William Gluckin & Co. v. International Playtex Corp.

• Decision Date: 28 January 1969
• Docket Number: No. 157,Docket 32623.,157
• Court: U.S. Court of Appeals — Second Circuit
• Parties: WILLIAM GLUCKIN & CO., Inc., Plaintiff-Appellee, v. INTERNATIONAL PLAYTEX CORPORATION, Defendant-Appellant.

407 F.2d 177 (1969)

WILLIAM GLUCKIN & CO., Inc., Plaintiff-Appellee, v. INTERNATIONAL PLAYTEX CORPORATION, Defendant-Appellant.

No. 157, Docket 32623.

United States Court of Appeals Second Circuit.

Argued December 13, 1968.

Decided January 28, 1969.

David H. T. Kane, New York City (Kane, Dalsimer, Kane, Sullivan & Smith, and Siegrun D. Kane, New York City, on the brief), for defendant-appellant.

Hugh Chapin, New York City (Kenyon & Kenyon, New York City, on the brief), for plaintiff-appellee.

Before MOORE, SMITH and HAYS, Circuit Judges.

MOORE, Circuit Judge:

International Playtex Corporation (Playtex) appeals from an order entered in the District Court for the Southern District of New York granting a preliminary injunction which restrains Playtex from further prosecuting a patent infringement suit pending in the United States District Court for the Northern District of Georgia until final disposition of the instant case. The underlying suit here in the Southern District of New York was brought by William Gluckin & Co. (Gluckin) against Playtex for a declaration of patent invalidity and/or non-infringement.

Involved here are two patent infringement suits and the question is which takes priority over the other. The first-commenced action was instituted by the patent holder against the customer of an allegedly infringing manufacturer in the Northern District of Georgia. The second action is a declaratory judgment suit against the patent holder in the Southern District of New York.

On April 25, 1968, Playtex brought a patent infringement action against F. W. Woolworth & Co. (Woolworth), alleging in its complaint that Woolworth was selling a brassiere which infringed a patent which it owned. The action was instituted in the Northern District of Georgia ostensibly because Woolworth was selling the allegedly infringing brassiere at its store in Gainesville, Georgia. Playtex, a Delaware corporation, has three of its five manufacturing plants located in Georgia. Its principal place of business is in New York. Woolworth is a New York corporation, with its principal place of business there, and operates retail stores throughout the nation.

The manufacturer of the challenged brassiere sold by Woolworth is Gluckin, a New York corporation with its principal place of business in New York City. It is not licensed to do business in Georgia and, apparently, not subject to suit there. On May 28, 1968, after Playtex had filed its Georgia action, Gluckin brought a declaratory judgment action for patent invalidity and non-infringement against Playtex in the Southern District of New York.

On July 2, 1968, a preliminary injunction was issued by Judge Motley restraining Playtex from further prosecuting the Georgia suit. Judge Motley held that since the first filed suit was against a customer rather than against Gluckin itself and since New York was the most convenient forum for resolving the questions of patent validity and infringement, special circumstances existed which justified giving priority to the second-filed suit.

The general rule in this Circuit is that, as a principle of sound judicial administration, the first suit should have priority, "absent the showing of balance of convenience in favor of the second action," Remington Products Corp. v. American Aerovap, Inc., 192 F.2d 872, 873 (2d Cir. 1951), Mattel, Inc. v. Louis Marx & Co., 353 F.2d 421, 423 (2d Cir. 1965), petition for cert. dismissed, 384 U.S. 948, 86 S.Ct. 1475, 16 L.Ed.2d 546 (1966), or unless there are special circumstances which justify giving priority to the second. Joseph Bancroft & Sons Co. v. Spunize Co. of America, 268 F.2d 522 (2d Cir. 1959). In deciding between competing jurisdictions, it has often been stated that the balancing of convenience should be left to the sound discretion of the district courts. Mattel, supra, 353 F.2d at 423, 424; Kerotest Mfg. Co. v. C-O Two Fire Equipment Co., 342 U.S. 180, 183, 72 S.Ct. 219, 96 L.Ed. 200 (1951).

In Mattel, supra, two situations were posed which are said to constitute special circumstances justifying a departure from the "first-filed" rule of priority. Id., 353 F.2d at 424. The first example is the so-called "customer action" where the first-filed suit is against a customer of the alleged infringer while the second suit involves the infringer himself. Delamere Company v. Taylor-Bell Company, 199 F.Supp. 55 (S.D.N.Y.1961).

The second example is where forum shopping alone motivated the choice of the situs for the first suit. Rayco Mfg. Co. v. Chicopee Mfg. Co., 148 F.Supp. 588 (S.D.N.Y.1957). This, however, is not applicable to the present case because Judge Motley made no specific finding of forum shopping, nor is one inferable and because the reasons Playtex asserts justifying the choice of a Georgia forum are not wholly frivolous. Compare Rayco Mfg. Co., supra.

Judge Motley, relying on the "customer suit" exception to the first-filed rule mentioned in the Mattel case, granted the preliminary injunction. Playtex insists, however, that there is no reason why the first suit should be enjoined simply because the defendant happens to be a customer rather than a manufacturer. Section 271 of Title 35 declares manufacturing, using or selling infringing products actionable. Each act is identified as an act of infringement and each is proscribed. 35 U.S.C. § 281. Since Woolworth allegedly has itself "sold thousands of dollars of the infringing merchandise" and is "an infringer of the patent in suit every bit as much as the manufacturer of the infringing article" (Playtex Brief, p. 25), Playtex argues that it has the statutory right as a patentee to sue an infringing seller. See Sundstrand Corp. v. American Brake Shoe Co., 315 F.2d 273, 276 (7th Cir. 1963).

Playtex asserts, therefore, that before the first-filed suit can be enjoined, there must be a finding of harassment, Kerotest, supra, 342 U.S. at 185, 72 S.Ct. 219, probable harassment, see Sundstrand, supra, 315 F.2d at 276, or forum shopping, Delamere Company, supra; Helene Curtis Industries, Inc. v. Sales Affiliates, Inc., 105 F.Supp. 886 (S.D.N.Y. 1952), aff'd, 199 F.2d 732 (2d Cir. 1952); Telephonics Corporation v. Lindly & Company, 192 F.Supp. 407 (E.D. N.Y.1960), aff'd, 291 F.2d 445 (2d Cir. 1961); United States Time Corporation v. Hamilton Watch Co., 327 F.2d 338 (2d Cir. 1964). Moreover, to rely on a "natural theatre" test as the District Court did, 294 F.Supp. 876 (S.D.N.Y. July 2, 1968), is said to be making an application of forum non conveniens which is not sanctioned by the statute.¹ See Sundstrand, supra.

In response Gluckin argues that the manufacturer of allegedly infringing goods is the real party in interest in the event his customer is charged with infringement of patents and this principle lies at the basis of judicial restraint on customer actions. Kessler v. Eldred, 206 U.S. 285, 27 S.Ct. 611, 51 L.Ed. 1065 (1907). Under the direction of the Supreme Court in Kerotest, where it was stated

Wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation, does not counsel rigid mechanical solution of such problems. The factors relevant to wise administration here are equitable in nature. Necessarily, an ample degree of discretion, appropriate for disciplined

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