Amicus Curiae Brief — Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation

~——- 2

TABLE OF CONTENTS

PAGE

MOTION FOR LEAVE TO FILE BRIEF AMICUS

CURIAE - 1

BRIEF AMICUS CURIAE OF AUTOMATIC

ELECTRIC COMPANY

QUESTIONS PRESENTED

INTEREST OF AUTOMATIC ELECTRIC .....

STATEMENT ..

ARGUMENT

QUESTION 1

Introduction ..

The Doctrine of Mutuality of Estoppel Per Se

Has No Place in the Law of Res Judicata

The Reasons for Rejecting the Mutuality

Doctrine Are Even More Convincing in Patent

Cases

1. Inconsistent Validity Determinations Are Ir-

reconcilable With a Federal Patent System ..

2. Judicial Economy and Preventing Harass-

ment

QUESTION 2 nos

CONCLUSION diceeiaes

Avtnoarrizs Crrep

Cases

Aghnides v. Goodrie, 210 F.2d 859, 100 U.S.P.Q. 335

(7 Cir. 1954)

Aghnides v. Holden, 226 F.2d 949, 107 U.S.P.Q. 195

(7 Cir. 1955) 10, 11, 20, 23

Page

Aghnides v. S. H. Kress & Co., 140 F.Supp. 582, 110.

U.S.P.Q. 234 (M.D.N.C. 1956), aff'd, 246 F.2d 718,

114 U.S.P.Q. 187 (4 Cir. 1957), cert. denied, 355

U.S. 889;-115' U.S.P.Q. 426 (1957) A

Aghnides v. Meyer’s Co., 117 F.Supp. 839, 9 USPQ.

488 (M.D.N.C. 1954)

Bernhard v. Bank of America, 19 Cal. 2d 807, 122 P.

2d 892 (1942)

Blumcraft of Pittsburgh v. Kawner Co., 166 U.S. ab:

265 (N.D. Ga. 1970)

Bruszewski v. United States, 181 F.2d 419 (3 Cir.

* 1950) ‘

Commissioner v. Sunnen, 333 U.S. 591 (1948)

Compeco Corp. v. an ere Lighting, 376 U.S. 234

(1964)

Connelly v. Balkwill, 174 F.Supp. 49 (D. Ohio 1959),

aff'd per curiam, 279 F.2d 685 (6 Cir. 1960)

Davis v. McKinnon & Mooney, 266 F.2d 870 (6 Cir.

1959) ‘i

B. R. Dewitt Inc. v. Hall, 19 N.Y. 2d 141, 225 N.E.

2d 195 (1967)

Dimock v. Revere Copper Company, 117 U.S. 559

(1886)

Dowell v. Applegate, 152 U.S. 327 (1894)

Eyber v. Dominion National Bank of Bristol Office,

249 F.Supp. 531 (W.D. Va. 1966)

Factor v. Pennington Press, Inc., 230 F.Supp. 906

(N.D. TL 1963)

Finney Company, The v. JFD Electronics Corp. and

University of Illinois Foundation, Civil Action No.

65 C 671, United States District Court for the

Northern District of Illinois, Eastern Division ....

ili

PAGE

Fleischer v. Paramount Pictures Corporation, 329

F.2d 424 (2 Cir. 1964) ‘3

Garden Suburbs Golf & Country Club v. Murrell, 180

F.2d 435 (5 Cir. 1950) 18

Gibson v. United States, 211 F.2d 425 (3 Cir. 1954) .. 15

Gold Seal Importers, Inc. v. Westerman-Rosenberg,

Inc., 133 F.2d 192 (2 Cir. 1943) 10

Goldstein v. Doft, 236 F.Supp. 730 (S.D.N.Y. 1964),

af’d, 353 F.2d 484 (2 Cir. 1965) 14

Good Health Dairy Products Corp. v. Emery, 275

N.Y. 14, 9 N.E. 2d 758 (1937) 14

Gorski v. Commercial Insurance Company, 206 F.

Supp. 11 (E.D. Wis. 1962)

Graham v. John Deere Co., 383 U.S. 1 (1966)

Graves v. Associated Transport, Inc., 344 F.2d 894

(4 Cir. 1965)

Haughey v. Lee, 151 U.S. 282 (1894)

Kellogg Switchboard and Supply Co. v. Michigan Bell

Telephone Co., 99 F.2d 203 (6 Cir. 1938)

Lear, Inc. v. Adkins, 395 U.S. 653 (1969)

9, 11, 12, 16, 19, 24

Louisville Trust Company v. Smith, 192 F.Supp. 396

(W.D. Ky. 1961) iC!

Mast, Foos & Co. v. Stover Mfg. Co., 177 U.S. 485

(1900) 10

Nickerson v. Kutschera, 419 F.2d 983 (3 Cir. 1969) ..

10, 11, 20

Nickerson v. Pep Boys—Manny, Moe & Jack, 247 F.

Supp. 221 (D. Del. 1965) 10, 20

Paramount Publix Corp. v. American Tri Ergon

Corp., 294 U.S. 464 (1935) poccenonscccncoqnoccqncesscnneecty SG

tv

PAGE

Penis v. Ohio Casualty Insurance Company, 232 F, .

2d 474 (10 Cir. 1956) i

Rains v. Jil-Mic, Inc. 301 F Supp. 545 (S.D.NLY.

1969) - 10

Royal Typewriter Co. v. rain Rand, 168 F.2d

691 (2 Cir. 1948) a

Sanitary Refrigerator Co. v. Winters, 280 U.S. 30

(1929) 10,2

Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225

( 1964) 9, 16

Seguros Tepeyac, S.A., ORG Mexicana v. Jer-

' nigan, 410 F.2d 718 (5 Cir. 1969) 14

Southern Pacific Railroad v. United States, 168 U.S.

_ 1 (1897) 22, 24

State of Maryland v. Capital Airlines Ine., 267 F.

Supp. 298 (D. Md. 1967) ....... 14

State of Michigan v. Morton Salt Sei 259 F.

Supp. 35 (D. Minn. 1966), aff’d sub nom. Hardy

Salt Company v. State of Illinois, 377 F.2d 768 (8

Ce, FIRE): weensinssenevcrsisvennsniaies 15

James Talcott, Inc. v. Allahabad Bank, Ltd., 310

F.Supp. 6 (S.D. Georgia 1969) 14

Technograph Printed Circuits, Ltd. and Techno-

graph, Inc. v. Automatic Electric Company (Civil

Action 63 C 36, N.D. II.) 1,5

Technograph Printed Circuits, Ltd. v. Bendix Avia-

tion Corp., 218 F.Supp. 1 (D. Md. 1963), aff'd per

curiam, 327 F.2d 497 (4 Cir. 1964), cert. denied,

379 U.S. 826 (1964) «0.0... 3, 5, 6, 20, 21

Technograph Printed Circuits v. Methode Elect.,

Inc., 356 F.2d 442 (7 Cir. 1966) 2, 3, 4, 6, 10

Technograph Printed Circuits, Ltd. v. Methode Elec-

tronics, 285 F.Supp. 714 (N.D. Ill. 1968) ........... 2, 5,2

Vv

PAGE

Seat Sates, he

Technograph Printed Circuits, Ltd. et al. v. United ©

States, 164 U.S.P.Q. 584 (1970) 3; 6, 10

Treinies v. Sunshine Min. Co., 308 U.S. 66 (1939) .... 18

Triplett v. Lowell, 297 U.S. 638 (1936) 2, 3, 6, 8

United Banana Company v. United Fruit Company,

172 F.Supp. 580 (D. Conn. 1959)

United States v. United Air Lines, Inc., 216 F.Supp. .

709 (E.D. Wash. 1962), aff'd sub nom, United

Air Lines, Inc. v. Wiener, 335 F.2d 379 (9 Cir.

1964) ...

University of Illinois Found. v. Blonder-Tongue Lab.,

Inc., 422 F.2d 769 (7 Cir. 1970)

University of Illinois Foundation v. Winegard Com-

pany, 271 F.Supp. 412 (S.D. Iowa 1967), aff’d, 402

F.2d 125 (1968), cert. denied, 394 U.S. 917 (1969) ..

Zdanok v. Glidden Company, Durkee Famous Foods

Division, 327 F.2d 944 (2 Cir. 1964)

SraTUTE

3% U.S.C. $103

Orser AUTHORITIES

“An Analysis of Patent Litigation Statistics,” Staff

Report of the Subcomm. on Patents, Trademarks,

and Copyrights of the Senate Comm. on the

Judiciary, 86th Cong., 2d Sess., S. Res. 240

59 Georgetown L.J. 73 (1970)

Hearings Before the Subcomm. on Patents, Trade-

marks, and Copyrights of the Comm. on the

Judiciary, United States Senate, 90th Cong., 1st

Sess., pursuant to S. Res. 37 on S. 2, S. 1042, S.

1377, S. 1691, pt. 1 (May 17, 18, 1967)

Kananen, Comments and Observations on Res

Judicata and Patent Laws, 18 W. Res. L.R. 103

(1966) . .

1B Moore’s Federal Practice (2d Ed.) 70.412(1] ... ig

Manual for Complex and Multidistrict Litigation,

“Classes of Potentially Complex Cases” (ff 0.22) .... 19

Report of the President’s Commission on the Patent

System entitled ““To Promote the Progress of . ..

Useful Arts’ In An Age of Exploding Technology,”

Nov. 17, 1966 18

es."

In Tue

SUPREME COURT OF THE UNITED STATES

’ Ocroszr Tzam, 1970 -

No. 338

BLONDER-TONGUE LABORATORIES, INC.,

Defendant and Counter Claimant-Appellant, Petitioner,

vs.

| UNIVERSITY OF ILLINOIS FOUNDATION,

Plaintiff and Counterclaim Defendant-Appellee,

{ and

JFD ELECTRONICS CORPORATION,

Counterclaim-Defendant-Appellee, Respondents.

MOTION FOR LEAVE TO FILE

BRIEF AMICUS CURIAE

| To the Honorable Chief Justice and Associate Justices of

| The Supreme Court of The United States:

| Automatic Electric Company, a defendant in Techno-

| graph Printed Circuits, Lid., and Technograph, Inc. v.

| Automatic Electric Company now pending in the District

Court for the Northern District of Dhinois (Civil Action

63 C 36), respectfully moves for leave to file the annexed.

BRIEF AMICUS CURLAE in this case now before the

siiudlibis

Court on writ of certiorari to the United States Court of

Appeals for the Seventh Circuit.

_ Automatic Electric Company has requested the consent

of each of the parties to the present action and consent has

It is the understanding and the belief of Automatic Elec.

tric Company that none of the parties to this case will ad-

vance the negative position as to the first question which

this Court asked the parties to brief in its letter of October

2°, 1970; more particularly, neither party will contend that

the holding of Triplett v. Lowell, 297 U.S. 638 (1936),

should be overturned. Furthermore, it is the understand-

ing and the belief of Automatic Electric Company that

none of the parties to this case will advance the affirmative

position on the second question raised by this Court, that

is, none of the parties will contend that the determination

of invalidity in the Winegard litigation binds the respon-

dents in this case. The attached amicus brief is directed

only to the two questions relating to the Triplett rule.

Automatic Electric Company is vitally interested in the

Court’s decision on the question of Triplett v. Lowell, 297

U.S. 638 (1936), because of its conviction that patent liti-

gation, like all litigation, should come to an end and because

the Court’s overturning of the Triplett rule will be con-

trolling in the Technograph cases pending in the District

Court for the Northern District of Illinois.

The Technograph cases were converted to a class action

in 1968 (See Technograph Printed Circuits, Lid. v. Meth-

ode Electronics, 285 F.Supp. 714 (N.D. Ill. 1968) ) after the

Seventh Circuit Court of Appeals had held that a prior

adjudication of invalidity in an earlier action against an-

other defendant could be given weight by comity only

after a second trial on the merits. Technograph v. Methode

.

-

h

r

t

)

-

it

e

it

l-

d

Elect. Inc., 356 F.2d 442 (7 Cir. 1966). Together with three

other defendants*, Automatic Electric has been. desig-

nated a class representative for most of the electronics

industry including approximately fifty defendants in ac-

tions pending in other districts.

The plaintiff in the class action is Technograph, Inc., the

owner of Hisler patent No. 2,706,697, which allegedly covers

a widely used process for manufacturing printed circuits.

The patent was declared invalid in Technograph Printed

Circuits, Ltd. v. Bendix Aviation Corp., 218 F.Supp. 1

(D. Md. 1963) ; aff'd per curiam, 327 F.2d 497 (4 Cir. 1964) ;

cert. denied, 379 U.S. 826 (1964), and in Technograph

Printed Circuits, Ltd. et al. v. United States, 164 U.8.P.Q.

584 (Comm. Ct. Clm. 1970).

The Technograph action in Chicago was tried and

briefed earlier this year; oral arguments were originally

scheduled for November 13, 1970. On November 9, 1970,

the trial judge, Hubert L. Will, vacated the oral argument

because this Court indicated its interest in re-examining

the decision in Triplett v. Lowell, 297 U.S. 638 (1936), on

the present writ. In vacating the oral argument, Judge

Will stated :

“Let us suppose the Supreme Court were to hold,

. which it seems to me is quite possible . . . that as

against the patentee a determination of invalidity is

the ball game. I always thought that ought to be the

rule, incidentally. I don’t see why .. . a patent that

is declared invalid should be relitigated against other

*The other representative defendants have been more

or less inactive in the case; only Automatic Electric Com-

pany and RCA Corp., a class member, actively participated

in the trial of the case. (RCA disputes its membership in

the class but was given leave to participate without waiver

of any rights relative to the dispute.)

alleged infringers in the hope that some court will end

up holding it is valid, when you: have got an oppor.

tunity to, appeal the first declaration of invalidity and

get it resolved.

“Suppose they hold that, that prior rulings in this

. ¢@ase to the contrary notwithstanding, that is the end

. of this case, isn’t it?” ‘

‘The Triplett decision is the only obstacle to concluding

the Technograph class action on the basis of the earlier

decisions of invalidity (See Technograph Printed Circuits

v. Methode Elect., Inc., 356 F.2d 442 (7 Cir. 1966) ). If this

Court: overturns Triplett it will obviously have a substan.

tial and probably controlling effect on the District Court's

decision in the Technograph cases.

The appended brief was prepared as soon as possible

after Automatic Electric Company learned that the peti-

tioner did not support the view that Triplett should be

overruled. Because Automatic Electric Company is not

supporting the position of the petitioner on this issue, and

because no other party will brief this question, the present

brief is considered timely and important in the proper con-

sideration of the issues raised by the Court.

Accordingly, Automatic Electric Company requests that

leave be granted to file the brief submitted with this motion.

Respectfully submitted,

THeoporE W. ANDERSON

Harry J. Rover

Attorneys for Amicus Curiae,

Automatic Electric Company.

BRIEF AMIOUS OURIAE OF ——

AUTOMATIO ELECTRIC COMPANY

QUESTIONS PRESENTED

Automatic Electric Company (hereinafter Automatic

Electric) will discuss the following two questions on which

the Court, in its letter of October 29, 1970, requested

briefing :

“1, Should the holding of Triplett v. Lowell, 297 U.S.

638, that a determination of patent invalidity is not res

judicata as against the patentee in subsequent litiga-

tion against a different defendant, be adhered to?

“2. If not, does the determination of invalidity in the

Winegard litigation bind the respondents iv this

case?”

INTEREST OF AUTOMATIC ELECTRIC

Automatic Electric is a defendant in Technograph

Printed Circuits, Ltd., and Technograph, Inc. v. Automatic

Electric Company (Civil Action 63 C 36, N.D. IIL), one of

four cases now pending in the District Court for the North-

ern District of Illinois as part of a class action (See Tech-

nograph Printed Circuits, Ltd. v. Methode Electronics, 285

F.Supp. 714 (N.D. IL 1968)).

The plaintiff, Technograph, Inc., alleges that the class

members infringe Hisler patent No. 2,706,697, which pur-

portedly covers a widely used process for manufacturing

printed circuits. Defendants challenge the validity of the

patent.

The Eisler patent has been declared invalid in Techno-

graph Printed Circuits, Ltd. v. Bendiaz Aviation Corp., 218

F.Supp. 1 (D. Md. 1963), aff’d per curiam, 327 F.2d 497 (4

Cir. 1964), cert. denied, 379 U.S. 826 (1964), and an opinion

and recommendation of invalidity have been rendered by

Commissioner Davis in Technograph Printed Circuits, Lid,

et al. v. United States, 164 U.S.P.Q. 584 (Comm. (¢

Clm. 1970).

The trial court in the Automatic Electric case granted a

motion for summary judgment holding the patent invalid

on the same grounds as in Bendiz, but the Court of Appeals

for the Seventh Circuit reversed on the grounds of the

Triplett decision (Technograph Printed Circuits v. Meth

ode Elect., Inc., 356 F.2d 442 (7 Cir. 1966)). The decision

of the Court of Appeals lead to a new trial on the validity

issues in the class action. There are still about seventy

other civil actions pending in about twenty federal districts

on the same patent, only some of which are subject to the

outcome of the class action. Thus, any argument that there

are only two or three cases a year relitigating invalid pat

ents and that this type of litigation is not a burden on the

courts and on the public must be faulty.

The Technograph class action in Chicago was tried and

briefed earlier this year and oral arguments were origi-

nally scheduled for November 13, 1970. On November 9,

1970, the trial judge, Hubert L. Will, vacated the scheduled

oral argument because this Court granted the present writ

of certiorari and indicated its interest in re-examining the

decision in Triplett v. Lowell, 297 U.S. 638 (1936). The

Triplett decision is the only obstacle to concluding the

Technograph litigation on the basis of the earlier deci-

sions of invalidity (See Technograph Printed Circuits v.

Methode Elect., Inc., 356 F.2d 442 (7 Cir. 1966)). If the

holding in Triplett is overturned or reinterpreted in this

case, the Court’s decision will probably be controlling in

the Technograph cases.

STATEMENT

The facts relating to the two questions are set out in the

opinions of the Seventh Circuit Court of Appeals (re-

ported at 422 F.2d 769 (A.54-71*) and the Eighth Circuit

Cott of Appeals (reported at 402 F.2d 125 (A.93-100)).

The Eighth Circuit suit was brought by the University

of Illinois Foundation against the Winegard Company in

the District Court for the Southern District of Iowa and

charged infringement of the Isbell patent 3,210,767. Wine-

gard successfully raised the defense of invalidity on the

ground of obviousness (35 U.S.C. § 103), and the patent

was declared invalid on June 23, 1967. University of Illi-

nois Foundation v. Winegard Company, 271 F.Supp. 412

(S.D. Iowa 1967), (A.101-114). The decision was af-

firmed in University of Illinois Foundation v. Winegard

Company, 402 F.2d 125 (8 Cir. 1968), (A.93-100), and this

Court denied certiorari, 394 U.S. 917 (1969).

After the Iowa District Court’s decision of invalidity,

the District Court for the Northern District of Illinois con-

sidered and rejected the same obviousness defense and

found the patent valid (A.71-90) in the present suit

against Blonder-Tongue. In the appeal which followed the

Blonder-Tongue decision, the Court of Appeals for the

Seventh Circuit thought that, as a matter of “sound judi-

cial policy,” it should follow the invalidity decisions in the

Eighth Circuit. Nevertheless, the court considered itself

constrained by this Court’s decision in Triplett v. Lowell,

297 U.S. 638 (1936), and was compelled to arrive at an

independent decision on the obviousness issue. The Court

1 All record references in this brief are to the Petitioner’s

Appendix which is before the Court.

of Appeals affirmed the trial court and upheld the patent,

University of IUinois Found. v. Blonder-Tongue Lab., Inc,

422 F.2d 769 (7 Cir. 1970). This Court granted certiorari,

There is other litigation pending on the same patent.

ARGUMENT

Introduction.

The Triplett rule is based on the archaic and rapidly dis-

appearing doctrine of mutuality of estoppel—a defendant

cannot have the benefits of an earlier decision, the doctrine

says, unless he was a party to the earlier litigation and

would have been bound by the decision had it gone the

other way. The doctrine has been dying slowly over the

past twenty years and is now virtually eliminated from

most areas of the law where it was a problem; the signifi-

cant exception is the patent law and its interpretation of

this Court’s statements in the Triplett case.

The mutuality doctrine and its effects are entirely in-

consistent with the constitutionally established purposes

and restrictions of the patent grant and the substantial

public interest involved in the issue of patent validity

on which this Court has founded its recent landmark

decisions in the patent field (see Lear, Inc. v. Adkins,

395 U.S. 653 (1969); Graham v. John Deere Co., 383 U.S.

1 (1966); Sears, Roebuck & Co. v. Stiffel Co., 376 U.S.

225 (1964); and Compco Corp. v. Day-Brite Lighting,

376 U.S. 234 (1964)). It is clearly incongruous to a

federal patent system, which “requires that all ideas in

general circulation be dedicated to the common good

unless they are protected by a valid patent” (Lear, supra,

at p. 668), to allow free distribution by the successful

defendant, and others in the Eighth Circuit, and at the

same time restrict the unsuccessful defendant, and others

in the Seventh Circuit, leaving everyone operating in any

of the eight other circuits in total doubt and confusion as

to the legal consequences of their activities. It is equally

incongruous to say that every patent which is subject to

two possible district court holdings which are not clearly

erroneous is entitled to review by this Court. (See this

Court’s order denying certiorari in National Sponge Cush

ion Co. v. Allen Industries, Inc., No. 1012 (October 1968),)

While the Triplett decision itself does not require such

results’, this is precisely how the courts have interpreted it’

*In Triplett, the court stated that an “earlier decision

may by comity be given great weight,” and further pro.

vided a test for the comity question:

. the court must decide whether the issues of law

ia fact in the two cases are the same, and if they are

not it is not bound by the earlier decision.” (297 U8.

at p. 648).

See the discussion in Nickerson v. Pe gos. Moe

& Jack, 247 F.Supp. 221 (D. Del. 1965 oe). Th e test obviously

does not require a full ‘rial the second time around. More.

over, the precedents cited by the court, Mast, Foos & Co. v.

Stover Mfg. Co., 177 U.S. (1900), and Sanitary Refrig.

erator Co. v. Winters, 280 U.S. 30, 35 (1929), do not compel

the result of a second trial because the question was not

presented; in both cases the patent had been held valid in

the earlier decisions.

* Examples are: Gold Seal Importers, Inc. v. Westerman

Rosenberg, Inc., 133 F.2d 192 (2 Cir. 1943) ;

Aghnides v. Holden, 226 F.2d 949 (7 Cir. 1955);

rg ge Printed Circuits v. Methode Elect., Inc.,

2d 442 (7 Cir. 1966) ;

Technograph Printed Circuits, Ltd. et al. v. United

Btates, 16 164 U.8.P.Q. 584 (1970) ;

Nickerson v. Kutschera, 119 F.2d 983 (3 Cir. 1969), com-

PF esis dissent of Hastie, C.J., 419 F.2d at p. 984;

t of Pittsburgh v. Kawner Co., 166 U.S.P.Q, 265

(N.D.Ga. 1970

)

aa” Inc., 301 F.Supp. 545 (8.D.N.Y. 1969),

For an analysis of the decisions on the question, see

Kananen, Comments and Observations on Judi-

cata and Patent Laws, 18 W. Res. L.R. 103 (1966).

an Sita

The various Courts of Appeal have recognized the ano-

maly of the Triplett doctrine in the patent law, and have

expressed their disagreement with its results as.a matter

of judicial policy. Nevertheless, the courts consider them- .

selves bound by the decision, and its subsequent interpre-

tation, just as the Seventh Circuit Court of Appeals did in

the cease now before the Court, where it said:

“... It would seem sound judicial policy that the

adjudication of that [validity] issue against the Foun-

dation in one action where it was a party would pro-

vide a defense in any other action by the Foundation

for infringement of the same patent.

“That, however, is not the law in this field. . .” 422

F.2d at p. 772 (citing Triplett).

In an earlier case in the Seventh Circuit, Aghnides v.

Holden, 226 F.2d 949 (1955), involving a similar situation,

Judge Schnackenberg, in a concurring opinion, stated at

page 951:

“,. Aghnides may litigate and relitigate again and

again... as long as he selects a different defendant

in each of the infringement suits which he files. .. .

This queer result is one which we are unable to avoid.”

The same view has been expressed by the Third Circuit

Court of Appeals in Nickerson v. Kutschera, 419 F.2d 983,

984 (3 Cir. 1969), where the court said:

“We continue to believe that such change as may be

‘desirable in this exception in patent cases to the gen-

eral rule of collateral estoppel should be made, on a

record such as this, by the Supreme Court itself or

by Congress, which so far has refused to change the

rule in Triplett. In this regard, it is noted that, while

the original version of the ‘Patent Reform Act of 1967’

introduced in the Senate contained a section providing

for collateral estoppel in patent cases, the present ver-

sion of that Bill has deleted this so-called ‘in rem in-

validity’ clause.”

As the Third Cireuit Court of Appeals recognizes, Qop.

gress has failed to deal with the problem and it remain

for this Court to provide the directive which these Cour

have requested. (Lear, Inc. v. Adkins, 395 U.S. oo8 (10m

The Doctrine of Mutuality of

Per Se Has No Place in

the Law of Res Judicata.

The mutuality rule has absolutely nothing to recommend

it but symmetry for the sake of symmetry. The prolifera.

tion of litigation which the rule can create, together with

the lack of any redeeming merit‘, have been enough tp

condemn it in most areas of the law. The irrationality

of the rule was exposed more than twenty years ago

by Chief Justice Traynor. Speaking for the Supreme

Court of California, Judge Traynor stated, in Bernhard y.

Bank of America, 19 Cal.2d 807, 122 P.2d 892 (1942):

“The criteria for determining who may assert a

plea of res judicata differ fundamentally from the eri-

teria for determining against whom a plea of res judi-

cata may be asserted. The requirements of due process

of law forbid the assertion of a plea of res judicata

against a party unless he was bound by the earlier liti-

gation in which the matter was decided. * * * He is

bound by that litigation only if he has been a party

thereto or in privity with a party thereto. * * * There

is no compelling reason, however, for requiring that

the party asserting the plea of res judicata must have

been a party, or in privity with a party, to the earlier

litigation.

“No satisfactory rationalization has been advanced

for the requirement of mutuality. Just why a party

‘The proponents of the rule offer little of a positive

nature in arguing for its retention. See 1B Moore’s Fed

eral Practice (2d Ed.) J 0.412[1].

_—

b who was not bound by a previous action should be

bs precluded from asserting it as res judicata against a

t party who was bound by it is difficult to comprehend.

ee 0”

The strength of Judge Traynor’s logic has virtually

eliminated the doctrine of mutuality from areas of the law

where it has been even less a problem than in the patent

field. In United States v. United Air Lines, Inc., 216 F.

Supp. 709, 725-729 (E.D. Wash. 1962), aff'd sub nom,

United Air Lines, Inc. v. Wiener, 335 F.2d 379, 404 (9 Cir.

1964), the District Court totally rejected the mutuality

doctrine as to the finding of fault in an airline disaster

case, stating, at pages 725 and 726:

“While it is true that the general rule requires that

there be identity of parties to invoke the doctrine of

res judicata, nevertheless, the Courts, increasingly so

in the last 20 years, have not adhered to that doctrine,

and have held that no constitutional right is violated

where the thing to be litigated was actually litigated in

a previous suit, final judgment entered, and the party

against whom the doctrine is to be invoked had full

opportunity to litigate the matter and did actually liti-

gate it. (Emphasis original).

Similarly, the Fourth Cireuit Court of Appeals rejected

the doctrine in Graves v. Associated Transport, Inc., 344

F.2d 894, 897 (4 Cir. 1965), (personal injury litigation),

where the court stated:

“The mutuality rule was probably never a solid wall;

| exceptions were created under the pressure of the pub-

lic interest in an end to litigation. The thought was

that under certain circumstances once the party

against whom the former judgment was asserted had

been afforded a full and fair day in court and a rea-

sonable opportunity to be heard on all the relevant

issues, even though against a different adversary, a

plea of estoppel by judgment ought to be recognized.”

=“ eo SI S&S FF 2

8 eee ae se SO le ae Se le

—14—

And in Zdanok v. Glidden Company, Durkee Famoy

Foods Division, 327 F.2d 944 (2 Cir. 1964), (contract case,

the court commented in rejecting the doctrine: ‘

“This doctrine of the need for mutuality of estop.

pels, criticized by Bentham over a century ago as dest.

tute of any semblance of reason, and as ‘a maxim whid

one would suppose to have found its way from th

gaming-table to the bench’. . . has been much eroded

in recent years.” (327 F.2d at p. 954).

United Air Lines and Graves, are diversity cases.’ But

as in Zdanok, the mutuality doctrine has been thoronghly

* Additional examples are:

Fleischer v. Paramount Pictures Corporation, 329 F.%

424 (2 Cir. 1964), (dicta—contractual obligation);

Davis v. McKinnon & Mooney, 266 F.2d 870 (6 Cir

1959), (personal injury) ;

People v. Ohio Casualty Insurance Company, 232 Fd

474 (10 Cir. 1956), (estate administration) ;

Seguros Tepeyac, S.A., Compania Mexicana v. Jernigan,

ho F.2d 718, 727 (5 Cir. 1969), (personal i yndury)

James Talcott, "Inc. v. Allahabad Bank, Ltd., 3

6 (S.D. Georgia 1969), (interpleader) ; :

Factor v. Pennngton Press, Inc., 230 F.Supp. 906 (ND.

Ill. 1963), (libel) ;

Louisville Trust Company v. Smith, 192 F.Supp. 39%

(W.D. Ky. 1961), (estate administration) ; :

State of Maryland v. Capital Airlines, Inc., 267 F.Supp.

298 (D. Md. 1967), (air disaster) ;

Goldstein v. Doft, 236 F.Supp. 730 (8. D.N.Y. 1964), (con-

tract), aff’d, 353 F.2d 484 (2 Cir. 1965) ; and

Gorski v. Commercial Insurance Company, 206 F.Supp.

11 (E.D. Wis. 1962), (personal injury).

And see:

* ene Inc. v. Hall, 19 N.Y.2d 141, 225 N.E.2d 1%

);

Good Health Dairy Products Corp. v. Emery, 275 N.Y.

14, 9 N.E.2d 758 (1937) ;

=e

rejected in federal question cases. See Gibson v. United

States, 211 F.2d 425 (3 Cir. 1954), (admiralty); Bruszew-

ski v. United States, 181 F.2d 419 (3 Cir. 1950), (Long-

shoreman action); United Banana Company v. United

Fruit Company, 172 F.Supp. 580 (D. Conn. 1959),

(antitrust); State of Michigan v. Morton Salt Company,

959 F.Supp. 35 (D. Minn. 1966), (antitrust), aff’d sub nom,

Hardy Salt Company v. State of [Winois, 377 F.2d 768 (8

Cir. 1967) ; and Connelly v. Balkwill, 174 F.Supp. 49, 62-63

(D. Ohio 1959), (securities case), aff'd per curiam, 279 F.2d

685 (6 Cir. 1960).

Viewed against these decisions in a wide spectrum of

litigation, the patent cases adhering to the mutuality re-

quirement are a singular exception which have withstood

attack in the Courts of Appeal solely by virtue of a ques-

tionable interpretation of a decision of this Court. The

compelling reasons of fundamental fairness and judicial

administration which led Judge Traynor, and the other

courts following his lead, to unconditionally reject the

“gaming table” doctrine of mutuality of estoppel leave no

room for Triplett in the patent field.

The Reasons for Rejecting

the Mutuality Doctrine Are Even

More Convincing in Patent Cases.

Above and beyond the reasons discussed above, the pub-

lic interest in the patent grant and its relation to the com-

petitive system, as well as the complexities involved in

patent litigation with their potential for harassing abuse,

are additional reasons for Triplett’s interment. Judge

Learned Hand aptly summarized the special nature of

— 16—

patent decisions in Royal Typewriter Co. v. Remingic,

Rand, 168 F.2d 691 (2 Cir. 1948) : 2 te

“(T]he reason why we should pass on. . . [the valid

ity] question . . . is so that invalid claims shall net

remain in terrorem of the art.”

Until Triplett is overruled or reinterpreted, however, that

purpose cannot be realized.

1. Inconsistent Validity

Determinations Are

Irreconcilable With a

Federal Patent System.

The prospect of a patent being invalid in some areas of

the country and valid in others is obviously inconsistent

with “the strong federal policy favoring free competition

in ideas which do not merit patent protection” (Lear, Ine.

v. Adkins, 395 U.S. 653, 656 (1969) ).

It is precisely the need for a wniform law which places

patents in the realm of federal jurisdiction. As this Court

noted in Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. %

(1964), at p. 228:

“Before the Constitution was adopted, some States

had granted patents either by special act or by general

statute, but when the Constitution was adopted prov-

sion for a federal patent law was made one of the

enumerated powers of Congress because, as Madison

‘ put it in The Federalist No. 43, the States ‘cannot

separately make effectual provision’ for either patents

or copyrights.”

It is just as irrational to permit nonuniform patent pro-

tection in the various circuits as it is to allow each state }

its own patent system. Either result is inconsistent with

—

a federal concept. One who wishes to sell a patented device

can and should be compelled to obtain a license from. the

patentee and pay royalties, but not when his compet-

jtors have been freed from the monopoly either by a

favorable decision of invalidity, or by simply being res-

ident in the circuit where the decision of invalidity

has been handed down. There is no conceivable reason

consistent with the patent system for granting resi-

dents of the Eighth Circuit immunity while severely re-

stricting their neighbors in the Seventh Circuit and leaving

the rest of the country in doubt and free to act only in the

peril of expensive and harassing patent litigation. It is

equally unjustifiable that such inconsistencies should be

permitted and even encouraged, with the burden of a final

uniform decision always resting on this Court.

In the situation presented by the case at bar, but for this

Court’s intervention, Winegard, the successful Eighth Cir-

mit defendant, would enjoy an unwarranted competitive

advantage over Blonder-Tongue, the loser in the Seventh

Circuit, and all others in the Seventh Circuit who may be

reluctant to practice the invention out of fear of a Seventh

Cireuit suit. In the rest of the country, only continued and

protracted litigation can be expected.* In such cases,

public policy would be far better served by invocation

of the doctrine of res judicata or collateral estoppel

which would not only preclude relitigation after a full

and fair trial and a decision of invalidity but would

effectively devitalize the spurious monopoly for the

‘The Isbell patent is presently being asserted in The

Finney Company v. JFD Electronics Corp. and Univer-

sity of Illinois Foundation, Civil Action No. 65 C 671

United States District Court for the Northern District of

Illinois, Eastern Division.

benefit of the whole public, including unsuccessful a

fendants in prior suits. (The last judgment render

would presumably be controlling. See Dimock v. Rever,

Copper Company, 117 U.S. 559 (1886); Dowel y,

Applegate, 152 U.S. 327 (1894); Treintes v. Sunshine Mia

Co., 308 U.S. 66 (1939); Garden Suburbs Golf & Country

Club v. Murrell, 180 F.2d 435 (5 Cir. 1950); and Eyber y,

Dominion National Bank of Bristol Office, 249 F.Supp. 631

(W.D. Va. 1966).)

The prospect of inconsistent validity determinations and

the thwarting effect that prospect has on new entries int

a market’ were major factors leading to the “in rem ip.

validity” clause embodied in the proposed 1967 version of

the Patent Reform Act pursuant to the recommendation

of the 1966 Report of the Presidential Commission.* The

clause read:

“A final federal judicial determination declaring a

patent claim invalid shall be in rem, and the cancella

tion of such claim shall be indicated on all patent

copies subsequently distributed by the Patent Office”

In making the proposal, the Commission stated:

“Under present law, even though one or more claims

of a patent have been held invalid in one Federal cir.

cuit, the patentee may pursue a different defendant in

another circuit for infringement of the same claims.

“As a result, a party may be held liable as an in

fringer or required to pay royalties in one circuit,

while his direct competitor is practicing the same in-

*The thwarting effect is discussed in 59 Georgetown L

J. 73, 81 (1970).

* Report of the President’s Commission on the Patent

System entitled “ “To Promote The Progress of . . . Useful

Arts’ In An Age of Exploding Technology,” Nov. 17, 196,

pp. 38-39.

vention without restriction in another circuit. More-

over, the mere possession of a patent, even though

held invalid in one or more circuits, serves as a poten-

tial threat to persons unwilling or unable to defend a

suit on the patent.

“Under the proposed recommendation, a claim, once

held invalid, would be treated as cancelled from the

patent. No one thereafter could be required, on the

basis of a royalty agreement previously made part of

an infringement judgment, to continue royalty pay-

ments on the claim. Furthermore, the proposal would

preclude a subsequent suit on a patent claim previ-

ously held invalid by a Federal court.

“A patentee, having been afforded the opportunity

to exhaust his remedy of appeal from a holding of in-

validity, has had his ‘day in court’ and should not be

allowed to harass others on the basis of an invalid

daim. There are few, if any, logical grounds for per-

mitting him to clutter crowded court dockets and to

subject others to costly litigation.”

Congress’ failure to enact that legislation and thereby

correct the problem merely heightens this Court’s responsi-

bility to reinterpret its own precedent (Lear, Inc. v. Ad-

kins, 395 U.S. 653 (1969) ).

2 Judicial Economy and

Preventing Harassment.

In Commissioner v. Sumnen, 333 U.S. 591, 597 (1948),

this Court referred to the basis of the res judicata

doctrine as “economy of judicial time.” There are few

areas of the law where economy would be more welcome

then in the patent field. Patent litigation is notoriously

complex. (See “Classes of Potentially Complex Cases”

identified in the Manual for Complex and Multidistrict

litigation ({ 0.22).) The history of the Technograph liti-

gation, as related in Judge Becker’s ruling establishing the

class action (Technograph Printed Circuits, Ltd. v. Meh

ode Electronics, 285 F.Supp. 714 (N.D. Ill. 1968), and ip

Judge Hall’s decision imposing sanctions on the plaintif

(Technograph Printed Cir. v. Packard Bell Electronics

Corp., 290 F.Supp. 308 (C.D. Calif. 1968), illustrates th

extremes to which such complexities may be aggravated by

a patent owner. The first decision of invalidity was handej

down in 1963 (Technograph Printed Circuits, Ltd. v. Bes.

diz Aviation, 218 F.Supp. 1 (D. Md. 1963)), and affirmed

in 1964 (327 F.2d 497 (4 Cir. 1964)); cert. denied, 379 U8,

826 (1964). Yet the patent owner continues the litigation

in the Fourth Circuit (where the patent has already been

held invalid), the Seventh Circuit (a class action), and the

Ninth Circuit.

If Triplett had not been the law when Technograph

Printed Circuits v. Methode Elect., Inc., 356 F.2d 442 (1

Cir. 1966), was decided, all of the subsequent proceedings

could have been avoided. If the court now overrules the

Triplett doctrine, it can eliminate additional time and ex.

pense from the history of an exceedingly long and complex

series of cases. The Nickerson cases* and the Aghmides

cases’ are other examples where the Triplett rule has re

quired large expenditures of judicial time.

* Nickerson v. Kutschera, 419 F.2d 983 (3 Cir. 1969);

and Nickerson v. Pep Boys—Manny, Moe & Jack, 247 F.

Supp. 221 (D. Del. 1965).

*” Aghnides v. Holdem, 226 F.2d 949, 107 U.S.P.Q. 1%

7 Cir. 1955); Aghmnides v. Goodrie, 210 F.2d 859, 10

upp. 582, 110 U.S.

718, 114 U.S.P.Q.

le ed ee, ee ee ee, ee le

The complexities of patent litigation provide substan-

tis] potential for harassment as illustrated by the Techno-

graph cases just discussed. Moreover, a study of patent

litigation during fiscal years 1949-1958", found that pat-

ents were reasserted in 62 instances “after a prior determi-

nation of invalidity,” but that a “vast majority of suits

commenced after a prior determination of the invalidity

of the patent” were settled without a second decision on

the merits, a disturbing statistic which suggests the wide-

spread acceptance of licenses under invalidated patents.”

Moreover, it is undoubtedly true that a large number of

licenses are taken without filing a second complaint.

Yet just such a result is to be expected in view of ex-

pense incident to patent litigation and the lack of cer-

tainty in legal relations consequent from the rule in

Triplett :

“ .. The businessman can be subjected to consider-

able harassment as an alleged infringer. Even in

eases where he feels strongly that the patent would

ultimately be held invalid; when he considers the

hundreds of thousands of dollars in complex cases

that could be involved in defending a suit, he may

““An Analysis of Patent Litigation Statistics,” Staff

Report of the Subcomm. on Patents, Trademarks, and

Copyrights of the Senate Comm. on the Judiciary, 86th

Cong., 2d Sess., S. Res. 240, p. 19.

"In the Technograph class action, one member of the

class agreed to pay a six figure sum for settlement on the

eve of the third trial on the Eisler patent, previously de-

dared invalid in Technograph Printed Circuits, Ltd. v.

Bendia: Aviation Corp., 218 F. Supp. 1 (D. Md. 1963), aff’d

per curiam, 327 F.2d 497 (4 Cir. 1964), cert. denied, 379 U.S.

826 (1964). Under the settlement agreement, Technograph

= nearly half of that sum that it could obtain a

Iding of validity in its second effort to sustain the pat-

ent, that is in the litigation against the United States in

the Court of Claims.

conclude that the best course of action is to Settle

for less to get rid of the problem. These nuisany

settlements, although distasteful, are often, under the

present system, justified on pure economics,” Hegy.

ings Before the Subcomm. on Patents, Trademarks,

and Copyrights of the Comm. on the Judiciary, Unites

States Senate, 90th Cong., 1st Sess., pursuant to §

Res. 37 on 8. 2, S. 1042, 8. 1377, 8. 1691, pt. 1, at 1%

(May 17, 18, 1967).

All these reasons lead to the conclusion that Tripley

should finally be interred; Automatic Electric urges the

Court to answer the first question in the negative,

QUESTION 2

With the first question answered in the negative, ina

more usual case, the second would seem to follow logic

ally, since the decisions of the Seventh and Eighth Cir.

cuits involve the same issue and the same plaintiff (Se

Bernhard v. Bank of America, 19 Cal.2d 807, 122 P2%

892 (1942) ). Here, however, Blonder-Tongue has specif.

cally requested that the court not overrule Triplett (Peti-

tioner’s Brief, p. 9), and apparently it has neither pleaded

the defense of res judicata nor has it any desire to do w.

Nevertheless, Blonder-Tongue has placed the issue of

validity before the court and the public interest in the

court’s decision is sufficient reason for considering the edl-

lateral estoppel question in the specific context of this liti-

gation (Haughey v. Lee, 151 U.S. 282, 285 (1894); Pare

mount Publiz Corp. v. American Tri Ergon Corp., 294 US.

464, 477 (1935); Kellogg Switchboard and Supply Co. +.

Michigan Bell Telephone Co., 99 F.2d 203, 205 (6 Cir.

1938) ).

With the mutuality question resolved against the Uni-

versity of Illinois Foundation, the only remaining cor

/

|

sideration is whether the same “right, question or fact”

at issue in the present case was “distinctly put in issue

and directly determined” by the District Court and Court

of Appeals in the Eighth Circuit (Southern Pacific Rail-

road v. United States, 168 U.S. 1, 48 (1897) ).

The opinions of the Seventh and Eighth Circuit Courts

of Appeal leave no room for doubt on the question. Both

courts were dealing with the same Isbell patent. In both

cases, the issue of invalidity on the basis of obviousness

was specifically raised and considered. Thus, precisely

the same validity issues were raised in the two cases.

The Foundation has argued in its reply to the petition

that the record on the obviousness issue is different in the

two cases (Reply p. 5). Specifically, it argues that

the Seventh Circuit Court of Appeals had the benefit of

Dr. DuHamel’s testimony.” But the fact that the records

are different in the two cases is immaterial in view of the

identity of the issues. While the question of “new evi-

dence” was sometimes an issue under the Triplett rule",

*DuHamel is a University of Illinois professor who

fworked in the same laboratory as Isbell on projects spon-

Asored by the United States Air Force (A. 231-32) when

the alleged Isbell invention was made. DuHamel has

a financial interest in the outcome of the litigation (A.

359). His testimony was obviously available to patentee

in the Winegard case but was not presented—possibl

Jin anticipation of an adverse decision from the Eigh

Cireuit in view of that Court’s strict adherence to the

{principles of Graham. Instead, the DuHamel evidence

‘was saved for presentation in the statistically far more

favorable climate of the Seventh Circuit. In these cir-

cumstances, it is in the public interest that the DuHamel

Itestimony, if received at all, should be given little or no

weight.

“See Aghnides v. Holden, 226 F.2d 949 (7 Cir. 1955).

it has no applicable place in a determination of collater|

estoppel or res judicata. When a similar contention wy

made in Southern Pacific Railroad v. United States, 1g

U.S. 1 (1897), the court stated at page 65:

“We cannot concur in the view that the evideny

upon this branch of this case is of such nature ag tp

compel the court, in the interest of truth and justice,

not only to consider it but to pass again upon the

issue made in the former suits as to the character

of the maps of 1872. Whatever is new in the evideng

now before us, touching that matter, is simply cumu.

tive on the one side or the other. The application tp

consider that evidence is practically an application for

a rehearing as to things directly determined in the for.

mer suits... . Such a course of procedure is wholly

inadmissible under the settled rule of res judicata”

We need only add that the public policy considerations

involved obviously require that the Court’s ruling be given

full retroactive effect (Lear, Inc. v. Adkims, 395 US. 653,

674 (1969)).

The second question, therefore, should be answered in

the affirmative.

— Fs ores se oS S&S FS

a jee

OONCLUSION

The Triplett rule of mutuality of estoppel should be

excised from the patent law and based on this record the

owner of the Isbell patent should be barred from asserting

that patent following the final holding of invalidity by the

Kighth Cireuit Court of Appeals.

Respectfully submitted,

TxeoporeE W. ANDERSON

Harry J. Rover

Attorneys for Amicus Curiae,

Automatic Electric Company.

Of Counsel :

PenpLeToN, NEUMAN,

Wuuums & ANDERSON

77 West Washington Street

Chicago, Illinois 60602

CERTIFICATE OF SERVICE

Service of copies of the foregoing MOTION FOR

LEAVE TO FILE BRIEF AMICUS CURIAE and

BRIEF AMICUS CURIAE OF AUTOMATIC ELEC-

TRIC COMPANY has been made this 3lst day of

December, 1970, upon all parties to the entitled action

by depositing copies thereof in a United States Post

Office, with first class air mail postage, respectively ad-

dressed to counsel of record for each of said parties.

Txeopore W. AnpERson

Attorney for Amicus Curiae,

Automatic Electric Company.