Neff Instrument Corporation v. Cohu Electronics, Inc.

• Decision Date: 06 August 1959
• Docket Number: No. 16266.,16266.
• Citation: 269 F.2d 668
• Parties: NEFF INSTRUMENT CORPORATION, a Corporation, Appellant, v. COHU ELECTRONICS, INC., and Neely Enterprises, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

269 F.2d 668 (1959)

NEFF INSTRUMENT CORPORATION, a Corporation, Appellant, v. COHU ELECTRONICS, INC., and Neely Enterprises, Appellees.

No. 16266.

United States Court of Appeals Ninth Circuit.

August 6, 1959.

Robert H. Fraser, Los Angeles, Cal., for appellant.

Lyon & Lyon, Charles G. Lyon, Los Angeles, Cal., for appellee.

Before BARNES, HAMLEY and JERTBERG, Circuit Judges.

BARNES, Circuit Judge.

This was an action for infringement of United States Letters Patent No. 2,832,848 brought by plaintiff Neff Instrument Corporation (hereinafter Neff or appellant) against Cohu Electronics, Inc., and Neely Enterprises (hereinafter Cohu or appellees). The patent in suit covered an electrical signal amplifier patented on April 29, 1958. The complaint alleged that appellees were manufacturing, using and selling a device known to infringe, identified as "Model 114-A amplifiers" or "Kin Tel 114A amplifiers."

Appellees answered that all Model 114A amplifiers had been manufactured and/or sold "for the United States Government within the meaning of Title 28 U.S.C. Section 1498," and that plaintiff-appellant's sole remedy was against the United States in the Court of Claims. Upon a motion for summary judgment filed by appellees on the same ground, which was accompanied by affidavits, and which was opposed by the filing of counter-affidavits, the trial court entered summary judgment dismissing the complaint. Findings of fact and conclusions of law were filed. The court held that "plaintiff's sole remedy under the premises is by action against the United States in the Court of Claims for recovery of its reasonable and entire compensation for such use and compensation." sic (Conclusions of Law II.)

Jurisdiction in the district court was founded upon 28 U.S.C. §§ 1338(a) and 1400(b). Timely notice of appeal was filed, and this Court has jurisdiction by virtue of 28 U.S.C. § 1291.

The sole legal issue is whether there was a single, genuine issue of material fact before the district court when it granted summary judgment. If there was, the summary judgment was improperly granted. Cee-Bee Chemical Co., Inc. v. Delco Chemicals, Inc., 9 Cir., 1958, 263 F.2d 150; Fed.R.Civ.P. 56(c), 28 U.S.C.

Plaintiff appeals, contending (a) there existed several issues as to material facts; (b) the defendant-appellees' affidavits in support of the motion for summary judgment did not establish as a matter of law that the government had given its authorization or consent to the infringement of the patents; (c) there was evidence clearly establishing nonexempt infringement which could not be disposed of under the theory of de minimis; (d) that the appellees' affidavits supporting the motion for summary judgment were technically deficient, and finally, (e) that the district court committed prejudicial error in certain rulings restricting the use of interrogatories requested by appellant.

The findings of fact made by the trial court with respect to the defense set out in 28 U.S.C. § 1498 are set forth in the margin.¹ And 28 U.S.C. § 1498 reads, in material part, as follows:

"Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner\'s remedy shall be by action against the United States in the Court of Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

"For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor, a subcontractor, or any person, firm, or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States."

In an attempt to bring themselves within this special defense created by 28 U.S.C. § 1498, the defendant-appellees on July 18, 1958, by affidavit listed thirty-two "114A amplifiers" as having been sold. This affidavit was signed by two vice-presidents of Cohu Electronics, Inc., Silberman and Hamilton, each professing "direct knowledge of the sales and deliveries of all 114A amplifiers manufactured and sold," emphasis added and specifically further stating: "That no 114A amplifiers have been sold to civilians for civilian use, and that all 114A amplifiers sold and delivered have been in connection with use on a specific United States Government prime contract."

It is to be observed that the foregoing affidavit deals only with "114A amplifiers." Subsequent to its filing, the appellant served certain interrogatories on both appellees. These interrogatories sought to determine if defendants had drawn a distinction between the manufacture, use, and sale of "Model 114A amplifiers," of "Kin Tel 114A amplifiers," and of any amplifiers "having similar characteristics to Kin Tel Model 114A amplifiers." They also sought specific information concerning the location and serial numbers of all such amplifiers.

Defendant-appellees objected to answering such interrogatories, charging that their purpose was "to provide information in the nature of a discovery as to damages, despite the fact that there has not yet been established that the patent, which is the basis of this suit, is valid, and that its claims are infringed," and that the interrogatories were "premature" in view of the pending motion for summary judgment.

It seems obvious that for the purposes of the appellees' motion for summary judgment on the special defense, the validity of the patent, and its infringement, were conceded. The sole question on the motion was the controlling applicability of 28 U.S.C. § 1498, which could only be material once infringement and validity of the patent had been assumed. We think the information called for by the interrogatories went far beyond any question of damages, and to the heart of the applicability of § 1498.

Appellees' objections to answering the interrogatories were never passed upon by the trial court. The hearing on the objections was set for the same date as the hearing on the motion for summary judgment. However, on that day the trial court refused to hear the matter of the interrogatories, assuming that if non-governmental sales could be proved, they would not exceed five and hence were "not substantial enough to deprive the defendants of the benefit of the statute."²

The court's refusal to rule on the interrogatories, (particularly in view of the conflicting nature of the affidavits filed in support of the motion for summary judgment, which we later consider) was alone sufficient to prevent a valid conclusion by the court that there was no issue of fact then existing, and was error.

We come to the affidavits in support of and in opposition to the motion for summary judgment.

It might here be noted, parenthetically, that the patented article was not something that could only be used in government contract work, or in defense contracts. It was not part of a missile or plane. It was an article which could be used to advantage by many electronics manufacturing companies in the manufacture of devices that might never be used on a government contract or in connection therewith. As the best evidence of this fact, the equipment in question was advertised for sale to the public in various trade journals (Ex. A to D, inclusive, attached to affidavit of Glyn A. Neff) on several occasions over a five month period beginning before suit was filed.

We have mentioned above the first supporting affidavit, signed July 18, 1958, by Silberman and Hamilton.

On September 11th and 12th, 1958, the next supporting affidavits were filed. They established that the thirty-two amplifiers previously referred to were marked or tagged "as being the property" of the United States, or of the Atomic Energy Commission; that one had been sold directly to the United States Naval Ordnance Department, and an officer of Lockheed Aircraft Corporation swore (as his conclusion) that title to eighteen amplifiers sold to Lockheed was in the United States Government.

On September 12, 1958, affidavits in opposition to the motion were filed by appellant. These disclosed that in addition to the thirty-two 114A amplifiers which the Cohu vice presidents had sworn were the only ones sold, five Kintel Model 114A amplifiers had been purchased by The Ramo-Wooldridge Corporation, one on January 29, 1958 (and the purchase order attached to the affidavit disclosed no reference to any government contract) and four on July 15, 1958 (which purchase order, also attached to the affidavit, likewise disclosed no reference to any government contract). This order was confirmed on July 9, 1958. Other documents attached to the affidavits as exhibits showed that a Model 114A amplifier was received by The Ramo-Wooldridge Corporation on May 26, 1958, and an improved model on August 22, 1958; that the four Model 114A amplifiers purchased by the same company, on July 15, 1958, were confirmed on July 24, 1958.

This affidavit filed by the opponents to the motion also disclosed (a) an additional prototype Kintel Model 114A at the Cohu Electronics company plant; (b) "a portion of a dismantled" structure of still another Model 114A at the same place; (c) that Sandia Corporation had purchased four Kin Tel Model 114A amplifiers, not the three listed in Cohu's list, theretofore submitted, of all thirty-two amplifiers sold (Ex. N attached to said opposition affidavit); and (d) that on August 21, 1958, there was on display at the West Coast Electronics Manufacturers' Association trade show still another Kin Tel Model 114A amplifier, which "was placed in operation and demonstrated," and six more amplifiers designated "Kin Tel Model 114A" described as "energized for operation" because "the red indicator lights were illuminated." These amplifiers were advertised for sale to the public by means of an advertising brochure, a copy...