Court Opinion

ID: 9452242
Source: CourtListenerOpinion
Date Created: 2023-08-04 17:34:20.332065+00
Date Added: 2024-06-11T17:33:07.923319
License: Public Domain

O’SULLIVAN, Circuit Judge
(dissenting).
I am unable to join the conclusion of my brothers. Defendant concedes that it is infringing a valid patent. The judgment before us allows it to continue. This is because a contract then in use by plaintiff, and which defendant refused to sign, licensed the use of all of plaintiff’s patents; and because the contract would continue unchanged as individual patents expired until the expiration of the final patent; and because plaintiff had a policy of not selling the materials which could be used to infringe its “combination” patents unless licenses were first taken.
Without any prior attempt to obtain a license to do so, defendant began infringing the patent in suit. Plaintiff threatened that it would sue unless defendant entered into the agreement then in use by plaintiff whereby it licensed builders to use “The Roeform System.” This agreement made no reference to any particular patents, but contained the following provisions:
“8. It is hereby acknowledged and agreed that certain features, hardware and accessories used in and being a part of the Roeform System are covered by letters of Patent for the protection of the Licensor and that it has good title thereto and the right to grant this license, and Licensor stipulates that any further improvement in its system developed by or for it shall be available for use hereunder by licensee, and,
“9. The licensee hereby agrees not to dispute the validity of any Letters of Patent or the title of the Licensor thereunder nor aid others in doing so, and,”
The proofs established that it had been plaintiff’s policy to require the signing of such a contract as a condition to use of its system. Use of the Roeform System required employment of the patent in suit, which will not expire until October 17, 1967. At the time here involved, plaintiff owned several other unexpired patents related to and useable in the processes of the Roeform System. The contract would require a licensee to continue to pay a stipulated fee so long as the Roeform System was used by a licensee.1 When requested to sign the Roeform System contract, defendant refused, without suggesting that any other agreement would be acceptable or making any request that it be given a license limited to the patent which it was infringing. Cf. McCullough Tool Co. v. Well Surveys, Inc., 343 F.2d 381, 408 (CA 10, 1965) cert. den. 383 U.S. 933, 86 S.Ct. 1061, 16 L.Ed.2d 851 (Mar. 7, 1966).
It is clear indeed that misuse of a patent denies its fruits to the patentee. Such misuse may consist of coercing the acceptance of unwanted licenses to gain the use of a desired patent — mandatory packaging. American Securit Co. v. Shatterproof Glass Corp., 268 F.2d 769 (CA 3, 1959); it may arise from coercing the purchase of unpatented material as a condition to use of a valid patent — illegal tying. Morton Salt Co. v. G. S. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363 (1942), reh. den. 315 U.S. 826, 62 S.Ct. 620, 86 L.Ed. 1222 (1942); it may consist of attempting to extend the monopoly of a patent after it *683has expired, Brulotte v. Thys Co., 379 U.S. 29, 85 S.Ct. 176, 13 L.Ed.2d 99 (1964); Prestole Corp. v. Tinnerman Products, Inc., 271 F.2d 146 (CA 6,1959) cert. den. 361 U.S. 964, 80 S.Ct. 593, 4 L.Ed.2d 545 (1960).
Defendant’s position here is that it is entitled to free use of plaintiff’s patent because plaintiff had in the past entered into 189 license agreements with users of the Rocform S3rstem containing provisions which, if they had been coerced, would not be enforceable and because plaintiff requested defendant to sign such a contract. We consider that the District Judge was correct in his statement that coercion was essential to a finding of misuse:
“Licensing of several patents in single license agreement does not constitute patent misuse unless element of coercion is present, such as where there has been request by prospective licensee for license under less than all patents and refusal of by licensor to grant such license. Eversharp, Inc. v. Fisher Pen Co., 1961, D.C., 204 F.Supp. 649.”
He was of the view that, there being no evidence of coercive practices in the making of plaintiff’s previous 189 license agreements, such licensing contracts did not constitute misuse of a patent. He said,
“ * * * present licensees of plaintiff could contract with it as they choose; if the consideration was acceptable to them, in return for the package patent license and services to be performed thereunder, and it has not been shown that any licensee requested but was refused a grant of a license to use one patent only upon acceptance of a license to use more than one patent, no mandatory package patenting has been established as to such licensees.”
He found misuse, however, in the case of plaintiff’s offer of a like contract to defendant, primarily, as we view it, because defendant refused to accept such a contract. He said,
“But plaintiff offered to defendant, and defendant refused, plaintiff’s standard license on the ground, primarily, that defendant would be required to continue payment of royalties after expiration in 1967 of the basic wall-form patent, if it entered into such licensing agreement.”
The District Judge’s observation that this refusal was “on the ground, primarily, that defendant would be required to continue payment of royalties after expiration in 1967 of the basic wall-form patent, if it entered into such licensing agreement” involved a misunderstanding of the evidence. The defendant tacitly concedes this now, saying in its brief only that such was “probably one of Acitelli’s reasons for its refusal to become a licensee.” (Emphasis added.) The fact is that defendant Acitelli’s representative who talked with plaintiff about Acitelli’s admitted infringement of the patent in issue, gave no reason for refusing to sign the offered contract; it asked for no modification of it, it did not ask to be licensed alone under the patent in suit; it merely refused and went on infringing.
For the view I express I concede arguendo that plaintiff’s previous agreements licensing its Rocform System would have been unenforceable if coerced and that had defendant sought and been refused a license for less than all of plaintiff’s patents, the plaintiff could be found guilty of misuse. That, however, is not what happened. I read defendant’s position to be that, without any showing of intent to coerce, plaintiff, having once proposed that defendant sign its regular licensing contract, thereby surrendered all right to enforce its patent; that such request alone gave defendant the privilege of appropriating the patent to its own free use. I find such position invalid.
Relevant to whether defendant had been coerced, the District Judge said,
“If defendant’s hands be unclean in that it made no bona fide application to plaintiff for licensing, or for any other reason indicated by the facts in this case, such uncleanliness will not render plaintiff’s hands clean if it is attempt*684ing to unlawfully extend its patent monopoly.” (Emphasis supplied.)
I read the majority opinion as holding that, without reference to coercion, the Rocform contract was illegal per se because, as viewed by them, Rocform was attempting to extend the life of one of its patents. But the majority also apparently assume that an element of coercion was indeed present, by stating that the District Judge held that
“plaintiff-appellant employed the patent in suit so as to coerce (or attempt to coerce) this defendant to purchase the Rocform System and thus to purchase other patents and unpatented materials and services.” (Emphasis supplied.)
Such conduct would result in an illegal tie-in, but I do not interpret the District Judge’s opinion as so holding, nor would the proofs justify such a conclusion.
1. Patent Extension.
I do not consider that fixing one price for use of the Rocform System and any one or all of Rocform’s patents constitutes illegal patent extension where no coercion was employed. Because the contract may continue past the date, 1967, when the patent in suit expires, does not mean that its monopoly is thereby extended. The majority opinion seemingly rests on the fact that “After the expiration of the patent in suit, Rocform’s licensees would continue to pay the same fees as are provided during the life of the crucial patent,” and the inference therefrom that some part of the license fees after 1967 would necessarily have to be attributed to an extension of the return from the patent which expired in that year. But this is not so. The price which a builder is willing to pay to use the Rocform System remains a constant, and it is immaterial to the builder whether the most effective use of that system is controlled by ten unexpired patents, or by the very last of those ten patents to expire. Such seems to be the clear implication of the Supreme Court’s holding in Brulotte v. Thys Co., 379 U.S. 29, 30, 85 S.Ct. 176, 178, 13 L.Ed.2d 99 (1964): “We conclude that the judgment below must be reversed insofar as it allows royalties to be collected which accrued after the last of the patents incorporated into the machines had expired.” (Emphasis added.) The majority would hold the Rocform contract illegal before the expiration of the first patent.
2. Illegal Tie-in.
There was a complete lack of proof that plaintiff had made any attempt to use the leverage of its patent monopoly to extend its power into another market, cf. Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953). The District Judge specifically found: “Under the license agreement plaintiff obligates himself to furnish all necessary equipment but licensees are not required to purchase any equipment from plaintiff, * * * ” and again, “While the license agreement does not obligate a licensee to purchase any equipment whatsoever * * (Emphasis added.) The only basis for any holding that there has been an illegal tie is a finding by the district judge that “Plaintiff will refuse to sell any of the wall-forming equipment to non-licensees.” Apart from the fact noted above that this seems a perfectly reasonable attitude for the holder of a combination patent to take, whatever else it might be, the policy complained ocould not be construed as misuse of the patent.
In the absence of any proof of coercion or attempt to extend the patent monopoly beyond the term of the last necessary patent, there is no ground for a finding of misuse. Contrast McCullough Tool Co. v. Well Surveys, Inc., 343 F.2d 381 408-410 (CA 10, 1965) and Automatic Radio Mfg. Co. v. Hazeltine Research, 339 U.S. 827, 70 S.Ct. 894, 94 L.Ed. 1312 (1950) with United States v. Paramount Pictures, Inc., 334 U.S. 131, 156-159, 68 S.Ct. 915, 92 L.Ed. 1260 (1948) and Brulotte v. Thys Co., 379 U.S. 29, 30, 33, 85 S.Ct. 176, 13 L.Ed.2d 99 (1964).
The majority recognize that defendant has appropriated plaintiff’s patent with*685out request for a license therefor, but withhold relief by asserting that “there is no merit in employing the equity powers of the federal court to force defendant to enter into an agreement which is plainly illegal, even if the damages therefrom be future ones.” (Emphasis supplied.) But plaintiff’s complaint does not ask such relief — it seeks only the enjoining of defendant’s infringement of its patent and damages flowing therefrom.
I would reverse the judgment.

. There was a provision in the contract for automatic termination upon any failure of the licensee to remit payments within thirty days. Presumably this could be used to terminate the agreement whenever a licensee decided he only needed to use devices on which the patents had already expired. Upon the happening of such event, a licensee would be responsible for any sums then due and unpaid and for damages for “the continued unlawful use” of the system.