Smiths America Corp. v. Bendix Aviation Corp.

• Decision Date: 17 February 1956
• Docket Number: Civ. A. No. 1690-52.
• Citation: Smiths America Corp. v. Bendix Aviation Corp., 140 F.Supp. 46 (D. D.C. 1956)
• Parties: SMITHS AMERICA CORPORATION, S. Smith & Sons (England) Ltd., Henry Hughes & Sons, Ltd., Kelvin and Hughes, Ltd., Plaintiffs, v. BENDIX AVIATION CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

140 F. Supp. 46

SMITHS AMERICA CORPORATION, S. Smith & Sons (England) Ltd., Henry Hughes & Sons, Ltd., Kelvin and Hughes, Ltd., Plaintiffs, v. BENDIX AVIATION CORPORATION, Defendant.

Civ. A. No. 1690-52.

United States District Court District of Columbia.

February 17, 1956.

COPYRIGHT MATERIAL OMITTED

Wm. D. Hall (of Moore & Hall), Washington, D. C., for plaintiffs.

Ralph Hudson (of Cameron, Kerkham & Sutton), Washington, D. C., for defendant.

McLAUGHLIN, District Judge.

This is a suit for patent royalties, based on a contract under seal, said contract defining "Smith" of England and "Bendix" of the United States of America as parties thereto.¹ Specifically, the agreement calls for a non-exclusive cross license, each party being licensed under the others' patents in the limited field of instruments² as that term is defined in paragraph one of the contract.

It is the contention of plaintiffs that during World War II both Smith and Bendix manufactured instruments for their respective governments under each others' patents in their respective countries. Plaintiffs aver that they kept defendant informed of their manufacture under Bendix patents and that they paid defendant under (and pursuant to the terms of) the contract a substantial sum based on such manufacture, but that defendant failed to pay plaintiffs' royalties due under said contract at the rate of 7½% on the selling price of an averaging sextant covered by plaintiffs' patents, made by Bendix and sold to the United States Government pursuant to Government contracts.

Defendant has raised four defenses to the suit: First, it did not use the inventions of any of the patents in suit; Second, the action is barred by the statute of limitations; Third, at least as to two patents in suit,³ it is entitled to the benefit of a license from the owner of these patents to the United States Government; and Fourth, that under British law, a release of the averaging attachment by the British Government operated to bar any recovery by plaintiffs in this case.

The sealed instrument bears the date August 21, 1936. Plaintiffs aver that on November 1, 1944, defendant rendered a report to S. Smith & Sons, Ltd., on royalties due in the sum of $408, but failed to mention that millions of dollars worth of equipment using the patented inventions had been sold to the United States Government. On July 22, 1947, a letter was sent by a representative of defendant to a representative of S. Smith & Sons, Ltd., informing the latter that the United States Government had informed defendant that it had obtained, through the British Government, a release from S. Smith & Sons, Ltd., under the Everitt U. S. patents, and that defendant had been informed that it was not to pay royalties on sextants made for the United States Government for its own use or for the use of the British Government during the period of the war. The letter also went on to state that "Under the circumstances it would seem that S. Smith & Sons should look to the British Government for compensation for use of its Everitt U. S. patents by the United States Government pursuant to the Patent Interchange Agreement between the United States and Great Britain." Plaintiffs aver that these statements were inaccurate and/or incomplete, but that in reliance on them at that time, they submitted their claim to the British Government as suggested in the letter. Plaintiffs further aver that it became clear in the latter part of 1950, that the British Government did not favor their claim. Once again correspondence on the subject of royalties was sent by plaintiffs to defendant. The matter was finally turned over to plaintiffs' attorneys in the United States, and it is plaintiffs' contention, that because of the distance involved as well as the complexity of the matter, these attorneys required considerable time to prepare and file the suit. The complaint was filed on April 16, 1952.

Defendant's averments controvert the bulk of plaintiffs' statements set forth above. Defendant avers that it received a letter dated September 23, 1947 from a representative of S. Smith & Sons, Ltd., charging that defendant was liable to plaintiffs, but that it promptly denied the charge, stating in a memorandum dated December 1, 1947 and forwarded to plaintiffs in a letter dated December 22, 1947: "Eclipse-Pioneer⁴ made the Hughes-Everitt averaging device for the United States Navy at the latter's request and in accordance with specifications and drawings furnished by the United States Navy, for the use of which the United States Government obtained permission and a release from the Government of the United Kingdom. Eclipse-Pioneer, therefore, was not obligated to accrue or pay any royalties under the Smith-Bendix agreement." Thus, defendant avers that the charge of liability having been made and denied to the full knowledge of plaintiffs, the statutory period began to run as of the receipt by plaintiffs of the memorandum which was forwarded on December 22, 1947.

From the foregoing it is clear that on the basis of the date relied upon by defendant as the date upon which the cause of action accrued, the twelve year period of limitations for a contract under seal as set forth in D.C.Code 1951, Title 12, § 201⁵ would not have run at the time of the filing of the Complaint. While not denying, however, that the 1936 contract sued upon is one under seal, defendant asserts the defense of the Statute of Limitations, and, in that connection, contends that the limitation applicable to suits on a sealed contract is not pertinent because Henry Hughes & Sons, Ltd., is not a party to the contract involved in this action. Defendant argues that said contract does not cover the patents in suit since (I) defendant did not embody any invention under patents owned by plaintiffs when manufacturing sextants sold to the United States Government, and (II) even if Bendix did use such patents, it had permission to manufacture from the United States Government through a license given the latter by Henry Hughes & Sons, Ltd.⁶

It is obvious that if the Court decides defendant to be correct under (I) above, the question of limitations becomes unimportant, since that determination would reach the very heart of the case; or, if the Court finds defendant correct under (II), as clarified in footnote six, then the suit would be barred by the statute of limitations since the patents sued on would not fall under the sealed instrument, and the period of limitations would have run on any simple contract that might have arisen between Hughes and defendant.

In the circumstances, it becomes incumbent on the Court before deciding the question of limitations, to determine the propositions as set forth in (I) and (II) above.

Determination of Issues.

I. Does Defendant's Sextant Embody the Invention of Any of the Patents in Suit?

A. As to the Gray Patent, No. 2,140,579.

The essence of the Gray patent is, in the words of the inventor: "the addition of a power-driven integrating device to an octant (sextant) that let me find the celestial body once in the range of vision, get it lined up with the bubble to the best of my ability, and keep it there to the best of my ability, without taking my eye down, and do that for a period of time that was significant, and at the end of that time have an average reading appear automatically on a register on the instrument."

The inventor points out that prior to his invention it was customary to take a series of separate sights, "* * * recording each sight as taken, and finally arithmetically averaging all of the sights with the hope that several errors would oppose each other and cancel out at least to some extent." Later in the patent specification Gray describes his improvement: "The improved method and means of the present invention are based upon my conception of taking a continuous sight of a celestial body over a period of time with an octant (sextant) which is provided with an averaging device that indicates at the end of the sight the true average reading for the entire interval during which the sight is taken." In effect it is contended that the apparatus employed by Gray, in the practice of his invention, involves the adapting and bringing together of two devices: (1) a sextant capable of taking a continuous sight and, (2) an automatic averaging device. The inventor also states that the precise mechanical details of the automatic averaging device are not important, so long as the device selected can do the desired averaging automatically and without interfering with the continuous sight afforded by the sextant.

Defendant argues that claims of the Gray patent call for automatic integration, and in that connection states, in effect, that the Bendix sextant does not perform an integrating function, but a function more properly termed "averaging". But there is evidence that the Bendix sextant is built according to Twiney and Thomas British patent No. 590,164. That patent in line 9, calls its mechanism an "automatic integrating" one, which are the exact words used in Claims 8, 9, and 12 of the Gray patent in suit. This fact was confirmed by the testimony of an expert witness of defendant. In addition, both the Gray patent and Bendix sextant have the following structural and operational similarities: (1) both have an octant (sextant) for continuous sighting; (2) both have an automatic averaging device; (3) both have a control knob geared to the averaging device; (4) both employ a clockwork drive; (5) in both, a clockwork drives a disc; (6) in both there is a second disc driven forward by the first one to an extent depending on movement of the control knob of the sextant; (7) both have an indicator or register coupled to the second disc; and (8) both average above a baseline. Defendant has also set forth the argument that prior to Gray's invention, three French (Le Petit) patents disclosed the combination of a sextant permitting a continuous...