General Excavator Co. v. Keystone Driller Co.

• Decision Date: 06 December 1932
• Docket Number: No. 6065-6068.,6065-6068.
• Citation: 62 F.2d 48
• Parties: GENERAL EXCAVATOR CO. v. KEYSTONE DRILLER CO. KEYSTONE DRILLER CO. v. GENERAL EXCAVATOR CO. OSGOOD CO. v. KEYSTONE DRILLER CO. KEYSTONE DRILLER CO. v. OSGOOD CO.
• Court: U.S. Court of Appeals — Sixth Circuit

62 F.2d 48 (1932)

GENERAL EXCAVATOR CO. v. KEYSTONE DRILLER CO.

KEYSTONE DRILLER CO. v. GENERAL EXCAVATOR CO.

OSGOOD CO. v. KEYSTONE DRILLER CO.

KEYSTONE DRILLER CO. v. OSGOOD CO.

Nos. 6065-6068.

Circuit Court of Appeals, Sixth Circuit.

December 6, 1932.

F. O. Richey, of Cleveland, Ohio, and C. R. May, of Beaver, Pa. (Richey & Watts, of Cleveland, Ohio, and May & Bradshaw, of Beaver, Pa., on the brief), for Keystone Driller Co.

E. P. Corbett, of Columbus, Ohio, and L. T. Williams, of Toledo, Ohio (Edw. L. Reed, of Dayton, Ohio, Corbett & Mahoney, of Columbus, Ohio, and Williams, Eversman & Morgan, of Toledo, Ohio, on the brief), for General Excavator Co. and Osgood Co.

Before HICKS, HICKENLOOPER, and SIMONS, Circuit Judges.

HICKENLOOPER, Circuit Judge.

The above-numbered appeals and cross-appeals are founded upon two almost identical actions commenced in the District Court for the Northern District of Ohio, respectively against the General Excavator Company and the Osgood Company, and alleging infringement of five separate patents owned by the Keystone Driller Company, one of which was patent to Robert Rex Downie, No. 1,511,114, granted October 7, 1924, which was held valid by this court November 5, 1930. Byers Mach. Co. v. Keystone Driller Co. (C. C. A.) 44 F.(2d) 283.

The bills of complaint in the present actions were filed after the decision of the Byers Case in the District Court, and while the appeal in that case was pending here, but the Downie and Clutter patents which had been upheld by the District Court were treated by plaintiff as adjudicated patents, and motions for interlocutory injunctions were forthwith made and pressed. These motions were denied, but in lieu of granting them the defendants were required to give bonds conditioned upon the payment of all profits and damages which might be decreed against them, and such bonds were in fact given. In this respect and to this extent the decision of the District Court in the Byers Case became an important factor in the prosecution of the present actions. Later, when this court affirmed the decree of the District Court, the effect of the Byers Case became even more apparent.

We come, then, to the issue which, in our opinion, is decisive of the present appeals. Prior to the grant of the Downie patent, No. 1,511,114, indeed, prior to the application for that patent, Downie heard of a possible prior use at Joplin, Mo., during the winter of 1919-20, by one Bernard R. Clutter, a brother of the patentee of the Clutter patent in suit. Downie himself testified that his own conception of the device of his patent was in the summer of 1920, so that the information which he had received at least cast serious doubt upon the validity of any patent which might subsequently be issued to him, whether the prior use were ultimately to be considered as an abandoned experiment or not (and he was advised by his counsel that it might be so considered), and whether or not he might be granted priority in any interference declared by the Patent Office, under the doctrine of Mason v. Hepburn, 13 App. D. C. 86; Cf. Westinghouse Elec. & Mfg. Co. v. Wadsworth Elec. Mfg. Co., 51 F.(2d) 447 (C. C. A. 6). Notwithstanding this information, and without thorough investigation of the facts, Downie proceeded to file his application for patent, and the same was prosecuted to issue on October 7, 1924.

The Downie patent having issued, and the action against the Byers Machine Company being in contemplation, doubt and uneasiness as to the effect of the Joplin use was revived. Counsel advised further investigation, and early in 1925 Downie went to Lakewood, N. J., to interview Bernard R. Clutter. It cannot be disputed upon any reasonable construction of the evidence here that as a result of this interview Clutter was offered a merchandise credit of approximately $3,800, perhaps $4,000, being one-half of the cost of a Keystone excavator to be purchased by him, of which credit 50 per cent. was to be enjoyed forthwith, and the other half was to be given if within two years any of the claims of patent No. 1,511,114 were held to be valid by a District Court. Clutter signed an affidavit prepared by Downie to the effect that the Joplin use was an abandoned experiment, and agreed to assign to the Keystone Driller Company any rights which he might have as inventor or coinventor of the device covered by the patent; but it is quite obvious that the credit which had been agreed upon was given to Clutter upon the implied condition that he should keep secret the details and circumstances of that prior use; that so far as he was able to produce this result the evidence which caused the patentee uneasiness was to be suppressed.

The full amount of the initial credit was not given immediately, but in January, 1927, we find the Keystone Driller Company canceling four of Clutter's notes, amounting in all to $1,700 exclusive of interest. Eighteen months thereafter Clutter became financially unable to perform further the terms of his agreement for the purchase of this and another excavator. He was in default upon his notes, and the company was threatening repossession proceedings. Bankruptcy threatened. The District Court had not yet decided the Byers Case, so that the second installment of credit was not yet due; but it would seem that the parties considered the continued silence of Clutter as essential, for in November, 1928, Downie agreed to pay in cash one-half of the second installment of the promised credit, inasmuch as the excavators were being repossessed. One-half of the promised amount of cash was paid by check November 15, 1928, but again, "the other half of the contingent cash credit was not to become payable until and unless our case the Byers action should be satisfactorily decided by the end of 1928." The decree in the Byers Case was finally entered January 31, 1929, and it was not until about that time that the payment of any further consideration to Clutter was definitely refused.

The District Court, after an exhaustive consideration of the evidence, a more detailed consideration than can here be given, characterized this conduct of the patentee as "highly reprehensible," but refused to apply the maxim that one who comes into equity must come with clean hands, because during the course of the taking of testimony all of the above-recited facts ultimately...