Court Opinion

ID: 8594327
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:01:04.544109+00
Date Added: 2024-06-11T16:54:48.256707
License: Public Domain

Nichols, Judge,
concurring in part, dissenting in part:
Except in one particular that follows I have no challenge to offer to the able jobs Commissioner Davis and Judge Davis have done with this complex case. Having determined the number of infringing units sold, the commissioner noted that plaintiff had licensed production to anyone who would pay at 0.25 cents per O-ring. He said, however, that “The commercial rate was set by patentee and offered to the trade with a view to avoiding litigation.” The idea seems to be that considering the cost and duration of patent litigation, and the mortality of issued patents in the Federal courts, anyone who pays for a license, prior to any litigation had, is in effect compromising a law suit. Of course, the compromise of disputed claims does not constitute the kind of arm’s-length buying and selling that will afford a measure of just compensation in eminent domain. Our trier of fact, with his expertise in the patent field, does not think that one who has dragged the patentee through the courts is similarly situated with one who, prior to any court decision, has paid such a royalty. The findings do not tell us whether those who paid the 0.25 cent figure had any doubt that the patent was valid, *61but they do show there was a realized cost saving of $0.73 per structure over prior art, and there is no explanation why the patentee was able to pocket so small a share of the benefits inuring from the invention, except the one that seems obvious to the commissioner. The court views the upward adjustment he made in the 0.25 cent unit figure as a back door attempt, contrary to precedent, to award plaintiffs their litigation expenses, but this depends on which end of the telescope you apply to your eye.
Furthermore, the commissioner tested his award against the amount the defendant would have paid if .it had simply renewed its existing license up through 1956, and made it applicable to non-aircraft uses. It appears to me that it is a proper way of determining just compensation in eminent domain, to compute an award one way and test it against figures computed other ways. Cf., United States v. Northern Paiute Nation, 183 Ct. Cl. 321, 393 F. 2d 786 (1968). Thus, if the trier of fact was in error in adjusting the 0.25 cent figure upward by one-third, it does not necessarily follow that the way to correct the error is to adjust it down by that one-third again. This ignores the effect of other factors that signalled to the commissioner that his upward adjustment was a proper one.
'In view of the foregoing discussion and in light of our Hule 147 (b), I consider the award, as modified by the court, inadequate to constitute reasonable and entire compensation by the amount of the eliminated one-third upward adjustment, and the calculated interest thereon.
FINDINGS of Fact
The court, having considered the evidence, the report of Trial Commissioner James F. Davis, and the briefs and arguments of counsel, makes findings of fact as follows:
1. On December 11, 1964, the court held that claim 5 of Christensen U.S. Patent 2,180,795 is valid and infringed and that plaintiffs are entitled to recover reasonable and entire compensation pursuant to 28 U.S.C. § 1498. 168 Ct. Cl. 663s 339 F. 2d 665,143 USPQ 439.
2. (a) The patent in suit issued on November 21, 1939, *62and expired on November 21,1956. On October 20,1942, tbe patentee granted defendant a license for $75,000 to use tbe patented invention “on or in airplanes or aircraft.” Tbe license was to run “for a period of five years * * * or for tbe remaining period of tbe present National Emergency * * * (whichever be longer) * * Officially, tbe National Emergency ended on April 28,1952, and tbe license was not thereafter renewed. However, defendant continued to use tbe patented invention, both in aircraft and otherwise.
(b) Plaintiffs’ petition was filed on November 19, 1955. Accordingly, tbe accounting period would normally run back 6 years to November 19, 1949. 28 U.S.C. §2501. However, on October 24,1958, plaintiffs made demand on defendant for administrative payment for unauthorized use of tbe patented invention. Tbe demand was refused on April 1,1954. Pursuant to 35 U.S.C. § 286, second paragraph, tbe statute of limitations was tolled during tbe period of administrative demand (about 5% months), so that tbe effective recovery period runs back to June 11, 1949. Further, tbe court held on December 17, 1965, that tbe accounting period should extend forward to November 21,1956, tbe expiration date of tbe patent. 173 Ct. Cl. 893, 354 F. 2d 337, 148 USPQ 12. Therefore, tbe recovery period extends from June 11, 1949 to November 21,1956.
Defendant, however, was licensed for aircraft use, under tbe previously mentioned October 20, 1942 agreement, up to April 28, 1952. Accordingly, tbe accounting period for defendant’s use of tbe patented invention in aircraft runs from April 28,1952 to November 21,1956.
(c) In sum, tbe accounting period is as follows:
For use of tbe invention in aircraft — April 28, 1952 to November 21,1956;
For tbe use of tbe invention other than in aircraft— June 11,1949 to November 21,1956.
3. Claim 5 of tbe patent reads as follows:
The combination of a cylinder and piston, of a resilient elastic packing element therebetween having normally approximately circular cross-section, *63of a groove having a flat bottom portion spaced from the cylinder wall a distance less than the normal radial dimension of the ring, whereby when the ring is in the groove in operative position, it is compressed into somewhat ellipsoidal cross-section, and the width of the groove being greater than the axial dimension of said compressed ring by a fractional part of said axial dimension.
The essence of the invention is the use of the O-rings as the sealing (or packing) element in a combination of a cylinder and piston. The O-ring prevents leakage of fluid between the cylinder and the piston as those parts move relative to one another. As defined in the claim, the O-ring and the groove in which it resides have a particular dimensional relationship. The parties agree that the claim covers structures only where the seal created by the O-ring is a dynamic seal. If the seal is a static seal, i.e., if the O-ring is used as a gasket or with nonmoving parts, there is no infringement.
4. Structures incorporating O-ring seals in both dynamic and static applications are found in many types of equipment, particularly hydraulic components of pumps, control mechanisms and the like. For example, O-ring seals (both dynamic and static) are used in the hydraulic components of military equipment such as aircraft landing gear and fuel systems, ship steering systems and windlasses, and gunfire control systems of tanks, ships and aircraft. They are also used in nonmilitary equipment such as flush valves and other plumbing devices.
5. (a) The Government, through its various agencies, maintains no records by which it can be readily determined how many structures having dynamic O-ring seals are procured and used from time to time. Most equipment having O-ring seals is procured as component parts of larger units; and the number of dynamic (as opposed to static) seals in any piece of equipment varies.
(b) On April 4, 1966, the trial commissioner ordered defendant to “prepare and submit * * * an ACCOUNTING SCHEDULE estimating the number of [infringing] O-ring assemblies * * * procured by defendant’s agencies” *64during the pertinent time period. Defendant responded on August 12, 1966, with a report which is based on “purchase orders and other available records” of its military services. The report concludes that “procurement of dynamic O-ring assemblies” by the military services during the pertinent time period was 5,785,391. The report is discussed in detail in finding 8.
(c) On October 12, 1967, the trial commissioner issued orders for call on the General Services Administration and the General Accounting Office for information showing O-ring procurement “for Government agencies other than the Department of Defense.” By letter dated December 18, 1967, the General Services Administration responded that “all procurement records for the * * * [pertinent time period] have been destroyed.” The General Accounting Office responded by letter dated November 14,1967, that its records “are not such as to show the number of ‘O-rings’ purchased by any Government agency” during the pertinent time period.
6. Failing to get complete and adequate O-ring procurement data through defendant, plaintiffs resorted to other means described below.
(a) Under a comprehensive licensing program set up in the 1940’s, the patentee contracted with manufacturers of O-rings whereby the manufacturers became the patentee’s agents for the collection of 0.25 cent per O-ring as a royalty for all O-rings sold to commercial buyers to be used in infringing structures. Three such manufacturer-agents were Goshen Bubber and Manufacturing Company, Goshen, Indiana (“Goshen”), Precision Bubber Products Co., Dayton, Ohio (“Precision”), and Linear, Inc., Philadelphia, Pennsylvania (“Linear”). Goshen, Precision and Linear kept monthly records of commercial sales and remitted royalties based thereon to the patentee. They also kept monthly records of all O-rings sold to the Government or to Government contractors for use in making equipment for the Government. No royalty was charged or collected on such sales. In prior litigation under the patent in suit, the following O-ring users were released from liability for infringement: Ford Motor *65Company, General Motors Corporation, Chrysler Corporation, International Harvester Company, J. I. Case Company, Minnesota Kubber & Gasket Company, and State Chemical Company (hereinafter the “released companies”). The following summary is taken from monthly royalty reports of Goshen, Precision and Linear and is the total number of O-rings sold to the Government or its contractors in the years indicated. O-rings sold to released companies are excluded.
1949 _ 4,486,714
1950 _ 15,266,753
1951_ 32, 550, 896
1952 _ 43,758, 637
1953 _ 30,452,314
1954 _ 25,670,981
1955 _ 27,623,060
1956 _ 25, 607, 614
Total_ 205,417, 9691
The monthly reports show that the total number of O-rings sold to both released and unreleased companies in the years indicated was 209,026,801. Therefore, 3,608,832 O-rings (or about 1.7%) were sold to released companies.
(b) The accounting period begins on June 11,1949. Therefore, if it be assumed that procurement in 1949 was evenly distributed from month to month, the pro rata sales of O-rings in the pertinent months of 1949 were about 2,420,000. Similarly, the accounting period ends on November 21, 1956. Under the same assumption as above, the pro rata sales of O-rings in the pertinent months of 1956 were about 22,450,000.
In sum, the number of O-rings sold to the Government (or to unreleased companies for Government use) by Goshen, Precision and Linear during the accounting period, and on which no royalty was charged or collected, was about 200,193,600.
(c) The evidence further establishes that the total number of O-rings sold by Goshen, Precision and Linear during the *66accounting period for Government use about 200,193,-600) includes (i) O-rings used in aircraft as well as used other than in aircraft, (ii) O-rings used in both dynamic and static seals, and (iii) O-rings used as replacement parts.
With respect to (i) above, between June 11,1949 and April 28,1952, defendant was licensed to use the invention in aircraft. O-ring sales during that period were about 64,824,000; and since about 93% of such O-rings (finding 8 (f)) went into aircraft use (about 60,200,000), this leaves a balance of 139,993,600 O-rings sold to the Government or for Government use not under license.
With respect to (ii) above, the evidence shows that, on the average, about 15% of the O-rings used in components of military equipment went into dynamic seals. This reduces the balance to about 21,000,000 O-rings (15% of 139,993,600).
With respect to (iii) above, the evidence establishes that about 15% of the O-rings procured for use in dynamic seals were replacement parts for already existing or newly procured equipment. After eliminating O-rings procured as replacements, there remains a balance of about 17,850,000 (85% of 21,000,000).
(d) In sum, the number of O-rings procured from Goshen, Precision and Linear by the Government or its contractors and used by the Government without license in infringing structures during the accounting pei’iod was about 17,850,000.
7. During the accounting period, the Government also procured O-rings, either directly or through its contractors, from subsidiary companies of Parker Appliance Company (now Parker-Hannifin Company), Cleveland, Ohio. The subsidiaries were Synthetic Eubber Company (“Synthetic”) and Berea Eubber Company (“Berea”). Synthetic and Berea made rubber products exclusively, about 90% of which were O-rings. No royalty was charged or collected on O-ring sales to the Government. Eecords (such as purchase orders, invoices, etc.) showing O-ring sales by Synthetic and Berea during the accounting period are not available.
In lieu of purchase orders, invoices or the like, plaintiffs produced at trial records showing sales, both renegotiable and nonrenegotiable, of Synthetic and Berea from June 30, *671951 to June 30,1956. The renegotiable sales were sales to the Government or its contractors. The total amount oí renegotiable sales during that period was $3,346,650; and 90% of that figure, representing O-ring sales, is $3,011,990.2 The figure of $3,011,990 must be corrected to reflect the fact that the accounting period (for aircraft) does not begin until April 28, 1952; $502,000 represents renegotiable sales of O-rings for the ten-month period from July 1, 1951, to April 28, 1952, and of this amount $466,860 (93% of $502,000) represents rings used in aircraft. Similarly, the total of $3,011,990 must be corrected because the accounting period extends '(for all procurement) beyond June 30, 1956 to November 21, 1958; $251,000 represents renegotiable sales for this five-month period. Offsetting the latter correction against the former leaves $215,860 to be deducted from the total, or a new total of $2,796,130. The average selling price was 5 to 6 cents per O-ring. Applying the price of 5y2 cents per O-ring, the number of O-rings sold was about 50,838,725.
Assuming that 1.7% (finding 6(a)) of the 50,838,725 O-rings (about 864,260) were sold to released companies (leaving a balance of 49,974,465); that 15% of that balance (i.e., about 7,496,170) went to mating dynamic seals rather than static seals; and that 15% of the O-rings for dynamic seals were replacement parts '(i.e., about 1,124,425); then the remaining O-rings (about 6,371,745) constitute those procured from Synthetic and Berea by the Government or its contractors and used by the Government without license in infringing structures during the portion of the accounting period April 28,1952 to November 21,1956.
8. On October 20, 1970, defendant filed with the court a report, pursuant to an order of the trial commissioner (noted in finding 5(b)), estimating the “maximum number of dynamic O-ring assemblies procured during the account*68ing period” by its military services. Defendant’s report, in pertinent part, is summarized below in subparagraphs (a) to (d).
(a) The Army procured, between 1946 and 1956, about 10 million O-rings of which more than 8 million were used in noninfringing static seals; 1,143,775 were used in dynamic seals, but were procured from released companies; and 878,894 were used in dynamic seals, and were procured from nonreleased companies. The above figures do not include O-rings procured as replacement parts.
(b) The Air Force procured an undisclosed total number of O-rings during the accounting period, of which 100,000 were deemed procured for “miscellaneous uses” in dynamic seal applications; and 2,355,466 were procured between May 15,1952 and November 21,1956, for use in dynamic seals in aircraft. The total number of O-rings thus procured during the accounting period for use in dynamic seals was 2,455,466.
(c) The Navy procured a total of about 19 million O-rings between May 15, 1952 and November 21, 1956. About 1 million were for replacement parts; about 2,385,000 were for dynamic seals for aircraft use, arrived at by estimating that about 1 of every 7 O-rings used in aircraft equipment were for dynamic seals, the other 6 being for static seals; and about 16,031 were for dynamic seals for shipboard equipment.
(d) In sum, defendant estimates the following procurement and use of unlicensed O-ring dynamic seals for military equipment:
Army- 878,894
Navy - 2,401, 081
Air Force- 2,455,466
Total - 5, 735, 391
(e)Defendant’s estimated figures and report are entitled to little weight because (i) it is not clear what records were available and compiled in order to arrive at the figures, (ii) it is reasonable to assume, on the basis of record-retention policies of Government agencies generally, that many, if *69not most, of the records relating to the period 1949-56 were destroyed or otherwise not available, and (iii) in at least one instance, the report is contrary to evidence produced at trial. In particular, the report states that the “Air Force did not procure any significant number of missiles during the accounting period.” Defendant’s evidence at trial, however, shows that defendant procured over 900 Corporal missiles between 1952 and 1956.
(f) Defendant’s report, though not reliable to show the number of dynamic O-ring seals used by the military services during the accounting period, is probative (i) to establish that about 93% of the O-rings procured by the Government during the accounting period went into equipment for aircraft use; and (ii) to corroborate evidence at trial that about 15% of the O-rings procured by the Government for military equipment were used in dynamic seals.
9. In view of findings 6 and 7, plaintiffs are entitled to compensation based on the Government’s unlicensed use of 24,221,745 O-rings, procured from Goshen, Precision, Linear, Synthetic, and Berea and used in infringing dynamic seals of military equipment. The evidence is not clear to what extent other companies (in addition to Goshen, Precision, Linear, Synthetic, and Berea) supplied O-rings to the Government or its contractors during the accounting period for use in infringing structures for which no royalty was paid. However, there is evidence from a Government witness that (a) Goshen, Precision and Linear were the “majority” suppliers, i.e., something more than 50% and that (b) other companies supplied the balance. A reasonable compromise, in view of the paucity of evidence, is that other companies supplied additional unlicensed O-rings for use in infringing structures, in an amount equal to about 20% of the O-rings supplied by Goshen, Precision and. Linear. The 20% figure is arrived at as follows: Assuming “something more” than 50% to be about 60%, then 40% is the maximum limit possibly supplied by other manufacturers, while 0% would be the minimum limit. Splitting the maximum and minimum limits would give 20%. This means that substantially all the *70“minority” supplies came from Synthetic and Berea (which supplied 6,371,745 unlicensed and infringing rings (see finding 7)); and plaintiffs are not entitled to compensation for more than the 24,221,745 O-ring structures referred to above (which includes the accountable sales by Synthetic and Berea).
10. The evidence does not establish how much nonmilitary equipment having infringing O-ring seals was procured and used by the Government during the respective accounting periods. Nor is there any evidence from which to estimate the relative amounts of procurement of military and nonmilitary equipment. However, it is reasonable to infer from the record that plaintiffs are entitled to little, if any, compensation, in addition to that noted in finding 9, with respect to nonmilitary equipment for the following reasons: (a) The Government contracts under which Goshen, Precision, Linear, Synthetic, Berea, and others, sold O-rings to the Government’s suppliers are not limited, so far as the record shows, to military procurement, and may include contracts for nonmilitary (as well as military) applications, in which event plaintiffs are compensated pursuant to finding 9; and (b) a large share of the Government’s nonmilitary procurement of equipment having dynamic O-ring seals (through the General Services Administration, etc.) was, in all probability, off-the-shelf items (such as plumbing fixtures or the like) from suppliers which used O-rings purchased from licensed sources, so that plaintiffs would have already been paid a royalty for such purchases.
In any event, compensation based on nonmilitary use of O-ring dynamic seals would be unduly speculative and unsupported by the evidence.
11. Starting in the 3940’s, the patentee established a commercial royalty rate for use of the patented invention by charging 0.25 cent per O-ring for each O-ring used in an infringing structure. The patentee entered into many license agreements on such basis and also filed in the U.S. Patent Office a form of license which stated that he was willing to grant a license to anyone who desired to make or sell the invention, at a royalty of 0.25 cent per “packing construction.” *71This sum of 0.25 cent represented fair market value for use of the patented invention.
12. A comparative cost analysis between an old-style prior art dynamic seal packing and the patented structure, which in large measure replaced the old-style packing, shows that for a %-inch structure, the cost saving is about $0.73. The evidence also shows that, on the average, O-rings sold during the pertinent accounting periods were of y2-inch diameter, though rings were made in sizes up to 12 inches. Typical O-rings used in military equipment range from 0.25 inch to 5 inches in diameter.
13. (a) As damages for unauthorized use of the patented invention, plaintiffs are entitled to $60,554.36, arrived at by applying the established commercial royalty of 0.25 cent to the total number of infringing O-ring structures, 24,221,745.
(b) As delay damages and as part of reasonable and entire compensation, plaintiffs are entitled to interest at 4% per annum from August 15,1954 to the date of payment.
14. There is no evidence to establish plaintiffs’ litigation expenses (costs or attorneys’ fees).
CONCLUSION 03P LAW
Upon the foregoing findings of fact which are made a part of the judgment herein, the court concludes as a matter of law that plaintiffs are entitled to recover the sum of $60,554.36, plus interest as part of just compensation at 4% per annum from August 15,1954 to the date of payment. The exact amount of recovery will be determined under Hule 131(c).
In accordance with the opinion of the court, a stipulation of the parties and a memorandum report of the commissioner as to the amount due, it was ordered on March 13,1972 that judgment for plaintiffs be entered for $60,554.36, plus simple interest at 4% per annum from August 15, 1954 to the date of payment. The stipulation further provided that plaintiffs agreed to fully release defendant from all claims for the manufacture or use by or for the United States of all devices covered by U.S. Patent No. 2,180,795.

 Plaintiffs’ calculation, proposed in their findings of fact, was 205,803,036. However, a recalculation of the monthly royalty reports shows that plaintiffs erred by an. overstatement of 386,067. The errors were in plaintiffs’ monthly summations for January and December 1951, August 1952 and April 1953.

 It is assumed, for ease of calculation and because of incomplete records, that sales in the time period June 30, 1951-June 30, 1956, were reasonably comparable to sales in the time period April 28, 1952-November 21, 1956. During the latter time period, defendant was not licensed under the patent and thus is liable for all infringing uses. The above assumption is a reasonable one under the circumstances because the record shows that O-ring sales by manufacturers during the years 1951 and 1956 were approximately comparable from month to month.