General Electric Co. v. Refrigeration Patents Corp.

• Decision Date: 08 March 1946
• Docket Number: Civil Action No. 2601.
• Parties: GENERAL ELECTRIC CO. v. REFRIGERATION PATENTS CORPORATION.
• Court: U.S. District Court — Western District of New York

65 F. Supp. 75

GENERAL ELECTRIC CO. v. REFRIGERATION PATENTS CORPORATION.

Civil Action No. 2601.

District Court, W. D. New York.

February 19, 1946.

Rehearing Denied March 8, 1946.

COPYRIGHT MATERIAL OMITTED

William I. Morey, of Buffalo, N. Y., (Charles H. Walker and Fish, Richardson & Neave, all of New York City, of counsel), for plaintiff.

Max D. Farmer, of Buffalo, N. Y. (Watson, Bristol, Johnson & Leavenworth, Leonard A. Watson, Lawrence Bristol, and Elmer R. Helferich, all of New York City, of counsel), for defendant.

KNIGHT, District Judge.

This is a suit for a declaratory judgment that claim 11 of the Bronaugh and Potter Patent No. 2,056,165, owned by the defendant, is invalid, and if valid, is not infringed by a product contemplated to be built by the plaintiff.

The Bronaugh and Potter patent relates to a domestic electric two-temperature refrigerator. Claim 11 includes four elements, to wit: (1) Two separate insulated compartments; (2) a single refrigerating mechanism for cooling the two compartments at the different temperatures; (3) a thermostatic switch to control the refrigerating mechanism and thicker insulation for the colder compartment than that provided for the warmer.

In 1941, the plaintiff contemplated building a two-compartment refrigerator, each to be maintained at different temperature and each with a separate motor compressor unit for each compartment. Due to wartime material restrictions, plaintiff did not produce any such refrigerator until 1945. It appears from the stipulation herein that plaintiff in 1942 scheduled for production in commercial quantities a refrigerator in which each of the two compartments were to be cooled by its own separate mechanism and that it was intended by the plaintiff at some later date to manufacture a two-temperature refrigerator in which a single mechanism would be used to cool both of the compartments. In April, 1945, and the following months, it advertised extensively in publications having wide circulations and issued catalogs picturing and describing refrigerators offered for sale by the plaintiff, as containing two compartments maintained at different temperatures. There was no reference in these publications or circulars to the particular mechanism to be employed for cooling the compartments at different temperatures. The plaintiff manufactured only a few of such refrigerators.

In the correspondence between the parties antedating the commencement of this suit, the plaintiff has designated four types of proposed constructions of refrigerators as "Method #1," "Method #2," "Method #3" and "Method #5." Our concern here is as respects "Method #2" only. The plaintiff ascertained late in the summer of 1945 that it could not get the Method #1 refrigerator on the market before January, 1946, and it then scheduled the "Method #2" machine to be put into production and ready for the market in the summer of 1946. Later still in 1945, the plaintiff gave up its intention to build "Method #1" refrigerators in favor of the "Method #2" refrigerator.

There has been no production of the "Method #2" refrigerator by the plaintiff. The complaint, however, alleges that the plaintiff is "actively preparing to manufacture and sell refrigerators with two separate insulated compartments maintained at different temperatures by a single motor compressor unit." It is admitted that the "Method #1" refrigerator does not infringe.

The general purpose of the Declaratory Judgment Act, Jud.Code, § 274d, 28 U.S.C.A. § 400, is well known. Succinctly stated, it is to provide a method of procedure to bring about speedy determination of legal rights as respects differing contending parties. The "actual controversy" "must be definite and concrete, touching the legal relations of parties having adverse legal interests. * * * It must be a real and substantial controversy * * *, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Ætna Life Ins. Co. v. Haworth, 300 U.S. 227, 240, 241, 57 S.Ct. 461, 464, 81 L.Ed. 617, 108 A.L.R. 1000. See also: Coffman v. Breeze Corps., Inc., et al., 323 U.S. 316, 65 S.Ct. 298; Electric Bond & Share Co. v. Securities and Exchange Commission, 303 U.S. 419, 58 S.Ct. 678, 82 L.Ed. 936, 115 A.L.R. 105; Wilshire Oil Co. v. United States, 295 U.S. 100, 55 S.Ct. 673, 79 L.Ed. 1329. "It was the congressional intent to avoid accrual of avoidable damages to one not certain of his rights and to afford him an early adjudication without waiting until his adversary should see fit to begin suit, after damage had accrued." E. Edelmann & Co. v. Triple-A Specialty Co., 7 Cir., 88 F.2d 852, 854. It is to be construed liberally in order to effect its purpose, and every fair intendment is to be drawn from the pleading. Treemond Co. v. Schering Corp., 3 Cir., 122 F.2d 702; Borchard's "Declaratory Judgments", 1st Ed. 1934, viii.

The Declaratory Judgment Act authorizes suit by one charged with infringement of a patent for an adjudication that the patent is invalid or not infringed by the accused. Borchard, 2d Ed. 1941, p. 806; 1 C.J.S., Actions, sec. 18, p. 1031. Vide: Leach v. Ross Heater & Mfg. Co., 2 Cir., 104 F.2d 88; Crowell v. Baker Oil Tools, 9 Cir., 143 F.2d 1003; Alfred Hofmann, Inc., v. Knitting Machines Corp. et al., 3 Cir., 123 F.2d 458; E. W. Bliss Co. v. Cold Metal Process Co., 6 Cir., 102 F.2d 105; Treemond Co. v. Schering Corp., supra. Any question in this respect has been settled by the decision in Ætna Life Ins. Co. v. Haworth, supra.

Does the Act apply where a party suing a patentee has not manufactured the product in question, but, as alleged, is "actively preparing to manufacture and sell" it? Does the complaint disclose jurisdiction?

As is said in "Declaratory Judgments" by Borchard, 2d Ed., supra, p. 807:

"In the cases thus far decided, there have usually been two elements present, actual manufacture, use or sale by the petitioner, and charges of infringement by the patentee or his successor in interest. * * * But actual manufacture, use or sale ought not to be essential. It ought to suffice that the party charged is about to infringe or take some action which is prejudicial to the interests of the patentee, and that he is then charged or put on notice that his action is attacked as an infringement, present or prospective."

What this author has said as respects the rights of a patentee is applicable equally respecting the rights of a prospective manufacturer as against a patentee claiming infringement. An actual controversy cannot exist till the patentee has made the claim that his patent was being infringed, but the notice need not be a formal one. A claim of infringement is a condition precedent to the right to maintain the suit. Borchard, 2d Ed., supra, p. 807; Treemond Co. v. Schering, supra. Simple notice of infringement suffices to constitute a controversy. 1 F.R.D. p. 306.

In the instant suit which was commenced on October 8, 1945, various written communications and a conference were had respecting the product proposed to be manufactured by the plaintiff. The communications between the representatives of the parties originated with the discovery by the defendant in April, 1945, of certain public advertisements of two-compartment refrigerators by the plaintiff. Thereupon the attorney for the defendant proposed an interview with respect to the possible bearing of the defendant's advertised refrigerator on the Bronaugh and Potter patent. The description and a sketch of the plaintiff's proposed two-temperature product was sent to the defendant and plaintiff asked whether it was the position of defendant that a construction of the refrigerator in accordance with the sketch attached to the letter would infringe the Bronaugh and Potter patent. Replying, defendant's counsel stated that plaintiff's proposed construction seemed to have "many of the earmarks of the Bronaugh & Potter patent," and further said: "We would prefer to consider the question of infringement on comparably full knowledge of the construction and operation of your proposed refrigerator. Can you describe for us the elements and connections of the refrigerant circuits for the freezing and for the high humidity compartments?" In answer to this communication, the plaintiff wrote a letter generally descriptive of the elements and connections of the refrigerator circuits for the two-compartments and also enclosed drawings of Methods #1, #2, #3 and #5. On May 29, 1945, defendant's attorney acknowledged the receipt of the description and sketches of these methods and stated that construction and operation according to "Methods Nos. 2 and 3 sketches are not clear in my mind from the information furnished." Defendant points out some elements of Method No. 5 which are not necessary to consider here. In this letter the counsel stated that: "Apparatus according to the showing of the Method No. 1 sketch, as I understand it, would be outside the scope of the Bronaugh & Potter patent, * * *. A license, I believe, would enable your people to utilize to the full the advantages which the patented disclosure offers, and at a less total cost than other constructions." Under date of June 8, 1945, plaintiff wrote that an agent of the defendant had interviewed the plaintiff relative to taking out a license under the Bronaugh & Potter patent. In that letter the plaintiff, also, stated that it was going to build and sell two-temperature refrigerators in accordance with Methods No. 1 and No. 2, and this letter also purports to and does give a "more complete idea of the operation and construction of the apparatus of Methods #2 and #3." The description of these methods enclosed in the letter seems to be quite complete as respects the construction and the operation of these two methods. In reply to the last-mentioned letter the defendant's attorney stated: "We have made a further study of the bearing of the Bronaugh & Potter patent on Methods #2, #3 and...