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INDEPENDENT WIRELESS TELEGRAPH COMPANY v. RADIO CORPORATION AMERICA

decided: January 11, 1926.

INDEPENDENT WIRELESS TELEGRAPH COMPANY
v.
RADIO CORPORATION OF AMERICA



CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.

Taft, Holmes, Van Devanter, McReynolds, Brandeis, Sutherland, Butler, Sanford, Stone.

Author: Taft

[ 269 U.S. Page 460]

 MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.

The Radio Corporation, a corporation of Delaware, filed a bill in equity in the Southern District of New York, joining with itself the De Forest Radio Telephone & Telegraph Company, also of Delaware, as co-plaintiff, against the Independent Wireless Telegraph Company, of Delaware, and the American Telephone & Telegraph Company, of New York. The case made in the bill was this:

[ 269 U.S. Page 461]

     Lee De Forest invented and received patents Nos. 841387 and 879532, dated in 1908 and 1909, for devices for amplifying feeble electric currents and certain new and useful improvements in space telegraphy. After giving limited licenses to the American Telephone & Telegraph Company, he assigned the patents to the De Forest Radio Telephone and Telegraph Company. On March 16, 1917, the De Forest Company, by writing duly recorded, gave an exclusive license to make, use and sell the devices for the life of the patents to the Western Electric Company, reserving to itself non-exclusive, non-transferable and personal rights to make, use and sell them for defined purposes. The Western Electric Company then assigned all that it thus received from the De Forest Company to the American Telephone and Telegraph Company. The American Telephone and Telegraph Company, on July 1, 1920, made a contract with the General Electric Company, by which they exchanged rights in various patents owned or controlled by each, including these rights in the De Forest patents. Some seven months prior, on November 20, 1919, the General Electric Company had granted to the Radio Corporation, the plaintiff, an exclusive license to use and sell for "radio purposes," i. e., "for transmission or reception of communication by what are known as electric magnetic waves except by wire," all inventions owned by the General Electric Company or thereafter acquired by it. The American Telephone and Telegraph Company subsequently confirmed in the Radio Corporation these after-acquired rights in the De Forest patents. Thus there came from the De Forest Company to the Radio Corporation, exclusive rights to use and sell in the United States, for radio purposes, apparatus for transmission of messages, and especially for use between ship and shore for pay.

The defendant, the Independent Wireless Company, has bought the same apparatus with the lawful right to use it in the amateur and experimental field only. The

[ 269 U.S. Page 462]

     apparatus thus bought bears a label with such a limitation on its use. The charge in the bill is that the Independent Company is using the apparatus, or the part of it called "radio tubes," in the commercial radio field between ship and shore for pay and thus is violating the Radio Corporation's rights in this field. An injunction is prayed and an accounting of profits and all damages to the plaintiffs and the American Telephone and Telegraph Company as their interests shall appear.

The twenty-fifth averment of the bill is that "the plaintiff, the De Forest Radio Telephone & Telegraph Company, as hereinbefore alleged, has certain rights in the patents in suit herein; that before filing this bill of complaint, said De Forest Radio Telephone & Telegraph Company, was requested to consent to join, as a co-plaintiff, herein, but declined; that said De Forest Radio Telephone & Telegraph Company is not within the jurisdiction of the Court and therefore can not be made a defendant herein; and that therefore to prevent a failure of justice, and to enable the plaintiff Radio Corporation of America to protect its exclusive rights under the patents in suit, said De Forest Radio Telephone & Telegraph Company, is made a plaintiff herein without its consent."

After securing an order for a bill of particulars, compliance with which disclosed the various agreements referred to in the bill and facts relevant thereto, the Independent Wireless Telegraph Company, defendant, moved that the court dismiss the bill of complaint, upon the following ground:

"That the De Forest Radio Telephone & Telegraph Company, the owner of the patent in suit, has not joined in this litigation as a party plaintiff by duly signing and verifying the bill of complaint herein, and the plaintiff Radio Corporation of America is not such a licensee under the patents as to permit it to sue alone in its own name, in the name of the owner of the patents in suit, or to

[ 269 U.S. Page 463]

     sue in the name of the owner of the patents joining itself as a licensee under the patents."

The District Court sustained the motion and dismissed the bill, in the view that it was bound by decisions of this Court to hold that the De Forest Company was the owner of the patent and an indispensable party and, being out of the jurisdiction, could not be made a party defendant by service or joined as a party plaintiff against its will. 297 Fed. 518. The Circuit Court of Appeals on appeal reversed the District Court, held that the De Forest Company was properly made co-plaintiff by the Radio Corporation, and remanded the case for further proceedings. 297 Fed. 521. We have brought the case here on certiorari. Section 240, Judicial Code.

The respondent in its argument to sustain the ruling of the Circuit Court of Appeals presses two points. The first is that by the contract between the De Forest Company and the Western Electric Company title to the patent was vested in the Western Electric Company and from it by assignment in the American Telephone & Telegraph Company; that the latter is a party defendant, having declined to be a plaintiff, and so satisfies the requirement of the presence in such a suit, as a party, of the owner of the patent. The difficulty the respondent meets in this suggestion is that its bill avers that what the American Telephone & Telegraph Company acquired from the De Forest Company was a license, so called in the contract creating it, and the making of the De Forest Company a party plaintiff to the bill was necessarily on the theory that it, and not the American Telephone and Telegraph Company, is the owner of the patent. The contracts between the corporations involved in the transfer of rights under the patent are long and complicated and in order to be fully understood require some knowledge of the new radio field. The Court is loath to depart, if it could, from the theory on which the bill was framed and both courts have acted, unless required to do so.

[ 269 U.S. Page 464]

     The question for our consideration then is, Can the Radio Company make the De Forest Company a co-plaintiff against its will under the circumstances of the case?

Section 4919, R. S., is as follows:

"Damages for the infringement of any patent may be recovered by action on the case, in the name of the party interested, either as patentee, assignee, or grantee. And whenever in any such action a verdict is rendered for the plaintiff, the court may enter judgment thereon for any sum above the amount found by the verdict as the actual damages sustained, according to the ...


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