A.B. Dick Co. v. Fuller

• Decision Date: 16 July 1912
• Citation: 198 F. 404
• Parties: A. B. DICK CO. v. FULLER.
• Court: U.S. District Court — Southern District of New York

198 F. 404

A. B. DICK CO. v. FULLER.

United States District Court, S.D. New York.

July 16, 1912

Edmonds & Edmonds, for complainant.

Milne Blake & McAneny, for defendant.

HAND District Judge.

I can see no ground for the allegation that the contract was unconscionable, or that it ought not to be enforced by a court of equity. So far as the bill shows, it was of Fuller's free will, and gave him $7,500 outright. The agreement to pay $3,000 a year to the Dermatype Company, for at least three years, only meant that Dwight should get about $1,500 a year, for three years, for his stock alone. The balance of $7,500 for Fuller's stock was what he got for the possibility that the company would continue. The covenant with the complainant to disclose all future inventions imposed substantially no new obligation upon him, as I construe it, in view of his prior engagements with the Dermatype Company. His covenant not to engage in business was the usual one under the circumstances, though I do not propose in this opinion to pass upon its legality.

The chief objection raised is to the legality of Fuller's promise to disclose all future inventions relating to stencil paper. This was a direct covenant to the complainant. No question could arise of its legality had it in form been limited to improvements upon the original invention. Littlefield v. Perry, 21 Wall. 205, 22 L.Ed. 577; Reece Folding Machine Co. v. Fenwick, 140 F. 287, 72 C.C.A. 39, 2 L.R.A. (N.S.) 1094. That was in terms the covenant which Fuller had entered into with the Dermatype Company, and the only question which can arise is, first whether his contract with the complainant should be construed more broadly; secondly, if it should, whether it is legal. The words are:

'All inventions * * * in or relating to stencil paper and processes, or methods for preparing, reducing and using same.'

If necessary to sustain the agreement, I think I should construe it so as to limit it to improvements upon the inventions assigned, but I do not consider it necessary to go so far. The reasoning by which the assignment of future improvements is supported is that the improvement may so overlap the invention as to constitute a successful hostile competition. See Putnam, J., in Reece Folding Machine Co. v. Fenwick, supra. The same reasoning applies to any subsequent inventions which relate to the same subject-matter. I think the covenant was intended to cover such processes as bore some relation to the patents or processes already discovered, and, so limited, it is quite clear that competition might arise hostile to the original grant of the complainant.

I have read a number of cases relating to this subject. In nearly all of them the covenant is expressly limited to improvements upon the original invention, and in every case the courts have upheld it. I have found no case in which a covenant of this character has been held invalid by the courts, except the first opinion of Emery, V.C., mentioned below, and in several covenants have been upheld which were not limited to improvements, but to the same subject-matter as the main patents. The earliest and best of these is Printing &amp Numerical Registering Co. v. Sampson, L.R. 19 Eq. 462, in which Sir George Jessel, on page 464, uses the following language: 'Persons, therefore, who buy patents from inventors are in the habit of protecting themselves from the utter destruction of the value of the thing purchased by bargaining with the seller that he shall not use any new invention of his for producing that product in which they are about to deal at a cheaper rate, because, if he were allowed to do so, he might, the day after he had sold his patent, produce something which, without being technically an infringement, and...