Prest-O-Lite Co. v. Avery Portable Lighting Co.

• Decision Date: 15 September 1908
• Citation: 164 F. 60
• Parties: PREST-O-LITE CO. v. AVERY PORTABLE LIGHTING CO. et al.
• Court: U.S. District Court — Eastern District of Wisconsin

164 F. 60

PREST-O-LITE CO. v. AVERY PORTABLE LIGHTING CO. et al.

United States Circuit Court, E.D. Wisconsin.

September 15, 1908

The averments of the bill are substantially as follows: That the complainant is a corporation organized and existing under the laws of the state of Indiana, having its principal office at Indianapolis, Ind., and being a citizen of that state. The defendants are alleged to be citizens of the state of Wisconsin, and the alleged infringements to have taken place within the Eastern district of Wisconsin. That prior to October 17, 1904, the defendant Avery invented a new and useful improvement in gas tanks for the storing of acetylene gas. That on the 3d of September, 1904, Avery produced and exhibited a complete gas tank, embodying his invention in perfected commercial form, which he was about to put upon the market, and induced James A. Allison and Carl G. Fisher to enter into a certain written agreement, which is attached to the bill, by which, among other things, said Avery assigned to Allison and Fisher an undivided two-thirds interest in such invention and in the right to letters patent therefor for which Avery had already applied; and by such contract it was further agreed that a corporation should be organized for the purpose of manufacturing, using, and vending such invention throughout the United States, and that all patents that might be thereafter obtained in the further development and perfection of said device should be transferred to said corporation. That pursuant to such written contract the complainant corporation was organized on the 6th day of September, 1904. Avery agreed to devote to and give said business his entire personal attention and experience, and in consideration therefor Allison and Fisher agreed that Avery shall be paid by said corporation a salary of $150 per month and that such salary shall be increased from time to time as said business may justify. That Avery became a stockholder and director, and also the secretary, of said corporation and entered into its employ upon a salary. The manufacture of the patented device was undertaken by said corporation, and a profitable business resulted. That on October 17, 1904, Avery applied for letters patent for such invention. That on the 3d day of December, 1904, the stockholders of said complainant corporation, including Avery, on motion of Avery, authorized and directed the directors of said company to purchase of Avery, Fisher, and Allison the letters patent theretofore applied for and to be granted for said invention, for the sum of $10,000, to be paid for by capital stock of complainant company; said stock to be issued in equal amounts to Avery, Allison, and Fisher.

That thereupon such capital stock was issued accordingly, and received and accepted by the parties as full payment for their several interests in said invention and the right to letters patent thereon. That Avery continued with the complainant company, which manufactured and marketed the devices covered by said invention. That said Avery received for his services from said corporation a salary, in addition to dividends declared by said company upon the capital stock thereof. That Avery, Allison, and Fisher were the officers and directors of said complainant company, and the conduct of the applications for letters patent was left entirely to Avery, by virtue of the trust and confidence reposed in him as an officer of such corporation. That on the 27th day of March, 1906, letters patent of the United States, numbered 816,059, were issued to said Avery for such invention. That on the 19th day of May, 1906, Avery sold his stock in the complainant corporation to Allison and Fisher for the sum of $33,333. That on the 2d day of May, 1906, said Avery, while still in the employ of, and an officer of, the complainant corporation, executed an assignment of such letters patent in writing to one George L. Wilkinson, who was one of the attorneys for said Avery in the prosecution of said application. That said assignment to said Wilkinson was without consideration, and with full knowledge of the facts hereinbefore set forth. That thereupon Avery left Indianapolis, Ind., where complainant's business was being conducted, and proceeded to Milwaukee. Wis., where, in conjunction with certain other parties, on the 29th day of March, 1906, he caused to be organized the defendant corporation, for the purpose of engaging in the manufacture and sale of the device covered by said letters patent. That practically all of the stock of the defendant corporation was issued to Edgar C. Avery, the father of the defendant Avery. That Wilkinson made an assignment to the defendant corporation of the said letters patent, which purported to be made on the 5th day of June, 1906. That thereupon the defendant corporation proceeded to manufacture the patented device, and had sold such patented gas tanks in large quantities, causing irreparable injury to, and amounting to an infringement of the rights of, the complainant. That complainant duly demanded the assignment of said letters patent from said Avery to the complainant, which demand was refused by Avery. That the value of said letters patent exceeds the sum of $5,000. The citizenship of Allison and Fisher is not alleged. It is further averred that Allison and Fisher by an instrument in writing did assign to complainant an undivided two-thirds interest in and to the invention and letters patent therefor, with all claims or demands, either in law or equity, for any damages or profits that have accrued or may accrue on account of infringement by defendants. The prayer is for an accounting of profits; an injunction restraining the defendants from the manufacture, use, or sale of the patented improvement; that the assignment by Avery to Wilkinson, and by Wilkinson to the defending corporation, be adjudged fraudulent, and be rescinded and set aside; that Avery and the defending corporation be compelled to assign to the complainant his interest in such invention and letters patent; and also an injunction to prevent the defendants from making further transfers or assignments of such letters patent or any interest thereunder.

Each of the defendants interposed a demurrer. The demurrers challenge the jurisdiction of the court because the complainant seeks to maintain this action as the assignee of one James A Allison and Carl Fisher, claiming that said complainant acquired certain rights from Allison and Fisher, which they had theretofore acquired from the defendant Avery, and had by written assignment transferred to the complainant; that complainant is seeking by virtue of such...