Bandag, Inc. v. Morenings

• Decision Date: 13 December 1966
• Docket Number: No. 52017,52017
• Citation: 146 N.W.2d 916,259 Iowa 998
• Parties: , 152 U.S.P.Q. 353 BANDAG, INCORPORATED, Appellant, v. Gerhard MORENINGS, Appellee.
• Court: Iowa Supreme Court

Page 916

146 N.W.2d 916

259 Iowa 998, 152 U.S.P.Q. 353

BANDAG, INCORPORATED, Appellant, v. Gerhard MORENINGS, Appellee.

No. 52017.

Supreme Court of Iowa.

Dec. 13, 1966.

Robert A. VanVooren and Lane & Waterman, Davenport, for appellant.

Ronald L. Carlson and Betty, Neuman, McMahon, Hellstrom & Bittner, Davenport, for appellee.

MASON, Justice.

Plaintiff's equity action seeks a decree of ownership to a formula and process for an adhesive to bond polyurethane to natural or synthetic rubber, which formula and process are in the possession of defendant, a former employee. Plaintiff sought a temporary injunction during the pendency of the action and a permanent injunction against defendant's utilizing in any manner certain books, records, charts and formulas in his possession which plaintiff claims to own.

After trial the court dismissed plaintiff's petition, set aside the temporary injunction and released the documents in question, previously deposited with the court, to defendant. Plaintiff appeals.

I. The appeal presents the legal question, Under what circumstances does the law award to the employer or the employee the right and title to an invention, process or formula discovered or developed by the employee during the course or term of his employment?

Plaintiff, an Iowa corporation with home offices in Muscatine, is engaged in automobile tire recapping, and as a part of such operation has devoted time, research and experimental work pertaining to the use of polyurethane in the recapping process. Apparently one of the problems involved in the tire recapping business is the development of a satisfactory 'bonding' or 'adhesive' agent in the process of bonding artificial rubber compounds, such as polyurethane, to old or synthetic rubber. We are told polyurethane is a rubber-like chemical compound used under various trade names in the chemical industry to provide a durable wearing surface to tires to be recapped; that the industry has experienced difficulty in finding an adhesive or bonding agent which will hold the old tire carcass to the new polyurethane tread; that there has been considerable research and experimentation on the problem without satisfactory results.

Defendant, a native of Germany, was originally employed in September 1958 by plaintiff as a common laborer. He had had no training in chemistry but obtained chemistry books written in German from his brother in Germany and began to study nights to prepare himself for his responsibility at plaintiff's plant. Two years after starting work as a laborer defendant developed a proficiency in chemistry.

During his employment as a laborer he realized plaintiff's products were not properly developed and there was a need for quality control consisting of testing each batch of rubber processed at plaintiff's plant. Defendant was sent to Akron, Ohio at plaintiff's expense to take a four-day course in the handling of rubber testing equipment. Upon his return he began working on quality control where he did all the testing of each batch of rubber processed at the plant as well as raw materials furnished by other companies.

Later defendant was placed in charge of plaintiff's laboratory as chief chemist, a position he held until termination of his employment in January 1964. While in plaintiff's employ he developed many processes but at no time asserted a claim of ownership to these. The most significant process developed was a calendered bonding agent which adhered tread rubber to tire carcasses, which defendant perfected in late 1960 or early 1961. Plaintiff patented it.

Part of defendant's function in research and development for plaintiff was to bring forth new ideas for its use. In this connection he maintained a project book which at time of trial contained 18 itemized projects in the index. Defendant concedes 17 were company projects worked on by him while head of research and development. The dispute is over project 12 (the polyurethane application) which defendant claims to own. This project, written in Greek in the book is also listed among the projects appearing in plaintiff's research program (exhibit 20), both in defendant's handwriting.

The value or efficiency of the formula for the bonding agent or material claimed to have been invented or produced by defendant is not in issue. It is conceded the utilization of the polyurethane application would improve plaintiff's position in the market.

II. The parties did not have a written contract regarding the assignment of inventions to plaintiff by defendant.

The gist of plaintiff's action is alleged in paragraph five of its amended petition: 'On or about April of 1961 defendant was given the specific assignment by plaintiff to head its research and development for uses of polyurethane as it related to plaintiff's business, specifically including the development of a process for bonding polyurethane to rubber and/or synthetic rubbers, with specific understanding that the development of this process, when perfected, would be utilized by plaintiff in its new products field.' Plaintiff seeks the exclusive title to the polyurethane formula or process.

Defendant's answer denies each of these allegations.

The burden of proof of plaintiff's ownership of defendant's formula by virtue of the alleged contract of employment is on plaintiff. Gemco Engineering & Manufacturing Co., Inc. v. Henderson, 82 Ohio App. 324, 77 N.E.2d 742, 743, modified on other grounds 151 Ohio St. 95, 84 N.E.2d 596.

The trial court found plaintiff had failed to carry the necessary burden and concluded that no contract, either express or implied, ever existed with defendant under which it was incumbent upon him to devote his entire time and skills in the attempt to discover or formulate a bonding agent which would do the work required in connection with the application of polyurethane to tire carcasses.

III. Plaintiff assigns a number of propositions relied on for reversal which we will not detail except as we find necessary in arriving at our decision.

Plaintiff's appeal is based on the contention the court misapplied the appropriate governing rule; the findings of fact are inconsistent with the testimony; the conclusions of law are inconsistent with the findings of fact; and the court failed to give consideration to testimony of Lynn Harbison, the only independent non-party witness testifying.

IV. Our review of this equitable action is de novo. Rule 334, Rules of Civil Procedure. We give weight to the fact findings of the trial court but are not bound by them. Rule 344(f) par. 7, R.C.P.

V. 'In the absence of special agreement to the contrary, an invention and a patent secured for it belong to the inventor, even though the invention was made during the period of his employment, and the invention relates to the matter in which the inventor was employed.' 4 Williston on Contracts, Revised Edition, § 1025A. To the same effect is the following statement in 56 C.J.S. Master and Servant § 73a.

'In the absence of an express or implied agreement as to the ownership of inventions of the employee, the employer from the mere fact of a general employment has no exclusive right to the inventions of his employee, even though in order to perfect his inventions the employee uses his employer's property.'

In Restatement, Second, Agency, § 397, it is said:

'Unless otherwise agreed, a person employed by another to do non-inventive work is entitled to patents which are the result of his invention although the invention is due to the work for which he is employed.'

In comment 'a' on this section it is stated:

'A person who has discovered a principle or device for which a patent is issued is entitled to the ownership of the patent unless, at the time of the employment or subsequently, he agrees to convey it to another. Such an agreement may be found in specific terms in a contract of employment or from the circumstances surrounding the employment, the nature of the work done, and the relations of the parties during the employment. For the employer to be entitled to a patent it is not necessary that the contract should specifically so provide. Whether or not the inventions of the employee are to belong to the employer is a question to be decided upon all the facts of the individual case. There is no inference from the mere fact of employment that an employee agrees that his employer is to own patentable ideas which are discovered in the course of or as a consequence of the work which the employee is employed to do. This is true although the employee uses the tools and facilities of the employer in developing the idea. * * *

'The fact that an employee uses time which he should have devoted to his employer's affairs in perfecting a patent does not entitle the employer to the patent. This is true even though, in addition, the employee has used improperly the employer's tools.'

The contract need not be in writing or contain formal words of agreement. 56 C.J.S. Master and Servant § 73b. Nor need the contract be express any more than any other contract. E. F. Drew & Co. v. Reinhard (1948, CA2 N.Y.) 170 F.2d 679, 682.

The respective rights and obligations of employer and employee, touching an invention conceived by the latter, spring from the contract of employment. United States v. Dubilier Condenser Corp., 289 U.S. 178, 187, 53 S.Ct. 554, 77 L.Ed. 1114, 1118.

Courts are reluctant to infer or imply an agreement by an employee to assign patents to the employer due to a recognition of the peculiar nature of the act of invention. 35 Am.Jur., Master and Servant, § 90. The reason for this reluctance is well stated in United States v. Dubilier Condenser Corp., supra, 289 U.S., at 188, 53 S.Ct. 554, at 557, 77 L.Ed., at 1119:

'The reluctance of courts to imply or infer an agreement by the employee to assign his patent is due to a recognition of the peculiar nature of the act of invention, which consists neither in finding out the laws of...