AL Smith Iron Co. v. Dickson

• Decision Date: 29 February 1944
• Docket Number: No. 235.,235.
• Citation: 141 F.2d 3
• Parties: A. L. SMITH IRON CO. v. DICKSON.
• Court: U.S. Court of Appeals — Second Circuit

141 F.2d 3 (1944)

A. L. SMITH IRON CO. v.DICKSON.

No. 235.

Circuit Court of Appeals, Second Circuit.

February 29, 1944.

Hector M. Holmes, of Boston, Mass., for plaintiff.

Theodore S. Kenyon, of New York City, for defendant.

Before L. HAND, AUGUSTUS N. HAND, and FRANK, Circuit Judges.

L.HAND, Circuit Judge.

Both parties appeal from a judgment, enjoining the defendant after a trial from misusing PatentNo. 1,864,232, issued to Harry Cocks on June 21, 1932, for ships' hatch covers; but dismissing the complaint so far as it sought a declaration that the patent was invalid.The facts were as follows.The patent had two claims: one, for putting an iron band around the ends of two or more timbers, placed side by side and together forming a hatch cover.These bands act as a protective shoe, and are countersunk so that the timbers lie flush upon the ledge of the coaming.The second claim was similar, except that, in addition, metal plates are placed between the timbers with bolts to hold the members together.Cocks is a British subject, and on April 1, 1942, a British corporation to which he had assigned the patent, gave Dickson a license to manufacture and sell the patented covers and the "End Shoes and Bands within the United States of America for the term of ten years" at a royalty of four pence for every "shoe or band" made or sold.Dickson was to have no right to grant sub-licenses except by consent, and was not to "do or permit to be done any act or thing with respect to said letters patent which shall * * * in any way prejudice the rights of the Licensors therein or the benefits and advantages conferred on the Licensors".Dickson never made hatch covers, but he did make and sell the bands in large numbers until November, 1942, since when he has ceased altogether.In spite of the contract, on June 23, 1942, without the consent of the Cocks company he granted an exclusive license to a California company "to manufacture, sell, and dispose of hatch cover bands" within a specified territory, reserving certain privileges to himself; and on October 26th he granted a similar license to a New Jersey company, and still a third to a New York company on November 10th.In all these he reserved a royalty of thirty cents to himself with certain exceptions not important here.Some time in November or December he learned that the plaintiff was selling bands, fitted as parts of the patented hatch covers, to persons who were using them to make such covers, and on December 3rd, he wrote a letter to it, suggesting that it might be selling the bands "without realizing that a band for a wooden hatch cover is covered by a patent issued to Mr. Harry Cocks * * * under U. S. A. PatentNo. 1,864,232, and therefore any sale of this band would be a violation of the patent."He added that a letter of the plaintiff to one of his customers, was "particularly interesting when you state that you had been furnishing Hatch Bands.In that case there would be a distinct violation.We trust you will let us know your attitude in the matter, as we have Mr. Cocks' instructions that his patent is to be protected at any cost."The plaintiff answered on December 7th, asserting "that the Cocks patent does not cover a band, but that the coverage is limited to a hatch cover made in a certain way * * * there can be no liability on our part for the sale of a common article of merchandise like a metal band, which is unpatented, any more than for the sale of the planking or the screws."Dickson replied on the 8th, that although nothing could prevent the plaintiff from "making a band", nevertheless, "you put your customers in an awkward position because the minute they put that band on a hatch board they violate the Cocks patent.It is a doubtful question whether the fact that you sell these bands for a specific purpose is a violation of the patent or not, but is it quite fair to your customers to offer these for sale, knowing that they are going to get into trouble when they use them?"

The plaintiff filed its complaint in this suit on the 25th of January, 1943, and served Dickson on the next day.Dickson informed the Cocks company of the suit, which on the second of February gave him the required consent; and armed with it on the 20th of April he granted a new sublicense to the New York licensee, and on the first of May, one to the California licensee.These were somewhat different from the first; they recited that Dickson was "the owner of full license and authority throughout the United States and power to grant sub-licenses"; and that by virtue of this he granted to the New York licensee an exclusive, and to the California licensee a non-exclusive, license "to make, use and sell Hatch Covers," over a specified territory of the United States; the licensee to pay forty cents for each hatch cover, "sold, shipped or put to use."Both licensees manufactured hatch bands, but neither manufactured covers.At about the same time Dickson wrote to eight manufacturers of hatch covers in the United States, offering them a non-exclusive sublicense to manufacture the covers, in which he declared that the "Licensee shall have the right to obtain hatch cover bands used in the manufacture of Hatch Covers under this sublicense, from any source whatsoever".By these changes made after the action was begun he sought to undo the effect of any unlawful extension of the Cocks patent to the bands as distinct from the patented hatch covers.He does not upon this appeal seek to support his original position that the patent prevented the plaintiff's sale of the bands alone.

The complaint demanded judgment enjoining Dickson from asserting that the patent covered the bands, and from threatening it for selling, or its customers for buying, them; adjudging that the patent was invalid and that the plaintiff did not infringe it; and asking other relief, not necessary to state.The judge thought that Dickson's efforts to "purge" himself of his original misuse of the patent had not been sufficient, and therefore entered judgment forbidding him to cause any suit to be brought under the patent, so long as he continued "to combine the sale of reenforcing bands for hatch covers with a license, express, or implied, under said Cocks patent, * * * until the consequences of defendant's illegal conduct have been fully dissipated."On the other hand, he dismissed the complaint so far as it sought a judgment determining the validity of the patent, because the Cocks company was not a party; relying for this upon our decision in Contracting Division v. New York Life Insurance Company, 2 Cir., 113 F.2d 864.Each party appealed from that part of the decree which was against him; but for reasons that will appear, it will not be necessary now to decide Dickson's appeal.

Dickson could not have sued upon the Cocks patent in his own name; as a mere licensee — and, at that, only a licensee to make and sell — he was not within the doctrine of Waterman v. Mackenzie, 138 U.S. 252, 11 S.Ct. 334, 34 L.Ed. 923; both parties are in accord so far.However, in his letter of December 3rd he had asserted that he had "Mr. Cocks' instructions that his patent is to be protected at any cost"; and his letter of December 8th, taken in connection with that of the 3rd, very plainly threatened suit against the plaintiff's customers, if they should use upon hatch covers...