Chas. Pfizer & Co. v. Laboratori Pro-Ter Prodotti Therapeutici

• Decision Date: 06 October 1967
• Docket Number: No. 67 Civ. 2566.,67 Civ. 2566.
• Citation: 278 F. Supp. 148
• Parties: CHAS. PFIZER & CO., Inc., Plaintiff, v. LABORATORI PRO-TER PRODOTTI THERAPEUTICI S. p. A., Raritan Chemical Corporation, and Rarisphere Corporation, Defendants.
• Court: U.S. District Court — Southern District of New York

278 F. Supp. 148

CHAS. PFIZER & CO., Inc., Plaintiff, v. LABORATORI PRO-TER PRODOTTI THERAPEUTICI S. p. A., Raritan Chemical Corporation, and Rarisphere Corporation, Defendants.

No. 67 Civ. 2566.

United States District Court S. D. New York.

October 6, 1967.

COPYRIGHT MATERIAL OMITTED

Dewey, Ballantine, Bushby, Palmer & Wood, New York City, for plaintiff, Arthur G. Connolly, Sr., Thomas S. Lodge, Arthur G. Connolly, Jr., Wilmington, Del., of counsel.

Christen, Sabol, O'Brien & Caldwell, Washington, D. C., and Mitchell & Barker, New York City, for Laboratori ProTer Prodotti Therapeutici S. p. A., appearing specially.

MANSFIELD, District Judge.

The defendant Pro-Ter Prodotti Therapeutici, S. p. A. ("Pro-Ter" herein) moves pursuant to Rules 12(b) (2), (3), (4) and (5), F.R.Civ.P., to dismiss the complaint against it, which alleges infringement of plaintiff's antibiotic (oxytetracycline) patents (U.S. Patents 2,516,080 and 3,017,323) within the district. Pro-Ter, an Italian corporation engaged in manufacture of drugs in Italy, challenges the sufficiency of service of process, the Court's jurisdiction over its person, and venue, for failure to meet the requirements of 28 U.S.C. § 1400(b), since it neither resides in this district nor has a regular and established place of business here.^* The essential facts appear to be as follows:

Pro-Ter has had a representative in the Southern District of New York (the Raritan-Rarisphere corporations, who are named as co-defendants) for four years (Rubenstein Deposition (hereinafter "R.D."), p. 5). Mr. Rubenstein, the vice-president of both corporations, has been the officer in charge of Pro-Ter's business in the United States, having visited Pro-Ter's plant in Milan and been in charge of extensive relations with Pro-Ter and its customers in the United States. The New York representative offers Pro-Ter's products for sale subject to the approval of Pro-Ter (R.D. 6), signs applications for Food & Drug Administration certification of Pro-Ter's products, and receives certain mailings from that agency (R.D. 15-16). One shipment of oxytetracycline has been made into this country by Pro-Ter. It went to Brooklyn (R.D. 22). The representative has transmitted six or seven orders for oxytetracycline which have been accepted by Pro-Ter (but none had been shipped as of the time of the deposition (R.D. 26)), and it has placed advertisements for Pro-Ter in a trade publication (R.D. 34). On some occasions an officer of Pro-Ter has been with the New York representative when the latter talked to prospective purchasers (R.D. 38). Samples of Pro-Ter's products have been shipped by Pro-Ter to the New York representative (R.D. 49). An officer of the New York representative has represented to a number of drug buyers in the United States that he would sell to them on behalf of Pro-Ter (R.D. 52). When purchases were made the letter of credit ran directly to Pro-Ter (R.D. 64). The New York representative's only compensation has been a commission based upon actual sales (R. D. 65), and there has been a commission contract in effect between Pro-Ter and Rarisphere (R.D. 72). Pro-Ter does not direct or control the activities of the New York representative, which engages in other business and for other companies (R.D. 67).

There can be no serious doubt about the insufficiency of the foregoing activities to satisfy the requirement of the patent venue statute that the defendant either reside in the district or have a "regular and established place of business" there. 28 U.S.C. § 1400(b); see Ruddies v. Auburn Spark Plug Co., 261 F.Supp. 648 (S.D.N.Y.1966); Brevel Prods. Corp. v. H. & B. American Corp., 202 F.Supp. 824 (S.D.N.Y.1962); Mastantuono v. Jacobsen Mfg. Co., 184 F. Supp. 178 (S.D.N.Y.1960); Bradford Novelty Co. v. Manheim, 156 F.Supp. 489 (S.D.N.Y.1957); Kamkap, Inc. v. Worldsbest Indus., Inc., 140 F.Supp. 854 (S.D.N.Y.1956). See also Railex Corp. v. White Machine Co., 243 F.Supp. 381 (E.D.N.Y.1965). Although recent decisions, Watsco, Inc. v. Henry Valve Co., 232 F.Supp. 38 (S.D.N.Y.1964) and Stiegele v. Jacques Kreisler Mfg. Corp., 213 F.Supp. 494 (S.D.N.Y.1962), indicate a more flexible approach in determining the weight to be given to solicitation activities for purposes of deciding whether they amount to the maintenance of a regular and established business, the conduct here falls short of that found sufficient in those cases. Accordingly, if the plaintiff here were required to satisfy this condition of 28 U.S.C. § 1400(b), Pro-Ter's motion to dismiss would be granted.

There remains, however, the question of whether venue is governed exclusively by the restrictive patent venue statute, 28 U.S.C. § 1400(b), or whether, at least in the case of a suit against an alien, it may be based on 28 U.S.C. § 1391(d), the general venue statute, which provides that "An alien may be sued in any district", the term "alien" having been interpreted to include alien corporations. State of Maryland For the Use of Mitchell v. Capital Airlines, Inc., 199 F.Supp. 335 (S.D.N.Y.1961); Japan Gas Lighter Assn. v. Ronson Corp., 257 F.Supp. 219 (D.N.J.1966); Bator v. Boosey & Hawkes, Ltd., 80 F. Supp. 294 (S.D.N.Y.1948) (alien venue rule applied to foreign corporation prior to § 1391(d)'s enactment). Pro-Ter, relying mainly on the Supreme Court's decision in Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 77 S. Ct. 787, 1 L.Ed.2d 786 (1957), and the Seventh Circuit's recent decision in Coulter Electronics Inc. v. A. B. Lars Ljungberg & Co., 376 F.2d 743 (7th Cir. 1967), contends the venue in patent infringement suits must be governed exclusively by 28 U.S.C. § 1400(b), and that it is neither supplemented by, nor dovetails with, § 1391(d).

In Fourco the Supreme Court, in holding that § 1400(b)'s requirements were exclusive in a suit against a domestic corporation, based its decision on the fact that when Congress re-enacted § 1400(b) in 1948, it expressed no intent (either in the Reviser's Notes or the text) that it should be supplemented by § 1391(c), after a prior Supreme Court decision clearly held that the requirements of § 1400(b)'s predecessor (§ 48 of the Judicial Code, 28 U.S.C. (1940 ed.) § 109) was the sole provision governing venue in a suit against a domestic corporation, and was exclusive with respect to § 1392(a)'s predecessor (§ 52 of the Judicial Code, 28 U.S.C. (1940 ed.) § 113). Stonite Prods. Co. v. Melvin Lloyd Co., 315 U.S. 561, 62 S.Ct. 780, 86 L.Ed. 1026, where the Court held:

"`that Section 48 is the exclusive provision controlling venue in patent infringement proceedings' and `that Congress did not intend the Act of 1897 which had become § 48 of the Judicial Code, 28 U.S.C. (1940 ed.) § 109 to dovetail with the general provisions relating to the venue of civil suits, but rather that it alone should control venue in patent infringement proceedings.'" (Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. at 225, 77 S.Ct. at 789, quoting 315 U.S. at 563, 566, 62 S.Ct. at 781, 782.)

As applied to suits against domestic corporations, there were sound reasons supporting the Supreme Court rationale of Congressional intent as to the relationship between § 1400(b) and § 1391 (c). In enacting § 1400(b) Congress was proceeding on the assumption that jurisdiction could always be acquired over a domestic infringer in some federal district in the United States. Hardship, inconvenience and additional expense might be visited upon a defendant, however, if it were required to respond in any district where it infringed rather than in the district where it resided or had a regular and established place of business. Congress therefore limited a plaintiff to suit in the latter district. The effect of holding § 1400(b) exclusive in suits against a domestic corporation, therefore, has not been to deny the plaintiff relief but merely to require that he seek relief in a prescribed district.

Neither the legislative history of § 1391(d), which deals with suits against aliens, nor the jurisdictional assumption underlying the venue requirements for suits against domestic infringers, supports a similar conclusion with respect to the relationship between § 1400(b) and § 1391(d). On the contrary, Fourco's rationale, which was based almost entirely on the Reviser's Notes, indicates a Congressional intent that the requirements of § 1400(b) were not to be exclusive in suits against aliens but were to be supplemented by § 1391(d). With respect to § 1391(d) the Reviser's Note reads:

"Subsection (d) of this section is added to give statutory recognition to the weight of authority concerning a rule of venue as to which there has been a sharp conflict of decisions. See (Sandusky Foundry & Machine Co. v. De Lavand, 1918, D.C.Ohio, 251 F. 631, 632 sic, and cases cited. See also Keating v. Pennsylvania Co., 1917, D. C.Ohio, 245 F. 155 and cases cited.)"

Sandusky Foundry, the decision expressly accepted as authority by the Revision Note, was a patent infringement suit against an alien in which the Court held that § 48 of the Judicial Code (the predecessor of § 1400(b)) did not run contrary to the general rule allowing the institution of such a suit in any district where process might be served. The Court said:

"The defendants who have appeared are aliens. It seems to be settled law that they are not inhabitants of any district, and may be sued in any district within which process can be served on them. It was so held under what is now section 48 of the Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1100 Comp.St.1916, §§ 1024, 1030) in United Shoe Machinery Company v. Duplessis Company (C.C.) 133 F. 930. Such is said to be the law in Walker on Patents (5th Ed.) § 389. The same holding has been repeatedly made under section 51 of the Judicial Code (Comp.St.1916, § 1033) as applied to causes of action other than suits arising under the patent laws. In re Hohorst, 150 U.S. 653, 14 S.Ct. 221, 37 L.Ed. 1211; Barrow

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