author: CRAVEN, Circuit Judge:

text:
    BELL LINES, INC., Appellee, v. UNITED STATES of America, Appellant.
    No. 72-2461.
    United States Court of Appeals, Fourth Circuit.
    Argued April 3, 1973.
    Decided June 26, 1973.
    Helen E. Marmoll, Atty., Tax Div., U. S. Dept, of Justice (Fred B. Ugast, Acting Asst. Atty. Gen., Meyer Rothwacks, Richard W. Perkins, Attys., Tax Div., U. S. Dept. of Justice, and Robert B. King, Asst. U. S. Atty., on brief), for appellant.
    Fuller Holloway, Washington, D. C. (William H. Bradford, Jr., and Hamel, Park, McCabe & Saunders, Washington, D. C., on brief), for appellee. (
    Before CRAVEN, RUSSELL and WIDENER, Circuit Judges.
   CRAVEN, Circuit Judge:

A corporation which trades in old trucks and pays boot in money for new trucks comes under Int.Rev.Code of 1954, § 1031; any gain on the trade-in is not recognized. There is, however, a capital gain, fully recognizable in the year of the transaction, where a corporation sells old trucks at a profit even though the proceeds are used to purchase new trucks. The two prior sentences are, obviously, simply different characterizations of the same economic event: replacement of property held for productive use in trade or business. But upon such characterizations tax consequences depend. If the transaction is said to be a sale and purchase rather than an exchange, the taxpayer’s future basis for depreciation is the actual cost of the new trucks. In this case Bell Lines treated truck replacement in its tax returns as a sale of old trucks and a separate purchase of new ones, and depreciated the new ones at full purchase price. The Commissioner viewed the transaction as a nontaxable exchange of old trucks for new trucks and accordingly adjusted the basis of the new trucks downward, reducing claimed depreciation deductions. In its suit for refund of taxes paid, the taxpayer prevailed in the district court, and the government appeals. We affirm.

Details of the transaction are as follows. The taxpayer, Bell Lines, Inc., as a West Virginia corporation with its principal place of business at Charleston, West Virginia, operated an interstate trucking line during 1959, 1960, and 1961. During this period of time, taxpayer’s stock was owned by its officers and directors: John Amos, President; Fred Sclavi, Vice-President and General Manager; Betty Winterholler, Secretary-Treasurer.

In the spring of 1959, taxpayer decided to replace the major portion of its truck tractors. Mack Trucks, Inc., and White Motor Corporation submitted competitive bids, and in the course of bargaining White urged the taxpayer that more could be obtained for the old trucks by selling them to a buyer White had found than by trading them to Mack. Mack immediately offered to buy the old trucks rather than take them as trades. The taxpayer refused Mack’s offer and stated that taxpayer was only interested in purchasing new trucks from Mack. Mack, in order to be competitive with White, offered to help taxpayer find a buyer.

Subsequently Mack submitted a proposal for the new tractors with prices quoted without reference to any trade-ins. On June 24, 1959, the board of directors of taxpayer voted to accept the Mack proposal. At the same time the board authorized Sclavi to sell 143 old trucks.

Pursuant to the board’s action, taxpayer submitted a purchase order to Mack on June 26, 1959, for 148 tractors, and pursuant to the purchase order taxpayer signed conditional sale agreements —on August 15, 1959, for 40 tractors; on September 15, 1959, for 65 tractors; and on October 15, 1959, for 43 new tractors.

To dispose of taxpayer’s used tractors, Sclavi accepted an offer of $650,000 from the Horner Service Corporation, an independent used truck dealership in Vineland, New Jersey. Unknown to the taxpayer, the Horner offer was prompted by an agreement between Mack and Horner. Horner agreed that it would purchase taxpayer’s trucks and attempt to resell them, Horner would keep any profit it made, and Mack guaranteed that Horner would not lose money on any truck. Pursuant to this agreement, Mack furnished funds to Horner with which to pay for the taxpayer’s used trucks and subsequently took title from Horner of most of the used trucks. Mack on its books treated the transaction as a trade-in.

The taxpayer treated the acquisition of new tractors and the disposition of old tractors as a purchase and sale and reported it as such on its 1959 tax return, paying tax on the capital gain resulting from the disposition of the used tractors. For depreciation of the new trucks, taxpayer used actual cost as the basis for the tax years here in question, 1960 and 1961. The Commissioner determined that the transaction was an “exchange” of tractors for tractors. Under the Commissioner’s view, the taxpayer could only use for depreciation purposes a transferred basis, computed under § 1031(d). Since this was less than the basis used by taxpayer, a deficiency was assessed. Taxpayer paid the deficiency and brought this suit for a refund.

The district court court found that taxpayer had entered into a contract with Mack for purchase of new trucks and had entered into a separate agreement with Horner for the sale of old trucks. The court further found that none of the officials of taxpayer knew of the arrangements between Mack and Horner. The government argues on appeal that the district court was clearly erroneous in finding: (1) that the transactions between taxpayer and Mack and between taxpayer and Horner were not mutually dependent; and, (2) that taxpayer did not have knowledge of the Maek-Horner arrangement.

The officers of taxpayer testified at the trial below. Winterholler stated that she would not have agreed to a trade-in and that taxpayer had never before traded-in tractors. Amos testified that he had no knowledge of the Horner-Mack arrangement and that the purchase by taxpayer of the 148 new trucks was not conditioned on the disposition of the old trucks. Sclavi also testified that the purchase from Mack was not conditioned on sale of the old trucks and that he had no knowledge of the Mack-Horner arrangement. The purchase order agreement of June 26, 1959, and the conditional sales agreements appear to have been fully enforceable against taxpayer regardless of whether it disposed of its used tractors. See, e. g., Wyckoff v. Painter, 145 W.Va. 310, 115 S.E.2d 80, 86-87 (1960).

In reviewing the findings of fact of the district judge we are bound by Fed. R. Civ.P. 52(a), whch provides in relevant part: “Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.” As stated in United States v. National Assoc, of Real Estate Bds., 339 U.S. 485, 495, 70 S. Ct. 711, 717, 94 L.Ed. 1007 (1950): “It is not enough that we might give the facts another construction, resolve the ambiguities differently, and find a more sinister cast to actions which the District Court apparently deemed innocent.”

We think the testimony of taxpayer’s officials, if believed, and the evidence of the contracts with Mack are sufficient to support the district court’s findings. The district court’s findings (1) that taxpayer had a binding agreement with Mack to purchase 148 tractors, (2) that taxpayer had a separate agreement with Horner to buy its used trucks, and (3) that taxpayer was unaware of the side agreement between Mack and Horner are not clearly erroneous.

There remains for us to determine whether on these facts the district court erroneously characterized the transactions as a sale and purchase rather than an exchange. We think not.

In Coastal Terminals, Inc. v. United States, 320 F.2d 333 (4th Cir. 1963), we held:

The purpose of Section 1031(a), as shown by its legislative history, is to defer recognition of gain or loss when a direct exchange of property between the taxpayer and another party takes place; a sale for cash does not qualify as a nontaxable exchange even though the cash is immediately reinvested in like property. [Emphasis added].

320 F.2d at 337. See also Leo A. Wood-bury, 49 T.C. 180, 197 (1967), acquiesced in, 1969-2 Cum.Bull. XXV; John M. Rogers, 44 T.C. 126, 133 (1965).

The court in Carlton v. United States, 385 F.2d 238 (5th Cir. 1967), stated:

The very essence of an exchange is the transfer of property between owners, while the mark of a sale is the receipt of cash for the property. . Where, as here, there is an immediate repurchase of other property with the proceeds of the sale, that distinction between a sale and exchange is crucial.

385 F.2d at 242.

It is urged upon us that since Mack supplied funds to Horner to purchase the trucks and later took most of the trucks from Horner, the substance of the transaction is a trade-in or exchange between taxpayer and Mack. The question of sale or exchange often turns upon whether separate steps in a transaction are to be recognized or disregarded. This depends on whether the steps are mutually dependent or merely artificial transactions, as opposed to being steps with legal significance in-dependent of the other steps and supported by legitimate business reasons. 3 Mertens, Law of Federal Income Taxation §§ 20.161, 20.163 (1972).

In the present case we cannot conclude that taxpayer had no legitimate business reasons for selling its old trucks and purchasing new ones. There was evidence it had always purchased without regard to trade-in value of old property, and it is doubtless possible to get a cheaper price where the dealer is not burdened with the necessity of disposing of old property. Moreover, as we have noted, the transactions were not mutually dependent as taxpayer was legally bound to purchase the 148 trucks from Mack whether it had sold the old ones or not. Thus the transaction between taxpayer and Horner may be reasonably viewed as one of substance to be treated separately from the taxpayer-Mack transaction.

That the two transactions were not mutually dependent also distinguishes this case from Redwing Carriers, Inc. v. Tomlinson, 399 F.2d 652 (5th Cir. 1968), and Rev.Rul. 61-119, 1961-1 Cum.Bull. 395. In Redwing Carriers the taxpayer had used its own wholly owned subsidiary to disguise an exchange as a sale and simultaneous purchase of property. The district court had specifically found that there would have been no purchase of the new equipment had there not been a concurrent and binding agreement for the sale of the old equipment. 399 F.2d at 655. The court thus held the transactions to be within § 1031(a). In Rev.Rul. 61-119 the disposition of old equipment to and acquisition of new equipment from the same dealer where the transactions were reciprocal was held to be an exchange even though accomplished by separately executed contracts.

In distinguishing Carlton, the Red-wing Carriers court stated:

The most that could be said for the transactional relationship in Carlton was that the sale for cash between the taxpayer and a purchaser had been complementary with the later purchase of like property between the taxpayer and a seller.

399 F.2d at 659.

Cases dealing with whether the replacement of property held for productive use in trade or business results in a sale or exchange have been termed “hopelessly conflicting.” However, the result in a case such as this one is controlled by the district court’s finding of facts, i. e., whether the replacement transactions were “complementary” or “mutually dependent.” The district court’s finding below, not clearly erroneous, that the transactions in question were not mutually dependent, precludes our determining that an exchange occurred. Accordingly, the decision of the district court will be

Affirmed.

      . Int.Rev.Code of 1954, § 1031 provides in relevant part:
      (a) Nonrecognition of gain or loss from exchanges solely in kind. — No gain or loss shall be recognized if property held for productive use in trade or business or for investment (not including stock in trade or other property held primarily for sale, nor stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest) is exchanged solely for property of a like kind to be held either for productive use in trade or business or for investment.
      (d) Basis. — If property was acquired on an exchange described in this section, . . . then the basis shall be the same as that of the property exchanged.....

      . Int.Rev.Code of 1954, § 1002 provides: Except as otherwise provided in this subtitle, on the sale or exchange of property the entire amount of the gain or loss, determined under section 1001, shall be recognized.

      . See generally United States v. Cumberland Pub. Serv. Co., 338 U.S. 451, 452, 454-455, 70 S.Ct. 280, 94 L.Ed. 251 (1950).

      . Eventually 144 used trucks were sold. The board’s authorization to sell 143 trucks was in apparent response to an offer from a used truck dealer, Udelson, on Juno 16, 1959, to purchase 143 trucks.

      . The Commissioner had originally assessed a deficiency for the year 1959 based on the useful life (of tractors) used by taxpayer for depreciation in the year of sale. When the Commissioner decided to treat the transaction as an exchange, he was unable to do so for 1959 because the deficiency based on useful life was already before the Tax Court.
      When the suit for refund of 1960 and 1961 taxes was brought, the district court originally held that the 1959 Tax Court decision estopped the Commissioner from proceeding in 1960 and 1961 to treat the transaction as an exchange. On appeal we held that the issue of sale or exchange had not actually been determined, and accordingly, in light of Commissioner v. Sunnen, 333 U.S. 591, 600, 68 S.Ct. 715, 92 L.Ed. 898 (1948), we reversed and remanded. Bell Lines, Inc. v. United States, No. 71-1823 (4th Cir., Jan. 20, 1972).

      . See Commissioner v. Court Holding Co., 324 U.S. 331, 65 S.Ct. 707, 89 L.Ed. 981 (1945); Gregory y. Helvering, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935); Alderson v. Commissioner, 317 F.2d 790, 793-794 (9th Cir. 1963).
      Where there is a series of steps, resulting in a change of property interests, it is vitally important to determine whether each step is to be separately tested against the statutory provisions in determining gain or loss or whether all of the steps resulting in the complete transaction are to be considered in their entirety and effect given to the whole transaction rather than to any of its separate parts.
      Mertens, infra § 20.161, at 731.

      . Mertens, supra § 20.161, at 730-31.


source: Caselaw Access Project

author: JAMES M. CARTER, Circuit Judge:

license: Public Domain

text:
    MAYVIEW CORP. et al., Plaintiffs-Counterdefendants-Appellants, v. Harvey B. RODSTEIN et al., DefendantsCounterplaintiffs-Appellees. MAYVIEW CORP. et al., Plaintiffs-Counterdefendants-Appellees, v. Harvey B. RODSTEIN et al., Defendants-Counterplaintiffs-Appellants.
    Nos. 71-2058, 71-2319.
    United States Court of Appeals, Ninth Circuit.
    June 19, 1973.

      Ellsworth R. Roston (argued), William H. Pavitt, Jr., Charles H. Schwartz, Smyth, Roston & Pavitt, Los Angeles, Cal., for Mayview Corp. and others.
    Hamer H. Jamieson (argued), Thelma S. Herzig, Herzig & Walsh, Beverly Hills, Cal., for Harvey B. Rodstein and others.
    Before CARTER and TRASK, Circuit Judges, and BURNS, District Judge.

       Honorable James M. Burns, United States District Judge, District of Oregon, sitting by designation.

   OPINION

JAMES M. CARTER, Circuit Judge:

In No. 71-2058, appellants Mayview Corporation et al. (hereafter Mayview) contest a preliminary injunction granted by the district court to appellees Harvey B. Rodstein, et al. (hereafter Rodstein) on May 25, 1971. The injunction prohibited Mayview from infringing Rod-stein’s patent No. 3,563,134 and trademark “RODAC,” No. 903,459. The question is whether the trial court applied the proper standard for grant or refusal of a preliminary injunction. We reverse.

In No. 71-2319, Rodstein cross-appeals from alleged refusal of the district court to grant injunctive relief against Mayview’s claimed use of identifying numbers from Rodstein’s devices. An earlier motion to dismiss the cross-appeal was denied pending hearing on the merits. It appears that the cross-appeal was improperly taken from alleged “failure” of the district court to grant such an injunction, and not from an order “granting, continuing, modifying, refusing or dissolving” an injunction as provided in 28 U.S.C. § 1292(a)(1). However, we dismiss the cross-appeal as not timely taken under Fed.R.App.P. 4(a). The notice of appeal was filed July 16, 1971, more than 14 days after the notice of appeal in No. 71-2058, supra, dated June 24, 1971, and more than 30 days after denial of a Rule 52 motion, dated June 10,1971.

Facts

Because of our disposition of this case, only a brief statement of facts is necessary. It is of course not to be construed as binding upon remand. May-view brought suit for declaratory judgment under 28 U.S.C. § 2201 to determine that Rodstein’s patent, above mentioned, was invalid. Other claims not material here were joined. Rodstein answered and counter-claimed under 28 U. S.C. § 1338 for patent and trademark infringement, and unfair competition.

After notice and a hearing, the district court on May 14, 1971 entered a minute order granting Rodstein’s requested preliminary injunction. May-view’s motion for reconsideration was heard and determined adversely to them on June 7, 1971. Meanwhile, on May 25, the injunction appealed from was entered.

The court requested that Rodstein prepare proposed findings of fact and conclusions of law. This was done, but the court instead prepared its own findings and conclusions, and entered them on June 14, 1971. The proposed findings filed by Rodstein included express findings of the validity of the ’134 patent and the infringement of the “RODAC” trademark; those entered by the court did not. After further unsuccessful motions for relief from the injunction and for a stay pending appeal, this court granted a stay on July 27, 1971.

The center of controversy is Rod-stein’s claimed invention of an in-line, air-operated sander. Rodstein claimed it was an improvement over earlier such sanders in that it was designed and the parts balanced so as to eliminate vibrations that had rendered its predecessors of little commercial utility. Rodstein’s patent was a typical combination patent. To be valid it had to produce “unusual or surprising” results. Great A. & P. Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 95 L.Ed. 162 (1950); Regimbal v. Scymansky (9 Cir. 1971), 444 F.2d 333, 338-340; Hewlett-Packard Co. v. Tel-Design, Inc. (9 Cir. 1972), 460 F.2d 625, 629.

Mayview challenges Rodstein’s claims on grounds of lack of invention over prior art, and on grounds of noninfringement of both patent and trademark, among others. We are concerned only with the propriety of the preliminary injunction.

Validity of the Patent

The general rule in equity is that a preliminary injunction will not issue absent a showing of irreparable injury and probable success on the merits. In patent cases a preliminary injunction requires the movant not only to establish irreparable injury, but also to make a special showing of the likelihood that he will prevail on the merits.

This special burden is said to require proof that the validity of the patent has been established beyond question, either by prior adjudication or public acquiescence. Carter-Wallaee, Inc. v. Davis-Edwards Pharmacal Corp. (2 Cir. 1971), 443 F.2d 867, 872 & n. 5; Simson Bros., Inc. v. Blancard & Co. (2 Cir. 1927), 22 F.2d 498, 499; Leavitt v. McBee Co., 124 F.2d 938, 939 (1 Cir. 1942); Eli Lilly & Co. v. Generix Drug Sales, Inc. (5 Cir. 1972), 460 F.2d 1096, 1099; Stoody Co. v. Osage Metal Co. (10 Cir. 1938), 95 F.2d 592, 593; see Pacific Cage & Screen Co. v. Continental Cage Corp. (9 Cir. 1958), 259 F.2d 87, 88 (per curiam) (dicta); Flintkote Co. v. Philip Carey Co. (7 Cir. 1926), 13 F.2d 850 (per curiam).

However, once validity is established by a showing of public acquiescence or prior adjudication, and infringement is shown, general equitable principles apply to the remaining prerequisites to an injunction.

The cases do not seem to decide whether any other showing might be sufficient to establish validity in exceptional cases, nor do we do so here. See White v. Leanore Frocks, Inc. (2 Cir. 1941), 120 F.2d 113, 114; Bose Corp. v. Linear Design Labs, Inc. (2 Cir. 1972), 467 F.2d 304, 307. Our case is not of that type.

The district court attempted to rely upon Ryan v. Ideal Toy Corp. (C.D. Cal.1966), 260 F.Supp. 828, 832, for a “strong probability” test. See also Observa-Dome Laboratories, Inc. v. Mc-Graw Hill, Inc. (E.D.Pa.1972), 343 F. Supp. 1030, 1031. While we of course intimate no view of the law in other circuits, we expressly overrule the language

In our case, the district court’s findings of fact, set forth in the margin, nowhere mention the validity of Rodstein’s patent. Mayview presents many other possible grounds for reversal. We need not reach them because, in our view, the lack of a finding that the patent was valid beyond question is dis-positive. Cf. Clairol, Inc. v. Gillette Co. (2 Cir. 1968), 389 F.2d 264, 265. There was no showing of public acquiescence, and there appears of record no suggestion of prior adjudication. of Ryan, supra, insofar as it conflicts with our opinion herein. Ryan, 260 F. Supp. at 831, distinguished our dicta in Pacific Cage, supra, 259 F.2d at 88, on grounds that the presumption of validity given to patents by 35 U.S.C. § 282 and case law was controlling, citing Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U.S. 1, 55 S.Ct. 928, 79 L.Ed. 163 (1934), and Mumm v. Jacob E. Decker & Sons, 301 U.S. 168, 171, 57 S.Ct. 675, 81 L.Ed. 983 (1937). We disagree. Neither Supreme Court case involved grant or denial of a preliminary injunction. See Carter-Wallace, Inc., supra, 443 F.2d at 872 n. 5. The presumption of validity is too slim a reed to support a preliminary injunction in a patent ease.

Moreover, the presumption of validity afforded to patents is not conclusive, but exists simply to give the grant substance and value. Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342, 348, 45 S.Ct. 117, 69 L.Ed. 316 (1924). On the question of obviousness against the prior art, for example, the presumption dissipates when it is shown that the prior art was not brought to the attention of the patent examiners. Hewlett-Packard, Co., supra, 460 F.2d at 628. The test of validity in combination patent cases is whether elements of existing art have been combined to form an “unusual or surprising” result. Regimbal, supra, 444 F.2d at 340. Proper findings under Rule 52(a) are “of the highest importance” to appellate review of the grant or refusal of a preliminary injunction. Mayo v. Lakeland Highlands Canning Co., 309 U.S. 310, 316-317, 60 S.Ct. 517, 84 L.Ed. 774 (1940); Bose Corp., supra, 467 F.2d at 311. In the present case, the district court made no finding of any kind as to validity.

Moreover, Rodstein’s affidavit appears to admit that all of his claim was “old in the art excepting this new element of balancing the piston and shoe in a single piston straight line sander.” On the other hand, the affidavit of Mayview’s witness, Sumida, indicates that Sumida, not Rodstein, first balanced the sander. It is also questionable whether the patent represents an advance over prior art. The district court did not resolve these disputes. In view of the lack of findings sufficient to meet the test of validity, “All questions of the adequacy of . . . proof . . . must await trial. It is enough now that the outcome is patently doubtful.” Simson Bros., Inc., supra, 22 F.2d at 499.

Trademark Infringement

The findings and conclusions of the district court only incidentally mention the “RODAC” trademark, in stating that it is the property of Rodstein. Nowhere did the court find facts which might form the basis of a preliminary injunction against trademark infringement. Cf. Ross-Whitney Corp. v. Smith Kline & French Laboratories (9 Cir. 1953), 207 F.2d 190, 194-195. Everything we have said above with regard to the need for specific findings of fact, applies here. Trademark infringement therefore could not properly support the injunction.

Unfair competition

The district court also seemed to rest its decision on the unfair competition tort alleged in the second, third, and fourth counterclaims. Unfortunately, the disputed facts of this claim are only very indefinitely resolved by the court’s finding of an “opportunity” for Rodstein’s ex-employee, Fisher, to divulge confidential information with which Mayview could produce a sander “strikingly similar” to Rodstein’s Sander.

An article may be copied unless covered by a valid patent or copyright. Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964); Compeo Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964). Thus to the extent that “copying” is the basis for the district court’s injunction, validity of the patent was also in issue, and the failure to find specially on the validity issue is fatal to the injunction. If Rodstein can hurdle these cases, then apparently the decisive test for unfair competition in California is whether the public is likely to be confused as to the source of the goods.

Conclusion
We have previously held that “The grant of a preliminary injunction is the exercise of a very far reaching power never to be indulged in except in a case clearly warranting it. . . . [O]n application for preliminary injunction the court is not bound to decide doubtful and difficult questions of law or disputed questions of fact.” Dymo Industries, Inc. v. TapePrinter, Inc. (9 Cir. 1964), 326 F.2d 141,143 (per curiam).

The district court did not and perhaps could not make specific findings which might have resolved the many disputed factual issues herein. So far as we can tell in the absence of such findings, no injunction would have been warranted because of Rodstein’s failure to establish that he was clearly entitled to it. We also note that the injunction as granted does not itself “set forth the reasons for its issuance.” Fed.R.Civ.P. 65(d). Because of the disputed facts, the matter should proceed to trial on the merits.

At oral argument counsel for both sides advised us that they would be ready for trial within 30 days. The case should be promptly tried, subject only to the cases on the trial court’s calendar that are entitled to legal priority.

“We cannot but animadvert upon the waste of time in filing of this appeal. Instead of attempting to try this case upon affidavits as to whether a preliminary injunction should issue . . ., the case should have been disposed of on the merits.” Pacific Cage, supra, 259 F.2d at 88.

The district court is directed to set the case for trial at as early a date as possible and to refuse to entertain any further applications for temporary injunctions.

Since our opinion sets aside the preliminary injunction, Rodstein’s motion filed April 30, 1973 to vacate the stay of that injunction is moot.

No. 71-2058 is reversed and remanded with directions. The cross-appeal, No. 71-2319, is dismissed as untimely.

      . The patent in suit was filed February 10, 1969, and issued February 16, 1971, immediately following which this action was begun on March 8, 1971.

      . We mention in passing that even if Ryan, supra, had been correctly decided, the district court improperly refused the suggestion in argument before it that the Ryan test applied to validity as well as infringement.

      . Pacific Cage & Screen Co. v. Continental Cage Corp. (9 Cir. 1958), 259 F.2d 87, 88 (per curiam) (dicta); Wilson v. Byron Jackson Co. (9 Cir. 1937), 93 F.2d 572, 574 (equitable estoppel); see Kings County Raisin & Fruit Co. v. United States Consol. Seeded Raisin Co. (9 Cir. 1910), 182 F. 59, 61 (prior adjudication) ; Jensen v. Norton (9 Cir. 1894), 64 F. 662, 664, following Blount v. Societe Anonyme du Filtre Chamber-land System Pasteur (6 Cir. 1892), 53 F. 98, 100-102 (public acquiescence); Southern Pacific Co. v. Earl (9 Cir. 1897), 82 F. 690, 691-692, applying Georgia v. Brailsford, 2 U.S. (2 Dali.) 402, 1 L.Ed. 433 (1792). (general equitable rule). See generally 2 Deller’s Walker on Patents § 185 (1964).

      . The district court found that Rodstein owned the patent and trademark in suit. It then found that “After issuance of the patent . . . and prior to the filing of the complaint herein” — a space of 26 days, we note — Mayview “manufactured, bought, sold and offered for sale and induced others to sell and offer for sale, sanders like [Rodstein’s].” The court then made its Finding of Fact No. 10, which states:
      “That said sander sold by counter-defendants [Mayview] has been examined by the Court along with the sander produced and sold by counter-plaintiffs [Rodstein] and there is a marked similarity between the two products which is hardly accidental. There is a strong probability that the sander which is the product of counterdefendants has infringed counter-plaintiffs patented device in Patent No. 3,563,134.” [Emphasis added]

      . The appeal was dismissed for lack of an adequate record.

      . See note 1 supra.

        . Finding No. 11 is the court’s only reference to purportedly confidential information which Fisher allegedly obtained from Rodstein:
      “Counterdefendant, Irving Fisher, was an employee of and brother-in-law to the principals of the counterplaintiffs [Rodstein] and in such employment obtained confidential knowledge of the sources of counterplaintiffs products and other information valuable to the business of counterplaintiffs. Said Fisher thereafter left the employment of counterplaintiffs and became associated with counterdefendants [Mayview] and there existed the opportunity for him to divulge said hereinbefore referred to confidential information to counterdefendants and to therefore assist counterdefendants in producing a product strikingly similar to the product of counterplaintiff.”
      Injunctive relief on such grounds should issue only on convincing proof of harm. Mathews Paint Co. v. Seaside Paint & Lacquer Co., 148 Cal.App.2d 168, 175, 306 P.2d 113 (1957). The court’s findings reflect no such standard. Rod-stein’s fourth counterclaim included allegations of appropriation of confidential customer lists and sources of supply; Finding No. 11 apparently refers to this claim. For equitable protection, it generally must be shown that a customer list was in fact a trade secret or confidential information, and not generally known or publicly available. Scavengers Protective Ass’n v. Serv-U-Garbage Co., 218 Cal. 568, 571, 24 P.2d 489 (1933); Mathews Paint Co., supra, 148 Cal.App.2d at 174, 306 P.2d 113. From the conclusory findings of the district court, we are unable to tell whether such a test was even applied, much less satisfied.

      . Audio Fidelity, Inc. v. High Fidelity Recordings, Inc. (9 Cir. 1960), 283 F.2d 551, 557; see Academy of Motion Picture Arts & Sciences v. Benson, 15 Cal.2d 685, 104 P.2d 650 (1940); 47 Cal. Jur.2d, Trademarks § 26, at 743 (1959).


author: MATTHES, Chief Judge.

text:
    UNITED STATES of America, Appellee, v. Rocco Salvatore LUPINO, Appellant.
    Nos. 72-1669, 73-1096.
    United States Court of Appeals, Eighth Circuit.
    Submitted May 14, 1973.
    Decided June 15, 1973.

      Jack S. Nordby, St. Paul, Minn., for appellant.
    Joseph T. Walbran, Asst. U. S. Atty., Minneapolis, Minn., for appellee.
    Before MATTHES, Chief Judge, and MEHAFFY and STEPHENSON, Circuit Judges.
   MATTHES, Chief Judge.

Rocco Salvatore Lupino, having previously been convicted of a felony, is in this court on appeal from his judgment of conviction of receiving, on two separate dates, a firearm in and affecting commerce, in violation of 18 U.S.C.App. § 1202(a)(1), and conspiring with Ralph W. Crippen and other persons to cause Crippen to receive a firearm in and affecting commerce in violation of 18 U.S. C. § 371.

This prosecution has its origin in two indictments returned against Lupino. The first, in two counts, was filed on April 13, 1972. Count I charged that on March 29, 1971, Lupino, having been convicted of a felony, knowingly received a .38 caliber revolver in and affecting commerce. Count II charged the conspiracy above mentioned. The second indictment, filed on June 27, 1972, charged, in language almost identical to Count I of the first indictment, that Lupino received a .38 caliber revolver on November 9, 1971.

The two indictments having been consolidated, the trial commenced before a jury on Monday, September 11, 1972, and terminated on September 19 in a verdict finding Lupino guilty as charged in the two indictments. Prison sentences were imposed as follows: two years on the substantive offense charged in Count I of the first indictment, five years for the conspiracy offense, Count II of the first indictment, and two years on the substantive offense charged in the second indictment, all to be served consecutively to each other for a total of nine years. It was further adjudged that the sentences were to run consecutively to the sentence Lupino is serving on the state charges.

Presented for consideration are these contentions of error:

I

The prosecution failed to prove the requisite interstate nexus;

II

The prosecution failed to prove appellant’s knowledge of the interstate nexus;

III-A

The alleged object of the conspiracy, “to cause” a convicted felon to receive a weapon, is not itself a federal offense;

III-B

The participation of both appellant and Crippen was necessary for commission of the substantive offense and therefore neither may be convicted of conspiracy to commit it;

IV

The classification of “felons” under § 1202(a)(1) violates the due process clause of the fifth amendment;

V

The trial court erred in refusing to issue the writ of habeas corpus ad testificandum to produce George Harmon as a witness for the defense;

VI

The totality of the circumstances denied appellant a fair trial.

In order to place the issues in proper perspective, we summarize the relevant facts and, in doing so, briefly describe the individuals who played important roles.

1. Appellant, who, as we have seen, has a history of criminal activities, had been released from the state penal institution and was on parole when the criminal activities here involved were initiated in March of 1971.

2. Ralph W. Crippen, the named conspirator in Count II of the indictment, had received a life sentence for second degree murder committed when he was 19 years old, had served 20 years and was released in November of 1970. He and Lupino were prison acquaintances.

3. Donald Thunstrom, who also had a criminal record, knew Lupino and Crippen.

4. Myrtle Peka, mother of Thunstrom, had been convicted of a felony.

5. Robert E. Rhoades, a former convict, was also acquainted with Lupino and Crippen.

All of the above named were government witnesses and gave damaging testimony against appellant.

According to the uncontradicted testimony of Thunstrom, Lupino had approached him on March 29, 1971, given him $35 or $40 and instructed him to purchase a gun. In compliance, Thunstrom and his mother, Myrtle Peka, purchased in her name a .38 caliber revolver from the Great North Trading Post, a Minnesota retail establishment. Later that evening, Thunstrom delivered the firearm to Lupino. This transaction is the subject of Count I of the first indictment.

The firearm in question had been manufactured in Germany and shipped to New York. It entered customs in Minneapolis, Minnesota, and did not leave the state thereafter. The subject revolver bore German markings, including the words “H. Weihrauch, Mellrichstadt” and “Made in Germany.”

In either late October or early November of the same year, Lupino acting in concert with Crippen, Rhoades, and Bernie O’Donnell planned a robbery of the Bungalow Bar in Minneapolis. In due course, the robbery was scheduled for the morning of November 9. Unknown to the plotters, federal agents and police officers had Crippen under close surveillance throughout the month of November, and therefore observed a number of meetings of Crippen, Lupino and others, as well as suspicious activities leading up to the robbery, although the agents were unaware of the specific criminal objective. On the evening before the day planned for the robbery, Lupino armed Crippen with the .38 revolver Lupino had obtained through the efforts of Thunstrom. Due to an unforeseen circumstance the next morning — an inability to secure a stolen getaway car, the robbery was postponed, and Crippen returned the firearm to Lupino. This delivery was the subject of the second charge of receiving a firearm. The parties were not easily discouraged, however, and after further consultation, the robbery was reset for the morning of November 16. Lupino again transferred his gun to Crippen. This time, having successfully obtained a stolen vehicle, Crippen and Rhoades completed the robbery. Crippen, armed with the revolver which is the subject of the indictments in this case, during the course of the holdup, shot the owner of the bar in the foot. Crippen and Rhoades absconded in the stolen automobile with approximately $8,000. Shortly thereafter, they and O’Donnell, who also participated in the holdup, divided the loot after paying $500 to the driver of the getaway car. Several hours later, Crippen was arrested while driving home with his fiancee, Sharon Dorn. The revolver used by him in the holdup was lying on the floorboard of the front seat of his car. The officers took possession of it and part of the stolen money.

Sharon Dorn, as a government witness, testified to threats made by Lupino against her and her children if Crippen cooperated with the officers in any prosecution against him.

At his trial, Lupino did not take the stand. In his defense, he presented a number of alibi witnesses to disprove the March 29th Receipt of the firearm. More broadly, he attempted to show that the prosecution witnesses were testifying falsely in return for promises of leniency. In support of this claim, several inmates of the Minnesota prison in which Crippen had been incarcerated testified that Crippen had disclosed to them that he had obtained the gun directly from Thunstrom.

We now advert to the six points of error relied upon for reversal and consider them seriatim.

I.

We reject without extended elaboration the claim that the government failed to prove the requisite interstate nexus mandated by United States v. Bass, 404 U.S. 336, 92 S.Ct. 515, 30 L. Ed.2d 488 (1971). As shown above the subject firearm was manufactured in Germany, was first transported to New York and then to Minnesota. This clearly proved that the weapon traveled in interstate commerce and satisfies the statute. United States v. Glasgow, 478 F.2d 850 (8th Cir. 1973); United States v. Mancino, 474 F.2d 1240 (8th Cir. 1973); United States v. Brown, 472 F.2d 1181 (6th Cir. 1973); United States v. Giannoni, 472 F.2d 136 (9th Cir. 1973).

II.

Contrary to appellant’s contention, the government was not required to prove appellant’s knowledge of the interstate nexus. United States v. Wiley, 478 F.2d 415 (8th Cir. 1973); United States v. Crow, 439 F.2d 1193, 1195 (9th Cir. 1971) , vacated on other grounds, 404 U.S. 1009, 92 S.Ct. 687, 30 L.Ed.2d 277 (1972); United States v. Bellperio, 452 F.2d 389 (9th Cir. 1971). Compare with United States v. Freed, 401 U.S. 601, 607-610, 91 S.Ct. 1112, 28 L.Ed.2d 356 (1971), cited with approval in United States v. Wiley, supra; Bryant v. United States, 462 F.2d 433, 435 (8th Cir. 1972) ; United States v. Quiroz, 449 F.2d 583 (9th Cir. 1971).

III-A.

Appellant further contends that the conspiracy count of the indictment fails to. state an offense against the United States. The argument advanced is that § 1202(a)(1) does not purport to punish one who “causes” a felon to receive a proscribed firearm.

This ingenious argument, in the final analysis, constitutes a futile exercise in sematics.

Beyond cavil the receipt by a felon of a firearm in or affecting interstate commerce is an offense against the United States. By virtue of the federal conspiracy statute, 18 U.S.C. § 371, and decisions too numerous to cite, a conspiracy to commit an offense against the United States is a crime and the conspirators are subject to prosecution and punishment for engaging in the conspiracy. And the commission of the substantive offense and the conspiracy to commit it are separate and distinct offenses. Pinkerton v. United States, 328 U.S. 640, 643, 66 S.Ct. 1180. 90 L.Ed 1489 (1946).

Here appellant and at least three other individuals, acting in concert and in order to carry out a well planned scheme, caused one of the conspirators to commit the substantive offense of receiving a firearm. Certainly, we would be required to engage in legalistic gymnastics to hold, as suggested by appellant, that the charge — conspiracy by a number of individuals to “cause” one of them to violate § 1202(a)(1) — does not fall within the ambit of 18 U.S.C. § 371. See and compare United States v. Rabinowich, 238 U.S. 78, 35 S.Ct. 682, 59 L. Ed. 1211 (1915) (holding in effect that individuals not bankrupt are subject to prosecution for conspiring with a bankrupt to conceal assets). See also Gebardi v. United States, 287 U.S. 112, 53 S. Ct. 35, 77 L.Ed. 206 (1932); May v. United States, 84 U.S.App.D.C. 233, 175 F.2d 994 (1949).

III-B.

Lupino phrases his second attack against the conspiracy count in this language: “The alleged object of the conspiracy, Mr. Lupino’s causing Mr. Crippen to receive a firearm, necessarily involved the mutual cooperation of both alleged conspirators and neither may therefore be convicted of a conspiracy.”

As stated above, the commission of a substantive offense and a conspiracy to commit it are two separate and distinct crimes. However, there are instances where a conspiracy charge may not be added to the substantive charge. Thus, an agreement by two persons to commit a particular crime cannot be prosecuted as a conspiracy when the crime is of such a nature as to necessarily require the participation of two persons for its commission. Pinkerton v. United States, 328 U.S. 640, 643, 66 S.Ct. 1180, 90 L.Ed. 1489 (1940) ; Gebardi v. United States, 287 U.S. 112, 121, 53 S.Ct. 35, 77 L.Ed. 206 (1932); United States v. Skillman, 442 F.2d 542, 548 (8th Cir.), cert. denied, 404 U.S. 833, 92 S.Ct. 82, 30 L.Ed.2d 63 (1971); Baker v. United States, 393 F.2d 604, 610 (9th Cir.), cert. denied, 393 U.S. 836, 89 S.Ct. 110, 21 L.Ed.2d 106 (1968); Ferina v. United States, 340 F.2d 837, 840 (8th Cir.), cert. denied, 381 U.S. 902, 85 S.Ct. 1446, 14 L.Ed.2d 284 (1965); Wharton’s Criminal Law and Procedure (Anderson) § 89, pp. 192, 193 (1957).

Conversely, this exception does not apply when the offense could be committed by one of the conspirators alone. Wharton’s Criminal Law and Procedure, supra at p. 192.

The exception to the general rule is also limited to cases where the essential participants are the only conspirators. See Gebardi v. United States, 287 U.S. 112 n.6, 53 S.Ct. 35, 77 L.Ed. 206 (1932); Reno v. United States, 317 F.2d 499, 503 (5th Cir.), cert. denied, 375 U. S. 828, 84 S.Ct. 72, 11 L.Ed.2d 60 (1963); United States v. Figueredo, 350 F.Supp. 1031, 1035 (M.D.Fla.1972); Wharton’s Criminal Law and Procedure, supra at p. 193.

We hold that this case does not fall within the above exception and that the conspiracy count is invulnerable to a successful attack.

First, we are not inclined to hold that the substantive offense of receiving a firearm prohibited by § 1202(a) is of such a nature as to necessarily require the participation of two persons for its commission. Conceivably a felon acting alone could receive a firearm. See, e. g., United States v. Giannoni, 472 F.2d 136 (9th Cir. 1973). Secondly, a fatal weakness of appellant’s contention inheres in the fact that in this case the active participants, i. e., Lupino and Crippen, were not the only conspirators. The indictment charged that Lupino conspired with Crippen and divers other persons to cause Crippen to receive the firearm in question. The record conclusively demonstrates that at least Rhoades and O’Donnell participated in the conspiracy in addition to Lupino and Crippen. All of the conspirators played an active role in the numerous transactions which culminated in the delivery of the firearm to Crippen by Lupino and the ultimate holdup and robbery of Bungalow Bar.

IV.

Lupino asserts the classification of “felons” in § 1202(a)(1) violates the due process clause of the fifth amendment because it discriminates against a class of persons without a demonstrated rational basis. We upheld the statute against a similar attack in United States v. Synnes, 438 F.2d 764, 771 (8th Cir. 1971). Synnes was vacated by the Supreme Court and remanded for further consideration in light of United States v. Bass, 404 U.S. 336, 92 S.Ct. 515, 30 L.Ed.2d 488 (1971). We adhere to the view expressed in United States v. Mancino, 474 F.2d 1240 (8th Cir. 1973), that the remand of Synnes resulted solely from our determination that no nexus with interstate commerce need be shown, and that our sustention of the constitutionality of the statute is still viable. See United States v. Burton, 475 F.2d 469 (8th Cir. 1973).

V.

We find no prejudicial error in the failure of the court to issue a writ of habeas corpus ad testificandum to produce George (Joey) Harmon, a prison inmate, as a witness for the defense.

The grant of the writ lies within the sound discretion of the trial court. United States v. Goldenstein, 456 F.2d 1006, 1012 (8th Cir. 1972).

Here appellant requested three writs in order to secure the presence and testimony of three prisoners confined in the state prison. He claimed two of the prisoners would directly impeach Crippen’s testimony, and that the third prisoner, George (Joey) Harmon, would testify that upon his arrest an agent of the State Crime Bureau told Harmon there were “unlimited funds available for informants. . . . All you have to do is give us Mancino or Lupino. . . Appellant offered Harmon’s testimony to show a concerted effort by law enforcement agents to “get” Lupino.

The court denied the writ on the ground that his proposed testimony was irrelevant. The other two writs were granted.

VI.

Lastly, appellant contends the totality of the circumstances denied him a fair trial. We disagree. We have with painstaking care examined the entire record. Lupino was represented by an able, experienced trial lawyer who made a valiant and determined effort against overwhelming odds to convince the jury of his client’s innocence. The trial court took care to safeguard all of Lupino’s rights; numerous conferences were held out of the hearing of the jury on objections raised as to admissibility of evidence. As indicated at the outset, the trial was a protracted one, and the relatively small number of claimed errors presented on this appeal attest to the fact that the trial was also fair.

' The judgment of conviction is affirmed.

      . Lupino is no stranger to tlie courts. In 1959 he was convicted under the Fugitive Felon Act for fleeing with intent to avoid prosecution for kidnapping and murder. I-Ie was sentenced to five years and a fine of $5,000. On appeal to this court the conviction was affirmed. Lupino v. United States, 268 F.2d 799 (8th Cir.), cert. denied, 361 U.S. 834, 80 S.Ct. 86, 4 L.Ed. 2d 75 (1959).
      In 1960, his § 2255 motion was denied, Lupino v. United States, 185 F.Supp. 363 (D.Minn.1960), and an appeal therefrom was dismissed as frivolous by this court. Lupino v. United States, 285 F.2d 429 (8th Cir. 1960).
      In 1964, the Minnesota Supreme Court affirmed a state kidnapping conviction, State v. Lupino, 268 Minn. 344, 129 N.W. 2d 294 (1964), for which he had received a sentence of 2-80 years. Certiorari was denied by the Supreme Court. 379 U.S. 978, 85 S.Ct. 681, 13 L.Ed.2d 569 (1965).
      In Lupino v. Tahasli, 252 F.Supp. 225 (D.Minn.1966), his petition for writ of habeas corpus was dismissed.

      . The indictment enumerated four overt acts performed in furtherance of the conspiracy.

      . The government introduced an invoice dated January 31, 1970, showing that the St. Hubert Company of Waseca, Minnesota, had purchased 11 cases of firearms from a German gun manufacturer. The subject revolver was part of this shipment.