De Filippis v. Chrysler Corporation

• Decision Date: 23 February 1944
• Citation: 53 F. Supp. 977
• Parties: DE FILIPPIS v. CHRYSLER CORPORATION et al.
• Court: U.S. District Court — Southern District of New York

53 F. Supp. 977

DE FILIPPIS v. CHRYSLER CORPORATION et al.

District Court, S. D. New York.

February 23, 1944.

William J. Rapp, of New York City, for plaintiff.

John B. Cunningham, of New York City (Max W. Zabel, Edward C. Gritzbaugh, and Edward U. Dithmar, all of Chicago, Ill., of counsel), for defendants.

BRIGHT, District Judge.

Plaintiff, claiming to have invented a transmission mechanism for automobiles, the use of which would eliminate parts and greatly increase efficiency in reducing the consumption of fuel, in 1931 communicated with the defendant Warner Gear Company (solely owned and controlled by the defendant Warner Corporation) regarding the possibility of interesting it in his device; that company requested him to deliver to it drawings and a description of the device, which he did, believing in the integrity and general reputation of the two corporations, and for upwards of eight months those drawings and description remained in their possession. Alleging that while so possessed the Borg Corporation copied and in 1934 and thereafter used his invention, without his authority or consent and without compensation to him, it thereby breached the relation of confidence and trust created, he brings this action for an accounting and injunction, and to recover upwards of $750,000 under an implied contract to pay him 7½% of the net cost of the transmission mechanism sold by the corporation. The complaint originally set out four causes of action. Upon the trial, the second and third were dismissed, as was the complaint in its entirety as against all defendants except the Borg-Warner Corporation.

Defendant, while admitting plaintiff's communication of October 5th, 1931, and the sending of the drawings and description and their retention for upwards of eight months, denies that they were submitted in confidence or that it copied or used the same or constructed or sold any transmission mechanisms using plaintiff's invention or any part thereof. It alleges that on June 11, 1929, long prior to the submission of the documents, plaintiff had applied for a patent to protect whatever invention was disclosed in his application; that whatever was submitted was nothing more than a copy of his patent application; and that his patent was finally issued on July 31, 1934, as No. 1,968,030. It further avers that plaintiff in February, 1937, filed suit upon that patent against the defendant Chrysler Sales Corporation; that Borg-Warner Corporation, to plaintiff's knowledge, undertook and was solely responsible for the defense of that cause, that it was dismissed with prejudice in 1938, and that dismissal is res judicata of any patentable cause of action which might have existed between plaintiff and these defendants or of any alleged infringement of plaintiff's device.

On October 5th 1931, plaintiff wrote to the Warner Transmission Company asking it if it was interested in a device that eliminates the clutch entirely, along with gears, and permits automatic shifting of speeds, and in which the well-known leverage and ratio (equivalent of gears) is always retained from infinite low to high. On October 13, 1931 the Warner Gear Company acknowledged receipt of this letter, stated it was always interested in new developments and would be glad to look over plaintiff's drawings with a sufficient description; and inquired whether plaintiff had actually built the device and tried it out in an automobile with any degree of success. On October 20th, 1931, plaintiff sent "a copy of the patent" (the patent had not then been issued and what was sent was substantially a copy of the specification later in the patent); and wrote that he had made two of the devices for bench experimental uses and one for practical car use not yet installed. On January 4, 1932, having received no reply to his last communication, he asked for an answer, stating "I have several propositions on this device and I would like to terminate same as soon as possible". The following day the company replied, apologizing for the delay, and stated that they now had quite a lot of new devices that deserved careful attention "yours being among them. We are certainly interested in your subject and will try to give you a report soon". On January 8, 1932 it wrote, stating that the general scheme had been proposed by numerous inventors, none of which had proven a practical success in the actual driving of an automobile, again inquired if he had yet installed his device in a car and what result had been obtained, and stated that they desired to give the matter further study, had forwarded it to an engineer, "and it would be too radical to introduce to the public just now". The blue print (it was apparently the photostat in evidence) and specifications were sent to the engineer with a statement, "It seems to me this mechanism is a little simpler than some of the others and there may possibly be some merits in the general scheme. Instead of ratchets it would probably be best to use one way roller clutches". The photostat and specifications were returned by the engineer on January 27th with a statement that it was questionable whether any adequate patent protection might be secured in light of the work that had been done on similar lines, mentioned two other transmissions "which functioned similarly", and that "I think it is a good idea to follow each one of these constructions through * * * as there are quite some possibilities in the general form".

Plaintiff again wrote on January 11th answering the letter of the 8th, stating that a search of the art disclosed no single competent or equivalent patent reference, that 35 of his claims had been allowed to date on his application for a patent; and regarding the statement that the scheme was too radical, pointed to Chrysler's "fluid power" and the Bendix automatic clutch and stated that Chrysler and several others were in the market for same and the first best proposition would possess it.

On February 16, 1932, the Gear Company wrote plaintiff again asking if his transmission had been put into a car, stating that if it proved to be practical, it probably would be interested in its application to automobiles and, asking for plaintiff's ideas as to a disposition of the device. On February 19th plaintiff wrote that he had not been in any particular hurry to place his device in a car as from his study he was absolutely positive of the expected results and performance, and stating the terms upon which he would be willing to enter into a contingent agreement, among which was that he should be paid a royalty of 7½% based on factory net cost. The Gear Company wrote on February 26th that it was still giving thought to plaintiff's general construction, which was very interesting and upon which a lot of work had been done by other inventors, but disagreeing with plaintiff's estimate of the value of his device. Plaintiff replied on February 29th changing somewhat the terms upon which he was willing to agree, stating that the 7½% which he had previously mentioned referred to the cost of the transmission only, and further that a complete model could be shipped upon a contingent agreement, which he suggested be drawn up "as I have several propositions on hand and desire to terminate the matter". On July 24, 1932, plaintiff wrote that the transmission had been licensed to the Clutchless Gearless Transmission Corporation (which was a corporation organized by him) and requested all "drawings and specifications which you may have on file". On July 27th the matter which he had sent was returned to him by the company which stated that it was glad that he had formed such an organization for development work, and as plaintiff's device did not seem to be as hopeful as some others it knew about, it had not felt that it could afford to spend money to develop it.

Nothing apparently was done in the matter after that until March 1934, when, it is shown by the evidence, defendant manufactured and sold an "overdrive" mechanism.

Plaintiff had applied for a patent for his device on June 11, 1929, and that was issued on July 31, 1934, as No. 1,968,030. The specification in his patent, as well as the drawings affixed thereto, are almost identical with the photostat and typewritten description sent to the defendant in October 1931. The only difference between the drawings is that an additional figure 7 is added; the specifications omit some immaterial matter and repetition contained in the typewritten copy sent to the defendant.

In the early part of 1937 plaintiff brought suit in this court against the Chrysler Sales Corporation, alleging that it was infringing his patent, and prayed that his patent be declared good and valid, that the defendant be enjoined from manufacturing, using and selling or further infringing, and for an accounting. The defendant Borg-Warner Corporation, to the knowledge of the plaintiff, defended that action. It was reached for trial on or about April 4, 1938, and an order was made on that day that the cause be dismissed without prejudice providing $250 was paid by plaintiff to defendant's solicitor within thirty days, and in the event no such payment was made, the cause was dismissed "on the merits and with prejudice to any further suit on the patent herein, with respect to the devices complained of herein". The payment was not made, and some time later an order was made denying any extension of time in which to make it. That order was affirmed on appeal and the judgment on the mandate of the Circuit Court of Appeals was entered on January 30, 1941. That court held that the District Court had power to dismiss with prejudice. 2 Cir., 116 F.2d 375, 376. Another action was brought by plaintiff against Studebaker Sales Corp., Borg-Warner Corporation and Nash Sales, Inc., for infringement of the same patent, in the United States District Court for the Southern District of Illinois, and that action was also dismissed on the ground that...