Union Carbide Corporation v. Graver Tank & Mfg. Co.

• Decision Date: 13 October 1960
• Docket Number: 12798.,No. 12797,12797
• Citation: Union Carbide Corporation v. Graver Tank & Mfg. Co., 282 F.2d 653 (7th Cir. 1960)
• Parties: UNION CARBIDE CORPORATION, Plaintiff-Appellant, v. GRAVER TANK & MFG. CO., Inc., and The Lincoln Electric Company, Defendants-Appellees. UNION CARBIDE CORPORATION, Plaintiff-Appellee, v. GRAVER TANK & MFG. CO., Inc., and The Lincoln Electric Company, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

282 F.2d 653 (1960)

UNION CARBIDE CORPORATION, Plaintiff-Appellant, v. GRAVER TANK & MFG. CO., Inc., and The Lincoln Electric Company, Defendants-Appellees.

UNION CARBIDE CORPORATION, Plaintiff-Appellee, v. GRAVER TANK & MFG. CO., Inc., and The Lincoln Electric Company, Defendants-Appellants.

Nos. 12797, 12798.

United States Court of Appeals Seventh Circuit.

August 31, 1960.

Rehearing Denied October 13, 1960.

COPYRIGHT MATERIAL OMITTED

Richard Russell Wolfe, Chicago, Ill., James A. Fowler, Jr., New York City, George N. Beamer, South Bend, Ind., Cahill, Gordon, Reindel & Ohl, New York City, Wolfe, Hubbard, Voit & Osann, Chicago, Ill., Crumpacker, May, Beamer, Levy & Searer, South Bend, Ind., C. Frederick Leydig, Jr., Chicago, Ill., William A. Jansen, New York City, of counsel, for Union Carbide Corp.

Casper W. Ooms, Edward A. Haight, Chicago, Ill., Thomas V. Koykka, Cleveland, Ohio, Charles G. Bomberger, Hammond, Ind., Dugald S. McDougall, Chicago, Ill., James R. Stewart, Cleveland, Ohio, for Graver Tank & Mfg. Co., Inc. and The Lincoln Electric Co.

Before HASTINGS, Chief Judge, and DUFFY and MAJOR, Circuit Judges.

MAJOR, Circuit Judge.

These appeals are from a final judgment in favor of plaintiff, entered August 26, 1959, after accounting, for infringement of claims 18, 20, 22 and 23 of patent No. 2,043,960 on a welding flux (sometimes referred to as Jones or the patent in suit). Judgment was rendered in the amount of $3,010,077.16, apportioned as follows:

  Award of damages based
                    on reasonable royalty ...........   $1,361,891.25
                  Interest at 6% per annum
                    from June 30, 1950, the
                    date of the last infringement ...      748,185.91
                  Additional damages ................      900,000.00
                

Plaintiff, Union Carbide Corporation (hereinafter referred to as Union Carbide) appeals on the basis that the judgment is grossly inadequate (appeal No. 12797). Defendants, Graver Tank & Mfg. Co., Inc. (hereinafter referred to as Graver) and The Lincoln Electric Company (hereinafter referred to as Lincoln) appeal on the basis that it is excessive (appeal No. 12798).

This action was commenced October 1, 1945, by Linde Air Products Company (hereinafter referred to as Linde) against the present defendants. Linde at that time was a subsidiary of Union Carbide and was subsequently merged into that corporation, which thereupon became the plaintiff. Lincoln (hereinafter called the defendant) since 1907 has been engaged in the manufacture of electric are welding equipment and supplies and from the beginning has conducted the defense on behalf of both defendants. Graver has a manufacturing plant at East Chicago, Indiana, where defendant's 660 flux, the infringing flux, was used for welding operations during the period of infringement. (The patented flux was called Unionmelt; the infringing flux, Lincolnweld.)

The litigation has been before one court or another from the time it was commenced in 1945, to the present time. Linde in its original action sued on sixteen claims to a process of electric welding and on seven claims to a composition or flux for use in the process. The case was heard by Honorable Luther M. Swygert, who held claims 18, 20, 22 and 23 valid and infringed and composition claims 24, 26 and 27 invalid. He also held all process claims invalid. Linde Air Products Co. v. Graver Tank & Mfg. Co., D.C., 86 F.Supp. 191. Upon appeal by both parties, this Court affirmed as to claims 18, 20, 22 and 23, but held valid and reversed the District Court as to all process claims and composition claims 24, 26 and 27. 167 F.2d 531. The Supreme Court agreed with Judge Swygert in toto, both as to claims 18, 20, 22 and 23, which he had held valid and infringed, and as to the other composition and process claims which he had held invalid. 336 U.S. 271, 69 S.Ct. 535, 93 L.Ed. 672.

The valid composition claims were held infringed by Lincoln in the manufacture and sale of its 660 flux. The Supreme Court, upon petition of Graver, granted a rehearing on the issue of infringement, limited to a consideration of the doctrine of equivalents. 337 U.S. 910, 69 S.Ct. 1046, 93 L.Ed. 1722. The majority of the Court (two Justices dissenting) held that although Lincoln did not utilize the material called for by the claims, the 660 flux infringed by application of that doctrine. 339 U.S. 605, 70 S. Ct. 854, 94 L.Ed. 1097.

After the 660 flux was adjudged an infringement by the District Court, Lincoln made and marketed four new fluxes, the 760, 770, 780 and 840 (known as the 700-series fluxes). Union Carbide, on the premise that these new fluxes infringed and, therefore, violated the District Court's decree, brought an action to have defendants adjudged in contempt. This proceeding was heard by Honorable Charles A. Dewey, D.C., 106 F.Supp. 389, sitting by special assignment. He held that the new fluxes infringed and that defendants were in contempt. This Court, on the basis of the doctrine of "File Wrapper Estoppel," held that Lincoln's new fluxes did not infringe and reversed the decision of Judge Dewey. 196 F.2d 103. The Supreme Court denied certiorari, 343 U.S. 967, 72 S.Ct. 1059, 96 L.Ed. 1363, and petition for rehearing, 344 U.S. 849, 73 S.Ct. 6, 97 L.Ed. 660.

We approach the issues argued on these appeals with knowledge of the careful and extensive consideration which has been accorded to the parties and their respective contentions in the Court below. The accounting proceeding was referred to Honorable Henry R. Sackett, as Special Master, by order dated February 10, 1953. The pre-trial hearing and proceedings extended over a period of three and one-half years. The hearing before the Master occupied a full month, September 25 to October 25, 1956. Twenty witnesses were examined and cross-examined, and the stenographic transcript of the trial came to 3,045 pages. Seven hundred and twelve documentary exhibits were put in evidence. Motion pictures, welding demonstrations and other forms of evidence were presented. Records and exhibits from the previous hearings were incorporated by reference. After the trial, both sides submitted printed briefs to the Master, together with proposed findings of fact and conclusions of law. Oral argument before the Master on these proposed findings occupied four days. The Master, after having the case under consideration for almost a year, submitted a draft report to counsel. Numerous objections were interposed to the Master's proposed findings and conclusions.

Union Carbide in the main acquiesced in the proposed findings but interposed objections to certain of the Master's conclusions. On the other hand, Graver objected to many of the proposed findings, as well as to some of the conclusions. After a hearing on the objections to the proposed report, the Master made a number of changes in his proposed findings and conclusions of law. On June 4, 1958, the report was signed in printed form and filed with the District Court. Objections to the report were argued before Judge Swygert for two days, at the conclusion of which the Court adopted the Master's findings of fact but modified his conclusions of law in certain respects. Union Carbide in its brief states, "It is not likely that any other matter has had more thoughtful and thorough study and attention than the Master's findings in this record." With this statement we agree. In addition to the Master's outstanding work, we are not unmindful of the fact that Judge Swygert, who heard and passed upon objections to the Master's report, has been with this case from its inception in 1945, and has demonstrated a clear understanding of the many difficult and complicated issues which have arisen during the course of the litigation.

Thus, we are possessed of an acute awareness of the force and effect imposed upon a reviewing court by Rule 52 (a) of the Rules of Civil Procedure, 28 U.S.C.A. Both parties disclaim any intent to attack directly the findings of the District Court; in fact, Union Carbide expressly accepts them. In its brief Lincoln states, "The evidentiary facts in this case are undisputed. The factual issues in this appeal relate to conclusions — i. e., inferences of ultimate fact — drawn by the District Court from underlying facts which of themselves are not in controversy."

Did Lincoln Copy and Thereby Become a Conscious and Wilful Infringer?

Prior to a consideration of the issues argued by the parties in their separate appeals, it appears appropriate to consider the Master's finding, approved by the Court, that Lincoln's 660 flux "was copied from the teachings of the patent." Based on this finding, the Court characterized Lincoln as a conscious and wilful infringer, notwithstanding that the Master had refused on request to do so. We shall consider this issue in the beginning for the reason that it permeates numerous of the issues raised on both appeals, particularly by Lincoln in appeal No. 12798; in fact, it is controlling as to some of such issues.

In treating the issue we must start, of course, with the premise that Lincoln by the manufacture and sale of its 660 flux infringed the four patent claims which remained in suit. That fact, as already shown, has been adjudicated by the courts up to and including the Supreme Court. The question, however, as to whether Lincoln copied its infringing flux from the teachings of the patent and thereby became a conscious and wilful infringer has not been adjudicated; in fact, it has not been previously in issue. This distinction must be kept in mind in appraising the relevancy of what has heretofore been shown and decided. Another factor is that the issue must be determined in the light of circumstances in existence at the time Lincoln commenced the manufacture and sale of its infringing flux rather than from those after issues have been litigated and determined.

After much thought, we find ourselves in the dark as to what it was that Lincoln copied. The Supreme Court on the second appeal, 339 U.S....