McCullough Tool Company v. Well Surveys, Inc.

• Decision Date: 16 May 1968
• Docket Number: No. 9426,9427.,9426
• Citation: McCullough Tool Company v. Well Surveys, Inc., 395 F.2d 230, 158 USPQ 81 (10th Cir. 1968)
• Parties: McCULLOUGH TOOL COMPANY, Appellant, v. WELL SURVEYS, INC. (now by change of name Dresser Sie, Inc.), and Dresser Industries, Inc., Appellees. McCULLOUGH TOOL COMPANY, Appellant, v. DRESSER INDUSTRIES, Inc., Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

395 F.2d 230 (1968)

McCULLOUGH TOOL COMPANY, Appellant, v. WELL SURVEYS, INC. (now by change of name Dresser Sie, Inc.), and Dresser Industries, Inc., Appellees.

McCULLOUGH TOOL COMPANY, Appellant, v. DRESSER INDUSTRIES, Inc., Appellee.

Nos. 9426, 9427.

United States Court of Appeals Tenth Circuit.

May 16, 1968.

COPYRIGHT MATERIAL OMITTED

R. Welton Whann, Los Angeles, Cal. (Richard B. McDermott, Tulsa, Okl., on the brief) for appellant.

Robert K. Schumacher, Chicago, Ill., and Rufus S. Day, Jr., Cleveland, Ohio (Robert J. Woolsey, Tulsa, Okl., on the brief) for appellees.

Before MURRAH, Chief Judge, and BREITENSTEIN and HILL, Circuit Judges.

HILL, Circuit Judge.

This is an appeal by McCullough Tool Company, hereinafter called McCullough, from summary judgment rendered against it below in the combined civil actions Nos. 4271 and 6467. A long history of litigation between the two parties to this suit exists and the present appeal is substantially a continuation of that litigation.

Civil Action 4271 was an infringement action brought by Well Surveys, Inc., hereinafter called W.S.I.¹ A number of patents were involved in this suit including the Swift Patent, No. 2,554,884, which continues to be of interest in the instant appeal. In that initial litigation Judge Savage found the Swift Patent to be valid and infringed by McCullough. See D.C., 199 F.Supp. 374. This decision was affirmed by this court on appeal. See 343 F.2d 381.² On remand to the district court, an injunction was issued against McCullough prohibiting it "from directly or indirectly manufacturing, using or selling, or inducing, or causing to be manufactured, used or sold, apparatus for simultaneously making radioactivity measurements and locating the casing collars in a cased well as exemplified by W.S.I. Exhibit 10, page 5-A." In the interim, McCullough, apparently following the advice of counsel, modified its structure to avoid infringement of the Swift Patent. On June 14, 1966, McCullough filed an action for declaratory judgment, Civil Action No. 6467, asking that a determination be made that the new McCullough structure does not infringe the Swift Patent. Thereafter, on August 4, 1966, W.S.I. filed a motion asking the trial court to issue a citation for contempt against McCullough by reason of its use of the modified structure. Also on August 4, 1966, W.S.I. filed a motion to dismiss the declaratory judgment action. On October 19, 1966, McCullough filed a detailed motion asking for relief from the judgment in Civil Action No. 4271, dissolution of the June 15 injunction and a vacation of the order for accounting based upon W.S.I.'s misuse of its patents. On November 29, 1966, a pretrial hearing was held. At this time it was decided that the Civil Actions Nos. 4271 and 6467 could be consolidated for pretrial and trial.³ Further, McCullough was ordered to show cause why it should not be held in contempt and the trial judge dismissed McCullough's motion to dissolve the injunction for failure to state a cause of action. On December 9, 1966, W.S.I. filed its answer to the declaratory judgment action and therein counterclaimed that McCullough was infringing its Swift Patent. On December 19, McCullough filed a reply to W.S.I.'s counterclaim wherein it was alleged that the modified structure did not infringe the Swift Patent and that W.S.I. should be barred from asserting infringement because of patent misuse. On December 28, 1966, McCullough filed its response to the motion to show cause in the contempt citation. Therein it was pleaded that the modified structure did not infringe the Swift Patent and did not come within the terms of the June 15 injunction and further that W.S.I. should be barred from asserting its patents because of misuse of these patents. On December 21, 1966, W.S.I. filed a motion for a summary judgment in the contempt proceeding and also asked the trial court to prevent McCullough from introducing evidence of misuse. On December 30, 1966, McCullough filed a motion to strike the cases from the court calendar for trial on January 12, 1967, on the basis that the parties were not prepared for trial due to the failure to complete discovery. This motion was allowed by the court, however, it was decided that a further pretrial hearing would be held on January 12, 1967. At that hearing, the court granted W.S.I.'s motion for summary judgment in the contempt citation and dismissed McCullough's declaratory judgment action.

McCullough argues error in the trial court's granting of summary judgment holding McCullough in contempt and thereby denying McCullough the opportunity to present evidence on five issues: (a) whether or not the claims of the Swift Patent can be construed broad enough to cover the new McCullough structure; (b) the content and effect of the prior art on determining whether or not the claims are of sufficient scope to be infringed by the new McCullough structure; (c) the difference in mode of operation of the device of the patent in suit and the new McCullough structure; (d) non-equivalency of elements and combinations of parts in McCullough's new structure, as compared to the structure of the patent in suit; and (e) misuse of the Swift Patent after the decision of March 16, 1961.

The question is presented as to how a patentee should be allowed to proceed when following a successful infringement suit the infringer modifies the infringing structure and continues as before. Allowing the patentee to proceed by a summary contempt proceeding in all cases would unnecessarily deter parties from marketing new devices that are legitimately outside the scope of the patent in question. On the other hand, to require in each instance the patentee to institute a new infringement suit diminishes the significance of the patent and the order of the court holding the patent to be valid and infringed. Obviously there must be a dividing point between those cases which should be handled by a summary contempt proceeding and those cases which should be more fully viewed in an infringement proceeding. Courts have uniformly held that the standard to be applied in determining the dividing point is whether the alleged offending device is "merely `colorably' different from the enjoined device or from the patent." Siebring v. Hansen, 8 Cir., 346 F.2d 474 at 477. See Hartford-Empire Co. v. Obear-Nester Glass Co., 8 Cir., 95 F.2d 414; American Foundry & Mfg. Co. v. Josam Mfg. Co., 8 Cir., 79 F.2d 116; and Wadsworth Electric Mfg. Co. v. Westinghouse Electric & Mfg. Co., 6 Cir., 71 F.2d 850. It is further stated to be "well established that it is within the discretion of the trial court to determine whether the charge of infringement is to be determined in a contempt proceeding or in a separate action * * *." Baltz v. The Fair, 7 Cir., 279 F.2d 899 at 903. See, also, John W. Gottschalk Mfg. Co. v. Springfield Wire & Tinsel Co., 1 Cir., 90 F.2d 468. In Jamco, Inc. v. Carlson, 10 Cir., 274 F.2d 338, 343, this court held that a colorable modification of the device shown to have infringed a patent should be handled by contempt proceedings.⁴

In the instant case the trial judge determined that the "McCullough device is only a colorable variation of the Swift Patent," that the modified device "does the same work in substantially the same way to accomplish substantially the same result as the Swift device" and that the "modified apparatus comes within the scope of the claims in the Swift Patent." In proceeding with the contempt citation the trial court found that there was no genuine issue of material fact and, therefore, that W.S.I. was entitled to a judgment as a matter of law. There was clearly no error in the trial court's proceeding with the contempt citation rather than requiring the issue to be tried in an infringement hearing. We believe that the trial court was correct in summarily deciding that the modified device was a colorable variation of the Swift Patent, that it thus infringed the Swift Patent and violated the June 15 injunction. The validity of the Swift Patent and the scope of its claims were conclusively determined as between the two parties in the instant suit in the original infringement suit. See Krentler-Arnold Hinge Last Co. v. Leman, 1 Cir., 50 F.2d 699. And Wadsworth Electric Mfg. Co. v. Westinghouse Electric & Mfg. Co., supra. This conclusively answers McCullough's claims that it should be allowed to introduce evidence upon issues (a) and (b).

There is also no merit to McCullough's argument as to issues (c) and (d). The difference between the modified structure and the original device found to infringe the Swift Patent is sufficiently established in the record by an affidavit filed by McCullough to decide the issue of contempt.⁵ This affidavit shows that the change in structure was to provide the casing collar locator signal with a separate amplifier and then connect it to the transmitting conductor whereas in the original device the signal from the casing collar locator was connected to a common amplifier which also amplified signals from the radiation detector. This change is merely a change in form with the new form serving the same function as the old, therefore, making the change a mere colorable variation justifying the trial court's finding of contempt. See Wadsworth Electric Mfg. Co. v. Westinghouse Electric & Mfg. Co., supra, 71 F. 2d at 852. We believe that the modified structure as shown by McCullough clearly infringes claims 1, 2, 5 and 6 of the Swift Patent as found by the trial judge. The relevant portions of these claims which cover the change in the McCullough device are: (1) in claim 1 "means for combining said first signal and the additional signal * * *"; (2) in claim 2 "means for introducing the last mentioned signals into the first detecting means to superimpose them on the signal characteristics of the phenomena being detected by said first detecting means, * * *"; (3) in claim 5 "means for introducing...