Kalvar Corporation v. Memorex Corporation

• Decision Date: 30 April 1974
• Docket Number: Civ. A. No. 73-1638.
• Citation: 386 F. Supp. 273
• Parties: KALVAR CORPORATION v. MEMOREX CORPORATION.
• Court: U.S. District Court — Eastern District of Louisiana

386 F. Supp. 273

KALVAR CORPORATION v. MEMOREX CORPORATION.

Civ. A. No. 73-1638.

United States District Court, E. D. Louisiana.

April 30, 1974.

Harry McCall, Jr., Chaffe, McCall, Phillips, Burke, Toler & Sarpy, New Orleans, La., for plaintiff.

Charles Kohlmeyer, Jr., Lemle, Kelleher, Kohlmeyer & Matthews, New Orleans, La., for defendant.

MEMORANDUM OPINION AND ORDER

BOYLE, District Judge.

Kalvar Corporation has filed suit against Memorex Corporation alleging infringement of two Kalvar patents. Patent Number 3,149,971 involves a manufacturing process for photographic films (process patent) and Patent Number 3,653,902 involves a photographic film product (film patent). Defendant Memorex has moved this court to dismiss this action on the ground that venue is not proper in the Eastern District of Louisiana. In the alternative, the defendant moves for transfer of this suit to the Northern District of California at San Francisco pursuant to 28 U.S.C. § 1404 or 28 U.S.C. § 1406. After hearing oral argument we took the matter under submission. After consideration of the pleadings, oral argument and memoranda of the parties and affidavits filed in the matter, we deny the defendant's motion to dismiss the film patent claim and grant the defendant's motion to dismiss the process patent claim.

In patent infringement cases, special venue provisions are found in 28 U.S.C. § 1400(b) 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. June 25, 1948, c. 646, 62 Stat. 936."

These provisions afford the exclusive basis for venue in patent infringement cases. Fourco Glass Company v. Transmirra Products Corporation, 353 U.S. 222, 77 S.Ct. 787, 1 L.Ed.2d 786 (1957). There is no contention that venue is based on the fact that Memorex resides in the Eastern District of Louisiana. Hence to sustain venue the defendant must have committed acts of infringement and have a regular and established place of business in this district. The defendant has admitted in its answer that it has a regular and established place of business at 1070 St. Charles Avenue, New Orleans, Louisiana, which is located in the Eastern District. We need only turn our attention to the issue of whether the defendant has committed acts of infringement in this district.

Defendant has submitted the affidavit of its employee, David Fukagawa, custodian of all Memorex records relating to all shipments of vesicular film made by Memorex. This affidavit shows that three shipments of film were made to New Orleans after the grant of plaintiff's film patent. Two of the shipments, one of a single roll of film to the plaintiff and another, also of one roll, to Associated Ideas International, otherwise unidentified in the record, involved no charge for the film. The third shipment was of 20 rolls of film to the plaintiff. A charge of $15.30 per roll was made by Memorex and paid by plaintiff. The shipment, prepaid, was apparently made from Memorex' place of business in California, but the order was placed by telephone by Tallon, plaintiff's employee, with a Lee Hayman at Memorex' place of business in New Orleans and subsequently confirmed by written purchase order, dated March 13, 1973, forwarded to defendant for the attention of Hayman.¹ Fukagawa's affidavit shows the shipment filling the order was made on March 19, 1973. The film was received by plaintiff in New Orleans on March 27, 1973.

The defendant also submitted the affidavit of its Area Manager, Ray S. Cook. Mr. Cook states that he has his office in Memorex' place of business at 1070 St. Charles Avenue in New Orleans, the same address to which Tallon says he telephoned the order to Hayman for 20 rolls of film and to which he directed the confirming written purchase order. Cook claimed that he was familiar with Memorex products sold through the New Orleans office and that since January 1, 1972 no vesicular film had been sold in the office and that had there been any sales or deliveries of such film made through a Louisiana source they would have been handled through the New Orleans office under his jurisdiction. It is noted that Cook does not discuss orders received in his office which may be transmitted to California for filling. The defendant has offered no proof that Hayman, with whom Tallon placed plaintiff's order, was not its employee. From Cook's claim that he was familiar with sales of Memorex products sold through the New Orleans office, we infer that sales are regularly made through his office.

That an order was placed with the New Orleans office of Memorex, that the order was filled, that Memorex sold the film to plaintiff and that plaintiff received delivery of the film in New Orleans are facts established in the record, Cook's affidavit notwithstanding.

Our task is to determine whether the sale by Memorex was one which may be held to be an act of infringement committed in this District. Citing Ronson Art Metal Works, Inc. v. Brown & Bigelow, Inc., 104 F.Supp. 716, 725 (S.D.N.Y. 1952) the Second Circuit Court of Appeals, in Kaz Mfg. Co., Inc. v. Chesebrough-Ponds, Inc., 317 F.2d 679, at p. 681 (1963), said "there is a distinct difference between the degree of use requisite to satisfy a jurisdictional inquiry, and that needed to establish substantial infringement; else, all jurisdictional inquiries would be decisions on the merits." See also Watsco, Inc. v. Henry Valve Company, 232 F.Supp. 38 (S.D. N.Y.1964); Union Asbestos & Rubber Co. v. Evans Products Co., 328 F.2d 949, 952 (7th Cir. 1964). In Union Asbestos, supra, the Seventh Circuit further said "We think the test is likewise less strict in determining, for venue purposes, whether defendant's act of selling amounted to a `sale'" and went on to declare that ". . . the technicalities of sales law should not control whether defendant's degree of conduct within the district was sufficient to constitute `acts of infringement' for venue purposes."

Judge Edelstein in Watsco, supra, points out that the liberal test appears to be chipping away at the completed act doctrine requiring that the sale be completed and consummated within the district where venue is sought to be established in order to constitute it an infringing sale, 232 F.Supp. 44-47. Judge Edelstein notes that Union Asbestos, supra, traced the genesis of the consummated sale doctrine and found it derived from the formulation of a rule by a single judge of the old Circuit Court of the Southern District of New York in Westinghouse Elec. & Mfg. Co. v. Stanley Electric Mfg. Co., 116 F. 641 (C.C.N.Y.1902). Analyzing W. S. Tyler Co. v. Ludlow-Saylor Wire Co., 236 U.S. 723, 35 S.Ct. 458, 59 L.Ed. 808 (1915), which heads the list of cases (as collected at 232 F.Supp. 45) espousing the doctrine, Judge Edelstein concluded that the Supreme Court's discussion of the doctrine was not vital to its decision of the venue issue for the Court first held the defendant did not have a regular and established place of business in the district, then added no act of infringement had occurred in the district since the sale was consummated outside the district and, therefore, he felt the ". . . authority of Tyler as support of the proposition that a consummated sale is required is at best a doubtfully buttressed alternative holding or dictum." pp. 45-46.

In W. S. Tyler v. Ludlow-Saylor Wire Co., supra, only one sale appeared on the record and it was negotiated by the purchaser in order that it might afford the basis of the suit. The defendant's "Eastern Sales Representative," Guerin, who also solicited orders on behalf of another corporation, received the order and forwarded it to his principal in St. Louis for acceptance. The principal accepted the order for the goods in St. Louis, manufactured and shipped the goods from there by express to the purchaser in New York City. The court held that the sale was consummated at St. Louis, when and where the offer was accepted, and did not constitute an infringing act in the Southern District of New York. The Tyler court cited Westinghouse Electric & Mfg. Co. v. Stanley Electric Mfg. Co., supra, as authority for the conclusion that no act of infringment occurred in the district in which the suit was brought. In Westinghouse, the court found that the defendant's representatives in New York forwarded the purchaser's proposals to Pittsfield, Mass. for acceptance and delivery therefrom. The court found that since the representatives had no power to bind their principal in the district where suit was brought, and since acceptance and delivery were also made outside the district, that a completed act of infringement did not occur in the Southern District of New York.² (Emphasis ours).

The case at hand differs factually from those cases which require that the sale be completed and consummated within the district where venue is sought to be established. Memorex has a regular and established place of business in this district where it keeps products, receives orders and makes deliveries.³ From the affidavits presented, we note that Memorex has at least two employees, Ray S. Cook and Lee Hayman, working at that office. Regarding the transaction at issue, the order for the 20 rolls of film was placed at defendant's New Orleans office and according to the affidavit of Cook "if any sales, displays or deliveries of vesicular film were made through a Louisiana source since January 1, 1972, they would have been handled through the New Orleans office." (Emphasis ours). Thus, we have no evidence before us indicating that the order for the 20 rolls of film was accepted at any place other than the defendant's regular place of business in this district. Delivery of the 20 rolls of Memorex film to the plaintiff in New Orleans was made through the New Orleans office of Memorex.⁴ The order for the film was placed...