Court Opinion

ID: 9650507
Source: CourtListenerOpinion
Date Created: 2023-08-23 15:41:25.172267+00
Date Added: 2024-06-11T13:19:58.909084
License: Public Domain

PATTERSON, Circuit Judge,
dissenting.
I am of opinion that in a suit to obtain a patent under section 4915 of the Revised Statutes, 35 U.S.C. § 63, 35 U.S. C.A. § 63, an exclusive licensee under an adverse patent or application for patent is not an indispensable party defendant. Some of the reasoning in Parker Rust Proof Co. v. Western Union Tel. Co., 2 Cir., 105 F.2d 976, decided here March 6, 1939, is the other way, but in my opinion the reasoning as to this point should not be followed.
Section 4915 provides that when an application for patent has been denied by the Patent Office, the applicant may have remedy by bill in equity .to obtain a patent, “on notice to adverse parties”, the bill to be brought within six months after denial. For years it has been the practice for an applicant who has been defeated in interference proceedings in the Patent Office to bring suit under this statute, making the person who won the interference proceeding or his assignee the party defendant. See Morgan v. Daniels, 153 U.S. 120, 14 S.Ct. 772, 38 L.Ed. 657. Prior to the Parker Rust Proof Co. case it had not been suggested that an exclusive licensee under the adverse patent must also be joined as a defendant. The suit is ordinarily brought in the district whereof the owner of the prevailing application is an inhabitant, the general venue provision embodied in section 51 of the Judicial Code, 28 U.S.C. § 112, 28 U.S.C.A. § 112, applying to such a case. Arbetter Felling Mach. Co. v. Lewis Blind Stitch Mach. Co., 7 Cir., 230 F. 992. By the Act of March 3, 1927, 35 U.S.C. § 72a, 35 U.S.C.A. § 72a, Congress provided that suit under section 4915 might also be brought in the District of Columbia where there were several adverse parties residing in different districts.
Who are the “adverse parties” referred to in the section? The present owners of the conflicting patent, whether original applicants or later assignees, are manifestly indispensable defendants. Armstrong v. De Forest, 2 Cir., 13 F.2d 438; Hazeltine Corporation v. White, 2 Cir., 68 F.2d 715. They will lose their patent if the plaintiff wins his. On the other hand, no one would say, I take it, that ordinary licensees under the adverse patent are indispensable. An ordinary licensee has nothing but an immunity against claim of infringement by the owner. He has no title of any sort in the patent. United States v. General Electric Co., 272 U.S. 476, 489, 47 S.Ct. 192, 71 L.Ed. 362; General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175, 181, 58 S.Ct. 849, 82 L.Ed. 1273.
An exclusive licensee has like immunity from claim of infringement by the owner. By the license he acquires “the right not *985to be sued.” Keystone Type Foundry v. Fastpress Co., 2 Cir., 272 F. 242, 245. He also has the owner’s covenant not to grant similar immunity to others. As a general proposition he has no property interest in the patent. In infringement he may not sue strangers in his own right. Gayler v. Wilder, 10 How. 477, 13 L.Ed. 504; Birdsell v. Shaliol, 112 U.S. 485, 5 S.Ct. 244, 28 L.Ed. 768; E. W. Bliss Co. v. United States, 253 U.S. 187, 40 S.Ct. 455, 64 L.Ed. 852. He is allowed in his own name to sue the owner of the patent for infringement, “to prevent an absolute failure of justice”, Waterman v. Mackenzie, 138 U.S. 252, 255, 11 S.Ct. 334, 335, 34 L.Ed. 923; and he may also use the owner’s name with or without consent in a suit for infringement against strangers, on the theory that the owner holds the patent in trust for the exclusive licensee to the extent that he must permit use of his name for following up infringers. Independent Wireless Tel. Co. v. Radio Corporation of America, 269 U.S. 459, 46 S.Ct. 166, 70 L.Ed. 357. The fact remains, however, that an exclusive licensee has no property right in the patent, save for this limited equitable interest. Waterman v. Mackenzie, supra. In line with these authorities, it is settled that an exclusive licensee, while a proper party, is not an indispensable party plaintiff in a suit in equity for infringement brought by the owner of the patent. Hussey v. Whitely, C.C., Fed.Cas. No. 6,950; Nellis v. Pennock Mfg. Co., C.C., 13 F. 451; Frankfort Whisky Process Co. v. Pepper, C.C., 26 F. 336; Comptograph Co. v. Universal Accountant Mach. Co., C.C., 142 F. 539; Bowers v. Atlantic, Gulf & Pacific Co., C.C., 162 F. 895. These cases, while they are suits for infringement Under section 4921, 35 U.S.C. § 70, 35 U.S.C.A. § 70, rather than suits under section 4915 to obtain a patent, seem to me determinative of the present case, because they make it clear that the validity of the patent involved in the suit may be determined without the presence of exclusive licensees. It follows, I think, that exclusive licensees under a conflicting patent have not such an interest in the patent as to make them indispensable defendants in a suit to obtain a patent under section 4915.
There is additional ground for this conclusion. Section 4915 gives the remedy to the defeated “applicant”. The word “applicant” doubtless refers to the assignee in cases where the alleged inventor has assigned his application for patent. Gay v. Cornell, C.C., Fed.Cas. No. 5,280; Becker v. General Chain Co., 1 Cir., 273 F. 419. But persons who hold prospective license rights, exclusive or non-exclusive under the defeated application are certainly not “applicants” for a patent, and the statute does not contemplate that they initiate the suit or be joined with the applicant as parties plaintiff. Smith v. Thompson, C.C., 177 F. 721. This being the situation on the plaintiff’s side, there is no reason to believe that the “adverse parties” referred to in the statute embrace a larger class and include persons who have mere licenses under the prevailing application.
In the Parker Rust Proof Co. case it is said that a decree will necessarily affect the exclusive licensee’s rights under the conflicting patent, and that hence the exclusive licensee is an indispensable defendant under Shields v. Barrow, 17 How. 130, 15 L.Ed. 158. That argument proves too much, for if it is sound ordinary licensees would also be indispensable parties defendant. But the answer is that in the suit the licensee, having at most an equitable interest, is represented by the owner of the patent. Where a stranger sues to oust a trustee from the trust estate, the interest of a beneficiary is represented by the trustee, and in such cases the beneficiary is not a necessary party. Vetterlein v. Barnes, 124 U.S. 169, 8 S.Ct. 441, 31 L.Ed. 400; Kerrison v. Stewart, 93 U.S. 155, 23 L.Ed. 843; Beals v. Illinois, M. & T. R. Co., 133 U.S. 290, 10 S.Ct. 314, 33 L.Ed. 608; Jackson v. Tallmadge, 246 N.Y. 133, 158 N.E. 48. It is also urged that the rights of a licensee are frequently of more value than the interest of the owner of the patent. In Armstrong v. De Forest, supra, Judge Hough held that comparative values played no part in determining who were necessary parties, in a suit like the present one. I think he was right.
In practice the rule laid down by the majority will result in frustration of the remedy given by Congress in section 4915. Recording of licenses is not required. They may be created by oral agreement or even by conduct. There may be dozens of hidden exclusive licenses under a single patent, for different territories and for different uses. If the exclusive licensees are necessary parties, a suit to obtain a patent, brought against the owner of the *986interfering patent in the district of his residence, will be thrown out when exclusive licenses held by residents of other districts are uncovered/ and it may then be too late for the plaintiff to go to the District of Columbia. In the present case the plaintiffs are sent away without trial on the merits and without a chance of redress elsewhere, by a concerted maneuver on the part of .the owner of the patent and the licensee, who had the suit dismissed as to the licensee on the point of venue, and then succeeded in having it dismissed as to the owner because the licensee, said to be an indispensable party, was not longer present. In my opinion the suit was maintainable against the owner alone, and the decree of dismissal as to that defendant should be reversed.