Empire State Nail Co. v. Faulkner

• Decision Date: 13 May 1893
• Citation: 55 F. 819
• Parties: EMPIRE STATE NAIL CO. v. FAULKNER et al.
• Court: U.S. District Court — Southern District of New York

55 F. 819

EMPIRE STATE NAIL CO. v. FAULKNER et al.

United States Circuit Court, S.D. New York.

May 13, 1893

Witter & Kenyon, for complainant.

Geo. B Ashley, for defendants.

TOWNSEND District Judge.

This is a complaint for infringement of letters patent No. 370,614 granted September 27, 1887, to Thomas F. N. Finch, for an improvement in furniture nails, with prayer for an injunction and accounting. It is conceded that the nails sold by defendants were manufactured by the American Solid Leather Button Company of Rhode Island, which I will hereafter call the American Company, and that they are the same as those made by complainant. The defendants claim--First, that the American Company is the equitable owner of the patent in suit; second, that, even if said company is not such equitable owner, yet that it has an irrevocable license to manufacture and sell the patented article.

The facts in the case are as follows: On April 25, 1881, Charles E. Bailey and William R. Talbot, who are now respectively president and treasurer of said American Company, applied for a patent for an invention substantially the same as that embraced in the patent in suit. A patent was granted to them October 18, 1881. When Thomas F. N. Finch made his application on November 2, 1881, it and said patent were put in interference, and a contest ensued, which lasted several years, and which was finally decided in favor of said Thomas Finch. During the hearing therein the American Company claimed that there had been a prior public use of said invention. This question also was finally decided in favor of Thomas Finch. As a result of these delays the letters patent were not granted until September 27, 1887. On February 21 1882, said Thomas Finch made an assignment of his interest in said patent, and, after various assignments, the complainant acquired the legal title thereto on November 20, 1888.

The grounds on which defendants claim that the American Company is the equitable owner of said patent are as follows: It appears that in 1880 Latimer Finch, a son of the patentee was in this country, trying to establish the manufacture of solid leather buttons, such as his father was making in England. He met said Bailey and Talbot, and represented to them that he controlled all his father's interests in this invention. A contract was made on February 1, 1881, between Latimer Finch and said Bailey and Talbot and one Prentice, wherein said Latimer claimed 'to own or control the business and certain knowledge, secrets, patent, registry, or other rights connected with the manufacture of solid leather buttons,' and, in consideration of the formation of a company carry on said manufacture, agreed 'that the said party of the first part (Latimer Finch) will at once turn over to said parties of the third and fourth parts all the information, secrets, patent, registry, or other rights connected with said business or manufacture which he may now, or may at any time hereafter, own, control, or come into possession of, and that he will disclose to said parties of the third and fourth parts, and to them only, all of the processes connected with the said manufacture. ' Latimer Finch further agreed to supervise the business of the company. The American Company was thereupon formed, and Latimer stayed with it for about 30 days, when he left, and engaged in business with a competing firm. On January 26, 1881, Thomas Finch shipped to said Prentice, one of the parties to the above agreement, a press for making furniture nails, which was afterwards transferred to the American Company. The price of the press, $19.36, was paid to Latimer Finch, and he, claiming to act on behalf of his father, gave a receipt therefor. In 1882, Latimer sold out all his interests to the American Company. In 1884 the American Company brought suit in the supreme court of Rhode Island, and obtained an injunction restraining Latimer from disclosing any information connected with the business of manufacturing solid leather nails, etc., mentioned in said agreement, and from violating any of the terms of said agreement. Among the intermediate assignments of the patent in suit was one whereby Latimer, in 1884, acquired an undivided half interest therein.

Defendants claim that, under the agreement of February, 1881, they acquired either an equitable title to the patent from Thomas Finch, through Latimer Finch, his agent, or to the interest therein, acquired by Latimer in 1884. The objection to the first claim is that there is no evidence to show that Latimer Finch was the agent of his father to transfer the title to the patent, other than the declarations of Latimer Finch, and the sale of the machine to Prentice. That Latimer Finch made representations to that effect, and that the parties made the agreement on faith of such representations, is not denied; but he is shown to have been utterly untrustworthy, and guilty of bad faith, and gross breaches of contract. The agreement of February, 1881, does not mention or refer to Thomas Finch, and there is no evidence that he ever communicated with the parties thereto. The sale of the machine to Prentice was not a ratification of Latimer's agency in making the February contract, for it was prior to it. The only testimony of Thomas Finch on this point is that he sent a press to the United States, which was prepared at his works, and was sent by another son to Latimer. In a deposition of Thomas Finch, in another suit against different parties, he says that he first introduced these nails into the United States in 1880; that his son Latimer took them and introduced them. This deposition was put in evidence against the objection of counsel for complainant. It does not seem to be admissible, inasmuch as the witness was examined in this cause. Even if it were admitted, the evidence would not be sufficient to show the authority of Latimer to bind Thomas Finch as to the disposition to be made of his inventions, or to dispose of a patent subsequently applied for by Thomas Finch. The act of Thomas Finch in so applying for a patent in November, 1881, his subsequent assignment of the patent, and his proceedings in the interference suits against Bailey and Talbot, lasting some five years, support the view that he neither authorized nor ratified the act of Latimer in attempting to dispose of his patent. It seems to me, therefore, that the evidence offered fails to connect Thomas Finch with Latimer as his agent to transfer title to this patent.

I am not satisfied that the subsequent assignment to Latimer of the undivided interest in the patent did not create an equitable interest in the defendants.

It is strenuously urged by complainant that certain agreements between Latimer and the American Company, and certain decrees obtained by it against him, show that the agreement of February 1st was merged therein, and that the part of the agreement relating to the assignment of patents to be thereafter owned by him was surrendered. There is considerable evidence to support this claim. But, for the purpose of determining the principal question in the case, I have assumed that the American Company did acquire Latimer's interest. This question is whether complainant, and each of the parties under whom it claims, had notice of the title of the American Company when they acquired title to the patent; and upon this question it seems to be settled that the burden of proof is on the defendants, and that, if they fail to show that each of said owners had, at the time of purchase, either record or actual notice of said claim, they cannot defeat the title of the complainant. Rev. St. U.S. Sec. 4898; Oakes v. Tonsmierre, 49 F. 449; Davis Improved Wrought Iron Wagon Wheel Co. v. Davis Wrought Iron Wagon Co., 20 F. 700; Gibson v. Cook, 2 Blatchf. 144; Wright v. Randel, 8 Fed.Rep. 599; American Solid Leather Button Co. v. Empire State Nail Co., 47 Fed.Fep. 741; Perry v. Corning, 7 Blatchf. 195; Secombe v. Campbell, 2 Fed.Rep. 357; Regan Vapor-Engine Co. v. Pacific Gas-Engine Co., 1 C.C.A. 172, 49 F. 68.

On July...