Agrashell, Inc. v. Hammons Products Company

• Decision Date: 09 November 1965
• Docket Number: No. 17972.,17972.
• Citation: 352 F.2d 443
• Parties: AGRASHELL, INC., Appellant, v. HAMMONS PRODUCTS COMPANY, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

352 F.2d 443 (1965)

AGRASHELL, INC., Appellant, v. HAMMONS PRODUCTS COMPANY, Appellee.

No. 17972.

United States Court of Appeals Eighth Circuit.

November 9, 1965.

Albert C. Johnston, of Keith, Johnston, Isner & Des Marais, New York City, made argument for appellant and filed brief with Sam F. Hamra, Jr., of Miller, Fairman, Sanford, Carr & Lowther, Springfield, Mo.

B. H. Clampett, Springfield, Mo., made argument for appellee and filed brief with Martin E. Hogan, Jr., Washington, D. C.

Before VAN OOSTERHOUT and MEHAFFY, Circuit Judges, and VAN PELT, District Judge.

VAN OOSTERHOUT, Circuit Judge.

This is an appeal by the plaintiff Agrashell, Inc., from final order sustaining defendant Hammons Products Company's motion for summary judgment and dismissing plaintiff's complaint for patent infringement.

Plaintiff, in its complaint filed August 7, 1963, claimed to be an assignee of United States Letters Patent No. Re. 23,422 covering "Cleaning Method and Material Therefor" by virtue of a document entitled "Exclusive License Agreement" effective October 1, 1961, entered into between plaintiff and Purex Corporation Ltd., the then owner of the patent. Responsive pleadings were filed and a number of pretrial conferences were held. Depositions were taken. Defendant upon its request was furnished with a copy of the licensing agreement on or about December 10, 1963. The jurisdiction of the court to consider the complaint was first challenged in defendant's motion for summary judgment filed November 9, 1964, which states in part:

"The ground for this Motion is that the Complaint is fatally defective in that the said suit has not been brought in the name of the owner of the patent (35 U.S.C. 281), or the patentee as defined in 35 U.S.C. 100, Purex Corporation, Ltd. The party Plaintiff, Agrashell, Inc., has brought this suit on an allegation that Plaintiff is an `Exclusive Licensee\'. However, the so-called `Exclusive License\' is not such that it gives to the Plaintiff title in the patent, nor a right to sue at law in its own name, Waterman v. Mackenzie, 138 U.S. 252, 11 S.Ct. 334, 34 L.Ed. 923."

The court in its memorandum opinion, 248 F.Supp. 258, determined that the exclusive license agreement falls short of being an assignment of the patent and that hence plaintiff did not have the right to sue in its own name without making the patent owner a party. The court also considered and rejected plaintiff's contention that "defendant's motion is grossly untimely and unjustly brought at this stage of the case." The court stated, "That argument is untenable for the reason that the issue raised by the motion is not a `technical' objection, as plaintiff describes it, but is a question that relates to the jurisdiction of this Court, a matter always open and a matter that could not be waived even by the agreement of the parties."

The court upon the basis of the foregoing determinations sustained the motion for summary judgment and dismissed the complaint. The order reads:

"Accordingly, the present suit should be and is hereby dismissed with prejudice, but said order does not prohibit Agrashell from being a party to any other suit it may maintain in which all indispensable parties are made parties in said new action, should such an action be filed. The new action, of course, would stand on its own feet and would not relate back or be in any way connected with the pending case."

This timely appeal followed. Plaintiff upon this appeal, as in the trial court, urges that by virtue of its agreement with Purex Corporation, Ltd., it is an assignee of the entire interest in the patent in controversy and that as such it is entitled to bring this action alone in its own name. Both parties cite and rely upon the landmark case of Waterman v. Mackenzie, 138 U.S. 252, 11 S.Ct. 334. The Court there lays down the rules for determining indispensable parties in patent infringement suits as follows:

"Every patent issued under the laws of the United States for an invention or discovery contains `a grant to the patentee, his heirs and assigns, for the term of seventeen years, of the exclusive right to make, use, and vend the invention or discovery throughout the United States and the territories thereof.\' Rev.St. § 4884. The monopoly thus granted is one entire thing, and cannot be divided into parts, except as authorized by those laws. 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. Id. § 4898. A transfer of either of these three kinds of interest 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. Any assignment or transfer, short of one of these, is a mere license, giving the licensee no title in the patent, and no right to sue at law in his own name for an infringement. Id. § 4919; Gayler v. Wilder, 10 How. 477, 494, 495 13 L.Ed. 504; Moore v. Marsh, 7 Wall. 515 19 L.Ed. 37. In equity, as at law, when the transfer amounts to a license only, the title remains in the owner of the patent; and suit must be brought in his name, and never in the name of the licensee alone unless that is necessary to prevent an absolute failure of justice, as where the patentee is the infringer, and cannot sue himself. Any rights of the licensee must be enforced through or in the name of the owner of the patent, and perhaps, if necessary to protect the rights of all parties, joining the licensee with him as a plaintiff." 138 U.S. 252, 255, 11 S.Ct. 334, 335.

Waterman also holds: "Whether a transfer of a particular right or interest under a patent is an assignment or a license does not depend upon the name by which it calls itself, but upon the legal effect of its provisions." 138 U.S. 252, 256, 11 S.Ct. 334, 335.

The principal problem presented by this appeal is whether the rules set out in Waterman have been properly applied to the facts of this case. Plaintiff claims its assignment falls in the first category described in Waterman — an assignment of the whole patent. Defendant urges the assignment falls in the second category — an undivided part of the exclusive right.

The rights of plaintiff and Purex in the patent here in controversy are to be determined by the written agreement entered into by them. The agreement is made a part of the motion and is before us. There is no dispute as to the contents of the agreement.

Our consideration of the Purex-Agrashell agreement satisfies us that the trial court properly determined that such agreement falls short of an assignment of the entire patent. Paragraph 1 of the agreement reads:

"PUREX agrees to and does hereby grant to AGRASHELL the sole and exclusive right and license to manufacture, use and sell the compositions and processes described and claimed in the Licensed Patent until the expiration of such patent except for the right expressly reserved by PUREX to make, use and sell such compositions and to convey to purchasers thereof the right to use such processes."

While the first portion of the paragraph grants broad rights, the "except" provision reserves to Purex the unlimited right to make, use and sell such compositions without...