Vogue Co. v. Vogue Hat Co.

• Decision Date: 17 May 1926
• Docket Number: No. 4066.,4066.
• Citation: 12 F.2d 991
• Parties: VOGUE CO. v. VOGUE HAT CO. et al.
• Court: U.S. Court of Appeals — Sixth Circuit

12 F.2d 991 (1926)

VOGUE CO. v. VOGUE HAT CO. et al.

No. 4066.

Circuit Court of Appeals, Sixth Circuit.

May 17, 1926.

Samuel W. Banning, Thos. A. Banning, Thos. A. Banning, Jr., Ehpraim Banning, all of Chicago, Ill., Chas. H. Studin, of New York City, and Rathbun Fuller, of Toledo, Ohio, for petitioner.

E. J. Marshall, of Toledo, Ohio, and Harry D. Nims, MacDonald DeWitt, and Minturn de S. Verdi, all of New York City, for respondent.

Before DENISON, MACK, and DONAHUE, Circuit Judges.

DENISON, Circuit Judge.

A bill was filed by the plaintiff, a New York corporation, in the District Court at Cleveland, against Thompson & Co., a Cleveland corporation, which was retailing hats manufactured by the Vogue Hat Company, a New York corporation, and it was alleged that these hats were being sold in violation of the rights indicated by the plaintiff's registered trade-mark and by means of fraudulent and unfair competition.

There was jurisdiction by diverse citizenship as well as by claim of right arising under federal laws. Upon the petition of the Vogue Hat Company, representing that it was the substantial defendant party in interest, it was allowed to intervene as defendant, and it was thereafter named as one of the joint defendants in the case.¹ It filed no answer, but it completely assumed and carried on the defense of the case. On final hearing the District Court dismissed the bill as to both parties defendant, because it found no infringement of trade-mark rights and no unfair competition. On appeal to this court we affirmed the finding in the first respect, but reversed as to unfair competition. 300 F. 509. The New York defendant filed a petition for review on the merits of the unfair competition question, which we denied. The plaintiff then applied for more specific directions as to the form of the decree, and this developed a controversy in which we eventually went somewhat further than the original opinion had in giving plaintiff effective relief. 6 F.2d 875. Now the New York defendant moves again for rehearing, and for the first time contends that, when all relief upon the basis of rights dependent on the registered trade-mark was denied, the court below and this court as well had no jurisdiction remaining to consider or decide the question of unfair competition. This contention is based on the line of cases hereafter considered; it is at least superficially supported by the authorities cited, and must be accepted unless there is specific reason for its rejection. Such reasons as suggest themselves are to be considered.

The first is that, after its voluntary appearance in the case and litigating to the end upon the merits, this defendant cannot be heard to question the power of the court to decide the very question which has been so litigated. This probably depends upon how far the defect in jurisdiction may be a matter of venue or of personal jurisdiction, rather than of the subject-matter. The peculiar facts of the case develop an interesting and perhaps unique aspect of this question; but it may for the present be passed by.

The next is whether under these peculiar facts the jurisdiction over the question of unfair competition as affecting the New York defendant may be considered as ancillary or incidental to the original cause. It is not usual for the more substantial controversy to be ancillary to one of lesser importance, and yet this result may well occur. Here there was equally complete jurisdiction by diverse citizenship over both grounds of the controversy which the plaintiff presented by its bill. The original defendant had done those acts which justified the final decree and order, so far as it was concerned. If the New York defendant, without formal intervention, but with plaintiffs knowledge, had assumed and paid for the defense, it would have been bound by the result, so far as that result could be rested on the acts of the Ohio defendant. It is clear to us that the New York defendant by its intervening petition thus presented a controversy growing out of and ancillary to the original bill in every necessary characteristic, even though the volume of matter affected was greater.

A late and complete discussion of the controlling principle is found in Wichita v. Commission, 260 U. S. 48, 53, 54, 43 S. Ct. 51, 67 L. Ed. 124. See, also, Lackner v. McKechney (C. C. A. 7) 252 F. 403, 408, 164 C. C. A. 327. The present case is to be distinguished from those where the intervener was a necessary party defendant, or where the intervention presented a new controversy not covered by the original bill. The New York defendant was not a necessary party, and the questions, not only as to the registered trade-mark, but as to the definition of unfair competition, are in a very substantial way the same against it which they were as against the Ohio defendant. Upon this principle of ancillary jurisdiction, we think the court below has power, pursuant to our mandate, to enter a decree for injunction against the New York defendant, and this in spite of the conclusion that it does not infringe any registered trade-mark.

Our disposition of the present application might rest upon what has been said; but the case presents another question, important and interesting enough to justify study. That question is, with reference to the rule that a federal court, the jurisdiction of which is invoked between citizens of the same state solely because a patent or registered trade-mark is being infringed, after deciding that controversy against the plaintiff, cannot proceed to give relief upon the ground of unfair competition, whether this rule extends not only to the cases where the patent or registered trade-mark has been held invalid, but to those cases where, though valid, it is found not to be infringed. This involves ascertaining the reason why the right to consider that further ground of relief has been denied by the Supreme Court in certain instances.

It is a familiar principle that, when the jurisdiction of a federal trial court is invoked upon the ground that the plaintiff presents a right arising under federal laws, the court thereby acquires jurisdiction of the case, and it examines and decides all questions involved, even though the federal question may be resolved against the plaintiff or may be passed without decision. It was redeclared, with many citations, in Siler v. L. & N. R. R., 213 U. S. 175, 191, 192, 29 S. Ct. 451, 53 L. Ed. 753, and it was again formulated in Davis v. Wallace, 257 U. S. 478, 482, 42 S. Ct. 164, 165 (66 L. Ed. 325), as follows:

"The case made by the bill involved a real and substantial question under the Constitution of the United States, and the amount in controversy exceeded $3,000, exclusive of interest and costs, so the case plainly was cognizable in the District Court. In such a case the jurisdiction of that court, and ours in reviewing its action, extends to every question involved, whether of federal or state law, and enables the court to rest its judgment or decree on the decision of such of the questions as in its opinion effectively dispose of the case."

We have applied the principle in this court (General Co. v. L. S. & M. S., 269 F. 235, 241; State v. Swift, 270 F. 141, 150, 151), and it continues to be of constant application in the Supreme Court. In Lincoln Co. v. Lincoln, 250 U. S. 256, 264, 39 S. Ct. 454, 456 (63 L. Ed. 968), and speaking of a supposition that the ordinance under fire could be attacked only for a reason founded in federal law, the court characterized it as "apparently overlooking that, even without diversity of citizenship, * * * the jurisdiction extended to the determination of all questions, including questions of state law, and irrespective of the disposition made of the federal questions" — citing Greene v. Louisville, 244 U. S. 499, 508, 37 S. Ct. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88. Again in Southern Ry. v. Watts, 260 U. S. 519, 522, 43 S. Ct. 192, 67 L. Ed. 375, and Atlantic Co. v. Daughton, 262 U. S. 413, 416, 43 S. Ct. 620, 67 L. Ed. 1051, the principle is clearly recognized.

It also has been of common observation that, even though the only ground for invoking the reviewing jurisdiction of the Supreme Court over a District Court might have been that a constitutional question was involved, yet the Supreme Court, having the case, decides all the questions in it, and that no matter whether the claim of constitutional right is sustained or denied.

It might seem that the same principle would apply in a suit for patent infringement and unfair competition. The cause of action and the relief sought are each single. In the ordinary case of this type the defendant is selling a specific article. The patentee claims that sale to be a trespass on his rights, and demands an injunction. He has two alternative or combined theories for supporting this single demand for relief. One is that the article sold is within his patent monopoly, and thus wrongfully interferes with his own business; the other is that the article is in deceptive "livery," thus also interfering with his own sales; all he (sometimes at least) wants the courts to do is to stop the sale of that article, thus marked. So it might be thought that a federal court, acquiring jurisdiction of this entire controversy by virtue of the patent question, would proceed to decide all questions involved, no matter how it decided the first one.

However, there is another familiar line of cases, growing out of the power of the Supreme Court of the United States to review the decisions of state courts. Upon principles of public policy, it may be important that this power should be confined to the federal question, and the language of the various statutes indicates this restriction. Accordingly we find the Supreme Court repeatedly refusing to consider any other question after it has decided this first one adversely to the appellant.

It is this latter restrictive principle, which to some...