Patent & Licensing Corp. v. Olsen

• Decision Date: 26 April 1951
• Docket Number: Docket 21802.,No. 84,84
• Citation: 188 F.2d 522
• Parties: PATENT & LICENSING CORP. v. OLSEN.
• Court: U.S. Court of Appeals — Second Circuit

188 F.2d 522 (1951)

PATENT & LICENSING CORP. v.OLSEN.

No. 84, Docket 21802.

United States Court of Appeals Second Circuit.

Argued January 3, 1951.

Decided April 26, 1951.

Alexander & Green, New York City, William R. McDermott, New York City, of counsel for defendant-appellant.

Sullivan & Cromwell, New York City.John G. Dorsey, New York City, of counsel, for plaintiff-appellee.

Before L. HAND, Chief Judge and SWAN and AUGUSTUS N. HAND, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

The plaintiff, Patent and Licensing Corporation, a wholly owned subsidiary of The Flintkote Company, manufacturing building materials, sought specific performance of an agreement entered into between it and Anders C. Olsen, an inventor of fastening and other devices useful in the building trade, and Olsen Products Company, a corporation owned by Olsen which held title to certain patents developed by him, whereby he agreed to assign to the plaintiff patents on any inventions he might make while in the latter's employ.The contract was made and was to be performed in New York.

Because the plaintiff — hereinafter called P & L — was desirous of obtaining exclusive licenses to use certain patents owned by Olsen Products Company and Olsen, P & L, Olsen and Products, on April 19, 1941, entered into an agreement providing that:

(1) P & L would employ Olsen for a period not to exceed one year at a biweekly salary of $192.30 clause 1(a), but P & L should have the right to terminate the employment of Olsen at any time and if it should terminate it prior to one year from the date of the agreement such termination, but not a termination by Olsen of his own accord, would cancel the agreement and the rights and obligations of the parties thereunder; Olsen would perform such duties as P & L might direct, and also would assign to P & L his entire right, title and interest in all inventions and improvements relating to or useful in connection with the business which P & L or the Flintkote Company might carry on during the period of such employment, excepting, however, inventions or improvements relating to clips licensed or agreed to be licensed under the provisions of paragraph 2infra.

(2) Olsen and Products would grant to P & L an exclusive license to manufacture, use and sell certain items on which Olsen and Products held, or during the terms of the agreement would hold, patents.

Under clause 14 the agreement was to run until the expiration of the latest patent to issue under the applications enumerated in a schedule attached to the contract, or referred to in paragraph 2, on which P & L had been granted a license, unless sooner terminated pursuant to any of the following provisions:

"9.Unless terminated prior to one year from the date hereof in accordance with the provisions of paragraph 1 hereof, P & L shall have the right to terminate this Agreement at any time thereafter by giving ninety (90) days prior written notice thereof to Olsen."

"10(c).Products shall have the right to terminate this Agreement on March 1, 1943, or on March 1 of any subsequent year during the continuance in force of this Agreement, by giving P & L thirty (30) days prior written notice" if royalties to Products under the agreement did not aggregate $5,000 in the year preceding the termination.

On account of wartime building restrictions, yearly royalties to Products under the agreement never reached $5,000 and P & L felt that it did not need Olsen's full services.Negotiations leading to a modification of the contract having failed, P & L, acting under clause 1(a), on January 15, 1946, terminated Olsen's employment as of January 31, 1946.On January 26, 1946, pursuant to clause 10(c), Products terminated the agreement as of March 1, 1946.Thereafter, on September 9, 1946, P & L brought this action to require Olsen to assign to P & L three patents covering inventions allegedly made by Olsen while in P & L's employ. (The Asbestos Siding Fastener, U. S. Patent No. 2,368,867, Canadian PatentNo. 430,217, and the Split Nail, U. S. PatentNo. 2,404,245.)Olsen answered alleging want of mutuality as a bar to specific performance, asserting that the agreement had been entirely cancelled by the termination of his employment, denying that the Split Nail was invented while he was employed by P & L and counterclaiming for 90 days wages ($1,235.70) due on termination of his employment.On this appeal, Olsen argues as an additional defense that the patents in question involved improvements on devices licensed under clause 2 of the agreement and were thus not required to be assigned.

P & L's motion for summary judgment dismissing the counterclaim was granted by Goddard, J., 71 F.Supp.181 and P & L's action for specific performance was tried without a jury by Barksdale, J., who ordered specific performance as prayed for.Olsen now appeals from the orders of Goddard, J., and Barksdale, J.

Olsen argues that P & L's action in terminating his employment pursuant to clause 1(a) of the contract effected "a cancellation of this entire agreement," including his duty to assign the patents in question, as P & L's continuation of his employment beyond the term set forth in clause 1(a) constituted a yearly renewal of his employment each April 19 on all the terms of clause 1(a) including the provision that termination "prior to one year from the date hereof * * * shall * * * effect a cancellation of this entire agreement."We do not so understand the contract.It is in two parts: the first provided for Olsen's employment and the assignment of...