United States v. Parker-Rust-Proof Co.

61 F. Supp. 805, 65 U.S.P.Q. (BNA) 563, 1945 U.S. Dist. LEXIS 2067
CourtDistrict Court, E.D. Michigan
DecidedMay 12, 1945
Docket3653
StatusPublished
Cited by13 cases

This text of 61 F. Supp. 805 (United States v. Parker-Rust-Proof Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Parker-Rust-Proof Co., 61 F. Supp. 805, 65 U.S.P.Q. (BNA) 563, 1945 U.S. Dist. LEXIS 2067 (E.D. Mich. 1945).

Opinion

LEDERLE, District Judge.

Findings of Fact

1. This is an action brought in accordance with the provisions of 15 U.S.C.A. §§ 4 and 25, to restrain and prevent the alleged violation of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1 and 2, and the Clayton Act, 15 U.S.C.A. § 14.

2. The defendant, Parker-Rust-Proof Company, hereinafter referred to as “Parker,” is a Michigan corporation. From 1930 to 1936, it organized and controlled certain subsidiary corporations but these corporations were absorbed by Parker in December, 1935. The Government does not claim that anything undertaken by the formation and subsequent assimilation of these companies or by their control violated the Anti-Trust Laws.

The individual defendants namedi are citizens and residents of Michigan and officers of Parker, and all of their acts referred to in the complaint were performed as officers of the corporation.

During the course of the trial, a petition for intervention was filed by Rust Proofing and Metal Finishing Corporation, located at Cambridge, Massachusetts, Pyrene Manufacturing Company, located at Newark, New Jersey, Parker Wolverine Company, located at Detroit, Michigan, Western RustProof Company, located at Chicago, Illinois, and Parker Rust-Proof Company of Cleveland, located at Cleveland, Ohio, and these parties were permitted to intervene as defendants and to take part in these proceedings. They will hereafter be referred to as intervenors.

3. The twenty-nine page complaint sets forth in great' detail the acts of Parker which are alleged to violate the laws involved, together with much explanatory matter. In brief, it charged that Parker attempted to; and. did, secure a monopoly of the so-called rust-proofing business by the illegal use of its patents, by conspiring *807 with some of its licensees, and by entering into illegal agreements for the purchase of the businesses of its most important competitors, with provisions in the purchase contracts which prohibited these so-called co-conspirators from again competing with Parker.

4. At pre-trial hearings under Rule 16, 28 U.S.C.A. following section 723c, stipulations comprising 98 pages were entered into, admitting, without further identification, a large amount of documentary evidence, which greatly reduced the time and expense consumed in actual conduct of the trial. See: Sunderland on “Pre-Trial,” 28 Journ.Am.Judicature Soc., page 48. All officers and employees of Parker cooperated to the fullest extent with the Government attorneys and agents in furnishing them with documentary evidence they desired to use. The officers and employees of Parker called as witnesses fully and frankly disclosed all the information which the Government sought. There is no dispute as to the authenticity of the documents offered in evidence and no conflict in testimony to be resolved. In fact, there is no dispute between the parties as to the underlying- facts, but a real controversy exists as to the inferences to be drawn from these facts, and, hence, as to the ultimate facts upon which a judgment must be based.

5. Some Parker agreements and policies might be unreasonable under some circumstances, whereas viewed in the light of actual experience, these agreements and practices are perfectly justified. In order to understand the issues involved, it is necessary to trace the history of Parker. From a modest beginning, Parker has developed into a substantial industry, and is extensively engaged in interstate commerce out of which the acts complained of arise. During peace time, Parker aided materially in developing many important industries. More recently, it has contributed substantially to our war effort in improving the materials used at the battle fronts. The company was organized in 1915 for the purpose of promoting the use of chemical coatings applied to metal surfaces, particularly iron and steel, to prevent or retard the corrosion thereof, and to provide a basis for paint or other finish. Most of Parker’s business has related to so-called phosphate coating. Parker first acquired a patent issued August 12, 1913, to Richards, United States No. 1,069,903. In the light of modern developments, the Richards patent taught a rather crude method of achieving the desired result. At first, Parker had very little capital and its business was confined almost entirely to treating small parts used mainly in connection with the automobile industry. Shortly after starting to use the Richards process, Parker purchased United States Patent No. 870,937 issued to Coslett November 12, 1907. The Coslett process achieved considerable success, and, in 1925, Parker brought suit against the Ford Motor Company, charging infringement of this patent. After a lengthy and expensive trial, Parker was awarded a decree for substantial damages. See Parker Rust Proof Co. v. Ford Motor Company, D.C., 6 F.2d 649; Id., D.C., 23 F.2d 502; Id., 6 Cir., 41 F.2d 1010.

6. Parker has always maintained a staff of chemists and other expert technical employees for two reasons: First, to improve its products and processes; and second, to aid and assist its customers in carrying out the patented processes. During its entire history, it has had the active competition of other forms of corrosion prevention, such as, galvanizing, sheradizing, plating and other similar processes.

7. From the day of the ancient alchemist, scientists have labored to devise means for endowing the baser metals with the quality of permanency of the higher metals. There is evidence that phosphates were used to protect iron articles as early as the third century. In 1869, metals were commercially treated with phosphoric acid. It was found that this changed the surface of the metal and made the iron and steel more rust resistant. Volumes have been published on the subject of corrosion control. An interesting discussion of the Parker processes appears in a volume entitled, “Protective Coatings for Metals,” by Bums and Schuh, one of the American Chemical Society monograms. Other publications reviewed during the trial were: “Corrosion — Causes and Preventions,” by Frank N. Speller, and “Protective Films on Metals,” by Ernest S. Hedges.

During its entire history, Parker has been in competition with many other scientific organizations, engaged in a search for better means to improve the surface of metals to make them more rust-resistant and to improve them for painting and other finishes. The opportunities in this field are limited only by the knowledge of the prior art and the imagination and energy of the individual who desires to enter it. The *808 only monopoly Parker ever had on these processes is the monopoly that it acquired because of the patent laws. As its patents expired, others were free to use the processes disclosed in such patents and others have entered this field.

At all times, Parker has depended for its business and commercial success upon its control of particularly patented processes and its aggressive salesmanship, coupled with its policy of locating and employing able technical men to improve its products and to interest manufacturers in the use of its products and processes. These employees have been under contract to turn their inventions over to Parker and to assign to it any patents issued therefor.

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Bluebook (online)
61 F. Supp. 805, 65 U.S.P.Q. (BNA) 563, 1945 U.S. Dist. LEXIS 2067, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-parker-rust-proof-co-mied-1945.