American Stainless Steel Co. v. Ludlum Steel Co.

16 F.2d 823, 1926 U.S. Dist. LEXIS 1630
CourtDistrict Court, S.D. New York
DecidedFebruary 4, 1926
StatusPublished
Cited by6 cases

This text of 16 F.2d 823 (American Stainless Steel Co. v. Ludlum Steel Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Stainless Steel Co. v. Ludlum Steel Co., 16 F.2d 823, 1926 U.S. Dist. LEXIS 1630 (S.D.N.Y. 1926).

Opinion

THACHER, District Judge.

Tbe nature of the - patents is sufficiently clear from tbe decision of tbe Circuit Court of Appeals. Speaking generally, they are for wrought •metal articles and cutlery fashioned from what is known as “stainless steel.” The defendant is a manufacturer of steel products,1 and among other products has manufactured and sold steel for cutlery and other purposes, for which it is sought to be held accountable as a contributory infringer of tbe patents in suit. On tbe proceedings be[824]*824fore the master, damages were waived by the plaintiff, and the defendant was held accountable for profits realized in the manufacture and sale of steels sold for cutlery purposes to manufacturers of cutlery of a composition common to both the Haynes and Brearley patents. The claims of Haynes, whose is the generic patent, cover alloys containing carbon of from .1 per cent, to 1 per cent., and chromium of from 8 per cent, to percentages in excess of 20 per cent. The claims of Brearley, whose is the specific patent, cover percentages of less than .7 per cent, of carbon, and from 9 per cent, to 16 per cent, of chromium. The master included in the accounting only steels which were within the field of percentages of carbon and chromium common to both patents, and which were sold to manufacturers of cutlery, excluding silerome valve steels sold and used for the manufacture of valves for use in airplane and motor engines.

The defendant has excepted to the master’s report in so far as it allows the recovery of any profits derived from the manufacture of any steels, claiming that there is no proof to show that any of these steels were used in the manufacture of infringing articles. The plaintiff has excepted to the master’s report, insisting that there should have been included in the accounting certain steels manufactured and sold by the defendant for cutlery purposes, which are within the field of percentages claimed by Haynes, but not within the field of percentages claimed by Brearley, and further insisting that the master was in error in limiting the accounting to steels sold for cutlery purposes, specifically claiming that the defendant is accountable for profits derived from the manufacture of its silerome valve! steels.

There can be no doubt that the sales of the defendant’s steels within the field common to both patents for cutlery purposes were made under circumstances which would constitute the defendant a contributory infringer, if this steel was in fact devoted by the defendant’s customers to an infringing use. If they in fact fashioned this steel into cutlery articles, as they were solicited to do by the defendant’s advertising, the defendant cannot be heard to say that it did not contribute to the infringement. Henry v. Dick Co., 224 U. S. 1, 48, 32 S. Ct. 364, 56 L. Ed. 645, Ann. Cas. 1913D, 880; Kalem Co. v. Harper Bros., 222 U. S. 55, 62, 32 S. Ct. 20, 56 L. Ed. 92, Ann. Cas. 1913A, 1285; Thomson-Houston El. Co. v. Kelsey El. Ry. Specialty Co. (C. C.) 72 F. 1016.

Defendant’s counsel do not say this.. What they do say is that neither Haynes nor Brearley patented a composition of metal, but only the articles covered by their claims, and that therefore there can be no recovery of profits derived from the manufacture and sale of the steel, which they say must be-treated as an unpatented raw material entering ipto the manufacture of a patented article. Hemolin Co. v. Harway Dyewood & Extract Mfg. Co. (C. C. A.) 166 F. 434, and similar eases are cited. These authorities are distinguishable and are not controlling. They involved claims for profits in the manufacture of an ingredient or element of the patented product, the manufacture of which was in no way covered by the patent. Here there could be no infringement, unless in the process of making the steel ultimately used in fashioning the patented articles-the learning of the patents was followed.

Of these patents the Circuit Court of Appeals has said: “Brearley and Haynes, proceeding along similar lines and having in view substantially the same purpose, produced as a new article of manufacture a. wholly novel product, and something almost in denial of previous scientific disclosure, ‘stainless steel.’ To such an inventive concept the often misleading word ‘pioneer’ may fairly be applied.” And further: “Yet ’these patents refer to the production or making of a certain kind of steel; they instruct with remarkable precision as to the component parts of the material, which is-to be stainless.”

As the special master in this case has-said: “If the customers of defendant had manufactured the infringing article by following the directions set forth in the patent,, using steel and chromium as their raw material, there would be no doubt that they would be accountable for the entire profit resulting. Defendant has received whatever profit is represented by the preparation of the alloy before sharpening, hardening, etc. It is that profit for which it seems to me to' be accountable.”

The distinction between this ease and such cases as Hemolin Co. v. Harway Dyewood & Extract Mfg. Co., supra, Canda Bros. v. Michigan Malleable Iron Co. (C. C. A.) 152 F. 178, and Rumford Chemical Works v. N. Y. Baking Powder Co. (C. C.) 136 F. 873, is that in all of those eases it. was sought to extend the accounting to matters entirely outside the field of the patent,, just as if in this case there had been claimed profits derived from the manufacture of carbon, chromium, or other raw materials, [825]*825through the combination, and treatment of which Haynes and Brearley produced stainless steel. The production of stainless steel is the essential and all-important disclosure in their process of manufacturing the patented articles covered in their patent claims. Without this disclosure their inventions would have been utterly worthless, and to deny the recovery of profits derived from the making of the steel prepared in accordance with their instructions as a step in the process of manufacturing the finished patented article would be to deprive the plaintiff of the principal value of the inventions covered by the patents in suit. The raw materials of this patent were “the component parts of the material which is to be stainless,” surely not the stainless product first produced under the instructions of the patents. There was therefore no error in requiring an accounting of profits derived from manufacturing and selling stainless steel for an infringing use.

But the defendant insists that there can be no recovery, because no proof was offered to show that any of the steel manufactured and sold by it was used by its customers in the manufacture of infringing articles. The defendant has accounted only for steel specially manufactured and sold for cutlery purposes to cutlery manufacturers, upon whom the desirability of the steel for such purposes was strongly impressed by the usual selling and advertising methods. Under these circumstances, and in the absence of any proof to the contrary, it must be assumed that the steel was actually used for the purposes for which the defendant sold it. Consolidated Rubber Tire Co. v. Diamond Rubber Co. (D. C.) 226 F. 455, 461, affirmed (C. C. A.) 232 F. 475.

What has been said disposes of the defendant’s exceptions to the master’s report. Coming to the plaintiff’s exceptions, it is insisted that the defendant is accountable and has not accounted for profits derived from the manufacture and sale of—

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Bluebook (online)
16 F.2d 823, 1926 U.S. Dist. LEXIS 1630, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-stainless-steel-co-v-ludlum-steel-co-nysd-1926.