Opinion
Argued April 14, 1891
Decided June 2, 1891
Reginald Hart for appellants.
Jacob S. Van Wyck for respondent.
The rights of the plaintiffs rested wholly in the license granted to them by Mrs. Judson, the patentee. And so far as their remedy was dependent solely upon the enforcement of the contract, it was within the jurisdiction of the state court. ( Hyatt v. Ingalls, 124 N.Y. 93.) The view urged by the plaintiffs, and essentially so to support the action, is that it involved the determination of no question within the patent laws of the United States, but that in its purpose and nature was merely an action to restrain the violation of a covenant and to recover damages resulting from it. If this view is sustained in such sense that the action is founded solely upon contract or breach of covenant, there was no want of jurisdiction in the state court to determine it upon the merits. But, although the defendant must be deemed to have taken the assignment of the interest of the patentee in the invention, subject to the rights of the plaintiffs, taken by the instrument granting the license to them, he was not a party to the covenants contained in it. Nor is the action to compel the defendant to observe or perform any covenant made by him, but its purpose is the assertion of the alleged claim of the plaintiffs dependent upon the granting covenants of another, subordinate to which are the rights taken by the defendant. The action is, therefore, founded upon the disregard and violation by the defendant of the alleged claim of the plaintiffs to the use of the patent, and not upon any contract obligation which he has made or by agreement undertaken to observe. This evidently was the view of the trial court, as appears by the conclusion that the defendant, in manufacturing and selling the patented article, "was a wrongdoer and trespasser upon the rights of the plaintiffs."
And while the defendant, by the assignment to him, took such right only as his assignor had, and in practical effect became subject to the responsibilities attending the title, the nature of the remedy against them was or might differ in so far that, as against her, it might rest upon her contract, while against the defendant it was necessarily founded upon a violation or invasion of the alleged rights of the plaintiffs, subject to which the defendant had taken the assignment. Both cases would alike depend upon the interpretation of the contract, and the results would be governed by the same principle of measurement; but while the former might rest upon the contract and its breach, the latter was founded upon the rights of the plaintiffs derived from the contract and the alleged violation of them by the defendant. This distinction is entitled to no consideration except in its bearing upon the question of jurisdiction of the state court. And in that respect it is not free from difficulty. If such violation of the rights and privileges of the plaintiffs derived from their license was an infringement by the defendant within the meaning of that term as applied to patents, the remedy was exclusively within the jurisdiction of the federal courts. And in Littlefield v. Perry (21 Wall. 205), it was held that a patentee may be an infringer of rights under a patent which he has assigned, and it was there said that his licensee could maintain an action for such cause against him. No reason appears why the rule so applicable to a patentee may not, for like cause, be available against his assignee. The cases cited by the court at General Term in support of the position that the state court had not jurisdiction, were Continental Store Service Co. v. Clark ( 100 N.Y. 365) and Hat Sweat Mfg. Co. v. Reinoehl (102 id. 167). In the former case, as here, there was no controversy about the validity of the patent; the claims of the parties were founded on alleged assignments, and each party insisted upon the superior right. Theirs were conflicting claims, and he, without the support of title as against the other, was an infringer. In the other case cited, the validity of the patent and the right of the plaintiff to the exclusive use of it were the subject of controversy. And it was held that those cases were within the exclusive jurisdiction of the federal court. The cases generally where it has been held that the state court had jurisdiction upon the subject, have been those founded upon contract to which the defendants were parties. Such were Hartell v. Tilghman ( 99 U.S. 547) and Dale Tile Mfg. Co. v. Hyatt (125 id. 46). But that was not so in Hill v. Whitcomb (1 Holmes, 317). And inasmuch as the validity of the patent and the license in the present case were admitted, there was practically no conflict of claim other than such as arose upon the construction of the instrument of license to the plaintiffs; and for that reason, we think, it involved the consideration of no question arising under any act of congress in relation to patents. And in that view the case was properly in the state court for determination. The plaintiffs insist that they took by the license, except as against one other licensee, the exclusive right to the use of the patent. Although such may have been the understanding of the plaintiffs, the patentee was not by the terms of the agreement denied the right to manufacture and sell the patented article, nor was she by any express provision of it required to retain the title in herself. Her covenant was that she would grant a license to one other person, firm or corporation only. She held the title to the patent and did not grant the exclusive right to its use to the licensees, but made the covenant before mentioned with a view to the protection, to that extent and in that manner, of the privileges granted to them. The assignment of the patent apparently carried with it to the assignee all the rights which remained in her in respect to it. It is said that whatever right to its use remained in the patentee after the licenses were granted were personal to her. If that were so and the assignment operated, within the meaning of the contract, as a license to her assignee, it would follow that she committed a breach of the covenant for which she would be liable to the plaintiffs. But it is not seen how that had the effect to charge the defendant, because as against him the rights of the plaintiffs rest upon the grant to them and not upon the covenant made by the patentee for their protection in the use of the rights granted as against other licensees. Upon the construction of the grant of the license to the plaintiffs we fail to see any support for the conclusion of the trial court that the defendant in manufacturing and selling the patented article was a wrong-doer and trespasser against the rights of the plaintiffs taken by the license granted to them.
The judgment entered upon the order of the General Term, so far as it dismissed the complaint, should be reversed, in other respects affirmed and a new trial granted, costs to abide the event.
All concur, except BROWN, J., not sitting.
Judgment accordingly.