in the assignments of error calling for such proof. A bill of exceptions is prepared with general reference to the assignments of error, and inasmuch as the question of venue was not raised at the trial, or by any specific assignment of error, it is not at all surprising that proof of venue is not found in the bill of exceptions. Furthermore, had the objection been timely made, no doubt the court would have permitted the government to supply the defect before submitting the case to the jury. The sufficiency of the evidence to support the verdict in other respects will not be considered, when raised for the first time in the appellate court, except to prevent a plain and obvious miscarriage of justice. Bilboa et al. v. United States (C. C. A.) 287 F. 125; Deupree v. United States (C. C. A.) 2 F. (2d) 44 (decided October 27, 1924).

No such exceptional case is presented here, and the judgment is therefore affirmed.

CARPENTER CHEMICAL CO. v. LANSDALE SILK HOSIERY CO.

Joseph J. Tunney, of Philadelphia, Pa., and Richard B. Cavanaugh, of New York City, for plaintiff.

John W. Speckman, of Philadelphia, Pa., and Irving M. Obrieght and Clair W. Fairbank, both of New York City, for defendant.

THOMPSON, District Judge. Upon an application filed April 4, 1924, patent No. 1,500,026 was on July 1, 1924, issued to the defendant, the Lansdale Silk Hosiery Com. the inventor. This patent is for a method of pany, as assignee of Edward Mendelsohn, treating silk stockings to give them a more sheer appearance and greater strength, by a process consisting of soaking them in waof alum and afterwards treating them with a ter containing about 5 per cent. by weight solution of soap in water; the purpose being to harden and make more compact the fiber of the threads, preventing the fiber of the thread from catching in sharp objects, and enabling the thread to slide more freely in the woven stocking. The action of the soap upon the alum deposited in the threads of the stocking is claimed to form an insolu

1. Patents

No. 3135.

328-1,500,026, process

for

treating silk stockings, issued to defendant as inventor's assignee, held substantially same as that assigned to plaintiff by same inventor. Mendelsohn patent, No. 1,500,026, for method of treating silk stockings after manufacture, by process consisting of soaking them in water containing alum, and afterwards treating them with a solution of soap and water, issued to defendant as inventor's assignee, held, on motion for preliminary injunction, substantially the same as invention of similar process for treatment of silk in the thread or skein prior to manufacture into stockings, assigned by same inventor to plaintiff, for patent for which application had been made prior to application for defendant's patent.

2. Patents 183-Preliminary injunction issued to restrain assignment of right to prac tice invention, but not to prevent defendant itself from practicing invention.

Where process covered by defendant's patent is shown, on motion for preliminary injunetion, to be substantially the same as invention assigned by defendant's assignor to plaintiff, and where application for patent for invention assigned to plaintiff was made before application for defendant's patent, and where defendant is financially responsible, court will not by preliminary injunction prohibit the defendant from practicing the invention, but will enjoin the licensing or granting of such right to others.

In Equity. Suit by the Carpenter Chemical Company against the Lansdale Silk Hosiery Company. On motion for preliminary injunction. Granted in part.

The plaintiff claims that it is the rightful owner of the invention covered by the patent, by reason of the fact that the inventor, Mendelsohn, had, prior to the application for the patent, assigned to it the invention covered thereby and an application for a patent thereon long prior to the application for the patent issued. From the pleadings, the affidavits, and exhibits accompanying the motion for a preliminary injunction, I find the following facts:

Mendelsohn, prior to June 21, 1922, claimed to be the inventor and owner of a chemical formula to be used for the treatment of silk stockings or other fabric, so as to make them more sheer and durable. He negotiated with Irving S. Carpenter, of New York, and demonstrated the use of his formula for making an alum solution, with which he treated silk stockings by saturating them in the solution, and, after drying, washing the stockings in a soap solution, and obtained satisfactory results. Mr. Carpenter then agreed to finance an application for letters patent, and an application for patent was filed on June 21, 1922, being serial No. 570,036, for improvement in methods of treating silk.

The method described in the specification is for treating the silk thread while in skeins or in any other loose form with a solution of alum of 5 to 10 per cent. in strength, this

On August 7, 1922, Mendelsohn assigned to Carpenter and Charles D. Levin each an equal one-third ownership in the chemical formula, to be used for the treatment of silk stockings or other silk fabrics. The parties agreed to form a corporation for the purpose of acquiring all rights to the formula, all patents to be issued thereunder, and to manufacturing articles in connection therewith. The Carpenter Chemical Company having been organized, Carpenter, Levin, and Mendelsohn entered into an agreement with the Carpenter Chemical Company by which, after reciting that the assignors are the proprietors of a certain formula or method of manufacturing a certain useful and marketable chemical formula for the treatment of silk stockings and silk fabrics, which is known under the name of "Keepit," they assigned the exclusive right to the method of manufacture, and the chemical formula known as "Keepit," to manufacture or otherwise market the same, and all rights of patent or trade-mark or registration whatever, and agreed that they would not disclose the secret of the composition or the formula, and would not make or compound for sale, or be in any way interested in compounding for sale or selling, the said chemical formula, or anything of a similar nature assigned for. a like purpose.

On August 28, 1922, Mendelsohn assigned to the Carpenter Chemical Company the full and exclusive right to the invention, set forth in his application for patent filed June 21, 1922, and the assignment was duly recorded in the Patent Office. On September 15, 1922, the Carpenter Chemical Company filed its application in the Patent Office for the registration of the trade-mark in the word "Keepit," for a chemical preparation used to treat silk to prolong its wearing quality, which was duly registered on May 8, 1923.

The Carpenter Chemical Company then made a contract with Lehn & Fink, Inc., of New York, to manufacture and distribute the chemical compound to the trade. Some time in the spring of 1923, one A. L. Ullman, who was the New York agent or representative of the defendant, the Lansdale Silk Hosiery Company, entered into a contract, with plaintiff's approval, with Lehn & Fink to act as exclusive salesman to the manufacturers of silk hosiery in connection with the use and 2 F. (2d)-62

On May 15, 1923, the defendant entered into an agreement with Lehn & Fink to purchase not less than 400 pounds of "Keepit" per month for a period of 12 months, and agreed to treat all of the silk stockings manufactured by it in accordance with the method set out in the directions supplied with "Keepit."

The article known as "Keepit," prepared in accordance with the formula invented and owned by Mendelsohn, was put up in packages for sale by retailers, with directions for its use which are substantially similar in method to that set out in the specification for the patent issued July 21, 1924. They contain the following directions, which are pertinent:

"(1) Dissolve the entire contents in one quart of warm water. (2) Soak the hose in the whole solution for at least half an hour. (3) Hang up and dry thoroughly. (4) After drying, and before wearing, wash with any good soap. (5) Rinse in warm clean water. This will leave the stockings sheer, soft, and lustrous."

It also contains the inscription, under the trade-mark: "Prevents runs in silk hose. Life insurance for silk stockings."

After Ullman obtained the right to act as exclusive salesman, to the manufacturers of silk hosiery, of the invention, and the defendant had made the yearly contract above referred to, the latter proceeded to advertise that its hosiery or silk stockings were treated with "Keepit" and to extol the merits thereof, and Mendelsohn visited the defendant's plant and gave instructions as to the practice and method of the invention.

At the end of the yearly agreement with Ullman on May 3, 1923, and that with the defendant on May 15, 1923, the agreements were not renewed. On April 3, 1924, Mendelsohn, being vice president and director of the plaintiff corporation, filed through the same patent attorney who had represented him in his application of June 21, 1922, an application for the patent, upon which patent No. 1,500,026 was issued on July 1, 1924. With this application was filed a petition to the Commissioner that it be made special, which petition was granted.

Meanwhile, the application filed June 21, 1922, had been allowed to lag. There had been rejection of some claims, and amendments filed thereto, with the result that, when patent No. 1,500,026 was issued, the patent for which the first application had been made was still pending. Mendelsohn assign

ed the patent on his second application to the defendant in consideration of $5,000. The plaintiff, having canceled the original power of attorney, filed a power of attorney to other patent attorneys, who filed amended claims covering substantially those allowed under the second application, which were refused upon the ground that their allowance would result in double patenting.

The principal contention of the plaintiff is that the invention protected by the issued patent is the same as that described in the first application. The first application covered the method of treating silk in the thread or skein with the alum solution, and subsequently, after the weaving into hose, of treating the woven article in the soap solution. The patent issued describes a method of treating the hose after manufacture in both solutions. The defendant earnestly contends that there is sufficient difference in the two methods to establish two separate inventions, and that the disclosures in the patent are not the same as those of the rejected prior application.

This is not the view of the Patent Office. The record of the case in the file wrapper shows that the Examiner on September 19, 1923, rejected certain claims, stating: "It is held to be immaterial whether the process is carried out while the fiber is still in the thread form or after it is made into a fabric." And this was reiterated by the Examiner on September 2, 1924, in response to a communication of the substituted patent attorneys for the plaintiff, calling the Commissioner's attention to the facts concerning Mendelsohn's assignment of his earlier application and invention to the plaintiff, nearly two years prior to the later application under which the patent was assigned to the defendant.

The disclosures in the specifications of the two applications are identical in most respects. The only marked distinction in the description is in the one fact that the first application provides for the washing of the silk in skeins or threads prior to weaving into fabric or hosiery and the treatment of the manufactured article afterward in the soap solution, while the specifications in the second application and the claims are for washing the stockings in the two solutions after they are woven.

[1] The case as now presented on motion for preliminary injunction sufficiently establishes for the purposes of the motion that the invention of Mendelsohn, as disclosed in his second application, is substantially the

same as that followed in the use of "Keepit" under the directions contained on the wrapper of that article, and followed by the defendant in its plant in the use of "Keepit," while obtaining its supply under its yearly contract through Lehn & Fink's contract with Ullman. I see no reason to differ from the ruling of the Patent Office that it is immaterial, so far as the invention is concerned, whether the process for coating the threads of which the stockings are woven with the alum hardening solution, for the purpose of preventing the pulling out of the fibers and incorporating them more closely with the thread, and thereafter fixing the alum with the soap solution, is carried out while the fiber is still in the thread form, or after it is woven into a fabric.

A further contention on the part of the defendant is that the solution of the first application, which was described as a solution of alum, is not identical with that used in the second application, because in the latter the applicant refers to the use of amonium alum, although potassium alum might be employed, and the original application refers to the preferable use of ordinary potassium alum. I think this distinction must be rejected on the doctrine of equivalents.

On the prima facie case made out by the evidence before me, the plaintiff has established to my satisfaction that Mendelsohn's invention, covered in his second application and in the defendant's patent is the same invention assigned to the plaintiff and used by it with Mendelsohn's acquiescence and consent in its direction to the public for the use of "Keepit" and in the first application. Mendelsohn's conduct shows an intention on his part for his own gain to place in the hands of the defendant what he had already sold to the plaintiff. The circumstances connected with the dilatory conduct of the proceedings under the first application and the eagerness to obtain a patent at once under the second application, the conduct of Ulman and of the defendant in the use of "Keepit," in connection with Ullman's exclusive right for its sale to manufacturers, are not, while unexplained, such as to create an impression of the utmost good faith.

The rejection of the new claims 2, 3, and 4 by the Patent Office is upon two grounds: First, because they are drawn to new matter, inasmuch as the application, as originally filed, described only the treatment of threads, while these claims are drawn to the treatment of fabric. This is somewhat inconsistent with the holding of the Patent Office

that it is immaterial whether the process 18 carried out while the fiber is still in thread form or after it has been made into fabric. These claims, together with new claim 1, are also rejected on the patent to Mendelsohn, No. 1,500,026. While the Examiner reiterates in this rejection his holding of immateriality as to when the process was carried out, it is indicated with some force that, if the Mendelsohn patent had not been allowed, the plaintiff would have been entitled to a patent on claims for carrying out the process on the thread before being formed into a fabric, which, if applied for in time, would have anticipated the claims allowed on the later application. Upon the showing here Upon the showing here made, the plaintiff is entitled to a preliminary injunction restraining the defendant from selling, assigning, or in any manner whatsoever incumbering the right or title to the patent it holds by assignment from Mendelsohn and the invention thereof pending the determination of the suit.

Upon the facts shown by ex parte affidavits on motion for preliminary injunction, and taking into consideration the question of irreparable injury, I am not convinced that a preliminary injunction should issue, except from such acts as would properly be construed as threatening and intimidating the plaintiff's customers. So far as appears from the evidence, no threats which justify the interference of the court have been made. [2] As prima facie the evidence shows that the defendant is financially responsible, and a preliminary injunction, if the defendant should prevail on final hearing, would no doubt cause it irreparable injury, the injunction will not prohibit the defendant from practicing the invention. As to licensing or granting to others the right to practice the invention, the defendant will be enjoined, with the right, however, to apply for modification of such clause in the injunction order, if occasion should arise. amount of injunction bond will be fixed upon application.

The

Counsel may present a decree in accordance with this opinion..

spect to the allowance or rejection of claims which may become, either primarily or ultimately, charges against a bankrupt estate, even though the suit in the state court is brought by state officers assuming to act on behalf of the state.

2. Bankruptcy 296-Prosecution of suit in state court enjoined.

Officers of a state commenced an action in a state court against the sureties on a bond given by a trustee in bankruptcy, with the approval of the court, to secure performance of a contract with the state, which contract, also with the approval of the court, he abandoned. The bankrupt estate was liable for any sum which might be recovered from the sureties. There were also counterclaims of the bankrupt estate against the state, arising out of transactions prior to the bankruptcy. Held, that the adjudication of such matters was within the exclusive jurisdiction of the court of bankruptcy, and that prosecution of the suit in the state court would be enjoined.

In Bankruptcy. In the Matter of The Montevallo Mining Company, bankrupt. On petition of David Roberts, Jr., trustee, against Harwell G. Davis, Attorney General, and L. A. Boyd, President of the State Board of Convict Supervisors, of the State of Alabama, for an injunction, and on motion of respondents to dismiss the petition. Motion denied, and injunction granted. See, also, 278 F. 989.

David Roberts, Jr., as trustee of the Montevallo Mining Company, the bankrupt, by his petition shows that the Montevallo Mining Company was adjudicated a bankrupt in

the District Court of the United States for the Southern Division of the Northern District of Alabama on January 25, 1922, and that said bankrupt estate is now being administered in that court. Roberts was appointed trustee on February 14, 1922, and is now acting as such trustee. Hon. Harwell G. Davis, Attorney General of the state, and Hon. L. A. Boyd, President of the State Board of Convict Supervisors, residents of Montgomery county, Ala., are made respondents to the petition. The American Surety Company and the Union Indemnity Company, each a corporation doing business in Montgomery county, Ala., are also made respondents.

Pursuant to the orders of said bankruptcy court the trustee operated the properties of the bankrupt, a coal mine in Shelby county, Ala., as a going concern, and in such operation made use of the convicts of the state of Alabama under a contract with the state made in the name of the state by said L. A. Boyd, president of the state board of convict supervisors, the officer or board authorized to contract in behalf of the state. The continued operation of the properties by

the trustee as aforesaid having been proven to be wasteful of the assets of the estate, the trustee, by the authority of said court, delivered the convicts back to the state before the expiration of the lease contract. At the time of making said contract with the state, and at the latter's instance, and with the authority of said court, the trustee executed a bond, with the American Surety Company and the Union Indemnity Company sureties, guaranteeing the faithful performance of the convict lease. In the application for such bond the trustee obligated himself as such to indemnify the sureties for all sums that the companies might be compelled to pay on account of such bonds. Said Harwell G. Davis and L. A. Boyd, in their respective official capacities, have begun suit on the bond in the state circuit court of Montgomery county, Ala., in the name of the state against the surety companies, claiming damages, against the first of $7,000 and against the second of $20,000, on account of alleged breaches of said bond in delivering back said convicts, for loss of time of said convicts, expenses incident to removing and replacing the same, loss of crops, damage to furniture, and other things relating to the matter, and it is not disputed that said suit will be prosecuted by said officials to conclusion unless restrained by this court. It is without dispute that such properties were on and after the convicts had been delivered back to the state, leased by the trustee, with authority of the bankruptcy court, to the Thomas & Weller Mining Company, a corporation, which in turn and in its own name leased the convicts

from the state of Alabama, to be worked in the mine property of the bankrupt estate. It is not denied on this hearing that there was much valuable machinery belonging to the bankrupt estate, in the mine, which it is alleged was damaged by the convicts to the extent of $20,000. It is shown that the state of Alabama has filed claim against the bankrupt estate, based upon matters and things arising before and at the time of the adjudication of the Montevallo Mining Company. Further it is alleged that the state has received on account of said claim $56,000, which is charged to be a preference over other creditors of the same class, and that the estate has not sufficient assets to pay all claims of such class. It is also alleged that, if such suit is allowed to proceed to judgment, the rights of the petitioner trustee will be prejudiced, in that the several claims, counterclaims, setoffs, and recoupments in favor of the peti

tioner against the state of Alabama cannot be pleaded in the suit in the circuit court of Montgomery county, Ala., without consent of the petitioner. The trustee also represents that, under his agreement with the surety companies, petitioner will be compelled to reimburse said companies to the extent of the amount paid by them in satisfaction of the judgments obtained. The trustee avers in his petition that he cannot consent to the surety companies pleading said matters by way of set-off or recoupment, because such matters, as well as the determination of administration costs involved therein, are within the exclusive jurisdiction of the bankruptcy court, which is without right to surrender its jurisdiction over the same. The petitioner also shows that, while he has not sufficient assets to pay all claims against the estate, he has ample assets to pay in full any amount which the court of bankruptcy may determine is due, owing and payable to the state of Alabama on account of any claims set up in said suit. He also insists that such suits will have the effect of ousting the jurisdiction of the bankruptcy court to hear, determine, and allow or disallow claims against the bankrupt estate, and the extent and priority thereof, and the amount of administration costs and expenses.

And by amendment to his petition the trustee shows that previous to the institution of the suit in the state court there had been no ascertainment in the District Court in bankruptcy of the merits of said claims set up in the suit in the state court, and that petitioner as such trustee is without authority to pay any amount which may be legally due the state of Alabama from the estate; also, that the petitioner trustee has not, prior to nor since the institution of said suit, made final settlement in said bankruptcy proceeding of his accounts, and that no decree establishing liability against him as trustee in favor of the state has been rendered; further, that prior to the institution of the suits in the state court no redress has been sought against the petitioner, to ascertain the liability claimed in said suit, in order that remedy against the sureties on said bond may be pursued, as it is claimed, in said suit. Moreover, it is contended by petitioner that he discontinued the use of the convicts and surrendered them back to the state of Alabama under order of the District Court in bankruptcy; furthermore, that neither the petitioner nor the sureties on the bonds are liable to suit in any other court for his acts done in performance of