Federal Electric Co. v. Flexlume Corporation

• Decision Date: 02 November 1925
• Citation: 9 F.2d 647
• Parties: FEDERAL ELECTRIC CO. et al. v. FLEXLUME CORPORATION.
• Court: U.S. District Court — Western District of New York

9 F.2d 647 (1925)

FEDERAL ELECTRIC CO. et al. v. FLEXLUME CORPORATION.

District Court, W. D. New York.

November 2, 1925.

Clarence E. Mehlope, of Chicago, Ill., and Botsford, Mitchell & Albro, of Buffalo, N. Y., for plaintiffs.

Penney, Persons, Blair & Nye, of Buffalo, N. Y. (John S. Powers, of Buffalo, N. Y., of counsel), for defendant.

HAZEL, District Judge.

The bill avers unfair competition arising from defendant threatening and intimidating plaintiffs' customers with suits for infringement of its patent No. 1,224,253, covering double-faced signs with letter plates of milk-white glass bearing raised letters, and falsely representing to the trade that it had brought suit for infringement against plaintiffs. In the bill there is contained a denial of infringement, an averment that defendant's patent is invalid, though admitting its validity was established in Flexlume Corp. v. Opalite Sign Corp. et al. (C. C. A.) 292 F. 98, and that additional evidence had been discovered since such decision to establish the invalidity of the patent.

Defendant's answer denies the essential averments upon which unfair competition is based, and sets forth a counterclaim particularly charging plaintiffs with unfairly competing with defendant in its business. In paragraph 23 defendant states that it had entered into an agreement or license with the Federal Sign System Electric Corporation, a corporation with which plaintiffs, or some of them, or successors of companies with which they were allied or associated, were in privity; that by such agreement or license defendant bound itself to protect the said licensee from infringement of its patent, and specifically that, if any infringing signs were made or sold by others in the territory included in the agreement, defendant by legal process would prevent such infringement. It is further averred that at the instance of the Federal Sign System Electric defendant brought suit against an infringing competitor, Opalite Sign Company et al., and the suit terminated in its favor, the patent being held valid in the Seventh Circuit (292 F. 98), and that during the entire life of the agreement defendant protected the licensee, or the Federal Sign System Electric, and its successors in privity with it, in the construction of electric signs of the class described in the patent; and therefore it is averred that plaintiffs, who were in privity with the Federal Company, are estopped to deny the validity of defendant's patent, or assert its prior use or anticipation.

To this answer plaintiffs replied, denying estoppel, particularly challenging the validity of defendant's patent, and, in short, setting up the statutory defenses usually found in patent suits to negative infringement. Thereupon defendant moved that paragraphs 19 to 22, containing such averments, be stricken out for impertinence.

The question is whether by its reply the patent has been subjected to litigation as to its validity and scope. It is true that ordinarily plaintiffs cannot bring into the case an issue of a statutory patent infringement...