Munger v. Perlman Rim Corp., No. 242

No. 242 | 2d Cir. | Jun 1, 1921

HOUGH, Circuit Judge

(after stating the facts as above). This appeal presents three questions: (1) lias the plaintiff title to the patent in suit? (2) Is claim 4 valid and infringed? (3) Have the damages been properly adjusted?

The question of title depends solely on whether the delivery of the written assignment of the patent in suit to the attorney for the promoters of Hunger Automobile Tire Company was absolute or in escrow. Plaintiff contended that it was merely deposited with the attorney in question until such time as his clients produced the money they had promised to provide for the new corporation. It is plain that they never provided the money.

It is not doubted that an escrow is a written instrument, which by its terms imports a legal obligation, and which is deposited by the grantor with a third party to be kept by the depository until the performance of a. condition or the happening of a certain event, and then to be delivered over to the grantee. 10 R.. C. E. 621.

Undoubtedly there was much to be said in favor of interpreting a deposit with the promoters’ attorney as a delivery to the promoters, yet it was and remained wholly a question of fact whether there ever was a delivery or merely a deposit in escrow. The trial judge considered this question of fact on a record containing the testimony (so far as we can see) of every living person who could have had knowledge in the premises, and after such, hearing decided that there was a deposit in escrow, and that the condition upon which delivery depended had never been fulfilled. We are not disposed to disturb these findings of fact, and it is not denied that from them flowed the conclusion of law that title to the patent never passed out of the National, etc., Company, as whose assignee the plaintiff brings this suit.

[1] The trial court found as a fact that defendant’s rims were made under the Perlman patent so fully considered in this circuit in. Perlman v. Standard, etc., Co., supra. This statement is true in a strictly legal sense, but it is also true that what this defendant has made and is making is in substance or essence the device which was found to infringe in Perlman v. Standard Co., supra. This means that the scope accorded Perlman patent 1,052,270 was so broad that it covered a style of demountable rim very much better for commercial purposes than anything disclosed by Perlman’s specification.

Perlman’s disclosed means consist essentially in a plurality of threaded bolts passing through the felly at appropriate intervals, having frustro-conical heads, which can be “set up” by nuts, into' apertures in the rim or tire base, which base fitted loosely over the felly. By the wedge-action of these frustro-conical bolt-heads the tire-base is to be held-firmly'in position. The wedge-action held to be a mechanical equivalent is set forth in (D. C.) 231 Fed. at page 455, and is mechanically identical with what is now said to infringe Munger’s patent. Throughout the Perlman litigation, supra, the patent now in suit was not cited or referred to. It is a necessary inference from our previous decision, and is abundantly proven here, that wedge-action for the purpose of tightly fastening a demountable rim was broadly new when Munger filed his application.

The references now introduced were disposed of by our previous decisions; they are assuredly no better as against Munger than they were against Perlman. The difference between Perlman’s disclosed device and that which was held to infringe in the case cited was in the method of applying wedge-action, but the devices of both parties applied wedges at certain predetermined points on the periphery of the felly, whereas Munger makes of the whole of his tapered rim one wedge when it is slipped over and pressed upon the similarly tapered felly. If, as we have held, wedge-action in this art was broadly new, it makes no difference that instead of a half a dozen wedges Munger has one large wedge.

It is objected that Munger’s device was not operative, but the evidence proves that it was used and that it did operate in accordance with the law of its being as described and claimed. That it was not a commercial success is true, as the story of sales shows. But neither was Perlman’s disclosed means successful, yet his concept of wedge-action seemed so new and meritorious, as to entitle him to dominate, and (in the person of the defendant corporation bearing his name) ultimately appropriate, the superior application of wedge-action practiced by the defendants in the original Perlman litigation, supra.

The Munger patent is entitled to the same broad scope, because it is a still earlier concept of wedge-action, operative and useful even though not commercially successful. As we have held that wedges driven in between felly and rim must pay tribute to one who described only wedge bolts protruding through the felly (the claim being sufficiently broad), so must the same successful device pay tribute to Munger’s earlier wedge-action device.

[2] The interlocutory decree (as interpreted by the opinion below) substantially held that this plaintiff was not entitled to profits; and that since there was not and never had been any established license rate under Munger’s patent, and there was no adequate basis for an assessment of damages on lost sales, the master was told to assess damages by ascertaining “what would have been a reasonable royalty, considering the nature of the invention, its utility and advantages, and the extent of the use involved.” Dowagiac, etc., Co. v. Minnesota, etc., Co., 235 U. S. 648, 35 Sup. Ct. 221, 224 (59 L. Ed. 398" court="SCOTUS" date_filed="1915-01-11" href="https://app.midpage.ai/document/dowagiac-manufacturing-co-v-minnesota-moline-plow-co-98333?utm_source=webapp" opinion_id="98333">59 L. Ed. 398). No assignment of error challenges this limitation on plaintiff’s recovery, and we express no opinion on this point. The only question before us is whether, assuming plaintiff to be entitled to any damages, the ascertainment and computation thereof was correct.

Plaintiff proved that defendant under the Perlman patent had an established or usual royalty charge; that there were many patents covering parts of or devices used in motor vehicles, and that for them rates of royalty had been and were being charged, based upon a percentage of the sale prices of the part or devices containing said patented invention. Then a witness, apparently disinterested, a pioneer in motor exploitation and himself an inventor and manufacturer, gave it as his opinion that from 10 per cent, to 15 per cent, of the sale price of infringing rims would be a reasonable royalty for the use of Hunger’s invention. There was substantially no evidence in contradiction of the foregoing. Under the Dowagiac Case we think this evidence competent, and if believed sufficient whereon to- ground an award of damages, if supplemented (as it was) by proof of sales and manufacture.

This expert’s royalty rate the master “accepted, for the purpose of apportioning defendant’s profits,” choosing, however “15 per cent, rather than the minimum 10 per cent, or any figure between the two.”

The sentence regarding “apportioning defendant’s profits” is the master’s method of stating the thought (naturally arising on this record) that a reasonable royalty under the Munger patent, a commercially unsuccessful invention, should be less than the price justly chargeable for using the detachable wedge of defendant’s actual system. It is but another way of stating the thought of plaintiff’s expert, when he suggested a percentage royalty, for his highest figure amounts to much less than the royalty defendant has been charging other manufacturers.

The case comes down to this: Having regard to the history of this invention, and the obviously more desirable application of the wedge principle, used by defendant, was the master justified in using the higher rate suggested by plaintiff’s expert rather than the lower? The matter is one not made plainer by discussion. After consideration of the record we are of opinion that the master should have taken the 10 per cent, estimate rather than the 15 per cent. one. It is therefore ordered that the decree appealed from be modified by reducing the amount of plaintiff’s recovery to $48,713.39, and that, as so modified, the decree appealed from be affirmed, without costs in this court.