110 F. Supp. 580 | D. Del. | 1953
F. A.R. Liquidating Corporation.
■ The critical issue on both -motions is whether certain cables sent from Germany to Farnsworth by a German company on June 14, 1941 constituted an assignment to Farnsworth of the patents, or a contract to assign them. If they did, defendant reluctantly concedes Farnsworth is -entitled to judgment. Defendant, however, contends the transadtioh could not be concluded without a confirming cable from Farnsworth to the cables of June 14.- The question for me, then, is whether such a confirming cable was necessary before there could be an' assignment or a contract between Farnsworth and the German company. , .
The Facts Circa June 14, 1941.
On June 26, 1935, Farnsworth Television, Incorporated, a California corporation, entered into an agreement with a German corporation, Fernseh Aktiengesellschaft (also known as Fernseh G.m.b.H.), located in Berlin-Zehlendorf, Goerzalle.
In December 1938, Farnsworth acquired all patents of Farnsworth Television, Incorporated, and Fernseh consented to the assignment of the patent licensing agreement to Farnsworth. Prior to June 1941, under the agreement, Fernseh received licenses under Farnsworth’s patents and applications in certain European countries, including Germany and Austria. These covered patents issued prior and subsequent to September 1, 1939. Under the agreement Farnsworth received licenses under Fernseh’s patents, granted in the United States prior to September 1, 1939, and thereafter. Fernseh’s United.States patents, the subject of this suit, comprise 111 patents.
In November 1939, Farnsworth was dissatisfied with the agreement ■ from a commercial standpoint- and communicated its desire to Fernseh for a revision of the original license agreement. Thereafter, on February -24, 1941, Farnsworth initiated negotiations with Fernseh by cable for a revision of the agreement. Two days later, Farnsworth’s board of directors authorized the negotiation for revision. No reply from Fernseh was had; Farnsworth then, on March 17, by cable, repeated its former cable of February 24. Farnsworth’s board was advised of these facts on March 26, 1941. By cable of April 1, Fernseh finally answered, suggesting more definite proposals. On April 4, Farnsworth replied by cable, proposing the assignment of all its patent rights in Europe to Fernseh and the assignment to it of all Fernseh’s patent rights in the United States. No reply from
On May 15, Farnsworth cabled its reply to Fernseh’s proposal. It accepted the'proposals except for one item, dealing with an existing license agreement with the American Telephone & Telegraph Company, which was to remain-unaffected. A cut-off dáte of September 1, 1939, with respect to the mutual assignments was agreed upon because the United States and European patents as of that date were of approximately equal value. The May 15 cable read as follows:
“We offer to make agreement with Fernseh as set forth in your cable of May Thirteenth Nineteen Hundred Forty-One excepting only quote fourth unquote point which point is not possible because of existing FarnsworthRCA and RCA-European agreements (Stop) Fernseh-Farnsworth agreements now existing to be abrogated as of effective date of present proposed agreement (Stop) Regarding quote sixth unquote point (Comma) Costs to be borne by party handling (Stop) If you wire your acceptance of this offer our confirming cable to you will constitute a binding agreement between us effective upon date of confirming cable (Stop) Have arranged special meeting our directors for May Twentieth to approve agreement if acceptable to you (Stop) If this arrangement acceptable to you suggest you also cable authority to representatiye- in United States tó execute for you formal Patent Office Assignment.”
At the February 26 meeting of Farnsworth’s board it was concluded any new agreement was subject to approval by the board. Prior to approval by its board, Farnsworth could not enter into any binding agreement. Hence, the provision that the new agreement would be effective on the date of Farnsworth’s confirming cable after Fernseh’s acceptance. 'On May 16, Farnsworth asked its board for ratification of the proposed arrangement. No reply having been received from Fernseh, Farnsworth’s board postponed its meeting from May 20 to May 22. .Unknown to . Farnsworth, Fernseh had received the cable of May 15 on May 17 and its officials had, in fact, on May 19, approved the new agreement. Fernseh, however, had to get authorization from the German authorities. Fernseh urged upon the German authorities that its reply, already drafted, had to be sent no later than May 19 to arrive in. time for the meeting of- Farnsworth’s board on May 20. The German authorities did not act. Fernseh, therefore, did not dispatch its acceptance in time for the meeting of May 20. Although no reply had been received from Fernseh, Farnsworth’s board had a special meeting on May 22. The cables of May 13 and 15 were read. At the meeting it was also stated the United States government had been consulted and that the proposed transaction did not conflict with any policy of the government. The board ratified the action taken by the cables of May 13 and 15 and authorized the consummation of the arrangement as set forth in those cables, with such changes as the President of Farnsworth might deem necessary.
1. The critical cables as to whether plaintiff is entitled to relief will now be discussed. On May 28, not having heard from Fernseh, Farnsworth cabled again. The cable stated: “We cabled you on May 15 as follows.” Then followed a full quote of the May 15 cable. The May 28 cable
“We accept your offer in your cable of day [sic,, May] Twentyeight 1941 consider abrogation of existing agreements and mutual assignment of patents as binding Stop We authorize Mr Martin as our representative by separate cable suggest you also cable authority to representative here for instance Wilhelm Reichel Berlin Zehlendorf Goerzallee 299 as follows Wir Revollmaechtigen Hierdurch insert name Zur Wahrenehmung Unserer Patentinteressen Inbesondere Zur Anmeldung Bearbeitung Geltendmachung Veraeusserung Und Uebertragun Von Schultzrechten In Den Laendern Des Europaeischen Festlandes Fernseh Gmbh Goerz Moeller”
Fernseh also on June 14 sent a cable to Martin, patent attorney and secretary of Farnsworth, which read as follows:
“We authorize hereby Edwin M. Martin 3700 East Potiac Street Fort Wayne Indiana to sell assign and transfer the whole rights titles and interests in and to all letters patent for which he is appointed as our attorney and filed in our name or in the name of Fernseh Aktiengesellschaft in the United States on and before September First 1939 — Fernseh Gmbh Goerz Moeller”
On June 14, 1941, at 1:10 P.M. in Washington, D. C., Executive Order 8785 went into effect.
(Although no affirmative defense was formally made by defendant that the cable was sent from Germany after the effective date of the Executive Order, nevertheless, at argument this point was discussed at some length. Defendant argues there is no evidence Fernseh’s June 14 cable was deposited in the German cable office prior to the effective time when the Executive Order went into effect on June 14, 1941, at 1:10 P.M. A Fernseh file note of June 18, 1941, affirms that Fernseh had secured the consent of the German authorities on June 13 and had sent its cables on June 14, 1941. As stated, defendant never challenged these cables were dispatched before the Executive Order went into effect. Accordingly, this was not an issue in the case. However, ih view of the discussion which occurred at argument, plaintiff demonstrated by expert evidence the cables were dispatched from Germany before the effective time of the Executive Order. I accept this evidence and hold the June 14 cable was dispatched, in point of time, before the Executive Order became effective.)
On June 20, 1941, Farnsworth applied to the Treasury Department for a license, Action was delayed on the application until after the outbreak of war with Germany in December 1941. On June 18, by Vesting Order No. 27,
2. Farnsworth, by depositing its cable of acceptance in the German cable office, on June 14,1941, brought into existence a binding contract between Farnsworth and Fernseh. That contract gave, if not the legal, the equitable title to Fernseh’s United States patents to Farnsworth.
The government argues even if a confirming cable was not necessary, the general tenor of the correspondence between the parties shows they intended no contract was to come into existence until the receipt of the acceptance by the offeror — Farnsworth. This is not the fact. Only mention of a provision for “receipt” of anything is that contained in Fernseh’s early cable of-May 13. Under ’undisputed facts, Farnsworth never required receipt of acceptance as a condition for creation of a binding contract.
Defendant has further argument whether Farnsworth made an assumption (in a certain memorandum submitted to the Custodian) it had inadvertently not indicated to Fernseh a confirming cable was not necessary to create the contract. The argument has been considered and is found to have no merit.
3. I think a complete assignment of Fernseh’s United States patents was made to Farnsworth by the cables of June 14, 1941. A Custodian’s powers to acquire rights in the patents could be no greater
On June 14, 1941, Fernseh assigned its title to the patents to Farnsworth. Thereupon all rights vested in Farnsworth. The June 14, 1941 cable from Fernseh to Farnsworth constituted the assignment. The,former’s cable of May 13 defined the patents involved in the assignment, to which Farnsworth had agreed on May 28. Fernseh’s June 14 cable, in stating “Consider * * * mutual assignment of patents as binding”, thus stated, as far as it was concerned, it had assigned its United States patents to Farnsworth. The assignment, by means of the June 14 cable, became effective when Fernseh deposited it in the German cable office for transmission to Farnsworth.
4. Defendant argues that if cable correspondence leaves any doubt or contains any ambiguity as to whether a contract was made, such doubt is resolved by the understanding of the parties, as evinced by their conduct after June 14, 1941
Events subsequent to June 14, 1941, have legal relevance, in showing the intentions of the parties, only if it is found there is a real ambiguity with -respect to the contract-cables of June 14. I have concluded there is no ambiguity at this point and that, in law, a contract and assignment of patents was had on June 14. Under my view, therefore, events occurring after June 14. are not acts of independent legal significance. Thus, there is no logical necessity to discuss what the parties did subsequent to the date mentioned. As defendant places such stress on those events, and this being the kind of case it is, defendant is entitled to my views of this phase of the case.
Actions of Farnsworth
A. The application to the Treasury Department. On June 20, 1941, Farnsworth applied to the Treasury Department for permission to execute formal assignments to Fernseh and to execute and record in the Patent Office a formal assignment to Farnsworth from Fernseh. This request of plaintiff for permission to execute formal assignments was merely an assertion that, as between the parties, an assignment of the patents had, in law, already occurred and the contract between the parties had become complete on June 14. In fact, in papers filed with the Treasury Department, Farnsworth stated: “These negotiations culminated in the acceptance by Fernseh G.M.B. H., by cable dated June 14, 1941, of an offer by Farnsworth, by cable dated May 28, 1941. In accordance with the offer and acceptance, the agreements in question are cancelled, certain U. S. patents and patent applications owned by Fernseh are assigned and transferred, to Farnsworth, and, certain Continental European patents and patent applications owned by Farnsworth are' as-signed and transferred to Fernseh” (Em-; phasis added.).
It appears when Farnsworth sought permission of the Treasury Department for a license it was not attempting to create or bring into existence a contract between the parties. All that was asked was permission to complete formalities. The administrative relief sought was permission that Farnsworth could take a formal license or a ruling that no license was required. This admitted no change of position. Applicant acted out of an abundance of caution to make certain it violated no governmental regulation in proceeding under its cable-contract with Fernseh. In fact, the application shows Farnsworth was seeking merely permission to convey technical information to Fernseh. Plaintiff’s dealings with the Treasury Department indicates no shift of position. In fact, the government knew Farnsworth’s position as early as September 16, 1941; it never expressed’any dissent. This phase of defendant’s case is bottomed on the postulate that Martin, á legal representative of Farnsworth, had one opinion as to the jural effect of Fernseh’s June 14 cables on June 20 and another on September 16. Obviously Martin’s legal' opinion is not-material; it is not admissible even as an admission ;
B. Modifications proposed by government officials. Representatives ■ of the Treasury and Justice Departments, after Farnsworth filed its application for a license on June 20, 1941, suggested Farnsworth make some “counter-proposals” to Fernseh. There are implications if these counter-proposals were not made the license would be denied; and if made the license would be granted. One of the counter-proposals had to do with the difficulty of -the
The record shows Farnsworth attempted to make its position .clear with the government it had no power to modify the June 14 contract. Farnsworth’s Martin, on Septem-. ber 16, told the government officials:
“The present status of the transaction under- consideration is.that the offer made by Farnsworth has been accepted by'Fernseh without reservation. ■ A binding contract, therefore, appears already to exist and neither of the parties thereto has a right to alter the terms thereof.
“Unless, therefore, Fernseh were willing to renegotiate a new agreement, the terms of the instant agreement could not be altered. The past attitude of the Fernseh company, their reluctance in negotiating the present agreement and the difficulties encountered in the negotiations up to now indicate no reason for'believing that Fernseh would be-willing to alter the terms of the present agreement, as, for example, by eliminating the export provision. Moreover, Farnsworth has no real basis for requesting such a re-negotiation, and furthermore, the present aggravated war conditions and difficulties of communication render an attempt at such re-negotiation highly impractical, if not impossible.” Clearly, therefore, Farnsworth’s consent to submit the counter-proposals to Fernseh was not because it believed no contract existed on June 14 but, rather, because it was willing to get a modification of its terms as the price ■ it must pay for a' license. Despite Martin’s consent to the government’s proposals ■ in' an attempt to get modification from Fernseh, no action was taken. The fact is government officials waited until war with Germany had begun; and then denied the license, refusing-permission to send the very cables the government itself had drafted. It is neither fair dealing nor, equity for the government — as it would be in the case of any litigant — to have suggested if Farnsworth would obtain modification through the counter-proposals a license would be granted. Farnsworth’s consent was, therefore, the price for the proposed license. The counter-proposals were drafted by the government. Action was delayed on them for a long time, at least until the outbreak of the war. It is not equity for defendant now to appear in court and -urge Farnsworth’s actions in this instance demonstrate the latter’s acknowledgment that no contract existed o-n June 14. The statutes and Executive Orders in question were designed to protect American citizens and to hinder enemy aliens. Equity is shocked at a situation which would leave no right to Fernseh’s patents in Farnsworth (American) while, admittedly, Fernseh (German) enjoys all rights in Farnsworth’s (American) patents.
C. Actions of Farnsworth’s board of directors. Defendant seeks to derive comfort from various meetings of Farnsworth’s' board of directors after June 14, 1941. The minutes of none of these meetings support any of defendant’s contentions.
D. Farnsworth’s treatment of Fernseh’s U. S. patents. From June 14, 1941, Farnsworth at all times treated Fernseh’s United States patents as 'belonging to Farnsworth. It did everything to protect its interest and title. No serious challenge is made to the facts o-n this phase of the case.
Again, defendant argues Farnsworth failed to respond to ■ a letter of May 20, 1946, regarding a Dutch patent assigned to Fernseh and to another letter of January 22, 1947, regarding certain Hungarian pat-tents. Reference is also had to a letter of November 16, 1946, where Dutch .patent attorneys stated they understood certain patents had been assigned to Fernseh, but were writing ■ to Farnsworth, since they could not communicate with Fernseh and the patent stood in Farnsworth’s name. From this, defendant argues, the Dutch attorneys were assuming Farnsworth still owned the patents. The evidence on this phase of the case is far from persuasive that the actions of the parties, as well as the actions of individual third parties, lend support to any view that no contract existed on June 14, 1941, Farnsworth vis-a-vis Fernseh.
Actions of Fernseh
By letter of March 28, 1947, Reichel, Fernseh’s patent attorney, stated: “In accordance with our cable of June, 1941, we are of the opinion that the European patents of Farnsworth were our property and that Fernseh’s U. S. patents originated before September 1, 1939, are your property.” Again, in 1949, Reichel wrote: “After conclusion of the agreement, i. e., after June 14, 1941, we (Fernseh) regarded ourselves as the undisputed owners of such of Farnsworth’s European patents as were applied for before September 1, 1939. ' Applications filed after that date we treated as ' previously, i. e., in accordance with the agreement of 1937. We paid the annuities on the Farnsworth patents in Europe until 1945.”' There is evidence Fernseh paid all fees on Farnsworth’s European patents, defendant, nevertheless, attacks Reichel because his. statements were solicited by Farnsworth. The critical fact for my determination is whether his statements are true. No evidence has been offered to show they are not. Evidence shows all his statements were not, in fact, solicited by Farnsworth. His 1947 statement was in response to a letter of Farnsworth. The 1949 declaration was given to an investigator of the ■ Department of Justice upon request and a copy was sent to Farnsworth. Attempts to show other correspondence of Reichel as inconsistent, are without merit. This correspondence consists of inquiries by Reichel to other European patent attorneys in attempting to clarify his client’s patent position. The fact is Farnsworth lent its aid by sending information in answer to all inquiries. None of the correspondence proves to me Farnsworth ever took the position there had been no assignment in June’1941.
Defendant’s attempt to show Fernseh regarded its United States patents as its property after June 14, 1941, is not persuasive. Reference is made to a certain report submitted to the United States Military Government in Germany by Moller, of Fernseh, as of May 18, 1946. Nothing in the evidence of Fernseh’s dealing with the United States Military Government in Germany shows Fernseh understood Farnsworth’s European patents remained Farnsworth’s and that’ Fernseh’s United States patents remained Fernseh’s. This particular evidence shows, if anything, the contrary. The evidence of Moller, who made the report to the United States Military Government, lends no aid to defendant’s position. Moller went to Berlin and reviewed the entire situation between the parties. After reviewing all facts, he concluded: “However, I am convinced that the agreement of June 14, 1941,
5. My conclusions are that the terms of the correspondence between plaintiff and Fernseh and the provisions noted in the cable exchange are unambiguous and demonstrate, in view of the surrounding circumstances, a binding contract and assignment occurred on June 14, 1941. At the time of the vesting by the Custodian, Farnsworth was the owner and assignee of the patent's, of contractual rights and equitable rights and interests in them; and plaintiff is entitled to the relief for which it prays. Farnsworth’s motion for summary judgment should be granted and defendant’s cross-motion denied.
. Prior to May 1949 it was known as Farnsworth Radio & Television Corporation. Here, both corporations will be referred to as “Farnsworth”.
. The latter German corporation -will be referred to as “Fernseh”.
. In 1941, Fernseh’s United States patents were in its name in the United States Patent Office. Farsnworth’s European patents in Germany and Austria were in Fernseh’s name in the patent offices of those countries and its European patents in other countries were under its own name. In 1941, most of those countries were under German occupation or domination.
. Subsequent evidence, unknown to Farnsworth at the time, shows the reason for this last requirement was the necessity of Fernseh to secure the consent of authorities of the German government before the transaction could be completed.
. 6 3T.R. 2897.
. 5 F.R. 1400; see 12 U.S.C.A. § 95a note.
. 7 F.R. 4629.
. 7 F.R. 8510.
. 2 Walker on Patents (Deller’s Ed.), p. 1435; Standard Oil Co. v. Clark, 2 Cir., 163 E.2d 917, certiorari denied 333 U.S. 873, 68 S.Ct. 901, 92 L.Ed. 1149.
. In any suit, for example, between Earnswortb and Fernseh, as Farnsworth had led Fernseh to believe no confirming cable was necessary, ánd Fernseh had acted on that belief, the latter’s belief would govern and its acceptance — as in the ease at bar — would constitute the contract.
O’Neil Supply Co. v. Petroleum H. & P. Co., 280 N.Y. 50, 55, 19 N.E.23 676; U. S. Rubber Co. v. Silverstein, 229 N. Y. 168, 128 N.E. 123; Gates v. Megargel, 2 Cir., 266. F. 811, 818, certiorari denied 254 U.S. 639, 41 S.Ct. 13, 65 L.Ed. 452; Sun Oil Co. v. Dalzell Towing Co., 2 Cir., 55 F.2d 63, 64-65, affirmed 287 U.S. 291, 53 S.Ct. 135, 77 L.Ed. 311.
. Standard Oil Co. v. Clark, 2 Cir., 163 F.2d 917, certiorari denied 333 U.S. 873, 68 S.Ct. 901, 92 L.Ed. 1149.
. 1 Williston on Contracts (Rev.Ed.), §§ 81, 86; Chapman v. Mills & Gibbs, D.C., 241 F. 715, affirmed 2 Cir., 250 F. 1018; Taylor v. Sanford, 108 Tex. 340, 193 S.W. 661, 5 A.L.R. 1660; Lynch v. Johnson, 171 N.C. 611, 89 S.E. 61; M’Kinney v. Rhoads, 5 Watts, Pa., 343.
. 35 U.S. C.A. § 47.
. Jonathan Mills Mfg. Co. v. Whitehurst, C.C., 56 F. 589, 594, affirmed 6 Cir., 72 F. 496; McClaskey v. Harbison-Walker Refractories Co., 3 Cir., 138 F.2d 493, 499; Kenyon v. Automatic Instrument Co., 6 Cir., 160 F.2d 878, 882.
. Delaware Seamless Tube Co. v. Shelby Steel Tube Co., 3 Cir., 160 F. 928, certiorari denied 212 U.S. 580, 29 S.Ct. 689, 53 L.Ed. 659; Acolian Co. v. Hallett & Davis Piano Co., C.C., 134 F. 872, 873.
. Westinghouse Electric & Mfg. Co. v. Formica Insulation Co., 6 Cir., 288 F. 330, 333, affirmed 266 U.S. 342, 45 S.Ct. 117, 69 L.Ed. 316; Dalzell v. Dueber Watch Case Mfg. Co., 149 U.S. 315, 320, 13 S.Ct. 886, 37 L.Ed. 749 ; Prest-O-Lite Co. v. Avery Portable Lighting Co., C.C., 164 F. 60; Schmitt v. Nelson Valve Co., 3 Cir., 125 F. 754; Spears v. Willis, 151 N.Y. 443, 451, 45 N.E. 849.
. Delaware Seamless Tube Co. v. Shelby Steel Tube Co., supra; John Turnan & Sons, Inc. v. Basse, 2 Cir., 113 F.2d 928; Why Corporation v. Super Ironer Corp., 6 Cir., 128 F.2d 539.
. Here, defendant relies on a point discussed in Speed v. Transamerica Corp., D.C.Del., 99 F.Supp. 808, where, at page 821, I wrote:
“Behavior rather than words among men and women is most significant in ascertaining intent. Attorney General v. Drummond, 1 Drury & Warren, 353, 368 (Lord Chancellor Sugden, ‘Tell me what you have done under such a deed, and I will tell you what that deed means.’)”
. Grand Trunk Western R. Co. v. H. W. Nelson Co., 6 Cir., 116 F.2d 823, 835.