Robert Boggild & William Dale v. Kenner Products, Division of Cpg Products Corporation

that attached each Fun Factory, to BOGGS, Before KRUPANSKY and during Jr. sale to be uniform the entire BROWN, Judges, Circuit and Senior year twenty-five period of the contract. Judge. Circuit plaintiffs’ patent applications subsequently expiration issued with dates KRUPANSKY, Judge. Circuit design patent of March 1979 for the and s-appellants, plaintiff Boggild Robert August patent. for the mechanical (plaintiffs), appealed and William Dale Accordingly, responsibility Kutol’s from of the the order district court licensing agreement required pay it to against defendant-ap- contract action royalties plaintiffs to until more than (defendant pellee, Kenner Products or Ken- years underlying patents four after the on ner). plaintiffs On March the extruder expired device in 1983. filed an action in the Common Pleas Court 1963, subsequent In consummating to County, Ohio, its alleging of Hamilton plaintiffs, defendant had breached with Kutol the terms of a licensing agreement rights, sold all its and between themselves title interest to successfully and Kenner. The Play-Doh, assigned defendant and its contractual petitioned for removal to the States rights obligations licensing under the District Court Southern District agreement with plaintiffs for market Ohio, diversity jurisdiction, based Jr., ing Factory, defendant, the Fun to the complaint filed an answer to the and coun- Products. In the plaintiffs Kenner alleging licensing terclaimed brought against the instant action de agreement at issue was as a unenforceable fendant, alleging that Kenner had breached royalties matter of to all accruing law as by failing pay royalties the contract due after the expiration pat- of the underlying plaintiffs licensing agree to the under the ents. ultimately granted The district court counterclaim, In ment. summary judgment to the defendant on its agreement charged licensing as to counterclaim. royalties subsequent that accrued to the expiration underlying patent, i.e., of the following The record disclosed the facts. after was unenforceable under the early Products, (Kutol), Kutol pronouncement in Bru brightly invented a colored and scented Thys lotte v. modeling compound Play- it trade named (1964),1 Doh, required because it was similar texture com- pay beyond position royalties year Kenner the 17 to clay, and which it offered for patents. toy sale to On December the children’s market. Contem- upon consideration poraneously, plaintiffs of cross motions for invented me- summary judgment, chanical extrusion device it named the district court trade Jr., partial Play-Doh granted summary judgment the Fun Factory, mold the favor plaintiffs, into variety concluding different configurations. the con During year per royalties li- not as tract was se invalid Kutol, censed the Factory, accruing Fun Jr. to after pat- of the per In Brulotte v. as se due (1964), had because it consti- provision requiring pay- held that a contractual attempted improp- tuted an use of the ment of for the use of a device or exacting licensing agreement. er invention alleging appellate disposition ents, on the distinguishing Brulotte that, action, agreement licensing the instant declared invalid basis filed application had been to the extent that it se under Brulotte licensing the execution prior royalties beyond required payment of Prod., Kenner agreement. Boggild v. patents. The underlying district rev’d, 533, (S.D.Ohio1983), F.Supp. accepted argument court the defendant’s denied, (6th Cir.1985), cert. F.2d 1315 and declared that the 91 L.Ed.2d 573 of negotiated a parties thereafter The grant patents accordingly in resolving outstanding all other settlement judgment summary ed for the defendant. ap reserving right issues, however C-1-83-638, unpublished opin entry par of court’s peal from the district (S.D.Ohio 1987) (1987 April deci ion The court summary judgment. district tial sion). plaintiffs then filed simulta The incorporating the a consent decree entered appeals from the district court’s 1987 neous decision). 12, 1984(1984 on settlement June decision, one with this circuit the other appeal on June filed an The defendant Appeals of with the Federal Circuit Court arguing that the Washington, in D.C.2 disposi- in pronouncements Brulotte In the instant 13, 1985, a case. On November tive of the challenged jurisdiction to this court’s have the district this court reversed panel of of the district review the 1987 decision decision, and held court’s 1984 court, contending that under U.S.C.A. payments due disputed (West 1295(a)(1) Supp.1988), the Federal patents were invalid § ap jurisdiction over Circuit “has exclusive Supreme Court’s mandate pursuant the se peals district courts from the United States in Brulotte v. (1964) (1985 part ap or in on that are based whole initially considered peal). The 1338.”3 See U.S.C.A. U.S.C.A. § plain Wright, concluded that the Mil 1295(a)(1); the case 15 C. A. see also § impending applica leveraged the tiffs had Pro ler, Cooper, E. Practice and Federal a of exact patents tions for the as means (Supp.1988); 17 id. at 58 cedure § period for a ing payment of (Supp.1987). Section at 110 § years and remanded the case twenty-five juris provides district courts with federal proceedings for further court the district arising under “any civil action diction over panel’s opinion. Bog consistent with relating patents.” Congress any Act of Prod., F.2d 1315 Kenner gild v. (West 1976).4 1338(a) The 28 U.S.C.A. § Cir.1985), urged that the defendant’s licensing counterclaim, alleging that beyond the unenforceable remand, agreement was again moved On counterclaim, patents, constituted underlying life of summary on judgment relating patents.... any Congress disposition of the Act 2. See footnote infra jurisdiction separate appeal Court of be exclusive of to the Federal Circuit Such shall Appeals. patent ... cases. courts of the states (West 1976). 1338(a) Su- § 28 U.S.C.A. pertinent part: reads in 3. Section jurisdiction un- preme has indicated that (a) Appeals for States Court of only to those cases in § "extend[s] der juris- Circuit shall have exclusive the Federal complaint ei- well-pleaded establishes which diction— (1) patent the cause of law creates that federal ther an from a final decision necessarily right relief action or that ... ..., the United States if court of district depends substantial on resolution based, jurisdiction whole court law, patent is a law of federal part, section 1338 of title.... or in on well-pleaded necessary one of the element of 1295(a)(1) (West Supp.1988). § 28 U.S.C.A. Operating v. Colt Indus. Christianson claims.” of section states 4. The relevant — -, Corp., as follows: added). (1988) (emphasis L.Ed.2d 811 original (a) courts shall have The district arising any jurisdiction civil action progeny claim under the laws within the consistently ... have held over scope of years section would divest disputes involving that contract this circuit of over the patents district do not arise ‘under any Act language court’s 1987 decision under of Congress patents,’ relating to required 1295(a)(1). section 1338(a).” by 28 U.S.C. Beghin-Say Int’l Rasmussen, v. Ole-Bendt however, plaintiffs, have failed to (Fed.Cir.1984); 1570-71 see also Bal appreciate distinction between lard Wright, Medical Prod. v. claim which arises federal statutes (Fed.Cir.1987); Atari, Inc., relating requires and which 4; Combs, F.2d at 1429 & n. 681 F.2d at validity to interpret scope court the of , 470-71. A counterclaim challenging the particular patent a section within validity of a is a con patent a contract claim in which issues are dispute, tractual arising and not an action merely incidentally implicated. under patent laws scope within the of A patent case does not arise under the general section 1338. “The rule is questions merely patent laws because brought enforce, where an action is set may interpret- law arise in the course of aside, contract, or annul a the action arises ing a contract.... “Federal courts have contract, out of the and not jurisdiction exclusive of all cases arising patent laws, though even con laws, contract patent under the but not of all patent Combs, cerns a right.” at questions 681 F.2d patent a may be the 470; Laboratories, v. subject accord Scherr controversy.” matter of the Difco Inc., (“A 447 Cir.1968) Inc., Plough, Combs v. 681 F.2d patent suit on a license does un not arise (6th Cir.1982) curiam) (per (quoting New patent States.”); der the of the laws Engine Marshall v.Co. Marshall Engine Mfg. Goff, Dill Co. v. 125 F.2d Co., 473, 478, 238, 239, U.S. S.Ct. (6th Cir.) U.S. (1912)); L.Ed.2d 513 also see Christianson S.Ct. — 87 L.Ed.2d 540 Operating Corp., v. Colt Indus. U.S. -, 2166, 2173, 108 S.Ct. 100 L.Ed.2d 811 case, In the instant defendant’s coun- (1988) (“[A] raising patent- case a federal terclaim challenged validity not, law defense alone, does for that reason plaintiff’s licensing agreement (alleging patent law_”); Atari, ‘arise under’ contract, requiring terms of Inc., v. JS & A Group, beyond the exist- (Fed.Cir.1984) (“Not n. 4 every dispute in- patents, ence of the underlying were unen- volving under’ ‘arises patents forceable after expired) had laws within meaning 1338.”). of § arose out of an of the con-

Under the Supreme however, not, mandate in tract. The counterclaim did (10 Sanford, How.) 99, Wilson v. implicate validity 51 U.S. scope or pat- of the (1850),5 13 L.Ed. 344 it was well established ents here in jurisdiction issue. Federal was contractual implicate claim did not pursuant diversity citizenship invoked jurisdiction of a federal district court and not sugges- section 1338. Plaintiffs’ arising decide claims under section tion that the Federal Circuit had exclusive Sandford, 1338. “Wilson v. U.S. of this under section [sic] (10 How.) 99, (1850) 1295(a) L.Ed. and its is therefore without merit.6 repeatedly Teas, 550, 554, The bright Court has reaffirmed v. See, holding its e.g., in Wilson Luck Sanford. Inc., 496, 502, Delpark, ett v. 46 S.Ct. plaintiffs joined In the instant 397, 399, (1926); 70 L.Ed.2d New Marshall regarding appellate jurisdiction the same Engine Engine Co. v. Marshall 223 U.S. they previously had 238, 239, (1912); 32 S.Ct. presented Ap- to the Federal Circuit Court of Excelsior Pipe Bridge Wooden Co. v. Pacific 87-1383, peals. Prods., Boggild v. Kenner 282, 285, 681, 682, (Fed.Cir. (re- unpublished 1987) order (1902); Lawder, Wade v. hearing rehearing denied). en banc The (1897); Al- Federal Circuit that it did concluded not have precludes license alternatively idity plaintiffs have enforcement of court erred provisions charged that the district developed in which were antici- to the defend granting summary judgment pation patent protection and which re- 1987 order because unresolved ant use, quire royalty payments for sale or court, upon required the trial factual issues patented item manufacture remand, if the had to consider added). patent.”) (emphasis by the leveraged bargaining position their plaintiffs’ allegation that issues of fact re- receiving pat applying for and prospect of by to be resolved remand mained Brulotte, Factory, Fun Jr. for the ents accordingly court is without merit. trial declared that contract suggested have also in which the amount underlying conclusions reached the initial during it the life the same as was remained clearly of this court in 1985 were underlying patents unenforcea erroneous, justifying thus reconsideration. as matter of law ble See, Christianson, e.g., 2177; 108 S.Ct. at pat accruing after Corp. Petition the United States Steel at 379 U.S. at ents. (Fuhrman Corp.), v. United States Steel (“The are ... on their face 179 contracts (6th 489, Cir.1973). 479 F.2d 494 A review to terms and attempt exact same bald legal reasoning employed period after the conditions for the arriving in at initial of this court monopoly they as do for the have appeal disposition of 1985 indicates Court concluded period.”). adopted it accurately of fact remained issue in Brulotte v. teachings U.S. drafting parties in the con intent of the (1964), and tract, have been the court would because Quick Aronson v. Point Pencil speculate as “what bar unable to U.S. parties might have gaining position of the (1979). addition, appeals In other courts arrangement what resultant been and have examined the issue ar for which have might emerged had the conclusion. See divorced post-expiration been at same rived subject Inc., nowise to its Ind., from the and v. Meehan PPG Brulotte, at leverage.” (7th Cir.1986) (“Under Brulotte when In the initial appeal, at the 1985 S.Ct. unchanged be payments extend relevant con panel of this court found the patent, patent yond the of a life factually to be indistin provisions tractual agreement is and the un has been abused Bru examined guishable from those denied, se.”), per lawful lotte, therefore concluded as matter (1987); 94 L.Ed.2d S.Ct. provisions requir of law that contract Mestre, Bowes, Inc. 701 F.2d Pitney v. ing payment royalties beyond life Cir.) (“[Ajgreement (11th re invalid, patents were without neces at pay[ment quiring] ... of] inquiry. sity for further factual rate on the same basis same (“The provisions for use F.2d at pat paid it while patents expired that royal extruder as a ent was effect” pre-expira applicable ties are both expired), patents had matter of law periods. post-expiration There tion and 893, 101 rt. un ce agreement is fore, se.”) (emphasis added); accord per lawful the re having demonstrate that failed to (“We judgment and reverse this id. at 1319 clearly errone- appeal se inval- rule sult of hold that the Brulotte challenge jurisdictional because the defendant’s counter- pro- subsequent given be deference should claim was based raising ceedings the same circuit patent. in another This court is contract rather than Christianson, game jurisdic- prevent perpetual "a disposition. See accord with pong....’’). disposition ping (Appellate tional court’s 108 S.Ct. at 47 0

ous, disposition a reexamination of that state is of mind of the parties respect with accordingly unwarranted. leverage. use of In all other I matter, respects agree with the

As a final majority opinion as written. imposition seeks the of sanctions under Appellate Federal Rule of Procedure

urging appeal plaintiffs’ was friv Ordinarily,

olous. sanctions are awarded only

under Rule 38 where there is some misconduct,

evidence of intentional such as

pursuit pur of an faith appeal bad harassment,

poses delay or other such See, improper INS, purposes. e.g., Dallo v. America, UNITED STATES of Cir.1985); 765 F.2d TIF In Plaintiff-Appellee, struments, Colette, Inc. v. v. (6th Cir.1983); accord Roadway Ex (87-1924), Agos Vito GIACALONE Mario press, Piper, (87-1931), Hady (87-1932), ta Albert 2455, 2463-64, (87-1933), Anthony Jack V. Giacalone the instant the defendant has not (87-1934), Defendants-Ap D. Giacalone presented demonstrated that issues pellants. unsupported so insubstantial or as to suggest initiated 87-1924, Nos. 87-1934. in bad faith. request The defendant’s Appeals, States Court sanctions is denied. Sixth Circuit. Accordingly, the decision of the district Argued June court, granting summary judgment in fa- defendant, vor of the is AFFIRMED. Decided BROWN, BAILEY Senior Circuit

Judge, concurring. that,

The majority opinion holds opinion

379 U.S. at of whether the provision

license require pay that would

ment of after is a void is to be resolved only a by case consideration of the

terms of the license that other evidence parties motivation of the with re

spect is irrelevant. I am not

sure that reading this is a correct of Bru However,

lotte. of this court on prior appeal clearly did hold that the solely was to determined be that,

terms of the license did hold light agreement, of the terms of that requirement patent expiration was unenforceable. 776 F.2d at 1320. The

Court denied certiorari. 477 U.S. 908 case, This is the law of this and I

therefore concur in result that there be taking proof

no remand for the

Case Details

Case Name: Robert Boggild & William Dale v. Kenner Products, Division of Cpg Products Corporation

Court Name: Court of Appeals for the Sixth Circuit

Date Published: Aug 5, 1988

Citation: 853 F.2d 465

Docket Number: 87-3522

Court Abbreviation: 6th Cir.