The opinion of the court was delivered by: SCHOONMAKER
The complaint discloses that plaintiff is seeking to recover royalties alleged to be due plaintiff on a series of license-agreements covering feeders, which are devices used in the process of manufacturing glass -- six known as "Howard Feeders," and four known as "Hartford Feeders."
By answer, defendant asserts, as a defense to plaintiff's claim for royalties under the six Howard licenses, an equitable rescission of these license-agreements. As a defense to the entire cause of action, the answer avers that all of the license-agreements sued upon are an inherent, essential, and integral part of unlawful monopolies, combinations, and conspiracies in restraint of trade in violation of Sections 1 and 2 of the Sherman Act 15 U.S.C.A. §§ 1, 2; that they are, therefore, in their entirety, illegal and void.
The counterclaim sets up two causes of action against the plaintiff in two counts. In the first count, defendant charges the license-agreements covering the six Howard Feeders, executed in 1923, and renewed and extended in 1932 and in 1938, were induced by fraud. And defendant invokes the equity power of the court to enforce a rescission of the 1923 transaction, the setting aside of the license-agreements with the renewals and extension thereof, the restoration of the royalties paid thereon, and the restoration to defendant of a royaltyfree license for twelve Howard Feeders which defendant originally had from the Howard Company under an agreement dated January 10, 1920. In the second count, the defendant charges that plaintiff, the cross-defendants, and other coconspirators formed and have continuously carried out and maintained monopolies, combinations, and conspiracies in restraint of trade and commerce in violation of Sections 1 and 2 of the Sherman Act. These two sections embrace: (1) Patents covering the manufacture of glass-making machinery; (2) the manufacture and licensing of glass-making machinery; and (3) the manufacture, distribution and sale of unpatented glass bottles and other glass containers. The defendant seeks recovery of treble damages for the injury to its business sustained thereby.
Defendant also asserts as a further defense to plaintiff's claim that the maintenance of this suit by plaintiff is contrary to public policy by reason of the conspiracy charged in counterclaim.
The plaintiff has by thirty separate motions moved to strike out specific paragraphs of defendant's answer and counterclaim on the ground: (1) That the answer does not state a legal defense to plaintiff's claim; and (2) the counterclaim does not state a legal cause of action against plaintiff.
The first question which presents itself on these motions is whether or not a motion to strike is the proper way in which to raise the question of the sufficiency of the answer and counterclaim. Rule 12(f) of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, provides that the court may, on motion or on its own initiative, order any redundant, immaterial, impertinent, or scandalous matter stricken from any pleading. We doubt whether the motions to strike in this case come within any of the categories mentioned in Rule 12(f), and think we might properly dismiss the plaintiff's motions on that ground alone. However, from the wording of the motions, it appears to us that, so far as concerns the complaint and answer, they are really motions for judgment on the pleadings, which is authorized by Rule 12(c). And so far as concerns the two counts of the counterclaim, the motions are equivalent to motions to dismiss for failure to state claims upon which relief can be granted, the form of remedy authorized by Rule 12(b). We shall therefore consider them in that category.
The next point to consider is whether or not the defendant is barred by the Pennsylvania statutes of limitations from recovering the moneys it has already paid on the license-agreements, and is also barred by laches as to its right to rescind the contracts and recover the moneys paid on these license-agreements. The defendant asserts that laches and the statute of limitations are affirmative defenses under Rule 8(c) of the Rules of Civil Procedure and may not be raised by a motion to strike. While it is true that this rule provides: "In pleading to a preceding pleading, a party shall set forth affirmatively * * * laches, * * * statute of limitations * * *," Rule 9(f) provides: Rule 9(f). "Time and Place. For the purpose of testing the sufficiency of a pleading, averments of time and place are material and shall be considered like all other averments of material matter."
It thus appears to us that where the allegations of time and place are averred in a pleading, whether a claim is barred by the statutes of limitations or laches may be determined on a motion to dismiss. See our opinion Cramer v. Aluminum Cooking Utensil Co., D.C., 1 F.R.D. 741; A.G. Reeves Steel Co. v. Weiss, 6 Cir., 119 F.2d 472; Moore's Fed. Practice, 597; 3 Ohlinger's Fed.Practice, 147; 3 Federal Rules Service 671.
In connection with this phase of the case, the defendant avers in its answer and counterclaim that on January 10, 1920, The Howard Company, a corporation owning certain patents relating to Howard Feeders, entered into an agreement with the defendant, whereby the defendant was licensed to operate twelve Howard Feeders on a royalty-free basis.
The answer further discloses that on or about June 23, 1922, the Hartford-Fairmont Company, predecessor of the plaintiff, Beechnut Packing Comany, The Howard Company and the stockholders of that company, entered into an agreement unknown to the defendant, whereby the plaintiff corporation was formed for the purpose of acquiring and holding title to various patents covering the manufacture of glassware; and by virtue of that agreement, acquired control over all of the patents of The Howard Company. The answer further states that thereafter, the plaintiff corporation, in order to induce the defendant to cancel and surrender its royalty-free Howard licenses, represented to the defendant that on November 18, 1922, The Howard Company was involved in a number of interference proceedings in the Patent Office with the Hartford-Fairmont Company and others; and that by reason thereof, a serious possibility existed that The Howard Company might lose its patent strength. In order to avoid that danger, The Howard Company executed the agreement of June 23, 1922, whereby the plaintiff acquired all control of the Howard patents and applications. At the same time the plaintiff represented to the defendant that at the time plaintiff acquired control of all the Howard patents and applications, the plaintiff and its predecessor, Hartford-Fairmont Company, possessed a powerful patent position which dominated that of The Howard Company in the field relating to gob-feeding machinery used in the production of glassware; and further that the use of the Howard Feeders by the defendant and other licensees of The Howard Company could be enjoined by the plaintiff or Hartford-Fairmont Company on the grounds that the Howard Feeders infringed the dominating patents other than the Howard patents and applications held, owned and controlled by plaintiff or the Hartford-Fairmont Company during that time.
The plaintiff further represented to defendant that the relinquishment and cancellation by defendant of its royalty-free Howard licenses would give the defendant protection of great value which would permit it to continue its business and prevent long, expensive, harassing, and ultimately unsuccessful litigation, which the plaintiff threatened to institute unless the defendant would consent to cancel and surrender its royalty-free Howard licenses and execute and accept royalty-paying licenses from the plaintiff.
The defendant avers that all these statements were false and fraudulent in the following particulars: (1) The Howard Company was not involved in any interference in the Patent Office with the Hartford Fairmont Company, nor was there any serious possibility or probability that it would be so involved; (2) neither the plaintiff nor the Hartford-Fairmont Company held a powerful or dominating patent position in the field relating to gob-feeding machinery used in the production of glassware; (3) neither the Hartford-Fairmont Company nor plaintiff could have enjoined the use by defendant of the Howard Feeders on the ground they infringed any patents held, owned or controlled by Hartford-Fairmont Company or the plaintiff; and (4) the relinquishment and cancellation by defendant of its royalty-free Howard license, and its acceptance of a license granted by plaintiff could not, and did not, give defendant any protection of any value in excess of that which defendant held as licensee of The Howard Company.
The answer discloses that defendant, relying upon the aforesaid false statements and representations, and believing them to be true, did, in March, 1923, cancel its royalty-free Howard license, surrendering and relinquishing the same to plaintiff. Simultaneously defendant executed with plaintiff six license agreements covering precisely the same Howard Feeders which the defendant had theretofore purchased from The Howard Company and which had been operated by the defendant under its royalty-free Howard license. Under the terms of its new Howard licenses, the defendant was required to pay exorbitant, unreasonable and oppressive royalties for the use of the Howard Feeders, being restricted and limited with respect to the type of glassware it could manufacture; the use which might be made of the defendant's products; the character of the glassware with respect to its ...