ECC CORPORATION v. Slater Electric, Inc.

• Decision Date: 14 July 1971
• Docket Number: No. 70-C-1266.,70-C-1266.
• Citation: 336 F. Supp. 148
• Parties: ECC CORPORATION, Plaintiff, v. SLATER ELECTRIC, INC., and Lucerne Products, Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

336 F. Supp. 148

ECC CORPORATION, Plaintiff, v. SLATER ELECTRIC, INC., and Lucerne Products, Inc., Defendants.

No. 70-C-1266.

United States District Court, E. D. New York.

July 14, 1971.

Giles C. Clegg, Jr., Houston, Tex., and Marvin N. Gordon, New York City (Sandoe, Hopgood & Calimafde, New York City, of counsel), for plaintiff.

Alfred P. O'Hara, Marie V. Driscoll, New York City, and Reese Dill, Cleveland, Ohio (Rogers, Hoge & Hills, New York City, and Merkel, Campbell, Dill & Zetzer, Cleveland, Ohio, of counsel), for defendant Lucerne Products, Inc.

Darby & Darby, New York City, for defendant Slater Electric, Inc.

MEMORANDUM and ORDER

DOOLING, District Judge.

Defendant Lucerne has moved under Rule 12(b) to dismiss the action against it on the ground that personal jurisdiction has not been and cannot be obtained over it in the Eastern District of New York. The action is for a declaratory judgment. While the parties have mentioned the venue under 28 U.S.C. § 1391, they have not specifically discussed it and they appear to assume that subdivisions (a) and (c) do not raise substantially different questions concerning the place in which the claim arose and concerning doing business than the questions raised under Sections 301 and 302 of the New York Civil Practice Law and Rules.

The complaint as originally filed sought a declaratory judgment that United States Patent No. 3,328,676 and Reissue 26,119, owned by defendant Slater and licensed by it to defendant Lucerne in 1966, and Lucerne's Reissue 26,267 were invalid, were not infringed by plaintiff's trigger speed control, had been abused, and, as to the Slater patent interests, had been licensed in violation of Section 7 of the Clayton Act, 15 U.S. C. § 18. An injunction against any attempt to enforce the patents against plaintiff or its customers was sought, along with an injunction against threats of enforcement against customers or potential customers. The Complaint as most recently amended adds two additional Lucerne patents, United States Letter Patent Nos. 3,389,365 and 3,536,973 (the latter patent issued in October 27, 1970), and a monopolization charge under Section 2 of the Sherman Act.

While plaintiff asserts in a general way that defendant Lucerne can be found to be doing or transacting business in New York within the meaning of CPLR § 301 and 15 U.S.C. § 22 (antitrust jurisdiction), the claim insistently advanced is that the license agreement between defendant Lucerne and defendant Slater was so far negotiated within the State of New York as to subject Lucerne to jurisdiction under either § 302 or § 22 on the theory that plaintiff's cause of action arose as a non-tortious one out of the negotiation of the license agreement in New York, or, viewed as an action in tort under the Anti-Trust Law arose in New York and constituted tortious misconduct of the kind visualized by CPLR § 302(a) 2.

For present purposes plaintiff and the defendant Lucerne must be considered as companies engaged in the manufacture of portable motor controls designed for use in electrical and other appliances and tools. Apparently both firms are interested in manufacturing solid-state motor controls, which include on-and-off switch elements, using semi-conductors, silicon controlled rectifiers, etc. which make possible radical miniaturization of complex control mechanisms. Defendant Slater owned United States Letters Patent No. 3,328,676 of June 27, 1967 and Reissue 26,119 (from No. 3,103,618 of September 10, 1963). In March 1966 Slater licensed Lucerne under No. 3,103,618 and under a then pending application on which Slater's patent No. 3,328,676 later issued. The license to Lucerne was exclusive (except for a non-exclusive license right of the General Electric Company) in the field of the making, use and sale of portable motor controls for use in or with tools and appliances.

Lucerne is an Ohio Corporation with its principal office at Hudson (North-field), Ohio not far southerly of Cleveland. Plaintiff is a Texas Corporation with its principal place of business at Euless, Texas, not far westerly from Dallas. Defendant Slater is a New York corporation with its principal place of business in Glen Cove on Long Island in New York.

The present action was precipitated by Lucerne's sending a letter to plaintiff under date of September 4, 1970, accusing its Trigger Switch Device for use in portable electric tools such as an electric drill of infringing Lucerne's interest in Reissue 26,119, No. 3,328,676 and Reissue 26,267. Certain claims of Reissue 26,119 were held invalid in this Court on September 30, 1970, in Leviton Manufacturing Co. v. Slater Electric, Inc., 331 F.Supp. 395. On October 8, 1970, plaintiff filed the present action for a declaratory judgment of invalidity and non-infringement, claiming alleged patent misuse and illegality in Lucerne's acquisition of the patent right as an anti-competitive acquisition of assets proscribed by Section 7 of Clayton Act (15 U.S.C. § 18). As amended, the complaint adds the additional patents of Lucerne and expands the anti-trust charges to include the claims of monopolization based on an alleged increase of Lucerne's share of the portable motor control market from 50% to 80%; more specifically, plaintiff now avers a failure to sell its product to Black & Decker Corporation, a customer of Lucerne, because Black & Decker has declined even to consider plaintiff's product until the question of infringement of the Lucerne-Slater patents has been resolved; plaintiff avers also that a prospective customer, the Singer Company, received a visit in New York from Lucerne's patent counsel during which Lucerne's patent position was pointed out to Singer and plaintiff was charged with infringement; plaintiff alleges a second Singer episode in which Lucerne's president, during a plant visit at Singer in South Carolina, threatened to sue a Singer customer, Sears Roebuck and Co., if Singer bought the solid-state variable speed motor control developed by plaintiff.

Lucerne does not do in New York State any of the usual things on which a finding of doing business or of being "found" in New York is based. It has no local telephone number, no local office, no resident salesmen, and, substantially, appears to have only one New York customer, Rockwell Manufacturing Company, Syracuse, which, however, buys on-off switches and not motor controls invoking any of the patents in question. Lucerne buys some of its copper supplies from a Buffalo supplier. It advertises in the usual National Trade Publications, perhaps as many as five of them, and it supposes that these publications circulate in New York. Lucerne's president and vice president have called on Rockwell here in New York a couple of times in 1970. Lucerne's business seems mainly to be with manufacturers. It supplies to them components which they build into other equipment. The conclusion of fact from the affidavits and the depositions would inevitably be that, viewed as a manufacturing and trading company, Lucerne is not "doing business" in New York or regularly transacting business in New York so as to be subject to personal jurisdiction under CPLR Section 301 or under Section 12 of the Clayton Act, 15 U.S.C. § 22.

The question comes down to whether the facts particularly...