Sonobond Corporation v. Uthe Technology, Inc.

• Decision Date: 09 April 1970
• Docket Number: Civ. No. 46772.
• Citation: 314 F. Supp. 878
• Court: U.S. District Court — Northern District of California
• Parties: SONOBOND CORPORATION, Plaintiff, v. UTHE TECHNOLOGY, INC., Defendant. UTHE TECHNOLOGY, INC., Counterclaim Plaintiff, v. SONOBOND CORPORATION and Aeroprojects, Inc., Counterclaim Defendants.

314 F. Supp. 878

SONOBOND CORPORATION, Plaintiff, v. UTHE TECHNOLOGY, INC., Defendant.

UTHE TECHNOLOGY, INC., Counterclaim Plaintiff, v. SONOBOND CORPORATION and Aeroprojects, Inc., Counterclaim Defendants.

Civ. No. 46772.

United States District Court, N. D. California.

March 6, 1970.

Order Denying Petition to Reconsider and Request for Certification to Appeal April 9, 1970.

Richard J. Archer, Hugh H. Redford, Morrison, Foerster, Holloway, Clinton & Clark, San Francisco, Cal., for plaintiff and counterclaim defendants; Richard Russell Wolfe, Wolfe, Hubbard, Leydig, Voit & Osann, Chicago, Ill., on the brief.

Charles E. Townsend, Jr., Paul W. Vapnek, Townsend & Townsend, George C. Limbach, Limbach & Limbach, San Francisco, Cal., for defendant and counterclaim plaintiff.

Order Denying Defendant's Petition to Reconsider and Request for Certification to Appeal April 9, 1970.

ORDER DENYING MOTIONS OF PLAINTIFF AND DEFENDANT FOR SUMMARY JUDGMENT AND MOTION OF DEFENDANT FOR A SEPARATE TRIAL

GERALD S. LEVIN, District Judge.

Preliminary Statement

Sonobond Corporation (hereinafter known as "Sonobond") has brought suit against Uthe Technology, Inc. (hereinafter known as "Uthe") contending that Uthe has infringed and continues to infringe Sonobond's Patent No. 2,949,119, "Method and Apparatus Employing Vibratory Energy for Bonding Metals." In its answer and counterclaim Uthe alleges the patent is invalid and unenforceable because it should not have been issued and because Sonobond is guilty of patent misuse and violations of the Federal Antitrust Laws.

Uthe moves for a summary judgment to the effect that Sonobond is guilty of misuse of its patent thereby rendering that patent unenforceable. In the alternative, Uthe moves for separate trials. In the alternative, Uthe moves under Local Rule 103(f) to defer any ruling on further discovery and time required by Uthe to prepare for pretrial pending this Court's decision on Uthe's other two motions; in the alternative, Uthe seeks an additional 120 days in which to complete discovery. Sonobond moves for summary judgment to the effect that Uthe has actively induced infringement of the patent and that it contributorily infringed the patent.

Uthe's Motion for Summary Judgment

Uthe contends that certain implied licenses of Sonobond constitute patent misuse. Uthe alleges that these licenses make the purchase of unpatented components from Sonobond a condition to obtaining an implied license under the patent. Sonobond disputes this in its entirety and claims that any basis for Uthe's assertion is grounded on facts occurring before Sonobond entered into its present written licensing program (mid-1967). Sonobond claims that prior to mid-1967, it was not in the licensing business but simply manufactured and sold the combination which was intended for use in the practice of the patented process. Sonobond contends that it imposed no conditions upon users regarding the purchase of any individual components or any materials or supplies. The record discloses genuine issues of material facts which must be resolved in deciding whether Sonobond had an implied licensing scheme which constituted a patent misuse and whether that scheme still persists.

Uthe also claims that Sonobond's express licenses constitute a patent misuse. Uthe has submitted copies of these licenses in camera. These licenses state that they are for a period commencing on the date of the signing and ending, unless sooner terminated as thereinafter provided, on the date of expiration of the patent. Since there is no evidence tending to show that these licenses have been terminated it can be presumed that they exist and are still in effect.

These licenses give the licensee a nonexclusive, nonassignable license and in consideration the licensee is required to pay Sonobond a license fee. This license fee is to be paid for each apparatus sold, computed on the basis of 6% of the net selling price of the license fee determining structure, or $50.00, whichever is greater. "Net selling price" is defined to be the gross amount received for each license fee determining structure sold less any freight or other transportation charges, sales or use taxes, or customary quantity or trade discounts. The licenses provide that where the licensee purchases components of the license fee determining structure from a manufacturing licensee of Sonobond, who certifies to the licensee that a license fee has already been paid to Sonobond, or purchases components directly from Sonobond, the licensee may eliminate said components from computation of the license fees due. The amount of royalty which a licensee of Sonobond directly or indirectly pays when he buys unpatented components could vary depending upon whether he made them himself or bought them ultimately from Sonobond, a licensee of Sonobond, or a non-licensed vendor.

In general, a patent owner can be guilty of misuse of his patent when he extends his patent monopoly to unpatented items. This doctrine was enunciated in Carbice Corporation of America v. American Patents Corp., 283 U.S. 27, 51 S.Ct. 334, 75 L.Ed. 819 (1931), and Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 64 S.Ct. 278, 88 L.Ed. 396 (1944). In these and other cases the rule has been stated that the owner of a patented combination patent cannot require as a condition for granting a license that unpatented components or materials be purchased only from the licensor.¹

In Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 84 S.Ct. 1526, 12 L. Ed.2d 457 (1964), the Supreme Court in light of 35 U.S.C. § 271 stated that a repair, which would otherwise not be an infringement or contributory infringement if made with respect to a licensed structure, would constitute contributory infringement where the structure itself is unlicensed and the requisite knowledge is present. Although this case and 35 U.S.C. § 271 provide a patent owner with a cause of action for contributory infringement against a person who sells an unpatented component knowing it will be used to infringe the patent, they did not abrogate the doctrine of patent misuse.

In order to establish misuse of a patent a substantial lessening of competition or other damages need not be shown. Morton Salt Co. v. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 315 U.S. 788, 86 L.Ed. 363 (1942), reh. den. 315 U.S. 826, 62 S.Ct. 620, 86 L.Ed. 1222 (1942); Berlenbach v. Anderson & Thompson Ski Co., 329 F.2d 782 (9th Cir. 1964), cert. den. 379 U.S. 830, 85 S. Ct. 60, 13 L.Ed.2d 39 (1964). Thus the mere fact that Sonobond's sales of its components have decreased does not prevent a court from finding patent misuse if it is otherwise shown.

In Electric Pipe Line v. Fluid Systems, 231 F.2d 370, 372 (2d Cir. 1956), the court held that where the owner of a combination patent designs the installation and guarantees its performance, it is not an unreasonable use of the patent to insist that the components of the patent system be obtained from it. This case is distinguishable from the present one because no such guarantees are shown here.

It does not appear from the present record that the effect of Sonobond's licenses is to induce the licensees to purchase component parts from Sonobond. Whether or not licensees of Sonobond purchase component parts from Sonobond, the licensor, depends in a great measure upon price differentials established by the licensor and third parties who may market such parts. Genuine issues of material fact must be considered in order to determine whether or not the licenses constitute patent misuse.²

Uthe bases this motion solely upon its alleged affirmative defense of patent misuse. No motion has been made with respect to its alleged affirmative defenses of patent invalidity and antitrust violation. Uthe's motion for summary judgment is denied.

Sonobond's Motion for Summary Judgment

The complaint charges Uthe with infringement of plaintiff's patent rights by (1) selling ultrasonic or vibratory welding equipment embodying the patent invention; (2) actively inducing infringement of the claims of Sonobond's patent by others; (3) contributory infringement of said patent by selling components of ultrasonic or vibratory welding equipment.

Sonobond's patent covers a method and apparatus employing vibratory energy for bonding metals. Uthe manufactures and sells two unpatented components of this patented combination— power supplies and transducers. Uthe says the patented combination is comprised of more components than the two it produces. Sonobond contends that its patent claim No. 27 covers a combination of a frequency converter and transducer-coupling system which includes the components that Uthe alleges constitutes the patented combination. It appears from the language of this claim that the combination comprises three elements: (1) a force applying member, (2) a transducer means, and (3) a frequency converter or power supply means.

Although Sonobond offers affidavits and depositions for the purpose of showing that Uthe has infringed Sonobond's patent, these documents also show that Uthe's equipment has been used or may be used in various types of applications, such as wire bonding, stitch bonding, flip-chip bonding, micromachining, soldering and possibly sealing. From such documents it cannot be readily determined whether Uthe is liable for infringement and, if so, the extent of Sonobond's damages. It is also not apparent whether the ultrasonic welding done by Uthe's equipment follows the theory or practice claimed by Sonobond in its patent. It is quite likely that expert testimony will have to be introduced in order to resolve these genuine issues of material fact. The necessity of expert testimony to translate and interpret material, technical facts is a justifiable ground for denying summary judgment. Rains v. Cascade Industries, Inc., 402 F.2d 241 (3d Cir. 1968); Ortman v. Stanray Corporation, 371 F.2d 154 (7th Cir. 1967); and ...