Wenborne-Karpen Dryer Co. v. Dort Motor Car Co.

• Court: U.S. Court of Appeals — Sixth Circuit
• Writing for the Court: DENISON, DONAHUE, and MOORMAN, Circuit
• Citation: Wenborne-Karpen Dryer Co. v. Dort Motor Car Co., 14 F.2d 378 (6th Cir. 1926)
• Decision Date: 10 July 1926
• Docket Number: No. 4326.,4326.
• Parties: WENBORNE-KARPEN DRYER CO. v. DORT MOTOR CAR CO. (CUTLER DRY KILN CO., Inc., Intervener).

14 F.2d 378 (1926)

WENBORNE-KARPEN DRYER CO. v. DORT MOTOR CAR CO. (CUTLER DRY KILN CO., Inc., Intervener).

No. 4326.

Circuit Court of Appeals, Sixth Circuit.

July 10, 1926.

Wm. R. Rummler, of Chicago, Ill., and Cyrus W. Rice, of Grand Rapids, Mich., for appellant.

J. Wm. Ellis, of Buffalo, N. Y. (Carton, Roberts & Stewart, of Flint, Mich., on the brief), for appellee.

Before DENISON, DONAHUE, and MOORMAN, Circuit Judges.

DENISON, Circuit Judge.

Plaintiff below, appellant here, is the owner of the Grosvenor patent, No. 1,186,477, of May 6, 1916, covering a process useful in drying varnish upon manufactured articles, like furniture. The patent contemplates apparatus in the form of a dry kiln, with special devices for putting the patented process into use during the drying operation. The appellee, the Cutler Company, is a manufacturer of dry kilns, and equips them with special apparatus which enables the user to employ the patented process or not, as he prefers.

Plaintiff brought suit upon this patent against a furniture manufacturer at Chicago, and secured the usual interlocutory decree establishing validity and infringement. 269 F. 144. It is to be inferred that the Cutler Company was interested in, and connected with, the defense of this case; but there is no estoppel by judgment for the reason, if for no other, that the decree was not final. Plaintiff then brought a suit at Buffalo against the Cutler Company and the user of one of its kilns. The district court, in an opinion by Judge Hazel, sustained the patent. 285 F. 73. Upon appeal, the Second Circuit Court of Appeals held the patent to be invalid. 290 F. 625; 292 F. 861.

After the favorable decision by the district court at Buffalo, and pending the appeal therefrom, plaintiff brought this suit against the Dort Company at Flint, Mich., which was using, in an infringing manner, one of the Cutler kilns. The Dort Company answered in its own name and on its own account, denying the validity of the patent, but averring that the apparatus which it was using was a Cutler kiln. After the decision on appeal in the Second Circuit the Cutler Company filed in the court below a petition, setting up that it had sold to the Dort Company the kiln in question under a contract by which it had agreed to defend, protect, and save harmless the Dort Company from all claims on account of or under any patent said to cover the kiln sold, and alleging that, by reason of the final decree in the Second Circuit, which it set up in full, the defendant, Dort Company, being in privity with the Cutler Company, was entitled to a decree dismissing the bill in this case because of that adjudication, and it prayed that the court inquire into the situation presented by the petition and make a decree dismissing the bill. A so-called amended answer was then filed as the joint answer of the Dort Company and the Cutler Company, but later it was stricken from the record because filed without leave. Thereupon the Cutler Company filed a petition for leave to intervene, accompanied by its proposed answer, if intervention was allowed, and the Dort Company prayed leave for permission to file a supplemental answer setting up the same adjudication. The District Court did not pass directly upon these petitions by the Cutler Company and the Dort Company, but, as a short cut to the final disposition, treated them as motions to dismiss, based upon undisputed facts, held that there was an adjudication by the decree in the Second Circuit, and dismissed the bill.

It is first urged that the principle of privity between maker and buyer, upon which the application here of the rule of estoppel depends, does not control where the patent is upon a process which the purchaser of the article may at his option use or not use, or where he may use the article in such a modified way that the question of infringement would not necessarily be the same in the two cases. We pass this question by without discussion.

If we assume that this distinction between a process patent and one upon a product is immaterial, and come to the larger question (considered first as between plaintiff and the Dort Company), we find that the action of the court below rests upon the construction given to Kessler v. Eldred, 206 U. S. 285, 27 S. Ct. 611, 51 L. Ed. 1065. That case is clearly distinguishable from this as to its form and direct effect; the question is whether its principle of decision is applicable.

In that case the patentee, Eldred, had sued a rival manufacturer, Kessler, in Indiana, and it was decided in that suit that the Kessler article, a cigar lighter, did not infringe the patent. Later Eldred brought suit in New York on the same patent against one of Kessler's customers, whereupon Kessler filed a bill in equity in the district where Eldred lived, and sought, and obtained, an injunction to prevent Eldred from prosecuting that suit or any other suit against Kessler's customers. It was this injunction which the Supreme Court approved. The question involved was not really one of res adjudicata or of estoppel by judgment, because, although there was identity of subject-matter, yet the identity of parties — or equivalent privity — was not clear. The Supreme Court pointed this out (page 288 27 S. Ct. 611), and expressly refused to decide whether the original decree of noninfringement could have been pleaded in the New York case by Kessler's customer as a bar or an adjudication — precisely the first question we have here.

The difficulty of finding the necessary identity or privity of parties seems insuperable. The cause of action against the manufacturer for injunction and damages and accounting is, in general, a distinct cause of action from that against the purchasing user for an injunction against him and for damages and profits coming from his infringement. The customer has a clear right, in his own interest, to defend against damages, profits, or injunction, regardless of what has been adjudicated in a suit against the manufacturer. It is a common, and we suppose an invariable, test of the applicability of an estoppel by judgment to inquire whether there would have been an estoppel if the previous adjudication had been the other way. If in this case Judge Hazel's decision had been affirmed, it seems clear that the Dort Company would nevertheless have been entitled to litigate in its own interest every question involved. If so, it cannot be that the plaintiff is estopped because the contrary result has been reached.

So much for the plaintiff-Dort Company status. We do not see that the desire of the Cutler Company to intervene, induced by the favorable result in the New York appeal, or even its duty to defend resting on its covenant in the contract, should change the relative rights of plaintiff and the Dort Company in the litigation over their controversy. If judgment had gone against the Cutler Company in New York, there is no procedure by which plaintiff could have forced it into this case, and thereby have subjected the Dort Company to the binding effect of that judgment. The rule ought to work both ways, if at all.

Although plaintiff had a suit pending against the manufacturer in another circuit, it had the (initial) right to sue a user in this circuit and get the judgment of different courts as to the patent. Wagner v. Meccano (C. C. A. 6) 239 F. 901, 902, 153 C. C. A. 29. It did not join the Cutler Company as defendant (probably could not). The Cutler Company made no effort to intervene, and had no absolute right to do so. Foote v. Parsons (C. C. A. 6) 196 F. 951, 953, 118 C. C. A. 105. We see no reason for allowing to the Cutler Company an intervention which it deliberately postponed until it was suited by the New York judgment, and thus compelling plaintiff to sue a party it had elected not to sue. The warranty given to the Dort Company did not make the warrantor the only real defendant. To rely on the warranty was optional with the Dort Company, and also it may be that the warranty did not reach a process use. If, at any time before the final New York adjudication, the Cutler Company had made itself a party in the Dort case, we would have a different question. If it had assumed the defense of the case with the knowledge of the plaintiff, and the Dort Company had abdicated its position as the defendant in the case, the suit would have become in most respects one between the plaintiff and the Cutler Company; and, when the final New York judgment was rendered, there seemingly would have been a complete adjudication in the Dort case, whatever the result was. If the Cutler Company had intervened at that time in some less complete manner, representing its own interests as well as those of the Dort Company, the New York adjudication would have been binding upon it in the Dort case. The extent to which it would have been binding, if at all, upon the Dort Company need not be now considered. Having delayed its intervention until after the New York final decision, the Cutler Company is in effect saying: "If...