Houser v. Snap-On Tools Corporation

• Citation: 202 F. Supp. 181
• Decision Date: 23 January 1962
• Docket Number: Civ. No. 11950.
• Parties: Samuel G. HOUSER t/a Houser & Son v. SNAP-ON TOOLS CORPORATION, a Delaware corporation.
• Court: U.S. District Court — District of Maryland

202 F. Supp. 181

Samuel G. HOUSER t/a Houser & Son v. SNAP-ON TOOLS CORPORATION, a Delaware corporation.

Civ. No. 11950.

United States District Court D. Maryland.

January 23, 1962.

Wm. E. Owen, Washington, D. C., and Melvin M. Feldman, Wheaton, Md., for plaintiff.

Wm. A. Grimes, Ober, Williams, Grimes & Stinson, Baltimore, Md., and Harry C. Alberts, Chicago, Ill., for defendant.

NORTHROP, District Judge.

This action is brought by Samuel G. Houser (herein referred to as "Houser") against Snap-On Tools Corporation (herein referred to as "Snap-On"). Houser resides in Maryland and owns and operates an automobile repair garage in Washington, D. C. Snap-On, a manufacturer and seller of a line of hand tools, is incorporated under the laws of Delaware, has its principal place of business in Wisconsin, and does business in Maryland.

The complaint seeks to enjoin Snap-On from the further manufacture, sale, or use of a tool alleged to be that of Houser; an accounting and damages are also sought. The complaint alleges the breach of a confidential relation and the unlawful expropriation of the subject matter of a trade secret.

Houser, in July of 1956, developed a nut-spinner, the principal value of which was that it made the threading and unthreading of nuts in both confined and open areas possible, where the mechanical advantage of a lever or "extension" was impractical and unnecessary. In developing this device Houser relied solely upon his own imagination and mechanical skill, except that his son assisted him in making a working model of the device, which was put into use immediately. It was kept in Houser's tool box, together with a wide assortment of other tools, and no particular steps were taken to secrete it from the perception of others. However, it was not displayed to any significant extent. It was treated as just another tool in the possession of a mechanic proud of his craft and the good order of his shop.

In the fall of the same year, 1956, Houser sought to protect himself with regard to the tool in question. No doubt he received pleasure from the successful application of his device, considered it unique, and thought it had some value. Previous to this time Houser had created another device which he had had patented at the cost of about $3,000. In this instance, apparently, Houser was under the impression that he could receive protection comparable to that provided under the patent laws by mailing a registered letter to himself in which were included drawings of the device in question. This he did on December 26, 1956.

On December 31, 1956, Houser wrote eo Snap-On for the first time to the effect that he had perfected a device in which he thought the corporation might be interested. In this letter there was no description of the device, but Houser did state that it was "registered for patent." Despite his own testimony to the contrary, Houser did not fully understand the meaning of this phrase. He saw no difference between sending the registered letter and having the device registered for patent. Houser did not intend to deceive Snap-On in this regard; he was attempting to show that he had what he believed was some measure of protection for his device.

That Snap-On was misled by Houser's erroneous reference to patent registration is almost certain. It is assumed that, had Houser's letter made no mention of this, the response by Snap-On would have been a letter of rejection. One of Snap-On's vice-presidents testified that the corporation will not consider any disclosures unless the disclosing party indicates that he has patent protection. This policy was in effect at the time of Houser's dealings with Snap-On but there is no evidence that Houser knew of it.

Instead of rejecting Houser's solicitation, Snap-On replied, by a letter of January 4, 1957, stating that it was interested in Houser's device but that the signing of its enclosed Form 230-Rev., set forth in the margin below,¹ would be required before it would give any consideration to the spinner. This form was signed by Houser, witnessed by his wife, and returned to Snap-On.

Form 230-Rev. is claimed by the defense to be a waiver of any confidential relation and all rights based thereon. As such it is far from being clear and unambiguous. In particular, condition No. 3 does not seem to indicate, as the defense urges it does, that the signing party is waiving all rights other than those based upon the patent laws. Without determining the effect of this so-called waiver, it is doubted that a document such as this would give a manufacturer the right to expropriate a disclosure without remuneration, where the course of dealings between the parties indicates, as it does here, that the disclosing party was seeking remuneration for the use of his creation.²

Shortly after Houser returned the form he sent to Snap-On a description of his nut-spinner, making a full disclosure thereof. This disclosure was handled by Gordon R. Anderson, an employee of Snap-On in charge of matters such as this. Anderson testified by deposition that he showed this description to one Ray Knudsen, also an employee of Snap-On working in the New Products Department. Knudsen drew a sketch, referring Anderson to a disclosure made to Snap-On prior to the Houser disclosure by one Manley Clary, in May of 1956. Anderson examined the Clary disclosure in the files of the corporation, surmised that it was markedly similar to the Houser disclosure, and sent a letter of rejection to Houser. This letter is dated February 11, 1957, and states simply that Snap-On has no present interest in manufacturing the device. The letter contains no mention of the prior Clary disclosure; nor does it contain any reference to prior patents of similar devices, Snap-On products of any vintage, or contemporaneous Snap-On research with tools of a similar nature.

This is the full extent of the dealings between Houser and Snap-On prior to the institution of these proceedings.

Subsequent to Houser's disclosure to Snap-On, Houser made similar disclosures to two other tool companies which might be considered competitors of Snap-On. In each instance the Houser tool was rejected by the company to which it was presented, and in neither instance did the company request the signing of a form similar to Snap-On's Form 230-Rev. The defense did not seriously urge, nor do we hold, that these subsequent disclosures and the manner in which the tool was kept in Houser's shop constitute a public dedication of the device.

In the fall of 1957, Snap-On began to market and is marketing at present, a device similar to the Houser device and capable of performing the same functions as the Houser device. Both tools are severable from and attachable to a ratchet wrench lever commonly used in the mechanic's trade. Each device has a broad "washer" arrangement at the base thereof with a square recessed area for engagement with the lever wrench, and the "washer" arrangement in each is sufficiently wide to protrude beyond the base of the lever wrench. This last feature permits the user conveniently to turn the spinner manually by grasping it directly, rather than being limited to the use of the lever extension of the wrench. Both devices are knurled on the "washer" area to facilitate grasping the spinner in the event the hands of the user are greasy; the knurling is different on the two devices, but the difference is one without substance. From the base of both devices there is an extended piece reduced to a square tang for the engagement of the tool which is to embrace the nut. Both devices have a recessed ball bearing in the tang portion to make this last engagement more secure, the bearing being the only part which might be considered moving. The exact proportions of the two devices are not identical, nor are their weights or shapes. The Houser spinner is heavier and squatter. Snap-On's product is "scooped out" between the "washer" and the tang. The metals of which the two devices are made are not the same. The Houser spinner is a crude assemblage of welded scraps, while the Snap-On product is a finely turned, manufactured item. However, none of the differences between the two spinners is material; they both perform the same function in the same manner and with equal efficiency and effectiveness.

A substantial portion of the evidence submitted by the defense relates to a disclosure made to Snap-On by one Howard Ferris, an Arizona mechanic, of another and comparable nut-spinning device. Joseph Johnson, then Snap-On's president, first saw this device at Woudenberg Pontiac in Mesa, Arizona, in 1956. There is some difference in the depositions of Ferris and Johnson as to the exact date, but none as to the year. Upon his return to Snap-On's Wisconsin plant and with the Ferris spinner in his possession Johnson ordered Kermit N. Caves, another employee, to make two production models of the Ferris device. One of these models was sent to Ferris, but Snap-On retained the other.

The evidence relating to the origins of the Snap-On nut-spinner establishes the fact that Snap-On relied almost exclusively upon the Ferris model in its production, with the consent of Ferris. The record is barren of testimony that might indicate that the Snap-On engineers who developed the marketed product were familiar with the Houser disclosure or that they consulted same during its development. Nor is there any evidence that might indicate that either Johnson or Caves had seen the Houser device at this time or that they had consulted with either Anderson or Knudsen about it. Rather, a comparison of the three spinners—those of Houser, Ferris, and Snap-On — demonstrates, even to the untutored eye, a much greater physical similarity between the Ferris and Snap-On devices than between the Houser and Snap-On devices. The only differences between Ferris' spinner and Snap-On's are variations in knurling and slightly varying proportions; and these discrepancies are...