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Etten v. Lovell Mfg. Co.

decided: September 29, 1950; As Amended October 17, 1950.


Author: Biggs

Before BIGGS, Chief Judge, and MARIS and KALODNER, Circuit Judges.

BIGGS, Chief Judge.

On October 22, 1943 Etten sued Lovell Manufacturing Company (Lovell) and Kauffman. A patent, No. 2,054,970 for a "Safety Release Mechanism" for power driven roll wringers of washing machines, had issued to Etten on September 22, 1936, on an application, S.N. 648,620, filed by him on December 23, 1932. Thereafter, on October 7, 1937, Etten filed an application, S.N. 167,775, for the reissue of the patent. Previous thereto, on September 3, 1935, Etten had filed an application, S.N. 38,932, for a "Wringer Release Mechanism" for power driven roll wringers of washing machines. On October 25, 1934 Jantz filed an application, S.N. 749,977, for a patent for a somewhat what similar device, and assigned the title of the application to Lovell. On February 15, 1938 the Commissioner of Patents declared an interference, No. 75,433, between Etten's application, S.N. 38,932, and the Jantz application, S.N. 749,977.

On April 25, 1939, the Commissioner declared an interference, No. 76,987, between Etten's reissue application, S.N. 167,775, and the Jantz application, S.N. 749,977. After hearing on the interferences, Nos. 75,433 and 76,987, the Examiner of Interferences awarded priority to Jantz and on appeal that decision was affirmed by the Board of Appeals of the Patent Office. No review was sought by Etten of the decisions on these interferences by the United States Court of Customs and Patent Appeals.

The instant suit in the court below was filed pursuant to R.S. § 4915, 35 U.S.C.A. § 63, and Etten sought thereby an adjudication that he was entitled to a patent for the claims in the Jantz application set forth in certain counts in the interferences, Nos. 75,433 and 76,987. It is not necessary to specify the contents of the counts in the interferences in this opinion. In the suit Etten also prayed for a declaratory judgment that he was entitled to the invention claimed in the counts referred to and, alleging a conspiracy between Lovell and Kauffman to defraud the Patent Office by procuring a fictitious early date of conception of invention for Jantz resulting in priority of invention being awarded to Jantz, he sought also to recover damages and the awarding of a counsel fee.*fn1

After October 5, 1939*fn2 two further interferences were declared between Etten and Jantz. One, No. 77,671, involved the Jantz application S.N. 749,977 and Etten's application S.N. 38,932. The other interference, No. 77,672, involved the Jantz application S.N. 749,977 and Patent No. 2,054,970, issued to Etten on his application S.N. 648,620, filed by him on December 23, 1932. It is unnecessary to specify here the contents of the counts in these interferences. Etten lost and appealed to the United States Court of Customs and Patent Appeals which decided the appeals in favor of Jantz on January 3, 1944, on the basis of the record before the Patent Office Board of Interference Examiners. See Etten v. Jantz, 31 C.C.A., Patents, 1177, 142 F.2d 680.

On October 15, 1946, on the basis of allegations that on September 3, 1946 Patent No. 2,406,951 issued to Lovell on Jantz application S.N. 749,977 and that the substance of that patent is in conflict with the disclosures of Etten's Patent No. 2,054,970, Etten moved to amend his complaint and to include in it an action based on R.S. § 4918, 35 U.S.C.A. § 66, to have Patent No. 2,406, 951 declared invalid.

On October 21, 1946 the case at bar came on for trial on that portion of the complaint based on R.S. § 4915 and the answer thereto. Etten was asked on direct examination if he was the person that was seeking a patent in the instant case and he replied that he was. He was then asked, "And you are properly entitled to bring this suit and were the party that testified in the previous [Patent Office] proceedings?" He replied, "I am, sir." He was not further examined as to his right to maintain the suit. Etten concluded the testimony in his case in chief shortly thereafter and the defendants informed the court that the proof in their case would consist "* * * in merely the introduction of exhibits" which were on a designated list. These exhibits included copies of the interference proceedings. We will deal with certain documents included in the interference proceedings and relating to the title of the disclosures of the applications at a later point in this opinion.

On October 21, 1947 the court below allowed the R.S. § 4918 amendment to the complaint and thereafter, on November 20, 1947, the defendants filed a supplemental answer and a counterclaim. The counterclaim asserted, inter alia, that the Etten Patent No. 2,054,970 was invalid over the prior art and that the "Chamberlain Corporation of Waterloo, Iowa, a corporation of Iowa, is the beneficiary of and is actively participating in the infringement and in these suits. Plaintiff * * * Etten is the active executive officer of Chamberlain Corporation." Etten filed a motion to dismiss the counterclaim on the ground that Chamberlain Corporation was an indispensable party and that no proper service had been made on the corporation.

On December 8, 1947 Etten filed an affidavit in support of his motion to dismiss in which he alleged that his activities in connection with the manufacture and sale of the washing machine wringers referred to in the complaint had been carried on by him solely as the managing officer of Chamberlain Corporation and that he did not have a controlling interest in that company and that the corporation was fully solvent and responsible for its own acts. On December 19, 1947 Etten filed another affidavit in which he reiterated the substance of that of December 8 and alleged that on May 16, 1929 he had granted an exclusive license to Floyd L. Chamberlain (president of Chamberlain Corporation) under "any" patents which he owned or controlled, with certain exceptions, in return for a minimum royalty payment of $5,000 a year. He alleged that the royalty agreement was entered into "* * * long before the subject matter here in suit was invented or contrived by either party * * *" as well "as prior to any knowledge * * * [by him, Etten] of the safety release type wringer shown in Jantz Patent No. 2,406,951 * * *." He stated also that insofar as the minimum royalty payment was concerned "* * * it made no difference to him which one of the number of wringers he had invented, the company [Chamberlain Corporation] adopted for commercial purposes, inasmuch as it was agreed that only this minimum, irrespective of the type of his patented devices adopted by the company, would be paid * * *."

On December 30, 1947 the defendants filed a "Notice" in which they referred to Etten's affidavits filed December 8 and December 19, 1947*fn3 and stated that they understood from these that "Etten has no interest in his patent and applications * * *." They went on to assert that if this were true there was no "case or controversy" before the court below and that that court would have no jurisdiction to proceed to a determination of the issues. But the defendants went on to state that "* * * we cannot accept Etten's * * * [December 8] and December * * * [19] affidavits. Etten has made too many sworn statements which cannot be reconciled with these affidavits. Etten has spent too much money for one as disinterested as he now claims." There was a motion to defer decision on both the R.S. §§ 4915 and 4918 actions until Etten's status was "clarified", it being alleged that Etten "* * * has no interest in the subject matter or outcome of this litigation. He has no interest in his patent and applications. He doesn't care whether he wins or loses. The Chamberlain Corporation is the party in interest." The moving papers also assert that Chamberlain Corporation is an indispensable party to the litigation and that its absence as a party deprived the court of "jurisdiction". Counsel for the defendants also filed an affidavit in which he set forth the substance of certain pleadings in a suit brought by Etten and Chamberlain Corporation v. Kauffman and Lovell in the court below, being No. 3 September Term 1937, Erie, which included a copy of the assignment made by Etten to Floyd P. Chamberlain, hereinbefore referred to.

On January 9, 1948 Etten filed an "Opposition" to the defendants' request to defer the decision in the action pending the clarification of Etten's status, pointing out that on December 9, 1947 the defendants' counsel had represented that the "previously tried suits", viz., the suit at bar embracing the actions bottomed on R.S. §§ 4915 and 4918, were "finished business", asserting also that certain compromises in favor of the defendants had been made by Etten because of this representation and that the defendants' request for the clarification of Etten's status as a plaintiff was in violation of an "agreement" made by counsel that the case should be decided without further testimony on behalf of the parties, the agreement being "reached * * * in open court". On December 16, 1947 the court entered an order, approved by the parties, which included the following statement: "It is further understood that both parties hereto have concluded their respective cases as to the original and amended complaint and that no further evidence or testimony will be adduced herein in connection with the causes of action of said original and amended complaints." The only issues remaining for the court's adjudication, seemingly, were those raised by the counterclaim.

Argument was had in the court below upon the issues presented by the complaint, the amended complaint and the answers thereto and the evidence adduced by the parties. The defendants also filed requests for conclusions of law. One of these, No. 27, raised the question of whether or not Chamberlain Corporation, the exclusive licensee, should be a party to the suit.

On February 28, 1949 the court handed down an opinion in which it held that Etten and not Jantz was entitled to the subject matter of the disclosures in controversy and that Jantz' award of priority of invention had been procured from the Patent Office by fraud.See D.C. 83 F.Supp. 178. On April 26, 1949 judgment was entered in conformity with the opinion and the defendants appealed. The court below did not decide the issues presented by the counterclaim, as we have indicated. It did not make the determination required by Rule 54(b), F.R.C.P., 28 U.S.C.A., in respect to its ...

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