Checkpoint Systems, Inc. v. Knogo Corp.
| Decision Date | 24 March 1980 |
| Docket Number | No. 75 C 1289.,75 C 1289. |
| Citation | 490 F. Supp. 116,207 USPQ 257 |
| Parties | CHECKPOINT SYSTEMS, INC., and I.D. Engineering, Inc., Plaintiffs, v. KNOGO CORPORATION, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Rogers, Hoge & Hills, New York City, by James N. Blair, New York City, Wolf, Block, Schorr & Solis-Cohen by Steven A. Arbittier, and Francis J. Bouda, Philadelphia, Pa., for plaintiffs.
Fitzpatrick, Cella, Harper & Scinto, New York City, by Lawrence F. Scinto, William J. Brunet, New York City, for defendant.
This is an action brought by plaintiffs, Checkpoint Systems, Inc. ("Checkpoint") and I.D. Engineering, Inc. ("I.D."), against defendant, Knogo Corporation ("Knogo"), for infringement of United States Patent No. 3,858,280 (the "280 Patent"). A trial was held in April and May 1979, and the following constitutes the findings of fact and conclusions of law of this Court as required by Fed.R.Civ.P. 52(a).
I.D. is a Massachusetts corporation having its principal place of business at Peabody, Massachusetts. It has been and is in the business of manufacturing, selling and leasing electronic theft detection systems in this country and abroad. I.D. is the owner, by assignment, of the 280 patent.
Checkpoint is a Pennsylvania corporation having its principal place of business in Barrington, New Jersey. It has been and is currently in the business of manufacturing, selling and leasing electronic theft detection systems in this country and abroad. In May 1975 Checkpoint became the exclusive licensee of the 280 patent.
Knogo Corporation is a New York corporation having its principal place of business at Hicksville, New York. Knogo has been and is a leading manufacturer of electronic theft systems since about 1965. Knogo manufactures and supplies magnetically releasable fasteners known as the "Instamatic" fasteners which are used in conjunction with its electronic theft detection system.
This Court has jurisdiction of the parties and the subject matter of the complaint under 28 U.S.C. § 1338(a) and under the Patent Laws of the United States, 35 U.S.C. §§ 100-03, 112, 271, 281, 282 and 285; and venue is properly laid in this District under 28 U.S.C. § 1400(b). The Court's jurisdiction as to defendant's declaratory judgment counterclaim arises under the Patent Laws and under the Declaratory Judgment Act, 28 U.S.C. § 2201.
The electronic theft detection systems supplied by Knogo, Checkpoint and I.D. are used to protect against shop-lifting and similar activity. These systems make use of a device for detecting electrical signals in the region of a doorway or other exit path from a protected area. Special electrical signaling circuits are encased in plastic wafers, and these wafers are fastened to various articles of merchandise. If a person attempts to carry an article of merchandise past the doorway with a wafer attached, signals from its electrical circuit will be detected by the detection device, and an alarm will be sounded. On the other hand, when a legitimate sale is made, the wafer is removed by a salesperson and the merchandise may then be taken past the doorway without setting off the alarm.
This litigation, however, involves only a specific type of fastener for securing the waiver to the protected article. It does not relate to the electronic detecting mechanism for detecting electrical signals, nor does it relate to the electrical signaling devices or the wafers. The fasteners which form the subject matter of this litigation are, in fact, only a small part of the electronic theft detection system.
This action was originally filed on August 8, 1975, alleging that defendant's fastener infringed the 280 Patent. Subsequently, on March 25, 1976, plaintiffs received permission to file a second amended complaint charging that this same fastener infringed another closely related patent, United States Patent No. 3,911,534 (the "534 Patent"). Plaintiffs subsequently filed a disclaimer of the 534 Patent in the United States Patent and Trademark Office (the "Patent Office") and moved to dismiss their cause of action relating thereto.
Defendant filed a cross-motion for an order dismissing with prejudice plaintiffs' second amended complaint in its entirety because of misconduct with respect to the 534 Patent and granting defendant its costs and attorneys' fees and such other and further relief as the Court may deem just and proper. Plaintiffs' motion was granted by Judge Costantino, and decision on defendant's cross-motion was reserved pending trial of plaintiffs' first cause of action, and defendant was granted leave to file its amended answer and counterclaim asserting its "fraud" defense.
The evidence at trial did not establish any intentional misconduct or fraud on plaintiffs' part with respect to the 534 patent. The motion of defendant to dismiss the entire complaint predicated on such misconduct is, therefore, denied. Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965). However, for the reasons indicated below, the Court finds that the 280 patent is invalid and that the complaint must be dismissed.
The 280 patent here in suit was granted on January 7, 1975, in the name of Martin A. J. Martens, as patentee, on an Application Serial No. 307,366 filed November 17, 1972. The general subject matter of the 280 patent is a fastening clip for securing two or more articles together in such a manner that they can be separated only by use of a special tool. In accordance with the 280 patent, the articles secured by the fasteners may be of any type, and the fastener is alleged to have utility as a general fastening device for any use, although the specific use described in the 280 patent for the fastener is in conjunction with an electronic theft detection system.
The fastener of the 280 patent uses a pin, which is pushed through the articles to be fastened together, and a lock assembly, which is pushed over the end of the pin to hold it in place. The lock assembly itself works on the conventional ball-wedge or ball-clutch principle which is found in tietacs, clothesline adjusters, and other fastener applications. In such devices there is provided a hollow cylindrical housing having an inner tapered well formed at one end thereof surrounding the pin. The balls are loosely carried in a retainer, and the retainer is forced by a spring toward the tapered wall of the housing so as to cause the balls to become wedged between the tapered housing wall and the pin, thus locking the pin into the housing.
The alleged departure of the fastener of the 280 patent from the prior art resides in the enclosure of the retainer entirely inside the cylindrical housing so that a special tool, such as a mechanical gripper (Fig. 5 of the 280 patent) or a magnet (Fig. 6 of the 280 patent), is required to be applied to the retainer in order to pull it back and release the balls from wedging engagement with the pin.
The fastener of the 280 patent proved to be unsuitable for commercial use. Fasteners like those described in the 280 patent using a mechanical tool to open them were demonstrated to prospective customers at an Atlanta, Georgia trade show in May 1972 and were found to be unacceptable. Prospective customers easily snapped off or otherwise removed the fasteners from the tags to which they were attached. Because of their unreliability, these fasteners were never manufactured for commercial use.
When confronted with this problem with the fastener, Martin Martens first attempted to make a shortened fastener operable by a mechanical tool. It was at this point that the idea of using magnetism to open the fastener occurred to Martin Martens. Following a series of meetings between Martin Martens, Henry Martens and Jan Vandebunt, a "second generation" fastener was developed that was shorter and entirely covered with a plastic cap. This redesigned fastener, using a plastic housing and a metallic sleeve insert, was first sold by plaintiff I.D. in November 1973. At least one hundred thousand of these sleeve-type fasteners were sold by plaintiff I.D. No application for patent was ever filed by either plaintiff for the sleeve-type fastener.
Plaintiff I.D. encountered problems with its "sleeve-type" fasteners which were due to the retainer malfunctioning in the sleeve and not allowing the balls to move into wedging or locking engagement with the pin. Plaintiff then modified its sleeve-type fastener by shortening the height of the metallic sleeve insert by one-half in order to create a "third generation" fastener. The fasteners with the shortened insert were referred to as "ring-type" fasteners in order to distinguish them from the earlier "sleeve-type" fasteners. These ring-type fasteners form the subject matter of the 534 Patent, which has since been disclaimed.
Plaintiffs have relied upon claims 1, 3 and 4 of the 280 Patent, which read as follows:
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