Mercoid Corporation v. Regulator Co

• Decision Date: 03 January 1944
• Docket Number: MINNEAPOLIS-HONEYWELL,Nos. 58 and 59,s. 58 and 59
• Citation: 64 S.Ct. 278,320 U.S. 680,88 L.Ed. 396
• Parties: MERCOID CORPORATION v. REGULATOR CO. (two cases)
• Court: U.S. Supreme Court

320 U.S. 680

64 S.Ct. 278

88 L.Ed. 396

MERCOID CORPORATION

v MINNEAPOLIS-HONEYWELL REGULATOR CO. (two cases).

Nos. 58 and 59.

Argued Dec. 9, 10, 1943.

Decided Jan. 3, 1944.

Rehearing Denied Feb. 7, 1944.

See 321 U.S. 802, 64 S.Ct. 526.

Mr. George L. Wilkinson, of Chicago, Ill., for petitioner.

Mr. Will Freeman, of Chicago, Ill., for respondent.

Mr. Justice DOUGLAS delivered the opinion of the Court.

These are companion cases to Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 64 S.Ct. 268, decided this day. One suit was instituted by petitioner, the other by respondent. Petitioner sought a declaratory judgment to the effect that the Freeman patent No. 1,813,732 was invalid and that petitioner did not infringe it, that respondent had used the Freeman patent in violation of the anti-trust laws, that respondent be restrained from threatening petitioner and its customers with infringement suits, that an accounting be had and treble damages awarded. Respondent in its bill sought a decree sustaining the validity of the Freeman patent and declaring that petitioner had infringed and contributed to the infringement of its claims. In the latter action petitioner filed a counterclaim praying for substantially the same relief as in its earlier bill. After issues were joined the causes were consolidated and tried together. The District Court said that the Freeman patent was valid and that Mercoid was guilty of contributory infringement. But it held that Minneapolis-Honeywell was using the patent as a means of controlling an unpatented device contrary to the rule of Morton Salt Co. v. G. S. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363. Accordingly, it dismissed both complaints. 43 F.Supp. 878. On appeal the Circuit Court of Appeals held that the patent claims in issue were valid and that Mercoid had infringed them. But it disagreed with the District Court that respondent had sought to extend the scope of the patent in violation of the anti-trust Laws. Accordingly, it reversed the judgment of the District Court, dismissing respondent's bill and affirmed it as respects the relief claimed by petitioner. 7 Cir., 133 F.2d 811.

The Freeman patent, as found below, covers a system of hot air furnace control which requires three thermostats for its operation. A room thermostat starts the stoker. Another thermostat (or limit switch) breaks the stoker circuit when the air in the furnace reaches a predetermined temperature, irrespective of the fact that the room thermostat may still call for heat. This second thermostat operates to prevent unsafe conditions due to overheating. The third thermostat is also in the furnace. It controls a fan which forces hot air from the furnace to the rooms. It does not permit the fan to start until the air in the furnace reaches a specified degree of heat. But at that point it starts the fan which continues to run, even though the limit switch has stopped the stoker, so long as the furnace is hot and the room thermostat calls for heat. The District Court found that the Freeman patent was a combination patent on a system of furnace control which requires those three thermostats for its operation and that it was not a patent on 'either the fan switch or the limit switch or both of them.' (43 F.Supp. 881.) That finding was not disturbed by the Circuit Court of Appeals, (133 F.2d 813) which held that Freeman's 'advance in the art' was the arrangement of thermostatic switches, subject to furnace heat to secure in connection with other parts the 'sequence of operations' which we have described.

Minneapolis-Honeywell has licensed five of its manufacturing competitors under the Freeman patent. The licensees are granted a non-exclusive right under the patent to make, use and sell a 'combination furnace control' which is defined as a thermostatic switch usable for a Freeman installation and designed in one unit to control the fan and limit circuits. Royalty payments to Minneapolis-Honeywell are based on the sales of the combination furnace controls, although the Circuit Court of Appeals found that the only Minneapolis-Honeywell con- trol 'which gets protection as a result of the licenses is the control usable only for a Freeman type installation.' Each licensee is required to insert in its catalogues or other sales literature and to attach to each combination furnace control sold a...