Duplan Corp. v. Deering Milliken, Inc., Civ. A. No. 71-306.
| Decision Date | 29 July 1977 |
| Docket Number | Civ. A. No. 71-306. |
| Citation | 444 F. Supp. 648 |
| Parties | The DUPLAN CORPORATION, et al., Plaintiffs, v. DEERING MILLIKEN, INC., Deering Milliken Research Corporation, Moulinage et Retorderie de Chavanoz, Ateliers Roannais de Constructions Textiles, and ARCT, Inc., Defendants. |
| Court | U.S. District Court — District of South Carolina |
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Paul B. Bell, Charles B. Park, III, John J. Barnhardt, III, of Bell, Seltzer, Park & Gibson, Charlotte, N. C., and Fletcher C. Mann of Leatherwood, Walker, Todd & Mann, Greenville, S. C., for Burkyarns, Inc., The Duplan Corp., Frank Ix & Sons Virginia Corp., Jonathan Logan, Inc., Lawrence Texturing Corp., Schwarzenbach Huber Co., United Merchants & Mfrs., Inc.
David L. Foster, Allan Trumbull, Michael C. Lambert, Richard A. Van Dusen of Willkie, Farr & Gallagher, New York City, for The Duplan Corp. and Lawrence Texturing Corp.
John W. Malley, William K. West, Jr., Lawrence A. Hymo, W. Warren Taltavull of Cushman, Darby & Cushman, Washington, D. C., and O. G. Calhoun, Jr., of Haynsworth, Perry, Bryant, Marion & Johnstone, Greenville, S. C., for Burlington Industries, Inc., National Spinning Co., and Leon Ferenbach, Inc.
McNeill Smith, Michael R. Abel of Smith, Moore, Smith, Schell & Hunter, Greensboro, N. C., and David Rabin, Greensboro, N. C., for Texfi Industries, Inc., Dixie Yarns, Inc., Reliable Silk Dyeing Co., Inc., Spring-Tex, Inc., Blanchard Yarn Co., Inc., and Olympia Industries, Inc.
David Rabin, Greensboro, N. C., for TexElastic Corp. and Hemmerich Industries, Inc. Paul, Weiss, Rifkind, Wharton & Garrison, Morgan, Finnegan, Pine, Foley & Lee, New York City, Butler, Means, Evins & Browne, Spartanburg, S. C., for Chavanoz S. A. (formerly Moulinage et Retorderie de Chavanoz), Milliken Research Corp. (formerly Deering Milliken Research Corp.) and Milliken & Co. (formerly Deering Milliken, Inc.); Simon H. Rifkind, Jay H. Topkis, Jay Greenfield, Cameron Clark, Victoria G. Traube, Howard S. Veisz, Granville M. Pine, Harry C. Marcus, Kurt E. Richter, Eugene Moroz, John F. Sweeney, New York City, of counsel.
Arthur O. Cooke of Cooke & Cooke, A. Wayland Cooke, Greensboro, N. C., for ARCT, Inc.
Brumbaugh, Graves, Donohue & Raymond, Granville M. Brumbaugh, James N. Buckner, Granville M. Brumbaugh, Jr., New York City, for ARCT-France.
This patent-antitrust litigation consisting of thirty-seven separate actions consolidated for purposes of trial has been tried to the court without a jury on the liability issues only, and in this memorandum of decision the court will record its findings of fact and conclusions of law in compliance with Rule 52(a), F.R.Civ.P. Jurisdiction is based on 28 U.S.C. §§ 1331, 1332, 1337, 1338, 2201 and 2202.
The first of the many complaints involved here was filed in the Spartanburg Division, United States District Court for the District of South Carolina, on August 8, 1968, as Case No. 68-705. In this original suit Deering Milliken Research Corporation (DMRC) and Moulinage et Retorderie de Chavanoz (Chavanoz) sought recovery of royalties alleged to be due by Textured Fibres, Inc., as a sub-licensee of DMRC which in turn was the exclusive use-licensee in the United States of certain apparatus and process patents issued to Chavanoz in the United States and relating to the false twist texturing of synthetic yarns.1 Similar suits were thereafter instituted by DMRC and Chavanoz against various other textile manufacturers (Throwsters) engaged in the yarn texturing business.
On November 25, 1969, the Duplan Corporation instituted in the United States District Court for the Southern District of New York the first of a series of actions by the Throwsters against DMRC and Chavanoz attacking the validity of the Chavanoz patents and asserting claims under the antitrust laws. Joined as defendants with DMRC and Chavanoz in these Throwster actions were Deering Milliken, Inc. (DMI), of which DMRC is a corporate subsidiary, Ateliers Roannais de Constructions Textiles (ARCT-France), a French manufacturer of textile machinery, and ARCT, Inc., a corporate subsidiary of ARCT-France organized under the laws of North Carolina for the purpose of selling in the United States the textile machinery manufactured by ARCT-France and embodying the Chavanoz patents. These actions by the Throwsters were followed by countersuits and counterclaims by DMRC and Chavanoz for unpaid royalties and patent infringement.
At that time the thirty-seven actions were pending in the federal courts in South Carolina, North Carolina, Virginia and New York. After treatment by various United States District Courts and a Panel on Multi-District Litigation all of the cases, which by this time involved generally the same basic issues of unpaid royalties, patent validity and infringement, patent misuse and alleged antitrust violations, were consolidated in the District of South Carolina in 1971 as Civil Action No. 71-306. The thirty-seven actions are listed in Appendix B attached hereto.2
Assigned originally to the Honorable Donald Russell, these cases were re-assigned to the Honorable Robert W. Hemphill of the District of South Carolina upon Judge Russell's elevation to a seat on the Court of Appeals for the Fourth Circuit in 1971. Thereafter Judge Hemphill assumed charge of the litigation, held numerous hearings, ruled on innumerable motions involving procedural, evidentiary and summary judgment matters and personally presided over the taking of a massive volume of deposition testimony in this country and in France. A summary of the previously-reported rulings and decisions in the case is attached as Appendix C.
The prodigious work of Judge Hemphill is summarized in a footnote to one of his decisions, Duplan Corporation v. Deering Milliken, Inc., 400 F.Supp. 497 at page 502 (D.S.C.1975). That case was concerned with a recusal motion filed by counsel for DMRC, DMI and Chavanoz which after characteristically careful and painstaking consideration Judge Hemphill denied. The decision was not appealed. Because of the press of other duties (see 400 F.Supp. at page 526, Footnote 159) Judge Hemphill thereafter asked to be relieved from further duties in this litigation, and the same was assigned to this writer.
Pre-trial conferences were held at Raleigh, North Carolina, on March 26 and June 4, 1976. The Throwsters who were aligned in interest on one side of the case were designated as plaintiffs and the parties opposing the Throwsters, DMRC, DMI, Chavanoz, ARCT-France and ARCT, Inc., were designated as defendants and will be so referred to during the course of this memorandum. The trial which was commenced at Rock Hill, South Carolina, on June 14, 1976 consumed ninety-one trial days and with periodic recesses was concluded on February 11, 1977.
The plaintiffs are companies, or divisions of companies, whose businesses involve the processing of synthetic filament yarns in order to make them suitable for a wide variety of end uses. Each plaintiff is a corporation organized and existing under the laws of the state indicated below and conducts its principal texturing activities in the city indicated:
State of Principal Place
Plaintiff Incorporation of Business
Blanchard Yarn Company, Inc. Delaware Whitakers, N. C
Burlington Industries, Inc. Delaware Greensboro, N. C
Burkyarns, Inc. North Carolina Valdese, N. C
Dixie Yarns, Inc. Tennessee Stanfield, N. C
The Duplan Corporation Delaware Winston-Salem, N. C
Frank Ix & Sons Virginia Corporation New Jersey Charlottesville, Va
Hemmerich Industries, Inc. Pennsylvania Denver, Pa.
Jonathan Logan, Inc. Delaware Spartanburg, S. C.
Lawrence Texturing Corporation (Division of Duplan) Lillington, N. C.
Leon-Ferenbach, Inc. Pennsylvania Johnson City, Tenn.
Madison Throwing Company (Division of Burlington) Madison, N. C.
National Spinning Company, Inc. New York Washington, N. C.
Olympia Industries, Inc. Delaware Tuscaloosa, Ala.
Reliable Silk Dyeing Company, Inc. New York New York, N. Y.
Schwarzenbach-Huber Company New Jersey Luray, Va.
Spring-Tex, Inc. North Carolina Gibsonville, N. C.
Texelastic Corporation North Carolina High Point, N. C.
Texfi Industries, Inc. Delaware Lumberton and New Bern,
N. C.
United Merchants & Manufacturers, Inc. Delaware Cartersville, Ga. and
South Carolina
The defendants opposing the Throwster plaintiffs are the following parties:
1. DMRC is a South Carolina corporation and is a wholly-owned subsidiary of DMI. It is the successor to Deering Milliken Research Trust, and its newly-acquired corporate name is Milliken Research Corporation. Under a license agreement with Chavanoz, DMRC is the exclusive use licensee see in the United States and Canada of the right to use the Chavanoz patents in suit and the right to grant sublicenses.
2. DMI is a Delaware corporation which maintains a place of business in New York, but its headquarters and much of...
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