Bredin v. National Metal Weather Strip Co.

• Decision Date: 09 November 1910
• Docket Number: 39-1904.
• Citation: 182 F. 654
• Parties: BREDIN et al. v. NATIONAL METAL WEATHER STRIP CO.
• Court: U.S. District Court — Western District of Pennsylvania

182 F. 654

BREDIN et al. v. NATIONAL METAL WEATHER STRIP CO.

No. 39-1904.

United States Circuit Court, W.D. Pennsylvania.

November 9, 1910

[Copyrighted Material Omitted] [Copyrighted Material Omitted] [Copyrighted Material Omitted] [Copyrighted Material Omitted]

'Q. 16. You have testified in your direct examination that as near as you could tell you thought the profit amounted to about three-fourths of a cent a foot on the National strip. Have you any reason to change that estimate? A. At the time I gave that estimate, I thought it about correct; but I have reasons now for changing it, for the reason that during the entire accounting period we sold approximately eleven hundred thousand feet, and all that we secured from that as stockholders was $1,600 in dividends and the cost of this litigation up to that time of $3,360.23 and $40 to Mr. Conner, as an expert. Figuring that up, we find that at the expiration of the accounting period there was left a deficit of $420. This left a balance of $4,580.23, which were our profits on eleven hundred thousand feet of strip. Therefore, it would have been impossible for us to have made three-fourths of a cent on National strip. Q. 17. You say there was a deficit at the end of the accounting period. What do you mean by that? A. I mean to say that at the end of the accounting period we had overdrawn $420. We had paid out $420 more than we had received. Q. 18. Figuring the amount which you paid in dividends during the continuance of the company up until the 8th of March, 1905, and such other items as you have given, what would they represent per foot in the way of profit on all the strip that you manufactured and sold? A. A little better than four-tenths of a cent per foot.'

It would seem apparent that to permit an estimate of manufacturer's profit to be fixed upon the basis of dividends paid stockholders would be most unreliable. The principal owners of a business under such a system of computation could show no profit whatever, if they saw fit to vote to themselves large salaries as officers of the company. And again, it would seem that the defendant has no right to take into consideration in figuring his manufacturer's profit the cost of the litigation. Upon a careful consideration of the testimony offered on this subject, I am therefore of the opinion that 1 cent per foot is about as near the true profit made by the defendant as can be arrived at.

L. S. Bacon, for exceptions.

Charles M. Clarke, for defendants.

ARCHBALD District Judge (specially assigned).

The complainants, according to the master, are entitled to nothing on this accounting, either by way of profits or damages, and must be content, as the result of the litigation, with the establishment of their patent, and the deterrent effect on others, for the time being, so secured. That profits were made by the respondents is not disputed, and there is evidence of damages as well. But for one reason or another the master has put both of them aside, and the question is whether they should not have been allowed.

In all cases where infringement is established, the infringing party is accountable in equity for the profits which he has made out of it. Where the owner of the patent has granted exclusive licenses, this accountability may be a divided one the infringer being liable to the owner for a part, and to the licensees for another part, according as the profits from the infringement may have been taken from the one or the other. In the present instance, there are numerous exclusive licensees, and, according to the master, in order to entitle the complainants to any of the profits made by the respondents, the licensees should have been joined in the bill. But this is based on a misconception. The licensees, under their agency contracts, were entitled to the profits made on the equipment of buildings, but, except as to Mr. Bredin, this is not what is being proceeded for now. They had nothing to do, however, with the profits of manufacture, which belong to the complainants, as owners of the patent, and for these the respondents must account to the complainants, if they are accountable at all. The right to manufacture and sell for the equipment of windows elsewhere than in buildings, was expressly reserved to the complainants in the license agreements, and the respondents, in manufacturing, having infringed on this right, the profits which they derived from it belong to the complainants, whose was the right so infringed. There is nothing to the contrary in Bredin v. Solmson (C.C.) 145 F. 944, assuming that it controls. The right to manufacturers' profits in that case was expressly disclaimed, the profits and damages outside of that being all that was sought, and the installation profits being all that were proved. These, of course, belonged to the licensee in whose territory they were obtained, and with whose trade they had interfered. And it was rightly held, in consequence, that the agent of the respondents, who was installing the infringing strips, was not liable to the complainants for the profits on installation sales which he had made. But that does not touch the question here. The liability to the complainants for manufacturers' profits was not involved, and, under the reserved right to manufacture and sell, that liability in the present instance is clear. The profits derived by the respondents, from the manufacture of the patented article, were in direct breach of the complainants' rights, as owners of the patent, and are regarded, in equity, as belonging to them, and are therefore properly brought into this account. During the period covered by the accounting, the respondents admittedly...