Stadium Mfg. Co. v. Plymouth Pajama Corporation

• Court: U.S. District Court — District of Massachusetts
• Citation: Stadium Mfg. Co. v. Plymouth Pajama Corporation, 24 F.Supp. 779 (D. Mass. 1937)
• Decision Date: 14 January 1937
• Docket Number: No. 4382.,4382.
• Parties: STADIUM MFG. CO., Inc., v. PLYMOUTH PAJAMA CORPORATION.

24 F. Supp. 779

STADIUM MFG. CO., Inc., v. PLYMOUTH PAJAMA CORPORATION.

No. 4382.

District Court, D. Massachusetts.

January 14, 1937.

Herbert A. Baker and Alan B. Bagley, both of Boston, Mass., and Julius H. Wyman and Harry Kairys, both of Baltimore, Md., for plaintiff.

Robert L. Thompson and Roberts, Cushman & Woodberry, all of Boston, Mass., for defendant.

BREWSTER, District Judge.

In defendant's answer to plaintiff's patent infringement suit it has set up two counterclaims, one based on unfair competition and the other upon the recent Declaratory Judgment Act, 28 U.S.C.A. § 400. Plaintiff moves to strike out both counterclaims.

The unfair competition charged against the plaintiff is the warning which the plaintiff has spread among the trade, including defendant's customers, to the effect that the defendant is manufacturing a garment which infringes the plaintiff's patent. These notices were given before and after this suit was instituted. Plaintiff argues that it was merely performing a duty imposed by law in notifying the trade as it did. Rev.St. § 4900, 35 U.S. C.A. § 49, does impose a duty on patentees to give notice that the article embodying the invention is covered by a patent, but I find nothing in the statute, or in the decisions, which holds that a patentee is under a duty to notify customers of a competitor that the competitor is infringing the patent. That the patentee has a right to notify customers of an alleged infringing manufacturer or dealer has been recognized from early days by the Court. Kelley v. Ypsilanti Dress-Stay Mfg. Co., C.C., 44 F. 19, 23, 10 L.R.A. 686; Virtue v. Creamery Package Mfg. Co., 8 Cir., 179 F. 115, 120; Alliance Securities Co. v. De Vilbiss Mfg. Co., 6 Cir., 41 F.2d 668, 670; Oil Conservation Engineering Co. v. Brooks Engineering Co., 6 Cir., 52 F.2d 783, 785; Boston Diatite Co. v. Florence Mfg. Co., 114 Mass. 69, 19 Am.Rep. 310.

But this right has limitations, and if the patentee over-steps the boundaries to the injury of another, and that injury is likely to continue, equity has intervened by restraining the continuation of the unlawful acts of a patentee. Thus, in Oil Conservation Engineering Co. v. Brooks Engineering Co., supra, it is said that page 785, "Notices to the competitor that he is infringing, and perhaps to the manufacturer for the competitor, and to a limited number of his chief customers, are the normal procedure and not to be condemned, when characterized by good faith. If not well based, they are in the nature of libels or slanders of title; possibly they are analogous to a cloud upon the competitor's title to his business and to his output. A court of equity has no jurisdiction to enjoin a mere slander or libel. * * * It is only when such slanders are both in bad faith — that is, malicious — and are working destruction of property or property rights, that equity will interfere; otherwise, the remedy is at law. * * * It fully recognizes that bad faith and malice must appear before any such power exists; and this limitation has been repeatedly affirmed."

See, also, Asbestos Shingle, Slate & Sheathing Co. v. H. W. Johns-Manville Co., C.C., 189 F. 611; Alliance Securities Co. v. De Vilbiss Mfg. Co., supra.

In the Asbestos Shingle, Slate & Sheathing Co. Case, supra, it was held that an injunction against claims of infringement would not issue unless the patentee acted in bad faith, and in the Alliance Securities Co. Case, supra, the Court, commenting upon the views expressed in the last named case, observed that they were "not inconsistent with the right of an equity court in which an infringement suit is pending to restrain the plaintiff from oppressive and inequitable harassing of the defendant's customers" page 670.

There would seem to be, therefore, authority for the proposition that a patentee's right to notify a competitor does not extend to warnings which are spread throughout the trade in bad faith without an honest belief that his patent is valid and infringed and with a deliberate purpose of impairing the business and good will of his competitor.

It is necessary to examine the allegations of defendant's counterclaim. They may be summarized as follows:

The defendant alleges the requisite diversity of citizenship and jurisdictional amount; the plaintiff and defendant are competitors in the business of manufacturing and selling pajamas in the United States; defendant's product has attained a high reputation in the trade; on September 25, 1936, plaintiff brought an infringement suit against the defendant for infringing Letters Patent of the United States No. 1,740,554 relating to pajama pants; since April 21, 1936, the pajama pants manufactured by the defendant have not infringed plaintiff's patent "for obvious reasons well known to plaintiff"; on said date and on subsequent dates prior to September, 1936, defendant advised plaintiff in writing that its pajamas did not infringe; the defendant, for a long time prior to the filing of the bill of complaint, had been aware that the only garments manufactured and sold by the defendant since April, 1936, were non-infringing garments; "that there could not be a color of a claim of infringement of the claims of plaintiff's said patent by virtue of defendant's manufacture or sale thereof"; that plaintiff, well knowing the premises, gave public notice of the pendency of the infringement suit and warned the trade against unauthorized manufacture and sale of pajama pants embodying the invention contained in plaintiff's patent; this notice and other warning notices given out by the plaintiff to defendant's customers since April 21, 1936, had been for the purpose of intimidating and deceiving defendant's customers and injuring its business, good will and reputation in the trade, and that, as a result of these acts on the part of the plaintiff, the orders for defendant's pajamas had been cancelled and the defendant had otherwise suffered damage, as alleged in the counterclaim. The defendant further alleges that plaintiff threatened "to continue to make such damaging, false and misleading statements all to the irreparable injury of the defendant, its business, good will and reputation" and that defendant "has no adequate remedy at law."

At the outset it may be observed that plaintiff, of course, is not bound by the notices which it received from the defendant that the defendant's garment did not infringe, and a comparison of the exhibits attached to the counterclaim, and the illustrative drawings in the patent, hardly justify the allegation that the defendant's pajamas did not infringe "for obvious reasons." Nevertheless, such is the allegation of the counterclaim, and it must be taken to be true. Whether the actions of the plaintiff in bringing the infringement suit and warning the trade were taken in the honest belief that defendant was...