Aeroquip Corporation (Aeroquip) (defendant) and Stratoflex, Inc. (Stratoflex) (plaintiff) were competitors in the business for polytetraflouroethylene (PTFE) tubing. PTFE tubing could be made conductive through the use of conductive fillers, but the practice tended to make leaking more prevalent due to the emergence of gaps between filler particles and the PTFE material. Hoping to address the leaking problems that plagued conductive PTFE tubing, Aeroquip assigned two engineers to isolate the cause. The engineers determined that the leakage was due to electrical erosion and that the consequent gaps in the PTFE tubing were preventing conductivity. To solve the problem, Aeroquip ultimately developed a composite tube that included both a layer of PTFE and a layer of PTFE interspersed with highly conductive filler called carbon black. Aeroquip obtained a patent for the composite tubing (the ‘087 patent). Eventually, Stratoflex began manufacturing its own version of composite tubing, which had an inner layer of PTFE featuring evenly dispersed carbon-black filling. Aeroquip believed that Stratoflex’s use of the composite tubing amounted to patent infringement, and Stratoflex responded with a declaratory-judgment action to determine the validity of the ‘087 patent. Aeroquip counterclaimed for patent infringement. The district court held that several claims of the ‘087 patent were obvious in light of prior art and that Stratoflex had not infringed upon the only non-obvious claim of the ‘087 patent. Aeroflex appealed the findings of invalidity and non-infringement.