Jack Winter, Inc. v. Koratron Company, Inc.
| Decision Date | 06 March 1974 |
| Docket Number | Civ. No. 49392. |
| Citation | 375 F. Supp. 1 |
| Court | U.S. District Court — Northern District of California |
| Parties | JACK WINTER, INC., a corporation, Plaintiff, v. KORATRON COMPANY, INC., a corporation, Counterclaimant, v. JACK WINTER, INC., a corporation, Counterclaim Defendant. |
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Marvin E. Klitsner, Timothy C. Frautschi, Foley & Lardner, Milwaukee, Wis., Carl Hoppe, Eckhoff, Hoppe, Slick, Mitchell & Anderson, San Francisco, Cal., for Jack Winter, Inc.
D. Carl Richards, V. Bryan Medlock, Richards, Harris & Hubbard, Dallas, Tex., for The Armory Garment Co. and Haggar Co.
David Rabin, Greensboro, N. C., for Blue Bell, Inc. and W. Koury Co., Inc.
Dayton R. Stemple, Jr., Browne, Beveridge & DeGrandi, Washington, D. C., for Salant & Salant, Inc. and Standard Romper Co., Inc.
Thomas V. Heyman, Albert Robin, Watson, Leavenworth, Kelton & Taggart, New York City, Harold C. Nachtrieb, Anthony G. Wilson, Miller, Groezinger, Pettit, Evers & Martin, San Francisco, Cal., for Henry I. Siegel Co., Inc.
Charles A. Legge, Bronson, Bronson & McKinnon, San Francisco, Cal., Irving Ostrow, Silverman & Kalnich, New York City, for Metro Pants Co., Inc.
Glen E. Keller, Jr., Phelps, Hall & Keller, Denver, Colo., Thomas V. Heyman, Albert Robin, Maxim H. Waldbaum, Watson, Leavenworth, Kelton & Taggart, New York City, for Bayly Corp.
William C. Clay, Jr., Clay & Marye, Mt. Sterling, Ky., Jack Corinblit, Los Angeles, Cal., for Cowden Manufacturing Co.
Jay Topkis, Bernard Ouziel, Paul, Weiss, Rifkind, Wharton & Garrison, Robert D. Spille, Curtis, Morris & Safford, New York City, for Deering Milliken, Inc.
John Izard, King & Spalding, Charles M. Kidd, Weltner, Kidd & Crumbley, Atlanta, Ga., for Oxford Industries, Inc. and Wright Manufacturing Co.
James M. Naylor, Naylor & Neal, San Francisco, Cal., Lawrence B. Biebel, Marechal, Biebel, French & Bugg, Dayton, Ohio, for Lion Uniform, Inc.
M. Laurence Popofsky, Stephen V. Bomse, Heller, Ehrman, White & McAuliffe, San Francisco, Cal., for Defiance Manufacturing Co., Inc.
M. Laurence Popofsky, Stephen V. Bomse, Heller, Ehrman, White & McAuliffe, Willard L. Ellis, Ellis & Levy, Paul D. Flehr, Sherman O. Parrett, Flehr, Hohbach, Test, Albritton & Herbert, John P. Sutton, Limbach, Limbach & Sutton, San Francisco, Cal., for Levi Strauss & Co.
Hunton, Williams, Gay & Gibson, Lewis T. Booker, Richmond, Va., Morgan, Finnegan, Durham & Pine, John C. Vassil, New York City, for Dan River Mills, Inc. third-party defendant.
Brobeck, Phleger & Harrison, Moses Lasky, Robert S. Dagget, San Francisco, Cal., Lyon & Lyon, James W. Geriak, Los Angeles, Cal., for Koratron Co., Inc. and Koracorp Industries, Inc., defendant and counterclaimant.
These seventeen consolidated1 actions were tried to the Court in a lengthy and comprehensive trial.2 All of the cases involve U.S. Patent No. 2,974,432 (the "'432 patent") issued March 14, 1961, to Koret of California ("Koret"), now known as Koracorp Industries, Inc. ("Koracorp"), as assignee, and thereafter assigned to Koratron Company, Inc. ("Koratron"), a wholly owned subsidiary of Koracorp.3
In 15 of the 17 cases Koratron seeks to recover from certain garment makers license royalties for the use of the patented process or damages for infringement of the patent after expiration of their respective licenses. Each of these garment makers contends in the alternative that the '432 patent is invalid for a multitude of reasons; that if valid, it has not been infringed by any use of the patented process for which royalties or damages are due; or that even if the patent is valid and infringed, Koratron is precluded from enforcing it because of its alleged misconduct before the Patent Office and by other patent misuse. Finally, they contend that Koratron has violated the antitrust laws.
In the Levi Strauss action,4 Koratron also asserts an antitrust complaint against Levi Strauss and a third party complaint against Dan River Mills, Inc. ("Dan River").5 Koratron contends that Levi Strauss conspired with other garment makers in violation of the antitrust laws to refuse to pay royalties due Koratron under their license agreements and to refuse to comply with and to perform their other obligations thereunder.
In the remaining cases, Koratron sued Deering Milliken Inc. ("Deering Milliken"), a mill which manufactures and sells fabric to garment makers, for common law interference with Koratron's business relations with certain of its licensed garment makers. Koratron charges that Deering Milliken unlawfully represented to garment makers that certain processed fabric offered for sale by Deering Milliken could be manufactured by '432 patent licensees into permanent press garments without incurring any royalty obligation to Koratron under the '432 patent. Deering Milliken denies the allegations and asserts the same defenses regarding the patent and its use as did the garment makers.
"Adversaries" (that is, all of the parties adverse to Koratron other than Dan River) claim that an agreement between Koratron and Dan River dated October 14, 1965, violates the antitrust laws. Dan River and Koratron both contend that the agreement does not violate the antitrust laws. Koratron contends that if such an antitrust violation were found Dan River would be liable in turn to Koratron. Koratron also claims that the fabrics manufactured by Dan River do not conform to the specifications contained in the October 14, 1965, agreement contrary to the representations of Dan River, and that Dan River thereby breached its contract with Koratron. The Court has heretofore ruled against Koratron that the agreement with Dan River is not void or voidable due to the common law principles of coercion,6 and that ruling is hereby reaffirmed.
The parties to these cases were referred to throughout the trial and are referred to in this opinion as Koratron, Adversaries, and Dan River. This terminology is appropriate because the use of the normal labels of plaintiff and defendant could cause confusion. Several of the cases were commenced by Koratron for royalties and damages, to which Adversaries' defenses and claims described above were interposed, and the others were commenced against Koratron by Adversaries.
Koratron, Adversaries, and Dan River submitted hundreds of findings of fact and conclusions of law, and then each filed exceptions to those filed by the other parties. Two weeks of argument to the Court were heard on the proposed findings and conclusions. Based upon a review of the proposed findings, conclusions, exceptions thereto, all the arguments made in connection therewith, the testimony at trial, portions of designated depositions, exhibits received in evidence, opening trial briefs of Adversaries and Dan River, and argument of counsel, the Court has reached its decision which is set forth in narrative form.
The trial was not designed to dispose of all the controversies among the parties. It was limited to the issues common to the consolidated cases relating to the legal bases for all affirmative claims set forth in the pretrial order dated March 20, 1972. The pretrial order which governed the trial expressly excluded other matters such as damages.
The Court has jurisdiction of each of the consolidated cases under 28 U.S.C. §§ 1331, 1332 and 1338, and venue is proper. This Court also has jurisdiction of all other claims under the doctrine of pendent jurisdiction.
All of the commerce involved in or affected by the matters in controversy is interstate.
The predecessor of Koracorp Industries, Inc. ("Koracorp"), Koret of California, was founded as a sole proprietorship in 1938 by Joseph Koret. It manufactured and sold skirts designed to coordinate with sweaters produced by other manufacturers. A partnership was formed in 1939, and in 1944 Koret of California ("Koret") was incorporated.
Over the years Koret has marketed a variety of sportswear items, having particular success with pleated garments. In the late 1940's it sold a line of permanently pleated synthetic skirts under the names, Tub-pleets, Tubinyl and Nylura. By 1953 over 600,000 of such permanently pleated garments had been manufactured and sold. During the 1950's Koret successfully marketed its Pleetset line of pleated skirts made of resin-impregnated and heat-cured cotton. Subsequently Koret produced permanent press garments under the process which forms the subject matter of the '432 patent at issue here.
Koret, now Koracorp, was the original assignee of the '432 patent, and in 1963 it began to license the patented process to garment makers. Subsequently, the corporation registered two trademarks dealing with this patented process: "KORATRON" (Reg. No. 764,009), for the chemically treated fabric used in the manufacture of permanent press garments, and "KORATRON" (Reg. No. 769,609), for permanent press garments.
In 1964 Koratron Company, Inc. ("Koratron"), was incorporated as a wholly-owned subsidiary of Koracorp, and the parent corporation transferred to Koratron the '432 patent, trademarks and existing licensing agreements. Koratron's only business consists of licensing and other activities relating to the '432 patent and its trademarks.
Koratron was also the owner of United States Letters Patent No. 3,268,915 (the '915 patent), which was issued on August 30, 1966, to Koratron as assignee and which disclosed and claimed an improvement upon the process of the '432 patent. By notice filed with the Patent Office on May 18, 1970, Koratron filed of record a formal dedication of the remaining term of the '915 patent.
The licensing of the patented process...
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