Lewis Invisible S. Mach. Co. v. Columbia B. Mach. Mfg. Corp.

• Decision Date: 06 January 1936
• Docket Number: No. 219.,219.
• Citation: 80 F.2d 862
• Parties: LEWIS INVISIBLE STITCH MACH. CO. v. COLUMBIA BLINDSTITCH MACH. MFG. CORPORATION.
• Court: U.S. Court of Appeals — Second Circuit

80 F.2d 862 (1936)

LEWIS INVISIBLE STITCH MACH. CO. v. COLUMBIA BLINDSTITCH MACH. MFG. CORPORATION.

No. 219.

Circuit Court of Appeals, Second Circuit.

January 6, 1936.

Henry L. Burkitt, of New York City, for appellant.

Victor D. Borst, of New York City (George T. Gill, of New York City, of counsel), for appellee.

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

L. HAND, Circuit Judge.

The plaintiff filed the usual bill in equity against the defendant for infringement of a patent. The defendant answered making certain denials, setting up some prior references and uses, and concluding with a defence and counterclaim. The defence is based upon the notion that the plaintiff has disqualified itself from suing in equity because of its unjust conduct in regard to the patent in suit; the counterclaim incorporated the defence in toto and asked for damages and an injunction. Thus the counterclaim is in effect only the defence in a new dress, and to it we may therefore confine our consideration. It consists of seventeen articles, 47 to 64 inclusive, in general designed to allege that the plaintiff had been engaged in a course of conduct, partly alone, partly in concert with others, all directed to monopolize the "blind stitch sewing machine" industry, by driving out competitors through falsehood and threats. The first three articles, 47, 48 and 49, are by way of inducement and allege that the defendant's market is composed in large part of small dealers who are fearful of any patent litigation, and at once without contest will return to the manufacturer any machine challenged by a patentee; and that the plaintiff, practicing upon this sensitiveness of the trade, has tried by unfair means to frighten the defendant's customers. Articles 50 to 53 inclusive, allege that the plaintiff continuously represented to the defendant's customers that its machines infringed the plaintiff's patents, and threatened "without justification" to sue them, with the purpose of intimidating all competitors, especially the defendant, and "stifling lawful and fair competition." That the plaintiff did this with full knowledge that its supposed inventions had all been in public use long before they were applied for; in spite of this it continued to misrepresent the facts. That in conjunction with one Mueller, the patentee of the patent in suit, the plaintiff for years watched developments in the trade, and filed applications for patents covering every new step as it appeared. The purpose in procuring such patents was to further this course of intimidation because the plaintiff knew that during the ensuing litigation with the defendant, its business would be ruined. Finally, though the patent in suit was procured nearly five years ago, and though the plaintiff had continuously used it to intimidate the trade, it had never sued anyone until it brought the suit at bar.

The remaining articles of the defence, 54 to 64 inclusive, lay a conspiracy. They allege that the plaintiff and two other persons named Buono (who did business as a company), conspired to destroy the defendant's business and others' by the threats of suits for infringement and by bringing such suits against users of "blindstitch" machines. The conspirators knew that the patents on which they relied covered machines previously in use, which had not been invented by the patentees. Merely to monopolize the trade and destroy the defendant, they made a cross-licensing agreement, and falsely broadcast that the trade was infringing their void patents, until, finding these threats ineffectual, they began to attack the defendant and other competitors by means of indiscriminate suits, which they knew to be groundless. The defendant's customers because of these practices refused any longer to deal with it, and cancelled their orders; because of all the conspirators' acts set forth in articles 47 to 63 inclusive, the defendant has been injured.

This was the defence; the counterclaim was in a single article which alleged that as set forth in the defence, "the plaintiff either individually or in association with its conspirators, has undertaken * * * to destroy defendant * * * and to suppress...