MEMORANDUM OPINION
Memorandum Opinion Embodying Findings of Fact and Conclusions of Law.
This case came on for trial on October 12, 1965. Following the closing of evidence seven days later, the parties commenced submission of numerous briefs, exhibits, letter and proposed findings of fact. Additional briefs were filed thereafter with respect to the March 3, 1966 ruling of the Seventh Circuit Court of Appeals reversing the issuance of a preliminary injunction herein. We have fully considered the evidence and supplemental papers filed to date, and hereby render the following opinion based thereon:
This is an infringement action arising under U. S. Patent No. 2,657,618 issued November 3, 1953 to one Dr. Walter Eisbein covering a machine constructed to develop photocopies by means of the diffusion-transfer-reversal process (hereinafter, DTR). Claims 1, 5, and 11 of said patent are in suit. Plaintiff herein is the American Photocopy Equipment Company, (APECO), an Illinois corporation, engaged in the manufacture and sale of office photocopying machines and supplies. Defendant Rovico, Inc., is a New Jersey corporation engaged, as a competing concern, in similar activities.
The Eisbein Patent at issue has been litigated extensively, primarily in Copease Mfg. Co. v. APECO, (7th Cir., 1961)
The DTR process involves two basic steps — exposure and development. In essence, a photosensitive emulsion on a
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negative sheet is initially exposed to the original sheet to be copied. Thereafter, the exposed grains of silver halide on the negative are reduced to metallic silver, and the unexposed grains are diffused through the emulsion of the negative and transferred to that of a non-photosensitive positive sheet containing nucleating agents which attract these unexposed grains and catalyze their reduction to metallic silver to form a positive image. (Tr. pp. 257-262; Copease v. APECO, supra,
The Eisbein patent at issue discloses and claims a machine for performing the development stage alone (Tr. pp. 22, 45-46, 56-57). In essence, the machine includes three elements:
a) a casing in which developer liquid is contained at a given level, said casing having an inlet opening above the liquid level for the insertion of sheets to be treated;
b) a pair of rollers contacting one another along a line located above the liquid level which press the emulsions of the two sheets together for transfer of unexposed silver halide particles, remove excess liquid from the sheets, and convey the adhering sheets out of the machine; and
c) guide means for conveying the sheets on curved paths from the inlet opening beneath the level of the liquid, and then upward to the rollers, and separating same until immersion into the liquid, so that the emulsions on the inner faces are wetted fully before pressing by the rollers (Tr. pp. 265-270).
This Court must decide three ultimate questions — whether the Eisbein patent is valid — whether the claims of said patent cover the machines manufactured and sold by defendant, and whether plaintiff through its licensing procedure, has violated the anti-trust laws and thus should be precluded from enforcing the patent in suit. These three areas may be entitled, for the purposes of this opinion, as Validity, Infringement, and Misuse.
I Validity
We are satisfied, initially, that the finding of validity by the Seventh Circuit Court of Appeals in Copease v. APECO, supra, is binding upon this Court in the absence of persuasive new evidence of invalidity, Cold Metal Process Co. v. E. W. Bliss Co. (6th Cir., 1960)
In support of its assertions of invalidity, defendant relies on four items of prior art, the Agfa machine, described in French Patent No. 879,995 (Def. Ex. Y-8) and in a drawing sent by Agfa to four designing companies (Def. Ex. Y-4a); Page 83 of Von Biehler’s Hand-buch der Fotokopie (Def. Ex. W); Edwards U. S. Patent No. 381,226 (Def. Ex. C-l); and Poliak U. S. Patent No. 717,021 (Def. Ex. C-l). These four references have all been previously considered in earlier decisions and found not to invalidate the Eisbein patent.
The Agfa machine, the only reference relating to the DTR Process, was considered by the U. S. Patent Office before it granted the Eisbein patent (Def. Ex. A, p. 32), by the Seventh Circuit Court of Appeals in Copease (298 F.2d at pp. 774, 777, 778), and by the District Court for the Southern District of New York in Anken (242 F.Supp. at pp. 996, 1000-1001), and found to anticipate said patent. We find no justification in the evidence before us to differ.
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The Agfa machine which includes a large rotatable drum and a series of endless belts supported on three or four rollers, unlike the Eisbein invention, was found to be “unfit for commercial use,” due to its large size, large liquid capacity, and frequent need for adjustment. (
Similarly, defendant can get little support from the Von Biehler publication. While this item is the only reference that was not before the Court in
Copease,
it was cited and discussed in the
Anken
opinion (
The Edwards patents, considered by the Seventh Circuit Court of Appeals in
Copease,
and dismissed (
Finally, we reach the Poliak patent which was before both the
Copease
and «
Anken
Courts. As the Court of Appeals for the Seventh Circuit concluded, this patent does not disclose the feeding of two sheets simultaneously through a liquid as specifically recited in the Eis-bein Claims, it being intended for use in development of a single sheet of photographic film or paper. Further, Poliak discloses no means for separating sheets until they have been wet by the liquid as called for in Eisbein’s Claims. (
It is thus clear that there has been no “anticipation” of the claimed invention by any single disclosure made in defendant’s proposed prior art, (Sec. 102, Title 35, U.S.C.). Thus, the patent must be considered valid if, — pursuant to Sec. 103, Title 35, U.S.C., and the decision of the U. S. Supreme Court in Gra
*196
ham et al. v. John Deere Etc. et al.,
As did the
Copease
Court, we have initially looked to the scope of the prior art, and have specified the differences between that development and the claims at issue. The level of ordinary skill in the pertinent art at the time the invention was made, has also been considered by this Court with regard to the 1939 invention of the DTR Process by Agfa and Gavaert (Tr. pp. 253-255;
After consideration of the evidence offered herein, we must conclude both on the basis of the Copease precedent, and our own independent analysis, that the invention at issue could not have been “obvious” within the meaning of Section 103.
Defendant further contends that the patent is invalid because the Claims are “broader than the invention” in that Eisbein disclosed a machine that requires all of the sheets to be kept separate until they reach the rollers, while his claims are broad enough to cover machines in which the separator guide plate is cut so short that it only separates the sheets until they have entered the processing liquid, (Tr. pp. 464-466).
Without reaching the question of whether this same argument was considered by the New Jersey Court in Ampto, supra, a fact never clarified at trial, we must conclude that defendant’s argument cannot stand.
It is our understanding that the “Claims” of a patent application can never be broader than the “invention,” as the latter is in fact defined by the former. That is, broadening of Claims may increase the risk of anticipation by prior art, by expanding the invention, or make a prior use defense more available, but does not of itself cause invalidity. Binks Mfg. Co. v. Ransburg Electro-Coating Corp. (7th Cir., 1960)
We have duly considered defendant’s further arguments, and conclude that the term “slideways” appearing in Claim 5 clearly relates to the paths sided by the guiding means, — that Claim 1 is not so vague and indefinite as to be unpatentable, and that the Eisbein patent Claims were narrowed by amendment during the *197 prosecution of the patent claims and not broadened.
Accordingly, we must hold that the Eisbein patent is good and valid in law.
II Infringement
Defendant herein has made and sold six different models of photocopying machines (PI. Ex. 13), all of which are charged to infringe:
1) The “Fotomate” (Discontinued Model) (PI. Ex. 4, 7);
2) The “Fotomate” 10-inch Deluxe (PI. Ex. 8, 17A, 17B, 17C);
3) The “Fotomate” 15-inch Deluxe;
4) The 12-inch Processor (Discontinued Model) (PI. Ex. 18, 18A, 18B);
5) The 12-inch Processor (Present Model) (PI. Ex. 9); and
6) The 27-inch Processor (PI. Ex. 19, 19 A, 19B).
These six devices can be classified into three categories for purposes of discussion: (a) The three Fotomate models which are complete photocopying machines including both the unpatented exposure machinery and the developing apparatus, and which differ only in the shape of the housing and in width; (b) the current 12 and 27-inch Processors (Items 5 and 6 above) which develop only, and are identical except for width; and (c) the discontinued original 12-inch processor model. The constructions referred to in Items (b) and (c) were directly involved in the New York Anken litigation as the “Anken 27” and “Anken 12” machines respectively (PL Ex. 11) and were found to infringe the Eisbein patent.
There was ample evidence offered at the trial of this cause to demonstrate that each of the three classes of accused machines falls within the language of the Claims at issue, 1, 5, and 11. (See Tr. pp. 298-308; 316-322; 322-324).
Apparently recognizing this, defendant contests the literal application of only three portions of the Claims to its machines, to wit:
“ * * * means extending from such opening (inlet) to a point adjacent the rolls for engaging and guiding the outsides of strips * * * ” (Claim l);
2) “ * * * substantially parallel guiding means * * * (Claim 5); and
3) “ * * * at least two superposed curved slideways * * * leading to the set of rollers.” (Claim 5).
In each of the three accused constructions the lower guide extends all the way from the inlet opening to the rollers (Tr. pp. 308, 375) and in the discontinued 12" Processor (Category “C”), the upper guide extends full length, as well, (Tr. pp. 306-307). In the “b” category, current processors, the upper plate extends downward to the lowest point of immersion, and half the distance from that point up to the rollers, and in the Foto-mate machines (Category “a”), it extends all the way down, and one-fifth of the distance upward.
In
Anken,
the New York District Court held that the language in Claim 1 was satisfied by machines having even shorter guide means than those present in the Rovico constructions (
While we may rest our decision on either theory alternatively, and do so, we lean more to the Anken view, concluding that all three constructions containing lower guide means running the whole route from inlet to rollers, and upper means running 100, 75 and 60 percent respectively, read literally on the language of Claim 1 at issue. That is, in all three machines, guide means of some nature conduct the two sheets the entire distance from the opening to the rollers, which is all that is required. The shortening of the upper guide alone does not *198 produce any significant variation in the paths of the sheets which naturally follow the lower guide curvature anyway, and does not affect the mode of operation of the machine or results obtained, (Tr. pp. 308-313). The full extension of the lower guide means to the rollers, after the upper plates have directed the sheets downward satisfies the language at issues.
We are further satisfied from the evidence and exhibits presented to this Court that the guiding means in each of the accused machines are “substantially parallel” within the meaning of Claim 5. It is apparent that in all three of the categories set forth above, the sheets are inserted simultaneously in the inlet opening and move in generally parallel paths through the solution to the rollers where they are pressed together. The sheets achieve this “parallel” trip by means of the plates which extend in the same general direction and serve as guides. While the guide plates are not perfectly straight, and are not at all times equidistant from each other, it must be remembered that the claims do not call for absolute parallelism, but only for a “substantial” degree thereof. The guide means follow the same general downward curve and maintain a substantially similar spatial distance between each other at all points, keeping both inserted sheets immersed in the liquid, and then guiding them upward to the rollers. We believe that such constructions were intended to fall within Claim 5, as differentiated from those machines in which the two sheets are inserted into opposite sides and move toward rollers located at the center of the machine (Tr. pp. 1090-1091). As the New York and New Jersey Courts which considered this precise question, we find that infringement is present. (See
Finally, it is clear to this Court that each of the accused machines contains at least two superposed curved slideways leading to the set of rollers. While the separator plates do not extend all the way to the rollers, as defendant argues, they do lead, or “direct” the sheets to the rollers. As the Ampto Court concluded at pp. 630-631 (140 U.S.P.Q.), this is all that is demanded by Claim 5, slideways which conduct the photographic sheets to the rollers on the course described in the Claims.
In addition to the literal' reading on the Claims just discussed, we find it abundantly clear that each of the Claims would be infringed under the “doctrine of equivalents” if such literal readability were absent. Indeed, counsel for defendant conceded at trial that the patented apparatus and the accused machines “perform substantially the same function in substantially the same way (to achieve) substantially the same result.” (Tr. pp. 464-465), — the traditionally accepted definition of an equivalent device. See Graver Tank Co. v. Linde Air Products Co.,
We cannot accept defendant’s further argument that the Eisbein Claims can not read on the accused Rovico machines because, as amended, the Claims have to be given the same meaning they had before amendment, under the doctrine of file wrapper estoppel. File estoppel, which prevents a patentee from seeking the benefit of a rejected claim once he has acquiesced to that rejection by amendment, arises only when an amendment has been filed to overcome a rejection based on prior art. Ekco Products Co., Inc. v. Chicago Metallic Mfg. Co., (7th Cir., 1965)
Accordingly, we shall hold that defendant has infringed Claims 1, 5, and 11 of the Eisbein patent by making and selling each of the aforementioned six accused models.
*199 III Misuse
Defendant finally contends that the Eisbein patent in suit is unenforceable because of its unlawful licensing use by the plaintiff in violation of the anti-trust laws of the United States, whereby (a) plaintiff derives its royalties from un-patented machines, and (b) plaintiff charges price-fixing royalties based on retail list prices. That is, defendant asserts that by its licensing policy of charging a 6 per cent royalty on the retail selling price of all machines manufactured by licensees utilizing the Eis-bein patent, APECO has, in effect, illegally charged royalties on the unpat-ented exposure devices contained therein, and further, has unlawfully set the minimum price at which photocopying machines produced thereunder can be sold. In support of the latter allegation, defendant contends that the 6 per cent retail based royalty referred to above, is actually 12 per cent of the manufacturing cost of the whole machine, and 24 per cent of the patented portion thereof (Tr. pp. 65-66).
We will not accept this argument. The evidence adduced at trial clearly demonstrates that APECO acquired the Eisbein patent after it was adjudged an infringer thereof in the Copease litigation, and continued the licensing policy entered into by its predecessor, — a uniform charge of 6 per cent of the retail sales of machines embodying the patented invention. It is further apparent that APECO paid $5,450,000 to purchase the patent, which figure, less $924,000 it has received in royalties and damages from infringers, totals $4,526,000, or 12Yz per cent of its total DTR sales in the United States. Under defendant’s reasoning, plaintiff has thus paid 50 per cent of its manufacturing cost of the patented device to Copease for the right to manufacture and sell machines which embody the Eisbein patent (Post Trial Stip., Par. 1, Exs. A & B). In addition, it is clear that the royalties charged licensees are payable on the sales of machines alone, and not on paper and chemical supplies which flow from the machine sales. These sales gross two to three times more income for licensees than is produced by the machines alone (Tr. pp. 1243-1244). Further, the evidence clearly demonstrates that APECO has charged a uniform royalty to all licensees so as not to grant to any recipient, any competitive advantage (Tr. p. 1225), that prices of DTR machines have declined since 1962 when APECO acquired the Eisbein patent (Tr. pp. 1245-46, 1218), and that DTR process machines account for only 10 per cent of the photocopying machine market, of which plaintiff’s sales amount to 15 per cent, or iy2 per cent of the total, (Tr. pp. 1249, 1247; Post Trial Stip. Ex. A).
From these facts, we must conclude that APECO has not misused its patent by engaging in licensing practices which run afoul of the anti-trust laws, as charged by defendant.
We cannot assume that there exist restrictions against “unreasonably high royalties,” absent any proof of favoritism or conspiracy to fix prices, neither of which has been inferred, much less proven herein. Where a patentee is certainly free not to license at all, we fail to see how competition is restrained by charging high royalties. Indeed, such licensing, if not beyond the scope of the patent grant, should be encouraged under anti-trust principles, as an alternative to monopoly, which would otherwise be present. The free competitive market place has built-in controls such as supply and demands to limit the royalties charged by a prospective licensor. There is no indication that further controls are justified. Indeed, the case law is uncontroverted to the effect that it is not a violation of the anti-trust laws for a patentee to grant a license under his patent
for any royalty
or upon any condition the performance of which is reasonably within the reward which the patentee by the grant of the patent is entitled to secure. This, of course, is not to say that the patentee is free to expand his statutory monopoly, as where royalties are to be paid after the patent has expired. United States v. General Elec-
*200
trie Co.,
Even assuming however, that a royalty may be unlawful because of its magnitude, and we do not adopt that position, we cannot consider the 6-12-24 per cent royalty charged herein to be oppressive. See Malleable Iron Range Co. v. Lee, (7th Cir., 1920)
We must, therefore, conclude that there is no evidence whatsoever in the trial record to prove that the royalties charged by plaintiff have tended to unlawfully fix prices, extend a monopoly, or restrain competition.
Similarly, we can find no ra- • tionale to support defendant’s argument relating to “tying.” While APECO’s royalties are charged as a percentage of the retail selling price of the whole photocopying machine, developing and exposure devices alike, it would seem illogical to this Court to conclude that APECO thus expanded its patent monopoly to include a non-patented device. By defendant’s own reasoning, with regard to“the alleged exorbitant royalty rate, licensees are paying 24 per cent of the manufacturing cost of the patented device alone. This is what was bargained for in dollars and cents, and this is what was received, a royalty payable on the patented device alone, but computed on the price of the whole machine. Whether the royalty is stated as 6 per cent of the retail price of the entire machine, including the non-patented device, or 12 per cent of the retail price of the Eisbein apparatus alone is not essential, for the result is precisely the same * * * a specified charge for the right to manufacture under the patent at issue. The means of computing same should be of no import. As the U. S. District Court for the Northern District of Ohio stated in Ohio Citizens Trust Co. v. Air-Way Elec. Appliance Corp., (D.C.Ohio, 1944)
“No case has been cited, and we have been able to find none, holding that the amount of royalty to be paid under a license agreement may not be measured by a rate or percentage calculated upon the sales of completed devices, parts and accessories, contemplated to be manufactured under the patents involved, irrespective of whether such sales include items which do not come within the claims of the licensed patents.”
See also: American Optical Co. v. N. J. Optical Co., (D.C.Mass., 1944)
“ * * * royalties are payable on total production of radio and television receivers, regardless of the extent to which the licensee uses any Hazeltine patent.” (227 F.2d at p. 147 )
Accord: Automatic Radio Co. v. Hazeltine,
“There are two provisions of Hazel-tine’s license agreements principally relied upon * * * (1) the exaction of royalty on entirely unpatented products made by plaintiff’s licensees * * *
“It is our conclusion that the misuse charge made by Admiral must be rejected.”
Defendant finally argues that under the March 3, 1966 ruling of the Seventh Circuit Court of Appeals, reversing the issuance of a preliminary injunction herein, that plaintiff may not enforce the patent at issue. We do not agree. That decision, as we read it, was limited to the state of the record as it stood on June 11, 1965, including Rovico’s allegations of price fixing, Robert Vinci’s affidavit in support thereof, and plaintiff’s incomplete denial, the opinion being based on “defendant’s undisputed, showing of an exorbitant, oppressive royalty, involving the bulk of the industry, with a corresponding raise of the manufacturer’s and retailer’s selling prices of the licensed machines.”
That “showing” is no longer undisputed. This Court is satisfied from the evidence introduced at trial that the royalty at issue is neither exorbitant nor oppressive, that the bulk of the office photocopying industry is not involved, and that the selling prices of the licensed machines have indeed declined. The evidence clearly demonstrates that there has been no price-fixing herein with the exception of that necessarily incident to any royalty charge; that no illegal “tying” is present, and that no restraint on competition has resulted from APECO’s licensing policies.
The Court of Appeals instructed this Court to proceed to trial of this ease on the merits. We have done so, and have concluded on the evidence, that plaintiff is not guilty of patent misuse as charged.
All additional arguments made by defendant, and not discussed herein, have been duly considered and denied.
Accordingly, it is the judgment of this Court that plaintiff, pursuant to Sections 283, 284, Title 35, U.S.C., is entitled to
(1) a permanent injunction restraining defendant from making, using and/or selling any of the accused machines;
(2) damages adequate to compensate for defendant’s past infringement, and (3) taxable costs.
Upon detailed consideration of the evidence adduced, briefed arguments, and surrounding circumstances, we further hold that defendant should not be held in contempt of court for the alleged sale of infringing photocopying machines after entry of the June 14, 1965 preliminary injunction by this Court, and that no award of treble damages and attorneys’ fees pursuant to Section 285, Title 35, U.S.C. shall be entered.