Mechanical Ice Tray Corp. v. General Motors Corp.

• Decision Date: 26 August 1944
• Docket Number: No. 378.,378.
• Parties: MECHANICAL ICE TRAY CORPORATION et al. v. GENERAL MOTORS CORPORATION.
• Court: U.S. Court of Appeals — Second Circuit

144 F.2d 720 (1944)

MECHANICAL ICE TRAY CORPORATION et al. v. GENERAL MOTORS CORPORATION.

No. 378.

Circuit Court of Appeals, Second Circuit.

August 26, 1944.

Pennie, Davis, Marvin & Edmonds, of New York City (William H. Davis and Daniel V. Mahoney, both of New York City, of counsel), for plaintiffs-appellants-appellees.

Drury W. Cooper, of New York City (John N. Cooper, of New York City, of counsel), for General Motors Corporation.

Before AUGUSTUS N. HAND, CHASE, and FRANK, Circuit Judges.

CHASE, Circuit Judge.

Mechanical Ice Tray Corporation and I. C. E. Corporation brought this suit against General Motors in the District Court for the Southern District of New York for an accounting and to recover royalties alleged to be due the plaintiffs for ice trays manufactured and sold by the defendant since April 1, 1940, under the terms of a license agreement the parties had made covering the manufacture, use and sale of ice trays for mechanical refrigerators under certain U. S. patents owned by Mechanical Ice Tray Corporation. Jurisdiction based on diversity of citizenship was alleged and is clear and undisputed.

By amendment to the complaint, the plaintiffs alleged that the license was an exclusive one and that the defendant had failed in violation of its implied obligation so to do, to exploit the licensed inventions in good faith and to refrain from adopting commercially equivalent devices outside the scope of the claims of the patents included in the license agreement.

The defendant answered by denying that it had since April 1, 1940, manufactured and sold without paying royalties any ice trays which were within the claims of the patents; denied that any royalties were due the plaintiffs; denied that it had broken any implied obligation to exploit the licensed devices in good faith; and alleged that no such implied obligation could exist because it would be contrary to public policy.

The trial court found that the defendant had not manufactured and sold any ice trays which were within the scope of the licensed patents without paying royalties to the plaintiffs. It did, however, find that the defendant had manufactured and sold an ice tray, known as type 4, which was a breach of its implied obligation to exploit the patents and awarded damages computed on the basis of the royalties agreed upon by the parties to the license. Both parties have appealed from the decree.

Though the license agreement covered other patents, the present controversy is confined to claims 13 and 17 of U. S. Patent No. 1,893,535 granted to Buchanan on January 10, 1933, and to claims 8, 9, and 14 of U. S. Reissue No. 18,819 granted to Buchanan and Horton on May 2, 1933. Ice trays, called types 2, 3, and 4, manufactured by the defendant without payment of royalty since April 1, 1940, are the ones involved.

A license was originally granted to the defendant by I. C. E. Corporation on August 21, 1934. Thereafter Mechanical Ice Tray Corporation, which claimed to own an interest in the patents, became a party to it. That agreement is the one on which this suit is based. It is dated April 1, 1936, and provides, so far as need now be stated, that the defendant was exclusively licensed under the patents within the United States, except in the County of Roscommon, Mich., with the sole exception of a non-exclusive license which had been granted to Westinghouse Electric & Manufacturing Company. It was agreed that if the Westinghouse license should be terminated the defendant should become the sole licensee. A minimum royalty of $5000 a year was payable to the plaintiffs and unit royalties were payable in amounts varying in accordance with the kind and number of ice trays sold each year.

Mechanical agreed to sue infringers upon the written request of the defendant and if it failed to do so within thirty days the defendant was given the right to prosecute infringers in its own name and at its own expense. Mechanical also agreed to defend any suit brought against defendant, its sublicensees, or customers or users growing out of the manufacture and sale of ice trays in accordance with the claims of the licensed patents. The license could be cancelled by the defendant upon ninety days' notice to the plaintiffs at any time after December 31, 1938, and the plaintiffs could cancel in the same way for any material breach by the defendant but during the notice period the defendant might repair the breach and thereby keep the license in effect. The defendant also was given the right to surrender the exclusive license at the end of any calendar year and retain a non-exclusive license. If it did so it was no longer bound to make the guaranteed minimum royalty payments.

At the request of the defendant four suits were brought against alleged infringers. Three of them were settled before trial. The fourth was against Abraham & Straus upon claims 4, 13, 17 and 19 of Buchanan Patent No. 1,893,535. It was tried in the District Court for the Eastern District of New York and decided March 8, 1940. The result was a decree holding the claims valid but not infringed as they were then construed. See, Mechanical Ice Tray Corp. v. Abraham & Straus, Inc., D.C., 31 F.Supp. 938. No appeal was taken from that decree and that fact plays an important part in the present controversy.

Paragraph Eleventh (b) of the license agreement provides in part as follows: "It is understood and agreed that in the event any of the claims of any of said patents are construed or held invalid by a decision of a court of competent and final jurisdiction, or by an inferior court from whose decree no appeal is taken within the time required by law, then the requirement to pay royalties under this license with respect to any such claim or claims shall be interpreted in conformity with the court's decision as to the scope or validity of such claims of said patents so that no royalty shall be payable under such claims after the date of such decision upon any ice tray which has heretofore been deemed made under such claims of any such patents and hence subject to royalties hereunder solely because they fell within the claims so held invalid or construed * * *."

After April 1, 1940, following this decision, the defendant stopped paying royalties on the trays, type 2 and 3, which it continued to manufacture without change in construction. It also changed the construction of other trays it made to what was essentially that of type 2 and 3 but was called type 4 and paid no royalties on that.

It will be convenient to discuss first the original cause of action to recover royalties claimed due under the license. Whether there are any depends upon whether any type 2, 3, or 4 ice trays made by the defendant would, but for the license, infringe either claim 13 or claim 17 of Buchanan Patent No. 1,893,535 as construed in the above suit or claims of Reissue Patent No. 18,819 since the plaintiffs now rely on no others.

Before this invention, ice that was frozen in metal trays of a mechanical refrigerator could not be readily removed until it had melted sufficiently to reduce the pressure between the ice and the sides of the tray caused by the expansion of the water during freezing or otherwise loosen the bond between ice and metal. By "sides of the tray" in this connection are meant the sides also of the metal insert which was placed in the pan to cause the ice to freeze into blocks of convenient shape and size which are called cubes. This insert is called a grid and is usually made of a piece of metal of a length to fit the inside of the pan longitudinally. Extending crosswise from it at intervals are pieces of metal, called fins, which with the middle piece divide the pan into spaces with sides approximately as high as the pan. The melting needed to permit the cubes to be removed from the tray was often caused by letting hot or cold water run over the tray and the ice. It was sometimes accomplished by letting the tray with the ice stand at room temperature for a sufficiently long time. However it was done, there was a wastage of ice and a somewhat vexatious consumption of time and effort.

The invention disclosed in the licensed patents and covered by the claims above mentioned did away with much of the trouble in a simple and effective manner. A cam placed at one end of the tray could be turned to exert sufficient pressure against that end of the grid so that the latter was raised a little from the pan. This raising of one end of the grid was sufficient to break the ice along the entire length of the tray. Then the grid could be lifted wholly from the pan, and the cubes, which would still be frozen to the grid, could be released from it by melting or breaking. The characteristic feature of patent No. 1,893,535 is the raising of the grid from the pan by the use of enough force mechanically applied through a cam to break the ice loose from the pan.

In the Reissue Patent No. 18,819 an improvement was disclosed which carried the same process to the grid itself by making part of it move relative to the remainder when the moveable section of the grid was raised from the pan and so the cubes were broken loose both from the grid and from the sides of the pan, i.e., from the tray as a whole.

The fins of the grid were made in separate pieces and those forming the outer ends were attached to the pan. The middle portion of the grid alone could be raised. That was done by a bar, flange and gears at one end which were a fair equivalent of the cam in No. 1,893,535 but in one form a supplemental lever was shown at the other end which had a flange extending over that edge of the pan. When the handle of the lever was raised this edge of the pan served as a fulcrum and thus that end of the grid was raised from the pan. There were nubs on this moveable portion of the grid which became frozen into each ice cube between the fixed parts of the fins and prevented the cubes from breaking away from the moveable part of...