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STALEY ELEVATOR CO. v. OTIS ELEVATOR CO.

October 31, 1940

STALEY ELEVATOR CO., Inc.,
v.
OTIS ELEVATOR CO.



The opinion of the court was delivered by: WALKER

Staley Elevator Company, Inc. (hereinafter referred to as "Staley"), filed its complaint herein against Otis Elevator Company (hereinafter referred to as "Otis"), and invokes the jurisdiction of this court under and by virtue of the Declaratory Judgment Act (Section 274d of the Judicial Code, 28 U.S.C.A. § 400), the Patent Laws of the United States and the diversity of citizenship of the parties.

Staley, it appears, manufactured, serviced and repaired a type of automatic push button elevator employing "selective, collective" control and is now manufacturing, servicing and repairing a type of automatic push button elevator which it identifies as "single interceptive".

 Otis is the assignee and present owner of United States Letters Patent No. 1,694,823 (D.C. Larson for "Collective" system of automatic electric elevator control); No. 1,904,647 (D. L. Lindquist, et al. for "Selective, collective" system of automatic electric elevator control) and Re-Issue Patent No. 16,297 (Parker for control of electric elevators).

 Staley, in its complaint, alleges that Otis charges it with infringing the patent rights it acquired by reason of the aforesaid, that it and those who use its elevators are threatened with suit because of said alleged infringement, when, in fact, the "single interceptive" system used by it does not infringe Letters Patent No. 1,694,823, No. 1,904,647 and Re-Issue No. 16,297; that said letters and re-issue letters patent do not amount to invention and are invalid and void because the claims in each of them do not particularly point out or distinctly claim the alleged improvement or combination sought thereby to be covered, as prescribed by Section 4888 of the Revised Statutes (35 U.S.C. Section 33, 35 U.S.C.A. § 33), further, Letters Patent No. 1,904,647 are invalid and void by reason of unreasonable neglect and delay in entering a disclaimer with respect to claims, 6, 9, 14 and 76 thereof and the failure of Otis to file suit on Letters Patent No. 1,694,823 prevents it from asserting same against Staley's "single interceptive" automatic electric elevator control system.

 Therefore, its rights and the questions aforesaid should be determined by a declaratory judgment and protected by a permanent injunction.

 This is not the first time certain of the aforesaid matters have been litigated, in fact, the litigation between the parties has been extensive and the review hereinafter set forth, is necessary, in order to rule upon the motion of Otis to dismiss said complaint. The grounds of said motion are: No actual controversy; Larson, Lindquist, et al. and Parker Re-Issue Patents have been passed upon by a court of competent jurisdiction; the "single interceptive" system is only a colorable evasion of the injunction obtained by Otis against Staley et al., and all matters in the complaint are now before a court of competent jurisdiction for adjudication.

 The record of previous litigation is:

 (a) On or about June 19, 1936, Otis instituted an action in the United States District Court for the Southern District of New York and therein it charged Staley with infringing Letters Patent No. 1,694,823 and No. 1,904,647.

 (b) On or about July 3, 1936, Otis instituted an action in the United States District Court for the Eastern District of New York on the aforesaid patents against certain customers of Staley and when Staley intervened therein, the complaint in the United States District Court for the Southern District of New York was dismissed without prejudice.

 (c) The defense of Staley in the action in the Eastern District was lack of invention and non-infringement. The District Court (35 U.S.Pat.Q. 420) and thereafter the Circuit Court of Appeals for the Second Circuit (Otis Elevator Co. v. 570 Bldg. Corp., 98 F.2d 699, certiorari denied, 305 U.S. 640, 59 S. Ct. 107, 83 L. Ed. 412 and rehearing refused 305 U.S. 673, 59 S. Ct. 228, 83 L. Ed. 436), held Letters Patent No. 1,694,823 and No. 1,904,647 valid and infringed.

 (d) An injunction issued restraining Staley from directly or indirectly practicing the inventions described in the Larson and Lindquist et als., patents and claimed in certain specific claims thereof and an accounting was ordered and hearings thereon commenced.

 (e) Prior to the issuance of said in injunction, Staley allegedly changed over all of its previously installed elevators which it was servicing, to what it identifies as "single interceptive" type of control, and began selling new elevators of said type. Otis believing that said system infringes claims 6, 9, 14 and 76 of the Lindquist et al. Patent, obtained an order to show cause, D.C., 26 F.Supp. 900, why Staley should not be held in contempt for violating the injunction. The matter was referred to a special master, who was required to determine whether or not Staley was guilty of a mere colorable evasion of the injunction and therefore guilty of contempt or did the "single interceptive" automatic electric elevator control present a triable issue on the question of alleged infringement. Hartford-Empire Company v. Obear-Nester Glass Co., 8 Cir., 95 F.2d 414.

 (f) The master filed his report and both Staley and Otis entered objections thereto. The court, on July 3, 1940, filed its memorandum with respect to said ...


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