Petition — A. Stucki Co. v. Railroad Dynamics, Inc.

Supreme Court, U.S,

FILED

MAR 4 1977

eaiceemeorermanennoaatar tis mR.

Supreme Court of the Wnited States

October Term, 1976

No. 76-1224

A. STUCKI COMPANY, a corporation,

Plaintif f-Petitioner,

Vv.

RAILROAD DYNAMICS, INC., a corporation,

Defendant-Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Respectfully submitted,

RayMonp G. HasLey

Ninth Floor, Oliver Building

Pittsburgh, Pennsylvania 15222

Counsel for Petitioner,

A. Stucki Company

Of Counsel:

Joun H. Riorpan, Jr.

and

ROSE, SCHMIDT AND DIXON

Ninth Floor Oliver Building

Pittsburgh, Pennsylvania 15222

Financial Press Corporation, Pittsburgh

TABLE OF CONTENTS

SE MIEN vincbchubccechvcccdcscccoesécce

STATEMENT OF JURISDICTION

Se STE: svn ccincedacncasecécssececece

QUESTION PRESENTED. ........cccccccsccceecs

Se ee TEED a cn cbeccccwescnceccecesse

REASONS FOR GRANTING THE WRIT..........

I.

Il.

Review Of The Decision Below By This

Honorable Court Is Necessary Because That

Decision Conflicts With Decisions Of This Court

And With Decisions Of Other Federal Courts

Regarding Whether A Corporation Is A Resident

Of Its Entire State Of Incorporation For The

Purposes Of Section 1400(b) ................4.

Review Of The Decision Below By This

Honorable Court Is Necessary To Prevent

Conflict With The Interpretation Given By The

Federal Courts To Similar Language Appearing

In Another Federal Venue Statute .............

Ill.Review Of The Decision Below By This

Honorable Court Is Necessary To Preserve

Uniformity In The Interpretation Of Section

1400(b) And To Close The “Gaps” In Venue

Which That Decision Creates .................

IV.Review Of The Decision Below By This

Honorable Court Is Necessary Because That

Decision Improperly Prejudices The Patent

Owner In Protecting The Rights Conferred Upon

Him By Federal Legislation ..................

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ii Table of Authorities

TABLE OF AUTHORITIES

CASES

Page

Aetna Cas. & Sur. Co. v. Singer-General Precision,

Inc., 323 F. Supp. 1141 (D. Del. 1971) ........... 6

Air Factors, Inc. v. Tempmaster Corp., 363

P. Supe. 63 (BE. D. Wit. BOTS) ccc cccscccccccces 6

Baksay v. Rensellear Polytech Institute, 281

F. Supp. 1007 (S.D. N.Y. 1968)...............05- 8

Brunette Machine Works, Ltd. v. Kockum

Industries, Inc., 406 U.S. 706, 32 L.Ed.2d 428,

ae: SN bdo ne tue enecns 5, 6, 7, 10, 12, 13

Carson v. Vance Trucking Lines, Inc., 245

Pa I SP UL SE EE npn veeeancvccvceedss 8

DeGeorge v. Mandata Poultry Company, 196

Fe A See I Os EDS ccdcucacccncccccsss 8

Devex Corp. v. General Motors Corp., 263

ie Ee Rec acbececsdvnccseescs 6

Fourco Glass Company v. Transmirra Products

Corporation, 353 U.S. 222, 1 L.Ed.2d 786,

Pe Te in hé6.c6 ccs ecaaccseeda 5, 6, 7, 9, 10

Hydro-Clear Corporation v. Aer-O-Flo

Corporation, 317 F. Supp. 1317

SD Es cndetedndsuricts 00-009 004 6, 9, 11

Johnstone v. York County Gas Company, 193

fs & Ff 6 | rrr TTT rr Tre 8

Junior Spice, Inc. v. Turbotville Dress, Inc.,

339 F. Supp. 1189 (E.D. Pa. 1972) ............. “ ©

Minter v. Fowler & Williams, Inc., 194

Pe UN. Gil Gn WO, Bec ccc ccscvccceccces 8

Pure Oil Co. v. Suarez, 384 U.S. 202, 16 L.Ed.2d 474,

Sn os ve oak cdeeeaeeueueenues's i)

Table of Authorities ili

Page

Richards v. Upjohn Company, 406 F. Supp.

ee cb ikcviendcccconccccccocves 8

Shelter-Lite, Inc. v. Reeves Brothers, Inc.,

356 F. Supp. 189 (N.D. Ohio 1973) ........... mie ae

Sterling Manufacturing Co. v. Radio Shack,

364 F. Supp. 1068 (N.D. Ohio 1973) ............. 6

Stonite Products Company v. Melvin Lloyd

Company, 315 U.S. 561, 86 L.Ed 1026,

Se CN cna a caeWiln bones senedes ves Yy

STATUTES

Title 28, United States Code

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PUIG Cub igs pedetaen bend ised ekacneeweessns 2

DE cobdls cecavcévetneeseeeneveovkecetuncevas 2

DE dbs tcenekes abe teuntan 4 2, 4, 7, 8, 9, 10, 14

DET Ucigcas Kcaknetedesaes soubesncntadeess 10

SU AEGS. bn 6ub66600k 000606045. d0s eR vOeeNNeS i)

CS nce Chek eens dseneeesees beau wens passim

Title 35, United States Code

UNS 6 he'nbons-c eu hus t0K05sbeeenedhens seutes 2

ME EP ebb eeu cnncdnndcaeeds cencsanvasbuscices 4

Federal Rules of Civil Procedure, Fiule 12(b)(3) ...... 3

MISCELLANEOUS

SET Pi 0 QR ais 6a cb biccccccsévctescunsss 14

. oe rr ae end

Opintons Below, Statement of Juriediction of 1

this Court and Question Presented

The Petitioner, A. Stucki Company, respectfully prays

that a Writ of Certiorari issue to review the Judgment Order _

of the United States Court of Appeals for the Third Circuit

entered in this case on December 7, 1976.

OPINIONS BELOW

The Judgment Order of the United States Court of

Appeals for the Third Circuit, filed on December 7, 1976 and

unreported, is reprinted in the Appendix hereto at la.

The Memorandum opinion and Order of Court of the

United States District Court for the Western District of

Pennsylvania, filed February 19, 1976 and unreported is

reprinted in the Appendix hereto beginning at 2a.

STATEMENT OF JURISDICTION OF THIS COURT

The Judgment Order of the United States Court of

Appeals for the Third Circuit which Petitioner requests this

Court review was entered on December 7, 1976. No Petition

for Rehearing of that Judgment Order was filed. The

jurisdiction of this Court to review the aforesaid Judgment

Order by Writ of Certiorari is invoked under 28 U.S.C.

§1254(1).

QUESTION PRESENTED

For the purpose of determining venue in a patent

infringement action in accordance with 28 U.S.C. §1400(b),

does a defendant corporation “reside” in all of the federal

judicial districts of the state of its incorporation?

Specifically, does a Pennsylvania corporation having its

corporate offices in the Eastern District of Pennsylvania

reside, under 28 U.S.C. §1400(b), in the Western District of

Pennsylvania when such corporation is committing acts of

infringement in the Western District of Pennsylvania?

2 Statutes Involved &

Statement of the Case

STATUTES INVOLVED

28 U.S.C. §1391(c):

A corporation may be sued in any judicial district in

which it is incorporated or licensed to do business or is

doing business, and such judicial district shall be

regarded as the residence of such corporation for venue

purposes.

28 U.S.C. §1400(b):

Any civil action for patent infringement may be

brought in the judicial district where the defendant

resides, or where the defendant has committed acts of

infringement and has a regular and established place of

business.

STATEMENT OF THE CASE

This is an action for injunctive and monetary relief

under the patent laws of the United States, 35 U.S.C. §1 et -

seq, for infringement of a patent owned by Petitioner herein

(plaintiff below). Jurisdiction of the District Court was

invoked under Sections 1331, 1332 and 1338 of Title 28 of the

United States Code.

Petitioner is a Pennsylvania corporation with its

principal place of business in Allegheny County, Penn-

sylvania, within the Western Judicial District of Penn-

syviania, and is the owner of United States Letters Patent

No. 3,837,292 granted September 24, 1974, for a device

indentified in the patent and railroad inudstry as a

“Hydraulic Truck Snubber”. .; non-technical terms,

Petitioner's patent relates to a hyiraulic-mechanical device

for use on railroad freight cars. On the typical freight car, a

“Hydraulic Truck Snubber” is installed in each spring group

on the four corners of the freight car in the truck assemblies

to minimize the effect of excessive rocking or lateral

Statement of the Case 3

instability of a traveling freight car. Petitioner sells its

hydraulic snubbers to railroad car builders who utilize the

device in manufacturing new freight cars.

Respondent is also a Pennsylvania corporation, and has

its principal place of business in the Eastern Judicial District

of Pennsylvania. Respondent cOnducts business within the

Western District from its office in the Eastern District. Since

approximately 1973, Respondent has manufactured and sold

a competing hydraulic snubber device which it has

identified as the “D-5 Snubber”. Although, to Petitioner's

knowledge, Respondent has no regular and established

place of business within the Western Judicial District of

Pennsylvania, it is doing business in that District and has sold

or agreed to sell to at least two railroad car builders a

minimum of 16,500 of its infringing D-5 Snubbers. Sales of

the D-5 Snubbers by Respondent to Bethlehem Steel

Corporation (“Bethlehem”) and Pullman-Standard Division

of Pullman, Inc., both located in the Western District, have

been in the sum of at least $1,640,000. Respondent, as part of

its contracts of sale with the aforesaid car builders, has

assumed liability and costs for patent infringement suits

against these car builders.

Petitioner filed this patent infringement action in the

United States District Court for the Western District of

Pennsylvania on April 21, 1975. On May 9, 1975 Respondent

filed a motion to dismiss this case under F.R.Civ.P. 12(b)(3)

for improper venue on the grounds that it did not “reside” in

the Western Judicial District of Pennsylvania and, as it had

no regular and established place of business in that District

— although admittedly conducting business there from its

office in the eastern part of the state — venue was improper

under 28 U.S.C. §1400(b). The District Court granted

Respondent's motion by its Order dated February 19, 1976.

In its Memorandum opinion issued the same day, the

District Court explained its decision. The Court stated at 3a:

4 | Statement of the Case

“With regard to the first test [the first of the two

alternative bases for venue under Section 1400(b)]

plaintiff contends that venue is proper because

defendant resides in this judicial district. The fun-

damental flaw in this contention is that it presupposes

that the residence of a corporation, in the context of

§1400(b), is its state of incorporation. Thus, the

argument extends that defendant resides in all three of

Pennsylvania's federal judicial districts. The Court does

not agree.” (Emphasis additional)

The Court refused to consider cases cited by Petitioner

construing similar language appearing in 28 U.S.C. §1391(c)

which held that for purposes of that Section a corporation is

considered to reside in all judicial districts of its state of

incorporation. ,

On February 24, 1978, Petitioner filed its Notice of

Appeal from the final Order of the District Court to the

United States Court of Appeals for the Third Circuit. The

Third Circuit aftirmed the District Court by a Judgment

Order dated December 7, 1976. Prior to the District Court's

dismissal of this case on February 19, 1976, no suits had been

commenced by Petitioner against Respondent's customers,

even though Petitioner had a right to do so. After this case

was dismissed by the District Court, however, Petitioner

promptly instituted an infringement action against

Bethlehem in the Western District of Pennsylvania at Civil

Action No. 76-247. Bethlehem was one of the customers of

Respondent who was incorporating infringing D-5 Snubbers

in the construction of new freight cars and was a direct

infringer within the jurisdiction of 35 U.S.C. §271(a).

On March 17, 1976, after Petitioner had commenced its

infringement action against Bethlehem, Respondent com-

menced an action for a declaratory judgment against

Petitioner in the United States District Court for the Eastern

Reasons for Granting the Writ 5

District of Pennsylvania. Respondent’s Complaint, inter alia,

sought an Order that Petitioner’s patent was invalid and that

the patent was not infringed by Respondent's D-5 Snubber.

On May 7, 1976, at the motion of Bethlehem, the District

Court in the Western District of Pennsylvania stayed

proceedings in Civil Action No. 76-247 until entry of final

judgments in this action and in Respondent's later filed

declaratory judgment action in the Eastern District of

Pennsylvania.

REASONS FOR GRANTING THE WRIT

I. REVIEW OF THE DECISION BELOW BY THIS

HONORABLE COURT IS NECESSARY BECAUSE

THAT DECISION CONFLICTS WITH DECI-

SIONS OF THIS COURT AND WITH DECISIONS

OF OTHER FEDERAL COURTS REGARDING

WHETHER A CORPORATION IS A RESIDENT

OF ITS ENTIRE STATE OF INCORPORATION

FOR PURPOSES OF SECTION 1400(b).

The specific conflict between the Lower Court's!

decision and prior opinions of this Court results from the

Lower Court’s determination of where a corporation

“resides” for the purposes of Section 1400(b). This Court has

stated that a corporate infringer “resides” in its state of

incorporation for the purposes of Section 1400(b). Fourco

Glass Company v. Transmirra Products Corporation, 353

U.S. 222, 1 L.Ed.2d 786, 77 S.Ct. 787 (1957); Brunette

Machine Works, Ltd. v. Kockum Industries, Inc., 406 U.S.

\In affirming the District Court, the Court of Appeals did not issue an

opinion explaining the basis for its action. Petitioner has assumed herein

that the Court of Appeals based its affirmance on the District Court's

Memorandum opinion; hence, Petitioner will treat the District Court's

decision and Memorandum opinion as if it had been adopted by the Court

of Appeals, and will refer to the District Court and the Court of Appeals

collectively as the “Lower Court” or the “Court below”.

6 Reasons for Granting the Writ

706, 32 L.Ed.2d 428, 92 S.Ct. 1936 (1972). Likewise, there are

so many decisions from other federal courts holding that the

residence of a corporate defendant is its state of incorpora-

tion for the purposes of determining venue in patent

infringement actions that the point may almost be said to be —

beyond dispute. See, for example, Air Factors, Inc. v.

Tempmaster Corp., 363 F. Supp. 93 (E.D. Wis. 1973);

Sterling Manufacturing Co. v. Radio Shack, 364 F. Supp.

1068 (N.D. Ohio 1973); Aetna Cas. & Sur. Co. v. Singer-

General Precision, Inc., 323 F. Supp. 1141 (D. Del. 1971);

Devex Corp. v. General Motors Corp., 263 F. Supp. 17 (D.

Del. 1967).

Despite this clear authority to the contrary, the Court

below nonetheless ruled that the residence of a corporate

defendant is something less than the entire state of its

incorporation.? The Court stated in its Memorandum

opinion at 3a:

“With regard to the first test [the first of the two

alternative bases for venue under Section 1400(b)]

plaintiff contends that venue is proper because

defendant resides in this judicial district. The fun-

damental flaw in this contention is that it presupposes

that the residence of a corporation, in the context of

§1400(b), is its state of incorporation. Thus, the

argument extends that defendant resides in all three of

Pennsylvania's federal judicial districts. The Court does

not agree.” (Emphasis additional)

The above-quoted language represents a distinct con-

flict with the prior statements of this Court in Fourco Glass

*The same error was made by the Court in Hydro-Clear Corporation

v. Aer-O-Flo Corporation, 317 F. Supp. 1317 (N.D. Ohio 1970), a case

relied upon by the District Court, where the Court held that an alleged

corporate infringer is a resident of the district in which it has its principal

office as designated in its articles of incorporation.

Reasons for Granting the Writ 7

Company and Brunette Machine Works, Ltd., supra. In

Fourco Glass Company, this Court, in considering the

Revisers’ Notes for the 1948 amendments to Section 1400(b).

stated at 353 U.S. 296:

“(W]e pause here to observe that this treatment, and the

expressed reason for it, seems to negative any intention

to make corporations suable, in patent infringement

cases, where they are merely ‘doing business’ because

those synonymous words [“inhabitant” and “resident” ]

mean domicile, and, in respect of corporations, mean

the state of incorporation only.” (citation omitted)

(emphasis additional)

Likewise, in Brunette Machine Works, Ltd., this Court stated

at 406 U.S. 707, n. 2: :

“Petitioner does not ‘reside’ in Oregon, because the

residence of a corporation for purposes of §1400(b) is its

place of incorporation”. (citation omitted)

Il. REVIEW OF THE DECISION BELOW BY THIS

HONORABLE COURT IS NECESSARY TO PRE-

VENT CONFLICT WITH THE INTERPRETA-

TION GIVEN BY THE FEDERAL COURTS TO

SIMILAR LANGUAGE APPEARING IN AN-

OTHER FEDERAL VENUE STATUTE.

The question of whether a corporate defendant

“resides” in each and every judicial district of its state of

incorporation for the purposes of venue under Section

1400(b) is an issue critical to the proper implementation of

the policies underlying federal patent legislation. This

question is apparently a matter of first impression in this

Court and in the federal appellate courts, as Petitioner is

unable to find a reported decision considering this problem.

Since there is an absence of controlling authority on point,

Petitioner submits that the Lower Court herein should have

relied upon decisions of other federal courts interpreting

similar language appearing in 28 U.S.C. §1391(c), the

~ Reasons for Granting the Writ

general federal venue provision, in construing Section

1400(b). The Lower Court refused to do this, with the result

that its decision creates needless conflict with those cases

interpreting similar language in Section 1391(c).

Section 1391(c) provides, in relevant part, that “a

corporation may be sued in any judicial district in which it is

incorporated”. Section 1400(b) provides that a patent

infringer may be sued in the “judicial district where the

defendant resides”. Given this similarity of language, and in

the absence of clear Congressional intent to the contrary,

Petitioner submits that the Lower Court, in the absence of

any appellate authority, should have turned to decisions of

other federal courts which considered whether a corpora-

tion resides in every judicial district of the state of its

incorporation or in only a particular judicial district of that

state.

The sizeable majority of decisions construing Section

1391(c) have concluded that a corporation resides in every

judicial district of its state of incorporation so that venue is

proper over a corporate defendant in any federal judicial

district. Johnstone v. York County Gas Company, 193 F.

Supp. 709 (E.D. Pa. 1961); Minter v. Fowler & Williams,

Inc., 194 F. Supp. 660 (E.D. Pa. 1961); DeGeorge v. Mandata

Poultry Company, 196 F. Supp. 192 (E.D. Pa. 1961); Junior

Spice, Inc. v. Turbotville Dress, Inc., 339 F. Supp. 1189 (E.D.

Pa. 1972); Carson v. Vance Trucking Lines, Inc., 245 F.

Supp. 13 (W.D. S.C. 1965); Baksay v. Rensellear Polytech

Institute, 281 F. Supp. 1007 (S.D. N.Y. 1968). Cf. Richards v.

Upjohn Company, 406 F. Supp. 405 (E.D. Mich. 1976).°

Had the Court below adopted the holdings of the above

cases construing Section 1391(c) and applied those holdings

3Those few cases which suggest a contrary interpretation are easily

distinguishable, since they confuse the independent “state of incorpora-

tion” and “doing business” bases for venue under Section 1391(c) and

effectively read the former ground out of the statute.

Fee

Reasons for Granting the Writ i)

to Section 1400(b), a just and fair result would have been

obtained as well as a harmonious interpretation of similar

language in two federal venue statutes. However, the Lower

Court summarily declined to consider the cases construing

Section 1391(c), stating that it was prevented from doing so

by the decisions of this Court in Stonite Products Company

v. Melvin Lloyd Company, 315 U.S. 561, 86 L.Ed 1026, 62

S.Ct. 780 (1942) and Fourco Glass Company v. Transmirra

Products Corporation, supra.‘

However, neither Stonite Products Company nor

Fourco Glass Company preclude resort to the cases decided

under Section 1391(c). In Stonite Products Company, the

Supreme Court rejected the argument that the predecessor:

of what is now 28 U.S.C. $1392 applied to a suit for patent

infringement, rather than the predecessor of Section

1400(b). Here, however, Petitioner acknowledges that the

venue issue is controlled by Section 1400(b) and not Section

1391(c), but submits that in the case of a corporation the

language of 1400(b) “where a defendant resides” should be

construed consistently with Section 1391(c).

Likewise, this Court’s decision in Fourco Glass Com-

pany is inapposite here.® In the instant case, Petitioner does

not claim that venue is proper over Respondent in the

Western District of Pennsylvania merely because Respon-

dent is doing business in that District. Rather, Petitioner

asserts that venue is proper in the Western District of

Pennsylvania because Respondent is a Pennsylvania cor-

poration and thus is present in all parts of the state and not

‘The Court also relied upon Hydro-Clear Corporation v. Aer-O-Flo

Corporation, supra. That case, as discussed supra at n. 2, is inapposite

here.

See this Court's decision in Pure Oil Co. v. Suarez, 384 U.S. 202, 16

L..Ed.2d 474, 86 S.Ct. 1394 (1966), limiting Fourco Glass Company to the

particular question of statutory construction presented there.

10 Reasons for Granting the Writ

merely in one, and only one, specific place. The question of

whether a corporation is deemed to reside in each district of

its multi-district state of incorporation was not considered

by the Court in Fourco Glass Company because the

defendant there was not a resident of the state where the

infringemem suit was brought.

By refusing to consider decisions of other federal courts

construing Section 1391(c), the Court below has dictated a

needless conflict in interpretations of these two federal

venue statutes while apparently ignoring that this Court has

recently indicated that mechanical invocation of the

exclusivity of Section 1400(b) in patent infringement actions

is not proper in the face of sound legal reasoning, precedent

and common sense. In Brunette Machine Works, Ltd. v.

Kockum Industries, Inc., supra, this Court reviewed the

origin and purpose of 28 U.S.C. §1391(d) and held that that

statute, rather than Section 1400(b), was the controlling

venue provision in a suit against an alien defendant—even a

suit for patent infringement. See also Shelter-Lite, Inc. v.

Reeves Brothers, Inc., 356 F. Supp. 189 (N.D. Ohio 1973).

The holding adopted by the Lower Court results in the

illogical and unnecessary consequence that a corporate

defendant under Section 1391(c) may be sued in every

judicial district of its state of incorporation, while a

corporate defendant under Section 1400(b) may be sued

only in that one district of the defendant's state of

incorporation where it has its main office, even though the

alleged corporate infringer is authorized to do business

throughout the state, is in fact doing business throughout the

state, and is committing acts of infringement in the district in

which suit is brought. Surely the Congress or this Court

could not have intended to bestow such special protection

upon infringers.

Reasons for Granting the Writ ll

Ill. REVIEW OF THE DECISION BELOW BY THIS

HONORABLE COURT IS NECESSARY TO

PRESERVE UNIFORMITY IN THE INTER-

PRETATION OF SECTION 1400(b) AND TO

CLOSE THE “GAPS” IN VENUE WHICH THAT

DECISION CREATES.

While the Lower Court held that the residence of a

corporation is something less than the entire state of its

incorporation for purposes of Section 1400(b), that Court

did not state exactly where it believed a corporation does

reside for the purpose of determining venue in a patent

infringement suit. The Lower Court’s Memorandum opinion

permits the interpretation that a corporation “resides” inany |

of the following districts: (a) the district in which it has its

principal place of business, whether or not this district is

located in the state of incorporation;® (b) the district or

districts in the state of incorporation in which the defendant

has an established place of business, whether or not

defendant's principal place of business is located within that

state; (c) the district in which the acts giving rise to the legal

birth of the corporate existence occur, i.e., the State Capitol

(in the case of Pennsylvania, this would be Harrisburg,

which is located in the Middle Judicial District); and/or (d)

the district in the state of incorporation in which the

defendant has its principal offices as designated in its articles

of incorporation (this was the holding in Hydro-Clear

Corporation v. Aer-O-Flo Corporation, 317 F. Supp. 1317

(N.D. Ohio 1970) ).

Approximately 24 states of the United States encompass

two or more federal judicial districts. The possibility for

*Respondent in its Brief in the Court of Appeals advanced the position

that a corporation resides in that district in its state of incorporation where

its principal place of business is located.

12 Reasons for Granting the Writ

conflict among the federal courts of these districts over the

proper construction of Section 1400(b) is apparent.

In addition to the potential for disharmony among the

federal courts, the Lower Court’s decision may create “gaps”

in venue under Section 1400(b). For example, assume that a

federal court decides that a corporation resides only in that

judicial district in its state of incorporation where its

principal place of business is located, but in the case before it

the alleged infringer’s principal place of business is located

outside its state of incorporation. Would suit be proper in

any district of the state of incorporation under such

circumstances, or would the “residence” basis for venue

under Section 1400(b) be foreclosed completely? If no

district existed in which the infringer maintained a regular

and established place of business and was committing acts of

infringement (as is the case herein), no district would exist in

which venue was proper.

This Court has stated that in construing venue statutes it

is reasonable to prefer the construction that avoids leaving a

gap. Brunette Machine Works, Ltd. v. Kockum Industries,

Inc., supra, n. 8. Contrary to this admonition, the Court

below adopted an interpretation of Section 1400(b) which is

rife with potential for conflict among the federal courts and

may result in creating gaps in venue in patent infringement

actions. For these reasons, this Court should review the

decision of the Lower Court.

Reasons for Granting the Writ 13

IV. REVIEW OF THE DECISION BELOW BY THIS

HONORABLE COURT IS NECESSARY BECAUSE

THAT DECISION IMPROPERLY PREJUDICES

THE PATENT OWNER IN PROTECTING THE

RIGHTS CONFERRED UPON HIM BY FEDERAL

LEGISLATION.

This Court has recognized that changes in the general

venue law since 1948 have left the patent venue statute far

behind, in the sense that it is now more restrictive than the

other venue statutes. See Brunette Machine Works, Ltd. v.

Kockum Industries, Inc., supra, n. 13. The Lower Court's

decision increases this disparity and provides a windfall

advantage to the corporate infringer. This disparity is -

evident in the context of the present suit. Here, even though

Petitioner does not maintain a place of business in eastern

Pennsylvania, Respondent has commenced a declaratory

judgment action in that Judicial District to have Petitioner's

patent declared invalid! There is no sound basis in law or

logic for the Lower Court's ruling that venue is proper over

Respondent herein only in the Eastern District of Penn-

sylvania. Respondent is doing business in the Western

District of Pennsylvania, its customers who are using the

infringing device are located in the Western District, the

inventor resides in the Western District and Petitioner's

principal place of business, including its manufacturing

facilities and the specialized machinery necessary to

perform tests on the accused device, are located in the

Western District. No sound reason exists to require

Petitioner to bring suit in a district which is not only

extremely inconvenient for Petitioner but which has little, if

any, relationship to the acts of infringement or the

convenience of the potential witnesses. Petitioner submits

that Section 1400(b) should be construed in a manner which

would facilitate, rather than hinder, the protection of rights

14 Reasons for Granting the Writ

conferred upon a patent owner by Congress through the

federal patent laws.

A disparity already exists under Section 1400(b) in favor

of the infringer insofar as the infringer’s declaratory

judgment action against the patent owner is governed by

Section 1391(c), a more liberal venue provision, while the

infringement action is controlled by the more restrictive

Section 1400(b). The Lower Court’s decision grants a

corporate infringer an even greater unfair advantage over

the patent owner.

The prejudice caused patent holders by the overly

restrictive imterpretation placed on Section 1400(b) has

caused concern among lawyers generally and the patent bar

in particular. Recently, the American Bar Association, at its

Mid-Year Meeting, adopted a resolution favoring an

amendment to Section 1400(b) which would provide that a

corporate infringer could be sued in any district in which it is

licensed to do business or is doing business, as well as in that

district in which it is incorporated.’ While the proposed

amendment to Section 1400(b) still would not resolve the

question of whether a defendant is amenable to suit in any of

the districts of its state of incorporation, the resolution does

indicate a growing dissatisfaction with the restrictive

application of the patent venue statute.

7As reported in 317 P.T.C.J. A-2 (2/24/77), the text of the resolution

reads:

“BE IT RESOLVED, That the American Bar Association

Pe meses dor som Laven a of ee Se Se eae

to as follows: ‘Any civil action for patent infringement may

be brought in the judicial district where the defendant resides, or

where the defendant has committed acts of infringement and has a

regular and established place of business. The judicial district in

which a corporation is incorporated or licensed to do business or is

doing business shall be regarded as the residence of such corporation

for the purposes of this section.’”

Conclusion 15

The decision below adds to the confusion surrounding

Section 1400(b) and will aggravate the unfairness to patent

owners which currently exists and which the American Bar

Association has condemned. The decision of the Lower

Court is not only inconsistent with the policies of the federal

patent laws and with decisions of other federal courts and

prejudicial to the rights of patent holders, but results in a

waste of judicial resources and increased expense to the

parties.

CONCLUSION

For these reasons, a Writ of Certiorari should issue to

review the Judgment Order of the Third Circuit.

Respectfully submitted,

RayMonp G. HAsLey

Ninth Floor, Oliver Building

Pittsburgh, Pennsylvania 15222

Counsel for Petitioner,

A. Stucki Company

Of Counsel:

Joun H. Riorpan, Jr.

and

ROSE, SCHMIDT AND DIXON

Ninth Floor, Oliver Building

Pittsburgh, Pennsylvania 15222

Appendix la

United States Court of Appeals

For The Third Circuit

No. 76-1414

A. STUCKI COMPANY, a corporation,

“ Appellant

RAILROAD DYNAMICS, INC., a corporation

D.C. Civil No. 75-482

APPEAL From THE UNrrep States District Court

For THe WestTeRN District Or PENNSYLVANIA

Submitted Under Rule 12(6) November 29, 1976 Before

ROSENN, KALODNER, and GARTH, Circuit Judges

JUDGMENT ORDER

(filed December 7, 1976)

After consideration of all contentions raised by

appellant, it is

Apyupcep and Orpenep that the judgment of the district

court be and is hereby affirmed.

Costs taxed against appellant.

By the Court,

/s/ Max RoseENN

Attest:

Dated: December 7, 1976 Chief Deputy Clerk

2a Memorandum

In the United States District Court

For the Western District of Pennsylvania

A. STUCKI COMPANY, 4

a corporation,

Plaintiff

Civil Action

v. 75-482

RAILROAD DYNAMICS, INC.,

a corporation,

Defendant :

MEMORANDUM

(filed February 19, 1976 in the District Court.)

This patent infringement suit is again before the Court

on defendant’s motion to dismiss for improper venue

pursuant to Fed. R. Civ. P. 12(b)(3). Earlier we deferred

ruling on the motion and permitted plaintiff to seek

discovery pertinent to the venue question. That having been

done the Court finds that plaintiff is incorporated under the

laws of Pennsylvania with its principal office in Pittsburgh.

The defendant is also a Pennsylvania corporation with its

principal place of business in Newton Square which is not

located within this judicial district. The record reflects that

defendant may be committing the alleged acts of infringe-

ment within the Western District of Pennsylvania! however

it is undisputed that defendant has no place of business

within this judicial district.

The sole question presented is whether venue properly

lies within this judicial district. Since we conclude that it does

not the defendant’s motion will be granted and the action

dismissed. See 28 U.S.C. §1406(a).?

'See Gallagher and Youngdahl affidavits submitted by stipulation.

*At oral argument counsel for plaintiff specifically requested

dismissal in the event of an unfavorable decision.

Memorandum 3a

Venue, for purposes of patent infringement suits, is to

be exclusively governed by 28 U.S.C. §1400(b). Fourco

Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).

The statute provides:

Any civil action for patent infringement may be

brought in the judicial district where the defendant

resides, or where the defendant has committed acts of

infringement and has a regular and established place of

business. (Emphasis added.)

Since §1400(b) reads in the disjunctive plaintiff need only

meet either of the above requirements to lay proper venue.

The discovery engaged by plaintiff, while showing that

defendant sells the alleged infringing device to customers —

located in this judicial district, does not reveal that defendant

“... has a regular and established place of business” in this

district. Accordingly venue cannot be properly based on that

provision of the statute.

With regard to the first test plaintiff contends that venue

is proper because defendant resides in this judicial district.

The fundamental flaw in this contention is that it presup-

poses that the residence of a corporation, in the context of

§1400(b), is its state of incorporation. Thus, the argument

extends that defendant resides in all three of Pennsylvania's

federal judicial districts. The Court does not agree.

Plaintiff has cited no meaningful authority for the

underlying premise of its position. All the cases we are

directed to which support the thesis that the state of

incorporation controls, for venue purposes, the definition of

residence deal with 28 U.S.C. §1391(c), the general venue

statute. Because §1391(c) is not applicable to the case at bar, .

see Fourco Glass Co. v. Transmirra Products Corp., supra,

we shall disregard those authorities.

We believe plaintiff's argument to be subsumed and

rejected by Stonite Products Co. v. Melvin Lloyd Co., 315

4a Memorandum

U.S. 561 (1942). This is a patent infringement case whereby

Stonite, an “inhabitant” of the Eastern District of Penn-

sylvania, was sued in the Western District of this state.

Stonite was without a regular place of business in the forum

district. After deciding that the patent venue statute, then

§48 of the Judicial Code, 28 U.S.C. §109, was to exclusively

govern the propriety of where suit could be brought, the

Supreme Court, in reversing the Third Circuit Court of

Appeals, held that venue was not proper in the Western

District of Pennsylvania. In rejecting the respondent's

argument that §48 should be supplemented by another

venue statute the Court necessarily read §48 [now §1400(b) |

restrictively. That is, Stonite was considered to be solely an

inhabitant (or resident) of the Eastern District of Penn-

sylvania—not the entire state—for venue purposes. See

Hydro-Clear Corp. v. Aer-O-Flo Corp., 317 F. Supp. 1317

(N.D. Ohio 1970).

We of course realize that §1400(b)’s predecessor, §48, is

not the exact statute which controls the issue sub judice,

however we are convinced that the patent venue statute, in

being revised and recodified in 1948, did not undergo any

substantive change. See generally, Fourco Glass, supra, at

pp. 224-28.

We must therefore conclude that the defendant, having

its residence only in the Eastern District of Pennsylvania, and

not having a regular and established place of business in the

Western District of Pennsylvania, cannot be sued in this

forum under §1400(b).

Likewise, we believe plaintiff's additional argument

that the “save harmless” clause found in defendant's

purchase orders constitutes an implied waiver of venue to be

without merit. See Sterling Manufacturing Co. v. Radio

Shack, 364 F. Supp. 1068 (N.D. Ohio 1973).

An appropriate order shall be issued.

Order of Court 5a

In the United States District Court

For the Western District of Pennsylvania

A. STUCKI COMPANY, 7

a corporation,

Plaintiff

Civil Action

No. 75-482

Vv.

RAILROAD DYNAMICS, INC.,

a corporation,

Defendant ,

ORDER OF COURT

(filed February 19, 1976 in the District Court.)

Anp Now, to-wit, this 19 day of February, 1976, it is

hereby OnpereD, pursuant to 28 U.S.C. §1406(a), that the

above-captioned case be dismissed.

/s/ JOHN L. MILLER,

United States District Judge.

cc: Raymond G. Hasley, Esq.,

Rose, Schmidt and Dixon,

919 Oliver Building,

' Pittsburgh, Pennsylvania 15222.

Michael W. Cook, Esq.,

Metz, Cook, Hanna & Kelly,

3600 Grant Building,

Pittsburgh, Pennsylvania 15219.

Louis V. Schiavo, Esq.,

1644 Fidelity Building,

123 South Broad Street,

Philadelphia, Pennsylvania 19109.