In Re W. C. Von Clemm

WORLEY, Judge.

This matter is before us on appeal by Werner C. Von Clemm from the findings and recommendation of the United States Tariff Commission, two members dissenting, pursuant to the provisions of section 337 of the Tariff Act of 1930, 19 U.S.C.A. § 1337. The findings and recommendation were made after an investigation by the Commission of a complaint instituted by Linde Air Products Company, a division of Union Carbide and Carbon Corporation, charging Von Clemm and others with unfair methods of competition and unfair acts in the importation of certain synthetic star rubies and sapphires, allegedly corresponding to those described and made in accordance with the process claimed in Linde’s United States Patent No. 2,488,-507.

The pertinent portions of the applicable section of the Tariff Act are as follows:

“Sec. 337. Unfair Practices In Import Trade.

“(a) Unfair Methods of Competition Declared Unlawful. — Unfair methods of competition and unfair acts in the importation of articles into the United States, or in their sale by the owner, importer, consignee, or agent of either, the effect or tendency of which is to destroy or substantially injure an industry, efficiently and economically operated, in the United States, or to prevent the establishment of such an industry, or to restrain or monopolize trade and commerce in the United States, are hereby declared unlawful, and when found by the President to exist shall be dealt with, in addition to any other provisions of law, as hereinafter provided.

“(b) Investigations of Violations by Commission. — To assist the President in making any decisions under this section the commission is hereby authorized to investigate any alleged violation hereof on complaint under oath or upon its initiative.

“(c) Hearings and Eeview. — The commission shall make such investigation under and in accordance with such rules as it may promulgate and give such notice and afford such hearing, and when deemed proper by the commission such rehearing, with opportunity to offer evidence, oral or written, as it may deem sufficient for a full presentation of the facts involved in such investigation. The testimony in every such investigation shall be reduced to writing, and a transcript thereof with the findings and recommendation of the commission shall be the official record of the proceedings and findings in the case, and in any case where the findings in such investigation show a violation of this section, a copy of the findings shall be promptly mailed or delivered to the importer or consignee of such articles. Such findings, if supported by evidence, shall be conclusive, except that a rehearing may be granted by the commission and except that, within such time after said findings are made and in such manner as appeals may be taken from decisions of the United States Customs Court, an appeal may be taken from said findings upon a question or questions of law only to the United States Court of Customs and Patent Appeals by the importer or consignee of such articles. * * *

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“(e) Exclusion of Articles from Entry. — Whenever the existence of any such unfair method or act shall be established to the satisfaction of the President he shall direct that the articles concerned in such unfair method or acts, imported by any person violating the provisions of this Act, shall be excluded from entry into the United States, and upon information of such action by the President, the Secretary of the Treasury shall, through the proper officers, refuse such entry. The decision of the President shall be conclusive.

“(f) Entry Under Bond. — Whenever the President has reason to believe that any article is offered or sought to be offered for entry into the United States in violation of this section but has not information sufficient to satisfy him thereof, the Secretary of the Treasury shall, upon his request in writing, forbid entry thereof until such investigation as the President may deem necessary shall be completed; except that such articles shall be entitled to entry under bond prescribed by the Secretary of the Treasury.”

As set forth above, the jurisdiction of this court in cases such as the present one is limited to questions of law. Findings of fact by the Commission may, therefore, be reviewed only to the extent of determining whether the record contains substantial evidence to support them.

The statute here under consideration provides broadly for action by the Tariff Commission in cases involving “unfair methods of competition and unfair acts in the importation of articles”, but does not define those terms nor set up a definite standard. As was noted in our decision in In re Northern Pigment Co., 71 F.2d 447, 22 C.C.P.A., Customs, 166, T.D. 47124, the quoted language is broad and inclusive and should not be held to be limited to acts coming within the technical definition of unfair methods of competition as applied in some decisions. The importation of articles may involve questions which differ materially from any arising in purely domestic competition, and it is evident from the language used that Congress intended to allow wide discretion in determining what practices are to be regarded as unfair.

In the present case the Tariff Commission found as facts that the Synthetic Crystals Division of Linde Air Products Company, hereinafter referred to as Linde, is an efficiently and economically operated industry in the United States; that synthetic star stones of the kind described and claimed in Linde’s patent, No. 2,488,507, and made by the process described and claimed in that patent, have been imported into the United States by or on behalf of Yon Clemm “in ever-increasing quantities” since 1951 “and are sold at prices below those at which Linde sells its stones;” that such practices involve unfair methods of com-petition and unfair acts in the importation of such stones; and that the tendency of such unfair methods and acts is to injure substantially Linde’s industry.

On the basis of those findings, the Commission made the following recommendation :

The Tariff Commission recommends that the President , direct the Secretary of the Treasury to instruct customs officers to> excludfrom entry into the United States until and including November 14, 1966, synthetic star sapphires and synthetic star rubies (whether imported separately or as part of any. article) described in, or made by the process disclosed in United States Letters Patent No. 2,488,-507, except where the importation is made under license of the registered owner of said United States Letters Patent.

It is not disputed that Linde is the owner of Patent No. 2,488,507, issued November 15,1949, for “Synthetic Star Rubies and Star Sapphires and Process for Producing Same.” In our opinion the holding by the Tariff Commission that Linde’s Synthetic Crystals Division is an industry efficiently and economically operated in the United States is amply supported by the record. There is nothing in the statute which requires that an industry must be of any particular size, or that more than one-, company must be involved before the protection provided by the statute may be-, invoked.

We have repeatedly held that in cases of this character, involving alleged unfair acts in connection with a patented article or process, the validity of the patent or patents involved may not be questioned by the Tariff Commission nor by this court on appeal therefrom, but that a regularly issued patent must be considered valid unless and until a court of competent jurisdiction has held: otherwise. Frischer & Co., Inc., v. Bakelite Corporation, 39 F.2d 247, 17 C.C.P. A., Customs, 494, T.D. 43964; In re Orion Co., 71 F.2d 458, 22 C.C.P.A., Customs, 149, T.D. 47123; and In re Northern Pigment Co., supra. Since no such.holding of invalidity is alleged here, Linde’s patent must be regarded as valid.

The record clearly shows that Von Clemm has imported a number of synthetic star stones into the United. States for sale, and the Tariff Commission found that such stones fell within the description of the article claims of Linde’s patent and were made by the-process described in the process claims; thereof.

The first finding is amply supported by the testimony of Burdick, one of the inventors named in Linde’s patent, who-explained in detail how the language of claim 19 was met by the imported stones. Moreover, Von Clemm, in answer to the-question “I would like to ask you whether the German synthetic star sapphire or ruby that you import falls within the description [claim 19] ?,” replied “Yes, sir.”

As to the finding that Von Clemm’s stones were made by the method described in the process claims of the patent, the evidence is less conclusive. Burdick admittedly did not know by direct evidence how the stones were made, but gave as his conclusion, based on tests which he described, that they must have been made by the patented process. Bur-dick’s testimony, coupled with Von Clemm’s failure to explain how the imported stones were made, or to enter anything more than a general denial based on information and belief of the allegation that his stones were made in the manner described in the patent, was considered by the Commission to be sufficient to conclude that they were so made. Under such circumstances we are unable to agree with appellant that such conclusion is not supported by substantial evidence.

Von Clemm testified that he obtained a copy of Linde’s patent early in 1950 and, as already noted, admitted that the stones imported by him answered the description of an article claim of that patent. In view thereof, and of the previously mentioned holdings of the Commission with respect to such stones, we conclude that the Commission’s holding of unfair methods of competition and unfair acts in the importation of the stones is a valid exercise of the authority delegated by the Congress and is supported by substantial evidence.

While the record does not show that Linde has as yet been substantially damaged by Von Clemm’s action, in our opinion it sufficiently supports the holding that such actions have a tendency to injure substantially Linde’s Synthetic Crystals Division, within the meaning of section 337 of the Tariff Act of 1930.

It is urged by Von Clemm that the Tariff Commission should have refrained from acting in this case and that this court should also refrain from acting since the questions of validity of Linde’s patent and infringement thereof by Von Clemm’s stones are involved in a suit now pending between appellant and Linde in the United States District Court for the Southern District of New York. We are aware of no statute, however, which would justify, much less require, this court to ignore the provisions of section 337, supra, which we must necessarily regard as requiring timely disposition of appeals arising thereunder.

As pointed out in In re Orion Co., supra, any order which may be issued by the President may be corrected in the event of a subsequent holding of invalidity of a patent. Moreover, under section 337, supra, the President may, in his discretion, provide for entry of the disputed merchandise under bond pending, inter alia, final determination of the issues of validity and infringement.

Appellant criticizes the recommendation of the Commission on the ground that it would in effect place upon the customs officials the duty of interpreting Linde’s patent and determining whether imported stones correspond to the patent claims or were made by the process described therein. However, the language of section 337(e), supra, seems clearly to contemplate an order of the type recommended. We note that recommendations for orders similar to the present one were made by the Tariff Commission in the Frischer, Orion, and Northern Pigment cases, supra.

In our opinion the record fully supports, as a matter of law, the findings and recommendation of the Tariff Commission. Accordingly, the decision appealed from is affirmed.

Affirmed.

JACKSON, J., retired, recalled to participate.