New Wrinkle, Inc. v. John L. Armitage & Co.
| Decision Date | 19 April 1960 |
| Docket Number | No. 12917.,12917. |
| Parties | NEW WRINKLE, INC., Appellant, v. JOHN L. ARMITAGE & CO. |
| Court | U.S. Court of Appeals — Third Circuit |
Harry A. Toulmin, Jr., Dayton, Ohio (McCarter & English, Newark, N. J., Toulmin & Toulmin, Dayton, Ohio, Ward J. Herbert, Griffith H. Jones, Newark, N. J., George W. Stengel, Dayton, Ohio, on the brief), for appellant.
Thomas Cifelli, Jr., Newark, N. J. (Richards & Cifelli, George D. Richards, Frank M. Murphy, Newark, N. J., on the brief), for appellee.
Before BIGGS, Chief Judge, and GOODRICH and McLAUGHLIN, Circuit Judges.
This is an action brought by New Wrinkle, Inc. (New Wrinkle) against John L. Armitage & Co. (Armitage) for a declaratory judgment that the manufacture, use or sale by Armitage of its product, "Armorhide", is an infringement of claims of three patents owned by New Wrinkle and licensed by it to Armitage. New Wrinkle also prayed for a decree requiring Armitage to carry out its obligations under the licensing agreement, and for an accounting. Armitage filed an answer and also a counterclaim seeking a declaratory judgment that it has not infringed the claims of the three New Wrinkle patents and that the manufacture, use, or sale of "Armorhide" by Armitage do not infringe the claims of the three patents. Jurisdiction is based on diversity and Section 2201, Title 28 U.S.C. The court below held in favor of Armitage, D.C., 1958, 168 F.Supp. 244 and this appeal followed. New Wrinkle bases its contentions in this court on claims 4 and 7 of U. S. Patent No. 2,510,966 to Flanagan. In the trial in the court below New Wrinkle also asserted that other patents supported its position, viz., No. 2,671,062, Waldie, claims 1, 4, 6, 7, 9, 10, and 12, and No. 2,671,063, Waldie, claims 1 to 4 and 8 to 18, inclusive.
The pertinent facts are as follows. In May, 1938, New Wrinkle granted Armitage a ten year non-exclusive license to make, use and sell "wrinkle" finishes, principally on metals but also for other materials, under any patents which New Wrinkle might own during the term of the license agreement. The agreement was renewed on substantially the same terms in 1948 and again in 1958. The present litigation grows out of the development by Armitage of its own finish for metals, "Armorhide". The record demonstrates that this composition was developed pursuant to a request by International Business Machines Corporation which was searching for a leather-like finish for the outside metal coverings of its machines. When the president of New Wrinkle discovered the existence of "Armorhide" in 1955 he proposed to the president of Armitage that the two companies jointly exploit the new product. This suggestion was rejected by Armitage and New Wrinkle then instituted the suit at bar in January, 1956.1
As we have said, one of the patents in issue is the Flanagan Patent No. 2,510,966, claims 4 and 7. The patent states a method for the production of a wrinkle or textured finish from materials which ordinarily do not wrinkle. The finish is produced by applying an organic solution of thermoplastic vinyl resin to a surface such as a metal base plate, which is, in fact, the material to be covered; drying the solution, either unaided or by the application of heat, to form a thin surface skin, spraying finely dispersed droplets of water onto the skin, and evaporating the solvent from the resin solution. This produces a textured leather-like finish. The use of Armitage's process also produces a textured or leather-like finish designated by Armitage as "Armorhide". Armitage contends that "Armorhide" is produced pursuant to the teachings of U. S. Patent No. 2,715,587, Armitage, and of U. S. Patent No. 2,575,046, Chavannes respectively owned by or exclusively licensed to Armitage. These patents are somewhat illustrative of the Armitage process but are, of course, otherwise irrelevant. Essentially Armitage's "Armorhide" finish is achieved by applying a layer of thermoplastic vinyl resin, some in solution, some in dispersion, to a base plate, flash drying, spraying the base plate with an organic oxygenated solvent such as cycloplexane, and heating or baking it. The evidence shows that vinyl in dispersion is essential to the proper working of the Armitage process. The vinyl in solution is also necessary as a binder.
New Wrinkle contends that the method employed in making Armitage's "Armorhide" is the same or the equivalent to that disclosed by the Flanagan patent and is covered by claims 4 and 7 in issue and that therefore Armitage must pay royalties to it under the terms of their license agreement.2 New Wrinkle insists that "Armorhide" is the same product as that produced by the Flanagan process. Armitage insists that it has achieved a novel result by a method not covered by claims 4 and 7 of Flanagan.
It is hornbook law that a licensee must pay royalties not only on the invention disclosed in a patent but he must also pay royalties on whatever is sufficiently similar to that disclosure to constitute infringement of the licensed process or product. St. Paul Plow Works v. Starling, 1891, 140 U.S. 184, 11 S.Ct. 803, 35 L.Ed. 404. If a licensor brings suit as here for additional royalties the licensee is not barred from questioning the scope of the patent sued on in order to establish a defense of non-infringement. Midland Steel Products Co. v. Clark Equipment Co., 6 Cir., 1949, 174 F.2d 541; Sinko Tool & Mfg. Co. v. Casco Products Corp., 7 Cir., 1937, 89 F.2d 916. The burden of proof is upon the licensor to prove infringement. Automotive Parts Co. v. Wisconsin Axle Co., 6 Cir., 1935, 81 F.2d 125, 128; Hatmaker v. Dry Milk Co., 2 Cir., 34 F.2d 609, 611, certiorari denied, 1929, 280 U.S. 604, 50 S.Ct. 86, 74 L.Ed. 649.
The construction of a patent presents an issue of law, but the issue of infringement is one of fact. Coupe v. Royer, 1895, 155 U.S. 565, 15 S.Ct. 199, 39 L.Ed. 263; Winans v. Denmead, 1853, 15 How. 329, 56 U.S. 329, 14...
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