Henry Hanger & Display Fixture Corp. v. Sel-O-Rak Corp.

• Decision Date: 18 September 1959
• Docket Number: No. 17477.,17477.
• Citation: 270 F.2d 635
• Parties: HENRY HANGER & DISPLAY FIXTURE CORPORATION OF AMERICA et al., Appellants, v. SEL-O-RAK CORPORATION, Appellee. SEL-O-RAK CORPORATION, Appellee, v. HENRY HANGER & DISPLAY FIXTURE CORPORATION OF AMERICA et al., Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

270 F.2d 635 (1959)

HENRY HANGER & DISPLAY FIXTURE CORPORATION OF AMERICA et al., Appellants, v. SEL-O-RAK CORPORATION, Appellee.

SEL-O-RAK CORPORATION, Appellee, v. HENRY HANGER & DISPLAY FIXTURE CORPORATION OF AMERICA et al., Appellants.

No. 17477.

United States Court of Appeals Fifth Circuit.

September 18, 1959.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Milton M. Mokotoff, Murray A. Gordon, New York City, Martin Yelen, Miami, Fla., for appellants.

Karl W. Flocks, Leonard Michaelson, Washington, D. C., Jack A. Abbott, Miami Beach, Fla., for appellee.

Before RIVES, Chief Judge, and CAMERON and JONES, Circuit Judges.

JONES, Circuit Judge.

Maurice Cohen procured a design patent on a garment rack which he assigned to Sel-O-Rak Corporation, here called the plaintiff. Suit was brought against The Henry Hanger and Display Fixture Corporation of America, and its affiliate, The Henry Hanger and Display Fixture Corporation of Florida, here called the defendants. Damages for patent infringement and unfair competition were sought. Reference was made to a master and on his report it was determined that the patent was invalid and the complaint was dismissed. On appeal this Court reversed, sustained the validity of the patent, and remanded the cause for further proceedings. Sel-O-Rak Corporation v. Henry Hanger and Display Fixture Corporation, 5 Cir., 1956, 232 F.2d 176, certiorari denied 352 U.S. 870, 77 S.Ct. 95, 1 L.Ed.2d 76. Another reference was made to a master and, following his report, the district court made findings of fact and conclusions of law, there being thirty-seven findings of fact and thirteen conclusions of law. Sel-O-Rak Corporation v. Henry Hanger & Display Fixture Corporation, D.C.S.D.Fla. 1958, 159 F.Supp. 769, 772. A decree was entered pursuant to the findings and conclusions. Damages for infringement of the patent were awarded to the plaintiff and further infringement by the defendants was enjoined. The defendants appealed asserting that none of their garment racks infringed except the Chinese copy which they had ceased to make or sell, and that the Court had computed damages at a higher figure than was proper under the evidence. The plaintiff appealed and contends that the court should have found the infringement to be willful and in bad faith that the damages for infringement awarded were inadequate, that error was committed in not finding the defendants guilty of unfair competition with an appropriate award of damages, that attorneys' fees should have been awarded to the plaintiff, and that the court should not have assessed against the plaintiff one-half of the fee of the master.

In the initial proceedings before Edward E. Fleming as Special Master, one of the witnesses was Henry Spitz, president of the defendant corporations. During his examination he stated that the defendants were not then manufacturing a rack resembling the patented rack, and the rack then being manufactured was changed, improved and better. Having no picture, the witness attempted to draw one and to show by the drawing and oral testimony where the rack then being manufactured differed from the patented article. There being a doubt as to whether the drawing was admissible, the witness volunteered to have the rack photographed. There was an adjournment for lunch. The afternoon session began with this statement by the Special Master:

"Let the record show that pursuant to the questioning this morning the defendant has produced before the Special Master a new type of slack rack which is here for inspection by the parties, counsel and the Special Master but since this new slack rack is not involved in this law suit by any of the pleadings as now framed it is my view that the new slack rack doesn\'t enter into this litigation. Is that correct?"

Counsel for both plaintiff and defendants stated that it was so stipulated. The so-called "new slack rack" was not then offered in evidence nor was any photograph of it tendered.

In the hearings before Special Master Worton, appointed after the former appeal, the Special Master first appointed, Edward E. Fleming, having died, the general manager of one of the defendants testified that the "new slack rack" which had been produced before Master Fleming was the same rack as was subsequently in evidence as Plaintiff's Exhibit (PX) 3A. It is the defendants' contention that "Since `the pleadings as now framed' include reference to `colorable imitation', it would seem too clear for any serious argument that the parties have duly stipulated PX 3A is no `colorable imitation' and, therefore, no infringement; a fortiori it was stipulated all the other racks of defendants, except PX 7 the Chinese copy did not infringe."

The plaintiff challenges the statement that the so-called "new rack" is the same as the one designated as PX 3A, pointing out that the witness who attempted to establish the identity was not present when the "new rack" was before Master Fleming and could have had no first-hand knowledge of the fact. The district court, in its findings and conclusions, says:

"The so-called oral stipulation, entered into before Master Fleming, on May 14, 1954, is at best ambiguous. * * * The stipulation was not relied upon or called to this Court\'s attention on hearing on the order of reference. This order, directing Master Worton to consider all phases of the case, including infringement by colorable imitation was never directly attacked. The defendants attempted, belatedly before Master Worton, to raise the stipulation but continued to and did defend fully on the merits.

* * * * * *

"Even if the so called `oral stipulation\' before Master Fleming could be construed to have the limiting effect which defendant now urges, a point which I do not find necessary to decide for this decision, the stipulation must be held to have been abandoned by the conduct of the parties themselves, and the cause is decided on the testimony as submitted."

The stipulation is ambiguous in that it is doubtful whether the parties intended to agree that the "new slack rack" did not infringe plaintiff's patent, or merely that the pleadings as then framed did not raise the issue of infringement as to the particular rack. The stipulation, in the form in which it was made and at the time it was made was not only ambiguous but was incomplete. The subject matter of the stipulation was not described otherwise than as a rack "which is here for inspection." Ambiguities in stipulations, as in the case of other agreements, may be removed and the intention of the parties may be determined by judicial construction, but the courts cannot, under the guise of construction, insert into an agreement an essential element such as the subject matter to which the agreement shall apply. Such a defect cannot be remedied by any conduct of the parties which falls short of an agreement of itself, or an estoppel; nor can such a deficiency be supplied by one party without the assent of the other, whether attempted by testimony or otherwise.

The defendants voice the opinion that if Master Fleming had lived the plaintiff would not have questioned the stipulation and would have accepted the defendants' views as to its meaning. We need not indulge in any speculation on this theme. An examination of the record of the first trial discloses that the issue paramount was the validity of the patent. Infringement played a minor role. On the remand of the cause to the district court an order was entered appointing J. Edward Worton as Special Master and directing him, among other things, to determine the extent of the defendants' infringement and take an accounting of all garment racks made and sold by the defendants which infringe on the plaintiff's patents. Pursuant to this authority the Master entered an order reciting the necessity of viewing and classifying all of the defendants' circular, portable or movable garment racks manufactured subsequent to the issuance of plaintiff's patent, and requiring the production of photographs of each model. There was nothing then said or done to indicate that the defendants relied upon the stipulation to exclude all of the racks made by them except the Chinese copy, from the charge of infringement. At the opening of the hearing there was a pre-trial hearing and discussion between Master and counsel. The Master stated that photographs of all of defendants' racks should be brought in so that he could determine "those which look like Cohen's patent and whether it is a colorable imitation". One of defendants' counsel stated his understanding that "the photographs will be, first, for determination of which are or are not colorable imitations or exact copies, and pick up from that point." It was agreed that the defendants would produce photographs of all garment racks manufactured or sold by them since the issuance of the patent. Then other counsel for the defendants objected to any consideration of colorable imitations on the ground that, at the original trial, the only rack which the plaintiff accused of infringement was the Chinese copy and that by election the plaintiff had precluded itself from asserting that any other racks infringed. The stipulation was not mentioned. We think that, even if the stipulation had the meaning which the defendants would read into it, their right to assert it was waived.

The defendants urge that there was error in the findings of the master and the court that their revolving garment racks infringed upon the plaintiff's patent. The test of infringement of a design patent has been stated in the often quoted opinion of the Supreme Court in Gorham Manufacturing Co. v. White, 14 Wall. 511, 81 U.S. 511, 20 L.Ed. 731. There it was said:

"We hold, therefore, that if, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase

...