Standard Sewing Mach. Co. v. Leslie

• Decision Date: 07 October 1902
• Docket Number: 831.
• Parties: STANDARD SEWING MACH. CO. v. LESLIE. [1]
• Court: U.S. Court of Appeals — Seventh Circuit

118 F. 557

STANDARD SEWING MACH. CO. v. LESLIE. ^[1]

No. 831.

United States Court of Appeals, Seventh Circuit.

October 7, 1902

John Dane, Jr., and Charles S. Holt, for plaintiff in error.

James H. Teller and Charles K. Offield, for defendant in error.

Leslie began this action in the superior court of Cook county, Ill upon a contract executed by the parties on August 20, 1884. The cause was removed to the federal court, on the petition of the company, on the ground of diversity of citizenship.

The contract provided: (1) A prior contract is hereby rescinded. (2) A trustee, to whom Leslie has conveyed full title, shall hold all of Leslie's patents for improvements in sewing machines and patents on 'the Rotary 'shuttle Sewing Machine' for the benefit of the parties under the terms of this contract. (3) Foreign patents may be taken out at the expense of the company, and shall be the joint property of the parties. (4) The company releases Leslie's debt to it. (5) The company agrees to pay Leslie as royalty 'upon each machine manufactured by it embodying the principles covered by Leslie's patents' 7 1/2 cents for the first 100,000 machines and 5 cents for the excess. The royalties shall be paid in cash, and $1,000 thereof in advance. (6) Leslie 'shall not be held to guaranty the validity of said patents or any of them or to protect said second party (the company) against infringements thereof or against actions brought against it for infringements, but all royalties hereunder shall cease upon the date of a decree of any

court of competent jurisdiction declaring the invalidity of said patent or patents.' (7) The company agrees to carry on the business with energy, 'and shall make such number of machines as to keep the supply as nearly as practicable up to the demand of the trade, and this contract shall endure during the life of the patents issued in 1882 unless sooner terminated, as hereinafter provided.' (8) The company 'shall not be obliged to make Rotary Shuttle Sewing Machines like any model that has been or may be constructed or settled on as a standard, but it may from time to time make such changes as may seem to it expedient; but no such alteration or change shall relieve second party from the payment of royalties as herein provided so long as the machine made by it involves any of the essential principles covered by the patents of first party.' (9) The company shall make monthly reports under oath. (10) The company 'shall have the exclusive right to make and sell machines under said patents as above provided during the monthly statements.' (11) The company 'may terminate this contract upon giving written notice to first party, and notifying said trustee that it has no further interest in said patents, and that the same may be reassigned to first party. ' The declaration contained counts for the recovery of royalties, for damages for not making machines to the number required by the trade, and for damages for refusing to surrender the patents after demand. The company pleaded the general issue.

At the first trial Leslie proved the contract, his patents, the company's manufacture of a large number of machines like one or another of our models produced to the jury, refusal to pay royalty or to relinquish the patents, and introduced expert testimony tending to prove that each of the models embodied one or more of the essential principles covered by one or more of the patents. The company offered expert testimony to prove that none of the models embodied any of the essential principles covered by Leslie's patents either in identical construction of mechanical equivalents. The court rejected the proffered evidence, charged the jury in effect, that the company could not hold the patents and at the same time escape the payment of royalties by altering the form of its machines, and directed a verdict for Leslie. The judgment was reversed by this court in Sewing Mach. Co. v. Leslie, 24 C.C.A. 107, 78 F. 325.

At the second trial Leslie introduced substantially the same evidence as at the first. The company introduced a great deal of evidence to show the state of the prior art, and expert testimony to the effect that none of its models embodied any of the essential principles covered by the Leslie patents. The court charged the jury, in effect, that under the prior art there was no room for the application of the doctrine of mechanical equivalents to the company's models, and directed a verdict for the company. On a record that did not contain the proof made of the prior art, the judgment was reversed by this court in Leslie v. Sewing Mach. Co., 39 C.C.A. 314, 98 F. 827.

At this the third trial Leslie made out substantially the same case as before. The company exhibited the prior art quite fully; introduced expert testimony to the effect that in view of the prior art Leslie's claims must be limited strictly to the very means detailed, and that, so limited, they do not cover any of the company's models; and also produced evidence tending to show that the changes were made in good faith, and not merely to escape the payment of royalty. No evidence was introduced to sustain the counts of the declaration other than the one for royalty. At the end of Leslie's evidence in chief, and again at the conclusion of all the evidence, the company moved the court to dismiss the cause for want of jurisdiction. The company further moved the court to direct a verdict in its favor. The cause was submitted to the jury, who returned a verdict in Leslie's favor. The company duly excepted to the giving and refusal of various instructions.

The assignments of error present the questions of jurisdiction, of the propriety of refusing to direct a verdict, and of the correctness of instructions given and refused.

Before JENKINS, GROSSCUP, and BAKER, Circuit Judges.

BAKER Circuit Judge, after making this statement of the of the case, .

If the state court had no jurisdiction, the federal court acquired none by removal, even though the defect was that the action should have been brought in the federal court in the first place. That the state court had jurisdiction of the subject-matter of the counts for wrongfully failing to make the required number of machines and for wrongfully refusing to surrender the patents after demand plaintiff in error does not controvert, but contends that since these counts, though not dismissed, were not supported by evidence, they cannot be considered; that the subject-matter of the remaining count was not within the jurisdiction of the state court; and that as soon as this state of things became apparent, it was the duty of the federal court to dismiss the action. If it be conceded that jurisdiction depends solely on the count for royalties, nevertheless we think the motion was rightly denied. Plaintiff in error admits that if it and Leslie agreed on the construction of the patents the case of Albright v. Teas, 106 U.S. 613, 1 Sup.Ct. 550, 27 L.Ed. 295, would be decisive, but insists that their contention over the applicability of the prior art and its effect in limiting Leslie's claims transmutes the cause into one of exclusively federal cognizance. In any action upon contract for royalties, the plaintiff produces the contract, his patents, and the machines made by the defendant. The contract being proven, the question is, do the defendant's machines embody any of the essential principles covered by the patents? To...