Crown Cork & Seal Co. v. Standard Brewery

• Citation: 174 F. 252
• Decision Date: 16 December 1909
• Docket Number: 28,804-28,807.
• Parties: CROWN CORK & SEAL CO. v. STANDARD BREWERY. SAME v. GREENBERGER.
• Court: U.S. District Court — Northern District of Illinois

174 F. 252

CROWN CORK & SEAL CO. v. STANDARD BREWERY.

SAME v. GREENBERGER.

Nos. 28,804-28,807.

United States Circuit Court, N.D. Illinois, Eastern Division.

December 16, 1909

Edwin G. Baetjer, James Q. Rice, and Robert H. Parkinson, for complainant.

William O. Belt (S. L. Moody and Louis C. Raegener, of counsel), for defendants.

SANBORN District Judge.

These are four suits for infringement, commenced in September 1907, of patents 468,258, February, 2, 1892, for the crown cork or seal bottle sealing device in common use, and three patents on machines for putting on the crown cork, Nos 473,776, April 26, 1892, 638,354, December 5, 1899, and 643,973, February 20, 1900. Complainant alleges that the Standard Brewery is its licensee of machines covered by the three machine patents, and the only infringement charged is the use of infringing corks, not made by complainant but by defendant Greenberger and others, in violation of licenses taken by it. As to Greeberger, he is charged with infringement of the crown cork, and a decree for injunction damages, and profits is demanded against him; and he is also charged with contributory infringement of the machine patents by furnishing infringing corks to the Standard Brewery, and a like decree demanded. As to the Standard Brewery, it is charged with infringing the crown cork patent by the use and sale of infringing corks, and it is also charged with a violation of its license by the same use and sale. In the machine patent cases the Standard Brewery is charged with infringement by the use of the machines in connection with infringing crowns, and Greenberger is charged with contributory infringement of the machine patents by causing to be used thereon infringing crowns, adapted to no other use, and by furnishing such crowns to complainant's licensees of machines, who were restricted by their licenses to the use of complainant's crowns, thus procuring the application of the crowns for purposes not authorized by the licenses; that the only market for the infringing crowns is among complainant's licensees of the machines, there being no other apparatus on the market or in use, practically adapted to the use of the crowns; and that this condition is well known to Greenberger, who furnished the crowns without any distinguishing marks, purposely to cause them to be confounded with complainant's crowns.

It will be seen that the suits are brought, not only in the exclusive federal jurisdiction for the infringement of the patents, but also in the concurrent state and federal jurisdiction for the breach of the alleged licenses; but diverse citizenship and a sufficient sum in controversy are alleged in each case. Complainant is alleged to be a Maryland corporation, and a citizen of that state, and defendants citizens of Illinois, and residents of the district where suit was brought, and the matter in dispute is averred to be $50,000 in each case. The citizenship of defendants and amount in dispute are admitted by failure to deny, but the answers deny the citizenship of complainant. However, there was no plea to the jurisdiction, so that in equity it stands admitted, whatever the rule may be at law. Butchers' & Drovers' Stockyards Co. v. Louisville & Nashville R. Co., 67 F. 35, 14 C.C.A. 290, 31 U.S.App. 252; Roberts v. Lewis, 144 U.S. 653, 12 Sup.Ct. 781, 36 L.Ed. 579. Complainant, therefore, may have relief in both aspects of the case, if otherwise entitled to it.

The case is thus stated by counsel for complainant:

'The bills show, and the proofs establish, that complainant has, from prior to the date of each of the several patents, been the sole owner of the inventions secured thereby, as assignee of the applications therefor and all rights to be secured thereunder; that prior to the issue of the first-mentioned patent it established a plant for manufacturing machines embodying the invention of such patent, and for manufacturing sealing devices adapted to use therewith, and ever since has carried on such manufacture on an extensive scale, including the invention of each of the subsequent above-mentioned patents from about the issue thereof, supplying such machines and the patented sealing devices adapted to use therewith throughout the United States in very large and constantly increasing quantities; that it is and has been prepared to supply the entire market therefor throughout the United States; that it has uniformly, throughout the terms of these patents, retained to itself the exclusive right to manufacture and supply these inventions, and has supplied these patented machines uniformly under a license authorizing their use only for the purpose of applying sealing devices furnished by it, the licensee in all cases stipulating, as a condition of obtaining such machine, to use it for such purpose only; that these patented machines, thus licensed, have been put into very extensive use throughout this country, and are the only means in practical use, or upon the market, for applying sealing devices of the character referred to; that the validity of these patents has been acquiesced in, and complainant's rights thereunder respected, except for the recent infringements herein complained of, and some others of like character, also of recent date; that the defendant the Standard Brewery is a licensee of complainant under the patents in suit, its license expressly limiting its rights thereunder to the use of these machines in applying sealing devices obtained from complainant; that this defendant obtained and is now holding these patented machines subject to such license, wherein it expressly agreed, as a condition of being furnished with these machines, not to use them for any other purpose; that shortly before the suit was begun it procured, in violation of its license, from unauthorized persons, imitations of complainant's sealing devices, made in such exact counterfeit thereof as to be applied with these machines and to pass for complainant's; that, when complainant discovered that it was using these patented machines for purposes not authorized by the license, it promptly notified it, calling its attention to the restriction of the license, and requesting it to desist; that it refused so to do, and continued thereafter to procure from unauthorized persons sealing devices made in exact imitation of complainant's, and to use said patented machines in applying the same in violation of its license, setting complainant's rights under its patents at defiance, while retaining the possession and unlawful use of the patented machines; that the defendant Max Greenberger, carrying on business under the assumed name 'Spanish-American Cork Company,' is, with full knowledge of the premises, supplying imitation sealing devices to complainant's licensees holding its above-mentioned patented machines under the aforesaid restricted license, these sealing devices being exact counterfeits of complainant's, and being made and sold for the express purpose of, and with exact adaptation for, application to the complainant's above-mentioned patented machines licensed as aforesaid, being solely furnished to bottlers holding such patented machines under such licenses and using no other means of applying such seals; that the only market for such sealing devices is for the purpose of being applied to bottles by complainant's above-mentioned patented machines held under the above-mentioned restricted licenses; that they have been supplied and offered by this defendant for use on such licensed machines and so used with full knowledge of the fact that such machines were subject to this restricted license, and could not be used on sealing devices furnished by others than complainant, except in violation of the license under which they were held; that this defendant was fully advised by complainant, both by publications in trade journals and by special notices served upon him, of the fact that those to whom he was furnishing these imitation sealing devices were using them, and could only use them, in violation of their aforesaid licenses, that all machines in use for applying such sealing devices were covered by complainant's aforesaid patents, and licensed only for use with complainant's seals, and that by furnishing such seals to complainant's licensees he was contributing to and inducing the violation of said licenses and the infringement of said patents; that he was requested to abstain therefrom, but refused so to do, and has continued to supply such imitation sealing devices to complainant's licensees for use on complainant's patented machines held under said restricted licenses, intending that they should be so used, and well knowing that they were being and would be so used.'

The system adopted and used by complainant is thus described by counsel for complainant:

'When complainant started, early in 1892, to introduce what it has called the 'Crown Cork System of Bottling,' a system which has completely revolutionized the art of bottling, it adopted at the outset the plan which it has uniformly pursued since of furnishing the patented machines for applying the new sealing devices only upon condition that they be used solely upon sealing devices obtained from it.

At the same time it agreed to furnish these sealing devices at a price not to exceed 35 cents a gross, which was afterwards reduced to 25 cents a gross. This made the cost of sealing a fraction of what it had been by inferior methods before. These machines, and sealing devices so formed that their corrugations and the seal inclosed in the crown, became active factors co-operating with the patented mechanism in effecting the closure, and were correlative elements in working out this new system of stoppering bottles. There had been so...