Safe Flight Instrument Corp. v. McDonnell Douglas Corp.

• Decision Date: 13 September 1973
• Docket Number: No. 71-1751.,71-1751.
• Parties: SAFE FLIGHT INSTRUMENT CORPORATION, a New York corporation, Plaintiff-Appellant, v. McDONNELL-DOUGLAS CORPORATION, a Maryland corporation, and Sperry Rand Corporation, a Delaware corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

482 F.2d 1086 (1973)

SAFE FLIGHT INSTRUMENT CORPORATION, a New York corporation, Plaintiff-Appellant, v. McDONNELL-DOUGLAS CORPORATION, a Maryland corporation, and Sperry Rand Corporation, a Delaware corporation, Defendants-Appellees.

No. 71-1751.

United States Court of Appeals, Ninth Circuit.

April 27, 1973.

Rehearing Denied September 13, 1973.

Thomas M. Marshall (argued), William R. Woodward, New York City, Robert Yale Libott, Richard H. Keatinge, Keatinge, Libott, Bates & Loo, Los Angeles, Cal., for plaintiff-appellant. W. Robert Spensley (argued), Stuart Lubitz, Edwin H. Taylor, Spensley, Horn, Jubas & Lubitz, Los Angeles, Cal., Richard B. Hoegh (argued), Dennis B. Haase, Hahn, Cazier, Thornton, Hoegh & Leff, Los Angeles, Cal., for defendants-appellees.

Before CHAMBERS, HAMLEY, and WALLACE, Circuit Judges.

HAMLEY, Circuit Judge:

Safe Flight Instrument Corporation (Safe Flight) brought this patent infringement action in the United States District Court for the Central District of California on December 31, 1968. In a six-count amended complaint Safe Flight charged defendants, McDonnell-Douglas Corporation (MDC) and Sperry Rand Corporation (Sperry), with infringement of Safe Flight's U.S. Letters Patent No. 3,043,540 ('540 patent), and with the improper use of trade secrets.

The '540 patent is entitled "Aircraft Instruments" and describes a closed-loop aircraft instrument system intended to assist the pilot of a jet aircraft in take-off and other flight maneuvers such as landing approach and go-round. The subject matter of the '540 patent claims in suit is in commercial practice by Safe Flight in a Speed Command and Automatic Throttle System (SCAT), manufactured and sold by Safe Flight. The patent was issued to Safe Flight on July 10, 1962, as assignee of Leonard M. Greene.

The infringement claims are set forth in counts one, two and three of Safe Flight's amended complaint. In count one, Safe Flight alleged that MDC and Sperry have infringed, and will continue to infringe, the '540 patent in connection with the manufacture and sale of an Automatic Throttle/Speed Control System (AT/SC) for installation on MDC's model DC-10 aircraft. In count two, Safe Flight alleged that MDC and Sperry have infringed, and will continue to infringe, that patent in connection with the manufacture and sale of devices comparable to AT/SC for use on aircraft manufactured by MDC other than model DC-10. In count three, Safe Flight alleged that MDC (but not Sperry) has infringed, and will continue to infringe, the '540 patent by making, using and selling products embodying the patented invention on MDC model DC-9 aircraft and other aircraft.¹

Defendants asserted various defenses, including that of patent invalidity. MDC moved for a partial summary judgment dismissing count three of the amended complaint. Safe Flight countered with cross-motions for partial summary judgment against MDC on the third count. Both motions were denied.

After a lengthy trial limited to the validity of the '540 patent and infringement of that patent by the Sperry AT/SC system, the district court entered a judgment declaring invalid all of the '540 patent claims in issue. In addition, the district court adjudged that Sperry's AT/SC system did not infringe the '540 patent even if that patent were valid. Safe Flight appeals.²

We will first consider issues pertaining specifically to counts one and two. The first such issue is whether MDC and Sperry are collaterally estopped from contesting the validity of the '540 patent.

In July, 1967, Safe Flight instituted a patent infringement suit, involving the '540 patent, and other patents, in the United States District Court for the Western District of Washington (Seattle case).³ The defendants were United Control Corporation and its successor U. C. Liquidating Corporation, collectively referred to herein as UCC.

That suit was the outgrowth of UCC's action in contracting to manufacture its so-called Speed Command Computers of the angle of attack type, for installation in MDC's model DC-9 aircraft. In connection with the manufacture and sale of these devices, UCC agreed to indemnify MDC for any damages MDC might be required to pay for patent infringement. Safe Flight alleged, in the Seattle case, that the UCC devices infringed the '540 patent.

After a lengthy trial in the Seattle case, the district court in that case entered findings of fact and conclusions of law to the effect that the '540 patent is valid and claims 1 through 8, 17, 19, 20, 22 and 26 of that patent had been infringed by the defendants in that case. A judgment for Safe Flight, consistent with these determinations, was entered on December 11, 1968, and UCC and U. C. Liquidating Corporation appealed. The appeals were docketed in this court as Nos. 23,746 and 23,867.

Safe Flight thereafter requested that the appeals in the Seattle case be remanded to the district court to enable that court to entertain Safe Flight's motion for a new trial and for other relief. On May 27, 1969, in an unreported order, this court granted the requested remand. On July 31, 1969, Safe Flight entered into an agreement with UCC settling all issues in the Seattle case. Under the terms of this agreement UCC paid Safe Flight the sum of $2,509,922.19, and, by consent, a final judgment was entered, one provision of which determined that the '540 patent is valid. The appeals in Nos. 23,746 and 23,867 were thereafter dismissed.

During the trial, Safe Flight did not contend that MDC and Sperry, in defending against counts one and two of the amended complaint, were collaterally estopped to challenge the validity of the '540 patent because of the adjudication of the validity of that patent in the Seattle case. At the outset of this case Safe Flight contended, at most, that the adjudication of validity in the Seattle case was entitled to "great weight" in the absence of convincing new evidence of invalidity. Accordingly, the pre-trial order of March 30, 1970, does not refer to any collateral estoppel issue.

As a matter of fact, during the pre-trial argument bearing on the cross-motions for summary judgment on count three, counsel for Safe Flight stated that had MDC not, by its motion for partial summary judgment, elected to accept benefits under the settlement agreement and judgment entered in the Seattle case, "they MDC could have remained solid and taken the position that nothing in Seattle affects them in any way . . . and they are entitled to their full day in court." Likewise, at the same hearing, counsel for Safe Flight conceded that "Sperry Rand has not had its day in court."

As recited in the judgment herein, the only issues tried were with regard to the validity of the '540 patent and whether that patent had been infringed by Sperry's AT/SC device. It is true that, in its cross-motion for partial summary judgment, Safe Flight contended that MDC was collaterally estopped by the judgment in the Seattle case. But that motion pertains only to count three of the amended complaint, to be dealt with below. The pre-trial order clearly provides for the separation of those matters pertaining peculiarly to counts three, four, five and six. Safe Flight did not raise collateral estoppel as to counts one and two during the proceedings in the district court. The court's findings of fact and conclusions of law made no reference to a collateral estoppel issue.

Even on this appeal, Safe Flight, in its opening brief, after referring to Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971), decided after the entry of judgment in this case, contended only that because of the judgment in the Seattle case, the '540 patent was entitled not only to the usual presumption of validity, "but also to the further strengthened presumption of validity after a considered decision" in the Seattle case.⁴

In its reply brief on this appeal, Safe Flight began to harden its position concerning the asserted binding effect of the Seattle judgment insofar as counts one and two are concerned, until it finally asserted that MDC "and its privy, Sperry" should be bound by the outcome of the Seattle case. It was not until the oral argument before us that Safe Flight began to talk about "collateral estoppel."

In the context described above, we hold that the issue concerning the collateral estoppel of MDC and Sperry to assert their defense of patent invalidity as against counts one and two of the amended complaint was not raised and preserved by Safe Flight in the district court and therefore may not be presented on this appeal. Grantham v. McGraw-Edison Co., 444 F.2d 210, 216-217 (7th Cir. 1971); Strouhal v. Allied Development Co., 220 F.2d 541, 544 (10th Cir. 1955); City of Erlanger v. Berkemeyer, 207 F.2d 832, 839 (6th Cir. 1953).

The findings of fact of the district court contained fifty paragraphs. Under five different headings Safe Flight argues that twenty-two of these findings, pertaining to the validity of the '540 patent are clearly erroneous.

At the outset of its argument concerning these findings of fact, Safe Flight observes that the questioned findings are "completely inconsistent and directly contrary" to the findings entered in the Seattle case, and postures the problem as one of determining which of the two sets of findings are clearly erroneous under Rule 52(a), F.R.Civ.P.

We decline to approach the problem in this way. It is true, as defendants concede, that prior adjudications as to the validity of a patent "are entitled to respectful consideration and in doubtful cases they are strongly persuasive." Ritchie v. Lewis-Browning Mfg. Co., 196 F.2d 434, 436-437 (5th Cir. 1952). It was on this theory that the district court, in the case before us, admitted in evidence the judgment, findings of fact and conclusions of law entered in the Seattle case. We have no reason to believe that the district court in our action...