Commercial Acetylene Co. v. Avery Portable Lighting Co.

152 F. 642, 1906 U.S. App. LEXIS 5086

• Court: U.S. Circuit Court for the District of Eastern Wisconsin
• Decided: December 22, 1906
• Status: Published

Opinion

QUARLES, District Judge

(after stating the facts). It is undisputed that the defendants in the ten suits brought by complainant in other circuits are the vendees of the defendant, whom defendant is morally, not legally, bound to protect and defend in this litigation. It further appears that the defendant is manufacturing only one t3’pe of gas tank, although of various sizes. So that the issues raised in all the suits will be practically identical. That complainant’s patent No. 664,-383 was granted on the 25th of December, 1900, which, by mesne assignments, became the property of complainant on the 3d day of June, 1901. The other of complainant’s patents, numbered 727,609, was issued on the 12th day of May, 1903, and by assignment became the property of complainant on the 19th day of April, 1904. That, prior to the bringing of the suits in this court, neither of the complainant’s patehts had been subjected to the test of legal adjudication.

Complainant challenges the. power of the court to make the order prayed for. This is naturally the first proposition requiring attention. It is contended that jurisdiction here is limited to the making of such order or decree as may determine the issues raised by the pleadings and that it has no authority to make any order whose purpose is to control the action of either party beyond the. territorial limits of the court. The complainant has come into this tribunal seeking equitable relief and has submitted itself to the jurisdiction of the court. The power in such case to proceed in personam against either litigant to protect the jurisdiction, or the subject-matter, or to prevent either party from doing with regard to the subject-matter of the suit what is contrary to equity and good conscience has always been assumed and exercised by the chancery courts of England as well as by the several courts of chancery in the states. Either party may in a'proper case be enjoined from prosecuting another suit although it may be pending in a foreign state or country. 1 High on Injunction, §§ 106 to 111, and cases cited: Story’s Eq. Juris. §§ 899, 900; 1 Bates’ Federal Eq. Procedure, § 454; Home Ins. Co. v. Howell, 24 N. J. Eq. 238; Cole v. Cunningham, 133 U. S. 107, 10 Sup. Ct. 269, 33 L. Ed. 538; Akerly v. Vilas, 15 Wis. 402; Berliner Gramophone v. Seaman, 113 Fed. 750, 753, 51 C. C. A. 440; Lord Portarlington v. Soulby, 3 Mylne & K. 104.

While the doctrine of exclusive jurisdiction in' the court first obtaining jurisdiction of the subject-matter does not apply to a case where complainant brings independent suits in several courts involving the same question, it is nevertheless true that the main issue involving the validity of a patent and the question of infringement ought to be litigated between the patentee and the principal infringer in the jurisdiction where such supposed infringement is centered, and, where the first suit brought is against that principal infringer, such suit is properly regarded as a parent suit where the leading issues in controversy should, for obvious reasons, be tried. Other suits may be brought against vendees or users, if that be done in good faith, for the sole purpose of protecting the rights of the complainant. But if, before any adjudication, the patentee shall bring a multiplicity of suits for the purpose of harassing and annoying a rival manufacturer, for the purpose of subjecting him to burdensome expense, and to destroy his business by exciting terror among his customers, it would seem that there must reside somewhere the power to intervene and protect the defendant against such a crusade until the validity of the patents already challenged may be established in the courts. Instancds are not wanting where patentees make illicit use of the courts as in-strumentalities of oppression; bring a multiplicity of suits, purposely scattered through the circuits, not for the honest purpose of securing an adjudication in support of the patent, but to crush a rival manufacturer by creating a stampede among his customers; alarming them by circulars breathing threats of prosecution, denouncing the product of the rival concern as an infringing device, at the same time taking no step to bring any of the numerous suits to final hearing.

Judge Blodgett refers to this practice in Emack v. Kane (C. C.) 34 Fed. 46, and cites an instance where a patentee, having excited general consternation in the trade, which he turned to his commercial advantage, dismissed his suits where the validity of his patent had been put in issue. In such a case the defendant is powerless. He may be prepared to demonstrate that the complainant’s patent is invalid, or that his own structure does not infringe; but, during the considerable period which must elapse before the vital questions can be brought to final hearing, his customers may desert him through fear of litigation, and he may be driven to the wall. It cannot be that a court of equity is powerless to prevent such a wrong. In Emack v. Kane, supra, referring to circulars distributed by the patentee among the trade, Judge Blodgett says:

“It shocks my sense of .-justice to say that a court of equity cannot restrain systematic and methodical outrages like this by one man upon another’s property rights.”

Perhaps the leading 'case cited by complainant is Kelley v. Ypsilanti Dress Stay Company (C. C.) 44 Fed. 19, 10 L. R. A. 686. A careful perusal of this case discloses that the application for the injunction was there made in one of the later cases to enjoin proceedings in the earlier case. The learned judge says that he never before heard of such a case, for presumably the earlier case had been brought against the principal infringer. Although holding that relief should be withheld in that particular case, Judge Brown in his opinion says:

“In this view of the law it was held that to prevent a multiplicity of suits the court might, in a proper case and on a proper showing, require the prosecution of suits between a patentee and a mere user of a patented machine to be suspended, to await the result of the suit between the patentee and the principal infringer from whom the user purchased this machine — a doctrine in which we fully concur, although we think the application should be made to the courts in which these suits are pending.”

In Allis v. Stowell (C. C.) 16 Fed. 783, 787, Judge Dyer says:

•“But apart from this phase of the question, I am of opinion that to prevent a multiplicity of suits the court may, in a proper case and upon a proper showing, require the prosecution of suits between the patentee and a mere user of a patented machine to be suspended, and await the result of a suit between the patentee and the principal infringer from whom the us'er purchased the machine. Undoubtedly the court has the power to exercise restraining control over the litigation where the principal parties are before it.”

The learned judge also in his opinion refers to an unreported case, Barnum v. Goodrich, decided in the Northern District of Illinois by Judge Drummond, Circuit Judge, wherein it was held that complainant should be enjoined from prosecuting numerous suits until the principal controversy in Illinois between the patentee and the manufacturer should be first determined.

In Ide v. Ball Engine Co. (C. C.) 31 Fed. 901, 904, the court holds that public policy would seem to favor the rule that litigation for the purpose of ascertaining and sustaining the validity of a patent should be between the patentee and the alleged infringing manufacturer.

The same doctrine was held in National Cash Register Co. v. Boston Cash Co. (C. C.) 41 Fed. 51, the opinion being by Judge Colt.

In New York Filter Co. v. Schwarzwalder (C. C.) 58 Fed. 577, Judge Lacombe, though denying the relief sought, says:

“As to the proposition that the court will interfere on any theory of preventing multiplicity of suits, there is nothing now submitted to show that such multiplicity is to be apprehended, even if a motion of this kind be the proper remedy. There is only one suit now pending, and nothing to indicate that suits are about to be brought against other users until there has been some adjudication of the rights of the owner of the patent in its suit with the manufacturer. If, when complainant has prevailed in "that suit (should he so prevail), has established the validity of his patent and shown that the infringing apparatus which defendant makes and sells is an infringement, users of such infringing machines refuse to accept that result and individually insist upon continuing their use, complainant may sue each and all of them, though they number 10,000, without thereby instituting such a multiplicity of actions as the courts will enjoin.”

■ See, also, Birdsell v. Manufacturing Co., 1 Hughes (U. S.) 64, Fed. Cas. No. 1437, citing two unreported cases.

In Farquhar v. National Harrow Co., 102 Fed. 714, 42 C. C. A. 600, 49 L. R. A. 755, the Circuit Court of App'eals for the Third Circuit held that equitable relief might be granted against a party who was in bad faith sending notices and trade circulars among the customers of a rival, solely for the purpose of destroying the business of such manufacturer. The same doctrine was held in Adriance Platt v. National Harrow Co., 121 Fed. 827, 58 C. C. A. 163, by the Circuit Court of Appeals, Second. Circuit.

In Warren Featherbone Co. v. Landauer et al., 151 Fed. 130, there is an opinion by Judge Bunn, then District Judge of the Western -District of Wisconsin, concurred in by his honor, Judge Seaman, wherein the doctrine of Emack v. Kane, supra, Farquhar v. National Harrow Company, and Adriance Platt v. National Harrow Co., are cited with approval.

Complainant cites the case of Rumford Chemical Works v. Hecker, 11 Blatchf. 552, Fed. Cas. No. 12,132. While an excerpt from the opinion might seem favorable to complainant’s contention, an examination of the case will differentiate it in two important particulars, First, there had been in March, 1873, a final adjudication holding certain claims of the complainant’s patent valid, and an accounting had been completed in the main case before the other suits were brought, the earlier of which was commenced in September, 1873. Second, the court concludes the opinion with the suggestion:

“Moreover, tbe Explication, to be entertained at all in respect to the New Jersey and South Carolina suits, should have been made before plaintiffs had been put to the trouble and expense of taking their proofs for final hearing."

The complainant contends that these several authorities above cited are overruled by the Supreme Court in Birdsell v. Shaliol, 112 U. S. 485, 5 Sup. Ct. 244, 28 L. Ed. 768. A question arises how far the doctrine of that case is applicable to the case at bar. In Birdsell v. Shaliol the question for determination was the effect of a prior judgment for nominal damages, and no reference is made to the effect of a complete recovery by a patentee of gains and profits as well as damages. In the present bill ■ complainant charges that defendant has been guilty of making or causing to be made, using or causing to be used, selling or causing to be sold, the alleged infringing devices, in Milwaukee and elsewhere within the United States. In its prayer the bill asks that the defendant may be decreed to account for and pay over the gains and profits realized by the said defendant by its unlawful acts, and, in addition, the damages sustained by the complainant. It is contended that an accounting under such a bill will completely compensate the complainant for the invasion of the three elements of his monopoly, and that, such decree having been complied with, the infringing device would be released from the -monopoly. In support of this position, defendant cites United States Printing Company v. American Company (C. C.) 70 Fed. 50, 53. I shall not now stop to consider this question, because in my judgment Birdsell vs Shaliol, even as construed by complainant, is not decisive of the present application. If complainant’s interpretation of the Birdsell Case be correct, it has simply demolished one of the principal grounds upon which injunctive aid has been granted in the earlier cases; but it does not exclude the power of the court in a proper case to prevent oppression wrought by means of multiplicity of suits brought for a commercial advantage rather than honest adjudication. In my judgment no additional suit, either at law or in equity, should be'brought by complainant against the purchasers or users of the defendant’s tanks, for infringement of complainant’s patents, until the validity of such patents and the question of infringement have been adjudicated. I direct that an order be prepared to that effect.

I am asked to restrain the further prosecution of the 10 suits brought by complainant in other courts. In view of the decision in Birdsell v. Shaliol, I think the better practice is to allow the defendants in those suits, or this defendant in their behalf,, to make suitable application to the courts where such suits are pending, to stay proceedings until these principal questions have been adjudicated. There may be urgent and proper reasons why some further proceeding may justly be had in some of them. I therefore decline to enjoin complainant from all further proceeding therein.

Complainant insists that the injunction asked for will not prevent the running of the statute of limitations against actions to recover damages. That is undoubtedly a sound proposition, and on that account I deem it my duty to speed this case, and to that end I direct the clerk of this court to enter an order giving the complainant 10 days after January 1, 1907, within which to make its prima facie proofs. Thereupon the defendant may have 40 days to submit its proofs, and thereafter the complainant to have 30 days to present its proofs in rebuttal. I will hear the case promptly as soon as the proofs have been taken, 'so that a conclusion may be speedily reached.

As to the circulars distributed by the complainant, I do not think they disclose upon their face any evidence of bad faith or malice. The language is temperate, and I do not think they have thus far exceeded the extent to which the patentee is permitted to go in advising the public of the complainant’s rights under his patent, and to warn them of the consequences of infringement. One clause in the second circular is open to criticism, but complainant’s counsel assures the court that it was inserted without his knowledge or advice. If, however, the complainant shall continue to memorialize the trade with further literature, a new application may be made for suitable relief, and this decision is without prejudice to a renewal of such application.