Met-Coil Systems Corp. v. Korners Unlimited, Inc.

• Decision Date: 08 October 1986
• Docket Number: No. 86-999,MET-COIL,86-999
• Citation: 231 USPQ 474,803 F.2d 684
• Parties: SYSTEMS CORPORATION, Appellant, v. KORNERS UNLIMITED, INC. and Ductmate Industries, Inc., Appellees. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 684

803 F.2d 684

231 U.S.P.Q. 474

MET-COIL SYSTEMS CORPORATION, Appellant, v. KORNERS UNLIMITED, INC. and Ductmate Industries, Inc., Appellees.

Appeal No. 86-999.

United States Court of Appeals, Federal Circuit.

Oct. 8, 1986.

Clarence Fleming, McDougall, Hersh and Scott, Chicago, Ill., argued for appellant. With him on the brief was James P. Ryther.

Melvin L. Moser, Jr., Buchanan Ingersoll P.C., Pittsburgh, Pa., argued for appellees. With him on the brief were George Rajnovich, Jr. and John M. Adams.

Before NIES, Circuit Judge, NICHOLS, Senior Circuit Judge, and ARCHER, Circuit Judge.

NIES, Circuit Judge.

The determinative issue in this appeal is whether a patent owner's unrestricted sale of a machine useful only in practicing the claimed inventions presumptively carries with it an implied license under the patent. The United States District Court for the Western District of Pennsylvania decided that legal issue in the affirmative. ¹ We affirm.

I.

Met-Coil Systems Corp. is the assignee of U.S. Patent No. 4,466,641, which claims an apparatus and method for connecting sections of metal ducts of the kind used in heating and air conditioning systems. Under the claimed inventions, the ends of the metal duct sections are bent to form integral flanges, specially shaped corner pieces are snapped in place, and the sections are bolted together. ² Met-Coil makes and sells roll-forming machines that its customers use to bend integral flanges in the ends of metal ducts so as to practice the claimed inventions. Met-Coil also sells the specially shaped corner pieces for use with the integral flanges. ³ Korners Unlimited, Inc. makes corner pieces for use with Met-Coil's integral flanges and sells them to purchasers of Met-Coil's machines. Met-Coil sued Korners for inducing infringement of claims 1-12, 14-25 of its patent. Korners moved for summary judgment.

The basis of Korners' motion for summary judgment was that Met-Coil, by selling the roll-forming machine, granted an implied license under the patent to its customers. Because of that license, Korners contended, Met-Coil's customers cannot infringe the claims of the patent and, thus, Korners can neither induce infringement nor contributorily infringe. Met-Coil, on the other hand, contended that its sales of the machines do not confer an implied license under the patent upon its customers.

II.

The district court recognized that "[t]he integral flanges are an essential part of Met-Coil's patented duct connecting system" and that the "flanges have no use other than in the practice of the duct connecting system." 628 F.Supp. at 133, 229 USPQ at 628. Applying the holding of United States v. Univis Lens Co., 316 U.S. 241, 62 S.Ct. 1088, 86 L.Ed. 1408, 53 USPQ 404 (1942), to those facts, the court held that purchasers of Met-Coil's machines enjoyed an implied license under the patent.

In Univis, the patent covered multifocal eyeglass lenses, and the patent owner sold blank eyeglass lenses to its licensees. The Court held that the sale of the blanks carried a license to complete the lenses:

But in any case it is plain that where the sale of the blank is by the patentee or his licensee--here the Lens Company--to a finisher, the only use to which it could be put and the only object of the sale is to enable the latter to grind and polish it for use as a lens by the prospective wearer. An incident to the purchase of any article, whether patented or unpatented is the right to use and sell it, and upon familiar principles the authorized sale of an article which is capable of use only in practicing the patent is a relinquishment of the patent monopoly with respect to the article sold. Leitch Mfg. Co. v. Barber Co., 302 U.S. 458, 460-61 [58 S.Ct. 288, 289-90, 82 L.Ed. 371] [1938]; B.B. Chemical Co. v. Ellis, 314 U.S. 495 [62 S.Ct. 406, 86 L.Ed. 367] [1942]. Sale of a lens blank by the patentee or by his licensee is thus in itself both a complete transfer of ownership of the blank, which is within the protection of the patent law, and a license to practice the final stage of the patent procedure.

....

... [W]here one has sold an uncompleted article which, because it embodies essential features of his patented invention, is within the protection of his patented invention, and has destined the article to be finished by the purchaser in conformity to the patent, he has sold his invention so far as it is or may be embodied in that particular article. The reward he has demanded and received is for the article and the invention which it embodies and which his vendee is to practice upon it.

316 U.S. at 249-51, 62 S.Ct. at 1093, 53 USPQ at 407-08. The trial court recognized that Univis was factually distinct from the instant case, but found the distinction to be of no effect:

It should be noted, however, that unlike Univis ..., the practice of the final stage of Met-Coil's patented system requires not just "finishing" the element sold, i.e. forming the integral flanges, but also the purchase of an additional element of the patented system, i.e. the corner pieces. Met-Coil cites no authority which suggests that this difference takes the present case out of the rule of Univis.

628 F.Supp. at 133, 229 USPQ at 629. Met-Coil appealed the district court's judgment of noninfringement to this court. 28 U.S.C. Sec. 1295(a)(1) (1982).

III.

On appeal, Met-Coil urges that the district court erred in relying on Univis. To support that proposition, Met-Coil cites Bandag, Inc. v. Al Bolser's Tire Stores, Inc., 750 F.2d 903, 223 USPQ 982 (Fed.Cir.1984). In that case, the owner of a patent claiming a method for retreading tires sued a retreader who had purchased retreading equipment from a former licensee of the patent owner. This court set out two requirements for the grant of an implied license by virtue of a sale of nonpatented equipment used to practice a patented invention. First, the equipment involved must have no noninfringing uses. Id. at 924, 223 USPQ at 998. In Bandag, the retreading equipment had noninfringing uses, so no license could be implied. To the contrary, Met-Coil's machines have no noninfringing use. Second, the circumstances of the sale must "plainly indicate that the grant of a license should be inferred." Id. at 925, 223 USPQ at 998, quoting Hunt v. Armour & Co., 185 F.2d 722, 729, 88 USPQ 53, 58 (7th Cir.1950). The circumstances of the sale in Bandag, purchase of the equipment from the former licensee of the patent owner, did not plainly indicate that the grant of a license should be inferred.

Met-Coil contends that this case does not meet the two-part test set out in Bandag, that is, although the machines sold have no noninfringing use, the circumstances do not plainly indicate that the grant of a license should be inferred. In this connection Met-Coil introduced certain written notices to customers with respect to the purchase of corner pieces from unlicensed sources. ⁴ Met-Coil relies on cases holding that no implied license arises where the original sale was accompanied by an express notice negating the grant...