Mills Novelty Co. v. Monarch Tool & Mfg. Co.

• Decision Date: 20 April 1931
• Docket Number: No. 5642.,5642.
• Parties: MILLS NOVELTY CO. v. MONARCH TOOL & MFG. CO.
• Court: U.S. Court of Appeals — Sixth Circuit

49 F.2d 28 (1931)

MILLS NOVELTY CO. v. MONARCH TOOL & MFG. CO.

No. 5642.

Circuit Court of Appeals, Sixth Circuit.

April 20, 1931.

Carl S. Lloyd, of Chicago, Ill. (Arthur H. Stuart, of Chicago, Ill., William R. Wood and Edmund P. Wood, both of Cincinnati, Ohio, Kirkland, Fleming, Green & Martin, of Chicago, Ill., and Wood & Wood, of Cincinnati, Ohio, on the brief), for appellant.

Walter Murray, of Cincinnati, Ohio (Murray & Zugelter, of Cincinnati, Ohio, on the brief), for appellee.

Before DENISON, MOORMAN, and HICKS, Circuit Judges.

DENISON, Circuit Judge.

Infringement suit upon two patents for coin controlled mechanically played instrument, one issued September 19, 1916, on application filed July 10, 1909, No. 1,198,860, to Lesley and Enz (hereafter called Enz) and one issued September 19, 1916, on application filed December 16, 1910, No. 1,198,861, to Lesley and Schoen (hereafter called Schoen).

The District Court's opinion held that Enz was invalid for lack of invention; that Schoen was valid and infringed; that the defense of laches was not good; and that the title to Schoen had failed through the effect of bankruptcy proceedings. The bill was therefore dismissed by a single entry, making no recitals; and the plaintiff appeals, assigning as error mainly that Enz should have been held good and infringed and that the plaintiff's title to Schoen should have been sustained.

On the argument here, defendant presents several of the defenses urged below; appellant insists we should consider only the questions which the District Court decided against it. This is not the rule. Appeals in equity bring up the whole case (with certain inferences in favor of the decree below), and the decree below should be sustained if it was right for any reason. Linde Co. v. Morse Co. (C. C. A. 2) 246 F. 834, 837. It follows that we must consider all those defenses which might be good as against the relief otherwise to be given.

The patents had special practical reference to automatic pianos, playing by electrical means and set in motion by a coin in the slot. In 1920, the owner brought suit upon these two patents, and another, against Wurlitzer, and in 1926 they were held valid and infringed. (D. C. Ill.) 10 F.(2d) 812. In the same year, 1926, this suit was brought.

It is plaintiff's theory that the Enz patent is generic and the Schoen patent specific, and that defendant by the same structures has infringed both. The Schoen form is the one which plaintiff has marketed and which has had the commercial acceptance which was important in leading the court below to conclude that the Schoen patent covered a real inventive advance and was valid — this conclusion being reached and announced before the objection to plaintiff's title to this patent was made. The two patents would expire at the same date; it is not suggested that any one has infringed or is likely to infringe Enz by any device which would not also infringe Schoen; and, so far as we observe, the commercial effect of an injunction and liability for profits and/or damages would be the same whether based upon one or upon both patents. The question whether Enz involves invention over the prior art is not easy of decision. It involves careful consideration of several conflicting questions, and the decision would have little or no value as a precedent upon other patents. Having reached the conclusion, hereinafter stated, that plaintiff is entitled to relief upon the Schoen patent, the questions arising under Enz now seem to us practically academic; and we prefer to leave them undecided. To effectuate this result, the bill as to Enz should be dismissed without prejudice.

The District Judge overruled the defense of laches. We think he was right. The defendant and its predecessors had been manufacturing devices, probably infringing, since some time before the Schoen patent was granted. Even if plaintiff's assignors knew of this, there was surely no obligation upon them to give the defendants notice of infringement, before the patent issued. To do so would be to invite interferences and other contests. Notice of infringement was given in 1916, promptly upon issue, and during the next four years the infringement continued and no action was taken. There is sufficient evidence that during most of this period the owners of the patents were financially unable to undertake the burden of patent litigation. Much of the period was also during the war, when such litigation was rightly discouraged. The patentees had given their notice, they had not withdrawn it, and, during that period, the defendants continued their infringement at their peril. In 1920 further notices of infringement were served, and, as in the former instance, defendants paid no attention whatever. A suit, serving as a test, was promptly begun; and there is no complaint of any unreasonable delay in its prosecution. On the termination of that suit, this one was begun at once.

The right to an accounting of damages in equity is given by the statute in a permissive way. The court of equity will exercise its discretion in granting an accounting as well as in passing upon a preliminary injunction, and will consider all the respective equities of the parties. This is well settled; but for refusing an injunction upon final hearing when the patent has still a substantial term to run, when the legal title to the monopoly and its infringement by defendant have been finally established and when there has been no misleading of defendant, akin to fraud, we find no precedent in the Supreme Court or in this court.¹ Some of the reasons which move a court of equity in passing, even finally, on equitable rights do not apply; the question is merely of an equitable remedy for a legal right. We have not been referred to or found any very satisfactory discussion of the problem; but it is sufficient for the purpose of this case to say that the record does not show such laches as to justify even the denial of the usual accounting. The facts above recited sufficiently excuse whatever delay there was. Alliance Co. v. De Vilbiss Co. (C. C. A. 6) 41 F.(2d) 668, 670; Kittle v. Hall (D. C.) 29 F. 508.

Defendant does not point out any special injury to it coming from the delay and tending to operate as an estoppel, except that, in 1920, its manager died, leaving no one in the business who was familiar with the history of the art and might have known about or been able to find anticipation. When he received the notice of infringement in 1916, and again in 1920, he apparently did nothing to prepare or preserve any defense. We cannot regard this event as magnifying delay into estoppel.

The only remaining question as to patent validity rests in some belated depositions as to the Schoen escapement device, tending to show prior invention or two years' prior use. Without considering the motion to strike out these depositions because taken without authority, the District Court held that they did not sufficiently establish either defense. We have reviewed the evidence and we agree with this conclusion. The proofs only attempt to carry the use back just beyond the critical two-year point, and certainty as to time is therefore particularly essential. The witnesses fixed the time with reference to certain events unrelated to this subject, and the time of these events is well enough established; but that the use in question occurred before these events is, after all, a matter of unconfirmed recollection. This use is also categorically denied by witnesses who should have known of it. The same comments apply generally to the proofs of prior invention; and, in addition, Lesley carries the invention by himself and Schoen far enough back to avoid the alleged priority in others. His testimony tends to show a sufficient reduction to practice, and a fair reason for suspending manufacture upon this form. It is as convincing as that on the other side. The criticisms made against it are fairly well met.

We come now to the ground upon which the court below based its dismissal of the case under the Schoen patent. Schoen, December 16, 1910, became an applicant for this patent, jointly with Lesley, and the Patent Office records continued to show his joint interest until the patent was issued to them both, September 19, 1916. On April 14, 1915, Schoen was adjudged an involuntary bankrupt, and thereupon (the exact date is not shown) filed his schedule of personal property assets, in which under the heading "Patents, Copyrights and Trademarks, etc.," he said "None." He was discharged in bankruptcy within the first year. Nothing appears as to any action by the trustee or creditor during the ten years before this suit was commenced or during its three years' pendency, indicating any claim against this patent as a bankruptcy asset. It is fairly to be assumed that the trustee was discharged many years ago. Lesley and Schoen sold the patent to plaintiff while this suit was pending, and, in effect, showed this by supplemental bill.

The situation presents a number of interesting questions which do not seem to be clearly covered by any authoritative decision.² Is it necessary that the complainant in an equity suit for infringement have the complete, perfect, and entire legal title, or may one joint owner (who owns, not the whole of a half, but a half of the whole) maintain the suit if it sufficiently appears that there is no outstanding...