Scam Instrument Corp. v. Control Data Corp.

• Decision Date: 07 April 1972
• Docket Number: No. 18961.,18961.
• Citation: 458 F.2d 885
• Parties: The SCAM INSTRUMENT CORPORATION, Plaintiff-Appellant, v. CONTROL DATA CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

458 F.2d 885 (1972)

The SCAM INSTRUMENT CORPORATION, Plaintiff-Appellant, v. CONTROL DATA CORPORATION, Defendant-Appellee.

No. 18961.

United States Court of Appeals, Seventh Circuit.

April 7, 1972.

Walther E. Wyss, M. Hudson Rathburn, Willis J. Jensen, Clemens Hufmann, Chicago, Ill., for plaintiff-appellant.

Allen Kirkpatrick, Kevin E. Joyce, Washington, D. C., Patrick H. Hume, Jack C. Berenzweig, James M. Wetzel, Hume, Clement, Hume & Lee, Ltd., Chicago, Ill., for defendant-appellee Control Data Corporation; Cushman, Darby & Cushman, Washington, D. C., Joseph A. Genovese, Washington, D. C., of counsel.

Before DUFFY, Senior Circuit Judge, and KERNER^* and PELL, Circuit Judges.

PELL, Circuit Judge.

Plaintiff, The Scam Instrument Corporation (Scam), an Illinois corporation, filed its complaint on August 19, 1969, in the District Court for the Northern District of Illinois, seeking damages and injunctive relief against defendant, Control Data Corporation (Control Data), a Delaware corporation, whose principal place of business was in Minnesota, for alleged infringement of three United States patents owned by plaintiff. The accused devices are process control computers allegedly sold by Control Data throughout the United States.

For approximately one year after the filing of the complaint, the parties devoted themselves to discovery and scrimmaging with regard thereto. In the intervening year, Control Data filed its motion to dismiss or transfer for lack of proper venue, relying on 28 U.S.C. § 1400(b), which reads as follows:

"(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business."

Pointing out that the defendant, a Delaware corporation, had no residence in the Northern District of Illinois, Control Data contended that it was incumbent upon Scam to show both that actual infringement had been committed in said district and that the defendant had a regular and established place of business therein. While denying the established place of business in the Northern District of Illinois, Control Data particularly urged that the discovery to data had reflected no acts of actionable infringement in the district during the limitation period.¹ Relying on 28 U.S.C. § 1406(a),² Control Data took the position that if its motion to dismiss for want of proper venue was not granted, the district court in the alternative should transfer the action to the appropriate district court in Minnesota. Further discovery procedures, devoted primarily to meeting the issue raised by Control Data's motion, fostered the defense contention that if there was any infringement in the Northern District of Illinois it was in sales to Argonne National Laboratories, which were sales or leases to a United States governmental instrumentality. Control Data here argued in reliance upon the first paragraph of 28 U.S.C. § 1498³ that the infringement, if any, being cognizable only in the Court of Claims, did not show infringement within the Northern District of Illinois as required by 28 U.S.C. § 1400(b).

At a hearing arising out of a motion pertaining to discovery, on September 30, 1970, the district court orally observed that it did not see much dispute that Argonne was really a part of the Government and in effect suggested a motion for partial summary judgment if there were no other than governmental purchases in the district.

Obviously acting upon the suggestion of the district court, Control Data on October 8, 1970, filed its "motions for partial summary judgment and for transfer" in which it moved for partial summary judgment pursuant to Rule 56(b) of the Federal Rules of Civil Procedure dismissing the complaint from the court, and additionally renewed its prior motion that the case be transferred to the United States District Court for the District of Minnesota. There is no indication in the record before us that there were in fact any alleged infringing activities other than that at Argonne, although in both the court below and on this appeal, Scam contends that the defense assertion of governmental purchases with respect to the computers at Argonne was factually unfounded. This contention was primarily based upon the form and claimed lack of correct factual basis in the supportive affidavits filed by Control Data.

In its reply brief in the district court to plaintiff's opposition to summary judgment and transfer, Control Data advised the court that on October 19, 1970, it had commenced a declaratory judgment action in the district court in Minnesota seeking a declaration that the patents in the present suit were invalid and not infringed.

On October 28, 1970, Scam filed a notice of dismissal, the body of which in its entirety reads as follows:

"Now comes Plaintiff The Scam Instrument Corporation and gives notice of voluntary dismissal of this action without prejudice under the provisions of Rule 41(a)(1)(i) of the Federal Rules of Civil Procedure."

The district court by bench notation acknowledged the filing of the notice of dismissal.

Control Data, on the next day, filed a motion to reinstate the cause of action asserting that the notice of dismissal was ineffective on its face because a dismissal under Rule 41(a)(1) (i) is only permitted prior to service by the adverse party of a motion for summary judgment.

During the course of a hearing on October 30, 1970, the district court stated that a memorandum decision had been prepared but had not been handed down. The court then stated:

"As a matter of fact I did say in that memorandum, reviewing it, that I have treated your motion for summary judgment as a motion to dismiss because I didn\'t think you could reach the jurisdictional question on your motion for summary judgment."

The court almost immediately following this statement then made the following further observation:

"So that I must say in all frankness that I was prepared to render partial summary judgment on the basis that 1498 is a jurisdictional section and not procedural."

We assume that the court did not intend to make contradictory statements back to back. We gather therefore that the reference to the court being prepared "to render partial summary judgment" means in effect that the court would have dismissed the action before it. This statement could have had no greater meaning than that while there may or may not have been infringements elsewhere, there was no basis for infringement litigation in the Northern District of Illinois. The reference to a partial summary judgment presumably meant that the plaintiff was not precluded from attempting to show infringement of a non-governmental type in some other forum.

The district court then indicated that it would dismiss the case with prejudice to its being refiled in the Seventh Circuit. Over objection by plaintiff, the court stated that it "now holds it has discretion to apply conditions and that is what it is doing, so, it will amend that order to dismiss this case with prejudice in this Circuit."

The reference to the "order" being amended is not entirely clear as no order of dismissal had been entered with regard to plaintiff's notice of dismissal filed pursuant to Rule 41(a)(1) (i). As will be developed hereinafter, no order is contemplated or needed in the 41(a)(1)(i) situation.

In any event, the district court made the following order on October 30, 1970:

"Having heard counsel in open court, it is hereby Ordered: That the Notice of Dismissal filed herein on October 28, 1970 is amended so

"That the above-captioned action be dismissed with prejudice to plaintiff reinstituting the suit within this Circuit."

It is from this order that the present appeal is taken.

On the assumption that protracted and extended litigation is of no real ultimate benefit to any of the involved parties, cause exists to query the purpose of machinations such as those here involved.⁴ However, the situation has been presented to us and it is necessary we attempt to unscramble the procedural eggs.

Rule 41(a)(2), Fed.R.Civ.P., provides for the district court dismissing actions upon the plaintiff's instance by order "and upon such terms and conditions as the court deems proper." No corresponding provision for the imposition of terms and conditions is found in Rule 41(a)(1)(i). The pertinent language of that portion of Rule 41(a)(1)(i) is clear and seemingly not subject to misinterpretation: "... an action may be dismissed by the plaintiff without order of court (i) by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs...."

If Scam was entitled to 41(a)(1)(i) procedure its voluntary dismissal automatically terminated the action upon the filing of the dismissal with the clerk. No order of court was required. Miller v. Reddin, 422 F.2d 1264, 1266 (9th Cir. 1970).

In American Cyanamid Company v. McGhee, 317 F.2d 295, 297 (5th Cir. 1963), the impact of the proper filing of notice of dismissal was pungently phrased as follows:

"That document itself closes the file. There is nothing the defendant can do to fan the ashes of that action into life and the court has no role to play. This is a matter of right running to the plaintiff and may not be extinguished or circumscribed by adversary or court. There is not even a perfunctory order of court closing the file. Its alpha and omega was the doing of the plaintiff alone. He suffers no impairment beyond his fee for filing."

We therefore hold that if Scam was entitled to proceed under Rule 41(a)(1)(i), the case below was effectively dismissed as of October 28, 1970, and any further action by the district court was neither necessary nor of any effect. We must further observe that a reversal would be necessary even if Scam had not been entitled to proceed under 41(a)(1)(i). We find no...