Activated Sludge v. Sanitary Dist. of Chicago

• Decision Date: 26 January 1946
• Docket Number: No. 4280.,4280.
• Parties: ACTIVATED SLUDGE, Inc., et al. v. SANITARY DIST. OF CHICAGO.
• Court: U.S. District Court — Northern District of Illinois

64 F. Supp. 25

ACTIVATED SLUDGE, Inc., et al. v. SANITARY DIST. OF CHICAGO.

No. 4280.

District Court, N. D. Illinois, E. D.

January 26, 1946.

Charles L. Byron and Gordon F. Hook, both of Chicago, Ill., for plaintiff.

Ernst Buehler, Edmund D. Adcock, Ralph M. Snyder, and Eli E. Fink, all of Chicago, Ill., for defendant.

LINDLEY, District Judge.

We are concerned here with the amount of compensation defendant should pay plaintiffs for infringement of patents held valid and infringed by decree dated February 8, 1935. The patents involved, their nature, their character, their advantages and limitations and the annals of the long extended litigation between plaintiffs and defendant and the city of Milwaukee are largely reflected by the findings of fact and opinions in Guthard v. Sanitary Dist. of Chicago, D. C., 8 F.Supp. 329, affirmed by the Court of Appeals, 7 Cir., 90 F.2d 727, and affirmance of a like decree in the Milwaukee case, Fehr v. Activated Sludge, Inc., 7 Cir., 84 F.2d 948. After affirmance of the decree of this court, defendant attempted to reopen the case. The order denying its petition, entered July 5, 1940, D. C., 33 F.Supp. 692, was affirmed in 7 Cir., 118 F.2d 899. In view of the extended exposition appearing in the published reports, I see no necessity of elaborating upon the innumerable details involved except to the extent to do so may be helpful in determination of the issue now presented.

Various claims of the patents were infringed by defendant's Calumet, Des Plaines and North Side plants. The contract for the construction of the Des Plaines plant was let May 1, 1919 and the works went into operation August 2, 1922 and continued in use until October 15, 1931. The Calumet plant was placed in operation June 5, 1923, after completion of a contract let September 6, 1920. It continued in operation until October 31, 1931 when one infringing unit was closed. Another remained in operation until September 3, 1933. The contract for construction of the North Side Works was let August 9, 1923. The plant began to operate October 3, 1928 and has remained in constant use. The contract for the Calumet extension plant was let May 7, 1931. This began operation December 3, 1935 and is still being operated, employing, allegedly, activated sludge methods.

Little dispute exists as to the elements to be considered in this proceeding. They include the character of the inventions, their utility, their history, their practicability and advantages, including savings resulting from their adoption, the usefulness and commercial value reflected by their advantages over other devices or processes and the extent of their use.

The damages allowable under Section 70, Title 35 U.S.C.A., include those which may be determined to more or less exactitude in dollars and cents and those which are more elusive. The law is not impotent in attempting precise valuation, even though no market value exists and no loss or impairment of sales can be proved. The court, in possession of all the facts and circumstances, makes its determination from them. Malleable Iron Range Co. v. Lee, 7 Cir., 263 F. 896, United States Frumentum Co. v. Lauhoff, 6 Cir., 216 F. 610.

Here neither party is engaged in commercial production. The product of the patents is not generally bought and sold in the open market; rather their value lies in their teachings of advanced methods in the treatment and purification of sewage by cities and other municipal bodies. As I said at the time I entered the decree of infringement: "All these patents and the art with which we are concerned have to do with inventions intended so to hasten nature's process as to bring about purification of sewage in the course of so short a time as to make the suggested process of great practical value to mankind, struggling with sewage disposal in modern congested centers." Under these circumstances there is no evidence of profits gained by defendant or loss to plaintiffs in manufacture and sale.

The solution must come from other sources. Proof of an established royalty is evidence of the value of what has been taken. Dowagiac Mfg. Co. v. Minnesota Moline Plow, 235 U.S. 641, 35 S.Ct. 221, 59 L. Ed. 398. Otherwise it is incumbent upon the court to determine a reasonable royalty compensating plaintiffs for the value of what has been wrongfully taken by defendant. As the Supreme Court has said, such proof is sometimes difficult to produce, but it is quite as admissible as that of an established royalty, Dowagiac Mfg. Co. v. Minnesota Moline Plow, supra, and recovery is allowed as general damages but not as profits. Overman Cushion Tire Co. v. Goodyear Tire Co., 2 Cir., 66 F.2d 361; Collins v. Hupp Motor Corp., 6 Cir., 22 F. 2d 27; Standard Brands v. Federal Yeast Corp., D.C.D.Md., 38 F.2d 314; A. T. & T. v. Radio Audion Co., D.C.D.Del., 5 F.2d 535; Alliance Securities Co. v. De Vilbliss Mfg. Co., 6 Cir., 76 F.2d 503.

The evidence here, I think, is conclusive that there has not been at any time an established royalty which could be applied as measure of damages in this case. Accordingly, it is necessary to determine from the evidence what would be fair general damages including a reasonable royalty, taking into consideration the elements I have mentioned and others, by which, under the decisions of this circuit, I am bound, including the success of the patents and their use. B. F. Goodrich Co. v. Consolidated Rubber Tire Co., 7 Cir., 251 F. 617; Malleable Iron Range Co. v. Lee, 7 Cir., 263 F. 896. See also United States Frumentum Co. v. Lauhoff, 6 Cir., 216 F. 610; Root v. L. S. & M. S. R. Co., 105 U.S. 189, 26 L.Ed. 975; Standard Brands, Inc., v. Federal Yeast Corp., D.C.D.Md., 38 F.2d 314; General Motors v. Blackmore et al., 6 Cir., 53 F.2d 725; Dunkley Co. v. Central California Canneries, 9 Cir., 7 F.2d 972.

In assessing the utility and practicability of the patented activated sludge process, it may be helpful to review briefly the historical facts of sewage disposal in the city of Chicago. Thus can we obtain a sketchy picture, at least, of the problem as it developed over the years until it became extraordinarily involved and difficult of solution. Before the Sanitary District was created, the city had grown rapidly from the days of Fort Dearborn to a thriving metropolis. The sluggish Chicago river and its two branches drained an area east of the sub-continental divide, discharging into Lake Michigan, the highest elevation of the river being only a few feet above that of the lake. On the other hand, the Des Plaines river, rising in Wisconsin and flowing southwesterly into the Illinois river, drained to the west of the divide. In this flat country, two rivers, the Des Plaines and the Chicago, very near each other, drained in opposite directions, the waters of one reaching the St. Lawrence and the Atlantic through the Great Lakes and those of the other, the Gulf of Mexico through the Mississippi. Obviously, the flatness of the land in the Chicago area tended to bring about inertia and sluggishness of water and poor drainage. Floods from the Des Plaines added to the sluggishness and pollution of the Chicago. Thus, slow moving sewage, carried by the Chicago into Lake Michigan for dilution, created noxious conditions at the lake entrance to the great city and even threatened its source of supply of drinking water from the lake. Two important problems thus became intimately involved, sewage and water supply. In the words of the Supreme Court in Wisconsin v. Illinois and Sanitary District, 278 U.S. 367, 49 S.Ct. 163, 166, 73 L.Ed. 426: "Before 1865 the Chicago river, being a sluggish stream in its lower reaches, had become so offensive, because of receiving the sewage of the rapidly growing city, that for its immediate relief the municipal authorities and the canal commissioners agreed to pump water from the river in excess of the needs of navigation. By 1872 the summit level of the canal had been lowered, and it was hoped that this would result in a permanent flow of lake water through the south branch of the Chicago river, sufficient to keep it in good condition, but the plan failed, and the canal again became grossly polluted."

In 1881 the city was still pumping water from the lake in an attempt to increase purification of the sewage in the river and in the Illinois and Michigan canal, but the existing nuisances along the latter persisted. Wisconsin v. Illinois, supra. Finally, in 1889, defendant District was organized under a state statute, with the express purpose of attempting to solve the problem of handling and purifying sewage from Chicago and its surrounding community. The first step was construction of the main drainage canal, completed in January, 1900, which effected a reversal of flow in the Chicago river and placed Chicago in the Mississippi Valley water-shed. This afforded temporary relief. As early as 1908, we find the District, when the Secretary of War refused to permit it to proceed with the work of opening the Calumet Sag Channel from Calumet Lake to the main drainage canal, thus bringing about greater diversion of lake water, continuing its preparations for the construction. Wisconsin v. Illinois, supra. Actually, the District increased its diversion of lake water from 4,167 cubic feet per second permitted by the War Department to 8,500 cubic feet per second. A suit to enjoin this diversion resulted eventually in a decree in favor of the Government, nine years later. More detailed facts appear of record in Sanitary District of Chicago v. United States, 266 U. S. 405, 45 S.Ct. 176, 69 L.Ed. 352, and Wisconsin v. Illinois and Sanitary District of Chicago, supra. In the latter, the court said: "Had an injunction then issued and been enforced, the Port of Chicago almost immediately would have become practically unusable, because of the deposit of sewage without a sufficient flow of water through the canal to dilute the sewage and carry it away."

It must have...