Hoeltke v. C. M. Kemp Mfg. Co.

80 F.2d 912 (1936) | Cited 30 times | Fourth Circuit | January 10, 1936

On rehearing.

PARKER, Circuit Judge.

This case has been reheard and the questions involved have been carefully considered in the light of the briefs filed and the arguments made on the rehearing. On the question of patentability and infringement nothing need be added to what was said in our original opinion.

Upon the reargument it was most strenuously insisted that we ought not find that, in manufacturing and selling its automatic fire check between the time of plaintiff's disclosure and the granting of plaintiff's patent, the defendant appropriated the idea of plaintiff in breach of the confidence reposed in it; and that, at any rate, we ought not disturb the findings of the District Judge with resect to this matter. We are thoroughly familiar with the salutary rule that in equity cases the findings of the District Judge on questions of fact will not be disturbed unless in our opinion such findings are clearly wrong. But as we recently had occasion to point out in Standard Acc. Ins. Co. v. Simpson (C.C.A.4th) 64 F.2d 583, 588, "in an appeal in equity we review the facts as well as the law, and the review is a real review and not a perfunctory approval." The finding of the judge below is persuasive, not controlling; otherwise review on the facts would be a delusion and a snare. In the case before us, we think that facts as to which there is no controversy establish so conclusively the liability of the defendant that the verbal testimony of officers and employees of defendant, unsupported as it is by anything in writing or of record, to the effect that the device of defendant was perfected prior to plaintiff's disclosure, is not sufficient for defendant's exoneration.

The following facts are undisputed: The defendant had been working without success upon the development of an automatic fire check. Plaintiff on December 4, 1928, wrote defendant calling attention to the fact that a gas explosion had occurred in the factory in which he was working "because an operator was not around just then to shut off the gas" and that he had made a device that would overcome that trouble. On December 10, 1928, defendant wrote plaintiff that it was interested in the device, and later, not hearing from plaintiff, sent one of its employees to advise him to patent his device an submit it for defendant's consideration. On April 27, 1929, plaintiff wrote defendant sending copies of the drawings and specification of his patent. On May 15, 1929, defendant replied to this letter stating that it was not interested in his device because it was a fire check instead of an improvement on a back-fire preventer, that plaintiff's invention comprised nothing but the old features of the Kemp back-fire preventer, patented in 1901, that there was no invention in the device and no claims of any consequence could be obtained on it, and that the device was considered inoperative and had one very objectionable feature which would prevent its acceptance by insurance authorities. Defendant said nothing in this letter indicating that it had perfected a fire check of similar character, or that it was interested in a fire check, but on the contrary stated that it was disappointed in the invention because it was for a fire check instead of for improvement on back-fire preventer. Nevertheless, defendant had its sales manager call on plaintiff in June and talk with him about his invention, plaintiff contends with a view of purchasing it.

It is further established, by undisputed testimony, that in August 1929, defendant caused two of its employees to file an application for a patent on a device functioning in the same way as plaintiff's device and similar thereto, except that, for the soldered pin which holds the lever in tension in plaintiff's patent, a wire fuse in a sleeve was substituted with a soldered joint in the flame of the back-fire, and about the same time defendant began making and selling these devices, all without any notice to plaintiff. About this time, August 25, 1929, plaintiff wrote defendant, directing the letter to the sales manager who had talked with him in June, and asking whether it had been decided whether defendant could use his invention. On August 28, 1929, defendant wrote that one Ponder, the employee who had called on plaintiff in January, would call and discuss the matter with him. Ponder did call on plaintiff and told him that if he had a proposition he should submit it to defendants, whereupon plaintiff, on September 23, 1929, wrote defendant offering to sell his invention for $75,000. Plaintiff heard nothing further from defendant and did not learn of its manufacture of the device covered by his patent application, or of the attempt of defendant through its employees, to obtain a patent thereon, until he learned of it in connection with proceedings in the Patent Office. After interference had been declared in the Patent Office between the plaintiff's application and that of employees of defendant, defendant offered plaintiff first $3,500 and then $5,000 for his patent rights. When plaintiff declined these offers, defendant moved to dissolve the interference on the ground that the invention was not patentable.

If there were no explanation offered of these undisputed facts, the conclusion that defendant had appropriated the ideas disclosed to it by plaintiff would be inescapable, and we do not think that the matters offered in explanation are sufficient to justify us in reaching any other conclusion. Defendant's contention is that it had been having its employees work on this fire check for years, that the basic idea had been worked out by Van Horn in 1918, that drawings embodying the idea, with the exception of the fuse, had been made for in in 1926, and that the fuse was developed by its employee Hunt on or about April 1, 1929. The only written evidence offered in support of any part of this contention is the evidence of the drawings which were made in 1926; but these do not support the contention. Theycover a mechanism of a complicated character, which was never found to be workable and which does not suggest the simple mechanism of plaintiff's patent and defendant's manufacture. Instead of helping, they hurt the defendant's case; for they show beyond question that as early as 1926 defendant was attempting without success to find a solution for the problem which plaintiff solved.

Defendant's case, on this point, in its final analysis rests upon the testimony of its president W. W. Kemp, its sales manager Dunkak, and its two employees Van Horn and Hunt to the effect that about April 1, 1929, Hunt perfected the device which defendant manufactured and attempted to have patented, and that they saw it in operation in defendant's plant before the receipt of plaintiff's letter of April 27th. If this were true, Hunt perfected the mechanism after plaintiff had perfected his invention and after defendant knew that this was so; for at that time it had plaintiff's letter of December 4, 1928, telling of his invention and had answered it under date of December 10th inviting him to make disclosure. When the letter of April 27th came, showing that the device which plaintiff had invented was of the same character as that worked out by Hunt, defendant, instead of trying to get a patent on the device for itself, or proceeding with the manufacture and sale of an article which at the most was a mere improvement on what plaintiff had invented, should certainly, in the exercise of good faith, have notified plaintiff of Hunt's achievement and, if there was any superiority in what Hunt had done, should have sought a patent on the improvement only, and not on plaintiff's idea. Instead of doing this, it proceeded to make and sell and attempted to patent a device which it knew at the time was substantially the device which plaintiff had invented some time before.

But we cannot accept this unsupported verbal testimony of interested officers and employees of defendant as to Hunt's independent development of the idea. One who invites the disclosure of an invention, and thereafter begins to manufacture articles embodying the principle of the disclosure, labors under a heavy burden when he seeks to justify his action on the ground of independent invention, and he ought to offer something of greater weight than the verbal testimony of interested witnesses. Here there is no writing or other record to sustain the contention, and no one, except Kemp, the two employees who acted under his direction in attempting to obtain the patent, and the sales manage who negotiated with plaintiff, claims to have seen the Hunt device prior to plaintiff's disclosure. Kemp's testimony is discredited by the fact that he failed to mention the Hunt device in his letter of May 15th and took the position in that letter that he was disappointed in the fire check because it was not an improvement on the back-fire preventer, and also by the fact that he had Hunt and Van Horn make application for a patent on the Hunt device when he knew that it was in substance the device of plaintiff's invention and admits that he thought it not patentable over the old Kemp back-fire preventer. Hunt and Van Horn's testimony is discredited by the fact that they made the application for the patent on the Hunt device, claiming to be the original inventors thereof, when they knew of plaintiff's invention and knew that it embodied the same principle of operation.

There can be no question but that defendant's sales of infringing devices prior to the grant of plaintiff's patent were made after plaintiff had made his invention and had disclosed it to defendant upon its invitation; and certainly the device of defendant was so nearly like that of plaintiff as to lead irresistibly to the conclusion that one was copied from the other, once the disclosure to defendant prior to its manufacture and sale is established. The defendant's explanation that its device was independently developed is one which we cannot accept in the light of its conduct, particularly in failing to mention the development of the device in its letter of May 15th, and in seeking to obtain a patent on a device embodying the idea of plaintiff's invention which had been disclosed to it, and which it knew that plaintiff had perfected prior to the perfection of its device. Under such circumstances, we think that defendant should account to plaintiff for the profits realized from its sale of the infringing device prior to the grant of plaintiff's patent, not under the patent statutes, but under the long-recognized principle of equity that no man ought to be allowed to enrich himself unjustly at the expense of another.

For the reason herein stated, as well as for the reasons stated in the original opinion, the decree appealed for will be reversed, and the cause will be remanded for further proceedings.

Reversed.

I adhere to my dissent previously filed.

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