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Uihlein v. General Electric Co.


January 24, 1931


Appeal from District Court of the United States for the Eastern District of Wisconsin; Ferdinand A. Geiger, Judge.

Author: Evans

Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.

EVANS, Circuit Judge.

This appeal involves a contest between inventors, who dispute as to which is the first discoverer of certain "improvements in electrical furnaces." The suit, authorized by section 4915, Rev. St. (35 USCA § 63), was to secure the issuance of letters patent to Messrs. G. and B., Joint inventors, whose application for letters patent was denied by the Commissioner of Patents. Appellants, who were defendants in the District Court, are all interested in patent No. 1,490,732 issued to one Callaghan, which covers the same combination for which G. and B. made application for a patent. The two applications were copending, and an interference was declared. The issue -- who was the first discoverer -- was tried and decided in favor of C. to whom the above-numbered patent was issued.

Appellants contested appellees' suit, and by counterclaim sought to enforce the C. patent and obtain the usual decree for an injunction and an accounting due to infringements thereof. Upon the trial of the issues presented by these pleadings, the District Court found for appellees and entered a decree directing the Commissioner of Patents to issue a patent to appellees and dismissed appellants' counterclaim. This appeal followed.

Disposition of this appeal turns on the answer to the question, Who was entitled to a patent on the combination described in the two copending applications in the Patent Office? To settle this question two issues of fact necessitate an answer: (a) Who first discovered the new combination for which C. obtained the patent; and (b) if C. was the first discoverer, did he abandon his discovery before the patent to him was issued?

As the District Judge found for appellees, it is necessary, for appellants to prevail, that they satisfy us that C. was entitled to a favorable answer to both questions.

The history of the contest in the Patent Office is important. B. and G. filed their application first, to wit, June 5, 1918. C. filed his application October 23, 1918. C. fixed the date of his discovery as about September 15, 1917. G. and B. asserted the date of their invention was March 14, 1918, and actual reduction to practice, July 10, 1918. The dates submitted by G. and B. are not disputed. Controversy exists over the date of C.'s discovery.

The Examiner of Interferences in the Patent Office found C.'s date of discovery to be September 15, 1917. On three successive appeals the same issue was decided by the Board of Examiners in Chief, the Commissioner of Patents, and the Court of Appeals of the District of Columbia in the same way.

The question of abandonment, i.e., the issue of diligence, was found in favor of C. by the Examiner in the Patent Office and by the Court of Appeals of the District of Columbia. The Commissioner and also the Board of Examiners in Chief in the Patent Office found C. had not been diligent.

The District Judge in this suit found against C. on both issues.

There was small difference in the testimony presented at the five trials. While counsel for appellants asserted that additional evidence was presented to the District Court, we cannot believe it accounted for the difference in the findings.

The quantum of proof required to justify the court in setting aside the patent is stated in Morgan v. Daniels, 153 U.S. 120, 14 S. Ct. 772, 773, 38 L. Ed. 657, as follows:

"Upon principle and authority, therefore, it must be laid down as a rule that where the question decided in the Patent Office is one between contesting parties as to priority of invention, the decision there made must be accepted as controlling upon that question of fact in any subsequent suit between the same parties, unless the contrary is established by testimony which in character and amount carries thorough conviction. Tested by that rule the solution of this controversy is not difficult. Indeed, the variety of opinion expressed by the different officers who have examined this testimony is persuasive that the question of priority is doubtful, and if doubtful the decision of the Patent Office must control."

The real test is laid down in the first sentence of the quotation. The last sentence is an unfortunate expression. It has been construed by counsel as stating a self-applicable test for courts. We cannot believe the court meant to say that a difference of opinion in the Patent Office conclusively negatived complainant's allegation that he was the first inventor in a suit authorized by this section of the statute. 35 USCA § 63.

In short, we are of the opinion that the District Court was right in its assumption that it was not bound by the departmental decisions, even though the testimony before those tribunals was similar to that presented in the District Court. The statute, which gave to the litigants the right to present the case anew to the District Court after it was finally closed in the Patent Office, imposed upon the District Judge the obligation of hearing the evidence and determining the issues in the light of the rule laid down by the Supreme Court, but not controlled by the decisions of the Patent Office tribunals.

It would serve no useful purpose to narrate all of the evidence bearing on this issue or discuss all phases of it. there were several witnesses who testified, and who were examined and cross-examined. There was little serious conflict in their testimony. Appellants' contentions were, in the main, well supported by their witnesses. Two, Callaghan and Uihlein, were interested in the outcome. The others were disinterested and apparently men of character and standing.

There was nothing inherently improbable about the testimony of Callaghan. Nevertheless, if his testimony alone made out appellants' case, we would hardly be justified, in view of his interest, in refusing to accept the finding of the District Court. But the testimony of his corroborating witnesses is strongly persuasive of the facts as asserted by C. In short, we can hardly find C. to be a willful falsifier without branding the other witnesses similarly. These other witnesses were all credible witnesses -- responsible parties. They were not interested in the outcome of the litigation. They were not disputed by other witnesses, and their story, far from being incredible, appears entirely reasonable.

Our conclusion is that the evidence was not sufficient, under the rule announced in Morgan v. Daniels, supra, to overcome the force of the finding of the Court of Appeals of the District of Columbia on this issue, supported as it is by the conclusion of three other fact finding tribunals.

Diligence. Was C. diligent in securing a patent for his invention?

Diligence ordinarily involves a mixed question of fact and law. Perhaps, it would be more accurate to say it is a question of fact, the determination of which often necessitates the application of a principle of law. The mental process by which diligence is determined necessitates a disposition of the fact controversy, if any. After the fact has been found, it must be tested by a standard of care fixed by law or created by the court in accordance with certain rules of law. And the result of this test determines the absence or existence of diligence.

Examining the statute (35 USCA § 31), we find some light on what constitutes diligence on the part of an inventor. The conditions upon which a patent may be obtained are there stated. The inventor is entitled to a patent, other named conditions appearing, "unless the same is proved to be abandoned."

Abandonment may be established in two ways. One is by the express declaration of the inventor to the effect that no monopoly is sought or desired. The other way is to introduce evidence from which the court may find that abandonment is implied. In other words, there may be an express abandonment or an implied or constructive abandonment. Controversy arises most frequently out of an infringer's effort to establish an abandonment by showing the inventor has been guilty of laches. It is in reference to this phase of implied abandonment that courts use the word "diligence." If the inventor has failed to diligently proceed with the reduction of his idea to practice or to diligently prosecute his application for a patent, courts have found therein the basis of an implied abandonment.

We find the facts regarding this issue, like the other issue, hardly in dispute. C.'s discovery was made about September 15, 1917. He did not apply for a patent until October 23, 1918. He first made drawings in August, 1918. Our inquiry, therefore, must be directed to ascertaining whether his failure to apply for a patent for thirteen months after discovery, or the failure to make drawings for eleven months, was satisfactorily explained.

C. was mechanic, married and supporting a wife and seven children. He had no independent means and earned $4.48 a day, part of the time, and $6.40 a day during the latter part of this period. to make application for a patent, he borrowed the necessary money of Uihlein, his superior officer.

The cost of building a furnace of the character here under consideration was such as to preclude the possibility of C.'s constructing one. His invention, moreover, was only an improvement in furnaces and could be readily understood without building an entire furnace.

But it is argued that he could have made sketches, drawings and written descriptions. Had he done so, proof of the first issue, the date of his discovery, would have been strengthened, no doubt. But our query now is directed to his diligence "in carrying forward his idea," not to his obtaining evidence to more conclusively establish the date of his discovery.

Doubtless there are many instances (perhaps in most cases) where the first step in the inventor's reduction to practice would be the preparation of drawings. But drawings would not be required in all cases, for reasons too numerous to mention. They were not necessary in the instant case because of the nature and character of C.'s employment and because his improvement could be satisfactorily explained and understood without drawings.

But lack of means was not the only difficulty which confronted C. The United States was at war. C. was employed by his government as an inspector of ordnance at the Inland Ordnance Company. This company was under contract with the government to manufacture five million pounds of gun forgings for 3" and 4" guns. About three hundred thousand pounds were to be furnished to the Navy Department each week. The government supplied the furnaces, which were furnished by the General Electric Company. C.'s immediate superiors at various times were Johnson, Holden, Reed, and Uihlein, and above them was Pickering.

It was the work of these government representatives to inspect and pass on materials and to facilitate production. The common work of all was the production of war material. To speed up production was the goal of the government and the manufacturer.

C., who had worked as a machinist and who had had experience in building and repairing heat treating furnaces, naturally had his attention promptly directed to the electrical heat treating furnaces. They were somewhat of an experiment, being almost new in this field at this time. Their success was most important because a breakdown cut production. The possibility of such interruption was the ever present subject of conversation and report. As interrupted production followed furnace trouble, attention was directed to the construction and successful operation of electrical heat treating furnaces. Concerning the asserted advantages of the electrical over the gas heat treating furnaces, there was sharp controversy among the superior officers.

C.'s first duty was, therefore, rather clear, we think. He could hardly carry his criticism of the furnaces installed, to the public. The war activities of the government, particularly the manufacture of guns or arms and munitions, were hardly matters of appropriate public discussion. C.'s duty, therefore, was to report to his superiors. He called their attention to certain weaknesses and told them of his proposed changes in the structure. His superiors corroborated him in this story. For several months thereafter, the furnaces installed were closely watched, the merits of electrical versus gas heat treating furnaces were debated. The government decided to stand back of the furnaces in use and rely upon the reputation and guaranty of the manufacturer. In the meantime the furnaces continued to function and turn out tons of forgings. Interruptions occurred and when necessary, the furnaces were repaired as promptly and diligently as possible. But the inherent weakness, which C. Claimed he pointed out in September, 1917, became more and more apparent. In the spring of 1918, B. and G. designed improvements, and an application for a patent thereon was immediately filed. When this fact was made known, C.'s immediate superior informed him that he could apply for a patent.

There seems to have been some dispute among the officers respecting the propriety of a government employee's applying for a patent without first obtaining the consent of his superiors. Back of this position was the fact that the country was at war and the invention related to machinery used in producing war material. While we do not accept the view that C. was barred because of his position from making an application for a patent, it was clearly contrary to the spirit of his employment to give publicity to the failure of the furnaces to turn out the desired quantities of gun forgings.

Considering all of the circumstances, we are unable to say that C.'s conduct was such as to indicate an abandonment of his invention or that he was so lacking in diligence as to bar his right to successfully prosecute his application for a patent.

In reaching this conclusion we have assumed that the rule announced in Morgan v. Daniels, above quoted, respecting the quantum of proof necessary to justify the disregard of a decree of the Circuit Court of Appeals of the District of Columbia, applies to this issue as well as to the issue of priority of invention. We have likewise been mindful of the weight which we should give to the findings of the District Court. With his customary clarity, the District Judge has given his reasons for his findings. It must be said on the other side, however, that much of the testimony was in the nature of depositions. Moreover, the probative value of the court's findings is weakened by the fact that, as to one issue, four tribunals, experienced in passing on such questions, reached a conclusion contrary to that found by the District Judge. As to the other issue, a mixed one of fact and law, the finding of the Circuit Court of Appeals of the District of Columbia is at variance with the finding of the District Judge.

We have intentionally refrained from passing on the validity or infringement of the patent issued to Callaghan, which issues were presented by appellants' counterclaim in the District Court, but which were not considered by the District Court in view of its disposition of the suit on other grounds.

The decree is reversed, with directions to proceed in accordance with the views expressed in this opinion.


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