Bishman Manufacturing Co. v. Stewart-Warner Corp.

259 F. Supp. 300, 151 U.S.P.Q. (BNA) 17, 1966 U.S. Dist. LEXIS 10258
CourtDistrict Court, N.D. Illinois
DecidedAugust 31, 1966
DocketNo. 65 C 897
StatusPublished
Cited by1 cases

This text of 259 F. Supp. 300 (Bishman Manufacturing Co. v. Stewart-Warner Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bishman Manufacturing Co. v. Stewart-Warner Corp., 259 F. Supp. 300, 151 U.S.P.Q. (BNA) 17, 1966 U.S. Dist. LEXIS 10258 (N.D. Ill. 1966).

Opinion

OPINION

WILL, District Judge.

This is an action for patent infringement in which defendant counter-claims for a royalty-free license based on what amounts to an alleged breach of promise of corporate marriage.

The facts as set forth in the Findings of Fact may be summarized as follows. Plaintiff, George T. Hemmeter (hereinafter also referred to as “Hemmeter”), is an inventor and prior to 1962 was the principal owner and president of the Hemmeter Corporation which, since 1952, had manufactured mechanical automobile wheel balancers.

Defendant, Stewart-Warner Corporation (hereinafter also referred to as “Stewart-Warner”), through its Alemite Instrument Division, prior to 1962 manufactured and sold an electronic wheel bal-ancer which would indicate the light section of an unbalanced wheel but would not indicate the amount of corrective weight to be added as the mechanical bal-ancers did.

In the fall of 1961, Hemmeter and representatives of defendant entered into discussions looking toward the acquisition of the former by the latter. Stewart-Warner was particularly interested in the latest model of the Hemmeter “Dial-O-Matic” and the several Hemmeter wheel balancer patents and patent applications, particularly Serial No. 700,773, which ultimately evolved into the patent in suit.

At Stewart-Warner’s request, Hem-meter, on October 16,1961, forwarded his file on the pending application to defendant with the understanding that it was submitted confidentially for “use in determining the value of the items offered for sale.”

Having had no response by November 6, Hemmeter wrote defendant inquiring as to whether or not they were interested in acquiring his business. After some inconsequential communications defendant in mid-December sent four of its representatives to California to inspect the Hemmeter operation. On their return to Chicago the delegation reported that the latest Hemmeter balancer was “superior to competition.”

On January 30, 1962, defendant by letter outlined two general alternative approaches which it might be willing to consider as a basis for the acquisition, but made it clear that the suggestions were “informal.” Hemmeter replied immediately by letter dated January 31, indicating a preference for the second alternative but suggesting some modifications and the desirability of having preliminary papers prepared.

On February 15, at defendant’s request, Hemmeter gave Stewart-Warner power to inspect his pending patent applications which power was filed with the Patent Office on February 28 by one of defendant’s patent attorneys who examined the files.

[302]*302On March 23, Hemmeter, not having heard from defendant, wrote observing that his ’’personal patent file has been in Stewart-Warner’s possession since the latter part of October 1961.” He pointed out that certain Patent Office due dates were “dangerously close” with much work remaining to be done. He also requested “a briefing on the progress of the written contracts.”

Six days later, on March 29, defendant advised Hemmeter that one of its patent attorneys had discussed the key pending application with the patent examiner who was handling it and suggested that “this office prepare a draft of an amendment which should be filed” in the Patent Office before May 12. They observed that if the acquisition was effected prior to May 12, Stewart-Wamer would file it directly. If not, then Hemmeter’s patent counsel could consider the advisability of filing the amendment as prepared by defendant’s patent department.

Hemmeter agreed to the suggestion on April 2 and on April 11, defendant sent him the proposed amendment which, as the covering letter indicated, contained “all new claims.” These are the claims which were subsequently allowed and which defendant’s patent counsel now urge are invalid although they expressed a contrary opinion in their letter of April 11.

Meanwhile, on April 3, 1962, defendant sent Hemmeter drafts of six proposed agreements which together were to constitute the contract of acquisition. The forwarding letter stated, however, that the drafts were sent only for Hemmeter’s comments and cautioned that “None of the agreements should be either dated or signed at this time since this letter does not constitute a firm offer which can be accepted by you.” Hemmeter turned the documents over to his general counsel and to his patent attorney who rendered written opinions dated April 17 and 18 respectively, both of which severely criticized the drafts.

Hemmeter sent the opinions to defendant with a covering letter on April 19 which expressed the hope that a “workable agreement” might still be reached. Defendant did not reply to Hemmeter’s April 19 letter until May 29. In the reply, defendant agreed to some modifications but referred to certain “important problems which still exist” and suggested these be re-referred to Hemmeter’s attorneys for further consideration.

Between April 19 and May 29, Hem-meter entered into discussions with representatives of Bishman Manufacturing Co. (hereinafter also referred to as “Bishman”), the first contact taking place on May 12. Hemmeter gave Bish-man an option on June 12, one month later. On June 13, Hemmeter advised Stewart-Warner of the option, and on July 11 informed defendant that the option had been exercised and he had sold his business, including the patents, to Bishman. Defendant, in a letter of July 24, acknowledged receipt of the information and the resultant termination of their negotiations, extended Hemmeter best wishes and invited him to bring to Stewart-Warner’s attention any wheel-balancing ideas he might develop in the future.

On July 2, Hemmeter picked up from Associated Techdata Inc. of Palo Alto, California, the original vellum drawings of his latest model balancer which drawings had originally been ordered by Stewart-Warner because they desired more sophisticated drawings that those Hem-meter had been using in his manufacture of the balancer. A set of the Techdata drawings had been sent to defendant in April with the advice that the originals were being left “at Techdata pending your further instructions.” No such instructions were ever given and, believing that Stewart-Wamer no longer had any interest in them, Hemmeter picked up the drawings and turned them over to Bish-man along with the other assets sold to them.

In 1962, after learning that Bishman had acquired Hemmeter, defendant instructed its Director of Engineering to design a balancer which would dp the same things as the new Hemmeter bal-ancer. While he had had no previous ex[303]*303perience in designing wheel balancers, he had had some experience in evaluating various competing units. In addition, of course, he had one of the latest Hemmeter models, the drawings thereof which had been forwarded by Hemmeter in April, the full patent application file, the results of the patent search, which disclosed all outstanding patents in the field and the report of the Stewart-Warner delegation which had inspected Hemmeter’s plant and observed his production techniques. Armed with this information, defendant’s Chief Engineer developed the accused unit.

Plaintiffs contend that the patent in question is valid and that defendant’s device infringes five of the claims allowed in the patent, i. e., claims 1, 4, 6, 7 and 12.

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259 F. Supp. 300, 151 U.S.P.Q. (BNA) 17, 1966 U.S. Dist. LEXIS 10258, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bishman-manufacturing-co-v-stewart-warner-corp-ilnd-1966.