National Cash Register Co. v. Remington Arms Co., Inc.

• Decision Date: 29 July 1922
• Docket Number: 443.
• Citation: 283 F. 196
• Parties: NATIONAL CASH REGISTER CO. v. REMINGTON ARMS CO., Inc., et al.
• Court: U.S. District Court — District of Delaware

283 F. 196

NATIONAL CASH REGISTER CO. v. REMINGTON ARMS CO., Inc., et al.

No. 443.

United States District Court, D. Delaware.

July 29, 1922

Melville Church, of Washington, D.C., and William G. Mahaffy, of Wilmington, Del., for plaintiff.

Drury W. Cooper and George Ramsey, both of New York City, and William S. Hilles, of Wilmington, Del., for defendant Remington Arms Co.

MORRIS District Judge.

This is a bill in equity filed by the National Cash Register Company against Remington Arms Company, Incorporated, and Frederick L. Fuller, to restrain the infringement by the defendants of three letters patent, owned by the plaintiff, relating to cash registers. The case is now before the court on a motion for a preliminary injunction, wherein is involved only the unadjudicated patent to Fuller, No. 1,394,256, the application for which was assigned by Fuller to the plaintiff.

Ordinarily if the validity of a patent has been neither adjudicated nor acquiesced in by the public, a preliminary injunction will not be granted. Several courts have held, however, that the special presumption of validity lying at the foundation of a plaintiff's right to a preliminary injunction arises, if the defendant is estopped from denying the validity of the patent. Time Telegraph Co. v. Himmer (C.C.) 19 F 322; Daniel v. Miller (C.C.) 81 F. 1000; Continental Wire Fence Co. v. Pendergast (C.C.) 126 F. 381; Mellor v. Carroll (C.C.) 141 F. 992; Northern Insulating Co. v. Union Fibre Co. (D.C.) 199 F. 793. The plaintiff here relies upon estoppel.

The assignor of a patent is estopped, when sued, by his assignee for infringement, to deny the validity of the patent he has sold. Standard Water Systems Co. v. Griscom-Russell Co., 278 F. 703 (C.C.A. 3); Walker on Patents, Sec. 469. The assignor of an application for a patent is estopped to deny the validity of a claim of the patent subsequently granted thereon, if such claim is supported by the specification as it stood at the time of the assignment. This is true, without regard to whether or not the claim had or had not been then made. Dynamic Balancing Mach. Co. v Akimoff (D.C.) 279 F. 285; Foltz Smokeless F. Co. v. Eureka Smokeless F. Co., 256 F. 847 (C.C.A. 7), 168 C.C.A. 193. Fuller, the assignor to the plaintiff of the application for the patent here involved, though made a party defendant, was not served with process, and has not voluntarily appeared.

The plaintiff contends, however, that under the facts of this case 'the estoppel which applies to Fuller extends also to the defendant company. ' Those facts are in substance that Fuller, an inventor of broad experience, entered the employ of the plaintiff in the year 1909 under a contract providing for his employment for one year and for the assignment to the plaintiff of any cash register inventions he might make during the term of his employment. It further provides that if, 'at the end of this contract,' Fuller should leave the plaintiff, it being still willing to employ him at a salary equal to that he is then receiving, he will not, for a period of one year immediately following the cessation of his employment with plaintiff, enter the services of any other cash register company as an inventor, or be in any way directly or indirectly associated with any such company during such period of one year. By that contract Fuller also agreed to assign and transfer to the plaintiff any invention in cash registers, recorders, or similar mechanisms which he might make during such period of one year following such termination of employment.

A second contract was made between Fuller and the plaintiff in 1910, in which he agreed to assign to the plaintiff any further inventions in cash registers he might make while in the employment of the plaintiff, or 'which depend for utility upon any such aforesaid inventions devised by me during such employment, whether such improvements be made during such employment or subsequent thereto. ' Fuller, feeling insecure in his position because of the custom of the plaintiff company summarily to discharge its employees, made repeated efforts to secure a time contract, but failed. He continued in the employ of the plaintiff, however, until September 15, 1917, when he resigned. The plaintiff accepted his resignation as of August 31st. He entered the employ of the Remington Arms Union Metallic Cartridge Company, defendant's predecessor, on October 1, 1917, and now remains in the employ of the defendant as the 'head of a department.'

Fuller invented and designed the machine of the patent in suit. He began work upon it in 1912. A full-sized machine was built and completed about June, 1916. At the request of plaintiff the application for the patent in suit, together with an assignment thereof to plaintiff, were executed by Fuller on April 20, 1918. The patent was granted October 18, 1921. The assignment applied, not only to the invention of the application, but also to 'any improvement thereon now or hereafter made by me depending for utility upon said invention.'

The defendant company is not the creature, agent, or alter ego of Fuller. It is a corporation of great magnitude. During the late war it was engaged in manufacturing munitions. It built up a large organization. Prior to the armistice it began to consider the uses to which its organization could be put after the end of the war. It investigated the cash register field. After much contemplation it was decided to lay the foundations for that business. It now employs about 800 men in that department. Fuller invented and designed the alleged infringing machine and actively participated in its manufacture by the defendant company. At the time Fuller was employed by the defendant company it probably knew of the contractual relations then or theretofore existing between Fuller and the plaintiff company.

The plaintiff urges that defendant's alleged infringing machine is the joint product of Fuller and the defendant company; that they are joint tort-feasors; that it is a rule of law that one who co-operates with an estopped assignor is estopped equally with the assignor, and that the defendant company is consequently estopped to deny the validity of plaintiff's patent No. 1,394,256 here in issue. In support of this contention plaintiff cites Woodward v. Boston Lasting-Mach. Co., 60 F. 283, 8 C.C.A. 622; Continental Wire Fence Co. v. Pendergast (C.C.) 126 F. 381; Daniel v. Miller (C.C.) 81 F. 1000; Mellor v. Carroll (C.C.) 141 F. 992; Northern Insulating Co. v. Union Fibre Co. (D.C.) 199 F. 793; and Mergenthaler Linotype Co. v. International T. Mach. Co. (D.C.) 229 F. 168, 172. In Woodward v. Boston Lasting-Mach. Co., 60 F. 283, 8 C.C.A. 622, the Court of Appeals for the First Circuit Said:

'The two parties, besides Woodward (who was the patentee and assignor), named as defendants, are James and Thomas Barrett. It appears by a stipulation in the record that the two alleged infringing machines were designed by Woodward, and constructed according to his designs, and that they were made, used experimentally, and offered for sale by the defendants Barrett. In the absence of any further evidence, we think this creates such a presumption of privity between the parties that all are estopped from disputing the validity of the patent. Telegraph Co. v. Carey, 22 Blatchf. 34, 19 F. 322.'

In the case relied upon (Time Telegraph Co. v. Himmer et al. (C.C.) 19 F. 322), the corporation was not a mere joint tort-feasor, or mere employer of the patentee assignor, but was his alter ego. Moreover, the Court of Appeals for the First Circuit, in a later decision in the same case (Boston Lasting-Mach. Co. v. Woodward, 82 F. 97, 27 C.C.A. 69), referring to its prior decision, said:

'We are again pressed with the proposition that the respondents below are estopped from denying the validity of the claims of the patent now in issue. The situation in this respect is, however, essentially different from that existing when the patent was previously under consideration. Then the respondents were nominally the same as now, namely, Woodward, who was the patentee and the assignor of the patent, and James Barrett and Thomas Barrett, and in both cases all these respondents were and are, in a general sense, co-operating. The essential difference, however, is that in the prior suit, Woodward, who was the only person directly subject to the rule of estoppel, was the principal, and the other respondents, so far as the evidence showed, were acting at his suggestion, and in subordination to him. Now, so far as the evidence shows, the other respondents are the principals, and Woodward is their employee, and no estoppel applies to them, by reason of their engaging Woodward in a subordinate position. Even though all might be properly regarded as joint tort-feasors, if any wrong has been committed, yet they have no joint interest in the sense of the law, and Woodward, being a mere subordinate, cannot be enjoined, under the circumstances of this case, unless his principals are also subject to injunction. Belknap v. Schild, 161 U.S. 10, 25, 16 Sup.Ct. 443. Under the rules laid down in that case, he cannot be holden to account for profits; so there is no ground of equitable jurisdiction against him severed from the persons who employed him. While a person occupying a subordinate position may be in privity with his principal, in the sense in which that word may properly be used in this connection, the reverse is not ordinarily true. Therefore, in the present suit, the question of the validity of the claims in issue is open for determination.'

In Continental Wire Fence Co. v. Pendergast, supra, it was said:

'The affidavits of these parties themselves are to the effect that Sutherland and Zickrick alone constitute

...