Excelsior Wooden Pipe Company v. Pacific Bridge Company

• Decision Date: 05 May 1902
• Docket Number: No. 375,375
• Citation: 46 L.Ed. 910,185 U.S. 282,22 S.Ct. 681
• Parties: EXCELSIOR WOODEN PIPE COMPANY, Appt. , v. PACIFIC BRIDGE COMPANY et al
• Court: U.S. Supreme Court

185 U.S. 282

22 S.Ct. 681

46 L.Ed. 910

EXCELSIOR WOODEN PIPE COMPANY, Appt.,

v PACIFIC BRIDGE COMPANY et al.

No. 375.

Submitted February 3, 1902.

Decided May 5, 1902.

This was a bill in equity filed by the Excelsior Wooden Pipe Company, a California corporation, against the Pacific Bridge Company, also a California corporation, but having a branch in the city of Seattle, Washington, and Charles P. Allen, for the inpringement of a patent issued to Allen, one of the defendants, for a wooden pipe.

Beside the usual allegations of a bill for the infringement of a patent, the plaintiff averred that, prior to the acts charged against the respondents, the said Charles P. Allen, one of the defendants, had granted, December 20, 1892, unto the Excelsior Redwood Company, a California corporation, the exclusive right within the Pacific states of manufacturing and selling wooden pipe under his patent to the full end of its term; that the Ex- celsior Redwood Company had, with the written consent of Allen the patentee, on December 22, 1892, transferred unto the Excelsior Wooden Pipe Company, plaintiff, the said exclusive license to it, from Allen, with all rights and privileges thereunder, and that Allen had been, and still was, the exclusive owner of the patent, and the plaintiff the sole and exclusive licensee; that the plaintiff has ever since and still is engaged in the manufacture and sale of the patented articles, and has filled all orders therefor, and is well known as the exclusive licensee, and that Allen has joined with the plaintiff in suits against infringers of his patent, all of which have resulted in his favor. The gravamen of the bill lies in the allegation that, notwithstanding all this, the defendant, the Pacific Bridge Company, and the said Allen, have since such license conspired to make and sell, and without the license and consent of your orator, exclusive licensee as aforesaid, have made and sold, within one year last past, within the state of Washington, wooden pipe substantially the same as that described in the patent and embodying the invention; and therefore it brought this bill to recover damages for this infringement and for an injunction.

The answer, which was a joint one of both defendants, admitted the issue and validity of the patent and its ownership by defendant Allen. It also admitted a license by defendant Allen to plaintiff's assignor, whereby the latter obtained the exclusive right to make and sell the patented articles in the territory described, and set out the license in full; but it denied that this license was a subsisting one, and alleged an abandonment of the same by the plaintiff, a forfeiture of all rights thereunder by failure and refusal to comply with its terms and conditions, and by acts of bad faith toward the patentee by seeking to defeat the patent and destroy its monopoly; and a revocation of the license by Allen for cause in pursuance of the terms of the contract. It also set up that after the alleged revocation of the license the defendant Allen granted a license to his joint defendant, the Pacific Bridge Company. In short, the only defense was a denial of the license which lies at the basis of plaintiff's suit, and constitutes its title to the patent.

The usual replication was filed, and, pending an application on the part of defendants for an extension of time to take proofs, the plaintiff, apparently at the suggestion of the court, moved for a decree in its favor upon the pleadings and affidavits on file. Upon argument, which was upon the question of jurisdiction alone, the court held that the suit was not one arising under the patent laws, but solely out of a contract; that the court had no jurisdiction, and a decree was entered to that effect. Plaintiff thereupon appealed to the circuit court of appeals, which dismissed the case upon the ground that it had no jurisdiction itself over the appeal, and that, as such appeal was prosecuted from an order dismissing the bill solely for want of jurisdiction, it should have been taken to this court. 48 C. C. A. 349, 109 Fed. 497. Whereupon, the mandate of the circuit court of appeals being filed in the circuit court, an appeal from the final decree of that court, which had been entered November 5, 1900, was taken to this court.

Messrs. L. S. Bacon, N. A. Acker, W. W. Wilshire, William F. Booth, and A. H. Kenaga for appellant.

Messrs. James B. Howe, W. H. Bogle, and A. R. Titlow for appellees.

Mr. Justice Brown delivered the opinion of the court:

1. Motion is made by defendants to dismiss this appeal upon the ground that no appeal was taken, and no certificate of the trial court upon the question of jurisdiction was made by such court during the term at which the decree was rendered, and that no such certificate has since or ever been made.

As the appeal was taken directly to this court, it must appear, under the 5th section of the court of appeals act, either that the question of jurisdiction was certified to this court, or that the decree appealed from shows upon its face that the sole question decided was one of jurisdiction. Plaintiff evidently supposed that the case was a proper one to carry to the court of appeals, but, its appeal having been there dismissed, it took this appeal May 27, 1901, from the original decree of the circuit court made November 5, 1900. This decree, after reciting 'that said suit does not really and substantially involve a dispute or controversy property within the jurisdiction of this court, and that this court should not further exercise jurisdiction, it is therefore ordered and decreed that said suit be and the same is hereby dismissed for want of jurisdiction.' An appeal was taken from this decree, and the order allowing the appeal states that the appeal was allowed 'from the final order and decree dismissing said suit for want of jurisdiction.' This is clearly a sufficient certificate of the circuit court that the jurisdiction of that court was in issue, and the only question to be considered by us relates to the jurisdiction of that court. Shields v. Coleman, 157 U. S. 168, 39 L. ed. 660, 15 Sup. Ct. Rep. 570; Re Lehigh Min. & Mfg. Co. 156 U. S. 322, 39 L. ed. 438, 15 Sup. Ct. Rep. 375; Huntington v. Laidley, 176 U. S. 668, 44 L. ed. 630, 20 Sup. Ct. Rep. 526.

The case being thus in proper condition for appeal, such appeal could be taken at any time within two years. Allen v. Southern P. R. Co. 173 U. S. 479, 43 L. ed. 775, 19 Sup. Ct. Rep. 518; Holt v. Indiana Mfg. Co. 176 U. S. 68, 44 L. ed. 374, 20 Sup. Ct. Rep. 272.

2. The most important question is whether this is a suit under the patent laws of the United States within the meaning of Rev. Stat. § 629, subsec. 9, which grants original jurisdiction to the circuit courts 'of all suits at law or in equity arising under the patent or copyright laws of the United States.' The rule is well settled that, if the suit be brought to enforce or set aside a contract, though such contract be connected with a patent, it is not a suit under the patent laws, and jurisdiction of the circuit court can only be maintained upon the ground of diversity of citizenship. But difficulties sometimes arise in determining whether the action be upon a contract or upon the patent. The first case involving this question was Wilson v. Sandford, 10 How. 99, 13 L. ed. 344, in which a bill filed on the equity side of the circuit court by the assignee of a patentee, to set aside a contract in the nature of a license upon the ground that the licensee had not complied with the terms of the contract, was held not to be a case under the patent laws. The object of the bill was to have the license set aside and forfeited, and plaintiff's title reinvested in him. Such was also the case in Brown v. Shannon 20 How. 55, 15 L. ed. 826, which was a bill to enforce the specific execution of certain contracts respecting the use of the patent; and in Albright v. Teas, 106 U. S. 613, 27 L. ed. 295, 1 Sup. Ct. Rep. 550, which was a suit brought by the plaintiff for moneys alleged to be due under a contract whereby certain letters patent granted to him were transferred to the defendant. This was clearly a bill to recover royalties, and no question under the patent laws was involved. Dale Tile Mfg. Co. v. Hyatt, 125 U. S. 46, 31 L. ed. 683, 8 Sup. Ct. Rep. 756, was an action in a state court by the owner of the patent upon an agreement by which such owner granted an exclusive license to make and sell the patented articles within a certain territory. Defendant expressly acknowledged the validity of the patent. This we held to be clearly within the jurisdiction of the state court. A like ruling was made in the next case of Felow v. Scharnweber, 125 U. S. 54, 31 L. ed. 687, 8 Sup. Ct. Rep. 759. In the same line of cases are those of Marsh v. Nichols, 140 U. S. 344, 35 L. ed. 413, 11 Sup. Ct. Rep. 798, to enforce the specific performance of a contract to transfer an interest in a patent to the plaintiff; Wade v. Lawder, 165 U. S. 624, 41 L. ed. 851, 17 Sup. Ct. Rep. 425, and Pratt v. Paris Gaslight & Coke Co. 168 U. S. 255, 42 L. ed. 458, 18 Sup. Ct. Rep. 62, which was an action by patentees in a state court upon the common counts to recover of the defendant the stipulated price for manufacturing and setting up an apparatus for the manufacture of water gas. Defendant pleaded that the plaintiff had agreed to save it harmless against any suit which might be brought against it for infringement, and to defend such suits at their own expense, and averred, among other things, that the patents were void and an infringement upon prior patents; that defendant had not kept plaintiffs harmless against such suits, but had refused to defend a certain suit brought against it; and that the defendant had rightfully rescinded the contract. It was held that the action was not one arising under the patent laws of the United States, and that to constitute such a cause the plaintiff must set...