Danville, Ill., Huebner & Worrel, Los
Angeles, Cal., and D.A.N. Chase, Kansas
City, Mo., for defendants,

Morgan, District Judge.

This'cause coming on to be heard on the motion of plaintiffs for a preliminary injunc tion against defendants, and due notice having been given to the defendants, and plaintiffs being represented in open court by their attorney, Thomas E. Harrington of Busch, Harrington & Porter; and defendants being represented in open court by their attorney, D.A.N. Chase of Kansas City, Missouri, and their local counsel, F. Daniel Welsch and William A. Young of Young, Welsch, Young and Hall; and the court having considered the Complaint, the Amended Complaint, the affidavits submitted in support of Plaintiffs' Motion for Temporary Restraining Order, the testimony of Douglas Allen, President of defendant Állen Archery, Inc., and the exhibits submitted to the court during the hearing in open court and in camera on the motion, and having heard the arguments of counsel, makes the following findings of fact and conclusions of law:

Findings of Fact

1. The Letters Patent in question were granted to defendant Holless W. Allen in 1969, who sold his interest therein to defendant Allen Archery, Inc., a corporation, by written assignment recorded in the U.S. Patent Office on June 18, 1974.

2. Said corporation is wholly owned by defendant Holless W. Allen and members of his family. Certain other matters pertaining to Holless W. Allen, Allen Archery, Inc., said assignment and said patent, including financial statements, were the subject of in camera proceedings and at defendants' request are the subject of a separate protective order entered herein. Said matters, including testimony and exhibits (to be kept under seal and to be opened only on order of court), are a part of the record of these proceedings and were considered by this court in arriving at the decision herein expressed.

3. Plaintiffs, pursuant to license agreement (Exhibit A attached to the Complaint herein), have paid approximately $285,000 in royalties prior to August 10, 1977, to defendants (or either of them) pertinent to the patent in question, and it appears reasonably likely that plaintiffs will, within the next two years, become obligated under said license agreement for further royalties

to defendants in an amount approximating $500,000.

4. At the time of filing the Complaint, plaintiffs paid into this court the sum of $47,901.39, being the amount of the royalty payment admitted to be due under the agreement attached to the Complaint, and an additional $6,000 as bond pursuant to this court's Temporary Restraining Order, dated August 16, 1977.

5. Defendants' said patent has been, is, and it appears reasonably likely that it will in the future be the subject of other litigation.

6. Defendants, or one of them, being the patent owners, have disclaimed claims 1, 2 and 11 of the subject patent.

7. It is reasonably likely that the plaintiffs may prevail in this declaratory judgment action, and in that event it is reasonably likely that the defendant corporation would be unable to repay the substantial royalties paid by plaintiffs under said License Agreement.

8. Plaintiffs have reasonable fear that they would be irreparably damaged if required to pay royalties directly to defendants, or either of them, during the pendency of this lawsuit, because of potential inability to repay.

9. Where any finding of fact, in whole or in part, may be construed as a conclusion of law, it should be so construed.

Conclusions of Law

[1] 1. A licensee may contest the validity of a licensed patent, may challenge whether certain products fall within a license agreement, and may challenge whether he is entitled to more favorable terms which may have been given to other licensees. Lear v. Adkins, 395 U.S. 653, 162 USPQ 1 (1969).

[2] 2. A patent licensee who wishes to continue using a patent cannot withhold royalty payments without risking a patent infringement suit and an injunction against all future use of the patent.

[3] 3. Where there is strong indication that the patent owner might not be financially able to repay royalties at the end of the litigation, it should be deprived of its right to receive royalties in the interim, so long as they are safely paid into escrow as here required.

[4] 4. It is clear under the "BlonderTongue" doctrine (Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 169 USPQ 513 (1971)] that once a patent is declared invalid

in any district, that judgment automatically applies to any other district.

5. The issue of escrowing royalty payments where the defendant's financial ability to repay has been challenged appears to be a question of first impression within the Seventh Circuit.

6. No damage has been caused to defendants as a result of the temporary restraining order granted heretofore; defendants had intended to raise the subject matter of this complaint in this district; and there is a reasonable likelihood of success by plaintiffs in their declaratory judgment action and thus a reasonable likelihood of irreparable damage to plaintiffs if they were required to continue to pay royalties to defendants, or either of them, during the period required for such litigation.

7. Wherever any conclusion of law, in whole or in part, constitutes a finding of fact, it shall be so construed.

It is therefore ordered that the defendants Holless W. Allen and Allen Archery, Inc., a corporation, and their officers, attorneys, servants, agents, associates, members, employees, and all persons acting in conjunction with the defendants or at their direction be, and they are hereby, until further order of this court, restrained and enjoined from bringing any other action in any other court, whether state or federal, against the plaintiffs or their assigns with regard to any subject matter which has been, reasonably could be, or will be pleaded to or counter-claimed in this action, until the subject matter raised by the Complaint herein has been disposed of by a final court order, or otherwise by agreement of the parties approved by this court.

It is further ordered that the plaintiffs, Precision Shooting Equipment Co. and Paul E. Shepley, Jr., or their assigns, shall continue to pay into this court all amounts of royalties which shall accrue under the License Agreement attached to the Complaint, pending the final disposition of this matter by court order, or otherwise by agreement of the parties approved by this court; and it is further ordered that all royalties paid in to court by plaintiffs shall be deposited by the clerk of this court in an interest bearing account or invested in interest bearing securities of the United States of America until further order of the court.

It is further ordered that the bond on said temporary restraining order is hereby dis

It is acceptable for application to be read to applicant who is illiterate, blind, or does not understand English or explained to him in way that allows him to suppose with some confidence that application he is called on to sign covers invention that he believes he has invented, to constitute actual inspection for purposes of Patent Rule 56; however, signing in blank or with no inspection and without other circumstances reasonably leading to such confidence on part of applicant justifies striking application as not vouched for by applicant.

3. Applications for patent - In general (15.1)

Oath (§47)

Actions of coinventor of plant whose principal characteristic was color, who looked at picture showing color and discussed application with attorney, and who would have realized that stated reference to plant's genetic parent was incorrect if he had read

Patent interference No. 98,252 between Walter H. Jessel, Jr., William E. Duffett, and Marvin D. Mix, application, Serial No. 232,393, filed March 7, 1972, and Robert N. Newland, Walter H. Jessel, Jr., and William E. Duffett, application, Serial No. 218,569, filed Jan. 17, 1972. On party Jessel's petition for reconsideration of decision striking application and dissolving interference. Decision vacated in part.

Original opinion 195 USPQ 678; see also 195 USPQ 674.

Stephen W. Blore, Portland, Ore., for party Newland.

Daniel P. Chernoff, and Jacob E. Vilhauer, Jr., both of Portland Ore., for party Jessel.

Dann, Commissioner of Patents and Trademarks.

The party Jessel et al. has filed a petition to the Commissioner requesting reconsideration of that part of the Commissioner's decision of February 25, 1977 which held that the Jessel et al. application should be stricken from the files under the provisions of 37 CFR 1.56, based on the failure of inventor Mix to read the application before signing it.

After careful reconsideration of the facts and arguments presented, it is concluded that the result reached in the February 25, 1977 decision represented too inflexible an application of 37 CFR 1.56.

[1] That rule states that an application may be stricken if it is signed and sworn without actual inspection by the applicant. Although it is admitted that Mix did not read the application "throughout" before signing it, petitioner nevertheless urges that there was sufficient actual inspection to preclude any striking under 37 CFR 1.56.

[2] What is needed to constitute actual inspection? It is certainly desirable that applicants read their applications carefully and completely before signing them. When the applicant is illiterate, blind, or does not understand English, it is acceptable for the application to be read to him or explained in a way that allows him to suppose with some confidence that the application he is called on to sign covers the invention that he believes he has invented. On the other hand, a signing in blank or with no inspection and without other circumstances reasonably leading to such confidence on the part of the applicant would justify striking the application as in essence not vouched for by the applicant.

[3] In the present case it is contended that Mix adequately inspected the application at the time of signing when he looked at the picture of the flower and discussed the application with his attorney. The principal characteristic of the new plant variety known to Mix was its color, which was shown in the picture. He indicated that he knew nothing about the data on the asexual reproduction and the botanical characterization supplied by his co-inventors, which constituted the bulk of the specification. It is claimed that he would have had no better idea of the application's coverage if he had read it completely, except that he would have realized that the reference to Gay Anne as the genetic parent of the new variety was incorrect.

All of this adds up to something more than a heedless signing in blank, though it is

doubtful whether it is enough to qualify as an actual inspection. Assuming arguendo that it does not, there remains the question of whether the circumstances call for the severe penalty of striking the application.

There is no suggestion that Mix's failure to read the application was part of an effort to deceive the Patent and Trademark Office in any way or that it had that effect. As noted, Mix testified that if he had seen the reference in the specification to Gay Anne as the genetic parent of the new variety Copper Anne, he would have realized that this was incorrect. This corroborates his admission that he failed to read the specification, but the correct identification of the parent is evidently not significant in providing a description of the new variety. With this one fairly unimportant exception, the application was what he supposed it to be and what he intended to have filed in the Patent and Trademark Office. The circumstances are consistent with a conclusion that Mix's

failure to more adequately inspect the application occurred because he was satisfied that the application covered what he believed to be his invention.

[4] The original declaration signed by Mix stated inter alia that "*** we have read the foregoing specification and claims * * *” Mix apparently failed to read these words as well as those constituting the specification and the claims. To sign a declaration under pain of perjury without reading it is most reprehensible. Nevertheless this particular allegation is not required by statute or rule and does not bear in a substantive way on the patentability of the Jessel et al. application. “The requirements of section 115 and of the implementing rules are concerned with substance and not with form."

[5] Under the present form of 37 CFR 1.56, the Commissioner is required to strike an application when fraud was practiced or attempted on the Office in connection with it. Striking is discretionary when the application has been executed in blank or without actual inspection. Striking is justified under these circumstances if the resulting application does not fairly reflect applicant's invention or if he has not taken reasonable steps to satisfy himself that the application does so reflect his invention.

'Carter-Wallace, Inc. v. Davis-Edwards Pharmacal Corp., 173 USPQ 65, 91 (1972). In this case execution of an application which was later partially retyped and a claim added before filing was held not to be defective.