Levine v. Massey

• Decision Date: 21 February 1995
• Docket Number: No. 14989,14989
• Parties: Robert A. LEVINE et al. v. James V. MASSEY III et al.
• Court: Connecticut Supreme Court

Page 737

654 A.2d 737

232 Conn. 272

Robert A. LEVINE et al. v. James V. MASSEY III et al.

No. 14989.

Supreme Court of Connecticut.

Argued Nov. 3, 1994.

Decided Feb. 21, 1995.

John M. Calimafde, New York City, pro hac vice, with whom, on the brief, were Lori Welch-Rubin, North Haven, and Roger Sullivan, Branford, for the appellants-appellees (plaintiffs).

Thomas E. Minogue, Jr., with whom were Alexander W. Samor, Southport and Barry Kramer, Stamford, for the appellee-appellant (named defendant).

Before CALLAHAN, BORDEN, BERDON, NORCOTT and PALMER, JJ.

CALLAHAN, Justice.

The plaintiffs, Robert A. Levine and Stephen C. Wardlaw, both medical doctors, and the named defendant, James V. Massey III (defendant), the owner and operator of a medical laboratory, collaborated to invent a device utilizing a capillary tube and an interior float that, upon centrifugation, separated a blood sample placed in the tube into constituent parts in discernible measurable layers (capillary tube-float device). This unique device was of substantial value to the medical profession because it permitted quick blood analysis. In 1976, Levine, Wardlaw and Massey jointly applied for and subsequently obtained a United States patent on the device. Thereafter, three additional patents were issued jointly to the inventors, all relating to the separation of blood by centrifugation into constituent parts by use of a capillary tube and float.

Wardlaw, alone, also invented what the parties have described as a "manual reader," an instrument used for viewing and measuring the thickness of each separated layer of blood constituents in the capillary tube-float device. A separate patent application for the manual reader was filed in 1977 and a patent was issued to Wardlaw in 1979, individually, as the inventor of that device. Wardlaw assigned equal shares in the manual reader patent to Levine and Massey. It is undisputed that Wardlaw had conceived of and worked on the manual reader prior to the time that the capillary tube-float device for separating blood into its constituent parts was patented or licensed.

On April 1, 1977, Levine, Wardlaw and Massey entered into a licensing agreement with the defendant Becton, Dickinson and Company (Becton, Dickinson), a manufacturer and distributor of medical equipment, which is not a party to this appeal. In exchange for royalties, this agreement gave Becton, Dickinson the exclusive right to manufacture, use and sell, worldwide, the capillary tube-float device and any related technology or improvements to that device invented by any of the licensors. The parties conceded, and it is obvious from the Becton, Dickinson agreement, that the manual reader, invented solely by Wardlaw but jointly owned by Wardlaw, Levine and Massey, was part of the technology related to the capillary tube-float device originally licensed to Becton, Dickinson.

As a method of payment of royalties, the agreement between Levine, Wardlaw and Massey and Becton, Dickinson provided: "A check for one third of the royalty or other payment due licensors shall be made payable to each licensor and sent to the addresses set out herein in the introductory paragraph. The licensors agree that this method of payment shall discharge licensee's obligation to each of the licensor's with respect to such payment." In the years since the agreement was executed, Becton, Dickinson has paid substantial royalties to each of the three licensors in this fashion.

On April 1, 1977, the same day that Levine, Wardlaw and Massey entered into the agreement with Becton, Dickinson, they executed a separate agreement defining their obligations to each other in relation to their invention and the licensing agreement with Becton, Dickinson. The purpose of the agreement, in part, was to distinguish between such future improvements on the basic invention or new inventions in which the parties would share equally, and those that would remain solely the property of the individual inventor.

At some time in 1982, the defendant ceased working with the plaintiffs. Thereafter, Wardlaw invented and subsequently obtained patents in 1985 and 1987 for an instrument called the "auto reader." The auto reader was described in Wardlaw's patent applications as relating to "an improved method and apparatus for measuring substantially accurate blood constituent counts in a centrifuged sample of anticoagulated whole blood." Wardlaw assigned a joint interest in the auto reader invention to Levine, with whom he was still affiliated.

Pursuant to its April 1, 1977 agreement with the parties, Becton, Dickinson acquired the rights to, and has manufactured, sold and distributed, the auto reader device. Pursuant to the terms of its April 1, 1977 agreement with the parties, it also has paid one third of the royalties due on its sales of the auto reader, as well as royalties due on the capillary tube-float device and the manual reader, to Levine, Wardlaw and Massey each. A controversy arose, however, as to whether Massey was entitled to royalties from sales of the auto reader. The royalties paid by Becton, Dickinson to each party attributable to the auto reader are in excess of $500,000.

After unsuccessful attempts to resolve the issue of entitlement to the royalties from the auto reader, the plaintiffs commenced this action against the defendant. In their complaint, the plaintiffs alleged that royalties from the auto reader did not fall within the royalty sharing agreement among themselves and Massey, and that the auto reader's claims were not dominated ¹ by any claims of the capillary tube-float device. They claimed, therefore, that Massey was not entitled to receive any royalties from the auto reader. In their prayer for relief, the plaintiffs claimed an accounting from Massey for any royalties received, damages, interest and costs, as well as an order determining the allocation of future royalty payments between the parties. ² The defendant denied the plaintiffs' allegations. ³

The defendant argued in the trial court that because the manual reader was contemplated by Wardlaw prior to 1977, and had been invented by him at the time of the agreement with Becton, Dickinson in 1977, and was actually a part of the technology that was originally licensed to Becton, Dickinson, it was a part of the basic invention referred to in the April 1, 1977 agreement among the parties. The defendant argued, moreover, that the claims of the manual reader patent dominated those of the auto reader patent and that he, therefore, was entitled, pursuant to the agreement of the parties, to royalties from the auto reader.

The trial court found that the manual reader was part of the basic invention as contemplated by the agreement among the plaintiffs and the defendant. The court then determined that the auto reader was an improvement on the manual reader and that its patent claims were dominated by those of the manual reader. It concluded that, pursuant to the April 1, 1977 agreement among the parties, the defendant was entitled to one third of the royalties from sales of the auto reader for the life of the manual reader patent. ⁴ Additionally, the trial court found that since there appeared to be no disagreement between the parties concerning the amount of royalties that had been paid, what they had been paid for, and to whom, there was no need for an accounting.

The plaintiffs appealed, and the defendant cross appealed, ⁵ from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c). We reverse the judgment of the trial court.

We agree with the trial court that the principal issue raised by this appeal is one of contract law and not one of patent law. It is not necessary, therefore, for us to determine whether the patent claims of the manual reader dominate ⁶ those of the auto reader. We conclude, rather, that the manual reader was not a part of the basic invention that was the subject of the April 1, 1977 agreement among the parties. Therefore, improvements to the manual reader, in the form of the auto reader, were not "vested in the parties in equal undivided shares or interest" as provided by their agreement.

Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact; Gurliacci v. Mayer, 218 Conn. 531, 567, 590 A.2d 914 (1991); Finley v. Aetna Life & Casualty Co., 202 Conn. 190, 199, 520 A.2d 208 (1987); "[w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law. Thompson & Peck, Inc. v. Harbor Marine Contracting Corp., 203 Conn. 123, 131, 523 A.2d 1266 (1987)." (Internal quotation marks omitted.) Mulligan v. Rioux, 229 Conn. 716, 740, 643 A.2d 1226 (1994). We regard this case to present such definitive contract language. ⁷

It is the general rule that a contract is to be interpreted according to the intent expressed in its language and not by an intent the court may believe existed in the minds of the parties. Id.; Barnard v. Barnard, 214 Conn. 99, 110, 570 A.2d 690 (1990); Powel v. Burke, 178 Conn. 384, 387, 423 A.2d 97 (1979). When the intention conveyed by the terms of an agreement is "clear and unambiguous, there is no room for construction." Gino's Pizza of East Hartford, Inc. v. Kaplan, 193 Conn. 135, 138, 475 A.2d 305 (1984). "[A] court cannot import into [an] agreement a different provision nor can the construction of the agreement be changed to vary the express limitations of its terms." Hatcho Corp. v. Della Pietra, 195 Conn. 18, 21, 485 A.2d 1285 (1985); see also Bank of Boston Connecticut v. Schlesinger, 220 Conn. 152, 159, 595 A.2d 872 (1991) (" '[i]t is not within the power of courts to create new and different agreements' "); Jay Realty, Inc. v. Ahearn Development Corp., 189 Conn. 52, 55, 453 A.2d 771 (1983) (same); ...