FAR Liquidating Corp. v. McGranery

• Decision Date: 24 February 1953
• Docket Number: Civ. A. 1462.
• Citation: 110 F. Supp. 580
• Parties: F. A. R. LIQUIDATING CORP. v. McGRANERY, Attorney General.
• Court: U.S. District Court — District of Delaware

110 F. Supp. 580

F. A. R. LIQUIDATING CORP. v. McGRANERY, Attorney General.

Civ. A. 1462.

United States District Court D. Delaware.

February 24, 1953.

E. Ennalls Berl, of Wilmington, Del., of Berl, Potter & Anderson, Wilmington, Del., and Ernest S. Myers and Lawrence R. Eno, New York City, of Laporte & Meyers, of New York City, for plaintiff.

Rowland F. Kirks, Asst. Atty. Gen., William Marvel, U. S. Atty., District of Delaware; Wilmington, Del., James D. Hill, Walter T. Nolte and Harold Ungar, of Washington, D. C., for defendant.

LEAHY, Chief Judge.

F.A.R. Liquidating Corporation.¹ a Delaware corporation, sues under § 9(a) of the Trading With The Enemy Act of October 6, 1917, c. 106, 40 Stat. 411, as amended, 50 U.S.C.A.Appendix § 9(a). Plaintiff brings its action to have itself declared owner of certain United States patents vested by the Alien Property Custodian, pursuant to § 5(b) of the Act, Herbert Brownell, Jr. and predecessor Attorney-Generals of the United States having succeeded to the authority and functions of the Alien Property Custodian. Plaintiff moves for summary judgment pursuant to Fed.Rules Civ. Proc. rule 56, 28 U.S.C.A., on the grounds there is no genuine issue as to any material fact and that Farnsworth is entitled to relief because, at the time of vesting in defendant's predecessor, it was lawful owner or assignee of the patents or of the contract and equitable rights in them. Defendant cross-moved for summary judgment on the ground the patents were lawfully vested by the Custodian and that Farnsworth has no right in them.

The critical issue on both motions is whether certain cables sent from Germany to Farnsworth by a German company on June 14, 1941 constituted an assignment to Farnsworth of the patents, or a contract to assign them. If they did, defendant reluctantly concedes Farnsworth is entitled to judgment. Defendant, however, contends the transaction could not be concluded without a confirming cable from Farnsworth to the cables of June 14. The question for me, then, is whether such a confirming cable was necessary before there could be an assignment or a contract between Farnsworth and the German company.

The Facts Circa June 14, 1941.

On June 26, 1935, Farnsworth Television, Incorporated, a California corporation, entered into an agreement with a German corporation, Fernseh Aktiengesellschaft (also known as Fernseh G.m.b.H.), located in Berlin-Zehlendorf, Goerzalle.² Under the agreement, Farnsworth Television, Incorporated, granted licenses to Fernseh in certain European countries under patents of Farnsworth Television, Incorporated, relating to television, radio, talking pictures and electrical transcription; and Fernseh granted similar rights under its patents to Farnsworth Television, Incorporated, in the United States and certain other countries. The agreement was amended on October 21, 1937, in respects not here material, but was to last until 1955, and for additional three-year periods thereafter.

In December 1938, Farnsworth acquired all patents of Farnsworth Television, Incorporated, and Fernseh consented to the assignment of the patent licensing agreement to Farnsworth. Prior to June 1941, under the agreement, Fernseh received licenses under Farnsworth's patents and applications in certain European countries, including Germany and Austria. These covered patents issued prior and subsequent to September 1, 1939. Under the agreement Farnsworth received licenses under Fernseh's patents, granted in the United States prior to September 1, 1939, and thereafter. Fernseh's United States patents, the subject of this suit, comprise 111 patents.³

In November 1939, Farnsworth was dissatisfied with the agreement from a commercial standpoint and communicated its desire to Fernseh for a revision of the original license agreement. Thereafter, on February 24, 1941, Farnsworth initiated negotiations with Fernseh by cable for a revision of the agreement. Two days later, Farnsworth's board of directors authorized the negotiation for revision. No reply from Fernseh was had; Farnsworth then, on March 17, by cable, repeated its former cable of February 24. Farnsworth's board was advised of these facts on March 26, 1941. By cable of April 1, Fernseh finally answered, suggesting more definite proposals. On April 4, Farnsworth replied by cable, proposing the assignment of all its patent rights in Europe to Fernseh and the assignment to it of all Fernseh's patent rights in the United States. No reply from Fernseh was had until May 13 when it, in turn, suggested: (1) the mutual assignments be limited to patents or applications which had been granted or filed prior to September 1, 1939; (2) the new arrangement would supersede the existing agreement as of the date of Farnsworth's receipt of a cable from Fernseh confirming Farnsworth's acceptance.⁴ On the same day, May 13, Fernseh wrote a letter to Farnsworth. It repeated the statements made in its cable and discussed a proposal to handle patent applications filed after September 1, 1939. The letter said the new arrangements would have to be consummated by cable.

On May 15, Farnsworth cabled its reply to Fernseh's proposal. It accepted the proposals except for one item dealing with an existing license agreement with the American Telephone & Telegraph Company, which was to remain unaffected. A cut-off date of September 1, 1939, with respect to the mutual assignments was agreed upon because the United States and European patents as of that date were of approximately equal value. The May 15 cable read as follows:

"We offer to make agreement with Fernseh as set forth in your cable of May Thirteenth Nineteen Hundred Forty-One excepting only quote fourth unquote point which point is not possible because of existing Farnsworth-RCA and RCA-European agreements (Stop) Fernseh-Farnsworth agreements now existing to be abrogated as of effective date of present proposed agreement (Stop) Regarding quote sixth unquote point (Comma) Costs to be borne by party handling (Stop) If you wire your acceptance of this offer our confirming cable to you will constitute a binding agreement between us effective upon date of confirming cable (Stop) Have arranged special meeting our directors for May Twentieth to approve agreement if acceptable to you (Stop) If this arrangement acceptable to you suggest you also cable authority to representative in United States to execute for you formal Patent Office Assignment."

At the February 26 meeting of Farnsworth's board it was concluded any new agreement was subject to approval by the board. Prior to approval by its board, Farnsworth could not enter into any binding agreement. Hence, the provision that the new agreement would be effective on the date of Farnsworth's confirming cable after Fernseh's acceptance. On May 16, Farnsworth asked its board for ratification of the proposed arrangement. No reply having been received from Fernseh, Farnsworth's board postponed its meeting from May 20 to May 22. Unknown to Farnsworth, Fernseh had received the cable of May 15 on May 17 and its officials had, in fact, on May 19, approved the new agreement. Fernseh, however, had to get authorization from the German authorities. Fernseh urged upon the German authorities that its reply, already drafted, had to be sent no later than May 19 to arrive in time for the meeting of Farnsworth's board on May 20. The German authorities did not act. Fernseh, therefore, did not dispatch its acceptance in time for the meeting of May 20. Although no reply had been received from Fernseh, Farnsworth's board had a special meeting on May 22. The cables of May 13 and 15 were read. At the meeting it was also stated the United States government had been consulted and that the proposed transaction did not conflict with any policy of the government. The board ratified the action taken by the cables of May 13 and 15 and authorized the consummation of the arrangement as set forth in those cables, with such changes as the President of Farnsworth might deem necessary.

1. The critical cables as to whether plaintiff is entitled to relief will now be discussed. On May 28, not having heard from Fernseh, Farnsworth cabled again. The cable stated: "We cabled you on May 15 as follows." Then followed a full quote of the May 15 cable. The May 28 cable then concluded: "Our directors have approved Agreement (stop) Awaiting your answer." On June 4, Fernseh cabled its receipt of the May 28 cable and advised Farnsworth to expect final answer in a few days. Unknown to Farnsworth the German authorities had issued a favorable response to Fernseh. Then, on the afternoon of June 13, Fernseh was informed the new agreement would be authorized by the German authorities and on June 14 sent its cables. According to plaintiff, its May 28 cable was an offer, and Fernseh's cable of June 14 to Farnsworth was an acceptance. That cable read as follows:

"We accept your offer in your cable of day sic., May Twentyeight 1941 consider abrogation of existing agreements and mutual assignment of patents as binding Stop We authorize Mr Martin as our representative by separate cable suggest you also cable authority to representative here for instance Wilhelm Reichel Berlin Zehlendorf Goerzallee 299 as follows Wir Revollmaechtigen Hierdurch insert name Zur Wahrenehmung Unserer Patentinteressen Inbesondere Zur Anmeldung Bearbeitung Geltendmachung Veraeusserung Und Uebertragun Von Schultzrechten In Den Laendern Des Europaeischen Festlandes Fernseh Gmbh Goerz Moeller"

Fernseh also on June 14 sent a cable to Martin, patent attorney and secretary of Farnsworth, which read as follows:

"We authorize hereby Edwin M. Martin 3700 East Potiac Street Fort Wayne Indiana to sell assign and transfer the whole rights titles and interests in and to all letters patent for which he is appointed as our attorney and filed in our name or in the name of Fernseh Aktiengesellschaft in the United States on and before September

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