Petition for Writ of Certiorari — Union Carbide Corp. v. E. I. du Pont de Nemours & Co.

eane cies ¢ ee Ud: mall | FEB 10° 1967

.° No. 105 lL: JOHN F, DAVIS, CLER

P)

In the

Supreme Court of the Gnited States

‘OcToBER se ee Se

UNION CARBIDE CORPORATION, e

mi ; Petitioner,

O°: ma ee

E. L ‘ PONT de NEMOURS and COMPANY, 3

Respondent

PETITION FOR WRIT OF CERTIORARI TO THE __

UNITED STATES COURT OF APPEALS ate

FOR THE SEVENTH CIRCUIT. — }

Siney NEUMAN,

Rosert L. AvsTIN,

77 W. Washington St. --*

-Chicago, Illinois 60602

© .Attorneys for Petitioner. .

2

¢

_ The Scheffer Press, Inc.—ANdover 3-6850

no! de esta pee bal rit soc

Mm @é

\ er

‘ ‘ .

INDEX

Ae oa, PAGE

I a nines a

FUTISAICHON aescssssclesseceueesesesne aellatisitetacit ae 2

Questions Presented ............. snnsecorenssnsdesssvonmnntenmnesonorereeove ae

€ RIE SII si aetecntincieencnivenncernanenniee 4

ae ty aa RT

‘Reasons for Granting the Wit .....:cc.ccessccsscoscscsecciecsnsssseeses 7

1. The Doctrine of Collateral Estoppel ws Judg-

‘ment, As It Was and Ought. . een ie, 2

2. The So-called “Rule of Eanentigiity,” Its Evolu- |

- tion and Misapplication jchiaieidiianialitaaiicdaiiiaeligus 10°

3. A Finding of Fact Should Not Become cia:

tive:in.a Later Case Between the Same Parties

: Merely Because the Jurisdiction or the Cause of .

Action is Different in the Eber CHR] cccecqeeececccesceee 14

4. The Collateral Estoppel’ “Effect of a J adgment.

Be ot aire Should Not Depend upon Whether it Has Been

. Re-examined by a Court of ReGiew ...cicccssscsescseseree 17

Conclusion ..:....ssecqeecseessersee piccsesidinenioininensiannsiie scisnttossdinadeanc! a

Appendix. 3 on

Opinion of the United States Court of Appeals

for the Seventh Circuit ...... Siisteacnsasdomaianee madness la .

Opinion of the “United States District Court for

the Northern District of Illinois, Eastern Division 9a.

_ Order of the United States District Court forthe «.

Southern District of Illinois, Northern Division .... 17a

<4

a ye PAGE

r CrrTaTIONs

| _ Cases

“Aurora City,v. West, 74 U.S. (7 Wall.) 82 (1868) ese 9

Becher v. ‘Contoure Labs., 279 U.S. 388 (1929) ........ 3, 15, 16

Bros Ine. v. W. E. Grace Mfg. Co., 320 F.2d 594 (5

Cir. 1963) i.scseissssesesprsesessesisnseeecssessseeenersssssisessecssee scauiabins 18°

PS ‘Cromwell v. County of Sac, 94 U. S, 351 (1876) edhe a 9

Electrical Fittings Corp. v. Thomas & Betts Co., 307 7

U.S. 241 (1989) rrrseeo it anit:

Emich Motors v. General Motors, 340 U.S.-558 (1951) .. 10 -

Evergreens v. _ Nunan, The, 141 | F.2d 927 (2 Cir. 1944). 12, 13

_ Fayerweather v. Ritch, 195 U. S. 276 (1904) ssisioscaiininis 10

Harries v. Air King Produets Co., 183 F.2d 158 ae

Cir: 1950) PSSA LINER We NOPE SREI RON SS PION SSS RINSE AOR 12

Hines v. Seaboard Air Line R. R. Co., 841 F.2d 229 |

ee 1965) deidtinanaaeien ER SI De A Oe AY eee I 18

Hyman v: Regenstein, 258 F.2d:502 (5 Cir. 1958) seilsina -13

- Johnson Co. v~ Wharton, 152 U.S. 252 (1894) .......... 3,9,17

Laughlin v. United States, 344 F.2d 187 (D.C. Cir.

— *°1965) _ sseneneneieceuranenntn ETON ee 13

| Partmar ‘Corp. v. Paramount Pictures Theatres Corp. ™

Ue et ee hectic cu eteeetcciecesiaes 17

) Railroad Companies v. Schutte, 103 U. S. 118 (1880)...

sclieesinasisdcaidabaciastaasiibidsclecalitbesapaiaaliibiahahaeluibesbinceaiboncidesis 3, 1, 12

: Reynolds v. Stockton, 140 U:S. 254 (1891) vcicssnnee 9

“Sanford v. Kepner, 344 U.S. 13 (1952) ...sssssssseessssee se

; 3 Noe PAGE

Stoll v. Gottlieb, 305 U.S. 165 (1988) .: oe ih cceemaes ae

Union Carbide. Corp: v. Traver Investments, Ine., 938.

F.Supp. 540 (S.D. TIL. N.D. 1965) .ssssscssseseussssesessssee 2, 6.

' Union Pacific Co, We “Mason baie Co, 199 U. S. 160.

OIE soiree pre cesconercvtiessnemstteiecnciciansonipecieiotnseri 9

Whee United States v. Kramer, 289-F'.2d 909 (2 Cir. 1961) . wa 13

United States v. Moser, 266 U.S. 236 (1924) ........« a 9

United States hia Munsingwear, 340 U. S. 36 (1950) ..

8 OEE DRAMA CR Re 3,17, 18 .

Yates v. United States, 354U.S, ‘8 (1957), secede AD, 18, 14

. * - Statutes |

98 U.S:C.A. NS is er Ce

28 U.S.C.A./§ 1338(a) cece [EER nae iilesensabien ae

Le ee, eae Seen eer ae

| ne © |. nee paren weet ee 4 Jae

B&H a aipvecccsceecceccrncnercactewinmecemvmseoevncnonse 4

85 U.S.C.A. § 146 oe... ae rere ecstatic aaaiosenl 2, 6, 14

ne - " -Rales . ; .

ee GI) OE, Fa Cte Bia eckicceticmrescnecsossecintinternisincteenaninns 18

Roald GO Pod: B. Civ, Be. -..reesigenscocesemvernonn encmeansiaileedaioait 18

Rulé 59(a) Fed. R. Civ. Py ...cssssssssssssseseseunesee sian een eu: 18

, Bule 60'Feds BR. Civ. Py svncircmnnsircnnnenrnneeneepmnenin 1B

Rule 60(b) Fed. R. Civ. Sea = anc orem ey Sober 18

ea Texts |

: Restatement of Judgments, $ 68, comment OD mcurienian a

Restatement of Judgments, § 69(2), comment © :echeccarcoht, 17

“INTHE .* *

s SUPREME COURT*OF THE UNITED STATES |

' + Ocroper ram, 1966 .

QO. 3 ‘

No.

- - UNION CARBIDE CORPORATION, wae ee,

| bees eek gee, Petitioner, ef |

VS. . . ey. Sab ase

- 7

© BL du PONT de NEMOURS and COMPANY, . |

aCe "Respondent.

2 t I

-¢° e

PETITION FOR WRIT OF CERTIORARI TO THE =

- UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT. —

‘Petitioner, ‘Paien Carbide Corporation, respectfully ce

petitions for .a writ: of certiorari to the ‘United, . States

Court of Appeals for the Seventh Circuit in this case.

'?

OPINIONS BELOW -

The opinion of thé Court -of iain is. reported at

369 F.2d 242- and is printed in the —— — Se

imfra, P. la.

The opinion of the District Court for the Northern |

‘District of Illinois is reported at 250 F. Supp. 816 and - ~

is printed in the Appendix, infra, p. 9a. : 3

ate.

The opinion of the District Court. for the Southern

. District of Illinois in the companion-case is reported at

. 238. F. Supp. 540. The post-judgment order entered in’

_ the Southern District is not reported. but is printed in .

: . the Axpendis, ‘infra, p. 17a.

= JURISDICTION

The judgment of the Court of Appeals was watered on

November 15, 1966, and became’final on Jaiauary 6, 1967,

_ upon.denial of.a timely petition for rehearing. The man-

date of the Court of. Appeals has been stayed to February

11, 1967, to nermit the filing of this - petition. -

The. jurisdiction of this Court. is invoked under 28

" S. C. § 1254(1).

QUESTIONS PRESENTED

Ps 1. ‘Is the time ripe for this Court: to establish the

guidelines for application of the doctrine of collateral

estoppel by judgment, or shall the exceptions and- tech-

nical refinements continue to proliferate so that parties

may relitigate issues to the limits of their ingenuity in

shifting forums and rephrasing causes of action?

2. Where, after prevailing in an interference, a pat-

entee circumvented public use proceedings“in the United

States Patent Office and obtained: his patent by claiming

the benefit of an application filed within a year of ‘the

public use, and where a United States District Court in

subsequent review Proceedings under 35 U.S.C. § 146 con- .

firmed the priority “of the patentee but found that the

method disclosed in the said .application was “onwork-.

able,” and where the patent owner after an unsuccessful ©

attempt by post-judgment proceedings to vacate this ad-

verse finding acquiesced therein by failing to take an

¢

ae

‘appeal, does not the doctrine - of collateral estoppel . by

judgment apply to the specific fact finding of unwork- |

ability in a. subsequent infringement suit between the

same parties? -

3. What should be the place of the’ so-called “pale of

essentiality to the ee in the Goetsine of: collat-

saan estoppel!

da the rule mean that a judicial Sidine was “es-

¢ ential”, and therefore binding between the parties,

» if it was actually presented, litigated . and decided in

- the.prior case [e.g., Railroad Companies v. Schutte,

’ 103 U.S. 118, 143 (1880) ], or does it mean that only

“necessary” or “foreseeably important” or “ulti-

mate” findings are binding?)

oe: Does .a court’s deliberate finding of fact in the

context of a credibility issue lose all effect when the

identical fact question arises between the same parties -

_ before a’ subsequent court in the context of ‘a patent

| validity issue? ‘

(Is Becher v. Contoufe Labs., 979 US. 388 [1929], ,

. still good law, or shall this Court permit the aboli-

tion of - collateral estoppel in patent cases?)

5. Is the Seis of collateral estoppel inoperative

as tota specific finding of fact merely because in the

previous litigation between the parties the finding was

not re-examined by a court of review? |

(Should the federal courts follow this Court’s de-

4

cisions in, e.g., Johnson Co. v. Wharton, 152 US.-

252 [1°94], and United States v. Munsingwear, 340

U.S. 36 [1950], or should they follow the contrary

view in the Restatement. of J udgments, § 69(2), com-

ment ¢?)

| Sees:

- STATUTES INVOLVED

35 United: States ‘Code, § 102.

“A.person shall be entitled to a patent unless—

- (b) the invention was... . in public use or on

sale in this country, more “than one year prior to

‘the date of: the sna for pet in the United

_ States. ee ay

35 United States Code, § 112.

“The specification shall contain a written descrip-

tion of the invention, and of the manner and process of

making and using it, in such full, clear, concise, and

‘exact terms as to enable any person skilled in the art -

to which it pertains, or with which it-is most nearly

_ connected, to make and “use the same, and. shall set —

forth the best mode contemplated by the inventor of

carrying out his: invention.” .

- 35 United States Code, § 120.

“An application for patent for att invention. “dis--

closed in the manner provided by the first paragraph

of section 112 of this title in an_application previ-

ously filed in the United States by the same inventor

shall have the same effect, as to such invention, as

- though filed on the date of the prior application, if

filed before the patenting or abandonment of or ter-

mination of proceedings on the first application or on

an application similarly entitled to the benefit: of the

filing date of the first application and if it ‘contains

or is amended to contain a me reference to the

earlier filed application.”

; _ STATEMENT OF THE CASE

Petitioner was sued by respondent in 1965 in the United

?

States District Court for the Northern District of Illinois -

for alleged infringement of three patents. The basis for

ss

ae Fae - ‘ - =.

federal jurisdiction of the suit in the first instance was

28 U.S. C. § 1338(a). x

The District Court held one of the Borate the “Tra-

ver” patent, invalid on the basis of a finding of fact made

in the decision of a prior suit where,the same parties had

contested priority of inventorship as to certain subject

matter of that patent (infra, p. 16a). ‘The Court of Ap-

peals reversed and held that the respondent patent. owner*

could relitigate the fact question in the infringement

ease even though the same question had been fully sub-

mitted and twice carefully decided against respondent in

‘the earlier inventorship case (infra, p. 1a). :

‘The controversy between these parties over the Traver

patent started in 1953 with the declaration of an inter-

- ference in the Patent. Office between Traver and rival

_ inventor's, including Adams and Wakefield, petitioner’s ap-

plicants (R. p. 189).* Although Traver was awarded pri-

. ority by the Board of Patent Interferences, the Board

also found that the invention had been used commercially

by Traver'in.March 1950 and that an.application filed by

him in October 1950 neither expressly nor inherently dis-- _

closed. the invention. (R. pp. 6466) This signalled the

beginning of strenuous efforts by Traver, and later re-

spondent, to change or avoid these crucial findings since

any patent issued on Traver’s 1953 application involved

- in the interference would obviously be invalid in view of

the 1950 public use. |

Traver unsuccessfully petitioned the Board three times ~~

to change its ruling as to the disclosure of the 1950 appli-

cation (R. pp. 233-4). Traver next requested the Com- |

missioner of Patents to overrule the Board, but again

' +R, p — Sieh the printed Appendix on appeal in

the cated noores from the Court below. :

is)

ie eS Seg Se des Se

.

cans .

without success (R. p. 231). Public use proceedings were

then initiated but sidestepped by Traver (R. pp. 204, 212,.

218, 293). He gave up the claims which he won in the

interference and requested some newly rewritten ones, |

claiming the bénefit and filing date of his 1950 application

for’ the avowed purpose of eliminating ‘‘all question: of -

a prior use bar’’ (R. pp. 181-8). Acting ex parte, Traver

- persuaded an Acting Examiner to allow the rewritten

claims (R. p. 222) and the patent issued.

When the inter partes priority contest was resumed in ©

civil review proceedings under 35 U.S.C. § 146 in the

United States District Court for the Southern District of

Illinois, that court (the Honorable Frederick O, Mercer)

agreed with the Patent Office Board that Traver was the

- first inyentor, and that Traver’s 1950 application did not

disclose the invention, ‘specifically finding that it. described —

an unworkable method (238 F. Supp. 544). Because of the -

limitations of his jurisdiction (R- p. 171, 238 F. Supp.

546), Judge Mercer could not and did not declare the

Traver patent invalid .because of the 1950 commercial

use. However, respondent recognized that the unworka-

bility finding effectively invalidated its patent and peti-

tioned Judge Mercer to change or withdraw it from his ~

opinion (R. p: 142). This move was again vigorously

opposed by petitioner (R. p. 145). After full resubmission ,

of the matter, Judge Mercer .refused to change his mind,’

ruling from ‘the expert .testimony and demonstrations in

open court that, the evidence was “incontestable” and

_thatythere was €no error’”’ in the finding (infra, p. 17a).

Respondent~ acquiesced in the post-judgment decision. It .

did not ask for a rehearing and made no effort to reopen |

the proofs or to appeal. Instead, respondent very.shortly

thereafter instituted this action in another forum.

e

— aes

Upon the filing of the insta case, petitioner immedi-

ately moved for summary judgment on the basis of Judge ©

Mercer’s findings (R. p. 6), The District Court, the

Honorable Abraham L. Marovitz, granted the motion,

holding that under the doctrine of collateral estoppel by

_ judgment, respondent was not entitled to relitigate with

petitioner the material facts on which the motion was

_ based (infra, p. 10a). Judge Marovitz, accepting Judge

Mercer’s finding of unworkability, decided that Trayer’s-

1950 application was: not effective because an unworkable

disclosure does not meet the requirement in 35 U.S.C.

§ 112 for a full description of the invention (infra, p

14a). ‘He therefore concluded, that the patent was invalid

under 35 U.S.C, § 102(b) because of the public use ‘more

than one year “before an effective application — was filed

(infra, p. 16a).

The Court of Appeals reversed bine it ee

_ with the application of the doctrine of collateral_estoppel ~

by the District -Court- tinfra, p. 8a). The Court of Ap- :

-peals admitted that Judge Mercer had made the unwork-

ability finding but seemed to think’ *that it related only

toa credibility i issue, that it was not “essential”, and that

the estoppel effect of Judge Meréer’s decision should be

determined solely ,by .what was in his judgment (infra,

pp. 7a-8a). The Court’s ‘opinion refuses to acknowledge

the difference between res judicata and eollateral estoppel

by failing to recognizé the clear distinction between valid-

ity of a patent as a conclusion of law and the findings of

faet orem which this conclusion is drawn.

REASONS FOR GRANTING. THE WRIT

The single fact question involved in this case has been

- contested seven times between these parties, and seven

times it- has been decided against respondent—first in

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the administrative proceedings of the Patent Office and

then in the courts, as explained above. But the- decision ©

of the Court of Appeals permits resporident to ignore the

prior rulings and to try this stale question again in a new

- forum under the heading of. a new cause of action. In

such redundant litigation, the mischief done to the. orderly

administration of the law is manifest.

How did the Court of Appeals come e sanction this

eiautacll Because the Court failed, like other: courts.

before it, to make sense out of the icine of collateral

estoppel. The law in the federal courts on the subject has

become murky, confused and contradictory. Require-

ments, exceptions, qualifications and corollaries abound:

_in_ the - authorities. Generations of judges and legions

of: lawyers and commentators have taken a fairly simple

and exceedingly sensible rule and, by relentless march of

elliptical rhetoric, have rendered it nearly useless. -

The questions raised in this petition are theréfore of

public and economic importance. Under the decision of.

the Court of Appeals, petitioner must now defend -a

patent infringement action which will be both pro-

tracted and expensive, and which -would be unnecessary

if collateral estoppel were applied. _The history of this

‘case should persuade this Court to settle the guidelines *

for application of the doctrine of collateral estoppel to —

all Sich cases. This would do much to relieve congestion

in the trial courts, reduce the cost of patent cases, and

' promote their. prompt disposition—the desiderata ” & a

truly just patent system.

é

1. The Doctrine of Collateral Estoppel by J udgment, As

It Was and Ought To Be. —

This Court has said that, “The peace and order of

society demand that matters distinctly put in issue and

es

determined by a court of competent jurisdiction as to

parties and subject-matter, shall not be retried between

the same parties” and thatsthis is.a general rule “deeply

_ imbedded in the jurisprudence of all civilized countries.”

“Johnson Co. v. Wharton, 152 U.S. 252, 257, 260 (1894).

“It is just as important that there should be a place to

end as that there should be a place to begin litigation.” —

‘Stoll v. Gottlieb, 305 U.S. 165, 172 (1 (1938).

An early statement of- tiig Fale by this Court was that

~ the estoppel of a. judgment “extends to every material

~ allegation or statement which, having been made on: one

side ‘and denied on the other, was at issue in the cause,

and was determined in the course of the proceedings.”

Aurora City v. West, 74 U.S. (7. Wall.) 82, 103 (1868).

The next authoritative statement by. this Court came in

Cromwell vy: County ’of Sac, 94 U.S. 351, 352-3 (1876),

where, in. distinguishing the operation of res judicata in’

-a second suit between the ‘same parties upon the same

claim from -the collateral estoppel arising in a second

suit between the same parties on a different claim, it

was said that in the latter case. “the inquiry must always ,

be as to the point or question actually litigated and de-

termined in the original action.” It is upon’ the ground

that the*parties have been heard, or have had the oppor-:

tunity of a hearing, that the law gives a conclusive effect _

to the matters adjudicated in the prior case. Reynolds v.

Stockton, 140 S.° 254, 268 (1891). -Whenever a question

“fairly -arises” at. trial, and there has been a distinct

decision of the question, the decision. is binding. Union .

Pacific Co. v. Mason City Co., 199 U.S. 160, 166 (1905).

Otherwise stated, ‘‘a fact, question or right distinctly ad-

judged in the original action cannot be dispyted in a sub-

sequent action’. even though the original determination

was erroneous, United States v. Moser, 266 U. S. 236, 242

(1924).

DP be Daan Keke tas Now

fe .

os +.

2: The So-called “Rule ‘of eeierveee ial ‘Its Evolution

and Misapplication.

It is axiomatic that an estoppel will not ‘be tousd it it

must be guessed at. The rule of essentiality in thea

doctrine of’ collateral estoppel was therefore devised to

fit the case of a general judgment or jury verdict. This .

Court phrased the rule as follows in Fayerweather v.

Ritch, 195 U.S. 276, 302 (1904) :

“The ordinary rule in respect to a judgment -without

any speci 1 findings is that it, like a general verdict

- of a jury, is tantamount to a ‘finding in favor of the

successful party of all the: facts necessary to sustain

the judgment. a

More recently, in Emich Motors v. General Motors, 340

U.S. 558, 569 (1951) :

“In: the case of a criminal conviction based on a jury

verdict of guilty, issues which were essential to the

verdict. must be regarded as having been determined.

by the judgment. . .'.. Accordingly, we think plain-

tiffs are entitled to introduce the prior judgment to

establish prima facie all matters of fact and. law

necessarily decided by the conviction and the verdict

on which it was based.” -

This requirement for certainty, expressed as a rule of.

law, made good sense in the context im which it was

intended * to operate. Obviously a general. verdict does

not explain what determinations the jury made in reach-

ing its decision and so it would not be fair or logical to

hold a party bound as to any fact question ‘tried before

the jury unless a finding on that question was “essential”

to: the verdict, i.e., unless the fact must “‘necessarily’’

*Emphasis added in “eer matter unless otherwise

indjcated.

ee

_ have been found in order for the jury to render its

‘verdict..

Unfortunately, Pee in the distant evolution of

the rule, it began to be thoughtlessly applied not only to

general jury verdicts but, to every kind of case. The.

result-has been to gradually cut down the doctrine of

collateral estoppel so that it can have only a very nar-

row éffect. The Restatement, for example, limits binding

or “essential” fiftdings of fact to those upon which the —

judgment was “dependent” (Restatement, Judgments § 68,

comment o at 309, 1942), and the Court of Appeals in

’ this case seems to have followed.the same criterion (infra,

p. 6a). This view would mean that a party can never

be bound by a finding of fact against him where the ulti-

’ mate judgment was in his favor. It would mean that no

matter how long the trial, no matter how thoroughly the

evidence. be presented and siffed, and no matter how

-earefully a judge might make his findings of fact, if the

case should go off on a narrow point of law, the winning

‘party may. relitigate without limit any question of fact

-decided against him. .

This narrowly restricted view of ‘the doctrine of col-.

_ lateral estoppel is squarely in conflict with. this Court’s

‘ruling in Radroad ati Vv. Schutte, 103 U.S. 118, ,

143 (1880) :

7 cannot be -— that a case is not authority on one —

point: because, although that point was properly pre-

‘sented and decided in the regular course of the con-

sideration of the cause, something else was found in

the end which disposed\of the whole matter. Here

the precise question wa8 properly . presented, fully |

argued, and elaborately considered in the opinion.

The decision on this question was as mich a na of

the judgment of the court as was that on any other

of the several matters on | which the case as a whole

depended. Pe

Be

The Restatement view is, furthermore, in conflict with

the decision of this Court upon which it is supposed to

have been based. In Electrical Fittings Corp: v. Thomas |

dé Betts Co., 307 U.S. 241, 242 (1939), the trial court’ had

entered a decree adjudging a patent elaim valid, but -

dismissing the bill; for failure.to prove infringement.

This Court said t the holding of validity, although

- immaterial to disposition of the case, stood ‘‘as an adju-

- dication of one of the issues litigated.’’ Surely this Court

must have meant thatthe holding of validity, if not’

deleted, would have been binding as an estoppel. Yet we

find the very same Second Circuit bench which this Court

_ reversed in Electrical Fittings saying in a later, case that _

this Court had held that the finding of

not an estoppel. Harries v. Air. King P oducts Co., 183

F.2d 158, 161 (1950). And it was the /Harries decision.

by Judge Learned Hand that the Sevefith Circuit Court’

_ of Appeals chose to follow in the present case (infra,

p. 7a) instead of obeying the line of authority based

upon this. Court’s ruling in Railroad Companies, supra.

The Court below also quoted from Yates v. United

' States, 354 U.S. 298, 336 (1957). In Yates, this Court

cited Judge Hand’s opinion in The.Evergreens v. Nunan,

141 F.2d 927 (2 Cir. 1944), for the proposition that col-

lateral estoppel applied to ‘‘ultimate’’ facts and not to

evidentiary or ‘‘mediate’’ facts but, at the sare time, |

_ this Court left open the question as to what circumstances

might justify giving conclusive effect to evidentiary

findings (354 U.S. 338).

What Judge Hand actually held in The Sverereens

was that there are at.’least three possible approaches.

to deciding questions of collateral estoppel: The distine-

tion between ‘‘mediate data’”’ and ‘‘ultimate facts;’’ the

(

. Sod Daw Sal Bae Sen A ht ie i a Ait arb agate Salma’ MEE SE Ee eee

—13—

test of ‘‘necessary to-the result”? in the first case; and

the test of foreseeability,~é.e., limiting the estoppel to

‘future controversies which could be thought réasonably

- in prospect when the first suit was tried’? (141 F.2d at,

928-9). Judge Hand seems to have chosen the ‘‘necessary

*to the result’’ test as most reliable, although not always .

fair, and he “rejected foreseeability as an ‘impossible?’

criterion.

¥ ; es ae

_ Paradoxically, Judge Hand’s holding in The Ever-

greens has been more recently cited to support the fore- —

seeability test that ‘he rejected. In Hyman v. Regenstein, ,

958 F.2d 502, 510-511 (5 Cir. 1958), Judge Wisdom cited. ,

‘The Evergreens and ‘‘stated”’ its rule as follows: . ,

‘©. collateral estoppel by judgment is applicable

only when: it is evident from the pleadings and .

record that determination of the, fact in question —

was necessary to the final judgment and it was

foreseeable that the fact would be of importance

in possible future litigation.’* Tee

- Even more paradoxically, the foreseeability test from .

the Fifth Circuit may have become the rule. of today

in the Second Circuit. In United States v. Kramer;.2!

F.2d’ 909, 917 (2 Cir. 1961), the majority endorsed ‘fore.,

seeability, doubted whether it was ever intended to estab-

lish the ‘‘ultifmate fact’’ criterion as a. rigid rule, and

limited The Evergreens to its peculiar set of facts.

Curiously, the majority and dissent reached. opposite

conclusions while both relied upon this Court’s decision

in Yates. © — ve | ee, oe

. In Laughlin v. United States, 344 F.2d 187 (D.C. Cir.

‘ 1965), Judge Wright rationalized the Yates decision as

based ‘on the foreseeability test (344 F.2d at 192, footnote

20). If Judge Wright is correet and Yates stands for

i

ion ities

the foreaceability Tule, the Seventh Cireuit has obviously

| misunderstood and misapplied Yates since it is ridiculous

to imagine that Judge Mercer was ko blind that he could

not foresee «a patent infringement suit when he made

the finding of fact against the patentee in the inventorship

suit. If Judge Wright is wrong about Yates, then the .

Second and Highth Circuits are also badly misled about

collateral estoppel. These disagreements between Circuits

and between Judges in the same Circuit as to the meaning

of the decisions, including those of this Court, have

become typical and they illustrate the ,widespread | con-

fusion and the need for this.Court to definitively restate

the doctrine of collateral estoppel. |

3. A Finding of Fact Should Not Become Inoperative in

a Later Case Between the Same Parties Merely Be-.

cause the Jurisdiction or the Cause of Action is Dif-

ferent in the Later Case.

The Court of Appeals in this ‘case reacted to the:

' confusion as to collateral estoppel by the simple expedient

of abolishing the doctrine for patent eases. The reason-

ing of the Court does so by completely obliterating the

distinction between that doctrine and res judicata. Thus,

the Court below said that Judge Mercer, in the earlier

-inventorship case, ‘‘did not intend to and did not deal

with’’ issues relating to patent validity (imfra, p. 8a),

and it gave this as another reason why his finding was _

‘not an estoppel in the later infringement case.

.Of course Judge Mercer did not. rule on validity!

He had no jurisdiction to make such a ruling (35 U.S.C. .

§ 146, Sanford v. Kepner, 344 U.S. 13 [1952]). The Court

of Appeals entirely, missed this point and, in deing so,

‘obviously implied that the finding in the first case would

. have been binding in the second only ‘if the first court

ie)

_

had Suddtiillattaia, like the ‘second, to rule directly on the

issue of validity. If that had been the case, the applicable ~

rule would have,been res judicata. And if ‘‘collateral

estoppel” applies only in such a case, then that doctrine

is no more—because it will have been merged into res

judicata."

The Court of Appeals’ reasoning that Judge __— ~~

‘‘did not’ intend’”’ to rule on validity is noteworthy also

because it suggests still another judicial refinement, and

one that will surely be impossible to apply. It suggests

that subsequent courts, instead of looking to see what

was actually tried and determined’ by an earlier court,

must also become mind réfders to’ find out what the

earlier court ‘‘intended’’ should be the effect of its

findings...

The decision of this Court in Becher v. . Contoure ede. ig

‘279 U.S. 388 (1929), should have been controlling in this

case ; it has never- been questioned in any court so far

as we know; and yet it was resolutely ignored by the |

Court below.

The Becher case was a patent infringement suit brenshit

by Becher in federal court. In.a prior state court suit,

Contoure and its assignor’ Oppenheimer had obtained

- a judgment that Becher was trustee ex maleficio for

Oppenheimer of the patent’ and ordering that Becher

, assign the patent to Oppenheimer. The-state court had

found that Becher had appropriated Oppenheimer’s in-

vention. in violation of a confidential relationship - and >

had obtained issuance of the patent by falsely swearing

that he, Becher, was the inventor.

In the indtvininensaint suit, Becher said that the state

court had no jurisdiction to try the inventorship issue

in the. earlier suit since federal courts have exclusive

—16—

jurisdiction i in. sinteut cases, and therefore the state court

- holding that he had misappropriated the invention could

not be given estoppel effect to. invalidate the patent.

_ This Court, speaking through Mr. Justice Holmes, dis-

agreed and pointed out that Oppenheimer’s state court

suit was not to.invalidate the patent but to obtain its |

assignment, and (pp. 391-2) :

‘*. . . even if the logical conclusion from the estab- |

lishing of Oppenheimer’s claim is that’ Becher’s

patent is void, that is not the effect of the judgment.

Establishing a fact and giving a oor effect to it

by judgment are. quite distinct. .

‘‘That decrees ‘validating or invalidating patents

belong to the Courts of the United States does not.

- give: sacrosanctity to facts that may be conclusive

upon the question in issue. A fact is not prevented

from being proved in any case in which it is material,

by the suggestion that if it is true an important

. patent is void—and, although there is language here

and there that seems to suggest it, we can see no

ground for giving less effect to proof of such a fact

than to ‘any other. A party may go into a suit

estopped as to a vital fact by a covenant. We

no sufficient reason for denying that he may ¥.

.equally estopped by a judgment.”’

The Court of Appeals in this case refused to’ honor

Judge Mercer’s finding as to Traver’s 1950 patent appli-

cation by saying that the finding related only to the

issue of the credibility of Traver’s witnesses and not

to the validity of his patent. Under the Becher decision,

that finding of fact under the issue of. credibility did not

..evaporate when the identical fact question was presented

to another court under the issue of validity. If the Court »

of Appeals were right, there would be nothing left of the.

doctrine of collateral estoppel and almost no limit to the

a ee

number of times a party could relitigate fact issues, so

long as he keeps changing forums and forms of action. _

4, The Collateral Estoppel Effect of a Judgment Should

Not Depend upon Whether ‘it Has Been Re-examined ]

by a Court of Review. __

This Court has said that the inquiry as to the con-

- elusiveness of a judgment in a prior suit between the ..

same parties can only be whether. the prior court had

jurisdiction. and whether the question, sought to be raised

in the .subsequent suit, ‘‘was covered-by the pleadings

and actually determined in, the ‘former suit.’’? Johnson

'.Co. v. Wharton, 152 U.S. 252, 261 (1894). At the same

time, this Court said (ibid.):

' **The existence or non- eaistbnes ofa right, in either -

party, to have the judgment in the prior suit re-

examined, upon appeal or writ of. error, cannot, in

any case, control this inquiry.’’

In. the present case, the Court of Appeals thought

that respondent could not have had appellate review

of the finding of fact in question and’ apparently : felt

that this was another reason precluding application . of

collateral estoppel (imfra, pp. 7a-8a). The Court of Ap- .

peals’ view is supported by Electrical Fittings Corp. v.

Thomas ‘& Betts: Co., 307 U.S. 241, 242 (1939), and in

§ 69(2) of the Restatement of Judgments, but that section -

was specifically repudiated by this Court in United States.

v. Munsingwear, 340 U.S. 36, 39. (1950), and this Court.

has more recently held that a winning party can appeal

from adverse findings, Partmar.Corp. v. Paramount

Pictures Theatres Corp., 347 U.S. 89, 99 (1954). In any

event, the Court of Appeals’ view herein is not only

- eontrary to the later decisions of this Court, it also has

“no basis in fact since respondent could have had appellate

review.

eee a See ee

After the original adverse finding: and after denial

of its post-judgment motion to change the finding, a |

_ number of procedures weré ‘open to respondent. It could

have appealed the.denial of its motion; it could -have

moved under Rule 52(b), .Fed. R.°Civ. P.; it could have

moved under Rulé 59(a) for a rehearing on‘any of the

issues and to aménd the findings or make new ‘findings;

‘or it could have moved under Rule 60(b) for relief.

Denial of a Rule 59 motion is appealable, Bros Ince. v.

we Grace Mfg. Co., 320 F.2d 594, 600-601 (5 Cir.

1963); ‘and so is the denial of a Rule 60 motion, Hines

v. Seaboard Air Line R.R. Co., - F.2d 229, 231 (2 Cir.

1965): .

Respondent, however, er no attempt to obtain appel-

late review of the adverse finding. This case, therefore,

may be compared to Munsingwear, in which this. Court

discussed the failure of the United mn to obtain .

appellate review and said (340 U.S. 41):

‘“‘The case is therefore one: where the ‘United

States, having slept on its tights, now asks us to do

what by orderly procedure it could. have done for .

itself. The case illustrates not the hardship of res

judicata but the need for it in providing terminal

points for litigation.”

bile

CONCLUSION : Anh

We bring only one case before this Court but we also

bring an.opportunity to make a decision affecting many —

more. Surely the courts of this country are sufficiently

oceupied with genuinely unresolved conflicts that they

should not expend their resources in aid of repetitious

trials like the present one. We submit that the season ve

is overripe for this Court to make-a simple clear state-

ment reviving and reaffirming the doctrine of collateral

estoppel. )

The overriding consideration is every case whowid be

whether a party has once had a full and fair hearing

on the matter which it seeks to relitigate. All of the

supposed requirements that a finding be ‘‘ultimate,’’

“essential,” “necessary,” “foreseeable,” “final” or “ap-

pealable’’ were originally intended only to promote the

single purpose of safeguarding the right to a hearing,

but. théy*have ‘been exalted and refined far beyond that

purpose so that in the presént case they. have obscured

peehaatinacl the salutary doctrine they were intended to ;

aid.

Respectfully submitted,

Sipney Neuman, ad

Rosert L. Austin,

77 W. Washington St.

Chicago, Illinois 60602

Attorneys for Petitioner.

<p February 10, 1967.