Atlas Underwear Co. v. Cooper Underwear Co.

210 F. 347 | E.D. Wis. | 1913

GEIGER, District Judge

(after stating the facts as above). There are two questions presented upon this motion: First, whether the defendant has been guilty of conduct which, if directed against the complainant, is tortious, and of such a character that a court of equity will take cognizance thereof and give injunctive relief; secondly, whether the facts sufficiently disclose an attack by the defendant upon the plaintiff, so that the latter can invoke the jurisdiction for the purpose of the relief which a court of equity can give.

[1] The first of these questions involves the consideration of the facts to determine the applicability of settled principles frequently recognized in this circuit, and particularly in the cases of Commercial Acetylene Co. v. Avery (C. C.) 152 Fed. 642; Warren Featherbone Co. v. Randauer (C. C.) 151 Fed. 130; Emack v. Kane (C. C.) 34 Fed. 46; Dittgen v. Racine Paper Goods Co. (C. C.) 164 Fed. 85; United Electric Co. v. Creamery Package Mfg. Co. (D. C.) 203 Fed. 53.

These cases, while all recognizing the elementary principle that a patentee has a right to protect his interest under a patent by notifying the world in general, or any person in particular, of his rights — cautioning against infringement thereof — recognize and enforce with equal vigor the principle that a patentee cannot,' under cover of his patent and his incidental rights, harass and annoy his competitors, seek to destroy their trade, and thereby accomplish results legitimately to be accomplished through the orderly processes of infringement suits. He may not terrorize the trade by calling attention to his rights, and seek to enforce such rights through a succession of threats which he never attempts to effectuate. Does the complainant show that the defendant has pursued a policy which calls for recognition and enforcement of this latter principle? It is my judgment that it does.

[2] It may be noted preliminarily to the manufacture and sale of the style of underwear known as union suits, and more particularly the. “closed crotch” garment, has developed with great rapidity in the past few years; that, while there are different types and styles, the demand for the garment has been enormous, taxing the capacity of manufacturers to meet it. The defendant claims that, under a patent owned, it originated a type of garment so greatly superior to anything previously produced that it instantly commanded favor, and, being placed upon the market, resulted in attempted appropriation by many other manufacturers. Upon the hearing its attitude approached that of charging, broadly, wholesale piracy. The complainant, on the other hand — and it seems to be representative of many other competitors of the defendant — as stoutly insists noninfringement. The warfare which has thus arisen in the trade has been spirited, ill tempered, and, as appears from trade publications and affidavits presented, carried on unceasingly; so that, without doubt, the trade, so far as it includes dealers and retailers, has been in a state of alarm and panic, no one apparently knowing what, if any, immunity there was in purchasing any type of underwear claimed to be covered by letters patent. In this situation the defendant has insisted that it was the possessor of a pioneer patent; that by virtue thereof its rights were unquestioned and were perfectly clear, and it has, through repeated circulars, called attention to its claim respecting the pioneer character of its patent, and has pointed out to the whole trade the dire consequences which must ensue from the purchase by any one, without its license, of underwear not bearing the date of its patent. I'n view of the widespread infringement, according to the view of the defendant, and particularly in view of the rapid development which confessedly has taken place in the last two years, it would 'seem that the duty rested peculiarly upon the defendant promptly to assert its right by instituting suits to restrain wrongful infringement of its patent, rather than by inaugurating and carrying on a system of terrorizing the trade.

In the consideration of the questions presented in this suit, obviously' the merits of tire infringement controversy are not before us. It will be assumed that the defendant herein is a patentee; that the complainant is charged to be an infringer; and, as indicated,- that the defendant, as a patentee, may assert and protect its rights .in the manner hereinbefore indicated. For the purpose of determining, as it must be determined upon this motion, the issue of fact whether the defendant has used, or attempted to use, its privilege as a patentee as a cover or cloak to wage competitive warfare, seeking to advertise its own and destroy the trade for its rival’s wares, the following consid-" erations are pertinent:

In the first place, if the complainant is an infringer, its acts have been open, long-continued, and clearly defiant. The whole situation appears as one in which the defendant asserts its ownership of a pioneer invention and complainant and a dozen or score of other manufacturers have been in an attitude of open hostility and defiance to and against the broad claim- made by defendant that the former, in so far as they make a “closed crotch” garment, are guilty of piracy. This appears to have been the situation for about a year prior to the filing of this bill. It is abundantly shown that the defendant, througn a repetition of circulars sent to the trade by mail, or through trade journals, apprised every one interested in the sale of the garment in question, of the defendant’s claim as patentee, and, as will hereafter be shown, has made use of such circulars to accomplish results obviously beyond the mere assertion of its rights as patentee. The question at once arises, if there is merit in defendant’s contention respecting the pioneer and comprehensive character of its invention, why has it permitted the complainant and the other manufacturers to gain great headway in establishing in the trade, garments made by them, when recourse to an infringement suit would instantly have brought the situation to a point where the defendant’s rights, could not only have been asserted, but, if meritorious, enforced, and further infringement prevented and past wrongs redressed ?

In the next place, what has just been referred to *is peculiarly significant in view of the fact that all the defendant’s circulars, notices, and advertisements, make, or attempt to make or intimate, the broad claim that by virtue of the patent which was issued to the defendant, it has within its exclusive control every shape of men’s closed crot.ch garment suit. Whereas, the complainant — and probably other competitors — make the definite claim that the garment of their manufacture is not covered by the claims granted to the defendant in its patent.

In support of this attitude the complainant calls attention to a circular sent by the defendant, either to the trade, or to persons who were in a position through its use to influence prospective purchasers of garments, wherein attention'is called to a suit instituted by the defendant against Browning, King & Co. for infringement of letters patent No. 973,200, and in which the defendant calls attention to a Canadian patent in the following language:

“Kenosha, Wis., June 18, 1913. This is to notify you that we have brought suit against Browning, King & Co. for infringement of our patent No. 973,200. We also have other infringement suits started under other patents. It is our intention to protect these patents fully and would call your attention to a recently issued Canadian patent, their number, 148,011.

“We would call your attention to this Canadian patent for the reason that it is the same as the patent that we have now pending in the United States, and which we. expect to have issued to us at an early date.

“If you send for the Canadian patent, we would call your attention particularly to claim No. 4, which you see will stop the manufacture of every form of a practical imitation closed crotch union suit. We expect, under this patent, to stop the manufacture of such garments as the Atlas, the Clark, the Globe, and others of the same character.

“We are writing you this in order to keep you posted, and for the reason that we think you can use the information to advantage in the marketing of your goods.”

The garment referred to as “Atlas” is of complainant’s manufacture.

A third fact — and one whose significance it is quite impossible adequately to disclose in an opinion — is found in an advertisement in a well-known trade journal. In part it is a picture, at one side of which appears a large factory building, over which, in bold type, is the word “Genuine.” At the other side- of the page appears another building over which in large type is the word “Imitation.” This latter building is apparently being destroyed, crushed, or crumbled, through the power of an enormous hand which is labeled “U. S.” — doubtless intending to symbolize the strong arm of the law. Below this picture, in large bold-faced type, is the following:

“Look Out for Uncle Sain.

“Eight now Uncle Sam is busy unmaking vast businesses because they have violated his laws. He unmakes businesses that infringe patent rights even more readily than he dissolves a trust.

“Kenosha — Klosed—Krotch.

“Uncle Sam is no respecter of persons. If you own an automobile, you will remember the recent famous case of the Weed Tire Chain Co., and how Uncle Sam handled this case, putting the infringer out of business and saddling him with a heavy fine.

“"We make this point,- because if you are so unfortunate as to be handling one of the number of closed-in-the crotch union suits that infringe the patents that Uncle Sam gave us Oct. 18, 1910, there is a very fair chance of a court order suddenly legislating your source of supply out of existence.

“This means that your sincere efEort to build up a closed-in-the crotch union suit business would all go for naught.

“Uncle Sam has expressed his opinion on this subject. His patent offiee granted us an exclusive patent for pioneer invention, the Kenosha-KIosed-Krotch, which is found in all White Cat union suits.

“This means that not only every infringing manufacturer lays himself open to an entire loss of business, .based on the infringement, but that every dealer- and jobber who handles his goods may have his supply cut off by an order of the United States Supreme Court, while he, the dealer, may be made the ‘goat’ of an expensive law suit.”

This advertisement, which covers two large pages of a trade journal, in addition to the literature above quoted, urges dealers not to handle an articlé which may get them intd trouble.

The circulars also deal with pending patents and the claims therein involved, and in fact assert a purpose to enforce the claims as made, even though they have not been allowed and covered by an issued patent; and, as I read them, they are framed to convey the impression, not that the claims are now in the Patent Office subject to proceedings there pending, but that they in reality have the effect of an issued patent. This is done particularly by quotation of conclusions expressed by the Board of Examiners upon a patent appeal; but inasmuch as the character of the proceeding is not disclosed in'the article, the layman, as I view it, necessarily regards the expression as a conclusion of a tribunal upon the precise question of infringement which is in controversy between the complainant, other manufacturers, and the defendant.

The defendant has not, in my judgment, met the inferences, legitimately to be drawn from its conduct thus disclosed. Upon argument of the motion, it was claimed that the failure for so long a time to institute infringement suits which the complainant and other manufacturers had, either directly or by their open defiance invited, was due to a desire on the part of defendant to await full disclosure by its rivals of the attitude of certain parties to interference proceedings pending in the Patent Office. This clearly would not justify the circularizing of the trade in the manner noted. It was the privilege of the defendant to defer institution of suits for any reason or for any-length of time it saw fit; but it could not, at its option,. either sue or adopt a policy of annoying its competitors.

With respect to the publication of the picture and its accompanying threats that the government “unmakes businesses that infringe patent rights even more readily than he (it) dissolves a trust,” referred to, counsel for defendant, instead of attempting seriously to justify it, sought to minimize its importance and to treat it as harmless because of its obvious grotesqueness. - It may be conceded that when subjected to proper standards it would not be awarded high artistic or literary merit. The award of such merit, however, is not primarily, what is sought to be attained in expensive advertising. Though not possessing other qualities, the advertisement was unquestionably calculated to be, as it is, an effective agency to “scare” defendant’s rivals. No other view can reasonably be entertained.

Further reference to, or discussion of/the facts is not needed to justify the conclusion that the defendant’s conduct has been unfair and tortious within the principles of the cases referred to.

[3] This brings us to a consideration of defendant’s contention that the motion for an injunction must be denied because the proofs fail to disclose a course of conduct which involves, or is directed at, the plaintiff, specially; that whatever defendant has done was done respecting a class, no member of which can claim to have been specially wronged to enable him or it to invoke individually the equitable jurisdiction. This is supported by reference to the analogous rule found in the law of libel and slander, that statements made regarding the public, or a class generally, do not and cannot by way of inducement or innuendo apply to particular individuals who constitute such class, or the public.

It will be noted that, howsoever general are the terms of the literature sent out by the defendant, the complainant was doubtless a manufacturer and an alleged infringer specially in mind as one to be conquered in the campaign Which was being or to be conducted. In the circular already quoted (which defendant claims was in fact confidential and sent only 'to licensees or jobbers, but which, upon the prompting of some one found its way into the trade publications) it is stated:

“If you send for the Canadian patent, we would call your attention particularly to claim No. 4, which you see will stop the manufacture of every form of a practical imitation closed crotch union suit. We expect, under this patent, to stop the manufacture of such garments as the Atlas, the Clark, the Globe, and others of the same character.”

Granting that this circular was sent out for limited purposes; that it was. not intended to serve (directly, at least) the same purpose as the others — it shows the defendant pointing out complainant as- one of an ascertained or ascertainable number or class whom or which it intended to reach. However, the brohd view upon all of the facts disclosed does not, in my judgment, permit escape for the defendant upon the contention thus advanced. This may be taken as illustrative of the situation presented: A., a manufacturer, conceives B., C., and D. tó be infringers. He can, of course, deal with them individually or regard them as a class — as constituting a body each of whom is trespassing upon his rights. He opens a campaign of sending threatening circulars and publishing threatening advertisements which are received by or come to the attention of E., F., and G., customers respectively of B., C., and D. Although the latter are not named or referred to specifically, their respective patrons are at once put in a state of alarm, and a situation threatens such as that described in the Dittgen Case (C. C.) 164 Fed. 85.

“His orders are countermanded, old customers desert him through fear of litigation, or demand bond of indemnity as a condition of placing orders. His business is melting away. Everywhere the trade is apprehensive of ‘peremptory measures’ if they buy goods of an infringer. * * * Customers will not listent to his explanation or denials, and unless he can get relief in a court of equity, his business, which represents 20 years of effort, will be entirely ruined by a competition which is malicious and unfair.”

In the present case, the proofs are abundant that the customers of complainant, and also other manufacturers, in fact, the whole closed crotch garment trade, have been thrown into a state of alarm and panic, and that complainant and the other manufacturers have had to face’a situation threatening many of the serious consequences above indicated. To recur to the illustration which we have used: Can or ought A. to be heard to say that the threatened consequences of his acts were not intended? Should he be heard to say that, if B. has suffered wrong, it is irremediable because his (A.’s) conduct was directed against a “class” which includes also C. and D. ? If he can, then the wholesome doctrine of the cases to which we have referred will be of academic value only. The choice of another equally effective method of achieving the same results will render it inapplicable. The wrongdoer- goes acquit because he proceeded by indirection. If this view were entertained, then the defendant before us may be permitted-to say that complainant’s customers were not justified in becoming panic stricken’ because the circulars referred to no one in particular. Yet, if these customers, instead of -evincing a desire to remain loyal to complainant, had turned their patronage to the defendant, could the latter in fairness deny that it had achieved against the plaintiff, at least one of the very victories for which its campaign was carried on? Manifestly it could not; and when the defendant’s conduct is as directed, not against a class or body not resolvable into individuals, but merely against a large number of individuals whose identity and individuality is rendered certain by sending circulars and the like to their respective customers; and when the conduct is such as at once inculcates the belief that each of the individuals whose identity is thus disclosed, was and is intended to be reached, then the analogy drawn from the law of libel fails. The situation, it seems, is then either well within the exceptional rule in libel, where the surrounding circumstances may be shown to make certain the libel of an individual ; or if is within a broader elementary principle which requires the patentee to respond for the conduct which is wrongful, whenever it is shown that injury to an individual is a consequence attributable thereto.

[4] Pending the motion for an injunction, Henry S. Cooper asked leave to intervene herein, also, for an order making Horace G. Johnson a party, to the end that, with such parties in the suit, they, or such of them as so desired, could by counterclaim set up a cause of action against complainant for infringement of the letters patent No. 973,-200 — being the infringement asserted by the defendant in its conduct which is the subject-matter of the bill before us.

Justification for the motion is sought in New Equity Rules, Nos. 30 (201 Fed. v) and 37 (198 Fed. xxviii), the latter embodying the familiar doctrine of adding as parties those whose presence is necessary or proper to a “complete determination of a cause,” and permitting intervention by any one claiming “an intefest in the litigation,” while the former relates to counterclaims. If the defendant Cooper Underwear Company were alone seeking to assert a counterclaim of the character noted, it might present the interesting question whether it should be allowed in view of the ruling of this court in the recent case of Adamson v. Shaler (D. C. Wis. filed November 10, 1913) 208 Fed. 566, wherein the scope of rule 30 respecting counterclaims is considered. But the filing of the counterclaim in the present case depends upon first admitting new parties. Now, as we have indicated* the controversy tendered by complainant’s bill must be settled irrespective of the merits of any infringement issue which the defendant may at any time or place tender against complainant. The latter may be an infringer and still prevail in the suit. Therefore, though Cooper and Johnson may each have such an interest in the patent as makes him a necessary or proper party to an infringement suit, which concerns only the defendant’s alleged unfair conduct, neither can be said to be necessary or proper to its ’ determination. These considerations are alone sufficient for a denial of the motion.

The conclusions are that a temporary injunction be awarded to complainant; that the motion for admission of Cooper and Johnson as parties be denied. j