Victor Talking Mach. Co. v. Brunswick-Balke-Collender Co.

• Decision Date: 09 March 1922
• Docket Number: 458.
• Citation: 279 F. 758
• Parties: VICTOR TALKING MACH. CO. v. BRUNSWICK-BALKE-COLLENDER CO. et al.
• Court: U.S. District Court — District of Delaware

279 F. 758

VICTOR TALKING MACH. CO. v. BRUNSWICK-BALKE-COLLENDER CO. et al.

No. 458.

United States District Court, D. Delaware.

March 9, 1922

William Houston Kenyon and Theodore S. Kenyon, both of New York City and Charles F. Curley, of Wilmington, Del., for plaintiff.

Melville Church, of Washington, D.C., George W. Case, Jr., of New York City, and William G. Mahaffy, of Wilmington, Del., for defendants.

MORRIS District Judge.

The bill of complaint of Victor Talking Machine Company alleges that claim 19 of patent No. 946,442, owned by the plaintiff and claim 1 of patent No. 1,402,738, owned by the defendants the Brunswick-Balke-Collender Company and John Bailey Browning, are interfering claims. It prays relief pursuant to R.S. Sec. 4918 (Comp. St. Sec. 9463), and that the defendants be enjoined from bringing any infringement suit upon their patent. The answer admits the interference alleged, but prays that the relief afforded by R.S. Sec. 4918, be given to the defendants. The answer also sets up, by way of counterclaim infringement by plaintiff of claims 1 to 10, inclusive, of defendants' patent, and prays the usual relief therefor.

The plaintiff has moved to strike from the answer the allegations and prayers with respect to infringement, upon the ground that, though the District Courts of the United States have general and exclusive jurisdiction of all cases arising under the patent laws (Judicial Code, Sec. 24 (7) and section 256 (5) (Comp. St. Secs. 991, 1233)) yet this court is without jurisdiction to entertain defendants' infringement claim against the plaintiff, because section 48 of the Judicial Code (Comp. St. Sec. 1030) provides:

'In suits brought for the infringement of letters patent the District Courts * * * shall have jurisdiction * * * in the district of which the defendant * * * shall have committed acts of infringement and have a regular and established place of business' -- and because the record does not disclose that the plaintiff is an inhabitant of this district or that it has here a regular and established place of business. The defendants, on the other hand, contend that the plaintiff, by filing its suit in this court, submitted itself to the jurisdiction of this court, not only with respect to the cause set up in the bill, but also as to the matters set up by the defendant as a counterclaim.

To settle this question it is necessary first to determine whether or not the charge of infringement made in defendants' answer is a proper counterclaim. This depends upon the scope of the second paragraph of equity rule 30 (201 F. v, 11, C.C.A. v), which provides: 'The answer must state in short and simple form any counterclaim arising out of the transaction which is the subject-matter of the suit, and may, without cross-bill, set out any set-off or counterclaim against the plaintiff which might be the subject of an independent suit in equity against him, and such set-off or counterclaim, so set up, shall have the same effect as a cross-suit, so as to enable the court to pronounce a final judgment in the same suit both on the original and cross-claims.'

That rule has been the subject of numerous and conflicting decisions. Many courts have held that it embraces any claim or cause of action which might be the subject of an independent suit in equity against the plaintiff, even though such cause of action be wholly unconnected with the subject of plaintiff's suit. Marconi Wireless Telegraph Co. v. National R.S. Co. (D.C.) 206 F. 295; Vacuum Cleaner Co. v. American Rotary Valve Co. (D.C.) 208 F. 419; Electric Boat Co. v. Lake Torpedo Boat Co. (D.C.) 215 F. 377; Buffalo Specialty Co. v. Vancleef (D.C.) 217 F. 91; Harper Bros. v. Klaw (D.C.) 232 F. 609; Paramount Hosiery Form D. Co. v. Walter Snyder Co. (D.C.) 244 F. 192.

Other courts have held that rule 30 authorizes the setting up in an answer of only those claims arising out of the transaction which is the subject-matter of the suit and which, prior to the adoption of the present equity rules, might have been set up in a cross-bill. Terry Steam Turbine Co. v. B.F. Sturtevant Co. (D.C.) 204 F. 103; Adamson v. Shaler (D.C.) 208 F. 566; Ohio Brass Co. v. Hartman Electrical Mfg. Co. (D.C.) 243 F. 629; Christensen v. Westinghouse Traction Brake Co. (D.C.) 235 F. 898; Williams Patent Crusher & P. Co. v. Kinsey Mfg. Co. (D.C.) 205 F. 375; Sydney v. Mugford Printing & Engraving Co. (D.C.) 214 F. 841.

In view of all that has been said by the courts with respect to this rule, it would serve no useful purpose to do more than to indicate briefly my reasons for adding this case to one group of cases rather than to the other. The term 'counterclaim' is not defined by the federal statutes or by the equity rules. It was not known either to the common law or to the early English and American equity practice. It was introduced into the practice of this country apparently through the reformed codes of procedure adopted by many of the states. In those codes it was generally defined as a cause of action (a) arising out of the contract or transaction set forth in the complaint as the foundation of plaintiff's claim; or (b) connected with the subject of the action; or (c) arising on a contract independent of the contract sued upon by plaintiff. 24 R.C.L. 793, 794; 25 A. & R. (2d Ed.) 581.

The term did not, in some states, at least, embrace all claims and demands that might be made the subject of an independent suit against a plaintiff. Byerly v. Humphrey, 95 N.C. 151; Newport News & O. P. Ry. & Electric Co. v. Bickford, 105 Va. 182, 52 S.E. 1011; Braithwaite v. Akin, 3 N.D. 365, 56 N.W. 133. But the portion of equity rule 30 here in question is based, not on the state codes, but on Order XIX, rule 3, of the English Supreme Court of Judicature, which reads:

'3. A defendant in an action may set off, or set up by way of counterclaim against the claims of the plaintiff, any right or claim, whether such set-off or counterclaim sound in damages or not, and such set-off or counterclaim shall have the same effect as a cross-action, so as to enable the court to pronounce a final judgment in the same action, both in the original and on the cross-claim. But the court or a judge may, on the application of the plaintiff before the trial, if in the opinion of the court or judge such set-off or counterclaim cannot be conveniently disposed of in the pending action, or ought not to be allowed, refuse permission to the defendant to avail himself thereof.'

Under that order 'any right or claim,' whether arising out of, or wholly unconnected with, the claim of the plaintiff, may, subject to the proviso of the last sentence, be counterclaimed. Furthermore, the English courts have held that a counterclaim need not be an action of the same nature as the original action, and is not restricted to matters arising out of the claim or transaction set up in the complaint, but may include wholly independent matters as well. Beddell v. Maitland, 17 Ch. Div. 181; Gray v. Webb, 21 Ch.Div. 802.

In view of the origin of rule 30 and the English decisions, I am constrained to conclude, though with some reluctance, that the term 'counterclaim' used in that rule has the breadth of meaning it has in the English order, and not the restricted meaning it has in the state codes; that rule 30 is as broad, if not broader, than the English order XIX, rule 3 and that under rule 30 a...