United States District Court, Northern District of Illinois, E.D
February 10, 1982
PETER M. ROBERTS, PLAINTIFF,
SEARS, ROEBUCK AND CO., A CORPORATION, DEFENDANT.
The opinion of the court was delivered by: Bua, District Judge.
Presently before the court is defendant's motion for summary
judgment dismissing Count II of plaintiff's action. An
introduction of sorts is necessary before the merits of
defendant's motion can be addressed.
This lawsuit represents the most recent stage of a dispute
between the named parties that has been in the process of
litigation since 1976. Although the cause now before the court
is an action separate from the initial lawsuit, the present
suit is intimately related to the former, and therefore, the
history of the earlier action must be related here. The
background of that case, which appeared twice before the
district court, and twice before the Seventh Circuit Court of
Appeals, is summarized below. Much of the following is borrowed
from the appellate court's second decision, Roberts v.
Sears, Roebuck & Co., 617 F.2d 460 (7th Cir. 1980)
The plaintiff inventor sued the defendant retail store
chain*fn1 for breach of confidential relation, fraud, and
negligent misrepresentation in the context of an agreement
entered into by the parties assigning to the defendant patent
rights held by the plaintiff in the plaintiff's invention of a
quick release socket wrench. The plaintiff prayed for
rescission of the agreement, an injunction against further use
by the defendant, imposition of a constructive trust upon the
defendant, an equitable accounting by the defendant and "such
further equitable relief as may be appropriate."*fn2 Included
among those equitable prayers was a plea "that damages be
awarded to plaintiff."
By the time of trial, the issues tried to the jury had been
limited to three separate claims: breach of a confidential
relation, fraudulent misrepresentations and negligent
misrepresentations. The court, in part, instructed the jury as
follows in regard to money damages:
If you find in favor of the plaintiff upon either
the first or second claim, then, one
of the elements of the money damages to be
considered by you may be the net value to the
defendant of the profits and benefits derived from
the use of plaintiff's invention. The award of
money damages you make may equal the net profits
which you find the defendant gained as a result of
its merchandising of wrenches incorporating
plaintiff's Quick Release invention and idea,
minus any expenditures which you find the
defendant has proved it incurred which it would
not have incurred had it not merchandised such
wrenches incorporating plaintiff's Quick Release
invention and idea, from the time of the contract
in question to the present . . .
The court further instructed the jury that "as a matter of
law, any damages you may award under each claim will not be
cumulative, and the plaintiff will not be permitted to collect
damages under more than one claim." Separate verdict forms were
supplied for each of the claims. The jury found for the
plaintiff on all three claims and awarded damages of $1,000,000
on each. The total amount of the verdict was represented by
that figure. The judgment has been satisfied.
In a post-trial motion, the plaintiff sought equitable
rescission and restitution. The district court held that when
the plaintiff permitted the case to go to the jury he had
elected his legal remedy under Illinois law and could not later
also seek equitable relief. Plaintiff appealed, seeking the
right to full equitable relief over and beyond the one million
dollar legal relief. The defendant cross appealed to set aside
the money judgment against it.
In Roberts v. Sears, Roebuck & Co., 573 F.2d 976
(7th Cir. 1978), cert. denied, 439 U.S. 860, 99 S.Ct.
179, 58 L.Ed.2d 168 (1978) ("Roberts I"), the Seventh
Circuit affirmed the district court's judgment against
defendant on all three claims in plaintiff's complaint and the
court's decision not to alter plaintiff's monetary award, but
reversed the court's determination that it lacked the power to
award rescission and remanded to the district court for a
determination of whether rescission was appropriate under the
facts of the case.
Subsequent to the Seventh Circuit's decision in Roberts
I, the case went through the trial court and a second
round in the Seventh Circuit, ultimately resulting in
reassignment of the patent rights to the plaintiff. In order to
"avoid if possible any future misunderstanding" the appellate
court detailed the implementation of its second order as
[T]he effect of these two assignments will be that
defendant owned all of the patent rights from June
15, 1965 to January 20, 1977, and the plaintiff
shall be considered the owner from January 20,
617 F.2d at 465.
In its holding in Roberts II, the Seventh Circuit
also expressed, in strong language, its opinion on the subject
of reconsideration on remand (or presumably in an additional
lawsuit) of the damage award in the initial trial. The Court
"In our prior opinion, we repeatedly referred to
the `return of plaintiff's patent' and when we
used the word rescission, we used it in the
context of returning the plaintiff's patent. We
did not say that the plaintiff could under any
theory upon remand be entitled to restitution or
additional damages or profits. In fact we
expressly said that the plaintiff did
elect his remedy as to past damages or
profits up to the jury verdict and that return of
his patent might be the most effective way of
insuring that the plaintiff receive the
future benefits of the patent."
617 F.2d at 464 (emphasis in original).
After the Seventh Circuit's decision in Roberts II,
plaintiff filed this lawsuit for damages for alleged patent
infringement and alleged violations of Sections 1 and 2 of the
Sherman Act, 15 U.S.C. § 1, 2, and Section 7 of the Clayton
Act, 15 U.S.C. § 18.
The antitrust count will now be addressed. For the purpose of
clarity and because this court believes that the Roberts
II decision compels it, this court's analysis will be
divided into two time periods: 1)
June 15, 1965 — January 20, 1977, and 2) January 20, 1977
June 15, 1965 — January 20, 1977
It is this court's conclusion that plaintiff cannot maintain
its antitrust action for Sears' activities during this time
period. Roberts has cited no case, nor has the court been able
to locate any decision which would support a finding that the
antitrust laws have been violated as to the plaintiff.
Roberts' antitrust allegations relevant to this period are
somewhat confused; however, it appears that plaintiff contends
that Sears' alleged pattern of activity, including the
acquisition of the patent in 1965, enforcement of that patent,
the acquisition of a second patent, and "other activities,"
injured plaintiff and entitled him to seek treble damages under
the antitrust laws. Recovery is sought for injury described as
"[P]laintiff has sustained damage in his business
and property, through inter alia, the
loss of royalty income that plaintiff would have
received, but did not receive from others for the
licensed manufacture and sale under plaintiff's
patents of ratchet wrenches equipped with
plaintiff's quick release feature."
Amended Complaint, Count II, ¶ 19. The inherent
problem in plaintiff's antitrust claim*fn3 is obvious. None of
the matters which Roberts characterizes as antitrust violations
can be said to have caused the injury which Roberts has
allegedly suffered — his inability to collect royalties
from others for licenses under the Roberts patent. Roberts'
assignment to Sears divested Roberts of all rights to
license the patent. Once the assignment occurred, Sears'
subsequent activities did not in any way affect those rights.
The initial assignment was wrongful and fraudulently induced,
but it was not an antitrust violation. As the defendant has
"conduct not within the scope of the [Sherman] Act
is not made into an antitrust violation by
accompanying conduct which is reprehensible under
some moral or ethical standard or even illegal
under some other law."
Sitkin Smelting and Refining Co. v. FMC Corp.,
575 F.2d 440
, 447 (3d Cir. 1978).
Apparently acknowledging this dilemma, plaintiff attempts to
rely on Walker Process Equipment, Inc. v. Food Machinery
and Chemical Corp., 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d
247 (1965) and Kearney & Trecker Corp. v. Giddings & Lewis,
Inc., 452 F.2d 579 (7th Cir. 1972). Defendant correctly
points out that these cases, which involved fraud upon the
patent office, are inapposite. The patent office dispenses
monopoly power in the form of patents. Fraud upon the patent
office involves deceiving the government into creating such
power where it would not otherwise exist. Such activity
frustrates the patent office's duty to protect the public
interest, a clear purpose behind its creation. Kearney &
Trecker, 452 F.2d at 590-591.
Of course, it is true that the antitrust laws are designed to
give private parties the right to, at least in part, protect
the public interest by bringing treble damage actions. P.
Areeda, Antitrust Analysis, ¶ 159 (1974). It is a
fundamental principle, however, that this potent right must be
exercised only by those who can also point to some personal
antitrust injury created by the alleged anti-competitive
conduct. Id. ¶ 160. As has already been stated,
however, Roberts cannot make such a showing. See p. 6,
supra. The victims of Sears alleged monopoly, if any
exist, are those who allegedly were excluded from competing in
the manufacture and sale of quick release wrenches.*fn4
Roberts is not in this category
as he admits that he was never in the wrench business and never
attempted to enter it.*fn5 See Deposition of Peter M.
Roberts at 91-94. He simply does not have standing to make the
charges included in his complaint.
Roberts' next attempt to breathe life into his antitrust
claim is his emphasis on a single Seventh Circuit case, which,
he alleges, gives him standing to bring his action against
Sears. That case is Moraine Products v. ICI America,
Inc., 538 F.2d 134 (7th Cir. 1976). Leaving aside
defendant's arguments as to the current validity of the
Moraine holding, it simply cannot be said that it
supports Roberts' antitrust claim.
The facts of Moraine, in somewhat simplified form,
are as follows. Moraine Products, the plaintiff, was an
organization founded for the purpose of licensing a patented
product. An exclusive license was granted to Atlas, a
defendant. Plough, the patentee of a competing product and a
process for use of that product also licensed Atlas, and
subsequently agreed with Atlas that no further licensing of the
Plough patent would occur without the mutual consent of Plough
and Atlas. The facts indicated that the Plough and Atlas
agreement was effective in excluding a significant number of
potential competitors who applied to use the Plough patent.
Moraine brought suit. As the Seventh Circuit explained,
"The gravamen of Moraine's complaint of injury is
that, because of potential licensees under the
[Moraine] patent also required a license under the
[Plough] patent in order to practice the [Moraine]
invention, the combination unlawfully limiting
licenses under the [Plough] patent necessarily
limited the number of licenses under the [Moraine]
patent and deprived Moraine of royalty income.
538 F.2d 134
, 149 (1976).
Atlas argued, in part, that Moraine's claims for loss of
royalties were inappropriately brought under the antitrust laws
because Moraine lacked standing to sue. The court explained
that resolution of the standing issue necessarily depended on
determination of whether "the plaintiff . . . had a reasonable
business expectancy to protect." Id. at 150. This
determination, the court explained, would depend on analysis of
the intent and effect of the original licensing agreement
between Moraine and Atlas. Such an expectancy would exist if
Moraine's original license agreement with Atlas contemplated
additional sublicenses by Atlas from which Moraine might derive
royalty income. This issue, the court ordered, was to be the
subject of "further factual exploration on remand."
Far from being "on all fours" with plaintiff's case, as
Roberts claims, Moraine is in fact wholly inapposite
with regard to the period presently under discussion. As the
Seventh Circuit's holding in Roberts II emphasizes,
Roberts had no rights in the patent between 1965 and
1977. The patent had been assigned. Sears was its owner.
Roberts, therefore, as a matter of law, could have no business
expectancy which now requires vindication by the antitrust
laws. No evidentiary inquiry on the part of this court could
dispel this fact.
As defendant correctly notes, Roberts' misreading of
Moraine is highlighted by the baffling footnote at
page 12 of his Memorandum to the effect that there is
"obviously" no difference between an assignment of a patent,
e.g. the Roberts-Sears agreement and an exclusive license
agreement like that present in Moraine. Defendant is
absolutely correct in stating that "the precise point made by
the Seventh Circuit in Moraine with respect to the
standing issue was that the license agreement, unlike a
complete assignment, could have contemplated sublicenses
from which Moraine could have expected financial benefit."
Defendant's Reply Brief at 13.*fn6
Even if it were possible that some theory exists upon which
the plaintiff could base his theory of antitrust recovery, this
court would nevertheless feel compelled to reconsider its order
of June 8, 1981, and find Count II barred under the doctrine of
res judicata. The court is persuaded by defendant's analysis of
Harper Plastics, Inc. v. Amoco Chemicals Corporation,
657 F.2d 939 (7th Cir. 1981). In this court's earlier opinion,
it was stated that res judicata did not bar
plaintiff's antitrust claims "because Roberts' Count II claim
involves a substantive right, i.e. the right to be free of
antitrust injury, significantly different from that asserted in
his prior action." Roberts v. Sears, Roebuck & Co.,
No. 80 C 5986, Order of June 8, 1981 at 3. After further
reflection, this court now believes that this distinction was
erroneous. Roberts' earlier action was brought for profits lost
as a result of plaintiff's assignment of his patent to Sears.
The present action claims an alleged loss of royalty income. It
must be noted, however, that when the holder of a patent sets
a royalty figure, his calculations are based primarily on his
assessment of the amount of profit he would obtain if he were
to market the invention himself. P. Areeda, Antitrust
Analysis ¶¶ 409, 410 (1974). Therefore, rather than
attempting to vindicate a separate substantive right in his
present action, Roberts is in fact suing for damages which
relate to a right substantially identical to that for which
damages were recovered in the earlier suit — lost
profits. Such a double recovery cannot be allowed. Plaintiff
cannot avoid the effects of res judicata merely by
asserting his claim under the label of a different theory.
Harper Plastics, 657 F.2d at 944. It is appropriate
here to reiterate the words of the Seventh Circuit's opinion in
Roberts II which were cited earlier. See p.
786, supra. The court stated,
"We did not say [in our earlier opinion] that
plaintiff could under any theory
(emphasis added) upon remand be entitled to
restitution or additional damages or profits. In
fact, we expressly said that the plaintiff
did elect his remedy as to past
damages or profits up to the jury verdict . . ."
617 F.2d at 464 (emphasis in original except as noted.) It is
the court's belief that these words are binding on both the
district court in the first lawsuit and upon this
For the above reasons, it must be concluded that plaintiff
could have and should have properly brought his antitrust claim
in the earlier lawsuit, and that, as a
result, his attempt to invoke this theory of recovery at this
late date must be barred.
January 20, 1977 — Present
As was stated earlier, this second time period is treated
separately because it is this court's belief that both the case
law relied upon by plaintiff and the Seventh Circuit's decision
in Roberts II compel such treatment. The preceding
analysis indicates that the defendant is entitled to summary
judgment as to the 1965-1977 time period because both the facts
and the law of standing prohibit plaintiff's attempt to recover
treble damages. The time period presently under discussion is
different, however. Although there exists a legal theory upon
which plaintiff could conceivably base his claim for damages,
see generally Moraine Products v. ICI America, Inc.,
538 F.2d 134 (7th Cir. 1976), plaintiff has not demonstrated
the sort of conduct, i.e. a conspiracy to restrict royalties,
which was found worthy of further factual exploration in
Moraine, nor has plaintiff presented the court with
any indication that he was possessed of the sort of "business
expectancy" which was found controlling on the issue of
standing in that case. Not only has plaintiff failed to bring
to the court's attention the details of any licensing agreement
which exists between Sears and Roberts, he has, in fact, failed
even to mention the existence or non-existence of such an
In light of the complete absence of any facts which would
bring plaintiff's claim within the ambit of Moraine,
this court sees no basis for proceeding to trial on the
antitrust issue for the above time period.
In sum, for the period covering June 15, 1965 — January
20, 1977, defendant is granted summary judgment on Count II of
plaintiff's claim both because plaintiff lacks standing to
bring his action for that time period, and because of this
court's belief that even if a theory of standing could be
identified, plaintiff's claim is barred by the doctrine of
res judicata. For the period covering January 20, 1977
to the present, summary judgment for the defendant will also be
granted because of the absence of any fact on which recovery
could be based.
IT IS SO ORDERED.