U.S. v. Markham, 75-3839

• Decision Date: 18 August 1976
• Docket Number: No. 75-3839,75-3839
• Citation: 537 F.2d 187
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. E. L. MARKHAM, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 187

537 F.2d 187

UNITED STATES of America, Plaintiff-Appellee, v. E. L. MARKHAM, Jr., Defendant-Appellant.

No. 75-3839.

United States Court of Appeals, Fifth Circuit.

Aug. 18, 1976.

Aubrey M. Daniel, III, C. S. Robb, Washington, D. C., John J. Fisher, Dallas, Tex., for defendant-appellant.

Frank D. McCown, U. S. Atty., Ft. Worth, Tex., Judith A. Shepherd, Asst. U. S. Atty., Dallas, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before GEWIN, GODBOLD and SIMPSON, Circuit Judges.

SIMPSON, Circuit Judge:

The appellant, E. L. Markham, Jr., was convicted after jury trial under an indictment charging him in a single count with violation of Title 18, U.S.C., Section 1001. The indictment was based upon the prosecution by appellant of a patent application before the United States Patent Office, the charge being essentially that Markham attempted to conceal from the Patent Office Three purported errors of the trial court are urged on appeal. Markham asserts that the court erred (1) in denying defendant's motion to dismiss the indictment as facially insufficient, (2) in denying his motion for judgment of acquittal because of insufficiency of the evidence, and (3) in prejudicially limiting the scope of defense counsel's cross-examination of certain witnesses. We find each point raised to lack merit, and accordingly affirm.

the true inventor of the process for which a patent was sought.

FACTS

Viewing the evidence at trial in the light most favorable to the government, Glasser v. United States, 1942, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680, 704; United States v. Warner, 5 Cir. 1971, 441 F.2d 821, 831, we note the following relevant facts.

In 1957 Orlando F. Klein patented a building process for construction of buildings by using corrugated asbestos panels with insulation sandwiched between them. Appellant invested in this process, and was an assignee of an interest in the patent. One house was built using this process and a second was partially completed. The project ran out of funds so that the process was never commercially exploited. Appellant and his fellow investors never received a return on their investment.

Between 1963 and 1968 Klein developed another building process he termed the "Drycore" system which differed substantially from the patented system. The new concept, simply described, called for the use of horizontally corrugated asbestos panels with insulation sandwiched between them, to be erected prior to the pouring of the slab and foundation of the building, with the asbestos panels serving as walls. Insulated heating and cooling ducts were formed, and steel reinforcing rods were set lacing through the asbestos walls throughout the area for the foundation and floors. Thus when the foundation and floor slab were poured in concrete, the walls, floor foundation, and heating and cooling ducts all became one integrated unit. The roof, constructed of the same material, was to be similarly tied to the structure by reinforcing bars and concrete, resulting in an extremely well insulated building designed to be economically and quickly built.

Between 1965 and 1969, Orlando Klein and Markham met several times to discuss the system. In 1968 Klein had an architectural firm draw up a set of house plans utilizing the Drycore program. These plans clearly identified Klein as developer of the system by means of a printed legend. Copies of the plans were distributed in 1968 to appellant and several other persons. In January, 1969, Klein and several investors to whom he had sold franchises in the Drycore system began construction of a model home in Grand Prairie, Texas, using Klein's plans. Markham was not an investor, although he was attorney for the project, which was to be incorporated. He appeared to believe that his percentage of the prior patent gave him a similar interest in the Drycore process. The Grand Prairie house took nine months to complete rather than the anticipated 21 days. The investors, the actual builders of the house, blamed their difficulties on Klein. Markham did not see the house until it was nearly complete. At that time signs around the house prominently stated that the construction technique had been developed by Klein.

Klein and his wife went to Markham's office on September 19, 1969, to sign articles of incorporation for the Drycore project. When they saw the final documents they expressed doubts and stated their desire to obtain another legal opinion before they signed. Appellant became angry and ordered the Kleins from his office, which marked the end of their attorney/client relationship. The following day Klein wrote Markham that it was important for the process to be incorporated to avoid a "deterioration" of the total concept, which he described as "entirely foreign" to the method patented in 1957.

Klein's relationship with the investors and purported franchisees rapidly deteriorated after the Grand Prairie model home was completed. Those investors realized Several disgruntled investors, including Messrs. Roberts, Shipley, and Crowson, met with Markham in December 1969 to discuss means of protecting their investments. A decision was reached to construct a Houston demonstration home without Klein's participation, but using the plans and knowledge they had obtained from constructing the Grand Prairie home. The group planned also to sell franchises for the building method. To this end a corporation, "Dry-Therm", was formed, with Markham as president. Tentative plans were made to escrow a percentage of Dry-Therm profits for the Kleins. Shipley, Roberts, and Crowson assigned to Dry-Therm the rights Klein had sold them under franchise agreements. Markham assigned to Dry-Therm his supposed interest under the old patent. Markham also furnished the major portion of the funds required to build the Houston house. This house was built, primarily by Shipley and Roberts, very quickly in January of 1970. With the exception of minor variations and innovations, the Houston house was substantially identical to the Grand Prairie model house. Appellant and Roberts prepared an advertising brochure from the Grand Prairie plans and prior advertising material of Klein.

that they were in danger of losing their money due to Klein's inability or refusal to take any action to market or distribute his process. Klein, aside from not having yet incorporated his project, as he had promised, had misled the investors by stating that his construction process was covered "by patents granted and pending". The only existing patent was that of 1957. Klein's concept of patent pending was merely that he had placed documents with his patent lawyer in anticipation of filing an application. Klein also failed to carry out a promise to build a model home in Houston prior to a major builder's conference there in early 1970.

Klein had not filed for a patent on his building process. The investors feared they would lose their investments because one year after the completion of the Grand Prairie model home the concepts of Drycore would become prior art and a part of the public domain, and therefore unpatentable. ¹ Markham arranged a meeting between Shipley, Roberts, Crowson, and his patent attorney, Howard Moore. Roberts, for one, asserted at trial that he understood that a patent application was to be filed on behalf of Klein, and that Moore had said such action was possible. Markham asked Roberts and Shipley whether they thought they had any patentable ideas. Each man suggested relatively small design modifications of the Klein process, and sketched these ideas for the benefit of the patent attorney. The patent attorney advised Markham that the Drycore process was distinct from the 1957 patented process, and that Markham's interest in the 1957 patent, and by contract in derivative patents, afforded him no rights in the Drycore system. After the meeting was concluded, Markham cautioned Crowson, Roberts, and Shipley to inform no one of what they had heard.

Moore's associate, Crutsinger, prepared a patent application for the building construction method. Drawings used to illustrate the patent application were traced by the patent lawyer from the plans used for the Grand Prairie house. Shipley and Roberts were named the joint and sole inventors of all the processes disclosed, when in fact no more than part of the peripheral ideas were arguably traceable to them. Appellant remained in contact with Crutsinger during the period of preparation of the application.

In May of 1970 the patent application was completed. Shipley signed the inventor's oath, appearing to believe that all the ideas contained therein were his and Roberts. After studying a copy of the application Roberts refused to sign the oath. Despite this refusal, Markham, as president of On April 2, 1971, the Patent Office wrote Moore requesting a further showing of the reasons Roberts refused to sign the inventor's oath, and the necessity for the submission of appellant's affidavit in lieu thereof. Markham and Moore each submitted an affidavit in reply. Appellant stated that a demonstration home had been built almost a year prior to the filing of the patent application (the Grand Prairie house), and that prompt filing was therefore necessary to protect the rights of Dry-Therm, the assignee. He informed the Patent Office also that Roberts had been in contact with a "competitor", Orlando Klein, who had failed to carry out prior licensing agreements concerning the process. Appellant said that Klein had learned the contents of the patent, so that prompt action on the part of Dry-Therm in filing the application was essential. Markham did not mention Klein's relationship to the Grand Prairie house.

Dry-Therm, the assignee of Shipley's and Roberts' "franchise rights" obtained from Klein, signed an oath that he believed Shipley and Roberts to be the sole and original inventors of the...