Gordon Form Lathe Co. v. Ford Motor Co., 9122

• Citation: 133 F.2d 487
• Decision Date: 04 February 1943
• Docket Number: No. 9122,9123.,9122
• Parties: GORDON FORM LATHE CO. v. FORD MOTOR CO. FORD MOTOR CO. v. GORDON FORM LATHE CO.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

133 F.2d 487 (1943)

GORDON FORM LATHE CO. v. FORD MOTOR CO.

FORD MOTOR CO. v. GORDON FORM LATHE CO.

Nos. 9122, 9123.

Circuit Court of Appeals, Sixth Circuit.

February 4, 1943.

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COPYRIGHT MATERIAL OMITTED

F. O. Richey, of Cleveland, Ohio, and George D. Spohn, of Milwaukee, Wis. (F. O. Richey, of Cleveland, Ohio, John W. Michael and Geo. D. Spohn, both of Milwaukee, Wis., B. D. Watts, of Cleveland, Ohio, Lecher, Michael, Whyte & Spohn, of Milwaukee, Wis., Richey & Watts, of Cleveland, Ohio, and Swan, Frye & Hardesty, of Detroit, Mich., on the brief), for appellant and cross-appellee, Gordon Form Lathe Co.

Drury W. Cooper, of New York City, and I. Joseph Farley, of Detroit, Mich., for appellee and cross-appellant, Ford Motor Co.

Before HICKS, ALLEN, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge.

These are appeals from the court's rulings on exceptions to a Special Master's report in a patent accounting case.

The Master recommended that appellant in No. 9122, The Gordon Form Lathe Company, was entitled to its choice of $206,824.22 alleged profits realized by the appellee, Ford Motor Company, or damages of $120,000 because appellee infringed appellant's patent No. 1,542,803.

Both parties excepted to the Master's report and on final hearing the court disallowed $120,625.89 alleged savings in overhead which the Master found appellee had realized by reason of its infringement. The court sustained the Master in all other particulars. The parties will hereinafter be referred to as The Gordon Company which was plaintiff below and the Ford Company which was defendant below.

The history of the litigation invoked by the present patent is helpful to a correct decision of the issues.

The inventors, Charles Gordon and Alfred W. Redlin, filed their application for the patent on June 19, 1920, which was granted June 16, 1925. It first appears in litigation in the case of Melling v. Gordon, 55 App.D.C. 278, 4 F.2d 945, 947, decided April 6, 1925, which was an action to review the decision of the Commissioner of Patents awarding priority of invention to Gordon and Redlin over the application of Herman W. Melling.

The embodiment of the invention was a lathe for turning irregular forms, specifically the camshafts of automobile engines. The core of the invention was the oscillation or tilting of the tool under the control of a master cam to maintain at all times a proper cutting angle between the upper surface of the cutting tool and the surface of the work cam. According to the opinion of the court, the patentees had manufactured and sold a number of machines in accordance with the disclosures of their application and drawings, but they did not operate satisfactorily from a commercial standpoint because from 10 to 20 percent of the camshafts turned out on them were commercially unusable and there was an excessive waste or scrap in their manufacture.

Melling's case, as the court decided it, was an attempt by him to secure an award of priority on the alleged superiority of his invention over that of Gordon and Redlin, because his machine was able to manufacture shafts with less waste than theirs and had a wider range of utility. The court said: "Neither wider range of utility nor better work are sufficient to deprive Gordon and Redlin of their right to the claims in issue."

The next litigation is found in Melling v. Gordon Form Lathe Company, D.C. Ohio, 14 F.2d 437. In that case Melling instituted proceedings under the Revised Statutes, Section 4915, 35 U.S.C.A. § 63, to compel issuance to him of a patent for an invention embodied in the patent issued to Gordon and Redlin, on the ground that the Gordon and Redlin device as described in the specifications and illustrated in the drawings was inoperative or lacked patentable novelty. The court there decided that patentable novelty was not lacking when the counts in issue were construed broadly. The next litigation is found in Gordon Form Lathe Company v. Walcott Machine Company, D.C.Mich., 20 F.2d 673, 674. This was a suit brought for the alleged infringement of the present patent. The court found that the patent was valid, but that the device of Walcott did not infringe. In deciding this issue, the court said: "Prior to the Gordon and Redlin invention, irregular shaped cams of automobile shafts were ground. This was an expensive and dangerous process."

On appeal this court reversed the District Court in part 6 Cir., 32 F.2d 55, 58 and held that the Walcott machine infringed the present patent. In the course of the decision, Judge Hickenlooper, writing for the court, said: "The present patent is in a very true sense generic, and the patentee a pioneer in this particular branch of the art. The machine had commercial utility and was accepted by the trade, and its manufacture was reasonably successful until thrown into competition with the infringing machine which avoided the chief defect, heretofore mentioned, and did not have some of the limitations of the patented device."

After this court's decision, The Gordon Company entered into a compromise settlement with the Walcott Company which had become financially involved. By the terms of the settlement, The Gordon Company accepted $1 for all claims of infringement and waived an accounting. In an amended final decree the Walcott Company was ordered to pay The Gordon Company $4,000 costs.

In August, 1922, The Gordon Company sold to the Ford Company one of its patented machines, which was delivered May 16, 1923. The Ford Company was unable to operate the machine successfully and after a fair trial it was returned to The Gordon Company. The machine was rebuilt and four months later was returned to the Ford Company which again put it in operation but without success.

In the early part of 1924, the Ford Company purchased a battery of eighteen Walcott machines which it used in the manufacture of all its camshafts and in 1929 it purchased six others, the twenty-four machines being used until 1931, when they were replaced by milling machines designed by the Ford Company's engineer Pioch.

On June 12, 1929, The Gordon Company sent notice of infringement to the Ford Company. At that time the Ford Company owed the Walcott Company $5,926.62 balance on the purchase of machines. The contract between the Ford Company and the Walcott Company contained a patent guarantee clause. The Ford Company notified the Walcott Company of its receipt of the notice of infringement and called on the Walcott Company to defend any action against it or to pay any claim it owed by reason of infringement of the present patent, at the same time withholding the payment of the sum due the Walcott Company. The Walcott Company informed the Ford Company that it was conducting negotiations for the purchase of the Gordon-Redlin patent and when completed, all costs or damages by reason of Ford's alleged infringement would be settled.

The Gordon Company instituted this action on Nov. 29, 1930, charging the Ford Company with infringing claims 1, 2, 12, 23, 24, 28, 29, 30, 33, 34 and 38 to and including 42 of the present patent.

On the original trial, the lower court found that the Ford Company had infringed the patent by the use of the Walcott-Melling machines and also the Pioch milling machine. On appeal Ford Motor Company v. Gordon Form Lathe Company, 6 Cir., 87 F.2d 390, 391 this court modified the decree of the District Court and decided that the Walcott-Melling machine infringed all of the claims relied on except 12, 23, 24 and 38, but that the Pioch machine infringed none of them. In the opinion prepared for the court by Judge Raymond, it was said: "Because of the sharper points of the cams as they had for many years been used in defendant's engine, plaintiff was unable with its machine, after efforts extending over many months, to accomplish more than a very moderate degree of success. Due to the necessary rapid change of position of the tool relative to the work piece as the tool passed from the lower to the upper side of the pointed end of the cam, a cut or gouge was frequently left on the lower side of the completed cam and an excess of material upon the upper side which resulted in a very considerable percentage of rejection, rendering it of dubious practical value in defendant's plant. Because of this inefficiency the Gordon machine was rejected by defendant after a long period of experimentation and the Walcott machine was substituted."

On remand, the cause was referred to a Special Master who has brought before the court a very able and complete report on the claims of the parties and a thorough discussion of the facts and the applicable law. The Master and the lower court correctly applied the rule that where the unlawful use of the patented article or process constituted infringement, the advantage, namely the savings which the infringer derived from using the invention of the patentee or his assignee over what he could derive with any other process or thing which was known prior to the invention constituted the profit which the Gordon Company was entitled to recover. Horvath v. McCord Radiator & Mfg. Co. et al., 6 Cir., 100 F.2d 326.

The principal issue between the parties does not relate to the correctness of the rule, but to its application, and each of the parties insists that the Master and the court failed to apply the correct standard of comparison in the light of the evidence.

The matter of shaping the cams in the Ford camshaft is of importance. The tolerance of the cams determines the degree the valves are raised or lowered in the combustion operation of the engine on which the efficacy of the motor depends.

Prior to the time the Ford Company installed the Gordon machine, and subsequently the Walcott machines, it made camshafts by the use of a shaper, which will be described hereinafter. The shaper used to machine camshafts on the Ford Model T cars was mechanically unsuitable to rough machine those...