
    REUSCH v. FISCHER.
    Patent Appeal No. 2728.
    Court of Customs and Patent Appeals.
    May 25, 1931.
    
      Stryker & Stryker, of St. Paid, Minn. (Cushman, Bryant & Darby, of Washington, D. C., of counsel), for appellant.
    A. C. Paul, of Minneapolis, Minn., for appellee.
    Before GRAHAM, Presiding Judge, and BLAND, HATFIELD, GARRETT, and LENROOT, Associate Judges.
   GRAHAM, Presiding Judge.

The United States Patent Office declared an interference between patent No. 1,576,548, issued to the appellant’s decedent, Jacob J. Reuseh, and a pending application of the appellee, Howard L. Fischer, serial No. 659,-966, whieh was filed August 29, 1923. The Reuseh patent was issued March 16, 1926, on an application filed August 4, 1924.

The subject-matter of the interference is set forth in one count, which is as follows:

“In apparatus of the class described, the combination with a casing adapted to contain stencil plates, of a gauge bar adapted to be held in rigid spaced relation with the front of said casing to engage a card to be printed, said bar having a surface adapted to constitute a guide for a stencil in use, and means on said bar adapted to facilitate centering cards beneath said bar.”

Both parties took evidence. The Examiner of Interferences awarded priority of the subject-matter to Reuseh, the junior party, and, in so doing, filed an enlightening and well-considered decision. He based his conclusion, in principal part, on the fiduciary relations which he found to exist between Fischer and Reuseh as attorney and client. On appeal to the Board of Appeals, the Examiner’s decision was reversed; the Board finding that there was no unethical conduct or breach of trust on the part of Fischer, that he was the original inventor of the subject-matter of the interference, and awarding priority to him.

The matter now comes to us on the issue of originality. Appellant contends that Reuseh conceived the invention in issue, employed Fischer as his attorney to prosecute an application for a patent thereon, and made a full disclosure to him thereof; that Fischer thereafter appropriated this idea and filed an application for a patent thereon contrary to the terms of his employment, and contrary to the ethical rules which should have controlled his actions as the attorney for Reuseh; that he (Reuseh) was the inventor of the particular subject-matter of the controversy, and conceived and disclosed the same fully before Fischer .entered the field; that he proceeded with due diligence after Fischer’s entry; and that appellant is justly entitled to priority herein.

On the other hand, Fischer maintains that he never was consulted by Reuseh about the subject-matter of the invention here; that he conceived the same before he conferred with Reuseh on the other matters hereinafter mentioned ; that 'Reuseh never disclosed the subject-matter of the invention here in issue to him at any time; and that he was the inventor thereof, filed his application in due course, and is entitled to priority.

The decision of the issue herein depends largely upon the facts presented by the record, and involves, to a large degree, the question of the veracity of the various witnesses who were called. On this point we do not have the concurring decisions of the tribunals of the Patent Office, with the presumption which arises therefrom.

Reuseh testified that he was employed by the Louis F. Dow Company as advertising and sales promotion manager in 1919, and at that time used what is described in the record as the Pokorny stenciling apparatus in his work; that on July 13, 1922, having attracted the attention of some of the stockholders in the National Sign & Stencil Company, he was employed as the general manager of that company. This was a small business, and it was marketing, at that time, the said Pokorny stenciling apparatus, consisting of a wooden ease of a horizontal type, with a drawer for holding stencils, and compartments for brushes, ink, etc., on the top, which was at that time being manufactured by the Wallin Manufacturing Company; that shortly after his employment by the National Sign & Stencil Company he conceived the invention in issue, and disclosed it to various employees of the company; that he applied to Wallin, who was then making the Pokorny outfits, and was referred to Fischer as a patent attorney, and that he disclosed fully to Fischer in the fall of 1922, the invention here in issue, furnishing him with drawings on or about March 29,1923, which drawings, although requested, were never returned to him, and full information about how he desired the application to be made and the samples to be constructed; that from that time until the fall of 1923, he was continually attempting to> get Fischer to proceed, without success; that he was told by Fischer, in the fall of 1923, that he (Fischer) had filed the application in his own name, and then vigorously protected against this; that he also, in a director’s meeting of the National Sign & Stencil Company, in October of the same year, protested against this action, insisting upon the invention being credited to him; that, when he first went into the National Sign & Stencil Company, the members of the Hickey family were not active in its management and paid very little attention to its business'; that, after his difficulties with Fischer began in the fall of 1923, Fischer came in constant contact with members of the Hickey family and established close relations with them; that at about the same time there began to be friction between Reuseh and the members of the Hickey family; that, when he first took charge of the National Sign & Stencil Company’s business, the cabinets were being made by Fischer’s Company, the Wallin Manufacturing Company, of which the party Fischer was then president, but that afterwards, because of his belief that manufacturing could not be carried out fast enough at this place, he directed the manufacture of the cabinets to be done elsewhere; that on September 8, 1923, Fischer was elected a director of the National Sign & Stencil Company, and that, on March 17, 1924, at an adjourned meeting of said company held at the office of Carl Cummins, an attorney of St. Paul, Reuseh was discharged as general manager; that, at the time he employed Fischer, Fischer gave no indication that he was working upon any patents in connection with a stenciling device or outfit; and that he had no idea Fischer claimed anything of the kind until after the application was filed and the altercation occurred between the parties, as hereinbefore referred to.

The party, Fischer, testified, in substance, that he was admitted to practice before the Patent Office, but was not a member of the general bar; that he conceived the invention in issue about January 1, 1923, and that he thereafter disclosed the same to Reuseh. He admits he was employed by Reuseh on the recommendation of Wallin, but he states that this employment only included the preparation of an abstract of title of the Pokorny patent, a copyright matter, and an application which Reuseh was making for a patent on improvements in tlie Pokorny device, and that Reuseh never at any time disclosed to him the invention here in issue; that his relations with Reuseh had always been amicable, and that he had had no difficulty with him at any time in the office of the National Sign & Stencil Company, or otherwise, about the invention here in issue; that he is the inventor of the device in question; and that, after he conceived it, he took the matter up with the members of the Hickey family and discussed it with them on numerous occasions, and finally, when the application was filed, assigned it to Agnes Hickey, who, at that time, paid him his fee for the same, $159. He further testified that he had never known the members of the Hickey family until the matter of this patent arose, and that he was elected a director of that company upon receipt of the transfer of one share of stock from Agnes Hickey, that Reuseh never protested at any meeting of the directors of the National Sign & Stencil Company about the patent being taken out in Fischer’s name, and that no fiduciary relation existed between himself and Reuseh, as attorney and client, as to the particular matter here in controversy.

In attempting to arrive at the truth of this matter, the court finds it necessary to rely upon facts and circumstances detailed by witnesses not parties in interest. On the part of Reuseh, these witnesses are: Paul Cyr, a foreman in the shipping department of the National Sign & Stencil Company during the time Mr. Reuseh was manager thereof;. Sister Barbara Anne, formerly Miss Marie Mitseh, now a nun, but employed as a stenographer in the office of the National Sign & Stencil Company during Mr. Reuseh’s incumbency as manager; Frank H. Tuttle,, a bookkeeper and auditor employed at the National Sign & Stencil Company during Mr. Reuseb’s incumbency; Raymond D. Spell-man, wbo bad office space in tbe office of tbe National Sign & Stencil Company during the same period; and Alexander S. T. Lagaard, a former law partner of tbe appellee, Fischer.

Fiscber relies principally for corroboration on the members of tbe Hickey family, wbo were tbe principal stockholders and owners of tbe National Sign & Stencil Company. These consisted of George B. Hickey, Miss Agnes Hickey, and Mrs. Mae C. McClure. Tbe business of this company bad been owned by James R. Hickey, wbo bad died on November 16, 1919, leaving Agnes Hickey bis devisee as to tbe business and assets of the company. Tbe Hickey family, at tbe time Reuscb was employed in this business, owned tbe major portion of tbe stock of this company; some amount being outstanding in tbe bands of tbe original owners of tbe Pokorny patent. When Reuseh was made manager, be was also created a director and given one share of stock.

Tbe witness Cyr stated that be began work for the* National Sign & Stencil Company in September, 1922, and that, within a few months after be began work there, Reuscb described an improvement in tbe Pokorny outfit which be intended to have made, and which was a vertical cabinet with a drop door and with its arrangement such as is the subject-matter of tbe controversy here. The witness fixes tbe time definitely as tbe winter of 1922 and 1923 when this disclosure was made to him. At that time, be says, and on numerous other occasions, Reuscb made rough pencil sketches which be showed to tbe witness, embodying tbe idea of tbe invention.

Tbe witness Sister Barbara Anne began to work for tbe National Sign & Stencil Company in August, 1922. She states that within three or four months after she began to work there she saw Mr. Fischer at tbe place talking to Reuscb, and on numerous occasions after that, in that year, these parties conversed in tbe office of tbe National Sign & Stencil Company where she could observe them, she being at that time'a stenographer, with a desk in tbe office where it was possible for her to observe what occurred. She recalls that she beard a controversy between Reuscb and Fiscber some , time in tbe latter part of tbe year 1923, at tbe office, in which Fiscber stated that be bad signed a certain “patent,” and in which Reuscb was objecting vigorously and insisting that be should sign it, and that be (Reuscb) was tbe inventor of the device. She fully corroborates, by her testimony, Reuseb’s statement of this conversation. Sister Barbara Anne also gathered from tbe conversation, according to her testimony, that tbe device in question was the device tbe subject of controversy here, of tbe “suitcase” type. Soon afterw Reuscb was discharged from tbe National Sign & Stencil Company, Sister Barbara Anne> also severed her relations with this company, because of difficulties which" occurred between her and Mrs.' McClure, one of the stockholders.

Tbe witness Tuttle testified that be began to work for the National Sign & Stencil Company in August, 1922, and that about tbe 1st of September of that year Reuscb explained an improvement in stencil cabinets to him which was substantially the device in controversy here. He states that numerous conversations occurred between him and Reuscb as they went back and forth to and from tbe office, as well as in the office and at other places, and that Reuscb made rough drawings when he was explaining tbe same to tbe witness. This witness identifies fully tbe device which was finally perfected, and a sample of which was afterwards made and brought to the office of tbe National Sign & Stencil Company. He also relates that Reuseh informed him of his employment of Fiscber to obtain a patent on this invention, and that Reuscb afterward told him, with considerable excitement, that Fiscber was attempting to obtain tbe patent in his own name. This witness on tbe stand made a sketch from his memory of tbe disclosures made to him by Reuseh in 1922, and which sketch is in evidence and plainly indicates tbe basic ideas of tbe invention in controversy.

Tbe witness Spellman testified that be bad a desk in tbe office of tbe National Sign & Stencil Company in such a position that be could see what occurred therein, and that be frequently saw Fischer there in conference with Reuscb in 1922 and 1923. He stated that be became aware of a bitter feeling between Reuscb and Fiscber by bearing them argue excitedly about some matter; that one conversation in tbe fall of 1923 concerned the way Fiscber was conducting Reuseb’s patent business; that be saw these two parties going over tbe plans, and at one time took a model to Fischer’s office; that one time Reuscb told tbe witness, in explanation of these controversies with Fischer, that be was to have received certain papers, which be never bad received from Fiscber. Tbe witness also stated that, within six months' after he moved into the office of the National Sign & Stencil Company, which was in July, 1922, Reuseh told him of his new invention in stenciling outfits which he had invented, and a model of which he had then ordered. The witness, on cross-examination, fixed the time of the conversation in which Reuseh was claiming the right to sign the patent application at approximately September or October, 1923.

Alexander S. T. Lagaard testified that at the time of the employment of Fischer by Reuseh, he (Lagaard) was in partnership with Fiseher, which partnership afterwards became a corporation. This association continued from January, 1921, to June 1, 1924. The witness testified that in the early part of 1923, not later than April, Fiseher showed him a drawing of a stenciling apparatus which was of the suitease type, and was approximately the invention in question here, and asked him for assistance in planning a metal clamp to be used upon this device. The witness testified that Fischer never claimed to him that -he invented this device other than the clamp just referred to, but did state that he had received instructions from Reuseh about the invention. Fiseher indicated to him at first that the feelings between himself and Reuseh were friendly, but afterwards demonstrated, by his actions, that they had become unfriendly, and in some of the conversations of a later date stated that Reuseh had not been dealing fairly with the National Sign & Stencil Company. He testified that his firm obtained a copyright for Reuseh on certain stencils and did some other patent work prior to the work on the particular invention here in controversy. He further states that, after the time when difficulties were arising between Fiseher and Reuseh, Fischer and he discussed the question as to whether the invention here in issue was to go to the National Sign & Stencil Company or to Reuseh individually, but that Fischer prepared the application and had the drawings made in his own name, without protest on the part of the witness Lagaard.

The various members of the Hickey family, stockholders of the National Sign & Stencil Company, corroborate Fiseher to this extent, that they all testify that Reuseh at no time made any claims or statements to them as to his being the inventor of the device in question.

One or two other circumstances appear from the evidence to have some bearing on the issue here involved. When Reuseh was first appointed general manager of the National Sign & Stencil Company, he placed an order with Fischer’s company, the Wallin Manufacturing Company, for the making of the Pokorny cabinets, which Reusch’s company was then selling. Some time during the summer of 1923, Reuseh transferred the business of making these cabinets to a cabinetmaker by the name of Schmidt, with whom apparently this business was conducted until Reusch’s discharge, when the business was replaced with Fischer’s company.

It also appears that the application which Reuseh filed for his improvements upon the Pokorny cabinet, and which duly went to-patent, was promptly prosecuted by Fiseher, was assigned by Reuseh to the National Sign & Stencil Company, and was paid for out of" the treasury of the National Sign & Stencil Company. The Fiseher application for the new model cabinet, however, was assigned to Agnes Hickey and paid for by her personal check.

It also appears that, during Reuseh’s incumbency as general manager, approximately $8,000 was taken out of the funds of the National Sign & Stencil Company and paid to original stockholders in the Pokorny Company for stock owned by them, and that this stock was assigned, not to the National Sign & Stencil Company, but to Agnes Hickey personally. Difficulty arose between Reuseh and the members of the Hickey family because of Reuseh’s insistence that this amount be carried as a charge on the books of the company against Agnes Hickey.

The fiduciary relations between an attorney and his client are of such a nature that the courts have, universally, adhered to the rule that such relation will be closely scrutinized, to the end that the attorney may take no personal advantage at the expense of his client as a .result of the confidential relations existing between them. No trust is more complete than that placed by the client with his attorney, and no trust should be more carefully and faithfully observed. The relation of attorney and client, admittedly, existed between Fiseher and Reuseh in patent matters obviously akin to that here in issue. This being true, the burden 'devolved upon Fischer to prove the utmost good faith upon his part, and to establish clearly that he, and not Reuseh, 'was the inventor of the subject-matter of this interference. If, after considering all the facts, there remains any doubt as to the originality of the invention, such doubt should be resolved in favor of the client. Goodrum v. Clement, 51 App. D. C. 184, 277 F. 586, 279 F. 304; Overholt v. Matthews, 48 App. D. C. 482; Baumgardner v. Hudson, 51 App. D. C. 150, 277 F. 552.

Not only is this true, but if, during such employment, the attorney or other person employed makes valuable discoveries ancillary to the plan disclosed by the employer, such suggested improvements are the property of the employer and not of the employee. Agawam Co. v. Jordan, 7 Wall. 583, 602, 19 L. Ed. 177; Milton v. Kingsley, 7 App. D. C. 531; Fritz v. Hawn, 37 F. (2d) 430, 17 C. C. P. A. 796.

We are satisfied, from the facts appearing from this record, that, applying the legal principles just stated, Reuseh should be considered as the inventor of the device in issue. All the incidental facts in the record lead the mind to the conclusion that he suggested the basic idea thereof to Fischer. Reuseh disclosed this idea and his invention fully to employees of his company before he conferred with Fischer. On the contrary, there is no evidence in the record tp even indicate that Fischer had this conception before he met and conferred with Reuseh. The early pleasant, and afterwards strained, relations between Fischer and Reuseh, denied by Fischer, but fully substantiated by other credible witnesses, corroborate Reuseh. Fischer’s statements to his law partner, Lagaard, in which he was debating whether Reuseh or the National Sign & Stencil Company should obtain the patent, are illuminating.

Other facts also reflect light on the relations of the parties and upon Fischer’s procedure. When Fischer first interviewed Reuseh, Reuseh was on friendly relations with the stockholders of his company, who were inactive in the business; Fischer’s Wallin Company was making the cabinets and whatever profit arose from this business; Fischer had no business relations with any of the Hickey family. However, when Fischer first began to plan to file an application in his own name, he became quite intimate with the Hickey family. He assigned his application to Agnes Hickey. Thereupon there was great activity in the company affairs by the members of the Hickey family. The company elected Fischer a director; it discharged Reuseh; it again placed its cabinet business with Fischer’s company. Reuseh did not ascertain until long after the Fischer application had been made that such action had been taken. The assignment being to Agnes Hickey direct, no record of the same would come to the notice of Reuseh, as general manager of the National Sign & Stencil Company.

Every one of these circumstances seems to indicate a carefully carried out plan to secure the benefit of Reuseh’s invention to Fischer and the members of the Hickey family. The most charitable thing that may be said, in view of the facts appearing upon this record, is that the testimony entirely fails to support the burden east upon the pajrty Fischer herein.

The decision of the Board of Appeals is reversed,-and priority will be awarded to the appellant.

Reversed.  