Muller v. Olin Mathieson Chemical Corporation

• Decision Date: 29 November 1968
• Docket Number: No. 275,Docket 31661.,275
• Citation: 404 F.2d 501
• Parties: Paul A. MULLER and Celfil Company Establishment, Plaintiffs-Appellants, v. OLIN MATHIESON CHEMICAL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

404 F.2d 501 (1968)

Paul A. MULLER and Celfil Company Establishment, Plaintiffs-Appellants, v. OLIN MATHIESON CHEMICAL CORPORATION, Defendant-Appellee.

No. 275, Docket 31661.

United States Court of Appeals Second Circuit.

Argued January 16, 1968.

Decided November 29, 1968.

Peter J. O'Shea, Jr., Royall, Koegel, Rogers & Wells, Caesar L. Pitassy, William F. Koegel, New York City, David E. Varner, Cushman, Darby & Cushman, Washington, D. C., James A. Velde, Gardner, Carton, Douglas, Chilgren & Waud, Chicago, Ill., for plaintiffs-appellants.

N. Dale Sayre, New York City (McLean, Morton & Boustead, New York City, of counsel, Roger T. McLean and J. Donald Tierney, New York City, on the brief) for defendant-appellee.

Before LUMBARD, Chief Judge, and WATERMAN and FEINBERG, Circuit Judges.

WATERMAN, Circuit Judge:

Plaintiff-appellant Paul A. Muller, a Swiss citizen, invented a paper filter for cigarettes and a process and apparatus for making the filter. Plaintiff-appellant Celfil Company Establishment is a legal entity organized under the laws of Liechtenstein to exploit the inventions and patent rights of plaintiff Muller. Defendant-appellee Olin Mathieson Chemical Corporation is a Virginia corporation doing business in North Carolina and having a place of business in New York.

This case is but one of a long series of legal battles between the parties. On April 18, 1955 Muller filed a patent application in the United States Patent Office, which became United States patent No. 2,995,481 (hereinafter "'481") on August 8, 1961. On June 3, 1958, more than three years after plaintiff Muller had filed his United States patent application, defendant's employees, Milton O. Schur and James C. Rickards, filed an application for a United States patent for a similar filter and filter process. The Schur-Rickards application was granted on September 27, 1960 as United States patent No. 2,954,036 (hereinafter "'036"). At plaintiffs' request, the Patent Office declared an interference between defendant's '036 patent and Muller's patent application. Subsequently the Board of Patent Interferences ruled against plaintiffs, finding defendant's patent different from the invention described in Muller's patent application. Plaintiffs' court action challenging the Board's decision was, upon stipulation of the parties, dismissed with prejudice by the United States District Court for the Southern District of New York, Civil Action 64-1688, on November 27, 1967.

In another patent interference proceeding, also relating to a paper filter cigarette process and apparatus, which was invoked in a three-party proceeding by both plaintiffs and defendant to contest a patent owned by the Kimberly-Clark Corporation (hereinafter called the "Marogg patent") the Patent Office Board of Patent Interferences again found against plaintiffs and awarded priority to defendant, the defendant, after the interference had been declared, having reached an agreement with Kimberly-Clark that as between the two of them the defendant had priority of invention. Plaintiffs' action against Kimberly-Clark and Olin Mathieson to have the Board decision reversed was, by stipulation, discontinued on November 28, 1967, United States District Court for the Southern District of New York, 65-967. On March 8, 1966, while Civil Action 65-967 was pending, defendant was granted United States patent No. 3,238,852 (hereinafter "'852") which incorporates claims from the Marogg patent.

In this action, which was instituted in the District Court for the Western District of North Carolina, and later transferred to the Southern District of New York, plaintiffs seek relief for alleged misappropriation of their invention and seek a declaratory judgment that defendant's patents '036 and '852 are invalid. Plaintiffs contend patent '036 is invalid by reason of prior art and invention, 35 U.S.C. §§ 102, 103; and that, in any event, it is unenforceable against plaintiffs because defendant wrongfully appropriated plaintiff Muller's invention. The invalidity of patent '852 is urged for similar reasons and on the ground that the award of priority to defendant was obtained through a fraudulent agreement with the Kimberly-Clark Corporation.

Plaintiffs' complaint also included a prayer for equitable relief in the form of a constructive trust upon defendant's foreign patents and patent applications that correspond to plaintiffs' '036 patent and a prayer for an order to compel the assignment of those patents and patent applications to plaintiffs. Alternatively, plaintiffs sought an injunction enjoining defendant from suing them for infringement of any of these foreign patents, and from suits that defendant might bring which would impede plaintiffs' expansion.

Defendant, pursuant to Rule 12(b) (6), Fed.R.Civ.P., moved to dismiss plaintiffs' complaint on the ground that the complaint failed to state a claim upon which relief could be granted. The district court granted the motion with leave to plaintiffs to amend. Plaintiffs then moved under Rule 41(a) (2), Fed. R.Civ.P. to have their action dismissed without prejudice. Taking into consideration the motion papers submitted by both counsel, the trial judge dismissed the plaintiffs' complaint with prejudice, on the grounds that the complaint failed "to disclose an actual controversy between the parties upon which declaratory relief can be granted under the Declaratory Judgment Act, 28 U.S.C. § 2201."¹

We reverse this order and remand with directions to reopen the pleadings so as again to permit plaintiffs to proceed with their complaint, if so advised.

The existence of an actual controversy in the constitutional sense is of course necessary to sustain jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201. Dr. Beck & Co., G. M. B. H. v. General Electric Co., 317 F.2d 538 (2 Cir. 1963). The difference between definite, concrete and substantial controversies which are justiciable, and hypothetical, abstract, or academic ones which are not justiciable, is one of degree, to be determined on a case by case basis. Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S. Ct. 510, 85 L.Ed. 826 (1941); Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-241, 57 S.Ct. 461, 81 L.Ed. 617 (1937); Wembley, Inc. v. Superba Cravats, Inc., 315 F.2d 87, 89 (2 Cir. 1963).

In patent cases of this kind, it is clear that a justiciable controversy is present if defendant, the patentee, has charged plaintiff with infringement, or has threatened plaintiff with an infringement suit, either directly or indirectly. Dr. Beck & Co. G. M. B. H. v. General Electric Co., supra; Technical Tape Corp. v. Minnesota Mining & Mfg. Co., 200 F.2d 876 (2 Cir. 1952). Professor Moore states that the requirement that there has been a "charge of infringement" has been given a very liberal interpretation. 6A Moore's Federal Practice ¶ 57.20 at 3119 (2d ed. 1966). The cases substantiate his view.

An infringement suit against one of plaintiff's licensees, Joseph Bancroft & Sons Co. v. Spunize Co. of America, 268 F.2d 522 (2 Cir. 1959) or against another manufacturer of a similar product, Dewey & Almy Chemical Co. v. American Anode, Inc., 137 F.2d 68 (3 Cir.), cert. denied, 320 U.S. 761, 64 S.Ct. 70, 88 L. Ed. 454 (1943), a notice in a trade journal, Rhodes Pharmacal Co.,...