Mida Mfg. Co. v. Femic, Inc.

• Decision Date: 03 May 1982
• Docket Number: Civ. A. No. 78-4318.
• Citation: 539 F. Supp. 159
• Parties: MIDA MANUFACTURING COMPANY v. FEMIC, INC., et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

539 F. Supp. 159

MIDA MANUFACTURING COMPANY v. FEMIC, INC., et al.

Civ. A. No. 78-4318.

United States District Court, E. D. Pennsylvania.

April 2, 1982.

As Amended May 3, 1982.

David Kanner, Philadelphia, Pa., for plaintiff.

James M. Peck, Duane, Morris & Heckscher, Philadelphia, Pa., for Femic.

Stanley H. Cohen, Caesar, Rivise, Bernstein & Cohen, Ltd., Philadelphia, Pa., for Woolworth's and McCrory's.

MEMORANDUM

RAYMOND J. BRODERICK, District Judge.

Plaintiff Mida Manufacturing Company ("Mida") filed this action against seven defendants, charging each with patent and trademark infringement of certain articles manufactured and sold by Mida. A stipulation and order dismissing the claim against defendant Jamesway Corporation was entered on November 21, 1980. Defendants S. Axelrod Co., Inc. ("Axelrod") and Femic, Inc. ("Femic") have filed motions to dismiss the claims against them for lack of proper venue. Defendants McCrory Stores Corp. ("McCrory") and F. W. Woolworth Co. ("Woolworth's") have filed a motion for summary judgment contending that the patent in question is invalid because Mida sold the patent more than one year before it applied to the U. S. Patent and Trademark Office for the patent. For the reasons hereinafter set forth, the Court will grant the motions to dismiss of Alexrod and Femic, but will deny the summary judgment motion of McCrory and Woolworth's. The Court will first consider the motions to dismiss based on improper venue.

Mida's one-count complaint alleges that it manufactures and sells earrings attached to miniature greeting cards placed in a small box. These small boxes and their contents bear the trade names "Mini-Dot," "Micro-Dot," and "Dot." The plaintiff has obtained a patent on this article and has obtained Certificates of Registration as to the trademarks. Mida alleges that the defendants infringed its patent and trademarks by manufacturing, without Mida's consent, various pieces of costume jewelry containing a forged representation of Mida's patented and trademarked products.

Venue in Patent Actions

Both Axelrod and Femic contend that 28 U.S.C. § 1400(b), which sets forth the requirements for venue in a patent infringement action, does not permit venue to lie in this district. Section 1400(b) provides:

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.

This section is "the sole and exclusive provision controlling venue in patent infringement actions." Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 229, 77 S.Ct. 787, 792, 1 L.Ed.2d 786 (1957).

Section 1400(b) provides that venue in a patent infringement action is proper in a district where the defendant resides or has committed acts of infringement and has a regular and established place of business. Neither acts of infringement alone, nor existence of a regular and established place of business alone, will satisfy the venue requirements in a patent suit. Both conditions must concur to meet the statutory criteria. IPCO Hospital Supply v. Les Fils D'Auguste Maillefer, 446 F.Supp. 206, 208 (S.D.N.Y.1978); Mastantuono v. Jacobsen Manufacturing Co., 184 F.Supp. 178, 179-80 (S.D.N.Y.1960). For the purposes of Section 1400(b), a defendant corporation "resides" in the state in which it is incorporated. Brunette Machine Workers, Ltd. v. Kockum Industries, Inc., 406 U.S. 706, 707, 92 S.Ct. 1936, 1937, 32 L.Ed.2d 428 (1972); Fourco Glass, supra. In order to demonstrate the existence of a "regular and established place of business" in a district it must appear that the defendant is regularly engaged in carrying on a part of its ordinary business on a permanent basis in a physical location within the district over which it exercises some measure of control. IPCO Hospital Corp. v. Les Fils D'Auguste Maillefer, supra, 446 F.Supp. at 208; Dual Manufacturing and Engineering, Inc. v. Burris Industries, Inc., 531 F.2d 1382 (7th Cir. 1976). Furthermore, the mere presence of sales representatives in the district does not create a regular and established place of business for venue purposes in a patent case. IPCO, supra, at 208; Burris, supra. The solicitation of sales alone in a district does not meet the residence requirement of 28 U.S.C. § 1400(b). See Knapp-Monarch Co. v. Casco Products Corp., 342 F.2d 622 (7th Cir.), cert. denied, 382 U.S. 828, 86 S.Ct. 64, 15 L.Ed.2d 73 (1965).

Axelrod and Femic each submitted an affidavit in support of their motions to dismiss. Mida submitted an affidavit in opposition to each motion. These affidavits clearly show that Axelrod and Femic are not subject to venue in the Eastern District of Pennsylvania under 28 U.S.C. § 1400(b). The affidavit of Axelrod's president stated that Axelrod is a New York corporation with its only offices in New York City, and that it employs fifteen people, all of whom work in New York City. Axelrod is not qualified or registered to do business in any other jurisdiction, including Pennsylvania. Alexrod does not own or rent any property, nor does it maintain a bank account, a telephone listing, sales or business records, samples, supplies, or inventories within the Eastern District of Pennsylvania. Axelrod does not exercise control over any sales representative within the district. Its only connections with this district are (1) the distribution of catalogs for purposes of soliciting business and the sale of some cataloged items, and (2) the sale of craft supplies through an independent sales representative who has offices in New Jersey. The affidavit of an officer of Mida, submitted in opposition to Axelrod's motion to dismiss, states that Axelrod advertises in certain trade magazines circulated to buyers in Philadelphia, and that Mida believes that sales are made by the defendant in the Philadelphia area.

The affidavit of Femic's president stated that Femic is a Rhode Island corporation with its principal place of business in Providence, Rhode Island, and no place of business outside Rhode Island. Femic has never been registered to do business in Pennsylvania, has never had an office or place of business in Pennsylvania, and has no employees or salesmen who regularly solicit business in Pennsylvania. Furthermore, Femic does not maintain a telephone listing or bank account in Pennsylvania and does not own or lease any property in Pennsylvania. Femic's only sales in Pennsylvania are mailed into the state pursuant to orders it receives by mail or telephone and accepts at one of its offices in Rhode Island. Mida's affidavit in opposition to Femic's motion states that the plaintiff purchased a set of Femic "Mini-Dots" in Philadelphia from a New Jersey resident, which set was sent to the New Jersey resident by Femic.

The affidavits show that Axelrod and Femic does not "reside" in this district because they are corporations of New York and Rhode Island, respectively. Neither defendant has a regular and established place of business in this district and neither defendant has an office or any location within this district over which it exercises any control. See IPCO Hospital Supply Corp. v. Les Fils D'Auguste Maillefer, 446 F.Supp. 206, 208 (S.D.N.Y.1978); Dual Manufacturing and Engineering, Inc. v. Burris Industries, Inc., 531 F.2d 1382 (7th Cir. 1976). Neither company employs salesmen or sales representatives in this district, and the affidavits show only that each company does solicit a certain amount of business in this district. The nature of these defendants' activities within the district does not constitute a regular and established place of business within the meaning of 28 U.S.C. § 1400(b). See Knapp-Monarch Co. v. Casco Products Corp., 342 F.2d 622 (7th Cir.), cert. denied, 382 U.S. 828, 86 S.Ct. 64, 15 L.Ed.2d 73 (1964). Therefore, venue does not lie in this district with respect to Mida's patent infringement claim.

Venue in Trademark Actions

Mida has also asserted a claim of trademark infringement against each defendant arising from the defendants' alleged use of the labels "Mini-Dots," "Micro-Dots," and "Dots," in connection with sales of the patented articles. Approximately the same evidence will be introduced by Mida at trial to seek to prove both its trademark infringement claims and its patent infringement claim. In such a case, if venue for the plaintiff's patent infringement claim is properly laid in this district, the Court should retain jurisdiction over Mida's trademark infringement claim. Bradford Novelty Co. v. Manheim, 156 F.Supp. 489 (S.D.N. Y.1957); Dolly Toy Co. v. Bancroft-Rellim Corp., 97 F.Supp. 531 (S.D.N.Y.1951); Ferguson v. Ford Motor Co., 77 F.Supp. 425 (S.D.N.Y.1948); see 1 Moore's Federal Practice ¶ 0.140(5) at 1329 (2d ed. 1979).

No specific statute governs trademark infringement claims. Therefore, the venue provisions of 28 U.S.C. § 1391, the general venue statute, are applicable to such claims. Sections 1391(a), 1391(d) and 1391(e) are clearly inapplicable to this action. Section 1391(b) provides:

A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, or in which the claim arose, except as otherwise provided by law.

Section 1391(c) provides:

A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.

The meaning of "doing business" under § 1391(c) is not coextensive with the "minimum contacts" definition of "doing business" in connection with service of process which has developed in the wake of International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). As the Court stated in Philadelphia Housing Authority v. American Radiator & S. San...