Petition for Writ of Certiorari — Union Carbide Corp. v. Graver Tank & Mfg. Co.

7 =

These characterizations were expréssly approved by

this Court in its 1949 decision (336 U.S 71). Justices

Black and Douglas, in a concurring opinion, stated that -

it met the standard announced by’ -this Court in Cuno

Engineering Corp. v. Automatic Devices Corp., 314 U.S.

84, the case that applied the ‘‘flash of creative genius’? test.

The’ unanjmious decision of this Court in 1949 was the first

in many years to uphold any patent. oy

On rehearing as to the infringement aspect of the case,

the majority of the Court, by the decision of May 29, 1950,

reaffirmed the earlier decision, two Justices dissenting

(339 U. S. 605).

The infringement. : —

Respondent Lincoln Electric Company has for many

years advertised itself as ‘‘the lergest manufacturer of arc

-welding equipment in the world’’ (Finding No. 23, A-13).

Lincoln is the principal defendant and has conducted the

defense of this action (Finding No. 1, A-6).

Lincoln first produced the infringing flux on August

21, 1942, at Lincoln’s laboratory in Cleveland (Finding No. .

28, A-14). This was called ‘‘Lincolnweld 660?’ and was

first used commercially on October 5, 1942 at. respondent

Graver’s plant in East Chicago, Indiana: (ibid. ; —

No. 31,.A-15). - - >

The infringing 660 flux was chomtedity and physically

the same as petitioner’s flux except that in compounding it

Lincoln substituted 1 manganese for magnesium.

“In the case before us, we have two electrio

welding compositions or fluxes: the patented com- .

* position, Unionmelt Grade 20, and the accused

composition, Lincolnweld 660: . Lincolnweld’s

composition is similar to Unionmelt 1s, except that it

substitutes silicates of calcium and manganese—the

latter not an alkaline earth metal—for silicates of

~ : : 7

f

calcium and magnesium. In dll other respects, the

two compositions are alike. The mechanical methods

- in which these compositions” are employed are simi-

lar. They are identical. in operation and produce

- the same: kind and quality of weld.’’ (339 U. S. at-

610) - e

Prior proceedings.

We commenced this action for patent infringement on

October 1, 1945, a few days after World War II ended.

The case was tried in January 1947, before Judge

Swygert, in the Northern District of Indiana. His decision

is reported in 86 F. Supp. 191. He held four of the com-

position or flux claims valid and infringed.

The other claims at issue were held invalid for techni-

cal reasons. The patent when issued contained claims to a

process or method of welding as well ‘gs to the flux used.

The process claims were held invalid because some made

“no reference in any manner to-the identity of the compo- *

sition’’, and the remainder, while identifying the composi-

tion, imported “that the electric are phenomenon is not

present’’, which was held to be an erroneous conception.

Cross-appeals were taken to the. then Circuit Court of

Appeals for the Seventh Circuit which decided all issues

in favor of petitioner (167 F. 24-531). \

Respondents brought the case to this Court on certio-

rari, This Court reinstated the District, Court’s decision

_in all réspects (336 U. S. 271). On rehearing, this bsrsania

“reaffirmed (339 U. S. 605).

On July 10, 1950, the District Court issued its writ of }

permanent injunction. Thereupon. the Lincoln Electric

Company stopped making the infringing flux No. 660.

Lincoln, however, substituted fluxes made from the same

ingree ‘ents, numbering them 760, 770, and 780. We charged

them with contempt in violating the permenant injunction ;

§.

| oe \O

and Judge Dewey, sitting in the District Court by assisn-

ment, uplield our charges after full trial (106 F. Supp: 389).

The Court of Appeals for the Seventh Circuit reversed

* (196 F.2d 103). This Court denied our petition for certiorari

(343 U. S. 967) and our petition for rehearing (344 U.S

849). * .

oe

The accounting prowling.

This accounting proceeding was begun by order dated

. February 10, 1953 appointing the Special Master. Pretrial

proceedings occupied a period of three and a half years.

The trial before the Master occupied a full month,. pro-

| ceeding on a day-by-day basis, September 25 to Octobee25,

1956. 7

The patent is included in Ex. App. 1-7. Its teachings

fully deseribe the patented flux. At the 1947 trial Judge

Swygert heard the expert testimony of witnesses on both ,

sides as to the teachings of the patent and he had much to

say on this subject in his opinio® THe made this specific

finding:

.

A serdie skilled ini the art can eal the

accused Lincolnweld 660 flux by folldwing the teach-

ing of the patent in suit. No evidence was intro-

_ duced to show that the accused flux was derived from_

the prioy art or by independent experiment, or from

any source other than the teachings of the patent

in suit.’’ (Finding No. 22, I R. 926)

Judge Swygert also found:

‘In this connection, the lack of any evidence of inde-

‘pendent research or experiments by the Lincoln

Electric Company in originating Lincolnweld 660 flux

creates an. inference that the teaching of the patent

-- in suit was the sole’ origin of that composition.’*”.

(86 F. Supp. at 200) |

ts

9

This Court expressly approved, saying: .

‘Without some explanation or indication that Lin-

colnweld was developed by independent research, the

trial court could properly infer that the accused flux

is the result of. imitation rather than experimenta-~

tion or invention.’’ (339 U.S. at 612)

- This Court’s decision on rehearing referred to the.

“unscrupulous copyist’’ whd made ‘tunimportant and

insubstantial changes and substitutions in the patent’* in

an effort to escape the reach of law (id. at 607).

In this accounting proceeding Lincoln insisted before

the Master that this issue was not foreclosed by the doctrine |

of res judicata and that Lincoln should be permitted te

introduce evidence to show that this Court's decision was

wrong and that in fact Linvoln*’s G60 flux was produced in

good faith as the result‘of independent experimentation.

The Master concluded that Lineoln ‘thas not vet had its

‘day in.court on the issue of willful infringement’? and

decided. to hear the evidence ¢III App. 1229).

However, the Master directed that Lincoln produce 1 iis

laboratory records bearing on its 660 flux, a disc losure

which Lineoln had theretofore successtully resisted in the

‘previous years of litigation. These yecords were produced

before the Master in full at the irial (II App. 808-50).

They rev ealed a great deal to the trained eye and were used —

" On cross- -examination of LE. A. Smith, Linéoin's laboratory

éngineer, Smith was the witness Lincoln. prodpeed at the

trial to supply evidence as to the alleged independent

experimentation. He was on the witness stand for four

days, mueh of the time under eross-examination with

respect To Lincoln's laboratory records.-

.

This evidence did not prove ‘*infdependent ex sperimenta-

tion’’. On the contrary, it directly confirmed the inference,

, Which Judee Swygert made in 1947 and this Court approved

“in 1949,

i aed ov

~ Master’s findings and svidentiary record.

The Master made a° series of findings. Here is the

pivotal finding :

‘In this accounting proceeding the Lincoln Elec-»

tric Company sought and,was given the opportunity

of producing competent evidence of independent

research and experimentation leading to the dis-

covery of 660. Having heard’ the testimony of the .

witnésses upon examination and cross-examination

-and having studied the exhibits and witnessed the

demonstration of . welding operations given by

defendants in the. course of the trial, I find that the

660 flux was not the result of independent research

or experimentation but was copied from the teach-

ings of the patent.’’ (Finding No: 30, A-15)

Finding No. 30 just quoted was buttressed by other find-

ings of specific facts as to the work amen 8 engineers did |

- which resulted in the 660 flux.

. Findings Nos. 21 and 22 related to the earlier period

at the time petitioner first. used the patented Unionmelt

flux undér actual factory conditions. Even at that early

e stage one of Lincoln’s engineers ontaines samples of peti,

tioner’s flux

‘¢... and sent ene to Lincoln’s laboratory in Cleve-

land where they were analyzed. Lincoln’s labora-

tory engineers prepared a simulation of the Union-

melt composition as early as July 1935, and pursued

their work with this composition over several months

and gave demonstrations. ’? (Finding No. 21, A-12)

This finding was supported by testimony and was docu-

mented by Lincoin’s ‘own laboratory records. We are

inserting a reproduction of page 1019 from the Lincoln

laboratory Notebook AC. In the middle of this page are

parallel columns giving the analyses of the two purloined.

—_ ~s

. ‘ ’

a

: - *e % ’

4, 1019 ‘iy

rr Zo. a peds ay 9 ‘oil

kK Or7)e ooo. ” Be aid ft ther?

K e1Or as oOo * evol aid ver

* Festn 10.9 ws . Synmelriea -

. Ne aa ae °° Le Soe

Fy .© iy

Fe Si SO “> 4

; Anatles: ov S/eg From west Coes

Sener ay eg Ttwle ,

| Ce Co--te/ee ae Bae.

so SIF SPE LRIS FF 00.

49/+r Oy 2.¢ _F¢t&o f 442.99.

f-<O _' (AF e |; .

Fe go 76 mf .

fr O ray =o | ‘. 39 } ae

Cao TGU9 I> FP NY FSO:

TG O.\ OF 7:29 6 00.

a GO « , 42 . O.Fo - =:

| a RR oe

.. . 14 Ay O: 76 ait

sone. £0 v.." OF :

Flonlya Ls OF: tod. used “n rypahes |

eee oie mee Se a: a. ee oe

Ravens Mn éo+u & os. @ 94. le : GQ. : ee

he. i ae oe DI pn

Page 1019 of Lincoln laboratory notebook AC

{entry made May 1, 1935). .

11 eee

samples of the patented compdsition. Then to the right

is a third column listing the constituents for the ‘‘simula- ad

tion’? referred to in the finding quoted above.

The Master found -that ‘‘the introduction of Unionmelt .

threatened to. have substantial effect on the business of

Lincoln Electric Company.’’ (Finding No. 22, A-12—A-13)

By 1940, Lincoln’s laboratory engineers were hard at

work trying to produce a new welding which would be com-

petitive with Unionmelt welding. Initially they worked on

projects involving a carbon arc in combination with a metal-

. lic arc, as they naturally-wanted to stay away ‘from the pat-

ent if they ould: As. to to these efforts, the Master found: ©

‘These efforts were not successful and in November

1941 Lincoln’s laboratory éhgineers abandoned their

work with dual-are and switched over to the use of

bare steel wire, as used in submerged arc welding.

They proceeded to compound various fluxes and make

-welding tests and check the results against tests with _ .

the Unionmelt composition.’’ ae No. 26, A-14)

After swifthing over, Lincoln’s engineers used bare

steel wire and loose granular flux just as in the teachings of

the patent. Thereafter they concentrated on an effort to

get a flux which would-stay away from the ; stent but would

produce the same excellent results as Unionmelt in their

comparison tests.

‘In the spring of 1942 they took some test fluxes they

referred to as ‘*620’’ and* ‘‘650”’ ‘over to respondent

Graver’s plant at East Chicago, Indiana. There they ran

welding tests but these were not successful (Finding No.

. 29, A-15). Referring to this figling, the Court of Appeals

— itself said, “This finding is supported, infact amplified, by

the testimony . . . .’’ (A-87) Seo '

On June 1, 1942, the Lincoln engineers returned to their

‘laboratory in Cleveland. They tried various mixes with

--

°* ©

| various ingredients (II App.’938). Their laboratory note-

_ Smith. In order that this Court may see a sample of these

‘laboratory records we are inserting a reproduction of page

_erences to ‘‘Linde’’. | sg .

teachings of the patent as to the ingredients used but they

weights of chemical elements. Dr. Willard, petitioner’s

stoichiometric proportions (II App. 938-39).

12

books and card records show the details of, the work they

did. These were produced at the trial before the Master and

were used on cross examinatioy of Lincoln’ 8 witness, F. A.

153 from Notebook E on which we have ennarennens ref-

The engineers were constantly checking the results of ,

their own test fluxes by comparison tests under identical

conditions -with the ‘‘Linde flux’’. Their laboratory notes

have frequent references to ‘‘Linde’’, the original plaintiff

The Linde Air Products Company.

The engineers concluded that they had to follow the

still tried to stay away from the patent as to the relative

quantities of the ingredients. The. pdtent gave detailed

instructions for the preparation of the patented flux includ-

ing specific directions for the use of stoichiometric propor-

tions of the.ingredients, that is, the relative quantities of

manganese and silica which would yield a true silicate. °

‘*Stoichiometry”? ‘is the art of calculating the combining

chemical expert at the 1947 trial, testified at some length

on this matter (IR. 266-72). The

On the basis of their comparison tests with Unionmelt,

the engineers tame to realize that they had to. follow the

teachings of the-patent as to stoichiometric proportions. On

August) 7, 1942 Lincoln,’s flux No. 135 made its appearance

and this was the first of their test .fluxes to approximate

a

On August 21,1942, thé Lincoln engineers compounded

their test. flux No. 146, the composition. later sold by

respondent as its “Lincolnweld. 660’ flux (Finding No. 28,

t. . AIR

| mee eT tag ay, A

oe LameKin. fo SZ. tne. ,

| | | temdl fom Ap Jon, pt ot. :

4 Frc. Jo sf M0610 fy: 3D dda

, a On ¢

& esta

me

ests . O Dat %

| wal

hog nese oF 4, book fs nde + sda

Pernt eal ae

~ LD.

Ho fod

ni),

ep oF Lot han + td

bigae page ne Lincoln laboratory. records:

ne 153 from Notebook E (entry made August 12, 1942),

13

,A-14; II App. 943). . Judge Swygert in 1947 made this

‘finding: : : |

‘ ‘In the Lincolnweld 660 flux the slight excess of

. basic oxide over stoichiometric proportions does not

substantially affect its operative character and fol-

luws the teaching of the patent.’’ (Finding No. 23,

. IR. 926-27)

a

_ What they did was to set down a formula identical in

every respect with Unionmelt -and exactly following the

teachings of-the patent, as to the ingredients and the pro-

portions and the characteristics and properties the com-

position must have. The 660 flux differed in a single

respect. Manganese, a known equivalent, was substituted

fer magnesium. This Court in its 1950 decision referred to

that substitution as a ‘‘minor variation to conceal and

shelter the piracy’? (339 U.S. at 607). _

On October 2, the Lincoln engineers took this flux to |

respondent Graver’ s plant for testing. It produced excel-

lent results (Finding No. 28, A-14).

, In October, just a few days after the successful testing

of the infringing flux at the Graver plant, Lincoln gave a

_ welding demonstration to one of petitioner’s licensees (Ex.

App. 214-16)--tW@reby initiating the vigorous campaign .

Lincoln carried on throughout the period of infringement.

The Master found:

‘‘Lincoln Electric Company carried on a vigorous

campaign against the Linde Company’s Unionmelt

licensing program. ... This campaign intentionally

interfered with the Linde Company’s licensing pro- ~

gram and the payment of royalties by the licensees.’’

(Finding No. 75, A-32) :

Judgment of the District: Court.

The District Court approv ed and-adopted the Master’s

findings of fact, ov er objections most vigorously presented

by respondents.

, a \

14

- The istrict Court also approved the Master’s conelu-

' gion that thé award should be based on the reasonable

,royalty method and also adopted the rate the Master found,

-to be reasonable. Petitioner’s proof established that it

had suffered a loss of profits on its Unionmelt operations

during the period of infringement in the amount of

$8,521,234 (Finding No. 50, A-23—A-24). However, the

p Master rejected this as the basis for the award, on the

. ground that petitioner had not been able to prove ‘‘with

ufficient accuracy for judicial determination’’ exactly how

- much of its total loss was caused by the infringement

(A-33—A-34). . The District Court-approved the Master's .

report in this respect.

The District Court, having determined that Lincoln was

a ‘‘conscious and wilful infringer’’ (A-52), awarded dam-

ages for théentire period of "infringement includitg the

period prior to the filing of this complaint. The District .

_ Court, again stating that ‘‘Lincoln’s conduct was conscious

and wilful’’, allowed interest from the last date of infringe- .

, ment rather than the date the Master filed his report (A 53).

The ‘District Court also granted $900,000 increased damages,

again premising its decision on the absence of good faith

on Lincoln’s part (A-47—A- 50).°

The District Court entered ‘ies on August 26,

1959 as follows (A-56—A-57):

‘Award of a based on reason- .

able royalty .. eiitsheiviainansiiasnens $1,361,891.25 -

Interest at 6% per annum from

‘June 30, 1950, the date of last’

infringement ..............-----e sete 748,185.91

: Additional damages .....................-..-. * 900,000.00

- Amount of judgment... $3,010,077.16

Decision of the Court of Appeals.

Both parties took appeals. Petitioner appealed « on the *

_ ground that the award.was grossly inadequate as a matter

~ | os

¢

<...,<’*

of law, :in view of its $8,521: 234 loss and the statute direct.

ing that the court ‘‘shall award to claimant damages ade-

.

~

13. °

quate to compensate for the, infringement”’ (35 os a es

§284 (1958) ). - oe Court of aopeem rejected petitioner’ 8

appeal (A-83). ,

On respondent Lincoln's s appeal, the Court of Appeals

first took up the patent | issue under the following caption :

‘Did Lincoln copy and thereby become a conscious

and wilful infringer?’’ (A-62)

The Court of Appeals, rejectinty the detailed, findings

"and reversing the District Court on this issue, held “that

the Court erred-both as a matter of faet and of law in-its

. conclusion that Lineoln was a econseions and wilful

infringer’? (A-103),

More specifically the Court of Apovle held

QQ) That the District Court erred in awarding

damages fer the infringement prior to the filing’

of the complaint because ‘Lincoln was not a con-

scious and wilful infringer’’ (A-100).-

(2) That the District Court erred in allowing interest

because ‘*‘ Lincoln was not a conscious and wilful

infringer”” (A-101).. .

(3) That the District Court erred in allowing addi-

tional damages because such damages are allowed

‘‘only on the basis of conscious and.wilful infringe-

‘ment’. and Lincoln was not such an infringer

(A-97).° -

Thus the Court of Appeals would reduce the District’:

Court's judgment. from $3,010,077.16 to an amount whieh

_would not be more than $1,212,725.

16 -

REASONS FOR GRANTING WRIT.

This Court in 1948 granted certiorari in this case—and

in 1949 took the unusual step of-granting a rehearing after

the unanifnous decision affirming Judge Swygert.

The decisions in this case have been ‘a matter of wide-

Spread public interest and have been discussed in many.

‘articles and legal periodicals. It is generally regarded as |

a landmark case in two important respects—the applica-

. tion of the doctrine of equivalents and the application of

‘Rule 52(a) to a finding of equivalence. This Court’s first

decision has been cited and applied in at least 77 ‘decisions

_ in the various.Courts of Appeal. This Court’s second deci-

sion has been cited and applied in at least 62 decisions in -

the various Courts. of Appéal.

I. The present decison t is in conflict with this. Court’s

~” decision rendered in this'case in 1950.

The Court of Appeals’ decision, right in the same*case

and relating to the same Lincoln Electric Company and the

same acts of inf ringement, is diametrically opposed to the

decisions of this Court rendered in 1949 and 1950. It is

~ hard te see how there could be a more direct conflict between

two ; decisions. This calls for a further review by this Court.

If the case’-vere left in its present posture the salutary

effect of the 1949 and 1959 decisions would ‘be lost and

there would be much confusion as to the effect of avoiding —

literal infringement by making colorable changes.

This Court in 1950 referred to the “unscrupulous copy-

ist’? who makes ‘‘unimportant and insubstantial changes”

in the patent (339 U. S. at 607).

But the Court of Appeals now states that ‘‘. | . Lincoln

was making a good faith effort to avoid infringement”’

(A-68; see, also, A-69, A-73, A-102),

17:

This Court in its 1950 decisiof squarely stated that

Lincoln’s changes were only ‘‘colorable,’’ and its product

was ‘‘the fesult of imitation’’:

$4It is*difficult to conceive of a case more appro-

_ priate for application of the doctrine of ‘equivalents.

The .disclosures of the prior art made clear that '

manganese silicate was a useful ingredient in weld-

- ing compositions. .Specialists familiar with the

problems of welding compositions understood that

manganese was equivalent to and could be substituted

for magnesium in the composition of the patented

> flux and: their observations were. confirmed by the

literature of chemistry. Without some explanation,

or indication that Lincolnweld was developed by

independent research, the trial court could properly

infer that the accused flux is the result of imitation

rather than experimentation or invention. Though

infringement was not literal, the changes which avoid

literal infringement are colorable only. We conclude

that the trial court’s judgment of infringement

respecting the four flux claims was proper, and we

adhere to our.prior decision on this aspect of the

case.”’ (339 U. S. at 612)

i

But the Court of Appeals, having read this Court’ 8

decision, finds it an ‘‘anomaly’’, saying: - %

. wi strikes us as an anomaly to find that Lincoln

copied from the patent but that infringement’ was

lents.”’ (A-64)

And again, the Court of Appeals says:

‘*Tn our view the word ‘copied’ as used to describe

‘ . . .

Lincoln’s conduct is a misnomer.’’ (Ibid.)

Turning again to this Court’s 1950 decision, we find

this very lucid statement as to what this Court meant:

‘found only by application of the doctrine of equiva-~

18°

‘*In determising whether an accused device or

composition infringes a valid patent, resort must

be had in the first instance to the words of the claim. .

If accused matter falls clearly within fhe claim,

infringement is made out and that is the end of it!

‘*But courts have also recognized that to per-

mit imitation of a patented invention which does

not copy every literal detail would be to con¥ert the

protection of ‘the pafent grant into a liollow and use-

less thing. Such a limitation would leave reom for

—indeed encourage—the unserupulous copyist to —

make unimportant and insubstantial changes and

substitutions in the patent which,-though adding

nothing, would be enough to take the copied matter

- outside the claim, and hence outside the reach of

law. One who seeks to pirate an invention, like one

who seeks to pirate a copyrighted book or play, may

a be expected to introduce minor variations to conceal

and shelter the piracy. Outright and forthright

duplication is.a dull and very rare type of infrinze-

ment. T> prohibit.no other would placé the inventor

at the merey of verbalism and would be subordinat-

- ing’ substauce to form. It would deprive him ‘of the -

benefit of his invention and would foster concealment

rathe: than disclosure of: inv entions, which is one

of the primary purposes of the patent system.

: ‘*The doctrine of equivalents evolved in response

-to this experience. The essence of the doctrine ‘is

that one may not practice a fraud on a patent.” %

(339 U. S. at 607-8)

The gist of the Court of Appeals’ holding is ‘that

although Lincoln was held to have practiced a ‘‘fraud on a

patent’’ and iis prodntt was the ‘result of imitation’’, it

was ‘‘anomalous”’ to find Lincoln a ‘‘copyist,’’ = that in ~

any case, this would have no bearing on whether

‘*conscious and wilful infringer’’.

fe was a

19

Such a holding quite clearly saps the prier decisions of

this Court in this ease of most of their vitality, and leaves

the patent law in a state of confusion as to the effect of an

infringer’s failure to copy every literal detail from a patent.

This Coyrt clarified this matter ir 1950, and its work‘

has been substantially undone, by the Court of Appeals.

Il. The present decision violates Rule 52(a) on a

finding of key importance in patent litigation.

The question whether infringement is ‘‘conscious and

wilful’’ is frequently presented in patent cases and has an

infpertant bearing on the measure of recévery. Although ~

the words ‘‘conscious and -wilful’’ do not appear in the

patent statute, it is the factor on which courts base their

: deteraninations a® to whether to inerease damages and as to

other important questions. .It is essential that the ld be

not left in a state of confusion as to the scope of review

permitted when a District Court finds infringement to be

_ “eonseious and wilful?’ " :

Such a finding. comes under Rule 52 2a) of the Federal

Rules of Civil Procedure, and the present decision of the

Court of Appeals vielates’ the letter and spirit of Rule

52(a). It constitutes such a serious departure from the

accepted course of jnglicial proceedings as to eall for the

exercise of this Court’s supervisory power. ,

Under Rule 52(a) the function of fact-finding is placed

exclusively 6n the trier of fact. The appellate court should

not set aside a finding unless it reviews the evidence and. *

concludes that the finding is “ele arly erroneous”*

This Rule was developed by the courts out of long

experience. It is frequently involved in appeals in patent

and other eases-and is a matter’ of continuing and vital

‘importance. i in the’ proper. administration of the federal

. courts. |

‘20

This Court premised its first decision in this case in 1949

upon the application of Rule d2(a):

eal a “Rule 52(a) of the fen Rules.of Civil Proce-

. dure provides in part: ‘Findings of fact shall not be

set aside unless clearly erroneous, and due regard

shall be given to the opportunity of the trial court

to judge of thé credibility of the witnesses.’ To no |

type of case is this last clause more appropriately

applicable than to the one before us... .” (336

U.S. at 2 kh. |

4

Likewise this-Coutt’s 1950 decision is premised on the

application of Rule 52(a):

‘A finding of equivalence is a determination of |

fact.... It is to be decided by the trial court and

. that court’s decision, under general principles: of

appellate review, should not be disturbed: unless

clearly erroneous. . . . 3 ‘

“Tt j is not for this Court to even essay an inde-

pendent evaluation of this evidence. This’ is the

function of the trial coprt. ** (339 U. S. at 609- Nn)

* Of the other decisions of this Cort we will mention

‘only a few. In United States v. Oregon State Medical

Society, 343 U. S. 326, au action for injunctive relief under

the Sherman Act, the District Court made findings against

the government and dismissed the complaint. On a direct

appeal, this. Court affirmed, saying:

‘*As was aptly stated by the New York Court of

Appeals, although in a case of a rather different

substantive nature: ‘Face to face with living wit-

nésses the original trier of the facts holds a position

of advantage from which appellate judges are ~°

excluded. In doubtful cases the exercise of his power

of observation often proves the most accurate method

“21

judge is wrong? We never saw the witnesses... .

To the sophistication atid sagacity of the trial judge

the law confides ie duty of appraisal.’ Boyd v.

Boyd, 252 N. Y. 422, 429, 169 N. E. 632, 634.”’ (348

l S. at 339)

In United States v. Yellow Cab Co., 338 .U. S. 338, this

Court affirmed on the basis of the trial court’s findings. |

This Court said:

‘‘Findings as to the design, motive and intent

with which men act depend peculiarly upon the Credit :

given to witnesses by those who see and hear them. a

* (338 U. S. at 341)

of ‘ascertaining the truth... . How can we say the |

>

i

In Timken Roller Bearing Co. v. United States, 341

U. S. 593, this Court rejected appellant’s contentions that

the ‘findings of the trial-court were witHout support and

affirmed on the basis of those findings, saying:

‘For the most part, this shotgun approach is actu-

ally only a. dispute as to the proper inferences to

be drawn from the evidence in the record; in effect,

it is an invitation for us to try the case de novo.

This Court must decline such an invitation just as

it does when the Government ‘makes the same

request.’’ (341 U. S. at 596-97)

-Of particular interest is this Court’s decision in Com-

missioner v. Duberstein, 363 U. S. 278 (June 13, 1960).

In that case, the taxpayer had received a Cadillac car and

.the Tax Court determined that this was not a gift but.

was intended fo be remuneration for services. The Court

g of Appeals reversed. This- Court reinstated the deter-

mination of the Tax Court, basing its decision on Rule

92(a), and saying:

.

22:

‘Decision of the issue presented in these cases

“must be based ultimately on the ayrplication of the

fact-finding tribunal’s experience with the ‘main-

“springs of human conduet to the totality of the faets

of each case.’’ (363-U. S. at 289)

Me eee

ThisCourt further stated, after citing United Stites v.

United States Gypsum Co., 333 U. S. 364:

I

‘*The rule itself applies: also io factual inferences

from undisputed. basfe facts, :d., at 394, as-will on

4 occasions be presented in this area. Cf. Graver”

Tank €& Mfg. Co. v. Linde Air Products Co., 339.U. 8:

605, 609-10... . .

‘*... We cannot say with thé Court of Appeal:

- that such a conclusion was ‘mere suspicion’ on the Tax

-Court’s part: To us it appears based in the sort of ..

informed experienée with human affairs that fact-

finding tribunals should bring to this task."* (269

U.S. at 291-92)

This Court has applied its Duberstein decision in a viry

recent ease, Dayton Rubber Co. v. Cordovan Assocrites,

Inc., where the Court on October 24, 1960 rendered the fol-

lowing per curiam opinion:

‘*The petition for writ of certiorari is granted.

The judgmenc is vacated and: the case is remanded

for consideration in light of Commissioner of Intir-

nal Revenue v. Duberstein, 363 U. S. 278; 291.°" (29

U.S. L. Week 3122

In our present case, the Court of Appeals secks to treat

the fact that respondent Lincoln was ‘‘a conscious and

wilful infringer’’ as a mixed conclusion of fact and law

rather than a finding. For example, the Court of Appeals

says

23

‘*We hold that the court erred both as a matter

of fact and of law in its conclusion that Lincoln was

a conscious and wilful infringer.’’ (A-103)

The authorities cited above are sufficient, if any are

needed, to demonstrate the obvious point that motive,

intention and the like are a question of fach and not a

question of law and that under Rule 52(a) the function

of fact-finding includes such things as wilfulness and good

faith.

‘The ‘state of a man’s mind is as much a fact as

the state of his digestion. It is true that it is very

*. diffieult to prove what the state of-a man’s mind at

a particular time is, but if.it can be ascertained it is

as much a fact as anything else.“ Bowen, L. J... in

Edgerton vy. Fitzmaurice, 29 Ch. D. 459, 483 41885).

Moreover, the Court of Appeals for the Seeond Circuit, —-

in Orerman Cushion Tire Co. v. Goodyear Tire & Rubber

Co., 66 F. 2d 361.(2d Cir.), cert. denied, 290 U.S. 681. in

upholding the District Court's increase of damages heeause

of **conscious and deliberate” infringement @)p. 362) indi-

cates that the question involved was in the diseretion of the

District Court, and the **fincings*’ were supported. The

issue as to whethet infringement was ‘“eonscious and delib-

efate’’ was thus necessarily held to be an issue of fact.

The conflict between the present case and the Orerman

~ ease should be resolved by this Court.

“Acute awareness” of Rule 52(a).

The Master and the District Court, beyond any ques:

tion, were in a better position than the Court of Aypeals

to determine this central issue of fact. The Court of

Appeals purported to recoguize this, in-the following

.

é

« a .

. oe newen: ae. wd oe sail or 24

ital of the proceedings which\ Jed ap to the judgment >

the District Court:

<) ae . approach the issues argued on these appeals

with knowledge of the careful and extensive con-

sideration which has been dvcorded to the parties

and their respective contentions in the Court below.

The accounting proceeding was “referred to Honor-

able Henry R. Sackett, as Special Master, by order

dated February 10, 1953. The pre-trial hearing and

proceedings extended over a period of three and one-

half years. The hearing before the Master occupied

a full month, September 25 to October 25, 1956.

Twenty witnesses were examined and cross-exam-

ined, and the stenographic transcript of the trial

came to 3,045 pages. Seven hundred and twelve

documentary exhibits were put in evidence.- Motion

’ pictures, welding demonstrations and other forms of

evidence were presented. Records and exhibits from

the previous -hearings were incorporated by refer-

ence. After the trial, both sides submitted printed

briefs to the Master, together with proposed findings

of fact and conclusions of law. Oral argument before

the Master on these proposed findings occupied four

days. The Master, after having the case under

consideration for almost a year, submitted a draft

report to counsel. Numerous objections were inter-

posed to the Master’s proposed findings and.conclu- °

sions.

*‘Union Carbide in the main acquiesced in the

proposed findings but interposed objections to cer-

tain of the Master’s conclusions. On the other hand,

Graver objected to many of the proposed findings,

as well’as to some of the conclusions. After a

hearing on the objections to the proposed report,

the Master made a number of changes in his proposed

findings and conclusions of law. On June 4, 1958, the

report was signed in printed form and filed with the

* District Court. Objections to the report were argued

9p

25

before Judge Swygert for two days, at the conclusion

of which the Court adopted the Master’s findings-of

‘fact but modified his conclusions of law in ey

respects. Union Carbide in its brief states, ‘It i

not. likely that any other matter has had more

thoughtful and thorough study and attention than the

Master’s findings inthis record.’ With this state-

ment we agree. In addition to the Master’s outstand-

ing work, we are not unmindful of the fact that

Judge Swygert, who heard and. passed upon objec-

tions to the Master’s report, has been with this case

from its inception in 1945, and has demonstrated a

clear understanding of the many difficult and com-

plicated issues which have arisen during the course

of the litigation.” (A- 60—A-61).

Disregard of letter and spirit of Rule 52(a).

Although recognizing the years of work devoted to this

accounting proceeding by the Master and by Jadge Swygert, |

and professing ‘‘an acute awareness of the force and effect

. imposed upon the reviewing court by Rule 52(a)’’ (A-61),

the Court of AppealSnevertheless treats their handiwork

as a ‘‘conclusion’’, finds it wrong as a matter of law as well

as fact, and thus never faces the necessity of describing their

handiwork as ‘‘clearly erroneous:’. Yet this case presents

the very model of a finding which rune be binding on an

: appellate court. The Court of Appeals has reached its

decision on the basis of a half day of oral argument and

.a study of the printed Joint Appendix and printed briefs.

The Court of Appeals .did not see the witnesses—nor the

motion pictures—nor the welding demonstrations—nor the

physical exhibits and the great bulk of the documentary

exhibits. Most important of all, the Court of Appeals did

not see the laboratory records Lincoln at long last was com-

pelled to produce.

26.

The Court of Appeals apparently did not even review

the evidence available to it in the printed Joint Appendix.

The Court was apparently misled into believing that *the

evidentiary facts in this case are undisputed”’ (A-62). That

statement is contrary to the truth, as should be apparent

from the fact that 20 witnesses were examined. and cross- -

examined and 712 documentary exhibits put in evidence,

together with motion pictures, welding demonstrations and

other forms of. evidence, “and also from the controversial

proceedings leading up to the Master’s final report: and thg

adoption of the findings by the District Court.

There is another point on which the Cour% of Appeals

was ‘wisled. The Court states more than once that the.

Master refused a request to-hold that Lincoln was a con-

scious and wilful infringer (.A-62, A-64, A-93). Here again

the Court of Appeals is inerror. Petitioner never requested

the Master te hold Lincoln to be @ conscious and wilful

infringer—in fact the petitioner never nequested any

change in the findings set forth in the Masteys draft report

or final report. Respondents on the other hand requested

many changes in the findings and whatever requests the

Master refused were made by respondents and not by

petitioner.

‘Disagreement between District Court and ‘Court of

Appeals as to relative weight to be given to counsel’s

opinion and other circumstances. ~ |

Judge Swygert, with his knowledge-of the evidentiary

record and Lincoln’s conduct. in these proceedings over the

past 15 vears, determined that Lincoln was ‘‘a conscious -

and wilful infringer’? (A-52). Judge Swrgert. attached

_impertance to all the cireumstances of the infringement.

including ‘‘copying’’. Under Rule 52(a) it was his preroga-

tive to determine the —— to be: ‘given the various ev viden-

tiary facts.

The Court of Appeals Ps parted from the Rule in holding

that the existguce of ‘‘copying’’ weuld make .no difference,

and that the crucial factor was an opinron Jetter of J. FP.

Oberlin, Esq. Lincoln’s patent lawyer, obtained several

weeks after production 4nd commercial use of the infringing

660 flux. a

In so holding the Court not only took upon itself the.

8

District Court’s function of determining the relative weight

of the opinion and other evidence, but it also failed to fully

appreciate the circumstance ‘$s surrounding the giving of the

opinion. .

There is. some ‘indication: that the Court of Appeals

believed that counsel for Lincoln by his study of the prior

art was able to tell Liticoln’s engineers how to make the 660

flux. That, howev er, overlooks the fact. that Mr. Oberlin

had no contact with the work of -Lincoln’s engineers for

more than a year prior to the start dP infringement (THI

App. 1004; Ex. App. 337-38). He was called back to give

his opinion, more than three months after the start of

ere and Several weeks after Lincoln started the

“vigorous campaign’’ fo interfere with petitioner’ s licens-

ing program (Ex. App. 338). |

Mr. Oberlin sat with the defense at the trial before the

Master and was called asa witness by respondents. Tlis-

direct examination was extremely brief, merely covering |

his qualifications as a patent attorney and the fact that he

signed the opinion letter dated Deeembe- 8, 1942. The

facts as to his contact with Mr. J. F. Lincoln and his engi-

neers had to be brought out by cross-examination on the ~

basis of his correspondence with Mr. Lincoln, as Mr. Ober-

lin had very little recollection of the facts. Respondents

28,

strongly resisted the disclosure of this correspondence and |

did not produce it until the Master ordered its production

when the trial was half over. —

The District’ Court presumedly gave weight to these and

other circumstances including the fact that Mr. J. F. Lincoln,

who was at all times in active control, failed to take the stand

and testify as to the matters involved in this case including

his own good faith and his reliance upon the opinion letter. |

The Master found that Lincoln did not furnish Mr. Oberlin

with the information he should have been given and that ,

‘Lincoln did not wholly rely in good fzith upon the advice

‘of counsel and/ took a chance on lack of infringement being

established”’ (Finding No. 36, A-19). The District Court

agreed (A-48 ).

Without taking these matters. into consideration, the

Court of Appeals by its ‘‘ process of reasoning”’ reaches the

conclusion that: ‘*Lincoln was making a good faith effort

to avoid infringement” (A-68).

On sucha basis, the Court of Appeals, by its ‘process of

reasoning,’’ reaches this conclusion :

‘It is, therefore, our conclusion and we so hold |

that there is no substantial support for the finding, if -

such it be characterized, that- Lincoln: copied its

infringing flux from the teachings of the patent; and,

in any event, there is no basis for a conclusion that:

Lincolu in the manufacture and use of its 660 flux

was a conscious and wilful infringer.’’ (A-74)

This, we submit, is such a serious departure from the

accepted course of judicial proceedings and has such import- .

ant consequences: for all patent litigation as to call for the

exercise of this Court’s aia of supervision.

. 2°

CONCLUSION.

For the foregoing reasons it is respectfully submitted

that this petition for a writ of certiorari should be grenton.

Respectfully niall.

Joun T. CaHILL,

James A. Fow er, Jr,

’ 80 Pine Street, ~

New York 5, N.Y.

Ricrarp ‘Russet, Wotrs, 3

1 North LaSalle Street,

Chicago 2, Illinois.

Attorneys for Petitioner. |

Gzorce N. BEAMER,

C. Frepericx Leyoic, Jr.,

-Wiiuua A. JANSEN, ;

Of Counsel.

Dated: December 7, 1960