Macbeth Evans Glass Co. v. General Electric Co.

• Decision Date: 27 January 1916
• Docket Number: 303.
• Citation: 231 F. 183
• Parties: MACBETH EVANS GLASS CO. v. GENERAL ELECTRIC CO.
• Court: U.S. District Court — Northern District of Ohio

231 F. 183

MACBETH EVANS GLASS CO. v. GENERAL ELECTRIC CO.

No. 303.

United States District Court, N.D. Ohio, Eastern Division.

January 27, 1916

Tolles Hogsett, Ginn & Morley, of Cleveland, Ohio, for plaintiff.

Squire Sanders & Dempsey, of Cleveland, Ohio, for defendant.

CLARKE District Judge.

In this cause infringement is claimed of United States reissued letters patent No. 13,766 dated July 7, 1914, and issued to the plaintiff as assignee of the inventor, George A. Macbeth. The original patent, No. 1,097,600, is dated May 19, 1914. This hearing was had upon the defense stated in paragraph 14 of the defendant's answer under an order of court entered pursuant to Supreme Court Equity rule No. 29 (33 S.Ct. xxvi).

The parties to the suit for the purpose of the hearing stipulated the relevant facts, which may be succinctly stated as follows, viz.:

(1) That prior to the fall of 1903 the patentee, Macbeth 'discovered and perfected' the formula and process which is the subject-matter of the patent relied upon.

(2) That about the fall of 1903 the plaintiff company, of which Macbeth was president and a stockholder, commenced the use of the formula and process for the manufacture of glass, and continued to so use them until the application for original letters patent was filed on May 9, 1913; that large quantities of the glass were sold during those years in the open market for profit; but that the formula and process were treated as secret inventions.

(3) Harry A. Schnelbach, a trusted superintendent, and C. H. Blumenauer, a salesman of the plaintiff, with knowledge of the secret formula and process in May of the year 1910, left the employ of the plaintiff, and, entering the employ of the Jefferson Glass Company, disclosed the formula and process to their employer; that that company proceeded to use them in the manufacture of glass which prior to December 17, 1910, it placed upon the open market; and that it continued to so use the formula and process and to manufacture and sell the glass until after the application for the original letters patent on May 9, 1913.

(4) That on December 17, 1910, the plaintiff commenced suit to enjoin the Jefferson Glass Company and Schnelbach and Blumenauer from disclosing said secret formula and process to others, and from further manufacture of glass by use of them. During the prosecution of this suit, the formula by agreement of counsel was kept secret, being disclosed to the court by the use of a code. A preliminary injunction was allowed, and on May 12, 1913, a decree was entered by the court of common pleas of Allegheny county, Pa., enjoining the defendants in that suit from disclosing the secret formula and process, and from manufacturing glass by use of them. On January 6, 1913, the Supreme Court of Pennsylvania on appeal affirmed this decision. The application for the letters patent in suit was filed on May 9, 1913.

Upon these facts substantially alleged in paragraph 14 of the answer, the defendant claims that, by the course of action described and admitted, the plaintiff and Macbeth forfeited any right to a patent which the latter may have had as an inventor of the formula and process, and any right which they or either of them had to obtain the patent protection declared on in this suit.

This state of facts presents two questions which are now before the court for decision, viz.:

(1) Does the manner in which the inventor dealt with his invention, as shown in the stipulation quoted, constitute an abandonment of it within the meaning of U.S.R.S. Sec. 4886 (Comp. St. 1913, Sec. 9430)?

(2) Does the manner in which the inventor permitted the plaintiff to use his formula and process, and to sell the resulting product or composition of matter in the open market for almost ten years, constitute a public use, or show that it was on sale for more than two years prior to the filing of his application for a patent on May 9, 1913, within the meaning of said section No. 4886 (section 9430).

The industry of counsel and of the court has failed to discover any decision of these questions by any court, and therefore they must be decided upon principle unaided by direct authority.

Letters patent are issued pursuant to statutory provisions, which, so far as the decision of this case is concerned, have not been greatly modified since the patent act of 1793 (Act Feb. 21, 1793, c. 11, 1 Stat. 318).

Fortunately, so early as 1829 the fundamental purpose and principles of our patent laws were fully discussed by Justice Story in Pennock v. Dialogue, 2 Pet. 1, 7 L.Ed. 327, in his usually illuminating and thorough manner, which leaves so little to be desired.

Our patent statutes have all been enacted under the power granted to Congress by the Constitution of the United States, art. 1, Sec. 8, cl. 8:

'To promote the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.'

And Justice Story, in the case cited, declares that:

While one object of such laws is to encourage inventors and to stimulate genius, yet their main object is 'to promote the progress of science and the useful arts; and this can be done best by giving the public at large a right to make, construct, use, and vend the thing invented, at as early a period as possible, having due regard to the rights of the inventor. If an inventor should be permitted to hold back from the knowledge of the public the secrets of his invention; if he should for a long period of years retain the monopoly, and make and sell his invention publicly, and thus gather the whole profits of it, relying upon his superior skill and knowledge of the structure; and then, and then only, when the danger of competition should force him to secure the exclusive right, he should be allowed to take out a patent, and thus exclude the public from any further use than what should be derived under it, during his fourteen (now seventeen) years-- it would materially retard the progress of science and the useful arts and give a premium to those who would be least prompt to communicate their discoveries.'

Thirty years later, the Supreme Court, in Kendall v. Winsor, 21 How. 322, 16 L.Ed. 165, quotes with approval this language of Justice Story, and adds:

'It is undeniably true that the limited and temporary monopoly granted to inventors was never designed for their exclusive profit or advantage. The benefit of the public or community at large was another and doubtless the primary object in granting and securing that monopoly.'

After discussing the subject at some length, the decision continues:

'By correct induction from these truths, it follows that the inventor who designedly, and with the view of applying it indefinitely and exclusively for his own profit, withholds his invention from the public, comes not within the policy or objects of the Constitution or acts of Congress. He does not promote, and if aided in his design would impede, the progress of science and the useful arts. And with a very bad grace could he appeal for favor or protection to that society which, if he had not injured, he certainly had neither benefited nor intended to benefit.'

Whether or not these conclusions, as to what are the principles upon which our patent laws are founded, were strictly necessary to the decision of the cases in which they were expressed, commending themselves as they do to sound thinking, they must be accepted as a correct statement of the principles and policy of that law which should guide us in the application of it to this cause.

It is palpably clear, from the admissions upon which this hearing proceeds, that Macbeth and the plaintiff decided in 1903 that they would rely upon their ability to keep the discovery of Macbeth a secret as long as they could without the aid of the patent laws. They made no application for a patent for nearly ten years, and when after seven years, through the exposure by trusted employes, the formula and process became known and came into use by others, still neither Macbeth nor the plaintiff applied for the protection of the patent laws, but, on the contrary, elected to still depend upon their common-law right to maintain the discovery as a trade secret.

They continued in this attitude of mind through two years of litigation, until their right to the trade secret was established by the Supreme Court of Pennsylvania on January 6, 1913, and, even when this right was thus seemingly established at least for the state of Pennsylvania, they did not elect to apply for a patent until four months later, on May 9, 1913.

What occurred in the interval between January 3 and May 9, 1913, to change the purpose of Macbeth and the plaintiff, does not appear; but their actions show that it was not until the latter date that they decided to abandon the monopoly of a trade secret for an indefinite length of time, and to make application for the patent monopoly for seventeen years.

Thus do the facts stipulated make it entirely clear to this court that the settled purpose of Macbeth, the inventor, and of the plaintiff from the very beginning, was to avoid compliance with the patent laws as long as they could maintain a monopoly without their aid, and that, when that was no longer possible, their purpose was then to apply for, and if possible obtain, a patent monopoly for seventeen years longer.

An inventor guilty of such conduct 'comes not within the policy or object of the Constitution or acts of Congress' with respect to...