Mechanical Plastics Corp. v. Rawlplug Co., Inc.
| Decision Date | 14 April 1986 |
| Citation | 501 N.Y.S.2d 85,119 A.D.2d 641 |
| Parties | MECHANICAL PLASTICS CORP., et al., Respondents, v. The RAWLPLUG COMPANY, INC., et al., Appellants. |
| Court | New York Supreme Court — Appellate Division |
Hopgood, Calimafde, Kalil, Blaustein & Judlowe, New York City (Paul T. Meiklejohn and John L. DuPre, of counsel), for appellants.
Pennie & Edmonds, New York City (Berj A. Terzian and James A. Power, Jr., of counsel), for respondents.
Before LAZER, J.P., and MANGANO, BROWN and KOOPER, JJ.
MEMORANDUM BY THE COURT.
In an action to recover damages for breach of contract, fraud and deceit, unjust enrichment and quasi contract, the defendants appeal from an order of the Supreme Court, Westchester County (Ingrassia, J.), entered August 23, 1984, which denied their motion to dismiss the complaint pursuant to CPLR 3211(a)(2), (4), (5), and (7).
Order modified, on the law, by granting that branch of the defendants' motion which sought to dismiss the fraud and deceit cause of action. As so modified, order affirmed, without costs or disbursements.
The plaintiff Thomas McSherry was employed as a consultant pursuant to a contract with the defendant Die Cast & Forge Corporation (hereinafter Die Cast). The contract provided that McSherry would disclose to Die Cast "inventions" created by him during his employment, whether the "inventions" were patentable or not, and that Die Cast would retain the exclusive rights to licenses to manufacture, use and sell such products throughout the United States and the world. McSherry was to be paid royalties for the sales of his "inventions", the rate depending upon whether McSherry's patent counsel believed the "invention" to be patentable or not. The obligation to pay royalties would not end with the termination of the employment contract, but would end either when the patent expired (if one was obtained) or 10 years from the date of manufacture. McSherry was to receive royalties from Die Cast "upon such inventions, developments, products and improvements of which McSHERRY is the inventor or co-inventor, developer or co-developer".
In 1977, while employed by Die Cast, McSherry disclosed a design for a plastic wall anchor. Upon termination of his employment in September of 1977, McSherry was allegedly told by the defendants that his wall anchor was inoperative and unsatisfactory, and that Die Cast did not intend to market the wall anchor or assist anyone in obtaining a patent thereon. On or about May 16, 1979, defendant Louis Giannuzzi, an employee of Die Cast who had worked with McSherry during the term of his employment, applied for a patent on a plastic wall anchor. The patent was issued on or about June 23, 1981. In 1979, the defendants Die Cast and The Rawlplug Company, Inc., (hereinafter Rawlplug) began to manufactu and sell the Giannuzzi wall anchor. In addition, Rawlplug has issued a sublicense to one Semco Plastic Co., Inc., to manufacture the Giannuzzi wall anchor.
The plaintiffs alleged that the two wall anchors were functionally equivalent and began an interference proceeding in the Patent and Trademark Office in 1981 in an effort to have McSherry declared the first inventor of the wall anchor and have the patent issued in his name. The Board of Patent Appeals and Interferences determined in 1985 that Giannuzzi was entitled to the patent on his wall anchor. The board's decision was affirmed by the United States Court of Appeals for the Federal Circuit on March 18, 1986 (McSherry v. Giannuzzi, Appeal No. 85-2753). The plaintiffs contend that since the wall anchor sold by Die Cast was invented or developed by McSherry during his employment with Die Cast, they are entitled to royalties under the contract for sales by Die Cast, and on sales made by the sublicensee. The complaint asserts causes of action, sounding in breach of contract, quasi contract, unjust enrichment, and fraud and deceit. The fraud causes of action alleged that when McSherry left his employment in 1977, the defendants stated that they did not intend to market the wall anchor, and did not intend to seek a patent on the wall anchor. These statements were allegedly false when made, and the defendants at that time allegedly intended to market and apply for a patent on the wall anchor.
The defendants argue that New York State courts do not have jurisdiction over the subject matter of the asserted claims. This contention is without merit.
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