Hazeltine Research v. Admiral Corp.

• Citation: 183 F.2d 953
• Decision Date: 18 September 1950
• Docket Number: No. 10058.,10058.
• Parties: HAZELTINE RESEARCH, Inc., v. ADMIRAL CORP.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

183 F.2d 953 (1950)

HAZELTINE RESEARCH, Inc., v. ADMIRAL CORP.

No. 10058.

United States Court of Appeals Seventh Circuit.

July 21, 1950.

Rehearing Denied September 18, 1950.

Francis H. Uriell, and Edmund W. Sinnott, Chicago, Ill., Floyd H. Crews and Morris Relson, New York City, Pope and Ballard, Chicago, Ill., Darby & Darby, New York City, J. Darrell Douglass, Cleveland, Ohio, of counsel, for appellant.

Laurence B. Dodds, Little Neck, N. Y., M. Hudson Rathburn, Chicago, Ill. (Philip F. LaFollette, and Leonard A. Watson, New York City, Mason Kolehmainen, Rathburn & Wyss, of Chicago, Ill., of counsel), for appellee.

Before MAJOR, Chief Judge, and FINNEGAN and LINDLEY, Circuit Judges.

MAJOR, Chief Judge.

Patent No. 2,208,374, entitled "Television Receiving System," was issued to H. M. Lewis July 16, 1940. Hazeltine Research, Inc. (hereinafter referred to as Hazeltine), assignee of said patent, brought the instant suit against Admiral Corporation (hereinafter referred to as Admiral), charging infringement of claims 1, 2 and 4. The patent, and particularly the claims relied upon, is directed to a portion of a television broadcast receiver. Admiral counterclaimed for a declaratory judgment of invalidity, non-infringement and non-enforcibility because of misuse by Hazeltine.

The District Court entered Findings of Fact and Conclusions of Law, finding the claims in suit valid and infringed by television receivers made and sold by Admiral. Predicated thereon, the court on September 22, 1949 entered judgment enjoining Admiral from further infringement, awarding damages and costs to Hazeltine and dismissing Admiral's counterclaim. From this judgment the appeal comes to this court.

The contested issues, all decided by the trial court adversely to Admiral, are (1) whether the claims in suit are anticipated by and therefore invalid in view of the prior art Vance Patent No. 2,136,810; (2) whether the claims in suit are invalid for want of patentable invention over prior art Willans Patent No. 2,252,746, in view of prior art Poch Patent No. 2,151,149; (3) whether Admiral's accused television receivers infringe the claims in suit (in connection with this issue is Admiral's contention that file wrapper estoppel exonerates it from what might otherwise amount to infringement), and (4) whether the royalty payment and license notice provisions of Hazeltine's standard form of license agreement constitutes misuse such as to preclude the enforcement of the patent in suit.

At the inception, we are met with the charge frequently made, particularly in patent cases but seldom demonstrated, that the findings of the trial court are entitled to little if any weight. Numerous complaints are registered relative to the manner and means employed by the court in the adoption of its findings. These complaints need no detailed consideration. They evidently are designed, without the frankness to so state, to have us believe that the trial court as a result of its ignorance, carelessness or negligence, permitted a hoax to be perpetrated upon it by counsel for the prevailing party. This insinuation is without justification. The record discloses that the findings were made after three full days of trial, during which testimony was given both by expert and fact witnesses, and after both parties had submitted briefs and oral argument. True, it appears that the findings were drafted by counsel for Hazeltine. But such practice is common and has been many times upheld. Taylor Instrument Companies v. Fee & Stemwedel, Inc., 7 Cir., 129 F.2d 156, 160; Saco-Lowell Shops et al. v. Reynolds et al., 4 Cir., 141 F.2d 587; Schilling et al. v. Schwitzer-Cummins Co., 79 U.S.App.D.C. 20, 142 F.2d 82, 83.

Obviously, this attack upon the court's findings is designed to escape the force of Rule 52(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A., the relevant part of which provides: "Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses." And it may be noted, in response to Admiral's argument that this court is as competent as the District Court to weigh the conflicting testimony of expert witnesses, that the rule makes no such distinction and we know of no reason why it should. In fact, the Supreme Court in the recent case of Graver Tank & Mfg. Co., Inc. et al. v. Linde Air Products Co., 336 U.S. 271, 274, 69 S.Ct. 535, 537, 93 L.Ed. 672, referring to this rule stated, "To no type of case is this last clause more appropriately applicable than to the one before us, where the evidence is largely the testimony of experts as to which a trial court may be enlightened by scientific demonstrations."

This case is briefed and argued here as though it were a nisi prius proceeding. While this practice is not limited to patent cases, it appears most prevalent in this field of litigation. We are thus prompted to make some observations relative to our function as a reviewing court. In doing so, we think it apparent that there has been a tendency to place the review of patent cases in a category different from other cases. This tendency, we suspect, has developed in large part from the uncertainty and confusion heretofore existing as to whether the answer to the question of patentable invention or infringement is to be characterized as a Finding of Fact or a Conclusion of Law. Obviously, if the answer is treated as a Finding of Fact, it comes within Rule 52(a) and is binding upon this court "unless clearly erroneous."

This confusion and uncertainty as to what constitutes a Finding of Fact in a patent case has been laid to rest by the Supreme Court in Graver Tank & Mfg. Co., Inc. et al. v. Linde Air Products Co., 336 U.S. 271, 69 S.Ct. 535, 93 L.Ed. 672. (See also the decision in the same case on rehearing, 70 S.Ct. 854.) There, the court, concerning the findings that certain claims were valid, 336 U.S. on page 275, 69 S.Ct. at page 537, 93 L.Ed. 672 stated: "The rule 52(a) requires that an appellate court make allowance for the advantages possessed by the trial court in appraising the significance of conflicting testimony and reverse only `clearly erroneous' findings", and concluded that the findings "are manifestly supported by substantial evidence." And as to the findings of the trial court that certain of the claims were invalid, the Supreme Court stated 336 U.S. at page 279, 69 S.Ct. at page 539, 93 L.Ed. 672: "The same deference is due to the findings of the trial court which overturn claims as to those which sustain them. * * * But the record in this case, while not establishing to a certainty that the findings are right, fall far short of convincing us that they are clearly erroneous."

A rehearing was allowed in the case under discussion upon the question of infringement of the claims the validity of which the court had previously sustained. Related to the issue of infringement was the applicability of the doctrine of equivalence. In a decision rendered May 29, 1950, 70 S.Ct. 854, 857, the court stated (page 4, slip opinion): "A finding of equivalence is a determination of fact. Proof can be made in any form: through testimony of experts or others versed in the technology; by documents, including texts and treatises; and, of course, by the disclosures of the prior art. Like any other issue of fact, final determination requires a balancing of credibility, persuasiveness and weight of evidence. It is to be decided by the trial court and that court's decision, under general principles of appellate review, should not be disturbed unless clearly erroneous."

Thus, there is no room longer to doubt that the issues most prevalent in patent litigation, and particularly those of validity or invalidity, infringement or non-infringement, are issues of fact and that a finding by the trial court on such issues is within the terms of Rule 52(a), which a court of review is not at liberty to set aside unless "clearly erroneous." Thus, factual issues in a patent case must be tried and decided by the trial judge in precisely the same manner as those in any other kind of a law suit, and the function of this court on review is no different than that in any other kind of a case.

Turning now to the contested issues, we shall first consider Admiral's charge that there has been such a misuse of patents by Hazeltine as to bar the enforcement of the patent in suit against Admiral. There are two provisions of Hazeltine's license agreements principally relied upon in this respect, namely, (1) the exaction of royalty on entirely unpatented products made by plaintiff's licensees, and (2) the requirement that each licensee mark all his products, whether patented or unpatented, with a notice restricting the uses to which a purchaser may put those products.

This misuse issue, predicated upon the same grounds asserted here, was made against Hazeltine and decided in its favor by the First Circuit. Automatic Radio Mfg. Co., Inc. v. Hazeltine Research, Inc., 176 F.2d 799. Certiorari was allowed by the Supreme Court in the Automatic Radio case, which was pending at the time of the oral argument in the instant case. Subsequently and on June 5, 1950, the Supreme Court rendered its decision in said case, No. 455, Automatic Radio Mfg. Co., Inc. v. Hazeltine Research, Inc., 70 S.Ct. 894. The Supreme Court held that the royalty provision of the license agreement did not constitute a misuse by Hazeltine. As to the asserted illegal license notice, the court found there had been a waiver by Hazeltine of the requirements of such notice and concluded that the question of its legality was not properly before the court. In the instant case, there is no proof of waiver. However, as stated, this issue was decided in Hazeltine's favor by the court of the First Circuit in the Automatic Radio case, and we agree with the result there reached. Moreover, we think that Hazeltine's...