Opposition Brief — Baker Mfg. Co. v. Whitewater Mfg. Co.

; Page

Questions Presented ........ VIR! SO ere |

IE BE IE siccrmcersirversiciciteiaiaian 3

This Case Does Not Warrant Action by This Court 7

The Policy of the Patent Statute is not in Conflict

-with the Equitable Rule of Laches ...................+. 7

The Decision in this Case. does not Conflict with

other Decisions on Laches FON AP SIE NE 4

The Court of Appeals Correctly Presumed Damage

to Respondent from an Unreasonable Delay by

STINE -scsteshcatecbscesnisleseestepabcivesbestsnbegbasaeonesaianiguiieonsen’ 13

Conclusion Fe EA LIE MSs welt ESET A MUN ha SEO 4

AUTHORITIES Citep

, Statute

35 USC. 206 ........... EEA AON NL 2,7,8

Cases

0 : F

Costellg v. United States, 81: Sup. Cr. 534, 365 U.S,

BE I saci co cccnanarreeeereaniiaminannnus 10

Gillons et al. v. Shell Co, of California, 86 F, 24

600, 610 (CCA-9, 1936) ..........000... eR 8,11, 12,13

Gutierrez v. Waterman §,S, Co., 373 US, 206, 215

(1963) ccsccrsssssesersnsee PORE TAINS AE 9, 10

Holmberg v. Armbrecht, 327 U.S. 392, 66 8. Ct.

Bs ts es Fe III cciesecctseootine Ade vetiesessexiicn 1]

ae em OY as jae

pla AC Bik Cl ON Ros BM | AaB ay Le 2S GON Ia 9 eB gai i ering 5 BRE NE

adits

>

il

Page

Kelly v Boettcher, 85 Fed. $5, 62-3 (CCA-8, H

1898 ) ’ Pee 8,11, 12,13

Lansdale v. Smith, 106 U.S, 391, 1S. Ct. 350, 27

L.. Ed. 219 (1882) AES EPS ne es VI

Mosler & Co. v. Lurie, 209 Fed. 364, 370-71 (CCA-

2 19] 3) ; ; ) 12

Meyer Miy.Co. v. Miller Mig. Co., 24 F. 2d 505

(CCA-7 1928) | oe 12,13

Northern Pacitic v. Boyd. . 228 U.S. 482.0... 10

Prevost ve Gratz, 19 US. 481, 6 Wheat. 481, 5 L.

mec S02 CURRY a ee If

Rome Grader vo Adams Mig. Co., 135 F.2d 617. .

(CCA-7 1943) aon ECR ONSR rs | eae

Russell v. Todd, 309 U.S, 280, 60.8. Ct. 527, 84 L.

Ed. 784 (1940)

Simpson v. Newport News, 18 F. 2d 318 (D.C,

S.D.N.Y. 1920) sieasa ty acttadaree teen ate 13

Sullivan v. Portland & K. R. Co., 94 U.S. 806, 24

Ries Dh. SOP CUPID. os cccccsacctss cies I]

United Drug v. Ireland Candy Co., 51 F. 2d 226,

282 (CCA-8, 1931). Se neetagcanierareeea i 8, 11,12

United Drug v. Rectanus, 248 U.S. 90, 39°S8. Cr.

OB CURR oe ieee 12

Universal Coin Lock v. American Sanitary Lock,

16 F..08 701 C190) a... 12

Window Glass Mach. Co. v. Pittsburgh Plate Glass,

ewes 11,12

IS+ Fed. 648, 649-82°(CCA-3, 1922) ..

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1970

No. 1152

BAKER MANUFACTURING CO,,

a corporation,

Petitioner,

vs, |

WHITEWATER MANUFACTURING CO,

a corporation,

Respondent.

Ee

BRIEF OPPOSING PETITION FOR A WRIT OF

CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE

SEVENTH CIRCUIT

QUESTIONS PRESENTED

|, Petitioner's first question is not presented by the.

record, The question assumes that the Court of Appeals

for the Seventh Circuit-held that the defense of laches

does not require the elements (1) lack of diligence, (2)

prejudice to the party asserting defense. In fact the

Court of Appeals held that prejudice would be presumed

where the delay was unreasonable and unexcusable, The

presumption was not overcome. ‘Thus both elements were

present.

2

4 Petitioner's second question is not presented by the

eed “Phe Court of Appeals did not presume damage

Wi reapondent by the mere passage of time. Lt presumed

Haniige Hind wereaonable delay, and trom petitioner's

Hilite Qe neet ie burden of proof that such delay was

ereionble Tt nay alse have relied on District Court

Vbiite alee prejidioe to respondent,

Phe Wehbe by the District Court that it would not be

WijMet te teapiiite respondent to defend the action is not

Hitiatieled Phe judgment of the Court of Appeals

Pn tt Have been rendered without reversing: that eon-

» Vivatenn .

7

1 Petitioner's third question os niet presented by the

Heel Ae toted abowe the Court of Appeals did not

Whe tile prewueing in jury to the detendant by the

Hee Pramite of time Rather at followed a long estab

> Habel cule preauming injury to the defendant where the

Helay te vitteveonable, and held that the ANAloOgoUN stat

Hie oT Ti iHiene ie a measure of the unreaionableness.

The Darden of proot wae thus on the petitioner, rather

Wath oid reapendent as umproperly held by the District

bet Petitioner failed te meet that burden.

Veritioner atutes that 36 ULS.C. 286, which denies re-

PVOPY Foe patent infringement committed more than six

vedi prior te filing the complaint, is the on/y limitation

mw relief Phere te no indication in that seetion that it

te He oH) Hititation on patent actions. Petitioner's as-

rHiied prilicy Would leave no room for laches or any

ihe: eytitable doctrine, such as the glean hands doc-

Hite Which forbide relief to those who violate the anti-

Hat Hawa or commit similar acts, ete,

7

No qteetion ie properly presented by petitioner,

tas ae |

3

STATEMENT OF THE CASE

In general the facts stated by petitioner are correct,

but the following vorrections and additional facts are

required,

Petitioner's reference to a District Court finding that

respondent had not in fact been damaged by -the delay

is incorrect. ‘The conclusion of the lower court related

to unfairness and not to damage (A-40). ‘The court did

not anywhere indicate that its denial of the defense of

Jaches was based on a finding that defendant suffered

no prejudice through the delay. ‘Fhe discussion appears

to indicate that the trial court felt that defendant was

unjustified in believing that plaintiff no longer pressed

its charge of infringement (A-40). ‘The Seventh Cir-

cuit correctly held that this placed an improper burden

on defendant and accordingly that the trial court's de-

cision was incorrect as a matter of law (Trial Court

Opinion A-40, Court of Appeals Opinion A-2, 3). Thus

the Court of Appeals did not overturn any factual find-

ing of the District Court, nor even find a fact which

the District Court had failed to find, but relied on a pre-

sumption. of damage which the District Court had failed

to apply.

Petitioner states that its letter of September 19, 1957

offered to “settle the controversy”. As pointed out by

the Court of Appeals the letter was an offer of cross-

license which did not repeat the charge of infringement

and which specifically acknowledged that respondent de-

nied infringement (A-10, Baker's Exhibit 11, Appendiy

pp. 355, 226).

Petitioner refers to a delay in bringing suit of seven

years and seven months. It fails to draw attention to the

1 Calas: ae oe

aR. WR: seep dane &

4

fuct that the total delay in a suit Was over nine

“years, as held by the Court of Appeals (A-2), and wis

held unreasonable,

At page 4 oot phonttl’s bret, the planutl indicates

that the rule of Law applied by the District Court Was

that "mere delay does not alone constitute laches and that

to uphold a defense of laches there must be both (1)

dn unreasonable delay by phanttl and (2) a showing that

defendant has been, or will be, damaged or prejudiced

by the delay.” “The District Court did) not specitioally

adopt that test, nor did at echirity which element was

found facking at it did apply it Te found speeitie facts

showing prepudice to respondent (A 86, 38) and put

the burden on respondent to explain the delay. Te ehus

appears that element (1) was found wanting. In any

vise the Courtot Appeals held that the decision of the

District Court was reversible error after stating: that it

would reverse only fora clear abuse of diseretion (A. 2,

% 12) Phe Cour lot Appeals cast upon petitioner the

burden of (1) excusing an unreasonable delay, and (2)

digproving the presumption of damage which flows from

thatdelay (A912). Phiinatt has not met either burden

Dut attempi to obnun a ruling of law which would free

ie from both burdens, ‘Tn fact plaintif® specitically indi

vafes in ity petition for certiorart that it does not chal:

lenge the ures denial of it} excuses for the delay (Peti.

honer’s Brief, p. +), |

Petitioner demands a showing of damage by respon-

dent. Respondent's answer is twofold,

Prejudive to respondent has been shown, The Court

of Appeals was correct in presuming damage where the

delay i unreasonable. Even if damage had not been pre-

sumed, proot of damage is ample (see pages 5 and 6),

5

Petitioner states that the Court of Appeals did not dis-

turb the District Court’s finding that the delay did not

work an injustice on respondent (A-40). The Court of

Appeals necessarily overruled that conclusion when it

reversed the District Court (A-12, 13). In any decision

as to an equitable defense, a conclusion as to where the

equities lie is crucial. Moreover, such a conclusion is

dmplicit in the holding that petitioner's delay of over

nine years is unreasonable (A-3, 9-12),

Petitioner further states that the Court of Appeals left

undisturbed the District Court finding that respondent

had not been damaged by the delay. Neither the District

Court (A-37 to A-40) nor the Court of Appeals (A-1 tu

A-13) found that defendant had not been prejudiced by

delay. “Phe CA-7 did hold that there is a presumption

of such damage. The District Court decision points out

particular items of prejudice to respondent (A-36, 38)

even though it did not rule in favor of respondent on the

defense of laches. |

One of the issues in the District Court was whether

Mr. Watry, one of the named inventors in the Patent in

suit, was in fact an inventor (A-35 to 37). Another is-

sue was whether plaintiff was guilty of unclean hands in

deliberately including Mr. Watry as an invéntor with

full knowledge of the fact that he was not sath an in-

ventor, and in knowingly taking an assignment of sub-

ject matter belonging to the State of Wisconsin. Re-

spondent asserted that any contribution made by Mr.

Watry to the alleged invention of the patent in suit was

made while he was an official of the State of Wisconsin

whos¢ duties included promoting standards of well sani-

He by promoting the use of structures which would

achieve the objectives of the patent in suit, and further

6

asserted that Mr. Watry's contribution to the structure

~ shown in the patent was made public more than one year

prior to the application for the patent in suit. Much of

~ the evidence was Mr, Watry’s own testimony, The Dis-

trict Court found (A-36) that Mr, Watry understanda-

bly had some difficulty remembering, Prejudice is also

shown by the District Court (A-38) quoting petitioner's

president showing the change in the (alleged) infringe-

ment situation during petitioner's long silence, Respond:

ent increased its infringing business and its employees

devoted thereto (Baker's Exhibit 38, App. 388, 227;

Whitewater Exhibit 15-16, App, 532-3, 229-30, Baker

Testimony App. 140), and admittedly had non-infring-

ing structurer it could have made instead (App. 190),

Were the respondent to be held liable for damages for

the last six years of the alleged infringement, the dam-

ages would be many times greater on defendant's pro-

duction duving those years than it would have, been dur-

ing the period just after plaintiff's charge of infringe-

ment in 1986 (Baker Exhibit. 38, Whitewater Exhibit

15-1@, supra,). |

The statement of the case by petitioner fails to indicate

that petitioner failed to press its negotiations for a period

of over a year prior to the letter of September 19, 1957

(A-8, 9), that it did not reassert its charge of infringe-

ment in 1957 but rather pecognized that defendant denied

infringement without reasserting its charge, The letter

of September 19, 1957 was an offer of a cross-license,

not a charge of infringement (A-9, 10), That letter was

followed by a deliberate additional delay of seven years

and seven months during which petitioner never reas-

serted its: charge of infringement despite the increas.

ing sales of respondent which were known to petitioner

(A-11). Petitioner made an anonymous market survey,

é

7:

preserving its appearing of inaction (A-38, App. 129-

32). These facts justified respondent's belief that_the

charge had been abandoned.

THIS CASE DOES NOT WARRANT ACTION —

BY THIS COURT

The asserted conflicts urged by Petitioner are not real.

They depend on differences in fact backgrounds of the

cases, on the relative equities between each set of parties, .

and on petitioner's insistence that the instant case be an-

alyzed ds one of “mere delay” despite’ the holding of

the Seventh Circuit Court of Appeals that the rules ap-

plicable are those relating to “unreasonable delay”. Peti-

tioner has not requested a ruling on the point. Many of

petitioner’s cases allegedly demonstrating conflict with

the decision below are distinguishable, as they relate

to mere delay for periods shorter than the six years of

the analogous statute of limitations.

Respondent notes that in general such an issue, relating

solely to one fact situation, is not-taken up by this court

on writ of certiorari, Petitioner says that the many cases

on laches require a uniform rule, but mere numbers of

cases count little unless the facts are similar. Petitioner

does not so state,

THE POLICY OF THE PATENT STATUTE IS

NOT IN CONFLICT WITH THE EQUITABLE

' RULE OF LACHES

The asserted conflict with 35 U.S.C. 286 does not exist.

Laches and the other equitable defenses long aptedate

the predecessor to the statute (first enacted March 3,

1897, ¢, 391, 86, 29 Stat. 694) and continued unchanged

after its passage. doctrine of laches has always ex-

isted concurrently with statutes of limitation, modifying

their effect. Petitioner's rationale would leave no room

for equitable defenses at all, Had Congress so intended,

‘it has had ample time to say so between 1897 and the

present, It particularly had ample opportunity in. the

gefieral codification and revision comprising the Patent

Act of 1952, now 35 U.S, Code, Tt has not done so, ‘This

court and all others having equitable: powers remain

free to apply the doctrine of laches,

The question of compatibility between the equitable

defense of laches and statutes of limitation was discussed

in Gillons v, Shell, 86 F. 2d 600 at 610 (CCA-9, 1936),

The court specifically stated that the defense was avail-

able even where the delay was /ess ty the period of

limitations, The line of cases which shifts the burden

of proof to plaintiff where the delay is greater than the

period of limitation assumes that the defense is compat:

ible with a statute of limitations, See for instance Gillons

v. Shell, supra; Kelly v, Boettcher, 88 Fed, 55, at 62-3

(CCA-8, 1898) (just after passage of the statute in

1897); United Drug v, Ireland ‘Candy Co,, $1 F, 2d 226

at 232 (CCA-8, 1931) and cases cited therein,

The defense of laches was developed by chancellors

in equity, hearing cases directly related to cases at law,

In many cases the latter were subject to statutes of limita-

tions but not the former, Laches as a defense developed

to correct the inequity of rigid reliance on periods of

limitation, Petitioner has not shown any reason of pub-

lic importance why the law should be cut away from its

historic content, It suggests only that it should not have

the burden of explaining its delay, or of disproving

damage, in a case wherein it deliberately delayed longer

9

than the period of limitations, with full knowledge of

the facts, giving the appearance of abandoning its claim,

while defendant expanded its potential liability, its em-

ployment, and the kinds of alleged infringing devices,

and while witnesses forgot facts crucial to the defense. —

THE DECISION IN THIS CASE DOES NOT

CONFLICT WITH OTHER DECISIONS ON

LACHES

‘The decision in this case by the Court of Appeals does

‘not conflict with Gutierres vs. Waterman S.S. Corp., 373

Us. 206, 215 (1963). In that case the Supreme Court

said that the test of laches is prejudice to the other party.

In that case there was a finding that there was no preju-

dice, In this case there is no finding by the trial court

that defendant was not prejudiced. The trial court put

the onus for the delay, and the burden of proof, upon

defendant (A-37, 38, 40) and held that it was not unjyst

to defendant to have to defend this suit. These holdin

were reversed, The trial court did find that Mr. Watry, ~~

a crucial witness as to the unclean hands defenses, had

difficulty remembering the facts after so long (A,36).

It also found that plaintiff intentionally waited to start

suit until after the damages increased (A-38, center &

bottom). These fact findings were not reversed. —

The Court of Appeals found that after unreasonable

delay is proven by respondent, there is a presumptic on

that defendant was prejudiced (A-3). Having made such

a finding it.did not find it necessary to discuss the fact

evidence but it must have believed that the evidence was

at least consistent with the presumption of damage or

it would have held the presumption to have been over-

come,

10

The circumstances of this case are radically different

from those of Gutierrez v. Waterman since the damages

here are measured by a reasonable royalty for the sales

volume, which as shown by the evidence increased steadi-

ly during the period of the delay. In’Gutierres the dam-

ages were for injuries which did not change during the

delay. Moreover, the delay was much shorter than that

present in this case. Even if we grant plaintiff's premise

that both an unreasonable delay and actual damage are

necessary, those conditions have been met.

In Costello v, United States, 81 Sup. Ct. 534, 365 U.S.

279 (1961), the Court specifically found that although

the delay had dimmed the memory of some witnesses

that this had benefited the petitioner since it impeded the

government in meeting a heavy burden of -proof in a

de-naturalization proceeding.

Northern Pacific v. Boyd, 228 U.S. 482, was a case

in which the party charged with laches was in fact dili-

gent in reducing his claim to judgment so that the later

suit could be brought.

Petitioner's argument seems to assume that the preju-

dice to defendant in this case is some unspecified legal

fiction having no relationship to the facts. Actually, it

is more in the nature of a determination of the burden

of proof, the Court of Appeals having held that after

defendant proved an unreasonable delay, thus meeting

its burden, the burden was on plaintiff to show that

the delay was excusable and that it had not prejudiced

the defendant. Here the plaintiff never put in any evi-

dence even tending to disprove defendant's evidence of

prejudice and in fact put in evidence of its own showing |

the prejudice (Baker Exhibit 38, App. 388, 227, Baker

testimony App. 128-132, 140). As the plaintiff would re-

: M

quire at the top of page 9 of its brief, the delay in this

case was such as to prejudice the defendant.

Each decision on laches is unique, depending on: the

relative equities between the parties.

In general, cases on laches fall into four categories:

1) the cases in whigh no significant delay is-fovad, 2)

those held to involve “mere delay”, 3) those held to in-

volve unreasonable delay, and 4) those in which there

are specific.acts leading to equitable estoppel. Only cate-

gory 3) requires discussion here.

Category 3) is illustrated by the following cases:

Gillons v. Shell, 86 F. 2d 600 (CCA-9, 1936)

Kelly v, Boettcher, 85 Fed. 55, 62-3 (CCA-8,

1898)

United Drug v. Ireland Candy, 51 F, 2d 226, 232

(CCA-8, 1931)

Window Glass Mach, Co. ». Pittsburgh Plate

Glass, 184 Fed. 645, 649-52 (CCA-3, 1922)

Holmberg v..Armbrecht, 327 U.S. 392, 66 8.. Ct.

582, 90 L. Ed. 743 (1946)

Prevost v. Gratz, 19 U.S. 481, 6 Wheat. 481, § L.

Ed. 311 (1821) |

Russell v, Todd, 309 U.S. 280, 60 S. Ct. $27, 84

L. Ed. 754 (1940)

Sullivan o Portland & K. R. Co., 94 U, S., 806,

24 L. Ed. 324 (1876)

Lansdale v, Smith, 106 U.S. 391, 1S. Ct. 350, 27

L. Ed. 219 (1882)

Sek an

Umited Drag o. Revtanes, MB US. WTS OY

48 (V9EN) (descwsers peeing wt haters dam

ages but net an myenctgon )

Mosivs & Qo. ww. Verte, NW the. 364. STA La |

(CON 19S) Chars damages but aor rT

tron )

Universal Com tivt « dmerivan Sanitary Lock.

W4 Od PRE COCA DT, 1939)

Mews Mite. Co. ¢ Miller Mite. Sp. 4PM Ws

(CUA, 1928) Pe

Dhe Seveath Circuit Court ot Appeals heid that this

vase mvalves unrcasonable delay (A 3,9. 1). adopune

the tact findings ot the District Court (AS, UTS bat re

ecting its comclusrons therctrom (A-9) becawee the ber

den of proot was erroneously put on respondent to cy

/euse the delay (A910). Dhe Court ot Appeals proper

Iw held that the burden rs on petitioner, the patente}, to

prove that the delay is cxcusable. once wnreason de

lay is shown. and held that wh re the delay us unregson

able and bevond the analogous statute ot lirmaitatic }-

udice to detendant- respondent is presumed (A-3). Ge

loms ©. Shell, No F.2d 600 (COA-9, 19%) - Acily ¢.

Boettcher, 88 Fed. 88, 62-3 (CCAR. S981: Cneted’

Drug v. Ireland Candy, 31 Fo 2d 2%, 232 (CCAR

}O31),

Lachesewill ordinarily bar an accounting, even in the

case of mere delay, although an injunction will ordinari

lv be available in such cases.

Window Glass Mach. Co. ¢. Pittsburgh Plate

Glass, 284 Fed. 645 (CCA-3, 1922)

18

Meyer Mite. Go. o. Milter Mfg. Go, 24 F.2d

‘WS (OCA-7, 1928) . t

- Simpron oe. Newport News, 18 Fd 31k (DC.

S.D.N.Y., 1920) Ars

Rome Greder vo. 4dams Mig. Co, 135 FB) 24 617

(CCA.-7, 1948)

. =

if the Court of Appeals mcorreetly demed imjunctive

relief, damarcs should be barred on this grownd. The

net effect would be the same since the patent has expired

In effect the issues sought to be raised by petitioner, if

properly presented, are moot.

THE COURT OF APPEALS CORRECTLY PRE.

SUMED DAMAGE TO RESPONDENT FROM AN

UNREASONABLE DELAY BY PETITIONER

The rule of Gillons ov. Shell, 85 Fo 24 GOO (CCA-9.

1936) appropriately shifts the burden of proof to peti-

tioner to show that respondent was wef damaged by peti.

tiener’s unreasonable delay. The delay was much longer

than the analogous statute of limitations, and gave. the

appearance that the claim bad been abandoned. Petitioner

apparently views Gellons v. Shell as an anomaly former.

ly limited to the Ninth Circuit but see Kelly v. Boettcher,

8S Fed. 55, 62-3 (CCA-8, 1898) and Umited Drag v.

Ireland Candy Co., §\ F. 2d 226, 232 (CCA-8, 1931),

and the numerous cases from other circuits requiring

plaintiffs to justify unusual delay, as cited by the Court |

of Appeals in this case.

=

$

|

2

:

#

I BR PRs os

.

14

It accords with conscience that when respondent has

proved an warcasonadle delay, the burden should shift

te petitioner to justify its lack of diligence. Moreover,

sume of the cases port out that the memories of witnesses

mevitably dim with time, and that failure to act appears

to a defendant tw show abandonment of the asserted _

claim, thus furnishing a basis for the presumption. Of

course petitioner was free to mect these burdens of proof,

if the facts warranted. [t admits it has aut done so (Peti.

toner’: Brief, p. 4) and that the delay is unexcused.

The Court of Appeals cited, correctly, many more

cases justifying its decision (A-3 through 8) |

The decision below did not reach the question of

actual proof of prejudice ty respondent from the delay,

but the trial court held memory of a crucial wit-

ness Was impaired with reference t a group of related

unclean hands defenses. “Also it isnot denied that peti-

toner could recover far more today in money damages

than it could have recovered in 1956 or 1957, and that

the delay was deliberate, with full knowledge of the

alleged infringement, with the intent of waiting until

the recoverable damages shoyld be greater (App. 129-

138, 140). Even petitioner's market survey was anony-

mous, preserving the appearzace that the claim was aban-

‘doned (App. 129). Respondent reserves the question of

actual damage if certiorari is granted.

q

CONCLUSION

The decision below was correct.

There is no overriding public interest in this case. The

.

application of the rule of laches to the case of an ex-

is

“e F

Pired patent is significant only to the parties. If the de-

cision below is reversed, all of the other issues would

return to the Court of Appeals despite expiration of the

The Petition for Certiorani should be denied.

Respectially. sebmined,

Aan B. WHenver

06 W. Wisconsin Avenue

Milwaukee, Wis. 53208

) Counsel for Respondent

4 January 28, 1971

<_

BAKER MANUFACTURING ©O.,

a corperation,

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=

WHITEWATER MANUFACTURING. c~o:,

Hh itty

Ht wilt

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HOT