Willingham v. Lawton

• Decision Date: 27 June 1977
• Docket Number: No. 76-1096,76-1096
• Citation: 555 F.2d 1340,194 USPQ 249
• Parties: John R. WILLINGHAM, Plaintiff-Appellant, STAR CUTTER COMPANY, Joined as Plaintiff, v. Norman B. LAWTON et al., Defendants-Appellees, and Star Cutter Company, Party Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1340

555 F.2d 1340

194 U.S.P.Q. 249

John R. WILLINGHAM, Plaintiff-Appellant STAR CUTTER COMPANY, Joined as Plaintiff, v. Norman B. LAWTON et al., Defendants-Appellees and Star Cutter Company, Party Defendant-Appellee.

No. 76-1096.

United States Court of Appeals Sixth Circuit.

Argued Feb. 11, 1977.

Decided May 26, 1977.

Rehearing Denied June 27, 1977.

William T. Sevald, Royal Oak, Mich., for plaintiff-appellant.

Frederick D. Steinhardt, Goldman, Mason & Steinhardt, Detroit, Mich., Gilgert E. Gove, Detroit, Mich., George N. Hibben, Chicago, Ill., Edward B. Evans, Cincinnati, Ohio, Charles R. Rutherford, Detroit, Mich., Francis J. Fodale, George E. Frost, Patent Section, GMC, Robert V. Seymour, Travis Warren, Hammond, Zeifelman & Burgoyne, Detroit, Mich., Dennis A. Gross, James Van Santen, Hill, Gross, Simpson, Van Santen, Steadman, Chiara & Simpson, Chicago, Ill., James A. Smith, Bodman, Longley, Bogle, Armstrong & Dahling, David J. Wood, William A. Wood, Jr., Robert A. Choate, Lloyd M. Forster, Detroit, Mich., Elwood S. Kendrick, Los Angeles, Cal., Randall G. Litton, Grand Rapids, Mich., William E. Johnson, Dearborn, Mich., for defendants-appellees.

John A. Reilly, Kenyon, Kenyon, Reilly, Carr & Chapin, New York City, for Ford Motor Co. & H. Ford II.

Before PHILLIPS, Chief Judge, and WEICK and EDWARDS, Circuit Judges.

PHILLIPS, Chief Judge.

The principal issue presented on this interlocutory appeal is whether the owner of a two-thirds undivided interest in a patent can maintain an action for infringement without the voluntary joinder of the co-owner, where the co-owner is joined in the litigation as involuntary party plaintiff pursuant to Fed.R.Civ.P. 19(a), and where the co-owners have entered into the following written agreement:

(10) In the event of any third party infringement of the Letters Patent, or any of them, the party having knowledge thereof shall promptly notify the other party of such infringement, whereupon the parties hereto shall consult with a view to reaching an agreement as to the ways and means of eliminating such infringement. If both parties desire to litigate such infringement they shall share any costs thereof and any recovery therein equally. In the event that either party desires to litigate such infringement and the other party refuses or fails to do so, or refuses or fails to bear one-half (1/2) the cost thereof in return for one-half (1/2) the recovery, the party desiring litigation may in his or its sole discretion, and at his or its sole cost and expense, bring suit to restrain such infringement, and shall be entitled to receive and retain, for his or its own use and benefit, any recovery awarded in such suit.

We hold that under the foregoing language of the contract, and the other facts of this case, the appellant has a right to maintain suit for infringement.

Accordingly, we reverse the district court on this issue and remand for further proceedings. We affirm the decision of the district court on all other issues presented on this appeal.

I.

The appeal grows out of four consolidated cases filed by John R. Willingham, plaintiff-appellant, alleging patent infringement. ¹ Joint ownership is involved in only one of the patents, designated in the record as the reamer patent. ²

Before proceeding to resolve the other issues in the case, the district court ruled that Willingham would be required to show a sufficient title to the patents to enable him to maintain an action for their alleged infringement. The district judge initially ordered a trial on this issue, limited by the following provision of the pre-trial order:

The issues of law and fact to be tried shall be limited to issues which would affect the ownership of patents, and consequently the right to sue for infringement of them.

The trial record indicates that on April 1, 1960, Willingham sold to appellee Star Cutter Company (Star) a one-third undivided interest in the reamer patent by a written contract, identified in the record as Agreement D, ³ which contained the following language:

(1) Willingham, by these presents, does sell, assign and transfer unto (Star) and (Star) does hereby purchase and acquire an undivided one-third (1/3) interest in the whole right, title and interest in and to (the reamer patent) . . . the same to be held and enjoyed by (Star) for its own use and behoof and for the use and behoof of its successors . . . , as fully and entirely as the same would have been held and enjoyed by Willingham had this assignment and sale not been made . . . .

Agreement D also contained the language quoted in the first sentence of this opinion granting to either party the right to initiate an infringement action at "his or its sole discretion."

Star did not join in Willingham's action for infringement, but was made an involuntary plaintiff pursuant to Fed.R.Civ.P. 19(a).

The district court held that Star owned an undivided interest in the reamer patent and that, since Star did not join voluntarily as plaintiff, Willingham did not have the right to maintain this action for infringement. The case was certified for interlocutory appeal under 28 U.S.C. § 1292(b). ⁴ The district court also made extensive findings of fact on other issues, which we hold not to be clearly erroneous. Fed.R.Civ.P. 52(a).

Willingham contends that the interest acquired by Star under Agreement D was a mere license because the limitations placed upon Star in the agreement were incompatible with a claim of ownership by Star. Agreement D, as we read it, clearly indicates a sale of a one-third interest to Star. It provides that Willingham

(D)oes sell, assign and transfer unto (Star) . . . an undivided one-third interest in the whole right, title and interest in (the reamer patent) . . . the same to be held and enjoyed by Star as fully and entirely as the same would have been held and enjoyed by Willingham had this assignment and sale not been made . . . .

The reservation of certain rights, including the right to a reassignment of the patents if Star failed to pay its obligation to Willingham, did not convert this assignment into a license. See, Waterman v. MacKenzie, 138 U.S. 252, 11 S.Ct. 334, 34 L.Ed. 923 (1891). We, therefore, agree with the district court that Willingham and Star are co-owners of the reamer patent.

Next, Willingham asserts that he has an express contract right under Agreement D to sue for infringement of the reamer patent without the consent of the co-owner Star. Star responds that joint ownership of a patent is a unique relationship and that a district court cannot entertain a patent infringement suit where all the co-owners are not voluntarily joined as plaintiffs. It is without significance, Star says, that Agreement D gave Willingham a right to sue in his sole discretion since there is no legal basis for suit absent complete ownership of the patent by Willingham or voluntary joinder of all co-owners as plaintiffs. Alternately, Willingham argues that the adoption of amended Fed.R.Civ.P. 19(a) in 1966, mandates that Star be joined as a party and the district court had no discretion in the matter. Star rejoins that Rule 19(a) is procedural and does not alter the substantive law requiring voluntary joinder of all co-owners of a patent in a suit for its infringement. ⁵

We recognize the general rule that all co-owners of a patent must be joined as plaintiffs before an infringement suit can be initiated. Waterman v. MacKenzie, supra, 138 U.S. at 255, 11 S.Ct. 334, at 335; Switzer Brothers, Inc. v. Byrne, 242 F.2d 909, 912-13 (6th Cir. 1957); Hurd v. Sheffield, 181 F.2d 269, 271 (8th Cir. 1950). This principle was enunciated in Waterman, where the Supreme Court said:

The patentee or his assigns may, by instrument in writing, assign, grant and convey, either, 1st, the whole patent, comprising the exclusive right to make, use and vend the invention throughout the United States; or, 2d, an undivided part or share of that exclusive right; or, 3d, the exclusive right under the patent within and throughout a specified part of the United States. Rev.Stat. § 4898. A transfer of either of these three kinds of interests is an assignment, properly speaking, and vests in the assignee a title in so much of the patent itself, with a right to sue infringers; in the second case, jointly with the assignor; in the first and third cases, in the name of the assignee alone.

This court relied heavily on Waterman in our decision in Switzer Brothers, Inc. v. Byrne, supra, 242 F.2d at 912, when we held that all co-owners of a patent must join in an infringement suit at its inception.

Neither Waterman nor Switzer presented the issue of whether a co-owner could authorize by contract another co-owner to file suit for patent infringement without the permission of the first co-owner, in an action in which the unwilling co-owner is joined as an involuntary plaintiff under Rule 19. That is the crux of the problem in the present case. Star contends that the above-quoted contractual provisions are ineffective to confer on a co-owner of a patent a unilateral right to sue. As authority for this proposition Star cites, among other cases, Agrashell, Inc. v. Hammons Products Co., 352 F.2d 443 (8th Cir. 1965); Duplan Corp. v. Deering Milliken, Inc., 184 U.S.P.Q. (D.S.C.1974), rev'd on other grounds sub nom., Duplan Corp. v. Deering Milliken Research Corp., 522 F.2d 809 (4th Cir. 1975); Sims v. Mack Trucks, Inc., 407 F.Supp. 742 (E.D.Pa.1976), and our decision in Switzer. As we indicated above, our decision in Switzer is distinguishable from the present case because of the absence of contract provisions giving one co-owner the sole discretion to sue. In Duplan the district court in concluding that a contract could not confer upon a licensee the right to sue for infringement, stated that the Supreme Court had expressly rejected "the contention that a right to sue for infringement can be created by contract." However, the court in Duplan...