Dictograph Products Company v. Sonotone Corporation

• Decision Date: 02 February 1956
• Docket Number: Docket 23716.,No. 137,137
• Citation: 230 F.2d 131
• Parties: DICTOGRAPH PRODUCTS COMPANY, Inc., Appellant, v. SONOTONE CORPORATION, Emil Henry Greibach and S. Michael Pineles, Appellees.
• Court: U.S. Court of Appeals — Second Circuit

230 F.2d 131 (1956)

DICTOGRAPH PRODUCTS COMPANY, Inc., Appellant, v. SONOTONE CORPORATION, Emil Henry Greibach and S. Michael Pineles, Appellees.

No. 137, Docket 23716.

United States Court of Appeals Second Circuit.

Argued December 9, 1955.

Decided February 2, 1956.

Rehearing Denied March 28, 1956.

Joseph M. Callahan, Theodore F. Tonkonogy, New York City, Mark F. Hughes, H. Bartow Farr, Jr., New York City, of counsel, for appellant.

Charles H. Tuttle, New York City, for appellees.

Breed, Abbott & Morgan, New York City, for appellee Sonotone Corp.

John E. Fetzer, New York City, for appellee Emil Henry Greibach.

George J. Mintzer, New York City, for appellee S. Michael Pineles.

Before HAND, SWAN and FRANK, Circuit Judges.

Rehearing Denied March 28, 1956. See 231 F.2d 867.

HAND, Circuit Judge.

The plaintiff appeals from a judgment of Judge Ryan, summarily dismissing its amended complaint upon the merits. Included in the appeal are a number of other orders whose correctness it will not be necessary to consider, because we hold that the amended complaint was properly dismissed on the merits. The jurisdiction of the court was based upon diversity of citizenship, and in substance the complaint, including the exhibits which it annexed, together with the affidavits disclosed the following situation. On June 29, 1933, one, Koch, filed an application in the Patent Office for a "hearing aid apparatus"; on August 25, 1933, one, Nicholides, filed another application for a similar apparatus, and on November 11th of the same year the defendant Greibach filed a third application. On August 31, 1934, the Patent Office declared an interference between certain claims prepared by the defendant, Pineles, upon these applications. Koch assigned his invention to the plaintiff; Nicholides assigned his to the Sonotone Corporation, and Greibach gave an exclusive license to the Sonotone Corporation. In October, 1934, Koch moved to dissolve the interference as to Nicholides and Pineles consented. Hence, the situation after October of 1934 was that the interference was only between Koch and Greibach. On February 11, 1936 the examiner of interferences awarded priority to Greibach, and on October 5, 1936 the Board of Appeals of the Patent Office affirmed the examiner's decision. Koch took an appeal to the United States Court of Customs and Patent Appeals and while it was pending the plaintiff and the Sonotone Corporation, on May 7, 1937, entered into a contract under which, in the event of an award of the invention to either party upon a final decision of the interference proceeding, the successful party would give to the other a non-exclusive license, for which the licensee would pay one dollar for every "bone receiver" sold. On the same day, Sonotone Corporation, for a gross sum paid, agreed to grant an exclusive license to the plaintiff under an existing patent, which, so far as appears, had nothing to do with the invention in question. On May 31, 1938, the United States Court of Customs and Patent Appeals affirmed the decision of the Board of Appeals and in due course Patent No. 2,127,468 issued on this decision. Koch v. Greibach, 96 F.2d 843, 25 C.C.P.A., Patents, 1168.

Two questions were decided in the interference proceeding: one, that Greibach's invention was prior to Koch's, the other, which is not raised on this appeal, that Greibach had not lost his right to a patent through delay. The decision of the first issue turned substantially altogether upon two physical exhibits, one of which, "No. 11," bore the date "V.10.32," and the other, "No. 14," bore the date "9-4-32." Koch claimed that the original years on both of these had been "33" and that Greibach had fraudulently changed them to "32." On the interference proceeding Koch swore that one, Nowak, who had been in the employ of plaintiff until no later than March 1933, was familiar with "all the development work" in the plaintiff's factory, and that every instrument discovered there was "always demonstrated" to him. Koch also swore that one, Benway, approached him in October or November, 1932, and came to the factory with Nowak. On his own behalf Greibach testified that in March, 1933, Benway called on him and explained to him that he was negotiating with people who promised to have "a bone conduction vibrator" ready in a short time, the designing of which Benway asked Greibach whether he would undertake. Greibach said he would, and Benway told him that the people with whom he was dealing — Nowak and Ring — were both Vice-Presidents of the plaintiff. Shortly thereafter, Benway, Nowak and Ring came to Greibach's home and he told them that he could manufacture a "vibrator" without external contacts. Nowak at the time said that the plaintiff had something of the same kind. Sometime in March, 1933, Nowak and Ring discussed with Greibach the cost of developing some new instruments, but the three apparently decided nothing, for Nowak and Ring left, telling Greibach that they would see him later. After another interview Nowak disappeared. At no time had he discussed the design of the plaintiff's vibrator with Greibach; he had merely spoken of his intention of starting a new "hearing aid company." Thus Greibach denied that he had ever got from Nowak and Ring any knowledge of the invention, or had appropriated it, fraudulently ante-dating his exhibits, so as to ante-date his conceded interviews with Nowak and Ring.

The complaint alleged that in the summer of 1950 the plaintiff for the first time learned of facts which would have resulted in a decision in favor of Koch in the interference proceeding. These were set out in an affidavit of Nicholides, used to defeat a motion by the defendants for summary judgment and are the basis for the action at bar. We quote them in the margin.¹ The relief demanded was that the Greibach patent be annulled, that the Sonotone Corporation refund all the license money paid by the plaintiff, that the Sonotone Corporation and Greibach be enjoined from claiming any rights under the patent, and certain other relief not necessary to set forth. In its brief on this appeal the plaintiff has disclaimed any effort to annul the patent, so that the remaining relief demanded is only for the annulment of the license agreements, a refund of the money paid and other incidental recovery. The action was commenced on October 24, 1950, originally against only the Sonotone Corporation; but on May 25, 1951, Greibach and Pineles were added as parties. An amended complaint was filed on January 8, 1952 and the cause came up on the day calendar on April 11, 1955; and was set for trial on April 25. Some time earlier the defendants had moved before Judge Weinfeld for summary judgment, which he had denied on January 29, 1951. On April 22nd the plaintiff's trial counsel became sick and went to the hospital, and after several adjournments and interlocutory proceedings not necessary to describe, Judge Ryan summarily dismissed the complaint on May 23. It would be necessary to consider these interlocutory proceedings and say whether the dismissal without prejudice for failure to prosecute was justified, were it not that the judgment granted a summary dismissal on the merits, not only, (1), of so much of the complaint as sought to annul the judgment of the United States Court of Customs and Appeals (which, as we have said, the plaintiff in any case has withdrawn), but also, (2), of the license agreements; and, (3 and 4), of the prayer that the Sonotone Corporation refund all payments and pay damages "by reason of alleged acts of the defendants."

The first question is whether Judge Ryan was so bound to follow Judge Weinfeld's denial of the defendants' motion for summary judgment that we must reverse his summary judgment on the merits without considering whether it was right: that is, whether the denial had become "the law of the case," and must be accepted thereafter without re-examination. Is the doctrine described by that phrase an inflexible rule of law, or only a cautionary admonition to be applied when the occasion demands it? The order denying the motion for summary judgment was not appealable, and the consequence of holding that Judge Ryan was forbidden to reconsider it, would be that, if the judgment of dismissal because of failure to prosecute was wrong, yet the complaint should have been dismissed on the merits, the defendants would be compelled to suffer the loss of time and money involved in a trial that from the outset was unnecessary. No one will suggest that the first judge himself may not change his mind and overrule his own order, so that the basis of the doctrine can only be that there are reasons why the second judge may not do so that do not exist when the first does. We can think of only two such reasons: (1) the second judge should defer to the rule of the first as a matter of mutual respect between members of the same court; (2) if he does not so defer, the defeated party may shop about in the hope of finding a judge more favorably disposed. The first reason is clearly untenable; judicial sensibilities should play no part in the disposition of suitors' rights. The second reason has indeed much to recommend it, and, as a matter of practice, has been universally regarded a sufficient reason for treating the first ruling as conclusive. It is, however, quite another question whether under all circumstances it makes the first ruling immune from reconsideration. As we view it, the question is in substance the same as that which arises when an appellate court upon a second appeal is faced with an earlier decision of its own, especially if the earlier decision happens to be that of a different panel of judges. The second panel has unquestioned power — "jurisdiction" — to deviate from the first, but as a matter of practice it rarely does so; and there is more reason to refrain than if two different actions are involved, when the only question is whether to...