Tights, Inc. v. Stanley

• Decision Date: 12 April 1971
• Docket Number: No. 71-1018.,71-1018.
• Citation: 441 F.2d 336
• Parties: TIGHTS, INC., Petitioner, v. The Honorable Edwin M. STANLEY, Chief Judge, United States District Court for the Middle District of North Carolina, Respondent.
• Court: U.S. Court of Appeals — Fourth Circuit

441 F.2d 336 (1971)

TIGHTS, INC., Petitioner, v. The Honorable Edwin M. STANLEY, Chief Judge, United States District Court for the Middle District of North Carolina, Respondent.

No. 71-1018.

United States Court of Appeals, Fourth Circuit.

April 12, 1971.

Jack W. Floyd and Richard W. Ellis, Greensboro, N. C., for petitioner; Thornton H. Brooks for respondent; Paul B. Bell and Samuel G. Layton, Jr., Charlotte, N. C., for Acme-McCrary Corporation and Kayser-Roth Corporation.

Before SOBELOFF, Senior Circuit Judge, and BOREMAN and BRYAN, Circuit Judges.

SOBELOFF, Senior Circuit Judge:

Petitioner, Tights, Inc., is plaintiff in two patent infringement suits pending in the District Court for the Middle District of North Carolina. In each case the District Court granted a motion to strike petitioner's demand for a jury trial on the issues of validity and infringement, although jury trials were granted to assess damages should the court determine that a valid patent has been infringed. Tights seeks from us a writ of mandamus directing the respondent judge to vacate his order striking the demands for jury trials on the issues of infringement and validity. We agree that the District Court erred in granting the motions to strike.

I

Tights, Inc., claims ownership by assignment of reissue patent No. RE 25360, a patent on a single garment combining stockings and a panty — commonly known as panty hose. The first case was begun on December 16, 1969, by Tights against Acme-McCrary Corporation alleging infringement of its patent and seeking injunctive relief, an accounting for damages, and an assessment of interest and costs. Acme-McCrary's answer denied infringement and denied the validity of the patent. It also included counterclaims seeking a declaratory judgment that the patent is invalid and not infringed by Acme-McCrary, and seeking injunctive relief and treble damages for alleged violation of the antitrust laws. Tights' reply to the affirmative defense and counterclaim, filed February 19, 1970, included a demand for jury trial on all issues.

On August 20, 1970, Tights instituted a second suit against Kayser-Roth Corporation alleging infringement of the same patent as well as breach of a patent licensing agreement. Again Tights sought both injunctive relief and an accounting for damages. Kayser-Roth, like Acme-McCrary, sought by counterclaim both a declaratory judgment that Tights' patent is neither valid nor infringed, and injunctive relief and treble damages under the antitrust laws. In addition, Kayser-Roth included a third counterclaim for recovery of royalties previously paid to Tights under the patent license agreement. Tights then filed a reply accompanied by a demand for jury trial.

Each defendant filed a motion to strike the demand for jury trial in its case. Both motions were considered by the court at a joint pretrial conference on December 4, 1970. Ten days later the court entered orders striking the jury trial demands as to the issues of validity and infringement, but separating the issues of damages, breach of contract, and violation of the antitrust laws for subsequent determination by a jury. Tights then instituted this petition for mandamus and the defendants below were given the opportunity to respond in accordance with Federal Rules of Appellate Procedure, Rule 21(b).

II

The Seventh Amendment to the Constitution states:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.

The Supreme Court has maintained a careful vigilance to assure this right against erosion, as is best illustrated by its decisions in Beacon Theatres v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959), and Dairy Queen v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962). The latter case bears so strongly on the case at hand that it merits brief summary before we turn to consideration of the arguments in opposition to the mandamus petition.

The Dairy Queen case arose from an action filed by the owner of the "Dairy Queen" trademark alleging breach of a licensing contract and infringement of the trademark. The complaint sought temporary and permanent injunctive relief and an accounting of monetary damages. The defendant's answer was accompanied by a demand for trial by jury.

The Supreme Court held that the District Court was in error in striking the demand for jury trial. Justice Black, speaking for the Court, indicated that the claim for monetary damages was a legal one whether characterized as a contract claim, trademark infringement claim, or hybrid of the two:

As an action on a debt allegedly due under a contract, it would be difficult to conceive of an action of a more traditionally legal character. And as an action for damages based upon a charge of trademark infringement, it would be no less subject to cognizance by a court of law.

Id. at 477, 82 S.Ct. at 899. The effect of that conclusion was to dictate that the case be tried to a jury:

The holding in Beacon Theatres was that where both legal and equitable issues are presented in a single case, "only under the most imperative circumstances, circumstances which in view of the flexible procedures of the Federal Rules we cannot now anticipate, can the right to a jury trial of legal issues be lost through prior determination of equitable claims." * * * Consequently, in a case such as this where there cannot even be a contention of such "imperative circumstances," Beacon Theatres requires that any legal issue for which a trial by jury is timely and properly demanded be submitted to a jury.

Id. at 472-473, 82 S.Ct. at 897.

Since Tights' claim for money damages is legal in nature, the Dairy Queen principles would seem to require that the issues of patent validity and patent infringement, as issues in a legal claim, be submitted to the jury in our case. We turn then to a consideration of the arguments advanced by the respondents.

III

The argument put forth most vigorously and persistently by the respondents is that "there are no factual questions which are common to the issues of validity and infringement and the separate issues of damages, antitrust violation and breach of contract in these cases." This effort to amputate the issues of validity and infringement from the body of the legal action for damages is doomed to failure.

An action at law to recover damages cannot succeed unless the validity and infringement of the patent are first proved. To the extent that resolution of these two issues entails determinations of fact, either party is entitled to demand trial by jury. The fact that the questions of validity and infringement have no factual issues in common with the actual assessment of damages does not sever them from the legal action and remove them from the domain of the jury. Because a suit in equity for injunctive relief also cannot succeed unless the patent's validity and its infringement are proved, these two issues are common to the legal claim for damages and equitable claim for injunctive relief in each of the two cases involved in this mandamus petition. Thus, under Dairy Queen, supra, and Beacon Theatres, supra, it would appear that Tights is entitled to determination by a jury of any factual questions related to the validity and infringement issues.

Respondents have another answer ready at this point. They assert that these two issues are issues of law so that there is no role to be played by a jury. Well established precedent is emphatically to the contrary. Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 70 S.Ct. 854, 94 L.Ed. 1097 (1950), involved alleged infringement of a patent for an electric welding process and fluxes to be used with it. The Supreme Court, considering only the issue of infringement and particularly the doctrine of equivalents,¹ stated quite explicitly:

A finding of equivalence is a determination of fact. Proof can be made in any form: through testimony of experts or others versed in the technology; by documents, including texts and treatises; and, of course, by the disclosures of the prior art. Like any other issue of fact, final determination requires a balancing of credibility, persuasiveness and weight of evidence.

Id. at 609-610, 70 S.Ct. at 857.

Nor is the issue of validity devoid of factual questions, although the respondents cite Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 71 S.Ct. 127, 95 L.Ed. 162 (1950), for the principle that patent validity is a matter of law. That case is far from unambiguous on this point, but has been brightly illuminated by subsequent cases. In Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), the Supreme Court held two patents invalid under the nonobviousness standard of 35 U.S.C. § 103.² The Court's opinion included this elaboration on the nature of the validity issue:

While the ultimate question of patent validity is one of law, Great A. & P. Tea Co. v. Supermarket Equipment Corp., supra, 340 U.S. at 155, 71 S.Ct. at 131, the § 103 condition, which is but one of three conditions, each of which must be satisfied, lends itself to several basic factual inquiries. Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined.

Id. at 17, 86 S.Ct. 684, at 694.³

Needless to say, nothing in our opinion is intended to intimate any judgment as to whether the issues of validity and infringement would have to be put to the jury in any given case. By the time a case actually comes to trial the facts may have become sufficiently clear to...