Northern Insulating Co. v. Union Fibre Co.

• Decision Date: 04 October 1912
• Citation: 199 F. 793
• Court: U.S. District Court — District of Minnesota
• Parties: NORTHERN INSULATING CO. v. UNION FIBRE CO. et al.

199 F. 793

NORTHERN INSULATING CO. v. UNION FIBRE CO. et al.

United States District Court, D. Minnesota, First Division.

October 4, 1912

Williamson & Merchant, of Minneapolis, Minn., for complainant.

John E Stryker, of St. Paul, Minn., and L. L. Brown, of Winona Minn., for defendants.

WILLARD District Judge.

This case is here upon a motion for a temporary injunction in a suit alleging infringement of letters patent No. 908,601 dated January 5, 1909, for flax felt, issued to the defendant Lappen and certain assignees, and now owned by the plaintiff.

No question can be made as to the infringement. That appears from the affidavits of the defendants themselves. The validity of the patent has not been established by any judicial decree. The plaintiff's claim is that the defendants are estopped to assert its invalidity.

Lappen assigned all his rights in the patent on January 8, 1909, to the Le Roy Fibre Company, assignor of the plaintiff. He continued in the employ of the Le Roy Fibre Company, of which he was a stockholder, until February, 1910. On the 15th of that month he made his first contract with the defendant the Union Fibre Company. That contract, among other things, gave the company a certain time within which to exercise an option for the acquisition of certain Canadian rights. On February 26, 1910, a second contract was made between Lappen and the defendant company, apparently for the purpose of indicating the exercise by the company of the option above referred to. The second contract contained practically all that the first contract contained, but was more explicit in certain respects. It recited that Lappen considered himself defrauded out of his rightful interests in the Le Roy Fibre Company, and in certain patents which he had given the company the right to use, and that he was desirous of protecting his rights in connection therewith. The Union Fibre Company agreed to employ counsel and pay the expense of such litigation as should be decided upon by the parties, in order to secure Lappen's rights. Lappen agreed to assign to the Union Fibre Company a half interest in any property, patents, or stock interests which he might secure from the Le Roy Fibre Company, or from any of the individual stockholders connected therewith.

Lappen assigned, by the contract, to the Union Fibre Company, the exclusive right to use or manufacture material under any or all of his patents pertaining to the cooking, degumming, treating, or manufacture of flax fibre or insulating materials, and the exclusive right to employ and use all processes patented by him therefor, and the exclusive right to use all machinery patented therefor. By the terms of the contract the Union Fibre Company agreed to pay Lappen a royalty--

'upon all of the flax felt of the kind heretofore made commercially by the Le Roy Fibre Company, at Le Roy, Minn., which it shall manufacture during the life of his composition patent therefor, notwithstanding said composition patent shall be declared void, or the manufacture thereof shall be adjudged an infringement upon the Kelley patent.'

The royalty specified in the contract was to be 15 cents per 1,000 square feet on all insulating materials 1/2 inch or over in thickness; 10 cents per 1,000 square feet on all material less than 1/2 inch, and not less than 3/8 of an inch in thickness; and 7 1/2 cents per 1,000 square feet on all material less than 3/8 of an inch in thickness. These royalties were to be paid to the first party (Lappen) by the second party (the Union Fibre Company), so long as the second party should see fit to manufacture under said patents, or until the expiration of said patents.

The contract up to this point said nothing about the employment of Lappen by the Union Fibre Company; but the second part of it did provide for such employment, and he agreed thereby to work for the company for $100 a month and to assign to the company an undivided half interest in any patents which he might secure, or inventions which he might make while he was in their employ. This contract was to continue at least until January 1, 1912.

Lappen continued in the employment of the defendant company under this contract until January, 1912, when on the 4th day of that month another contract was made between him and the Union Fibre Company. This contract contained the same agreement for the exclusive right to manufacture and sell under the Lappen patents as did the other contracts. It also provided for the payment of royalties in substantially the same way as did the prior contracts. It further provided that the Union Fibre Company should pay the royalties during the life of the patents, whether the same should be declared void or not, and whether they were adjudged an infringement upon the Kelley patent, or not, and regardless of whether Lappen should remain in the employ of the second party or not. This contract also provided for the employment of Lappen by the defendant company, and he is now in their employ under the terms thereof.

The patent in suit is not described in any one of these contracts by its number or by its date, but that it is covered by all of them admits of no doubt. If in February, 1910, when Lappen made his first contract with the defendant company and went into their employment, the defendant company had not manufactured and sold any flax felt like that described in Lappen's patent, the estoppel by which Lappen is unquestionably bound would extend to the company. It would then plainly appear that the defendant company acquired its knowledge of the patent and the way to manufacture the article described therein from Lappen, and under all the authorities its co-operation with Lappen in the infringement would be such as to estop it as well as him.

The vital question, therefore, in the case, is whether or not the Union Fibre Company had been engaged in manufacturing and selling this material prior to February, 1910. It claims that it had been prior even to the issuance of Lappen's patent, and it presented affidavits in support of that claim. One of these affidavits is made by Kelley, to whom the Kelley patent mentioned in the contracts above referred to was issued, who assigned his patent to the defendant company, and who for some time was in its employ. In this...