Kinnear-Weed Corp. v. Humble Oil & Refining Co.

• Decision Date: 21 July 1954
• Docket Number: No. 14777.,14777.
• Citation: 214 F.2d 891
• Parties: KINNEAR-WEED CORP. v. HUMBLE OIL & REFINING CO.
• Court: U.S. Court of Appeals — Fifth Circuit

214 F.2d 891 (1954)

KINNEAR-WEED CORP. v. HUMBLE OIL & REFINING CO.

No. 14777.

United States Court of Appeals Fifth Circuit.

July 21, 1954.

Homer T. Bouldin, Houston, Tex., William E. Kinnear, Beaumont, Tex., for appellant.

Nelson Jones, Houston, Tex., B. D. Orgain, Beaumont, Tex., Melvin F. Fincke, Walter B. Morgan, Garrett R. Tucker, Jr., Frank B. Pugsley, Houston, Tex., for appellee. Orgain, Bell & Tucker, Beaumont, Tex., Baker, Botts, Andrews & Shepherd, Rex G. Baker, Houston, Tex., of counsel.

Before HUTCHESON, Chief Judge, RIVES, Circuit Judge, and DAWKINS, District Judge.

RIVES, Circuit Judge.

The complaint was based upon five separate claims: (1) infringement of patents, (2) violation of a confidential relationship, (3) unjust enrichment, (4) unfair competition, (5) for the recovery of threefold damages¹ for violation of Section 2 of the Sherman Act.² Upon this appeal we are concerned only with the last claim, the one for violation of the antitrust or monopoly laws. That claim was presented by paragraph 12 of the complaint.³ The district court sustained the defendant's motion to strike said paragraph 12, and, pursuant to Rule 54(b), Federal Rules of Civil Procedure,⁴ the court determined "that since Paragraph 12 presents a claim for relief separate and apart from the other claims presented in plaintiff's complaint, there is no just reason for delay in having a final decision made as to whether the allegations in said Paragraph 12 state a claim for treble damages under Section 15, Title 15, U.S.C.A.", and directed the entry of a final judgment from which this appeal is prosecuted.

If the evidence sustains the plaintiff's⁵ averments on its first four claims, the plaintiff can recover all of the actual damages to which it is entitled. In its claim for treble damages in paragraph 12, the plaintiff seeks a windfall on account of an alleged violation of the antitrust laws. The main purpose of those laws was to protect the public from monopolies and restraint of trade, and the private right of action for treble damages was incidental and subordinate to that main purpose. Glenn Coal Co. v. Dickinson Fuel Co., 4 Cir., 72 F.2d 885, 889. The grant of a claim for treble damages to persons injured was for the purpose of multiplying the agencies which would help enforce the antitrust laws and therefore make them more effective. Maltz v. Sax, 7 Cir., 134 F.2d 2, 4. The very foundation of the right of a private suitor to recover "threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee" is the violation of public rights prohibited by the Act and, indeed, made criminal offenses. 15 U.S.C.A. §§ 1, 2 (see footnote 2, supra).

Public injury alone justifying the threefold increase in damages and being an indispensable constituent of a claim for violation of the antitrust laws, a general allegation of such injury is not sufficient. It is essential that the complaint allege facts from which it can be determined that the conduct charged to be in violation of the antitrust laws was reasonably calculated to prejudice the public interest by unduly restricting the free flow of interstate commerce. Apex Hosiery Co. v. Leader, 310 U.S. 469, 493, 60 S. Ct. 982, 84 L.Ed. 1311; Wilder Mfg. Co. v. Corn Products Refining Co., 236 U.S. 165, 174, 35 S.Ct. 398, 59 L.Ed. 520; Feddersen Motors v. Ward, 10 Cir., 180 F.2d 519, 522; Dublin Distributors, Inc. v. Edward & John Burke Limited, D.C.S.D. N.Y., 109 F.Supp. 125, 127; National Used Car M. Report v. National Auto D. Ass'n, D.D.C., 108 F.Supp. 692, 694; Bader v. Zurich General Accident & Liability Ins. Co., D.C.S.D.N.Y., 12 F.R.D. 437, 439.

The averment of public injury in paragraph 12 of the complaint is a bare conclusion of the pleader: "And that such acts and conduct by defendant in attempting to, and by, establishing and maintaining such a monopoly has resulted in prejudicial consequences to the public interest whereby the public interest has been injured." It is true that the conduct charged to the defendant was in fact antagonistic to the purpose of the patent laws, and that that purpose is a public purpose, "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries", Constitution Art. I, § 8, Clause 8. That, however, is not the kind of public purpose protected by the antitrust laws, which are designed instead to protect the free flow of interstate commerce. Indeed, to an extent the two purposes conflict. But for the beneficent purpose of encouraging invention, the limited monopoly granted by a patent might itself be contrary to the spirit of the antitrust laws. It is significant also that, while violations of the antitrust laws have been made criminal offenses, Congress has not declared patent infringement even willfully committed, to constitute a crime. Every fact averred in paragraph 12 of the complaint might be true, and yet the inventions or improvements of drilling bits or drills covered by the plaintiff's patents might not have been restrained from the free flow of interstate commerce. Indeed, for aught that appears, the defendant's conduct may have increased the flow of such products in commerce.

Paragraph 12 of the complaint is fatally defective because it alleges no facts which show injury to the public. It is not necessary to decide whether it is defective in the several other particulars urged by the defendant.⁶

The allegations of paragraph 12 have no proper place in the trial or disposition of the other claims upon which the suit is based, and might serve to prejudice the defendant or to prolong the trial. The district court did not err, therefore, in sustaining the defendant's motion to strike paragraph 12.⁷

Affirmed.

Appendix.

Paragraph 12 of the Complaint:

"That defendant is one of the largest producers of oil in the United States and engages in interstate commerce on a big scale in the drilling, production and sale of petroleum products in that it transports oil well drilling equipment and oil and gas storage equipment in the regular course of its usual business, and transports and has transported, oil and other petroleum products by truck, railroad and pipe lines from the State of Texas to various other states and sections of the United States, and from other states to various other sections of the United States, and sells oil and other petroleum products in a number of states, the exact number not being known to plaintiff, and often drills oil and gas wells in at least several states of the United States. That defendant by reason of its great volume of oil well drilling equipment, including drills or drilling bits, which it purchases, the economic position of oil well drilling equipment manufacturers is greatly affected by the distribution of defendant's patronage. That defendant has had a policy for the past several years of sending its engineers, who have been under contract with defendant to assign their inventions and applications for Letters Patent to the Standard Oil and Development Co., a Delaware Corporation, which is a research and development Company, or to defendant, out to various manufacturers of oil well drilling and completion equipment and by representing that defendant wishes to evaluate and compare said equipment, in order to determine whether defendant wishes to use same in the drilling and controlling of...