Zenith Radio Corp. v. Radio Corp. of America

• Decision Date: 13 June 1952
• Docket Number: Civ. A. No. 1098.
• Citation: 106 F. Supp. 561
• Parties: ZENITH RADIO CORP. v. RADIO CORP. OF AMERICA et al.
• Court: U.S. District Court — District of Delaware

106 F. Supp. 561

ZENITH RADIO CORP. v. RADIO CORP. OF AMERICA et al.

Civ. A. No. 1098.

United States District Court D. Delaware.

June 13, 1952.

COPYRIGHT MATERIAL OMITTED

Arthur G. Connolly, Wilmington, Del., Willis H. Taylor, Jr., and R. Morton Adams, of Pennie, Edmonds, Morton, Barrows & Taylor, New York City, Burton K. Wheeler and George F. Hirmon, Washington, D. C., Irving Herriott and Francis W. Crotty, Chicago, Ill., Thomas Reddy, Washington, D. C., for plaintiff.

Caleb S. Layton, of Richards, Layton & Finger, Wilmington, Del., Stephen H. Philbin, of Fish, Richardson & Neave, John T. Cahill and John W. Nields, of Cahill, Gordon, Zachry and Reindel, William H. Davis and Brian Forrow, New York City, for defendant Radio Corp. of America.

William Prickett, Wilmington, Del., John E. F. Wood and Henry R. Ashton, of Fish, Richardson & Neave, New York City, for defendant Western Electric Co., Inc.

John J. Morris, Jr., of Hering, Morris, James & Hitchens, Wilmington, Del., Albert C. Bickford and Thomas Thacher, of Simpson, Thacher & Bartlett, New York City, for defendant General Electric Co.

LEAHY, Chief Judge.

This is an action for judgment that defendants' pooled patents be declared unenforceable against plaintiff. Defendants counterclaimed charging infringement on specific patents. In 1946 plaintiff was a licensee under defendants' patents. Plaintiff brought its first declaratory judgment suit and this particular action came at issue. Then, after the license had expired plaintiff brought its second and the present suit. A statement is made that a motion will come later to consolidate.¹ The second complaint, substantially similar to the first, recites that the license has ended.

The action here is by Zenith Radio Corporation against Radio Corporation of America, Western Electric Company, Incorporated, and General Electric Company.² Zenith filed its complaints seeking a declaratory judgment of non-infringement, invalidity, and unenforceability of defendants' patents. Defendants — RCA, WE and GE — counterclaimed on infringement of 40 specific patents.³ Although some of the patents involved are concerned with television receivers using cathode ray tubes, RCA brought another action in Chicago in 1948 alleging infringement because of manufacture and sale of cathode ray tubes for television receivers. The action was brought against Zenith, plaintiff here, and its subsidiary, Rauland Corporation. To that action plaintiff here plead invalidity and non-infringement, and it also raised the same issue of unenforceability because of misuse.

The complaint alleges pooling of thousands of patents and a blanket assertion against Zenith for infringement. The vital allegation, for present purposes, is that none of the pooled patents "can be validly asserted against plaintiff as infringed by plaintiff's radio apparatus." The justiciable controversy asserted is broad and without limitation. Plaintiff wants to know whether the manufacture and sale by it of its radio apparatus constitutes infringement of any valid patent rights owned by defendants; and whether any of defendants may in any way use their patents to interfere with the continuance of plaintiff's business.

As stated, defendants RCA, GE and WE filed answers and counterclaims.⁴ The existence of a justiciable controversy is admitted with respect to the 40 identified patents. Plaintiff's reply denies infringement, charges invalidity, and claims the specified patents are unenforceable for the reasons stated; in fact, it is charged all of defendants' patents were acquired "as part of a plan and conspiracy to dominate and monopolize in violation of the antitrust laws". As a result, says plaintiff, by virtue of unlawful monopoly and practices, defendants are abusing the privileges of the patent system and therefore they should be barred from enforcement of their patents.

Much pretrial discovery has occurred as well as many pretrial conferences. Defendants utilized interrogatories in order to require plaintiff to particularize the allegations of invalidity. Answers to these have been made. Plaintiff has asked for the right to inspect certain writings relating to the origin and history of the inventions. I allowed this inspection by order of May 7, 1951. Defendants have stated that it will take many more months before they will be able to collect the remainder of these particular documents. It is planned depositions will follow the disposition of the questions raised by the interrogatories. The latest group of interrogatories, the ones which become pertinent for discussion at this time, will be described later.

One of the major problems for decision is the parties are apart on the frame of reference — plaintiff seeks to go back to 1919 at the time of the formation of RCA in order to show an original conspiracy, among the defendants, to illegally pool patents and to show, also, divisions of territories as well as divisions of use.

The present matter originally arose by a blanket objection on the part of defendants to plaintiff's interrogatories. These interrogatories are voluminous. They run to 166 printed pages, comprising 419 numbered interrogatories; and, by looking at the independent paragraphs, it may be said that some 1,185 separate queries have been put. For example, RCA claims that interrogatory 356 asked for a total of more than one million items respecting defendants' patents, many of which have expired and have nothing to do with the patents in suit. In short, the interrogatories seek, in detail, the business, management and affairs of more than 20 corporations over a period of 30 years. After a pretrial discussion on the problems surrounding the questions raised by the interrogatories, defendants filed a motion under Fed. Rules Civ.Proc. rule 42(b), 28 U.S.C. and asked for an order granting a separate trial of the issues of validity and infringement of the patents specified in the counterclaim.

A pretrial conference was noted, at which time an attempt — it was hoped — would be made to limit the issues. Plaintiff's position is that defendants' motion is premature for the reason that a pretrial conference directed to a determination of the issues to be tried should not be had until all discovery is completed. Plaintiff objects to the attempt on the part of defendants to limit the issues to the apparatus alleged to infringe in the counterclaim.

One of the questions which must be met is whether defendants, having been brought into court, can say they charge plaintiff with an infringement of 40 patents, and whether that is the issue raised by the declaratory judgment suit; or whether plaintiff can say it has the right during pretrial discovery procedures to go back 30 years in order to demonstrate misuse or violation of the antitrust laws in order to establish defendants' inability to charge infringement, not only as to the 40 patents mentioned, but also as to some 10,000 patents which are owned by all defendants.

The nature of plaintiff's proposed interrogatories may be found by succinct exposition. Interrogatories 1 through 196, for example, are concerned with ancient agreements entered into before 1923. Interrogatories 197 through 308 cover the period from 1925 to the consent decree of 1932 (which will be explained later). Interrogatories 309 through 354 deal with other consent decrees and certain activities pursuant to those decrees through 1935. All the interrogatories are, in the main, concerned with radio broadcasting, and international radio telegraph traffic. In this connection, interrogatories 341-43 call for all contracts and documents relating to the negotiation of all contracts and the identification of all personnel engaged in the negotiation of such contracts with respect to the transmission of wireless messages by RCA between the United States and Poland, Argentina, Chile, Brazil, Belgium, China, Czechoslovakia, The Dutch West Indies, The States of the Levant Under French Mandate, Italy, Indo-China, Japan, Liberia, The Netherlands, The Dutch East Indies, Portugal, Surinam, Siam, Spain, Sweden, Costa Rica, Turkey, Russia, Venezuela, Australia, Germany, France, Bolivia, Canada, Cuba, Switzerland, Territory of Hawaii, The Fiji Islands and Tahiti. With respect to interrogatories 355 through 419, they are addressed to patents but they make no mention of the patents in suit; instead they relate to all patents ever owned or licensed by RCA. I have no intention of going through all of the 419 interrogatories⁵ with their 1,185 subdivisions and discussing them in detail.⁶ The 166 pages of interrogatories, while put, I believe, in good faith by plaintiff's counsel, nevertheless, I have concluded, to permit them to be used would be to expand this case by a length and breadth of oppressive detail which the courts, if not in the past, should refuse to countenance.⁷

I shall refer to substantial portions of the record taken at the pretrial conferences. The matter to be determined is of much vital interest to the parties, for the decision which is made now will direct the course of this large and complex litigation. Many difficult and troublesome questions arose at pretrial. For example, I attempted to have counsel give me the legal distinction between the "misuse of a patent monopoly" and a "use" which was in violation of the antitrust laws. The following occurred:

"Mr. Adams: Assuming we prove that they have just taken this blanket of patents and said to Zenith, `We have a blanket of patents and we are going to get you. You are the only one in the industry who refuses to take our license. You are the only one that refuses to pay us a tax for the privilege of doing business.' That is what we say they say.

"Now, I would expect, if we are right about it, your Honor would also find that that mass of patents which they used as a mass was part of a scheme, was created as part of a scheme to violate the antitrust laws. Therefore your Honor would hold that...