Hann v. Venetian Blind Corporation, 880.

• Decision Date: 13 June 1936
• Docket Number: No. 880.,880.
• Citation: 15 F. Supp. 372
• Parties: HANN v. VENETIAN BLIND CORPORATION et al.
• Court: U.S. District Court — Southern District of California

15 F. Supp. 372

HANN v. VENETIAN BLIND CORPORATION et al.

No. 880.

District Court, S. D. California, Central Division.

June 13, 1936.

COPYRIGHT MATERIAL OMITTED

Lyon & Lyon and Lewis E. Lyon, all of Los Angeles, Cal., for plaintiff.

J. Calvin Brown, of Los Angeles, Cal., for defendants.

YANKWICH, District Judge.

On July 26, 1930, Edwin Anderson filed his application in the United States Patent Office for letters patent for what is claimed to be a new and useful invention known as "Venetian Blind Bracket." On October 27, 1931, letters patent No. 1,829,718 were granted to him for the invention. Anderson, by an assignment in writing, sold and assigned to Francis Hann, the plaintiff, all his right, title, and interest in the letters patent. By his bill of complaint in equity, Francis Hann, after making general allegations relating to the value, commercial utility, wide use of the patented article and of its manufacture and sale by him under the letters patent, charges the defendants with infringement by the manufacture, without the plaintiff's license and consent, of devices embodying the inventions disclosed by the letters patent. The bill also alleges notification of the defendants of the exclusive right of the plaintiff to the patent, gains and profits realized by the defendant from the sale of the infringed article, and seeks injunctive relief and an accounting. The defendants have pleaded the general issue and certain special defenses, to be noted more fully further on in the discussion. As a part of their answer, they have filed what they denominate a "counterclaim and petition for declaratory relief," which seeks a declaration of the invalidity of plaintiff's patent, and which we shall call "the counterclaim." The plaintiff has moved to dismiss the counterclaim upon the ground that it does not state a cause of action for declaratory relief.

The question presented by the motion is: May the defendants in an equity suit for infringement assert a counterclaim of this character and assert the existence of a controversy which would entitle them to a declaration of invalidity under the Declaratory Judgment Act (28 U.S.C.A. § 400). Their counsel, with perfect candor, state that the object of the inclusion of the counterclaim is to prevent a dismissal of the suit by the plaintiff without an adjudication of the validity of the patent. It is conceded that, in the absence of cross-demands in a suit for infringement, the plaintiff has the right to dismiss it. See New York Life Insurance Company v. Driggs (C.C.A.4, 1934) 72 F.(2d) 833; Pullman's Palace-Car Company v. Central Transportation Company (1898) 171 U.S. 138, 18 S.Ct. 808, 43 L.Ed. 108; Jones v. Securities and Exchange Commission¹ (1936) 56 S.Ct. 654, 80 L.Ed. ___. By filing a counterclaim, the defendant gains the right to have the cause of action set up in it heard, even though the plaintiff does not proceed to a hearing upon the bill or the bill is actually dismissed. See Howard v. Leete (C.C.A.6, 1919) 257 F. 918; Vidal v. South American Securities Co. (C.C.A.2, 1921) 276 F. 855; Moore v. New York Cotton Exchange (C.C.A.2, 1923) 296 F. 61. Writers on patent law have pointed to this as the great advantage that might flow from seeking declaratory judgments of invalidity by way of counterclaim. See Journal of the Patent Office Society, 1935, vol. 7, No. 3, p. 244; Journal of the Patent Office Society, 1935, vol. 17, No. 8, p. 674. But neither this advantage nor the fact, to which these articles and counsel have called attention, that certain District Judges, including some in our own district, have allowed such counterclaims, is decisive of the matter. In last analysis, the matter must be determined with reference to the requirements of Equity Rule 30, 28 U.S.C.A. following section 723. The Declaratory Judgments Act is remedial in nature. Its aim is to introduce into federal procedure the benefit of the English rule (Order 54A of the Supreme Court), which, in its present form, dates back to 1883. Its aim is to allow declaration of rights whether any other relief was asked or not, in imitation of the equitable principles which lay at the foundation of the bills quia timet. They were ordinarily applied to prevent wrongs or anticipated mischief and not merely to redress them when done. By them, a party sought the aid of a court of equity because he feared some future probable injury to his rights or interests and not because an injury had already occurred which required any compensation or other relief. Yankwich, Pleading and Procedure (1926) §§ 211-216; Ball, The Annual Practice (1936) pp. 187-189. Given, therefore, an actual controversy, the aim of the Declaratory Judgments Act is to allow courts to take jurisdiction of it in order to grant declaratory relief either before or after "the stage of relief by coercion has been reached." See Gully v. Interstate Natural Gas Company (C.C.A.5, 1936) 82 F.(2d) 145, 149. As somebody once put it, through declaratory judgment the law is turned from a repair shop into a service station. None the less, the Declaratory Judgments Act does not change the character of the judicial power of the federal courts or the essential requisites for its exercise. See United States v. West Virginia (1935) 295 U.S. 463, 55 S.Ct. 789, 79 L.Ed. 1546; Ashwander v. Tennessee Valley Authority (1936)¹ 56 S.Ct. 466, 80 L.Ed. 688; Southern Pacific Company v. McAdoo (C.C.A.9, 1936) 82 F.(2d) 121. The tendency of courts has been to interpret the power granted by the act "to declare rights and other legal relations" broadly. See Nashville, C. & St. L. R. Co. v. Wallace (1933) 288 U.S. 249, 261-264, 53 S.Ct. 345, 77 L.Ed. 730, 87 A.L.R. 1191; Ashwander v. Tennessee Valley Authority, supra; 1 C.J.S., Actions, #18, pp. 1018-1058.

The jurisdiction of District Courts over suits or cases at law or in equity arising under the patent laws of the United States is both original and exclusive. 28 U.S.C.A. § 41; 28 U.S.C.A. § 371. And a cause of action arises under the patent laws when the plaintiff sets up some right, title, or interest under the patent laws. See Pratt v. Paris Gaslight Co. (1897) 168 U.S. 255, 259, 18 S.Ct. 62, 42 L.Ed. 458; Odell v. F. C. Farnsworth Co. (1919) 250 U.S. 501, 39 S.Ct. 516, 63 L.Ed. 1111; Dickinson Tire & Machine Co. v. Dickinson et al. (C.C.A.2, 1928) 29 F.(2d) 493. Certain it is that a person who claims the monopoly of a patent and another person who asserts the right to the use of the patented article by reason of its invalidity for lack of invention, or for any other reason, and who is threatened by the patentee, his assignee or grantee, with suit for infringement, have an actual controversy involving valuable "rights" and "legal relations" which are a proper subject for declarations by Federal courts, for "some right or privilege will be defeated by one construction, or sustained by the opposite construction of these laws." Pratt v. Paris Gaslight Co., supra, 168 U.S. 255, at page 259, 18 S.Ct. 62, 64, 42 L.Ed. 458. And the trend is to entertain declaratory judgments relating to patents declaring their validity or invalidity, whether there has been infringement or not. Borchard, Declaratory Judgments (1934) pp. 17-19, 68; Zenie Bros. v. Miskend (D.C.N.Y.1935) 10 F.Supp. 779; Automotive Equipment, Inc., v. Trico Products Corporation (D.C.N.Y.1935) 11 F.Supp. 292, both cited with approval by our own Circuit Court of Appeals in Southern Pacific Co. v. McAdoo, supra; Mitchell & Webber v. Williamsbridge Mills (D.C.N.Y.1936) 14 F.Supp. 954.

A writer in a recent issue of the Yale Law Journal, commenting upon this trend, justifies this assumption of jurisdiction by the District Courts under the Declaratory Judgments Act. He writes: "But it can be contended that a case `arising under' the federal laws is presented even though the plaintiff does not claim for himself a right conferred by one of those laws if, as in the present case, an essential ingredient of the plaintiff's original cause of action is the non-existence of such a right in the defendant; if, that is, the plaintiff's complaint, properly stated without the aid of anticipated defenses, makes inevitable an adjudication as to the existence of that right. On several occasions, the Supreme Court has laid down a sufficiently broad definition of the statutory grant of jurisdiction to warrant this conclusion. And it finds particularly strong support in the cases involving a bill to quiet title to real property, where the defendant claims title by virtue of a federal grant or statute. There the allegation that the defendant is asserting his claim and that the claim is invalid is called an essential element of the plaintiff's cause of action, and such an allegation is apparently sufficient to invoke federal jurisdiction. Although these cases cannot be regarded as conclusive, because the plaintiff, as well as the defendant, typically bases his claim to the property on a federal grant or statute, they are of considerable force, since a claim of title under federal statute by the plaintiff does not alone justify the exercise of federal jurisdiction. If this broader statement of the rule is correct, the plaintiff in the principal case presented a proper case for the exercise of federal jurisdiction by alleging that the defendant's patents were invalid, even though his interest in obtaining this declaration was not conferred by the patent law. For although prior to the Declaratory Act no separate cause of action existed in which the invalidity of the defendant's patent was an essential ingredient of the plaintiff's cause rather than an anticipated defense, the Act enables the plaintiff to state an original cause of action which is directly based on the invalidity of the defendant's patent, since it permits a proceeding to determine `legal relations', thereby, it is said, allowing the plaintiff to state a justiciable case by alleging that the defendant has a no-right."...