Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division.
Before EVANS and SPARKS, Circuit Judges, and JOHNSON, District Judge.
This is an appeal from a final decree entered September 22, 1931, which awarded to appellee $97,030.86, with interest, accountant fees, and costs, on account of appellant's infringement of White patent, No. 1,180,810, issued April 25, 1916, and on that date assigned to appellee.
The bill of complaint out of which this controversy arises was filed June 30, 1916, and charged appellant with manufacturing, selling, and putting into use metallic structures embodying the invention covered by claims 2, 5, 11, 12, and 15 of the White patent. That invention relates to metallic boxes, drawers, cases, cabinets, and the like, and particularly to metallic structures of that variety which are assembled and fastened together without the use of rivets or slots.
It was alleged in the bill that appellant was manufacturing, selling, and putting to use its products under and by virtue of the Wege patent, which had formerly and inadvertently been issued to appellant as assignee of Wege on August 8, 1911, and over which appellee had been awarded priority in an interference proceeding by the Patent Office, and by the United States Circuit Court of Appeals for the District of Columbia, to which said interference was appealed. The prayer was for injunction, accounting, and judgment for profits, damages, and costs.
On July 26, 1916, appellant filed its answer to the bill in which it alleged, among other things, that it "admits, and avers, that, as assignee of the Wege patent, it began to manufacture fire-proof safe cabinets under the claims of said Wege patent, * * * and has built up an extensive and lucrative business thereunder, having sold hundreds of thousands of dollars' worth of safe cabinets made in accordance with the invention forming the subject of said Wege patent; defendant denies that any of the safe cabinets thus manufactured and sold by it, embodied the invention alleged to be secured to plaintiff under the White patent * * * that, if it were enjoined from marketing its safe cabinet, which it has manufactured for years and which has become so extensively and favorably known to the public, the rights and advantages of the latter, as well as those of defendant, would be greatly hampered and seriously jeopardized, if not to a great extent destroyed * * *."
On August 1, 1921, an interlocutory decree was entered after hearing, and it was therein found and adjudged that the White patent is valid and is entitled to priority of right over the patent granted the Safe Cabinet Company, as assignee of Wege, August 8, 1911, No. 999,929. It was further decreed: "That defendant has infringed said patent, and particularly the claims selected by plaintiff as those under which the charge of infringement was made, claims 2, 5, 11, 12 and 15, by the manufacture and sale, in this District and elsewhere in the United States, of cabinets embodying the said invention; and that plaintiff is entitled to an accounting of profits and damages accruing by reason thereof. * * * That this cause be referred to * * * master in chancery of this Court, to ascertain, state and report to the Court, the gains and profits derived by defendant from the manufacture, use and sale of cabinets or other devices embodying the invention or inventions embraced in said claims found to be infringed and the damages which the plaintiff has sustained thereby * * *." From the interlocutory order appellant appealed to this court and the decree was affirmed. That opinion is found in 293 F. 568, and is made a part of this opinion by reference.
The controversy here presented arises out of the master's construction of the District Court's decree, including the order of reference to the master, and also the master's construction of the character of the invention and the infringing devices.
The accounting period is uncontroverted and extends from April 25, 1916, the date of the patent, to November 24, 1923, which is the date of the permanent injunction. Within this period of time appellant manufactured and sold two structures which constitute the basis of this controversy. One was called "Phoenix Safe," and the other "Safe Cabinet," specifically termed and known as the "S-Cientest Cabinet." All of appellant's products, except the "Phoenix Safe," were and are called "Safe Cabinets."
The master found and reported that the S-Cientest safe cabinets did not come within the terms of the decree and should not be included in the accounting, and that the only structure to be considered in the accounting was the Phoenix Safe. He therefore rendered an account of appellant's profits on that structure and found there should be nominal damages only, because of the fact that the patent was not a unitary structure but merely an improvement of an old structure. For that reason he held that the burden was upon appellee to prove the profits on the improvement separately from the profits on the entire structure; and, having failed in that respect, it was entitled to nominal damages only. He further found that appellee was not entitled to compensation for the services of its accountants, and that appellant was entitled to credit for federal taxes which it had paid.
Appellee filed exceptions to the master's report and, upon hearing, the District Court made special findings of fact and conclusions of law*fn1 allowing and sustaing exceptions numbered 1 to 10 and 13 to 18, inclusive, and 20. The court found that all safe cabinets and safes made, sold, or used by appellant during the time covered by the accounting were made, marked, and sold by appellant under the Wege patent and embodied the inventions embraced in claims 2, 5, 11, 12, and 15 of the White patent, and that the interlocutory decree had so considered and adjudged.
The court further found that the White patent covers a unitary structure and that appellee is entitled to all profits derived by appellant from the manufacture and sale of the complete unitary Safe Cabinets and Phoenix Safes, and that no apportionment of parts should be made. It was further found that appellee was entitled to recover its costs ...