United States v. Hartford-Empire Co.

• Decision Date: 09 October 1947
• Docket Number: Civ. A. No. 554.
• Citation: 73 F. Supp. 979
• Parties: UNITED STATES v. HARTFORD-EMPIRE CO.
• Court: U.S. District Court — District of Delaware

73 F. Supp. 979

UNITED STATES v. HARTFORD-EMPIRE CO.

Civ. A. No. 554.

District Court, D. Delaware.

October 9, 1947.

John F. Sonnett, Asst. Atty. Gen., Roy C. Hackley, Jr. and Alfred C. Aurich, Sp. Assts. to Atty. Gen., and John J. Morris, Jr., U. S. Atty., of Wilmington, Del., for plaintiff.

Aaron Finger (of Richards, Layton & Finger), of Wilmington, Del., and Walter J. Blenko, Albert C. Hirsch and Morton Burden, Jr., all of Pittsburgh, Pa., for defendant.

LEAHY, District Judge.

The United States sues to cancel expired patent No. 1,655,391 and three subsisting patents Nos. 2,073,571, 2,073,572 and 2,073,573, on the ground of fraud in their procurement. The matter is here on defendant's two motions for summary judgment — one, that as to '391 the case is moot; and, two, that as to '571-3 defendant's right to hold and own such patents is beyond dispute because of res judicata and other defenses. For purposes of determining the motions, the allegations of fact in the complaint must be considered as true. Hence, at this point there are presented only questions of law for decision. The fraudulent misrepresentations practiced on the Patent Tribunals are set out in detail in the complaint but will not be quoted at length. The facts there alleged are detailed in Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250. See also, Hartford-Empire Co. v. Shawkee Manufacturing Co., 3 Cir., 147 F.2d 532, and Hartford-Empire Co. v. Shawkee Manufacturing Co., 3 Cir., 163 F.2d 474; and for proceedings against the attorneys who precipitated and engaged in the fraudulent practices, see Hatch v. Ooms, D.C., 69 F.Supp. 788.

1. The point raised by motion for summary judgment directed at '391 is this: Does United States have a right to maintain an action to cancel a patent which was procured by fraud practiced on the Patent Tribunals when the patent's legal life has expired and the party charged with the fraud is unable to assert any future rights under the patent?

The right of the United States to sue to cancel a patent procured by fraud may not be challenged;¹ but this admittedly is a case of first impression because the patent expired prior to the institution of suit by the government. Many if not all of defendant's citations of authority are patently irrelevant. That is why defendant places much reliance on Bourne v. Goodyear, 1869, 76 U.S. 811, 19 L.Ed. 786, to support its argument that where the patent has expired the question as to whether a suit can be maintained to cancel the patent has become moot. In the Bourne case, suit was in the name of the United States ex rel. Bourne against the executor of the defendant Goodyear and sought to have the Court vacate an extension of a patent on the charge it had been procured by fraud. The extension of the patent had expired the day before suit was filed. The Supreme Court sustained a demurrer to the bill. Plaintiff argues against the applicability of the Bourne case because there is nothing to show the United States there had permitted or consented to the institution of the litigation and consequently the case is no authority against plaintiff's legal position here.

Much of the internal evidence—besides the Court's opinion—certified by the National Archives, consisting of the Transcript of Record and certain correspondence between the then-Attorney General and counsel for plaintiff-Bourne, shows not only that the United States was not a party to the proceedings but that the government also specifically refused to become such or give its consent to the litigation. The rule of the Bourne case is manifestly not pertinent. The question for decision, then, is an open one.

Its answer, I believe, is as ineluctable as death and taxes. A patent is a contract between an inventor and the government. The consideration which supports the contract is the inventor's disclosure of his invention and the government's grant of an exclusive monopoly for a stated period of time. Fried Krupp Aktien Gesellschaft v. Midvale Steel Co., 3 Cir., 191 F. 588, 594. But like any other contract it may be set aside for fraud. For purposes of defendant's motion for summary judgment the fact of fraud must be admitted. Such fraud, I think, must vitiate plaintiff-defendant's entire transactions; cancellation of the patent ab initio must follow. Those who have paid defendant money for royalties or damages as infringers should be in a position to demand the status quo; otherwise defendant will be unjustly enriched. While provision has been made by certain settlement agreements between defendant and former licensees and infringers, this fact can have no legal relevance. If the government's case be said to be a vindication of a right in vacuo, under such circumstances, nevertheless I am of the view that a court must hold illegitimate even a paper semblance of a patent right where its grant is caused by the utilization of techniques of fraud. At bottom, the right of government here is based on its obligation to protect the public from the apparent monopoly of the patent which was fraudulently obtained, whether for current or historical reasons. The count with respect to '391 must be maintained and defendant's motion for summary judgment as to this phase of the case is denied.

2. Defendant's motion for partial summary judgment aimed at the second count of the complaint is directed at patents Nos. 2,073,571, 2,073,572 and 2,073,573. This count details the same fraudulent practices. It recites that proceedings were commenced before the Examiners and ended after the Commissioner authorized the issuance of the patents in compliance with a mandate of the Circuit Court of Appeals for the District of Columbia in § 4915, R.S., 35 U.S.C.A. § 63, actions. See Hartford-Empire Co. v. Coe, 66 App.D.C. 344, 87 F.2d 741.

Supporting its position, defendant argues its right to '571-3 was decreed by a court of competent jurisdiction against the...