Opinion ID: 1566005
Heading Depth: 1
Heading Rank: 2

Heading: Licensing Agreements.

Text: The charge that appellees' license agreements constituted contracts in restraint of trade has two separate bases. Hunt by a contract signed February 14, 1940 made Mueller his exclusive licensee to manufacture, use and sell or have manufactured the feather picking apparatus disclosed in his application and Mueller agreed to pay him a 5% royalty. This agreement was modified on December 17, 1940 by permitting Mueller to grant sub-licenses. On February 1, 1941, Mueller granted to Barker Poultry Equipment Company (in a contract in which Hunt joined) a non-exclusive license to manufacturer, use and sell apparatus embodying the inventions and it was agreed that this license to Barker would be the only license granted under the    applications or patents for the use of those inventions in automatic apparatus.    (Italics ours.) Subsequently on August 12, 1942, Mueller, joined by Hunt, entered into a non-exclusive agreement with the Ashley Machine Company to manufacture, use and sell manually operated apparatus    embodying the invention. (Italics ours.) Appellants particularly point to the second paragraph of Clause 1 of that agreement, which we quote in its entirety: The parties understand and agree that this license is limited to manually operated apparatus and that it does not extent to or include automatic apparatus, that is, apparatus wherein a conveyor or other non-manual (sic) is used to convey fowls into contact with the feather picking apparatus and Ashley specifically agrees that it will not make or sell such automatic apparatus during the life of any patents included in this license. (Italics ours.) Appellants assert that this language does not limit the license to manually operated apparatus covered by the patents, but covers unpatented automatic apparatus as well and is therefore reprehensible. We cannot agree to this interpretation. The first clause states that the license covers manually operated apparatus and not automatic apparatus. The connotation of that sentence is clear. Palpably the reference there is to automatic apparatus which might be manufactured under the license. The second use of the term automatic apparatus is prefaced by the word such. The reference is clearly to automatic apparatus previously referred to in the paragraph, which, as we have said, was covered by the license. We are brought to this conclusion by the first definition of the word such appearing in Webster's New International Dictionary, Second Edition: 1. Of this or that kind, character or measure; of the sort or degree previously indicated or contextually implied.    (Italics ours.) As to the second contention: Barker Poultry Equipment Company was a large manufacturer and seller of poultry equipment. Clause 11 of the agreement with it of February 1, 1941, was as follows. 11. The parties hereto agree that Mueller may specify, and from time to time alter, the minimum prices below which manually operated devices, licensed hereby, shall not be sold to the trade by or for the several licensees, and the parties further agree that, until altered by notice in writing hereafter from Mueller to Barker, they will not sell to the trade any manually operated licensed apparatus for less than Two Hundred and Fifty Dollars ($250.00). The contention is made that Clause 11 created a price fixing arrangement which violated the provisions of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note, and that the courts should withhold their aid in the enforcement of a patent where plaintiffs are asserting their rights thereunder contrary to the public interest. See Barber-Colman Co. v. National Tool Co., 6 Cir., 136 F.2d 339; National Aluminate Corp. v. Permutit Co., 8 Cir., 145 F.2d 175, 180. However, toward the end of the trial, appellees filed as Exhibit 61 a supplement to the agreement of February 1, 1941, executed on July 6, 1944, whereby Clause 11 was abrogated and cancelled and replaced by a simple agreement by Barker to pay a royalty of $12.00 on each feather picking apparatus sold by it under the agreement of February 1, 1941. Appellants contend that since the price-fixing clause 11 was in effect when the suit was filed, appellees are bound by the issues then made and that the attempt to correct the license after the trial began is ineffective. This is a suit in equity to enforce a patent right. If there is price fixing, the court simply withholds enforcement. Barber-Colman Co. v. National Tool Co., supra. But it is possible for the patentee to purge himself of the unfair business practice. Novadel-Agene Corp. v. Penn et al., 5 Cir., 119 F.2d 764, 767. The only evidence in the record tending to show price fixing by appellees is clause 11 above quoted. There is no evidence that the price fixing clause was ever invoked. The repudiating agreement, Exhibit 61, stated, and there has been no contradictory evidence, that none of the parties to the agreement have ever, in any way, enforced, relied upon, resorted to, acted upon, or conformed to the aforesaid Section 11 of such agreement or any other agreement or understanding on the subject of Section 11   , and the District Court found as a fact in its Finding 29, to wit: 29. The license agreements, under the Hunt patent-in-suit, Plaintiffs' Exhibits 9, 10, 10-a, 11, 21, 21-a and 61 do not contain any conditions acting to enlarge the patent monopoly or to give the patentee Hunt or the licensee Mueller any additional monopoly or additional right which the statute and the patent together do not give. None of said license agreements,    contains any provision enlarging or abusing, or tending to enlarge or abuse the rights granted by the patent itself or any provision restraining trade or tending to restrain trade. In Morton Salt Co. v. G. S. Suppiger Co., 314 U.S. 488, 492, 493, 62 S.Ct. 402, 405, 86 L.Ed. 363, the court, in a patent infringement case in which it was charged that the patentee sought to restrain contributory infringement, said: It is a principle of general application that courts, and especially courts of equity, may appropriately withhold their aid where the plaintiff is using the right asserted contrary to the public interest.    Equity may rightly withhold its assistance from such a use of the patent by declining to entertain a suit for infringement, and should do so at least until it is made to appear that the improper practice has been abandoned.  (Italics ours.) See also B. B. Chemical Co. v. Ellis, 314 U.S. 495, 498, 62 S.Ct. 406, 86 L.Ed. 367. This pronouncement seems to point the way to decision here. On the facts before us, the clause relied upon to set the stage for a prohibited use of the patent rights, was never acted upon, was cancelled and at the time of the decision the plaintiffs' conduct was blameless in practice and in intention. The court so found. There is a maximum, Equity delights to do complete justice and not by halves. The maxim grows out of the desire of the chancery court to decide every question involved in the litigation so that there will be no controversy left out of which other suits may arise. No purpose would be served by putting blameless plaintiffs to the expense, and the courts to the trouble, of another suit when the issues can be settled here. We shall therefore proceed to consider the case on the issues of validity and infringement since it clearly appears that Clause 11 has been abrogated and cancelled, and since, on this record, there has never been in fact a misuse of the patent. Sylvania Industrial Corp. v. Visking Corp., 4 Cir., 132 F.2d 947, 958; Universal Sewer Pipe Corp. v. General Const. Co., D.C., 42 F.Supp. 132, 135.