Switzer Brothers, Inc. v. Byrne

• Decision Date: 08 April 1957
• Docket Number: No. 12902.,12902.
• Citation: 242 F.2d 909
• Parties: SWITZER BROTHERS, Inc., Appellant, v. James P. BYRNE, d.b.a. Byrne Wallpaper & Paint Store, Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

242 F.2d 909 (1957)

SWITZER BROTHERS, Inc., Appellant, v. James P. BYRNE, d.b.a. Byrne Wallpaper & Paint Store, Appellee.

No. 12902.

United States Court of Appeals Sixth Circuit.

April 8, 1957.

Albert Ely, Jr., Ely, Pearne & Gordon, Cleveland, Ohio, on the brief, for appellant.

Carl Hoppe, San Francisco, Cal., Townsend & Townsend, San Francisco, Cal., on the brief, for appellee.

Before SIMONS, Chief Judge, ALLEN and McALLISTER, Circuit Judges.

ALLEN, Circuit Judge.

The District Court dismissed with prejudice a complaint alleging infringement of Patents Nos. 2,417,384 and 2,475,529 for fluorescent devices and materials and praying for the usual equitable relief. Two principal questions are presented in this appeal: (1) Are tenants in common of the patents in question indispensable parties to the suit? (2) If the tenants in common are indispensable parties and were not joined in the suit at its inception, does a subsequent assignment purporting to convey all right, title, and interest of the tenants in common to the licensee of the patents cure the defect in parties existing at the time the suit was instituted?

The chronology of the case has importance and will be given somewhat in detail. On February 9, 1953, appellant, licensee of the patents above named, with authority to conduct and control all litigation relating to such patents, instituted the infringement suit herein. Robert C. Switzer and Joseph L. Switzer, hereinafter called the Switzer brothers, original patentees of such patents and holders of the record title, joined as plaintiffs. On January 10, 1951, the patents involved had been held valid and infringed, Switzer Brothers, Inc., v. Centennial Liquor Stores, Inc., 5 Cir., 186 F.2d 414, 416. On February 13, 1953, Patent No. 2,417,384 was held invalid in view of the prior art. Texas-Miller Hat Corporation v. Switzer Brothers, Inc., 5 Cir., 201 F.2d 824, certiorari denied Switzer Brothers, Inc., v. Texas-Miller Hat Corporation, 346 U.S. 821, 74 S.Ct. 36, 98 L.Ed. 347. On October 22, 1953, appellant and the Switzer brothers, coplaintiffs, entered into a consent decree in a pending antitrust action, United States v. Switzer Brothers, Inc., D.C.N. D.Cal., 115 F.Supp. 49. This consent decree, which related to the two patents involved here, 1952-53 CCH Trade Cases, paragraphs 68,878-9, provided:

"(A) Defendants are jointly and severally ordered and directed to grant to each applicant making written request therefor a non-exclusive, unrestricted, royalty-free license to manufacture, sell and use under United States Letters Patent Nos. 2,417,384; 2,475,529 or 2,450,085.

* * * * * *

"(B) Defendants are jointly and severally enjoined and restrained from instituting or threatening to institute any suit or proceeding against any person to restrain or enjoin, or collect damages for, infringement occurring prior or subsequent to the date of entry of this Final Judgment, of said patents Nos. 2,417,384; 2,475,529 or 2,450,085; provided, however, that nothing herein shall prevent defendants (1) from defending the validity of said patents, or (2) by way of claim (counterclaim) or defense, from asserting claims for past unlicensed, contributory or induced infringement of said patents.

"(C) Except as to cases now on appeal or on certiorari defendants are ordered and directed to dismiss any of their pending actions for infringement of the patents listed in subsection (B) above in which a counterclaim has not been pled, or to dismiss any such pending action in which a counterclaim, if pled, is dismissed. However, in case a counterclaim has been pled and is not dismissed, defendants may, but only to the extent of such counterclaim and only until the time of such dismissal, assert in such case the validity of said patents and plead by way of claim (counterclaim) or defense past unlicensed, contributory or induced infringement of said patents."

The instant case is not shown to have been on appeal or on certiorari on October 22, 1953, and no counterclaim had been filed therein. On November 5, 1953, presumably in compliance with paragraph (C) above quoted, appellant and the Switzer brothers moved for dismissal of the instant suit and appellee consented to such dismissal on condition that an award for attorneys' fees be granted defendant under 35 U.S.C. § 285. Appellant and the Switzer brothers, after opposing dismissal upon such terms and conditions, withdrew their motion to dismiss the suit.

October 28, 1955, in Switzer v. Commissioner of Internal Revenue, 6 Cir., 226 F.2d 329, this court affirmed a decision of the Tax Court of the United States to the effect that the license agreement executed in favor of appellant by Robert C. Switzer and Patricia Switzer, Joseph L. Switzer and Elise DeGroot Switzer, dated July 30, 1946, and later transactions through 1949, did not constitute an effective assignment for tax purposes of the various patents and applications in which the wives of the Switzer brothers had acquired an interest on or before November 1, 1945. Later, December 16, 1955, the Switzer brothers and their wives quitclaimed to appellant all their right, title, and interest in the patents involved. Appellee then moved to dismiss the complaint for want of indispensable parties plaintiff, namely, Patricia Switzer and Elise DeGroot Switzer. Appellant opposed this motion and moved to drop Robert C. Switzer and Joseph L. Switzer as plaintiffs. The District Court granted the motion to dismiss for lack of indispensable parties plaintiff and from its order this appeal is prosecuted by Switzer Brothers, Inc.

We think the decision of the District Court was clearly correct. It is true that in the tax case in this court, Switzer v. Commissioner of Internal Revenue, supra, the issues presented were not identical with those of the instant case and hence the decision is not res judicata. General Protestant Orphans' Home v. Ivey, 6 Cir., 240 F.2d 239. However, the record in the tax case shows without dispute the following: that, prior to November 1, 1945, the Switzer brothers gave their wives each an undivided 1/8 interest in the patents involved; that on July 30, 1946, the Switzer brothers and their wives owned as tenants in common the entire right, title, and interest in the patent applications and inventions involved; and that on July 30, 1946, the four Switzers executed a license authorizing appellant to make, use, sell, and grant sublicenses, and to make, use, and sell products, devices, and methods within the scope of the patents, applications, and inventions involved. The Switzer brothers as record title owners of the patents, and appellant as licensee, joined as coplaintiffs in the filing of the instant complaint on February 9, 1953. The reasoning of the tax case under these undisputed facts, that it was not shown that the license agreement of July 30, 1946, was intended to be an assignment, is certainly persuasive. Switzer v. Commissioner, supra, 226 F.2d 330. While it is true that in Waterman v. Mackenzie, 138 U.S. 252, 11 S.Ct. 334, 335, 34 L.Ed. 923, the Supreme Court held that a transfer of the exclusive right under the patent is an assignment, it also declared that any assignment or transfer short of the assignment described in that case "is a mere license, giving the licensee no title in the patent, and no right to sue at law in his own name for an infringement."

Appellant maintains that there is no evidence in the record to the effect that on the date the complaint was filed the wives of the record title owners owned as tenants in common an outstanding undivided ¼ of the entire right, title, and interest in and to the patents in suit. It states that this is a faulty premise and based only upon the record in the tax case, Switzer v. Commissioner, supra. However the pertinent part of the record in the Tax Court of the United States was introduced herein accompanying the affidavit of appellee in support of motion to dismiss complaint. The facts set forth in the opinion of the Tax Court shown in this appendix to the affidavit are in no way denied.

The use of affidavits in support of motions is recognized in the Federal Rules of Civil Procedure, rule 6(d), 28 U.S.C. and the verification of motions by affidavit is the general practice. 37 Am.Jur. 507, Section 14, Papers in Support of Motion, Note 18 and cases cited; State of Texas v. White, 131 U.S.Appendix xcv, 19 L.Ed. 532. Cf. Universal Adjustment Corporation v. Midland Bank, Limited, of London, England, 281 Mass. 303, 184 N.E. 152, 87 A.L.R. 1407, opinion by Chief Justice Rugg.

The license executed July 30, 1946, on its face indicates that it was not intended to be an assignment. It was called "Memorandum of License Agreement" and referred to the Switzer brothers and their wives as "Licensors" and to appellant as "Licensee." This is not determinative. Waterman v. Mackenzie, supra, ...