McSherry Mfg. Co. v. Dowagiac Mfg. Co.

• Decision Date: 20 February 1908
• Docket Number: 1,751.,1,667
• Citation: 160 F. 948
• Parties: McSHERRY MFG. CO. et al. v. DOWAGIAC MFG. CO. [1]
• Court: U.S. Court of Appeals — Sixth Circuit

160 F. 948

McSHERRY MFG. CO. et al. v. DOWAGIAC MFG. CO. ^[1]

Nos. 1,667, 1,751.

United States Court of Appeals, Sixth Circuit.

February 20, 1908

E. E Wood and Joseph Wilby, for appellant McSherry Mfg. Co.

B. F Harwitz, for appellant C. B. Oglesby.

F. L Chappell, for appellee.

Before LURTON and RICHARDS, Circuit Judges, and COCHRAN, District judge.

COCHRAN District Judge.

This case is here for the second time. The opinion delivered on the former occasion is reported in 101 F. 716, 41 C.C.A. 627. We then held, partly in affirmance, and partly in reversal of the action of the lower court, that the appellant company had infringed the first five claims of patent No. 446,230 for an improvement in shoe grain drills issued February 10, 1891, to W. F. Hoyt, and by him assigned to the appellee, and that appellee was entitled to an injunction and an accounting. Questions relating to this patent have also been passed on by this court in the case of Dowagiac Manufacturing Company v. Brennan & Co., 127 F. 143, 62 C.C.A. 257, and by the Circuit Court of Appeals for the Eighth Circuit in the cases of Dowagiac Mfg. Co. v. Minnesota Moline Plow Co., 118 F. 136, 55 C.C.A. 86, and Dowagiac Mfg. Co. v. Fowler et al., 121 F. 988, 58 C.C.A. 643. On the return hereof to the lower court a decree was entered pursuant to the mandate, and a reference had to a special master to take and state the account.

The suit was brought in March, 1897, and the infringement complained of extended from 1893 to June, 1900, the time of the entry of said decree. The special master found that the appellant company had made and sold during said infringing period 3,496 shoe grain drills of the kind held to infringe the patent, and that it was accountable therefor to appellee in the sum of $76,082.07. He found in its favor both for profits received by the appellant company and damages sustained by appellee on account of the sale of said drills. The amount of profits which he found said company had so received was $1,729.69. The damages which he found appellee had sustained he divided into two items. One item amounted to $46,122.26, and was for the profits which appellee would have made had it made and sold that number of its shoe grain drills, assuming that the making and sale thereof would have involved a proportionate increase in its expenses of administration, operation, and selling. The other amounted to $28,232.62, and was for additional profits appellee would have in fact made because such assumption would not be correct, inasmuch as the making and selling thereof would not have involved such proportionate or even a material increase therein. The lower court on the hearing of exceptions to the special master's report approved his finding as to profits received by the appellant company, and as to the first item of damages sustained by appellee, but disapproved his finding as to the second item of such damages. A decree was entered accordingly in favor of appellee for the sum of $47,851.95. It is from this decree that this appeal is taken. A cross-appeal has been taken by the appellee because of the rejection of said second item of damages and of the refusal of the court to treble the amount of damages allowed.

First, as to the appeal. The position of the appellant company as to the finding of the special master that it had received said amount of profits from the sale of said drills and should be charged therewith is that in fact it received no profits whatever from the sale thereof, and that, if it did, it should be charged only with so much of the profits received as was attributable to the patented feature of the drills, the burden of showing which was on the appellee, and that it has not shown how much thereof was attributable thereto. As to this last branch of said appellant's position, appellee contends that the patent covered not some part of the drill, but the entire machine; that it was not for an improvement on a shoe grain drill as it is characterized in the patent, but in reality was for an improved shoe grain drill; and that, therefore, all the profits received were for the patented article, and it is entitled to the whole thereof, or that if, in fact, the patent was only for a particular feature of the drill, to wit, the spring pressure device, that the profits received from the whole drill were attributable solely to that device, and on this ground, therefore, it is entitled to the whole thereof. The special master, and the lower court in approving his action in this particular, based the allowance of the whole profits received on this latter ground. In the case of Canda Bros. v. Michigan Malleable Iron Co., 152 F. 178, 81 C.C.A. 420, we held that, if a patent covers only a particular feature of an article sold by an infringer, the burden is on him in a suit against him to recover the profits received from such sale to show that they were not attributable solely to the patented feature thereof, and that it is only in case the infringer sustains this first burden that the second burden rests on the patentee to apportion said profits between such feature and the rest of the article.

There was evidence tending to show both that the appellant company received said amount of profits from the sale of said drills, and that the profits arising therefrom were attributable solely to said spring pressure device, which it contends was all that was covered by the patent. The findings of the special master that such was the case, approved by the lower court, must, therefore, be presumed to be correct, and, in the absence of clear evidence of mistake or error, should not be set aside or modified. To say the least, we find no such clear evidence in the record, and for this reason we feel bound to affirm the action of the lower court in this particular.

Then as to the first item of damages allowed by the special master, which the lower court approved. It is a portion of the profits which he found the appellee would have made had it sold to the persons to whom the appellant company sold said 3,496 drills of its make in addition to those which it did sell. Said company questions whether appellee would have made profits to the amount of this item had it so done, and raises the same question as to the apportionment of such profits as it would have so made that it raised in relation to the profits which it made by the sale of said 3,496 drills. And back of these two questions it is contended that there is no sufficient legal evidence tending to show that appellee would have sold that or any other certain number of its drills to said persons had not appellant company sold them its drills.

Of course, if this contention is correct, then appellee is not entitled to any allowance on account of the profits that it would have so made. Walker on Patents (1st Ed.) Sec. 563, states, as one of the two methods of assessing damages for infringement of patents, available where the patentee keeps his patent within a close monopoly by not granting licenses, the ascertainment of 'what the plaintiff would have derived from his monopoly if the defendant had not interfered, but which he failed to realize because of that interference with his rights. ' It is this method that is involved here. Further, 'in order,' as he states, 'to show that a patentee would in fact have made a particular profit if an infringer had not forestalled his sales,' he says that 'it is necessary to show that he would, but for that infringer, have made those sales; and to that end it is necessary to show that he could have supplied the articles wanted, and that the persons wanting those articles would have bought them had no infringer interfered. ' In order, then, to uphold the action of the lower court in the particular under consideration, there must be evidence tending to establish two things. One is that appellee could have supplied 3,496 drills of its make in addition to those it did supply; the other, that the persons who bought from the appellant company that number of drills of its make would have bought from appellee a like number of drills of its make had not they so bought from appellant company. It is not sufficient that there is evidence to establish either-- there must be evidence tending to establish both.

As to the first proposition, it may be said that there is evidence tending to establish to a certain extent, at least, that appellee could have supplied that additional number of drills of its make. Appellee's sales manager testified that it had a plant capable of producing 24,000 drills per year, and the greatest number of drills it produced in any year during the infringing period did not exceed 7,000. Such fact however, is hardly sufficient of itself to make out that appellee could have supplied that additional number of drills of its make. It should also have had sufficient capital to enlarge its business to this extent, or been able to obtain it. Concerning this, the record is by no means satisfactory. Nor was any attempt made at demonstrating that appellee's plant had such productive capacity. We have nothing more than the bald statement that it did. But perhaps it should be accepted that any successful business concern, as appellee was, can readily obtain under ordinary conditions sufficient capital to enlarge its business to the extent that the production of this additional number of drills would have involved on appellee's part, and, in the absence of anything to the contrary to said statement, that the plant did have such productive capacity. At any rate, it would seem that it cannot be said that there is any clear evidence that the master's report, in so far as it involved a finding that appellee could have so done, was so plain an error as to justify the court in ignoring the...