Source: https://www.legalcrystal.com/case/94633/independent-wireless-tel-co-vs-radio-corp
Timestamp: 2017-12-12 03:02:13
Document Index: 360036155

Matched Legal Cases: ['§ 4921', '§ 4921', '§ 4921', '§ 4919', '§ 4921', '§ 4919', '§ 4919', '§ 4921', '§ 4921']

Independent Wireless Tel Co Vs Radio Corp - Citation 94633 - Court Judgment | LegalCrystal
LegalCrystal Citation legalcrystal.com/94633
Case Number 269 U.S. 459
independent wireless tel. co. v. radio corp. - 269 u.s. 459 (1926) u.s. supreme court independent wireless tel. co. v. radio corp., 269 u.s. 459 (1926) independent wireless telegraph company v. radio corporation of america no. 87 argued october 23, 1925 decided january 11, 1926 269 u.s. 459 certiorari to the circuit court of appeals for the second circuit syllabus 1. a suit by an exclusive licensee under a patent to protect his rights against infringement by a stranger, without joining the patent owner as plaintiff, does not arise under the patent laws (rev.stats. § 4921), but is based merely on contract rights, and is not maintainable in the federal court in the absence of diversity of citizenship. p. .....
Independent Wireless Tel. Co. v. Radio Corp. - 269 U.S. 459 (1926)
U.S. Supreme Court Independent Wireless Tel. Co. v. Radio Corp., 269 U.S. 459 (1926)
1. A suit by an exclusive licensee under a patent to protect his rights against infringement by a stranger, without joining the patent owner as plaintiff, does not arise under the patent laws (Rev.Stats. § 4921), but is based merely on contract rights, and is not maintainable in the federal court in the absence of diversity of citizenship. P. 269 U. S. 466 .
2. An exclusive licensee may bring suit under Rev.Stats. § 4921 by joining the patent owner as a co-plaintiff when the latter is out of the jurisdiction and declines to join and when such suit is
necessary to protect the rights of the licensee against an infringer, so that a failure of justice might result if such joinder were not allowed. Pp. 269 U. S. 467 , 269 U. S. 472 .
3. This is analogous to the right of the licensee to bring an action on the case for damages in the patent owner's name under Rev.Stats. § 4919, which is in pari materia with § 4921. Pp. 269 U. S. 464 , 269 U. S. 472 .
4. A patent owner is under an equitable obligation to allow the use of his name and title to protect lawful exclusive licensees against infringers. P. 269 U. S. 473 .
5. A patent owner cannot thus be made a co-plaintiff in equity without having first been requested to become such voluntarily. P. 269 U. S. 473 .
6. When a patent owner, though requested, declines to permit the use of his name in a proper case by an exclusive licensee in a suit against an infringer, but is nevertheless joined as co-plaintiff and duly notified of the suit, he will be bound by the decree. P. 269 U. S. 474 .
The Radio Corporation, a corporation of Delaware, filed a bill in equity in the Southern district of New York, joining with itself the De Forest Radio Telephone & Telegraph Company, also of Delaware, as co-plaintiff, against the Independent Wireless Telegraph Company of Delaware and the American Telephone & Telegraph Company of New York. The case made in the bill was this:
The defendant, the Independent Wireless Company, has bought the same apparatus, with the lawful right to use it in the amateur and experimental field only. The
The district court sustained the motion and dismissed the bill in the view that it was bound by decisions of this Court to hold that the De Forest Company was the owner of the patent and an indispensable party, and, being out of the jurisdiction, could not be made a party defendant by service or joined as a party plaintiff against its will. 297 F. 518. The circuit court of appeals, on appeal, reversed the district court, held that the De Forest Company was properly made co-plaintiff by the Radio Corporation, and remanded the case for further proceedings. 297 F. 521. We have brought the case here on certiorari. Section 240, Judicial Code.
The respondent, in its argument to sustain the ruling of the circuit court of appeals, presses two points. The first is that, by the contract between the De Forest Company and the Western Electric Company, title to the patent was vested in the Western Electric Company, and from it by assignment in the American Telephone & Telegraph Company; that the latter is a party defendant, having declined to be a plaintiff, and so satisfies the requirement of the presence in such a suit as a party of the owner of the patent. The difficulty the respondent meets in this suggestion is that its bill avers that what the American Telephone Company acquired from the De Forest Company was a license, so called in the contract creating it, and the making of the De Forest Company a party plaintiff to the bill was necessarily on the theory that it, and not the American Telephone Company, is the owner of the patent. The contracts between the corporations involved in the transfer of rights under the patent are long and complicated, and, in order to be fully understood, require some knowledge of the new radio field. The court is loath to depart, if it could, from the theory on which the bill was framed and both courts have acted unless required to do so.
These cases were decided in 1860 by a Justice of this Court, and no case is cited to us questioning their authority. Indeed, the cases have been since referred to a number of times with approval by distinguished patent judges.
Mr. Justice Blatchford, while Circuit Judge, in Nelson v. McMann, 17 Fed.Cas. 1325, 1329, No. 10109; Mr. Justice Gray, while Chief Justice of the Supreme Judicial Court of Massachusetts, in Jackson v. Allen, 120 Mass. 64, 77; Judge Lowell, in Wilson v. Chickering, 14 F. 917, 918; Judge Shipman, in Brush-Swan Co. v. Thomson Co., 48 F. 224, 226. The term "action on the case" and the phrase "in the name of the party interested, either as patentee, assignee, or grantee" in § 4919 were evidently construed to constitute a remedy at law like the suit at common law on a chose in action in the name of the assignor in which the assignment gave the assignee the right as attorney of the assignor to use the latter's name. Lectures on Legal History, Ames, 213. See also Eastman v. Wright, 6 Pick. 316; Pickford v. Ewington, 4 Dowling P.C. 458; McKinney v. Alvis, 14 Ill. 33.
found by verdicts in actions in the nature of actions of trespass upon the case. * "
There is no express authority given to the licensee to use the name of the patent owner in equity as we have seen that he can under § 4919 in suits at law. The presence of the patentee or his assignee in the equity suit, however, it has been held, is just as essential to obtaining an injunction, or an accounting of profits or damages, under the patent laws, as it is in an action on the case for damages at law. Indeed, both the owner and the exclusive licensee are generally necessary parties in the action in equity. Waterman v. Mackenzie, 138 U. S. 252 ; Littlefield v. Perry, 21 Wall. 205, 88 U. S. 223 ; Paper Bag Cases, 105 U. S. 766 ; Birdsell v. Shaliol, 112 U. S. 485 , 112 U. S. 486 .
It is urged on behalf of the respondent that in equity the real party in interest, the exclusive licensee whose contract rights are being trespassed upon by the infringer, should be able without the presence of the owner of the patent to obtain an injunction and damages directly against the infringer. We recognize that there is a tendency in courts of equity to enjoin the violation of contract rights which are invaded by strangers in a direct action by the party injured, instead of compelling a roundabout resort to a remedy through the covenant, express or implied, of the other contracting party. But such a short cut, however desirable, is not possible in a case like this. A suit without the owner of the patent as a plaintiff, if maintainable, would not be a suit under § 4921 of the patent laws, but only an action in equity, based on the contract rights of the licensee under the license and a
stranger's violation of them. There would be no jurisdiction in courts of the United States to entertain it unless by reason of diverse citizenship of the parties, which does not exist in this case. Hill v. Whitcomb, 12 Fed.Cas. 182, 185, No. 6,502; Wilson v. Sandford, 10 How 99, 51 U. S. 101 ; Albright v. Texas, 106 U. S. 613 , and cases cited.
What remedies, then, can equity afford in a case like this? Waterman v. Mackenzie, 138 U. S. 252 , involved the question whether a grant from the owner of the patent of the exclusive right to make and sell, but not to use, was an assignment under the statute, entitling the grantee in his own name to sue an infringer in equity, and it was held that it was not. Mr. Justice Gray, speaking for the court at 138 U. S. 255 , said:
"In equity, as at law, when the transfer amounts to a license only, the title remains in the owner of the patent, and suit must be brought in his name, and never in the name of the licensee alone, unless that is necessary to prevent an absolute failure of justice, as where the patentee is the infringer, and cannot sue himself. Any rights of the licensee must be enforced through or in the name of the owner of the patent, and perhaps, if necessary to protect the rights of all parties, joining the licensee with him as a plaintiff. R.S. § 4921; Littlefield v. Perry, 21 Wall. 205, 88 U. S. 223 ; Paper Bag Cases, 105 U. S. 766 , 105 U. S. 771 ; Birdsell v. Shaliol, 112 U. S. 485 -487. And see Renard v. Levinstein, 2 Hem. & Mil. 628."
Littlefield v. Perry, 21 Wall. 205, was a suit for infringement by one to whom was granted an exclusive right to make, use, and vend by the patent owner. The Court held that it was an assignment under the statute, but further held that, even if it were only an exclusive license, the suit might be maintained under the patent laws, because the patentee, who had been privy to the alleged
Page 269 U. S. 468
infringement, had been made a party defendant with the infringer. This Court said at 88 U. S. 223 :
If the owner of a patent, being within the jurisdiction, refuses or is unable to join an exclusive licensee as co-plaintiff, the licensee may make him a party defendant by process, and he will be lined up by the court in the party character which he should assume. This is the necessary effect of the decision in Littlefield v. Perry, supra. See also Brammer v. Jones, 4 Fed.Cas. 11, No. 1806; Gamewell Telegraph Co. v. Brooklyn, 14 F. 255; Waterman v. Shipman, 55 F. 982, 986; Libbey Glass Co. v. McKee Glass Co., 216
F. 172, aff'd, 220 F. 672; Hurd v. Goold, 203 F. 998. This would seem to be in accord with general equity practice. Waldo v. Waldo, 52 Mich. 91, 94. A cestui que trust may make an unwilling trustee a defendant in a suit to protect the subject of the trust. Porter v. Sabin, 149 U. S. 473 , 149 U. S. 478 ; Brun v. Mann, 151 F. 145, 153; Monmouth Co. v. Means, 151 F. 159, 165; Eastman v. Wright, 6 Pick. 312, 316.
But suppose the patentee and licensor is hostile, and is out of the jurisdiction where suit for infringement must be brought -- what remedy is open to the exclusive licensee? The matter has been given attention by courts dealing with patent cases. In Wilson v. Chickering, supra at p. 918, an exclusive licensee brought a bill in equity to
In the case of Brush-Swan Electric Co. v. Thomson-Houston, 48 F. 224, the Brush-Swan Company in Connecticut sued the Thomson-Houston Company in equity for infringing the former's rights as an exclusive
licensee for the sale of a device made under a patent owned by the Brush Electric Company of Cleveland, Ohio. The Brush-Swan Company made the Brush Electric Company a co-plaintiff. The Cleveland company appeared for the purpose of asking that its name be stricken out as a party complainant because the bill had been filed without its consent. The motion to strike out the co-plaintiff's name was denied by Judge Shipman on the ground that as the patent owner, being without the jurisdiction, could not be served with process, there would otherwise be absolute failure of justice. The judge said that prima facie there was an implied power in the exclusive licensee under such circumstances to make the patent owner a party plaintiff. The same conclusion was approved by the Ninth Circuit Court of Appeals in Brush Electric Co. v. California Electric Co., 52 F. 945, before McKenna and Gilbert, circuit judges, and Knowles, the district judge, affirming the same case in 49 F. 73, and by the same court in Excelsior Co. v. Allen, 104 F. 553, and in Excelsior Co. v. The City of Seattle, 117 F. 140, 143, 144. In Hurd v. Goold Co., 203 F. 998, before the Circuit Court of Appeals of the Second Circuit (Lacombe, Coxe, and Noyes, judges), Hurd, who was the exclusive licensee, joined with himself two corporations who held the legal title to the patent. The corporations had been enjoined in the Sixth Circuit from maintaining suits for infringement. The Second Circuit Court of Appeals held that Hurd was entitled to present his licensors -- that is, the owners of the patent -- as co-plaintiffs, even against their will and in spite of their protests. This doctrine was approved by the same court in Radio Corp. v. Emerson, 296 F. 51, 54. See also McKee Glass Co. v. Libbey Glass Co., 220 F. 672 (3d C.C.A.), aff'g same, 216 F. 172; Chisholm v. Johnson, 106 F.191, 212; Owatonna Mfg. Co. v. Fargo, 94 F. 519, 520.
In so doing, equity does no more than courts of law did at one period in their history, as we have seen, in implying in the assignee of a chose in action a power of attorney to maintain an action in the name of the assignor in order to assure to the assignee the benefits of his assignment. Where the assignor attempted to interfere with the exercise of the power of attorney by collection of the assignee's claim, or where for any technical reason the remedy through the exercise of implied power of attorney
The objection by the defendant that the name of the owner of the patent is used as a plaintiff in this suit without authority is met by the obligation the owner is under to allow the use of his name and title to protect all lawful exclusive licensees and sublicensees against infringers, and by the application of the maxim that equity regards that as done which ought to be done. Camp v. Boyd, 229 U. S. 530 , 229 U. S. 559 ; United States v. Colorado Anthracite Co., 225 U. S. 219 , 225 U. S. 223 ; Craig v. Leslie, 3 Wheat. 563, 16 U. S. 578 . The court should on these grounds refuse to strike out the name of the owner as co-plaintiff, put in the bill under proper averment by the exclusive licensee.
The owner beyond the reach of process may be made co-plaintiff by the licensee, but not until after he has been requested to become such voluntarily. If he declines to take any part in the case, though he knows of its imminent pendency and of his obligation to join, he will be bound by the decree which follows. We think this result follows from the general principles of res judicata. In American Bell Telephone Co. v. National Telephone Co., 27 F. 663, heard before Judges Pardee and Billings, the question was whether the National Telephone Company was bound by a decree in favor of the Bell Company for infringement against a Pittsburgh company claiming under a license from the National Company. The National Company, under a contract upon notice to defend its license, took control of the case, but, becoming dissatisfied with a preliminary ruling of the court, withdrew its counsel and evidence from the case. The National Company was held bound on the authority
of the case of Robbins v. Chicago, 4 Wall. 657. When Robbins was building a store in Chicago by an independent contractor, an areaway adjoining the street was left open. A passer-by fell in and was injured. He sued the city, and recovered judgment for $15,000. Robbins had been previously warned by the city of the danger of the unprotected area, and had notice of the accident and of the pendency of the suit, but did not become a party. The city then sued Robbins, and was given a judgment against him for the amount of the recovery against the city. This Court, in sustaining the result, held that parties bound by the judgment in such a case included all who were directly interested in the subject matter, who had knowledge of the pendency of the suit and a right to take part therein, even if they refused or neglected to appear and avail themselves of this right. Lovejoy v. Murray, 3 Wall. 1, 70 U. S. 19 ; Plumb v. Goodnow, 123 U. S. 560 ; Robertson v. Hill, 20 Fed.Cas. 944, No. 11925; Miller v. Liggett, 7 F. 91.
There is nothing in the case of Crown Co. v. Nye Tool Works, 261 U. S. 24 , which conflicts with this conclusion. That case was brought by the plaintiff, a licensee, to establish as a principle of patent practice that a transfer by an owner of a patent to another, conferring only the right to sue a third for past and future infringements