Summary
granting of stay is discretionary with trial court and reviewable by appellate court
Summary of this case from Jones v. AllenOpinion
May 13, 1971
Appeal from an order of the Supreme Court at Special Term, entered December 23, 1970 in Broome County, which granted defendant's motion for a stay of further proceedings herein until 20 days after final determination of an action pending in the United States District Court, Southern District of New York, instituted by defendant against plaintiff. On March 20, 1967, the Franklin Institute and General Precision, Inc. (which subsequently changed its name to Singer-General Precision, Inc.) entered into an agreement licensing the latter to manufacture, use and sell devices embodying the invention claimed in a United States patent for a motion simulator, previously issued and assigned to the former. In 1969, the Franklin Institute in turn assigned its interest in the patent to plaintiff. In its complaint seeking compensatory and punitive damages, served August 25, 1970, plaintiff alleged that subsequent to said agreement defendant sold motion simulators embodying the invention claimed and, that, despite plaintiff's demand, defendant refused to render statements and pay royalties as agreed. The time to answer having been extended to October 14, 1970, defendant filed a complaint in United States District Court on October 9, 1970 praying for a declaratory judgment that the patent in question is invalid and void and four days later moved, pursuant to CPLR 2201, for a stay of proceedings in the within Supreme Court action. The issuance of a stay pursuant to CPLR 2201 is discretionary in the trial court (cf. Trieber v. Hopson, 27 A.D.2d 151, 152) and reviewable by the Appellate Division ( O'Connor v. Papertsian, 309 N.Y. 465, 471-472). Though the State action is for breach of contract, the record reveals that the dominant issue is not construction of the contract but rather the validity of the patent on which the conract is based, as the licensee may avoid payment of all accrued royalties if it can prove the invalidity of the patent ( Lear, Inc. v. Adkins, 395 U.S. 653, 674). In view of unique legal problems surrounding the issue of patent validity and the Federal courts' expertise in the area (cf. Sears, Roebuck Co. v. Stiffel Co., 376 U.S. 225, 230-231), the trial court, in the interests of comity, orderly procedure and uniformity, properly exercised its discretion in granting the stay and deferring to the United States court (cf. General Aniline Film Corp. v. Bayer Co., 305 N.Y. 479, 485). There has been no demonstration that the Federal action was not brought in good faith nor that it was instituted to delay plaintiff and subject it to expense and inconvenience (cf. Curlette v. Olds, 110 App. Div. 596, 600). Although appellant correctly points out that in Lear ( supra) the United States Supreme Court remanded to the California Supreme Court for a determination as to validity of the patent there involved, significantly, after remand and after having been informed that the United States District Court was willing to proceed, the California Supreme Court "stayed its proceedings in order to permit the issue of the validity of Adkins' patent to be litigated de novo in the federal courts" (See Adkins v. United States Dist. Ct., 431 F.2d 859, 860). The issue before Special Term was not one of jurisdiction, it having been held in American Harley Corp. v. Irvin Ind. ( 27 N.Y.2d 168, 172), that actions involving contracts relating to patents are not considered suits arising under Federal patent laws, even if patent validity may somehow be involved. In explanation, it was stated that the fact that the foundation for a suit is a contract granting patent rights and that plaintiff must rely on a patent in support of his cause of action is not determinative and neither vests the Federal court with jurisdiction nor deprives the State court of power to entertain the action. Order affirmed, with costs. Staley, Jr., Cooke, Sweeney and Simons, JJ., concur; Herlihy, P.J., dissents and votes to vacate the stay in the following memorandum: Special Term properly exercised its discretion in granting a stay on December 18, 1970 pending "final determination of the issues in the action pending in the United States District Court". The issue before this court is whether, as of May 1, 1971, to continue the stay which was granted prior to the defendant having interposed any pleading in response to the complaint. I would vacate the stay and require the defendant in the State action to answer or otherwise plead. The issues sought to be resolved in the Federal action are determinable in the State action and the plaintiff is entitled to an early resolution of the pending issue.