United States v. Cold Metal Process Co.

• Decision Date: 05 October 1944
• Docket Number: Civil No. 21910.
• Citation: 57 F. Supp. 317
• Parties: UNITED STATES v. COLD METAL PROCESS CO. et al.
• Court: U.S. District Court — Northern District of Ohio

57 F. Supp. 317

UNITED STATES v. COLD METAL PROCESS CO. et al.

Civil No. 21910.

District Court, N. D. Ohio, E. D.

October 5, 1944.

Francis M. Shea, Asst. Atty. Gen., Don C. Miller, U. S. Atty., of Cleveland, Ohio, and Roy C. Hackley, Jr., Sp. Asst. to Atty. Gen., for plaintiff.

Clarence B. Zewadski, of Detroit, Mich., Franklin B. Powers, of Youngstown, Ohio, Howard F. Burns, of Cleveland, Ohio, Whittemore, Hulbert & Belknap, of Detroit, Mich., Manchester, Bennett, Powers & Ullman, of Youngstown, Ohio, and Baker, Hostetler & Patterson, of Cleveland, Ohio, for defendants.

MILLER, District Judge.

The United States of America brought this action for the purpose of having cancelled by judgment of this court Patent No. 1,744,016 and Patent No. 1,779,195 dealing with the process of cold rolling metals. The principal ground of the complaint is that fraud was perpetrated upon the Patent Office by defendants in securing the issuance of these patents. Other allegations in the complaint are that all or parts of the patents should be cancelled upon various grounds other than fraud in the procurement thereof, such as mutual mistake of fact, and that as a matter of law said claims were not legally allowable by the Patent Office.

The plaintiff has moved for a temporary injunction enjoining the defendant corporation from receiving any further monies by way of royalties, payments in settlement of claims, or satisfactions of judgment for damages or otherwise on account of said patents; from making any further distribution to its stockholders on account of monies received under said patents; and from taking any steps for the collection of payments under said patents other than the reduction of claims to judgment or the direction to persons owing money by reason thereof to pay said money into the registry of this court to await disposition by this court upon final disposition of the present action. It is stated in the motion that the defendant corporation is promptly distributing monies received by it from said license contracts to its stockholders which places it beyond the reach of the persons from whom these monies is being exacted in the event it is adjudged that the patents should be cancelled; that the defendant corporation is engaged exclusively in the business of holding and licensing patents and the collection of royalties and is itself not engaged in any operations which would be irreparably damaged or interfered with by the relief herein sought by the plaintiff. The defendants deny the alleged fraud and vigorously oppose the issuance of the temporary injunction prayed for, chiefly on the ground that a temporary injunction should never be granted where the right to the relief asked is doubtful, which they claim is the situation in the present case. Other practical difficulties in functioning under such a decree are also urged upon the Court, in addition to claiming that such an order would cause immediate, substantial and irreparable injury to the Cold Metal Process Company. The so-called practical difficulties do not impress the Court. Even though the licensees who will make the royalty payments in the future are not before the Court and no order can be binding against them, yet it is believed that a suitable order could be drafted requiring the defendants, over whom the Court does have jurisdiction, to take certain steps therein specified which would result in these payments being made either directly or indirectly into the registry of the court, and that the defendants could be permitted enough freedom of action to protect all rights under their contracts against such licensees which would fall short of actually receiving and distributing the money to stockholders. The real issue seems to be whether or not the Court should grant a temporary injunction where the right to the relief asked is doubtful. It appears that a number of decisions state the rule in such general terms as stated by the defendants, and in such cases the Courts have declined to issue a temporary injunction. See Anargyros & Co. v. Anargyros, 9 Cir., 167 F. 753; Hall Signal Co. v. General R. Signal Co., 2 Cir., 153 F. 907; Madison Square Garden Corporation v. Braddock, 3 Cir., 90 F.2d 924; Burroughs v. City of Dallas, 5 Cir., 276 F. 812; United States v. Weirton Steel Co., D.C.Del., 7 F.Supp. 255, 265; United States v. Hartol Products Corp., D.C.N.J., 8 F.Supp. 897; United States v. Schine Chain Theatres, Inc., D.C. W.D.N.Y., 31 F.Supp. 270, 272. However, such a brief general statement does not appear to be a full and complete statement of the rule. It is no doubt well settled and conceded by both sides that whether a preliminary injunction shall be granted rests fundamentally in the sound discretion of the trial court, although such discretion must be exercised according to the well-known and established principles of equity. Deckert v. Independence Shares Corporation, 311 U.S. 282, 290, 61 S.Ct. 229, 85 L.Ed. 189; Meccano, Ltd., v. John Wanamaker, 253 U.S. 136, 141, 39 S.Ct. 10, 63 L.Ed. 419. The more complete statement of the correct rule is contained in Volume 28, American Jurisprudence Subject Injunctions, Section 14, where it is stated:

"The application for a temporary injunction rests upon an alleged existence of an emergency, or of a special reason for such an order, before the case can be regularly heard, and the essential conditions for granting such temporary injunctive relief are that the complaint allege facts which appear to be sufficient to constitute a cause of action for injunction, and that on the entire showing from both sides it appear, in view of all the circumstances, that the injunction is reasonably necessary to protect the legal rights of the plaintiff pending the litigation. Where the danger or injury threatened is of a character which cannot be easily remedied if the injunction is refused and there is no doubt that the act charged is contemplated, the temporary injunction should be granted, unless the case made by the bill is satisfactorily refuted by the defendant. As stated by the Supreme Court, the rule is that where the questions presented by an application for an interlocutory injunction are grave, and the injury to the moving party will be certain and irreparable if the application is denied and the final decree is in his favor, while if the injunction is granted, the injury to the opposing party, even if the final decree is in his favor, will be inconsiderable or may be adequately indemnified by a bond, the injunction usually will be granted."

The Circuit Court of Appeals for this Circuit has in at least two instances decided the question upon a balancing of the conflicting equities, rather than upon the rule contended for by the defendants. In Blount v. Societe, etc., 6 Cir., 53 F. 98, 101, it said:

"The legal discretion of the judge or court in acting upon allegations for a provisional injunction is largely controlled by the consideration that the injury to the moving party, arising from a refusal of the writ, is certain and great, while the damage to the party complained of, by the issuance of the injunction, is slight or inconsiderable."

Also in City of Louisville v. Louisville Home Tel. Co. 6 Cir., 279 F. 949, at page 956, the same Court said:

"It is equally well understood that the trial court will balance the conflicting equities of the parties, and, if it appears reasonably probable that plaintiff may prevail upon the final hearing, will for the time being preserve plaintiffs' supposed right against destruction, if that temporary maintenance can be accomplished without danger of greater harm to defendant than there will be of benefit to plaintiffs."

In that same case the Court held that a preliminary injunction may be issued without requiring the same degree of demonstration which would be required at a final hearing, and that where the result depends upon a disputed question of fact the plaintiff is usually entitled to the benefit of the presumption that upon the final hearing he may be able to establish his claims with sufficient certainty. The question is well considered and discussed in Pratt v. Stout, 8 Cir., 85 F.2d 172, 176, 177. In that case the Court said:

"Especially will the granting of a temporary writ be upheld when the balance of injury as between the parties favors its issue. (Cases cited.) If the questions presented by a suit for an injunction are grave and difficult and the injury to the moving party will be certain, substantial, and irreparable if the motion for a temporary injunction is denied and the final decision is favorable, while if the motion is granted and the decision is unfavorable the inconvenience and loss to the opposing party will be inconsiderable or he may be protected by a bond, the injunction usually should be granted. (Cases cited.)"

The same view was taken by the Court in the following cases: Doyne v. Saettele, 8 Cir., 112 F.2d 155, 160; American Medicinal Co. v. United Distillers, 2 Cir., 76 F. 2d 124, 125, 126; Sinclair Refining Co. v. Midland Oil Co., 4 Cir., 55 F.2d 42, 45; Continuous Glass Press Co. v. Schmertz Wire Glass Co., 3 Cir., 153 F. 577, 578.

The rule as quoted above from Pratt v. Stout also appears to be the rule laid down by the Supreme Court in Ohio Oil Co. v. Conway, 279 U.S. 813, 815, 49 S.Ct. 256, 73 L.Ed. 972. In almost every lawsuit where the allegations of the complaint are denied the right to the relief asked is doubtful. The existence of such a doubt is what really causes the litigation. If we adopted the rule contended for by the defendants, the protection granted by a temporary injunction would rarely be available to the plaintiff. On this phase of the case it seems to the Court that it would be better for the Court to consider whether or not it appears reasonably probable that the plaintiff may prevail upon the final hearing, rather than to consider whether the relief asked for is doubtful. This probable right to prevail...