Union Asbestos & Rubber Company, by Change of Name Unarco Industries, Inc. v. Evans Products Company

328 F.2d 949, 140 U.S.P.Q. (BNA) 634, 1964 U.S. App. LEXIS 6160
CourtCourt of Appeals for the Seventh Circuit
DecidedMarch 4, 1964
Docket14279_1
StatusPublished
Cited by47 cases

This text of 328 F.2d 949 (Union Asbestos & Rubber Company, by Change of Name Unarco Industries, Inc. v. Evans Products Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Union Asbestos & Rubber Company, by Change of Name Unarco Industries, Inc. v. Evans Products Company, 328 F.2d 949, 140 U.S.P.Q. (BNA) 634, 1964 U.S. App. LEXIS 6160 (7th Cir. 1964).

Opinion

KILEY, Circuit Judge.

Plaintiff’s appeal from the district court’s dismissal of its patent infringement suit for improper venue raises the question: Whether defendant’s activities, in the Northern District of Illinois, Eastern Division, amounted to “acts of infringement” of plaintiff’s patent. 1 We disagree with the district court’s negative answer to the question.

Since defendant concedes that it has a regular and established place of business within the district, venue will lie if defendant, a non-resident of the district, has infringed plaintiff’s patent by selling or using the accused device within the district. 2

The complaint alleges defendant’s infringement by “making and selling” the accused “lading separating devices” covered by plaintiff's patent. 3 Defendant’s motion to dismiss asserted that it had committed no act of infringement “within this district” and that venue was accordingly improper.

Orders for the accused device were solicited in the district as part of a continual sales effort, and literature describing the device was distributed in the district to promote sales, but orders were immediately forwarded to defendant’s home office in Michigan for approval. There is no evidence in the record of any sales or deliveries made in the district. 4 On one occasion Veague, defendant’s Chicago sales manager, took representatives of the Santa Fe Railroad and the Jewel Tea Company, prospective customers, to a Southern Pacific freight car, located within the district, which was equipped with the accused device. There he demonstrated the operation of the device, with the car both loaded and empty.

Plaintiff contends that these demonstrations by Veague for the purpose of making a sale constituted an infringing “use” and therefore satisfied the venue statute. 5 It also urges the “broader proposition” that defendant’s systematic and continuous solicitation of orders for the accused device from a regular and established place of business in the district, in and of itself, is sufficient to sat *951 isfy the venue requirement. We think the true rule in the case at bar is that the systematic and continuous solicitation plus the two demonstrations is sufficient to establish venue on the basis of plaintiff’s allegation of selling.

A mistaken reliance on the decision of the Supreme Court in W. S. Tyler Co. v. Ludlow-Saylor Wire Co., 236 U.S. 723, 35 S.Ct. 458, 59 L.Ed. 808 (1915), seems to have led courts into believing that there is a necessity for holding that demonstrations for the purpose of sale constitute infringing “use” for venue purposes, rather than considering the demonstrations as part of a sales effort. For example, the district courts have found infringing “use” sufficient for venue in Transmirra Prod. Corp. v. Magnavox Co., 110 F.Supp. 676 (S.D.N.Y.1953), where defendant displayed its products in two trade shows; in Ronson Art Metal Works, Inc. v. Brown & Bigelow, Inc., 104 F.Supp. 716 (S.D.N.Y.1952), where the defendant supplied the accused cigarette lighters to its salesmen for exhibition and demonstration to customers; and in Patent Tube Corp. v. Bristol-Myers Co., 25 F.Supp. 776 (S.D.N.Y.1938), where defendant’s salesmen distributed some of the accused devices to physicians and dentists within the district for advertising purposes. But in those cases, as here, it appears that the infringement complained of was defendant’s manufacture or sale of the accused device. 6

This has resulted in a rather strained interpretation of infringing “use.”

In the case at bar plaintiff charges “selling” and presumably will offer proof of “sale” at trial and not proof of “use.” The demonstrations are proper proof of “sale” and not proof of “use” because in them the accused article was not used for the purpose for which it was intended. Its intended use was to divide loads in freight cars, not for demonstration to intended customers. We believe it is illogical to lay venue on “use” where proof is to be of a “sale” and we prefer, not to nourish that procedure.

In W. S. Tyler Co. v. Ludlow-Saylor Wire Co., 236 U.S. 723, 35 S.Ct. 458, 59 L.Ed. 808 (1915), the Court, relying on Westinghouse Elec. & Mfg. Co. v. Stanley Elec. Mfg. Co., 116 F. 641 (C.C.S.D.N.Y.1902), said that if the sale was consummated outside the forum it did not constitute an infringement within the district where the suit was brought. However, in Tyler the first and decisive holding was that defendant did not have a regular and established place of business within the district. Therefore what was said about the consummation of a sale outside the district not amounting to an act of infringement within the district was dicta. 7 Westinghouse did hold as the Supreme Court said it did, but there Judge Lacombe’s opinion cited no authority for his holding. The necessity of finding a “completed sale” to support venue had its genesis in Judge Lacombe’s opinion:

“But when the commission of an act of infringement is essential to jurisdiction, the completed act must be proved. There must be proof either of a manufacture, a use, or a sale within the district, contracts to manufacture, threats to use, negotiations for a sale, will not be sufficient, for the reason that the statute requires proof of the completed act.” 116 F. at 641.

The necessity for a “completed sale” or a “completed act of infringement” had *952 the apparent approval of the Second Circuit in Bulldog Elec. Prod. Co. v. Cole Elec. Prod. Co., 134 F.2d 545 (2d Cir. 1943), pet. for mandamus denied, 322 U.S. 714, 64 S.Ct. 1256, 88 L.Ed. 1556 (1944), and the Ninth Circuit in Endrezze v. Dorr Co., 97 F.2d 46 (9th Cir. 1938). But in each of those cases Tyler and Westinghouse are cited to dicta. The Fourth Circuit in Dow Chemical Co. v. Metlon Corp., 281 F.2d 292 (4th Cir. 1960), did hold, as its decisive rule of law, that a “completed act” is necessary, and that the conduct in that case did not amount to a “completed act.”

We do not think the dicta in Tyler, Bulldog, and Endrezze compels us to decide that a completed sale was necessary for a finding of venue. The “completed sale” notion derived from the formulation of a rule, without authority cited, by a single judge of the old circuit court of the Southern District of New York.

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328 F.2d 949, 140 U.S.P.Q. (BNA) 634, 1964 U.S. App. LEXIS 6160, Counsel Stack Legal Research, https://law.counselstack.com/opinion/union-asbestos-rubber-company-by-change-of-name-unarco-industries-inc-ca7-1964.