Lemelson v. Carolina Enterprises, Inc.

Decision Date22 June 1982
Docket NumberNo. 81 Civ. 6434.,81 Civ. 6434.
Citation541 F. Supp. 645
PartiesJerome H. LEMELSON, Plaintiff, v. CAROLINA ENTERPRISES, INC., Defendant.
CourtU.S. District Court — Southern District of New York


Arthur T. Fattibene, New York City, for plaintiff.

Kirschstein, Kirschstein, Ottinger & Cobrin, P. C. by Peter T. Cobrin, New York City, for defendant.


LOWE, District Judge.

This is an action for patent infringement, 35 U.S.C. §§ 281 et seq., and misappropriation of trade secrets under New York common law.1 Jurisdiction lies under 28 U.S.C. §§ 1331, 1332 and 1338. Defendant moved for summary judgment: 1) dismissing the first cause of action (patent infringement) on the ground that it is barred by laches; and 2) dismissing the second cause of action (misappropriation of trade secrets) on the grounds that it is barred by the New York Statute of Limitations, N.Y. CPLR § 214(3) (McKinney Supp. 1980-81), that it is barred by laches, that the protectible ideas of plaintiff were publicized by plaintiff in his patent application, thereby barring any recovery for use of his ideas, and that any other disclosures to defendant did not constitute trade secrets, as a matter of law. Plaintiff cross-moved for partial summary judgment declaring that defendant infringed plaintiff's patent.

By stipulation of the parties, all pretrial discovery has been limited to matters relevant to the affirmative defenses of laches and Statute of Limitations. The Court therefore ordered that resolution of those parts of defendant's motion challenging the merits of plaintiff's patent and trade secret claims, and the entirety of plaintiff's motion, be adjourned pending its determination of the defenses in bar. A discussion of those defenses follows.


A party moving for summary judgment pursuant to Fed.R.Civ.P. 56 bears the considerable burden of demonstrating the absence of disputed material issues of fact by proof which would be admissible at trial.2 The Court must "resolve all ambiguities and draw all reasonable inferences against the moving party."3 As our Court of Appeals has explained:

"The responsibility of the district judge on a motion for summary judgment is merely to determine whether there are issues to be tried, rather than to try the issues himself via affidavits."

American International Group, Inc. v. London American International Corp. Ltd., 664 F.2d 348, 351 (2d Cir. 1981), quoting Jaroslawicz v. Seedman, 528 F.2d 727, 731 (2d Cir. 1975).4

On the other hand, the Second Circuit has recently confirmed the principles that:

Properly employed, summary judgment is a useful device for unmasking frivolous claims and putting a swift end to meritless litigation. citations Thus, the mere possibility that a factual dispute may exist, without more, is not sufficient to overcome a convincing presentation by the moving party. citation The litigant opposing summary judgment, therefore, "may not rest upon mere conclusory allegations or denials" as a vehicle for obtaining a trial. citation Rather, he must bring to the district court's attention some affirmative indication that his version of relevant events is not fanciful.

Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir. 1980). Under Rule 56, a party opposing summary judgment cannot rely on his pleadings alone to raise a genuine issue of fact.5 On the contrary, summary judgment is a device for piercing the pleadings to determine whether there are genuine issues to be tried.6

In the following sections, the Court will analyze, first, defendant's motion with respect to the claim for patent infringement and, second, the claim for misappropriation of trade secrets. The analysis will be guided by the principles enunciated above.

A. Statement of Facts

On the basis of the affidavits of Jerome H. Lemelson, sworn to on January 29, 1982 ("Lemelson Aff.") and Mason Benson, sworn to on November 25, 1981 ("Benson Aff."), the reply affidavit of Mason Benson, sworn to on February 17, 1982 ("Benson Reply Aff."), the depositions of Jerome H. Lemelson, dated November 13, 1981 ("Lemelson Dep."),7 and Mason Benson, dated November 13, 1981 ("Benson Dep."),8 plaintiff's exhibits and the statements submitted pursuant to Rule 3(g),9 the Court finds as follows:

1. Plaintiff is a professional inventor whose primary source of income derives from the licensing of his ideas to manufacturers. (Lemelson Aff., ¶¶ 2, 3)

2. On June 20, 1961, plaintiff received Letters Patent No. 2,988,848 for one of his inventions (the "patent in suit").10

3. The patent in suit covers a "novel sound producing bellows structure which is especially adapted for use in providing noise making toys."11 The device (the horn) may be placed on a ride-on toy such that the axis of compression of the bellows is aligned with and molded to the axis of the steering column of the particular toy. (Lemelson Aff., ¶ 10)

4. Defendant Carolina Enterprises, Inc. is a toy manufacturer and distributor.12 One of its affiliates, up until 1978, was a company called Empire Plastic Corporation ("Empire"), which acted as sales agent for Carolina. (Benson Aff., ¶ 4)

5. Bernard Schiff acted as President of Empire until 1976. Since that time, he has officially remained as a consultant to Carolina. However, he has not been active in that capacity over the intervening years. (Benson Aff., ¶ 4; Benson Dep., pp. 6-7)

6. Joseph Schiff was Chairman of the Board of Empire through 1972. Since that date he has had no dealings with Empire or Carolina. (Benson Aff., ¶ 4)

7. Mason Benson first joined Carolina in November 1972. He served for six years as Executive Vice President. From 1978 through 1979, he was President and Chief Operating Officer of the company. Since that time, he has served as President and Chief Executive. (Benson Aff., ¶¶ 1, 2)

8. Due to his position with the company over the past decade, Benson has been involved in "virtually every business decision of the company," including design of toys and day-to-day management. (Benson Aff., ¶ 3)

9. On July 14, 1965, plaintiff, accompanied by his counsel, Mr. Fattibene, went to a Toy Fair where Empire had a showroom. He went into the showroom because he believed the company was "a likely candidate" with which to strike a deal. (Lemelson Aff., ¶ 4; Lemelson Dep., pp. 5, 7, 42)

10. At that time, plaintiff and Mr. Fattibene met with Bernard and Joseph Schiff—the only officers/representatives of Empire in the showroom.13 (Lemelson Dep., p. 16) Plaintiff showed the Schiffs his Letters Patent and several pages of drawings consisting of specific applications of his noise-making device.14 (Lemelson Aff., ¶¶ 5, 6, 9; Lemelson Dep., p. 7) Each page was marked "Confidential" "Patent Pending," and indicated that it had been shown to both of the Schiffs.

11. Plaintiff's purpose in showing these drawings to the Schiffs was to interest them in entering into a licensing agreement whereby Empire would utilize the patented noise-maker on its toys and pay plaintiff a royalty. (Lemelson Dep., pp. 7, 26)

12. Plaintiff recalls that his offer of a license was turned down in July 1965. (Lemelson Dep., p. 7)

13. On May 19, 1966, Mr. Fattibene addressed a letter to Empire on behalf of his client. That letter stated, in relevant part:

This letter is to inquire as to whether or not your company would be interested in licensing the subject matter covered by the U.S. Patent No. 2,988,848 for use in toys manufactured and/or sold by your company. A copy of this patent is enclosed for your convenience.
You will notice that this patent is directed to an integrally molded bellows construction incorporating therein a noise making device which is actuated upon the compression and expansion of the associated bellows structure.

(Plaintiff's Exhibit 17)

14. No one from Empire ever responded to that letter.

15. Sometime in 1966, plaintiff discovered in a catalogue an Empire tricycle with bellows horn on the steering wheel which he believed infringed his patent. (Lemelson Aff., ¶ 12; Lemelson Dep., pp. 18, 25)

16. In October 1966, Mr. Fattibene sent the following letter to Bernard Schiff:

I am writing this letter in behalf of Mr. Jerome H. Lemelson, owner of the above-identified U. S. patent, with the hope that you may find this patent of sufficient interest to seek a license thereunder and thereby avoid any possible claim of infringement.
* * * * * *
At this writing I can tell you that we have licensed a number of companies to manufacture various integrally molded bellows type noisemakers under this patent. The latest license granted was to Gerber Products Company and its licensee.
* * * * * *
Also, I have been advised by Jerry Lemelson that he at one time disclosed to you a number of various designs in which this structure could be successfully utilized. Under the circumstances, we would appreciate hearing from you as to whether or not your company desires to take a license under this patent.
* * * * * *
In the past Mr. Lemelson has diligently policed and prosecuted known infringers of this structure. It is therefore urged, in order to avoid any possible misunderstandings with respect to this matter, that your company seriously consider taking a license from Mr. Lemelson if it desires to manufacture and/or sell integrally molded bellows type noisemakers of the type disclosed in the enclosed patent and covered by the claims thereof.

(Plaintiff's Exhibit 18)

17. Defendant did not send any reply to this communication.

18. Plaintiff met with Mason Benson sometime in the early 1970's. He did not mention the patent in suit at that time. Instead, he showed Benson some of his new ideas. (Lemelson Dep., pp. 15, 26) This was the last contact he had with any representative of Carolina. (Lemelson Dep., p. 39)

19. Since 1966, plaintiff has not seen the particular tricycle that prompted the October 1966 letter to Bernard Schiff.15 (Lemelson Aff., ¶ 17)

20. Plainti...

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