General Electric Company v. Sciaky Bros., Inc.

• Decision Date: 20 June 1962
• Docket Number: No. 14464-65.,14464-65.
• Citation: 304 F.2d 724
• Parties: GENERAL ELECTRIC COMPANY, Plaintiff-Appellant, v. SCIAKY BROS., INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

304 F.2d 724 (1962)

GENERAL ELECTRIC COMPANY, Plaintiff-Appellant, v. SCIAKY BROS., INC., Defendant-Appellee.

Nos. 14464-65.

United States Court of Appeals Sixth Circuit.

Decided June 20, 1962.

As Corrected June 27, 1962.

Dugald S. McDougall, Chicago, Ill. (Casper W. Ooms, Chicago, Ill., T. Donald Wade, Daniel J. Tindall, Jr., Detroit, Mich., on the brief), for plaintiff-appellant.

Edmund C. Rogers and Lawrence C. Kingsland, St. Louis, Mo. (Kingsland, Rogers, Ezell & Robbins, St. Louis, Mo., on the brief), for defendant-appellee.

Before MARTIN^* and WEICK, Circuit Judges and DARR, Senior District Judge.

WEICK, Circuit Judge.

These appeals are in patent infringement cases which were consolidated for trial in the District Court. General Electric is engaged in the business of manufacturing and selling electrical equipment and supplies including control components for use in electric resistance welding machines. Sciaky manufactures and sells complete welding machines. The patents in suit relate to apparatus and methods of electric resistance welding.

In its first action filed on May 10, 1957, General Electric sought a declaratory judgment that four Sciaky patents were invalid and not infringed by its control mechanisms. Sciaky counter-claimed for infringement of two of its patents being Nos. 2,431,083 and 2,415,708.

In its second action filed on August 28, 1958, General Electric sued Sciaky for infringement of eight patents owned by it.

After an extended hearing, the District Judge handed down a memorandum opinion in both cases, which he adopted as findings of fact and conclusions of law, and held that General Electric was barred by laches and estoppel from asserting infringement of six¹ of its patents and that said two Sciaky patents were valid and infringed by General Electric.

In the present appeals only four General Electric patents, being Garman No. 2,361,846, Whiteley No. 2,315,916, Livingston No. 2,331,124 and Livingston No. 2,384,937, and two Sciaky patents being Nos. 2,431,083 and 2,415,708 are involved.

We will discuss the questions in the order in which they were presented to us.

Laches and Estoppel as Barring Enforcement of General Electric Patents.

The six General Electric patents in suit were issued in the years 1943, 1944 and 1945.

Suit for infringement was not filed until 1958. No notice of infringement other than that provided by the suit was ever given.

At the time of the hearing in the District Court in 1959 all of the General Electric patents were then growing old and by the end of the present year will have expired.

None of the General Electric patents were included in the declaratory judgment case filed by General Electric against Sciaky in 1957. In his statement to the District Court, the counsel then representing General Electric explained to the Court why they were not included in its first action as follows:

"General Electric — nothing much happened in the case. Somebody then in General Electric said, `We have a lot of patents, haven\'t we?\' And somebody said, `Yes.\' `What are we doing with them?\' `They are sitting over there in the file.\' `Well, that doesn\'t seem very sensible, why doesn\'t somebody look them up and see what they are, see who is infringing on these things, and why not start with Mr. Sciaky.\' And so they did, and they found eight patents in the General Electric port-folio that appeared to be infringed by Sciaky."

Two of the General Electric patents in suit were Livingston '553 and Bivens '982. It was undisputed that in July 1949 General Electric sent a letter to the welding trade, which included Sciaky, to the effect that General Electric had no present intention of asserting any claims of said two patents, among others, against welding manufacturers or their customers applicable primarily to complete resistance welding equipment sold by welding machine manufacturers. This was a plain invitation to welding machine manufacturers to use the patents. The District Court held that the letter estopped General Electric from maintaining an action against Sciaky for infringement of the two patents. General Electric has not questioned this ruling in these appeals.

The District Court found that General Electric had been dealing with Sciaky since 1940 and was well acquainted with every patent including those in suit affecting the welding business and with that knowledge endeavored to arrange a cross-licensing between Sciaky's and some of its own patents, but failed to do so; that in August 1958, long after the six year statute of limitations had run, General Electric for the first time claimed infringement by Sciaky of its patents although Sciaky machines allegedly using the accused features had been discussed between the parties since 1948; that the No. 3 machine (Sciaky '083) went into production in 1945; that a three-phase to single-phase machine employing an anode transformer was exhibited by Sciaky in an open house attended by General Electric personnel in October 1945. The District Court enumerated many of the items of evidence showing knowledge for a long time by General Electric of Sciaky's machines and inventions, including its acquisition of Sciaky drawings, inspection of the machines and actual purchase of some of them by Hot Point, a General Electric subsidiary. The Court further found that General Electric never marked the products which it sold with a patent notice as required by Title 35 U.S.C. § 287. The Court further found General Electric's delay in bringing suit was "completely unexplainable, inexcusable and unreasonable."

The Court further found that Sciaky would be substantially and irreparably damaged if General Electric were allowed to change its position. Sciaky had sold 990 welding machines at an average cost of $16,000 a machine between 1954 and 1958. It spent about $100,000 a year on advertising. It built up a valuable business. It had a sales and service force and an established good will. During the years 1948-1956 Sciaky's sales of welding machines totalled $43,000,000.

In view of General Electric's failure to mark its products as required by statute, or to give any notice of infringement, it could not, in any event, recover damages for infringements occurring prior to the filing of the action for infringement. Dunlap v. Schofield, 152 U.S. 244, 14 S.Ct. 576, 38 L.Ed. 426; Smith v. Dental Products Co., 140 F.2d 140 (C.A. 7); Horvath v. McCord Radiator & Mfg. Co., 100 F.2d 326 (C.A. 6), certiorari denied 308 U.S. 581, 60 S.Ct. 101, 84 L.Ed. 486, rehearing denied 308 U.S. 636, 60 S.Ct. 171, 84 L.Ed. 529. In this Court, General Electric stated that it "seeks only prospective relief, an injunction and damages for infringements committed after August 21, 1958 when suit was filed." Brief p. 50.

This case involves more than mere delay by General Electric in the enforcement of its rights. The delay, as found by the District Court, was unreasonable, inexcusable and unexplained. General Electric had knowledge of Sciaky's machines at least since 1948 and failed to bring action for infringement until nearly ten years later. Whether General Electric might have been influenced by the fact that Sciaky was making substantial purchases of electrical supplies from it is not material. Nor did the Korean war furnish any justification for the delay as was claimed in the District Court.

Where the unexplained delay exceeded the applicable period of the statute of limitations, injury to the defendant is presumed. In a patent infringement action equitable principles are applied. Equity will not aid those who have slept on their rights. The failure of General Electric to take action over the many years constituted laches. Whitman v. Walt Disney Productions, Inc., 263 F.2d 229 (C.A. 9); Smith v. Sinclair Refining Co., 257 F.2d 328 (C.A. 2); Gillons v. Shell Co. of California, 86 F.2d 600 (C.A. 9); Woodmanse & Hewitt Mfg. Co. v. Williams, 68 F. 489 (C.A. 6).

In the present case, we need not rely on any presumption as the Court found injury.

The facts distinguish this case from the trade-mark case of Menendez v. Holt, 128 U.S. 514, 9 S.Ct. 143, 32 L.Ed. 526, which was relied on by General Electric and involved a mere failure to enforce trade-mark rights. Where more than mere inaction is involved the doctrine of laches and estoppel will prevent enforcement of trade-mark rights. Ambrosia Chocolate Co. v. Ambrosia Bakery Co., 165 F.2d 693 (C.A. 4).

Whether or not General Electric was guilty of laches was a question of fact to be determined by the trial judge in the exercise of judicial discretion. Gillons v. Shell Co. of California, supra. We are of the view that the findings of fact adopted by the District Court on this issue are supported by substantial evidence and are not clearly erroneous. They are binding on us. Frank Adam Electric Co. v. Federal Electric Products Co., 200 F.2d 210 (C.A. 8); Gillons v. Shell Co. of California, supra. We think his conclusions of law were correct.

The fact that General Electric wanted licenses on Sciaky's patents and negotiated with Sciaky on a cross-licensing basis did not in our judgment excuse the long delay in enforcing its own rights. The District Court found that in so doing General Electric was engaged in a "fishing expedition." In any event, the negotiations between the parties ceased in 1951 and General Electric took no action until seven years later.

Sciaky Patents '083 and '708

In the District Court, General Electric claimed that Sciaky was barred by laches from enforcing his patents. The District Judge found on the facts that Sciaky was not guilty of any laches, but had given General Electric notice of infringement and took aggressive steps including actions for infringement to enforce its patents against others. This matter was not included in the questions presented in General Electric's brief filed in this Court and, therefore, requires no further discussion on our part.

'083 patent was issued...