Petition for Writ of Certiorari — Westinghouse Co. v. Wagner Mfg. Co.
Supreme Court brief1912
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OCTOBER TERM, 1909. [guise seyeme Coet, U
DEC 28 1909
In Equity.
JAMES H. McKENNE
i‘ cL
WESTINGHOUSE ELECTRIC & MANUFACTURING
COMPANY, PETITIONER,
vs. s
WAGNER ELECTRIC MANUFACTURING COMPANY,
RESPONDENT.
Petition for Writ of Certiorari
FROM THE
SUPREME COURT OF THE UNITED STATES
TO THB
UNITED STATES CIRCUIT COURT OF APPEALS
FOR THE EIGHTH CIRCUIT.
7
THOMAS B. KERR, —
PAUL WELL,
Solicitors and of Counsel for Petitioner,
Westinghouse Electric & Manufacturing
Company.
Supreme Court of the United States
OCTOBER TERM, 1909.
In Equity.
WESTINGHOUSE ELECTRIC & MANUFACTURING
COMPANY, PETITIONER,
VS.
WAGNER ELECTRIC MANUFACTURING COMPANY,
RESPONDENT.
PETITION FOR WRIT OF CERTIORARI FROM THE SUPREME Cour?
OF THE UNITED STATES TO THE UNITED STATES CIRCUIT
Court OF APPEALS FOR THE EIGHTH CIRCUIT.
———
To the Honorable the Chief Justice and Associate Justices
of the Supreme Court of the United States:
Westinghouse Electric & Manufacturing
Your petitioner,
respectfully repre-
Company, 2 Pennsvivania corporation,
sents :
That the following rules of law voverning the profits which
a complainant in a suit in equity for infringement of letters
a we
patent is entitled to recover from a defendant, under sec.
tion 4921 of the Revised Statutes of the United States, where
the defendant has made and sold a patented invention in yio.
lation of complainant's rights, have been established by the
decisions of this Court:
(1) Where the patented invention is for “a complete
thing, consisting of a certain combination of elements,” re.
sulting in a new or improved machine or manufacture, and
the defendant, in violation of complainant's rights under the
patent, has made and sold machines or manufactures which
embody in their construction such invention, “the whole of
it,” thereby having been guilty of making and selling the
patented machine or manufacture; in such a case the com-
plainant is entitled to recover al] the profits made by the de-
fendant in the manufacture and sale of such infringing
machines or manufactures, Elizabeth vy. Pavement Co., 97
U.S. 126, 141; Hurlbut v. Schillinger, 130 U. 8. 456, 472;
Crosby Valve Company vy. Safety Valve Co., 141 U. §. 441,
453, 454.
(2) In such a case, if it appear that the defendant, in the
manufacture of such infrir
iging machines or manufactures,
has also embodied
in them some addition or improvement,
the burden of proof is on the defendant to show what pro-
portion of the profits made on said infringing machines or
manufactures was due to such addition or improvement: and
if the defendant fail to produce data from which the Master
may ascertain what proportion of the profits made by the
defendant were due to such addition or improvement on the
patented invention, then the complainant is entitled to re-
cover all the profits made by the defendant in the manu-
facture and sale of the infringing machines or manufactures,
Elizabeth vy. Pavement Company, 97 U. 8. 126, 141; Crosby
=
=
Valve Company v. Safety Valve Co., 141 U. S. 441, 444; Rub-
ber Co. v. Goodyear, 9 Wall., 802, 803, 804.
The above rules, established by this Court in the cases
above cited and in other cases referred to in this petition, are
especially applicable, where, from the record, it affirmatively
appears—-as it does in the case at bar by matters found and
decreed antecedently to the particular case at bar, in
respect to which matters this Respondent is legally and ad-
mittedly bound—that:
The invention of the patent was a distinct advance in the
art, recognized as such by the public when the patented in-
vention was first introduced, and where the infringing ma-
chines were sold as units or complete things, each consisting
of the certain combination of elements claimed by the patent,
each of the infringing machines constituting in itself a sepa-
rate unit or entirety, embodying, as an entirety, the complete
machine or manufacture claimed as an entirety in the patent
in suit.
The above rules of law, established by this Court in its
construction of Section 4921 R. 8. U. S., have been set aside
by the majority opinien of the U.S. Cireuit Court of Appeals
for the Eighth Cireuit in the case at bar (although said
majority opinion was dissented from by Sanborn, Circuit
Judge, in his separate opinion in this case), as we shall now
proceed to particularly point out.
That heretofore, to-wit, on August 19, 1909, in an opinion
delivered by Riner, Distriet Judge, concurred in by Van
Devanter, Circuit Judge, but dissented from in a separate
opinion of the same date delivered by Sanborn, Circuit Judge,
on appeal from the Circuit Court of the United States for the
Eastern Division of the Eastern Judicial District of Mis-
4
ails
—-—
souri, in case No. 2857 in the said U. S. Court of Appeals for
the Eighth Circuit, in which case your Petitioner was ap-
peilant and this Respondent was appellee, a certain final
decree, found between pages 699 and 703 of the transcript
of the record in this case, entered by the Circuit Court on the
5th day of March, 1908, was affirmed.
In affirming the said decree in and by its said opinion filed
August 16, 1909, the said Majority of the United States
Court of Appeals affirmed the following propositions:
That letters patent of the United States (being the letters
patent involved in this suit and reproduced between pages 244
and 246 of the record) issued to George Westinghouse, Jr.,
for Electrical Converter, dated July 12, 1887, and numbered
366,362 were good and valid in ‘aw, particularly as to the
fourth claim thereof, and that your setitioner, was the owner
of said letters patent and of all righ.s thereunder.
That George Westinghouse, Jr. was the first, true and
original inventor of the inventions and iimprovements de-
scribed and claimed in claim 4 of said letters patent.
That the Respondent herein, Wagner Electric Manu-
facturing Company, had infringed claim 4 of said letters
patent and the exclusive rights of your Petitioner under the
sume, by inaking, using and selling electrical converters or
transformers embodying in their construction and principle
of speration the combination, substantially as deseribed in
said Westinghouse patent, of an electrical converter or trans-
former constructed with open spaces in its core, an inclosing
case, and non-conducting fluid in said case adapted to cir-
culate through said spaces and about the converter or trans-
former.
That the report of the Special Master, Henry H. Denison,
Esq., to whom this cause had been referred by the interlocu-
ieee:
_
tory decree entered in this cause on February 16, 1904, by the
Cireuit Court, (Record pp. 345-347), to take and state an ac-
count of damages and profits (for the report of said Master,
see Record, pages 349 and 401), be disapproved and the excep-
tions thereto sustained, and it was ordered that your Peti-
tioner was “entitled to nominal damages only on account of
the infringing devices.”
The said Special Master had found (Record 401) that
your Petitioner was entitled to recover from this Respondent,
on account of the manufacture and sale of the infringing
transformers, as profits made by this Respondent, by reason
of said infringement, the sum of $132,433.35.
In the confirmation of this judgment or decree by the ma-
jority of the Court of Appeals, not only has your Petitioner
been deprived of $182,483.55, awarded to your Petitioner by
the Master’s finding, and also interest thereon from the date
of the filing of the said Master’s report (July 29, 1907), but a
precedent has been established in the United States Circuit
Court of Appeals for the Eighth Circuit which is in direct
conflict with the decisions of the Supreme Court of the
United States in analogous cases and is also in conflict with
the decisions of the United States Circuit Courts of Appeal
in other circuits of the United States——a precedent which, if
allowed to stand, will eventually and necessarily destroy
rights of property of inestimable value.
This petition is made not only because the question arising
thereunder is one of great gravity and importance, affecting
valuable rights of property, but chiefly “in the interest of uni-
formity of decision,” the conclusions of the opinion of the
majority of the Circuit Court of Appeals for the Righth Cir-
cuit in this case, as well as the reasons given in the said
opinion for the said conclusions, being, as above stated and
7
as we shall now proceed to demonstrate, in this petition and in
the brief accompanying the same, in direct conflict with well
settled principles and rules of law established by this Court
and followed by Circuit Courts of Appeal in other circuits
of the United States.
The letters pateat involved in this suit relate to an
electrical transformer or converter. The said letters patent
are found in the record in this case, between pages 244 and
246. Claim 4 in suit is in the following words:
“4. The combination, substantially as described, of
an electric converter constructed with open spaces in its
core, an inclosing case, and a non-conducting fluid or
gas in said case adapted to circulate through said spaces
and about the converter.”
The bill was filed on June 24, 1902. Before the bill was
filed a contest had been had between your Petitioner and Ke-
spondent’s Vendee, the Union Carbide Company, in the See-
ond Circuit, with respect to these very identical letters patent
and this identical claim 4. Less than one month before the
bill in this ease was filed, that is to say, on May 29, 1902, that
contest culminated in an opinion rendered by the Cirenit
Court of Appeals for the Second Cirenit, which opinien, as Tre-
ported in the 117th Federal Reporter, between pages 495 and
DOL thereof, was stipulated into this case at page 443 of the
record. In and by that opinion the UL 8. Cirenit Court of Ap-
peals for the Second Circuit affirmed the decree and opinion
of the U. 8. Circuit Court for the Western District of New
York. which latter opinion is reported in 112th Federal Re-
porter between pages 417 and 431, that is to say: In the case
of your Petitioner against Union Carbide Company, in
which case the Circuit Court for the Western District of
New York, on November 11, 1901, rendered an opinion and
ordered a decree sustaining said letters patent No. 366,362
a
and finding that said Union Carbide Company, Respondent’s
vendee, in the use of certain transformers which said Union
Carbide Company had purchased from this Respondent, said
Unien Carbide Company bad infringed the above-recited
claim 4 of the said letters patent No. 366,362, the Circuit
Court in that case stating, at page 418 of 112 Fed.: “The
Waguer Electric Manufacturing Company of St. Louis,
Missouri” (which is this Respondent), “furnished the alleged
infringing transformers to the defendant and it may therefore
be regarded as the real defendant in each case”.
In the opinion of the Court of Appeals for Second Cirenit in
the Union Carbide case (117 Fed. 497, 501), rendered May 29,
1902, the Court, referring to the opinion of the Court below
as found in 112 Fed. £17 (see LIT Fed. 495), also found that
the said letters patent were good and valid, sustained the
same, found that the Union Carbide Company had infringed
claim 4 thereof, and affirmed the decree of the Cireuit Court
as to said patent No. 366.562 (see 117 Fed. 501).
The form and construction of the infringing trausformer
made and sold by this Respondent to said Union Carbide
Company, and the defendant's infringing transformer re-
ferred to in the opinions of the Cireuit Court aud Circuit
Court of Appeals in the said case against the Union Carbide
Company, is illustrated af page 168 of the record in the case
at bar. As to tht construction of transformer, found to
have infringed claim 4 of the patent in suit, it is admitted
on this record that, between the date of the filing of the bill
(June 24, 1902) and six years prior thereto, this Re-
spondent has made and sold, ineluding the transformers
sold te) Carbide Co. Go24 infringing transformers
for which it received the sum of $955,271.76. The
answer in this case (in Paragraph IX thereof, at
TAL
willie
page 13 of the Record), admits that this Respondent
had been duly notified of the grant of the letters
patent in suit and of its infringement thereof; and said para-
eraph of the answer contains the following admission in re-
gard to the construction of Respondent's infringing trans
formers :
“And this defendant admits that it has, since the
12th day of July, 1887, and subsequent to the as-
signment to the complainant, within the Eastern Dis-
trict of Missouri and elsewhere throughout the United
States, made, used and sold devices or apparatus which
embody the invention or discovery claimed in claim 4
of said letters patent.”
Furthermore, with specitic reference to the construction
of transformer illustrated at page 168 of this record, after
the pleadings in the case at bar were made up and in
connection with the complainant’s proofs-in-chief, the follow-
ing stipulation was made and appears at page 19 of the
record :
“Pirst, That the defendant prior to the filing of the
bill of complaint herein, did manufacture and sell elec-
trical transformers constructed and intended to be used
as shown and described in figure 24 of an article which
appeared in the issne of the “American Electrician’ for
January, 1900, on page 18 thereof, said ilHustration show-
ing a transformer having parallel primary and second-
ary coils and a core composed of thin plates of soft
iron arranged in groups, said groups being separated
from each other by blocks, thus providing spaces be-
tween the groups of plates; and the coils and core he-
ing enclosed in a metal case containing a non-conducting
fluid which circulates through the open spaces in the
laminated core.”
It further appears on this record that on the accounting
before the Master, Mr. Layman, the General Manager and
Sere: : -
= =
Treasurer of the Respondent company, admitted (Record
105, 106) that since June 24, 1896, which was six years be-
fore the filing of the bill, up to the date of the filing of the
bill, this Respondent had manufactured and sold at) least
6524 transformers similar in construction to the one illus-
trated at page 168 of the record, and each and all of which,
in accordance with the admission in the answer hereinbefore
recited and the stipulation hereinbefore recited, embodied
in their construction the invention claimed by claim 4 of the
Westinghouse patent in suit,
As the opinions of the U.S. Cireuit) Court and U. 8&8.
Court of Appeals in the suit against Uuien Carbide Co, show
isee 112 Fed. 417 and 117 Fed. 195), and as the patent
in suit. itself shows, claim 4 of the said patent hereinbefore
recited is the only claim which covers the converter or trans-
former deseribed in the said letters patent in its complete
form and as an entirely,
Therefore it stands admitted on this record and proved
beyond question —a fact not questioned by the majerity
opinion of the U.S. Cirenit Court of Appeals in the ease at
bar—that on the accounting before the Master if) was es-
tablished that between June 1896 and the filing of the bill
of complaint herein, with full knowledge of your Petitioner's
rights under the letters patent in suit, this Respondent had
manufactured and sold at St. Louis, Missouri, 6524 infring-
ing transformers, each and every one of which embodied,
as an entire and complete transformer, precisely that in-
vention the subject-matter of claim 4 of the patent in suit
which had been passed apon and found infringed by the
U.S. Circuit Court for the Western District of New York,
in the ease of your Petitioner against the Union Carbide
Company, and by the U. 8. Circuit Court of Appeals for
the Second Circuit, in the same case, on appeal.
alibi
When your Petitioner filed its bill in the case at bar, it
recited in Paragraph VI thereof the history of the litigation
in the case against the Union Carbide Company, Respondent's
vendee, and charged:
“That the devices involved in the said suit, and whieh
were used by the Union Carbide Company, the defend-
ant therein, were manufactured and sold by the Wag-
ner Electric Manufacturing Company, the defendant
herein, and that said suit against the Union Carbide
Company was defended by said Wagner Electric Manu-
facturing Company and was argued by its counsel, and
that. the matters and thines found and decreed in the
said suit against the Union Carbide Company are rex
adjudicata against the said Wagner Electric Manufac-
turing Company.” (See Record 4, 5.)
In its answer the Respondent (in Paragraph VI and VII
thereof) specifically and in detail admitted the allegations
of the bill in respect to the prior litigation under this pat-
ent in the suit against the Union Carbide Company, and then
stated in Paragraph VITL of the Answer (pages 12 and 13
of the record) as follows:
“This defendant admits that the device involved in
said snit and used by the Union Carbide Company, the
defendant therein, was manufactured and sold by this
defendant, and that said suit against the said Union
Carbide Company was defended by this defendant and
wes argued by its counsel, and that the matters and
things found and decreed in said suit against the Union
Carbide Company are res adjudicatae against this de-
fendant.”
There was no contest in the Circuit Court nor in the Cir-
cuit Court of Appeals in the case at bar on the question as to
whether or not these Union Carbide transformers and the
6524 infringing transformers accounted for before the Mas-
ter infringed claim 4. That fact is conceded and has been
conceded throughout the litigation in this case. The only
contest in the case at bar, prior to the interlocutory decree,
found at page 745 of the record, was in regard to a certain
“Type M° transformer made and sold by this Respondent
after the decree in the Carbide suit. One question on the
appeal to the U. 8. Court of Appeals for the Bighth Circuit
ed to that “Type M” transformer. On this peti-
tion we are not concerned with that “Type M” transformer.
The Cirenit Court found that said “Type M” transformer
did not infringe claim 4. Therefore, when your Petitioner
appealed the whole case, after the entry of the final decree,
eve of the questions before the U. 8. Circuit Court of Ap-
peals for the Eighth Circuit related to that “Type M” trans-
former. In the interlocutory decree in this case, (Record
p. 345-347) entered February 16, 1904, by Adams, Cireuit
Judge, it was expressly found that respondent’s original
type or construction of transformer illustrated at page 168
of this record was an infringement of claim 4 of the patent
e decree directed an accounting accordingly.
On that accounting your Petitioner sought to recover, not
damages, but the projits which this Respondent had made,
or which it could be estimated that the Respondent had
sale of said infringing trans-
also relat
in suit and th
made, by the manufacture and
formers.
On the accounting the Respondent's position was that the
profits made on these 6524 infringing transformers were
sy intermingled with the eeneral profits of its business that
they could not be separated therefvons although Respondent
eyoss amounts received by it from the sale of said
each year covered by the
the total sum thus re-
wave the
infringing transformers during
accounting (Record, pp. b. and f12),
ceived by Respondent from the sale of these infringing trans-
formers accounted for, between the vears IS86 and the
filing of the bill, being $955,271.76. (Record 442).
— =
The Treasurer and General Manager of the Respondent
company contended, at one phase of the proofs, before the
Master, that although he could give the number of infring-
ing transformers and the price at which each of the said
transformers was sold (a thing which he did), he could not,
from the books of the Respondent Company “or otherwise”
tell the cost of manufacture of these infringing transformers
respectively, nor the profits made on the transformer busi-
ness as distinguished from the other and general business
of the Respondent. Your Petitioner, on the other hand,
produced as witnesses persons who had been in the employ
of the Respondent company during the time covered by the
accounting, and showed from their testimony and from a
sample blue print reproduced at page 726 of the record, that
it had been the practice of the Respondent company, during
the six years covered by the inquiry before the Master and
up to the filing of the bill in this case, or at least up to the
date of the decision in the case against the Union Carbide
Company in November 1901, to make and keep most aceu-
‘ate detailed, written estimates of the cost of every item
entering into the manufacture of these infringing trans.
formers, including even the boxing and packing of the same
for shipment.
It also appeared from the proofs before the Master, when
the same witness, Layman, Treasurer and General Manager
of the Respondent company, was called as a witness for the
Respondent, that he admitted that the «: fendant had in its
vaults inventories made annually or sciiiannuially in respect
to these infringing transformers, yet the Respondent omitted
to produce the same in evidence (Record G15-616), a faet
found and referred to by the Master in his fourteenth find-
ings of facts (Ree, 376-7.)
As a result, the Master found that the profits of the Re-
spondent in the manufacture of the infringing transformers,
otitinn
as nearly as could be reached through estimates, comparisons
and apportionment, was approximately 259% on the net
amount of the sales of the infringing transformers (Record
374-377), and recommended a judgmen: in favor of your Peti-
tioner for the sum of $132,433.55, as the profits made by the
Respondent from the manufacture and sale of the infringing
transformers.
In overruling the findings of the Master on this point the
majority of the Court of Appeals ignored completely the rule
recognized and established by this Court in the cases of:
Crosby Valve Co. vy. Safety Valve Co., 141 U.S. 447;
Rubber Co. v. Goodyear, 9 Wall. 802, 803, 804;
Manufacturing Co. v. Cowing, 105 U.S. 257-8;
Tilghman y. Proctor, 125 U.S. 148;
National Bank vy. Insurance Co., 104 U. S. 54;
and other leading decisions of this Court, particularly pointed
out in the brief in support of this petition, that:
1. Under circumstances such as those which appear in the
record in this case, where the complainant seeks to recover
the profits made by the defendant by reason of the infringe-
ment, the profits may be estimated by the Master on the data
before him, especially where the Respondent has confused
the profits with the profits of his general business, or has
sought to conceal the profits actually made by him.
2 ‘That in ascertaining profits made by an infringer a
compensation is granted, “computed and measured by the
sume rules that Courts of Equity apply to a case of a trustee
who has wrongfully used the trust property for his own ad-
rantage.” (Tilghman vy. Proctor, 125 U.S. 148.)
3. And failed to pay that respect to the findings of a Spe-
cial Master in this case which this Court has repeatedly de-
cided must be paid to a Master's report, it being the law that
—14—
“the conclusions of the Master, depending upon the weighing
of conflicting testimony, have every reasonable presumption
in their favor and are not to be set aside or modified unless
there clearly appears to have been error or mistake on his
part.” Tilghman y, Proctor, 125 U.S. 136-149; Callaghan y.
Myers, 128 U.S. 617, 666; Kimberly vy. Arms Co., 129 U.S.
512-525; Crawford y. Neal, 144 U.S. 585; Furrer y. Ferris,
145 U.S. 132.
But the cardinal and most flagrant instance, in the light
of the actual facts in the case at bar, of failing to recognize
the rule established by this Court, and which seems to have
been the controlling reason resulting in the matjority opinion
herein, holding that your Petitioner was not entitled to re-
cover anything but nominal damages on account of the in-
fringing transformers accounted for before the Master, is
thus stated in the opinion of the majority of the Court.
“Tt must of course be conceded that while appellant's
combination, Claim 4, although really designed to keep
the core from becoming overheated, also tended to keep
the coils from becoming overheated, but the appellee's
transformer much more efficiently accomplished the re-
sult desired by providing for a circulation of oil or other
cooling medium through the open spaces between the
coils and between the core and the coils, as well as
through the open spaces in the core. We conclude, there-
fore, that the master was in error in finding that the en-
tire commercial value of the infringing transformers
inanufactured and sold by the appellee during the time
concerned in the accounting was due to the combination
described in Claim Four of appellant's patent.” * * *
“The patented device covered by Claim Four, being, as
we view it, a limited detailed claim and not being gener-
ally for a circulatory system throughout the heat pro-
ducing parts of the transformer, and the appellee’s in-
fringing transformer embracing something of value not
covered by that claim, viz: open spaces between the coils
= =
and between the coils and the core, we are of opinion that
the appellant, whose patent covered only part of the in-
fringing device, is net entitled to recover all the profits
made by the sypellee, but only such as resulted from the
patented invention.”
In other words, assuming that the majority of the Court of
Appeals is right in its facts involved in these statements (we
are prepared to show from reference to the patent in suit that
as to some of the facets here stated the opinion is wrong), it
would follow, contrary to the opinions of this Court in
Blizabeth v. Pavement Co, 97 U.S. 141, and contrary to
other decisions to which we have more specifically referred
in the brief in support of this petition, that: Where a patent
is for a combination of devices forming an entirety or unit,
and where the defendant has used that combination, adding
thereto certain features which may be an improvement
thereon, the burden of proof is on the complainant, not on
the defendant, to show what proportion of the profits received
by the defendant in the sale of these infringing transformers
was due to the alleged improvements found in the infringing
structure,
We respectfully submit) that under the decisions of this
Court in cases more particularly referred to in our brief inp
support of this petition, notably in the cases of Elizabeth v.
avernent Co., OT US. Tal, Hurlbut v. Schillinger, 130 0.8.
163, Crosby Valve Co, vy. Safety Valve Co, 141 U, S. 441,
where the complainant's invention is for a complete thing—
a combination of elements as an entirety or unity—and the
defendant has made and sold that combination, even if in
the defendant's structure the defendant has superadded some
improvements, (he burden of proof ts on the defendant to
show what proportion of the profits received by the defend-
ant from the sale of the infringing devices were due to such
a"
alleged, real or imaginary, improvements, and the burden of
proof in this respect is not upon the complainant.
Therefore, under the decisions of this tribunal, followed,
as We show in our brief in support of this petition, by similar
decisions by other Circuit Courts of Appeal in other circuits,
it is utterly immaterial whether or not the Master was right
or wrong in finding (as we believe he was entirely warranted
in finding) that the entire commercial value of the
infringing — transformers manufactured and sold by the
Respondent was due to the invention claimed — by
claim 4 of the patent in’ suit. The answer in this
case, by Paragraph IX, (found at page 15 of the record) and
the stipulation as to the Respondent's infringing trans.
formers found at page 19 of the record, as well as the proofs
before the Master, show that every one of the Respondent's
infringing transformers, in construction, was like the struc-
ture illustrated at page 168 of the record, and that every one
of Respondent’s more than six thousand infringing trans-
formers embodied the invention claimed by claim 4 of the
patent in suit, and was therefore for a converter constructed
as described in claim 4 and with an inclosing case and oil in
the inclosing case. These facts being established, and. it
having been established that the Respondent has manufae-
tured and sold more than six thousand of these infringing
transformers, even if said infringing transformers did con-
tain features which were improvements thereon, the burden
of proof (under the decisions of this Court), was on the re-
spondent to show exactly what proportion of the profits re-
ceived by the Respondent were due to those improvements as
distinguished from the precise, particular and improved in-
vention claimed by claim 4 of the patent in suit,
In a case such as this one is, where the patented) trans-
former is “a complete combination in itself, differing from
itn
every other” (transformer), “and the profit made by the de-
fendant was a single profit, derived from the construetion
of the” (transformer) “an an entirety.” the defendant having
made and sold the said patented invention (the complete
thing), “as such —the ichole of it prima facie the entire
“single profil” thus made by the defendant is due to the
thing patented (Elizabeth v. Pavement Co. OF UL S. 141;
Hurlbut v. Schillinger, 130 UL 8., 472). Tn such a case, if
the Respondent in “fhe form in which it clothed the” (pat-
ented) “inrention.” to paraphrase the language of this Court
in Crosby Valve Co. vy. Safety Valve Co., 11 UU. S.
444, 454, has improved on the form of embodiment of the
invention as shown in the patent, nevertheless the Com-
plainant is entitled to recover that “single profit’ derived
from the coustruction of the’ (invention) “as an entirely,”
unless the Respondent can show and does show (and the
burden is on the Respondent to do so) what proportion of
the “single profit™ made on each of such infringing trans-
formers was due to such improvement——was due to “the form
in ahich” (Respondent) “clothed the (patented) “Tree
lion’—so that such proportion of the profits can be sepa-
rated out of the “single profit” obtained by the Respondent
on the sale of each infringing transformer,
This is the law, clearly laid down by this Court in Eliza-
beth v. Pavement Co., 97 U.S. 141; Turibut v. Schillinger,
180 U.S. 456, 472; Croshy Valve Co. vy. Safety Valve Co.,
141 U. S. 444-454: and Rubber Co. vy. Goodyear, 9 Wall. S02,
803. 804. Tt is also the law as daid down by other U. 8.
Courts of Appeal in other cireaits, and the law as laid down
in the case at bar by the dissenting opinion of Judge San-
born.
—1&—
In the case of Rubber Co. vy. Goodyear, 9 Wall. 802, 803.
this Court expressly held, not only that the defendant's
profits on the infringing structures may be estimated by the
Master where the defendant has confused the profits due to
the infringement with the profits of iis general business,
but, referring to the Master's finding, says, at page S083 of
9 Wall:
“Tie refused to allow the profits due to elements not
patented, which entered into the composition of the pat-
ented article. There may be cases in whieh such an
allowance would be proper. This is not one of them.
The manner in which the books of the Provident Com-
pany were kept rendered such an accounting impossible
as to the business done in their name.”
In other words, under the aforesaid decisions, even if. it
had been possible to have shown what proportion of the
profits made by this Respondent on its infringing trans-
formers was due to the form in which the Respondent clothed
the invention of claim 4 of the Westinghouse patent in its
infringing transformers, due to the alleged inyprovement
therein, the burden of proof was on the Respondent and not
on your Petitioner to show what proportion of the “single
profit” derived by Respondent from the sale of its infringing
transformers was due to such improvement,
Furthermore, the majority of the Court of Appeals in its
opinion, in the parts which we have just quoted in this peti-
tion, is wrong, as a matter of fact, in two important respects:
It is wrong in saying or implying that there was any depar-
ture from the patent in suit in the fact that the Respondent's
infringing transformers had “open spaces betircen the coils”.
for this feature of open spaces between the coils is not only
illustrated in Figure 2 of the patent in suit but the specitica-
—i9—~—
tion of the patent in snit distinctly says, at page 1, beginning
at line 65, of column 2, “Preferably also the primary and
secondary coils C! C* are separated from each other it a sine
ilar manner’, this sentence ‘immediately following the pre-
vious sentence of the same patent beginning at line 62, which
says: “Lh may be sufficient in other instances lo bleck the
group of plates apart al intercals instead. of ertending the
tnbes the entire length.”
The majority opinion of (he Court of Appeals is also wrong
in stating in this ease, in the last sentence of its opinion
hereinbefore quoted, that the invention of claim 4 of the
patent in suit: is not generally for a circulatory system
throughout the heat producing parts of the transformer. On
this record and in view of the estoppel arising on the record,
on account of the things found and decreed in the Carbide
ease, by which the answer admits the Respondent: is bound,
the U.S. Cirenit Court of Appeals for Second Cireuit in
the Carbide case had found (see pages 197 and 498 of 117
Fed.) that:
“Phis claim’ (claim £ of the Westinghouse patent in
suit) “covers such an inclosing case as will confine the
non-conducting fluid, and such open spaces in the core
as will permit the cirentation of the liquid through them.
Westinghouse, then, wes the first to patent such an air:
tight, closed mne” * + * * “me these circum.
stances, the patentee seems to he entitled to claim the
means by which the external and internal surfaces of
the heat-producing parts of a converter were cooled, by
such an arrangement and separation of parts as would
permit the eirenlation about them of oil, and the means
for the retention of said oil within and about said sur-
faces, whereby the heat from the oil radiated to the
surrounding air.”
The decision of the majority of the Court of Appeals in
this respect pays little heed to the rule laid down by this
etd
lion
Court in respect to combination claims and thus stated in
Cantrell vy. Wallick, 117 U.S. 694:
“The first defense is based on the theory that a patent
cannot be valid unless it is new in all its elements as
well as in the combination, if it is for a combination.
But this theory cannot be maintained. If it were sound
no patent for an improvement on a known contrivance
or preeess could be valid. And yet the great majority
of patents are for improvements in old and well known
devices, or on patented inventions, Changes in the con-
struction of an old machine which increase its usefulness
are patentable. Sevmoure v. Osborne, 11 Wall. 316. So
anew combination of known devices, whereby the effeet-
iveness of a machine is increased, may be the subjeet
ofa patent. Loom Co, y. Higgins, 105 U.S. 580."
It also would seem to ignore completely the binding force
and effect of the things found and decreed by the Cirenit
Court and Court of Appeals in the Carbide case, by whieh
the Answer in this case specifically admits that this Re-
spondent is hound.
“The matters and things found and decreed in said suit
against the Union Carbide Company” (which) “are res ad.
judicatac against this defendant.” as Paragraph VII of the
Respondent's answer in the ease at ba ‘admits (Reeord 12-13),
are the following:
(1) That the letters patent in suit are goml and valid.
(2) That George Westinghouse, Jr. was the inventor of
the invention claimed by claim 4 of said letters patent.
(3) That the defendant in that case. which had used trans-
formers precisely like the one illustrated at page 168 of the
record in this case, made and sold to if by Waener Electric
Manufacturing Company (this Respondent), had infringed
claim 4 of said patent.
— =
(4) That by reason of this invention “hy the arrangement
of various known elements, to wit, dividing the iren into sec-
tions and separating the coils, thereby increasing the surface
ever which heat dissipation in the core and coils may he ear-
ried on, aided by oil as an insulating material, and adding
an inclosing case, a new combination, producing a new and
beneficial result, not before attained, is” (was) “contributed
to the art’, by Mr. Westinghouse. “By this arrangement
of the parts” (the combination claimed by claim 4) “a su-
periority was undoubtedly obtained, in durability, efficieney
and cheapness over prior transformer devices.”
(5) That said “invention of Mr. Westinghouse, consist-
ing of a combination of elements, is” (was) “a distinctive step
forward in the progress ¢° electrology, in the light of the tir-
mediate recognition which it received by the public.” (Italics
ours.)
(6). That the public instantly recognized the merit of the
invention the subject-matter of said claim 4 as an improeve-
ment in the prior art.
(7). That “the proofs show that the maximum of large-
size, dry transformers— transformers without sectional open-
ings in the core and witheut the use of oil as an insulating
material—is 10 kilowatts. or 18 te Tf herse power, while
that of the large-size transformers of the Westinghouse pat-
ent in suit is 500 kilowatts, or from 650 to TOO horse power,”
all this being due to the invention claimed by claim 4 of the
patent in suit.
(8) That in none of the devices of the prior art “is found
the combination of clements couteined in the We stinqhouse
patent in suit” and claimed by claim 4 thereof.
(The above are among the essential things found and de-
ereed by the Circuit Court in the Carbide case. The follow-
—29—
ing are among the things found by the U. 8. Court of Appeals
for the Second Circuit in the Carbide case, confirming the
things fond and decreed by the Circuit Court in that case.)
(9) That “the claim here in suit (claim 4) was filed with
the original application, and it was never cancelled or
modified.”
(10) That said claim 4 is for a new and most useful in-
vention.
(11) “This claim covers such an inclosing case as will
confine the non-conducting fluid, and such open spaces. in
the core as will permit the circulation of the liquid through
them. Westinghouse, then, was the first to patent such an
air-tight, closed converter.”
(12) “It embodies at least a combination radically modi-
fied from those of the prior art, in order to adapt it to a novel
purpose,”
(13) “In these circumstances the patentee seems to be
entitled to claim the means by which the external and _ in-
ternal surfaces of the heat-producing parts of a converter
were cooled, by such an arrangement and separation of parts
as would permit the circulation about them of oil, and the
means for the retention of said oil within and about said sur-
faces, whereby the heat from the oil radiated to the surround-
ing air.”
(14) “The practical result of the invention in suit” * * *
“was to so increase the capacity of the couverters that, while
a dry converter, cooled by the natural circulation of air, is
limited to 10 kilowatts, the oil-insulated converters of the
patent in suit are commercially serviceable up to 500° kilo-
watts.”
—
(15) “The decree” (of U.S. Cirenit Court in the Carbide
suit) “is affirmed as to patent No, 366,362" (the Westinghouse
patent in suit).
Now, the only diiference between the Respondent's infring-
ing transformer accounted for before the Master and the in-
vention actually claimed by claim 4 of the patent in suit
(that difference being a slight modification adopted long after
the date of the patent in suit) is, that in addition to having
the open spaces in the core and everything else called for by
claim 4, Respondent's infringing transformers also had some
space between the inner surface of the core and the outer
surfaces of the coils, through which space additional op-
portunity was given for the circulation of oil in and about
the parts, thus carrying out, perhaps to a greater degree than
by the identical means specitied in claim 4, the very object of
the invention claimed by claim 4. The patent in suit: states
(page 1, lines 16, ete.) that the object of the invention is “Ce
provide a simple and efficient conrerter which will not be-
come overheated 2 and also (page 1, lines 80, ete.) that the
liquid cireulates through “l/r intervening spaces of the coils
and plates.” Furthermore, the fact that the Respondent in
its infringing transformers also had the additional feature of
having spaces between the coils and the cove, if said feature
was really an improvement on the invention claimed by claim
4. such a construction was cortainly in harmony with that
invention as defined by the (6° Court of Appeals for the
Second Circuit in the Carbide case, at page 498 of 117 Fed.,
as follows:
“In these circumstances, the patentee seenis to he en-
titled to claim the means by which the external and in-
ternal surfaces of the heat-producing parts of the con
verter were cooled, by such an arrangement and separa-
tion of parts as would permit the circulation about them
of vil, and the means for the retention of said oil within
—24—
and about said surfaces, whereby the heat from the oil
radiated to the surrounding air.”
Clearly, then, the burden of showing what if any of the
profits made by the Respondent in the sale of its said infring-
ing transformers were due to this modification (improvement,
if you will) of the invention claimed by claim 4 of the patent
in suit was on the Respondent and not on your Petitioner, as
pointed out by the decisions particularly referred to in our
brief accompanying this petition, notably the decision of this
Court in Elizabeth v. Pavement Co., 97 U.S. 141.
The vice in the majority opinion of the U.S. Court of Ap-
peals for the Eighth Circuit and which vice conflicts with the
settled rule in analogous cases laid down by the decisions of
this Court and followed by the U.S. Courts of Appeal in
other Circuits, as pointed out more particularly in our ae-
companying brief, lay:
(a) In holding that this slight modification in the in-
fringing transformers (which transformers admittedly other-
wise embodied the entire invention claimed by claim 4 of the
patent in suit) was not, after all, within the invention of
claim 4 as defined by the U.S. Court of Appeals for the
Second Circuit in the Carbide case.
(b) That even if it be granted that that modified form of
your Petitioner’s patented invention was a betterment or in-
provement, nevertheless the burden of proof was not on your
Petitioner but on the contrary on the Respondent to show
what part of the Respondent's profits made on those infring-
ing transformers was due to that improvement; and it was
fer this Respondent to separate out those profits due to that
addition or betterment (if it was an addition or betterment)
from the general profits made by Respondent on the infring=
ing transformers accounted for before the Master. This
thing, however, Respondent did not even pretend to do.
—25—
This cardinal error is the basis of the conclusion by virtue
of which the majority of the Court of Appeals for the Kighth
Circnit held that the Master's report and finding should be
set aside.
But for these errors in its premises and consequently in
its conclusion, it is manifest that the majority of the U. 8.
Court of Appeals for the Eighth Cireuit would have agreed
with Sanborn, Circuit Judge, reversed the decree of the Cir-
cuit Court as to the accounting, and confirmed the Master’s
report, thus giving your Petitioner a decree for $132,433.35,
as recommended by the Master in his report filed July 29,
1907, plus interest from the date of said report, in accord:
ance with the decision of this Court in Tilghman vy. Proctor,
125 U.S. 136, 161.
Therefore your Petitioner believes that the aforesaid
majority opinion of the U.S. Court of Appeals for the Eighth
Cirenit aflirming the decree of the U.S. Circuit Court for the
Eastern Division of the Eastern Judicial District of Missouri,
thus depriving your Petitioner of a substantial reeovery on aec-
count of the profits made by the Respondent in the manu-
facture nnd sale of its infringing transformers accounted for
before the Master, is erroneous and in conflict with the deei-
sions of this Court in analogous eases, as well as in conflict
with the decisions of the U.S. Circuit Courts of Appeal in
other Cirenuits; and has resulted in depriving your Petitioner
of property rights granted to it by the Statutes of the United
States; and that the patent laws, as construed in the case at
bar by the majority opinion of the UL Ss. Conre of Appeals for
the Eighth Cireuit, contrary to the opinion of this Court
rendered by Chief Justice Marshall in the case of Grant v.
Raymond, 6 Peters *
P42) have not been construed so as “to
execute the contract” (the patent) “fairly on the part of the
United States.”
= =
We also respectfully submit, for the reasons. stated
in this petition for certiorari and more fully amplified
in our brief in support of the same, that the majority opinion
of the Court of Appeals for the Eighth Circuit in the ease at
bar, in a matter of gravity, where a large amount is involved,
establishes a precedent which must necessarily aifect almost
incaleulable values in the way of property rights under letters
patent for inventions,
Wherefore your Petitioner respectfully prays: That a writ
of certiorari may be issued out of and under the seal of this
Court, directed to the United States Circuit Court of Appeals
for the Eighth Circuit, commanding the said Court to certify
and send to this Court, on a certain day to be therein desig-
nated, a full and complete transeript of the record of all pro-
ceedings of the said Court of Appeals in the said case therein,
entitled Westinghouse Electric & Manufacturing Company,
Appellant, v. Wagner Electric Manufacturing Company,
Appellee, in Equity No, 2857, to the end that the said case
may be reviewed and determined by this Court as provided in
Section 6 of the Act of Congress entitled “An Act to establish
Circuit Courts of Appeal and detine and regulate in certain
cases the jurisdiction of the Courts of the United States. and
for other purposes, approved Mareh 3, 1901.7 and that your
Petitioner may have such other or further relief or remedy
in the premises as to this Court may seem appropriate and in
conformity with the said Act.
And your petitioner will ever pray.
THOMAS B. KERR,
PAUL BAKEWELL,
Solicitors and of Counsel for Petitioner,
Westinghouse Electric & Manufacturing
Company.
ain
CERTIFICATE OF COUNSEL.
I certify that I am Solicitor and of counsel for the Peti-
tioner herein, Westinghouse Electric and Manufacturing
Company; that in accordance with the request of said Peti-
tioner the foregoing petition has been prepared; that the
allegations contained in said petition are true, to the best of
my knowledge and belief; and that said petition is, in my
opinion, well-founded in law as well as in fact.
PAUL BAKEWELL.
No. 8 179°
Supreme Court of the United States,
OCTOBER TERM, 1909.
In Equity. JAMES H. McK
WESTINGHOUSE ELECTRIC & MANUFACTURING
COMPANY, PETITIONER,
vs.
WAGNER ELECTRIC MANUFACTURING COMPANY,
RESPONDENT.
Baier ON BEHALF OF PETITIONER FOR WRIT OF CERTIORARI TO
THE UNITED STATES CiRCcUIT COURT OF APPEALS
FOR THE EIGHTH CIRCUIT.
THOMAS B. KERR,
PAUL BAKEWELL,
Solicitors and of Counsel for Petitioner,
Westinghouse Electric & Manufacturing
Company.
Supreme Court of the United States.
OCTOBER TERM, 1909.
In Equity.
WESTINGHOUSE ELECTRIC & MANUFACTURING
COMPANY, PETITIONER,
VS.
WAGNER ELECTRIC MANUFACTURING COMPANY,
RESPONDENT.
BRIEF ON BEHALF OF PETITIONER FOR WRIT OF CERTIORARI TO
THE UNITED STATES CIRCUIT COURT OF APPEALS
FOR THE EreutTu Circuit.
The patent in suit, No. 366,362, dated July 12, 1887, is for
“Electrical Converter.” Claim 4 of said patent is the only
claim which is for the electrical converter combined with an
inclosing case and a non-conducting fluid, such as oil; it is
as follows:
“4. The combination, substantially as described, of
an electric converter constructed with open spaces in
its core, an inclosing case, and a non-conducting fluid or
ead
5 een Bp SO a!
-_
gas in said case adapted to circulate through said spaces
and about the converter.”
This claim is for a new combination of elements which per-.
formed a function and produced a result never before ac-
complished, making it possible to increase the capacity of the
electrical transformer (converter) from 10 kilowatts, or 13
to 14 horse power, to 500 kilowatts, or 650 to 700 horse power,
These results were due to the invention claimed by said claim
4, because that invention, for the first time in the art to which
it relates, set forth and claimed the means by which the ex-
ternal and interna! surfaces of the heat-producing parts of
the transformer (converter) were cooled, by such an arrange-
ment and separation of parts as would permit the circula-
tion about them of oil, and the means for the retention of the
oil within and about said surfaces, whereby the heat from
the oil radiated to the surrounding air. In the language of
this Court in Elizabeth v. Pavement Company, at page 141
of 97 UL S., this invention “iras a complete thing, consisting
of a certain combination of elements, and the defendant” (in
the infringing transformers accounted for) “used it as such—
the whole of it.”
As is well-settled, claims in letters patent are each “in-
dependent inventions and in the nature of separate and
cistinet patents.” Leeds & Catlin v. Victor Talking Machine
Co., ; U.S. 319; Russell v. Place, 94 U.S. 609.
The present suit, as well as the suit against Respondent's
vendee, the Union Carbide Company (112 Fed. 417 and 117
Fed. 496), related only to sal claim 4 of the said Westing-
house patent.
Paragraph VI of the Bill in this case (Record pp. 3-4)
pleads the history of the suit against the Union Carbide Com-
pany, and that the U. S. Cireuit Court for the Northern
=
District of New York found claim 4 valid and infringed, and
that the U. S. Circuit Court of Appeals for the Second Cir-
cuit, composed of Hon. William J. Wallace, Hon. E. Henry
Lacombe, and Hon. William K. Townsend, Circuit Judges,
affirmed the said findings and decree of the Circuit Court;
and Section VI. of the Bill (Record, pp. 4-5) concludes as
follows:
“That the devices involved in the said suit, and which
were used by the Union Carbide Company, the defend-
ant therein, were manufactured and sold by the Wagner
Electric Manufacturing Company, the defendant herein,
and that said suit against the Union Carbide Company
was defended by said Wagner Electric Manufacturing
Company and was areued by its counsel, and that the
matters and things found and decreed in the said suit
against the Union Carbide Company are res adjudicata
ageinst the said Wagner Electric Manufacturing Com-
pany.”
The Respondent’s Answer, in sections VI. and VII.
(Record pp. 11-12), specifically admits the charges in para-
graph VI. of the Bill, and paragraph VIII of the answer
(Ree. pp. 12-13) is in the following words:
“This defendant admits that the device involved in
said suit and used by the Union Carbide Company, the
defendant therein, was manufactured and sold by this
defendant, and that said suit against the said Union
Carbide Company was defended by this defendant and
was argued by its counsel, and that the matters and
things found and decreed in said suit against the Union
Carbide Company are res adjudicatae against this de-
fendant.” (Italics ours.)
The record in the Carbide case, including the opinion of
Judge Hazel in the Cireuit Court, which opinion is also re-
ported in 112 Ped. 417-423, was offered in evidence by Re-
oan
spondent (Record, p. 30); and by stipulation in this case
(Record, p. 443) the opinion of the U. 8. Court of Appeals
for Second Circuit, as the same is reported in 117 Fed. 495-
ov1, is before this Court.
The said decree, taken from said Union Carbide record
which was offered in evidence by respondent (Ree. q. 30), is
in the following words:
“At a Stated Term of the United States Cirenit Court
for the Western District of New York, held in the United
States Court and Post Office Building in the City of
Buffalo, on the 22nd day of November, 1901,
Present—Hon. John R. Hazel, Judge.
Westinghouse Electric and Manufacturing Company,
Complainant,
No. 6854. vs, In Equity.
Union Carbide Company, Defendant.
This cause having been commenced by the filing of the
bill of complaint and by service of subpoena upon the de-
fendant; and the said defendant having duly appeared
and having answered the said bill of complaint ; and issue
kaving been joined; and said cause having come on for
final hearing upon the pleadings and upon proofs taken
on behalf of both parties; and argument having been
made by Thomas B. Kerr, Esy., for the complainant, and
by A. C. Fowler, Esq., for the defendant, and due con-
sideration having been taken of said arguments, plead-
ings and proofs, and of briefs filed on behalf of both par-
ties,
Now, therefore, on motion of Kerr, Page & Cooper, so-
licitors for the complainant, it is
Ordered, adjudged and decreed that claim 4 of Letters
Patent of the United States, No. 366.362, granted to
George Westinghouse, Jr., on July 12, 1887, is good and
valid in the law; that the said George Westinghouse was
bf
ens
the original, true and first inventor of the improvements
set forth in said claim 4; that the complainant, Westing-
house Electric and Manufacturing Company, a corpor-
ation organized and existing under and by virtue of the
laws of the State of Pennsylvania, is entitled to the ex-
clusive right in and to the said Letters Patent, and in
and to the invention described and claimed in claim 4
thereof; that the defendant, Union Carbide Company,
a corporation organized and existing under the laws of
the State of West Virginia, and having a regular and
established place of business within this district, has
within this district infringed upon claim 4 of Letters
Patent No. 366,362; that the said defendant has violated
the exclusive rights of the complainant under said claim
4 of Letters Patent No. 366,362; that the complainant do
recover out of the said defendant the gains and profits
by it made and the damages sustained by the complain-
ant by reason of such infringement, as well as the costs
and charges of this suit to be duly taxed; that it be re-
ferred to “Harry L. Taylor, Esq., residing ‘at Buffalo, N.
Y., Master of this Court, to ascertain the : amount of such
eains and profits and the damages sustained by said com-
plainant by reason of such infringement ; and
It is further ordered, adjudged and decreed, that the
complainant on such accounting have the right to cause
an examination to be made of the defendant, Union Car-
bide Company, and any of its officers, agents, servants,
attorneys, workmen and employees, ore tenus or other-
wise, and also to cause the production of the books, vouch-
ers and documents of the said defendant, and that the
said defendant attend by its officers, agents, servants, at-
torneys and employees, before the Master from time to
time within this district as the said Master shall direct ;
and
It is further ordered, adjudged and decreed that an
injunction be issued in due form of law against the
defendant Union Carbide Company, permanently _ re-
straining it, its officers, agents, servants, attorneys, work-
—
men and employees, and each and every of them, from
making, constructing, vending, using or putting into
practice the said invention or improvement recited or
specified in Claim 4 of Letters Patent No, 366,362, or in
any manner infringing upon the claims of said patent,
or any of them, or upon the rights of the complainant
thereunder.
JOHN R. HAZEL,
U.S. Judge.
Approved: <A. C. Fowler for defendant.”
From the above-quoted decree and from the opinions of
the Circuit Court for the Northern District of New York and
the Court of Appeals for the Second Circuit, so far as said
opinions relate to the Westinghouse patent in suit, we shall
understand what were “the matters and things found and
decrced in said suit against the Union Carbide Company”,
which paragraph VILI of the Answer specifically admits are
“res adjudicatae against this defendant,” (the Respondent
here).
The said opinions are entitled in two cases, one being
the case already referred to of Westinghouse Electric &
Manufacturing Co, v. Union Carbide Company, and the
other being the case of The Thomson-Houston Electric Com-
pany, vs. Union Carbide Company. These two cases were
tried together, one relating to this Westinghouse patent
No. 366,362, and the case of Thomson-Houston Electric Co. v.
Union Carbide Company relating to the Thomson patent No.
508,654. We are here only concerned with the Westinghouse
patent which was involved in the case of Westinghouse
Electric & Manufacturing Co. vy. Union Carbide Compaiiy,
and we shall only here quote such parts of the said opinions
as relate to the Westinghouse patent No. 366,362.
a
The opinion of the Circuit Court for the Northern Dis-
trict of New York in said Carbide Case, as found reported
in 112 Fed. 417-423, and as found in the Union Carbide ree-
ord, so far as the same relates to Westinghouse patent No.
$66,362, is in the following words:
“Hazel, District Judge. These two suits in equity for
infringement of United States letters patent No. 366,362,
eranted to George Westinghouse, Jr., July 12, 1887, and
No. 508,654, issued to Elihu Thomson, November 14,
1893, substantially relate to the same general subject.
They are for improvements in electrical converters or
transformers. The suits were heard at the same time
by consent of parties. The complainants own the pat-
ents by assignments, and are jointly interested as cross
licensees. Patent No. 366,362 relates to the construc-
tion of an apparatus for transforming alternating cur-
rents ‘into currents differing therefrom in certain char-
acteristics.” The object of the invention is thus stated
in the patent:
‘To provide a simple and efficient converter, which
will not become overheated when employed for a long
time in transforming currents of high electromotive
force, and which will be thoroughly ventilated.’
The specifications, after describing in detail the ac-
companying drawings, which set forth features of the
invention, contain the following:
‘It may be preferred in some instances to surround
the converter with some oil or paraffin or other suit-
able material, which will assist in preserving insula-
tion, and will not be injured by heating. This mate-
rial, when in a liquid form, circulates through the
tubes and the intervening spaces of the coils and
plates, preserves the insulation, excludes the moisture,
and cools the converter.’ (Italics ours.)
The patent has five claims. The fourth only is stated
to be infringed. It reads as follows:
:
j
|
{
|
i
\
i
)
i
|
=
‘The combination, substantially as described, of an
electric converter, constructed with open spaces in its
core, an inclosing case, and a non-conducting fluid
or gas in said case adapted to circulate through said
spaces and about the converter” * * * *
“The answer in each case pleads anticipation and want
of novelty. /t was stipulated at the time of taking
proofs that defendant had in use one or more trans-
formers, described by patents in suit, at its works, sub-
sequent to the grant and assignment of said patents to
complainants, If, then, the defense of anticipation and
want of novelty fails, infringement is admitted. The
Wagner Electric Manufacturing Company of St. Louis,
Mo., furnished the alleged infringing transformers to
the defendant, and it may therefore be regarded as
the real defendant in each case. A brief recital of the
state of the art will aid to a better understanding of
the patents. The discovery and perfection of mechan-
ical generators for the production of electrical current
energy demanded an exact distribution and apportion-
ment of the generated electricity for its employment in
the many uses to which it could be commercially applied.
By the generator an alternating current is produced,
which changes uniformly in strength and_ intensity,
and flows successively in one direction, until if reaches
a maximum, and thereupon gradually diminishes in
intensity until it ceases, only to immediately begin its
flow in the opposite direction. For this reason great
difficulty was experienced in bringing this powerful cur-
rent, for the purpose of distribution, within such de-
sired control as to permit its utilization for lighting,
power, and many other purposes. Commutators having
for an object the rectifying of alternating currents so as
to secure uniformity of direction were invented, and
proved highly successful. An apparent obstacle, how-
ever, was the limitation which the use of the commuta-
tor and dynamo imposed upon the generating capacity,
and upon the distance to which the electricity could
be transmitted and assigned for its useful and extensive
=
application. The practicability of varying the volume
and pressure of a primary and secondary current, so
‘alled, with reference to each other, was completely
demonstrated by changing the relative length of the
primary and secondary circuits within the influence of
an alternating magnetic field. This was accomplished
by the numerical arrangement of the coils encircling the
cove, In this manner a volume and pressure of the in-
duced and inducing current may be equalized. By sim-
ilar arrangement, or by the varying size, thickness, char-
acter, or stability of the surrounding coils, a current
of the desired intensity is obtainable. Thus the prob-
lem of simultaneous generation of electricity and its
distribution at either high or low pressure was solved.
The apparatus required for this purpose was named a
converter or induction coil, and latterly a transformer.
It is composed of two coils of insulated copper wire,
wound around an iron core or frame near each other.
They are designated primary and secondary coils, re-
spectively. The former initially receives the electric
current from the generator, and magnetizes the core,
whieh thereupon becomes a conductor from the primary
to the secondary coil. The particular purpose and ob-
ject of transformers is tersely stated in defendant's
brief to be ‘an apparatus whereby the current is gen-
erally transformed or converted from a certain pres-
sure and quantity to a certain other pressure and
quantity, or it may be transformed or converted to the
same pressure or quantity, but usually is transformed
or converted from a higher pressure and smaller quan-
tity to a lower pressure and larger quantity, in order
that the higher pressure may be transmitted on the lines
outside of buildings, and transformed or converted to
lower pressure and greater quantity for use in build-
ings.” Their utility is well established. It has resulted
in the expansion of the use of electric energy to such
an extent that there is substantial basis for the claim
that the invention of the static transformer and sub-
sequent improvements has ereated a surprisingly mem-
_— S
orable period in the development of electric science,
followed by amazing commercial success. It made pos-
sible the utilization of electricity at far distant points,
as well as its application in various ways, ‘and in any
desired machine, from motors developing hundreds of
horse power to the fragile filaments of incandescent
lamps.’ Noteworthy as was the success attained by the
generator, dynamo, and commutator, the surprisingly
noteworthy advance in electrology made possible by
the transformer is equally deserving of great praise.
That improvements were needed to adapt the trans-
former to the manifold uses anticipated by those skilled
in the art is not astonishing. The necessity of rapidly
magnetizing and demagnetizing the core in a transformer
resulted in the production of a great amount of heat, and
a consequeit loss of electrical energy. In order to ob-
viate this difficulty, the plates which constitute the core
were made of laminated iron, so as to suppress the Eddy
currents in the core which caused the heating. This
brings on a discussion of the patents in suit. The core
of the Westinghouse patent is composed of thin plates
of soft iron, in groups having sectional openings, and
separated by thin sheets of paper or other insulating
material. The insulating material is so arranged as to
magnetically separate the plates in pairs. The method
of constructing an induction coil or transformer having
a core of thin plates is disclaimed by the patentee. It
is not claimed to be new in the art to arrange a trans-
former so as to accomplish a means of ventilation of the
parts, and thereby prevent a waste of energy through
heating.
“The claim is that by the arrangement of various known
elements, and by the introduction of new elements, to-wit,
dividing the iron into sections, and separating the coils,
thereby increasing the surface over which heat dissipa-
tion in the core and coils may be carried on, aided by oil
as in insulating material, and adding an inclosing case,
a new combination, producing a new and beneficial re-
—
sult, not before attained, is contribuicd to the art. The
mechanical parts of the transforimer are immovable and
compact. They are so constructed as to enable the em-
ployment of a closed circuit of magnetic material. By
this arrangement of the parts a superiority was un-
doubtedly obtained in durability, efficiency, and cheap-
ness over prior transforming devices. The tendency of
the transformers to become overheated, however, was an
obstacle retarding their use for long-distance lighting,
transmission of power, and other purposes, It was at
this period that the Westinghouse patent in suit was con-
ceived. Both the Westinghouse and Thomson patents in
suit are for a combination of old and new elements. It
is well settled that the right to patentability is estab-
lished when the combination performs new and addi-
tional functions, and accomplishes new and additional
results. 1 Rob. Pat. Sec. 115; Cantrell vy. Wallick, 117
U.S. 695, 6 Sup. Ct. $70, 29 L. Ed, 1017, What was the
achievement of the Westinghouse and Thomson patents?
The proofs show that more or less experimenting was re-
quired to develop the transformer in the then state of
the art, so as to secure the transmission of higher elee-
trical energy. The disposition of heat was a most serious
question. Different sizes of transformers, yarying from
one-half kilowatt to seven and one-half kilowatts were
then in commercial use. Larger sizes (fifteen to thirty
kilowatts) had been siarted experimentally. In employ-
ing the larger sizes, a lower current density in the copper
and lower magnetic density in the iron was necessary
than in the smaller sizes. This greatly increased the ex-
pense of production of the required electrical energy.
Later experiments proved the efficacy of filling the trans-
former cases with oil for reducing the temperature, and
thereupon fifteen and thirty kilowatt transformers were
advantageously operative, although heat convection still
continued of such a nature as to require additional
thought and labor. What Westinghouse failed to ac-
complish was later successfully performed by the inven-
tion of Thomson.
=.
“Tam of the opinion that the invention of Westing-
house, consisting of a combination of elements, unless
anticipated by the prior state of the art, is a distinctive
step forward in the progress of electrology, in the light
of the immediate recognition which it received by the
public. It does not seem to me, under the circumstances,
iv have been obvious to those skilled in the art.” * * * * #
“The public instantly recognized both patents in suit
as an iinprovement on the prior art. Indeed, the proofs
show that the maximum of large-size dry transformers—
transformers without sectional openings in the core, and
without the use of oil as an insulating material—is 10
kilowatts, or 13 to 14 horse power, wile that of the large-
size transformers of the Westinghouse patent in suit is
IU0 kilowatts, or from 650 to 700 horse power. The use
of coils of pipe through which water can be circulated,
and which are placed in the oil of the static transformer,
found in the Thomson patent, increases the number of
kilowatts to at least 2,000. The union of elements con-
tained in the two patents in suit is not embraced or con-
tained in any similar patented devices. The defendant
contends that the various elements of claim 4 in the
Westinghouse patent, and claims 1 and 2 of the Thomson
patent, are old. Old though some of them are, they have
been joined together for the first tine by the patentces,
who are the original and first inventors. Simple though
the inventions may appear, they were produced as a re-
sult of labor and study. The degree of labor and thought
is unimportant, in view of the practical utility of the in-
vention. Many vy. Sizer, 1 Fish. Pat. Cas. 17, Fed. Cas.
No. 9,056; Carr v. Rice, 1 Fish. Pat. Cas. 198, Fed. Cas.
No. 2,440.) The combination adopted by the complain-
ants in each suit produces a new result, dependent upon
the union of various elements never before combined to-
gether. The result is not merely an aggregation of the
component parts, but a co-operation of all the elements
producing a new result by their union, Wailes vy. Van
Wormer, 20 Wall. 353, 22 L. Ed. 241; Reckendorfer v.
Faber, 92 U. S. 357, 23 L. Ed. 719; Pickering v. Me-
Cullough, 104 U.S. 318, 26 L. Ed. 749.
|
|
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:
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To
“T have given examination to such of the patents as are
claimed on argument to anticipate the combinations of
the patents in suit. I incline to the belief that the ele-
ments of the patents in suit, constituting the combina-
tion for which the patents were issued, are not antici-
pated. J have already stated that in my judgment the
rarious elements found in both patents sued on have
never before been combined together, and that the union
of elements contained in cach patent is not embraced in
any similar patented inventions, The combination itself
being new, the effectiveness and efficiency of both trans-
formers being increased -—a fact quickly recognized by
the public—it becomes obviously unnecessary to espe-
cially point out in detail the various differentiating
structural features found in patents claimed to be an-
ticipatory. Many of the patents cited to anticipate the
Westinghouse patent relate to patents for dynamo-elec-
tric machines and other electrical devices, including
transformers. None of them point out a way to dissipate
the heat, although a number of them were designed to
prevent waste energy produced by heat. Jn none of them
is found the combination of elements contained in: the
Westinghouse patent in suit. The Pike and Barnett
patents are for transformers immersed in oil, in a easing
connected with pipes passing to an elevated oil receptacle
stationed near the transforming apparatus, for the pur-
pose of increasing the radiating surface. The liquid is
maintained in constant circulation around and through
the coil by the change of specific gravity due to the
change of temperature of the oil. The heat may be ex-
tracted by a water jacket connected with the vessel con-
{ining the oil. In the Thomson patent, as we have seen,
a coil of the pipe through which the water constantly
circulates passes through the transforming chamber and
oil or other conducting fluid contained therein. No ex-
tended external surface or separate apparatus is required
to make the Thomson patent operative. A receptacle or
chamber is constructed of sufficient size to contain one or
more transformers surrounded by oil. The oil is cooled
thins
in the transforming chamber, ard not, as in the Pike and
Barnett patent, in a separate vessel elevated from the
transformer, and evidently was, as the patent states,
designed to be built into walls of buildings or located in
underground chambers. I do not think these patents
anticipate that of Thomson. None of the others, in view
of what has been stated, need be discussed.
“The point is made by defendant that, inasmuch as
various claims contained in the original application filed
in the patent office for the Westinghouse patent in suit
were rejected by the commissioner of patents, were there-
after canceled, and substitution of other claims allowed,
the patentee conceded, among other things, that open
spaces between the coils were not new, nor was it new
to have gas or non-conducting fluid adapted to circulate
through the spaces and about the transformer. All that
may hare been done by the patentee, yet a patent for a
combination of old and new elements, co-operating to-
gether, was granted him by the patent office, and the pre-
sumption of patentability to which he is entitled by
reason thereof has not been orercome by the defendant.
The Westinghouse patent stated that the plates are pref-
erably separated, and that it may be preferred in some
instances to surround the transformer with oil or paraf-
fin or other suitable material. It is stated by the patent
that ‘the converter or transformer may be sealed in an
inclosing case, and may or may not contain a non-con-
ducting fluid or gas.’ It is insisted that these are matters
of preference or recommendation only, and do not con-
stitute essential features of the patent, but this, how-
ever, must be read with claim 4 of the patent. It is quite
true that a feature which is mentioned only by way of
recommendation in describing an invention must usually
be considered as a subordinate, and not an essential, part
of the patent. Holliday v. Pickhardt (C. ©.) 29 Fed.
853; Sewall v. Jones, 91 U. S. 171, 23 L. Ed. 275; An-
sonia Brass & Copper Co. v. Electrical Supply Co., M44
U.S. 11, 12 Sup. Ct. 601, 36 L. Ed. 327; Krajewski v.
_—
Pharr, 44 C. C. A., 572, 105 Fed. 514. But the claim
upon which complainant relies still clearly indicates the
intention of the patentee to claim as essential the
features described by the specifications as preferably
employed.
Decree for complainant may be entered in each case.”
(Italic ours.)
The opinion of the Court of Appeals for the Second Circuit
in the case of Westinghouse Electric & Manufacturing Co. v.
Union Carbide Company, stipulated into this case at page
143 of the record, and reported in 117 Fed. 495-501, so far
us the said opinion relates to the Westinghouse patent No.
366,362 (the patent in issue here}, is as follows:
“The specification of the Westinghouse patent in suit
states its subject-matter as follows:
‘The invention relates to the construction of a class
of apparatus employed for transforming alternating
or intermittent electric currents of any required char-
acter into currents differing therefrom in certain
characteristics. Such apparatus are usually termed
“induction coils” or “converters”. ”
“This apparatus comprises a core of soft iron wound
with two coils of insulated copper wire,—the one a pri-
mary coil, Which receives and transmits the magnetic cur-
rent; the other, a secondary coil, which transforms the
pressure and quantity of the current according to the
purpose for which it is required. The type of trans-
former here under consideration is known as the ‘step-
down transformer.” <A current of high pressure and
small volume transmitted from a distance may, by its
use, be transformed to a current of low pressure and
large volume, and then adapted for ordinary household
uses. The object of the Westinghouse improvement is
stated by the patentee as follows:
—
‘The object of this invention is to provide a simple
and efficient converter, which will not become over-
heated when employed for a long time in transform-
ing currents of high electromotive force, and which
will be thoroughly ventilated.’
“The patentee primarily proposed to obviate the seri-
ous objection of loss ef energy by overheating involved
in such transformation by separating the plates of the
core and the primary and secondary coils from each
other, so as to permit of ventilation. This construction
adapted for ventilating purposes is covered by the other
claims not in suit, and is not involved herein. The partic-
ular construction which is the subject of the fourth
claim.—the only one involved herein,—is suggested as
follows:
‘It may be preferred in some instances to surround
the converter with some oil or paraflin or other suit-
able material, which will assist in preserving insula-
tion, and will not be injured by heating. This mate-
rial, when in a liquid ferm, circulates through the
tubes and the intervening spaces of the coils and
plates, and preserves the insulation, excludes tlte
moisture, and cools the converter. The entire con-
verter may be sealed into an inclosing case, H, which
may or may not contain a nonconducting fluid or gas.’
“Sid claim: is as follows:
‘(4) The combination, substantially as described,
of an electric converter constructed with open spaces
in its core, an inclosing case, and a nonconducting
fluid or gas in said case, adapted to circulate through
said spaces and about the converter.
“Complainant contends that this claim covers a trans
former whose surfaces are cooled by means of oil cir-
culating through said open spaces in said core and con-
fined in said inclosing case. The first objection raised
to this contention is estoppel by reason of proceedings
-_— =
in the patent office. There the patentee, it is true,
erased a claim for a combination of a converter and in-
closing airtight case, and a fluid therein, which was
identical with the claim in another pending application,
and modified his claims for ventilating spaces between
the core and the coils. But the claim here in suit was
filed with his original application, and it was never can-
celed or modified. That other combinations originally
claimed by him were old appears from the prior art.
Converters having open spaces in the core to avoid heat-
ing were old. In the Hindley & Buffham patent of 1882
(No. 266,290), for a generator, is disclosed the arrange-
ment of wires ‘whereby openings or spaces are provided
for the free circulation of air, in order ‘to overcome in
a great degree the generation of heat’; and the patentees
describe the winding of the coils ‘in separate groups,
so that air can freely circulate through them.’ And
in this patentee’s earlier patent, No. 342,553, of 1886, he
stated that its object was to ‘construct the converter
in sueh manner that there shall be but little loss of
energy through heating the iron,’ and described a core
composed of thin plates ‘separated from each other by
intervening washers or plates of nonmagnetic material,
—such as vuleanized fiber,—and an air space may be
left, if desirable, between each two plates.’ The use of
oil or other nonconducting fluid to reduce the conduc-
tivity of the wire coils of a dynamo when driven at a
high speed and thus reduce the heat is described in the
Millar patent, No. 270,457, of 1883.
“Defendant's counsel chiefly rely on the Stanley pat-
ent No. 349,612 of 1886, for an induction coil, in which,
they say, they ‘have the identical combination of the
fourth claim of the Westinghouse patent.’ This patent
is for a converter. The plates of the core are so stamped
as to form interior and exterior teeth. Of the plates
the specification says :
‘They are placed upon each other, the positions of
the teeth coinciding; but they are insulated or sep-
enim
arated from each other by paper, cloth, asbestus, oii
silk, air, or other well-known insulating material, and
they are firmly bolted or otherwise secured together.
“The specification further says:
‘The coil is preferably protected by being placed
within a suitable case consisting of a base F, to which
there is secured a removable cover, F’. In the cover
there are preferably formed perforations, if
“Although the drawings do not show open spaces in
the core, and defendant's expert assumes that there
are no such spaces, yet it appears from the foregoing
description that the patentee conceived the idea of a
separation of the plates either so as to admit air or to
provide for the insertion of some fabric for purposes of
insulation. The description and drawings of the Stan-
ley patent show a base plate and perforated cover
adapted to ventilate the converter and to protect it
from physical injury. We have, then, in the prior art
every element of the combination claimed, and a_ phys-
ical combination of the same elements, except that the
separations in Stanley are not adapted to, and the con-
struction of the inclosing case is prohibitive of, the
purposes of the claim in suit. This claim corers such
an inclosing case as will confine the nonconducting fluid,
and such open spaces in the core as will permit the cir-
culation of the liquid through them. Westinghouse,
then, was the first to patent such an air-tight, closed con-
verter. Does the combination covered by the claim in
suit show patentable invention? If the idea of venti-
lation be rejected, and the patent be confined to th
statement of and claim for the inclosed construction, /f
embodies at least a combination radically modified from
those of the prior art. in order to adapt it toa novel pur-
pose. The primitive telegraph coils of the Brooks pat-
ent of 1878 were immersed in oil ‘to protect them from
the influence of the damp atmosphere’; and the Miller
dynamo, without open spaces in its core, had its coils
suspended in a tank of oil. But the construction of
=
these devices excluded the novel idea of oil which would
‘circulate through the tubes and intervening spaces of
the coils and plates.’ And while the assumed or sug-
gested separations between the plates of the Stanley pat-
ent would be sufficient for insulation only, and not
for circulation, its inclosing case is not sealed so as to
contain the circulating oil, and the use of oil is not sug-
gested. Jn these circumstances, the patentce scems to
be entitled to claim the means by which the external
and internal surfaces of the heat-producing parts of a
converter were cooled by such an arrangement and sep-
aration of parts as would permit the circulation about
them of oil, and the means for the retention of said oil
within and about said surfaces, whereby the heat from
the vil radiated to the surrounding air. If there is any
doubt upon the question of patentability, the practical
and commercial results of this improvement must re-
solve such doubt in its favor.
“{t appears that in the early history of the art only
small converters were used, and the heat generated in
them was dissipated by radiation into the surrounding
air. But when the art began to call for converters ex-
ceeding 10 kilowatts in capacity, it was found, as stated
by the expert for complainant, ‘that the capacity of
the transformer increased as the cube of the linear
dimensions, and the heat, if the amount of loss was held
stationary, would increase in like proportion, while the
radiating surface would increase only as the square of
the linear dimensions.’ Further difficulties were e¢n-
countered, resulting from the inequality of the con-
ductivity of iron and copper. The testimony herein
shows that these difficulties were so serious that for
some time it was feared that the practical limit of such
transformers had been reached; that experiments were
made by grouping, by the use of lower current densities,
by filling the cases with oil, and by subdividing the iron
and copper parts of the converters by large ducts and
using forced drafts. It was only when, as the result of
these experiments, it was found that the oil would cir-
_- =
culate through the ducts that any practical progress
was made. Then, as complainant’s expert says, ‘the
problem of making large units became greatly simplified.
It became only necessary to so subdivide the coils and
iron so as to expose a uniform surface as compared
with the losses in the transformer in all sizes, and to
provide a case having sufficient external surface to
enable the oil again to give up its heat to the surround.
ing air, to make transformers of any desired capacity.
The practical result of the invention in suit, as testified
to by complainant's experts, was to so increase the capac.
ity of converters that, while a dry converter, cooled by
the natural circulation of air, is limited to 10 kilowatts,
the oil-insulated converters of the patent in suit are
commercially serviceable up to 500 kilowatts’? * * *
“The decree is affirmed as to patent No. 366,362.” * * *
(Italics ours.)
After the decision of the U. S. Court of Appeals for the
Second Circuit in the case against the Union Carbide Com-
pany, your Petitioner, on June 24, 1902, filed its Bill in the
present case in the United States Circuit Court for the East-
ern District of Missouri, Eastern Division, against this Re-
spondent, Wagner Electric & Mfg. Company, to enjoin this
Respondent from further infringement and to recover from
the Respondent the profits which this Respondent had made
by the manufacture and sale of infringing transformers, in-
cluding those sold to said Carbide Co.
In its Answer in this case this Respondent made the fol-
lowing admission as to its past infringement, which is found
in paragraph IX. of the Answer (at page 13 of the record):
“And this defendant admits that it has, since the
12th day of July, 1887, and subsequent to the assign-
ment to the complainant, within the Eastern District of
Missouri and elsewhere throughout the United States,
made, used and sold devices or apparatus which embody
_
the invention or discovery claimed in claim 4 of said
letters patent;’ * * *
After proofs were taken in this case, and on February 16,
1904, an interlocutory decree was entered in this case by
Ilon. Elmer B. Adams, Circuit Judge, (Rec. pp. 345-347).
That decree, so far as any question arising on this applica-
tion for certiorari is concerned, is in the following words:
“Interlocutory Decree.
“This cause having come on to be heard upon the
pleadings and proofs herein,
“It is Ordered, Adjudged and Decreed as follows:
“That letters patent of the United States issued to
George Westinghouse, Jr., for Electrical Converter,
dated July 12, 1887, and numbered 366,362, and duly
assigned to the complainant Westinghouse Electric &
Manufacturing Company are good and valid in law,
particularly as to the fourth claim thereof, and that com-
plainant, Westinghouse Electric & Manufacturing Com-
pany, is the owner of said letters patent and all rights
thereunder.
“That George Westinghouse, Jr., was the first, true
and original inventor of the inventions and improve-
ments described and claimed in claim 4 of said letters
patent.
“That the defendant herein, Wagner Electric Manu-
facturing Company has infringed the fourth claim of
said letters patent, and upon the exclusive rights of
the complainant under the same, by making, using and
selling electrical converters or transformers embodying
in their construction and principle of operation the com-
bination, substantially as described in said Westing-
house patent, of an clectrie converter or transformer
constructed with open spaces in its core, an enclosing
ease, and a non-conducting fluid in said case adapted
to circulate through said spaces and about the converter
or transformer.
willis,
“That complainant do recover of the defendant the
profits, gains and advantages which the said defendanr
has derived, received or made by reason of said infringe-
ment by said defendant of claim 4 of the said Westing-
house patent No. 366,362, and that the complainant do
recover of the said defendant any and all damages which
the complainant has sustained by reason of said infringe-
ment by said defendant in the manufacture, use or sale
of electrical transformers or converters, found to be in
infringement of claim 4 of said Westinghouse patent
No. 366,362 as hereinbefore specified, or any electrical
converters or transformers which embody in their con-
struction and principle of operation the combination
substantially as described in said Westinghouse patent,
of an electric converter or transformer constructed with
open spaces in its core, an enclosing case, and non-con-
ducting fluid or gas in said case adapted to circulate
through the spaces and about the converter.
“And this cause is hereby referred to Henry H. Den-
ison, Esq., as Special Master to take and state an ae-
count of said gains, profits and advantages, to assess
such damages and to report thereon with all convenient
speed; and that the defendant herein, said Wagner
Electric Manufacturing Company, its directors, officers,
attorneys, clerks, servants and workmen, are hereby
directed to attend before said Master from time to time
as required and to produce before him such books, pa-
pers, vouchers, and documents and to submit to such
oral examination as the Master may require.
“That a perpetual injunction issue out of and under
the seal of this Court, directed to said fendant, Wag:
ner Electric Manufacturing Company, its officers, direc-
tors, agents, attorneys, clerks, servants, and workmen,
enjoining and restraining them, and each of them from,
directly or indirectly, making, or causing to be made,
using, or causing to be used, or vending to others to be
used in any manner, any electrical converters or trans-
formers containing, embodying or employing the said
linn
inventions or improvements claimed by the fourth claim
thereof, or from infringing or violating the said letters
patent No. 366,362, as to the fourth claim thereof, in
any manner whatsoever.”
In acordance with the said decree, this case proceeded
before the Special Master, Henry H. Denison, Esq., on the
accounting, the complainant, on said accounting, not ask-
ing for damages but for the profits made by the defendant
on account of the infringement found. All the evidence on
the accounting was reduced to writing and taken before the
Master and is found in the record between pages 403 and 693,
and after a large amount of time consumed in the taking
of testimony and after the matter had been under advise-
ment by the Master for a long time, and your Petitioner
relying also on the record in this case and the things found
and. decreed in the said Carbide case, on July 29, 1907, the
Master filed his report which is found in this record between
pages 349 and 401, which report contains, among other
things, various findings of fact tabulated in this record be-
tween pages 374 and 375, with the result that the Master
recommended that a judgment be entered in this case in
favor of your Petitioner and against Wagner Electric
Manufacturing Company for the sum of $132,433.35. The
reasons compelling the Master to make this recommendation
and these findings are fully set forth in the Master’s report,
between pages 349 to 401 of record.
Thereafter, on August 28, 1907, this Respondent filed its
exceptions to the Master's said report, and after argument
of said exceptions, Hon. David P. Dyer, District Judge, en-
tered an order (Rec, pp. 698-699), as follows:
“This cause having heretofore come on to be heard
upon the exceptions filed by said defendant to the repor:
of Henry H. Denison, Esq., to whom as Special Master
on
this cause had been referred for the purpose of stating
an account of the damages and profits derived by said
defendant from the unlawful infringement heretofore
decreed herein, and said exceptions having been duly
submitted to the Court upon the arguments and briefs
of counsel, the Court now being fully advised in the
premises doth order that said report be disapproved
and said exceptions sustained in so far as said excep-
tions are directed to the findings of said Master as to
the amount of profits derived by said defendant from
the sale of the infringing electrical transformers and
to the recommendation of said Master for the entry of
a judgment for the amount of profits so found, for the
reasons set forth in the opinion of Court this day filed,
and in lieu thereof the Court doth now enter a tinding
upon said accounting for nominal damages in the sum
of One Dollar; it is therefore
Considered, Adjudged and Decreed that the decree
heretofore entered on February 16th, 1904, including
the injunction awarded thereby be and the same are
hereby confirmed and made final; and that said com-
plainant do have and recover of said defendant the sum
of One Dollar so found as aforesaid, and also its costs
and charges herein expended upon said accounting, for
all of which execution may issue as at law.”
Afterwards and on the 5th day of March, 1908, a final
decree was entered by the Circuit Court in this case (Rec.,
702 and 703), which decree, so far as it is relevant to this
petition foy certiorari, is in the following words:
“And the cause now coming before the Court for the
entry of a final decree, it is
Ordered, Adjudged and Decreed:
“1. That letters patent of the United States, issued to
George Westinghouse, Jr., for Electrical Converter,
dated July 12, 1887, and numbered 366,362, and duly
assigned to the complainant, Westinghouse Electric &
ree
= =
Cx
Sep awe vee,
Manufacturing Company, were good and valid in law,
particularly as to the fourth claim thereof during the
term of seventeen years from the said 12th day of July,
1887, down to and including the date of their expiration
on July 12, 1904, and that the complainant, Westing-
house Electric & Manufacturing Company was the owner
of the said letters patent and of all the rights there-
under during the said term of seventeen years.
k
ie
iz
Le
2. That George Westinghouse, Jr., was the first, true,
and original inventor of the invention and improvement
set forth in claim four of said letters patent.
3. That the defendant herein, Wagner Electric Manu-
facturing Company, has infringed the fourth claim of
said letters patent, and has infringed the exclusive
rights of the complainant under the same, by making,
using and selling electrical converters or transformers
embodying in their construction and principle of opera-
tion the invention, substantially as described in said
Westinghouse patent, of an electric converter or trans-
former constructed with open spaces in its core, an en-
closing case, and a non-conducting fluid in said case
adapted to circulate through said spaces and about the
converter or transformer.
4. That the said letters patent and the complainant's
rights thereunder, did expire on July 12, 1904.
5. That the complainant is entitled to recover only
nominal damages of one dollar because of the defendant's
infringement of claim 4 of the said letters patent.
6. That the complainant is not entitled to recover
any sum or amount as gains, profits and advantages
made, derived or received by the defendant by reason of
infringement of claim four of said letters patent in suit.”
Your Petitioner appealed from the said final decree, not
merely in respect to the accounting feature of the case, but
also in respect to a certain Wagner “Type M” transformer,
onlin.
with which form of transformer we are not concerned on this
petition for certiorari. The result of that appeal was that
on the 16th day of August, 1909, a majority opinion was
rendered in this case by Hon. Riner, District Judge, con-
curred in by Hon. Van Devanter, Circuit Judge, the con-
clusion expressed in that opinion, so far as the accounting
feature of the case is concerned, being that your Petitioner
“is entitled to nominal damages only on account of the in-
fringing device,” and that therefore the decree of the Circuit
Court “must be affirmed.” The majority opinion also con-
curred in the conclusion reached by Judge Adams, in the
Circuit Court, that what was known as “Type M” trans-
former was not an infringement of claim 4 of the patent in
suit. However, as heretofore stated, we are not concerned on
this petition for certiorari with the so-called “Type M” trans-
former, as this petition is limited solely to the accounting
feature of the case, which has to do only with transformers
which are admittedly infringements of claim 4 of the Westing-
house patent in suit.
On the same day that the United States Court of Appeals
for the Eighth Circuit filed its said majority opinion, San-
born, Circuit Judge, wrote a dissenting opinion in which he
disagreed with the majority of the Court, not only to the
effect that your Petitioner was entitled to recover, as Re-
spondent’s profits, the amount found by the Master, but also
that the “Type M” transformer was an infringement of claim
4 of the Westinghouse patent. Our present petition for cer-
tiorari is based upon the fact that the majority opinion of
this Court is clearly in opposition to and out of harmony with
established principles which have been fixed by decisions of
this Court, for reasons very clearly set forth in the minority
opinion of Judge Sanborn, to which opinion we respectfully
refer this Court.
ad
al
et
—27—
THE THING CLAIMED BY CLAIM 4 OF PATENT IN
SUIT.
Claim 4 of the Westinghouse patent in suit is the only
claim involved here and is the only claim of the patent
which is for the converter as an entirety, including the en-
closing case and the oil or non-conducting thuid, and, as the
U.S. Court of Appeals found in the Carbide Case, is a claim
for “the means by which the external and internal surfaces
of the heat-producing parts of a converter were cooled, by
such an arrangement and separation of parts as would permit
the circulation about them of oil, and the means for the re-
tention of said oil within and about said surfaces, whereby
the heat from the oil radiated to the surrounding air.”
Now, as this Court has said in Leeds y. Victor Talking
Machine Co. 213 U. 8. 318, 319: “Claims are independent
inventions.” And also: “A combination is a union of ele-
ments, Which may be partly old and partly new, or wholly
old or wholly new. But, whether new or old, the combination
is a means—an invention—distinct from them. They, if
new,” (the separate elements) “may be inventions and the
proper subject of patents, or they may be covered by claims
in the same patent with the combination.”
To the same effect is Cantrell v. Wallick, in which this
Court says, at ; ige 694 of 117 UL S.:
“The first defence is based on the theory that a patent
cannot be valid unless it is new in all its elements as well
as in the combination, if it is for a combination. But this
theory cannot be maintained. If it were sound no patent
for an improvement on a known contrivance or process
could be valid. And yet the great majority of patents
are for improvements in old and well known devices, on
patented inventions. Changes in the construction of an
old machine which increase its usefulness are patentable.
wiles
Seymour v. Osborne, 11 Wall. 516. So a@ new combina-
tion of known devices, whereby the effectiveness of a
machine is increased, may be the subject of a patent.
Loom Co. y. Higgins, 105 U. 8. 580.”
It was in the case of Loom Co. y. Higgins that this Court,
afier laying down the general rule that a new comibnation of
known elements producing a new and beneficial result is
patentable, stated, with respect to the fifth claim of Webster's
patent (a claim for a combination of elements and the only
claim of Webster’s patent in issue), at pages 591-2 of 105
U.S.:
“It was certainly a new and useful result to make a
loom produce fifty yards a day when it never before had
produced more than forty; and we think that the com-
bination of elements by which this was effected, even
if those elements were separately known before, was
invention sufficient to form the basis of a patent.”
In the case at bar, a finding of the Circuit Court in the
Carbide case is that the combination which is the invention
of claim 4 of the Westinghouse patent in suit “is @ distinct
step forward in the progress of electrology, in the light of
the immediate recognition which it received by the public.”
And the Court of Appeals in the Carbide Case found, in re-
spect to this very combination:
“The practical result of the invention in suit, as testi-
fied to by complainant’s experts, was to so increase the
capacity of converters that, while a dry converter, cooled
by the natural circulation of air, is limited to 10 kilo-
watts, the oil-insulated converters of the patent in suit
are commercially serviceable up to 500 kilowatts.”
We mention these matters here, because the niajority opin-
ion in the case at bar contains the following statement, which
involves at least one material error in point of fact, which
is entirely out of harmony with the decisions which we have
—29—
just cited, and which utterly ignores the things found in
the Carbide case:
“The patented device covered by Claim Four, being,
as we view it, a limited detailed claim and not being
generally for a circulatory system throughout the heat
producing parts of the transformer, and the appellee’s
iafringing transformer embracing something of value
not covered by that claim, viz: open spaces between the
coils and between the coils and the core, we are of opin-
ion that the appellant whose patent covered only part
of the infringing device, is not entitled to recover all
the profits made by the appellee, but only such as re-
sulted from the patented invention.”
In the first place, “open spaces between the ‘coils’ is é
thing expressly contemplated by the Westinghouse patent
in suit, the specification stating, at page 1, lines 65 and 66:
“Preferably also the primary and secondary coils cl ce are
separated from cach other”; and at page 1, between lines
78 and 80: “This material when in a liquid form circulates
through the tubes and the intervening spaces of the coils
and plates”.
In the next place, as the Court of Appeals, in the Carbide
case, states:
“In these circumstances, the patentee seems to be en-
titled to claim the means by which the external and in-
ternal surfaces of the heat-producing parts of a conver-
ter were cooled, by such an arrangement and separation
of parts as would permit the circulation about them of
oil, and the means for the retention of said oil within
and about said surfaces, whereby the heat from the oil
radiated to the surrounding air.”
Thus we see that it is not true or correct to say, even if
claim 4 be for a combination of elements old in themselves,
that therefore it is a limited detail claim, when we consider
=~
the results achieved and the decisions of this Court to which
we have referred, notably the case of Loom Co, v. Higgins.
Furthermore, even if the claim were a limited detail claim,
respondent has used that limited detail claim in every one
of its more than sir thousand infringing transformers, and
it is precisely the combination of that claim which received
at once recognition by the public, as the Circuit Court and
Court of Appeals found in the Carbide case, and these find-
ings are absolutely binding on this respondent, as the
Answer expressly admits. It is only by altogether ignoring
the estoppel arising on this record against this respondent
and the findings of the Cireuit Court and Court of Appeals
in the Carbide case that the majority opinion in the case
at bar can make the statements and reach the conclusions
contained therein.
We therefore see that it was no departure from the inven-
tion as defined in the patent to have, in the respondent's in-
fringing transformers, “open spaces between the coils”.
Furthermore, the fact that those infringing transformers
also had open spaces between the coils and the core is not a
departure from the invention of claim 4 as the same is de-
tined by the United States Court of Appeals in the Carbide
case; because, even with that feature in the respondent's
infringing transformer, it was only an extension of the idea
of the invention of claim 4 which the Court of Appeals in the
Carbide case defined to be:
“Such an arrangement and separation of parts as
would permit the circulation about them of oil, and the
means for the retention of said oil within and about said
surfaces, whereby the heat from the oil radiated to the
surrounding air.”
And even if the feature of having spaces “between the coils
and the core” was, in fact, an additional feature in the re-
mye, F en
ation
spondent’s infringing transformer over and above the pre-
cise invention claimed by claim 4, nevertheless the respond-
ent is liable for profits made on all those infringing trans-
formers, and the burden of proof was on the respondent, not
on your petitioner, to show what proportion of the respond-
ent’s profits were due to the fact that, in addition to having
the precise combination claimed by claim 4, respondent also
had spaces “ between the coils and the core”. (Elizabeth v.
Pavement Co. 97 U. 8. 141).
THE MATTERS AND THINGS FOUND AND DECREED
IN SAID SUIT AGAINST UNION CARBIDE COM-
PANY.
From the decree and opinions of the ¢
Court of Appeals in the Carbide Case, recited above for the
convenience of the Court, we find that among “the matters
and things found and decreed in said suit against Union
Carbide Company,” by which respondent admits that it is
bound (see Paragraph VITI of Answer, Record 12 and 13),
are the following:
‘ircuit Court and
(1) That the letters patent in suit are good and valid.
(2) That George Westinghouse, Jr. was the inventor of
the invention claimed by claim 4 of said letters patent.
(3) That the defendant in that case, which had used trans-
formers precisely like the one illustrated at page 168 of this
record, which were made and sold to it by Wagner Electric
Mfg. Co. (this respondent), had infringed claim 4 of said
patent.
(4) That by reason of this invention “by the arrangement
of various known elements, to wit, dividing the iron into
sections and separating the coils, thereby increasing the
surface over which heat dissipation in the core and coils
—
may be carried on, aided by oil as an insulating material,
and adding an inclosing case, a new combination, producing
* new and beneficial result, not before attained, is” (was)
“contributed to the art”, by Mr. Westinghouse.
(5) That said “invention of Mr. Westinghouse, consist-
ing of a combination of elements, is” ( was) “a distinctive
step forward in the progress of electrology, in the light of
the immediate recognition which it received by the public.”
(Italics ours.)
(6) That “the proofs show that the maximum of large-
size, dry transformers—transformers without sectional open-
ings in the core and without the use of oil as an insulating
material—is 10 kilowatts, or 13 to 14 horse power, while
that of the large-size transformers of the Westinghouse pat-
ent in suit is 500 kilowatts, or from 650 to 700 horse power,”
all this being due to the invention claimed by claim 4 of the
patent in suit.
(7) That in none of the devices of the prior art “is
found the combination of elements contained in the West-
inghouse patent in suit” and claimed by claim 4 thereof.
(The above are among the essential things found and de-
erced by the Circuit Court in the Carbide Case. The fol-
lowing are among the things found by the U. S. Court of
Appeals for Second Circuit in the Carbide Case, confirming
the things found and decreed by the Cireuit Court in that
case.)
(8) That “the claim here in suit (claim 4) was filed with
the original application, and it was never cancelled or mod-
ified.”
(9) That said claim 4 is for a new and most useful in-
vention.
—_ aamaraaananc ae mranins
—33—
(10) “This claim covers such an inclosing case as will
confine the non-conducting fluid, and such open spaces in
the core as will permit the circulation of the liquid through
them. Westinghouse, then, was the first to patent such
an air tight, closed converter.”
(11) “It embodies at least a combination radically modi-
fied from those of the prior art, in order to adapt it to a
novel purpose.”
(12) “In these circumstances the patentee seems to be
entitled to claim the means by which the external and in-
ternal surfaces of the heat-producing parts of a converter
were cooled, by such an arrangement and separation of parts
as would permit the circulation about them of oil, and the
means for the retention of said oil within and about said
surfaces, whereby the heat from the oil radiated to the sur-
rounding air.”
(13) “The parctical result of the invention in suit”
* * * “was to so increase the capacity of the converters
that, while a dry converter, cooled by the natural cireulation
of air, is limited toe 10 kilowatts, the oil-insulated converters
of the patent in suit are commercially serviceable up to 500
kilowatts.”
These things, found and decreed in the Carbide Case, must
then be taken as established, incontrovertible facts in the
case at bar, not only in legal effect, but also by virtue of the
express admissions in Paragraphs VI and VII of the An-
swer, and in Paragraph VIII of the Answer, which reads
as follows:
“This defendant admits that the device involved in
said suit and used by the Union Carbide Company, the
defendant therein, was manufactured and sold by this
defendant, aud that said suit against the said Union
a
Carbide Company was defended by this defendant and
was argued by its counsel, and that the matters an
things found and decreed in said suit against the Union
Carbide Company are res adjudicatae against this de-
fendant.”
Therefore, this respondent was forever estopped from de-
nying the truth of any of these “matters and things found
and decreed in said suit against Union Carbide Company,”
and cannot be relieved of this estoppel at any stage of this
case,
A judgment or a decree is a finality as to the claim or de-
mand in controversy, concluding parties and those in privity
with them, not only as to every matter which was offered
and received to sustain or defeat the claim or demand, but
as to any other admissible matter which might have been
offered for that purpose. Cromwell v. County of Sac, 94
U.S. 351. See also, Southern Pacific Railroad Co. v. United
States, 168 U.S. 1.
Following this docirine, in the case of David Bradley
Mfg. Co. v. Eagle Mfg. Co., the Circuit Court of Appeals
for the 7th Circuit says, in 57 Fed., page 991, as follows:
“We are compelled, therefore, to the conviction that
this suit falls within the first resolution in Cromwell v.
County of Sac, namely, that it is a second action upon
the same claim or demand, to-wit, upon the claim for
a monopoly granted by patent; and that the former
decree, the question being necessarily involved and at
issue in that cause, determines conclusively and for all
time, as between the parties thereto and their privics,
the validity of the patent. It can no more be made the
subject of contention between them.”
Also, as this respondent admits by its Answer (Paragraph
IX, Record 13), that “it has, since the 12th day of July, 1887,
and subsequently to the assignment to the complainant,
—
= =
within the Eastern District of Missouri and elsewhere
throughout the United States, made and sold devices or
apparatus which embody the invention or discovery claimed
in claim 4 of said letters patent,” there was no contest in
this case as to those infringing transformers and the decree
was accordingly entered as to them.
The contests in the Cireuit Court, prior to the interlocu-
tory decree, resulting in an opinion by Judge Amidon on
contempt proceedings and by Judge Adams at final hear-
ing in the Circuit Court, all related to another and later
transformer, known in this record as “Type M Transformer”
which was not involved on the accounting and with which
we are not at all concerned on this petition for certiorari.
|
|
sut in view of the estoppel arising on this record, by vir-
| tue of the decree and decisions in the Carbide Case and the
admissions in the Answer, the majority of the Court of Ap-
peals, on the accounting feature of this case, was precluded
from holding that the invention the subject-matter of claim
4 was not a most valuable and useful invention, and was
bound by the finding of the Court of Appeals in the Carbide
(Case, that by virtue of claim 4 the Westinghouse patent
in suit was for “the means by which the erternal and ine
ternal surfaces of the heat-producing parts of 4 converter
were cooled, by such an arrangement and separation of parts
as would permit the circulation about them of oil, and the
means for the retention of said oil within and about said
surfaces, whereby the heat from the oil radiated to the sur-
rounding air”
Therefore, in so far as the majority of the Court of Ap-
peals in the case at bar states in its opinion that the invention
of claim 4 is not “for a circulatory system throughout the
heat-producing parts of the t ‘ansformer,” and so far as that
finding may have influenced its conclusion resulting in set-
—
ting aside the Master’s report, that finding was unlavw.
fully made by the majority of the Court of Appeals, being
directly contrary to a matter which had been prejudged
and settled by the decision of the U. S Court of Appeals
of the Second Circuit in the Union Carbide case, and being
one of the things found by the Court of Appeals in the Car-
bide Case, by which this respondent was legally and admit.
tedly bound.
RESPONDENT'S INFRINGING TRANSFORMERS AC-
COUNTED FOR BEFORE THE MASTER.
As a reference to Paragraph IX of the Answer will show
(Record 13):
“This defendant admits that it has been duly notified
of the grant and date of said alleged letters patent and
of its alleged infringement thereof” ** * “And this de-
fendant admits that it has, since the 12th day of July,
1887, and subsequent to the assignment to the complain-
ant, within the Eastern District of Missouri and else-
where throughout the United States, made, used and sold
devices or apparatus which embody the invention or dis-
covery claimed in claim 4 of said letters patent.”
And before any proofs were taken in this cause, on the 2nd
of June, 1903, the construction of the admittedly infringing
transformers, an illustration of one of which (the same as in-
volved in the Carbide Case) is found at page 168 of the record
in this case, was thus stipulated in the case. We here quote
from page 19 of the record:
“First. That the defendant, prior to the filing of the
bill of complaint herein, did manufacture and sell elee-
trical transformers constructed and intended to be used
as shown and described in Figure 24 of an article which
appeared in the issue of the ‘American Electrician’ for
January, 1900, on page 13 thereof” (see the record in
this case, page 168), “said illustration showing a trans-
—~ =
former having parellel primary and secondary coils and
a core composed of thin plates of soft iron, arranged in
groups, said groups being separated from each other by
blocks, thus providing spaces between the groups of
plates; and the coils and core being enclosed in a metal
case containing a non-conducting fluid which circulates
through the open spaces in the laminated core.” (Italies
ours.)
So that the construction of the admittedly infringing trans-
formers is identically the same as the construction of the
respondent's transformer in the Carbide Case, the picture of
the infringing transformer referred to in the above stipula-
tion (see Record 168) being a picture of one of the trans-
formers made by the respondent Company and sold by it to
Carbide Company.
The record also shows (Record 404-406) that the 6524 in-
fringing transformers made and sold by respondent and ac-
counted for before the Master were all of similar construc-
tion to those described in said stipulation, quoted from above,
and to the one illustrated at page 18 of the article in
“American Electrician,” reproduced at page 168 of this
record; and, as the stipulation expressly states, in those in-
fringing transformers the coils and core were “enclosed in
a metal case containing a non-conducting fluid” (oil, the
proofs show) “which circulated through the open spaces in
the laminated core” of the transforiner, thus embodying, as
the Answer expressly admits (Record 13), “the invention or
discovery claimed in claim 4 of said” (Westinghouse) “/et-
ters patent.”
The accounting had before the Master was in respect to
these admittedly infringing transformers, manufactured and
sold by the respondent, your petitioner seeking to recover on
that accounting the profits made by the respondent in the
—33—
manufacture and sale of these infringing transformers. The
account was limited to six years before filing of the bill, in
pursuance of Section 4921 of the Revised Statutes of the
United States, as amended in 1897.
That this matter may be clearly understood, we here re-
produce in full the stipulation between the parties to this
suit which was used in making up the record for the U. 8.
Court of Appeals for the Eighth Circuit, which stipulation
appears in the very first pages of the record, i. e. pages a,
b and ¢:
“United States Circuit Court of Appeals, Eighth Circuit.
Westinghouse Electric & Manufacturing Co., Appellant,
No, 2857. VS. In Equity.
Wagner Electric Manufacturing Co., Appellee.
Stipulation.
“In order to save the printing of ‘two volumes compris-
ing the tabulations from the books of the defendant’
taken before the Master and complied under his direc-
tions, which two volumes are referred to towards the
close of the Master’s report in this case, which Master's
report was filed in the United States Cireuit Court on
July 9, 1907, it is stipulated and agreed between counsel
for appellant and counsel for the defendant:
“That said two volumes of tabulations contain a list of
more than six thousand transformers sold by the Wagner
Electric Manufacturing Company, appellee, from and
after June 24, 1896, up to and including November 14,
1901, being a list of transformers manufactured and sold
by the Wagner Electric Manufacturing Company, appel-
lee and defendant, each of which transformers embodies
in its construction the invention claimed by the fourth
claim of the Westinghouse patent in suit No, 366/02.
dated July 12, 1887, being infringing transformers
manufactured and sold by the defendant, and which are
Ee
— =
the transformers referred to in the Master’s report in this
case, and concerning which transformers the Master in
this case was ordered to take and state an account by the
interlocutory decree entered in this cause by the Circuit
Court on the 16th day of February, 1904. Said two
volumes of tabulated statement of infringing trans-
formers made and sold by the Wagner Electric Manu-
facturing Company from and after June 24, 1896, up
to and including November 14, 1901, which it is stipu-
lated need not be printed as part of the record of the
Court of Appeals in this case, is the tabulation from the
defendant’s books presented and filed before the Master
on September 7, 1904, and is the same tabulation, record
or report thereafter referred to by Waldo H. Layman,
one of defendant’s witnesses, in his testimony taken in
this case. And that, as said defendant's witness, Waldo
H. Layman, admits in questions and answers 84 and 85
of his testimony before the Master, said tabulated report
or statement covers all transformers made and sold by
the Wagner Electric Manufacturing Company from and
after June 24, 1896, up to and including November 14;
1901, which transformers embody in their construction
the invention claimed by claim 4 of the Westinghouse
patent in suit, No. 366,362, dated July 12, 1887.
“That said record or tabulated statement of infringing
transformers in two volumes and referred to in the last
part of the Master's report, is made up of a list of de-
fendant’s infringing transformers covering the period
specified above that is, between June 24, 1896, and No-
vember 14, 1901, containing the factory number of the
order for each transformer, name of customer, residence
of customer, date of sale, number of transformers in
each sale to each customer, price of each transformer,
total price to customer for each sale, and net price re-
ceived.
“That on the last page of said report is a tabulated
statement concerning Union Carbide transformers re-
ferred to in the Master's report, which record shows that
Pa AN
— es
on December 7, 1898, the Wagner Electric Manufactur.
ing Company, appellee, sold to the Union Carbide Com-
pany of Niagara Falls, New York, as order No. ‘A 2069’,
nine transformers, receiving for the same the sum of
$15,460.00.
“That in the following schedule given by appellee's
witness, Waldo H, Layman, in answer to question 135
of his testimony before the Master, the figures under
the heading ‘Proportion of business involved in the ree-
ord of this inquiry’ represent the amount received by
the Wagner Electric Manufacturing Company, for the
years 1896, 1897, 1898, 1899, 1900, 1901, beginning with
June 24, 1896, and ending with November 14, 1901, for
the infringing transformers listed in the said two books
of tabulations from the books of the defendant com-
pany relating to infringing transformers manufactured
and sold by Wagner Electric Manufacturing Company
between June 24, 1896, and November 14, 1901:
Proportion
Total Volume of Business Total Profits of the
Year Company's Involved in Company on all
Business the Record of kinds of apparatus
this Inquiry
1896 $238,122.35 $ 65,601.82 — Profit $20,707.33
1897 226,096.46 128,244.12 Loss 21,743.38
1898 343,494.76 148,542.29 Profit 62,592.12
1899 411,337.74 235,335.78 Profit 58,382.67
1900 515,013.32 230,732.67 = Loss. —-12.277.57
1901 580,710.10 146,815.08 — Profit 40,318.90.
“That the sum of the various amounts in the first col-
umn of the above tabulation is the $2,314,774.75 re-
ferred to by the Master at page 42 of his printed report
as found in the transcript of this record; the sum of
the various amounts in the second column of the above
tabulation is the $955,271.76 referred to by the Master
on said page of his report; and the arithmetical sum
of the various amounts in the third column of the above
oe
tabulation is the $182,001.02 referred to by the Master
on said page of his report.
July 23rd, 1908.
BAKEWELL & CORNWALL,
Solicitors for Westinghouse Electric &
Manufacturing Company, Appellant.
A. C, FOWLER,
Solicitor for Wagner Electric Manufac-
turing Company, Appellee.”
(Italics ours.)
Notwithstanding the fact that each one of these infringing
transformers embodies, as an entirety, the invention of claim
4 of the Westinghouse patent in suit; notwithstanding the
fact that claim 4 is for the converter or transformer as an
entirety; and notwithstanding that the Master found that
your petitioner was entitled to recover from the respondent,
as profits made by it, the sum of $132,433.25, nevertheless,
in direct contravention of the decisions of this Court in
strictly analogous cases, the majority of the Court found
that your petitioner was “entitled to nominal damages only
on account of the infringing device.” From this conclusion
of the majority of the Court of Appeals, however, Sanborn,
Circuit Judge, dissents, for the reasons stated in his opinion,
As we understand it, the essential ground upon which the
majority of the Court based its conclusions is stated in the
last paragraph but one of the majority opinion, and is in
these words:
“Here the appellant failed to prove by reliable or
tangible evidence that the entire value of the infringing
transformer as a marketable article was properly and
legally attributable to appellant's patented combination
embodied therein, and so, in the light of the decisions
above cited, and many others, which we have examined,”
be
a on
(not one of which has any application to the facts in
the case at bar) “announcing the same rule, we think
that the appellant is entitled to recover nominal dam-
ages only; in other words, that as part only of the profits
made by the appellee are attributable to the appellant’s
combination, the balance being attributable to the pres-
ence in the infringing device of elements not included in
that, combination, and as the appellant failed to make
proof of how much of the total profits was due to the
presence of its combination in the infringing device,
there is nothing upon which more than a nominal re-
covery could be grounded.”
To reach this conclusion, the majority of the Court com-
pletely disregarded the findings of fact contained in the
Master’s report (Rec. pp. 374 and 377), to which we respect-
fully refer this Court.
When the majority opinion refers “to the presence in the
infringing device of elements not included in that combina-
tion” it means to say that each of said infringing trans-
formers had present in it not only the combination, as an
entirety, of claim 4 of the Westinghouse patent, but that
each of said transformers also had a feature not specifically
claimed in the patent, i. e.: open spaces between the coils
and the core. This feature, if present in the respondent’s
infringing transformer, was no departure from the inven-
tion of claim 4 which the Court of Appeals in the Car-
bide case, defined, as: “the means by which the external
and internal surfaces of the heat-producing parts of a con-
verter were cooled by such an arrangement and separation
of parts as would permit the circulation about them of oil,
and the means for the retention of said oil within ond about
said surfaces, whereby the heat from the oil radiated to the
surrounding air.” This feature, even if present in the re-
spondent’s transformers, was not a patented feature, and,
- us
=
as we have said, was quite within the spirit of the invention
claimed by the fourth claim of the Westinghouse patent,
being, at most, merely an additional separation of parts for
the cireulation of oil through the core. The majority opin-
ion does not even pretend to say that these infringing trans-
formers accounted for before the Master were not infringe-
ments of claim 4, but does in fact say, that because they not
only embody the invention of claim 4 but also had addi-
tional spaces for the oil to circulate between the parts, and
because your petitioner “failed to make proof of how much
of the total profits” made by the respondent was due to that
feature, which feature was in direct harmony with the in-
vention of Mr. Westinghouse, ergo, your petitioner is en-
titled to recover nothing but nominal damages. This in-
yolves a non sequitur, and is also direcily contrary to the rule
laid down by this Court in Elizabeth v. Pavement Co., 97
U. S. 141.
It would have been impossible to have shown what propor-
tion of the respondent's profits were due to the fact that
| the respondent’s infringing transformers, in addition to em-
bodying the invention of claim 4, also had, in harmony with
| that invention, spaces between the coils and the core, thus
providing additional separation of the parts for the circu.
lation of the oil; but, as a matter of law, this Court has
decided, in Elizabeth v. Pavement Co., 97 U. S. 141, that
where the defendant has used the complainani’s invention
as an entirety plus some additional feature, the complain-
ant is entitled to recover all the profits made by the defend-
ant, unless the defendant itself show what proportion of
the profits made by the defendant in the sale of the infrina-
ing structures were due to this additional feature. In other
words, this Court in Elizabeth v. Pavement Company has
decided that the burden of proof, under such circumstances,
a
is thrown on the defendant and not on the complainant, to
show what proportion of the profits made by the defendant
were due to such additional feature.
The majority opinion also ignores the estoppel arising on
this record, pleaded by the Bill and admitted in Paragraph
VIII of the Answer, to the effect “that the matters and
things found and decreed in said suit against the Union)
Carbide Company are res adjudicatae against this defendant.”
It was in that very case against this respondent's vendee, de-
fended by this respondent, that the ( ‘ircuit Court and Court
of Appeals for the Second Circuit held that the particular
transformer illustrated at page 168 of the record, which
illustrates the construction of all the infringing trans-
formers accounted for before the Master, infringed claim 4,
and it was in that case that the Circuit Court and Court of
Appeals for the Second Circuit found and decreed those
specific things to which we have already called attention in
this petition and which are the things which Paragraph VIII
of the Answer in this case admits that the respondent. is
bound by. Those things having been found and decreed, and
ihe defendant being admittedly bound by them, and the scope
of the invention of petitioner's patent having been defined in
the Carbide case, your petitioner was only concerned in
proving before the Master the number of infringing trans-
formers and such data as would enable the Master,
under the peculiar circumstances developed on the record in
this case, to estimate the profits which the defendant made
on its infringing transformers within six years prior to the
filing of the bill of complaint. The petitioner having done
this, it was the duty of the respondent, if the respondent
could show such a state of affairs, to show exactly what pro-
portion of the respondent's profits were due to the fact that
in making up its infringing transformers so as to embody in
—
— =
each of them the invention of claim 4, the respondent so
made those transformers, in harmony with the spirit of the
invention as defined by the Court of Appeals in the Carbide
case, so that there would be even more space for the oil to
circulate in and between the parts of the converter, to this
end making spaces between the coils and the core. Not only
did the respondent fail to produce any such proof, but, on
the contrary, as pointed out by the Master's report, it had
eo confused its profits on the transformers with the general
profits of its business that it could not tell the Master what
profits it had actually made in the manufacture and sale of
the infringing transformers accounted for.
In this case the invention of claim 4, as the Circuit Court
and Court of Appeals found in the Carbide case, as the
patent itself shows, and as the Master found (Record 375),
is a complete thing, consisting of a certain combination of
elements, being a new transformer, complete in itself. The
defendant used it as such—the whole of it, as the Answer
admits and as the decrees in the case found. If the defend-
ant superadded the additional feature, not specifically
claimed in the patent but quite in harmony with the inven-
tion, of having spaces between the coils and the core, the
defendant failed to show that such addition contributed to
the profits realized. The burden of proof was on the de-
fendant, not cn your petitioner, to do this, contrary to the
majority opinion of the Court of Appeals in this case, This
precise question was decided in the case of Elizabeth v.
Pavement Co., where this Court held:
“The Nicholson pavement was a complete thing, con-
sisting of a certain combination of elements. The de-
fendant used it as such—-the whole of it. If they super-
added the addition made to it by Brocklebank & Trainer,
they failed to show that such addition contributed te
—{4§—
the profits realized. The burden of proof was on them
to do this.” See Elizabeth v. Pavement ( ‘o., 9T U.S.
141.
To the same effect see Hurlbut v. Schillinger, 130 U. 8. 456,
472; Crosby Valve Co. v. Safety Valve Co., 141 U. 8. 454;
Root v. Railway Co. 105 U, 8. 203.
Not only is the majority opinion in the case at bar in
direct conflict with the decisions of this tribunal in the ease
of Elizabeth y. Pavement Company and the other cases just
cited, but it is in direct conflict with the rule applied by the
U. 8. Circnit Court of Appeals for the Sixth Circuit in Bren.
nan Co. v. Dowagiae Mfg. Co. 162 Fed. 475, and by the U.
S. Cireuit Court of Appeals for the Seventh Cireuit in
Orr & Lockett Hardware Co. vy. Murray, 163 Fed. 55, where
that court, following and referring to Elizabeth v. Pavement
Co., 97 U.S. 126, says:
“Where profits are made by an infringer, by the use
of an article patented as an entirety, the infringer is
responsible to the patentee for the whole of such prof-
its, unless he can show—and the burden is on the in-
fringer to show it—that a portion of such profits is
the result of some other thing used by him.”
Thus it is clear that when the majority of the Court de-
cided, as it did decide, that because in respondent’s more
than six thousand infringing transformers accounted for
there were present, in addition to the invention of claim 4
as an entirety, spaces between the coils and the core through
which the oil could also circulate, the burden of proof was
on your petitioner to show what proportion of the profits
made by the respondent was due to that feature, ifs deci-
sion was in conflict with the decision of this Court, in
Elizabeth v. Pavement Co... 97 U8. 141. and with the other
decisions of this Court. herein cited: and it also under-
took to establish a rule in the Righth Circuit directly in con-
— =
flict with the rule established in the Sixth and Seventh
Circuits.
We respectfully submit that it is for the very purpose of
obtaining uniformity of decisions in the various circuits,
to harmonize with the decisions of this Court, that this tribu-
nal exercises its prerogative in issuing the writ of certiorari
to review decisions of lower tribunals, in cases such as this,
where a U. S. Court of Appeals has neglected, or refused, to
follow when this Court has construed and defined the law.
UNDER THE DECISIONS OF THIS COURT, WHERE
THE INFRINGER HAS CONFUSED THE PROFITS
MADE IN THE MANUFACTURE AND SALE OF THE
INFRINGING ARTICLE WITH THE GENERAL PROF-
ITS OF HIS BUSINESS, THE MASTER IS WAR-
RANTED IN ESTIMATING TILE PROFITS TO WHICH
COMPLAINANT IS ENTITLED. AND IN ESTIMATING
PROFITS MADE BY AN INFRINGER A COMPENSA-
TION IS GRANTED “COMPUTED AND M EASURED BY
THE SAME RULES THAT COURTS OF EQUITY APPLY
TO THE CASE OF A TRUSTEE WHO HAS WRONG-
FULLY USED THE TRUST PROPERTY FOR HIS OWN
ADVANTAGE.”
Tilghman v. Proctor, 125 U. S. 148.
Root v. Railway Co., 105 U. 8. 189, 214. 215.
Central Natl. Bank v. Connecticut Mut. Life Ins. Co.
104 U. S. 54.
The Idaho, 93 U. 8. 575.
Rubber Co. vy. Goodyear, 9 Wall. 802, 805, S04.
Callaghan v. Myers, 128 U. 8. 617.
Manufacturing Co. v. Cowing, 105 U.S. 255.
ee
Between the matters and things found and decreed in the
Carbide case and the matters and things found on the record
in this case it was established :
That the invention of claim 4 of the patent in suit was a
new and very useful invention; nothing preceding it in the
art accomplished what this invention accomplished; that
within the period covered by the accounting the respondent
had made and sold more than six thousand transformers,
each and every one of which embodied, as an entirety, the in-
vention of claim 4, thus recognizing, as the Courts found in
the Carbide case, that the public had theretofore recognized,
the great merit of this invention. The respondent profited
by the manufacture and sale of these infringing transform-
ers, but confused its profits in this branch with the general
profits of its business, The Master, who had the advantage
of hearing the testimony of the witnesses, noticing their be-
havior on the stand, ete., found, among other things (Record
374-377) :
(1) That the entire commercial value of the infringing
transformers so manufactured and sold by the respondent
during the time covered by the accounting was due to the in-
vention claimed by claim 4 of the patent in suit.
(2) That the respondent had merged the profits made by
it on the infringing transformers with the profits of the re-
spondent’s entire business, so that, as shown by the testi-
mony, the respondent was unable to separate such profits.
(3) That respondent claimed that it did not know and
could not furnish the cost of manufacturing the infringing
transformers nor even an estimate thereof.
(4) That the business of the respondent as to the manu-
facture of the infringing transformers was so intermingled
_ ws
with its other and general business that approximate results
only were possible, in estimating the profits.
(5) That the profits of the respondent from the manufac-
ture of its infringing transformers, as nearly as it could be
reached by estimates, comparisons and apportionment, was
approximately 25%, on the net amount of sales on the in-
fringing transformers.
Under these circumstances, and under the decisions of this
Court above cited, notably the case of Manufacturing Co. v.
Cowing, 105 U. 8. 257, 258, applying the rules that Courts of
equity apply to cases of a trustee who has wrongfully used
the trust property and commingled the profits made vith the
general profits, and under the doctrine laid down in Tilgh-
man v. Proctor, 125 U. 8. 148, the Master estimated the
profits and found that your petitioner was entitled to recover
from the respondent $132,433.35.
The majority opinion says in regard to this matter:
“The master found that the appellee kept no separate
account of its profits realized from its infringing device,
but on the contrary, that the profits made by appellee on
the infringing transformers were merged with the profits
of its entire business, so that it was impossible to sepa-
rate them and that the appellee did not know and could
not furnish the cost of the manufacture of the infringing
transformers or even an estimate thereof. We do not
think the mere failure to keep separate the profits de-
rived from the infringing device under the circumstances
disclosed by the record, warrants the application of the
equity rule, that where one wrongfully mingles his goods
with those ef another so that they are indistinguishable
from the mass, the party injured is entitled to take the
whole. This rule has becn opplied in cases of the inva-
sion of a copyright where the wrongdver has mingled in
the book, matter to which a copyright does not properly
Peete vu
—
extend with matter covered by the copyright, ‘the two
necessarily going together, when the volume is sold as a
unit, and it being impossible to separate the profits on
the one from the profits on the other and the lawful
matter being useless without the unlawful.’ Callaghan
v. Myers, 128 U. S. 617.”
In the first place, we wish to say that the rule of Callaghan
v. Myers, although applied in a copyright case, is a rule which
this Court has repeatedly recognized, approved and applied
in patent cases, the equitable principle being the same
whether the profits to be accounted for relate to a copyright
or to a patent, (see Hurlbut v. Schillinger 130 U. 8., page
472).
Furthermore, it appears from the record that the Master
was warranted in his findings above referred to and in
estimating the profits under the circumstances of this case,
When your petitioner began to take its proofs before the
Master the first witness called was Waldo A. Layman, Gen-
eral Manager and Treasurer of the respondent company, from
whom with great difficulty, as the record shows, your peti-
tioner at last succeeded in obtaining the statement found at
page 442 of the record and hereinbefore quoted, which shows
in the third column under the heading, “Proportion of busi-
ness involved in the record of this inquiry,” the gross sales
of the respondent's business in the infringing transformers
during the years 1896 up to and including 1901, this state-
ment being also further explained by the stipulation found
at pages a, b and ¢ of the record in this case. This state-
ment also shows the total profits of the respondent's business
in the years 1896, 1898, 1899 and 1901. Layman tells the
Court (Record 442) that he was not able to give the data
from which could be ascertained the cost of manufacture of
the infringing transformers, although he did provide a list,
an
referred to in the stipulation found at pages a, b and ¢, of
all the infringing transformers sold during that time and
the price at which each of those transformers was sold. At
page 439 of the record Layman was asked whether he was in
a position to ascertain from the books of the respondent com-
pany, from which this transcript or list of infringing trans-
formers had been made up, “or otherwise,” the cost of manu-
facturing the 6524 transformers covered by that list. His
answer to Q. 113 (found at page 439 of the record) was that
he could only determine that by reference to the books of the
company. After an adjournment, and on October 17, 1904,
when the witness was again called before the Master, in
answer to inquiries found at page 442 of the record, he stated
that he wished to be understood as stating that he had
examined the books of the company and the information as to
the cost of manufacturing these infringing transformers in-
quired about at the previous session could not be ascertained ;
that all he could give was the total volume of the business
as specified in the tabulated statement found at page 442 of
the record and also reproduced in connection with the stipu-
lation found at page b of the record. It must here be observed
that the same witness had antecedently been asked (at page
439 of the record) whether he could ascertain from the books
of the respondent company “or otherwise” the cost of manu-
facturing the said transformers, and that his reply was
(Record 439, Q. 113) that he could only determine this by
reference to the books of the company.
Your petitioner and the Master were then driven to other
means of trying to ascertain what the facts were, and the
testimony of Johannesen and Foster was taken, Johannesen’s
testimony beginning at page 446 and Foster’s beginning at
page 481,
_
Johannesen and Foster had formerly been in the employ
of the respondent including the time covered by the account-
ing, and both proved by their testimony that during that time
and all the time they were in the employ of the respondent
most accurate estimates were made and kept by them for re.
spondent as to the details of cost of these transformers, even
to the cost of boxing and transporting the same, all of which
is illustrated by the sample blue print exhibit found opposite
page 726 of the record, referred to by them; and this not-
withstanding the fact that the witness Layman, the Treasurer
and General Manager of the respondent, stated most posi-
tively that no such information could be had from the books
of the respondent company “or otherwise.”
Afterwards, when Layman was called as a witness on
behalf of the respondent, he shows that some records which
would have been of material assistance in this inquiry as to
the exact profits made by the defendant had been destroyed,
about six years prior to the time when he gave his testimony
(November, 1905), which would correspond almost exactly
with the date of the decision of the Court of Appeals of the
Second Circuit in the Carbide case (Record, pp. 652-653).
Then, he says (p. 615) that it was the practice of the re-
spondent to make at least one inventory a year. At the foot
of page 615 and at page 616 of the record, in answer to
inquiries, Layman stated that those inventories “ought to
be in the vaults of the company.” It must be noticed that
that inquiry was then being conducted by the respondent's
counsel, who, after the witness had said, at the top of page
616, in answer to Q. 232, that he thought those inventories
were available, or at least that they ought to be in the
vaults of the company, stated: “J will say to the Master
that on this matter of inventories I shall drop the matter
for the present, because T hare not eramined them and do
rs ere , > ee? a
= =
not know anything about them.” The Master then replied
on the record: “I see of course that will be necessary.”
However, although those inventories were evidently in the
possession of the respondent and accessible to the witness,
ihe subject was dropped there by the respondent's counsel,
and the inventories were never produced.
It was under these circumstances and with these diffi-
culties that the Master was compelled to resort to estimates
of respondent's profits; and it may be noted here that the
Master expressly finds in his findings of fact, at pages 376
and 377 of the record:
“Phat the defendants admitted in the evidence of the
witness, Layman, p. 334” (the Master here refers to the
typewritten pages of the testimony then before him,
and the reference now should be Record 615 and 616)
“that it had in its vaults inventories made annually or
semi-annually, referred to in the testimony of Johan-
nesen, aud omitted to produce the same in evidence.”
In view of this record and the findings of the Master we
are at a loss to understand how the majority opinion con-
tains this statement:
“We do not think the mere failure to keep separate
the profits derived from the infringing device, under
the circumstances disclosed by the record, warrants the
application of the equity rule, that where one wrong-
fully mingles his goods with those of another so that
they are indistinguishable from the mass, the party in-
jured is entitled to take the whole.”
This is in marked contrast to the unanimous decision of
the U. 8. Court of Appeals for the Sixth Circuit in the case
of Dowagiac Mfg. Co. v. Superior Drill Co., 162 Fed. 479,
481, where the rule laid down by this Court in Rubber Co.
vy. Goodyear, 9 Wall. 802, 808, 804, Callaghan v. Myers, 128
a ae
U. 8S. 617, and other similar cases, is applied, the U. §,
Court of Appeals for the Sixth Circuit in that case holding,
in conformity with the decisions of this Court, that where
the infringement was deliberate and intentional the defend.
ant cannot avoid liability for profits by so confusing the
profits made on the infringing business with the profits made
on its general business that the profits made on the infring-
ing articles could not be separated from the profits on its
entire business.
It must also be remembered that the Answer in the case at
bar (Record 13) expressly admits that respondent had been
notified of your petitioner's letters patent and of the infringe.
ment, and that nevertheless it had infringed by making, using
and selling devices or apparatus embodying the invention
or discovery claimed by claim 4 of the letters patent in suit.
Under the evidence before the Master and the findings
of the Master and the decisions of this court in the cases
hereinbefore cited, the Master was clearly warranted, under
the circumstances detailed above, in estimating the respond-
ent’s profits on the data furnished him by the witnesses
Johannesen and Foster, in view of the attitude taken by
the respondent's Treasurer and General Manager, Mr. Lay-
man; and, therefore, we are not able to understand the
following sentence in the opinion of the majority of the
Court of Appeals, in view of the record in this case:
“There is no evidence tending to show that the appel-
lant’s failure to show how much of the appellee’s profii
resulted from the infringed combination and how much
from the presence of the other elements of the infring-
ing transformer, was due to any refractory or deceit-
ful conduct on the part of the appellee, such as destruc-
tion or hiding of the books, or refusal to produce them
for the use of the appellant.” (Italies ours.)
_ =
We have already shown, under the decisions of this Court,
that even if the infringing transformers did have open spaces
between the coils and the core, in addition to having the
precise combination called for by claim 4 of the patent in
suit, the burden of proof was on the respondent and not on
your petitioner to show what proportion of the profits made
by the respondent was due to this difference. See Elizabeth
y. Pavement Co., 97 U. S. 141. But the trouble was that
the deceitful and refractory conduct on the part of the wit-
ness Layman and the whole attitude of the respondent on
this accounting, as the record shows and as the Master found,
proved clearly that the respondent sought to prevent all the
facts as to the profits made by the respondent on
these infringing transformers being adduced before the
Master; and that Layman stated most positively that the
profits made by the respondent on the infringing trans-
formers could not be separated from the profits made in its
general business. Therefore, under such circumstances, the
Master was left to estimate the profits on the data before
him.
THE MAJORITY OF THE COURT OF APPEALS DID
NOT ATTACH SUFFICIENT WEIGHT TO THE
FINDINGS OF THE MASTER, AND FAILS UT-
TERLY TO SHOW THAT THE FINDINGS OF
FACT MADE BY THE MASTER, AS WELL AS
HIS CONCLUSIONS OF LAW, ARE ERRONEOUS.
This of itself is in direct conflict with leading decisions
of this Court. In the case of Warren v. Keep, 155 U. §. 265,
this Court affirmed the decision in Keep v. Fuller, reported
in 42 Fed. 897, in which case Judge Coxe, Circuit Judge,
said :
“Tt is wise to remember at the outset that the Court
is not now to decide de novo the various questions pre-
—_ oN
sented on the accounting. The present investigation
is contined simply to the question—Did the Master
make any mistake which requires the setting aside of
his report? He stands as the representative of the
Court, and is better able by far, than one who only reads
the testimony froma printed book, to tell what witnesses
are entitled to credit, and where the truth lies in the
controversy before him. His findings are prima facie
correct, and the burden of showing error is upon the
party who excepts. If the proof is ‘suflici lent to sustain
the Master's findings it is enough. The investigation
terminates at this point, even though the Court, sitting
in the Master's place, might, upon similar evidence,
reach a different result. The conelusions of the Mas.
ter, depending upon the weighing of conflicting testi-
mony, have every reasonable presumption in their favor,
und are not to be set aside or modified unless there
clearly appears to have been error or mistake on his
part.’ Tilghman v. Proctor, 125 U. S. 136, 149, 8 Sup.
Ct. Rep. 894; Callaghan v. Myers, 128 U. 8, es 666,
9 Sup. Ct. Rep. 177; Kimberly v. Arms, 129 U. 8. 512,
525, 9 Sup. Ct. Rep. 355; Central T. Co. v. Texas R. Co.,
52 Fed. Rep. 448; Welling v. La Ban, 34 Fed. Rep. 41,
and cases cited. "Tested by the rule of these cases, it
cannot be said that the Master's findings of fact are er-
roneous, except, perhaps, in a few particulars which
will be referred to hereafter.”
A Master appointed to take an accounting is a judicial
officer, representing the Court in this work, and his findings
are and should be entitled to the greatest weight; they are
not to be lightly set aside and will not be set aside except in
the case of a very clear mistake. In regard to any doubtful
matters the presumption will be in favor of the Master's re-
port. The courts recognize that the findings of a Master are
entitled to even greater weight than the findings of a jury.
In the case at bar, the Special Master appointed by the Court
is not only a lawyer, but a man of very extensive experience
= =
as a Master in Chancery in considering and weighing evi-
dence; and he has had an advantage which the Court cannot
have, for he has seen the witnesses and had an opportunity of
observing their appearance, attitude and manner on the stand,
of hearing their testimony and of interrogating each witness
himself.
As to the weight which should be given to the Master's re-
port in such a case as this, this Court says in Tilghman v.
Proctor, 125 U. 8. 149-150:
“We are then brought to a consideration of the excep-
tions taken to the Master's report in matters of fact,
affecting the accuracy of his conclusions in respect to the
amount of those profits, gains and savings. In dealing
with these exceptions, the conclusions of the Master, de-
pending upon the weighing of conflicting testimony, have
every reasonable presumption in their favor, and xre not
to be set aside or modified unless there clearly appears
to have been error or mistake on his part. Medsker v.
Bonebrake, 108 U. 8. 66; Donnell v. Columbian Ins. Co.,
2 Sumner, 366, 371; Mason v. Crosby, 3 Woodb. & Min.
258, 269; Paddock v. Commercial Ins. Co., 104 Mass.
521, 5381; Richards v. Todd, 127 Mass. 167, 172.”
In Crawford v. Neal, 144 U. 8. 585, this Court holds as
follows:
“The findings and conclusions of a Master upon con-
flicting testimony are to be taken as presumptively cor-
rect, and unless some obvious error in the application
of the law has intervened, or some serious or important
mistake has been made in the consideration of the evi-
dence the decree should stand.”
To the same effect is Furrer v. Ferris, 145 U. 8. 132, citing
Kimberly v. Arms, 129 U. 8. 512.
In the case at bar the record shows that the master had
abundant warrant for his findings of fact, while the decisions
—
of this Court support him in his conclusions of law and show
that the majority opinion of the Court of Appeals for the
Eighth Circuit in the case at bar is in conflict with the deci-
sions of this Court in analogous cases.
GARRETSON V. CLARK, 111 U. S. 120.
This case, utterly inapplicable to the facts in the case at
bar, is cited by the majority opinion of the Court below on
the following proposition:
“The patentee must in every case give evidence tending
to separate or apportion the defendant’s profits and the
patentee’s between the patented feature and the un-
patented features, and such evidence must be reliable
and tangible, and not conjectural or speculative.”
The trouble is that that proposition, while sound, does not
apply to the facts in the case at bar. In the case at bar, un-
like the case of Garretson y. Clark, where the patent was for
a mere feature in the mop head, the invention is for a com-
plete combination in itself—for a wholly new thing as an
entirety—, which combination, as an entirety, the defendant
has used. This tribunal has repeatedly construed its decision
in the case of Garretson y. Clark and held that the rule there
laid down does not apply to a case like the one at bar, where
the invention in question is, as an entirety, “a complete com-
bination in itself.”
In the case of Hurlbut v. Schillinger, at page 472 of 130
U. 8., this court says:
“In Elizabeth v. Nicholson Pavement Co., 97 U. 8.
126, 139, it is said that ‘when the entire profit of a busi-
ness or undertaking results from the use of the invention,
the patentee will be entitled to recover the entire profits,
if he elects that remedy.’ This language was quoted
with approval in Root v. Railway Co., 105 U.S. 189, 203.
As in the case of the Nicholson patent, so in the case of
—59—
the Schillinger patent, the pavement was a complete com-
bination in itself, differing from every other pavement,
and the profit made by the defendant was a single profit
derived from the construmtion of the pavement as an en-
tirety. Callaghan v. Myers, 128 U. S. 617, 665, 666.
Within the decision in Garretson Vv. Clark, 111 U. 58.
120, the proof in this case is satisfactory, that the entire
value of the defendant’s pavement, as a marketable ar-
ticle, was properly and legally attributable to the in-
vention of Schillinger.
The decree of the Circuit Court is affirmed.”
So, in the case of Crosby Valve Co. vy. Safety Valve Co.,
where the claim was on the improved valve as an entirety,
and where the defendant had used that valve plus some
features which he claimed as improvements, this Court says,
at page 453 of 141 U. S.:
“In regard to the holding by the master and the court
that all the profits of the defendant from the valves it
made and sold were to be attributed to the employment
by it of the improvement covered by the patent of 1866,
we hold that, in view of what was determined in the
former opinion of this court, and on the whole case, the
safety-valves known to the art and open to be used by
the defendant would not do the same work as the Richard-
son invention covered by the patent of 1866, or have any
commercial value; and that, within the case of Garret-
son vy. Clark, 111 U. S. 120, it appears, by reliable and
satisfactory evidence, that the profits made by the de-
fendant are to be caleulated in reference to the entire
valve made and sold by it, for the reason that the entire
value of that valve, as a marketable article, is properly
and legally attributable to the patented feature of the
patent of 1866.”
Thus this Court by its own decisions has distinguished
eases like the one at bar from cases such as Garretson Vv.
Clark.
onal
In the case at bar, however, as had been antecedently found
by the U. 8. Circuit Court and Court of Appeals for the
Second Circuit in the Carbide case, the invention the sub-
ject-matter of claim 4 was for a new converter, which ae-
complished marvelously improved results and resulis which
had never
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