Clayton v. Swift & Company

• Decision Date: 08 June 1955
• Docket Number: Civ. A. No. 1890.
• Citation: 132 F. Supp. 154
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Benjamin CLAYTON, doing business under the fictitious name and style of Refining, Unincorporated, Plaintiff, v. SWIFT & COMPANY, a corporation, Defendant.

132 F. Supp. 154

Benjamin CLAYTON, doing business under the fictitious name and style of Refining, Unincorporated, Plaintiff, v. SWIFT & COMPANY, a corporation, Defendant.

Civ. A. No. 1890.

United States District Court E. D. Virginia, Norfolk Division.

June 8, 1955.

Vandeventer, Black & Meredith, Norfolk, Va., Charles M. Thomas, Washington, D. C., Barron F. Black, for plaintiff.

Williams, Cocke, Worrell & Kelly, Leigh D. Williams, Norfolk, for defendant.

HOFFMAN, District Judge.

Plaintiff, a resident of California, has instituted this action by way of a petition for declaratory judgment against defendant, Swift & Company, incorporated under the laws of the State of Illinois but having a regular and established place of business within this Judicial District and having domesticated in Virginia by appointing the Secretary of the Commonwealth of Virginia as its statutory agent. The petition alleges that plaintiff is the sole owner, by way of assignment, of a certain patent No. 2,247,359; that an actual justiciable controversy exists; that plaintiff's patent is valid and has been infringed upon by defendant; and that defendant has denied the validity of the patent and has refused to pay royalties for the use of the invention or inventions referred to in said patent, which denial and refusal has been in writing. The prayer for relief asks this Court to (1) declare the rights and legal relations of the parties, (2) decree that patent No. 2,247,359 is valid in law, (3) decree that the processes practiced by defendant infringe valid claims of said patent, and (4) grant a preliminary injunction against further infringement by defendant's officers, employees, agents, confederates, and all others controlled by defendant, together with an accounting for damages.

In legal effect, it appears that this is a patent infringement action instituted by way of a petition for declaratory judgment pursuant to the provisions of the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202. The able brief of counsel for plaintiff states that it is the full equivalent of a patent infringement action, and is an alternative remedy open to plaintiff.

Defendant filed a motion to dismiss and, in the alternative, to transfer the action to the United States District Court for the Northern District of Illinois, Eastern Division, in accordance with 28 U.S.C. § 1406(a). The motion to dismiss alleges the failure of the complaint to state a proper venue, and the additional fact that there is no allegation defendant has committed any act of infringement in the Eastern District of Virginia. Counsel freely admit that there is no present contention of any infringement, existing or threatened, within this District. Plaintiff readily concedes that the primary purpose of selecting this Court in which to bring the action is the favorable decision of this Court by the late Judge Luther B. Way in a case upholding the validity of a patent closely related to the patent involved herein. In fact, the patent now under consideration has been referred to as a continuation-in-part of the prior patent, in which case the decree of Judge Way was affirmed by the Circuit Court of Appeals. Proctor & Gamble Mfg. Co. v. Refining, Inc., 4 Cir., 135 F.2d 900. It is not improbable that the pronouncements of the Fourth Circuit in the Proctor & Gamble case furnish a motive for defendant's desire to transfer this action.

The primary question in this case involves a consideration of the general venue statute, 28 U.S.C. § 1391, and the special venue provisions for patent infringement cases, 28 U.S.C. § 1400(b), as applied to petitions for declaratory judgments where plaintiff alleges infringement by defendant. An adjunct to this question of venue is the problem of whether this Court, in a case of doubtful venue, should transfer the action pursuant to 28 U.S.C. § 1406(a) to a District of unquestioned venue.

It is interesting to note the provisions of the venue statute relating to patent infringement cases. § 1400(b) of 28 U.S.C. provides as follows:

"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".

If it be true that a plaintiff may, by proceeding under the Federal Declaratory Judgment Act, obtain the "full equivalent" of a patent infringement action, then Congress would do well to repeal § 1400(b) as it would, in effect, be meaningless as to a corporate defendant. While it is fundamental that the existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate under Rule 57 of the Federal Rules of Civil Procedure, 28 U.S.C.A., it does not necessarily follow that the venue of such an action falls under 28 U.S.C. § 1391, which is the general venue statute and, as applied to this case, would, but for the provisions of § 1400 (b), permit the action to be brought in this District as the defendant is a corporation licensed and doing business within the Eastern District of Virginia.

Essentially all of the cases instituted under the Declaratory Judgment Act involve plaintiffs who are alleged infringers and are desirous of determining their rights to prevent the accumulation of large damages in the event of an adverse decision. It is no longer necessary to await the institution of a patent infringement action under § 1400 (b) by the owner. Such declaratory judgment actions have universally been held to be subject to the general venue statute (now § 1391, formerly § 51). Crosley Corporation v. Westinghouse Electric & Mfg. Co., 3 Cir., 130 F.2d 474, certiorari denied 317 U.S. 681, 63 S.Ct. 202, 87 L.Ed. 546; American Blower Corp. v. B. F. Sturtevant Co., D.C.S.D. N.Y., 61 F.Supp. 756; Hook v. Hook & Ackerman, Inc., D.C.W.D.Pa., 89 F.Supp. 238; Independent Pneumatic Tool Co. v. Chicago Pneumatic Tool Co., D.C.N.D. Ill., 74 F.Supp. 502. In view of these decisions, plaintiff urges that this Court should disregard the provisions of § 1400(b).

The leading case of Neirbo Co. v. Bethlehem Shipbuilding Corp., Ltd., 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167, 128 A.L.R. 1437, is authority for the proposition that a designation by a foreign corporation of an agent for service of process is tantamount to a waiver of venue. While the Neirbo case involved a question of diversity of citizenship, courts have applied the same rule in patent declaratory judgment actions. American Blower Corp. v. B. F. Sturtevant Co., supra; Independent Pneumatic Tool Co. v. Chicago Pneumatic Tool Co., supra; Crosley Corporation v. Westinghouse Electric & Mfg. Co., supra 130 F.2d 476, in which the Court, in referring to the Neirbo case, had this to say:

"This, however, would only enlarge the venue of suits against a corporate patent owner and then only to states in which it had appointed a local agent for service of process".

This Circuit has applied the rule of the Neirbo case in Knott Corp. v. Furman, 4 Cir., 163 F.2d 199, but this latter opinion did not involve a patent infringement action by way of declaratory judgment.

The question now before this Court was squarely presented in Carbide & Carbon Chemicals Corp. v. United States Industrial Chemicals, Inc., 4 Cir., 140 F.2d 47, 50. Had the Fourth Circuit specifically passed upon the issue, it is improbable that there would be any controversy before this Court at this time. An action by way of declaratory judgment as to the validity of a patent was instituted in the Federal Court in Maryland. Plaintiff and defendant were incorporated under the laws of New York and Delaware respectively. Defendant was qualified to do business in Maryland and had appointed an agent therein. No infringement was alleged to have occurred in Maryland, in fact, an infringement was only threatened as contrasted with an alleged infringement in the instant case. In affirming the action of the District Court in granting the motion to dismiss, Judge Parker said:

"It is not necessary, however, that we decide the jurisdictional question. The fact that it was present, that it presented grave difficulties and that a prior suit was pending in a court of unquestioned jurisdiction where the issues could be fully determined, was adequate ground for the exercise of the discretion involved in the dismissal".

In the case at bar there is no prior suit pending in a court of unquestioned jurisdiction, but this case could be transferred to such a jurisdiction if "doubtful venue" is of sufficient importance to be considered as ground for transfer under 28 U.S.C. § 1406(a). In the opinion of this Court such a factor should be given great weight in exercising appropriate discretion in such a case, thereby avoiding the delay and expense incident to litigation in a District where the venue is at least doubtful. Certainly, to this extent, the case of C-O-Two Fire Equipment Co. v. Barnes, 7 Cir., 194 F.2d 410, 415, affirmed by divided Court, ...