93 F. Supp. 376 | D. Del. | 1950
On January 31, 1949, plaintiffs sought a. declaratory judgment that they need to pay-no royalties stipulated by the terms of, a, license agreement between defendant and’, plaintiffs under No. 2,358,222, the Fink-. Richardson patent, and that the license ■ agreement should be cancelled. Defendant. then asked for summary judgment and dis- - missal of the complaint.
Years before, on March 17, 1945, the-■plaintiffs sought declaratory judgment against defendant in 'this court — our C.A.. No. 538 — to adjudicate their non-infringe- -
The license agreement granted plaintiffs a non-exclusive, non-transferrable license to practice and participate in the practice of the inventions claimed in the Fink-Richardson patent. The term of the license runs from January 29, 1948 to the date of expiration. There is no expressed right to discontinue payment of royalties prior to the expiration of the patent except in the event of an adjudication of invalidity of the Fink-Richardson patent
Under the license agreement plaintiffs made payment of royalties for three calendar quarters of the year 1948 at the royalty specified in the license agreement. Several months later they filed their complaint in the present case and asked this court to
On this record the parties urge a large number of legal arguments to support their respective positions. I have followed through their contentions and weighed each one. Defendant contends that (1) the license agreement sets forth the sole conditions under which plaintiffs may be relieved of their obligation to pay royalties and these conditions have not occurred; (2) as a matter of fact, it appears in the record that plaintiffs have not been evicted from the benefits of the license; (3) plaintiffs are obligated to pay royalities under the license agreement regardless of the prior art because the processes they now admittedly use are the same as those described in the license, agreement and which form the basis of the use on which they agreed to pay royalties; (4) plaintiffs’ past royalty payments operate as an estoppel of their right to discontinue royalty payments; and (5) plaintiffs are seeking to re-litigate the same issues earlier compromised and settled in the previous litigation in this court involving the same patent and inventions. It seems to me that all these reasons except (2) above are, at bottom, estoppel arguments ; they will be so treated as one argument under that theory.
On the other hand, while they do seriatim deny and discuss each of defendant’s arguments, plaintiffs contend mainly that this suit is controlled and should be disposed of by the doctrine of the Marcalus case,
I think defendant’s motion for summary judgment should be denied. The basis of the conclusion is not that I think the Marcalus doctrine controls so as to defeat defendant’s right but, rather because of a doubt' as to the proper construction and limitations that should be placed on defendant’s admission that plaintiffs’ activities “correspond with the prior art”. This aspect of the case may be determined after considering the Marcalus case in some detail. Marcalus involved the question whether an assignor of a patentee is estopped by virtue of his assignment to defend a suit for infringement of the assigned patent on the ground that the alleged infringing device is that covered by a prior art expired patent. In deciding in such circumstances the assignor was not estopped, the Supreme Court stated: “It is thus apparent that the patent laws preclude the patentee of an expired patent and all others including petitioner
“It follows that the patent laws preclude the petitioner assignee from invoking the doctrine of estoppel, as a means of continuing as against respondent, his assignor, the benefit of an expired monopoly, and they preclude the assignor from estopping himself from enjoying rights which it is the policy of the patent laws to free from all restrictions. For no more than private contract can estoppel be the means of successfully avoiding the requirements of legislation enacted for the protection of a public interest.”
At the outset it is clear there are two factual differences between the Marcalus case and the case sub judice. First Marcalus involved an action for infringement between assignor and assignee, whereas this is an action for royalties between licensor and licensee. Second, and more important, is the factual difference that the Court in the Marcalus case relied upon an expired patent as prior art whereas the plaintiffs here rely only on a prior scientific text.
Since the Marcalus case, I have held, in effect, that the rule of estoppel of the licensee to contest validity of a licensed patent has not been abrogated. Atlas Imperial Diesel Engine Co. v. Lanova Corp., D.C. Del., 79 F.Supp. 1002. Thus, for present purposes (I do not rule on it finally) the Marcalus doctrine, as urged by plaintiffs, does not control here. The conceded factorial differences call for the operation of different rules; and a clear understanding, as far as I am concerned, of the significance of these factual differences can be only understood better after a full hearing. This, then, is a good part of the obstacle to granting defendant’s motion. Plaintiffs contend that defendant, for the purpose of this motion, has admitted without qualification that plaintiffs’ practices “correspond with the prior art”. They interpret this latter phrase to create the same situation as would be created by practices under an expired patent as in Marcalus. If this interpretation or conclusion were accepted, it would clearly minimize the significance of the factual difference which I have referred to, and which has given me pause. While I am not convinced defendant’s admission goes this far, I think it raises sufficient doubt to defeat defendant’s right to summary judgment.
By denying the present motion for summary judgment in defendant’s favor, there will be present at trial live and informed testimony or other evidence placing plain
An order denying the motion may be submitted.
. “Final Judgment.
“And Now, to wit, this 10th day of February, 1948, it having been represented to the Court by counsel for plaintiffs and counsel for the defendant that the parties hereto have compromised and settled this controversy and that the defendant has granted a license to the plaintiffs under Fink and Richardson patent No. 2,-358,222,
“It Is Ordered, Adjudged And Decreed:
“(1) That the complaint herein is hereby dismissed;
“(2) That the counterclaim herein is hereby dismissed;
“(3) That each party shall pay its own costs.
“(s) Paul Leahy
“U. S. District Judge.
“Dated Feb. 10, 1948.”
. The text of paragraph 8 follows: “8. If in any suit for infringement of the Fink-Richardson patent any of its claims shaE be held to be invalid or not infringed by the final judgment of a court of competent jurisdiction from which no appeal or other proceeding for review thereof ■can be or is taken, the construction placed upon the patent by the court shaE be followed by the parties hereto from and after the date of the entry of such final judgment, and royalties thereafter ■accruing shall be payable only in accordance with such construction; and with respect to claims that are held in such final judgment to be invalid the obfigation ■¡to pay royalties shall cease; provided, that such final judgment shaE cease to have the effect set forth in this paragraph from and after the date of a subsequent final judgment of a court of equal or superior jurisdiction to the extent that such subsequent judgment shaE be inconsistent therewith.”
. The text of this part of the Ecense agreement follows: “9. Nalco shall in good faith endeavor to enforce and maintain the Fink-Richardson patent. In case the Hagan companies shall notify Nalco of an aEeged infringer and Nalco shall not in good faith beEeve that the bringing of suit against the aEeged infringer is reasonably required for the protection of the Hagan companies, the question shall be submitted to an arbitrator, whose judgment shall be final. If the arbitrator’s decision be in favor of the Hagan companies, Nalco shall sue the alleged infringer, but if the decision be in favor of Nalco there shall be no obligation to bring suit against the aEeged infringer under the circumstances existing and presented to the arbitrator. Nalco shaE have thirty days from the date of decision by the arbitrator in favor of the Hagan companies within which to bring suit. In case it shall not bring suit within such time the Hagan companies shaE be relieved of their obligation to pay royalties hereunder from the date of the decision of the arbitrator up to the date when suit shall be brought, against the alleged infringer. * * * ”
. Automatic Paper Machinery Co. v. Marcalus Mfg. Co., 3 Cir., 147 F.2d 608, affirmed Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249, 66 S.Ct. 101, 105, 90 L.Ed. 47
. This text — the “Fresenius text” as judicially determined — vas in existence and known to plaintiff prior to the execution, of the license agreement