Kaplan v. Helenhart Novelty Corporation

• Decision Date: 05 May 1950
• Docket Number: Docket 21597.,No. 194,194
• Citation: 182 F.2d 311
• Parties: KAPLAN et al. v. HELENHART NOVELTY CORPORATION et al.
• Court: U.S. Court of Appeals — Second Circuit

182 F.2d 311 (1950)

KAPLAN et al. v. HELENHART NOVELTY CORPORATION et al.

No. 194, Docket 21597.

United States Court of Appeals Second Circuit.

Argued April 10, 1950.

Decided May 5, 1950.

Levisohn, Niner & Cohen, New York City, Edwin Levisohn and Harry Cohen, New York City, of counsel, for appellants.

Friedman & Friedman, New York City, Hyman R. Friedman, New York City, of counsel, for appellees.

Before L. HAND, Chief Judge, and SWAN and CHASE, Circuit Judges.

CHASE, Circuit Judge.

The two questions to be answered on this appeal are whether there is federal jurisdiction of all of the causes of action alleged in the complaint and in the counterclaim and whether a temporary injunction was improvidently granted on motion of the plaintiffs.

The plaintiffs, who are partners in business under the firm name of The Plastrix Company and are both residents of New York, brought this suit in the District Court for the Southern District of New York against defendants, a New York corporation and one of its officers, also a New York resident, for a declaratory judgment and for damages for unfair competition. They sought to have United States Patent No. 2,178,190 held invalid, and in the alternative held not infringed by them if valid; to have an unregistered trade-mark of the defendants held invalid, or, if valid, not infringed; for an accounting of profits and for damages due to the misuse of both the patent and the trade-mark; and for a temporary and permanent injunction to prevent further misuses of both the patent and the trade-mark.

The defendants answered by way of general denial of the allegations and filed a counterclaim alleging the infringement by the plaintiffs of both the patent and the trade-mark, seeking a temporary and a permanent injunction against the plaintiffs, together with a judgment for profits and damages. Upon hearing on affidavits before trial on the merits, the court held that it had jurisdiction of the action and granted the plaintiff's motion for a temporary injunction. This appeal followed.

There can be no doubt but that the court did have jurisdiction of that part of the suit which put in issue the validity and infringement of the patent. But since the trade-mark is unregistered and there is no diversity jurisdiction, the cause of action based on its alleged infringement or on its misuse is not by itself within the jurisdiction of a federal court. Nor did its joinder with the cause of action on the patent suffice to give the district court jurisdiction within Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148, or within § 1338 (b) of the Judicial Code, 28 U.S.C.A. § 1338(b), which reflects the so-called Hurn v. Oursler doctrine. This is so because rights in issue under the patent and those under the trade-mark are not dependent upon substantially the same facts and those under the trade-mark are not so ancillary to the patent jurisdiction of the court as to be but an incident of that. Armstrong Paint & Varnish Works Co. v. Nu-Enamel Corp., 305 U.S. 315, 325, 59 S.Ct. 191, 83 L.Ed. 195; Zalkind v. Scheinman, 2 Cir., 139 F.2d 895, certiorari denied, 322 U.S. 738, 64 S.Ct. 1055, 88 L.Ed. 1572; Derman v. Stor-aid, Inc., 2 Cir., 141 F.2d 580, 584, dismissed, 323 U.S. 805, 65 S.Ct. 25, 89 L.Ed. 643. Even though the trade-mark may have been applied to some of the articles claimed to be covered by the patent, the different rights still rest upon the different facts essential to their establishment.

The alleged misuse of the patent, however, does not fall within the same jurisdictional restrictions. This misuse lay in the defendants' claimed giving of notices to the plaintiffs and to its customers that the plaintiffs' articles of manufacture, which were sold to those customers, infringed the patent, and the defendants' failure to bring suit on the patent within a reasonable time thereafter to vindicate their assertions of infringement. The validity and scope of the patent and the right of the plaintiffs, notwithstanding it, to conduct their business as they have, are here involved. This cause of action is, therefore, within § 1338(b) of the Judicial Code and the court has jurisdiction of it. See E. Edelmann & Co. v. Triple-A Specialty Co., 7 Cir., 88 F.2d 852, certiorari denied, 300 U.S. 680, 57 S.Ct. 673, 81 L.Ed. 884; Mitchell & Weber, Inc. v. Williamsbridge Mills, D.C., S.D.N.Y., 14 F.Supp. 954.

But though there was jurisdiction to issue the temporary injunction granted the plaintiffs, the effect of it was to give them a substantial part of the relief they sought in advance of a trial on the merits. As to their right to that, a more complete statement of the facts, as shown by this record, is necessary.

The defendants have been manufacturing and selling plastic toys, puzzles and novelties since 1939, the corporate defendant having been organized in 1938. The patent in suit was granted to defendant Steinhardt in October 1939 for a puzzle made of six interlocking pieces which in the whole may take various forms. He has owned it ever since it was granted and the defendants have since manufactured and sold puzzles they claimed to be covered by it. In 1946 the plaintiffs began to manufacture and sell plastic toys and novelties, including plastic puzzles. This was several years after one of them, Kaplan, had some discussion with the individual defendant concerning the business in general and apparently some fruitless discussion about Kaplan's obtaining an interest in the defendants' business.

On January 16, 1948, the defendants' attorney gave Kaplan notice by letter that the plaintiffs were infringing the above mentioned patent and the defendants' trademark "Lucky" by making and selling what they called a "Lucky Football Puzzle Key Chain" and demanded immediate assurance...