Skil Corp. v. Lucerne Products, Inc.

• Decision Date: 22 February 1980
• Docket Number: C 74-121.,No. C 69-461,C 69-461
• Citation: 489 F. Supp. 1129
• Parties: SKIL CORPORATION, Plaintiff, v. LUCERNE PRODUCTS, INC. et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

489 F. Supp. 1129

SKIL CORPORATION, Plaintiff, v. LUCERNE PRODUCTS, INC. et al., Defendants.

Nos. C 69-461, C 74-121.

United States District Court, N. D. Ohio, E. D.

February 22, 1980.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

MEMORANDUM OPINION AND ORDER

LAMBROS, District Judge.

The consolidated cases, C 69-461 and C 74-121, sound in suit for royalties under a licensing agreement and patent infringement. The issues are centered upon two patents owned by plaintiff — U. S. Patent No. 3,209,228, in the name of Alex F. Gawron ("Gawron Patent"), titled "System For Controlling Electric Motors in Power Tools and The Like;" and U. S. Patent No. 3,260,827 in the name of Carl J. Frenzel ("Frenzel Patent"), titled "Motor Reversing Mechanism For Electrically Powered Portable Tools."

These consolidated cases were referred to the Honorable Jack B. Streepy, Magistrate for the United States District Court, Northern District of Ohio, Eastern Division. 28 U.S.C. § 636(b)(2). Magistrate Streepy was authorized by this Court, with the written permission of the parties, to try these cases as a special master under the provisions of Rule 53 of the Federal Rules of Civil Procedure.

The Magistrate conducted a twenty-one day trial, which developed over 3600 pages of testimony and over 400 exhibits. He considered proposed findings of fact and conclusions of law from both parties and extensive posttrial memoranda. The result was a well-reasoned, concise and clear Report and Recommended Decision, filed with the Court on March 9, 1979.

On March 19, 1979, defendants¹ filed "Objections of Defendants to the Magistrate's Report Filed on March 9, 1979" with this Court. This document is a shocking display of groundless ad hominem attacks on the Magistrate, crude solecisms, and incoherent analysis and argument.² The memorandum alleges a "pattern of prejudiced rationalization" in the actions of the Magistrate, and refers to his actions in preparing the report as "chicanery." These attacks are not supported by any evidence other than the fact that the Magistrate, in reaching his conclusion, decided certain legal issues contrary to the wishes of defendant. This Court readily acknowledges defense counsel's expertise in the field of patent law and continues in its respect for counsel's legal abilities and reputation in the legal community; therefore, the Court can only conclude that counsel was driven to this excess by the length, difficulty and unfavorable result of the hearing — and this is understandable. However, the Magistrate's reputation is questioned by these attacks, and the allegations are certainly undeserved. Therefore, this Court directs that all passages in defendant's memoranda that make personal attack upon the Magistrate beyond the parameters of legal argument and analysis be stricken. Federal Rules of Civil Procedure, Rules 7(b)(2) and 11.

I.

Rule 53(e)(2) provides that "the court shall accept the master's findings of fact unless clearly erroneous." Professors Moore and Lucas explain the purpose of the rule in this way:

The mandate of Rule 53(e)(2), as applied in the typical case where the master who makes the findings of fact is the one who heard the parties and the testimony is based on hard common sense: the master, as a judicial officer, must as a general proposition be trusted as to factual matters, particularly those involving oral and disputed testimony. 5A Moore's Federal Practice ¶ 53.124 (1979), footnotes omitted.

Thus, it is inappropriate for this Court to retry the case — to reexamine all of the evidence and reweign it — unless defendant can make an initial showing that the Magistrate made a clearly erroneous appraisal of the weight of the evidence.

Defendant's objections to the findings of fact, however, do not go to the heart of the clearly erroneous appraisal standard. Defendant's initial objections are to those findings relating to the nonobviousness of the Gawron patent in the light of the state of prior art in 1962. The Magistrate found that the use of human feedback in a variable-speed trigger tool to obtain a constant rotational speed was not obvious to one skilled in the art at the time of the patent's approval. Finding 8(c), Magistrate's Report (hereafter, "MR"). The Magistrate reached this conclusion by carefully comparing all prior related patents with the Gawron patent and by considering the testimony of various experts, all of which resulted in substantial evidence in support of a finding of nonobviousness. Defendant may disagree with the weight given to various evidence and testimony by the Magistrate, but this is not cause for a finding of "clearly erroneous" by this Court. Defendant seeks to have the Magistrate's findings specifically state all of the evidence presented by defendant in this matter, but this is not the purpose of the Findings of Fact. The Magistrate is granted authority to weigh and sift the evidence and then to distill the evidence into a summary of the material facts upon which conclusions of law may be based. So long as there is substantial evidence on the record to support this distillation, this Court may not discard it. The Court has carefully gone over the record and finds substantial support for the Findings made by the Magistrate.

The same problem is present in defendant's remaining objections to the Findings of Fact. Defendant disputes the weight given by the Magistrate to the various documents, evidence and testimony offered, and complains that the Magistrate failed to include all the evidence presented by defendant into the Findings of Fact. As explained above, these arguments are not appropriate to this Court's decision to accept and adopt the Findings of the Magistrate, vel non. The Court has carefully considered the record, and finds that there is substantial support therein for the Findings of the Magistrate.

II.

A different standard of review applies to the Magistrate's Conclusions of Law. These have no effect except to the extent that they are correct propositions of law. 5A Moore's Federal Practice ¶ 53.125 (1979). Defendant's objection to the Conclusions of Law are based upon the Magistrate's analysis of Precision Investment Manufacturing Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806, 65 S.Ct. 993, 89 L.Ed. 1381 (1945), which case deals with the defense of fraud on the patent office in a patent infringement action.

Defendants argue that several examples of fraud by plaintiff can be found in the circumstances of the Gawron patent application. Most of these examples have a common nexus — the failure of plaintiff to disclose defendant's device to the patent office when seeking the Gawron patent.

In early March of 1965, both plaintiff and defendant had patent applications for the Gawron-type device pending. The patent examiner had twice rejected plaintiff's patent application, and the parties decided to enter into an agreement in furtherance of their mutual interests respecting the pending patents. MR, p. 19. Negotiations culminated in an agreement dated March 9, 1965, between Skil and Lucerne that provided that parties would disclose evidence relating to patent rights to each other. The parties would then decide if they could agree on the import of the evidence; failing agreement, parties would ask the Patent Office to set up an interference to determine patent rights. MR, pp. 19-20. They disclosed their respective patent applications to each other on the day the agreement was concluded.

On March 16, 1965, plaintiff demonstrated its device to the patent examiner by operating a variable-speed-control drill that incorporated plaintiff's claimed invention. The invention was embodied in a Lucerne speed control device that plaintiff had purchased from defendant Lucerne. Apparently, the examiner was not informed that Lucerne had made the device for Skil. Six days later, plaintiff again amended its application and, this time, the application was allowed by the examiner. On May 20, 1965, Mr. Gawron executed a supplemental oath, stating in part that ". . . he does not know and does not believe that the same Gawron invention was even known or used before his invention thereof." MR, pp. 20-21.

The Magistrate began his thorough analysis of these facts by pointing out that the Sixth Circuit deals with the fraud defense by requiring that the party asserting the defense prove "specific intent", that is, intent to defraud. Kearney & Trecker Corp. v. Cincinnati Milacron, Inc., 562 F.2d 365 (6th Cir. 1977); Kolene Corporation v. Motor City Metal Treating Inc., 440 F.2d 77 (6th Cir. 1971), cert. den., 404 U.S. 886, 92 S.Ct. 203, 30 L.Ed.2d 169. Further, the specific intent must be associated with a material matter. Schnadig Corporation v. Gaines Manufacturing Co., Inc., 494 F.2d 383 (6th Cir. 1974).³

Defendant admits that this statement of the law is correct see footnote 3, supra, and also does not dispute or object to the Magistrate's Findings of Fact on this issue. Defendant builds its argument on the following language from Precision Instrument, especially the emphasized sentence:

Those who have applications pending with the Patent Office or who are parties to Patent Office proceedings have an uncompromising duty to report to it all facts concerning possible fraud or inequitableness underlying the applications in issue. citations This duty is not excused by reasonable doubts as to the sufficiency of the proof of the inequitable conduct nor by resort to independent legal advice. Public interest demands that all facts relevant to such matters be submitted formally or informally to the Patent Office which can then pass upon the sufficiency of the evidence. 324 U.S. at 818, 65 S.Ct. at 999, emphasis added.

Defendant argues that plaintiff's failure to disclose the pendency of the Lucerne application cannot be justified by plaintiff's assertion that, despite an agreement by defendant to give plaintiff evidence of reduction to practice and...