Georgia-Pacific Plywood Co. v. UNITED STATES PLY. CORP.

• Decision Date: 26 October 1956
• Citation: 148 F. Supp. 846
• Parties: GEORGIA-PACIFIC PLYWOOD COMPANY, Plaintiff, v. UNITED STATES PLYWOOD CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

148 F. Supp. 846

GEORGIA-PACIFIC PLYWOOD COMPANY, Plaintiff, v. UNITED STATES PLYWOOD CORPORATION, Defendant.

United States District Court. S. D. New York.

October 26, 1956.

John Vaughan Groner, New York City, for plaintiff. John Vaughan Groner, Charles B. Smith, Fish, Richardson & Neave, New York City, of counsel.

Darby & Darby, New York City, for defendant. Floyd H. Crews, James M. Heilman and Heilman & Heilman, New York City, of counsel.

HERLANDS, District Judge.

The Court will dictate from the bench its opinion, which so far as practicable will contain the specific findings of fact and conclusions of law. Either party may upon five days' notice submit such additional or supplemental findings of fact and conclusions of law not inconsistent with the decision as such party may consider necessary or appropriate for the purpose of clarifying or implementing the decision.

I shall first take up the findings of fact and, in addition to the specific findings of fact, shall make such comments and observations as may be helpful in explaining the findings and the conclusions where I think explanation is necessary.

As a preliminary, the Court states that it has meticulously examined all of the documentary and physical exhibits and has, in this respect, been greatly aided by outstandingly competent and skillful counsel on both sides.

The Court has also closely observed the demeanor of those witnesses who took the stand. Many of the important issues in this case depend upon credibility. Mindful of the responsibility of a trial court in deciding questions of credibility, I have endeavored very closely to follow every nuance of the testimony as it was given from the witness chair.

Coming to the findings of fact I find as follows:

1. This is an action for a declaratory judgment of invalidity and non-infringement of three patents, referred to in this case as the Deskey patent and two Bailey patents. There are also two counterclaims: one for infringement of the Deskey patent and the other for unfair competition.

The three patents in suit are the following: Deskey No. 2,286,068, filed May 25, 1940, on the application of Donald Deskey, issued on June 9, 1942, to United States Plywood, the defendant herein. William C. Bailey on June 27, 1941 filed an application which on March 6, 1942, was divided. On November 28, 1944, patents Nos. 2,363,492 (Process) and 2,363,927 (Product) issued to United States Plywood, the defendant herein. No issue is raised as to the present or past ownership by United States Plywood of those three patents.

This Court has jurisdiction of the parties, the subject matter and the issues raised by the complaint and the answer, including the two counterclaims.

Georgia-Pacific Plywood Company has, since the complaint was filed, changed its name to Georgia-Pacific Corporation. Georgia-Pacific Corporation is a corporation of the State of Georgia licensed to do business in the State of New York, having an office at 270 Park Avenue, New York, N. Y.

2. United States Plywood Corporation is a corporation of the State of New York, having its principal place of business at 55 West 44th Street, New York, N. Y.

3. The Deskey patent will be described in fulsome detail by the Court in the course of this decision and opinion. At this point, and in connection with this finding, the Court states that the Deskey patent relates to a plywood panel in which one or both faces are striated or grooved by a multiplicity of grooves which are made generally parallel with the grain of the wood of the grooved face and which extend entirely over the grooved face. The Court finds that the grooves disclosed and claimed are of uneven size and depth. Panels having both faces grooved are not pertinent to the issues herein. The Deskey claims are not limited to panels of any particular kind of wood.

The Court finds that the primary effect of the grooving is to produce a highly decorative panel of great sales appeal. Another effect of the grooving, incidental to its decorative effect, is to reduce checking and cracking and to reduce edge separation which occurs on plain, ungrooved plywood panels.

4. The two Bailey patents are asserted to be improvements on the Deskey patent. They are in substantial respects identical in specifications, the claims of Bailey 2,363,492 being directed to a process, and those of Bailey 2,363,927 directed to the resultant product. Both assert that panels made according to the disclosure of the Deskey patent tended to cup or warp. Bailey aimed at correcting this tendency by employing front and rear plies which originally were unbalanced, that is, of uneven thickness, in such degree that, after the removal of the wood from the front ply as an incident of the grooving, the front and rear plies contained substantially the same amount of wood; and thus the panel became balanced.

5. The defendant, United States Plywood, has charged the plaintiff with infringement of the two Bailey patents; and this Court, therefore, has jurisdiction of the Bailey patents.

6. Long prior to Deskey, the exposed face of lumber, shakes and shingles, plywood and other related wood products had been grooved in a way fundamentally indistinguishable (in kind and in principle) from the grooving disclosed, with reference to plywood panels, by Deskey.

Examples of these prior practices are shown in what has been called in this trial the Craft-Putman-Melby prior use, and in the following patents which issued to those three men:

Putman — 1,577,150, of 1926 (Plaintiff's Exhibit 1, tab 2);

Melby — 1,634,789, of 1927 (Plaintiff's Exhibit 1, tab 4);

Melby — 1,764,412, of 1930 (Plaintiff's Exhibit 1, tab 5);

Putman — 1,780,097, of 1930 (Plaintiff's Exhibit 1, tab 7);

Craft — 1,820,445, of 1931 (Plaintiff's Exhibit 1, tab 9);

Putman (Canadian) — 302,038, of 1930 (Plaintiff's Exhibit 1, tab 18).

Other examples of similar or analogous grooving of wood products are shown in the following patents:

Morden — 1,773,695, of 1930 (Plaintiff's Exhibit 1, tab 6);

Gilmer — 1,910,895, of 1933 (Plaintiff's Exhibit 1, tab 10);

Gilmer — 1,943,597, of 1934 (Plaintiff's Exhibit 1, tab 11);

Gram — 2,090,529, of 1937 (Plaintiff's Exhibit 1, tab 13);

Maurer — 2,202,109, of 1940 (Plaintiff's Exhibit 1, tab 14);

Maurer — 2,202,110, of 1940 (Plaintiff's Exhibit 1, tab 15);

Maurer — 2,244,426, of 1941 (Plaintiff's Exhibit 1, tab 17).

While the first two Maurer patents issued on May 28, 1940 (three days after the Deskey application had been filed), they were filed respectively on December 1, 1937 and June 1, 1938. Maurer No. 2,244,426 was filed in the United States on November 13, 1939, but it is entitled to a Canadian filing date of December 17, 1938.

7. In the period from 1923 to 1926, Charles Putman and Dale Craft produced a machine which grooved the face surface of shingles in simulation of handsplit shakes (Plaintiff's Exhibit 2, pp. 57, 154).

In 1927 Charles J. Melby became associated with them. Thereafter grooved face shingles or imitation shakes were produced on a planer, the knives of which had serrated cutting faces. Substantially all grooved wood products made since that time (including the grooved plywood made by defendant under the Deskey and Bailey patents, and that made by plaintiff, and here accused) are similarly made on planers, the knives of which are serrated.

The Craft-Putman-Melby imitation shakes have continued to be widely sold up to the present date (Plaintiff's Exhibit 2, pp. 31-34, 79, 81-82, 158).

The manufacture of these imitation shakes suggested the extension of the idea to lumber, one face of which was grooved for use as interior paneling (Plaintiff's Exhibit 2, pp. 164-165, pp.) 64, 100-101. This in turn suggested the grooving of plywood (Plaintiff's Exhibit 2, p. 308). All of these similar operations were performed in the same way on the same sort of machine (Plaintiff's Exhibit 2, pp. 102 and 103, 185). This natural development or progression is only what is to be expected of anyone ordinarily familar with the manufacture and utilization of wood products. This development and progression contained no attribute or element of invention.

The Bishop home built in 1928 at Hood's Canal, Washington, still has the paneling which originally was installed throughout (Plaintiff's Exhibit 2, sub-exhibits M-2A through F).

In 1928 Craft-Putman-Melby granted the right to manufacture and sell grooved lumber to the E. C. Miller Lumber Company which from that date to the present has continued to make and sell such lumber (Plaintiff's Exhibit 2, pp. 103-104, 185-186, 199).

The contract with Miller significantly excluded from the terms of the grant the right, among other things, to make or sell "veneer and/or plywoods * * * so processed" (Plaintiff's Exhibit 2, sub-exhibit M-9, paragraph 1). This exclusionary phrase was interlineated in the typed contract in longhand.

Having reserved to themselves the right to make grooved plywood, Melby proceeded to its manufacture; Putman acted as his sales agent (Plaintiff's Exhibit 2, pp. 325, 326, 340-341, 192, 272, 189, 197, 279). Such plywood was installed and is still used as paneling in a home built by the American Legion in Everett, Washington (now the home of P. Unkeles), in the office of Royal Shingle Company at Whites, Washington (now the home of K. Luken), was used in the storefronts of a building (now destroyed) in Everett, Washington, and samples were made up for use by Putman (Plaintiff's Exhibit 2, pp. 72-74, 189-193, 197, 235-242, 250-252, 279, 311-312, sub-exhibits E-24A through C and sub-exhibits M-6A through D; Defendant's Exhibits 18 and 19).

The depression intervened. The lumber industry was prostrated, with a resultant inability to sell any but the most common or essential products. Melby failed in business (Plaintiff's Exhibit 2, pp. 172, 174, 197-200, 296-298, 315, 318). Consequently manufacture by Melby of the grooved plywood ceased (Plaintiff's Exhibit 2,...