THE LAW AND
PRACTICE UNDER 35 USC 135(c)[1]
A. What is “an interference” Within the Meaning of 35 USC 135(c)?
B. Who are
the “parties to an interference” Within the Meaning of 35 USC 135(c)?
C. What is
an “agreement... made in connection with or in contemplation of the termination
of the interference” Within the Meaning of 35 USC 135(c)?
D. What is
an “understanding... made in connection with or in contemplation of the
termination of the interference” Within the Meaning of 35 USC 135(c)?
E. What is a
“collateral agreement[ ]” Between the Parties to an Interference Within the
Meaning of 35 USC 135(c)?
F. What Kind
of a Reference to a “collateral agreement
[ ]” Between the Parties to an Interference is Required to Trigger 35
USC 135(c)?
G. What is “the
termination of... [an] interference as between the said parties to an agreement
or understanding” Within the Meaning of 35 USC 135(c)?
H. What (If
Anything) Must One Do If an Agreement or Understanding a Copy of Which Has Been
Filed in the PTO Pursuant to 35 USC 135(c) is Later Modified?
I. Does 35
USC 135(c) Apply to Agreements or Understandings Made Prior to the Declaration
of an Interference?
J. What Does
It Mean for an Agreement or Understanding
to “be in writing” Within the Meaning of 35 USC
135(c)?
K. What is a “true copy” of an Agreement or Understanding Within the Meaning of 35 USC 135(c)?
L. Who Has
Standing to Assert a Violation of 35 USC 135(c)?
M. By What
Standard of Proof Must a Party Asserting a Violation of 35 USC 135(c) Prove Its
Case?
N. How Does
the PTO Implement the Mandate in 35 USC 135(c) that, “If any party filing... [a
true copy of an agreement or understanding between the parties to an
interference] so requests, the copy shall be kept separate from the file of the
interference...”?
O. What
“Government agencies” are Entitled to Obtain Access to the Copies of 35 USC
135(c) Agreements “kept separate from the file[s] of the interference[s]”
Pursuant to the Written Requests of the Parties That Filed the Copies, and What
Government Agencies Do Obtain Access to the Copies of 35 USC 135(c)
Agreements “kept separate from the file[s] of the interference[s]” Pursuant to
the Written Requests of the Parties That Filed the Copies?
P. How Do the Government Agencies Go About Obtaining Access to the Copies of 35 USC 135(b) Agreements “kept separate from the file[s] of the interference[s]” Pursuant to the Written Requests of the Parties That Filed the Copies?
Q. What Do
the Government Agencies Do After Having Obtained Access to the Copies of 35 USC
135(c) Agreements “kept separate from the file[s] of the interference[s]”
Pursuant to the Written Requests of the Parties that Filed the Copies?
R. What
Reasons Have Been Accepted or Not Accepted as Constituting “good cause” Within the
Meaning of 35 USC 135(c) for Someone Other Than a “Government agenc[y]” to
Obtain Access to a 35 USC 135(c) Agreement “kept separate from the file of the
interference” Pursuant to the Written Request of the Party That Filed the Copy?
S. If a
Party to an Interference Failed to Comply with 35 USC 135(c), Does the Entire
Patent Become Permanently Unenforceable or Only the Claims That Were Designated
as Corresponding to the Count or Counts in the Interference?
T. If a
Party to an Interference Failed to Comply with 35 USC 135(c), is a Patent That
Matured from a Downstream Application Permanently Unenforceable?
U. If a
Party to an Interference Failed to Comply with 35 USC 135(c), Can That Failure
be Remedied in Any Way?
V. What
Reasons Have Been Accepted or Not Accepted as Constituting “good cause” Within
the Meaning of 35 USC 135(c) Justifying the Filing of a Copy of a 35 USC 135(c)
Agreement or Understanding “during the six-month period subsequent to the
termination of the interference as between the parties to the agreement or
understanding”?
W. Is a
Notice Concerning 35 USC 135(c) Given in the Declaration of the Interference a
“notice... [given] a reasonable time prior to... [the] termination [of the
interference]...” Within the Meaning of 35 USC 135(c)?
X. Does a
Notice Given to a Patent Agent or Agents of Record Rather Than to an Attorney
or Attorneys of Record Comply with the Second Paragraph of 35 USC 135(c)?
Y. Is a
Patent Permanently Unenforceable If the Commissioner Fails to Give the Required
Notice, But the Patentee and/or the Patentee's Attorney or Agent Knew About 35
USC 135(c) and Nevertheless Failed to Comply with It?
Z. What are
the “discretionary action[s] of the Commissioner” Referred to in the Third
Paragraph of 35 USC 135(c), and What Standard of Review Will the Court Apply if
you Do Seek Review Under Section 10 of the Administrative Procedure Act of a
Discretionary Action of the Commissioner Under 35 USC 135(c)?
I. Introduction
35 USC 135(c) was added to 35 USC
135 in 1962 by Public Law 87-831.
According to the House Committee Report relating to the enactment of the
bill that became 35 USC 135(c):
Interference proceedings may be terminated in a manner
hostile to the public interest by using patent interference settlement
agreements as a means of restricting competition. To make such a practice more difficult[,] the bill requires the
filing of such agreements in the Patent Office.[3]
The legislative history indicates that its sponsors
expected what became 35 USC 135(c) to have a major, salutary impact on patent
law.[4] Specifically, what became 35 USC 135(c) was
apparently expected to aid the Antitrust Division of the Justice Department in
ferreting out antisocial activity by the patent interference bar.
In practice, 35 USC 135(c) has had little
impact. However, the “harsh”[5]
and “penal”[6]
results of non-compliance with 35 USC 135(c) require that careful attention be
paid to it. Compliance may be pointless,
but it can't be overlooked.
II. The Statutory and Regulatory Scheme -- and
a Few Questions
In
its current incarnation, 35 USC 135(c) reads as follows[7]:
Any agreement or understanding
between parties to an interference, including any collateral agreements
referred to therein, made in connection with or in contemplation of the
termination of the interference, shall be in writing and a true copy thereof
filed in the Patent and Trademark Office before the termination of the
interference as between the said parties to the agreement or
understanding. If any party filing the
same so requests, the copy shall be kept separate from the file of the
interference, and made available only to Government agencies on written
request, or to any person on a showing of good cause. Failure to file the copy of such agreement or understanding shall
render permanently unenforceable such agreement or understanding and any patent
of such parties involved in the interference or any patent subsequently issued
on any application of such parties so involved. The Commissioner may, however, on a showing of good cause for
failure to file within the time prescribed, permit the filing of the agreement
or understanding during the six-month period subsequent to the termination of
the interference as between the parties to the agreement or understanding.
The Commissioner shall give notice
to the parties or their attorneys of record, a reasonable time prior to said
termination, of the filing requirement of this section. If the Commissioner gives such notice at a
later time, irrespective of the right to file such agreement or understanding
within the six-month period on a showing of good cause, the parties may file
such agreement or understanding within sixty days of the receipt of such
notice.
Any discretionary action of the
Commissioner under this subsection shall be reviewable under section 10 of the
Administrative Procedure Act.
The statutory mandate that, “If any
party filing... [a true copy of an agreement or understanding between the
parties to an interference] so requests, the copy shall be kept separate from
the file of the interference...” is reflected in 37 CFR 1.666, which currently
reads as follows:
§
1.666 Filing of interference settlement
agreements.
(a)
Any agreement or understanding between [the] parties to an interference,
including any collateral agreements referred to therein, made in connection
with or in contemplation of the termination of the interference, must be in
writing and a true copy thereof must be filed before the termination of the
interference (§ 1.661) as between the parties to the agreement or
understanding.
(b)
If any party filing the agreement or understanding under paragraph (a)
of this section so requests, the copy will be kept separate from the file of
the interference, and made available only to Government agencies on written
request, or to any person upon petition accompanied by the fee set forth in §
1.17(i) and on a showing of good cause.
(c)
Failure to file the copy of the agreement or understanding under
paragraph (a) of this section will render permanently unenforceable such
agreement or understanding and any patent of the parties involved in the
interference or any patent subsequently issued on any application of the parties
so involved. The Commissioner may,
however, upon petition accompanied by the fee set forth in § 1.17(h) and on a
showing of good cause for failure to file within the time prescribed, permit
the filing of the agreement or understanding during the six month period
subsequent to the termination of the interference as between the parties to the
agreement or understanding.
Finally, the statute and the rule
are further explained in MPEP § 2366, which currently reads as follows:
***
37
CFR 1.666 sets out the procedure for filing settlement agreements in
interference cases. The PTO is merely a
repository for copies of agreements filed under 35 U.S.C. 135(c) and does not
undertake to rule on whether the statute requires that a copy of any particular
agreement be filed. Nelson
v. Bowler, 212 USPQ 760 (Comm'r Pat.
1981).
A
Certificate of Mailing under 37 CFR 1.8 cannot be used for the purpose of
filing a settlement agreement, nor can the settlement agreement be transmitted
by facsimile, (37 CFR 1.6(d)(3) and 1.8(a)(2)(i)(C)).
The
language of 35 USC 135(c) suggests at least the following questions, some of
which have been answered by the case law or PTO practice and some of which have
not yet been answered by the case law or PTO practice:
What is “an
interference” within the meaning of the first sentence of the first paragraph
of 35 USC 135(c)?
Who are the
“parties to an interference” within the meaning of the first sentence of the
first paragraph of 35 USC 135(c)?
What is an
“agreement...made in connection with or in contemplation of the termination of
the interference” within the meaning of the first sentence of the first
paragraph of 35 USC 135(c)?
What is an
“understanding...made in connection with or in contemplation of the termination
of the interference” within the meaning of the first sentence of the first
paragraph of 35 USC 135(c)?
What is a
“collateral agreement[ ]” between the parties to an interference within the
meaning of the first sentence of the first paragraph of 35 USC 135(c)?
What kind
of a reference to a “collateral agreement[ ]” between the parties to an
interference is required to trigger 35 USC 135(c)?
What is
“the termination of... [an] interference as between the said parties to an
agreement or understanding” within the meaning of the first sentence of the
first paragraph of 35 USC 135(c)?
What (if
anything) must one do if an agreement or understanding a copy of which has been
filed in the Patent and Trademark Office pursuant to the first paragraph of 35
USC 135(c) is later modified (a) prior to termination of the interference, (b)
within the six-month period subsequent to the termination of the interference
as between the parties to the agreement or understanding, or (c) after the
six-month period subsequent to the termination of the interference as between
the parties to the agreement or understanding?
Does the first
paragraph of 35 USC 135(c) apply to an agreement or understanding made prior
to the declaration of an interference?
What does
it mean for an “agreement or understanding” to “be in writing” within the
meaning of first sentence of the first paragraph of 35 USC 135(c)?
What is a
“true copy” of an agreement or understanding within the meaning of the first
sentence of the first paragraph of 35 USC 135(c)?
Who has
standing to assert a violation of 35
USC 135(c)?
By what
standard of proof must a party asserting a violation of 35 USC 135(c) prove its
case?
How does
the PTO implement the statutory mandate in the second sentence of the first
paragraph of 35 USC 135(c) that, “If any party filing... [a true copy of an
agreement or understanding between the parties to an interference] so requests,
the copy shall be kept separate from the file of the interference...”?
What
Government agencies are entitled to obtain access to the copies of 35 USC
135(c) agreements “kept separate from the file[s] of the interference[s]”
pursuant to the written requests of the parties that filed the copies, and what
Government agencies do obtain access to the copies of 35 USC 135(c)
agreements “kept separate from the
file[s] of the interference[s]” pursuant to the written requests of the parties
that filed the copies?
How do the
Government agencies go about obtaining access to the copies of 35 USC 135(c)
agreements “kept separate from the file[s] of the interference[s]” pursuant to
the written requests of the parties that filed the copies?
What do the
Government agencies do after having obtained access to the copies of 35 USC
135(c) agreements “kept separate from the file[s] of the interference[s]”
pursuant to the written requests of the parties that filed the copies?
What
reasons have been accepted or not accepted as constituting “good cause” within
the meaning of the second sentence of the first paragraph of 35 USC 135(c) for
someone other than a “Government agenc[y]” to obtain access to a copy of a 35
USC 135(c) agreement “kept separate
from the file of the interference” pursuant to the written request of the party
that filed the copy?
If a party
to an interference failed to comply with 35 USC 135(c), does the entire patent
become permanently unenforceable or only the claims that were designated as
corresponding to the count or counts in the interference?
If a party
to an interference failed to comply with 35 USC 135(c), is a patent that
matured from a downstream application permanently unenforceable?
If a party to an interference failed to comply with 35 USC
135(c), can that failure be remedied in any way?
What
reasons have been accepted or not accepted as constituting “good cause” within
the meaning of the fourth sentence of the first paragraph of 35 USC 135(c)
justifying the filing of a copy of a 35 USC 135(c) agreement “during the
six-month period subsequent to the termination of the interference as between
the parties to the agreement or understanding”?
Is a notice
of 35 USC 135(c) given in the declaration of the interference a “notice...
[given] a reasonable time prior to... [the] termination [of the
interference]...” within the meaning of the first sentence of the second
paragraph of 35 USC 135(c)?
Does a notice
given to a patent agent or agents of record rather than to an attorney or
attorneys of record comply with the second paragraph of 35 USC 135(c)?
Is a patent
permanently unenforceable if the Commissioner fails to give the required
notice, but the patentee and/or the patentee's attorney or agent knew about 35
USC 135(c) and nevertheless failed to comply with it?
What are
the “discretionary action[s] of the Commissioner” referred to in the third
paragraph of 35 USC 135(c), and what standard of review will the court apply if
you do seek review under section 10 of the Administrative Procedure Act of a
discretionary action of the Commissioner under 35 USC 135(c)?
III. A
Few Answers -- and a Few Guesses
A. What is “an interference” Within the Meaning
of 35 USC 135(c)?
The
only guidance we have on this question comes from Carella v. Starlight Archery 804 F.2d 135, 231 USPQ
644 (Fed. Cir. 1986)Carella v. Starlight Archery, 804 F.2d 135, 231 USPQ
644 (Fed. Cir. 1986). There a third
party had previously sued the patentee (Carella) for a declaratory judgment,
apparently that one or more claims in Carella's patent were invalid. The previous action had been settled, and
the patentee had “fail[ed] to disclose [that settlement] to the PTO....”[8] The defendant in the action for patent
infringement on appeal argued that the patentee's failure to disclose the settlement of the previous
litigation to the PTO “should have rendered Carella's patent void ab initio.”[9] The court rejected that argument, saying
that:
We have considered this argument, but are
unpersuaded. The cited cases [i.e., Precision Instrument Mfg. Co. v. Automotive
Maintenance Machinery Co.
324 U.S. 806, 65 USPQ 133 (1945)Precision Instrument Mfg. Co. v. Automotive
Maintenance Machinery Co., 324 U.S. 806, 818-20, 65 USPQ 133, 138-40
(1945), and Moog, Inc. v. Pegasus Laboratories, Inc. 521 F.2d 501,
187 USPQ 279 (6th Cir. 1975)Moog Inc.
v. Pegasus Lab., Inc., 521 F.2d 501, 504, 187 USPQ 279, 281-82 (6th Cir.
1975)] are inapposite because they deal specifically with failure to disclose
in the context of an interference proceeding before the PTO, which is not
present in this case.[10]
Thus,
I think it safe to say that both patent infringement actions and actions for
declaratory judgments of non-infringement and/or invalidity are not
interferences within the meaning of 35 USC 135(c). However, how about (a) a patent-patent interference under 35 USC
291 and (b) a civil action under 35 USC 146 to review a decision by the board
in a proceeding under 35 USC 135(a)?
Even more importantly, how about an agreement or understanding between
the parties to an incipient interference -- i.e., an interference that
has not yet been declared?
As
to patent-patent interferences under 35 USC 291, I know of no authority
requiring that an agreement or understanding between the parties to a 35 USC
291 action must be filed with the Patent and Trademark Office,[11]
and it could be argued that, since, by definition, a United States district
court has jurisdiction over any such proceeding, there would be no reason to
file a true copy of an agreement or understanding between the parties to such a
proceeding with the Patent and Trademark Office. On the other hand, a 35 USC 291 action is clearly “an
interference” in a general sense, and it could be argued that the plain
language of the statute requires that result whether or not it makes any sense. Moreover, if the point of 35 USC 135(c) is
to aid the Antitrust Division of the Justice Department in ferreting out
antisocial activity by the patent interference bar, there is no reason to think
that we engage in any less such activity in patent-patent interferences under
35 USC 291 than we do in application-application and application-patent
interferences under 35 USC 135. On
balance, I recommend the filing of a true copy of any such agreement or
understanding with the PTO.
As
to civil actions under 35 USC 146 to review decisions of the board in proceedings
under 35 USC 135(a), again assuming that the point of 35 USC 135(c) is to aid
the Antitrust Division of the Justice Department in ferreting out antisocial
activity by the patent interference bar, there is obviously no reason to draw a
distinction between a 35 USC 135(a) proceeding before the board and a 35 USC
146 proceeding before a district court -- or, for that matter, between a
proceeding before the board and an appeal to the Federal Circuit from a
decision by either the board in a 35 USC 135(a) proceeding or a district court
in a 35 USC 146 proceeding. However, in
CTS Corp. v. Piher International
Corp. 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984)CTS Corp. v. Piher
International Corp., 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984), the court
specifically left open the possibility that a 35 USC 146 proceeding is not
"an interference" within the meaning of 35 USC 135(c):
We
note with interest that appellee contends that an "interference," as
stated in section 135, refers only to the proceedings in the PTO and not to the
proceedings in the district courts under section 146. Thus, the "interference" in the instant case terminated
in 1980 when the PTO granted priority to CTS.
We, however, do not and need not reach this issue. Moreover, the record for this issue was not
fully developed below.[12]
As
to an agreement or understanding settling an incipient interference, see
section III.I, infra.
B. Who are the “parties to an interference”
Within the Meaning of 35 USC 135(c)?
As stated
in section I.C., “The Parties to an Interference” of Gholz, “Interference
Practice,” Chapter 24 in Patent Practice (6th Ed. Release No. 1):
The
nominal parties to interferences in the Patent and Trademark Office are the
named inventors, regardless of whether the applications or patents involved
have been assigned. That is, the
interference will be termed “Jones v.
Smith,” not “ABC Corp. v. XYZ Inc.,”
even if Jones and Smith have each left their former employers and have no
further interest in the subject matter of the interference.
However, as that treatise notes in the next
paragraph:
The
polite fiction that the litigation is between the inventors rather than the
owners of the applications or patents involved is, however, abandoned when it
comes to discovery (e.g., when the question is whether a given document is in
the possession, custody, or control of one of the “parties”), when it comes to
determining personal jurisdiction or venue for a civil action brought to review
the decision of the board under 35 USC § 146, and when two or more cases are
owned by the same real party in interest.[13]
While
I have found no opinion that expressly deals with the issue, it is my opinion
that, if the issue were ever litigated, the court would hold that the “parties
to an interference” within the meaning of 35 USC 135(c) are the real
parties in interest, not the nominal “parties” as that term is used in the
Patent and Trademark Office.
The
opinion that comes closest to answering this question is PPG Industries, Inc. v. Bausch & Lomb,
Inc.___ F.Supp. ___, 205 USPQ 914 (W.D.N.Y. 1979)PPG Industries, Inc. v. Bausch
& Lomb, Inc., ___ F.Supp. ___, 205 USPQ 914 (W.D.N.Y. 1979). There the defendant, Bausch & Lomb,
argued that Brockaway's Weber patent[14] was
“unenforceable because a license agreement between PPG, Research Corporation[,]
and Corning, excuted [sic; executed] September 16, 1969 was not filed with the
Patent Office.”[15] The opinion says that Bausch & Lomb
“contend[ed] that this agreement should have been filed because of the
provisions of 35 U.S.C. Section 135(c), which requires parties to an
interference to file agreements they make in contemplation of termination of
the interference.”[16] That sentence implies that the September 16,
1969, license agreement was entered into prior to termination of the
interference. However, elsewhere in the
opinion the court indicated that the interference was Kistler v. Webber412 F.2d 280, 162 USPQ 214 (CCPA
1969)Kistler v. Weber, 412 F.2d 280, 162 USPQ 214 (CCPA 1969) (Rich,
J.). That case was decided by the CCPA
on June 26, 1969, which was before the license agreement was executed on
September 16, 1969, and certiorari was not sought. Accordingly, the interference had apparently terminated before
the license agreement was executed,[17] which makes
the court's analysis doubly suspect -- i.e., suspect for a reason other than
the goofiness of the court's reasoning, discussed below.
Now,
recall that the patentee was Brockaway and that the court said that the license
agreement was “between PPG, Research Corporation[,] and Corning....”[18] Elsewhere in the opinion the court said that
“Research Corporation, acting as... [Brockaway's] licensing agent in the
ophthalmic field, has [apparently as of the 1979 date of the court's opinion]
licensed nearly fifty companies to use the Weber invention in strengthening
lenses.”[19] Thus, Research Corporation's position in the
license agreement with PPG and Corning was apparently that of Brockaway's
agent, not that of a principal.
Nevertheless, the court said that 35 USC 135(c) didn't apply because:
45. Brockaway was, at all relevant times, the
owner of the Weber patent and was the controlling party to the interference
between the Weber patent and Kistler's application. Brockaway was not a party to the agreement in question. Since the only agreements required to be
filed under the penal provisions of the statute are those between parties to an
interference, the statute is not applicable.
PPG, which was a party to the agreement, was not a party to the
interference. The fact that a PPG house
counsel, Oscar Spencer, was representing Brockaway in the interference does not
make PPG a party. It is clear that
Spencer was acting under the direct control of Brockaway, its general counsel,
Saperston, and its outside patent counsel, Christel.
46. The statute requires only the filing of
agreements made in settlement of interferences or those which totally destroy
the incentives of the parties to the interference to litigate in an adverse
manner. The license agreement in
question here did not terminate or otherwise decide the interference, and
Research Corporation, the only party to the license agreement who was also a
party to the interference,[[20]]
retained the same strong incentives to litigate after the license agreement
that it had before that agreement.
Research Corporation's financial incentives to win the interference were
greater after the license agreement than they had been before it.[21]
Comment: In my opinion, if Research Corporation was
acting as Brockaway's “licensing agent” when it entered into the license
agreement with PPG and Corning, Brockaway should have been deemed a party to
the license agreement for purposes of 35 USC 135(c). However, 35 USC 135(c) apparently still did not apply (a) because
the license agreement was entered into after the interference had been
terminated[22]
and (b) because the party Kistler's assignee (which was apparently the University
of Utah, although Judge Rich's opinion does not say so expressly) was not a
party to the license agreement. That
is, the license agreement was not between the real parties in interest to the
interference.
Despite
the general goofiness of the opinion, PPG can be cited (gingerly) for
the proposition that 35 USC 135(c) does not require the filing of a license
agreement entered into during the course of an interference between one real
party in interest to the interference and another party that is not involved in
the interference.[23]
C. What is an “agreement... made in connection
with or in contemplation of the termination of the interference” Within the
Meaning of 35 USC 135(c)?
According
to CTS Corp. v. Piher International
Corp., 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984):
As a means to prevent anti-competitive settlements
between parties involved in patent interferences, any settlement agreements
between parties must be filed with the PTO.[24]
***
We agree
with the district court that, pursuant to section 135(c), there must be a
causal relationship between the agreements and the termination of the
interference. See United States v. FMC Corp. 514 F.Supp. 1166, 210 USPQ 486
(E.D. Pa. 1981), ___ F.Supp. ___, 215 USPQ 43 (E.D. Pa. 1982), rev'd, 717 F.2d
775, 219 USPQ 761 (3rd Cir. 1983)United States v. FMC Corp., 215 USPQ 43, 51-53
(E.D.Pa. 1982), rev'd on other grounds, 717 F.2d 775, 219 USPQ 761 (3rd Cir.
1983); cf. Moog [, Inc. v. Pegasus Laboratories, Inc., 521 F.2d 501, 187 USPQ 279
(6th Cir. 1975)], 521 F.2d at 506 (“The District Court was right in finding a
causal relationship between the withholding [of an agreement] and the
termination of the interference.”).[25]
That language certainly suggests that 35 USC 135(c)
requires the filing only of copies of settlement agreements (i.e., of
agreements that are part of the termination of an interference),[26]
and indeed CTS was found not to have violated 35 USC 135(c) in this case
because the agreement a copy of which it did not file had nothing to do with
the termination of the interference.[27] However, there is other precedent that
indicates that the obligation is actually much broader.
In Old Dominion Box Co. v. Continental Can Co.
273 F.Supp. 550, 155 USPQ 70 (S.D.N.Y. 1967), aff'd on other grounds, 393 F.2d
321, 157 USPQ 353 (2nd Cir. 1968)Old Dominion Box Co. v. Continental Can Co.,
273 F.Supp. 550, 155 USPQ 70 (S.D.N.Y. 1967), aff'd on other grounds, 393 F.2d 321, 157 USPQ 353 (2nd Cir. 1968), the
agreement a copy of which the patentee had not filed was “quite lengthy”[28]
and “contained numerous provisions covering many matters”[29] -- most of
which apparently had nothing to do with the interference. Nevertheless, the agreement was entered into
during the pendency of the interference, and one of its provisions “granted
Federal [the assignee of the party that lost the interference] an exclusive
license to manufacture and sell cartons under the Weiss patent [i.e., one of
the patents involved in the subject declaratory judgment action].”[30] According to the court:
The agreement contained no specific provision for
the termination of the interference proceedings as to the Weiss patent, yet the
licensing of Federal under the Weiss patent, for all practical purposes, made
it improbable that the interference proceedings would or could be
continued. The parties to the agreement
apparently recognized that fact, for on the very day the contract was entered
into counsel for Continental wrote counsel for Federal in regard to the matter
of terminating the interference proceedings, which was done.
Realistically,
it is difficult to envision the agreement of June 18, 1962, other than as an
agreement “in connection with or in contemplation of the termination of the
interference.” It seems clear that at
the time the agreement was signed there was in the contemplation of the parties
a termination of the interference proceedings.
It is the finding of the Court that the agreement of June 18, 1962, did
constitute an agreement within the purview of Section 135(c), Title 35 U.S.C.A.[31]
While
the broad supposition that the licensing of one interferent by another
interferent makes it improbable that the interference proceedings will be
continued is utter nonsense,[32] what the Old Dominion court said may
have made sense under the facts of that case.
Specifically, the court noted that:
On June 18, 1962, on the day the agreement was
executed and while the interference proceedings were still pending, counsel for
the defendant, Continental Can Company, Inc., wrote counsel for the Federal
Paper Board Company, in part, as follows:
“Obviously, the public use
referred to in your letter of May 21, 1962 would constitute a bar to the
allowance of any valid claims in the Arneson application [i.e., in Federal's
case in the interference] which would cover the Weiss carton. However, the disclosures in the [Arneson]
application and in patent No. 2,990,997 [i.e., the Weiss patent] are not
identical[,] and possibly limited claims could be drawn which would not be
generic. Whether any such claims, if
obtained, would be of any value is questionable, particularly in view of the
fact that the lock per se is broadly old as shown in Trogman patent No. 2,102,497,
which we note is cited in 2,990,997.
“If you feel the interests
of both parties will best be served by abandoning the Arneson application, we
are authorized [sic; we authorize you?] to drop the prosecution of the same
***.”[33]
That certainly suggests that the agreement had taken
the fight out of the party Arneson!
Also, it is no doubt relevant that the party Arneson filed its
concession of priority on October 17, 1962, only four months after the
agreement was executed.
Morever,
while Old Dominion could perhaps be limited to its own peculiar facts,
in Forbro Design Corp. v. Ratheon Co. ___ F.Supp. ___, 190 USPQ 70 (D. Mass.
1975), aff'd on other grounds, 532 F.2d 758, 190 USPQ 49 (1st Cir. 1976)Forbro
Design Corp. v. Ratheon Co., ___ F.Supp. ___, 190 USPQ 70 (D. Mass.
1975), aff'd on other grounds, 532 F.2d 758, 190 USPQ 49 (1st Cir. 1976), the
agreement a copy of which was not filed was a garden variety “non-exclusive,
royalty-free cross-license agreement”[34] entered into
during the pendency of the interference.
Despite the cross license, “Interference proceedings continued[,] and
the matter never went to settlement.”[35] Nevertheless, the court found that the
prevailing party had violated 35 USC 135(c) by not filing a copy of the cross
license agreement:
Plaintiff's
position that the agreement was not connected with settlement discussions is
simply untenable. It is true that the
parties agreed to let the Board decide their dispute, but there can be no question
but that the cross-license had to have had an effect upon the proceedings. After their agreement was signed, both
parties had the right to use the patent in issue royalty-free, regardless of
the outcome of the Interference. The
Court is particularly struck by the deposition of Hewlett-Packard counsel
Chognard [Hewlett-Packard was the assignee of the party that lost the
interference] on the question of the Interference decision:
Q. Why did
you not appeal from the decision?
A. Mostly
pressure of other work. We had a
license under the patent, anyway, since we had at that time negotiated a fairly
broad cross-licensing agreement with Kepco,[[36]] and there
wasn't enough economic interest involved as far as we were concerned to justify
further expense.
And
later in the same deposition:
Let me clarify one point as
far as our mental state at the time was concerned: We had a sporting interest in winning the interference[,] and you
can see from the papers that we did quite a bit of digging and trying to get
some evidence. But from the business
standpoint we really didn't care whether we won it or not.
The point is that there can be no doubt of a
connection between the cross-licensing agreement and the resolution of the
Interference. Whether the Interference
is terminated by a settlement or by the Board is unimportant if the effect of
an agreement is to remove the adversary character of the proceedings. The harm to the public from such an
agreement is present in either situation.[[37]] The legislative history of § 135(c) reflects
this sentiment: “Interference
proceedings may be terminated in a manner hostile to the public interest by
using patent interference settlement agreements as a means of restricting
competition.” Senate Report No. 2169,
U.S. Code Cong. & Admin. News, 87th Cong., 2nd Sess., p. 3286 (1962). This is not to say that there has been an
antitrust violation or that the failure to file was fraudulent. Section 135(c) addresses itself only to
filing requirements[,] and it is only this filing requirement which I find
plaintiff has violated in the prosecution of the Interference.[38]
Comment: Of course interferents through their counsel
enter into myriads of “agreements” during the course of most interferences, and
I do not think that an agreement to start a witness's deposition an hour later
than originally scheduled needs to be reduced to writing and a copy filed with
the PTO.[39] However, if a court can be persuaded that,
absent additional facts, a royalty-free cross-license agreement entered into
during the course of an interference is “an agreement... [that] remove[s] the
adversary character of the proceedings,”[40] it is
certainly prudent to reduce to writing and file with the PTO copies of many
agreements that fall far short of being “settlement agreements” as that phrase
is normally used.
D. What is an “understanding... made in
connection with or in contemplation of the termination of the interference”
Within the Meaning of 35 USC 135(c)?
The
word “understanding” in 35 USC 135(c) was presumably intended to cover
agreements by “a wink and a nod,” as opposed to formal agreements. That is, if two friendly real parties in
interest[41]
trust each other enough not to reduce a mutual understanding to a written
contract,[42]
but each party clearly understands that the other is going to do something
"in connection with or in contemplation of the termination of the
interference," 35 USC 135(c) is designed to compel the parties to reduce
that mutual understanding to writing and to submit it to the PTO for scrutiny
by the Antitrust Division.[43]
That
is how the court treated the “understanding” language in 35 USC 135(c) in United States v. FMC Corp., ___ F.Supp. ___, 215 USPQ 43
(E.D. Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983). There the Antitrust Division (which was the
party asserting that 35 USC 135(c) had been violated):
conten[ded]... that
defendant [FMC] and Bayer [the assignees of the interferents] reached an
unwritten understanding at the August, 1968 meeting that defendant drop pending
oppositions to Bayer's patent applications in Australia, Israel, and
Japan. The government argue[d] [that]
defendant's failure to reduce the understanding to writing and file it with the
Patent Office... [was] a violation of 35 U.S.C. §135(c).[44]
The Antitrust Division almost won on this
issue. The court said that:
Defendant's decision to drop its pending oppositions
to Bayer's patent applications followed the August, 1968 meeting where the five
written agreements were negotiated.
*** This creates the inference
that the parties came to an unwritten understanding concerning those
oppositions. This inference is
reinforced by statements made after the August, 1968 meeting referring to a
“settlement” of defendant's patent dispute with Bayer in countries not covered
by the written agreements.[45]
However,
the court ultimately ruled that the Antitrust Division had failed to prove the
existence of such an unwritten understanding:
Nonetheless, the evidence establishes that no
unwritten understanding was reached at the August, 1968 meeting. Although Bayer suggested to defendant that
it drop its oppositions to Bayer patent applications[,] there is no
contemporaneous evidence that FMC acquiesced in that suggestion at the
meeting. By August, 1968 defendant knew
that it was almost certain to lose its pending oppositions because of the
first-to-file rule. *** Defendant's decision to drop its pending
oppositions was made in order to cut its losses. *** Furthermore, one
opposition was not dropped. *** That opposition was not dropped because
defendant had fully prepared its case[,] and it needed no additional investment
of money. *** This is further evidence that defendant terminated its other
oppositions because they were not worth pursuing.[46]
However, Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp.
445, 183 USPQ 225 (E.D. Mich. 1974), aff'd, 521 F.2d 501, 187 USPQ 279 (6th
Cir. 1975), suggests that the word “understanding” in 35 USC 135(c) means a lot
more than a clear, but unexpressed understanding. According to that opinion:
The use by Congress of the word “understanding”
conveys as clearly as possible its intent to include any meeting of the minds
of whatever proportions. An
understanding is not exempted from the requirements of section 135(c) merely
because it is tentative or informal or because certain details are to be filled
in at a later date.[47]
Of
course, a tentative understanding is not an agreement at all, in the normal
sense of that word,[48]
so this opinion suggests that interferents who have reached a tentative
understanding are under a legal compulsion to solidify that tentative
understanding, to reduce it to writing, and to submit the understanding to
scrutiny by the Antitrust Division.
Fortunately, this aspect of Moog
is clearly dictum. The facts were as
follows. Moog had been in two
interferences with Bell Aerospace Corporation.
They had “entered into a written agreement which provided for a
settlement procedure requiring the exchange of proofs, to be followed by
concessions of priority.”[49] In addition, “[t]he parties... granted each
other nonexclusive royalty-free cross-licenses under their respective
applications [and, presumably, under any patents maturing from those
applications!], and each granted the other the right to sublicense third
parties.”[50] A copy of that agreement was duly
filed with the Patent Office in each interference. However, “After proofs had been exchanged and concessions [of
priority] filed [but before the interferences were terminated], Moog and Bell
entered into a written supplemental agreement dated March 16, 1965, which
revoked the previously agreed-upon right of each to sublicense any patent
awarded to the other as a result of the interference proceedings.”[51] The interferences were then terminated on
May 11, 1965. However, a copy of the
supplemental agreement was not timely filed,[52] and it was
the failure to timely file copies of the supplemental agreement that was at
issue in this case.
The supplemental agreement was
highly material. Moog and Bell had each
filed a concession of priority in one of the two interferences, meaning that
each of them wound up with a patent on one of the two inventions at issue. Under the original agreement, each had the
right to license its own patent and to sublicense the other's patent. Under the supplemental agreement, neither
could license the other's patent, and, since the two patents were blocking
patents, third parties who wanted to practice either invention had to obtain
licenses from both parties. As the
court put it:
the purpose and effect of eliminating the
sublicensing provisions in the original settlement agreement was to eliminate
the potential for competition in the granting of licenses which would result
from each party['s] having the power independently to license third parties
under either patent.5 The
result was to restore to each patentee the exclusive power to grant further
licenses under its own patent.
____________________
5At
the time of the original agreement neither Moog nor Bell was assured of winning
either interference, and the sublicensing provision eliminated the risk of
total loss for both parties. However,
once they had determined that each was to prevail on certain claims, and that
the resultant patents would be blocking patents, the original risk against
which both had sought protection was eliminated, and because the value of each
patent would be enhanced if held by only one rather than two potential
licensors, the parties followed their economic self-interest and eliminated the
original pooling-type arrangement.[53]
In sum, the “meeting of the minds”
between Moog and Bell had gone from being an “understanding” to being a written
agreement before the interferences were terminated. Hence, by the time that the interferences
were terminated, it was neither “tentative” nor “informal.” Moreover, the supplemental agreement
contained what was clearly a highly material amendment to the original
agreement. Under the circumstances,
there was no excuse for not filing a copy of the supplemental agreement. Thus, I agree with the court's holding. However, what the court had to say about the
meaning of the word “understanding” in 35 USC 135(c) was dictum and should not
bind (or even influence) future courts.
E. What is a “collateral agreement[ ]” Between
the Parties to an Interference Within the Meaning of 35 USC 135(c)?
Once the real parties in interest sit
down together to discuss the settlement of a U.S. patent interference, they
frequently decide to “settle” other matters.
Those other matters may be very directly related to the interference or
very tenuously related to the interference -- if they are related to the
interference at all by anything other than the fact that they involve the same
parties. In my experience, the most
typical example of such a collateral matter that is very directly related to
the interference is a settlement of oppositions, potential oppositions,
cancellations, and potential cancellations involving counterpart applications
and patents in foreign countries. An
example of a less directly related collateral matter would be an agreement by
one real party in interest to supply another real party in interest with parts
or raw materials needed to make the subject matter in dispute. An example of an arguably collateral matter that is very tenuously related to the
base interference but which might nevertheless get settled as part of settling
the base interference is another potential interference concerning another
invention entirely. The possibilities
are endless.[54]
The leading opinion on such
“collateral agreements” is United States v. FMC Corp., ___ F.Supp. ___, 215 USPQ 43
(E.D.Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983). There the parties entered into a plurality
of agreements contemporaneously. One of
those agreements was clearly covered by 35 USC 135(c), and a copy of it was
filed, but copies of the other agreements were not filed. However, the trial court found as a matter
of fact that:
Each of the agreements was discussed and its terms
negotiated separately and sequentially.
There were no trade-offs or bargaining between agreements.[55]
***