Werner Machinery Company v. National Cooperatives, Inc.

• Decision Date: 12 September 1968
• Docket Number: No. 67-C-394.,67-C-394.
• Citation: 289 F. Supp. 962
• Parties: WERNER MACHINERY COMPANY, Plaintiff, v. NATIONAL COOPERATIVES, INC., Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

289 F. Supp. 962

WERNER MACHINERY COMPANY, Plaintiff, v. NATIONAL COOPERATIVES, INC., Defendant.

No. 67-C-394.

United States District Court E. D. Wisconsin.

September 12, 1968.

Ross, Stevens, Pick & Spohn, Madison, Wis., for plaintiff, Price, Heneveld, Huizenga & Cooper, Grand Rapids, Mich., of counsel.

Arnold, Murray & O'Neill, Milwaukee, Wis., for defendant.

DECISION and ORDER

MYRON L. GORDON, District Judge.

This is a suit for patent infringement. The plaintiff alleges that certain machinery sold by Universal Milking Machine Division, a department of the defendant company, infringes patent no. 2,895,450 held by the plaintiff. The infringing sales are alleged to have been made from the defendant's office in Wales, Wisconsin.

The defendant has now made motions challenging venue and service of process. The motions ask for dismissal of the suit, or, in the alternative, transfer to another district.

I. IS THERE VENUE IN THIS DISTRICT?

Venue in a patent infringement action is governed by 28 U.S.C. § 1400(b). Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 77 S.Ct. 787, 1 L.Ed. 2d 786 (1957). This section reads as follows:

"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."

Residence is defined as the state of incorporation. See Fourco Glass Co. v. Transmirra Products Corp., supra; since this defendant is incorporated in the District of Columbia, venue in this district must be predicated on the second clause of § 1400(b), rather than the first. We must therefore determine whether the defendant has a "regular and established place of business" in this district and also whether alleged acts of infringement appear to have been committed here.

It is uncontroverted that at least three units which allegedly infringe the plaintiff's patent were sold in Wales, Wisconsin from July 1, 1967 to December 31, 1967. This satisfies the court that "acts of infringement" took place in this district. See Knapp-Monarch Co. v. Casco Products Corp., 342 F.2d 622, 624 (7th Cir. 1965), where the court held that acts of infringement had occurred because "Casco admitted * * * that it sold two of the accused devices during the 1963 Houseware Show * * *."

The requirement that a corporation have a "regular and established place of business" in the district has received a somewhat narrow and limiting interpretation. Mid-Continent Metal Products Co. v. Maxon Premix Burner Co., 367 F.2d 818 (7th Cir. 1966). Something more than "doing business" is required. See Knapp-Monarch Co. v. Casco Products Corp., supra; and it has been held that plaintiff must establish that

"defendants had an established place at which they conducted business and that such business was conducted with such a degree of regularity and permanence as to compel the conclusion that the place was `a regular and established place of business'." Railex Corporation v. White Machine Co., 243 F.Supp. 381, 385 (E.D.N.Y.1965).

See also Mastantuono v. Jacobsen Mfg. Company, 184 F.Supp. 178 (S.D.N.Y. 1960) and Watsco, Inc. v. Henry Valve Co., 232 F.Supp. 38, 47 (S.D.N.Y.1964), where the test applied was whether

"there has been a sufficient showing of a systematic, regular and continuous course of business activity carried on from a permanent location in New York City * * *.'

With these guidelines in mind, the court will examine the facts in the case at bar. The affidavit of Omer L. Majerus, the defendant's sales manager, and the defendant's answers to the plaintiff's interrogatories show the following: Universal Milking Machine Division is merely a department (and not a separate corporate structure) of the defendant devoted to manufacturing, with its principal place of business in Albert Lea, Minnesota; that defendant has owned Universal Milking Machine since 1943; that the defendant has operated a small sales and service operation under the Universal name in Wales, Wisconsin since 1960; that because of a rapid decrease in dairy farmers in the area, the defendant has periodically attempted to dispose of this office, and is in the process of doing so again; that the operation in Wales is conducted in a building owned by Universal; that one male employee and one part time secretary are employed at this office; that defendant bills Universal for rent, and Universal pays the taxes; that there is no tenant identification in the building itself, but in front there is a sign reading "Universal Milking Machine Equipment"; that the office is listed in the phone directory; that a bank account for deposits is maintained in the defendant's name in Wales; that the Wales office is closed two days a week; that the office is under the control and supervision of Mr. Majerus; that in addition to the building, the defendant owns a truck in Wales with the inscription "Universal Milking Machine of National Cooperatives, Inc." and secretarial equipment; that during the fiscal period of July 1, 1966 to June 30, 1967, the business at Wales amounted to $42,000; and that a sales inventory is maintained at Wales for repair and replacement parts. It also appears that orders are accepted and completed at Wales, although Mr. Majerus states that "substantial" orders are accepted only at Albert Lea. No records or files, other than "records of local interest", are kept at Wales.

The defendant, citing three recent opinions of the seventh circuit court of appeals, insists that these facts are not sufficient to establish that the defendant maintains a "regular and established place of business" in Wales. The three cases cited are Knapp-Monarch Co. v. Casco Products Corp., 342 F.2d 622 (7th Cir. 1965); Knapp-Monarch Co. v. Dominion Electric Corp., 365 F.2d 175 (7th Cir. 1966); and University of Illinois Foundation v. Channel Master Corp., 382 F.2d 514 (7th Cir. 1967).

An examination of these cases shows that they differ from the present action in one important respect. They all involved situations where the defendants' sales representative in the district was authorized merely to solicit orders which were then accepted by the defendants' home offices located outside of the district. Even though there are a few points of similarity between those cases and the one at bar, it is apparent that the solicitation factor was the key that led the court in all three cases to hold as it did. A long line of cases stemming from the supreme court's opinion in W. S. Tyler Co. v. Ludlow-Saylor Wire Co., 236 U.S. 723, 35 S.Ct. 458, 59 L.Ed. 808 (1915), hold that maintenance of a sales representative who solicits (but does not complete) sales does not meet the statutory test.

On the other hand, Mr. Majerus' affidavit establishes that the defendant's employee at Wales does more than solicit business; he has the authority to and does complete sales. This is exemplified by the fact that Mr. Majerus' affidavit admits that three allegedly infringing units were sold at Wales during the last half of 1967. The fact that only "small" orders are accepted at Wales is not controlling; the case at bar is not governed by the holdings in the two Knapp-Monarch Cases and Channel Master. While the fact that the defendant's employee at Wales completes sales of merchandise is important, it does not in itself determine that the Wales office is a "regular and established place of business" within the Railex and Watsco tests. But other factors persuade me that the requirements of § 1400(b) have, in fact, been met.

The building at...