91 F. Supp. 159 | D. Mass. | 1950
Hoague-Sprague Corporation, doing business at Lynn, Massachusetts, and Bird & Son, Inc., doing business at Walpole, Massachusetts, are competitors in the shoe box-blank industry. Both supply shoe manufacturers or .shoe box manufacturers with flat box-blanks which are then formed into a completed shoe box. This latter operation is usually effected by means of box-forming machines which either automatically or. semi-automatically bend, glue, form and fold the boxes, or perform certain of those functions.
Hoague-Sprague Corporation alleges that it' is the owner of Letters Patent of the United States No. 2,186,977, originally granted on January 16, 1940, on the application of one Cutler D. Knowlton and assigned by him to Hoague-Sprague Corporation. This “Knowlton patent” embraces certain improvements in box-making.
It appears that it was the practice of both Hoague-Sprague Corporation and Bird &'Son, Inc., to lease box-making machines to shoe or shoe box manufacturers. The manufacturers would then purchase box-blanks to be formed upon these leased box-making machines. It is evident that the real profit for both corporations from these transactions was derived from the sale of blanks and not from the leases themselves. Competition in the vending of blanks was, therefore, keen.
On September 26, 1947, Hoague-Sprague Corporation (hereinafter sometimes called plaintiff) filed a complaint alleging that Bird &; Son, Inc. (hereinafter sometimes called defendant) was infringing certain claims
On April 13, 1948, defendant was allowed to amend its answer to allege that plaintiff was unjustifiably and illegally attempting to use the “Knowlton patent” to control commerce in materials not covered by the patent, viz., box-blanks, and that such practices were contrary to public policy, constituting a misuse of the patent which rendered the patent unenforceable.
Plaintiff made the next move by amending its complaint on December 27, 1948, to charge the defendant with violation of the Clayton Act, 15 U.S.C.A. § 14. Plaintiff was required to file a more definite statement under Rule 12(e) of the Federal Rules of Civil Procedure, 28 U.S.C.A. The substance of the amendment to the complaint is an assertion that defendant, by means of a clause in its leasing agreements, prevented competitors from selling box-blanks to be used on defendant’s machines. Defendant proceeded to take depositions of Charles F. Sprague, plaintiff’s vice-president, and J. Morton Hoague, plaintiff’s sales manager. A number of exhibits were introduced in evidence during the taking of the depositions and furnished by plaintiff’s counsel at the request of defendant’s counsel. Interrogatories were propounded by defendant and answered by plaintiff.
On the basis of answers to these interrogatories, admissions and the depositions, defendant moved for summary judgment. On the same day plaintiff’s interrogatories were served. Two days later defendant filed a motion to suspend action on plaintiff’s interrogatories. This motion was heard by me and granted; the motion for summary judgment was set for an immediate hearing and argued at some length. Plaintiff was then given an opportunity to secure affidavits and subsequently did file twelve affidavits in support of its position in opposition to the motion.
The motion for summary judgment is aimed at both the original complaint of patent infringement and the subsequent assertion of violation of the Clayton Act. The gist of defendant’s argument in favor of its motion is that there is no genuine issue as to any material fact; that plaintiff is precluded from maintaining the patent infringement suit because its leases and its practices thereunder are illegal and constitute a misuse of the patent; that the Clayton Act charge is unfounded and barred by laches, unclean hands and the statute of limitations.
Plaintiff does not dispute the established legal proposition that a misuse of the patent in suit by the patentee may, and should, bar the latter from relief in a court of equity. Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 37 S.Ct. 416, 61 L.Ed. 871, L.R.A.1917E, 1187, Ann.Cas.l918A, 959; Carbice Corp. of America v. American Patents Development Corp., 283 U.S. 27, 51 S.Ct. 334, 75 L.Ed. 819; Leitch Mfg. Co. v. Barber Co., 302 U.S. 458, 58 S.Ct. 288, 82 L.Ed. 371; Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 64 S.Ct. 268, 88 L. Ed. 376. It contends, however, that there is a genuine issue of material fact as to the nature of its business practices, asserting that its “quota policies” are not illegal and, furthermore, that any portions of its leases which could be found to be objectionable were discontinued as of June 1, 1949. It also claims that there is a genuine factual issue involved on the question of the laches and limitations.
Summary judgment should not be allowed if there is a genuine issue of material fact proper for trial. Peckham v. Ronrico Corp., 1 Cir., 171 F.2d 653. The duty of the court is to determine, not what the facts are, but whether such an issue of fact exists, United States v. Curtiss Aeroplane Co., 2 Cir., 147 F.2d 639; American Optical Co. v. New Jersey Optical Co., D.C.Mass., 58 F.Supp. 601, and all doubts as to the existence of such an issue must be resolved against the party moving for a summary judgment. Toebelman v. Missouri-Kansas Pipe Line Co., 3 Cir., 130 F.2d 1016, 1018.
In the case at bar, after careful deliberation I have determined that there are such triable issues of fact involved. I con-
A more difficult problem is presented in regard to plaintiff’s leases. The Hoague-Sprague leases involved in this action contain a paragraph No. 7 which reads as follows: “The lessee shall pay Hoague-Sprague for the use of said machine at the rate of one dollar ($1.00) for each and every one thousand (1,000) pieces or parts of blanks for shoe boxes operated upon by said machine, provided, however, that in respect to pieces or parts of blanks for shoe boxes purchased by the Lessee from Hoague-Sprague at prices from time to time established by Hoague-Sprague therefor, which prices shall include payment for the use of said machine, the Lessee shall not be required to pay for operating upon said pieces or parts of blanks by the use of said machine under the terms of this agreement.” (Emphasis supplied.) Defendant insists that this paragraph constitutes a “tying clause” embodying the type of “leverage” condemned in Leitch Mfg. Co. v. Barber Co., supra, see Judge Magruder’s concurring opinion in B. B. Chemical Co. v. Ellis, 1 Cir., 117 F.2d 829, 836, affirmed 314 U.S. 495, 62 S.Ct. 406, 86 L.Ed. 367, and that as a matter of law plaintiff is guilty of a misuse of its patent and, as respects the Clayton Act complaint, is in court with unclean hands. From which it asserts that plaintiff should have no standing to seek relief from patent infringement or to prosecute an anti-trust action.
There is much force to defendant’s argument
As regards the Clayton Act and the defense of unclean hands: notwithstanding the language of the final sentence
Plaintiff, however, has alleged that since June 1, 1949, its leases no longer call for a royalty as in the quoted paragraph
Moreover, viewing the instant action in its broader aspects, it would seem that the case is one which is better decided after a full hearing on all the issues involved. See Paul E. Hawkinson Co. v. Dennis, 5 Cir., 166 F.2d 61, 63; Westinghouse Electric Corp. v. Bulldog Electric Products Co., supra.
For these reasons defendant’s motion for summary judgment must be denied.
Since the defendant agrees that the word “Licensor” in line eleven (11) of the last paragraph of the first page of the license entered into by Hoague-Sprague and Bird & Son on June 3, 1942, was evidently a typographical error and that said word “Licensor” should be changed to “Licensee”, an appropriate order reforming, correcting and conforming the said license to the true intent of the parties may be submitted to the Court by plaintiff for signature.
. Through a mistake of both parties or by a typographical error .the word “Licensor” was used in place of the word “Licensee” in line 11 of the last para- • . graph on page 1 of the agreement. The defendant has agreed that the
. Defendant points out that the amount of the “payment for the use of said machine” (para. No. 7, Hoague-Sprague lease quoted supra) is not stated in the lease nor is it separately billed to the customer (Hoague, It. 114, Qs. 57-59); the same price for blanks is charged to those customers who do not have Hoague-Sprague machines (Hoague, R. 118, Q. . 91).
. “It- is understood and agreed, however, that, the Licensee shall-not be required and undertakes no obligation to purchase any pieces or parts of blanks operated upon by said machines from said Hoague-Sprague