United States v. Studiengesellschaft Kohle, MBH

• Decision Date: 03 December 1976
• Docket Number: Civ. A. No. 1255-70.
• Citation: 426 F. Supp. 143
• Parties: UNITED STATES of America, Plaintiff, v. STUDIENGESELLSCHAFT KOHLE, M. B. H., et al., Defendants.
• Court: U.S. District Court — District of Columbia

426 F. Supp. 143

UNITED STATES of America, Plaintiff, v. STUDIENGESELLSCHAFT KOHLE, M. B. H., et al., Defendants.

Civ. A. No. 1255-70.

United States District Court, District of Columbia.

December 3, 1976.

COPYRIGHT MATERIAL OMITTED

Kurt Shaffert, Hays Gorey, Jr., and Roger B. Andewelt, U. S. Dept. of Justice, Anti-trust Div., Washington, D. C., for plaintiff.

Johnnie M. Walters, Washington, D. C., Henry V. Nickel, Washington, D. C., Bernard M. Borish, Philadelphia, Pa., Robert A. Fulwiler, Wilmington, Del., Barry E. Cohen, Washington, D. C., Philip S. Neal, Washington, D. C., Arnold Sprung, Burgess, Dinklage & Sprung, New York City, Robert F. Brooks, Hunton & Williams, Richmond, Va., for defendants.

MEMORANDUM OPINION AND ORDER

AUBREY E. ROBINSON, Jr., District Judge.

The United States of America has sued the Defendants for violation of Sections 1 and 2 of the Sherman Anti-Trust Act. It complains of Defendants' acts arising from a contractual arrangement between the Defendant, Hercules, and a patentee, Karl Ziegler, now deceased and succeeded in interest by the Defendant, Studiengesellschaft Kohle, M. B. H. Defendants contend that the arrangement with Ziegler granting Hercules the exclusive right to sell the unpatentable product made by the patented process is a license agreement protected by the patent laws and therefore immune from attack under the Anti-Trust Laws. For the reasons discussed below, this Court has concluded that Defendants are not entitled to judgment as a matter of law.

Professor Karl Ziegler, Director of the Max Planck Institute for Coal Research in Malheim, West Germany, while engaged in organic-metallic chemical research, developed a number of catalysts and processes for the manufacture of certain plastic, rubbers and other synthetic fibers. These ultimately revolutionized the world's plastic industry and won for Professor Ziegler the Nobel Prize for Chemistry in 1963. One group of organo-aluminum components of the polymerization catalysts used by Ziegler was aluminum trialkyls (ATA's). Among the numerous U. S. patents, Ziegler received, several covered processes for the manufacture of aluminum trialkyls (ATA's).

Hercules Incorporated entered into an agreement with Ziegler on September 24, 1954 (styled "Technical Field Contract") by which Hercules was granted non-exclusive rights to Ziegler's patented processes for the manufacture of polyethylene and certain exclusive rights in his patented process for the manufacture of aluminum trialkyls, namely:

"An exclusive license to sell in the United States the aluminum trialkyls produced within the scope of the technical field."

No other U. S. manufacturer was granted rights to use Ziegler's patented process to manufacture aluminum trialkyls for sale. Ziegler did grant rights to some to use the process to manufacture aluminum trialkyls for their internal consumption.

Hercules and Defendant, Stauffer Chemical Company, formed a 50-50 joint venture in 1959 to manufacture and sell aluminum trialkyls. That joint venture is the Defendant, Texas Alkyls, Inc. and Hercules transferred to it the rights conferred by Ziegler in the "Technical Field Contract" of 1954. Since that time defendants have successfully prevented the unrestricted sale of aluminum trialkyls made with the patented process.

The Motions for Summary Judgment proceeded upon the single legal premise that the "Technical Field Contract" is in fact a patent license agreement between Ziegler and Hercules and that every activity of which plaintiff complains was taken pursuant to that license and therefore authorized by the patent laws.

The current law governing patent grants, 35 U.S.C. § 154 (1970), provides that:

"Every patent shall contain a . . . grant to the patentee, his heirs or assigns, for the term of seventeen years, of the right to exclude others from making, using, or selling the invention throughout the United States."

The grant is the exclusive right to the patentee to exclude others from making, using or selling the subject matter covered by the claims of the patent. In Motion Picture Patents v. Universal Film Mfg. Co., 243 U.S. 502, 510, 37 S.Ct. 416, 418, 61 L.Ed. 871 (1917), the Supreme Court declared:

"It has long been settled that the patentee receives nothing from the law which he did not have before, and that the only effect of his patent is to restrain others from manufacturing, using or selling that which he has invented. The patent law simply protects him in the monopoly of that which he has invented and has described in the claims of his patent."

A patentee may enforce his statutory right to exclude others from making, using, or selling the subject matter of the patent claim, by bringing an infringement suit against one who infringes the claim (cf. 35 U.S.C. §§ 271(a), 281). He may license others to exercise rights under the patent claim. Such a license is a waiver by the patentee of his statutory right to sue the licensee for infringement of the patent claims.

The scope of a patent monopoly is determined by the patent claims. The law requires that these claims be stated distinctly and with particularity. (35 U.S.C. § 112). The patent as issued by the Patent Office contains the claims which are the sole measure of the patent grant. As stated in Motion Pictures Patents, supra:

"The scope of every patent is limited to the invention described in the claims contained in it, read in the light of the specification. These so mark where the progress claimed by the patent begins and where it ends that they have been aptly likened to the descriptions in a deed which set the bounds to the grant which it contains. It is to the claims of every patent, therefore, that we must turn when we are seeking to determine what the invention is, the exclusive use of which is given to the inventor by the grant provided for by the statute, — He can claim nothing beyond them."

The holder of a patent on a product has the monopoly to exclude all others from making, using or selling the product. His patent is infringed where another makes, sells or uses the product. The holder of a patent on a process has the monopoly to exclude all others from making, using or selling the process. Such a patentee has his patent infringed when another makes, sells or uses the process. The product patentee may grant licenses with respect to his product; the process patentee with respect to his process.

Ziegler's patent monopoly is thus defined and limited to the claims in his patent, claims relating solely to the process of producing ATAs, not the product of the use of that process. The patent office had refused his application to patent the ATAs produced by his process because they were not invented by Ziegler and had previously been produced by other means. He subsequently withdrew his product claim. His advancement of science was the process, not the product and for this he received the statutory reward of a patent which gave only him the right to exclude others from using his process for making ATAs. (35 U.S.C. § 101).

The license agreement at issue in this case is one in which Professor Ziegler granted to Defendant, Hercules, certain rights under Ziegler's patented processes for the manufacture of ATAs. The relevant portion of the agreement reads as follows:

". . . Professor Ziegler hereby grants to Hercules . . . a non-exclusive license in the United States and Canada under the Patent Applications and under the Patents and each and every claim thereof, to use the processes therein described and claimed or resulting from the practice of said processes. Prof. Ziegler further grants to Hercules an exclusive license to sell in the United States the aluminum trialkyl produced within the scope of the technical field."

The exclusive grant to Hercules was the exclusive right to sell the ATAs produced pursuant to his patented process.

It is this grant of an exclusive right to sell the unpatentable product of the patent process which is the heart of this litigation. The critical inquiry in deciding this Motion is whether this grant represents no more than an exercise of the patent monopoly conferred by law or whether the grant extends the patent monopoly.

Judicial approval has been given to a wide-range of licensing options that a patentee may utilize in excluding others from "making, using or selling" the subject of his patent claim. He may issue a license for a limited period of time, Pursche v. Atlas Scraper and Engineering Co., 300 F.2d 467 (9th Cir. 1961), cert. denied, 371 U.S. 911, 957, 83 S.Ct. 251, 9 L.Ed.2d 170 (1963); he may grant a license with territorial limitations, Gayler v. Wilder, 51 U.S. (10 How.) 477, 13 L.Ed. 504 (1850); he may grant a license to make and use but not to sell the subject of his patent, Mitchell v. Hawley, 83 U.S. (16 Wall.) 544, 21 L.Ed. 322 (1872); or to exercise only one of his rights to make use and sell his invention, Adams v. Burke, 84 U.S. (17 Wall.) 453, 456, 21 L.Ed. 700 (1873); E. W. Bliss Co. v. United States, 253 U.S. 187, 40 S.Ct. 455, 64 L.Ed. 852 (1920). In short, the patentee may divide and parcel out certain portions of his patent monopoly. Such licensing restrictions have come to be known as "field-of-use" licenses.

The principal rationale of Defendants' argument is that the Ziegler license to Hercules of an exclusive right to sell the product of the patented process is a "field-of-use" restriction.¹ They contend that the "field-of-use" is the commercial sales market for ATAs produced by the use of the Ziegler process. Defendants state as follows:

"The ATA rights granted to Hercules may be considered a field-of-use license if Ziegler is viewed as having granted to Hercules the exclusive right to use his patented aluminum trialkyl processes to manufacture ATAs for the resale field, and correlatively limited his other licenses to the use of his ATA processes to manufacture for the purpose of internal consumption."²

In support of their position,...