Schmertz Wire Glass Co. v. Western Glass Co.

203 F. 1006, 1913 U.S. Dist. LEXIS 1782
CourtDistrict Court, N.D. Illinois
DecidedMarch 17, 1913
DocketNo. 28,615
StatusPublished
Cited by6 cases

This text of 203 F. 1006 (Schmertz Wire Glass Co. v. Western Glass Co.) 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
Schmertz Wire Glass Co. v. Western Glass Co., 203 F. 1006, 1913 U.S. Dist. LEXIS 1782 (N.D. Ill. 1913).

Opinion

SANBORN, District Judge.

On exceptions to master’s report on accounting finding nominal damages.

Defendant was decided to be an infringer in this cause ([C. C.] 178 Fed. 977; 185 Fed. 788, 109 C. C. A. 1), and an accounting for damages and profits awarded. Defendant was held to be using substantially the machine, and substantially the process, secured to the patentee in reissue No. 12,443. Upon the issuing, of the injunction, and on February 10, 1910, defendant changed its method from the Schmertz process to the so-called European three-step process, which was held not to infringe in (C. C.) 188 Fed. 436, and on appeal, 195 Fed. 760, 115 C. C. A. 459. The master reported that, while defend-

ant had realized profits, they were not proved with sufficient clearness, and that, since the noninfringing process had been open for. defendant to use during the whole period of infringement, it was not liable for profits. He also reported that no damages could lawfully be imposed by reason of the infringement. After the master reported, the most important decision on patent accountings since Garretson v. Clark, 111 U. S. 120, 4 Sup. Ct. 291, 28 L. Ed. 371, was made by the Supreme Court, that of Westinghouse Co. v. Wagner Mfg. Co., 225 U. S. 604, 32 Sup. Ct. 691, 56 L. Ed. 1222. The case involved the infringement

of an electric converter. A combination of several old elements with two new ones was made by the patentee which gave an exceedingly beneficial result. After a period of infringement defendant changed its converter by leaving out one element of such combination, and thus escaped further infringement. In an accounting the master decided that defendant had made $134,000 in profits by the infringement, but that these profits were merged in the general business, so that it was impossible to separate them, because no separate account was kept, and the master recommended a decree for the whole $134,000. On appeal to the Court of Appeals of the Eighth Circuit (173 Fed. 361, 97 C. C. A. 621) it was held that the master erred in finding that the whole commercial value of the infringing converters was- due to the patented combination, but was partly the result of improvements made by defendant-appellee; that, as complainant-appellant had failed to separate the profits made by the patent from those made by the defendant’s addition, there was no evidence upon which a decree for profits could go; and that the rule as to wrongful confusion of goods did not apply.

A writ of certiorari was granted from the Supreme Court and the decree reversed. It will be observed that there was nothing in the record to suggest any standard of comparison, since there was no converter in the prior art adapted to obtain a result like'that secured by the patent device; hence the Supreme Court, in stating the general rules governing the case, was not called upon either to cite or distinguish cases in which it had previously used a .standard of comparison, [1008]*1008like McCreary v. Pennsylvania Canal Co., 141 U. S. 467, 12 Sup. Ct. 40, 35 L. Ed. 817.

■ With .this state of facts before it the Supreme Court laid down the following rules:

“Where the infringer has sold or used a patented article, the plaintiff is entitled to recover all of the profits. Where a patent, though using old elements, gives the entire value to the combination, the plaintiff is entitled to-recover all the profits. Hurlbut v. Schillinger, 130 U. S. 456, 472 [9 Sup. Ct. 584, 32 L. Ed. 1011]. Where profits are made by the use of an article patented as an entirety, the infringer is liable for all the profits, ‘unless he can show — and the burden is on him to show — that a portion of them is the result of some other thing used by him.’ Elizabeth v. Pavement Co., 97 U. S. 126 [24 L. Ed. 1000]. But there are many cases in which the plaintiff’s patent is only a part of the machine, and creates only a part of the profits. His invention may have been used in combination with valuable improvements made, or other patents appropriated by the infringer, and each may have jointly, but unequally, contributed to the profits. In such a case, if plaintiff’s patent only created a part of the profits, he is entitled to recover that part of the net gains. He must, therefore, ‘give evidence tending to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented features, and such evidence must be reliable and tangible, and not conjectural or speculative; or he must show, by equally reliable and satisfactory evidence, that the profits and damages are to be calculated on the whole machine, for the reason that the entire value of the whole machine, as a marketable article, is properly and legally attributable to the patented feature.’ Garretson v. Clark, 111 U. S. 120 [4 Sup. Ct. 291, 28 L. Ed. 371].”

The court further observed that the statute expressly makes the infringer liable for all profits, but the rule as to the burden of proof has been so applied that this statutory right has often been nullified by infringers who had ingenuity enough to smother the patent with improvements made by themselves or third persons. “In such cases the greater the wrong the greater the immunity; the greater the number of improvements the greater the difficulty of separating the profits.” The principle that the burden of showing profits is upon the complainant should not be pressed so far as to override others equally important in the administration of justice.

It was further held, however, that, where defendant shows that it uses noninfringing and valuable improvements in connection with its infringement, the burden of apportionment is on the complainant. This may be difficult to meet, but that is no reason why complainant should be denied its rights. It may be impossible to reach a conclusion mathematically exact, but expert or other evidence may be received on this question, in the same manner as in questions relating to state and interstate rates in cases brought to determine whether the former are confiscatory. When complainant shows that witnesses who have kept defendant’s books, purchased material, etc., are unable to show what profits have been made, it has sufficiently met the burden cast upon it. '

Finally, it was decided that the rule relating to trustees ex maleficio applies in patent cases, so that' where complainant has made all possible proof of profits, and defendant has made,clear proof impossible by inextricably mingling and confusing the parts composing the fund constituting such profits, the whole fund belongs to complainant.

[1009]*1009While the full effect of this important case can only he told after the federal courts shall have applied it to the complicated and difficult circumstances appearing in patent accountings, yet it is evident that it marks an epoch in that most unsatisfactory chapter of the patent law. Undoubtedly the generally accepted construction of the Garretson Case has been much modified. As the Supreme Court said in another part1 of its opinion:

“It may be argued that in its last analysis this is but another way of saying that the burden of proof is on the defendant.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Union Carbide Corp. v. Graver Tank & Mfg. Co.
243 F. Supp. 358 (N.D. Indiana, 1963)
Union Electric Welding Co. v. Curry
279 F. 465 (Sixth Circuit, 1922)
Western Glass Co. v. Schmertz Wire Glass Co.
226 F. 730 (Seventh Circuit, 1915)
United States Frumentum Co. v. Lauhoff
216 F. 610 (Sixth Circuit, 1914)
Dunn Mfg. Co. v. Standard Computing Scale Co.
204 F. 617 (Sixth Circuit, 1913)

Cite This Page — Counsel Stack

Bluebook (online)
203 F. 1006, 1913 U.S. Dist. LEXIS 1782, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schmertz-wire-glass-co-v-western-glass-co-ilnd-1913.