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UNITED ENGG. & FOUNDRY CO. v. COLD METAL PROCESS C

August 28, 1950

UNITED ENGINEERING & FOUNDRY CO.
v.
COLD METAL PROCESS CO.



The opinion of the court was delivered by: FOLLMER

The cross-complaint was filed March 28, 1949, and prayed for injunctive relief and an accounting. Cross-defendant has moved to dismiss on the following grounds:

 (1) Lack of jurisdiction over the person of cross-defendant, Cold Metal, because the complaint is not ancillary to Equity No. 2991 or Equity No. 2506 in this Court, hence cross-defendant is not subject to service of process in this district.

 (2) Lack of jurisdiction over the subject matter of the complaint if considered as supplemental or ancillary to Equity No. 2991 or Equity No. 2506 in this Court. *fn1"

 (3) Complaint fails to state a claim against cross-defendant upon which relief can or should be granted.

 (4) Laches.

 This litigation between these parties has been in progress for over twenty years and the many reported decisions *fn2" would seem to render it unnecessary at this time to engage in an extended recital of all of the factual background.

 The immediate problem is a narrow one. Can this suit be considered as ancillary to either Equity No. 2991 or Equity No. 2506 in this Court?

 As has been frequently stated in the reported decisions above referred to, all of this litigation had its inception in an agreement dated June 20, 1927, entered into between the parties hereto and at a time when both had applications pending in the United States Patent Office relating to 4-high rolling mills and the rolling of thin material. Both parties at that time were represented by the same firm of attorneys. The agreement sought to compose their apparently conflicting positions; subsequent events have revealed that at least in that regard it has been a total failure.

 In Equity No. 2506, in this Court, Cold Metal sued United for infringement of patent 1,779,195, referred to as '195', alleging that United was using the invention covered by that patent without right or license. United answered by claiming, inter alia, that it had a license under the patent by virtue of the contract of June 20, 1927. This Court sustained United's defense of 'license' and dismissed the bill, D.C., 3 F.Supp. 120. United appealed, seeking to have the patent declared invalid. The appeal was dismissed on the ground that United, being a licensee, could not contest validity 3 Cir., 68 F.2d 564. That, it seems to me, ended the proceedings in Equity No. 2506.

 Subsequently, in Equity No. 2991, Cold Metal sued United in this Court to enjoin United From prosecuting suits as an exclusive licensee, for specific performance of the 1929 contract, and praying the Court to determine the payment required to be made by United to Cold Metal under the terms of that license contract. The case was initially heard on Cold Metal's motion for a preliminary injunction. The motion was denied, D.C., 9 F.Supp. 994, the Court finding the contract valid and enforceable, that United had an exclusive license under the contract, and that United could sue as said licensee. Cold Metal appealed and the Court of Appeals reversed this Court's denial of the motion for preliminary injunction, 3 Cir., 79 F.2d 666. Thereafter, Cold Metal filed a supplemental complaint praying that the Court enter a decree declaring a rescission of the June 20, 1927, contract; also a prayer for alternative relief in the event of a refusal of a decree of rescission for the determination of the amount due Cold Metal under the said contract. After final hearing, this Court on January 4, 1938, filed an opinion, D.C., 83 F.Supp. 914, refusing to rescind the contract of June 20, 1927, holding that Cold Metal was entitled to a decree providing for a determination of the amount due from United under the said contract and the basis of payment to be made thereafter; that Cold Metal did not come into Court with unclean hands; and that the June 20, 1927, contract was 'a valid, subsisting contract.' On appeal from this decision, the Court of Appeals, 3 Cir., 107 F.2d 27, on page 31, modified its earlier decision, 3 Cir., 79 F.2d 666, as to the injunction against United restraining the prosecution of infringement suits brought by United in Ohio and Indiana and holding that 'On principle and comity, and especially on the record as it now stands before us, freed as we think from fraud, we feel that the questions which are justiciable before the District Courts of Ohio and Indiana should be left to those courts without interference from the courts of this circuit.'

 The Court further held in 107 F.2d on page 32:

 'The only benefit which United received for its forbearance to contest the interference proceeding was the exclusive license which it secured by the agreement of June 20, 1927. This United is seeking to retain and Cold Metal is seeking to take away. Each party is signing the agreement doubtless thought it was getting something from, and was giving something to, the other. The one was getting a patent; the other an exclusive license under it. Cold Metal is unwilling to surrender the Steckel patent and United cannot be asked to give up it exclusive license. Cold Metal with a patent and United with an agreement giving it an exclusive license are in the position in which they placed themselves and we should leave them there. The agreement of 1927 is, as Judge McVicar found, 'a valid and subsisting contract' for a license. This 'contract' has been partly performed and equity requires that it be completed by supplying the amount which United must pay for the license in accordance with the intention of the parties. * * * The evidence shows what that intention was, for the parties had an 'understanding' as to what the royalties would be and what that understanding was can readily be ascertained from the evidence by the master appointed or to be appointed by the District Court.

 'The learned District Judge did not err when he held the agreement to be a 'valid, subsisting contract', and so regarding, the ...


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