Radio Corporation of America v. Emerson

• Decision Date: 07 January 1924
• Docket Number: 129.
• Citation: 296 F. 51
• Parties: RADIO CORPORATION OF AMERICA v. EMERSON et al. [1]
• Court: U.S. Court of Appeals — Second Circuit

296 F. 51

RADIO CORPORATION OF AMERICA v. EMERSON et al. ^[1]

No. 129.

United States Court of Appeals, Second Circuit.

January 7, 1924

Samuel H. Wandell, of New York City, for appellants.

L. F H. Betts, of New York City (James J. Cosgrove, of New York City, of counsel), for appellee.

Before HOUGH, MANTON, and MAYER, Circuit Judges.

MANTON Circuit Judge.

The appellee, the Radio Corporation of America, as the sole plaintiff, filed this bill originally, seeking to restrain the appellants from infringing letters patent Nos. 803,684 879,532, and 841,387; the infringement consisting of the sale of certain vacuum tubes. An accounting was demanded. The bill of complaint alleged that patents 879,532 and 841,387 were originally issued to one Lee De Forest, and that title thereto and to patent No. 803,684 became vested by assignment in the American Telephone & Telegraph Company on or about May 24, 1917, and that it has continued to own the same. It was alleged that on August 23, 1922, the American Telephone &amp Telegraph Company--

'transferred and assigned all its rights, arising from or under said letters patent, of excluding the above-named defendants from the practice of the inventions of said letters patent, to the Radio Corporation of America, the plaintiff here, together with all claims recoverable in law or equity, whether for damages, profits, or savings, or any other kind or description, which the said American Telephone & Telegraph Company had against the above-named defendants arising out of said defendant's infringement of said letters patent giving and assigning unto the said Radio Corporation of America the full right to bring suit on said letters patent, either at law or equity, against said defendants, and for the benefit of the Radio Corporation of America to exclude said defendants from practicing the inventions of said letters patent, and for said Radio Corporation of America's own use and benefit to collect damages, profits, and savings which may arise by reason of the future infringement of said letters patent by said defendants.'

The answer denied the allegations of the bill generally, and it also denied the right of the plaintiff to maintain the action. It alleged a defect of parties, in that the De Forest Radio Telephone & Telegraph Company and the American Telephone & Telegraph Company were not joined in the action. It claimed that the bill was therefore defective.

On motion of the plaintiff, a preliminary injunction was granted, restraining the infringement of claims 4 and 6 of patent No. 841,387 and claims 2, 3, 6, 14, 18, and 21 of patent No. 879,532. This injunction was subsequently vacated after the decision of the Supreme Court in Crown Die & Tool Co. v. Nye Tool & Machine Works, 261 U.S. 24, 43 Sup.Ct. 254, 67 L.Ed. 516. See, also, Radio Corp. v. Hohenstein (C.C.A.) 289 F. 757. Thereafter a motion was made by the appellant for a dismissal of the bill, resulting in one of the orders appealed from, and contemporaneous with this a motion was made for leave to amend bringing in additional parties. The motion to dismiss was denied, and the motion to amend granted, and the order to show cause with the temporary restraining order was also granted. There are many assignments of error, but the underlying question is the right of the complainant named in the amended bill to maintain this action. The De Forest Company has been made a party plaintiff and the American Telephone & Telegraph Company, party defendant. The latter refused to join as a plaintiff, and after due request was named as a defendant.

It is urged that the appellees have no such right, title, and interest as will permit them to maintain this action under Rev. St. Sec. 4919 (16 Stat. 207 (Comp. St. Sec. 9464)), providing that damages for infringement of patent may be recovered in an action, and Rev. St. Sec. 4921 (16 Stat. 206 (Comp. St. Sec. 9467)), providing for an injunction in restraint of infringement and damages by a party interested, such as a patentee, assignee, or grantee. The appellants insist that the ownership in the patent is not in either of the plaintiffs named in the bill, and that the question of infringement cannot be contested in this suit, where one (the American Telephone & Telegraph Company) in whom the title resides is made a party defendant.

The amended bill makes profert of the agreements by virtue of which the American Telephone & Telegraph Company acquired its rights under the patent in suit. It pleads and makes profert of the license agreements, and alleges that by virtue thereof the Radio Corporation on July 1, 1920, acquired the exclusive license (except for certain nonexclusive rights of the De Forest Company) to sell and use radio devices, vacuum tubes, etc., for radio amateur use, and for wireless telegraphy use, embodying the inventions of the letters patent in suit. It charges a continuing infringement by the appellants of the manufacture and sale of the vacuum tubes for radio use, including amateur use, and that such infringement is resulting in irreparable injury and damage to the appellee and the American Telephone & Telegraph Company's rights under the patents, and, unless restrained by injunction, further immediate and irreparable damage will result to the appellee and the defendant American Telephone & Telegraph Company before a motion can be heard and determined seeking a preliminary injunction therefor, and it prayed for a restraining order. It alleges that the American Telephone & Telegraph Company is jointly interested with the plaintiff in the suit, and that before the commencement of the suit and the filing of the amended bill the American Telephone & Telegraph Company was requested to consent to become a coplaintiff, but declined, and therefore it was made a party defendant.

No answer was filed to this amended bill by the appellants, but the American Telephone & Telegraph Company did file an answer, admitting that it declined to become a party plaintiff, and making no objection to being joined as a defendant. It admits that it is jointly interested in the suit with the plaintiffs in the relation of licensor and licensee, and in effect admits that the appellee and the American Telephone & Telegraph Company have substantial rights under the patent.

Equity rule No. 37 provides that:

'Persons having a united interest must be joined on the same side as plaintiffs or defendants; but, when any one refuses to join, he may for such reason be made a defendant.'

It is conceded by the appellees that the owner of the legal title is the American Telephone & Telegraph Company. The latter admits its declination to become a party plaintiff, and is unwilling to join with the exclusive licensee, the Radio Corporation of America, in a suit in equity for infringement of the licensee's rights. Where the owner of a patent is hostile to a licensee, a court of equity will allow a suit to proceed for the benefit of the licensee, permitting him to make the owner of the patent a party defendant. Littlefield v. Perry, 21 Wall. 205, 22 L.Ed. 577; Libbey Glass Co. v. McKee Glass Co. (D.C.) 216 F. 172, affirmed without opinion 220 F. 672, 136 C.C.A. 314. A licensee has been permitted to join an unwilling owner of a patent as a party plaintiff, where such party resides without the jurisdiction of the court, and therefore cannot be served with process as a defendant. Brush-Swan Co. v. Thomson-Houston Co. (C.C.) 48 F. 224; Brush-Swan Co. v. California etc. Co., 52 F. 945, 3 C.C.A. 368. And where the patent owner is under injunction from bringing any suit for infringement, this court permitted the licensee to join him as a plaintiff. Hurd v. James Goold Co., 203 F. 998, 122 C.C.A. 298.

The reasoning of these cases is that the patentee has been granted exclusive rights under the patent, which are claimed to be infringed. The only protection offered to the licensee is a suit for infringement. If the owner, after opportunity is afforded to him, refuses to join voluntarily in the suit, the right of the licensee to join the owner is implied from the license contract, and when he is made a party he is therefore regarded as in court on his implied consent. This is essential in the interest of justice, where the owner or licensor is hostile to the licensee, and where he will not or cannot join in the suit, he will not be permitted to invade by such action the exclusive rights which he has granted. If the Radio Corporation of America is the exclusive licensee, it owns valuable equitable and legal rights, which should be protected by a court of equity as against infringement of such rights. Therefore, in the case here at bar, a decree in equity can be entered, so as to protect all parties in suit, irrespective of whether the owner appears as a plaintiff or a defendant.

It is argued that the De Forest Company was improperly joined as a party plaintiff. The argument is that it was not the owner of the patents, and, as it is only a nonexclusive licensee, it is not a proper party. It makes claim to ownership in the patents, and has become a party plaintiff to assert that claim. Its interest in the patents should be determined at final hearing. To permit it to remain a party plaintiff is not prejudicial to any rights of the appellants. Indeed, it is a protection to the appellants in any possible future claim which the De Forest Company might base on acts of infringement, if it should eventually turn out to have some ownership in the patents.

It is argued by the appellants that the Radio...