241 A.D. 110 | N.Y. App. Div. | 1934
Lead Opinion
Upon motion by the defendants Leo Brecher, Max Goldberg and Associated Cinemas of America, Inc., for judgment on the pleadings, the complaint has been dismissed as against them.
The complaint alleges that previous to October, 1926, Tri-Ergon, A. G., a Swiss corporation, was the owner of various patents, inventions and trade-marks known as “ Tri-Ergon Process,” relating to motion pictures and including both “ sound on film ” and “ sound on disc.” On October 14, 1926, Tri-Ergon, A. G., granted an option to William Fox for an exclusive license to the Tri-Ergon process and the products thereof with respect to “ sound on film ” within the United States, Canada, Mexico and the West Indies, which option was exercised by Fox on June 27, 1927. On September 4, 1928, an agreement, subsequently assigned to American Tri-Ergon Corporation, a New York corporation, was executed by Tri-Ergon, A. G., and William Fox, consummating the sale to Fox of the Tri-Ergon process and the products thereof with respect to “ sound on film ” within the contract territory.
In November, 1926, Tri-Ergon, A. G., granted to Tri-Ergon Musik, A. G., a Swiss corporation, license rights to certain of the
By agreement made in March, 1929, Ton-Bild Syndikat, A. G., and Klangfilm G. m. b. H., also a German corporation, granted to each other reciprocal licenses of the patents under which each was operating. It is charged that in disregard of the rights of the plaintiffs, Ton-Bild Syndikat, A. G., has conspired with others, including the defendant Klangfilm G. m. b. H., to engage in unlawful competition with the American Tri-Ergon Corporation within the contract territory. Pursuant to this conspiracy these defendants, and the defendant Universum Film, A. G., have manufactured in Europe and distributed in the United States, Canada, Mexico and the West Indies apparatus and inventions, including films and talking pictures produced by the Tri-Ergon process. This they have done not only through subsidiaries organized in the United States, but through distributors, including the defendants Brecher, Goldberg and Associated Cinemas of America, Inc.
The complaint also contains a second cause of action which, in substance, repeats the allegations of the first, and further alleg'es that the defendants in violation of an express provision of the license agreement between Tri-Ergon Musik, A. G., and Ton-Bild Syndikat, A. G., have failed to designate the various products, processes, patents and inventions used and distributed by them by the name “ Tri-Ergon,” thereby depriving the plaintiffs of the benefits of the advertising value which would result from the use of that name.
The principal relief demanded is that the defendants be restrained from manufacturing, distributing, exhibiting or using any of these patents, inventions or films within the contract territory; that the defendants be required to account to the American Tri-Ergon
The action is maintained by American Tri-Ergon Corporation as assignee of the party entitled by contract with Tri-Ergon, A. G., to the exclusive right to manufacture, sell and distribute the TriErgon process and films produced thereby within the United States, Canada, Mexico and the West Indies. It is maintained by TriErgon, A. G., as the party, and by Tri-Ergon Holding, A. G., as assignee of the party, with whom the defendant Ton-Bild Syndikat, A. G., contracted to abstain from distribution in that territory. The court at Special Term granted the motion of the defendants Brecher, Goldberg and Associated Cinemas of America, Inc., to dismiss the complaint upon the ground that none of these defendants is in a contractual relation with any of the plaintiffs and that the complaint does not sufficiently allege that they had knowledge that the distribution by them of Tri-Ergon films within this territory constituted a violation of the plaintiffs’ contractual rights. The court for that reason held that these defendants were not liable for inducing the breach of the plaintiffs’ contracts. (Lamb v. Cheney & Son, 227 N. Y. 418, 421.) It further held that “ if the complaint is to rest upon the theory that the moving defendants, with whom plaintiffs have no contractual relationship, have unlawfully exploited the patents of the plaintiffs in this country to their damage, the cause of action is one for infringement of the plaintiffs’ rights under patents ” of which the State court has no jurisdiction. (Wise v. Tube Bending Machine Co., 194 N. Y. 272; Couch Patents Co. v. Berman, 137 App. Div. 297.)
These conclusions might indeed be tenable if this were an action at law and the only relief demanded was the recovery of money damages. It might then be true that the moving defendants would not be hable to the plaintiffs, except for an infringement of patent rights, if unwittingly they had contracted for the distribution of films and talking pictures in violation of the contract between the plaintiffs and other of the defendants. We do not decide that question at this time because the allegations of the complaint are such, and the relief demanded against other defendants is such, that the moving defendants are necessary, or at least proper, parties to the action. (See Delcambre v. Delcambre, 210 N. Y.
If the complaint states a cause of action against the moving defendants on this theory, no question of the jurisdiction of the State court can arise, as the court at Special Term appears to have recognized. The action is one to enforce, against certain of the defendants, contracts relating to the distribution of apparatus, devices and films made by the Tri-Ergon process. The fact that that process is protected in whole or in part by patents does not affect the character of the suit. It remains an action to enforce contractual rights, of which the State courts have complete jurisdiction. Any question that may arise concerning the validity of the patents under which these devices and films are produced is merely incidental to the enforcement of these rights. (Pratt v. Paris Gas Light & Coke Co., 168 U. S. 255; Hartell v. Tilghman, 99 id. 547; Becher v. Contoure Laboratories, 279 id. 388; New Era Electric Range Co. v. Serrell, 252 N. Y. 107.)
Martin and O’Malley, JJ., concur; Finch, P. J., and Merrell, J., dissent and vote for affirmance.
Dissenting Opinion
(dissenting). This action was brought by plaintiffs against some nineteen named defendants to restrain the defendants and each of them during the pendency of the action, and permanently, from manufacturing, distributing, exhibiting, using, or in any manner aiding or abetting in the use thereof, any of the patents, inventions, experiences or the products or improvements thereof, specified in the contract between plaintiff Tri-Ergon, A. G., and William Fox made September 4,1928, and in a contract executed August 30, 1928, between Tri-Ergon Musik, A. G., and Ton-Bild Syndikat, A. G., or in any manner breaching said agreements or interfering with the terms or intentions thereof within the territorial confines of the United States and its territories and possessions, Canada, Mexico and the West Indies, and requiring the defendants and each of them to account for and turn over to the plaintiff American Tri-Ergon Corporation the proceeds and profits derived and received by said defendants from the manufacture, sa le, leasing, distribution and exhibition of said films, patents, inventions, etc., made, used or distributed within the said contract territory, and the benefits of which were claimed to be expressly reserved to said William Fox and the plaintiff American Tri-Ergon Corporation, as his assignee. Plaintiffs also ask that the defendants and each of them be enjoined and restrained from using, distributing, exhibiting, leasing or selling or in any way aiding in the use thereof, anywhere, of said films, talking motion pictures, etc., dependent wholly or in part upon Tri-Ergon inventions, unless the name Tri-Ergon, either alone or in combination with one referring to the defendant TonBild Syndikat, A. G., be used in the designation thereof, and directing that all advertising matter and all instruments referring to the processes and product specified be destroyed, and directing that the defendants and each of them hereafter in connection with the use of said films, etc., which depend in whole or in part upon Tri-Ergon patents, use a name or title which shall designate same as a TriErgon process or product.
In the brief of the appellants an attempt is made to bolster up a clearly insufficient complaint by claiming that said complaint alleges that the respondents “ conspired ” with the other defendants to invade the plaintiffs’ contractual rights, or that the respondents had “ knowledge ” of the contract between Tri-Ergon, A. G., and
As a second cause of action the plaintiffs allege that in violation of the specific covenant contained in the contract between the plaintiffs and Ton-Bild Syndikat the defendants distributed the aforesaid inventions and photoplays without designating the same by the name of “ Tri-Ergon.”
The only references in the complaint to the respondents Associated Cinemas of America, Inc., and Max Goldberg, are that they are alleged to have purchased from the defendants Ton-Bild Syndikat, Klangfilm and Universal Film, films and devices expressly reserved to the plaintiff American Tri-Ergon. In paragraph 36-c of the complaint it is alleged that the respondent Goldberg aided in the maintenance of certain theatre corporations for the express purpose of facilitating this distribution in the United States territory and to enable Ton-Bild to enter into unlawful competition within said territory with said plaintiff American Tri-Ergon Corporation. In the 44th paragraph of the complaint all of the defendants are alleged to have exhibited and distributed various films transported to the United States “ in direct violation of the license agreement * * * to Ton-Bild Syndikat, A. G.,” and in the following paragraph of the complaint it is alleged that said defendants, by reason of such exhibition and distribution, received large sums of money “ rightfully and within the intent of the several contracts, licenses and agreements ” belonging to the plaintiffs. There is no allegation in the complaint that either of the respondents was a party to such alleged unlawful arrangement. There is no allegation contained in the complaint that the defendants, at any time, entered into any contract relationship with the plaintiffs, and there is no allegation that the respondents, at the time of distributing or exhibiting the designated photoplays within the United States, or at the time of failing to designate the same by the name “ Tri-Ergon,” knew of the contract between the plaintiffs and Ton-Bild Syndikat and between Tri-Ergon, A. G., and Fox. There is no allegation that the respondents conspired among themselves or with any other defendants to commit any of the acts enumerated. The allegations of the complaint do not set forth any common-law cause of action in tort or contract against the respondents. There is no direct
In granting the motion of the defendants, respondents, for judgment on the pleadings, the Special Term held, I think correctly, that the complaint failed to state a cause of action for conspiracy to commit an actionable wrong. There is no fact showing any criminal conspiracy alleged. (Kellogg v. Sowerby, 190 N. Y. 370.) Section 580 of the Penal Law, subdivision 5, does not create any cause of action against the defendants, respondents. Only by reason of wrongful acts committed by the conspirators resulting in injury to plaintiffs does there arise a cause of action. In support of the determination of the Special Term the cases of Miller v. Spitzer (224 App. Div. 39, 40); Moskin v. Lyden (200 id. 304) and Green v. Davies (182 N. Y. 499) were cited. The complaint was also held faulty in so far as it is claimed that a cause of action is therein set forth for the tort of malicious interference with the contract rights of others. There is no allegation of any malicious inducement on the part of the defendants to cause a breach of such contract to the damage of plaintiffs. The Special Term held that so far as the moving defendants were concerned the complaint is defective in that it faffed to allege that the defendants had knowledge of the existence of the contract between Tri-Ergon, A. G., and William Fox, and of the contract between Tri-Ergon, A. G., Tri-Ergon Musik, A. G., and Ton-Bild Syndikat, A. G. The court, furthermore, found that there was no allegation that the defendants maliciously induced a breach of said contracts with the plaintiffs to the plaintiffs’ damage. An examination of the complaint fully sustains the position that such allegations of knowledge of and malicious interference with such contract are essential. (Hornstein v. Podwitz 254 N. Y. 443; Campbell v. Gates, 236 id. 457; Posner Co. v. Jackson, 223 id. 325; Goodman Bros., Inc., v. Ashton, 211 App. Div. 769.)
In paragraph 35 of the complaint the plaintiffs allege that alter the execution of the agreement of August 30, 1928, between TriErgon Musik, A. G., and the defendant Ton-Bild Syndikat, A. G., contrary to the express prohibitions therein contained and in disregard of the rights of said William Fox and of the plaintiffs and in violation of said agreement with Tri-Ergon Musik, A. G., and with the express intent and scheme of defrauding plaintiffs and depriving them of the benefits of their contracts and of the plan which had been devised, and with the unlawful purpose of invading the contract territory which had been exclusively assigned to said William Fox and plaintiff American Tri-Ergon Corporation, as his assignee, the defendant “ Ton-Bild Syndikat,
The plaintiffs, of course, by their complaint, allege ownership and the exclusive right of control over the alleged patented articles which the plaintiffs claim are being exploited in this country. The answers of the defendants Brecher, Goldberg and Associated Cinemas of America, Inc., by denials, put in issue all of the allegations of the complaint, including the allegation of ownership of the patents in question. Said defendants deny in their answer, either positively or of information sufficient to form a belief, as to each and every of the allegations contained in the complaint so far as the same apply to said defendants. The allegation of the complaint as to ownership of the patent rights is, therefore, put in issue and the claim of the appellants from the nature of the rights asserted and from the nature of the relief demanded affirmatively indicates that those claims involve a question of patent law. If so, the State courts have no jurisdiction to try the issues raised by the pleadings. The right of the plaintiffs, as alleged owners of the patents, to prevent their exploitation within the United States by a purchaser from a European licensee certainly involves interpretation of the extent of the patent monopoly conferred by the letters of the United States. The Court of Appeals in Waterman v. Shipman (130 N. Y. 301), as to infringement cases, stated the rule as follows: “ An infringement, as applied to patents, is a violation of the exclusive right conferred upon the patentee. An adjudication that a certain act is an infringement necessarily requires the construe
I think the matter was correctly disposed of at Special Term below on the motion of the defendants, respondents, and that the order appealed from granting the defendants, respondents, judgment on the pleadings should be affirmed, with twenty dollars costs and disbursements to the defendants, respondents, against plaintiffs, appellants.
Finch, P. J., concurs.
Order reversed, with twenty dollars costs and disbursements, and motion denied, with ten dollars costs.