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PPG Industries, Inc. v. Guardian Industries Corporation

597 F.2d 1090 (1979)

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PPG Industries, Inc. v. Guardian Industries Corporation

United States Court of Appeals for the Sixth Circuit

597 F.2d 1090 (1979)

Facts

Both PPG Industries, Inc. (PPG) (plaintiff) and Permaglass, Inc., fabricated glass products and held patents related to their manufacturing processes. Under a 1964 agreement, Permaglass granted PPG an “exclusive” license of Permaglass’s patent rights, except Permaglass reserved for itself a “non-exclusive, non-transferable, royalty-free, worldwide right and license”—that is, a license “for the benefit and use of” Permaglass. Under the same 1964 agreement, PPG granted Permaglass a “non-transferable” license to PPG’s patent rights. The agreement contained a non-assignment clause so that the license granted from PPG to Permaglass was “personal” to Permaglass and “non-assignable” except with the prior consent of PPG. Furthermore, the agreement contained a termination clause, stating that in the event a majority of Permaglass’s voting stock was owned or controlled by a manufacturer of automobiles or glass, the license granted to Permaglass would terminate. In 1969, Permaglass merged into Guardian Industries, Inc. (Guardian) (defendant). Guardian was a glass manufacturer for automobiles that intended to provide Permaglass with a larger manufacturing facility. After the merger was complete, PPG brought a patent infringement action against Guardian, claiming that Guardian was using technology contained in 11 patents covered by the 1964 agreement. PPG’s position was that (1) the patent-license rights reserved by Permaglass did not pass to the surviving, post-merger corporation and (2) the patent-license rights that PPG had granted to Permaglass were non-transferable and, in any event, had terminated under the termination clause. The district court found that Guardian had acquired the patent-license rights by operation of law under state merger statutes and that there had been “no assignment or transfer” of the license rights within the meaning of the 1964 agreement. The court dismissed PPG’s patent-infringement action. PPG appealed.

Rule of Law

Issue

Holding and Reasoning (Lively, J.)

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