American Stainless Steel Co. v. Rustless Iron Corp.

• Decision Date: 28 February 1933
• Docket Number: No. 1543.,1543.
• Parties: AMERICAN STAINLESS STEEL CO. et al. v. RUSTLESS IRON CORPORATION OF AMERICA.
• Court: U.S. District Court — District of Maryland

2 F. Supp. 742

AMERICAN STAINLESS STEEL CO. et al. v. RUSTLESS IRON CORPORATION OF AMERICA.

No. 1543.

District Court, D. Maryland.

February 28, 1933.

Marshall A. Christy, of Pittsburgh, Pa., Charles Neave and Maxwell Barus, both of New York City, and Semmes, Bowen & Semmes, of Baltimore, Md., for plaintiffs.

C. P. Byrnes, G. E. Stebbins, and Walter J. Blenko, all of Pittsburgh, Pa., and J. Kemp Bartlett and Edgar Allan Poe, Jr., both of Baltimore, Md., for defendant.

WILLIAM C. COLEMAN, District Judge.

This suit is one for infringement of two patents, relating to stainless steel: Clement, No. 1,365,091, application filed March 12, 1917, issued January 11, 1921, which is for a product, that is, an alloy; and Hamilton and Evans, No. 1,432,289, application filed May 23, 1922, issued October 17, 1922, which is for a process, that is, a method of reducing metals and making alloys.

The principal plaintiff, the American Stainless Steel Company, is not a manufacturer, but a patent-holding company, which grants licenses to manufacturers, under its various patents, to make stainless steel. The other plaintiff, the Electro Metallurgical Company, a limited manufacturer, was found by the court at the inception of the trial, as a result of a motion by defendant to dismiss the suit because of a deficiency of necessary parties plaintiff, to be a necessary party plaintiff, since as part of the transaction by which it had assigned to the American Stainless Steel Company the two patents here in suit, it had retained for itself certain interests in their subject-matter. The defendant company is a manufacturer, operating a plant in Baltimore since 1926. With respect to both patents, the defendant resists the suit with numerous defenses, all of which may be included under the usual (1) denial of infringement, and (2) invalidity of the patents. The burden of proving infringement is upon the plaintiffs. The burden of proving invalidity is upon the defendant. We will consider the two patents separately, and will first take up the Clement patent.

Clement Patent.

Claims 10 and 11 only of the Clement patent are here involved. This invention, as stated in the patent, relates "to alloys and has for its object the provision of a composition of this character which shall be susceptible of easy working by commercial cutting, boring, turning and shaping tools and devices; which shall be highly resistant of chemical action, corrosion or oxidation, as by the action of acids, alkalis or oxidizing atmospheres," and "consists of iron and chromium, the chromium content being equal to at least 10% of the whole and the carbon content being not greater than .2 of 1% of the whole and preferably not over about one-tenth of 1%. * * *" His "improved alloy is not a chrome steel, the criterion of chrome steel being the possession of a high carbon content which produces a substance of such hardness and brittleness as absolutely to prevent any working or machining operations, this hardness being retained even to a red heat. My researches have shown that if the total carbon content be less than .1 or .2%, this hardness is entirely absent and the resulting metal possesses exactly the qualities of chemical resistivity combined with mechanical working ability which it is the object of my invention to secure." Specifications, p. 1, lines 10-15, 31-37, 45-59.

Claim 10, which is the more specific of the two claims here in suit, is as follows: "An alloy containing iron and chromium wherein the chromium constitutes not less than 10% and the carbon less than .2 of 1% of the alloy and substantially free from oxids." The only other claim in suit, claim 11, specifies the composition of the alloy and identifies its characteristics, namely, it is an "alloy of iron with upward of 10% of chromium which is ductile and malleable when cold and susceptible of machining and substantially free from oxids." By the disclaimer filed in the case, both of these claims are further limited as to the carbon content to not more than about one-tenth of 1 per cent.

The specifications describe the process of melting the iron and the chrome ore which, summarized, is as follows, the process under this patent, however, not being at issue: The iron is thrown in a mass into an electric furnace, into which protrude electrodes, through which the electric current forms an arc through the metal, thereby melting down all of the metal until it becomes fluid, and the slag remains floating on the top of this lower, heavier metal.

It will be seen that the novelty claimed by Clement is that he found he could make iron or steel stainless, even if not hardened, if he kept the amount of carbon very low and lowered the oxids. He was not the creator, however, of stainless steel. Harry Brearley, an Englishman, and Elwood Haynes, an American, were the real pioneers, although for perhaps the previous half century the experiments and discoveries by others in the steel industry in England had been strongly prophetic of what these men actually did. To the former was issued a patent for cutlery as early as 1916, and to the latter a patent for a wrought metal article as early as 1919. Both related to the composition and production of acid resisting or stainless steel for the manufacture of cultery or other articles where nonstaining properties were desired. Haynes covered alloys containing carbon of from .1 per cent. to 1 per cent. and chromium of from 8 per cent. to 60 per cent. Brearley covered alloys containing carbon of less than .7 per cent. and between 9 per cent. and 16 per cent. of chromium. In an infringement suit, American Stainless Steel v. Ludlum Steel Co., decided in 1923 by the Circuit Court of Appeals for the Second Circuit, 290 F. 103, both of these patents were declared valid. They were also held to have been infringed by a high chromium-silicon alloy, with an average of carbon, .43 per cent. The practical scope of these two patents may best be understood from the following description taken from the court's statement of facts in this suit (page 104 of 290 F.): "Haynes called his application one for a `wrought metal article,' and Brearley his for `cutlery.' But the object of both patentees is the same, and may be shortly described as a desire to produce what has for some years been increasingly well known under the trade-name `stainless steel.' Although Brearley's patent date is earlier, his date of application is later, and it may be summarily held that Haynes' is the generic and Brearley's the specific patent. Haynes declares that his invention relates to the production of wrought metal articles of manufacture `having polished surfaces of the general character which is termed noble, in that such surfaces are incorrodible.' Brearley states that his invention relates to the production of `cutlery or other hardened and polished articles of manufacture where nonstaining properties are desired.'" The court concluded its opinion with the statement: "Whether there may not be in Haynes an attempt to cover too much ground is a question that may be left until occasion for decision arises." We assume that this was intended to refer primarily, if not exclusively, to the wide range of chromium.

In the decision on exceptions made by both parties to the master's report on the question of accounting in this same case (American Stainless Steel Co. v. Ludlum Steel Co. (D. C.) 16 F.(2d) 823), the court affirmed the master's inclusion, in the accounting, of all steels which were within the field of percentages of carbon and chromium common to both patents, and which were sold to manufacturers of cutlery, with one exception found not to be within the Brearley patent, and which we need not dwell upon here.

The Brearley and Haynes patents were the foundation of the business of the American Stainless Steel Company, whose licenses under these two patents include a large number of the leading steel manufacturers in the country.

Then came Clement. He was an employee of the Cleveland Brass Manufacturing Company at the time he filed application for his patent in suit. The Brearley United States patent had already been issued, but the Haynes application was still pending. Clement died in 1919, almost two years before his patent issued. He claimed to have made an advance in the pioneer work of Haynes and Brearley, that is to say they relied, as we have seen, upon hardening to make their steels stainless, while he claimed he had discovered that he could do so even if the steels were not hardened, if he kept the carbon content as well as oxids very low; that is, he would still continue to have a soft steel, workable when cold. New fields were opening for stainless steel, until now its use has become very broad in both exterior and interior building construction work, in certain types of valves, in the bright metal parts of automobiles, and for a variety of other purposes.

Question of Invalidity.

We will first consider the defense of invalidity of the Clement patent, in support of which defendant asserts it is invalid because of (1) the disclaimer; (2) disclosures in prior patents and especially in Haynes' patent, No. 1,299,404, heretofore referred to; (3) prior public use; (4) disclosure in prior publications; (5) inoperativeness of the process in Clement to produce the claimed result; and (6) insufficient disclosure in Clement for production of a ductile and malleable metal. We will take up these defenses in the order named.

I. Disclaimer.

On February 9, 1932, the Steel Company filed in the Patent Office a disclaimer in due form "of so much of the subject matter" of the two claims here in controversy "as may cover or include a product otherwise conforming to the terms thereof and having a content of carbon over about one-tenth of one per cent." When the Electro Company was made a party plaintiff, it filed a similar disclaimer, all of which was done pursuant to the provisions of sections 4917 and 4922 of the...