# Petition — AB Turn-O-Matic v. Tveter > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1435%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1981 - **Citation:** 451 U.S. 911 ## Text STEVAS, CLERK In the Supreme Court of the United States Oocroser TrRM, 1980 AB Turn-O-Martio, Petitioner, vs. Sven TVETER, ! Respo.dent. | | Petition for Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit New. A. Smirx# Grorce C. Limpacn Liusacn, Limsace & Sutton 2001 Ferry Building San Francisco, CA 94111 (415) 433-4150 Counsel for Petitioner === —————__ = SORG PRINTING COMPANY OF CALIFORNIA, 346 FIRST STREET, SAN FRANCISCO 94109 SUBJECT INDEX Page Opinions Below 1 Jurisdiction 2 Question Presented , ; 2 Sistutore Provision Involved.............. 2 Statement of the Case 2 A. The Issue .. 2 B. The Opinions Below 3 Reason for Granting the Writ | 3 _A. Summary 3 B. The Conflict ie “ie Conclusion : 8 Appendix A. Opinion Tveter v. AB Turn-O-Matic. Cite as 633 G.2d 831 (9th Cir. 1980) App. p. 1 Appendix B. United States Code, Title 35 Patents. 18 a Appendix C. Opinion AB Turn-O-Matie v. Tveter (N.D. Cal. 1977) 19 TABLE OF AUTHORITIES CasEs Pages American Seating Co. v. National Seating Co., 586 F.2d 611 (6th Cir. 1978) 000... 5 Amp Ine. v. Bunker Ramo Corp., 604 F.2d 24 (7th Cir. 1979) 6 Anderson’s-Black Rock Inc. v. Pavement Salvage Goi, % ge «ME 2S. 5 SBR anc aMMROD i UCTS OS A 4,7 and 8 Astro Music Inc. v, Eastham, 564 F.2d 1236 (9th Cir. 1977) SEPM OSE N BRIE CTS he OTE 6 Bowser, Inc. v. United States, 388 F.2d 346 (Ct.Cls. ESE ERIE AMO 2S SEL Ny PL OER 7 Brennan v. Mr. Hanger, Inc., 479 F.Supp. 1215 (S.D. N.Y. 1979) a 8 Champion Spark Plug Co. v. Gyromat Corp., 603 F.2d 361 (2nd Cir. 1979)................... 5 Clark Equipment Co. v. Keller, 570 F.2d 778 (8th Cir. 1978) ta 6 Deere and Co. v. Hesston Corp., 593 F.2d 956 (10th Cir. 1979) sila aia sageelininiickeisekeSisedehsansasieoacsighibbeda ue 7 Digitronics Corp. v. New York Racing Ass’n Inc., 553 nae cep (a0 Cir, 1977) 5 Graham v. John Deere Co., 383 U.S. 1 (1966)................ 3, 4 Hanson v. Alpine Valley Ski Area, Inc., 611 F.2d 156 6th Cir. 1979) : 6 Herschensohn v. Hoffman, 593 F.2d 893 (9th Cir. 1979) 6 International Tel. & Tel. Corp. v. Raychem Corp., 538 F.2d 453 (1st Cir. 1976) ..................:...... 4 > TABLE OF AUTHORITIES ed iii Pages John Zink Co. v. National Airoil Burner Co., 613 F.2d 547 (5th Cir. 1980) Leinoff v. Valerie Furs Ltd., 501 F.Supp. 720 (S.D. N.Y. 1980) Norfin, Inc, v. International Business Machines, 625 F.2d 357 (10th Cir. 1980)..... Palmer v. Orthokinetics Inc., 611 F.2d 316 (9th Cir. 1980) Parker v. Motorola, Inc., 524 F.2d 518 (5th Cir. 1975) Penn Internationa] Industries v. Pennington Corp., 583 F.2d 1078 (9th Cir. 1978) Plastic Container Corp. v. Continental Plastics, 607 F.2d 885 (10th Cir. 1979) Reinke Mfg. Co. Inc. v. Sidney Mfg. Corp., 594 F.2d 644 (8th Cir. 1979 ) Republic Industries, Inc. v. Schlage Lock Co., 592 F.2d 963 (7th Cir. 1979) Reynolds Metals Co. v. Acorn Bldg. Components, Ine, 548 F.2d 155 (6th Cir. 1977) Roanwell Corp. v. Plantronics, Inc., 429 U.S. 1004 1976) Sakraida v. Ag Pro, Inc., 425 U.S. 273 (1976) ............ Sims v. Mack Truck Corp., 608 F.2d 87 (3rd Cir. 1979) Smith v. ACME General Corp., 614 F.2d 1086 (6th Cir. 1980) Sponnoble, In re, 405 F.2d 578 (CCPA 1969)................ True Temper Corp. v. C F & I Steel Corp., 601 F.2d 495 (10th Cir. 1979) 22... pra Sten cheatin hah 5 4,7 5 iv TABLE oF AUTHORITIES MISCELLANEOUS Pages Conner, Some Highly Personal Reflections on Section 103,5 APLA Journal 2, pp. 77-86 (1977) 8 Markey, The Synergism Virus: Cause and Cure, 2 Bull. L.A. Pat, La Assoc. 2 (Oct. 6, 1980) .................. 8 Miller, Factors of Synergism and Ordinary Skill in the Pertinent Art in Section 103 Determinations, 8 APLA Journal 4, pp. 321-332 (1980) 8 Rich, Escaping the Tyranny of Words—Is Evolution im Legal Thinking Impossible? 60 JPOS 5, pp. 271- 303 (1978) 8 STATUTES Patent Act of 1952, Sec. 103 (35 USC 103) ............ 2, 3, 4, 6, 8 United States Code, Title 28, Sec. 1254(1) we , 2 | ERE In the Supreme Court of the United States Ocroser Term, 1980 AB Turn-O-Matio, Petitioner, vs. Sven TVETER, Respondent. Petition for Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit Petitioner, AB Turn-O-Matic, prays that a Writ of Cer- tiorari issue to review the judgment of the United States Court of Appeals for the Ninth Circuit. OPINIONS BELOW The opinion of the Court of Appeals is reported at 633 F.2d 831 and is reprinted as Appendix A to this Petition. The opinion of the District Court for the Northern District of California which is unreported is reprinted as Appendix C prefaced by final amendments thereto and including the supporting record references. 2 JURISDICTION The judgmcnt of the Court of Appeals. was filed Decem- ber 4, 1980. The jurisdiction of this Court is invoked under 28 USC 1254(1). QUESTION PRESENTED Is “synergism” a requirement for unobviousness of in- ventions under 35 USC 103 despite the fact the statute says nothing about synergism? STATUTORY PROVISION INVOKED This case involves Section 103 of the Patent Act of 1952, 35 USC 103. (Appendix B). _ STATEMENT OF THE CASE A. The Issue. Petitioner, AB Turn-O-Matic, seeks review of the deci- sion of the Court of Appeals for the Ninth Circuit reversing in part the judgment of the District Court and holding Petitioner’s ticket dispenser patent invalid by failing to meet the non-statutory, post-invention, factual test of “synergism”—i.e., only when the whole in some way exceeds the sum of its parts is the accumulation of old elements patentable. Turn-O-Matic is the owner of United States Letters Patent No. 3,885,724 issued in 1977 on a ticket dispenser for a waiting customer numbering system. Turn-O-Matie brought an action against Respondent, Sven Tveter, who had duplicated the Turn-O-Matic ticket dispenser. The ac- tion was for patent infringement, trademark infringement, and unfair competition. The District Court held that the patent on the ticket dispenser was valid and infringed, that the trademark in question was valid and infringed and that Tveter had unfairly competed with Turn-O-Matic. While 3 affirming the District Court’s decision of trademark in- fringement and unfair competition, the Court of Appeals reversed the trial court and held the patent invalid under 35 USC 103. B. The Opinions Below. The trial court made detailed factual determinations for a decision of obviousness under 35 USC 103 by the test established by this Court in Graham.’ The District Court concluded from its factual determinations that the ticket dispenser would not have been obvious to one skilled in the art and was, therefore, patentable. The District Court made a determination if such was required under the law that the ticket dispenser of the patent produces a synergistic result. The Court of Appeals seized upon a four sentence ex- cerpt from the eleven-day trial as supposedly the sole basis for the trial court’s determination of a synergistic result and suggested that the synergistic resuli stated there would accurately describe a simple cellophane tape dispenser. With its own offhand unsupported determination that the patented ticket dispenser would not produce a synergistic result, the Court of Appeals held that lacking a necessary synergistic result the patent was invalid for obviousness. REASON FOR GRANTING THE WRIT A. Summary. ; Petitioner respectfully submits that this Court should review the present case to eliminate the conflict among the Circuits as to the effect of synergism on patentability. B. The Conflict. By Section 103 of Title 35 enacted in 1952, Congress has specified that an inventor is entitled to a patent for his invention unless that invention would have been obvious, 1. Graham v. John Deere Co., 383 U.S. 1 (1966). + at the time the invention was made, to a person of ordinary skill in the art. This Court in construing Section 103. in Graham recognized the difficulty for courts in interpreting what would be “obvious,” and the need for a practical test for patentability. Accordingly, this Court set out in Graham? the following test for determination of patentability in terms of obvious- ness: “Under Section 103 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 subject matter is determined.” Nothing in Section 103 or the test specified in Graham says anything about synergism or even mentions “syner- gism.” Subsequent to Graham, this Court decided Anderson’s— Black Rock * and Sakraidat While both of these subsequent decisions mention “synergism,” neither decision states that synergism is necessary or sufficient to establish non- obviousness and thus patentability. There is a split among the Circuits, and even within certain circuits, as to the effect of “synergism” on a de- termination of obviousness. Some courts says “synergism” is necessary to establish patentability; some say “syner- gism” is unnecessary to establish patentability; and some say “synergism” is sufficient to establish patentability. The First Circuit in International Tel. & Tel. Corp. v. Raychem Corp.’ held that a synergistic effect was the rele- 2. Id. at page 17. 3. yw rhe. ’s-Black Rock v. Pavement Salvage Co., 396 U.S. 57, (1969). 4. Sakraida v. Ag Pro, Inc., 425 U.S. 273 (1976). 5. 538 F.2d 453, 457 (1st Cir. 1976). 5 vant legal standard for determining patentability and that the findings established “a sufficient synergistic effect” be- tween the materials of the article to cross the border line to constitute patentable invention. The Second Cireuit impliedly, but not specifically, re- jected the theory that synergism is necessary to establish patentability in Champion Spark Plug v. Gyromat Corp.,° but that Circuit has held that synergism is a sufficient condition to establish patentability. Digitronics Corp. v. New York Racing Ass’n Inc.? The Third Circuit in evaluating synergism as a require- ment noted the split among the circuits and declined to rule that synergism is a precondition to patent validity in all cases. Sims v. Mack Truck Corp.® 3 The Fifth Cireuit on the one hand has stated that only where there is a synergistic result is the device patentable. Parker v. Motorola, Inc.® On the other hand, that same Fifth Cireuit has recited the requirement of a synergistic result as one of three alternative conditions for determining patentability. John Zink Co. v. National Airoil Burner Co.” The Sixth Circuit requires synergism to constitute pat- entability. Reynolds Metals Co. v. Acorn Bldg. Components, Inc.™ and American Seating Co. v. National Seating Co. In its most recent pronouncement in Smith v. ACME Gen- eral Corp.™ the Sixth Circuit discussed various applica- 6. 603 F.2d 361, 372 (2nd Cir. 1979). 7. 533 F.2d 740, 747 (2nd Cir. 1977) and recently followed in Leinoff v. Valerie Furs Ltd., 501 F.Supp. 720, 725 (S.D.N.Y. 1980). 8. 608 F.2d 87, 93 (3rd Cir. 1979). 9. 524 F.2d 518, 531-532 (5th Cir. 1975). 10. 613 F.2d 547, 551 (5th Cir. 1980). 11. 548 F.2d 155, 166 (6th Cir. 1977). 12. 586 F.2d 611, 620 (6th Cir. 1978). 18. 614 F.2d 1086, 1093-1095 (6th Cir. 1980). tions of the synergism test and again applied it-as a re- quirement for patentability. This circuit also has held that synergism is a sufficient condition for APR Rees Hanson v. Alpine Valley Ski Area, Inc.™ The Seventh Circuit rejects the requirement of syner- gism for establishing patentability. In Republic Industries, Inc. v. Schlage Lock Co2* the Seventh Circuit made a de- tailed analysis of the background and application of the “synergism” test including Anderson’s-Black Rock and Sakraida before concluding that “synergism” does not com- port with the Graham mandate to apply Section 103. In accord: Amp Inc. v. Bunker Ramo Corp.* While the Eighth Circuit held in Clark Equipment Co. v. Keller that “synergism” has no talismanic power and is merely one indication of nonobviousness, that same Court has more recently held that synergism is one of the require- ments that the court must look for in determining whether patents meet the Section 103 requirements of patentability. Reinke Mfg. Co. Inc. v. Sidney Mfg. Corp.® The Court in the Ninth Circuit where the present case arose has required synergism. Astro Music Inc. v. East- ham,” Penn International Industries v. Pennington Corp.,” and Herschensohn v. Hoffman.” In a decision just eleven months before the decision in the present case the Ninth Circuit examined the split among the Circuits regarding 14. 611 F.2d 156, 160 (6th Cir. 1979). 15. 592 F.2d 963, 971 (7th Cir. 1979). 16. 604 F.2d 24 (7th Cir. 1979). 17. 570 F.2d 778, 789 (8th Cir. 1978). 18. 594 F.2d 644, 648 (8th Cir. 1979). 19. 564 F.2d 1236, 1238 (9th Cir. 1977). 20. 583 F.2d 1078, 1081 (9th Cir. 1978). 21. 593 F.2d 893, 896 (9th Cir. 1979). - any requirement of synergism and then sidestepped’ the issue. Palmer v. Orthokinetics Inc.” | In the Tenth Circuit the Court in Deere and Co. v. Hesston Corp.™ and True Temper Corp. v. C F & I Steel Corp.™ stated that synergism must exist for a valid patent but in Plastic Container Corp. v. Continental Plastics*™ stated that synergism is not a requirement. In Norfin, Inc. v. International Business Machines* the Tenth Circuit acknowledged the conflict within its own circuit but left reso- lution of the conflict “for a later day.” The Court of Customs and Patent Appeals in In re Sponnoble*™ rejected a requirement of synergism for pat- entability as did the Court of Claims in Bowser, Ine. v. United States. From the conflicts even within certain of the Circuits it is apparent that it is not even possible to make an ac- curate summary of which Circuits require and which reject synergism. Views from Justices of this Court have added to the conflict. In the published dissent to the denial of certiorari in Roanwell Corp. v. Plantronics, Inc2* Justice . White, joined by Justice Brennan, stated that for patentability “there must be a synergistic result that is itself unobvious,” citing Anderson’s-Black Rock and Sakraida. This statement is in sharp contrast with the Seventh Circuit which noted 611 F.2d 316, 324 (9th Cir. 1980). 593 F.2d 956, 962 (10th Cir. 1979). 601 F.2d 495, 506 (10th Cir. 1979). 607 F.2d 885, 904 (10th Cir. 1979). 624 F.2d 357, 365 (10th Cir. 1980). 405 F.2d 578, 585 (CCPA 1969). . 888 F.2d 346, 349-350 (Ct.Cls. 1967). 429 U.S. 1004, 1006 (1976). BENEBRER 8 in Republic” that nowhere in Anderson’s-Black Rock or in Sakraida did this Court hold a synergistic effect to be a necessary condition of patentability. | Federal Judges Howard T. Markey,™ Giles S. Rich,” Jack R. Miller® and William C. Conner. all of whom have had extensive exposure to patent cases, have written ar- ticles criticizing a requirement that synergism exist to establish patentability. Application of a synergism test suffers right from an attempt to define the term. “Synergism” is only a figure of speech and in the literal sense never has existed and never can exist in mechanical inventions when the term is defined as a whole result greater than the sum of its constituent parts. A more fundamental flaw with the synergism test is that the test reflects on “obviousness” after the invention was made rather than “at the time the invention was made” as specified in Section 103. This Court is aware of the need for reducing the number and duration of Federal court cases. Until this Court acts to clear up the morass surrounding “synergism” as applied 30. Republic Industries inc. v. Schlage Lock Co., 592 F.2d 963, 969 (7th Cir. 1979). 31. Markey, The Synergism Virus: Cause and Cure, 2 Bull. L.A. Pat. Law Assoc. 2, (Oct. 6, 1980). 32. Rich, Escaping the Tyranny of Words—Is Evolution in Legal Thinking Impossible?, 60 JPOS 5, pp 271-303 (1978). 33. Miller, Factors of Synergism and Level of Ordinary Skill in the Pertinent Art in Section 103 Determinations, 8 APLA Journal 4, pp 321-332 (1980). Judge Miller wrote the decisions in the Champion Case, note 6 supra, and the Plastic case, note 25 supra. 34. Conner, Some Highly Personal Reflections on Section 103, 5 APLA Journal 2, pp 77-86 (1977). Judge Conner stated in his recent opinion in Brennan v. Mr. Hanger, Inc., 479 F. 1215, 1225 (S.D.N.Y. 1979) that left any choice he would join the Courts of Appeal for the Seventh and Tenth Cireuits in expressly repudiating the synergism requirement. 9 in patent cases, the number of lengthy, complex patent trials and appeals revolving on the application of “syner- gism” will increase. And it appears clear that sooner or later this Court will have to speak on this issue. In order to bring consistent predictability to this branch of the law and resolve the conflict between the Circuits, we urge that Petitioner’s Writ be granted and that this Court strike synergism as a requirement for patentability. CON ©LUSION For the reasons stated, a Writ of Certiorari should issue to review the judgment and opinion of the United States Court of Appeals for the Ninth Circuit. Respectfully submitted, Lrusac#, Limpacn & Surron By New A. Suir Attorneys for the Petitioner Appendix A Filed December 4, 1980 Richard H. Deane, Clerk, U.S. Court of Appeals United States Court of Appeals for the Ninth Circuit No. 77-2299 D.C. No. C 75 1097 RHS SVEN TVETER, an individual, doing business as SGT Enterprises, Defendant-A ppellant, Vv. AB TURN-O-MATIC, a Swedish corporation, and SCANDUS, INC., a California corporation, Plaintiff s-Appellees. OPINION Appeal from the United States District Court for the Northern District of California Cecil F. Poole, District Judge, Presiding Argued and submitted March 13, 1979 Before: BROWNING, Chief Judge, WALLACE, Circuit Judge, and CURTIS,* District Judge BROWNING, Chief Judge: Appellant Tveter produces and distributes “Take-A- Turn,” a device for dispensing numbered tickets to persons awaiting service, Appellee AB Turn-O-Matic produces “Turn-O-Matic,” a similar device performing the same func- tion. The “Turn-O-Matic” device is distributed in the United *Honorable Jesse W. Curtis, Senior Judge, United States District Court for the Central District of California, sitting by designation. 2 Appendix States by appellee Scandus, Inc. It was first on the market. The district court held that appellant had infringed appei- lees’ patent and trademark rights, and that appellant had unfairly competed with appellees by simulating the appear- ance of the “Turn-O-Matic” and “palming off” appellant’s goods as those of appellees. We reverse in part and affirm in part, concluding that the “Turn-O Matic” device is unpatentable for obviousness, but that appellant violated appellees’ trademark rights and engaged in unfair competition in the marketing of “Take- A-Turn.” I. Appellees’ “Turn-O-Matic” is a commercial embodiment of Ehrlund U.S. Patent No. 3,885,724, issued May 27, 1975, for a “Device for Tearing Off Pieces of a Certain Length from a Strip.” Appellant contends the Ehrlund patent was invalid under 55 U.S.C. § 103, which permits a patent to be issued only 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. The district court made findings on the factual issues identified in Graham v. John Deere Co., 383 U.S. 1, 17 (1966), as relevant to the determination of obviousness under section 103: (1) the scope and content of the prior art; (2) the differences between the prior art and the claims at issue; and (3) the level of ordinary skill in the pertinent art. The district court concluded that the device disclosed by the Ehrlund patent would not have been obvious to one Appendiz 3 skilled in the art and was therefore patentable—a conclu- sion of law. Sakraida v. Ag Pro Inc., 425 U.S. 273, 280 (1976). In defending the court’s findings and conclusion, appel- lees argue that because of the statutory presumption of validity, 35 U.S.C. § 282, appellant bore “the heavy burden of persuasion by ‘clear and convincing’ proof of the alleged obviousness of the patented invention.” The presumption of non-obviousness over the prior art rests upon the assumption that the patent examiner com- pared the claims with the prior art. The examiner did not have before him Ingram No. 1,704,044, Burr & Davis No. 843,579, Osborn Nos. 3,173,601 and 3,229,876, Williams No. 3,098,594, Belouc. No. 2,361,528, Kingsbury No. 1,983,463, and Suk No. 1,575,081. As indicated below, these prior pat- ents contain disclosures closer to Ehrlund’s device than those found in the patents considered by the examiner. This circumstance dissipated the presumption of validity. The burden of proof with respect to non-obviousness remained with appellees as claimants under the patent. Photo Elec- tronics Corp. v. England, 581 F.2d 772, 775 (9th Cir. 1978) ; Deere & Co. v. Sperry Rand Corp., 513 F.2d 1131, 1132 (9th Cir. 1975) ; Hewlett Packard Co. v. Tel-Design Inc., 460 F.2d 625, 628 (9th Cir. 1972). The district court’s findings as to the content of the prior art are not in question. The court treated all of the prior patents relied upon by appellant as pertinent prior art. The district court’s findings as to the differences between the prior art and the patented device consist primarily of listings of one or more respects in which a particular device disclosed in a particular prior art patent, separately con- 1. See note 6, infra. > | 4 Appendix sidered, differed from the device disclosed in the Ehrlund patent. The differences are largely semantic—often relating more to the label attached to a particular element than to its function.? In any event, the fact that each prior patented device differed in one or more respects from the Ehrlund device establishes only that the latter was not “identically disclosed or described” in previous patents, thus satisfying section 102 of Title 35. This is not enough to satisfy the requirement of section 103 that a patentable device disclose a non-obvious advance over the whole of the pertinent prior art. Nor is the non-obviousness requirement satisfied simply because the article sought to be patented differs from the pertinent prior art taken as a whole. “[T]he mere existence of differences between the prior art and an invention does not establish the invention’s nonobviousness. The gap be- tween the prior art and [the invention must be sufficiently] great as to render the system nonobvious to one reasonably skilled in the art.” Dann v. Johnston, 425 U.S. 219, 230 (1976). The district court found that the “skill of the average man in this art includes mechanical knowledge, knowledge of materials, and properties of materials, a mechanical abil- ity to see how things fit together, and probably exposure to earlier model dispensers.” (Emphasis added). The empha- sized phrase suggests a misapprehension of the law. There can be no doubt that the test for patentable invention is whether the innovation would have been obvious to a person of ordinary skill charged with complete knowledge of all pertinent prior developments, however much universal knowledge might exceed the knowledge actually possessed by the ordinary workman in the art. Walker v. General 2. See note 7, infra. ; Appendix 5 Motors Corp., 362 F.2d 56, 60 n.3 (9th Vir. 1966). Since. such compendious knowledge is at best unlikely, in the usual case the inquiry must be hypothetical. The district court’s findings recite testimony by the alleged inventor and by two experts that the patented device would not have been obvious either to them or to a person of average skill in the art even had they known of the prior art cited by appellant. Such testimony is of little value. “Obviousness” is not a simple factual conclusion drawn from the subsidiary findings of fact as a matter of ineluc- table logic. “Obviousness” is a question of law, Sakraida v. Ag Pro Inc., swpra, 425 U.S. at 280, a legal concept embody- ing the constitutional standard of invention. An innovation is not necessarily patentable because it results in greater convenience and utility. To be patentable, an innovation must embody “invention”; and “invention” excludes adjustments, alterations, and improvements that could be expected to result from the exercise of the skill and ingenuity of a mechanic charged with knowledge of all that is: disclosed in prior art. This is the exclusion expressed in section 103’s requirement that the innovation must not be “obvious” to such a person. Sakraida v. Ag Pro Inc., supra, 425 U.S. at 279. The level of innovation required for patentability is especially high where the device is a combination of old elements, as here. Such a “mechanical combination must utilize a new principle or achieve a new result to cause it to rise to the status of invention.” SSP Agricultural Equip- ment, Inc. v. Orchard-Rite Ltd., 592 F.2d 1096, 1101 (9th Cir. 1979). “The conjunction or concert of known elements must contribute something; only when the whole in some way exceeds the sum of its parts is the accumulation of old devices patentable.” Great Atlantic & Pacific Tea Co. v. 6 Appendiz Supermarket Equipment Corp., supra, 340 U.S. at 152. There must be “unusual or surprising consequences from the unification of the elements”; the old elements must per- form an “additional or different function in the combina- tion than they perform out of it.” Jd. As we have repeatedly said, this is a “severe test.” See, e.g., Rigimbal v. Scyman- sky, 444 F.2d 333, 339 (9th Cir. 1971); Santa Anita Manu- facturing Corp. v. Lugash, 369 F.2d 964, 967 (9th Cir. 1966) ; Bentley v. Sunset House Distributing Corp., 359 F.2d 140, 144 (9th Cir. 1966). “Mechanical patents covering a combi- nation of old elements must be scrutinized with care, since it is unlikely that such combinations will amount to patent- able invention.” SSP Agricultural Equipment, Inc. v. Or- chard-Rite Ltd., swpra, 592 F.2d at 1101. The Ehrlund “Turn-O-Matic” contains a roll of paper tickets numbered consecutively. The tickets are divided by a punched or perforated line across most of the width of the strip, leaving an uncut margin on both sides. The per- forated or punched line is curved or angled toward the user at midpoint. As a ticket is pulled, it passes over a projecting flange having the same width as the flap or tongue. Downward pressure on the tape brings the uncut, unperforated margins of the tape in contact with cutting edges at each side of the flange, separating the ticket. The flap or tongue of the succeeding ticket, held level by the flange, projects from the dispenser for the next user to grasp. Appellees’ claim of inventive difference in the Ehrlund device “is the guidance structure that cooperates without moving parts with the forwardly directed ticket tongue or flap to dispense intended tickets in a one-hand, one-step pull- ing operation in which the end ticket is separated from the roll leaving the ticket tongue of the succeeding ticket Appendix 7 protruding from the dispenser ready to pull the next tic- ket.” Appellees’ Brief, page 16. Devices for severing and dispensing sheet material in predetermined lengths are old.’ Such devices commonly dis- close means for guiding the material over a cutting edge for separation.* Several employ a one-hand, one-step oper- ation and have no moving parts.® In the final analysis, appellees’ argument for patentability over the prior art rests upon the interaction between the pro- jecting flange and a ticket strip having flaps or tongues pointed in the feeding direction of the strip. Brief for Ap- pellees, page 31. This development is not inventive over Burr & Davis, No. 843,579 (1907), in light of Beloud No. 2,361,528 (1944), or over the so-called “Baggie” patents, Os- born Nos. 3,173,601 (1965) and 3,229,876 (1966) and Wil- liamson No, 3,098,594 (1963).° 3. Burr & Davis No. 843,579 (“Means For Holding and Detach- ing Ribbon Strip Labels”) (1907); Ingram No. 1,704,044 (“Dis- pensing and Severing Device for Rolled Strip Material’) (1929); Beloud No. 2,361,528 (“Device to Sever Paper Sales Tax Slips’’) (1944); Williamson No. 3,098,594 (“Container For Shipping, Storing and Dispensing Sheet Material in Predetermined Lengths”) (1963) ; Osborn No. 3,173,601 (“Dispensing Sheet Material in Pre- determined Lengths”) (1965); Osborn No. 3,229,876 (“Dispensing Sheet Material in Predetermined Lengths”) (1966). 4. Burr & Davis No. 843,579; Ingram No. 1,704,044; Beloud No. 2,361,528. 5. Burr & Davis No. 848,579; Williamson No. 3,098,594; Osborn No. 3,173,601; Osborn No. 3,229,876. 6. None of these references was cited by the examiner, who relied instead upon four less pertinent patents. Borden No. 2,221,213 (1940) discloses a dispenser permitting the user to tear off a piece of any length desired from a roll of adhesive tape. Burez No. 3,007,619 (1961) discloses a similar dispenser for thick tapes that are difficult to tear, such as plastic electricians’ tape. Kunsch No. 3,088,640 (1963) is a variation of the standard aluminum foil box, having several large teeth on the cutting edge so that foil may 8 Appendix Burr & Davis No. 843,579 (“Means for Holding and De- taching Ribbon Strip Labels”) discloses a rolled ribbon, divided into individual labels by perforated lines, wound inside the machine. The perforated cloth strip is pulled out and down over a frame or flange causing the perforations to tear, beginning in the center of the perforation, until a single label is separated.” The outer casing or cover of the device has an inward curve over the flange that exnoses a tongue-shaped portion of the succeeding label resting on the flange. By pulling this exposed tongue out and down over the flange, the next user ms, detach a label with a single motion. Burr & Davis cuts fxom the «enter rather tnan at the sides, and the next ticket, though exposed, does not pro- trude. But cutting at the sides and protrusion are found in Beloud No. 2,361,528, a dispenser described as leaving a portion of the next section of the material visible and accessible, in order to allow the operator to withdraw the material to the desired position which will permit a section to be separated from the main body of the material and to repeat the operation at will. Under the “Baggie” patents, a rolled sheet of bags or plastic, divided by perforations, is drawn from a container be either torn off or perforated, or both, at any intervals desired. German Application Disclosure No. 1,218,492 (German Federal Republic 1966) discloses a device for separating punched data processing tape and at the same time marking the direction in which the tape is traveling. 7. The district court found that Burr & Davis No. 843,579 “does not disclose a flange for temporarily arresting movement of the ticket tongue that is directed in the feeding of the strip as specified in’ the Ehrlund patent. Whether or not any portion of the projecting separation edge of the Burr & Davis device is called a “flange,” the Burr & Davis patent discloses a guiding means that arrests the tape, allowing separation. Similar semantic dis- tinction clouded the district court “erp as to Beloud No. 2,361,528 and the “Baggie” patents, all of which disclose arresting mechanisms. Appendix ‘9 across a cutting edge having a vertically projecting section at the center. When the perforated line is pulled over this projection or flange, the perforations tear and the forward motion of the next bag is arrested by the flange. Continued pulling completes the separation. The patent description specifies that after each bag is removed its successor pro- trudes: During the act of severance, some small distortion of the sheet material takes place whereby the severed portions thereof on opposite sides of the arresting tab extend outwardly and the corner extremities are sup- ported upon the angular edges of the guide tabs and thus restrained against dropping within the container and out of reach. In this manner the material of the roll (or otherwise packaged material) remains avail- able for convenient grasping whereby withdrawal and severance of the next successive length may be accom- plished. Appellant argues that the Baggie device requires the user to lift the next bag over the projecting flange before it can be removed. This problem could be solved by qurving or angling the line of perforations between bags to/produce one or more tabs or tongues. Appellant recognizes that “Ta] major difference between this prior art and the claims of the Turn-O-Matiec patent is the construction of the ticket strip recited in the Turn-O-Matic claim.” _ Because the description of the ticket strip is found in the preamble rather than in the body of the claims of the Ehrlund patent,® the parties debate whether it is an element 8. Claim 1 of the Ehrlund patent, for example, reads: A device for tearing off pieces of the same predetermined length from a roll of fed flexible strip, said strip having punched lines forming tongues equally spaced along said strip with their spacing equal to said predetermined length and 10 Appendiz of the combination claimed by Ehrlund.® It is unnecessary to resolve the issue. Based on the record before us, the essentials of the strip’s construction are in any event old in the art. Suk No. 1,575,081 (1926) claims: A record strip comprising a signal [sic] oblong length of flexible fibrous material having equally spaced portions thereof scored transversely to pro- vide a series of detachable sections, the scoring be- tween adjacent sections extending along an irregular shaped line so that each section upon detachment will have at one end a projecting tongue. Appellees contend the Ehrlund device meets the not “obvious” standard because the combination of old elements is “synergistic”, i.e., “result{[s] in an effect greater than directed in the feeding direction for said strip, whereby the portion of each tongue which is firmly connected to the re- mainder of the strip is perpendicular to the longitudinal direction of the strip, said device comprising a casing for said strip roll, said casing having side walls and an open top, a cover pivotally connected to said casing and closing said top, said cover having an outwardly extending portion, another portion integral with the first-mentioned portion and extend- ing in a downwardly direction relatively to the cover, said casing having a portion extending substantially parallel to the first-mentioned portion but spaced therefrom to form a gap for the passage of the strip out of the casing, a flange for temporarily arresting movement of said tongue in with the third-mentioned portion and extending close to the second- mentioned portion but spaced therefrom to form a gap for the continuing passage of the remainder of the strip, and tear-off portions on either side of said flange connecting the base of said flange to the side walls of the casing arranged for the cut-off to the remainder of the strip. (Emphasis added.) 9. Marston v. J. C. Penney Co., 353 F.2d 976, 986 (4th Cir. 1965); Stradar v. Watson, 244 F.2d 737, 741 (D.C. Cir. 1957); Kropa v. Robie, 187 F.2d 150 (C.C.P.A. 1951). Appellant comes close to arguing that the tape is part of the claimed combination for the purpose of determining validity but not for the purpose of determining infringement, a position forced upon them by the fact that appellees did not manufacture or distribute the tape itself. *> Appendix ll the sum of the several effects taken separately.” Anderson’s Black Rock v. Pavement Co., 396 U.S. 57, 61 (1976). Appel- lees cite the following exchange with their expert witness: Q. In your opinion, does the device of the patent produce a synergistic result? A. Yes, it does, indeed. As I have already described it, it permits several things to happen at the same time. That is it permits a ticket, a single ticket, to be dis- pensed with one hand without moving parts other than the ticket strip itself in the casing, and in such a way that the next ticket is not touched by the person who pulls off the previous ticket, or anyone else for that matter.” This description accurately mirrors Borden’s 1940 patent (No, 2,221,213) for a simple cellophane tape dispenser, cited as prior art by the patent examiner. The Ehrlund combination is an improvement over pre- vious devices in this field, “perhaps producing a more strik- ing result,” Sakraida v. Ag Pro Inc., supra, 425 U.S. at 282. But it does not reflect the application of a new principle or the achievement of a surprising or unexpected result required to satisfy the severe test for patentability of a new combination of elements old in the art. The projecting flange temporarily arrests the movement of the tape, separates the tongue from the tape, and guides the tongue horizontally toward the user as in Burr & Davis, the cutting edge severs the tape at the sides as in Beloud, the tongue of the succeeding ticket serves as a handle for the next user to grasp as in Suk, the elements combine to permit a single segment of the tape to be dispensed with a one-step pulling operation, without moving parts, as in Burr & Davis and the Baggie structure. As we said in Kamic-Autokomfort v. Curasian Automo- bile Products, swpra, 553 F.2d at 609, quoting our earlier 12 Appendiz decision in Rex Chaindelt Inc. v. Harco Products, Inc., 512 F.2d 993, 1000 (9th Cir. 1975): “What we have here is: ‘an improved product but not an innovatively different one . » » [W]e see the development and refinement of an old concept . . . but not an inventive or new approach to the problem.’ ” The commercial success of the Ehrlund device “cannot fill the gap.” Exer-Genie, Inc. v. McDonald, 453 F.2d 132 (9th Cir. 1971). See SSP Agricultural Equipment, Inc. v. Orchard-Rite, Ltd., supra, 592 F.2d at 1101. II. Trademark Infringement and Unfair Competition The district court’s holding that appellant’s use of the name Take-A-Turn infringed appellees’ registered Turn-Q- Matic trademark and that appellant had engaged in unfair competition by “palming” off appellant’s dispenser as that produced by appellee are factually and legally unassailable. Appellant was a distributor of appellees’ Turn-O-Matic ticket dispenser in an assigned territory for over seven years. He became dissatisfied with the relationship. When appellee introduced its new dispenser based upon the Ehrlund patent, appellant set about to copy it. In less than a month he had obtained quotations for the manufacture of a like dispenser from a producer of plastic products, He continued to distribute appellees’ Turn-O-Matic until his dispenser became available. About a year later appellant began distributing his dispenser under the name Take-A- Turn. Appellant’s dispenser is virtually identical with ap- pellees’ Turn-O-Matic in operation, and is almost indistin- guishable in appearance, even to the distinctive red color and the location and type-style of the trade name. Appel- Appendiz 13 lant’s advertising brochure for Take-A-Turn was copied from appellees’ Turn-O-Matie brochure. Appellant em- ployed the same stock number he had previously used in the sale of Turn-O-Matic dispenser and parts. He sold the Take-A-Turn dispenser in the same territory in which he had previously sold the Turn-O-Matic, and to the same cus- tomers. Customers ordered Turn-O-Matie by name but were delivered Take-A-Turn. Appellees’ evidence fully supported the district court’s findings that appellant’s Take-A-Turn trademark was likely to and did cause confusion, mistake, and deception as to the origin of the dispenser, that the appearance of ap- pellees’ dispenser, copied by appellant, had acquired a sec- ondary meaning identifying appellant as its source, and that appellant deliberately intended to pass his goods off as those of appellee. As a matter of hornbook law, these facts established both trademark infringement and unfair competition. Appellant argues that “Turn-O-Matie” is descriptive of the use of appellees’ dispenser and is therefore a “weak” mark. Appellees respond that the mark has become “incon- testable” under 15 U.S.C. § 1065, and therefore cannot be challenged on the ground that it is descriptive, Appellant answers that he is not challenging the validity of appellees’ mark but is asserting that because of the weakness of the mark there is no likelihood of confusion. The short answer is that even if this factor had the probative tendeney appel- lant suggests, it was overwhelmed by appellees’ evidence that confusion was likely, intended, and occurred. Appellant argues that because the name “SGT Enter- prises” (under which Tveter conducted business) was printed on appellant’s dispenser there could have been no confusion as to source. Although proper labeling will usu- 14 Appendiz ally preclude confusion, see American Rolex Watch Corpo- ration v. Ricoh Time Corp., 491 F.2d 877, 879 (2d Cir. 1974) ; Bose Corp. v. Linear Design Labs, Inc., 467 F.2d 304, 310 (2d Cir. 1972), the overwhelming evidence in this instance is that confusion did occur. Appellant cites West Point Manufacturing Co. v. Detroit Stamping Co., 222 F.2d 581 (6th Cir. 1955), but in that case the court found the label- ing was in fact sufficient “to avoid confusing the public as to the producer or the source of the product.” Id. at 596. The court recognized that “when the imitation is likely to deceive prospective customers who care about source... the imitator is guilty of unfair competition.” Id, Appellant was known in the trade as a distributor of appellees’ product. Under such circumstances, the addition of his own label “is an aggravation and not a justification.” Menedez v. Holt, 128 U.S. 514, 521 (1888); see A. T. Cross Co. v. Jonathan Bradley Pens, Inc., 470 F.2d 689, 692 (2d Cir. 1972). There was evidence that appellees used the mark ‘Turn- O-Matic” on their earlier dispenser together with the words “Patent Pending” when no patent application on this dis- penser was in fact pending. Appellant argues that this misuse bars judicial enforcement of appellees’ trademark rights. But “misconduct in the abstract, unrelated to the claim to which it is asserted as a defense, does not consti- tute unclean hands.” Republic Molding Corp. v. B.W. Photo Utilities, 319 F.2d 347, 349 (9th Cir. 1963). “What is ma- terial is not that plaintiff’s hands are dirty, but that he dirtied them in acquiring the rights he now asserts, or that the manner of dirtying renders inequitable the asser- tion of such rights against the defendant.” Ibid. No rela- tionship is suggested between appellees’ asserted misuse and the acquisition of appellees’ trademark rights; no other Appendix 15 reason, arising out of the misuse, is advanced that would make it inequitable to enforce those rights. Appellant argues that since appellees’ dispenser was not patentable, appellant had a right to copy it in light of Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (1964) ; and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234 (1964). Under the rule of these decisions, ‘however, copying may constitute evidence which, when accompanied by proof of confusion as to source or deliberate palming off, as in this case, may support a cause of action for unfair competition upon which appropriate relief may be founded. Compco Corp., supra, 376 U.S. at 238. TTT. Remedy The judgment and the injunction issued pursuant to the judgment must be modified in light of our decision that the Ehrlund United States Patent 3,885,724 is invalid; that the trademark “Turn-O-Matic” is valid and infringed by the mark “Take-A-Turn”; that the configuration of appel- lees’ dispenser has acquired a secondary meaning reflective of its source, and that appellant has engaged in unfair competition by passing off appellant’s dispenser as orig- inating from the same source as appellees’ dispenser. These adjustments are best left initially to the district court, but it may be helpful to comment upon two matters. First, it is clear from the decisions in Sears, Roebuck & Co. v. Stiffel Co., swpra, and Compco Corp. v. Day Brite Lighting, Inc., swpra, that an injunction against copying the configuration of appellees’ dispenser cannot be based upon California unfair competition law. This does not, . however, preclude an injunction under state law that will. "16 | Appendix prevent the palming off of appellant’s product as that of appellees, nor an injunction requiring that appellant’s product “be labeled or that other precautionary steps be taken to prevent customers from being misled as to the source.” Sears, Roebuck & Co., supra, 376 U.S. at 232. See generally, Cal. Civ. Code § 3369, Tomlin v. Walt Disney Productions, 18 Cal. App. 3d, 226, 231-235, 96 Cal. Rptr. 118, 120-123 (Ct. App. 1971); Components for Research, Inc. v. Isolation Products, Inc., 241 Cal. App. 2d 726, 730- 731, 50 Cal. Rptr. 829, 832 (Ct. App. 1966). The more difficult question is whether Sears and Compco preclude an injunction based upon § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) against copying the exterior de- sign insofar as it incorporates nonfunctional features and has acquired a secondary meaning. See Truck Equipment Service Co. v. Freuhauf Corp., 536 F.2d 1210 (8th Cir. 1976) ; American Rolex Watch Corp. v. Ricoh Time Corp., supra, 491 F.2d at 879. The district court should recon- sider this question free of the distracting assumption that an injunction against copying appellees’ device was in any event justified because of infringment of the Ehrlund patent. Even if such an injunction would not be barred by Sears and Compco, it could not be so broadly drawn as to preclude appellant from using a circular casing to en- close the circular roll of tickets, a common and essentially utilitarian feature of tape dispenser designs. See Applica- tion of Honeywell, Inc., 5382 F.2d 180, 182-83 (USCCPA 1976). Second, the provision: of the injunction requiring appel- lant to deliver up for impoundment and destruction device \and materials infringing the Ehrlund patent or the “Turn- O-Matic” trademark will require reconsideration and ee modification for the same reasons. In addition, however, ry Lat \ ‘ipeee “f° Appendiz 17 appellant contends this provision exceeds the pretrial stip- ulation of the parties that “[o]nly the remedy of injunction is sought.” Appellant objects on similar grounds to the requirement that appellant notify future customers that he does not sell products under the marks “Turn-O-Matic” and “Take-A-Turn.” But orders for impoundment or de- struction and for issuing remedial notices are no less in- junctive because they impose affirmative requirements to act. Neither provision imposes liability “for damages, costs, and attorney’s fees” in contravention of the parties’ agreement. U.S. Letters Patent No. 3,885,724 is declared invalid. The judgment and injunction are vacated and the cause remanded for further proceedings consistent with this opinion. . “y 18 Appendix. Appendix B United States Code, Title 35—Patents ‘Section 103. Conditions for patentability; non-obvious . subject matter. 3 3 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 mat- ter 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 or- dinary skill inthe art to which said subject matter pertains. Patentability-shall not be negatived by the manner in which the invention was made. APPENDIX C. 19 Opinion. United States District Court, Northern District of California. AB Turn-o-matic & Scandus, Inc., Plain- tiffs, v. Sven Tveter & SGT Enterprises, Defendants. Civil Action No. C-75-1097CFP. AB Turn-o-matic, Plaintiffs, v. Henry Nakagawa, et al, Defendants. Civil Action No. C~75~-1844CFP. Filed: April 29, 1977. Magistrate's Determination and Order. . Defendants' Objections to Magistrate's Findings and Recommendations, having been referred to Magistrate Woodruff in view of the Order Setting Trial filed October 28, 1976 which was stipulated to by the par- ties and which provides that the find- ings and conclusions reached by Magistrate Woodruff shall be the findings and con- clusions of this court and shall be adopted by this court and having come on for hear- ing before the Magistrate April 26, 1977 and the Magistrate having been apprised of the matter and having considered the briefs and argument of counsel for both parties, it is Recommended : Defendant's Objections to Magistrate's Findings and Recommendations be denied with the exception that: -l. Finding of Fact #92 be deleted; 2. Conclusion of Law #85 shall be so ' = Appendix 23 defendant came to a parting of the ways and within approximately thirty days there- after the defendant brought out on the market a competing machine which he gave the name TAKE-A-TURN. From my study of the evidence and after hearing the witnesses testify I am satis- fied that the defendant Sven Tveter went to Henry Nakagawa and had Nakagawa dupli- cate the plaintiff's machine. Thereafter defendant Sven Tveter openly sold this . copy as his own all to the detriment of the plaintiff. In brief summary this is what the case is all about and this is the way I see the evidence. I directed counsel for both sides to prepare findings of fact and conclusions of law supported by record references to the transcript. Having heard their final arguments and having reviewed their proposed findings and con- clusions, I recommend that the Court adopt the proposed findings of fact and conclusions of law as submitted by the plaintiff. (TAB A) Defendant's pro- posed findings and conclusions which I reject are attached. (TAB B) Respectfully submitted, OWEN E. WOODRUFF, JR. United States Magistrate Dated: March 8, 1977. 24 Appendix United States District Court, Northern District of California. AB Turn-O-Matic, et al, plsinki een. Vv. Sven Tveter, et al, Defendants. No. C=-75- 1097 CFP. AB Turn-O-Matic, Plaintiff, v. Henry Nakagawa, et al, Defendants. No. C-75- 1844 CFP. Findings of Fact and Conclusions of Law. This action having been tried upon the facts by the Court without a jury, the Court does hereby find the facts and states its conclusions of law thereon, as follows: FINDINGS OF FACT. A. Nature of the Actions. 1. The first of these actions was brought by plaintiff AB Turn-O-Matic and Scandus Inc. charging Sven Tveter and SGT Enterprises among other things with infringement of U.S. Letters Patent No. 3,885,724; infringement of the trademark “TURN-O-MATIC" registered with the United States Patent Office, No. 776,575 and registered with the Secretary of State of the State of California, No. 53020 and unfair competition under Federal and California law. Defendants answered de- nying infringement and unfair competition and asserted affirmative defenses and a counterclaim. (PT. 0. pg. 2=3)*. an Reference will be made to the record by page as "pg.", by line as "ln.", by para- graph as "4", as "PT.O." for the Pre Trial Order, by the witness' name followed by the page of the trial transcript for recorded testimony, as "Pl. Ex." for plaintiffs’ exhibit and as "Def. Ex." for defendants' exhibit. Appendix 25 2. Subsequently, plaintiff AB Turn-0- Matic brought an action against Henry Nakagawa and Industrial Plastic Products, Inc. for infringement of U.S. Letters Patent 3,885,724. These defendants an- swered denying infringement and asserted affirmative defenses (PT. 0. pg. 4). 3. The separately filed actions were consolidated for trial by stipulation. The parties amended the pleadings to dis- miss with prejudice causes of action and counterclaims other than those referred to above, and prayers for damages, costs and attorney fees. As a result, the trial was limited to the issues of patent validity and infringement, trademark validity and infringement and unfair com- petition, and only the remedy of injunc- tion was sought. (Pt. 0. pg. 4). B. The Parties 4. Of the plaintiffs, AB Turn-O-Matic is a Swedish corporation having its prin- cipal place of business in Sundbyberg, Sweden, and Scandus, Inc., is a California corporation having its principal place of business in Mountain View, California (hereinafter sometimes "Scandus"). (Pt.O.pg. 5 qs 2-3). Turn-O-Matic has a Swedish subsidiary, export corporation, AB Scandus (Ericson pg. 577 lns. 7-16). 5. Of the defendants, Sven Tveter is an individual residing in Saratoga, Cal- ifornia, and is doing business as SGT Enterprises in Santa Clara, California (hereinafter sometimes "Tveter"), and Henry Nakagawa (hereinafter sometimes "Nakagawa") is an individual residing in San Carlos, California, and is President of Industrial Plastic Products, Inc., a California corporation having its prin- cipal place of business in San Carlos, wt 3S Cat 26 Appendi: California which is doing business as Pro- deco (hereinafter sometimes "Prodeco"). (Pt.0. ps. 5, qs 4-5). C. Marketing of the TURN-O-MATIC Products. 6. Plaintiff, AB Turn-O-Matic has, since at least the early 1960's, been, and presently remains, in the business of mar- keting in the United States a waiting cus- tomer numbering system. (Ericson, pgs. 576-577). 7. Between 1963 and January, 1973, AB Scandus was the marketing arm for the products of AB Turn-O-Matic in the United States. -(Pt.0. pg. 5 4 6). In January, 1973, Scandus, Inc. became exclusive mar- keting agent and representative of AB Scandus and thus AB Turn-O-Matic in the United States. Stig Ericson, who had served as a consultant to AB Scandus from 1963 to 1973, is President of Scandus, Inc. (Pt.O. pg. 6 ¥ 7; Ericson, pg. 576 ln. 28- pg. 577. in. 13). 8. The waiting customer numbering sys- tems of AB Turn-O-Matic are designed for use at sales and service counters to dis- pense sequentially numbered tickets to customers to determine the order of ser- vice of the customer. The products of this numbering system include the ticket dispensers, strip rolls of sequentially numbered tickets, and a number indicator for showing the number of the customer being waited on. (Ericson pg. 577 ln. 7- 21; Pl. Exs. 7B, 8, 10, 13, 23B, 42, 42A). 9. In its customer numbering system from 1963 up to 1974, AB. Turn-O-Matic was marketing first through AB Scandus and then through Scandus, Inc. a ticket dis- penser which is now designated the Appendix 27 "Classic" model dispenser. (Pt.0. pgs. 6 q8; Pl. Ex. 7B). The "Classic" ticket dis- penser was and is regarded as a reliable ticket dispenser; there are more TURN-O- MATIC "Classic" model dispensers on the market than any of the other hand oper- ated ticket dispensers. (Ericson, pg. 585 ln. 15 - pg. 586 ln. 18; Graham, pg. 417 lns. 8-19). However, the "Classic" was constructed of a rather larger number of parts, i.e., forty-six different plas- tic and metal parts. (Ericson, pg. 595, lns. 1-6). Also, when "Classic" model tickets were used in that dispenser, jamming of the tickets occasionally occurred as they were pulled from the dis- penser. (Ehrlund, pg. 105 lns. 5-10). The construction of the "Classic" ticket dispenser is disclosed in British Patent No. 841,034. (Ehrlund, pg. 115, ln. 20 - pg. 116, ln. 3). 10. In the use of the TURN-O-MATIC "Classic" customer numbering system, the customer grasped an exposed portion of the leading ticket of a roll of tickets contained in the dispenser. On the roll transverse perforations equally spaced along the length of the strip roll de- fined the separate tickets. (Ehrlund, pg. 231 Ins. 1-15). A notch at the corner of each ticket cooperated with a latch mechanism in the "Classic" dis- penser so that after each ticket had been pulled from the dispenser, the latch mechanism would hold back the ticket strip beginning with the next ticket so that continued pulling action on the lead ticket would cause the ticket to tear from the remaining strip. (Ehrlund, pg. 104 Ins. 7-10, pg. 231 ln. 16 = pg. 232 ln. 2; Pl. Exs. 7B, 8, 106). The number on the torn ticket in the sequence of 28 Appendix ai numbers on the tickets in the roll would establish the order of service or the cus- tomer. As service for each customer at the counter was completed, the service person would advance the number showing on the number indicator, usually hanging on the wall, thereby indicating the num- ber of the person next in order for service. (Ericson, pg. 579 ln. 7 = p. 580 ln. 7; Pl. Exs. 8, 42, 42A). ll. AB Turn-O-Matic has identified its business and products to the public by the trade name and trademark "TURN-O- MATIC", and AB Turn-O-Matic presently so identifies itself and its products. (Ericson, pg. 577 ln. 22 - pg. 578 ln. 22, Pl. Exs. 7B, 10, 10B, 11, 12, 13, 42, 42A, 12, The "Classic: model ticket dis- penser, the tickets for the "Classic" model dispenser and the indicator used with the "Classic" model dispenser were all sold and distributed under the trade- mark “TURN-O-MATIC". The trademark "“TURN-O-MATIC" is actually embossed on the front of the "Classic" ticket dis- penser, is printed on the tickets for the "Classic" dispenser and is printed on the face of the number indicator. (Pt.0O. pg- 6 ¥ 9; Ericson pg. 577 1n.22 = pg. 578 ln. 22; Tveter pg. 826 Ins. 9-12; Pl. Exs. 7B, 106, 42, 42A). 13. AB Turn-O-Matic and Scandus, Inc. through continuous sales of customer num- bering systems for over ten years and pro- moting the sales and advertising of their products including the ticket dispensers, ticket strips, and number indicators at trade shows have made the trademark and trade name known to the public. (PT.0. pg. 6 qs 8-9); Ericson pg. 589 ln. 2 = pg. 590 ln. 8). As a result, "TURN-O- Appendix 29 MATIC" has become distinctive of AB Turn-O-Matic's goods in commerce within the United States and commerce within California, and has come to be understood and is understood to refer to ticket dis- pensers, indicators, and ticket strips therefor originating with AB Turn-O-Matic as distinguished from goods’ from other sources. (Ericson, pg. 600 Ins. 12-23; Graham pg. 417 lns. 8-19; Baxter, pg. 973 lns. 13-16). Several customers associated the "TURN-O-MATIC" trademark and products with Sweden and Scandus (Graham, pg. 414 ln. 28 - pg. 415 ln. 2; Robb, pg. 313 lns. 7-15). 14. Plaintiff AB Turn-O-Matic first registerd the "TURN-O-MATIC" trademark in the United States on September 8, 1964 when United States Trademark Registration NO. 776,575 issued on "TURN-O-MATIC"” for apparatus for dispensing tags. This mark is valid, uncancelled and has not been _ abandoned. The provisions of 15 USC §1051 et seq. have been fully met for the es- tablishment of incontestable rights in the trademark "TURN-O-MATIC". (Pl. Ex. 2). AB Turn-O-Matic also obtained United States Trademark Registration No. 1,051,234 for “TURN-O-MATIC" as applied to tickets. (Pl. Ex. 155). AB Turn-0O- Matic has also registered its trademark "TURN-O-MATIC" in the State of California as No. 53020 issued April 14, 1975 for tickets. (Pl. Ex. 3; PT.0. pg. 8 qs 20- 21). 15. Beginning in about 1963, first as an employee and then as a shareholder, Tveter was associated with a distributor of AB Scandus for the sale and distribu- tion in part of the United States of TURN-O-MATIC products, namely the 30 Appendix "Classic" model ticket dispensers, the ticket strips therefor, and number indi- cators. (Pt.0O. pg. 6 ¥ 10). 16. In about 1967, Sven Tveter, doing business as SGT Enterprises, began on his own behalf to distribute the TURN-O-MATIC "Classic" model dispensers, ticket strips therefor and number indicators for AB Scandus, and on September 12, 1967 a Dis- tributorship Agreement was entered into between AB Scandus and Tveter wherein and whereby Tveter became an exclusive distributor of TURN-O-MATIC ticket dis- pensers, number indicators and tickets in a specified territory. (PT.O. pg. 6 ¥ ll). 17. Sven Tveter continued to act as distributor for TURN-O-MATIC customer num- ¥ bering systems in the Western United States from 1967 until he terminated his distributorship agreement by a letter dated January 8, 1975 sent to AB Turn- O-Matic in Sweden, indicating that the distributorship agreement was terminated effective January 10, 1975. (Tveter, pg. 712 1lns. 17-21, p. 727 Ins. 16-19). 18. During the period of 1965 to Janu- ary, 1975, the TURN-O-MATIC products were handled in the United States by a few national distributors (Ericson, pg. 580 ln. 8 - pg. 581 ln. 8) who typically sold the TURN-O-MATIC products by sales to sub-distributors and direct sales to re- tail customers including retail store outlets of nationwide chain stores where the products were used, such as Baskin- Robbins Ice Cream Stores, Sears Roebuck & Company, Montgomery Ward, and independent retail stores such as bakeries, hardware and auto supply stores. (Ericson, pg. 586 lns. 9-18, p. 589 In. 18 =- pg. 591 ln. 8). Appendix 31 19. Sven Tveter included the trademark "“TURN-O-MATIC" in the heading on his price lists and invoices and listed his business Phone in the white pages of the telephone book under the name "TURN-O-MATIC Tickets and Equipment". (Ericson, pg. 586 ln. 19 - Pg. 587 In. 16; Pl. Exhs. 156, 136, 138). 20. MTveter's customer/distributor Vern Baxter as well as purchase orders themselves show that customers would or- der tickets by referring to the "TURN-0O- MATIC" trademark (Baxter, pg. 977 ln. 27 - Pg- 978 ln. 3; Pl. Exs. 129-D, E, G, H, I, prises had long been distributors of "TURN- O-MATIC" products, users of these products were accustomed to contact SGT for service and supplies for "TURN-O-MATIC" numbering Systems. (Emanuel, pg. 291 lns. 5-13, pg. 297 Ins. 17-24; Robb, pg. 390, lns. 16-19, Pg- 395 In. 18-24; pg. 398 Ins. 13-16). D. Development and Introduction of the Mark II Dispenser and Tickets. 21. In late summer 1971, Ake Ehrlund, an independent designer of point of sale display products in Sweden (Ehrlund, pg. 89 ln. 11 - pg. 92 ln. 12), invented an improved ticket dispenser device and ticket strip therefor incorporating novel and unique features. (Ehrlund, pg. 103 Matic later acquired rights to this in- vention (Ehrlund, pg. 154 ln. 15 = pg. 155, In. 10; Pl. Exs. 34, 36) which was placed in a uniquely shaped housing (Ehrlund, pg. 122 In. 14 = pg. 124 ln. 24; Pl. Ex. 35, 90D, 10), and AB Turn-0-Matic subsequently introduced the product in the United States as its improved TURN-O-MATIC dispenser. Plaintiff has referred to this dispenser as the "Mark II" model. (Ericson, pgs. 592- 32 Appendix 593; Pl. Exs. 10, 130, 131). 22. While waiting in a shop in Sweden, Ake Ehrlund had observed the operation of — a TURN=O=-MATIC “Classic” model ticket dispenser, and noticed the dispenser jam on several occasions when patrons appeared to be pulling tne ticket to the right as the ticket was being pulled from the dis- penser. Upon returning home, Ake Ehrlund began experimenting with different ticket strips and strip dispensing mechanism in order to design a better ticket dispenser than the "Classic" model. (Ehrlund, pg. 100 ln. 2 = pg. 101 ln. 3, pg. 103 ln. 24 = pg. 109 ln. 18). 23. Ake Ehrlund began with a ticket strip provided with a central hole or cut- out to engage a stopping mechanism for the remainder of the ticket strip. (Ehrlund, pg- 105 lns. 10-27; Pl. Ex. 88B). To avoid the necessity and problems attendant to actually removing a portion of the ticket to make an opening for a stopping mechanism, he experimented with a ticket where a central portion or flap was punched out but not removed. (Ehrlund, pg. 105 ln. 21 = pg. 106 ln. 6; Pl. Ex. 88C). The intended direction of travel for the strip was with the free end of the punched out portion or flap trailing so that the ticket portion adjacent the trailing end of the flap would engage the stopping mechanism. (Ehrlund, pg. 106 ins. 1-16; Pl. Ex. 88C). In experimenting with the latter ticket construction and by accident, he happened to run the ticket strip backward over the edge of a table, and in doing so, he noticed how the punched portion continued in the original direction before it was forced to follow the new direction. (Ehrlund, pg. 106 ln. OS ee ee eae i ate ee een + me ee pees + Appendix 21 - pg. 107 In. 3). He pulled the strik, : backwards over the corner of a table \ | found he could have the lead flap or \ ticket hanging under the succeeding flap) or ticket, and as he continued to pull downwards, the lead ticket would be torn off. (Ehrlund, pg. 107 lns. 4-15). He realized that in his dispenser he would have to guide the succeeding flap down- ~ wards, or people using his dispenser would pull the strip out straight where it would not tear off. (Ehrlund, pg. 107 In. 23 - pg. 108 ln. 2). He then realized he had discovered something totally new for a ticket dispensing structure with no moving parts. (Ehrlund, pg. 106 ln. 14 - pg. 107 ln. 19, pg. 115 Ins. 5-ll, pg. lll lns. 1-12). He worked out a guidance structure with a casing tongue member and & a downwardly extending cover protion to ; cooperate with the sequential ticket tongues on the strip roll to dispense » individual tickets in a one hand, one step pulling operation in which the end ticket is separated from the strip roll leaving the ticket tongue of the succeeding ticket protruding from the dispenser ready to pull the next ticket. (Ehrlund, pg. 107 In. 20 - pg. 108 ln. 2, pg. 109 In. 1 —- pg. 110 ln. 15). 24. Ake Ehrlund built a number of work- ing models of ticket dispensers incorpor- ating the new punched ticket strip and dispensing structure (Ehrlund, pg. 107 ln. 20 - pg. 110 ln. 22; Pl. Ex. 89) and then initiated a patent application in Sweden which was filed January 26, 1972. (Ehrlund, pg. 116 lns. 9-19; Pl. Ex. 1A; Pt.0O. pg. 7 412). Figures 1 and 2 of the application actually illustrate one of Mr. Ehrlund's models which operated to dis- pense tickets (Ehrlund, pg. 109 lns. 1-18; 34 Appendix Pl. Exs. 1, 1A, 89). 25. Mr. Ehrlund made additional models of his dispenser and ticket strip (Ehrlund, pg. 110 ln. 25 = pg. 111 In. 17, pg. 112 ln. 16 - pg. 114 ln. 10, pg. 114 ln. 22 - Pg. 115 ln. 4, Pg. 119 ln. 2 nae Pg. 120 ln. 11; Pl. Exs. 89, 37-41) and began negotiations with AB Turn-O-Matic for marketing his invention. (Ehrlund, pg. 118 lns. 16-23). Before completing an arrangement with AB Turn-O-Matic, Mr. Ehrlund contracted with a design firm named A&E Design to finalize the aesthetic design of the ticket dispenser and to provide him with a drawing and solid model showing how the final product should look. (PT.O. pg. 7 413; Ehrlund, pg.123 ln., 14 = pg. 124 ln. 21; Pl. Exs. 35, 90D). Mr. Ehrlund had already built at least eight different models embodying his invention, all generally box-shaped. (Pl. Exs. 89, 40). After entering the contract with A&E Design, Mr. Ehrlund contracted with AB Turn-O-Matic giving them an option to acquire the Swedish and world-wide patent rights on this new ticket dispenser. (Ehrlund, pg. 124 ln. working prototype incorporating the look suggested by A&E Design was completed for Mr. Ehrlund by a model maker in Stockholm and presented by Mr. Ehrlund to AB Turn- O-Matic. The external appearance of the prototype, later incorporated in produc- tion versions, did not look like any of Ehrlund's models or any other dispenser. The appearance is not functional. 3-4; Pl. Ex. 90). After receiving the working prototype, AB Turn-0-Matic acquired the world-wide rights and pro- ceeded with production and marketing of Appendix 35 the new product. (Ehrlund, pg. 154 ln. 15 - pg. 115 ln. 9; Pl. Ex. 34,36). 26. From the prototype (Pl. Ex. 90, 90A) to the first production version of the "Mark II" (Pl. Ex. 140), changes were made (1) in the latch (Ehrlund, pg. 132 lns. 11-17), and (2) in one front angled side surface of the casing (Ehrlund, pg. 132 lbs. 2-10). From the first pro- duction version (Pl. Ex. 140) to the final production version (Pl. Ex. 10) additional changes were made (3) by adding a web or ridge to the cover (Pl. Ex. 140, 10, 72), (4) by adding two tabs to the cover, and (5) by adding a mating semi- cylindrical projection and recess on one side of the casing and cover, respective- ly. (Ehrlund, pg. 134 lns. 7-17; Pl. Exs. 72, 90A, 90C; Def. Exs. Q2, Q4). 27. A metal clip is provided on the casing flange in the "Mark II” to pre- vent the wearing away of the plastic by the paper ticket strip. (Ehrlund, pg. 130 Ins. 6-15). At the tear-off por- tions on either side of the casing flange, the metal clip is about even or below the edge of the plastic. (Tveter, pg. 914 lns. 1-27; Def. Ex. Q4). 28. In early 1974, AB Turn-O-Matic through Scandus, Inc. introduced the new "Mark II" ticket dispenser into the United States market. (PT.O. pg. 7 415). The first models of this dispenser were dispatched to both Scandus, Inc. and Tveter separate from a letter of announce- ment by AB Scandus dated January 17, 1974, (Erickson, pg. 592 ln. 9 - pg. 593 ln. 27; Pl. Exs. 10, 11, 130, 131) and successful operation of the "Mark II" dispenser and ticket strip rolls was witnessed by Erickson and Tveter in a i 36 Appendix retail establishment in late January, 1974 (Erickson, pg. 595 ln. 19 = pg. 596 ln. 1; Tveter, pg. 716 ln. 15 = pg. 171 ln. 12). 29. In 1974, Tveter purchased the new "Mark II" dispensers and tickets therefor from Scandus, Inc. and resold these products. (PT.O. pg. 7 416). For years he had used a parts numbering sys- tem for the components of the "TURN-O- MATIC" customer service system (Tveter, Og. 712, in. 22 . which the invention per- tains, the Ehrlund invention would not have been obvious to the person of ordinary skill in that art at the time Ehrlund made his invention or on the filing dates of either the Swedish or United States patent application of Ehrlund. The Ehrlund invention of the litigated patent and embodied in defen- dants' ticket dispenser was not an obvious development in the material dispensing technology. Moreover, it is apparent that the material dispensing industry with all its progress and expertiese had not solved the particular problem which the Ehrlund patent solved. G. Origin and Introduction of Defendants' TAKE-A-TURN Products 84. Immediately upon introduction of the TURN-O-MATIC Mark II ticket dispen- ser and tickets, Tveter secretly under- . took efforts to copy these products. Defendant Tveter met with defendant A Sah ‘era Appendix 57 Nakagawa, and with a TURN-O-MATIC Mark II dispenser defendant Nakagawa formulated the design drawings for a ticket dispen- ser to be marketed by Tveter. (Tveter, pg. 720, lns. 9-22; Nakagawa, pg. 933, ins. 3-73 Pl. Re. 157, pg. 47). On February 14, 1974, less than a month after the date of the announcement of the Mark II dispenser to Tveter from Sweden, Naka- gawa's company Prodeco made a quotation to Tveter of $23,862.00 for the tooling to make the ticket dispenser for Tveter and of $1,825.00 for the parts of one thousand dispensers. (Tveter, pg. 719, ln. 17 = pg. 720, ln. 8; Nakagawa, pg. 930, Ins. 20-27; Pl. Ex. 49). 85. On May 14, 1974, Tveter entered into a contract with one John Ostrowski to print and provide to Tveter tickets of an old style to fit TURN-O-MATIC "Classic" dispensers then presently in operation and a new style to fit Tveter's copy of the TURN-O-MATIC Mark II dispen- ser, the latter tickets virtually iden- tical to the TURN-O-MATIC tickets of plaintiffs then being sold by Tveter for the TURN-O-MATIC "Mark II" dispenser. (Tveter, pg. 721, ln. 1 - pg. 722, ln. 5; Pl. Ex. 106). 86. On May 28, 1974, Tveter issued a purchase order to a company, Total Technology, for 1,000 indicators. (Tveter, pg. 722, lns. 6-24; Pl. Ex. 43, 43A). 87. On June 1l, 1974, Tveter issued a purchase order to Prodeco for the tooling for the ticket dispenser for an amount of $23,880.00. (Tveter, pg. 723, lns. 1-12; Pl. Ex. 52). The purchase. order was accepted by Nakagawa the same day and within the next two days the 58 Appendix arrangement was finalized by first the - Prodeco quotation of $23,312.80 for the tooling and sales tax and then Tveter's down payment. (Tveter, pg. 723, lns. 13-24; Pl. Ex. 53). These molds were not completed until December, 1974. No model or prototype of a ticket dispenser designed by Nakagawa for Tveter was made prior to actually assembling dis- penser parts made from the completed molds purchased by Tveter from Nakagawa. (Tveter, pg. 727, In. 25 - pg. 728, ln. 5; pg. 724, Ins. 3-9). 88. Defendant Tveter started selling his own number indicator on about Nov- ember 12, 1974 under the name TAKE-A- TURN. (Tveter, pg. 722, lns. 12-28; Pl. Ex. 154). Although this indicator displayed the number by lights instead of the mechanically rotating numbers in the TURN-O-MATIC unit, the TAKE-A-TURN indicator is substantially the same size as the TURN-O-MATIC indicator, includes the same words "Now Serving" above the indicator number and includes the name "TAKE-A-TURN" in the same location below the indicator numbers as the trademaz.. "TURN-O-MATIC" appearing on plaintiff's indicator. (Ericson, pg. 578, lns. 16-22; Tveter, pg. 722, lns. 10-28; Pl. Exs. 23B, 42, 42A, 43, 43A). 89. In or about December 16, 1974 defendant Tveter first offered for sale and sold his TAKE-A-TURN tickets. (Pre- trial 0. pg. 10, 427; Pl. Ex. 1297). By January 3, 1975, to the same customers to whom he had been selling TURN-O-MATIC products, defendant TIveter was selling his tickets virtually identical to the "Classic" and “Mark II" tickets, but including the name "TAKE-A-TURN" instead of "TURN-O-MATIC". (Pre-Trial 0. pg. 10, tee ms ie Appendix 59 426; Tveter, pg. 725, lns. 6-15; pg. 813, ‘Ins. 8-12; Pl. Exs. 106, 153). 90. When he had his TAKE-A-TURN dis- penser, an illustrative brochure and TAKE- A-TURN tickets ready, defendant Tveter, by letter dated January 8, 1975, termina- ted his distributorship agreement with AB Scandus and. Scandus, Inc. with the stated effective termination date of January 10, 1975. (Tveter, pg. 727, ln. 16 - pg. 729, In. 16; Pl. Exs. 21, 24). 91. On the termination date of January 10, 1975, Tveter appeared in the offices of the purchasing agent for Baskin-Robbins, one of the largest users of TURN-O-MATIC equipment, and displayed for sale his TAKE-A-TURN dispenser and tickets. (Tveter, pg. 729, ln. 17 - pg. 731, ln. 25). From his meeting at Baskin-Robbins Tveter went on to pre- sent proposals to other companies such as Sears, Roebuck & Co., Montgomery Ward and other customer-distributors to whom he had been selling TURN-O-MATIC products. (Tveter, pg. 732, lns. 1-19; Pl. Ex. 61A-61D). 92. On the termination date of January 10, 1975, Tveter appeared in the offices of the purchasing agent for Baskin-Robbins, one of the largest users of TURN-O-MATIC equipment, and dis- played for sale his TAKE~-A-TURN dispen- ser and tickets. (Tveter, pg. 729, ln. 17 pg. 731, ln. 25). From his meeting at Baskin-Robbins Tveter went on to present proposals to other companies such as Sears, Roebuch & Co., Montgomery Ward and - other customer-distributors to whom he had been selling TURN-O-MATIC products. (Tveter, pg. 732, lns. 1-19; Pl. Ex. 61A-61D). 7e 60 Appendix 93. The first models of the TAKE-A- -TURN dispenser were virtually identical to the TURN-O-MATIC Mark II dispenser right down to the almost identical color. (P. Exs. 10, 21). Later, other colors were used (Tveter, pg. 819, In. 28 - pg. 820, ln. 14), but the only differences were slight changes from the exterior appearance of the TURN-O-MATIC Mark II dispenser, such as the deletion of the rounding of certain surfaces and the dele- tion of the ribs at the rear mounting portion. (Pl. Exs. 10, 21, 25, 70-60C). The TAKE-A-TURN ticket dispenser holding cavity and ticket strip rolls were therefore slightly narrower than the TURN- O-MATIC Mark II dispenser cavity and ticket strip rolls, and the casing tongue in the first TAKE-A-TURN dispensers (P. Ex. 21) was substantially narrower than the casing tongue in the TURN-O-MATIC Gispenser. (Chilton, pg. 458, lns. 22-28, pg. 740, lns. 1-7; Pl. Ex. 21, 25, 106). It is difficult to tell which dispenser is which even with the two dispensers positioned side-by-sid«c. (Pl. Exs. 10, 25, 70-70C, 90C, 157 pp. 33-34). 94. The TAKE-A-TURN dispenser is such an exact copy of the TURN-O-MATIC dispenser that even the structural changes between the TURN-O-MATIC proto- type (Pl. Ex. 90) and final production version (Pl. Ex. 10) are incorporated in the TAKE-A-TURN dispenser (Pl. Ex. 25), namely, 1) the cooperating ridges of cover and latch, 2) one front angled side surface of the casing, 3) the ridge inside the cover, 4) the two tabs on the cover, and 5) the semi-cylindrical mating projection and recess on one side of the casing and cover respectively. (Ehrlund, F : Appendix 61 pg. 169, ln. 1 - pg. 170, ln. 20; Honeker, Exs. 72, 90D; Def. Exs. Q2, Q3, Q4). While making the drawings on which Naka- gawa later presented his quotation on February 14, 1974, Nakagawa had a TURN-O- MATIC Mark II dispenser to work from. (Nakagawa, pg. 933, Ins. 3-7; Pl. Ex. 157, pg. 47). Nakagawa presented his drawing and a TURN-O-MATIC dispenser to a mold maker, Klaus Honeker, to obtain a quote on making the mold for the TAKE-A-TURN dispenser. (Honeker, pg. 1154, ln. 16 - pg. 1155, in. 15). In order for Mr. Honeker to make the mold for the TAKE-A- TURN, he would have had to have a drawing or a mold or his customer's request that detailed those individual features of the TURN-O-MATIC Mark II dispenser that were incorporated into the TAKE-A-TURN dispen- ser. (Honeker, pg. 1159, ln. 9 - pg. 1160, ine: 33S) 95. Even Fred Wagner, Tveter's own customer-distributor first for TURN-O- MATIC products and later for TAKE-A- TURN products, believed the TAKE~-A-TURN dispenser had been copied from the TURN-O-MATIC Mark II dispenser. (Wagner, pg. 965, lns. 10-28; Pl. Ex. 65; Tveter, pg. 746, ln. 3 = pg. 747, in. 21). 96. The evidence presented at trial establishes that defendants Tveter and Prodeco copied plaintiffs' patented product. (Tveter, pg. 719, ln. 17 - pg. 720, In. 223 pg. 738, ln. 33 pg. 741, ln. 12; Nakagawa, pg. 933, Ins. 3-7, 12- 14; Ehrlund, pg. 169, in. pA bad pg. 170, ln. 20; Honeker, pg. 1154, ln. 16 - pg. 1162, In. 17; Wagner, pg. 965, ins. 10- 28; Pl. Ex.s. 10, 25, 70, 7OA, 72, 73A, 90, 140, 157 pg. 47; Def. Ex. Q2, Q3, Q4). etd 62 Appendix 97. The TURN-O-MATIC Mark II was easier and less expensive for Tveter to copy. (Pl. Ex. 157, pg. 12, in. 16 = pg. i3,. in. 6, pg. 14). . 98. Within four months after Tveter began the sale and distribution of his TAKE~A-TURN customer numbering system including the sale of "Classic" style tickets to fit "“TURN-O-MATIC" "Classic" ticket dispensers, he discontinued the sale of "Classic" style tickets because it was easier and cheaper to give away one of his TAKE-A-TURN ticket dispensers copied from the TURN-O-MATIC Mark II dis- penser with the sale of new style TAKE-A- TURN tickets copied from the TURN-O-MATIC Mark II tickets than to repair or ser- vice an old style TURN-O-MATIC "Classic" model dispenser. (Tveter, pg. 747, In. 28 - pg. 748, ln. 23). 99. The original and all subse- quent models of the TAKE-A-TURN dispen- ser have included the mark "TAKE-A-TURN" embossed on the closing latch on the front of the dispenser in the same loca- tion, style and lettering as the TURN-O- MATIC Mark appears on the front of the TURN-O-MATIC dispenser. (Tveter, pg. 743, Ins. 13-20; Pl. Exs. 21, 25, 73, 90C). 100. The bulk of Tveter's imitation dispensers, even today employ virtually an identical color scheme; the body and cover are red in color like the TURN-0O- MATIC Mark II, the hinge pins connecting the cover to the casing, the mounting bracket, and the closing latch cn the front of the TAKE-A-TURN dispenser are black in color like the TURN-O-MATIC Mark II. Appendix 63 101. For the front of his first bro- chure, Tveter used the same format and text with minor caption changes from a brochure (Pl. Exs. 23B, 132) which he had used for the distribution of the TURN-O- MATIC Mark II dispenser and which had been paid for in large measure by Scandus, Inc. and the other TURN-O-MATIC national distributor. (Tveter, pg. 870, lns. 17- 20, pg. 918,. ln. 12 - pg. 919, ln. 18; Pl. Ex. 156). MTveter merely substituted for the photograph of the TURN-O-MATIC dis- penser a photograph of the TAKE~A-TURN dispenser taken at a similar angle and distance and changed the words TURN-O- MATIC to TAKE~A-TURN wherever they appeared. The picture's format and language are arranged in such a way that one cannot easily distinguish the two brochures or the products they exhibit. (Pl. Exs. 23B, 24, 143; Ericson pg. 616, ln. 12 - pg. 617, ln. 22; Tveter, pg. 719, lns. 5-16). The identity of the dispenser illustrated in Tveter's seco i brochure is even harder to distinguish. (Ericson, pg. 617, lns. 23- pg. 618, ln. 13; Pl. Ex. 63). 102. The Tveter initation ticket dis- penser is operated in exactly the same manner as the Ehrlund patented invention and the TURN-O-MATIC Mark II dispenser to dispense in a one-hand, one-step opera- tion the end ticket from a strip roll that has punched lines equally spaced apart along the length of the strip forming flaps directed forward in the feeding direction of the strip. (Ehrlund, pg. 214, In. 25 = pg. 215, ln. 8; Chilton, pg. 494, ln. 19 - pg. 495, ln. 3). 103. At least some of the TAKE-A- TURN ticket dispensers exhibited opera- Seow: ty. ee pee nner ~ —— —- + 64 Appendix tional difficulties, such as more than one ticket being dispensed at a time. (Pratt, pg. 277, ln. 27 - pg. 278, in. 14; Burgess, pg. 311, lns. 1-10; Robb, pg. 400, Ins. 12-19; Graham, pg. 416, ln. 20 - pg. 417, ln. 3; Tweter, pg. 734, in. LF =pgs. 735,.In. 63; Bricson, pg. 679, ln. 23 - pg. 680, In. 1; Pl. Exs. 21, - 6, 116 pp. 12-16,.& Ex. JB-3). Tveter attempted to solve problems by modifying dispensers, sometimes in the field, by grinding off part of the cover between the depending tabs and by adding tape on the casing tongue. (Tveter, pg. 743, In. 18 - pg. 746, ln. 2; Pl. Ex. 143). In order to experiment with possible changes in the TAKE-A-TURN dispenser, Tveter had the bottom front portion of one of his dispensers con- taining the narrow casing tongue removed and replaced with a plastic part inclu- ding a wider casing tongue portion sub- stantially the same width as the casing tongue portion of the TURN-O-MATIC dis- penser. (Tveter, pg. 738, ln. 3 ppg. 741, ln..23 Pl. Exs. 21, 25, 913). In about April, 1975 the molds for the TAKE-A- TURN ticket dispenser were modified to provide an increased width to the casing tongue portion of the TAKE-A-TURN. dispenser to be substantially the same width as the casing tongue of the TURN-O- MATIC dispenser. (Tveter, pg. 740, ln. l- pg. 741., ln. 5). Also on subsequent units, a bar was added to the lower front portion of the TAKE-A-TURN dispenser. (Tveter, pg. 737, Ins. 22-25). 104. Prodeco sells the TAKE-A-TURN dispenser to Tveter without cover and casing assembled and without the bar. (Tveter, pg. 742 lns. 24-27). »*-* Appendix 65 105. Often Tveter ships his TAKE-A- TURN dispenser and tickets together (Tveter, pg. 821, lns. 1-4) and often the dispenser and tickets are part of the same transaction (Pl. Exs. 129D, H, T, 61B, 116 Pg. 37, 117BB-3, Emanual, pg. 287 lns. 104). 106. The first time Mr. Ericson saw a TAKE-A-TURN dispenser was in late February, 1975 in a Baskin-Robbins store in New Orleans. The store owner Wayne Lassen had ordered a TURN-O-MATIC Mark II dispenser from a TURN-O-MATIC brochure provided by Tveter's Texas distributor. Lassen received a TAKE-A-TURN dispenser, and Mr. Ericson was first to inform Mr. Lassen that they had not received a YTURN-O-MATIC dispenser. Mr. Ericson acquired that TAKE-A-TURN dispenser. (Ericson, pg. 603 In. 28 - pg. 607 ln. 21; Pl. Exs. 21, 22, 23A-D, 108). 107. After discovery and examination of the Tveter TAKE-A-TURN dispenser, plaintiffs informed certain parties that a patent application was pending on the TURN-O-MATIC Mark II dispenser. By a copy of a letter from plaintiffs’ — attorneys, parties were informed of the patent rights plaintiffs expected to have when the patent issued. Plaintiffs informed certain parties only that legal action would be taken once the patent issued. (Ericson, pg. 645 ln. l - pg. 647 ln. 17 = pg. 708 ln. 3 - pg. 709 ln. 1; Pl. Ex. 65; Def. Ex. AW). After the patent issued and suit had been brought against Tveter, but before the hearing on plaintiffs' motion for pre- liminary injunction when Fred Wagner was selling the TAKE-A-TURN dispenser, plain- tiffs' attorneys put Fred Wagner on 66 Appendix notice of the pending motion. (Wagner, pg. 95 ln. 27 - pg. 953 In. 28; Def. Ex. AE). Also after the patent issued plaintiffs’ attorneys put Nakagawa on notice that he would be sued, and he was in fact sued. (Def. Ex. AD). It was not established that plaintiffs intimi- dated anyone either in the United States or elsewhere by threat of bringing in- fringement action before the patent issued May 27, 1975 or in a foreign country. H. Infringement of the Ehrlund Patent by the TAKE-A-TURN Dispenser 108. The TAKE-A-TURN dispenser, like the TURN-O-MATIC Mark II dispenser and the invention of the Ehrlund patent, has a casing with a second guidance means to guide the strip, a flange or separation unit, and means on both sides of the flange or separation unit connec- ting the base of the flange or separa- tion unit to the side walls of the casing. The ticket strip has lines forming equally spaced apart tongues directed in the feeding direction for the strip. The cover of the dispenser connected to the casing is provided with a first guidance means in the form of an outwardly extending first portion and a downwardly extending second portion with the cover first guidance means spaced from the casing second guidance means to pass the strip. The flange or separation unit has a trapezoid shape corresponding to the shape of the bottom part of the ticket tongue. The ticket strip comes off the roll, is guided over the casing tongue in contact with the side connec- ting means, and extends downward between Appendix 67 the end of the flange and downwardly extending portion. A pull on the exposed flap or ticket tongue at the end of the ticket strip advances the ticket strip along a predetermined path such that the lead portion of the succeeding ticket is carried out and down and then the succeeding ticket tongue is guided along One path and the remainder of the leading ticket along another path so that the pulled ticket is torn off at the sides of the flange or casing tongue leaving the flap of the succeeding ticket car- ried beyond the end of the casing flange and down ready to be pulled for the next ticket. (Ehrlund pg. 183 ln. 21 - pg. 190 ln. 17; pg. 192 ln. 22 = pg. 198 ln. 24, Chilton pg. 485 ln. 23 - pg. 493 ln. 2; Pln. Exs. 1, 25 69A1-69Cl, 70). 109. In the operation of the TAKE-A- TURN dispenser the ticket strip contacts the edges on either side of the casing flange or separation unit. (Chilton, pg. 506 ln. 5 - pg. 508 ln. 1; Myronuk, pg. 1004 ln. 24 - pg. 1005 ln. 2 —- pg. 1074 In. 26 - pg. 1077 In. 9; Def. Ex. BO). Wear on these edges would indicate contact of the ticket strip there (My- ronuk, pg. 1076 ln. 25 = pg. 1077 ln. 9 - pg. 1183 ln. 13 - pg. 1184 ln. 15), and there was wear on such edges of a TAKE- A-TURN dispenser that had been in use in a retail store. (Myronuk, pg. 1187 ln. 22 a Pg. 1189 ln. 5; Pl. Ex. 143). Defendants' own artist's drawing of the operation of defendants' device shows the ticket strip of the TAKE-A-TURN device in contact with the tear off edges. (Def. Ex. BO view CC; Myronuk, pg. 997 ln. 13 = pg. 998, In. 15 — pg. 1076 ln. 16 = pg. 1076 In. 24). _ -- peu 68 Appendix 110. In the defendants' TAKE-A-TURN ticket dispenser the free end of the ticket. strip is not torn solely by virtue of the frangibility of the paper. When the end of a string of tickets extending from the TAKE-A-TURN ticket roll sepa- rate from the TAKE-A-TURN dispenser is pulled, the single end ticket tears off. When the end of a string of tickets extending from the TAKE-A-TURN ticket roll and protruding out the exit opening of defendants’ TAKE-A-TURN dispenser is pulled, the whole string of tickets tears off at the casing flange of the dispenser. In the latter case if the ticket strip tore solely by virtue of the frangibility of the paper, the single end ticket rather than the whole string would tear off. (Ehrlund pg. 215 ln. 11 - pg. 217 ln. 14; Pl. Ex. 142; Chilton, pg. 571 in. 10 - pg. 572 ln. 14; Pl. Ex. 148). lll. In the defendants’ TAKE-A-TURN device the ticket tears in the vacinity of the base of the casing tongue due to the stress concentration in the paper. (Chilton, pg. 506 ln. 5 = pg. 508 ln. 17). 112. The defendants' TAKE-A-TURN dis- penser incorporates all the structural limitations recited in the claims of the Ehrlund patent. (Ehrlund, pg. 183 ln. 21 - pg. 190 ln. 17 - pg. 192 ln. 22 = pg. 198 ln. 24; Chilton, pg. 485 ln. 23 - pg. 493 ln. 2; Pl. Exs. 25, 69A1-69Cl, 70). 113. Even defendants’ expert, Pro- fessor Myronuk, agrees that the TAKE-A- TURN dispenser (Pl. Ex. 25) has the structure of the Ehrlund claims with the exception that he would not character- ize the portions or means on either side of the flange or guidance means (Pl. Ex. 1, Claims 1 & 2) as “tear-off" portions or "cutting off" means and Appendix | 69 would not characterize the flange as "temporarily arresting movement of the ticket tongue". (Myronuk, pg. 1115, ln. 11 - pg. 1125 ln. 25). 114. Besides the structure recited in the claims of the Ehrlund patent, the TAKE-A-TURN dispenser has two tabs projecting inwardly from the down- wardly projecting portion of the cover and a bar below the flange of the casing. (Ehrlund, pg. 225 ln. 26 - pg. 226 ln. 2; Chilton, pg. 497 lns. 19- 26; Pl. Exs. 25, 72). The tabs and bar do not eliminate from the TAKE-A~-TURN dispenser the structure therein corres- ponding to the structure recited in the Ehrlund claims. The tabs operate in guiding the ticket tongue in the downward direction amd limiting the space between the downwardly directed portion of the cover and the casing flange. (Chilton, pg. 498 lns. 10-17). The projecting tabs in both the TURN-O-MATIC Mark II and the TAKE-A-TURN dispensers do not change the operation of the inven- tion from that described and illustrated in the patent, because the entire succeeding ticket tongue can be removed and the first ticket will still tear off. (Ehrlund, pg. 266 ln. 10 = pg. 268 ln. 13). The bar was added to prevent the user from pulling ticket straight Tveter, pg. 916 lns. 15-25). It is possible to pull tickets out of the TAKE-A-TURN dispenser without touching the bar. (Tveter, pg. 916 ln. 26 - pg. 917 ln. 14; Myronuk, pg. 1061 lns. 17- 21). Additionally, the addition of the bar has no bearing on infringement by Prodeco because Prodeco sells the dis- penser to Tveter without the bar. 70 Appendix (Tveter, pg. 742 Ins. 24-27). While a bunching action of the ticket tongue may take place in the defendants’ TAKE- A-TURN dispenser (Myronuk, pg. 1073 lns. 9-20), a bunching action can also take place in the device in the Ehrlund patent. (Myronuk, pg. 1074 lns. 4025). The claims of the Ehrlund patent do not specify structure or operation that would ex- clude the use of the bar, the depending tabs or a bunching action. (Pl. Exs. l, 69A-69C). 115. The TAKE-A-TURN dispenser made and/or sold by Prodeco and Nakagawa and made and/or sold by Tveter and SGT, and the dispenser embodied in the invention Claimed in Ehrlund U.S. Patent No. 3,885,724 are constructed substantially the same and operate in substantially the same way to produce substantially the same result. (Chilton, pg. 494 ln. 19 - pg. 495 ln. 3). 116. The TAKE-A-TURN dispenser as made and/or sold by Nakagawa and Prodeco embodies the invention claimed in Ehrlund U.S. Patent No. 3,885,724. 117. The TAKE-A-TURN dispenser as made and/or sold by Tveter and SGT em- bodies the invention claimed in Ehrlund U.S. Patent 3,885,724. I. Ma*keting of the TAKE-A-TURN Products 118. Tveter sells his TAKE-A-TURN ticket dispensers, tickets and/or number indicators to the same type of customers and to the very same customers to whom he formerly sold TURN-O-MATIC ticket dispensers, tickets and/or number indicators. (Tveter, pg. 750 ln. 27 - pg. 751 ln. 24). Appendix | 71 119. MTveter sells his components for his TAKE-A-TURN customer numbering system, including his ticket dispenser and number indicator, under the same part numbers under which he sold the components for the TURN-O-MATIC customer numbering system, and sales of TAKE-A- TURN products are made to identical cus- tomers to whom Tveter formerly sold TURN-O-MATIC products under identical part mimbers. (Tveter, pg. 713 ln. 3 - pg. 714 ln. ll: pg. 750 ln. 27 = pg. 751 ln. 24; Pl. Exs. 136, 61A-61D). 120. Tveter has included on one side of certain of his dispensers a silver label that includes the trade- mark TAKE-A-TURN in the manner and style in which the TURN-O-MATIC trade- mark is used and the name SGT Enter- prises. (Tveter, pg. 822 lns. 13-26; Def. Ex. 0) 121. Tveter uses the word "TAKE-A- TURN” as a trademark and has filed an application to register the trademark TAKE-A-TURN. There is no evidence in the record of the prosecution of the trademark application before the Trade- mark Office that the Office was aware of either the use or registration of the TURN-O-MATIC trademark by plaintiff for identical goods sold to the same type of customers or that Tveter had called attention to such use or registration or to the fac’: that plaintiffs had sued Tveter for trademark infringement of the TURN-O-MATIC trademark by his use of the trademark TAKE-A-TURN. (Pl. Ex. 154; Tveter, Pg. 765 In. 27 ~. Pg. 766 ln. 2). 122. MTveter's customers associated him with TURN-O-MATIC products and con- tinued to order TURN-O-MATIC brand 72 Appendix products from him after he terminated his distributorship agreement. (P. Exs. 129-0, 129-R, 129-K, 129-V, 129-G, 129-H, 129-I, 129-E, 129-D, 129-P, 127-Q). 123. On his invoices Tve’ zr used the word “ours” to refer to tickets Tveter made, as opposed to tickets made by plaintiffs. The decision to do this was made by defendant Tveter. (Tveter, pg. 787 ln. 6°8). He also used the designation "TAT" or "T.A.T." to desig- nate the sale of TAKE-A-TURN brand pro- ducts as distinguished from the same of TURN-O-MATIC brand products. (Pl. Exs. 129-H, 129-I, 129-P, 129-Q). MTveter used the designation "(old) (ours)" on his internally generated purchase orders and invoices to indicate when. he sold TAKE-A-TURN tickets of his own manufacture designed to fit the TURN-O-MATIC Classic ticket dis- penser. (Tveter, pg. 780 ln. 23 - pg. 781 ln. 6, pg. 786 ln. 7 - pg. 787 ln. 29). Tveter used the design " (new) (ours)" on his internally generated purchase orders and invoices to indicate when he was. selling TAKE-A-TURN tickets designed to fit the TAKE-A-TURN dispen- ser or TURN-O-MATIC Mark II dispenser of his own manufacture, and not those tickets made by plaintiffs. Tveter used the designation "(Swedish)" on in- ternally generated purchase orders and invoices to identify his sale of plaintiff's TURN-O-MATIC brand tickets. (Tveter, pg. 805 lns. 28-25; Pl. Ex. 129-G). 124. Tveter would sell plaintiffs' "Classic" model TURN-O-MATIC tickets and his own "Classic" model TAKE-A-TURN tickets for the same price. (Tveter, pg. 794 ln. 11 - pg. 796 ln. 11). In such cases the customer did not save money by receiving TAKE-A-TURN tickets °°. Appendix 73 rather than TURN-O-MATIC tickets. 125. Contrary to defendant Tveter's assertion that price is an important factor in the purchase of ticket dis- pensers and tickets, many customers stated that the price was not as impor- tant as proper operation or service. (Graham, pg. 422 ln. 14 - pg. 423 ln. 4; Baxter, pg. 971 ln. 23 - pg. 972 ln. 25; Burgess, pg. 304 lns. 19-25; Mar, Pl. Ex. 123 pg. 14 lns. 5-12; Wagner, pg. 950 lns. 18-24). 126. Tveter uses the name and mark TAKE-A-TURN on his price list and invoices in the same location, manner and style in which he formerly used the name and mark TURN-O-MATIC. (Pl. Exs. 136, 61-A, 61-C, 153, 129-I). J. Trademark Infringement, Production Simulation and Palming Off 127. The marks TURN-O-MATIC and TAKE-A-TURN are similar in sound, in appearance and in meaning. Both begin with the same sound, have short beginning and ending words hyphenated against a single middle letter and are used in identical ways and locations on the products of plaintiffs and defendants. Both contain as a dominant part the work "TURN". The following are rubbings made directly from the identical location on plaintiffs' and defendants’ dispensers showing the respective marks of the parties as used on sng oe Son ~~ oO meagre pee 2s in. 18) 149. Mr. Bogue was familiar with the TURN-O-MATIC trademark and knew that the Classic ticket dispenser he had in the store when it bought it was a “URN-O-MATIC ticket dispenser (Pl. Ex. 116, pg. 4 in. 13 ae $ ln. 3) 150. A working ticket dispenser which functions to dispense a single ticket to each customer is very essen- tial in an ice cream store (Pl. Ex. 116, pg. 8 ln. 12 - pg. 9 ln. 5) The brand a? ae 82 Appendix of ticket dispenser which Mr. Bogue had was extremely important to him. TURN-O- MATIC products had a good reputation with him and he did not feel that the TAKE-A-TURN unit shipped to him lived up to the quality of TURN-O-MATIC products. (Pl. Ex. 116, pg. 24 In. 7-9, pg. 23 ln. 19-21) 151. After Mr. Bogue came to under- stand that the TAKE-A-TURN ticket dis- penser had been substituted for the TURN-O-MATIC ticket dispenser he had ordered, he believed that he had been "taken" by Tveter's customer/distributor, Ed Cole, who was also a personal friend of Mr. Bogue. (Pl. Ex. 116, pg. 25 ln. 4-18, pg. 41 ln. 8-14, pg. 44 ln. 14-22, pg. 54 ln. 9-13) 152. Mr. Bogue was actually con- fused by the similarity in appearance between the TAKE-A-TURN received and TURN-O-MATIC Mark II ticket dispenser demonstrated. (Pl. Ex. 116, pg. 25 ln. 16-25, pg. 6 In. 15-17, pg. 10 ln. 11 - pg. ll ln. x Pg. 12 ln. 15-16, Pg. 13 153. Defendants’ customer Burgess, owner of the Baskin-Robbins store in Walnut Creek, California, (Burgess pg. 299 ln. 22-25) was solicited by SGT Enterprises over the telephone to purchase the TAKE-A-TURN ticket dispen- ser. The customer described to the caller from SGT Enterprises the dispen- ser he wanted as the round red, modern- looking one, believing that he had described the TURN-O-MATIC Mark II dis- penser which he had seen in another Baskin-Robbins store on Clayton Road. (Pl. Ex. 117-BB-4) Burgess indicated that he might have even made reference Appendix 83 to that store in his conversation with the man from SGT Enterprises, and was clearly thinking of the TURN-O-MATIC Mark II ticket dispenser in that store when he ordered the ticket dispenser from SGT.(pg. 300 ln. 22 - pg. 302 ln. 6) 154. Even after purchasing and - receiving the TAKE-A-TURN machine from ae ttn alia arate adn ieee tenet eee SGT Enterprises, Burgess believed that he had a TURN-O-MATIC brand ticket dis- penser, that the ticket dispenser he had was made by the same manufacturer as the TURN-O-MATIC Classic ticket dispenser, and that the TAKE-A-TURN ticket dispen- ser he had was made by the same company that made the TURN-O-MATIC wall indicator. (Burgess pg. 302 In. 3-6, pg. 302 ln. 22 - pg. 303 ln. 6) 155. After defendants’ customer Burgess learned that he had been passed off a TAKE-A-TURN dispenser for the TURN-O-MATIC dispenser which he thought he was getting, he knew that what he wan- ted was a TURN-O-MATIC machine. (Burgess pg. 305 ln. 17-25) 156. Tveter's invoicing, packaging and labeling never made it clear to his customer Burgess that the ticket dispenser he was sélling was not a TURN- O-MATIC. Even where Tveter crossed out the trademark TURN-O-MATIC on his invoice the TURN-O-MATIC still came through very clearly to Tveter's cus- tomers. (Burgess pg. 306 ln. 6 - pg. 308 ln. 8) 157. The TAKE-A-TURN ticket dispenser at Burgess' Baskin-Robbins worked very poorly. It would dispense several tickets at a time, sometimes 10 or 20, or as long as the customer wanted to °° — °’? Appendix 97 without regard to which trademark the tickets bore, or in fact received orders for TURN-O-MATIC trademarked tickets and filled them with TAKE-A-TURN trade- marked tickets; in either case Tveter's acts resulted in passing off his tickets as plaintiff's. (Tveter pg. 786 ln. 7 - pg. 787 ln. 29) 202. On contacting Tveter after January 10, 1975, when Tveter was no longer distributing TURN-O-MATIC products, many customers were not told that SGT Enterprises no longer was distributing those products, specifically John Bogue (Pl. Ex. 116, pg. 16-17), Robert Pratt (Pratt pg. 276, ln. 1-5), William Graham (Graham pg. 414 ln. 24-25), Victor Mar (Pl. Ex. 122, pg. 25 ln. 3-5) No wit- nesses have testified that Tveter made it clear to them that the product he was selling was not manufactured by the manufacturer of the TURN-O-MATIC machine and, in fact, the testimony of several witnesses is to the effect that they believed that the TAKE-A-TURN machine they had was a TURN-O-! ATIC machine. 203. The note at the bottom of some SGT-generated invoices indicating "this is our new model dispenser; please return your old model” implies defendants’ JAKE-A-TURN dispenser to be a new model TURN-O-MATIC dispenser as the "old" model referred to is the TURN-O-MATIC model. (Pl. Ex. 129-D). 204. Many people were actually con- fused by the similarity in appearance of plaintiff's Mark II TURN-O-MATIC ticket dispenser and the defendants’ TAKE-A-TURN ticket dispensers, specifically Henry Nakagawa (Finding #182), John Bogue 98 Appendix (Pinding #152), Wayne Lassen (Finding #137, 141, Jane Emanuel (Finding #163), Brad Burgess (Finding #158), William Sraham (Finding #135, Robert Pratt (Finding #180). Many customers were so confused by the devices’ similar appearance that they believed they had a TURN-O-MATIC instead of a TAKE-A-TURN device. (Findings 136, 137, 142, 147, 152, 153, 154, 162, 163) 205. Customers recognized plaintiff's TURN-O-MATIC trademark as a brand name and not as descriptive of defendants' products (Findings 149, 150, 174, 193; Burgess p. 302 ln. 3-17) and used the brand name and trademark TURN-O-MATIC to identify a distinctive product they wished to acquire. (F ndings 142, 151, 187, 180, 188, 191, 192, 196, 197, 198) 206. Defendants’ product, the TAKE- A-TURN dispenser, operated poorly in many of the stores in which it was situated, car ing difficulty for customers' staff ana slientele. (pg. 311, ln. l-ll, pg. 277 ln. 27 - pg. 278 ln. 14, pg. 400 ln. 12- 22, pg. 401 ln. 3-6, pg. 734 ln. 17 - pg. 735 ln. 6, pg. 743 ln. 21 - pg 744 ln. 8, pg. 416 ln. 20 - pg. 419 ln. 27) The fact that these faulty dispensers were believed to be manufactured by plaintiff destroys the good reputation of plaintiff in the marketplace. 207. Many customers who ordered TURN-O-MATIC tickets were shipped TAKE-A- TURN tickets. (Findings 187, 188, 190, 191, 192, 194, 196, 197) 208. Many customers who ordered TURN-O-MATIC products from Tveter after early December, 1974 were shipped TAKE-A- ‘TURN products and believed the products ithey received were TURN-O-MATIC products Appendix 99 and/or products originating from the same company from whom the TURN-O-MATIC products originate. (Findings 131, 132, 136, 142, 154, 162, 163, 167, 172, 178) Neither customers' communications with SGT Enterprises, wirtten or oral, nor Tveter's labeling of the TAKE-A-TURN dispensers, nor his brochures and new invoice headings have done anytning to dispel that belief. 209. The fact that defendants manu- facture a dispenser of the same size, — shape, color and function coupled with the facts that defendants formerly dis- tributed plaintiff's products and employ a trademark confusingly similar to plaintiff's, has made it difficult for ' Customers to describe, order and obtain TURN-O-MATIC products. 210. Defendants' customers sent orders to plaintiff for defendants' TAKE-A-TURN tickets. (Findings 183, 185) 211. AFter Tveter cancelled his distribution agreement with TURN-O-MATIC, some of his customers ordered products from Tveter or plaintiff designating on the purchase order “TURN-O-MATIC TICKETS PER THE ATTACHED” to which was attached a sample of the TAKE-A-TURN ticket while other customers ordered "TAKE-A-TURN TICKETS PER THE ATTACHED" to which has been attached a TURN-O-MATIC ticket. (findings 183, 185, 192) 212. MTveter's TAKE-A-TURN trademark is similar in sound, meaning and appear- ance to plaintiff's TURN-O-MATIC trade- ‘Mark. (Findings 135, 159, 164, 169, 175, 180) 100 Appendix 213. Many customers were actually confused by the similarity between the trademarks TAKE-A-TURN and TURN-O-MATIC. (Findings, 159, 164, 175, 180, 184, 186, 195, 199) 214. Numerous customers for the TURN-O-MATIC products of plaintiff and the TAKE-A-TURN products of the defendants have been actually confused as to the source or origin of the goods. (Findings 131, 132, 136, 154, 162, 172, 181,. 183, 185) 215. The term TAKE-A-TURN as applied to ticket dispensers, tickets therefor and number indicators for customer numbering systems is a mere colorable imitation of the trademark TURN-O-MATIC for similar goods. 216. The use of the name TAKE-A-TURN on Tveter's disvenser, tickets and number indicators, including the identity of the goods, the similarity of the names TURN- O-MATIC and TAKE-A-TURN, the location and manner of the use of these names on the goods, the nature of the offer for sale and sale of the goods, the channels of distribution of the goods. and the specific identity of the customers for the goods, is likely to cause confusion, or to cause mistake or to deceive. 217. Defendant Tveter has palmed off his ticket dispenser, tickets and indicators as those of plaintiff. Ne ae ee ae - Appendix 101 II. CONCLUSIONS OF LAW 1. This court has jurisdiction over the parties and jurisiction over the subject matter under 28 U.S.C. 1338(a) and (b). Venue is proper under 28 U.S.C. 1400 and 1391(b). A. Patent Validity 2. U.S. Letters Patent No. 3,885,724 to Ehrlund and Claims 1-5 thereof are presumed : valid and the burden of establishing invalid- ity for anticipation or on any other basis is on the defendants. 35 U.S.C. 282; Neff In- strument :Corp. v. Cohu Electronics, Inc. , 298 F.2d 82, 86 (9th Cir. L96L); Western Li htin v. Smoo -Holman Co., 381 F.2d 355, 5 ‘ai Cir. 1966)); Schlumberger v. Douglas Furniture, 275 F.Supp. .D. Cal. ; 3. The defendants bear a heavy burden of persuasion by "clear and convincing proof" of the alleged anticipation under 35 §.8.C. 102, obviousness under 35 U.S.C. 103, insufficient disclosure or non-operativeness of the dis- closed structure under 35 U.S.C. 112 and the introduction of new matter under 35 U.S.C. 132. Munn v. Jacob E. Decker & Son, 301 U.S. 168, 171 (1937); Radio Corp of America v. Radio Engineering Laboratories, 293 U.s. 1, 7 (1934); Hayes ray Gun Co. v. E.C. Brown Co., 291 ro 319, 397 (Sth Cir. I961); Reeves Instrument Corp. v. Beckman Instru- ments eC. . .9.P.Q, : - 444° F.2d 263 (9th Cir. 1961), cert. denied, 404 U.S. 951 (1971). Reasonable doubts must be resolved in favor or validity of the Ehrlund patent. Moon v. Cabot Shops, Inc., 270 F.2d 539, 541 (Sth Cir. I959). 4. The pen par gi of validity is not completely disspelled merely because the 102 Appendix defendants’ alleged prior art discloses tic- ket dispensers and the prior art cited by the Examiner does not disclose ticket dis- pensers. The prior art cited by the Exan- iner discloses dispensing structures having flanges cooperating with tongues or flaps in strip material directed in the feeding dir- ection of the material which is the most in- portant aspect of the invention of U.S. Letters Patent 3,885,724 and is not dis- closed by the defendants' prior art. Saf- Gard Products, Inc. v. Service Parts, Inc., : Ee t 2. ; Ne Instrument Corp. v. Cohu, supra, 269 F.2d at 656. 5. Regardless of the strength of the presumption the trial court can and this trial court does find U.S. Letters Patent 3,885,724 valid and enforceable. Saf-Gard Products, Inc. v. Service Parts, Inc., supra, 532 F.2d at L271. 6. The disclosure made in the descrip- tion and drawings of the Ehrlund patent is such as would enable a person of ordinary skill in the art to make and use the patented invention. 35 U.S.C. 112. Not only would the latch and unrolling of the ticket strip from the bottom of the roll be obvious to a person skilled in the art, but also these structural features were not part of the in- vention as set forth in the claims. The relevant inquiry is whether the scope of en- ablement provided to one of ordinary skill in the art by the disclosure is commensurate in scope with the protection sought by the . claims. In the Ehrlund patent the enablement is commensurate with the protection sought by the claims. Illinois Took Works, Inc. v. Foster Grant Co., Inc., F. 2d , 2192: es Appendix 103 U.S.P.Q. 365, 372 (7th Cir. 1976); Yosemite Chemical Co. v. United States, 360 F.2d 948, 952 (Ct.Cls 1966); Georgia-Pacific Corp. v. United States Peres Cass 258 F.2d ri n a 6), cert. denied 358 U.S. 884 (1958); Congoleum Industries, Inc. v. Armstrong Cork oe 339 F.Supp 1036, 1055 (E.D. Pa. 1972); Trio Process Corp. v. L. Goldstein's Sons, Inc., 461 F.2d 7 74 (3rd Cir. I972). 7. The conception by Ake Ehrlund of his invention and his construction of working models in late 1971 and the filing of his Swedish patent application on January 26, 1972 serve to establish "the time the inven- tion was made" within the meaning of 35 U.S.C: 103. The invention described and claimed in Mr. Ehrlund's original Swedish application is the same invention described and claimed in his U.S. application filed less than a year later and on which U.S. Letters Patent 3,885,724 issued. Thus, U.S. Letters Patent No. 3,885,724 has an effective filing date of January 26, 1972, the filing date of the original Swedish application. 35 U.S.C. 119; Application of Ziegler, 347 F.2d 642,649 (Cte Pe 1965). 8. Claims 1-5 in U.S. Letters Patent 3,885,724 precisely cover the subject matter disclosed in the specification and drawings. The i i of the claims is to be con- strued in light of the patent specification and drawings, and the patentee can be his own lexicographer. United States v. Adams, 383 U.S. 39 (1966); Cool-Fin Electronics Corp. v. International Electronics Research Corp., 451 F. ‘ t r Illinois Tool Works, Inc. v. Burnsin ; 389 F. 2d 38, 40 (Sth Cir. 1968); Canaan Products, 104 Appendix — v. Edward Don & Co., 388 F.2d 540 (7th ; Walker on Patents, Deller Ed. Section 228. 9. The Ehrlund patent is not indefinite under 35 U.S.C. 112 merely because every word which is found in the claims is not found in the specification. It is sufficient if there is disclosure in the specification which supports the limitations which are in the claims and for this purpose resort may be had to the patent drawings which are a part of the specification. Autogiro Co. of America v. United States, 38 ; , (Ct. CIs. 1967); Loon Co. v. Higgins, 105 U.S. 580, 590 (1881); Systron Donner Corp. v. Sundstrand Data Contro nc. 1Oee.Q. : a. Superior Ct. Contra Costa Co. 1974). 10. A statement of the forces coming in- to play in the operation of the Ehrlund in- vention or even statement of the scientific principles involved is not required in the claims or even in the specification of the Ehrlund patent which teaches how to make and use the device. Indeed, it is not even nec- essary that the patentee understand or be able to state the scientific principles underlying his invention. U.S. Letters Patent 3, 885,724 is not invalid for failure to disclose or claim the forces that cause the end ticket to tear uff. Eames v. Andrews, 122 U.S. 40, 55-56 (1887); Diamond Rubber Co. v. Consol. Tire Co., 220 U.S. 3 = ; DeForest Radio Co. v. General Elec- tric Co., ee , ; inter- mountain Research & Eng. Co. v. Hercules, : th Cir. ‘shew Reese v. Elkhart Welding & Boiler Works, Inc., Appendix 105 ll. The recited construction of the strip roll in the preamble to the claims of U.S. Patent No. 3,885,724 gives life, mean- ing and vitality to the claims and is an important limitation to define the remaining recited structural limitations of the claim, and is referred to in a determination of an- ticipation under 35 U.S.C. 103. Marston v. J. C. Penney Co., 353 F.2d 976, 986 (4th Cir. 1965), cert. denied 385 U.S..974; Kropa v. Robi, 187 F.2d 150, 152 (C.C.P.A. OF Stradar v. Watson, 224 F.2d 737, 741 (D.C. ¥. ; Jac inter, Inc. v. Koratron Co., Inc., 375 F. upp i, -D. Cal. : Application of Szajna, 422 F.2d 443, 447 -C.P.A. ; Union Carbide Corp. v. Fil- trol Corp., 170 U-S.P.0. : .D. Cal. IS7I), are id 179 U.S.P.Q. 209 (9th Cir. 1973). However, the element recited in the preamble does not form a part of the patented combi- nation for infringement purposes. Williams — Mfg. Co. v. United Shoe Machine Corp., 316 Hi “ ; Harris v. Nationai Machine Works, Inc., l th Cir. 1948); Stukenbore v. Teled ne Inc., 299 F.Supp 1152 (C.D. Cal 1969), ard G4T F.2d 1069 (9th Cir. 1971). 12. The claims of U.S. Patent 3,885,724 are not a mere aggregation of old and well- known elements because the claims define a device composed of certain defined elements in combination. Reeves Instrument Co ei supra, 444 F.2d at 2763; Sat-Card Products, Inc. v. Service Parts, Inc., 3 PP . D.C. Ariz. aff'd. 532 F.2d 1266 (9th Cir. 1976). 13. Anticipation under 35 U.S.C. 102 being strictly a technical defense, the claims of U.S. Letters Patent No. 3,885,724 ie ll ne 106 Appendix are valid because none of the prior art items relied upon by defendants discloses the same elements in exactly the same situation and united in the same way to perform the iden- tical function as specified in the claims. Saf-Gard Products, Inc. v. Service reacts, Inc., supra; Walker v. General Motors Corp., 326 F.2d 56, 58 (th Cir. 1966); Stauffer v. Slenderella Systems, Inc., 254 t ait 2; Cool-Fin . v. International Electron- Electronics Co ics Rasearch Ce ., Supra; Schroeder v. Owens -Corning Fiber Class Corp., 514 F.2d 501, 903 (Sth Cir. 1975). 14. To establish invalidity of U.S. Letters Patent 3,885,724 under 35 U.S.C. 103 as obvious at the time the invention was made to a person having ordinary skill in the art to which the invention pertains, the defen- dants must establish the scope and content of the prior art, the differences between the pee | art and the claims at issue and the evel of ordinary skill in the pertinent art. Defendants have failed to carry their burden of proof that U.S. Letters Patent No. 3,885,724 is invalid as being obvious under 35 U.S.C. 103 by failing to establish the level of skill of the average man skilled in the art to which U.S. Letters Patent 3,885,724 pertains. Universal Athletic Sales Co. v. American Gym, F.2d : rd Cir. 1976); Graham v. John Deere Co., 383 U.S. 1,17 15. To establish invalidity under 35 U.S.C. 103 defendants’ alleged prior art patents must be viewed through the eyes of a person having ordinary skill in the art at the time of the invention as was done by °’? Appendix 107 plaintiffs' expert Professor Chilton who believed the invention would have been un- obvious using such test. Hindsight must play no part in determining what would have been obvious, and the teachings of the litigated patent must not be read into the prior art as attempted by defendants' expert Professor Myronuk. The non-obviousness of the inven- tion to Messrs. Osborne and Williamson, who were persons skilled in the art and inventors of certain of defendants' alleged prior art, and to Tveter, who was a mechanic knowledge- able in the field, confirms lack of obvious- ness under 35 U.S.C. 103. Saf-Gard Products, Inc. v. Service Parts, Inc., supra; Ne jert Instrument Corp. v. Cohu Electronics, Inc., supra, 298 F.2d at 88. 16. The invention of U.S. Patent No. 3,885,724 is not invalid under 35 U.S.C. 103 because it was made in part by accident by a person skilled in the art. General Tire & Rubber Co. v. Watson, 184 F.Supp 344, 347 D.C. I960). 17. Professor Myronuk, being an expert, cannot be equated with the "person having ordinary skill in the art" contemplated by 35 U.S.C. 103. An expert is by his very nature inordinary. Westinghouse Electric Corp. v. Titanium Metals . Of Aman, 454 ‘ ; t r. ; Abington Textile Machinery Works v. Carding Brecial- sts, Ltd., . supp Gr’ Bee ). 18. From the skill of the ordinary man in the pertinent art established by plain- tiffs, the subject matter defined 3 Claims 1-5 of U.S. Patent No. 3,885,724, as a whole, would have been unobvious at the time in 1971 when Mr. Ehrlund made his first working ie iis 108 Appendix dispenser on January 26, 1972 when the Swedish application was filed or on January 24, 1973 when the U.S. application was filed, to a person having ordinary skill in the art to which the subject matter pertains. 35” . U.S.C. 103; Graham v. John Deere, Co., supra, Saf-Gard Products, Inc. v. Foe Parts t ¥. ; ne. 7 ° ? Neff Instrument Corp. v. Cohu Electronics, Inc., supra. 19. The acclaim received by the Mark II dispenser, its widespread commercial success and virtual total replacement of the "Classic" model, and the long felt want for a reliable, inexpensive, simple ticket dis- penser prior to Mr. Ehrlund's invention fur- ther establish the unobviousness of Mr. Ehrlund's invention, were there any doubt as to the validity of U.S. Letters Patent 3,885,724. Graham v. John Deere Co., supra; Goodyear Tire er Co. ne. v. Ray-0O- ac, De ; Sat-Gard Products Inc. v. Service Parts, Inc., supra, 532 F.2d ie bet ee 20. Tveter and Prodeco saw the value of Mr. Ehrlund's improvement over existing tic- ket gg pone. pg sought to profit by copy- ing his invent and selling it. S$ copy- ing itself is evidence of patentability. Antici v. KBH Corp., 324 F.Supp 236, 244 .D. ss. }, aff'd 455 F.2d 607 (5th Cir. 1971); Troy Company v. Products Re- search Co., : ve z; ; Zamboni v. M.B. Vanderber, 257 F.Supp 80, 82 (S.D. Cal. I965). 21. Patent validity is bolstered where, as in the Ehrlund patent, the patented device achieves the unexpected results of a ticket Appendix 109 dispenser sa oma with no moving parts to dispense asingle ticket pulled in a one-hand operation without contact with other parts and levving the next ticket exposed to be grasped. The dispenser produces a syner- istic result. Reeves Instrument Co Vv. eckman Pye e amen ES TRS supra, 444 F 2d aft-Gar at 270-273; Sat-G roducts, Inc. v. Ser- vice Parts, Inc., supra, 370 F.Supp at 269. 22. In view%o£. the pelea OR findings of fact and concl of law, it is concluded that the differences between the subject matter claimed in the Ehrlund patent and the prior art are such t the subject matter of the Ehrlund patent as. a whole would not have been obvious at the time the invention was made to a person having ordinary skill in the art to which the subject matter pertains. 23. There was not fraud on the Patent Office in obtaining issuance of U.S. Letters Patent No. 3,885,724 from the manner in which Ehrlund executed the declaration for his | atent application. Jack Winter, Inc. v. oratron [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1435%3A1. Public record. Not legal advice.