Ronson Patents Corp. v. Sparklets Devices, 7923(2).

• Decision Date: 25 May 1953
• Docket Number: No. 7923(2).,7923(2).
• Citation: 112 F. Supp. 676
• Parties: RONSON PATENTS CORP. et al. v. SPARKLETS DEVICES, Inc. et al.
• Court: U.S. District Court — Eastern District of Missouri

112 F. Supp. 676

RONSON PATENTS CORP. et al. v. SPARKLETS DEVICES, Inc. et al.

No. 7923(2).

United States District Court E. D. Missouri, E. D.

May 25, 1953.

COPYRIGHT MATERIAL OMITTED

John H. Sutherland, of St. Louis, Mo., for plaintiff and additional party to the counterclaim.

Kingsland, Rogers & Ezell, and Edmund C. Rogers, of St. Louis, Mo., for defendant and intervenor.

HULEN, District Judge.

Ronson Patents Corporation¹ sued defendant Sparklets Devices, Inc.² for patent infringement by manufacture and sale of an automatic cigarette lighter. Ronson Art Metal Works, Inc.³ was brought into the case on motion of defendant as a party plaintiff on defendant's counterclaim. Brown & Bigelow intervened as a party defendant. Defendants denied infringement and countered with a claim for $1,500,000 damages, charging plaintiffs with illegal monopoly and conspiracy in the production and sale of automatic cigarette lighters, to defendants' damage, in violation of the Sherman Act, 15 U.S.C.A. §§ 1-4; Wilson Act, 15 U.S.C.A. §§ 8, 9; Clayton Act, 15 U.S.C.A. §§ 13, 14. The charge of infringement was separated for hearing. It has been finally decided against plaintiffs, 8 Cir., 202 F.2d 87. The record has been completed on the issue made by the counterclaim. It is now for ruling.

I. Positions and Claims of Parties Defendants claim:

"In the present case * * * there exist contracts, combinations, and conspiracies in restraint of trade, condemned under Section 1 of the Sherman Act. These all involve more than one actor. Additionally there exist a monopoly and attempt to monopolize condemned under Section 2. * * * Also there exist here a combination or conspiracy to monopolize part of the trade of cigaret lighters condemned under Section 2, and this, of course, requires more than one person."

Plaintiffs deny: (1) all the defendants charges; (2) defendants have suffered damage from any act of plaintiffs.

In Kobe, Inc., v. Dempsey Pump Co., 10 Cir., 198 F.2d 416, 422, the Court gave a generally accepted interpretation of the Sherman Act:

"Sec. 1 of the Anti-Trust Act declares that every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states or with foreign nations, is declared to be illegal. Sec. 2 provides that every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be guilty of a misdemeanor * * *."

To establish the charges made against plaintiffs, defendants rely on a chain of events, namely:

As of May, 1951, Art Metal was the primary producer of automatic cigarette lighters in the United States; Art Metal on May 8, 1951, made a final payment to their attorneys in connection with Congressional action extending the patent under which they manufacture automatic cigarette lighters; on May 5, 1951, Ronson sued intervenor Brown & Bigelow for patent infringement in St. Paul, Minnesota, the home of Brown & Bigelow; on May 6, 1951, Ronson published in a New York newspaper an advertisement announcing a butane cigarette lighter with a throw-away cartridge, but Ronson's lighter was not ready for sale "until a year and a half later"; on May 7, 1951, Ronson filed this suit, substantially identical with the suit in St. Paul; on May 4th Ronson notified one of defendants' largest customers (Bennett Bros. in New York) that sale of defendants' automatic butane lighter was an infringement upon plaintiffs' patent; in June, 1951, Ronson published an ad setting forth an aggressive policy against patent infringers; defendant got a patent on its throw-away cartridge automatic butane lighter in July of 1951 known as the Felt patent; in the late Fall of 1951 Art Metal secured a patent on a butane throw-away cartridge automatic lighter known as the Flamm patent; plaintiffs sued Brown & Bigelow in New York for declaratory judgment that (1) the Felt patent is invalid, (2) not infringed by the Flamm patent, and (3) the Felt patent infringes the Flamm patent.

Defendants charge an intent on the part of plaintiffs to suppress the sale of butane automatic lighters by the conduct listed and to avoid the effect their success would have on plaintiffs' monopoly of wick liquid fuel lighters. Defendants present the same factual charges to support their argument that plaintiffs intend to extend their monopoly of automatic wick liquid fuel lighters over to cover automatic butane lighters.

Defendants also assert that plaintiffs illegally created a monopoly and were part of a conspiracy to monopolize and that plaintiffs' acts thereafter to further the monopoly are acts which are possible because the monopoly exists and are illegal and that such subsequent acts are themselves intentionally monopolistic. To support this position defendants present the following particulars against plaintiffs: an agreement between Ronson and Evans by which Ronson imposed price control on Evans; Ronson and Evans "fair traded" under the agreements; the Ronson-Evans agreements restricted certain officers of Evans entering into a competitive business; the Ronson-Evans agreements called for a royalty on all lighters manufactured by Evans regardless of whether they come under the Ronson patents or not; the Ronson-Evans agreements provided for cross-licensing.

As background evidence of plantiffs' intent to engage in and form a monopoly both individually and by conspiracy, and that plaintiffs did create an illegal monopoly defendants state: Ronson and Evans conspired to secure Congressional action to extend reissue Patent 19023, and among other things misrepresented the factual situation to Congress; Ronson had an aggressive policy of protection of its patent interest by suits and notice of infringement; Ronson acquired a large number of patents; Ronson was active in securing Treasury Department orders excluding foreign lighters from importation into this country; Ronson contracted with Japanese manufacturers not to ship automatic cigarette lighters into this country; Ronson's license contract provided for an increasing royalty scale as the sale of products increased; Ronson, not being a manufacturer, cannot enter into price-fixing contracts.

To support the prayer for $1,500,000 defendants claim damages: (a) cost of the patent litigation, including the New York suit still pending for trial; and (b) lost sales of table model lighters. By their brief defendants abandon any claim of loss of business on sale of pocket lighters. They sold all they could make, production having been curtailed by metal priority of the Government.

II. Facts

Plaintiff Ronson is a subsidiary of Art Metal. It was formed in 1946 and holds patents assigned to it by Art Metal, under some of which Art Metal manufactures lighters. Ronson does not manufacture. Art Metal has been manufacturing various articles for over forty years and cigar lighters since 1910, and automatic wick cigar or cigarette lighters for over twenty-five years. About 1928 it acquired the Aronson patent. Its business, growth, and success, using the Aronson patent, and the utility of an automatic lighter made under the Aronson patent, was commented on in a case decided by the Court of Appeals for the Second Circuit:

"Devices which have been marketed by the complainant Art Metal under the patent have had a large commercial success. While this success has been substantially promoted by advertising, there is little doubt that the patentee has devised a lighter that excels in compactness and convenience and has made valuable and meritorious contribution to an old art."

Mr. Harris, President of Art Metal, testified that sale of the automatic lighter was such that it "took a commanding place" in the sales "practically instantaneously." At first there was no need for advertising. Manufacture of other items by the factory was discontinued to make the automatic lighters. Sales of automatic lighters from July 1927 to the end of 1927 amounted to $100,000 for 230,000 pieces; for 1928 sales were $2,335,000 for 830,000 pieces. Thereafter there was a gradual growth through the years. By the time of trial of the patent infringement feature of this case, Ronson was a leading manufacturer of automatic cigarette lighters. Lighters involved in this case are of two models, table and pocket. Seventy-five percent of plaintiffs' business is in the pocket lighter model. Including the two models, Art Metal now makes more automatic lighters than any other manufacturer.

The industry is a crowded one. Defendants listed eighteen patents as prior art in the defense to the patent infringement suit. There are many makes and kinds of lighters now on the market. We name some: A. S. R., Zippo, Elgin, Flaminaire, Stratoflame, Evans, Rogers, Marathon. Japan is exporting lighters. France, England and Canada are doing the same thing. All lighters are competitive with one another before the user. There are many kinds of butane lighters.

Defendant Sparklets is a manufacturer of the fuel cartridge for the lighter sold under its patent. Brown and Bigelow manufacture the lighter. Defendants started taking orders in 1950 for their automatic butane pocket lighter. The table model came later. The defendants divide their business. Sparklets has exclusive sales rights for the "re-sale field", and Brown & Bigelow sell direct to parties who want to distribute to consumers as an advertising medium.

Sales resistance met by defendants in introducing the new lighter was described by defendants' New York representative, Ruth Weissblum:

"I realized the distributor salesmen have so many items to sell that they couldn't concentrate or help introduce a new item successfully; so I took it upon myself to call on what I thought were the fine shops in New York to get them interested in our lighter—which I was able to do.

"Q. Would you say whether or not, in the

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