Koehring Company v. ED Etnyre & Company, 64 C 12.

• Decision Date: 07 March 1966
• Docket Number: No. 64 C 12.,64 C 12.
• Citation: 254 F. Supp. 334
• Parties: KOEHRING COMPANY, Plaintiff, v. E. D. ETNYRE & COMPANY, Inc. and Harold Lund, Defendants.
• Court: U.S. District Court — Northern District of Illinois

254 F. Supp. 334

KOEHRING COMPANY, Plaintiff, v. E. D. ETNYRE & COMPANY, Inc. and Harold Lund, Defendants.

No. 64 C 12.

United States District Court N. D. Illinois, W. D.

March 7, 1966.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

William A. Denny, Koehring Company, Milwaukee, Wis., William E. Lucas, Lucas & Coffee, Chicago, Ill., for plaintiff.

Homer J. Schneider, Wolfe, Hubbard, Voit & Osann, Chicago, Ill., for defendant.

MEMORANDUM OPINION

WILL, District Judge,

Plaintiff, Koehring Company, brings this action seeking damages and other equitable relief because of defendant Etnyre's marketing of a self-propelled chipspreading machine in competition with a similar machine manufactured and sold by Koehring through its Flaherty Division (Flaherty). Specifically, Etnyre is charged with patent infringement, misappropriation of trade secrets or other acts of unfair competition and breach of an exclusive distributorship contract under which it was obligated both to refrain from selling competitive equipment and to use its best efforts in the promotion and sale of Koehring's Flaherty chipspreader. Defendant Lund, Chief Engineer of Flaherty prior to its acquisition by Koehring and for four and one-half months thereafter and subsequently an employee of Etnyre is charged with misappropriation of trade secrets and, additionally, with breach of certain agreements which required Lund to disclose all discoveries and inventions to Koehring while in its employ and prohibited him from engaging in any business activity in competition with Koehring prior to September 1, 1962. Koehring further alleges that the defendants' conduct was the product of a conspiracy and that, in particular, Lund's breach of the no-competition agreement was induced by Etnyre. Accordingly, it seeks judgment against both defendants jointly and severally.

The background of the instant controversy and the facts pertaining to each element of the plaintiff's complaint are presented in detail in the findings of fact and conclusions of law which accompany this memorandum and, accordingly, need not be repeated here. There are, however, several contentions raised by plaintiff at trial and subsequently upon brief which merit discussion.

As shown by the findings of fact, the court is convinced that the subject matter of United States Patent No. 3,086,684 was invented solely by defendant Harold Lund. Gene P. Flaherty, then president of Flaherty, Inc. and now employed by Koehring was neither the sole inventor, as he claimed in the patent application nor can he be classed as a joint or co-inventor with Lund. Flaherty's claim to the patent is not based on his disclosure of any scheme, suggestion or principle to Lund, but rests merely on the fact that he was the majority stockholder and chief executive officer of Flaherty prior to its acquisition by Koehring and thus was entitled to reap the benefits of his employee's labor.

Koehring relies on the fact that Lund admits that Flaherty made "some suggestions" during a meeting at which problems regarding the chipspreader gate assembly were discussed and asks the court to infer from this that Flaherty described the essentials of the radial gate assembly disclosed in the patent, leaving Lund merely to work out the details. No such inference can be drawn from the record. Significantly, Gene P. Flaherty himself admits that Lund was entirely on his own in the development of the radial gate. Flaherty does not claim that he suggested any idea incorporated in the patented construction and points out that during this period he was away from the Flaherty plant for substantial lengths of time.

In short, Lund, while an employee of Flaherty in point of law, conducted his development activities alone. The instant case, therefore, is factually similar to Allegheny Steel and Brass Corporation v. Elting, 141 F.2d 148 (7 Cir. 1944). While plaintiff refers to Allegheny Steel to support its contention that the employer may claim inventorship where an employer-employee relationship is involved, there is no magic in the legal description of Lund's relationship to Flaherty. The question of inventorship depends on the actual conduct of the parties with respect to the development of the patent rather than on the legal relationship existing between them. In Allegheny Steel, the court found the independent contractor to be the sole inventor, rejecting his principal's claim of joint inventorship. Flaherty's suggestions to Lund were similar to the suggestions given the independent contractor in Allegheny Steel. That Flaherty was Lund's employer does not allow him to claim inventorship when the record does not support his claim and, on the contrary, shows that Lund, working "on his own", developed the construction disclosed in the patent.

The statutory requirements as to inventorship are inflexible and the severity of the remedy prescribed for a false claim of invention cannot be tempered by the court. While Flaherty did not act out of malice and the property right in the patent was assigned by him to his corporation and thence to Koehring just as Lund would have been obligated to do, the fact remains that Patent No. 3,086,684 was issued initially to one who was not the inventor and, accordingly, said patent is void.

The evidence also shows that Claims 4 and 6 of the patent in suit, allegedly infringed by Etnyre, are invalid for want of invention. When the subject matter of these claims is first compared with the prior art, the construction shown in the patent appears to be a substantial advance over prior chipspreading machines. Closer examination, however, reveals that this initial impression stems from the modernity of the exterior design as compared with the crude appearance of earlier machines and the fact that the elements of the gate control means are grouped together in a manner which suggests that the mechanism is highly complex. The rigorous standard of invention is not met by visual impressions, but rather, must be found in the actual construction employed in the device. As noted in the findings, the result described in the patent is easily achieved through application of mere mechanical skill by one familiar with the prior art.

Plaintiff emphasizes the fact that the gate construction detailed in the patent in suit was novel and unique in the self-propelled chipspreader field, however, the prior art cannot be so narrowly defined. The gate design developed by Lund and described in the patent is made obvious by the prior patents covering other types of spreaders and spreader gates. Moreover, the shiftable latch pin arrangement is derived from other devices where it is obvious and well-known and requires no special inventive skill for adaptation to a chipspreading machine. Lund, lacking formal engineering training, may not have come by his design in this fashion, however personal discovery is not the measure of patentability.

Plaintiff's claim for misappropriation of trade secrets and unfair competition rests on a series of erroneous legal premises which, when taken as a whole, result in Koehring's claiming damages for Etnyre's use of ideas which never belonged to Koehring, are not unique, and were never secret. As noted in the findings of fact, Koehring has not demonstrated the existence of any trade secrets in the chipspreader field and Etnyre has shown that no such secrets can be found. What has been demonstrated is Harold Lund's skill in applying general knowledge in the design of chipspreading machines. Lund first exercised that skill for Pickett & Nelson Construction Company; thereafter for Flaherty and Koehring; and afterward for Etnyre. Plaintiff's position is tantamount to an assertion that Lund's skill is a trade secret which it owned and continues to own despite termination of the employment relation. Were this accurate, it would appear that Flaherty and Koehring should be similarly liable to Pickett & Nelson. Moreover, if Lund was permanently precluded from exercising his skills in the chipspreading field, Koehring had no reason to obtain Lund's promise to refrain from competition for the three years following its acquisition of Flaherty.

The "trade secrets" claimed by Koehring fall into three categories: (1) general descriptions of elements in a chipspreading machine whose construction and operation is fully visible to anyone examining the machine; (2) specific devices found in the Etnyre chipspreader which are not employed on and were never developed for the Flaherty machine; and (3) a description of a self-locking truck hitch which Lund built while employed by Flaherty and which was shown in a Flaherty advertising brochure but was thereafter discarded and never used on any machine.

Koehring acknowledges that the court must find that the alleged trade secrets involve matters which were novel and unique; that the information belonged to Koehring and was misappropriated by Lund; and that the information was in fact secret. It attempts to fulfill these burdens of proof by the following contentions. First, all of the elements of both the Koehring and Etnyre chipspreaders are novel and unique insofar as Etnyre is concerned because Etnyre could not have developed its chipspreader with the personnel it employed prior to Lund. Second, the ideas which Lund set down in rough sketches after leaving Koehring's employ must have been thought of while Lund was still employed by Koehring and should have been disclosed to Koehring, so that they belong to Koehring and Lund's failure to disclose them amounted to misappropriation. Third, even if Etnyre could have obtained the information by other means, including a simple examination of a Flaherty chipspreader, obtaining any information from Lund amounts to wrongful use of Koehring's property. Finally, all matters must necessarily be secret because no other firm before Etnyre produced self-propelled chipspreaders in competition with Koehring.

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