Petition — Mohasco Industries, Inc. v. Spound
Supreme Court brief1976
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— - —— —
MICHAEL RODAK, JR..CLERK
In the -
Supreme Court of the United States.
Ocroser Term, 1976.
no. %6-197
MOHASCO INDUSTRIES, INC., et At.,
PETITIONERS,
0.
ALBERT M. SPOUND er AL.,
RESPONDENTS.
Petition for Writ of Certiorari to the United States
Court of Appeals for the First Circuit.
Daviv Wo tr,
Georce L. GREENFIELD,
Wo tr, GREENFIELD & SAcKs,
185 Devonshire Street,
Boston, Massachusetts 02110.
(617) 426-6131
BATEMAN & SLADE, INC. BOSTON, MA.
Table of Contents.
Citations to opinions below
Jurisdiction
Questions presented
Statements under rule 33(2)(b)
Constitutional provisions involved
Statutory provisions involved
Federal rules of civil procedure involved
Statement of the case
The patent rights involved
The leasing agreement
Interpretation of the agreement by the courts below
Erroneous jury instructions
1. The level of skill for purposes of obviousness
2. The weakened presumption of patent validity
Other licenses by respondents
Reasons for granting the writ 10
Conclusion 22
Appendices follow p. 22
como mtmonoeoouwrnrt f® & OW WD
Table of Authorities Cited.
CASEs.
ADM Corp. v. Speedmaster Packaging Corp., 525 F. 2d
662 (3d Cir. 1975) 15
Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476
(1964) 11, 12
ii TABLE OF AUTHORITIES CITED.
Bolkcom v. Corborundum Co., 523 F. 2d 492 (6th Cir.
1975) 21
Brulotte v. Thys Co., U.S. 29 (1964) 10
Chicago Rawhide Mfg. Co. v. Crane Packing Co., 523
F. 2d 452 (7th Cir. 1975), cert. denied, 423 U.S.
1091 (1976) 20, 21
Cold Metal Process Co. v. E.W. Bliss Co., 285 F. 2d
231 (6th Cir. 1960), cert. denied, 366 U.S. 911 (1961) 12
Diamond International Corp. v. Maryland Fresh Eggs,
Inc., 523 F. 2d 113 (4th Cir. 1975) 15
Duplan Corp. v. Deering Milliken Research Corp., 522
F. 2d 809 (4th Cir. 1975) 12
Eisele v. St. Amour, 423 F. 2d 135 (6th Cir. 1970) 21
Flour City Architectural Metals v. Alpana Alum. Prod.,
Inc., 454 F. 2d 98 (8th Cir. 1972) 14
Graham v. John Deere Co., 383 U.S. 1 (1966) 13, 17, 18
Hadco Products, Inc. v. Walter Kidde & Co., 462 F. 2d
1265 (3d Cir. 1972), cert. denied, 409 U.S. 1023
(1972) 20
Henry Mfg. Co., Inc. v. Commercial Filters Corp., 489
F. 2d 1008 (7th Cir. 1972) 21
Hensley Equipment Co., Inc. v. Esco Corp., 375 F. 2d
432 (9th Cir. 1967) 14
Kolene Corp. v. Motor City Metal Treating, Inc., 440
F. 2d 77 (6th Cir. 1971), cert. denied, 404 U.S. 886
(1971) 14
L & A Products, Inc. v. Britt Tech Corp., 365 F. 2d
83 (8th Cir. 1966) 19
TABLE OF AUTHORITIES CITED. iii
Laser Alignment, Inc. v. Woodruff & Sons, Inc., 491
F. 2d 866 (7th Cir. 1974), cert. denied, 419 U.S.
874 (1974) 19
Layne-New York Co., Inc. v. Allied Asphalt Co., Inc.,
501 F. 2d 405 (3d Cir. 1974), cert. denied, 421 U.S.
914 (1975) 15
Lear, Inc. v. Adkins, 395 U.S. 653 (1969) 10
Ling-Tempco-Vought, Inc. v. Kollsman Instrument
Corp., 372 F. 2d 263 (2d Cir. 1967) 19
Lorenz v. F.W. Woolworth Co., 305 F. 2d 102 (2d Cir.
1962) 19
M.B. Skinner Co. v. Continental Industries, Inc., 346
F. 2d 170 (19th Cir. 1965), cert. denied, 383 U.S.
934 (1966) 21
Moore v. Shultz, 491 F. 2d 294 (10th Cir. 1974), cert.
denied, 419 U.S. 930 (1974) 15, 19
Motion Picture Patents Co. v. Universal Film Mfg. Co.,
243 U.S. 502 (1917) 10
Panther Pumps & Equipment Co., Inc. v. Hydrocraft,
Inc., 468 F. 2d 225 (7th Cir. 1972), cert. denied,
411 U.S. 965 (1973) 14, 17
Parker v. Motorola, Inc., 524 F. 2d 518 (5th Cir. 1975) 14
Pederson v. Stuart-Warner Corp., ___ F. 2d ___._ (7th
Cir. 6/23/76) 13, 14
Purer & Co. v. Aktiebolaget Addo, 410 F. 2d 871 (9th
Cir. 1969), cert. denied, 396 U.S. 834 (1969) 19
Reeves Brothers, Inc. v. U.S. Laminating Corp., 417 F.
2d 869 (2d Cir. 1969) 20
iv ‘TABLE OF AUTHORITIES CITED.
Sakraida v. Ag Pro, Inc., 96 S. Ct. 1532 (1976) 16
Shanklin Corp. v. Springfield Photo Mount Co., 521 F.
2d 609 (Ist Cir. 1975) 15
Shaw v. E.B. & A.C. Whiting Co. 417 F. 2d 1097
(2d Cir. 1969), cert. denied, 397 U.S. 1076 (1970) 14, 21
Sperberg v. Goodyear Tire & Rubber Co., 519 F. 2d
708 (6th Cir. 1975), cert. denied, 423 U.S. 987 (1975) 20
Spound et al. v. Action Industries, Inc., Civil No. ‘/4-C-
6-L, W.D. Va. 1974 13n
Spound et al. v. Berkline Corporation et al., Civil No.
73-317M, D. Mass. 1973 13n
Tights v. Acme-McCrary Corp. ___. F. 2d _____ (4th
Cir. 7/12/76) 13, 15
Trio Process Corp. v. L. Goldstein’s Sons, Inc., 461
F. 2d 66 (3d Cir. 1972), cert. denied, 409 U.S. 997
(1972) 19
Triumph Hosiery Mills, Inc. v. Alamance Industries,
Inc., 299 F. 2d 793 (4th Cir. 1962), cert. denied,
370 U.S. 924 (1962) 19
Turzillo v. P & Z Mergentime, 532 F. 2d 1393 (D.C.
Cir. 1976) 15
Van Gorp Mfg., Inc. v. Townley Industrial Plastics,
Inc., 464 F. 2d 16 (5th Cir. 1972) 19
Westinghouse Electric Corp. v. Titanium Metals Corp.
of America, 454 F. 2d 515 (9th Cir. 1971), cert.
denied, 407 U.S. 911 (1972) 21
TABLE OF AUTHORITIES CITED.
Williamson-Dickie Mfg. Co. v. Hortex, Inc., 504 F. 2d
983 (5th Cir. 1974)
20
Zenith Radio Corp. v. Hazeltine Research, Inc., 395
U.S. 100 (1969)
STATUTES.
United States Constitution
Article 1, § 8
Fifth Amendment
28 U.S.C.
§ 451
§ 1254(1)
§ 1331(a)
§ 1332(a)
§ 2403
35 U.S.C.
§ 102
§ 103
§ 282
§ 284
MISCELLANEOUS.
Federal Rules of Civil Procedure
Rule 8(a)
Rule 8(f)
Rule 52(a)
Rule 54(c)
10
~ >
oa aw w&w
In the
Supreme Court of the United States.
Ocroser Term, 1976.
No.
MOHASCO INDUSTRIES, INC., er Av.,
PETITIONERS,
ov.
ALBERT M. SPOUND er At.,
RESPONDENTS.
Petition for Writ of Certiorari to the United States
Court of Appeals for the First Circuit.
Petitioners Mohasco Industries, Inc., Super Sagless Spring
Corporation, and Futorian Corporation pray that a writ of
certiorari be issued to review the judgment of the United
States Court of Appeals for the First Circuit in Civil Action
No. 75-1385 entered on April 16, 1976.
2
Citations to Opinions Below.
The opinion of the District Court (CA 124)' is reported in
186 USPQ 183 and is printed in Appendix B, infra, p. 12a.
The opinion of the Court of Appeals, printed in Appendix Cl,
infra, p. 29a, is reported as amended in 534 F. 2d 404, 190
USPQ 1; the addendum to the opinion of the Court of
Appeals, printed in Appendix C2, infra, p. 4la, is unreported;
the Order on Petition for Rehearing, amending the opinion of
the Court of Appeals is printed in Appendix C3 hereto, infra,
p. 53a; the Memorandum on Petition for Rehearing of the
Court of Appeals is printed in Appendix C3, infra, p. 50a,
and is unreported.
Jurisdiction.
The judgment of the Court of Appeals was dated and
entered on April 16, 1976. A petition for rehearing filed April
30, 1976, was denied on May 13, 1976 (App. C3, infra, p.
53a). The jurisdiction of this Court is invoked under 28
U.S.C. § 1254(1).
Questions Presented.
The questions presented are:
(1) Whether the policy established by this Court which
allows patent licensees to challenge the validity of a licensed
patent is subverted by a damage award that is almost four
times the royalty established in the patent license.
~'“CA” refers to the Consolidated Appendix; “Tr.” refers to Designated
Portions of the Transcript; “Ex.” refers to the Volumes of Exhibits and is
followed by the exhibit number and page. All are of record on appeal.
3
(2) Whether a licensee who enters into an agreement to
pay royalties under a pending patent application can be re-
quired to continue to pay royalties when that patent appli-
cation is abandoned.
(3) Whether a jury may award as damages for patent in-
fringement a sum nearly four times greater than any royalty or
income the respondents could have received had petitioners
not infringed respondents’ patent.
(4) Whether the obviousness of a patent is properly treated
solely as a fact issue for a jury, or should be independently
reviewed as a matter of law against constitutional standards.
(5) Whether it was error for the Court of Appeals:
(a) to refuse to allow the jury to determine the level
of skill against which obviousness was to be measured;
(b) to hold that petitioners had a heavy, rather than
an ordinary burden of proof in establishing the invalidity
of a patent; and
(c) to hold that it was not necessary to instruct the
jury that the presumption of patent validity is weakened
or destroyed when the Patent Office fails to consider the
most relevant prior art.
Statements under Rule 33(2)(b).
Since the proceeding draws into question the constitution-
ality of 35 U.S.C. § 103 as construed by the Court of Appeals,
an Act of Congress affecting the public interest, and since
neither the United States nor any agency, officer or employee
thereof is a party, it is noted that 28 U.S.C. § 2403 may be
applicable.
No court of the United States as defined by 28 U.S.C. § 451
has, pursuant to 28 U.S.C. § 2403, certified to the Attorney
General the fact that the constitutionality of such Act of
Congress has been drawn into question.
4
Constitutional Provisions Involved.
The Congress shall have Power . . . To promote the Progress
of Science and useful Arts, by securing for limited Times to
Authors and Inventors the exclusive Right to their respective
Writings and Discoveries. United States Constitution, art. 1,
§ 8.
No person shall . . . be deprived of life, liberty, or property,
without due process of law. . . . United States Constitution,
amend. V.
Statutory Provisions Involved.
The statutory provisions involved are 35 U.S.C. §§ 102, 103,
282, and 284 of the patent laws. These laws may be found in
volume 7 of the United States Code (1958 edition) at the fol-
lowing pages: § 102, p. 5979; § 103, p. 5980; § 282, p. 6001;
and § 284, p. 6002. They are printed insofar as pertinent in
Appendix D, infra, p. 55a.
Federal Rules of Civil Procedure Involved.
The Federal Rules of Civil Procedure involved are Rule 8(a)
and (f), Rule 52(a), and Rule 54(c). These rules may be
found in volume 6 of the United States Code (1958 edition) at
the following pages: 8(a) and (f), p. 5135; 52(a), p. 5170; and
SA(c), p. 5173. They are printed, insofar as pertinent, in
Appendix D, infra, p. 57a.
5
Statement of the Case.
The basis for jurisdiction in the court of first instance was
diversity of citizenship under 28 U.S.C. § 1332(a) and the
existence of a federal question under 28 U.S.C. § 1331(a).
Petitioners are New York corporations and respondents are citi-
zens of Massachusetts and California. The amount in contro-
versy exceeds $1,500,000.
Respondents, claiming a jury trial, sued petitioners for
royalties under a licensing agreement covering a patent appli-
cation and five issued patents and, alternatively, for infringe-
ment of the Spound/Martin ’992 and '374 patents licensed by
that agreement.* Prior to trial, respondents purported to
terminate the licensing agreement for nonpayment of royalties.
The case was tried on the basis of the enforceability of the
licensing agreement until the purported termination, and
thereafter for damages for patent infringement of the "992 and
’374 patents. The case was submitted to a jury on 17 special
verdict interrogatories, which it answered favorably to re-
spondents on the agreement and patent issues.
The District Court subsequently entered judgment for
respondents on the licensing agreement to the date of its
purported termination, and on the infringement claims under
the ’992 patent after termination. The District Court held the
’374 patent invalid for double patenting.
* The licensing agreement, consisting of a document entitled “Agreement”
and two letters, is printed in Appendix A hereto, infra, p. la. The parties
agreed and the courts below found (App. C2, infra, p. 42a) that these three
documents together constituted one integrated document which we refer to
herein as the licensing agreement.
6
THE Patent Ricuts INVOLVED.
The ‘992 and °374 patents were both directed to an up-
holstered reclining chair in which a headrest concealed in the
chair back moves to an elevated position above the back when
the chair is moved from an upright to a reclining position. The
headrest is elevated by a linkage mechanism having a lost
motion function which allows the chair to continue its reclin-
ing motion after the headrest is elevated (Tr. 105; App. E,
infra, p. 59a).
The prior art Spound '347 patent related to the same subject
matter as the "992 and °374 patents, except that the linkage
mechanism did not permit the chair to continue to recline
after the headrest was fully elevated. (Ex. S, p. 498; App.
Cl, infra, p. 36a.) A linkage mechanism that did permit such
a chair to continue to recline after a footrest was fully ex-
tended was in the prior art (Ex. EE, p. 524). Also, the basic
idea of an elevatable headrest in a reclining chair is very old,
dating back to the 19th century (Ex. E, p. 425).
The licensed patent application (the “’402 application”)
principally added a latch to the '374 mechanism to prevent
accidental depression of the headrest and an improved linkage
mechanism, but the claims as originally filed improperly
claimed the whole concept of a reclining chair with a pop-up
headrest (App. C2, infra, p. 47a). The 402 application was
finally rejected by the Patent Office and was thereafter
abandoned (Ex. 22, p. 113).
THE LICENSING AGREEMENT.
The licensing agreement, which was entered into shortly
after the ‘402 application was filed, granted a license to peti-
tioners under the '402 application and under five issued patents
7
including the "992 patent, the "374 patent and the °347 patent.
The agreement expressly defined the licensed “Invention” as
the improvement defined in the "402 application and required
payment of $1.00 for each chair sold that incorporated that
“Invention.” It also gave petitioners the right “without pay-
ment therefor . . . to make, use and sell the inventions em-
bodied in . . .” the issued patents also licensed. A further
provision gave respondents the option to cancel the agreement
if the payment for any year was less than $10,000.
INTERPRETATION OF THE AGREEMENT BY THE Courts BELOw.
A key issue at trial and on appeal related to the termination
of the licensing agreement by respondents. Petitioners had
contended that the $1.00 per unit royalty called for by that
agreement was payable only as to the “Invention” embodied
in the ‘402 application, and that the rejection of that applica-
tion by the Patent Office rendered such royalty payment unen-
forceable with the same effect as though a patent had issued
and had been declared invalid. The District Court ruled,
however, that the licensing agreement was ambiguous as to
the scope of the “Invention” licensed under the agreement,
and admitted parol evidence with regard to that issue.
As a result, the jury found that the licensed “Invention”
comprised all five issued patents and the '402 patent applica.
tion, and therefore the licensing agreement had been properly
terminated by respondents because of nonpayment of a $1.00
per unit royalty for use of the “Invention” as so defined (App.
B, infra, p. 25a). The jury also determined that $3.75 per
chair was a “reasonable royalty” for infringement of the "992
and 374 patents following such termination (App. B, infra, p.
27a).
The Court of Appeals, however, found that the licensing
agreement was not ambiguous, and that it clearly and plainly
8
called for payment of a $1.00 per unit royalty only as to the
subject matter of the licensed '402 application as petitioners
had contended (App. C2, infra, p. 46a).
However, the Court of Appeals also found that a residue of
royalty-supporting consideration remained under the broad
claims of the "402 application despite its total rejection by
the Patent Office and its subsequent abandonment by respond-
ents. It also disregarded that respondents’ ’402 chair was dis-
continued because it did not work, and a chair became suc-
cessful only after extensive development work by petitioners
(Tr. pp. 78-80, 82; see also, Tr. pp. 44-46, 243). On the basis
of this unsupported and sua sponte interpretation of the
licensing agreement, the Court of Appeals affirmed that the
licensing agreement had been properly terminated by respond-
ents, although on a totally different ground from that of the
jury and District Court, and on a ground that the Court of
Appeals acknowledged had not been advanced by either side
in the entire course of the litigation (App. C2, infra, p. 49a).
ERRONEOUS JURY INSTRUCTIONS.
1. The Level of Skill for Purposes of Obviousness.
The District Court instructed the jury over petitioner's
objection that the level of skill for determining the obviousness
of the 992 and °374 patents was the “art of furniture manu-
facture and not . . . the art of mechanical engineering” (Tr.
1012, 1015, 1016).
The Court of Appeals found no error in this charge with
respect to the ‘992 patent because it concluded that the most
innovative aspect of the "992 patent was the concept of a chair
with an adjustable headrest having a lost motion (App. Cl,
infra, p. 36a). The Court of Appeals acknowledged that this
instruction was erroneous with respect to the °374 patent,
which differs from the ’992 patent only in the details of the
linkage mechanism (App. Cl, infra, p. 37a).
9
2. The Weakened Presumption of Patent Validity.
Petitioners requested instructions to the effect that the pre-
sumption of validity under 35 U.S.C. § 282 was weakened as
to the '992 patent because relevant prior art was not con-
sidered by the Patent Office in issuing that patent (CA 105-
106). The District Court failed to give these requested in-
structions, to which failure petitioner duly objected (Tr. 1017).
The Court of Appeals found no error in this failure, holding
that a “. . . heavy presumption . . . normally attaches to
Patent Office decisions. . . .” It concluded that since the
District Court did not characterize petitioners’ normal burden
of proof as a heavy burden in its charge, it was not necessary
to instruct the jury that the usual presumption of patent valid-
ity was weakened because relevant prior art was not con-
sidered by the Patent Office (App. C3, infra, p. 5la).
OTHER LICENSES BY RESPONDENTS.
Four months after termination of petitioner.’ license and
before trial, the "992 patent, together with the subsequently
invalidated '374 patent and two cther related patents, was
exclusively licensed to Flexsteel Industries, Inc., for a
purported royalty of $1.00 per chair (Ex. L, p. 480). No evi-
dence was offered by respondents that the amount of royalty
they were able to negotiate with Flexsteel was reduced by the
pendency of this litigation. In fact, no evidence of any kind
was offered with respect to the negotiations between
respondents and Flexsteel. At the time the Filexsteel license
was granted, one of the petitioners had not yet commenced
manufacture.
10
Reasons for Granting the Writ.
(1) In Lear, Inc. v. Adkins, 395 U.S. 653 (1969), this
Court rejected the licensee estoppel doctrine which had for
many years precluded licensees from challenging the validity
of patents. It rejected it on the principle that patent licensees
should be encouraged to challenge invalid patents so that the
yoke of unjustified patent monopolies would be removed from
the neck cf the public. This Court reasoned that it is the
licensee that has the greatest interest in challenging invalid
patents.
The result reached by the jury and affirmed by the Court of
Appeals below requires petitioners to pay $3.75 per chair,
rather than the $1.00 per chair required under the license.
This result, if it is allowed to stand as precedent, in fact would
create a “licensee risk doctrine” having the same chilling effect
on challengers to invalid patent monopolies as the rejected
licensee estoppel doctrine. The chilling effect arises because
the result below (a) awards respondents nearly four times more
than any amount petitioners would have had to pay had they
not challenged respondents’ patents, and (b) reconstructs the
licensing agreement adversely to petitioner in a manner not
contemplated by either party (App. C2, infra, p. 49a). This
result, as precedent, will have a negative effect on all licensees
considering such challenges in the future, and will severely
limit the Lear doctrine.
(2) This Court has consistently held that a patentee’s right
to royalties is limited to the subject matter in a valid, sub-
sisting patent. Lear, Inc. v. Adkins, supra; Brulotte v. Thys
Co., 379 U.S. 29 (1964); Zenith Radio Corp. v. Hazeltine
Research, Inc., 395 U.S. 100 (1969); Motion Picture Patents
Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917).
1]
The Court of Appeals found below, however, that the
abandoned °402 application defined a royalty bearing obliga-
tion (App. C2, infra, p. 47a). As a result, the Court of
Appeals required that petitioners pay a $1.00 per unit royalty.
In building toward its rationalization of the trial result,
the Court of Appeals has breathed life into a long abandoned
patent application, in effeet overruling the rejection of
that application pursuant to the prescribed examination pro-
cedures of the Patent Office required under the patent law.
Such actions are inconsistent with this Court’s well-established
policy of limiting royalties to inventions which have been
properly defined in valid patents.
In substance, the Court of Appeals created a patent.
(3) The Court of Appeals’ decision with respect to damages
is in conflict with decisions of this Court and with decisions of
other courts of appeals. This Court held, in Aro Mfg. Co. v.
Convertible Top Co., 377 U.S. 476, 507 (1964), under 35
U.S.C. § 284, that:
. . . the present statutory rule is that only ‘damages’
may be recovered. These have been defined by this
Court as ‘compensation for the pecuniary loss he [the
patentee] has suffered from the infringement, without
regard to the question whether the defendant has gained
or lost by his unlawful acts.’ Coupe v. Royer, 155 U.S.
565, 582. They have been said to constitute ‘the dif-
ference between his pecuniary condition after the infringe-
ment, and what his condition would have been if the
infringement had not occurred.” Yale Lock Mfg. Co. v.
Sargent, 117 U.S. 536, 552. The question to be asked in
determining damages is ‘how much had the Patent Hold-
er and Licensee suffered by the infringement. And that
12
question [is] primarily: had the Infringer not infringed,
what would Patent Holder-Licensee have made?’ Livesay
Window Co. v. Livesay Industries, Inc. supra, 251 F. 2d,
at 471.
Had petitioners not infringed either by continuing under their
licensing agreement or by taking a sublicense from Flexsteel,
or by leaving the market to Flexsteel, respondents would have
received a royalty of at most only $1.00 per chair. There-
fore, the award of $3.75 per chair by a jury is almost four
times the maximum pecuniary loss that could have been
suffered by respondents and, in fact, is almost four times more
than respondents ever sought in any arms length dealings.
Indeed, in 1970, the respondents, in referring to the $1.00
per chair royalty, wrote “. . . the royalty provided for in the
original Agreement was fair then and most certainly is fair
now... (Ex. 42, p. 214).
An award for patent infringement that is substantially in
excess of respondents’ damages is not only inconsistent with the
express holding of Aro, but also enhances the possibility that
owners of weak patents will seek jury trials in the hope of
windfall profits. Indeed, others in the industry have been
sued for infringement of the ’992 patent and presumably the
respondents will seek a $3.75 per chair royalty.
The Court of Appeals’ ruling in this case is also contrary to
decisions in other circuits which, consistent with the theory of
Aro, hold that a patentee cannot recover royalties in excess of
what he would receive from his exclusive licensee, whether the
patented device is made and sold by the exclusive licensee, a
sublicensee, or a nonlicensed infringer. Cold Metal Process Co.
v. E. W. Bliss Co., 285 F. 2d 231, 240-241 (6th Cir. 1960),
cert. denied, 366 U.S. 911 (1961); see also, Duplan Corp. v.
Deering Milliken Research Corp., 522 F. 2d 809, 815 (4th Cir.
1975).
13
(4) There is a clearly established conflict among all the
circuit courts as to whether obviousness of a patent is a matter
of law or fact, and as to the manner in which the issue of
obviousness is reviewable on appeal. Consequently the validity
of a patent is measured by different standards in different cir-
cuits. Since every circuit court has taken a position which is
in conflict with other circuits, the guidance of this Court is
required to assure a uniform standard of patentability. A re-
quest to resolve this conflict is not only made in this case, but
also, we understand, will shortly be made in two other jury
cases, Tights v. Acme-McCrary Corp. ___ F. 2d _____ (4th
Cir. 7/12/76) which reached the same result, and Pederson v.
Stuart-Warner Corp., _.. F. 2d ____ (7th Cir. 6/23/76)
which reached an opposite result.
This case presents an ideal opportunity for this Court to
resolve the conflict because it was tried to a jury where
the resolution of the issue was critical to the outcome of the
case. The outcome of this case is also important in the furni-
ture industry as respondents have charged at least six other
manufacturers with infringement of the ‘992 patent and have
instituted two additional suits.’
Graham v. John Deere Co., 383 U.S. 1 (1966), outlines the
test of patentability. In Graham, this Court stated:
. . . the scope and content of the prior art are to be
determined; differences between the prior art and the
claims at issue are to be ascertained; and the level of
ordinary skill in the pertinent art resolved. Against this
background, the obviousness or nonobviousness of the sub-
ject matter is determined. Id. at p. 17.
*Spound et al. v. Berkline Corporation et al., Civil No. 73-317M, D.
Mass. 1973 _; Spound et al. v. Action Industries, Inc., Civil No. 74-C-6-L,
W.D. Va. 1974.
14
The courts of appeal, however, have disagreed as to
whether this obviousness test is one of fact or law, and have
also disagreed as to the degree to which facts should be re-
viewed on appeal. In Flour City Architectural Metals v.
Alpana Alum. Prod., Inc., 454 F. 2d 98 (8th Cir. 1972), the
court recognized the reasons for this disagreement:
This language of the Supreme Court [in Graham]
serves as a rather precise guideline for the trial court, but
does not articulate with particularity a standard for our
appellate review. Although stating that ‘the ultimate
question of patentability is one of law,’ Graham does
not clarify whether the underlying ‘condition’ of non-
obviousness also calls for treatment as a question of law.
The Court, moreover, did not expressly overrule its earlier
precedents which indicate that obviousness is to be treat-
ed as a matter of fact, governed on appeal by the ‘clearly
erroneous’ rule. (Emphasis supplied.) Id. at p. 105.
The Courts of Appeals of the Second, Fifth, Sixth, Seventh,
Eighth, Ninth and D.C. Circuits hold that the question of
obviousness is a matter of law to be measured against a con-
stitutional standard. Shaw v. E.B. & A.C. Whiting Co., 417
F. 2d 1097 (2d Cir. 1969), cert. denied, 397 U.S. 1076 (1970);
Parker v. Motorola, Inc., 524 F. 2d 518 (5th Cir. 1975);
Kolene Corp. v. Motor City Metal Treating, Inc., 440 F. 2d
77 (6th Cir. 1971), cert. denied, 404 U.S. 886 (1971); Peder-
son v. Stuart-Warner Corp., ____ F. 2d __, (7th Cir. 6/23/
76); Panther Pumps & Equipment Co., Inc. v. Hydrocraft,
Inc., 468 F. 2d 225 (7th Cir. 1972), cert. denied, 411 U:S.
965 (1973); Flour City Architectural Metals v. Alpana Alum.
Prod., Inc., 454 F. 2d 98 (8th Cir. 1972); Hensley Equipment
Co., Inc. v. Esco Corp., 375 F. 2d 432 (9th Cir. 1967);
15
Turzillo v. P & Z Mergenitime, 532 F. 2d 1393 (D.C. Cir.
1976).
On the other hand, the Courts of Appeals for the First and
Tenth Circuits hold that the issue of obviousness is one of fact,
not to be overruled unless clearly erroneous under F.R.C.P.
52(a). Shanklin Corp. v. Springfield Photo Mount Co., 521
F. 2d 609 (Ist Cir. 1975); Moore v. Shultz, 491 F. 2d 294
(10th Cir. 1974), cert. denied, 419 U.S. 930 (1974).
The position of the Third Circuit is not clear. See, Layne-
New York Co., Inc. v. Allied Asphalt Co., Inc., 501 F. 2d 405
(3d Cir. 1974), cert. denied, 421 U.S. 914 (1975); ADM Corp.
v. Speedmaster Packaging Corp., 525 F. 2d 662 (3d Cir.
1975).
The Fourth Circuit appears to apply different standards for
jury and nonjury cases. In Diamond International Corp. v.
Maryland Fresh Eggs, Inc., 523 F. 2d 113 (4th Cir. 1975), the
court held obviousness was a question of law in a nonjury
case. However, in Tights, Inc. v. Acme-McCrary Corp.,
F.2d (4th Cir. 7/12/76), the court refused to disturb a
jury finding of nonobviousness because it was not clearly
erroneous as a matter of fact, even though it stated obviousness
was a matter of law.
In the present case, the District Court accepted the jury
finding of nonobviousness as a requirement that the patent be
held valid as a matter of law. The District Court held:
The Court is satisfied that the jury's finding of non-
obviousness in answer to question no. 18 fulfills the factual
requirements of a § 103 determination. Based upon the
jury’s findings, the Court concludes that patents "992 and
’374 are valid under the tests of § 103. (App. B, infra,
pp. 14a-15a.)
16
This action amounts, essentially, to a rubber-stamp approval
of the jury findings of nonobviousness.
The courts below should have independently reviewed the
evidence as this Court did in Sakraida v. Ag Pro, Inc., 96 S.
Ct. 1532 (1976), to determine if the constitutional standard
had been met. The ’992 patent was a combination in which
each element of the combination was old. A reclining chair
with a headrest automatically elevated by a linkage mechan-
ism was shown in the prior art "347 patent as well as many
other patents going back to 1892 (Ex. E, p. 425; Ex. V, p.
515). The lost motion concept was shown in the prior art
Fletcher reclining chair patent ’119 and in other mechanical
engineering art (Ex. EE, p. 524; App. B, infra, pp. 18a-19a).
The linkage mechanisms for producing the lost motion also
were in the prior art for perhaps one hundred years (App. B,
infra, pp. 18a-19a). Rather than carefully scrutinizing this
combination of elements as required by Sakraida, the Court of
Appeals said:
“Whether plaintiff achieved synergism, or new and
surprising result, or any other expression of the require-
ment involved in obviousness vel non, we believe was a
jury question.” (App. C3, infra, p. 52a.)
The Court of Appeals not only refused to carefully scrutinize
this combination patent, but actually considered a determina-
tion of validity as irrelevant. The Court of Appeals stated
that even if the ’992 patent was invalid for lack of invention,
the jury could have “transferred its conclusions” of nonobvi-
ousness to respondent's 347 patent (App. C3, infra, p. 52a).
* Since the '347 patent was not asserted against petitioners in the pleadings
because it was not infringed, this statement cannot be taken seriously.
However, if it is taken seriously, it raises a very significant due process ques-
tion because the case then turns on a patent which petitioners never had an
opportunity to challenge.
17
Since there are approximately 150 patent cases a year
decided on the issue of validity, this critical conflict should be
resolved. It is especially important to resolve it in jury trials,
because, if “obviousness” is to be determined solely by a jury,
it provides a loophole in the strict standard of patentability
established by Graham.
Indeed, the percentage of patent cases tried by a jury in the
past three years has almost doubled to 7% per cent from 4 per
cent in the three preceding years, which suggests an in-
creased recognition of this loophole.*
This Court should make it clear that the validity of patents
will be measured against constitutional standards, and that
invalid patents will be struck down as a matter of law. Re-
quiring a court to make a determination of validity as a mat-
ter of law, independent of the jury finding, will have the
effect of discouraging unnecessary jury trials, and will further
discourage forum shopping by patent litigants for circuits
which will not review jury findings, thus effecting an overall
saving of district court pretrial and trial time.
(5) This Court should delineate the boundaries within
which a district court’s instructions to a jury must be framed
in order to obtain simple justice ard uniformity in jury cases
involving validity of a patent. The necessary latitude per-
mitted trial courts in framing jury instructions (Panther Pumps
& Equipment Co., Inc. v. Hydrocraft, Inc., supra), coupled
with the lack of guidance by this Court, has resulted in con-
fusion and disparities between and within the various circuits.
The proceedings in the District Court and the Court of
Appeals exemplify this confusion and disparity, and this case
* Calculated from the Annual Report of the Director of the Administrative
Office of the United States Courts for the years 1970 to 1975 inclusive. We
also estimate from these reports that jury trials in late 1975 averaged 7 days
or 40 per cent more than the 5-day average for nonjury trials.
18
thus presents an excellent opportunity for this Court to provide
clarification and direction for the proper framing of instruc-
tions when patent validity is tried before a jury.
The courts below made three principal errors in jury in-
structions. First, the District Court did not permit the jury to
make all the factual determinations as prescribed by Graham
v. John Deere Co., supra. Second, the Court of Appeals
imposed upon the petitioner a heavy, rather than an ordinary,
burden of proof in establishing invalidity: Third, the District
Court failed to instruct the jury that the presumption of validi-
ty was affected by the failure of the Patent Office to con-
sider the most relevant prior art.
Graham specifically required that the “level of ordinary skill
in the pertinent art [be] resolved . . .” as one of “several basic
factual inquiries.” 383 U.S. at 17. There was ample support
in the record for the jury to determine that the level of skill
was that of a mechanical engineer. For example, the patent
claims specifically related to mechanicai linkages (App. E, in-
fra, pp. 68a-69a); the co-inventor with respondent Spound was
a mechanical engineer (Tr. 17, 226); the experts for both sides
were mechanical engineers (Tr. 437, 442, 443, 669); and both
testified that the problems solved were mechanical engineering
problems (Tr. 656, 674, 675). Therefore, petitioners were
clearly entitled to an instruction which allowed the jury to
determine whether or not the level of skill against which
obviousness was to be measured was that of a mechanical
engineer. The District Court refused such an instruction and
told the jury, over petitioners’ objections, that the level of skill
was that of a furniture designer (Tr. 1012, 1015). That
instruction usurped the jury fact-finding role and is inconsis-
tent with this Court’s holding in Graham v. John Deere Co.,
supra.
The Court of Appeals’ affirmance of the District Court's
instructions to the jury turned on its holding that the pre-
19
sumption of validity attaching to an issued patent is a “heavy”
rather than “ordinary” burden as is set forth in the statement
supra, p. 9).
The hn law states that a patent shall be presumed valid
(35 U.S.C. § 282; App. D, infra, p. 56a). In the twenty-four
years since the enactment of the new patent law, this Court
has never interpreted the nature of the presumption that
attaches to a patent, even though that presumption would
have been involved in nearly all the approximately 4,000
patent cases tried since the enactment of the statute.
In view of this lack of guidance and the silence of the
statute, the extent to which a patent is presumed valid has
varied, not only from circuit to circuit, but also within cir-
cuits. For example, the Third, Fifth, Seventh, Ninth, and
Tenth Circuits have required “clear and convincing” evidence
to overcome the presumption of the validity of a patent. Trio
Process Corp. v. L. Goldstein’s Sons, Inc., 461 F. 2d 66 (3d
Cir. 1972), cert. denied, 409 U.S. 997 (1972); Van Gorp
Mfg., Inc. v. Townley Industrial Plastics, Inc., 464 F. 2d 16
(5th Cir. 1972); Laser Alignment, Inc. v. Woodruff & Sons,
Inc., 491 F. 2d 866 (7th Cir. 1974), cert. denied, 419 U.S. 874
(1974); Purer & Co. v. Aktiebolaget Addo, 410 F. 2d 871 (9th
Cir. 1969), cert. denied, 396 U.S. 834 (1969); Moore v.
Shultz, 491 F. 2d 294 (10th Cir. 1974), cert. denied, 419 U.S.
930 (1974). The Fourth Circuit has stated the requirement as
a “generous preponderance of evidence,” Triumph Hosiery
Mills, Inc. v. Alamance Industries, Inc., 299 F. 2d 793 (4th
Cir. 1962), cert. denied, 370 U.S. 924 (1962), while the
Eighth Circuit has called for “substantial evidence,” L & A
Products, Inc. v. Britt Tech Corp., 365 F. 2d 83 (8th Cir.
1966). On the other hand, the Second Circuit has stated that
only a “slight” presumption of validity attaches to a patent.
Ling-Tempco-Vought, Inc. v. Kollsman Instrument Corp.,
372 F. 2d 263 (2d Cir. 1967); Lorenz v. F.W. Woolworth
20
Co., 305 F. 2d 102 (2d Cir. 1962); Reeves Brothers, Inc. v.
U.S. Laminating Corp., 417 F. 2d 869 (2d Cir. 1969). Some
circuits have dissected the presumption into procedural and
evidentiary aspects. Chicago Rawhide Mfg. Co. v. Crane
Packing Co., 523 F. 2d 452 (7th Cir. 1975), cert. denied, 423
U.S. 1091 (1976); Sperberg v. Goodyear Tire & Rubber Co.,
519 F. 2d 708 (6th Cir. 1975), cert. denied, 423 U.S. 987
(1975).
This case presents an ideal opportunity to consider the
problem because the Court of Appeals acknowledged that, if
only the usual burden of proof were required to overcome the
presumption of validity, reversal would have been in order
(App. C3, infra, p. 51a).
The District Court instructed the jury:
You must presume in reaching your answer to this
question that both the Spound ’992 and °374 patents are
valid patents. You must presume that for purposes of this
question, and that the differences between the inventions
patented and the prior art would not have been obvious
to a person having ordinary skill in furniture manufac-
turing at the time each invention was made. (Empha-
sis supplied.) (Tr. 1011.)
The District Court refused to give any additional instructions
specifically relating to prior art which was not considered by
the Pateni Office (CA 105-106; Tr. 1017). Therefore,
the charge of the District Court cannot be reconciled with
the position of many courts of appeals that relevant prior art
not considered by the Patent Office weakens or destroys
the presumption of validity. Hadco Products, Inc. v.
Walter Kidde & Co., 462 F. 2d 1265 (3d Cir. 1972), cert.
denied, 409 U.S. 1023 (1972); Williamson-Dickie Mfg. Co. v.
21
Hortex, Inc., 504 F. 2d 983 (5th Cir. 1974); Bolkcom v.
Carborundum Co., 523 F. 2d 492 (6th Cir. 1975); Chicago
Rawhide Mfg. Co. v. Crane Packing Co., supra; M.B.
Skinner Co. v. Continental Industries, Inc., 346 F. 2d 170
(10th Cir. 1965), cert. denied, 383 U.S. 934 (1966); all
holding the presumption is weakened. Shaw v. E.B. & A.C.
Whiting Co., supra; Eisele v. St. Amour, 423 F. 2d 135 (6th
Cir. 1970); Henry Mfg. Co., Inc. v. Commercial Filters
Corp., 489 F. 2d 1008 (7th Cir. 1972); Westinghouse Electric
Corp. v. Titanium Metals Corp. of America, 454 F. 2d 515
(9th Cir. 1971), cert. denied, 407 U.S 911 (1972); all holding
the presumption is destroyed.
Because the best prior art was not considered by the Patent
Office, because the jury was instructed to presume the patent
was valid, and because the courts below refused to consider
obviousness as a matter of law, the public has been saddled
with a patent monopoly without anyone ever impartially
measuring its validity against an objective constitutional
standard.
Inadequate jury instructions in a patent case, which re-
sult in a finding of patent validity, will frequently have
an industry-wide effect. A patent which has once been
-held valid is not likely to be challenged a second time.
This results in companies paying royalties or discontin-
uing manufacture without testing the patent. The costs are
eventually passed to the public without the patent ever being
adequately reviewed. In the present case, the ‘992 patent is
now the subject of additional suits by respondents against
others in the industry (see footnote 3, supra, p. 13).
In addition, non-uniform instructions to juries, particularly
when the jury decisions on obviousness are not reviewed as a
matter of law, encourage forum shopping by owners of weak
patents. The obligation to pay royalties should not depend
upon the circuit in which the trial takes place.
22
Conclusion.
For the foregoing reasons the petition for certiorari should
be granted.
Respectfully submitted,
DAVID WOLF,
GEORGE L. GREENFIELD,
WOLF, GREENFIELD & SACKS,
185 Devonshire Street,
Boston, Massachusetts 02110.
(617) 426-6131
Table of Contents.
Appendix A
Plaintiffs’ exhibit 17
Plaintiffs’ exhibit 18
Plaintiffs’ exhibit 19
Appendix B
Memorandum of United States District Court for
the District of Massachusetts
Special verdict of United States District Court for
the District of Massachusetts
Appendix Cl
Opinion of the United States Court of Appeals for
the First Circuit dated April 16, 1976
Appendix C2
Addendum to Opinion dated April 16, 1976
Appendix C3
Memorandum on Petition for Rehearing
Order on Petition for Rehearing
Appendix D
United States Code, Title 35
Federal Rules of Civil Procedure
Appendix E
4la
THis AGREEMENT made and entered into as of the 3lst day of
March, 1961, by and between ALbEent M. Spounp, of Welles-
ley, Norfolk County, Massachusetts, and JosepH Spounp and
Morris Loes, both of Leominster, Worcester County, Massa-
chusetts, hereinafter referred to as the “HoxLprers”, and SuPer
SAGLEss SPRING CoRPORATION, a New Jersey corporation having
a principal place of business in Bayonne, New Jersey, herein-
after referred to as the ‘ComPpaNny”,
Witnesseth :
Wueneas an application has been made by the Houpers in
the United States Patent Office on February 15, 1961, Serial
No. 89402, for a patent on an invention cunsisting of a head
rest hidden in the back of a chair which rises automatically
with accelerated action, hereinafter referred to as the “Inven-
tion”, and the Invention constitutes an improvement on
certain patents hereinafter described, and the Invention when
incorporated in a mechanism for use in a reclining chair con-
stitutes, for the purpose of this Agreement, an “Improved
Chair Fixture”; and
Wuenreas the Hotpers own the entire right, title and interest
in and to United States Patent No. 2884992, issued May 5,
1959, for Reclining Chair Head Rest Constructions, herein-
after referred to as the “basic patent”; and
Wueneas the Hopers own the entire right, title and interest
in and to the following United States patents: No. 2947347,
No. 2952303, No. 2958374 and No. 2975826; all relating to
reclining chair constructions, hereinafter referred to as “im-
provement patents”; and
2a
Wuereas the Company is desirous of obtaining from the
Hovpers a license under the Invention and under any patent
which may be issued on said application or for the Invention
to manufacture, use and sell the Invention throughout the
United States and all foreign countries, on the terms and con-
ditions hereinafter set forth;
Now, THererore, the parties hereto agree as follows:
1. The Hovpers hereby grant to the Company a license
under the Invention and under any patent which may be
issued on said application or for the Invention to manufacture,
use and sell the Invention throughout the United States and all
foreign countries. The Company shall have the further right
without payment therefor, but shall not be obligated, to
manufacture, use and sell the inventions embodied in the basic
patent and the improvement patents solely in connection with
the manufacture, use and sale of the Invention hereby li-
censed.
2. The Company agrees to pay to the Hoxpers for the
right to manufacture, sell and use the Invention an amount
equal to One (1) Dollar for each set of Improved Chair Fix-
tures sold and delivered or otherwise disposed of by the Com-
PANY into which the Invention is incorporated. Each such set
shall consist of that number of Improved Chair Fixtures used
in a single chair. Payment of said amounts due hereunder,
other than for use of Improved Chair Fixtures by the Com-
PANY itself, shall be made solely out of the proceeds collected
on account of the sale of each such set of Improved Chair
Fixtures.
The Company agrees that if the aggregate amount which
shall be due and payable hereunder shall be less than Ten
Thousand (10,000) Dollars for any twelve-month period
ending March 15, 1962, or for any subsequent twelve-month
period, then and in such event, the Hoxpers shall have the
3a
option to cancel this agreement upon sixty (60) days notice to
the Company in writing, unless during such sixty (60) day
period the Company shall pay to said Hopers the difference
between the amount otherwise due and payable hereunder for
such twelve-month period and Ten Thousand (10,000) Dol-
lars.
3. Within fifteen (15) days after the end of each month,
the Company will make written reports of the number of
Improved Chair Fixtures shipped and invoiced during the
month preceding the date of such report by the Company, and
the amount due the Ho.pers on account thereof. Payment of
said amount shall be made by the Company to the Hopers
within sixty (60) days after the end of such month.
Under this Agreement, seid Improved Chair Fixtures shall
be considered to be sold wher invoiced to Company's cus-
tomers, except that upon expiration of any Letters Patent
specifically -overing the Invention pursuant to said patent
application or upon any termination of this Agreement, all
shipments made on or prior to the day of such expiration or
termination which have not been billed out prior thereto shall
be considered as sold (and therefore subject to payments). Pay-
ments made on said articles which are returned by the custo-
mer and accepted by the Company for credit shall be credited
against payments to be made by the Company.
4. The Company agrees to keep records showing the sale of
Improved Chair Fixtures under the license herein granted in
sufficient detail to enable the amounts payable hereunder by
the Company to be determined, and further agrees to permit
its books and records to be examined from time to time to the
extent deemed necessary by the Ho.pers to verify the reports
provided for in paragraph 3 hereof, such examination to be
made at the expense of the Hotpers who shall be acceptable to
the Company, or by a certified public accountant appointed
by the Ho.pers.
4a
5. If the Company shall at any time default in the pay-
ment of any amounts due hereunder or the making of any
report hereunder, or shall commit any breach of any covenant
or agreement herein contained, or shall make any false report,
and shall fail to remedy any such default, breach, or report
within thirty (30) days after written notice thereof by, the
Hovpers, the Hotpers may, at their option, cancel this Agree-
ment and revest in themselves all right, title and interest in the
Invention and any patents relating thereto by notice in writing
to such effect; but such act shall not prejudice any cause of
action or claim of the Howpers accrued or to accrue on
account of any breach or default by the Company.
6. The obligations of the Company hereunder, including
the obligations to make reports and to pay amounts due here-
under, and the Houpers’ rights hereunder shall run in favor of
the heirs, successors, assigns or other legal representatives of
the Ho.pers.
7. The Hovpers hereby warrant that there exists no con-
dition, claim or other disability on account of which the
execution and performance of this Agreement by the Hopers
can be prohibited. They further warrant that the Invention
does not infringe on any other patent or invention and agree
that they will defend at their own expense any action of in-
fringement which may be brought against the Company or its
customers by reason of manufacture, sale or use of the Inven-
tion licensed hereunder, and will indemnify and save harmless
the Company from all damages on account thereof, but in no
event shall the Hotpers be required or obligated to pay or
otherwise incur liability under this paragraph 7 in an aggre-
gate amount in excess of the total amount of the payments
received by the Ho_pers pursuant to the terms hereof.
8. In the event of any claimed infringement of the Inven-
tion or any patent issued pursuant to said patent application,
the Company shall notify the Hotpers in writing, whereupon
5a
the Hotpers shall have the option for sixty (60) days after said
notice to require the Company to commence appropriate
action to abate said infringement or recover damages, or both,
at the expense of the Hotpers, with counsel selected by the
Houpers. In the event the Hotpers exercise such option, an
amount equal to the recoveries, if any, is to be paid by the
Company to the Hoipers. The balance due on account of
any such expenses shall be deducted by the Company from
said amount. If the Hotpers do not exercise said option, the
Company shall be free to prosecute such action as it may deem
appropriate, at its own expense, and shall be entitled to retain
any amounts recovered by reason thereof. In the event the
Hovpers do not exercise the option provided herein, the Com-
PANY shall have the right to manufacture the device on ac-
count of which said infringement is alleged until a Federal
District Court has determined that said device infringes the
Invention or any patent issued pursuant to said application. In
the event of such determination the Company will pay on
account of said devices such amount as would have been due
hereunder if the devices were the Invention. The failure of
the Ho.pers to exercise the option provided hereunder shall
not be deemed to be a waiver of any rights which the Ho_pers
may have against the Company or against any other person on
account of said alleged infringement.
9. In the event any claim or claims made under the patent
issued pursuant to said patent application is declared invalid
by a Federal District Court to such an extent that the manu-
facture, sale and use of the Invention can be carried out with-
out infringement of any claim of said patent, no amounts shall
thereafter be paid hereunder until the validity of said patent is
finally re-established by the entry of a judgment or decree
which is not further reviewable through the exhaustion of all
permissible applications for rehearings or review by a superior
tribunal or by the expiration of time permitted for such appli-
cations.
6a
10. Whenever under the terms of this Agreement any
notice is required or permitted to be given by either party to
the other, it shall be deemed to have been sufficiently given
for all the purposes thereof if mailed by registered mail,
postage prepaid, to the party or parties to be notified at the
address set forth herein for such party or to the Hotpers c/o
Charlten Company, Inc., Fitchburg, Massachusetts, and to the
Company at East 46 Street, Bayonne, New Jersey.
11. A waiver at any one time of any of the terms and con-
ditions of this contract shall not be considered a modification,
cancellation or a waiver of such term or terms or condition or
conditions thereafter.
12. This Agreement shall inure to the benefit of and be
binding upon the Ho-pers and the Company and their respec-
tive successors and assigns. The rights of the Company under
this Agreement shall not be transferable or assignable by the
ComPany except to a person, firm or corporation succeeding to
the entire manufacturing assets of the Company.
13. In the event of bankruptcy of the Company or a re-
organization of the Company under the Bankruptcy Act, all
rights herein transferred and sold to the Company shall auto-
matically revest in the Houpenrs.
In Wrrness Wuereor the parties have caused their re-
spective names and seals to be hereunto and to another instru-
ment of like tenor signed and affixed as of the day and year
first above written.
SUPER SAGLESS SPRING CORPORATION
By Atex J. Katz,
ALBERT M. SPOUND,
JOSEPH SPOUND,
MORRIS LOEB.
7a
PLAINTIFFS Exuisit 18.
April 1, 1961
Super Sagless Spring Corperation
East 46th Street
Bayonne, New Jersey
Attention: Mr. Alex Katz
Gentlemen:
Reference is herewith made to a License Agreement executed
of even date herewith, under which you are permitted to
manufacture, use and sell an invention relating to a head rest
hidden in the back of a chair which rises automatically with
accelerated action, a patent application for which has been
filed in the United States Patent Office on February 15, 1961,
Serial No. 89402.
As further inducement for you to execute said License Agree-
ment of even date herewith, which inducement we acknowl-
edge that you have relied upon, the undersigned, as the Hold-
ers of all right to said Invention, hereby agree that the right
granted under said Agreement shall be the sole and exclusive
right to said Invention and any patent which may be issued on
said application and shall include, without limitation, the
right to sublicense on the terms and conditions set forth in said
Agreement.
The Holders and the Company further agrees and consent to
be joined in any action on account of infringement of or by
the Invention or any patent which may be issued on said
patent application if the moving party deems such joinder
necessary or advisable in connection with the defense or prose-
cution, as the case may be, of any such action. The Holders
8a
and the Company agree to co-operate in any such defense or
prosecution.
The Company agrees that it will use its best efforts to initi-
ate the manufacture, sale and use of said Invention.
Very truly yours,
ASSENTED TO:
SUPER SAGLESS SPRING ALBert M. Spounp
CORPORATION
By Avex J. Katz. JoserH SpouNnD
Morris Loes
PLAINTIFFS’ Exuisit 19.
April 1, 1961
Mr. Alex Katz
Super Sagless Spring Corporation
East 46th Street
Bayonne, New Jersey
Dear Mr. Katz:
To assist you in the manufacture of the Invention embodied
in the application for Letters Patent filed February 15, 1961,
Serial No. 89402, of which you are the exclusive licensee, it is
agreed that if Super Sagless Spring Corporation does not
9a
manufacture and sell or use twenty thousand (20,000) sets of
improved chair fixtures embodying said Invention during the
twelve (12) month period ending March 30, 1962, we will pay
you Two Thousand Eight Hundred (2,800) Dollars.
In the event a fixture is introduced for sale in the market in
commercial quantities which competes directly with said In-
vention by reason of its similarity and design to said Invention
and which comprises a head rest for a reclining chair with
means for mounting said head rest for projection from con-
cealed position within the back rest to exposed useful condition
and operating means for automatically projecting the head rest
only during the initial motion of the back rest from sitting to
reclining position, and the price of said fixture is such as to
result in a competitive disadvantage to the sale of the Inven-
tion, we will consent to adjustment in the amount due us
measured by the sale of sets of Improved Chair Fixtures under
the following terms and conditions:
A written statement will be delivered to us setting forth the
nature of the competitive fixture, the present and foreseeable
future market situation with respect to the fixture and inven-
tion, including specifically an analysis of the projected adverse
effect on the sale of the Invention by reason of any price
differential between the Invention and the competitive fixture,
and your recommendation of the minimum adjustment in
price to achieve vompetitive balance between the Invention
and the competitive fixture, taking into account all factors of
competition normally prevailing in the reclining chair hard-
ware industry, such as comparative quality and efficiency of
the two mechanisms and the capacity of the producers to meet
delivery commitments.
Upon receipt of such statement, the amount to be paid
under the License Agreement executed of even date herewith,
measured by the sale of each set of Improved Chair Fixtures
shall be reduced by one-half (%) of the price reduction pro-
10a
posed in said statement. The balance of said price reduction
or any part thereof shall be made only with our written
consent, which consent will not unreasonably be withheld. In
no event shall the amount to be paid under the License
Agreement, measured by the sale of sets of Improved Chair
Fixtures, be reduced to less than Thirty-Five (35) Cents per
set.
In the event that we desire to make use of the Invention
outside the United States, you agree that you will grant us a
license to manufacture, use and sell such invention outside the
United States and agree that so long as such manufacture, sale
or use outside the United States does not compete with your
business, there will be no payment required on account of
such license.
It is further agreed that upon the termination of said Agree-
ment, the Holders shall have the option to acquire the sole and
exclusive ownership of any trade-mark or trade name which
may be adopted by you in connection with the Invention,
including specifically the name and trade-mark “Hide-A-
Rester”. The Holders agree that such option shall not be ef-
fective unless the Holders shall have reimbursed you for your
expenses in connection with the development and registration
of any such mark. In the event that the option is exercised,
you will execute any instrument or instruments necessary to
effect the transfer of any such names or trade marks to the
Holders.
lla
This instrument also binds Joseph Spound and Morris Loeb,
the other Holders under the License Agreement.
Very truly yours,
AuBert M. SPOUND
ASSENTED TO:
SUPER SAGLESS SPRING CORPORATION
By Avex J. Katz.
12a
Appendix B.
UNITED STATES DISTRICT COURT.
DISTRICT OF MASSACHUSETTS.
ALBERT M. SPOUND er At.,
Crvit ACTION
v. No. 70-1825-F.
MOHASCO INDUSTRIES, INC., er AL.,
Memorandum.
May 16, 1975.
FREEDMAN, D.J.
This contract/patent infringement case was tried before a
jury for ten days in May, 1974. The matter was submitted to
the jury on special verdicts pursuant to Fed. R. Civ. P. 49(a).'
The answers on the contract issues and infringement were
properly the province of the jury and the answers stand as
verdicts on those issues. The issue of the validity of the
patents and related questions of law were reserved until after a
transcript had been prepared and the parties had submitted
briefs and requests for findings of fact and conclusions of law.
The Court hereinafter enters its rulings on those questions of
law.
' A copy of the special verdict questions and answers is appended hereto as
Appendix “A”.
13a
VALIDITY OF THE PATENTS.
Defendants contend that the patents in suit* are invalid as
anticipated, 35 U.S.C. § 102, and obvious, 35 U.S.C. § 103.
While the question of validity is never a simple one, in a jury
case it takes on added complexity since some of the considera-
tions are clearly factual while the ulitmate finding is one of
law. Graham v. John Deere Co., 383 U.S. 1, 17 (1966).
Defendants treat this issue as one which the Court must
address under Fed. R. Civ. P. 52(a) and enter independent
findings of fact as well as conclusions of law. Plaintiffs, on
the other hand, appear to take the position that the jury’s
answer to question 18° contains all the factual inquiry that is
necessary and that validity is merely a legal conclusion man-
dated by these jury findings. The Court has grappled with
this issue for some time before undertaking to answer this
question. Some further discussion seems to be in order.
A. Validity under 35 U.S.C. § 103.
The starting point for any discussion of patent validity
under § 103 (defendants’ principal basis for their charge of
invalidity) is Graham v. John Deere Co., supra, the case
which first construed this section of the patent laws which had
been added by Congress in 1952.‘
* United States Patent No. 2,884,992 (“'992"); United States Patent No.
2,958,374 (“374”).
* See Appendix “A”.
* 35 U.S.C. § 103:
A patent may not be obtained though the invention is not identically dis-
closed or described as set forth in section 102 of this title, if the differences
between the subject matter sought to be patented and the prior art are such
that the subject matter as a whole would have been obvious at the time the
invention was made to a person having ordinary skill in the art to which
said subject matter pertains. Patentability shall not be negatived by the
manner in which the invention was made.
l4a
While the ultimate question of patent validity is one of
law, A & P Tea Co. v. Supermarket Corp. [340 U.S. 147]
at 155, the § 103 condition, which is but one of three
conditions, each of which must be satisfied, lends itself to
several basic factual inquiries. Under § 103 the scope
and content of the prior art are to be determined; dif-
ferences between the prior art and the claims at issue are
to be ascertained; and the level of ordinary skill in the
pertinent art resolved. Against this background, the
obviousness or non-obviousness of the subject matter is
determined. Id. at 17 (emphasis supplied).
Since this case was tried before a jury it would seem that
the “factual inquiries” to which the Graham case points are
porperly the function of a jury. The legal conclusion of valid-
ity, vel non, then becomes a question for the Court. The
decided cases make it less than clear exactly what functions a
court and jury are to play in a determination of validity under
§ 103.° But one thing is evident: this is not a situation, as
urged by defendants, in which the Court makes findings of
fact and conclusions of law under Fed. R. Civ. P. 52(a).° The
First Circuit has indicated that the question of obviousness is
one of fact. Koppers Company v. Foster Grant Co., 396 F.
2d 370, 372 (1st Cir. 1968):
In this situation, although, within limits, a question of
law, the determination whether a discovery of a new
combination is or is not obvious must be a question of fact.
* See, e.g., Swofford v. B & W, Inc., 305 F. 2d 362 (5th Cir
denied 393 U.S. 935 (1968); Bentley v. Sunset H —
359 F. 2d 140 (9th Cir. 1966). ” ——
* The Court would have been in a position to make Rule 52(a findings
fact issues which had not been submitted to the jury, Fed. my Ae P. 49(2).
This is unnecessary since the questions of fact were before the jury.
l5a
While that case was not tried before a jury it defines the ques-
tion of obviousness av one for the trier of fact.’ See, also,
Nashua Corporation v. R.C.A. Corporation, 431 F. 2d 220,
222 (Ist Cir. 1970); General Instrument Corporation v.
Hughes Aircraft Co., 399 F. 2d 373, 384 (Ist Cir. 1968).
In this case the jury was instructed on the basic factual con-
siderations which must be examined before a determination of
obviousness or non-obviousness is made. The prior art was
before them as well as the exhaustive testimony of plaintiffs’
and defendants’ experts. The Court is statisfied that the jury's
finding of non-obviousness in answer to question No. 18 fulfills
the factual requirements of a § 103 determination.*
Based upon the jury’s finding the Court concludes that
patents "992 and °374 are valid under the tests of § 103.
B. Validity under 35 U.S.C. § 102(a).*
The defense of invalidity based upon anticipation requires
that a single prior art reference disclose all of the elements of
the accused device or the substantial equivalents of these ele-
ments. In order for the jury to have made its findings with
respect to non-obviousness it was necessary to impliedly deter-
mine that no one prior art device anticipated either the "992 or
the ’374. A defense based upon § 103 is broader than one
See, Flour City Architectural Metals vy. Alpana Aluminum Products,
Inc., 454 F. 2d 98, 106, n. 8 (8th Cir. 1972), for the leading cases on this
issue from the various circuits. See, 2A Deller, Deller’s Walker on Patents,
Supp. 1973, 20 et seq. (2d ed. 1964).
* This is correct unless as a matter of law the Court finds that the inven-
tion was obvious. Upon a review of the record the Court does not so find.
* 35 U.S.C. § 102(a): A person shall be entitled to a patent unless —
(a) the invention was known or used by others in this country, or patented
or described in a printed publication in this or a foreign country, before the
invention thereof by the applicant for patent, or . . .
l6a
which relies upon § 102. The language of § 103 makes this
plain.’ Thus a finding of non-obviousness under § 103 pre-
cludes a § 102 defense.
C. Double Patenting.
Defendants have raised a defense to the validity of 374
based upon the judicially created doctrine of “double patent-
ing.” This defense, hinted at in earlier cases, was definitively
articulated by Mr. Justice Jackson in Miller v. Eagle Manu-
facturing Company, 151 U.S. 186 (1894):
If upon a proper construction of the two patents . . . they
should be considered as covering the same invention, then
the later must be declared void, under the well-settled
rule that two valid patents for the same invention cannot
be granted either to the same or to a different party. Id.
at 196-7.
It is settled also that an inventor may make an improve-
ment on his own invention of a patentable character, for
which he may obtain a separate patent . . . [and] that
a later patent may be granted where the invention is
clearly distinct from, and independent of, one previously
patented. Id. at 199.
The reason for this rule is to prevent the extension of a patent
monopoly beyond the 17 years permitted by the statute.
Weatherhead Company v. Drillmaster Supply Company, 227
F. 2d 98, 102 (7th Cir. 1955); Tractor Supply Co. v. Interna-
tional Harvester Company, 155 U.S.P.Q. 420, 426 (N.D. Il.
1967).
'°n. 4, supra.
17a
The question of double patenting arises in a situation where,
as here, there are co-pending patent applications by the same
inventor.'' In such a case the applications are not prior art as
to each other for purposes of patentability under 35 U.S.C.
§§ 102 and 103,'* but there must be patentable differences in
order for two valid patents to issue on these applications.
Briggs v. M & J Diesel Locomotive Filter Corp., 342 F. 2d
573 (7th Cir.), pet. for cert. dismissed 382 U.S. 801 (1965);
Southern Implement Mfg. Co. v. McLemore, 350 F. 2d 244,
247 (5th Cir. 1965); Tractor Supply Co. v. International Har-
vester Company, supra, at 424.
The issue in this case turns upon whether claim 1 of °374
represents a patentable difference of the claims of ‘992. If
not, ’374 is invalid despite the jury’s findings and the Court's
conclusions based upon §§ 102 and 103.
In analyzing the patentability, vel non, of ‘374 over 992,
the Court deems it helpful to examine the testimony of plain-
tiff and co-inventor Albert M. Spound as well as that of plain-
tiffs’ expert, Joseph Harrington.
I. Albert M. Spound:
Tr. 1-64: Q. You mentioned the 374. That is another
patent, and that is Exhibit 5?
A. Yes, sir.
Q. You do not have a chair here in the court-
room at the moment of that, but can you
tell us what the 374 device was?
“1 Patent No. 2,884,992 applied for — January 17, 1958; granted — May
5, 1959.
Patent No. 2,958,374 applied for — October 24, 1958; granted — Novem-
ber 1, 1960.
'* It should be noted that "992 and '374 were processed by the same exam-
iner; "992 was cited by the examiner in processing ‘374 and was referred to
in rejecting certain of the claims in the original ‘374 application.
A.
Tr. 1-65: Q.
A.
Q.
A.
Tr. 4-69: Q.
A.
18a
The 374 was an alternative mechanical
method of driving the headrest up and
holding it in a useful position. It would
function about the same way as the white
chair does, the 992. The difference being
in the mechanical means by which it is
done.
Is it true the 374 was an improvement
on the 992?
Yes.
You got a patent also on the 374?
Yes, sir.
Is it true that the only difference between
the chairs in the 992 and the 374 is in
the type of lost motion device used?
That is correct.
II. Joseph Harrington, plaintiffs’ expert:
Tr. 6-58: Q.
o>
You indicated yesterday, I believe, or Fri-
day that both the lost motion device or
dwell device used in 374 and the lost
motion device used in 992 were well
known expedients in technology back in
1958; is that correct, sir?
I don’t recall making that statement.
Is it not true that in 1958 and perhaps
a hundred years prior to that time or
hundreds of years earlier lost motion
devices had been made with slots and
pins as the type that is employed in 992?
19a
A. That is right. These lost motion devices
are well-known components of machinery.
Q. Isn't it also true that the lever in the
link chain used [in] the 374 mechanism is
a well-known device that has been used
perhaps for hundreds of years to get
dwells or so-called lost motions?
A. By itself, that is not an unfamiliar con-
figuration.
Q. Do you agree with me, sir?
A. Yes.
A comparison of claim 1 of '374 and claim 9 of ‘992 con-
firms that the only difference between the two inventions is
the configuration of the lost motion device.’ Since lost
motion devices are old, a substitution of one such device for an
equivalent would not seem to amount to a patentable differ-
ence.
Plaintiffs correctly assert that a patent enjoys a presumption
of validity, 35 U.S.C. § 282, and to overcome such a presump-
tion defendants must bear a heavy burden of proof. This is
especially true where, as here, the earlier patent was proces-
sed by the same patent examiner and was used by him in dis-
allowing some of the initial claims in the application for the
374.
The Court has given full effect to the presumption, but is
nonetheless constrained to conclude that the °374 discloses no
patentable invention over the "992 and is invalid for double
patenting.
‘3 In this connection, it should be noted that “parallelogram type of link-
age” in the 992 and “parallel bar linkage” in the ‘374, are equivalent struc-
tures according to the testimony of Joseph Harrington at Tr. 6-51.
20a
ADDITIONAL DEFENSES.
Patent Misuse.
Defendants had originally raised an issue of patent misuse.
They appear to have abandoned this defense, however, since it
was argued only briefly in their pre-trial brief and not at all in
their post-trial brief. At any rate, the Court has found no evi-
dence of such misuse and summarily rejects this defense.
35 U.S.C. § 112.
The Court similarly disposes of this defense in summary
fashion. I have examined the patents in suit in light of the
provision of § 112 which requires “. . . a written description of
the invention in such full, clear, concise and exact terms as to
enable any person skilled in the art . . . to make and use the
same... .” Defendants’ contentions that the patents do not
fulfill that requirement and that the claims do not “. . . dis-
tinctly [claim] the subject matter which the applicant regards
as his invention . . .” are without merit. The Court finds that
the language of the patents is adequate to withstand a chal-
lenge based upon § 112.
DAMAGES.
The Court leaves undisturbed the finding of the jury on the
issue of contract damages. (Question No. 8 of special verdicts
— $106,146).
Damages for Infringement.
The Court asked the jury to set a reasonable per chair royal-
ty. (Question No. 16). A later question (No. 17b) asked the
total damages for infringement. A reasonable royalty was
2la
found to be $3.75. Total damages for infringement were set
at $500,000. Since the number of devices sold by defendants
was stipulated to be 236,018 as of the time of trial, and
damages for infringement may be no less than a reasonable
royalty, 35 U.S.C. § 284, the damages for infringement may
be no less than $885,067.50 (236,018 x $3.75) as of the date of
trial.
Plaintiffs urge that they are entitled to $500,000.00, plus a
per chair royalty of $3.75, = $1,385,067.50. The Court
rejects this approach for several reasons.
In my instructions I told the jury that a “[r]easonable royal-
ty is a useful tool for making . . . [the damage] calculation.”
In order to ensure that the jury did not return damages less
than a reasonable royalty, a question (No. 16) was included to
establish a reasonable royalty. From the sequence of the in-
structions and the context of the instructions, it was clear that
the jury was to use the answer to Question No. 16 in arriving
at the answer to Question No. 17b. One possible explanation
for the discrepancy is that the jury had forgotten the number
of infringing devices. Earlier in its deliberations it had asked
the Court the number of devices sold under the license agree-
ment. Since this information was stipulated by the parties the
Court gave the jury that part of the stipulation, but no more.
It seems evident that the jury did not know the number of in-
fringing devices and thus attempted to arrive at a reasonable
figure. The estimation was too low; the minumum damages,
given the answer to Question No. 16, were $885,067.50.
Question No. 16 was included for the very purpose for which
the Court now uses it: to prevent the awarding of damages
which would be less than a reasonable royalty.
The Court will disregard the answer to Question No. 17b
since it is inconsistent with the answer to Question No. 16 and
enter an award for infringement based upon a reasonable
royalty of $3.75 for each of the infringing devices.
22a
Foreign License.
Defendants contend that damages for infringement are only
due from the date of plaintiffs’ retroactive foreign license —
December 19, 1973. 35 U.S.C. § 184 requires that a person
obtain a license from the Commissioner of Patents before filing
an application for a foreign patent if the foreign application is
made within six months of the application for the United
States patent. Section 185 provides that a failure to comply
with the § 184 requirement renders a patent invalid. How-
ever, § 184 specifically allows such licenses to be granted retro-
actively if the application is “inadvertently filed abroad.”
In this case an application was filed abroad through in-
advertence and the license of December 19, 1973 was made
retroactive to July 5, 1958.
Defendants have argued vigorously that the policy of §§
181-185 is best served by limiting damages to the period after
the date of the retroactive license. Nothing in the statute, the
license or in the case law supports this position. Further, it
would be a particularly harsh result for such inadvertence.
The Court finds that plaintiffs have complied with the
foreign licensing requirement and thus hold a valid license
retroactive to July 5, 1958.
FURTHER RELIEF.
Plaintiffs have requested treble damages (35 U.S.C. § 284)
and attorneys’ fees (35 U.S.C. § 285). Upon a review of the
evidence in the case and of the history of the litigation, the
Court is not of the opinion that this is the kind of case which
merits such relief. Accordingly, plaintiffs’ requests are denied.
23a
The Court will grant the injunctive relief sought by plain-
tiffs to the extent that it is appropriate in light of the Court's
finding of invalidity with respect to ‘374.
The plaintiffs shall submit a proposed form of judgment in
accordance with the foregoing rulings of law. Defendants
shall provide the number of sets of devices for inclusion in the
final judgment. Both parties may submit such memoranda as
they deem helpful to the Court for its order of judgment.
Such filings shall be made within ten days of the date of this
memorandum.
FRANK H. FREEDMAN,
United States District Judge.
2Aa
UNITED STATES DISTRICT COURT.
DISTRICT OF MASSACHUSETTS.
ALBERT M. SPOUND er At.,
Crvit ACTION
v. No. 70-1825-F.
MOHASCO INDUSTRIES, INC., er Ax.,
Special Verdict.
[Federal Rule of Civil Procedure 49(a), 28 U.S.C.]
WE, THE JURY, IN THE ABOVE-ENTITLED ACTION, UNANIMOUSLY
FIND AS FOLLOWS:
Interrogatory Unanimous
Answer of the
Jury
(1) Does the agreement of Mar. 31/Apr. 1,
1961 (Exhibits 17, 18, 19) grant an ex-
clusive license only for patent applica-
tion 89402? NO
[ Yes or No]
(2) Does the agreement of Mar. 31/Apr. 1,
1961 grant an exclusive license with
respect to the basic patent 992 and
improvement patents as well as to
patent application 89402? YES
[ Yes or No]
(3)
(4)
(5)
(6)
(7)
25a
Interrogatory
As used in the agreement of Mar. 31/
Apr. 1, 1961, does the word “Inven-
tion” (spelled with a capital “I”) refer
only to the subject matter of the 89402
application and any patent that might
be issued thereon?
As used in the agreement dated Mar.
31/Apr. 1, 1961, does the word “In-
vention” (spelled with a capital “I”)
refer to both the subject matter of the
89402 application and the basic and
improvement patents?
Was the subject matter of the agree-
ment for which a $1.00 royalty was to
be paid the pop-up headrest chair as
covered by the patents in the agree-
ment?
Was the subject matter of the agree-
ment for which a $1.00 royalty was to
be paid only the “improvement” con-
tained in the 89402 application or any
patent which might issue thereon?
Has the agreement been breached by
the defendants?
NO
[Yes or No]
YES
[ Yes or No]
[ Yes or No]
26a
Interrogatory
(8) If the answer to question No. 7 is in
the affirmative, what damages are
due the plaintiffs from October 1969
to April 18, 1972, the date of the
purported cancellation by the plain-
tiffs?
(9) If the answer to question No. 7 is in
the affirmative, and assuming that
the cancellation of April 18, 1972 was
ineffective, what damages are due the
plaintiffs under the agreement for the
period April 18, 1972 to date?
(10) Does the Futorian Chair infringe
claims 5, 9, or 12 of patent ’992?
(11) If the answer to question No. 10 is in
the affirmative, what claim or claims
are so infringed?
(12) Does the Futorian Chair infringe
claim 1 of patent ’374?
(13) Does the Super Sagless mechanism
infringe claims 5, 9, or 12 of patent
"992?
$106,146.00
[ Amount]
[ Yes or No]
27a
Interrogatory
‘14) If the answer to question No. 13 is in
the affirmative, what claim or claims
are so infringed?
(15) Does the Super Sagless mechanism
infringe claim 1 of patent 374?
(16) What do you find as a reasonable per
chair royalty to be paid by the de-
fendants for infringement of patents
992 or 374?
(17) If you have found that defendants
have infringed one or more of the
claims of the patents in suit, what
damages do you find? —
(a) If there was never an agreement
in effect, what are the damages from
October 1969 to date?
(b) If there was a valid agreement, but
it was cancelled in April 1972, what
are the damages for infringement
from April 1972 to date?
(18) Do you find that the Spound inven-
tions of "992 or °374 were not obvious
5, 9, 12
[Claim Nos. ]
YES
[ Yes or No]
[ Amount]
$500,000.00
[ Amount]
28a
Interrogatory Unanimous
to a person with ordinary skill in the
furniture art when the inventions
were made? YES —
Not Obvious
[ Yes or No}
THOMAS A. HILLS,
Foreman.
Dated: May 24, 1974.
29a
Appendix Cl.
United States Court of Appeals
for the First Circuit
No. 75-1385
ALBERT M. SPOUND Er AL.,
PLAINTIFFS, APPELLEES,
v.
MOHASCO INDUSTRIES, INC., er Ax.,
DEFENDANTS, APPELLAN Ts,
No. 75-1386
ALBERT M. SPOUND er AL.,
PLAINTIFFS, APPELLANTS,
v.
MOHASCO INDUSTRIES, INC., er AL.,
DEFENDANTS, APPELLEES.
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MASSACHUSETTS
(Hon. FRANK H. Freepman, U.S. District Judge )
30a
Before Corrin, Chief Judge,
AupricH and CampBe.L, Circuit Judges.
Daniel O. Mahoney and George L. Greenfield, with whom Reginald H.
Howe, Palmer & Dodge, and Wolf, Greenfield & Sacks were on brief, for
Mohasco Industries, Inc., et al.
Jerome P. Facher, with whom Robert F. McLaughlin and Hale and Dorr
were on brief, for Albert M. Spound et al.
April 16, 1976
AvpricH, Senior Circuit Judge. This action, initiated in
1970 as a petition for declaratory judgment, and subsequently
enlarged, presents a two-pronged claim, for royalties under a
1961 license agreement and, after the agreement was pur-
portedly cancelled by the licensor in 1972, for damages for
subsequent infringement of two of the patents that had been
licensed. A.M. Spound, although but one of three plaintiffs,
will be referred to as plaintiff. He was, at all times, engaged
in designing and manufacturing furniture, including up-
holstered livingroom furniture. The original licensee was
defendant Super Sagless Spring Corp., of which one Katz was
president. Defendant was at all times engaged, inter alia, in
making metal furniture components. There are two other,
connected, corporate defendants, one of which, Mohasco
Industries, Inc., a furniture manufacturer, acquired the Super
Sagless stock in 1963. For simplicity, the defendants may be
treated as one. Defendant's position is that nothing was due
under the agreement, and that it was improperly cancelled,
but that if, in fact, it was properly cancelled, the patents were
3la
invalid and not infringed. The case was tried to a jury,
which answered special questions, all favorably to plaintiff.
After some modification in plaintiff’s disfavor, a judgment was
entered determining, inter alia, that the first patent was valid
and infringed and that the second was invalid, and assessing
damages for breach of the agreement and for infringement.
Both sides appeal.
In 1957 plaintiff conceived the idea of a reclining living-
room chair which would have a headrest that was concealed
within the back when the chair was upright, thereby present-
ing a low profile, but which would emerge automatically
(pop-up) when the user, by leaning back, caused the chair to
recline. The chair would also have an extending legrest, but
this is not involved. Plaintiff spent a considerable time en-
deavoring to reduce his idea to practice, and in due course
sought, and received, confidential help from Katz. Katz in-
troduced plaintiff to one Martin, a mechanical engineer. On
September 5, 1957, plaintiff filed an application, and on
August 2, 1960, received Patent No. 2,947,347, Spound, Auto-
matic Projecting Headrest for Reclining Chairs. Meanwhile,
on January 17, 1958, Spound and Martin applied for a patent
on Reclining Chair Headrest Constructions, which ripened into
Patent No. 2,884,992, on May 5, 1959. On October 24, 1958,
Martin and Spound filed a further application, Automatically
Projectible Headrest, receiving Patent No. 2,958,374 on
November 1, 1960. Finally, Spound, alone, filed on February
15, 1961, Application No. 89,402, Headrest for Reclining
Chairs Including Latching Means. This application was
rejected on July 14, 1961, on the basis of '374 and a legrest
patent cited by the examiner, and was not pursued.
Briefly, 992 was an improvement in result over ‘347; 374
was an improvement over ‘992 in internal operation, and '402
principally added a latch to prevent accidenta) depression of
the headrest. °347 was never manufactured. ‘992 was well
32a
received and, commencing in 1958, was sold by plaintiff and
various licensees in substantial quantities, defendant making
most of the mechanisms. However, the concept was better
than the product. Functional difficulties resulted in so many
returns that the various chair manufacturers lost interest, and
in the early ’60’s the market dried up. It was anticipated that
the operational faults could be remedied. This, however, did
not occur for a long time.
The parties had long considered a royalty basis license for
defendant, and in January, 1961 negotiations came to a head.
During the next two months plaintiff and Katz discussed
terms, and their counsel discussed form. Besides general pro-
tection of their clients, it is apparent that counsel had special
matters in mind. One of these was that plaintiff’s receipts
should be considered capital gains. Another was that defend-
ant wished separate documents, so that it could exhibit only
part of the agreement to an interested competitor. In retro-
spect, it seems that the handling of these subsidiary matters
may have been what led to the present difficulties. Evidence,
duly objected to by defendant on the ground of the parol evi-
dence rule, indicated that the principals intended that defend-
ant should have an exclusive right to manufacture the mechan-
ism for plaintiff's chair in any form, and was to pay a single
royalty of one dollar a set irrespective of what patents were
involved, so long as that right was protected, so that to the
extent the agreement appears more limited it was simply faulty
draftsmanship. Under the circumstances of this case, where
defendant is now claiming the apparent windfall of having to
pay nothing, this is an appealing contention. The question is,
is it open?
[In a somewhat lengthy addendum to this opinion we
review the merits of the parties’ analysis of a license agree-
ment entered into on April 1, 1961 and the events attending
on its execution, concluding that the jury could warrantably
33a
find in accordance with plaintiff’s contentions. Because no
questions of law are involved, but only highly subjective facts
of no interest to anyone but the parties, no purpose would be
served by including this in the permanent reports, and the
addendum will be retained in our file of unpublished opin-
ions.
It a be unfortunate for defendant, particularly in light of
the jury’s finding a fair royalty in the "70's to be $3.75, rather
than the earlier figure of $1.00,' that, like Aesop's dog who
thought it saw another bone in the water, it overreached and
lost what it had, but, as defendant’s brief said of plaintiff in
another connection, he “made a deliberate tactical choice . . .
[and] must take the consequences.” Defendant was not
entitled to escape liability on the ground that the agreement
permitted free use of the patents. Correspondingly, plaintiff
was within his rights in terminating it on account of defend-
ant’s default.
We turn to the second part of plaintiff’s case, the damage
claim for infringement of the 992 and °374 patents subsequent
to the 1972 cancellation to the agreement. No appeal is
pressed regarding the jury’s determination that defendant's
chair infringed — the dispute concerns validity. Here we find
a singular situation. The sole question put to the jury on this
issue was.
“(18) Do you find that the Spound inventions of "992 or
’374 were not obvious to a person with ordinary skill in
the furniture art when the inventions were made?” (Em-
phasis suppl.)
' The evidence warranted this finding. The jury was not obliged to find
$1.00 to be the “established” royalty on the ground that plaintiff's new
licensees were so charged, when they were to have to compete against
already entrenched defendant, and the whole matter was in litigation.
34a
As a matter of syntax, this means the invention of ‘992 or [the
invention of] 374.* As such, this question corresponds exactly
with question 16 —
“(16) What do you find as a reasonable per chair royalty
to be paid by the defendants for infringement of patents
"992 or °374?”
But while 18, read with 16, saves from attack the royalty
finding, strictly it does not indicate that a particular patent
was found to be non-obvious.*
The court, however, did not so conclude, but found that the
jury had accepted the validity of "992. On reflection, we
accept that decision. On the evidence before it, the jury
could not have found ’992 obvious if it had found ’374 non-
obvious. We note, also, that defendant does not challenge the
judgment below on this basis. However, we are left, in any
* This reading accords with the court's charge. In discussing this issue, it
said, “The burden of establishing the invalidity of either the Spound 992 or
the '374 patents is upon the defendants. . . . In considering whether either
of the Spound patents was obvious. . . .” While the jury might not have
recalled this language precisely, it certainly did nothing to contradict what
would appear to have been the plain meaning of the question put by the
court.
* It is interesting to note that throughout his briefs plaintiff disregards the
“or” in question 18, and reads it as “and;” indeed, pointing out that the
“jury's answer was clear and unambiguous.” However, where the shoe is on
the other foot, and he is anxious to retain the full royalty in case we should
affirm the judgment invalidating '374, plaintiff is careful to point out that
because of the “or” in question 16, “The answer was $3.75 which clearly
indicated that for infringement of either the "992 or the ‘374, a royalty of
$3.75 was due.” (Emphasis in orig.) Such Janus-like perceptions exceed
acceptable advocacy.
35a
event, with no jury finding as to the non-obviousness of °374.
This situation plaintiff must be deemed to have assented to,
since he failed to object to the form of the questions. Hence
we are in the position, taking a portion of plaintiff’s appeal
out of order, simply of passing upon whether the court’s inde-
pendent finding of invalidity, because of double patenting,
was warranted.‘
The court found.
“A comparison of claim 1 of ’374 and claim 9 of 992
confirms that the only difference between the two inven-
tions is the configuration of the lost motion device. Since
lost motion devices are old, a substitution of one such
device for an equivalent would not seem to amount to a
patentable difference.” (Footnote omitted.)
Although plaintiff says there is much more to '374, the court
had before it not only the testimony of defendant's expert, to
which, in all candor, we do not attach great weight in view of
much of the prior art he thought material, but significant testi-
mony of plaintiff’s own witness. Basically, the difference
between °374 and 992 was a different mechanism to accom-
plish the same result. Plaintiff’s expert testified that lost
‘ Frankly, we are happy that this is the case. Whatever may be a party's
right to a jury trial, experienced judges who have spent days deciding a
single question of obviousness must regret that such questions should be put
to an inexperienced jury on a complicated record, to decide in a matter of
hours. Even if it be thought that juries are as competent as judges, they
must rely on their memories of expert testimony after days of trial, an excep-
tionally difficult task in this area. In such a circumstance, the least a court
owes the parties is “a special duty of vigilance in . . . reviewing verdicts” cf.
Stone v. Essex County Newspapers, Inc., Mass. 1975, 339 N.E. 2d 161, 170,
by which we mean that the court should not hesitate to set findings aside in
case of substantial doubt.
36a
motion devices, post, of this character are legion, and a matter
of choice. More important, he stated, with relation to ’992,
that the pop-up concept, with lost motion, was the invention;
that “the design of a linkage mechanism to elevate a headrest
is a mechanical engineering problem,” and that he believed a
good mechanic, once given the instructions of what was
wanted, could have carried them out.
It may well be that the "374 mechanism was an improve-
ment over "992, but that does not necessarily save the patent.
Granted there was no exact anticipation, still there must be
something more than an obvious improvement over the prior
patent. E.g., Preformed Line Products Co. v. Fanner Mfg.
Co., 6 Cir. 1964, 328 F. 2d 265, 269-70, cert. denied, 379
U.S. 846. We are helped in concluding that ’374 could be
found invalid by the fact that it failed to remedy a deficiency
in "992 which was, in fact, common to both. The operational
difficulties that long persisted were due in part to the fact that
sufficient dimensions were not supplied. While we would not
void either patent for overgenerality, neither do we give them
high marks with respect to disclosure. The court’s coriclusion
of invalidity was warranted.
Upholding the jury’s finding as to 992 would be easy, but
for one problem. The evidence justified, if not compelled, a
finding that plaintiff's chair was novel, and of substantial
value, and, but for the ’347 chair, unique. There was, more-
over, a substantial difference between °347 and ’992. The
latter could be found to be, due to its “dwell,” or lost motion
feature, much more attractive to the user than, and inventive
over, the former, whose headrest did not fully pop up until
the final reclining position. The difficulty arises from the
court’s charge to the jury.
There was no error in charging simply that the burden was
on defendant to prove invalidity. Defendant’s complaint that
the jury should have been told that the presumption of validity
37a
was weakened by the examiner’s failure to have all the prior
art before him must be overruled in light of the fact that the
court never mentioned the presumption at all.* However, the
court did err, over defendant’s adequate objection, in charging
the jury that it was to measure obviousness from the stand-
point of an ordinarily skilled furniture designer, without
taking into consideration the knowledge of a person skilled in
the mechanical arts. In so doing, it disregarded the record.
Before filing the °992 application, plaintiff obtained the
assistance of Martin, a mechanical engineer, and both '992
and °374 name Martin as a joint inventor. Even plaintiff's
expert conceded that “the design of a linkage mechanism to
elevate a headrest is a mechanical engineering problem.”
Obviousness as to this was not to be judged solely by the
limited skill and assumed knowledge of a furniture manufac-
turer. See Graham v. John Deere Co., 1966, 383 U.S. 1, 35;
Burgess Cellulose Co. v. Wood Flong Corp., 2 Cir. 1970, 431
F. 2d 505, 509. It is true, as plaintiff points out, that the
court admitted into evidence all that defendant offered with
respect to prior art, but the ultimate issue was the standard by
which obviousness was to be considered.
This erroneous instruction, omitting reference to what
would be obvious to a mechanical engineer, would have
faulted any jury finding that ’374, the improved mechanism
patent, was not obvious. °992’s validity presents a different
question. Here the most innovative aspect was that of the
chair, and not the mechanical means. As a practical matter,
we must find that a jury could not have found Martin’s con-
tribution to this patent inventive unless it had found the chair
itself inventive. Since the idea of a pop-up headrest was,
strictly, a furniture design concept, the test here was the
* We will deal with this whole issue more fully on some later occasion, but
for the time being, while the charge in this case was not the best, we do not
find it prejudicial on the facts.
38a
knowledge of furniture designers. Accordingly, restricting the
jury's consideration to what would be obvious in the furniture
art was not prejudicial to defendant with respect to this
patent.
Defendant's other points on appeal do not warrant discus-
sion.
Continuing with plaintiff's appeal, we might at first blush,
fault the court for construing the dollar figure of general
damages for infringement found in answer to question 17 to be
simply alternative to the royalty found in question 16, multi-
plied by the number of chairs produced. However, a cumu-
lative finding, awarding both amounts, could not be supported
without an evidentiary basis. We find nothing outside of
what is covered by royalties. Plaintiff's charge that defend-
ant has “enjoyed” the patents for fourteen years must be taken
with more than a grain of salt. During a number of those
years defendant's enjoyment consisted of trying to make them
function, for, as it turns out, plaintiff’s benefit. For the
balance, there is no evidence that plaintiff suffered any loss
other than royalties, and for this he is now being compen-
sated.
Finally, plaintiff asserts that he was entitled to penalty relief
under 35 U.S.C. §§ 284 and 285. We do not reach those
questions. Plaintiff made such a request at the trial and the
court responded in its opinion as follows.
“Plaintiffs have requested treble damages (35 U.S.C.
§ 284) and attorneys’ fees (35 U.S.C. § 285). Upon a
review of the evidence in the case and of the history of
the litigation, the Court is not of the opinion that this is
the kind of case which merits such relief. Accordingly,
plaintiffs’ requests are denied.”
«
39a
Thereafter the court entered a multi-paragraphed judgment
awarding only single damages, and costs that made no pro-
vision for attorney's fees. Plaintiff’s notice of appeal specified,
simply, two paragraphs, viz., the paragraph invalidating the
’374 patent, and the paragraph which rejected the jury’s find-
ing of general damages. After the 30 days, but not before 60
days, had run, plaintiff successfully moved to amend his
appeal to include the sections 284 and 285 matters. He
asserted,
“The plaintiffs’ Notice of Appeal did not specifically
mention the matters set forth in Paragraphs 3 and 4 of the
Substitute Notice of Appeal (the failure to award treble
damages and attorneys’ fees), there having been no men-
tion of such matters in the June 6th Judgment itself.”
The last clause could not be true. This was a final judgment.
The monetary award, being in the exact amount represented
by the jury’s finding, was necessarily a rejection of plaintiff's
demand that it be increased. The awarding of “costs and dis-
bursements” was necessarily a denial of extraordinary costs.
Nor was plaintiff correct in his further allegation that his
specific and limited prior appeal raised matters contained in
entirely different paragraphs. Bach v. Coughlin, 7 Cir.,
1974, 508 F. 2d 303 (per curiam); Ruckman & Hansen, Inc.
v. Contracting & Material Co., 7 Cir., 1964, 328 F. 2d 744;
cf. Donovan v. Esso Shipping Co., 3 Cir., 1958, 259 F. 2d 65,
cert. denied, 359 U.S. 907.
An appeal which is enlarged as a matter of substance is a
new appeal. See Bach v. Coughlin, ante. After 30 days from
judgment a party can appeal ony in accordance with the final
paragraph of F.R.A.P. 4(a), viz., upon a showing of “ex-
cusable neglect,” the establishment of which is jurisdictional.
40a
Buckley v. United States, 10 Cir., 1967, 382 F. 2d 611, cert.
denied, 390 U.S. 997. Excusable neglect calls for “circum-
stances that are unique or extraordinary.” Maryland Gas. Co.
v. Conner, 10 Cir., 1967, 382 F. 2d 13, 17. See also Stern,
Changes in the Federal Appellate Rules, 41 F.R.D. 297, 299
(“emergency situations only”). If this includes a mere palpa-
ble mistake by experienced counsel, the requirement would be
meaningless. We may add that, after the original appeal had
been filed, the case remained in the district court only for
procedures “in aid of the appeal.” See Moore’s Federal Prac-
tice, 203.11. We do not believe this includes passing on a
motion to enlarge its substance. Finally, the rule makes no
provision for plaintiff’s contention that the defendant was not
prejudiced. Such an exception would be limitless.
Affirmed.
4la
Appendix C2.
United States Court of Appeals
for the First Circuit
No. 75-1385
ALBERT M. SPOUND Er AL.,
PLAINTIFFS, APPELLEES,
v.
MOHASCO INDUSTRIES, INC., er At.,
DEFENDANTS, APPELLANTS.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MASSACHUSETTS
(Hon. FRANK H. Freepman, U.S. District Judge)
Before Corrin, Chief Judge,
AupricH and CamMpBELL, Circuit Judges.
Addendum to Opinion dated April 16, 1976.
Aupricu, Senior Circuit Judge.
After a number of exchanges, on April 5, 1961, plaintiff's
Boston counsel forwarded to defendant’s New York counsel a
further “revised basic Agreement” and two “letters,” stating
42a
that, if acceptable, they were ready for execution. Counsel
replied that they were satisfactory, and thereafter they were
executed by the parties, the Agreement as of March 31, and
the letters, although they recited they were of “even date,” as
of April 1. This was an irrelevant mistake; it being agreed
that the three documents constituted one, integrated docu-
ment.°
No dispute over the agreement arose until 1969, because
until then, although defendant asserted that it was working on
the problem, the operational kinks were apparently not solved,
and no chairs were made. In 1969, without notification to
plaintiff, defendant came out with a properly functioning
chair, which has been a commercial success ever since. Taxed
by plaintiff, defendant asserted that its chair infringed none of
plaintiff's patents, but, after some waffling as to its meaning,
contended that the 1961 agreement gave it free license to do so
in any event. This action resulted.
The preliminary recitations in the March 31 Agreement read
as follows.
“WHEREAS an application has been made by the Hop-
ers [plaintiff] in the United States Patent Office on Feb-
ruary 15, 1961, Serial No. 89402, for a patent on an in-
vention consisting of a head rest hidden in the back of a
chair which rises automatically with accelerated action,
hereine*ter referred to as the “Invention”, and the Inven-
tion constitutes an improvement on certain patents here-
inafter described, and the Invention when incorporated
in a mechanism for use in a reclining chair constitutes, for
the purpose of this Agreement, an “Improved Chair Fix-
ture”; and
* The full agreement is what.we refer to when using the small “a”. The
use of the capital “A” denotes the March 31 document.
43a
“Wuenreas the Hotpers own the entire right, title and
interest in and to United States Patent No. 2,884,992,
issued May 5. 1959, for Reclining Chair Head Rest Con-
structions, hereinafter referred to as the “basic patent”;
and
“Wueneas the Houtpers own the entire right, title and
interest in and to the following United States patents:
No. 2,947,347, No. 2,952,303, No. 2,958,374 and No.
2,975,826; all relating to reclining chair constructions,
hereinafter referred to as “improvement patents”; and
“Wuerneas the Company [defendant] is desirous of
obtaining from the Houpers a license under the Invention
and under any patent which may be issued on said appli-
cation or for the Invention to manufacture, use and sell
the Invention throughout the United States and all foreign
countries, on the terms and conditions hereinafter set
forth.”
The Agreement continued,
“1. The Houpers hereby grant to the Company a
license under the Invention and under any patent which
may be issued on said application or for the Invention to
manufacture, use and sell the Invention throughout the
United States and all foreign countries. The Company
shall have the further right without payment therefor,
but shall not be obligated, to manufacture, use and sell
the inventions embodied in the basic patent and the im-
provement patents solely in connection with the manu-
facture, use and sale of the Invention hereby licensed.”
ta
Paragraph 2 provided that defendant would pay plaintiff,
“One (1) Dollar for each set of Improved Chair Fixtures
sold and delivered or otherwise disposed of by the Com-
PANY into which the Invention is incorporated.”
It further provided that plaintiff might cancel in any year that
the amounts payable were less than $10,000, except that de-
fendant must first be given the option of making up the dif-
ference.
Paragraphs 3, 4, 5 and 6 obliged defendant to keep records
open for inspection, to file written reports and to make timely
payments, and provided for cancellation in case of default,
and for the obligation to run in favor of assigns. Under para-
graph 7 plaintiff warranted the Invention, while paragraph 8
made provision, “[i]n the event of any claimed infringement
of the Invention or any patent issued pursuant to said patent
application,” for alternative arrangements for bringing actions
for infringement.
Paragraph 9 read,
“In the event of any claim or claims made under the
patent issued pursuant to said patent application is de-
clared invalid by a Federal District Court to such an ex-
tent that the manufacture, sale and use of the Invention
can be carried out without infringement of any claim of
said patent, no amounts shall thereafter be paid here-
under until the validity of said patent is finally re-estab-
lished by the entry of a judgment or decree which is not
further reviewable through the exhaustion of all permis-
sible applications for rehearings or review by a superior
tribunal or by the expiration of time permitted for such
applications.”
45a
The first April 1, 1961 letter read in part as follows,
“Reference is herewith made to a License Agreement
executed of even date herewith, under which you are per-
mitted to manufacture, use and sell an invention [sic]
relating to a head rest hidden in the back of a chair
which rises automatically with accelerated action, a
patent application for which has been filed in the United
States Patent Office on February 15, 1961. Serial No.
89402.
“As further inducement for you to execute said License
Agreement of even date herewith, which inducement we
acknowledge that you have relied upon, the undersigned,
as the Holders of all right to said Invention, hereby agree
that the right granted under said Agreement shal’ be the
sole and exclusive right to said Invention and any patent
which may be issued on said application and shall in-
clude, without limitation, the right to sub-license on the
terms and conditions set forth in said Agreement.
“The Company agrees that it will use its best efforts to
initiate the manufacture, sale and use of said Invention.”
The second April 1 letter, which provided for a reduction in
royalties in case of competition, does not seem presently
material.
When plaintiff made claim for royalties on account of
defendant’s 1961 chair, defendant pointed to the -provision in
paragraph | of the Agreement to the effect that so long as they
were used “solely in connection with the . . . Invention hereby
licensed,” the prior patents could be used without payment
46a
therefor, and to the provision in paragraph 9 that in case of a
judicial determination of invalidity of the claims made under
“the patent issued pursuant to said patent application . . . no
amounts shall thereafter be paid hereunder.” It first took the
position that the failure of the 402 application to result in a
patent justified a reduction in the amount of royalty,’ but
ultimately claimed that it was entitled to use the '402 improve-
ment without charge, in the light of the first WHereas clause
and paragraph 9, and, similarly, to use the prior patents with-
out charge by virtue of paragraphs 9 and 1. To rebut this,
plaintiff sought, and was permitted, to offer parol evidence.
Defendant objected that the agreement was unambiguous, and
irremediable.
Although the result reached by defendant's interpretation of
the agreement seems quite unreasonable, it is not easy to fault
its analysis. The clear framework of the agreement, com-
mencing with the first WHereas clause, is that all the defend-
ant agreed to pay for was the invention described in the ’402
application, which “Invention constitutes an improvement on
certain patents hereinafter described.” Plaintiff does not meet
this problem by its basic argument that “the subject matter of
the agreement . . . was not solely the 89402 application.”
Whatever the total subject matter of the agreement, the only
obligation to make payments is under § 2, for the “use of the
Invention,” and the Invention is plainly, in terms, described in
the first Whereas clause as what is embodied in the 402 appli-
"There was no error in the admission of Mohasco’s president's letter of
August 13, 1970. We can agree that it was highly damaging, since,
contrary to defendant's position at the trial, it conceded that something was
due under the agreement. We disagree with plaintiff’s claim that the letter
was not an attempt to compromise, but was expressed in terms of defend-
ant’s interpretation of the facts, and as such, admissible. Hiram Ricker &
Sons v. Students Intl Meditation Society, 1 Cir., 1974, 501 F. 2d 550. On
the assumption of those facts, the 50 cents offer was not prejudicial.
47a
cation. However awkward some of the subsequent language
may be said to be, the agreement is highly resistant to reading
plaintiff's ambiguity arguments other than is impermissibly
creating a direct contradiction. There is, however, an alter-
native; what did the parties think of as covered by the ‘402
application?
As of the date of the agreement, before later cancellations
and amendments required by the Examiner to bring its seven
claims down to size, the 402 application did not claim merely
the minor improvement, a latch. Grandiosely, it included the
whole concept of plaintiff's chair. A patent lawyer should
have known better than to make such broad claims, which
would clearly have led to double patenting. Non constat,
however, that the parties could not contract with them in
mind. Nor is it a violation of the parol evidence rule to look
off the agreement to clarify its intended subject matter. Cf.
Antonellis v. Northgate Constr. Corp., 1973, 362 Mass. 847,
851; Robert Indus., Inc. v. Spence, 1973, 362 Mass. 751, 753-
54. Where the agreement itself, as here, refers to a written
document, this is particularly appropriate. Cf. Imper Realty
Corp. v. Riss, 1970, 358 Mass. 529, 534-35. When the agree-
ment is read in light of the ’402 application as it then stood, it
is not necessary for plaintiff to claim that the invention dis-
closed in the application is not the sole basis of the royalty
obligation. Rather, by incorporating the application’s broad
language, the royalty obligation attaches to the use of the
“Invention” as thus claimed.
Such an interpretation causes everything to fall into
place. For example, the seemingly singular limitation with
respect to exclusivity in the first April 1 letter, which, under
defendant’s narrow interpretation, would apply only to the
’402 improvement, and not prohibit licenses to third parties
under 992 and °374, thereby exposing defendant to substan-
tial competition, ceases to be inexplicable. Correspondingly,
48a
the obligation imposed on defendant in that letter to further
the use of the Invention, which would be of limited benefit to
plaintiff if restricted to the 402 improvement, acquires a rea-
sonable meaning. Most important, this reading explains the
grant in paragraph 1 of the right to use the prior patents
“without payment . . . in connection with the manufacture,
use and sale of the Invention hereby licensed.” If defendant
was to pay for the invention as broadly claimed in the *402
application, there was no point in paying for certain elements
of it twice. Instead, including these patents specifically in the
agreement was simply a cautionary matter, ai indicated by
defendant's counsel in one of his negotiating letters.
The only provision needing special comment is paragraph 9.
Here we think defendant’s contention that the examiner’s
rejection of the application is equivalent to a judicial deter-
mination of invalidity is too facile. As was testified to orally,
it is quite apparent on the face of the agreement that the
parties failed to contemplate a rejection of the application. If
we should assume, what the parties assumed, that the patent
were to be granted as sought, a declaration of invalidity, by
similar reasoning, would have permitted the “use of the Inven-
tion . . . without infringement of any claim of said patent,”
only if the declaration were that the whole Invention of plain-
tiff’s chair was unpatentable. Admittedly, this a broad con-
struction, which gives short shrift to the principle of double
patenting, but so did the preparer of the ’402 application.
We are aided in making it, when it rounds out the sense of the
agreement, by the fact that paragraph 9 was drafted by de-
fendant. On this basis, the actual eventuality, the examiner’s
cutting the application down to size and then rejecting it as
non-inventive, was not a determination that plaintiff’s basic
chair Invention was unpatentable and freely available to the
public. Accordingly, a jury was warranted in finding that
defendant was not relieved of the obligation to make payments.
49a
We recognize that our approach to the agreement does not
correspond exactly with that of the parties, here, or below,
and is somewhat at variance with the form of some of the
questions put to the jury. However, the rights that defendant
saved were with respect to a directed verdict, and this we
must hold it was not entitled to. Of equal importance, the
jury’s answers corresponded at least largely with our approach,
and reached exactly the same result. No purpose would be
served in granting a retrial.
50a
Appendix C3.
United States Court of Appeals
for the First Circuit
No. 75-1385
ALBERT M. SPOUND er A .,
PLAINTIFFS, APPELLEES,
0
MOHASCO INDUSTRIES, INC., er AL.,
DEFENDANTS, APPELLANTS.
Before Corrin, Chief Judge,
AupricH and Campse.L, Circuit Judges.
Memorandum on Petition for Rehearing
Entered May 13, 1976
Avpricu, Senior Circuit Judge. 1. The court regrets that in
concentrating on the substance of the trial court’s charge it
misspoke itself, to the extent of possibly creating a false im-
pression. Petitioner is right that the court did speak of a pre-
sumption of validity. However, it spoke of it only in terms of
a simple burden of persuasion, and not in the heavy patent
sense. The net result was that, to the extent there was error
5la
in the charge, it was in the defendant's favor. Defendant is
strictly correct, however, in criticizing the opinion, and we
will amend it by enlarging the phrase on slip page 8, “never
mentioned the presumption at all,” to read “never mentioned
the heavy presumption which normally attaches to Patent
Office decisions,” and by omitting footnote 5. The opinion
will be further amended by adding immediately thereafter, the
following.
Had such a burden been imposed upon defendant, it
would have been appropriate to add defendant's requested
qualification, viz., that to the extent there was relevant
prior art not considered by the Patent Office, this burden
was pro tanto weakened. However, the ordinary burden
of persuasion to which the court limited its charge is a
minimum that is never diminished. Rather, it “remains
upon the alleged infringer througout the proceeding and
is in no sense dependent on the character of the proceed-
ings before the Patent Office or the amount of prior art
cited to, or considered by, the Patent Examiner.” Chica-
go Rawhide Mfg. Co. v. Crane Packing Co., 1975, 523
F. 2d 452, 458, cert. denied, U.S. (1/26/76).
II and V. Petitioner’s second point we had considered, but
had decided not to vocalize further. It is not true that be-
cause a mechanical means was involved in ‘992’s improvement
over ‘347 it was only a mechanical — if anything — inven-
tion. Sakraida does not announce any new principle. De-
fendant did not complain of the charge in this respect. We
are not prepared to say as a matter of law that a close-fitting
“pop-up” headrest is but an obvious advance over ‘119’s ex-
tending footrest. Particularly we reject the argument in
defendant’s main brief suggesting plaintiff was in some way
52a
estopped by abandoning the ’402 application. Whether plain-
tiff achieved synergism, or a new and surprising result, or any
other expression of the requirement involved in obviousness vel
non, we believe was a jury question.
We may add that if there were any serious basis for defend-
ants claim that the invention was "347, to the exclusion of
‘992, "347 was both owned by plaintiff and included in the
license. It would seem to us that a jury that followed the
path to find '992 inventive would surely have transferred its
conclusions to "347 if that were to be thought the necessary
approach. See F. R. Civ. P. 15. Plaintiff might have brack-
eted defendant more neatly had it included ’347 in its com-
plaint, although in the final analysis, had it done so, we be-
lieve it would merely have complicated the proceedings to no
purpose.
III and IV. The balance of the petition largely reflects a
misunderstanding of what we said, and what we held. This
agreement was not a perfect agreement. One of the more dis-
ruptive features was contributed by defendant. Courts must
endeavor to make sense out of a business agreement if it is
possible to do so. Particularly must they try when an inter-
pretation is sought which, quite apart from any parol evi-
dence, makes no apparent sense.
The petition for rehearing will be otherwise denied.
By the Court,
DANA H. GALLUP,
Clerk.
53a
United States Court of Appeals
for the First Circuit
No. 75-1385
ALBERT M. SPOUND Er AL.,
PLAINTIFFS, APPELLEES,
‘
v.
MOHASCO INDUSTRIES, INC., er AL.,
DEFENDANTS, APPELLANTS.
Before Corrin, Chief Judge,
Aupricw and Campse.i, Circuit Judges.
Order on Petition for Rehearing
Entered May 13, 1976
The opinion herein, filed April 16, 1976, is amended by
striking out the phrase on slip page 8, “never mentioned the
presumption at all,” and footnote 5, and substituting in the
place of said phrase, the following,
Never mentioned the heavy presumption which normally
attaches to Patent Office decisions. Had such a burden
54a
been imposed upon defendant, it would have been appro-
priate to add defendant’s requested qualification, viz.,
that to the extent there was relevant prior art not con-
sidered by the Patent Office, this burden was pro tanto
weakened. However, the ordinary burden of persuasion
to which the court limited its charge is a minimum that
is never diminished. Rather, it “remains upon the alleged
infringer throughout the proceeding and is in no sense de-
pendent on the character of the proceedings before the
Patent Office or the amount of prior art cited to, or con-
sidered by, the Patent Examiner.” Chicago Rawhide
Mfg. Co. v. Crane Packing Co., 1975, 523 F. 2d 452,
458, cert. denied, U.S. (1/26/76).
Petition for rehearing denied.
By the Court,
DANA H. GALLUP,
Clerk.
55a
Appendix D.
Unrrep States Cope, Trrie 35.
§ 102. [Conditions fer patentability; novelty and loss of
right to patent. ]
A person shall be entitled to a patent unless —
(a) the invention was known or used by others in this coun-
try, or patented or described in a printed publication in this or
a foreign country, before the invention thereof by the appli-
cant for patent, or
(b) the invention was patented or described in a printed
publication in this or a foreign country or in public use or on
sale in this country, more than one year prior to the date of the
application for patent in the United States, or
(c) he has abandoned the invention, or
(d) the invention was first patented or caused to be patented
by the applicant or his legal representatives or assigns in a
foreign country prior to the date of the application for patent
in this country on an application filed more than twelve
months before the filing of the application in the United
States, or -
(e) the invention was described in a patent granted on an
application for patent by another filed in the United States
before the invention thereof by the applicant for patent, or
(f) he did not himself invent the subject matter sought to be
patented, or
(g) before the applicant’s invention thereof the invention
was made in this country by another who had not abandoned,
suppressed, or concealed it. In determining priority of inven-
tion there shall be considered not only the respective dates of
conception and reduction to practice of the invention, but also
the reasonable diligence of one who was first to conceive and
last to reduce to practice, from a time prior to conception by
the other.
56a
§ 103. [Conditions for patentability; non-obvious subject
matter. ]
A patent may not be obtained though the invention is not
identically disclosed or described as set forth in section 102 of
this title, if the differences between the subject matter sought
to be patented and the prior art are such that the subject
matter as a whole would have been obvious at the time the
invention was made to a person having ordinary skill in the
art to which said subject matter pertains. Patentability shall
not be negatived by the manner in which the invention was
made.
§ 282. [Presumption of validity; defenses. ]
A patent shall be presumed valid. The burden of establish-
ing invalidity of the patent shall rest on a party asserting it.
The following shall be defenses in any action involving the
validity or infringement of a patent and shall be pleaded:
(1) Noninfringement, absence of liability for infringe-
ment, or unenforceability,
(2) Invalidity of the patent or any claim in suit on any
ground specified in part II of this title as a condition of
patentability.
(3) Invalidity of the patent or any claim in suit for
failure to comply with any requirement of sections 112 or
251 of this title,
(4) Any other fact or act made a defense by this title.
§ 284. [Damages.]
Upon finding for the claimant the court shall award the
claimant damages adequate to compensate for the infringe-
ment but in no event less than a reasonable royalty for the use
made of the invention by the infringer, together with interest
and costs as fixed by the court.
57a
When the damages are not found by a jury, the court shall
assess them. In either event the court may increase the dam-
ages up to three times the amount found or assessed.
The court may receive expert testimony as an aid to the
determination of damages or of what royalty would be reason-
able under the circumstances.
FeperaL Ru.es or Crvit PROCEDURE.
Rule 8.
GENERAL RULES OF PLEADING.
(a) Claims for Relief. A pleading which sets forth a claim
for relief; . . . shall contain . . . (2) a short and plain
statement of the claim showing that the pleader is entitled to
relief, and (3) a demand for judgment for the relief to which
he deems himself entitled. . . .
(f) Construction of Pleadings. All pleadings shall be so
construed as to do substantial justice.
Rule 52.
FINDINGS BY THE COURT.
(a) Effect. In all actions tried upon the facts without a
jury or with an advisory jury, the court shall find the facts
specially and state separately its conclusions of law thereon,
and judgment shall be entered pursuant to Rule 58; and in
granting or refusing interlocutory injunctions the court shall
similarly set forth the findings of fact and conclusions of law
which constitute the grounds of its action. Requests for find-
ings are not necessary for purposes of review. Findings of fact
58a
shall not be set aside unless clearly erroneous, and due regard
shall be given to the opportunity of the trial court to judge of
the credibility of the witnesses. The findings of a master, to
the extent that the court adopts them, shall be considered as
the findings of the court. If an opinion or memorandum of
decision is filed, it will be sufficient if the findings of fact and
conclusions of law appear therein. Findings of fact and con-
clusions of law are unnecessary on decisions of motions under
Rules 12 or 56 or any other motion except as provided in Rule
41(b).
Rule 54.
JUDGMENTS; COSTS.
(c) Demand jor Judgment. . . . Except as to a party
against whom a judgment is entered by default, every final
judgment shall grant the relief to which the party in whose
favor it is rendered is entitled, even if the party has not de-
manded such relief in his pleadings.
EE TT
, ~
(Ff
4 ow
Whereas Albert M. Spound, of Los Angeles, California,
and Joseph Martin, of Bayside, New York said Martin assignor
to seid Spound, ; IA
pemearren to ras Com minnfanor af Pati-ats « eerrrnox varie ron
ves maw oo Ler rKies PRTRNT ret AX A142.60.D NEW AND UHEFTL INVENTION TME TIT
AND 4 GA.SCMIrTINUs Or WHITCh Ae. CAPTAINED DP ER TRE eer HM ATION OF Which
A COPY © MENMEUNTY AN NEAED ANT? SMAI: A PANT 900.008.0088, AND? 4 OMIA WITM THE
VARIOUS REQUINEMENTS OF LAW Im MEE 8 CARER MATDR: ANED BodeCEWEIDE ED, anD
CRON CK KRAMIASTION Mane: Tee mun CEAEMANT s ere
ADEUDUKD Te BK SUNTLY ENTITLED Ter 2 ETRE ENED EE FEee. Law.
Xow tnemeronr turn Lottery Weeatermé wc. ro Geavr tere THR BuD
9 Albert M. Spound, bis heirs On ASSIGNS
ror tek Tee of SEVENTEEN vraten rieom pur mare: OF THIN CHANT
TMK MIGHT TO HRCEA TF COTE PEETEM SCAM ENT. PENG et SELES Tee ME Invecn-
Tox THHROVOHOLT THe UNirxw State».
Sn testimony whereof. Vou hapa nte se my
hand ard rmusd lhe seal of the Perens hice
hohe uffiied al the Coty of Washengylon
fhe: fifth ay of _—s ay.
tn the yowrif ts. Jord one lhrrisn nine
Abandon wud Tifty-nine, and lr
. Inilype nde mer of thr Woah huh sof * hen g
Me we Aantrd unl eighty-third. é
60a
Disclaimer
2,884 ,992.--Albert M. Spound. Los Angeles, Calif. and Joseph Martin, Bay-
side, N.Y. Recuininc CHam Heaprest Constructions. Patent
dated May 5, 1959. Disclaimer filed Oct. 4, 1961, by the inventors.
Hereby enter this disclaimer to claims 7 and 8 of said patent.
[Official Gazette November 14, 1961.]
6la
May 35, 1959
A.M. SPOUND ETAL 2,884,992
RECLINING CHAIR HEADREST © -NSTRUCTIONS
Filea Jan. *7, 1958
6 Sheets-Sheet
FIG.7
—— = 6
a Ses. =
ne trielie © cused
gg” F
rr 2
o oe
ad
, 7#
a Fit
/
4
4
,
INVENTORS
ALBERT M SPOUND
JOSEPH MARTIN
@ fable,
ATTORNEY
62a
May 5, 1959 A.M. SPOUND ETAL 2,884,992
SEL INING CHAIR HEADREST CONS PUCTIONS
Fited Jan. 17, 13957 6 Sheets-—Sheet 5
FIG.6
ia
INVENTORS
ALBERT M SPOUND
JOSEPH MARTIN
” fale Uy,
AT TORNEY
63a
May 5, 1959 A. M. SPOUND ETAL 2,884,992
RECLINING CHAIR HEADREST 72277CTIONS
Filed can. 17. 1958 6 Sheets-Sheet 4
. ‘ s :
' S54"
. Ws .
/ Fp ae ©
WA ! ARX © INVENTORS
“4 ? _—-—
\
Woe ALBERT M. SPOUND
; yr él \ YA py, YOSEPH MARTIN
. e > ~~
\ i - ta PM fog,
N 7
ATTORNEY
64a 65a
May 5, 1959 A.M. SPOUND ETAL 2,884,992 May 5, 1959 A.M. SPOUND ETAL 2,884,992
PECLI'ING CHAIR HEACREST CONSTRUCTIONS , PECLINING CHAIR HEADREST CONSTRUCTIONS
ri- bs e
Fi.ed Jan. 17, 1956 6 Sheets-Sheet 3 Filed Jan. 17, 1956 & Sheets-Sheet 2
i tie SR ATs = ~\~
IT | iia
g s = +2 s E ' . » . VES
4 ‘sr. 8 ;* INVENTORS ‘ a. 7 * ALBERT M SPOUND
ath | . : ALBERT M. SPOUND . y- 8 SOSEPH MARTIN
_ — JOSEPH MARTIN \ BY
o Ky P re. — Male Oy
\ a Mad rg, ed .
AT TORNE Y
2 ATTORNEY
67a
United States Patent Office
2,884,992
Patented May 5, 1959
2,884,992
A.M. SPOUND ETAL
May 5, 1959
aie
NSTRUCTIONS
an
-¥
REST
~
-
CriAIR HEA
RECLINING
6 Sheets-Sheet 1
1958
Fated Jan. 17,
ee HTH
TH
Agcy pasaT EY iin nt Hs debeshle S223
Fi a eae ul
alas ss ue il oin2% 3° § 42 B36
PDs tHe et eel (Ht sata ii HATH
: ata ae Eiilialaes ERE HARE
Sie el eeitufaiee Here UU ean ag
: Pee HH ieee ta i aitiad
Brite el Ee dade bei
art Late Tear
jie % ¥ ayitts | 423 ¢222 TE
i He an ge A
Be iy i He HE i Hi: at Ae a
2142 a sae z fgette biafets gi-kd
aul ii Ht iT east (ail
igh ats Hea 4 if eet int Hint
ieee eit Hy ee lillteeeelia
Ht CHITIN Te : att 1k nlite ii
69a
2,884,002
68a
9,884,002
place only at the final portion of the motion of the
backrest toward sitting position.
3
My oom
uninterrupted
Eh ie Hie
pri ll
stationary frame
head supposting
headrest i
hind =
when the Pocket unt
3 ly
ATT tt ce
He ee Hu i: Mi iit Hil will
ijt] ime sinitt it ELLE peel ia runt 1s
ae a t i | rhe i vet a
He
rabntteiinadiile
ae He aati r
‘iti ae fi ‘t nil si uly ib fi Tanna
the unit, a headrest, a mov-
the other end of the link being pi
if {fay E322
i an Ht - :
g2: |
sition to force the headrest and its
Cited in the file of this patent
UNITED STATES PATENTS
having a substantially
amp eres oon
headr
a
ee en
see
4-4
ive
alle Te
chair comprising a
rest supporting <urface
$33
183
- ing
rs backrest
the frame toward reclining pos
surface, said unit heing swings
Se tag on a
‘
.
“xe
pivotally connected to
able ny) sone in the bracket
eo position om he
and 0 sedilaing peuitien _ a headrest mov
rt
6
eo bracket intermediate its ends. one end of the link
eo a wit id eae Bvig
—s mounting frame so that
YO"
asters
so supporting surf.
first link intermediate the ends of the
comprising a frame, a ———
member at its other end.
driving
oo sai
sealing
unit, a
said bac
means
mammaticaly soe
to reclining
ee) aoe ‘
the frame,
angles to
_—*
ye
and the
meter dhe
of furniture
oo
to the
to the
at tana
mounted
and
with said
~— A, L.
thereof, and
ii if} iff ae
ee
i te Beir id (file Haul un tif it
i! a i a itt Eel 1! nut Hh 1
it
ay4 aj id it i i
i] te if if, i i] 1 if iE ca ae
seeettia erate sii ial He thitles ‘
Hi ee 144 21344 i qi] SMEUTT | a rH et SH iH ta
an IH Berean ayes delish Sh liee
nit en due ae iu He ii ut ithe t
The link
may be
of the inte
ig. 5
de
94 or 96 and this is Mustrated in Fi
member 106 is operated as abov
to driving member 76 and has
108 and 110.
ided
in
Li
In
ast
4, which
This is provi
rest is connected
34 in a rectilinearly movable ma
ts at 2118 and 117.
ub
33. << ho
TT
HATE
ttl
pivu
A modification of this construction is shown in Fig.
ates Go Sites canes 5) haseens © See
is provided
po ey
member acts
wr 4
te brie 2
Link 164
case, links 162 and
the parts as show
of lever 82 in a
to the
this causes
as above
reached its
alignment
member 76
tion is true
rm motion of
py 44
reach portio
If desired, driving member 76
to the link 102 without the use
forms the four-bar lini
fixed
is substantially the san
pana
Girectly on link 11
when bk 094 gun
gitudina! portioa
OE is jatite thi
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.