B. HELLER & COMPANY v. First Spice Manufacturing Corp.
| Decision Date | 06 April 1959 |
| Docket Number | No. 58 C 687.,58 C 687. |
| Citation | 172 F. Supp. 46 |
| Parties | B. HELLER & COMPANY, Plaintiff, v. FIRST SPICE MANUFACTURING CORP. and First Spice Mixing Co., Inc., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Schneider, Dressler, Goldsmith & Clement, Chicago, Ill., for plaintiff.
Olson, Mecklenburger, VonHolst, Pendleton & Neuman, Chicago, Ill., for defendants.
This is a suit for infringement of plaintiff's Patent No. 2,491,646, which relates to a process of treating meat to improve its color by the use of nicotinic acid or a salt thereof.
Plaintiff alleges that defendant manufacturing company manufactures a product containing sodium nicotinate for the treatment of meat to improve its color and that defendant Mixing company is a sales company for the manufacturing company and sells the product. Plaintiff further alleges that neither defendant practices the process of the patent, but that each defendant is a contributory infringer of the patent under 35 U.S.C. § 271(c) because the manufacturing company makes and the mixing company sells a composition which is especially adapted to be used in an infringing process.
Defendants have appeared specially and move to quash return of service and to dismiss for improper venue.
The following basic facts are revealed in the pleadings, affidavits and briefs of the parties. Each of the two defendant corporations is a New York corporation whose principal activities take place in New York and who apparently carry on no business activities within this district except by participating as associate members in the regular annual meetings of the National Independent Meat Packers Association and the American Meat Institute in Chicago, Illinois. At these annual meetings defendants occupy space rented to them for displaying their goods. Defendants' products are demonstrated and orders are solicited and taken by them during this exhibition. Defendant mixing company has, on occasion, sold the product in question within this district.
One Mr. Epstein, the president of each of the defendant corporations, was on April 19, 1958, served with process herein while he was in Chicago with a display of the goods of defendant mixing company in an exhibition booth during a period of three days as a part of a trade show held by the National Independent Meat Packers Association. This service the defendants now challenge by the pending motion.
The problems of jurisdiction and venue presented in patent infringement cases seem to me to have been mostly left unresolved in the scores of cases which have touched upon these subjects.
A simple and logical approach, yet one which has received little expression, might be to base jurisdiction of a foreign corporation in patent infringement cases upon the traditional test of "doing business" or upon the "minimum contacts" test thus establishing the "presence" of the corporation within the district. 28 U.S.C. § 1400(b) would then clearly relate to venue only which would simplify its interpretation and application.
Unfortunately, however, the interpretation of jurisdiction and venue in patent infringement cases is not that simple due to a half century of Congressional legislation and judicial interpretation.
Actions for infringement of patent, being transitory in nature, could formerly be brought in any district in which the defendant was an inhabitant, or could be found. In re Hohorst, 150 U.S. 653, 661, 14 S.Ct. 221, 37 L.Ed. 1211. However, by a statute of March 3, 1897, re-enacted by Act of March 3, 1911, Chap. 231, Sec. 48 (36 Stat. 1100; 28 U.S.C. § 109) such suits were restricted to the district of which the defendant was an inhabitant, or to any district in which the defendant whether a person, partnership, or corporation, committed acts of infringement and had a regular and established place of business. This section (28 U.S.C., 1940 ed., Sec. 109) provides:
Thus it seems evident that Congress intended that the forum of a patent infringement suit should be one reasonably convenient to the defendant. Up-Right, Inc. v. Aluminum Safety Products, Inc., D.C., 165 F.Supp. 742. In the incorporation of Sec. 109 into our present Code, Congress made some changes in phraseology and also divided the section so that 28 U.S.C. § 1400(b) which specifically governs venue in cases of patent infringement provides:
Thus, both sections employ the phrase "regular and established place of business" and both are based upon 28 U.S.C., 1940 ed., Sec. 109.
Venue in a general sense is a personal privilege of a party which may be asserted or waived. Commercial Casualty Ins. Co. v. Consolidated Stone Co., 278 U.S. 177, 49 S.Ct. 98, 73 L.Ed. 252; Cyclopedia of Federal Procedure, Sections 4.01, 4.49, 4.51. However, Congress has in many cases provided specifically in what districts only particular suits may be brought and where such venue statutes are jurisdictional, and not merely a privilege to a party for his convenience, a different situation exists. Granite Trust Bldg. Corp. v. Great Atlantic Pac. T. Co., D.C., 36 F.Supp. 77.
It is my opinion that such was the intention of Congress in enacting 28 U.S.C. 1940 ed. Sec. 109. The very wording of the statute "* * * the district courts * * * shall have jurisdiction * * * in the district in which the defendant * * * shall have committed acts of infringement and have a regular and established place of business. * * *" is indicative of such intention. Certainly, Congress has the power to so limit jurisdiction. Shelton v. Schwartz, 7 Cir., 131 F.2d 805, 807. The Supreme Court of the United States in construing this section stated:
"Section 48 (Sec. 109) gives jurisdiction of suits for patent infringement to the United States district courts in the district of which the defendant is an inhabitant or in any district in which the defendant shall have committed acts of infringement and have a regular and established place of business." Stonite v. Melvin Lloyd Co., 315 U.S. 561, 562, 62 S.Ct. 780, 86 L.Ed. 1026. (Italics supplied).
It is clear from this interpretation and numerous other cases construing Sec. 109, that jurisdiction of a district court over the person of a non-inhabitant defendant corporation depends upon the commission of acts of infringement and the existence of a "regular and established place of business" within the district. Blaw-Knox Co. v. Lederle, 6 Cir., 151 F.2d 973; Bulldog Electric Products Co. v. Cole Electric Products Co., 2 Cir., 134 F.2d 545; Shelton v. Schwartz, 7 Cir., 131 F.2d 805; James P. Marsh Corp. v. United States Gauge Co., 7 Cir., 129 F.2d 161; Phillips v. Baker, 9 Cir., 121 F.2d 752; Arkay Infants Wear v. Klines Inc., D.C., 85 F.Supp. 98; Gibbs v. Emerson Electric Mfg. Co., D.C., 29 F.Supp. 810.
Thus, under Sec. 109, if a non-inhabitant corporation does not commit an act of infringement within the district or does not have a "regular and established place of business" within the district, service of process upon the corporation, by any method and to any officer or agent will not act to give a district court jurisdiction over the corporation in a patent infringement action. Furthermore, the "doing business" in a district is not of itself sufficient to confer jurisdiction in patent infringement suits. See Phillips v. Baker, 9 Cir., 121 F.2d 752, 755, and cases there collected. For jurisdictional purposes, a corporation under Sec. 109 is only present within a district and amenable to service of process if it is an inhabitant of the district or if it has committed acts of infringement and has a "regular and established place of business" therein.
There is an exception to this rule which I shall here discuss. Unfortunately, this exception seems to have become confused because many cases have erroneously used and construed the terms "waiver" and "venue" in regard to Sec. 109. The principal decision and the one upon which most other decisions rely is General Electric Co. v. Marvel Co., 287 U.S. 430, 53 S.Ct. 202, 77 L.Ed. 408. In this case, a counterclaim was filed by the defendant against the plaintiff for infringement of its patent. The plaintiff was not an inhabitant of the district, nor did it have a place of business in the district and had committed no acts of infringement within the district. It is true that in refusing to grant plaintiff's motion to dismiss the counterclaim for lack of jurisdiction, the Supreme Court in reference to Sec. 109 did use the term "venue" and made the statement that it was a privilege which could be "waived". However, immediately following this statement, 287 U.S. at page 435, 53 S.Ct. at page 204, the Court concludes:
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