George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc.

Decision Date12 April 1974
Docket NumberCiv. A. No. 68-695-F.
Citation376 F. Supp. 125
PartiesGEORGE R. WHITTEN, JR., INC., d/b/a Whitten Corporation v. PADDOCK POOL BUILDERS, INC., et al.
CourtU.S. District Court — District of Massachusetts

John E. Lecomte, Howard A. Levine, Boston, Mass., for plaintiffs.

Paul A. Good, Butterworth & Good, Lynn, Mass., John D. Hawke, Jr., Washington, D. C., for defendant.


FREEDMAN, District Judge.

This civil antitrust action was commenced in August of 1968. The Court of Appeals reversed a summary judgment for the defendant in 1970 and remanded the case for trial. George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc., 424 F.2d 25 (1st Cir., 1970). Thereafter the case was tried before this Court, sitting without a jury, over a period of twenty-two (22) days from July 9 through August 10, 1973. After a careful review of the entire record— including the trial transcript, nearly 600 exhibits, and the briefs and memoranda of counsel—the Court has made the following findings of fact and conclusions of law.

The Parties

The plaintiff, George R. Whitten, Jr., Inc., (Whitten), is engaged in the design, manufacture, and installation of a stainless steel swimming pool recirculation system and accessory equipment and also in serving as a general contractor for the construction of entire swimming pool facilities. Whitten, incorporated in 1964, is controlled by George R. Whitten, Jr., its president and principal stockholder, and has its usual place of business in Bellingham, Massachusetts. Its recirculation system, known by the trademark "Uniflow," was first marketed in 1966 and patented in 1968. It should be noted that during the period covered by this action—1965 to 1971, Whitten's total sales increased from $116,653 to $650,487.

The defendants, Paddock Pool Builders, Inc., Paddock of California, Inc., and Paddock Pool Equipment Co., Inc. (hereinafter collectively Paddock), are closely affiliated separate corporations and under the control of William Baker, their principal stockholder. They are all located in Albany, New York. Paddock of California, Inc. holds the Paddock trademarks and is the licensee of a patent under which a metal swimming pool recirculation system is manufactured. Approximately thirty (30) swimming pool dealers and distributors throughout the country are franchised by this Paddock company to use the trademark and sell the Paddock products. Paddock Pool Equipment Co., Inc. manufactures and distributes swimming pool equipment and accessories, including its patented metal recirculation system, the Integrated Flow Recirculation System (I. F.R.S.). These products are sold to Paddock dealers and to independent contractors for use in residential and public pools. Paddock Pool Builders, Inc. is a swimming pool contractor and construction company which builds residential and public pools in the northeastern region of the United States. The pool equipment used in its construction is purchased from Paddock Pool Equipment Co., Inc.

The Product

The allegations in the complaint are directed at the marketing and distribution practices employed by Paddock in promoting its I.F.R.S. system. Whitten's Uniflow system is in competition with the I.F.R.S. system for public swimming pool business. While the two systems perform essentially the same function in much the same manner, there are clear differences between them.

Recirculation systems are designed to remove water from a swimming pool, pass it through a filter and chlorinator, and then reintroduce the filtered and chlorinated water into the pool. The basic purpose is to maintain the cleanliness and clarity of the water while losing as little as possible to waste. It is considered important to skim water from the top of the pool where most of the contaminants are concentrated, as well as to allow some water to be recirculated through the drain. In fact, this skimming from the top is now required by most state health codes for public swimming pools.

There are several methods of providing this type of recirculation. The majority of the recirculation systems now in use fit within the category of what are called conventional systems. These are systems which are fashioned from traditional swimming pool materials: tile, concrete, masonry. The conventional system requires that pipes be installed around the perimeter of the pool in order to return the clean water. In the last fifteen years the metal prefabricated pipeless recirculation gutters have entered the market and made significant inroads. These systems have the advantages of prefabrication and the fact that no pipes need to be laid around the pool. Such systems have been fabricated from galvanized steel, stainless steel, and aluminum. This development has not eliminated the conventional gutter which still enjoys a dominant role in the industry.

Whitten's patented Uniflow system first appeared on the market in 1966. The system is designed such that the surface of the water is maintained slightly above the top of the gutter. The surface water thus overflows into the gutter and is conducted through the gutter to the filter. The newly filtered and chlorinated water is returned to the pool through a plastic pipe in the gutter which has outlets for injecting the water into the pool. The gutter channel is covered by a plastic grate with holes appropriately spaced to control the flow of water into the gutter. The grate protects the plastic pipe. The grate is not easily removed, but maintenance personnel are equipped with a special tool which facilitates such removal. The prefabricated gutter sections are joined together end to end by spot welding.

Paddock's I.F.R.S. had its beginnings in 1958 with the so-called Ogden patent. The patent was assigned to Lifetime Metal Products, Inc., an Ohio corporation. In 1963 the patent was again assigned, this time to Paddock. It has undergone some changes and modifications, but basically it embodies the original Ogden design.

The I.F.R.S. consists of an open metal gutter channel which receives water from the surface of the pool and conveys it to the filter. The filtered and chlorinated water is returned to the pool via the rectangular shaped conduit which forms the lip of the gutter. The gutter channel and return conduit are of different gauge steel and there is a continuous weld along the length of the gutter joining the two sections. During periods of quiescence the water level is below the lip of the gutter. There are openings in the gutter which permit the water to be skimmed from the surface during such periods of non-use. When the pool is in use these openings, or skimming weirs, are closed and skimming is over the gutter lip. This different method of skimmining is required since the water level rises when the pool is in use as a result of the displacement of the bodies of the bathers. This rising of the water level is referred to as "surge."

Although both Uniflow and I.F.R.S. represent a departure from conventional recirculation systems, there are substantial differences between the two systems. The following is a list of the significant differences; it is by no means exhaustive.

1. Uniflow returns the water to the pool by means of a removable plastic pipe mounted in the gutter. I.F.R.S. uses a steel conduit which forms the gutter lip.
2. Uniflow uses Type 304 stainless steel; I.F.R.S.-Type 304L. The difference is that the Paddock stock is low carbon which is desirable where there is considerable welding as there is in the I.F.R.S. design. It is not necessary where there is just spot welding as in the Uniflow system.
3. Uniflow's skimming function is accomplished by permitting the water to overflow the lip all around the perimeter of the pool. I.F.R.S. uses openings below the gutter lip (skimming weirs) placed at intervals around the pool. Paddock claims that this enables its system to accommodate the surge produced when the pool is in use without the use of a special tank called a surge tank. Whitten claims that its system performs a better job of skimming and that I.F.R.S. requires a surge tank (as does Uniflow) regardless of its claims.
4. The gutter of the Uniflow system is covered by a plastic grate; the I.F.R.S. system utilizes an open gutter. The difference is a function of the return pipe configuration: a plastic pipe which must be protected in the Whitten system; a welded part of the gutter lip in the Paddock version. Whitten claims its system is safer as a result since bathers' limbs cannot get caught in its gutter. Paddock asserts that its open gutter is preferable since it is more accessible and easier to keep clean.

These differences provide a basis upon which a prospective buyer, or architect representing a buyer, may make an informed choice of one system over the other.

Relevant Market

In cases brought under the antitrust statutes it is important to define the competitive area in which the parties operate. The plaintiff argues that this market should be restricted to prefabricated pipeless pool gutters. The Court rejects this argument; it is clear that the market within which the plaintiff and defendant compete encompasses the entire public swimming pool industry.

Whenever a public swimming pool is contemplated the potential choice of gutter is not limited to Uniflow and I.F.R. S. All of the conventional tile, concrete, or masonry possibilities are available, as well as the aluminum pool offered by Chester Products. The record is replete with references to pool projects for which Whitten and Paddock had competed that were ultimately built of conventional materials. Often specifications are issued for pool bids which contain the option of bidding either a metal prefabricated system or a conventional system.

The leading case setting forth the considerations for determining the market for purposes of the antitrust laws is United States v. E. I. Du Pont De Nemours & Co., 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). That case was...

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