Jenkins Petroleum Process Co. v. Sinclair Refining Co.

• Decision Date: 10 August 1928
• Docket Number: No. 816.,816.
• Citation: 32 F.2d 247
• Parties: JENKINS PETROLEUM PROCESS CO. v. SINCLAIR REFINING CO.
• Court: U.S. District Court — District of Maine

32 F.2d 247 (1928)

JENKINS PETROLEUM PROCESS CO. v. SINCLAIR REFINING CO.

No. 816.

District Court, D. Maine.

August 10, 1928.

Mayer, Meyer, Austrian & Platt and Parkinson & Lane, all of Chicago, Ill., and Philip G. Clifford, of Portland, Me., for plaintiff.

Jones, Addington, Ames & Seibold, of Chicago, Ill., and Verrill, Hale, Booth & Ives, of Portland, Me., for defendant.

PETERS, District Judge.

This is a bill in equity brought to compel the defendant to assign to the plaintiff letters patent of the United States numbered 1,285,200, issued to Edward W. Isom November 19, 1918. The plaintiff claims to be entitled to this assignment by reason of a written agreement with the defendant dated October 2, 1916, by which it was stipulated that the plaintiff should loan the defendant for experimentation purposes a certain apparatus devised by one Jenkins for the purpose of obtaining gasoline and other light oils from heavier hydrocarbons, and that any improvements in its mechanism or in the process that might be thereby developed by the defendant's agents should accrue to the plaintiff.

After the machine had been examined and the proposed new process explained to Isom, an agent of the defendant, he obtained the patent referred to which was assigned to the defendant and which also covered a method of "cracking" hydrocarbons claimed by the plaintiff to be in some respects similar to the Jenkins process and to be derived therefrom. Meanwhile Jenkins has been granted two patents on his process and apparatus, the first patent, the application for which was filed July 13, 1916, being issued May 15, 1917, numbered 1,226,526, and the second, for which application was issued September 27, 1918, being issued November 11, 1919, and numbered 1,321,749.

In order both properly to interpret the agreement and to apply it to the complicated situation which subsequently arose, it is necessary to briefly state the situation of the parties in 1916.

The tremendous increase in number of automobiles and the increasing demand for gasoline had for some years directed the attention of experts toward new processes for obtaining a larger percentage of gasoline from the crude oil taken from the ground. The defendant was largely interested in the oil refining business, having plants in many parts of the country, and had its experts constantly on the alert to note and examine every "cracking" process that came out. E. W. Isom, a son of the president of the defendant company, was specially assigned to this branch of the work and incidentally kept in close touch with the Patent Office. At its plant in Coffeyville, Kan., the defendant had a special row of small buildings for investigating and experimenting with any apparatus which was offered to them and which it was thought or hoped might have merit. There was much competition, and the personnel of the defendant company which came in contact with this branch of the business was eager to find and acquire any process that would increase the percentage of gasoline, formerly discarded as worthless, now the most valuable product of the petroleum.

In the business of cracking oil — meaning breaking up the molecules of the crude oil by heat and pressure into different forms — a distinct evolution can be traced. The first process was practically an iron kettle with a top bolted on, heated very hot, with a vent for the resulting vapor to escape and be condensed.

This was the original "batch" process where one quantity of oil was put in the still and cooked till there was nothing left but a tar-like product, whereupon the apparatus was cooled off and the kettle cleaned out. Gradually the bulk of the oil was removed from the fire, a small quantity being separately heated in tubes connected with the bulk supply tank, oil was added as the process went on, a reflux tower was invented to retreat escaping vapors, various improvements in apparatus were devised, and in different ways the percentage of the distillate increased, but always the carbon formed by breaking down the hydrocarbon molecules was the bane of the industry.

In 1916, Jenkins, a steam power engineer, who gives his name to the plaintiff company, entered the employment of the defendant (then called the Cudahy Refining Company) as a lubricating engineer and became interested in the problem of carbon or coke which was so badly clogging the cracking machines and impeding the progress of the industry. As a result he evolved the so-called Jenkins process and a small experimental still to exemplify it and interested some other employees of the Cudahy Company, who brought the matter to the attention of the elder Isom, president of the company, who directed his son, E. W. Isom, to look into it.

The claims made by the Jenkins people — very strong in their prospectus and in conversation, but rather milder in the application for patents — were in substance that they had a process and a machine whereby formation of carbon was practically eliminated and a continuous stream of petroleum could be carried into the still "and (as described in the patent) a substantially equal quantity of light, condensable oil, such as gasoline, will flow continuously from that apparatus."

This was revolution. Young Isom and other employees of the defendant went to the garage of Jenkins, with his consent, to have him explain the system and see it work.

He had a small experimental still there. Jenkins explained it to them, but they could not see it work, as in getting up pressure a fire occurred which burned the garage and everything combustible to the ground. However, the Cudahy people were sufficiently impressed so that they wanted to try again under more favorable conditions, and arrangements were made to ship the surviving still to Coffeyville. Whereupon the plaintiff prepared the letter of October 2, 1916, which, accepted by the defendant, constitutes the contract which is the basis of the suit, and is as follows:

"Chicago, Ill., Oct. 2, 1916.

"Cudahy Refining Co., Chicago, Illinois.

"Gentlemen: Pursuant to our conversations and conferences relative to the Jenkins process of treating petroleum, it is understood that we are to loan you our experimental still to be shipped to Coffeyville, Kansas, so that your experts and engineers may have apparatus immediately available upon which to carry out experiments upon the Jenkins improved process upon your petroleum products.

"It is further understood that Mr. Ulysses S. Jenkins of Chicago will go to Coffeyville, Kansas, to install the still and will remain in an advisory capacity throughout the entire course of experimental work carried on by your experts, Mr. Jenkins' salary being $150.00 a month, and all expenses, including railroad expenses incurred by him in making trips to Chicago rendered necessary by said experimental work, this to be paid by you.

"It is further definitely understood and agreed between us that any improvements, whether of a mechanical nature or in the process, which may be developed as the result of the work of your engineers and experts in familiarizing themselves with the Jenkins apparatus and process, shall accrue to the Jenkins Petroleum Process Company, and that you shall so far as you are able to do, cause your employees carrying on such experimental work to execute applications for patents for the United States and any other countries to protect any such improvements, but at the expense of Jenkins Petroleum Process Company and to assign said applications, together with the improvements they are intended to protect, to the Jenkins Petroleum Process Company. This provision is of course rendered necessary by the fact that in development of a process of this character, and particularly in its application to particular oils, many shortcuts and improvements necessarily are developed by the experts entrusted with the carrying out of the process, which belong by right to their employer, and under the circumstances here involved, of course, to the Jenkins Petroleum Process Company, inasmuch as they are loaning you not only their experimental still, but also the services of Mr. Jenkins, the inventor himself.

"It is further understood that all expenses in connection with the transportation of the still and incidental expenses shall be paid by you, and that as soon as your engineers and experts have carried on sufficient work with this still to thoroughly familiarize themselves with the process and discover the best conditions under which to apply the process to your petroleum products the still will be returned in good condition to us, and that Mr. Jenkins' salary will continue from the time the still is first shipped to Coffeyville until such time as it is returned.

"Yours very truly "Jenkins Petroleum Products Co. "By A. G. McGuire, President.

"This letter and agreement accepted and approved.

"Cudahy Refining Company "By W. H. Isom, Pres."

This letter, which had been prepared for the plaintiff carefully and...