Esther Marion Armstrong v. Motorola, Inc.

374 F.2d 764
CourtCourt of Appeals for the Seventh Circuit
DecidedMarch 22, 1967
Docket14830_1
StatusPublished
Cited by29 cases

This text of 374 F.2d 764 (Esther Marion Armstrong v. Motorola, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Esther Marion Armstrong v. Motorola, Inc., 374 F.2d 764 (7th Cir. 1967).

Opinion

CUMMINGS, Circuit Judge.

This patent infringement action concerns three frequency modulation (FM) patents owned by the late Major Edwin Armstrong. The plaintiff is his widow and executrix.

The three patents involved are No. 1,941,069 (’069) covering the wideband FM system, No. 1,941,066 (’066) covering the synchronous heterodyne method for FM reception, and reissue patent No. 21,660 (’660) covering a preemphasis and deemphasis system for use in FM. The ’069 and ’066 patents issued on December 26, 1933, and reissue patent ’660 issued on December 17, 1940.

In an exhaustive opinion, District Judge Robson held that the three patents were valid and infringed by Motorola, Inc.’s FM receivers. He also held that Motorola’s FM communication equipment infringed the ’069 and ’066 patents. For a complete description of the history of this litigation, reference is made to the District Court’s extensive findings reported in 230 F.Supp. 337 (N.D.I11.1964). The same patents were involved in Armstrong v. Emerson Radio and Phonograph Corp., 179 F.Supp. 95 (S.D.N.Y. 1959), where, in a very thorough opinion, Judge Palmieri also held them valid and infringed.

In the present case, with the consent of the parties, the District Judge appointed George R. Town, Dean of the College of Engineering at Iowa State University, to act as his impartial technical expert. Dean Town filed a report on the technical issues in the case and excerpts from his report were later received in evidence.

To avoid an unnecessarily voluminous opinion, the facts of the present case will be discussed in conjunction with the contested issues. Because of their ready accessibility, the 339 findings below (230 F.Supp. at pp. 338-379) will only be highlighted here.

*768 Estoppel

Motorola first claims that by December 1948, when notices of infringement were sent to Motorola and others, Armstrong was estopped from suing Motorola on these three patents. Based on 36 findings of fact, most of them carefully annotated by references to the trial record and the exhibits, the District Court rejected this defense. Unless clearly erroneous, those findings are binding on appeal. Armour & Co. v. Wilson & Co., 274 F.2d 143, 149, 156 (7th Cir. 1960). In our view, the findings bearing on the estoppel defense are not clearly erroneous. Based on those findings, the District Court properly rejected the estoppel defense. The related defense of laches, rejected below, was not renewed in this Court.

In 1940, Motorola decided to manufacture and sell FM apparatus for police and mobile communication. In the same year, Motorola decided, to add FM broadcast receivers to its line of home receivers. At the time Motorola entered the FM market, Major Armstrong was acknowledged as the inventor of the wide-band FM system. Motorola’s predecessors as FM apparatus manufacturers had taken licenses under Major Armstrong’s FM patents. 1

Upon Motorola’s inquiry in April 1940, Major Armstrong sent appropriate patent license forms to Motorola. He advised Motorola that his ’069 patent covered the FM system, that his ’066 patent was important in the receiver field, and that he owned other patents useful in the FM system. Motorola knew that Major Armstrong expected to receive royalties on a uniform basis from all manufacturers of wideband FM apparatus and that he was actively engaged in establishing a uniform licensing system.

Early in 1941, Motorola commenced license negotiations with Armstrong. In May 1941, a Motorola representative stated to Radio Corporation of America (RCA), which had not taken a license under the Armstrong patents, that Motorola might take a license thereunder if Armstrong would reduce his royalty rate from 2%% and 3% to 1%.

The license negotiations between Armstrong and Motorola terminated in August 1941, when Major Armstrong advised Motorola’s counsel that he was designating his lawyer, Alfred McCormack, to conduct further negotiations with Motorola for a license under Armstrong’s patents. Instead of pursuing those negotiations, Motorola, on advise of its patent counsel, decided late in 1941 that it was not infringing Armstrong’s patents and therefore would not take a license from him. In a May 1945 letter to American Telephone & Telegraph Co., Motorola reiterated that it was not infringing the Armstrong FM patents.

In March and April 1941, Armstrong advised the Secretaries of War and of the Navy respectively that “so long as the present national and international emergency shall exist’”, he would waive all royalties under his FM patents with respect to FM apparatus manufactured for the United States for military purposes. This waiver was a matter of public knowledge. Throughout World War II, Major Armstrong was primarily engaged in research work for the Armed Forces, as was well known.

During World War II, Motorola and other radio manufacturers ceased the production of home receivers and other equipment for broadcast purposes. However, from 1941 through 1945, Motorola did sell FM equipment for police communication under War Production Board releases. It sold no television receivers until 1947.

In January 1946, Western Electric Company took an Armstrong license for FM mobile communication apparatus. *769 Until 1950, Western Electric paid royalties to Armstrong with respect to such apparatus, including substantial quantities that Western Electric purchased from Motorola. In June 1946, Motorola’s patent counsel protested Western Electric’s payment of Armstrong royalties on Motorola’s apparatus, stating that “over the past six years * * * it has been and still is our considered opinion that Motorola’s F.M. equipment does not infringe any valid Armstrong patent. On this basis, Galvin [Manufacturing Company, predecessor to Motorola] has not taken a license from Major Armstrong.”

World War II ended on September 2, 1945, but the official cessation of hostilities did not occur until December 31, 1946 (50 App.U.S.C.A. p. XXII). By the end of 1947, the post-war market for FM receivers and television receivers reached significant proportions. At that time, Motorola entered the market and sold substantial quantities of such receivers in competition with Armstrong licensees. 2 Motorola’s other competitors included RCA, Philco Corporation, Emerson Radio and Phonograph Corporation, and Admiral Corporation. These four manufacturers had not been licensed by Major Armstrong either. In July 1948, a few months after the resurgence in sales of FM apparatus, Major Armstrong filed suit against RCA for infringement of the ’066, ’069 and reissue ’660 patents. Six months thereafter, Major Armstrong sent a written notice of infringement to Motorola and other alleged infringers of his FM patents.

In January 1949, RCA informed its licensees, including Motorola, that RCA would complete the Armstrong-RCA litigation before any other contemplated patent infringement suits could be started and completed by Armstrong.

From 1953 to 1957, because of unfavorable market conditions, Motorola discontinued the manufacture and sale of FM broadcast receivers.

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