Eno v. Prime Mfg. Co.
| Decision Date | 29 October 1943 |
| Parties | MARY T. ENO, administratrix, v. PRIME MANUFACTURING COMPANY. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
December 8, 1942 October 28, 1943.
Present: FIELD, C.
J., DONAHUE, QUA DOLAN, & RONAN, JJ.
Contract Construction, Validity, Use of patented process, Implied. Patent. Profits. Damages, For breach of contract, Nominal. Evidence, Presumptions and burden of proof, Documentary evidence. Jurisdiction, Patent. Estoppel. Equity Jurisdiction, Nominal damages. Equity Pleading and Practice Question of law or fact, Injunction, Intervention.
A contract between the inventor of a process and a corporation controlling a machine for using the process, providing that the corporation should manufacture the machines and for a reasonable time distribute them and the materials used in the process to the trade and seek an adoption of the process by the trade so that, from practical experience so gained, a mutually satisfactory agreement "for the distribution of profits" might be reached between the inventor and the corporation; and that the corporation would "justly and properly compensate" the inventor "for the use of his invention in such arrangement as shall be satisfactory to all parties"; but that, if he and the corporation were unable within a reasonable time to enter into such an agreement, the corporation would cease using the process, impliedly required the corporation to compensate the inventor for use of the process during such trial period although the parties ultimately were unable to reach such an agreement and the inventor notified the corporation to cease use of the process; and the contract was sufficiently definite for maintenance of a suit by the inventor for such compensation.
Construction of the contract above described showed that the compensation of the inventor for use of his process during the trial period was contingent upon profits being realized during that period from the contemplated use of the process and of the machines as a unit; and, it appearing that no such profits were realized, no such compensation was due.
The owner of a patent for a process was not entitled to maintain an action for wrongful use of it during the period of an exclusive license for its use given by him to a third person.
Invalidity of a patent, although it would not bar a suit by the patentee against one who had been licensee for breach of the defendant's promise to the plaintiff not to use the patented process after termination of the license, would be a material factor in the determination of the plaintiff's damages.
The exclusive jurisdiction of the Federal courts of "all cases arising under the patent right . . . laws of the United States" did not deprive the courts of this Commonwealth of jurisdiction to determine the validity of a patent when that question became material in a suit by the patentee against one who had been licensee for breach of the defendant's agreement with the plaintiff not to use the patented process after the termination of his license.
One, who, after termination of a license given him to use a patented process, continued its use in breach of his contract with the patentee, was not estopped to show invalidity of the patent as bearing on the question whether the patentee was damaged by the breach.
A defendant, relying on invalidity of a patent on the question of damages in a suit by the patentee for use of the patented process in breach of the parties' contract, had the burden of proving such invalidity.
The determination on documentary evidence of the validity of a patent in view of previous patents granted to others was a question of law for the court.
The plaintiff, owner of a patent of a process, failed to show that he was damaged by use of the process by the defendant in breach of a contract with him where an examination of the state of the art as shown by his patent and by those of others established that the process was not an invention and that the patent was worthless.
A suit in equity will not be retained merely for the assessment of nominal damages for breach of a contract.
Any rights which the plaintiff, holder of a patent adjudged to be invalid, had through use by the defendant of the patented article in breach of his promise to the plaintiff not to use it were not sufficiently tangible as a practical matter to require the granting of an injunction against such use.
In a suit in equity based on breach of a contract, a petition to intervene properly was dismissed where it appeared that what rights the petitioner alleged he had did not arise under the contract.
BILL IN EQUITY, filed in the Superior Court on January 21, 1941. The suit was heard on the question of liability by Buttrick, J., and, after the filing of a master's report on the question of damages, by Williams, J., by whose order a final decree was entered from which the plaintiff and the defendant appealed.
A petition of Eno Systems, Inc., to intervene was dismissed after a hearing by Good, J., and the petitioner appealed.
D. P. Ranney, for the defendant. M. Jenckes, for the intervener.
A. Brayton, for the plaintiff.
The plaintiff, the administratrix of the estate of Frank F. Eno, who, it is alleged, invented a certain process in the manufacture of shoes, seeks to recover compensation from the defendant for the use of the process under a license granted by him to the defendant on May 26, 1933, and terminating on May 16, 1940, and damages from the last mentioned date to July 1, 1941, for breach of the license agreement by the failure of the defendant to cease using the process upon the termination of its license. The suit was heard upon the issue of liability by a judge who made a report of the material facts and entered an interlocutory decree in accordance with these findings. The suit was then referred to a master for the assessment of damages. Two exceptions of the plaintiff were sustained and the remaining exceptions of both parties to the report of the master were overruled. The report as modified was confirmed. All parties appealed from a final decree enjoining the defendant from using the process, adjudging that there was nothing due the plaintiff for the use of the process by the defendant during the period of the license, and ordering the defendant to pay $20,670.19 as damages for the use of the process after the termination of its license, with interest.
It appears from the transcript of the evidence, the report of material facts, and the exhibits, that Eno claimed to have discovered a method by which insoles, too thin to channel a leather rib out of the sole itself through which it could be sewed to the upper of the shoe, could be used by making a rib out of adhesive tape with a filler which was to be attached to the lower surface of the insole. Ridderstrom, the president of the defendant, had developed a machine that would lay the adhesive tape on the insole in accordance with Eno's process. On May 26, 1933, the parties entered into a contract in the form of a letter signed by the defendant, a copy of which was assented to by Eno and retained by the defendant. This contract recited that Eno had developed a new method for making an insole and that Ridderstrom had developed a machine capable of putting this method in use. Both Eno and Ridderstrom were to furnish a certain attorney with the plans and other necessary information in order to enable the attorney to prepare applications for patents on the process and the machine. The patent on the machine was to be assigned to the defendant. The defendant agreed to commence the manufacture of the machines and to purchase the adhesive tape and filler, and thereafter for a reasonable period to distribute these machines and materials to shoe manufacturers, and to endeavor to have them adopt the process in order that from the experience gained from the practical use of the process a mutually satisfactory agreement could be made between the plaintiff's intestate and the defendant "for the distribution of profits." The defendant agreed that it would "justly and properly compensate Mr. Eno, the inventor, for the use of his invention in such arrangement as shall be satisfactory to all parties," but that if they were unable within a reasonable time to enter into a contract for the distribution of the process then the defendant agreed to cease using it. The defendant commenced in February, 1935, and has since continued to furnish its machines to shoe manufacturers, to license them to use the process, and to supply them with the adhesive tape and filler. Eno secured United States patent No. 1,998,125 on April 16, 1935, and a Canadian patent, No. 356,557, on March 17, 1936. Eno, and after his death the plaintiff, carried on negotiations with the defendant for a permanent plan for the use of the process by the defendant including the amount of compensation that should be paid for its use, but these negotiations were unsuccessful and the plaintiff on May 16, 1940, notified the defendant to cease using the process. She gave a license on May 27, 1940, to Eno Systems, Inc., to use this process, and cancelled this license on June 30, 1941. Eno Systems, Inc. v. Eno, 311 Mass. 334 , 336.
The defendant contends that the contract provided for a temporary arrangement, which was to continue only long enough to permit the parties to secure from actual experience in putting the machines and process upon the market an approximation of the profits and then to agree upon such apportionment of them as would give Eno fair compensation for the use of the process and that, as the parties never agreed, this preliminary contract "was not a legal, binding contract and was void for uncertainty." One of the...
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