232 Mass. 196 | Mass. | 1919
The defendant in a written contract with the plaintiff under date of January 20, 1908, agrees “that if ever it' sells the filler business for Canada or for any foreign country,” it will pay him a proportionate part thereof. The question is whether the defendant has become liable under this term of the contract. The “filler business” was the right to manufacture and sell “a certain compound known as ‘Besto’ shoe filler, a patented article used in the manufacture of shoes.” The defendant entered into a contract on April 5, 1909, whereby it granted to a British corporation, which theretofore had been its sole agent to sell “Besto” in England, “an exclusive license under the patents aforesaid in the territory aforesaid [¡Great Britain and Germany] to manufacture use exercise and sell its Besto bottom filler . . . from the date hereof to the 14th day of August, 1919, subject to the further terms and conditions of this agreement,” with the right to assign the license or to grant sublicense or sublicenses thereof. Several terms and conditions follow as to the furnishing by the defendant to the British corporation of patterns of “outfits” (which were machines for heating, mixing and applying the “Besto”) and of “the chemical compound required for the aforesaid manufacture.” At the end
The point to be decided is whether these two contracts between the British licensee and the defendant constituted a sale of its business in a foreign country, within the meaning of the contract of January 20, 1908, between the plaintiff and the defendant.
There is no evidence in the record respecting the patent laws of Great Britain or Germany touching the sale or assignment of patents or the granting of licenses to manufacture, use, exercise and sell patented articles. Therefore the words of the contracts
The word “sale” has a well defined meaning. It is the transfer of property from one person to another for a consideration of value. Howard v. Harris, 8 Allen, 297, 299. Commonwealth v. Woelz, 219 Mass. 37, 38. The sales act, St. 1908, c. 237, § 1. The word implies ordinarily the passing from seller to buyer of the general and absolute title to property as distinguished from a special interest, a bailment, a license, a lease, a pawn or other limited right falling short of complete ownership. The distinction between a sale as a complete change of title and other transactions amounting merely to the acquisition of some particular property right is well established. Hunt v. Wyman, 100 Mass. 198. Kennedy v. Drake, 225 Mass. 303. Storm v. Baker, 150 U. S. 312, 328-330. Sewell v. Burdick, 10 App. Cas. 74. Smith v. Niles, 20 Vt. 315.
Plainly the contract between the defendant and the British corporation in form was not a sale. The decisive descriptive words used are “ exclusive license.” That means, considered abstractly, a privilege or authority granted to another to do that which he would not otherwise be justified in doing, by one who' possesses and retains a superior right or power. As applied to a patent it signifies the assignment by the patentee to another of rights less in degree than an interest in the patent itself. Waterman v. Mackenzie, 138 U. S. 252. Poye Manuf. Co. v. Gormully & Jeffery Manuf. Co. 144 U. S. 248. The law, however, will not be bound by the form of the transaction, but giving due effect to all the words used will look to the substance of the matter in order to determine whether there has been a sale. Testing the contract in this way, it confers a license and is not the equivalent of a sale or absolute transfer. It was limited in point of time. It does not appear what was the unexpired term of the patent rights in Great Britain or in Germany. But the time during which the British corporation had rights under the patents was definitely restricted and well may have been less than for the term of the patents. The defendant as the owner of the patent might be held liable to some extent for expenses in necessary suits to restrain infringements of the patents. The
Judgment for the defendant.