Bee Mach. Co. v. Freeman, 1224.

• Decision Date: 06 October 1941
• Docket Number: No. 1224.,1224.
• Parties: BEE MACH. CO., Inc., v. FREEMAN.
• Court: U.S. District Court — District of Massachusetts

41 F. Supp. 461

BEE MACH. CO., Inc., v. FREEMAN.

No. 1224.

District Court, D. Massachusetts.

October 6, 1941.

James W. Sullivan, of Lynn, Mass., Walter Powers, of Sherburne, Power & Needham, Dike, Calver & Porter, and Cedric W. Porter, all of Boston, Mass., for plaintiff.

Allen & Allen and Marston Allen, all of Cincinnati, Ohio, and Nathan Heard and Frederick A. Tennant, both of Boston, Mass., for defendant.

BREWSTER, District Judge.

In this action defendant has moved for a summary judgment under Rule 56 of Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. The motion is based on the doctrine of res adjudicata, the defendant contending that all genuine issues of facts raised by the pleadings have already been adjudicated in a suit in equity, brought by this plaintiff against this defendant and another, in the Federal Court in the Southern District of Ohio. The motion was submitted on the pleadings and affidavits which included copies of the records of the Ohio court.

No genuine issue exists respecting the following facts. The defendant entered into a license contract with the plaintiff, dated November 29, 1933, whereby the plaintiff was licensed to manufacture and sell certain devices under Letters Patent of the United States owned or controlled by defendant. This license agreement contained these paragraphs:

"10. This license may be cancelled by the Licensor for cause or breach of condition by the Licensee upon first giving thirty (30) days written notice of the cause or breach complained of, and if not corrected within said time, a further written notice of cancellation may be sent by registered mail by Licensor cancelling this license within an additional thirty (30) days from said second notice, but such cancellation shall not affect the right of Licensor to collect royalties then due."

"12. Licensor agrees that if in the future he should develop or acquire improvements in the dies, anvils, and masks licensed herein that the Licensee shall have the right subject to the conditions of this license, to use the same without additional royalty, and the Licensee agrees that if it develops or acquires any such improvements that it will grant the Licensor * * * if requested to do so by the Licensor, a right to employ the same without charge * * *."

One of the patents included in the license agreement was subsequently declared invalid as to many of its claims. Premier Machine Co., Inc., v. Freeman, 1 Cir., 84 F.2d 425.

On September 25, 1936, the defendant gave to the plaintiff the first 30-day notice required by paragraph 10 above. The breach charged was failure to furnish complete royalty returns and to pay the stipulated royalties. After an attempted arbitration had failed, a second notice was given on May 13, 1937, cancelling the contract for breach of its conditions.

On June 3, 1937, the plaintiff filed in the United States District Court at Cincinnati a bill of complaint, praying for injunctive relief against the attempted cancellation, for an accounting to establish the royalties due, and for an order to compel the defendant to comply with the provisions of the license set forth in paragraph 12, above noted. In the bill plaintiff alleged the execution of the license contract, an overpayment of royalties, the failure of defendant to carry out his agreements respecting future developments and improvements and other wrongful acts of defendant calculated and intended to injure the plaintiff in its business. The defendant, in his answer, denied these allegations, except as to the execution of the contract, and also counterclaimed for royalties due before cancellation and for infringement thereafter.

Before hearing, the parties entered into a stipulation agreeing that the issue of the existence of a license agreement between the parties should be tried first under Equity Rule 29, 28 U.S.C.A. § 723 Appendix, the case to proceed without amendment to the pleadings at that time. The court heard the parties and thereafter submitted findings of fact and conclusions of law in a written opinion, 40 F.Supp. 299, which was subsequently adopted by the Circuit Court of Appeals for the Sixth Circuit in affirming the decree of the court entitled an "Interlocutory Judgment." 121 F.2d 451. In this judgment it was adjudged and decreed that the original bill be dismissed, that amendments be allowed and the amended bill dismissed; that the license was legally cancelled for breach of conditions justifying cancellation. The first counterclaim was allowed in part and the matter referred to a master for an accounting, and the second counterclaim for infringement was reserved for further hearing. A motion by plaintiff to file a supplemental bill was denied without prejudice to plaintiff's rights to bring to the attention of the court, by appropriate proceedings, "any infraction of its rights which it believes the defendant has committed or is committing in connection with representations or threats to the trade or plaintiff's customers."

From an examination of the findings and conclusions of the court, it is clear that the only issues concluded by the judgment were whether the plaintiff had breached the license by failing to...