Etherington v. Hardee

• Decision Date: 04 May 1961
• Docket Number: No. 18563.,18563.
• Citation: 290 F.2d 28
• Parties: Walter H. ETHERINGTON, Appellant, v. S. M. HARDEE, d/b/a Hardee Tool Company, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

290 F.2d 28 (1961)

Walter H. ETHERINGTON, Appellant, v. S. M. HARDEE, d/b/a Hardee Tool Company, Appellee.

No. 18563.

United States Court of Appeals Fifth Circuit.

May 4, 1961.

Jack W. Hayden, Hayden & Pravel, B. R. Pravel, Houston, Tex., for appellant.

Ralph R. Browning, Houston, Tex., James B. Simms, Browning, Simms, Hyer & Eickenroht, Houston, Tex., of counsel, for appellee.

Before TUTTLE, Chief Judge, and JONES and BROWN, Circuit Judges.

JONES, Circuit Judge.

The appellant was plaintiff in a patent infringement suit and takes this appeal from a decree granting a motion of the appellee, who was the sole defendant, to dismiss. The motion was grounded on the assertions that the complaint failed to state a claim on which relief could be granted, and that an indispensable party was not joined. The reasons for the entry of the district court's decree are set forth in its opinion. Etherington v. Hardee, D.C.S.D.Tex.1960, 182 F.Supp. 905.

The narrow question presented for our review was outlined by the district court in the following manner:

"It is alleged that Hughes Tool Company, Huntsinger Associates, and plaintiff were involved in an interference proceeding before the United States Patent Office concerning applications for the patent in question. As the result of an agreement between these parties and a decision on priority in favor of Hughes, plaintiff obtained `the exclusive, irrevocable, royalty-free license with the irrevocable, royalty-free exclusive right to grant sub-licenses to manufacture, use and sell throughout the world mud guns and line jets used above ground according to the disclosure of said Payne application Serial No. 420,994 and any United States or Foreign Patent obtained by Payne or by Hughes thereon.\' Plaintiff\'s exclusive field was protected from invasion by subsequent licenses through several express covenants of Hughes and Huntsinger. It was agreed that the party awarded priority (Hughes) would grant to the other parties (including plaintiff) `the sole and exclusive right in their respective fields of operation to sue for enforcement and infringement of the patent.\' The agreement further provided that the party awarded priority would join in any such action and thereby granted to the other parties the right to join in as a proper party to any action to enforce the rights provided thereunder. Originally Hughes was a party plaintiff but voluntarily dismissed its suit on August 24, 1959."

Our question is whether the appellant, Etherington, has such an interest in the patent as permits him to maintain a suit for infringement without the joinder of Hughes as the holder of the patent. The district court held that Etherington did not have such an interest.

It was held as early as 1850 that a licensee could not maintain a suit for patent infringement in his own name. Gayler v. Wilder, 10 How. 477, 51 U.S. 477, 13 L.Ed. 504. This is still the law. 3 Walker on Patents, Deller's Ed. 1638, § 431. The appellant reminds us of the principle that the legal effect of the terms used will determine whether the instrument is to be regarded as a license or an assignment. E. W. Bliss Co. v. United States, 253 U.S. 187, 40 S.Ct. 455, 64 L.Ed. 852. Upon this principle the appellant urges that, although the instrument creating his rights is a license in form, it is in effect an assignment in that he is the grantee of "the exclusive, irrevocable, royalty-free license to manufacture, use and sell throughout the world mud guns and line jets used above ground according to" the patent in the suit. Plausible as this argument may be, it is contrary to the established principle that the grant of a right of a limited use is a mere license and the licensee cannot maintain a suit to enjoin infringement. Pope Manufacturing Co. v. Gormally & Jeffrey Manufacturing Co., 144 U.S. 248, 12 S.Ct. 641, 36 L.Ed. 423.

Since the leading case of Waterman v. Mackenzie, 138 U.S. 252, 11 S.Ct. 334, 34 L.Ed. 923, it has been held that where the patentee has granted an exclusive right under the patent throughout a specified part of the United States, the grantee is an assignee and may sue in his own name for infringement. The appellant poses the question, "Since a geographical transferee can sue in his own name alone, why can't an industry wide transferee sue in his own name alone?" The same question was asked by the Court of Claims in Pratt & Whitney Company v. United States, 153 F.Supp. 409, 139 Ct.Cl. 540, where the Court could think of no reason why the limited use transferee should not have a right to maintain an...