
    Saly J. Mayer et al., App’lts, v. Garret L. Hardy, Resp't.
    
    
      (Court of Appeals, Second Division,
    
    
      Filed June 2, 1891.)
    
    1. Patents—Jurisdiction of state courts.
    A patentee of a corset clasp entered into an agreement with plaintiffs’ granting them a license to make and sell it, upon a royalty, she agreeing not to • license more than one other person without their consent. She issued the second license and then assigned the patent. In an action to restrain defendant from making and selling the patented article, Held, that as the validity of the patent and the license were admitted, there was practically no conflict of claim other than arose upon the construction of the license to plaintiff, and the case was properly within the jurisdietion of the state court.
    2. Same.
    Defendant in manufacturing and selling the patented article was not a wrongdoer and trespasser against the rights acquired by the plaintiffs by the license granted to them.
    
    
      Appeal from judgment entered upon order of the general term of the supreme court, in the first judicial department, reversing the interlocutory and final judgments of the special term, and dismissing the complaint.
    In January, 1879, Gurdon 0. Judson entered into an agreement under seal with three of the plaintiffs and the assignor of one of them, whereby she, as the patentee of an improvement in corset clasps, granted unto them a license to make, use and sell them for the term of the patent, and for any re-issue thereof, for a royalty fee of fifty cents per gross, they to render an account monthly, and to pay the royalty within ten days thereafter, and they agreed to make all due and diligent effort to sell and increase the sale of corsets and corset clasps containing said patent invention; to assert the validity of the letters patent at all times, and otherwise to aid Mrs. Judson by all the means in their power to prevent infringement thereof; and she agreed with all practicable speed to prosecute any infringers of the patent, and protect the privileges so granted to them, and not to license more than one other person, firm or corporation without their consent.
    About the same time the second license was granted to a company as provided by the terms of the license first mentioned. And the plaintiffs proceeded to manufacture and sell the patented article, and, so far as appears, performed the contract on their part.
    In October, 1879, Mrs. Judson assigned to the defendant all her right, title and interest in such invention secured to her by letters patent, including all royalties accrued and to accrue from the invention. And the defendant proceeded to manufacture and sell the patented article. This action was afterwards brought to restrain him from further manufacturing and selling it, and to recover damages sustained by reason of his having done so. And amongst other matters the plaintiffs alleged that the defendant, advised of the license to and contract with the plaintiff, has manufactured and sold the patented article in violation of such contract. The defendant by his answer admitted the granting of the letters patent, the license to the plaintiffs, and alleged that the cause of action involved his right to manufacture under, “ and the infringement of said patent, over which the United States courts have exclusive jurisdiction, and that this (the state) court has not jurisdiction over the subject matter thereof.”
    The trial court determined that the defendant took by the assignment to him no right to manufacture and sell the patented corset clasp; and that in manufacturing and selling it “ he was a wrong doer and trespasser upon the rights of the plaintiffs under their said contract ” with Mrs. Judson, and directed judgment for injunctive relief and for damages and a reference to ascertain them. An interlocutory judgment was entered accordingly, followed by final judgment on the coming in of the report of the referee, whereby the plaintiffs recovered $7,696.18 damages.
    
      Reginald Hart, for applts; Jacob S. Van Wyck, for resp’t.
    
      
       See 21 N. Y. State Rep., 61.
    
   Bradley, J.

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; 35 N.Y. State Rep., 114. 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 wrong doer 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; 1 N. Y. State Rep., 340. 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 construe tion 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 rights 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 he reversed, in other respects affirmed, and a new trial granted, costs to abide the event.

All concur, except Brown, J., not sitting.  