Bull v. Logetronics, Inc., Civ. A. No. 4196.
| Decision Date | 05 January 1971 |
| Docket Number | Civ. A. No. 4196. |
| Citation | 323 F. Supp. 115 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | Glen C. BULL, Jr., Plaintiff, v. LOGETRONICS, INC., and Richard N. Johnson, Defendants. |
COPYRIGHT MATERIAL OMITTED
James R. Sharp, Arnold B. Christen, George H. Mitchell, Jr., Washington, D. C., for plaintiff.
William A. Moncure, Alexandria, Va., William D. Hall, George E. McMurray, Jr., Kenneth L. King, Washington, D. C., for defendants.
This action and cross-action bring to the Court for determination contract and patent rights, a claim of conspiracy, alleged misappropriation of documents and information, and a claim of libel and slander.
The facts are presented through oral testimony, depositions, and numerous exhibits. Counsel have likewise filed exhaustive briefs.
The plaintiff, Glen C. Bull, Jr. (Bull), was for a number of years an employee of Haloid-Xerox Corporation (Xerox). That company was engaged, among other things, in the graphic arts business. Among its products it sold Foto-Flo-C machines, which were, in part, based on what is referred to as the Garraway patent. During the time of Bull's employment at Xerox, he obtained and assigned to Xerox patent 2,913,973 (973 and/or Bull patent), and a co-employee, Edward R. Sabel, obtained and assigned to Xerox patent 2,913,974 (974). Soon thereafter Xerox determined to devote the greater part of its energies toward the development of other products, and decided to dispose of all or some part of its graphic arts business. Up to that time it had sold and agreed to service a number of graphic and film processors based on the Bull and Sabel patents.
By agreement dated September 24, 1960, Bull obtained from Xerox an option to acquire its business of manufacture, sale and servicing of film processors, including the trademark "Lithoflo," the exclusive license under the Bull and Sabel patents (and eventually the patents themselves), another patent application, parts, et cetera. On or about July 24, 1961, Bull entered into an agreement (PX-2) with LogEtronics, Incorporated (LogEtronics), granting it an option to acquire all of Bull's rights under his agreement with Xerox dated September 24, 1960. On August 24th, 1961, LogEtronics exercised its option (PX-3) and confirmed the terms of the agreement of July 24, 1961 (set out in PX-2), conditioned upon Xerox agreeing to three amendments to the Xerox-Bull agreement of September 24, 1960 (PX-1). On that same day Bull assigned all of his rights under the September 24, 1960 agreement (PX-1) to LogEtronics (See PX-4). On that day LogEtronics (PX-5) advised Xerox it was assuming all of the rights and privileges and undertaking the contract responsibilities of Bull under the aforesaid contract. It forwarded a check for $50,000.00, representing the initial base royalty payment, and advised the exercise of the option was on condition of three modifications of the September 24, 1960 agreement, which it understood was agreeable to Xerox, namely, (a) LogEtronics would undertake the responsibility described in paragraph 13 of the contract in lieu of the performance bond therein called for, (b) it could purchase the inventory on a "pick and choose basis," rather than assuming the liability to purchase up to $100,000.00, and (c) the last sentence of paragraph 6 as shown on top of page 5 be amended to provide that "such unearned portion of such royalty will be applied as a credit against royalties due in future years," but not to change the total price of $250,000.00. Xerox so agreed.
LogEtronics paid to Bull the $25,000.00 called for by the option of July 24, 1961.1 A copy of the agreements of September 24, 1960, PX-1 and July 24, 1961, PX-2 are appended to this opinion.
Bull became an employee of LogEtronics about August 1961 and continued in its employ until January 1966. Following his separation from such employment, this action was filed. Subsequent to Bull's leaving LogEtronics in January 1966, Frank Steinhilper, then a vice-president of Xerox Corporation, assigned any claims which Xerox had or might have against LogEtronics (resulting from the September 1960 Bull-Xerox agreement) to Bull. The consideration for this assignment was an agreement by Bull to pay Xerox a portion of any recovery had in this litigation. Defendants question the authority of Steinhilper to make this assignment of the rights of Xerox.
In the able briefs filed by counsel, they enumerate the causes of actions and defenses substantially as follows:
Plaintiff says this is not a patent infringement action and likewise he "is making no claim for any invention, design, trade secret, know-how, or the like, other than what is shown in patents '973 and '974."
As to the three causes of action asserted by plaintiff, defendants say (a) that the '973 and '974 patents are invalid in view of the prior art; (b) neither of said "patents cover any LogE equipment;" (c) Bull does not own any rights in the PX-1 contract on which he is suing; (d) the actions of Xerox and Bull have destroyed the PX-1 agreement and rendered it unenforceable, and Bull's actions amount to "unclean hands;" and (e) there was no conspiracy.
Concerning the defendants' counterclaims, plaintiff says (a) it is not shown Bull removed the documents and/or information, or that it was confidential; and if so, he had a right to have and use the information; (b) that the alleged libel and slander was privileged, not actionable, and was without malice; and (c) as to the alleged constructive trust, Bull acted within his rights, that he acted honestly, without fraud, and such action was in protection of his rights.
Prior to the decade of the 1950's, graphic arts film as a general rule was processed by hand, using trays filled with emulsion and hanging the film up to dry. It was a tedious process. Automatic film processors were generally used only for X-ray film and motion picture film.
The Foto-Flo-C machine sold by Xerox as a result of the Garraway Reissue patent and some few others alleviated the problems of graphic arts processing to some extent. This machine suffered from the fact that although it was automatic (using an all-belt open-tray process), the film was occasionally damaged or scratched by the friction produced by the belts' rubbing against the film.
At the same time, the early automatic machines suffered from the fact that the emulsions used to process the film were thicker than those of today and tended to gum up the processors, making it necessary to shut down a processor in order to clean it. There were then several types of processors available, but they were not completely satisfactory. In recent years automatic film processors have become more popular because the film manufacturers have designed new type film with very hard emulsions which do not scratch and scar.
Sometime in the early 1950's, either Bull or one of his Foto-Flo-C customers, Chalis Hupp, concluded that if you substituted an idle roller section for one of the three belt sections of the Garraway Foto-Flo-C machines, damage or scratches to the film would be less frequent. (Which of the two first had this idea is a question which will be discussed later in this opinion.) Subsequent to this discovery, Bull or his superior in Rochester, New York, Sabel, had the idea that by placing a chain, similar in theory to a bicycle chain, on the roller section (or sections) of the automatic processor, that graphic arts film could be driven through the processor in a more determined and steady or regular fashion, and thus eliminate some of the damage.
Illustration A appended to this opinion shows the drawings used by Bull during the prosecution of the patent. To explain the way in which the apparatus worked, first the film is placed on the tray 1 at the upper left with the emulsion side up. In '973, the film drops down between the V-shaped guides near the numeral 55, and moves down between the endless belt 93 (see Figure 2) and the series of rollers 25. Once the film has started its downward path it is carried along between the belts and the rollers at a predetermined rate of speed until it reaches the bottom of the tank, at which point it is reversed by a guide assembly 12, and it starts upwardly between the belts 93 and the rollers 25. Furthermore, there are tensioning bars 94, also referred to as "bail members," which push the belts 93 outward against the rollers 25. Each of the arms 94 is provided with a coil spring 95 (see Figure 1) which provides the tension to keep the belts 93 against the rollers 25 so that the film does not fall to the bottom on the upward portion of its journey through the '973 apparatus.
At this point it...
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