## Facts

- Frank Talbot invented a device involving a non-refillable receptacle used in storing and handling lubricating oil and sought patent protection for the invention.
- Talbot assigned William Mann an undivided one-half interest in several pending patent applications, including the application that later issued as U.S. Patent No. 1,890,421, making Talbot and Mann co-owners of the patent.
- Talbot and Mann also entered a written agreement governing their shared inventions and proceeds; it included a term that neither would dispose of his share without the other’s written consent.
- After the assignment, Talbot entered employment with Quaker-State Oil Refining Company to modify his inventions to meet Quaker-State’s stated requirements.
- Following the end of Talbot’s employment, Quaker-State brought an equity action in Pennsylvania state court to establish its right to use the device and related inventions completed during Talbot’s employment.
- The Pennsylvania litigation culminated in a Pennsylvania Supreme Court decision interpreting Talbot’s employment contract as granting Quaker-State the right to use Talbot’s pending applications and improvements, including the application that became the patent later asserted in this suit.
- Talbot and Mann then filed a federal infringement suit in the U.S. District Court for the Western District of Pennsylvania, seeking an injunction and an accounting for alleged infringement of Patent No. 1,890,421.
- Quaker-State raised defenses including that the state-court judgment conclusively established a license (or equivalent contractual right) and therefore barred the federal infringement claim under res judicata.
- The district court limited proceedings to the special defenses and dismissed the complaint on res judicata grounds.
- Talbot and Mann appealed, contending res judicata should not bar Mann’s claim because Mann was not a party to the state-court action.

## Issues

1. Does the prior Pennsylvania Supreme Court judgment interpreting Talbot’s employment contract as granting Quaker-State the right to use the invention bar the subsequent federal patent infringement suit under res judicata?
2. Can one of two joint owners of a patent grant a license to a third party without the other joint owner’s consent, such that the license defeats an infringement suit by the co-owner?
3. Does a private agreement between joint owners restricting transfers or licenses limit a third party’s rights when the third party lacked notice of that restriction?

## Decision

- The Third Circuit affirmed the district court’s dismissal of the federal infringement suit.
- The court held the Pennsylvania Supreme Court judgment conclusively determined that Talbot’s employment contract granted Quaker-State the right to use the invention (i.e., that Talbot had granted Quaker-State a license/right to use), and that determination was binding in the later federal action under res judicata.
- The court agreed that Talbot, as a joint owner, had power to grant Quaker-State a license to use the patented invention without Mann’s consent.
- The restriction in Talbot and Mann’s private agreement requiring mutual consent did not affect Quaker-State’s rights absent notice to Quaker-State of that restriction.
- Because a license from one joint owner is a complete defense to infringement, Talbot and Mann could not maintain the infringement action once the existence of Quaker-State’s licensed right to use had already been adjudicated.

## Legal Principles

- A nonexclusive license granted by one joint owner of a patent can be a complete defense to an infringement claim brought by another joint owner.
- Private contractual limits between co-owners on licensing or disposition of interests do not bind a third-party licensee that lacked notice of those limits.
- A final state-court judgment deciding the existence and scope of a contractual right to use an invention may preclude a later federal infringement suit between the same adversaries when the determinative issue (license/right to use) was already litigated and decided.
- In a patent infringement suit, if the accused use falls within the defendant’s contractual license/right to use, infringement relief is unavailable regardless of other disputes between the patent co-owners.

## Conclusion

Talbot and Mann’s federal infringement suit failed because Pennsylvania courts had already finally adjudicated that Talbot’s employment contract gave Quaker-State the right to use the invention, and that determination barred relitigation in federal court; in any event, Talbot’s status as a joint owner allowed him to grant a license without Mann’s consent, and the co-owners’ private consent requirement could not restrict Quaker-State absent notice.


Talbot v. Quaker-State Oil Refining Co., 104 F.2d 967, 41 U.S.P.Q. 1 (1939)