American Home Products Corp. v. Lockwood Mfg. Co.

• Decision Date: 28 August 1973
• Docket Number: No. 72-2202,72-2203.,72-2202
• Citation: 483 F.2d 1120
• Parties: AMERICAN HOME PRODUCTS CORP., Plaintiff-Appellant-Cross-Appellee, v. LOCKWOOD MANUFACTURING CO., Defendant-Appellee-Cross-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

483 F.2d 1120 (1973)

AMERICAN HOME PRODUCTS CORP., Plaintiff-Appellant-Cross-Appellee, v. LOCKWOOD MANUFACTURING CO., Defendant-Appellee-Cross-Appellant.

Nos. 72-2202, 72-2203.

United States Court of Appeals, Sixth Circuit.

Argued June 12, 1973.

Decided August 28, 1973.

George P. McAndrews, Chicago, Ill., for appellant; Timothy J. Malloy, Molinare, Allegretti, Newitt & Witcoff, Chicago, Ill., and Thomas Y. Allman, Taft, Stettinius & Hollister, Cincinnati, Ohio, on brief.

Richard H. Evans, Cincinnati, Ohio, for appellee; Truman A. Herron, John D. Poffenberger, Wood, Herron & Evans, Cincinnati, Ohio, on brief.

Before EDWARDS, PECK and LIVELY, Circuit Judges.

JOHN W. PECK, Circuit Judge.

This is an appeal and a cross-appeal from a judgment of the District Court which found that the two patents in suit were valid and infringed, but that the plaintiff was guilty of laches and therefore could not prosecute the suit. The plaintiff appealed from the finding of laches, and the defendant has cross-appealed from the findings of validity and infringement.

The predominant patent is a process patent (#2,687,994) which concerns a method of darkening tin by oxidizing it. The second is a product patent (#2,724,526) for a baking pan having a steel base, an overlaying layer of irontin alloy, a further layer of metallic tin, and a surface layer of olive-green oxide. The second is a derivative of the first in that the pan is the end result of the process. These patents are fully discussed in two opinions of the Seventh Circuit, Ekco Products v. Chicago Metallic Mfg. Co., 321 F.2d 550 (7th Cir. 1963), cert. denied, 375 U.S. 970, 84 S. Ct. 490, 11 L.Ed.2d 418 (1964), and 347 F.2d 453 (7th Cir. 1965), and in the opinion of the District Court, 173 U.S. P.Q. 486 (S.D.Ohio 1972), and the technical details need not be repeated here.

I LACHES

The record discloses that there are only three major manufacturers of commercial baking pans in the United States. The largest is Ekco, a subsidiary of the named plaintiff, American Home Products; the second is Lockwood, the defendant; the third, and smallest of the three, is Chicago Metallic Mfg. Co., against whom Ekco brought an infringement suit in 1958 for infringement of the same patents which are the subject of this suit.

In March of 1950, Ekco applied for the '994 patent, which issued in 1954; in April of 1950, Ekco applied for the '526 patent, which issued in 1955. Ekco began to market baking pans manufactured by the patented (pending) process in 1950. In the fall of 1951, Lockwood began to market an identical line of pans. In September of 1956, after both patents had issued, Ekco notified Lockwood and Chicago Metallic that Ekco felt that they were infringing Ekco's patents. Both Lockwood and Chicago Metallic denied that they were infringing, and both declined an offer to sign licensing agreements.

Following this reply from Lockwood, Ekco replied to Lockwood with a two paragraph letter, a document critical to this case, which read in its entirety:

"We have received your letter of June 11th, 1957 regarding our proposed license agreement relating to the process of forming a heat absorptive oxide coating on tin plated bake pans.

Since your letter raises a legal question, I have referred this matter to our attorneys and have asked them for their opinion regarding the position you have taken."

There was no further correspondence or other communication between Ekco and Lockwood concerning these patents until the filing of this suit in 1967. During this ten year interval, however, Ekco was not idle.

In May of 1958, Ekco commenced patent infringement litigation against Chicago Metallic in the Federal District Court in Chicago (N.D.Ill.) for infringement of the dominant '994 and the derivative '526 patent (and for infringement of two other derivative patents not relevant to this case). In March of 1962, the Chicago District Court held that the Ekco patents were invalid. In August of 1963, the Seventh Circuit reversed this judgment, holding that the '994 patent was valid, 211 F.2d 550 (7th Cir. 1963), cert. denied, 375 U.S. 970, 84 S.Ct. 490, 11 L.Ed.2d 418 (1964); the parties are not in agreement as to the holding of this case concerning the '526 patent.

Upon remand, the District Court found that the '526 patent was valid and infringed (damages as to the '994 patent had been settled). On June 17, 1964, the Seventh Circuit reversed this judgment of the District Court and held that the defendant in that case was not infringing patent '526 relating to the tin plate baking pan because it had a thicker alloy layer than described in the patent claims, 347 F.2d 453 (7th Cir. 1964). Upon remand, accountings were made and on September 19, 1966, the parties settled the case and the District Court entered a final order terminating all proceedings in the Chicago Metallic case. Eight months later, on May 23, 1967, Ekco brought this action against Lockwood in the District Court for the Southern District of Ohio. As noted above, the District Court found that the patents were valid and infringed, but dismissed the complaint upon a finding of laches.

The parties do not dispute that the doctrine of laches is applicable to patent cases in which the plaintiff has "acquiesced for a long term of years in the infringement of the exclusive right conferred by the patent, or has delayed, without legal excuse, the prosecution of those who have openly violated it." Woodmanse & Hewitt Mfg. Co. v. Williams, 68 F. 489, 493 (6th Cir. 1895) quoting Kittle v. Hall, 29 F. 508, 511 (S.D.N.Y. 1887); see also General Electric Co. v. Sciaky Bros., 304 F.2d 724 (6th Cir. 1962).

Generally, laches requires that there be, in the light of all the existing circumstances, an unreasonable delay resulting in prejudice to the other party. Sobosle v. United States Steel Corp., 359 F.2d 7, 12 (3rd Cir. 1966). Ekco, however relies upon the generally accepted principle that delay in suing an infringer is not legal delay in a laches sense when the party asserting the patent is engaged in other litigation against other infringers. U. S. Mitis Co. v. Detroit Steel & Spring Co., 122 F. 863, 866 (6th Cir. 1903); Jenn-Air Corp. v. Penn Ventilator Co., 464 F.2d 48, 50 (3rd Cir. 1972). This exception takes into account the fact that patent litigation is often unusually complex, lengthy and expensive. It is an equitable doctrine, and must be considered as one factor which would, in appropriate circumstances, negate a defense of laches. Therefore, we must assess the various factors which might tend to negate a claim of unreasonable delay and must consider all of the factors which contributed to this admittedly unique situation.

First of all, we reject Ekco's suggestion that the existence of other litigation automatically excuses any delay in bringing suit against a second alleged infringer. We do not find that the cases support so rigid an application of this equitable doctrine. For example, in Remington Rand v. Acme Card System, 29 F.Supp. 192 (S.D.Ohio 1937), the earlier litigation had been terminated favorably to the patent owner only four weeks before the second suit was brought. Nevertheless, the patent owner was precluded from maintaining the second suit by the doctrine of laches because the plaintiff had lulled the defendant into a sense of security and induced it to make expenditures which otherwise would have been unnecessary. The court rejected the plaintiff's argument that other litigation automatically excused the delay in bringing the action against the defendant. 29 F.Supp. at 200.

Also, in Anchor Stove & Range Co. v. Montgomery Ward & Co., 114 F.2d 893 (7th Cir. 1940), the Court refused to permit the action to be prosecuted even though the plaintiff was engaged in other litigation during the period of alleged delay principally because the defendant in the present suit may have had no knowledge of the prior action. Similarly, in Baker Mfg. Co. v. Whitewater Mfg. Co., 430 F.2d 1008 (7th Cir. 1970), upon which the District Court relied heavily, the Seventh Circuit rejected the "other litigation" defense to the laches doctrine because the patent owner had not found time during the five years prior to the instigation of the second litigation to notify the defendant that it was going to press its claim of infringement. 430 F.2d at 1015.

In this respect, the admonition of the District Court is precisely pertinent:

"The fact is there was no agreement to delay a suit against Lockwood pending the determination of validity in the Chicago Metallic litigation. If there had been, these corporate entities and their counsel were fully capable of writing an appropriate one-page letter. No other explanation is advanced by the delaying plaintiff." 173 U.S.P.Q. at 497.

This is not to imply that the other litigation rule is applicable only by agreement between the parties; clearly it is not. See: 2 Pat.L.Pers. § B.3 2 at 10-11 (1972). But if Ekco had intended to press its claim after the Chicago litigation, it surely would have (or should have) found time to send Lockwood a simple letter to that effect.

This notification is important, partly because it puts the accused infringer on notice that a suit will be filed against him on this issue, and partly because it permits him to bring a declaratory judgment action if the delay in waiting for a judicial determination would be a burden upon his proposed...