Hall Laboratories v. National Aluminate Corp.

• Decision Date: 22 January 1951
• Docket Number: Civ. No. 1192.
• Parties: HALL LABORATORIES, Inc., et al. v. NATIONAL ALUMINATE CORP.
• Court: U.S. District Court — District of Delaware

95 F. Supp. 323

HALL LABORATORIES, Inc., et al. v. NATIONAL ALUMINATE CORP.

Civ. No. 1192.

United States District Court D. Delaware.

January 22, 1951.

Aaron Finger and Robert H. Richards, Jr., (of Richards, Layton & Finger), of Wilmington, Del., and Walter J. Blenko and James K. Everhart, Jr. (of Blenko, Hoopes, Leonard & Glenn), of Pittsburgh, Pa., for plaintiffs.

Arthur G. Connolly, of Wilmington, Del., John T. Chadwell, Victor P. Kayser and Richard L. Johnston, all of Chicago, Ill., for defendant.

LEAHY, Chief Judge.

Defendant's motion for summary judgment was denied. D.C., 93 F.Supp. 376. It was there suggested if the Fink-Richardson patent and plaintiffs' practices do not correspond with the teachings of the Fresenius text the prayers of the complaint at bar should be denied. Defendant contends that a finding in its favor on this issue will be dispositive of the case.

In addition, defendant repeats its contention that because of the compromise and settlement of the previous litigation, the license agreement entered into between the parties was a part of the settlement and hence plaintiffs are bound to pay royalties; and accordingly, plaintiffs are estopped to contest the validity of the Fink-Richardson patent either directly or indirectly by a subterfuge of alleging eviction. On this basis, defendant argues plaintiffs are estopped to set up as a reason for non-payment of royalties either the Fresenius text or any of the prior art so far mentioned in the record; defendant, therefore, asks for reconsideration of summary judgment in its favor.

I reject reconsideration of defendant's motion for summary judgment and will pass only on the pending motion under Rule 42(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A. Defendant argues in support of its motion that the basis of the present litigation is plaintiffs' claim there has been a change of "circumstances" or a "new situation", created since plaintiffs entered into a license agreement in connection with the settlement and compromise of the prior litigation in this court, by reason of a judicial interpretation placed upon the teachings appearing in an early chemical textbook by a German chemist named Fresenius.¹ The complaint alleges plaintiffs instituted action in the District Court of the United States for the District of Minnesota against Economic Laboratories, Inc., charging infringement of plaintiffs' No. Re. 19,719, in which action Economic Laboratories cited the Fresenius text as having anticipated plaintiffs' patent. This contention was sustained. D.C.Minn., 72 F.Supp. 683. Subsequent to compromise and settlement of the prior action pending in our Delaware court² (and the plaintiffs here taking a license from defendant here), the decision of the Minnesota District Court and its findings and conclusions were sustained in entirety; 8 Cir., 169 F.2d 65. Defendant in the case at bar was not a party to that litigation and the Fink-Richardson patent, in suit here, was in no way involved.

However, the gravamen of the present complaint is that as plaintiffs' activities "correspond in all material and substantial respects to the teachings of the Fresenius text as it has been interpreted by the courts in the Economics case", plaintiffs are relieved of their obligations to pay royalties to defendant here because the Fresenius text as so interpreted "alone and in conjunction with the prior patents and/or prior uses recited" anticipated the Fink-Richardson patent.³

In my former memorandum, see 93 F.Supp. 376, denying defendant's motion for summary judgment, I suggested plaintiffs' claim for declaratory judgment was based solely upon the Fresenius text as interpreted in the Economics case and indicated that, as plaintiffs-licensees were subject to various estoppels, any evidence relative to prior art would be confined to Fresenius. Summary judgment having been denied, defendant filed its answer and affirmative defenses. As stated, defendant's assumption that plaintiffs' practices corresponded with the prior art was made solely for the purpose of the motion for summary judgment, for in its answer, defendant denies all allegations to the effect that plaintiffs' practices correspond with the teachings of the Fresenius text and denies that the text anticipated the Fink-Richardson patent.

1. Since denial of summary judgment in defendant's favor, I think the issues in the case at bar have become crystallized for inspection: (1) There should be a decision whether plaintiffs' practices and the Fink-Richardson patent correspond with the teachings of the Fresenius text; and (2) for immediate decision, at this time, whether that issue should be tried separately prior to any other issues.

2. Defendant argues its pending motion under Rule 42(b) should be granted because a finding that plaintiffs' practices and the Fink-Richardson patent do not correspond to the teachings of the Fresenius text would dispose of the case. Therefore, it contends, a separate hearing on this issue should be ordered. This action was brought by plaintiff to test the liability of a licensee to pay royalties. In such a situation, it seems to me the traditional doctrine of estoppel, working against the licensee to attack the validity of the patents which are the basis of the license agreement itself, leaves merely a single issue for determination in the case at bar brought about by the quasi-admission made by defendant respecting the Fresenius text in connection with its former motion for summary judgment. Clearly plaintiffs' claim is based solely upon that text, as interpreted in the Economics case. In fact, it is so stated in the complaint, where it is alleged, as a basis of declaratory judgment relief, that there is a "genuine controversy between the parties as to the force and effect of the Fresenius publication; and that plaintiffs are, therefore, in need of a judicial determination of that controversy." (Emphasis supplied). Again it was so stated in the briefs opposing defendant's motion for summary judgment.⁴ I so interpreted plaintiffs' position in my former memorandum when I...