Aronson v. Orlov

• Decision Date: 03 July 1917
• Citation: 116 N.E. 951,228 Mass. 1
• Parties: ARONSON et al. v. ORLOV et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

228 Mass. 1

116 N.E. 951

ARONSON et al.

v.ORLOV et al.

Supreme Judicial Court of Massachusetts, Suffolk.

July 3, 1917.

Appeal from Superior Court, Suffolk County; Jabez Fox, Judge.

Bill by Abraham Aronson and others against George Orlov and others. From a decree for plaintiffs, defendants appeal. Affirmed, and ordered that final decree be entered for plaintiffs.Dunbar, Nutter & McClennen, of Boston (Geo. R. Nutter and Adolf A. Berle, Jr., both of Boston, of counsel), for appellants.

Samuel Sigilman and Chas. H. Dow, both of Boston, for appellees.

RUGG, C. J.

The case, as stated in the bill, is that the plaintiffs are and for a long time have been manufacturers of petticoats in Boston and sellers of the same to large retail dealers in various parts of the country; that in November, 1912, one of them, named H. Aronson, conceived an invention to remedy some of the difficulties encountered in the use of close-fitting petticoats by providing a certain amount of elasticity in connection with the seams; that later he filed an application for a patent on this invention; that the plaintiffs subsequently manufactured petticoats in accordance with the idea of H. Aronson, which were called ‘Flexo Seam’; that in December, 1912, two of the defendants, Fatherson and Wachtel, were in the employ of the plaintiffs and by reason and in the course of that employment the plaintiffs communicated to them the knowledge of this improvement; that subsequently Fatherson and Wachtel left the employ of the plaintiffs and entered into an arrangement with Orlov, the other defendant, who was not then a manufacturer of petticoats and who knew all the circumstances, whereby they were to develop the Aronson idea and then Orlov was to manufacture and sell petticoats in competition with the plaintiffs among their customers, and that this plan had been carried out, and that letters had been written by the defendants to the customers of the plaintiffs threatening them with prosecution for infringement of alleged rights of the defendant Orlov under the patent laws, whereby certain customers were caused to break contracts with the plaintiffs for the purchase of petticoats of their manufacture, and other prospective purchasers were deterred from entering into contracts for such purchases, all to the great damage of the plaintiffs. The defendants answered, in substance admitting none of these allegations and denying them all. The case was sent to a master. His findings support in all essential particulars the averments of the bill, except that it is not clear whether Wachtel learned of the proposed improvement conceived by Aronson while in the plaintiffs' employ, or was told of it by Fatherson, who learned of it directly from Aronson. But he finds in addition that the attorney of Orlov and the defendant Fatherson filed an application for a patent in January, 1914, which has not been disallowed, and that in the April or May following Aronson filed an application for a patent which has been disallowed. The defendants, in the name of the defendant Orlov, in April and May, 1914, wrote and mailed 2,000 or 3,000 letters to the trade throughout the United States, including those known to them to be customers of the plaintiffs. These letters stated in substance that petticoats of their manufacture, called ‘Wundre Seam,’ were patentable and that patents had been applied for and that ‘I am the assignee and owner of these patent rights'; that the writer was informed that attempts were ‘being made to manufacture and sell similar articles,’ and notified the recipient that ‘the purchase by you or offering of such articles for sale will be an infringement on my rights and make you liable to me for damages.’ This letter was sent, according to the master's finding, not only to the trade, but to the plaintiffs' customers, ‘with the deliberate purpose of injuring the plaintiffs' sales of the Flexo Seam garments,’ the trade-name adopted by the plaintiffs for the garments manufactured by them in accordance with the idea conceived by H. Aronson.

Apart from the questions arising because of the applications for patents, it is plain that the plaintiffs make out a case for equitable relief on the facts found by the master. The idea of the improvement in the manufacture of garments was Aronson's. It was not a mere nebulous phantom of the fancy, but a definite conception of a material device so simple that its mere statement would convey as clear a notion as would a model of a complicated mechanism. This idea was used rightfully by the plaintiffs. Fatherson was the first of the defendants to know of that idea and he learned of it solely by reason of and in the course of his employment by the plaintiffs. The doctrine is well settled that an employé cannot lawfully use for the advantage of a rival and to the harm of his employer confidential information which he has gained in the course of his employment. This rests upon the implied contract, growing out of the nature of the relation, that the employé will not after the termination of his service use information gained during the period of his employment to the detriment of his former employer. This doctrine has been frequently applied in this Commonwealth and it prevails generally. Peabody v. Norfolk, 98 Mass. 452, 96 Am. Dec. 664;American Stay Co. v. Delaney, 211 Mass. 229, 97 N. E. 911, Ann. Cas. 1913B, 509;Essex Trust Co. v. Enwright, 214 Mass. 507, 102 N. E. 441,47 L. R. A. (N. S.) 567. See American Circular Loom Co. v. Wilson, 198 Mass. 182, 207, 84 N. E. 133,126 Am. St. Rep. 409;Agawam Co. v. Jordan, 7 Wall. 583, 602, 19 L. Ed. 177.

It is also true, as decided by these and other cases, that equity will enjoin interference with the right of a manufacturer to his own trade secrets and will prevent continuance of violation of duty by a former employé in divulging them, and will give relief in damages for injury already inflicted. There is a plain distinction between instances where employés leave one employer and use their own faculties, skill and experience in the establishment of an independent business or in the service of another, and instances where they use confidential information secured solely through their employment to the harm of their previous employer. The plaintiffs have clear ground for relief against their former employés, Fatherson and Wachtel. The former, at least, has appropriated the Aronson idea for improvement in dress design acquired solely through his employment. The latter participated in, if he did not frame, the scheme whereby Orlov was to embark in the business of manufacturing petticoats in competition with the plaintiffs by the use of the information which he and Fatherson had acquired wholly through their employment by the plaintiffs. Orlov in this respect stands no better than the other two defendants. The Aronson idea was communicated to him by one or both of his co-defendants. At the first meeting of the three, the previous employment and experience of Fatherson with the plaintiffs formed the subject of the conference. Orlov and Wachtel were well acquainted. The inference is irresistible that one of his dominating motives in forming the arrangement with the other two was the knowledge that there would be at his disposal the Aronson idea of garment design. Under these circumstanceshe is on the same footing and subject to the same liabilities as Wachtel and Fatherson. Morison v. Moat, 9 Hare, 241 263.

It is contended that the subject-matter of this suit is within the exclusive jurisdiction of the federal courts and that, therefore, the state court is without jurisdiction. That contention rests upon the theory that the case arises under the patent laws of the United States. By the Constitution and laws of the United States exclusive jurisdiction ‘of all cases arising under the patent right or copyright laws of the United States' is vested in the courts of the United States. Constitution of United States, art. 1, § 8; Judicial Code March 3, 1911, c. 231, § 256, 36 U. S. Stat. at Large, 1160. The question presented is whether the present suit is ‘a cause arising under the patent right or copyright laws.’ The meaning of these words has been settled by numerous decisions. It was said in Pratt v. Paris Gaslight & Coke Co., 168 U. S. 255, 259, 18 Sup. Ct. 62, 64 (42 L. Ed. 458):

‘There is a clear distinction between a case and a question arising under the patent laws. The former arises when the plaintiff in his opening pleading-be it a bill, complaint or declaration-sets up a right under the patent laws as ground for a recovery. Of such the state courts have no jurisdiction. The latter may appear in the plea or answer or in the testimony. The determination of such question is not beyond the competency of the state tribunals.’

This statement has been cited with approval frequently. Excelsior Wooden-Pipe Co. v. Pacific Bridge Co., 185 U. S. 282, 286, 22 Sup. Ct. 681, 46 L. Ed. 910;Minn. v. Northern Securities Co., 194 U. S. 48, 64, 24 Sup. Ct. 598, 48 L. Ed. 870. Suits, although involving the patent laws of the United States, are not cases under the patent laws ‘where they do not turn upon a controversy between the parties in regard to the operation of’ such laws on the facts. Bankers' Casualty Co. v. Minneapolis, St. Paul & Sault Ste. Marie Ry., 192 U. S. 371, 384, 24 Sup. Ct. 325, 48 L. Ed. 484. Said Mr. Justice Lurton in Henry v. Dick Co., 224 U. S. 1, at 16, 32 Sup. Ct. 364, 367 (56 L. Ed. 645, Ann. Cas. 1913D, 880):

‘The test of jurisdiction is this: Does the complainant ‘set up some right, title or interest under the patent laws of the United States, or make it appear that some right or privilege will be defeated by one construction or sustained by another, of those laws.’?'

It was said by Mr. Justice Gray in David v. Park, 103 Mass. 501, 503:

‘Questions of the existence, validity or construction of letters patent for inventions, when arising collaterallyin a suit in a ...