use of any patents which he might have on the basis of remuneration. to him.

On July 17 Mr. Dick replied to the defendant, asking whether he suggested a new agreement, which would wipe out the present one, or whether he wished to modify that, and if so, in what respect, and stated that they were

constantly on the lookout for improvements on our machines, our stencil paper, our ink, and other accessories. It has always been our policy to treat any offer in this line on its merits and in a liberal spirit, but we can not deal in generalities, particularly where there is danger of misunderstanding.

On July 19 the defendant wrote to Mr. Dick, that he did not ask him to name a figure for something he knew nothing about and had not seen, but wished him to state whether he was willing that he should receive remuneration, provided his patents or inventions were of value and were accepted.

Mr. Dick replied on July 26, 1922, saying:

You may have a machine or an improvement in the duplicating art which would revolutionize the industry, in which case I would be deeply interested. On the contrary, you may have some minor improvement only which would not interest me at all. If I should become interested in what you may have and wished to acquire it, I should naturally expect to pay for it. In either case, I should have to use my judgment and I could only do that when I had before me a full description of the thing itself and such information concerning it as I deem pertinent.

Mr. Dick again insist [397]ed upon information before he suggested any arrangement.

The next letter of any importance is from the defendant to the Dick Co., dated July 31, 1922, containing an outline of a proposed agreement between the Dick Co. and himself in regard to "any patent that might issue to me," and which the Dick Co. should desire to acquire. The letter contains this sentence:

The foregoing is, of course, a mere synopsis of what I propose, but it expresses my thought. It is clear that I am proceeding on the theory that from the beginning there should have been royalty payments provided for myself.

The foregoing proposal of July 31 appears to have met with no approval from the Dick Co., who wrote, on August 13, 1922:

As there was a complete and entire lack of seriousness in your previous letter of July 31st, I did not reply to it, nor shall I do so now.

On August 16 and 24, 1922, the defendant again wrote complainant; in the first letter reiterating its proposal to enter into a contract involving payments to defendant. Mr. Dick wrote him on August 30:

If you have an invention to submit under our present agreement, I will give it my careful and unprejudiced consideration, but I can see no necessity of such a contract as last proposed.

On September 2, 1922, the defendant replied to the last letter suggesting an exchange of releases and a renewal of negotiations for some working agreement. On September 29, 1922, Mr. Dick, in reply to a telegram from defendant, said:

Refer to my letter of August 30th further compensation, if any would depend on my appreciation of your inventions. There is no alternative.

There was a certain amount of further correspondence, which has no legal significance, prior to December 6, 1922, when Mr. Dick wrote Mr. Fuller, in New York:

If you still desire to show me your new stencil sheet, I shall be in position to make arrangements for Thursday afternoon or Friday morning.

To this the defendant replied on December 7, stating that Dick had already terminated the discussion, and, if he wished to reopen it, would he not say so. Fuller wrote Dick on December 18, apparently complaining of Dick's failure to call to see him, and stating:

If we are to deal honestly and sincerely, and each be reasonably sure of the good faith of the other, a sum of earnest money and an agreement setting forth our intentions are essential.

On December 26 the defendant wrote Mr. Dick, saying:

I have said nothing about stencil paper or demonstrations, and this now is the first time that you have referred to these. If you are interested in an important invention appertaining to "the art of duplication," why do you not and why have you not met my suggestions reasonably? On December 28 Dick again wrote Fuller:

I have consistently maintained that I shall view your inventions in the stencil-duplicating business as coming fully under the contract we have with you, regardless of any further considerations which might apply, if I felt so inclined.

[6] On December 30, 1922, the defendant wrote Dick, expressing astonishment at the latter's attitude and reminding him that in a letter of July 26, 1922, to defendant, he had stated that he

would be deeply interested in an invention that might revolutionize the art of duplication, and that such as you accepted you would pay for, but that you would not be interested in minor improvements. That left no doubt in your case and none in my case.

This last statement is based upon the clause in Mr. Dick's letter of July 26:

If I should become interested in what you may have and wished to acquire it, I should naturally expect to pay for it.

This letter, written by a man who was not a lawyer, certainly can not be regarded as binding him to pay for something which he is already entitled to get under a contract. It either involves a generous suggestion or a proposal based on no consideration whatever, but it is to be remembered that the Dick Co. never had a definite knowledge of what the defendant had invented. The latter had said in his letter of February 18, 1915, that his invention of a "stencil sheet" did not come within the terms of the contract of May 12, 1911, and in fact took that position at the trial here.

On March 20, 1923, the defendant wrote the Dick Co. offering to deliver an assignment of his pending application of duplicator transmitting apparatus named the Cosmotype, together with working formulæ, stating that he conceded nothing and waived "no right past, present, or future." He also said that in letters of July, 199 Mr. Dick stated "that anything you accepted you would pay for. I now call upon [398] you to accept and to pay the reasonable value of this invention."

To this letter Mr. Edmonds replied, on March 21, 1923, stating that the defendant was under obligation to disclose and turn over his inventions, saying:

I should expect that, if any stencil sheet inventions so turned over br you proved to be broadly patentable and commercially valuable (or promising). Mr. Dick, although under no obligation so to do, would show in a substantis!

way his appreciation of your interest in the effort to keep his company at the front in its line. This would not, of course, involve payment for inventions, but would, I fancy, be referred to a "good will" account. What, if anything, he would see fit to do in this line, would be " up to him," and therefore not the subject of negotiation.

I believe the foregoing states the substance of the letters, so far as they have any real bearing upon the issues. It is entirely clear to me that the complainant throughout the period succeeding Judge Hunt's decree, has insisted upon its right to have a prompt disclosure of all inventions relating to stencil paper or processes or methods for preparing, producing, and using the same. The defendant never disclosed, or offered to disclose, until forced to disclosure by Judge Mack's order, the invention involved upon this hearing, except as he had offered to make a disclosure if remunerated. Moreover it is quite certain that the A. B. Dick Co. never definitely knew whether his invention came within the contract of May 12, 1911. They appear to have been given the opposite information by letter of February 18, 1915.

On June 8, 1916, Fuller wrote:

I have made an invention of a dry process stencil sheet, and have also made other inventions which it is likely relate to stencil paper.

This is neither a disclosure nor a clear affirmation of the subject matter of the invention, particularly when he had said in February, 1915, as to a stencil sheet invention, that he did not think it came within the contract. In his letter of December 26, 1922, he seemed to confirm his former position by saying: "I have said nothing about stencil paper." He testified before the master that he had made no inventions "in stencil paper, or processes or methods of preparing or using the same," except the Cosmotype stencil paper in question.

[7] Furthermore the A. B. Dick Co. never asked the defendant to perform any services for them, nor asked him to make any inventions and expend any time or labor for their benefit. There is no such basis for compensation as was shown in the trial before Judge Hunt. (213 F. 98.) The defendant was bound to disclose unconditionally, and can not claim that the contract was broken or rescinded because the A. B. Dick Co. refused to accept a disclosure coupled with a condition of remuneration. The only suggestion of compensation made by the Dick Co. was in the letter of July 26, 1922, in the course of a correspondence aimed by defendant at a general compromise which was never effected. There has been no rescission of the contract, and no laches on the part of the A. B. Dick Co.

[8] Complainant asks for an order directing an assignment of the pending application of the defendant for a patent on stencil plates. I am of the opinion that this can not be granted in this proceeding to punish for contempt. Judge Hunt's decree held the contract of May 12, 1911, valid, but only directed the assignment of certain inventions relating to stencil paper upon the terms set forth in the decree. It did not direct the disclosure or assignment of future improvements or inventions of the same class, though under the contract the defendant was bound to disclose and, if required, to assign them; nor did the prayer of the bill ask for any such relief.

While the manufacture and sale of the stencil paper described before the master and stated to be covered by defendant's applica

tion for a patent filed in November, 1922, violate the injunction issued under Judge Hunt's decree, the complainant can, in my opinion, only enforce an assignment of the pending application and future inventions of the same class by filing an original or supplemental bill and securing a decree therefor.

[9] As the defendant has very deliberately violated the injunetion, he should be adjudged in contempt, and ordered to pay within 30 days to the complainant, as a fine, a sufficient sum to make good its damages arising out of the unlawful sales of stencil paper, as well as its expenses "in enforcing the disregarded order of the court." (Board of Trade v. Tucker (D. C.) 221 F. 300; in re Kain, 204 F. 581, 123 C. C. A. 107; Gompers v. Buck's Stove Co., 221 U. S. 418, 31 S. Ct. 492, 55 L. Ed. 797, 34 L. R. A. (N. S.) 874.) The foregoing cases indicate the proper practice, and also dis [399] cuss the theory in proceedings like the present for a civil contempt. A counsel fee of $500, and the sum of $25, as estimated damages cause by the sale by defendant of 1,600 sheets of stencil paper, will be the amount of the fine. The complainant is entitled to tax its costs and taxable disbursements in this proceeding. The fees and disburse ments of the master are fixed at $254.08. If there is any criticism of the sum of $25, estimated damages for the infringing sales, it may be submitted in writing upon the settlement of the order. It seems more sensible to estimate this damage than to have the expense of a further reference.

Settle order on notice.

PROPER v. JOHN BENE & SONS, INC., ET AL.

(United States District Court, Eastern District of New York. November 30, 1923.)

1. PLEADING, KEY No. 363-POWER TO STRIKE OUT SHOULD BE EXERCISED WITH CAUTION.

The power to strike out allegations of a pleading should be exercised with caution.

2. JUDGMENT, KEY No. 540-PRIOR ADJUDICATION, TO BE "RES JUDICATA," MUST INVOLVE SAME ISSUES AND SAME PARTIES, OR THEIR PRIVIES.

A prior adjudication, to be "res judicata," must have been a determine tion of the same issues between the same parties, or their privies, and it must have been a final judgment.

3. JUDGMENT, KEY No. 547-TRADE-MARKS AND TRADE NAMES AND UNFAIR COMPR TITION KEY NO. 96-ORDER OF FEDERAL TRADE COMMISSION NOT FINAL JU MENT, AND NOT RES JUDICATA.

A proceeding before the Federal Trade Commission results in an order which has no effect in itself, unless made operative by the Circuit Court of Appeals, and the doctrine of res judicata has no application thereto. 4. MONOPOLIES, KEY No. 28--PROCEEDING BEFORE FEDERAL TRADE COMMISSION HELD NOT COMPETENT EVIDENCE IN ACTION FOR DAMAGES FOR ATTEMPTING TO MONOPOLIZE TRADE.

Under Clayton Law, section 5 (Comp. Stat. sec. 8835e), providing that a fira! judgment or decree in a criminal prosecution or any proceeding in equity, This case is reported in 295 Fed. 729. For connected case, see p. 354.

1

brought by or on behalf of the United States under the antitrust laws shall be prima facie evidence in any suit or proceeding brought by any other party against such defendant under said laws, held, that a proceeding before the Federal Trade Commission and a finding thereon are not competent evidence in an action for damages for attempting to monopolize trade.

[730] 5. PLEADINGS, KEY No. 364 (5)-ALLEGATIONS OF VIOLATION OF ACTS or CONGRESS HELD MERE CONCLUSIONS.

Allegations of the violation of acts of Congress held mere conclusions of law, and should be stricken out.

6. PLEADING, KEY No. 364 (3)-CAUSE OF ACTION UNDER FEDERAL TRADE COMMISSION ACT, REPEATING ALLEGATIONS MADE UNDER SHERMAN ANTITRUST ACT, STRICKEN OUT.

No new cause of action is given by either the Federal Trade Commission Act (Comp. Stat. secs. 8836a-8836k) or the Sherman Antitrust Act (Comp. Stat. secs. 8820-8823, 8827-8830), but the latter provides for a new rule of damages, and a cause of action under the Federal Trade Commission Act, merely repeating the allegations of the cause alleged under the Sherman Antitrust Act should be stricken out.

At law. Suit by Nathan Proper, an individual doing business as the Proper Antiseptic Laboratory, against John Bene & Sons (Inc.), and others. On motion to strike out certain paragraphs of the complaint. Motion granted.

Edward P. Sobel, of New York City, for plaintiff.

Frederick N. Van Zandt, of New York City, for defendants.

GARVIN, District Judge:

This is a motion for an order striking out paragraphs 12, 13, and 14 of the first alleged cause of action set forth in the amended complaint, such part of paragraph 30 of the third alleged cause of action as realleges the contents of the first three mentioned paragraphs, and the entire third alleged cause of action.

The suit is brought to recover treble damages for injuries caused to plaintiff's business by the unlawful acts of defendants. The first cause of action is for treble damages, and is based upon defendants' attempt to monopolize the trade in disinfectants in a manner constituting a violation of the act of Congress approved July 2, 1890, known as the Sherman antitrust law (Comp. Stat. secs. 8820-8823, 8827-8830). The second cause of action is likewise for treble damages sustained as a result of a fraudulent and criminal combination and conspiracy by defendants to prevent lawful competition in the sale of disinfectants in such a manner as also constituted a violation of the antitrust law. The third cause of action is based upon the same allegations of fact upon which the first cause of action rests, except that the amended complaint alleges that they constitute a violation of the Act of Congress entitled "An act to create a Federal Trade Commission," which became a law on September 26, 1914. (Comp. Stat. secs. 8836a-8836k.) Under this cause of action only actual damages are demanded.

Paragraph 12 sets forth certain proceedings which were had before the Federal Trade Commission, its findings and order entered