Diamond International Corporation v. Walterhoefer

Decision Date21 October 1968
Docket NumberCiv. A. No. 14510.
Citation289 F. Supp. 550
PartiesDIAMOND INTERNATIONAL CORPORATION, a corporation of Delaware v. Harry C. WALTERHOEFER, Jr., William C. Walterhoefer and John A. Walterhoefer, trading as Harry C. Walterhoefer & Sons, and Packaging Corporation of America.
CourtU.S. District Court — District of Maryland

John W. Avirett, 2d, Piper & Marbury, Baltimore, Md., Karl W. Flocks, Sheridan Neimark, Washington, D. C., Sumner S. Kittelle, Willkie, Farr, Gallagher, Walton & FitzGibbon, New York City, for plaintiff.

John Henry Lewin, Venable, Baetjer & Howard, Baltimore, Md., Arthur A. Olson, Jr., James R. Dowdall, and Thorley Von Holst, Pendleton, Neuman, Seibold & Williams, Chicago, Ill., for defendants.

R. DORSEY WATKINS, District Judge.

This is an action brought by Diamond International Corporation (by change of name from Diamond National Corporation, assignee of the patent in suit, and hereinafter sometimes "plaintiff") against Harry C. Walterhoefer, Jr., William C. Walterhoefer, and John A. Walterhoefer, trading as Harry C. Walterhoefer & Sons (distributors) and Packaging Corporation of America (manufacturer), hereinafter defendants or PCA, for alleged infringement of United States Patent 2,990,094 (Reifers '094) issued June 27, 1961, on a continuation of a copending application filed December 16, 1953, which in turn was a continuation-in-part of an application filed May 24, 1952, and abandoned, for a "Molded Pulp Egg Carton." The patent in question is a product patent.

The progress of the various patent applications was tortuous and protracted, and the patent was allowed only after the Board of Appeals had overruled the disallowance by the Examiner of Claim 23 (later Claim 25, and Claim 1 of the patent as issued). The procedure in this court might be similarly characterized.1

Nor has PCA been niggardly in its defenses as to validity, infringement and enforceability. It asserts invalidity under 35 U.S.C. sections 101, 102, 103 and 112; absence of invention because of contemporaneous development of a similar locking device; misrepresentations to the Patent Office and to the Board of Appeals; file wrapper estoppel; abandonment at time of public use; violation of section 2 of the Sherman Act by fraudulently obtaining the patent in suit and an attempt thereby to obtain power to exclude competition; and an attempt to monopolize a distinct relevant market in molded pulp egg cartons.

Defendants also filed a counterclaim for a declaration of invalidity and non-infringement; and after the decision in Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 1965, 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247, filed an amended counterclaim adding two paragraphs to their original counterclaim and seeking therein a dismissal of the principal suit on grounds of unenforceability of the patent because of unclean hands and patent misuse, including violation of section 2 of the Sherman Act.

Background.

Whatever may be the correct answer to the question of "which came first, the chicken or the egg?", at all times relevant herein, there were millions of hens, and millions of dozens of eggs. The practical question was: "How can these eggs be commercially transported, either to their ultimate destination, or to points of distribution?"

The chief commercial containers for the transportation of eggs were either paperboard (cardboard) or molded pulp containers or separators in which some thirty dozen eggs would be packed in a single container, separated by "egg flats" and egg "filler flats." Then began the manufacture of egg cartons, in which a dozen eggs would be placed in a container, packed thirty cartons to a container. The competition between paperboard cartons and molded pulp cartons was, and continued to be, severe, their sales being split roughly 50-50 as of the time of trial. Each needed to be automatable as to loading. Each had certain advantages and disadvantages. The paperboard carton would better accept ink and advertising material; it could be closed by staple, glue or cord; but it did not accord maximum protection to the eggs, and was not readily adapted to re-use. The molded pulp carton was much more readily susceptible to cell formation designed to support and protect the eggs, but it was relatively brittle, and presented problems of closure similar to the paperboard cartons. Flaps or lugs were difficult to automate, and tended to break or bulge. In general, no satisfactory automatable locking had been developed prior to Reifers '094 in a molded pulp carton.

In several instances a compromise had been sought to be effected, a molded carton being placed in a paperboard "sleeve" or container. Moreover, "tri-fold" molded cartons had been developed, in which a flange connected to the cover portion contained extensions to be inserted in apertures in the tray portions of the containers.

In general, locking devices for molded pulp cartons had proceeded on the basis of frictional closure by placing a flap between the lower container, or tray portion, of the carton and the contained eggs, the eggs together with the spring action of the flap being relied upon to cause a locking; or tabs,2 usually in the upper, or cover, portion of the carton were inserted in slots or openings in the front of the tray portion. Some suggestions had occurred in paper patents that the lugs could be placed on a flanged portion attached to the tray and inserted into the cover portion. Variations as to whether the cover portion should be cellular or non-cellular (planar) also existed.

At the time the Reifers alleged invention was conceived, the most nearly commercially satisfactory molded carton was one which combined the physical structure of Cox Patent 2,771,233, issued November 20, 1956 on an application filed June 21, 1950, with the Sherman "Tab-Lock", Patent 2,587,909, issued on March 4, 1952 on application filed February 17, 1947. Cox '233 contained quite satisfactory egg cell formations in the tray, to which a flange was attached, and a non-cellular cover, with a flexible front side. The Sherman tab-lock had a tab-receiving opening between the cells in the bottom (tray) section, and an extension from the cover section with a locking tab for insertion into the opening in the bottom section.

Efforts to secure effective locking devices in molded pulp cartons had been the subject of numerous efforts by many inventors, including Cox, president of plaintiff, and others, to be mentioned in specific discussion of the prior art.

Where a tab or lug device, as distinguished from a frictional one (or adhesives, or staples, or string) was relied upon, in general the male member was on the cover, or a flange thereof, and the female member was in the tray. In these, and in the few instances in which the flange and male member were attached to the tray, and the female member was in the cover, the entry was always directed from the outside in.

When Reifers was employed by plaintiff, he was given two assignments, one of which was to design a satisfactory lock for a molded pulp egg carton. He had had no experience in the field of egg cartons, but had shown substantial ingenuity in the field of packaging containers. Without study of the prior art, but with a background of extensive practical experience in packaging, in about five months3 he developed the product on which the patent in suit issued. His testimony as to the production of a working model, its disclosure and recordation of invention, is in the Court's opinion entirely satisfactorily supported by the evidence.

In substance, he took the Cox '233 patent, placed the male members (nobs, or lugs) on the flange hinged to the tray, the thrust of said male members being directed from the inside out, and inserted receiving notches (holes, female members) in the front wall of the cover portion. This permitted easy filling, by having the tray portion completely open, with the flange extended outwardly, and an easy closing by then pressing in the flange and rotating the cover over it. Upon release, the flange would spring outwardly, securely locking the cover; protecting the eggs; permitting release of the cover without harming the eggs, and also the opening, removal of some of the eggs, and manual reclosing. Simple — beautifully simple; and so obvious in the view of 20-20 hindsight vision; and so completely missed previously by those "skilled in the art."

Moreover, simplicity, far from being an objection to invention, "may constitute its great excellence and value." Chesapeake & Ohio Railway Co. v. Kaltenbach, 4 Cir. 1938, 95 F.2d 801, 804; "* * * some of the simplest advances have been the most non-obvious." Van Veen v. United States, Ct.Cl.1966, 151 USPQ 506; Webster Loom Company v. Higgins, 1882, 15 Otto 580, 105 U.S. 580, 591, 26 L.Ed. 1177; Eastern Rotocraft Corp. v. United States, Ct.Cl.1966, 150 USPQ 124; Refractolite Corporation v. Prismo Holding Corporation, 2 Cir. 1941, 117 F.2d 806, 807; "It only remains now for the wisdom which comes after the fact to teach us that * * * Reifers discovered nothing, invented nothing, accomplished nothing." (Carnegie Steel Co. v. Cambria Iron Co., 1901, 185 U.S. 403, 446, 22 S.Ct. 698, 715, 46 L.Ed. 968).

The claims in question read as follows:

"1. In an integral and nestable egg carton made of relatively flexible molded pulp, a cellular tray portion having a front side, a rear side, and two ends, an inverted dished cover hinged to said tray portion, means for latching said tray portion to said cover with a latch located above said tray portion and extending completely through said cover from the inside to the outside, said tray portion having its front side strongly tied to its rear side by a plurality of spaced cell-forming partitions extending generally parallel to said tray portion ends, said partitions acting as means for preventing spreading of said front side from said rear side, said tray portion
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