PPG Industries, Inc. v. Westwood Chemical, Inc.

530 F.2d 700, 189 U.S.P.Q. (BNA) 399
CourtCourt of Appeals for the Sixth Circuit
DecidedFebruary 18, 1976
DocketNos. 75-1714, 75-1715
StatusPublished
Cited by16 cases

This text of 530 F.2d 700 (PPG Industries, Inc. v. Westwood Chemical, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
PPG Industries, Inc. v. Westwood Chemical, Inc., 530 F.2d 700, 189 U.S.P.Q. (BNA) 399 (6th Cir. 1976).

Opinion

PHILLIPS, Chief Judge.

As of what date does the liability of a patent licensee for royalties under an invalid patent terminate pursuant to Lear v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1968)? This recurring question is presented on the present appeal under a factual situation that differs somewhat from those involved in other decisions of this court dealing with this issue.

Ordinarily, liability would terminate as of the date the licensee ceases the payment of royalties for the purpose of prompting an early adjudication of the invalidity of the patent. However, under the facts and circumstances presented here, we hold that the liability of the licensee terminated as of the date this suit was filed on January 18, 1971.

This is a declaratory judgment action to declare unenforceable a nonexclusive patent royalty agreement executed between appellant, PPG Industries, Inc. (hereinafter referred to as PPG) and ap-pellee, Westwood Chemical, Inc. (hereinafter referred to as Westwood).

In case No. 75-1714, PPG appeals from the judgment of the District Court awarding Westwood back royalties from the time PPG ceased making payments until this action was filed, despite the court’s finding of patent invalidity based on collateral estoppel. In case No. 75-1715, Westwood cross-appeals from the court’s disallowance of royalties beyond the date PPG filed this action. We affirm the judgment of the District Court as to both issues.

I

On January 1, 1962, PPG and West-wood entered into the license agreement involved in this action. Under that agreement, Westwood granted to PPG a nonexclusive license under United States Patents No. 2,742,378 (’378) and No. 2,841,566 (’566), and several foreign patents. Its pertinent provisions are as follows:

Whereas, PPG is interested in

(1) Obtaining a non-exclusive license to make, use and sell articles and to [702]*702practice processes claimed in one or more of said U.S. patents;
(2) Obtaining for its customers immunity from suit for infringement of licensed patents as hereafter defined because of its customers’ manufacture, use or sale of licensed products as claimed in the licensed patents in which are incorporated primary products on which the royalty hereinafter provided for is payable by PPG to Westwood, and
(3) Obtaining immunity from suit for infringement of any foreign patents as hereinafter defined for itself and its customers for practice of any of the inventions covered in said foreign patents wherein primary products are used on which royalty as hereinafter provided for is payable by PPG to Westwood.
3.3 Westwood hereby grants to PPG the right to grant to customers of PPG a royalty-free immunity from suit for infringement under the licensed patents and foreign patents for the manufacture, use or sale of licensed products where such licensed products contain a product upon which a royalty as hereinafter provided for is payable by PPG to Westwood. Such immunity as provided for in this subsection, however, shall not extend to such customers’ manufacture, use or sale of a composite article or method of making same covered by a claim or claims of an unexpired licensed patent if in such composite article there is incorporated additional fibers and/or inorganic solids on which royalty would be due Westwood from a licensee of Westwood if such additional fibers or inorganic solids had been acquired from such licensee of West-wood.
Section 6 — Termination
6.1 This agreement shall terminate with the expiration of the last to expire of the licensed and foreign patents; subject, however, to earlier termination as provided hereafter in this Section 6.
6.2 PPG shall have the right to terminate this agreement by giving Westwood thirty (30) days’ notice in writing of its intentions so to do. * * * * * *
6.4 In the event that any time hereafter there shall not be pending a suit by Westwood against an infringer of the licensed patents based upon infringement on such scale that if licensed on the terms herein imposed the annual royalty return to West-wood would be at least two thousand dollars ($2,000) per year, then if any person or concern, without a license or right under the licensed patents, shall produce products coming within the definition of licensed products and if:
(1) PPG shall give Westwood written notice that such production has infringed a claim or claims of the licensed patents and
(2) PPG shall request that suit be brought under a licensed patent against such person, concern or third party because of such infringement and
(3) Westwood fails to bring such suit under some one or more of the licensed patents or to obtain discontinuance of such infringement or to license such infringer within six (6) months after receipt of such request, and
(4) Sales of said person or concern of such products is of such volume as to produce, if licensed, royalties of at least two thousand dollars ($2,000) per year,
then, in such case PPG shall be relieved of the payment of royalties, with respect only as to the licensed patents so alleged to be infringed until the day Westwood shall bring suit against an infringer or shall obtain discontinuance of said infringement or license said infringer; provided, however, that if during said six (6) months’ period Westwood shall have entered into bona fide negotiations to license such infringer and within six [703]*703(6) months after the expiration of said such six (6) months’ period shall license such infringer, then PPG shall not be relieved from paying royalties under this subsection with respect to any period for which royalties shall be paid on such material by such infringer except to the extent that the rate of royalties payable by PPG hereunder exceeds the rate of royalties paid by such infringer for such period.
6.5 Upon failure or inability of either party to perform any obligation under this agreement, the other party may give notice in writing to the party in default specifying the thing or matter requiring performance. Unless such performance be accomplished within sixty (60) days following the giving of such notice, the party seeking performance may give further written notice to the party in default terminating this agreement, in which event this agreement shall terminate on the date specified in such further notice. Waiver by either party of any single failure or inability or succession of failures or inabilities shall not deprive the other party of any right to terminate this agreement arising by reason of any subsequent failure or inability.

Pursuant to § 6.4 of the agreement, patent infringement suits were brought by Westwood in the Northern District of Ohio against companies alleged to infringe patents ’378 and ’566. In civil action C62—681, Westwood sued Ferro Corporation. In civil action C63-208, Molder Fiber Glass Body Co. was sued. In civil action No. C63-460, Westwood sued Johns-Manville Fiber Glass and Owens Fiberglass Corp., and on September 18, 1963, Ferro Corporation was made an additional defendant. In 1967, West-wood sued Certain-Teed Products Corp.

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Bluebook (online)
530 F.2d 700, 189 U.S.P.Q. (BNA) 399, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ppg-industries-inc-v-westwood-chemical-inc-ca6-1976.