Cambria Iron Co. v. Carnegie Steel Co.

• Decision Date: 24 June 1915
• Docket Number: 1857.
• Citation: 224 F. 947
• Parties: CAMBRIA IRON CO. v. CARNEGIE STEEL CO. CARNEGIE STEEL CO. v. CAMBRIA IRON CO.
• Court: U.S. Court of Appeals — Third Circuit

224 F. 947

CAMBRIA IRON CO. v. CARNEGIE STEEL CO.

CARNEGIE STEEL CO. v. CAMBRIA IRON CO.

No. 1857.

United States Court of Appeals, Third Circuit.

June 24, 1915

Charles C. Linthicum, of Chicago, Ill., and David A. Reed, of Pittsburgh, Pa., for plaintiff.

James I. Kay, of Pittsburgh, Pa., and Francis T. Chambers, of Philadelphia, Pa., for defendant.

Before McPHERSON and WOOLLEY, Circuit Judges, and THOMSON, District judge.

Cambria Iron Company's Appeal.

McPHERSON Circuit Judge.

This prolonged litigation is now, we may hope, approaching its final stage. It grows out of the Jones patent, No. 404,414 granted June 4, 1889, for an improvement in the method of mixing molten pig metal, and charges the Cambria Iron Company with infringement, especially of the second claim. In a very careful and elaborate opinion (Carnegie Steel Co. v Cambria Iron Co. (C.C.) 89 F. 721) Judge Buffington sustained the validity of this claim and held the process infringed. He found that the central idea of the patent was the maintenance of a 'dominant pool'-- a happy term as the Supreme Court afterwards said-- and that the Iron Company's method was a plain infringement. The Circuit Court of Appeals disagreed on the subject of infringement (Cambria Iron Co. v. Carnegie Steel Co., 96 F. 850 37 C.C.A. 593), but the majority of the Supreme Court differed from this opinion, and adopted the views of the District Court (Carnegie Steel Co. v. Cambria Iron Co., 185 U.S. 403, 22 Sup.Ct. 698, 46 L.Ed. 968). Thereupon the case went to an accounting, and in that proceeding the Carnegie Company did not ask for damages, but demanded profits alone. As the principal question, both below and here, is, By what standard should the profits be computed? we may pause to consider the established rule on this subject.

Of course, such an inquiry always seeks to ascertain how much money the infringer has made by the use of the patented process; but the problem is not fully stated in so general a form, since this may leave out of account the infringer's right to use whatever is open to the world. The state of any art usually presents much that may be freely used, and if these devices can do substantially the same work, if they can produce the same result that is accomplished by the process in question, a patentee cannot complain if the earlier methods be adopted. What he has done is to contribute something to an existing stage of development, and therefore an infringer is liable, not for the profit made by his use of what is already free to the world, but only for the profit made by the use of the patentee's contribution. But it must always be borne in mind that in order to compare processes accurately they must be such as produce the same, or practically the same, result. Speaking generally, the object of any process is to produce something to be sold or used. Nobody practices a process for the mere satisfaction of taking the steps required; at the end, he desires a foreseen result, and if the thing produced be inferior in quality or less adapted for use than the thing produced by the patented process, the comparison is not satisfactory. Under such circumstances the cheaper cost of the inferior article is not decisive. Certainly it would not be fair to say that, because an infringer might have produced an inferior unpatented article more cheaply, his possible profit in so doing should measure the amount of his liability, although he had really gained a larger sum by producing the superior article protected by the patent. A court is more concerned with actual facts than with contingencies.

These rules are scarcely open to question. In Mowry v. Whitney, 81 U.S. (14 Wall.) 621, 20 L.Ed. 860, the Supreme Court said:

'The question to be determined in this case is: What advantage did the defendant derive from using the complainant's invention over what he had in using other processes then open to the public and adequate to enable him to obtain an equally beneficial result? The fruits of that advantage are his profits. They are all the benefits he derived from the existence of the Whitney invention. It is found that there were other processes by which the inherent strain caused by unequal cooling could be, and was prevented, counteracting which strain was the sole object of the complainant's invention, and a car wheel could be prepared for similar service, valuable in the market, and salable at a price not less than was obtained for those which the defendant manufactured. The inquiry then is: What was the advantage in cost, in skill required, in convenience of operation, or marketability, in bringing car wheels by Whitney's process, from the condition in which they are when taken hot from the molds to a perfected state, over bringing them to the same state by those other processes, and thus rendering them equally fit for the same service? That advantage is the measure of profits.'

And in Tilghman v. Proctor, 125 U.S. 136, 8 Sup.Ct. 894, 31 L.Ed. 664, the Supreme Court used the following language in speaking of the profits for which an infringer must account:

'The infringer is liable for actual, not for possible, gains. The profits, therefore, which he must account for, are not those which he might reasonably have made, but those which he did make by the use of the plaintiff's invention, or, in other words, the fruits of the advantage which he derived from the use of that invention over what he would have had in using other means then open to the public and adequate to enable him to obtain an equally beneficial result. If there was no such advantage in his use of the plaintiff's invention, there can be no decree for profits.'

See, also, Sessions v. Romadka, 145 U.S. 29, 12 Sup.Ct. 799, 36 L.Ed. 609.

The object of the Jones patent is the mixing of molten metal from a blast furnace in such a manner that, as successive charges of the mixture are furnished to a Bessemer converter to be transformed into steel, they shall change their composition and other characteristics so gradually that for practical purposes each charge shall be substantially uniform with its immediate predecessor. And the object is accomplished; the result is that a better and a more uniform steel is produced. The molten metal does not cool after leaving the blast furnace, and this method of producing steel is therefore properly called 'direct.' Other direct methods had previously been used, but these had not been successful. We need not pass upon the Steel Company's contention that the Supreme Court has by necessary inference excluded the direct process in any of its varieties from use as a standard of comparison. For present purposes we may assume that this process was still open to consideration after the case was sent back for the purpose of taking the account; but we do not think the conclusion can be avoided that the court did express a definite opinion about the merits, and therefore the availability, of this process. A few quotations will show clearly that the earlier methods were considered, and were declared to produce an inferior result:

Page 424 of 185 U.S., page 706 of 22 Sup.Ct. (46 L.Ed. 968): 'While all (these prior devices) contemplate the reservoir between the blast furnaces and the converters, such reservoir is used for storage and for such incidental steps toward uniformity as the necessary mixing of the different products of the blast furnace would lead to, while in none of them is there a provision for supplying and withdrawing from the mixer such quantities of metal at a time, and the retention of a considerable quantity of metal in the reservoir, as a necessary prerequisite to that uniformity of product which was recognized as the great desideratum and was the constant effort of manufacturers to secure. Granting that some of these devices may have been made use of to carry out the Jones process, none of them in practical operation, seems to have been effective to secure the desired result. * * * '

Page 425 of 185 U.S., page 707 of 22 Sup.Ct. (46 L.Ed. 968): 'To enable the Jones process to be successfully carried out it is necessary: (1) That the intermediate reservoir or mixer should be of large size, 'say 100 tons' capacity; (2) that it be covered to prevent the access of cold air from without; (3) that it be provided with a stop, so that it may not be tilted so far as to be emptied of its contents; (4) that a quantity of molten metal, so large as to absorb all the variations of the product of the blast furnace received into it and thus to unify the metals discharged into the converters, be constantly retained in it. None of the prior patents or processes to which we are referred meets these requirements. Indeed, it is scarcely too much to say that none meets more than one of them. When we add to this that none of them was ever used, or was ever susceptible of being used, without material alteration, to carry out the Jones process, it is evident that the defense of anticipation by prior patents rests upon a slender foundation.

'Certain discussions, reported in the Journal of the British Iron and Steel Institute, are relied upon as embodying a description of the Jones process. Running through all these discussions there is the same idea of the difficulties experienced in the practical carrying out of the direct process by reason of the want of uniformity in the different products of the blast furnaces, and the possibility of remedying this and thereby doing away with the expense of remelting the pig iron in cupolas by a mixture of such products in a reservoir intermediate the furnaces and converters; but the dominant idea of the Jones patent, of maintaining a permanent and large quantity of molten metal in the mixer for that purpose does not seem to have occurred to...