Ellicott Machine Corp. v. Wiley Manufacturing Co.
| Decision Date | 07 March 1969 |
| Docket Number | Civ. No. 17176. |
| Citation | 297 F. Supp. 1044 |
| Parties | ELLICOTT MACHINE CORPORATION v. WILEY MANUFACTURING COMPANY, Frank J. Shebby and Nathaniel E. Insley. |
| Court | U.S. District Court — District of Maryland |
Donald W. Farrington, Lynn L. Augspurger and McNenny, Farrington, Pearne & Gordon, Cleveland, Ohio, and William A. Grimes and Ober, Williams & Grimes, Baltimore, Md., for plaintiff.
David E. Varner, Edward M. Prince and Cushman, Darby & Cushman, Washington, D. C., and Benjamin C. Howard and Miles & Stockbridge, Baltimore, Md., for defendants.
Plaintiff, Ellicott Machine Corporation (Ellicott), a Maryland corporation, is the leading manufacturer of portable dredges, that is, dredges composed of several sections which can be shipped overland and assembled on the shore of the lake or other body of water where they are to work, and when the work is completed, disassembled, shipped to a new site and reassembled there. In November 1950 C. F. Kaufmann, plaintiff's chief engineer, applied for and in January 1956 was granted U. S. Patent No. 2,731,741 for a portable dredge with specified features which enable it to be assembled in the water, thus permitting the heavy pump and power unit to be installed in the center section at the factory. Kaufmann assigned Patent '741 to Ellicott.
Defendant Wiley Manufacturing Company (Wiley) is a Delaware corporation, having its principal place of business and shipyard at Port Deposit, Maryland, on the Susquehanna River, where it manufactures various types of vessels and hulls. In late 1964 and early 1965 it manufactured a portable dredge, the Betty M, for defendant Frank J. Shebby, a Maryland citizen, and assembled it on the banks of the Gunpowder River at Joppatowne, Maryland, where Shebby used it in performing a contract with the developers of Joppatowne.
In the early part of 1964, because of a strike at the Ellicott plant, Wiley had built for Ellicott the hulls and some other components for two dredges, and had completed the assembly of a third dredge, installing equipment manufactured by Ellicott. The contract for that work included an appropriate provision for the protection of any trade secrets of Ellicott's disclosed to Wiley.
In the last days of February 1964, while Wiley was performing that contract, defendant Insley, a salesman of portable dredges for Ellicott, left Ellicott's employ. Shortly thereafter he sought employment by Wiley and was engaged to make a market survey of the feasibility of Wiley's manufacturing and selling portable dredges in competition with Ellicott, AMMCO and Dixie, the other principal manufacturers of portable dredges in the eastern United States. In the middle of May 1964, Insley was engaged by Wiley to head its new dredge division. In June 1964, Ted Jacks, who had been employed by Ellicott as a draftsman until he was laid off in January 1964, was employed by Wiley as an engineer. Jacks, with assistance from Insley and Wiley's engineering staff, prepared preliminary designs for a line of portable dredges, and prepared the working drawings for the Betty M, the portable dredge which Wiley manufactured for Shebby.
Count I of the complaint herein charges Wiley and Shebby with infringement of Patent '741.
Count II charges Wiley with unfair competition, misappropriation and use of Ellicott's trade secrets, and inducing Insley to disclose Ellicott's trade secrets to Wiley.
Count III charges Wiley with breach of its contract with Ellicott, by using in the manufacture of the Betty M and otherwise the trade secrets which Ellicott had disclosed to Wiley for the purposes of that contract.
Count IV charges Insley with unfair competition and wrongful disclosure to Wiley of Ellicott's trade secrets and other confidential information.
In November 1967 Ellicott filed an amended complaint charging Wiley in Count V with infringement of Ellicott's alleged common law trademark Sandpiper, and in Count VI with infringement of Ellicott's copyrights on two business forms. In November 1967, the Court granted Wiley's motion for summary judgment on Counts V and VI, without prejudice to Ellicott's offering evidence of copying of those business forms for whatever bearing such copying might have on the unfair competition and trade secret counts. The Court reserved ruling on Wiley's claim for an award of attorneys' fees for defending against those two counts.
Defendants denied all charges made by Ellicott,1 and Wiley filed a counterclaim for damages, alleging that Ellicott brought this action in bad faith, without hope of recovery, and with the primary purpose of harassing and damaging Wiley.
The Court has jurisdiction of the patent claim under 28 U.S.C. § 1338(a), and has jurisdiction of the claims asserted against Wiley in Count II under 28 U.S.C. § 1338(b), as amended June 25, 1948, which provides: "The district courts shall have original jurisdiction of any civil action asserting a claim of unfair competition when joined with a substantial and related claim under the copyright, patent or trademark laws."2
The Court also has ancillary jurisdiction of Count III3 and of the counterclaim.4
The Court does not have jurisdiction of the claim asserted in Count IV against Insley, since no claim under the patent laws was asserted against him.5
In November 1967 the Court and counsel examined at Crisfield, Maryland, the several sections and machinery of the Betty M, which had been repossessed by Wiley, disassembled and transported overland to Insley's new shipyard at Crisfield. During that examination Ellicott's counsel made his opening statement, and took a number of photographs. On the first day of the trial, April 29, 1968, the Court and counsel examined on a lake near Cedarville, New Jersey, the Big Bear, a portable dredge manufactured by Ellicott for Pennsylvania Glass Sand Company. During that examination Wiley's counsel made his opening statement and took a number of photographs. In addition to the photographs, many documents were offered in evidence, and both sides introduced factual and expert testimony.
Rulings on findings of fact proposed by the respective parties have been made and filed. This opinion will include only such facts as are necessary to understand the conclusions of law stated herein.
Ellicott relies on Claims 1 and 2 of Patent '741, which read:
A. Defendants contend that those claims are invalid (1) for lack of novelty,6 and (2) for failure to meet the non-obvious requirement for patentability set forth in 35 U.S.C. § 103.7
B. Defendants further contend that Claims 1 and 2 of the patent in suit are not infringed by the accused dredge Betty M on the ground that it would be impossible to assemble the Betty M in the water in accordance with the teachings of the patent, and therefore that "the Betty M differs in structure, function and mode of operation from, and does not operate in the same way with the same means to secure the same result as, the teachings of the patent in suit".
Ellicott concedes that portable dredges were not new in 1950; it also concedes that the several elements contained in Claims 1 and 2 are all old. Ellicott argues, however, that the combination of those elements produces a new and useful result—a portable dredge which can be assembled in the water—which is patentable under 35 U.S.C. § 101.8
For the reasons stated below, this Court agrees with that contention, if, but only if, the claims be narrowly construed to require that the teachings of the patent be followed strictly, so that the dredge can in fact as well as in theory be assembled in the water.
This conclusion is supported by the applicable legal principles, by the specifications in Patent '741, and by the file wrapper or prosecution history of that patent in the Patent Office.
The controlling principles are fully discussed in two recent and important decisions of the Supreme Court, Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), and United States v. Adams, 383 U.S. 39, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966). In the Adams case the Court said: "While the claims of a patent limit the invention, and specifications cannot be utilized to expand the patent monopoly, * * * it is fundamental that claims are to be construed in the light of the...
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