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March 2, 1936


The opinion of the court was delivered by: CAMPBELL

CAMPBELL, District Judge.

This is an action in equity in which plaintiff seeks relief by injunction and damages for the alleged infringement of the six following patents, for center spot crowns for bottles, and methods of making such spot crowns, to wit:

(1) Patent No. 1,339,066, issued to Charles E. McManus, for bottle-closure, dated May 4, 1920, on an application filed November 17, 1915; (2) patent No. 1,899, 782, issued to Albin H. Warth, assignor to Crown Cork & Seal Company, Inc., for material for facing bottle caps and method of making same, dated February 28, 1933, on an application filed December 17, 1929; (3) patent No. 1,899,783, issued to Albin H. Warth, assignor to Crown Cork & Seal Company, Inc., for bottle cap and method of manufacturing same, dated February 28, 1933, on an application filed May 5, 1929, divided and this application filed October 31, 1930; (4) reissue patent No. 19,117, issued to Albin H. Warth, assignor, by mesne assignments, to Crown Cork & Seal Company, Inc., for process of producing closures, dated March 20, 1934. Original No. 1,788,260, dated January 6, 1931, serial No. 159,743, January 7, 1927. Application for reissue January 23, 1934; (5) patent No. 1,956,481, issued to Albin H. Warth, assignor to Crown Cork & Seal Company, Inc., for spot crown and liner material therefor, dated April 24, 1934, on an application filed June 16, 1933; (6) patent No. 1,967,195, issued to Albin H. Warth, assignor to Crown Cork & Seal Company, Inc., for method of manufacturing bottle caps, dated July 17, 1934, on original application November 7, 1930, serial No. 494,201, which in turn is a division of serial No. 159,743, January 7, 1927, now patent No. 1,788,260, dated January 6, 1931.Divided and this application filed April 4, 1933.

 The general defenses of the defendant are: Invalidity of all of the patents over the prior art, laches and estoppel on the part of the plaintiff as to one of the patents, noninfringement, lack of title to two of the patents in suit, owing to collusion in interference proceedings in the patent office, in which interference priority was purported to have been found in favor of the patentee Warth, prior use by the defendant and others as to some of the patents, prior use by the plaintiff as to some of the patents, the plaintiff has not come into equity with clean hands, for the reason that it has suppressed evidence in the patent office in some of the interferences and applications, and also attempted to suppress evidence of other material facts. Defendant has also counterclaimed against the plaintiff alleging infringement of patent No. 1,921,808, issued to Benno Cohn, assignor to Ferdinand Gutmann & Co., for method of making closures, dated August 8, 1933, on an application filed July 20, 1932, the title to which patent is now in the defendant.

 The plaintiff is a New York corporation with its principal factory at Baltimorc, Md.

 The defendant is a New York corporation with its factory in Brooklyn, N.Y.

 Plaintiff's title to all of the said patents, except McManus No. 1,339,066, is stipulated.

 As to the McManus patent No. 1,339,066, plaintiff is the owner, and takes its title in the following manner:

 Plaintiff was formed by a consolidation of New Process Cork Company and New York Improved Patents Corporation, each a corporation of the state of New York. The McManus patent in suit was assigned by McManus, to whom the patent issued, to Cem Securities Corporation, which corporation granted an exclusive license under that as well as other patents to New Process Cork Company. The Cem Securities Corporation assigned the entire right, title, and interest of the McManus patent in suit, together with other patents, to the plaintiff. No formal instrument transferring to plaintiff the exclusive license granted to the New Process Cork Company was shown, but since the New Process Cork Company was one of the merging companies from which plaintiff was formed, obviously, the exclusive license was thus carried to plaintiff, thus vesting in plaintiff both the legal title and any outstanding exclusive license.

 The crown cap to which the center spot of the patents in suit is applied has a thin metal shell with corrugated skirts, adapted to be pressed into engagement with a lip on the bottle, to hold the cap tightly in place. Inside the cap is a disc of cork, either natural cork or composition cork, the latter being made up of small particles held together by a binder. Without something on the disc, the liquid contents of the bottle come directly into contact with the cork disc. This has created a problem as to certain beverages, which has been solved by the center spots.

 The desirability of covering the cork closure with some material which would prevent contact between the beverage and the cork was appreciated by the art for a long time. Where the bottle contents are not under gas pressure, this can be done by the "overall" form of closure, in which a sheet of paper or foil covers the entire surface of the cushion disc, but as this interposes the paper or foil between the entire bottle neck and the cushion disc, it is not suitable for pressure beverages. The cushion discs in such overall crowns are cut out of a composite sheet of cork or pulp board, which has previously been faced with the facing material.

 For high pressure beverages which are to be held for a long time without leaking or breaking down, the center spot is designed, and it is particularly desirable for beverages having a national distribution from one or more bottling points, and to enable the use of relatively cheap composition cork discs. The facing material is applied to the cork discs, so that the cork can still function as a seal against the mouth of the bottle while, at the same time, the periphery of the center spot is also engaged by the neck of the bottle to prevent, so far as possible, the liquid in the bottle from reaching the cork disc of the closure.

 The center spot crown illustrated on Exhibit 17 may be of paper or metal foil, and is large enough to extend part way over the lip of the bottle mouth, leaving a considerable area of the lip to be contacted by the cork disc itself which forms the pressure holding seal, while the center spot keeps the beverage from contacting with the cork. Before being applied to the bottle, the center spot lies flat on the surface of the cork, but when the crown is placed on the bottle under very heavy pressure, the cork adjacent to the periphery of the shell is highly compressed, resulting in a deformation of the center spot, which subjects the center spot to a considerable stretching pressure, and the spot material must be strong enough to withstand it.

 It is essential for pressure beverages that the spot be accurately centered on the cork disc. If it is not, a part of the center spot may extend over the entire surface of the neck of the bottle at one side, and thus permit leaking and, at the other side, it would be pulled away from the neck of the bottle, and thus permit the bottle contents to contact with the cork.

 To prevent complaints as to the resuits of the bottling, either on the part of the bottler or consumer, the center spot crowns must be substantially perfect as the caps are applied to the bottles at a rate of speed as high as 160 a minute, and the bottler has no time to inspect each center spot crown to make sure that it is satisfactory.

 Both to stand shipment and because of the conditions obtaining in the bottle capping machine itself, it is essential that the spots be very tightly affixed to the discs.

 To meet the competition with other forms of corking, the spot crowns must be made cheaply, and to do this the spots must be accurately and positively placed in position, at a high rate of speed, and with a minimum number of "rejects" requiring subsequent operations.

 A tremendous amount of spot crowns are made and sold today, at from 22 to 24 cents a gross, which includes the entire crown, consisting of the shell with its ornamental printing, the composition cork disc, and the center spot.

 By the methods of the patents in suit, plaintiff is now applying these spots to crowns at the rate of 500 per minute for each operating unit, and its sales at the annual rate of about 9,000,000 gross of center spot crowns constituting about 30 per cent. of its entire crown production.

 Plaintiff has some fifteen licensees under the patents in suit, who are also producing center spot crowns, and adding defendant's output, the total annual output of center spot crowns is of very large proportions.

 The first patent in suit is the McManus patent No. 1,339,066, of which claims 3 and 8, reading as follows, are in suit:

 Claim 3:

 "3. A bottle closure embodying therein a metallic cap, a compressible disc within said cap, and a flexible disc of non-absorbent material superimposed upon and united by means of a fusible binding medium with, said compressible disc, said superimposed disc being of smaller diameter than said compressible disc, whereby a sufficient portion of the surface of said compressible disc is exposed, to permit the sealing of the bottle directly against said compressible disc and the portion of the compressible disc within the neck of the bottle is protected by said flexible disc."

 Claim 8:

 "8. A bottle closure embodying therein a metallic cap, a compressible disc secured within said cap by means of a fusible binding medium, and a flexible disc of nonabsorbent material superimposed upon, and united by means of a fusible binding medium with, said compressible disc, said superimposed disc being of smaller diameter than said compressible disc, whereby a sufficient portion of the surface of said compressible disc is exposed to permit the sealing of the bottle directly against said compressible disc and the portion of the compressible disc within the neck of the bottle is protected by said flexible disc."

 This patent describes the center spot substantially as I have hereinbefore described it.

 The patentee in his specification showed his knowledge of what is required in a center spot, and disclosed various ways to make such a center spot.

 At page 2, commencing at line 75 of the patent, McManus describes the attachment of the flexible disc (center spot) to the compressible disc (cork disc), either by the binding medium used to bind the granules of the composition disc, or by the kind of binding medium used to hold the disc to the cap shell.

 At the time of the filing of the application, the material used to hold the disc in the cap was a gum and resin combination. This was a thermoplastic cement; that is, one which becomes tacky when heated so that, when it is pressed into contact with a surface, it will adhere thereto when the cement cools.

 At page 2, lines 81-84, McManus says: "By using this bond, the disc e and the disc f may be assembled in relation to the cap and to each other by one and the same operation if desired."

 With the exception of the so-called "White Rock" center spot, there is universally used, as the adhesive for attaching the center spot, a heat fusible, one such as gutta percha or a thermoplastic nitrocellulose-resin combination, which is one of the elements of the claims 3 and 8 in suit. The fusible binding medium has displaced the water soluble adhesives and the heat-set adhesives, the use of which was previously attempted by others in what proved to be commercial failures.

 Center spot caps adhered by a heat-fusible cement were not commercialized by McManus because the particular thermoplastic used by him, consisting of copal and rosin, with a little wax to soften it, was rather brittle, and he attempted in his commercial production to use a water soluble adhesive, but the limitations of this adhesive in his commercial production rendered it unsuccessful.

 The fact still remains that McManus was the first to perceive and disclose to the world the use of a heat-fusible cement, to stick the center spot to the cork, and it is immaterial that neither the plaintiff nor defendant uses the particular kind of thermoplastic bond that McManus gave as an illustration. E.I. Du Pont De Nemours & Co. v. Glidden Co. (C.C.A.) 67 F.2d 392, 393.

 The defendant has offered in evidence as the alleged prior art thirteen patents, the showing of which was not explained on the trial, but they have been discussed by the counsel for the respective parties in their briefs, and I will briefly consider the same.

 French patent No. 415,794, to Societe American Cork & Seal Company, published October 4, 1910, shows the so-called "American" form of a crown illustrated on chart 17, in which the cushion was a rubber ring, and the center member analogous to a center spot, was a cup-shaped piece of foil with the cup extending over the ring to hold the latter in place. The spot was not adhered to the cushion disc, but was soldered to the metal shell where the two metals were in contact, and solder obviously would not be useful in adhering a spot to a cork disc.

 French patent No. 463,971, to Montaner & Co., published March 10, 1914, shows a plain tin center spot on a cork disc, which is to be fastened to the cork by being "stamped or pasted," without further suggestion as to how this "stamping" or "pasting" is to be done, and, in particular, what kind of "paste" is to be used.

 British patent No. 16,075, A.D. 1913, to Ernest Frederic Edouard DeMuth, accepted July 9, 1914, shows a metal foil center spot adhered to the cushion disc "by cementing or in any other appropriate manner." There is no suggestion as to how this cementing is to be done, or what kind of cement is to be used.

 British patent No. 26,297, A.D. 1909, to John MacCormack and David Eglin McPhun, accepted November 10, 1910, shows a disc A of wood pulp, the drawing showing the wood pulp disc contacting with the bottle top, but with the tinfoil disc B no larger than the interior of the neck of the bottle. Such a construction experience has shown to be wholly inoperative. The patent also contains the general statement that the tinfoil is to be coated with some "adhesive substance," without any specification of the kind of adhesive to be used.

 Patent No. 1,199,026, to John Alberti, granted September 19, 1916, shows a bottle-closure with a center spot crown. This is the nearest reference to the patent in suit. It taught the use of a wet-heat-set adhesive (albumen), which is not now in use, but did not even suggest the use of a thermoplastic to adhere the spot to the cork. The heat-set adhesive of Alberti was the reverse of the heat-fusible adhesive of the patent in suit, which latter adhesive has proved to be the solution as is shown by its present day universal use. The sample center spot crowns made by Alberti, produced from the files of the patent office, which were filed in connection with his application for patent, do not prove that the wet-heat-set crowns were commercially practical, because, as Alberti says, they were made partially by hand, which, done slowly and carefully, can be accomplished with almost any kind of adhesive.

 Patent No. 903,865, to John A. Jones, granted November 17, 1908, shows a method for making composition cork discs by the use of a solution of pure rubber. It discloses no center spot.

 Patent No. 1,110,138, to John A. Jones, granted September 8, 1914, shows an ordinary crown cap in which a cork composition is held in the shell. It discloses no center spot nor any kind of covering for the disc.

 Patent No. 993,288, to Leonard Bartlett, granted May 23, 1911, shows a machine for making a crown of the type which uses a ring instead of a disc, and leaves no resilient member in the center. In the center of the crown metal foil was used which was cupped and flanged so that the center could be adhered to the crown, and the flanges could be used to hold the rubber ring in place. The rubber ring took the place of the cork, but was not itself adhered to the metal shell.The so-called center spot was used as a means to hold the rubber ring in the shell and at the same time protect the rubber ring from the contents of the bottle. The so-called center spot was held to the shell by solder.

 Patent No. 1,195,392, to George M. C. Nielsen, granted August 22, 1916, shows an elaborate machine for the manufacture of the so-called "White Rock" or "Stewart" center spot crown, and in Figs. 13 and 15 the crown itself. The spot is a circular piece of metal foil, having its edges turned up to form a cup, and the edges inserted into a circular slit cut in the cork, thus holding the spot mechanically and not adhesively to the cork. The necessity for using in this type of spot crown natural cork and not a composition cork disc adds greatly to the expense and prevents general competition with the crowns of the patent in suit. As the spot must be of metal foil, and cannot be of paper, its field is restricted, as metal foils cannot be used with acidulated beverages, like dry ginger ale. It is used substantially by one company only.

 This was the only commercial spot crown prior to that of the McManus patent in suit, and has been used by the White Rock Company since 1914.

 Patent No. 1,129,578, to George F. Knox, granted February 23, 1915, shows a better seal for the ordinary crown cap, to accomplish which the patentee proposed having the bottles specially made with a circular groove in the top into which the cork would be pressed. He also provides a pliable facing sheet, which may be of tinfoil and is of a diameter approaching that of the cork disc. He expects the swelling of the cork to break the spot when applied to his specially shaped bottle top. Fig. 3 shows a special form in which there are a series of perforations to hasten this breaking. No reference is made to any adhesion of the covering to the cork, and none is needed because he has lapped the covering material around the edges of the cork disc, as shown in Fig. 2.

 Patent No. 408,177 to Daniel W. Johnson, granted July 30, 1889; patent No. 957,064, to Charles R. Keeran, granted May 3, 1910; and patent No. 796,356, to Frederick Recht, granted August 1, 1905, all of these three patents being referred to only as showing the state of the art. Each of these patents shows a cap of an overall form, the cushion disc of which has its entire face covered with the protecting material which, rather than the cushion disc itself, really forms the seal. This cap is not satisfactory for pressure bottling. No adhesive is mentioned, the obvious intent being that the protecting material shall be merely laid on the surface of the cushion disc. Reference is made to "wax," but it is to be used to seal the protecting disc to the mouth of the jar rather than to the cushion disc. No center spots are shown in any of the patents. None of the patents of the prior art anticipates the patent in suit.

 From all the evidence it seems quite clear to me that neither gutta percha nor any thermoplastic or heat-fusible adhesive was used by the plaintiff or any one prior to 1917, and this is not overcome by the testimony of Smith in the interference proceeding, given entirely from recollection, and as to date given by him, about 1914, he then said, "I am not sure what it was in 1914."

 From my examination of the prior art, it appears that what McManus did was much greater than a mere change of the adhesive, in fact it was the solving of a real problem which practical men in the art had tried and failed to solve, and the turning of failure to success by means not even suggested by the prior art.

 This I believe constituted invention and the McManus patent in suit is valid.

 I do not agree with the defendant's contention that the McManus patent is limited to parchment paper. Foil was at the time of the filing of the McManus application a well-known equivalent for paper in the manufacture of spot caps of other construction, and while claim 2 of the patent in suit limits the spot to papers, claims 3 and 8, which are here in suit, are not so limited but require a disc of nonabsorbent material.

 In claim 3 of the patent in suit, a center spot crown is described, the novel feature of which is a fusible binding medium for adhering the spot to the cork disc, and in claim 8 there is described a center spot crown in which a fusible binding medium is used to hold the spot to the disc, and to hold the disc in the shell of the crown.

 The stipulated crowns, representative of those made by the defendant, Exhibits 6, 7, and 8, use gutta percha to adhere the spot to the cork disc, and this is heat-fusible. In defendant's caps, Exhibits 4 and 5, an adhesive known as No. 4620 duPont is used, which is also heat-fusible. These caps infringe claim 3 of the McManus patent in suit.

 In defendant's caps, Exhibits 4 and 8, the disc is attached to the shell by a fusible binding medium, and infringe claim 8 of the McManus patent in suit.

 In 1927, the patentee McManus acquired control of the plaintiff, of which the Crown Cork & Seal Company was a predecessor, and defendant contends that because there is nothing to show that McManus sued the Crown Cork & Seal Company for its infringement of his patent, plaintiff is guilty of such laches against defendant that neither an injunction nor any accounting should be granted. This contention is not sustained. Except for its abandoned experiment of January, 1925, defendant did not manufacture an infringing crown until late in 1928. McManus was engaged in litigation with the International Cork Company until 1926, when he acquired it. McManus had been a stockholder in the Crown Cork & Seal Company from 1922, during which time he had been endeavoring to acquire control of the company.

 It does not seem to me that defendant can justify its infringement which commenced years later by the fact that McManus merged his company with Crown Cork & Seal Company instead of indulging in expensive litigation with it while he was engaged in patent litigation with another company. There is no evidence that defendant was misled by the conduct of McManus.

 There is no evidence that it came to the attention of McManus that the other companies mentioned by plaintiff's witnesses were infringing, or its extent, but in any event, most of the companies mentioned accepted licenses under the McManus and other patents, as soon as the patent was called to their attention, and are paying royalties today.

 The cases of Dwight & Lloyd Sintering Co. v. Greenawalt (C.C.A.) 27 F.2d 823, Banker v. Ford Motor Co. (C.C.A.) 69 F.2d 665, and Westinghouse Electric & Mfg. Co. v. Jeffrey-De Witt Insulator Co. (C.C.A.) 22 F.2d 277, are clearly distinguishable, as in none of them was it contended that there was any question of laches raised, because of the relationship of the plaintiff to other infringers than defendant.

 The defendant also contends that the plaintiff is estopped from maintaining any suit against it based upon certain correspondence between the parties, and the assertion that plaintiff knew, in 1928, of defendant's infringement. This contention is not sustained. I find no reference in either letter as to patents, nor do I find any evidence to support defendant's assertion that plaintiff knew of defendant's infringement in 1928. The offer of plaintiff to sell to defendant, like other crown manufacturers, various kinds of cork discs, does not show any knowledgement of the fact of defendant's infringement or its extent. The letter of 1930 did not induce defendant to undertake the manufacture of infringing crowns for Goetz, whom it had been selling since 1928, or for any one else.

 While I well understand that each case involving the defense of laches and estoppel must be decided on its own facts, it seems to me that applying the general rules laid down in Benthall Mach. Co. v. National Mach. Corporation (D.C.) 222 F. 918, 922; Simpson v. Newport News Shipbuilding Co. (D.C.) 18 F.2d 318; Mills Novelty Co. v. Monarch Tool & Mfg. Co. (C.C.A.) 49 F.2d 28, 30; and Walker on Patents (6th Ed.) Vol. 1, p. 726, cited by plaintiff, the defendant cannot succeed in that defense.

 There is no proof in the case at bar that defendant, to its disadvantage, relied upon any act or lack of action of the plaintiff, or that defendant, during the period in question, changed its position, or that its actions were based upon an assumption that plaintiff did not intend to enforce its patent rights. It is not shown that plaintiff had knowledge of defendant's infringement prior to 1933.

 The McManus patent No. 1,339,066, as to the claims in suit, is valid and infringed.

 The second patent in suit is the Warth patent No. 1,899,782, of which claims 7 and 9, reading as follows, are in suit:

 Claim 7: "7. As a new article of manufacture, laminated bottle cap spotting material in strip form comprising hard, tough paper having relatively low absorptive properties, a coating of resistant varnish on one surface of the paper and bonded to the other surface a coating of gutta percha."

 Claim 9: "9. As a new article of manufacture, highly flexible material in sheet or strip form for the spotting of cushion discs of caps with center spots of less diameter than the disc diameter consisting of a continuous layer of metallic foil coated on one side with an exposed continuous layer of waterproof, flexible, and acid resistant adhesive adherent to the foil and adapted to adhere to a cork disc, said adhesive being substantially non-tacky at room temperature but fusible upon the application of heat and substantially impervious to moisture whereby spots may be punched from the strip and united to the cushion discs of caps by the mere application of heat and pressure."

 Claim 7 is limited to a laminated bottle cap spotting material of hard, tough paper in strip form, with a coating of resistant varnish on one surface, and a coating of gutta percha on the other. Claim 9 is for a strip of bottle cap spotting material consisting of a metal foil coated on one side with a thermoplastic adhesive.

 The claims in suit are for the strip as a new article of manufacture, and not for the machine or method of manufacture.

 Briefly described, the patent shows a strip of paper, or other material, drawn between a series of rollers, and thereby one side of the material is coated with a coat of gutta percha. This gutta percha material is fed through a cap-assembling machine, and spots of the size required for center spot crowns are punched from this material, and the gutta percha center spots are secured to the cork lining of a cap by means of heat and pressure, causing the gutta percha to adhere to the cork or composition cork lining.

 The plaintiff uses these strips in connection with the Warth method of the patents in suit, to make paper spots and metal foil spots, respectively.

 The defendant has offered in evidence as the alleged prior art, which were not explained on the trial but were discussed by the counsel for the respective parties in their briefs, the following patents:

 Patent No. 1,213,926, to Charles E. McManus, granted January 30, 1917, a strip of tinfoil having a layer of paper, the exposed side of which was "gummed," and the other side bonded to the metal foil by some binding medium such as sodium silicate. The spotting strip of McManus was formed of two layers of material bonded to each other, the face of the paper being covered with a water-soluble adhesive, the gum being described as permitting the application of the material of the strip to a cork by dampening the cork itself.

 Patent No. 1,638,541, to Charles E. McManus, shows a strip material to be used for "overall" discs to be placed in metal shells. The strip is made up of a layer of rubber to which is adhered a layer of paper having a cement binder to which another layer of paper is adhered. Discs are cut from this composite strip to be used instead of cork discs for bottle closures. This is not center spot material.

 Patent No. 1,657,802, to Louvern G. Lange, granted January 31, 1928, shows a sheet of paper with one face coated with a water-soluble gum, and the other side coated with a quick-drying oil varnish. The cement of the sheet having been dried, it is run through water to wet the adhesive, and the dampened sheet is then pressed into contact with the pulp board to form a composite sheet from which the desired discs can be cut simultaneously across the entire width of the composite sheet. Discs for shells for jars for preserves, mayonnaise, mustard, and the like can be punched from the composite strip material.

 Patent No. 1,758,610, to Louvern G. Lange, granted May 13, 1930, contained but a single claim, which was granted to Warth as a result of interference No. 60,878, and is now claim 3 of the Warth patent in suit, No. 1,899,782.

 In 1927, Warth built a combining machine by which strips of spotting material could have a thermoplastic adhesive combined with it, and had used the machine for combining metal foil with gutta percha. The combined strip was first used in making the experimental lots of Warth paper spot crowns sent to Burroughs Bros., in April, 1927, and Macomber, in August, 1927. Lange's earliest date is his filing date of July 3, 1929.

 Patent No. 983,319, to Smith, granted February 7, 1911, shows an overall type of closure, the sealing pad of which has a sheet of Manila paper adhered to it, which paper is coated with a layer of cellulose varnish, and adhered to the pad by a watersoluble glue but not a thermoplastic.

 Patent No. 1,238,156, to Reinhold Gustav Koch, granted August 28, 1917, shows an overall covering for a cork pad, the metal foil layer F being adhered to a paper covering by the vulcanized rubber E, the paper D, which is tough but absorbent, being adhered to the face of the cork a by the gutta percha C, and the cork a being adhered to the shell or cap A by a mixture of tartaric acid gum arabic and rosin, which by the application of heat sticks the cork disc to the cap.

 Patent No. 1,358,834, to Frederick W. Farrell, granted November 18, 1920, shows a strip of paper coated with Trinidad asphalt, adapted to be used for sealing cartons.

 Patent No. 408,177, to Daniel W. Johnson, granted July 30, 1889, which is referred to only as showing the state of the art, shows an overall sealing gasket in which a layer of parchment or parchmentized fiber is secured ...

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