Campbell v. Mueller

• Decision Date: 03 February 1947
• Docket Number: No. 10237,10238.,10237
• Citation: 159 F.2d 803
• Parties: CAMPBELL et al. v. MUELLER et al. MUELLER et al. v. CAMPBELL et al.
• Court: U.S. Court of Appeals — Sixth Circuit

159 F.2d 803 (1947)

CAMPBELL et al. v. MUELLER et al. MUELLER et al. v. CAMPBELL et al.

Nos. 10237, 10238.

Circuit Court of Appeals, Sixth Circuit.

February 3, 1947.

John J. Mahoney, of Columbus, Ohio (John J. Mahoney, of Columbus, Ohio, of counsel; Corbett, Mahoney & Miller, of Columbus, Ohio, on the brief), for Campbell and others.

F. O. Richey, of Cleveland, Ohio (F. O. Richey and H. F. McNenny, both of Cleveland, Ohio, on the brief, Richey and Watts, of Cleveland, Ohio, of counsel), for Conrad B. Mueller.

Before HICKS, ALLEN and MILLER, Circuit Judges.

HICKS, Circuit Judge.

Suit by George R. Hunt, patentee, and Conrad B. Mueller, exclusive licensee, against Harold C. Campbell, H. D. Thomas, d. b. a. The Thomas Company, and William E. Ginovan, d. b. a. Ginovan Poultry Market, for infringement of Patent No. 2,300,157, issued to Hunt October 27, 1942, for "Feather-Picking Apparatus for Fowls. * * *"

The principal defenses were, invalidity, and non-infringement. A counterclaim by appellants Thomas and Campbell asserting an implied license to the patent, was withdrawn. Although not specially pleaded, appellants relied upon the defense of unclean hands by reason of alleged knowledge by appellees of perjury committed by Campbell in Interference Proceedings involving Hunt, Campbell and others; and further relied upon an alleged attempt of appellees through their licensing arrangements to fix prices and control unpatented articles in violation of the anti-trust laws and in abuse of the patent laws.

Claims 2, 3, 7, 10, 12, 14, 16, 17 and 19 were in suit. Of these, the court held Claims 2, 3, 7, 10 and 17, for apparatus, and Claims 12, 14 and 19 for a "Finger" valid and infringed by plaintiffs' Exhibit 16. It held Claim 16 for a method, invalid. It found that appellees did not come into court with unclean hands and concluded that the license agreements under the Hunt patent were not in restraint of trade or in violation of the anti-trust laws, and did not constitute an abuse of the patent right or an attempt to control re-sale prices or to interfere with the exercise of any rights of purchasers of the patented machines, and were not contrary to the public interest. Hence these appeals by appellants and appellees' cross-appeal from the decree on Claim 16.

Unclean Hands.

The facts as to the averment that appellees concealed Campbell's perjury in Interference No. 78,955 relative to the dates of the first drawing or embodiment of his invention of a Chicken Picker or Cleaner, seem to sift down as follows:

Campbell, in his preliminary statement in the Interference proceeding, declared that the first drawing of his invention was made in February 1935. Hunt disclosed a later date in 1938. It is now conceded that Campbell's date was falsified and that his embodiment was in late 1939 or early 1940, after he had seen a mechanical picking machine made by Hunt.

Nevertheless, in anticipation of the issuance of a patent to himself, Campbell entered into a licensing agreement with the Ashley Machine Company and became a stockholder therein. Campbell soon sold out his interest, with the understanding that he would receive an additional $5000.00 if the Interference was successfully contested. He subsequently concluded that he had been induced by fraud to sell his interest in the Ashley Company and determined because of the "raw deal" he thought he had received, to disclose to opposite parties to the Interference that his filing dates were wrong.

Accordingly, he got in touch with Barker of the Barker Equipment Company, at Ottumwa, Iowa, who through Mueller, the licensee, was a sub-licensee of Hunt. There were several meetings, one in Chicago about ten days later, on August 11, 1941, attended by Barker, Mueller, Campbell and Bair, attorney for Barker Equipment Company, whereat Campbell "told them some of our filing dates I had found was wrong" and signed an affidavit declaring that the dates set forth in his preliminary statement were "erroneous." This was followed by a meeting in Cleveland at which were present Campbell, Mueller and his attorney Douglass, Frye, representing Hunt, Thomas, one of the defendants, McKinley of the Ashley Company, and Biebel, attorney for McKinley and the Ashley Company, at which meeting the Ashley people were confronted with Campbell's repudiating affidavit.

Biebel testified that he made an independent investigation and was convinced that the dates in Campbell's preliminary statement were not true and that as a consequence his clients "defaulted" on the main issue counts of the Interference and relied upon Campbell's narrow claims for fingers upon which Patent No. 2,302,525 eventually issued to him. A consent judgment in favor of Hunt, the senior party to the Interference, was entered on August 21, 1942.

Appellants base the charge of unclean hands upon the assertion that appellees had knowledge of Campbell's perjury which they did not disclose to the patent office nor to a district attorney. Appellees answer that they knew only that the dates were erroneous and not that they were falsified, until the second pretrial deposition just before the trial of the case. This knowledge was very promptly called to the attention of the District Court in the opening statement of appellees' counsel. On this question of knowledge by appellees of the falsity of the dates, there is only the testimony of Campbell, that they did know of the falsity. His testimony was that at the Chicago meeting he offered to give the information that the dates were wrong if they would pay him $5000.00, that he told them there that the dates were wrong, and that he knew they were wrong (although on cross-examination he stated that he told them the dates were wrong but not that they were false); that Bair, Barker and Mueller said they would give him only $2000.00 and not the $5000.00 asked for, that he thought Mueller said this; that after he signed the affidavit they said they couldn't pay him because, as Bair stated, they were afraid the court might hold them for tampering with a witness.

Against this was the testimony of Biebel, that at the Cleveland meeting when confronted with the affidavit, he asked if they paid Campbell anything for it; that Douglass answered "No," that Frye answered "No," and that Mueller said "No, we did not as much as buy him a meal." On the question whether Douglass had said that Campbell had given "false dates" he testified that he did not know whether they used the words "false" or "incorrect."

Bair's testimony was that Campbell never actually asked for money, although he left that implication. He admitted that they told Campbell they would not pay him but denied that any one said that they could not pay him until they knew what he had to offer. Bair further testified that Campbell said he had "found an error and we talked error all the time. That was all. Nobody talked or suggested or hinted that he had known that his dates were false at the time * * * he signed the preliminary statements." On cross-examination he testified that Campbell left the impression upon him that it was "just an ordinary mistake."

Frye, attorney for Hunt, testified that he learned of the Campbell affidavit by letter from Bair, dated August 12, 1941, that he called Mueller by phone in Cleveland to learn whether any compensation of any kind had been paid, and that Mueller said, there had not, either by him, Bair or Barker. He further testified that at the Cleveland meeting when Biebel "in spontaneous outburst" asked Campbell, "What did they give you for this, referring to the affidavit. Campbell's answer was `Nothing.'"

Mueller testified that at the Chicago meeting, Campbell stated some of the dates in the preliminary statement were in error, and that at no time did he ask for money or intimate that he wanted money; that Campbell said he had discovered certain errors, and that what he had signed in the applications "was done more or less from memory," and that he was clearing his conscience.

Barker was ill and did not testify.

The court was the judge of the credibility to be given these contradictory witnesses and we cannot say that his conclusion that appellees did not come into court with unclean hands was "clearly erroneous." Rule 52, Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. Upon the evidence we think he could not have found otherwise.

Licensing Agreements.

The charge that appellees' license agreements constituted contracts in restraint of trade has two separate bases. Hunt by a contract signed February 14, 1940 made Mueller his exclusive licensee to manufacture, use and sell or have manufactured the feather picking apparatus disclosed in his application and Mueller agreed to pay him a 5% royalty. This agreement was modified on December 17, 1940 by permitting Mueller to grant sub-licenses. On February 1, 1941, Mueller granted to Barker Poultry Equipment Company (in a contract in which Hunt joined) "a non-exclusive license to manufacturer, use and sell apparatus embodying the inventions" and it was agreed that this license to Barker would be "the only license granted under the * * * applications or patents for the use of those inventions in automatic apparatus. * * *" (Italics ours.) Subsequently on August 12, 1942, Mueller, joined by Hunt, entered into a non-exclusive agreement with the Ashley Machine Company "to manufacture, use and sell manually operated apparatus * * *" embodying the invention. (Italics ours.) Appellants particularly point to the second paragraph of Clause 1 of that agreement, which we quote in its entirety: "The parties understand and agree that this license is limited to manually operated apparatus and that it does not extent to or include automatic apparatus, that is, apparatus wherein a conveyor or other non-manual (sic) is used to convey fowls into contact with the feather picking apparatus and Ashley specifically agrees that it will not make or sell such...