New Marshall Engine Company v. Marshall Engine Company/Opinion of the Court

The Federal courts have exclusive jurisdiction of all cases arising under the patent laws, but not of all questions in which a patent may be the subject-matter of the controversy. For courts of a state may try questions of title, and may construe and enforce contracts relating to patents. Wade v. Lawder, 165 U.S. 627, 41 L. ed. 852, 17 Sup. Ct. Rep. 425. The present litigation belongs to this class. The controlling fact for determination here is whether patent 725,349 belongs to the Marshall Engine Company, of New Jersey, or to the New Marshall Engine Company, of Massachusetts. The complainant did not, by its bill in the state court, raise any question as to the validity or construction of the patent, nor did it make any claim for damages for infringement. The suit was an ordinary bill for specific performance to compel Marshall to assign to complainant the improvement on patent 342,802, in compliance with his covenant for further assurance. If patent 725,349 was an improvement thereon, as on the face of the application and letters patent it appeared to be, then the complainant was entitled to a decree requiring Marshall to make a conveyance which could be properly recorded for the protection of the true owner.

Marshall had, however, in violation of his contract, previously assigned patent 725,349 to the New Marshall Engine Company, which took with notice of the prior transfer. This company, therefore, held the legal title as trustee for the complainant. Under the circumstances the state court had jurisdiction to pass on the question of ownership, and to enter a decree requiring Marshall, as patentee, and the New Marshall Engine Company, as trustee, to make an assignment in due form to the complainant. This jurisdiction was based on general principles of equity jurisprudence, and did not present a case arising under the patent law.

It is, however, urged that the state court was ousted of the jurisdiction to enter a decree for specific performance, because the bill went farther, and prayed that the defendants, and each of them, should be enjoined from manufacturing or selling the machines covered by patent 725,349. It is claimed that this was, in effect, an application and decree for injunction against infringement, and could only be granted by a Federal court.

But the allegations of the complainant's bill do not involve any construction of the meaning or effect of patent 725,349, nor does it charge that the manufacture or sale of engines by the defendants would be an infringement of the patent, or of any right of the complainant, if in fact, patent 725,349 belonged to the New Marshall Engine Company. The injunction was asked for only as an incident of a finding that the title was vested in the complainant. 'The bill. . . must be regarded and treated as a proceeding to enforce the specific execution of the contracts referred to and not as one to protect the complainants in the exclusive enjoyment of a patent right. . . . It is to prevent the fraudulent violation of these contracts, therefore, that the complainant seeks the aid of the court and asks for an injunction.' Brown v. Shannon, 20 How. 56, 57, 15 L. ed. 827, 828. As said in Wilson v. Sandford, 10 How. 99, 13 L. ed. 344, 'the injunction is to be the consequence of a decree sanctioning the forfeiture. He alleges no ground for an injunction unless the contract is set aside.' Here the injunction asked for is to be the consequence of the decree sustaining the complainant's title. It alleges no ground for injunction unless that title is established.

The state court had jurisdiction of the subject-matter of the controversy. The relief granted was appropriate to the cause of action stated in the bill. The decree must therefore be affirmed.