United States v. Cold Metal Process Co.

• Decision Date: 11 August 1945
• Docket Number: No. 21910.,21910.
• Citation: 62 F. Supp. 127
• Parties: UNITED STATES v. COLD METAL PROCESS Co. et al.
• Court: U.S. District Court — Northern District of Ohio

62 F. Supp. 127

UNITED STATES v. COLD METAL PROCESS Co. et al.

No. 21910.

District Court, N. D. Ohio, E. D.

August 11, 1945.

Frances M. Shea, Asst. Atty. Gen., Roy C. Hackley, Jr., Sp. Asst. to Atty. Gen., Don C. Miller, U. S. Atty., of Cleveland, Ohio, and T. Hayward Brown, Atty., Dept. of Justice, of Washington, D. C., for plaintiff.

Clarence B. Zewadski, of Detroit, Mich., Franklin B. Powers, of Youngstown, Ohio, and Howard F. Burns, of Cleveland, Ohio

(Whittemore, Hulbert & Belknap, of Detroit, Mich., Manchester, Bennett, Powers & Ullman, of Youngstown, Ohio, and Baker, Hostetler & Patterson, of Cleveland, Ohio, of counsel), for defendants.

MILLER, District Judge.

This action was filed by the United States of America as plaintiff on July 27, 1943, praying cancellation of United States Letters Patent No. 1,744,016 (hereinafter referred to as '016) and Patent No. 1,779,195 (hereinafter referred to as '195) owned by the defendant The Cold Metal Process Company (hereinafter referred to as Cold Metal) assignee of the defendant Abram P. Steckel, for fraud upon the Commissioner of Patents in the procurement thereof, or, in the alternative, for mutual mistake of fact upon the part of the applicant and the Commissioner.

The complaint consists of two counts, the first count being directed to Patent '016 granted January 14, 1930, and the second count being directed to Patent '195 issued October 21, 1930. The defendants denied the allegations of fraud and mutual mistake, and alleged that even if mutual mistake existed it did not authorize the District Court to cancel the patents, or either of them, in this proceeding, and that the thirteen years delay in bringing the action was such laches as barred its present prosecution. This Court ruled in a preliminary hearing that it did not have the right to review in this action any decision of the Patent Examiner or any alleged error of judgment or law on the part of the Patent Office resulting in the granting of the two patents involved, but that the right did exist to cancel in such a proceeding as this any patent issued as the result of either fraud on the part of the applicant or of mutual mistake of fact upon the part of the applicant and the Commissioner. United States v. Cold Metal Process Company, D.C., 57 F.Supp. 317, 321. The case has accordingly been heard upon both the issue of fraud and the issue of mutual mistake.

Findings of Fact

1. The defendant Cold Metal is an Ohio corporation with its principal office and place of business at Youngstown, Ohio. The defendant Abram P. Steckel is a citizen of the United States and a resident of Youngstown, Ohio. The corporate defendant, as assignee of the defendant Steckel, is the owner of the two patents '016 and '195, granted January 14, 1930, and October 21, 1930, respectively. Both of these patents stemmed from an original application by Steckel, Serial No. 648,761, filed June 30, 1923. Patent '195 was issued upon application Serial No. 412,742, filed December 9, 1929, as a division of the original Steckel application. The defendant Cold Metal has heretofore filed an infringement suit against United Engineering and Foundry Company (hereinafter referred to as "United"), with reference to Patent '195, in which action this patent was held to be valid. Cold Metal Process Company v. United Engineering & Foundry Co., D.C., W.D.Pa., 3 F.Supp. 120; United Engineering & Foundry Co. v. Cold Metal Process Co., 3 Cir., 68 F.2d 564. It also filed an infringement suit against American Sheet and Tin Plate Company (also referred to as Carnegie-Illinois Steel Corp.) with respect to both Patents '195 and '016. In that action the District Court held Patent '195 invalid and Patent '016 valid, but upon appeal the Circuit Court of Appeals for the 3rd Circuit held both patents valid. Cold Metal Process Company v. American Sheet & Tin Plate Co., D.C.N.J., 22 F.Supp. 75; Cold Metal Process Company v. Carnegie-Illinois Steel Corp., 3 Cir., 108 F.2d 322.

Re: Patent 1,779,195

2. On June 30, 1923, the defendant Steckel filed application Serial No. 648,761 for a patent on a "Method and Apparatus for Rolling Thin Sheetlike Material." The invention referred to therein related to an improved rolling mill and method of rolling, applying particularly to the rolling of thin sheet-like material in long lengths at high speeds. The apparatus was what is commonly called a "4-high" mill, designed for cold rolling of thin narrow metal strips, and was described by Steckel in his application as follows:

"I provide working rolls having backing rolls of larger diameter and anti-friction mounting for said backing rolls of a character adapted to withstand the rolling pressures encountered and the high speeds which are employed. In a preferred form of the invention the backing rolls are provided with necks which carry the anti-friction bearings, these necks being of sufficient size to withstand the rolling pressure, and the diameter of the backing roll body relative to the diameter of the working roll being of exaggerated size so as to permit of using antifriction bearings of sufficient size for the conditions encountered."

This application was drawn by George E. Stebbins of the law firm in Pittsburgh, Pennsylvania, then known as Byrnes, Stebbins and Parmelee. This firm later became Byrnes, Stebbins, Parmelee and Blenko, and still later Stebbins, Blenko and Webb, and will be hereinafter referred to as the Byrnes firm. Stebbins also prepared the first amendment in the application. Some time prior to April 6, 1926 Walter J. Blenko, a lawyer then employed by the Byrnes firm and from 1929 on a partner of the Byrnes firm, took charge of the Steckel application, and had charge of it, and the divisional application thereon in the Patent Office at all times thereafter. The corporate defendant Cold Metal was organized in 1926 and acquired the Steckel application at that time.

3. Steckel made his claimed invention in 1922 and built and operated his first mill as described in the application in that year. Steel rolled on the Steckel mill was sold during the years 1923 through 1926, the proceeds from such sales totalling approximately $13,000. After Cold Metal was organized it adopted the policy of showing the mill generally to the public and granting license to others. The representatives of a number of companies came to see the Steckel mill roll various types of steel, brass and nickel to thin gauges without intermediate annealing and thereafter purchased such mills and took licenses. Up to the time of this suit about 50% of the total capacity of the steel industry has taken licenses and are operating thereunder and paying substantial royalties to Cold Metal. The adoption of the Steckel mill was gradual, but by 1937 most of the old pack rolling mills in the sheet industry had been discarded, in favor of the patented mills. The cold rolled product of the patented mills was better and could be produced at lower cost. The product of the patented mills is truer to gauge, has a better surface, has better drawing qualities and has a better grain structure. Licensees included Carnegie-Illinois Steel Corporation and other subsidiaries of the United States Steel Corporation, National Steel Corporation, Inland Steel Company, Allegheny Ludlum Steel Corporation and a number of smaller producers. Infringement suits are pending against Youngstown Sheet and Tube Company, American Rolling Mill Company, Wheeling Steel Company, Jones and Laughlin Steel Corporation, Bethlehem Steel Corporation and Republic Steel Corporation.

4. On April 20, 1926, Earl Parmelee, now deceased, a member of the Byrnes firm, without any knowledge of the existence of the Steckel application, filed in the Patent Office an application in the names of Florence C. Biggert, Jr., and Lane Johnson, Serial No. 103,264, for a patent on "Improvement in Rolling Mills." Biggert was then President and Johnson was Chief Engineer of United Engineering & Foundry Company. That application described a 4-high mill with backing rolls mounted in roller bearings. This application is hereinafter referred to as the Biggert application, and was assigned by Biggert and Johnson to United. About November 1, 1926, Walter J. Blenko took charge of the Biggert application and continued in charge of the prosecution of it, and of the subsequent continuation application based thereon, in the Patent Office at all times thereafter. United was the largest builder of rolling mills in the world and by July 1927 had sold mills of the kind described in the Biggert application to the extent of more than $3,600,000. Such mills had proved successful and popular.

5. After the Biggert application was taken over by Blenko, who was at that time also handling the Steckel application, Blenko became aware that the Byrnes firm was prosecuting two applications for different clients disclosing common subject matter. Blenko promptly advised the partners of this conflict, who decided that the firm would withdraw as attorneys for both applicants unless the parties could come to some satisfactory agreement. Stebbins and Blenko thereupon conferred with Biggert and Steckel separately, advising each that both applications involved the common subject matter of 4-high mills. Disclosure was not made to either one of the name of the other applicant nor was the application of either shown to the other. The Byrnes firm advised each applicant that it would withdraw as his attorney or it would arrange a conference between the applicants if they so desired for the purpose of discussing the situation. The parties desired to meet. During May and June 1927, meetings were held between officials of Cold Metal and United, at which one or more members of the Byrnes firm were present. The positions of the parties developed as follows: United was interested in building and selling the mills, while Cold Metal was interested in collecting royalties on the invention. Both...