Armstrong v. Belding Bros. & Co.

• Decision Date: 08 May 1922
• Docket Number: 1217.
• Citation: 280 F. 895
• Parties: ARMSTRONG v. BELDING BROS. & CO.
• Court: U.S. District Court — District of Connecticut

280 F. 895

ARMSTRONG v. BELDING BROS. & CO.

No. 1217.

United States District Court, D. Connecticut.

May 8, 1922

J Edgar Bull and C. G. Heylmun, both of New York City, for plaintiff.

Robert B. Honeyman, of New York City, for defendant.

THOMAS District Judge.

This matter is again before the court on exceptions to the master's report respecting the accounting. The case has been in the courts since March 23, 1906, and its history is disclosed in a very lengthy record. See (C.C.) 172 F. 234; 174 F. 410, 98 C.C.A. 361; (C.C.) 178 F. 554; (C.C.) 181 F. 173. See, also, order of Judge Platt, dated April 30 1912; order of Judge Martin, dated October 21, 1913; this court's order, dated October 1, 1915; the order of the master, dated January 5, 1914; certificate of the master dated January 13, 1914; petition by defendant for mandamus; and the order of the Circuit Court of Appeals, dated April 14, 1915, denying the petition.

The patent is for a 'skein thread holder,' and, to quote the specification, relates-- 'to devices by which thread which is usually sold and used in the form of skeins can be kept in such form while in the merchant's stock and while being used, without becoming either tangled or soiled, and without any tendency upon the part of one length of thread, when drawn from the skein, to disturb or disarrange the lengths remaining,' and the invention 'has been designed more especially for use with what are generally known as 'embroidery silks,' which easily become tangled, and a large percentage of which has heretofore been lost because of the lack of any convenient means for preventing the tangling and soiling.'

The patent having been adjudged valid and infringed, the cause was referred to a special master, with instructions to ascertain, state, and report to the court an account of the profits, gains, and advantages which the defendant had received by reason of the infringement. A controversy having arisen between the parties as to the manner in which these profits should be ascertained, the court (Platt, District Judge) instructed the master that the defendant need not account for any profits made by it on the silk which it sold in the infringing holder, as distinguished from the profits which it made on the holder.

In compliance with these directions, the master, on January 23, 1913, filed a report stating that from the evidence he was unable to find that the defendant made any profits from the sale of infringing holders. To this report exceptions were filed by the plaintiff, and, after hearing had, the court (Martin, District Judge) ordered that the accounting be resubmitted to the master, 'to ascertain the profits that the defendant received from the sale of silk through, or by the use of, the holders which are covered by complainant's patent and infringed by the defendant. In making this accounting the master will ascertain the cost of the raw silk so used, and the expense of advancing the same in manufacture to embroidery silk in bulk, as well as the expense of packing it in the infringing holders.'

The defendant having refused to comply with an order of the master directing it to produce certain books showing these costs, the cause came before this court on plaintiff's motion that the defendant be adjudged in contempt. In denying that motion without prejudice, this court said:

'This ruling of Judge Martin must be taken as the law of the case. The entire value of defendant's infringing package as a marketable article is properly attributable to the invention disclosed in the Schroeder patent, No.

546,251 . Westinghouse Mfg. Co. v. Wagner Mfg. Co., 225 U.S. 604, and the authorities therein cited.'

The defendant still contends that the measure of plaintiff's recovery is the difference between the market price of skeins in the infringing holders and of skeins in old-fashioned packages. But it is clearly established by the testimony of two of defendant's employees, Schmidt and Crocks, that the defendant sold silk in infringing holders only when it could not have sold it at all if it had not been in such holders, so that all the profit made on the silk thus sold was directly due to the use of the patented holders. This fact brings the case at bar within the rule approved in Wales v. Waterbury Manufacturing Co., 101 F. 126, 41 C.C.A. 250; Carborundum Co. v. Electric Smelting & Aluminum Co., 203 F. 976, 982, 122 C.C.A. 276; Metallic Rubber Tire Co. v. Hartford Rubber Works Co. (C.C.A.) 275 F. 315; Vandenburgh v. Concrete Steel Co., 278 F. 607, decided by the Circuit Court of Appeals for the Second Circuit on December 14, 1921; and in many other cases. In the latter case the court said:

'The test is whether the invention of a patent gives the whole value to the infringing device. Obviously it must, in a case where the sale of the article would be impossible without availing of the disclosure of the patent.'

Bush & Lane Piano Co. v. Becker Bros., 222 F. 902, 138 C.C.A. 382, and Vandenburgh v. Concrete Steel Co. are not to the contrary. There the court refused, in the absence of any evidence, to presume that the patented device sold the entire mechanism of which it was a minor part. Here there is no need to indulge in presumptions. The evidence shows that the entire value of defendant's infringing package as a marketable article is properly attributable to the holder. For this reason, I am still of the opinion that the defendant must account for the profit made on the contents of the infringing holder.

In considering the remaining questions raised by the defendant's exceptions to the master's report, we are met at the outset by the contention that, because the plaintiff did not except to the various accounts filed by the defendant in response to the master's orders, he is concluded by the figures therein contained. With this contention I cannot agree. It is well settled that an account filed under equity rule 63 (198 F. xxxvii, 115 C.C.A. xxxvii) merely performs the functions of a pleading, namely, to narrow the issues (In re Beckwith, 203 F. 45, 121 C.C.A. 381; Beckwith v. Malleable Iron Range Co. (D.C.) 207 F. 848), and that, while it would have been better practice for the plaintiff to file exceptions to the account, it is not required to indicate its dissatisfaction therewith in any particular form (Coffield Motor Washer Co. v. Wayne Mfg. Co. et al., 255 F. 558, 166 C.C.A. 626).

I think that where, as here, evidence inconsistent with the figures stated in the defendant's account is received without objection on the part of the defendant, on the ground that no exceptions to the account have been filed, the plaintiff's dissatisfaction with the account as filed is sufficiently indicated. Under the circumstances, the situation is the same as if the plaintiff had excepted to the entire account; that is, the statements therein contained are not to be regarded as evidence, but merely as admissions on the part of the defendant. The master was entitled, therefore, to base his conclusions, not alone on the figures contained in the accounts filed by the defendant, but also on the evidence introduced by the plaintiff.

The defendant, in compliance with various orders of the special master, rendered accounts purporting to show the number of skeins in infringing holders billed by its factory to its offices in New York and Chicago and to independent sales agencies in other cities, the prices at which they were billed, the prices at which skeins in old-fashioned packages were billed at the same time, in similar quantities and to the same parties, the cost of putting skeins in infringing holders, and the loss sustained by selling skeins in holders. It also furnished a partial list of the sales of skeins in infringing holders made at its New York office, showing the price at which skeins were billed to customers. Although ordered on June 17, 1910, to produce its bills or vouchers showing the prices at which its factory billed holder goods to its various agencies, and again ordered on January 4 1914, and March 13, 1915, to produce all books, written entries, vouchers, etc., showing sales...