Brownell v. Ketcham Wire & Mfg. Co.
| Citation | 211 F.2d 121 |
| Decision Date | 19 February 1954 |
| Docket Number | No. 13718.,13718. |
| Parties | BROWNELL, Atty. Gen. v. KETCHAM WIRE & MFG. CO. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
COPYRIGHT MATERIAL OMITTED
Paul V. Myron, Deputy Director, Office of Alien Property, Washington, D. C., James D. Hill, George B. Searls, Westley W. Silvian, Attorneys, Department of Justice, Washington, D. C., Charles P. Moriarty, U. S. Atty., Seattle, Wash., John E. Belcher, Asst. U. S. Atty., Seattle, Wash., Val Hammack, Sp. Asst. to Atty. Gen., for appellant.
Skeel, McKelvy, Henke, Evenson & Uhlmann, W. Paul Uhlmann, William H. Gates, Jr., Altha P. Curry, Seattle, Wash., for appellee.
Before HEALY and BONE, Circuit Judges, and JAMES M. CARTER, District Judge.
This appeal raises questions concerning the jurisdiction of the District Court under the Trading With The Enemy Act, Oct. 6, 1917, c. 106, § 1; 40 Stat. 411 as amended; 50 U.S.C.A.Appendix, §§ 140; interpretation of appellee's patent licensing contract with a German national and the impact of the antitrust laws of the United States on such contract.
Motions for summary judgment supported by affidavits were made by both appellant and appellee, and the basic facts are not in dispute. No findings were made. We draw the facts hereafter related from the admitted facts of the pleadings, the undisputed affidavits, and correspondence between the parties set up as exhibits to the motions.
The appellee and plaintiff hereafter called Ketcham is a corporation of the State of Washington. It is not an "enemy" or "ally of the enemy." On December 23, 1938, there was delivered to Ketcham an option agreement executed by Oscar Kind, a German national, covering two U. S. patents, and two applications for U. S. patents relating to wire tieing and wire strapping methods, devices and machines.1 The patents in question were the product of German invention, and owned by Oscar Kind.2
Ketcham paid $1000 to Kind on receipt of the option, and within the time specified and an extension thereof, paid an additional $4000 on or about June 30, 1939. Ketcham thus secured an exclusive licensing agreement covering the patents and patent applications hereinafter referred to as the "patents" within the United States and its territories.
In return for the exclusive license, Ketcham was obligated to pay royalties based on the amount of wire sold with the inventions covered by the licensing agreement, and on the sale of machines manufactured under the patents. Royalty provisions also gave the licensor, Kind, the right to cancel in the event that sales did not produce $2000 royalty per year within two years. Kind promised, among other things, to supply Ketcham with plans and specifications and a sample of an automatic wire tieing machine. Due to the intervention of the war, this machine and the plans and specifications were never delivered to Ketcham.
After describing the patents, the agreement read as follows: "I, Kind, offer you the sole and exclusive right to manufacture, sell, loan, give in sub-license or dispose of otherwise in the United States and its territories and possessions, the articles covered by said patents and applications for patents, and all improvements thereon at the following conditions * * *"; and provided in paragraph 12, "It is understood and agreed that you will not sell or export the articles covered by the aforesaid patents and patent applications to any foreign country, and that I will not import nor permit the importation of said articles into the United States of America, its territories and possessions."
The patents were vested3 by the Alien Property Custodian by vesting orders No. 68 and No. 201 7 Fed.Reg. 6181, 8 Fed.Reg. 625, dated respectively July 30, 1942 and October 2, 1942. All right, title and interest of Kind in the license agreement was vested by the Alien Property Custodian by vesting order No. 3998 9 Fed.Reg. 10652 on August 8, 1944.
Pursuant to inquiry by Ketcham, the Alien Property Custodian on November 5, 1942, enclosed copies of two forms which could be filed with his office — Form APC-1, issued pursuant to General Order No. 4, Fed.Reg. 5539 and Form APC-2, issued pursuant to General Order No. 2, 7 Fed.Reg. 4634.
On November 5, 1942, the Alien Property Custodian also informed Ketcham that the Custodian was willing to consider an informal claim to any rights it might have and that if action satisfactory to Ketcham was not taken, Ketcham could then file a claim on APC-1. On December 1, 1942, Ketcham filed form APC-2. The government4 contends Ketcham never filed form APC-1.
By letter of July 1, 1949, the government advised Ketcham that it had concluded that the licensing agreement violated the Sherman Act, 15 U.S.C.A. § 1 et seq., that rights claimed by appellee under the licensing agreement were unenforcible and that the government considered itself "at liberty to take such action with respect to the patents as appear to be desirable in the public interest, including the grant of revocable, non-exclusive, royalty free licenses thereunder."
On September 20, 1950, the government informed Ketcham of its intention to terminate the agreement as of December 31, 1950, for failure to pay the minimum royalties provided for in the agreement.
This action was commenced November 27, 1950, before the date of the announced termination.
Upon granting Ketcham's motion for summary judgment, the district court entered a judgment which we summarize as follows:
(1) That the agreement between Kind and Ketcham was an enforcible agreement, had not been abandoned or terminated by the parties, and was still in force and effect.
(2) That the agreement did not violate the antitrust laws of the United States. That if paragraph 12 of the agreement could be said to violate the antitrust laws, the paragraph was severable from the rest of the agreement and the lawful parts would be given effect.
(3) That forfeiture or termination of the agreement for failure to pay minimum royalties could be effected by the licensor or his successors in interest only for failure to pay minimum royalties during the particular two year period prior to the effective termination date.
(4) That the furnishing by the licensor of models and complete drawings of each of the patented articles were conditions precedent to the obligation to pay royalties.
(5) That the defendant as successor to the Alien Property Custodian and his predecessors did not by their acts or their letter of September 20, 1950, terminate Ketcham's rights under the agreement.
(6) That Ketcham is, and at all times since June 30, 1939, has been, the sole and exclusive licensee in the United States for the patents involved.
(7) That the defendant and all persons claiming by, through or under him or his predecessors in interest, are directed to recognize Ketcham as such sole and exclusive licensee.
The appellant now contends:
(1) That Ketcham failed to comply with Section 9(a) of the Trading With The Enemy Act, in that it did not file a claim for the return of vested property;
(2) The government did not vest any property or rights of Ketcham and that therefore the court below lacked jurisdiction to enter a judgment under the Trading With The Enemy Act;
(3) That the reliance by the court below on the Declaratory Judgment Act was improper;
(4) That the agreement provided for a division of markets which was a per se violation of the antitrust laws and that the agreement was therefore unenforcible.
Notice under Section 9(a) of the Act.
The filing of a notice of claim for the return of vested property under Section 9(a) of the Act is a condition precedent to maintaining the suit. 50 U.S.C.A.Appendix, § 9(a); Central Union Trust Co. of New York v. Garvan, 1921, 254 U.S. 554, 567-568, 41 S.Ct. 214, 65 L.Ed. 403; Panatech Corp. v. Carl Zeiss, Inc., D.C.S.D.N.Y.1953, 110 F.Supp. 664, 665.
Appellant contends such a claim was never filed. But the complaint alleges in Paragraph XII that Ketcham, on or about December 1, 1942, The answer denies the filing of a claim under Section 32(a) of the Act and admits the other allegations of Paragraph XII of the complaint. Thus, the government's pleading admits the filing of a claim under Section 9(a) of the Act.5
The Alien Property Custodian by press release dated February 23, 1943, announced that, "* * * An American licensee under a vested patent or patent application, need not file a form APC-16 to assert his claim to rights under his license." The government includes this press release as part of its showing on a motion for summary judgment. We can only conclude that either the notice required under Section 9(a) was given as admitted by the pleadings, or its equivalent, notice by form APC-2 was given as is shown clearly by the record, or that the notice was waived. In any event we find no merit to this contention by appellant.
Vesting or seizure of Ketcham's rights.
It is admitted that the Alien Property Custodian vested in the United States all the right and interest of Oscar Kind in the four patents and in the licensing agreement sued upon. But appellant contends the orders "did not vest and did not purport to vest" any rights of Ketcham.
It makes little difference what name or language is used. We inquire into what was done and the result accomplished. After the vesting orders, the Alien Property Custodian and his successor, the Attorney General, did the following things:
(1) Advised Ketcham that the licensing agreement was unenforcible because it violated the Sherman Act, letter of 7/1/49;
(2) Advised Ketcham of its election and intention to terminate the agreement on December 31, 1950, pursuant to ...
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