Opinion
Civ. A. 982.
July 21, 1948.
Arthur G. Connolly, of Wilmington, Del., Floyd H. Crews, of New York City, and Irving Herriott, of Chicago, Ill., for plaintiff.
Caleb S. Layton (of Richards, Layton Finger), of Wilmington, Del., Stephen H. Philbin (of Fish, Richardson Neave), John T. Cahill and William H. Davis, all of New York City, for defendants.
Action by the Zenith Radio Corporation against the Radio Corporation of America, and others, for a declaratory judgment of the invalidity of certain patents, wherein the named defendant counterclaimed for declaratory judgment of the invalidity and non-infringement by it of certain of plaintiff's patents. On motion by plaintiff to strike the counterclaim.
Motion granted.
This is an action by Zenith Radio Corporation, against Radio Corporation of America and others, seeking declaratory judgment of invalidity of certain patents. The present matter arises on RCA's third counterclaim, which seeks declaratory judgment of invalidity and non-infringement by it of certain of plaintiff's patents. The allegation of this counterclaim charges that plaintiff "has threatened, directly or by implication, to bring suit on such of said patents which it considers may be infringed by radio apparatus manufactured or sold, including radio apparatus manufactured and sold by this defendant which is manufacturing and intends to manufacture apparatus that plaintiff, upon information and belief, would assert would infringe one or more of said patents."
Zenith filed a motion requesting, among other things, that RCA's third counterclaim and the corresponding prayer for relief be stricken and dismissed on the ground that no justiciable controversy exists between plaintiff and defendant with respect to the subject matter alleged. In support of this motion, Zenith submitted an affidavit of its Executive Vice-President, Hugh Robertson. In opposition to the motion of Zenith, RCA submitted two affidavits, one by Ewen C. Anderson, who is Vice-President of RCA in charge of licensing matters, and the other by James G. Norton, who is familiar with matters relating to possible infringement of patents by RCA. These affidavits were followed by an answering affidavit by Robertson.
The question is whether there is a justiciable controversy within the meaning of the Declaratory Judgment Act, 28 U.S.C.A. § 400, as to whether RCA's manufacture and sale of radio receivers infringes valid patents owned by Zenith. There is no dispute between the parties as to any essential fact, but since the parties drew different inferences from the facts, it will be necessary to detail them with some particularity.
Plaintiff's Robertson affidavit states:
"I state as a fact, of my own knowledge, that no diagrams of the listed apparatus manufactured by or for Radio Corporation of America have been examined by direction or authorization of the Board of Directors or any officer of Zenith Radio Corporation or otherwise for Zenith Radio Corporation so far as I am aware with respect to any patent owned by Zenith Radio Corporation for the purpose of determining whether or not any of the said apparatus made or sold by the Radio Corporation of America infringes any patents owned by Zenith Radio Corporation. I further state, of my own knowledge, that no one authorized by the Board of Directors of Zenith Radio Corporation or any officer thereof, or otherwise so far as I am aware, has ever charged or stated orally or in writing that the said apparatus manufactured or sold by Radio Corporation of America infringes any patent owned by Zenith Radio Corporation."
RCA's Norton affidavit states that Zenith has marked its patents on its radio sets. That affidavit also lists certain specific patents and asserts that in Norton's opinion Zenith has a claim against RCA for infringement of these patents. In this connection it should be pointed out that Robertson's original affidavit indicates that no RCA apparatus has been examined to determine whether, in Zenith's opinion, it has a claim and his answering affidavit points out that there has still been no examination made despite the Norton affidavit.
RCA's Anderson affidavit contains an exchange of letters between the two companies in 1928 and 1930 in which certain Zenith patents were asserted to have been infringed. The Anderson affidavit shows that RCA in 1933 took a non-exclusive license under the Zenith patents. Attached to the Anderson affidavit is correspondence between the companies from 1941 to 1944 containing a supplemental agreement between the companies. This correspondence includes a charge of infringement of a number of Jones' patents owned by plaintiff. There is a letter from Zenith which acknowledges that only a single Jones patent has been infringed by an RCA subsidiary. The Robertson answering affidavit shows that this infringement consisted of the manufacture by RCA Manufacturing Company, Inc., then a subsidiary of RCA and not the asserter of the counterclaim here, of some five thousand phonographs of a very special and complicated type. These phonographs were a commercial failure. The Anderson affidavit states that RCA has now stopped the manufacture and sale "of this apparatus". This manufacture was also discontinued by RCA's subsidiary.
The answering Robertson affidavit asserts that Zenith has never given any serious consideration to the question of suing RCA or any subsidiary for the infringement of these Jones patents, and contains a release of any claim Zenith may have against RCA for any past, present or future infringement of certain patents, including the Jones patent.
The Anderson affidavit directs attention to a license agreement which provides that RCA is not released "from any claim, liability or demand whatsoever arising subsequent to February 20, 1941." But the Robertson answering affidavit, however, quotes the general release given by Zenith to RCA in the main agreement of June 15, 1944. Further in the Anderson affidavit there are letters from Zenith to RCA written in 1943 and 1944 in which it is admitted that Zenith knows of no claim as against RCA except with respect to the Jones patent mentioned above. The Anderson affidavit also asserts that Zenith offered RCA a royalty-free exchange license.
There is no assertion in the affidavits of RCA that Zenith has ever charged it with infringement of any patent except the Jones patent. But RCA claims that the affidavits support inferences which are claimed to support the action as a matter of law. RCA states: "(1) Zenith has in the past charged RCA with infringement and has specifically reserved rights to sue RCA for past and future infringements; (2) Zenith has stated to RCA that Zenith's patents are as important to RCA manufacture as the patents licensed by RCA to the rest of the industry and that RCA infringes them; and (3) by its marking Zenith has attempted to subject anyone infringing its patents to liability." It is also charged that Zenith has taken a positive attitude to strengthen its patents and that its only disclaimer of intent to sue RCA on Zenith's patents relates to its Jones patents and this was not made until after the counterclaim was filed.
Zenith answers these contentions by arguing that it has never charged RCA with infringement of any Zenith patent except those under which RCA in 1933 took a fully paid license for the life of the patents; that the release which RCA required of Zenith included a release to all of its subsidiaries; that RCA has never been charged with infringement of any patents except those under which RCA took a fully paid license for the lives of the patents in 1933. Plaintiff further answers that by its marking, it has not attempted to subject anyone to liability but merely performed a statutory duty. And it further answers that the record does not support its statement that it has continued to strengthen its patent position or that after RCA agreed to accept Zenith's claim of infringement of the Jones patent Zenith extended its patent infringement claims against RCA to other Zenith patents.
Before discussing the legal phase, I shall resolve the inferences to be drawn from the facts. I think Zenith has drawn the correct inferences from the facts and that the facts do not support RCA's inferences. Clearly from the record, Zenith has never charged RCA with infringement of any Zenith patent except those under which RCA in 1933 took a fully paid license for the life of the patents and the release which RCA required of Zenith included a release to all of its subsidiaries. Moreover the mere fact that Zenith has marked its patents is not to be construed as an in terrorem threat to the industry or against any of RCA's circuits. R.S. § 4900, 35 U.S.C.A. § 49, makes it a "duty" of all patentees to mark their patents. True, under Hazeltine Corp. v. Radio Corporation of America, 20 F. Supp. 668, no recovery may be had for infringement of any patent not marked; this is the only penalty for failing to mark the articles patented. Nevertheless, I do not think that the inference can be drawn, as RCA contends, that the only reason an article is marked "patented" is to enable the patentee to make a charge of infringement. It is still a statutory duty to mark the article, so that it is not correct to say that the marking necessarily constitutes a charge of infringement against anyone.
In the view I take of the inferences and the facts, it is clear that there is no justiciable controversy. The cases relied on by RCA, such as, Ætna Life Insurance Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617, 108 A.L.R. 1000; Lances v. Letz, 2 Cir., 115 F.2d 916; Treemond v. Schering Corp., 3 Cir., 122 F.2d 702; Dewey Almy Chemical Co. v. American Anode, Inc., 3 Cir., 137 F.2d 68; and Girdler Corp. v. DuPont, D.C.Del., 56 F. Supp. 871, affirmed 3 Cir., 152 F.2d 757, are good law but RCA has failed to bring itself within the prerequisites of these cases. For example, it has failed to meet the requirement of these cases that there must be allegations or facts that the claiming manufacturer is in jeopardy by reason of the patent, extensive threats of litigation, allegations or facts of interference with customers, or statements demanding that a certain company take a license. In short, RCA has failed to show any adequate substitute for the requirements which have usually been considered essential to establish a justiciable controversy.
The cases which RCA cites, in support of its claim that the controversy may exist even though its production threatened by the patent is only prospective at the time the action is commenced, are inapplicable because there is not even a threat of prospective infringement action here. There is no showing here that threatened action has been made at any time except the discussions that occurred in 1933; the fact of fourteen years of silence and inaction itself reenforces the view of a lack of a justiciable controversy.
Accordingly the motion to dismiss the third counterclaim should be granted.