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AMERICAN SAFETY EQUIP. CORP. v. HICKOK MFG. CO.

July 11, 1967

American Safety Equipment Corp., Plaintiff
v.
Hickok Manufacturing. Co., Inc., Defendant, American Safety Equipment Corp., Plaintiff v. J. P. Maguire & Co., Inc., Defendant


Constance Baker Motley, D.J.


The opinion of the court was delivered by: MOTLEY

Opinion on Plaintiffs' Motion for Preliminary Injunction and Defendants' Motion for Stay

CONSTANCE BAKER MOTLEY, D.J.

 These are two private antitrust actions instituted by the same plaintiff, American Safety Equipment Corp. (ASE), against two different defendants. Hickok Manufacturing Corp. (Hickok) is the primary defendant. The second defendant, J. P. Maguire & Co., Inc. (Maguire), claims to be the assignee of Hickok.

 The first action was commenced on October 21, 1966, against Hickok. Jurisdiction is predicated upon the Clayton Act, §§ 4 and 12, (15 U.S.C. §§ 15 and 22) and 28 U.S.C. §§ 1331 and 2201. The claim is that a fifteen year License Agreement entered into in 1963 between ASE and Hickok, and extended in 1964 to sixteen years, violates the antitrust laws of the United States. The relief sought is judgment declaring: 1) the License Agreement illegal and void in its entirety ab initio ; and 2) that ASE has no liability to Hickok under the License Agreement, either for royalties for the period prior to the filing of the complaint or for royalties which, by the terms of the Agreement, may have accrued thereafter. ASE, according to the complaint, is a corporation duly organized and existing under New York law with its principal place of business in the Southern District of New York. ASE is engaged, inter alia, in the manufacture and distribution, in interstate and foreign commerce, of automobile safety seat belts and other safety protective devices, accessories and equipment.

 Hickok is engaged in the business, inter alia, of manufacturing automobile safety seat belts and components thereof as well as items of wearing apparel, apparel accessories, and gift sets, and in the distribution of said items in interstate and foreign commerce.

 On August 28, 1963, Hickok entered into two separate agreements with ASE. One was a Manufacturing Agreement which provided, inter alia, that Hickok would manufacture for and sell to ASE certain safety seat belts and/or pertinent parts or accessories thereof of a special type and construction for ASE's particular use. The second agreement was a License Agreement. This latter Agreement provided, in part, that Hickok would grant to ASE the exclusive right to use Hickok's trademarks and trade name in connection with the advertising, promotion, marketing and sale of safety protective devices and accessories. In return for such license, ASE agreed to pay Hickok certain royalties as set forth in the License Agreement.

 Plaintiff claims the License Agreement violates the antitrust laws for two reasons: 1) it constitutes an illegal attempt on the part of Hickok to unlawfully extend the monopoly position and privileges derived by it from its ownership of the Hickok trademark; and 2) it unreasonably restrains the interstate and foreign commerce of the United States by imposing unreasonable and illegal restrictions upon the business of plaintiff.

 The first provision of the License Agreement which ASE attacks requires it to pay royalties to Hickok upon all safety protective devices sold by plaintiff "whether or not sold under the Hickok trademark or other trademarks or without trademark".

 The next provision which ASE deems unlawful prohibits it from granting any sublicenses for the sale, within the United States, of "safety protective devices" and "accessories" when sold under the Hickok trademark. The provision further permits the granting of sublicenses with respect to the sale of products outside the United States only upon prior written approval of Hickok and then only to such persons as "shall not be a competitor of Hickok or any of its licensees with respect to any products sold or dealt with by said proposed sublicensee."

 The third provision alleged to violate the Sherman Act prohibits ASE from engaging in the business of "manufacturing, selling or dealing with any items or types of items of wearing apparel, apparel accessories and gift sets, other than sets related to transportation", even though the Hickok trademark is not utilized in connection therewith.

 The original term of the License Agreement was for 15 years beginning August 28, 1963. On April 20, 1964, the original License Agreement was amended to extend its life for one additional year.

 On November 3, 1966, plaintiff received from Maguire a Demand for Arbitration and Notice of Intention to Arbitrate issues arising under both the Manufacturing Agreement and the License Agreement between ASE and Hickok. Maguire's Notice and Demand alleged that it was the assignee of Hickok under both agreements.

 In response to Maguire's Notice and Demand, ASE on November 7, 1966, commenced the second action against Maguire. Jurisdiction was likewise predicated on the Clayton Act, the federal question and declaratory judgment provisions of the Judicial Code. The first claim is the same as that alleged in the Hickok case. As to this claim, the relief sought is a declaratory judgment that: 1) the trademark License Agreement and an amendment thereto extending the life of the Agreement from 15 to 16 years, under which Maguire claims as assignee of royalty payments, is in violation of §§ 1 and 2 of the ...


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