Treemond Co. v. Schering Corporation
Decision Date | 03 September 1941 |
Docket Number | No. 7684.,7684. |
Citation | 122 F.2d 702 |
Parties | TREEMOND CO. v. SCHERING CORPORATION. |
Court | U.S. Court of Appeals — Third Circuit |
Harry Price, of New York City, for appellant.
Fred A. Klein, of New York City (Briesen & Schrenk and Henry C. Quigley, Jr., of New York City, on the brief), for appellee.
Before CLARK, JONES, and GOODRICH, Circuit Judges.
Some District Courts seem to have found difficulty in freeing themselves from the strait-jacket of the "adversary" conception. They exhibit a tendency toward a narrow and technical interpretation1 of an Act2 intended to be construed in accordance with its broad and wise purpose.3 The case at bar is, we think, a typical instance. The defendant-patentee, a manufacturer, informed the customers of the plaintiff-appellant, an importer and vendor of a certain chemical known as "Estradiol" that it alone had the right to manufacture that chemical. It also had the following advertisement published in a trade journal:
"To Purchasers of Estradiol Notice By Schering Corporation
United States Letters Patent No. 2,096,744 for Hydrogenation Products of Follicle Hormones and Method of Producing Same, has been issued to us.
Notice is hereby given to manufacturers and importers that our patent covers the product known as
Estradiol is also known as dihydroxyestrin, dihydrofolliculin or dihydrotheelin. Our patent also covers the process of making the same.
All uses of this material, without our consent, including medicinal, pharmaceutical and cosmetic, are a violation of our giths (grants)4 under this patent.
We are giving this notice to the trade so that there may be no misunderstanding or doubt as to the exclusiveness of our rights in the United States to the product Estradiol (also known as dihydroxyestrin, dihydrofolliculin or dihydrotheelin).
Schering Corporation Bloomfield New Jersey"5
Plaintiff-appellant thereupon brought suit for a judgment declaring the defendant's patent invalid and/or not infringed and for an injunction for unfair competition. The learned District Judge dismissed the complaint for the reasons that (1) since the plaintiff alleged that it was not infringing defendant's patent, no actual controversy existed; (2) the plaintiff did not allege that it had been given notice of the claimed infringement, and (3) the notice in the trade publication was made in good faith and therefore could not give rise to a cause of action.
Such a construction of the Federal Declaratory Judgment Act would, in our opinion, destroy its entire usefulness in patent litigation. Before the passage of that Act patentees received greater protection from the law than was warranted by their patent monopoly.6 Competitors desiring to introduce an article somewhat similar to one already patented met with much difficulty. The patentee could, without bringing suit, publicly claim an infringement and threaten to sue the manufacturer or anyone who dealt with the product in issue. Unless the patentee's actions were of such a character that he might be shackled with the sanctions of the law of unfair competition,7 he had his alleged infringer at his mercy. Although the competitor's business was gravely injured, he was remediless and in order to survive, he might be forced to make a settlement with a patentee whose claim of infringement was absolutely unfounded.8 Prior to the New Federal Rules of Civil Procedure,9 the patentee might even bolster his charges by bringing an action for infringement and publicly advertising the fact to the trade. Then after postponing trial as long as possible, he could move for a dismissal without prejudice10 and repeat the process.11
We think that Professor Borchard has answered both points made by the learned District Judge in such convincing fashion that it is hardly necessary for us to do more than quote what he has to say. In speaking of the failure of a plaintiff to assert infringement and in criticizing the case principally relied on by the court below, he has this to say:
Borchard, Declaratory Judgments, 2d Ed.1941, 808.
In the same tenor is an opinion of one of the Circuit Courts of Appeals referred to by the learned professor: Bliss & Co. v. Cold Metal Process Co., 6 Cir., 102 F. 2d 105, 108.13
Manifestly, the threat is as unjust if the plaintiff is not infringing a valid patent as it is if he is infringing an invalid one.
There can be no doubt that an "actual controversy" does not exist until the patentee makes some claim that his patent is being infringed.14 The claim need not be formally asserted; nor should it be necessary that notice be given directly to the plaintiff. Aside from the cases cited in the opinion of the learned District Judge direct notice has not been stressed.15 In fact, declaratory actions have been maintained within our own Circuit16 where the only allegation of notice was that given to the plaintiff's customers.17 Although defendant's notice in a trade journal was craftily phrased, it does threaten purchasers with suits for contributory infringement if they purchased plaintiff's product. Indeed the only purpose of this notice can be to make such a threat and thereby intimidate would-be purchasers into buying its own product rather than the plaintiff's. It was unnecessary if defendant really intended to enjoin the infringement. Notice to infringers that a patent exists is not a condition precedent to a subsequent action to obtain an injunction in an infringement action.18 If the courts were to impose a requirement that direct notice by a patentee to an alleged infringer was necessary before a declaratory judgment action might be maintained, the Federal Declaratory Judgment Act would be in effect repealed so far as patent actions were concerned. Once again patentees might threaten a manufacturer's customers with suit and the manufacturer would be helpless until such time when he was directly notified. That time would of course never arrive if the patentee knew that only upon the happening of this event might he be sued. Professor Borchard sums the matter up:
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