Court Opinion

ID: 9650506
Source: CourtListenerOpinion
Date Created: 2023-08-23 15:41:25.165112+00
Date Added: 2024-06-11T13:19:58.907494
License: Public Domain

AUGUSTUS N. HAND, Circuit Judge.
. This is a suit brought under U. S. Revised Statutes, § 4915, 35 U.S.C.A. § 63, to obtain the issue of letters patent. The suit arises out of two Patent Office interferences Nos. 65,227 and 70,404 in which the Board of Appeals had awarded priority of invention to Henry A. Haugh, Jr., and the Commissioner of Patents had refused a patent on the application of plaintiffs Stolp and Richterkessing. Plaugh assigned his application involved in the interferences by mesne assignments to the defendant The Engineering & Research Corporation. The latter thereupon granted to Automatic Signal Corporation an exclusive license to manufacture, use and sell the devices covered by any patent that might be granted on the Haugh application. Stolp and Richterkessing assigned their applications to the plaintiff Nachod & United States • Signal Company. Automatic Signal Corporation, the exclusive licensee of the Haugh application, was originally joined as a defendant but, -appearing specially, succeeded 'in having the suit dismissed as against itself on the
ground that it was not an inhabitant of the district. The defendant The Engineering & Research Corporation also succeeded in obtaining a dismissal so far as it was concerned on the ground that Automatic Signal Corporation, against which-the suit had been dismissed, was an indispensable party. The sole question before us is whether Automatic Signal Corporation was such an indispensable party.
We held in Parker Rust Proof Co. v. Western Union Telegraph Company, 105 F.2d 976, decided March 6, 1939, that a defendant in the position of the Automatic Signal Corporation should be regarded as an indispensable party to a suit under Section 4915 in the absence of special circumstances which made joinder inequitable. The conclusion that the presence of the exclusive licensee was not necessary was reached because he knew of the pendency of the suit against the defendant from which he held his license, knew of the plaintiff’s ignorance of his interests, and also knew that the defendants, one of them the company of which he was president, instead of promptly filing their answer and setting up the defense that the licensee was an indispensable party to the suit, were obtaining an extension of time to answer and suppressing that special defense until it was too late for the plaintiff to bring suit in the District of Columbia and to obtain jurisdiction over him there by virtue of Title 35 U.S.C.A. § 72a. In the case at bar the plaintiff knew of the exclusive license because it alleged in the bill of complaint that Automatic Signal Corporation held an exclusive license from The Engineering Si Research Corporation and joined the licensee as a party. Instead of doing this, if the plaintiff had chosen to avail itself of the privilege granted by Title 35 U.S.C.A. § 72a, it could have sued in the District of Columbia and have obtained jurisdiction over both the inventor and the licensee before the six months’ statute of limitations created by Section 4915 had run. But it neglected to take advantage of Title 35 U.S.C.A. § 72a which was enacted in 1927 (Chapter 364, 44 Stat.1934) to give relief in situations like the present and now finds itself without remedy under Section 4915.
A hardship may arise in a case where a plaintiff suing under Section 4915 does not know of the existence of an exclusive license and therefore makes only the inventor a party-defendant for, as a result, *983his bill may be dismissed after it is too late to bring suit in the District of Columbia. Such a hardship might ordinarily have been avoided if Congress had required exclusive licensees to record their licenses as a condition of being treated as indispensable parties in suits under Revised Statutes Section 4915. But the law imposes no such requirement upon an exclusive licensee in order that he may possess complete rights against any person under his license. Nevertheless, a way would seem to be open whereby a plaintiff may avoid having his suit under Section 4915 dismissed for failure to obtain jurisdiction over the exclusive licensee within six months after the refusal of a patent by the Commissioner of Patents. He may sue in the district wherein the person who has been held to be the prior inventor resides and promptly examine the latter under Subdivision V, rule 26 et seq, of the new Rules of Civil Procedure for the District Courts of the United States, 28 U.S. C.A. following section 723c, and ascertain whether the interfering applicant or patentee has granted an exclusive license to any one. Upon discovery that an exclusive license is outstanding, he may either bring the licensee into the pending suit, if the latter is an inhabitant of the district or consents to appear therein, or he may start a new suit in the District of Columbia. While it is true that this would probably require prompt initial action and a vigorous conduct of the litigation by the plaintiff yet such a course of procedure would completely safeguard the plaintiff’s right to obtain a patent under Section 4915, if he was entitled to one.
It is, however, strenuously maintained on behalf of the plaintiffs that an exclusive licensee is not an indispensable party to a suit under Revised Statutes Section 4915. The contention is based on the arguments we rejected in Parker Rust Proof Co. v. Western Union Telegraph Company and we do not find it persuasive in the present case. The rights of an exclusive licensee are often far more extensive than those remaining in the inventor. To be sure, if the owner is not a party to a suit under Section 4915, though the exclusive licensee is, the suit cannot proceed. Armstrong v. De Forest, 2 Cir, 13 F.2d 438. Likewise an exclusive licensee cannot bring a proceeding for injunction or damages for infringement in his own name without joining the owner. Waterman v. Mackenzie, 138 U.S. 252, 11 S.Ct. 334, 34 L.Ed. 923; Independent Wireless Tel. Co. v. Radio Corporation of America, 269 U.S. 459, 466, 467, 46 S.Ct. 166, 70 L.Ed. 357. But none of these holdings negatives our conclusion that an exclusive licensee is an indispensable party. Section 4915 of the Revised Statutes requires “notice to adverse parties.” An exclusive licensee who has sufficient interest in the patent to compel an infringement suit (though nominally in the name of the patentee), Independent Wireless Tel. Co. v. Radio Corporation of America, 269 U.S. 459, 46 S.Ct. 166, 70 L. Ed. 357, should be regarded as coming within this definition.
For the contrary view, that an exclusive licensee is not a necessary party to a suit under Section 4915, reliance has been placed upon certain lower court decisions holding or asserting that an exclusive licensee is not an indispensable party-plaintiff in a suit for infringement brought by the patentee. Bowers v. Atlantic, Gulf & Pacific Co, C.C, 162 F. 895, 901; Comptograph Co. v. Universal Accountant Mach. Co, C.C, 142 F. 539, 545; Frankfort Whisky Process Co. v. Pepper, C.C, 26 F. 336; Nellis v. Pennock Mfg. Co, C.C, 13 F. 451, 455. Compare, also, D. M. Sechler Carriage Co. v. Deere & Mansur Co, 7 Cir, 113 F. 285. It is to be noted, however, that Taft, C. J, said in Independent Wireless Tel. Co. v. Radio Corporation of America, 269 U.S. 459, at page 466, 46 S.Ct. 166, at page 168, 70 L. Ed. 357, that “both the owner and the exclusive licensee are generally necessary parties in the action in equity”. If it be thought that the effect of the decisions just referred to has been to treat an exclusive licensee as a party not indispensable in an infringement suit they nevertheless do not show that such licensee is not an indispensable party to a suit in equity under Section 4915. So far as they may be thought to hold that exclusive licensees, while generally necessary parties in infringement suits, are not in all cases indispensable the rule they lay down seems to be derived from the provisions of U. S. Revised Statutes, § 4919, 35 U.S.C.A. § 67, which allows a recovery of damages at law “in the name of the party interested, either as patentee, assignee, or grantee”. The case at bar involves a different situation because of the express requirement of Section 4915 that notice must be given to “adverse parties.”
*984It has been suggested that the owner of the title to an interfering patent or patent application is a trustee for his exclusive licensee and represents the latter in defending his interests in a suit under Section 4915, and it is argued that for this reason the licensee is not an indispensable party. The suggestion is based upon statements in certain decisions to the effect that the owner of the patent holds the title in trust for his exclusive licensee to the extent that he.must allow the use of his name as plaintiff in an infringement suit. But in the absence of an express covenant, a patentee seems to be under no duty to sue infringers for the benefit of the licensee. Sea Gull Specialty Co. v. Humphrey, 5 Cir., 242 F. 271; Wilfley v. New Standard Concentrator Co., 9 Cir., 164 F. 421, 424. It is for this reason that the licensee may use the patentee’s name in an infringement suit when the patentee is unwilling to institute one himself. Independent Wireless Tel. Co. v. Radio Corporation of America, 269 U.S. 459, at page 469, 46 S.Ct. 166, ,70 L.Ed. 357. There appears to be no more reason for requiring the patentee to defend a suit under Section 49.15 on behalf of the licensee than for requiring him to institute one on behalf of the latter for infringement. The absence of such an affirmative duty is incompatible with the trust relation suggested. Indeed, the compulsory use of a patentee’s name by his licensee in an infringement suit is but a fiction which shows that the real party is the licensee. The patent owner in such cases is little more than a phantom litigant.
We think that an exclusive licensee is an indispensable party because he is an adverse party within the meaning of Section 4915 and that any hardship which may arise by reason of licenses that are outstanding without the knowledge of a plaintiff may be obviated by the means we have already indicated.
For the foregoing reasons the decree is affirmed.