Federal Electric Products Co. v. Frank Adam Electric Co.

• Decision Date: 17 September 1951
• Citation: 100 F. Supp. 8
• Parties: FEDERAL ELECTRIC PRODUCTS CO. v. FRANK ADAM ELECTRIC CO.
• Court: U.S. District Court — Southern District of New York

100 F. Supp. 8

FEDERAL ELECTRIC PRODUCTS CO. v. FRANK ADAM ELECTRIC CO.

United States District Court S. D. New York.

September 17, 1951.

COPYRIGHT MATERIAL OMITTED

Levisohn, Niner & Cohen, New York City (Harry Cohen, Edwin Levisohn and Reuben Spencer, all of New York City, of counsel), for plaintiff.

Ward, Crosby & Neal and Page S. Haselton, all of New York City, for defendant.

IRVING R. KAUFMAN, District Judge.

This is an action for alleged infringement of five of plaintiff's patents. Defendant moves for an order dismissing the action under the provisions of Title 28, U.S. C. § 1406(a) on the ground that venue is improperly laid in this district or in the alternative, for an order transferring this action to the District Court for the Eastern District of Missouri under the provisions of Title 28 U.S.C., § 1406(a) or § 1404(a). Defendant also moves for a more definite statement under Rule 12(e) of the Federal Rules of Civil Procedure, 28 U.S.C.

Title 28 U.S.C., § 1400(b) defines the jurisdictional requirements in patent infringement cases as follows: "Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business."

Defendant is a non-resident of this district. The jurisdiction of this court may be invoked only if the two alternate requisites of Section 1400(b) are met. Defendant must have a regular and established place of business in this district and it must have committed an act of infringement within the district. Failure of either standard results in improper venue here. Rava v. Westinghouse Electric Corp., D.C.S.D. N.Y.1950, 90 F.Supp. 707; Bull Dog Electric Products Co. v. Cole Electric Products Co., 2 Cir., 1943, 134 F.2d 545.

Most of the critical facts of this case are in sharp contention. This much seems reasonably clear. Both plaintiff and defendant are manufacturers of electrical apparatus. Both have factories in St. Louis, Missouri. Defendant is clearly a resident of St. Louis where all its manufacturing operations are carried on. Plaintiff's operations are more widely dispersed, with its main plant in Newark, New Jersey, and branch plants in Long Island City, N. Y. and Hartford, Connecticut as well as St. Louis. Defendant has a number of what it terms "reshipping centers" spaced around the country. One of these is located in New York City. Defendant describes its function as "incidental to the filling of orders for goods manufactured and sold in Missouri, by expediting delivery thereof to purchasers along the Atlantic Seaboard." It denies that the New York operation constitutes a regular and established place of business within the meaning of Section 1400(b).

Defendant employs two men at its New York office, both of whom, defendant asserts, are under instructions prohibiting sales or collections of any kind. It concedes that distribution of the accused devices has probably been carried on from the New York office but this, defendant contends, is not sufficient in itself to constitute a regular and established place of business. This Court concludes otherwise.

Lengthy precedent is available to show that courts have been unwilling to constrict the definition of "regular and established place of business." The concept should not be narrowed or limited in its construction. Urquhart v. American-La France Foamite Corp., 1944, 79 U.S.App. D.C. 219, 144 F.2d 542, certiorari denied 1944, 323 U.S. 783, 65 S.Ct. 273, 89 L.Ed. 625. Emphasis must be on the existence of such a place of busines and not on the character of business conducted there. Shelton v. Schwartz, 7 Cir., 1942, 131 F.2d 805.

Defendant owns the building at 419 West 54th Street in Manhattan which it uses to stockpile its products. Defendant is listed both in the Manhattan telephone directory and in the Manhattan Classified directory. A recent case has pointed up the responsibilities attendant upon a foreign corporation which channels business through regional offices, to its main factory. Latini v. R. M. Dubin Corp., D.C.N.D.Ill.1950, 90 F.Supp. 212. Where the corporation maintains an office, appears in the telephone directory, accepts orders for transmission elsewhere, it cannot interpose its extra-territorial corporate citizenship as a shield. In return for obtaining profitable business, it must stand legally accountable in that district. Defendant admits that orders were accepted from field representatives and filled from its New York stock. The mechanics of bookkeeping which invoiced these orders in St. Louis, do not alter the nature of defendant's New York office. It is a regular and established business within the meaning of Section 1400(b).

Under Section 1400(b) an act of infringement must also be established for proper venue.

A patent may be infringed by manufacture, use or sale, Title 35 U.S.C.A. § 40. Plaintiff makes no effort to prove manufacture or use. He relies solely on affidavits which purport to show sales of the alleged infringing device at defendant's New York office. One of these affidavits, by plaintiff's president, is based on information, and standing alone would not constitute proof of sales strong enough to establish an infringing act in this district. Rava v. Westinghouse, supra. A companion affidavit by one Edward Stahl, states that on two occasions, April 27 and September 5, 1951, he presented orders for the alleged infringing device to defendant's New York office and both times received delivery. Photostats of receipts of the deliveries are annexed to the affidavit.

Defendant contends that in 1951, four of plaintiff's five patents had expired, and in any event these transactions did not constitute sales because all accounts of the company are kept in St. Louis. Defendant's position seems at best tenuous. The facts culled from the affidavits seem to favor plaintiff. I am inclined to the position that where affidavits of plaintiff show facts, which, if established at trial, would give the court jurisdiction, a motion to dismiss should be denied. Rudolph v. Eisen, D.C.N.J.1941, 38 F.Supp. 868. Upon the papers before it, the Court is satisfied that sales have been consummated in New York. If the assertions in the affidavits are established at a trial, an act of infringement has occurred at a regular and established place of business. Defendant's motion to dismiss under Section 1406(a) is accordingly denied.

The propriety of venue aside, defendant's alternative motion asks for a transfer of this action to the District Court, Eastern District of Missouri, in the interest of justice and for the convenience of parties and witnesses, pursuant to Title 28 U.S.C. § 1404(a).

This Court has averred on numerous occasions that the criteria to be followed in 1404(a) transfer cases are essentially those of the forum non conveniens decisions, particularly those enumerated by the Supreme Court in Gulf Oil Corp. v. Gilbert, 330 U. S. 501, 67 S.Ct. 839, 843, 91 L.Ed. 1055. There is no set yardstick by which the court can measure precisely the advisability of transfer in each instance. The Supreme Court has said, Gulf Oil Corp. v. Gilbert, supra: "Important considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses * * * and all other practical problems that make trial of a case easy, expeditious and inexpensive * * *. The court will weigh relative advantages and obstacles to fair trial."

The balance of convenience must be strongly in...