32 F.R.D. 608 | S.D.N.Y. | 1963
The defendant, V.E.B. Carl Zeiss, Jena, an East German concern (hereafter referred to as Zeiss Jena), moves (1) to dismiss the action as against it for lack of jurisdiction upon a claim that it does not and did not transact business within this district, or, in lieu thereof, (2) to quash service of the summons and complaint upon it on the ground that service was not made upon any managing or other agent within the purview of Rule 4(d) (3) of the Federal Rules of Civil Procedure.
The action is brought by two West German corporations against Zeiss Jena, the East German corporation, Steelmas-ters, Inc., an Illinois corporation, and Ercona Corporation, a New York corporation.
The summons and complaint here sought to be set aside was served in March, 1962 on Steelmasters and Ercona as managing agent of Zeiss Jena. The essence of the plaintiffs’ position is that from 1950 to date Zeiss Jena’s activities and contacts within this district, through Steelmasters and Ercona, have been so substantial and continuous that, under the doctrine of International Shoe Co. v. State of Washington,
Zeiss Jena, on the other hand, denies that either was its agent. It contends that the sole relationship between it and Steelmasters and Ercona was and is that of buyer and seller of Zeiss Jena scientific equipment and optical goods. The substance of its position is that Steel-masters and Ercona are importers of Zeiss Jena products which they buy in Germany on their own account and thereafter sell in the United States as exclusive distributors of such products. Emphasis is placed upon the fact that Zeiss Jena never owned any stock or had any financial interest in Steelmasters or Ercona; nor did the latter ever own stock or have any financial interest in Zeiss Jena; and at no time have there been interlocking officers or directorships.
The conflict must be resolved not upon what the parties claim, nor even upon what their agreements say, but within a framework of actual fact and course of conduct which mirror their true relationship. The ultimate question is whether Zeiss Jena’s contacts within this district through Ercona
Extensive depositions were taken on the contested issue of fact. Zeiss Jena, by its overseas sales manager, was examined at Salzburg, Austria before the American Vice Consul and many exhibits were received as part of and attached to the deposition. The plaintiffs also examined officers of Steelmasters and Er-cona in this district. The Court has fully reviewed these extensive depositions, the voluminous affidavits and exhibits submitted in support of and in opposition to the motion. While no single or isolated fact is determinative of the issue, I am persuaded that upon the entire record a sufficient showing has been made to support jurisdiction as well as service upon Ercona as a managing agent under Rule 4(d) (3). Upon the facts here presented, neither Jones v. Motorola, Inc.,
We start with a fact which is not in dispute, that is, from about May, 1950 to the present all products manufactured by Zeiss Jena (with certain limited exceptions) have been distributed in the United States exclusively either through Steelmasters or Ercona, each of which conducted activities from its offices maintained in the City of New York. The
Zeiss Jena’s first contact with either local defendant came in 1950. In May of that year it entered into a written agreement with Steelmasters under which the latter was granted the exclusive right to distribute all Zeiss Jena products in the United States. Although the relationship between the two formally terminated in June, 1961, what transpired during Steelmasters’ period has bearing on the issue here, since Ercona had continuous contact with Zeiss Jena in the prior period and played an active role in the distribution of its products. On May 20, 1950, at or about the time the Steelmasters agreement was signed, Ercona was organized by Steelmasters as an affiliate corporation “ * * * in order to do business, among other things, as the exclusive sales agent and representative of * * * Zeiss Jena * * * for the sale of goods manufactured by Zeiss Jena.”
The Zeiss Jena-Steelmasters agreement of May, 1950 obligated Steelmasters actively to promote and sell Zeiss J ena products ; not to deal in products competitive with those of Zeiss Jena; to employ experts trained in the Zeiss Jena factories; to report market conditions in the United States and to render annual reports of Steelmasters’ sales activities; to agree with Zeiss Jena upon retail prices and to control the observance of such prices by its [Steelmasters’] customers; not to sell to wholesalers and exporters and to instruct retailers that the products must be sold to consumers directly and not exported.
The defendants contend that most of the provisions of this agreement were honored more in the breach than in the observance; that many of the obligations of Steelmasters recited above were dead letters. They also assert (but disputed by the plaintiffs) that the agreement by its terms expired in 1952 and that although the relationship continued until J une, 1961, this was only with respect to the net prices to be paid for the merchandise and the terms of payment. But whether the terms of the 1950 agreement were in fact fully observed or otherwise, the undisputed fact is that Steelmasters, through Ercona, was the exclusive medium whereby for a period of eleven years, until June, 1961, all Zeiss Jena products
In June, 1961, an agreement, currently in effect, was entered into directly with Ercona. The agreement is for ten years and is automatically continued unless six months’ notice before expiration is given. It confers “on distributor [Ercona] the sole agency right in the territory of the United States and its possessions” for products manufactured by Zeiss Jena.
The relationship between Zeiss Jena and Ercona is not confined to the sale and distribution of merchandise. An integral part of the arrangement between Zeiss Jena and Steelmasters, and later Ercona concerned the protection in the United States of the Zeiss Jena trademarks, and this aspect of their relationship cannot be ignored. The actions and course of conduct between the parties during the entire period from 1950 to date in the assertion by Ercona of the trademark rights in connection with the Zeiss Jena products sold in this country is of substantial significance.
In the instance of each agreement, Zeiss Jena assigned trademarks for use in, and furthering, the sales of Zeiss Jena products. Under the 1950 Steel-masters agreement, Zeiss Jena transferred to Steelmasters for the duration of the agreement its rights to the trademarks registered in the United States and Steelmasters undertook “to safeguard the interests of Carl Zeiss [Jena]” and to take all necessary steps toward that end. Rather significantly, from the origin of the relationship down to the present, it was Ercona, whether the assignment was to it or to Steelmasters, that appeared in various litigations in this Court, the District Court for the District of Columbia, and in proceedings before the Patent Office. Its appearance in each instance was as the “agent and representative” of Zeiss Jena. While officers of Ercona and Steelmasters dismiss as a businessman’s expression, and without legal significance, the various references to Ercona as the “exclusive American sales agent for Zeiss Jena,” appearing on its letterhead, publications and advertising over the same eleven-year period, the representations contained in court documents drafted by attorneys cannot be so readily dismissed.
In a suit filed by Ercona in September, 1957, in the District Court for the District of Columbia against the Commis
In 1957, in an interference proceeding pending in the United States Patent Office relating to a trademark used on merchandise distributed by Ercona, the latter, with reference to the 1950 Steel-masters agreement, stated, “Section 8 provides for the reassignment to Carl Zeiss, Jena, at the termination of the distributorship, of all the trademarks, registrations, and all other rights * * which had been transferred to protect the interests of said Carl Zeiss, Jena.” (Emphasis supplied.) Ercona further stated that the registration thereunder attacked was “legally owned by [Ercona), who, nevertheless, held it in trust for Carl Zeiss, Jena.” Parenthetically, it is noted that although the defendants assert this contract, except as to net prices and terms of payment, expired of its own force in June, 1952, the representation was made that it “still is in full force and effect.” A year earlier, in 1956, in the same proceeding, Ercona’s vice president filed an affidavit wherein, after referring to Ercona as the exclusive distributor in this country of Carl Zeiss products, he stated, “In the year 1951, at the request of Carl Zeiss of Jena, [Er-cona] applied for registration of this mark in its own name * * * on the express agreement that [Ercona] would hold this trademark and the registration thereof, in trust for said Carl Zeiss of J ena, to be returned and assigned to them on request, or on the termination of the distributorship, neither of which eventualities has thus far occurred.” Also in 1956 Ercona filed an action in this Court against the Collector of Customs involving the importation of goods by a wholly owned subsidiary of plaintiffs which allegedly infringed upon the trademarks assigned by Zeiss Jena to Ercona. Er-cona described itself in the complaint in that action as “exclusive agent or representative of various factories located in foreign countries.”
In still another action, in the District Court for the District of Columbia, involving Zeiss Jena assigned trademarks which Ercona as plaintiff was seeking to protect, its vice president, when questioned whether Zeiss J ena or Ercona first used the trademarks in the United States, testified, “We were the representative of Carl Zeiss, Jena. * * * We are the United States of America sales representative.” While these various statements and references were made by Er-cona in the different actions brought by it in the courts of the United States, Zeiss Jena and its counsel were kept fully advised as to the proceedings.
The pattern of representation by Er-cona with respect to the Zeiss Jena trademarks continued after the 1961 agreement. An essential part of that agreement relates to trademarks on goods to be distributed by Ercona in the United States. Zeiss Jena executed an assignment of designated trademarks to Er-cona. Zeiss Jena and Ercona acknowledged they “are aware of the endeavours of others to secure unto themselves the
The totality of facts reflecting the conduct of the parties forecloses the view that their relationship can be circumscribed simply as that of buyer and seller, or manufacturer and exclusive distributor. The evidence abundantly establishes, whatever standard is applied, whether that of “consent,” “doing business” or “presence,”
Upon the totality of all the facts—the continued dealings and course of conduct between Zeiss Jena and Ereona—it does not offend “traditional notions of fair play and substantial justice” to require Zeiss Jena to defend the suit here. In the light of the continued representation of its interests by Ereona, it will suffer no inconvenience, especially so since it has in this and other courts sought to defeat the very claims now advanced by the plaintiffs in the pending suit. This conclusion makes it unnecessary to detail various other factors relied upon by the plaintiffs, such as the listing of Zeiss Jena in the building directory where En-cona is located and in the New York City telephone directory, or those advanced by the defendants in resisting jurisdiction. While they may have bearing in some situations, they are not of special significance in the instant case.
The same facts which support jurisdiction also warrant the conclusion that Ereona at the time of service was a managing agent of Zeiss Jena within Rule 4(d) (3).
. Two other corporations are named as defendants, but they play no part in the present motion.
. 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).
. While the plaintiffs served the summons and complaint on Steelmasters and Erco-na as a managing agent for Zeiss Jena, the papers make it clear that for the purposes of this motion the contention is that at and prior to the service of process, Ercona was the managing agent.
. Cf. McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); French v. Gibbs Corp., 189 F.2d 787 (2d Cir.1951); Bomze v. Nardis Sportswear, Inc., 165 F.2d 33 (2d Cir. 1948); Hutchinson v. Chase & Gilbert, 45 F.2d 139 (2d Cir.1930).
. Jaftex Corp. v. Randolph Mills, Inc., 282 F.2d 508 (2d Cir.1960). The claim there was in negligence and jurisdiction rested on diversity; in the instance case the claim rests upon a federal statute.
. 186 F.2d 707 (2d Cir.), cert. denied, 342 U.S. 817, 72 S.Ct. 31, 96 L.Ed. 618 (1951).
. 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634 (1925).
. Notice of opposition filed by Ercona in the United States Patent Office (Plaintiff’s Exhibit R).
. With the exception of Werra cameras and, at times, binoculars,
. In addition to Werra cameras, the following were excluded: photographic lenses mounted in cameras, field and opera glasses, and surveying apparatus.
. Under a stipulation of the parties precise figures have not been furnished.
. Cf. United States v. Scophony Corp., 333 U.S. 795, 814, 68 S.Ct. 855, 92 L.Ed. 1091 (1948).
. An affiliate of Carl Zeiss, Jena.
. See generally, G. H. Mumm Champagne v. Eastern Wine Corp., 142 F.2d 499 (2d Cir.), cert. denied, 323 U.S. 715, 65 S. Ct. 41, 89 L.Ed. 575 (1944); Scandinavia Belting Co. v. Asbestos & Rubber Works of America, Inc., 257 F. 937 (2d Cir.), cert. denied, 250 U.S. 644, 39 S.Ct. 494, 63 L.Ed. 1186 (1919).
. Cf. McGee v. International Life Ins. Co., 355 U.S. 220, 222, 78 S.Ct. 199, 2 L.Ed. 2d 223 (1957).