Dawson Chemical Company v. Rohm and Haas Company, 79-669

• Decision Date: 27 June 1980
• Docket Number: No. 79-669,79-669
• Citation: 65 L.Ed.2d 696,448 U.S. 176,206 USPQ 385,100 S.Ct. 2601
• Parties: DAWSON CHEMICAL COMPANY et al., Petitioners, v. ROHM AND HAAS COMPANY
• Court: U.S. Supreme Court

448 U.S. 176

100 S.Ct. 2601

65 L.Ed.2d 696

DAWSON CHEMICAL COMPANY et al., Petitioners,

v ROHM AND HAAS COMPANY.

No. 79-669.

Argued April 21, 1980.

Decided June 27, 1980.

Rehearing Denied Sept. 17, 1980.

See 448 U.S. 917, 101 S.Ct. 40.

Syllabus

Title 35 U.S.C. § 271(c) provides that "[w]hoever sells a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer." Section 271(d) provides that "[n]o patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done one or more of the following: (1) derived revenue from acts which if performed by another without his consent would constitute contributory infringement of the patent; (2) licensed or authorized another to perform acts which if performed without his consent would constitute contributory infringement of the patent; (3) sought to enforce his patent rights against infringement or contributory infringement." Respondent chemical manufacturer obtained a patent on the method or process for applying propanil, a chemical compound herbicide, to inhibit the growth of undesirable plants in rice crops. Propanil is a nonstaple commodity that has no use except through practice of the patented method. Petitioners manufactured and sold propanil for application to rice crops, with directions to purchasers to apply the propanil in accordance with respondent's patented method. Respondent filed suit in Federal District Court, seeking injunctive relief and alleging that petitioners contributed to infringement of its patent rights by farmers who purchased and used petitioners' propanil and that petitioners induced such infringement by instructing the farmers how to apply the herbicide. Petitioners responded by requesting licenses for the patented method, but when respondent refused to grant licenses, petitioners raised a defense of patent misuse, claiming that there had been misuse because respondent had "tied" the sale of patent rights to the purchase of propanil, an unpatented and unpatentable article, and because it refused to grant licenses to other propanil producers. The District Court granted summary judgment for petitioners on the ground that respondent was barred from obtaining relief against infringers be- cause it had attempted illegally to extend its patent monopoly. The court ruled that the language of § 271(d) specifying conduct that is deemed not to be patent abuse did not encompass the totality of respondent's conduct. The Court of Appeals reversed, holding that, by specifying in § 271(d) conduct that is not to be deemed patent misuse, Congress conferred upon a patentee the right to exclude others and reserve to itself, if it chooses, the right to sell nonstaples used substantially only in its invention, and that since respondent's conduct was designed to accomplish only what the statute contemplated, petitioners' misuse defense was of no avail.

Held: Respondent has not engaged in patent misuse, either by its method of selling propanil, or by its refusal to license others to sell that commodity. Pp. 187-223.

(a) Viewed against the backdrop of judicial precedent involving the doctrines of contributory infringement and patent misuse, the language and structure of § 271 support respondent's contention that, because § 271(d) immunizes its conduct from the charge of patent misuse, it should not be barred from seeking relief against contributory infringement. Section 271(c) identifies the basic dividing line between contributory infringement and patent misuse and adopts a restrictive definition of contributory infringement that distinguishes between staple and nonstaple articles of commerce. Section 271(c)'s limitations on contributory infringement are counterbalanced by the limitations on patent misuse in § 271(d), which effectively confer upon the patentee, as a lawful adjunct of his patent rights, a limited power to exclude others from competition in nonstaple goods. Respondent's conduct is not dissimilar in either nature or effect from the three species of conduct that are expressly excluded by § 271(d) from characterization as misuse. It sells propanil, authorizes others to use it, and sues contributory infringers, all protected activities. While respondent does not license others to sell propanil, nothing on the face of the statute requires it to do so. And, although respondent's linkage of two protected activities—sale of propanil and authorization to practice the patented process—together in a single transaction is not expressly covered by § 271(d), petitioners have failed to identify any way in which such "tying" of two expressly protected activities resdent's contention that, because § 271(d) immunizes its conults in any extension of control over unpatented materials beyond what § 271(d) already allows. Pp. 200-202.

(b) The relevant legislative materials, especially the extensive congressional hearings that led up to the final enactment of § 271 in 1952, reinforce the conclusion that § 271(d) was designed to immunize from the charge of patent misuse behavior similar to that in which respondent has engaged, and that, by enacting §§ 271(c) and (d), Congress granted to patent holders a statutory right to control nonstaple goods that are capable only of infringing use in a patented invention and are essential to that invention's advance over prior art. There is nothing in the legislative history to show that respondent's behavior falls outside § 271(d)'s scope. Pp. 202-215.

(c) The above interpretation of § 271(d) is not foreclosed by decisions in this Court following passage of the 1952 Patent Act. Contrary to petitioners' assertion, this Court in those decisions did not continue to apply the holdings of Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376, and Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 64 S.Ct. 278, 88 L.Ed. 396—that even an attempt to control the market for unpatented goods having no use outside a patented invention would constitute patent misuse—and did not effectively construe § 271(d) to codify the result of the Mercoid decisions. The staple-nonstaple distinction supplies the controlling benchmark and ensures that the patentee's right to prevent others from contributorily infringing his patent affects only the market for the invention itself. Aro Mfg. Co. v. Convertible Top Co., 365 U.S. 336, 81 S.Ct. 599, 5 L.Ed.2d 592, and Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 84 S.Ct. 1526, 12 L.Ed.2d 457, distinguished. Pp. 215-220.

599 F.2d 685, affirmed.

Ned L. Conley, Houston, Tex., for petitioners.

Rudolf E. Hutz, Wilmington, Del. (Arthur G. Connolly, Januar D. Bove, Jr., James M. Mulligan, and Connolly, Bove & Lodge, Wilmington, Del., George W. F. Simmons, William E. Lambert, III, Philadelphia, Pa., J. Fay Hall, Jr., Wynnewood, Pa., and James C. Winters, and Winters, Deaton, Briggs & Britton, Houston, Tex., on the brief), for respondent.

Eugene L. Bernard, Washington, D. C., for the National Agricultural Chemicals Association, et al., as amici curiae, by special leave of Court.

Mr. Justice BLACKMUN delivered the opinion of the Court.

This case presents an important question of statutory interpretation arising under the patent laws. The issue before us is whether the owner of a patent on a chemical process is guilty of patent misuse, and therefore is barred from seeking relief against contributory infringement of its patent rights, if it exploits the patent only in conjunction with the sale of an unpatented article that constitutes a material part of the invention and is not suited for commercial use outside the scope of the patent claims. The answer will determine whether respondent, the owner of a process patent on a chemical herbicide, may maintain an action for contributory infringement against other manufacturers of the chemical used in the process. To resolve this issue, we must construe the various provisions of 35 U.S.C. § 271, which Congress enacted in 1952 to codify certain aspects of the doctrines of contributory infringement and patent misuse that previously had been developed by the judiciary.

I

The doctrines of contributory infringement and patent misuse have long and interrelated histories. The idea that a patentee should be able to obtain relief against those whose acts facilitate infringement by others has been part of our law since Wallace v. Holmes, 29 F.Cas. 74 (No. 17,100) (CC Conn. 1871). The idea that a patentee should be denied relief against infringers if he has attempted illegally to extend the scope of his patent monopoly is of somewhat more recent origin, but it goes back at least as far as Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 37 S.Ct. 416, 61 L.Ed. 871 (1917). The two concepts, contributory infringement and patent misuse, often are juxtaposed, because both concern the relationship between a patented invention and unpatented articles or elements that are needed for the invention to be practiced.

Both doctrines originally were developed by the courts. But in its 1952 codification of the patent laws Congress endeavored, at least in part, to substitute statutory precepts for the general judicial rules that had governed prior to that time. Its efforts find expression in 35 U.S.C. § 271:

"(a) Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the...