A suit, the parties thereto being citizens of the same state,
was brought in a court thereof, for moneys alleged to be due to the
complainant under a contract whereby certain letters patent granted
to him were transferred to the defendant.
Held that the
suit, not involving the validity or the construction of the
patents, is not one arising under a law of the United Staten, and
cannot be removed to the Circuit Court.
This was a suit in equity originally brought in the Court of
Chancery of the State of New Jersey by Teas against Albright,
Cahoone, and Tompkins. The bill alleged that Teas was the inventor
and patentee of certain improvements in coach pads, harness
saddles, and saddle trees covered by three certain letters patent
issued to him; that on February 1, 1876, he made an agreement in
writing of that date with Albright and Cahoone, which was in
substance as follows: Teas agreed on his part to make assignments
of said letters patent to Albright and Cahoone, and also of certain
other letters patent for which he had made application to the
Patent Office, and also of any other patents which he might obtain
for improvements in gig saddles and coach pads for harness, in
consideration whereof Albright and Cahoone agreed that they would
"use their best endeavors to have the aforesaid inventions worked,
goods manufactured and sold to the best advantage of themselves and
said Teas," and to pay Teas certain specified royalties for the use
of the patented improvements, and pay "all just and necessary
expenses for the purpose of procuring and sustaining all of said
letters patent against infringers," provided it be for the mutual
interests of and financial benefits to all the parties to the
agreement.
The bill further alleged that Teas did assign the patents as
stipulated in the agreement and that the agreement was in full
force; that a large amount of goods in which the improvements
covered by the patents of the complainant were used had been
manufactured by Albright and Cahoone under the name of the Cahoone
Manufacturing Company and by Tompkins, Albright, and Cahoone under
the firm name of Samuel E. Tompkins, Cahoone & Co.;
Page 106 U. S. 614
that the defendants had failed to render proper statements of
the quantity of goods manufactured by them; that complainant
believed there was a large amount due him under said contract for
royalties, and that he had tried without success to obtain an
inspection of the account books of defendants to ascertain what was
so due him.
The bill prayed for discovery, for an account of the sums due
the complainant for royalties under said contract, and for a decree
against Albright and Cahoone for the amount found to be due from
them to him on said account and for general relief.
Albright and Cahoone filed a joint and several answer and
Tompkins a several answer to the bill.
Albright and Cahoone in their answer neither admitted nor denied
that Teas was the original inventor of the patents assigned to
them, but they denied that he had not free access to their books of
account. They averred that they had rendered full accounts and made
all payments due to Teas under the agreement set forth in the bill;
that if any disputes existed between Teas and defendants, they
arose from a wrong construction put in the agreement by Teas and
from unfounded claims by him as to his rights under it; that at the
time of the agreement, they were in litigation with Tompkins in
respect to certain patents held by him for improvements in saddle
trees; that the litigation and rivalry impaired the business of all
three, and that in October, 1877, they settled their differences
with Tompkins and united their business with his, and it had since
been carried on by the firm of Tompkins, Cahoone & Co., which
had been entitled to use all the patents of both parties, and that
the new firm had manufactured many goods without employing any of
the improvements described in the patents of Teas, and had
manufactured many to which they had applied the improvements
covered by the Teas patents, in connection with those covered by
patents of Tompkins and others; that Tompkins had always disputed
the value and validity of the Teas patents, but that they --
Albright and Cahoone -- had always been anxious to fulfill their
agreement with Teas, and had paid royalties on all goods to the
manufacture of which it could by any reasonable construction be
claimed that the improvements covered by the Teas patents had been
applied, and that if Teas claimed more, it was because he insisted
that goods made
Page 106 U. S. 615
under the patents of Tompkins were infringements on his
patents.
Tompkins made substantially the same denials and averments in
his answer. He also averred that he was not a party to the
agreement with Teas and denied all obligations under it. He alleged
that though he had always disputed the validity of the Teas
patents, he had desired to enable his partners, Albright and
Cahoone, fairly to fulfill their agreement with Teas, and that it
had been fulfilled, and all moneys had been paid him to which he
was entitled for goods made under his patents.
Replications were filed to these answers, and the parties
proceeded to take testimony. While the taking of the testimony was
going on, some correspondence took place between the counsel of the
parties in which counsel for defendants specified a large number of
articles which they admitted that the defendants were manufacturing
under the Teas patents, and gave a list of nineteen other articles
manufactured by the defendants, which they contended were not made
under the Teas patents and did not therefore fall within the
agreement between Teas and Albright and Cahoone. Thereupon the
defendants filed a petition for the removal of the cause to the
circuit court of the United States in which they alleged that all
the parties to the suit were citizens of the State of New Jersey,
but that the suit was one arising under the patent laws of the
United States, and exclusively within the cognizance of the courts
of the United States, and removable under the Act of March 3, 1875,
c. 137. Upon this petition the cause was removed to the Circuit
Court of the United States for the District of New Jersey. By
consent of parties, an interlocutory order was made in the circuit
court referring the cause to a master to report the amount due the
complaint, if anything, for royalty upon the articles, enumerating
them, in the manufacture of which the patented improvements of the
complainant were used.
Upon final hearing, the testimony having been closed, the
counsel for the complainant moved the circuit court to remand the
cause to the state court of chancery, and the court, declaring its
opinion to be that the suit was not one arising under any of the
laws of the United States, but was one over which the United States
courts had no jurisdiction, and that it was a suit for an
accounting and
Page 106 U. S. 616
relief for the settlement of controversies under a contract of
which the state courts had full cognizance, ordered the cause to be
remanded to the state court. To obtain a review of this order, the
present appeal was taken by Tompkins, Albright, and Cahoone,
defendants in the circuit court.
MR. JUSTICE WOODS delivered the opinion of the Court, and after
stating the case as above proceeded as follows:
The contention of the appellants is that the case is one
"arising under the . . . laws of the United States," and was
therefore properly removable from the state to the United States
courts, and should not have been remanded. It is clear from an
inspection of the bill and answers that the case is founded upon
the agreement in writing between the appellee and the appellants
Albright and Cahoone, by which the former, for a consideration
therein specified, transferred to the latter his interest in
certain letters patent. The suit was brought to recover the
consideration for this transfer, and was not based on the letters
patent. The appellants insist, however, that evidence was taken in
the cause by the appellee for the purpose of proving that they were
using his patented improvements in the manufacture of goods for
which they paid him no royalty, and which they contended did not
embody the improvements covered by his patents; that the testimony
developed a controversy between the parties on the question whether
the goods manufactured by the appellants under the Tompkins and
other patents owned by them were or were not infringements on the
patents of appellee; consequently that questions of infringement
and of the construction of the claims of appellee's patents were
necessarily involved in the case, and therefore it was one arising
under the patent laws of the United States.
We search the bill of complaint in vain to find any averments
raising these questions. It makes no issue touching the
construction of the patents granted the appellee or their validity
or their infringement. The only complaint made in the bill is that
the appellants were fraudulently excluding the appellee from an
inspection of their books of account and refusing to pay him the
sums due for royalties under his contract.
Page 106 U. S. 617
And the prayer of the bill was for a discovery, an account of
what was due appellee under his contract, and a decree for the
amount found to be due him.
On the face of the bill, therefore, the case is not one arising
under the patent laws of the United States.
Wilson v.
Sandford, 10 How. 99.
The testimony on which appellants rely to show the jurisdiction
of the circuit court is not before us, but conceding that it
discloses the controversy which appellants assert it does, the
question arises does this fact give the courts of the United States
jurisdiction of the case?
Tompkins is the only one of the appellants who questions the
validity of the appellee's patents. But he is not a party to the
contract between appellee and Albright and Cahoone, and no relief
is prayed against him by the bill, and though he says in his answer
that he had always disputed the value and validity of the patents
of appellee, he raises no issues thereon. The fact that he is made
a party defendant to the bill can therefore have no effect on the
question in hand.
In passing on the question of jurisdiction, the case is to be
considered as if Albright and Cahoone were the only defendants.
The appellee, before the commencement of the suit, sold and
transferred to Albright and Cahoone all his title and interest in
the inventions covered by his patents. The transfer was absolute
and unconditional. No right, therefore, secured to the appellee in
the patent by any act of Congress remained in him. He had no right
to prosecute anyone for infringements of his patents, or to demand
damages therefor or an account of profits.
He was entitled to the royalties secured by his contract and
nothing more. And the only question raised by the bill of complaint
and the answer of Albright and Cahoone was simply this: what is the
sum due the appellee from Albright and Cahoone for his royalties
under his contract? In ascertaining this amount, it of course
became necessary to inquire what goods were manufactured by the
appellants under the patents of the appellee. In prosecuting this
inquiry, an incidental question might arise -- namely what goods
were manufactured
Page 106 U. S. 618
by the appellants under other patents of which they were the
owners or licensees? But this incidental and collateral inquiry
does not change the nature of the litigation. The fact that
Albright and Cahoone had licenses to use other patents under which
they were manufacturing goods does not give them the right to
litigate their cause in the United States courts because certain
goods, which they asserted were made under the other patents, the
appellee asserted were really made under his. The suit,
notwithstanding the collateral inquiry, still remains a suit on the
contract to recover royalties, and not a suit upon the letters
patent. It arises solely upon the contract, and not upon the patent
laws of the United States.
In fact it does not appear that there is any dispute whatever
between the parties in reference to the construction of the patents
of the appellee. The controversy between them, as stated by the
appellants themselves, is whether certain goods manufactured by
them embody the invention covered by the appellee's patents. This
does not necessarily involve a construction of the patents. Both
parties may agree as to what the patented invention is, and yet
disagree on the question whether the invention is employed in the
manufacture of certain specified goods. The controversy between the
parties in this case is clearly of the latter kind.
The case cannot therefore be said to be one which grows out of
the legislation of Congress. Neither party asserts any right,
privilege, claim, protection, or defense founded in whole or in
part on any law of the United States.
We are therefore of opinion that even if we go outside the
pleadings and look into the testimony, the case is not one arising
under the laws of the United States, and consequently that the
courts of the United States had no jurisdiction to entertain
it.
The cases adjudged by this and other courts of the United States
sustain this conclusion. In the case of
Wilson v. Sandford, ubi
supra, the object of the bill was to set aside a contract made
by the appellant with the appellees, by which he had granted them
permission to use and vend to others to be used one of Woodworth's
planing machines in the Cities of New Orleans and Lafayette, and
also to obtain an injunction against
Page 106 U. S. 619
the further use of the machine on the ground that it was an
infringement of his patent rights. Upon this cause, the Court,
speaking by Mr. Chief Justice Taney, said:
"The dispute in this case does not arise under any act of
Congress, nor does the decision depend upon the construction of any
law in relation to patents. It arises out of the contract stated in
the bill, and there is no act of Congress providing for or
regulating contracts of this kind. The rights of the parties depend
altogether upon common law and equity principles."
The case of
Hartell v. Tilghman, 99 U. S.
547, is also in point. In that case, Hartell, the
complainant, alleged that he was the original patentee and inventor
of a process for cutting and engraving stone, glass, metal, and
other hard substances by what is known as the sand blast process;
that the defendants had paid him a considerable sum for machines
necessary in the use of his invention, and had also paid him during
several months the royalty which he asked for the use of the
invention described in and secured by his patent; that the
defendants refused to do certain other things which the complainant
charged to have been a part of the consideration of the contract
between them, whereupon he had forbidden them further to use his
invention, and that the defendants had disregarded this
prohibition. The bill prayed for an injunction, an account of
profits, and damages.
The defendants admitted the validity of the patent, their use of
it, and their liability for its use under their contract with the
complainant, and offered to perform all that the contract required
them to perform. All the parties were citizens of the same
state.
Upon this case, the question of the jurisdiction of the United
States courts was raised, and this Court, after a review of several
cases bearing on the subject, held that the suit was not one
arising under the laws of the United States and that the circuit
court had no jurisdiction of the case, and reversed its decree and
remanded the cause with directions to dismiss the bill.
The argument against the jurisdiction in the case under
consideration is stronger than in the two cases above referred to.
In each of these cases, the object of the complaint in filing
Page 106 U. S. 620
the bill was to go behind the agreement under which the
defendant had contracted for the right to use the complainant's
invention, and to obtain an injunction against the defendant as an
infringer. In this case, the appellee admits the contract to be in
force, and simply seeks to compel its performance.
The following cases cited by this Court in
Hartell v.
Tilghman are in accord with the views we have expressed:
Goodyear v. India Rubber Company, 4 Blatchford 63;
Merserole v. Union Paper Collar Co., 6 Blatchford 356;
Blanchard v. Sprague, 1 Cliff. 288;
Hill v.
Whitcomb, 1 Holmes 317.
From the conclusions reached by us, it follows that the decree
of the circuit court remanding the cause to the state court must
be
Affirmed.
