Systron-Donner Corp. v. Palomar Scientific Corp.

• Decision Date: 16 February 1965
• Docket Number: No. 41353.,41353.
• Citation: 239 F. Supp. 148
• Parties: SYSTRON-DONNER CORPORATION, a Corporation, Plaintiff, v. PALOMAR SCIENTIFIC CORPORATION, a Corporation, et al., Defendants.
• Court: U.S. District Court — Northern District of California

239 F. Supp. 148

SYSTRON-DONNER CORPORATION, a Corporation, Plaintiff, v. PALOMAR SCIENTIFIC CORPORATION, a Corporation, et al., Defendants.

No. 41353.

United States District Court N. D. California, S. D.

February 16, 1965.

Flehr & Swain, San Francisco, Cal., for plaintiff.

Harvey G. Lowhurst, Palo Alto, Cal., for defendant.

SWEIGERT, District Judge.

This suit for patent infringement and unfair competition was filed March 3, 1963. The patents in suit are No. 3,057,195, issued October 9, 1962 and No. 3,074,279, issued January 22, 1963. Defendant answered, denying infringement and unfair competition, and raising the further separate and affirmative defense that in any event all sales of the accused device were for government end use within the meaning of 28 U.S.C. § 1498 and, further, raising the issue of the jurisdiction of this Court to try the issues.

On October 23, 1963, this Court filed its memorandum denying defendant's motion for summary judgment but ordering a separate trial of the issue of government end use.

On January 27, 1964, this Court granted a motion by plaintiff to strike defendant's defense of no jurisdiction and re-affirmed its order for separate trial of the government end use issue.

The case is now before the Court after trial by the Court of that issue.

The statute, in pertinent part, provides as follows:

"Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the Court of Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

"For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor, a subcontractor, or any person, firm, or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States. * * *" (Italics added).

Plaintiff introduced evidence which, it contends, shows sales by defendant of the accused product for purposes other than government end use: (1) a sale by the defendant to plaintiff, itself, through G & R Engineering Service, and (2) a sale of five accelerometers by defendant to Micro Gee Products, Inc.

Plaintiff also introduced evidence which, it contends, shows that defendant has attempted to market the product for purposes other than government end use, or at the least, without regard to the end use of the product.

Defendant introduced evidence which, it contends, shows (1) that the alleged sale made by it to plaintiff through G & R was unwittingly made by defendant as the result of a ruse by which plaintiff entrapped defendant into the sale for the purpose of enabling plaintiff to maintain this infringement suit; (2) that the sales to Micro Gee, and all other sales by defendant, were, in fact, for government end use within the meaning of the statute; (3) that in any event the specifically disputed sales are such a small percentage of defendant's total sales that the doctrine of de minimis should be applied to those disputed sales; (4) that the nature of the product is such that there is no probability that it will be sold for purposes other than government end use.

Before considering whether defendant has met its burden of proving that all its sales, other than these specifically disputed sales, were in fact made for government end use, we will consider the disputed sales. If either or both of them are held to be such as would entitle plaintiff to proceed in this Court on its infringement issue, the character of defendant's other sales would be immaterial.

(1) THE G & R SALE

The evidence is to the effect that defendant sold and shipped one accelerometer to G & R Engineering Service, St. Louis, Missouri, on February 25, 1963. The evidence shows that this sale was made by defendant without restriction or any inquiry concerning the ultimate end use of the unit.

The details of the transaction are as follows: One Jack Wulfmeyer, a sales manager of plaintiff's accelerometer division, contacted defendant, without disclosing his connection with plaintiff, in an effort to obtain one of defendant's accelerometers. Mr. Wulfmeyer had formerly operated the G & R Engineering Service of St. Louis, Missouri. Using stationery of that firm, Wulfmeyer wrote to defendant asking for a quotation. Receiving no response he telephoned for a quotation. A quotation was forwarded to him, and as a result, a purchase order and a check for $1044.75 were sent to defendant and the accelerometer was shipped as noted above.

Defendant contends that, since this sale was surreptitiously procured by plaintiff for the purpose of this infringement suit, it would be insufficient to support an infringment action, citing Byam v. Bullard, 4 Fed.Cas. p. 934, No. 2,262 (C.C.Mass.1852).

That case was an action at law for infringement in which the Court held that no action on the case could be maintained because there were no damages shown. There were no damages, said the Court, because the plaintiff-patentee had consented to the sale (for 6 cents) of the infringing matches to the patentee's agent. The Court, noting that the case had been submitted on an agreed statement of facts, said that it could not draw any inference from the single sale to plaintiff's agent as to infringement by sales to others in the normal course of defendant's business.

It has more recently been held that, even if no money damages are suffered by a patentee, a single sale by another to the patentee through an agent is, nevertheless, an actionable infringement. Chicago Pneumatic Tool Co. v. Philadelphia Pneumatic Tool Co., 118 F. 852 (C.C.S.D.N.Y.1902). And see Hutter v. De Q. Bottle Stopper Co., 128 F. 283, 285 (2d Cir. 1904).

The Court, therefore, concludes that for patent infringement purposes this single sale to plaintiff's agent is sufficient to support an infringement action. The question still remains whether it should be considered de minimis for the purpose of applying 28 U.S.C. § 1498 in this case. This point will be later considered.

(2) THE MICRO GEE SALE

The evidence shows that Micro Gee Products, Inc., sent to defendant its purchase order, No. 10815, dated December 12, 1962, for five (5) accelerometers. These units were sold and shipped by defendant to Micro Gee early in 1963. No government contract number appears on the face of this purchase order. The evidence shows that at the time the order was placed Micro Gee had no government contracts, nor any orders from government contractors, for which these accelerometers might have been used. There is evidence, however, that two of these accelerometers were incorporated into acceleration tables manufactured by Micro Gee, and that the tables were eventually shipped by Micro Gee, under subsequently obtained government purchase orders, to government installations to become the property of the United States.

Another of these five (5) accelerometers was incorporated into an acceleration table manufactured by Micro Gee for the Martin Company. This table, with the accelerometer installed thereon, was shipped by Micro Gee to the Martin Company, Denver, Colorado, on a Martin purchase order, No. RC3-513,253, dated May 24, 1963, some months after the shipment of accelerometers from defendant to Micro Gee. This Martin purchase order lists no government contract number, although there is a blank space for it, but a government priority rating of "DX-B8" appears on the face of the Martin order. Defendant contends that this shows intended government end use.

The appearance of a priority rating on the Martin purchase order to Micro Gee does not necessarily establish that the Martin purchase from Micro Gee was for government end use—especially in view of the significant absence of a government contract number in the space provided for it. See: Drexler v. Koza, 88 F.Supp. 298, 299 (W.D.Pa.1950).

In any event, the defendant's accelerometer sale to Micro Gee, which is really the one in issue, was made some months prior to the purchase order upon which Micro Gee acted in ultimately selling its...