AMF Tuboscope, Inc. v. Cunningham

• Decision Date: 06 October 1965
• Docket Number: No. 7836.,7836.
• Citation: 352 F.2d 150
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: AMF TUBOSCOPE, INC., and American Machine & Foundry Co., Appellants, v. Joe H. CUNNINGHAM and Arrow Pipe Service, Inc., Appellees.

352 F.2d 150 (1965)

AMF TUBOSCOPE, INC., and American Machine & Foundry Co., Appellants, v. Joe H. CUNNINGHAM and Arrow Pipe Service, Inc., Appellees.

No. 7836.

United States Court of Appeals Tenth Circuit.

October 6, 1965.

Tom Arnold and Frank S. Vaden III, Houston, Tex., (Arnold & Roylance, Houston, Tex., Robert M. Rainey and Rainey, Flynn & Welch, Oklahoma City, Okl., of counsel, on the brief), for appellants.

Jerry J. Dunlap, Oklahoma City, Okl., (W. Samuel Dykeman, Morgan, Dykeman & Williamson and Dunlap & Laney, Oklahoma City, Okl., of counsel, on the brief), for appellees.

Before PHILLIPS, BREITENSTEIN and HILL, Circuit Judges.

PHILLIPS, Circuit Judge.

This is a patent infringement suit, originally brought by Tuboscope Company,¹ a Delaware Corporation, against Joe H. Cunningham and Arrow Pipe Service, Inc.² The plaintiff below alleged that the defendants had infringed each of three patents owned by Tuboscope, directly and contributorily, and had induced infringement of such patents by others, and that defendants intended to continue so to infringe and induce infringement, unless enjoined from so doing. The plaintiff prayed for an injunction against further infringements and inducements to infringe and for "an accounting of damages for said infringements and inducements and an award of treble damages."

In their answer the defendants denied the validity of the patents, on the ground, among others, that the respective inventions were "in public use or on sale in this country * * * more than one year prior" to the date of the respective applications for such patents, and denied infringement of any of the patents. They also set up a counterclaim for a declaratory judgment, adjudging that the patents in suit were invalid and that the defendants had the right to make and use the types of electromagnetic pipe inspection devices being used by Arrow Pipe Service without interference by Tuboscope; and also prayed for damages caused by alleged falsely published and circulated letters and oral statements to the trade that the defendants were infringing the patents in suit. On December 21, 1962, Tuboscope filed a reply to the counterclaim, in which it denied the allegations thereof, other than that it was a suit for declaratory judgment.

Tuboscope did not, either within 10 days after the answer was filed or within 10 days after its reply was filed, demand a trial by jury by serving upon the defendants a demand therefor in writing in the manner prescribed by Rule 38(b) of the Federal Rules of Civil Procedure, or otherwise.

On December 30, 1963, an amended complaint was filed in which AMF Tuboscope, Inc.,³ a Texas corporation, was substituted as a party plaintiff for Tuboscope, and in which American Machine & Foundry Co.⁴ was joined as a party plaintiff. In the amended complaint, it was alleged that at all times pertinent, prior to October 8, 1963, Texas Tuboscope was the owner of all rights, title and interest in the three patents in suit; that on such date A.M. & F. Co. became and thereafter continued to be the owner of all right, title and interest in each of such patents, and that on such date Texas Tuboscope became and thereafter continued to be exclusively licensed under such patents by A.M. & F. Co.; and it was further alleged that because of the alleged acts of infringement, commenced on September 19, 1960, and occurring since such date, plaintiffs had been damaged "in the vicinity of" $86,000. In other respects the allegations of the two complaints were substantially the same.

In the amended complaint Texas Tuboscope and A. M. & F. Co. prayed that each of the patents be declared valid and infringed; that they be awarded their actual damages, compounded by three, because of the wilful and deliberate quality and character of the actual infringement, and that the defendants be enjoined from further direct and contributory infringement and from inducing infringement by others.

On January 9, 1964, defendants filed their amended answer to the first amended complaint, setting up substantially the same defenses and counterclaim as they set up in the original answer, including the defense of prior public use. Texas Tuboscope and A. M. & F. Co. filed their reply to the amended answer and counterclaim on January 20, 1964.

On December 23, 1963, Texas Tuboscope and A. M. & F. Co. filed a written demand for a trial by jury of all the issues in the case.

On January 2, 1964, counsel for the parties plaintiffs and defendants addressed and delivered to the Chief Judge of the District Court a joint letter in which they stated:

"The parties having agreed to the filing of Plaintiffs\' First Amended Complaint, thereby making Case No. 9892 hereinafter styled as shown above, and, the parties having agreed to trying this lawsuit to a jury and having it scheduled on the court\'s next jury docket, the parties hereby request that this case be scheduled for trial during the week commencing Monday, January 20, 1964, which we understand would be the second week of the court\'s proposed jury docket for January, 1964."

Prior to February 28, 1964, the Chief Judge of the District Court entered an order for a jury trial of the case and set it for trial on March 2, 1964, the first day of the next jury docket. He thereby impliedly approved the stipulation of the parties agreeing to and requesting a trial of the issues by jury.

On February 28, 1964, the Chief Judge conducted a second pretrial conference in the case. At such conference, of his own motion, he raised the question of whether the case was one for trial to a jury. He expressed the view that it would be a difficult case to try to a jury, indicated great reluctance to try the case to a jury, stated he would be "willing to take the responsibility of holding that it's not a jury case"; that he was "inclined to deny a jury trial * * * and set aside my order allowing a jury" and that he could "stop the jurors" called to report Monday morning, March 2, 1964.

Acting sua sponte, the Chief Judge held that the amended complaint did not give the plaintiffs a new right to demand a jury trial and stated, "I first hold that it's not a jury case in the first instance, as a matter of law" and "in the second instance" that the request for a jury trial was not timely and the matter of a jury trial was within his discretion. He further stated that on those two grounds a jury trial was denied.

The case proceeded to trial before the court without a jury. The court found the claims of the patents in suit were invalid and not infringed and that the plaintiffs were "estopped from enforcing the patents in suit against the defendants."

We hold that under the original complaint, the answer thereto, and the reply to such answer, Tuboscope was entitled as of right to a jury trial of the issues of fact respecting validity and infringement of the patents in suit and of damages, and we hold that under the amended complaint, the answer thereto, and the reply to such answer, Texas Tuboscope and A. M. & F. Co. were entitled as of right to a jury trial of the issues of fact respecting validity, infringement, and damages, unless that right was waived, by the failure of Tuboscope to make a timely demand for a trial by jury of such issues raised by the original pleadings.

Both the original and the amended complaint sought the recovery of damages. While the original complaint was couched in terms of an accounting for damages, no basis for an equitable accounting was alleged. What was said in Dairy Queen, Inc. v. Wood, 369 U.S. 469, 477, 478, 82 S.Ct. 894, 900, 901, 8 L.Ed.2d 44 is apposite:

"The respondents\' contention that this money claim is `purely equitable\' is based primarily upon the fact that their complaint is cast in terms of an `accounting\' rather than in terms of an action for `debt\' or `damages.\' But the constitutional right to trial by jury cannot be made to depend upon the choice of words used in the pleadings. The necessary prerequisite to the right to maintain a suit for an equitable accounting, like all other equitable remedies, is, * * * the absence of an adequate remedy at law. Consequently, in order to maintain such a suit on a cause of action cognizable at law, as this one is, the plaintiff must be able to show that the `accounts between the parties\' are of such a `complicated nature\' that only a court of equity can satisfactorily unravel them. In view of the powers given to District Courts by Federal Rule of Civil Procedure 53(b) to appoint masters to assist the jury in those exceptional cases where the legal issues are too complicated for the jury adequately to handle alone, the burden of such a showing is considerably increased and it will indeed be a rare case in which it can be met."

Prior to the adoption of the Federal Rules of Civil Procedure in 1938, a claim properly cognizable only at law could not be united in the same pleading with a claim for equitable relief.⁵

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