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COLD METAL PROCESS CO. v. UNITED ENGG. & FOUNDRY C

January 4, 1938

COLD METAL PROCESS CO.
v.
UNITED ENGINEERING & FOUNDRY CO.



The opinion of the court was delivered by: MCVICAR

This is a suit to restrain the defendant from prosecuting three suits brought by it in other districts, to rescind a contract between the parties made June 20, 1927; or in lieu thereof, to determine the amount due plaintiff under said contract and for other relief.

June 30, 1923, Abram P. Steckel made application for a patent for the rolling of thin sheet metal. In pursuance to this application, a patent was issued October 21, 1930, No. 1,779,195. This patent was assigned to the plaintiff. April 20, 1926, Biggert and Johnson made application for a patent on the same subject matter, which was assigned to the defendant.

 June 20, 1927, plaintiff and defendant made a contract, whereby plaintiff agreed, when and if the claim or claims to common subject matter in the foregoing applications are granted in any patent issued to plaintiff, that plaintiff shall grant to defendant a license to make, use and sell rolling mills under such claim or claims, which license shall be exclusive to defendant for 4-high hot mills and for 4-high cold mills in which the major portion of the power required by a roll stand is supplied to the rolls directly and not through tension exerted on the material for pulling it through the rolls (with certain exceptions therein stated.) It was agreed, further, in said contract, that the parties shall negotiate the payment to be made by defendant to Cold Metals for such license, when and if granted; further, that if the parties could not agree, that the mater shall be submitted to three arbitrators named; that if any of the arbitrators could not serve, that another or other arbitrators may be selected by the parties, and in event that the parties could not agree, that the arbitrators named, shall select the substitute arbitrator or arbitrators.

 March 7, 1931, plaintiff filed a bill in this court against defendant at No. 2506, Equity, alleging that it was the owner of the aforesaid patent; that defendant had infringed the same, and prayed for an injunction and for an accounting. Defendant filed an answer thereto May 22, 1931, wherein defendant alleged that the patent of plaintiff was invalid; and further, that defendant had not infringed the same by reason of the contract of June 20, 1927. January 9, 1933, this court dismissed the bill for the reason that defendant had not infringed the patent of plaintiff on account of the license contract of June 20, 1927, 3 F.Supp. 120.

 Defendant took an appeal from the aforesaid decree of this court to the Circuit Court of Appeals of this circuit, which was dismissed on motion of plaintiff January 3, 1934. The Circuit Court of Appeals, in an opinion by Buffington, C.J., 3 Cir., 68 F.2d 564, stated: ' * * * is the defendant, which has not surrendered or canceled the license, and is now enjoying the monopoly of the patent, warranted in asking this court in this appeal to convict the court below of error in its decree and here contest the validity of the patent? In that connection we note that, assuming for present purposes the defendant could plead whatever defenses it chose, the situation of standing on its unsurrendered license and insisting on a decree which does not invalidate, and therefore leaves it in possession of a licensee's rights, it follows that, enjoying and possessing such license, the defendant is not in a position to contest the validity of its licensor's patent, the monopoly and rights to which it retains.'

 A writ of certiorari was refused by the Supreme Court March 5, 1934, 291 U.S. 675, 54 S. Ct. 530, 78 L. Ed. 1064.

 July 7, 1934, plaintiff brought suit against the United States Steel Corporation and the American Sheet and Tin Plate Company in the District Court of the United States for the District of New Jersey, Equity 4906, charging infringement of the Steckel patent No. 1,779,195. Cold Metal Process Co. v. American & Tin Plate Co., D.C., 22 F.Supp. 75.

 September 21, 1934, plaintiff brought suit against the Continental Roll & Steel Company in the United States District Court for the District of Delaware, Equity 1078, charging infringement of the Steckel patent.

 October 5, 1934, plaintiff petitioned this court for the appointment of arbitrators to determine the payment to be made by defendant to plaintiff under the June 20, 1927 license contract, Misc. 808. This petition was dismissed on defendant's motion January 28, 1935.

 July 9, 1934, defendant brought suit in the United States District Court for the Northern District of Ohio, Eastern Division, Equity 4981, against E. W. Bliss Company and plaintiff, charging infringement of the Steckel patent.

 October 3, 1934, defendant brought suit against the Illinois Steel Company, the Continental Roll & Steel Foundry Company and Hubbard Steel Foundry Company in the United States Court for the Northern District of Indiana, Equity 510, wherein the plaintiff in this case was joined as a party plaintiff, and which charged the defendants therein with an infringement of the Steckel patent.

 October 15, 1934, defendant entered suit against plaintiff in the United States District Court for the Northern District of Ohio, Eastern Division, Equity 5059, for the purpose of determining the payment due from defendant to plaintiff under the license contract of June 20, 1927.

 November 17, 1934, plaintiff brought this suit against defendant, Equity 2991, wherein plaintiff sought an injunction against the defendant from prosecution of the two suits aforesaid of defendant for infringement of the Steckel patent and the suit of defendant against plaintiff to determine the payment due plaintiff under the June 20, 1927 contract; also, for a determination of the amount due plaintiff under said contract. A hearing was held on plaintiff's application for a preliminary injunction to restrain the defendant from the prosecution of the suits aforesaid. A decree was entered January 28, 1935, refusing the application of plaintiff. This decree was appealed from to the Circuit Court of Appeals of this circuit, which reversed the decree of this court September 27, 1935. 79 F.2d 666. A preliminary injunction was then issued, restraining the prosecution of the suits aforesaid.

 May 11, 1936, plaintiff filed a supplemental bill in this suit in which it averred, inter alia, a contract made by the defendant with the Mesta Machine Company, dated October 28, 1931. It contained prayers, inter alia, that this court enter a decree declaring a rescission of the June 20, 1927 contract; also, a prayer for alternate relief in the event of a refusal of a decree of rescission for the determination of the amount due ...


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