American Securit Company v. Hamilton Glass Company

Citation254 F.2d 889
Decision Date24 April 1958
Docket NumberNo. 12162.,12162.
PartiesThe AMERICAN SECURIT COMPANY, a corporation, Plaintiff-Appellant, v. HAMILTON GLASS COMPANY, Inc., a corporation, et al., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

John Seymour, Bauer & Seymour, New York City, Joseph W. Burns and Fulton, Walter & Halley, New York City, Samuel E. Beecher, Jr., Terre Haute, Ind., for appellant.

Milton Miller, Howard R. Koven and Henry H. Koven, Chicago, Ill., Koven, Koven, Salzman & Homer, Chicago, Ill., and Byron, Hume, Groen & Clement, Chicago, Ill., of counsel, for appellees.

Before DUFFY, Chief Judge, and SCHNACKENBERG and HASTINGS, Circuit Judges.

SCHNACKENBERG, Circuit Judge.

Plaintiff sued Hamilton Glass Company and others for alleged infringement of eight patents. To plaintiff's amended complaint, defendants filed a second amended answer denying infringement and affirmatively alleging invalidity of the patents and misuse thereof by plaintiff. They also sought by an amended counterclaim a declaratory judgment of invalidity and noninfringement and an injunction for attempted monopolization and restraint of trade in violation of the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note.

Both sides moved for summary judgment and to strike the exhibits submitted by the opposite side. All of these motions were denied by the court, except defendants' motion for summary judgment, which was granted. From that judgment plaintiff has appealed to this court.

1. Defendants' motion for summary judgment under rule 56 of the Federal Rules of Civil Procedure1 was based on three reasons, to which the district court referred in its judgment order. It found that defendants were entitled to summary judgment as a matter of law for two of said reasons:

"(1) That the plaintiff has misused the patent sic in suit and comes into this court with unclean hands in that it presently is engaging in the packaged licensing of its patents by refusing to license less than all of its patents; and, in refusing to license less than all of the patents for less than the royalty rate charged for all patents;
"(2) That the plaintiff has misused the patent sic in suit and comes into this court with unclean hands by reason of the fact that it has violated the consent decree in the case of United States of America v. Libbey-Owens Ford Glass Co., et. al., cause No. 5239, in the United States District Court for the Northern District of Ohio, Western Division, in the above listed packaging practices."
(Plaintiff was a defendant named in the consent decree).

The court further found that defendants were not entitled to summary judgment on a third reason specified in their motion, which was that plaintiff had engaged in discriminatory licensing in violation of the consent decree.

The charges of packaged licensing of patents and the violation of the consent decree involved in such packaged licensing were alleged in the second amended answer of defendants and denied by plaintiff's reply thereto.

In support of their motion for summary judgment, defendants offered and the court received various affidavits and depositions. To prove the charge of packaged licensing, defendants took and offered to the court the deposition of plaintiff's vice-president, Robert Ingouf, who testified that licenses were issued by plaintiff to Libbey-Owens-Ford Glass Company, Pittsburgh Plate Glass Company, Eagle Convex Glass Specialty Co., and Permaglass, Inc., for practically the same number of patents. However, he also testified that plaintiff issued to the Blue Ridge Glass Corporation a license "not for the same patents, but for 24 patents, many more being in the Pittsburgh Plate Glass agreement."

Moreover, the record contains a letter by an attorney for plaintiff, offering to license an individual patent to Shatterproof Glass Corporation, but at the group license royalty.

As to the finding that plaintiff refused to license less than all for a royalty rate less than charged for all, the deposition of Ingouf revealed that plaintiff charged Blue Ridge Corporation a license fee of only 1¢ per square foot, while Libbey-Owens-Ford Glass Company and Pittsburgh Plate Glass Company were each paying 2¢ per square foot for the use of all of the patents collectively.

It is thus clear from the record that, assuming that there was some showing tending to sustain the reasons given by the district court for the entry of judgment because of packaged licensing, there was also the foregoing showing in Ingouf's deposition that plaintiff did not refuse to license less than all, or less than all at a royalty rate less than charged for the group of patents. In other words the showing of facts before the court was conflicting.

Moreover, there is no evidence that the seven2 applicants who received plaintiff's standard license between 1947 and 1949, were forced to accept it. In fact there is no unequivocal evidence that anyone, including defendants, ever applied either to plaintiff or the federal district court at Toledo, Ohio, which entered the consent decree referred to in the summary judgment herein, for licenses and were refused. It seems clear that this failure of proof undermines the district court's holding which is based on a refusal by plaintiff. Although defendants never made any request for a license, the court below in effect held that the failure of plaintiff to grant a nonexistent request constituted a free license to defendants, who thereby were put in an advantageous position to compete with plaintiff's licensees.

As to the alleged violation of the consent decree in "above listed packaging practices", given as the second reason for the summary judgment, defendants rely on proceedings in a case in the United States District Court for the District of Delaware, American Securit Co. v. Shatterproof Glass Co., 154 F. Supp. 890, to which defendants were not parties. However, Judge Kloeb, who entered the consent decree in the court at Toledo, when Shatterproof was before him with an application for his determination of reasonable royalties to be paid by it, said:

"My interpretation of that section XIV (c) of the Decree would be this: that if a fellow wants the use of the patents and he makes application for their use and he can\'t agree with the patentee for fair rates for the use of the patents, then within sixty days the applicant has the authority under the Decree to apply to this Court for a hearing and ask the Court to fix the rates. I don\'t know of any such step that was taken. * * * I don\'t believe that the Decree was promulgated for the purpose of protecting a wrongdoer."

Speaking of a statement in a letter which plaintiff sent to Shatterproof that plaintiff did not "concede any obligation to apportion this royalty among the different patents", Judge Kloeb said:

"The Court can well see how an attempt to so apportion might result in discrimination: * * *".

These views of the judge who entered the consent decree emphasize the complexity of the issues involved in the case at bar, a complexity the dissipation of which requires a thorough trial before the court where witnesses for one side may be cross-examined by the other side, all subject to the traditional safeguards in the law of evidence, as we shall now point out.

2. It is fundamental that a summary judgment should be granted only if there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. Federal Rules of Civil Procedure, 28 U.S.C.A. rule 56. In Mitchell v. McCarty, 7 Cir., 239 F.2d 721, 723, we said:

"* * * It follows that issues of fact raised by pleadings and affidavits in a summary judgment proceeding may not be tried on the basis of affidavits. Campana Corporation v. Harrison, 7 Cir., 135 F.2d 334, 335."

From our examination of the entire record, we are convinced that, not only are there issues of material fact arising on the pleadings, but there are direct contradictions in the evidence upon those issues, as well as situations appearing from established facts where different inferences may be drawn. In fact, the interpretation of the evidence appearing in the form of affidavits and other documents is itself a controversial subject. Summary judgment is foreclosed in such a situation.

From the pleadings of the parties, as well as their briefs in this court, it appears that important questions of substantive law must eventually be decided. However, no court should attempt such a decision until all pertinent facts are ascertained. If the record shows, as we believe it does, that genuine issues of fact exist and that the evidence on those issues is conflicting, of uncertain weight, in part incompetent, and itself susceptible of various interpretations, only by a trial can the court ascertain the pertinent facts and move on to decide such questions of substantive law as those facts present. In such a situation entry of summary judgment is not the proper method. Although summary judgment procedure is a praiseworthy timesaving device, and although prompt dispatch of judicial business is a virtue, denial of a trial on disputed facts is worse than delay. Mitchell v. McCarty, 7 Cir., 239 F.2d 721.

The pattern of facts upon which the district court entered judgment lacks both clarity and completeness. It has unclear parts, blind spots and sharp contradictions. It leaves the issues joined by the pleadings unresolved.

Moreover, defendants got certain material into the record by the most unusual means. While, on a motion for summary judgment, it is customary to consider facts set forth in affidavits, these facts must be personally known to the affiant.3 It is the policy of rule 56(e) to allow the affidavit to contain evidentiary matter, which if the affiant were in court and testified on the witness stand, would be admissible as part of his testimony.4 In Automatic Radio Mfg. Co. v. Hazeltine, 339 U.S. 827, 831, 70 S.Ct. 894, 896, 94 L.Ed. 1312, the court was...

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