Hazeltine Research Corp. v. Freed-Eisemann Radio Corp.
| Decision Date | 03 September 1924 |
| Docket Number | No. 1485.,1485. |
| Citation | 3 F.2d 172 |
| Parties | HAZELTINE RESEARCH CORPORATION et al. v. FREED-EISEMANN RADIO CORPORATION. |
| Court | U.S. District Court — Eastern District of New York |
Pennie, Davis, Marvin & Edmonds, of New York City (H. Bartow Farr, William H. Davis, and Nathan L. Miller, all of New York City, of counsel), for plaintiffs.
Koenig, Sittenfield & Aranow, of New York City (Frank Aranow, Almet F. Jenks, and Walter C. Noyes, all of New York City, of counsel), for defendant.
This is an action in equity. Plaintiff asserts that a certain written sublicense contract should be canceled. The defendant asserts that this contract should not be canceled, but should be reformed as to a certain clause therein, wherein defendant promises to pay a royalty of 6 per cent. on each set manufactured and sold by it. Defendant wants to pay 6 per cent. on patented parts thereof only.
The validity of the Hazeltine patents in the radio art, as well as the validity of certain registered trade-marks associated with the practice of these patents, are not in issue here and remain unaffected by this decision. It has been deemed unnecessary to quote in detail the testimony referred to herein, which seems to me to prove the various facts on which this decision is based.
Suffice it to say that my rather clear recollection of the testimony of the various witnesses, together with my observance of their demeanor, their credibility, interest, etc., coupled with the very great aid given the court by the able counsel on each side, both during the trial and in the subsequent briefs, and finally a complete and careful reading of the stenographer's minutes of the trial, satisfactorily indicates to me the conclusions found. The majority of facts do not seem to be seriously disputed, and it is only after most of such facts have been presented that the parting of the factual way commences, and discloses, in spite of the abundant testimony, a narrow issue.
In November, 1922, a young man, under 30, named Freed, together with another young man, his associate, named Eisemann, were engaged in the business of making radio receiving sets. The art was new. These sets were based on the so-called crystal detector idea. This method produced results, but the whole situation was surrounded somewhat, in the public's mind, with the atmosphere of a new toy. It was the time of the quiet beginning of this new and great and ever-growing business, which in spite of constant scientific development and improvement is but yet in its infancy.
Messrs. Freed-Eisemann had as their patent attorneys a firm of lawyers, Pennie, Davis, Marvin & Edmonds, a well-known and substantial law firm, particularly devoted to patent matters. Two young lawyers, Mr. Russ and Mr. Taylor, were connected with this firm, and they are specifically mentioned, as it is on them that defendant heaps its greatest blame. The evidence, that I credit, shows nothing to indicate to me that they were either incompetent or disloyal, but, on the contrary, it appears that they at all times performed their work in an intelligent and lawyerlike manner.
Certain large concerns had become interested in radio sets, and Messrs. Freed-Eisemann and several other of the then smaller concerns, such as those represented by Mr. Andrea, Mr. Rodman, and others, had formed themselves into what was called the Independent Radio Manufacturers. This was subsequently incorporated and is referred to as the "I. R. M." During most of the time herein mentioned Mr. Freed was secretary of this corporation, and Mr. Rodman was president.
The law firm of Pennie, Davis, Marvin & Edmonds, were the attorneys for this combination and apparently most of the detail work was left to Mr. Russ. It is, however, apparent that Mr. Davis, the head of the firm, was in general charge and was occasionally consulted. About this time a certain professor in a nearby college, Professor Louis A. Hazeltine, had discovered certain improvements in the radio art relating to particular parts in a receiving set, and the said law firm of Pennie, Davis, Marvin & Edmonds was also his patent attorneys.
Bearing the above in mind, we find in November, 1922, Messrs. Freed-Eisemann in consultation with Mr. Russ about certain patent applications of the Freed-Eisemann Radio Corporation. Professor Hazeltine happened to be in said law office consulting Mr. Taylor. Mr. Russ, plainly in the interest of said Freed-Eisemann, suggested to them that perhaps an opportunity existed for them to meet Professor Hazeltine.
Freed's direct testimony, page 64: "
Accordingly Professor Hazeltine and Mr. Taylor were brought in by Mr. Russ and introduced to Messrs. Freed-Eisemann, as the result of which meeting and of this suggestion of Mr. Russ Professor Hazeltine furnished Mr. Freed with a penciled diagram and the latter made for Professor Hazeltine a model. This model did not work as well as expected, but a few days later, under certain changes made by Professor Hazeltine at his college, to which he had taken the model, the result was quite satisfactory.
Although Mr. Russ and Mr. Taylor have been accused of fraud and misrepresentation by Messrs. Freed-Eisemann yet it clearly appears from the above that it was due solely to this opportunity voluntarily suggested by Mr. Russ that Messrs. Freed-Eisemann have made a fortune; for, from what would appear to have been a very small business in crystal sets, which they were doing in November, 1922, Mr. Eisemann testifies that the present net worth of their business, not more than a year and a half afterwards, is $300,000 a year, and that they have employed as high as 570 workmen, and have a very large number of outstanding valuable contracts for the purchase of their sets. The quarter ending December 31, 1922, according to the Freed-Eisemann statement, shows sales of $687,000, and the quarter ending March 31, 1924, sales of $2,000,000.
In the brief of the defendant mention is made that the quarter ending July 1, 1924 (about two months ago), and after the trial, the sales diminished greatly. Whether this was caused by season, as plaintiff claims, or from some other cause, I do not know; but it is somewhat difficult to reconcile this with the testimony of Mr. Eisemann, as to the present worth of business and outstanding contracts in June, but two weeks before said July 1st. However, the foregoing facts are mentioned, for the reason that all this large sum of money has been made under the sublicense contract herein attacked by the Messrs. Freed-Eisemann by reason of alleged fraud or mistake on the part of said Russ.
It seems to me it could be fairly argued that such a state of facts might suggest gratitude to and not abuse of Mr. Russ and Mr. Taylor. Prior to this lawsuit such a feeling seems to have existed in their minds and in the minds of the others of the I. R. M. At the meeting of the directors of that company held March 9, 1923, the following appears from the minutes:
This was after the important exclusive license contract with Hazeltine had been secured, but prior to the execution of the several sublicense contracts. Facts calling for gratitude are, of course, not a defense against a proven fraud or a mutual mistake; yet a court of equity should always take a broad view of all the facts and circumstances and the reasonable inferences arising therefrom.
Returning to the first successful demonstration of Professor Hazeltine's invention, at his college, there were present, besides the professor, Messrs. Freed-Eisemann, Andrea, Rodman, and others of the I. R. M., and we find immediate interest in the commercial value of these inventions and great activity on the part of Freed, Rodman, and others. At the above meeting Mr. Russ, who was subsequently thanked, suggested speed.
A committee of three was appointed, of which Mr. Freed was one, to wait upon the professor and obtain, on terms, an exclusive license, and after several informal meetings among themselves a meeting was had with Professor Hazeltine early in January, 1923, at a restaurant. By that time Professor Hazeltine had applied for two patents. One was shortly, in March, 1923, duly granted. The other was at first rejected, and was not duly granted until the spring of 1924, after this lawsuit had been commenced, and but shortly before the trial.
At this...
To continue reading
Request your trial
- Gonzales v. United States Shipping Board EF Corp.
-
Crosley Radio Corporation v. Dart
...counsel in this court, compelling respect both for their integrity and professional competence. Compare Hazeltine Research Corp. v. Freed-Eisemann Corp., D.C.E.D.N.Y., 3 F.2d 172. Our conclusion is that Dart's reserved inventions must be construed in the language of the assignment as partic......