Wilson v. Consolidated Store-Service Co.

PUTNAM, Circuit Judge. This is an appeal from an order granting an ad interim injunction in a patent suit. Apparently, the hearing on the application for the injunction occurred only a short time before the complainant below might have brought the case to an issue on bill, answer, and proofs. Meanwhile a voluminous record was made up on the application, which apparently had in view a determination as on the full merits of the cause. These matters were not brought to the attention of the court below, and we would not be justified in commenting on this particular record in these respects. We refer to them only because we do not wish to leave any presumption that we impliedly approve that parties should proceed with a voluminous hearing on a mere motion for an ad interim injunction at a time when a final hearing may be accomplished almost as speedily. Under the circumstances, there are some grounds for presuming that both parties intended to waive all objections as to the issues to be determined on the motion. At the hearing before us, however, the appellants took the usual special objections against the issue of temporary injunctions. Consequently we are not justified in assuming that the parties intended any waiver. Coining to the rules applicable under these circumstances, it cannot be denied that a preliminary injunction may properly issue in a patent suit, where the validity of the patent is clear, although it lias not been sustained by a prior adjudication or public acquiescence. Of course, there must in every instance be an equitable necessity for relief by injunction; but we are not required to consider this necessity, because the case at bar clearly falls within the rule stated by this court in Davis Electric Works v. Edison Electric Light Co., 8 C. C. A. 615, 621, 60 Fed. 276, 282, that: “The fundamental basis of jurisdiction in equity in relation to patent rights and trade-marks is the necessity of protecting established enterprises from the great uncertainty caused by infringements, and by the difficulty of measuring the direct and indirect losses if infringements continue.” When the effect of a temporary injunction is merely to maintain matters statu quo until a final hearing, one may well he granted, notwithstanding the rights of the complainant are doubtful, and sometimes even when very doubtful. But in patent suits such an [288] injunction does not ordinarily have that effect. On tbe ótber band, tbe respondent, while under tbe injunction, is ordinarily a constant loser, and never regains bis losses unless tbe complainant bas given a bond. Therefore in this class of cases tbe courts usually bold that unless tbe patent is supported by public acquiescence or prior adjudication, or some other peculiar condition, tbe complainant’s rights must be free from doubt, to entitle him to a preliminary injunction. It is sufficient for this to refer to Eob. Pat. § 1173 et seq., and North v. Kershaw (1857) 4 Blatchf. 70, Fed. Cas. No. 10,311, and to tbe expressions of tbe circuit court of appeals for tbe Seventh circuit, in Standard Elevator Co. v. Crane Elevator Co., 6 C. C. A. 100, 56 Fed. 718, 719, reaffirmed by tbe same court in Williams v. Manufacturing Co., 23 C. C. A. 171, 77 Fed. 285, 286. Tbe case at bar is not an exceptional one in other particulars, so that tbe questions are as follows: Is tbe validity of the patent clear? or bas there been a prior adjudication? or bas there been sufficient acquiescence? Tbe validity of tbe claim in issue in each of tbe two patents in suit is far from clear. It is sufficient to say that we are all of the opinion that tbe validity of each' claim is very doubtful, although we do not deem it necessary at this stage of tbe proceedings to elaborate tbe matter. Indeed, we regard it prudent not to do so, in view of tbe fact that tbe case may again come before us on final bearing. Tbe complainant below relies on tbe result of certain interference proceedings in tbe patent office as constituting a prior adjudication; but tbe defendants below were not parties to that proceeding, and tbe authorities cited by tbe complainant are limited to privies! Tbe issues on an interference proceeding are narrow, when compared with tbe broad question of the validity of a patent, and tbe method of procedure in tbe patent office is so unlike that of judicial tribunals that a use made of the latter furnishes no precedent for a use to be made of tbe former. Walk. Pat. (3d Ed.) § 674, states that an interference proceeding cannot be invoked against strangers on tbe question of a preliminary injunction; and Judge Lacombe, who carefully reviewed tbe decisions in regard to this matter, in Dickerson v. Machine Co., 35 Fed. 143, 147, came to the just conclusion that tbe only adjudication which can support such an injunction, is a judicial one. This leaves to be considered, on this point, tbe prior suit of Store-Service Co. v. Whipple, 75 Fed. 27, in which an interlocutory decree was rendered sustaining tbe claims now in suit. Tbe rule as to prior litigation was stated by the circuit court of appeals, in tbe Seventh circuit, in Electric Mfg. Co v. Edison Electric Light Co., 10 C. C. A. 106, 61 Fed. 834, 836, and, as there stated, was approved by this court in Bresnahan v. Leveler Co,, 19 C. C. A. 237, 72 Fed. 920, 921. It requires “a bona fide and strenuous contest,” resulting in favor of tbe validity of tbe patent. With reference to a prior judgment or general acquiescence, it is clear, on principle, that there must be tbe same freedom from doubt, in behalf of a party applying for a temporary injunction, as if tbe question was one of validity alone. A court would be no more jus289 tilled in granting suck an injunction on a doubtful case of a prior judgment than it would on a doubtful case of validity. Neither cau a doubtful case of a prior judgment be assisted by a doubtful case of acquiescence, and vice versa. It is plain, on principle, that ilie complainant's right must be clear, either as to the validity of the patent, or on the question of a prior judgment, or on the question of acquiescence, although, of course, judgments rendered by consent may be admissible on the proposition of acquiescence, even, when not so on that which we are now considering. The position with reference to the decree against Whipple is as follows: Whipple was the agent of a corporation known as the Fuller Company, and was sued by the complainant below because, as agent of the Fuller Company, he had leased or constructed cash-carrier systems, to or for various users, alleged to infringe the patents in suit. The suit against him was begun on June 20, 1894, and tbe defense was assumed by the Fuller Company. At that time the complainant below had made an adjustment with a corporation, known as the Lam-son Company, of certain controversies in regard to the patents in issue here. This adjustment was of such a character that, although its terms are somewhat confusing, yet its effect gave that corporation all the same practical advantages with reference to all parties with whom it had dealt, or might afterwards deal, as though it had become a co-owner of the patents. Afterwards, on August 15, 1895, the Lamson Company, having then this broad contract with the complainant below, purchased from the Fuller Company its business, and stipulated with it that the Lamson Company would obtain from the complainant below licenses under the patents in suit, and waivers of all claims for damages, covering all the customers of the Fuller Company, not exceeding 2,000 stations, and that, so far as it did not accomplish this, it would assume the defense of the suits of the complainant below against the Fuller Company, its agents and customers. Thereupon the counsel who had been employed by the Fuller Company in the Whipple suit was superseded in that suit by the counsel of the Lamson Company. Whipple was not a customer, but an agent; and it is possible that a full investigation of all the facts, and a careful construction of the two contracts referred 1o (that is, the contract between the complainant below and the Lam-son Company and that between the Lamson Company and the Fuller Company), might leave some remnant for a proceeding against Mm by the injunction which the interlocutory decree directed to issue against him. But the Lamson Company had no interest in preventing the issue of an injunction against Whipple, as, under its contract with the complainant below, it could at once license Whipple as its own customer, and thus practically annul the injunction. It is true, the interlocutory decree which was entered in the suit against 'Whipple may be assumed to have provided for an assessment of damages and profits; but there is no evidence that this was ever done, or that, under the contracts between the parties which we have referred to, it could have resulted in anything substantial. On the other hand, as, under its adjustment with the complainant below, the Lamson Company was practically enjoying the advan [290] tages of a co-ownership of the patents in suit, it was apparently for its interest to have the patents sustained, even if, as a consequence thereof, it might be compelled to pay some damages pursuant to its contract with the Fuller Company. On the whole, the best conclusion which can be formed, on the record as presented to us, is that the suit against Whipple, before it was finally passed on judicially, became a moot case. Apparently, the question of patentability, .which, rather than that of mere anticipation, is the important one, was not presented in that suit; and it is plain that under the rule which we have cited, as to the requisites of a prior adjudication as the basis of a temporary injunction, the decree therein is not sufficient on the questions now on appeal. The complainant maintains that it prosecuted the case against Whipple vigorously, and that it ought not to be made to suffer for any matter which was omitted by the Lamson Company in defending it. This is not at all relevant, because the question is not whether it can be made to suffer in consequence of that suit, but what it shall gain by virtue of it. General acquiescence in the patents in suit is set up in the bill, but it has not been pressed on us. The law as to this is succinctly stated in Sargent v. Seagrave, 2 Curt. 558, 558, Fed. Cas. No. 12, 365. While acquiescence, even of a qualified or doubtful nature, may give aid to a patent on a final hearing, yet, as already said, when relied on to support a temporary injunction it must be clear in its character and extent. There is nothing in this record answering this requirement. The bill gives the result of the litigation with the Lamson Company, as shown by the adjustment to which we have already referred; and, if that corporation had been the only infringer, the claim of acquiescence would be established. But the bill states that there were many other infringers, against some of whom suits are still pending. Also, the record leads to the inference that the patents have been in constant litigation, although it is alleged that, so far as the litigation has been determined, it has resulted in favor of the patents. This undoubtedly refers to various adjustments of suits, because no decision of any court is produced, except that in the Whipple Case. The result is that whether we look at the question of validity, or at that of a prior adjudication, or at that of alleged public acquiescence, the position is too doubtful to justify a temporary injunction in a patent suit. The order appealed from is reversed, and the costs of appeal are awarded to the appellants.