Appendix — Butterfield v. Plastic Contact Lens Co.

Supreme Court brief1967

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| Appellate Court Judgment . aK; la

fete ts APPENDIX’ cave

Ales A

“UNITED: STATES: COURT OF APPEALS

‘For the Ninth Cireuit irae

THE PLASTIC. CONTACT LENS _

pert? a corp.,

vs.

GEORGE H. BUTTERFIELD, SR,’ p

; Appellee.

. APPEAL from ‘the United States District Court ior.

the......... tps ase! District of Oregon.

THIS CAUSE came on to be heard On: the Tran-

| script of ‘the, Record from the United States District

‘ gon and was 3 duly sabpnittod:

ON CONSIDERATION ' WHEREOF, It is now. here

ordered and adjudged by this Court, that the................ ile

judgment of thé said District Court in this Cause be,

3 and hereby is reversed and that this cause be and hereby ;

" is. remanded to the said District Court with directions.

> Filed and ‘entered August 31, 1966."

}

= Dist Cent aligned Be

-_ APPENDIX. B

* . UNITED STATES DISTRICT: COURT

eer DISTRICT OF OREGON —

: "GEORGE, H. ‘BUTTERFIELD, )

SR, 5 é )

PS, " Plaintiff, ) Crvi. No. 63-294

THE PLASTIC CONTACT _- ) JUDGMENT

LENS COMPANY, oy = eS

a corporation, 3 é re gh

ne Defendant? )

” his action came on for trial on Jus 22; .1964, the

. - Plaintiff appearing through R. R. Bullivant and Doug-

las G. Houser, his attorneys,, and the Defendant appear-

ing through James C. Dezendorf, Dugald S. McDougall -

and Irwin Panter, ‘its attorneys. After the production of

evidence upon behalf of both Plaintiff and Defendant,

“and at. the conclusion of the trial, the Court directed .

each? party to submit proposed Findings of Fact and.

Conclusions of Law. After exhaustive study.and analysis —

" of the record, including the” Findings of Fact and Con-

_. clusions of Law proposed . by Plaintiff and Defendant, *

‘the Court made and entered detailed Findings of Fact:

and Conclusions of Law dated March 1, 1965, in favor

of the ‘Plaintiff and agairist the ‘Defendant. |

; By these: Findings of Fact and Conclusions of fia:

‘thé Court has finally disposed of all claims for relief .

and counterclaims involved herein as Set forth either ee

ay e in, the pleadings or ~ pre-trial order — that the

Mer _ District Court Judgment

Court has reserved the holding of an accounting to fix

the amount of Plaintiff's . darhages growing from the

| conduct of Defendant found to have been wrongs ‘coth-

‘ mitted by Defendant against the ‘Plaintiff, which con-

duct is also the subject of the Cpermanent injunction ~

_ héreafter set forth. The Court heréby’ expressly deter- .

mines, within the meaning of Rule 54 of: the Federal

Rules of Civil Procedure, that. there is no just reas@h

for delay ‘in eritering final judgment on all of such

' matters now determined by the Court, and the Court

hereby expressly directs the. entry of final judgment on"

all of the matters herein set, forth save only the amount

~ of: Plaintiff's damages to be determined in an account-.

. ing as in the ee ‘and Conclusions and hereinafter ;

- get forth. : . apes

Thie Findings of Fact and. Conclusions of Law hete-

; tofore entered among: other - things set forth that an .

. interlocutory decree should be’ entefed permanently’ en- |

| joining and restraining the Defendant i in the particulars

hereafter set forth. Now, therefore, it is hereby

CONSIDERED, ORDERED, ‘ADJUDGED AND

DECREED that Defendant, The Plastic Contact Lens

- Company, a corporation, and each, and all of its officers, z

agents, servants, employees ‘and privies, be and they

hereby are and. each hereby is ‘permanently mere

- ‘and restrained from: meee

(@) The making of par tien y representation, in-

cluding non-disclosure or -concealment, concerning the

scope, qualities or characteristics of the Butterfield Pat-..

| oy Ss. Patent’ No.22,544, 246, or the ‘scope, qualities ei

@ o

oe ! marginal portion of the

periphery. The comeal surfact, however, has separa

eee - District Court Judgment Cae Sa

or characteristics “of the Tuohy Patent, U. S. Patent No.

2,510,438, .or the scope, ‘qualities or characteristics of

- -each of said Patents, when compared with the other,

except in accord, with the following in its entirety:

“There are suaterial and substantial differences -

_. between the Tuohy and Butterfield Patents so that, a.

~ Jens made in accordance with the Butterfield Patent

__.does not. infringe the Tuohy Patent, and a lens made: __

- in accordance with the Tuohy Patent does not infringe ES

the Butterfield Patent. |

: “(1) A. corneal contact ‘lens. is a ha ae ob-

| Jest worn: directly on the cornea, being held thereon by. |

| capillary attraction with the tear fluid between the: lens

and the cornea. All corneal contact lenses are concavo- _

- Convex in cross- -section and are smaller in. diameter

‘than the diameter of the limbus of ‘the eye, which is the

area surrounding the cornea between the cornea and the

white of the eye. The human cornea is shaped more like

a parabola “than a segment of a ’ sphere, in that its cen-

tral or optical zone is s stantially spherical while the

nea flattens out toward its

irregularities. —

that it does not exert undue pressure, . -and its marginal

portion so corresponds: to the marginal zone of the cor- .

_ nea that it provides uninterrupted flow of tear or lach-

(2). The ‘Butterfield lehs is a substantially :

. parabolic on its: concave side, sO that it follows closely

"the shape of the cornea. That i is, its central portion con-

forms to the optical zéne of the cornea in such manner

| oe. : | District Court Judgment.

ryanth fluid. This relationship to the cornea is ais ae

. about ‘by the concave surface of the lens being defined

by at least two concentric.curves of relatively different

radii of. curvature. The lens of the Butterfield Patent —

is: known in the trade as the *bi-curve conforming type.’

“The cornea inherently has surface irregular-

ities and, therefore, exact conformity i is neither. required

nor intended. ‘Only approximate conformity and corres-

pondence are intended, _as shown by the following lan-.

"guage of the Butterfield Patent specification: |

| “ “The applicant, by providing. a lens whose con-

tact.surface is very close to the shape of the eye-

ball, has brought about the ideal corneal contact °

lens condition.”

“The Butterfield Patent contains two claims, :

the broadest of which reads as follows:

“1. A corneal contact lens* of concavo-convex

form in: ‘section and of a size to lie within the area

defined by the limbus having an-.inner central

spherical area conforming to the corresponding area

. of the cornea to which the lens is applied so that

undue pressure will. not be present at any point, .

the remainder of said inner surface extending, ra- —

dially outward toward the limbus being formed on

a curve different from: that of said central area and

corresponding in curvature with that portion of the |

corneal peripheral area to which the lens is applied,

_ whereby space is provided for the natural uninter-

_ rupted circulation of lacrimal fluids between said .

lens and the cornea.’

“ (3) The Tuohy Patent, on the ian: hand, de-

scribes and claims a lens whose concave surface is de-

&. io 3 ; ‘°

. ¢ oe

District Court Judgment Ia

fined by a single spherical curve ‘ofte raditis, ‘flatter,’ “or

: of sufficiently longer radius than that of the cornea so

as to provide a gradually increasing clearance or tear

- space between the lens and cornea, radially outwardly

| from the center. The lens of the Tuohy Patent, is known :

‘in the trade as the ‘flatter type lens.’

Z “Thus the Tuohy lens is the opposite of the

Butterfield lens, in that it has a loose or flatter fit as

: distinguished from the conforming type fit of - But-

terfield lens. 7

; “Claim 1 of the Tuohy Patent reads as ‘Shes:

-“1° A contact lens applicable to the human

eye comprising a concavo-convex lens formed of -

light-transmitting material having a marginal size _

smaller than the limbus portion of the eye to which

it is applicable but larger than the maximum iris

‘opening, said lens having a radius of curvature on

_its concave side slightly greater than the radius of

- curvature of the cornea to-which ,it is applied so

that radially from the center of the lens there will

_ be a’small but gradually increasing clearance: for

othe entry of natural eye fluids between the lens

and the cornea, said lens being ground to correct

997

for visual deficiency. on.

: - (b) ‘The ane Ste of any type of rineebeutation, in-

. cluding: non-disclosure or concealment, concerning the

. terms of the settlement of the former action between the

parties, Civil 60-107, in the District Court of the Unit- -

‘ed States for the District of Oregon, except in accord-

ance with the. following statement of the terms of said

settlement, in its entirety:

Y”

“<< District Court Judginent

rs)

ee “(1 The formes litigation between the parties 3

was settled by a duly entered consent judgment, a filed —

_ stipulation of facts and matters, a filed stipulation for -

dismissal of counterclaini, and an unfiled settlement =

agreement. The consent judgment was entered May 10,

1962, and the stipulation of facts.and matters on which

“it was based, as well as the unfiled: settlement agreement,

were dated April 24, 1962.

“(2) The entered consent judgment, in pertinent

part, provides:

Sas ¥ is HEREBY. ADJUDGED AND. DE-

CREED as follows:

+4. Ptaintitt-couinterdetecdent The ° Plastic

Contact Lens Company is an Illinois corporation

having its principal place of business in Chicago,

Cook County, State of Illinois. gs

Fkw | Plaintiff-counterdefendant ‘Solex Labora- |

tories, Inc. was, up to May 12, 1961, a California

corporation, having its principal place of business

-in Los Angeles, ‘County _ of ‘Los Angeles, State of

; California.

i: ie Cas ok r about May 12, 1961, plaintiff-coun-

terdéfendant The Plastic Contact Lens Company,

became successor in interest to and caused said So-

lex Laboratories, Inc. to be dissolved. and. assumed .

all rights and obligations of said Solex soepensse

‘igs, Inc. arising out of this action.” :

yi, * Defendant-counterclaimant Ccorge: H.

. Butterfield, Sr. is’a ‘resident of Portland, Multno- ©

mah County, State of Oregon. ila

a ‘5. Defendant-counterclaimant Geo. H. But-

Digteict Court Judgment =——s«O9a

terfield & Son is an Oregon corporation, fieiring es

- principal place of business in Postiand, Multnomah

County, State of Oregon.

“6. This Court has jurisdiction: over the ‘paities one

and the subject matter. of this action. ke .

. © *7, Plaintiffs’. complaint is dismissed with ‘prej- :

udice as to the defendant George H. Butterfield, Sr.

ae oS. ‘Counterdefendant The Plastic . Contact:

Lens Company is’ a licensee, under U. S. Letters

Patent in suit No. 2, 544,246.

a Defendant: Geo. H. Butterfield & Son is a

, licensee. under U. S.. Letters Patent in suit: No.

. = 2,510, 438. - :

“10, U. S. Letters Patent in suit.No. “9,510,438 Sie

» are good and valid in law as between plaintiffs and 2

counterdefendant Geo. H. ‘Butterfield &’ Son. |

“11. United States Letters Patent. in wit No.

\@, 544,246 are good and valid in law as between

- counterclaimant George H. Butterfield, Sr. and the »

: plaintiffs-counterdefendants. :

i 12. ‘Within six (6) years immediately ad

ing May\12,.1961, said counterdefendant Solex Lab- .

- oratories, Inc., infringed U. .S. Letters Patent No. |

2,544,246 and\counterdefendant The Plastic Contact .

Lens Company has made full settlement.of and for

damages suffered by- counterclaimant George H.

Butterfield, Sr. from and by virtue of said infringe-

ment. © :

S ": 13, All matters.cf ost, attorneys’ ‘docs and all

_ other financial recoveries involved in or arising ‘out

of this action have been settled and satisfied out of .

| court by and between the parties and the parties

» have Pence: judgement therefor. : p

10a : . ‘Di ict C | Judé ent

on ‘14. The parties having waived injunctive re-

lief, no injunctive relief is granted by this judgment.

. “+15. The injunction pendente lite which has —

- been issued out of and under the seal of this Court.

against plaintiffs-counterdefendants pursuant to the.

Court’s order of September 19, 1961, is hereby ‘dis-

solved and the surety bond posted as security there-

for by defendant counterclaimant George H. But-

terfield, Sr. is hereby exonerated and released.’

- «(3) The stipulation of facts and matters which .. |

was filed in court as a basis for the entry of the con-

gent judgment, so far as here material, contained provi-

sions coiricident with the above rovisions of the con-

. sent judgment. The only relevant . additional matters —

provided for in it were: 7

Gis ~“(a) That. Butterfield and Butterfield & Son

". should - dismiss with prejudice . alt counterclaims - set

- forth in the ‘amended and supplemental answer and —

counterclaim except the counterclaim for infringement

of the Butterfield Patent. -

“(b). That Butterfield, the individual, has « not

infringed the Tuohy Patent.

“(c) That by license agreement between Plas-

tic and Butterfield dated May 6, 1960, Butterfield grant-

ed a license to Plastic under the Butterfield Patent, that

said license agréement has been and still is in full force: :

and effect and that, therefore, no judgment for infringe- Ss

‘ment should be entered in favor of Butterfield against

e Plastic for infringement by Plastic of Butterfield’s Pat-.

_ “ent other than for the infringernent of ‘said Patent se NE

Solex prior to May 12, 1961.

NG cat . res ee q . fe : . : ie ;

- District Court Judgment ay a Ma

- “The const judgment and stipulation’ ede.

nized that “substantial, vinandeit aU of the Butterfidld”

; Patent had been made by Solex. ;

| “(4) The urffiled ‘settlement moana aes |

* for the formal dismissal of the counterclaim of Butter-

field and the corporation, Butterfield & Son, completes

the important settlement documents. It Its provisions, so

far as here. relevant, were as follows:

“(a) Provision: i is made in ‘the agreement for .

the precise - form of stipulation of facts and matters

-- and consent judgment to.be presented to the Court. The |

forths attached. to the agreement are identical with those

filed and entered i in court.

“(b) That Solex ‘i iting the Butterfield

| Patent and as settlement for damages suffered by But-

terfield. from such.infringement Plastic: ; \

“(i) Releases. any claims against Butterfield ° .

or r Butterfield & Son for infringement. of the Tuohy Pat- :

ent;

“(ii) Conveyed to’ - Butterfield the right” to.

grant Butterfield & Son a royalty-free license under the

Tuohy Patent; o

3 “Gii) Coniteped to Butterfield the. ‘right to

grant royalty-free Tuohy licenses to Butterfield licen-

sees, Titmus, Rogers, Sloan and Utah Optical;

: iad ( Agreed to dismiss with prejudice the :

3 pending actions by Plastic against the Butterfield licen- “

sees, Titmus and Rogers; and - ;

“() Agreed to pay to Butterfield tnd sum

Wa. ye District Court Judgment

of $6,000.00: (This latter sun is clearly allocated in the

‘settlement agreement to the part payment of infringe-

ment damages suffered by Butterfield from infringement

Wy ‘Solex.) i aig

- “(c) Plastic "hathdr: aguied; ‘as geet of ths

settlement above set forth for Butterfields’ infringement

claims against Solex, to pay the’ sum of $60,000.00. in

three installments, two in 1962 and the balance January

2, 1963. (This $60,000.00 sum is separate from and in Pe

3 ‘addition to consideration to be paid by Plastic. for-in-

fringement of the Butterfield Patent.)

(d+) That nothing contained in the sciticmentt

; agreement should prevent either Plastic or Butterfield

from soliciting licensees of the other or ‘from bringing

suit against such Ecenseca, for infringement of their re-

' spective’ patents.

“(e) Butterfield: gave: to Plastic thé: tight to

grant to a Plastic licerisee,. Ocular Products, Inc., of

Seattle, Washington, a royalty-free license under the

: Butterfield Patent.

- “() Butterfield and Butterfield & Son shall

file a dismissal with prejudice of their counterclaims ex-

cept the second aterclaim seeking damages for in-

? fringement of the Butterfield Patent. .

"(g) Bach party thereby released ‘any’ and

all claims or causes of action which he’ or it has or may ~

is have against each of the other’parties arising out of the

‘action or the subject matter of the action.’ ” : :

~ pkg

ries f

‘District Court Judgment 1a.

: od, either under existing or future. agreements, by claim

_or otherwise, of a royalty base i in its license agreements -

“covering the Tuohy Patent, U. 'S. Patent No. 2 510,438,

or covering any other patent, by which the amount of

* royalty payable to Deferidant is. measured by oracom-

puted’ upon | lenses or devices, finished or unfinished,

patented or unpatented, other than those made under —

‘the teachings of said Tuohy Patent; a Sag A a

(d) The continued use, ‘either under existing or fu-

_ ture: agreements with its. licensees or prospective licen-

sées, of indemnity agreements or Offers, offering to in-° _

demnify or iridemnifying ficensees of Defendant either —

partially or totally against claims. for infringement of

- the Butterfield Patent, U. S. Patent No. 2,544,246, ° Or

claims for yeamnaameeeaty arising from the use or manu-

facture of ‘any, device not miade in accordance with the .

| teachings of the sep — U.S. Patent. 1 No. 2, 510,-

438; : rs a heres,

“(1 The institution, maintenance, prosecution or cone

tas institution, maintenance or prosecution of actions

or suits against licensees of Defendant or Plaintiff and

others. wrongfully and without foundation . charging al-

leged conspiracy | with Plaintiff ¢ or with others and the

assertion of damages therefor, including, but not ped

- to, the following: pending actions:

(1). The Plastic Contact Lens Company, a cor-

poration; vs. Richard Hunt, Marco Lens ‘Co.,

- a corporation et al, Civil Action No. 528,952 °

"in the Superior Court of the State of Califor-

nia in and for the City and County of San

Francisco, ss 60.

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@ Wesley-Jessen Inc, a corporation, ‘iad The

* Plastic Contact Lens canbe: a corporation, }

: Plaintiffs and Cross-Defendants, vs. Con-Cise — -

deieg Lens Co.; Defendant and Cross-Coritplainant,

' _ Court of the Statie of California in and for the

ap At City and County of San Francisco, Ex. 137-B.

ie In. the Findings’ of Fact ‘and Conclusions - of Law ‘.

: ‘heretofore entered, the Court has determined. that the

acts of Defendant hereinbefore enjoined are. wrongful, Se

-.. in tortious’ vidlation of Plaintiff's rights, and illegal. re-

Streintson’ trade, violations’ of Federal anti-trust daws

_./ against acts in restraint of trade, and are unfair compe- |

. tition,, that such acts, until such time as they shall \be i

.. “enjoined, have directlyand ‘proximately: caused Plaintiff.

tbsta tial and irreparable injury and damage, andthe’.

Goat ai further directed. in, such Findings of Fact and’ aa

_ -Cametosions of Law: that an. accounting ‘be had to ‘fix.

~ the: ‘amount of Plaintifi's damages growing. from such

acts and conduct and that'a judgment be entered after

"such accounting, for thrice the amount of such damages esr)

“ag: “Hlows-from violation of the Federal Acts against’ re-

_. straifits’ on trade and for other damages, plus a reason=

‘able amount to be recovered by Plaintiff from: Defend-.

ant for ‘attorneys’ fees. Therefore, it is. hereby further ..

Nos “CONSIDERED, ORDERED | AND ‘ADJUDGED

that ruling’ is reserved on the amount of damages sus-

~ (ained by Plaistiff ap a direct and froximate result.of

“such acts, and- conduct by Defendant. and as to. the |

“amogat of attorneys’ ee to be awarded, to Plaintiff; ,

"Civil Action No. 528,422, ‘in the Superior aa

District Court Judément oe

| provided, however, that it is now Considered; Adjudged -

* and Ordered that Plaintiff is entitled to recover judg- .

‘ment from Defendant for thrice the amount of the dam-

ages Plaintiff has sustained as a proximate result of De-_

fendant’s conduct - in violation: of the Federal’ laws

against , restraints on trade, as ‘may be determined . by

‘such, accounting to be hereafter held, plus reasonable -

attorneys’ fees to be allowed to the Plaintiff, and that -

an accounting shall” be hereafter held, at a time to be

fixed by. the, Court, to’ ‘determine all of Plaintiff's dam- !

ages arid that theredfter. jadgment shall be entered ac- —

“cordingly in favor of Plaintiff: against ‘Defendant for -

such damages, attorneys’ fees and. costs, the costs so to.

_ be. recovered to be those incurred in ection with

4 a e

oe: -accounting..

“In. the Findings of Fact oak Cénclusions: ‘of: Law

heretofore entered, the Court found and determined that

the. evidence did not sustain any of the charges. set forth *

ie the counterclaim asserted by Defendant’ clea.

; Plaintiff either as. set forth in the pleadings or-as set -

oe forth in the pre-trial order, and that the charges made

Aes -. in-such counterelaim were untrue. It i is therefore

CONSIDERED, ORDERED AND _ADJUDGED,,

that Defendant ‘shall have and receive no "relief whatso-

ever from the Plaintiff by virtue of the matters set forth

in its said counterclaim and that such counterclaim be

ge ‘aed the same hereby is dismissed, with , It is.

consiperip, ORDERED AND ADJUDGED’

that Pidintitt have and recover of and from. ‘Defendant : :

eee - Diietrict Court Judgment

sain tot i tise neti, sti

the entry of this judgment order, subsequent costs on

the accounting for damages to be allowed on the con-

clusibn of said pecounting, and entry of Sipe there :

on. =.

i Inasmuch as the Court, pursuant. to the provisions

“of “Rule 54, has determined that there is no just reason

for delay in the entry of final judgment on the matters _

herein set forth, and has expressly directed the entry of ’

judgment as to the matters herein set forth, this shall ¢.

_ stand as the. final judgment of the Court as to’all such

my matters, reserving only the accounting for damages, and .

the -entry of judgment thereon, and for Plaintiff's at-

‘ — fees and costs as previously set forth.

' Dated this 23rd day of April, 1965

J/s/ JOHN F. KiLKENNY

District Judge

Pas Caley ame

Appellate eee Opinion: Gao a

APPENDIX Cc

... - UNITED STATES. COURT OF APPEALS ) |

pf E FOR: THE NINTH CIRPUIT

t? f 2

“tere PLASTIC | Contact) LENs ComPANy

a torporation, A

ae ee | Appellant,

GEORGE H: BUTTERFIELD, ARR. Ie

Appellee.

[August 31, 1966] 4

| Appeal from the United States District, Court ‘

- ". for the District of Oregon. :

Fal

Before: POPE, BROWNING, and ELY, Circuit J tat |

-ELY, Circuit Judge:

Each of the parties owns a patent pertaining to the

design and construction of ‘corngal contact lenses. Ap-

pellant, the defendant below and hereinafter called Plas-

. tic, holds the rights to the so-called Tuohy patent, Num- :

ber 2 ,5 10,438. It is senior to that called the Butterfield

patent, ‘Number 2,544,246, owned by George H. ‘But-”

terfield, Sr. Ks plaintiff, Butterfield was - - successful in

‘the court below, and Plastic appeals. - |

The present dispute follows a long history of contro-

versy arising from conflicting claims. pertaining to the

two patents and their scope. A.part of the history is.

interwoven with contentions in the present litigation and. a

| must be briefly reviewed.

_ Plastic acquired its rights ¢ to- the Tuohy patent in-

= : °

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Ben iaah at

vs. a e ; No. 20,212 |

-£ A} i ; se

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Yipee’

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18a | “ Appellate Court Opinion

November, 1960, ‘when it purchased all of the capital |

stock of Solex Laboratories, the previous owner of the

patent. Before that time, Solex had sued ‘Plastic, alleging

that the latter had infringed the, Tuohy patent. In that

which it now owns. See Solex Labs, Inc. v. Plastic Con-

tact Lens Co., 268 F.2d 637 (7th Cir. 1959).

Before the transfer of.its ownership to Plastic, Solex ;

had sued Butterfield and George H. Butterfield & Son,

a corporation in which Butterfield was the majority ae

stockholder, in-the United States District Court for the

infringement of the Tuohy pa ; was opending when

. Plastic purchased Solex, and Plastic became a party

plaintiff. Before its purchase of “ Sélex, Plastic had, in

“May, 1960, purchased from Butterfield a license. under

‘ ‘which it might employ the Butterfield patent. The Ore- © 3

_ gon suit into which Plastic had moved as plaintiff end-

ed: by compromise in April, 1962. Solex Labs, Inc. v.° |

_ Butterfield, 202 F. Supp. 461 (D. Or. 1961). Pursuant

- to the agreement there was entered, with the consent

of the parties, a judgment in which it was declared that

‘the Butterfield patent was valid, that it had been in-

fringed..by Solex, Plastic’s predecessor, and that the

action, Plastic challenged the validity of the patent

- District of Oregon. That suit, in which’ Solex alleged 7

amount of infringement damages had been settled by Pe

agreement between Butterfield and Plastic. ‘Under'the

terms of the compromise, Butterfield and the Butterfield

corporation’ dismissed, with firejudice, all claims against

Plastic "(other than the, settled infringement - claim

against Solex) and granted to Plastic a royalty-free. li-

». cense to the Butterfield patent. In ——— Plastic re-

—_,

Appellate Court Opinion i oe

_ leased Butterfield, his licensees, and the Butterfield cor-

- poration from, all claims of infringement of the Tuohy

‘patent to the date of the agreement, gave to Piutterfield °

the right to grant royalty-free licenses under the Tuohy »

patent to four Butterfield licensees and to the ‘But-

terfield corporation, so long as it was " “held ‘by the

Butterfield family, and agreed to pay . Butterfield the

~~ sum of approximately $66,000. It was specifically

: agreed. that both Plastic and Butterfield might, by so-

licitation, , seek ‘to enter into license _agreements with «

existing licensees of the other. wad that both “might ' en-| _

force their rights to their respective patents against such

licensees in the future. - ‘o ‘

Against, the foregoing ‘background, we. now look at

the present suit, filed by Butterfield in July, 1963; only :

fifteen months after the “settlement” of the previous lit- |

igation. In his complaint, Butterfield, seeking an in-

| junction and damages, alleged his grievance in three-

- -€auses of-action.. In the first, it_is charged that certain |

acts of Plastic, committed following - the settlement

agreement | of April, 1962, and committed “unlawfully,

ors deliberately, and in bad faith,” constitute unfair eompe--

: ton In the second, it is ‘alleged that. certain acts of —

‘ Plastic, specified in the first cause of action, constitute

actionable interference with contractual relationships ex-

isting between Butterfield and his licensees. In the third, .

Plastic: is accused of having breached the settlément

- agreement and having also, by certain of the acts speci-

fied’ in the first cause of action, violated antitrust laws

of the United States. 3

vey ey ei ers STS Selita ER

" al ‘

OF:

a Plastic filed an answer in tlic: gensciity; it denied <

Butterfield’s accusations of wrongful acts. It also inter-

posed a counterclaim in which’ it made charges against

. Butterfield which are somewhat similar to those. made

ies by Butterfield against it and, in which it prayed for

damages, as well as for injunctive relief. The jurisdiction

_ of the District, Court rested upon diverse citizenship

of the parties and the requisite amount in controversy.)

Following trial, the court made factual determinations

and ‘arrived at legal coriclusions which supported the

‘contentions of Butterfield in all substantial respects. It

“fssued an injunction against Plastic and, ‘ordering that —

there be an accounting, adjudged that upon the deter- ®

mination of Butterfield’s. damages, the’ amount thereof

be trebled. Plastic appeals, invoking our jurtadiction un- °

der 28 U.S.C. § 1292(a) (1).

In their briefs, the parties devote much of their dis-

- eussion to the relative merits and scopes of their respec-

- tive patents. The trial court also: directed much of its

attention to these considerations, and some of the find-—

ings and conclusions appear to be predicated upon the .

- gesolution of conflicting claims in this connection. In the -

i posture of the case as cast by the pleadings, ‘we see .

- much. of the evidence as being of little relevance. There

is, of course, a technical . difference in the arts defined

in the two patents. The Tuohy patent calls for a contact —

‘Jens which, on its inner surface, has a curve of greater

‘radius than the portion of the eye which it covers. This —

is to provide “a small but gradually increasing . clear-

ance” between the lens and. the tissue’of the eye, thus

as ee for lubrication which is claimed to be desirable.

‘Appellate Court Opinion a 21a

Certain of Butterfield’s original claims, having been re- —

- jected as “unpatentable over : Tuohy” were abandoned,

and the finally. ‘acquired Butterfield patent generally

discloses a contact, lens with two or more concentric

curves ‘on the inner surface, designed to conform. to the

" eye’s underlying curvature throughout the area covered

by the lens.. As we have recited, the Tuohy patent was

senior. Challenges | to its validity have been previously

rejected and courts, including ours, have jhailed it<as ;

pioneer: Pacific Contact Labs, Inc. v. Solex Labs, Inc.,

209 F.2d 529 (9th Cir. 1953). See also Solex Labs, Inc.

v. Graham, 165 F. Supp. 428 (S.D. Cal. 1958). The

characterization bears significance, for our court wrote,

long ago, :

“If pioneers, ‘they [a patent’s. owners] would be

entitled to a broad and liberal. construction, if,

mere improvers, the claim. would only be entitled

' to a narrower interpretation.”

‘Los Angeles Art Organ Co. v. Aeolian:Co., 152 Fed.

' . 880, 882. (9th Cir: 1906). Here, the District.Court de-

termined that the Tuohy patent was not-a pioneer, bas-

ing its findings upon a publication of prior art not

brought to the attention of the courts which had previ-

.. ously held to the contrary. The publication ‘is- ‘an. article ;

from. the April, 1936, issue of Fortune magazine. The

article does . recite that corrieal contact lenses were

-* known before the? time of the Tuohy patent, but we

do not read the article as negating the novelty of Tu- ©

- ohy’s invention. The opinions in both Pacific Contact

- Labs, Inc., and Solex Labs, Inc.; supra, reyeal that much

es consideration was given to the existence of prior art:

2 Rb : , ies

'29a' Appellate Court Opinion

The evidentiary material in ‘those cases was detailed,

complicated, and technical, while the Fortune article,

worthy for its enlightenment of lay readers, is com-.

_ paratively, superficial." It is emphasized in the findings

that the Butterfield patent was not involved in the prior

litigation in which two: courts determined that» Tuohy

was pioneer, This would not’ seem to be. significant,

since the” issuance ‘of Butterfield’s patént followed the’ .

-. grant of Tuohy’s.and could not have affected the valid-

ity of the Tuohy patent, or, of itself, prevented the de-

termination that Tuohy was pioneer. wi lint as taal

Having erroneously determined that the Tuohy pat-

_* ents was not a pioneer and thus not subject to the re-

quirement that it be, accorded a liberal interpretation, ©

the District Court went on, in its eleventh conclusion, to

hold, . : sae bean ae

- “Plastic is estopped to assert that the Butterfield

em, 1 It.is interesting to note that some of the same counsel rep-

~~ gesenting the parties challenging the validity of the Tuohy patent

in the prior cases are, here again, challenging its scope. In Solex

Labs, Inc. v. Graham, supra, the court commented,

“Some of the-same counsel who represented the infringer in |

the Patific Contact Laboratories, Inc. v. Soléx Laboratories © -

case appear for the defendants in this, case and contend that

not all the prior art was brought to th attention of the Court

. in that case... .-‘These omissions from the ‘briefs in the

- earlier case were unimportant for the newly cited art does not |

. add anything of worth to defendants’ case. . . . Not one of the -

cited examples of prior art teaches a radius of curvature on

its concave side slightly greater than the radius of curvature —

of the cornea to which it is applied so that radially from the:

‘y «center of the lens there will be a small -but gradually in-

' creasing clearance for the entry of natural eye fluids between .

the lens ‘and the cornea: . . . This was new in the contact

lens art and the discovery of how to accomplish -it was in-

vention” = « wees: Sea iupeelel a7 boa hat

‘Solex Labs, Inc. v. Gratiam, supra, 165 F. Supp. at 433-34.

a .

Appellate Court Opinion == 28

lens is covered by any claim of the Tuohy patent

by the rule of patent construction, often referred to

~ as ‘File: Wrapper ‘Estoppel,’ that a claim in a. pat-

‘ent must be read and interpreted with reference to

claims that have been cancelled or rejected. we

Applied to. ‘the facts of this case, the conclusion is an

-roneous. Tuohy, in its application, abandoned no claims °

which were later successfully presented by Butterfield,

the junior patentee. As we have previously’ noted, cer- -

tain of the original Butterfield claims were rejected be-

cause of: ‘the. prior grant to Tuohy and were abandoned.

’ Of course, the principle of file wrapper estoppel is ap-

_ plicable in interpreting: the scope of the Tuohy patent

or any other, but it could not here ‘bé invoked to bar

a contention by Plastic that its Tuohy patent covered

the lenses being manufactured under licenses granted by

| Butterfield.” Rk. seen eae

2 The conclusion followed the pe Finding of Fact No. 12

(a), which reads,

“(a) The’ file wrapper of the Tuchy Patent, Ex.. 113, dis-

closes that patentee Tuohy surrendered broader claims in

order to obtain allowance ‘of. the two claims which matured

as the claims of his patent, and therefore Plastic is estopped

to assert for the Tuohy Patent any broader scope than is.

defined by the two claims of thé patent.” «.. .

Factors which would necessarily require consideration in the

; sedertalemntek of the scope ofthe patent are the claims, both sur-

* rendered and matured, and the pioneer classification. ~

3 The District Court correctly held that Plastic is enopped

from challenging thé validity of the Butterfield patent. This is so

because Plastic is a licensee and licerisees may not attack the val- |

idity of the licensor’s patent. IV Walker, Patents § 403 (2d Deller

_ ed. 1965). However, the court erred when it went on, in its con-.

- clusion, ‘to hold that Plastic is also estopped to challenge the -

operative effect or utility of the Butterfield patent. The law is

quite cléar that while a licensee cannot attack the validity of the

- patent, he is ‘free to attack its scope. Westinghouse Elec. & Mfg.

‘, Co. V. Formica Insulation Co.; 266 U.S. 32, 69 L.‘Ea. 316, 45 Sup.

24a. .. Appellate Court Opinion

_ We. must assume’ that the District Court’s’ careful, cd

recordation of its determinations in the particulars just: ®,

discussed are indicative of belief that they wébe re-

quired as predicate for the determinations made in favor

of Butterfield as to its claims of unfair competition and

violation of antitrust laws. The findings and conclusions —

_ pertaining to the relative scope and effect of the twd -

" patents are clearly seen as having been influential ‘to

_ the court, and we see the errors which we have already.

discussed as having contaminated other findings and

conclusions leading to the judgment under attack.

a While the long history of frequent litigation centered

upon claims relating to the two patents was not improp-

erly heard by the court below, theultimate issués which

were presented in Butterfield’s complaint were limited.

‘to issues not of patent law but of law pertaining to the ©

charges that Plastic had unfaitly competed, had tofti--

ously interfered with Butterfield’s contractual relation- —

ships, and had infringed upon federal prohibigions

against certain trust activities. Disregarding the finding:

and conclusions which are erroneous or not germane,

our examination of the record compels the conclusion

Ct. 117. (1924). Let us assume that a manufacturer is a licensee

of a patent undes which he makes refrigerators. The manu-

facturer also makes stoves, and the owner of the patent, gontend-

ing that the refrigerator patent also covers stoves, c im

alty on all the stoves manufactured. Surely the mi:

should not be estopped to challenge the asserted scope. of the pat-

ent. We notice that one of the reasons the court expressed in its

- ‘conclusion that Plastic should be so estopped is that it is a li-

- censee of the Butterfield patent. Yet, Butterfield was not held

- similarly estopped from attacking the operative effect or. utility

- . -of the Tuohy patent even though the settlement agreement.gave ~

Butterfield the right to grant a number of licenses under the

Tuohy patent. Se ‘

° ,

‘

that the evidence does not support the judgment against :

Plastic and that, also, it would not’ have supported a

judgment against Butterfield on Plastic’s counterclaim. 7

5a Plastic-had entered’ into contracts with numerous fis.

Ne censees. As consideration’ for its grants ‘of the: licenses,

+ the contracts provided that the licensees were to pay

royalties, the amounts of which were to be measured by

the amount of the total sales of contact lenses by each .

~ particular licensee.* A number of the conclusions -and

findings of the trial court relates to its determination

‘that Plastic, in. enforcing its standard royalty agree- )

- ments, engaged in competition which ‘was unfair to -

Butterfield and which violated federal antitrust laws. |

The court determined that: the royalty agreement oe

_ covered only those devices which were made under the

teachings of the Tuohy patent and. that Plastic, by col-.:

lecting royalties on all devices, rather. than merely those

made urider Tuohy teachings, unfairly competed and vio-

lated ob gata of the antitrust laws. The court stated

o..

T's Rah debpeemne ietehdied, ane ee Seer

“2(a) LICENSEE, solely for the caiman ‘iad accounting ~

. * hereunder, to pay to LICENSOR royalties upon. all

' devices of pieces of finished material in which two

reaagpndrnec nypen fpod ay heiraagsor Yo ¢ ape nipir aur to .

be or are made into a finished or unfinished corneal lens cal-

culated in accordance with the following schedule on all.

such devices sold by LICENSEE: -

$1.00 on each-pair of fhe first 150,000 pairs of devices

or $.50 per device.

ee ; $-.75 on each pair of the next 100,000 pairs of devices .

“8 ; - or $.375 per device. —

$ .50 on each pair of the next 100,000 pairs of devices.

. or $.25 per device..

# 25 on cach pais of oll adiitionsl. pale of devices or :

; $.125 per device.” , ¥, . * t

\. a >

= 4

@ &.

. 26a sped Appallate Court Opinion |

he in its. findings that it construed the jstaeinii narrow-

: _ely so.that it might be held valid as written even though,

according to the court, it was invalid as enforced. ‘The

court found no vice in one form.of an agreement. en-

forced by Butterfield, calculating the consideration paid

by the licensee upon the. ‘basis of all the licensee’s sales

3 during ‘the twelve-month, period. immediately preceding

ee the date of. the:licensing agreement. It must be assumed

that none of these devices, sold in’ advance of acquisi- .

tion of a Butterfield license, were constructed under'the

Butterfield teachings. While ruling that Plastic had pro-

_- duced no evidence to support its claim that its method.

ee of royalty determination was to accomplish simplified.

accounting, the court accepted Butterfield’s position

,, that its: foyalty scheme was conceived and ee for f

. that purpose. . 3 2 |

a The Plastic saneines cills for royalties measured by aes

current sales rathet thon by~past-sales. Such an agree- \

"ment was upheld ‘by the Supreme Court in Automatic —

Radio Mtg. Co. v. Hazeltine Research Co., 339 U.S. 827, ¥

04 L.. Ed. 1312, 70 Sup. Ct, 894 (1950). Butterfield’s at-

temptg, to distinguish this case are not persuasive.” Our —

- construction’ of the decision leads us to the conclusion

| | that there was error in the interpretation of the Plastic

licensing agreement and* in. the’ decision that Plastic’s

collections under the. royalty provision were. illegal. ae

5 In addition to the. method of royalty calculation described eo

above, Butterfield has granted royalty agreements requiring the -

payment of a fixed amount each month. This provision, too, is st

without regard to whether any devices are made by the licensee glo

_ under the teachings of the Butterfield patent. Ee

Peg eee emree serennee ot Si cicee. of DE sates”

. ® : ors .

wiret =

i.)

| Appellate Court Opinion a, 27a.

al _ Another of Bptterfild's claims ‘of unr ‘competi ou

_ through the use of cirenlars, letters, and other methods

) of dissemination, of the operative nature of the Butter- .

field patent andthe scope and effect of the consent — ”

-judgment and settlement agreement in the prior action

between the parties. Butterfield alleges that the purpose -

__ of the claimed misrepresentation wis to induce others =

“not to deal with Butterfield. - a a, boars a

Generally, Plastic’s alleged wrong ‘was 5 the distribi- ;

- tion, of information as to its point of view of the act- |

_ tlement. On October 25, 1962, it sent to all of its li-

“-censees a’ form, letter which purported to: ea.

settlement which had been accomplished in the ‘precéd-

ing April. The court conceded that a primary'reason \ -+

. for the letter may have been to explain to these licensees

* the reasons for permi Butterfield to ‘grant-the four Pe

Tuohy licenses and possible effect on other out-.

_ standing licensees. to” employ the Tuohy teachings. At -

: the same time, it was foupd that the letter contained ac- .

tionable misrepresentations. ‘Among these was the rep-

resentation that Butterfield and Plastic had ——

settled their dispvte. ‘This was untrue because, wrote the ~

" court, “In fact this settlement had been made more thafi ©

six months before in . April ‘of 1962.” We see no solid ©

basis for finding that'a reference to a matter six months

old as “recent” is actionable misrepresentation, and we ®

| sce ino showing of how such a “‘mierepresentittion” — 7

have injured Butterfield. ne dea eae

ment and. corisent judgment, : question should be held to have

- been resolved. Because we that the agreement and its en-

forcement were not illegal, we do not reach that issue oe

s§

Syl bees 28a LAggaate Court Opaion ;

} Tie « court emphasized that while, Plastic represented.

‘that.it had -been released. ‘ from all claims alleging in- ies

‘fringément of the Butterfield Patent,” it did not further .

state that Solex had been determined to have ‘infringed

the. Butterfield patent. We cannot see that. Butterfield .

. ° - -e-was theréby injured or even that omitting to advise

that a predecessor had infringed the patent could be ~

characterized as misrepresentation. . Other facts: omitted ee

|. ftom the distributed information are mentioned, and the ~~

Lis, 2 court found, “To a trade, ‘then ‘under active solicitation 3

by Fsutterfield the — omissions of these~ material facts.

‘coul pot have resulted. in. anything except severe dét--

iment to Butterfield in his solicitation * efforts.” We -

construe this ruling to mean that the court felt obliged

- to conclude, as a matter of law, that any detriment to.

" Butterfield would. necessarily. be severe. We. disagree. a

'' Furthermore, nothing preverited Butterfield #om circy-

egg lating his own version: of the settlement agreement, and =

it is indicated that he did this to a limited extent.

~ Phe courtfound. that. Plastic “assum ed. the burden

., of explaining the . settlement and did so in a manner.»

_ which could only have been detrimental to Butterfield. se

We are aware of no requirement that a competitor : shall

"affirmatively present his competition’s view of the im-

port of\, an event. It is ‘perfectly understandable ‘that: :

Plastic wished to avoid discontent among its existing li- -_ 3

“censees. Butterfield could have reached the same-people,—. -

and, the trial court indicated, it did circulate its own

version of. the settlement agreement. The identities of

_ potential licensees in the business were not secret. The

trial court mentions the number of people in 1 the busi-

° \

% ; Te % | ag =) = |

al Beat SMe

‘ness, référring.to a partial list of thein. All were subject

| to the.reach of Butterfield, as well as of Plastic. BEE

. There is similar inconsistency in Butterfield’s chal-

| lenige of the hidlenisitty- sqrectent Ghick Plantic atesred Sieh

’ its licensees. The District Court found that this, too,.- per

. - constituted sufficient eviderice of unfair competition. °

"The finding can hardly be reconciled with the court’s :

observations without a finding of fault, that in the past : &

Butterfield itself had indemnified several of its licensees

against liability arising from any claims of infringement.

of: the Tuohy pateht. ‘Throughout the record, it is seen a

that, Butterfield has cotnmitted many of the. same acts .

. which, . committed by his competitor, he charges as un- .

fair competition.

. The crucial part of the indemnity agreement offered _

ee Saf Plastic provides, “Licensor ‘shal! indemnify Licensee, ae

a Oe . against any and alt claims for infringement under ue

Butterfield U. S. Patent = 2,544,246. with respect to

devices sold by Licensee .. Peis Se tees

arity of the inventions{taught by the two patents. One

“In reviewing a one*is struck by the simil-

undertaking to construtt a device under the teachings

} of the one patent, because-of variations in thé curvature

. -of human eyes: vand the close precision required, con-

fronted almost certain a

Appellate Gourt Opinion | 298

@ iJ :

ss ue eesscoeree

Lg ae eat ll tes a le Pie

PH as OR Sia aaa:

ent. It was inevi as the history reveals, that li-

saudi of telbcnds iocald denied Ca ar ewe

fringement of the Tuohy patent and that licensées - of

Plastic would be charged with trespass upon the rights

; of Butterfield. These renee nesses _—— and le-

ae 4 " . a ge > fe

Ps . . ‘¢

NAAR Ripe a ROPES LEE RSS SCBA He eet NEN

GAT Sit

. 7

} ~ , . Appellate Court Opinion

Sh es ‘necessity, othe ole ‘of each patent holder to offer i in-

~ Saas demnity agreements to its Heensees:

Assuming that. one’s offer of lider asiiaicns:

may bé attended by. circumstances ‘supporting a deter- | 3

_ mination of this wrongful and unfairly competitive pur-

rt pose, the offers of Plastic here, and of Butterfield also, —

"were so clearly induced “by a legitimate business motive

| that there is: insufficient support for the determination

: > that Plastic’s overtures to its licensees were ‘inspired. si

Pe eats actionably wrongfil ‘intent. and’ sabugene!

hee. = 7 Butterfield Pe in the Nas his sale ‘a letter,

which was before the court below. The letter is characterized as °° | s

“typical correspondence. ” It was received by Plastic from one of .

- its licensees. It cannot be considered as “typical” of Cortespond- -

> efice pertaining to the effect of the indemnity agreement, since ©

2° this licensee had not been a party to such an agreement. Butter-

_ field had filed an infringement suit against the licensed, Rich-Tint,

: and a consent judgment was entered-prior to the time that Plastic.

aaa +had-made the indemnity offer. The licensee iffformed Plastic that

it was financially: unable to undertake the defense of the infringe- .

;.') ment suit and had entered into a licensing agreement with But-

» — terfield at a cost to it of $50.00 per month for the rerhaining life

of the Butterfield patent. The licensee requested, in its letter, that.

. Plastic do for it retroactively what it offered to do for ‘other li-

censees prospectively. It asked that it be allowed to deduct the .

amount of the; Butterfield royalty from the amount due Plastic.

ee : for royalties:

> _ We.do not read this letter, “typical” or not, as supporting. But- ak

on” It reveals that Butterfield had filed an _in-

fringement action against a small manufacturer who, unable to

afford the cost of defending ‘the suit, purchased a Butterfield .

license, the amount of the royalty to be paid without, regard to * .

* whether it constructed any devices. under the teaching of the

Butterfield patent. We cannot know whether* Rich-Tint was §in-

_.- fringing or whether it ever made a device comporting with the

Butterfield. teaching. But we can s¢e that Plastic, prevent bur-

' den to its licensees in confronting similar claims, had ample jus- _

ae tpg metas net aekeeramen eee

Pere |

' age and. injure the’

oe eicidetiia, . ome

“Finally, we consider Buatterfield’s complaint and the ee

: determination that: Plastic unfairly competed through 7

instituting ‘litigation against jts own licensees which 1i-

licensees from dealing with Butterfield. ‘aoe

One, parpose of these actions was to recover unpaid

Toyalties alleged by Plastic to be due’ under the royalty _

agreements. As an extension of its narrow’ interpretation

of the Plastic royalty agreement and its determination

_ that Plastic improperly applied the royalty provisions as

: by attemptirig. to collect for all. devices: made by its '

es censees, the

i court held the suits to ‘be |

We have alredidy expressed our view that- orecad

royalty provisions and the manner of their application

"were legally permissible. ‘Furthermore, nothing in the -

, ~ rétord indicates that the claims for \unpaid — ~

the suits were not made in' good faith.* a eo: a3

Another aspect’ of Plastic’s suits was ite. aan that © o

-the defaulting licensees, together with Butterfield. and A

Mason, oné of Butterfiel, 's attomnéys, conspired to dam- .

tic licensing system. ‘None of -

_ these suits ended successfully for Plastic. That does not

mean’ that the suits’ were wholly 5

ny court»found, or that they were’ coercive or unfair to.

Butterfield, just as-an unsuccessful criminal, prosecution

ess, as the trial |

a a3

. beled Bulterfield and ‘his attorneys and frightened the oy

does not, simply because it is unsuccessful, create liabil- |

ity for malicious prosecution. : Conspiracy involves. a

rather sophisticated undertaking. ‘Steps. are generally |

S cs ak ths paces wocls Mien oor Minkued io Acc

*. for ‘unpaid ag under a — mcrae ‘between Hunt

INGE

i 32a ; s < Appellate Court Opinion a

“tillers to cover tracks. See Esco Corp. V.. United States;

"340 F.2d 4000, 1006 (9th Cir. 1965). Plastic knéw that —

Mason had ———— parties unsuceessful in their at-- -

. Labs, Ines “Sipea, and Solex Labs; Ine. v. . Gah su-

: pra. Mason had also represented several of the patties

- defendant in ‘those actions ‘filed by Plastic, which are-

claimed by. Butterfield to have been wrongfully coercive. .

Mason also represents Butterfield. ‘There was no direct |

connection between. the parties: defendant arid Butter-

field other than as revealed by attempts’ of Butterfield

. in some: instances to enter into license agreements| with

them; nevertheless, the circumstances, as could be seen

by Plastic in advance of plenary determination, ; were

sufficient to. prevent a valid finding that Plastic’s suits.

lesé”

The District Routt concluded ‘that “The tigation

; previously described. was. wholly groundless and, in view -

_ of its coordination with the other activities of. Plastic in

oe ‘these Findings described, was brought for the cs

purpose and effect of inducing persons in the trade. not

to deal with Butterfield.” This conclusion was drawn,

expressly, “in view” of Plastic’s “other activities”; and

we do not, in the light of the whole evidence, see that

these “other activities” were illegal. : Reviewing them -

specifically, we do not believe that it is supportable to

~ conclude that the broad royalty base was unlawful, that |x:

the disclosures. with: regard to the settlement. agreement ~

were actionable misrepresentation, that. the indemnity

Nites

ae ps

“were, instituted in bad faith or that. ee were —— :

ie |

a :

agreements involved constituted a. method of unfalé

‘ competition, or that it was wrongful for Plastic to’ com- ee

Roose: its view that,a patent twice held to be a

ors “pioneer” was a pioneer and, thus, had a broad scope.

ei We ‘recognize’ that a’ series of lawsuits, wrongfully insti-. 7

ae tuted Soe ‘oppestive porpiee; imay: cGoskiinte! the baat. Ove

Pee for a just charge. of unfair competitive activity.. See— =

i ~+.\Callman, Unfair Competition and Trademarks. § 8.1d, -

ip. 139 (2d ed. 1950). But see Frolick v. Miles Labs, Inc.,

316 F.2d 87 (9th Cir.),. cert. denied, 375. U.S. 825, 11.

LL. Ed. 2d. 58, 84 Sup. Ct. 66 (1963). Here, however, the

evidence is insufficient to support Butterfield’s conten- - a

Z tion for the application of that rule.. : Bear

All of the foregoing leads to the conclusion that we,

from the entire evidence, are “left with a definite and

firm: conviction that a’ mistake has. been committed.”

_ 364, 365, 68 Sup. Ct. 525, 542, 92 L. Ed. 746.(1948): The

Ser case was carefully tried, and it is plain that there was

ey -a full production “of evidence.® 1 " 7

. treason for imposing further- burdens, upon the parties —

and’ upon the court. The judgment against Plastic is :

reversed. Upon remand, ee eee ee eens

and, — co

‘Reversed with directions

facturers of plastic contact lenses in the United States. Plastic has.

... licensed about one-half. this number. A At the time of trial, Butter-

_ field had only solicited about fifty of these, of which twenty-three

had purchased licenses from hin. During the ‘period following the © \

1962 settlement and before the trial of the present case, Butter- eS

recs cea dior een d sharon a ee

“ee

"- United’ States: v. United States Gypsum. Co., 333 US. «

¢ * Y

. * M

Aig Alla secon inal Raidahs alilhdinaioniy atibebianien SONS die TAG eT tecemalet

. 5 5

ON ao inge ot Fect 38

” APPENDIX “Se he

_UNITED STATES DISTRICT COURT

__, DISTRICT OF OREGON.

| Gronar H. Burren, Se, ) ix: Fon

: ; Plaintiff, : oe Faniomves or Fact

| ) |

Tie Slane: Contacr/ Lens ) Contciraiern. OF Law*

? Company, a corporation ) Civ No. 63-294

“| en ‘Defendant. ) —

b <i te eceacecll aik ao town ied tin ow os “=

: : 2

* trial on the 22nd day of June, 1964, the plaintiff appear-

ing through R. R. Bullivant and “Douglas G. Houser,

and | e defendant, appearing through James C. Dezenr

dorf, Dugald S. McDougall and Irwin Panter, its at--

torneys. ‘Plaintiff and defendant produced. evidence: on

_ their ‘respective hearings. and’ at the conclusion of the

trial, the Court directed each party to submit proposed’ A

ae findings and conclusions. After an exhaistive study and

‘analysis of the record, including the findings and. con- &

clusions proposed by plaintiff and defendant, the Court _

“has ‘airived at the conclusion - ‘that the weight of sub- sub- - 2

Stantial evidence supports the plaintiffs contentions,

- . both of Jaw Cane hoe ce

- meaningful result, findings of fact and ‘conclusions of

and are, in some instances, interwoven.

For brevity, the following definitions will, apply un- a ae

“te lise the context indicates otherwise:

(a) “Butterfield” means the Plaintif, ind “Plastic”

"means: the Defendant. a ee

: “Record References,” oe tren atea ale

"* Docum@ntation to the iecced and. Evidence supple. See

Sata

° ar

. ¢ . .

; 5 e . ot} .

“ ct *

° °

‘36a oes Findings of Pact

7 - @) « “Solex” will refér. to a former California cor-

? seca known as Solex Laboratories, Inc. AG

corporation known as ,Geotge H. Butterfield & Son.. 0

(d) The term. “Tuohy Patent” coters to ‘United ;

States. Patent No. - 2,510,438; whereas the term ““But-

terfield. Patent” refers to United States Patent No. "Qyec

$44,246." | mei aa egh he oS

% |. /) FINDINGS @F, FACT °

1 " Butterfield ; is, and throughout the eric’ here ma-

, terial has been a. citizen and resident of Portland, ‘Ore- a

"gon. ‘He is and has” been licensed to practice as an op- ~ -

tometrist . in the State of Oregon since 1918 but has

_ not done so actively, for about two years. He is ‘ tHe

majority stockholder: of Butterfield & Son which-j -is, and

ss since December, 1948, has beén, engaged dn the manu-

: facture and sale of plastic contact lerises urider a roy-.

alty « license from Butterfield. Butterfield ‘is also the

owner , of the ° ‘Butterfield Patent and has been since |

its issuance on March | 6, 1951. The Butterfield Patent

will expire under its terms in * March, 1968.

Pre-Trial . Order, Agreed Fact 1, R. p. 45, Butfer-

‘field Patent, _ Ex. 45; tterfield, Tr. 159. |

vite * Plastic is, ang throughout the period . here. ma-

.. terial has been, an. Illinois corporation, having “its prin- ,

cipal place .of ‘business: in’ Chicago, ‘Iliniois. - dstic is

licensed to do business in ‘the State of Oregon and is ~

subject to suit thergin. At least since 1948, Plastic has

& 6 AS ey ° eed

* ae : e a4 3 i

yeah aye cog Beas: WM tes ey a. es.

ey: b 753: es : ; FES ee y- fe 2 :

“Findings of Fact as ME eres ae 2 ;

es been engaged i in the business of manufacturing and sell- -. 30 ns

' ing plastic contact’ lenges. @ : 2 ‘

a = ae

Pre- Trial Order, Agreed Fact 2, 7 p. 45.

on The amount in controversy in this action and in:

the. counterclaim each . exceeds the sum. of, $10, 000. 00, .

_ exclusive of interest and. gosts, and. this Court has jur-”

isdiction of the ‘parties pie of the subject matter of -

the: action ‘and of the counterclaim. eons ah

‘Pre-Trial Order, Agreed Fact 3, keen. "8:

Sa “The: Tuohy Patent for, improvements in a cdineal ,

contact lens was: issued June 6, 1950, to.K. M. Tuohy .

: and. will expire under its statutory term in June, 1967."

It was issued on an applicatiog filed February 28, 1948:

q Ss

4 Nd

. Ex. 43 (Patent); File Wrapper of Tuohy Patent : Sao =

aa Patent Application, Ex. 113. - 7 aS | /

- 58Solex, the original owner of the. Tuohy. Patent, toe ee

. was uritil May 12, 1961, a California corporation having

its principal place of business in Los Angeles, California.

' From 1948 until May 12, 1961, Solex was engaged in

the business’ of. making and selling plastic: contact lenses,:«- ee :

and it owned the ‘Tuohy Patent from the date of its . on:

_ issuance until April 12, 961. ges S A

- Pre-Trial Order A itted Fact 4, R. p.. eo: nati

6. On November 4, 1960, Plastic acquired. all the

capital stock and control of Solex. On ‘April 12, 1961,

- ~ the Tuohy Patent was assigned’ by Solex. to. “Plastic, e

= 'which\still owns it. On May 12,-1961, Selex was liqui- -

‘ dated and dissolved, ‘Plastic on: that date having ac-

as quired its assets: and assumed its liabilities, after liquid-

-. ating and dissolving Solex. Plastic continued to” sell

to 0 Solex’s a 3

38a , Findings of Feat

Pre-Trial Order, aeuiaia Fact 5, WR. p. 46; Agree-

ment between Plastic, as buyer, and Tuohy and

Zabner, as sellers, dated November 6, 1960, for

purchase of all of stock of Solex by Pisatic,

Be ise oO -:

°7. There“are material and substantial ‘ineetiites ae

tween the Tuohy and Butterfield Patents so that a lens

made in accordance with the Butterfield Patent does not

infringe the Tuohy Patent, and a lens made in ‘accord-

ance with the Tuohy Patent. does not infringe the But-

terfield Patent. a’

| (a) A corneal contact lens is a trainegienete ject

worn directly on the cornea, being held thereon by

capillary attraction with the-tear fluid between: the

lens. and the cornea. All corneal contact Jenses are con-

cavo-convex in cross-section’ and are smaller in diameter. |

than the diameter of the limbus of. the eye, which i is the

area surrounding the cornea between. the cornea and

; the white of the eye. The human cornea is heeet more

Jike a parabola than’a segment of-a' sphere, in that its

’ central or optical zone is substantially spherical while

the marginal portion of the cornea flattens out toward -

its periphery. The. corneal surface, however, a micro<

. _ scopic irregularities. _ .

(b) The Butterfield lens is died edbutantiatty par-

abolic on its concave side, so that it follows closely: the 5

~ ‘Rape of the cornea. That is, its central portion conforms

to the optical zone of. the cornea in such manner that

4t does not exert undue pressure, and its marginal por- .

‘tion so.corresponds to the marginal zone of the cornea.

that it ‘provides uninterrupted flow of tear’ or fachtymel i

-. fluid. This relationship to the cornea is brought about

by. the. concave surface of the lens being | defined by

“at least two concentric curves of relatively different

radii of curvature. The lens of the Butterfield Patent is -

known in the trade ‘as the “bi-curve conforming type.”

- The cornea inherently has surface irregularities and, —

therefore, exact conformity is neither required nor in-

tended. Only approximate conformity, and correspond-

ence are intended, as.shown by the. following language —

of the Butterfield Patent specification:

“The applicant, by providing:a lens whose contact

_- surface is very close:to the shape of the eyeball, has ~

brought about the ideal corneal contact lens con-

- dition.” -

' @

‘The Butterfield Patent: contains . two: claims, the

broadest of which reads as follows: :

oS corneal contact lens of concavo-convex

"form in section and of a size to. lie-within the area -

_ defined ‘by ‘the limbus having an. inner central

- spherical area conforming to the ‘corresponding area

oe I of the cornea to which the lens is applied so ‘that

_ - undue pressure will not be present at any point, the

"remainder of said inner surface extending, radially

different from that of said central area and cor-

responding in curvature with that portion of the .

corneal peripheral area to which the lens is ap-

-. plied, whereby space is provided for the natural

uninterrupted circulation of lacrimal fluids between

said lens and the cornea.

“McClain, Tr. 620; Butterfield, Tr. 289, 295, 305, :

- Findings of Fact . a i b : 398:

{,-

outward toward the limbus being formed on a curve —

40a | Findings of\F Bee s

341; Conlogue, “Tr. 335, pail Satterlee, TA 463;

Butterfield Patent, Ex. 45; Dippery, Tr. 217;

-Model; .Ex. 122; , Drawing, Ex. 151.

.(c) The TPuchy Patent, on the other ae de-

scribes and» claims a lens whose concave surface is de-

fined by a single spherical curve of a: radius “flatter,” or

of sufficiently longer radius than that of the cornea

$0 as to provide.a. gradually increasing clearance or tear

_ space. between the lens and cornea radially outwardly

from the center. The lens ‘of the Tuohy Patent i is known

in the trade as the “flatter type,lens.” —

| - Thus the Tuohy lens is the opposite. of the But- .

- terfield lens, in that’ it has.a loose or flatter fit.as dis- -

tinguished from the qpatoemiog. re fit of the Butter-

‘field lens.

poearenen.: FEY contact len: lens applicable to thé human eye

‘comprising a contavo-convex lens: formed of light-

3 transmitting material having a marginal size smaller oes

than the limbus portion of the eye to which it is:

i applicable but larger than the maximum iris open- .

-ing, said lens having a radius of curvature on its

- concave side slightly greater than the radius of eure

vature of the cornea to which it is applied so that .

radialf® from the center of the lens’ there will be a

small but gradually increasing. clearance : for the

entry of. natural eye fluids between the lens and

the cornea, said lens: ‘being ssatank to correct for

: visual deficiency.” Hos

’ Tuohy Patent, Ex. 43.

3. ‘The trade in contact lensés both at the es |

Claim 1 of Se

©.

et 2

Butterfield-type lenses.

Butterfield, Tk 171, 172, 181, 185, 186, 264, et seq,

* 351, 368, 391-2; Satterlee Tr. 462-3; Dippery,

* . Tr. 208; Conlogue, Tr. 315, 320; Hunt Deposi-

tion, Ex. 149, p. 32, line 21, to p. 33, line 6;

- Corneal contact lens trade literature, Ex. 104

to 104y, inclusive, particularly at the’ pages or

portions indicated in the pre-trial list covering |

.these* exhibits.

: 9. The Tuohy Patent was adjudged d as validly cov- k

ering, the fil. flatter. type-lens which it describes: and claims

“Gn Solex v. Pacitic Contact Laboratories, Inc., in ‘the —

United States District Court for the Southern District

of .California, Central Division, on September 14, pool,

~ Opinion of Judge Harrison, Ex, 128.

-10. Subsequent litigation in the same ‘Federal Dis- _

trict Court was “brought by Solex against six. fitters of

contact lenses for alleged infgingement of ‘the Tuohy —

_- Patent, one of such cases being known as Solex v. Gra-..*

ham, 165 F. Supp. 428 (Aug: 1958). This. litigation

again adjudged the validity of the Tuohy Patent. Init _

Plastic, through its attorney, W. M. Van Sciver, defend- _

‘ed three of the. fitters, and Collins Mason, one ‘of. But- |

- terfield’s_ attorneys herein, - ‘defended two of the de-

fendants. This” activity by: Mr Masori was prior: to

: ay time at which he had been retained cae Butterfield. °

. -

CT ee

| Findings of Fact == (asi

_ turing, dispensing ‘and fitting levels, has recognized that _

_, there are substantial differences between the two pat- —

’ ents, and a very substantial volume of this trade i is now

and for some time last past, including the period since: ~

_ . April, 1962, has consisted of the “bi- ee conforming” %

Ksa(hile ip tiak maaan

AM IMGT Ge

a | Findings: of Fact .

heiiee were Prosecuted by. the defendants in sds of. -

_ these cases but were terminated without an adjudication

on the merits by the: appellate court and the -appeals |

| dismissed as a part of the transaction by which Plastic

acquired Soléip in 1 November, 1960. - Fi)

Mason, Tr. 481- 2; Agreement: for snicdiais of : So. _—"

{ : . ‘lex stock by Plastic, Ex. 136; Final_judgment

1° ¥ | ae *'Solex’ V. Graham, November 28, 1960, Ex. 141,

| ol eae “ Neither_the Pacific Laboratories case nor the

pee “cases by Solex against ‘the six. fitters involved any de- ~

\ vice made under. the ‘teachings | of the Butterfield Pat- .

/_-- eat and Butterfield was not a party to any | of that lit-

igation. eee cae f

eo i Tr. 482. : ot ae

12. The matnciel and substantial differences between

the two patents are additionally, shown by factors other ne

than those previously mentioned i in these respects:

(a) The. ‘file wrapper of the Tuohy Patent, Ex.

. 113,,discloses that patentee Tuohy surrendered broader

claims in order: to obtain allowance. of the two claims .

which matured as the claims of his patent, and. there-

ee fore Plastic is estopped to assert for the Tuohy Patent -

bh es ancy (Geeaetae Spe eat fe Sean Ney Se. ry clatny ot

* . the Patent. chee

(b) As is hareatter more fally set forth, Plastic, . -

" since “May, 1960, has been a licensee under the Butter-

field Patent and, as such is not only estopped to chal-

lenge the. validity. of the Butterfield Patent but is: also

oe to challenge its operative effect or utility. .

eee eee The priot Portland litigation between the par- |

en Teer | Findings of Fact. Ba

ties whith was settled and terminated in April, 1962, as

will be hereafter more fully described, was the first

_ “court action in which the Butterfield Patent or lens was

' involved. This was a renewed recognition by Plastic, as

, well as the decree, that established both validity. and < —

wee utility of the Butterfield Patent. as ‘Getacen the eres. yee ea.

; @ Prior publication ext, an. article Seas Fortdine 7 -

Magazine for April, 1936, known to Plastic since the

termination ‘of the prior litigation, while not disclosing | . .o

_ a. corneal’ con lens with the fitting relationships = =

claimed by cither Butterfield or Tuohy, does. disclose °. | : ; ye

that corneal contact lenses were known to the public = //

; many years before the application for either patent. The ..

Court can find no justification for Plastic’s position, —

“serted on oral argument, that. the “Tuohy Patent’ is‘

_ * broad in scopé, but that the Butterfield Patent is narrow,

: * and of only very limited. utility or use. * oe th

‘Ex. 68; Wesley Déposition, Ex 12; pp. 134-5. ess

13. At the time of the acquisition of Solex by Plastfc aa hae

in November, 1960, ‘there was pending in the United 7 eos Fl

'-. States District Court for the Northern District of Illi- oF

nois, Eastern Division, an action by Solex against Pas- -. if

tic for alleged infringement by Plastic of the Tuohy Pat-°

ent. In this action Plastic had charged in verified plead- | wy

ings and sworn affidavits filéd therein that Solex me

practiced: deceit and coercion, had misused court opin- SESS

ions for the purpose of coercing manufacturers of. cor-

neal contact lenses into entering into license agreements Hi

_with Solex under the toy F Patent and had eerie , a)

4 ¢

Bier escaeeoernnngenceiarrencrenenmnenr annie er ae

r .

WR - Findings of Pact

* sented. the scope of. the ‘Tuohy - ‘Patent. In-that action

Plastic obtained. a temporary injunction \against Solex _

prohibiting acts of the kind previously described and

‘this injunction was affirmed on appeal. — ,

: See Pleadings in Solex v. Plastic, #57-C-466; Ex.

66, 67; Solex’ v. Plastic, 268 Fed. 2d 637.

- 14, a May, 1960, Plastic acquired from Butterfield _

a license under the Butterfield Patent, paying or agree-

ing to pay a total Aonsideration. therefor, on a monthly

basis, of $50, 000.00. This license was acquired from But-

~~ terfield when Plastic was maintaining in court, as here- © ;

tofore set forth, a position in which it not only was at-. .

eel the Tuohy Patent but was also challenging coer-

cive and’ deceptive tactics -of :Solex. whom it had not

then acquired. | v

Pre-Trial Order, Admitted Fact 9,'R. p. 47; But-'

terfield-Plastic license aerccménit, Part of Ex.

117.. 3

., 15. Prior t to the scniielitin of Solex: ao So-

lex had brought an. action against. Butterfield. and But-

terfiéld & Son i in the District Court of the United States .

. for the’ ‘District of Oregon, Civil. 60-107. After this ac-

tion: had been pending for some time’ and after the

acquisition of Solex by Plastic,.. Plastic ‘became a co- .

oplaintiff against Butterfield and Butterfield & Son and

continued the litigation: against him and the corpora-

tion, Butterfield & Son.. While \this action was pending

’ the plaintiff and Butterfield & Son applied for and af- -

eS ter hearing obtained, on September 10, 1961, a prelim-

inary injunction ‘against Plastic against bringing or con- ee

Car, the prosecution of actions or eit — li-

“Findings of Fact ee

" censees: of Butterfield for infringement a the: Tuoliy

Patent by reason of manufacture of devices under the ss

Butterfield Patent, , including actions then pending in

‘ ° other Federal Courts against Titmus Optical: Company,

'Inc., a licensee of Butterfield, and against Rogers Broth-

ers, “another licensee of Butterfield.. The temporary in-. |

junction also enjoined Plastic from -notifying the trade

that lenses made under the teachings of the Butterfield a

' , Patent infringed the Tuohy Patent, from threatening to

gue licensees of Butterfield because of such ‘alleged in-

. fringement, and from notifying the trade that the But- —-

terfield Patent is inoperative or that the trade could

_ manufacture and sell corneal contact. lenses under the

teachings of the Butterfield Patent: without: infringing

it. This injunction order of this Court was made pur-

‘suant to findings and an opinion setting. forth in sub-.

stance that Plastic, Since its acquisition, of Solex, had

continued many of the improper acts of Solex in its

‘licensing program which Plastic had successfully chal-"

lenged in the Federal Court in Illinois..Solex Labora-.

tories, Inc. v. George H. Buttertield, et al, 202 F. Supp.

461 Ds Or. 1961). 3 Lyi V

* Order’ granting Preliminary injunction and ° mem-

orandum opinion of the Court, Ex. ‘129.

16. There:i is no evidence that Plastic, since the. time

of said injunction order or since the time of the settle-

ment of the fofmer action between the. parties; Civil

60-107, ever took any Steps to repudiate or disassociate

+ itself from the wrongful conduct of Solex’ enjoined in

the Federal Court in. Illinois as. heretofore set forth ee)

=m its own conduct Of a somewhat similar r type en-

= joined by this Court i in the former oitice init there is

-Tikewise no evidence -of any such effort by Plastic to

disassociate itself from such conduct or to disavow such.

a6. conduct since’ the time of the settlement of the former

action in April, 1962, ee 7

17. At.the time Plastic ‘init Solex and control °

of the Tuohy Patent in November, 1960, Solex had out--

standing. approximately 56 license. agreements all: or |

substantially all of which were in the form of Form 2,

Ex. 46. Substantially all of such agreements had been -

obtained by: Solex subsequent - to August 6, 1958, the

date of the decision of J udge Tolin in Solex v. Graham,

supra. This is the’ opinion which Solex improperly used ,

in circularizing the. trade concerning the’ effect of the

* @pinion and the gcope of the Tuohy Patent as deter-

parent in the. Chicago litigation between Solex and Plas-

c, above referred to. These Solex license agreements

ele for a royalty of $3.50 per pair of lenses and the.

royalty paid by the licensee was measured only by the

quantity of Tuohy lonses handled by ‘eid cenace dur-

ing éach accounting’ period. Eventually Plastic, by deal-?

* ings with the Solex licensees and | by dealings with the

trade, had acquired a total nulger of approximately 4.10

licensees at the time of the settlement of the former ac-

- tion between the: parties in April, 1962. At. the time-of

the settlement of the former action in April, 1962, the |

license agreements between Solex and*its licensees and. ~

the new licenses acquired by. Plastic had: been converted

"into 4 di@jerent. form of li

by Form Number 8 in Ex. 46. The new agreements re-

aS A eapsond lal

®@-- )

Bois

agreement exemplified ©

sf between Plastic - and Tuohy and Zabner for

‘purchase of Solex stock, Ex: 136: Pre-Trial Or-

“det, Admitted: Fact No. 7, R. p. 46. |

18: At the tinie’ of ihe scttiniieint| of the former ac-

* tion “between the parties Butterfield, had | 12 licensees, . ae

_ including: Plastic, the Butterfield’ corporation, Titmus . —

ePptical Company, Rogers Brothers, Sloan. Optical Com-

pany, Inc. .(name Changed to- Southern Contact Lens

bs Laboratories, Inc.), and. Utah Optical Supply. Co..

- List of Butterfield licensees showing ddtes when li-

(cipadibdans ceeds asisen iktshecimepesiongs

Findings of Fact. ee

; Group of license forms used ‘by Solex and Plastic,

aa a with attached explanatory yéllow sheet, Ex. 46; ;

- dist of sPiastic’s active licensees with date they’. -

_,. Signed. license agreement; ‘Ex. 109; Agreement: ae

Cena agreement first. obtained; Ex.:-73; File . a

Ex. 117. Sgr ped ie

of outstanding’ Butterfield license sermons ie :

19. At thé-time of the setlemént oF. the Gone ac-

‘tion between. the. parties in this. Court, ‘the current

pleadings before the Court of. the respective ‘parties wete-

“the’ amended complaint of Solex and’ Plastic (Ex. KK-' .

1), the amended and supplemental answer and counter-

claim of. Defendants Butterfield ‘and Butterfield & Son

. (Ex. ‘KK); and the answer to counterclaim of Plastic

and: Solex (Ex. KK-2). The case was never tried on -*

” the’ merits anid there was never any adj ion in con-

tested proceedings between the parties. of the» issues :

raised’ in the pleadings except to the extent that this

‘Court held a hearing on thé merits. 6f Butterfield’s mo-. ree

tion for. temporary | injunction and: issued its temporary ne

teateantiony 6 after. pinion ,and higreg in October, 1961, Saree

. * “e i a ,

‘ : : ‘

a she

é ‘ , eae !

<< — a =

. © .

ce n-Tuohy-type. lenses. - The pleadings did not tender

well: as the unfiled settlement agreement, were dated

AB - Findings of Fact

this eenniensy injunction aid the opi ion and findings .

having been previously described.

20: At the time of the settlement of the he former action

, the current | pleadings before the Court did not . tender

any issue as to the yalidity, either under the” anti-trust

. laws or otherwise, of the royalty base then in use by

Plastic under its license "agreements of the type exem-

plified in Form 8, Ex. 46, being the form now in use

- by Plastic. The /pleadings likewise tendered no ‘issue as

to the. - validity or existence of any conduct by Plastic -

‘in interpreting or seeking to apply i in the | trade the scope

__ of said royalty base as it may, hgye applied to mnpatent:

’ -ed, unfifishéed and uneut pieces of plastic material.or to

any issug as to the proper interpretation of the form of

:. license agreement then in use by Plastic, with respect

~ to royalty -base, as to ‘whether it did or did not

‘ apply t6 uncut, unfinished or non-Tuohy-fype pieces of -

plastic material. ee 8 oy

eee | Pee former litigation between the parties was

settled by a. duly entered consent judgment (Ex. 1), 6 a i

‘filed. stipulation of facts and matters (Ex, 2), a

- Giled stipulation fos dismissal ‘of counterclaim (Ex. A),

and an unfiled settlement agreement (Ex. 3). The con-

: sent judgment was entered May 10, 1962, ‘and the stip-

oh. ulation of facts and matters on ‘Which jt ‘was “based, as.

"April 24, RR. er:

aiaoatsiua Order, Admitted Fact 8, ao 46-47.

| 22. The’ entered consent Jodement, i in pertinent part,

E weorient: oo. Saar |

;, St ®

Finkings at Fact! Sita

“arp Is HEREBY ADJUDGED AND DE- —

-. CREED as follows:

Res I, Plaintit-ounterdfendant The « ‘Plastic Dig

_ tact Lens Company is an-Illinois corporation having

its principal place of business in. Chinen: Cook

County, State of Illinois. ;

2. Plaintiff-counterdefendant Solex ‘Labovater-

" ies, Inc., “was; up to May 12, 1961, a California cor-

: poration, having. its principal place of ‘business in

‘Los Angeles, County of Los a State of Cal-

_ ifornia.

. 3. On or ‘about “May 12, 1961, plaintitf-bounter-

defendant The Plastic Contact Lens Company, be;/

- came successor. in interest to and caused said Solex __

Laboratories, Inc. to be dissolved and ‘assumed all

rights and’ obligations of said Solex Laboratories,

‘Ine. arising out of this action.

4. 'Defendant-counterclaimant George H. But-

_terfield, Sr. ., is a resident of Portland, Multnomah

County, State of, Oregon. «

ie Defendant-counterclaimant Geo. H. Butter-

- field & Son is an Oregon corporation, having | its

principal place of business in Portland, ‘Multnomah

‘ ping: State of Oregon.

‘6. .This Court has jeriiedstains over ‘the parties

and. the subject matter of this action: j

7. Plaintiffs’ complaint is dismissed with prej- :

_ udice 7 a to the defendant Gsoens H. ‘Butterfield,

- Company .is a licensee - under UW S.. Letters Patent

nt baie 2,544,246. eta . a, coe }

8. Coipteniabantent The Plastic’ "‘Comtiek ‘cai €

- 4

sv-~eosweomererapeanenrtisapieesitnensentetseae

' 5 y

50a

_ Findings of Fact

9, Defendant Geo. H. Butterfield’ & Son.is a

licensee under U. S. Letters erasers in suit No.

2,510,438. f .

10. U: S. Letters’ Patong! in in suit No. 2,510,438

are: ‘good and valid in law as between plaintiffs and

counterdefendant Geo. H. Butterfield & Son.

411. United States Letters Patent in ‘ suit No. 2,-—

4 944, 246, are good and valid in law as betwéen coun- -

terclaimant George H.. Butterfield, Sr. — the .

plaintiffs-counterdefendants.

me. Within six (6) years. irtimediatety ‘satan

May 12, 1961, said counterdefendant Solex Labora-

tories, Inc., infringed U. S. Letters Patent No. 2,- |

544,246 and counterdefendant The Plastic Contact

Lens Company has made full settlement of and for

' damagés ‘suffered, by counterclaimant George H.

: ment.

_ Of this action have been settled and satisfied out* —

Butterfield, Sr. from — by virtue of said infringe-

13. All matters of costs, attorneys! eee ond all

other financial recoveries involved in or arising out

of court by and between the parties and the parties

have waived judgment therefor.

14. The parties having waived injunctive relief, |

. no injunctive relief is granted . by this judgment.

15.. The injunction pendente lite which has been

issued out of and under the seal of this Court ,

- against plaintiffs-counterdefendants pursuant to the

Court’s order of September | 19, 1961, is hereby dis-

solved and the surety bond posted as security

‘therefor by defendant-counterclaimant, George H...

— Sr. is eae! exonerated and released.’ we

- Ex. 1. oe

: cee

“Ke

Findings of Fact ' 5la

23. The stipulation of facts ad matters which was,

filed in court as a basis. for :the entry of the consent. —

judgment, so far as here material, contained provisions

coincident with the above provisions of the consent:

| judgment. The only relevant additional matters ore.

for in it were:

(a) That Baie and. Butterfield’ & Son“

shoyld dismiss with prejudice all counterclaims set forth .

in the amended’ and supplemerital answer and counter-

claim except the ‘counterclaim for dieigem ery of the

- Butterfield Patent. “

Par. 2;

(b) That Butterfield, the individual, has not in-

_ fringed the Tuohy Patent.

. ita

and Butterfield dated May 6, 1960 (EX. 71), Butterfield ,

granted a license to Plastic under the Butterfield Pat-

ent, that said license agreement has been and still is ”

in full force and effect and that, therefore, no judgment

for infringement should be eritered in favor of Butter-

_ field against Plastic for infringement by Plastic of But-

. terfield’s Patent other than for the. ipfringement of said

Patent by Solex prior to May 12, 1961.

These added matters appearing | in the pulang

taken together with the consent judgment are of signif-

icance in considering the contentions:of the parties with —

respect to the scope of the Butterfield-Patent as rn

to the Tuohy Patent. The consent judgment and stip- |

ulation recognized that. substantial infringement of the

‘Butterfield Patent had been made by Solex:

Penpanner Per even wear

» agen an =e pla

¢ soa , .

@ See

De a ermal ed tel a el aces Ca

0 le Pant re tne See

~ 52a ssts~*é*QRinddinngs of Fact ae

24. The unfiled settlement: agreement (Ex. 3), ex- |

cept. for the formal dismissal of the counterclaim of

Butterfield and the corporation, Butterfield & Son,

: completes the important settlement documents. Its pro- |

visions, so far as here relevant, were as follows:

| (a) ‘Provision is made in the aqrestiith ide ths

_ precise form of -stipulation of facts-apd matters and

- consent judgment to be presented to the Court. The

- forms attached to the agreement are identical with. _

filed and entered in court.

Par. 1.

(b) That Solex hes infringed the’ Butterfield Pat-

ent and as settlement ‘for damages, suffered ~ Butter-

field from such ez saaat Plastic: Neale S ys

‘(i) Release claims. against ‘Butterfield or

Butterfield ° & Son. for infringement of the mages Pat~

ent;

Butterfield & Son a gieuee Mang license ‘under the brand

Patent; ie sigs

eres _ ii). Commenced ‘ns Butterfield ‘ac right to grant

royalty-free “Fuohy licenses to Butterfield licensees, Tit-

mus, Rogers, Sloan and Utah Optical;

(iv) ‘Agreed to dismiss with Minidindlics the pend-

“ing actions by Plastic against the Butterfield irik:

_Titmus and Rogers; and

(v) Agreed to pay to Butterfield: the sum “of

- $6,000.00. (This latter sum is clearly: allocated in the.

settlement agreement to the part payment of infringe-

~ Gi) Conveyed to Butterfield the ne to grant :

tll

rie

| "Findings of Pct | eS 53a

ment Seiden suffered by Butterfield ae infringe- ‘

ment by. Solex.)

‘ e .

s — eid : + ~ sot parva nme S

Par. 2. ata er roo ate

gon aS MILER

Peat: (c)- Plastic ‘forther saree aS part of the settle.

ment above set forth -for Butterfield’s infringement

‘- claims against Solex, to pay the sum of $60,000.00 in

. three installments, two in 1962 and the balance Jan-

uary 2,. -1963. (This $60,000.00 sum is separate from and

in addition to consideration toe be paid by Plastic for

infringement of the Butterfield mug!

‘Par. 3.

(d) That nothifig” ‘contained in the settlement ;

' agreement. should prevent either Plastic or Butterfield

- from’ soliciting licensees. of. the other or ftom bringing

suit against. such licehsees for wagers ‘of their re-

: 5 spective patents. ;

Par. 4.. acre We |

en > &

- (e) Butterfield gave to Plastic the right’ to grant

' to a Plastic licensee,. Ocular Products, Inc., of Seattle,

WaShington, « a royalty-free licerise under the - Biter: a

field Patent, .

Par. 6:

(£) Butterfield and Buttérfield. & Son shall filé

‘a dismissal with prejudice of their counterclaims except

. the second counterclaim seeking oe for infringe-

* ment of the Butterfield. Patent. ,

Par. 7. °

Each party thereby released “any and all claims or

causes of action which he or it has or may have against

: a Findings of Fact ah

a : each of the other parties arising , of: the action or °

: - the subject. matter of the action.”

Par. 8. Se

25. All -sums qecraireid to a paid by Plastic under

the terms of the settlement, agreément of April 24, 1962;

have been paid. |

pee oe «2 pal,

° ape 8F oR vem g

26. Issues No. 1 and 2 herein as set forth in the pre-

“trial order require a determination as to what, if any,

- issues involved in the present action between the parties ~

' ‘were finally terminated by the settlement of the former

- action in the manner heretofore set forth. None of the :

_.issues presented in the pre-trial order, either under the

statement of Plaintiff's contentions, Defendant’s conten-

tions with respect to Plaintiff's claims, or . under the

_ Statement of ‘the. issués to bé tried could, have been

affected by the settlement of the former action so as to :

bar Butterfield herein.

Defendant’s contentions with respect to. Plain-

tiff’s claims, Pre-Trial Order, Contention No.5,

R. P. Sia Sr :

07: None of the Plaintiff's eration herein or the

issues to be tried involving Plairitiff’s ' contentions, as

set forth in the pre-trial order, were terminated or barred

by the settlement and final termination of the previous

litigation between the parties, including specifically,’ ‘but

not limited to, any contentions of the Plaintiff or issues

. formulated thereon dealing with the subject matter of - -

. the royalty base sought to be enforced by Plastic against °

its‘ licensees as including lenses consisting of unpatented,

uncut or unfinished lenses or finished lenses not made in’

Findings ot Fact == =—«SS.

accordance with the teachings of the Tuohy Patent. .

Among the more detailed evidence, considerations

_. and reasons leading to the Court’s above ultimate find-_

ing are: the. following:

(a) Plastic’s conduct ‘with respekt to the appli:

cation and enforcement of its royalty base pertained ©

only to acts and conduct of Plastic occurring subse-

“quent to the date of the settlement. There was no evi-

dence whatsoever that Plastic had interpreted or sought

to -enforce its current forms of license agreement against

tits licensees so .as to cover any devices or lenses other

than Tuohy lenses prior to the. time of the settlement.

(b) Plastic admitted at the trial of the case: in

chief that it now construes, enforces and seeks to en-

~ : force its current license - agreements to require, pay-

oe ment by its licensees on unfinished and uncut lenses,

. both of which are unpatented, and on finished Butter-

a _ other oe of son SOOnY jae eee that in

ane,

_ both by demand upon its licensees and by fitigation filed

against them covering gaia on such: a: broad non-

Tuohy base. :

_ Plastic’ S answers to Plaintiff's. second interroga-

. tories 5 and 6, Ex. 6; Wesley Deposition, pp.

84-6, 118, 132-3, 115 (Ex. 12); Admissions of

_“ Plastic’s counsel during’ trial, Trial Record,

ED TG p. 113; The following illustrative items of cor-

. espondence between Plastic . and its licensees,

'. including. Exs. 20, a, b, c, 21 a, b; Plastic Roy-

, ny Report gies Ex. 76, ,

pay

RP Rar Lt heat hath A

ee SY Findings of Fact

| ie “© However, there i is no evidence that any of the

foregoing concemed enforcement activities of Plastic

in the application of its royalty base | prior to. the time

of. the settlement of : the former action. :

¢d) The supplemental answer and counterclaim of

Butterfield in the former, action. did* not. challenge the .

validity of the Plastic royalty: base as recited in its li- .

cense agreements or Plastic’ s ‘enforcement of that Roy- =

alty base in the broad sense now under ‘consideration _

in any respect but was limited to \charges. of extended

' ‘and unjustified claims by Plastic as to the pretended —

broad scope of the Tuohy Patent itself as covering all

finished corneal contact lenses made under. the teachings

_ of other patents, such as. the Butterfield Patent. @

See supplemental answer and. counterclaim of But- mon ;

tetfield i in former action, Ex. KK.

ae The proper construction of the: current Plastic

license agreement with respect to the royalty base there- . |

in provided was not an issue in the. ‘fortner case and ©

there. is no evidence from Defendant ‘or: otherwise that .- .

- it was in ‘any manner before the Court either under the

pleadings or ‘the settiement agreement’ or the consent

judgment or stipulation. ere Jee

. (f) The agreement between Plastic ie: its licen-

sees_ is somewhat ambiguous, with respect to its royalty

base, but, ‘when properly.construed, does not call for the

payment of royalties on devices’ other than Tuohy-type =~

lenses. The word “devices” as’ used-in paragraphs 1 and .

2 of the current ficense agreement (Form 8, Ex. 46) is. °

limited to Tuohy-type sessed which the license - ‘particu-

— G) .

"Findings of Pact ae

“larly covers: as more fully set forth in paragraph 1 of

‘the license agreement. The word “devices” as it appears

in the royalty base provision in paragraph 2 is not en- sate

~ larged to cover unpatented, unfinished or uncut pieces

of lens - ial or non-Tuohy patent items despite -

some rather broad. langygge ip ‘paragraph 2. Because -

of the’ Court’s: later factual and legal conclusions that/a

broader interpretation and. application of the royalty -_ ee

‘@

base are illegal as violations of the anti-trust-iaws, re- x

‘straints on trade and sinfair competition, the Court

: adopts a constructidn: of ‘this instrument which reriders.

it legal and valid, rather ‘illegal (a cofistruction al-: -

Sewvays to be pref (and further adopts gnother car-

‘dinal rule of con ct construction ‘by cotistruing the

agreement. most strongly against the party who caused ;

**the document ‘to be prepared and placed in circulation.

| (g). The current form of Plastic license’ agreement,

-not having been .énforced by Plastic according ta anv

; evidence before this Court is an illegal or improper man-

ner by covering non-Tuohy-type devices in its royalty —

base, prior to the settlement, there is no justification for

any finding that the isu an to royalty base covering

on-Tuohy-type or unpatented items either was or °

a2 might have been involved i in the former settlement.

(h) Assuming for purposes of argument only that

"there was any evidence in ‘the current case that Plastic,

prior to the settlement, was secking to enforce a broader

. *Foyalty base, covering unpatented or non-Tuohy-type

x devices (this, being ‘evidence which Plastic was required

\t? Produce in this ease, in onder to support its codten-

aD ee ar

~a@*

4 é res } ‘ ; a P ; oe io zr ‘

58a" sts«éRinddings of Fact. /

. /

tion. of res adjudicata. or settlement), such évidence |

* would. not change the result in view of the clearly estab-

= lished circumstances ‘in the present record that the con-

duct of Plastic in this respect. was repeated arid cofi- . :

tinuing in nature so that the settlement agreement and .

.. any provisions of the consent judgment apfilied only to”

damages and wrongs sustained by. Butterfield from such = °° 3

_.. Supposed. activity or from. such broad royalty base pro-

visions as may. have occurred prior to the entry of the

3 consent judgment and prior to the exchange of mutual

_ releases under. the settlement agreement. Ri

@ In the case of continuing or repeated + wrongs

* or. torts” of the type involved under the Plastic license oe

: agreement. or Plastic’s acts thereunder, neither the set-

' tlement agreement nor. the consent judgment affected .

"anything except Butterfield’s claims because of wrongs

in this ared committed prior to the time of the settle-

| “ment. Both the stipulation of facts and the consent — :

3 judgmen bearing the approval of the parties expressly

set. forth’ that the parties had waived any rights for in-

junctive relief and that no injunction of any kind was

‘sought or obtained. No provisiori of the settlement agres-

ment or the consent judgment or filed stipulation at-

"tempted to validate, for the future, any of the acts wr

. Tights of the parties as they might have existed prior’ to

the settlement except for ‘the clearly stipulated provi-

sions that both the Tuohy Patent and the Butterfield

Patent should be recognized as valid, for, purposes: of the

. future relations of the parties, and that nothing in the :

settlement shguld prevent one party from soliciting the ©

“oO

Findings of Fact fies cil

het licensees “op suing the other's licensees for ine

fringement. Except for these latter there’ is\

nothirig in any of the settlement documen em \

~ sent judgment which operated prospectively on any of

meerrar alas iourig ny or a

as it might have theretofore existed. The Court thege-

oe .fore finds that there was no intent in either the con-

sent judgment or any of - the settlement documents tp

release, bar or approve, for future purposes, after £hi

date of the settlement, either Plastic’s conduct An

‘serting and enforcing a broad royalty base .

royalty base if properly provides for in the Plastic li-

cense agreements. — , Ee

(j) The foregoing reasoning and facts apply.

equally even though the current Plastic license agree-

ment, properly interpreted, provides fot toyalties’ on_

- unpatented and non-Tuohy lenses. It was not.intended

by the parties to the settlement of the former action or |

. by the consent judgment to validate: prospectively the

; broad’ contractual royalty base contended for by Plas- |

tic since the settlement of the former action: :

_ (k) The broad _Toyalty base contended for by

Plastic under its current license agreement, in any event, .

whether this’ rests on a misinterpretation or misappli-

cation of the agreement by Plastic or by the correct

application of contract terms, as applied to the facts in:

this case, is violative of the anti-trust laws, is an invalid

“restraint on trade and constitutes unfair competition.

The detailed reasons for these ultimate findings will be

later set forth and are, in the interests of brevity, here

a broad —

on.

Findings of Fact

incorporated by refengnce. Under oe scttiément agree-

ment of the parties and the consent judgment, viewing |

it as a contract or a series of. contracts, the parties were

_ legally. incapable of giving their” approval to.the execu- .

_ tory portion of an illegal-cont®act or illegal acts to:be |

committed by Plastic thereafter, and the consent Judg-

- ment, properly construed, contains no adjudication what-

soever, including the order. for ‘dismissal of Butterfield’s

: counterclaim in. the former action, placing judicial ap-

proval. on suck an illegal contract or conduct. |

” ()EThe wrongs of which - Butterfield presently.

complains in his contentions. are not the same as Plas- _

tic’s conduct in. the forry of its enforced or contractually

. provided broad royalty base because this base thas been

' combined with other. wrongs all occurring since ‘the time

OF ‘the former setthment, thus Biving rise ‘to an entirely

- new tort or series of. torts, . SO. that ‘the presently con- :

tended for wrongs ‘ere in, no manner ‘the saine- as. the

4g “tort of the broad royalty” base -which Plastic. contends .

gas Was barred- by the former settlement. As previously set’

_ forth, Plastic’ s application of its broad royalty base has

not only been continuous subsequent to. the time 6f the

‘ settlement, but also it has, been combin with the

i claimed. improper. use - of offers of ind

; ‘infringement of the Butterfield Patent, made: by Plastic’ - .

sto its. licensees, | a course of - ‘instituted and threatened ”

_ ‘coercive litigation and misrepresentations to” the. trade,

alt designed, . in combination with the ‘royalty base, do

nity against

age Butterfield. in the. furtherance. of his _licensi

o--

‘under his own competing patent. The specific :

c situation igveiving the broad royalty base asserted oy

_ er

t.5

hey

qg.

7 Firidings of. Fact, ares 61a ‘

Plastic. ‘elnes thereon, be consitlered out of context -

with ‘the: other claimed illegal activities now contended _

for by “Butterfield. If the’ combination of all of those

: elements . gives rise to‘ oa new tort it is. obviously. not

the same ‘as ‘that which Plastic contends might have

_. been before the Court ‘at the time of the last settle-

7 & ment. Therefore, consideration of this element as a-basis »

. .for a possible new tort or series: of torts committed — ;

against Butterfield by Fiastic is not barred or fore-

closed either by the settlement agreement ‘ ‘Or the con-

sent.judgment. Fi ae ae |

oo 98. Corneal. ‘contact. ciew saeidbsbiiocins im the United .

oe . States, including Plastic licensees, in addition to manu-

- facturing and selling complete and finished corneal con-

‘tact lenses, also partially: fabricate and sell to lens fit-

ters “and dispensers" unpatented pieces of lens ma- —

terial known in the trade as “unfinished”. and “uncut”

‘ “devices which the purchasing fitters and dispensers use |

- in, themselves, fabricating complete and finished corneal’

> coptact lenses.. These fitters and dispensers fabricate said |

devices ..into* finished cornpal eontact. lenses having any

, desired diameter and curvature relationship to the pa- —

v " tient’s cornea,’ whether it be in accordance with the

utterfield Patent, the-Tudhy Patent, or. any other Pet-

t, and such unpatented. pieces of lense material con-‘ |

itute-& substantial part of the commerce between the

several states of the United States. S

ey Deposition, Ex. 12, pp. 10°48; Butterfield

Tr. 278-80.

29. As previously set Yorth in Finding’ 27 (by; it was

Ga | _ Findings of Fact

- clearly. established in the dilhiete that siiee the settle-

ment of the former action between the parties Plastic

_ has consistently, in its dealings with cits own licensees,

who are prospective Butterfield. licensees, sought to re-

quire. them and did in faet require them to pay royal-

ties under their license agreement’ on non-Tuohy-type

lenses and on ,unpatented, unfinished and uncut lens ‘

devices. Plastie threatens to continue such practice.

.30. For the purpose of exacting unjustified royalties |

on unfinished and uncut lenses and on non-Tuohy lenses,

Plastic. has filed and maintained and is threatening to

file and maintain court actions against its licensees. In-

cluded in such court actions which are currently pend- 3

ing and being maintained are the following against its _

licensees who are also licersees .of Butterfield:

The Plastic Contact Lens Company, a corporay -

' tion, vs. Richard Hunt, ‘Marco Lens Co., a corpo- :

i “ration, et al, Civil Action No. 528,952 in Pt Supe-

rior. Court of the State of California in and for: the

’ .City and County of San Francisco, Ex. 60.

Wesley-J assen, Inc., a corperation, and the |

Plastic ° Contact Lens Company, a corporation, .

Plaintiffs, and Cross-Defendants, vs. Con-Cise Lens

Co., Defendant .and Cross-Complainant, .Civil Ac-

tion No. 528,422, in the Superior Court’ of the State

‘of California in and. for the City and Gounty of ..

San Penne, ix. 137-B. 3

31. At the time of the trial of the principal case Plas-

ic. had ‘acquired a total of approximately. 160 to 165 li-

censees, and of these, at the time of-trial, approximately

135 represented apparently valid, active, outstanding li-

e o

Findings of Fact i el

cense agreements, not represented by onictlintiiint! or.

terminations because the licensee had gone out of busi-

“ness or because of similar reasons. Practically all of the :

7 present Plastic license agreements are the safne or sub- :

. Stantially the same as Form 8 of Ex. 46, previously re- .,

_ ferred to, containing a royalty base which Plastic claims |

covers all devices, whether or not Tuohy devices. .

| Pre-Trial Order, Admitted Fact 6, R. p. 46; Pre-

. Trial Order, Admitted Fact. 7, R. p. 46; _List of

Plastic’s : active licensees with date they signed -

license agreement, Ex.. 109; List of sersce rn can-

cejlations, Ex. 123.

~-32.. Plastic has consistently been mle eathicinints

of royalties on this basis from its. licensees in substan-

‘tial amounts, as evidenced by Ex. 1¥1, containing a

breakdown of the Plastic royalty re epiues by periods.

_ This. Exhibit shows that Plastic, ‘subsequent to April,

1962, has collected at least $459,314. 00 in royalties from’

|. its licensees calculated on. thi basis. There is no direct

_, evidence in the record from a determination can

be made: as to the approximate ount of these royal-

‘ties ‘which’ were calculated on pure ‘Tuohy-type lenses

from royalties on. _

unpatented, wafinished, uficut jor iodigi en ay lenses.

Ex. 7. 6 .

and the amounts which were

33. There are rnore thiéi 300 manfsctiers of plae-

tic contact lenses in the United States. —— eae

Pre-Trial Order,. Admitted Fact 6,’ R p. 46; -Par-

. tial list of names of contact lens manufacturers 3

in the United — Ex.. 132.

Q z

Ga : 5 Findings of Fact Lae ae

34. At the time of trial Butterfield held approxi-

oe mately 35° licenses from manufacturers and of these

about 20 held licenses under both patents.

Pre-Trial Order, Admitted Fact 6, R. 'p. 46.

ae 35. Of the total number of Butterfield licensees, 12.

were in existence at the time of the settlement of the

former action, he had acquired 12 additional licensees up -

to the time Plastic sent out to the trade its form let-

. ter offering special indemnity against: claims for in-

fringement’ of the Butterfield Patent (Letter, Ex. 54;

form of- indemnity agreement with list of signers, Ex.

_75), and 10 licensees since the time of this offer of in-

_demnity on December 10, 1962. The last’ licensee. ob-

tained by Butterfield, despite solicitation efforts by him, ©

was under date of August 15,1963, and the.last group

of licensees acquired by- him were small in volume and

- did not substantially affect his royalty revenues. =

Butterfield, Tr. 165-6; List of Butterfield licensees

showing dates he first obtained license agree-

ment, Ex. 73; List of Butterfield licensees. who. -

have ceased paying royalties, Ex. 74; Graph

and schedule showing receipts by Butterfield

. from license, agreement; Ex. 118 /

; 36. The Plastic Contact Lens Cimpany heat its prin-

cipal office and manufacturing establishment in Chicago,

- Illinois, has. 24 branches throughout the United States,

_ and competes with its own licensees in the figld of man-

fe) ufacturing and sale of contact. lenses’ as well as. with

other unlicensed manufacturers: in this same field of

activity.

: Deposition of Wesley, Ex. y, pp. 12- 13, 16- 18.

ar. Pee

Findings of Fact ey

aie The canniieitnin and sale of contact lenses is

highly competitive and the evidence shows that the con-

stant trend since April, 1962, in the prices charged by .

manufacturers is downward so that the prevailing prices _

are approximately $3.00 per uricut lenis and $3. 75 per

_ finished lens.. - -

Butterfield, Tr. 276; 2 281- 2; Diners! Tr. 207; Con-

logue, Tr. 310-313; Exs. 80-A, 80-B; Price lists

covering manufacturers’ Prices on lenses. Ex:

124.

38, The prevailing ficenee rate per lens under the

Plastic licensing system is 50 -cents per lens or per un-

_ patented piece of lense material, and the prevailing But-

terfield rate is slightly less than this amount.

See current Plastic license agreements, Form’8, Ex.

° 46; See forms of Butterfield license agreements,

Ex. 117, some of which contain unitary royalty

provisions at 50¢ per lens, and “paid- -up” roy-

alty at a flat monthly rate calculated as de-

_ scribed by Butterfield ok isha as 3714¢ per

lens. ° -

39. The ordinary iohcaatactiner with the low “wales

- price of: his lenses, whether Tuohy or Butterfield or some :

other type, .cannot afford’ to pay double royalties

‘amounting to $1.00. a lens or slightly less than that

figure, without serious economic stress. This stress: be-

comes much greater when royalties in similar amounts

are exacted by Plastic from its licensees on unpatented,

unfinished and uncut ienses which they may handle and

which will not be made ‘into Tuohy-type finished lenses

but which will: be completed in accordance with the

teachings of the Butterfield Patent. ites

‘ iz

Ge .

a Findings of Fact

> 40. “‘The,commerce in, the manufacture and sole of

contact lenses and the competing licensing systems of

‘the parties to this case is interstate in-character and i in-

terstate commerce is directly and ee affected

by it. . .

Butterfield, Tr. 365.

41. That licensees of. Plastic, comprising a ‘cilenen

tial part of Butterfield’s potential market for his license

agreements, objected to and could not afford to pay

double royalties on either finished or unpatented unfin-

ished lenses, including lenses of the Butterfield type, was _

Clearly established by numerous items of correspondence —

in the record and by the testimony of witnesses. What

' is even more significant is that: this. ‘evidence, all of

which was offered by Butterfield, was in no manner con-

troverted or challenged by any evidence offered by

‘Plastic.

Butterfield, Tr. 185, 188, 190, 269, 351; Conlogue,

- Tre 310-312; Dippery, Tr. 207; See the follow-

ing correspondence between Plastic and its li-

" censees and Butterfield and ‘his licensees or po-

tential licensees; Corresp.—Acon Laboratories,

Exs. 81A-B, 23a, b; Conlogue (Procon), 80A-B;

Tanco, Ex. 88-B, Ex. 30; Bell Optical, Denver,

Ex. 91B, Ex. 29; Spokane Optical; Ex. 17A, B,.

'C; Dr. Robett Shumate, Ex. 18A, B. 3

42. At.the time of the settlement and. ‘evhnination of

_the--prior, litigation, and by correspondence immediately —

thereafter with Plastic’s attorneys, Butterfield and his

attorneys attempted to have Plastic join with Butter- ©

a er a te . . F .

GST ee

Finding ot Pact eB:

fick tn giibicing “to “the ‘teats: w:jolae peice do-

| scribing the terms and conditions of the said settle-

ment and termination, which attempts were rejected by :

Plastic and its attomeys. In this’ correspondence,’ the

attorneys for Butterfield and Plastic agreed that the

Consent Judgment and. the Stipulation of Facts and

‘Matters on file with the Court should be made known

‘to the trade, but that the terms and conditions of the

_ Settlement Agreement, which was not filed, should not

‘be made known to the trade. In the conduct of his li-

censing program since said settlement, Butterfield and

- his attorneys have conformed to said agreement .and “

did not make the Settlement Agréement known to the

trade. until after Plastic had done so in the Fall of 1962.

Deposition. of Wesley, pp. 50-54, Ex. 12; Mason, ~

Tr. 503-4; Correspondence between Mason and

- Van Sciver from May 16 to May 25, 1962,

“inclusive, Ex. 47-52, inclusive.

43. During the. period’ from April, 1962, up until De-

cember 10, 1962, when Plastic made its widespread of-

fer of indemnity to its licensees against claims for in-

fringement under the Butterfield Patent, Butterfield was

, actively out in the field soliciting license agreements

from both Plastic licensees and: others. During this pe-

riod he made significant, though not outstanding prog-

ress, and, as stated previously, obtained approximately

12 new licensees. During this time he repeatedly met :

with statements and communications from manufactur-

ers interviewed that they were making a Butterfield-—

type lens with the qualities. and characteristics previ-

— stare in the metew but that sian would

. ®.

eran aa prema ener a

= MAR IN Phin es Sig ne lites 2s

e *

68a Bath. Findings of Fect = mS

not a could not pay double royalties on Butterfield

‘lenses. In many instances Butterfield failed to obtain —

In most ‘instances Butterfield or others on his behalf -

- either viewed the lenses in question or obtained samples

tod satisfy themselves that a prospective licensee was

~ actually making or. handling Butterfield- -type lenses.

Butterfield, Tr. 171, 173, 183, 185, 186, 188, 190,

192, 264, 269 344, 345, 351; Dippery, Tr. 205,

208, 234, 222, 235, 237; Conlogue, Tr: 310, 315,

320; See also Exhibits: Dippery Report of Oct.

11, 1963, Ex. 84A; Vision Clear Correspond-~

ence, Ex.. 41-41E; Northwest Northern Deal-

_ ings, Ex. 83-83R; Rich-Tint Dealings, Ex. 87A- —

C. (f % . ’ , :

"44. During this same period, substantial numbers of

prospective licensees of Butterfield were: making the But- .

_ terfield-type of lens and there was a substantial demand |

in the manufacturing and fitting trade for a Butterfield-

type lens. Several manufacturers were called by: Butter-

field who testified to the substantial use of Butterfield

lenses in their own operations and described the type of

lens they deemed to comply with the teachings of the

Butterfield. Patent. No contrary witnesses or evidence

‘were offered by Plastic.

_Conlogue, Tr. 315, 320; ead Tr. 208; Satter- -

~ lee, Tr. 462-3; Butterfield, Tr. 171, 173, 185,

_ 264-6, 351, 391- 2,

- It is clear from the | sanie. portions of the record -

"that large numbers of manufacturers who held Plastic

licenses under the ees Patent and who were“paying

Findings of Fact. te ae

on the basis of Plastic’s claimed becind soyaly- tis ad- *

mitted that they were making a Butterfield-type lens’ -

but declined to deal with, Butterfield, nevertheless.

“46. On October 25, 1962, Plastic sent out.to all of its

licensees a form letter (Ex. 53): purporting to explain

the settlement it had made with Butterfield i in the pre-

ceding April, after a lapse of some six months during

| which it had been attempting to keep its licensees in liné

on its broad ‘royalty base. After referring to the settle-

ment; and without describing it, this letter in ‘substance

cane -(@) That “Plastic had “recently iinet its + pane |

. litigation with Butterfield. In ‘fact this settlement had

‘been made more than six months before in April of 1962. X.

(b) A ecttiinnienk was reached. with Butterfield to A

avoid further expenses of iteyation and ekpomete to the —

risks of litigation.

“from all claims alleging infringement of the Butterfield =

- Patent.” €.%:

No statement was sseiie that Butterfield - ‘or

Butterfield & Son’ were similarly released, no statement

was made that Solex had been found guilty of infring-

_. ing the Butterfield: Patent and that Plastic had. agreed

to pay Butterfield for this infringement. Furthermore, —

> Plastic failed to state that it already held a Butterfield

license which protected it from infringement 4 so

that a’ release was unnecessary.

(d) That as consideration for Plastic’s release by

mi "Findings of Fact

Butterfield, Plastic had given the right to Butterfield to

grant to Butterfield & Son: and to four other Butterfield

licensées licenses under the Tuohy Patent.

.(e) That these Butterfield licensees, Titmus, Rog-. -

: ers, Southern Contact Lens and Utah Optical, were thus

included in the settlement firrangement “because the

-. Butterfield interests had indemnified thém against lia-

‘’ bility arising from their infringement of the Tuohy Pat-

ent.”’ fe | th ig

Ex. 117, Butterfield, Tr. 433-5.

(f) There i is a failure to point out that i eee

determined in the settlement to have infringed the But-

terfield Patent. No ‘explanation ‘is made in the letter

that both parties recognized the validity of the other’s

_ patent, that Plastic already ‘held a Butterfield license Bs

_ agreement, and that each party recognized the right of

the other to solicit one another’s licensees and bring in-

; fringement actions against them. To a trade, then un-.

der active -sglicitation. by Butterfield, the omissions of

- these material facts could not have resulted i in anything

except severe detriment to Butterfield in his solicitation _

{g) That the settlement with Butterfield did not-

constitute the granting of a license under the Tuohy

’ Patent “upon-terms and conditions more favorable” than

those provided i in the Plastic standard license agreement.

Plastic license agreement, Form 8, Ex. 46, p. 6.

The foregoing - form letter, by iis: endielon to

- state many material facts concerning the settlement, sent

~ pez

| Findings of Fact = a

out as it was some six months after the settlement, was

- obviously deceptive . and designed to cause Butterfield .

difficulties in ‘the promotion of his licensing program —

4 which, by. contract, specifically included permission ,to :

solicit Plastic licensees.

47. “in the period oulce 45 thn teens leiden al Ocoee

25, 1962, the correspondence files of Plastic with several

of its licensees and their counsel deal with the subject of |

whether or not the Butterfield settlement, by extending

Tuohy licenses to five Butterfield licensees, invoked the

operation of Plastic’s most favoted nation clause.

_ See the following items of correspondence: Muel- -

ler-Welt, Ex. 22a, b. c; Univis, Ex. 25a-e, 69;.

Precision Cosmet, Ex. 26a-d; Kontur Raion”

Ex. 27-27c; Contact Lens Guild, Ex. 32; Con-

: forma (Goldberg), Ex. 33-4. :

(a) While Plastic may ‘ane had some reason for

"sending out the letter of October 25, 1962, because of.

-- possible difficulties over thé most favored nation clause,

it had no right to misrepresent to the trade, mainly by

concealment and non-disclosure of relevant terms, sig-

nificant and compelling circumstances of the settlement.

It assumed the burden of explaining the ‘settlement and

hd ss ae eek Ce oe ee

: mental to Butterfield.

~(b)- Some correspondence between Plastic_and at

least one ‘Of its. licensees in the period prior to October

25, 1962,’ shows that Plastic. did disclose certain of the

terms of ‘the: ‘unfiled settlement’ agreement, ‘and the let-

ter of October 25, 1962, is a partial ce at wa)

(

of the terms of this unfiled settlement document.

Laat | Ee, 69 —letter of August 3, 1962, ‘Van Seiver to

are SM -Biehel. he. th

I . ‘ r é \ { ij | :

ey Butterfield did not ‘make public the terms. of

» the: unfiled settlement agreement until’ after ‘said terms

Lo ag ae & Findings of Pact ee

‘

were made public by Plastic, ‘and both, Mason and But» : vic

a at is non. sions in April, 4962, there was. an andéretathag that. |

A Rf See ea Sciver); Butterfield, Ras 445; Mason, 3 a

nea | come Xe o @ That the letter“of October 25, 1962, purported. *.

oe |e pia: - to be'a fault and fair explanation of the circumistances

y * - field Patent, it stated, that, ‘under date of October 25,

eee. H: Butterfield, Sr, and his company.” "

1 lia Pup

: . 48. On ‘December. 10, 1962, Plastic sent hae? to its

: % “eines: ‘the: previously mentioned’ circular’ letter ‘ (Ex.

T= terfield-Patentt. The form of indemnity: agreement (Ex.

he : were sent: to all Plastic licensees and, ‘as. of the. date of

:| y, trial, oe pea musa such licensees st accepted. the

- = Pe : ROMER - es Par

SS |: eee and facts ‘of the Butterfield: settlement is Clear. In a

SOW SS ° opening paragraph of Plastic’s circular letter of Decem-~ *

a | are ee hee 10, 1962 Mae 54) to its own ‘licensees offering them :

ene sair ‘claims for infringement of the Butter- |

54) offering indemnity against infringernent of the But-

" 1962,” At wrote to its: licensees: “advising them of the —

2 7 vs ee , the. unfiled provisions of the settlement agreement should ‘

ae | Stee ie “i be made pabli, poe lea opie

2 ae Ex. 47, 49 (Correspondence -- _ Mason ‘and Ven

., Company recently settled ‘its “patent “Titigation with” oe

-. 75) was. ehciosed.. These“ letters and indemnity forms -

| Findings of Fact. as 7 oe

oftse not: executed the indemnity form. A’ few of those

_ who .signed included Butterfield licensees, and the offer

of indemnity was obviously made, to. any pre

licensee who also’ held a Plastic’ license.

- Pre-Trial Order, Admitted Fact 10, R. p- “47; lias

‘ter offering indemnity, Ex. 54; Indemnity ..-

as _agreement with list. of signers, Ex. 75;.Plastic’s

+ . answers to Interrogatories Nos. 1, 2, 3, 4,6 and.

; 10: to’ Plaintiff's Second Interrogatories, Ex. 6.

“49. Since the offer of indemnity by Plastic, Butter- ee

' field has obtained only 10 additional licensees, all small °..

in- number, the last being obtained August 19%} 1963. Dur-

_ing this time, Butterfield continued his efforts. ..- +

' Butterfield,’ Tr. 165-6; List of Butterfield Licerise

Ex..84A; Statement of- Butterfield roy-

“ : since this date, Ex. 118.

‘ : 50. ‘At or about. this PRN time Plastic entered pe

ae Pp of litigation against. certain of its non-paying Bae

“heme who had. either had dealings with Butterfield "

over alicenge agreement or had obtained .a Butterfield :

: _ license: agreement, ‘designed to coerce and restrain not

only the’ ‘sued Plastic licensees ‘but other Plastic licensees

-from dealing with Butterfield, under the threat of litiga-

“tion which would involve not only the amount of unpaid

*) royalties but. conspiracy “damages for*alléged. activi-

ties in dealing with Butterfield to -damage. and injure

the Plastic ‘licensing system. These .actions included an.

Action. against Security Contact Lens of Los Angeles in ne ee

the California ‘state court oayeee Ex. 58), an ac-.

\ 7 POD Ss =

o} .

_ . *

Tet; and dates; Ex. 73; Dippery, Tr.-207,:

2 0;

_alty revenues, showing no_ substantial increase

oh?

Ma - ilidicceiten .

~ tion re a Midwest Scientific Co. of Chicago, in the

Illinois state court (see conspiracy charges in supple-

mental co laint ‘and second supplemental complaint,

Ex. 61 and 62), an action against Mueller-Welt (Ex. _

100),. and an action against Con-Cise Lens Co. of San |

| Francisco, i in the California state. court at San-Francisco

against Marco and Hunt, both being licensees of Plastic

and of ‘Butterfield, also naming Mason, Butterfield and

Butterfield & Son as defendants (Ex. 60). In all but one

of these actions a count or allegations appear charging

that the defaulting Plastic licensee has conspired swith

Butterfield and. his attorneys to damage the Plastic li-

censing system, and recovery is asked not only for de- — . ;

faulted royalty ‘payments but for substantial sums as

conspiracy damages. In the Mueller-Welt case, conspir-

acy is charged, but the conspirators are not named.

Ex. 137b. | | |

51.. The litigation cia described was wholly

groundless and, in view of its coordination with the

- other activities of Plastic in these Findings described,

was brought for the wrongfill purpose and effect of

” inducing persons in the tfade not €o deal with Butter-

~ field. CR see cies abe ;

(a) The litigation against Security Contact Lens __

Company in Los Angeles was finally terminated by set-

3 tlement with a dismissal of the action at law and coun-

terclaim by agreement of the parties with prejudice and

‘without, costs (Ex.. 119). Despite the allegations of de-

fendant’s counterclaim, in the instant case, concerning

' ot rT: and epeisibact By. ese .

Findings oe Fact ‘ Ba _

a and his attorneys, there was" no evidence ‘whatsoever

se of any connection between Butterfield of ‘any of his

| attorneys with Plastic’s licensee, Security ‘Contact Lens, |

and the | only evidence on this subject was from Mason

~ and Butterfield who completely negatived any dealings.

upon which such charges might have been based.

| Mason, Tr. 490; Butterfield, Tr. 189-90. i

- (hk) The Mactler-Weit conspiracy charges were. :

‘Mason, Tr. 497-8; 556; Butterfield, Te 190-1.

‘Company in Chicago, the only evidence is that. of But-

_ terfield and Mason, and both of tHese witnesses estab-

lished that no improper | relations of the type claimed by: .

Plastic. took place. This action was against a- non-li-

censeé of Plastic when Plastic’s supplemental complaint

~ charging conspiracy was filed and involved an issue as

to the validity of the Tuohy Patent. Butterfield had no

dealings with Midwest Scientific Company. except to

obtain ‘a license agreement, while the litigation was

pending. Mason was Tetained by Midwest as its patent -

attorney -in the Midwest case and first aries in the *

case in July, 1962. si &

- Butterfield, Tr. 176-7, 354, 363; ‘idea Tr. 486;

- Notice of Mason’s formal. eeeemne case eS "as

& 139)..

- (i) Masco’ s relationship v was Solely with ‘Mid-

wont; tly ak sun ttracaey WG: ees ales aaa |

toward issues of Dasee and iatrinapimneet of E the Tooke,

ae ae

16a. er. Findings of Fact”

| Patent, and his bills were rendered - to and paid by ,

Midwest. Butterfield had no part in their payment and

, Played'no part in, the. employment of Mason. SS

Mason, ° Tr. 488-9; Butterfield, Tr. 176-7, 354-6.

_ i) Mr. Patrick Ford, fo an office employee

* in the Portland office representing Butterfield, Pender-

* grass, ‘Spackman, Bullivant & Wright, played:a limited

part in this case by arranging depositions for and at

. the request of Mason, in the northwest, of individuals

possibly saving knowledge as to some of the prior art

in the- contact lens field, which ‘might have a bearing’

on. the validity and scope of the Tuohy Patetit. Neither

‘this ‘Taw office nor Mr. Ford - played any other part

' in. this litigation, Butterfield had no connection with

directly by Mason who, in turn, was paid by Midwest.

_' Mason, Tr. 488-9; Butterfield, Tr. 363-4; File of .

correspondence. involving . attorney Ford’s’ ac- ,

tivities, Ex. 97 through 97a to 97-1, inclusive; -

Paid statement of Pendergrass, Spackman, ~

Bullivant & Wright, August 31, 1962, Solex

ate, Midwest, Ex. 134. ,

- ii) Plastic intteodiced’ no hein tine

. of any improper connection or dealings concerning this

* + jitigation. This litigation terminated in a settlement

made after -Mason’s withdraw: Bo dren t= segs :

s _ Mason, Tr. 488; Ex. 120 for settlement agreement.

: ‘(ay The. evidence concerning the litigation be- f

ie tween Con-Cise and Plastic is equally lacking in any

oe plausible basis for any charges of improper cooperation

a eee Findings of Fact a

_ = conspiracy beliicen i Butterfield dnd his pihoeticiis on

the one- hand and Con-Cise, a Plastic Sees on the

) “other. ihe eases

J y : ‘

oe ae Mason was cetsieed in this case at thd re-

, quest of Mr. Tiret; an executive, of Con-Cise, « on or

shortly prior to September. 27, 1962. ;

a Formal notice of association of Mason as attorney ae

in case, September 27, 1962, Ex. 138; Tatty

te 426-7; _—" Tr. 491- 2. A. ree

ie AL ie ]

“@. In the cleidione in phe case, Sian. as as-

sociate counsel, filed pleadings challenging the validity

_ of the broad Plastic royalty base. :

7 Eenting? in Plastic. v. Con-Cise Ex. 137 b. ee

* (iii) Tiret’s eompany, Con-Cise, had a royalty .

agreement with Plastic which went into default before ai

the. settlement agreenient of April, 1962, and Tiret’s —

company entered into a license agréement: with Butter- °

field subsequent to the settlement. Mason, Butterfield

and Tiret all testified fully concerning the circumstances ~

‘of this relatidnship and there is no evidence whatsoever

- Of any improper dealings by: Penertind or his attorneys -

- concerning the defaults by Con=Cise in their Plastic: li-

cense agreement or of any activity dgrigned. ~ se ie

_ the ‘Plastic licensing system. ae. X et

Pees! Mason, Tr. 493; Butterfield, co 363: "Tiset, Tr.

425, 427; Tiret. Deposition, Ex. 146 (in: Plas-.

. tic V. Hunt, et al), p. 9, line 20,.to p. 11, line

13; See also deposition of Marlin ‘D. ‘Parker,

@ Ex. 103, formerly an exteutive ‘of Con-Cise -

Setitia” the Sane ok Sa a Ee

<i - Findinge.ot Fact :

: and Butterfield, showing clearly the absence

of any foundation for “charges of conspiracy

or improper dealing; p. 23, line 18, to p. 24,

's' 9. line 21, p. 43, lines 11 to 19; P. 44, line 10, to

— ~p. 4, line 4.

(iv) There is correspondence indicating that .

someone in the trade felt that there should -be trade |

: contributions toward litigation costs in the Con-Cise lit-

igation, but there is. no evidence whatsoever of any trade

contribution to Mason’ s fees, and Mason testified that

he did not authosize such efforts (but Parker’s deposi-

tion states that Mason said that “it would be okay to

. write such a letter”), and that he had received only

$600.00 in fees from .Con-Cise, all paid . €Con-Cise

See part of Ex. 103, lett Parker to Hunt, Tr.

° + §19; See part of Ex. , letters, Tabin to Bre-

ger, January 3, 1963, Breger to Goldberg,

. January 9, 1963; Mason, Tr.. 493, 517-37, 555-

6; Tiret Deposition, Ex. 146, p. 11, lines 4-13;

' p. 16, line 19 to p. 18, line 22; Parker Deposi- —

tion, Ex. 103, p. 35,-line 7 to p. 41, line 21; p.

45, line 5 to p. 46, line 2; P. 48, lines .8-10.

(e) The Plastic licensees ‘iecieedl in the San

Francisco litigation by Plastic in which Butterfield, Ma-

son, and Butterfield & Son were also named as defend-

ants- were Hunt and Marco. er ee ee Oe

licensees of Butterfield.

‘Pleadings in Plastic v. Hunt, Ex. 60; File of But-

: ‘ terfield licensees, Ex. 73; Butterfield, Tr. 356;

Boyle, an executive of Merco, called as witness, .

Findings of Fact. = 798

Tr,, 244; Boyle deposition, p. 15, lines 16-25;

-p. 40, lines 6-21; and Ex. 10la to 101w, in-

clusive, the: exhibits. being a part of the Boyle’

deposition; Hunt: deposition; p. 12, ae 1-9; Pp.

5, lines d6- 19, Ex. 149.

(i) Butterfield had no dealings with Hunt what-

under the Butterfield Patent and subsequently had to.

sue Hunt-under the license agreement for unpaid royal-"

ties. This action by Butterfield . against Hunt was filed

Bi) some. time ago and is still pending. ser

| Butterfield, Tr. 357; Pleadings in Buttertield ve

' Hunt, Ex. 137a; Hunt Deposition, Ex. 149, p.

‘ 16, lines 12-15; a ” ay oe to p. 45, line 4;

p. 61, lines 8-18. - :

Gi) As to the dedetdent ‘Heaetn in this case,

: both Boyle and Butterfield testified to no dealings what-

soever except for the taking of an oral license from But-

* terfield by’ Marco.

Butterfield, Tr. 359-61; Boyle, Tr. 244-6, 249-50;

Boyle . Deposition, ‘Ex. 101, p..22,. lines 23-26;

p. 44, lines 18-22; p. 46,: lines 2-23; p. 47,

lines 10-13; p. 61, line 14, to p. 62, line ,

. (iii) Concerning both Hebnaits ‘Hunt -and Mar-

co, Mason testified that he had had no relations with ~

_ either of them whatsoever, and neither Hunt. nor Boyle, .°

-or Marco, gave any evidence concerning any improper

relations or activities by Mason, or any improper deal-

ings with Plastic licensees. _

| Mason, Tr. 500-2, 506: Mason Hecdiun. p23; -

line 8, to p. 24, line 25, Ex. 102; Boyle, Tr.

80a =——:—=«;s~CséCF idling of acct

., .2-25, p. 50, line 24, to p. 51, line 22; Ex: 101;

-» Hunt Deposition, -p. 43, line 18, » Pp 44, line.

| 14, Ex. Ms

(iv) In this litigation against Hunt and Marco, _

_ commenced in January, 1963, the case as against Mason —

was, dismissed voluntarily by Plastic in November, 1963,

only after Plastic through its attorneys had taken’ Ma- —

. son’s adverse party deposition. ~° pe

eee

_ Mason Deposition, Ex: 102; ‘Mason,. Te. 358.

(v) The depositions of Tiret, Parker, Hunt and

ee Boyle, previously above described, were all taken by .

Plastic’s counsel i in the San Francisco litigation of Plas-

None of these depositions demonstrates any basis what-

soever for the litigation or the charges made. Mason, in :

- this same litigation, filed a motion for summary judg-

- ment, because of jack.of support for the case, and this

was resisted by an affidavit of Plastic’s. San Francisco

counsel, Mr. Hoppe | (Ex. 59), clearly showing the lack

of any information or evidence upon which to base the ?

charges made. In essence, many of the charges i in Plas- .

tic’s. counterclaim in this. principal case are . centered

. around charges of improper activities. by Butterfield

and his attorneys in aa acc with Plastic licensees ~

or their attorneys. | Jae

52. The lack of any adequate foundation for Plas- ;

tic’s claims which are in effect the same as the chatges

made in the litigation above described is further dem-

onstrated in Plastic’s answers to Plaintiff's Third In- .

Findings ot Fact === Bla

terrogatories, dealing with Plastic’s counterclaim herein

(Ex. 7). In these interrogatories, Butterfield’s counsel

were attempting to:compel Plastic to set forth the basis

_for such charges and, except for the areas, previously .

described, the regions of possible improper contact set .

forth by Plastic in their answers to these interrogatories ~

appear in the answers to Questions Nos. 3 and 22.

_ * (a) These show that there is litigation : between *

Plastic and W:R.S? Contact Lens’ Laboratories. Corre- |

spondence between Bullivant, one of Butterfield’s at-.

‘torneys Ex. 86 to 86b inclusive, occurred in October,

1963. This occurred after the present, action was filed,

in an effort by Butterfield’s attorneys to ascertain wheth-

er or. not Plastic was charging in its litigation. with

_ -W.R.S. that Butterfield conspired. with W.R S. to dam-

_ , age Plastic. Similarly; there was some correspondence

between Mason and Bader, the attorney for W.R.S., all _

occurring between October,. 1963,.and February,: 1964

: (Ex. 144), looking toward a possible meeting. between

Bader and Mason which never took place. All of this

occurred long ‘after Plastic had sued Mason ° for con- |

_ Spiracy in January, 1963, and ‘after the: Butterfield case

- against Plastic was filed in Portland in Federal Court

in July, 1963. In view of the contentions made by But-

terfield in his pleadings in this case that the charges |

hurled by Plastic against Mason and Butterfield were

‘groundless, the Court’ finds nothing wrong in the efforts

of Butterfield’s attorneys to contact other attorneys .

- litigating with Plastic to determine the nature of the

pleadings and proceedings involved. : «

82a es Findings of Fact

- (b) Defendant's answers to the istiaenanienten ’

above described: infer some improper’ dealings between

oe , Butterfield’s attorneys and Dr. Noel Genevay, of New

Ne Orleans. The evidence shows that’ the dealings of Bul-

livant, attorney for Butterfield, all took place in New

- Orleans in a personal meeting between Bullivant and,

--Genevay’s attorneys in January, 1963, ‘held for the pur-

pose of discussing a possible license between Butterfield

- and Genevay.

: rmraremenen Ex. 96 to 96d, inclusive; Butter-

pe ae ni Court finds that the correspondence is-

sued by Mr. Breger or by his counsel (attachments to

Ex. 59, letter, January 3, 1963, Tabin to Breger, letter

January 9, 1963, Breger to Goldberg) pertaining only

to Mr. Mason, shows nothing whatsoever improper on

_ Mason’s part and that Mason did not have any knowl- ~

edge of any effort by Dreger or his group -to solicit , o

for counsel fees.

Mason, Tr. 517- 37, 555-6.

| (d) While Ocular Products, Inc,, of New York is

|, mentioned in the answers to these interrogatories as a

_ possible source of improper contact, both Butterfield and

Mason have testified that there was no’ relati

"whatsoever in this area, and there is no evidence W

_soever supporting any. ‘charge of conspiracy involving

this Plastic licensee.

Butterfield, Tr. 345; Mason, Tr. 499.

«53. Since the time of the settlement agreement Plas-

Lid

a a

RNS

: Findings of Fact Sl Se ee

tic has improperly ‘asserted as. its policy in te trade

that the Butterfield Patent: is inoperative, highly re-

stricted in scope .and lacks utility. It has.also asserted.

an unduly wide scope for its Patent, including corre-

‘.. spondence claiming the Tuohy Patent to be of pioneer -

nature and stating its susceptibility to broad and liberal. :

construction.

Wesley Deposition: pp. 107-111, 112- 114, Ex. 12;

Opening statement of counsel in this case, Tr.

44-45; Ex: 95, attached letter of July 8, 1963,

“McClure to vane Clear.

+ PF ; f

54, It has further, i in corteapondente, venient

to a ‘material degree, the nature of the settlement _

' made with Butterfield. Van Sciver, its attorney, in writ-

ing to Biebel, attorney for Univis, a substantial Plas-

tic licensee, after: being advised by Biebel in his letter os

of July 27, 1962, that “Mr. Butterfield continues to

”

press his: ‘claim for infringement against ‘Univis.... ,

stated ‘in his reply letter of August 3, 1962, in :

referring to the settlement, “that Geo. H. Butterfield &

Son has acknowledged that the Tuohy Patent is good in

law and has been infringed by it.” Under the Settlement: —

documents, no party acknowledged any: ‘infringement of

patent except that Plastic. agreed that Solex had io

fringed the Butterfield Patent. -

‘See Ex: 69 for Biebel-Van Sciver letters.

55, The effectiveness of aie offers of indemnity .

by Plastic to its licensees, .in December, 1962, in pre- .

venting them from dealing with Butterfield for a license,

. despite their manufacture of Batteifield-€ype? lenses, is

\\Lone

oe "Findings of Pact | :

enacted eg tilseccinaes ‘alten Seetiond aol sone

-’ through sample lenses, of their aky

a type lenses. These were. the instances of Columbian Bi- :

focal, of Portland, Northwest-Northern and Paramount,

of Portland, and Rich-Tint, of. Vancouver, Washington.

3 .

- licenses, Who were sued by Butterfield: fer infringement ae

or threatened with suit after Butterfield . had proof,

of Butterfield-

,\(a). Butterfield had proof ‘that Rich-Tint and

: making Batterfield lenses, yet declined to take a sacanilte

Butterfield, Tr. 173, 182-3.

\b) Butterfield sued both Northwést:Northem a

Rich- Tint. in the Tynited States District ‘Court for the

District of Oregon before either of these conceins had —

ee actepted Plastic’s offer of indemnity for claims aqeerted 3

for ‘infringement of th¢ Sutterfield Patent. Each action |

was settled: after appearance by attorneys for each li-

censee by the entry of a consent’ Suderent and the tak-

ing of a Butterfield license.

- See Exs. 83a, 83p, as to Northwest-Norttier:; 87e,"

'. 87a, as to. Rich-Tint. c >

with respect to. Columbian Bifocal ‘ as against, whom the -

complaint was ‘prepared but never filed after meetings

‘between the attorneys for Butterfjeld and Columbian ~

Bifocal, In each of these three instances . the “evidence

shows that the attorneys for each licensee corresponded

‘ with the attorneys for Plastic, bitterly comp'aining of

;

“S

Findlinge of Pact tee ee 85a < ag

‘) >

Plastic’ s -\anvwilliagness to extend ‘indemnity egiina

: claims for infringement of the Butterfield Patent and —

the ‘conclusion i is inescapabl¢ that, if ahy of these Plas-

- tic licensees had previously, obtained an indemnity agree-

ment “from Plastic, they would not have settled with -

Butterfield by taking a Butterfield license, despite their

- manufacture ‘of Butterfield- -type lenses. +

Butterfield, ‘Tr. 174, as to Columbian Bifocal deal

lings; Correspondence « -concerning Colum - :

~ +. ‘Dbian Bifocal, Ex. 94 to-94h inclusive? and Ex. 2

” , 56 and Ex.\70; Pleadings and correspondence .

_.. °°" concerning Northwest-Northern and Pam- -

, mount, Ex. 83 to 83r, inclusive, and Ex. 39a to

39r, inclusive; ’ Pleadings and poqwewg

concerning Rich-Tint, Ex. 87 to 87b, facty

and Ex. 38 to 38b, inclusive. sf

aa, Plastic’ 's offer of indemnity by” its 5 ciecisae letter

a of December 10, 1962, withthe accompanying indem- ~

nity agreement, was wipngful,. done. with intent to im-- -

properly injure Butterfield in his licensing program and

_ was wrongfully used with the purpose’ and effect of pre-

venting Butterfield from ‘btaining additional. licensees.

(a): Prior to the actual offer of indemnity ‘to iG -

licensees, Plastic had been approached repeatedly by va- -

- rious of its licensees; ‘pointing | out variously that they “

had been solicited by Butterfield, that they could not or

- would not pay doublé royalties on Butterfield lenses, or

expressing concern on the part of several as to whether - ®

they were justified in continuing ‘0 deal with Plastic

3 and pay double royalties.

— et Ex. 15a-b; Contact Laie Co. of

oe Oa ; Say eo | ee

' eet : .

Se ee Findings of Fact

America, Ex 16, a, b; Univis, Ex. 25a-e; Pre-

- - cision Cosmet, Ex. 26a-d; Marvin Nelson, E%. —

"2, 82a-b; Erickson -Optical, Ex. ‘19a, b, c;. Ray-

_ Ex. 55; Spokane Eye Clinig, Ex. 92B;' Global

* Contact Lens, Ex. 13B, C;. Wisconsin Optical

Ex. 14a, b, c, d, e; Dist-O-Con, Ex.. 21a, b;

Ca]-Con, Ex. 24a, b, ¢ d, e; Tanco (Tannehill)

Ex. 88a, b, c, d, e £} Bostick Optical Ex. 28;

‘Conair ait Re . ieee

—(b) In its jetter of Décember 10, 1962 (Ex. 54),

Plastic after stating that it had advised its licensees in

- stances of the settlement, stated that “concern was ex- —

"pressed by a few of our licensees after this notification

_ that they might be exposed to liability under the Butter-

field, <Patent.” Obviously, Plastic. feared that many of its |

licensees ‘making Butterfield ‘lenses would not continue ,

:.) pay royalties on such lenses to Plastic aid would eh

tect themselves against infringement liability by taking

_a Butterficid license. The inference is clear that, i order _

to head off this revolt and continue to exact royalty and

fer of indemnity. “The offer could have been made only

- for the purpose of inviting its licensees to continue to

make But field lenses -without the payment of royal-

7 ‘Ges to Butterfield and to look to: Plastic for indemnity.

fails to condition. the offer of indemnity, to devices which

: are made in accordance with the teachings of the Tuohy

| Patent. This agreement provides in paragraph 2 that.

bm,

toll on Butterfield-type lenses, Plastic then made its. of- .

]

Plastic. will indemnify a licensee “against any ‘and all

claims for infringement under Butterfield U. S. Patent

oe Findlinge of Pact eet 8a

No. 2,544, 246 with respect to devices sold by; licensee —

during the ‘period beginning on the date hereof and ‘end-

4 ing at such time as this agreement shall be, terminated:”

The agreement in paragraph 1 expressly reaffirms the

e .

duty of the licensee “faithfully to"feport and pay royal-

ee ties to licensor in accordance with the provisions of par-

agraphs 2, 3, and 4 of said patent license . . .. upon ‘all

devices. as defined. in said patent license, that are sold

by: licensee during said term.” The agreement, | more-"

over, in ‘addition (a), “Paragraph 2 in ‘measuring the

amount of the indemnity, refers to an award of. dam-

° ages to be finally adjudged against the licensee, and pro. =

vides that Plastic will pay 85% of such award “on de-

vices sold by licensee during. ‘the term hereof . and on

which licensee shall have paid royaities to licensor as . .

__ provided in paragraph 1 hereo poe ites

Ex; 75: 3 ee ge

} ment removes’ all doubg that it was Plastic’s intent: not.

' only to indemnify agai t only claims arising under the

. Butterfield Patent but ‘to continue -the claim of a broad

| royalty base which it sought to enforce on rion-Tuohy —

. and HP st resa under its orignal Poe

—————

ited to devices minds under the teachings of the aes

Patent. Plastic’ s offer of indemnity in conjunction “with |

“The ‘quoted material. fect he ee

its existing claim of broad royalty base was a ‘clear in-

Vitation to all of its licensees to,continue to trespass on

. 88a % os 3 “Findings of Fect pp aioe Neat

ee Buttéifield’s rights under his’ Patent and | look solely to*

et Plastic for indemnity. f 3 :

(4) aE SE Ck PRE RD

oa * field Patent and because of the consent judgment and —

"settlement in which it again récognized the validity of |

the Butterfield Patent ‘and agreed that Butterfield might. —

*: solicit Plastic licensees, Plastic i is. estopped and preclud-

ed from carrying out such indemnity ‘agreements, for —

reasons more fully” hereafter stated in the Conclusions — .

- Of law. This estoppel, as the Court-hereafter determines, '

; is an estoppel to challenge that it has utility and a use-

ful scope as well as an estoppel to-aid and assist its ‘li-

be. censees in infringing the Butterfield Patent, because of

" its duty in good faith to carry out the terms of tlie set- a

tlement agreement. Additionally, the Court finds that

the use of these indemnity agreements is a breach by

and of the implied and- express terms ‘of the consent ,

judgment stipulation and settlement agreement.

i eae 57. Plastic’s application of its royalty base in. its li-

cense agreement to all types of corneal: lens devices,

whether Tuohy or not, and whether patentable or not,

wrongfully and illegally ‘restrained trade and violated the _

: +, antitrust laws to, the injury « and detriment of Butter-

ar A Sees

: (a) Wiis inh ealnanedl widnoaper tes tanta |

justifying any'claim by Plastic that convenience of ac:

counting is a proper excuse for such a broad royalty

basis. Plastic: called no licensees end.no one from its

‘a

: ; , aya

Th . Ade ~ he \« a

45 . b: a ee

. -

|. censee. ‘These agreements all

“<@)y “The broad royalty base enforced: 1 by Plastic,

‘* . whether: justified by | its license contract. or not, is an“

‘ illegal effort to extend the legitimate ‘monopoly of Plas-

tic under the Tuohy Patent to large quantities of non-.

for royalties under: ‘their own patents.

(ce) Séme contention ‘was made at. tis trial by

ye Plastic that~ Butterfield himself, in his Ticensif agree-.

ments, employed ‘a royalty base which was-

: own ‘administrative staff to sunt: to’ “any ‘ificutties |

: ‘which might csiet in this area a

a pure Butterfield-type: of*lens. Butterfield’s license ts

_- ‘agreements were all placed in evidence as Exhibit 117.

-. . The Court finds that. these ‘agreements do not oper

Plastic’s contentionis in this respect. .

(i) These’ license agreements of Butterfield. fall . ;

- into three categories: Four of them only, we. ‘Utah —

Optical, Mann Ins ent nt Company and Southern Con-

-- tact Lens, call.for-a payment of a royalty baied on five =

per cent of the gross sales of contact lenses by the’ li-

ed the settlement of

April; 1962, ‘and all of them, with the exception of Mann

Instrument Company, became Tuohy licensees, through 2

Butterfield, as’ a part, of the settlement. Therefore,

: whether or ‘not Tuohy lenses or Butterfield lenses were. *

. covered. in the royalty base becomes immaterial. net Eh :

"> @i) “The next class of Butterfield license agree-

shee is the so-called paid-up license form, and these

-. Tuohy devices and the ‘enforcement of this -provision .. oS

_ necessarily causes; Plastic licensees to refuse to deal with

_ Butterfield and others who may have cpsco a claims.

: /

ee - Fitdinge of Pact ae

ae a ek”

_ Exhibit. Butterfield testified, Tr. 284-6, as to-thie method

: _ type of license. He bases jt upon the'voluine’of the pros-

in-the previous. year. The monthly av- ..

oe : erage is ascertained and the monthly number of lenses je

ee "_—aitaltiplied by 3774 cents per Jens. This monthly rate is

ee - _ then applied for determining the total royalty: for the

Bee hs remainder of the ,life of the patent. The licenste pays

_. the thus-determined amount for the paid-up license and.

"that amount is paid in equal instalments, a |

— (iii). The third type of Butterfield license agrée-

oe ment is the so-called unitary type which rather clearly, -

under the forms in Ex. 117, calls for a royalty of 50-

. cents per lena’ ony lenses made, under the Butterfield

Patent. e oh ; = :

\ io. / (ia) Several of the royelty agreements of But-

: oo .” terfield. contain express provisions ‘that all unfinished

ne lenses shall be sold: by: the licensee with a notice on the

invoice that the lenses are to be finished only in ac- .

a ‘cordance with the Butterfield Patent. Moreover, the evi- - -

_ dence is undisputed that Butterfield used a rubber stamp

(ex. 115) ‘which. he provided to all of his licensees with —

instructions that they use the rubber stamp on their in-

voices, This rubber stamp contains instructions that the

- lenses involved are to be finished only in accordance

: with. the. Butterfield Patent. Butterfield, as the owner

- of the Butterfield Patent, had every’ legal right to au-

ie thorize his licensees to. in effect grant an ‘oral subli¢ense

to their buyers to. finish lenses in accordance with the

ided for in this

“Findings of Pact . | Me

Con-Cise, uses @ printed form on its invoice similar ‘to .

- the text of the rubber stamp. ve |

. , Butterfield,-Tr, 286-8; Butterfield, Tr. "288-9: Ex. .

Wie: 131; Tiret Deposition, Ex. 146,:p. 38, lines 2-15;

Parker: Deposition, Ex. 103, p..21, line 21, to.

P. 23, Hine 17; P. Ea line 24, 2 P 26, Sine 1:

- sa i es noe EE ees.

has ‘been prevented from acquiring a. substantial vol-

ume of new business under license agreefnents, further vt

* finds that, because of the sane acts of Plastic, various.

_ Butterfield licensees. have stopped paying royalties to

him. This decrease in royalty revenue is reflected in the -.

statement of Butterfield royalty. revenue and the list .

of defaults appear. Typical of the refusals to pay, be ieee

| cause of the activities of Plastic, are the cases of James

Tannehill (see correspondence), and Dr. Conlogue who

ee appeared as a witness. These licensees advised Butter-

field that they: were not. paying ‘eithet Plastic or But-

» terfield because they were unwilling to pay double roy-

alties and it is clear in both cases thiat each licensce was

_ making a Butterfield-type of lens. ee “

Ex. 118; Ex. 74; Exs. 88a to f; Exs. 80 a, b; But-

‘terfield, Tr. 270; ‘Conlogue, ‘Tr. 310-12. es

.§9. The Court finds that the acts of Plastic in seek-

"ing to enforce a broad ‘royalty base, in misrepresent--

ing the terms of the settlement with Butterfield, in

‘wrongfully challenging the,scope and utility of the But- oe

terfield Patent, in offering indemnity. against infringe-. - .

; é !

92a ha “Fledinge of Past |

; ment of the: ‘Butterfield Patent to its licensees and in

_ bringing, ‘maintaining and- threatening to prosecute

_. goercive actions against licensees who may deal, with

oe Butterfield or negotiate with him are wrongful, in tor-

tious violation of Butterfield’s rights, are ‘illegal | re-

- straints on-trade, violations of Federal antitrust laws

' against acts in restraint of trade, are unfair. competition 7

in that they wrongfully: interfere with Butterfield’s con- :

tractual relations with his licensees and with Butter-.*. ~

' field’s. legitimate business anticipations in his licensing ~

program and are a violation of the implied covenant of .

"good faith in the settlement agreement, settlement stip-

ulation and consent judgment involved ‘in the settle- |

ment of the former litigation between. the parties.

60. While the Coiurt is unable at this time from the

evidence now before it ‘to. make.@ reasonably accurate

determination of the damage. sustained by Butterfield —

as a proximate result of the wrongful conduct of Plastic,

the Court finds. that the damage and injury suffered. by

is Butterfield from such: conduct and the damage and in-

jury he will sustain. in the future are ‘substantial -and-

irreparable and that the wrongful. ‘conduct of. Plastic,

i unless enjoined by. appropriate: injunction, will continue

and will result in. further irreparable damage and injury

to Butterfield. . ae

. Ruling is beaeived: on the. amount, ‘of ‘haw sus-

:. tained by the plaintiff by virtue of the acts of defendant .

| until an accounting is had, as hereinafter directed. Like- ~~

‘wise, the. Court reserves ruling on the peroagpomsts value —

of the attgeoey fees | to be: allowed to pletatilt.

"ining of Foot ee

| 61, The Butterfield Patent was’ issued March 6, :

“1951, atid has only about 44 remaining months of the —

- term for which it was granted, . and the time and expense .

_ which would be required. to. institute and prosecute —

infringement. actions against the numerous infringers in

‘various jurisdictions would be prohibitive and the delay

_ incident to“the maintenance of such: actions would re- -

- sult in \the expiration | of the Butterfield Patent before

such actions could be. completed. A large majority’ of.

the corneal contact letis manufacturers who would ee

defendants in such actions have limited financial means |

and for, that reason. alone many. of the actions ‘would’: - co

ae quite likely. be ineffective insofar as Butterfield obtain- :

“ing any financial hia abetd for the infringements would

-be concerned. - pees ete

62. The. Court oie already determined Phat. substan-

tial ‘numbers of corneal contact lenses fitted and sold

-*° in the market today embody the principles of the But-

terfield invention and are ‘covered. by the Butterfield

Patent, and: the Court: expressly. finds as untrue the — me

contention of ‘Plastic that the great ‘bulk, if not all, of :

‘the successful ‘corneal contact. lenses Gancaed and sold eine

embody the pririciples of the Tuohy Patent.

- 63. The Court further finds that the Butterfield

- Patent has’ been infringed by many: of Plastic’s li-.

B censees. : ; ji oe

64. There is no evidence to support the charge of :

Plastic that Butterfield - has ‘asserted for ‘his Patent ‘a

' scope far. broader than it actually has or ‘that: Butter-

field hes —— ‘many manufacturers. with Bsa

ee ie parte ct Mae de

, effort to protect its licenseés who were not making ‘But-

“g O40, | ree : "Findings of Fact

- stope of his Patent.

65. Plastic did not: offer | its indemnity agieemint ‘:

.« \ ° eg : ~ see

\ Se :

' . : .

| \, *

& = ment based on alleged over-broad pretensions as to the

“ December, 1962, as claimed by Plastic, in a sincere.

field lertses. but, as. previously found, .said, indemnity _

* was. offered’ ‘for the purpose of preventing Plastic licen-

"gees. ‘making Butterfield lenses from canting with But- .

: terfield. a, . aoe . Se

66. ‘There is no ‘alain sapporting Plastic’s sto

that Butterfield has repeatedly told Plastic licensees that.

‘* their lenses did not utilize the Tuohy invention or that.

they need not pay royalties to Plastic on such lenses or «

‘ that the royalty: base provided in Plastic’s license agree-

_ ments was illegal, and the alleged’ defaults’ in Plastic’ Ss

license agreements have not ‘been brought er thes any.

: wrongful conduct.on the part of Butterfield.

67. The Coiyrt: finds as untrue ithe. charge of Plastic

that Butteffield, through his attorneys, has been: an of-

- ficious intetmeddler i in Plastic’s suits and actions against

- its licensees by. aiding and abetting such — licensees -

through tendéring legal advice or through encouraging

them , to .bafid. together or by ah legal services

and talent for such parties. > :

68. Plastic has’ ‘failed to ‘estab, prove® or justify ~

" any -of its material allegations or contentions with re-

spect to its counterclaim. :

® .

69. While. Butterfield is a atc stockholder ae

Butterfield & Sort, there is. no evidence that Butterfield

ef ai &. Sen i is’ Butterfield’s ajter CEO. ;

has’ ever used the Bu

: : ? Ny |

> we oo" r : = 7 \ ‘ /

71. There is no .eviderice ‘showing that Butterfield

in “and by said Patent. or °

cy ae Conclusions of Law ee

: “70. There is no evidence showing that* Plastic has

. been damaged or injured in any ‘sum by any act of

: Butterfield or any of his. attorneys.

has ever asserted or contended for any. broader’ scope

_of the Butterfield Patent than i is described ‘and. claimed |

72. There is no evid : ale that Butterfield.

Patent in ‘any manner

which Violates the anti-trust laws of the United | States.

,: & ‘The Court- has carefully observed the mane

se and demeanor of % the plaintiff and each of his witnesses,

while on the witness stafd; and, is convinced that plain-

tiff and each of ‘said witnesses is apaieed of belief.”

Based on the foregoing Findings of Fact and the -

proceedings in this cause, the Court makes the fol-

lowing rc =o maak e

ek CONCLUSIONS OF LAW. .

: Butterfield is not estopped to raise the issues of un-

fair competition, restraint of. trade and’ violation of the

anti- trust laws due to- -Plastic’ s ‘enforcement of a broad

royalty prevision in its licgnse agreements. Neither the

interpretation of these license agreements, the validity

of the contractual base ‘therein provided or the validity.

of Plastic’s acts in seeking to enforce a broad royalty

. base were adjudicated, settled or’ disposed of in the

consent judgment ‘and = spttlement documents.

is II.

ew =}

‘Butterfield is not estopped to po bieise of unfair”

. "2

cat ee Conclusions of Lave

Comapetition, restraint of trade or wilettina of thie: anti-

trust laws due to Plastic’s royalty practice, and such

practice’ and conduct on ‘the part’ of. Plastic represent

- not only continuing: wrongs giving rise to new causes —

of.action but also subsequent misconduct, actions‘ for

which are not: ‘barred by the prior consent | a seach and

settlement agreement.

| 3 Be es i |

Plastic, as a party to the prior consent judgment and .

settlement agreement, is estopped to ‘challenge the val-

| _idity of the Butterfield Patent and the other issues |

former* action is not involved in the present litigation.

therein pied concluded by agreement.

4 °

_ Additionally, the sicaiionie: use by Plastic of. sath

claim of: broad royalty base, in - ‘combination ‘with: the.

other wrongs set forth in the Findings ef Fact and in

these Conclusions of Law, give tise to a new. tort or

wifong or series of new torts or wrongs in combination

*so that the same wrong or tort as that witich might.

have been involved at the time of the. stttlement of the

V. 3 -

; {eee ‘ | |

Plastic’s use of circulars, letters and other means of -

comminication. for the dissemination of ° false or’ mis-

leading representations as to the operative effects . of

the Butterfield Patent and the scope and effect of the

cégsent judgment and settlement agreement in the prior

action between the parties, in an effort to induce But-

terfield licensees and prospective “licensees in the cor-

: neal oe lens field to. discontinue or refuse to enter

Conclusions of Law are. eae a

into contractual eiailiine with Butterfield, is actionable :

interference with Butterfield’s contractual relations ands:

" business interests. de ise ®

The institution or threat of institution of groundiess

and vexatious civil ‘Suits: against Butterfield,. his li-

censees and potential | licensees by Plastic are wrongful

and justifiable interferences with business relations and

enjoinable’ acts of unfair competition and, when. such

_ suits and threats of suit: are. considered in relation to

other related aetivities on the part of. Plastic, an under-

lying unlawful ‘scheme to suppress competition is re- :

_ vealed for which‘ Butterfield is entitled to relief even if

such suits are not entirely. groundless. _—

? VII..

‘Plastic’ s “‘aileiaaiy agreement is entirely diffetent

_, from the standard indemnity form uséd in patent li-

censes.’ The indemnity agreement, on. the facts in this i

case, constitutes a wrongful bargairi to indemnify an- _

other against the consequenses of committing a tor-_

' tious act, and ‘it is illegal since the performance: of' the

es tortious act under the evidence, to-wit: interference’ in. fe

dealirigs - between ‘Butterfield and prospective. licensees

_and

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