MacLaren v. BIW Group Inc.
| Decision Date | 13 July 1971 |
| Docket Number | No. 70 Civ. 5348.,70 Civ. 5348. |
| Citation | 329 F. Supp. 545 |
| Parties | Owen Finlay MACLAREN and Miron Charles Bell, Plaintiffs, v. B-I-W GROUP INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
Kane, Dalsimer, Kane, Sullivan & Kurucz, New York City, for plaintiffs by Philip T. Dalsimer, Charles R. Hoffman, Gerald Levy, New York City, of counsel.
Greenman, Zimet, Haines & Goodkind, New York City, for defendant by Howard I. Rhine, Gottlieb, Rackman & Reisman, New York City, of counsel.
In this action the plaintiffs are the inventor and exclusive American licensee of a certain folding baby stroller which folds into a "stick" under patent No. 3,390,893 issued by the United States Patent Office on July 2, 1968. They claim that the defendant has infringed the patent. The defendant denies the material allegations of the complaint and counterclaims for a declaratory judgment of patent invalidity and for unfair competition. The validity of the patent has not been previously adjudicated by any Court. The motion by the defendant now before the Court will be described below.
The defendant is a corporation which was organized approximately one year ago with its principal place of business in Briarcliff Manor, New York. After having seen the plaintiffs' patented stroller, the defendant approached the plaintiffs for the purpose of negotiating a sublicense under the patent in suit. The negotiations fell through. The defendant sought patent counsel who, after the negotiations fell through, rendered an opinion to the defendant that the patent involved was invalid primarily because of the existence of a prior (1930) patent reference for a "TENT" "which comprises a collapsible framework" and which was not considered by the Patent Office in granting patent No. 3,390,893.
After obtaining the opinion of counsel the defendant started to market an unpatented folding stroller. The defendant's unpatented folding stroller appears to be virtually the same as the plaintiffs' patented folding stroller. That is obvious from the photographs submitted on the motion and from a demonstration of the two competing strollers by the plaintiffs' counsel at oral argument.1 The defendant contends, and it is not denied, that its unpatented folding stroller sells at wholesale for $13.50 per unit while the plaintiffs' patented version is sold for $18 per unit.
After it came to the plaintiffs' attention that the defendant was manufacturing and selling an allegedly infringing product to retailers they commenced this action on December 7, 1970. Apparently in response the defendant on or about January 1, 1971 distributed nationally a single-spaced, two-page letter to the trade (juvenile furniture retail buyers) which is not only lengthy but is confusing and misleading. Although disclaiming any "monopoly rights" it nevertheless speaks of "conflicting patent claims" as though it did claim patent rights of its own, although it is undisputed that there is only one registered patent and that is the one owned by the plaintiffs. In early January 1971 the defendant also embarked upon an extensive national advertising campaign for the purpose of marketing its unpatented folding stroller.
Later in January 1971, after the defendant had mailed its letter to the trade and after some of the advertisements had appeared, the plaintiff Bell mailed letters to two of his customers, to a third retailer, and to a sales representative of the defendant, advising them of the pending lawsuit. All of these notices make the following statement: "You will surely understand that we must take whatever action we deem appropriate should we find that you are offering for sale a device that infringes U. S. Patent No. 3,390,893." Two other letters, one dated the first week in January 1971 and the other in March 1971 were written by the plaintiffs' attorneys. One was written to a sales agent for the defendant who also leases a showroom to the defendant, the other to a retailer. These letters gave notice of the patent (enclosing a copy) and stated: "* * * We presume in the present situation that you are unaware of the presence of the patent; accordingly, you will take the necessary steps to rectify the situation and immediately cease and desist from further marketing of your stroller and infringement of the aforesaid patent." Defendant also claims that a great many retailers and some of those persons previously mentioned have been threatened orally with lawsuits on more than one occasion, and in a sealed affidavit has given a long list of their names. The plaintiffs do not deny that they have informed the trade of their ownership of the patent or that they have threatened suit.
On May 4, 1971 the plaintiffs, having discovered where at least some of the parts being used in defendant's unpatented folding stroller were being manufactured instituted an action for infringement in the Western District of New York against Genesee Plastics Company, Inc. (Genesee) of Rochester, New York.2 The defendant concedes that Genesee and another corporation related to Genesee at the same premises in Rochester do work in connection with the manufacture and assembly of the defendant's unpatented stroller. Another company, Jefferson Leisure Products Company (Jefferson) of Annandale, Virginia, is a wholly owned subsidiary of the defendant which is engaged as a sales agent for the defendant. From the papers submitted by the defendant it is unclear where else the defendant and its agents are manufacturing their unpatented stroller and whether there are any other corporations or entities with common principals also engaging in the manufacture and sale of the unpatented stroller.
The defendant now moves for an order: (1) enjoining the plaintiffs from prosecuting the action against Genesee in the Western District of New York; (2) enjoining the plaintiffs from instituting and prosecuting additional actions for patent infringement under patent No. 3,390,893 against customers and sales representatives of the defendant and vendors of component parts to the defendant; and (3) enjoining the plaintiffs from communicating with customers and potential customers of the defendant, sales representatives of the defendant and vendors of component parts to the defendant either orally or in writing or otherwise harassing such persons in connection with patent No. 3,390,893.
The defendant contends that since the instant action was instituted approximately five months before the Genesee action and involves the real parties in interest and the very same issues (see Coleco Industries, Inc. v. Empire Plastic Corp., 321 F.Supp. 146 (S.D.N.Y.1970)), the Genesee action should be stayed. It contends that an adjudication of this lawsuit favorable to the defendant will be dispositive of the Genesee action under the doctrine of collateral estoppel (see Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971)), and that it has undertaken, in any event, to defend and indemnify Genesee. It undertakes to have Genesee intervene as a defendant in the case at bar if the Western District action is stayed. The Court sees no sound reason why the Western District action should not be stayed in the interests of judicial economy and since there would be no inconvenience to any party. The New York action is not only first in time but it has proceeded well into the discovery stage. The lawyers in New York are "of counsel" in Rochester. This was the way pointed by the Supreme Court in Kerotest Mfg. Co. v. C-O-Two Co., 342 U.S. 180, 185, 72 S.Ct. 219, 96 L.Ed. 200 (1952) and again in the philosophy of the Blonder-Tongue case, supra. For these reasons and because we in no way wish to impair the ability of the plaintiffs to collect any judgment for infringement which they might ultimately obtain, the Court will order the plaintiffs to take no further steps in the Western District action upon the condition that Genesee, within fifteen days from the date of the order to be settled herein, intervenes in this action as a party defendant.
With respect to the application to enjoin the plaintiffs from harassing defendant's customers, sales agents and vendors, and from instituting or commencing further actions against said customers, sales agents and vendors, it is contended that the...
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