10 F.(2d) 851 cuit Court should, upon a motion for a preliminary injunction, sustain the patent and leave the question of its validity to be determined upon the final hearing." The same rule was adhered to in Wayne Co. v. Coffield Co., 209 F. 614, 126 C. C. A. 608. The same rule prevails in other circuits. [2] It is contended, however, that there is an exception to the above rule, where in the later suit new matters are set up in defense. Conceding that such exception exists, yet it must be qualified by the condition that the new matter must be of such character as to lead the court in the later case to believe that, had the new matter been presented in the former suits, the patent would have been held invalid. On the present hearing, most of the matters bearing on the question of validity of the patents, have been the same, in substance, as those which have been considered in prior suits. In the interest of economy of time, such matters will not be here discussed. Turning to the alleged new defenses as outlined in the affidavit of counsel for defendant: One new matter to which attention is called is a decision by the French court, Civil Tribunal of the Seine, under date of June 1, 1923, holding invalid the French patent procured by Langmuir in France, December 20, 1913, No. 466,581, and covering, it is claimed, the same invention that is covered by the United States patent No. 1,180,159. This decision of the French court was based upon prior patents: Sinding-Larsen, Kellner, Letang, and Henry. and Hanaman, patent and was before the court in the Mallory and Save Cases (D. C.) 286 F. 175, 180; The Letang patent was before the court in the Incandescent Products Case (D. C.) 280 F. 856; the Henry patent was before the Circuit Court of Appeals in the Mallory and Save Cases, 298 F. 579yet in all of these cases the Langmuir patent was sustained. Fourth. The conclusion which it is sought to have this court draw from the French court decision, is that the French court is the only court thus far which has actually understood the Langmuir patent, and that all of the other courts which have passed upon it have failed to understand it. Fifth. It further appears from the record, in the case at bar, that the French court decision was before the Court of Appeals of the Second Circuit, in the Mallory and Save Cases, and it must be assumed that the decision received due consideration. [3] In view of the foregoing, I am unable to accord to the French court decision such decisive value, at this time, as defendant claims for it. At most, it can at present serve only to raise a doubt as to the validity of the Langmuir patent. Some of the so-called new defenses are merely renewed and enlarged expositions of patents or other matters already considered by the courts in the prior suits. For example, the setting up of the German patent No. 154,262 to Just and Hanaman, which was considered in the Laco-Philips suit (C. C. A.) 233 F. 96, and in the Alpha suit (D. C.) 277 F. 290, and (C. C. A.) 280 F. 852; and the setting up of the British patent No. In reference to this decision and its effect 20,277 to Siemens and Halske, which was upon the case at bar, it is to be noted: First. That the French Langmuir patent is not before this court, and it cannot be assumed that it is identical with the Langmuir patent here in suit. Second. The Kellner patent, on which the French decision is to some extent based, is not here in evidence before this court. Under these circumstances, this court is not in a position to properly evaluate the French decision. Third. All of the patents, Sinding-Larsen, Kellner, Letang, and Henry, have been before the courts in connection with litigation respecting the Langmuir United States patent. Sinding-Larsen was before the court in the Alpha Case (D. C.) 277 F. 290, and in the Nitro-Tungsten Case (C. C. A.) 266 F. 994; the Kellner patent was considered in the Patent Office interference on the Just considered in the Laco-Philips Case and in the Mallory and Save Cases (C. C. A.) 298 F. 579. Another alleged new defense is that the construction placed upon the Just and Hanaman patent by the plaintiff makes it a patent for mere result. This contention was exploited in the Laco-Philips Case. Another alleged new defense is based upon the Bottome patent, No. 408,286. This patent also was before the court in the LacoPhilips Case. Another alleged new defense is that Just and Hanaman were not entitled to their French and British filing dates for priority purposes in this country, because they were citizens of Austria-Hungary, and that country was not a member of the "Convention" at that time. It appears from the record in this case, however, that this defense was pre sented to the Circuit Court of Appeals on petition for rehearing in the Alpha Case, and again on petition to the Supreme Court for a writ of certiorari in the same case. Another alleged new defense is based upon evidence, said to be presented for the first time, "that the coiling of filaments in vacuum tungsten lamps was begun immediately upon the advent of drawn tungsten wire, and long before the filing of the Langmuir patent." This matter, however, was exploited in the Nitro-Tungsten Case. [4] It is thus seen that all of these so-called new defenses are in reality old defenses, and, while some of them set up new matter along with old, yet I am not persuaded that, had such new matter been presented to the courts in the prior suits, the decisions would have been different. Though these alleged new defenses, as well as the other defenses, concededly old, are all entitled to full consideration upon the final hearing, yet that fact does not prevent the application of the abovequoted rule in regard to the issuance of preliminary injunctions in this class of suits. Infringement. The evidence shows sales by the defendant of Save lamps which were held to be infringements in the Save suit. The Melco lamps, No. 1129 and No. 81, which defendant makes and sells, are, according to the affidavit of Langmuir, "identical in structure, theory, and mode of operation with the lamps of the patents in suit." Defendant seeks to differentiate its lamps, because of their short life. It is a matter of choice with defendant whether to have short life and high efficiency, or longer life and lower efficiency of its lamps. This is clearly shown by Langmuir in his affidavit. A change in the voltage used, or change in the length of the filaments used are not such differences as go to the principles and theory of the inventions of the patents in suit. Nor are they such differences as will avoid infringe ment. [5] The use of the thoriated drawn tungsten wire as an avoidance of infringement was considered in the Alpha suit and in the Mallory and Save suits. It was held that the use of thoria was for purely mechanical reasons. The evidence on the present hearing appears to support such holding. The rule laid down in Lourie Implement Co. v. Lenhart, 130 F. 122, 129, 64 C. C. A. 456, 463, is applicable: "One may not escape infringement by adding to or subtracting from a patented de vice, by changing its form, or by making it more or less efficient, while he retains its principle and mode of operation, and attains its result by the use of the same or of equivalent mechanical means. Walker on Patents, §§ 347, 348; Sewall v. Jones, 91 U. S. 171, 183, 23 L. Ed. 275; Coupe v. Weatherhead (C. C.), 16 F. 673, 675.” [6] Without discussing the matter in further detail, it is sufficient to say that on the present record infringement is in my judg ment clearly established, of the claims of the Just and Hanaman patent and of claims 4, 5, 12 and 13 of the Langmuir patent. The defense that the plaintiff has condoned what it now claims to be an infringement, by the sale of lamp bases to the defendant, was considered and disposed of adversely in the Continental Lamp Works Case (C. C. A.) 280 F. 846. The motion for preliminary injunction is granted. The form of the order, if not agreed upon by the parties, may be settled on five days' notice. Motion To Strike Parts of Defendant's At the hearing on the motion for preliminary injunction a motion was also made by plaintiff to strike out divisions III, V, VI, and VIII of defendant's answer. The ground alleged for the motion is that the facts set forth in said divisions, respectively, do not constitute a defense to the complaint, and that the facts set forth in division VIII do not constitute a counterclaim cognizable in equity. These divisions of the answer set up, in substance, that plaintiff has been guilty of violating the Anti-Trust Laws of the United States (Comp. St. § 8820 et seq.); that it is engaged in a conspiracy to monopolize the entire business of the manufacture and sale of electric lamps; that as a part of said conspiracy it has engaged in efforts to destroy defendant's business by refusing to sell lamps to defendant, and by canceling a contract once existing between them. [7] It is well settled that the mere fact that a party may be guilty of violating the AntiTrust Laws will not deprive him of his right to maintain a suit for injunction on account of infringement of a patent owned by him. Brown Saddle Co. v. Troxel (C. C.) 98 F. 620; Virtue v. Creamery Package Mfg. Co., 179 F. 115, 102 C. C. A. 413. [8] The maxim, "He who comes into equity must come with clean hands," applies only to cases where the unconscionable conduct 10 F.(2d) 851 of the plaintiff is directly connected with the subject-matter of the suit. The maxim does not mean that the general conduct of a plaintiff must have been above reproach, nor even that the plaintiff's conduct towards the defendant as to other matters must have been fair and equitable. Langley v. Devlin, 95 Wash. 171, 163 P 395, 4 A. L. R. 32, note, 44, 65; Talbot v. Independent Order of Owls, 220 F. 660, 136 C. C. A. 268; Bentley v. Tibbals, 223 F. 247, 138 C. C. A. 489; Trice v. Comstock, 121 F. 620, 628, 57 C. C. A. 646, 61 L. R. A. 176; American Sugar Refining Co. v. McFarland (D. C.) 229 F. 284. [9] If plaintiff has been guilty of violating the laws of the United States, there are remedies which may be pursued by the proper parties in interest. If plaintiff has committed breach of a contract with defendant, whether of agency or sale, or has wrongfully canceled such a contract with defendant, or committed a tort against defendant, remedies exist which are available for the defendant; but none of such acts of the plaintiff, even if they were committed, are so directly connected with the plaintiff's right, which it is now seeking to protect and enforce in the instant suit, as to make applicable the above quoted maxim. Division VIII of the answer sets up also a counterclaim. As a pleading, this counterclaim can hardly be called artistic. It gathers together by reference all of the preceding divisions of the answer, and makes them part of the counterclaim. It then adds two new paragraphs and a prayer for relief. There is thus thrown into this counterclaim, a great mass of allegations which has no proper place in the cause of action which the defendant is apparently trying to set up. Part of the prayer for relief would indicate that this cause of action is equitable; another part would indicate a legal cause of action. After considerable study, I have reached the conclusion that, if any cause of action can be spelled out of the counterclaim, it is one which is legal in its nature; one growing out of an alleged breach, or out of an alleged cancellation of a contract formerly existing between the parties. No contractual relations are alleged to exist between plaintiff and defendant at the present time, so that no specific performance can properly be prayed for. The contract, which it is claimed was wrongfully canceled, would have expired by its terms long before the commencement of this suit. Though it is possible for a cause of ac tion for an injunction to arise in favor of an individual against a violator of the AntiTrust Act, as amended by the Clayton Act (Comp. St. § 8835a et seq.) (see General Investment Co. v. Lake Shore Railway, 260 U. S. 261, 287, 43 S. Ct. 106, 67 L. Ed. 244), yet the allegations in the defendant's counterclaim in the instant case are not sufficient to constitute such an equitable cause of action. Apart from the alleged breach of contract and the alleged cancellation of contract, the whole grievance set forth in the counterclaim seems to be that defendant is being deprived, by plaintiff, of the opportunity of selling the lamps manufactured by plaintiff, which plaintiff claims are covered by the patents in suit; and that this deprivation has been brought about by plaintiff's refusal to have further business relations with defendant relative to the sale of such lamps. But no facts are set forth showing that defendant has the right to force plaintiff into such business relations; on the contrary, the allegations of the counterclaim, assuming them to be true, show that defendant is not entitled to the equitable relief asked, to wit: (1) That plaintiff.be enjoined "from refusing to sell electric lamps to defendant upon the same terms and conditions as it sells to any other dealer or agent; (2) that plaintiff be enjoined "from refusing to grant to defendant a license upon proper and lawful terms and conditions to use said patents herein in suit, in case the same are herein found to be valid." As to the first prayer for relief, it is to be noted that defendant has alleged in its counterclaim that plaintiff is in reality making sales of its lamps to dealers through its so-called "agency contracts," and that these agency contracts are illegal and void; yet defendant asks as relief that it be given the right of purchasing from plaintiff on the same (illegal) terms and conditions as other so-called agents. [10] Defendant can have no valid cause of action to compel plaintiff to make with it an illegal and void contract, even though plaintiff has heretofore made many such contracts with other people. The allegations of the counterclaim, assuming them to be true, also show that defendant is not entitled to the second equitable relief prayed for. It is alleged at great length in the counterclaim that both the Just and Hanaman patent and the Langmuir patent are illegal and void; if this be true, no license is neces sary, and certainly defendant would not be entitled to a license from plaintiff under void patents. Nor is the defendant entitled to this equitable relief asked in its counterclaim, even though the patents are valid; for, if the patents are valid, plaintiff has by virtue of them a lawful monopoly, and the court would not be authorized by virtue of anything alleged in the counterclaim, nor by virtue of the Anti-Trust Statute or the Clayton Act, to decree who should be plaintiff's licensee under its patents, much less to fix the terms of such license. The allegations of the counterclaim, in my judgment, wholly fail to make a case for the injunctive relief asked in favor of the defendant. [11] If any cause of action is stated in the counterclaim, it is in my judgment legal and not equitable. Such being the character of the counterclaim, it cannot be set up in the present suit under either of the branches of new equity rule 30 which relate to counterclaims. See American Mills Co. v American Surety Co., 260 U. S. 360, 43 S. Ct. 149, 67 L. Ed. 306. Liberty Oil Co. v. Condon Nat. Bank, 260 U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232, is not to the contrary. That case simply holds that an equitable defense may be set up to a legal cause of action, by virtue of section 274b, Judicial Code (Comp. St. § 1251b); and that the effect of such pleading may be to convert the suit from one at law to one in equity. Motion to strike divisions III, V, VI, and VIII of the answer is granted. and equipment at bankrupt sale, for much less than its actual value, does not make the purchase price the sole measure of its invested capital nor debar it from showing the actual value of the property employed in its business. 3. Patents 318(6)—Taxes and insurance allowable to infringer on accounting for profits. On an accounting by an infringer for profits, taxes and insurance premiums paid stand on the same footing as interest on capital invested and are allowable as charges against gross profits. 4: Patents 318(1)-Liability of infringing manufacturer for manufacture and sale of repair parts. On an accounting for profits by the manufacturer of infringing machines, defendant cannot be charged with profits from making and selling repair parts, unless on the ground of contributory infringement, and on proof that such parts were used as repairs or replacements on infringing machines, their manufac ture and sale being no part of the original infringement by making and selling the completed machines. 5. Patents 318(2)-Complainant entitled to finding of both damages and profits against infringer. While a complainant cannot recover both damages and profits from an infringer, where either, awarded him, affords full compensation for the infringement, he has the right of choice between them and is entitled to a finding of both. 6. Patents 322-Accounting for profits by infringer. kept by the manufacturer of infringing machines Whether patterns and drawings made and should be regarded as items of expense on an accounting for profits, or valued as assets, is a question of fact to be determined on each case. 7. Patents 318(1)—Infringer is accountable for profits though enhanced by "improvements" of the patented structure. Though an infringer claims to have "im CHRISTENSEN v. NATIONAL BRAKE & proved" the patented structure, so long as he ELECTRIC CO. is within the inhibited field he is still infringing; and if by his improvements he has enhanced (District Court, E. D. Wisconsin. August 14, his sales and profits, he is still exercising the 1924. Supplemental Opinion March 2, 1926.) 1. Patents 328-Christensen 635,280, for combined pump and motor, held not infringed. In the Christensen patent, No. 621,324, as corrected by No. 635,280, for a combined pump and motor, as construed by the trial and appellate courts, compactness of the structure is an essential feature of the invention, and as so construed the patent held not infringed by a new structure of defendant, brought into the case on accounting before a master. 2. Patents 318 (6)-Determination of invested capital on accounting for profits. In determining invested capital as a basis for computing interest and depreciation on an accounting for profits made by an infringer, the ordinary measures of value are to be applied, and the fact that defendant bought its plant patentee's rights and is accountable for the profits. 8. Patents 322-Infringer held to have bur. den of proving right to segregation of profits. Where an infringer on an accounting for profits claims to have commingled other elements with those of the patented combination, he has the burden of proving such facts as entitle him to a segregation of profits. Supplemental Opinion. 9. Patents318(3)-As respects liability of infringing manufacturer, "profits" are determined by principles applicable to noninfringing situations. On an accounting for profits by infringing manufacturer, "profits" are determined by same principles that determine profits or loss in noninfringing situations, and neither patentee nor 10 F.(2d) 856 infringer can select methods of calculation, thereby to cast infringing units into or out of realm of profit or of loss, to augment or mitigate liability. 10. Patents 318(6)—Variable overhead cannot be allocated per unit of infringing product, to make sales appear unprofitable. On accounting of profits by infringing manufacturer, where manufacture or selling is continuous, having constant direct costs and variable overhead and selling prices, the variable overhead cannot be averaged or allocated per unit, for the purpose of making sales at lowered prices appear unprofitable. In Equity. Suit by Niels A. Christensen and the Allis-Chalmers Company against the National Brake & Electric Company. On exceptions by both parties to master's report on accounting. Exceptions sustained in part. Lines, Spooner & Quarles, of Milwaukee, Wis., Joseph B. Cotton, of New York City, and Wm. R. Rummler, of Chicago, Ill., for plaintiffs. Brown, Boettcher & Dienner, of Chicago, Ill., for defendant. GEIGER, District Judge. It is difficult, in a written opinion, to deal with all exceptions assigned upon the master's report. The views given upon the principal contentions will justify the court in declining to restate the account, howsoever desirable that might ordinarily be. If, upon the rulings now to be made, the parties and the master can recast the account without further testimony, I am confident that they can do it far more readily than can the court. In any event, the court will leave parties first to determine whether either side may desire to amplify the showing of the record. [1] I shall consider first the contention of the defendant respecting the alleged unwarranted scope of the account because of the inclusion of the so-called "industrial compressors." Manifestly, it must find its support, if at all, in the original decree and record, wherein is exhibited the law of the patent as indicating what is to be included, and what, of necessity, is thereby excluded from the legal right of the patentee, what is within, and what is without, the legal liability of the alleged trespasser upon that right. It ought to be regarded as elemental that if, upon the contest respecting validity (scope) of the patent in suit and its infringement, the court was called upon to consider the art, and that such consideration upon the decision of either issue resulted in giving the patent either breadth or narrowness, it is no longer open to the defendant to exclude structures identical with-or at least not more than colorably variant from those which were before the court on either issue. Nor is it open to the plaintiff to include structures which the court must have considered as excluded in order to give effect to or save the patent in view of the art. And this brings us necessarily to an interpretationnot a reconsideration-of the decree for the purpose of determining whether it can include the so-called "industrial compressors." In performing this task recourse must be had to the record as disclosing the court's views in point of law upon the facts which it found, which views presumably furnish the foundation for the decree. It thus appears that the court, in deciding the case, said: "The patentee expressly claimed novelty in 'features of construction and arrangement of parts' to accomplish the 'main object' of providing, 'within small compass or in compact form, a combined pump and motor of simple and durable construction that will not be affected by dust, mud, ice or snow, that will be efficient and economical in operation and that will require little attention,' and, further, a structure 'designed particularly for use in connection with airbrakes for railway cars in which the pump and motor are usually exposed to dust, mud and snow and the working parts, if unprotected, soon become worn and inoperative, besides requiring constant and frequent attention.' After referring to certain testimony in the case, which paid a tribute to the combination because of its compactness, its adaptability to hang from the bottom of the car, to be capable of operation by the same means as the car itself, etc., the court continues: "Thus, it was generally conceded that prior to Christensen's application, there were known in the art, mechanisms such as a combined pump and motor; a pump actuated by an electric motor; a pump whose working parts are enclosed, and protected from dirt; a combination of a frame or case formed or provided with a closed chamber adapted to exclude dirt; a shaft having bearings in the frame or case and provided with a crank within the chamber; a cylinder formed with or attached to the frame or case; a piston fitted to work in the chamber and connected to the crank or eccentric, and a shaft mounted on the frame or case and connected by gearing with the crank shaft; and steam engines having a crank case and the general combination of parts last noted in whose operation splash lubrication was practiced. These, it is claimed, are, generally speaking, the elements or parts of the patented structure, which, being known, were aggregated by complainant." It will hardly do at this time to even at |
