Royal Industries, a Corporation v. St. Regis Paper Company, a Corporation

420 F.2d 449 ROYAL INDUSTRIES, a corporation, Appellant, v. ST. REGIS PAPER COMPANY, a corporation, Appellee. No. 22456. No. 22717. United States Court of Appeals Ninth Circuit. December 22, 1969. Robert M. Newall (argued), of Newall & Chester, Los Angeles, Cal., Christie, Parker & Hale, Pasadena, Cal., for appellant. Bennett W. Priest (argued), of O'Melveny & Myers, Los Angeles, Cal., Ward, Haselton, McElhannon, Brooks & Fitzpatrick, Stuart A. White, Nicholas L. Coch, New York City, for appellee. Before ELY, CARTER, and HUFSTEDLER, Circuit Judges. HUFSTEDLER, Circuit Judge: 1 Royal Industries ("Royal") brought this action against St. Regis Paper Company ("St. Regis") for patent infringement and unfair competition. Federal jurisdiction was based on 28 U.S.C. § 1338 . Royal appeals from the orders of the District Court denying Royal's motion for a preliminary injunction (28 U. S.C. § 1292(a) (1)) and granting St. Regis' motion for summary judgment ( 28 U.S.C. § 1291 ). 2 St. Regis was licensed to practice the patent in suit and to use the manufacturing know-how to produce the patented product, plastic tie strips. Royal cannot successfully maintain its…

Royal Industries (“Royal”) brought this action against St. Regis Paper Company (“St. Regis”) for patent infringement and unfair competition. Federal jurisdiction was based on 28 U.S.C. § 1338 . Royal appeals from the orders of the District Court denying Royal’s motion for a preliminary injunction (28 U. S.C. § 1292(a) (1)) and granting St. Regis’ motion for summary judgment ( 28 U.S.C. § 1291 ).

St. Regis was licensed to practice the patent in suit and to use the manufacturing know-how to produce the patented product, plastic tie strips. Royal cannot successfully maintain its patent infringement-unfair competition action unless St. Regis’ license was effectively terminated.

Royal contends that it terminated St. Regis’ license for breach of an oral condition to the written license that required St. Regis to adhere to sale prices set by Royal. St. Regis replies that: (1) the California parol evidence rule forecloses proof that there was any oral price fixing agreement; (2) even if the oral, condition could be proved, Royal, as one of two licensors, could not unilaterally terminate the license and Royal’s eolicensor joined in neither the notice of termination nor this action; and…

(concurring):

I concur in the result.

That portion of Judge Hufstedler’s opinion which states that Royal could not terminate the licensing agreement without the joinder or consent of its co-licensor, Plas-Ties, is sufficient to support affirmance of the summary judgment and I concur in this portion of the opinion.

The discussion concerning the parol evidence problem is dicta, since the decision does not rest upon it.

I would further affirm the judgment on another ground, relied upon by the district court. Assuming Royal’s contentions as to the price fixing agreement, the agreement violates the antitrust laws. The conflict between the antitrust laws and the rights arising under the patent monopoly have been discussed in many cases. The doctrine that a patent holder may fix the prices at which his licensee sells is a narrow one, and is limited to situations where the patent holder is also manufacturing and selling. United States v. General Electric Co., 272 U.S. 476 , 47 S.Ct. 192 , 71 L.Ed. 362 (1926) is limited to a situation where the “patentee licenses another to make and vend and retains the right to continue to make and vend on his own account,” 272 U.S. at 490 , 47 S.Ct.…