Opinion ID: 459933
Heading Depth: 2
Heading Rank: 1

Heading: The Relationship of the Parties

Text: 3 The relationship of the parties to this case is somewhat complex and bears a brief explanation here. Appellant Eur-Control is a Georgia corporation engaged in the manufacture and sale of equipment used in the power generating industry, including items known as desuperheaters which are the subject of the '592 patent, and which are used to cool superheated steam in conduits. Kalle is a Swedish company also involved in the manufacture of desuperheating equipment. Both Eur-Control and Kalle are owned or controlled by a common parent and thus Eur-Control is neither a wholly-owned subsidiary nor independent of Kalle. 4 In 1970, the '592 patent, entitled Device for Introducing Cooling Water Into a Conduit for Superheated Steam, was issued to defendant-appellant Kalle as assignee of the inventor Gustafsson. During the pendency of the '592 application, Kalle entered into a contract with Yarway, the provisions of which are relevant here. Kalle gave Yarway, subject to certain narrow exceptions not pertinent here, the exclusive right to manufacture, use, sell and distribute throughout the United States a desuperheater component described in the contract as the Nozzle, covered by the '592 application, as well as any modifications or improvements thereon. Yarway in turn agreed to pay Kalle a royalty for each Nozzle it manufactured at a rate of 8 percent of the price at which Yarway could have purchased the product from Kalle. In practice Yarway instead generally purchased the Nozzles from Kalle for resale in the United States as provided by the contract terms. This device is sometimes called in the record the DA-4 and is widely sold by Kalle outside the United States. The contract also provides that Yarway shall inscribe upon all Nozzles a reference to the applicable patent number as well as the phrase produced under license from [Eur-Control]. By the terms of the contract, either party could terminate the agreement if the other breached any of its terms and fails to remedy such breach within ninety (90) days after receipt of written notice to do so. 5 In 1980 Eur-Control began marketing a Model DA-6 desuperheater in the United States in competition with Yarway; in 1981 Eur-Control continued to compete by marketing a newly designed DA-8 Model. Yarway, claiming the DA-6 and DA-8 desuperheaters infringe the '592 patent, thereafter commenced suit charging Eur-Control with infringement and Kalle with inducement of that infringement. In so doing, Yarway, the licensee, placed itself in the unusual, but not extraordinary, position of claiming the United States patent owner was infringing its own patent.