Hiner v. C.G. Aldrich Co.

• Citation: 255 F. 785
• Decision Date: 25 February 1919
• Docket Number: 735.
• Parties: HINER et al. v. C. G. ALDRICH CO.
• Court: U.S. District Court — District of Massachusetts

255 F. 785

HINER et al. v. C. G. ALDRICH CO.

No. 735.

United States District Court, D. Massachusetts.

February 25, 1919

Charles J. Williamson, of Washington, D.C., and Nathan Heard, of Boston, Mass., for plaintiffs.

Jesse A. Holton, for defendant.

ANDERSON Circuit Judge.

The bill in this case is a typical infringement bill, brought by owners of a patent, citizens of Virginia, against a Massachusetts corporation, the alleged infringer. The defenses set up in the amended answer are that the Hiner patent, construed in the light of the prior art, does not cover the construction used by the defendant. In the alternative, the defendant claims a license under a written instrument dated September 12, 1913, executed by plaintiffs and defendant. This instrument is alleged never to have been rescinded or annulled as the result of any judicial proceeding, nor terminated by mutual consent of the parties.

In this agreement the plaintiffs are parties of the first part, and the defendant corporation the party of the second part. It recites that:

'Whereas parties of the first part are the owners' of the Hiner patent 'covering a reel for eyeglasses'; and

'Whereas,' the defendant company 'is desirous of purchasing such patent and all interests thereunder' 'Now, therefore, this indenture witnesseth:

'First: The parties of the first part hereby agree to sell to said party of the second part their entire interest in said patent on the following terms and conditions: The total purchase price shall be the sum of fifteen hundred dollars ($1,500), of which one hundred dollars shall be paid in cash October 1, 1913; one hundred dollars November 1, 1913; one hundred dollars February 1, 1914. For the balance of the purchase price the party of the second part shall pay to the parties of the first part a royalty of twenty-five cents per dozen of reels sold by said party of the second part, monthly payments to be made on account of said royalty on the 20th day of each and every month, beginning with the 20th day of November, 1913, and to cover accounts to the 1st day of said month. Succeeding settlements to be made monthly on the 20th day of each month until the royalties so realized shall equal the amount of twelve hundred dollars ($1,200), at which time full title to said patent and all improvements on the same shall pass to the parties of the second part.

'Second. The parties of the first part hereby agree to execute a proper assignment of said patent when said payments shall have been fully completed.

'In witness whereof, the said C. G. Aldrich Company has caused these presents to be signed, sealed, and delivered, and its corporate seal hereto affixed, and the said parties of the second part have hereto set their hands and seals, the day and year first above written.'

The instrument is duly signed and acknowledged by all the parties thereto; it was recorded in the Patent Office on November 6, 1913.

The parties agree that the three $100 payments referred to in this instrument were duly made, leaving unpaid $1,200, referred to in the instrument as 'the balance of the purchase price.'

The defendant proceeded shortly after the execution of this instrument to manufacture and put upon the market in large numbers, many thousands in all, a reel for eyeglasses which the defendant claims is not within the scope of this patent.

Carl G. Aldrich appears to be the chief executive officer of the defendant corporation. Under date of August 10, 1914, he filed in the Patent Office an application for a patent on an improved eyeglass reel, which patent was granted on July 18, 1916. Apparently the reels manufactured by the defendant are claimed to be covered by the Aldrich patent. It does not appear that the plaintiffs, until at or about the time of the trial, had any knowledge that Aldrich had made this application, or that a patent had been granted to him.

The written contract, dated September 12, 1913, contemplated that the defendant should begin almost immediately the manufacture and sale of reels under the Hiner patent, for it provided for the first accounting of royalties on the 20th of November, 1913, to cover the preceding month of October. The plaintiff Lang, who seems to have had a store in Staunton, Va., where he sold diamonds, watches, optical goods, etc., in a letter written in October, 1913, expressed to the defendant the hope that it would hurry along the dies, as he (Lang) was anxious to get some of the reels manufactured by the defendant, thinking the prospects good for their sale. The dealings between the parties thereafter are indicated by correspondence as follows:

On October 31, 1914, the plaintiff Lang wrote the defendant:

'I have been waiting for some time to see the reels on the market; also to hear from you in regard to same. You will recall that the royalty should have commenced some time back, but I took it for granted that you did not have it ready for the market. I understand that the same is being placed, and I will be glad to hear from you.' To this the defendant replied on November 6, 1914:

'In reply to your favor of the 31st Oct., will say that we have not as yet sold any reels made under your patent No. 1,036,844. When we do, we will, of course, give an accounting and settlement according to agreement.'

At that time defendant was manufacturing and selling reels, and Aldrich had already applied for his patent.

On March 13, 1915, Lang wrote again to the defendant:

'You will please render me a statement of all reels sold, according to contract. I want to congratulate you on the beautiful reel which you have put on the market. I am selling them, and think they are going to have a big sale, from all indications.'

The defendant replied to Lang on March 22, 1915:

'In reply to your letter of the 14th, will say that in our experiments to date we have not produced a satisfactory working model of a reel embodying the particular construction of the Hiner patent, therefore have sold none under that contract. The reels which we are marketing are of entirely different construction, as you will observe by a comparison.'

On January 12, 1916, the plaintiff sent a registered letter to the defendant, which is as follows:

'We hereby notify you that your course in regard to the contract, dated September 12, 1913, between you and us, respecting United States letters patent No. 1,036,844, issued August 27, 1912, to Chas. N. Hiner, for a reel for eyeglass, and particularly what is set forth in your letter dated March 22, 1915, to Mr. Henry L. Lang, wherein you say that you have not made the 'particular construction of the Hiner patent,' and 'therefore have sold none under the contract,' has constituted such a repudiation and breach by you of said contract as to terminate the same, and to discharge and release us from any obligations which performance on your part would have created, and to render you liable for all other consequences that have ensued from your said repudiation and breach. We further notify you that the eyeglass reel which you have made and sold, and which in your said letter of March 22, 1915, you say is an 'entirely different construction' from the 'particular construction of the Hiner patent' forming the subject of said contract, is an infringement of said patent, and we have instructed our attorney to institute suit against you for an injunction, and an accounting of profits for your said infringement.'

By this letter the plaintiff sets up:

(a) That the defendant's course of conduct, and particularly its claim that it has not made 'the particular construction of the Hiner patent,' and therefore sold none under that contract, is such a repudiation and breach of the contract as to terminate the obligations under it; and

(b) The inconsistent claim that the eyeglasses which the defendant has made and sold are covered by the Hiner patent and are therefore an infringement of it.

The bill...