Standard Stoker Co. v. Lower

• Citation: 46 F.2d 678
• Decision Date: 06 January 1931
• Docket Number: No. 1771.,1771.
• Parties: STANDARD STOKER CO., Inc., v. LOWER et al.
• Court: U.S. District Court — District of Maryland

46 F.2d 678 (1931)

STANDARD STOKER CO., Inc., v. LOWER et al.

No. 1771.

District Court, D. Maryland.

January 6, 1931.

Semmes, Bowen & Semmes, Frederick W. Brune, and Edwin F. A. Morgan, all of Baltimore, Md., and Whitman, Ransom, Coulson & Goetz, of New York City, for complainant.

Brown & Critchlow, of Pittsburgh, Pa., and August A. Denhard, of Baltimore, Md., for defendants.

WILLIAM C. COLEMAN, District Judge.

The questions here at issue arise upon three motions to dismiss the bill of complaint, a separate motion being filed by each of the three defendants, appearing specially for the purpose of these motions only. Complainant has also filed a motion to be allowed to bring one of the defendants, Ketchpel, within the jurisdiction of the court by substituted process, pursuant to the provisions of section 57 of the Judicial Code (28 USCA § 118).

A number of distinct questions of venue are presented by the three motions which will be hereinafter separately considered. In order that these questions may be fully understood, it is necessary first to summarize the allegations of the rather lengthy bill of complaint. These may be summarized as follows: The complainant is a Delaware corporation engaged in the business of manufacturing and selling locomotive stokers and fuel conveyors, with its principal place of business in Erie, Pa. Defendant Lower is a citizen and resident of the state of Maryland. Defendant Ketchpel is a citizen and resident of the state of Pennsylvania, and the third defendant, the Lower Stoker Company, is a Pennsylvania corporation having offices and being engaged in business similar to that of complainant, in both Pennsylvania and Maryland. Both defendant Lower and Ketchpel were employed, for a number of years, by the Locomotive Stoker Company, a Pennsylvania corporation, which was engaged in the same kind of business. The duties of these defendants were primarily to develop the Locomotive Stoker Company's inventions and to initiate and prosecute, for the benefit of that company, applications for patents upon inventions made by the company's employees. Pursuant to contracts (not claimed to be in writing) between them and the company, any inventions which they might make while in the company's employment became the property of the company, and they obligated themselves to obtain patents thereon whenever possible and to vest the ownership of such patents in the company. In February, 1928, the company assigned to the complainant all its right, title, and interest in all inventions relating to stokers made by these two defendants while employed by the company, both defendants being fully advised of this assignment. At the same time they both entered the employment of the complainant, where Ketchpel continued until March 15, 1928, and Lower until May 31, 1928. Upon his resignation, Ketchpel became an employee of Lower, even while Lower was still working for the complainant. On June 22, 1928, defendant Ketchpel filed an application for a patent upon an alleged invention in locomotive stokers which forms the basis of the present suit. This application Ketchpel immediately assigned to Lower. The original written assignment is now in the possession of defendant Lower in Maryland. Defendant Ketchpel admits that his alleged invention was first conceived by him while he was employed by the Locomotive Stoker Company, as evidenced by his sworn statement which forms part of the record in an interference proceeding in the Patent Office, between his application and a patent held by the complainant, as assignee of the Locomotive Stoker Company.

At or about the time that Ketchpel made the aforesaid assignment, defendant Lower organized the Lower Stoker Company for the purpose of manufacturing and selling stokers, made in accordance with the alleged invention covered by the application which Ketchpel had assigned to him. A number of these stokers were manufactured and sold to potential customers of complainant, the latter having no knowledge of the date when Ketchpel first conceived his alleged invention, until November 22, 1929, after which complainant negotiated with defendant Lower for the restoration of its rights to the alleged invention in controversy, but settlement was not reached and the present suit was filed. The complainant further alleges that both defendant Lower and Ketchpel practiced deception by their concealment of the alleged invention from the Locomotive Stoker Company and its assignee, the complainant, and were otherwise fraudulent with respect to their use and development of this alleged invention.

The specific relief prayed for in the bill of complaint may be summarized as follows: (1) A decree that complainant is the sole owner of the alleged invention and application; (2) that all three of the defendants be required to release any interest therein to complainant; (3) that they be required to account to complainant for all profits which they may have derived from the alleged invention and application, and also to account in damages for such injury as complainant may have suffered by virtue of their wrongful manufacture and sale of stokers under the alleged invention and application; and (4) injunctive relief against all the defendants with respect to manufacturing, selling, or otherwise dealing in stokers designed in accordance with the alleged invention and application.

Taking up, first, defendant Ketchpel's motion to dismiss the bill of complaint, that motion is based upon the ground that, since he is a resident of Pittsburgh, Pa., and since plaintiff is a Delaware corporation, this court has no jurisdiction over him in the present suit, because, being founded solely on the fact that it is an action between citizens of different states, it is not brought in the district of the residence of either the plaintiff or the defendant, as it must be, according to section 51 of the Judicial Code (28 USCA § 112) the pertinent provision of which is as follows: "* * * Where the jurisdiction is founded only on the fact that the action is between citizens of different States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant." But complainant contends, through its own special motion, that jurisdiction attaches by reason of substituted service having been obtained upon Ketchpel according to the provisions of section 57 of the Judicial Code (28 USCA § 118), which are as follows: "When in any suit commenced in any district court of the United States to enforce any legal or equitable lien upon or claim to, or to remove any incumbrance or lien or cloud upon the title to real or personal property within the district where such suit is brought, one or more of the defendants therein shall not be an inhabitant of or found within the said district, or shall not voluntarily appear thereto, it shall be lawful for the court to make an order directing such absent defendant or defendants to appear, plead, answer, or demur by a day certain to be designated, which order shall be served on such absent defendant or defendants, if practicable, wherever found, and also upon the person or persons in possession or charge of said property, if any there be; or where such personal service upon such absent defendant or defendants is not practicable, such order shall be published in such manner as the court may direct, not less than once a week for six consecutive weeks. * * *"

The court concludes, for the following reasons, that the motion of defendant Ketchpel must be granted and complainant's motion must be dismissed. Section 57 of the Judicial Code is not applicable to the present situation. The express language of that section requires as a condition precedent to its being invoked that there shall be "real or personal property within the district where such suit is brought." A patent does not give to the patentee anything more than an intangible property interest, namely, the right to exclude others from the use of the patent. Motion Picture Co. v. Universal Film Co., 243 U. S. 502, 37 S. Ct. 416, 61 L. Ed. 871, L. R. A. 1917E, 1187, Ann. Cas. 1918A, 959; Bloomer v. McQuewan, 14 How. 539, 548, 14 L. Ed. 532; Paper Bag Patent Cases, 210 U. S. 405, 424, 28 S. Ct. 748, 52 L. Ed. 1122. This principle is well settled, although the Supreme Court has said, in a recent case, that, for state tax purposes, a patent is vested with the indicia of a federal instrumentality. Long v. Rockwood, 277 U. S. 142, 48 S. Ct. 463, 72 L. Ed. 824. Since the above be true regarding a patent, a fortiori it is true with respect to a mere application for a patent. In short, neither the application nor the patent itself can be said to represent more than an intangible property right. The fact that by successive partial assignments various assignees might have relative rights in a number of jurisdictions is itself proof that, for the purpose of the present suit, the application in question is not to be considered as a res with its definite situs in Maryland, the residence of the present assignee, Lower.

That section 57 of the Judicial Code may not be invoked against defendant Ketchpel is affirmed by the decided weight of authority. The earliest case, decided in 1890, is Non-Magnetic Watch Co. v. Association, etc., 44 F. 6, a decision by Judge Lacombe sitting in the Circuit Court for the Southern District of New York. There the precise question here presented was at issue, and the court said (pages 6 and 7 of 44 F.):

"This is an application for an order directing service of process upon the defendant, a Swiss corporation, by publication. The petition states that the suit is brought to remove a cloud upon `the title to certain letters patent' which it is claimed are the property of the complainant corporation, or rather of its receiver, and which `original letters patent, the subject-matter involved in this suit, are in possession of (such receiver).' This statement is not technically...