Opinion
March 28, 1950.
Appeal from Supreme Court, New York County, WALTER, J.
H. Russell Winokur of counsel ( Horace T. Herrick and Harry J. Walters with him on the brief; Paul, Weiss, Wharton Garrison, attorneys), for appellants.
Emanuel R. Posnack ( Abraham S. Nydick with him on the brief), for respondents.
The plaintiff sued to recover royalties allegedly due from the defendants under an exclusive licensing agreement relating to three patented devices used in the manufacture of cameras. One day after the commencement of the present action, the plaintiffs instituted suit against the defendants in the Federal courts to enjoin infringement of the patented devices. This action in the State court covers a period during which the licensing agreement was in force. The infringement suit followed a cancellation of the licensing agreement because of failure of the licensees to pay royalties.
The defendants assert the invalidity of the patents in both suits.
The Special Term granted a stay of this action pending trial of the Federal suit, although it found that the Federal action would not determine all of the issues in this case. We think that this was error.
It has long been the law of this State that a licensee is estopped from challenging the validity of a patent, until he has completely repudiated and renounced the licensing agreement (see Farnsworth v. Boro Oil Gas Co., 216 N.Y. 40; Saltus v. Belford Co., 133 N.Y. 499; Hyatt v. Ingalls, 124 N.Y. 93; Marston v. Swett, 66 N.Y. 206).
In Tams-Witmark Music Library, Inc., v. New Opera Co. ( 298 N.Y. 163, 173) it has been suggested that this rule of estoppel no longer prevails by reason of the decisions in Katzinger Co. v. Chicago Mfg. Co. ( 329 U.S. 394) and MacGregor v. Westinghouse Co. ( 329 U.S. 403). However, such statement concerning the rule of licensee estoppel appears to have been unnecessary to the decision in the Tams-Witmark case ( supra). There the court was considering the rights of a licensee under an expired copyright of an opera within the public domain. The MacGregor and Katzinger cases ( supra) have been construed by later Federal decision to be confined to situations involving price fixing or other restraints of trade (see Automatic Radio Mfg. Co. v. Hazeltine Research, 176 F.2d 799, certiorari granted 338 U.S. 942). In such circumstances there may be a conflict between the public interest sought to be served by the Sherman Act and the doctrine of estoppel aforesaid. The latter is required to yield in favor of the public policy behind the antitrust laws. In the absence of such conflict it is still apparently the Federal rule that the invalidity of a patent does not affect a licensee's obligation to pay royalties for the time during which the license agreement remains in force and not repudiated (see Harley C. Loney Co. v. Perfect Equipment Corp., 178 F.2d 165).
If the doctrine of estoppel is applicable in this case, it seems clear that there is no point in staying the present action until after trial of the Federal suit. Whether such estoppel exists must be determined on the trial of this action in the State court.
The order appealed from should be reversed, with $20 costs and disbursements and the motion denied.
PECK, P.J., DORE, COHN, CALLAHAN and VAN VOORHIS, JJ., concur.
Order unanimously reversed, with $20 costs and disbursements to the appellants and the motion denied. [See 277 App. Div. 757.]