Tubeco, Inc. v. Crippen Pipe Fabrication Corporation
| Citation | 402 F. Supp. 838 |
| Decision Date | 21 October 1975 |
| Docket Number | No. 73 C 203.,73 C 203. |
| Parties | TUBECO, INC., Plaintiff, v. CRIPPEN PIPE FABRICATION CORPORATION and Henry O. Crippen, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
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Sandoe, Hopgood & Calimfde, New York City by Roy C. Hopgood and Arthur M. Lieberman, New York City, for plaintiff.
Morgan, Finnegan, Durham & Pine, New York City by John D. Foley, Robert E. Paulson, and James V. Costigan, New York City (Nelson Littell, Jr., New York City, of counsel), for defendants.
Plaintiff ("Tubeco") brought this action pursuant to 28 U.S.C. §§ 2201, 2202, seeking a declaratory judgment which would determine that defendants' Patent No. 3,456,468 (1) is invalid, unenforceable, and not infringed by Tubeco or its customers, (2) has been used in unfair competition with Tubeco, and (3) has been used as a false description or representation, and a false designation of origin of goods and services in violation of the Lanham Act, 15 U.S.C. § 1125(a).1 There being no diversity of citizenship between the parties, subject matter jurisdiction is allegedly based on 28 U.S.C. §§ 1331(a), 1338(a) and (b), and 15 U.S.C. § 1125(a).
The case is now before the court on defendants' (hereinafter "Crippen") motions to dismiss the complaint pursuant to Rule 12(b)(1) and (6), F.R.Civ.P. The grounds urged are that subject matter jurisdiction is lacking because there is no justiciable controversy between the parties regarding the patent in question; and, alternatively, no claim is stated upon which relief can be granted. Extensive briefs, affidavits, exhibits and depositions have been submitted in support of and in opposition to the motions. The court has carefully reviewed these and concludes for the reasons which follow that the motion to dismiss the complaint should be granted.
These facts appear not to be in material dispute. Tubeco is a New York corporation having its principal place of business in Brooklyn. For at least 24 years it has been engaged in the business of pipe fabrication, specializing among other things in the precision custom bending of steel pipe larger than six inches in diameter for use in industrial installations such as chemical and power plants, refineries and the like. Hot pipe bending, as it is called, is essentially a process of heating pipe and bending it into desired shapes around the curvature face of an arced forming die. Tubeco's customer clientele includes well-known large corporations and it regards itself as a major national pipe fabricator and distributor of materials for fabrication as well as "one of the primary sources for the world's requirements of large size pipe bends."2 Although describing its pipe bending equipment as "unique", see n. 2 supra, Tubeco has never obtained a patent on its apparatus or methods.
Defendant Henry O. Crippen began his training and experience in the art of hot pipe bending while employed by the Sun Shipbuilding and Drydock Corporation during the period 1942-1946. In 1954 he was employed by Tubeco's predecessor, where he was in charge of all hot pipe bending operations and claims to have "tested out during the course of his work most of the principles and concepts later incorporated into his invention",3 described in the patent hereinafter mentioned. Crippen remained in Tubeco's employ until January 1966, during which period he admittedly "had knowledge of all the equipment used, and all of the processes practiced, by Tubeco, Inc. in its pipe bending and fabrication operations."4
After leaving Tubeco, Crippen became self-employed. In March 1967 he filed an application in the United States Patent Office for a patent on a hot pipe bending apparatus and process he claimed was his own invention. On July 22, 1969 United States Patent No. 3,456,468 was issued to Crippen on the apparatus and method described.5
While his patent application was still pending, Crippen approached Tubeco about using his alleged innovation. By letter of March 6, 1968, he informed Tubeco of his invention and offered it to Tubeco for its use, admittedly with the expectation of being paid if the offer were accepted. Tubeco responded by letter dated March 20, 1968, declining to permit any further disclosure or discussion of the matter unless an agreement was entered into assuring that Tubeco would be "the sole judges of the novelty and worth of the idea, and that any payment to you would be entirely voluntary on our part."6
On or about August 13, 1970, after the patent had issued, Crippen succeeded in arranging a meeting with Tubeco officers and employees at which he explained the patented process in detail for the first time and exhibited drawings which form part of the patent involved. Tubeco's president, Allan B. Wesler, after viewing these, concluded from Crippen's presentation that he was attempting to "sell us our own process" and told him so.7 Wesler then left the meeting, which ended shortly thereafter without result for Crippen.
There apparently were no further communications between Crippen and Tubeco, except for the two Tubeco letters mentioned below. At some point, Tubeco obtained a copy of the patent, examined it, and concluded it covered processes Tubeco had either used for many years before March 28, 1967, the date of application, or had earlier tried and discarded. On June 3, 1971, Tubeco wrote Crippen stating it considered the patent invalid and that Tubeco "will continue to use all of the procedures which it presently is using and has used in the past."8 The letter by its terms called for no response from Crippen and none was forthcoming.
Tubeco's next letter to Crippen — written some eighteen months later — demanded a response. That letter, annexed as Exhibit A to the complaint, is dated January 17, 1973, shortly prior to the institution of this action. After informing Crippen that Tubeco considered his patent to have been fraudulently obtained, his claim of inventorship false, and his use of the patent "unfair competition", the letter demanded "that you disclaim your patent forthwith." When Crippen did not respond, this action was begun.
Tubeco's earlier notice and eventual ultimatum to Crippen were obviously a response to news of his further efforts to exploit the patent after the unfruitful meeting at Tubeco. A month or so after that meeting and on September 18, 1970, Crippen Pipe Fabrication Corporation, predecessor of the present co-defendant, was organized in New York.9 Initially Crippen had explored the possibility of licensing his patented method to other companies engaged in industrial pipe fabrication. Unsuccessful in that effort, he decided to form his own enterprise and enter the heavy industrial pipe bending and fabrication industry in which Tubeco was a principal competitor.10
In pursuit of that goal Crippen conducted a campaign of telephone calls, letter writing, and dissemination of brochures and reports directed not only to potential customers for pipe fabrication work but also to banks, insurance companies and other sources of the financing he required. The brochures and reports, which bear dates of November 1970 and June 1971, make reference to Tubeco and other prior employment in describing Crippen's experience and knowledge in the industry and also assert that he designed Tubeco's present equipment, which "represents his early efforts to devise an improved pipe bending apparatus."11 The claim was also made that "Crippen's patented apparatus represents a significant improvement over any equipment or method currently in use" and that "all of the components and concepts embodied . . . have been tested and proven of sic full-size equipment."12 The June 1971 brochure included several pipe bend drawings, which Crippen acknowledged were made for him by a Tubeco draftsman just prior to his leaving Tubeco's employ in 1966.13
Crippen succeeded in launching his enterprise on October 31, 1972. On that date Crippen Pipe signed a lease for manufacturing buildings and facilities at the Brooklyn Navy Yard, having obtained substantial financing from a banking and investment consortium and firm sales commitments from a number of major industrial corporations.14 The event received local news publicity which came to Tubeco's attention. In mid-February 1973, just as Crippen's enterprise was getting under way,15 this action was commenced.
Although it is Crippen's motion which calls into question the court's subject matter jurisdiction, it is Tubeco's burden to demonstrate that this is a case involving a federal question, or the patent laws or a cognizable claim under the Lanham Act. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936). The Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202, does not of itself confer subject matter jurisdiction but only a remedy where such jurisdiction independently exists. Sachs v. Cluett, Peabody & Co., 91 F.Supp. 37 (S.D.N.Y.1950). There being no diversity of citizenship between the parties and no apparent federal question apart from the patent laws and the Lanham Act, subject matter jurisdiction must rest upon the existence of either an actual patent controversy or a cognizable claim under the Lanham Act.
Tubeco's first alleged cause of action mingles two separate claims: (a) a claim of patent invalidity under 35 U.S.C. §§ 102, 103, and (b) a claim of unfair competition under 28 U.S.C. § 1338(b) based upon Crippen's alleged misuse of the patent. The latter is, of course, a claim wholly dependent for jurisdictional purposes upon the substantiality of the related patent invalidity claim.
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