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INDIVIDUAL DRINKING CUP CO. v. LILY-TULIP CUP CORP

June 15, 1936

INDIVIDUAL DRINKING CUP CO., Inc.,
v.
LILY-TULIP CUP CORPORATION



The opinion of the court was delivered by: BYERS

BYERS, District Judge.

This is a hearing on a petition for leave to file an original bill of complaint in the nature of a supplemental bill. The petition is by the corporate successor to the plaintiff above-named, into which the latter was merged since issue was joined. The successor corporation was organized under the laws of Delaware, as was the defendant, while the original plaintiff was a corporation of Pennsylvania.

The cause of action as embodied in the original bill was for patent infringement, trade-mark and copyright infringement and unfair competition.

 The proposed original bill alleges ownership on the part of the original plaintiff of the said patents, trade-marks and copyrights and of the business in the manufacture and sale of paper cups against which the alleged unfair competition was said to have been levied, and of all rights to recover for said infringements and rights of action to recover for the alleged unfair competition; the merger of the original plaintiff into the Dixie-Vortex Company, the successor corporation; and the merger of all the property and business of the old corporation into that of the new; and specifically that the enumerated items are and since April 1, 1936, have been the exclusive property of the latter; that, in furtherance of the merger, written assignments of the several patents and trade-mark and copyright registrations have been executed and delivered by the old corporation to the new, together with the rights of action to recover for infringements.

 The prayer is that the causes of action and infringements originally charged shall be taken as charged against the defendant in this bill; that the answer heretofore filed shall stand as the answer thereto; that the counterclaim therein contained stand, and that the new corporation be substituted as defendant thereto, and that the answer to that counterclaim by the old corporation stand as the answer thereto of the new; and that the new company be granted the relief sought in the first bill.

 The answer to the bill was filed July 3, 1935, and the answer to the counterclaim therein pleaded was filed July 12, 1935.

 The motion is not opposed as to patents which have not expired; it is opposed as to one patent which expired February 19, 1935, four months after the first bill was filed on October 16, 1934; and as to the alleged unfair competition on the part of the defendant.

 The opposition is that, as to the expired patent, the bill sought to be filed should not be accepted, and that, as to the alleged unfair competition, the court is without jurisdiction since diversity no longer exists.

 The controversy will be clarified by an understanding of the status of the parties which results from the circumstances which have been related. If the property rights asserted in the bill filed October 16, 1934, were not susceptible of alienation by the original plaintiff to the petitioner so as to permit of a present assertion of those rights by it, manifestly the opposition to the petition is sound.

 As to the patent which expired after the filing of the original bill, and prior to the assignment, it is thought that the nature and extent of the property rights of the former owner of the patent were of such a nature that they could be the subject of a complete and effectual assignment to this petitioner, and that this pending cause may be continued by it. Ross v. City of Ft. Wayne (C.C.A.) 63 F. 466; Jackson v. Friestedt Interlocking Channel Bar Co. (C.C.) 159 F. 496.

 The distinction between the former case and this, which the defendant urges, namely, that prior to the assignment, the assignee had an equitable interest in the patent which is not the fact here, has been considered. It seems that the decision was not limited to that narrow ground, see 63 F. 466, at page 472 of the opinion. On rehearing, the subject was referred to as to its bearing only upon the common law doctrine of maintenance.

 The question concerning unfair competition as asserted, is more difficult of determination.

 There seem to be no decisions in this circuit touching the effect upon the jurisdiction of the court, of an assignment by a complainant in equity of a pending cause of action to a resident of the same state as that of the defendant.

 The issue has given rise to conflicting decisions elsewhere, and the difficulty seems to have arisen in the development of procedure in Chancery as can be seen from the presentation of the subject of Abatement in Daniels Chancery Pleading & Practice. He discusses the subject of the transmission of the interest in a suit by either party after the commencement of a cause, and the necessity for the presence of the transferee before the court, prior to the statutory regulation by Parliament in the ...


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