Knapp-Monarch Co. v. Casco Products Corp.

• Decision Date: 23 March 1965
• Docket Number: No. 14788.,14788.
• Citation: 342 F.2d 622
• Parties: KNAPP-MONARCH CO., Plaintiff-Appellant, v. CASCO PRODUCTS CORP. and E. A. Langenfeld Associates, Ltd., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

342 F.2d 622 (1965)

KNAPP-MONARCH CO., Plaintiff-Appellant, v. CASCO PRODUCTS CORP. and E. A. Langenfeld Associates, Ltd., Defendants-Appellees.

No. 14788.

United States Court of Appeals Seventh Circuit.

March 23, 1965.

Norman Lettvin, Chicago, Ill., Seymour Rothstein, George P. McAndrews, Bair, Freeman & Molinare, Chicago, Ill., of counsel, for appellant.

Thomas F. McWilliams, Granger Cook, Jr., Adolph L. Haas, Howard W. Clement, Chicago, Ill., for appellee Casco Products Corporation.

Before CASTLE, KILEY, and SWYGERT, Circuit Judges.

SWYGERT, Circuit Judge.

This is an action for patent infringement brought by plaintiff Knapp-Monarch Company against defendants Casco Products Corporation and E. A. Langenfeld Associates, Ltd. Casco moved to dismiss the complaint for lack of proper venue, and the district court granted the motion. Langenfeld moved to dismiss the complaint on the ground that it had not infringed. The district court treated Langenfeld's motion as one for summary judgment and dismissed the complaint on the basis of de minimis. Plaintiff has appealed from the orders of dismissal. A summary of the facts follows.

Casco is a Connecticut corporation, having its principal place of business in Bridgeport, Connecticut. It manufactured and sold a steam and spray iron which plaintiff alleged infringed United States Letters Patent No. 3,038,269. Casco's only manufacturing plant is in Bridgeport. During the time relevant for our consideration, it had no employees in the State of Illinois. Although it maintained an account in a Chicago bank, it had no office or other facilities in the state.

The Master Electric Service Company of Chicago had a telephone listing as the "Casco Authorized Service" and was authorized by Casco to make repairs on appliances under the terms of a warranty which accompanied each Casco product. In 1963 Casco initiated an across-the-counter replacement policy. Under this policy the retailer or wholesaler who sold a defective Casco product was authorized by Casco to honor its warranty by taking back the product and giving to the customer a new one at no charge. The retailer or wholesaler was reimbursed by Casco.

For many years Casco rented space at the Housewares Show, a national trade show which is held semiannually in Chicago. During these shows Casco also rented a "hospitality suite" for entertaining prospective customers and for holding general sales meetings. It is conceded that two of the accused devices were sold at the 1963 shows.

Langenfeld was a manufacturer's representative for Casco's products in the Chicago area. A written agreement between the two companies described Langenfeld as an "independent businessman." Langenfeld had its office in the Merchandise Mart in Chicago, paying its own rent and other expenses. These expenditures were not reimbursed by Casco. Although Casco's name was listed on the directory of the Mart to assist customers in contacting Casco's representative, the Casco name was not on the door of the Langenfeld office. As a manufacturer's representative, Langenfeld solicited orders for Casco products for which it received a commission. The orders were forwarded to Casco in Connecticut. The latter made shipments directly to the purchaser and the purchaser made payments directly to Casco. Casco called upon Langenfeld at times to check on delinquent accounts, but Langenfeld did not comply with these requests. Samples of the accused irons were displayed in Langenfeld's offices though they were never demonstrated or used by Langenfeld. Langenfeld made a gift or an accommodation sale of two of the accused irons to its employees.

On November 12, 1963, one week after filing of the instant action, Casco transferred that portion of its business relating to the accused devices to another company; and by the end of November, 1963, Langenfeld no longer represented Casco.

Casco's motion to dismiss.

The Supreme Court in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 77 S.Ct. 787, 1 L.Ed.2d 786 (1957), made it certain that venue in patent infringement actions is governed exclusively by section 1400(b) of the Judicial Code, 28 U.S.C. § 1400(b). That section provides that such actions 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."

Casco, being a Connecticut corporation, was not a resident of Illinois. Accordingly, venue in the Northern District of Illinois could not be based on the first alternative requirement of the statute. Casco admitted, however, that it sold two of the accused devices during the 1963 Housewares Show in Chicago. Therefore, the matter of venue depends upon whether the defendant had a regular and established place of business within the district.

Casco had many varied contacts in the State of Illinois. These contacts, simply because of their multiplicity and variety, do not demonstrate that the company had a regular and established place of business within the state, although they might well indicate that it was "doing business" in the Chicago area within the meaning of that term as it is contained in the general venue statute, section 1391(c) of the Judicial Code, 28 U.S.C. § 1391(c).¹ Despite plaintiff's urging, we decline, however, to substitute the "doing business" test in section 1391 (c) for the "regular and established place of business" test in section 1400(b). If we were to treat the two phrases as synonymous, we would ignore the holding in Fourco Glass to the effect that section 1391(c) does not supplement section 1400(b). Moreover, we would be inattentive to what the Court said in a later decision, when referring to section 1400 (b) and Fourco Glass. "The language of this special statute is clear and specific." Schnell v. Peter Eckrich & Sons, Inc., 365 U.S. 260, 81 S.Ct. 557, 5 L.Ed.2d 546 (1961).

The narrow question remains: Did Casco's contacts and activities in Illinois amount to having "a regular and established place of business" within the meaning of section 1400(b)? We start with an analysis of its separate activities and contracts. Initially, we hold that Casco's maintaining a sales representative in Chicago does not meet the statutory test. In W. S. Tyler Co. v. Ludlow-Saylor Wire Co., 236 U.S. 723, 35 S.Ct. 458, 59 L.Ed. 808 (1915), a Missouri corporation employed a sales representative in New York City. He solicited orders which were completed at the home office. The company paid him a salary, commission on sales, and traveling expenses. It also paid rent on the quarters he occupied to transact company business. In these circumstances, the Court held that the company did not have a regular and established business in New York so as to come within the meaning of section 1400 (b)'s statutory predecessor. We are in agreement with the First Circuit's appraisal of the Tyler decision to the effect that solicitation of sales alone does not meet the statutory requirement. General Radio Co. v. Superior Electric Co., 293 F.2d 949 (1st Cir. 1961). The fact that Casco had its name listed on the building directory where Langenfeld had its office is not determinative when we are mindful that Casco paid none of Langenfeld's expenses, had no employees in the latter's office, and exercised no control over its operation.

Similarly, the fact that Casco's warranties against defective products were honored by its dealers and its authorized repair station does not mean that the company had a regular and established place of business in Chicago. This activity, although concerned with Casco's products, was conducted at places of business which were independently operated. For more obvious reasons, Casco's maintenance of a bank account in Chicago and the listing of its name in the classified telephone directory do not by themselves signify that Casco had a regular and established place of business in the city.

We next consider Casco's participation in the...