Stephens v. Howells Sales Co.

• Decision Date: 15 December 1926
• Citation: 16 F.2d 805
• Parties: STEPHENS et al. v. HOWELLS SALES CO., Inc., et al.
• Court: U.S. District Court — Southern District of New York

16 F.2d 805 (1926)

STEPHENS et al. v.HOWELLS SALES CO., Inc., et al.

District Court, S. D. New York.

December 15, 1926.

Henry Staton, of New York City, for plaintiff Stephens.

Kelley & Becker, of New York City(Charles E. Kelley, of New York City, of counsel), for plaintiffGoldwyn Pictures Corporation.

Davies, Auerbach & Cornell, of New York City(Charles H. Tuttle and Carl E. Peterson, both of New York City, of counsel), for defendantHowells Sales Co.

William Klein, of New York City, for defendant Blumenthal.

Arthur W. Weil, of New York City, amicus curiæ.

GODDARD, District Judge.

This is a suit to recover damages under the Copyright Act for infringement of the book "Mr. Barnes of New York" by the motion picture "Vendetta," imported and distributed by the defendants.

On March 8, 1887, the book "Mr. Barnes of New York" was copyrighted by Archibald Clavering Gunter, its author.In copyrighting the book the author "reserved the right to dramatize" under section 4952 of the Copyright Act of July 8, 1870(Rev. Stat. U. S. § 4952), then in effect.Mr. Gunter died February 20, 1907, leaving a widow, Esther L. Gunter, to whom a renewal of the copyright was issued on October 7, 1914, pursuant to the Copyright Act of March 4, 1909, c. 320(Comp. Stat. 1913, §§ 9517-9524,9530-9584), extending the term of the copyright to March 8, 1943.Before obtaining the renewal she, as executrix and sole beneficiary under her husband's will, assigned the "moving picture rights" under the copyright to John F. Stephens, and after the renewal she assigned renewed copyright of the book to John F. Stephens.By various assignments, the "moving picture rights" under the copyright of the book were assigned by John F. Stephens to the plaintiffGoldwyn Pictures Corporation.There are no other outstanding assignments of copyright or rights under the copyright.

The author dramatized the book into a play of the same name, and the first public performance of it was on May 8, 1887, under the authority of the author, in New York City.The play was not copyrighted.The plaintiffs are the executors of John F. Stephens, the owner of the copyright of the book "Mr. Barnes of New York," and the Goldwyn Pictures Corporation, as the owner of the "moving picture rights," under that copyright; Stephens having died after the suit was at issue, and, awaiting trial, his executors were substituted in his place.

The negative of the motion picture "Vendetta" was brought into this country by the defendant Blumenthal on June 10, 1921, and was originally exhibited in New York late in 1922.Shortly thereafter an action was commenced by the Goldwyn Pictures Corporation against the defendants, all of which took a more or less active part in the exploitation of the motion picture.

There has already been considerable litigation over the matter now involved.In this present suit, the Goldwyn Pictures Corporation, hereafter referred to as Goldwyn, and Stephens are made plaintiffs in Goldwyn's effort to overcome the former defect of the absence of Stephens, the owner of the copyright, as a plaintiff, which is necessary because such a licensee cannot bring suit for infringement of the copyright under which he holds his license in his own name; this for the reason that the copyright is, technically speaking, indivisible, the legal title remaining in the licensor and the licensee having merely an equitable title.In order to induce Stephens to come in as a joint plaintiff, Goldwyn paid Stephens $2,500 and agreed to hold Stephens harmless from all expenses incidental to the litigation, and Stephens transferred to Goldwyn any rights it might have in damages recovered, and executed an irrevocable power of attorney authorizing him "to be joined as a partyplaintiff or a partydefendant in any legal proceedings now pending or which may hereafter be brought."

It is urged by defendants that this is collusive, and an improper scheme of the Goldwyn Pictures Corporation to create a semblance of jurisdiction, which otherwise did not exist, and contrary to the rule in Cashman v. Amador, etc., 118 U. S. 58, 6 S. Ct. 926, 30 L. Ed. 72.In Goldwyn Pictures Corporation et al. v. Howells Sales Co. (C. C. A.)287 F. 100, Judge Hough refers unfavorably to the procuring of Stephens as a plaintiff, but makes no definite statement that the action should be dismissed on that ground.In the recent case of Independent Wireless Co. v. Radio Corporation, 269 U. S. 459, 46 S. Ct. 166, 70 L. Ed. 357, decided by the Supreme Court on January 11, 1926, Mr. Chief Justice Taft, in the unanimous opinion of the court, said:

"There is no express authority given to the licensee to use the name of the patent owner in equity, as we have seen that he can under section 4919 in suits at law.The presence of the patentee or his assignee in the equity suit, however, it has been held, is just as essential to obtaining an injunction or an accounting of profits or damages under the patent laws as it is in an action on the case for damages at law.Indeed, both the owner and the exclusive licensee are generally necessary parties in the action in equity.Waterman v. Mackenzie, 138 U. S. 25211 S. Ct. 334, 34 L. Ed. 923;Littlefield v. Perry, 21 Wall. 205, 22322 L. Ed. 577;Paper Bag Cases, 105 U. S. 76626 L. Ed. 959;Birdsell v. Shaliol, 112 U. S. 485, 4935 S. Ct. 244, 28 L. Ed. 768. * * *

"It seems clear, then, on principle and authority, that the owner of a patent, who grants to another the exclusive right to make, use, or vend the invention, which does not constitute a statutory assignment, holds the title to the patent in trust for such a licensee, to the extent that he must allow the use of his name as plaintiff in any action brought at the instance of the licensee in law or in equity to obtain damages for the injury to his exclusive right by an infringer or to enjoin infringement of it. * * *

"We think the cases cited go beyond the defendant's interpretation of them, and do hold that, if there is no other way of securing justice to the exclusive licensee, the latter may make the owner without the jurisdiction a co-plaintiff without his consent in the bill against the infringer.Equity will not suffer a wrong without a remedy.1 Pomeroy's Equity Jurisprudence(4th Ed.) §§ 423, 424. * * *

"The objection by the defendant that the name of the owner of the patent is used as a plaintiff in this suit without authority is met by the obligation the owner is under to allow the use of his name and title to protect all lawful exclusive licensees and sublicensees against infringers, and by the application of the maxim that equity regards that as done which ought to be done.Camp v. Boyd, 229 U. S. 530, 55933 S. Ct. 785, 57 L. Ed. 1317;United States v. Colorado Anthracite Co., 225 U. S. 219, 22332 S. Ct. 617, 56 L. Ed. 1063;Craig v. Leslie, 3 Wheat. 563, 5784 L. Ed. 460. * * *"

Cashman v. Amador, etc., supra, and the other cases cited by defendants' counsel are instances where the plaintiffs, which were brought into the cases, had no real cause of action, were not necessary parties, and were brought in solely for the purpose of accomplishing indirectly a result which was contrary to the law.In Cashman v. Amador, supra, the relationship of trustee and cestui, between the person who brought the suit and the one who caused him to bring it, did not exist; he was under no duty originally to bring suit.But in the case at bar Goldwyn, the licensee, can obtain no relief unless the owner of the copyright, Stephens, is a party to the action.Stephens' position was in the nature of that of a trustee, and was obligated to protect his "cestui que trust," or at least put him in a position to protect himself.But, upon Stephens' failure to do this, Goldwyn was confronted with a practical situation, and in an effort to obtain what he was rightly entitled to he paid Stephens $2,500 and agreed to hold him harmless.Goldwyn could have made Stephens a partyplaintiff without Stephens' consent, and Stephens for his services as trustee was entitled to payment for his own services and for necessary disbursements for counsel fees, etc. Wehrenberg v. Seiferd, 125 App. Div. 527, 109 N. Y. S. 896;39 Cyc. 482.

If a similar clause had been inserted in the original license agreement, and the licensee had found it necessary to sue an infringer to protect his rights, could it be said that such an arrangement was so collusive or champertous as to vitiate the suit thus instituted against the infringer?I would think not.Goldwyn did more for Stephens than it was legally required to do, but the history of this litigation shows convincingly that Goldwyn's purpose was only to secure prompt action to protect his own rights, which he felt were endangered.It seems to me that under the circumstances there is a distinction between this situation, where he is endeavoring to save rights which he had previously and properly obtained, and where new rights are bought for the purpose of bringing suit.Moreover, this is a court of equity, and, as I view it, the nature of Goldwyn's act was not such as should permit these defendants to escape from the consequences if they have infringed plaintiffs' rights, and that would be the practical result if this action was dismissed because of Goldwyn's payment to Stephens.

At the trial an affidavit of Esther L. Gunter, made March 16, 1922, and a deposition of John F. Stephens, were offered in evidence by plaintiffs' and defendants' counsel respectively, and received subject to examination by the court.Mrs. Gunter's affidavit is excluded, it being a mere ex parte statement.Stephens' deposition is received in evidence, as it is the testimony of a witness upon a former trial, who has since died, and it is an alleged admission against interest.

The plot in the moving picture "Vendetta" is so strikingly like the book "Mr. Barnes of New York" in general plan and detail as to plainly lead one to conclude...