Sinclair Refining Co. v. Jenkins Petroleum Process Co.

• Decision Date: 27 September 1938
• Docket Number: No. 3318.,3318.
• Citation: 99 F.2d 9
• Parties: SINCLAIR REFINING CO. v. JENKINS PETROLEUM PROCESS CO.
• Court: U.S. Court of Appeals — First Circuit

99 F.2d 9 (1938)

SINCLAIR REFINING CO. v. JENKINS PETROLEUM PROCESS CO.^*

No. 3318.

Circuit Court of Appeals, First Circuit.

September 27, 1938.

Nathan L. Miller, of New York City (Frank E. Barrows, of New York City, and Robert Hale, of Portland, Me., on the brief), for appellant.

Howard A. Hartman and David Fox, both of Milwaukee, Wis. (Henry Herrick Bond, of Boston, Mass., Philip G. Clifford and Richard S. Chapman, both of Portland, Me., John Howley, of New York City, Frederick Schafer and Russell C. Jewell, both of Washington, D. C., and John J. McKeague, of Chicago, Ill., on the brief), for appellee.

Before WILSON and MORTON, Circuit Judges, and McLELLAN, District Judge.

WILSON, Circuit Judge.

This is an appeal from the District Court of Maine in an action at law to recover for an alleged breach of a contract under date of October 2, 1916, under which the defendant agreed to cause its employees to execute applications for patents for any improvements which it or its engineers and experts might develop in a certain apparatus or process claimed to have been invented by the plaintiff for cracking crude petroleum oils for the recovery of the lighter oils, including gasoline, and to assign said applications, together with the improvements they were intended to protect, to the plaintiff.

A suit in equity was originally brought in January, 1921, to compel a specific performance of the contract. Specific performance was denied by the District Court for lack of sufficient evidence to warrant such a decree and the bill was dismissed. On appeal to this court the decree of the District Court was in part affirmed, but the appeal was dismissed without prejudice and the case was remanded to the District Court with directions to transfer it to the law side, and with permission to the plaintiff to amend its bill of complaint within thirty days by filing a declaration at law for a breach of contract.

The history of the litigation over this contract, prior to the judgment at law from which this appeal was taken, will be found in D.C., 273 F. 527; D.C., 32 F.2d 247; 1 Cir., 32 F.2d 252; D.C., 38 F.2d 820; D.C., 56 F.2d 272; 1 Cir., 62 F.2d 663; 289 U.S. 689, 53 S.Ct. 736, 77 L.Ed. 1449, 88 A.L.R. 496; D.C., 6 F.Supp. 67.

Following the mandate in the equity suit, a declaration at law was filed, and a motion by the defendant to strike out and dismiss on the ground that the proposed declaration at law set forth a different cause of action from that described in the complaint in equity. The motion of the defendant was denied and an exception taken.

On May 15, 1930, a third count as an amendment to the declaration at law was proposed and objected to and exceptions taken to the allowance.

Defendant then filed a plea of general issue with a brief statement of defense, on which issue was joined, and the case was continued from term to term until the December Term, 1936. On March 29, 1937, the case went to trial before a jury. At the close of the evidence on April 23, 1937, the defendant filed a motion for a directed verdict, which was denied and exceptions taken. Whereupon the jury rendered a verdict for the plaintiff for $2,000,000.

A motion for a new trial by the defendant was overruled. From a judgment on the verdict the present appeal was taken to this court. The defendant filed twenty-five assignments of error.

The case was carefully tried during a trial of five weeks, but with astute and experienced counsel on both sides, by whom every point involving a question of law was strenuously contested, it would be unusual if some error did not appear, either in the admission or exclusion of evidence, or in instructions to the jury, either requested or refused.

An attempt to analyze the mass of evidence pro and con in the case would of necessity be futile within reasonable limits of an opinion.

It is only necessary to consider assignments of error numbered 4, 5, 8, 9, 10 and 12.

We find it unnecessary to discuss assignments 1, 2 and 3 which raise some doubtful questions of pleading under the state practice. We shall first consider assignments of error relating to the admission and exclusion of evidence, viz., 5, 8, 9, 10 and 12.

The District Judge excluded evidence of the prior art bearing on the construction and scope of the Jenkins and Isom patents, and on the question of whether Isom was an improvement in Jenkins, which was assigned as error under assignment No. 5; on the question of damages he excluded evidence bearing on the validity of the Isom patent, and its anticipation by the patent issued to the Russians, Schuchow and Gavrilow, in 1891, and received in the United States Patent Office on March 3, 1897, which was assigned as error under assignments 8 and 9; he also excluded the facts relating to an interference between the Isom patent and an application of one Dubbs, which was filed before the application of Isom and assigned as error under assignment No. 10; the testimony of E. W. Isom in the action of the Sinclair Refining Company v. Globe Oil & Refining Company, D.C., 20 F.Supp. 681, was admitted, which related to the amount of gasoline extracted during a given period by the Isom stills, which was assigned as error under assignment No. 12.

We think the evidence relating to the scope and validity of the Isom patent should have been received, notwithstanding the stills constructed under the Isom patent had been in use by the defendant for many years without objection or claim of infringement. Isom obtained the patent on his still by claiming that vertical tubes were new. The Russian patent was not called to the attention of the Patent Office, when the application for the apparatus patent of Isom was pending, but when his divisional process patent was under consideration the Russian patent was cited, and the process patent was refused on the ground of anticipation by the Russian patent.

The jury was instructed that prima facie the Isom patent was a valid patent, and the jury must have weighed the evidence in view of this instruction. In cross-examination the plaintiff's expert, Darnell, testified as follows: "Q. Then wouldn't you think as an expert qualifying to pass judgment on the value of a patent that you would need to take into account whether or not the particular patent you were evaluating was one which would enable its owner to exclude other people from practicing the same thing? A. Certainly that would be a factor." "Q. But you didn't do it? A. No, I assumed this was a valid patent."

The excluded evidence of the Russian patent of Schuchow and Gavrilow and the other prior art patents offered and excluded would have shown, if admitted, that Isom's vertical tubes on which his patent was based and forced mechanical circulation were anticipated by more than twenty years, and were in the public domain. Jenkins was free to use them as well as the defendant.

This appeared when Isom applied for a divisional process patent for oil cracking and the Russian patent was cited against it. A process patent was denied. The Court of Appeals of the District of Columbia in the Dubbs interference case, Isom v. Dubbs, 58 App.D.C. 25, 24 F.2d 467, stated in its opinion that the Isom apparatus patent had been inadvertently issued, no doubt in view of the Russian patent, which was not cited when Isom's application for an apparatus patent was considered.

This evidence, if it had been admitted, would have shown that Isom's parallel vertical tubes and the mechanical forced circulation of oil through tubes and tank had all been anticipated. The two features in the Isom patent which were claimed by the plaintiff to be an improvement in Jenkins, viz., vertical tubes and a balanced stuffing box, were both old and left nothing of value in the Isom patent to be assigned to the plaintiff under the letter-contract in suit hereinafter referred to. Therefore, even if the improvements claimed by the plaintiff had been assigned in accordance with the letter-contract, they could have added nothing of value to the Jenkins patent, and the failure to assign them deprived the plaintiff of nothing of value. The effect of the contract of October, 1916, was merely to assign any patent obtained by the defendant on improvements in the Jenkins process, if within the contract, for whatever it might be worth. Hence the actual damage suffered by the plaintiff through the failure to assign to it the Isom alleged improvements in accordance with the letter-contract of October, 1916, could not have been more than nominal, even assuming the so-called improvements claimed by the plaintiff were the result of the Isom engineers and experts familiarizing themselves with the Jenkins still under the contract of October, 1916.

The testimony of E. W. Isom in the case of Sinclair Refining Co. v. Globe Oil & Refining Co., 20 F.Supp 681, should have been excluded. The case against the Globe Oil & Refining Co. involved a claim of infringement of certain patents issued to one Bell and assigned to the defendant, by which continuous operation of the Sinclair still was greatly increased and consequently the production of gasoline. The District Court ruled in the law action that special profitable uses of the Isom patent could not be considered on the question of damages, but in the Globe Oil & Refining Co. Case evidence given by E. W. Isom as to the efficiency of the Isom patent, with the addition of the Bell inventions, was admitted as bearing on its commercial use.

The defendant did not deny the usefulness of its invention, but utility and invention are not alone sufficient to warrant the issuance of a patent. There must also be novelty. Paramount Publix Corp. v. American Tri-Ergon Corp., 294 U.S. 464, 474, 55 S.Ct. 449, 453, 79 L.Ed. 997; Walker on Patents (6th Ed.), Sec. 91.

The District Judge expressed doubt as to the admissibility of this evidence at the time it was offered. The plaintiff, however, was permitted to put in the testimony of E. W. Isom as to...