Kobe, Inc. v. Dempsey Pump Co.

As inventors made advancements in the field of hydraulic pumps for oil wells, the heads of two companies sought to acquire relevant patents and pool them under a single business entity to manufacture the pumps. This corporation’s assets eventually included more than 70 patents. As part of a reorganization agreement, these assets were transferred to a new corporation, Kobe, Inc. (plaintiff), which continued manufacturing the pumps under substantially the same personnel. A few years later, Oscar Dempsey (defendant) created a hydraulic pump of his own and marketed it through his corporation, Dempsey Pump Company (defendant). The Dempsey pump attracted much attention within the industry, which Kobe representatives conveyed to Kobe’s president. Kobe requested drawings of the pump from Dempsey but served Dempsey with notice of a claim of patent infringement before the drawings were received. Kobe brought suit against Dempsey in federal district court, later amending its complaint to include unfair competition and unfair business practices. Dempsey counterclaimed for triple damages under the Sherman Antitrust Act, alleging that Kobe had engaged in monopolistic practices. The court found that one of the patents in question had been infringed but otherwise ruled in favor of Dempsey, including an award of triple damages. The court’s ruling included a finding that the infringement action itself had been designed to further Kobe’s monopoly. Kobe appealed to the United States Court of Appeals for the Tenth Circuit. Kobe argued that, even if it had engaged in monopolistic practices, Dempsey was not affected by such practices, only by initiation of the lawsuit itself.