Universal Rim Co. v. General Motors Corp.

SIMONS, District Judge.

The nature of the bill is indicated by the single prayer for relief contained therein; the plaintiff praying that the defendant may be restrained and enjoined from manufacturing or selling any wheel and rim constructions which are included in and covered by the terms and conditions of certain license agreements set forth fully m the bill, excepting only on condition that the defendants shall perform each and every obligation imposed by the said license agreements, and shall pay to the plaintiff all of the royalties due and owing on rim and wheel constructions already manufactured and sold, and shall compensate the plaintiff for all losses and damages caused to it by the failure of the defendants to pay and discharge all of the obligations imposed !by the said agreements, and for such further and other relief as may be equitable and just.

The agreements entered into between plaintiff and the defendants are license agreements for the use and sale of certain demountable rim constructions for wheels under some 16 patents owned by the plaintiff at the time the agreements were entered into. It was also agreed that the licenses should extend to any patents that might afterwards be acquired by the licensor, and the bill recites some twenty-ñve patents subsequently acquired by the plaintiff, and which are claimed to be included in and covered by the agreement. The term of the contracts was to extend to the end of the terms of the several patents, except that the contracts might be surrendered and terminated by the licensees at any time after 10 years from their dates. The contracts contain a number of other covenants, mutually interdependent.

Before pleading to the bill of complaint, defendants asked for and secured from the plaintiff a stipulation extending the time in which to answer. Before the expiration of the extension defendants filed a motion in the cause, asking that the bill be dismissed on the ground that the relief prayed for is not such as ought to be granted by a court of equity, that the plaintiff has an adequate remedy at law, that it does not appear from the averments of the bill that the plaintiff will suffer irreparable injury if injunction is not granted, and that the bill is otherwise defective, in that certain of its averments are indefinite and vague.

Plaintiff’s position with respect to the motion to dismiss is that the extension of time granted to the defendant by stipulation was by the express terms of such stipulation for the sole purpose of filing an answer, that the defendants must be limited now to the step for which the extension was obtained, and that the motion ought therefore to be dismissed, relying upon rule 12 of the equity rules. In view of the fact, however, that the issues raised by the defendant’s motion may again be raised by answer, no purpose can be served, in view of the fact that arguments have been made and briefs submitted, by denial of the motion at this time, and a reconsideration of the issues raised by it upon a trial of the case upon its merits, except one of delay. It seems to me, therefore, that the stipulation ought to be interpreted broadly, and the order made in pursuance of it similarly construed, and, so construed, to be held to cover the right of the defendants to interpose any proper plea within the extended time. I shall therefore pass to the merits of the controversy.

The relief sought by the bill, as seems to. be clearly indicated by the prayer thereof, is against the breach of a negative covenant, at least one negative in form, if not in effect. Subject to certain exceptions not here in point, where more or less definitely specific acts may be enjoined, the rule seems to be settled that, where the effect of au injunction would be to compel specific performance of a contract, more or less complex in its nature, and the enforcement of which would entail the supervision by a court of equity of continuous transactions between parties over an extended period, such injunction will not be granted. Shubert v. Woodward (C. C. A.) 167 F. 47; Marble Co. v. Ripley, 77 U. S. (10 Wall.) 339, 19 L. Ed. 955; Incorporated Town of Laurens v. Northern Iowa Gas & Electric Co. (D. C.) 262 F. 712; Washburn & Moen Manufacturing Co. v. Freeman Wire Co. (C. C.) 41 F. 410; 32 Corpus Juris, 194; Javierre v. Central Altagracia, 217 U. S. 502, 30 S. Ct. 598, 54 L. Ed. 859; Berliner Gramophone Co. v. Seaman (C. C. A.) 110 F. 30; United Cigarette Machine Co. v. Winston Cigarette Machine Co. (C. C. A.) 194 F. 947; Standard Fashion Co. v. Magrane, Houston Co. (C. C. A.) 251 F. 559; Voigt Brewery Co. v. Holtz, 168 Mich. 352, 134 N. W. 19.

Applying what seems to be the prevailing rule to the situation in the instant case, as presented by the bill and motion filed herein, it would seem to me inevitable that, if injunction were granted as prayed for, and upon the terms asked, it would necessitate a close and constant supervision of the activities of the defendant in its sale or use of wheel and rim constructions, and a determination from time to time by this court as to whether such wheel and rim constructions are covered by the claims of any of the numerous patents now owned or controlled by the plaintiff, and a supervision also of the activities of the plaintiff in reference to the covenants to be performed by it under the terms of the contract. Manifestly this is not the sort of supervision over the conduct and activities of parties that a court of equity can undertake to exercise, either in the enforcement of an injunctional order or of a decree for specific performance.

I am not unmindful of the earnest consideration that should be given, and which has been given, to the unreported opinion of the District Court of the Northern District of Ohio in the case of Universal Rim Co. v. Frank A. Scott, Receiver, 21 F.(2d) 346, filed by Judge Westenhaver cn March 17, 1922. The important question decided in that case, however, was whether or not a receiver appointed by the court should or should not make his election to affirm or disaffirm a license agreement. The apparent holding on the right to relief by injunction was in the Seott Case merely incidental to the principal issue therein determined, and was considered in the opinion filed, as immaterial because of the conclusions stated relating to other aspects of the case. Nor does it appear that the District Court therein had its attention called to the impressive array of authority on the subject of injunctional relief against breach of negative covenants that is here presented.

In view of the limitations of the bill of complaint herein, and the specific relief asked for, it would seem to be clear that the suit is brought solely for the purpose of recovering royalties claimed to be due under the contract, and damages, and that the injunctional relief is asked merely for the purpose of enforcing such claim. In view of this construction, which seems to me to be inevitable, it is perfectly clear that the plaintiff has an adequate and complete remedy at law. It seems to me wholly unnecessary to extend this opinion by a recital and discussion of authorities.

For the reasons stated, the motion to dismiss the bill of complaint will be granted, and an order may be entered accordingly.