Massillion-Cleveland-Akron Sign Co. v. Golden State Adver. Co.

Massillion-Cleveland-Akron Sign Co. v. Golden State Adver. Co.

Opinion

 [***441]  [*425]   HAMLEY, Circuit Judge:

This is an interlocutory appeal, taken pursuant to 28 U.S.C. § 1292(b), from a district court order striking certain affirmative defenses and a counterclaim asserted by one of the defendants.

The plaintiff and appellee is Massillon-Cleveland-Akron Sign Co. (MCA), which is the owner of Letters Patent No. 2,764,830 for "Articulated Banner Unit Construction." The defendants are Golden State Advertising Co., Inc. (Golden State), Albert A. Gold, sole stockholder and President of Golden State, William Monaghan, an employee of Golden State, and McCoy-Gold Merchandising, Inc. (McCoy-Gold), in which Gold owned a fifty percent interest. McCoy-Gold acts as a sales representative for Golden State.

MCA acquired its patent from the original patentee, Edward Frey. In 1962, MCA charged Golden State, Gold, and others not involved in this litigation, with infringement of the patent. MCA informed Golden State and Gold that legal action would be taken if they did not cease infringement [**2]  activities and if they did not account for sales of the infringing items.

This threatened legal action was forestalled when the concerned parties, on July 23, 1962, entered into a written agreement settling the controversy. Under the terms of the agreement, Golden State and Gold acknowledged the validity of the patent and covenanted to refrain from directly or indirectly contesting or questioning the validity of the patent. Golden State and Gold also therein admitted having infringed the patent and covenanted that they would not infringe the patent in the future. As called for in the agreement, Golden State and Gold paid MCA five hundred dollars as liquidated damages.

In 1964, MCA again charged Golden State and Gold with infringing the patent and further asserted they breached the 1962 settlement agreement. After representations were made to it, MCA concluded that the 1964 infringement was not deliberate and involved sales of only a few units. When Golden State and Gold informally expressed an intent to avoid further infringement, MCA  [*426]  elected not to pursue the matter further at that time.

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