Mills Alloys v. Stoody Co.

• Decision Date: 24 January 1938
• Docket Number: No. 8313.,8313.
• Citation: 94 F.2d 413
• Parties: MILLS ALLOYS, Inc., et al. v. STOODY CO.
• Court: U.S. Court of Appeals — Ninth Circuit

94 F.2d 413 (1938)

MILLS ALLOYS, Inc., et al. v. STOODY CO.

No. 8313.

Circuit Court of Appeals, Ninth Circuit.

January 24, 1938.

John Flam and Phillip Grey Smith, both of Los Angeles, Cal., for appellants.

Fred H. Miller and Charles C. Montgomery, both of Los Angeles, Cal., for appellee.

Before WILBUR, MATHEWS, and HANEY, Circuit Judges.

WILBUR, Circuit Judge.

This is a patent infringement suit brought by the owner of letters patent 1,803,875 to enjoin the use of the process therein described for surfacing the face of an oil well drill. The matter was referred to a special master over the objections of the appellants. The master found the patent claims involved to be valid and infringed. Exceptions were taken to the master's report, and overruled. The master's findings were sustained and adopted by the court, and an interlocutory injunction granted and an accounting ordered. From this interlocutory decree this appeal is taken.

The appellants attack the findings of validity and of infringement by appropriate assignments of error. The scope and character of the review of the findings of the special master is defined by the new Equity Rule 61 ½, 28 U.S.C.A. following section 723, promulgated May 31, 1932, before the master's report herein. The finding of fact and law are to be treated as presumptively correct, but subject to review by the trial court and by this court on appeal. Wilson-Western Sporting Goods Co. v. Barnhart, 9 Cir., 81 F.2d 108; Anraku v. General Electric Co., 9 Cir., 80 F.2d 958; Stewart-Warner Corp. v. Jiffy Lubricator Co., 8 Cir., 81 F.2d 786; Reinharts, Inc., v. Caterpillar Tractor Co., 9 Cir., 85 F.2d 628; Antonsen v. Hedrick, 9 Cir., 89 F.2d 149.

We proceed to a consideration of the findings and interlocutory decree. The first question to be considered is that of res judicata.

The patentee procured this process patent May 5, 1931, and upon an application pending at the patent office at the same time secured a product patent for a welding rod by letters patent No. 1,757,601.

The latter patent (No. 1,757,601) was before this court in Stoody Co. v. Mills Alloys, Inc., 9 Cir., 67 F.2d 807. We there held that its claims were void for lack of invention. The patent covered a welding rod which was to be used for the surfacing of a drill in accordance with the teaching of the patent, and, therefore, covered the use of the welding rod for the purpose for which it was designed. This use, as disclosed by the patent, was to deposit and fasten the hard particles inclosed therein upon the face of the drill by melting the tube upon the face of the drill to which it adhered with the inclosed particles by reason of the welding of the molten metal of the tube to the heated surface of the drill. In describing the invention in the welding rod patent it is shown that the purpose of the invention was to furnish a tube filled with particles of hard material, preferably tungsten carbide, to be melted upon the face of the drill by the use of an acetylene torch.¹ We there approved the finding of the master that a tube designed for such purpose did not constitute invention in view of the state of the prior art. The master's finding on that subject, which we quoted in part in our former opinion (page 815) is set out in the margin.²

The same master, in considering the patent for the process of applying the welding rod and its contents to the surface of the drill, sustained the patent and upon that finding the court enjoined the defendants from manufacturing or selling the welding tube covered by the void patent (No. 1,757,601) because it was held that the manufacture and sale of the welding rod was a contributory infringement of the process covered by patent No. 1,803,875. It also enjoined the sale of a welding rod in which the tungsten carbide particles had been embedded in the metal of the rod instead of being inclosed loosely in a welding tube. The appeal is from this decree. If this decree is affirmed by us and if, also, we adhere to our former opinion as to the invalidity of the product patent, it would follow that the product (the welding rod) patent which we held invalid would be made effective through the process patent.

The appellants rely strongly upon the doctrine of res judicata to support the conclusiveness of the facts found in the former case to establish the invalidity of the patent in suit.

One of the issues in the former case was the factual one of invention. It was there held that no invention was involved in producing a welding rod to be used according to the teaching of the patent. The court declined to enjoin the manufacture, sale, or use of the welding rod described in the patent. The finding that there was no invention in the welding rod not only implied a finding that there was no invention in the only use for which the rod was designed, but also there were express findings that the method of applying face hardening material such as tungsten carbide to a well drill by inclosing or incorporating them in a welding tube or rod and melting the rod on the face to be hardened was not new and did not call for the exercise of inventive genius. The question as to whether the proposed use of the welding rod was new or old was inherent in the question of invention in the welding rod itself. The proposed use of the welding rod could not be ignored in litigation over the question of whether or not the inventive faculty was exercised in its manufacture. It is true that the two patents are different and that the invalidity of one would not necessarily invalidate the other, but where the litigation in each case turns upon the question of the novelty of the manner of use, the adjudication of invalidity of the process (or manner of use) patent follows as an inevitable conclusion from the finding of lack of novelty in the product patent. As to general principle, see Freeman on Judgments, 5th Ed., vol. 2, p. 1469, § 695 et seq. This conclusion, we think accords with the view expressed by the Second Circuit Court of Appeals in Vapor Car Heating Co. v. Gold Car Heating & Lighting Co., 7 F.2d 284, 287. The master should have held the claims of the process patent here involved invalid for lack of invention because that lack was conclusively established by the prior finding and decree.

Furthermore, if we now adhere to the views expressed in the previous opinion, the same result follows because the evidence upon which that finding is based in the former case has been introduced in the main case, hence, it would follow that whether we rely upon the evidence herein of the prior art, or upon the doctrine of res judicata, our holding would be the same; namely, that the state of the prior art embraced the application on face hardening material to the surface of a well drill by incorporating or inclosing the hard material in a welding tube to be melted on the face of the drill by the use of an acetylene torch, or otherwise.

There is one notable exception between the prior art shown in this case and that shown in the former case. In the prior case the master concluded that the "hot rod method" of applying the tungsten carbide anticipated the product patent. In the present litigation he finds that the "hot rod method" was used a year later than he held in the former case, and that its use was by the patentee only, and shortly before, or immediately after, the present invention. Thus, in considering the evidence of the prior art, we must either ignore this particular alleged prior use or reverse the decision of the master on that subject reached by him after hearing the conflicting testimony of the witnesses who appeared before him, as to a date, where documentary evidence pointed toward the conclusion reached by the master. We should not do this except upon the principle of res judicata. Consequently, we will in our present inquiry ignore the hot rod method and consider the other prior art only. We will now consider that evidence.

In arriving at the conclusion that the process patent was valid, the master was strongly impressed by the fact that tungsten carbide was a recent metallurgical product whose reactions to the application of the intense heat were not entirely understood and that the patentees having discovered that the carbide particles could be applied to the face of the tools by the welding process retaining their hardness without impairment were entitled to the award of the patent for their inventive genius.³ Evidence was offered to show the various experiments conducted by the patentees with a view of determining the best method of applying this newly produced product to the face of the drilling tool. It appears that other methods were tried, including grinding the tungsten carbide to uniform sizes and shapes and embedding them in holes countersunk in the face of the drill by soldering with molten brass or other soft material. It was known while these experiments were being conducted that tungsten carbide is almost as hard as diamond (98 per cent. to 99 per cent., or, 9.8 to 9.9). It was also known that tungsten carbide has an extremely high melting point as compared to iron, or mild steel. The relative melting point of mild steel and tungsten carbide is as 2,600° F. is to 5,400° F. It was known that it did not soften or fuse at any lower temperature, and that it had the tenacity or strength of high speed steel.⁴ It was also known from German patent No. 427,074 issued to Siemens and Halske March 22, 1926, that tungsten carbide in the form of grains could be mixed with molten metal and become imbedded therein without forming an alloy. From these known characteristics of tungsten carbide it was evident that the iron of a welding rod or tube could be melted without melting the tungsten carbide inclosed in the tube. However, the acetylene torch has a very high temperature at the apex of the cone of the flame. This temperature is about 6,000° F. It is thus apparent that if the hottest part of the...