Schnell v. Peter Eckrich Sons, Inc

• Decision Date: 20 February 1961
• Docket Number: No. 219,219
• Citation: 365 U.S. 260,81 S.Ct. 557,128 USPQ 305,5 L.Ed.2d 546
• Parties: Carl SCHNELL et al., Petitioners, v. PETER ECKRICH & SONS, INC., et al
• Court: U.S. Supreme Court

365 U.S. 260

81 S.Ct. 557

5 L.Ed.2d 546

Carl SCHNELL et al., Petitioners,

v PETER ECKRICH & SONS, INC., et al.

No. 219.

Argued Jan. 11, 1961.

Decided Feb. 20, 1961.

Mr. Charles J. Merriam, Chicago, Ill., for petitioners.

Mr. M. Hudson Rathburn, Chicago, Ill., for respondents.

Mr. Justice CLARK delivered the opinion of the Court.

The sole issue in this patent infringement suit, filed in the Northern District of Indiana, is whether as a matter of law respondent Allbright-Nell Co., an Illinois manufacturer, by openly assuming and controlling in this action the defense of its customer, respondent Peter Eckrich & Sons, Inc., of Indiana, subjected itself to the jurisdiction of that court and waived the statutory venue requirements of 28 U.S.C. § 1400(b), 28 U.S.C.A. § 1400(b). ¹ The motion of Allbright-Nell to dismiss as to it because venue in the Northern District of Indiana was improper was sustained without opinion. The Court of Appeals affirmed, 279 F.2d 594.² We granted certiorari, 364 U.S. 813, 81 S.Ct. 60, 5 L.Ed.2d 45. We affirm the judgment.

Allbright-Nell manufactured the alleged infringing device, a machine for cutting sausage meat, known as the 'ANCO Emulsitator.' It sold some of the devices to Eckrich, whose principal place of business was at Fort Wayne, Indiana. In the contract of sale, Allbright-Nell agreed to defend any infringement suits which might be filed against Eckrich involving the device and to bear all of the expense thereof, including any recovery. While Eckrich was using the machines, petitioners sued it in Indiana for infringement.³ Pursuant to its contract, Allbright-Nell employed attorneys who defended the suit in the name of Eckrich. Thereafter, before any judgment was entered, petitioners amended their complaint, naming Allbright-Nell as a party defendant. Service was made upon Allbright-Nell by serving its president in Illinois. Motions to quash (on the ground that such service was made outside of the jurisdiction of the court) and to dismiss (on the ground that venue under § 1400(b) was improper) were promptly filed. The petitioners admit that this service conferred no jurisdiction on the court and also concede that Allbright-Nell had no place of business in Indiana and, therefore, under § 1400(b), venue as to it could not lie in Indiana. However, they urge that the presence of Allbright-Nell through the attorneys, openly defending and controlling the suit against Eckrich, gave the court jurisdiction over the former.⁴ In effect, petitioners argue, Allbright-Nell was in fact before the court protecting its own interests, was acting only as a 'puppeteer' of Eckrich, and was seeking all the benefits of litigation but attempting to avoid all of its responsibilities, save the ultimate application of res judicata. It, therefore, should be deemed to have entered a general appearance and waived its objection to venue. In the face of § 1400(b), however, we think not.

While objection to venue 'may be lost by failure to assert it seasonably, by formal submission in a cause, or by submission through conduct, * * * courts affix to conduct (such) consequences as to place of suit consistent with the policy behind' the applicable venue statute. Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 168, 60 S.Ct. 153, 155, 84 L.Ed. 167. As is pointed out in the cases, Congress adopted the predecessor to § 1400(b) as a special venue statute in patent infringement actions to eliminate the 'abuses engendered' by previous venue provisions allowing such suits to be brought in any district in which the defendant could be served. Stonite Products Co. v. Melvin Lloyd Co., 315 U.S. 561, 62 S.Ct. 780, 86 L.Ed. 1026. The Act was designed 'to define the exact jurisdiction of the * * * courts in these matters,' 315 U.S. at page 565, note 5, 62 S.Ct. at page 782, and not to 'dovetail with the general (venue) provisions.' Id., 315 U.S. 566, 62 S.Ct. 782. As late as 1957 we have held § 1400(b) to be 'the sole and exclusive provision controlling venue in patent infringements actions.' Fourco Glass Co. v. Transmirra Products Corp., 1957, 353 U.S. 222, 229, 77 S.Ct. 787, 792, 1 L.Ed.2d 786. The language of this special statute is clear and specific. The practice complained of here was not at all unusual at the time of this statute's passage,⁵ and for us to enlarge upon the mandate of the Congress as to venue in such patent actions would be an intrusion into the legislative field.

In fact, the petitioners would have us do now what this Court specifically refused to do 45 years ago in Merriam Co. v. Saalfield, 1916, 241 U.S. 22, 36 S.Ct. 477, 60 L.Ed. 868. There the entire defense of the named defendant (Saalfield) was openly financed and controlled by one Ogilvie, as to whom venue was improper; Merriam sought by supplemental bill to make Ogilvie a defendant before a final judgment was rendered, but after the issue of unfair competition ahd been decided; and Ogilvie would have been bound by the final judgment under res judicata. Nevertheless, his seasonable motion to quash the substituted service had upon the attorneys defending Saalfield was sustained. We believe the holding in Merriam completely supports our conclusion here. If a general appearance could be found in such conduct, the facts there were stronger, for the proceedings against Saalfield, handled entirely by Ogilvie, had progressed to the appointment of a master to determine the amount of damages. All that remained when it was sought to join Ogilvie was an accounting. Yet a unanimous Court sustained the dismissal, saying:

'(I)f...