Artvale, Inc. v. Rugby Fabrics Corp.

• Decision Date: 23 June 1964
• Citation: 232 F. Supp. 814
• Parties: ARTVALE, INC., Plaintiff, v. RUGBY FABRICS CORP. and Barmil Associates, Ltd., Defendants.
• Court: U.S. District Court — Southern District of New York

232 F. Supp. 814

ARTVALE, INC., Plaintiff, v. RUGBY FABRICS CORP. and Barmil Associates, Ltd., Defendants.

United States District Court S. D. New York.

March 20, 1964.

Supplemental Opinion June 23, 1964.

COPYRIGHT MATERIAL OMITTED

Emanuel R. Posnack, New York City, for plaintiff.

Brumbaugh, Free, Graves & Donohue, New York City, James N. Buckner, Joseph D. Garon, New York City, of counsel, for defendants.

LEVET, District Judge.

This is an action for infringement of U. S. Patent No. 2,667,775 brought by the patent's present owner, Artvale, Inc., against Rugby Fabrics Corp. and its wholly-owned subsidiary, Barmil Associates, Ltd., two of Artvale's competitors in the manufacture and sale of knitted textiles. Defendants deny infringement and plead as affirmative defenses and counterclaims unfair competition and breach of an agreement entered into between the parties on October 26, 1959 in settlement of a prior action involving the same patent. The reply denies the material allegations of the counterclaims.

The case was tried to the court without a jury. After hearing the testimony of the parties, examining the exhibits, the pleadings, the briefs and the proposed findings of fact and conclusions of law, this court makes the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

1. Plaintiff, Artvale, Inc., is a New York corporation having its principal place of business in the City, County and State of New York.

2. Defendant, Rugby Fabrics Corp., is a New York corporation having its principal place of business in the City, County and State of New York.

3. Defendant, Barmil Associates, Ltd., is a wholly-owned subsidiary of the defendant Rugby Fabrics Corp., with its principal place of business within the City, County and State of New York.

4. U. S. Patent No. 2,667,775 was issued on February 2, 1954 to Fredric L. Aibel and through assignments is presently owned by the plaintiff Artvale. The patent is hereinafter referred to as the Aibel patent.

5. On October 26, 1959, the plaintiff and the defendant Rugby Fabrics, in settlement of a prior action involving the Aibel patent, Artvale, Inc. v. Rugby Fabrics Corp., Civil 110-199 (S.D.N.Y.), entered into an agreement, which in pertinent part provided:

"(2) That * * * Rugby Fabrics Corp., its officers, directors, agents, employees, servants and those claiming rights under and through them, will discontinue forthwith the manufacture, use and/or sale, during the term of U. S. Patent No. 2,667,775 in suit, of the following netting material made on a warp or Raschel type knitting machine having a front bar and a rear bar: netting material made of diamond mesh fabric constructed according to Figure 4 of the said patent in suit, * * * the following formula, set forth in lines 53 and 54, column 6 of said patent, being one of the formulas for making said diamond mesh fabric:

"Chain I: 20, 00, 24, 44

"Chain II: 00, 02, 44, 42

* * * * * *

"(3) That the provisions of Paragraph (2) hereof shall not apply to other materials that do not have the specific structures set forth in Paragraph (2) hereof, it being agreed that diamond mesh fabrics made with one bar always knitting and one bar always laying in are among such other materials that do not have the specific structures set forth in Paragraph (2) hereof and Artvale agrees not to bring suit against * * * Rugby * * * for infringement, or otherwise involve them in litigation under the patent in suit because of their making, selling or using such other materials.

"(4) Artvale agrees not to bring suit against * * * Rugby * * merely because of the similarity of appearance of the goods of Artvale and the goods of the other parties hereto, provided the other parties have not committed acts of unfair competition or patent infringement.

* * * * * *

"(10) That a judgment of infringement and decree against further infringement of said patent by * * * Rugby * * * shall be entered without further notice." (Deft. Ex. H)

6. The consent judgment, entered the same day, pursuant to paragraph 10 of the settlement agreement, provided:

"(2) That as to the defendant Rugby herein said Patent No. 2,667,775 is good and valid in law.

* * * * * *

"(4) That the defendant, its officers, directors, agents, employees, servants and those claiming any rights under and through it, be and hereby are enjoined and restrained from manufacturing, using or selling netting fabrics constructed specifically according to Figures 1, 2 and 4 of said patent." (Deft. Ex. I)

7. The phrase "being one of the formulas" was inserted into paragraph 2 to express the intent of the parties that the prohibition was from making the fabric illustrated in Figure 4 regardless of the knitting formula employed. (634-36) The agreement initially did not contain these words and they were inserted in response to an inquiry by Milton Kurz, President of Rugby Fabrics, as to whether he would be in violation of the agreement if he constructed a fabric as illustrated in Figure 4 by a formula other than that specified in paragraph 2. There was no intention to alter the prohibition from that existing prior to the insertion of the words "being one of the formulas."

8. In paragraph 3 the parties agreed that "diamond mesh fabrics made with one bar always knitting and one bar always laying in are among such other materials that do not have the specific structures set forth in Paragraph (2)." A fabric so defined was, at the time of the agreement, being manufactured by A & W Manufacturing Corp., a party to the settlement agreement, and is illustrated in Figure 2 of the Harris patent (Deft. Exs. F and Z), which at the time of the agreement had not yet been issued to A & W. (358)

9. The fabric structure of Figure 4 of the patent can be made by more than one knitting formula.

10. Figure 4 of the Aibel patent diagrammatically represents a fabric in a stretched but unfinished state, substantially as it appears while being knitted.

This finding is based on the description of Figure 4 contained in the patent specification at col. 3, lines 47-50, where Figure 4 is described as being "substantially like Fig. 2." Figure 2, in turn, is described as "showing the fabric elements in their stretched condition substantially as they appear while being knitted." Pl. Ex. 1, col. 3, lines 39-41.

Both the plaintiff's expert, Prof. Shinn, and defendants' expert, Prof. Efland, testified to the same effect. Prof. Shinn testified that Figure 4 illustrates a fabric not completely finished (56) and that there are differences between Figure 4 and the finished fabric. (90-91) Prof. Efland testified that Figure 4 represents a stretched but unfinished fabric.

Other statements in the patent specification (Pl. Ex. 1) confirm this fact. One of the objects of the patent is "to enable the production selectively either of a diamond or hexagonal netting construction during the knitting process, rather than during the finishing process after the product is removed from the machine." (id. at Col. 2, lines 34-38) A prior art method of knitting is distinguished in the Aibel patent specification as producing a fabric "as an irregular mesh, and assumes a regular hexagonal shape only when stretched during a subsequent finishing operation, after the fabric is removed from the machine." (id. at Col. 1, line 54, to Col. 2, line 2) The specification describes the fabric resulting from use of the Aibel patent as "the finished product is a locked symmetrical mesh, of lace-like appearance; and the product comes off the machine in finished shape." (id. at Col. 5, lines 42-44) The inventor, Fredric Aibel, testified that this referred to the fabric as it "comes off the machine and before it is put into a finishing process." (598)

While the inventor testified at the trial that Figure 4 was intended to illustrate the fabric "as it would appear in its end use" (614), equating this with a finished fabric, I cannot accept this testimony, especially in view of his unsatisfactory explanation of the other statements in the patent specification.

Lastly, this finding is based on the nature of the finishing process. Both plaintiff's and defendants' experts agree that the finishing process, consisting of heat-treating and stretching, can substantially alter the appearance and mesh construction of the fabric, and, in fact, the meshes of a nylon fabric, such as those at issue here, can be finished to almost any shape. (176; compare Deft. Exs. D, G, AA, which are prior art finished fabrics) The plaintiff's and defendants' fabrics are very similar in the finished state, (compare Pl. Exs. 13 and 37, or Pl. Ex. 26) while substantially different in the unfinished but stretched state (compare Deft. Exs. C and Y). Since the Patent Office has granted a patent to the defendants, Deft. Ex. T, the differences cannot be based upon mere visual similarity in the finished product.

The mere fact that greige or unfinished goods are not sold for end use in the apparel or millinery trade does not require a holding that Figure 4 refers to a finished fabric. Quite obviously, there are many patents which have no direct reference to the commercial end product.

11. Figure 4 of the Aibel patent pictorially represents a fabric of diamond mesh configuration where the diamond is constructed, as follows: Two adjacent sides are open elongated loops (Pl. Ex. 11, at 31, 37) made by the same knitting bar and held together by a contracted loop. (id. at 32) The other two adjacent sides are unknitted thread sections, each composed of a thread from each knitting bar. (id. at 33, 29, 35, 35A) Each juncture point of the diamond is a contracted loop. (id. 28, 30, 32, 36) The complete diamond is formed during five courses and three wales of knitting. (See Appendix A)

12. The defendants' unfinished fabric is pictorially represented (Deft. Ex. AH and Pl. Ex. 31) by alternate horizontal rows of diamonds and hexagons. Three sides of the hexagon are formed as follows: One side of...