Calhoun v. United States

• Decision Date: 21 January 1972
• Docket Number: No. 432-55.,432-55.
• Citation: 453 F.2d 1385
• Parties: Jo. C. CALHOUN, Jr., and Esther C. Young, Executors of the Estate of Niels A. Christensen (Deceased) v. The UNITED STATES.
• Court: U.S. Claims Court

453 F.2d 1385 (1972)

Jo. C. CALHOUN, Jr., and Esther C. Young, Executors of the Estate of Niels A. Christensen (Deceased) v. The UNITED STATES.

No. 432-55.

United States Court of Claims.

January 21, 1972.

COPYRIGHT MATERIAL OMITTED

Albert R. Teare, Atty. of record, Cleveland, Ohio, for plaintiffs.

Vito J. DiPietro, Reston, Va., with whom was Asst. Atty. Gen. L. Patrick Gray, III, for defendant.

Before COWEN, Chief Judge, LARAMORE, Judge, DURFEE, Senior Judge, and DAVIS, COLLINS, SKELTON, and NICHOLS, Judges.

OPINION

DAVIS, Judge.^*

This case, involving the "accounting" phase of patent litigation, follows upon the court's decision in Calhoun v. United States, 339 F.2d 665, 168 Ct.Cl. 663 (1964), that claim 5 of Christensen U. S. Patent 2,180,795 is valid and has been infringed. On the basis of that holding, the plaintiffs seek to recover "reasonable and entire compensation", pursuant to 28 U.S.C. § 1498.

The invention relates to the use of O-rings, the sealing or packing element in a piston-cylinder combination, which prevents leakage of fluid as the parts move relative to one another. The claim involves only those structures in which the O-ring is used as a dynamic seal, i. e. where there is relative movement between piston and cylinder. If the O-ring is used as a gasket or with stationary parts, then the seal is static and not covered by the patent. O-ring seals, both dynamic and static, are used in many types of equipment, particularly hydraulic components of pumps, control mechanisms and the like. For example, both static and dynamic O-rings are used in the hydraulic systems of military equipment such as aircraft landing gear and fuel systems, ship steering systems, windlasses, and gunfire control systems of tanks, ships, and aircraft. O-rings are also found in nonmilitary equipment, for instance flush valves and other plumbing devices.

The patent issued on November 21, 1939 and expired on November 21, 1956. The owner granted the Government a license, for $75,000, to use the invention "on or in airplanes or aircraft", on October 20, 1942. The license was to run "for a period of five years * * * or for the remaining period of the present National Emergency * * (whichever be longer) * * *." Officially, the national emergency ended on April 28, 1952 and, along with it, the license term. However, defendant continued to use the patented invention, both in aircraft and otherwise, although the license was not renewed. On October 24, 1953 the plaintiffs requested administrative payment of compensation for the unlicensed use. Defendant denied the demand on April 1, 1954, and this suit followed on November 19, 1955. Since the Government was licensed to use the invention for aircraft up to April 28, 1952, the accounting period for such use runs only from April 28, 1952 to November 21, 1956, the patent's expiration date.¹ For nonaircraft infringement, the span is considerably longer. The six-year statute of limitations was tolled during the 5 ¼ months in which the plaintiffs were seeking administrative relief (see 35 U.S.C. § 286), and therefore the accounting period for government use of the O-ring other than in aircraft runs from June 11, 1949 to November 21, 1956.

I Extent of Infringement

The prime difficulty in calculating the extent of infringement is that the Government maintains no records by which one can readily determine how many devices having dynamic O-ring seal assemblies have been procured and used during the accounting period. Most equipment with O-ring seal assemblies is obtained as component parts of larger units; and the number of dynamic (as opposed to static) seal assemblies in any piece of equipment varies. Furthermore, most of such records as the Government had of O-ring procurement during 1949-56 have long since been destroyed, apparently in routine fashion. Some figures supplied by the claimants are, however, available, and were used by the trial commissioner as the basis for his award.²

A. Plaintiffs introduced at the accounting trial sales records of some O-ring manufacturers. Under a comprehensive licensing program established in the 1940's, these companies became the patentee's agents for the collection of 0.25 cent per O-ring as a royalty for all O-rings sold to commercial buyers to be used in otherwise infringing structures. Among the manufacturer-agents were three companies (Goshen Rubber and Manufacturing Company; Precision Rubber Products Co.; Linear, Inc.) which kept monthly records of commercial sales and remitted the appropriate royalties to the patentee. They also kept records of all O-rings sold to the Government or government contractors, but the trial commissioner found no royalty was charged or collected on such sales. As a result of prior litigation, several major O-ring users were released from liability for infringement.³

Monthly royalty reports of Goshen, Precision, and Linear, excluding O-rings bought by the released companies, show that 205,417,969 O-rings were sold to the Government or its contractors from 1949 to 1956. Apportionment was necessary for the first and last years since the accounting period began on June 11, 1949 and ended on November 21, 1956. If it be assumed (as it reasonably can) that the procurement was evenly distributed from month-to-month, the pro-rata sales of O-rings in the pertinent months of 1949 were about 2,420,000 (based on the total figure for 1949, 4,486,714), and for the covered part of 1956 about 22,450,000 (based on the total figure for that year of 25,607,614). Thus, the total number of O-rings sold to unreleased companies for government use by Goshen, Precision, and Linear for the full accounting period, on which no royalty was charged or collected, was about 200,193,600.

The trial commissioner found that this figure needed correction since it included O-rings used (1) in aircraft as well as otherwise; (2) in both dynamic and static seals; and (3) as replacement parts. As we have pointed out, defendant was licensed to use the invention in aircraft between June 11, 1949 and April 28, 1952. Since O-ring sales during that period were about 64,824,000 and 93% of these rings (see finding 8(f)) went into aircraft use (about 60,200,000), there remained a balance of 139,993,600 O-rings sold to the Government, or its contractors for government use, without a license. This number was further reduced to 21,000,000 (15% of 139,993,600) since only 15% of those employed in military equipment were in dynamic seals. With respect to replacement parts, the evidence established that about 15% of the O-rings used in dynamic seals were replacement parts for worn-out rings, and this was deemed by the commissioner to be a permissible repair and non-infringing. The adjusted total of 17,850,000 (85% of 21,000,000) was found to be the number of O-rings procured from Goshen, Precision, and Linear, by the Government or its contractors for government use without license.

During the accounting period, the Government also procured O-rings, either directly or through contractors, from two subsidiary companies of Parker Appliance Company—Synthetic Rubber Company and Berea Rubber Company. Synthetic and Berea made rubber products exclusively, 90% of which were O-rings. No royalty was charged or collected on O-ring sales to the Government. Since no actual records of O-ring sales by these firms during the accounting period are available, plaintiffs produced records of renegotiable sales, i. e. all sales of all products to the Government or its contractors by Synthetic and Berea from June 30, 1951 to June 30, 1956. In his computation, the commissioner took the total amount of renegotiable sales during that time and reduced it by 10% to determine the amount representing O-ring sales. He arrived at $3,011,990, divided it by 5½¢ per O-ring (the average selling price), and concluded that the number of O-rings sold was 54,763,500. Because of incomplete records, he relied on sales data from June 30, 1951 to June 30, 1956, which were reasonably comparable to sales from April 28, 1952 to November 21, 1956. This number of 54,763,500 was reduced by the further estimates that 1.7% were sold to released companies; 15% of that balance went to making dynamic seals; and 15% of the O-rings for dynamic seals were replacement parts. The corrected total (6,840,000) constitutes the commissioner's calculation of the number of O-rings procured from Synthetic and Berea and used by or for the Government without license in infringing structures during the accounting period.

Finally, Commissioner Davis considered the extent to which other companies (in addition to Goshen, Precision, Linear, Synthetic and Berea⁴) supplied rings for government use during the accounting period. He found that these five were the "majority" suppliers, responsible under the testimony for "something more than 50%", an imprecise term which he understood as about 60%. The remaining 40% he thought to be the maximum limit possibly supplied by other companies, while 0% would be the minimum; splitting the difference, he used 20% as the measure of the "minority" firms' contribution. This would add 4,938,000 rings, for a grand total of 29,628,000 in infringing uses.

B. Both sides dispute the commissioner's method of calculation, which we have just outlined. Plaintiffs' main attack is the more drastic. Urging that the defendant, as the responsible party, should bear the whole burden of its own failure to maintain and preserve proper and accurate records which would separate out infringing from non-infringing uses, the patent-owners say that the Government must be regarded as a trustee for their benefit and held accountable for all the government's procurement (put by plaintiffs at 260,181,469 rings), without reduction for use in static seals, or licensed use in aircraft, or sales through released companies. This treatment, it is said, is mandated by the doctrine of Westinghouse Electric & Mfg. Co. v. Wagner...