Shackelton v. J. Kaufman Iron Works, Inc., s. 168

• Decision Date: 14 September 1982
• Docket Number: D,434,Nos. 168,s. 168
• Citation: 689 F.2d 334
• Parties: Cecil SHACKELTON, Carlos M. Quinones, Vivian M. Williams, Richard H. Williams, Jr., Alfred C. Williams and Raymond A. Williams, Plaintiffs-Appellants-Cross Appellees, v. J. KAUFMAN IRON WORKS, INC., and Windor Security Systems, Inc., Defendants-Appellees-Cross Appellants. ockets 81-7319, 81-7347.
• Court: U.S. Court of Appeals — Second Circuit

Page 334

689 F.2d 334

217 U.S.P.Q. 98

Cecil SHACKELTON, Carlos M. Quinones, Vivian M. Williams Richard H. Williams, Jr., Alfred C. Williams and Raymond A. Williams Plaintiffs-Appellants-Cross Appellees, v. J. KAUFMAN IRON WORKS, INC., and Windor Security Systems Inc., Defendants-Appellees-Cross Appellants.

Nos. 168, 434, Dockets 81-7319, 81-7347.

United States Court of Appeals Second Circuit.

Argued Nov. 4, 1981.

Decided Sept. 14, 1982.

James Reisman, Barry A. Cooper, Rackman & Reisman, New York City, for plaintiffs-appellants-cross appellees.

Robert W. Fiddler, Fiddler & Levine, New York City, for defendants-appellees-cross appellants.

Before WATERMAN, OAKES and MESKILL, Circuit Judges.

WATERMAN, Circuit Judge:

Plaintiffs-appellants (hereinafter plaintiffs or appellants) appeal from a final judgment entered in the United States District Court for the Southern District of New York, after a five day trial before Judge Thomas P. Griesa sitting without a jury. The trial judge dictated his decision, including findings of fact and conclusions of law, and ruled that appellants' patent in suit, No. 3,506,056, issued on April 14, 1970, was invalid for obviousness under 35 U.S.C. § 103. The lower court, having held the patent at issue to be invalid, declined to rule on plaintiffs' cause of action for patent infringement, which cause was dismissed. Defendants-appellees (hereinafter defendants or appellees) cross-appeal from that portion of the judgment which dismissed their counterclaim for breach of contract, which action sought repayment of royalties previously paid under an exclusive licensing agreement.

For the reasons expressed below, we hold the patent valid. Accordingly, the district court's judgment below is reversed and the cause is remanded for a finding as to the issue of infringement. We affirm that part of the lower court's judgment which dismissed the counterclaim for breach of contract.

I. The "Burglar Proof Window Grill"

Appellants' invention, the patent validity of which is in dispute, is encaptioned a "burglar proof window grill" on the patent. The invention is in the form of a slidable gate which is installed into windows in apartments and other similar residences. The purpose of the grille mechanism is to prevent illegal entry into an apartment through the window while also providing for quick egress in case of an emergency.

The trial judge notes the following background with reference to the need for such a window grille:

For some years prior to the issuance of the patent there had been a problem about security gates placed in buildings, particularly inside of doors and windows opening onto fire escapes. In view of the ever-increasing burglaries in New York City and other metropolitan areas, there was an increasing use of security gates, including gates located in doorways and windows opening onto fire escapes. It appears that most of these gates were locked with padlocks. These padlocked gates were apparently reasonably satisfactory in keeping out burglars, but they had a great disadvantage in hindering the egress of building occupants at times of emergency, particularly during fires. The record shows vividly that these padlocked gates were responsible for the deaths of many persons because in the panic and confusion attending a fire, the padlocks could not be opened, or the key would be lost, or some other problem would arise which made these padlocked gates barriers to the exit from the fire-stricken structure.

The State of New York responded to the grim problem of people, safe from burglars, but in danger of perishing from smoke and flames by being trapped behind a padlocked burglar-safe window. It prohibited the use of padlocked security gates in fire escape doors and windows. The gates continued to be sold, however, and were particularly popular in crime-ridden areas where occupants attached the devices themselves, in violation of the law. The lower court noted that appellees, long-time manufacturers of security gates and doors, continued to manufacture and sell such padlocked gates knowing that many would be used not for the protection of business store fronts but for apartment use.

In the 1960's New York City officials sought to stimulate ironworking and construction firms to find an alternative to the padlock gate which was resulting in the deaths of many people.

Two firemen, Cecil Shackelton and Richard H. Williams, and a "fire buff," Carlos Quinones, who had first-hand knowledge of the problem, took up the challenge and used their expertise in an attempt to develop a gate whose design characteristics would have the two-fold objective of providing protection against burglars seeking entry from the outside, and of permitting quick egress from the inside in the event of a fire. In 1967 appellants ¹ developed the gate which is the basis of the present suit. They filed a patent application May 31, 1967 and began exhibiting their prototype to the New York City Fire Department and other city agencies for approval. At that time the New York Multiple Dwelling Law did not permit any gates or grilles to be placed in a window leading to a fire escape. Appellants hoped that city approval would pave the way for an amendment to the state law. When appellants' design met with praise from various city agencies, procedures were undertaken to obtain an amendment to section 53 of the New York Multiple Dwelling Law which would permit approved devices. Such an amendment was enacted on March 29, 1968. On July 25, 1968 the New York City Board of Standards and Appeals approved the gate.

In anticipation of such approval appellants in the meantime had approached appellees and had shown them the prototype. Appellees, who had been working on their own design, were favorably impressed by the prototype. Appellees abandoned their own efforts to design a new gate and entered into an exclusive licensing agreement with appellants, which agreement was dated July 21, 1968. The appellee manufacturers agreed to pay the appellant inventors a ten per cent royalty and guaranteed payment of minimum royalties of $20,000 per year. The agreement was to last for the life of any patent which might be granted but could be terminated upon sixty days' written notice by either party. The agreement noted a patent application was pending.

The burglar-proof window grille, as designed by the appellants, was essentially a basic slidable gate, commonly known as a lazy tongs gate, with close mesh grill-work similar to that found on other such security gates. The grille's locking device, however, did not involve a padlock. The gate edge contained two clasps which fitted into a latch post when closed. The latch bar is lowered by a handle which engages and locks the hasp, much like the mechanism of a gymnasium locker. The handle has a cover fitted over it. The close mesh of the gate and the cover over the handle, in conjunction with a plate at the closing edge of the gate, prevents an intruder from reaching in from the outside and opening the closed gate. When someone inside the apartment wishes to open the gate, the cover over the handle is lifted and the handle is raised, thus disengaging the latch bar from the hasps. Once the gate is unlocked it can be slid open, permitting quick exit.

Appellees, in manufacturing the gate, made certain modifications which departed from the prototype given them from the patent application and thus from the design as approved by the Board of Standards and Appeals. The prototype and the patent design used a form of track in the latch post which was intended to guide the latch bar up and down. This involved two leaf springs which were supposed to give the gate a boost when being opened. The prototype and patent design also employed a gate structure which involved welded angle irons at the top and the bottom. The appellees believed in simplifying the product. They eliminated the track as a separate piece and arranged for a simpler manner of latch post guidance. The leaf springs were determined not to be very useful and were eliminated. The appellees also decided that it would be more practical if the top and bottom of the gate structure were to be formed with sheet metal rather than with angle irons.

With these modifications appellees commenced the manufacture and sale of the appellants' basic design and, for four years, paid royalties pursuant to the license agreement. The trial court stated that the evidence presented to it indicated that by 1972 the appellees, faced by costs rising faster than their ability to increase the prices they charged, found the ten per cent royalty too onerous. Appellees attempted to renegotiate the license agreement but failed. In mid-1974, they terminated the agreement.

Appellants claimed below that the appellees infringed the "burglar proof window grille" patent by manufacturing the same gate structure under the name "Protect-A-Gard," and selling the device without payment of royalties, in violation of the appellants' patent rights. Defendants responded by claiming that the patent in question was invalid, and the district court agreed, issuing a declaratory injunction to that effect.

II. Scope of Review

An initial matter is the scope of our review. This, in turn, hinges upon the nature of the evidence admitted by the district court. Here, aside from the testimony of only two witnesses, plaintiff Shackelton and the defendant's vice-president, David Kaufman, the record is composed of stipulations, exhibits, and the "testimony" of "hypothetical expert witnesses" submitted by both sides. This type of record is as easily examined by this court as by the court below. Though the district court's factfinding will not ordinarily be disturbed absent clear error, here, the record consists of very little testimonial evidence, and so our review of the facts is broadened. Philip v. Mayer, Rothkopf Industries, Inc., 635 F.2d 1056, 1061 (2d Cir. 1980); Eutectic Corp. v....