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TRIPLEX SAFETY GLASS CO. v. DUPLATE CORP.

May 1, 1934

TRIPLEX SAFETY GLASS CO. OF NORTH AMERICA
v.
DUPLATE CORPORATION et al.



The opinion of the court was delivered by: SCHOONMAKER

This case now comes to the court: (1) On exceptions to the final report of the master, G. Dixon Shrum, Esq., appointed to take and state an account of the profits derived and the damages sustained by the plaintiff by reason of infringements by defendants of letters patent 1,182,739, for the manufacture of strengthened glass; (2) on the motion of the plaintiff to assess interest on the damages allowed; and (3) on the plaintiff's motion to assess against the defendants the cost of reference to the special master.

Two decrees were entered in this case: One on December 9, 1929, against the defendant Duplate Corporation, the original defendant in this suit for the infringement of the patent; and the other on December 5, 1931, against the Duplate Corporation and the Pittsburgh Plate Glass Company, the latter company being brought into the case on supplemental bill charging the Pittsburgh Plats Glass Company to be a contributory infringer.

 This decree of December 5, 1931, held that both defendants were jointly and severally liable to account for the costs, profits, and damages arising from infringement of this patent.

 The master found that the defendants had received no profits out of the manufacture and sale of infringing glass, showing by Appendix B attached to his report under heading "Statement of Account Per Finding of Special Master," a net loss to the defendants on the sale of infringing glass of $276,857.47. The master did find, however, that the plaintiff had suffered damage, and assessed the same on the basis of a royalty of 10 cents per square foot on the infringing laminated glass, the total amount being $414,120.70. In addition to that, the master found that the plaintiff had suffered damage in the sum of $2,807.89 due to price reductions forced upon the plaintiff by the infringement of the patent in suit. This makes the total award of damage $416,928.59.

 Both the plaintiff and the defendants have filed exceptions to this report.

 The plaintiff's exceptions are forty-three in number. The defendants have moved to dismiss them, because it is alleged that they do not conform to the proper equity practice, in that they are general assignments of error without specific reference to what the master should have found in lieu of the findings complained of.

 The exceptions, as filed by the plaintiff, do not seem to meet the requirement laid down by the Supreme Court in Sheffield & Birmingham Coal, Iron & Railway Co. v. Gordon, 151 U.S. 285, 289, 291, 14 S. Ct. 343, 38 L. Ed. 164. But as plaintiff's counsel in their argument in support of these exceptions largely raise only questions of law as to the proper method of computation of the profits and loss and of damages arising out of the sale of infringing glass, we will deny this motion to dismiss.

 These forty-three exceptions filed by the plaintiff raise, as we look at it, practically three questions: (1) Are the defendants willful and deliberate infringers? (2) Did the master adopt and use in his statement of profits on the sale of infringing glass a proper basis for computing the cost of manufacture and the deductions that the defendants should be permitted to make in computing profits? (3) Did the master correctly compute the general damages awarded to the plaintiff.

 The defendants' exceptions are twelve in number, and relate largely to the damage items awarded to the plaintiff, it being the contention of the defendants that the evidence in this case before the special master would only justify the award of nominal damages.

 The question of wanton and deliberate infringement we must resolve in favor of the defendants. It appears by the evidence that the defendants had notice of the plaintiff's patent and took the advice of legal counsel who not only examined the plaintiff's patent, but the plaintiff's process in the manufacture of laminated glass, after which defendants' counsel gave to the defendants his legal opinion that their method of manufacturing strengthened glass did not infringe the plaintiff's patent. We find nothing in the evidence which impugns the good faith of the defendants in seeking the advice of their counsel or the good faith of counsel in studying the plaintiff's process to determine whether there was infringement. In that we are satisfied that both defendants and their counsel were acting in good faith in the matter of infringment and in believing that their process did not infringe the plaintiff's patent. We conclude therefore that the defendants were not willful and deliberate infringers.

 We go next to the master's computation of profits and losses. There seems to be no dispute in the case over the correctness of the computation of the amounts; there is no dispute over the correctness of the figures. The dispute is over the question of whether items deducted are properly and legally allowable as deductions from the sale price, in order to determine profits. The plaintiff's objection to these deductions allowed by the master may be grouped and discussed under the heads: (a) Comparisons of average costs and specific selling prices; (b) factory operating losses (rejects and returns); (c) additional pyralin losses; (d) allowance for use of defendants' patents; (e) special cutting losses; (f) federal income tax; (g) selling commissions; (h) interest on investment.

 (a) Comparison of Average Costs and Specific Selling Price. The master found that this was not a case in which it would be permissible to state an accouunt of profits by offsetting the monthly average costs per square foot unit against the price for which the glass was sold. We agree with the master in his conclusions that the profits of the infringing sales are not to be computed in the way contended by the plaintiff. To determine truly the profits or losses, sales prices must be compared with specific costs of items of manufacture of the infringing article. The defendants were engaged in a regular and continuous business during the period of these operations in the manufacture of infringing glass. In this continuous business, the infringing glass cannot be treated separately.

 We believe Judge Thomson of this court, in MacBeth Evans Glass Co. v. L.E. Smith Glass Co. (D.C.) 21 F.2d 553, 555, thus correctly stated the rule to be applied to infringements of this character. This opinion of Judge Thomson was approved by the Circuit Court of Appeals of this ...


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