Continental Store Service Co. v. . Clark

This action was brought to compel the specific performance of a written agreement, under seal, and to remove a cloud on the title of the plaintiff to certain property manufactured by the plaintiff by virtue of the written agreement before named, and as assignee of the same and of certain patents therein mentioned, and to prevent respondents from using the patents pendentelite.

The patents in question relate to the cash car system, in use in stores, issued to Milton Clark. The plaintiff claimed to have acquired the title to these patents by virtue of an assignment thereof, and the same claim was made on behalf of the defendants, The New York Store Service Company insisting that they had acquired a superior title.

A preliminary injunction was granted, and on the return day of the order to show cause and on the hearing of the motion, an order was made making the preliminary injunction permanent until the termination of the action. An appeal was taken to the General Term, which modified the order so far as it restrained the defendants from putting up or in use implements, machines, etc., or any of them, under said patents and systems, on the ground that it was made without authority. The decision of the General Term is claimed to be erroneous, on the ground that the action is based on contract and is exclusively within the jurisdiction of the State courts, the parties being residents of this State. It is no doubt true, and numerous authorities hold that the State courts have jurisdiction of an action on contract although such action involves the validity of a patent. (Middlebrook v. Broadbent, 47 N.Y. 444; Messerole v.Libby, 6 Blatchf. 356; Rich v. Hotchkss, 16 Conn. 409.)

It is very apparent that cases may arise upon contracts relating to patents and their validity, which are especially within the power and jurisdiction of the State courts, but it by no means follows necessarily that this jurisdiction confers upon the State courts the right to adjudicate and determine questions arising as to infringements made upon rights and privileges which are secured by patents issued by the government. The interpretation of the contract, the effect to be given to its various parts, and even the right to the patent, may well be the subject of consideration within the courts of the State, while any interference beyond this is in contravention of the general rule that in such an action the jurisdiction rests exclusively within the courts of the United States. In the case now considered the facts which would have been disclosed upon the trial would have authorized the court to determine as to the title of the parties claiming the patents, and to adjudicate in reference to any violation of the contract which affected their interest, except so far as it might interfere with the infringement of the patents and the interests conferred by the same upon the patentee and his assignee.

It cannot be said, we think, where a suit is brought upon a contract relating to a patent, where it is sought to prevent an infringement upon the rights of the patentee, that the case presented arises exclusively under a contract and not under the patent laws. It may arise under a contract so far as an interpretation of the same is required and demanded, but where it is sought in addition to prevent an infringement of the patent and by injunction to restrain the defendant from an invasion of the plaintiff's rights in the use of the patent, it cannot be claimed that it does not arise under the patent laws, and that, by seeking relief against an infringement upon the rights of a patentee, there is no interference with the jurisdiction conferred upon the courts of the United States in such a case. The appellant relies in this connection upon Hartell v.Tilghman (99 U.S. 547). That case arose under a contract in reference to the use of an invention of the plaintiff, and it was claimed that the defendants refused to do certain things which, it was charged, were a part of the contract. The defendants admitted the use of the patent and a liability for the use of the same and a tender of all that was due to the plaintiff under the contract and their readiness to perform the same. The court held that there was no question in the case arising under the patent laws of the United States or involving a consideration thereof; that there was no denial of the validity of the plaintiff's patent except as he had parted with that right by contract and that such a case was not cognizable in the courts of the United States by reason of the subject-matter. It was said in the opinion by MILLER, J., that if the contract was to be rescinded it could only be done by a mutual agreement or by a decree of a court of justice. If one party disregards it, it can be specifically enforced against him, or damages can be recovered for its violation. There was no question of infringement in the case, and hence it is not applicable to the point presented here.

We have examined the other cases cited by the appellant in support of the position that the State court has jurisdiction in the case considered, and we do not find that any of them sustain that view where a question as to the infringement of a patent is involved. The Federal courts have exclusive jurisdiction, under the Constitution and laws of the United States, in cases of any infringement of the rights granted by a patent issued by the authority of the government, and where such rights are conferred by law and a remedy is provided as to the forum where the same may be enforced, the party must be restricted to the remedy and the forum provided. The decisions of the courts of this State are quite uniform in holding that they have no jurisdiction in an action to prevent an infringement upon a patent right or to restrain the violation of a right conferred by authority of the patent laws of the United States. (De Witt v.Elmira Nobles Mfg. Co., 66 N.Y. 459; Hovey v. Rubber TipPencil Co., 57 id. 119; Dudley v. Mayhew, 3 id. 9; Parsons v. Barnard, 7 Johns. 143; Livingston v. Van Ingen, 9 id. 582.)

In De Witt v. Elmira, etc., Co. (supra) it was held that one owning an undivided interest in letters-patent cannot maintain an action in a State court to recover compensation for the use of the patent to the extent of his interest from one using it without his permission. The cause of action does not arise upon contract, but is simply the infringement of a patent right, and so arises under the patent laws of the United States; the United States courts, therefore, have exclusive jurisdiction.

It is insisted by the appellant that that case is distinguishable from the one at bar, as the claim was not on contract as is the case here, but was for the recovery of money damages and not for an injunction pendente lite, and was an action for infringement. It is true there is a distinction existing between these cases, but the rule laid down is applicable here so far as it relates to the plaintiff's claim in reference to an infringement of his rights as the owner of the patents, and it is not held that this rule does not apply where an action is brought involving the rights of the parties under a contract and where a question arises as to an infringement of a patent. The courts of this State have an undoubted right to adjudicate upon questions arising in reference to the title to letters-patent as well as other questions as to the rights of parties which do not come within the provisions of law relating to patent rights. In such cases the right secured by the patent is collateral to the main purpose and object of the action, and when this is the case the State courts have jurisdiction to determine the controversy (Middlebrook v. Broadbent, 47 N.Y. 443), and while they have authority to this extent they cannot acquire jurisdiction beyond this. Here is the dividing line and a State court cannot grant relief beyond its jurisdiction as an incident to other relief which is within its power. It may determine what the contract is and in whom the title to the patent is vested, but it has no right to say that a party shall be enjoined from using the patent, or in any way to pass upon any question arising as to its infringement. In view of the authorities cited and the rule applicable to such a case we think it is clear that where a State court has obtained jurisdiction, by reason of the contract, it has no authority to determine matters which relate to an infringement of a patent.

Nor can it be claimed, we think, that there was no question of infringement in the case presented. Although both the parties claimed the right to manufacture the same article under the same patents, and to own the patents, yet it is very plain that the party who was not the owner, who sought to enjoy and reap the benefits of the patents by the manufacture and sale of the same, was infringing upon the rights of the one who possessed the actual title.

An action for an infringement lies in favor of the owner of a patent against any one who claims to manufacture, use or enjoy the same in opposition to his rights, and it makes no difference whether the defendant violates the rights of the plaintiff on the ground that the patents are invalid, or that the plaintiff is not or that he is the owner of the same.

After a careful examination of the question discussed we are brought to the conclusion that no error was committed by the General Term in modifying the order of the Special Term.

The order appealed from should be affirmed.

RUGER, Ch. J., EARL and FINCH, JJ., concur; ANDREWS, RAPALLO and DANFORTH, JJ., dissent.

Order affirmed.