Urbain v. Knapp Brothers Manufacturing Company

• Decision Date: 01 December 1954
• Docket Number: No. 12155.,12155.
• Parties: Leon F. URBAIN and Loxit Systems, Inc., Appellants, v. KNAPP BROTHERS MANUFACTURING COMPANY, Al Levinson, Charles Levinson, and Robert Levinson, Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

217 F.2d 810 (1954)

Leon F. URBAIN and Loxit Systems, Inc., Appellants, v. KNAPP BROTHERS MANUFACTURING COMPANY, Al Levinson, Charles Levinson, and Robert Levinson, Appellees.

No. 12155.

United States Court of Appeals, Sixth Circuit.

December 1, 1954.

Curtis F. Prangley, Chicago, Ill. (Clarence B. Des Jardins, of Des Jardins, Robinson & Keiser, Cincinnati, Ohio, Curtis F. Prangley, Mark H. Clayton, Chicago, Ill., on the brief), for appellants.

Truman A. Herron, Cincinnati, Ohio (Truman A. Herron, Wood, Herron & Evans, Cincinnati, Ohio, on the brief), for appellees.

Before MARTIN, McALLISTER and MILLER, Circuit Judges.

MARTIN, Circuit Judge.

The appellants — Leon F. Urbain, an individual residing in Chicago, and Loxit Systems, Inc., an Illinois corporation — filed on February 2, 1953, a complaint in the United States District Court for Southern Ohio against appellees — Knapp Brothers Manufacturing Company, an Ohio corporation, and Al Levinson and his two sons, Charles and Robert, as controlling stockholders of the corporation. Urbain, as sole owner, and Loxit Systems, Inc., as exclusive licensee of Letters Patent 2,319,278 and 2,338,146, sought to enjoin appellees from infringing such patents and from manufacturing, using, selling, advertising, distributing, or displaying board constructions and chalk troughs in infringement or threatened infringement of the patents.

Appellees filed an answer and a counterclaim for declaratory judgment attacking the validity of the patent claims and seeking against appellants a permanent injunction from asserting that the display board constructions and chalk troughs manufactured by appellees infringed appellants' patents, or that the Letters Patent covered validly the constructions manufactured or sold by appellees; and from filing or threatening to file suit against any of their suppliers, customers, or prospective customers. Appellees prayed further for declaratory judgment that each of the Letters Patent is invalid and not infringed by the manufactured products of appellees.

Appellants traversed the material allegations of appellees' counterclaim for declaratory judgment.

On January 15, 1954, the appellee corporation filed under oath of its vice-president a motion for an order restraining the plaintiffs-appellants from prosecuting a companion action in the United States District Court for the Northern District of Illinois. This sworn motion averred that, on February 3, 1953 (one day after the present action was filed in the Southern District of Ohio), the appellants brought a second suit in the Northern District of Illinois naming as defendants therein the Claridge Equipment Company, and individuals Preble, Jecman, and Jecman, Junior; that the Illinois suit charged infringement of patents identical with those charged in the instant action to be infringed; that the Claridge Equipment Company is a distributor of the challenged products of appellees; that the three named individual defendants are officers of the Claridge Equipment Company; and that the appellee company (Knapp Brothers Manufacturing Company) is advised and believes that the products which are charged to infringe plaintiffs' patents in the suit in the Northern District of Illinois were manufactured by this defendant and are identical in nature with those charged to infringe in this action; that accordingly the issues in the two cases are identical; and that this defendant, by an instrument in writing, has assumed the defense of the Chicago suit and has agreed to indemnify the defendants therein from all loss and damage.

The motion averred further that the case had been formally set for trial on March 22, 1954, in the United States District Court for the Southern District of Ohio; but that, despite this fact, appellants have threatened to have the action pending in the Northern District of Illinois set for trial prior to March 22, and have threatened to try that case, notwithstanding the fact that the instant action is entitled to precedence both by reason of its earlier filing and by reason of the fact that it is directed against the manufacturer of the alleged infringing products. The motion then prayed for a court order enjoining appellants and all in privity with them "from proceeding with the trial of said action in the Northern District of Illinois prior to the trial of this action and prior to the decision of the court herein."

There appears in the appendix to appellees' brief a copy of the indemnity agreement in the language set out in the margin.¹

The appendix to appellants' brief includes an affidavit of one of the attorneys for appellants, as set forth in the margin.² We deem this affidavit of no guidance toward correct determination of the decisive issue.

After a hearing on the motion of appellants for injunction, as aforesaid, the district court entered an order declaring that the motion was well taken and should be granted. Appellants were enjoined and restrained from proceeding with the trial of the action in the Northern District of Illinois prior to the trial of the instant action and prior to the decision of the United States District Court for Southern Ohio. Unfortunately, the United States District Judge wrote no opinion and did not file any findings of fact or conclusions of law.

1. Appellants say first that the United States District Court for the Southern District of Ohio had no right to enjoin appellants, as ordered, from prosecuting their civil action against the Claridge Equipment Company, et al., in the United States District Court for the Northern District of Illinois. They point out that while the plaintiffs in both actions are identical, the defendants are not; that infringement by different parties is charged in the two suits; and that it has not been established that the defendants in the Illinois case are distributors of the products of the appellees, or that appellees have undertaken the defense of the proceeding in the Northern District of Illinois. The opinion in Triangle Conduit & Cable Co. v. National Electric Products Corporation, 3 Cir., 138 F.2d 46, 48, is presented as authority for the proposition that a United States District Court should not enjoin the prosecution of a later proceeding instituted in another United States District Court, unless the controversy in each court involves the same issues and the same parties. The Court of Appeals stated: "It is well settled that a patent owner has a cause of action, separate and independent from that against an infringing manufacturer, to recover profits and damages and to restrain one who resells a product which he purchased from an infringing manufacturer."

Appellants contend that the decision of the United States Supreme Court in Kerotest Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 72 S.Ct. 219, 96 L.Ed. 200, does not modify or impair the authority of the Triangle case just cited or of the earlier Triangle case reported in Triangle Conduit & Cable Co. v. National Elec. P. Corp., 3 Cir., 125 F.2d 1008, to which reference is made in a footnote 342 U.S. 184, 72 S.Ct. 221. The writer of the opinion in the Kerotest case 342 U.S. 180, 72 S.Ct. 221 pointed out that wise judicial administration in the "conservation of judicial resources and comprehensive disposition of litigation, does not counsel rigid mechanical solution" of complicated problems resulting from the initiation of litigation by different parties to many-sided transactions; and that the factors relevant to wise administration being equitable in nature, "an ample degree of discretion, appropriate for disciplined and experienced judges, must be left to the lower courts." The Supreme Court held that a manufacturer who is charged with infringement of a patent is not privileged to stretch the Federal Declaratory Judgment Act to give him a paramount right to choose the forum for trying out questions of infringement and validity.

Kryptok Co. v. Stead Lens Co., 190 F. 767, 8 Cir., is also cited by appellants. The holding there was that the owner of a patent could not properly be enjoined from prosecuting an action already commenced against a retailer, or from instituting other actions of like character, where he had sued a manufacturer for infringement of his patent. Judge Sanborn stated, however, that where a judge has not substituted his arbitrary, whimsical will for sound judicial discretion, informed and guided by established principles, rules and practice of equity jurisprudence, his orders granting injunctions may not be reversed without clear proof of an abuse of his discretion.

Appellants cite Advance Transformer Co. v. Bromberg, D.C.N.D.Ill., 106 F. Supp. 691, where a motion for stay of proceedings in another district was denied for the reason that the same parties were not involved in both actions and upon the principle that a cause of action of a patent owner against an infringing manufacturer is wholly separate and distinct from his cause of action against one who resells the infringing product.

In rejoinder to appellants' argument upon the proposition under discussion, the appellees assert that appellants, though residents of Illinois, voluntarily chose the Ohio District Court as their first forum by filing their suit there before they instituted their action in Illinois. Numerous steps have been taken in the Ohio court and extensive hearings on various motions have been afforded. The Ohio suit had been set for trial on March 15, 1954, and except for this appeal the action in Ohio doubtless would have been tried before now and probably decided. It is emphasized by appellees that Claridge Equipment Company, as shown by the affidavit of the Vice-President of Knapp Brothers Manufacturing Company, is a distributor of products of appellees which are charged to infringe appellants' patents. These products were manufactured by appellees and are identical in nature with those charged in the instant action to infringe appellant...