University of Illinois Foundation v. Channel Master Corp.

• Citation: 382 F.2d 514
• Decision Date: 09 August 1967
• Docket Number: No. 15997.,15997.
• Parties: The UNIVERSITY OF ILLINOIS FOUNDATION, an Illinois corporation, Plaintiff-Appellant, v. CHANNEL MASTER CORPORATION, a New York corporation, Defendant-Appellee, and Electronic Distributors, Inc., an Illinois corporation, Defendant.
• Court: U.S. Court of Appeals — Seventh Circuit

382 F.2d 514 (1967)

The UNIVERSITY OF ILLINOIS FOUNDATION, an Illinois corporation, Plaintiff-Appellant, v. CHANNEL MASTER CORPORATION, a New York corporation, Defendant-Appellee, and Electronic Distributors, Inc., an Illinois corporation, Defendant.¹

No. 15997.

United States Court of Appeals Seventh Circuit.

August 9, 1967.

William A. Marshall, Basil P. Mann, Charles J. Merriam, Nate F. Scarpelli, Chicago, Ill., for plaintiff-appellant, Merriam, Marshall, Shapiro & Klose, Chicago, Ill., of counsel.

Morris Relson, New York City, William E. Lucas, Chicago, Ill., Michael J. Sweedler, New York City, for defendant-appellee.

Before SCHNACKENBERG, KILEY and FAIRCHILD, Circuit Judges.

SCHNACKENBERG, Circuit Judge.

The University of Illinois Foundation, an Illinois corporation, plaintiff, has appealed herein from a final judgment of the district court dismissing Channel Master Corporation, a New York corporation, as a defendant in the aboveentitled case, because of improper venue.

Plaintiff brought suit in the district court charging, inter alia, infringement of United States Letters Patent No. 3,210,767 by said defendant and Electronic Distributors, Inc., an Illinois corporation.

Plaintiff is the owner of the patent in suit. Channel Master is a manufacturer of television antennas, with its plant and home offices in Ellenville, New York, where it was served with a summons.

The statute directly involved herein is 28 U.S.C.A. § 1400(b), which reads:

(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.

Defendant has an employee, Joseph O. Nicolau, who resides in the Northern District of Illinois. It is a basic contention of plaintiff that venue was properly laid in that district because Channel Master has a regular and established place of business in that district. It specifically refers to Nicolau, who uses his home in that district as a base for his sales activities in promoting his employer's products. He regularly prepares reports at his home and transmits them to his employer's home office. He receives and initiates telephone calls at his home, the address and telephone number of which are listed on his employer's business card, and Channel Master reimburses him for car expenses, postage and telephone calls. He deducts on his income tax return a percentage of his own household expenses as business usage.

Plaintiff reasons that, as Nicolau "maintains control of a permanent establishment in the district for his employer, and systematically conducts a substantial portion of the employer's business in the district from this location, the employer has a regular and established place of business in the district."

Plaintiff relies on Knapp-Monarch Co. v. Casco Products Corp., 7 Cir., 342 F.2d 622 (1965), at 625, where plaintiff sued in the same district court as in the case at bar, charging patent infringement by defendant Casco Products Corporation, and E. A. Langenfeld Associates, Ltd. Casco, a Connecticut corporation, had its principal place of business there. Langenfeld was a manufacturer's representative for Casco's products in the Chicago area. It had an office in Chicago for which it paid the rent and other expenses and was not reimbursed by Casco. Langenfeld solicited orders for Casco's products for a commission and forwarded them to Casco in Connecticut, whereupon Casco shipped the goods directly to the purchaser, who made payments directly to Casco. Samples of the accused irons were displayed in Langenfeld's office but were never demonstrated or used by it.

We said, at 624:

"* * * Therefore, the matter of venue depends upon whether the defendant had a regular and established place of business within the district."

And at 625, we added:

"* * * we hold that Casco\'s maintaining a sales representative in Chicago does not meet the statutory test. * * *"

In affirming the orders of dismissal by the district court, we said at 626:

"* * * The undisputed facts disclosed by these papers show that Langenfeld\'s activity was confined to solicitation of orders except for the sale of two irons to its employees; * *"

Thus it appears that Knapp-Monarch fails to justify plaintiff's reliance upon it.

In the case at bar Channel Master's sole activities in the district are sales promotion and solicitation by a single employee. All orders from customers in the district are accepted in New York. All shipments to customers are made from New York. All payments for goods are made to New York.

Undoubtedly Nicolau's duties are to promote the sale of Channel Master's products. The record shows that he vis its about a dozen distributors in his territory and at times holds sales meetings with their personnel. On these visits he speaks of new products, assists in checking a distributor's inventory and suggests reordering goods which seem...