314 Mass. 686 | Mass. | 1943
The plaintiff, the administratrix of the estate
It appears from the transcript of the evidence, the report of material facts, and the exhibits, that Eno claimed to have discovered a method by which insoles, too thin to channel a leather rib out of the sole itself through which it could be sewed to the upper of the shoe, could be used by making a rib out of adhesive tape with a filler which was to be attached to the lower surface of the insole. Ridderstrom, the president of the defendant, had developed a machine that would lay the adhesive tape on the insole in accordance with Eno’s process. On May 26, 1933, the parties entered into a contract in the form of a letter signed by the defendant, a copy of which was assented to by Eno and retained by the defendant. This contract recited that Eno had developed a new method for making an insole and that Ridderstrom had developed a machine capable of putting this method in use. Both Eno and Ridderstrom were.to furnish a certain attorney with the plans and other necessary information in order to enable the attorney to prepare applications for patents
The defendant contends that the contract provided for a temporary arrangement, which was to continue only long enough to permit the parties to secure from actual experience in putting the machines and process upon the market an approximation of the profits and then to agree upon such apportionment of them as would give Eno fair compensation for the use of the process, and that, as the parties never agreed, this preliminary contract “was not a legal, binding contract and was void for uncertainty.” One of
The judge found that Eno had fully performed his part of the contract; that both Eno and the plaintiff had endeavored to agree with the defendant upon the amount of compensation to be paid for the use of the process, but that they were unable to do so, and that Eno and the plaintiff were not guilty of laches in failing to notify the defendant sooner than May 16, 1940, to cease using the process. The parties did not intend that the payment of compensation should be left entirely to the decision of the defendant. Whitten v. New England Live Stock Ins. Co. 165 Mass. 343. McCrillis v. L. Q. White Shoe Co. 264 Mass. 32. While it may not have occurred to them at the time the contract was executed that several years might elapse in fruitless negotiations to settle the matter of compensation, yet, from the language employed in their contract, the nature
Eno was hired by the defendant for a year in March, 1935, and for six months in October, 1937. His duties were to interview shoe manufacturers and to endeavor to have them use the process. He was paid wages for this work. While there was testimony by the defendant’s treasurer that he and Eno had conferred in reference to making a new agreement for the use by the defendant of his process, yet there was a conflict in the testimony and the judge was not plainly wrong, as the defendant contends, in finding, as he did, that the contract of May 26, 1933, was not modified, cancelled or superseded by any arrangements made between Eno and the defendant at the times he was hired to work for the defendant. Dean v. Washburn & Moen Manuf. Co. 177 Mass. 137. Makletzova v. Diaghileff, 227 Mass. 100. Allen v. Williams
The principal contention of the plaintiff is that the master erred in finding that the defendant had not secured any profits from the use of the process during the period of the license and that the defendant had suffered a loss. Although this period ended May 16, 1940, when the plaintiff notified the defendant that the license was terminated, the parties for convenience in dealing with bookkeeping entries have considered the period as ending on May 1, 1940, and the second period, which ended on July 1, 1941, as beginning on May 1, 1940, instead of May 16, 1940.
We are now concerned with the first period. The master found that the gross profits amounted to $49,651.85. He charged against these gross profits operating expenses of $79,951.70, which left a deficit of $30,299.85 which was reduced to $25,551.94 by crediting the defendant with the fair value of machines on hand at the end of this period. We see nothing in the computation of the operating expenses that was improper with the exception of two items, one for factory overhead and the other for office and administrative expense, which amount to $22,795.39. The defendant conducted four different lines of business and did not keep account of the cost which was incurred by it by the exploitation of Eno’s process and which it included in office and administrative expenses. The master has found that the method the defendant used to apportion a part of the factory overhead and office and administrative expenses “to the innersole. line of business bears no relation to the actual amount by which” these expenses were “increased by the defendant’s undertaking and carrying on the particular line of business having to do with the Eno Process.” Those two items should have been disallowed. Regis v. H. A. Jaynes & Co. 191 Mass. 245. Nelson v. J. H. Winchell & Co. 203 Mass. 75. Grocers Supply Co. v. I. Renaud Co. 234 Mass. 180. MacDonald v. Page Co. 264 Mass. 199. Levin Bros. v. Davis Manuf. Co. 72 Fed. (2d) 163. Horvath v. McCord Radiator
The master has made an alternative finding based entirely upon the gross income and gross expenses derived from the sales of tape and filler, and considered apart from the income and expenses heretofore discussed in treating the undertaking as a unit, which included both the machines and process. Under this alternative finding the accounting would show a balance of $9,338.24 in favor of the plaintiff. The master properly disregarded the testimony of the defendant’s treasurer that it was contemplated that the net proceeds from the sales of tape and filler would be divided somehow between the process and the machines. Baker v. Sanderson, 3 Pick. 348, 355. Goodell v. Smith, 9 Cush. 592, 594. Gold v. Boston Elevated Railway, 244 Mass. 144, 147. Fenton v. Federal Street Building Trust, 310 Mass. 609, 613. The construction of the contract was for the judge. The contract was plain and free from ambiguity. It called for the adaptation of the process to commercial use by means of the machines of the defendant. The process might be applied by hand but it would probably be of little practical use unless it could be mechanically applied to "the insole by a taping machine suitable for the purpose. Not only the contract itself, but Eno’s application for a patent,, shows that the defendant’s machines were to be used in laying the tape on to the insole. The parties to the contract were to be compensated out of the profits of an undertaking in which Eno’s process and the defendant’s machines complemented each other and together constituted the means by which an insole with a stitch receiving rib of adhesive tape with a core or filler could be produced.
We now pass to the question whether the plaintiff is entitled to an assessment of damages for the period beginning on May 16, 1940, and ending on July 1, 1941, on account of the wrongful use of the process by the defendant. The plaintiff, however, parted with the use and enjoyment of the process when on May 27, 1940, she granted an exclusive but not a sole license to Eno Systems, Inc., which continued until it was terminated on June 30, 1941. Western Electric Co. Inc. v. Pacent Reproducer Corp. 42 Fed. (2d) 116. Paul E. Hawkinson Co. v. Carnell, 112 Fed. (2d) 396. The right to the full use and enjoyment vested in this licensee and the conduct of the defendant constituted an interference with the use of the process by the licensee. If the patent was valid the plaintiff would have no right to proceed against the defendant as an infringer for damages sustained subsequent to May 27, 1940, for that right vested in the new licensee who could, in the name of the plaintiff, bring an action against the defendant for its wrongful use of the patent, and the damages, when collected, would belong to the licensee. Gayler v. Wilder, 10 How. 477. Birdsell v. Shaliol, 112 U. S. 485. Waterman v. Mackenzie, 138 U. S. 252. Pope Manuf. Co. v. Gormully & Jeffery Manuf. Co. 144 U. S. 248. Independent Wireless Telegraph Co. v. Radio Corp. of America, 269 U. S. 459. E. W. Bliss Co. v. United States, 253 U. S. 187. Western
The full use and enjoyment of the process being in the new licensee from and after the date of its license, the plaintiff is not entitled to damages for the wrongful use of the process during the period of such license. Our inquiry is narrowed down to the question whether she can recover for the period from May 16, 1940, to May 27, 1940. The defendant contends that the agreement of May 26, 1933, was based upon the implied condition that the process was patentable. If this were so, we would have to consider whether the promise of the defendant not to use the process was unenforceable for want of consideration. Bliss v. Negus, 8 Mass. 46. Dickinson v. Hall, 14 Pick. 217. Bierce v. Stocking, 11 Gray, 174. Lester v. Palmer, 4 Allen, 145. Nash v. Lull, 102 Mass. 60. Harlow v. Putnam, 124 Mass. 553. But the original agreement, besides this negative promise of the defendant, also included a license. This agreement was entire and indivisible and did not rest upon the implied condition urged by the defendant. The usual rule governing the interpretation of contracts respecting the issuance of licenses to manufacture and the use of an article covered by a patent is that the licensor does not warrant the validity of the patent. Walker, Patents, § 383. Am. Law Inst. Restatement: Restitution, § 24, Comment (f). A licensee who continues the use of a patented article in accordance with the terms of the license after the patent has been adjudged invalid may be liable for the payment of the royalty fixed by the license. Standard Button Fastening Co. v. Harney, 155 Mass. 507. Standard Button Fastening Co. v. Ellis, 159 Mass. 448. Potterton v. Condit, 218 Mass. 216. The parties, however, did not agree on what the defendant should pay for the use of the process subsequent to the termination of the license. The plaintiff is entitled to recover such damages as she proves were sustained by her as the natural and probable consequence of the breach of the contract by the defendant. Wheeler v. Balestri, 304 Mass. 257. F. A. Bartlett Tree Expert Co. v. Hartney, 308 Mass. 407. Ordinarily, the measure of damages to be assessed upon one who has wrongfully appro
The first question arises as to the jurisdiction of a State court to determine the validity of a patent in a suit for damages for breach of a written contract by the wrongful use of the patented method by a former licensee. Exclusive jurisdiction “Of all cases arising under the patent-right . . . laws of the United States” is vested in the Federal courts. United States Constitution, art. 1, § 8. Judicial Code, § 256; U. S. C. (1940 ed.) Title 28, § 371. That there is a clear distinction between a case and a question arising under the patent laws has been frequently pointed out by this court, and it is settled that the courts of this Commonwealth have jurisdiction to pass upon the validity of a patent or the originality of an invention when that issue arises collaterally or is incidentally involved in a cause properly cognizable
The next question is whether the defendant is estopped from raising this point. The defendant had been a licensee of the patent, and the general rule is that a licensee, continuing to enjoy the benefits of his license, is estopped, when sued for the royalty, to deny the validity of the patent. Kinsman v. Parkhurst, 18 How. 289. Eureka Co. v. Bailey Co. 11 Wall. 488. United States v. Harvey Steel Co. 196 U. S. 310. Westinghouse Electric & Manuf. Co. v. Formica Insulation Co. 266 U. S. 342. That principle is not applicable where the claim is for wrongful use of the patent after the termination of the license. We have already decided that the defendant does not owe the plaintiff anything for the use of the patent during the licensed period, and the present suit is therefore reduced to a claim for damages for the wrongful use of the patent after the termination of the license. Indeed, the position of the defendant in respect to this claim is not essentially different from that of one who is charged with infringement of a patent. In this situation, it is open to the defendant to challenge the validity of the patent. H. Tibbe & Son Manuf. Co. v. Heineken, 37 Fed. 686. Tate v. Baltimore & Ohio Railroad, 229 Fed. 141. Eskimo Pie Corp. v. National Ice Cream Co. 20 Fed. (2d) 1003. International Burr Corp. v. Wood Grinding Service, Inc. 34 Fed. (2d) 905. Paine & Williams Co. v. Baldwin Rubber Co. 113 Fed. (2d) 840.
. The granting of a patent is weighty evidence that the device or method is new and useful and that the patentee was the first inventor. The burden is upon the defendant to negative novelty in the plaintiff’s patent. Nash v. Lull,
Previous to the filing of an application by Eno, patents covering various methods of supplying a stitch receiving rib to the surface of an insole had been granted. See Orr, United States Patent No. 681,506, dated August 27, 1901; Preble, United States Patent No. 1,022,391, dated April 2, 1912; Poole, United States Patent No. 1,137,282, dated April 27, 1915; Poole, United States Patent No. 1,244,891, dated October 30, 1917; Arlidge, United States Patent No. 1,298,156, dated March 25, 1919; Poole, United States Patent No. 1,728,362, dated September 17, 1929; and Emerson, United States Patent No. 1,895,709, dated January 31, 1933. The application filed by Preble states that the method of cementing to the insole the textile material from which is formed the crease or rib to receive the stitches by which the insole is stitched to the upper of the shoe is not satisfactory. His method consisted in using celluloid instead of cement. The stitch receiving rib had a filler or core. Poole’s Patent No. 1,137,282 was a method of making an insole by stitching to the insole a composite rib, consisting of a core strip and a covering strip of fabric of sufficient width to cover said core strip, and to provide attaching flaps on each side thereof, said covering strip embracing the core and being stitched to the insole at each side of the core. Poole’s Patent No. 1,244,891 was a machine suitable for applying a stitch receiving rib to insoles. The method of making the insole was fully described. "In making the complete innersole, a body and a flat strip of textile fabric or other material suitable for forming the rib are fed together into the machine, and in the act of so feeding the strip it is folded or bent into the shape required for the rib as it approaches the innersole body. After being brought into contact with the said body stitches are passed through the rib-forming strip at one or both sides of the part which forms the rib. This operation is carried on progressively throughout the entire part of the sole on which the rib is provided, commencing at the beginning
The use of a fabric stitch receiving rib attached to an insole was nothing new at the time Eno filed his application. Neither was there anything novel in sewing the fabric to the insole or in cementing it to the insole. The principal difference between Poole’s and Eno’s methods was that in the first the attachment was made by stitching and in the second by adhesive. An insole made by the Poole method and one made by the Eno method were introduced in evidence. The substitution of an adhesive for stitching was not in these circumstances a discovery and it was not an invention. It was not an advance which was not plainly indicated by the prior art. The use of a rib containing a filler or core was nothing new in the art. The methods of applying the fabric to the insole as shown by the patents already enumerated rested upon documentary evidence, and in that respect we stand in the same position as did
The evidence of the experts was competent to explain the meaning of certain terms in the letters patent, but the construction of the claims included in the letters patent was a question of law for the court. Seymour v. Osborne, 11 Wall. 516. United States Industrial Chemicals, Inc. v. Carbide & Carbon Chemicals Corp. 315 U. S. 668. In view of the state of the art existing at the time Eno applied for a patent, especially Poole’s patent No. 1,244,891, we hold that his process was anticipated by previous patents, and that his process was not an invention but, at most, merely called for the exercise of skill by one familiar with the art. John E. Thropp’s Sons Co. v. Seiberling, 264 U. S. 320. Alexander Milburn Co. v. Davis-Bournonville Co. 270 U. S. 390. DeForest Radio Co. v. General Electric Co. 283 U. S. 664. Electric Cable Joint Co. v. Brooklyn Edison Co. Inc. 292 U. S. 69. Keystone Driller Co. v. Northwest Engineering Corp. 294 U. S. 42. Paramount Publix Corp. v. American Tri-Ergon Corp. 294 U. S. 464. Altoona Publix Theatres, Inc. v. American Tri-Ergon Corp. 294 U. S. 477. Toledo Pressed Steel Co. v. Standard Parts, Inc. 307 U. S. 350. Standard Brands, Inc. v. National Grain Yeast Corp. 308 U. S. 34. Detrola Radio & Television Corp. v. Hazeltine Corp. 313 U. S. 259. Cuno Engineering Corp. v. Automatic Devices Corp. 314 U. S. 84. Marconi Wireless Telegraph Co. of America v. United States, 320 U. S. 1.
The plaintiff had no statutory monopoly on the use of the process. Anyone, excepting only the defendant, could use it without any let or hindrance by the plaintiff. Barett v. Goodwin, ante, 279. A mere paper title to a thing that every member of the public, except one, could freely use for his own benefit cannot have any great commercial
Equity does not concern itself with the entry of a decree for nominal damages arising out of a breach of contract where no grounds for relief are shown. The fact that nominal damages might be assessed were this an action at law does not in equity prevent the entry of a decree dismissing the bill. Cummings v. Barrett, 10 Cush. 186, 190. Cragin v. Jones, 283 Mass. 474. Fred T. Ley & Co. Inc. v. Sagalyn, 302 Mass. 488. Compare DiNardo v. Dovidio, 312 Mass. 398. Nor do we think as a practical matter that the plaintiff’s rights in the defendant’s promise not to use the process in the circumstances of this case, are sufficiently tangible to call for the granting of an injunction.
It follows that the final decree must be reversed and a decree be entered dismissing the bill.
Ordered accordingly.
This is an appeal by Eno Sj^stems, Inc., from a decree dismissing its petition to intervene as a party plaintiff.
The intervener was not a party to the contract between the plaintiff and the defendant which was the sole basis for the cause of action alleged. The intervener had no beneficial interest in that contract. If it had any standing, by virtue of its license from the plaintiff, to maintain an action against the defendant for the wrongful use of the process during the period covered by the license, then such an action could not be based upon the contract, but would have to rest upon a claim of infringement — a cause of action over which our courts have no jurisdiction.
We assume that an appeal lies to an order refusing intervention, but, as the petitioner had no interest in any cause of action arising out of the contract, there was no error in dismissing the petition. Dillaway v. Burton, 256 Mass. 568. Check v. Kaplan, 280 Mass. 170. Piper v. Childs, 290 Mass. 560. New York v. New York Telephone Co. 261 U. S. 312. United States v. California Coöperative Canneries, 279 U. S. 553, 556.
Decree dismissing petition affirmed with costs.