Triax Co. v. TRW, Inc.

• Decision Date: 16 January 1984
• Docket Number: No. 82-3575,82-3575
• Citation: 724 F.2d 1224,221 USPQ 1133
• Parties: , 221 U.S.P.Q. 1133 The TRIAX COMPANY, Plaintiff, Jerome H. Lemelson, Proposed Plaintiff-Intervenor, Appellant, v. TRW, INC. and Conco, Inc., Defendants-Appellees, Hartman Metal Fabricators, Inc., Defendant-Intervenor-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1224

724 F.2d 1224

76 A.L.R.Fed. 827, 221 U.S.P.Q. 1133

The TRIAX COMPANY, Plaintiff, Jerome H. Lemelson, Proposed Plaintiff-Intervenor, Appellant, v. TRW, INC. and Conco, Inc., Defendants-Appellees, Hartman Metal Fabricators, Inc., Defendant-Intervenor-Appellee.

No. 82-3575.

United States Court of Appeals, Sixth Circuit.

Argued Oct. 6, 1983.

Decided Jan. 16, 1984.

William C. McCoy, Jr., Pearne, Gordon, Sessions, McCoy & Granger, Stephen A. Hill (argued), Cleveland, Ohio, for appellant.

Charles B. Lyon, Maky, Renner, Otto & Boissell, Cleveland, Ohio, Stanley C. Dalton, Wegner, Stellman, McCord, Wiles & Wood, Ronald L. Wanke (argued), Chicago, Ill., Hal D. Cooper, Jones, Day, Reavis & Pogue, Cleveland, Ohio, for appellees.

Philip K. Fitzsimmons (argued), Shlesinger, Fitzsimmons & Sclesinger, Rochester, N.Y., for defendant-intervenor.

Richard J. Egan, Baldwin, Egan, Walling & Fetzer, Cleveland, Ohio, for plaintiff Triax Co.

Before CONTIE, Circuit Judge, and PHILLIPS and CELEBREZZE, Senior Circuit Judges.

PHILLIPS, Senior Circuit Judge.

This appeal involves the asserted right of Appellant, Jerome H. Lemelson, the inventor and original owner of the two patents-in-suit, to intervene as plaintiff in a patent infringement action. The district court entered summary judgment holding the two patents to be invalid. The purpose of Lemelson's attempted intervention was to prosecute an appeal after the original plaintiff, the losing party, had decided not to appeal.

Friday, May 28, 1982, was the last day for filing a notice of appeal. Six days before that date, on Sunday, May 23, Appellant Lemelson learned for the first time that the original plaintiff was not going to perfect an appeal from the summary judgment holding that the patents were invalid. On May 28, 1982, Appellant filed his motion to intervene pursuant to Fed.R.Civ.P. 24(a)(2) and to extend the time for filing a notice of appeal. He also filed a notice of appeal on that date.

The district court denied the motion to intervene. We reverse.

I.

On August 6, 1973, plaintiff, Triax Company, filed an action in the United States District Court for the Northern District of Ohio, seeking injunctive relief and compensatory damages due to the alleged infringement by defendant TRW, Inc. of its United States Letter Patent No. 3,486,640. Jurisdiction was invoked under 28 U.S.C. Sec. 1338 and 35 U.S.C. Sec. 281. Almost a year later, Triax filed a "supplement to the complaint" alleging that its United States Letter Patent No. 3,389,814 also was infringed by TRW, Inc.

On June 13, 1974, Triax filed a second action in the Northern District of Ohio alleging infringements of the same patents by Otis Elevator Company.

On July 30, 1974, Triax filed an action in the United States District Court for the Northern District of Illinois alleging that defendant Conco, Inc. was infringing the same two patents. On November 26, 1974 the Judicial Panel on Multidistrict Litigation issued an order consolidating pre-trial discovery in the three actions in the United States District Court for the Northern District of Ohio. In re the Triax Company Patent Litigation, 385 F.Supp. 590 (J.P.M.D.L.1974). On February 18, 1975 defendant Hartman Metal Fabricators, Inc. was given leave to intervene in the action filed against TRW, on the ground that Hartman had manufactured and sold to TRW the device alleged by Triax to constitute an infringement of the patents. On May 8, 1978 the action against Otis Elevator Company was dismissed.

On October 21, 1980 the remaining defendants filed a joint motion for summary judgment asserting that the patents were invalid under 35 U.S.C. Sec. 102(b). ¹

On April 28, 1982, the District Court granted defendants' joint motion for summary judgment on the ground that the patents allegedly infringed upon were invalid under 35 U.S.C. Sec. 102(b), and an invalid patent cannot be infringed. Triax decided not to appeal the grant of summary judgment.

In 1964, plaintiff Triax had entered into a Patent Rights Agreement (Agreement) with the inventor, Lemelson. On August 16, 1978 Lemelson and Triax entered into a supplementary agreement incorporating the two patents that are the subject of this litigation into the 1964 agreement. This agreement constituted an assignment of the "entire present and future right, title and interest" in the patents-in-suit "together with all claims, demands or rights of action in the name of Triax." In addition, in the 1978 supplementary agreement Lemelson agreed to share in the litigation expenses arising from this litigation.

II.

The sole question presented in this appeal is whether Lemelson was entitled to intervention as of right under Fed.R.Civ.P. 24(a)(2) ² after the decision of the district court granting summary judgment in favor of defendants, from which plaintiff Triax decided not to appeal, when Lemelson both knew of, and was actively involved in, the litigation prior to the granting of summary judgment.

To intervene as a matter of right the proposed intervenor must demonstrate (a) that he has an interest in the property or transaction that is the subject matter of the litigation; (b) that the disposition of the action as a practical matter may impair or impede his ability to protect that interest; and (c) that parties already in the litigation cannot adequately protect that interest. Fed.R.Civ.P. 24(a)(2). Goldberg v. Fisher Foods, 717 F.2d 290, 292, (6th Cir.1983); Blanchard v. Johnson, 532 F.2d 1074 (6th Cir.), cert. denied, 429 U.S. 869, 97 S.Ct. 180, 50 L.Ed.2d 149 (1976). See 7A C. Wright and A. Miller, Federal Practice and Procedure Sec. 1908 (1972).

In addition, a motion to intervene must be timely filed. United Airlines v. McDonald, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed.2d 423 (1977); Fed.R.Civ.P. 24(a).

The district court concluded that Lemelson, as proposed intervenor, had the requisite "interest" to satisfy the first requirement. The Court stated: "It is uncontroverted that Lemelson receives Royalties from Triax contingent on continuing validity of the patents. Further, he paid forty percent of the litigation costs in suit and would receive forty percent of any recovery. Therefore, he maintains the requisite interest for intervention." Furthermore, Lemelson held a contingent interest in the patents. Under the agreement, if Triax failed to make minimum royalty payments, the patents would revert to Lemelson. Thus, Lemelson met the requirement that his interest be "a significant protectable interest." Donaldson v. United States, 400 U.S. 517, 531, 91 S.Ct. 534, 542, 27 L.Ed.2d 580 (1971).

As stated above, the second prong of the test for intervention as of right is whether the disposition of the action as a practical matter may impair or impede Lemelson's ability to protect that interest. Goldberg, supra. Undoubtedly Lemelson satisfies this criteria. A final judgment declaring the patents at issue invalid means that Lemelson no longer is entitled to receive any royalties on these patents. In addition, Lemelson would be collaterally estopped from seeking damages from other potential infringers of the patents, because there can be no infringement of an invalid patent. The only way he could protect his interest effectively would be to seek appellate review of the district court decision. Triax's decision not to file a notice of appeal left Lemelson without a mechanism to seek appellate review of the summary judgment of the district court declaring the two patents to be invalid. Thus, we conclude that denial of his motion to intervene impairs and impedes Lemelson's ability to protect his interest in the patents.

The third prong of the test is whether the parties already in the litigation cannot adequately protect the interests of the proposed intervenor. The district court concluded Lemelson had failed to demonstrate that Triax had not protected his interests adequately. In this Circuit, "an applicant for intervention has the burden of showing that representation by existing parties is inadequate." Goldberg, supra; Blanchard, supra, 532 F.2d at 1077; Afro-American Patrolman's League v. Duck, 503 F.2d 294, 298 (6th Cir.1974). However, the Supreme Court has stated that the burden of demonstrating inadequacy of representation is a minimal one. See Trbovich v. United Mine Workers, 404 U.S. 528, 538 n. 10, 92 S.Ct. 630, 636, 30 L.Ed.2d 686 (1972).

The district court concluded that representation was adequate because Plaintiff Triax did not fail in its duty to represent Lemelson. The district court stated:

Representation is adequate, for purpose of intervention, if no collusion is shown between the representative and an opposing party, if the representative does not have or represent an interest adverse to the proposed intervenor and if the representative does not fail in the fulfillment of his duty.

The opinion of the district court suggests that only if one of these three factors is shown, representation is inadequate. These three factors, however, cannot be said to be a comprehensive list of the circumstances where intervention of right ought to be granted. See 7A C. Wright & A. Miller, Federal Practice and Procedure Sec. 1909, at 523-24 (1972).

There is no dispute that Lemelson's and Triax's interests were in accord prior to the granting of defendants' motion for summary judgment. Therefore, under the plain language of Fed.R.Civ.P. 24(a)(2), Lemelson would not have been entitled to intervention as of right before the patents were held to be invalid because he could not demonstrate that Triax was not adequately protecting his interests in the patents. However, after final judgment was rendered in favor of defendants, Lemelson wanted to appeal but Triax elected not to do so. It is at this point, Lemelson contends, that Triax's representation became inadequate. For whatever reason, Triax determined its best interests were served by not seeking a judicial review of the summary judgment of the district court....