Brand Plastics Company v. Dow Chemical Company

• Decision Date: 17 May 1967
• Docket Number: Civ. No. 65-1725-WPG.
• Parties: BRAND PLASTICS COMPANY, Plaintiff, v. The DOW CHEMICAL COMPANY, Defendant.
• Court: U.S. District Court — Central District of California

267 F. Supp. 1010

154 USPQ 140

BRAND PLASTICS COMPANY, Plaintiff, v. The DOW CHEMICAL COMPANY, Defendant.

Civ. No. 65-1725-WPG.

United States District Court C. D. California.

May 17, 1967.

Lyon & Lyon, by Leonard S. Lyon, Jr., Roland N. Smoot and James W. Geriak, Los Angeles, Cal., Grant A. Brown, Arthur G. Gilkes, Chicago, Ill., for plaintiff.

Wood, Herron & Evans, by Edward B. Evans and Richard H. Evans, Cincinnati, Ohio, N. Jerome Rudy and W. D. Miller, Midland, Mich., Fulwider, Patton, Rieber, Lee & Utecht, by Robert W. Fulwider and William K. Rieber, Los Angeles, Cal., for defendant.

WILLIAM P. GRAY, District Judge.

The plaintiff in this action (Brand) seeks a declaratory judgment that patent No. 2,694,692, owned by the defendant (Dow), is invalid and that it has not been infringed by Brand. The patent involves a method whereby rubber and styrene are polymerized in the formation of a plastic material known as impact polystyrene. Dow has moved to strike from the complaint the allegation denying the validity of the patent, which motion has been briefed and argued and submitted to the court for decision. Such decision is now rendered in this memorandum.

Dow's contention is grounded upon the facts that J. L. McCurdy and two of his fellow scientists discovered and developed the process that formed the basis for the patent while they were in the course of their employment by Dow. On August 23, 1950, they signed the patent application, in which they asserted under oath that they believed themselves to be the first inventors of the process and that they did not believe it to have been in prior public use; they thereupon assigned to Dow all of their interests in the invention as set forth in the application. Two days later, the application was filed by attorneys representing the Dow patent department, and, after the usual file wrapper was built up between such attorneys and the Patent Office, reflecting numerous rejections, amendments and cancellations of claims, a patent was issued to Dow on November 16, 1954.

In 1958, Dr. McCurdy left Dow, and in 1960 he became the principal organizer, half owner, and president of the plaintiff corporation. It is Dow's contention that the precise purpose for which Brand was formed was to manufacture impact polystyrene through utilization of the patented process, and that from the beginning it has acted pursuant to such purpose. Dow has accordingly counterclaimed against Brand, alleging patent infringement.

Dow insists that under the hereinabove stated facts, both Dr. McCurdy and Brand should be estopped to challenge the validity of the patent, and that allegations in the complaint purporting to raise such challenge should therefore be stricken. Dow urges, as controlling, the opinion by Chief Justice Taft, speaking for the Court in Westinghouse Electric & Manufacturing Co. v. Formica Insulation Co., 266 U.S. 342, 45 S.Ct. 117, 69 L.Ed. 316 (1924). The opinion expressed considerable respect for the rule announced in earlier cases by lower federal courts that "* * * an assignor of a patent right is estopped to attack the utility, novelty or validity of a patented invention which he has assigned or granted as against any one claiming the right under his assignment or grant. As to the rest of the world, the patent may have no efficacy and create no right of monopoly; but the assignor can not be heard to question the right of his assignee to exclude him from its use." (Page 349, 45 S.Ct. at page 119.) He thereupon likened estoppel in assignments of a patent right to estoppel in conveyances of land, and concluded that "If one lawfully conveys to another a patented right to exclude the public from the making, using and vending of an invention, fair dealing should prevent him from derogating from the title he has assigned, just as it estops a grantor of a deed of land from impeaching the effect of his solemn act as against his grantee." (Page 350, 45 S.Ct. at page 120.)

The analogy thus expressed by Chief Justice Taft has the virtue of simplicity, but it was not applied in the matter that he was then considering, and it has not been very helpful in deciding the subsequent cases. In Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249, 66 S.Ct. 101, 90 L.Ed. 47 (1945), the Supreme Court refused to allow estoppel to prevent the assignor from defending an infringement suit on the ground that the claims of the very patent that he had assigned were based upon a prior patent that had expired. The opinion pointed out the public interest in the right of unrestricted exploitation of an expired patent, and asserted the following:

"It follows that the patent laws preclude the petitioner assignee from invoking the doctrine of estoppel, as a means of continuing as against respondent, his assignor, the benefit of an expired monopoly, and they preclude the assignor from estopping himself from enjoying rights which it is the policy of the patent laws to free from all restrictions. For no more than private contract can estoppel be the means of successfully avoiding the requirements of legislation enacted for the protection of a public interest. Citing cases. The interest in private good faith is not a universal touchstone which can be made the means of sacrificing a public interest secured by an appropriate exercise of the legislative power. The patent laws preclude us from saying that the patent assignment, which they authorize, operates to estop the assignor from asserting that which the patent laws prescribe, namely, that the invention of an expired patent is dedicated to the public, of which the assignor is a member." (Page 257, 66 S.Ct. at page 105.)

The opinion in Scott referred to "* * * the doctrine of estoppel by patent assignment as stated by the Formica case * * *", and said that "To whatever extent that doctrine may be deemed to have survived the Formica decision or to be restricted by it, we think that case is not controlling here."

In Katzinger Co. v. Chicago Metallic Manufacturing Co., 329 U.S. 394, 67 S.Ct. 416, 91 L.Ed. 374 (1947), the Supreme Court held that a licensee under a patent could not be estopped to deny the validity of such patent as a basis for challenging the legality of the price fixing provisions contained in the license agreement. In doing so, the Court drew support from its decision in Scott, referring to that case as follows:

"In thus emphasizing the necessity

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