KELLEY II.!YPSILANTI DRESS-STAY KANUF'G 00.
the state by such enactments not be presumed. EridL Interp.;Sf. § 161. This statute was first enacted by the territoriallegislature, atiti:! first session, in 1854,9.s part of the civil practice act, and I think it is obvious that the law-makers did not, either at the time of originally drafting it, or re-enacting it, contemplate that the territory or state would become an opposing claimant to land under the laws of the United States, or that the execution of its subsequently enacted laws could be thereby hindered or prevented. The demurrer, therefore. should be sustained, and a judgment thereon entered for the defendant.
KELLEY II. YPSILANTI DRESS-STAY MANUF'G
(Circuit; Cmlll't, E. D. Michigan. November 17.1890.)
A defendant in a patent suit who was the mannfacturer of certain articles claimed to be an infringement ,of plaintiff's patent, sought to obtain an oroer enjoining the prosecutio'n of three' suits begun in other districts against its customers, as well as the oommencement of new SUits, and the sending of letters and circulars .to others engaged in .the trade. threatening prosecution for sellingarticles made by .the defendant. Hetd--F'Lrst, that the prosecution of suits in other districts should not be enjoined, because such. suits were begun before this suit, and because comity demandell that application. should be made to the oourt in which such suits were pending. 2. Suni-IRRRPARABLE INlURY. secolld, that as the plaintiff might recover substantial damages against the defendant'. vendees, in addition to tliose which he would be entitled to recover against the'defendant as manufacturer. the oommencemt:mt of new suits should not be enjoined, unless irreparable injury was threatened to defendant's business, or there was evidence of malice or bad faith on the part of the plaintiff in commenoing such Buits. 8. SAME. And, tMrd. that plaintiff had a right to notify persons using his device of his claim,. and to call attention to the fact that. by or using it, they were making themselVes liable to proseoution, and that an injunotion would not be ordered unless the lanfP.lage of his letters or circulars was false, malicious, offensive, or opprobrious, or they were used for the willful purpose of inflicting an injury. (SyUab'u8 by the Court.)
INlUNCTJON-SUITS POR INFRINGEMENT-IdSUB OJ' THREATENING CIRCULARS.
InEquity. On petition by defendant for an injunction to restrain the commencement and prosecution of suits against its customers and the sending of circulars to others engaged in the trade. The petition set forth, in substance, that this suit was brought against the petitioner on the 10th of September, 1890, for the infringement of a patent corset thai petitioner owns property subject to execution in this district of the value of $50,000, and is engaged in the mannlactUre of'dress stays at Ypsilanti, under a patent to Enoch C. Bowling, and another to Elsie M. Smith; that plaintiff has brought three suits for alleged. infringement of his patentagaim,t customers of petitioner for seiling, in the ordinary course of trade, dress stays made by petitioner, the defense: of which Buits petitioner· is forced to assume, viz·· one in the circui1CO\1rttor the southern district of New York against the firm of
Calho\l1l, Robbins &. Co., one in the circuit court of Massachusetts against Colenum,Mead & Co., and one in the circuit court for Illinois against the Storm & Hill Company; ·that the defendants in these suits are merchants, and have no real interest in' the suits, petitioner being the real defendant; that, in addition to bringing said suits, plaintiff' has sought further to intimidate the trade, and maliciously to injure and interfere with his business by means of circulars and letters from himself and his counsel addressed to petitioner's customers, threateni ng suit against them; and also in advertising that he will bring suit against any person who sells a dress stay made in the same manner as petitioner's; that petitioner has filed its answer, and is ready to proceed with the trial, and is abundantly responsible for all damages or profits which may be recovered against it. Prayer for an injunction against the prosecution of suits al. ready begun) against the bringing of other suits against petitioner's customers, and against molesting in any way by letters, circulars, oral threats, or otherWise, persons who may buy or sell or deal in petitioner's dress stays, etc., during.. the pendency of this suit. George H. Lothrop, for petitioner. (]has. H. JiUJk and Broadnax & Bull, for plaintiff.
BROWN, J. Defendant seeks .in this petition to obtain an injunction for three distinct purposes, viz., to prevent (1) the prosecution of three suits already begun; (2) the commencement of new suits against its customers; and (3) the molesting of others engaged in the trade by letters, circulars, or oral threats. As the legal principles applicable to these three kinds of relief are not precisely the same, we are compelled to give them an independent consideration. 1. Conceding that there are intimations in some of the cases that the court has power to enjoin the prosecution of suits already begun in other districts, (although our attention has not been called to any reported case where an injunction was actually ordered,) we think that this power, if it exists at all, of which we have grave doubt, should not be exercised in this case for the following reasons: First. Because the suits sought to be enjoined were all begun before this suit. While this case may not be exactly within the line of authorities which hold that, where jUrisdiction has once attached, it cannot be taken away by proceedings in another question which frequently arises where property in possession of one court is interfered with by another, or an issue pending in one court is raised in we apprehend that there must be some peculiar reRson giving to the court enjoininK some superior authority to the other, such, for instance, as the pendency of proceedings 'under the bankruptcy or limited liability act, to authorize it to reach out its arm and arrest a pending suit of like character in another court. "Second. Because We think that comity demands that the application should be made to the court in which the proceedings are pending. Such court is perfectly competent to give the relief, and would undoubtedly do sO upon a proper showing. For this court tonssume such power ill virtuany.all" attempt to. dictate to another court ofcocordinate jurisdic-
KEI,LEY V. YPSILANTI DRESS-STAY MANUF'G CO.
tion what it ought to do in a particular case, and. wot'l1d naturally be considered as an offensive intermeddling with its proceedings. Third. As the plaintiff is a non-resident of this district, an injunction, if granted, could only be enforced by staying proceedings in this court, or dismissing his bill. He might still ele:Jt to proceed in the other courts, which would be under no obligation to take notice of our injunction. 2. With regard to the commencement of new suits, there are undoubtedly authorities which support the contention of the defendant; but most of them seem to be founded upon an impression with regard to the rights of a patentee against infringers which the supreme court has held to be erroneous. Thus, in BirdsaU v. Manufacturing Co., 1 Hughes, 64, where a-similar application was made by a defendant who had been sued for manufacturing and selling a patented machine for hulling and threshing clover, it was held that an injUnction should be granted, the court giving as a reason:
"That tile defendants Were thoroughly responsible. and that upon the orig-. inal,sait being carried on to completion. if recovery was made, the complainant w,ould recover intbat suit nIl the profits that defendants had obtained frOm the wrongful manufacture, and the damages that he had suffered by reason of the wrongful manufacture. and lhat complainant would therefore be put in the same position as if he had originally sold all the machines; that, this being the case, he ought not to be allowed to interfere with the vendees' of defendants while the suit against them was pending." , Yet, in a subsequent case upon the same patent,(Bird8eU v. Shaliol, 112 U. A. 485, 5 Sup. Ct. Rep. 244,) it was held that a deqree in favor of a patentee, upon a bill in equity against one person for making and sell- ' ioga patented machine, was no bar to a subsequent suit by the patentee against an,other person for afterwards using the same machine within the terin of the patent; that while a license to make, use, and sell machines gives the licensee the right to do so throughout the term of his patent, and has the effect of wholly releasing them from the monopoly, and discharging all claims of the patentee for their use py anybody, an infringer' does not,by paying damages for making and using a machine in infringePlent of a patent, acquire any right himself to a future use of the machine. "On the contrary, he may, in addition to the payment of damages for past infringement, be restrained by injunction from further use, and, when the whole machine is an infringement of the patent, be ordered to deliver it up to be destroyed." The court in this case cites with approval the case of Penn v. Bibby, L. R. 3 Eq. 308, in whioh the chancellor said that "the patent is a continuing patent, and I do not see why the article should not be followed in every man's hands until the in-· is got rid of. So long as the article is used, there is a continuing We do not see why the same principle does not apply to one who purchases of manufacturer for the purpose of resellingto consumers. Indeed, it is difficult to see how.this case can, be reconcHed with the language of the courts in Spaulding v. Page,4 Fish. Pat. <A!:s.. 641; Gilbert, etc., Cp.v. BU88ing, 12 Blatchf.426; Perrigo v. Spaulding, 391 i Booth v. Seevers, 1s;) O. G. 1140.· So, in AUia ;v'.
StowilU; 16 Fed. Rep. 783, in which ;the injunction was denied, it was
intimated that, "where a patimteerec0vers from an infringing manufact- . urer in11 dnmai;es and profiti; on account' of the infringement, the purchaser froln such manufa.cturer; who' is. a user Qf the machine, will be, proteotediIlsuch use 'against 'a 'suit for infringement, as he would be if he were a licensee from the patentee." ,In this view of the law it was heliltfrll.t; to prevent a multiplicity of 8uits, the court might, in a proper on proper showing,requireihe. prosecution of suits' between a patentee, and a mere user Of a patented machine to be suspended, to await tl!i,nesult of the suit, between the patentee and the principal infringer ,from whom the 'user purchased thismachine,-a doctrine in whichJwe ;funy concur, we think the', application should be madetoithe courts inwhich,thesesuits are pending. The cases of Ide v. 19rigirie' 00. ,31 Fed. Rep.: 90J. ,and National. Ca8h RegiBter 00. v. BOBton 0aBh Indicator Co., 41 Fed. Rep. 51, seem to have been decided upon the aut11prity ofthepriorcasel!ti\nd without attention of the court being caJled to the case of Birdsell. v. Shaliol, ,above cited. Upon the other hand, inChemicalWorkB v.Hecker', 11 Blatchf. 552, it was held, by . Mr. Justice, -BLATCHFORD, tbat'the- :court had no jnris,Jiction of a bill to assumetQregulate the conduct of the plaintiffs by . filed by ,8 injunction,'.eXcept liS regards the proceedings in the. particular suit. "To grant the injunction, ,asJ,ted, wou'ld. be .toturn the defendant into, the plaintiff, and the plaintiff into the defendant, and to administer indepimclent.<affirmative relief iilfa:vor of a party, without his coming into courtaean actor, by bill or 'otheil pleading containing allegationscapaor of being contested on ble of being put in issue by fdrmal proofs; and !tio do so on matters arising post litem motam. " See, also, A8belltoa Felting 00. v. U. S.,etc., Felting 00., etc., 13 Blatchf. 453. ' The view-we! have taken of: the case of Bird8ell v. Shllliol seems to be supported by the opinion of Judge COXE, in Tuttle v. Matthews, 28 Fed. Rep. 98, in whioh a similarappliclltion for an injunction was denied upon the authority ·of that case. There is undoubt,edly greatforee in the argument that a defendant manufacturer, who has agreed todelEmd suits brought ll!?:ainst his customers, and indemnily them l1!!ll.lnstdamages obtained by their selling his machines or device, ought not-to be vexed by a multiplicity of suits in difI'etent parts of the country,:But, in view of the case of Bij'(lsell v. Shaliol, it· is not easy to how the recovery of damages from the de- ' fendant· for manufacturing and selling would prevell1 the recovery of other substantial damages from; the defendant's vendees for their profits upon reselling the patented atticles. If the recovery of damages from themanutactuter does uotoperate as a license tonse the patented artiell'l" or, in the language 'of' thesupre'me court in Bloomer v.McQ1J..eU)an, 14 'How., 549, topaag 'It out 'of I the limitation thEHnol10poly, there would seem to be no for enjoining him from prosecuting anyone trespassing upon His dQmam."'Phensk of being mulcted in costs will' ordinarily besuffideritfto prevent the patenk>e from any ntunbi:tf of suits Witll his' patent has, beeu judicially' established. '
)[ELLEY tI. YPSILANTI DRm:lS-8TaY' lUNUF'G CO.
In addition to these considerations, the plaintiff, by an injunction of this kind, might be debarred' from the commencement of actions pending an appeal so long as to lose his rights against intringers, since it is well settled that the existence Of an injunction does not operate to sus, pend the running of the statute of limitations. ",ood, Lim. 484. ,There would seem to b(3' however,rlo bbjectlon to the court in \vhicl1 such actions are brought staying proceedings in them until the validity of plaintiff's patent and the infringement of the defendant have been judiciallyascertained in one of the principal.suits; and perhaps in an agof threatened irreparable injqry to defendant's business, or, If there were any evidence of malice, oppression, or bad faith on the part of the plaintiff, the court might enjoin temporarily the commencement of new suits. 3. With regard to the third branch of this application, viz., the molesting of others engag:ed '. in the trade by letters,' .circulars,. and oral threats, it is sufficient to say that, even if it be conceded that a court of power upon petition, of a defendant to (mjoin the plaintiff frOm libelous businellS,.therewould seem to: be no,good reason wby,a patel,1t!l'il not!notify persons using device of his claim,and c!111attenti,on to the fact that, bysellingpr '\Ising it, they are making theQlse]ves .liable to apl'o!!ecution. is llndoubtedlyauthority for holding that, iUhe langu/1.ge of such or circulars be false, ma.licious, or opprobrious, or used, for .the ,willfulpm.:pose of inflicting an injury, the party is entitled to .his remedy by injunction; .and. this is the extent to whicb,the authorities g9. v., ,Rubber Tip PrmC'iJ, Co:, 57 N. Y. 119; 8rl.owv:. J1,Ul.sQn, 3S Barb. 210; Emack v. Kane, 34 Fed. Rep. 46; Croft v. P.irhq.rdson, 59 How.Pr.356; Wren v, Weild, L. R. 4 Q. B. 730. Upon, the other hand" it to be a1;lact of prudence,if not of kindness,upon thepal1t of a to notify the public of his invention,.and to warn persons article of the consequence of purchnsing from others, and in such cases an injunction hasbeenuniformly denied. Chase v. 2,7 Fed. l¥lp. 110; BOBton DiaWe Co. v.FlorrmceManuj'gGJ. ,114 Mass. 69; v. Horry, 28 Fed. Rep. 773. The language of the letters in the present case is perfectly respectful and courteous, and while the cirqular ilia distinct and firm .assertion of the patentee's rights, there is nothipg in it to which the person receiying it can ta.ke a just exception. ,Nolls there anything to indicate that they wel'e nQt written in gooQ. and. in the belief that the plaintiff had rights under his patents which he was entitled to protect by suit. , ThE\ motion for an injunction is therefore denied·
DPERAL REPORTER, vol. 44.
SOUTHERN COTTON OIL CO. V. 'VEMPLE.
(Circuit Court, N. D. New York. November 14. 1890.)
. rAliTIOJf-FOREIGN CORPORATIONS DOING BUSINESS WITHIN THE STA.TE.
A foreign manufacturing company which maintains an established location and an agent in New York city for the purpose of selling its products or facilitating their sale, and which keeps funds in New York city to maintain its place of business and to enable its agent to carryon his operations, is "doing business within the state" within the meaning of Laws N. Y, 1885. cc. 359, 501, which prOVide that every foreign corporation "doing busineSll within this lltate" shall be subject to a tax on its corporate franchise or business, to be computed on the basis of the amount of capital.stock employed within the state. .
On bill for injunction.
W.. W. MacFarland. for complainant. ' Ohaa. F. Tabor, Atty. Gen., for defendant.
WALLACE, J. This suit is brought by complainant to restrain the colledion of a tax assessed against it by the comptroller of the state of New York for the years 1887, 1888, and 1889, which "every corporation, joint-stock company, or association Whatever; hereafter incorporat.ed or organized under any law of this state, or now or hereafter incorporated or organized by or under the laws of any other state or country, and doing business in this state, shall be subject to pay a tax upon its corporate franchise or business." La wi! N. Y. --1885, c. 359. The statute provides that "the amount of capital stoek, which shall be the basis for tax, * * * shall be the amount of capital stock employed within this state." Id. c. 501. Complaint ·is not made of any excessive or irregular assessment, but the bill avers that tbecomplaitlant is not subject to taxation, and that the assessmerit is void. '1'he complainant is a manufacturing corporation, organized under the lawB of New Jersey, and having its principal place of business in that state. Its factories and plant are all situate outside the state of New York. It sells its products in various states and in foreign countries, and for that purpose, during the years 1887, 1888, and 1889, it maintained Baales agency and office at New York city, and kept a bank account-there for the convenience of its local transactions. Its corporate meetings have always been held either at its principal office-in New ·Jersey; orin Philadelphia, where it has a branch office, and where its books:ofaccount are kept and its general financial business is done. The president of the corporation deposes as follows: "Since about October; 1887, the company has had a sales agent in the city of New York, whose duty it has been to make sales of the pl'oducts of the company's mills. These products are not kept 011 store at any place in the state of New York. bnt the sales agent receives orders, which he transmits to the company's officers and managers, and the goods are then forwarded from the company's milia for delivery to the purchaser. Such deliveries are, and always have been, made in the same barrels, tanks, or packages in which the products have been brought from the mills into the state, and without opening or breaking any of the tanks, bal'l'els, or packages, ex-