of the declaration that the '287 patent is valid, there seems to be no need for injunctive relief.
There is another reason why injunctive relief is not appropriate in this case. Krupp Polysius has entered into an agreement with KHD, a competitor of Krupp Polysius and Fuller, whereby Krupp Polysius will sub-license KHD and Schonert will not license any other firm unless both Krupp Polysius and KHD concur. There is authority for the proposition that agreements among some competitors not to allow further licenses for other competitors are undesirable and should not be encouraged. See United States v. Besser Mfg. Co., 96 F. Supp. 304 (E.D. Mich. 1951), aff'd 343 U.S. 444, 96 L. Ed. 1063, 72 S. Ct. 838 (1952); Mannington Mills, Inc. v. Congoleum Industries, 610 F.2d 1059, 1072 (3d Cir. 1979); United States v. Krasnov, 143 F. Supp. 184 (E.D. Pa. 1956), aff'd mem., 355 U.S. 5, 2 L. Ed. 2d 21, 78 S. Ct. 34 (1957).
I recognize that denial of injunctive relief may relegate plaintiffs to a damage action for each act of infringement committed in the future by Fuller. However, I am not at all sure that Fuller will embark on a course of infringement in light of the declaration of the validity of the '287 patent set forth in this opinion. If Fuller does not infringe the patent in the future, then there is no need for equitable relief. If Fuller does infringe the patent in the future, and if the validity of the patent is upheld on appeal, then plaintiffs can return to this court with an action seeking both damages and equitable relief. That subsequent action should be marked as related to this case in accordance with Local Rule of Civil Procedure 3 and at that time I can reconsider the issue of whether equitable relief should be denied because of the existence of an agreement among competitors to veto further licensing of the '287 patent.
5. Plaintiffs Are Not Entitled to Counsel Fees for Willful Infringement
Plaintiffs claim that they are entitled to reasonable attorney's fees as the prevailing party in accordance with 35 U.S.C. § 285. The statute requires that a case be "exceptional" as a predicate to a fee award. Case law requires that the "exceptional" element be established by clear and convincing evidence.
Plaintiffs urge that this case is "exceptional" for several reasons. First, Fuller engaged in reprehensible conduct in sending an employee to meet with Schonert in West Germany for the purpose of appropriating Schonert's intellectual property. Second, plaintiffs urge that Fuller blatantly copied the '287 patent when it was refused a license. Third, plaintiffs maintain that Fuller proceeded with infringement prior to obtaining an opinion letter from outside counsel. Fourth, plaintiffs contend that Fuller engaged in a cover-up (erasure of the audio portion of a commercial videotape related to the patent) and caused plaintiffs considerable expense in this litigation by raising every conceivable objection to the validity of the patent and plaintiffs' claim of infringement.
There is considerable merit to plaintiffs' position. Schonert, the scholar, willingly shared his intellectual achievements with Fuller's representative. The opinion letter postdated some of the infringing acts, the copying was blatant, and Fuller's defenses were expensive to counter. Nevertheless, I find that there are several facts which suggest that this is not an exceptional case for the award of attorney's fees.
Although the letter opinion, plaintiffs' exhibit no. 46, postdates some infringing conduct, it is nevertheless an indicia of good faith. Furthermore, although Fuller raised some insubstantial defenses, several of its contentions raised legitimate and close questions. These legitimate and close questions include the troublesome issue of the failure to reveal the German opposition proceedings to the United States patent examiner and the uncertainty of the range of fineness for the product produced by the patented process.
There are several other reasons why this is not an exceptional case. Fuller made no infringing sales. No money damages are sought by the plaintiffs. Although this factor does not prevent an award of attorney's fees, it is highly relevant on the issue of whether this is an exceptional case.
Finally, there is an element of discretion in whether or not an award of counsel fees is to be made.
Balancing the above factors, I exercise my discretion not to award counsel fees.
6. Defendant's Antitrust Claims and Unfair Competition Claims are Rejected
Fuller has filed counterclaims against Polysius and Schonert and has also named Krupp Polysius as a defendant on the counterclaims. Krupp Polysius defends, initially, on the ground that this court lacks in personam jurisdiction as far as it is concerned. I hold that the marketing in Pennsylvania of heavy industrial equipment manufactured by Krupp Polysius through its wholly owned and totally controlled subsidiary, Polysius, subjects Krupp Polysius to in personam jurisdiction in this forum. PPS, Inc. v. Jewelry Sales Representatives, 392 F. Supp. 375 (S.D.N.Y. 1975).
My holding that the Polycom manufactured by Krupp Polysius is a non-staple article of commerce is dispositive of Fuller's counterclaim based on allegations of an illegal tying arrangement. Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176, 201, 65 L. Ed. 2d 696, 100 S. Ct. 2601 (1980). Fuller alleges that the plaintiffs have illegally tied the '287 patent to the purchase of a Polycom. However, Congress permits a patentee to do precisely that, provided the tied product is non-staple.
Fuller also maintains that the plaintiffs have committed antitrust violations by taking aggressive steps to enforce the '287 patent when in fact the '287 patent was procured by fraud. Since I have found that Fuller has failed to prove by clear and convincing evidence that the '287 patent was procured by fraud, this antitrust claim cannot stand. Also, the decision I have made in holding that the Krupp Polysius Polycom is a non-staple article of commerce disposes of Fuller's counterclaim that the '287 patent has been misused by the plaintiff in an attempt to control the commerce of unpatented staple articles of commerce.
What is left of the Fuller counterclaims is related to the licensing agreements for the '287 patent. In 1978 Schonert gave a non-exclusive license to Krupp Polysius. KHD was engaged in opposing the grant of a West German patent to Schonert. These opposition proceedings extended over several years. Krupp Polysius resolved this problem by amending its license agreement with Schonert to provide that Krupp Polysius be given the right to sublicense KHD provided KHD withdraws its opposition in the German patent proceedings and takes no action against foreign patent rights. Schonert further agreed that he would not grant any further licenses without the concurrence of Krupp Polysius. Krupp Polysius entered into an agreement with KHD licensing KHD to use the Schonert process and KHD withdrew its opposition to the issuance of a German patent. Krupp Polysius agreed not to grant additional sub-licenses without the consent of KHD. Krupp Polysius also agreed not to allow Schonert to grant further licenses unless KHD approved in advance. Krupp Polysius and KHD agreed to share those expenses related to the enforcement of the patents for the Schonert process. Schonert agreed that his royalties would be limited to the sale of the high-pressure presses.
Fuller contends that these agreements among competitors not to license others unless both agree is a per se violation of the Sherman Act, 15 U.S.C. § 1. I hold that this type of licensing agreement is not a per se violation. There is no evidence of any illegal agreement between Krupp Polysius and KHD to fix prices, allocate markets, or engage in predatory pricing. The mere fact that two competitors enter into a contractual arrangement to share (to the exclusion of others) the rights derived from a patent as well as expenses connected thereto is insufficient to trigger per se liability. Moraine Products v. ICI America, Inc., 538 F.2d 134 (7th Cir.), cert. denied, 429 U.S. 941, 50 L. Ed. 2d 310, 97 S. Ct. 357 (1976).
I also hold that this licensing arrangement, in the factual context of this controversy, is not a violation of either section 1 or section 2 of the Sherman Act. There are many serious and fatal problems with Fuller's antitrust counterclaims.
It must be emphasized that Fuller premises the alleged antitrust taint on the inclusion of a worldwide competitor (KHD) in the arrangement between Schonert and Krupp Polysius. The proof is, however, that Krupp Polysius, acting alone, made the decision not to allow Schonert to license Fuller. Fuller acknowledges as much on page 7 of its brief on this issue:
This veto power has been exercised by Krupp Polysius. In June, 1985 on the advice of counsel that Fuller was entitled to a license, defendant Fuller requested a license from the patentee, Schonert (PX-201.3, Tr. 1.150). Schonert informed Krupp Polysius of this request (DX-363) and a member of the Board of Krupp Polysius told Dr. Schonert that it was not willing to grant a license and therefore Schonert was forced to deny Fuller's request (PX-45, Tr. 1.151 and Fuller's informed Schonert Depo. pp. 901-07.) Schonert informed Fuller of this decision (DX-364). Executives of Krupp Polysius confirm that they were not willing to grant licenses to Fuller (Ritzmann Depo. (Vol. I) pp. 61, 65-72 and DX 225 A and B). The inventor himself testified that no matter what recommendation he made on licensing, Polysius could say no and there wasn't anything he could do about it (Tr. 15.61). In fact Krupp Polysius always did say no.
There is no antitrust prohibition against Schonert, the inventor, and Krupp Polysius, the manufacturer, combining to maximize the value of the patent. Statutory
pronouncements foster the policy of providing economic incentive to the innovator. Of course, the inventor and the manufacturer may not use the legal monopoly of a patent in an illegal manner whereby competitors agree upon prices, allocate markets, or unreasonably extend monopoly power. As noted, there is insufficient evidence that the plaintiffs acted illegally in these respects. It is this failure of proof that distinguishes this case from Krasnov and Besser. In those cases the defendants used the restricted licensing arrangements as a means to stifle competition and control markets. What is missing in this record is proof of illegal conduct by Krupp Polysius and/or KHD. Actually, the record shows KHD and Polysius actively competed with each other for orders.
C. CONCLUSIONS OF LAW
1. This court has subject matter jurisdiction over the controversy before it.
2. This court has in personam jurisdiction over all parties to this proceeding.
3. Proper venue lies in this court.
4. The '287 patent is valid.
5. The Polycom, manufactured by Krupp Polysius, is a non-staple article of commerce.
6. There is no need for injunctive relief.
7. The plaintiffs are not entitled to an award of counsel fees.
8. All of plaintiffs' claims based upon alleged violations of the antitrust laws of the United States are denied.
9. All of plaintiffs' claims related to allegations of misuse of the '287 patent are denied.
10. An appropriate order will be entered.
AND NOW, this day of February, 1989, IT IS ORDERED AND DECREED as follows:
1. It is hereby declared that United States Patent No. 4,357,287 is VALID.
2. Plaintiffs' claims for injunctive relief are DENIED.
3. Judgment is hereby ENTERED in favor of plaintiffs, Polysius Corp. and Dr. Klaus Schonert, in regard to all of defendant's counterclaims.
4. Judgment is hereby ENTERED in favor of Krupp Polysius, A.G., in regard to all of defendant's counterclaims.
5. Plaintiffs' claim for counsel fees is hereby DENIED.
6. The Clerk is requested to mark the within docket closed for statistical purposes.