Republic Molding Corporation v. BW Photo Utilities

• Decision Date: 19 June 1963
• Docket Number: No. 17433-17435.,17433-17435.
• Citation: 319 F.2d 347
• Parties: REPUBLIC MOLDING CORPORATION, Appellant, v. B. W. PHOTO UTILITIES, doing business as B. W. Molded Plastics, Appellee. REPUBLIC MOLDING CORPORATION, Appellant, v. ALLADIN PLASTICS, INC., Appellee. REPUBLIC MOLDING CORPORATION, Appellant, v. GOTHAM INDUSTRIES, INC., Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

319 F.2d 347 (1963)

REPUBLIC MOLDING CORPORATION, Appellant, v. B. W. PHOTO UTILITIES, doing business as B. W. Molded Plastics, Appellee.

REPUBLIC MOLDING CORPORATION, Appellant, v. ALLADIN PLASTICS, INC., Appellee. REPUBLIC MOLDING CORPORATION, Appellant, v. GOTHAM INDUSTRIES, INC., Appellee.

Nos. 17433-17435.

United States Court of Appeals Ninth Circuit.

June 19, 1963.

Lyon & Lyon, Leonard S. Lyon, Jr., and Roland N. Smoot, Los Angeles, Cal., Mason, Kolehmainen, Rathburn & Wyss, M. Hudson Rathburn, and Clemens Hufmann, Chicago, Ill., for appellant.

Mason & Graham, Collins Mason and William R. Graham, Los Angeles, Cal., for appellee B. W. Photo Utilities.

Bernard Kriegel and Jerrold A. Fadem, Los Angeles, Cal., for appellee Alladin Plastics, Inc.

Silverman, Mullin & Cass, Eli Mullin, Chicago, Ill., Harris, Kiech, Russell & Kern, and Donald C. Russell, Los Angeles, Cal., for appellee Republic Molding Corp.

Before CHAMBERS, HAMLEY and MERRILL, Circuit Judges.

MERRILL, Circuit Judge.

In these three cases, consolidated for trial before the district court, Republic Molding Corporation seeks recovery of damages for patent infringement and unfair competition. Upon appeal, the question presented is whether the district court erred in holding, in all three cases, that appellant's unclean hands barred relief.

The subject of Republic's patents is a plastic vegetable bin, marketed under the trade-mark of "Polly-Flex." Appellant asserts damage by virtue of the fact that appellees are wrongfully marketing substantially similar products. The action against B. W. Photo was brought before issuance of the patents, and is confined to a claim of unfair competition. The other actions include claims for both unfair competition and patent infringement. The action against Alladin also includes a claim for copyright infringement relating to the copying of a copyrighted advertisement.

The conduct found to constitute unclean hands was Republic's disregard of title 35 U.S.C. § 292, which provides in pertinent part:

"Whoever marks upon, or affixes to, or uses in advertising in connection with any article, the words `patent applied for,\' `patent pending,\' or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public * * * shall be fined not more than $500 for every such offense."

The B. W. Photo case contains the fullest and most specific finding of unclean hands. There the court found:

"5. Although plaintiff was aware of the provisions of the patent statute, 35 USC § 292, which provides that it is unlawful for anyone, for the purpose of deception, to advertise to the effect that an application for patent has been filed or is pending on an article when in fact such patent application has not been filed and is not pending, plaintiff falsely advertised, for a continuous period of over six months before it filed an application for patent on said receptacle, and, prior to the filing of the complaint herein, that an application for patent had been filed and was pending on said receptacle. During said period plaintiff was attempting to create a secondary meaning in the design of said receptacle and contrary to public interest conducted said false advertising for the purpose of preventing competition in said receptacle while attempting to create said secondary meaning, which the Court finds to constitute unclean hands."

The nature of the unclean-hands defense in patent and unfair competition litigation and its proper place in the context of the issues presented in such cases has not been clearly established. Professor Chafee, in 47 Michigan Law Review, 877, 1065 (1949) ("Coming Into Equity With Clean Hands"), has conducted a searching inquiry into the doctrine including its application in the field of patent (page 1070) and trade-mark (page 1076) law.

What does seem clear is that misconduct in the abstract, unrelated to the claim to which it is asserted as a defense, does not constitute unclean hands. The concept invoking the denial of relief is not intended to serve as punishment for extraneous transgressions, but instead is based upon "considerations that make for the advancement of right and justice." Keystone Driller Company v. General Excavator Company (1933), 290 U.S. 240, 245, 54 S.Ct. 146, 147, 78 L.Ed. 293.

What is material is not that the plaintiff's hands are dirty, but that he dirtied them in acquiring the right he now asserts, or that the manner of dirtying renders inequitable the assertion of such rights against the defendant. As Professor Chafee suggests (page 1072), we should not by this doctrine create a rule comparable to that by which a careless motorist would be "able to defend the subsequent personal injury suit by proving that the pedestrian had beaten his wife before leaving his home."

Further, the extent of actual harm caused by the conduct in question, either to the defendant or to the public interest, is a highly relevant consideration. G. Heileman Brewing Company v. Independent Brewing Company (9 Cir. 1911), 191 F. 489. In patent cases a patent owner who has misused his patents in a manner contrary to the public interest is not denied relief in enforcing his patent rights if he can demonstrate that the consequences of misuse have been dissipated or "purged." See, e. g., Morton Salt Co. v. G. S. Suppiger Co. (1942), 314 U.S. 488, 493, 62 S.Ct. 402, 86 L.Ed. 363; U. S. Gypsum Co. v. National Gypsum Co. (1957), 352 U.S. 457, 465, 77 S.Ct. 490, 1 L.Ed.2d 465. In trade-mark cases involving "unclean hands" as a defense "the courts will carefully weigh whether the representation actually leads to deception * * *." Derenberg, Trademark Protection and Unfair Trading, page 666.

Unclean hands, then, does not stand as a defense that may be properly considered independent of the merits of the plaintiff's claim — such as the defenses of the statute of limitations or the statute of frauds. Its assertion does not eliminate the need for the court to ascertain the soundness of the plaintiff's claim. In the interests of right and justice the court should not automatically condone the defendant's infractions because the plaintiff is also blameworthy, thereby leaving two wrongs unremedied and increasing the injury to the public. Rather the court must weigh the substance of the right asserted by plaintiff against the transgression which, it is contended, serves to foreclose that right. The relative extent of each party's wrong upon the other and upon the public should be taken into account, and an equitable balance struck. Alfred Bell & Co., Ltd. v. Catalda Fine Arts (2 Cir. 1951), 191 F.2d 99, 106; Stein v. Mazer (4 Cir. 1953), 204 F.2d 472, 480. The ultimate decision is whether the deception actually caused by plaintiff ...