31 F.2d 969 | 6th Cir. | 1929
There is no merit in the contention that the court should not have permitted the defendants to file a motion to dismiss, but should have required the filing of an answer. The term “answer,” as used in the stipulation giving defendants additional time for filing answer, is to be construed, we think, to include a motion to dismiss. New Jersey v. New York, 31 U. S. (6 Pet.) 323, 8 L. Ed. 414; Martin v. Baltimore & O. R. Co., 151 U. S. 673, 14 S. Ct. 533, 38 L. Ed. 311. Besides, a trial court can look to the sufficiency of a bill on its own motion, at any time, even after answer is filed.
The bill, is based upon alleged violations of license agreements which grew out of the settlement of a suit against defendants for the infringement of certain patents. These agreements were alleged to have been violated in two particulars: One, in manufacturing and selling the patented construction without paying the royalties thereon; and, the other, in refusing to arbitrate disputes arising under the agreements, as required by one of the provisions thereof.
The defendants are not obligated under these agreements to manufacture or sell the patented article. If they do sell it they are bound to pay a stipulated royalty. The bill alleges that the license agreements are still.
If it be true, as alleged, that defendants failed to account for royalties which were due to plaintiff, there was undoubtedly a breach of a contractual obligation which conferred a right of action upon the plaintiff. If the breach went to the whole consideration of the contract, the plaintiff had the right either to treat the contract as rescinded and to sue the defendants as infringers or to sue upon the contract itself. Oscar Barnett Foundry Co. v. Crowe (C. C. A.) 219 F. 450. The averments of its bill show that it elected to pursue the latter course. Here also it had dual rights — the right' to sue at law or the right to sue in equity for specific performance if there was no adequate remedy at law. Indiana Mfg. Co. v. Nichols & Shepard Co. (C. C.) 190 F. 579. As we have said, the gist of its complaint is the failure to pay royalties that have been earned. What it seeks is to collect those royalties and secure those to be earned in the future. The claims for past royalties, for losses and for damages are matters for which there is a complete remedy at law. Javierre v. Central Altagracia, 217 U. S. 502, 30 S. Ct. 598, 54 L. Ed. 859. And, while the bill alleges that defendant has threatened and will continue to manufacture and sell the patented articles in the future, without paying the royalties thereon, it contains no allegations of fact showing that for such action there is not an adequate legal remedy. The averment that plaintiff will suffer irreparable injury if the injunction is not issued is a conclusion of the pleader, which does not constitute ground for equitable relief unless it is made to appear from the facts that are pleaded. Cruickshank v. Bidwell, 176 U. S. 73, 20 S. Ct. 280, 44 L. Ed. 377.
The remaining provision which is alleged to have been breached is the arbitration provision. It contains nothing providing for arbitration as a condition precedent to the bringing of an action. The extent of the enforceability of such provisions has often been the subject of judicial consideration.
We are aware that it has been held that a bill in equity will lie against a licensee to enjoin him from using the patented articles in violation of the license agreement. Those eases
Although the bill did not show grounds for equitable relief, it does not follow that it should have been dismissed without prejudice to plaintiff’s right to bring an action at law. If the facts stated were true, plaintiff had a cause of action at law for a part of the relief which it sought; and while, under Equity Rule No. 22, the court should transfer a cause on its own motion to the law side
The decree below is set aside, and the case remanded, without costs, in order that plaintiff may have an opportunity to elect whenever it wishes such a transfer as it may have under Rule 22.
Exhaustive reviews of the English and American cases are contained in the following decisions: United States Asphalt Refining Co. v. Trinidad Lake Petroleum Co. (D. C.) 222 F. 1006; Atlantic Fruit Co. v. Red Cross Line (D. C.) 276 F. 319; Tatsuuma Kisen Kabushiki Kaisha v. Prescott (C. C. A.) 4 F.(2d) 670; Hamilton v. Home Insurance Co., 137 U. S. 370, 11 S. Ct. 133, 34 L. Ed. 708; Red Cross Line v. Atlantic Fruit Co., 264 U. S. 109, 44 S. Ct. 274, 68 L. Ed. 582.
Compare Atwood v. Portland Co. (C. C.) 10 F. 283; McKay v. Smith (C. C.) 29 F. 295; Ball Glove Fastening Co. v. Ball & Socket Fastener Co. (C. C.) 36 F. 309; Indiana Mfg. Co. v. J. I. Case Threshing Machine Co. (C. C. A.) 154 F. 365; Thomson Spot Welder Co. v. National Electric Welder Co. (D. C.) 260 F. 223; Shubert Theatrical Co. v. Rath (C. C.) 271 F. 827, 20 A. L. R. 846; Universal Rim Co. v. Scott (D. C.) 21 F.(2d) 346; Eureka Clothes Wringing Mach. Co. v. Bailey Washing & W. Mach. Co., 78 U. S. (11 Wall.) 488, 20 L. Ed. 209.