Borden Company v. Clearfield Cheese Co.

• Decision Date: 13 August 1965
• Docket Number: Civ. A. No. 64-548.
• Citation: 244 F. Supp. 366
• Parties: The BORDEN COMPANY, Plaintiff, v. CLEARFIELD CHEESE CO., Inc., a Pennsylvania corporation, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

244 F. Supp. 366

The BORDEN COMPANY, Plaintiff, v. CLEARFIELD CHEESE CO., Inc., a Pennsylvania corporation, Defendant.

Civ. A. No. 64-548.

United States District Court W. D. Pennsylvania.

August 13, 1965.

Pennie, Edmond, Morton, Taylor & Adams, New York City, Reed, Smith, Shaw & McClay, Pittsburgh, Pa., for plaintiff.

Eckert, Seamans & Cherin, Pittsburgh, Pa., for defendant.

DUMBAULD, District Judge.

The burden of defending against unmeritorious lawsuits is one of the inescapable concomitants of living in a civilized society, as Justice Brandeis has aptly reminded us.¹ Ancillary and incidental thereto, and an integral part thereof, is the burden of discovery procedure, under the rules adopted for the federal court system in 1937 through the efforts of Attorney General Homer Cummings.

There comes a time, however, where the hardship is so severe, and the injustice so manifest, that the courts will exercise their equitable powers in order to prevent abuse of process. The courts will refuse to be used as affirmative instrumentalities of injustice, but will leave the wrongdoers to their own devices. Whatever necessary evils may come must come through other agencies. Toyosaburo Korematsu v. United States, 323 U.S. 214, 247-248, 65 S.Ct. 193, 89 L.Ed. 194 (1944); Shelley v. Kraemer, 334 U.S. 1, 13, 20, 68 S.Ct. 836, 92 L.Ed. 1161 (1948). As said in Bank of the United States v. Owens, 2 Pet. 527, 538, 7 L.Ed. 508 (1829), it "would seem to be plain and obvious that no court of justice can in its nature be made the handmaid of iniquity."

Patent litigation, of which the case at bar is an instance, furnishes a good example of the use of lawsuits as an economic weapon to harass competitors. The abuses of patent infringement suits, particularly in the glass industry, were exhaustively ventilated in the TNEC hearings, and led to antitrust prosecutions marked, among other features, by disciplinary proceedings against lawyers connected with prominent metropolitan firms for deceptions practiced on the courts handling those cases. United States v. Hartford-Empire Co., 46 F. Supp. 541, 612 (N.D.Ohio W.D.1942); Hartford-Empire Co. v. United States, 323 U.S. 386, 400, 65 S.Ct. 373, 89 L.Ed. 322 (1945); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 241-243, 64 S.Ct. 997, 88 L.Ed. 1250 (1944); Hartford-Empire Co. v. Shawkee Mfg. Co., 163 F.2d 474, 475-476 (C.A. 3, 1947); Hatch v. Ooms, 69 F.Supp. 788, 794-801 (D.C.1947). In the words of Justice Black: "Where the patent owner has ample resources to bear the costs of repeated litigation, the power of the infringement suit to stifle competition is increased. And where potential competitors are weak and few, it may afford a practically complete protection for the preservation of undeserved monopoly." Williams Mfg. Co. v. United Shoe Machinery Corp., 316 U.S. 364, 381, 62 S.Ct. 1179, 1188, 86 L.Ed. 1537 (1942). See also United States v. Hartford-Empire Co., 46 F.Supp. 541, 565 (N.D.Ohio W.D. 1942).

It must never be forgotten that the primary policy of the patent laws is to promote invention for the benefit of the public. Private gain is secondary. Pennock v. Dialogue, 2 Pet. 1, 19, 7 L.Ed. 327 (1829); Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 510-511, 37 S.Ct. 416, 61 L.Ed. 871 (1917); Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 665, 64 S.Ct. 268, 88 L.Ed. 376 (1944); Mazer v. Stein, 347 U.S. 201, 219, 74 S.Ct. 460, 98 L.Ed. 630 (1954); Sinclair & Carroll Co. v. Interchemical Corp., 325 U.S. 327, 330-331, 65 S.Ct. 1143, 89 L.Ed. 1644 (1945); Dumbauld, The Constitution of the United States (1964) 153-154. A valid patent must add to, not detract from, the state of the prior art. As stated in Great A. & P. Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 130, 95 L.Ed. 162 (1950): "The function of a patent is to add to the sum of human knowledge. Patents cannot be sustained when, on the contrary, their effect is to subtract from former resources freely available to skilled artisans." Hence it is a public service to strike down an invalid patent, which is in truth a trespass upon the public domain, as Justice Douglas observed in Automatic Radio Mfg. Co. v. Hazeltine Research, 339 U.S. 827, 840, 70 S.Ct. 894, 94 L.Ed. 1312 (1950). The very power of Congress to grant a patent is limited and delineated by the purpose proclaimed in the constitutional grant itself. The power is one "To promote the Progress of Science and useful Arts"; the "exclusive Right" conferred by the patent is merely the means of accomplishing the intended result. Ibid., 836-837, 70 S.Ct. 899; Great A. & P. Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 154-156, 71 S.Ct. 127, 95 L.Ed. 162 (1950); U.S.Const. Art. I, sec. 8, cl. 8.

"It follows, from the language used in the Constitution, limiting patentability to inventions which in fact contribute to the `progress' of science that every case involving the validity of a patent presents a constitutional question. Hence the Supreme Court of the United States is often required to devote its time and effort to determinations involving minute questions of fact with respect to the patentability of trivial gadgets."²

It follows also, from these basic policies, that commercial success alone, without the requisite invention and novelty, will not establish patentability. Great A. & P. Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 153, 71 S.Ct. 127, 95 L.Ed. 162 (1950). It further follows that the mere discovery of a phenomenon or law of nature is not patentable. Funk Bros. Seed Co. v. Kalo Co., 333 U.S. 127, 130, 68 S.Ct. 440, 92 L.Ed. 588 (1948).

Bearing in mind these controlling legal principles, we proceed to consideration of their application to the situation disclosed by the affidavits, depositions, and pleadings contained in the present record, in order to pass upon defendant's motion for summary judgment. This motion was filed on April 2, 1965, and argued on April 7, 1965. Briefs have been subsequently filed and considered.

Defendant, Clearfield Cheese Co., Inc. is a small local concern which in the 1950's developed a successful process for producing commercially acceptable individually wrapped slices of cheese. This process is unpatented (and, one may surmise, probably unpatentable) and is regarded by Clearfield as a trade secret, enshrouded in rigid security measures.

At that time Clearfield approached plaintiff, The Borden Company, a large national seller, regarding the possibility of Clearfield's producing slices to be marked by Borden. Borden was not interested. (Moran dep. 5, 11-12).

Clearfield thereupon decided to produce individually wrapped slices on its own account and to put them on the market. It was successful, and in the fiscal year 1963-64 sold 29,211,000 pounds of such slices, having a dollar volume of $13,291,000. (Tate affidavit).

In 1963, the sale of such slices had become such an important factor in the market that Borden wished to enter it. (Moran dep. 16-17). As of November 1, 1964 Borden was selling slices of its own to certain selected outlets on an experimental basis (Ibid., 21). Borden expects to market nationally in the near future. (Erekson affidavit, par. 9).

In connection with the request of the marketing department for such slices to sell, the production department requested the law department to make a search for patents dealing with packaging of individually wrapped slices of cheese. As a result of this search the patent involved in this case, known as the Brandenberger patent, was unearthed. (Erekson dep. 14-15). As early as January 28, 1964, Borden was contemplating acquisition of this patent and an infringement suit against Clearfield. (Defts. Brief App. 14).

On February 14, 1964, Borden obtained an option on that patent for $7500 (Erekson dep. 25-26). Later (on April 30, 1964) the option was exercised and an additional $22,500 was paid. A general contract of assignment covering ten United States and Canadian patents was executed by plaintiff on May 1, 1964, and by La Cellophane on May 14, 1964. A special assignment of the Brandenberger patent involved here (No. 2,505,603) was executed by the assignor (La Cellophane) on May 27, 1964, specifically granting the right to sue for past infringements. This assignment of May 27, 1964, was recorded in the United States Patent Office on June 3, 1964. At this time Borden had decided to sue Clearfield for infringement. Ibid., 55. This suit was filed on May 22, 1964. No attempt was made to see whether the Brandenberger process would work before it was bought (Ibid., 28-29). Up to July 30, 1964, Borden had not used the patent in its own production. (Ibid., 31-33). Its own experimental process does not use the teachings of the patent. (Steinke dep. 25-26).

In July, 1963, Borden contacted Clearfield to see if Clearfield could furnish Borden with individually wrapped slices for marketing by Borden. (Erekson dep. 42-44). At a conference at Borden's New York office on October 25, 1963, Clearfield indicated that its production facilities were fully employed, and also feared legal consequences under the Robinson-Patman Act if it supplied Borden more cheaply than other customers. (Ibid., 45-49). A letter of December 4, 1963, reiterated these objections. Borden concluded that "Clearfield was not interested in supplying us with cheese slices." (Steinke dep. 8). Borden's copy of the letter was marked in pencil "1-27/64 Hold till patents are cleared up".

Clearfield's process is regarded by defendant as a trade secret. Strict precautions are practiced to avoid its disclosure (Tate affidavit). To establish non-infringement, defendant attaches to its motion the affidavit of Karl B. Lutz, a prominent Pittsburgh patent lawyer, who states that he has "personally visited and examined" the defendant's operation, and has studied the Brandenberger patent (No. 2,505,603); and that he is "confident that if it becomes...