Bijur Motor Lighting Co. v. Eclipse Mach. Co.

• Decision Date: 11 June 1917
• Docket Number: 247.
• Citation: 243 F. 600
• Parties: BIJUR MOTOR LIGHTING CO. v. ECLIPSE MACH. CO. et al.
• Court: U.S. Court of Appeals — Second Circuit

243 F. 600

BIJUR MOTOR LIGHTING CO. v. ECLIPSE MACH. CO. et al.

No. 247.

United States Court of Appeals, Second Circuit.

June 11, 1917

George W. Wickersham, E. Henry Lacombe, and Walter H. Pollak, all of New York City, for appellant.

John B Stanchfield, of New York City, Samuel E. Hibben, of Chicago Ill., and Alexander D. Falck, of Elmira, N.Y., for appellees.

For opinion below, see 237 F. 89.

The plaintiff (hereinafter called 'Bijur Company') owns the patent described in the document below given, covering an invention of Joseph Bijur, its president. The bill alleged in usual form infringement by the defendants, who, admitting in substance that they were using Bijur's invention asserted a right so to do as licensees, and (by counterclaim) demanded that plaintiff be required specifically to perform the contract under which they justified and denied (as a conclusion of law) the infringement asserted.

This alleged contract, which sufficiently defines the relation of parties contended for by defendants, is as follows:

'Memorandum of Agreement Reached July 9, 1914, Between

Bijur Motor Lighting Company and Vincent Bendix.

'First. Mr. Bendix is to receive a license under the Bijur patent, No. 1,095,696, for the life of the patent, and for the manufacture, use and sale of starters involving a screw shaft.

'Second. This license is to be exclusive as against all parties save Bijur Motor Lighting Company.

'Third. This agreement is to be binding upon the heirs and successors of both parties, and upon the assignees of the whole business of each party, and is to convey to Mr. Bendix the right to sublicense the Eclipse Machine Company, its heirs, successors and assigns of its business.

'Fourth. Mr. Bendix is to pay a royalty of five hundred dollars ($500) a year.

'Fifth. Mr. Bendix is to grant the Bijur Motor Lighting Company an exclusive license under each of his foreign patents or applications on starting apparatus for the life of the prospective foreign patents or applications.

'Sixth. The foreign rights under the Bendix foreign patents are in no way to interfere with the rights of export and use in foreign countries of all apparatus built in accordance with the license to Mr. Bendix under the Bijur patent in this country.

'Seventh. The rights of Mr. Bendix under this agreement and those of his licensee shall extend to the manufacture in Canada, as well as its use and sale.

'Eighth. Mr. Bendix agrees, without further consideration, either to secure a certain United States application now pending in the Patent Office and alleged to interfere with the Bijur patent, and guarantee that it be conducted and handled throughout in a manner satisfactory to the Bijur Motor Lighting Company, or, failing in this, that he will, at his own expense, vigorously prosecute the parties owning or controlling such application, or the resultant patent, to his full ability, under any rights which he may possess.

'Ninth. Mr. Bendix and the Eclipse Machine Company agree to mark the goods licensed under this agreement, 'Licensed Under Patent No. 1,095,696,' or equivalent words.

'Tenth. As against infringers of the Bijur patent, building screw shaft starting apparatus, Mr. Bendix is to bear the expense of legal proceedings, and as against other infringers of said patent, Bijur Motor Lighting Company is to bear the expense of legal proceedings.

'Eleventh. Mr. Bendix is to furnish the wording of the broadest claim which has been allowed in his German application, and warrant that it has been allowed, and also the effective filing date of the German case.

'Twelfth. Mr. Bendix agrees that the licensee (the Eclipse Machine Company) will, in consideration of the granting of this license by the Bijur Motor Lighting Company, give an additional discount of five per cent. (5%) off from the best price named to any other motor and lighting company, and that he will also obtain the best of deliveries and prompt service.

'In witness whereof, we have hereunto set our hand and affixed our seals this 9th day of July, 1914, the Bijur Motor Lighting Company by its proper officer thereunto duly authorized.

Bijur Motor Lighting Company,

'By Walter C. Allen. (L.S.)

'Vincent Bendix. (L.S.)'

The foregoing is typewritten, except signatures of Allen and Bendix, which are admittedly genuine.

Plaintiff replied, in effect, that this paper was never intended to be a contract; was nothing but a tentative scheme for a business arrangement, of which the fruition was to depend on Bendix proving a scope and value in his German patent which it was never shown to possess; and that the appearance of contractual finality exhibited by the document in question resulted from fraud on the part of Bendix.

The District Judge, after a trial in which all the actors were examined in open court, held that defendant's position was justified by the evidence, dismissed the bill on the ground that Bendix was, and had been since the date of agreement, entitled to a formal license, with authority to sublicense the Eclipse Company, and on the counterclaim decreed that such license be given within 60 days. Plaintiff took this appeal.

Bijur is an inventor, with considerable experience in management and exploitation of patents. He entirely controlled the Bijur Company, not so much by stock ownership as by his personality and the fact that the company existed largely, if not wholly, in the hope of profiting by his inventions. He had several times made contracts for and in the name of his company, without consulting his board of directors. Allen is a relative of Bijur's, a stockholder in the Bijur Company, and an employe, with wide but not very accurately defined duties.

While the application for Bijur's patent was in the office, Bendix filed an application of his own, covering matter sufficiently close to Bijur to give rise to an interference if demanded. Nevertheless 'by inadvertence,' as the examiner stated, Bijur's patent issued without notice to Bendix, or knowledge thereof on the part of the latter. Thereupon the commissioner advised both parties of the facts, and suggested steps still open to Bendix if he wished to contest. Pending his application Bendix had agreed to license Eclipse Company under his expected patent. Dunn is president of that corporation, and he, as financier for Bendix, preferred some settlement with Bijur to litigation in Patent Office or court.

Bijur had no patent in Germany; Bendix had applied for one, and Bijur hoped that Bendix's German rights would 'dominate' the device of one Rushmore, which was already offered in the German market. There was also a pending American application for an apparently similar or allied contrivance by one Remy; this is the matter referred to in article 8 of the above agreement.

In this situation of affairs, Allen, Bijur, and Bendix at various times talked over what each party had to offer toward a union of forces, to the profit of all and avoidance of litigation and competition.

On July 9, 1914, Bijur and Allen, Bendix, and Dunn met at the office of Bijur's patent counsel, no other lawyer being present. Several hours were spent in discussion, and a stenographer was present who noted in shorthand what was dictated to her as the result of talk. At the end, there existed in shorthand the agreement above set forth, except the signatures and attestation clause. The latter was added by the stenographer from some form book or the like. Dunn and Bijur left without seeing the result of the stenographer's labors, and on departure Bijur specifically authorized Allen to 'sign for' the ...