Appendix — Dawson Chemical Co. v. Rohm & Haas Co.
Supreme Court brief1980
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a an ,
5 FILED
FP tire Court, U. ny
FEB 6 j9Q@9
APPENDIX
IN THE
Supreme Court of the United States
OoroseR TERM 1979
No. 79-669
Dawson CHeEmiIcaL ComMPANy,
CrysTaL MANUFACTURING CORPORATION AND
CrystaL CHEMICAL CoMPANY,
Petitioners,
V.
Roum anp Hass Company,
Respondent.
On Writ or CERTIORARI TO THE
Unrrep States Court or APPEALS
FoR THE Firra Crrovir
PETITION FOR CERTIORARI
FILED OCTOBER 24, 1979
CERTIORARI GRANTED JANUARY 7, 1980
Caries Docainet TRWGGEGS ccocccecscvsccrsttssstictcbensvissslenviniamanansnncinniin
Plaintiff's First Amended and Supplemental Complaint,
FOE SURG BA, ROTG ccvcnscessessccssnsssscssevecscvwsereaniavinitinnenntebensantadee
First Amended Answer and Counterclaim of Defendants
Dawson Chemical Co., et al, Filed July 17, 1974 ...............
Plaintiff’s Reply to Counterclaim of Defendant Crystal
Chemical Co., Filed July 25, 1974 wo... eccssccscsessssescseeees
Answer by Defendant Helena Chemical Co. to Interrogatory
No. 12 of Plaintiff’s Interrogatories (First Set), Filed
CRabebed’ FG, BOGE. siccossivsssesaustiscntiincsiinhindimsdadaseeapunivamedieanats
Answers by Defendants Dawson Chemical Co., et al to Inter-
rogatories No. 20, 21 and 22 of Plaintiff’s Interrogatories
(First Set), Filed October 17, 1974 occ ceceeteetseeeeeeteees
Plaintiff’s Response to Defendant Crystal Chemical Co.’s In-
terrogatories (First Set), Filed October 18, 1974 ................
Stipulation by all Parties, without Exhibits, Filed October
31, 1974 (Exhibits reproduced in separate volume) ............
Defendants Dawson Chemical Co., et al’s Motion for Sum-
mary Judgment, Filed November 11, 1974 .................ccccesee
a Motion for Summary Judgment, Filed December
©, TPR. winrenstihictncdanateaenbaan ee
Reply Memorandum by Defendants Dawson Chemical Co.,
et al in Support of Their Motion for Summary Judgment
and in Opposition to Plaintiff’s Motion for Summary
Judgment, Without Attachment, Filed December 16,
BOE .:cersscessentniensenininnahsinniightslianitisneenieadanstinadamadeainmeemaaens
Reply Memorandum by Defendant Helena Chemical Co. in
Support of Defendants’ Motions for Summary Judgment
and in Opposition to Plaintiff’s Motion for Summary
Judgment, Without Attachment, Filed December 30, 1974
Supplemental Memorandum by Defendant Helena Chemical
o. in Support of Motion for Summary Judgment, Filed
RUT BE, BPO sieicisisnnsnicctesiusitinnsvsniebisiaaiiiiaiinia aaa aaa
—— and Opinion of District Court, Filed August
WD, TUG ccecssssecocnsneasosouninerssvstnenecusessousnansstiognesseessahiosesesshinaatotioun
Defendants Dawson Chemical Co., et al’s Motion for Re-
consideration of the Court’s Decision Not to Dismiss Plain-
tiff’s Complaint, Filed September 3, 1976
OOOO eee eee eens neee
17
46
55
Defendants Dawson Chemical Co., et al’s Memorandum in
Support of Motion for Reconsideration, Filed September
8, 1976 ......00008 suveecccensboscnecnensaneoseseqeneinceveeuianeedeseecses sessuusseesususeners
BB, 1DTC rrccrcororeresscserssercsvessvssovoesvosseneosonovenenbonecceseaacessosensessosonses
Final Judgment, Filed November 23, 1976 .........sscsssssssesseees
Plaintiff’s Notice of Appeal, Filed December 16, 1976 ............
Defendants Dawson Chemical Co., et al’s Joint Notice of
Appeal, Filed December 28, 1976 ........:sccccseseseneneeeteeneeenenes
Opinion of Court of Appeals, Filed July 30, 1979 ............04
Judgment of Court of Appeals, Filed July 30, 1979 ...............
Pa@E
114
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oi SEE PROTECTIVE ORDER FILED li-is-—74.
-tItA
JURY ReQuesTed
Jury demand date:
Hele
. Givin Docker
CRITED STATES DISTRICT COURT
peft.
erts.
GOee
C Ferm Ne. 106A Rev.
TITLE OF CASE
74-H-799 -
CARE 0. DUD, rp
igdenar de2irds, 2h |
rs 72 zg . rp ee ne.
Crystal Gnemical Co. 2B=2=AITORNEYS
Ce eee
ROHN AND HAAS COMPANY
VS.
DAWSON CHEMICAL COMPANY, INC.,
.CRYSTAL MANUFACTURING CORP.,
BRYSTAL CHEMICAL CO., INC., and
HELENA CHEMICAL COMPANY
For plaintiff: ‘
James C. Winters .
CRAIN, WINTERS, DEATON, JAMES iGGS
& BRIGGS
3300 Two Houston Center
Houston, Texas 77002 654-1616
_— re —_ m+ eo Se a ed
Dawson Chem. Co.; Cryst21 Mfc. Cors.:!
For defendant:Crvstal Chemical: a
alohn Li. Neconn, sr.
BUTLER, 3INION,RICE,CCOK & KNAPP
1100 Esperson Buildings
Houston, Texas 77002 -
Helena Chemical Co.:
rave
PRAVEL AND WILSON
2010 Marathon Bldg.
224-6711, 288
Houston, Texas 77002 224-2020
| * STATISTICAL RECORD COSTS DaTE | phAME OF. ] REC. DISB. :
3.5 mailed Clerk hag CiDcaz jf «S15 00 | |
[Ent ¥-7y| 210 10357 /s\e0
S. 6 mailed Marshal 12/16/76 $15537 jN.A.| 5.06
ck deans toiled as 12/23/76 #15639 IN.A.| $.0D
een reeatory judgment; ,
ent infringement :
USC 2 4o0(r) . Witness fees sae
‘tlon arose at: Depositions
a t
: ; ‘ © saa Py 2 +9 ‘
™ Vamsi. ;
" . C-eeum so® @& Bilal
JURY REQUESTED NORMAN %. BLACK yw season,
Date 01
DATE PROCEEDINGS Sudgmen |
2-11-74 |ORIGINAL COMPLAINT, filed. No summons copies available at this ss i.
$<-14-74 (Summons issued on 4 defts. i
6-14-74 !Plt#.'s REQUEST to Defts. FOR PRODUCTION OF DOCUMENTS (First
Request), filed. 2
6-14-74 (Plt#.'s INTERROGATORIES to Defts. (First Set}, filed. 3
$-24-74 'pltf.'s FIRST AMENDED AND SUPPLEMENTAL COMPLAINT, filed. Summons ’
issued (4) on defts. Yr
7- 1-74 peft. Crystal Chemical Co.'s REQUEST to Pltf. FOR PRODUCTION of
| Documents (First Request), filed. . 7 5
T= 1-74 Deft. Crystal Chemical Co.'s INTERROGATORIES £9 Pltf., (First Set), ;
filed. . :
-. 2-74 ANSWER AND COUNTERCLAIM of Dawson Chemical Co., Crystal Manufacturing
Corp. and Crystal Chemical Co., filed. wT
Ja 9474 STIPULATION, Deft. Helena Chemical Co. shall answer, move oF z
otherwise plead to the First Amended and Supplemental Complaint
by 7-23-74, filed. 8
7210-74 | Return of Summons on the follewing, filed: mt ee
Dawson Chemical Co. thru Roy Dawson, returned unexecuted, Dawson
deceased ; _ 9
| Dawson Chemical Co. thru Roy Dawson, served 6-17-74 thru Mr. i:
Varcenan ‘
Crystal Mig. Corp. thru Joe C. Eller, served 6-17-74 thru Mr.
Var¢deman R =
Helena Chemical Co. served 6-19-74 thru C. T. Corp. System l
| Crystal Chemical Co. thru Joa Eller, served 6-21-74 thru Mr. a
Varéeman
Crvstal Chemical Co. thru Joe Eller, served 6-27-74 (am. comp.) 4
Cxvstal wifg. Corp. th=u Joe Eller, served 6-27-74 (am. comp.) 15
Helena Chemical Co. served 6-23-74 thru C. T. Corp. System 16
(am. comp.) oe
7=17=74 FIRST AMENDED ANSWER. AND COUNTERCLAIM of Dawson Chemical Co., ”
Crystal Manufacturing Corp. and Crystal Chemical Co., riled. te
7=-19=74 Pltf#.'s REQUEST FOR PRODUCTION CF DOCUMENTS (SECOND REQUEST) to-
! Deft2. Dawson Chemical Co., Crystal Manufacturing Corp. and -
Crystal Chemical Co., filed. é
7219-74 | Plt#.‘'s INTERROGATORIES to Defts. Dawson Chemical Co., Crystal ia
|! Manufacturing Corp. and Crystal Chemical Co. (SECOND SET), filed.; 19
7224-74 |} ANSWER and COWMATERCLAIMS of Deft. HGlena Chemical Co. w/JURY -
t
{ DEMAND, filed. mee .
7-25=74 ' >lte.'s REPLY to Counterclaim of Deft. Crystal Chemical Co., aa Gi
3— 1-74 | STIPULATION, pltf. and Defts. agree that the time for answeling,
| objecting o= otherwise gleading to each of the fcllewing 13
| extended for 30 days, filed: : hoe
| SLe€.'s Request to Bests. for Production of Doerments (ist cies
i pitS.'s interrcgatoriee to Usits. (1st Request) hs
| [nterrocztories of Crystal TRemical Co. td elte. (lst Set)
Crvstai Chemical Co.'s Request to Pitt. for Procuction o€ Socr--
ments (lst Request) (Entry conmciaued =o top cf next peg)
TP Pa TY Ue 9 AO Ng SP NS oS ee OT ee eT re ae ES Ie, eee ying
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‘CA 74={8-790
>. C 1204 Rev. Civil Docket Continuation
=a
8=-1-74
8~2-74
S=- 9-74
S= 9-74
~ \ 8-13-74
Gm 4-74
10-17-74
10-17-74
15-17-74
Baan
Entry continued from previous page:
Pltft.'s Request for Preduction cf
Pltf.’s Interrogatories to Defts. Dawson Chemical Co., Crystal
Manufacturing Corp. and Crystal Chemical Co. (2nd Set)
Defts. Dawson Chemical Co., Crystal Manufacturing Corp. and
Crystal Chemical Co. DEMAND FOR JURY TRIAL, filed. !
Pltf£.‘s INTERROGATORIES to Deft. Helena Chemical Co. (3rd Set),file
Pltt.'s REQUEST FOR PRODUCTION OF DOCUMENTS (3rd Request) to
Deft. Belena Chemical GOce filed. 4
Pltf.'s REPLY to COUNTERCLAIMS of Helena Chemical Co., filed.
STIPULATION, Pltf. and Defts. stipulate that the time for answer Pe x
objecting or otherwise pleading to each of the following is
extended to and including 10-15-74, filed:
Pltt.'s Request to Defts. for production of documents (lst Req.)
piltt.'s Interrogatories to Defts. (lst Req.)
Interrogatories of Crystal Chemical to Pitt. (lat Set)
Crystal Chemical Co.'s Request to Pltf. for Production of Documents
(lst Req.) :
Pltt.'s Request for Production of Documents (2nd Req.)
Plt=.'’s Interrogatories to Defts. Dawson Chemical Co., Crystal
MSg. Corp. and Crystal Chemical Co. (2nd Set) .
Pitt.’s Interrogatories to Dert. Helena Chemical Co. (3rd Set)
Pitt.*s Request for Production of Documents (3rd Req.) :
Dociments (2nd Request)
aT
une
ANSWEFS by Deft. Helena Chemical Co. to Pltf.'s INTERROGATORIES
(FIRST SET), filed.
ANSVWEPS by Deft. Helena Chemical Co. to Pltf.'s INTERROGATORIES
(THIRD SET), filed.
ANSWERS by Defts. Dawson Chemical Co., Crystal Manufacturing Corp.,
ane Crystal Chemical Co. to Pltf.‘'s INTERROGATORIES to Defts.
(FIRST SET), filed. eper
ANSWERS to Pitf.‘s INTERROGATORIES to Defts. Dawson Chemical Co.,
_ Cxystal Manufacturing Corp. and Crystal Chemical Co. (SECOND SET).
filed. 4F
10-15-74 | Pltft.'s NCTICE of Taking Depositions to Defts. Dawson Chemical Co.,
Crystal Chemical Co. and Crystal Manufacturing Corp. tnru Joe C.
Eller, President and various other unnamed officers on 11-13-74,
filed. a
10-15-74 | Pitf.'s NCTICE of Taking Depositions to Deft. Helene Chemical Co. |
thru Jerry A. Williams, J. C. Blue and various other unnamed
officers on 11-21-74, filed. b3
€5)1o-18-7er1t2. 's RESPONSE to Deft. Crystal Chemical Co.'s Request for
Production of Documents (First Request), filed. AS
20-13-74 | Pltf.'s RESPONSE to Deft. Crystal Chemical Co.'s Interrogutories
| (Pirse Set), filed. ae
10=29-74 }
pee Xe
Deft. Helena Chemical Co.'s RESPONSY to Pitf.'s Requests for
Documents (First Sst) and (Second Set?, filed.
12-16-74
12-30-74
Summary Judgment, filed.
REPLY MEMORANDUM by Defts. Dawscn Chemical Co., Crystal 42g - Coro.
and Crystal Chemical Co. in Suncort of Their Motion for Summary .
Judgment and in OPPOSITION to Pltt.'’s Motion for Summary Jucgment,
filed.
Deft. Helena Chemical Co. MEMCRANDUM IN SUPPORT of defts. cotions
for Summary Judgment and IN CPPOSITION of pltf. motion for summary
judgment, filed.
yt
=
as ---
: ae Ss Sa eee ee we
Sas sia ie nioeehcasctai atin
. .°
CA 74-H-790 ; = ee
NORMAN W. BLACK
CARL 0. SUE, JR. —
or * PROCEEDINGS Po nig
Ba
10-31-74 STIPULATION by all parties, filed.
10 31-74 |Pite. AMENDED NOTICE FOR TAKING OF DEPOSITIONS of deft. Helena -"
Chemical Co., filed. °
10-31-74 | PROCEDURAL STIPULATION by all parties, filed. a) 2
11-11-74 Defts. Dawson Chemical Co., Inc., Crystal Manufacturing ee ican
M/D: tt=2s=74 12-16-74 (Stipulation filed 11-19-74) - 40
11-11-74 Defts. Dawson Chemical Co., Inc., Crystal Manufacturing eee and
Crystal Chemical Co., Inc. MEMORANDUM in Support of Motion for in
rotective Order, filed. -: -
11-11-74 nadine. Dawson Chemical Co., Crystal Manufacturing Corp.'s and
: Crystal Chemical Co.‘s MOTION FOR SUMMARY na ae ge oo 11-19)
ae Tt=75=74 Oral hearing requested. 12-16-74 (Stip.file srs | 42
11-11-74 '\Defts. Dawson Chemical Co., Crystal Mfg. Corp.'s and Crystal | ze
Co.'s MEMORANDUM in Support of Motion for Summary Judgment, °
1-15-74 |(COB) PROTECTIVE ORDER, filed. Directions and guidelines given
— recarding the handling of confidential material to be ma
desisnated by counsel. Parties ntfd. by copy. pt
| j : to and including
i rc for Extension of Time, Pltf. has :
teat wre *o resvond to Defts. Dawson Chemical Co.'s, Crystal Mfg.
Corp.'s and Crystal Chemical Co.'s Motion for Summary Judgment
and Motion for Protective Order; Defts. have to and oe
12-16-74 <o answer Pltf.‘'s response; oral argument requested. ‘
4
filed. a ; ;
11-22-74 Pltf. Rohm and Haas Co.'s MEMORANDUM IN OPPOSITION to Déeft.'‘s as
Motion fcr a Protective Order, filed.
11-25-74 £t. Helena Chemical Co. MOTION SOR SUMMARY JUDGMENT, filed. 3
M/D: 12-9-74 ’
11-25-74 ft. Helena Chemical Co. MOTION FOR PROTECTIVE ORDER, Ciled. =
M/D: 12-9-74 Ss ‘
12- 6-74 PltzZ. Rohm and Haas Co.'s OPPOSITION to Deft. Helena Chemical Co.'s =
Motion for Protective Order, filed. Ry
12- 6-74 Plt£. Rohm and Haas Co.'s MOTION FOR SUMMARY JUDGMENT, rilec. ‘nics | =
pI M/D: 12-16-74 Oral argument requested. i bases Age}
i L a : 3 in Opoosition to fts.
12- 6-74 Pitf. Rohm and Haas Co.'s MEMORANDUM in Ope abet ra
fdotions for Summary Judgment and in Support of Its Own Motion £0 “i
o- - -
term
—-
of motion for Summary Judgment by Defts. & in opposition to motions
‘for Summary Judgment by Pltf., filed.
|
eT
6-20-75 Pltf's NOTICE of TAKING DEPOSITION of Deft Helena Chemical Company,
on 7-31-75, filed.
f 6-20-75 Pltf’s NOTICE of TAKING DEPOSITION of Defts Dawson Chemical Company
Crystal Chemical Company and Crystal Manufacturing Corpora-
tion on 7-29-75, filed.
7- 8-75 | MOTION for PROTECTIVE ORDER Quashing Pltf's Notices of Deposi-
tions of Deft. Helena’ Chemical Co.,. filed. M/D 7-21-75
7- 8-75 | MEMORANDUM in Support of MOTION for Protective Order Quashing
Pltf's Notices of Depositions of Deft. Helena Chemical
Co., filed.
MOTION to Vacate Pltf. Notice of Taking Depositions; and Alterna-
tive Motion to Stay Pltf's Taking of Depositions of Defts.
Dawson Chemical Co., Inc., Crystal Manufacturing Corp., and
Crystal Chemical Co., Inc., filed. M/D 7-21-75
RESPONSE to Motion to Vacate Pltf. Notice of Takine Deposi-
tions and Alternative Motion to Stay Pltf. Taking of Deposi-
tion of Detts. Dawson Chemical Co., Crystal Chemical Co., and
Crystal Manufacturing Corp., filed.
7-11-75
7-21-75 | Pltf.
4-13-7 SUPPLEMENTAL MEMORANDUM of Deft Helena Chemical Co. in Support
‘ O= Motion for Summary Judgment, filed.
* 60260? Answer *o
2na Suppl. Memo. of Deft Helena Chem. Co., returned to
Al Dezton
a
6 |
|
|
€
| for signature.
4-26-76,
4-29-76
ANSWER o= Fltf to SECOND SUPPLEMENTAL MEMORANDUM of Deft Helena
Chemical Co., filed. ae
REPLY of Deft” Helena Chemical Co. to Pltf's Answer to Second
Supplemental Memorancum of Deft Helena Chemical Co., filec.-
¢ 5= 5-76 SUPPLEMENTARY MEMORANDUM cf Defts Dawson Chemical @s. and Crystal —
; | Chemical Cc., on Motion for Summary Judgment, filed.
Referred ty Order
of the Court
WL2 076 the U. S. Kegistrate for Consideration
| NG recommended action. A
OVE RS
—~— —
| 1-13-75 SUPprEnmrraL REPLY MEMORANDUM by Deft. Helena Chemical Co. in support
eNetes -CA 74<-H-790 Le L- Carl O. Bue, J
| ae
D. © 190A Rev. Civti Docket Continuation NORMAN W. BI
DaTEZ | PROCEEDINGS Ra.
f | se a
iis | Te | |
'| l= 6=75 ‘Plt£. MEMORANDUM in REPLY to Deft. OPPOSITION to Plt=. Motion for
Summary Judgment, filed. oo : 54
,
55
56
57
58
59
60
52
63:
65
a ee. ee + ee
10 en eee me Oe em eee eee Cues se + oe + 6
ROHM & HAAS CO.,
=
&
Pe. | | ree
fe Sem OR oa Pe eee OC ae a ES as Ba Rak ~~ — =»
vs DAWSON CHEMICAL co °° et al y os = a a
reowntt WT. BLACK
CA 74<8-790 CARL Os BUE, JR.
Date oO:
DATE PROCEEDINGS Jedeme:
Lo
8-10-76| (COB) MEMORANDUM & OPINION, filed. a/n, =
lL. Plt#. Motion for partial summary judgment-DENIED
3. Defts. Motions for Partial summary judgment-GRANTED in
part & DENIED; :
3. Defts. Motions for Protective Orders-DENIED except
4. Deft. Helena's Motion to quash notices of deposition ee
3°
8-26-76
8-26-76
9- 3-76
9—- 3-76
9-13-76
9-13-76
9-17-76
to Jerry A. Williams and J. C. Blue-GRANTED
Pltf's NOTICE to Take Depositions Defts Dawson Chemical Se
Chemical Co., and Crystal Mfg. Corp., on 9-28-76, filed.
Plt£'s NOTICE to Take Deposition of Deft Selena Chemical Co., on
9-30-76, filed.
MOTION for Reconsideration of the Court's Decision Not to Dismiss
Plt#'s Complaint of Defts Dawson Chemical Co., Crystal Manu-
facturing Corp., and Crystal Chemical Co., filed.M/D 9-27-76
MEMORANDUM in Support of Motion for Reconsiderztion of the Court's
Decision Not to Dismiss Pltt's Complaint of Deftts Dawson
Chemical Co., Crystal Manufacturing Corp., and Crystal Cheni-
cal Co., filed.
MOTION fcr Reconsideration of the Court's Jecision Not to Dismiss
plt='s Complaint and Alternative Motion for Order for Immedi-
ate Appeal Under 28 USC 1292(b), fileci. M/D 10—4—76
MEMORANDUM in Support of Motion for Reconsideration of the Court's
Decision Not to Dismiss Pltf's Complaint and Alternative
Motion for Order Under 28 USC 1292(b), filed.
for Stay of Depositions Until
for Reconsideration, filed.
MOTION of Deft Helena Chemical Co.,
Resolution of Pending Mocions
M/D 10-4-76
Pltf's cPOSS-MOTION for sn Order Permitting an Immediate Apveal
Under 28 USC 1292/b) Without a Stay of Discovery, filed.
S 10-4-76 - ™
Pktf's MEMORANDUM in Support of Its Cross-Notion and in Opposition
to Defts' Motions for Reconsideration and to Deft Helena
mn ‘
s Chemical Co's Motion for an Immediate Aspeal of the Court s
~ = . rs : je.
Refusal to Dismiss the Complaint and for a Stay of Discovery,
filed.
67
68
69
70 +
71
72
75
Sah pee ee ee. eee
Hees ay aan
— =. ys 3 nd - e is
.
‘orviw DOCKET CONTINUATION SHEET
<—S,- re z i CARL O. BUE, UR. ety ess
a het ee Le
/
PLAINT-FF DEFENDANT
P 74—-H-7
ROEM & KAAS CO. DAWSON CHEMICAL CC., et al | poster = yeti
PAGE ___OF PAGES
DATE NR. | PROCEEDINGS
9-17~76 76 REPLY MEMORANDUM of Defts Dawson Chemical Co., Crystal Mfg. Corp.,
and Crystal Chemical Co., filed.
1-11-76 77 Pitf's NOTICE to Take Deposition of Defts Dawson Chemical Co.,
Crystal Chemical Co., and Crystal Manufacturing Corp., on
12-14-76, filed.
1-11-76 78 Pltf's NOTICE to Take Deposition of Deft Helena Chemical Co., on
12-16-76, filed.
\-23-76| 79 (COB) MEMORANDUM & ORDER, filed. a/n, rlo
1. Defendants Motion for Reconsideration of the
Court's Decision of 8-10-76-GRANTED
2. Plaintiff's cause should be DISMISSED w/o prej-
3. All pending motions-DENIED as moot.
4. This Court's decision of 8-10-76 to decline
dismissal (Memo & Opinion 8-10-76) -wITHDRAWN
and this memo & order substituted.
l-23-76; 89 (COB) FINAL JUDGMENT, filed. a/n, rlo
12-i6-76 90 | Plaintiff's NOTICE OF APPEAL from the Court's Order entered on
November 23, 1976, filed.
12-16-76 21 | Plaintiff's COST BOND ON APPEAL (Lawyers Surety Corporaticn), filed,
12-23-76 92} Joint Notice of Appeal (defendants), filed.
2-29-76 93 | Appellant's COST BOND on Appeal (Cash Deposit of $250.00), filed.
1-28-77) 94 | Recors on Appeal consisting of all original papers mailed to
Fiith Circuit Court of Appeals.
8-28-79, 35 | Cerzitied copy of JUDGMENT by Court of Appeals datedc 7-30-79 and
issued as MANDATE on 8-24-79 Ordering that Judgment of District
Court is REVERSED and REMANDED in accordance with Opinion of
Court of Appeals and it is further ORDERED that deft-Appellees
pey pltf.-Appeliant the cost on Appeal, filed.
apne 96 | Certified copy of OPINION by Court of Appeals, filed.
wee 97 | Bill of Costs by Court of Appeals, filed.
8-28-79 Recorc on Appeal RETURNED by Court of Appeals.
DOC.1MlA REV. (1/75)
CA 74=1=790
DOCKET NO.
O€FENOANT
DAWSON CHEMICAL CO.,.et al
9-25-7
9-1-79
10-12-79
10-22-79
1 10-22-79
10-23-79
11-2-79
11-5-79
PAGE ___OF PAGES
DATE NR. PROCEEDINGS
9—- 7-79 98 (COB) ORDER to Disburse Cash Bond for Costs on Appeal, filed.
P/n. mac 1 a
9-14-79) 99 MOTION of pltf- appellant for Bill of Costs in the District Court
and Sth Circuit Court of Appeals, filed. mgc
9-14-79] 100 | BILL OF COSTS, filed. mgc ($l, 494. 19)
Hebe 75}-1or Pitts -HOTHON~TO-RHEND and -Gupplement-the-ALtfs—Sinst—amendedand
. Suppremenrtet-Compirint;-friecd-nge -
9-18-79 101 | Defts OPPOSITION to Motion for Bill of Costs, filed. mgc DD 9-19-79
9-21-79 102! Pltfs REPLY to Opposition to Motion for Bill of Costs, filed. mgc
9-25-79 103
“104
105
10-10-79 106
107
108
109
Pltfs SECOND AMENDED and SUPPLEMENTAL COMPLAINT, filed. mge
(COB) ORDER, filed. Parties ntfd.mgce
Re: Pltf Motion for S3ill.of Costs.
1. Responses due Ost. 22, 1979
2. Additional Responses due Oct. 29, 15979
3. Submission date Nov. 5, 1979
Notification re: Change of Address for atty in charge in behalf
of Helena Chemical Co., filed. mgc
SECOND AMENDED ANSWER and COUNTERCLAIM of Dawson Chemical Co.,
Crystal Manufacturing Corp. and Crystal Chemical Co., filed.nmg}
SECOND AMENDED ANSWER and COUNTERCLAIM of Helena Chemical Co.,
filed. mgc
Pltis REPLY to Counterclaim of Dawson Chemital Co., Crystal Manu-
facturing Corp and Crystal Chemical Co., filed. mgc
Defts Sawson Chemical Co, Crystal Chemical Co., and Crystal Manu-
Zacturing Co., REQUEST FOR PRODUCTION of Documents, filed.
—-o
-s
Pltis sae po to Second Amended Answer and Counter-Claim of Helena
mical Co., filed. mgc
REQUEST by deft Helena Chemical Co. for Production of Documents,
Filed. mgc
(COB) ORDER following motion conference, filed. mgc
Appearances: Ali Deaton f/pltf.
1. Pltfs Motion for Bill of Costs - GRANTED; ($1,425.03)
2. Pltfs counsel only attends.
3. Defts Counsel (Conley) does not oppose.
4. Defts Counsel (Pravel) did not appear.
OC-ttta Mev. (1/75)
eS ts ES
[32]
In THE
UNITED STATES DISTRICT COURT
For THe SourHern District or Texas
Houston Drvision
Crvm Action No. 74-H-790
Roum Anp Haas Company, a corporation
Plaintiff,
V.
Dawson CHEmIcAL Company, INc., CrysTaL
MaNvuFACTURING CorporaTION, CrystaL CHEMICAL
Company, Inc., anp HeLena CHEMICAL CoMPANY,
corporations,
Defendants.
FIRST AMENDED AND SUPPLEMENTAL
COMPLAINT
Plaintiff, for its first amended and supplemental com-
plaint against defendants alleges:
1, Plaintiff, Rohm and Haas Company (hereinafter
‘*Rohm and Haas’’), is a corporation organized and existing
under the laws of the State of Delaware with its principal
place of business at Independence Mall West, Philadelphia,
Pennsylvania 19105.
2. Defendant, Helena Chemical Company, is a corpora-
tion organized and existing under the laws of the State of
Arkansas, it is licensed to do business and it is doing busi-
ness in the State of Texas where it has regular and estab-
2
lished places of business at E] Campo, Conroe and Katy,
State of Texas, within this Judicial District.
3. Defendants, Dawson Chemical Company, Inc. and
Crystal Manufacturing Corporation are corporations or-
ganized and existing under the laws of the State of Texas.
Crystal Chemical Company, Inc. is a corporation organized
and existing under the laws of the State of Florida and it
is licensed to do business and it is doing business in the
State of Texas. Dawson Chemical Company, Inc. and Cry-
stal Manufacturing Corporation, on information and belief,
are subsidiaries of
[33]
Crystal Chemical Company, Inc. All three of these corpora-
tions have regular and established places of business at
North Post Oak Road and at Rogerdale Road in the City
of Houston, State of Texas and within this Judicial Dis-
trict.
4. On June 11, 1974, United States Patent No. 3,816,092
was duly and legally issued to Harold F. Wilson and Dougal
H. McRae for an invention in a method for selectively
inhibiting growth of undesirable plants in an area contain-
ing growing undesirable plants in an established crop (here-
inafter the ‘‘ Wilson patent’’). Rohm and Haas is and has
been the sole owner of the Wilson patent since its issuance.
COUNT I
5. This Court has jurisdiction over Count I of the
present action because it is a suit for patent infringement
arising under the Patent Laws of the United States, 28
U.S. C. § 1338(a); and defendants have regular and estab-
lished places of business in this Judicial District where
they have committed and are committing many of the acts
ve
3
of infringement hereinafter alleged, 28 U.S.C. § 1400(b).
6. Defendants have heretofore sold and offered for sale
the chemical compound 3,4-dichloropropionanilide (herein-
after ‘‘propanil’’) and have actively induced and are con-
tinuing to induce purchasers thereof to practice the meth-
ods now claimed in the Wilson patent and to proceed with
preparations to continue the practice of such infringing
activities in the future. On information and belief, defend-
ants have been aware for more than a year of the pendency
of the application for the Wilson patent and the presence
therein of patentable claims covering the methods of use
recommended by defendants to their customers and prac-
ticed by said customers pursuant to defendants’ recommen-
dations. Notwithstanding the issuance of the Wilson patent
and knowledge by defendants of its issuance, defendants
have .
[34]
continued these activities, within this Judicial District and
elsewhere, and purchasers and users of defendants’ pro-
panil have directly infringed the Wilson patent and are
being urged by defendants to continue such infringing
activities. Direct infringement by defendants’ customers
and users of their propanil pursuant to defendants’ recom-
mendations and urgings has occurred within this Judicial
District and elsewhere inter alia on June 11, 12, 13, 19, 20
and 21, 1974. Defendants are therefore actively inducing
others directly to infringe the Wilson patent. Defendants
are also contributorily infringing the Wilson patent by sell-
ing propanil for use in practicing the patented process,
knowing that it constitutes a material part of the invention
of the Wilson patent, and is especially made or especially
adapted only for the use claimed in the Wilson patent. Said
4
product is not a staple article or commodity of commerce
suitable for substantial non-infringing use.
7. Rohm and Haas has been and will continue to be
damaged by defendants’ afore-mentioned infringing acts,
and said damages are of a continuing and proliferating
nature.
COUNT II
8. This Court has jurisdiction over Count II of the
present action because it seeks a declaratory judgment to
settle an actual controversy between the parties hereto
with respect to acts taking place within this Judicial Dis-
trict, 28 U.S. C. §§ 2201 and 2202, and it arises under the
Patent Laws of the United States, 28 U.S.C. § 1338(a).
Defendants are residents of the Southern District of Texas,
28 U.S.C. § 1391(c).
9. Defendants have heretofore sold propanil together
with instructions and recommendations to purchasers and
users thereof that it be used solely in the method now
[35]
patented in the Wilson patent. At defendants’ urging and
with their knowledge, purchasers and users of defendants’
propanil practiced the method now claimed in the Wilson
patent pursuant to these instructions and recommendations.
On information and belief, defendants’ aforesaid sales, in-
structions and recommendations were with the knowledge
that Rohm and Haas had pending in the United States
Patent Office an allowed claim covering the only use of pro-
panil recommended by defendants to their customers and
users with knowledge that the Wilson patent had issued.
10. Defendants now have in their possession, within
this Judicial District and elsewhere, substantial quantities
b)
of propanil for sale packaged and labeled with instructions
to purchasers and users thereof to employ it in a manner
which necessarily infringes the claims of the Wilson patent.
Moreover, defendants have made and are now making
preparations to manufacture or purchase additional quan-
tities of said material and to advertise and otherwise induce
purchasers to employ said material to infringe the Wilson
patent. Defendants are offering and intend to continue to
offer such propanil for sale. Use of defendants’ propanil in
the manner recommended by defendants on their labels and
instructions would directly infringe the Wilson patent and
defendants’ intended sales and recommendations would
constitute active inducement of infringement of said patent.
Such use by defendants’ customers and users of their pro-
panil has occurred within this Judicial District and else-
where inter alia on June 11, 12, 13, 19, 20 and 21, 1974.
Moreover, sale of defendants’ propanil would constitute
contributory infringement of the Wilson patent because
propanil constitutes a material part of the invention
claimed in the
[36]
Wilson patent, propanil is especially, made. or. especially
adapted only for use in an infringement of said patent, and
propanil is not a staple article or commodity of commerce
suitable for substantial non-infringing use.
11. Defendants’ proposed and threatened sale of pro-
panil and their proposed and threatened active inducement
of infringement and contributory infringement of the Wil-
son patent by such sale will cause irreparable damage to
plaintiff and will continue unless enjoined by this Court.
12. An actual justiciable controversy thus exists between
the parties hereto with respect to whether the aforesaid
continued sales of propanil and recommendations by defen-
6
dants will constitute an active inducement of infringement
and contributory infringement of the Wilson patent.
WHEREFORE, Rohm and Haas prays for:
AS TO COUNT I
A. A preliminary and final injunction against further
infringement of the Wilson patent by defendants and those
controlled by or in active concert with them;
B. The costs of this action, and such other relief as the
Court may deem just and the circumstances warrant;
AS TO COUNT II
C. <A declaration that continued sales of propanil by
defendants would constitute an active inducement of in-
fringement and a contributory infringement of the Wilson
patent;
D. A preliminary and final injunction to prevent defen-
dants from directly or indirectly participating in any in-
fringement of the Wilson patent; and
E. The costs of this action and such other
[37]
relief as the Court may deem just and the circumstances
warrant.
Respectfully submitted,
Crain, WintTeERS, DEATON, JAMES
& Brieas
By /s/ James C. WINTERS
JAMES C. WINTERS
1009 San Jacinto Building
Houston, Texas 77002
713+236-0860
Attorneys-in-Charge for Plain-
tiff Rohm and Haas Company
Of Counsel:
MicHaEL J. Woop
Crain, Winters, Dzaton, James & Bricos
ArtTHuR G. ConnoLLy
Januar D. Bove, Jr.
Ruvotr E. Hurz
ConNnoL_y, Bove & Lover
Farmers Bank Building
Wilmington, Delaware 19899
302+658-9131
8
[57]
In THE
UNITED STATES DISTRICT COURT
For Tue Souruern District or TEexas
Hovston Division
Crviz Action No. 74-H-790
Roum Anp Haas Company, a corporation
Plainttf,,
v.
Dawson CHEMICAL CoMPANY, CRYSTAL
Manvuracturine Corporation, CrystaL CHEMICAL
Company, AND HeLena CHEMICAL COMPANY,
corporations,
Defendants.
FIRST AMENDED ANSWER AND COUNTERCLAIM
OF DAWSON CHEMICAL COMPANY,
CRYSTAL MANUFACTURING CORPORATION
AND CRYSTAL CHEMICAL COMPANY
NOW COME Defendants Dawson Chemical Company,
Crystal Manufacturing Corporation, and Crystal Chemical
Company, and in answer to the Complaint says .
1. The allegations of paragraph 1 of the Complaint
are admitted.
2. These defendants have insufficient knowledge upon
which to form a belief as to the allegations of paragraph 2
of the Complaint, and therefore such allegations are denied.
3. The allegations of paragraph 3 of the Complaint
are admitted, except that neither Dawson Chemical Com-
9
pany nor Crystal Chemical Company has ‘‘Ine.’’ in its cor-
porate name.
4. In answer to the allegations of paragraph 4 of the
Complaint, these defendants admit that United States
Patent No. 3,816,092 (the ‘‘ Wilson patent’’) was issued on
June 11, 1974 on the application of Harold F. Wilson and
Dougal 1. McRae, and that plaintiff Rohm & Haas Company
(‘‘Rohm and Haas’’) is and has been the sole owner of the
said patent since its issu-
[58]
ance. Defendants deny that such patent was duly and
legally issued, and that it covers an invention.
5. In answer to paragraph 5 of the Complaint, these
defendants admit that jurisdiction and venue are proper
under the statutes set forth, however these defendants
deny that they have committed or are committing any acts
of infringement as alleged.
6. These defendants admit that Crystal Chemical Com-
pany (‘‘Crystal’’) has heretofore sold and offered for sale
the chemical compound 3, 4-dichloropropionanilide (“pro-
panil’’) in containers which are marked with instructions
for the use of propanil for the control of weeds in rice
fields. These defendants further admit that they have been
aware for more than a year of the pendency of the appli-
cation for the Wilson patent and that Rohm and Haas
was seeking in such application to patent claims covering
methods of use recommended by Crystal to its customers
and practiced by said customers pursuant to such recom-
mendation. These defendants further admit that since June
17, 1974, these defendants have known that United States
Patent No. 3,816,092 was issued on June 11, 1974. These
defendants further admit that after the issuance of the
10
Wilson patent Crystal is still selling and offering for sale
the chemical compound propanil in containers which are
marked with instructions for its use to control the growth
of weeds in rice fields. Other than as specifically admitted,
the allegations of paragraph 6 of the Complaint are denied.
7. The allegations of paragraph 7 of the Complaint are
denied.
8. The allegations of paragraph 8 of the Complaint are
admitted.
[59]
9. In answer to paragraph 9 of the Complaint these
defendants admit that Crystal has sold propanil to pur-
chasers with instructions and recommendations for use in
controlling the growth of weeds in rice fields, and that
purchasers and users thereof used the propanil in that
manner. Defendants further admit that they have been
aware for more than a year of the pendency of the applica-
tion for the Wilson patent and that Rohm and Haas was
seeking in such application to patent claims covering
methods of use recommended by Crystal to its customers
and practiced by said customers pursuant to such recom-
mendations. Defendants further admit that they have
known since June 17, 1974 that United States Patent No.
3,816,092 had issued on June 11, 1974. Other than as specifi-
cally admitted, the allegations of paragraph 9 of the Com-
plaint are denied.
10. In answer to paragraph 10 of the Complaint, these
defendants admit that Crystal now has in its possession,
within this judicial district and elsewhere, substantial quan-
tities of propanil for sale packaged and labeled with in-
structions to purchasers and users thereof to employ it
to control the growth of weeds in rice fields. These defend-
ants further admit that Crystal has made and is now mak-
11
ing preparations to manufacture additional quantities of
propanil and to advertise and seek purchasers of said
material. These defendants further admit that Crystal is
offering and intends to continue to offer such propanil for
sale. These defendants further admit that propanil sold
by Crystal has been used in this Judicial District since
June 11, 1974, but have no knowledge of the special dates
of such use. Other than as specifically admitted, the alle-
gations of paragraph 10 of the Complaint are denied.
[60]
11. The allegations of paragraph 11 of the Complaint
are denied.
12. The allegations of paragraph 12 of the Complaint
are admitted.
13. The Wilson patent is invalid and of no force or effect.
14. Rohm and Haas is estopped to contend that the
Wilson patent has such scope that it covers the methods
used by customers of Crystal.
15. Propanil is a commodity of commerce suitable for
substantial uses which do not infringe the Wilson patent.
16. Neither Dawson Chemical Company nor Crystal
Manufacturing Corporation makes, sells or offers to sell
propanil in any form or for any purpose.
17. The Wilson patent is unenforceable because Rohm
and Haas has misused it, in that Rohm and Haas has sold
propanil with an implied license to purchasers of propanil
from Rohm and Haas to use the method covered by the
claims of the Wilson patent, and at the same time has
refused to grant licenses to use the method which will allow
licensees to purchase propanil from others, even though
propanil itself is unpatented, thereby tying the grant of a
12
license to the purchase of the unpatented material and
attempting to monopolize the market in the unpatented
material.
18. The Wilson patent is unenforceable because Rohm
and Haas has misused it, in that for at least two years
prior to the issue of the Wilson patent representatives of
Rohm and Haas coerced distributors into refusing to pur-
chase propanil from anyone but Rohm and Haas by the
threat that uncooperative distributors would be cut off from
a supply after the patent issued.
[61]
Counterclaims
1. This is an action for violation of the Antitrust Laws
of the United States, Title 15 U. S. C. Sections 1, 2 and 14.
This court has jurisdiction of the subject matter of this
action pursuant to Title 28 U. 8. C. Section 1337.
2. For many years prior to the issue of the Wilson
patent and continuing to the present, both Rohm and Haas
and Crystal have manufactured and sold propanil for use
in controlling the growth of weeds in rice fields, a use
which Rohm and Haas contends infringes the Wilson pat-
ent. Propanil itself is not patented, the patent thereon
having been held invalid in litigation in which Rohm and
Haas and Crystal were accused of infringement, and having
been dedicated to the public by the patent owner, Monsanto
Company.
3. No other chemical is known which will effectively
compete with propanil in the control of weeds in rice fields,
so propanil is in much demand by rice farmers.
4. On information and belief, for two years or more
prior to the issue of the Wilson patent representatives of
Rohm and Haas told propanil distributors that Rohm and
13
Haas was going to get a patent on the use of propanil to
control weeds in rice, and warned such distributors that
after the patent issued Rohm and Haas would favor those
distributors who had, prior to the issue of the patent, pur-
chased propanil only from Rohm and Haas and who had
refused to purchase from Crystal or other suppliers of
propanil. As a result of this coercion, on information and
belief some distributors entered into agreement with Rohm
and Haas that they would purchase propanil only from
Rohm and Haas, even before the Wilson patent issued. On
information and belief,
[62]
before Monsanto Company dedicated to the public the pat-
ent which covered propanil, some distributors were coerced
into agreeing to purchase propanil only from Monsanto or
Rohm and Haas. On information and belief, this resulted
from an agreement between Monsanto and Rohm and Haas
to divide the market in propanil between them, using Mon-
santo’s patent, which was declared invalid, and Rohm and
Haas’ hoped-for future patent, as a lever to exclude others
from the market. As a result of such agreements and ac-
tions, Crystal was foreclosed from a substantial share of
the market in propanil before the Wilson patent was issued
and is still foreclosed from a substantial share of the mae
ket, whereby Crystal has suffered injury and will continue
to suffer injury unless such agreements and actions cease.
5. Rohm and Haas has stated to Crystal that it will
grant licenses under the Wilson patent only to users who
purchase propanil made by Rohm and Haas, and that such
licenses extend only to the use of the propanil made by
Rohm and Haas. Rohm and Haas refuses to grant licenses
under which users will be licensed to practice the patented
process with propanil made or supplied by Crystal or other
14
competitors of Rohm and Haas. Thus, Rohm and Haas has
tied the granting of a license under the Wilson patent to
the purchase of propanil from Rohm and Haas, has re-
strained trade in propanil, and has attempted to establish
a monopoly in propanil, all of which has caused and will
continue to cause injury to Crystal.
6. The total annual retail market in propanil in inter-
state commerce in the United States is, on information and
belief, about $14,000,000.00, of which market Rohm and
Haas has about one-half, so that the amount of interstate
commerce which is affected by Rohm and Haas’ actions is
not insubstantial.
[63]
7. Rohm and Haas intends to monopolize the sale of
propanil, an unpatented chemical, in the United States, and
to utilize its patent on a method of use of propanil to accom-
plish such monopolization by tying licenses under the pat-
ent to sales of propanil. Such acts by Rohm and Haas will,
if allowed to continue, substantially eliminate competition
and tend to create a monopoly in the sale of propanil,
thereby causing substantial injury to Crystal.
8. The aforesaid acts of Rohm and Haas constitute
violations of Sections 1 and 2 of the Sherman Act, Title 15
U. 8. C. Sections 1 and 2, and Section 3 of the Clayton Act,
Title 15 U. S. C. Section 14, for which Crystal should re-
cover damages and an injunction.
WHEREFORE, defendants Dawson Chemical Company,
Crystal Manufacturing Corporation, and Crystal Chemical
Company pray:
1. That.the Complaint herein be dismissed.
2. That the Court decree the Wilson patent to be invalid
and unenforceable, and that defendants jointly or singly
15
have not infringed, induced infringement of, or contribu-
torily infringed said patent.
3. That the Court grant an injunction enjoining Rohm
and Haas and any of its privies from further asserting,
contending, claiming or alleging that the sale of propanil
by any defendant constitutes infringement, inducement of
infringement or contributory infringement.
4, ; That they be awarded their costs and attorneys’ fees
in this suit and such other and further relief as to this court
may seem just and proper.
Defendant Crystal Chemical Company further prays:
[64]
5. That the court decree that Rohm and Haas has
entered into agreements in restraint of trade in violation
of Section 1 of the Sherman Act, Title 15 U. S. C. Section
1, and award compensatory damages to Crystal for such
violation. |
6. That the court decree that Rohm and Haas has at-
tempted to monopolize the sale of propanil in the United
States in violation of Section 2 of the Sherman Act, Title
15 U. S. C. Section 2, and award compensatory damages to
Crystal for such violation.
7. That the court decree that Rohm and Haas is guilty
of tying arrangements in violation of Section 3 of the Clay-
ton Act, Title 15 U. S. C. Section 14, and award compensa-
tory damages to Crystal for such violation.
8. That the damages awarded for violations of the Anti-
trust Laws be trebled.
9. That the court grant an injunction enjoining Rohm
and Haas and any of its privies from hereafter performing
16
or threatening or seeking to perform any of the acts found
to be in violation of the Antitrust Laws.
Burier, Brinton, Rice, Coox &
KNAPP
By /s/ Joun L. McConn, Jr.
John L. McConn, Jr.
Attorney in Charge
Nep L. ConLry
Exurotr Cox
Attorneys for Defendants
1101 Esperson Buildings
Houston, Texas 77002
(713) 224-6711 — Ext. 295
CERTIFICATE OF SERVICE (OMITTED)
~
17
[90]
In THE
UNITED STATES DISTRICT COURT
For Tue Souruern District or Texas
Houston Drvision
Crvim Action No. 74-H-790
Roum anp Haas Company, a corporation
Plaintiff,
V.
Dawson CHeEmicaL Company, OrysTaL
Manvuracturine Corporation, CrystaL CHEMICAL
Company, AND Hetena CuemicaL Company,
corporations,
Defendants.
REPLY TO COUNTERCLAIM OF
CRYSTAL CHEMICAL COMPANY
Defendants have filed two papers entitled “Answer and
Counterclaim of Dawson Chemical Company, Crystal Manu-
facturing Corporation and Crystal Chemical Company”?
and “First Amended Answer and Counterclaim of Dawson
Chemical Company, Crystal Manufacturing Corporation
and Crystal Chemical Company”. Although so captioned,
the allegations of the counterclaim (which is identical in
each paper) and its prayers for relief indicated that it was
filed only on behalf of Crystal Chemical Company. The
following Reply to the Counterclaim is directed to the coun-
terclaim stated in each paper and is based on this under-
standing.
Plaintiff, Rohm and Haas Company, for its Reply to the
18
Counterclaim of Crystal Chemical Company (hereafter
“Crystal Chemical’’) :
1. Admits that Crystal Chemical purports to plead an
action for violation of the Antitrust Laws, Title 15, U.S. C.
Sections 1, 2 and 14 and that this Court has jurisdiction
but denies that any such violation has occurred;
[91]
2. Admits the averments of paragraph 2 except that it
is without knowledge or information sufficient to form a
belief as to the truth of the averment that for many years
Crystal has manufactured and sold propanil ;
3. Denies the averments of paragraph 3 except that it
admits that propanil is in much demand by rice farmers;
4. Denies the averments of paragraph 4;
5. Denies the averments of paragraph 5 except that
it admits that it has advised Crystal Chemical and other
suppliers of propanil that no license under the Wilson
patent is available to them at the present time;
6. It is without knowledge or information sufficient to
form a belief as to the truth of the averments of para-
_graph 6;
a
Seq
Z Déntiesthe averments of paragraph 7;
8. Denies the averments of paragraph 8;
9. Plaintiff's present licensing policy concerning the
Wilson patent is expressly sanctioned by the provisions
of Title 35 U. S. C. § 271(d).
WHEREFORE, plaintiff denies that Crystal Chemical
is entitled to the relief prayed for in the counterclaim,
or to any relief, prays that the counterclaim be dismissed
19
with costs and reasonable attorney fees; and prays that
the relief sought in the complaint be granted.
Crain, Winters, Deaton, James
& Brices
By /s/ James C. WINTERS
James C. Winters
1009 San Jacinto Building
Houston, Texas 77002
(713) 236-0860
Attorneys-in-Charge for Plaintiff
.Rohm and Haas Company
Of Counsel:
Michael J. Wood
Crain, Win TERS, Deaton,
JAMES & Briaes
Arthur G. Connolly
Januar D. Bove, Jr.
Rudolf E. Hutz
ConNno..y, Bove & Lopes
Farmers Bank Building
Wilmington, DE 19899
(302) 658-9141
20
[118]
In THE
UNITED STATES DISTRICT COURT
For Tue SoutruHern District or TExas
Hovston Division
Crvm Action No. 74-H-790
Roum anp Haas Company, a corporation,
Plaintiff,
v.
Dawson CHEemicaL Company, Inc., CRYSTAL
Manvuracturine CorporaTION, CrystaL CHEMICAL
Company, Inc., anD Hetena CHEMICAL CoMPANY,
corporations,
Defendants.
ANSWERS BY DEFENDANT HELENA
CHEMICAL COMPANY TO PLAINTIFF'S
INTERROGATORIES (FIRST SET)
NOW COMES, HELENA CHEMICAL COMPANY and
answers Plaintiff's Interrogatories (First Set), as follows,
using the same numbers for the answers as for the inter-
rogatories:
* * *
[122]
Interrogatory No. 12: Does defendant deny that is has
infringed (whether directly or contributorily or by active
inducement) any claim of the Wilson patent? If the answer
is other than an unqualified negative, identify the claims
defendant admits it has infringed and as to the remainder
21
of the claims, state the complete basis for the answer given
including, without limitation, as to each claim:
(a) identify the composition, product or article made,
used, sold or offered for sale by defendant since June 11,
1974 which contains propani!, to which the denial pertains:
(b) quote the precise language in the claim which alleg-
edly does not properly describe the composition, product, or
article or does not
[123]
properly describe the method by which the product, composi-
tion or article is used and provide the proper description
alleged to conform correctly to the composition, product,
article or process;
(c) describe any tests or observations conducted by de-
fendant leading to the denial of infringement and describe
the circumstances thereof;
(d) identify each document which relates, reflects or re-
fers to the basis for each denial and any tests or observa-
tions conducted by or on behalf of defendant which relate
to the denial; and
(e) identify the individual(s) who firm concluded there
was no infringement and the individual(s) most familiar
with the factual basis for the denial.
Answer to Interrogatory No. 12: Since Plaintiff does
not contend claims 4, 5 and 7 of the Wilson patent are in-
fringed by Helena, no answer is required as to those claims.
As to claims 1-3, 6 and 8-12, Helena denies infringement.
(a) Helena Brand Propanil-3.
Helena Brand Propanil-4.
(b) Not applicable.
(c) None.
(d) None.
(c) Attorneys for Helena concluded there was no in-
fringement on the basis of the invalidity of the Wilson
patent because of Plaintiff’s misuse thereof, and other
grounds hereinafter set forth.
[131]
HELENA CHEMICAL
COMPANY
By: /s/ J. Charles Blue
President
STATE OF TENNESSEE
COUNTY OF SHELBY
Notary for J. Charles Blue, President of Helena Chemical
Company — stated under oath that the foregoing “Answers
by Defendant Helena Chemical Company to Plaintiff’s In-
terrogatories (First Set)” are true and correct to the best
of his knowledge.
[132]
CERTIFICATE OF SERVICE (OMITTED)
23
[135]
IN THE
UNITED STATES DISTRICT COURT
For Tue Soursern Disrrict or Texas
Houston Drvision
Crvm Action No. 74-H-790
Roum anp Haas Company a corporation,
Plaintiff,
V.
Dawson CHeEmicaL Company, et al
Defendant
ANSWERS BY DAWSON CHEMICAL COMPANY
CRYSTAL MANUFACTURING CORPORATION AND
CRYSTAL CHEMICAL COMPANY TO PLAINTIFF'S
INTERROGATORIES TO DEFENDANT’S (FIRST SET)
Defendants, Dawson Chemical Company and Crystal
Manufacturing Corporation have not since June 11, 1974
made, used, sold or offered for sale any product which
contains propanil, nor have they taken part in any of the
other acts as to which inquiry is made in the interrogatories.
Accordingly the answers of those Defendants are in the
negative to each of the interrogatories, and all the answers
hereinafter set forth are the answers of Crystal Chemical
Compauy only.
24
[142]
20. When did defendant or someone acting in its behalf
first learn that Rohm and Haas had pending in the United
States Patent Office a patent application containing claims
embracing a method of using propanil as a post emergent,
selective herbicide?
ANSWER: June, 1968.
21. When did defendant or someone acting in its behalf
first learn that Rohm and Haas had pending in the United
States Patent Office a patent application containing allowed
claims embracing a method of using propanil as a post
emergent, selective herbicide?
ANSWER: June, 1968.
22. When did defendant or someone acting in its behalf
first learn of United States patent application SN. 96,089
filed March 16, 1961 and the pendency therein of allowed
claims embracing a method of using propanil as a post
emergent, selective herbicide?
[143]
ANSWER: June, 1968.
BO Oe iri seeibtniataananesemnionine
Joe ©. Eller, President of
Crystal Chemical Company,
Dawson Chemical Company,
and Crystal Manufacturing
Corporation
z
?
4
4
£
&
i.
25
[156]
IN THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority on this the
15th day of October, 1974, personally appeared Joe C.
Eller, known to me to be the person who signed the fore-
going instrument, and, being duly sworn, stated to me that
the answers set forth therein are true, to the best of his
knowledge and belief.
s/ W. W. VarpEMan
Notary Public in and for
Harris County, Texas.
CERTIFICATE OF SERVICE
(OMITTED)
26
[182]
In THE
UNITED STATES DISTRICT COURT
For Tue SourHern District or TExas
Hovston Division
Crviz Action No. 74-H-790
Roum anp Haas Company, acorporation =
Plaintiff,
Vv.
Dawson CHeEemIcaL Company, CRYSTAL
MANUFACTURING CoRPORATION, CRYSTAL CHEMICAL
Company, AND HELENA CHEMICAL CoMPANY,
corporations,
Defendants.
PLAINTIFF ROHM AND HAAS COMPANY’S
RESPONSE TO DEFENDANT CRYSTAL
CHEMICAL COMPANY’S INTERROGATORIES
(FIRST SET)
Plaintiff Rohm and Haas Company responds as follows
to defendant Crystal Chemical Company’s interrogatories
(first set), said interrogatories having been modified pur-
suant to the Procedural Stipulation between the parties:
1. Identify all documents evidencing any agreement be~
tween plaintiff and any other person, firm or corporation
relating to the marketing of propanil.
2. Identify all documents evidencing any agreement
between plaintiff and any distributor, purchaser or user
of propanil relating to the marketing of propanil.
27
3. State whether plaintiff has ever made any oral agree-
ment with anyone, other than its employees, concerning the
marketing of propanil, and if so, state whom the agreement
[183] j
was with, when it was made, and the names of plaintiff's
personnel knowledgeable about such agreements.
Response to Interrogatories 1-3
As presently advised, plaintiff has made no oral agree-
ments concerning the marketing of propanil. In lieu of
the identification requested in interrogatories 1-2, the doc-
uments will be produced for inspection and copying in
accord with the conditions set forth in the concurrently
filed response to defendant Crystal Chemical Company’s
request for production.
4. State whether or not plaintiff is aware of any use
for propanil which does not infringe the Wilson patent.
5. If the answer to the preceding interrogatory is other
than an unqualified negative, state, as to each such use,
the period or periods of time during which propanil was
so used, the place where the propanil was so used, and
who the individuals were who made such use of propanil
and identify the individuals most knowledgeable of the
answer to this interrogatory; and identify all documents
which relate, reflect or refer to the facts stated in answer
to this interrogatory.
Response to Interrogatories 4 and 5
No.
6. State whether since June 11, 1974 anyone in the
United States has requested, either orally, in writing, or
28
by any other means, a license from plaintiff under the
Wilson patent.
Response to Interrogatory 6
Yes.
[184]
7. If the answer to the preceding interrogatory is in the
affirmative, as to each such request state:
(a) the name of the person who made such a request;
(b) the date of the request;
(c) the type of license which was requested ;
(d) the response to such request which was given by
plaintiff; and
(e) identify the individuals most knowledgeable of the
answers to the foregoing interrogatory subparts and
identify all documents which relate, reflect or refer
to the facts stated in such answers.
Response to Interrogatory 7
A) On June 18, 1974, Mr. Charles Blue, President of
Helena Chemical Company, telephoned Mr. Ronald Cheves,
Area Marketing Manager for Agricultural Chemicals at
Rohm and Haas, and in the course of this conversation he
asked if licenses (type unspecified) under the Wilson patent
were available. Mr. Cheves referred Mr. Blue to Connolly,
Bove & Lodge. The individuals most knowledgeable are
those identified above. The only document known to exist
is an internal Connolly, Bove & Lodge memo written by
Januar D. Bove, Jr., Esq. on June 18, 1974 which docu-
; *
29
ment is deemed privileged by reason of the work product
doctrine.
B) On June 18, 1974, Mr. Charles Blue, President of
Helena Chemical Company, telephoned trial counsel for
plaintiff, Rudolph E. Hutz, Esq. of Connolly, Bove & Lodge,
Wilmington, Delaware. In the course of this conversation,
Mr. Blue inquired if licenses (type unspecified) were avail-
able under the Wilson patent and was advised that at the
present time no licenses would be granted. The most
knowledgeable individuals are those identified above and
the only document known to exist is an internal Connolly,
Bove & Lodge memo written by Rudolph E. Hutz, Esq. on
June 18, 1974 which document is deemed privileged by
reason of the work product doctrine.
[185]
C) On June 19, 1974, Ned L. Conley, Esq., trial counsel
for defendants Dawson Chemical Company, Crystal Manu-
facturing Corporation and Crystal Chemical Company,
telephoned trial counsel for plaintiff, Rudolf E. Hutz, Esq.
of Connolly, Bove & Lodge, Wilmington, Delaware. In the
course of this conversation, Mr. Conley asked if licenses
(type unspecified) were available under the Wilson patent
and was advised that at the present time no licenses would
be offered. The most knowledgeable individuals are those
identified above. The only document known to exist is an
internal Connolly, Bove & Lodge memo written by Rudolf
E. Hutz, Esq. on June 19, 1974 which document is deemed
privileged by reason of the work product doctrine.
D) On August 2, 1974, Januar D. Bove, Jr., Esq. and
Rudolf E. Hutz, Esq. of Connolly, Bove & Lodge, Wilming-
ton, Delaware, trial counsel for plaintiff, met with Ned L.
Conley, Esq. and B. R. Pravel, Esq., trial counsel for
defendants. During the meeting, Messrs. Conley and Pravel
30
mentioned the possibility of a license (type unspecified)
under the Wilson patent and were advised that at the
present time no licenses were available. The most knowl-
edgeable individuals are those identified above. The only
document known to exist is an internal Connolly, Bove &
Lodge memo written by Januar D. Bove, Jr., Esq. and
Rudolf E. Hutz, Esq. on August 6, 1974 which document is
deemed privileged by reason of the work product doctrine.
E) On August 27, 1974, S. Leslie Misrock, Esq. of the
firm of Pennie & Edmonds, 330 Madison Avenue, New
York, NY made a general inquiry concerning the avail-
ability of licenses (type unspecified) under the Wilson
patent. The request was directed to George W. F. Simmons,
Esq., Assistant Secretary of Rohm and Haas and Manager
of the Patent Department. Mr. Simmons responded that
at the present time no licenses were available. No docu-
ments respecting this request are known to exist. Mr.
Misrock is presumed to be the most knowledgeable con-
cerning the request.
[186]
F) On or about September 9, 1974, Rohm and Haas
Company received an undated letter purporting to be from
John R. Denison of Iowa, LA. The most knowledgeable
person about this letter reading:
‘‘Rohm & Haas Company
Agricultural Chemical Division
Independence Mall West
Philadelphia, Pa. 19105
Gentlemen:
I would like to have a license under your U.S. Patent
No. 3,816,092 to use Propanil on my rice fields.
31
Please let me know on what terms you will grant a
license.
Very truly yours,
John R. Denison
Rt. 1 Box 34
Iowa, La. 70647”
is believed to be Ned L. Conley, Esq. The only documents
known to plaintiff referring to this letter are a) a letter
dated September 11, 1974 from Januar D. Bove, Jr., Esq.
to J. Fay Hall, Esq., General Counsel of Rohm and Haas
and b) an internal memo of Connolly, Bove & Lodge written
by Rudolf E. Hutz, Esq. dated September 10, 1974 which
documents are deemed privileged under the work product
and attorney-client doctrines. On advice of counsel, and
because the letter was not a bona fide request for a license
— but rather a sham and pretext designed by counsel for
defendant Crystal Chemical Company — no response has
been or will be made.
8. Identify all agreements between plaintiff and Mon-
santo Company relating to or arising out of Interference
No. 93751 in the United States Patent Office, and identify
the
[187]
individual or individuals most knowledgeable about any
such agreements and the negotiations leading up to them.
Response to Interrogatory 8
The only agreement between Rohm and Haas and Mon-
santo relating to or arising out of Interference No. 93,751
is the agreement filed in the United States Patent Office
on January 15, 1973 pursuant to 35 U.S.C. §135(e). A
32
copy will be made available to counsel for defendant Crys-
tal Chemical Company pursuant to the conditions of the
concurrently filed response to defendant Crystal Chemical
Company’s request for documents.
The most knowledgeable individuals concerning the agree-
ment are J. Fay Hall, Esq., General Counsel for Rohm and
Haas Company, and Robert J. Whitesell, Vice-President
of Rohm and Haas Company.
9. State whether, prior to June 11, 1974, any representa-
tive of plaintiff made any statement to any prospective
purchaser or user of propanil concerning the expected issue
of the Wilson patent.
Response to Interrogatory 9
Yes.
10. Identify each communication between plaintiff and
its sales representatives and marketing personnel which
refers to uses for propanil.
Response to Interrogatory 10
As presently advised, none.
[188]
11. State whether plaintiff is aware of any proposed
use for propanil other than in the method covered by the
claims of the Wilson patent; and, if the answer is other
than an unqualified negative, state where, when and by
whom all such proposals have occurred, and identify all
documents which relate, reflect or refer to the facts stated
and the persons most knowledgeable of such facts.
Response to Interrogatory 11
No.
es
33
12. State whether plaintiff sells propanil in the United
States for use by rice growers in the United States.
Response to Interrogatory 12
Yes.
13. If the answer to the preceding interrogatory is in
the affirmative, state whether plaintiff recommends such
propanil be used by rice growers for controlling the growth
of weeds in rice fields.
Response to Interrogatory 13
Yes.
[189]
ROHM AND HAAS COMPANY
By /s/ Gerorce W. F. Simmons
STATE OF PENNSYLVANIA
COUNTY OF PHILADELPHIA ( 5%*:
GEORGE W. F. SIMMONS, being duly sworn, deposes
and says that he is Assistant Secretary of the plaintiff,
Rohm and Haas Company, in the present action; that the
foregoing response to interrogatories are answered by him
as an officer of plaintiff; that said responses are based
upon information received by him from the records and
employees of plaintiff or upon knowledge obtained by him
during the term of his employment; that to the best of
his knowledge and belief said responses are true and
complete.
/3/ Gerorce W. F. Smmmons
34
Sworn to and subscribed before me this 14th day of
October 1974.
/s/ Lauran A. Rago
Notary Pub'c
LILLIAN A. RAGO
Notary Public, Philadelphia, Philadelphia Co.
My Commission Expires December 14, 1974
[190]
CERTIFICATE OF SERVICE (OMITTED)
35
[193]
In THE
UNITED STATES DISTRICT COURT
For Tue SoutHeRN District oF TEexas
Houston Drvision
Crvm Action No. 74-H-790
Roum anp Haas Company, a corporation,
Plaintiff,
V.
Dawson CuemicaL Company, Inc., CrysTaL
MANUFACTURING CoRPOoRATION, CrysTaAL CHEMICAL
Company, Inc., anD HeLena CHEMICAL CoMPANY,
corporations,
Defendants.
STIPULATION
The parties hereto, by and through their respective
attorneys, hereby stipulate for all of the purposes of this
proceeding only as follows:
1. This Court has jurisdiction of the parties and subject
matter, and venue is proper.
2. On June 11, 1974, United States Patent 3,816,092
issued to Harold F. Wilson and Dougal H. McRae (here-
inafter the ‘‘Wilson patent’’). Rohm and Haas Company
36
(hereinafter ‘‘Rohm and Haas’’) is and has been the sole
owner of the Wilson patent since its issuance. The Wilson
patent contains the following claims:
“J, A method for selectively inhibiting growth of
undesirable plants in an area containing growing un-
desirable plants in an established crop, which com-
prises applying to said area 3, 4-dichoropropionanilide
at a rate of application which inhibits growth of said
undesirable plants and which does not adversely affect
the growth of said established crop.”’
“2, The method according to claim 1 wherein the
3, 4-dichloropropionanilide is applied in a composition
comprising 3,4-dichloropropionanilide and an inert
diluent therefor at a rate of between 0.5 and 6 pounds
of 3, 4-dichloropropionanilide per acre.’’
“3. The method according to claim 1 wherein most
of the undesirable plants are destroyed by 3, 4-dichlor-
opropionanilide applied thereto without substantial ad-
verse effect on the crop growiug therewith.’’
[194]
“6. The method according to claim 2 wherein the
established crop is monocotyledonous.’’
“8. The method according to claim 2 wherein the
undesirable plants include monocotyledonous.’’
“9 The method according to claim 2 wherein the
undesirable plants include dicotyledenous plants.’’
“10. The method according to claim 2 wherein the
established crop is a grain crop.’’
“11. The method according to claim 2 wherein the
undesirable plants include barnyardgrass.’’
37
“12. A method for selectively inhibiting the growth
of growing, tender, undesirable, annual plants which
are susceptible to 3,4-dichloropropionanilide, said un-
desirable plants growing in an area containing an es-
tablished monocotyledonous crop which is resistant to
3,4-dichloropropionanilide, which comprises applying
to said undesirable plants a composition comprising
3, 4-dichloropropionanilide and an inert carrier there-
for at a rate of application which inhibits growth of
said undesirable plants and which does not substan-
tially effect the growth of said established monocoty-
ledonous crop.”
3. Both before and after June 11, 1974, the issue date
of the Wilson patent, defendants have sold formulations
containing 3, 4-dichloropropionanilide, which is also known
as “propanil”. After they were served with the Complaint
in this suit, such sales were with knowledge of the Wilson
patent. Both before and after June 11, 1974, purchasers of
defendants’ propanil formulations have carried out in this
country the method described on the labels attached hereto
as Exhibits 1-6. Defendants knew when they sold their
propanil formulations that such formulations would be
used by purchasers in carrying out the methods described
on those labels. Defendants are continuing and intend to
continue the making and/or selling and offering of propanil
formulations for sale in this country with the same recom-
mendations and instructions. Defendants, however, contend
that the Wilson patent is invalid and unenforceable, and
that defendants are not liable as infringers or contributory
infringers.
[195]
4. Based upon the representations of defendants that
they have recommended the use of their propanil products
38
only for controiling weeds in rice crops, plaintiff does not
charge infringement of either claim 4, 5 or 7 of the Wilson
patent.
5. Rohm and Haas makes and sells the chemical com-
pound, 3, 4-dichloropropionanilide, known as propanil, in
various formulations in this country, with instructions to
use the propanil in carrying out the steps of the Wilson
patent in suit 3,816,092. Purchasers of the Rohm and Haas
propanil formulations in this country are impliedly licensed
by operation of law to use the method of the Wilson patent.
Each of defendants have requested a license under the
Wilson patent. Rohm and Haas stated in reply to such
requests that it has no present intention of granting a li-
cense under the Wilson patent to any of defendants or to
propanil users, except with purchases of propanil from
Rohm and Haas, which have implied licenses by operation
of law. To date, Rohm and Haas has not granted a written
license to anyone under the Wilson patent, and it does not
intend at the present time to grant such a license. Rohm
and Haas has never received any payment from its pro-
panil customers who use the Wilson patent method other
than the purchase price of the propanil.
6. In a suit by Monsanto Company against Rohm and
Haas for patent infringement, Monsanto’s Patent 3,382,280
claiming the chemical compound, 3, 4-Dichloropropionan-
ilide per se, was held invalid. Propanil and the various
formulations of it presently sold by Rohm and Haas are
unpatented chemicals.
[196]
7. Defendants represent that the only products con-
taining propanil sold by them, since the issuance of the
Wilson patent, are the products described in the six labels
—
39
attached hereto and that sales of such propanil products
have been made in containers bearing such labels,
PraveL & WiLson Crain, Winters, Deaton, JAMES
& Briaas
By /s/ B. R. Praver
B. R. Pravel By /s/ James C. Winters
2019 Marathon James C. Winters
Building 1009 San Jacinto Building
Houston, Texas 77002 Houston, Texas 77002
713-224-2020 713-236-0860
Attorneys for Helena Attorneys for Plaintiff
Chemical Company
Butier, Binion, Rice, Coox
& Kwapp
By /s/ Nev L. Conuzy
Ned L. Conley
1100 Esperson Buildings
Houston, Texas 77002
713-224-6711
Attorneys for Dawson Chemical
Company, Inc., Crystal Manufac-
turing Corporation and Crystal
Chemical Company, Inc.
[197]
EXHIBITS 1-6 (OMITTED AND
REPRODUCED IN SEPARATE VOLUME)
40
[222]
In THE
UNITED STATES DISTRICT COURT
For Tue SoutHern District or TEexas
Houston Drvision
Crvm. Action No. 74-H-790
Roum anp Haas Company, a corporation, ver
Plaintiff,
Vv.
Dawson CxuemicaL Company, Ino., CrysTaL
Manuracturine Corporation, CrystaL CHEMICAL
Company, Inc., anD Hetena CHEMICAL CoMPANY,
corporations
ball Defendants.
DEFENDANT DAWSON CHEMICAL COMPANY’S
CRYSTAL MANUFACTURING CORPORATION'S and
CRYSTAL CHEMICAL COMPANY’S
MOTION FOR SUMMARY JUDGMENT
Defendants Dawson Chemical Company, Crystal Manu-
facturing Corporation, and Crystal Chemical Company,
hereinafter referred to as Defendant Crystal Chemical Co.,
move the Court to enter, pursuant to Rule 56 of the Federal
Rules of Civil Procedure, a summary judgment in Defend-
ant Crystal Chemical Co. favor dismissing the claims
alleged in Count I of the complaint on the ground that there
is no genuine issue as to any material fact and that Defend-
ant Crystal Chemical Co. is entitled to judgment as a matter
of law.
a
41
Defendant Crystal Chemical Co. would show that Plain-
tiff is the owner of a method patent and grants licenses
under said method patent only to purchasers from Plaintiff
of the unpatented chemical product used in the practice of
Plaintiff’s patented method, while at the same time Plain-
tiff refuses
[223]
to grant licenses to purchasers from Defendant Crystal
Chemical Co. of the same unpatented chemical product and
sues Defendant Crystal Chemical Co. for contributory
infringement seeking injunctive relief to prevent Defendant
Crystal Chemical Co. from making and selling the said
unpatented chemical product, which acts constitute a
scheme and pattern of conduct to extend the economic
effect and limited monopoly of Plaintiffs method patent
and therefore constitute misuse by Plaintiff of Plaintiff's
method patent, which misuse renders Plaintiff’s said
method patent unenforceable and requires this court to
dismiss Plaintiff’s Count I and in view of Plaintiff’s with-
drawal of Count II by the Procedural Stipulation filed in
this action on October 31, 1974, requires summary judgment
in favor of Defendant Crystal Chemical Co.
This motion is based upon:
(a) The pleadings on file in this action,
(b) Plaintiff Rohm and Haas Company’s Response to
Defendant Crystal Chemical Company’s Inter-
rogatories (First Set),
(c) The agreed to facts set forth in the Stipulation
filed in this action on October 30, 1974, and
(d) The attached Memorandum in Support of Defend-
ants Dawson Chemical Company’s, Crystal Manu-
42
facturing Corporation’s and Crystal Chemical
Company’s Motion for Summary Judgment.
In accordance with Local Rule 16F, counsel for the
Defendant Crystal Chemical Co. states that they are of the
view that oral argument on the foregoing motion is
[224]
desirable and therefore request that this motion be set
for oral hearing.
Respectfully submitted,
BUTLER, BINION, RICE, COOK & KNAPP
By /s/ Joun L. McConn, JR.
John L. MeConn, Jr., Attorney in Charge
Ned L. Conley
Elliott Cox
Attorneys for Defendant Crystal
Chemical Co.
1100 Esperson Building
Houston, Texas 77002
(713) 237-3188
/llm
43
[263]
In THE
UNITED STATES DISTRICT COURT
For Tue SourHern Distreiot or Texas
Hovstron Drvision
Civ Action No. 74-H-790
Roum anv Haas Company, a corporation,
Plawmtiff,
V.
Dawson CHEmicaL Company, CrysTaL
ManvuFactuRiInG Corporation, Crystal CHEMICAL
Company, AND Hetena CuemicaL Company,
corporations,
Defendants.
PLAINTIFF ROHM AND HAAS COMPANY’S
MOTION FOR SUMMARY JUDGMENT
Plaintiff Rohm and Haas Company (“Rohm and Haas”)
moves the Court to enter a partial summary judgment
striking the defense of patent misuse pursuant to Rule 56,
F. R. Civ. P. since there is no genuine issue as to any
material fact and Rohm and Haas is entitled to such relief
as a matter of law.
Specifically, Rohm and Haas moves the Court to strike
the defense that United States patent 3,816,092 (the Wilson
patent) has been misused and is unenforceable because
Rohm and Haas has sold the chemical 3, 4-dichloropropion-
anilide (propanil) for use in the process patented by the
Wilson patent but has refused to license defendants to sell
propanil for such use.
a | San ee
44
The ground for this motion is that the undisputed facts
of record established that propanil is not a staple article or
commodity of commerce suitable for substantial nonin-
fringing use. Consequently unlicensed sale of propanil
by defendants or others is
[264]
contributory infringement of the Wilson patent as defined
by 35 U. S. C. § 271 (ce). Rohm and Haas as the patent
owner has the right to sell propanil for the patented use
and to refuse expressly to license defendants and others
to infringe its Wilson patent. Such acts do not constitute
patent misuse or illegal extension of monopoly under the
controlling case law and statute 35 U. 8. C. § 271 (d).
In the alternative, should the Court find that a genuine
issue of material fact is raised by Rohm and Haas’ main
motion, Rohm and Haas moves the Court nonetheless to
declare that if at trial propanil is found not to be a staple
article or commodity of commerce suitable for substantial
noninfringing use, Rohm and Haas’ sales of propanil for
use in the process patented by the Wilson patent and its
refusal expressly to license defendants and others to sell
propanil for such use is not patent misuse but is sanctioned
under the controlling statute, 35 U. S. C. §271(d).
Respectfully submitted,
Crain, Winters, DEATON, JAMES
& Briccs
By /s/ James C. WINTERS
James C. Winters
1009 San Jacinto Building
Houston, Texas 77002
(713) 236-0860
Attorneys-in-Charge for Plain-
tiff Rohm and Haas Company
Of Counsel:
MicHar. J. Woop
Crain, Winters, Deaton,
JaMEs & Briacs
ArtHuR G. ConNnoLiy
Januar D. Bove, Jr.
Ruvotr KE. Hurz
Conno.iy, Bove & LopcE
Farmers Bank Building
Wilmington, DE 19899
(302) 658-9141
[265]
NOTICE OF SUBMISSION
Please take notice that the above Motion for Summary
Judgment will be submitted to the Court on Monday, De-
cember 16, 1974, at 10:00 A. M. or as soon thereafter as
counsel may be heard.
/s/ James C. WINTERS
James C. Winters
Attorney for Plaintiff,
Rohm and Haas Company
CERTIFICATE OF SERVICE (OMITTED)
46
[316]
In THE
UNITED STATES DISTRICT COURT
For Tue SoutHern District or TExas
Houston Drvision
Crvi Action No. 74-H-790
Roum anv Haas Company, a corporation,
Plaintiff,
V.
Dawson CHEMICAL CoMPANY, CRYSTAL
MANUFACTURING CorPoRATION, CrysTaL CHEMICAL
Company, AND HeLtena CHEMICAL CoMPANY,
corporations,
Defendants.
REPLY MEMORANDUM BY DEFENDANTS
DAWSON CHEMICAL COMPANY,
CRYSTAL MANUFACTURING CORPORATION, AND
CRYSTAL CHEMICAL COMPANY IN SUPPORT
OF THEIR MOTION FOR SUMMARY JUDGMENT
AND IN OPPOSITION TO PLAINTIFF'S
MOTION FOR SUMMARY JUDGMENT
TO THE SAID HONORABLE COURT:
Defendants do not contend that the owner of a method
patent must license the patent in order to avoid patent
misuse. But if he does choose to license it, he must do
so in such a way as to avoid illegal extension of the patent
monopoly. When Rohm and Haas sells propanil with an
implied license to use the patented method, it has chosen
to grant licenses under the patent. Having so chosen, it
47
is bound to conduct its licensing policy in such a way as
to avoid economic control of the unpatented material. By
its refusal to grant any licenses under the patent except
with its own sales of the unpatented material, Rohm and
Haas is attempting to extend the scope of its method
patent to a monopoly over the unpatented material. Under
the authorities this constitutes misuse of the patent.
Rohm and Haas ignores, in its argument that it is only
doing what is permitted by 35 U.S.C. 271(d), the fact
that it is
[317]
doing one thing is not mentioned anywhere in 271(d): it
is tying the grant of a license under its patent to the
purchase of the unpatented material. Neither the authori-
ties relied upon by plaintiff nor any other authority con-
dones such activity. To this extent, at least, the doctrine
of the Mercoid cases (Mercoid Corp. v. Mid-Continent
Investment Co., 320 U.S. 661 and 320 U.S. 680, 1944) has
continued vitality. At lease the Supreme Court still thinks
so. Note that in United States v. Loew’s Inc., 371 U.S. 38
(1962) the Court cited Mercoid and like cases in support
of its reiteration of the doctrine that a patentee who
utilizes tying arrangements will be denied relief against
infringements of its patent (page 46 of 371 USS.) :
‘These eases reflect a hostility to use of the statu-
torily granted patent monopoly to extend the patentee’s
economic control to unpatented products. The patentee
is protected as to his invention, but may not use his
patent rights to exact tribute for other articles.”
Further, in the Second Aro case, Aro Manufacturing
Co. v. Convertible Top Co., 377 U.S. 476 (1964) the court
noted, at page 508, that on the authority of Mercoid and
48
other cases a patentee cannot be allowed to derive its
profit, not from the invention on which the law gives it a
monopoly, but from the unpatented supplies with which
it is used.
More recently in Zemith Radio Corp. v. Hazeltine Re-
search Inc., 395 U.S. 100 (1969) the court stated, at page
136:
‘‘ Among other restrictions on him, he [the patentee]
may not condition the right to use his patent on the
licensee’s agreement to purchase, use, or sell, or not
to purchase, use, or sell, another article of commerce
not within the scope of his patent monopoly’’.
In the face of such authority plaintiff has retreated to
the argument that this case is different because, plaintiff
[318]
says, the unpatented material in this case is not a staple
article of commerce, so that plaintiff’s activities fall within
the scope of § 271(d), and that for this reason alone plain-
tiff should be excused from the attempted monopoly of
propanil. For the purpose of this motion we may assume,
although defendants do not agree, that propanil is not a
staple. However, as will be shown, the court decisions
simply do not support plaintiff’s view. Defendants are
aware of no case in which such activities have been held
to be condoned by § 271(d) solely because the monopolized
material or article was a non-staple.
Rohm and Haas argues that the activities which were
condemned in the Mercoid cases are now expressly con-
doned by the wording of the statute, 35 U.S.C. 271(d).
However, it is apparent that the statute falls short of the
mark. The statute merely declares that it shall not be mis-
use for a patentee to perform acts, or to license others to
49
perform acts, which if committed by another would be
contributory infringement, and to sue others for contribu-
tory infringement. But the essence of the patentee’s offense
in the Mercoid cases was the tying of the license to use
the patented combination to the sale of one of the elements.
This tying in factor is not excused in 271(d). Furthermore,
although several court decisions, including those cited by
Rohm and Haas, have intimated that 271(d) did effect
some change in the law of misuse as set forth in Mercoid,
none of these decisions, not even those cited by Rohm and
Haas, has concluded that tying as condemned in Mercoid
is now excused. As a matter of fact, substantially every
court decision which has, since the enactment of 271(d),
ruled on a tying situation, has held that such activity con-
stitutes misuse. As stated by the 10th Circuit
[319]
Court of Appeals in McCullough Tool Company v. Well
Surveys Inc., 343 F.2d 381 (1965), at page 406:
“The law in this area is no longer open to question.
It has been held in a long line of patent cases that a
patentee who utilizes a so-called ‘tying arrangement’
will be denied all relief against infringement of his
patent.” (Citing pre-1952 as well as post-1952 Supreme
Court and Courts of Appeal cases).
The McCullough case involved the granting of licenses
by Well Surveys, Inc. (WSI) under WSI’s radioactivity
well logging patents, which licenses required the licensees
to purchase from WSI the instruments necessary to con-
duct the patented well logging operations. The 10th Cir-
cuit Court of Appeals held that this finding by the lower
court establishes the prohibited tying arrangement (page
407). The Court made no distinction between staples and
; ciel a ee
50
non-staples, although it seems certain the instruments were
not staple items, since they were specifically designed to
practice the patented operations.
Summary judgment on the basis of misuse was sought
in Sonobond Corp. v. Uthe Technology, Inc., 314 F.Supp.
878 (N. D. Calif. 1970), the defendant alleging that plain-
tiff’s licensing policy was such as to induce licensees to
buy unpatented components from the patentee. The de-
fendant had been sued for contributory infringement for
selling the unpatented component, so that the plaintiff
patent owner must have considered the component to be
a non-staple. The plaintiff patent owner took the position
that Rohm and Haas takes here, that their activity was
excused by §271(d). However, the court held that this
statute did not abrogate the doctrine of misuse. Summary
judgment was refused because the court found that there
was a fact issue as to whether the effect of the licenses
was to induce licensees to buy the unpatented component.
The parties have stipulated that no such fact issue exists
in the present case.
[320]
The argument by Rohm and Haas is similar to that
presented to a three judge court in United States v. Umted
States Gypsum Co., 134 F. Supp. 69 (D.C. D.C. 1955) re-
versed on other grounds, Umited States Gypsum Co. v
National Gypsum Co., 352 U.S. 457 (1957). In a previous
decision by the court, reported at 124 F.Supp. 573 (1954)
the court had enjoined prosecution of patent infringement
actions by United States Gypsum Company (USG) be-
cause of USG’s illegal patent licensing practices, such
practices having been found to be illegal in a previous
Supreme Court decision. USG took the position that
§271(d) of Title 35 expressly protects the USG suits
ea | See een
51
against infringers from any defense of misuse on its part
of its patents. The court held that Congress did not intend
by 271(d) to give the patentee a protection superior to the
broad public policy of the Antitrust Laws, and that USG’s
misuse was not excused by 271(d). As the court stated, USG
was not “otherwise entitled to relief for infringement”, as
required by 271(d) because of its violation of the Antitrust
Laws.
Despite plaintiff’s protestations to the contrary, the
cases relied upon by defendants in their Memorandum
accompanying their Motion are also supportive of the
continued vitality of the Mercoid rule, insofar as it applies
to a fact situation like the present. National Foam System
Inc. v. Urquhart, 202 F.2d 659 (3rd Cir. 1953) concerned a
situation where, in addition to granting a license with the
purchase of the unpatented material, Urquhart offered a
separate license to consumers. However, this separate
license was at such a high rate, as compared to the rate
available when the unpatented material was purchased
from Urquhart, that the patentee was “given Hobson’s
choice” (page 664). The court held that this had the same
effect as not offering any alternative license at all, and that
the patentee was therefore
[321]
guilty of misuse for, in effect, granting licenses only with
the purchase of the unpatented material.
A similar situation was found to constitute misuse in
Ansul Co. v. Uniroyal, Inc., 448 F.2d 872 (2nd Cir. 1971).
There, as here, the patent claim on the product had been
held invalid, and the court stated, in a footnote at page
882, that if Uniroyal wished to avoid the charge of patent
misuse it was obligated to license its patented use of the
52
unpatented product to those who wished to buy the product
from other manufacturers,
The case of Preformed Line Products Co. v. Fanner
Manufacturing Co., 328 F.2d 265 (6th Cir. 1964) did not
directly involve the tying of an unpatented product to the
granting of a patent license, but instead was concerned
with the tying of an unpatented product with a patented
product. Thus in order to use the patented product (ie.,
obtain a license to use it) it was necessary for the user to
buy the unpatented product from the patent owner. The
court held that this constituted an illegal tying arrange-
ment, relying upon Mercoid and its predecessors.
An analysis of the foregoing cases makes it clear that
§ 271(d) does in fact excuse certain activities which pre-
viously were condemned as misuse under the Mercoid
doctrine. Thus, the patent owner can now (1) grant licenses
to others to make and sell the unpatented non-staple com-
ponent of the patented invention, (2) make and sell such
components itself, and (3) bring suit against those who
without license make and sell the component. However, the
patent owner cannot adopt a licensing scheme under which
the only way that anyone can get a license is to buy the
unpatented component from the patent owner himself.
[322]
Michae] D. Nelson, in his article ‘‘Mereoid-Type Misuse
is Alive”, at 56 Journal of the Patent Office Society 134
(1974), a copy of which is attached hereto, has provided
an excellent analysis of the precise question presented by
the motions now before the court. He concludes that such
a licensing plan, wherein a license under a patent is attached
to the sale of an unpatented component, is lawful only if
an alternative license is provided which would allow the
licensee to purchase the unpatented component from an
53
independent source, the royalties under the alternative
license not being unreasonably different from the royalties
payable with the purchase of the component from the patent
owner, and there being no discrimination between licensees
which would tend to restrain trade of any unpatented
product.
Plaintiff cites only two district court cases which it con-
siders as authority for a contrary rule. However, plaintiff
misconstrues both of these cases. In Sola Electric Co. v.
General Electric, 146 F.Supp. 625 (Dist. Ill. 1956) the
patentee did, notwithstanding plaintiff’s statement to the
contrary, grant licenses to other suppliers of the unpatented
product, so that purchasers were not obligated to buy the
unpatented component solely from the patentee in order
to obtain a license. See pages 646 and 647. If Rohm and
Haas would agree to grant such licenses, this case would
become moot.
In Harte and Co. Inc. v. L. E. Carpenter and Co., 138
U.S.P.Q. 578 (S.D.N.Y. 1963) the court’s conclusion that
there was no misuse resulted from the finding that the
requirement that the rollers be purchased from the patent
owner was due to the patent owner’s skills and experience
in the design field, and not to his ownership of the patent
(page 584). There is no contention here that Rohm and
Haas’ propanil is any better than any one else’s.
[323]
In the present case the defendants have offered to take
a license, and now stand ready to take such a license.
However, Rohm and Haas has steadfastly refused to even
discuss the granting of a license to defendants or to anyone
else unless they also buy the unpatented material from
Rohm and Haas. Thus Rohm and Haas has refused to
54
follow a course of action which has been explicitly recog-
nized as proper use of its patent, and which would be
undoubtedly very profitable, since Rohm and Haas would
profit from every gallon of propanil sold in the United
States, instead of just the propanil which it sells. Instead,
Rohm and Haas prefers, for reasons that we can only
guess, to seek to monopolize the entire United States market
in the unpatented propanil, by tying the sales of propanil
to a license under the patent.
It is submitted that neither this scheme, nor any other
scheme involving a tying arrangement, is a proper use of
a patent. As stated by the Supreme Court in the United
States v. Loew’s, Inc,, supra, at page 49 of 371 U.S.:
‘‘Accomodation between the statutorily dispensed
monopoly in the combination of contents in the patented
or copyrighted product and the statutory principles of
free competition demands that extension of the patent
or copyright monopoly by the use of tying agreements
be strictly confined. There may be rare circumstances
in which the doctrine we have enunciated under Section
1 of the Sherman Act prohibiting tying arrangements
involving patented or copyrighted tying products is
inapplicable. However, we find it difficult to conceive
of such a case, and the present case is clearly not one.”’
Respectfully submitted,
BUTLER, BINION, RICE, COOK & KNAPP
John L. MecConn, Jr.
1100 Esperson Building
Houston, Texas 77002
(713) 237-3111/237-3188
Attorneys for Defendants,
Dawson Chemical Company, Crystal
Manufacturing Corporation,
Crystal Chemical Company, and
Helena Chemical Company
55
[324]
ATTACHMENT (OMITTED)
[333]
CERTIFICATE OF SERVICE (OMITTED)
[334]
In THE
UNITED STATES DISTRICT COURT
For Tue Souruern District or Texas
Houston Drviston
Crviz Action No. 74-H-790
Roum anp Haas Company, a corporation,
Plamtiff,
V.
Dawson CuemicaL Company, CrystTaL
Manvuracturine Corporation, Crysta, CHEMICAL
Company, anp Hetena CuemrioaL Company,
corporations,
Defendants.
REPLY MEMORANDUM BY DEFENDANT
HELENA CHEMICAL COMPANY IN
SUPPORT OF THE MOTIONS FOR
SUMMARY JUDGMENT BY DEFENDANTS
AND IN OPPOSITION TO THE MOTION
FOR SUMMARY JUDGMENT BY PLAINTIFF
Defendant Helena Chemical Company joins with the
other Defendants in supporting the Motion for Summary
Judgment in Favor of Defendants and in opposing the
56
Motion for Summary Judgment by Plaintiff. To avoid
repetition by Defendant Helena Chemical Company with
respect to the points already presented to this Court in
the “Reply Memorandum” by the other Defendants, De-
fendant Helena Chemical Company (hereinafter referred
to as “Helena”) adopts and relies upon the law presented
in such “Reply Memorandum”. The following is supple-
mental to such “Reply Memorandum” and is submitted
specifically on behalf of Defendant Helena.
A. THE CONTROLLING STIPULATED FACTS
The following are submitted to be the controlling stipu-
lated facts filed in the “STIPULATION” on October 31,
1974:
1. Plaintiff makes and sells the chemical “propanil”
which is unpatented (Stipulation, Par. 6).
2. The purchasers of such unpatented chemical from
Plaintiff are impliedly licensed to use the method of the
Wilson patent (Stipulation, Par. 5).
[335]
3. To date, Plaintiff has not granted a written license
to anyone under the Wilson patent, and it does not intend
at the present time to grant such a license (Stipulation,
Par. 5).
4. Plaintiff does not receive any payment from its pro-
panil customers other than the purchase price of the pro-
panil (Stipulation, Par. 5).
5. Each of the Defendants has requested a license from
Plaintiff under the Wilson patent, but Plaintiff has refused
to grant such licenses to anyone, except to those customers
of Plaintiff’s who purchase the unpatented propanil from
Plaintiff (Stipulation. Par. 5).
o7
B. PLAINTIFF’S ATTEMPTED MONOPOLY IN THE
SALE OF AN UNPATENTED CHEMICAL IS A
MISUSE OF ITS PATENT ON THE METHOD
Summary judgment in favor of Defendants is proper in
this case because the essential controlling facts are not in
dispute, and such facts establish as a matter of law a
misuse by Plaintiff which prevents any recovery by Plain-
tiff with respect to the Wilson patent.
A law note specifically dealing with the legal point in-
volved appeared in the “Harvard Law Review”, Volume
66, Pages 909-918 (1953), a copy of which is attached. The
Court’s attention is particularly directed to pages 916-918
because the analysis there presented pinpoints the error
of Plaintiff.
The error in Plaintiff’s position is that Plaintiff relies
upon 35 U.S.C. 271(d)(1) which states, in substance, that
a patent owner is not guilty of misuse when the patent
owner derived revenue from an unpatented non-staple
component of a patented method or combination. However,
Plaintiff fails to recognize that Plaintiff has gone beyond
such permissible acts because Plaintiff has attempted to
monopolize the sale of the unpatented chemicals by re-
fusing to license any except those who purchase the un-
patented chemicals from Plaintiff. Thus, as stated on page
916 of the “Harvard Law Review” article, cited supra:
[336]
“A monopolistic intent most clearly appears where,
as in Mercoid, the patentee licenses only those who
purchase the part from him.”
Clearly, Plaintiff in the present case violates Section 2
of the Sherman Act which states that it is an antitrust
violation to “monopolize” or “attempt to monopolize”. An
LE Ee
58
attempt to use the Wilson patent in suit as a lever for a
violation of the antitrust laws by seeking to obtain a
monopoly in the sale of unpatented propanil is a misuse
which is not permitted by 35 U.C.S. 271(d). As further
stated in the “Harvard Law Review” article, cited supra,
on page 917:
“Nothing in the new section requires a court to con-
done explicit restrictions conditioning the issuance of
licenses on agreements to purchase components from
the patentee or his licensee, nor to sanction the use
of contributory infringement suits as instruments to
monopolize the non-staple parts market.”
It is thus seen that Plaintiff’s argument that there is
no misuse because the unpatented chemical is a “non-
staple” is likewise in error. In fact, unless the unpatented
chemical is a “non-staple” (especially adapted for use in
the method) there would be no contributory infringement
and 35 U.S.C. 271(d) would not even be involved. Plaintiff
can not stop anyone from selling non-staples under the
contributory infringement doctrine. It is only when non-
staples are involved that 35 U.S.C. 271(d) comes into play,
so Plaintiff’s argument that its misuse is excused on the
basis of propanil being a non-staple is a non-sequitur.
Therefore, Plaintiff’s attempt to monopolize the sale of
the unpatented non-staple propanil (assuming that to be
a non-staple as Plaintiff contends) is clearly an attempted
illegal extension of the method claims of the Wilson patent
in suit, and as such, completely bars Plaintiff from any
relief until such misuse has been purged,
59
[337]
C. SUMMARY
Since there is no genuine issue as to any material fact,
and Plaintiff is clearly guilty of a misuse by its attempt
to monopolize the sale of unpatented propanil, the motions
of Defendants for Summary Judgment should be granted
and the motion of Plaintiff for Summary Judgment should
be denied.
Respectfully,
PRAVEL & WILSON
By: B. R. Praven
B. R. Pravel
PRAVEL & WILSON
600 Jefferson, Suite 2010
Houston, Texas 77002
(713) 224-2020
Attorneys for Defendant
Helena Chemical Company
Of Counsel:
Auten T. Matone
CERTIFICATE OF SERVICE (OMITTED)
[338]
ATTACHMENT (OMITTED)
60
[386]
In THE
UNITED STATES DISTRICT COURT
For Tue SourHern District or Texas
Hovstron Division
Crvm Action No. 74-H-790
Roum anp Haas Company, a corporation,
Plawmtiff,
V.
Dawson CHEMICAL Company, INc., CRYSTAL
MANvuFACTURING CoRPORATION, CRYSTAL CHEMICAL
Company, Inc., aND HELENA CHEMICAL CoMPANY,
corporations,
Defendants.
SUPPLEMENTAL MEMORANDUM IN SUPPORT
OF MOTION FOR SUMMARY JUDGMENT
BY DEFENDANT
HELENA CHEMICAL COMPANY
Defendant Helena Chemical Company wishes to submit
the following supplemental comments with respect to the
Motion for Summary judgment filed by Helena Chemical
Company and the corresponding Motion for Summary
Judgment filed by the other Defendants.
1. ABA “ANTITRUST LAW DEVELOPMENTS”
The Court’s attention is specifically called to the follow-
ing sentence which appears on page 341 of the ABA “Anti-
trust Law Developments” (1975), and the authorities cited
in support thereof:
61
“And even when the sale of the component would be
contributory infringement, the indication is that it
would nevertheless be misuse for the patentee to refuse
to license the combination patent (or a method patent)
except on condition that the purchaser also buys the
unpatented component (or raw material) from the
patentee.”
[387]
The above quotation is ‘‘on all fours’? with the fact
situation presented to the Court by this Motion for Sum-
mary Judgment. Here, the ‘‘component”’’ is the propanil,
the sale of which by Defendants should, for the purposes
of this Motion, be considered a non-staple and therefore
contributory infringement. The patent owned by the Plain-
tiff Rohm and Haas is a ‘‘method patent’’. Rohm and Haas
has agreed that it would ‘‘refuse to license’’ the method
patent “except on condition that the purchaser also buys
the unpatented component (propanil) from the patentee’’
(Rohm and Haas).
It is to be noted that the statement by the ABA is made
after a careful consideration of 35 U.S.C. § 271 and also
the Mercoid case. Although such conclusion by the ABA is
not court authority, it certainly is submitted to be highly
persuasive in a situation such as this where there has been
no court decision subsequent to the passage of the statute
35 U.S.C. 271 (d) which has been squarely confronted with
these facts.
2. 35 U.S.C. 271(d) CANNOT LOGICALLY BE CON-
STRUED TO PERMIT A PATENTEE TO USE A
METHOD PATENT TO MONOPOLIZE THE SALE
OF THE UNPATENTED CHEMICAL EMPLOYED
IN THAT METHOD, WHETHER OR NOT THAT
CHEMICAL HAS USES OTHER THAN IN THE
PATENTED METHOD
62
Historically, the Federal Courts have been violently op-
posed to any extension of a patent owner’s rights beyond
the scope of the granted patent claims. For example, the
court cases are legion with respect to prohibiting tying
arrangements, wherein the patentee attempted to extend his
patent monopoly by tying an unpatented item to a patented
combination or method. See for example, Carbice Corp. v.
American Patents Development Corp., 283 U.S. 27 (1931) ;
Leitch Mfg. Co. v. Barbour Co., 302 U.S. 458 (1938); B. B.
Chemical Co. v. Ellis, 117 F.2d 829, 834 (1st Cir., 1941),
affirmed 314 U.S. 495 (1942).
[388]
The following quotation from the United States Supreme
Court decision in the B. B. Chemical case reflects accurately
the rationale of the Federal Courts, and particularly the
United States Supreme Court, in dealing with attempts to
extend the patent rights (page 497 of 314 U.S.):
“We may assume, for purposes of decision, that
respondents’ infringement did extend beyond the mere
sale of the materials to the manufacturers. But in view
of petitioner’s use of the patent as the means of
establishing a limited monopoly in its unpatented ma-
terials, and for the reasons given in our opinion in
the Morton Salt Company case, we hold that the
maintenance of this suit to restrain any form of in-
fringement is contrary to public policy, and that the
district court rightly dismissed it.
“Tt is without significarice that, as petitioner con-
tends, it is not practicable to exploit the patent rights
by granting licenses because of the preferences of
manufacturers and of the methods by which petitioner
has found it convenient to conduct its business. The
patent monopoly is not enlarged by reason of the fact
that it would be more convenient to the patentee to
have it so, or because he cannot avail himself of its
benefits within the limits of the grant.
63
“Despite this contention, petitioner suggests that it
is entitled to relief because it is now willing to give
unconditional licenses to manufacturers on a royalty
basis, which it offers to do. It will be appropriate to
consider petitioner’s right to relief when it is able
to show that it has fully abandoned its present method
of restraining competition in the sale of unpatented
articles and that the consequences of that practice have
been fully dissipated.”
It is the position of Defendant Helena Chemical Com-
pany that the last paragraph quoted above from the B. B.
Chemical case is highly pertinent to the present fact situa-
tion. The granting of the licenses to the Defendants with
respect to the unpatented propanil would remove the Plain-
tiffs’ misuse and antitrust violations, and would entirely
dispose of this case, Plaintiff has not done so, but instead,
like in the B. B. Chemical case, Plaintiff Rohm and Haas
insists here that “relief is not to be denied the patentee
no matter what his course of business” (Page 834 of 117
F.2d). That proposition has been strictly and forcibly
rejected by the Federal Courts and the United States
Supreme Court.
[389]
If it were not for the passage of 35 U.S.C. 271 (d) there
would be no question but that the present practices of
Plaintiff Rohm and Haas would be a clear misuse under
the foregoing decisions. The passage of 35 U.S.C. 271 (d)
raises two questions with respect to the present Motion
for Summary Judgment filed by Defendants, as the Defen-
dants see the situation.
First, did Section 271 (d) completely obliterate the mis-
use doctrine when there is a contributory infringement
action such as was held to be a misuse in the Mercoid case?
And (2) does the present fact situation come within 35
64
U.S.C. 271 (d) so as to allow Plaintiff Rohm and Haas
to monopolize the sale of an unpatented chemical just
because it is to be used in a patented method by others?
For the answer to the first question, reference is made
to the language of the United States Supreme Court in
Aro Mfg. Co. v. Convertible Top Replacement Co., 377
U.S. 476 (1964) which is generally referred to as ‘‘Aro IT’’
wherein the Court made the following statement in con-
nection with Section 271:
‘‘Congress enacted Section 271 for the express pur-
pose of reinstating the doctrine of contributory in-
fringement as it had been developed by decisions prior
to Mercoid, and of overruling any blanket invalidation
of the doctrine that could be found in the Mercoid
opinions.’’ (Underlining added)
It is interesting to note first that the B. B. Chemical case
was a decision ‘‘prior to Mercoid’’ dealing specifically with
the very fact situation which is present in this case.
It is believed abundantly clear from a reading of the
legislative history of Section 271 and the above interpre-
tation by the United States Supreme Court in Aro II that
the purpose of Section 271 was to reinstate the doctrine
of contributory infringement. By no stretch
[390]
of the imagination or interpretation, can it logically be
construed that the intention was to permit a patent owner
te condition and tie the sale of an unpatented non-staple
to a license under a method patent. That kind of condition
was expressly held to be a misuse by the United States
Supreme Court in the B. B. Chemical case. The tieing ar-
rangement becomes even clearer as in the present case,
wherein Plaintiff grants licenses to purchasers of the pro-
panil from Plaintiff Rohm and Haas, was an implied license
65
for re-sale to the ultimate users of the patented method.
Whether the license is “expressed or implied” is immaterial
in connection with the misuse of the patent, Ansul Company
v. Umroyal, Inc., 306 F. Supp. 541, 558 (S.D. N.Y., 1969).
In other words, Plaintiff Rohm and Haas in this case has
done more than the acts permitted by Section 271 (d).
Section 271 (d) permits a licensing to perform acts which
would constitute contributory infringement, but it does not
permit, nor state that it would not be a misuse or illegal
extension of the patent right, to condition that license to
the other party upon the purchase of an unpatented non-
staple chemical from the patentee. That is the misuse or
illegal extension of the patent right which has historically
been condemned by the United States Supreme Court and
certainly was not condoned by Section 271 (d).
As acknowledged by Plaintiff Rohm and Haas in
“PLAINTIFF ROHM AND HAAS COMPANY’S MEM-
ORANDUM IN OPPOSITION TO DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT AND IN SUP-
PORT OF ITS OWN MOTION FOR SUMMARY JUDG-
MENT”, beginning at page 7 thereof, Rohm and Haas sells
the propanil to its customers (implied licensees for re-sale)
who automatically acquire the right to resell it. Although
this fact was not stipulated, it is obviously admitted by
Plaintiff and does not raise a
[391]
‘*genuine issue as to any material fact’’ which would defeat
Defendants’ Motions for Summary Judgment.
3. BECAUSE THE MONSANTO PATENT ON THE
PROPANIL WAS SPECIFICALLY HELD INVALID
AT THE HANDS OF PLAINTIFF ROHM AND
HAAS, THE MISUSE BY PLAINTIFF IS EXCEP-
TIONALLY APPARENT
66
As previously pointed out, Plaintiff in this case was the
Defendant in Monsanto Company v. Rohm and Haas Com-
pany, 456 F.2d 592 (3rd Cir., 1972), wherein the patent on
the chemical propanil was specifically held invalid at the
hands of Rohm and Haas Company. Now, Rohm and Haas
is effectively trying to construe Section 271 (d) to give
Rohm and Haas a monopoly in the very patent which the
3rd Circuit Court of Appeals has held to be invalid and
unprotectable by the original inventor of that product,
Monsanto Company. Certainly, it would be incongruous for
Section 271 (d) to be construed to give Rohm and Haas
a monopoly now in the chemical which has been declared
by the Federal Courts to be not subject to a patent
monopoly.
For the foregoing reasons, it is respectively submitted
that logic, equity and the controlling case law clearly point
to the conclusion that the activities of Plaintiff in this case
are an illegal extension of the patent monopoly and a
misuse. Such a holding would not deny Plaintiff its reason-
able royalty from either the Defendants or from the users
of the patented method and therefore, Plaintiff can receive
its reward for its lawful patent monopoly in the method.
Respectfully,
PRAVEL & WILSON
By B. R. Praven
B. R. Pravel
Of Counsel:
AtuLen T. MALonE
Apperson, Crump, Duzanr & MAxwELL
100 North Main Building, Suite 2610
Memphis, Tennessee 38103
[392]
CERTIFICATE OF SERVICE (OMITTED)
67
[408]
In THE
UNITED STATES DISTRICT COURT
For Tue SourHern District or Texas
Houston Division
Crvim Action No. 74-H-790
Roum anp Haas Company,
Plamttff,
v.
Dawson CHEmicaL Co., Inc.;
CrystaL MANUFACTURING CoRP.;
CrystaL Cuemicau Co., Inc.;
AND Hetena CHEMICAL Co.;
Defendants.
James C. Winters, Crain, Winters, Deaton, James
& Briggs, Houston, Texas for plaintiff.
John L. McConn Jr., Butler, Binion, Rice, Cook &
Knapp, Houston, Texas, for defendants Dawson
Chemical Co., Inc., Crystal Manufacturing Corp.
and Crystal Chemical Co., Inc.
B. R. Pravel, Pravel and Wilson, Houston, Texas,
for defendant Helena Chemical Co.
MEMORANDUM AND OPINION
I. INTRODUCTION
Im this suit for patent infringement of a combination
patent plaintiff Rohm and Haas Company, as patent owner,
alleges that defendant corporations have actively induced
68
and otherwise contributed to the direct infringement of a
method or combination patent implemented in controlling
weeds in rice crops. Defendants challenge plaintiffs right
to relief contending that regardless of whether they have
committed acts of infringement, Rohm and Haas is not
entitled to relief because it has committed patent misuse
in exploiting its patent.
Defendants Dawson Chemical Company. Crystal Manu-
facturing Corporation and Crystal Chemical Company have
pursued the
[409]
defense of this action independently from defendant Helena
Chemical Company. The Court is thus confronted with two
sets of motions and briefs on every contention raised by
the parties. For purposes of this interlocutory order, unless
otherwise noted, the Court has concluded that the relative
positions of the four defendants coincide.
Three motions presently are pending before this Court.
Specifically, defendants move for dismissal of plaintiff's
complaint on the ground that the undisputed facts in this
cause establish patent misuse as a matter of law, since this .
defense acts as a complete bar to plaintiff’s action. Plain-
tiff moves that the Court enter a partial summary judgment
ruling that its conduct does not constitute patent misuse
under 35 U.S.C. § 271(d). The parties submit, and the Court
agrees, that sufficient undisputed facts exist to permit an
interlocutory ruling as to whether plaintiff’s exploitation
of its combination patent constitutes patent misuse.
The Court concludes after carefully analyzing the undis-
puted facts, the briefs submitted by the parties and the
wealth of authority pertinent to this perplexing interface
between the patent laws and the public policy notions
‘ 69
undergirding our antitrust laws, that plaintiff’s present
licensing policy, if sanctioned by this Court, would consti-
tute patent misuse. However, for reasons set out in Section
V.B., infra, the Court has determined that the defendants’
motions for partial summary judgment should be granted
at this time only insofar as they seek an adjudication of the
legality of plaintiff’s monopolization of the sale of propanil,
but should be denied to the extent that they seek dismissal
of plaintiff’s complaint. With the exception of the limita-
tions set out in Section V.C.. infra, defendants’ motions for
protective orders are denied at this time.
[410]
II. MATERIAL FACTS
The following matters in this suit are not controverted:
1. Jurisdiction and venue are proper in this Court as
to all parties and subject matter. 28 U.S.C. §§ 1338(a) ;
1400(b) and 35 U.S.C. § 271.
2. On June 11, 1974, United States Patent 3,816,092
issued to Harold F. Wilson and Dougal H. McRae (here-
after the ‘‘Wilson patent’’). Rohm and Haas is and has
been the sole owner of the Wilson patent since its issuance.
The Wilson patent contains the following claims which are
pertinent to this action:
a. A method for selectively inhibiting growth of un-
desirable plants in an area containing growing undesir-
able plants in an established crop, which comprises
applying to said area 3, 4-dichloropropionanilide at a
rate of application which inhibits growth of said un-
desirable plants and which does not adversely affect
the growth of said established crop.
b. The method according to claim 1 wherein the 3,
4-dichloropropionanilide is applied in a composition
70
comprising 3, 4-dichloropropionanilide and an inert di-
luent therefor at a rate of between 0.5 and 6 pounds of
3, 4-dichloropropionanilide per acre.
c. The method according to claim 1 wherein most
of the undesirabie plants are destroyed by 3, 4-dichloro-
propionanilide applied thereto without substantial ad-
verse effect on crop growing therewith.
d. The method according to claim 2 wherein the
established crop is monocotyledonous.
e. The method according to claim 2 wherein the
undesirable plants include monocotyledonous plants.
f. The method according to claim 2 wherein the un-
desirable plants include dicotyledenous plants.
g. The method according to claim 2 wherein the
established crop is a grain crop.
h. The method according to claim 2 wherein the
undesirable plants include barnyard grass.
[411]
i. A method of selectively inhibiting the growth of
growing, tender, undesirable annual plants which are
susceptible to 3, 4-dichloropropionanilide, said unde-
sirable plants growing in an area containing an estab-
lished monocotyledonous crop which is resistant to 3,
4-dichloropropionanilide, which comprises applying to
said undesirable plants a composition comprising 3,
4-dichloropropionanilide and an inert carrier therefor
at a rate of application which inhibits growth of said
undesirable plants and which does not substantially
affect the growth of said established monocotyledonous
crop.
3. Both before and after June 11, 1974, the issue date
of the Wilson patent, defendants have sold formulations
containing 3, 4-dichloropropionanilide, which is also known
as ‘‘propanil’’. After they were served with the Complaint
71
in this suit, such sales were with knowledge of the Wilson
patent. Both before and after June 11, 1974, purchasers of
defendants’ propanil formulations have carried out in this
country the method described on attached labels. Defen-
dants knew when they sold their propanil formulations that
such formulations would be used by purchasers in carrying
out the methods described on those labels. Defendants are
continuing and intend to continue the making, selling and
offering of propanil formulations in this country with the
same recommendations and instructions. Defendants, how-
ever, contend that the Wilson patent is invalid and unen-
forceable, and that defendants are not liable as infringers
or contributory infringers.
4. Based upon the representations of defendants that
they have recommended the use of their propanil products
only for controlling weeds in rice crops, plaintiff does not
charge infringement of either claim 4, 5 or 7 of the Wilson
patent.
5. Plaintiff makes and sells the chemical compound, 3,
4-dichloropropionanilide, known as propanil, in various
[412]
formulations in this country, with instructions to use the
propanil in carrying out the steps of the Wilson patent.
Purchasers of the plaintiff’s propanil formulations in this
country are impliedly licensed by operation of law to use
the method of the Wilson patent. Each of defendants has
requested a license under the Wilson patent. In reply to
these requests, plaintiff maintains that it has no present
intention of granting a license under the Wilson patent to
any of the defendants, or to any propanil users except
purchasers of propanil from plaintiff, who enjoy implied
licenses by operation of law. To date, plaintiff has not
72
granted a written license to anyone under the Wilson
patent, and it does not presently intend to grant such a
license. Plaintiff has never received any payment other
than the purchase price from its propanil customers who
employ the Wilson patent method.
6... In a suit by Monsanto Company against plaintiff for
patent infringement, Monsanto’s Patent 3,382,280 claiming
the chemical compound, 3, 4-dichloropropionanilide per se,
was held invalid. Propanil and the various formulations
of it presently sold by plaintiff are therefore unpatented
chemicals.
* * * e * o
The Court is aware of no opinion involving conduct
which was factually congruent to the stipulated conduct
of the parties to this action. Resolution of the question
of patent misuse in this dispute is further complicated
by broad language in the seminal opinion of Mercoid Corp.
v. Mid-Continent Investment Co., 320 U.S. 661 (1944),
which went beyond the facts confronting the Supreme
Court in that opinion and threatened the continued vitality
of the tort of contributory infringement in any context.
In 1952 Congress enacted a new Patent Act codifying the
three torts of patent infringement.
[413]
35 U.S.C. § 217(a-c) (1952). Paragraph (d) of § 271 sets
out certain acts of a patent owner which are not barred by
the doctrine of patent misuse.
None of the parties dispute the general rule that a
patent cannot be exploited to monopolize unpatented arti-
cies. Plaintiff argues, however, that a narrow exception
to this rule lies whenever the unpatented article is a
nonstaple component possessing no substantial, noninfring-
73
ing uses, Plaintiff supports this contention on four grounds.
First, it argues that Congress, in enacting 4 271(d), in-
tended to overrule completely the Supreme Court’s opinion
in Mercoid, supra. Second, it argues that the clear lan-
guage used in §271(d) expressly sanctions the conduct
of the plaintiff in this action. Third, it contends that the
Supreme Court in Aro Mfg. Co. v. Convertible Top Replace-
ment Co., 377 U.S. 476 (1964), expressly concluded that
§ 271(c-d) overruled the result in Mercoid. Finally, plain-
tiff maintains that the only two opinions squarely on point
which were decided subsequent to the enactment of § 271
both sanctioned extensions of patented combinations to un-
patented, nonstaple components.
In addressing these contentions the Court first examines
the doctrine of patent misuse as it was applied prior to
the Supreme Court’s decision in Mercoid, supra. Section
III.A.1, infra. The Court next considers the facts in Mercoid
as they compare to the facts sub judice, as well as the
broad language in that opinion which has spawned con-
siderable controversy. Section III.A.2-4, infra. In Section
III.B., wmfra, the Court examines the language and the
legislative history of § 271. Finally, the Court examines
Mercoid-type misuse as it has been construed by the courts
in the aftermath of § 271. Section III.C., infra.
III. THE PATENT MISUSE DOCTRINE
[414]
Defendants support their contention that plaintiff has
misused its method patent in seeking to monopolize sales
of unpatented components by relying primarily on a line
of Supreme Court decisions culminating with Mercoid
Corp. v. Mid-Continent Investment Co., 320 U.S. 661
(1944), and Mercoid Corp. v. Honeywell Co., 320 U.S. 680
74
(1944) (hereinafter Mercoid I and Mercoid II, respec-
tively). In arriving at the conclusion reached in this inter-
Jocutory ruling, the Court has found it necessary to study
carefully this line of decisions.
A. Patent Misuse Prior to the Enactment of § 271(d)
1. Supreme Court Decisions Antedating Mercoid
The Supreme Court, in Motion Picture Patents Co. v.
Universal Film Mfg. Co., 243 U.S. 520 (1917), relying for
the first time on a rationale which was subsequently to
form the basis of the misuse defense, denied relief to a
patentee who tried to enforce a tying arrangement which
required the purchaser of a patented motion picture ma-
chine to limit use of the machine to unpatented film pur-
chased from the patentee. Without considering the scope
of the defendant’s infringement, the Court denied relief
wholly on the basis of the inequitable conduct of the pat-
entee.
In 1931, and again without ever reaching the questions
of patent validity or infringement, the Supreme Court
applied the patent misuse doctrine to bar a suit for con-
tributory infringement filed by a patentee which had ex-
plicitly required that users purchase from its exclusive
licensee dry ice used in its combination patent. Carbice
Corp. of America v. American Patents Dev. Corp., 283 U.S.
27 (1931). In his opinion for the unanimous Court Mr.
Justice Brandeis stated:
“(The patent owner] has no right to be free from
competition in the sale of [refrigerant]. Control over
the supply of
[415]
such unpatented material is beyond the scope of pat-
75
entee’s monopoly; and this limitation, inherent in the
patent grant is not dependent upon the peculiar funce-
tion or character of the unpatented material or on the
way in which it is used.” 283 U.S. 27, 33.
In Leitch Mfg. Co. v. Barber Co., 302 U.S. 458 (1938),
the Court extended the patent misuse doctrine to apply
in a situation wherein the owner of a process patent limited
the right to use the process to implied licensees who pur-
chased unpatented bituminous emulsion from the patentee;
no expressed licenses were granted. The Court character-
ized this attempt to monopolize the sale of an unpatented
component as an “unauthorized extension of the [patent]
monopoly.” 302 U.S. at 463, which constituted misuse
“whether the patent be for a machine, a product, or a pro-
cess.” Id,
In Morton Salt Co. v. G. S. Suppiger Co., 314 U.S.
488 (1941), the Supreme Court upheld the trial court’s
action in granting summary judgement dismissing the
complaint, without ruling on the issues of validity and in-
fringement, holding that the patent owner’s attempt to
suppress competition in the marketing of unpatented salt
tablets, specially made to fit the patented dispenser, was
a misuse of the patent.
In B. B. Chemical Co. v. Ellis, 314 U.S. 495 (1941),
decided the same day as Morton Salt Co., supra, the rule
of Carbice and Leitch was applied to bar relief from in-
direct infringement by a defendant who sold unpatented
component products specially made for use in a patented
process for reinforcing shoe insoles; the component had no
other substantial commercial use. The patentee sought to
ovoid Carbice and Leitch by arguing that the patent misuse
doctrine should be limited to situations in which the com-
ponents supplied by the alleged contributory infringer were
j 76
staple articles of commerce. It argued that dry ice and
bituminous coal were staple articles. The First Circuit
Court of Appeals expressly
[416]
considered and rejected this argument, 117 F.2d 829, at
834, 835, holding that “[t]here is every indication that the
Carbice and Leitch cases apply to specially designed arti-
eles”. Jd. In a unanimous opinion the Supreme Court
affirmed; without discussing the staple versus non-staple
component question, the Court simply held that “in view
of petitioner’s use of the patent as the means of establish-
ing a limited monopoly in its unpatented materials, . . . the
maintenance of this suit to restrain any form of infringe-
ment is contrary to public policy. ...” 314 U.S. at 498. It is
not clear whether the staple versus non-staple distinction
was ever raised before the Supreme Court, or whether it
was considered and rejected as legally insufficient to justify
extending the patented process to monopolize the supply
of unpatented components.
Although implicitly sanctioned in B. B. Chemical, supra,
patent misuse in the context of non-staple and unpatented
components of a patented combination did not enjoy the
expressed imprimatur of the Supreme Court until 1944,
when it decided Mercoid I and Mercoid II, supra.
2. The Mercoid Decisions
The patentee in Mercoid I held a combination patent for
a furnace stoker system; its exclusive licensee manufac-
tured one essential component of the unit, a stoker switch,
and the right to assemble and install the patented system
was conditioned upon the purchase of this stoker switch.
a ae
17
The defendant, Mercoid Corporation, also manufactured
these stoker switches which were exclusively designed for
and usable in the patentee’s stoker system. The defendant’s
customers were guilty of direct infringement whenever they
installed the stoker system, and the Supreme Court assumed
for purposes of its opinion that the defendant’s stoker
switch sales constituted contributory
[417]
infringement. Relief was denied, however, on the ground
that the patentee’s licensing scheme constituted patent
misuse. The facts in Mercoid II were similar to those in
Mercoid I except for the absence of any policy of granting
express licenses exclusively to purchasers of the unpatented
stoker switch. The Supreme Court held that the effect was
the same, however, since restrictions on implied licenses
constituted misuse, barring equitable relief.
Although the doctrine of patent misuse was firmly
embedded in the jurisprudence of patent law well before
the Supreme Court was confronted with the issues pre-
sented by the Mercoid cases, this equitable variation of
‘unclean hands’’ had never before been analyzed in a con-
text wherein the Court focused on the fact that the
‘‘unpatented material or device [was] itself an integral
part of the structure embodying the patent,’’ 320 U.S. at
665, and ‘‘no use for the accused devices other than in the
. .. combination patent’’ existed. Id. at 664. The Supreme
Court concluded that “no difference in principle” existed
between misusing a patent to monopolize materials em-
ployed or consumed in a machine or process, (such as dry
ice, bituminous coal, salt tablets, or shoe insole materials),
and misusing it to monopolize the supply of integral, albeit
unpatented components. Id.
es ee
78
3. Mercoid Contrasted with the Facts in this Action
Two significant distinctions should be noted between the
parties’ conduct in Mercoid and the conduct at issue in the
present case. First, the patent owner in Mercozd initially
‘‘oranted and offered licenses to companies that would take
them, including Mercoid, who refused”. Mid-Continent Inv.
Co. v. Mercoid Corp., 133 F.2d 803, 810 (7th Cir. 1942).
See also Mercoid II, supra, 320 U.S. at 683. Parties in the
present case have stipulated that defendants
[418]
have requested licenses under the Wilson patent, and plain-
tiff has unequivocally stated that it has no intention of
granting such licenses.' For this reason the patent misuse
found in Mercoid applies a fortiori in the present context.
The second distinction lies in the conduct of the alleged
infringers. The defendant in Mercoid was charged with
selling stoker switches which contributed to the direct in-
fringement of users of the plaintiff’s patented combination.
The defendants in this action are charged not only with
contributing to direct infringement by its customers by
supplying nonstaple propanil; they are also charged with
the specific intent to induce direct infringement by labelling
containers of propanil and otherwise actively encouraging
others to infringe the Wilson patent. Although these two
separate torts of indirect infringement are in many in-
stances overlapping, see C. Miller, Some Views on the Law
of Patent Infringement by Inducement, 53 J. PAT. OFF.
SOC’Y 86, 98 (1971), the specific intent to cause direct in-
fringement which is required in order to establish induce-
ment is not a necessary element of contributory infringe-
ment. Likewise, the sale of a nonstaple article having no
known noninfringing uses is not a necessary element of
79
the tort of inducement. Jd. Thus, the total infringing effect
if all of the elements of both of these torts are established
is potentially greater in the present case than it was in
Mercoid. Although defendants’ conduct does not illume
the question of whether plaintiff’s conduct constitutes pat-
ent misuse, the Court has concluded, Section V.B., that the
defendants’ conduct might well affect the ultimate relief
granted in this case.
4. The Dictum in Mercoid I
The Mercoid decisions severely restricted the well-estab-
lished doctrine of contributory infringement. To the
[419]
extent that the Court had not previously acknowledged
expressly that the principle in Carbice applied in the con-
text of a non-staple component possessing no known non-
infringing use, the defense of patent misuse reached a new
milestone in the Mercoid decisions. Beyond that, however,
the Supreme Court in sweeping dictum also cast a pale on
the doctrine of contributory infringement in any context,
regardless of wh her the patentee’s conduct constituted
patent misuse.
“The result of this decision, together with those which
have preceded it, is to limit substantially the doctrine
of contributory infringement. What residuum may be
left we need not stop to consider.” 320 U.S. at 669.
This Court has concluded that when Congress enacted the
Patent Act of 1952, the inclusion of § 271 was intended to
mollify the potential effect that this dictum could have on
the patent owner’s ability to protect his property against
contributory infringers in any context, whether or not he
was seeking to monopolize the sale of unpatented articles.
80
This interpretation simply restores the remedy of contrib-
utory infringement as it was applied prior to Mercoid.
B. 35 U.S.C. §271
Section 271? represents the first congressional effort to
codify the parameters of the common law doctrines of pat-
ent infringement. As stated before, it is generally accepted
that § 271 was prompted by the Mercoid decisions.’ How-
ever, it is somewhat more difficult to determine whether
the substantive holding of Mercoid — that a combination
patent may not be enforced against sellers of unpatented
non-staple components possessing no known non-infring-
ing uses—or whether the broad dictum in that decision
precipitated the enactment
[420]
of § 271*. Based on a consideration of (1) the language
of this section, (2) its legislative history, (3) its applica-
tion by the courts, and (4) the post-1952 vitality of Mercoid
in numerous opinions, this Court has concluded that the
facts addressed by the Supreme Court in Mercoid would
not mandate a different conclusion under § 271. This Court
is further of the opinion that the patentee sub judice, by
seeking to monopolize the sale of an unpatented component
of its protected method without even attempting to license
other manufacturers, is exploiting its patent in a manner
which is less legitimate than the exploitation condemned
by the Supreme Court in Mercoid. Section III. A. 3., swpra.
Plaintiff submits that until substantial uses for propanil
are discovered other than in plaintiff’s patented method,
plaintiff is entitled to monopolize the supply of this un-
patented chemical compound. Plaintiff further contends
that it has no obligation to alter its present “no licensing”
policy until and unless such noninfringing uses for propanil
_
81
are discovered. Although defendants’ direct or indirect
infringement of plaintiff’s patent presents no threshold
inquiry in resolving the patent misuse issue, see Morton
Salt Co. v. G. S. Suppiger Co., supra, 314 U.S. at 490, a
brief consideration of the interrelation of the four para-
graphs of § 271 is nevertheless necessitated by the plain-
tiff’s contention.
Paragraph (a) of § 271 defines “direct infringement” as
the using, making or selling of a patented invention. Para-
graphs (b) and (c) codify two doctrines of indirect in-
fringement: active inducement of direct infringement, and
contributory infringement. Paragraph (d) sets out
[421]
three acts the commission of any one or more of which
by a patentee seeking to protect and exploit his patent
cannot be relied upon by an infringer as the sole basis
for its defense of patent misuse.
1. Emergence of the Doctrines of Indirect Infringe-
ment Embodied in Paragraphs (b) and (c) of 35
U.S.C. § 271
The Constitution provides for Congress to promote “the
Progress of Science and Useful Arts, by securing for
limited Times to Authors and Inventors the exclusive Right
to their respective Writings and Discoveries.” U.S. CONST.
art. I, §&. In accordance with this provision of the Con-
stitution, Congress enacted the first patent act in 1790
which established the exclusive right of inventors to exploit
their discovery. Patent Act of April 10, 1790, ch. 7, 1 Stat.
109. See also 35 U.S.C. $154 (1952).
An early principle of the law of combination patents
established that direct infringement would not lie unless
82
the combination in its entirety was used. See Prouty v.
Draper Ruggles & Co., 41 U.S. 335 (16 Pet.) (1841). It soon
became apparent, however, that the doctrine of direct in-
fringement was inadequate to protect effectively the paten-
tee’s invention.> Two distinct doctrines of indirect infringe-
ment therefore were developed to protect the inventor.
The doctrine of contributory infringement as it pres-
ently is codified in § 271(c) was recognized in the early
ease of Wallace v. Holmes, 29 F. Cas. 74 (No. 17,100) (C.C.
Conn. 1871).° In this case, the defendant sold burners which
had no known use except in the patentee’s invention. The
court concluded that the act of selling these burners con-
stituted a ‘virtual” infringement of the protected patent.
[422]
In Bowker v. Dows, 3 F. Cas. 1070 (No. 1734) (C. C.
Mass. 1878), the court found liability for infringement in
a context foreshadowing the indirect infringement doctrine
of inducement. The defendant sold an unpatented com-
ponent of the patentee’s patented chemical compound. Un-
like the burners in Wallace, supra, this chemical component
had various commercial uses; however, the defendant ad-
vertised that the compound could be used in the particular
manner claimed in the plaintiff’s patent. The Court con-
eluded that the defendant’s act of encouraging infringe-
ment rendered him a joint tortfeasor.
Section 271(b) provides that “[w]hoever actively induces
infringement of a patent shall be liable as an infringer”.
It is quite clear from the language of this provision that
the broad tort of infringement by inducement is not re-
stricted in any way to unpatented component articles which
lack any substantial non-infringing use. Liability for con-
83
ributory infringement under section 271(c), on the other
hand, is far more restrictive:
“Whoever sells a component of a patented machine,
manufacture combination or composition, or a material
or apparatus for use in practicing a patented process,
constituting a material part of the invention, knowing
the same to be especially adapted for use in an in-
fringement of such patent and not a staple article or
commodity of commerce suitable for substantial non-
infringing use, shall be liable as a contributory in-
fringer.” (Emphasis added)
Paragraphs (b) and (c) of § 271 codify the type of conduct
which will give rise to a cause of action for indirect in-
fringement of a patent. Neither of these paragraphs delin-
eates or refers to conduct of a patentee that constitutes
[423]
patent misuse, which is the essence of the defendants’ mo-
tion for partial summary judgment. Paragraph (d) is the
only paragraph of § 271 which addresses the conduct of a
patentee.’
2. Patent Misuse Under § 271(d) of 35 U.S.C.
Section 271(d) provides that:
“[N]o patent owner otherwise entitled to relief for in-
fringement or contributory infringement of a patent
shall be denied relief or deemed guilty of misuse or
illegal extension of the patent right by reason of his
having done one or more of the following: (1) derived
revenue from acts which if performed by another with-
out his consent would constitute contributory infringe-
ment of the patent; (2) licensed or authorized another
to perform acts which if performed without his consent
would constitute contributory infringement of the
patent; (3) sought to enforce his patent rights against
infringement or contributory infringement.”
84
The plaintiff takes the position that the language of this
provision expressly sanctions its licensing policy.
The Court notes three aspects of this provision which are
immediately apparent before turning to legislative history
or judicial construction. First, presuming actionable in-
fringement, § 271(d) focuses solely on the conduct of the
patent owner, and not the alleged infringer. Second,
§ 271(d) does not define conduct which equates to patent
misuse; this paragraph simply sets out certain conduct
which does not constitute patent misuse. Finally, § 271(d)
does not limit or condition the conduct it describes on the
staple or nonstaple nature of component articles of a com-
bination patent. The only reference in § 271 to the staple
or nonstaple nature of component articles can be found in
paragraph (c), which focuses solely on conduct of an
infringer that gives rise to an action for contributory
infringement.
[424]
The Revisory Notes to § 271 state that paragraph (d) is
ancillary to paragraphs (b) and (c). Provided that the
patent owner successfully establishes that the defendant is
guilty of either actively inducing or contributing to in-
fringement, “[he] is not deemed to have misused his patent
solely by reason of doing anything authorized by the sec-
tion.” Id. No combination of one or more of the three patent
owner acts set out in § 271(d) can form the sole basis for a
finding of patent misuse.
3. Legislative History
The intent of Congress with regard to the effect that
§ 271 should have on the result in the Mercoid decisions
has been the subject of numerous commentaries.’ During
85
the Senate debate, just before the bill Was passed, Senator
Saltonstall asked on the floor, “Does the bill change the law
in any way or only codify the present patent laws?” Sena-
tor MeCarran, Chairman of the Judiciary Committee which
had been in charge of the bill for the Senate, responded, “It
codifies the present patent laws.” 98 Cong. Rec. 9323 (July
4, 1952). To the extent that this exchange represents a
knowledgeable consideration of the substance of § 271, it
would support the conclusion that the only purpose of this
section was to prevent the total emasculation of the law of
contributory infringement threatened by the dictwn in
Mercoid. This otherwise innocuous exchange bears repeti-
tion in this ruling not because of the insight that it repre-
sents or reveals, but rather, because this colloquy between
Senators has been quoted by the Supreme Court on at least
two separate occasions.®
A statement made by Mr. Giles S. Rich, the chief drafts-
man of the provisions on contributory infringement in § 271,
was somewhat more reflective on the scope of patent
[425]
misuse contemplated or intended by Congress:
‘Shir. Oca.
‘Other decisions following Mercoid have made it quite
clear that at least some courts are going to say that
any effort whatever to enforce a patent against a con-
tributory infringer is in itself misuse .... Therefore,
we have always felt—we who study this subject
particularly — that to put any measure of contributory
infringement into the law, you must, to that extent
and to that extent only, specifically make exceptions
to the misuse doctrine, and that is the purpose of
paragraph (d).’’
(Emphasis added)
86
Hearings before the Subcommittee of House Judiciary
Committee on H.R. 3760, 82d Cong. 1st Sess. 161-162 (1951),
cited in Aro Mfg. Co. v. Convertible Top Co., 365 US.
336, 349, note 4 (1961) (Black, J., concurring) (Aro J).'°
‘‘To that extent and to that extent only,’’ this Court would
concur that any dictum in Mercoid which can be construed
to condemn as misuse ‘‘any effort whatever to enforce a
patent against a contributory infringer’’ has been pre-
empted by § 271(d). Section 271 assures the viability of
contributory infringement actions, but it does not compel
the overruling of the result in Mercoid.
4. Conduct of Rohm and Haas Perceived
Through the Lens of Section 271(d)
As noted earlier, in enacting § 271(d), Congress, rather
than attempting to define the parameters of the defense of
misuse, sought instead to delineate three exceptions to this
doctrine. It is not disputed that the first exception set out
in § 271(d)(1) sanctions plaintiff’s right to sell propanil,
an act which this Court assumes for purposes of this ruling,
would constitute contributory infringement if performed by
another without plaintiff’s consent. This act in and of itself
therefore cannot constitute patent misuse, by statutory
definition. Nor is it disputed that plaintiff,
[426]
under § 271(d)(2), has the right to authorize a third party
by virtue of an implied license to resell the propanil for
use in plaintiff’s patented method.
Finally, it is clear that §271(d)(3) eliminates the fear
created by Mercoid, that the mere filing of a law suit alleg-
ing indirect infringement in and of itself constitutes misuse.
See Note, 66 HARV. L. REV. 909, 917 (1953). Cf. W. ZL.
87
Gore & Assoc., Inc. v. Carlisle Corp., 529 F.2d 614 (3d Cir.
1976). It is plain from the language of §271(d) that no
‘fone or more’’ of the three foregoing acts will give rise
to the defense of patent misuse. Defendants argue, how-
ever, that plaintiff has gone beyond the sum of the acts
rendered permissible by § 271(d). They further maintain
that while § 271(d)permits plaintiff to sell the unpatented
propanil, the act does not permit plaintiff to monopolize
such sales.
Defendants also maintain that they are and have at all
times been willing to pay royalties to plaintiff for licenses
to sell propanil for use in plaintiff’s patented method. It
is plaintiff’s refusal to license which defendants maintain
is the act not sanctioned by any of the exceptions to the
misuse doctrine set out in § 271(d). Defendants submit that
§ 271(d) does not require this Court to legitimize a scheme
by which a patent owner licenses others on the explicit con-
dition that the licensee purchase an unpatented component
from the patent owner. This refusal to grant licenses to the
defendants, coupled with plaintiff’s acts which are specific-
ally sanctioned by § 271(d), results in the scheme which
the defendants argue would impermissibly extend the Wil-
son patent.
Plaintiff’s response to this contention is that it enjoys
an unrestricted right to refuse licenses to defendants which
would permit defendants contributorily to infringe the Wil-
son patent.’! In support of this contention plaintiff
[427]
maintains that a patent owner “is neither bound to use his
discovery himself nor permit others to use it,” citing
Contmental Paper Bag Co. v. Eastern Paper Bag Co., 210
U.S. 405, 425 (1908), and Cataphote Corp. v. DeSoto Chemi-
88
cal Coatings, Inc., 450 F.2d 769, 744 (9th Cir. 1972), cert.
denied, 408 U.S. 929 (1972). Neither of these cases involved
the attempted extension of a patent right to monopolize
the sales of unpatented components. The context of this
rule in Continental Paper Bag involved a patentee’s right
to hoard his discovery. In Cataphote the Court simply
upheld a patent owner’s right to restrict the marketing of
his patent to one exclusive licensee. The plaintiff sub judice
is neither hoarding his patent nor limiting its monopolistic
effects to the actual claims of its patented method. More-
over, “(t]he fact that the patentee has the power to refuse
a license does not enable him to enlarge the monopoly of
the patent by the expedient of attaching conditions to its
use.” Blonder-Tongue v. University Foundation, 402 U.S.
313, 344 (1970).
Still focusing on the conduct of plaintiff as it bears on
the defense of patent misuse, defendants advert to a brief
portion of the history of litigation pertaining to propanil
in federal courts. In 1970 plaintiff, as defendant in Monsanto
Co. v. Rohm & Haas Co., 312 F. Supp. 778 (H.D. Pa. 1970),
aff'd, 456 F.2d 592 (3d Cir. 1972), suecessfully argued that
a patent which had been issued for the chemical compound
propanil should be declared invalid. Plaintiff succeeded in
pursuading the court in Monsanto that propanil:
“was for all purposes in the public domain and cannot
be patented as a compound....[T]he inventor of
the novel property of the compound is not without
recourse since he may patent the use of 3,4-DCPA
[propanil] as a selective post-emergence herbicide.”
Id. at 790. Therefore, prior to the issuance of the Wilson
[428]
patent, propanil was declared “for all purposes in the public
89
domain”. With regard to matters belonging to the public,
the Supreme Court has held that:
“a patent is not, accurately speaking, a monopoly....
The term “monopoly” connotes the giving of an ex-
clusive privilege for buying, selling, working or using
a thing which the public freely enjoyed prior to the
grant. Thus a monopoly takes something from the
people. An inventor deprives the public of nothing
which it enjoyed before his discovery, but gives some-
thing of value to the community by adding to the sum
of human knowledge.”
United States v. Dubilier Condenser Corp., 289 U.S. 178,
186 (1933). Plaintiff seeks in this lawsuit to monopolize
the sale of propanil by taking it from the public domain.
This Court is aware of no decision wherein the patent laws
have been construed to permit such a taking.
Construed broadly, § 271(d) could be read to embrace the
plaintiff’s efforts to corner the market on all sales of un-
patented and unpatentable propanil. However, the language
of this provision is hardly a “clear and certain signal
from Congress” that prior cases should be overruled. Deep-
south Packing Co. v. Laitram Corp., 406 U.S. 518, 530
(1971). The language of §271(d) simply does not encom-
pass the totality of plaintiffs’ conduct in this ease.
Neither the Supreme Court nor the United States Court
of Appeals for the Fifth Circuit has construed § 271(d) to
overrule the result in the Mercoid decisions. Section
II1.C.1.-3., fra. Although neither of these Courts has
confronted this question in the precise context of a Mercoid-
type misuse, both have continued to cite Mercoid as good
authority.’* Certainly the enactment of § 271 quelled the
broad dictum in Mercoid. However, if it likewise overruled
the result in Mercoid, it is incongruous that Mercoid is
nevertheless still cited as good law.
90
[429]
C. Mercoid-Type Misuse Subsequent to the Patent Act
of 1952
1. The Supreme Court’s Decision in Aro II
Plaintiff contends that the Supreme Court’s holding
in Aro Mfg. Co. v. Convertible Top Replacement Co., 377
U.S. 476, 492 (1964) (hereafter Aro IT), demonstrates that
§271(d) was clearly intended to and did reverse the
Mercoid rulings:
“.. Congress enacted § 271 for the express purpose
of reinstating the doctrine of contributory infringement
as it had been developed by decisions prior to Mercord,
and of overruling any blanket invalidation of the doc-
trine that could be found in the Mercotd opinions.”
377 U.S. at 476. This contention is without merit for several
reasons. First, as noted previously by the Court, Section
III.A., supra, the B. B. Chemical Co, v. Ellis opinion ren-
dered three years before Mercoid held that an action for
contributory infringement was defeated by the application
of patent misuse on facts very similar to the cause here
pending. Therefore, “contributory infringement as it had
been developed by decisions prior to Mercoid” did not
authorize or sanction patent extensions which effected a
monopoly over unpatented components. Also, “prior to
Mercoid” the doctrine of contributory infringement did
not suffer from the sweeping language used by Justice
Douglas which cast a doubt on the surviving “residuum” of
this tort in any context. Moreover, in construing § 271 to
overrule “any blanket invalidation of [contributory in-
fringement],” the Supreme Court chose language which
carefully avoided overruling the Mercoid result in toto.
Finally, the language which is relied upon by plaintiff in
91
Aro II was not intended by the Supreme Court to signal
the complete demise of Mercoid because the Court resur-
rects Mercoid some five pages later in the opinion, 377 U.S.
at 497, by stating in reference to a patent owner seeking to
monopolize the sale
[430]
of an unpatented, nonstable fabric component:
“In particular, the patent owner cannot impose con-
ditions concerning the unpatented supplies, ancillary
materials, or components with which the [patented]
use is to be effected.”
Aro II, supra, 377 U.S. at 497.18
2. Supreme Court Rulings Subsequent to Aro II
Decisions rendered by the Supreme Court since Aro II
which address the question of the permissible scope of a
combination patent demonstrate that Mercoid continues
to retain vitality. Deep South Packing Co. v. Laitram Corp.,
406 U.S. 518 (1971); Blonder-Tongue v. University Foun-
dation, 402 U.S. 313 (1970); Zenith Radio Corp. v. Hazel-
tine Research, Inc., 395 U.S. 100 (1969).
In Deep South Packing Co. v. Laitram Corp., supra,
the Supreme Court reversed a decision by the United States
Court of Appeals for the Fifth Circuit which had held that
a defendant who exported unpatented parts of an easy-to-
assemble, patented combination, was guilty of direct in-
fringement for “making, using, or selling any patented
invention within the United States”. 35 U.S.C. § 271(a).
The Supreme Court reversed. Citing Mercoid II, the
Supreme Court premised its reversal on the “unassailable”
92
rule that “a patent on a combination is a patent on the
assembled or functioning whole, not on the separate parts”.
320 U.S. at 684.14 The Supreme Court proceeded to set out a
rigorous test for advocates who would urge that the Patent
Act modified or overruled prior cases.
“!'Wle should not expand patent rights by overruling
or modifying our prior cases construing the patent
statute, unless the argument for expansion of privilege
is based on more than mere inference from ambiguous
statutory language. We would require a clear and cer-
tain signal from Congress before approving the posi-
tion of a litigant who, ... argues that the beachhead of
privilege is wider, and the area of public use
[431]
“narrower, than Courts had previously thought. No
such signal legitimizes respondents’ position in this
litigation.”
406 U.S. at 530.
In Blonder Tongue v. University Foundation, 402 U.S.
313 (1970), the Supreme Court, while “recognizing the
patent system’s desirable stimulus to invention,” cited
Mercoid as one of a “series of decisions in which the
[Supreme] Court has condemned attempts to broaden the
physical or temporal scope of the patent monopoly”.*® Id.
at 343.
Zenith Radio Corp. v. Hazeliine Research, Inc., supra,
and United States v. Loew’s, Inc., 371 U.S. 38, 46 (1962).
do not deal with § 271(d) or its effect on the Mercord rule,'®
but it is nevertheless evident that the language in these
opinions reveals a great reluctance on the part of the
Supreme Court to aid a patentee seeking to extend the
93
scope of his property rights beyond the claims of his
patent.?”
3. Lower Court Decisions
a. The Fifth Circuit
The United States Court of Appeals for the Fifth Circuit
has not construed § 271 in the context of a Mercoid-type
misuse, although it has indicated in dictum that the result
in Mercoid still maintains some vitality..* In Fromberg,
Inc. v. Thornhill, 315 F.2d 407 (5th Cir. 1967), the Court
of Appeals cited Mercoid for the general rule that any
effort to extend a combination patent to monopolize an.
unpatented component would be patent misuse, 315 F.2d
at 412, but acknowledged that the enactinent of ‘‘§ 271 was
intended to work some changes in these concepts’’. 315
F.2d at 412, n.13. The Court expressly reserved judgment
on the reach or purpose of such changes. Id. at 414, n.18,
The law in this Cireuit
[432]
as to whether patent owners can monopolize the sale of
nonstaplc components of their patent is therefore unsetttled.
b. Other Lower Court Decisions
Plaintiff cites two post-1952 decisions which it maintains
are the only authorities squarely on point with the case at
bar. Harte & Co., Inc. v. L. E. Carpender Co., 138 U.S.P.O.
538 (S.D.N.Y. 1963); Sola Electric Co. v. General Electric
Co., 146 F. Supp. 625 (N.D. Ill. 1956). In Sola the plaintiff
owned a patent on a combination of unpatented components
to be used in an alternating current supply system. Like
the patentee in Mercoid, and the patent owner sub judice,
the plaintiff and his licensees derived their income from
94
sales of unpatented, nonstaple components. Licenses were
granted only to customers who purchased the unpatented
components sold by the plaintiff or his licensees. The court
held that the patent was invalid and therefore unenforce-
able. 146 F. Supp. at 646.
Although it was wholly unnecessary to do so in light of
the court’s ruling on the invalidity of the patent, the court
went on to consider the defendant’s allegation of patent
misuse, concluding that 4271 had indeed overruled the
result in the Mercoid decisions. This Court does not agree
with this conclusion. However, it is more important to note
that the licensing policy in Sola, unlike the policy sub judice,
did not effect a monopoly in unpatented components —
licensed use of the Sola patent was not conditioned exclu-
sively on purchases of the unpatented component from the
patent owner. The patent owner in Sola exploited its patent
in two ways. First, it collected royalties from licensees
who in turn manufactured and marketed the unpatented
component. Second, it derived profits from the sale of
unpatented components,
433
which were presumably Be compete with the plain-
tiff’s competitor-licensees. Section 271(d)(1) clearly per-
mits an owner of a combination patent to compete with
other manufacturers in the sale of unpatented components.
Plaintiff Rohm and Haas, on the other hand, is urging its
right to eliminate competition wholly by monopolizing the
sale of unpatented and now unpatentable propanil.
The patent in Harte involved an ornamental design for
resinous plastic material used in raincoats, shower curtains
and upholstery. The defendant patent owner required its
licensees to purchase from the defendant all embossing
rollers used in the patent design. These rollers were used
95
exclusively in the defendant’s design and thus were non-
staple items. In its findings the court held that the ‘‘rollers
were sold by [the patent owner] at cost, and without intent
to restrain competition in or monopolize the production of
the rollers.’’ 138 U.S.P.O. at 583. The court concluded that
sales of the rollers did not constitute patent misuse since
such sales were based on the defendant’s skills and experi-
ence in the design field, and hence not conditioned on the
defendant’s ownership of the patented design.
Unlike the Harte plaintiff, the plaintiff at bar does not
contend that it sells its propanil at cost in order to secure
licenses for its patented method; nor does it make any pre-
tense as to its intent to eliminate competition by monopo-
lizing the sale of propanil. There is also no contention here
that plaintiffs propanil is in any way superior to the prop-
anil sold by the defendants. Notwithstanding plaintiff's
reliance on this opinion, the Court is unable to agree that
the rationale of Harte applies in the present context.
Post-1952 authority cited by defendants supports the
broad proposition that a patent on a combination
[434]
does not secure a monopoly on any of the unpatented com-
ponents of that combination, and whether those components
are staple or nonstaple is a factor which the courts have
simply ignored in applying this principle. See M. Nelson,
Mercoid-Type Misuse is Alive, 56 J. PAT. OFF. COC’Y 134
(1974), and cases cited therein. See also McCullough Tool
Co. v. Welis Surveys, Inc., 343 F.2d 381 (10th Cir. 1965).
Plaintiff distinguishes defendants’ cases on various
grounds, including the fact that some do not deal with non-
staple components. /.g., Calhoun v. United States, 339
F.2d 665 (Ct. Cl. 1964), Sonobond Corp. v. Uthe Technolo-
96
gy, 314 F. Supp. 878 (N.D. Cal. 1970). For example, it is
urged that the unpatented component at issue in Sonobond
possessed many uses outside of the patent in dispute. Plain-
tiff concludes that § 271(d) was therefore inapplicable in
Sonobond because the condition precedent to its applica-
bility—the existence of a nonstaple article whose sale would
constitute contributory infringement—simply could not be
satisfied. As noted in Section III.B.1., supra, the Revisory
Notes to § 271 belie this interrelation between the four par-
agraphs of § 271. Only the tort of contributory infringe-
ment, as defined in paragraph (c) is limited to the sale of
nonstaple articles. Neither direct infringement under para-
graph (a), nor induced infringement under paragraph (b)
limits the applicability of these respective torts to non-
staple components. Paragraph (d) is ancillary to all three
of the paragraphs which precede it. Therefore, regardless
of whether the infringing article is staple or nonstaple,
patent misuse may be an appropriate defense.
Plaintiff also argues that cases in which royalty rates
are determined to be discriminatory because they are based
on whether the licensee purchased unpatented components
from the patent owner are not apposite to the present
facts.’®
[435]
However, in the context of patent misuse it is clear that
discriminatory royalty rate cases are applicable at least
to the limited extent that the discriminatory rate unduly
stifles or effectively destroys competition in the sale of
unpatented components. In the present context, if plaintiff
had offered at a prohibitive cost to license defendants, the
stifling effect might well be functionally indistinguishable
from a refusal to license at any price.
97
It is not necessary to consider all of the authority cited
by defendants. The Supreme Court in B. B. Chemical Co.,
supra, and Mercoid I and II, supra, characterized efforts
to effect a monopoly over unpatented components as patent
misuse, whether the component was nonstaple or otherwise.
Neither the legislative history nor the language of § 271
indicates that this rule has been modified. In determining
whether such a modification has transpired, it is sufficient
to conclude that the Court is aware of no authority that
construes § 271 to sanction, on grounds that the monopoly
sought extended to a nonstaple component, patent owner
conduct which would otherwise constitute patent misuse.
IV. DEFENDANTS’ COUNTERCLAIM FOR
ANTITRUST VIOLATIONS
Defendants have filed counterclaims in this action alleg-
ing violations of the antitrust laws, 15 U.S.C. §$1, 2 and
14. Defendants also seek declaratory relief under 28 U.S.C.
§ 2201, pronouncing the Wilson patent invalid and unen-
forceable. Nothing in this ruling should be construed to
be determinative of any of the matters raised by defendants
in their counterclaims. While conduct of a patent owner
which constitutes a violation of the antitrust laws would
usnally, if not always, constitute patent misuse as a matter
of law, the congruence of patent misuse and violations of
antitrust laws
[436]
has long been an unsettled question. It was unclear until
recently whether a finding of patent misuse required proof
of an antitrust violation. See Hensley Equipment Co. v.
ESCO Corp., 383 F.2d 252, note 19 (5th Cir. 1967). In
Zenith Radio Corp. v. Hazeltine
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