunker was a result of collective discussions between Bill McCollister, James Fink, LeRoy Couture and Ralph Hill.

The Burlington Northern took the AFFX 2002 and the AFFX 2003 back after the AFFCAR project and put both cars in their fleet, and built 75 additional such cars in the remaining part of 1985 after March of that year.

The AFFX 2002 was an experimental car. It went on two test runs before final acceptance. The AFFX 2002 design showed that an overhead bunker might be a useful innovation. Nevertheless, the AFFX 2002 still needed improvement, which was made to the design of the exhaust vents and floors which were incorporated into the AFFX 2002 for subsequent test runs. Mr. Fink was principally responsible for the design of the AFFX 2002.

The same improvements were made to the AFFX 2003, which was identical to the AFFX 2002, except for its overall length.

The cryogenically refrigerated railcar designated AFFX 2002 was built by employees of the Burlington Northern in June and July 1983. Burlington Northern sold the railcar to AFFCAR after its completion. This railcar was used to transport frozen food product from the State of Washington to an unloading site near Kansas City, Kansas, in the summer of 1983. Ralph Hill was familiar with the AFFX 2002 railcar construction. He witnessed the loading, testing, and unloading of the AFFX 2002 in 1983 and understood its construction. Ralph Hill publicly asserted that the technology was available for anyone in the trade to use.

The AFFX 2002 was a converted mechanical refrigerator car having corrugated side and end walls, aluminum floor racks, corner floor drains used as cargo area vents, and an overhead bunker. The bunker had screened vents along one side and alternating CO2 nozzles penetrating into the duct. The bottom wall of the air duct was insulated. The CO2 nozzles were connected to a CO2 manifold pipe running the length of the car and connectable to an outside source of liquid CO2. The aluminum floor racks were of a herringbone construction with spaced apart slats running obliquely transversely and supported by lengthwise stringers to support the load. The stringers formed a plurality of parallel lengthwise channels for allowing CO2 gas to flow beneath the cargo. A center rail between the floor racks would make it difficult for CO2 gas to flow side to side under the floor.

When the AFFX 2002 railcar was initially charged with CO2, the doors were kept ajar to relieve pressure. Although the drain vents at each of the corners of the AFFX 2002 railcar were kept open during the charging phase, most of the pressure was relieved through the open door. If the door was not kept open, the roof of the car was in jeopardy of being blown off because the drain vents were not sufficient to relieve the pressure.

There was a dispute as to how the sublimated CO2 gas would flow in the AFFX 2002. Many of the people involved in developing the AFFX 2002, including Messrs. Hill, Couture, Habel and Barron, believed that its CO2 gas would drop down the sidewall nearest the bunker toward the aluminum floor racks, pass through the gaps between the slots on the aluminum floor racks beneath the load, and then go up on the opposite sidewall of the car and over the top of the load. Mr. Fink, who also was involved in the design of the AFFX 2002, however, believed that the gas would flow on top of the load and go down both sidewalls. This dispute eventually resulted in two competing patents.

Although GATC attempted to prove in the 1995 legal dispute that the later Fink and Habel Patent, as applied to the prototype AFFX 2002 may have worked, the court found that it did not answer the question of how the relevant persons in the design believed the AFFX 2002 worked during the relevant time period.

Mr. Hill was involved in providing input and design assistance for the BNFE 3, the AFFX 2001, and both AFFX 2002 and 2003. The development of a successful cryogenic railcar was very much an evolutionary process involving trial and error. Mr. Hill was the only person who was aware of everything that was going on in connection with AFFCAR activities. He was the only person actively involved in the development phase of each and every AFFX prototype car developed by AFFCAR.

Each of the prototypes developed by AFFCAR and Burlington Northern had problems. However, by 1985, Burlington Northern began to commercialize the design of AFFX 2002 and 2003, and built 75 rail cars incorporating the AFFX 2003 design. Burlington Northern indicated to the industry that it was going to seek a patent. As a result, AFFCAR disbanded in March 1985.

At the time AFFCAR disbanded in March of 1985, Mr. Hill and his employer Lamb-Weston knew that there were problems with the design of AFFX 2002 and2003. In particular, it was generally known that the car had hot spots along the sidewall opposite the bunker vents, were, resulting in the thawing of frozen product by the time it reached the East coast. Therefore, Lamb-Weston instructed Mr. Hill to continue working on the development of a successful cryogenic car.

Burlington Northern patented the design of AFFX 2002 and 2003 design. The patent issued as U.S. Patent No. 4,593,536 to two Burlington Northern employees, James K. Fink and David H. Habel. The Fink and Habel Patent specifically disclosed that "when the refrigerant flakes sublimate in the bunker, the vapor flows from the bunker out the screen mesh, down the channel of the first sidewall, across the air flow channel and up the channel of the second sidewall, all by convection." Ultimately, Burlington Northern refurbished 75 cars utilizing a modified AFFX 2003 design. These cars were not effective because they suffered from hot spots on the sidewall. As a result, the Burlington Northern cars were never accepted in the marketplace, and ultimately were taken out of service.

Cryo-Trans and CRYX 1000 (1985)

In 1985 Ralph Hill partnered with Marvin Weiner, who agreed to fund a new prototype. They hired James Moe of Cryo-Van to perform the modifications on the old AFFX 2001 shell. While Cryo-Van provided mechanical expertise and suggested technical improvements, the evidence indicated that Hill was the principal designer. The resulting prototype car was named the CRYX 1000.

The CRYX 1000 successfully utilized:

The design that ultimately led to the Hill Patent was conceived by Mr. Hill during the summer of 1985. During the summer of 1985, Mr. Hill spoke often to Mr. Jenkins, a fellow employee at Lamb-Weston, about how a CO2 car should be designed. Mr. Hill often pulled out pieces of paper and made sketches. During the summer of 1985, Mr. Hill described a potential design for a CO2 car to Mr. Jenkins which included a false ceiling created by the use of a bunker (metal enclosure) mounted in the car's ceiling. During this same time period, Mr. Hill also described this idea to a Mr. LeRoy Couture, a marketing manager with the Burlington Northern. Mr. Hill's idea included use of vents along both sides of the ceiling bunker, as well as the use of corrugated walls on the end walls and the side walls and flooring of the car. Mr. Jenkins also saw Mr. Hill with blueprints regarding this design. These blueprints reflected Mr. Hill's design, and were prepared by Lamb-Weston's engineering draftsman during the summer of 1985.

Mr. Hill's employer, Lamb-Weston, was not interested in manufacturing rail cars. It was interested in having someone else make them for Lamb-Weston's use.

Mr. Weiner knew Mr. Hill because of the business relationship between Weiner's Mount Airy Cold Storage and Lamb-Weston. Mr. Weiner was familiar with the Burlington Northern cryogenic rail cars because they had been off-loaded at Mount Airy's warehouse in Mount Airy, Maryland. Because of this, he also knew that the Burlington Northern cars AFFX 2001 and 2002 (which were the AFFCAR prototypes) had "hot spots" resulting in a thawing of frozen food product by the time the cars reached Mount Airy.

Mr. Weiner recognized the commercial potential of cryogenic rail cars as a replacement to mechanical cars. Mr. Weiner and Mr. Hill agreed to work together to build a new prototype cryogenic railcar. Mr. Weiner agreed to fund the construction of a new prototype.

Mr. Weiner and Mr. Hill acquired and modified one of the AFFCAR prototypes, the AFFX 2001, into a new design. However, because the previously used construction facilities were no longer available, Messrs. Weiner and Hill had to find another party to do the modification work they desired.

Mr. Hill first met James S. Moe of C.V. Engineering in October of 1985. At all relevant times, the company was commonly referred to simply as Cryo-Van, a company principally operated by James S. Moe and Tom Maxwell. Mr. Hill's initial meeting with Mr. Moe led him to believe that Cryo-Van had the capability of modifying the AFFX 2001 into his new design because Cryo-Van had the capability to manufacture fiberglass which was an important component of the new design.

In late 1984, James Moe, with the assistance of Tom Maxwell, designed and developed a cryogenically refrigerated "all purpose container" for the transport of frozen fish. Mr. Moe was a natural mechanic with cryogenic experience. His real expertise was in design and finding creative practical solutions to mechanical problems. The container included a bunker (or tray) extending the full length and width of the container to serve as a false ceiling above the fish cargo and upon which solid carbon dioxide was placed. The bunker served the same purpose as all bunkers holding refrigerants such as solid carbon dioxide, to-wit: to prevent direct contact of the refrigerant with the cargo below and, thus, avoiding overfreezing of the top of the load. Cryo-Van's bunker was formed with vent openings along the side walls of the container to permit sublimated carbon dioxide gas to flow naturally down from the bunker to the cargo below.

In October of 1985, Mr. Hill sent blueprints of his design and of the original railcar which was to be converted into the new design (the AFFX 2001), to Cryo-Van. Mr. Moe ultimately threw away the blueprints sent to him by Mr. Hill. After receiving blueprints from Mr. Hill, C.V. Engineering submitted a bid to Mr. Hill in the amount of $22,150 by letter dated October 29, 1985. This letter specifically acknowledges receipt of the blueprints from Mr. Hill and itemizes in detail the various changes requested by Mr. Hill for modification of the AFFX 2001 into the new design which ultimately became known as the CRYX 1000. Mr. Moe acknowledged that Mr. Hill's prior designs included a bunker-type compartment.

Cryo-Van converted the AFFX 2001 to the CRYX 1000. Although who actually designed the CRYX 1000 was not without some controversy, the evidence indicates that it was more likely than not that Mr. Hill principally designed the CRYX 1000.

The October 29, 1985 letter from Cryo-Van to Ralph Hill, while he was at Lamb Weston, Inc., confirms that the blueprints were sent to Cryo-Van by Mr. Hill. In the first paragraph of the letter, Tom Maxwell, General Manager of Cryo-Van, thanked Ralph Hill specifically for his prompt arrangement for expediting his blueprints for the car.

The same October 29, 1985 letter, after reviewing Ralph Hill's blueprints, made the following proposed changes in the refurbishment of rail car #2001 to Bunker type rail car:

Although Cryo-Van helped to improve the original Hill design, this letter does not, contrary to GATC's position, indicate that Cryo-Van principally invented the CRYX 1000. Messrs. Moe (C.V. Engineering) and Maxwell (Cryo-Van) used Mr. Hill's blueprints and the shell of the AFFX 2001 railcar to complete the construction of the CRYX 1000.

A December 10, 1985 letter from Mr. Marvin H. Weiner to Mr. M. Tom Maxwell, General Manager of C.V. System Engineering, Inc., stated the following:

You should by now have received AFFX 2001 (hereinafter referred to as CRYX 1000) for refurbishment....

It is also my understanding from Ralph Hill that he has discussed the matter of patent searches, clearances and indemnification with you. Indemnification should be for Lamb-Weston, Ralph and myself personally, Cryo-Trans and Mount Airy Cold Storage.

Based on the ultimate performance of CRYX 1000, we see this as the forerunner of mutually exciting times for all of us.

At the time of this letter, Messrs. Hill and Weiner were concerned that Cryo-Van's liquid CO2 bunker-style refrigeration system might be alleged to infringe the Rubin Carbonaire Plate CO2 Snow Bunker System, the patented design used on AFFX 2002 and 2003.

There were concerns over a possible patent suit by Burlington Northern. These concerns ultimately led to a proposed Patent License Agreement between Cryo-Trans and Burlington Northern. Cryo-Trans also entered into a Patent License Agreement with the owner of the Rubin Patent. Given this background, Messrs. Weiner and Hill's desire to obtain a "hold harmless" indemnification from Cryo-Van was understandable.

Cryo-Trans' request for "hold harmless" indemnification was accepted by Cryo-Van by letter dated December 12, 1985. The same letter also stated, "Regarding a patent, our attorney of Washington, D.C. indicated there was no such patent applied for in recent years, however, as you understand, we are going to apply our concept as patent as soon as possible."

In this letter Messrs. Moe and Maxwell never claimed that they were the principal designers of the CRYX 1000. If they had been, it is extremely unlikely that they would have agreed to Mr. Weiner's "hold harmless" request without some reciprocal business consideration.

A February 4, 1986 letter written by Cryo-Van to Mr. Weiner upon the completion of the CRYX 1000 also makes no claim that Cryo-Van had designed the CRYX 1000. Instead, this letter merely refers to the "refurbishment of your CRYX 1000".

Mr. Moe had no credible documentation which clearly and convincingly indicates that he conceived of the invention defined in the Ralph Hill Patent prior to the time the invention was conceived by Mr. Hill. The earliest documentation that Mr. Moe had which allegedly supports any claim by him as inventor was a sketch of a CO2 container having a manifold and exhaust system, which was sealed and mailed on December 17, 1985 after Mr. Moe had met Messrs. Hill and Weiner.

This Court specifically finds that the testimony of Messrs. Hill and Weiner about the development and invention of the Hill Patent was corroborated by admissible evidence and that Mr. Moe's testimony concerning the same issue was not. Unlike Mr. Hill, Mr. Moe had no historical involvement in the development of cryogenically refrigerated rail cars. Mr. Moe had no experience with rail cars or with CO2 manifold systems prior to building the CRYX 1000 for Cryo-Trans.

From 1983 to 1988, Mr. David Burgener served as Food Program Manager and Director of Applications for the Cardox Corporation. This position gave him engineering and marketing responsibilities with respect to the use of solid or liquid carbon dioxide for the refrigeration of food supplies. As part of the management of Cardox Corporation, Mr. Burgener was aware that a committee of the American Frozen Food Institute was exploring the feasibility of non-mechanical, cryogenic refrigeration for food shipments on rail cars, and that Cardox was being solicited as a supplier of the liquid carbon dioxide to be used in such cryogenically refrigerated rail cars. Cardox was at that time, and long had been, in the business of selling solid or liquid carbon dioxide for use in refrigeration systems.

In March of 1986, Mr. Burgener witnessed the maiden voyage and unloading of the CRYX 1000 at the Mount Airy Cold Storage warehouse in Mount Airy, Maryland. The unloading of the CRYX 1000 occurred on March 14, 1986 at Cryo-Trans' Mount Airy Cold Storage warehouse in Maryland. At the unloading were representatives from Mount Airy Cold Storage, Lamb-Weston, Liquid Air-Cardox, and the Burlington Northern Railroad. The unloading was also not a secret event. All who attended were there at the invitation of Cryo-Trans' chief executive officer, Mr. Weiner and Mr. Hill.

A July 2, 1986 letter from Mr. Weiner to Mr. Hill, which significantly predates this controversy and resulting litigation, also documents that Mr. Hill was the inventor of the CRYX 1001 design.

On August 12, 1986, Ralph Hill, while still a Lamb-Weston employee, filed a patent application for the cryogenic refrigeration system at issue. The Hill patent application was prepared by Lamb-Weston's attorney, Kenneth Klarquist. He did not have a copy of the original design blueprints in his file. He did have a copy of a sketch of the railcar reflecting changes to be made at Mells Cargo from the original CRYX 1000, which he could use to describe the best mode of the patented invention.

Kenneth Klarquist, received, but did not disclose to the Patent Office, the Kurth British Patent 399,678. Klarquist received the Kurth Patent and other prior art patents from Mr. David Abrams, who was Mr. Weiner's patent attorney. Klarquist indicated that his usual practice was that he would, in fact, have received such materials, and supplemented the disclosure already made to the Patent Office if he believed it was appropriate.

The Kurth Patent discloses a cryogenic refrigerated railcar with an overhead solid carbon dioxide bunker system having a plurality of openings arranged along the side walls for downward flow into the cargo area of sublimated CO2 gas.

On or about December 2, 1986, the Patent and Trademark Office of the United States Department of Commerce rejected Mr. Hill's patent application stating that Hill's claims 1-6 were rejected as being unpatentable over the Fink patent. It would be obvious to modify either the Fink patent to arrange the CO2 flow within the wall channels for sinuous flow as taught in the Hall patent.

To obtain reconsideration of this denial, Hill amended the patent application to stress the corrugated nature of the containers' walls.

On November 10, 1987, Hill's application was granted, and the Hill Patent was issued. The Hill Patent states that "it is an object of the invention to provide a railcar construction utilizing carbon dioxide snow as the refrigerant wherein all the contents of the car will be maintained within desirable temperature limits during shipment." The invention relates to a refrigeration system for vehicles, and more particularly to the construction of storage compartments for utilizing carbon dioxide as a refrigerant in transporting products by vehicles such as trucks, trailers, rail cars and the like. In April of 1990, Cryo-Trans acquired the Hill Patent from Lamb-Weston.

Mr. Hill testified he last saw the original blueprints at Lamb-Weston. During the proceedings in this case, Mr. Hill was unable to produce the original blueprints that led to the Hill Patent. In 1988, after Mr. Hill's departure, Lamb-Weston was sold to Con-Agra, Inc. Thereafter Lamb-Weston's headquarters were moved from Portland, Oregon to Pasco, Washington and a substantial number of business records from Lamb-Weston were discarded. The original blueprints may have been discarded by Lamb-Weston.

On November 8, 1977, United States Letters Patent, No. 4,057,367 was issued to Mr. James S. Moe, and Messrs. Marvin B. Carter and Ray L. Carter for their invention of a "Combined Rotary-Reciprocating Piston Compressor," to-wit: "[a] compact but high volume displacement, relatively noiseless and vibration free compressor for refrigeration gas or the like combining a rotary drive input with six cylinders and three reciprocating pistons within a rotor housed in a stator."

On August 9, 1988, United States Letters Patent, No. 4,761,969 issued to Mr. James. S. Moe for the invention of "[a] non-mechanical refrigeration system particularly for use in a large insulated container such as a truck or railroad car for maintaining perishables at a desired low temperature during shipment. A cryogenic material such as liquid CO2 is used in a plurality of modes to permit or prevent exposure of the foodstuffs to CO2 vapors."

Mr. Moe never sought to patent an invention exactly like the Hill Patent and his attorney never challenged the issuance of the Hill Patent to Mr. Hill.

The cryogenic refrigeration system covered by the Hill Patent at issue in this case, was essentially, a railcar refrigerated by carbon dioxide snow with a compartment at top for containing a supply of such snow. Openings were provided along each side and end wall for escape of carbon dioxide gas from the compartment so it can flow down along each side envelop the load. Floor of car was formed with longitudinal channels with manifolds at ends of car to cause flow of gas toward one end along side walls and then through interior channels to discharge opening at opposite end.

The Hill Patent make reference to and distinguish the subject invention from such prior art as the Fink patent, which refers to a bunker-style cryogenically refrigerated railcar, and the AFFX 2001 railcar. As concerns the AFFX 2001 railcar, the Hill Patent notes as a problem the direct deposit of carbon dioxide snow on the cargo load, causing overfreezing at exposed parts of the load. The Fink patent was acknowledged to disclose a bunker to contain carbon dioxide snow out of contact with the load, but was reported to not be effective in enveloping the load with cold carbon dioxide gas since the openings in the bunker floor were only along one side wall of the car.

The Ralph Hill patent differed by allowing the cold carbon dioxide gas to downward on each of the opposite sides and on the ends of the car and in direct contact with the bottom of the load, by which all parts of the load will be maintained at a desirably low temperature to preserve the quality of the product shipment.

Because of concerns Mr. Weiner had about C.V. Engineering's ability to quickly construct further CRYX 1000 cars, the CRYX 1000 was sent to Mells Cargo, Inc. in Sacramento, California, an established business with extensive experience in working with rail cars.

Mells rebuilt the CRYX 1000 bunker system and other components of the car. After Mells rebuilt the CRYX 1000, Weiner contracted with Mells to retrofit the first 150 used cars of Cryo-Trans "C" plate fleet.

The original CRYX 1000 included vertical ducts, which served as exhaust vents, which were designed by C.V. Engineering. These ducts were not included in the Hill Patent and were removed at Mells. Mells also rebuilt the flooring in the CRYX 1000.

Mr. Weiner personally borrowed $8.5 million in order to purchase used mechanical cars and rebuild them into the first 150 cars of Cryo-Trans' "C" plate fleet. Thereafter, Mr. Weiner incorporated Cryo-Trans as a company and began entering into leasing agreements with Lamb-Weston and other food processors. While mass construction of the CRYX 1000 was underway, problems developed relating to its manifold pressure which caused the roofs of the rail cars to be ruptured. Cryo-Trans spent close to $1 million working out these problems to improve the CRYX 1000.

Shortly after Cryo-Trans began construction of its Plate "C" fleet, Mr. Weiner conceived of an improved "high cube" version of Mr. Hill's design. Instead of being limited by the size of the Plate "C" shell, Mr. Weiner's high cube design optimized interior car dimensions to fit the size of the boxes used as product packaging by various food processors.

Commencing in the Spring of 1987, Mr. Weiner approached Gunderson, Inc. in Portland, Oregon to arrange for the production of a prototype high cube car. Gunderson's engineering department, working in conjunction with Mr. Weiner, developed a comprehensive set of blueprints for the car which Gunderson labeled the "Weinermobile".

Gunderson built the shell of the high cube car in the Fall of 1987. The car was then moved to Mells where the CO2 bunker system and walls were installed in accordance with Hill's design, as well as other structures. The car also included a customized "high profile" plug door designed specifically for Cryo-Trans by Youngstown Door Company in Ohio.

After two years of testing, Cryo-Trans was able to lease fifty high cube production cars in 1989 or early 1990. By that time, Cryo-Trans had increased its Plate "C" fleet to a total of 222 cars which were under lease.

The food processors who leased Cryo-Trans' cars were able to ship their product at a transportation cost that was considerably lower than the cost of using the older, mechanical cars.

Lewis Tyree was an inventor who was active in AFFCAR and who was paid to work on inventions to increase the use of CO2. It was in his financial interest to come up with an invention similar to the Hill Patent. He did not. The same financial incentive applied to David Burgener yet he also did not invent the Hill Patent.

Burlington Northern had an interest in building a CO2 railcar that worked. Burlington Northern did not conceive of the Hill Patent design. Instead, it built 75 CO2 rail cars employing the Fink and Habel Patent design, which were not effective.

GATX's Articar (1990)

General American Transportation Corporation (GATC) had over 61,000 cars of all types under lease. In late 1990, GATC decided it had to promptly get into the cryogenic railcar market and copy Cryo-Trans' high cube car.

GATC recognized it needed the Hill Patent to get involved in the marketplace and tried to hire Mr. Hill.

GATC had Gunderson make a shell identical to the Cryo-Trans high cube car. Gunderson also provided GATC with a set of engineering drawings it had originally made for Weiner and Cryo-Trans.

GATC then moved the shell from Gunderson in Portland, Oregon, to Mells Cargo in Sacramento for completion of the interior. The GATC car was completed by Mells along with the identical cars Mells was completing for Cryo-Trans.

GATC spent $130,000 to have a prototype copy of Cryo-Trans' railcar built as a tag-along order to the Cryo-Trans cars being built.

The prototype railcar GARX 68000 was originally produced with openings in the bunker floor adjacent the end walls of the car. In April, 1991, after this lawsuit was filed, GATC blocked up these end wall openings before commencing production of the Arcticar railcar design. From its first demonstration run in December 1990 to April 1991, GATC admits the GARX 68000 car literally infringed on the Ralph Hill patent, at which time GATC filed its suit to ask if the Hill patent was valid and enforceable.

The Arcticar was cryogenically refrigerated with carbon dioxide snow deposited in a bunker area beneath the roof of the car. The source of the snow was a manifold pipe mounted along the roof and length of the car, and connected to a source of liquid carbon dioxide for charging the bunker. The floor of the bunker area serves as the ceiling to the cargo area beneath. The walls of the Arcticar in the cargo area were formed with corrugated, open channels extending from the bunker floor to the floor of the car.

The only significant change made to the GARX 68000 in its transformation into the Arcticar, relative the Hill patent, was the elimination of the ceiling bunker vents on each of the end walls of the railcar.

In designing the Arcticar production railcar, GATC was cognizant of the Hill Patent and eliminated end wall vents on the bunker floor system precisely to avoid infringement of the patent.

Mr. Mowatt-Larssen, GATC's engineer, admitted that the Arcticar did not work any differently than the first GATC prototype in the way the load was cooled.

The Court's own observation and inspection of the Arcticar disclosed that it did not work any differently than the Cryo-Trans high cube car.

GATC copied the design of the Cryo-Trans high cube car after the commercial viability of the technology was proven by Cryo-Trans.

There was no perceptible market difference between the Cryo-Trans rail car and GATC's Arcticar.

Prior to the introduction of the Arcticar production railcar, GATC sought and obtained the advice of outside patent counsel concerning its possible infringement of the Hill patent. In a written opinion dated November 16, 1990, GATC was advised by outside patent counsel that its Arcticar production railcar design did not infringe the Hill patent.

GATC had produced and leased approximately 80 Arcticar rail cars.

At the time of trial GATC also had orders for 100 more Arcticar rail cars.

Final Judgment (1995)

The Hill patent design, and Cryo-Trans had enjoyed a high degree of commercial success, not only from the standpoint of reducing transportation costs for food processors, but also from the standpoint of making Cryo-Trans a profitable leasing company. The Hill patent design had been accepted by the industry. This was the main reason GATC decided to enter the market.

The Hill patent design solved a long felt transportation problem for frozen food processors, who were searching for a viable solution since 1980 to the poor economic and maintenance viability of old railroad mechanical cars.

On July 14, 1995, the court found that GATC had infringed on the Hill patent, and therefore Cryo-Trans, and awarded Cryo-Trans $9.7 million. GATC was permanently enjoined from any further infringement of the Hill Patent as of August 1, 1995 the date that was used for the calculation of Cryo-Trans' damages.