Independent Wireless Telegraph Co v. Radio Corporation of America, 87

Decision Date11 January 1926
Docket NumberNo. 87,87
Citation70 L.Ed. 357,46 S.Ct. 166,269 U.S. 459
PartiesINDEPENDENT WIRELESS TELEGRAPH CO. v. RADIO CORPORATION OF AMERICA
CourtU.S. Supreme Court

Mr. Wm. H. Davis, of New York City, for petitioner.

Mr. John W. Davis, of New York City, for respondent.

Mr. Chief Justice TAFT delivered the opinion of the Court.

The Radio Corporation, a corporation of Delaware, filed a bill in equity in the Southern district of New York, joining with itself the De Forest Radio Telephone & Telegraph Company, also of Delaware, as coplaintiff, against the Independent Wireless Telegraph Company of Delaware and the American Telephone & Telegraph Company of New York. The case made in the bill was this:

Lee De Forest invented and received patents Nos. 841,387 and 879,532, dated in 1908 and 1909, for devices for amplifying feeble electric currents and certain new and useful improvements in space telegraphy. After giving limited licenses of the American Telephone & Telegraph Company, he assigned the patents to the De Forest Radio Telephone & Telegraph Company. On March 16, 1917, the De Forest Company, by writing duly recorded, gave an exclusive license to make, use, and sell the devices for the life of the patents to the Western Electric Company, reserving to itself nonexclusive, nontransferable, and personal rights to make, use, and sell them for defined purposes. The Western Electric Company then assigned all that it thus received from the De Forest Company to the American Telephone Company. The American Telephone Company, on July 1, 1920, made a contract with the General Electric Company, by which they exchanged rights in various patents owned or controlled by each, including these rights in the De Forest patents. Some seven months prior, on November 20, 1919, the General Electric Company had granted to the Radio Corporation, the plaintiff, an exclusive license to use and sell for 'radio purposes'-i. e., 'for transmission or reception of communication by what are known as electric magnetic waves except by wire'-all inventions owned by the General Electric Company or thereafter acquired by it. The American Telephone Company subsequently confirmed in the Radio Corporation these after-acquired rights in the De Forest patents. Thus there came from the De Forest Company to the Radio Corporation exclusive rights to use and sell in the United States, for radio purposes, apparatus for transmission of messages, and especially for use between ship and shore for pay.

The defendant, the Independent Wireless Company, has bought the same apparatus, with the lawful right to use it in the amateur and experimental field only. The apparatus thus bought bears a label with such a limitation on its use. The charge in the bill is that the Independent Company is using the apparatus, or the part of it called 'radio tubes,' in the commercial radio field between ship and shore for pay, and thus is violating the Radio Corporation's rights in this field. An injunction is prayed, and an accounting of profits and all damages to the plaintiffs and the American Telephone Company, as their interests shall appear.

The twenty-fifth averment of the bill is:

'That 'the plaintiff, the De Forest Radio Telephone & Telegraph Company, as hereinbefore alleged, has certain rights in the patents in suit herein; that before filing this bill of complaint, said De Forest Radio Telephone & Telegraph Company, was requested to consent to join, as a coplaintiff, herein, but declined; that said De Forest Radio Telephone & Telegraph Company is not within the jurisdiction of the court and therefore cannot be made a defendant herein; and that therefore to prevent a failure of justice, and to enable the plaintiff Radio Corporation of America to protect its exclusive rights under the patents in suit, said De Forest Radio Telephone & Telegraph Company is made a plaintiff herein without its consent.'

After securing an order for a bill of particulars, compliance with which disclosed the various agreements referred to in the bill and and facts relevant thereto, the Independent Wireless Telegraph Company, defendant, moved that the court dismiss the bill of complaint, upon the following ground:

'That the De Forest Radio Telephone & Telegraph Company, the owner of the patent in suit, has not joined in this litigation as a party plaintiff by duly signing and verifying the bill of complaint herein, and the plaintiff Radio Corporation of America is not such a licensee under the patents as to permit it to sue alone in its own name, in the name of the owner of the patents in suit, or to sue in the name of the owner of the patents, joining itself as a licensee under the patents.'

The District Court sustained the motion and dismissed the bill, in the view that it was bound by decisions of this court to hold that the De Forest Company was the owner of the patent and an indispensable party, and, being out of the jurisdiction, could not be made a party defendant by service or joined as a party plaintiff against its will. 297 F. 518. The Circuit Court of Appeals, on appeal, reversed the District Court, held that the De Forest Company was properly made coplaintiff by the Radio Corporation, and remanded the case for further proceedings. 297 F. 521. We have brought the case here on certiorari. Section 240, Judicial Code (Comp. St. § 1217).

The respondent, in its argument to sustain the ruling of the Circuit Court of Appeals, presses two points. The first is that by the contract between the De Forest Company and the Western Electric Company title to the patent was vested in the Western Electric Company, and from it by assignment in the American Telephone & Telegraph Company; that the latter is a party defendant, having declined to be a plaintiff, and so satisfies the requirement of the presence in such a suit as a party of the owner of the patent. The difficulty the respondent meets in this suggestion is that its bill avers that what the American Telephone Company acquired from the De Forest Company was a license, so called in the contract creating it, and the making of the De Forest Company a party plaintiff to the bill was necessarily on the theory that it, and not the American Telephone Company, is the owner of the patent. The contracts between the corporations involved in the transfer of rigths under the patent are long and complicated, and in order to be fully understood require some knowledge of the new radio field. The court is loath to depart, if it could, from the theory on which the bill was framed and both courts have acted, unless required to do so.

The question for our consideration then is: Can the Radio Company make the De Forest Company a coplaintiff against its will under the circumstances of the case?

Section 4919, R. S. (Comp. St. § 9464), is as follows:

'Damages for the infringement of any patent may be recovered by action on the case, in the name of the party interested, either as pattentee, assignee, or grantee. And whenever in any such action a verdict is rendered for the plaintiff, the court may enter judgment thereon for any sum above the amount found by the verdict as the actual damages sustained, according to the circumstances of the case, not exceeding three times the amount of such verdict, together with the costs.'

In Goodyear v. Bishop, 10 Fed. Cas. 642, No. 5,558, a suit for damages for infringement had been brought in the name of the patentee by a licensee under the fourteenth section of the Patent Act of 1836 (5 Stat. 357, c. 357), which contained language similar to section 4919. The defendant moved with the consent of the patentee to discontinue the suit. It was contended that, as the patentee had stipulated with the licensee to sue infringers, his remedy was on the covenant. Mr. Justice Nelson, at the circuit, denied the motion. He said that a suit at law to protect the patent right was properly brought in the name of the patentee, that the license was sufficient to give the protection sought, and that the covenant by the patentee did not take from the licensee the remedy by use of the patentee's name to proceed directly against the wrongdoer. The same ruling was made in Goodyear v. McBurney, 10 Fed. Cas. 699, No. 5,574.

These cases were decided in 1860 by a justice of this court, and no case is cited to us questioning their authority. Indeed, the cases have been since referred to a number of times with approval by distinguished patent judges. Mr. Justice Blatchford, while Circuit Judge, in Nelson v. McMann, 17 Fed. Cas. 1325, 1329, No. 10,109; Mr. Justice Gray, while Chief Justice of the Supreme Judicial Court of Massachusetts, in Jackson v. Allen, 120 Mass. 64, 77; Judge Lowell, in Wilson v. Chickering (C. C.) 14 F. 917, 918; Judge Shipman, in Brush-Swan Co. v. Thomson Co. (C. C.) 48 F. 224, 226. The term 'action on the case' and the phrase 'in the name of the party interested, either as patentee, assignee, or grantee' in section 4919 were evidently construed to constitute a remedy at law like the suit at common law on a chose in action in the name of the assignor in which the assignment gave the assignee the right as attorney of the assignor to use the latter's name. Lectures on Legal History, Ames, 213. See, also, Eastman v. Wright, 6 Pick. 316; Pickford v. Ewington, 4 Dowling, P. C. 458; McKinney v. Alvis, 14 Ill. 33.

But section 4919 applied by its terms only to actions on the case at law to which the licensee was not a necessary and hardly a proper party. This is a bill in equity. The remedy for violation of an exclusive licensee's interest in equity under the patent laws is found in section 4921, R. S., which is as follows:

'The several courts vested with jurisdiction of cases arising under the patent laws shall have power to grant injunctions according to the course and principles of courts of equity, to prevent the violation of any right secured by patent, on such terms as the court may deem reasonable; and upon a decree being...

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