Helene Curtis Industries v. Sales Affiliates

• Decision Date: 30 April 1954
• Citation: 121 F. Supp. 490
• Parties: HELENE CURTIS INDUSTRIES, Inc., et al. v. SALES AFFILIATES, Inc. GILLETTE CO. et al. v. SALES AFFILIATES, Inc. SALES AFFILIATES, Inc., et al. v. LAYDEN. SALES AFFILIATES, Inc., et al. v. SKILLERN & SONS, Inc., et al.
• Court: U.S. District Court — Southern District of New York

121 F. Supp. 490

HELENE CURTIS INDUSTRIES, Inc., et al. v. SALES AFFILIATES, Inc.

GILLETTE CO. et al. v. SALES AFFILIATES, Inc.

SALES AFFILIATES, Inc., et al. v. LAYDEN.

SALES AFFILIATES, Inc., et al. v. SKILLERN & SONS, Inc., et al.

United States District Court S. D. New York.

April 30, 1954.

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Kenyon & Kenyon, New York City, Theodore S. Kenyon, Malvin R. Mandelbaum, New York City, Maurice S. Cayne, Chicago, Ill., of counsel, for plaintiff Helene Curtis Industries, Inc., Helene Curtis Sales, Inc. and C. V. Layden, plaintiff-intervener.

Henry R. Ashton, New York City, Edgar H. Kend, Boston, Mass., Harry R. Pugh, Jr., Rynn Berry, New York City, and Martin Kirkpatrick, Boston, Mass., of counsel, for plaintiff Gillette Co.

Hawkins, Delafield & Wood, New York City, Clarence Fried, New York City, of counsel, for plaintiffs-interveners Skillern & Sons, Inc., and Walgreen Drug Co. of Texas.

Morgan, Finnegan & Durham, New York City, George B. Finnegan, Jr., William D. Denson and Jerome G. Lee, New York City, of counsel, for defendant Sales Affiliates, Inc.

IRVING R. KAUFMAN, District Judge.

The Court has before it for review the Report of a Special Master which

(1) holds U. S. Patent No. 2,577,710 invalid;

(2) dismisses all counterclaims brought by defendant, Sales Affiliates, Inc., for infringement and damages; and

(3) dismisses two consolidated infringement actions originally brought by the defendant in Texas.

In issue here, in four actions which were consolidated for trial,¹ is the validity and infringement of the McDonough U. S. Patent, issued on December 4, 1951, to Procter and Gamble as mortgagee of Sales Affiliates, Inc., the assignee of the applicant-inventor, Everett G. McDonough. The McDonough patent is concerned with permanent waving compositions which employ as a waving agent any one of a broad class of chemical compounds known as mercaptans.

The litigious history of the patent since application for it was first made on June 16, 1941, is indicated in the Master's Report and in a former opinion of this Court.²

I. Objections to Master's Report

Plaintiffs filed nine objections to the Master's Report; defendant filed 371. Ample time was given the parties to brief their contentions. In addition to the voluminous briefs submitted, a copy of the Master's Report, with annotated reference to the objections and the stenographic minutes, was also submitted to this Court. Copies of the voluminous briefs submitted to the Master, totalling nearly 1000 pages, were also carefully examined by this Court. A date for oral argument on the objections was fixed and counsel were given ample time to present to this Court their respective positions.

II. Proceedings Before the Master

Before passing to a consideration of the extensive objections made to the Master's Report, it is appropriate to note the magnitude of the trial before the Master.

"On July 2, 1952, informal preliminary statements and outlines of proof were made by counsel. * * With customary optimism, it was anticipated that the trial would be completed by the end of September. However, the New York depositions, which were taken before the Master, consumed over two months, filling more than 2,000 pages of transcript, most of which was subsequently offered at the trial. The trial got under way on October 21, and continued well into January, 1953. During its course more than twenty witnesses gave more than 4,000 pages of testimony, all in addition to the depositions of absent as well as present witnesses. Almost a thousand exhibits were marked for identification or offered in evidence" (out of a total of 8,455 documents which had been produced on demand of one party or another). "The exhibits * * * themselves added up to several thousand pages of evidence. The briefs of the parties totaled almost a thousand pages. It can be said that rarely, if ever, has a patent case been more thoroughly presented by way of testimony and documentation, and so exhaustively argued." (Page 7 of Master's Report.)

The Master, a former Federal Judge, was eminently qualified to deal with a case of such complexity. The length of his report and the detailed and meticulous consideration of each point presented show the extraordinary thoroughness with which he dealt with a complex problem. Many of the factual issues are of a scientific nature and a determination of these issues required the digesting of literally thousands of pages of documentary evidence. Often, a careful search through hundreds of pages of laboratory records was necessary — a practice followed by this Court as well in the instant proceeding.

Before reviewing a decision which rests on such an extensive investigation, it should be pointed out that the Federal Rules of Civil Procedure instruct us that the Master's findings of fact are to be accepted unless clearly erroneous. Rule 53(e) (2), 28 U.S.C.A. This same principle applies to the findings of a district court upon an appeal. U. S. v. Village of Highland Falls, 2 Cir., 1946 154 F.2d 224, 227, certiorari denied Volkringer v. United States, 1946, 329 U.S. 720, 67 S.Ct. 54, 91 L.Ed. 624.

The language of the Court of Appeals for the Seventh Circuit in Santa Cruz Oil Corporation v. Allbright-Nell Co., 7 Cir., 1940, 115 F.2d 604, 607-608 is appropriate here:

"Much labor and thought was given to the matter by an experienced Master, as is amply disclosed by a study of the first report rendered by him. He heard, saw and observed the witnesses and was in a better position to judge of their credibility and the weight to be given their testimony than either the District Court or this court, neither of which has had such an opportunity. To set aside his findings `unless clearly erroneous' is not only contrary to the rule quoted and the accepted practice, but amounts to a trial de novo by the reviewing court with no assurance that any better or more accurate results could be achieved."³

It is of course true that in judging the Master's findings, the district court must consider the basis of the particular findings under consideration. Thus, findings based on oral testimony where credibility is involved, are entitled to great weight, since the Master (like a trial court) had the chance to see and observe those who testified. On the other hand

"any presumption in favor of the Master is of slight importance relative to inferences, deductions, or conclusions, which the Master draws from uncontradicted, admitted, or stipulated facts and which the trial or appellate court is equally capable of making." 5 Moore's Federal Practice, 2d Ed. 1951, pp. 2981, 2985 et seq.

The Master's findings of fact in the case at bar, drawn in large part from extensive and controverted testimony by many experts in the permanent waving field, arrive for review here, at least as to those parts based upon oral testimony, armored with a strong presumption of validity.⁴

III. Form of the Report⁵

Sales Affiliates' opening objection to the Report of the Special Master is that he failed to comply with the order of reference and with the provisions of Rule 53 (e) (1) of the Federal Rules of Civil Procedure, because he did not separately list and number his findings of fact and conclusions of law, but instead incorporated his findings and conclusions in his Report. This contention is without merit.

Rule 53(e)(1), referred to by Sales Affiliates, specifically states that if the Master is required to make findings of fact and conclusions of law, "he shall set them forth in the report." It is not essential that findings and conclusions be separately stated and numbered. Under Rule 52(a), a district court's findings and conclusions may be presented in an opinion. Similarly, the findings and conclusions of a Master may be presented in the form of an opinion, as in the present case, providing his findings and conclusions have "sufficient form and content." 5 Moore's Federal Practice, supra, page 2980. The Special Master's findings and conclusions are clearly set forth in his Report and that is all that is required. There is more interest in substance than in form.

IV. The Invention Claimed⁶

Of the extensive substantive objections made by defendant to the Master's report, I shall deal first with the questions of criticality and the invention claimed. Defendant does not posit invention on the broad generic discovery of mercaptan waving lotions,⁷ for it is clear that McDonough was not the first to discover the usefulness of mercaptans as permanent waving agents. Prior disclosures by others of the usefulness of a species of mercaptans for waving bars any claim by defendant to a generic discovery. Metals Recovery Co. v. Anaconda Copper Mining Co., 9 Cir., 1929, 31 F.2d 100; In re Steenbock, 1936, 83 F.2d 912, 23 C.C.P.A.,Patents, 1244; Application of Kyrides, 1947, 159 F.2d 1019, 34 C.C.P.A.,Patents, 920.

Defendant claims as invention, however, the discovery of certain critical limits for mercaptan waving — points at which there occurs some result differing in kind, not merely in degree, from the results achieved by the prior art. Kwik Set, Inc. v. Welch Grape Juice Co., 2 Cir., 1936, 86 F.2d 945; 2 Walker on Patents, p. 755. Specifically, defendant claims a mercaptan waving lotion falling within the asserted critical limits.

Plaintiff's initial attack on the patent is based on McDonough's failure to disclose these critical limitations in his application and in his patent. Such disclosure is essential for patent validity. 35 U.S.C.A. § 112. Defendant urges that the critical limits which comprise the invention need not necessarily be stated in the claims, so long as they are disclosed in the specification. But the validity of each claim depends on whether it covers a "patentable advance over the prior art which the specifications disclose". Addressograph-Multigraph Corp. v. Staudt, 2 Cir., 1942, 124 F.2d 672, 675; See also Walker, supra, at p. 770. This...