GRAND UNION COMPANY v. KINGSTON MANUFACTURING CO.

• Decision Date: 21 October 1968
• Docket Number: Civ. A. No. 2338.
• Citation: 292 F. Supp. 483
• Parties: The GRAND UNION COMPANY and North American Equipment Corporation, Plaintiffs, v. KINGSTON MANUFACTURING CO., Inc., and Gardner I. Hinckley, Defendants.
• Court: U.S. District Court — District of New Hampshire

292 F. Supp. 483

The GRAND UNION COMPANY and North American Equipment Corporation, Plaintiffs, v. KINGSTON MANUFACTURING CO., Inc., and Gardner I. Hinckley, Defendants.

Civ. A. No. 2338.

United States District Court D. New Hampshire.

October 21, 1968.

Arthur A. March, Douglas W. Wyatt, March, Gillette & Wyatt, New York City, Gerard O. Bergevin, Manchester, N. H., for plaintiffs.

Stanley M. Brown, McLane, Carleton, Graf, Greene & Brown, Manchester, N. H., Robert A. Townsend, Roberts, Cushman & Grover, Boston, Mass., for defendants.

McNICHOLS, District Judge.

This matter came on for trial at Concord, New Hampshire, on September 18, 1967, the Court sitting without a jury. Evidence oral and documentary was taken, and time afforded for post-trial briefs after preparation of a transcript of evidence by the Court Reporter. The cause is now submitted with a reservation of the issue of damages, if any.

Plaintiffs' action is for patent infringement and unfair competition. Defendants attack, by answer and counterclaim, the validity of certain of the patents, deny infringement as to all, and deny the alleged unfair competition.

Jurisdiction is laid under 28 U.S.C. § 1338, as an action relating to patents and the related claim of unfair competition.

Plaintiffs, Grand Union Company (hereinafter "Grand Union"), is the parent company to its totally owned subsidiary, plaintiff, North American Equipment Corporation (hereinafter "North American"). It is conclusively shown that Grand Union is the owner, by assignment, of the patents in question and North American, the licensee. Defendant, Kingston Manufacturing Co., Inc. (hereinafter "Kingston"), operates a metal fabricating business and has, since approximately 1961 or 1962, engaged in the manufacturing and selling of certain metal shelving devices claimed to infringe on said patents. The defendant, Gardner I. Hinckley (hereinafter "Hinckley"), is a former employee of North American, who subsequently, and during times important hereto, became an employee of Kingston.

Three of plaintiffs' patents are involved and are listed chronologically:

1. Patent No. 2,443,871, issued to L. P. Shield, June 22, 1948, entitled "Display and Delivery Device". A certified copy of this patent, designated as plaintiffs' Exhibit No. 3 and a certified copy of the file wrapper thereof, designated as defendants' Exhibit No. XX were admitted in evidence. This patent was, at the trial, and will be here, generally referred to as the Shield Patent. By stipulation the plaintiffs rely only on Claim 5 of the Shield Patent. It is to be noted that this patent expired on its anniversary date in 1965, prior to this trial.

2. Patent No. 2,669,361, issued to G. A. Just, February 16, 1954, entitled "Display and Delivery Stand". A certified copy of this patent, designated plaintiffs' Exhibit No. 1, and a certified copy of the file wrapper thereof, designated as defendants' Exhibit YY were admitted in evidence. This patent was, at the trial, and will be here, generally referred to as "Just First". By stipulation the plaintiffs rely only on Claim 9 of the Just First Patent. It is to be noted that defendants do not challenge the validity of this patent, contenting themselves with denying infringement.

3. Patent 3,091,317, issued to G. A. Just, May 28, 1963, entitled "Display and Delivery Stand". A certified copy of this patent, designated as plaintiffs' Exhibit No. 2, and a certified copy of the file wrapper thereof, designated as defendants' Exhibit ZZ, were admitted in evidence. This patent was, at the trial, and will be here, generally referred to as "Just Second". By stipulation the plaintiffs rely only on Claim 2 of the Just Second Patent. It is to be noted that this patent was issued after the commencement of this action and was included herein by an amendment to the complaint.

The evidence establishes the following background of events leading to the litigation: North American (and its predecessor company, "Food-O-Mat Corporation") had, for a number of years prior to 1962, been engaged in the sale and installation of gravity type display and delivery shelving utilizing generally the designs of Shield and Just described in the patents in question. The largest market for this shelving as sold by North American was in the retail grocery trade, with the parent company having numerous installations in its retail outlets (Grand Union Stores). For many years up to this time Kingston was a principal supplier of component parts of the shelving so utilized by the plaintiffs. A long, friendly, co-operative and apparently mutually advantageous relationship had existed between Kingston and North American. During the days of development of the display and delivery shelving, Kingston's technical know-how was applied to North American's experienced problems in the field. Improvements were regularly designed by Kingston and embodied into the North American product.

In 1954, Hinckley joined North American as a salesman; in 1956 or 1957, he became vice-president, apparently in charge of sales. He resigned in December, 1960 and went to work for Kingston in a sales-executive capacity. During Hinckley's years at North American the display and delivery shelving sales were roughly 80% to retail business and 20% to commercial. In 1960, Mr. Shield (of the Shield Patent) died and Mr. Just (of the Just Patents) retired. Shield had wielded influence in the plaintiff companies and had insisted on the use of the gravity shelving devices in all Grand Union Stores. After the death of Shield and upon the retirement of Just the research and development people employed by North American were "let out". Rumors were rife that the company was for sale. Hinckley felt that the great potential of the live storage shelving business lay in the development of the commercial field. He was justified in believing that North American would not likely move forward into this market. Kingston, on the other hand, was about to enter into the live storage shelving competition and offered Hinckley employment. He accepted the opportunity even though it entailed a substantial reduction of personal income. Hinckley very properly, and for no wrongful purpose, left a company where the future was at least obscure to go with a company about to enter into a market where Hinckley felt a favorable opportunity existed.

With the know-how of Kingston's engineers, competitive live storage shelving was developed and Hinckley set up a sales program to merchandise the devices. Kingston, in 1962, secured patents covering its rack and trackway used in its live storage shelving to be merchandised under the trade name of "King-Way." These patents were Nos. 3,040,904 and 3,063,534. Conscientiously, Hinckley avoided interfering with any sale to any customer where negotiations had been commenced during his tenure with North American. This was a highly competitive business with many types of equipment on the market and with well known and published listings of potential customers readily available. No proof exists that Hinckley or Kingston, in their sales approach, were anything but scrupulously fair to North American. However, they did concededly enter into competition in the manufacture and sale of live storage shelving. Plaintiffs promptly advised defendants that it considered the devices being merchandised by Kingston under the trade name "King-Way" infringed on plaintiffs' patent rights. Kingston persevered in its program and this action ensued.

UNFAIR COMPETITION

In Count II of the complaint, plaintiffs state a claim against the defendants alleging unfair competition. At the close of all evidence, the Court orally found against the plaintiffs on this cause. Subsequently a formal Interlocutory Order was entered, supported by Findings of Fact and Conclusions of Law, dismissing Count II. Said Interlocutory Order and its Findings and Conclusions are, by reference, incorporated herein. Said Order is affirmed as entered.

SHIELD PATENT

The Shield Patent, No. 2,443,871, held by the plaintiffs, expired on June 22, 1965. We are here limited in our concern to claim No. 5 of this patent, which claim reads as follows:

"5. A merchandise display and delivery stand comprising upwardly extending supports, rectangular frames secured in vertically spaced relation and in inclined positions on said supports and each having opposite horizontally extending portions, a plurality of inclined shelf forming means supported adjacent their opposite ends by the horizontal portions of said frames, each of said shelf forming means including article supporting means and a pair of spaced article guiding elements cooperating with said article supporting means to form parallel inclined channels for maintaining articles in alignment during movement thereof from the rear to the front of said shelf forming means, said shelf forming means being adjustably secured to said frames by interengaging parts movable to hold said article guiding elements in various predetermined positions with respect to each other to guide articles of predetermined sizes, said channels being accessible at the rear of said stand for receiving articles and accessible at the front of said stand for the removal of articles from said channels, the front ends of said channels extending progressively farther forward from the upper to the lower portion of the stand and means engageable by the foremost article in each channel for holding articles in place in said channels."

The claim in question thus embodies the framework supporting shelving as well as the shelving itself. The shelves, or tracks, rest on the framework in an inclined position toward the front so as to utilize gravity to cause items inserted from the rear to roll or slide forward. As items are removed from the front, those behind move into position creating the so-called "live storage" feature. The design of the shelves or tracks tends to keep items in alignment while...