Philco Corporation v. Radio Corporation of America

• Decision Date: 21 June 1960
• Docket Number: Civ. A. No. 21923.
• Citation: 186 F. Supp. 155
• Parties: PHILCO CORPORATION, Lansdale Tube Company, Plaintiffs, v. RADIO CORPORATION OF AMERICA, General Electric Company, American Telephone and Telegraph Company, Western Electric Company, Inc., Bell Telephone Laboratories, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

186 F. Supp. 155

PHILCO CORPORATION, Lansdale Tube Company, Plaintiffs, v. RADIO CORPORATION OF AMERICA, General Electric Company, American Telephone and Telegraph Company, Western Electric Company, Inc., Bell Telephone Laboratories, Inc., Defendants.

Civ. A. No. 21923.

United States District Court E. D. Pennsylvania.

June 21, 1960.

COPYRIGHT MATERIAL OMITTED

Hamilton C. Connor, Jr., William S. Rawls, Charles I. Thompson, Jr., Roy N. Freed, Edward G. Bauer, Jr., Philip Dechert, Philadelphia, Pa., R. Morton Adams, New York City, Ballard, Spahr, Andrews & Ingersoll, Philadelphia, Pa., Pennie, Edmonds, Morton, Barrows & Taylor, New York City, of counsel, for plaintiffs.

Bernard G. Segal, Philadelphia, Pa., for R. C. A.; Charles J. Biddle, Philadelphia, Pa., for G. E.; Arthur Littleton, Ernest R. vonStarck, Philadelphia, Pa., for A. T. & T., Western Electric Co., Bell Telephone Laboratories, Inc., Schnader, Harrison, Segal & Lewis, Drinker, Biddle & Reath, Morgan, Lewis & Bockius, Philadelphia, Pa., of counsel, for defendants.

CLARY, District Judge.

This is a civil action for violation of the antitrust laws, Title 15 U.S.C.A. §§ 1, 2 and 3, and for a declaratory judgment concerning the alleged misuse, abuse and unenforceability of certain of the defendants' patent rights, Title 28 U.S.C.A. § 2201 et seq. Both of the plaintiffs are Pennsylvania corporations: Philco Corporation (hereinafter referred to as "Philco") being engaged for many years in the development, manufacture and sale of electronic communications apparatus, (i. e., radio, television and radar); and Lansdale Tube Company (hereinafter referred to as "Lansdale"), its subsidiary, the supplier of tubes and transistors to Philco.

The defendants are engaged in various fields of electronics:¹ Radio Corporation of America (hereinafter referred to as "R. C. A."), like Philco, is primarily involved in the electronic communications industry; General Electric Company (hereinafter referred to as "G. E.") is primarily involved in the electrical apparatus industry i. e., incandescent lamps, electric motors and generators), although they also produce electronic communications apparatus in competition with the plaintiffs; American Telephone and Telegraph Company (hereinafter referred to as "A. T. & T.") is in virtual control of the public communications industry (i. e., telephone and telegraph); Western Electric Company, Inc. (hereinafter referred to as "Western Electric") manufactures practically all of the public communications apparatus used by A. T. & T. and in addition produces electronic communications apparatus; Bell Telephone Laboratories, Inc. (hereinafter referred to as "Bell Labs.") conducts extensive research in the various fields of electronics; and Westinghouse Electric Company (named as coconspirator but not as a defendant) is primarily involved in the electrical apparatus industry, although it also produces electronic communications apparatus in competition with the plaintiffs. All of the defendants along with Westinghouse Electric Company hold numerous patents in the various fields of electronics.

The complaint, consisting of some 60 pages with 138 numbered paragraphs, was filed on January 14, 1957. Briefly stated, it alleges a mass conspiracy among the defendants, beginning in 1919 and continuing to date, to restrain trade and eliminate competition in the field of electronic communications and to further divide up and monopolize various other fields of electronics among themselves. The basic means alleged to have been used by the defendants to effect this conspiracy was the improper use and manipulation of the extensive patents and patent rights held by each of them. In their prayer for relief the plaintiffs seek $150,000,000 damages ($50,000,000 trebled) plus certain injunctive relief concerning the defendants' vast patent rights. The defendants on their part deny any conspiracy to monopolize, or monopolization, and, in addition, assert various defenses to the complaint.

Before the Court at this time is a motion by the defendants for partial summary judgment under Rule 56 of the Federal Rules of Civil Procedure, Title 28 U.S.C.A. The defendants contend that the applicable statute of limitations requires us to summarily dismiss the suit as to all of the defendants to the extent of any cause of action which accrued against them prior to January 15, 1953.² The plaintiffs take issue with this cutoff date, except as to defendant Bell Labs, whom they apparently agree has the protection of the four year federal statute of limitations, Title 15 U.S.C.A. § 15b. (See transcript of oral argument, page 111.) Since the contentions of the parties as to each of the remaining defendants differ, we will treat them separately. Following this we will discuss the problem of a single versus a multiple judgment in this action.

A. T. & T. and Western Electric

These defendants may be treated together because both the plaintiffs' and the defendants' contentions are the same as to each. The point on which the parties sharply disagree is whether an earlier Government antitrust suit against A. T. & T. and Western Electric, which commenced on January 14, 1949, and ended on January 24, 1956, tolls the statute of limitations in the present action, by virtue of Section 16(b), Title 15 U.S.C.A. The defendants argue that it does not, for the reason that the present action is not "based in whole or in part on any matter complained of in the Government suit", as those words are used in the statute. As a result they conclude that January 15, 1953 is the proper cutoff date for A. T. & T. and Western Electric (i. e., four years prior to filing of the complaint, 15 U.S.C.A. § 15b). The plaintiffs disagree and as a result conclude that counting back from the date the earlier Government suit began, they have the benefit of the six year Pennsylvania statute of limitations, 12 P.S. § 31, which would ordinarily take them back to January 14, 1943, but that this period is further suspended by the Wartime Suspension Act of October 10, 1942, c. 589, 56 Stat. 781, amended June 30, 1945, c. 213, 59 Stat. 306, 15 U.S.C.A. § 16 note, so as to take them back to May 2, 1939.³ Although the defendants did not meet this contention by arguing in the alternative, the plaintiffs' contention, assuming that the Government suit did toll the statute during its pendency, would appear to be basically correct.

After carefully considering this question and the extensive argument made by each side in this extremely complicated antitrust case, we are convinced that the correct answer as to the tolling effect of the earlier Government suit lies somewhere between the two extreme positions taken by the parties. The defendants' error on this issue results in large part from their apparent failure to appreciate the burden placed upon them when presenting a motion of this nature for a partial summary judgment based upon the statute of limitations. It is incumbent upon such a moving party to show that, taking all of the allegations of the complaint as true (unless, of course, they are clearly controverted by supplemental documents), the plaintiffs are not entitled to recovery upon any claim for relief contained in the complaint. Smart v. United States, D.C.Okl.1953, 111 F.Supp. 907, affirmed at 10 Cir., 1953, 207 F.2d 841. See also Nagler v. Admiral Corp., 2 Cir., 1957, 248 F.2d 319, and authority cited therein.

The defendants have convinced us that were we, at this stage of the proceeding, compelled to view the complaint as stating only a single cause of action—based upon the mass conspiracy among all of the defendants, to divide up and monopolize the various areas of trade within the electronics field—we would have to reject the plaintiffs' claim that the earlier Government suit against A. T. & T. and Western Electric tolled the statute of limitations as to that single cause of action. Such a claim is clearly not "virtually identical" with the earlier Government claim. See for instance, Steiner v. 20th Century-Fox Film Corp., 9 Cir., 1956, 232 F.2d 190. However, we must reject such a conclusion, since we find that the plaintiffs have stated enough facts upon which to base a separate claim for relief against A. T. & T. and Western Electric alone, for a separate conspiracy in violation of the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note.

Thus, after plaintiffs set out the jurisdictional grounds, identify the parties and indicate the various fields of commerce involved, the complaint alleges, among other things, that (1) A. T. & T. and Western Electric violated Sections 1, 2 and 3 of the Sherman Act (complaint, pars. 22, 23); (2) A. T. & T. required, with only minor exceptions, that all of their operating units purchase all of their apparatus from Western Electric (complaint, par. 55); (3) A. T. & T. and Western Electric refused until recently to grant licenses to others to manufacture, use and sell public communications apparatus under their patents relating to such apparatus (complaint, par. 56); (4) A. T. & T. and Western Electric conspired with the various defendants to maintain a monopoly in the public communications industry, particularly through the manipulation of their patent rights (complaint, pars. 52, 57); (5) as a result of these and other wrongful acts, A. T. & T. and Western Electric enjoy a monopoly in the public communications industry (complaint, par. 88a); and the public (complaint, pars. 88b, c and e), as well as Philco (complaint, par. 121m) have been injured thereby.

Taken together these allegations state a separate claim for relief against A. T. & T. and Western Electric. It is true that this separate claim is alleged as a part of and even necessary to the larger conspiracy. However, we see nothing novel in stating a conspiracy within a conspiracy, each constituting a separate claim for relief. Undoubtedly in such a situation the plaintiff cannot have full recovery upon both, since this...