Jenkins Petroleum Process Co. v. Sinclair Refining Co.

• Decision Date: 09 April 1929
• Docket Number: No. 2203.,2203.
• Citation: 32 F.2d 252
• Parties: JENKINS PETROLEUM PROCESS CO. v. SINCLAIR REFINING CO.
• Court: U.S. Court of Appeals — First Circuit

32 F.2d 252 (1929)

JENKINS PETROLEUM PROCESS CO. v. SINCLAIR REFINING CO.

No. 2203.

Circuit Court of Appeals, First Circuit.

April 9, 1929.

Henry Russell Platt and Wallace R. Lane, of Parkinson & Lane, both of Chicago, Ill. (Philip G. Clifford, of Portland, Me., on the brief), for appellant.

Isaac B. Lipson, of Chicago, Ill., and Frank E. Barrows, of New York City (W. Clyde Jones, J. Bernhard Thiess, and Arthur B. Seibold, all of Chicago, Ill., Dean S. Edmonds, of New York City, and Charles D. Booth, of Verrill, Hale, Booth & Ives, of Portland, Me., on the brief), for appellee.

Before JOHNSON and ANDERSON, Circuit Judges, and MORRIS, District Judge.

JOHNSON, Circuit Judge.

This is an appeal from the District Court of the United States for the District of Maine. 32 F.(2d) 247.

A statement of facts is necessary to a consideration of the questions which have been raised. The Jenkins Petroleum Process Company will be referred to as plaintiff, and the Sinclair Refining Company as defendant.

The plaintiff is a corporation organized and existing under the laws of the state of Wisconsin; the defendant, a corporation organized and existing under the laws of the state of Maine. The latter was originally organized and known as the Cudahy Refining Company. Its name was later changed to that which the defendant bears. The business of the Cudahy Refining Company, which was continued by the defendant, was in part to treat petroleum products. The plaintiff was organized for the same purpose and acquired the ownership of an invention of Ulysses S. Jenkins and letters patent of the United States No. 1,226,526 issued to him on May 15, 1917, and letters patent No. 1,321,749 issued to him on November 11, 1919. The former was for a process patent and the latter an apparatus patent.

The process relates to the distillation of crude oil to obtain gasoline, and is called a "cracking process" in distinction from "straight distillation." By the latter crude oil as it comes from the well is heated to different temperatures, the vapors from which gasoline is derived coming off at one temperature and those forming kerosene and gas oil coming off at other temperatures. The lighter oils which yield gasoline, the most valuable product of the "cracking process," contain fewer atoms of hydrogen and carbon to the molecule than the heavier oils which yield other products. By the "cracking process" the crude oil is subjected to a high degree of heat to break up the molecules of the heavier oils into smaller molecules to form lighter oil before they are distilled over. In order to do this it is necessary to prevent the escape of gases and vapors in order that the distillation may not take place before a temperature is reached at which the molecules are disrupted or broken up.

At the time with which the present case is concerned, "straight distillation" had been employed, by which the refiners were not able to obtain more than 30 to 35 per cent. of the amount of the oil as gasoline, and in the attempts that had been made to obtain gasoline by the "cracking process" a great deal of carbon was deposited in the still which adhered to its sides, interfering with the proper heating of the oil and producing other results which caused the bursting of the still. It then became necessary to shut down the process and let the still cool so that the carbon which adhered to its walls might be removed and it again be heated to the temperature required for the "cracking process."

Experts in the refining process were devoting their knowledge and skill to discovering some method for the elimination of carbon. Two methods were in use at this time: One, called the Burton method, by which a still was charged by oil pumped into it and then heated; another, devised by different inventors, was a tube method by which the oil was heated in tubes instead of in a still. Various inventions by Clark, Seeger, Smith, and Cross employed the tubular method.

The demand for gasoline had largely increased and the "cracking" art was the subject of a great deal of study. Ulysses S. Jenkins, to whom the patents before mentioned were issued, was in the employ of the defendant in its lubricating sales department. He had had experience with steam boilers, but, knowing that there was serious trouble with the "cracking process" due to the formation of carbon, turned his attention to inventing a still for "cracking" oil, and set up one in a small garage in Chicago.

Others became interested with him and prospectuses were issued, when his experimentation had gone far enough to justify it. These were distributed to the public and particularly to oil refiners.

The striking feature of his method and apparatus set out in the prospectus issued was that the process could be made continuous by new oil being pumped into the still continuously and the desired products obtained by an indefinite running of the still, so that it would not be necessary to stop the process to clean the carbon from the still before a fresh charge of oil could be put into it. Inclined boiler tubes were shown through which the oil was driven, and it was claimed that by this method "coking, the bane of practical oil men, which is responsible for more trouble, inefficiency, burned bottoms, ruined stills, and spoiled product, than any other single cause, is absolutely done away with. Our stills if properly operated, need practically never be cleaned except to remove the small percentage of impurities which may be carried in with the oil." The prospectus then pointed out how the oil circulating rapidly through the inclined boiler tubes would gather the maximum of heat, being "seventy-five per cent. as high as that of the flames." It then pointed out other advantages of the method, including the gas take-off so adjusted as to take off the gases generated, which would arrange themselves according to various densities by what was known as "mass action." Reference was made to the demonstration of Dr. Rittman, connected with the United States Bureau of Mines. These prospectuses were issued and came into the possession of the Cudahy people in the fall of 1916.

The defendant in the meantime had been studying methods for cracking oil since 1912, through its engineer, Edward W. Isom, in charge of its refining plants. He had visited different places as described in the record and examined the methods used in refining oil and the cracking processes there.

Mr. William H. Isom was the father of Edward W. Isom and the president of the defendant company. It was brought to his attention in 1916 that Jenkins claimed to have invented an apparatus for cracking oil which eliminated the carbon practically and that it would run continuously and "revolutionize the oil industry." He communicated with his son, Edward W. Isom, who came to Chicago, and arrangement was made to visit the garage where the Jenkins apparatus had been set up. He did so, but the apparatus did not work, and a fire soon after put it out of commission. This was in August, 1916.

Edward W. Isom saw the Jenkins apparatus but once in Chicago. He thought that different oil should be used and wanted to try it upon the oils of the defendant company. He therefore made a suggestion to the officers of the plaintiff company that they ship the still to Coffeyville, Kan., where the defendant had a plant. Following this a letter was written by the plaintiff, as follows:

"Chicago, Ill., October 2, 1916.

"Cudahy Refining Co., Chicago, Illinois.

"Gentlemen: Pursuant to our conversations and conferences relative to the Jenkins process of treating petroleum, it is understood that we are to loan you our experimental still to be shipped to Coffeyville, Kansas, so that your experts and engineers may have apparatus immediately available upon which to carry out experiments upon the Jenkins improved process upon your petroleum products.

"It is further understood that Mr. Ulysses S. Jenkins of Chicago will go to Coffeyville, Kansas, to install the still and will remain in an advisory capacity throughout the entire course of experimental work carried on by your experts, Mr. Jenkins' salary being $150.00 per month, and all expenses, including railroad expenses incurred by him in making trips to Chicago rendered necessary by said experimental work, this to be paid by you.

"It is further definitely understood and agreed between us that any...