Freeman v. Altvater

• Citation: 129 F.2d 494
• Decision Date: 08 September 1942
• Docket Number: No. 12241.,12241.
• Parties: FREEMAN et al. v. ALTVATER et al.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

129 F.2d 494 (1942)

FREEMAN et al. v. ALTVATER et al.

No. 12241.

Circuit Court of Appeals, Eighth Circuit.

July 15, 1942.

Rehearing Denied August 24, 1942.

Order Denying Rehearing Vacated September 8, 1942.

Marston Allen, of Cincinnati, Ohio (Allen & Allen, of Cincinnati, Ohio, Bruninga & Sutherland and John H. Sutherland, all of St. Louis, Mo., on the brief), for appellants.

Edmund C. Rogers and Lawrence C. Kingsland, both of St. Louis, Mo. (Estill E. Ezell and Kingsland, Rogers & Ezell, all of St. Louis, Mo., on the brief), for appellees.

Before GARDNER, WOODROUGH, and JOHNSEN, Circuit Judges.

Order Denying Rehearing Vacated September 8, 1942. See 130 F.2d 763.

GARDNER, Circuit Judge.

This was a suit brought by appellants as plaintiffs against appellees, seeking specific enforcement of a license agreement under reissue United States patent No. 20,202, issued to Benjamin W. Freeman December 8, 1936, upon an application filed October 30, 1936, for a cut-out machine for shoe uppers, and to enjoin defendants from making and selling flat bed dies and masks, more particularly the so-called clamp gauge dies and elevated gauge dies. An accounting was also sought. The parties will be referred to as they appeared in the trial court.

By supplemental bill plaintiffs alleged that since the filing of their original bill the subject matter of the suit became covered by reissue patent 20,202, issued on the surrender of its patent No. 1,681,033, and that the reissue patent had been submitted to defendants and accepted by them as a substitute for the original patent No. 1,681,033. Defendants denied the validity of the reissue patent, denied that they had accepted it as a substitute for the original patent, denied that the accused dies manufactured by them infringed the reissue patent, pleaded that by disclaimer plaintiffs had been evicted from the monopoly granted by their original patent, thus terminating the contract between plaintiffs and defendants. They pleaded affirmatively that plaintiff Benjamin W. Freeman filed a suit in the United States District Court for the District of Massachusetts, against Premier Machine Company, Freeman v. Premier Mach. Co., 11 F.Supp. 761, alleging infringement of twenty-six claims of plaintiffs' original patent; that such proceedings were had in said suit that the United States Circuit Court of Appeals for the First Circuit adjudged that twenty-three of the twenty-six claims, including claims 13 and 17 herein sued upon, were held invalid, and that three claims, 18, 70 and 81, were held valid but restricted to certain limited scope; that following the decision in Premier Machine Co. v. Freeman, 1 Cir., 84 F.2d 425, and by reason thereof, plaintiff Benjamin W. Freeman filed a disclaimer in the United States Patent Office. By amendment during the trial defendants pleaded that the leases and licenses of plaintiffs were an attempt to monopolize unpatented dies and machines, thus precluding them from maintaining this suit because of their unclean hands.

On the trial on the issue of specific performance, plaintiffs limited their charges to the complaint that defendants had sold certain flat bed dies coming within claim 6 of the reissue patent. The court made elaborate and detailed findings of fact and conclusions of law, finding, among other things, that the accused devices consisting of certain flat bed cutting dies for use in forming decorative patterns in shoe upper material, did not infringe plaintiffs' reissue patent; that the decision in the Premier case evicted Freeman from any claim to a patent monopoly on a machine and any claim to a monopoly on the so-called anvil type of die holder, and that the reissue patent was devoid of patentable subject matter; that the decision limited claim 6 to a clamping mask and die with a window shaped to correspond to the outline of the stitched pattern of the perforations to be made, or corresponding in size and shape to the pattern of the decoration to be perforated, and that the mere use of a window in a clamping plate was not invention, nor was the use of a straight or curved edge on a clamp for gauging purposes invention; that plaintiffs had entered into license and lease agreements involving the patent in suit, which attempted to monopolize and limit competition in unpatented dies and masks, and that such contracts were in existence at the time of the trial; that the original contract between the parties to this litigation was based upon the original Freeman patent No. 1,681,033; that said patent was surrendered and expired December 8, 1936, thus terminating the original contract; that defendants, since the date of reissue have paid certain royalties upon the original patent; that they are under an injunction in the first Freeman v. Altvater suit to pay such royalties, but that they protested payment in correspondence with plaintiffs and by numerous legal actions, so that they have not indicated any acceptance of the reissue to form a new contract; that Freeman's disclaimer of all claims held invalid in the Premier suit constituted an abandonment of the subject matter of such claims and he had retained claims not definitely distinguishable from the claims held invalid; that the reissue did not accord with the findings of the court in the Premier case, but were in disregard of the disclaimer.

Based on its findings and conclusions, the court adjudged that the accused devices did not infringe the reissue patent; that the license contract between the parties was terminated December 8, 1936, the date of the reissue patent, and that since that time no new contract had been entered into; that Freeman was evicted from the monopoly of his patent by the decision in Premier Mach. Co. v. Freeman that the original patent became invalid upon Freeman's disclaimer; that the complaint and supplemental complaint be dismissed. Other facts will appear in the course of the opinion.

On appeal plaintiffs seek reversal on substantially the following grounds: (1) the acts of defendants were such as to revive the contract in suit as of December, 1936, after the reissue patent was tendered by plaintiffs to defendants; (2) defendants, being licensees, can not attack the validity of the patents under which they are licensed; (3) in considering infringement by the licensees operating under the protection of the patent, the construction of the patent claims should be generous in order to result in the licensor being recompensed for what he has given up; (4) the reissue patent is valid; (5) the doctrine of unclean hands is not applicable to plaintiffs.

Plaintiffs brought a similar suit against defendants in 1930, asking specific performance of a contract, an injunction against infringement, and an accounting. The trial court denied relief and on appeal we reversed. Freeman v. Altvater, 8 Cir., 66 F.2d 506, 507. Freeman's original patent No. 1,681,033, issued April 14, 1928, covered a cut-out machine for shoe uppers. In January, 1929, plaintiffs entered into a license contract with the defendants, which granted defendants the right to make and sell within a designated territory, upon payment of royalties, parts known as dies, anvils and masks of the patented machine and permitted them to repair but not to rebuild the machines they had already sold. Within a few days after entering into the license contract, the defendant Altvater placed upon the market a machine known as the "Model T," for which he was granted patent No. 1,807,952 on June 2, 1931, his application being dated January 25, 1929. This court held that defendant Altvater's Model T machine infringed plaintiffs' patented device. Freeman v. Altvater, supra. In that case it was said that, "The important question in this case is whether the Model T machine infringes the Freeman patent. The validity of the patent is not in question, since the defendants, being licensees, are estopped to assert its invalidity." The dies now accused as infringing plaintiffs' patent were not before the court in the prior suit. In the accounting ordered in that suit, plaintiffs presented to the special master these flat bed dies, claiming that they came within the decree. The master, however, held that they were not covered by the decree and consequently plaintiffs brought this suit. In the meantime, the Premier case was decided, resulting in a finding that many of the claims of the original Freeman patent were void. Plaintiffs then disclaimed as to the claims so adjudicated to be void and secured the reissue patent No. 20,202. Plaintiffs then wrote to defendants as their licensees under the prior patent, as follows:

"December 9, 1936. "Western Supplies Company "2920 Cass Avenue "St. Louis, Missouri "Gentlemen:

"We herewith enclose copy of Reissue Letters Patent No. Re. 20,202 and No. Re. 20,203. These, as you will note, are divisions of patent No. 1,681,033, which forms the basis of your license agreement.

"Re. 20,202 relates to dies with masks only, and Re. 20,203, states the invention of the anvil die as a part of a method of shoemaking, which was indicated as the nature of this invention in a recent court decision. A sale of an anvil die without a mask by you will carry with it the right to use it according to this method.

"As we view the matter, the patent situation under which you are licensed is improved by this change and applies to the same dies, and this letter is to advise you that your license will apply in the future to these Reissue patents, instead of the one recited in the license.

"Yours truly "The Louis G. Freeman Company "Benj. W. Freeman"

To this letter defendants made no immediate reply but they continued to send reports of dies sold under the contract and paid the royalties due on the same basis as before and as required by the injunctional order in the original suit. In February, 1937, they requested a conference, due, they said, to complications arising from the result of the Premier Machine Co. suit...