Rogers v. Schering Corporation, 12816.

Decision Date08 January 1959
Docket NumberNo. 12816.,12816.
Citation262 F.2d 180
PartiesWilliam P. ROGERS, Attorney General of the United States, v. SCHERING CORPORATION, Appellant, Hexagon Laboratories, Inc., Intervenor.
CourtU.S. Court of Appeals — Third Circuit

Anthony A. Augelli, Jersey City, N. J., William D. Denson, New York City, for appellant.

Allan L. Tumarkin, Newark, N. J., and Montrose H. Massler, New York City, for intervenor.

Chester A. Weidenburner, U. S. Atty., Newark, N. J., for the Government.

Before BIGGS, Chief Judge, and MARIS, GOODRICH, McLAUGHLIN, KALODNER, STALEY and HASTIE, Circuit Judges.

MARIS, Circuit Judge.

Hexagon Laboratories, Inc., an intervenor in the district court, has moved to docket and dismiss an appeal taken by the defendant, Schering Corporation, from an order of the district court denying Schering's motion to confirm an award of arbitrators and granting the motion of the intervenor to vacate the award. The background facts will be summarized briefly.

The stock of Schering, owned by German interests, was taken over by the Alien Property Custodian pursuant to the Trading with the Enemy Act, 50 U.S. C.A.Appendix, § 1 et seq. In 1952 the Schering stock was sold to the public, after an agreement had been entered into by the corporation with the Attorney General, as successor to the Alien Property Custodian, whereby, inter alia, it was agreed that certain patents owned by Schering were to be licensed by it to qualified applicants on a non-exclusive basis at a reasonable royalty to be arrived at by negotiation or, if negotiation failed, by arbitration under the rules of the American Arbitration Association.

An action was brought by the Attorney General as plaintiff to enjoin alleged violation of the agreement and for a declaratory judgment that the agreement was valid. The defendant, Schering Corporation, counterclaimed for rescission of the agreement. On July 8, 1955 the district court gave judgment for the plaintiff. Brownell v. Schering Corp., D. C., 129 F.Supp. 879. The judgment was affirmed by this court on appeal. 3 Cir., 228 F.2d 624, certiorari denied 351 U.S. 954, 76 S.Ct. 849, 100 L.Ed. 1477.

On July 6, 1956 Hexagon applied to Schering for a license under Schering's Patent No. 2,567,245 to manufacture and sell an anti-histamine known as chlorprophenpyradimine maleate. The parties were unable to agree on the amount of royalty and on September 8, 1956 Hexagon demanded arbitration. On September 20, 1956 Schering moved the district court to construe its final judgment of July 8, 1955 and to determine that Hexagon was not a qualified applicant for a license within the meaning of that judgment. On January 14, 1957 the district court entered an order declaring that Schering is required in good faith to negotiate for a license with Hexagon and to arbitrate any disputes over reasonable royalties pursuant to the agreement. Brownell v. Schering Corp., D. C., 146 F.Supp. 106.

Meanwhile the arbitration demanded by Hexagon in September 1956 had been begun, the first hearing having been held on December 20, 1956. The proceedings terminated with an award by the arbitrators on February 25, 1958. The motions by Schering to confirm the award and by Hexagon to vacate it followed. On September 22, 1958 the district court entered an order denying the motion to confirm and granting the motion to vacate. D.C., 165 F.Supp. 295. Its action was based on its finding that one of the arbitrators was disqualified to act. From this order Schering appealed. The motion to dismiss that appeal which is now before us raises the question whether the order appealed from has appealable finality.

In support of its motion Hexagon argues that the order vacating the arbitration award is essentially similar to an order granting a new trial in a civil action, since a new arbitration proceeding must follow under the agreement and prior order of the district court. It relies upon Stathatos v. Arnold Bernstein S. S. Corp., 2 Cir., 1953, 202 F.2d 525, for this proposition. In that case the court held, one judge dissenting, that an order vacating a prior arbitration award and directing a resubmission to new arbitrators was but a step in a continuing process of arbitration and, therefore, lacked appealable finality.

We think that the present case is distinguishable from the Stathatos case in that here the court merely vacated the arbitrator's award and refrained in its order from directing a new arbitration although requested by Hexagon to do so. It is probably true, as Hexagon now argues, that such a direction was unnecessary in view of the fact that the court's order of January 14, 1957 directing Schering to arbitrate, if necessary to arrive at a royalty rate, remained in effect and was binding on Schering. It is upon this theory that Hexagon urges upon us our decision in United States v. Agne, 3 Cir., 1947, 161 F.2d 331, as authority in support of its motion. In that case we held that an order vacating a default decree which had been entered in favor of the Government in a suit to cancel a certificate of...

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    ...F.2d 554, 557 (3d Cir.1988). ("The leading case in this circuit analyzing arbitration orders under section 1291 is Rogers v. Schering Corp. [262 F.2d 180 (3rd Cir.1959) ] where Judge Maris, writing for the in banc court, set forth the rule that an order requiring arbitration is appealable a......
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