Reference no: EM131543886
After reading the facts of each case, determine whether the Court should permit an exception to the American Rule for attorney fees or not. (Yes or No, Explain why.):
- The Computing Scale Company and the Toledo Scale Company were competitors in business. The former had acquired the Smith patent by the purchase of the assets of the Boston Computing Scale Company, and before 1906 was manufacturing scales using the Smith cylindrical drum in the competition with scales of the Toledo Company having a fan-shaped registering dial. There had been patent suits between them concerning other parts of the weighing mechanism than the indicator. Each had other patents in this field. In 1906, the Toledo Company did not give up its fan-shaped scales, but began the manufacture of scales with an indicator drum of skeleton aluminum frame and paper periphery, and so increased its sales of them, so that they ultimately constituted the larger part of its business. T is led to two suits by the Computing Scale Company in 1907 against the Toledo Company in the District Court for the Northern District of Ohio. Nothing was done with them until the suit at bar was brought in the District Court for Northern Illinois in 1910. Then, as a condition of getting extension of time to take evidence herein, the Computing Scale Company was required by court to dismiss the Ohio suits. In its answer to the bill in this case, filed in August, 1910, the Toledo Company alleged that the Smith patent and the claims 5 and 6 had been anticipated by a patent granted to one Phinney in 1870 and further averred anticipation 'by reason of prior public use and sale by various persons at various places among others at Pawtucket by William H. Phinney, then and now, as defendant is informed and believed residing at said Pawtucket.'
On the trial, the Toledo Company's expert testified that he had built a Phinney scale following the patent to Phinney, but that he could not get it to stop twice within an ounce of the same weight, and that a scale which would not weigh within a very small fraction of an ounce was not an instrument of precision and not a commercial article at all. It should be said the specifications of the Phinney patent made no reference to the material of which the cylinder of the scale was to be made of its weight, or the importance of those features. The District Court held that the fourth and fifth claims of the Smith patent were valid, and this was affirmed by the Circuit Court of Appeals, April 15, 1913 (208 Fed. 410, 413, 125 C. C. A. 662), holding that Smith had put in the hands of the world's vendors of commodities the first usable computing scale; the long before the 'paper' art, including a patent to Phinney in 1870, had proposed to teach practical scale makers how to build automatic computing scales, but all attempts to make them were failures, that in the 25 years between Phinney and Smith the brightest and most skillful men had sought the necessarily tremendous commercial success of a reliable computing scale, but had not found it until Smith had the happy conception that the lightest possible drum would secure the required accuracy of revolution and stopping.
On May 14, 1913, the Toledo Company made a motion in the Circuit Court of Appeals that the court include in its mandate, affirming the decree of the District Court for an accounting leave to rehear the cause and to permit the Toledo Company to introduce proof that computing scales had been and sold and introduced into use by the patentee Phinney of Pawtucket, R.I., which had a cylinder drum of light wood skeleton covered with thin paper and anticipated the drum of Smith. Three Phinney scales and 13 supporting affidavits were introduced. These included one of the son of Phinney, the patentee, who had been with his father during his manufacture and sale of the scaled until his death and who still lived at Pawtucket, of Phinney's widow, and also those of residents of Pawtucket who said they had bought and used the scales. The affidavits also disclosed that in a suit against the Federal Company for infringement of the Smith patent brought by the Computing Scale Company in Philadelphia, which never came to trial, all this evidence had been taken and was on file. The three Phinney scales which were exhibits there had been in the custody of Church & Church who had been counsel for the Computing Scale Company in Philadelphia. It was also shown that the Computing Scale Company had three or four of these scales and drums in their possession at Dayton. It also appeared from young Phinney's affidavit that the Boston Computing Company, which owned the Smith patent and which subsequently was bought out by the complainant Computing Scale Company, was trying to buy the scales which Phinney had. The evidence tended to show that only 20 scales had been made by Phinney, and that no scales were made after 1895. The president of the Toledo Company in his affidavit excused failure earlier to discover this evidence by saying that the company made every effort to learn of prior use. His counsel explained that he had been led away from investigation into manufacture of Phinney scales at Pawtucket, which was not visited by agents of the Toledo Company till after June, 1912, by the fact that the model of the Phinney patent at the Patent Office was only a small one of solid wood and not of light material, and that he only acquired knowledge of Phinney's manufacture and use of scales with indicator drums by accident after June, 1912, from counsel for defendant in a suit brought by the Computing Company against the Standard Company in 1911. There was no direct charge in these 1913 affidavits that the Computing Scale Company was purchasing and gathering in these Phinney scales to conceal them , but there were averments in the affidavits which were only relevant to sustain such a charge and were evidently inserted for that purpose. The 1913 motion for a rehearing was overruled by the Circuit Court of Appeals.
The case went back for an accounting, and in 1917 the Toledo Company took depositions of the witnesses who affidavits had been filed in 1913, and sought to use the evidence to reduce the damages by showing what kind of a scale might have been constructed by the Toledo Company without infringing the Smith patent, but the evidence was not given weight for that purpose. The expert of the Toledo Company in these depositions said he did not test the Phinney scales of wood and paper cylinders when they were in the custody of the Toledo Company, because he did not think they would weigh properly. The District Court confirmed the master's report of the accounting and made a decree accordingly for $420,000. This was carried on appeal to the Circuit Court of Appeals, which affirmed it in October, 1921. 279 Fed. 648.
The Toledo Company at the same time again made a motion for leave to open up the case that it might introduce the evidence contained in the affidavits presented in May, 1913, and the depositions taken in 1917, and retry the issue of validity of the patent and show its invalidity by reason of the Phinney prior manufacture, sale and use. In brief of counsel urging the granting of this motion for the Toledo Company, it was said:
'To refuse to consider the evidence in the present record respecting the Phinney scale, as affecting the validity of the patent in suit, would be to permit the plaintiff to take advantage of essential facts known to it and unknown to the defendant or the court and its consequent imposition on both.'
In the subsequently filed petition for certiorari to this court, counsel for the Toledo Company, in discussing this same issue, said:
'The affidavits further showed that plaintiff had full knowledge of the Phinney scales for more than 10 years, that evidence and numerous samples of them had been introduced in a suit which plaintiff had brought at Philadelphia 10 years earlier upon the reissued patent here in suit, that the prosecution of said suit had been abandoned because of such evidence, and that plaintiff had suppressed and concealed such fact from the court and defendant throughout the litigation in the present cause.'
2) Fleischmann Distilling Corporation, here called Fleischmann, filed in the court below its complaint for trademark infringement and unfair competition against Maier Brewing Company, here called Maier, and Ralphs Grocery Company, here called Ralphs, seeking an injunction restraining the defendants from using the name "Black & White" upon beer manufactured by Maier and sold by Ralphs. It asserted that such use of that name was an infringement of a trademark "Black & White" used on Scotch whisky manufactured abroad by James Buchanan & Company, here called Buchanan, and imported and sold by Fleischmann in the United States.
Jurisdiction in the court below was invoked by reason of the diversity of citizenship of the parties with the requisite amount in controversy, and also on the ground that it "arises under Acts of Congress relating to trademarks, [citing the Acts of February 20, 1905. And of July 5, 1946, hereafter referred to], and also asserts a related claim of unfair competition." Subsequently Buchanan filed a complaint in intervention against the same defendants adopting and incorporating therein Fleischmann's complaint and joining with Fleischmann in the prayer for relief.
Fleischmann and Buchanan, together will be referred to herein as plaintiffs. After trial to the Judge, sitting without a jury, the court below entered its finding of fact and conclusions of law and a judgment finding generally for the de4fendants and against the plaintiffs dismissing the action and awarding the defendants their costs. This appeal followed.
As the trial Judge noted in his opinion, the record presents no basic dispute as to the facts, Buchanan and its predecessor have blended and sold Scotch whisky under the name "Black & White" since before the turn of the century, and have marketed the product in the United State under that name for more than 50 years. Buchanan registered the name as its trademark for Scotch whisky in the United State Patent Office in 1908 and in California in 1911. The federal registration was renewed under the Act of 1946 in 1948. Fleischmann has been the sole importer of Black & White whisky in the United States since 1948.
With respect to this Scotch whisky the trial court found as follows: "8. 'Black & White' Scotch whisky is a widely known Scotch whisky. It is the leader among Scotch whiskies. Its sales have exceeded one hundred million bottles during the tenure of Fleischmann and more than five hundred thousand cases have been sold in the six year period between 1951 and 1957, in California, more than half of which were sold in Los Angeles County were Ralphs does business. In the alcoholic beverage industry the name 'Black & White' has come to mean Scotch whisky." During the six year period mentioned, the plaintiffs expended more than five millions dollars in advertising their Black & White Scotch whisky.
Maier is a brewing company in Los Angeles, and Ralphs owns and operates a chain of grocery stores in that area. Maier brews a low price beer which it sells under a variety of different labels. In the summer of 1956, Ralphs was seeking to obtain an inexpensive beet for sale in its chain of stores under a label for Ralphs' exclusive use. The upshot was that Maier sold beer to Ralphs through a wholesaler under the label Black & White. In December, 1957, Maier was notified by attorneys for Buchanan that they considered Maier's use of the Black & White name a trademark infringement and unfair competition. Maier was asked to discontinue using the name. A similar notice was sent to Ralphs the following May. These demands were refused and this suit followed.
3) Petitioner F.D. Rich Co., the prime contractor on a federal housing project in California, had two separate contract for the project with Cerpac Co., one contract being for Cerpac to select, modify, detail, and install all custom millwork and other being for Cerpac to supply all exterior plywood. Cerpac in turn ordered the lumber called for under the plywood contract from respondent. When Rich needed plywood for another project in South Carolina, one of the shipments called for by respondent's contract with Cerpac was diverted to South Carolina. When Cerpac defaulted on its payments to respondent for the plywood, including the South Carolina shipment, respondent gave notice to Rich and its surety of a Miller Act claim and thereafter brought suit in the Federal District Court for the Eastern District of California where the California project was located. Finding that Cerpac was a 'subcontractor' within the meaning of the Miller Act, rather than merely a material man, that hence respondent could asset a Miller Act claim against Rich and that venue for suit on the South Carolina as well as the California shipments property lay, under 40 U.S.C. 270b(b), in the Eastern District of California, the District Court granted judgment for respondent for the amount due on the unpaid invoice, but denied its claim for attorney's fees. The Court of Appeals affirmed in large part but held that attorneys' fees should be awarded respondent.