Chicago Pneumatic Tool Co. v. Hughes Tool Co.

• Decision Date: 07 August 1945
• Docket Number: No. 463.,463.
• Citation: 61 F. Supp. 767
• Parties: CHICAGO PNEUMATIC TOOL CO., et al. v. HUGHES TOOL CO.
• Court: U.S. District Court — District of Delaware

61 F. Supp. 767

CHICAGO PNEUMATIC TOOL CO., et al. v. HUGHES TOOL CO.

No. 463.

District Court, D. Delaware.

August 7, 1945.

William F. Hall, of Washington, D. C., and Raymond G. Mullee, of New York City, and William S. Potter (of Southerland, Berl & Potter), of Wilmington, Del., for plaintiffs.

George I. Haight (of Haight, Goldstein & Hobbs), of Chicago, Ill., Robert F. Campbell and Lester B. Clark (of Andrews, Kelley, Kurth & Campbell), both of Houston, Tex., and Arthur G. Connolly, of Wilmington, Del., for defendant.

LEAHY, District Judge.

This is an action containing three counts and based on the Anti-Trust Laws,¹ the Patent Laws² and the Declaratory Judgment Act.³ Defendant filed a consolidated motion to strike portions of the complaint, to dismiss the three counts, or for summary judgment as to counts 1 and 2.⁴

Count 1. Plaintiffs allege the parties manufacture rotary bits for drilling oil wells. Defendant in 1933 sued plaintiff, Chicago Pneumatic Tool Company of Massachusetts,⁵ in the United States District Court for the Western District of Oklahoma for selling bits manufactured by Chicago Pneumatic Tool Company of New Jersey,⁶ charging infringement of Scott and Wellensiek patent No. 1,647,753 owned by defendant. Defendant procured an injunction and a Master was appointed to take an accounting. The Tenth Circuit affirmed. 97 F.2d 945, certiorari denied 305 U.S. 643, 59 S.Ct. 146, 83 L.Ed. 415. Defendant Massachusetts alleges that the claims there in suit were for a drill-bit assembly, although defendant's theory of the case was that claims 2, 3, 4 and 5 were on cutters per se. It is urged that under the recent decisions of Mercoid Corporation v. Mid-Continent Investment Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376, and Mercoid Corporation v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 64 S.Ct. 278, 88 L.Ed. 396, a claim for a combination is not infringed by a sale of one element of the combination; and the injunction and accounting ordered in Oklahoma, on the basis of that contributory infringement suit, is an approval of a misuse of the patent and is therefore in violation of the Anti-Trust Laws. The relief sought under count 1 is for injunction against further proceedings in the Oklahoma case; that defendant be enjoined from further violations of the Anti-Trust Laws and be required to pay treble damages; and that defendant be enjoined from bringing suit anywhere on patent No. 1,647,753.

If the count's purpose is to seek a retrial of the issues adjudicated by the Tenth Circuit, the count will be rejected. The Oklahoma court first acquired jurisdiction. It decided the issues between the parties. Awaiting a final report from its Master, it still retains jurisdiction of the subject matter of the controversy between the parties.⁷

The major point in this count is the effect of the Mercoid decisions. If affirmance by the Tenth Circuit Court of Appeals of the decree in defendant's favor is to be considered a violation of the Anti-Trust Laws, then plaintiffs are required to journey to that forum in order that that Court may correct its own error. As long as its decree remains in force it retains jurisdiction. It is unknown in our federal system for the District Court of Delaware, say, to emasculate a decree of the Tenth Circuit because what the latter Court thought the law to be in 1938, on the doctrine of contributory infringement, has now proved to be error in the light of what the Supreme Court said the law was on January 3, 1944.

Plaintiffs' contention is that the Mercoid decisions have made it law that the grant of a patent is a special privilege, to be narrowly confined to the subject matter of its claims; and that a claim for a combination is not infringed by the sale of one of the elements of the combination, less than the whole number recited in the patent claim, even though a single element may constitute the nub of the invention (the advance in the art) and even though such part might have been sold for the intentional purpose of being associated with another part or parts to form the combination recited in the claims; in short, that the patent law, now, no longer recognizes contributory infringement. We hesitate to adopt plaintiffs' point that Mercoid "announced * * * that should an injunction, or an accounting, be decreed for `contributory infringement' it would amount to approval of a misuse of the patent and a violation of the Anti-Trust Laws." Although there were some of us who ventured to suggest that the law of contributory infringement was not rejected in toto by the Mercoid decisions,⁸ a postreading of the government's brief, filed as amicus curiae in the Mercoid cases, prompts the suggestion that such skillful and learned presentation might well have been persuasive and it may be the doctrine of contributory infringement is no longer with us.⁹ A reading of these two cases at first led us to believe that when it was stated "The controversy centers around the license agreement"¹⁰ the rule of decision was when the patent owner by improper licenses extends the patent monopoly he is to be held as misusing his grant and violates the Anti-Trust Laws; or, he is rejected when he attempts to enforce the patent grant where he has unclean hands. It may be the tortfeasor, who aids and abets the direct infringer, is no longer called upon to exculpate himself in the courtroom. Clearly, the current emphasis is not on what is meant by "property" in a patent. Mr. Justice Holmes' semantic definition of "property" seems apt — "You cannot give it definiteness of contour by calling it a thing. It is a course of conduct * * * subject to substantial modification according to time and circumstances both in itself and in regard to what shall justify doing it a harm."¹¹ The latest announcement at hand states: "The primary purpose of our patent system is not reward of the individual but the advancement of the arts and sciences. Its inducement is directed to disclosure of advances in knowledge which will be beneficial to society; it is not a certificate of merit, but an incentive to disclosure." Sinclair & Carroll Co. v. Interchemical Corporation, 65 S.Ct. 1143, 1145. What proprietary interest — its metes and bounds — rests in a patent owner seems at the present writing to be difficult to define. Critical re-examination of the original constitutional purposes of the patent laws and suggested procedures for their administration have so far not come to fruition. See TNEC, Mon. No. 31, Patents and Free Enterprise, p. 145 et seq.

In the interim, as to the case at bar, the conclusion is the Supreme Court has not, so far, rejected the doctrine as applying to a "straight" contributory infringement suit where there are no licenses or other tie-ins and no evidence of intention to extend the grant in violation of the Anti-Trust Laws, If there is implicit in the Mercoid cases a complete abandonment of the doctrine, then it is preferred to have the Third or Tenth Circuits make such interpretation.

Plaintiffs' theory supporting their cause of action contained in count 1 is that the devices under consideration in the Oklahoma proceedings were drill-bit assemblies and did not involve simply a cutter alone. Unless plaintiffs are correct and the District Court and the Tenth Circuit Court of Appeals were considering a combination, the violation of the Anti-Trust Laws argument must fail. Patent No. 1,647,753 is entitled a "drill cutter"; the claims claim cutters. The Circuit Court of Appeals, 97 F.2d 945, 947, refers to "conical cutters"; but in one instance, at least, there is reference to "one element in the combination covered by the patent is cutters" etc. Whether plaintiffs' infringement of defendant's patent was direct or contributory, should be left for the determination of the Courts in the Oklahoma proceeding, when plaintiffs seek — as they should seek if they are convinced of their cause — the cancellation of the decree on the basis of the law they urge is found in the Mercoid decisions.

No extended discussion will occur on argument that res adjudicata doctrine can not apply to the instant case because the decision of the Tenth Circuit Court of Appeals and the decision of the District Court does not constitute a final judgment. Where substantial rights of parties have been adjudicated and nothing remains but the ascertainment of the amount of award plaintiff should receive, the decree adjudicating the rights of the parties is regarded as the final decree. Victor Talking Machine Co. v. George, 3 Cir., 69 F.2d 871. Moreover, an action for declaratory judgment cannot be maintained for the veiled purpose of relitigating questions as to which a former judgment is conclusive. 154 A.L.R. 743.

Count 2. This count likewise seeks declaratory judgment relief. It contends the Master in the Oklahoma proceeding assumed to be included within the reference and considered not only two-cone bits but three-cone bits as examples of infringing devices. After argument, over objection, the District Court sustained the ruling of the Master. The prayers under this count seek findings, here, that the threecone bits do not infringe patent No. 1,647,753, i.e., that such devices are not properly within the reference issued by the District Court in Oklahoma; that if the threecone bits are construed to come within the patent then Scott and Wellensiek is invalid; that defendant ought to be restrained from asserting the three-cone bits come within the patent; that further proceedings before the Oklahoma Master with respect to this item should be restrained.

As just stated, declaratory judgment remedy is not available to a party concerning matters already adjudicated. 154 A.L.R. 743. If plaintiffs think error has been committed by the Master and the District Court in permitting the three-cone bits to be included within the reference, such error is subject to review by appeal to the Tenth Circuit Court of Appeals. At most, inclusion...