Toledo Scale Co. v. Computing Scale Co.

• Decision Date: 25 March 1922
• Docket Number: 2784.
• Citation: 281 F. 488
• Parties: TOLEDO SCALE CO. v. COMPUTING SCALE CO.
• Court: U.S. Court of Appeals — Seventh Circuit

281 F. 488

TOLEDO SCALE CO. v. COMPUTING SCALE CO.

No. 2784.

United States Court of Appeals, Seventh Circuit.

March 25, 1922

John M Zane, of Chicago, Ill., for petitioner.

Horace Kent Tenney, of Chicago, Ill., and George D. Welles, of Toledo, Ohio, for respondent.

Before BAKER, MACK, and EVANS, Circuit Judges.

BAKER Circuit Judge.

Computing Company's patent was granted in 1895 and expired in 1912. Toledo Company's infringement began in 1906 and continued throughout the life of the patent. Suit was begun in a District Court in Ohio in 1906 and Toledo Company answered that the patent was void by reason of prior patents and prior public use. In 1910 the present suit was instituted, and as a condition for extending time for taking evidence the court below required Computing Company to dismiss its Ohio suit. In answering the bill in this suit Toledo Company averred anticipation by reason of earlier patents, among them patent 106,869 granted to William H. Phinney in 1870, and further averred anticipation by reason of prior public use and sale 'by various persons at various places within the United States, and among others at Pawtucket, R.I., by William H Phinney, then and now, as defendant is informed and believes residing at said Pawtucket. ' Additional instances of alleged prior use and sale were also set forth.

So far as the validity of the patent was concerned Computing Company pleaded a good case by setting forth its grant from the government; and thereupon Toledo Company was obliged to plead one or more of the affirmative defenses permitted by statute. So far as meeting its duty to go forward with proofs was concerned, Computing Company made a good prima facie case by introducing the patent and proving Toledo Company's infringement. Toledo Company introduced many prior patents and a large amount of evidence relating to alleged prior uses and sales, but none relating to the alleged prior use and sale by Phinney at Pawtucket. By its decree of June, 1912, sustaining validity and finding infringement, the court below necessarily decided that Phinney had neither used nor sold anything that could impair the patent.

In April, 1913, this court affirmed the decree of validity and infringement. 208 F. 410. Prior to the argument Toledo Company moved to have the cause remanded to the court below, with the direction to open the decree and receive newly discovered evidence relating to the alleged prior use by Phinney. This motion was overruled. In May, 1913, before our mandate had gone to the court below, Toledo Company filed another motion to the same end, referring to accompanying affidavits and exhibits for the facts that would require this court, in the interests of justice, to annul its affirmance of validity and infringement and direct the lower court to receive the new evidence and in the light thereof to decide afresh the issue of validity. This motion was also overruled.

During the accounting before the master Toledo Company took depositions concerning Phinney's commercial practice, filed them together with identified Phinney exhibits, and, insisting that the decree of validity was not in any sense determinative of that issue, contended that the new evidence entitled it to prevail on the issue of validity. The master, and likewise the court below on exceptions to the master's report, ruled that they had no authority to depart from this court's mandate which they were engaged in executing.

On appeal from the accounting decree (279 F. 648), Toledo Company again presented to this court its contentions respecting the Phinney testimony and exhibits. We ruled that the decree of validity and infringement was so far final in its essence as to preclude the court below and this court from deciding the issue of validity anew unless that decree should first be opened. Treating the matter as a petition in the nature of a bill of review, we held that the showing on its face disclosed a lack of reasonable diligence and no sufficient excuse for that lack.

After affirming the accounting decree in October, 1921, this court, on Toledo Company's motion, entered an order staying the issuance of the mandate pending the decision of the Supreme Court on petition for writ of certiorari. By virtue of that order the cause is still pending in this court.

On January 9, 1922, the Supreme Court denied the petition for writ of certiorari. 257 U.S. 657, 42 Sup.Ct. 184, 66 L.Ed. . . . . On the same day Toledo Company filed a bill in the District Court of the United States for the Northern District of Ohio, Western Division, to enjoin Computing Company from taking any steps to enforce the decree of the court below as affirmed by this court, and that court on the same day issued a restraining order. On February 10, 1922, Computing Company filed in this court its petition for a rule (and on the same day the rule was issued) upon Toledo Company to show cause why it should not be enjoined from maintaining the bill in Ohio and why it and its sureties on supersedeas bonds should not be ordered to pay the decree. On February 13, 1922, the Ohio court issued a preliminary injunction.

In its petition Computing Company avers the proceedings in this court and in the court below as above narrated and also the bill and proceedings in the Ohio court. In its response Toledo Company sets up the Ohio bill and the proceedings thereon; and the Ohio bill itself exhibits the prior proceedings in this circuit.

As grounds for claiming that Computing Company should be enjoined from collecting the accounting decree, the Ohio bill alleged:

(1) Since 1901 Computing Company has endeavored to monopolize the computing scale business, and formed a conspiracy to which its officers and agents were parties to drive Toledo Company out of business.

(2) In 1902 and some subsequent years Computing Company built and sold a dishonest scale. Toledo Company exposed the fraud in public circulars. Computing Company unsuccessfully sought to enjoin the distribution of the circulars. This increased Computing Company's malicious hatred.

(3) Between 1902 and 1905 Toledo Company built a so-called 'fan' scale. Computing Company brought suits for infringements of its patents (other than the patent here in suit) and finally dismissed them without trial.

(4) In 1901 Computing Company brought suit in the Eastern District of Pennsylvania to enjoin Federal Company from infringing this patent. Federal Company took depositions relating to the Phinney commercial practice and introduced three Phinney scales in evidence.

By stipulation each side retained possession of its own proofs and exhibits. The Phinney exhibits were later turned over by Federal Company's counsel to Computing Company's counsel who had them in possession until after the court below in this suit had tried and decided the issue of validity. Finally the Federal case was dismissed because, as Toledo Company alleges, Computing Company was advised by its then counsel that the Phinney practice was a dangerous defense and would probably defeat the suit.

(5) Similar prior suits against Randall in the Eastern District of Pennsylvania and against Standard Company in the Eastern District of Wisconsin were dismissed after similar evidence of the Phinney practice was brought forward by the defendants.

(6) After 1906 and before the court below decided the issue of validity Computing Company secretly purchased and took into its possession all the Phinney scales it could get, being all of the twenty scales Phinney ever made except one or two then in the hands of users, and except those in possession or control of defendants in the Federal, Randall, and Standard suits. Such purchases were made by Computing Company 'in pursuance of said conspiracy,' 'secretly,' and 'fraudulently,' for the purpose of preventing Toledo Company and the court below and this court from learning of the Phinney commercial practice.

(7) Toledo Company made diligent investigations to find the Phinney commercial practice and Computing Company's fraudulent suppression of evidence thereof (but never went to Pawtucket until after the trial in June, 1912). While Toledo Company has had knowledge of the Phinney commercial practice since 1912, it had no knowledge of Computing Company's fraudulent suppression of evidence thereof until December 20, 1921, which was after the affirmance of the accounting decree. And so Toledo Company has never had the opportunity to present to any court the true facts with respect to the Phinney sale and use, and has had no hearing on Computing Company's fraudulent conduct.

From the foregoing synopsis of Computing Company's petition and Toledo Company's response it is evident that a conflict of jurisdiction is involved. Of course the District Court in Ohio would not enjoin Computing Company from proceeding in this court and the court below to enforce the accounting decree, unless that court felt constrained by the rules of law and equity to exercise such a jurisdiction. And likewise this court would not entertain the present petition and response, if it did not believe that the duty so to do was inevitably cast upon it. In this situation the course, if open, that would seem most consonant with our respect for the District Court in Ohio would be for us to certify the question to the Supreme Court. But inasmuch as we deem that the ultimate question cannot be answered without considering and weighing the recorded facts in the two courts, and inasmuch as that would require the transmission to the Supreme Court of the entire record, we find that the above suggested course is not available. Graver v. Faurot, 162 U.S. 435, 16 Sup.Ct. 799, 40 L.Ed. 1030. If, however, our answer is wrong, the question can be presented to the Supreme Court by ...