Garter-Bare Co. v. Munsingwear, Inc.
| Decision Date | 17 April 1980 |
| Docket Number | No. 75-3826,GARTER-BARE,75-3826 |
| Citation | 650 F.2d 975 |
| Parties | COMPANY, an Unincorporated Association (a limited partnership), and Knut L. Bjorn-Larsen, Plaintiffs-Appellants, v. MUNSINGWEAR, INC., a corporation, et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Robert W. Driscoll, John E. Wagner, Lillian Tomich, San Marino, Cal., for plaintiffs-appellants.
Robert T. Edell, Minneapolis, Minn., argued, for defendants-appellees; Gregory L. Roth, Minneapolis, Minn., on brief.
Appeal from the United States District Court for the Central District of California.
Before CHAMBERS, ELY and WALLACE, Circuit Judges.
In 1963 appellant Bjorn-Larsen applied for, and in 1966 he was granted, a patent for a "double layer" method of constructing ladies' girdles so as to eliminate the necessity for metal or other garters (Patent No. 3,253,599 hereinafter No. '599). His device had a double layer of fabric on the leg of the garment, with friction elements placed in the interior. When the stocking top was inserted into this fabric enclosure, the friction element closed in to support it.
In 1965 Garter-Bare, the limited partnership of which Larsen was the general partner, entered into a written agreement with appellee Munsingwear under which they were to "develop and share in the commercial application of a certain device for supporting ladies hosiery." Garter-Bare warranted that it was the sole owner of the device and that it was properly protected by "appropriate patents and/or patents pending." A three-stage commercial application program of research and development and licensing was agreed to. All improvements and developments of the device, or the ideas for its application and use, were to be shared by the parties.
In January 1967, Larsen applied for a patent for a single layer device, which eliminated the necessity for the double layer of fabric and operated by the pressure of the friction element against the stocking and the bare leg. (In November 1969, this application matured into Patent No. 3,478,748 hereinafter No. '748). In December 1967 Munsingwear notified appellants that it did not wish to "renew the Agreement", purportedly because the device had not shown promise of being marketable. But in February 1969, appellee Munsingwear (through an employee named Cuozzi) applied for a patent for a single-layer style girdle bearing a remarkable resemblance to the style covered by appellant Larsen's No. '748 application. (The Cuozzi patent matured in February 1970 into No. 3,496,944 hereinafter No. '944.)
This action was filed in district court in January 1972. The amended complaint is in eleven claims alleging breach of written, oral and implied contract, fraud and conspiracy to defraud, misappropriation, patent infringement, and other violations of appellants' rights. Jury trial was demanded. Munsingwear answered with denials and with affirmative defenses, as to the '748 patent, of lack of invention, anticipation by other devices in the alleged prior art; it also sought a declaration of the invalidity of the '748 patent, by means of a counterclaim. Extensive discovery was undertaken and Munsingwear then filed its motion for summary judgment under Rule 56, F.R.Civ.P. The district court adopted appellee's proposed findings of fact and conclusions of law, dismissed all eleven claims, and on the counterclaim declared the '748 patent invalid. This appeal followed. Appellants raise issues related to the legal interpretation of the written agreement and they contend that there are issues of fact that precluded summary judgment. We discuss the contract issues first.
The 1965 agreement between the parties (prior to amendment) described the commercial application program in three phases. There was a six-month period of research and development terminating in December 1965, followed by a two-year period during which Munsingwear would have an exclusive license, followed by a period of non-exclusive license during which the parties would cooperate in obtaining industrywide use of the product. As the agreement is drafted, each phase followed immediately on the termination of the preceding phase. Nothing in the agreement, as executed, contained provisions giving either party a right to terminate it. However, executed contemporaneously with the basic agreement was a First Amendment which states that Munsingwear (whose termination rights are here relevant) might cancel the agreement "upon 90 days prior written notice to the licensor Garter-Bare; however, any and all royalties due and accruing to Garter-Bare at the cancellation date shall be paid within 30 days after cancellation."
On December 22, 1967, just a few days before the expiration of the last extension, Munsingwear sent the following notice to appellants:
By letter dated January 2, 1968, an attorney for Garter-Bare wrote to Munsingwear expressing regret that Munsingwear did not wish to "renew the Agreement", and stating Garter-Bare's position that 90 days prior written notice was required for cancellation and that $3,000 (i. e. the amount that would accrue in the 90 days following the December 22 notice) was due within 30 days as provided for in the agreement.
On January 17, 1968, the Garter-Bare attorney wrote acknowledging Munsingwear's "cancellation" and asking again what Munsingwear intended to do to "complete the agreement" in the light of the 90-day cancellation clause and the requirement of paying the $1000 monthly advance-royalties. He quoted from the Third Amendment's provision that the monthly payment of $1000 would be paid until actual royalties totalled that amount or more "or said Agreement is terminated as provided for therein." He stated, "it would appear that Garter-Bare is entitled to receive $3,000 from Munsingwear within 30 days after cancellation." Using December 22 as the date of notice of cancellation, and adding 30 days, he set the date for payment as January 22, 1968.
On January 18, 1968, a letter from Munsingwear acknowledged the existence of the provision for 90 days prior notice but then stated that "it applied to the original agreement and provided a cancellation period, assuming that royalties would have been earned and due Mr. Larsen." The letter states that as no royalties were due and owing there was no requirement for further payment of the monthly $1000 sums. Additional correspondence of the parties in the succeeding months merely restated these same interpretations of the agreement.
The district court's conclusions of law recite that there can be no recovery under the first and second claims because they are "predicated on the continuing nature" of the July 9, 1965, written agreement, and because that agreement "was terminated by a notice of termination sent by Munsingwear on December 22, 1967, and both Munsingwear and Garter-Bare specifically understood that Munsingwear intended to and had cancelled the agreement."
We cannot agree with these conclusions of law. The notice sent on December 22, 1967, did not comply with the explicit requirements for which the parties bargained. It did not give 90 days notice unless it were interpreted as going into effect 90 days thereafter, on March 21, 1968. Munsingwear consistently rejected such an interpretation when it was suggested by Garter-Bare. Instead it appears to have relied on 1) an assumed right to terminate the entire contract merely by electing not to extend the research and development period, and 2) an assumed right to dispense with the monthly payments called for in the extension amendment simply because the research and development extension was to be terminated. The contract and its amendments cannot fairly be read to permit these interpretations. The termination of the research and development phase merely set in progress the phase during which Munsingwear was to have an exclusive license. Termination of the entire agreement was required to be in the manner spelled out i. e. 90 days prior written notice. And the $1000 monthly payments called for in the amendment continued until such termination was effected. We cannot read the amendment as assuring the monthly payments only during the life of the extension of the research and development period.
The district court's conclusion that the parties had an "understanding" that the agreement had been cancelled cannot be sustained on summary judgment. We may surmise that Garter-Bare was aware that Munsingwear intended not to proceed with development and merchandising of the device. But Garter-Bare's acknowledgement of this intent should not be equated, as a matter of law on summary judgment, with any acknowledgement on its part that Munsingwear had effectively...
To continue reading
Request your trial
-
Bryant v. Ford Motor Co.
...were never dismissed. Accordingly, original jurisdiction would not have lain with the district court. See Garter-Bare Co. v. Munsingwear, Inc., 650 F.2d 975, 981 (9th Cir.1980); 14 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 3642 (1985).1 In CTS Printex, Inc. v. Am......
-
Mich & Mich TGR, Inc. v. Brazabra, Corp.
...only with great caution." Acrison, Inc. v. Schenck Corp., 973 F.Supp. 124, 126 (E.D.N.Y.1997) (quoting Garter–Bare Co. v. Munsingwear, Inc., 650 F.2d 975, 982 (9th Cir.1980) ); see also Gaus v. Conair Corp., No. 94–CV–5693, 1998 WL 92430, at *2 (S.D.N.Y. Mar. 3, 1998) (citations omitted). T......
-
Rojas v. Sea World Parks & Entm't, Inc.
...the naming of doe defendants implicates a substantive or procedural issue.In 1980, the Ninth Circuit, in Garter-Bare Co. v. Munsingwear, Inc. , 650 F.2d 975, 981 (9th Cir. 1980), affirmed dismissal of a claim for relief premised on diversity jurisdiction because the inclusion of doe defenda......
-
Grayson v. Grayson, 2614
...carefully or give less weight to such prepackaged findings; 54 A.L.R.3d 868, 887, and supplement thereto; see Garter-Bare Co. v. Munsingwear, Inc., 650 F.2d 975 (9th Cir.1980); we do not adopt the reasoning of these few cases because a conscientious appellate court will make such examinatio......