Appendix — Potter Instrument Co. v. Storage Technology Corp.

Office-Supreme Court, U.S.

yi hk oy

80-2097 MAY 21 1981

~ — ALEXAND sie VAS,

CLiRK

IN THE ;

Supreme Court of the United States

POTTER INSTRUMENT COMPANY, INC.

Petitioner,

v.

STORAGE TECHNOLOGY CORPORATION

TELEX COMPUTER PRODUCTS, INC.

SPERRY CORPORATION

CONTROL DATA CORPORATION,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

APPENDIX

DAVID R. MURPHY

Attorney for PICO

Suite 307; File 5363.160

2001 Jeff Davis Hwy.

Arlington, VA 22202

(703) 521-2400

ee —e——————————————eE

APPELLATE PRINTING SEAVICES INC, HERITAGE BLOG . RICHMOND. VA (804) 643-7789

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1980

POTTER INSTRUMENT COMPANY, INC.

Petitioner,

Vv.

STORAGE TECHNOLOGY CORPORATION

TELEX COMPUTER PRODUCTS, INC.

SPERRY CORPORATION

CONTROL DATA CORPORATION,

Respondents.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI

NOW COMES the petitioner,

Potter Instrument Company, Inc. (PICO)

by counsel and files and serves this

Appendix to the document entitled

"PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT" in the above-

captioned case which was timely filed

with the Clerk of the United States

Supreme Court on the 2lst day of May

1981.

Pursuant to Supreme Court

Rule 28.1, the undersigned affirmatively

states on information and belief that

petitioner has no parent companies and

that all petitioner's subsidiaries are

wholly owned subsidiaries.

Respectfully submitted,

Zod K Murphy

Attorney for PICO

Suite 307; File 5363.160

2001 Jeff Davis Hwy.

Arlington, VA 22202

(703) 521-2400

TABLE OF CONTENTS

TO APPENDIX

Item Page

Statement of Counsel.........- 1

SEBES OF CONCONEH si ccccsersccve 3

Findings and Conclusions...... 4

EY Ba Oi a he ob awe 6 nO 0b 6 6 0.8 18

Decision of the Court of Appeals 20

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF VIRGINIA

ALEXANDRIA DIVISION

Civil Action No. 79-579-A

Porrer Instrument Company, Inc., Plaintiff,

Vv.

Storace Tecunotocy Corporation, Defendant.

Civil Action No. 79-626-A

Potrer Instrument Company, Inc., Plaintiff,

v.

Terex Computer Propucts, Inc., Defendant.

Civil Action No. 79-993-A

Porter Instrument Company, Inc., Plaintiff,

v.

Te.ex Computer Propucts, Inc., Defendant.

Civil Action No. 79-994-A

Potrrer Instrument Company, Inc., Plaintiff,

v.

Spenry Corporation, Defendant.

Civil Action No. 79-995-A

Porrer Instrument Company, Inc., Plaintiff,

v.

Controt Data Corporation, Defendant.

FINDINGS AND CONCLUSIONS

(Filed March 25, 1980)

whe

These suits were brought by the Potter Instrument

Company, Ine. (Potter) against Storage Technology Cor-

poration (STC),' Telex Computer Products, Inc. (Telex),’

Sperry Corporation (Sperry),? and Control Data Corpora-

tion (CDC)* charging the defendants with infringement of

United States Letters Patent No. 3,176,894 (“the ’894 pat-

ent”) by making, using and selling magnetic tape drives

employing an “industry standard Z buffer” and United

States Letters Patent No. 3,226,685 (“the ’685 patent”)

by making, using and selling magnetic tape recording sys-

tems employing Group Coded Record (GCR) adopted as

an industry-wide standard by the American National

Standards Institute (ANSI).

The defendants claimed these patents were invalid and

denied the claimed infringement.

A parallel proceeding is currently pending in the United

States Court of Claims. The Court of Claims proceeding

was instituted on March 24, 1978 when Potter filed suit

against the United States Government alleging infringe-

ment of the ’894 and ’685 patents in connection with the

United States Government’s use of computer equipment

and tape drives supplied by STC, Telex, Sperry and CDC.

The defendants were made third-party defendants.

These consolidated cases came on for hearing on the

joint and/or individual motions of the defendants for

summary judgment on the basis of, inter alia, file wrapper

estoppel, laches, and equitable estoppel.

The Court declared the file wrapper estoppel claim pre-

mature and scheduled the laches and estoppel issues for

further hearing.

Civil Action No. 79-579-A (filed July 6, 1979).

* Civil Action Nos. 79-626-A und 79-993-A (filed July 24, 1979

and November 21, 1979, respectively).

* Civil Action No, 79-994-A (filed November 21, 1979).

* Civil Action No, 79-995-A (filed November 21, 1979).

-5-

Detailed memoranda of points and authorities, together

with voluminous exhibits and live testimony, were sub-

mitted by each of the parties in support of their respective

positions.

From the record thus made, the Court finds that the

894 patent was issued to Robert E. Schoeneman as in-

ventor on April 6, 1965. This patent, allegedly covering

“industry standard Z buffer” magnetic tape drives, was

owned by Potter during the time period relevant to this

consolidated action.

The ’685 patent, allegedly covering the industry stand-

ard “GCR” recording and information storage technique,

was also owned by Potter during the relevant time period.

Although the record is silent as to when, if ever, Potter

began manufacturing and marketing its Z buffer tape

drive and GCR recording equipment, it had bulk paid-up

licensing agreements with IBM and other manufacturers

covering both the ’894 and 685 patents as early as 1971.

In early 1970, Potter had actual and/or constructive

notice that each of the defendants had developed and were

selling tape drives utilizing the accused industry standard

Z buffer and, later, the GCR technique.

STC introduced its first magnetic tape drive employing

an industry standard Z buffer at the Atlantic City Na-

tional Computer Conference in the spring of 1970—this

conference was attended by Potter representatives. STC

sold its first Z buffer tape drive in late 1970,

Beginning in 1970, STC undertook a marketing program

for its tape equipment which included low profit sales to

original equipment manufacturers (OEMs).

On December 1, 1971, Potter wrote to STC concerning

possible infringement of the '894 patent. Subsequent cor-

responding relating to the ’894 patent between Potter’s

patent counsel and STC’s patent counsel followed during

wSe

1972. This correspondence terminated with a letter dated

January 17, 1973—nothing more was heard from Potter

regarding the ’894 patent until this suit was filed in 1979.

On March 8, 1973, STC publicly announced its GCR

tape recording system—a copy of which announcement

was received by Potter. On May 17, 1973, George W. May,

“then president of Potter, wrote to STC stating that the

’685 patent covered the fundamental concept of GCR and

offered STC a license under the ’685 patent.

STC began selling its tape drives employing GCR tech-

nology after the March 8, 1973 announcement, for delivery

in the fourth quarter of 1973. In March 1974, John T.

Potter reported to the Potter Board of Directors that

STC was infringing its 685 patent—no legal action was

undertaken by Potter against STC for patent infringement

until the filing of this suit in 1979.

Telex publicly announced its Z buffer tape drive in May

1970 and subsequently made shipments to customers in the

latter part of 1970.

Potter first contacted Telex regarding the ’894 patent in

a letter dated November 10, 1971, in which Potter directed

Telex’s attention to the ’894 patent. An exchange of corre-

spondence followed which included a letter from Telex’s

patent counsel denying infringement of the ’894 patent and

a letter dated October 25, 1972 from Potter threatening

immediate legal action if Telex did not take a license under

the '895 patent. Nothing further was said or done regard-

ing the '8!4 patent until this suit was filed in 1979.

In May 1975, Telex negotiated for and purchased Pot-

ter’s United Kingdom assets for approximately $500,000.00.

Potter neither claimed nor mentioned infringement of its

’894 patent during these negotiations.

The record is devoid of evidence concerning precisely

when Telex introduced and began marketing its GCR tape

oFa

equipment. However, the undisputed evidence discloses that

Potter became aware of Telex’s GCR equipment and the

possibility that Telex might be infringing on its ’685 pat-

ent in 1976—as evidenced by the exchange of correspon-

dence between Potter and Telex with regard to the ‘685

patent initiated hy Potter’s letter of February 13, 1976 and

terminated by Telex’s letter of February 3, 1977.

On November 10, 1970, Sperry Univac issued a press re-

lease to approximately 75 magazines and trade journals

announcing the introduction of the accused Sperry Univac

Uniservo-20 tape drive. This tape drive, which employs

the accused Z buffer, was given wide publicity at trade

shows following the November announcement.

On December 31, 1971, the Sperry Univac Division of

Sperry acquired the computer business and operations of

the RCA Corporation in a widely publicized transaction.

RCA had earlier acquired a paid-up license under numer-

ous Potter patents, including the ’894 patent.

CDC issued press releases to the computer industry re-

garding its own Z buffer tape drive no later than August

22, 1973. On or before September 27, 1973, CDC had begun

leasing the accused Z buffer tape drive. As of the time of

the press releases, Potter knew or should have known that

CDC was marketing the accused Z buffer tape drives.

Potter never asserted any infringement claim under the

894 patent against CDC until the filing of this suit in

1979.

With respect to the GCR patent, in November 1973, the

ANSI Subcommittee X3B1 received a proposal from IBM

—which was licensed by Potter under the '685 patent—for

adoption of GCR recording as an industry-wide standard.

GCR is allegedly an infringement of the ’685 patent in

suit. Representatives of Potter attended the November

1973 ANSI subcommittee meeting but did not disclose

Potter’s ownership of the ’685 patent or any other patents

relating to the proposed GCR standard.

ANSI Subcommittee X3B1 formulates industry-wide

standards for magnetic tape information interchange sys-

tems. The Subcommittee had a written policy, of which all

members were aware, stating that when any one or more

patents are to be included within a proposed industry

standard, the owner of such patent[s] must bring to the

attention of the Subcommittee the existence of such pat-

ents and agree to offer licenses to members of the affected

industry on reasonable and nondiscriminatory terms as a

prerequisite to the adoption of the industry-wide standard.

This policy was adopted to allow all industry members an

equal opportunity to utilize any industry-wide standard

adopted.

The GCR recording was adopted as the industry-wide

standard in June of 1976.

During the time periods relevant to this suit, Potter was

fully cognizant of the methods used to protect one’s pat-

ents and patent rights. On January 2, 1970, it instituted a

suit against Bucode, Inc. for infringement of, inter alia, its

894 patent (184 U.S.P.Q. 662 [1975]). After protracted

litigation, the ’894 patent was held valid by the District

Court—this suit was compromised and settled pending

appeal.

Potter took no action against any of the alleged in-

fringers, either during or after the conclusion of the

Bucode suit, prior to filing the Court of Claims’ suit against

the United States.

Potter's economic survival reached the acute stage in

late ‘73 or early "74—many of its patents, including the

894 and ‘685 patents, were assigned to the Midland Bank

of New York as security for bank loans—Alexander was

employed as its financial consultant in late 1974, and the

Company filed its petition for a Chapter XI Bankruptcy in

aGa

April 1975. Potter remained as debtor in possession with

Alexander as its new president.

None of these infringement claims were listed as assets

or choses in action in Potter’s Chapter XI Bankruptcy

petition.

Alexander neither petitioned the Bankruptcy Court nor

took any action as debtor in possession against any of these

defendants in re their right to continue using the 894 or

the '685 patents, even though the Potter Board of Directors

had been advised by one of its patent advisors that failure

to so do might give rise to the defense of laches.

Instead, Potter sought and obtained permission from the

Bankruptcy Court to employ counsel on a contingent basis

to bring suit against the United States in the Court of

Claims for infringement of its '894 and ’685 patents—in

the hopes that the Government would bring in the defen-

dants as third-party defendants and force a settlement—

which was done in a similar suit filed against the United

States in the Court of Claims.

Suit was filed against the United States in the Court

of Claims on March 24, 1978, and the Government gave

notice of the suit to these defendants in September 1978.

Potter changed counsel in the Court of Claims’ suit—

and he recommended that individual infringement suits

be brought in this Court against these defendants, on a

contingent basis—three were filed in July 1979; three were

filed in November 1979; two have been settled, and four

remain to be settled and/or tried.

Although an unusually large amount of pretrial discov-

ery has been had both in the Court of Claims and in this

Court, many of the pertinent documents have disappeared

and many of the material witnesses, including the inven-

tors of the patents in suit, have suffered lapses of memory

or otherwise have become unavailable.

-10-

While the causes arc myriad, much of the blame is at-

tributable to Potter’s delay in filing these suits.

Potter’s unsupported contention that laches is not appli-

cable to suits at law’ is inapposite to all the relevant

authorities.

It is clear in the Fourth Circuit that the equitable doc-

trine of laches is applicable to suits brought solely at law.

See Giddens v. Isbrandtsen Co., 355 F.2d 125 (4th Cir.

1966). Similarly, laches has expressly been held applicable

to patent infringement actions. TWM Manufacturing Co.,

Inc. v. Dura Corporation, 592 F.2d 346 (6th Cir. 1979);

Baker Manufacturing Co. v. Whitewater Manufacturing

Co., 480 F.2d 1008 (7th Cir. 1970), cert. denied, 401 U.S.

956 (1971); Union Shipbuilding Co. v. Boston Iron &

Metal Co., 93 F.2d 781 (4th Cir. 1938); Wolf Mineral

Process Corp. v. Minerals Separation N.A. Corp., 18 F.2d

483 (4th Cir. 1927).

Laches may be invoked when the prejudice to the defen-

dant caused by the plaintiff’s unexcused delay in institut-

ing suit outweighs the harm to the plaintiff caused by the

acts of the defendant upon which the suit is predicated, It

is sustainable upon proof of two elements: (1) lack of

diligence by the party against whom the defense is as-

serted, and (2) prejudice to the party asserting the de-

fense. Sew Costello v, United States, 365 U.S. 265 (1961).

In construing this two-pronged standard, Judge Albert

V. Bryan, Sr., speaking for the Fourth Circuit, stated in

Giddens, supra, that:

... the presence of laches is ascertained by a balanc-

ing of the claimant's delay with the proferred excuse,

if any, against the defendant’s consequent detriment.

*The plaintiff asserts that this consolidated action is an action

at law rather than an action in equity because Potter seeks only

monetary damages and no injunctive relief.

-ll-

The determination demands a weighing of equities.

These in turn depend upon an assay of the circum-

stances. 355 F.2d 125, 127.

The length of delay constituting laches is generally anal-

ogized to a corresponding statute of limitations—but the

laches period may be longer or shorter than the analogous

statutory period, depending on the individual facts and

circumstances of each case. Giddens, supra, at 127; Gil-

lons v. Shell Co, of California, 86 F.2d 600 (9th Cir. 1936),

cert, denied, 302 U.S. 689 (1937).

Although there is no express statute of limitations for

patent infringement suits, 35 U.S.C. § 286 limits a pat-

enteo’s recovery in a patent infringement action to the six-

year period immediately preceding the filing of the suit.

TWM Manufacturing Co., supra, at 348.

The time when the patentee gains knowledge—either

actual or constructive—of the alleged infringement trig-

gers the running of the laches period. TWM Manufactur-

ing Co., supra, at 348; Dymo Industries v, Monarch Mark-

ing Systems, 474 F.Supp. 412, 414 (N.D. Tex. 197!))—the

period stops when the patentee files suit against the al-

leged infringer.

Potter filed suit in this Court against these defendants

for their alleged commercial infringement of the '894 and

’685 patents in 1979, Its 1978 suit against the United States

in the Court of Claims alleging that the defendants’ prod-

ucts infringed its 894 and '685 patents was for governmen-

tal infringement only. The Court of Claims’ suit did not toll

the running of the laches period against these defendants

for commercial infringement. See TWM Manufacturing,

supra, at 349,

Where there has been an unreasonable delay by a pat-

entee in bringing suit for infringement of his patent, there

is a presumption that the alleged infringer has been pre-

atte

judiced by the delay. The weight of authority indicates that

delays in excess of six years in bringing such suits are

presumptively unreasonable—and shifts the burden of

proof to the patentee plaintiff to show a legally cognizable

excuse for the delay.

This rule has been in existence at least since its promul-

gation by the Ninth Circuit in Gillons v, Shell Co. of Cali-

fornia, 86 F.2d 600 (9th Cir. 1936), cert. denied, 302 U.S.

689 (1937). In 1970, the Seventh Circuit in applying laches

to bar a patent infringement suit delayed for seven years

after notice of infringement, cited Gillons with approval.

Baker Manufacturing Co. v. Whitewater Manufacturing

Co., 430 F.2d 1008 (7th Cir. 1970), cert. denied, 401 U.S.

956 (1971).

While the Fourth Circuit has not specifically addressed

the six-year rule, this presumption has been adopted by the

Second,’ Sixth,’ and Tenth * Circuits by the district court in

the Fifth’ and District of Columbia Circuits *°—and by this

Court, and counsel has been so advised.

The plaintiff was given every opportunity to justify its

long delay in bringing these infringement suits and they

failed to so do.

The undisputed evidence clearly shows that Potter de-

layed bringing suit against these defendants for infringe-

ment of the '894 patent for more than six years after it

* Jones v. Ceramco, Inc., 387 F.Supp. 940 (E.D.N.Y. 1975), aff’d

526 F.2d 585 (2nd Cir. 1975).

"TWM Manufacturing Co., Inc. v. Dura Corporation, 592 F.2d

346 (fth Cir, 1979).

* Maloncry-Crawford Tank Corp. v. Rocky Mountain Natural Gas

Co., 494 F.2d 401 (10th Cir. 1974).

° Dymo Industries, Inc. v. Monarch Marking Systcms, 474 F.

Supp. 412 (N.D. Tex. 1979),

Van't Veld v. Honeywell, 440 F.Supp. 1020 (D.D.C. 1979).

-13-

had knowledge of the alleged infringement by these de-

fendants.

Potter's attempt to excuse this delay on the grounds they

were negotiating with the defendants in re-licensing and

were in the process of suing another company (Bucode)

for infringement of the '894 patent—and their precarious

financial condition—are simply not supported by the evi-

dence.

Potter failed to call any of its corporate officers, many

of whom were available, except its present president, to

explain why their so-called licensing offers were rejected

or why they delayed filing infringement suits against these

defendants. None of Potter’s office memoranda or copies

of its correspondence in re these negotiations were offered

in evidence. The correspondence in evidence came from the

defendants’ files. All the defendants denied they were in-

fringing the 894 patent. That must have ended the matter

as far as Potter was concerned because they did nothing

to stop uny of the defendants from continuing to manu-

facture and sell their machines, Although Potter’s present

president was not with the Company until late 1974, he

offered no explanation as to why these suits were not filed

until late 1979—except that he was too engrossed in keep-

ing the Company financially afloat to look into the matter

before then.

However one characterizes these licensing negotiations,

they terminated more than six years before these infringe-

ments suits were filed.

Similarly, Potter’s maintenance of the Bucode litigation

does not constitute a legally cognizable excuse for Potter’s

delay in suing these defendants for infringement of its

’894 and ’685 patents. Other patent infringement litigation

brought by a patentee does not excuse a delay in suing

other defendants for infringing the same patent. Advanced

Hydraulics, Inc. v. Otis Elevator Company, 525 F.2d 477

(7th Cir. 1975), cert. denied, 423 U.S. 869 (1975).

“hie

The bald knowledge that a patentee has sued other com-

panies for patent infringement does not impute knowledge

of the patentee’s intention to sue all infringers for patent

infringement—even if the patents in suit are identical. At

the very least, at some time during the course of the

Bucode litigation, Potter should have notified the defen-

dants of its intention to sue them for infringing its ’894

patent upon obtaining a favorable resolution of the Bucode

case, American Home Products Corp. v. Lockwood Manu-

facturing Co., 483 F.2d 1120 (6th Cir. 1973), cert. denied,

414 U.S. 1158 (1974).

For the period from 1975 up until these suits were filed

in 1979, Potter cites its financial difficulties as its primary

reason for failing to sue. However, except in unusual cir-

cumstances, poverty is ordinarily no excuse for delay in

filing suit. A party’s poverty or pecuniary embarrassment

is not a sufficient excuse for unreasonably postponing the

assertion of its legal rights. Hayward v. National Bank,

96 U.S. 611 (1877); Leggett v. Standard Oil Co., 149 U.S.

600 (9th Cir. 1936), cert. denied, 302 U.S. 689 (1937).

The plaintiff offers no excnse for its failure to timely

sue the defendants under the 685 patent—its position with

respect to this patent is that there was no presumptive un-

reasonable delay, with the possible exception of STC—the

period of delay being less than six years.

Nevertheless, laches should be applied where the delay

has been less than six years if the facts and circumstances

so warrant—if the defendants have suffered enough pre-

judice from the delay. This policy was enunciated by the

Fourth Circuit in Fretwell v. Gillette Safety Razor Co.,

106 F.2d 728 (4th Cir. 1939), recognized in Giddens v.

Isbrandtsen Co., 355 F.2d 125 (4th Cir. 1966), and exempli-

fied in Advanced Hydraulics, Inc. vy. Otis Elevator Co.,

525 F.2d 477 (7th Cir. 1975), cert. denied, 423 U.S. 869

(1975).

The Court finds from the evidence that the defendants

have been seriously and irreparably prejudiced by the

plaintiff’s delay in filing this consolidated patent infringe-

ment suit. Prejudice “contemplates the dispersal and in-

accessibility of witnesses, the dimming of recollections and

other disadvantages incident to the lapse of time.” Giddens

v. Isbrandtsen, 355 F.2d 125, 127 (4th Cir. 1966). The facts

ure clear that, as a result of the long delay in the filing of

these suits, many crucial documents, including the inven-

tor’s files, have become lost or been destroyed, and several

crucial witnesses, including the inventors of the patents in

suit, have either died or suffered lapses of memory. In

addition, many of Potter’s corporate records which are

relevant to the defendants’ case have been destroyed due

to the ravages of time. This type of prejudice—the loss of

relevant evidence—is clearly of the type upon which laches

can be supported. See Dymo Industries, Inc. v. Monarch

Marking Systems, 474 F.Supp. 412, 416 (N.D. Tex. 1979).

None of the defendants have included any possible roy-

alty costs in the sale or lease of their machines. All claimed

they were lulled into believing, by Potter’s inaction, that

their products were not infringing upon any of Potter’s

patents.

All testified they could and would have circumvented

Potter’s patent claims, had they been timely sued for in-

fringement. The costs to so do now on the machines in

place would be both prohibitive and impractical.

Further, the Court is of the opinion that Potter ought

to be estopped from bringing an infringement action

against these defendants under the ’685 patent.

Estoppel is proper where “one has... acted to mislead

another and the one thus misled had relied upon the action

of the inducing party to his prejudice.” Advanced Hy-

draulics, supra, at 479. Potter actively participated with the

ANSI Subcommittee in developing GCR as the industry

standard—it intentionally failed to bring its ownership of

@16=

the ’685 patent to the committee’s attention notwithstanding

he committee’s policy to the contrary. By so doing, Potter

has gained a monopoly on the GCR industry standard

without any obligation to make its use available on reason-

able terms to competitors in the industry.

Equity will rarely, if ever, permit one to waive by acqui-

escence its alleged patent rights, for a long period of time ™

and attempt tc assert them after they have been adopted

as the industry standard.”

Whatever right the plaintiff has to enforce its delayed

infringement claims against these defendants will not be

impaired by the dismissal of this consolidated suit—the

defendants are the real parties-in-interest in the plaintiff’s

pending suit in the United States Court of Claims—all

available discovery has been completed and the Court of

Claims’ action is now ready for hearing on the merits as

soon as that Court’s docket permits.

Surely the defendants ought not to be put to the extra

expense of defending the same claims in two federal courts.

The Order dismissing the above-styled suits was entered

herein on March 12, 1980, with the Court’s findings and

conclusions to follow.

The Clerk will send a copy of these findings and conclu-

sions to the Honorable Francis C. Browne of the United

States Court of Claims, and to all counsel of record.

/s/ Oren R. Lewis

United States Senior District Judge

March 25, 1980

A True Copy, Teste:

W. Farley Powers, Jr., Clerk

By /s/ Maria Hevett

Deputy Clerk

" ANSI Subcommittee X3B1—November 1973.

** The GCR recording was adopted as the industry-wide standard

in June 1976,

aiTe

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

ALEXANDRIA DIVISION

Civil Action No. 79-579-A

Porrer Instrument Company, Inc., Plaintiff,

v.

Storace Tecuno.ocy Corporation, Defendant.

Civil Action No. 79-626-A

Porrer Instrument Company, Inc., Plaintiff,

v.

Terex Computer Propucts, Inc., Defendant.

Civil Action No. 79-993-A

Potter Instrument Company, Inc., Plaintiff,

v.

Te.ex Computer Propucts, Inc., Defendant.

Civil Action No. 79-994-A

Porrer Instrument Company, Inc., Plaintiff,

v.

Sperry Corporation, Defendant.

Civil Action No. 79-995-A

Potrer Instrument Company, Inc., Plaintiff,

v.

Controt Data Corporation, Defendant.

ORDER

(Filed May 23, 1980)

-18-

Tus Causz came on to be heard on the 16th day of May

1980 and was argued by counsel.

1. Upon hearing plaintiff’s Motion for Rehearing and

considering the arguments of counsel, the Motion is de-

nied;

2. Upon plaintiff’s motion that an appeal bond be set, it

is ordered that the appeal bond for a consolidated appeal

is three thousand five hundred dollars ($3,500.00) ;

3. Upon consideration of defendants’ Storage Technol-

ogy Corporation, Sperry Corporation and Telex Computer

Products, Inc., Motion for Voluntary Dismissal of their

Counterclaims without prejudice to reinstate the counter-

claims in the events these actions are remanded to this

Court for a trial on the merits;

4. Orperep, that Defendants’ Joint Motion for Voluntary

Dismissal without prejudice should be and hereby is

granted;

5. This order is without prejudice to any of the rights

of the parties in the Court of Claims Docket No. 111-78;

Enrerep at Alexandria, Virginia, this 23rd day of May

1980.

/s/ Onenw R. Lewis

Oren R. Lewis

District Court Judge

A True Copy, Teste:

W. Farley Powers, Jr., Clerk

By /s/ Rut WarpmMan

Deputy Clerk

Seen anD AGREED

Wixuiam O. Bitrman, Esquire

Attorney for Defendant

Storage Technology Corporation

at

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 80-1428

Potter Instrument Company, Inc.,

Appellant,

versus

Storage Technology Corporation;

Telex Computer Products, Inc.;

Sperry Corporation; Control Data

Corporation,

Appellees.

Appeal from the United States District

Court for the Eastern District of

Virginia, at Alexandria.

Oren L. Lewis, District Judge.

Argued December 4, 1980

Decided February 23, 1981

Before HAYNSWORTH, Chief Judge, FIELD,

Senior Circuit Judge,

and PHILLIPS,

Circuit Judge.

David R. Murphy for Appellant;

Richard E. Kurtz (Woodcock Washburn

Kurtz Mackiewicz & Norris on brief)

and Allen Kirkpatrick (Cushman Darby

& Cushman; Alan E. J. Branigan,

Griffin Branigan and Butler; Harrison

McCandlish, LeBlanc Nolan Shur & Nies

on brief) for Appellees.

-20-

HAYNSWORTH, Chief Judge:

Potter Instrument Co., Inc.

filed in the district court separate

suits against Storage Technology

Corp., Control Data Corp., Sperry

Corp., and Telex Computer Products,

Inc., alleging infringement of two

patents. Potter requested monetary,

but not injunctive relief. The

actions were consolidated for trial

and the district court granted

defendants’ motions to dismiss on

the grounds of equitable estoppel

and laches.

This court has on occasion

addressed the equitable doctrines of

laches and estoppel in patent in-

fringement suits. See Eastern

Venetian Blind Co. v. Acme Steel Co.,

188 F.2d 247, 254 (4th Cir. 1951);

Baker-Cammack Hoisery Mills v. Davis

Co., 181 F.2d 550,564-68 (4th Cir.

1950); Fretwell v. Gillette Safety

Razor Co., 106 F.2d 728, 730-31

(4th Cir. 1939); Hartford-Empire Co.

v. Swindell Bros., 96 F.2d 227,

ol an

232-33, modified, 99 F.2d 61 (4th Cir.

1938); Denominational Envelope Co. v.

Duplex Envelope Co., 80 F.2d 186,

193-94 (4th Cir. 1935). Those

occasions have not invited compre-

hensive treatment of the subjects.

Other courts, however, recently have

surveyed the area. E.g.,

Studiengesellschaft Kohle v. Eastman

Kodak Co., 616 F.2d 1315, 1325-28

(Sth Cir. 1980); TWM Mfg. Co. v.

Dura Corp., 592 F.2d 346 (6th Cir.

1979).

The laches defense “may be

invoked where the plaintiff has

unreasonably and inexcusably delayed

in prosecuting its rights and where

that delay has resulted in material

prejudice to the defendant."

Eastman Kodak, 616 F.2d at 1325.

The district court found

that Potter should have known of the

alleged infringement of the '894

patent for more than six years before

it filed suit. A delay of six years

triggers a presumption that the delay

-22-

was unreasonable and that the defend-

ant was prejudiced. Eastman v. Kodak,

616 F.2d at 1326; TWM Mfg. Co.,

592 F.2d at 348-40. The district

court considered and rejected each

of the justifications which Potter

offered for the delay.

With respect to the ‘685

patent, the delay in filing suit

was slightly less than six years.

The district court nonetheless found

that the delay was unreasonable and

that the defendants were prejudiced.

The invocation of the

estoppel or laches doctrines is with-

in the sound discretion of the dis-

trict court and will be reversed only

if clearly erroneous. Eastman Kocak,

616 F.2d at 1325. Because we do not

find clear error, we affirm the

dismissal on the laches ground.

The district court also

held that Potter “ought to be estopped

from bringing an infringement action

against these defendants under the

‘685 patent." Although we would be

inclined to uphold this ground of

ata

decision on the facts of this case,

we think that the invocation of the

doctrine of estoppel would produce a

result unintended by the district

court. Unlike laches, which only bars

recovery of damages for past infringe-

ment, estoppel forecloses, as well,

prospective patent enforcement through

an injunction or through damages for

continuing infringement. Eastman

Kodak, 616 F.2d at 1325. The district

court, however, clearly did not intend

for its dismissal to have that effect.

Whatever right the plain-

tiff has to enforce its

delayed infringement claims

against these defendants

will not be impaired by the

dismissal of this consoli-

dated suit--the defendants

are the real parties-in-

interest in the plaintiff's

pending suit in the United

States Court of Claims--

all available discovery has

been completed and the Court

of Claims' action is now

ready for hearing on the

merits as soon as that

Court's docket permits.

-24-

Consistent with the district

court's view of the preclusive effect

of its decision, we limit our affirm-

ance to the laches ground of decision.

AFFIRMED.

nOBa