Hall v. Wright

• Decision Date: 04 March 1957
• Docket Number: No. 14626.,14626.
• Citation: 240 F.2d 787
• Parties: Jesse E. HALL, Weatherford Oil Tool Company, Inc., a corporation; Weatherford Spring Company of Venezuela, C. A., a corporation; Hall Development Company, C. A., a corporation; Weatherford, Ltd., a corporation; Weatherford Internacional, S. A., DE CV., a corporation; Nevada Leasehold Corporation, a corporation; Parker Industrial Products, Inc., a corporation, Appellants, v. Kenneth A. WRIGHT and B & W, Inc., a corporation, Appellees. Kenneth A. WRIGHT and B & W, Inc., a corporation, Appellants, v. Jesse E. HALL, Weatherford Oil Tool Company, Inc., a corporation, et al., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

240 F.2d 787 (1957)

Jesse E. HALL, Weatherford Oil Tool Company, Inc., a corporation; Weatherford Spring Company of Venezuela, C. A., a corporation; Hall Development Company, C. A., a corporation; Weatherford, Ltd., a corporation; Weatherford Internacional, S. A., DE CV., a corporation; Nevada Leasehold Corporation, a corporation; Parker Industrial Products, Inc., a corporation, Appellants, v. Kenneth A. WRIGHT and B & W, Inc., a corporation, Appellees.

Kenneth A. WRIGHT and B & W, Inc., a corporation, Appellants, v. Jesse E. HALL, Weatherford Oil Tool Company, Inc., a corporation, et al., Appellees.

No. 14626.

United States Court of Appeals Ninth Circuit.

January 16, 1957.

Rehearing Denied March 4, 1957.

COPYRIGHT MATERIAL OMITTED

Thomas E. Scofield, Kansas City, Mo., Philip Subkow, Los Angeles, Cal., for appellant.

Lyon & Lyon, Lewis E. Lyon, R. Douglas Lyon, Los Angeles, Cal., for appellee.

Before LEMMON, CHAMBERS, and HAMLEY, Circuit Judges.

HAMLEY, Circuit Judge.

On December 10, 1947, Jesse E. Hall, a citizen of the state of Texas, commenced this action against his competitors in the business of manufacturing and selling certain oil well bore cleaning devices. Named as defendants were Kenneth A. Wright, a citizen of the state of California, and B & W, Inc., a California corporation. Hall sought reformation of a certain contract, dated September 15, 1944, wherein the parties had attempted to resolve their differences. He also asked for a declaration of rights concerning the contract, as reformed; an injunction against asserted actual and threatened violations of the contract; and damages for the alleged violation of the antitrust laws of the United States.

Defendants answered, denying the principal allegations of the complaint. They also counterclaimed for a different declaration of rights concerning the contract; cancellation of the contract and an accounting; and for an accounting and damages by reason of Hall's asserted infringement of three patents issued to Wright and then held by B & W, Inc.

The devices manufactured and sold by the respective parties, concerning which this lawsuit arose, are used in the oil-production industry in preparing wells for production. Oil wells are drilled with a string of pipe carrying at the lower end a drill bit which is rotated with the pipe. Mud is forced into the drill pipe at the surface and is passed downward through the drill pipe, out through the opening of the drill bit, and back upward to the surface in the space between the pipe and the well bore. The principal purpose in circulating the mud is to flush the drill cuttings out of the well.

After the well has been bored, pipe or casing is usually inserted, for the purpose of lining the well bore. Cement is then placed between the casing and well wall at selected locations, to seal the formations to the casing and prevent migration of fluids along the casing. To improve the cement bond between the casing and well bore, it is desirable to remove the mud which has caked over the surface of the well bore during the drilling and mud circulation process.

The devices in question are used for this purpose. They are known as "scratchers," and each consists of a circular metallic collar from which extend numerous wire bristles. The devices are mounted on the casing throughout the zone to be cemented. They are attached to the pipe in such manner that they are free to rotate, and have limited longitudinal movement along the casing between stops secured to the outer surface of the casing.

When the casing is reciprocated, the scratchers abrade the surface of the well bore, with the result that the mud cake is effectively removed. While this is going on, liquid cement is pumped through the pipe so that it displaces the circulating mud and effects a seal between the abraded surface of the bore and the casing. The casing and hardened cement is then perforated, opposite the permeable sections of the formation, to permit recovery of oil.

Preceding the development of these scratcher devices there had been a long history of well-cementing failures. The oil-production industry was thus on the lookout for an effective solution of the problem. When it appeared that the devices which have been described, used in the indicated manner, would solve this problem, there developed a broad and lucrative market for their sale. Hall and Wright¹ each conceived that he was first in the field, and each sought to satisfy the market and, at the same time, exclude the other. As before indicated, the resulting conflict gave rise to this litigation.

The commencement of this action, however, failed to contain the controversy between the parties. Intense and widespread business friction, reflected in a staccato of fresh lawsuits, kept the competitive pot boiling during the next several years. As a result, new grievances arose, additional parties became involved, and the mere lapse of time accounted for a substantial change of conditions. In an effort to keep the instant suit abreast of these developments, there were amended pleadings and counter pleadings, interventions, motions, hearings, partial trials, stipulations, orders, preliminary injunctions, and a partial judgment.

By March 19, 1954, when the trial had finally been completed and the case was submitted, the questions for determination were these: (1) Were any or all of the patents valid? (2) If so, were the valid patents infringed? (3) Were either the defendants or the plaintiff guilty of unfair competition?

The trial court held that none of the patents was valid. Accordingly, the court did not reach the question of infringement. The court also held that the defendants and the plaintiff both were guilty of unfair competition, but that the unclean hands of the opposing parties precluded the granting of relief.

Judgment was entered dismissing the action and cross-action, but maintaining the status quo pending appeal. Plaintiffs and defendants appeal, each side contesting the holdings of the trial court which are adverse to their respective interests.²

We will first give consideration to the question of whether the trial court was correct in ruling that the patents are invalid. With regard to each of the four patents, this ruling was based upon a finding that the subject-matter of the patent lacked invention over the state of the prior art.

The question of novelty and invention of a patented device or method is a question of fact. Lane-Wells Co. v. M. O. Johnston Oil Field Service Corp., 9 Cir., 181 F.2d 707. A finding of fact that the subject-matter of a patent lacks invention over the state of the prior art should therefore not be disturbed unless the finding is clearly erroneous.³

In determining whether there is invention, everything previously known to the art through patents, publications, or use, must be taken into consideration.⁴ Much of the record consists of evidence submitted by the respective parties tending to show that the patents claimed by the other party were anticipated by previous patents, publications, or use. If as to any of these patents there is substantial evidence of such anticipation, it follows that as to such patent the finding of lack of invention is not clearly erroneous.

Concerning Hall apparatus patent No. 515,⁵ the testimony and documentary evidence of such anticipation, although disputed, is substantial. Hall first applied for this patent on April 16, 1941. About a year and a half before that date, Phillip H. Jones and Dennis Berdine, engineers for the Union Oil Company, were commissioned to make experiments on the causes of failures in oil well cement jobs. These tests were made at Dominquez Hills, near Long Beach, California. There is evidence indicating that the B & W, Inc., device used by Jones and Berdine was very similar, structurally and functionally, to the device described in Hall patent No. 515.

It is apparent that, in sanctioning issuance of Hall patent No. 515,⁶ the Board of Patent Appeals was of the view that it had not been established that the Jones and Berdine device was rotatably mounted. An engineer who conducted the test, however, testified at the trial in this action that the device there used was rotatably mounted. The trial court apparently accepted this testimony as true. We have no basis for holding otherwise. The evidence as to the similarity of the two devices, and of the way they were mounted and used, is sufficient to sustain the finding of fact that Hall patent No. 515 lacked invention.

Regarding Wright apparatus patent No. 317, we likewise find the evidence, though again in dispute, sufficient to support the finding that this patent lacked invention. This patent was applied for on December 10, 1940, and was issued on April 24, 1945.⁷

There is first to be resolved a dispute between the parties as to the nature of the device covered by this patent. Hall contends that the patent calls for a non-rotatable collar with scratcher arms extending radially. The various devices which have been manufactured and sold under this patent during the last ten years or so, however, are intended for rotatable mounting and have sidewise bristles. It seems to be agreed that rotatable mounting and angular disposition of the scratcher wires are essential to the successful use of such devices.

The trial court made no finding as to the kind of mounting, or the angle of bristles, as called for in Wright patent No. 317.

The B & W, Inc., device which was used during the Jones and Berdine test was rotatably mounted. This is also probably true with respect to the units which were sold to Kelly and Sons, in December, 1939. The patent itself, however, makes no reference to the rotatable feature. In describing the attachment of the scratcher to the pipe, the word "secured" is used throughout the patent. Moreover, the patentee pointed out in his application that manipulation of the scratcher could be accomplished by rotation of the casing,...