# Appendix — Butterfield v. Plastic Contact Lens Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_0124%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1967 - **Citation:** 385 U.S. 1009 ## Text . ; a a S 2® ? . : od ; . ~ - ’ . . . . z ny . e 2 ° ; ; , : 2 ; 7 7 : *) . ° ao Fa > . ° p Pa , . , . . ees ae ee Mee nen Re ee ee * > ry ed — ; id . *. : ‘ ~ e ® ’ ’ e : ‘ ; . : ‘9 ° Aa : ° : . * fn a | 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." } yw a = 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 m 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 7, 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 wo 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” ar “: 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.’ ” : : (c) The enforcement or use, by any means or meth- ~ pkg oY 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, a “(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. rs ¥ -e ae “aN y’ = 4 , :, | = By oe X e1e : * ee be ‘ ? * "4 te a? oy ™ ae x ‘ ote “ Le at r Pea i ee bs a ; > cod > ee . Bt ae J; “4 ° ties + oc Se ie if psi: p> eS tied : eles Xo ; 4 i ies - ad - ; @ - ® . - 2m ~ ras: os : | a Cen ge "Dinteict Cork Judgment | @ 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 : : ¢ ZS % co = 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 x. a 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- = : ° ) Ben iaah at vs. a e ; No. 20,212 | J -£ A} i ; se “ , Yipee’ te SSS 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- ¥ es ve —_, \ Appellate Court Opinion i oe 3s _ 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 = 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 © Plastic makes the further contention that sinc? it was en-. Peg eee emree serennee ot Si cicee. of DE sates” ~~ a . ® : 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- ° \ 0 s % ; 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’ i) 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 od oS ° INGE i 32a ; s ° 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 Qi 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. : e ¢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 os “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- a) 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-- a ‘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 > e Ga | _ Findings of Fact 6 se - 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 $2 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. G ~-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 $459,314. 00 in royalties from’ |. its licensees calculated on. thi basis. There is no direct _, evidence in the record from a determination can be made: as to the approximate ount of these royal- ‘ties ‘which’ were calculated on pure ‘Tuohy-type lenses from royalties on. _ unpatented, wafinished, uficut jor iodigi en ay lenses. Ex. 7. 6 . and the amounts which were 33. There are rnore thiéi 300 manfsctiers of plae- tic contact lenses in the United States. —— eae Pre-Trial Order,. Admitted Fact 6,’ R p. 46; -Par- . tial list of names of contact lens manufacturers 3 in the United — Ex.. 132. | S$ ae 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. 9 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 — license agreements after meéting a response of this kind. © 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. (c) Plastic was fully released. by’ ‘the: settlemenit “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 ao 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) yO v ( 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, i ae | ' “Grcumstances | under © which: ‘the . Plastie ‘Contact. Lens 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 . 4 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. (c) Ae to the litigation against idee Scientific ‘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. ge _ 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 --.-~the arrangement, and Mr. Ford’s firm’s bill was paid © 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 - ud (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- . tic v: Hunt and Marco, et al, after the action was filed. © 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 a 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 y = 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 . a) a8 Vancoyver, ‘Washington, manufacturers holding. Plastic © _ - 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 Pr Northwest-Northem, both holding Plastic licenses, were © : 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 > “© A substantially similar result was | obtained 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 ZN ; “S Findlinge of Pact tee ee 85a 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 e 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- “© con, Inc., Ex 20a; b, c; Yakima: Contact Lens, _ 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 its © of October 25, 1962, concerning the circum- - 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, @i) “The next class of Butterfield license agree- shee is the so-called paid-up license form, and these s oe -. 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. SY A : / a oN 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 _ Butterfield Patent. ‘At least one ‘Butterfield licensee, © 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 ne , 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 : ' . : . | \, * s , & = 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 +4 66. ‘There is no ‘alain sapporting Plastic’s sto that Butterfield has repeatedly told Plastic licensees that. 5 ‘* 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 \ ‘ / be 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. a | 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 infringement of the Butterfield Patent and the offer of indemnity tended to and did bring about such acts. ae “6 i | et een Plastic is estopped to challenge the operative effect | or utility of the Butterfield Patent and is likewise ) estopped to ae its validity. ‘ a e) pide as a licensee of the Butterfield -Patent, is e & . ; ; 6 eS: Gonibhibins: of Law sulisginui to shtac its. validity ne since the utility of” the Butterfield invention: is an essential | “requisite to patentability, Plastic cannot challenge the operative effect or dieses of : the Butterfield Patent. x. Plastic cantor use its legitimate patent monopoly as . a method of suppressing competition or acquiring a mo- | nopoly outside the area of the monopoly which the pat- ent grants or in any way extending the scope of the patent beyond that granted which it does through the. exaction of royalties | from its licensees on unpatented, unfinished and . uncut pieces of material used in the manufacture of corneal contact lenses, as well as upon oe finished corneal cohtact lenses accuse in accordance with the Butterfield ieaects eat West, ae eee ? Plastic is aicenel to assert that, the. ‘the. Butterfield Se "lens is covered: by tiny claim of ‘the “Tuohy J Patent ‘by Ss the rule of patent construction, often, referred to as: “File Wrapper ‘Estoppel, ” that a claim in a. patent as allowed. must. be: read and interpreted with reference to claims that have been cancelled or rejected.. sans Sie! tae eve wae = Re po ae ve An interlocutory decree should bé entered perma- a meets enjoirfigg. and restraining Plastic from: Oe . (a) The dissemination of false claims and infos = piace concerning the lack of utility or claimed narrow ~ d ‘scope: of, the Butterfield Patent, ae Peay ah ee (b): The ‘dissemination of sileinadicle, dies: or er- * goneous. information concerning the terms of the settle- -o e ‘" ©. » Conclusions of Law eas 998 ‘ment of the former action between the parties, including deceptive types of aepreroratca: and non-disclosure with . .; SEE eee, ° sy oo x's ‘ ‘ | _(c) The coud ehiforcement or, use of a roy- =. alty base in its license agreements ortring devices other As than Tuohy-type devices, (d) The continued use of an sisihitinaite agreement _ with its. licensees offering indemnity against claims for | BR ones of the Butterfield me, | (© The institution, fnaintenance, prosecution orl. continued institution, maintenance or prosecution of ac- tions against Plastic licensees wrongfully. and without — | foundation chasging alleged conspiracy with Butterfield _ or: with others and the assertion of damages s therefor, in- cluding any a oa = in the bascnalh ee 5 E es re: : ' An accounting: should be had to fix the amount of Butterfield’s damages growing from the conduct of Plas- - tic as found in this litigation and a judgment entered ‘3 for thrice the amount of such damages. At the same time - the Court should fix the vinptee of, attorney fees: to. be es awarded to — , ) XIV. _ Realizing that an 1 appeal: may ‘be rosecuted under_ the: provisions of 28 U.S.C. §: 1292 (a) (4), from my interlocutory decree, I shall not fix a time for hearing on the issues of damages. | aes : _ DATED this Ist day of March, 1965. | a ’ Joun F. Rexam, eect © District Judge © % ea! a Q Shp Samael, +" Opinion in Prior Litigation =——S 10a APPENDIX E SOLEX LABORATORIES, -INC,, iil Plastic Contact . Lens Company, an Illinois hess cancogean Plaintiffs and 2 Counterdefendants, GEORGE H. BUTTERFIELD, Sr, aad Geo. Hi Bats’ - = ce) Mies terfield & Son, a corporation, Defendants and ‘Counter- = e | «+ Civ. No. 60-107. eae Se Ne ee yaaa _ Uniti States District Court’ Seca ene a; A a D. Oregon’ AS oe ) aes ©. ay \ ee Maple: Te 1961. fii Ups Se pe ) KILKENNY, District Judge. MSY a 4 Plaintiffs charge that defendant Gees H. Butter: ¢ | | | ie, field, Sr., has infringed on what is commonly known as | ee: fe the Tuohy Patent, dealing with contact lenses for the human, eye. The cause is beféré the Coyrt on said de- COT fendants’ motion for a temporary injunction restraining ee | aa - plaintiffs from instituting actions in other jurisdictions” against licensees of the defendants, in which said licen-. sees. are charged with infringement. of said patent, and enjoining plaintiffs from notifying members of the trade that corneal contact lenses constructed in accordance . with defendant’s patent infringe on the patent owned es ‘fT by plaintiffs. In support of the motion the defendants | have produced evidence that subsequent to the filing of — this cause the plaintiffs commenced two additional ae a tions, one in Virginia and one in Texas, against certain. es licensees of the defendants, charging infringement of the _ : 102a Opinion i in Prior Litigation Tuohy Patent. At the hearing thé defendants produced. substantial evidence of the mailing by plaintiffs to mem- bers of the ocular trade: of a series of threatening let- — ters and circulars which in effect notified said members that the ‘corneal contact lerises. constructed: in ‘accord- _ ance with defendants’ patent infringed on the Tuohy seis ‘Patent. ‘The motion of defendants. prceesite three prin- cipal questions: - (1) Should ‘aides be restrained from Sgeekibaitetne _-writing, advertising, or in any manner. threatening or . Bante the members of. the ocular trade, or stating or implying, to the trade or public. that all contact lenses. of the corneal variety are é an. infringement on the Sean Patent,. or . - oe (2) Should daintiffs be fenteadsied’ from prosecuting : pending actions against licensees of defendants, or — (3) Should’ plaintiffs be enjoined ' from prosecuting | future apne against licensees of defendants. : a) 1. Solex was the original party plaintiff i in this cause. During ‘the early stages of the: proceeding it de- _ veloped that’ Plastic had purchased all rights of Solex in the Touhy Patent and was ‘joined as a party plaintiff. | This transfer is noteworthy when we ‘recognize that ise the plaintiffs were recently involved 3 in litigation against 7 _ each other presenting problems \which were practically me identical with those here presented. Soléx Laboratories, 3 Inc. v. Plastic Contact Lens Co., 7 Cir., 1959, 268 F.2d - - 637. Also of importance is the fact that Plastic was and is a licensee under. the Butterfield patent and has been such a licensee for many — While the a — Opinion in Prior Litigation ie | 103a - was ‘circulated in the Solex Laboratories, thie. v. Plastic Contact Lens Co. case was more all-inclusive. than the ie : ae } a fact that ‘plaintiffs continued: to carry on activities in Circularizing the trade quite similar to those condemned -_ ' Cee © by the Court, at the request of Plastic, in Solex Lab- - : oratories, Inc. v. Plastic Contact Lens Co., supra. It ‘iy, seems quite clear that the parties should not be permit- ~ ted to conduct such activities and possibly impair or . ~ destroy rights, ‘the exercise of which is the. major point in . controversy in this litigation.. Defendants. are en- titled to prevail on the first point of the motion. . [2] °-2. The second point raises . the question of " whether the: ‘Court should exercise its discretion and en- . join the plaintiffs from further proceeding with the. .pending actions ‘against licensees of the. defendants. - - Plaintiffs - argue that a final judgment in the pending _ Texas. They assert that. they. have _independent causes - Of action against infringing third parties and’ that noth- ing will be accomplished by enjoining these actions. They point to the fact that. the parties to. the. other ac- . tions are not the samie, nor are they in privity so as ~ to form a basis for the application of the tule of res ju- . dicata. On ‘the other hand,’ defendants urge that the ‘same parties are involved and that privity can: be traced - ant licensee and the license agreement with the other. a Shortly after the adoption of the FRCP, the Third | . proceedings will have little, if any, effect on those cases ee now pending before the District Courts of . Virginia and | ffirough the indemnity | agreement with the one defend- (— a ¢ 2” eens a. 104a” i Opinion in Prior Litigation Circuit in Crosley Corporation. Me -Hazeltine Corpora- tion, 1941, “122° “F.2d 925, cert. den. 315 US. 813, 62 -. .-§. Ct. 798, 86 B. Ed. 1211, adopted a rule which seemed - to be both rigid. and absolute to the effect that the .- Court first obtaining jurisdiction over an issue and the . _ parties’ should enjoin, during the pendency of that ac- tion, subsequent litigation in other jurisdictions. The de- . cision in Crosley was deflated, if not completely re- — : jected, in Kerotest. Mfg. Co. v.. C-O-Two-Fire Equip- "ment Co., 342°US. 180, 72'S. Ct.’ 219, 96 L. Ed. 200, - in which the Supreme Court held that wise judicial ad- oe at ministration required that the issuance of a restraining *. order, under such circumstances, -should be: lodged in the sound discretion of the trial court. Gey ae re er. > ‘number. ‘of cases, including J oseph Baricrott- & + Sons Co. Vv. Spunize Co. .of America, 2’ Cir, 1959, 268. F.2d 522; Minnesota Mining & Mfg. Co. v. Polychrome os Corp., 7 Cir.,°1959, 267. F.2d 772, recognized the. discre- tionary rule as announced in Kerotest, ‘but’ continued _ to apply the strict, rigid and. mechanical approach, i.e., “same issues and same parties, which was used in Crosley. - In my opinion, a hard, and fast application of. the deg- trine of the same parties’ ‘and same issues test entirely. overlooks the possible’ application’ of the doctrine of a sah collateral estoppel. hereafter mentioned. On the’ anse of tion of “privity,” it would seem that” the indemnity agreement would supply the link. Weyerhaeuser Timber. Co. v. ‘Bosifich, Inc., D.C.R.I. 1959; 178 F. Supp."757. : While this case involves a motion for’ a stay, rather than | _ for an injunction which. ry -of a Court of equal dignity/i in another Circuit, the prin- d.interfere with the rights’ orhe ie & nar | © ye - ‘ : : i : Bs Ae Ps pene Ly SS ees nigh od F | Opinion in Prior Litigetion Ze - 105a i : ciple anriounced would seem to be valid when applied es Sete ’ the injunction proceedings. Bechik: Products v. Flexible favs a 3 Products, 2 Cir., 1955, 225 F.2d 603, 607. To apply the . doctrine’ of res judicata, it is ‘necessary that. the subse- © ‘quent determination involve the same parties or their | privies,/In Kessler v. Eldred; 206 US. 285, 27 S.Ct. 611, 51 L.Ed.. 1065, it was held that a mariufacturer, if he | ‘prevailed in an infringement suit brought against him by the. patentee, could prevent the. impairment of his Tights under the judgment by’ enjoining the patentee . _/ from: prosecuting suits against ‘his customer. The scope of the decision in Kessler was enlarged in General Chem- 7 ‘ical Co. v, Standard Wholesale Phosphate & Acid Works, «Inc, 4-Cir., 1939, 101°F.2d 178,-to| permit ‘customers of + the manufacturer to assert a de ense. -of collateral estop- - pel based on a previous judgment in the manufacturer's favor. General Chemical. recognized that a customer was” ¢ not. estopped to relitigate the issues. decided in favor of - ; the patentee against. the manufacturer, . but concluded. a that the patentee should be prevented from again raising _ the issue on ‘the’ ‘ground that he%already had his day in Court. It is significant that General Chemical would, in . - the, event: the Tuohy Patent was declared invalid in this proceeding, eprevent plaintiffs from again litigating this | question, with . the licensees in Texas or Virginia, and — = . this is true even though the licensees are not parties in. : the present litigation. Bechik Products: v. Flexible Prod- . “ucts, supra, is in full support of. General. Chemical. In - | Bechik the Court held. that a decree on the merits hold- ing invalid a patent ‘such as plaintiff’s claim in ‘this:case, \ would : ene 6n — — actions Lin SIP - eats © ae Sh. ° _'. eases, Pacific’ Contact Laboratories, Inc. v. Solex Labo-— 106a - _ Qpinion. in Prior Litigation w= and Virginia.” Plaintiffs call .attention to’ the fact that the validity of the Tuohy Patent has been upheld in two ‘ratories, Inc.; 9 Cir., 1953, 209 F.2d 529, and Solex Lab- ‘oratories, Inc. .v. Graham, D.C. S.D. Cal. 1958, 165 F. ‘” Supp. 428? In the light of these cases and under ordinary .. circumstances, I would be inclined to say there was-little - probability of the, Court finding the Tuohy Patent in- — valid and declare that those decisions, , while not conclu- | : - give, were entitled to great. weight. ‘Georgia-Pacific Cor- poration v. U: S. Plywood Corporation, 2 Cir., 1958, 25g F.2d 124, cert. den. 358 U.S, 884, 79 S. Ct.124, 3.L. Ed. 2d 112; Cold Metal Process Co. v. Republic Steel Cor- poration, @-Cir., 1956, 233 F.24°828, cert, den. 352 USS. “© 391,77 S. Ct. 128, 1 L- Ed. 2de86,-reh, dep. 352 U.S. 955, : “99 8; Ct 323," Se» Ed. 2d 245. However, in. none of *" those cases ‘did the owner of the patent adopt an entirely ‘inconsi t position. such as Plastic has ‘here adopted. Solex & wratories, Inc. v. Plastic Céntact. Lens Co., if any, to be given to the actions f Plastic, nor the weight to be given to. the decisions upholding the Tuohy Patent, ‘under ° the pm facts and circumstances of this case. However, I have concluded that in‘ the: exer-. ned = a sound legad discretion, I should allow, defend- motion. I feel that this motion can be granted, with-" “out impairment of plaintiffs’ rights under ~ ‘the’ patent law and that such an ‘injunction. would prob- ably prevent needless. litigation. American Chemical ee ev Pa J against persons such as the licensee defendants in “Texas 4 és wi ~ ee? - supra. I have: arrived at no. conclusion as to the weight, pei da! . Paint C6.. xe. Thoipson Chemical Corp, 9 Cir., 19 ‘a ang i Fld o | i 5° Opinion in Priot Litigation bine 107a. | op oe The third: point raises essentially the same ques- . tions of law as raised by point No. 2. Further discus- sion is not required. —er injury may —_ to defendants. This opinion shall stand as my + Sittings. ‘An Appro- “ priate decree patterned ‘after the suggestions in Solex Laboratories, Inc. v. Plastic Contact Lens Co., ‘supra, may be prepared, served and “presented by counsel for | "_. defendants. I fix the amount of ' defendants’ ‘bond sass : $15,000.00. ise pe ee. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_0124%3A2. Public record. Not legal advice.