Petition for Writ of Certiorari — Sontag Chain Stores Co. v. National Nut Co. of Cal.

IN THE

Supreme Court of the United Statés

OCTOBER TERM, A. D. 1939 ‘

No. rn

SONTAG CHAIN STORES CO., LTD.,

a corporation,

5 Coe Petitioner,

vs.

NATIONAL NUT COMPANY OF CALIFORNIA.

D. a corporation,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES CIRCUIT COURT OF APPEALS

FOR THE NINTH CIRCUIT AND BRIEF IN SUP-

PORT THEREOF

“ Wn. NEVARRE CROMWELL,

‘ FRANK H. TOWNER,

/ Guy A. GLADSON, FS

Counsel for Petitioner.

INDEX.

SuBsect INDEX.

(1) An important question of federal law, as

yet rigkanaiemaatees by this court, is in-

Mame Pimmae Pra ancne SORE Tks ano 7

(2) There is a conflict in the decisions of the

Circuit Courts of Appeals................ sbieeuiet ‘8

{Brief in support of petition

Opinion below .......................... REOITS SD ERP SRR GOAT aN 13

. Jurisdiction -................. CARICA MEA an Rea orerE a RNS 13

Statement of case .......................... eno 25 one po

Specification of errors ...............-.-:--0-ceceseeceeeeeeesee 14

Summary of Argument ..............-...---..:.0.eeee- <..-- 16

Argument eS NieRED: ete «Panam SMe te avi AE alias - 37

1. Respondent delayed so long in : applying

- for a reissue of the patent that its laches

should bar enforcement of the broadened

claims of the reissue against petitioner... 17

| 2. The: record, i in this case reveals undisputed

facts demanding that respondent be

estopped to enforce its reissue patent

H Petition for writ of certiorari 2.0.20... ee

Summary Statement of matter involved.............. 2.

_ Statement of matter involved....................02.0...-.. 3

Reasong for allowance of writ...................--.....%.. 7

against petitioner ...:...................secceelecectee- we 20:

3. Intervening ‘rights in the true sense are

| permanent in nature. sienuanheginaienediicasonapueiie 24

Conclusion le ENS a AEE aA a Motu Sos Resear ar ecb ene Os 26

4 Appendix (the-statute relating to reissues )............. x

4

¥Y

ii

CASES CITED: ~ -

PA

Altoona Theaters v. Tri-Ergon Corp., 294 U.S. 477.

Ashland Fire Brick Co. v. General Refractories Co., .

BY | ie can ema eb

Fed. 276 .......... cccapea hire remsinieavclniaiamie aig cblsteeloitlts ..10,

Bulldog Floor Clip Co. v. Munson Mfg. Co., 19 Fed.

, (2d) 43 ....... Vg TRAE? NDE ine RE Ee Es |

Christman v. New York Air Brake Co., 1 Fed. Supp.

Pe ees 0 preiioielectaekiate wisi eae

Duplate Corporation, et al. v. Triplex Safety Glass

*Co., 298 U. S. 448 ieihetGaebbeaadvanas 2 RO .

Keller v. Adams- -Campbell Co., 264 U. 8. 314... 8, 13,

Keller v. Adams-Campbell Co., 287 Fed. 838.000.2000...

Miller v. Bridgeport Brass, 104 U. , A ee :

\

. Moto Meter Gauge & Equipment Co. v. E. A. Labors-

- tories, 55 Fed. (2d) 936 -................1.ceeeee 11, 24, :

Roos v. McMillan, 64 Fed. (2d) 568... 8,

Topliff v. Topliff 145 U.S. 156..0..00.0...0--0cccccceseoeeeeeeee 21, |

Wichita Visible Gasoline Pump Co. v. Clear Vision

Pump Co., 19 Fed. (24) 435. 11, 19,

| STATUTE CITED.

§ 4916, Revised Statutes Uy CURE ot ED OA ANS RTR ae

Yi)

IN THE

Supreme Court of the United States

Phagn OcToBER TERM, A. D. 1939

No. >

‘SONTAG CHAIN STORES CO., LTD.,

| acorporation, aoe

: Petitioner,

vs.

NATIONAL NUT COMPANY OF Cane.

a corporation,

oe

PETITION FOR WRIT OF CERTIORARI .

\

To the Honorable, the Chief Justice and

Associate Justices of the cupreme Court

3 of the United States:

.

iF

iz

‘Your petitioner, Sontag Chain Stores €o., Ltd., a cor-

poration of Delaware, respectfully prays for a writ of

on infringement of Reissue No.\20,204 (R. 333) of orig-

inal patent No. 1,958,409 | R. 342)\because of petitioner’s

intended.

‘certiorari to the United States Circuit Cour: of Appeals |

} for the Ninth Circuit to.review a judgment entered by

that court on November 3, 1939 holding petitioner guilty

°F

~

2

‘continued use of a nut treating machine. Tg judgmen

turned upon ‘the question of intervening rights in relation

to the broadened claims of said reissue patent. A peti-

tion for rehearing was filed December 2, 1939 and denied

December 5, 1939.

In conformity with the provisions of Rule 38. of this

court, a certified copy of the record, including the pro-—

ceedings in the Circuit Court of Appeals, accompanies

this a eae

Summary Statens of Matter Involved.

This case" presents squarely the important and}

_ troublesome matter of’ intervening rights in relation tof

the broadened.claims of a reissue patent, which has been 9

the subject of many conflicting opinions in the different. 0

circuits. The scope of such rights and the. principles ti

governing their determination have not been fixed by}

decisions of this court. The facts in the present case, Ff

while simple, are such as to present most of the phases}

of the problem with which the lower courts have j

’ struggled. More specifically:

(1) Respondent waited twenty months before |

m

applying for a reissue broadening the claim of its} ¢l

| original patent. During a portion of this period peti- 4 W

tioner used the accused machine without knowledge} fe

of the original patent. There was no infringement |71,

of that patent. Is the respondent guilty of laches| et

which precludes its securing a valid reissue under |}

the circumstances of this case, or, put in another }} fc

way, does its failure to apply more promptly for}} 01

such a reissue create an estoppel in favor of the}. 41

public, including petitioner?

(2) For: more than three months bef re sna ;

for. the reissue, and nine months before the reissue} -

was. granted, na aes! by aati and} °ti

1 eee

. i

ors ‘

aa ¥

. — .

‘

°

3-

litigation led petitioner to believe that it was rely-

_ing wholly upon the narrow claims of the original _

patent, which the accused machine did not infringe.

Is there, under these circumstances, an emtoppel. in

- favor of the petitioner? a!

' (3) The relief requested was an injunction, an

accounting of profits and an award of damages. If |

petitioner acquired intervening rights to use the ac-

cused machine, are those rights limited to. the .

period prior to the reissue, or does petitioner also

enjoy an irrevocable and permanent license to con-. -

tinue such use without restriction? ;

The district court found that respondent was guilty

f laches, that petitioner had acquired intervening rights

fa permanent nature, and that respondent was not en- :

tled to any relief. The Circuit Court of Appeals, how- —

ver, reversed the district court, arriving at conclusions

1 conflict with the decisions of three other circuits. .

Statement of Matter Involved. ,

About the first of April, 1935, the petitioner com-

enced using in its: store the accused machine—a ma-

line designed to keep nuts and nut meats hot and fresh

hile on display for sale (R. 79, 80). At’this time de-

ndant was without actual knowledge of patent No.

958,409, which had been issued May 15, 1934 to respond-

it. This original patent, admittedly a simple one

R. 110i, contained four claims of narrow scope. These -

ur elaine had been substituted (before grant of tle

‘iginal patent) for the twenty made in the original

plication and rejected by the examiner.

On October 8, 1935, respondent sent petitioner notice.

at its use of the accused machine was an infringement

crespondent’s patent (R. 71). This notice gave peti-

ner its first knowledge of the original patent (R. 77).

me |

v e 4

While the record is not clear as to the exact time, it is

apparent that respondent’s kriowledge of petitioner’s ma-

chine was acquired at least some weeks prior to such

notice (R. 105).

On October 19, 1935, before petitioner could ‘complete

investigation of the assertions of the notice, respondent®

instituted suit.in the United States District Court (casef

3941-S), charging petitioner with infringement of saidf

patent, and also with infringement of a design patentB

(R. 2, 9). We are not here concerned with the designe

patent because both of the courts below held that: thef

accused machine did not infringe the design patent}

(R. 94, 284). Petitioner answered ( November 22, 1935:

_~ denying infringement (R. 12), and continued to use the

accused machine (R. 80). **

On December 16, 1935, respondent filed interrogatories

callirg for pictorial illustrations and drawings which

would fully disclose the details of design and operation

of the accused machine being used by petitioner (R. 63).

On January 13, 1936 petitioner filed its answers to}.

said interrogatories, actompanied by illustrative ma-

terial revealing such details (R. 74, 75).

, Two days thereafter, on January 15, 1936, respondent

applied for a reissue of its patent, gsserting seventeen

claims, the first four of which were identical with the

four claims of original patent No. 1,958,409 (R. 338, 346): }

The.thirteen additional claims were of broader scope and

were framed to cover the machine being used by the

— (R: 92). °°) “ye -

- Respondent did not notify petitioner of its applica:

tion for a reissue. On the contrary, by keeping the peti-

tioner busy with interrogatories, respondent led the peti-

~*~ ~ — coc ee

RN DER a ¥ 8 og S84 PERE

Bite

pecs

.

tioner to believe that it relied on its original patent}.

(R.-77, 80). Respondent proceeded with the suit which} «

was based on i the patent it had offered to surrender when

a. ee

t filed application for reissiie—the piitent respondent

Itimately admitted was not infringed by petitioner’s

nachine (R. 86, 87). Petitioner continued to use the ac- >

used machine in reliance upon the narrow reas of the

riginal patent.

On June 30, 1936 reissue patent No. 20,024 was granted

0 respondent, containing the seventeen claims above re-

ferred to (R. 92, 337). ;

On June 26, 1936, respondent moved to amend its bill

of complaint and to file an amended and supplemental bill _

30 as’ to bring in the broadened claims of the’ reissue.

This motion was the first notice that petitioner had of. |

the reissue (R. 92). The trial court’ on September 18,

1936 denied the motion in s0°far as-it sought to add the

broadened claims to its asserted cause of action, but

allowed respondent to file an amended and supplemental —

bill based upon the first four claims of the reissue (R.

17), which, as noted, were the same. as the four claims

of the original patent. ‘Thereafter on January 11, 1937,

such an amended and supplemental bill was filed in case

3941-S (R. 18).

On January 26, 1937, nearly six months after the re-

issue (and fifteen months after first notice of infringe-

nent of the original patent), respondent instituted.a new .

suit (case 4133-S) charging petitioner with infringement

of the broadened claims of the reissue patent (R. 42-51).

in its answér in this case petitioner asserted that the

respondent was estopped because the petitioner had.ac- °

juired intervening rights: in. reliance on the narrow

‘laims of the original patent, and because respondent.

vas guilty of laches in applying for a reissue. The two

‘ases, 3941-S on the original patent, and the correspond-

ng claims of the reissue, and 4133-S on the broadened

‘laims (5 to 17) of the reissued eee. were tried to-

rether (R. 84, 86).

In advance of the trial respondent stated that it would

not rely upon claims one to four of the reissue patent,

thus conceding that petitioner’ s use of its machine had.

not infringed | original patent 1,958,409 (R. 86), as

charged: in case 3941-S. Since the issue relating to the

design.patent is no longer in either.case, this proeecding, F

‘although originating in two separate ‘suits, must be

viewed as a suit instituted in January of 1937 to restrain

the alléged infringement of the reissue patent granted inf

June of 1936. The purpose of the reissue was to domin- F

ate the petitioner’s machine, which since October 8, 1935 |

petitioner had used in reliance upon the narrow claims

of .respondent’s original patent. :

- The’ cases were submitted to the district court prima-

rily upon the question of whether the petitioner had ac-

quired intervening rights which would prevent respond-

ent from ‘obtaining injunctive relief against contigued

use of the accused machine (R. 93, 107), and secondarily.

upon the question of the validity of the reissue (R. 109). f°

The district court held that the petitioner had acquired 4

intervening rights and that the reissue was not enforc-

ivle because of the respondent’ s laches in applying thére-

for, but did not pass upon the validity of the reissue |

claims in relation to the prior art (R. 94). The district

Surt also held that there was no infringement of thé de- i

sign patent (R. 94) and entered judgment for petitioner }

. in both cases (R. 96). i

On appeal the-Circuit Court of Appeals (Judge Haney |

dissenting) reversed the district court with yespect to

the reissue patent. It held, in substance, that since the }

application for the broadened reissue was filed within

_ two, years after grant of the original patent, any inter-

vening rights would have to be based upon two years af Fi

adverse use by the petitioner prior to the application for }

reissue, or upon knowledge of and reliance upon the

arrow claims of the original patent or upon facts creat-

ng an estoppel.’ It also held that because petitioner |

yan its use of the accused machine without actual

nowledge of the original patent there could be no es-

oppel against the claims of the reissue patent.

Although the decision is silent on the question of.

vhether an estoppel was created in favor of petitioner

ecause of its continuing to use the machine for at least .

line months in reliance upon the narrow claims of the

riginal patent, a period when those claims were being

essed by respondent’s litigation, and the question of

vhether. an inventor can lose his right to a‘reissue by

aches within the two-year period, the.holding of the

ourt and the propositions of law formulated by it an-

wer. these questions in the’ negative.

a \°

Reasons: Relied Upon for Allowance of Writ. =

1. The matter of intervening rights in relation to the

roadened claims of a reissue patent presents important

ind difficult questions of federal law which have not

een but, should be: decided by this court.

/On the one hand is the interest.of the inventor in the

nonopoly granted him by the patent law, a monopoly

hat is limited to his. irivention as-defined in his claims

ith respect thereto. What he does not so claini is dedi-

ated to the public, but may, in the event of mistake, be

eclaimed by means of @ reissue. On the other hand is

he interest of the public and its individual members to

e free to use that which the inventor has dedicated by

*

ot claiming. , ‘ .

The variety of circumstances presented in the « cases

as required the courts to cull the factors carefully in

rder to determine which interest is entitled to prevail. - .

1 absence of decisions of this court fixing the scope

f such rights and the principles which should govern

8

their ascertainment, the results in the lower courts have

not been uniform, and upon various points it is difficult,

and indeed impossible, to reconcile the decisions of. the

various Circuit Courts of Appeal. ‘That fact was recog-

_ nized gy this.court when it granted certiorari in the case

- of Keller v. Adams-Campbel Co., 264 U. S. 314, on the

representation made in the petition that the case in-

. volved the question of intervening rights. It later de-

cided that the question ‘was hot: involved because there .

was, in fact, no infringement, and dismissed. the peti- ae

tion, saying, however ( p. 318):

“The views of the Circuit Court of Appeals on the

general subject of the scope of intervening rights

are not entirely easy to reconcile. | ee ques-

' tion, if it were really before us, wouid be one suffi- —

ciently important, therefore, to justify our con-_

sideration of it on certiorari.”

_In the present case the Circuit Court of Appeals recog-

nized that there are no authoritative decisions to guide

- the lower courts. It said:

.’. “It would serve no useful purpose to analyze the

remainder of the cases cited by defendant. No case

has been cited wheréin. the Supreme Court has ruled .

on the extent of: the estoppel creating intervening

rights in an otherwise valid reissue. Therefore, as

said by the trial court, in General Refractories Co.

v. Ashland Fire Brick: Co., supra [p. 218}. (Italics

ours),

such a question [referring to the so-called doc-

-trine of intervening rights] to think it through,

and see if it is not possible to reach a personal

conviction in regard to it’.” .

2. The decision of the court. below is in sharp conflict

with the law as formulated by other Cir@uit cate of

Appéals.

In H. W. Roos Co. v. McMillan, 64 F. (2d) 568, ‘the.

‘It. is*a challenge to anyone canteen with f

9

Circuit Court of Appeals for the’ sixth circuit, in hold-

ing that intervening rights had not been established,

nevertheless refused to enforcea reissue patent because |

of plaintiff’s laches in applying for the same. The appli-

cation for reissue had been filed well within two years |

after the grant of the original patent, but not until six

months after the patentee had seen a clamp that sug-

gested a possible deficiency in the scope of the claims of

his original’patent. The Court said that in view of the

simplicity of the patented deyic2, an inspection of the

original patent at any time after its issuance and before ©

seeing the other clamp should have disclosed the mistake

or‘ deficiency in the claims. In concluding chat six

months’ delay was unreasonable» under such circum-

stances, the Court said (p. 570):

“In this view-of the patentee’s rights, we are con--

' tent to hold, until the Supreme Court bas held other-

wise, that a reissue patent may be-held to be invalid

- because of unreusonable. delay in filing the applica-

tion therefor, notwithstanding the absence of a

showing of intervening private rights and even

though the application were filed within ‘two years

from the date of the original issue.”’, (and at p.571) :

_«* * * Tn our opinion there’ are two reasons why

the reissue patent cannot. be sustained. The first .

is the failure of the patentee to file an application

‘therefor prior to the date of his discovery of

the use of a similar device in Chicago. An inspec-

tion by the patentee of his patent.at any time after

. it igsued and prior to his noticing the Chicago clamp

would’ have disclosed the miistake which he claims

was made, and, whether he did not inspect it and

thus did not discover the mistake or did inspect it

and failed to file his application, he was guilty of

negligence effecting an unreasonable delay. The

second is the failure to file an application for six

Months after he had seen the clamp which sug- -,

gested a possible defect in his claims. This was

10

sufficient to bar a reissue if-it was not already

barred by failure to discover the error, if there was

error, and correct it in. the preceding twelve

‘ months.” * . Sata

® In Autopiano Co. v. American Player Action Co., 222

/

Fed. 276, decided by the Circuit Court of Appeals fof the.

second circuit, aspatent had been issued containing broad

claims. Six years later an application for a reissue was —

filed asking for only narrow claims in lieu of the broad

claims of the original patent for the purpose of avoid-

ing possible invalidation of the entire patent. A reissue

was granted, as prayed for. Four months later applica-

tion was made for a second reissue for the purpose of re-

establishing the broad claims of the original patent. The

application for the second reissue was also granted.

‘Defendant sold-one accused device while the applica-

tion for.the first reissue was pending, and a second dur-

ing the four months’ period between the grant of the first

reissue and the application for the second reissue. The

Circuit Court of Appeals which decided that case treated

it as, though the original patent had issued with the nar-

row claims of the first reissue, and had been broadened

by the second reissue, and as though the second reissue

ee for within four months of.the date of.

the original patent. The court held that since the de-

fendant had started its. use within the four months’

period between the.date of the first reissue and the appli-

cation for the second reissue, the defendant had inter-

' vening rights, saying (p. 282) :_

“We, therefore, reach the conclusion that com-

plainant is estopped from claiming infringement by

this particular defendant in continuing the manu-

facture and sale which it entered upon while the

first reissue was the only public announcement of

complainant’s alleged monopoly.” (Italics ours.)

The lower courts of the second circuit have followed

~~ a ae ae ee se a.

|

11

= > oe

his decision consistently and have found intervening

ights in two cases where the defendant’s accused ac-

ivity did not commence two years hefore the. filing of

he application for reissue, and in fact, was originally

vithout knowledge of the patents. Moto Meter.Gauge ¢

iquipment Company v. E. A. Laboratories, 55 Fed. (2d)

36, 940 (D. C. N. Y.) and Christman v. New York Air

srake Company, 1 Fed. Supp. 211, 212 (D. C..N. Y.) ©

In Wichita Visible Gasoline Pump Co. v. Clear Vision

>ump Co., 19 Fed.: (2d) 435, decided by the Circuit Court

yf Appeals for the eighth circuit, an original patent was

ssued May 20, 1919. Defendant commenced building a

factory in July of 1920 and completed manufacture of

its first pump therein in September of 1920. Application

for reissue was filed February 8, 1921 for the purpose

of dominating the device manufactured by defendant.

[The basis of the. court’s decision is concisely set out in-

he following (p. 438) : -

«* * * Meantime appellants had developed a plant

and a business relying upon the limitations of the

Crouse invention as it was disclosed. We think upon

the face of the’ record, at least as affecting these

appellants, the reissue was not applied for within a

reasonable time, nor upon a legitimate ground. Its

object was to stifle competition from this source.

For this reason we think appellant’s device does not

infringe the claims of the reissue patent.”

It is clear that the troublesome questions relating to

itervening rights have not yet been authoritatively ad-

udicated. It cannot be doubted that the various Circuit

‘ourts of Appeals which have passed upon the question,

vill, until the question is settled by this court,. continue

o follow their own precedents; that the fate of litigants

3 in fact left to geographical happenstance—a situation

hat can be remedied at this time only by granting this

etition and determining the issues here involyed.

12

WHEREFORE your petitioner respectfully prays that

a writ of certiorari be issued under the seal of this-Court

directed to the United States Circuit Court of. Appeals

for the Ninth Circuit commanding that Court to certify

_ and.send to this Court on a day to be designated a full

and complete. transcript of the record and all proceed-

ings of said Circuit Court of Appeals had in this cause,

to the end that this cause may be reviewed and deter-

mined by this Court; that the judgment of said Circuit

Court of Appeals be reversed as to this patent; and that ~

your petitioner be granted such other and ceahranl relief

as ad seem. yn = proper.

"Respectfully submitted, —

Pe ee meee ee eee ee eee ee eRe eee ete eee emee ed eneeeeneeeens

eee ee eee eee eee eee

Counsel for Petitioner.

eo ee

13

“BRIEF IN SUPPORT OF PETITION FOR WRIT OF

CERTIORARI.

ES

The Opinions of the’ Courts Below.

"The opinion of the Circuit Court of Appeals appears at

107 Fed.. (2d) 318 (Advance Sheets, January 1, 1940);

and is to be found at page 282 of the record. The district .

court filed no memorandum of opinion, The findings of

fact and conclusions of law entered by the district court

are at pages 89 to 94 of the record.

Il.

Jurisdiction.

The jurisdiction of this court is invoked under section

240(a) of the Judicial Code as amended by the act of .

February 13, 1925; 28 U. S. C. 347(a).

The date of the judgment to be reviewed i is November

3.1939 (R. 281). A petition for rehearing filed December -

2, 1939 was denied December 5, 1939 (R. 330). oe

_ The decisjon of the Circuit Court of Appeals for the

ninth circuit is‘in conflict with decisions of the Circuit

Courts of Appeals for the second, sixth and eighth cir-

cuits on an important question of federal law involving

intervening rights in relation to reissue patents. Cases

believed to sustain the jurisdiction in “this instance are:

Keller v. Adams-Campbell bo., 264 U. S.. 314;.

' 44 Sup. Ct. 356, 357.

Duplate Corporation, et al. v. Triplex Safety .

Glass Co. of North America, 298 U. S. 448,

452; 56 Sup. Ct. 192, 794.

Ill.

Statement.

The facts are thought t to be aemnind stated in the

nen

IV.

Specification of Errors.

The errors which defendant will urge, if the writ of

certiorari is granted, are that the Circuit Court of Ap-

-peals for the ninth circuit erred:

1. In enjoining petitioner from continuing the -use of

a machine that did not infringe respondent’s original -

patent where petitioner’s use of said machine began ten

months before plaintiff filed an application for reissue to. .

obtain broadened claims for the — of dominating |

petitioner’s machine;

2. In failing to hold that respondent: was on of

unnecessary delay and laches in applying for a reissue

to secure broader claims and therefore may not assert -

said reissue patent to prevent petitioner’s continued use

of said machine.

3. In holding that respondent was not ‘eis to .as-

sert the broadened claims of its reissue patent to pre-

vent continued: use of petitioner’s machine where the

. use of said machines was begun by petitioner before the

application for reissue was filed and where-such use was

continued in reliance upon the narrowness of all of the

. claims of the original patent, while respondent was pres-

sing its suit a petitioner for infringement of said |

original patent.

4, In concluding “In the instant case there was’ admit-

tedly no knowledge of or reliance on the scope of plain-

tiff’s [respondent’s] patent and no facts — an

estoppel.”

5. In failing to affirm he decree of the district court

in. its entirety.

6. In granting any relief to respondent.

—

“~

Q »

Pie

a /

. SUMMARY OF ARGUMENT.

Notwithstanding the holding of the court below, and in

, reliance on different conclusions reached by other Circuit

Courts of Appeals, and on principle, petitioner contends:

(a) Application for the reissue patent involved in the

suit was not filed until twenty months after the grant of

the original patent and ten months after petitioner eom-

menced to use the accused machine. This long delay in-

dulged in by ‘respondent before applying for a reissue

of its patent, constitutes such laches that respondent

should be barred from enforcement of the broadened

claims of the reissue against petitioner.

(b) The record in this case reveals facts demanding’

- that x Se be estopped to enforce its reissue patent

against petitioner. The undisputed evidence shows that

from the time petitioner was advised by respondent of

its claims under its original patent, petitioner proceeded

in reliance upon the narrowness of those claims which

the respondent admits were not infrimged by petitioner's

machine. The change of. position thus: induced by re-

spondent’s acts and litigation clearly constitutes an _

estoppel against the assertion of rights under aes re-

_ issue patent against the petitioner.

és) Intervening rights, in the true sense, are ‘perma-

nent in nature. This court should establish that the

; intervening rights contended for by petitioner here pro-

tect the petitioner in the continued use of the accused

machine from the date of. the rene: of the reissue

“Ae patent. forward. | :.

17

j). |. ARGUMENT?

I

Respondent delayed so long in applying for a reissue of

its patent -that its laches should bar enforcement of

the broadened claims of the reissue against petitioner.

Application for the reissue patent involved in suit was

not filed until twenty months after the grant of: the

original patent and ten months after petitioner. com-

menced to use the accused machine. From these facts

alone, and without regard to petitioner’s knowledge of

the original patent, it seems that respondent was guilty

of laches which should preclude it from asserting rights

_ under the reissue patent superior to those of petitioner.

_ . The district court so held, saying that “in view of the

_ defense of intervening rights and the laches of the plain-

_ tiff’ it was unnecessary to consider the other defenses _

- to the reissue patent (R. 94). The Circuit Court of Ap-—

peals made ‘no mention of respondent’s laches, merely -

holding that petitioner had not established intervening °

rights.. This refusal to consider laches at all,, whenever

application for reissue is made within two years, is an-

unwarranted construction of the statute. Other Circuit —

Courts of Appeals have given proper weight to the.

patenteée’s delay in a situation where the duty of dili- -

gence is imposed upon him.

In H. W. Roos v. McMillan, 64.Fed. (2d) 568, the Cir-

cuit Court of Appeals for the sixth circuit held that

~ intervening rights had not been established, but never-

theless refused to enforce a reissue patent because of

°

1 The statute i to reissues is set forth in the Appendix, page 27.

>

7 18° cl

the patentee’s laches in applying for it. The application

‘for reissue had been filed weil within the two years after _

the grant of the original patent, but not until six months

after: the patentee had seen a clamp that suggested a

possible deficiency in the scope of the claims of his

origina] patent. The court said that in view of the sim-

plicity of the patented device an inspection of the orig-

inal patent at any time after its issuance and before

seeing the other clamp should have disclosed the mistake .

or déficiency in the claims, In concluding that six

‘months’ delay .was unreasonable under such circum-

stances, the court said at page 570:

*. “In this view of the patentee’ s rights, 1 we are con-

tent to hold, until the supreme court has held other-

wise, that a reissue patent may be held to be invalid

because of unreasonable delay in filing the- applica;

tion therefor, notwithstanding’ the absence of a

showing of intervening private rights and even

though the application was filed. within two years

from the date of the original issue.’ ty

The conclusion reached in Roos Vv. ‘MeMillan\is exactly

opposite to the conclusion of the majority of the court i in

, the present suit. Here the patent was extremely simple

- (R. 110) and no expert was needed to point out that the

‘claims thereof did not dominate petitioner’ s accused ma-

chine. Any sort of examinatjon of its patent by respond-

ent wouid have made its deficiencies apparent. Instead

of Icoking into the merits of its charge of infringement, .

respondent started suit on the original patent and this .

- led petitioner to believe it had to consider only the nar-

row claims of that patent. It was ten months after peti-.

tioner commenced its use of the accused machine, and

three months after it started suit on the original patent,

that respondent abit for the reissue here under

censideration. fs |

In Wichita Visible Gasoline Pump Co. Vv. Clear Vision

4°

19 ©

&

Pump Co., 19 Fed. (2d ) 435, the Circuit Court of Appeals

for the eighth circuit applied the doctrine of laches to a

reissue applied for Within two yéars after the grant of

the original patent contrary to the holding of the lower

court:in the present case. There the original patent cov-

_ering a pump was granted May 20, 1919. Petitioner

built a pump in September, 1920, and previously had

built a factory to make this pump. The application for

_ reissue’ was filed February 8, 1921, which was twenty

months after the original patent was granted. -

On these facts the court there said at page 438:

“It was not until appellee discovered appellee’s

. device that it took any steps to make its paten® |

cover appellant’s structure. It called its patent at-

torney, who did not venture a suit upon the original

patent, although now claiming that a cause of action

existed and that the reissue was procured only out

of abundance of caution and as against other in-

fringers. Meantime appellants had developed a

plan and a business relying upon the limitations of

the Crouse invention as was disclosed. *We think |

upon the face of the record, at least, as affecting

these appellants the reissue was not applied for

within a reasonable time nor upon a legitimate

ground. Its object was to stifle competition from

_this source. For*this reason, we think appellant’s

does not infringe the claims of the reissue patent.”

Fen)

CV

The holding that a‘patentee may be guilty of laches,

. Which will bar him from securing a valid. reissue, ap-

pears to be sound. The courts have been liberal in their —

construction of the statute authorizing reissues in order

_ to protect an inventor where the rights of third parties

_ have not intervened. But their zeal to protect an in-.

‘ventor who, through his own mistake, has failed to make

proper claims to his invention should not lead them to

hold that his rights are superior to those of one who

uses a device not dominated by the claims of an original

+

e 20

patent where such use began before an application for

reissue was made. They should recognize that the policy .

‘behind the granting of a limited monopoly under the

patent laws is in derogation of the fundamental policies a.

of free enterprise and competition and hold that the in-

- ventor has the burden of diligence and care if he would

‘have the benefit of the monopoly. Conversely, the recog- .

nition of the rights in a third person is supported by the

broad underlying interest in the preservation of

competition. :

Such an approach would protect the rights of one who |

has begun the use of an unpatented device without put-

ting upon ‘him the burden and uncertainty of being able

to show facts which create an estoppel. It would protect

the rights of those who have small investments as well

as those who have large investments. It would free the.

purchaser of a single device of the expense of having a

patent attorney investigate the matter of infringement

in order to ‘protect him.

The placing of such burdens on third parties may he ~

_ justified in the interests of encouraging inventions and

protecting diligent inventors, but they do not appear to

-be justified to protect a negligent inventor. Moreover.

the right of an inventor to cnlarge his patent should

‘not, in absence of clear congressional intent, be extended

for a period of two years in derogation of the interests

of persons who, in the meantime, have changed their

position, whether with or without knowledge of the nar-

row claims of the original patent. : ;

In. two early decisions this \court indicated that an

inventor. seeking to broaden hig claims through reissue

must be diligent, and in one of! them indicated that the .

application for reissue should be applied for before any

rights in poner of third parties could reasonably as ex- —

21

pected to have attached. In Miller v. "Bridgeport Brass,

104 U.S. 350, the court said at. page 352:

“If two years’ public enjoymtnt of an invention

with the consent and allowance of the inventor ‘is

evidence of abandonment, and a bar to an applica-

tion for a patent, a public disclaimer in the patent

ite-lf should be construed equally favorable to the

public. Nothing but a clear mistake or inadvertence,

and ‘a speedy application for its correction is .ad-

missible when .it is sought a to enlarge the

claim.” (Italics. ours. Bs :

In Topliff v. Topliff, 145 U. S. 156, the’ court said at

page 829: :

“Whether this be an enlargement of the original

claim or not, it is for the same invention, and, in -

view of the fact that the reissue was applied for as

-sdon as the mistake was discovered, and before any .

rights in favor of third parties could reasonably be

expected to have attached, or had in fact attached, _

we think this reissue is not open to the objections

which have proved fatal to so.many since the case

of Miller v. Bridgeport Brass Company, 104 U. S.

350, was decided.” (Italics ours.) —

Most of the courts have veccsiaeit the tendianentel

justice of protecting intervening rights, but in doing so

have at times found it difficult to assign a reason there-

for..Some of them have. found it necessary to base their

decisions on the fiction of estqppel where no true estoppel

exists; a few have said merely that the inventor was

guilty of laches in applying for a reissue. This court

should hold squarely that the rights of an inventor to a

reissue patent are subordinate to those of one who has

changed his posit‘on in the meantime, and relieve the —

courts of the necessity of groping for reasons therefor.

22

a“

a ty

The record in this case reveals undisputed facts demand-

ing that respondent be estopped to enforce its reissue

patent against petitioner.

We have urged under the first point of our argument .

that the respondent’s laches should prevent the enforce-

ment of the reissue. patent against the petitioner. The

respondent’ s sins of omission there dis¢ussed are

equalled, if not exceeded, by its sins of commission. .

_ There can be no question here that by affirmative acts

it misled the petitioner and, if’ the decision of the court

below should stand, to its-injury.

e We do not here raise a disputed question of fact. The

record shows without contradiction that some little time

after discovery of petitioner’s use of the accused ms-

chine, respondent notified petitioner that the machine

was an infringement of respondent’s mechanical and de-

sign patents (R. 71).- The notice demanded petitioner’s

acquiescence in the rights asserted, and an accounting,

within ten days. On petitioner’s failure to reply, re-

spondent on the eleventh day’‘filed suit (R. 2).

As soori as petitioner was able to complete its investi-

gation of the charges thug preferred by notice and litiga-

tion, it filed an answer denying infringement of either

‘the mechanical or the design patent (R. 12); petitioner

-- continued to use the accused machine (R. 80). Thus peti- .

tioner’s position was completely changed by respondent’s

affirmative acts. Having knowledge of respondent’s

patents petitioner concluded that the machine it was .

using was not embraced within their claims. Petitioner

concluded, and rightly, that it could continue to use the

machine without liability to respondent.

Respondent ultimately admitted that there was no in«

fringement of the original mechanical patent (R. 86, °

y

os

23 =

87) and both of the courts below held that there was no |

infringement of the design patent (R. 94, 284).

For months after its initial.step in notifying peti-

- tioner of the alleged infringement of its original patent,

respondent by pressing its suit led petitioner. to believe -

that it was relying solely upon the claims of that patent.

Even after the application for reissue had been tardily

_ filed on January 15, 1936, respondent by insisting on

. further answers to. its interrogatories led petitioner to,

believe that it was still. relying upon the claims of the

original patent. These further answers were filed May

16, 1936 (R. 80). $ ae

The court below found as its ultimate conclusion on

the question of intervening rights that “In the instant

case there was admittedly no knowledge of or reliance

on the scope of plaintiff’s patent and no facts creating

an estoppel.” (R. 310.) -.

This can only be regarded as a conclusion of Taw. hen

a statement of fact it is obviously erroneous. It is equally

sunconvincing as a conclusion of law. An insubstantial

foundation—and the only foundation for it in the record

>—is the fact that petitioner did not know of respondent’ 8

patent claims when petitioner commenced to-use the ac-

‘cused machine. But estoppel” ‘could -and. did arise when

respondent advised petitioner and led petitioner to be-

lieve, for over three months before filing an application

for reissue, and thereafter, that the narrow claims of the

original patent ‘were all respondent relied on.

The court below does not point out, nor does there

seem to exist, any sound basis for: a distinction between

the circumstance that use of a mafine is begun in reli-

- ance upon the narrow claims of a patent, and the slightly

' different circumstance that such use, having been begun

without such knowledge, is continued in reliance on the

24

narrow claims for an extended period, before application

for reissue is ntade. -

In Keller v. Adams- Cainpbell Co., 287 Fed. 838, the

court said chat “prior to any knowledge on their part of

- the Keller patent the appellees had been working on

their device and had made and sold a few of them but,

subsequently, learnéd 6f and becaine familiar with the

original Kelter patent * * “” (p. 841). The court’s con-

clusion was “we, therefore, think it clear that the ap-

pellees had and have such intervening rights as were

properly protected by the court below.” (p. 841.)

In the second district the district courts have twice,

following the principle of the Autopiano case (222 Fed.

_276:, found intervening rights in cases where the defend-

ant’s activity began without knowledge of the original

_ patents. (Moto Meter Gauge & Equipment Company Vv.

KE. A. Laboratories, 55 Fed. (2d) 936, 940; Christman v.

New York Air Brake Company, 1 Féd. Supp. 211, 212.)

Intervening rights in the true sense are permanent:

, \. . in nature.

The court below sugggests that in situations where

intervening rights may be established on the basis of

estoppel they should extend only to the date of the grant

of the reissue. This suggestion indicates a complete mis--

understanding of the nature of a reissue patent. While

it is true that a reissue may incorporate broadened

. claims ( Topliff v. Topliff, 145 U. S. 156, 170, 171), the

| enlarged claims speak only from the date of the reissue

(Altoona Theatres v. Tri-Ergon Corp., 294 U. S. 477,

491). There can be no infringement of the broadened

claims prior to grant of the reissue. To say that the:

right of use, prior to the reissue, is an “intervening

25 eee!

right,” is to say that an absolute right of the: public

generaliy, must somehoW be specially found in the case

of one who avails himself of it. Such- a conclusion ap-

pears to be contrary to several of the decisions of other

Circuit Courts of ‘Appeals, as well as to this court’s

decision in the Altoona case just referred to. .

' The inddequacy of intervening: rights having ‘such

‘narrow Scope seems cléar. Investments made or business .

/ created or economies effected by the manufacture, use

>

“or sale of a device which some negligent inventor has

failed to cover by claims when securing an original

patent, will be lost, by such a doctrine. It is no satisfac- _

tion to the one who is said to have acquired intervening

rights to be told that he is thereby protected against

liability for infringement. up to the time of the reissue.

This is true under the law relating to reissues, regardless

of laches, estoppel, or other pertinent considerations.

Although there appears to be some inconsistency in

the decisions, most of the courts which have found inter-

vening rights to exist,.have held them to be of:a per-:

manent nature, and have, in effect, said that the. rights

of an inventor secured through a reissue are subordinate

to the rights of one who has in the meantime begun the

manufacture, use or sale of a device which does not in-

“fringe the original patent. Autopiano Co. v. American

Player Action Co., 222 Fed. 276, 282; Moto Meter Gauge

& Equipment Co. v. E. A. Laboratories, 55 Fed. (2d) 936,

940; Christman v. New York Air Brake Co., 1 Fed. Supp.

211, 212; Ashland Fire Brick Co. v. General Refractories

Co., 27 Fed. (2d) 744, 747; Bulldog Floor Clip Co. v.

Munson Mfg. Co., 19 Fed. (2d) 43, 46; Wichita Visible

Gas Pump Co. v. Clear Vision Pump Co., 19 Fed. (2d)

435, 438; Keller v. Adams-Campbell Co., 287 Fed: 838,

841.

The petitioner here can under no circumstances be —

26

' subject to any liabiiity to respondent for’its use of the

. accused machine prior to the date of the issuance of

the reissue patent. It fs submitted that this court should

establish that the intervening rights contended for by

petitioner here extend, not to the date of the reissue, but

from| that date forward.

|. , ‘

Sea

|

CONCLUSION, ©

~ = F

We respectfully submit that for the reasons stated the

petition for certiorari. aed herein should be granted.

Respectfully submitted; .

Wo. NEVARRE CROMWELL,

FRANK H. TOWNER, -

Guy A. GLADSON, - <«

Counsel for petitioner.

a

27

APPENDIX. —

“Section 4916, Rev. Stat. as amended May 24, 1928,

~ chapter 730, 45 Stat. 732, reads as follows:

“Whenever any patent is wholly or partly in-

operative or invalid, by reason of a defective or in-

sufficient specification, or by reason of the patentee

claiming as his own invention or discovery more

than he had a right to claim as new, if the error has

arisen by inadvertence, accident, or mistake, and

without any fraudulent or deceptive intention, the

commissioner shall, on the surrender of such patent.

and the payment of the duty required. by law, cause

a. patent for the same invention, and in accordance

with the corrected specification, to be reissued to the

patentee or to his assigns or legal representatives,

for the unexpired part of the term of the original

patent. Such ‘surrender shall take effect upon the

issue of the reissued patent, but in so far as the

claims of the original and reissued patents are iden-

tical, such surrender shall not affect any action then

‘ pending nor abate any cause of action then existing,

and the reissued patent to the extent that its claims

are identical with the original patent shall consti-

tute a continuation thereof and have effect contin-

uously from the date of the original patent. The *

commissioner may, in his discretion, cause several .

patents to be issued for distinct and separate parts

of the thing patented, upon demand of the applicant,

and upon payment of the required fee for reissue for

each of such reissued letters patent. The specifica-

tions and claims in every such case shalf be subject

to revision and restriction in the same

original applications are. Every patent so

together with the corrected specifications, sha

the same effect and operation in law, on the trial of

all actions for causes thereafter arising, as if the

4a

Ww

_— a

_ same had been originally filed in. such corrected

form; but no new matter shall be introduced into the

specification, nor in the case of a machine patent

shall the model or drawings be amended, except

éach by the other; but when there is neither model ”

nor drawing, amendments may be made upon proof |

satisfactory to the commissioner that such new mat-

ter or amendment was a part of the original inven-

tion, and was omitted from the specification by in-

advertence, accident, or mistake, as aforesaid.”