Harrington v. Atlantic & Pacific Telegraph Co.
| Decision Date | 25 January 1906 |
| Citation | 143 F. 329 |
| Parties | HARRINGTON et al. v. ATLANTIC & PACIFIC TELEGRAPH CO. et al. |
| Court | U.S. District Court — Southern District of New York |
Butler Stillman & Hubbard (John Notman, of counsel), for complainants.
Dillon & Swayne and Rush Taggart, for defendants.
This action was brought to restrain infringement by the Atlantic & Pacific Telegraph Company (herein called the 'Company') and Jay Gould in his lifetime of a large number of United States letters patent granted to George Harrington, assignor, and Thomas A. Edison, inventor, and for an accounting and damages, together with such other relief as the complainants may equitably be entitled to receive. The bill was filed in this court in May, 1876, nearly 30 years ago. In December, 1892, Jay Gould died, and on or about the 20th of December, 1895, on the application of the complainant Edison, this suit was revived as against his executors and trustees under his last will and testament. Pending this bill, and on or about the 5th day of December, 1892, George Harrington, one of the original complainants, died, and on March 10, 1895, Josiah C. Reiff, by order of the court, was made a party complainant in his stead. The complainants claim that the principal purpose of the bill is to establish the liability of the company as an infringer of said patents, and also to determine the liability of the testamentary executors and trustees of Jay Gould, who in his lifetime, it is claimed, actively participated in the alleged infringing acts and inspired the same. Although the case has been pending undetermined many years, it cannot truthfully be asserted that the patience, courage, and anticipation of the litigants have been exhausted or the final settlement deferred because of objectionable rules of procedure or any tardiness of justice. As stated, parties to the suit have died and others have intervened, yet whatever delay or procrastination may be presumed is not attributable to any causes other than such as were created and suffered by the mutual acts of the parties themselves.
At the threshold of the case the court is confronted by the question of lack of jurisdiction; it being contended by the defendants that this is not a case arising under the ninth clause of section 629 of the Revised Statutes of the United States (U.S. Comp. St. 1901, p. 504). This section in plain terms confers original jurisdiction upon the Circuit Courts of the United States 'of all suits at law or in equity arising under the patent or copyright laws of the United States ' Concededly, the requisite diversity of citizenship does not exist herein, the original complainant Harrington having been a citizen of the District of Columbia; and accordingly the point that requires discussion is whether this action is one arising under the patent right laws, or whether the bill simply involves contractual rights in relation to the patents in question. The joint and separate answers of the defendants raise no issue regarding the validity of the patents. It is, however, contended that the principal question to be decided arises out of the contracts hereinafter mentioned, and that the rights under the patents are merely incidental to the relief demanded in the complaint; such relief being in the nature of a demand to set aside the title because of the fraud of the defendants. To solve the problems presented it is necessary to preface the material facts; for, even though contract rights are involved, if the question of infringement of patents is also presented, the court is not deprived of jurisdiction. This principle was enunciated in Littlefield v. Perry, 88 U.S. 205, 22 L.Ed. 577, Excelsior Wooden Pipe Co. v. Pacific Bridge Co., 185 U.S. 282, 22 Sup.Ct. 681, 46 L.Ed. 910, and Atherton Machine Co. v. Atwood-Morrison Co., 102 F. 949, 43 C.C.A. 72.
The complainant Edison was the original inventor of an apparatus and improvement relating to the rapid transmission of communication by telegraph. Such devices and improvements specifically relate to recording and copying messages, chemically preparing paper and perforators for a new and novel method or system of automatic telegraphy, and a so-called duplex and quadruplex telegraphy. According to a written instrument in evidence Edison assigned a two-third interest in such patents and inventions to Harrington, the original complainant, retaining a one-third interest. Under the terms of the written arrangement, Harrington exclusively controlled the inventions and had power and authority to dispose of them whenever he deemed it advisable to do so. And he was empowered to assign the respective interests in such patents and inventions owned either by Mr. Edison or himself and such other owners as became associated with them in projecting and developing the same. Sales or transfers of the property rights mentioned under the agreement were to inure to the benefit of the owners. The bill alleges that 39 different patents were granted by the Commissioner of Patents to secure to the patentee the monopoly of the inventions and improvements for automatic telegraphy. The earlier patent, No. 121,601, was dated December 5, 1871, and the latest, No. 171,273, was granted December 21, 1875. The numbers of the various patents, together with the date of each and a titular statement of the particular character of the improvements are set forth in the complaint.
It is alleged, inter alia, that the defendant company is infringing the various patents for said system of automatic telegraphy, and that in its behalf it is falsely claimed to have the right to use such system, together with a telegraph line between New York and Washington, owned by the Automatic Telegraph Company. The oral and documentary evidence found in the record abundantly shows that, though the titles to the patent in suit were in Harrington, certain other individuals named in the bill were associated with him to exploit and install the said automatic system of telegraphy. Indeed, the court is convinced that, on account of financial assistance received from such associates, they were entitled under the agreement to participate in the profits of the enterprise in proportion to the amount contributed by them; in fact, Mr. Harrington was trustee for his said associates conjunctively with himself, and as such held title to the patents. At the time of the transfer to Mr. Gould, as hereafter stated, Harrington was president of the Automatic Telegraph Company and with his associates managed and controlled said company. Under a contract of purchase from a company known as the National Telegraph Company, the Automatic Telegraph Company had the right to use, and at that time did use, the telegraph line of the latter from New York to Washington. In the conduct of its business the Edison patents in suit and also the patents of one Little, comprising the automatic system of telegraphy, were used. In this situation the complainant Reiff in the month of December, 1874, negotiated with Jay Gould, apparently at the latter's solicitation, for the sale and transfer to him of the automatic telegraph system, with the telegraph line and apparatus, officers, etc., above mentioned, including any similar patents that Mr. Edison might thereafter invent. The proofs show that Gould had actual knowledge of the existing arrangements between Harrington and Edison and their associates, and that they were jointly interested in promoting the contemplated installation of a new and rapid method of telegraphy. He was fully informed on the subject. In explanation of his desire that the company should acquire the ownership of the line and property of the Automatic Telegraph Company and the patents covering its system, it is claimed that, as the owner of a majority of the capital stock of the former, he intended to inaugurate a departure in telegraphy so as to better enable competition with the Western Union Telegraph Company. During the progress of the negotiations between Reiff and Gould, the latter declared that he represented the company, while the former stated that he represented Mr. Harrington. Additional negotiations quickly following resulted in a memorandum, dated December 30, 1874, expressing the understanding of the parties; and, whatever were the ultimate relations, the said memorandum concededly became the basis for subsequent negotiations between Harrington on the one side and Gould on the other. The memorandum is in these words:
Another paper was signed at this time. It reads as follows:
'N.Y., Decr. 30, '74.
'It is understood that in the negotiation between the undersigned, Jay Gould is to receive 1-10th of...
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Harrington v. Atlantic & Pacific Telegraph Co.
...is not enough to establish the jurisdiction of the Circuit Court. The judge of the Circuit Court, in coming to an opposite conclusion (143 F. 329, 336), 'Having stated the essential facts and my conclusions thereon, I come again to the principal objection insisted on by counsel for the defe......