Joseph Bancroft & Sons Co. v. Spunize Co. of America
| Decision Date | 01 July 1959 |
| Docket Number | Docket 25519.,No. 310,310 |
| Citation | 268 F.2d 522 |
| Parties | JOSEPH BANCROFT & SONS CO., Plaintiff-Appellee, v. SPUNIZE CO. OF AMERICA, Incorporated, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Second Circuit |
Charles J. Nager, Fennelly, Eagan, Nager & Lage, New York City, for defendant-appellant. Melvin S. Katz, Levine & Katz, Hartford, Conn., Henry N. Paul, Jr., Austin R. Miller, Paul & Paul, Philadelphia, Pa., of counsel.
Victor D. Borst, Alan W. Borst, Borst, Leek & Des Marais, New York City, for plaintiff-appellee. Edmond M. Bartholow, Rockwell & Bartholow, New Haven, Conn., of counsel.
Before SWAN, HINCKS and MOORE, Circuit Judges.
This is an appeal by defendant, hereafter called Spunize, from an order entered in a declaratory judgment action wherein the plaintiff, hereafter called Bancroft, sought an adjudication that Patent No. 2,715,309 owned by Spunize is invalid. The patent contains only a single claim. This is for a product, namely, a yarn of synthetic resin material whose filaments are crimped in a particular manner.1 The complaint, filed August 1, 1958, alleges that Bancroft owns or controls numerous patents relating to method and apparatus for the crimping of filament yarn; that it has made license agreements with many yarn manufacturers under which it receives royalty payments; that one of its licensees is The Duplan Corporation, hereafter called Duplan; that on July 11, 1958 Spunize filed suit in the United States District Court for the Middle District of North Carolina charging Duplan with infringement of Patent No. 2,715,309 and that such suit "is a direct attack upon the legality" of Bancroft's outstanding license agreements. Before answering the complaint Spunize moved to dismiss the action or, in the alternative, to transfer it to the Middle District of North Carolina, or to stay it. Thereafter Bancroft moved for an injunction to restrain Spunize from prosecuting its infringement suit against Duplan. The motions were heard on supporting and opposing affidavits. The motions of Spunize were denied and Bancroft's motion was granted. From the order entered December 16, 1958 Spunize has appealed.
Appellant contends that Bancroft's complaint should have been dismissed because there was no "actual controversy" between Bancroft and Spunize, as required by the Declaratory Judgment Act. We think there was an actual controversy between them. Under paragraph 14 of its license agreement with Duplan, Bancroft was obligated to pay the attorneys fees and taxable costs of Duplan in the infringement suit brought by Spunize, and could have intervened therein. Consequently an actual controversy existed between Bancroft and Spunize as to the validity and the infringement by Duplan of Patent No. 2,715,309. The fact that Bancroft elected not to intervene or to control Duplan's defense but only to give advice to Duplan's attorneys, does not, we think, negative the existence of an actual controversy between Bancroft and Spunize. Nor is it material that Spunize had never threatened to sue Bancroft for infringement. Simmonds Aerocessories, Ltd. v. Elastic Stop Nut Corp., 3 Cir., 257 F.2d 485, 490; Technical Tape Corp. v. Minnesota Mining & Mfg. Co., 2 Cir., 200 F.2d 876, 878; Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826. We see no error in the district court's denial of Spunize's motion to dismiss the complaint or the alternative motion to transfer or stay the suit.
But the granting of Bancroft's motion to enjoin pendente lite prosecution of the North Carolina suit presents other issues, and we cannot sanction the granting of that motion. The North Carolina suit was properly brought in the only district in which the infringing acts were being committed by Duplan. That court had jurisdiction to determine the validity of Spunize's patent and whether it was being infringed. The suit there would have come to trial in May 1959 if not stayed by the Connecticut injunction. Upon motion of Spunize the North Carolina court might possibly have enjoined pendente lite Duplan's continuance of its alleged infringing acts. The Connecticut injunction prevents the making of such a motion, permits Duplan to continue its challenged conduct, and delays any decision in North Carolina until the Connecticut court shall have determined the questions of validity and infringement of the patent. There is nothing to indicate when the Connecticut suit may be expected to be tried. Moreover, if Spunize is correct...
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...when the indemnitor is not chargeable as a contributory infringer. Nippon, 489 F.Supp. at 122 (noting Joseph Bancroft & Sons Co. v. Spunize Co. of America, 268 F.2d 522, 523 (2d Cir.1959)). The Court is not convinced, however, that the mere fact that an agreement may exist, unsupported by e......
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