Baker-Cammack Hosiery Mills v. Davis Co., 5995.

• Citation: 181 F.2d 550
• Decision Date: 11 April 1950
• Docket Number: No. 5995.,5995.
• Parties: BAKER-CAMMACK HOSIERY MILLS, Inc., et al. v. DAVIS CO.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

181 F.2d 550 (1950)

BAKER-CAMMACK HOSIERY MILLS, Inc., et al. v. DAVIS CO.

No. 5995.

United States Court of Appeals Fourth Circuit.

Argued January 10, 1950.

Decided April 11, 1950.

Henry N. Paul, Jr., Philadelphia, Pa., and James F. Byrnes, Washington, D. C. (Ernest F. Mechlin, Washington, D. C., L. P. McLendon and Thornton H. Brooks, Greensboro, N. C., on the brief), for appellants.

James P. Burns, Washington, D. C., and Charles A. Noone, Chattanooga, Tenn. (Robert E. Burns, New York City, and Welch Jordan, Greensboro, N. C., on the brief), for appellee.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

SOPER, Circuit Judge.

Six United States patents, relating to elastic top self-supporting hosiery and methods for producing it, constitute the subject matter of this appeal. The Davis Company, the plaintiff in the District Court, is a corporation which was formed in 1946 to hold the patents for the beneficial owners. They are Scott and Williams Company, the largest manufacturer of circular hosiery knitting machines in the United States, Interwoven Stocking Company, the largest manufacturer of men's socks in the world, and W. B. Davis & Son, Inc., which until recently owned and operated a large hosiery mill in Alabama. The nominal defendants in the District Court were Baker-Cammack Hosiery Mills, Inc. and Baker-Mebane Hosiery Mills, Inc., located at Burlington, North Carolina; but the defense has been conducted and financed by the Hosiery Investigating Committee, an organization composed of one hundred and seventy-two hosiery mills located in North Carolina and fourteen other states, which was formed to investigate the validity of the patents and to defend suits brought to enforce them. J. E. Baker, president of both defendant corporations, is president of the Investigating Committee. Each member of the Committee has contributed financially to the defense of the suit. It was stipulated that one hundred and eighty manufacturers are involved directly or indirectly in the matters in issue. In argument it was stated that there are over five hundred hosiery mills in the United States.

There are two suits, one charging that Baker-Cammack has infringed five of the patents, and one charging that Baker-Mebane has infringed all of the patents in suit. Both companies are under the same management and control. The suits were consolidated and disposed of in one trial in the District Court, and conclusions of law and an opinion applicable to both cases were filed by the District Judge. 86 F. Supp. 180, 181. The court held in separate decrees that the patents are valid and have been infringed as alleged. The court also decreed in each case that the present firms and corporations comprising the Investigating Committee should be bound by the decrees except that all of them other than the named defendants were not adjudged guilty of infringement and were not deprived of the separate defense of non-infringement. The named defendants were enjoined from further infringement and the cases were referred to a special master to ascertain the damages sustained by the plaintiff by reason of the infringement by the named defendants.

In addition to the defenses of invalidity and non-infringement, the defendants raised the defenses: (1) that the plaintiff holding company was estopped from suing for infringement of the patents by reason of conduct of its predecessors in title which amounted to laches and acquiescence in the use of the patents; (2) that the defendant, Baker-Cammack, had acquired an implied license to use certain machines and attachments in making stockings under five of the patents in suit by reason of the purchase of the equipment from Scott & Williams when Scott & Williams had a controlling interest in the patents; and, (3) that the actions of the owners of the patents in forming the Davis Company and seeking to impose upon the industry the provisions of proposed license agreements offered in evidence constituted such a violation of the federal anti-trust laws and such an abuse of the patent monopoly as to disentitle the Davis Company to the enforcement of its rights under the patents. The District Judge rejected all of these defenses; but he stated in his opinion that it might be necessary in assessing damages to reexamine the evidence in order to ascertain whether Scott & Williams had furnished the defendants machinery and equipment for the manufacture of infringing stockings as to confer upon the defendants an implied license to make infringing stockings on the equipment so furnished.

The great commercial importance of the products and processes described in the patents in suit is attested by the prominence of the beneficial owners of the patents in the industrial field and by the organization of a great part of the industry in a determined effort to destroy the patents and make use of the disclosures without compensation. It was found by the District Judge that the disclosures of one of the patents in suit, that is, the Davis Patent No. 2,306,246, granted to Robert E. Davis on December 22, 1942, on an application filed June 26, 1935, produced a great change in the manufacture of seamless hosiery. It had been customary for many years in knitting half hose to provide a top or calf portion of rib knitting in order to secure the desired elasticity, but to make the leg and foot of plain knit fabric in order to secure the desired fineness of texture. Hosiery fashioned in this way involved difficulties of manufacture which were avoided by Davis in a manner described in the following passage from the opinion of Judge Hayes in the District Court.

"This litigation concerns patents in the knitting of seamless hosiery which formerly involved three distinct and independent operations. The top of the hose was conventionally produced in the form of rib fabric on a separate machine for that purpose. The leg and foot of the stocking were produced of plain knit fabric formed on a so-called plain knitting machine having a single set of needles known as cylinder needles. The rib fabric tops produced on the rib machine were transferred by hand to the plain knitting machine. This required the use of a so-called transfer ring on which each succeeding rib top is placed by hand, loop by loop on the pointed quills of the transfer ring. The ring carrying the rib top is then placed on the plain knitting machine with each quill point in the ring fitted over a cylinder needle and the rib top is then moved down by hand from the ring on to the needles so that they will knit the plain knit leg and foot on to the rib top. This was the conventional method at the time of the inventions involved in this suit and the cost per dozen pairs of hose produced by this cumbersome method was 20¢ per dozen pairs more than the cost embodying the inventions of the patents in suit.

"Various attempts were made to improve this method of production as well as to devise some ways or means by which hosiery could be produced that would have the appearance of true one by one rib top and be self-supporting and with an anti-ravel edge or selvage. Attempts were made to produce a single machine capable of performing the rib top affecting its automatic transfer and continuing the knitting of the plain knit leg and foot, but this turned out to be very expensive and commercially unsuccessful. Attempts were made to produce a complete stocking on the somewhat simple plain knitting machine having a single set of cylinder needles but none of them were successful or solved the problem until Davis through his invention embodied in patent No. 2,306,246 discovered a commercially successful automatic top stocking possessing self-supporting characteristics that has not only made it competitive with the transferred rib top stocking but which has caused the automatic self-supporting top stocking to substantially displace the transferred rib top stocking in the commercial field. Davis achieved this result through a successful incorporation of an elastic strand into a plain fabric forming the top of the stocking in such manner as to draw in the plain fabric so as to have the normal width of true rib fabric and expansibility equal to or greater than that of true rib fabric and a self-supporting characteristic far beyond that possessed by true rib fabric. To the automatic top stocking of the Davis patent 2,306,246 Getaz invented the anti-ravel, a remarkably successful anti-ravel selvage for the stocking top which obviated the necessity for a separate hemming operation as disclosed in his patent 2,344,350. One method of forming the selvage edge is the subject matter of Getaz patent 2,054,217. Since the public demand required a stocking having the true oneby-one rib appearance Getaz produced an automatic elastic top stocking which was indistinguishable from a true one-by-one rib fabric and is embodied in his patent 2,230,402 and the corresponding method patent 2,230,403.

"Full fashioned hosiery is produced on flat bed knitting machines as distinguished from circular knitting machines and it was with the full fashioned hosiery that Gastrich was primarily concerned. He was endeavoring to avoid contraction rather than induce it and in Claims 1 and 4 of his patent No. 2,067,486 he discloses one form of elastic carrying selvage edge but quite different from that contributed by Getaz."

The problem which confronted the industry was to find a fabric which could be knitted automatically without transfer on a single machine and which would retain the desirable qualities of the conventional rib top that was uniformily used on men's and children's stockings. The advantages of the rib top were that it had a pleasant appearance, possessed considerable expansibility, would not curl at the edge and would not run from the top of the piece. The attempts to find the solution which preceded the inventions of Davis and Getaz included the manufacture of the whole stockings on a plain...