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

SOPER, Circuit Judge

(dissenting).

When Hoeltke, the patentee, first informed the representatives of. the Kemp Manufacturing Company that he had made an invention that would be of value in the manufacture of gas appliances, they requested him to apply for a patent before he divulged to them the nature of his discovery. It is difficult to reconcile this conduct with the theory that these men were prone to dishonesty, and willing to appropriate to their own use the property of another. Their subsequent conduct in the interference proceeding is even more significant. They then knew not only the nature of the Hoeltke device, but also that he had made it between April 24, 1928, and December 4, 1928. With this knowledge in their possession they asserted that they had first embodied their invention on April 1, 1929. This circumstance alone seems well-nigh sufficient to dispel the charge of fraud; for if they were then engaged in a conspiracy to purloin the Hoeltke invention, it is hard to understand why they should have chosen a false date later than Hoeltke’s discovery, as we are asked to believe, rather than an earlier one. They were not inexperienced in patent matters, and we cannot suppose that they were devoid of average intelligence, for during two decades they had successfully conducted a business founded sixty years ago, and had supplied the industry with gas appliances of such efficiency as to command a price higher than their competitors.

A third important circumstance, found as a fact by the District Judge, and abundantly established by uncontradicted evidence, demonstrates that long before Hoeltke made his disclosure to the defendant, its employees had conceived the idea of an automatic fire check. Pattern makers, connected with an independent business, refreshing their recollection from their books, showed that in May, 1926, they had made patterns from drawings of an automatic fire check designed by Van Horn, an employee of the business for fifty years. A model thereof was made during the trial and was said by Hoeltke’s attorney in argument in this court to be an infringement of the Hoeltke patent. It is not suggested that priority over Hoeltke is established by these facts, for the delay of the defendant before and after 1926 must be considered. See Automatic Weighing Machine Co. v. Pneumatic Scale Corp. (C. C. A.) 166 F. 288, 300 . But when due weight is accorded to these important circumstances, it is more reasonable to believe that the parties to the cause independently conceived and completed automatic fire checks rather than to find that reputable men had been guilty of dishonesty and false swearing.. It is true that *925 when a patent is attacked on the ground that it was anticipated by an unpatented device, whose existence and use are proved only by oral testimony, the proof must be clear, satisfactory, and beyond a reasonable doubt. But it is not the rule that when a patentee charges that an infringer has secured possession of the patented device by fraud prior to the issuance of the patent, the person accused must prove his innocence beyond a reasonable doubt. On the contrary, the law never presumes fraud, and the burden devolves upon him who alleges it to show it by clear and convincing proof. Lalone v. United States, 164 U.S. 255, 257 , 17 S.Ct. 74 , 41 L.Ed. 425 ; U. S. v. American Bell Tel. Co., 167 U.S. 224, 241 , 17 S. Ct. 809 , 42 L.Ed. 144 . Even if the rale were otherwise, it would still be unreasonable in the pending case to conclude that the first idea of the invention came to the defendant from Hoeltke, in view of the evidence that its employees were in possession of the idea years before. One who is familiar with the numerous interference proceedings in the United States Patent Office is not surprised when the evidence shows that two men, working independently of one another upon a mechanical problem, have found the same solution.

The delay on the part of the defendant in putting its idea into commercial practice is satisfactorily explained. While there had been backfires in the defendant’s apparatus and in the appliances of other manufacturers, they had been neither so numerous nor so destructive as to be of great importance. Since 1901, the Kemp devices, equipped with the backfire preventer, had been successfully used, and since 1911, appliances equipped with backfire preventers and with hand-operated fire checks had not only been successfully and safely used, but had received the approval of the Fire Underwriters. The fire checks were so constructed that a flash back would be retarded from entering the gas pipe for a considerable interval of time, so that with the use of odorous paint, the danger could be discovered by the attending workmen; and if the fire succeeded in making its way back to the fire preventer, its automatic arrangement was such that the bottom of the device, purposely made weak and unsubstantial, would give way and prevent the access of the fire to the gas supply. Under these circumstances, the need for an automatic fire check was not considered imperative, and the improvement was delayed until the defendant began to manufacture gas ovens, in which it was necessary to install fire checks that were not accessible to the workmen. It was then that efforts were made to develop a practical and efficient automatic fire check which culminated in the device conceived and manufactured in the defendant’s plant.

Emphasis is placed upon the fact that when the defendant received for the first time the Hoeltke invention on April 27, 1929, it sent a letter of May 15, 1929, in reply, in which, without disclosing the work which it had done along the same lines in its own factory, it expressed the opinion that the Hoeltke device was not patentable, since it merely incorporated the principles of the old Kemp fire preventer. It is suggested that fraud must be inferred from this concealment. The fact that a well-established concern did not choose to divulge what it was doing in its own factory to an outsider seems a slender basis for an inference of crime. Moreover, the evidence clearly shows that the defendant did not conceal that it was making an automatic device, for beginning in the month of September, 1929, it caused advertisements of its automatic fire check to be inserted in the trade journals and offered them for sale. It is also suggested, as evidence of criminality, that the defendant first offered $3,500 and then $5,000 to settle the controversy. The great delay and expense attendant upon patent litigation are well known to all experienced persons; and heretofore it has not been supposed that an offer to compromise a disputed claim was evidence of liability. It has never been received as evidence of fraud. Hoeltke on his part demanded $75,000 at one time, and $100,000 at another.

The filing of the application for the Van Horn patent, the subsequent participation in the interference proceedings, the failure to follow them up, and the abandonment of the application for the patent were done upon the advice of counsel. Unless one starts with a presumption of fraud, these actions have no tendency to show fraud in view of the circumstances already discussed; for they merely show that the applicants for the Van Horn patent adopted the usual way to raise the question of patentability of the Hoeltke device in the Patent Office. The fact that the defendant, through its employee, made application for a patent on a device which may involve the same principles as that of *926 the Hoeltke structure, does not preclude the defendant from alleging now that the Hoeltke device lacks invention. The Supreme Court has recently reiterated the rule that there is no estoppel under such circumstances. See Paramount Publix Corp. v. American Tri-Ergon Corp., 55 S. Ct. 449, 455 , 79 L. Ed. 997 , where it is said: “However inconsistent this early attempt to procure a patent may be with petitioner’s present contention of its invalidity for want of invention, this Court has long recognized that such inconsistency affords no basis for an estoppel, nor precludes the court from relieving the alleged infringer and the public from the asserted monopoly when there is no invention. Haughey v. Lee, 151 U. S. 282, 285 , 14 S. Ct. 331 , 38 L. Ed. 162 .”

It may be added that Hoeltke laid his charges against the defendant and its representatives before the Department of Justice of the United States and endeavored to secure a prosecution for crime. Government agents visited the defendant’s factory and made an examination, and, as the result, the idea of criminal prosecution was abandoned.

A finding of fraud cannot be made in this case unless the conclusion is reached that the defendant’s witnesses deliberately gave false testimony. Hence it is of the utmost importance to observe the rule repeatedly laid down by this and other courts that the findings of the trial judge in an equity case, who had the opportunity of seeing the witnesses, hearing their story, judging their appearance, manner, and credibility on the question of fact, is entitled to great weight, and will not be set aside unless clearly wrong. Standard Transportation Co. v. Wood Towing Corp. (C. C. A.) 64 F.(2d) 282 . The District Judge heard all of the defendant’s important witnesses in person, except one. The record shows that he proceeded with great care and deliberation during the taking of the testimony and afterwards, hearing argument on more than one occasion, and receiving a number of written briefs. His conclusions, even if the issue should be considered doubtful, should not be disregarded.

The question still remains as to whether Hoeltke’s device involved a patentable invention. It wás of narrow scope, for all that he did, as he said in a letter to his lawyer was to take the well-known fire check, consisting of a perforated refractory metal disc, a mat of copper wire gauze and a hand-operated valve, and make it automatic. He accomplished this very readily, as soon as the idea of an automatic valve occurred to him, by placing a fusible pin in front of the metal disc and connecting it by a lever to a spring valve so that when the fuse melted, the lever was released and the valve closed. The District Judge, taking into account that the same principle was involved in the Kemp fire preventer, properly held that it required merely the skill of a mechanic thus to alter the fire check by the use of familiar devices. It is a mistake to suppose that Hoeltke found that for which the art had been searching in vain, for the uncontradicted evidence shows that an equally serviceable structure was independently made in the defendant’s factory as soon as the need for it in a commercial sense was felt, and this evidence may reasonably be believed, since it merely proves that defendant’s experienced employees were also able to do that which Hoeltke so easily accomplished. The conclusion of the District Judge that the Hoeltke patent is void for lack of invention should be affirmed.