Trenton Industries v. A. E. Peterson Manufacturing Co.

Brief Fact Summary.

John Alder, creator of a high chair, shared his chair with Haugh. Haugh provided Defendant’s owner a sample of the chair and offered to negotiate a royalty agreement with Defendant to manufacture the chair. Defendant declined the offer and returned the sample. Thereafter, Defendant put a chair on the market that was similar to Alder’s. Trenton Industries, a company managed by Alder, received a patent for Alder’s chair. Trenton Industries brought suit against Defendant alleging patent infringement and seeking compensation in quasi-contract.

Synopsis of Rule of Law.

A holder of an invalid patent is entitled to receive compensation for unjust enrichment when the holder had previously disclosed the intention to a party who used the invention without paying for it, even if a patent for an invention based on a combination of known elements is deemed to be invalid.

Facts.

John Adler created a high chair that was foldable and distributable, comparedto other high chairs because it contained a signature attachment item,which was publicly disclosed in previous patents. However, Adler did not create the attachment item. Adler sharedhis high chair with Haugh. Haugh gave a sample chair to Peterson, the owner of A. E. Peterson Manufacturing Company (“Defendant”). Haugh proposed to negotiate a royalty agreement with Peterson to permit Peterson’s manufacture of the chair. For two months, Peterson examined the chair. However, Peterson decided to return the chair to Haugh and decline to manufacture the chair.Subsequently,Peterson put a chair, which was similar to Alder’s chair, on the market, and did not reimburse Adler for using his chair’s design. Thereafter, Trenton Industries (“Plaintiff”), a company that Alder managed, received a patent for Adler’s chair. On the patent application, there was a combination-patent claim detailing the elements that present on the chair instead of the attributed that made the chair unique. Plaintiff brought suit against Defendant alleging patent infringement and for compensation in quasi-contract for operating the chair before the issuance of the patent. Defendant asserted the defense that the patent was invalid, thus Defendant did not infringe on any rights, as Plaintiff founded his design on church chairs, which he believed he was free to use in good faith.

Issue.

Whether a holder of an invalid patent is entitled to receive compensation for unjust enrichment when the holder had previously disclosed the intention to a party who used the invention without paying for it.

Held.

Yes, a holder of an invalid patent is entitled to receive compensation for unjust enrichment when the holder had previously disclosed the intention to a party who used the invention without paying for it, even if a patent for an invention based on a combination of known elements is deemed to be invalid.

Discussion.

A holder of an invalid patent is entitled to receive compensation for unjust enrichment when the holder had previously disclosed the intention to a party who used the invention without paying for it, even if a patent for an invention based on a combination of known elements is deemed to be invalid. Patent law is formed to protect product innovation, not to protect improvements to a product that an average, reasonably skilled person could create. Patent law does not seek to create a monopoly for every idea because such a policy would prevent the public from making constant improvements. Even though patent applicants may submit combination-patent claims, not all combination-patent claims are effective. Pursuant to the United States Supreme Court precedent and 35 U.S.C. § 103, a patent is deemed to be invalid if an invention combines elements that exemplify knowledge that is common to people of ordinary skill. In this case, Plaintiff submitted a combination-patent claim for Adler’s high chair. Alder’s high chair proposed in the claim contains improvements that are similar among chairs, and the chair’s signature attachment item was previously in other patents. Thus, Alder’s chair is the result of mechanical skill, not the result of an inventive faculty. As a result, the patent is invalid. Furthermore, when a person shares an innovative idea with another party, expecting the latter will compensate the former for using the idea, the latter is required to compensate the former for using such idea. In these circumstances, neither the party’s good faith nor the patentability of the invention is dispositive. In this case, Peterson did not create a chair that was similar to Adler’s chair till Peterson examined Adler’s chair. Moreover, in the event that Peterson was acting in good faith, such a finding is unnecessary under an unjust enrichment claim. Plaintiff is entitled to a reasonable royalty for the chairs that Defendant manufactured for the time period that Peterson had possession of the sample chair until the date Plaintiff’s patent was issued.