S. & S. Corrugated Paper Mach. Co. v. George W. Swift, Inc.

• Decision Date: 05 August 1949
• Docket Number: 9790.,No. 9768,9768
• Citation: 176 F.2d 358
• Parties: S. & S. CORRUGATED PAPER MACHINERY CO., Inc., v. GEORGE W. SWIFT, JR., INC.
• Court: U.S. Court of Appeals — Third Circuit

176 F.2d 358 (1949)

S. & S. CORRUGATED PAPER MACHINERY CO., Inc., v. GEORGE W. SWIFT, JR., INC.

Nos. 9768, 9790.

United States Court of Appeals Third Circuit.

Argued April 8, 1949.

Decided August 5, 1949.

Samuel Ostrolenk, New York City, Sidney G. Faber, New York City (Ostrolenk & Faber, New York City, Osborne, Cornish & Scheck, Newark, N. J., on the brief), for plaintiff.

Kenneth S. Neal, New York City (McCarter, English & Studer, and James R. E. Ozias, Newark, N. J., on the brief), for defendant.

Before MARIS, GOODRICH and KALODNER, Circuit Judges.

KALODNER, Circuit Judge.

These are cross-appeals arising out of a patent controversy which had its beginnings in the Patent Office. The Board of Interference Examiners determined that as between Shields, who assigned to the plaintiff, S. & S. Corrugated Paper Machinery Co., Inc., and Morrison, who assigned to the defendant, George W. Swift, Jr., Inc., the latter was entitled to a patent on the mechanism involved on the ground that he was the prior inventor. Plaintiff then commenced this action in the district court pursuant to R.S. Section 4915, 35 U.S.C.A. § 63,¹ and the defendant filed a counterclaim alleging infringement.

In this Court, the questions for disposition are (1) whether Shields, the senior party, exercised diligence in the actual reduction to practice of his invention, and (2) whether a license agreement executed by and between plaintiff and defendant is operative as a defense to defendant's claim of infringement.

The invention involved is a mechanism whose purpose is to enable the cutting, in predetermined lengths, of corrugated paper while it is in continuous motion.² Shields filed his application on February 17, 1938, and on June 4, 1940, a patent, No. 2,202,872, was issued covering thirteen of his claims. Morrison, the junior party, filed his application on March 4, 1938, and on September 24, 1940, a patent, No. 2,215,762, was issued covering five of his claims. Shields then filed an application for reissue on August 20, 1941, adopting therein as his own certain claims of Morrison's, Shields maintaining that he was the prior inventor. As a consequence, an interference was declared.

It is the general rule of patent law that an inventor is entitled to his date of conception as the date of his invention, provided he is diligent in reducing his invention to practice, either actually, or constructively by the filing of an application. And the necessity for diligence begins just prior to the time his rival enters the field. I Rivise and Caesar, Interference Law and Practice (1940), Chapter XIII. The Board of Interference Examiners accorded Morrison March 12, 1937, as the date of his conception and constructive reduction to practice, for on that date he had filed a provisional application in Great Britain. Shields was accorded the conception date of February 8, 1937, and, although he contended before the Board and the court below that he was entitled to an earlier actual reduction to practice, both tribunals found that he did not achieve an actual reduction to practice prior to January, 1938. That issue is not disputed here. However, the Board found, and the district court agreed, that Shields was not entitled to priority because, during the critical period, he was lacking in diligence from about June, 1937, to December, 1937, in the reduction of his invention to practice. It is from the concurrence of the district court in this finding that the plaintiff appeals.

The Patent Office decision presents itself as a particularly heavy unit of weight which the evidence of the plaintiff in the district court must counterbalance: it is the rule that "where the question decided in the Patent Office is one between contesting parties as to priority of invention, the decision there made must be accepted as controlling upon that question of fact in any subsequent suit between the same parties, unless the contrary is established by testimony which in character and amount carries thorough conviction." Morgan v. Daniels, 1894, 153 U.S. 120, 125, 14 S.Ct. 772, 773, 38 L.Ed. 657. We have heretofore applied this rule in a variety of instances.³ The question before us is whether the learned trial judge committed clear error in confirming the Patent Office decision. United States v. United States Gypsum Co., 1948, 333 U.S. 364, 394-395, 68 S.Ct. 525, 92 L.Ed. 746; Smith v. Carter Carburetor Co., 3 Cir., 1942, 130 F.2d 555, 560. We think the answer must be in the negative if Morgan v. Daniels, supra, is to be applied effectively.

The plaintiff introduced into evidence in the district court the record it made before the Board of Interference Examiners, and adduced additional testimony as well. We consider both records together. General Talking Pictures Corp. v. American Tri-Ergon Corp., 3 Cir., 1938, 96 F.2d 800, 811. But we do not find any substantial difference. It is clear that Shields was employed by the plaintiff solely for the purpose of working on the project which resulted in the invention in controversy. Moreover, the plaintiff was in great need of a new mechanism to replace the hydraulic cut-off machine it was then using. By June, 1937, Shields had brought his experimental machine up to the point where he was satisfied that the principle was sound, but he still had to adjust the machine in order to meet the requisites for commercial use. There was testimony that between June and September, 1937, he was awaiting delivery of a small gear, and was engaged generally in testing his experimental model and in calculating new relations between various parts of the machine to secure the best performance. Both the Board and the district court considered this latter evidence too general to rely upon. Further, Shields maintained that in October, 1937, his machine was approved by Stern, then the plaintiff's president, who instructed him at that time to proceed to adapt the invention to a hydraulic machine which the plaintiff had installed in the plant of one of its customers, Superior Paper Products Co. A design drawing dated December 15, 1937, was introduced in evidence, and Shields stated that, on the basis of this document, he began to work on the adaptation about two months before, that is, in October. However, the Superior hydraulic machine was first operated on October 21, 1937, and the Board was of the opinion that it was not probable that the decision to replace it was made before that date. In addition, Stern was called as a witness before the Board, but did not verify Shields as to the date of his approval; Stern did not testify in the district court; there was testimony that Superior did not complain about the hydraulic machine immediately; and it appears that a patent attorney was not called in to view the Shields experimental machine until early in December. The Board, therefore, did not fully accept the oral testimony as to the work done on the...