Hazeltine Corporation v. General Electric Co.

• Decision Date: 17 July 1937
• Docket Number: No. 2466,2467.,2466
• Citation: 19 F. Supp. 898
• Parties: HAZELTINE CORPORATION v. GENERAL ELECTRIC CO. et al.
• Court: U.S. District Court — District of Maryland

19 F. Supp. 898

HAZELTINE CORPORATION v. GENERAL ELECTRIC CO. et al.

Nos. 2466, 2467.

District Court, D. Maryland.

July 17, 1937.

Henry T. Kilburn, of New York City, and Eben J. D. Cross, of Baltimore, Md., for plaintiff.

Stephen H. Philbin and William J. Barnes, both of New York City, and Gaylord Lee Clark and Semmes, Bowen & Semmes, all of Baltimore, Md., for defendants.

COLEMAN, District Judge.

These two suits, which have been consolidated, relate to alleged infringement of four patents on radio apparatus owned by the plaintiff. There are two defendants. One of them, the General Electric Company, appeared specially and moved to dismiss the bill of complaint in each case on the ground that it had committed no acts of infringement within the District of Maryland, and that therefore this court has no jurisdiction to entertain a suit against it under the provisions of section 48 of the Judicial Code (28 U.S.C.A. § 109). These motions, supported by affidavits, were denied, this court concluding that the question raised should be decided after hearing testimony, since the plaintiff claimed that the General Electric Company had committed not merely direct acts of infringement within the state of Maryland, but had infringed indirectly through sales made by the other defendant, the General Electric Supply Corporation, for which, as plaintiff alleged, General Electric Company is responsible, because it owns the entire stock of the supply corporation, directs its policies, and, in general, controls its business.

Leave was granted to General Electric Company, upon its motions being overruled, to answer the bills of complaint which again raise the issue of jurisdiction, and this question was heard separately, extensive testimony was taken, oral argument heard, and briefs filed.

There are thus presented to the court at this time two questions for determination: (1) Has the General Electric Company, which, for convenience, will hereinafter be referred to as the electric company, itself committed, directly, any acts of infringement in the state of Maryland? and (2) Are the activities in Maryland of the General Electric Supply Corporation, hereinafter referred to, for convenience, as the supply company, to be treated as the activities of the electric company, so as to make the latter responsible for any acts of infringement by the former in Maryland?

Both questions are governed by the provisions of section 48 of the Judicial Code (28 U.S.C.A. § 109), the pertinent parts of which are as follows: "In suits brought for the infringement of letters patent the district courts of the United States shall have jurisdiction, in law or in equity, in the district of which the defendant is an inhabitant, or in any district in which the defendant, whether a person, partnership, or corporation, shall have committed acts of infringement and have a regular and established place of business."

We will consider the two questions in the order in which they have been stated. As to the first, since the electric company is a New York corporation, it is not "an inhabitant" of the District of Maryland. But it is admitted that it has a regular and established place of business within the Maryland district. Therefore, the question is this: Has it, itself, "committed acts of infringement" within the Maryland district? The existence both of a regular and established place of business, and the commission of such acts is a condition precedent to assumption of jurisdiction by this court.

The only evidence that the electric company itself committed acts of infringement in Maryland is a letter, introduced by the plaintiff, written by the sales' manager of the radio department of the electric company at Schenectady, N. Y., to the electric company's counsel, and given by him to plaintiff's counsel, which is to the effect that the electric company "sold * * * to the United States Coast Guard some receiving and transmitting apparatus, delivery of which was made to the Supply Depot at Curtis Bay, Maryland." The evidence remains in this meager state. The terms of the contract of sale were not proven, so that it is not clear as to exactly where title passed, that is, whether in Maryland or in Schenectady, N. Y., where the apparatus was manufactured and whence it was shipped, the presumption, however, being that it passed at the place of shipment. Furthermore, there was no evidence introduced to identify the particular apparatus, and therefore it is not shown whether, assuming the patents in suit to be valid, this apparatus infringed. But, conceding, as we must, that the Coast Guard is an agency or instrumentality of the United States, Panhandle Oil Co. v. State of Mississippi ex rel. Knox, 277 U.S. 218, 48 S. Ct. 451, 72 L.Ed. 857, 56 A.L.R. 583, and assuming, without deciding, that the apparatus sold to the Coast Guard does infringe, and that the sale of it took place within the District of Maryland, nevertheless, any remedy that the plaintiff might have is exclusively against the United States by suit in the Court of Claims.

We believe that this conclusion is inescapable by the decision of the Supreme Court in Sperry Gyroscope Co. v. Arms Engineering Co., 271 U.S. 232, 46 S.Ct. 505, 70 L.Ed. 922. There a patent owner sued the manufacturer of gyroscopic compasses, alleging infringement and that they were made for, and sold to the United States Navy. The District Court dismissed the bill of complaint for want of jurisdiction under 35 U.S.C.A. § 68, the pertinent parts of which are as follows: "Whenever an invention described in and covered by a patent of the United States shall be used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, such owner's remedy shall be by suit against the United States in the Court of Claims for the recovery of his reasonable and entire compensation for such use and manufacture. * * * In any such suit the United States may avail itself of any and all defenses, general or special, that might be pleaded by a defendant in an action for infringement, as set forth in this chapter, or otherwise." By virtue of section 238 of the Judicial Code (28 U.S. C.A. § 345) as it then read, a direct appeal was had to the Supreme Court, which reversed the ruling of the District Court, and held that (271 U.S. 232, at page 235, 46 S.Ct. 505, 506, 70 L.Ed. 922) "it became the duty of the court below to consider and determine whether, in the circumstances stated, appellee was relieved of liability and permitted by the statute to do what otherwise would have constituted a violation of appellant's rights," that is, the case was remanded to the District Court for the purpose of having it determine by or for whom the alleged infringing devices were manufactured. Applying the principle there announced to the present case, we interpret it as meaning that this court has jurisdiction to determine whether or not the apparatus claimed to infringe was used by or manufactured for the United States. Plaintiff has not been taken by surprise, nor deprived of full opportunity to present adequate proof. The hearing was granted on the understanding that the question of direct acts, as well as indirect acts of infringement by the electric company, would be heard. The only evidence, as has been explained, offered with respect to direct acts of infringement, was the letter above mentioned. So, if the sales there referred to do not constitute such infringement, then there has been no such infringement, and thus there would be no further factual issue that this court would be required to decide with respect to this phase of the case. But, assuming that such evidence is sufficient to indicate possible infringement, the result is the same in so far as the right of the plaintiff to proceed further in this court is concerned, because, as has already been pointed out, since the Coast Guard is an agency or instrumentality of the United States, and since the only apparatus alleged to infringe was sold to and used by it, if not in fact expressly manufactured for it, plaintiff must seek redress in the Court of Claims, by virtue of the provisions of 35 U.S.C.A. § 68. In Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 48 S.Ct. 194, 72 L. Ed. 303, this statute was interpreted and the Supreme Court held that where an invention is used or manufactured by or for the United States, the manufacturer is entirely relieved from liability and the patent owner has his sole remedy against the United States in the Court of Claims. Parenthetically, it may be noted that this decision, rendered subsequent to the Sperry Case, supra, does not refer to the Sperry Case, but it is not to be inferred from this fact that the later decision is to be treated as in any way modifying or qualifying the earlier one. The later case was begun, unlike the Sperry Case, in the Court of Claims by the owner of a patent suing the United States. Thus, the construction of the statute above referred to was brought directly and immediately in issue, which was not true with respect to the situation in the Sperry Case, there, the issue being as to whether the District Court had jurisdiction at all, because of the allegation in the complaint that the alleged infringing devices were made under contract with the government, the court saying (271 U.S. 232, at page 234, 46 S.Ct. 505, 506, 70 L.Ed. 922): "But for the allegation that the inventions were made and sold under such a contract with the government, this would be but the ordinary patent suit. And so the real question presented is whether that allegation was enough to deprive the District Court of the jurisdiction plainly conferred by section 24 Judicial Code, 28 U.S.C.A. § 41."

We now turn to a consideration of the second question, namely, whether electric company has indirectly committed any acts of infringement within the Maryland district; or, stated in another form,...