Eclipse Bicycle Company v. Willard Farrow
| Decision Date | 18 December 1905 |
| Docket Number | Nos. 40,217,s. 40 |
| Citation | 199 U.S. 581,26 S.Ct. 150,50 L.Ed. 317 |
| Parties | ECLIPSE BICYCLE COMPANY, Appt. , v. WILLARD M. FARROW |
| Court | U.S. Supreme Court |
Messrs A. S. Worthington, Howard L. Osgood, C. Schuyler Davis, and D. S. Mackall for appellant.
Messrs. Henry M. Earle and John C. Gittings for appellee.
This is an appeal from a final decree upon a bill for an account. As there was a technical doubt whether the decree first appealed from was final, a second decree was entered and a second appeal taken; but no point is made upon that matter here. There is one question and one case. See 16 App. D. C. 468, 18 App. D. C. 101.
The bill was brought upon an agreement under seal, dated June 5, 1897, of which the material portions are as follows: It begins with a recital that Farrow has invented certain improvements in bicycles, etc., pertaining to automatic mechanism for coasting and braking, for which he has made two numbered applications for patents and intends to file additional ones, and that the Eclipse Bicycle Company desires to acquire the entire right and title 'to said inventions as described in the above identified applications, and any letters patent that may be issued thereon,' and to all improvements that may be made by Farrow upon the same. Then Farrow conveys to the company 'his entire right, title, and interest in and to the inventions in bicycles, as fully described and claimed in the applications above referred to,' letters patent and improvements as above. The company is to pay $2,500 within certain short times as advanced payments on royalties, and to pay royalties, as specified, 'on all the devices made or sold embodying the invention above referred to,' and to that end to make returns of the number of devices sold. The title is to revert to Farrow in default of payment for more than sixty days. Arrangements are made for taking out foreign patents, and then the company agrees to 'defend said invention against piracy or infringement,' and to 'use due business diligence in the manufacture and sale of the devices embodied in said letters patent, and to push the sale by all proper and legitimate enterprise.' Then follow further agreements as to taking out foreign patents, and finally it is covenanted that in case Farrow 'for any reason fails to procure letters patent of the United States for the improvements above referred to, the [company] shall be relieved from the payment of all royalties from and after the date of final adverse action of the Patent Office on the application or applications for patents for said improvements.' The invention described was an automatic brake and coaster, one of the applications being for a hub brake, the other for a tire brake, both operating on the rear wheel by back pedaling.
The bill alleges that, soon after this agreement was made, one Morrow, the defendant's general manager, applied for a patent on a device in effect the same as Farrow's, accomplishing the same result and being a mere mechanical equivalent for the same, that he forthwith assigned a half interest to the company's president, and that the company began to manufacture and sell the Morrow device. It further charges a failure to use the diligence which the company covenanted to use in pushing the Farrow device, and a sale of substituted things. A supple- mental bill alleges that, upon the consummation of the sale of Farrow's interest, the company caused an assignment to it of Farrow's application to be made, and a power of attorney to be executed by Farrow to the company's attorney for the purpose of permitting the company to prosecute applications for patents, after which, under its rules, the Patent Office would recognize Farrow no more. It charges that the company, thus having the whole matter in his own hands and power, is failing to prosecute the applications, and will allow the claims to be rejected or lapse upon points easily obviated, in furtherance of a scheme to substitute the reproduction of Farrow's device and thus, it is implied, to get rid of the contract.
The answer does not need to be stated. It admits the contract, but denies the plaintiff's case, charges him with fraud, and sets up that his invention had been anticipated by a patent to Stover and Hance and otherwise, and that it was impossible to obtain a patent for it, and that, therefore, the defendant was not bound by the contract further. The case went to a hearing and a decree was made to the effect that the plaintiff was entitled to royalties upon all the devices manufactured by the defendant embodying the inventions mentioned in the plaintiff's applications, and specifically upon devices manufactured under the patent to Morrow, and the cause was referred to an auditor to state the account. This decree was affirmed by the court of appeals for the District. 16 App. D. C. 468. It was found that one of Farrow's applications was placed in interference after its patentability had been allowed, and thereupon was abandoned, his acquiescence not appearing, and that the other was not contested, and, after some modification, was allowed and authorized to go to an issue, but was permitted by the company to lapse. The purchase by the company of the Stover and Hance patent, and an interest in the Morrow patent, and the adoption of the latter for the purpose of evading the contract with Farrow, were found.
After the decree which we have mentioned, the defendant moved for leave to amend its answer, and to introduce new tes- timony, on the grounds that the plaintiff knew that the broad claim for a coasting device in combination with a back-pedaling device had been anticipated by the Stover and Hance patent when he made the contract, that the defendant had been under a misapprehension as to the scope of the contract and of the suit until the former decision, and that it now had learned that there were other patents which would defeat any broad claim on the part of Farrow, etc. The motion was allowed by the supreme court, but, on a second special appeal, the court of appeals held that the supreme court was not at liberty to allow the motion after the decree directing an account had been affirmed by the court of appeals, until leave had been granted by the latter; and also held that no sufficient grounds for an amendment were shown, as no fraud on the plaintiff's part was made out, and it appeared that the company knew of the Stover and Hance patent and sufficiently understood the situation when it made the contract; and as the company certainly knew the facts when its former answer was filed. 18 App. D. C. 101. We are satisfied that the company suffered no injustice by this decision, and, in view of our conclusion upon the merits, we need say no more about it.
The case went to an account, and, before the auditor, Farrow sought to make the defendant account not only for the Morrow device heretofore mentioned, but also for another, known as Exhibit E 10, which the company had been manufacturing since the bill was filed. The auditor rejected this claim on the ground that an important part of the Farrow device was not used in E 10, that there was a radical difference in both construction and operation, and that one could not be called the mechanical equivalent of the other. On exceptions the auditor was directed by the supreme court to include royalties on E 10 in his account. Accordingly he made a further report, which, after some subordinate modifications, was confirmed by the supreme court and by the court of appeals (23 App. D. C. 411), and the defendant ordered to pay the amount found due. From this decree the defendant appeals. It takes the technical objection that E 10 was not within the scope of the bill or the reference, and the substantial one that it was not within the scope of the contract. There is also an ob- jection to the allowance of interest, because it was not claimed in the earlier hearing, but, as the defendant says, was waived.
We do not perceive any sufficient reason for saying that the plaintiff was estopped to claim interest. As to the technical objections to including E 10 in the account, the bill charges that a large number of devices similar to Farrow's are being manufactured and sold by the defendant, avers the plaintiff's ignorance of details and want of means of learning them except by discovery, and prays for disclosure of the number of both the devices manufactured, sold, and held by the defendant. The word 'both' means in the context the Farrow brake and the Farrow coaster, and the disclosure obviously is intended to include substitutes. An account is prayed of the Farrow...
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Bull v. Logetronics, Inc., Civ. A. No. 4196.
...the patent, whatever the contract may read, if the item covered by the patent is simply unmarketable. Eclipse Bicycle Co. v. Farrow, 199 U.S. 581, 26 S.Ct. 150, 50 L.Ed. 317 (1905). Misappropriation of Documents In the first of its counterclaims, defendant LogEtronics asserts that upon leav......
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Perma Research and Development v. Singer Co.
...supra, 144 F.2d at 725. Thus, courts have not required the transferee to enter into a hopeless contest, Eclipse Bicycle Co. v. Farrow, 199 U.S. 581, 26 S.Ct. 150, 50 L.Ed. 317 (1905), to resort to "any means whatever" to produce royalty for the transferor, Tibbetts Contracting Corp. v. O & ......
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Sbicca-Del Mac v. Milius Shoe Co.
...The liability of the defendant for royalties is to be determined by the terms of the license contracts. Eclipse Bicycle Co. v. Farrow, 199 U.S. 581, 586-588, 26 S.Ct. 150, 50 L.Ed. 317; Carbo-Frost, Inc., v. Pure Carbonic, 8 Cir., 103 F.2d 210, 223; Saco-Lowell Shops v. Reynolds, 4 Cir., 14......
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Monolith Portland Mid. Co. v. Reconstruction F. Corp.
...other competitors assert invalidity of the patents, and R.F.C. has demonstrated that they might. Nor is Eclipse Bicycle Co. v. Farrow, 1905, 199 U.S. 581, 26 S.Ct. 150, 50 L.Ed. 317, controlling. Conceding that the case stands for the rule contended for by Monolith, that where parties contr......