Stearns-Roger Mfg. Co. v. Ruth, 1418.

• Decision Date: 29 December 1936
• Docket Number: No. 1418.,1418.
• Parties: STEARNS-ROGER MFG. CO. v. RUTH.
• Court: U.S. Court of Appeals — Tenth Circuit

87 F.2d 35 (1936)

STEARNS-ROGER MFG. CO. v. RUTH.

No. 1418.

Circuit Court of Appeals, Tenth Circuit.

December 29, 1936.

COPYRIGHT MATERIAL OMITTED

Forrest C. Northcutt, of Denver, Colo., for appellant.

Max D. Melville, of Denver, Colo., for appellee.

Before LEWIS, McDERMOTT, and BRATTON, Circuit Judges.

McDERMOTT, Circuit Judge.

Heretofore we have held the appellee's patent valid and infringed, Stearns-Roger Mfg. Co. v. Ruth, 62 F.(2d) 442, and declined to hear additional evidence tendered with a view of demonstrating the error of our way, Stearns-Roger Mfg. Co. v. Ruth (C.C.A.) 79 F.(2d) 425, and have ordered that appellee recover from appellant "the profits, gains, and advantages which defendant has received or which may have accrued to it by reason of its past infringements of said Claims 1 and 3 of plaintiff's said patent No. 1,277,750, in suit, as in the findings and conclusions herein found and determined, and/or the damages which plaintiff has suffered by reason of defendant's infringement."

The accounting was taken by Robert B. Cartwright, Esquire, as a Special Master, who has filed comprehensive findings of fact accompanied by a helpful memorandum opinion, reported in (D.C.) 13 F. Supp. 697. Exceptions were denied by the trial court. In discussing the errors specified, we refer the reader to the reported opinion of the Master for many pertinent authorities which we do not here repeat.

1. The infringing devices were equipped with a sands hole; the function of that hole was an important issue in the trial of the infringement case; much proof was heard; the trial court found that the hole was not essential to a proper functioning of the machine, and that in the use of the commercial device it was kept closed. This court affirmed. 62 F.(2d) 442, 448. Appellant thereupon made tests and procured testimony from users said to show that the finding was erroneous, and applied here to file a bill of review to bring onto the record this additional evidence. No reason appearing why this testimony was not available at the trial, nor why it was not then produced, this court denied the application. 79 F.(2d) 425. It may be added that the machines either were infringing machines or not when they were sold. We held they were. If they were designed so that they could be operated normally in an infringing way, it would seem to be immaterial that some customers did not choose at times to operate them in that manner.

Appellant then undertook to convince the Master that we were in error in affirming the trial court's finding on the first appeal, and tendered testimony to the effect that tests and experience disclosed a state of facts in conflict with our first opinion. The Master refused to hear the evidence which this court had held on the application for the bill of review should have been offered at the trial. In this he was clearly right. It is conceded that the machines found to infringe were constructed precisely as disclosed by drawing 4965 which was decreed to infringe. While this court may, on an equity appeal, enter such decree as the proof warrants, we are in no sense a trial court. The place to offer proof on issues of fact is at the trial. There would be no end to litigation if cumulative proof might be offered on appeal, or, which is even more aggravated, when an account is being taken after affirmance. The controlling authorities cited by Judge Lewis in the opinion on the bill of review, together with his analysis of the situation, makes further comment superfluous.

2. The Master computed the profits upon the entire sale price of the machine. Appellant contends the award should have been confined to the profits received because of its use of the patented partition or weir; that appellee having failed so to apportion the profits, may recover only nominal damages.

The general principles are stated in Westinghouse Co. v. Wagner Mfg. Co., 225 U.S. 604, 32 S.Ct. 691, 56 L.Ed. 1222, 41 L.R.A.(N.S.) 653; many applications may be found in the authorities collected by the Master. Those authorities disclose the difficulties attendant upon appraising the value of an invention, and the impossibility of any hard and fast formula by which exact justice can be meted out in every case. In the case at bar, we are not dealing with damages as such, nor with savings accruing to users of infringing devices. We are concerned only with profits made on sales. But even when so narrowed, perplexity persists in many cases. We do know that there is no magic in words which leads directly to a just result. Egry Register Co. v. Standard Register Co. (C.C.A.6) 23 F.(2d) 438; Alliance Securities Co. v. De Vilbliss Mfg. Co. (C.C. A.6) 76 F.(2d) 503. In the case at bar, appellant relies largely upon the fact that in the patent to Pearce and in the opinion of this court, the invention was described as an "improvement," from which it concludes that appellee must apportion the profits or fail. But there is nothing entirely new under the sun. Alexander Graham Bell described his revolutionary invention of the telephone in his basic patent as "a new and useful improvement in telegraphy." Telephone Cases, 126 U.S. 1, 8 S.Ct. 778, 31 L.Ed. 863. Nor can appellee prevail simply because his invention is a "combination," for the separable drill shoe in Dowagiac Mfg. Co. v. Minnesota Plow Company, 235 U.S. 641, 35 S.Ct. 221, 59 L.Ed. 398, was described in the patent as in combination with the rest of the drill. Dowagiac Mfg. Co. v. Smith (C.C.4) 108 F. 67. Nor is it material that the patent is for an ingenious and useful combination of old elements. Dow Chemical Co. v. Williams Bros. Well Treating Corporation (C. C.A.10) 81 F.(2d) 495, 498.

Judge Learned Hand's discussion in Cincinnati Car Co. v. New York Rapid Transit Corporation (C.C.A.2) 66 F.(2d) 592, goes far toward clearing up the problem. The conventional distinction¹ between an article patented as an entirety, and one in which the article is a separable device to be used in connection with another machine operable without the device, suffices in most cases, but it may be pressed to the point, as Judge Hand points out, where the conscience of the Chancellor rebels.

A practical approach is a better solvent of the problem here than the theoretical. If the case is such that it is practicable for the patentee to apportion the profits between what is new and what is old, he should do so or fail. If it is not, then the infringer should either make the apportionment or yield up all the profits unless such a decree would be shockingly unjust, in which event the patentee should be relegated to a royalty. This, as we understand it, is the rationale of Judge Denison's opinion in Egry Register Co. v. Standard Register Co., supra.

So approaching the problem, we turn to the case at bar. The opinion on the first appeal, 62 F.(2d) 442, describes the patented machine and the prior art; it discloses that the essence of the invention was the arrangement of parts and the steps of a process so that a proper pulp level is automatically maintained, thus doing away with valves, etc. No structural part can be pointed to as effecting the desired result. The weir would be useless without the impeller or without two communicating compartments; each unit must be properly positioned. The conception is not of a separable device to improve the efficiency of an old machine; it is a new machine. Other flotation machines were on the market; the problem the patentee attacked was that of substituting automatic control of the pulp for the manual or hydrostatic control then in use. If this had been accomplished by a float valve which could be attached to the machines then in use, a very different case would be presented. The patentee solved the problem by a rearrangement of parts coupled with a defined process. The case is one, as we see it, where any apportionment of profits, by either party, is impossible.

Even where a machine is patented as an entirety, the infringer still may show, if he can, that a portion of the profits received from the sale of an entire machine was the result of some other thing used by him. Westinghouse Co. v. Wagner Mfg. Co., 225 U.S. 604, 32 S.Ct. 691, 56 L.Ed. 1222, 41 L.R.A.(N.S.) 653. Either in an effort to apportion the profits, or to carry this burden, appellant offered the testimony of two mining engineers. But the proof so adduced was simply that the witnesses, in recommending this machine to their clients, considered the air control, the hard iron liners, the sands hole, ball bearings, etc., as well as the weir; that the presence of the weir was not the dominating influence in the recommendations. This evidence is without value. The engineers recommended the entire machine, and the appellant sold an entire machine. Resort cannot be had to an analysis of the mental processes of the engineers in recommending the purchase of infringing machines in order to compute profits. If so, the profits would vary with the state of mind of different purchasers. If the accounting were for damages for lost sales or of savings to a user of an infringing device, then proof that other comparable articles were available at about the same price — the so-called "standards of comparison" rule — would be pertinent. But where the recovery is limited to net profits of sales actually made, such evidence is not pertinent. Page Mach. Co. v. Dow, Jones & Co. (D.C.N.Y.) 238 F. 369, 372; Walker on Patents (6th Ed.) § 775.

The Master was put to the choice, under the proof, of awarding appellee nominal damage, which would be grievously unjust and not in accord with the spirit of our mandate; relegating him to royalties, manifestly impracticable here, for there could be no fairly accurate measure of a reasonable royalty; or requiring appellant to yield up all the profits made on the sales of these machines. The latter choice was made, and we concur; if care is taken to see that appellant is allowed all its costs, so...