Court Opinion

ID: 9641202
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:25:04.869563+00
Date Added: 2024-06-11T18:10:35.793011
License: Public Domain

FRANK, Circuit Judge
(concurring).
Although the opinions of Judge Wyzan-ski are of unusual excellence, they leave for our consideration several complicated problems with which Judge Clark’s opinion brilliantly deals. Nevertheless, as to sev-' eral items, I think it well to make some further comments.
1. Since its last paragraph disposes of the matter, all else in point 4 of the majority opinion is dictum in which I do not join, especially because the issue there discussed was not orally argued before us and will soon be decided by the Supreme Court.
2. Point 5 discusses defendant’s contention concerning the anti-trust laws as if that contention were confined to patents. I would add the following, lest our opinion be taken as rejecting it: Perhaps it is the rule, quite aside from any patent doctrine, that the return of property seized without lawful authority by any government officer will be judicially denied if the property upon its return would be used illegally.1 *937Perhaps, then, if it seemed highly probable that plaintiffs here, on return of any of the property, would employ it to violate the antitrust laws, judgment, on that sole ground, should be for defendant, with leave to renew the suit on proof that the threat of such illegal use had ceased. But we need not here consider that question, because the consent decree enjoins such use, and defendant does not suggest that plaintiffs have violated or contemplate violation of that decree.
3. The district judge held that S.I.G. obtained title to some of the Class A patents and the right in equity to require I.G. to convey title to the others. As- I read my colleagues’ point 9, they, in effect, agree with that ruling. Elsewhere in their opinion, however, they seem to conclude that, because of the anti-trust consent decree, S.I.G. is entitled merely to grant licenses to others under those patents. Assuming that to be the result at which the majority opinion arrives, I concur in it. But I cannot go along with my colleagues’ intimation, by way of dictum, that, had there been no consent decree, the trial judge’s ruling would have been correct. I call it dictum because I think it is not a necessary step in arriving at our decision. And I regret that dictum, and will not join in it, because its apparent approval of the trial judge’s ruling (i. e., that title passed) is, I believe, contrary to the precedents, and would have had the consequence, absent the consent decree, of giving S.I.G. greater rights in these patents than, under the Four Party Agreement, it had befar.,-the seizure. To make that statement intelligible and to explain adequately my objection to my colleagues’ dictum, I must state in detail the following record facts not fully stated by my colleagues and the legal effect of which, I think, they have overlooked.
Notwithstanding that, by Article II of the Four Party Agreement, I.G. “assigns and agrees to assign” the Class A patents, Article IV-A explicitly provides: “S.I.G. obligates itself for the period of this agreement not to engage in any business save that of granting licenses or transferring interests in patents rights coming within the hydrocarbon field and assigned to it under this agreement by Standard or I.G.”2 (This provision ties in with the provision of the corporate charter of S.I.G. which prohibits it from engaging in manufacturing operations; this charter provision could be amended only by holders of 85% of the. stock of S.I.G.; as I.G. held 20%, such an amendment required the consent of I.G.) Article V, as I read it, provides that any transfer of “interests” by S.I.G. is to be restricted to transfers to corporations which “shall not be empotvered to engage in manufacturing operations, and shall be obliged to conduct the licensing of the patent rights conveyed to them under conditions the same as those imposed upon S.I.G. under Article IV-A hereof.”3
*938The “conditions * * * imposed by Article IV-A” upon S.I.G., I think, had this legal effect: If S.I.G. itself made or used or sold any of the patented products, then (if the pertinent Class A patent were valid), S.I.G. would not be immune — as it would have been if it had had title to that patent- — from an adverse judgment in an in-*939fringcment suit. S.I.G. acquired merely the right to license others.4 It had no right to sell any of the patents outright, since any purchaser would likewise be confined to granting licenses; and (as the majority opinion shows) S.I.G. had no interest in the royalties beyond reimbursement of its expenses and $11,000 a year. Yet the decision of the district judge — that S.I.G. has full title to these patents — would confer upon it an immunity from judgments of infringement and would empower it to sell the patents free of all restrictions, despite the explicit contrary provisions of the Four Party Agreement.
The legal effect of these restrictive provisions is not discussed by my colleagues. And I consider most unfortunate their dictum, as it may mislead the district court in this case and as it disregards the precedents —including our own recent decision in Rohmer v. Commissioner, 2 Cir., 153 F.2d 61, 63, 64. There we held that the crucial question in this type of case is whether the patent-owner has parted with “substantially less than the entire ‘bundle of rights’ ”; we made clear that, when substantially less is transferred, the amount of consideration paid is irrelevant; there, too, we explained and qualified our previous general statements in General Aniline & Film Corp. v. Commissioner, 2 Cir., 139 F.2d 759, a case cited by my colleagues.
Surely S.I.G. acquired far less than the full “bundle” of patent rights since it enjoyed no immunity from infringement judgments, and could not validly dispose of the patents except subject to drastic conditions. In such circumstances, I think a transferee does not become vested with title to a patent, although it receives a formal “assignment” in the same or a separate instrument. See Waterman v. Mackenzie, 138 U.S. 252, 256, 11 S.Ct. 334, 34 L.Ed. 923; Crown Die & Tool Co. v. Nye Tool Machine Works, 261 U.S. 24, 43 S.Ct. 254, 67 L.Ed. 516; Rohmer v. Commissioner, 2 Cir., 153 F.2d 61, 63; Six Wheel Corp. v. Sterling Motor Truck Co., 9 Cir., 50 F.2d 568; Doherty Research Co. v. Vickers Petroleum Co., 10 Cir., 80 F.2d 809.
Nevertheless, I agree that plaintiffs should receive relief. Here it is well to differentiate two kinds of situations: (1) Suppose that, after an alien enemy contracted to sell to an American citizen some ordinary property (wheat or coal, for instance), the Custodian seized that property in the hands of the alien before title passed to the citizen, who had paid the alien a large purchase price. As, ordinarily, no matter what the size of the consideration or the monetary value of the property, the courts will not grant specific performance of such a contract, it may be that the citizen could not obtain specific performance, under this statute, against the Custodian.5 *940(2) But I think this statute would authorize specific performance against the Custodian of such a contract with an alien enemy if it related to land or unique chattels, because (a) such a contract would have been specifically enforcible against a transferee with notice and (b) the Custodian, under this statute, must, I think, be regarded as such a transferee. As I agree with my colleagues that the right of S.I.G. to grant licenses to others would have fcoen specifically enforcible against I.G. or a transferee from it with notice, I therefore believe that plaintiffs are entitled to a decree in this suit that that right be thus enforced against the defendant.
That, however, is very different from a ruling that S.I.G. has or should be awarded title to these ■ patents, since, to repeat, such a ruling would confer upon S.I.G. immunity, even if the patents are valid, from judgments in infringement actions, should it make, use or sell the patented products— an immunity which I think the Four Party Agreement carefully precluded.6

 Cf. Strong v. United States, 1 Cir., 46 F.2d 257, 261, 79 A.L.R. 150; Voorhies v. United States, 5 Cir., 299 F. 275, 277; United States v. O’Dowd, D.C., 273 F. 600, 602; United States v. Good-hues, D.C., 53 F.2d 696,. 699-701; In re Fried, 2 Cir., 161 F.2d 453, 458; Gallagher v. United States, 2 Cir., 6 F. 2d 758, 759.

 Emphasis added.
This Article also provides that the licenses should be granted by S. I. G. “only in consideration of substantial royalties payable to it and upon a fair, and as nearly as may be, a uniform basis. $ * s* »

 Emphasis added. Note the reference to Article IV-A as stating “conditions * * * imposed upon S. I. G.”
It is suggested that Article V deals solely with patent rights for the hydrogenation process which, in Article I, is defined as a “specific class of processes lying within the hydrocarbon field.” I think such an interpretation of Article V incorrect. It cites patent rights for this specific class merely by way of “example.” A reading of Article V as a whole makes this apparent, I think. Article V in its entirety is as follows:
“Departures from Article III and IV. Standard may refrain from making- the assignment to S. I. G. as provided in Art. Ill and S. I. G. may depart from the proposed licensing plan of Art. IV so long as the result as far as the interests of I. G. are concerned, shall he the same as though the said assignment were made and the proposed plan followed and sc long as the result contemplated by Arts. Ill and IV is effected. For example, S. I. G. may grant to another corporation for a consideration, the patent rights for the hydrogenation process in the United States, and to a third corporation, for a consideration, the patent rights for the hydrogenation process outside of the United States. These cor*938porations shall not be empowered to engage in manufacturing operations, and shall bo obliged to conduct the licensing of the patent rights conveyed to them under conditions the same as those imposed upon S. I. G. under Art. IV-a hereof. S. I. G. shall not be obligated to account to I. G. for the considerations received for such grants but shall pay over the entire considerations so received to Standard Oil Company of New Jersey after deductions for its own account as provided in Art. IV-B, b & c. But S. I. G. shall be obligated to provide that I. G. receives an account of all royalty payments including cash, free shares or other consideration, received by said corporations from the licensees the compensation provided in Art. IV-A hereof to tire same extent as if those licensees were licensed directly by S. I. G.”
It is also suggested that Article IX authorizes S. I. G. to assign any of the patents outright to Standard or I. G. But Article IX relates solely to “patent rights hereafter purchased by Standard or I. G. from others,” and not transferred to S. I. G. Article IX reads as follows:
“Purchased Patent Rights. All assignments and grants of patent rights which are herein made or agreed to be made by Standard or I. G. to S. I. G. are subject to the following provisions, in so far as they relate to patent rights hereafter purchased by Standard or I. G. from others: If such patent rights are offered for purchase to Standard or I. G. the one to which the oiler is made shall, if the matter appears to be important to the other, and it shall be practicable to do so, seek the cooperation of the other in making such purchase, with such fair distribution of the total expense as may be then agreed upon. The refusal of the other to cooperate in and share the expense of any such acquisition shall release the acquired patent right in every way from the operation of this agreement, but the patent right may be brought under this agreement, to the extent that the acquiring party still holds the same, at any time upon payment by the other of its equitable share of the purchase price.”
It is further suggested that Article XII authorizes S. I. G. to assign the Agreement itself. But that Article (which must bp read in the light of the rest of the Agreement) is as follows: “Assignment of Agreement. Any party may assign the whole or any part of the rights and benefits accruing to it under this agreement, with or without assignment of those obligations which are not personal and inseparable from the business of tlie respective parties. Any assignment of obligations by one party shall, however, not be effective as regards the responsibility of the assigning party to the parties in respect thereto.”
Another such suggestion rests on Article XVII, which reads as follows:
“Duration of Agreement.
“A. This agreement shall bo effective Nov. 9th, 1929, and shall remain in force until terminated by two years written notice served by any party upon the others but no such notice shall be served prior to December 31, 1945.
“B. All patent rights, including licenses (save those covered in paragraph D hereof), which are or may be assigned or granted by any party to another by or in accordance with this agreement shall continue to be held and enjoyed by the party so acquiring them until the expiration of the respective patents, even though this agreement shall have earlier terminated, but no party shall be obligated to give to any other any technical assistance or experience with relation to surviving patent rights after the expiration of this agreement.
“C. Neither Standard nor S. I. G. shall be obligated to make any payments to I. G. except as covered in paragraph D hereof, after the termination of this agreement, save for and on account of licensing revenue coming within this agreement and accruing before its termination, but I. G. shall continue to hold and enjoy its participation in any compensation paid for accruing before the termination • of this agreement, even though such payment shall cover in part rights obtained by the licensee enduring beyond the term of this agreement.
“D. Excepted from the provisions of paragraphs B and C of this Article, shall be patent rights of I. G. relating to the hydrocarbon field but not to the hydrogenation process and acquired by I. G. subsequent to December 31, 1941. These excepted patent rights may, before the expiration of this agreement, be licensed by S. I. G. to others for the full term of the patents in question, but S. I. G. shall be obligated to account to I. G. as provided in Art. IV hereof in re*939spect to any revenues received from suck licenses for the full term thereof, notwithstanding the same may extend beyond the life of this agreement.
“E. Effective as of the date of termination of this agreement S. I. G. shall reassign to I. G. all patent rights coming within Paragraph D, subject to such licenses as may theretofore have been granted thereunder. As to such licenses, this reassignment shall not affect the obligation of the licensee or the participation of the parties in tire royalties to be paid.”
It is suggested that paragraph B gives S. I. G., after the termination of the agreement the right to pass outright title (subject to existing licenses) to any of the patents (other than those within D) for the then unexpired life of such patent. I do not so construe B. Reading it in connection with O, D. and E, and in the light of Articles IV-A and V, I think it merely cuts off the right of I. G. to “licensing revenue” accruing after the termination of the agreement. But even if B is construed as suggested, the right thereby conferred is of very narrow scope; for the agreement could not be terminated, at the earliest, until December 1, 1947, by which date the life of many of the patents would have been over or of brief duration.

 Except perhaps (as indicated in note 3) the narrow right to transfer outright patents unexpired when the agreement terminated.

 As this question was not discussed by the parties and is not here involved, it need not here be answered.
I note in passing that here the $35,-000,009 cannot be said to have been paid solely for title to the Class A patents and the rights under the. Class B patents; for Standard received 80% of the royalties and other immensely valuable intangibles.

 It might conceivably be argued that S. I. G. owns the title but defendant, as successor to I. G., has the right to an injunction against S. I. G., should the latter attempt to violate the conditions imposed by Articles IV-A and V. However, I think" that, under the authorities above cited, the facts which would justify such an injunction prevent passage of title: When a court will enjoin the use of a substantial part of the “bundle of rights,” it is difficult to deny that the transferor has parted with “substantially less than the entire ‘bundle’ * * Rohmer v. Commissioner, supra. At best, S. I. G., as to a most important part of the “bundle,” acquired a bare legal title, which is far less than that which the trial judge allotted to it.