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JULIUS KAYSER & CO. v. ROSEDALE KNITTING CO.

April 13, 1937

JULIUS KAYSER & CO. et al.
v.
ROSEDALE KNITTING CO.



The opinion of the court was delivered by: DICKINSON

This cause concerns United States letters patent No. 1,969,307, issued to Charles A. Kaufman August 7, 1934, on an application filed May 20, 1932.

The patent is a method and product patent. All its claims are in issue. It was granted for a claimed invention or discovery of a "new and useful art" and for a "manufacture." The particular method invention claimed is that of knitting a stocking fabric so as to practically eliminate the appearance of what are called rings in the leg of the stocking. The method is known to this record as the three carrier method.It applies to full-fashioned hose chiffon stockings, knit of natural animal silk threads. The idea of the invention begins with the fact that such threads are the product of the silk worm. They are not uniform in the diameter size of the thread. When the stocking was knitted by the pre-invention method, these irregularities in the size of the threads gave the ocular appearance of rings in the stocking except very closely or very openly knit ones. The sole purpose of the invention was to get rid of the appearance of rings by producing "Ringless Stockings."

 The real defense is that this patentee invented nothing except perhaps the advertising slogan of "Ringless Stockings." He did not even invent this because he makes no claim to have originated the phrase. There is no difference between a stocking produced by the old method and one produced by the new, otherwise than in its appearance. Well-tooted changes rung on the slogan "Ringless Stockings" might, however, make of them the only stockings sold. The producers of "Ringless Stockings" would thus have a monopoly of this branch of the hosiery trade. The right to produce them would be indispensable to every hosiery mill. Two very abundant sources of profit were thus opened to any one who could secure a patent upon the production of "Ringless Stockings." One was the profit from their manufacture. The other was the receipt of license fees from the numerous hosiery mills of the country. The idea upon which the claim to a patent rested was the common property of many and was well known to the trade. Several mills employed this method and were fathering rival claims to the invention. In fact, after this application had been filed six or seven interferences were declared and another afterwards admitted. What the plaintiff is charged to have done is to have formed a conspiracy to monopolize the full-fashioned or chiffon hosiery trade through and by the procuring of the patent in suit. Into this conspiracy were brought all who were interested in the pending applications by allotting to them shares in the prospective profits. The plan was for all those who figured in the interference proceedings in the Patent Office to concede priority of invention to one of them and thus enable the plaintiff to secure the issue of a patent. With this leverage, as many of the mills as could be thus reached, were to be intimidated by threats of patent litigation, so as to be induced to take out licenses from the conspirators and all others were by like threats to be deterred from encroaching upon the monopoly. It was in this way that the patent in suit is charged to have been obtained. This introduces a digression necessary to an understanding of the issues presented.

 The bill is the usual patent infringement bill. The formal defenses are noninfringement and invalidity. In addition to the defenses mentioned, the defendant has pleaded a counterclaim for damages suffered by reason of the unfair competition with which the plaintiff is charged, and we are further asked to dismiss the bill because the hands by which it is presented are unclean.

 The real controversy is over the issue of the validity of the patent. Preparatory to its discussion, we will dispose of these other defenses. The defense of noninfringement is a mere formality. Infringement is admitted as to the method claims and its denial is not interposed to the product claims. Indeed, the real purpose of the defendant would be defeated by a finding of noninfringement.What it is really seeking is a finding of invalidity. The noninfringement branch of the defense is disposed of by its not being pressed and infringement is found if the Patent is valid.

 Many interesting questions could be raised over the counterclaim defense. Into these we will not go, for the reason that this branch of the defense has not been argued and because of this we will not discuss it. If the defendant desires to press it we will give it the opportunity.

 We formally dispose of the counterclaim by dismissing it.

 The defense of "unclean hands" rests upon the fact averment that the plaintiffs' hands have been soiled by the tactics employed. It is beyond controversy that it is a doctrine of equity, and indeed an adage that every applicant for equitable relief shall show himself to be free from guile. This rests upon the doctrine that every application for relief through the forms of equity is the invocation of a privilege, not the assertion of a right. The relief which a chancellor grants is always of grace. It can never be demanded as a right.The beautiful symmetry of the procedural systems, both of law and equity, has however been marred by arbitrary innovations. Resort to a bill in equity in patent cases does not depend wholly upon equitable principles. It is now a statutory right. That right is conditioned upon several things, but that the plaintiffs should be persona grata to the chancellor is not one of them. The plaintiffs' right to maintain a bill rests in patent cases, not upon equitable principles, but upon the statute. The defenses are likewise statutory by the defendant being permitted under the general issue to offer evidence of the special matters set forth in the statute.

 The charge really rests upon the averment, the truth of which is frankly admitted, that the seven or eight rival claimants to this invention who were parties to the interference proceeding in the Patent Office, agreed among themselves to submit their respective claims of priority of invention to an arbitrator by whose decision they agreed to abide. The arbitrator decided in favor of the patentee. The others accordingly conceded priority to him and the Commissioner issued to him the patent in suit.

 There is this to be said of this agreement: Patent litigants, as all others, are encouraged by the law to settle their differences. There is nothing unlawful or improper in their so doing. A patentee must, however, have been not merely the inventor of the subject-matter of the patent but also the first inventor. Among rival claimants in an interference proceeding the Patent Office must decide. Concessions and admissions made by litigants, so far as the parties are concerned, are evidentiary between the parties to the interference. If the other interferers concede priority to one, a patent may issue to him. Neither the ruling of the Commissioner nor the admission of the parties affects others. Upon an issue of validity all the patentee gets is the prima facie evidence of his patent. If the ruling of the Commissioner was based wholly upon the admission of the parties to the interference, the patentee would get only this technical benefit.

 This comment may, however, be added. Under an agreement, such as was here made, all the several claimants would have an interest in the claimant, to whom priority was conceded, being in truth and fact the first inventor, because if he were not the patent would have no validity.

 We dispose of the "unclean hands" defense by the ruling that if the patent in suit is valid, the bill may be sustained.

 This takes us to the real defense of invalidity. This resolves itself into the simple question of fact of whether this patentee was "the original and first inventor or discoverer" of the process of knitting full-fashioned chiffon stockings by the three carrier method. This, of course, means first inventor within the meaning of the patent laws. Usually contests of this kind are between rival claimants to an invention. The patent should issue to one or the other. It should never be forgotten, however, that a patent is a monopoly. The public is in consequence always concerned. A monopoly is a thing of commercial value. It is so because the possessor is thereby able to reap a harvest, the yield of which he could not otherwise command. What he gets is at the cost of the ultimate consumer. To the public, monopoly has always been anathema. In the days of Queen Elizabeth the evil was widely felt. Monopolies were rampant. They were granted wholly by the grace of the sovereign. With us the grant is regulated by law. Congress was given the power to grant monopolies but only for the purpose expressed in the Constitution as that "to promote the ...


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