Knitting Machines Corp. v. Hayward Hosiery Co., Civ. No. 7258.

• Citation: 95 F. Supp. 510
• Decision Date: 30 October 1950
• Docket Number: Civ. No. 7258.
• Parties: KNITTING MACHINES CORP. et al. v. HAYWARD HOSIERY CO.
• Court: U.S. District Court — District of Massachusetts

95 F. Supp. 510

KNITTING MACHINES CORP. et al. v. HAYWARD HOSIERY CO.

Civ. No. 7258.

United States District Court D. Massachusetts.

October 30, 1950.

Maxwell Fish and Fish, Richardson, & Neave, all of Boston, Mass., for plaintiffs.

Nathan Heard, Boston, Mass., Walter A. Darby, Louis D. Fletcher, New York City, for defendant.

McCARTHY, District Judge.

This is an action for patent infringement brought by the plaintiffs Knitting Machines Corporation and Kalio, Inc., hereinafter referred to as Kalio, against the defendant Hayward Hosiery Company. The litigation has been long and involved. A motion has been filed by the defendant for an order permitting an amendment to the answer.

There are six patents involved in the action, one called the Liebernecht patent, and five Miller patents. The Liebernecht patent and four of the five Miller patents are concerned in this motion, which concludes with a prayer that the complaint be dismissed as to each of these patents.

The defense which Hayward Hosiery seeks to offer by way of amendment is, briefly, as to each patent: (1) Kalio is the owner of this patent; (2) the United States, through the Attorney General as successor to the Alien Property Custodian, has vested all of the stock of Kalio by virtue of the Trading With the Enemy Act, 50 U.S.C.A.Appendix, and Executive Orders thereunder, and (4) the United States cannot sue any citizen of the United States for infringement of a patent once owned by enemy aliens and now vested by the Attorney General. There is some dispute as to Kalio's ownership of the four Miller patents, but none as to its ownership of the Liebernecht patent. If the argument of defendant fails as to the Liebernecht patent, it must of necessity do so with respect to the others.

Since December of 1943 all of the stock of Kalio has been owned by the United States, it having first been vested by the Alien Property Custodian, later the Attorney General as his successor. The Liebernecht patent, as such, was not vested, but the defendant contends that inasmuch as the United States is the sole stockholder in Kalio, this court should "pierce the corporate veil" and recognize the fact of government ownership of the patent itself. Defendant asserts that since there is no minority interest in Kalio, the patent is owned by the United States as fully and undeniably as though it had been vested directly by the Attorney General.

The answer to the question why the Attorney General or his predecessor in function did not seize the patent directly sheds some light on the problem. Kalio is a domestic corporation organized under the laws of New York. All of the stock of Kalio prior to its seizure was held by alien enemies, and among the assets of the corporation was the patent in question. The stock rather than the corporate property was seized because, with respect to the Trading With the Enemy Act, supra, the property of all domestic corporations is characterized as non-enemy and not subject to seizure,...