Usm Corporation v. Sps Technologies, Inc.

Facts

D owned a patent on a patch-type self-locking industrial fastener. In 1969 it sued P, a competing manufacturer or infringement. After a trial on the issue of whether P had a valid license under the patent by virtue of a grant-back clause in a licensing agreement between the parties, the district court held that P did not have a valid license. P and D settled the case by entry of a consent judgment in which P acknowledged that the patent was valid and had been infringed. D granted P a license which allowed P to continue using the patent but required it to pay royalties. P brought the present suit, seeking to invalidate D's patent and get back the royalties it had paid since the settlement. P alleged that D had procured the patent by a fraud on the Patent Office and that D had concealed this fraud from the district court in the previous suit and by so doing had committed a fraud on the court as well. The court held that D had committed a fraud on the Patent Office, but not on the court, and that P was entitled to have the patent declared void as of the date the second suit had been filed and to get back the royalties it had paid since then. The court declined to reconsider a ruling that res judicata prevented P from getting back any of the royalties it had paid before the second suit was filed. Both parties appealed. P challenges the conclusion that there was no fraud on the court in the first suit and argues that a consent judgment in a patent case should have no res judicata effect. D challenges the conclusion that it committed a fraud on the Patent Office and argues that res judicata bars P from any relief based on that fraud. P’s suit not only challenges the validity of the patent but also alleges that certain terms that first appeared in the license agreement entered into at the termination of the first suit constitute patent misuse.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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