Conway v. White

• Decision Date: 29 June 1925
• Docket Number: No. 233.,233.
• Citation: 9 F.2d 863
• Parties: CONWAY et al. v. WHITE.
• Court: U.S. Court of Appeals — Second Circuit

9 F.2d 863 (1925)

CONWAY et al. v. WHITE.

No. 233.

Circuit Court of Appeals, Second Circuit.

June 29, 1925.

COPYRIGHT MATERIAL OMITTED

Louis W. Southgate, of New York City (Robert C. Cooley, of Springfield, Mass., O. Ellery Edwards, of New York City, of counsel), for appellants.

Mitchell Bros., of New York City (Robert C. Mitchell and George H. Mitchell, both of New York City, of counsel), for appellee.

Before ROGERS, MANTON and HAND, Circuit Judges.

ROGERS, Circuit Judge (after stating the facts as above).

This is the second time this case has been before this court. When the case first came before the District Court a motion was made to dismiss the bill on the ground that it did not state facts sufficient to constitute a cause of action. The District Judge granted the motion and dismissed the bill. On appeal to this court we held that the bill stated facts sufficient, if true, to entitle the plaintiffs to the relief sought. We accordingly reversed the decree and remanded the case, with directions to reinstate the bill, and proceed to the trial of the issues. 292 F. 837. The bill was accordingly reinstated, and the court proceeded to a trial of the issues as directed. At the conclusion of the trial, and after the matter had been duly considered, the District Judge entered a decree again dismissing the bill, with costs.

The bill was filed to compel defendant in accordance with his agreement to assign to plaintiffs his entire right, title, and interest in United States letters patent, serial Nos. 455,346 and 440,296. The principal property right involved is the legal title to an invention involving specific detail combinations in a grand player piano.

The plaintiffs rely upon a provision found in the contract of employment which the company made with the defendant on March 25, 1920, and by which the company employed the defendant as its mechanical engineer. The term of his employment began on April 1, 1920, and it was to terminate on March 31, 1925. It contained the provision which is to be found in the statement preliminary to this opinion which obligated the defendant, "when required," to transfer to the company his entire right, title, and interest in any inventions made by him during the period of his employment, and which were capable of being used in the company's business.

The plaintiffs herein state in their bill that they seek to obtain title to certain patents, patent rights, and pending applications now in the possession of the defendant. They base their claim on the rights they have derived in the following manner: That the company was entitled to the rights in the patents and in the applications for patents which are herein involved; that the company was adjudged a bankrupt, and its estate passed to its trustee in bankruptcy; that its estate was sold at auction to one Norman November, who was the highest bidder, and who paid the purchase price for the same; that subsequently the said November assigned all his right, title, and interest in the patents and applications for patents, which he had acquired by his purchase, to the plaintiffs.

The plaintiffs in their complaint alleged that during the time of the defendant's employment under his contract he made certain inventions, the substances of which were embodied in applications for United States letters patent as follows: "Serial No. 455,346, filed March 24, 1921, for drawer construction; and serial No. 440,296, filed January 27, 1921, for transposing mechanism." It was averred that these applications were filed at the cost and expense of the company.

It was alleged that defendant still retains title to the unassigned applications, and refuses to assign the same to the plaintiffs, although he has been requested to do so, and that, unless the title is assigned to the plaintiffs, they will be irreparably damaged, and they asked that specific performance of his agreement be ordered.

The defendant in his answer, referring to the invention, the substance of which was embodied in application for letters patent of the United States, serial No. 455,346, alleged that essential and material parts thereof were invented, discovered, and completed by him prior to the commencement of the term of his employment under the contract, and in his answer referring to the application for letters patent, serial No. 440,296, he admitted that during the time of his employment under the contract he made an invention, the substance of which is embodied in that application, but he stated that he was without information as to whether those applications were filed at the cost and expense of the company.

For a separate defense he alleged that the company had never performed its part of the contract, nor had the receivers or the trustee in bankruptcy; neither had the plaintiffs performed or offered to perform the same. The answer alleged as follows: "* * * On the contrary defendant's salary and compensation under said contract have not been paid, except that the face or principal amount of his salary and compensation through the month of March, 1921, has been paid, and $650 of his salary or compensation for the month of April, 1921, has been paid. Beginning shortly after the commencement of defendant's employment under said contract, all payments which were made to defendant thereunder for salary or compensation were wrongfully delayed, and were made in partial payments, and no interest has ever been paid or tendered to the defendant for any of the delayed payments."

It is of course well-settled law that a contract to sell or transfer a patented right, like a contract to sell real estate, may be specifically enforced. The reason is that there is no accurate measure of damages, and a pecuniary payment is inadequate relief. Hapgood v. Rosenstock (C. C.) 23 F. 86; New York Paper Bag Machine Co. v. Union Paper Bag Machine Co. (C. C.) 32 F. 783; Hull v. Pitrat (C. C.) 45 F. 94.

In Littlefield v. Perry, 21 Wall. 205, 226 (22 L. Ed. 577), Chief Justice Waite, writing for the court, recognized this doctrine when he said: "An assignment of an imperfect invention, with all improvements upon it that the inventor may make, is equivalent in equity to an assignment of the perfected results."

And agreements to assign any future inventions one may make may also be specifically enforced. Such contracts are not contrary to public policy, and are not on that account necessarily invalid. Aspinwall Manuf. Co. v. Gill (C. C.) 32 F. 697, 700; Westinghouse Air Brake Co. v. Chicago Brake & Mfg. Co. (C. C.) 85 F. 787; Mississippi Glass Co. v. Franzen, 143 F. 510, 74 C. C. A. 135, 6 Ann. Cas. 707; Fairchild v. Dement (C. C.) 164 F. 200; A. B. Dick Co. v. Fuller, (D. C.) 198 F. 404; Lion Tractor Co. v. Bull Tractor Co., 231 F. 156, 161, 145 C. C. A. 344; Wege v. Safe-Cabinet, 249 F. 696, 704, 161 C. C. A. 606.

This court, in T. B. Harms & Francis, Day & Hunter v. Stern, 229 F. 42, 48, 145 C. C. A. 2, in a copyright case, said that, "if a vendor sells future acquisitions — in this case musical compositions at the time unwritten — the equitable title to the property attaches the moment it comes into existence and vests in the grantee. Holroyd v. Marshall, 10 House of Lords Cases, 191 (1862)." We added that "it would seem that an agreement made by an author assigning his interest in any future musical composition he might compose, if supported by a valuable consideration and limited in time, is as much entitled to be specifically enforced as agreements made by a patentee who assigns all future improvements on a patented device."

In Chadeloid Chemical Co. v. H. B. Chalmers Co., 243 F. 606, 156 C. C. A. 304, this court affirmed a decree which granted specific performance of an agreement to assign all improvements or inventions which the parties "may have made or may hereafter make relating to paint and varnish removers." It was pointed out in the opinion that the plain intent of the agreement was to safeguard the business in which the parties were engaged, and that it was not an unconscionable or an unreasonable restraint of trade, and it was said that the failure to limit the time during which the agreeing parties were to surrender inventions did not vitiate the contract. That proposition is not controverted in this case, and it would be hopeless if one undertook now to question it. But, as we pointed out, when this case was here before, the theory on which this bill proceeds is that the defendant is a trustee and holds the legal title to property the beneficial ownership of which is not in him.

The contract in this case did not lack consideration, and its plain intent was the protection of the business in which the company was engaged. It was not an agreement to assign in gross the defendant's future labors as an inventor, but only the inventions and discoveries made during the term of his employment, and which in any way might affect the articles manufactured by the company, and which were used or capable of being used in the business. There was nothing in the agreement which was unreasonable, or which rendered it invalid or unconscionable. We do not understand that the validity of the agreement is challenged, or that the defendant is at liberty now to challenge it. The validity of his agreement was really settled as between these parties by our former decision, and it is no longer open to controversy in this court.

We come now to the consideration of the question whether the invention claimed in application serial No. 455,346 was made by defendant during the term of his employment under the contract he entered into with the company. That employment began on April 1, 1920, and he continued in its service for more than a year from that time. On July 14, 1921, the company was adjudged to be bankrupt, and receivers were at that time appointed to take possession of its property and empowered to carry on its business for a period of 30 days. On November 17, 1921, defendant wrote the...