Duplan Corporation v. Deering Milliken, Inc.

• Decision Date: 18 October 1971
• Docket Number: 70-14,70-628,71-90,70-295,70-391,70-385,71-92,71-88,69-777,70-968,70-622,71-89,70-189,71-91,71-98,70-493,71-126,71-87,71-96,71-100,68-705,Civ. A. No. 71-306,71-102,70-250,70-683,71-94,69-1096,70-677,71-93,70-358,70-386
• Citation: 334 F. Supp. 703
• Parties: The DUPLAN CORPORATION, Plaintiff, v. DEERING MILLIKEN, INC., et al., Defendants. DEERING MILLIKEN RESEARCH CORPORATION, Plaintiff, v. The DUPLAN CORPORATION and Burlington Industries, Inc., Defendants. The DUPLAN CORPORATION et al., Plaintiffs on the Counterclaim, v. DEERING MILLIKEN RESEARCH CORPORATION, Defendant on the Counterclaim, and Deering Milliken, Inc., et al., Additional Defendants on the Counterclaim.
• Court: U.S. District Court — District of South Carolina

334 F. Supp. 703

The DUPLAN CORPORATION, Plaintiff, v. DEERING MILLIKEN, INC., et al., Defendants.

DEERING MILLIKEN RESEARCH CORPORATION, Plaintiff, v. The DUPLAN CORPORATION and Burlington Industries, Inc., Defendants.

The DUPLAN CORPORATION et al., Plaintiffs on the Counterclaim, v. DEERING MILLIKEN RESEARCH CORPORATION, Defendant on the Counterclaim, and Deering Milliken, Inc., et al., Additional Defendants on the Counterclaim.

Civ. A. Nos. 71-306, 70-968, 69-1096, 68-705, 70-14, 70-250, 70-358, 70-386, 70-493, 70-628, 70-683, 71-88, 71-90, 71-92, 71-94, 71-96, 71-98, 71-100, 71-102, 71-126, 69-777, 70-189, 70-295, 70-385, 70-391, 70-622, 70-677, 71-87, 71-89, 71-91, 71-93, 71-95, 71-97, 71-99, 71-101, 71-115, 71-127, and 71-283.

United States District Court, D. South Carolina, Spartanburg Division.

October 18, 1971.

Thomas A. Evins, Butler, Means, Evins & Browne, Spartanburg, S. C., Jay Greenfield, Simon Rifkind and David Brody, of Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for Deering Milliken, Inc., and Deering Milliken Research Corp.

William M. Cooper, Spartanburg, S. C., Joseph W. Burns, of Burns, Van Kirk, Jube & Kafer, New York City, for Moulinage et Retorderie de Chavanoz.

Rufus M. Ward, Ward, Howell & Barnes, Spartanburg, S. C., Granville A. Brumbaugh, of Brumbaugh, Graves, Donohue & Raymond, New York City, for Ateliers Roannais de Constructions Textiles, (ARCT, France)

R. Hoke Robinson, Thomas T. Moore, Robinson, McFadden & Moore, Columbia, S. C., Arthur O. Cooke, Cooke & Cooke, Greensboro, N. C., for ARCT, Inc.

W. Francis Marion, O. G. Calhoun, Jr., Haynsworth, Perry, Bryant, Marion & Johnstone, Greenville, S. C., John Malley, Wm. K. West, Jr., of Cushman, Darby & Cushman, Washington, D. C., for Burlington Industries, Inc., Madison Throwing Company, Inc., Leon-Ferenbach, Inc. National Spinning Co., Inc.

Fletcher C. Mann, Leatherwood, Walker, Todd & Mann, Greenville, S. C., Charles B. Park, III, of Parrott, Bell, Seltzer, Park & Gibson, Charlotte, N. C., for United Merchants & Manufacturing Inc.

Fletcher C. Mann, Leatherwood, Walker Todd & Mann, Greenville, S. C., Charles B. Park, III, Parrott, Bell, Seltzer, Park & Gibson, Charlotte, N. C., Anthony F. Phillips, Willkie, Farr & Gallagher, New York City, for The Duplan Corp., The Schwarzenbach-Huber Co., Jonathan Logan, Inc., Frank Ix & Sons Va., Corp., Lawrence Texturing Corp. and Burkyarns, Inc. Edward P. Perrin, Perrin, Perrin & Mann, Spartanburg, S. C., David Rabin, McNeill Smith, Smith, Moore, Smith, Schell & Hunter, Greensboro, N. C., for Texfi Industries, Inc., Blanchard Yarn Co., Reliable Silk Dyeing Co., Dixie Yarns, Inc., Tex-Elastic Corp., Hemmerich Industries, Spring-Tex, Inc., Olympia Mills, Textured Fibres, Virginia Mills, Inc., and Throwing Corp. of America.

ORDER

HEMPHILL, District Judge.

Motions to dismiss for lack of jurisdiction by defendants Moulinage et Retorderie de Chavanoz (referred to hereinafter as "Chavanoz") and Ateliers Roannais de Construction Textiles (referred to hereinafter as "ARCT-France") invite decision in this forum. The issue projected is whether, under the facts displayed before this court the South Carolina contacts of Chavanoz and ARTC-France are of such sufficiency in kind and extent, such quality and nature, to give this court that in personam jurisdiction to allow plaintiff Duplan Corporation, et al, and certain defendants, to proceed against them in the United States District Court for the District of South Carolina. This issue immediately focuses attention on the application of South Carolina's "long arm" statutes¹, and hopeful reconciliation of those statutes with the constitutional considerations propounded by the United States Supreme Court and courts of appellate jurisdiction.

Initially, this litigation was instituted by Deering Milliken Research Corporation (referred to hereinafter as DMRC) to collect moneys allegedly due from Textured Fibres, Inc., and others, for payments due under licensing agreements between DMRC and those licensees, known as "throwsters". The litigation has been subject of considerable judicial treatment. See Textured Fibres, Inc. v. Deering Milliken Research Corp. (D.C. S.C.1969) 302 F.Supp. 487, reversed 415 F.2d 875 (4th Cir. 1969) reviewed (D.C. 1970) 310 F.Supp. 491; Throwing Corp. of America v. Deering Milliken Research Corp. (D.C.1969), 302 F.Supp. 487; Leesona Corp. v. Cotwool Mfg. Corp., Judson Mills Div. (4th Cir. 1962), 308 F.2d 895. These cases involve some 21 patents owned by one or the other of two French corporations which are contesting jurisdiction of this Court: Chavanoz² and Arct-France. After the institution of the suit by DMRC, various other litigations were pitched, all of which have now been consolidated, with venue in the District of South Carolina.

At the outset of the litigation at least one of the patents was registered in the name of ARCT-France and the remainder in Chavanoz. It is alleged now that ownership of all the patents is in Chavanoz. Be that as it may, about half of the total group of patents originated on applications of Henri Crouzet or Charles Crouzet, principal officers of ARCT-France, and it is the contention of Duplan, et al, the plaintiffs, that they were subsequently assigned to Chavanoz as a part of a master plan to exploit the patents, in the United States and particularly in South Carolina. This plan was developed, perfected, and carried out over a period of years.

With this background, and on the basis of the record presented by the parties at this stage of the proceedings, this court publishes its

FINDINGS OF FACT —THE PARTIES—

1. Chavanoz is Moulinage et Retorderie de Chavanoz, a French corporation with its principal place of business at Chavanoz, France. It is engaged in owning and licensing patents and collecting royalties on these patents on a world-wide basis.

2. ARCT-France is Ateliers Roannais de Construction Textiles, a French corporation with its principal place of business at Roanne, France. It manufactures and sells ARCT yarn texturing machines, sometimes called FT machines. Its principal officers, Henri Crouzet and Charles Crouzet, allegedly originated many of the FT patents involved in this litigation. These were conveyed to Chavanoz who granted ARCT-France the exclusive rights to manufacture and sell the FT machines throughout the world. The several ARCT-France contracts, which require performance in and affect South Carolina have been reviewed by the court in the posture of exhibits. They form a basic part of the structure of the plan for marketing the ARCT machines and imposing tribute on their future operation.

3. The Duplan Corporation, Jonathan Logan, Inc., and the other yarn "throwsters" are the purchasers of these ARCT machines and are the plaintiffs in these actions asserting that the court has jurisdiction over Chavanoz and ARCT-France.

4. DMRC is Deering Milliken Research Corporation, a wholly-owned subsidiary of Deering Milliken, Inc. (DMI), and is a South Carolina patent holding and licensing corporation with its principal place of business in Spartanburg, South Carolina. It has entered into a series of contracts with Chavanoz and also with ARCT-France requiring performance in South Carolina. Copies of the contracts have been reviewed as exhibits. Chavanoz made DMRC its agent for (1) regularly procuring United States patents for the French owners, (2) policing the machines in this country so as to make certain that the purchasers signed up to pay the royalties, (3) collecting the royalties, (4) remitting the royalties (more than a million dollars a year) from South Carolina to France, (5) collecting additional know-how from the experience here in this field and transmitting such knowhow to the French concerns, and (6) demonstrating the use of the machines in South Carolina for the customers.

5. ARCT, Inc. is a subsidiary of ARCT-France, established by it at the beginning of 1966 as sales and service agency in North America. It is a North Carolina corporation with its principal office at Greensboro, and is regularly active in business in South Carolina. Henri Crouzet, president of ARCT-France, is also president of ARCT, Inc. and a director of both. Charles Crouzet, the "directeur generale" and vice president of ARCT-France, is also a director of ARCT, Inc.

6. Before 1966, ARCT-France sold and serviced its machines in the United States through Whitin Machine Works of Massachusetts. Whitin is mentioned here because it was a party to some of the basic contracts between Chavanoz, ARCT-France and others.

7. Another party to some of the basic contracts is Leesona Corporation of Warwick, Rhode Island. It is the only American manufacturer of competing machinery. It acquired from a partnership of alleged inventors (The Permatwist Company) certain other United States patents on the competing machinery.

8. Leo Soep, a French resident and a director of ARCT, Inc., negotiated many times on behalf of ARCT-France, Chavanoz, and both of them in South Carolina and elsewhere in the United States on licensing the use of ARCT machines here. He is or has been an agent or employee of both French defendants and sometimes is said to be an employee of CTA, a French corporation which is an affiliate of Chavanoz.

9. Norman C. Armitage, a Spartanburg resident and vice president of DMRC and DMI, negotiated the original and subsequent agreements with Chavanoz and ARCT-France and pursuant to them supervised the licensing of ARCT machines in this country. His diary entries refer to meetings in South Carolina (and elsewhere) with Chavanoz and ARCT-France representatives. The references in his diary to Milliken mean Roger Milliken, to Rhone Poulenc mean a French industrial concern of which Chavanoz is a subsidiary, to Conrad mean Robert Conrad, a lawyer who represents Leesona in connection with its patents and their litigation and who also, at the outset of some of these cases, represented...