Court Opinion

ID: 9446029
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:44:25.447274+00
Date Added: 2024-06-11T17:25:15.467991
License: Public Domain

HAND, Circuit Judge
(concurring).
I agree writh Judge HINCKS in affirming the award of $2,500 as reimbursement for costs and expenses and the award of $2,500 in terrorsm, and in reversing the “fine” of $1,000 for past disobedience of the judgment.
First, as to the “fine” of $1,000. The Supreme Court in Leman v. Krentler-Arnold Hinge Last Co., 284 U.S. 448, 52 S.Ct. 238, 76 L.Ed. 389, held that in a civil contempt proceeding for violation of a judgment forbidding infringement of a patent, the court might award to the patentee the infringer’s profits upon his sales, even though the patentee proved no damages. It is true that the Third Circuit in banco decided by a vote of five to two that this was not what the Supreme Court meant, and that the plaintiff must show “that the contemptuous conduct did, in fact, have substantial injurious effect upon his economic interest” (National Drying Machinery Co. v. Ackoff, 245 F.2d 192, 194). However, I find it impossible to reconcile this holding with the language used in Leman v. Krentler-Arnold Hinge Last Co., supra, 284 U.S. 456, 52 S.Ct. at page 241: “While the distinction is clear between damages, in the sense of actual pecuniary loss, and profits, the latter may none the less be included in the concept of * * * compensation to the party injured. * * * The court of equity in such cases applies familiar principle in ‘converting the infringer into a trustee for the patentee as regards the profits thus made.’ * * this Court succinctly stated the controlling principle in its opinion in Tilghman v. Proctor, 125 U.S. 136, 148, 8 S.Ct. 894, 900, 31 L.Ed. 664, as follows: * * * ‘a court of equity, which has acquired, upon some equitable ground, jurisdiction of a suit for the infringement of a patent, will not send the plaintiff to a court of law to recover damages, but will itself administer full relief, by awarding, as an equivalent or a substitute for legal damages, a compensation computed and measured by the same rule that courts of equity apply to the case of a trustee who has wrongfully used the trust property for his own advantage.’ ” This doctrine is equally applicable to the case at bar. The defendant acquired articles in question subject to a lawful condition that it should not sell them below the Fair Trade price. In selling them below that price it received the proceeds as illegally as the infringer receives the proceeds of whatever infringing articles he may manufacture and sell.
However, difficulty arises in ascertaining what in fact were the defendant’s profits. These consisted of the difference between the prices at which it sold and those at which it bought from the plaintiff, or from the plaintiff’s middlemen. It is true that by destroying all the documents showing the prices at which it had bought or sold, the presumption arose contra spoliatorem, and justified the conclusion that the contents of the documents of purchase and sale if produced would have shown that it did realize profits. Yesbera v. Hardesty Mfg. Co., 6 Cir., 166 F. 120, 122; Armstrong v. Belding Bros. & Co., 2 Cir., 297 F. 728, 730. That however, does not fix the amount of the profits unless there be a maximum beyond which the profits could not have gone. Stella v. Graham-Paige Motors Corp., 2 Cir., 232 F.2d 299, 302. Although it might be proper to take as the maximum for the minuend the Fair Trade prices, there is no way to find the proper subtrahend: i. e., the prices at which the defendant bought. And most important of all, there is no way to ascertain how many and what articles the *472defendánt sold at less than Fair Trade prices. The occasion seems to us of the kind of which Judge Severens spoke in Yesbera v. Hardesty Mfg. Co., supra, 166 F. at page 123: “Of course if, in the absence of the better proof, there is still nothing of substance left on which the court can lay hold, there is no help, and the plaintiff must endure his loss.” Much as we should like to find a way by which to compute the profits, we cannot do so, and for that reason I concur with Judge HINCKS in holding that the “fine” for past disobedience may not stand. Had the plaintiff sought to punish the defendant criminally for disobedience of the judgment, as it could have done, this lamentable result could have been avoided, but the proceeding was in no sense for criminal contempt.
We also hold that what I have called the “fine” in terrorem should be affirmed. For support of this conclusion we rely upon United States v. United Mine Workers, 330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884, which imposed a “fine” as part of the civil remedy, conditioned upon the defendant union’s continuing an existing strike. The opinion (330 U.S. at pages 303, 304, 67 S.Ct. at page 701) used the following language: “Judicial sanctions in civil contempt proceedings may, in a proper case, be employed for either or both of two purposes: to coerce the defendant into compliance with the court’s order, and to compensate the complainant for losses sustained.” The “fine” that the court imposed upon the union in that case was of two kinds: $700,000 as damages for the injury already done by the strike and $2,800,000 in terrorem to secure its discontinuance. The Court agreed that in fixing the amount of the second “fine” the court should “consider the amount of the defendant’s financial resources and the consequent seriousness of the burden to that particular defend-' ant” (330 U.S. at page 304, 67 S.Ct. at page 701); but the “fine” was only “a means of securing future compliance” with the decree and was not measured by any damage that the plaintiff might suf-' fer from future disobedience. In both that case and here this “fine” was imposed only conditionally and depended upon the contemnor’s future conduct-The only distinction is that there the-future conduct forbidden was continuing' a strike already in existence, and here it is future sales of the plaintiff’s goods, below the Fair Trade prices. We can see no relevant difference between ceasing to strike against an employer and ceasing to sell goods one has procured below their fixed price. As appears from the language I have cited in United States v. United Mine Workers, supra, this does not mean that we have no control whatever over the amount of a “fine” in terrorem; but there is no ground for disturbing the discretion of the District Court in this case.
We therefore reverse the “fine” of $1,000, but otherwise affirm the judgment.