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Clean Hands Doctrine in Patent Infringement: Keystone Driller Co. v. General Excavator Co., Slides of Law

The legal case keystone driller co. V. General excavator co., where the plaintiff's lack of clean hands was used as a defense in a patent infringement suit. The concept of the doctrine of clean hands, its origins, and its application to separate causes of action. It also examines the specific facts of the case, including the plaintiff's prior knowledge of a supposed prior use of the patented device and the subsequent agreement to suppress evidence. The document concludes with a discussion of the implications of the case for the application of the doctrine of clean hands in patent infringement cases.

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RECENT
CASES
Equity-Doctrine
of
Clean
Hands
as
Applied to
Separate
Causes
of
Action-[Feder-
al].-In
a
suit
for
infringement
of
five
patents, the
first
a
basic
one
and
the
others
for
improvements,
plaintiff's
lack
of
clean
hands
was
set
up
as
a
defense.
Before
plaintiff
had
conceived
of
the
device
embodied
in
the
first
improvement,
a
supposed
prior
use
thereof
had
been
made.
Several
years
later
plaintiff learned
of
this
fact,
and
secured
from
the
prior
user
an
assignment
of
all
his
rights
and
an
agreement
to
suppress
evi-
dence
as
to
the
use.
Subsequently,
in
a
suit
against
one
Byers, plaintiff
obtained a
de-
cree
of
validity
and
infringement
of
three
patents,
including
the
one
supposedly
invali-
dated
by the
prior
use.
Immediately
thereafter
he
instituted
the
present
suit,
alleging
infringement
by the
defendants
of
the
same
patents
as
were
involved
in
the
prior
ac-
tion, and
sought
a
temporary injunction,
partly
on
the
basis
of
the
prior
decree.
The
injunction
was refused.
Plaintiff
later
amended
his
complaint
to
include
claims
of
in-
fringement
of
the
remaining
two
patents,
and
continued
to
trial.
Held,
the
transaction
with
the
prior
user,
and
the
employment
of
the
prior
decree
(secured
in
part
by
sup-
pressing
evidence)
in
applying
for
a temporary injunction,
were
so
unconscionable
as
to
bar
plaintiff
from
relief,
in
this suit,
as
to any
patent.
Keystone
Driller
Co.
v.
General
Excavator
Co.,
54
Sup.
Ct.
146
(1933).
The
maxim
that
he
who
comes
into equity must
come
with
clean
hands
arose
in
early times
when
exercise of
the
powers
of
a court
of
equity
was
largely
a
matter
of
dis-
cretion.
i
Pomeroy,
Equity
Jurisprudence
(4
th
ed.
1918),
739,
§
398.
Generally
the
maxim
will
be applied
only
in
favor
of
a
person
substantially injured
by
the
acts
of
which he
complains.
Meyer
v.
Yesser,
32
Ind.
294
(1869);
Halladay
v.
Faurot,
8
Ohio
Dec. Rep.
633
(1883);
Langdon
v.
Templeton,
66
Vt.
173,
28
Atl.
866
(1893);
Langley
v.
Devlin,
95
Wash.
171,
163
Pac.
395
(1917).
The
maxim
has
not
been
applied
where
the
harm
to
the
defendant
is small,
and
the
injury
to
the
plaintiff
through
denying
re-
lief
would
be great.
Valley Smokeless Coal
Co.
v.
Manufacturers'
Water
Co.,
302
Pa.
232,
153
Atl.
327
(1930);
McNair
v.
Benson,
63
Ore.
66,
126
Pac.
20
(1912);
Bias
v.
Bias,
155
S.E.
898
(W.Va.
193o);
Huntzicker
v.
Crocker,
135
Wisc.
38,
115
N.W.
340
(i9o8).
Several exceptions
to
this
general
rule
have
evolved.
It
has
been suggested
that
where
plaintiff
has
a
fraudulent
intent
and
commits
an
overt
act
in
attempting
to
effectuate
that
intent,
he
comes
within
the
maxim
irrespective
of
injury
to
the
de-
fendant.
See
Curtin
v.
Benson,
222
U.S.
78,
85,
32
Sup.
Ct.
31,
56
L.
Ed.
102
(1911);
Peltzer
v.
Gilbert,
26o
Mo.
500,
521-522,
169
S.W.
257
(194);
Cook
v.
Chapman,
30
N.J.
Eq.
114,
118
(1878).
It
has
also
been
held
sufficient
for
the
maxim
to
be applied
to
show
that
plaintiff's
acts constituted
a
fraud
on
the
public,
or
were
criminally
punishable.
Worden
&
Co.
v.
California
Syrup
Co.,
187
U.S.
516,
23
Sup.
Ct.
*6i,
47
L.
Ed.
282
(i9o3);
American
University
v.
Wood,
294
Ill.
i86,
128
N.E.
330
(1920);
Munn
&
Co.
v.
American
Co.,
83
N.J.
Eq.
309,
41
Atl.
87
(i914);
but
cf.
General
Electric
Co.
v.
Minn.
Electric
Lamp
Co.,
io
F.
(2d)
85i
(D.
C.
Minn.
i924);
Carson
Inv.
Co.
v.
Anaconda
Copper
Co.,
26
F.
(2d)
65i
(C.C.A. 9
th
1928);
i
Walker,
Patents
(6th
ed.
1929),
720,
§
625.
It
is
not
sufficient,
however,
to
show
that
plaintiff
has
committed
a
reprehensible,
fraudulent
or
criminal
act;
that
act
must
be
closely
related to
the
subject
matter
of
the
suit
in
which
the
defense is
set
up.
i
Pomeroy,
Equity
Jurisprudence
(4
th
ed.
i9r8),
741,
§
399.
Thus,
inequitable
conduct
with
respect
to
one claim
or
"cause
of
action"
has
been
held
not
to
bar
other
claims
or
"causes
of
action"
in
the
same
suit.
pf3

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RECENT CASES

Equity-Doctrine of Clean Hands as Applied to Separate Causes of Action-[Feder- al].-In a suit for infringement of five patents, the first a basic one and the others for improvements, plaintiff's lack of clean hands was set up as a defense. Before plaintiff had conceived of the device embodied in the first improvement, a supposed prior use thereof had been made. Several years later plaintiff learned of this fact, and secured from the prior user an assignment of all his rights and an agreement to suppress evi- dence as to the use. Subsequently, in a suit against one Byers, plaintiff obtained a de- cree of validity and infringement of three patents, including the one supposedly invali- dated by the prior use. Immediately thereafter he instituted the present suit, alleging infringement by the defendants of the same patents as were involved in the prior ac- tion, and sought a temporary injunction, partly on the basis of the prior decree. The injunction was refused. Plaintiff later amended his complaint to include claims of in- fringement of the remaining two patents, and continued to trial. Held, the transaction with the prior user, and the employment of the prior decree (secured in part by sup- pressing evidence) in applying for a temporary injunction, were so unconscionable (^) as to bar plaintiff (^) from relief, in this suit, as to any patent. Keystone Driller Co. v. General Excavator Co., 54 Sup. Ct. 146 (1933). The maxim that he who comes into equity must come with clean hands arose in early times when exercise of the powers of a court of equity was largely a matter of dis- cretion. i Pomeroy, Equity Jurisprudence ( 4 th ed. 1918), 739, § 398. Generally the maxim will be applied only in favor of a person substantially injured by the acts of which he complains. Meyer v. Yesser, 32 Ind. 294 (1869); Halladay v. Faurot, 8 Ohio Dec. Rep. 633 (1883); Langdon v. Templeton, 66 Vt. 173, 28 Atl. 866 (1893); Langley v. Devlin, 95 Wash. 171, 163 Pac. 395 (1917). The maxim has not been applied where the harm to the defendant is small, and the injury to the plaintiff through denying re- lief would be great. Valley Smokeless Coal Co. v. Manufacturers' Water Co., 302 Pa. 232, 153 Atl. 327 (1930); McNair v. Benson, 63 Ore. 66, 126 Pac. 20 (1912); Bias v. Bias, 155 S.E. 898 (W.Va. 193o); Huntzicker v. Crocker, 135 Wisc. 38, 115 N.W. 340 (i9o8). Several exceptions to this general rule have evolved. It has been suggested (^) that where plaintiff has a fraudulent intent and commits an overt act in attempting to effectuate that intent, he comes within the maxim irrespective of injury to the de- fendant. See Curtinv. Benson, 222 U.S. 78, 85, 32 Sup. Ct. 31, 56 L. Ed. 102 (1911); Peltzer v. Gilbert, 26o Mo. 500, 521-522, 169 S.W. 257 (194); Cook v. Chapman, 30 N.J. Eq. 114, 118 (1878). It has also been held sufficient for the maxim to be applied to show that plaintiff's acts constituted a fraud on the public, or were criminally punishable. Worden & Co. v. California Syrup Co., 187 U.S. 516, 23 Sup. Ct. *6i, 47 L. Ed. 282 (i9o3); American University v. Wood, 294 Ill. i86, 128 N.E. 330 (1920); Munn & Co. v. American Co., 83 N.J. Eq. 309, 41 Atl. 87 (i914); but cf. General Electric Co. v. Minn. Electric Lamp Co., io F. (2d) 85i (D. C. Minn. i924); Carson Inv. Co. v. Anaconda Copper Co., 26 F. (2d) 65i (C.C.A. 9 th 1928); i Walker, Patents (6th ed. 1929), 720, § 625. It is not sufficient, however, to show that plaintiff has committed a reprehensible, fraudulent or criminal act; that act must be closely related to the subject matter of the suit in which the defense is set up. i Pomeroy, Equity Jurisprudence ( 4 th ed. i9r8), 741, § 399. Thus, inequitable conduct with respect to one claim or "cause of action" has been held not to bar other claims or "causes of action" in the same suit.

THE UNIVERSITY OF CHICAGO LAW REVIEW

Maatschappij etc. v, Kosloff, 45 F. (2d) 94 (C. C. A. 2d 193o); In re Meyerfdd, 46 F. (2d) 665 (D.C. N.D. Cal. 1931); Barnes v. Barnes, 282 Ill. 593, 118 N.E. ioo4 (1918). It is somewhat difficult to reconcile the present case with these principles. There is some doubt as to whether the defendant was substantially injured by the acts of the plaintiff. In^ the^ first place,^ the^ facts^ involved^ in^ the^ agreement^ to^ siippress^ evidence were brought to light during the course of the present suit; hence it may be said the agreement did not prejudice the defendant. Cf. Conn. Tel. Co. v.^ Brown^ &^ Came, io F. (2d) 823 (D.C. Ill. 1926). Although the agreement to suppress evidence did not prejudice the defendant, it could still be argued^ that^ the^ use^ of^ the^ decree^ in^ the Byers suit had produced an injury, inasmuch as on motion for a temporary injunction a prior decree of validity is entitled to considerable weight. Leeds & Catlin v. Victor Co., 213 U.S. 301, 319, 29 Sup. Ct. 495, 53 L. Ed. 805 (i9o9). The injunction was not granted in the present case, but defendants were required to post a heavy bond in- stead; and the Supreme Court considered this sufficiently burdensome. In the second place, it would seem that if plaintiff had secured only an assignment of rights from the prior user the result as to suppression of evidence would have been sub- stantially the same as that which developed under the express agreement to suppress; and the court made no criticism of the assignment. Third, after the evidence came to light in the present suit, the defendants in the Byers case attempted to have the decree therein set^ aside,^ but^ it^ was^ held^ that^ the prior^ use^ was^ an^ abandoned^ experiment and that plaintiff's conduct, though hardly excusable, was immaterial. Keystone Driller Co. v. Byers Machine Co., 4 F. Supp. 159 (N.D. Ohio 1932). It is possible that two courts might interpret the same evidence in different ways; however, this is improbable in view of the rule that where evidence of^ an^ anticipation^ is^ oral, as^ it^ was^ here, proof must be "ciear, satisfactory and beyond a reasonable doubt." Barbed Wire Patent, 143 U.S. 275, 12 Sup. Ct. 443, 36 L. Ed. 154 (1892); Albertson & Co. v. Alvord Reamer Co., 51 F. (2d) 557 (D.C. Pa. i93i); i Walker, Patents (6th ed. 1929), 141-144, § i16. Inasmuch as the plaintiff did combine a fraudulent intent with an overt act (at- tempt to suppress evidence), the application of the maxim may be supported on that ground. In a sense, too, plaintiff's acts were illegal; the government could sue to cancel his patent if a prior use had been made, and it appears that at the time plaintiff applied for a patent he had some knowledge of the prior user's acts. i Walker, Patents (6th

ed. 1929), 474, §§ 383, 384. However, it would seem that in the patent field such

"collateral" (^) illegality is insufficient to invoke (^) the maxim. Western Glass (^) Co. v. Sclmertz Co., 185 Fed. 788 (C.C.A. 7th 1911); Carson Inv. Co. v. Anaconda Copper Co., 26 F. (2d) 651 (C.C.A. 9 th 1928), cert. den. 278 U.S. 635, 49 Sup. Ct. 32, 73 L. Ed. 551 (1928); cf. Conn. Tel. Co. v. Automotive Co., 14 F. (2d) 957 (D.C. N.J. 1926), affd. ig F. (2d) 990 (C.C.A. 3 d 1927), cert. den. 275 U.S. 543, 48 Sup. Ct. 121, 72 L. Ed. 428 (1927); but cf. Creath v. Sims, 5 How. (U.S.) 192, 12 L. Ed. ii (1847). Even if the nature of plaintiff's acts is such as to permit the application of the maxim, it must be shown that those acts are sufficiently closely related to the subject matter of the suit. Although it may be admitted that plaintiff's conduct was closely related to the patent included in the agreement to suppress evidence, it was far less closely related to the other four patents, and it seems doubtful whether the maxim should be invoked as to them. It is true the patents related to the same device, and thus were closely interwoven; however, the court admits that the infringement^ of^ each patent gives rise to a distinct "cause of action," and thus implies that a separate suc- cessful suit could be brought for the infringement of each patent. This the court recog-