Capri Jewelry Inc. v. Hattie Carnegie Jewelry Enterprises, Ltd., 750

• Decision Date: 26 May 1976
• Docket Number: No. 750,D,750
• Citation: 539 F.2d 846
• Parties: CAPRI JEWELRY INCORPORATED and Tancer & Two, Inc., Plaintiffs-Appellees, v. HATTIE CARNEGIE JEWELRY ENTERPRISES, LTD., Defendant-Appellant, and Bill G. James, Defendant. ocket 75-7604.
• Court: U.S. Court of Appeals — Second Circuit

Page 846

539 F.2d 846 191 U.S.P.Q. 11 CAPRI JEWELRY INCORPORATED and Tancer & Two, Inc.,
Plaintiffs-Appellees,
v.
HATTIE CARNEGIE JEWELRY ENTERPRISES, LTD., Defendant-Appellant,
and
Bill G. James, Defendant. No. 750, Docket 75-7604. United States Court of Appeals,
Second Circuit. Argued April 21, 1976.
Decided May 26, 1976.

Page 847

Robert E. Isner, New York City (Nims, Howes, Collison & Isner, and Kenneth R. Umans, New York City of counsel), for defendant-appellant Hattie Carnegie Jewelry Enterprises, Ltd.

Morton Amster, New York City (Amster & Rothstein, New York City of counsel), for plaintiffs-appellees Capri Jewelry Incorporated and Tancer & Two, Inc.

Before FRIENDLY, HAYS and MESKILL, Circuit Judges.

FRIENDLY, Circuit Judge:

Defendant Hattie Carnegie Jewelry Enterprises, Ltd. (Hattie Carnegie) appeals from an order of the District Court for the Southern District of New York in an action brought against it by two distributors of costume jewelry, Capri Jewelry Incorporated (Capri) and Tancer & Two, Inc. (T&T).

Hattie Carnegie has been licensed ¹ by Bill G. James, a resident of California who was named as a defendant but has not been served, to make or have made for it color-change rings under James' Patent No. 3,802,945 (the Patent), entitled "Heat Sensitive Novelty Device." The special appeal of these rings is that changes in temperature activate a change in the color of the transparent "stones"; there is no contention, however, that James invented the basic material having this property, which is commercially available. On September 19, 1975, when plaintiffs were in the process of obtaining orders for their own color-changing rings for the Christmas trade, Hattie Carnegie caused to be published in Women's Wear a notice reproduced in the margin. ² Eight days later Hattie Carnegie's attorneys sent Gimbel's department store a telegram asserting that "the 'personality ring'

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now being sold by you" infringed the Patent; two days later the attorneys confirmed this in a letter and wrote that unless they obtained immediate assurance of discontinuance of sales, they would take "prompt and stringent action . . . ." No such assurances having been given, James and Hattie Carnegie, on October 2, 1975, brought an action in the Southern District against Gimbel's for patent infringement; they were represented by the same counsel who appear for Hattie Carnegie in this case. The bringing of the action was reported in Women's Wear for October 3. Although Gimbel's rings had been purchased from another supplier, they were manufactured by the same firm that manufactured T& T's rings, and were identical to them. As a result of the article in Women's Wear, T&T was advised by Macy's on October 3 that, unless indemnified by T&T, it would not sell T&T's Personality Ring and would recall an advertisement scheduled for October 5; T&T gave such indemnity.

On September 25, T&T had obtained an opinion of counsel that the Personality Ring did not infringe the Patent, which was also thought to be of "doubtful validity"; T&T made this opinion available to Hattie Carnegie's counsel on October 6, without result. Thereupon Capri and T&T brought this action on October 8. ³ They sought, inter alia, a declaration that the Patent was invalid or, alternatively, was not infringed by their rings, an injunction against further threats or the prosecution of actions charging infringement, and damages for unfair competition.

Under the Southern District's Individual Assignment Plan the case was assigned by rotation to Judge Conner, who had been a leading patent lawyer. ⁴ Along with the complaint Hattie Carnegie's counsel were served with notice of a hearing before the judge at 2:00 p. m. that afternoon, October 9, on plaintiffs' demand for discovery to facilitate their moving for summary judgment. At the request of Hattie Carnegie's counsel the hearing was adjourned until the morning of Friday, October 10. The judge then expressed doubt whether the case was suitable for summary judgment but stated he would give plaintiffs an immediate trial on the issue of infringement. He directed plaintiffs' attorneys to furnish defendant's counsel with specimen rings and instructed the latter to state their position with respect to infringement on October 14. Capri submitted samples of two rings; T&T of one. Defendant conceded that one of Capri's rings did not infringe and a partial consent judgment was entered to that effect; it continued to assert that the other Capri ring and the T&T ring, which were substantially identical, did infringe. Taking out-of-town engagements of defendant's counsel into account, the judge set the trial for October 23.

Prior to trial the judge had studied the Patent, the history of its prosecution in the Patent Office, and a prior art patent, which, as will be seen below, had figured in the prosecution, as well as proposed findings of fact and conclusions of law which the parties had submitted as required by the judge's standing order a course which, far from being censurable as defendant claims, was a commendable effort by the judge to educate himself on what was to come before him. Before the trial began the judge spoke to both counsel separately in an effort to promote a settlement; defendant's counsel claims that the judge advised that on the basis of his study of the incontrovertible documents mentioned above, he was going to find non-infringement, and suggested the advisability of counsel's settling the case on a basis whereby, in return for defendant's conceding this, plaintiffs would withdraw their damage

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claim. ⁵ At the beginning of the trial the judge referred to these conferences and remarked that since defendant's counsel were unable to get in touch with their client, they would prefer to go to trial. Defendant's counsel asked that a patent lawyer whom they proposed to call as "a patent expert" be heard first. The judge stated that he would...