Broadview Chemical Corporation v. Loctite Corporation
| Decision Date | 23 January 1969 |
| Docket Number | No. 219,Dockets 32722,32723.,220,219 |
| Citation | 406 F.2d 538 |
| Parties | BROADVIEW CHEMICAL CORPORATION, Plaintiff-Appellant, v. LOCTITE CORPORATION, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Second Circuit |
Granger Cook, Jr., Chicago, Ill. (Hume, Clement, Hume & Lee, Chicago, Ill., David A. Anderson, James P. Hume and Henry L. Brinks, Chicago, Ill., of counsel), for plaintiff-appellant.
Walter D. Ames, Washington, D. C. (Watson, Cole, Grindle & Watson, Robert J. Lasker, Washington, D. C., J. Rodney Peck, Newington, Conn., and W. Robert Hartigan, Hartford, Conn., of counsel), for defendant-appellee.
Before LUMBARD, Chief Judge, FRIENDLY, Circuit Judge, and FRANKEL, District Judge.*
Certiorari Denied April 21, 1969. See 89 S.Ct. 1472.
In June of 1964 Broadview Chemical Corporation, the plaintiff-appellant, brought the action from which this appeal arises seeking a declaration of invalidity and non-infringement with respect to several patents held by Loctite Corporation, the defendant-appellee. Following counterclaims charging infringement and a course of discovery proceedings, the parties, on February 3, 1967, made a settlement agreement which provided for, and incorporated, the consent decree Broadview has now been found to have violated. Some limited aspects of the patents and of the steps preceding the settlement are germane to the issues on this appeal.
The patents cover anaerobic curing sealant compositions which serve to bond metals together in the absence of air (, oxygen) — e.g., when spread upon the surface of a screw and bolt which, upon being threaded together, exclude air and are thereby made to adhere to each other through the action (polymerization) of the patented composition. In the course of discovery, responding to Loctite's interrogatories, Broadview listed the 32 formulations, designated by Roman numerals I-XXXII, of the sealant compositions it was making and selling. Thereafter, in a stipulation of facts dated May 31, 1966, the parties agreed in the following language that Loctite's charges of infringement (and the "issues" generated by such charges) were rested upon three patents and directed against the several formulations, as follows:
In other words, Loctite charged that 30 of Broadview's 32 formulations (Nos. II through XXVIII and XXX through XXXII) infringed one or more of the patents. Two of the formulations, Nos. I and XXIX, were omitted from this listing of "the Broadview * * * products from among the formulations given in the answers to Loctite Corporation's interrogatories which were charged to infringe * * * and which therefore were in issue * * *."
The settlement agreement of February 3, 1967, among its other relevant aspects, incorporated the stipulated description of the "charges" and the "issues" in the case, and tied these to the consent decree, by providing (par. 5):
And the consent decree, as thus described, after announcing, inter alia, that the parties had "settled their differences with respect to the matters in dispute," adjudged that Broadview had infringed "Patent Nos. 2,895,950; 3,043,820 and 3,046,262 by the manufacture and sale of products made under formulations covered by said Letters Patent * * *."
The decree went on to enjoin further infringement of the named patents; to provide that each party would pay its own costs and attorneys' fees; and to state that there should be no award of damages since Broadview had "made a monetary payment" ($7,500) to Loctite under the settlement agreement.
The peaceful era thus inaugurated was short. In September, 1967, Loctite moved to punish Broadview for contempt of the consent decree, charging that the latter was making and selling named products which infringed claims of Patent No. 3,043,820. Following a hearing and some discovery, Loctite filed a supplemental motion charging as further contumacious acts that:
After discovery proceedings and three days of evidentiary hearings, Judge Blumenfeld concluded that all the contempt charges should be sustained. He held, first, that the "resales" of the old, admittedly infringing formulations violated the decree. Further, he found that all of Broadview's assertedly new formulations (identified as CP-1 through CP-9), contrary to the decree's prohibitions, infringed either Patent No. 3,043,820, or No. 3,046,262, or both. In a detailed opinion, he explained the bases for these determinations and prescribed remedial sanctions.
In its appeal Broadview tenders five questions (we formulate them as four) on which it claims the District Court erred.* We reject all of these contentions save one, the effect of our ruling being to absolve only Broadview's new compositions CP-8 and CP-9 from the charge of contempt.
As is true of substantially all the District Court's fact findings, there is no quarrel by Broadview with the findings that: (1) Broadview's distributors, after the consent decree, began returning the products which had been declared to infringe; (2) Broadview in some cases resold such returned products to other distributors; and (3) in other cases, Broadview arranged for direct transfers of such products from one distributor to another, crediting the transferor with what amounted to returns and billing the transferee for purchases. Broadview argues, however, that these post-decree transactions were outside the terms of the injunction because Loctite, in the settlement agreement, had given a standard form of release "of and from any and all actions, causes of action, claims and demands which Loctite Corporation may have against Broadview, its officers, customers, etc. jointly or severally, from the beginning of the world to the date hereof." The argument is not weighty.
The consent decree adjudged that Broadview had infringed by "manufacture and sale" of the condemned products. It enjoined such infringement for the future. Cf. Western Lighting Corp. v. Smoot-Holman Company, 352 F.2d 1019, 1022 (9th Cir. 1965). The release, because Broadview was making an agreed payment for the past, waived any claims for infringement, whether by "manufacture" or "sale," up "to the date" of the settlement. There was no suggestion in the customary language of the release that it was intended to excuse any acts of infringement (whether by manufacture or by sale of products already in existence) after its date. There was no hint of the thought now pressed that the release gave immunity for any future sales or uses of products in existence as of its date. And Broadview introduced no evidence in the contempt hearing to suggest that the parties had intended any such unusual meaning. On the contrary, answering interrogatories during the contempt proceedings, Broadview's President said he believed "part or all" of the infringing products in Broadview's possession on the date of the consent decree had been "discarded or destroyed" and that none had been "transferred to another for consideration * * * monetary or otherwise." True or false, these answers were consistent with the terms of the decree and the release, not with the unlikely construction Broadview now proposes.
Insofar as Judge Blumenfeld's findings of contempt rest upon his determination that Broadview has, since the consent decree, made and sold compositions infringing Patent No. 3,043,820, Broadview attacks his decision in an elaborate argument charging (1) that he mistakenly failed to consider the prior art and (2) that he improperly limited discovery with respect to the prior art. These interrelated contentions, to which there are short answers, may be summarized briefly for our purposes.
As Broadview states the starting-point for this line of argument, it is that Patent No. 3,043,820 "covers compositions including (1) a dimethacrylate (monomer), (2) a hydroperoxide (catalyst), and (3) a quinone (inhibitor)." Elaborating this summary, Broadview stresses that the inclusion of hydroquinone, as distinguished from quinone, "was old and in the public domain." Thus, the argument continues, "by using or adding hydroquinone to the accused sealant compositions, Broadview is following the prior art and is not infringing * * *."
Insofar as this argument rests upon the specific ingredients of Broadview's formulations, it is...
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