Court Opinion

ID: 9448270
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:29:36.966177+00
Date Added: 2024-06-11T17:31:21.424700
License: Public Domain

KIRKPATRICK, Judge.
This is an appeal from the decision of the Patent Office Board of Appeals, affirming the rejection by the primary examiner, of all the claims of Hession’s application No. 312,951 for a patent on an “Aerosol Apparatus.” The construction and operation of the apparatus are not in issue and none of the appealed claims need be reproduced here.
The following facts either are not in dispute or are clearly established:
Hession’s application was filed October 3, 1952, and was assigned to Z & W Machine Products Inc., hereafter referred to as Z & W, by an instrument dated October 8, 1952, and duly recorded in. the Patent Office. Previously, on August 26, 1952, an application for substantially the same invention was filed by one Frank A. Ziherl, which application was also assigned to Z & W, by an assignment duly recorded.
On December 31, 1954, the Patent Office called upon Z & W to make an election as between Hession and Ziherl and to limit the claims directed to common subject matter to one of those applications. As of January 4, 1955, Isler and Ornstein were the attorneys in charge of both applications and had the duty of taking the necessary steps to comply with Z & W’s direction in this matter. According to a statement made by those attorneys in an amendment filed *931June 16, 1955, in the Hession application, they ascertained, early in 1955, that Ziherl had drawings dated March 20, 1952, disclosing the subject matter as to which the election was to be made while “In support of Hession’s position as a possible first inventor, was his uncorroborated statement that he had numerous sketches and an actual model of the invention which were prior to March 20, 1952, but which, after diligent search and investigation, he was unable to find and produce.” It is to be noted that the attorneys’ statement that Hession told them that he was unable to produce records “after diligent search” is in conflict with Hession’s statement in an affidavit filed in his application to the effect that prior to April 1955 he “made no attempt and had no reason to produce proofs of inventorship.” No attempt seems to have been made in the record to reconcile those statements. //
On the basis of the investigation by the attorneys an election was made in favor of Ziherl and a patent was granted on his application on March 29, 1955, containing claims which are either identical with or not materially different from Hession’s claims involved in the instant appeal.
It was the holding of the examiner and the board that this election is binding on Z & W and precludes the allowance of the appealed claims in the Hession application. That holding, somewhat loosely described by the board as “the ground of double patenting,” constitutes the basis of the rejection appealed from.
Hession’s application has now been reassigned to him as the result of a series of transactions, the details of which are not important here.
In connection with his appeal to the board Hession presented an elaborate showing of documents and affidavits which, if interpreted most favorably to him, show that he made the invention here in issue as the result of an agreement made with Z & W August 15, 1951, by which he agreed to develop an aerosol device in exchange for a payment of $200 per week and expenses as well as certain payments for royalties; that his application was assigned to Z & W as a result of a further agreement dated October 8, 1952; that he disclosed the invention to Ziherl, who was an officer of Z & W, “long before” the filing of Ziherl’s application; that Ziherl improperly appropriated Hession’s ideas and embodied them -in his application without notifying Hession, and that Hession had no knowledge of that application until the Ziherl patent issued at which time “Upon being confronted with the fraudulent activities resulting in the issuance of the Ziherl patent, Lewis Ziherl (brother of Frank A. Ziherl) and G. W. Walker, officers of Z & W, realized the seriousness of the situation and formally agreed to disclaim the Ziherl patent and reassign the Hession application to applicant (Hession).” This was done, and an offer has also been made to file a disclaimer limiting the term of any patent granted on Hession’s application so that it will expire on the original expiration date of the Ziherl patent, thus avoiding any question of extension of monopoly. Also, Ziherl executed an affidavit in which he acknowledged that he was not the inventor of the subject matter set forth in the claims of the patent issued to him.
With reference to the two agreements between Hession and Z & W, since Hession states that Z & W refused to pay the royalties as provided under the first agreement but made no mention of the payment of $200 per week and expenses, we assume that such payments were made during the life of this agreement which was in force 14 months less one week.1 The second agreement among other considerations provided for payments totaling $5,000 to Hession and since Hession in his affidavit did not deny that he received this amount we assume, also, that he received it.
We agree with the solicitor that Hession, now having title to his invention and application by virtue of a reassign*932ment from Z & W, has only such rights in the premises as Z & W had.
Except for a new ground of rejection raised for the first time by the board, and which we find it unnecessary to consider, the simple question presented by the above rather unusual facts is whether the law would permit Z & W, the common assignee, having elected to pursue the Ziherl application rather than the Hession, which resulted in the issuance of the Ziherl patent, to now require the Patent Office to issue the Hession patent upon the disclaiming of the Ziherl patent.
Therefore, it seems to us that it is incumbent upon this court to decide the issues involved here on this basis only and we cannot properly concern ourselves with the fortunes or misfortunes of Hession who had assigned all his right, title and interest in the invention to Z & W for what we presume he thought was an adequate consideration. Even though there is no reason to believe that Hession was involved in the machinations of Frank Ziherl and the other officers of Z & W, he stands in the shoes of that corporation.
The law pertaining to the irrevocability of election of remedies generally has been stated in 28 C.J.S. Election of Remedies, § 29, page 1101, as follows:
“An election once made between coexisting remedial rights which are inconsistent is not only final and irrevocable and cannot be withdrawn without due consent, even though it has not been acted upon by another to his detriment, but it is also conclusive and constitutes an absolute bar to any action, suit, or proceeding based upon a remedial right inconsistent with that asserted by the election, or to the maintenance of a defense founded on such inconsistent right.”
While the election as to whether to obtain a patent on one or the other of two commonly owned applications may not, technically, be an election of remedies, it would appear that the same basic principles should govern in these two types of cases.
The requirement by the Patent Office that a common assignee of two or more applications must eliminate conflicting claims from all but one of them is made in accordance with Patent Office Rule 78 (b), 35 U.S.C.A., and section 1101.01(b) of the Manual of Patent Examining Procedure.2 The object of requiring such an election is to avoid the anomaly of an interference between applications controlled by a single interest. The requirement transfers the burden of determining priority in such a a case from the Patent Office to the assignee, and the election takes the place of an award of priority in interference. Such an award cannot be set aside on the basis of a subsequent showing, no matter how convincing, that the party to whom priority was awarded was not in fact the first inventor. Blackford v. Wilder, 28 App.D.C. 535; In re Shimer, 69 F.2d 556, 21 CCPA 979, 21 USPQ 161; In re Rhodes, 80 F.2d 525, 23 CCPA 816, 28 USPQ 75; Josserand v. Taylor, 159 F.2d 249, 34 CCPA 824, 72 USPQ 357; In re Gregg, 244 F.2d 316, 44 CCPA 904, 113 USPQ 526.
The question of the revocability of elections by common assignees has been before this and other courts on several occasions.
In the first of these, In re Dunbar, 51 App.D.C. 251, 278 F. 334, 335, the Court of Appeals of the District of Columbia held that a common assignee who had elected to take out a patent on one of its applications was precluded from obtaining a second patent for the same invention on another application. While ex-tention of the monopoly was given as the principal reason for refusing the *933s.econd patent, the court quoted with approval, the following statement of the Commissioner:
“By taking out the Dyson patent, an election was made on the question of priority between Dyson and Dunbar, and the common assignee is just as much bound by that election as if an interference had been declared and priority decided in favor of Dyson.”
The question as to the effect of an election by a common assignee first came before this court in In re Mann and Koppelman, 47 F.2d 370, 371, 18 CCPA 1020, 8 USPQ 381. The decision of the court holding the election to be binding was not based on any extension of monopoly, but on the ground that the election constituted a final determination of priority. This is clear from the following statement in the court’s opinion:
“Under this state of facts it is obvious that no interference should be declared between the applications of Koppelman and Cooper and of appellants because there were no adverse interests, the beneficiaries of both applications being the same parties. In so far as both applications covered the same invention, and in so far as the disclosures in each specification show claim by the respective applicants of being the first inventors thereof, since no interference could properly be declared because of lack of adverse interest, it became a matter of election by appellants whether they would take out the patent as original inventors upon their application, or, as assignees of Koppelman and Cooper, upon the application filed by the latter. Having elected to take out a patent upon the application of Koppelman and Cooper, it was in legal effect a concession of priority of invention in Koppelman and Cooper and the same invention disclosed in the two applications * *
The question was again considered in In re Howard, 53 F.2d 896, 899, 19 CCPA 759, 11 USPQ 280, in which a common assignee of applications o'f Howard and Peiler directed to generally similar subject matter had taken out a patent on the latter application. The court reaffirmed the doctrine of the Dunbar and Mann and Koppelman cases in the following lam guage:
“Because of the presence.of such common assignee no interference could be declared between the two applications for the reasons stated in the cases of In re Dunbar, 51 App.D.C. 251, 278 F. 334, and In re Mann & Koppelman, 47 F.2d 370, 18 C.C.P.A. (Patents) 1020, and, if appellant’s assignee had included in the Peiler patent claim 25 of the application upon which it is based, or any claim corresponding to the claims here in issue, clearly the claims in issue should have been rejected, even though Howard was in fact the first inventor.” [Emphasis added.]
While the court found Howard’s claims allowable, that action was not based on any modification of the doctrine of election but on the fact that the claims were “for a separate and distinct invention not embraced in the claims of the Peiler patent.”
In the case of In re Willoughby, 88 F.2d 482, 24 CCPA 1033, 33 USPQ 46, the court considered the Howard and Mann and Koppelman cases and reaffirmed the doctrine of election as stated in the latter.
The question of election was again thoroughly considered in In re Fischel et al., 136 F.2d 254, 258, 30 CCPA 1085, 58 USPQ 80. In that case a common assignee of two applications disclosing the same invention elected to take out a patent on one of them. Thereafter it was discovered that the other applicants, Fisehel and Rieper were actually the first inventors, and claims to the common invention were inserted in their application, while the patent was reissued to eliminate such claims. It was alleged by appellants that no extension of monopoly would be involved in issuing a patent to Fisehel et al., since the previously issued *934patent was void ab initio because the patentees were not the first inventors of the claimed subject matter.
In its opinion the court made the following statement with respect to the doctrine of election:
“We think the true doctrine of election in patent cases is grounded upon one or more of three fundamental propositions. First, the application of the doctrine prevents two patents being issued for the same invention. Second, it prevents an avoidance of the determination of priority. Third, it prevents an extension of the monopoly.”
The court found the first of these grounds to be avoided by the reissue of the patent without claims to the common subject matter, and it may be noted that the same result has been obtained in the instant case by the disclaimer of the Z & W patent.
I In considering the second ground, we are faced with the necessity of understanding the phrase “it prevents an avoidance of the determination of priority.” Webster’s New International Dictionary (1932) gives the following definitions of “avoidance”:
“* * * 2. Act of annulling; annulment.
-x- -x- *
“5. Act of avoiding or shunning; keeping clear of. * *
Although it is possible that the court intended to use “avoidance” as in definition 5, we believe the word was used as in definition 2, and that the entire phrase means that application of the doctrine of election will have the effect of preventing a common assignee from annulling the effect of his choice as to which one of two or more assigned applications is to be issued as a patent.3 In other words, the court was of the opinion that priority is determined by the elective act of the common assignee and he should not be permitted to annul or avoid that determination. We believe our interpretation of this phrase finds support in the following statement of the court:
“ * * * Both applications were owned by the common assignee. It elected to take out the broad invention in the Fischel and Thiry patent and is bound thereby. It cannot now, in view of the facts of this case, avoid the effect of the election and the consequent waiver of the right to take out the instant subject-matter in the instant application by contending that it was a mistake. To hold with appellants on this phase of the case would be, in our judgment, to lend hopeless confusion to the administration of the patent laws when questions like that at bar are presented to the Patent Ofiice tribunals.”
With respect to the third ground, it was found that extension of monopoly would exist since the patent claims in question had constituted a prima facie monopoly until their invalidity was disclosed.
It is clear that both the second and third grounds were significant in the Fischel et al. decision. This is apparent from the following statement of the court:
“In the instant case our conclusion is that the proper basis for the application of the doctrine of election by the common assignee of two applications, to wit: extension of monopoly and concession of priority, appears from the instant facts and requires the application of the doctrine.”
The most recent rulings by this court on the doctrine of election were In re Keim et al., 229 F.2d 466, 43 CCPA 784, 108 USPQ 330, and In re Ward et al., 236 F.2d 428, 43 CCPA 1007, 111 USPQ 101. In each of those cases, the Dunbar, Mann and Koppelman and Willoughby decisions were cited with approval as supporting the proposition that a corn*935mon assignee of two or more applications disclosing the same invention is bound by his election in taking out a patent for that invention on one of them and cannot obtain a second patent for it on the other application. In the Keim et al. case the second patent was allowed, but only on the ground that the invention claimed was patentable over that claimed in the first.
No case has been cited, and we have found none, in which a common assignee, having elected to take out a patent for an invention on one of two or more applications owned by him, has subsequently been held entitled to a patent on another of his applications containing claims to the same invention.
„7, . . . , . . ... quently given m the cases above cited „ ,. . as a reason for not granting a second . , , patent, the fact that the assignees elecf. . ,, , „ . , tion has the effect of a concession and . . ... ...... determination of priority is also consistently given as a reason. Where there are two grounds upon either of which an appellate court may rest its decision, and it adopts both, the ruling on neither is obiter dictum, but each is the judgment of the court and of equal validity with the other. United States v. Title Ins. Co., 265 U.S. 472, 486, 44 S.Ct. 621, 68 L.Ed. 1110. See also Woods v. Interstate Realty Co., 337 U.S. 535, 537, 69 S.Ct. 1235, 93 L.Ed. 1524. The former reason may be said to have been eliminated in the instant case by the disclaimer of the Z&W patent and the offer to limit the term of a patent to Hession, if granted, to expire on the expiration date of the Z & W patent; but the latter reason is still present here,
However, even if it be assumed that under some circumstances an election made by a common assignee is not absolutely irrevocable if no extension of monopoly is involved, we are of the opinion that, when a patent has been issued as the result of such an election, a second patent should not be issued on an application owned by the assignee when the election was made, merely because it has been discovered that the election was incorrect. It is not necessary to determine whether there is any state of facts which could justify the issuance of a second patent, since we are of the opinion, for the reasons stated below, that the circumstances of the instant case could not under any reasonable rule relating to election by a common assignee be sufficient for that purpose. Entirely apart from any question of irrevocability of election as a matter of law, an assignee who deliberately and knowingly elects to take out a patent on the basis of the application of one who is not the first inventor should not be allowed to obtain a patent on the basis of an application by the first inventor merely because subsequent developments make such a course appear expedient. In the case at bar not only do we not find that Z & W made a . . , , , ,, , „ . , mistake but on the contrary we find that v „ , ,, . ,, , . Z&W allowed their attorneys to make .... the election knowing that Ziherl did not • , ,, , . invent the device. ,
Appellant in urging that a mistake was made by Z & W relies largely upon a statement by the lawyer who had charge of the two applications at the time the election was made as to his ignorance of the facts necessary to make a proper decision and his efforts to discover the truth. That approach overlooks the facts that the common assignee was the eorporation (Z & W) and not the lawyer and that it was the corporation, not the lawyer, who was the only party vested with the authority and right to make the election. The fact is that there was no mistake on the part of the corporation. If there was any mistake on the part of the lawyer, it was in relying on the information provided him by the corporathroagh ZiIíer1’ °n® of 0fc+er? who was the applicant for the elefted ’ and w^° kne^that ** had not “fV invention. It is not the “se ®f+ a IawJeil a^ng inadvertently to the detnment of hls chent-
The knowledge which Z & W in this case had acquired through its agents and officers, or with which it is chargeable by reason of their knowledge, precludes any pretense that it was laboring under *936any erroneous belief as to the facts. On the contrary, it is indisputable on this record that it had full knowledge of every circumstance of the entire transaction.
It appears that Z & W approached Hession and induced him to develop the apparatus of the application and that from the date of its first agreement with him (August 15, 1951) he “fully and currently disclosed the nature and results” of his work with Z & W and “particularly to its officers G. W. Walker, Lewis Ziherl and Frank Ziherl,” Walker being the president.
Certainly, it cannot be denied that Z & W knew of the date of the application of Frank Ziherl,4 since it had accepted an assignment of it from him before it was filed. Equally, it had knowledge of the filing of the Hession application, also assigned to it, and of the fact that it was filed over a month later. Nor can there be any doubt that it knew that the two applications were for the same invention. Prior to January 1952 the device was made and successfully tested and fully disclosed to Ziherl by Hession and, by March 1952, a production model had been constructed by the corporation itself under Hession’s direction.
A corporation can acquire knowledge or notice only through its officers and agents and is held to know all material facts of which they acquire knowledge in the course of their employment and within the scope of their authority, even though they do not in fact communicate it. 19 C.J.S. Corporations, § 1078, page 613. Plainly, Frank A. Ziherl was acting within his powers as an officer in dealing with Hession. He executed for Z & W the agreement of August 15, 1951, which Z & W acted upon and subsequently expressly acknowledged as binding upon it.
Further, as stated under that agreement, Z & W agreed to pay Hession $200 per week or 5% of the net sale price of each device sold, whichever was greater, for one year, and 5% of the net sale price thereafter; said device being the subject of both applications under consideration here. Under the second agreement he was to be paid $5,000 in three installments. In other words, under the two agreements, we assume Hession was paid some $15,000. In view of these agreements, it is obvious to us that Frank Ziherl, Lewis Ziherl and G. W. Walker knew who invented the device at the time the Ziherl application was filed and at the time that Ziherl assigned his application to the Z & W Corporation.
Under these circumstances, it is difficult to see how it can be said that this common assignee made a mistake 5 when it elected to proceed on the Ziherl patent. And it is extremely significant that not a word of testimony or a particle of evidence has been forthcoming from Z & W or any of its officers that a mistake was made or that the election was not deliberately taken with full knowledge of the facts. The only evidence on the point is what possibly might be derived from the lawyer’s “Remarks” (filed in the Patent Office in connection with an amendment of June 16, 1955) leading to the conclusion that Z & W deliberately either misrepresented the situation to its attorney or allowed him to act in ignorance of the material facts.
The element of fraud has been largely discussed in the course of the proceedings in the Patent Office and in the briefs, but it is quite immaterial whether or not the election was made to consummate a fraud. Whatever it may be called, it was not and could not have been a mistake. And if there is fraud it was perpetrated by the party (Z & W) in accepting an assignment from one who did not invent the device, in permitting an election in favor of the Ziherl application, and indirectly asking this court to *937void the election. It must be remembered it is Z & W’s actions which are under consideration here, not Hession’s.
It should be noted that Hession had no financial interest whatever in the patent which is the subject of this controversy from the date on which he assigned the application (five days after he had filed it) until November 1955, when it was reassigned to him, some eight months after the Ziherl patent had issued. His compensation under the agreements was based upon cash payments plus a percentage of net sales of the device. The percentage was not contingent upon the ultimate issuance of any patent.
It appears to be argued on behalf of Hession that he had the right to have his name appear on a patent for the invention here involved, regardless of the ownership of the patent. Obviously, any patent issued on the appealed application must bear Hession’s name as inventor, but under the terms of the assignment agreements Z & W was under no obligation whatever to obtain a patent on that application. At the time of the election, therefore, Hession had no rights whatever with respect to an application or patent on the invention here involved and accordingly the election could not have deprived him of anything.
There is no evidence that Z & W obtained the contract of October 8, 1952, from Hession and acquired the assignment of the application which placed it in the position of a common assignee of the two applications, by any fraud. Hession in his affidavit does not allege or suggest that the agreement of October 8, 1952, was obtained by any misrepresentation, or that it was unfair or unconscionable, or that he did not get full value for what he sold, or that there existed any confidential relationship which the corporation abused.
The lawyer’s “Remarks” above referred to, which have been urged as evidence of mistake, were not sworn to. His statements of fact concerning his inquiry are flatly contradicted by Hession’s affidavit, although, in view of the fact that the corporation at all times had full knowledge of all the facts, the matter is not of great importance. It would be an unusual case indeed in which we would accept an unsworn statement rather than a sworn one.
The Patent Office is an administrative tribunal having full jurisdiction in the premises. Courts and other tribunals are frequently asked to vacate or nullify their orders, decrees or actions, but we know of no case where such request was granted without a showing of good cause. It seems to us that it would be hard to find a case presenting less cause for the relief requested than the case at bar. This is not one of those cases where the doubt can be resolved in favor of the applicant since there is no doubt about the law nor the facts.
We find no circumstances here which under any view of the effect of an election could justify the setting aside of the deliberate election made by Z & W in favor of Ziherl and since Hession can have no greater rights than those of Z & W, the decision appealed from was proper and is affirmed.
Affirmed.

. It was terminated by the execution of the second agreement.

. The Rules of Practice in the Patent Office, when not inconsistent with the statutes from which they are derived, have the force of law and control the procedure in that Office. Land v. Dreyer, 155 F.2d 383, 33 CCPA 1108, 69 USPQ 602; Anderson v. Walch, 152 F.2d 975, 33 CCPA 774, 68 USPQ 215.

. Black’s Law Dictionary, 3d Ed. 1933: AVOIDANCE. A making void, useless, empty, or of no effect; annulling, cancel-ling; escaping or evading.

. The record does not show what Ziherl’s position was except that he was an officer.

. There is a shade of difference between a mistake and an error. It may be an error for one to enter into a transaction, -whether innocent or fraudulent, but if one does so with full knowledge of all material facts, he cannot plead mistake to avoid the consequences.