Breese Burners v. United States

• Decision Date: 08 June 1954
• Docket Number: No. 50191.,50191.
• Citation: 121 F. Supp. 530
• Parties: BREESE BURNERS, Inc. v. UNITED STATES.
• Court: U.S. Claims Court

121 F. Supp. 530

BREESE BURNERS, Inc. v. UNITED STATES.

No. 50191.

United States Court of Claims.

June 8, 1954.

Huston Thompson, Washington, D. C., for plaintiff.

Bernard Wohlfert, with whom was Warren E. Burger, Asst. Atty. Gen., for defendant.

Before JONES, Chief Judge, and LITTLETON, WHITAKER, MADDEN and LARAMORE, Judges.

WHITAKER, Judge.

Plaintiff sues for damages for the unauthorized use of its patents in the manufacture of oil burning tent stoves by or for the defendant in the latter part of 1950.

Defendant defends on the ground that it had the right to use these patents under a license granted it by plaintiff on or about September 11, 1943. Plaintiff replies that the unauthorized use of which it complains was after the expiration of the term of the license. Plaintiff also says there was no consideration for the license, and that it was given under duress.

In view of the relatively large number of patents and applications plaintiff alleges it owned (13 patents and 4 applications), at the suggestion of the Commissioner, in order to save time and expense, the parties agreed in the pretrial memorandum of October 30, 1952, that the basic defense of license be first determined upon full proof taken before the Commissioner, submission of findings of fact by the Commissioner, and subsequent arguments of counsel on this issue. The parties further agreed that evidence as to any unauthorized use by or for the Government of any of the plaintiff's patents herein involved and the amount recoverable therefor be deferred until the court determines the validity and duration of the license.

Prior to September 11, 1943, defendant's army tents were heated by coal-burning stoves. It desired to adapt these stoves to oil burners so as to minimize the smoke emitted from the stoves. Accordingly, some time in August 1942 it requested plaintiff, which was a research and sales organization, to undertake this task. Plaintiff agreed and began work on the development of such an oil burner.

Some time prior to May 19, 1943, it had developed such a burner and had submitted it to the Army for testing. On that date it was notified that while the Army was on the whole pleased with the product, it thought it might be improved by certain modifications, but the letter concluded, "all members of this office are in accord on its adoption and use."

About a month later, to wit, on June 18, 1943, Colonel Doriot, of the Quartermaster General's Office, wrote plaintiff requesting a royalty-free nonexclusive license covering the patents used in the manufacture of these tent stoves. Plaintiff gave careful consideration to working out a plan whereby it could give the Government such a license and still protect itself against the day when governmental controls would be lifted and it could again do a general commercial business.¹ But nothing was done at the time.

Later, on September 3, 1943, after conferences between the parties, plaintiff was notified that it was to be awarded a contract for 74,620 of these burners and it was given a bid form, which it was instructed to fill out and return. The notice read as follows:

"Your company is to be awarded contract of 74,620 each Outfits, Burner, Oil, Stove, Tent, M-1941, at a unit price of $14.34, in accordance with Spec. JQD No. 431, dated 31 August, 1943, Stock No. 65-N-1852. Deliveries are to be as follows:

"November, 1943.. 35,000 "December, 1943.. 39,620

"Packaging to be in accordance with Spec. JQD No. 431 and in addition a separate quotation will be made by your company to cover export packaging, which will become a part of the contract.

"Contract Number is W-12-036-QM-182, O. I. 1587-4-x. Priority rating assigned is AA-1. Master Allotment is W-710-0914-3Q-4Q-43.

"You are requested to furnish this branch a list of subcontractors together with Cost Analysis of the item on this contract and the contract is to bear Re-Negotiation Clause, Article No. 33, Revision of Entire Price by Negotiation, which is a part of your bid."

Plaintiff was requested to furnish the following information among others:

"Give general description of nature of engineering and development expenses and special tools considered as applicable to this proposal and state approximate period in which they were incurred or are to be expected to be incurred. If such expenses are to be amortized under this proposal, give the estimated basis of amortization:

To this item plaintiff replied as follows:

"Engineering and development expense $45,000 incurred since Aug. 27, 1942 to date. Development of several models of complete tent heaters at Santa Fe and Chicago laboratories. Work with Research and Development Section O. Q. M. G. and Bureau of Standards. Collaboration with accessory manufacturers. To be amortized on this order."

The development cost item was allocated in the itemized portion of the bid at 60 cents a burner, making a total of $44,772. The bid price was $14.34 a unit, the total quantity being 74,620 units involving a total sum of $1,070,050.80. This bid form was signed by Perry, plaintiffs' Chicago representative, on September 13, 1943, and was returned to defendant a few days later.

On September 4, 1943, defendant renewed its request for a license to use the patents to be incorporated in the stoves. Its request read:

"Supplementing this Depot's letter to you of yesterday, 3 September 1943, referring to prospective award to you of contract for 74,620 each Outfits, Burner, Oil, Stove, Tent, M-1941, upon the delivery schedule and with the packaging specifications and under the prospective contract number therein indicated, you are advised that, of course, such an award cannot be made until and unless your concern enters into an agreement with the Government extending the Government a royalty-free license on each and all of your claimed patents which may be applicable to this contract item and all and any parts, features, etc., of the same.

"This is pursuant to conversations with the Office of The Quartermaster General, Washington, D. C., in which royalty-free license covering each and all of the said claimed patents was requested of you, to be applicable to manufacture by or for the Government for governmental use, sale or disposal of this item, its parts, features, etc.

"In conversation yesterday at this Depot, with Mr. N. McManamy, Procurement Specialist and Captain Edward W. Moses, Officer in Charge of Legal Section, your Mr. Perry advised that the giving of such royalty-free license to the Government was under close consideration.

"Within the next few days the form of the royalty-free license which is requested for the Government will be forwarded to you.

"It is anticipated that this office will hear from you favorably in the immediate future so that this matter may be disposed of to the mutual satisfaction of both parties."

The license not having been sent in by plaintiff, defendant wired it on September 10, 1943, as follows:

"Re Conversation Must Have Names All Partners Your Company And Patent Numbers Immediately Or Letter Of Award Will Be Withdrawn

"Jeffersonville QM Depot "Food Equip. Pur. Br."

On the following day defendant sent plaintiff a license for its signature, which was executed and returned by plaintiff on September 17, 1943.

The part of this license relative to the term of it reads:

"Now, Therefore in consideration of the premises and the sum of One Dollar, and other good and valuable considerations the receipt and sufficiency thereof are hereby acknowledged, Licensor hereby grants to the United States of America, as represented by the Secretary of War, the irrevocable, non-exclusive, royalty free right and license under said Oil Devices burner patents and applications to make, use, and sell, or otherwise dispose of in accordance with law, and to cause to be made, used and sold, or dispose of, burner outfits substantially in conformance with specification JQD 431 hereto attached and marked Exhibit A, and all other gravity feed, pot type, low draft burner outfits suitable for tent or other space heating, baking and cooking, and any and all component parts thereof; said right and license to extend throughout the United States, its territories and possessions, and to remain in full force and effect for the duration of the present war and the period of six months thereafter only, reserving to Licensor the unrestricted use and enjoyment of all other rights not hereby expressly granted to the United States of America."

Finally, on September 25, 1943, defendant sent plaintiff an order for 74,620 tent stoves at $14.34 each, which was accepted by plaintiff on September 30, 1943. This order, some eleven pages long, set out in detail the contract between the parties. It was designated as contract No. W12-036QM182, Order No. 1587-4-x.

Plaintiff says, and the Commissioner has found, that defendant gave plaintiff no valuable consideration for the license. We are compelled to disagree.

Defendant first requested this license on June 18, 1943, which was 2½ months before defendant had notified plaintiff it was to be awarded a contract, and the matter had also been discussd with the manager of plaintiff's Chicago office when he went to Washington on August 23, 1943, for a conference with defendant. No mention was made of it in the bid form which defendant instructed plaintiff to fill out, but its two previous requests were reiterated on the following day and before the bid form had been filled out and returned by plaintiff and before the above-mentioned contract No. W12-036QM182, Order No. 1587-4-x, had been executed.

The fact that the demand for the license was made on the day after plaintiff had been notified that it was to be awarded a contract, is of no significance since twice before plaintiff had been notified that defendant would expect a license. Besides, the demand of September 4, 1943, was several weeks prior to the date of the formal contract, and the license was given a week or two prior to...