H. J. Heinz Co. v. Superior Court In and For Alameda County

• Citation: 42 Cal.2d 164,266 P.2d 5
• Court: United States State Supreme Court (California)
• Decision Date: 29 January 1954
• Parties: , 100 U.S.P.Q. 403 . S. F. 18605. Supreme Court of California, In Bank

Page 5

266 P.2d 5

42 Cal.2d 164, 100 U.S.P.Q. 403

H. J. HEINZ CO. v. SUPERIOR COURT IN AND FOR ALAMEDA COUNTY et al.

S. F. 18605.

Supreme Court of California, In Bank.

Jan. 29, 1954.

Rehearing Denied Feb. 24, 1954.

Chickering & Gregory, William H. Parmelee, Frederick M. Fisk, San Francisco, Paul M. Duff, Pittsburgh, Pa., Moses Lasky, San Francisco, Christy, Parmless & Strickland, Pittsburgh, Pa., Brobeck, Phleger & Harrison and Herman Phleger, San Francisco, for petitioner.

Morris Lowenthal, Juliet Lowenthal and Karl D. Lyon, San Francisco, for respondents.

CARTER, Justice.

This is a review of an order made after proceedings in contempt for violation of an injunction issued in an action in which Charles Owens was plaintiff, hereafter referred to as plaintiff, and H. J. Heinz Company, a corporation, petitioner here, was defendant, hereafter referred to as defendant.

In 1943, plaintiff commenced the above-mentioned action for declaratory and injunctive relief against defendant, charging that he was the owner of a patent for a vinegar generator; that a license agreement from plaintiff to defendant to use the patent in making and using the generator was obtained by fraud and lacked consideration. A declaration of the invalidity and unenforceability of the license was asked, together with a declaration that defendant had no right to build or use the patented generators, but threatened to do so, and should be restrained from asserting any claims under the license. On December 21, 1944, the court gave judgment in that action declaring the license invalid and unenforceable; that plaintiff owned the patent and defendant had no right to build or use generators of the character covered by plaintiff's patent. Defendant was enjoined from asserting any right under the license or any right to build or use the generator covered by the patent other than one at its plant in Berkeley, California. That judgment became and is final.

In September, 1949, plaintiff filed in that action an affidavit stating that the court had issued an injunction wherein it was adjudged and decreed that defendant had no right or license to build or use vinegar generators of the type covered by plaintiff's patent and that the purported license given by plaintiff to defendant was invalid; that the judgment provided (stating the exact words of the injunction) that notwithstanding the injunction plaintiff is 'informed' that defendant has built and used the generators covered by plaintiff's patent; that in correspondence with defendant in June of 1949, the latter did not deny that it had built and installed generators but did deny that it violated plaintiff's rights; that when plaintiff was installing a generator at defendant's Berkeley plant the latter's agent took pictures and sketches thereof, and during the installation, one of plaintiff's assembly prints disappeared and plaintiff believes the agent took it; that plaintiff believes defendant has appropriated his patent and is claiming the right to make and use generators covered thereby; that defendant's conduct is in violation of the injunction. Pursuant to the affidavit the court issued an order reciting that it appeared that defendant had been making and using generators in violation of the injunction and directing defendant to show cause why an order should not be made holding it in contempt of court for violating the injunction and why there should not be made such other orders as may be required to 'correct' the violations. Deendant filed a return to the order to show cause (later amended) asserting insufficiency of plaintiff's affidavit, the lack of jurisdiction of the court in granting the injunction because it involved patent rights over which the federal courts have exclusive jurisdiction, and denying that it had built or used generators of the type covered by the patent. Defendant moved to vacate the order to show cause and to modify the injunction by striking out the provisions thereof restraining it from building and using generators of the type covered by the patent, asserting that they invaded the jurisdiction of the federal courts.

The court made an 'interlocutory order' reciting the foregoing and that it had denied defendant's motions; that the judgment in the action was res judicata of defendant's claims of lack of jurisdiction; that defendant was estopped to assert lack of jurisdiction; and that the sole issue was whether the injunction had been violated. The court made findings on those matters and also that the issues in the action embraced the right, if any, of defendant to build and use the generators in view of plaintiff's patent, independent of as well as under the license; that the issue of patent infringement was raised by both plaintiff and defendant therein but at no time did defendant question the court's jurisdiction; and that defendant was violating the injunction and infringing plaintiff's patent. It found that defendant was in contempt of court and ordered it to appear for the purpose of determining the penalty to be imposed and relief to be awarded plaintiff for violation of the injunction.

The court made its 'Final Order,' here reviewed, on March 24, 1952, incorporating its interlocutory order and awarding plaintiff compensatory damages against defendant in the sum of $375,934.66, for past damages suffered by reason of the violation of the injunction and $526 per day for the continuing violation of the injunction until defendant has destroyed the generators; if the damages were not paid, execution might issue against defendant's property and plaintiff might apply for a contempt order. To prevent future violation of the injunction defendant was ordered to destroy 16 specified generators (valued at over $160,000), being operated by it, within 45 days and report to the court. It was also ordered that the proceeding was in civil contempt and the relief granted was remedial and not for punishment for wilful disobedience of the injunction; that jurisdiction was retained to make further orders to carry out its order.

Defendant's main contentions are: That the court had no jurisdiction to grant the injunction in the action nor entertain the contempt proceedings because they involved patent rights within the exclusive jurisdiction of the federal courts and hence it could not properly be held in contempt for violating the injunction; that the court had no authority to award to plaintiff, in the contempt proceedings, compensatory damages resulting from the violation of the injunction.

On the question of jurisdiction to grant the injunction in the action and entertain the contempt proceedings, it should be noted that the Constitution of the United States provides that Congress shall have power 'To promote the Progress of Science and useful Arts, by securing for limited Times to * * * inventors the exclusive Right to their respective * * * Discoveries'. U.S.Const. art. I, § 8(8), and pursuant thereto Congress has provided by statute that: 'The (federal) district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent and copyright cases.' 28 U.S.C.A. § 1338(a). Before coming to the question of the jurisdiction of the court to grant injunctive relief in the judgment rendered in the action, other things must be considered.

Defendant claims that the action, and ensuing judgment granting plaintiff injunctive relief against defendant, dealt only with conduct by it in claiming and exercising a right under the license agreement to build and use the generators; that the court did not enjoin it from infringing plaintiff's patent independent of the license, but in the contempt proceeding the court construed the injunctive provisions in the judgment as prohibiting infringement as well as claiming rights under the license, and that so interpreted, the court lacked jurisdiction to render the judgment with its injunctive provisions because of the exclusive federal court jurisdiction. It is true that the complaint in the action charges that defendant threatens to exercise rights under the license, which plaintiff asserts is invalid, by building generators of the character covered by the patent, but it is also alleged that defendant threatens to build generators of the character covered by plaintiff's patent and, by so doing, is causing depreciation of the value of plaintiff's patent. In the prayer it is asked that it be declared that defendant has no right to build generators of the type covered by plaintiff's patent and that it be enbjoined from claiming any rights under the patent and claiming any right to build generators covered by plaintiff's patent. Fairly interpreted, the complaint demands that the license be set aside and, prevailing on that issue, relief be granted for infringement. Defendant, in its answer, denied it had no right to build generators covered by the patent. In its findings the court stated that plaintiff was the owner of the patent; that the license was void; that a controversy existed between the parties concerning defendant's right to build generators covered by the patent and concerning the effect of the license; that defendant threatens to exercise and claim rights under the license and to build generators covered by the patent, which will cause depreciation in the value of the patent. In its judgment the court declared defendant has no right to build generators covered by the patent and that defendant is restrained 'from asserting or claiming the right or license to build or have built for itself or to maintain or operate vinegar generators of the type, kind or character covered by any Letters Patent (issued to) * * * plaintiff * * *, other than the one vinegar generator installed by plaintiffs at the (defendant's) * * * factory in Berkeley, California.' (Emphasis added.) Thus it is...