Lear Siegler, Inc. v. Adkins

• Decision Date: 06 April 1964
• Docket Number: No. 18634.,18634.
• Citation: 330 F.2d 595
• Parties: LEAR SIEGLER, INC., a corporation, Appellant, v. John S. ADKINS, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

330 F.2d 595 (1964)

LEAR SIEGLER, INC., a corporation, Appellant, v. John S. ADKINS, Appellee.

No. 18634.

United States Court of Appeals Ninth Circuit.

April 6, 1964.

Christie, Parker, & Hale, C. Russell Hale and Edwin L. Hartz, Pasadena, Cal., for appellant.

Beilenson, Meyer, Rosenfeld & Susman, and Peter R. Cohen, Beverly Hills, Cal., and Fulwider, Patton, Rieber, Lee & Utecht, Los Angeles, Cal., for appellee.

Before MADDEN, Judge, Court of Claims, and BROWNING and DUNIWAY, Circuit Judges.

DUNIWAY, Circuit Judge:

This action was filed in the trial court on March 1, 1963. On April 9, 1963, pursuant to a motion made by the defendant Adkins, the court entered the following order:

"IT IS ORDERED that the Motion of the Defendant to Stay all Further Proceedings herein until final adjudication in that certain action now pending between the same parties hereto in the Superior Court of the County of Los Angeles, entitled JOHN S. ADKINS, Plaintiff v. LEAR, INCORPORATED, ET AL., Defendants, being Case No. 737,267 therein, is hereby granted.

"The Court finds that this Order involves a controlling question of law as to which there is ground for difference of opinion and that an immediate appeal from this order may materially advance the ultimate termination of the litigation."

Plaintiff Lear Siegler, Inc. (Lear) appeals. Pursuant to the provisions of 28 U.S.C. § 1292(b), it applied to us for permission to appeal, and on April 25 we granted leave to appeal for the purpose of permitting argument before this court and review of the following questions:

"1. Whether an order for a stay is the type or kind of order which could or does involve a controlling question of law within the meaning of § 1292(b) of Title 28 U.S.C.?

"2. Whether, in case said question No. 1 is answered in the affirmative, the district court was in error or abused its discretion in granting the said order for stay?

"3. Whether, in case it be determined that this appeal could not properly be maintained because of a negative answer to the first question above stated, this court may nevertheless consider and treat the application presented to us as an application for writ of mandamus. Cf. Mach-Tronics, No. 18,349, (April 1, 1963) Mach-Tronics, Inc. v. Zirpoli 9 Cir. 316 F.2d 820"

Lear contends that the order is appealable under both subsections (a) and (b) of 28 U.S.C. § 1292, and further contends that if we should hold that it is not, we should treat the appeal as an application for a writ of mandamus and issue a writ directing the trial court to vacate its order and proceed with the action. Appellee asserts that the order is not appealable, but concurs with Lear in urging us, if we think it is not appealable, to treat the appeal as an application for a writ of mandamus. On the merits, Lear asserts that the district court abused its discretion in granting the order, and appellee asserts that the order falls within the court's discretion, which was not abused.

In its complaint in the district court, Lear alleges that appellee owns United States Letters Patent No. 2,919,589 issued on January 5, 1960 and entitled "Gyroscope." It also asserts that since that date Lear has been manufacturing various models of gyroscopes, and that appellee asserts that in doing so Lear is infringing the patent and has demanded that Lear pay him royalties. Lear then proceeds to list some 16 reasons why it claims that the patent is invalid and to state various reasons why the gyroscopes that it manufactures do not infringe the patent if it is valid. The prayer is for a judgment decreeing that the patent is invalid and void and is not infringed by Lear, and that in demanding royalties, appellee is misusing the patent. There is a further prayer for an injunction.

Jurisdiction is not based upon diversity of citizenship, but upon the patent laws of the United States and 28 U.S.C. § 1338(a) which reads:

"The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, copyrights and trade-marks. Such jurisdiction shall be exclusive of the courts of the states in patent and copyright cases."

The remedy sought is declaratory relief and an injunction under 28 U.S.C. §§ 2201 and 2202.

Appellee's motion for stay of all further proceedings was based upon the fact that, on January 5, 1960, appellee had filed in the Superior Court of the State of California, in and for the County of Los Angeles the action referred to in the district judge's order, quoted above. A copy of the complaint and of Lear's answer in the state court action are attached to the affidavit of appellee upon which the motion was based. The complaint's allegations are as follows: On December 29, 1951 appellee and Lear entered into a written agreement in connection with appellee's employment by Lear under which all new ideas, discoveries, inventions, etc. relating to "vertical gyroscopes" were to become the property of appellee and to be licensed to Lear. On September 15, 1955 the parties entered into a detailed written agreement, a copy of which is attached to the complaint, under which Lear agreed to pay appellee certain royalties. Both during and prior to appellee's employment by Lear, appellee conceived, created and devised the inventions, ideas and discoveries referred to in the agreement and made them available to Lear. Beginning on or about September 10, 1957, Lear breached the agreement in numerous respects, including principally failure to pay royalties. Under date of April 8, 1959 Lear purported to terminate the agreement, but is nevertheless continuing to manufacture the products for which royalties are to be paid and refusing to pay the royalties. Additional damages will be incurred in the future. There is a second cause of action in which it is charged in substance that during the period of appellee's employment with Lear, Lear became familiar with his discoveries and inventions, that there was a confidential relationship between the parties and that Lear has appropriated the inventions but refused to pay for them. General damages in the sum of $100,000 are sought under the first cause of action, and in the sum of $250,000 under the second cause of action, which also asks for $250,000 exemplary damages.

The agreement of September 15, 1955 was not mentioned by Lear in the complaint filed by it in the district court. The agreement recites that appellee owns Letters Patent No. 2,542,975 relating to vertical gyroscopes and that he is also an owner of the inventions disclosed in a pending application for a United States patent on gyroscopes. Appellee's affidavit alleges that a patent, No. 2,919,589, was issued pursuant to this application on January 5, 1960. The agreement further recites that appellee is the owner of an invention relating to a "no gimbal lock feature for a gyroscope." The purpose of the agreement was to give Lear a non-exclusive license under patent No. 2,452,975 and an exclusive license under any and all applications for patents, and patents, claiming the subject matter referred to in the agreement but for which patents had not yet issued. The agreement grants such licenses, but, as to unissued patents, is limited to such claims or inventions as are patented or patentable by appellee. In the portion of the agreement that grants the licenses there appears this statement: "Lear shall have the right on 90 days' prior written notice to Adkins, to terminate any one or more of the licenses herein granted." There is also a provision permitting Lear to terminate if the patent office refused to issue a patent on the substantial claims of the application described in the agreement. In its answer filed in the state court Lear asserts that it did terminate the agreement on April 8, 1959, pursuant to these provisions.

1. The order is appealable.

We need not pass upon appellant's contention that the order is appealable under subsection (a) (1) of § 1292 because we are of the opinion that it is appealable under subsection (b) of that section, which reads as follows:

"(b) When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order * * *."

We think the court's order, quoted above, is a sufficient compliance with the statute, which expressly covers interlocutory orders not otherwise appealable. The controlling question of law here involved is whether the district court was in error or abused its discretion in granting the stay. Our examination of the briefs and authorities leads us to the conclusion that the district judge was correct in his opinion that the question of law is one "as to which there is substantial ground for difference of opinion." Certainly it cannot be said that he was wrong in thinking that an immediate appeal may materially advance the ultimate termination of the litigation. His order stays all further proceedings until final adjudication in the pending state court action. That action has been pending since January 1960 and had not yet gone to trial at the time that the district judge made his order, although appellee said that it was to go to trial soon. While the order remains in effect there will be no further proceedings in this action. On the other hand, if the appeal were successful, the district court would be compelled to proceed with the action. Thus a reversal might materially advance the ultimate termination of the litigation, (i. e., the action in the district court). We think that the...