Solo Cup Company v. Paper Machinery Corporation

• Decision Date: 14 January 1965
• Docket Number: No. 58-C-138.,58-C-138.
• Citation: 240 F. Supp. 126
• Parties: SOLO CUP COMPANY, Plaintiff, v. PAPER MACHINERY CORPORATION, Ralph O. Martin, and John R. Baumgartner, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

240 F. Supp. 126

SOLO CUP COMPANY, Plaintiff, v. PAPER MACHINERY CORPORATION, Ralph O. Martin, and John R. Baumgartner, Defendants.

No. 58-C-138.

United States District Court E. D. Wisconsin.

January 14, 1965.

Robert C. Williams, Chicago, Ill., Elwin Andrus, Milwaukee, Wis., for plaintiff.

James E. Nilles, Suel O. Arnold, Milwaukee, Wis., for defendants.

TEHAN, Chief Judge.

This is an action in two counts (1) for patent infringement, and, (2) for unfair competition.

In Count 1 of the amended complaint, plaintiff seeks an accounting of the profits made by defendants as a result of the alleged infringement of Patent No. 2,321,407, and damages. Since the patent in suit has expired no injunctive relief is sought in this count. Jurisdiction of the cause of action arises under Title 35 U.S.C. § 281, and jurisdiction is conferred by Title 28 U.S.C. § 1338(a).

In Count 2 of the amended complaint, plaintiff also seeks an accounting and damages and an injunction restraining defendants from manufacturing or selling machines derived from drawings of plaintiff's conical paper cup forming machines. This cause of action arises under common law, and jurisdiction is conferred by Title 28 U.S.C. § 1332(a) in that the parties are citizens of different states and the matter in controversy exceeds the sum of $10,000 and also by § 1338(b) of Title 28 U.S.C.

COUNT 1. MERTA PATENT NO. 2,321,407.

The patent in suit is Merta patent No. 2,321,407, issued to George M. Merta, June 8, 1943, on an application filed August 30, 1940, and plaintiff is owner of said patent by assignment.

The patent discloses a conical cup-making machine designed for automatically converting paper supplied in strip form into a conical paper cup having a glued joint.

The paper cups are formed on mandrels which are conical in shape and rotatable. After the paper enters the machine, and a knife has severed a blank of the correct size and shape to form a conical drinking cup and glue has been applied to one edge of the blank, the blank proceeds to the mandrel through suitable guidemeans which presents the blank to the mandrel at the first station. The mandrel is equipped with a gripper which grabs a portion of the blank to hold it on the mandrel. While a cup is being formed around the conical mandrel and is being rotated against pressing means to wind the blank thereon and press the glue joint, the mandrel is moved to a station on the machine where an additional operation is performed. At this station additional die members are brought around the cup on the mandrel, the bottom end of the cup is slightly blunted to effectuate a seal and the top of the cup is rolled outwardly and downwardly into a bead. Following the blunting and beading of the rim of the cup the mandrel is moved to the final station where the cup is discharged from the mandrel into a stacking trough or tube. It then returns to the first station where it grips another blank and repeats the process.

The machine of the patent in suit was not a pioneer paper cup machine but follows other rotary paper cup machine patents of a similar type including Barbieri No. 2,049,417, issued August 4, 1936. As the introductory paragraph of the Merta patent states, the invention is related to "improvements in a cup-making machine and more particularly to machines for making sanitary conical cups from paper for use as drinking receptacles, ice cream cups, or the like, * * *."

The claims charged to be infringed by defendants' machines, the X-56 and V-59 relate to three groups of claims, directed to three different features of the cup making machine (1) the paper feed mechanism, (2) the gripper device for holding the paper on the mandrel, and, (3) the rimmer and blunter mechanism which rolls a bead on the top of the cup.

Defendants have denied infringement as to some of the claims and in addition assert as an affirmative defense, the invalidity of the patent by reason of (a) prior public use in the United States more than one year prior to the date of the application for the patent under § 102(b) of Title 35 U.S.C., and (b) invalidity of each of the claims charged to be infringed as anticipated by patents granted on applications filed in the United States before the invention by the patentee G. M. Merta under § 102 of Title 35 U.S.C. and lack of invention over prior art under § 103.

PRIOR PUBLIC USE.

Defendants contend that the evidence adduced at the trial fully establishes that the Merta machine embodying the invention of the patent in suit was in public use by the inventor, Merta, more than one year before the patent application was filed, hence the statutory bar of 35 U.S.C. § 102(b) invalidates the patent.

The defendants have the burden of proving such use by clear and convincing proof. Devex Corp. v. General Motors Corp. (C.A. 7) 321 F.2d 234.

The date of application for the patent in suit was August 30, 1940. Thus the critical date is August 30, 1939.

We find the following facts to be clearly and satisfactorily established by the evidence at the trial which includes the testimony of George Merta, the inventor, and George Zila, his associate.

On February 14, 1936, Merta's wife had applied for a patent for a novel heart-shaped paper blank for a cone cup which she had accidentally discovered while working with a paper heart on a Valentine box. Thereafter, Merta began work on a mechanism to make the blank and a mandrel for rolling the cone. In the latter part of 1936 or early 1937, Merta began work on his own cup-making machine at his home in Chicago during his spare time. He had gained experience with cup-making machines while working in Chicago at the Vortex Company, a paper cup manufacturing concern. Early in the year 1938, Merta started to operate his machine in a bedroom in his home. In the latter part of 1938, Merta obtained sample rolls of plain paper from various paper companies in Chicago, including Marathon, International and Smith Company, from which he made about 50,000 cups. By the end of 1938, the machine was operating to Merta's satisfaction, producing about 130 cups per minute. Merta's next step was the actual purchase of his first roll of paper for the sum of $6.00 from Smith Company in April of 1939. Before manufacturing cups from this paper, he made a design for the paper, selected the name Solo for the cups, after a suggestion from his wife that it would be a good name for a one-use disposable container, and had the design printed on the roll of paper by a printer in Chicago.

None of the cups made from the machine, either the plain or printed ones, were sold or distributed in the Chicago area. Instead, more than one-half of them were sent to a George Zila in Los Angeles, California. Zila, a fellow countryman¹ of Merta, had originally worked at Vortex Company with Merta, but had moved to California in 1936. As Merta and Zila testified, the two of them had an oral agreement to go into business together.

Admittedly, Merta maintained a policy of secrecy in the development of his machine and in its operation and permitted no outsider to see it throughout 1938 and 1939.

Meanwhile, Zila in Los Angeles, in his spare time, made the rounds of various wholesalers in the Los Angeles area and left samples of the cups with them. No prices were set for the cups, written orders taken, or records kept of the number of cups distributed. However, there is evidence that at least two companies — Drake Machine Company and Mechanical Development Company in Los Angeles, paid Zila for the cups he left with them. The record establishes that approximately 50,000 cups were distributed and the sums of money received were less than One Hundred Dollars. However, the activities of Zila in introducing the cups in the Los Angeles market was sufficient to come to the attention of the major cup machine manufacturers in Chicago.

In June of 1939, which is prior to the critical date, the West Coast representative of Dixie Cup had notified his Chicago office that the new type of cup was appearing on the Los Angeles market, and Mr. Hulseman of the plaintiff corporation (then Paper Container Corporation) had heard that "he Merta had a cup making machine on the west coast * * *". Mr. Hulseman went to see Merta in Chicago to inquire about the machine sometime prior to July 3, 1939.

In early July, 1939, and before the Fourth, Merta had the machine crated and shipped to Los Angeles and he and his family moved to that city. Merta took with him the remainder of the cups which had been produced by the machine and upon settling in Los Angeles, obtained a job at Mechanical Development Company with Zila. In furtherance of their business plans, Merta started to make dies for a proposed paper cup dispenser to be sold with the paper cups while Zila continued to make the rounds of the wholesalers to introduce the cups.

The machine itself was not set up in California or cups made therefrom until October of 1939, after the critical date. On February 23, 1940, Merta applied for a patent (No. 2,272,920) on a Method of Forming Reinforcing Beads on Conical Paper Cups, which included improvements in bead forming disclosed in an application, No. 233,890, filed October 7, 1938, and formally abandoned.

In March of 1940 Merta sold his machine to plaintiff's predecessor. Thereafter, the attorney for plaintiff's predecessor prepared the application for the patent in suit which was signed by Merta and filed on August 30, 1940.

Since the decision of Judge Learned Hand in Metallizing Engineering Co., Inc. v. Kenyon Bearing & Auto Parts Co., Inc., et al., 2 Cir., 153 F.2d 516, it is well settled that the commercial exploitation of a secret process or a machine maintained in secrecy, by the sale of its product constitutes a public use under § 102(b). In a well-reasoned opinion, Judge Hand wrote that

"* * * it is a condition upon an inventor's right to a patent that he shall not exploit his discovery competitively after it is ready for

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