author: TERRENCE WILLIAM BOYLE, District Judge.

text:
    HARRINGTON MANUFACTURING COMPANY, INC., Plaintiff, v. POWELL MANUFACTURING COMPANY, INC., Defendant.
    No. 82-8-Civ-2.
    United States District Court, E.D. North Carolina, Elizabeth City Division.
    Nov. 27, 1985.
    Harvey B. Jacobson, Jr., Fleit, Jacobson, Cohn & Price, Washington, D.C., for plaintiff.
    George M. Sirilla, Cushman, Darby & Cushman, Washington, D.C., for defendant.
   ORDER

TERRENCE WILLIAM BOYLE, District Judge.

This is an action for injunctive relief and damages arising out of defendant’s alleged infringement of four patents owned by Harrington Manufacturing Company, Inc., (hereinafter “Harrington”). All four patents are directed to various features of automatic tobacco harvesters, or tobacco combines. The matter presently before the court involves only United States Pickett, et al Patent No. 3,507,103 entitled TOBACCO HARVESTER (hereinafter “Pickett Patent”). The defendant, Powell Manufacturing Company, Inc. (hereinafter “Powell”), has moved for partial summary judgment alleging that claim 8 of the Pickett Patent is invalid.

The record shows that the application for the Pickett Patent was filed in the United States Patent and Trademark Office on October 2, 1967 and was granted April 21, 1970. There are three inventors listed in the Pickett Patent; William L. Pickett, Linwood J. Cooper, and Joseph J. Harrington. The Pickett patent is essentially a mechanized tobacco harvester that channels each tobacco stalk into a defoliation head where rubber-like blades, twisted into spiral shapes, rotate and strip, wipe or rub the leaves off the stalk in a downward wiping action. The leaves then fall on belts and then are conveyed to boxes located at the rear of the machine. What sets the Pickett patent apart from all previous attempts at mechanized harvesters, however, is its ability to accommodate tobacco stalks that are out-of-line or dog-legged and, to assist the driver in tracking the row of tobacco being harvested. This is accomplished by suspending the defoliator heads from the upper frame structure, thereby permitting the defoliation heads to swing laterally. Prior to the Pickett harvester the defoliator heads and guide elements on other harvesters were fixed on the frame so that any stalk that was out of line was knocked down and broken by the mechanized harvester. This so-called “swinging head” feature of the Pickett patent is found in claim 8 and distinguishes this harvester from the design of predecessors.

Powell contends that the Pickett patent is invalid under 35 U.S.C. § 102(b) which reads as follows:

A person shall be entitled to a patent unless—
(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States...

Powell’s invalidity argument under § 102(b) is predicated upon the ground that more than one year prior to the date upon which the patent application was filed the tobacco harvester, including the swinging head feature described in claim 8, allegedly (1) was in public use; (2) was on sale within the meaning of § 102(b); and (3) was described in a printed publication with sufficient clarity to enable one skilled in the art to reproduce the harvester. Anyone of these allegations, if proven, would serve to invalidate the patent.

There is no dispute that the patent application was filed on October 2, 1967, therefore making the critical date for § 102(b) purposes October 2, 1966. Powell’s allegations of public use and “on sale” activities pertaining to the Pickett patent before the critical date center around an article written by Clyde Osborne about the harvester that appeared in the September 26, 1966 issue of The Charlotte Observer. A copy of this article has been submitted as evidence by Powell.

Powell has also submitted as evidence a deposition of Clyde Osborne taken on March 18, ■ 1985, in which he testified, in part, as follows:

(1) That prior to writing the September 26, 1966 article, Mr. William Pickett invited him to visit Pickett’s tobacco farm in Scotland Neck, North Carolina. Osborne’s understanding was that Pickett wanted to demonstrate his newly developed tobacco harvester and that Pickett wanted publicity for this harvester.
(2) At Pickett’s farm, Osborne watched the Harvester in operation for a half-hour and took photographs.
(3) That Osborne saw the defoliation head of the harvester in operation and that it channeled each stalk into the machine where the leaves were rubbed off.
(4) That Osborne wrote the September 26, 1966 article after returning from Pickett’s farm and that the article was based on the interview and demonstration with Pickett.
(5) That during Osborne’s interview with Pickett, Pickett told him that he thought the Harvester would be very helpful to farmers in the region and the “machine will cost between $6,000 and $7,000”.

Powell has also submitted an affidavit of Mr. Robert Wilson, President of Powell, that states that prior to October 2, 1966 and after he read the Osborne article of September 26, 1966, he visited Mr. Pickett. Further, Mr. Wilson states that Pickett “allowed me to freely examine his tobacco harvester” and “let me observe it operating in a tobacco field removing tobacco leaves.” There is also testimony that Pickett demonstrated the harvester to both Dr. William Splinter and Dr. Charles Suggs, two professors who did early research in an attempt to build a mechanized tobacco harvester.

Claim 8 of the Pickett patent has previously been held valid in Harrington Manufacturing Company, Inc., v. Taylor Tobacco Enterprises, Inc., 664 F.2d 938 (4th Cir.1981). Powell’s basis for the present allegation of invalidity of the Pickett patent is new evidence that was not known by the court or the Taylor defendants in the prior litigation. This new evidence centers around The Charlotte Observer article written by Clyde Osborne. A prior judgment of patent validity against an unrelated defendant does not collaterally estop another defendant from attacking the validity of that patent in a subsequent law suit. Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971). This is particularly true “when additional, prior or other evidence on patentability is produced in the subsequent suit.” Stevenson v. Sears, Roebuck & Company, 713 F.2d 705, 711, n. 5 (Fed.Cir.1983). Therefore, while the court notes that the Pickett patent has previously been held valid, the weight given to such holding is greatly diminished in light of the new evidence in this case.

“Summary judgment is as appropriate in a patent case as in any other case.” Barmag Barmer Maschinenfabrick AG v. Murata Machinery, Ltd., 731 F.2d 831, 835 (Fed.Cir.1984). For summary judgment to be appropriate there must be no genuine issue as to the material facts in the case (emphasis added). The party opposing summary judgment may not merely rely on its denials and the pleadings, but must come forward with some admissible evidence in an offer of proof to challenge the movant’s claim of undisputed material facts. (Rule 56(e) F.R.Civ.P). If the party resisting summary judgment fails to draw out a conflict in the evidence on the material facts, then summary judgment will lie. Mere denials or conclusory statements are insufficient. Barmag Barmer, supra, at 836; Union Carbide Corporation v. American Can Corporation, 724 F.2d 1567, 1571 (Fed.Cir.1984).

When, as in this case, a defendant in an infringement suit challenges the patent’s validity on the ground that the claimed invention was in public use prior to one year before the patent was applied for, that defendant has the burden of showing by clear and convincing evidence that the invention was, in fact, in public use. “Even a single public use, or only a placing on sale is sufficient to invalidate a patent under 35 U.S.C. § 102(b).” Minnesota Mining & Manufacturing Company v. Kent Industries, Inc., 409 F.2d 99 (6th Cir.1969); Tool Research & Engineering Corporation v. Honcof Corporation, 367 F.2d 449 (9th Cir.1966), cert. denied, 387 U.S. 919, 87 S.Ct. 2032, 18 L.Ed.2d 972 (1967). Once a prima facie case of such use has been made out, however, the burden of going forward with the evidence shifts to the plaintiff, who must then show that the use .was an experimental use. Hycor Corporation v. Schlueter Company, 740 F.2d 1529, 1535 (Fed. Cir.1984); TP Laboratories, Inc., v. Professsional Positioners, Inc., 724 F.2d 965, 971 (Fed.Cir.1984). On a motion for summary judgment once the “experimental use defense is raised by the patent holder, the burden is on the alleged infringer to demonstrate that no genuine issue of material fact exists with respect to such defense and. that he is entitled to judgment as a matter of law.” Watts v. University of Delaware, 622 F.2d 47, 51 (3rd Cir.1980), quoting Long Corporation v. Raymond International, 622 F.2d 1135, 1144 (3rd Cir.1980). See also Kelley Manufacturing Company v. Lilliston Corporation, 180 U.S.P.Q. 364 (E.D.N.C.1973).

In this case the fact that William Pickett demonstrated the Pickett harvester to Mr. Osborn, Mr. Wilson and Drs. Splinter and Suggs, on separate occasions prior to the critical one year period (i.e., October 2, 1967), is uncontested. There is no denial by plaintiffs witnesses that the tobacco harvester was shown to these individuals and that it was the subject of Mr. Osborne’s article. However, the plaintiff asserts that the co-inventors were not aware of such demonstrations. Harrington’s principal contention is that these incidents did not constitute public use, but rather, experimental use. Further, Harrington argues that the harvester shown by Mr. Pickett was only a second prototype and it was not until the third prototype proved satisfactory that the inventors applied for a patent.

The law is clear that “In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use or sell the patented invention without the consent of the co-owners.” 35 U.S.C. § 262. Willingham v. Star Cutter Company, 555 F.2d 1340, 1344 (6th Cir. 1977). Moreover, an invalidating public use or sale of the invention may even take place by a third party without the consent of the patentee. Andrews v. Hovey, 123 U.S. 267, 8 S.Ct. 101, 31 L.Ed. 160 (1887); Hobbs v. United States Atomic Energy Commission, 451 F.2d 849 (5th Cir.1971) (A more liberal standard than presented by the facts of this case, where the public use was by a co-owner). Therefore, whether or not Joseph H. Harrington and/or Linwood Cooper, Mr. Pickett’s co-inventors, knew of Mr. Pickett’s alleged public use is immaterial in this matter.

The issue of whether or not Pickett’s uncontroverted use was public or experimental “must be determined by considering the totality of the circumstances.” Hycor Corporation v. Schlueter Company, 740 F.2d 1529, 1535 (Fed.Cir.1984). Further, in order for a patentee to show experimental use, he must prove that the experiment to improve and perfect the invention was the real purpose in such public use and not merely incidental and subsidiary to its use. Smith and Griggs Manufacturing Company v. Sprague, 123 U.S. 249, 266, 8 S.Ct. 122, 130, 31 L.Ed. 141 (1887); In re Smith, 714 F.2d 1127, 1134 (Fed.Cir.1983). “In determining the purpose of the alleged experimental use, objective evidence indicating a purpose for such testing and experiment is generally preferred. An inventor’s subjective intent is of minimal value.” In re Smith, supra at 1135.

In this case the evidence shows that Mr. Pickett invited Mr. Osborne of The Charlotte Observer out to his farm to witness a demonstration of the newly developed tobacco harvester. Mr. Osborne has testified that he was under no obligation to secrecy. In fact, Osborne testified that Pickett wanted publicity. Harrington offers no evidence to rebut Osborne’s testimony. Further, there is no evidence to suggest that such “testing” or “experiment” in front of a newspaperman who was the agricultural editor for the largest circulation daily in North Carolina was necessary, or the “real purpose” of the public use. The evidence clearly shows that William Pickett, as co-inventor, considered the Harvester to be marketable and was in fact making great efforts to commercialize the new tobacco harvester by going to the most widely published newspaper in the Carolinas.

The very purpose of the § 102(b) “public use rule” is to stimulate a reasonable disclosure of new inventions within the framework of the patent laws. The provision is “Aimed at preventing an inventor from holding back the secrets of his invention while concurrently exploiting it, and thereafter exchanging his knowledge for a legal monoply when confronted with the possibility of competition.” Atlas v. Eastern Airlines, Inc., 311 F.2d 156, 159 (1st Cir.1962). Pickett’s public use of the tobacco harvester in order to gain commercial recognition so as to market the new machinery is exactly the type of activity § 102(b) was aimed at stopping.

Harrington contends that the machine demonstrated by William Pickett in September, 1966 was only a second prototype which was changed and refined to the extent that any showing of the second prototype could not affect the ultimate patent. Powell counters this argument by contending that claim 8 of the Pickett patent is written in such broad language that there is nothing in the third prototype that was not included in the second prototype. Claim 8 reads as follows:

8. A machine for stripping tobacco leaves off the stalks of rows of tobacco plants standing in a field comprising:
(a) a mobile frame adapted to travel along a row of tobacco plants,
(b) defoliator means carried by said frame for stripping leaves from tobacco stalks as said frame moves along a row,
(c) guide means associated with said frame for guiding successive tobacco stalks between said defoliator members,
(d) conveyor means carried by said frame for receiving and carrying away loose leaves thus stripped off the defoliator means,
(e) said defoliator means and guide means having at least their front ends suspended from an upper portion of said mobile frame so that at least the front portions of said defoliator means and guide means will have a considerable degree of freedom to swing laterally with respect to the longitudinal axis of said machine.

Harrington submits the deposition of Joseph Harrington as evidence that changes were made in the harvester shown to Osborne, Wilson, Splinter and Suggs. Careful review of this deposition reveals that the changes do not affect claim 8. For example, Mr. Harrington states that the third prototype was a three-wheel driven machine with a driver’s seat in a lower position, while the second prototype was a four-wheel machine with the driver’s seat located on a higher level. Mr. Harrington also testified that the conveyor belts used to move the tobacco leaves from the defoliation head to boxes at the rear of the machine were replaced by steel rollers. Harrington, therefore, denies that the harvester demonstrated by Pickett in September, 1966 was in its final form. Such changes, however, are not critical because Claim 8 is so broadly written that it describes both the second prototype demonstrated in September, 1966 and the third prototype developed in January, 1967. Such changes in no way affect the functions of claim 8. It is well-settled law that the experimental use exception does not apply to experiments performed with respect to non-claimed features of an invention. In re Smith, 714 F.2d 1127, 1136 (Fed.Cir.1983). The only change alluded to by Mr. Harrington that affects the defoliation process is the addition of the so-called “stalk gripping belts, 150 and 152.” Mr. Harrington’s recollection of this particular addition, however, appears to be clouded. When asked whether this feature was included on any prototype after the second, he replied that he could not recall. Moreover, the court finds that the addition of the stalk-gripping belts to be no more than a refinement of claim 8. The applicable rule in such instances is “that an invention is deemed functional for public use purposes when it can perform the general function for which it has been developed, even though the device might be later refined. Atlas v. Eastern Airlines, Inc., 311 F.2d 156, 162 (1st Cir.1962); Application of Theis, 610 F.2d 786, 792 (C.C.P.A.1979).

Harrington further argues that there are material questions of fact in dispute that bar summary judgment. This argument is also without merit. The precise issue to be settled in this matter is whether there was a public use of the invention of claim 8 of the Pickett patent. Powell has shown that with regard to the public demonstrations of the tobacco harvester in September, 1966, which included all of the basic elements of claim 8, there are no material facts in dispute. Harrington submits no evidence which tends to show that an experiment or test of claim 8 of the Pickett patent was necessary and not merely incidental to and subsidiary to a public and commercial use in September, 1966. Harrington’s mere conclusory statements that Pickett’s demonstrations were experimental is insuffident to raise a genuine issue of material fact so as to forestall summary judgment. See Atlas v. Eastern Airlines, Inc., 311 F.2d 156 (1st Cir.1982); Barmaq Barmer Maschinenfabrik AG v. Mur ata Machinery, Ltd,., 731 F.2d 831 (Fed.Cir.1981).

Based upon the totality of the circumstances the court finds that William Pickett’s demonstrations in September, 1966, of a mechanized tobacco harvester incorporating claim 8 of the Pickett patent was a public use within the meaning of 35 U.S.C. § 102(b). The court further finds that Harrington has failed to meet its burden of coming forward with clear and convincing evidence that the public use activity was experimental in nature and therefore exempt from § 102(b). Further, Harrington has presented no evidence to rebut the showing by Powell that claim 8 of the Pickett patent was in public use before the critical date of October 2, 1966.

The court, therefore, finds that claim 8 of the Pickett patent is invalid as a matter of law and defendant’s motion for partial summary judgment is hereby ALLOWED.


source: Caselaw Access Project

author: DIANA E. MURPHY, District Judge.

license: Public Domain

text:
    CERRO GORDO CHARITY, Plaintiff, v. FIREMAN’S FUND INSURANCE CO., Defendant. CERRO GORDO CHARITY, an Iowa non-profit corporation, Plaintiff, v. NORTH AMERICAN LIFE AND CASUALTY CO., Defendant.
    Civ. Nos. 4-83-251, 4-83-871.
    United States District Court, D. Minnesota, Fourth Division.
    Nov. 27, 1985.

      Richard G. Mark, Michael Streater, Briggs and Morgan, Minneapolis, Minn., for plaintiff.
    Steven D. Jamar, Meagher, Geer, Markham, Anderson, Adamson, Flaskamp & Brennan, Minneapolis, Minn., for defendant Fireman’s Fund.
    Robert S. Cragg, Cragg, Bailly, Gordon & McCollum, Minneapolis, Minn., for defendant North American Life.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

On September 27, 1985, after a three-week trial of the above-entitled matters, the jury returned a special verdict finding that Leonard Richards intentionally killed or caused to have May Wilson, the insured, killed as part of a fraudulent scheme to obtain insurance benefits in which Wilson was a mere pawn. It further found that Richards’ fraudulent intent existed at the time the two North American Life and Casualty Co. (NALAC) policies were originally purchased. The jury also concluded that although Richards had no fraudulent intent at the time the policy was initially purchased, fraudulent intent existed when the Fireman’s Fund insurance policy was last renewed. Fireman’s Fund subsequently moved for, and the court issued, an order determining that the effective date of its final contract with May Wilson was June 1, 1981, entitling it to judgment in its favor. Judgment was entered in favor of Fireman’s Fund on October 3, 1985, and for NALAC on October 8, T985.

These matters are currently before the court upon plaintiff’s motion for judgment notwithstanding the verdict (JNOV) and, alternatively, for a new trial on all issues except whether May Wilson’s death resulted from an accident. In addition, Fireman’s Fund has filed a cross-motion for dismissal on the grounds that Richards, creator and controller of. Cerro Gordo through June 1983, refused to answer questions put to him. It also seeks an order changing the “no” answer on the Special Verdict to “yes” on the grounds that the Fireman’s Fund’s insurance policy was originally procured on December 1, 1980, rather than at an earlier time. The parties subsequently submitted responses to the motions and all materials were received by the court as of October 28, 1985. Cerro Gordo’s Motions

In determining a motion for JNOV under Fed.R.Civ.P. 50, the court is to consider the evidence and the inferences which may be drawn from it in a light most favorable to the prevailing party. Polk v. Ford Motor Co., 529 F.2d 259, 267 (8th Cir.) (en banc), cert. denied, 426 U.S. 907, 96 S.Ct. 2229, 48 L.Ed.2d 832 (1976). The court must deny the motion if, in reviewing the evidence in this light, reasonable people could differ as to the conclusions to be drawn. Id.

The jury verdict in these cases is well-supported by the evidence. The insurers presented credible evidence on each of the issues contained in the special verdict enabling reasonable people to find that Richards caused or committed May Wilson’s murder and that he did so pursuant to a fraudulent scheme. Similarly, from the evidence presented, reasonable people could differ as to the date the Fireman’s Fund policy was originally obtained.

Plaintiff also asks for a new trial, arguing that the court erred in refusing to stay the proceedings until the Hennepin County criminal investigation files were available as evidence, in admitting and rejecting evidence, and in instructing the jury. It relies on the briefs and arguments that it has previously submitted to the court to support its motion.

The standard governing a motion for a new trial is broader than the JNOV standard in the sense that the court, in evaluating the weight of the evidence, may apply some independent scrutiny to determine whether a miscarriage of justice has occurred. See, e.g., Bates v. Hensley, 414 F.2d 1006, 1011 (8th Cir.1969). The court has carefully considered the points raised but finds plaintiff has not shown error in the various evidentiary rulings or the jury instructions. The basis for the court’s rulings and instructions are set out in some detail in written orders and various portions of the record, but time did not permit much discussion about the admission of Dr. Guerrero’s prior testimony.

Cerro Gordo contends that the court erred in allowing defendants to introduce the transcript of Dr. Guerrero’s prior testimony in a 1979 conciliation court hearing. Dr. Guerrero is a psychiatrist who treated Leonard Richards and who Richards called to testify in 1979 in a number of actions brought by Richards against insurance companies to recover benefits for a 1977 hospitalization. Richards called Dr. Guerrero to prove medically necessary treatment. The court ruled, over objection, that Richards had placed his mental and physical condition in issue, thereby waiving the doctor-patient privilege. Dr. Guerrero testified, among other things, that Richards told him that he had been managing his sister’s financial affairs and that he made unveiled threats against May Wilson. No attempt was made by Richards to seek relief in a higher court.

Cerro Gordo relies on Knudsen v. Peickert, 301 Minn. 287, 221 N.W.2d 785 (1974) to maintain that under Minnesota law no waiver of the medical privilege occurs beyond the bounds of the action in which the privilege is waived. The insurers, by contrast, argue that Dr. Guerrero’s testimony does not fall within the privilege, but that even if it did, any such privilege was waived after Dr. Guerrero testified in open court.

Minn.Stat. § 595.02 subd. 1(d) governs the physician-patient privilege and provides in pertinent part:

A licensed physician ... shall not, without the consent of his patient, be allowed to disclose any information or any opinion based thereon which he acquired in attending the patient in a professional capacity, and which was necessary to enable him to act in that capacity;....”

To ensure that the medical privilege exists as a shield and not a sword, Minn.R.Civ.P. 35.03 provides for a waiver of the privilege in certain situations. It states:

If at any stage of an action a party voluntarily places in controversy the physical, mental or blood condition of himself, of a decedent, or a person under his control, such party thereby waives any privilege he may have in that action regarding the testimony of every person who was examined or may thereafter examine him or the person under his control in respect of the same mental, physical or blood condition.

The language of Rule 35.03 and subsequent case law indicate that when a waiver of medical privilege occurs, it is not a general wholesale waiver of the entire privilege. For example, a waiver of the privilege for one medical problem is not a waiver for an unrelated medical problem. See, e.g., Derrick v. St. Paul City Railway Co., 252 Minn. 102, 89 N.W.2d 629 (1958). Similarly, a prior filing of an action for personal injuries does not automatically waive the party’s medical privilege in a subsequent wrongful death suit, alleging negligent driving, brought against that party. See, e.g., Knudson v. Peickert, 301 Minn. 287, 221 N.W.2d 785 (1974).

Nonetheless, where a selective disclosure of confidential information occurs, a finding of limited waiver as to the same evidence is warranted. See, e.g., State v. Clark, 296 N.W.2d 372 (Minn.1980). (Where defendant waived marital privilege in prior trial and information was made public, no confidence remains to be protected and investigation of truth outweighs policies against restatement of information already made public.) In such a situation, the policy behind the medical privilege—encouraging the patient to reveal his or her condition by ensuring confidentiality—is not undermined. Disclosure breaches confidentiality. Because there is no “confidence” left to protect, there is no justification for recognizing the privilege and ignoring pertinent evidence. Id.

Applying these principles of Minnesota law to the instant situation, the court finds that the waiver of the medical privilege which occurred in 1979 is not a general waiver of Richards’ privilege. It would therefore be inappropriate to allow the insurers access to Richards’ medical records or areas of his medical privilege which were not previously disclosed.

On the other hand, the holding in State v. Clark, 296 N.W.2d 372 (Minn. 1980), and the policy reasons behind Minnesota’s medical privilege dictate that the limited testimony previously taken in a public proceeding after a waiver of privilege under Minn.R.Civ.P. 35.03 be admitted in this action. Richards voluntarily brought suit in 1979 against various insurers to try to recover on insurance policies concerning his treatment with Dr. Guerrero. He specifically called Dr. Guerrero to the stand for that purpose, and the doctor’s testimony was heard in open court and transcribed for the record. The instant actions to collect insurance proceeds were brought in the name of Cerro Gordo while Richards was its controlling voting member. The evidence at trial showed that Richards was the motivating force behind initiation of the suits and that his conduct, including his plans and intent, was a central issue in the cases.

Once Dr. Guerrero’s testimony became public in the earlier proceeding, no “confidence” remained and no purpose is served by excluding the same relevant evidence in the instant proceedings. At a minimum, as stated in State v. Clark, 296 N.W.2d 372, 376 (Minn.1980), “the investigation of truth outweighs the policies against the restatement of information already made public.” Over time, a judicial system that ignores information publicly disclosed and known risks losing its legitimacy as a truth-finding process. See, Note, Developments— Privileged Communications, 98 Harv.L.Rev. 1450, 1643-1648 (1985). Under the circumstances presented, a finding of no waiver in the face of previous disclosure and waiver would extend the medical privilege unjustifiably. For these reasons, the court finds that the testimony of Dr. Guerrero was properly admitted.

Motion of Fireman’s Fund

The motion is timely. The record shows that Fireman’s Fund first filed its motion on October 18, 1985 and that the judgment was entered on October 3, 1985. Under Fed.R.Civ.P. 6(a) as amended in 1985, the motion is within the 10 day time period of Fed.R.Civ.P. 50, 52, 58, and 59. Because of the judgment entered in its favor on the jury’s verdict and the court’s prior ruling, however, it is unnecessary to reach the issues raised.

ORDER

Accordingly, based on the above and all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that

1. The motion of Cerro Gordo Charity for judgment notwithstanding the verdict, and, alternatively, for a new trial is denied.

2. The motion of Fireman’s Fund Insurance Company for dismissal or for an order changing the “no” answer on the Jury Special Verdict to a “yes” answer is denied as moot.

      . Specifically, plaintiff argues that the court committed error in allowing defendants to introduce evidence of i) the HIP and other accidental death and dismemberment insurance owned by May Wilson, ii) the "Kruggerands” incident, iii) the carbon monoxide incident of March, 1982, iv) the churches and other corporations in which Leonard Richards was involved, and v) alleged "witness intimidation”. Plaintiff states that the court further erred in allowing defendants to introduce the transcript of Dr. Guerrero’s prior testimony, in allowing the defendants to call Leonard Richards, in precluding it from calling Jay Jaffe, its proposed expert, and in excluding evidence of settlement of certain May Wilson policies. Plaintiff also contends that the court’s instructions on fraudulent procurement of insurance and the burden of proof were incorrect, and that the special verdict form inaccurately set forth the law on fraudulent procurement of insurance.

      . By Memorandum Opinion and Order dated April 30, 1985, this court held that the medical records of Dr. Guerrero and the Golden Valley Health Center were privileged. Although the court considered the question of privilege a close one, no new arguments have been advanced by the insurers to persuade the court to reconsider its previous ruling. In the April order, the court did not address the issue of whether the physician-patient privilege was waived by Dr. Guerrero's conciliation court testimony.

      . The statute goes on to discuss the special situation of a deceased patient providing:
      [A]fter the decease of the patient, in an action to recover insurance benefits, where the insurance has been in existence two years or more, the beneficiaries shall be deemed to be the personal representatives of the deceased person for the purpose of waiving this privilege, and no oral or written waiver of the privilege shall have any binding force or effect except when made upon the trial or examination where the evidence is offered or received. .
      Cerro Gordo emphasizes this portion of the rule, but it is clear from the punctuation and the plain meaning of the language that this part pertains only to the specific situation of a deceased patient. Thus, this portion of the rule is inapplicable in the instant cases.


author: SHADUR, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. Cyrus YONAN, Jr., Defendant.
    No. 84 CR 246.
    United States District Court, N.D. Illinois, E.D.
    Dec. 2, 1985.

      Anton R. Valukas, U.S. Atty., Michele E. Smith, Asst. U.S. Atty., Chicago, 111., for plaintiff.
    Edward M. Genson, Thomas A. Corfman, Genson & Steinback, Chicago, 111., for defendant.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

On November 27, 1985 the United States Attorney obtained from the grand jury its fifth essay—the fourth superseding indictment (simply the “Indictment,” except where it is necessary to distinguish the current version from prior versions)—at leveling multiple charges against Cyrus Yonan, Jr. (“Yonan”). This latest return to the drawing board was directed at correcting obvious drafting errors in the third superseding indictment, which had itself made one important substantive change from the second superseding indictment, the version dealt with in this Court’s November 15, 1985 memorandum opinion and order (the “Opinion,” 622 F.Supp. 721).

For the same reasons discussed in the Opinion, id. at 722-26, Indictment Count Two (identical to Count One of the second superseding indictment) is dismissed. Indictment Count Three (identical to Count Two of the second superseding indictment) survives under the analysis in the Opinion, id. at 727-28. . Mail fraud Indictment Counts Four through Eleven also stand, for the reasons stated in the Opinion, id. at 729-34 in dealing with corresponding Counts Three through Ten of the second superseding indictment.

That leaves for fresh consideration only Indictment Count One, which reflects a wholly new theory for Yonan’s conviction under 18 U.S.C. § 1962(c), one of the provisions of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968. According to new Count One ¶ 3(b), the RICO “enterprise” (see Section 1961(4)) was the Office of the Cook County State’s Attorney (the “State’s Attorney’s Office”). Count One ¶ 5 charges Yonan with the same acts of bribery referred to in the Opinion, 622 F.Supp. at 728, all involving payments and offers of payment to Terrence Hake (“Hake”)—an Assistant State’s Attorney whom Yonan believed to be corrupt but who turned out to be an undercover agent—to fix criminal cases involving Yonan’s clients. As Count One II 3(c) would have it, that renders Yonan “associated with” the State’s Attorney’s Office enterprise—a necessary ingredient of any charge under Section 1962(c).

It is by now familiar lore that proper pleading of a Section 1962(c) charge requires the allegation that a “person” conducted or participated in the affairs of an “enterprise,” each of the quotation-marked terms being an entity distinct from the other. Haroco, Inc. v. American National Bank & Trust Co., 747 F.2d 384, 400-02 (7th Cir.1984) (citing with approval this Court’s decision in Pames v. Heinold Commodities, Inc., 548 F.Supp. 20, 23-24 (N.D.Ill.1982)), aff'd per curiam,—U.S.-, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985). Further, Section 1962(c) in terms attaches criminal responsibility only to a person “employed by or associated with” an enterprise.

Yonan (the “person”) was obviously not “employed by” the State’s Attorney’s Office (the charged “enterprise”). Thus he must perforce have been “associated with” that office if Count One is to stand. Unfortunately, RICO’s definitional Section 1961 does not prescribe the content of “associated with,” nor is the legislative history very helpful. But a few basic propositions will serve to put Yonan’s situation in proper perspective.

RICO’s very sentence structure and normal use of the English language demonstrate that “associated with” is a concept wholly distinct from “conductpng] or participatpng], directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” In that respect United States v. For't/the, 560 F.2d 1127, 1136 (3d Cir.1977), on which the government relies in part, simply misreads the statute. In RICO terms the phrase “associated with,” like “employed by,” defines a status relationship between the person and the enterprise. Acts of “racketeering” by the “person,” though the rest of Section 1962(c) says they must have an effect on the conduct of the enterprise’s affairs, do not themselves provide the status nexus between the racketeer and the enterprise. United States v. Bledsoe, 674 F.2d 647, 663 (8th Cir.1982). Were it otherwise, robbing a bank twice would cause the robber to be “associated with” the bank. Just as the enterprise itself must amount to more than a sheer pattern of racketeering activity, United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 2528, 69 L.Ed.2d 246 (1981) (“enterprise” is “proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit”), one does not “associate with” an enterprise by committing crimes against it.

In part, Congress’ use of the term “associated with” (and not simply the term “employed by”) shows an intention to permit criminal charges against persons outside the organizational structure of an enterprise as well as within it. United States v. Elliott, 571 F.2d 880, 903 (5th Cir.), cert. denied, 439 U.S. 953, 99 S.Ct. 349, 58 L.Ed.2d 344 (1978); United States v. Bright, 630 F.2d 804, 830 (5th Cir.1980) (citing Elliott); United States v. Lee Stoller Enterprises, 652 F.2d 1313, 1320-21 (7th Cir.1980) (en banc) (citing Bright), cert. denied, 454 U.S. 1082, 102 S.Ct. 636, 70 L.Ed.2d 615 (1981). But that does not answer what quality of “association” is required to permit the outside person to be swept into the criminal net.

RICO, it should be remembered, is directed against the acquisition and conduct of “enterprises” through specified types of criminal behavior by persons directly linked to those enterprises. Sections 1962(a) and (b) address the acquisition of interests in, and the maintenance of, enterprises through racketeering (Section 1962(b)) or through funds obtained from racketeering (Section 1962(a)). Section 1962(c) addresses the conduct of enterprises through racketeering activity by specified categories of persons. Thus a prime instance of the sort of non-employee target Congress aimed at through RICO is the control of a corporate enterprise’s activities by a majority shareholder—a “person” who is not necessarily an employee but who is clearly “associated with” the enterprise.

Subcontractors, accountants, lawyers and consultants all may be “associated with” an enterprise, see Schacht v. Brown, 711 F.2d 1343, 1360 (7th Cir.), cert. denied, 464 U.S. 1002, 104 S.Ct. 508, 78 L.Ed.2d 698 (1983) though they are not its employees. And as n. 5 illustrates, if the enterprise is simply what Section 1961(4) calls “any union or group of individuals associated in fact although not a legal entity,” logic as well as normal language usage tells us each of those individuals is ordinarily “associated with” the enterprise (whether or not its employee). Membership in a union or a club is an example, as well as membership in a criminal organization of the sort described in Turkette.

Whether inside or outside the enterprise’s organizational structure, all of the “associates” given above as examples share two characteristics;

1. All have a relationship with the enterprise characterized by a stake or interest in the goals of the enterprise— legitimate or illegitimate.
2. All are associated with the enterprise as such, not merely with some other individual who is “employed by or associated with” the enterprise but is off on a frolic and detour of his or her own.

Both those characteristics are in a sense tautological. But that is due in large part to their obviousness. And given the government’s myopia on this score, it is necessary to state them in that form to show exactly why Yonan’s connections with Hake did not associate Yonan with the State’s Attorney’s Office.

There is a sharp distinction between the Yonan-Hake association and the situations that have been held to present “associated with” relationships in the cases the government has cited. In Bright, for example, Bright operated a bail bond agency involved in bribing the county sheriff. Bright was held a person “associated with” the enterprise of the County Sheriff’s Office, 630 F.2d at 830. In like fashion, the sheriff’s bagman and payoff collectors in his corrupt scheme were held “associated with” the enterprise, id. at 831-34. Of course the goals of a county sheriff’s office are not supposed to be corruption of justice. But the involvement of the head of the office—the sheriff himself—as bribe-taker made his goals those of his own office qua “enterprise.” Thus Bright shared the purpose of the charged enterprise, though Bright’s own purpose (and that of the entrepreneur himself, the sheriff) was to subvert the goal the enterprise should have had. And because Bright and his co-defendants worked for the man who directed and set the policy of the enterprise, they were related to the enterprise as a whole, at the management level.

Yonan’s case is critically different. Here the State’s Attorney’s Office itself is not alleged to have been corrupt or to have had a corrupt goal. Quite to the contrary, Yo-nan’s goal was to undermine the Office’s— the enterprise’s—actual legitimate goals. Hake had (that is, pretended to have) a corrupt goal, but that was his own goal and not his employer’s. Nor was Hake a policy-maker of the State’s Attorney’s Office as “enterprise.” His own (feigned) corruption is not alleged to have infected anyone else. So Yonan was not associated through Hake with anyone but Hake.

Forsythe and Lee Stoller Enterprises are analytically identical to Bright. In each case the goal of the enterprise identified in the indictment—in Forsythe a bail bond agency and in Lee Stoller Enterprises a county sheriff’s office—was corrupt, though in a perfect world it would not have been. And in each case the defendant—the person associated with the enterprise— shared that goal. In each case the defendant dealt with management-level people at the enterprise, so it could be said the defendant dealt with the enterprise as a whole, and not merely with a corrupt employee out to torpedo the enterprise’s actual activities as set by its leader(s).

Finally, United States v. Starnes, 644 F.2d 673 (7th Cir.1981), cert. denied, 454 U.S. 826, 102 S.Ct. 116, 70 L.Ed.2d 101 (1981), not cited by the parties, illustrates the same two principles in a context not involving official corruption. There Starnes, president of Tri-No Corporation, hired Roland to “torch” the building that housed Tri-No’s operations. Our Court of Appeals focused its discussion principally on the question whether Roland, the arsonist, “participat[ed], directly or indirectly, in the conduct of the enterprise’s affairs” by burning its headquarters, 644 F.2d at 679. But it is also clear (as it had to be for Roland’s conviction) Roland was “associated with” Tri-No Corporation. Though TriNo had been a legitimate business, its president had determined it was better off in cinders. Thus Roland shared the twisted goal that had been set for the enterprise, rather than working against it. Toward that end he dealt with the enterprise’s policy-maker directly—with the enterprise as such, not (say) with a disgruntled shipping clerk whose purpose was revenge against Tri-No.

All the cases thus reflect the sense (and common sense) that must be ascribed to the “associated with” concept in Section 1962(c). And that sense, and common sense, are flouted by Count One. Hake was himself only an employee of the State’s Attorney’s Office. Even had he been corrupt (as Yonan allegedly believed him to be), an association with him was not an association with the State’s Attorney’s Office—the “enterprise.” It was an association against that enterprise.

In sum, the government’s latest attempt to frame a Section 1962(c) indictment against Yonan is a failure. Now that pleaders have finally understood Section 1962(c) requires the allegation of an “enterprise” distinct from the “person”-defendant, it is time they focused more carefully on the statutorily required relationship between the person and the enterprise. Merely picking an enterprise out of a hat will not do.

Conclusion

Counts One and Two of the Indictment are dismissed, but the other nine counts remain. Speedy trial concerns dictate an early decision by the government as to whether it is prepared to go to trial on those counts. Status for this case is next set for December 16, 1985 at 9:00 a.m., at which time the government will be required to advise this Court of its determination.

      . As the Opinion at 15 reflects, Counts Three through Ten in the second superseding indictment were mail fraud charges. All except the first of those counts followed the customary drafting form of incorporating by reference (rather than repeating in haec verba) the general allegations of Count Three. Because the third superseding indictment then shoehorned in a new Count One (the same as the current Count One, of which more later), the unchanged mail fraud charges were moved up in the numbering—they became Counts Four through Eleven. Yet through a drafting oversight the last seven of those counts continued to incorporate by reference "Count Three" (even though that had become a RICO charge in the third superseding indictment, whereas it had earlier been a mail fraud charge), rather than properly changing that reference to “Count Four” to conform to the renumbering in the third superseding indictment. That mistake was corrected in the Indictment, which also took the occasion to cure an omission that was identified in the Opinion at 26 n. 12 but was nevertheless perpetuated in the third superseding indictment.

      . Both Judge Thomas McMillen (to whose calendar this case was originally assigned) and this Court have entered orders properly excluding time for purposes of the Speedy Trial Act, 18 U.S.C. §§ 3161-3174, and those orders prevent this case from coming even close to posing a time problem under the statute. All the same, there is something disquieting about such continuing and repeated efforts by the prosecutor to restate criminal charges based on the identical conduct that was addressed by the United States Attorney and the grand jury from the very beginning of this case. Both a defendant and the public have a right to expect criminal charges to proceed to trial promptly. And though that is universally true, it may be even more so in high-profile cases (Yonan’s 1984 indictment grew out of the original Greylord investigation). In any event, this Court expects to push the case to an early trial.

      . All further RICO citations will take the form "Section—," with the numbering drawn from Title 18 rather than RICO’s internal numbering.

      . Had Congress meant simply to equate the terms "employed by or associated with” with an offender’s conduct or participation in the conduct of the enterprise’s affairs, the quoted language could have been omitted entirely. Section 1962(c) could have made it unlawful for "any person to conduct or participate ... in the conduct of [an] enterprise’s affairs through a pattern of racketeering activity.” To give any content to the “employed by or associated with” language, it must be given the status-defining meaning next expressed in the text, while the "conduct or participate” clause defines what the defendant must do to or with the enterprise.

      . One other obvious purpose stems from Section 1961(4)’s sweeping definition of "enterprise” to embrace not only conventional legal entities but also such less structured concepts as an association of persons. If Section 1962(c) had spoken only of persons "employed by” the enterprise, the anomalous result could have been that employees of such an association could be indicted, while the principals—the associates themselves—might not.

      . See 116 Cong.Rec. 602 (1970) (emphasis added) (remarks of Sen. Hruska, co-sponsor of the bill):
      Stated simply, this legislation makes it unlawful for any person to acquire an interest in or establish an enterprise engaged in interstate commerce by the use of income derived from “a pattern of racketeering activity" ____ It would also prohibit any person from acquiring or maintaining any interest or control of any such enterprise by a pattern of racketeering activity, and likewise prohibit any person employed by or associated with such an enterprise from conducting the enterprise’s affairs by a pattern of racketeering activity.

      See also id. at 607 (remarks of Sen. Byrd) (RICO makes it unlawful "to acquire or operate such businesses by racketeering methods”); id. at 35,-193 (remarks of Cong. Poff) (similar); id. at 35,197 (remarks of Cong. McCulloch) (similar); id. at 35,304 (remarks of Cong. Railsback) (similar). House Judiciary Committee Chairman Celler expressed a somewhat narrower view of what RICO was about (id. at 35,196) (emphasis added):
      [RICO] proscribes the acquisition, maintenance or control of any interest in a business engaged in commerce through a pattern of racketeering activity____ The conduct of the affairs of a business by a person acting in a managerial capacity, through racketeering activity],] is also proscribed.
      Thus in Congressman Celler’s view a Section 1962(c) "person" would have to be someone more than a mere employee, despite the simple "employed by” language of Section 1962(c). This Court is not prepared to embrace that restriction (see, e.g., Pames, 548 F.Supp. at 23-24), but that issue need not be faced for current purposes (see also n. 10).

      . That example illustrates the utility of "associated with” in the more conventional legal-entity type of "enterprise" (such as a corporation) as well as the more amorphous "enterprise” (see n. 5).

      . Of course many such persons may also be said to be "employed by” an enterprise in common speech (if not perhaps in technical parlance). See Forsythe, 560 F.2d at 1136 (constables and magistrates who regularly solicited and received bribes from a bail bond agency might be viewed as “employees” of that agency, for in essence they were on its payroll).

      . It is worth observing the reading of "associated with” reflected in this opinion conforms to all the legislative statements cited in n.6, including the somewhat divergent expression by Congressman Celler.

      . As Section 1962(c) is drafted, the lack of an "associated with” relationship may screen out potential RICO defendants in a somewhat different way from the "employed by” situation. For example, Hake himself was employed by the State’s Attorney’s Office. Had he actually been corrupt, he could have been a "person” and the State’s Attorney’s Office the "enterprise,” even though he were working against the policy of the office. For him to have been charged and convicted under RICO, the next elements of the crime would have had to come into play: Hake would have to conduct, or participate in the conduct of, the enterprise’s affairs through a pattern of racketeering activity. See United States v. Grzywacz, 603 F.2d 682, 685-87 (7th Cir.1979) (upholding, without discussing the “employed by or associated with” issue, the Section 1962(c) conviction of three corrupt policemen whose enterprise was the county police department), cert. denied, 446 U.S. 935, 100 S.Ct. 2152, 64 L.Ed.2d 788 (1980). But the fact Hake (if actually crooked) might have been convicted for his connection with the enterprise alleged by the government does not at all mean anyone associated with him in his scheme would by extension be "associated with” his employer in Section 1962(c) terms. After all, Section 1962(c) speaks only of a "person employed by or associated with any enterprise,” not of a "person associated with any person employed by any enterprise.”


author: WANGELIN, District Judge.

text:
    Howard Harley HULSTINE, Plaintiff, v. BUTLER COUNTY, et al., Defendants.
    No. S85-236C(D).
    United States District Court, E.D. Missouri, Southeastern Division.
    Dec. 2, 1985.
    Howard Harley Hulstine, pro se.

      Randy P. Schuller, Pros. Atty., Wayne County, Greenville, Mo., Mark A. Kennedy, Pros. Atty., Butler County, Poplar Bluff, Mo., for defendants.
   MEMORANDUM AND ORDER

WANGELIN, District Judge.

This matter is before the Court sua sponte.

Plaintiff in this action was imprisoned in both the Wayne and Butler County Jails during his trial for first degree murder. His incarceration in said county jails terminated July 12, 1977 when he plead guilty to the murder charge and was sentenced to imprisonment for his natural life commencing July 12, 1977.

Plaintiff alleges that the terms of his confinement in the Wayne and Butler County Jails violated his constitutional rights pursuant to the Eighth and Fourteenth Amendments. Specifically, plaintiff alleges that he was not allowed to bathe or to take exercise outside of his cell. He further alleges that he was denied access to the County Law Libraries. Normally such allegations may give rise to a valid cause of action.

However, in the instant case, plaintiff did not bring this action until May 28, 1985, some nine (9) years after his incarceration in Wayne and Butler County Jails had come to an end. Thus, the actions complained of by plaintiff are barred by MORS §§ 516.120 and 516.130. Further, the tolling provision of MORS § 516.170 are inapplicable due to the fact that plaintiff is imprisoned for a term of his natural life.

Accordingly,

IT IS HEREBY ORDERED that the above-styled action be and is DISMISSED with prejudice as to all named defendants.


author: GERALD J. WEBER, District Judge.

text:
    Dorothy RODGERS, et al., Plaintiffs, v. EIGHTY FOUR LUMBER COMPANY, Defendant. JONICO MUSIC, et al., Plaintiffs, v. EIGHTY FOUR LUMBER COMPANY, Defendant. HARRISON MUSIC CENTER, et al., Plaintiffs, v. EIGHTY FOUR LUMBER COMPANY, Defendant.
    Civ. A. Nos. 84-828, 84-1114 and 84-1944.
    United States District Court, W.D. Pennsylvania.
    Dec. 3, 1985.

      John Eichleay, Kevin Abbott, Pittsburgh, Pa., for plaintiffs.
    Daniel J. Weis, Weis & Weis, Pittsburgh, Pa., for defendant.
   MEMORANDUM ORDER

GERALD J. WEBER, District Judge.

In these related copyright infringement actions, the court has granted summary judgment on the issue of liability for the plaintiffs. Plaintiffs have filed a Motion to Strike the Jury Demand. We now consider the issue of whether or not the defendant is entitled to a jury trial on damages where copyright owners seek only an injunction and statutory damages.

Defendant has submitted a brief in support of its right to a jury trial on the issue of damages, citing Gnossos Music v. Mitken, Inc., 653 F.2d 117 (4th Cir.1981) for the proposition that the Seventh Amendment to the United States Constitution provides it with the right. Defendant argues that the Copyright Act provides a remedy of a type which would traditionally have been enforced at law and therefore the Seventh Amendment right applies. Moreover, defendant points to the necessary determination of wilfulness as a factual issue traditionally within the province of the jury.

Plaintiffs argue that defendant is not entitled to trial by jury on the issue of statutory damages as a matter of law, citing Oboler v. Goldin, 714 F.2d 211, 213 (2d Cir.1983); Twentieth Century Music Cory, v. Frith, 645 F.2d 6, 7 (5th Cir.1981); Sid and Marty Krofft Television Productions, Inc. v. McDonald’s Corp., 562 F.2d 1157, 1177-78 (9th Cir.1977); Monogram Models, Inc. v. Industro Motive Corp., 492 F.2d 1281 (6th Cir.1974); Chayyell and Co., v. Palermo Cafe Co., 249 F.2d 77, 82 (1st Cir.1957). Plaintiffs do not challenge defendant’s right to a jury trial on the issues of actual damages or profits under the statute. Rather they urge a statutory construction interpreting the act’s statutory damages to be equitable in nature and therefore not within the Seventh Amendment purview.

The United States Court of Appeals for the Third Circuit has not addressed the issue of whether there is a right to a jury trial in a copyright infringement case in which the only issue left to be decided is that of statutory damages. The parties have cited six circuit court decisions, only one of which has concluded that a right to a jury trial exists in such cases. We believe that the majority view finding that no right to a jury trial exists is the better view, and therefore we will adopt it for the reasons discussed herein.

The Copyright Act does not iself specifically provide the right to a jury trial. Therefore if the right exists it is derived from the Seventh Amendment to the United States Constitution which preserves the right to a jury trial in suits at common law. The United States Supreme Court has left no doubt that the Seventh Amendment may be applicable to new causes of action based on statutes. See, Dairy Queen, Inc. v. Wood, 369 U.S. 469, 477, 82 S.Ct. 894, 899, 8 L.Ed.2d 44 (1962) (trademark laws); Curtis v. Loether, 415 U.S. 189, 193, 94 S.Ct. 1005, 1007, 39 L.Ed.2d 260 (1974) (Title VIII of the Civil Rights Act). Whether this right exists should be decided as a matter of statutory construction rather than constitutional interpretation whenever possible. Lorillard v. Pons, 434 U.S. 575, 577, 98 S.Ct. 866, 868, 55 L.Ed.2d 40 (1978). Furthermore, application of the Seventh Amendment depends on the nature of the issues to be tried rather than the character of the overall action. Ross v. Bernhard, 396 U.S. 531, 538, 90 S.Ct. 733, 738, 24 L.Ed.2d 729 (1970). In considering the test set forth by the Court in Ross v. Bernhard, we believe that the inquiry here centers on whether the remedy sought is legal or equitable in nature.

The Court in BMI, Inc. v. Papa John’s, Inc. 201 U.S.P.Q. 302, 305 (N.D.Ind.1979) addressed this inquiry:

... these statutory damages were provided by Congress to create a remedy where actual damages are not provable at law, but yet where it is proven that a violation of the copyright occurred. In this sense at least, Congress has simply authorized by statute what equity courts have long done as a matter of course, i.e. not to suffer a wrong to be without a remedy. In codifying this remedy, Congress did not remove it from the equitable jurisdiction of the courts, instead they simply provided guidelines to be used by the courts in the exercise of their discretion.

We agree, and find the statutory damages provided by the 1976 Copyright Act to be equitable in nature.

Therefore, IT IS ORDERED that plaintiffs Motion to Strike defendant’s Jury Demand is GRANTED. Trial on damages shall proceed non-jury as previously scheduled on Monday, December 9, 1985, at 9 a.m.

      . The relevant portion of the 1976 Copyright Act is as follows:
      § 504(c)—STATUTORY DAMAGES—
      (1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally in a sum of not less than $250 or more than $10,000, as the court considers just ...
      (2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court, in its discretion may increase the award of statutory damages to a sum of not more than $50,000. In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $100 ...
      17 U.S.C. § 504(c).

      . 396 U.S. at 538 n. 10. "... The 'legal' nature of an issue is determined by considering, first, the pr&merger custom with reference to such questions; second, the remedy sought; and, third, the practical abilities and limitations of juries. Of these factors, the first, requiring extensive and possibly abstruse historical inquiry, is obviously the most difficult to apply, (cite omitted)”. For discussion indicating that neither the first or third factor is determinative of the issue before the court, see BMI, Inc. v. Papa John’s, Inc. 201 U.S.P.Q. 302, 304-305 (N.D.Ind.1979).


text:
    Dorothy RODGERS, et al., Plaintiffs, v. EIGHTY FOUR LUMBER COMPANY, Defendant. JONICO MUSIC, et al., Plaintiffs, v. EIGHTY FOUR LUMBER COMPANY, Defendant. HARRISON MUSIC CENTER, et al., Plaintiffs, v. EIGHTY FOUR LUMBER COMPANY, Defendant.
    Civ. A. Nos. 84-828, 84-1114 and 84-1944.
    United States District Court, W.D. Pennsylvania.
    Dec. 11, 1985.

      Kevin C. Abbott, Thorp, Reed & Armstrong, Pittsburgh, Pa., for plaintiffs.
    Daniel J. Weis, Pittsburgh, Pa., for defendant.
   FINDINGS AND CONCLUSIONS

GERALD J. WEBER, District Judge.

These are three consolidated actions by registered holders of copyrights to musical compositions. All are members of ASCAP (American Society of Composers, Authors and Publishers) which has the right to license performance of members copyrighted compositions. We have previously granted summary judgment to plaintiffs based on 49 counts of specific copyright infringement occurring in defendant’s stores in various states from prior to February 1, 1983 through June 7, 1984.

We have now held an evidentiary hearing on damages. Plaintiff has elected to claim statutory damages for each count in lieu of actual damages and profits under 17 U.S.C. § 504(c)(1). The court has the discretion to award between $250 and $10,000 for each infringement, but if the infringement is willful the court may increase the award to $50,000 for each cause of action. The plaintiff alleges that these infringements were willful. (17 U.S.C. § 504(c)(2)). Because the violations have been established, the court will confine itself to the evidence of willfulness.

Defendant utilized the same system of transmitting broadcast music throughout its nationwide chain of more than 360 stores as a matter of corporate policy. Defendant corporation is therefore liable for the infringing activities of its employees in carrying out this policy. Gershwin Publishing Corp. v. Columbia Artists Management Inc., 443 F.2d 1159 (2d Cir.1971). The corporate headquarters of defendant purchased the equipment centrally. This equipment included a radio receiver, an amplifier, and multiple speakers distributed throughout the large interior premises (from 10,000 to 25,000 square feet). The music thus performed could be heard and the individual compositions played could be heard and recognized throughout the stores that are the subject matter of the specific counts here.

Beginning on February 1, 1983 defendant was notified by letter of ASCAP that its use of music in this fashion violated the copyright laws and offering a license arrangement. There were five such letters through August 9, 1983, and in addition attempts to contact defendant’s officers by telephone and visits. No response to these communications was received. On September 1, 1983, a certified letter was sent to defendant’s president and produced a response on September 9, 1983 that defendant was considering music options. A further letter from defendant dated October 21, 1983 promised to provide ASCAP a list of its stores using music. In the meantime defendant continued its policy of playing broadcast music through loudspeakers in its stores.

A meeting was finally held on November 17, 1983 between ASCAP representatives and defendant’s officers. Based on defendant’s list it was established that 362 stores were involved. ASCAP demanded a standard annual license fee of $200 per store for the first 200 stores and $90 per store for those above 200, or a total of $34,580. Defendant made an attempt to bargain but ASCAP insisted that it could not bargain on the license fee because of the restrictions of an anti-trust consent decree to which it was a party. It was proposed that defendant should sign a license agreement for $34,580 per annum beginning July 1, 1983, with a payment of $25,935 forthwith, representing fees through March 31, 1984. A form of agreement was forwarded to defendant at that time, and further requests were made by ASCAP by letter and phone without results.

ASCAP not only warned defendant of the continuing copyright infringements, but also sent pamphlets explaining the copyright laws. This was not necessary because the defendant had in-house counsel available at its headquarter office.

Defendant argues that it made no direct profit from playing the music in its stores, that it was not audible outside the stores to attract customers into the stores from the street, nor would passers-by be attracted because of the isolated locations of the stores. The music served as background music, mood music, or “white sound” of which the customer was not specifically conscious. However, the value of such music to its business was apparent to defendant, as evidenced by its investment in this equipment for all its stores. More telling is the evidence that during the period of these negotiations, defendant secured offers from several purveyors of background music, such as MUZAK, to provide such services. The costs, which would include royalty fees to copyright owners, were considerably greater than the license fee demanded by ASCAP.

Plaintiffs continued to gather evidence of violations during 1984. The first of the three complaints was filed April 3, 1984 based on 10 infringements, the second was filed May 7, 1984 citing 18 infringements, the third was filed on August 13, 1984 citing 21 infringements. Despite defendant’s denial in its answers of currently playing music in any of its stores, plaintiff continued to collect evidence of current infringements up through April 12, 1985.

Defendant’s evidence in defense attempts to show that its headquarters was investigating this matter, attempting to stop the practice, and attempting to negotiate a license fee. Executive directives were issued in January 1984 to all stores in the Pittsburgh area, in April 1984 to all stores nationally. In the face of continuing evidence of violations, all stores were inspected in the summer of 1984, and further all equipment was ordered returned to defendant’s headquarters. This was allegedly completed in February 1985, but plaintiff has presented unrefuted evidence of violations in Yuma, Arizona on April 11 and 12, 1985. Plaintiff disclaims corporate responsibility for isolated violations after its attempt to stop the practice in 1984, particularly because it is not shown that it received any pecuniary benefit to itself from these infringements. However, we have previously noted that defendant considered the playing of background music to be advantageous to its business. The widespread use of background music in business establishments convinces us that it is beneficial to business generally. Chappell & Co. v. Middletown Farmers Market & Auction Co., 334 F.2d 303 (3d Cir.1964) holds that “Though this was not of direct pecuniary benefit, it was ‘for profit’ to the degree that it was commercially beneficial to the Mart to have an attractive shopping atmosphere.” (p. 306).

We find the. evidence supports the conclusions that the infringements were deliberate and wilful; they continued after many warnings and showings of specific proofs; they continued after specific denials that any music was currently being played. Finally, we find that defendant avoided responses to many notices and did not negotiate for a license in good faith.

The courts have applied many standards as a guideline in the imposition of statutory damages. Running through them as a common thread is the principle that defendant should not reap a benefit from its violation of the copyright laws, that statutory damages should exceed the unpaid license fees “so that defendant will be put on notice that it costs less to obey the copyright laws than to violate them.” Music City Music v. Alfa Foods, Ltd. 616 F.Supp. 1001, 1003 (E.D.Va.1985). Furthermore, they serve the strong public interest in insuring integrity of copyright laws, (ibid, p. 1004).

The actual damages here proven are the amount of royalties that plaintiffs lost; the benefit to defendant is the amount of royalties, that it has not paid. Plaintiff has argued for an assessment of damages of $2,500 per violation for each of the 49 infringements proven here. The total of these $122,500 substantially exceeds plaintiffs’ claim of lost license revenues of $77,-805 between the period from February 1, 1983 and April 12,1985 and should serve as a proper deterrent for such illegal practice. We are mindful that plaintiffs are also entitled to attorney’s fees and costs, which will be assessed later.

We will, therefore, assess damages in favor of the individual plaintiffs as set forth in the accompanying judgment order in the amount of $2,500 for each infringement for a total sum of $122,500 against the defendant in these consolidated actions.

ORDER pF COURT

AND NOW, this 11 day of December, 1985, after trial oft the issue of damages and in accordance with the accompanying findings, IT IS ORDERED that:

1. JUDGMENT be, and the same is ENTERED for the Plaintiffs in Civil Action No. 84-828 against Defendant in the amount of $25,000 based on. ten violations at $2,500 per violation.

2. JUDGMENT be, and the same is ENTERED for the Plaintiffs in Civil Action No. 84-1114 and against the Defendant in the amount of $45,000 based on eighteen violations at $2,500 per violation.

3. JUDGMENT be and is ENTERED for the plaintiff in Civil Action No. 84-1944 and against the Defendant in the amount of $52,500 based on twenty-one violations at $2,500 per violation, with costs in each action.

4. JUDGMENT in the total amount of $122,500 BE, AND THE SAME IS HEREBY ENTERED against the defendant and in favor of the plaintiffs representing damages as set forth above.

5. Plaintiffs are hereby awarded costs and reasonable attorneys’ fees pursuant to 17 U.S.C. § 505. Counsel for plaintiffs will file a statement of fees and costs within twenty (20) days of this Order.

6. The defendant and all persons acting under the direction, control, permission or license of the defendant be, and they hereby are, permanently enjoined and restrained from publicly performing and broadcasting the works set forth in the Complaints and from causing or permitting said works to be publicly performed and broadcasted in the defendant’s premises or in any place owned, controlled or conducted by the defendant.

IT IS SO ORDERED.