Triumph Hosiery Mills, Inc. v. Alamance Industries, Inc.

• Decision Date: 08 February 1962
• Docket Number: No. 8374.,8374.
• Citation: 299 F.2d 793
• Parties: TRIUMPH HOSIERY MILLS, INC., Hudson Hosiery Company, Burlington Industries, Inc., Claussner Hosiery Company, and McCallum Hosiery Company, Appellees and Cross-Appellants, v. ALAMANCE INDUSTRIES, INC., Kayser-Roth Corporation, and Kayser-Roth Hosiery Company, Inc., Appellants and Cross-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

299 F.2d 793 (1962)

TRIUMPH HOSIERY MILLS, INC., Hudson Hosiery Company, Burlington Industries, Inc., Claussner Hosiery Company, and McCallum Hosiery Company, Appellees and Cross-Appellants, v. ALAMANCE INDUSTRIES, INC., Kayser-Roth Corporation, and Kayser-Roth Hosiery Company, Inc., Appellants and Cross-Appellees.

No. 8374.

United States Court of Appeals Fourth Circuit.

Argued October 12, 1961.

Decided February 8, 1962.

Simon H. Rifkind, New York City (Jay H. Topkis, New York City, Welch Jordan, Greensboro, N. C., Paul B. Bell, Charlotte, N. C., Paul, Weiss, Rifkind, Wharton & Garrison, John G. Simon, John Lyon, New York City, Eaton, Bell, Hunt & Seltzer, and Charles B. Park, III, Charlotte, N. C., on brief), for appellants and cross-appellees.

John W. Malley, Washington, D. C. (Carl G. Love, C. Willard Hayes and Cushman, Darby & Cushman, Washington, D. C., and Thornton H. Brooks, David Rabin and McLendon, Brim, Holderness & Brooks, Greensboro, N. C., on the brief), for appellees and cross-appellants.

Before BRYAN and BELL, Circuit Judges, and CRAVEN, District Judge.

ALBERT V. BRYAN, Circuit Judge.

A patent for a surgical stocking, marketed as Supp-hose, was attacked in the District Court as fraudulently procured, lacking in inventiveness and as misused. On these grounds a declaratory judgment was sought of its invalidity. Besides denying these charges of the plaintiff non-patentees, the defendant patentees accused them of infringement, asked appropriate enforcement of the patent, and additionally charged the plaintiffs with unfair competition.

The trial judge found a purposeful omission of the patentees to disclose in the patent application a product that will be referred to as the Burlington stocking, which he noted was very similar to the one described in the application and was generally known in the art for several years before the filing of the application. Thereupon he held the patent for naught.

Thoughtfully, to prevent a new trial in the event his determination was not sustained on appeal, he ruled on the remaining accusations and recriminations in regard to the patent. In this he struck down nine of its claims as wanting in novelty and definiteness. The remaining fifteen claims he thought valid. He found unwitting infringement by the non-patentees of eleven of the claims and acquitted them of unfair competition. But, in the end, he concluded that the patent had been rendered unenforceable by the excessive and unlawful restraint imposed by the patentees in a license of it.

The initial appeal is by the defendant patentees against the finding of fraud in the procurement of the patent and the alternate determination of misuse. They do not ask review of the dismissal of the claim of unfair competition. Cross-appealing, the plaintiff non-patentees pray the vacation of the alternate findings of validity and infringement.

The plaintiffs are Triumph Hosiery Mills, Inc., Hudson Hosiery Company, Burlington Industries, Inc., Claussner Hosiery Company and McCallum Hosiery Company. McCallum is a division of Claussner. These are the non-patentees; they are engaged in the manufacture and sale, among other things, of ladies' nylon hosiery.

The patent in suit, No. 2,841,971, was issued July 8, 1958 on an application filed August 19, 1957 by Joseph H. Bird, Marvin H. Comer, Charlie A. Miles, and Ralph C. Braxton. The application and patent were assigned to the defendant Alamance Industries, Inc., a corporation engaged in acquiring, holding and licensing inventions and patents obtained from the defendant Kayser-Roth Corporation and others. Defendant Kayser-Roth Hosiery Company, Inc. operates as a division of Kayser-Roth Corporation, both manufacturing and selling hosiery. The three defendants we call the patentees.

"Compressive Stocking" — the title of the patent — is an explicit description of the article constituting the centerpiece of this litigation. The Bird patent strove to perfect a woman's stocking which would be therapeutically successful in compressing the leg of the wearer and at the same time offer a fashionable appearance. Since before August 1955 Burlington had made and sold a ladies' hosiery that it now asserts to be a compressive stocking with properties like those specified and claimed in the Bird patent. Thus, strife between the Burlington and Bird merchandise lies at the heart of this litigation.

Apparently for many years the market had been demanding and research had been seeking a surgical-type stocking for women affording therapeutic attributes, but which would be at the same time sheer and otherwise attractive. The therapy was directed to the relief of vascular ailments and fatigue of the leg. The most effective surgical stockings in use relied upon the elasticity of rubber yarns to give the necessary repressive force. But they were neither popular nor practicable because the rubber made them heavy, thick and hot; they were expensive, unattractive and did not launder readily. See Johnson & Johnson v. Carolina Lee Knitting Co., 258 F.2d 593 (4 Cir.1958).

The rival stockings in this suit were all full-fashioned and of unplied yarn. Burlington's were of three types. The first was knit with a single thread or "end" of monofilament nylon yarn, in alternating courses or loops, having fifteen turns of twist per inch in one direction to impart torque, the intervening courses being of the same yarn and turns but with the turns in an opposite twist. The second was similar to the first save that two ends of unplied yarn were used in each course. The third was like the other two but every course had three ends. Each of these styles was knit in a two-carrier system on the usual full-fashioned knitting machine. Prior to October 1955 the nylon monofilament torque yarn used was fifteen denier and heat-set. The patentees were aware of all of the contemporary and earlier stockings made by Burlington when they filed the application for the Bird patent.

A description of the Bird stocking is given in the fact findings of the District Court as follows:

"7. The Bird patent specifications and claims disclose a full-fashioned knit ladies\' nylon stocking having three or more unplied monofilament nylon yarn ends of false twist spindle processed yarn wherein at least three ends of the false twist yarn of the same rotational direction are knit in some courses of the knitted fabric, and three ends or more of the opposite rotational direction are knit in other courses of the knitted fabric, forming alternatively distorted loop stitches throughout the stocking. The knitted fabric forming the stocking is described as providing high compressive support for the leg of a wearer."

Actually, the patent was broader, specifying and claiming a stocking with "multiple" or a "plurality" of ends, which would include two ends.

I. Concededly, the Burlington stocking was the closest of all the prior products to the Bird stocking. However, it was not listed or cited in the patent application. The District Judge found that the applicants at no time brought the Burlington three-end 15 denier stocking to the attention of the United States Patent Office or its Examiner. This omission he found intentional. It was in his judgment a deliberate withholding of information in order to deceive the Patent Office. He further concluded that the claims of the patent would not have been allowed if the Burlington stocking had been brought to the attention of the Patent Office.

The Court heard and weighed the evidence sedulously, evincing a comprehensive knowledge of the proof and a firm grasp of the legal principles it invoked. But we cannot agree that the evidence adduced meets the required standard of a "clear and definite" showing of fraud. Armour & Co. v. Wilson & Co., 274 F.2d 143, 148 (7 Cir.1960). Indeed, an analysis of the testimony precludes, we think, the suggestion of fraud.

To begin with, the sole witness testifying on whether or not before the patent was issued the Patent Office was apprised of the Burlington three-end 15 denier garment, was positive that it had been. Time, place and occasion were given specifically and without contradiction. This witness stated that the disclosure was made by one of the patentees' present trial counsel. Although the lawyer asked to testify to the point, the Court felt it should not hear him as his name had not been included in the advance listing of witnesses required by the pre-trial order. His offer to withdraw from the trial was rejected as coming too late, on the ground that he must have known before or at the start of the trial that this issue, on which his testimony was critical, would enter the case.

These reasons, we think, were outweighed by the right of the attorney to be heard. Especially is this so in view of the gravity of the accusation lodged against him and his clients.

Further, ignorance of the Examiner or the Patent Office of the existence of the Burlington stocking is not readily conceivable. Without question the patentees and their attorney had alluded to equivalent prior art in such patents as Neumager, No. 2,641,914; Tait, No. 2,636,369; and Weller, No. 2,755,616. Tait taught the use of three ends and Tait with Weller a stretch stocking. Incidentally, the Examiner on the Bird patent was the same person who had heard the Tait and Weller applications. Hence, he was familiar with the concept of plural ends composed of monofilament yarns knitted into a stretchable fabric, with the threads twisted to impart torque. Consequently, whether or not the applicants or their attorney specifically directed the Examiner to the Burlington article, the elements of its construction were generally known to him. The District Court might (and did) disagree with the Examiner as to the impact of the prior art on the Bird patent, but this is not tantamount to a finding of misconduct.

II. But the entire patent is invalid, in our opinion, for want of invention. At the same time it...