author: MURRAY M. SCHWARTZ, Chief Judge.

text:
    In re CONVERTIBLE ROWING EXERCISER PATENT LITIGATION. DIVERSIFIED PRODUCTS CORPORATION, et al., Plaintiffs, v. WESLO DESIGN INTERNATIONAL, INC., a Utah Corporation, Defendant.
    Civ. A. No. 85-119 MMS. Master File No. Misc. 85-14. MDL No. 623.
    United States District Court, D. Delaware.
    July 23, 1985.

      Harold J. Birch, and Alan I. Cantor, Banner, Birch, McKie & Beckett, Washington, D.C., for plaintiffs.
    . Peter Sieglaff, Potter, Anderson & Corroon, Wilmington, Del. (Thomas J. Rossa, Trask & Britt, Salt Lake City, Utah, of counsel), for defendant Weslo Intern., Inc.
    Lyn M. Schlitt, Michael P. Mabile, and Jack M. Simmons, III, U.S. Intern. Trade Com’n, Washington, D.C., for U.S. Intern. Trade Com’n.
   OPINION

MURRAY M. SCHWARTZ, Chief Judge.

The question presented is whether an order should be entered staying or suspending an ongoing investigation by the United States International Trade Commission (“ITC”) under section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337 (“section 337”), by reason of parallel patent litigation in the district court. The investigation was initiated by a complaint filed with the ITC in December, 1984, by Diversified Products Corporation (“Diversified”) against ten respondents, one of whom is Weslo Design International, Inc. (“Weslo”), the movant in these proceedings.

The complaint before the ITC alleges unfair acts and methods of competition in the importation of articles into the United States, or in their sale, the effect or tendency of which is to destroy or substantially injure an efficient and economically operated United States industry. The proceedings center upon the importation and sale in the United States of convertible rowing exercisers which allegedly infringe U.S. Patent No. 4,477,071 (“’071 patent”), issued on October 16, 1984, and a related patent, U.S. Patent No. 4,488,719 (“’719 patent”), issued on December 18, 1984. Docket Item (“Dkt.”) 22, Exh. A.

Diversified seeks from the ITC an exclusion order permanently preventing the entry into the United States of convertible rowing exercisers which infringe the claims of the ’071 and ’719 patents, and a cease and desist order permanently prohibiting the respondents from engaging in unfair competition and selling their existing allegedly infringing convertible rowing exercisers in the United States. Id.

The ’071 and ’719 patents have also generated substantial litigation at the district court level. Soon after the issuance of the ’071 patent, plaintiffs Brown Fitzpatrick Lloyd Patent Ltd. and its allegedly exclusive licensee, Diversified Products Corporation (hereafter jointly referred to as Diversified), filed infringement actions against ten defendants in eight different jurisdictions. On February 13, 1985, the Judicial Panel for Multidistrict Litigation, on motion of Diversified, ordered seven of the actions transferred to the District of Delaware for coordinated or consolidated pretrial proceedings pursuant to 28 U.S.C. § 1407.

In March, 1985, Diversified filed suit for infringement of the ’719 patent against three defendants, all of whom were previously sued on the ’071 patent. These three “tag-along” actions were brought in three separate jusidictions but have been transferred to this district by order of the Multidistrict Panel.

Weslo has the misfortune of being the only named defendant common to the ITC investigation and the district court patent litigation. Shortly before the Multidistrict Panel transferred the patent action, Weslo had moved to stay discovery and to dismiss the ’071 patent action pending against it in. the District of Utah on the ground of non-infringement. The fully briefed motion to dismiss had been converted to a motion for summary judgment by reason of the filing of affidavits. Transfer occurred before argument was held.

Weslo, as the only active respondent in the ITC investigation, filed a motion with the ITC on March 15, 1985, to suspend the investigation. Dkt. 22, Exh. B. By order dated March 29, 1985, the ITC Administrative Law Judge (“ALJ”) suspended proceedings as to Weslo except as a party obligated to produce discovery. Id. The suspension order was reviewed and reversed by the ITC on May 1, 1985. Dkt. 33, Exh. 1. The ITC investigation has been in discovery and is currently scheduled for hearing on August 5, 1985, before an ALJ.

Weslo now requests similar relief from this Court. It seeks a halt of the ITC investigation until final disposition of this action. Specifically, Weslo requests an injunction prohibiting Diversified from going forward or participating in the ITC investigation and an order directing Diversified to withdraw without prejudice its ITC complaint until final disposition of the district court patent litigation. Alternatively, it requests a suspension or stay of the ITC investigation “as to Weslo and any and all of its suppliers and/or vendors pending final disposition” of the district court litigation. Dkt. 22 at 21-22. Analytically, irrespective of the terms used, Weslo seeks two injunctions, either of which for all practical purposes would achieve its goal— an injunction which would cause Diversified to impede or halt the ITC investigation or an injunction directed to the ITC ordering it to suspend its investigation.

ITC investigations, such as In re Convertible Rowing Exercisers, are instituted by the ITC either on its own initiative or after receipt of a proper complaint which the ITC has evaluated for its sufficiency. There are three groups of parties to the investigation—complainants, respondents, and the ITC investigative attorney, the latter participating as a full party in all section 337 investigations for the purpose of safeguarding the public interest. If instituted, the section 337 matter is referred to an AU who conducts the investigation, including the hearing. See generally 19 C.F.R. §§ 201.10-.15 (1984). The investigation, conducted in conformity with the Administrative Procedure Act, 5 U.S.C. §§ 551-559 (1982), confers a broad range of rights upon the parties, including, inter alia, a period of discovery, the right to present evidence, a hearing on the record, and the right to compel testimony. 19 C.F.R. §§ 210.30-44 (1984). The parties to the investigation may raise “all legal and equitable defenses.” 19 U.S.C. § 1337(c).

JURISDICTION TO ENJOIN THE ITC DIRECTLY

As a threshold matter, the Court must determine whether a federal district court may suspend an ITC investigation or directly enjoin the ITC from going forward with its investigation as to Weslo. Congress did provide that an ITC investigation could be “suspended because of proceedings in a court or agency of the United States involving similar questions concerning the subject matter of such investigation.” 19 U.S.C. § 1337(b)(1). Although the statute is silent as to who may suspend, it is clear from the context that the ITC may suspend its own investigation. In addition, the legislative history indicates that “suspension of proceedings may be undertaken by the Commission ... as a result of a court order.” Senate Comm. on Finance, U.S. Senate Report on H.R. 10710, Trade Reform Act of 1974, S.Rep. No. 1298, 93d Cong., 2d Sess. 194-95 (1974), reprinted in 1974 U.S.Code Cong. & Ad.News 7186, 7326, 7327. The legislative history does not, however, provide any indication of which court, under what circumstances, may order suspension of an ITC proceeding. It follows that the above quoted language from the legislative history is not in itself sufficient evidence that Congress has vested jurisdiction in the district court to suspend an ITC investigation.

Weslo’s position is advanced no further if the request for an order of suspension is characterized as an injunction. The issue then becomes whether a federal district court has jurisdiction to enjoin an agency from pursuing its congressionally mandated task. Weslo has pointed to no statute which expressly confers jurisdiction on the Court. Subject matter jurisdiction, if any, must be found in the All Writs Act, 28 U.S.C. § 1651.

The ITC argues a district court does not have jurisdiction under the All Writs Act to enjoin an ongoing ITC proceeding. It correctly observes that Congress has vested in the ITC exclusive jurisdiction over certain practices involving the importation of articles of commerce into the United States and has placed appellate, review of the ITC’s sphere of activity in the Court of Appeals for the Federal Circuit. The ITC then reasons that since the All Writs Act only endows the court with authority to act in preservation of jurisdiction which it already possesses, the district court remains powerless to attempt to preserve jurisdiction it does not possess.

While having superficial appeal, the ITC position sweeps too wide. The question is not whether the district court may invoke the authority of the All Writs Act to preserve jurisdiction it does not have, but rather whether on these facts there is a need to invoke the Act to preserve jurisdiction which the court does have. Clearly a district court may not address certain questions concerning the importation of articles of commerce into the United States. Congress has placed exclusive jurisdiction over such questions in the ITC and a federal district court has no jurisdiction under the All Writs Act to intrude upon the ITC’s domain.

The issue here, however, is whether the district court has jurisdiction to enjoin the ITC in áid of its own exclusive jurisdiction over domestic patent matters. Conceivably, ITC proceedings might actively interfere with concurrent patent litigation to such an extent that a federal district court could not effectively exercise its jurisdiction. In those instances, a district court could well be justified in invoking its powers under the All Writs Act. Such an occurrence is unlikely in view of the policy of the ITC to suspend its investigations when there is actual and active interference with ongoing concurrent district court litigation. See Certain Card Data Imprinters and Components Thereof 47 Fed.Reg. 7348 (1982) (suspension of Investigation No. 337-TA-104); Certain Plastic Fastener Assemblies, 42 Fed.Reg. 55654 (1977) (suspension of Investigation No. 337-TA-36).

Moreover, there is no indication on this record that the ITC investigation will in any way frustrate or impinge upon federal district court administration of this particular multidistrict litigation. The first pretrial conference was held on May 10, 1985. At that conference August 10, 1986, was established as the discovery termination date. In contrast, the ITC, mindful of its statutory duty to render a decision within twelve months (eighteen months in more complicated cases), 19 U.S.C. § 1337(b)(1), has scheduled a hearing to commence on August 5, 1985. Regardless of whether the hearing is continued, there appears to be no chance that the ITC proceeding will actively interfere with the conduct of the multidistrict litigation now pending in this district. What is actually at stake here is not the preservation of the district court’s jurisdiction, but the protection of Weslo from the inconvenience of responding in two tribunals at the same time. The All Writs Act, however, serves to protect courts and not parties. As a consequence, the. All Writs Act provides no basis upon which to exercise jurisdiction and the Court is left without power under these circumstances to directly enjoin, suspend or stay the ITC investigation.

ENJOINING OF DIVERSIFIED

It is argued that if the Court lacks jurisdiction to enjoin the ITC directly, it lacks jurisdiction to enjoin Diversified from pursuing its ITC remedy. In other words, Weslo should not be permitted to accomplish indirectly that which it could not do directly. This argument is too facile. While an injunction against Diversified would represent an interference with the ITC investigation, this fact alone would not be conclusive. The issue here is not the lack of jurisdiction to issue an injunction but the existence of sufficient reason to cause the Court to grant such extraordinary relief.

Central to Weslo’s assertion of its right to have Diversified enjoined from pursuing it in the ITC action is its protest against being a named defendant in parallel proceedings. Weslo contends the simultaneous ITC and district court actions include substantially the same factual and legal questions. Weslo objects to the use of two fora to determine the same issues. Specifically, Weslo asserts the ITC, like the district court, will have the task of determining the validity and enforceability of the ’071 and ’719 patents, as well as Weslo’s alleged infringement of the patent claims. It follows, argues Weslo, that because the issues in both fora are the same, discovery and witnesses will be substantially identical and any relief afforded by the ITC will be inclusive of that sought in the district court. Indeed, urges Weslo, there is no material difference between the ITC and district court matters.

Weslo is partially correct. Whenever a claim of unfair.practice in import trade is premised upon infringement of a United States patent, there is an unavoidable overlap of the issues involved in parallel patent proceedings. The ITC is confronted with the necessity for making a “determination” as to the validity, infringement and, if applicable, enforceability of the identical patents which are at issue in the district court. This overlap of issues in the ITC and district court is where the similarity ends. The two proceedings have different jurisdictional foundations, different final adjudications, different purposes, different proof, different time constraints, different remedies, and different issues on appeal.

Differing Jurisdiction

Patent law is based upon article 1, section VIII, clause 8 of the Constitution which grants to Congress the power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Congress placed original jurisdiction over patent actions exclusively in the federal district courts. 28 U.S.C. § 1338(a). Only a federal district court may adjudicate patent validity, enforceability and infringement issues. Appeal of the district court decision may be taken to the Court of Appeals for the Federal Circuit. 28 U.S.C. § 1292(c)(2).

Original jurisdiction over unfair practices in import trade lies exclusively with the. ITC. 19 U.S.C. §§ 1332(b), 1337. Appeals from ITC decisions may also be taken to the Court of Appeals for the Federal Circuit. 19 U.S.C. § 1337(c). While the ITC makes a “determination” as to patent issues, it has no jurisdiction to make a binding adjudication on patent matters. Neither a federal district court nor the ITC may transgress upon the jurisdiction of the other. Ashlow, Ltd. v. Morgan Construction Co., 672 F.2d 371, 375 (4th Cir.1982).

Differing Purposes

Given their respective mutually exclusive jurisdictions, it is not surprising each forum makes vastly different adjudications. A district court decides validity, enforceability and infringement of United States patents. The district court determination has no extraterritorial effect.

In contrast, an ITC investigation of allegedly unfair competition based upon patent infringement always contains an international element. The ITC’s focus is on preventing importation of the patented article by anyone, foreign or domestic, in competition with a domestic patentee or licensee. If unfair methods of competition are found to injure a patentee in an economically operated United States industry, the ITC may, within its statutory limitations, fashion a remedy to protect United States domestic industry against unfair foreign competition.

Differing Proof and Timing

Proof in a district court patent case always centers on and is limited to validity, enforceability, and infringement. There are no statutory time limits governing patent litigation and often the cases span several years. In many patent cases, including this convertible rowing exerciser multidistrict litigation, the trial is bifurcated and the damage issue is postponed until liability is ascertained. See Dkt. 36.

The time constraints upon and determinations made by the ITC are unlike those of the district court. In the absence of a suspension of proceedings, the ITC must determine within twelve months (eighteen months in complicated cases) whether: (1) there are imports into the United States; (2) there is an industry in the United States; (3) there are unfair acts or methods of competition; (4) the effect or tendency of the unfair acts or methods of competition is to destroy or substantially injure the industry; and (5) the industry is efficiently and economically operated. See 19 U.S.C. § 1337(a), (b). If the ITC is unable to make affirmative findings as to each and every component of the injury, it may not, under its limited statutory authority, issue a remedial order. If a remedy is appropriate, the ITC may either order the exclusion of the subject articles from entry into the United States or direct one or more of the parties to cease and desist from the unfair practices.

Before issuing a remedial order, however, the ITC is required to evaluate the impact of such an order on the public interest. Specifically, the ITC must consider the effect of a remedial order “upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers____” 19 U.S.C. § 1337(d), (f)(1). The ITC determination and remedy are then transmitted to the President, who has sixty days in which he may disapprove the ITC’s determination or order for “policy reasons.” 19 U.S.C. § 1337(g). If the President approves the ITC determination, a party adversely affected by a final determination of the ITC may appeal to the Court of Appeals for the Federal Circuit within sixty days. 19 U.S. C.A. § 1337(c) (Supp.1985). The appeal is limited to issues determined by the ITC. Beloit Corp. v. Valmet Oy, 742 F.2d 1421 (Fed.Cir.1984).

It is evident from the above discussion that the elements of proof and consequent discovery are far more expansive in the ITC proceeding than in the district court. The two proceedings overlap only insofar as both consider whether there have been unfair acts or methods of valid competition—the district court in the context of determining whether a domestic patent has been infringed, and the ITC in determining whether articles have been imported which infringe a domestic patent. The two fora have in common proof of patent validity, enforceability, infringement, and defenses to the same. Proof on all other issues before the ITC are not relevant to the district court patent inquiry. In short, the adjudication within the exclusive jurisdiction of the district court is but one relevant component of the ITC investigation.

Differing Remedies

A successful plaintiff in a district court infringement action may obtain in person-am injunctive and monetary relief against a defendant for infringement which occurs in the United States. If the statutory life of the patent has not expired, the district court will generally enjoin future infringement and award damages for past infringement. Compliance with the district court’s order is left to the plaintiff to police.

A complainant in an ITC action who successfully establishes an unfair method of competition or unfair act of importation or sale of imported items and otherwise qualifies for a remedial order can normally obtain an exclusion order, 19 U.S.C. § 1337(d), or a cease and desist order, 19 U.S.C.- § 1337(f)(1). An exclusion order is typically an in rem remedy directing the exclusion from entry into the United States of any infringing product. Since it is directed to exclusion of the product, it is not limited to the respondents named before the ITC. Responsibility for excluding entry into the United States of the offending item is placed upon the Secretary of the Treasury, not the complainant. 19 U.S.C. § 1337(d). An ITC cease and desist order is analogous to a district court injunction in that the ITC respondents are in effect enjoined from further committing the acts enumerated in the ITC complaint or, in appropriate circumstances, are enjoined from selling existing inventories of infringing items.

Differing Issues on Appeal

Prior to passage of the Federal Courts Improvement Act of 1982, Pub.L. No. 97-164, it was recognized that the overlap between the ITC and the district courts with regard to patent matters contained the potential for intriguing problems. See, Kaye, Lupo and Lipman, The Jurisdictional Paradigm Between the United States International Trade Commission and the Federal District Courts, 64 J.Pat.Off.Soc’y 118 (1982). The Federal Courts Improvement Act placed jurisdiction to hear appeals from both types of actions in the same court, the Court of Appeals for the Federal Circuit. See 28 U.S.C. § 1295(a)(1), (6).

Although appeals must now be taken to the same court, the fact remains that appeals from ITC matters and appeals from district court patent proceedings cover different issues. Such is not surprising, given the differing jurisdictions, purposes, issues, proof and remedies afforded by the two tribunals. Broadly stated, the Court of Appeals for the Federal Circuit may review district court adjudications of patent validity, enforceability and infringement for erroneous findings of fact and errors of law. The issue on appeal from an ITC decision is whether the ITC made the correct determination with respect to unfair practices in import trade, and issued an appropriate remedial order under section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337. Because the question on review from the two fora is different and since the district court has exclusive original jurisdiction over patent matters, it necessarily follows the appellate court cannot render a binding determination on the issues of patent validity, enforceability and infringement on an appeal from the ITC.

Weslo has nevertheless articulated concern about the evolving law of issue preclusion. Weslo contends that the potential for serious intrusion upon the exclusive original jurisdiction conferred by Congress upon the district court is exacerbated by the fact that appeals from the ITC and district court are now heard by the same appellate court. Appeal of the later filed ITC action will in all probability precede any appeal of the district court judgments in the patent actions. The appellate court might well have to pass upon issues of patent validity, enforceability and infringement of the ’071 and ’719 patents as a component of reviewing an ITC section 337 determination of unfair practices in trade imports. If it does, argues Weslo, when appeal of the district court matter reaches the Court of Appeals for the Federal Circuit, the court might refuse to undo what has already been done on appeal from the ITC matter. See Stevenson v. Sears, Roebuck & Co., 713 F.2d 705, 710 n. 4 (Fed.Cir.1983).

The fact that the law of issue preclusion is evolving does not warrant issuance of an injunction. The Court of Appeals for the Federal Circuit has not as yet applied any preclusion doctrine in this context. Undoubtedly, when the court does consider the preclusive effect of its rulings on an ITC appeal, it will take into account the jurisdictional thicket. The appellate court might well determine that the parties to an ITC proceeding “failed to carry their burden of persuasion in asserting the invalidity of the subject claims,” Stevenson v. International Trade Commission, 612 F.2d 546, 555 (C.C.P.A.1979), and still conclude on a later appeal from a district court, based on a conceivably different record, that the patent is invalid. See Stevenson v. Sears, Roebuck & Co., supra (reconciling inconsistent holdings of Stevenson v. International Trade Commission, 612 F.2d 546 (C.C.P.A.1979), and Stevenson v. Grentec, Inc., 652 F.2d 20 (9th Cir.1981), cert. denied, 456 U.S. 943, 102 S.Ct. 2008, 72 L.Ed. 465 (1982)). Moreover, given that the Court of Appeals for the Federal Circuit might understandably be reluctant to undo a prior ITC section 337 patent determination, this only means a district court would do well to heed the “red flag.” A district court might accordingly demand that trial counsel thoroughly explain 1) the differences in the record; 2) why those differences were not presented to the ITC and to the Court of Appeals for the Federal Circuit; and 3) why the differences should cause a district court to reach a result contrary to that of the Court of Appeals for the Federal Circuit in its review of the ITC ruling. A potential increase of the burden upon the non-prevailing party before the Court of Appeals for the Federal Circuit does not generally warrant issuance of an injunction.

In any event, regardless of the outcome of the issue preclusion question, Congress, as the source of this Court’s patent jurisdiction and the ITC’s jurisdiction, has made the choice to permit an overlap of issues in these two fora. It cannot, therefore, be said that the simultaneous prosecution of an ITC action is an unlawful intrusion upon this court’s patent jurisdiction.

Multidistrict Litigation Transfer as a Basis for Injunction

In a further attempt to find a jurisdictional basis for its requested injunctive relief, Weslo points to the multidistrict litigation statute, 28 U.S.C. § 1407, which Diversified has invoked to have proceedings consolidated in the district court. Weslo argues that section 1407, read in conjunction with 19 U.S.C. § 1337, evinces a clear congressional intent against parallel proceedings. Weslo purports to find support for its position in two sentences of the legislative history of section 337:

The provision for the tolling of the running of the time limits provided by this amended section is intended to apply to situations where the section 337 proceedings are suspended due to concurrent proceedings involving similar issues concerning the same subject matter before a court or agency of the United States. Such suspension of proceedings may be undertaken by the Commission as an ex-ereise of its own discretion, or as a result of a court order to the same effect.

S.Rep. No. 1298, 93d Cong., 2d Sess. 194-95 (1974), reprinted in 1974 U.S.Code Cong. & Ad.News 7326, 7327.

The short answer to this assertion is that the multidistrict transfer statute was passed for purposes of judicial economy, and not to frustrate ongoing administrative proceedings. Similarly, the suspension provision of 19 U.S.C. § 1337(b) was not intended to be utilized every time there are parallel proceedings in the ITC and the district court. Suspension should be reserved for when it is necessary—a policy which the ITC already follows. Suspension is not warranted in this case.

Irreparable Injury

A showing of irreparable injury is almost always essential to obtain injunctive relief. Weslo contends it is suffering irreparable injury by reason of being “bludgeoned with two simultaneous actions,” Dkt. 33 at 12. Specifically, it complains “duplicative” proceedings are resulting in substantial and unnecessary costs, lost business time, inordinate-difficulties for respondent/defense counsel, conflicting protective orders which place counsel in an untenable position, and a denial of due process. None of these factors, considered singly or in combination, constitute irreparable injury.

Congress implicitly recognized that more than one proceeding might result from its statutory scheme. Section 337 expressly provides that “[violations] found by the Commission to exist shall be dealt with, in addition to any other provisions of law, as provided in this section.” 19 U.S.C. § 1337(a) (emphasis added). This directive has existed in one form or another since 1922. See Act of Sept. 21, 1922, ch. 356, Title III, § 316, 42 Stat. 943. Yet Congress has never acted to prevent simultaneous proceedings despite the obvious possibility that a single party could be involved in parallel litigation.

Moreover, Congress has established a finite period in which the ITC must make its determinations, a period far shorter than the time it typically takes to resolve a district court patent case. Given this statutory time limit, one would assume that if Congress intended that a suspension be granted whenever a patent infringement action is instituted, it would have made the suspension mandatory or directed that district court proceedings be stayed.

The burdens complained of by Weslo are no different than those suffered by anyone who imports or sells an imported article which allegedly infringes a domestic patent. In each such instance there is the potential for exposure to proceedings before both the district court and the ITC. That exposure carries with it unavoidable expenditures of time and money to defend in parallel litigation. The additional burden on a corporation’s counsel, or the need to obtain additional counsel, does not constitute irreparable injury which would compel the grant of an injunction to delay an administrative proceeding. The same is applicable to litigation expenses. Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. 1, 23-24, 94 S.Ct. 1028, 1040-41, 39 L.Ed.2d 123 (1974).

Weslo also urges that conflicting confidentiality orders place it in an untenable position. The confidentiality orders are not, however, conflicting, but merely protect discovery produced in each case. Weslo stresses that, as a practical matter, counsel should not have to compartmentalize what has been learned in each case and should not be subjected to the unnecessary expense of duplicative production. These concerns could conceivably be resolved by seeking modification of the confidentiality order operating in each forum so as to permit relevant patent information to be used irrespective of the proceeding in which it was produced.

Weslo additionally complains it is denied due process because it must proceed in the relatively fast-paced ITC proceeding. Weslo in effect is asserting there is a constitutional entitlement to the overdiscovered, overtried, and consequent glacial pace of district court patent litigation. It has cited no authority for this amazing proposition. Its due process argument is further blunted because the ITC statute provides for a determination made on the record after notice and an opportunity for hearing during which all legal and equitable defenses may be presented. 19 U.S.C. § 1337(c). If any constitutional infirmity creeps into the ITC administrative proceedings, the appellate court is well equipped to redress such flaws.

Finally, Weslo contends that if the ITC action is appealed to and decided by the Federal Circuit before the district court has an opportunity to render its decision, Weslo will, in effect, be denied its right to a jury trial on those issues which have been presented in both fora. Weslo’s argument presupposes that some theory of issue preclusion will prevent this Court from trying on the merits issues which are similar, though not identical, to issues passed upon by the Federal Circuit on appeal from an ITC determination. That theory has already been rejected in the Court’s earlier discussion, based upon the differing exclusive provinces of the district court and the ITC. See supra pages 1142-1143. At present, the existence of simultaneous proceedings before the ITC poses only the most tenuous threat to Weslo’s right to a jury trial, and is insufficient to satisfy the Court that an injunction is appropriate.

In short, the existence of parallel litigation, without more, confers no right to injunctive relief.

Relative Harm to the Parties and the Public

Weslo urges for the reasons detailed above that it will suffer irreparable harm if an injunction against Diversified is not granted. Other defendants in this multidistrict litigation support Weslo’s application, presumably fearing the faster moving ITC matter might adversely affect them without affording them an opportunity to participate actively. Diversified, on the other hand, contends it needs protection from foreign imports in an efficiently and economically operated domestic industry in which it was a development leader. Moreover, Diversified asserts protection against infringing importers is not available under the domestic patent law. The short answer is that the ITC, the statutory representative of the public interest, has determined that interest is best served by continuing the ITC investigation at this time. Nothing has been placed before me which demonstrates the ITC is incorrect in its assessment of the public interest. Similarly, independent of the ITC determination, I am not persuaded that the interest of the public would be better served by issuance of an injunction.

Finally, Weslo urges that this Court should be guided by Pfizer, Inc. v. International Rectifier Corp., 182 U.S.P.Q. 595, 597 (D.Minn.1974), rev’d on other grounds, 183 U.S.P.Q. 400 (8th Cir.1974), reinstated, 185 U.S.P.Q. 449 (D.Minn.1975). The facts in that case are vastly different from those presented here and the case is distinguishable on that basis alone. To the extent the Pfizer case conflicts with this Opinion, I respectfully decline to follow it. Balancing the interests of all parties and the public interest, exercise of my discretion points in only one direction—denial of the injunction. There has been no convincing demonstration that the statutorily authorized ITC investigation should be obstructed by enjoining Diversified. While the Court has found no jurisdiction to enjoin the ITC directly, if the Court possessed such jurisdiction, it would decline to issue the injunction for the reasons that it declines to enjoin Diversified.

      . A convertible rowing exerciser permits the user to engage in rowing and a variety of other popular exercises.

        . Suits have been filed against the following defendants in the jurisdictions indicated:
      Rocket Industries, Inc. (C.D.Calif.)
      Roadmaster, Inc. (S.D.Ill.)
      Columbia Manufacturing Co. (D.Mass.)
      Beacon Enterprises, Inc., and Saw Mill River
      Industries, Inc. (S.D.N.Y.)
      Billard Barbell Co. (E.D.Pa.)
      Walton Manufacturing Co. (N.D.Tex.)
      Weslo Design International, Inc. (D.Utah)
      Ajay Enterprises Corporation (D.Del.)
      Allegheny International Exercise Company (D.Del.)
      In addition, a declaratory judgment action was filed in the Northern District of Illinois by Ajay Enterprises Corporation against Diversified. It is anticipated the Illinois action will find its way to this Court for pretrial purposes.

      . Misc. 85-14 MMS, Dkt. 1.

      . The 719 defendants and the districts in which they were sued are: Billard Barbell Co. (E.D. Pa.), Weslo Design International, Inc. (D.Utah), and Allegheny International Exercise Company (D.Del.).

      . The Panel’s conditional order of transfer of the Eastern District of Pennsylvania and District of Utah 719 patent actions became final on May 28,1985. Misc. 85-14, Dkt. 34.

      . Weslo requested that its motion be given a prompt hearing in this Court. Taking a larger view of the entire convertible rowing exerciser litigation, the Court declined for administrative and substantive reasons to hear summary judgment motions on a piecemeal basis where predicated on non-infringement. Cf. D.M.I. v. Deere & Co., 755 F.2d 1570 (Fed.Cir.1985) (because infringement is a fact issue, a motion for summary judgment should be approached with care "proportioned to the likelihood of its being inappropriate”).

      . The ITC has intervened in this action for the limited purpose of opposing Weslo’s motion to stay or suspend the ITC proceedings. Dkt. 29.

      . 28 U.S.C. § 1651 provides:
      (a) The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable, to the usages and principles of law.
      (b) An alternative writ or rule nisi may be issued by a justice or judge of a court which has jurisdiction.

      . 19 U.S.C. § 1337(a) provides:
      (a) Unfair- methods of competition and unfair acts in the importation of articles into the United States, or in their sale by the owner, importer, consignee, or agent of either, the effect or tendency of which is to destroy or substantially injure an industry, efficiently and economically operated, in the United States, or to prevent the establishment of such an industry, of to restrain or monopolize trade and commerce in the United States, are declared unlawful, and when found by the commission to exist shall be dealt with, in addition to any other provisions of law, as provided in this section.
      The statutory time period provided in 19 U.S.C. § 1337(b) begins to run upon publication of notice of the investigation in the Federal Register. 19 U.S.C. § 1337(b).

      . During the course of an ITC section 337 investigation, the Commission may determine there is reason to believe there is a violation of the statute and may direct that the articles concerned be excluded from entry into the country except under bond. See 19 U.S.C. § 1337(e).

      . Statistics show that since the passage of the Trade Act of 1974, holders of U.S. patents have prevailed on the issue of patent validity in about 65% of the ITC decisions, as compared to 40 to 45% of the district court decisions. See Kaye, Lupo & Lipman, supra page 1142, at 118.

      . See supra page 1139.

      . Weslo hints that duplicative litigation costs might bankrupt the company. However, there are no facts of record to support that bankruptcy is imminent as a result of these costs.


source: Caselaw Access Project

author: JOSEPH H. YOUNG, District Judge.

license: Public Domain

text:
    UNITED STATES of America v. Mardy Ralph ERRERA, et al.
    Crim. No. Y-85-013.
    United States District Court, D. Maryland.
    July 24, 1985.

      J. Frederick Motz, U.S. Atty., Baltimore, Md. and Barbara S. Sale, Asst. U.S. Atty., Baltimore, Md., for plaintiff.
    Plato Cacheris, Larry S. Gondelman, Washington, D.C., Eugene Zoglio, Bowie, Md., and William H. Murphy, Jr., Baltimore, Md., for defendants.
   MEMORANDUM

JOSEPH H. YOUNG, District Judge.

Defendants Mardy Ralph Errera, Anthony LaRusso, Willie Gore, Arturo Palacious, and James (Jamie) B. Palacious have been indicted for conspiracy to distribute cocaine, and possession of cocaine with intent to distribute, in violation of 21 U.S.C. §§ 841(a)(1) and 846.' Defendant Errera filed a motion to suppress recorded oral conversations and tangible evidence and defendant LaRusso filed motions to suppress evidence secured by search and seizure and oral and written statements. All defendants have moved to adopt all other defense motions. Following an evidentiary hearing on the merits of defendants’ motions, and after a review of the memoranda filed, defendants’ motions to suppress will be denied.

On November 19, 1984, Judge Bryan of the United States District Court for the Eastern District of Virginia authorized the electronic interception of oral communications transmitted over telephone lines serving defendant LaRusso’s residence (Virginia wiretap). The court gave its authorization after having found probable cause to believe that the defendant was using his home telephone in connection with the distribution of cocaine and that conversations relating to this offense would be intercepted. (Government’s Exhibit 1, Order Authorizing Interception of Wire Communications). The court relied on a forty-eight page affidavit of Special Agent Joseph Sciacea of the Federal Bureau of Investigation (“FBI”). (Government’s Exhibit 1, Affidavit).

On December 14, 1984, Judge Miller of this Court found probable cause to believe that defendant Errera’s home telephone was being used in connection with the distribution of cocaine and that conversations revealing this fact would be intercepted and authorized a wiretap of defendant Err-era’s home telephone, (Maryland wiretap), (Government’s Exhibit 2, Order), on the basis of a thirty-two page affidavit of Special Agent Cameron Craig. (Id., Affidavit). The government’s application for electronic interception and the supporting affidavit which it incorporates by reference were based in large part on conversations intercepted pursuant to the wiretap placed on defendant LaRusso’s residential phone. (Id., Application and Affidavit).

The record reveals that soon after the wiretap on defendant Errera’s phone was commenced, federal agents learned from many “veiled” phone conversations among the various defendants that defendant Err-era was expecting a shipment of cocaine. Testimony and other evidence in the record indicates that on or about December 20, 1984, Errera and his co-defendant Willie Gore drove to the Delta Cargo Terminal at the Baltimore-Washington International (“BWI”) Airport where Gore picked up a pallet loaded with cardboard cases. The two defendants then returned separately to the Errera residence. Telephone activity upon Errera’s return home indicated that he had received cocaine and was packaging it for distribution. Federal agents hastily applied for a warrant to search the Errera residence and Magistrate Clarence Goetz of this Court authorized the warrant based upon an oral affidavit which relied extensively on the contents of intercepted phone conversations and the observations of surveillance officers.

Defendant LaRusso visited the Errera house just prior to the execution of the search warrant and his car was stopped shortly after leaving the Errera residence. Approximately two pounds of cocaine were seized from a brown bag that agents contend was half concealed under the front seat of his ear. Defendant Palacious also appeared at the Errera residence before the search warrant was executed; he was stopped after leaving the house and a small amount of cocaine was seized from him. Thereafter, agents executed the search warrant and a search of the Errera home revealed a triple beam balancing scale, packaging materials, and two kilos of purportedly high quality cocaine.

I. ISSUES RAISED BY DEFENDANTS’ MOTIONS TO SUPPRESS

Defendants offer a number of challenges to the evidence in this case. Their contentions may be briefly summarized as follows: (1) the initial order authorizing the interception of wire communications at the residence of defendant LaRusso (Virginia wiretap) was illegal because there was no probable cause to believe that communications concerning and involving cocaine trafficking would be transmitted over LaRusso’s residential phone; (2) the failure to establish probable cause requires that the communications obtained pursuant to that authorization and all derivative evidence obtained therefrom be suppressed; (3) all evidence obtained from the wiretap of defendant Errera’s phone (Maryland wiretap) and from the subsequent search of his residence should be suppressed as “tainted fruits” of the illegal Virginia wiretap because the order authorizing the Maryland wiretap was issued in reliance on information obtained from the Virginia wiretap and the authorization to search the Errera residence was based in large part upon information gleaned from both wiretaps; (4) the Maryland wiretap order was also defective because there was not probable cause to believe that communications relating to cocaine trafficking would be transmitted over Errera’ home phone; (5) the application for a search warrant of the Errera residence was not supported by probable cause established by information untainted by the unlawful wiretaps; and (6) there was not probable cause nor were there exigent circumstances which justified the stop and search of the LaRusso vehicle.

II. APPLICABLE LAW

Title III of the Omnibus Crime Control and Safe Streets Act, 18 U.S.C. §§ 2510-2520, is the statutory scheme which governs the authorization of electronic and wiretap surveillance. Gelbard v. United States, 408 U.S. 41, 46, 92 S.Ct. 2357, 2360, 33 L.Ed.2d 179 (1972). Wiretap and electronic surveillance activities also are subject to the Fourth Amendment, which requires that warrants be issued only “upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the person or things to be seized.” See Berger v. New York, 388 U.S. 41, 54-55, 87 S.Ct. 1873, 1881, 18 L.Ed.2d 1040 (1967). Section 2518(l)(b) of Title III embodies the warrant clause requirement and mandates that an application for wiretap authorization set forth facts establishing probable cause. See United States v. Talbert, 706 F.2d 464, 467 (4th Cir.1983); see also J. Carr, The Law of Electronic Surveillance, at 168 (1978). Every application must include:

a full and complete statement of the facts and circumstances relied upon by the applicant, to justify his belief that an order should be issued, including (i) details as to the particular offense that has been, is being, or is about to be commit-ed, (ii) a particular description of the nature and location of the facilities from which or the place where the communication is to be intercepted, (iii) a particular description of the type of communications sought to be intercepted, (iv) the identity of the person, if known, committing the offense and whose communications are to be intercepted;

18 U.S.C. § 2518(l)(b). In addition, the issuing judge must determine, on the basis of the facts submitted by the applicant that: (a) there is probable cause to believe that an individual is committing, has committed, or is about to commit one of several enumerated offenses which includes trafficking in narcotics; (b) there is probable cause to believe that particular conversations involving that offense will be obtained through a wiretap; (c) there is probable cause to believe that the telephone or place where the wire communications are to be intercepted is being used, or is about to be used in connection with the commission of the offense charged. 18 U.S.C. § 2518(3); United States v. Webster, 473 F.Supp. 586, 590 (D.Md.1979), aff'd in part, 639 F.2d 174 (4th Cir.1981), cert. denied sub nom., Christian v. United States and Adams v. United States, 454 U.S. 857, 102 S.Ct. 307, 70 L.Ed.2d 152 (1981). A link between the individual, the telephone, and the offense must be established.

Applications for electronic surveillance orders, like search warrants, are to be read “in a common sense and realistic fashion.” United States v. Armocido, 515 F.2d 29, 40 (3d Cir.), cert. denied, 423 U.S. 858, 96 S.Ct. 111, 46 L.Ed.2d 84 (1975). Webster, 473 F.Supp. at 591; United States v. Santarpio, 560 F.2d 448, 453 (1st Cir.), cert. denied, 434 U.S. 984, 98 S.Ct. 609, 54 L.Ed.2d 478 (1977). Assessments concerning probable cause are to be made after the “totality of circumstances” test has been used to determine the adequacy of an application. Cf. Illinois v. Gates, 462 U.S. 213, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983) (applying the “totality of circumstances” test to applications for search warrants). If there is, under all the circumstances, a “fair probability that ... evidence of a crime will be found,” authorization should be granted. Id., at 238, 103 S.Ct. at 2332.

Where electronic surveillance has been authorized by a judicial officer, “the fact that the issuing judge found probable cause is itself a substantial factor tending to uphold the validity of the order so issued.” United States v. Becker, 334 F.Supp. 546, 549 (S.D.N.Y.1971). The propriety and adequacy of the review given to the application by the issuing judge should be presumed. See generally United States v. Lucido, 373 F.Supp. 1142, 1146 (E.D.Mich.1974) (court will not assume that issuing judge did not make, or was not capable of making, a finding of probable cause based on the relevant data). This reasoning is consistent and dovetails with that of the Supreme Court in United States v. Leon, — U.S. —, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984). In Leon, the Court determined that the exclusionary rule does not require the suppression of evidence gathered in good faith on a facially valid warrant. See, id., 104 S.Ct. at 3421.

Finally, the requirements of § 2518(3) are intended to implement and faeiliate the Fourth Amendment requirement of probable cause to believe that the evidence sought is located in the place to be searched. United States v. Green, 634 F.2d 222, 225 (5th Cir.1981). Without such a showing, the authorization, and surveillance pursuant to it is invalid and the fruits of the surveillance may not be admitted at trial. See United States v. Giordano, 416 U.S. 505, 524-29, 94 S.Ct. 1820, 1831-33, 40 L.Ed.2d 341 (1974); see also, 18 U.S.C. § 2515, 2518(10)(a)(i) (provisions mandating the suppression of illegally obtained evidence in wiretap authorization statute).

III. ANALYSIS

Defendants contend that the wiretap application involving the telephone of defendant LaRusso (Virginia wiretap) was insufficient to establish probable cause to believe that conversations concerning a cocaine conspiracy would be intercepted by a wiretap of that particular residential telephone. Defendants argue that the results of the FBI surveillance operations do not support the conclusion that LaRusso was conducting his alleged cocaine business over his home telephone. Defendants state that “in fact, the pattern of activity observed by the FBI indicates that the subjects of the surveillance conduct their affairs in person. The affidavit is replete with observations of personal meetings.” (Memorandum in Support of the Motion to Suppress of Defendant Errera, at 6-7). Thus, defendants urge that Special Agent Sciacca’s affidavit fails to provide a reasonable basis for concluding that the telephone communications to be intercepted would relate to the alleged crimes.

Defendants’ arguments on this point are simply not persuasive in light of the overwhelming evidence in the record which substantiates the information cited by the government in its application for a wiretap order. The affidavit supporting the application itself makes reference to six phone calls made by a confidential government informant to LaRusso where drug purchases were discussed. One confidential informant met defendant LaRusso and purchased a quantity of cocaine directly from him following a cocaine related conversation in which LaRusso’s home telephone was used. Moreover, FBI surveillance, pen registers, and two other confidential sources with proven records of reliability corroborated the observations of the first informant who purchased the cocaine from the defendant. The record also reveals that a second informant was offered cocaine by defendants LaRusso and Errera and that other sources furnished considerable information concerning the identity of LaRusso’s cocaine customers and partners. The evidence further indicates that surveillance officers observed numerous meetings and transactions involving defendant La-Russo typical of those which take place in drug trafficking. Pen registers also showed there were numerous calls among the alleged co-conspirators during this time.

Taken as a whole and under the “totality of circumstances,” the affidavit in support of the application for the Virginia wiretap warrant is sufficient to establish a reasonable belief that defendant LaRusso was using his home telephone to further a cocaine trafficking enterprise and that conversations relating to such an enterprise would in all probability be intercepted during a wiretap of defendant’s phone.

Federal courts have upheld the validity of wiretap orders issued in reliance on affidavits which state that a suspect has conducted illegal business over the telephone (for which the wiretap order is sought). These wiretap orders have been properly issued where the affidavit accompanying the government’s application is supported by a reliable informant' whose testimony itself is corroborated by government surveillance and other evidence. See, e.g., Becker, 334 F.Supp. at 550-51; United States v. Leon, 534 F.2d 667 (6th Cir.1976). If a defendant is willing to conduct business over the telephone with one presumed customer on more than a single occasion, it is not unreasonable to assume that he will conduct business similarly with other customers, partners, or co-conspirators at other times.

Defendant argues that even if the affidavit and application are sufficient to establish probable cause, the issuance of the Virginia wiretap order was nonetheless improper because of the government’s participation in the creation of probable cause. (Errera Memorandum, at 8 (citing United States v. Archer, 486 F.2d 670 (2d Cir. 1973)). However, defendant’s argument is unavailing and his reliance on Archer misplaced. Nothing in Archer, or any other relevant authority of which the Court is aware compels it to conclude that the government may not confirm a drug dealer’s willingness to do business over the telephone by using confidential informants. See Leon, 534 F.2d at 667 (informant’s assertions that he had placed bets with the defendant was proper basis for finding probable cause upon which wiretap order was authorized); United States v. Sellaro, 514 F.2d 114 (8th Cir.), cert. denied, 421 U.S. 1013, 95 S.Ct. 2419, 44 L.Ed.2d 681 (1973) (recitals in affidavit supporting wiretap application noted that two informants had placed bets with co-defendants over the phone and were sufficient to establish probable cause). The Court of Appeals in Archer simply disapproved of the “sting” tactics in which government agents committed perjury and gave false declarations. It found these tactics to be “substantially more offensive than the common cases where government agents induce the sale of narcotics in order to make drug arrests” but it reversed defendant’s conviction on other grounds. Archer, 486 F.2d at 677. If the government may develop probable cause to assert a suspect by inducing a narcotics sale under circumstances which do not amount to entrapment, certainly it can rely on probable cause established by similar means when applying for an electronic surveillance order.

Finally, defendant contends that the information in the application for the Virginia wiretap order was stale and therefore insufficient to establish probable cause. This argument is equally without merit. The application for a wiretap was approved by the court on November 9, 1984, and a confidential informant engaged in a drug related conversation with LaRusso using one of the telephones at his home as recently as October 29th. Additionally, there was pen register activity showing a high volume of calls to suspected criminal associates of LaRusso at the end of October, 1984. Recognizing that several weeks may be required to process an application for electronic surveillance, the information supporting the wiretap order was as current as possible and sufficiently fresh to establish probable cause. In United States v. Fina, 405 F.Supp. 267 (E.D.Pa.1975), the district court determined that although the information upon which the government relied was three weeks old, it was proper to find that probable cause existed at the time the wiretap order was issued because there necessarily must be a delay between the time the information is gathered to support the application for a wiretap and the time the court actually issues the wiretap order. Id., at 274-75.

Considering all the relevant factors and applicable standards, it is apparent that there was probable cause to believe that defendant LaRusso and hi's associates would engage in conversations of a drug related nature over his home telephone. The Court also finds that the information supporting the government’s application was not stale. Therefore, defendant Err-era’s contention that the evidence obtained by virtue of the wiretap on his home (Maryland wiretap) should be suppressed because of its reliance in large part on the information intercepted in the Virginia wiretap provides no basis for the suppression of any evidence. The Virginia wiretap was valid and it follows that the Maryland wiretap also was valid. See United States v. Webster, 639 F.2d at 180.

The application and supporting affidavit for the Maryland wiretap of the Errera residence incorporated information from the Virginia wiretap which directly implicated defendant Errera in the alleged cocaine trafficking enterprise and was sufficient to establish probable cause for a wiretap order. During the course of the intercept on LaRusso’s telephone, the record reveals that LaRusso engaged in numerous conversations with Errera apparently concerning cocaine. For example, on November 16, 1984, LaRusso asked Errera if he had “a couple of old cars ... to sell.” Later the same day, Errera told LaRusso that “that car is 700,” and indicated that the figure “700” did not refer to money. He also added that he did not have two cars. LaRusso apparently did not understand the meaning of 700 so Errera arranged to go to a pay phone to explain it to him in straightforward language. FBI agents monitoring the conversation understood that Errera did not have two pounds of cocaine, but only 700 grams.

Having established that neither Errera nor LaRusso were currently in the car business, and in the context of all the evidence previously obtained, the monitoring agents reasonably concluded that Err-era and LaRusso were discussing quantities of cocaine. It is well established that in the context of electronic surveillance, an otherwise ambiguous converstation may serve as a predicate for probable cause so long as it is reasonably interpreted. E.g., U.S. v. Fury, 554 F.2d 522, 530-31 (2d Cir.), cert. denied sub nom, Quinn v. U.S., 433 U.S. 910, 97 S.Ct. 2978, 53 L.Ed.2d 1095 (1977); U.S. v. Aloi, 449 F.Supp. 698, 736 (E.D.N.Y.1977). In the context of LaRusso’s and Errera’s conversations and transactions, it is reasonable to conclude that the two men were discussing cocaine and thus there was probable cause to support Judge Miller’s decision to issue the wiretap order.

Defendants also challenge the warrant issued to search the Errera home on the day cocaine was brought to the house and the warrantless search of defendant La-Russo’s car after he left the Errera residence. These objections are without merit and will not provide a basis for granting defendants’ motion to suppress evidence.

The oral affidavit presented to Magistrate Goetz states that cocaine was being “cut,” concealed, and packaged for distribution at Errera’s home. The affidavit recites numerous facts which indicate that Errera was expecting a shipment of cocaine. These conversations with his co-defendants involved talk of Errera’s expectations for a “white Christmas” and of his failure to complete his “Christmas shopping.” After Errera and defendant Gore were observed picking up a large pallet of cardboard boxes at the Delta cargo terminal at BWI the next day, then off loading the boxes at Errera’s house, and telling callers (one of them LaRusso) that the “Christmas packages” had been picked up, agents applied for a search warrant of Errera’s residence. Additionally, agents listened to Errera tell callers that he was wrapping the “packages,” and that LaRusso could “play Santa Claus.” LaRusso later called back to say that he was coming over.

The Court concludes that these communications were reasonably interpreted under the totality of circumstances, by agents expert in the field of narcotics investigation and that these communications were sufficient to establish probable cause for the issuance of a search warrant of the Errera house. See Massachusetts v. Uptown, 466 U.S. 727, 104 S.Ct. 2085, 2086, 80 L.Ed.2d 721 (1984). Furthermore, a deficiency in the warrant would not require exclusion of the evidence seized here as it was gathered in good faith reliance on a facially valid warrant. Leon, 104 S.Ct. at 3421.

Defendant LaRusso also challenges the stop and search of his vehicle after he left the Errera residence. Agents discovered and seized approximately two pounds of cocaine during the search and LaRusso argues that the search was conducted without probable cause and that the evidence seized from this improper search should be suppressed.

However, the search of LaRusso’s vehicle was based in this instance upon probable cause as required by United States v. Ross, 456 U.S. 798, 825, 102 S.Ct. 2157, 2173, 72 L.Ed.2d 572 (1982), because the information obtained by agents from the Virginia and Maryland wiretaps and surveillance indicated that there was a high probability that defendant's vehicle would be transporting contraband after leaving the Errera residence. Defendant LaRusso’s automobile was searched upon “a belief reasonably arising out of circumstances known to the seizing officer that [it] contain[ed] that which by law is subject to seizure.” Carroll v. United States, 267 U.S. 132, 149, 45 S.Ct. 280, 284, 69 L.Ed. 543 (1925).” One of the circumstances in which the Constitution does not require a search warrant is when police stop an automobile on the street or highway because they have probable cause to believe it contains contraband or evidence of a crime.” Arkansas v. Sanders, 442 U.S. 753, 760, 99 S.Ct. 2586, 2591, 61 L.Ed.2d 235 (1979). The mobility of the LaRusso vehicle created an exigent circumstance and a virtual certainty that the evidence inside the vehicle would be carried away and therefore made any efforts to obtain a warrant before stopping and searching the vehicle impossible.

Defendants argue that obtaining a search warrant was not impractical in this case because agents could have obtained an anticipatory search warrant for all of the vehicles at defendant LaRusso’s disposal when they first learned that he intended to visit the Errera residence. This argument is not persuasive because it is unlikely that such a broad and sweeping application would have met the specificity requirements for obtaining a search warrant. Moreover, agents would not have had probable cause to obtain a search warrant for any vehicle until after it left the Errera resident. See State v. Bell, 195 N.J.Super. 49, 477 A.2d 1272 (1984) (police who had probable cause to believe that occupants of a car would possess drugs upon their return to Elizabeth, New Jersey from New York City had no present probable cause until the car was sighted driving back to New York City and therefore an anticipatory warrant was not required before police conducted search of the car). Therefore, defendant LaRusso’s motion to suppress evidence will be denied.

For the foregoing reasons, the conversations and tangible evidence derived from the Virginia and Maryland electronic surveillances, the search of the Errera residence, and the search of LaRusso’s vehicle were lawfully seized and defendants’ motions to suppress will be denied.


author: GAGLIARDI, District Judge.

text:
    SYGMA PHOTO NEWS, INC., Plaintiff and Defendant-on-Counterclaims, v. GLOBE INTERNATIONAL, INC., Defendant-Counterclaimant.
    No. 83 Civ. 2604.
    United States District Court, S.D. New York.
    April 15, 1985.

      Ben C. Friedman, New York City, for plaintiff and defendant-on-counterclaims.
    Milgrim, Thomajan, Jacobs & Lee, New York City (Andrew L. Deutsch, New York City, of counsel), for defendant-counter-claimant.
   MEMORANDUM DECISION

GAGLIARDI, District Judge.

Plaintiff Sygma Photo News, Inc. (“Sygma”), brought this action against defendant Globe International, Inc. (“Globe”), for alleged fraud and misrepresentation arising out of an agreement between the parties regarding the publication of photographs of certain members of Great Britain’s Royal Family. Globe has asserted counterclaims against Sygma for abuse of process and prima facie tort. Several motions are now before the court. Sygma has moved to amend its complaint to assert claims of copyright infringement, to add two affiliated corporations as defendants, to dismiss Globe’s counterclaims, and for summary judgment. Globe opposes these motions and has cross-moved for summary judgment on various grounds.

Background

On December 24, 1982, Timothy Graham, a free-lance photographer, was contacted by the press secretary to the Prince of Wales and invited to shoot exclusive photographs of Prince Charles, Princess Diana, and their infant son, Prince William (the “Prince William photographs”). Graham accepted the invitation, selected certain rooms at Kensington Palace for the photography session, and on February 1, 1983, took about 200 photographs. From those, he selected the best and submitted them for review by Buckingham Palace. According to Graham, it was understood that “as a matter of courtesy” he would not distribute any photographs to which the Royal Family objected. Graham also had an unwritten “gentleman’s agreement” with Buckingham Palace regarding distribution and the publishing date of the Prince William photographs. In the United States, the photographs were not to be published before March 15, 1983 (the “embargo date”).

Sygma, a New York corporation, is a news agency which distributes and sells reproduction rights in photographs to newspapers and magazines, such as the Globe, a weekly tabloid that is published by defendant and distributed throughout the United States and Canada. Pursuant to an exclusive agency agreement with Graham, Sygma obtained sixteen slides of the Prince William photographs for distribution to all newspapers, magazines, and television stations that requested them. On March 2, 1983, Sygma provided the slides to Globe with a written statement from Sygma’s general manager:

I, Elaine Laffont, as General Manager of Sygma New York undertake to ensure that all clients receiving from Sygma the official photographs of the Prince and Princess of Wales and Prince William will comply with the Strict Embargo that forbids publication or use of these photographs until the morning of TUESDAY, MARCH 15TH, 1983 (i.e. magazines/newspapers featuring the pictures must not be on sale before March 15 or have cover dates of earlier than March 15th). In the case of TV it is noted that the photographs must not be televised until March 15th.
I guarantee to ensure that all prints and sets of color transparencies issued by Sygma in syndicating these photographs will be marked clearly with the embargo date as set by Buckingham Palace.
Any legal action necessary to sue for damages will be undertaken by Sygma against any publisher breaking the embargo—and any sums donated to charity.

The statement was signed by Laffont and by Kas Wilson, Globe’s New York photo editor. Wilson also assured Laffont in a letter dated March 2, 1983: “We agree not to break the embargo on Tim Graham’s Royal Family pictures____ They will be published in the March 22, 1983 issue of the GLOBE, which goes on newsstands for sale on Tuesday, March 15, 1983.”

However, according to Laffont, she subsequently learned that the Globe typically appeared on newsstands on Mondays and that the March 22 issue would thus go on sale March 14. Sygma thereafter commenced suit in state court and moved for a preliminary injunction. The motion was granted, ordering Globe to notify all of its wholesalers and distributors that the March 22, 1983 issue of the Globe should not go on sale until March 15, 1983, and enjoining Globe and its agents from publicly displaying or selling the issue before the embargo date. On April 5, 1983, defendant removed this action to federal court pursuant to 28 U.S.C. §§ 1332 and 1441.

Sygma thereafter filed certificates of copyright registration with respect to the four photographs at issue, indicating Graham as copyright owner. Pursuant to an agreement drafted by Sygma and signed by Graham on May 12, 1983, Graham assigned the copyrights in the photographs to Sygma “for the sole and exclusive purpose of prosecuting” copyright infringement claims against Globe and Globe-related companies. Sygma agreed to assign the copyrights back to Graham at the conclusion of the action and to donate any sums recovered in the action “to charity as directed by Graham.”

Discussion

1. Motion to amend

Sygma has moved to amend its' original complaint (1) to add copyright and Lanham Act claims and (2) to add as defendants two Globe-affiliated companies. With regard to the copyright claims, Globe urges that the court deny leave to amend on the ground that the alleged assignment of copyright from Graham to Sygma failed for two reasons: (1) Graham had no rights to assign, and (2) even assuming that he had copyright in the photographs, the assignment was void under public policy.

Globe claims first that, in view of the supervision and rights of approval exercised by Buckingham Palace, the Prince William photographs are “works for hire” within the meaning of the Copyright Act of 1976, 17 U.S.C. § 101 et seq. (“a work prepared by an employee within the scope of his or her employment”). According to Globe, Graham took the photographs as an employee of Buckingham Palace, which as the employer “owns all of the rights comprised in the copyright.” 17 U.S.C. § 201(b).

However, if (as Sygma contends) Graham shot the photographs on “special order” or “commission” from Buckingham Palace, copyright ownership will vest in Graham unless “the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.” 17 U.S.C. § 101. It is undisputed that no such written instrument exists.

In determining whether Graham created the photographs “on commission” or as an “employee,” the extent to which Buckingham Palace controlled the creation of the works is determinative. A formal or regular relationship of employment is not a necessary condition for “employee” status within the meaning of section 101. See Aldon Accessories Ltd. v. Spiegel, Inc., 738 F.2d 548 (2d Cir.), cert. denied, — U.S. —, 105 S.Ct. 387, 83 L.Ed.2d 321 (1984). The Second Circuit in Aldon framed the issue in this manner: “is the contractor ‘independent’ or is the contractor so controlled and supervised in the creation of the particular work by the employing party that an employer-employee relationship exists.” 738 F.2d at 552.

In Aldon, the court affirmed a jury verdict for a “hiring author” who “actively supervised and directed the creation” of statuettes by contracting artisans. “While he did not physically wield the sketching pen and sculpting tools, he stood over the artists and artisans at critical stages of the process, telling them exactly what to do.” 738 F.2d at 553. There is little evidence of a “hiring author” in this case. The present facts are closer to those in Childers v. High Society Magazine, Inc., 557 F.Supp. 978, on reargument, 561 F.Supp. 1374 (S.D.N.Y.1983). In Childers, the plaintiff-photographer shot photographs of well-known actresses, at their request, and had expressly agreed to certain conditions regarding the distribution of the work. The Childers court found that the photographer’s deference to his celebrity subjects did not render the photographs “works for hire.” Such deference seems even more warranted where, as here, the photographer’s subjects are not publicity-seeking actresses but members of royalty.

Accordingly, the court cannot find on the present record that Graham’s “understanding” with Buckingham Palace proves the existence of an employer-employee relationship. Defendant’s opposition to plaintiff’s motion to amend on this ground therefore fails.

Defendant next contends that, even if Graham owned the copyright in the photograph, his assignment of copyright to Sygma for the conceded purpose of prosecuting this action is void under New York’s champerty law, N.Y.Jud.Law § 489. That section prohibits any corporation from taking an assignment in any claim “with the intent and for the purpose of bringing an action or proceeding thereon____”

Against Globe’s claim that the assignment of copyright in this case falls squarely within the language of N.Y.Jud.Law § 489, Sygma primarily argues that the assignment does not violate the spirit of the law prohibiting champerty. Sygma also discounts the relevance of those cases cited by Globe in which assignments were voided on the basis of champerty—notably American Optical Co. v. Curtiss, 56 F.R.D. 26 (S.D.N.Y.1971)—on the ground that the voided assignments there were between “total strangers,” the assignees having “no connection or involvement” with the transaction giving rise to the claims assigned.

Sygma has not cited, and the court is not aware of, any case expressly holding that a prior relationship between the parties may save an assignment made solely for the purpose of litigation. Cf. American Express Co. v. Control Data Corp., 50 A.D.2d 749, 376 N.Y.S.2d 153, 154 (App. Div.1975) (assignment of claim upheld as “an incident to a substantial commercial transaction” between the parties). However, a review of the precedents, considered in the light of the underlying purpose of section 489, persuades the court that Graham’s assignment to Sygma survives scrutiny under the champerty doctrine.

In Fairchild Hiller Corp. v. McDonnell Douglas Corp., 28 N.Y.2d 325, 321 N.Y. S.2d 857, 860, 270 N.E.2d 691, 694 (1971), the New York Court of Appeals stated that the “legislative concern” reflected in section 489 “is clear”: “[t]o prevent the resulting strife, discord and harassment which could result from permitting attorneys and corporations to purchase claims for the bringing of actions thereon____” The present statute dates from a penal law enacted in 1909, but champerty itself is an “extremely ancient doctrine which developed early in the history of the common law [and] whose roots go back even further.” Martin v. Morgan Drive Away, Inc., supra n. 3, 665 F.2d at 603. The Second Circuit has defined champerty as “a bargain between a stranger and a party to a lawsuit by which the stranger pursues the party’s claim in consideration of receiving part of any judgment proceeds.” Alexander v. Unification Church of America, 634 F.2d 673, 677 n. 5 (2d Cir.1980) (applying New York law). Although section 489 does not by its terms limit its operation to assignments of claims undertaken by strangers for a share of the judgment proceeds, the situation described in Alexander is plainly the evil that the statute sought to prohibit.

In this regard, it is significant that Sygma’s association with Graham long preceded this suit and that the assignment agreement stipulates that any recovery will be donated to a charity of Graham’s choosing. All the evidence before the court indicates that Sygma undertook the assignment not for mercenary reasons but rather to vindicate the rights of a photographer who had relied on Sygma, his agent, to police unauthorized publication of his work. Section 489 should not void an assignment to a plaintiff who, like Sygma, “had such a relationship with its assignor as to give it a substantial and legitimate interest on the transactions involved in the suit.” American Express Co. v. Control Data Corp., supra, 376 N.Y.S.2d at 154.

Moreover, Globe’s reliance on the letter of the statute is misplaced. Section 489 prohibits assignments “for the purpose of bringing an action” (emphasis added) and thus, read strictly, extends only to the “transfer of claims prior to the institution of any proceeding or action.” Rosenkrantz v. Berlin, 65 Misc.2d 320, 317 N.Y. S.2d 704, 705 (Sup.Ct.1971). The instant assignment of copyright occurred after Sygma had already filed suit and obtained preliminary relief. In view of the fact that the assigned claims are asserted in an action “which [has] been commenced and the mischief the statute seeks to avoid is nonexistent,” id., Globe’s champerty objections fail.

Sygma also seeks leave to plead in its amended complaint that Globe falsely described the source of the photographs in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125. Globe, however, argues that plaintiffs proposed complaint does not adequately state a Lanham Act claim on the ground that it fails to allege that prospective purchasers were deceived. See Skil Corp. v. Rockwell International Corp., 375 F.Supp. 777, 783 (N.D.Ill.1974). Sygma has not filed any papers in opposition to Globe’s objections. Because the proposed complaint does not sufficiently allege essential elements of a Lanham Act violation, the court denies Sygma leave to include in its amended complaint a Lanham Act claim in the form now proposed.

Finally, Sygma moves to add as defendants two Globe-related entities, Globe Communications Corp. and Summit Publishing Co. (“Summit”), based on the publication of one of the Prince William photographs in the April 5, 1983 issue of the Summit tabloid, “Your Health and Medical Bulletin.” Sygma alleges that Summit’s publication of a photograph previously published in the Globe was unauthorized in view of an alleged “one-time use only” restriction with regard to each photograph supplied to Globe. Globe denies that any such restriction existed and on that basis opposes the motion to add new parties. However, since the court cannot at this time find that Sygma’s proposed claim against these new parties is groundless, plaintiff is granted leave to amend its complaint in this respect.

For these reasons, plaintiff’s motion for leave to file an amended complaint is granted to the extent that such amended complaint alleges claims of copyright infringement against Globe, Globe Communications Corp., and Summit (the third, fourth, fifth, sixth, and seventh claims in the proposed complaint). Sygma’s motion is denied in all other respects.

2. Motions for Summary Judgment

The parties have cross-moved for summary judgment with regard to the claims of copyright infringement. Sygma asserts that no genuine issue of material fact exists with regard to its claim that Globe infringed Graham’s copyright in the four Prince William photographs when certain copies of the March 22 issue appeared on newsstands before the March 15 embargo date. For its part Globe asserts that the present record proves that it complied with the terms of its written commitment regarding the embargo date. Arguing that such terms must be viewed “in the light of unquestioned publishing industry custom and usage,” Globe has submitted affidavits that the words “on sale,” according to accepted industry meaning, refer to the date the publisher recommends to its independent retailers for selling the new issue, not the date that such retailers may actually choose for the sale. According to Sygma, however, Globe understood its obligations under the license agreement to require more than the recommendation of a sale date, as evidenced by the letters and mail-grams Globe sent distributors as a result of Sygma’s demands for compliance with the embargo date.

The meaning of the terms of the agreement is thus a matter in sharp dispute. Because each party’s submissions in this regard evidence a genuine issue of material fact, summary judgment is plainly inappropriate. The cross-motions are therefore denied in all respects.

3. Motion to dismiss counterclaims

Sygma has moved pursuant to Rule 12(b)(6), Fed.R.Civ.P., to dismiss Globe’s counterclaims alleging, inter alia, that Sygma agreed to license publication rights in the photographs for the Globe’s March 22 issue; that Sygma agreed not to license the photographs to the Globe’s competitors; that Sygma thereafter sought to deprive Globe of its bargained-for benefits by bringing an action in state court and obtaining an injunction; and that, as a result of Sygma’s harassment, Globe was damaged, incurring legal fees, lost sales, and other injuries. In deciding a motion to dismiss for failure to state a claim, a court must accept as true all material allegations of the non-movant. See Cooper v. Pate, 378 U.S. 546, 84 S.Ct. 1733, 12 L.Ed.2d 1030 (1964). A Rule 12(b)(6) motion should not be granted “unless it appears beyond doubt that [non-movant] can prove no set of facts in support of his claim that could entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957).

Construed under these liberal standards, Globe’s allegations suffice to state claims, in the alternative, for abuse of process and prima facie tort. See Board of Education v. Farmingdale Classroom Teachers Ass’n, 38 N.Y.2d 397, 380 N.Y.S.2d 635, 343 N.E.2d 278 (1975).

Conclusion

For the foregoing reasons, Sygma’s motion for leave to file an amended complaint is granted as to the statutory copyright claims. Sygma’s motion to add new party defendants also is granted. All motions are denied in all other respects.

So Ordered.

      . Sygma now claims that the relevant issue of the Globe began appearing on newsstands on March 11, 1983.

      . This treatment of commissioned works represents a substantial departure from pre-1976 law. See 1 Nimmer on Copyright, § 5.03(B) at 5-24 (1983).

      . Stating that “[d]efendants can not possibly assert that plaintiff is an ‘employee’ of either [actress],” the court in Childers analyzed the case under the "special order” or “commission” sub-paragraph of section 101. 557 F.Supp. at 984.

      . It is not disputed that state law governs the validity of an assignment challenged on grounds of champerty. See Martin v. Morgan Drive Away, Inc., 665 F.2d 598, 604-05 (5th Cir.), cert. dismissed, 458 U.S. 1122, 103 S.Ct. 5, 73 L.Ed.2d 1394 (1982).

      . See, for example, Sygma letter to Graham dated April 5, 1983 (necessary for Sygma to proceed in behalf of Graham "because, as a professional photographer and a non-U.S. resident, it would be virtually impossible to schedule court dates around your availability in the United States").

      . Accordingly, the court need not address Sygma’s claim of waiver.

      . The first two claims of the proposed amended complaint track the language of the original complaint alleging state law claims of fraud and undue enrichment. Reasoning that the "gravamen" of plaintiffs claims here is injury for unauthorized publication—a right protected under federal copyright law—Globe contends that the state law claims are pre-empted under the Copyright Act, 17 U.S.C. § 301. See Harper & Row Publishers, Inc. v. Nation Enterprises, 723 F.2d 195, 201 (2d Cir.1983), cert. granted, — U.S. —, 104 S.Ct. 2655, 81 L.Ed.2d 362 (1984). Sygma apparently concedes the point, but asks that the two claims be read to allege wilful infringement under the statute. Such a construction does not seem appropriate in view of the language of the claims and the statement in the proposed amended complaint that the court’s subject matter jurisdiction depends in part on principles of pendent jurisdiction. Moreover, to the extent that the two claims may be read as federal claims, the claims are merely duplicative. Accordingly, plaintiff’s first two claims must be dismissed. Plaintiff’s request for punitive damages is also stricken, since only "actual” damages are available under the copyright statute. See Oboler v. Goldin, 714 F.2d 211, 213 (2d Cir.1983).

      . Globe relies heavily on the fact that the tabloid is distributed by independent wholesalers and retailers, and thus the precise date of sale is arguably beyond Globe’s control. However, the issue of publisher-distributor control is not dis-positive, for the absence of any such control may have obligated Globe to feature the Prince William photographs in a later issue to assure compliance with the embargo date.

      . Disputed issues of fact regarding the terms of the license also preclude granting Globe’s cross-motion to the extent that it seeks the dismissal of Sygma’s claim that Summit's publication of one of the photographs violated an alleged "onetime use” condition in the copyright license.


author: McLAUGHLIN, District Judge.

text:
    In re GRAND JURY SUBPOENA DUCES TECUM DATED NOVEMBER 13, 1984 (John Doe, Petitioner).
    No. 84 CV 4756.
    United States District Court, E.D. New York.
    July 26, 1985.

      Lawrence S. Goldman, New York City, for petitioner.
    Edward A. McDonald, U.S. Dept. of Justice, Organized Crime Strike Force, Bruce Maffeo, Sp. Atty., Brooklyn, N.Y., for defendant.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

Petitioner, one of two partners in a consulting firm, moves to quash a grand jury subpoena duces tecum. Fed.R.Crim.P. 17(c). On March 25, 1985, this Court held that the traditional rule of Beilis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974), was not an automatic bar to petitioner’s assertion of the Fifth Amendment in opposition to the subpoena. The Court left open, however, pending consideration of the act of production doctrine, whether the claim of privilege covers the particular documents sought. In re Grand Jury Subpoena Duces Tecum Dated November 13, 1984, 605 F.Supp. 174 (E.D.N.Y. 1985).

The Court directed the parties to submit briefs on the applicability of the act of production doctrine. In addition, the government filed an ex parte affidavit detailing its knowledge of petitioner’s activities. Petitioner in turn submitted to the Court documents that would be responsive to the subpoena. The Court has reviewed all of these submissions; for the reasons developed below the motion to quash is granted in part.

Discussion

The challenged subpoena is directed to petitioner as custodian of partnership records, and commands production of books and records from January 1, 1981 to the present, including cash receipts and disbursements, general ledgers, cancelled checks, bank statements and partnership tax returns. In its previous opinion this Court held that the contents of these records were not privileged, 605 F.Supp. at 178 (citing United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d.552 (1984); Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976)), but that the act of producing them might be.

One aspect of petitioner’s motion requires little discussion. To the extent the subpoena is directed to partnership tax returns, which petitioner is required by law to keep, the motion to quash is denied. In re Doe, 711 F.2d 1187, 1191 (2d Cir.1983). I turn now to petitioner’s contention that the act of production doctrine protects against disclosure of the other subpoenaed documents.

The physical act of complying with a documentary subpoena may constitute compelled testimony in two situations. First, “if the existence and location of the subpoenaed papers are unknown to the government, then ... compelled production of those documents ‘tacitly concedes the existence of the papers demanded and their possession or control by the [person subpoenaed].’ ” United States v. Fox, 721 F.2d 32, 36 (2d Cir.1983) (quoting Fisher v. United States, 425 U.S. 391, 410, 96 S.Ct. 1569, 1581, 48 L.Ed.2d 39 (1976)). Second, a “taxpayer’s production of documents may ‘implicitly authenticate’ the documents and in so doing provide a link in the chain of incrimination.” United States v. Fox, supra, 721 F.2d at 36; see Fisher v. United States, supra, 425 U.S. at 412-13, 96 S.Ct. at 1581-82.

A. Existence and Location

If the government can demonstrate with reasonable particularity that it knows of the existence and location of subpoenaed documents, no privilege to refuse production on the first ground exists. United States v. Fox, supra, 721 F.2d at 37; United States v. Praetorius, 622 F.2d 1054, 1063 (2d Cir.1979), cert. denied, 449 U.S. 860, 101 S.Ct. 162, 66 L.Ed.2d 76 (1980). The government’s pre-production knowledge must be sufficient “to eliminate any possibility that ... production would constitute an incriminating testimonial act.” United States v. Fox, supra, 721 F.2d at 37-38. A blunderbuss subpoena, such as that issued here, creates an inference that the government is seeking to compensate for its lack of knowledge by compelling petitioner “to become the primary informant against himself.” Id. at 38.

Notwithstanding the broad subpoena and the inference arising therefrom, the government’s ex parte affidavit establishes that much is known about this petitioner’s activities. The government is aware that he keeps a set of partnership books, and is aware of two bank accounts—one in the name of the partnership and the other in the name of petitioner and his wife. Petitioner cannot refuse to comply with the subpoena on the ground that the existence and location of the documents are unknown. Cf. United States v. Fox, supra, 721 F.2d at 37 (proper inquiry is what government knows about this taxpayer’s practices, not about taxpayers in general).

B. Implicit Authentication

Although the existence and location of the subpoenaed documents are known, petitioner may still refuse to produce them if by so doing he would “implicitly authenticate” them for the government. “Implicit authentication occurs when an individual who receives a summons demanding production of documents complies with the summons and thereby implicitly testifies that he owns or at least possesses the documents.” United States v. Fox, supra, 721 F.2d at 38. If a government official will one day be able to testify that he knows the documents in question belong to petitioner because petitioner produced them when asked, then by that very act of production petitioner will have made'á self-incriminating testimonial admission. His act of production will provide a’mecessary link to incriminating evidence contained in the documents by removing the government’s need to authenticate them by other means. Id.

Conversely, when the government can authenticate the documents without relying on any act by petitioner, then production by petitioner does not implicate the Fifth Amendment. The Supreme Court illustrated this in Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), when it enforced an IRS summons requiring a taxpayer to produce tax workpapers in his possession but prepared by his accountant:

As for the possibility that responding to the subpoena would authenticate the workpapers, production would express nothing more than the taxpayer’s belief that the papers are those described in the subpoena. The taxpayer would be no more competent to authenticate the accountant’s workpapers or reports by producing them than he would be to authenticate them if testifying orally. The taxpayer did not prepare the papers and could not vouch for their accuracy. The documents would not be admissible in evidence against the taxpayer without authenticating testimony. Without more, responding to the subpoena in the circumstances before us would not appear to represent a substantial threat of self-incrimination.

Id. at 412-13, 96 S.Ct. at 1581-82 (footnotes and citations omitted).

With respect to most of the documents demanded by the subpoena, petitioner’s production of them will not constitute authentication implicating the Fifth Amendment. For example, production of the partnership’s'cancelled checks will not provide the government with authentication that would otherwise be lacking; the checks are self-authenticating. Fed.R. Evid. 902(9). Additionally, the bank statements demanded were not prepared by petitioner; and the government can authenticate them through the testimony of bank personnel without relying upon any testimonial act petitioner may perform by producing the statements.

As to partnership ledgers, cash receipts, and records of disbursements, however, a different situation exists. Compelled production of these documents would provide the government with just what it needs for authentication—“an admission [by petitioner] that the subpoenaed documents are records pertaining to his business.” United States v. Fox, supra, 721 F.2d at 39. Petitioner may invoke his Fifth Amendment privilege to block production of these records if he can establish that the act of production would be incriminatory.

C. Would Producing the Subpoenaed Documents Be Incriminatory?

The Fifth Amendment does not protect against all compelled testimony, but only against that which is self-incriminatory. Petitioner bears the burden of establishing that the act of producing these documents would be incriminatory. Mere assertion of the privilege is not sufficient; the potential for self-incrimination must be a “real danger.” Zicarelli v. New Jersey State Commission of Investigation, 406 U.S. 472, 480, 92 S.Ct. 1670, 1676, 32 L.Ed.2d 234 (1972); United States v. Edgerton, 734 F.2d 913, 921 (2d Cir.1984).

Petitioner in this case has been told that he is the target of a grand jury investigation. He also knows that agents from the F.B.I. and the Customs Service have been asking third persons about his business activities. Finally, it is not without significance that the government has declined to confer immunity upon petitioner— even limited solely to the act of production—in order to compel compliance with the subpoena. See 18 U.S.C. §§ 6002-03. Based on the foregoing, I conclude petitioner has demonstrated that by complying with the subpoena, petitioner creates a real danger of incriminating himself. Zicarelli v. New Jersey State Commission of Investigation, supra; see In re Katz, 623 F.2d 122, 126-27 (2d Cir.1980) (“real and substantial risk”).

Summary

For the foregoing reasons, petitioner’s motion to quash the subpoena is granted in part. Petitioner is directed to deliver the following subpoenaed documents to the United States Attorney: (1) partnership tax returns; (2) all cancelled checks of the partnership; and (3) bank statements reflecting transactions in Citibank Account No. 11959997: In all other respects, petitioner’s motion to quash is granted.

SO ORDERED.