Tele-Sonic Packaging Corp. v. Errich International Corp. (173 F. Supp. 335, 1959)

LEVET, District Judge.

. The complaint herein charges the defendants with a wilful and deliberate infringement of United States Letters Patent No. 2,673,016, issued to plaintiff John Gerbe on March 23, 1954, on an application filed on October 11, 1952. Said infringement is claimed to have resulted from the defendants’ manufacture, sale and use of a certain bag-distending apparatus allegedly within the scope of the patent. The answer admits the existence of the patent but denies that any bagging apparatus made by the defendants was within the scope thereof; denies any wilful or deliberate infringement of the patent; denies the validity of the patent; alleges affirmatively that plaintiffs have misused the patent and have come into court with unclean hands so as to preclude the relief sought.

The first counterclaim seeks a declaratory judgment that the aforesaid Gerbe patent is invalid and not infringed. The reply to this counterclaim is a general denial. The second counterclaim was withdrawn. The third counterclaim alleges that the plaintiffs have illegally conspired among themselves to monopolize the sale of bags to various industries and have misrepresented the allegations of the present action to others and thus have damaged defendants’ business reputation, for which damages are sought. The reply to this counterclaim is a general denial.

The Validity of Patent

No. 2,673,016

After hearing the testimony, examining the exhibits, the pleadings, briefs and proposed findings, this court makes the following Findings of Fact and Conclusions of Law:

Findings of Fact

1. The plaintiff Tele-Sonic Packaging Corporation (hereinafter called “TeleSonic”) is a corporation of the State of New York, having its principal place of business in the City of New York, State of New York, and is engaged in the manufacture and sale of bag-distending apparatus or packaging machines as alleged exclusive licensee under the Gerbe patent hereinafter referred to.

2. The plaintiff John Gerbe (hereinafter called “Gerbe”), a resident of the State of New York, is the patentee of United States Letters Patent No. 2,673,-016, issued on March 23, 1954, on an application filed on October 11, 1952, for a bag-distending device, and said plaintiff is now the owner of a one-half undivided part of the entire right, title and interest in the patent.

3. The plaintiffs Irving Wolf and Arthur Wolf (hereinafter called “Wolf”) are both residents of the State of Illinois and are the owners of the remaining one-half undivided part of the entire right, title and interest in the aforesaid patent derived from an assignment to them from Gerbe dated May 21, 1954. (PI. Ex. 3.)

4. By an agreement dated May 21, 1954, between Wolf and Gerbe it was agreed that Gerbe was to have the exclusive right to make and sell bag-distending apparatus according to the Gerbe patent for all trades and industries other than laundry and dry-cleaning in all states except Minnesota, Wisconsin, Iowa, Illinois, Indiana, Michigan, North Dakota and South Dakota. In these states, Wolf was to have the exclusive right to make and sell bag-distending apparatus according to the Gerbe patent for any use whatsoever. Wolf was to have the exclusive right to make and sell bag-distending apparatus for use in the laundry and dry-cleaning industries throughout the entire United States with the exception of the States of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, Pennsylvania, New Jersey, Delaware, Maryland, West Virginia, Virginia, Florida and the District of Columbia, in which area Gerbe was to have exclusive rights with respect to the laundry and dry-cleaning industries. (PI. Ex. 4.)

5. On February 23, 1955, Gerbe entered into an agreement with Tele-Sonic, which was conditioned upon his prior agreement with Wolf of May 21, 1954, whereby Gerbe, for consideration and a royalty, granted to Tele-Sonic such exclusive right to make, sell and use bag-distending apparatus as had been retained by him under the agreement with Wolf. (PI. Ex. 15.)

6. On or about August 9, 1955, Wolf, for a royalty, granted to Tele-Sonic the exclusive right to make, sell and use for any purpose except the laundry and dry-cleaning industries bag-distending apparatus made according to the Gerbe patent aforesaid in Minnesota, Wisconsin, Iowa, Illinois, Indiana, Michigan, North Dakota and South Dakota. By this said agreement Wolf confirmed Tele-Sonic’s right to make bag-distending apparatus to be used in the laundry and dry-cleaning industries in the states allotted to Gerbe in the Gerbe-Wolf agreement of May 21, 1955, to wit, Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, Pennsylvania, New Jersey, Delaware, Maryland, West Virginia, Virginia, Florida and the District of Columbia. (PI. Ex. 16.)

7. The defendant Errich International Corporation (hereinafter called “Er-rich”) is a corporation of the State of New York, having its principal place of business in the City of New York, State of New York, within the Southern District of New York, which manufactures and sells packaging machines which are alleged to infringe the said Gerbe patent.

8. The defendant Manuel L. Ruder-man is president and treasurer of the defendant-corporation Errich and owns a substantial stock interest therein.

9. The additional defendant Clear-view Packaging Company (hereinafter called “Clearview”) is an Illinois corporation having its principal place of business in Chicago and is engaged in the business of making and selling bags. Plaintiffs Irving Wolf and Arthur Wolf are its controlling stockholders. Clear-view was made an additional party herein by stipulation and order entered thereon on January 12, 1957, jurisdiction of this court having been consented to by its president, Irving Wolf.

10. The Gerbe patent relates to the art of packaging machines and describes a machine for packaging articles; the particular article shown to be packaged thereby is a shirt, although the machine is and has been used by Tele-Sonic for the packaging of many articles such as popsicles, potato chips, loaves of bread and other items. The art goes back at least to 1924, as exemplified by the Colby patent No. 1,611,268, relating to the packaging of meats such as hams, and by the Anderson patent No. 2,355,500 in 1941 for packaging other articles such as confections like popsicles.

11. The Gerbe patent, which is stated to be an invention relating to apparatus for supporting and distending bags, consists of the following:

(a) A moveable support 18 for holding a stock of collapsed bags.

(b) A spring 21 to force the bags against a tongue.

(c) A tongue 16 located above the stack of bags.

(d) A pair of chutes 36 pivoted on vertical posts and urged towards one another at their forward ends by a spring 40 so that normally there is a wide opening between the chutes in which to receive the article which is being moved into the bag by an operator, causing the forward ends of the chutes to spread against the spring action into and against the sides of the bag which has been inflated by means of

(e) A fan 32 which blows air between the front ends of the chutes and over the tongue.

(f) A stop means or back stop 30 positioned beyond the ends of the collapsed bags. (See Gerbe patent, Pl. Ex. 2.)

12. The said Gerbe patent has eleven claims. Seven of these claims, to wit, 1, 2, 3, 4, 5, 6 and 8, are alleged to be infringing herein. Of these, 2, 3, 4, 5 and 6 are of the type known as dependent claims, all of which refer to and are dependent upon claim 1.

13. Claim No. 1 calls for three principal elements of the machine, as follows:

(1) “A tongue for engaging one side of a collapsed bag.”

(2) “An openable distending means having bag engaging ends for shaping the inside of the bag when opened.”

(3) “A support for said collapsed bag for holding a side of the bag stationary in filling position against the tongue and for holding the collapsed bag in proper position for filling with respect to the distending means.”

The distending means above referred to is further described as follows: “The said distending means being longitudinally fixed in position with respect to said tongue and laterally openable inside the bag while said bag is secured between said support and tongue.”

This claim does not limit the support to one for horizontal stacking of the bags. It does not refer to a spring for holding the support against the tongue; nor does it refer to a blower, without which a manual opening of the bag would be required.

14. The dependent claims are as follows:

(a) Claim 2 describes the distending means as comprising a pair of chute-like members having free ends positioned over the collapsed bag whereby when the bag is opened a portion of the said free ends will be positioned inside the bag.

(b) Claim 3 states that the distending means are normally spring biased to closed position over the collapsed bag.

(c) Claim 4 is worded as follows:

“The apparatus of claim 1, where- . in the distending means are pivotally mounted and having article engaging cam faces and pressure means secured to said distending means and operated by the pressure of the article for opening said distending means.”

(d) Claim 5 provides only that “the edge of the tongue is convexly curved over the collapsed bag to facilitate opening of the bag about the distending means.”

(e) Claim 6 provides that the space between the distending means, that is, the chutes, is of “a width equal to the human hand” so that the bag may be supported while being moved through the chutes.

15. Claim 8 calls for the following elements :

(a) “A movable support for holding a stack of collapsed bags.”

(b) “Means for inflating the top bag.”

(c) “A stop means positioned beyond the closed ends of the collapsed bags.”

(d) “A tongue positioned over the open ends of the collapsed bags and engaging the outside of the top bag of the stack.”

(e) “Means for applying pressure to the movable support.”

This claim specified a stop means “extending beyond the closed ends of the collapsed bags for a distance less than the distance to the end of the top bag in inflated position.”

16. Certain features of the Gerbe patent are anticipated in Patent 2,633,281, granted to M. B. Rasmusson (Deft. Ex. 1E), filed August 18, 1947 and issued March 31, 1953. The Rasmusson patent relates to a bagging device with pivotally mounted guide and spreader fingers for use in vertically bagging confections. This device contains each of the following elements:

(a) A tongue 18.

(b) A support in the form of a pendulum weight 12, by means of which the stack of bags are urged against the tongue.

(c) Spreader fingers 34, spring biased towards each other. These act as guides for the entering article; also as a distending means to spread the top of the bag apart and to hold it spread apart while the article descends into the bag.

(d) A blower (not shown in the figures) .

With respect to the spreader fingers, the Rasmusson patent states:

“The primary object of the invention is to provide a bagging device wherein an article passing to the bag actuates spreader elements for holding the top of the bag open and for guiding the article into the bag.

“Particularly the invention is directed to the provision of spreader elements which are automatically withdrawn to an initial out of way position away from the open top of the bag, and which are moved by the article passing to said bag so as to spread the top of the bag apart and hold it spread while the article descends into the bag.”

Haviland H. Platt, an engineering consultant called by the defendants, testified, and I so find, that the Rasmusson device could be converted from a vertical to a horizontal bagger by any competent designer using the ordinary skill expected of a mechanic. (SM 670-671.)

17. Features of the Gerbe patent are also anticipated in Patent 2,721,015, granted to John L. Canales, filed May 20, 1950, and issued October 18, 1955. (Deft. Ex. 1H.) In the Canales device, which provides for a plurality of units side by side,

(1) Collapsed bags stand vertically pressed forward by a support member which takes the form of a swinging weight 177 against a tongue 154.

(2) The article to be packaged passes through distending means in the form of attachable flexible bag opening fingers. 197 and 198, which, in turn, distend the opening in the bag, forming it to receive the article.

(3) An air blower inflates the bags. (SM 610-614.)

The flexible bag opening fingers referred to in (2) above are described in claim 26 of the Canales patent as follows:

“ * * * flexible resilient finger members of relatively soft compressible material mounted at the opposite sides of said chute adjacent its lower end and extending into said chute in downwardly converging relation for displacement by an article into the open top of said foremost bag to distend said bag for receipt of said article, said fingers being mounted and constructed to spring back into their position aforesaid in said chute upon release of said foremost bag.”

The Canales patent apparently contemplates the use of a resilient substance such as perhaps rubber for its finger members rather than spring biased metal members as in the Gerbe patent. However, this does not, in my opinion, diminish its effectiveness as controlling prior art.

18. For a number of years, commencing in 1940, Anderson Bros. Mfg. Co. (hereinafter called “Anderson”) manufactured and sold certain quantities of a packaging machine known as the Anderson Model 134 bagger. (See model, Deft. Ex. 13.) This Anderson Model 134 is of the vertical type wherein the popsicle, a comparatively small article, is dropped from a chute into an inflated bag.

19. In 1949, Anderson commenced to market a bagger as Anderson Model 184 and 184-1, which was adapted for use by bakers in packaging loaves of bread. The loaf was fed horizontally by hand instead of vertically by gravity. The Model 184 and 184-1 provided for horizontal stacking of bags. It has guide blades, a substantially horizontal spring platform or support for the bags and a tongue against which the bags are pressed. The earliest sale by Anderson apparently was May 27,1949, to Ray-Mor Baking Company of Salisbury, Maryland. (Deft. Ex. 26B.) Unlike plaintiff’s bagger, the guide blades on Anderson’s Model 184 and 184-1 bagger were not spring biased towards each other and did not extend into the bag. However, Walter E. Gunnersen, a vice-president of Anderson, testified by deposition that Anderson had manufactured a bagger with longer guide blades which did move inside the bag. (SM 511-512.)

20. In 1949, Anderson was requested by the Ambrosia Chocolate Co. of Milwaukee, Wisconsin (hereinafter called “Ambrosia”) to produce a machine for packaging a large bar of chocolate in a bag with an aecordian fold. Whereas Model 184 had been designed for the bakery trade, another machine (Model 184-4) was made and adapted to accommodate the particular product and bag as required by Ambrosia. The guides were modified to a greater length and with wider tips which reached into the bag. The distending fingers were pivoted, springs being mounted on a post for biasing the members to a closed position towards one another. A photograph of the Ambrosia machine (Deft. Ex. 28) was taken before the machine was shipped, and the original invoice dated January 30, 1950 (Deft. Ex. 26F) evidences the shipment.

Gunnersen testified, and I so find, that Anderson employees installed the machine and “got it to work” (SM 556-557); that after installation certain additional servicing was required (SM 559); and that Ambrosia sought to return the machine about a year after its delivery but Anderson refused to accept the return. (SM 556.)

21. The Anderson Model 184-4 machine, sold to Ambrosia, has all of the operative elements of Claim 1 of the Gerbe patent, to wit, a pair of pivoted distending guides, a pair of tongues for engaging the front of a collapsed bag near its mouth, and a spring urged support for the collapsed bags which presses the mouth of the top bag against the tongues. Furthermore, the bags are stacked horizontally and guides are swung into a bag held between the tongues and moved laterally against the side of the bag so as to distend the same. Additionally, the Ambrosia machine has springs for biasing the guides to closed position over a bag.

22. Claim 1 of the Gerbe patent is fully anticipated by the Anderson Model 184-4 machine sold to Ambrosia. It is in part anticipated by the Anderson 184 and 184-1 machines, which do not, however, have openable distending means with bag engaging ends as described in the Gerbe claim. It is in part anticipated by the Rasmusson (see Finding 16) and by the Canales (see Finding 17) patents, each of which contains openable distending means.

23. The so-called “chute-like” members for distending means described in Claim 2 of the Gerbe patent were anticipated in the following patents:

(1) Patent 1,611,268, filed May 23, 1924, issued December 21,1926, to H. W. Colby. (Deft. Ex. 1A.)

(2) Patent 2,685,995, filed December 4, 1950, issued August 10, 1954, to R. R. Fesser. (Deft. Ex. 1G.)

In the latter device, the chute-like members 161 and 162 are spring biased, there being a spring 166 on one chute and a cross linkage which causes the other chute to follow the motion of the first. (SM 626.)

24. Claim 3 of the Gerbe patent is anticipated by the Anderson bagger Model 184-4 and by the Rasmusson patent. (Deft. Ex. IE.) It is also substantially anticipated by the Canales patent. (Deft. Ex. 1H.)

25. Claim 4 of the Gerbe patent is likewise anticipated by the Anderson bagger Model 184-4 and by the Rasmusson patent. (Deft. Ex. IE.)

26. Claim 5 of the Gerbe patent, which provides for a convexly curved tongue, represents no substantial invention over the prior art as reflected in the Rasmusson (Deft. Ex. IE) and Canales (Deft. Ex. 1H) patents or in the Anderson Model 184, 184-1 and 184-4 machines. The tongue in each of the foregoing devices holds the bag in position for filling and functionally operates in the same way as does the tongue in the Gerbe machine. (SM 603.) While a convexly curved tongue may tend to conform to the shape of an inflated bag, which is not true of a flat tongue, I am not persuaded that this facilitates the opening of the bag about the distending means to any greater extent than a fiat tongue.

27. Claim 6, in reference to the space between the distending means or chutes being of the width equal to a human hand, is a triviality. In any event, this principle is present in Patent 2,640,638 of C. T. Nichols, filed May 17, 1949 and issued June 2, 1953. (Deft. Ex, IF; SM 605-606.)

28. The back stop referred to in Claim 8 of the Gerbe patent is an unessential element which in fact was not always used in the Gerbe machine.

The “means for applying pressure to the movable support,” referred to in said claim, is anticipated by Patent 2,685,995, filed on December 4, 1950 and issued to R. R. Feeser on August 10, 1954, which employs a horizontal support 190, spring pressed 192 against a tongue 186, where a horizontal rather than a vertical stacking is desired. (Deft. Ex. 1G, Fig. 11; SM 624-625.)

The “means for inflating the top bag,” referred to in Claim 8, namely a blower, is employed in and anticipated by many of the patents and machines heretofore discussed and represents no patentable invention by Gerbe.

29. Claims 2, 3, 4, 5, 6 and 8 of the Gerbe patent are each for trivial variances from Claim 1 and are obvious changes or adaptations well within the competence of a person having ordinary skill and knowledge in the art.

Discussion

Charles L. Mantell, a chemical engineering expert called by the plaintiffs, conceded that each of the features of the Gerbe patent might be found in the prior art. He maintained that the novelty of the Gerbe patent was in “The combination of elements and the order in which they function;” that “It gave a new com* bination which satisfied a need * (SM 1215-1216.) According to Mantell, the novelty of the combination of elements in the Gerbe patent arose from “The fact that they were arranged on a flat machine, that they had distendable means.” (SM 1216.) However, he conceded that there were “flat machines” and “distendable means” before. (SM 1216.)

The test of novelty applicable to combination patents was stated in Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 1950, 340 U.S. 147, 71 S.Ct. 127, 95 L.Ed. 162, as follows:

“ * # * create the erroneous impression that the validity of the Gerbe patent had been passed upon in an adversary proceeding, whereas in fact none of the actions com■menced on the Gerbe patent had resulted in a litigated determination of validity.

58. The defendants have failed to prove that any other letters, advertisements, notices or signs employed by Wolf, •Gerbe or Clearview were sent in bad faith with an intent to injure the defendants’ business.

59. The defendants have failed to prove any conspiracy on the part of the ■plaintiffs and the additional defendant to monopolize the sale of bags to various industries.

60. The defendants have failed to prove any misuse of the Gerbe patent by Wolf or Clearview arising out of their sale of bags to the laundry and dry cleaning trades or the leasing out by them of bagging machines to purchasers of their bags.

Discussion

As to the defendants’ claim of unfair competition allegedly arising out of the various infringement notices in the form of circulars, letters, advertisements and signs employed by the plaintiffs and the additional defendant, the law is clear that it is not an actionable wrong for one having rights under a patent to assert in good faith, to whomsoever he will, that he intends to enforce what he conceives to be his legal rights. This is so even though he is mistaken concerning his rights. Kaplan v. Helenhart Novelty Corporation, 2 Cir., 1950, 182 F.2d 311; Bechik Products, Inc. v. Flexible Products, Inc., 2 Cir., 1955, 225 F.2d 603; Zoomar, Inc. v. Paillard Products, Inc., D.C.S.D.N.Y.1957, 152 F. Supp. 328, affirmed 2 Cir., 258 F.2d 527.

With the exception of the sign •displayed by Tele-Sonic at the Chicago National Packaging Show and the Atlantic City Knitting Arts Show in April 1955, and the infringement notices dated October 10, 1956, sent on behalf of the additional defendant Clearview Packaging Company to various concerns in Milwaukee, Wisconsin (Deft. Exhibits 46, 50, 51A; Findings 36, 55, 56), I have •concluded that the plaintiffs and the additional defendant acted in good faith to protect their interests in the Gerbe patent against those whom they believed to be infringers. It is immaterial that subsequent events have proven the plaintiffs and the additional defendant to be in error concerning the validity of their patent. Similarly, it is of no legal consequence that the defendants’ business may in fact have been injured by infringement notices sent in good faith. Under these circumstances, no liability on the theory of unfair competition or otherwise can be predicated upon such infringement notices.

However, in my opinion, TeleSonic is liable to the defendants for any damages which may have been sustained by them as a result of the display at the Chicago and Atlantic City trade shows of the sign referred to in Finding 36. Judge Edward J. Dimock of this court, referring to this sign in his memorandum decision of August 9, 1955, stated:

“Defendant was referred to as ‘a fraudulent copier of the patent.’ These are strong words and they are not to be found in plaintiffs’ complaint. They convey charges that go far beyond a charge that defendants’ device is an infringement of plaintiffs’ [patent]. Charges of malice and fraud are no part of a legitimate notice of claim of infringement. An unadorned notice is sufficient warning. The terms of reproach can have no purpose other than intimidation.”

I have concluded that this sign was displayed in bad faith with intent to injure the defendants’ business. Its use, therefore, constituted an actionable wrong.

Similarly, I have concluded that Clear-view is liable to the defendants for any damages which may have been sustained by them as a result of the October 10, 1956, infringement notices sent to various firms in Milwaukee, Wisconsin. (Findings 55, 56.) These letters were obviously designed to create the impression that the validity of the Gerbe patent had been successfully litigated, whereas in fact none of the actions commenced or. the Gerbe patent had resulted in a judicial determination of validity. At least one of the concerns to whom this notice was sent distributed machines manufactured by the defendants. Clearview’s attorney was informed of this by letter dated October 18, 1956 (Deft. Ex. 51B) but no attempt was made to correct the erroneous impression conveyed by the notice.

Misleading infringement notices of this sort are inconsistent with good faith on the part of the sender and have been held to constitute a species of unfair competition. See Price-Hollister Co. v. Warford Corporation, D.C.S.D.N.Y.1926, 18 F.2d 129; Remington Research, Inc. v. Modern Aide, Inc., D.C.S.D.N.Y.1959, 170 F.Supp. 7.

Accordingly, the defendants are entitled to a further hearing in this matter, limited solely to the issue of whether and to what extent their business was injured by the aforesaid sign and notices.

The defendants have failed to establish any conspiracy by the plaintiffs and the additional defendant to monopolize the sale of bags in the laundry and dry cleaning trades, nor, with the exceptions noted above, has any other misuse of the Gerbe patent by the plaintiffs or the additional defendant been shown. In my opinion, the various agreements between the plaintiffs and the additional defendant pertaining to the apportionment of rights under the Gerbe patent and the various policies adopted by Wolf and Clearview for supplying bag-distending devices in the laundry and dry cleaning trades were motivated by valid and lawful business considerations of the respective parties rather than by any scheme to monopolize or to lessen competition among bag distributors in the Mid-West or elsewhere.

While Title 35 United States Code Annotated, § 285, permits this court “in exceptional cases” to award reasonable attorney fees to the prevailing party in an action such as this, I do not believe that such an award would be proper here. It does not appear that this action was commenced in bad faith, that the action was vexatious or that the tactics of the plaintiffs and the additional defendant during the course of this litigation were unfair.

Conclusions of Law

1. The court has jurisdiction of the parties and subject matter of this cause.

2. Claims 1, 2, 3, 4, 5, 6 and 8 of the Gerbe patent No. 2,673,016 are void for anticipation by and lack of invention over the prior art.

3. The defendants are entitled to judgment dismissing the complaint with costs but without attorney fees.

4. The defendants under their first counterclaim are entitled to judgment declaring claims 1 through 6 and 8 of the Gerbe patent No. 2,673,016 invalid.

5. The defendants under their third counterclaim are entitled (a) to recover from Tele-Sonic such damages, if any, as they may have sustained by reason of the display of the sign, referred to in Finding 36 hereof; and (b) to recover from Clearview such damages, if any, as they may have sustained as a result of the letters dated October 10, 1956, referred to in Findings 55 and 56 hereof.

6. Except to the extent heretofore expressly provided, defendants’ counterclaims should be dismissed.

The parties are directed to appear on April 1, 1959, at 10:30 A.M. in room 1306 for further proceedings in accordance with this opinion.