CLEMENTS INDUSTRIES v. A. Meyers & Sons Corp.

• Decision Date: 14 April 1989
• Docket Number: No. 87 CIV 3971 (LBS).,87 CIV 3971 (LBS).
• Citation: 712 F. Supp. 317,12 USPQ 2d 1874
• Parties: CLEMENTS INDUSTRIES, INC. and Ben Clements & Sons, Inc., Plaintiffs, v. A. MEYERS & SONS CORP., Defendant.
• Court: U.S. District Court — Southern District of New York

712 F. Supp. 317

12 USPQ 2d 1874

CLEMENTS INDUSTRIES, INC. and Ben Clements & Sons, Inc., Plaintiffs, v. A. MEYERS & SONS CORP., Defendant.

No. 87 CIV 3971 (LBS).

United States District Court, S.D. New York.

April 14, 1989.

Blum Kaplan, New York City (Lawrence Rosenthal, of counsel), for plaintiffs.

James and Franklin, New York City (Harold James, of counsel), for defendant.

OPINION

SAND, District Judge.

On March 9, 1988, in an Opinion with which full familiarity is assumed, this Court held that there was no meeting of the minds on April 20, 1983, when the parties purported to enter into a settlement agreement of litigation then pending before Judge Milton Pollack of this Court. Accordingly, the settlement agreement was set aside. The parties engaged in further discovery and have now tried to the Court a host of patent, trademark, unfair competition, antitrust and other issues. The parties have agreed that all matters in controversy between them are now ripe for adjudication except issues relating to damages and applications under Rule 11 and other provisions for costs and sanctions.

The issues resolved by this Opinion, which sets forth the Court's findings of facts and conclusions of law pursuant to F.R.Civ.P. 52(a), are the following:

I. Whether, as plaintiffs assert, the defendant's sale of its Super Sabre tag attachment having a round or full-moon paddle infringes claims 6 and 7 of U.S. Patent No. 4,347,932; whether, as defendant asserts, said patent is invalid in its entirety, void and unenforceable against defendant; or whether said patent was obtained as a result of inequitable conduct. Defendant concedes that if the patent is valid, defendant is an infringer. Subsequent to the commencement of this litigation, plaintiffs disclaimed claim 5 of the Patent. Plaintiffs do not claim that claims 1-4 have been infringed, but defendant asserts the validity of these claims is also at issue.

II. Whether defendant's importation and sale of various tag attaching guns (Pioneer, KW-2000, Laser, Lozio, Target Tagger, and certain guns with no identification of manufacturer or source) should be enjoined as embodying or being confusingly or deceptively similar to the registered shape of the Clements' tag attaching gun (Reg. No. 1,424,615). Whether said trademark registration is invalid and should be cancelled.

III. Whether defendant's use of a fan-shape depiction of tag attachments in advertising and promotional material constitutes unfair competition or misappropriation of any right of the plaintiffs. Whether defendant's advertising claims that the "Super Sabre full moon" attachment was the "first designed to avoid tag switching" and that such attachments "have a Unique Half-Moon designed button in 2" and 3" lengths" constitute false advertising injurious to plaintiffs.

IV. Whether plaintiffs, in conjunction with an Italian attachment gun manufacturer (Lozio), have interfered tortiously with defendant's rights, violated the Sherman and Clayton antitrust laws of the United States and committed acts of unfair competition.

All other issues raised by the parties and embodied in the pretrial order signed on December 29, 1988 relate to damages, costs or sanctions and have been deferred to a later stage of these proceedings. The statement of facts not in dispute as set forth in said pretrial order is adopted and incorporated by reference herein.

We address the issues raised seriatim.

BACKGROUND

As we noted in our March 9, 1988 Opinion, both parties are engaged in the business of importing and selling tag attaching systems. Such systems constitute a significant aspect of plaintiffs' business and a relatively minor portion of defendant's business. The relations between the parties are acrimonious. The causes of this acrimony are varied. For example, Plaintiffs believe that defendant persists in resisting plaintiffs' litigation claims because defendant's litigation costs, unlike plaintiffs', are reimbursed by insurance. Although this and other like bones of contention between the parties have no relevance to the issues in this case, they furnish some insight into the reason why so many claims have been made in this litigation and pursued with a vigor which often appears disproportionate to their commercial significance.

DISCUSSION

I. Patent Issues

In response to plaintiffs' patent infringement cause of action, defendant contends that the patent-in-suit, and each of the claims thereof, is invalid because of prior art. For the patent to be valid, the invention must meet the statutory requirements of utility, novelty and non-obviousness. 35 U.S.C. §§ 101-103. Defendant has argued that anticipation or obviousness preclude a finding of novelty. Based on the facts before us, we find that claims 1-4 of the Clements patent are not novel because of obviousness and claims 6 and 7 are not novel because of anticipation.¹

Defendant has met its required burden of proving the facts establishing the patent's invalidity by clear and convincing evidence. American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1360 (Fed.Cir.), cert. denied, 469 U.S. 821, 105 S.Ct. 95, 83 L.Ed.2d 41 (1984). The usual presumption of patent validity, 35 U.S.C. § 282, is here significantly undercut because the applicant erroneously advised the Patent Examiner that certain prior art did not involve clips but rather, contained only single attachments. Further, it appears that applicant's assertion to the examiner that it could not furnish samples of other alleged prior art because the prior patent was never exploited commercially was also erroneous even if made in good faith.²

The prior art at issue is an attachment device developed by Dennison in the 1960's. It enables price tags to be attached to garments before sale to the public by means of a tagging gun. Each fastener contains a thin strip of plastic filament with a small transverse bar (perpendicular to the filament) at one end and a round paddle at the other.

Plaintiffs assert that the Dennison device was never commercially marketed and that the exhibits introduced at trial appear to be crude non-production models. We reject this claim. The deposition of the inventors, who were Dennison employees, satisfies us that the production and marketing of this device was an event which in fact occurred and was regarded by the inventors as a memorable occasion.

Dennison developed and marketed the device at a time when the state of the art did not include the concept of stretching the filament after removal from the mold to enhance flexibility. Thus, Dennison used a round paddle at a time when tangling was not a serious concern. Subsequent to Dennison's development of the device, Dennison patented (and later disclaimed) the stretching process. Increased flexibility increased the tangling problem. By this time the industry was using other shapes for the end of the filaments, and Dennison attempted to deal with the tangling problem by connecting the paddle ends in each clip with thin plastic. These connected paddles created other problems, however, such as requiring an additional motion by the operator and leaving a protuberance where the connector was broken which sometimes caused snagging.

Clements' claimed invention is the use of a half-moon shape on the flexible filament as an anti-tangling device. Plaintiffs admit in their Summary of the Invention that the Dennison fasteners constitute prior art but state that their invention removes the above-mentioned drawbacks of the prior art.

Plaintiffs assert that the shape of its paddle, a "continuously arcuate slope," in combination with the thinner filament, prevents the jumbling of the fasteners and the enlarging of the tag hole and constitutes a patentable improvement. Yet these alleged structural improvements must fail. The arcuate shape of the paddle, even if we read the word "convex" into the claim as plaintiff urges, has not been shown to prevent tangling any more effectively than a paddle with straight edges. (Deposition of Mr. Furutu at 98). Clements' illustrations depict paddles with both curved edges and straight edges, and the wording of the patent expresses no preference for straight or curved edges. The patent does not claim that straight edges will tend to enlarge the tag hole and continuously arcuate edges will not, and there is no evidence that this is so.

As for the improvement on the filament, we look to claim 7 of the patent which refers to the filament by stating "wherein said filament is flexible." If there is to be an improvement on the filament, it would have to come from the word "flexible" alone since this is the only description of the filament in the claims. On this point, plaintiffs urge us to give the term flexibility in claim 7 a broad meaning to encompass the development of more flexible filament since the original Dennison attachment was produced. They cite the liberal interpretation given to the term by the court in Harrington Manufacturing Co., Inc. v. White, 475 F.2d 788 (5th Cir.1973), in support of their position. In that case, the term "flexible interconnection device" was given a broad meaning to encompass a rigid device among more flexible ones because all of the devices were intended to be covered by the patent. However, as defendant contends, adherence to Harrington produces a result opposite to that desired by plaintiffs. Such a reading means that the Dennison attachments, though not as flexible as later models, would also have to be considered flexible and would necessarily negate Clements' asserted improvement. Even without reading the claim broadly, the single word "flexible" is insufficient to distinguish the filament from the Dennison filament.

Moreover, plaintiffs' interpretation is belied by the patent's Summary of the Invention wherein it is stated that the improvement over the prior device comes from the "funnel-like shape of the paddle in which as the center portion of the edge...