Schiebel Toy & Novelty Co. v. Clark

• Decision Date: 16 October 1914
• Docket Number: 2443-2445.
• Citation: 217 F. 760
• Parties: SCHIEBEL TOY & NOVELTY CO. v. CLARK (three cases).
• Court: U.S. Court of Appeals — Sixth Circuit

217 F. 760

SCHIEBEL TOY & NOVELTY CO. v. CLARK (three cases).

Nos. 2443-2445.

United States Court of Appeals, Sixth Circuit.

October 16, 1914

Wm. R Wood, of Cincinnati, Ohio, for appellant.

H. A Toulmin and H. A. Toulmin, Jr., both of Dayton, Ohio, for appellee.

Before WARRINGTON, KNAPPEN, and DENISON, Circuit Judges.

WARRINGTON Circuit Judge.

These three suits were for alleged infringements of particular letters patent, and, in addition to the usual features of such cases, issues growing out of the dissolution of a copartnership and sale of its assets, also concerning alleged unfair competition, were involved. As far as necessary, these issues will be noticed as we progress. The patents in suit relate to improvements in toys of the type known as locomotive toys.

The first suit involved letters patent No. 676,420, dated June 18, 1901, and issued to the appellee, Clark. The patent covers a friction-driven device designed for the operation of toys in the forms of locomotives, automobiles, and the like.

The infringement complained of in the second suit concerns letters patent No. 930,107, issued August 3, 1909, in the name of John C. Turner, assignor, to the plaintiff. The invention was designed to provide a toy 'preferably representing a racer automobile, in which the body is struck up from a single blank.'

The third suit charged infringement of letters patent No 930,633, issued August 10, 1909, in the name of John C. Turner, assignor, to the plaintiff; and the patent was intended for 'an engine locomotive toy wherein the boiler, cab side walls, fire box side walls, and boiler support are struck up from a single sheet of metal and bent into shape.'

The devices in issue in these last two suits were designed as bodies, automobile and locomotive, for the friction-driven device involved in the first suit. The suits were all between the same parties, were tried together, and passed upon in one opinion below. The decree in the first suit was based upon noninfringement, and in each of the other suits upon invalidity of the patent in issue. The appeals were argued and submitted as one cause here, and will be disposed of in this opinion.

1. The Clark Patent in Suit. It is contended that plaintiff has no title to the Clark patent and cannot maintain suit upon it for that reason; also that Clark may contest its validity. D. P. Clark & Co. in name, with some changes in membership, was engaged as a copartnership in the toy business at Dayton, Ohio, from 1897 to 1909. In February, 1904, D. P. Clark and William E. Schiebel became equally and solely interested in the firm, and continued the business under the old name until dissolution, which will be explained later. Clark and Schiebel each secured letters patent upon certain devices designed by them respectively; and they entered into an oral agreement, and carried it out at least in part, to transfer their patents to the firm. On May 18, 1904, Clark transferred to the firm a number of his patents-- including the patent now under consideration, No. 676,420-- and this transfer was two days later recorded in the Patent Office.

Differences arose between the partners, and in December, 1908, Clark commenced a suit against Schiebel in the common pleas court of Montgomery county, Ohio, for the dissolution of the partnership and sale of its assets. He alleged that the company was engaged in a large and profitable business in the manufacture and sale of novelties and toys; that it possessed 'a number of copyrights and patents issued to it by the United States,' a valuable good will, and assets of about $75,000 above its liabilities; that the assets were of 'far greater value when taken together than if separated,' and should be sold as an entirety, and the proceeds divided between the partners. The prayer was that the partnership 'be adjudged dissolved, and a receiver of the property and good will be appointed, with power to dispose of the same. ' Clark made and signed the required verification to the petition. Two receivers were appointed; and, under orders of the court, the firm assets, which included the patents, good will, and the right to use the firm name, were sold to plaintiff in the instant suits as the successful bidder. The sale was confirmed, and the receivers were ordered among other things to assign the patents to the purchaser, and 'to do and perform all other acts and things necessary and proper to convey and transfer to and vest in said purchaser all the property, assets, and interests so sold. ' On March 26, 1909, the receivers executed and delivered a written transfer to the plaintiff, embracing the letters patent now in question, No. 676,420; and this transfer was recorded in the Patent Office April 1, 1909.

It is claimed that the legal title to the patent then stood in the name of D. P. Clark & Co.; but we need not pass upon this claim, for, conceding it, and also that under section 4898, U.S. Rev. Stat. (Comp. St. 1913, Sec. 9444), the formal course in the state court would have been to have the firm join in the execution of the transfer (Ball v. Coker (C.C.) 168 F. 304, and citations), still the insistence would be unavailing. In disposing of the suit to dissolve the firm and wind up its business, the state court was in the exercise of its chancery powers and jurisdiction, and the members of the firm could have been compelled to execute a formal assignment, either themselves, or, in default, by some suitable person appointed by the court. Ager v. Murray, 105 U.S. 126, 127, 132, 26 L.Ed. 942. Moreover, the sale was voluntary, not involuntary. Schiebel is president of the plaintiff company, and is not questioning the receivers' transfer of the patent. As we have seen, these receivers were the official instrumentality sought by Clark for disposing of the firm assets; and Clark received and now enjoys the benefits of his full share of the sale proceeds. It results that at least the equitable title to the patent passed to plaintiff; and Clark's reliance upon an outstanding naked legal title is in effect a claim that he may have the benefits of both the patent and the money he received for it. This cannot be assented to, and, for the purposes of this suit, he will not be heard to deny plaintiff's title.

It follows that Clark is estopped from denying the validity of the patent, either for lack of novelty or utility, or by reason of anticipation through prior inventions; but this does not prevent him from denying infringement. Noonan v. Chester Park Athletic Club Co., 99 F. 90, 91, 39 C.C.A. 426 (C.C.A., 6th Cir.); Babcock & Wilcox Co. v. Toledo Boiler Works, 170 F. 81, 84, 95 C.C.A. 363 (C.C.A., 6th Cir.); Fishel-Nessler Co. v. Fishel & Co., 204 F. 790, 791 (C.C.A., 2d Cir.). In aid of the denial of infringement, Clark may invoke the prior art (Noonan v. Chester Park Athletic Club Co., supra; Leather Grille & Drapery Co. v. Christopherson, 182 F. 817, 822, 105 C.C.A. 249 (C.C.A. 9th Cir.)); for the effect of this is simply to define the thing sold, and so to ascertain definitely whether it has been infringed or not. As the late Mr. Justice Lurton said in the Noonan Case, 99 F. 91, 39 C.C.A. 426, respecting the admissibility of the state of the art involved, it enables the court to see--

'* * * what the thing was which was assigned, and thus determine the primary or secondary character of the patent assigned, and the extent to which the doctrine of equivalents may be invoked against an infringer. The court will not assume against an assignor, and in favor of his assignee, anything more than that the invention presented a sufficient degree of utility and novelty to justify the issuance of the patent assigned, and will apply to the patent the same rule of construction, with this limitation, which would be applicable between the patentee and a stranger.'

And this court again had occasion to declare the rule in United States Frumentum Co. v. Lauhoff, 216 F. 610, 132 C.C.A. 614, decided June 30, 1914; Judge Denison saying:

'While a patentee assignor may, when made a defendant, litigate the scope of his patent and have it judicially construed according to its true extent (Noonan v. Chester Co. (C.C.A., 6th Cir.) 99 F. 91, 39 C.C.A. 426; Smith v. Ridgeley, 103 F. 875, 43 C.C.A. 367 (C.C.A., 6th Cir.)), the courts * * * will not, in a doubtful case, construe it so narrowly as to make it worthless. * * * They will be inclined, so far as the record permits, to make its exclusive right a real and valuable thing. Alvin Co. v. Scharling (C.C.) 100 F. 87.'

What then, is the Clark patent in suit, and is it infringed? It is a combination patent, and purports to be 'in the general nature of an improvement upon the structure set forth in letters patent No. 593,174, granted November 2, 1897, to Clark & Boyer, as assignees of Israel D. Boyer and Edith E. L. Boyer,' and called in this litigation the Boyer patent; and this reference will be found helpful in distinguishing between old and new elements of the patent in suit. The Clark structure, as described in the specification and drawings, consists of a truck frame, composed of side members having preferably an arched form and joined at their ends by transverse members, mounted between two sets of running wheels with parallel axles; and as thus far described is similar in appearance to a miniature open road wagon, except that all the running-wheels are of the same diameter and the fore and aft sets are brought into close proximity at their rims. The axles pass through slots extending from the bottom, at points near the ends, of each side member of the truck frame; and when this frame is lifted, the axles of the running-wheels are held within the slots by a wire frame which passes under each axle and extends over the end...