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PPG Indus. v. Guardian Indus. Corp. - 597 F.2d 1090 (6th Cir. 1979)

Rule:

Questions with respect to the assignability of a patent license are controlled by federal law. 

Facts:

Plaintiff PPG Industries, Inc. ("PPG") and a third party company were both in the business of manufacturing glass. They entered into a license agreement whereby each granted the other rights to various patents. The agreement terminated upon merger or acquisition. Defendant Guardian Industries, Corp. ("Guardian") later merged with the third party company. Guardian then began to utilize PPG's patents. PPG brought suit against Guardian for patent infringement, claiming that the license agreement had terminated upon the merger. The district court held that although the agreement provided for its termination upon merger, Guardian had acquired license rights by the operation of law.

Issue:

Does the surviving or resultant corporation in a statutory merger acquire patent license rights of the constituent corporations?

Answer:

No

Conclusion:

The Court reversed the district court's judgment, holding the license rights were not passed by the operation of law, and thus, by virtue of the merger, Guardian acquired no rights under the license agreement.

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