National Development Co. v. Gray

• Decision Date: 31 May 1944
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: NATIONAL DEVELOPMENT COMPANY v. ELLEN GRAY & another, administrators, & another.

316 Mass. 240

55 N.E.2d 783, 62 U.S.P.Q. 205

NATIONAL DEVELOPMENT COMPANY v. ELLEN GRAY & another, administrators, & another.

Supreme Judicial Court of Massachusetts, Essex.

May 31, 1944

March 6, 1944.

Present: FIELD, C.

J., LUMMUS, DOLAN RONAN, & WILKINS, JJ.

Invention. Contract, Of employment.

Agency, Agent's liability to principal Estoppel. Equity Pleading and Practice, Decree.

Statement by RONAN J., as to the ownership of inventions made by employees during the period of their employment.

The facts that although an employee was under no express contract to assign to his employer rights to inventions made by him during his employment and was not expressly employed as an inventor and it was on his own time and at his home that he made drawings of an improvement invented by him during his employment upon a patented machine of the employer, but it nevertheless was understood that part of the employee's duties was to study improvements and developments for the employer's machine and that inventions might result from such work, and the employee knew that the improvement so invented by him, if perfected and patented by a competitor, might destroy the employer's business, justified a conclusion that the employee was under an implied obligation to assign to the employer a patent which he obtained upon such improvement after his employment had terminated.

From findings that during his employment an employee had conceived an idea for an improvement upon a patented machine of his employer, that in the three months before leaving his employment he had made a drawing and had shown and explained it to others, including a patent attorney and one who became willing to invest money in a project for development of the improvement, and that, when he left his employment, the idea of the improvement "was sufficiently definite in his mind and in the minds of others that it was workable and practical and capable of development to make it possible to secure financial backing for its development," a conclusion was warranted that the employee had invented the improvement before he left his employment.

The mere facts, that employees of a corporation, following an application by a former employee as inventor for a patent on a certain machine, had filed an application as inventors for a patent on the same machine, that interference proceedings had resulted, that, upon filing of affidavits by the parties as to dates of first drawings, the employees had not offered further evidence and the interference proceedings had been terminated and the former employee had procured his patent, did not as a matter of law require a finding that the employer was estopped to contend thereafter that the former employee had invented the machine during his employment and that under the terms of his employment the employer was entitled to an assignment of his patent.

On a bill in equity disclosing ground for relief by an injunction only against exploiting a certain edge setting machine for wood heels invented by the defendant, a former employee of the plaintiff, the decree improperly included an additional injunction, in accordance with a prayer therefor, against exploiting "any invention, device, improvement, machine or attachment for setting the edges or breasts of heels for shoes."

BILL IN EQUITY, filed in the Superior Court on February 19, 1941, against Oscar L. Lawson and Lawson-Porter Shoe Machinery Corporation.

The suit previously was before this court when a report by Greenhalge, J., was dismissed as appears in 315 Mass. 127 . Further proceedings in the Superior Court are described in the opinion.

L. Withington, (L.

G. Miller with him,) for the defendants.

H. D. Linscott, for the plaintiff.

RONAN, J. The plaintiff manufactures an automatic wood heel edge setting machine known as the Howard machine upon which it holds a patent, and leases the machines under license contracts to wood heel manufacturers.

It services these machines, supplies parts and receives a royalty for their use. The bill alleges that the defendant Lawson while in the plaintiff's employment had invented an edge setting machine for wood heels, which on account of the nature and terms of his employment belongs to the plaintiff; that Lawson had applied for a patent for his invention; and that he had assigned his rights in the application to the defendant Lawson-Porter Shoe Machinery Corporation which, the plaintiff alleged, was organized to develop, manufacture and lease said machine in competition with the plaintiff's machine. The bill seeks an assignment from the defendants of the application for letters patent, an injunction prohibiting the manufacturing, selling or leasing of the machine by the corporate defendant, an accounting and damages. Since the filing of the bill, Lawson has died and the administrators of his estate have been substituted for him. Letters patent have also been issued on the machine and are now held by the corporate defendant, which has developed and manufactured the machine and has distributed it to the makers of wood heels. By agreement of the parties and with the assent of the judge, the only question presented was the right of the plaintiff to an assignment of the patent, and if such right was established then the matter of an accounting and damages was to be later determined. After rescript was sent down, National Development Co. v. Gray, 315 Mass. 127 , further proceedings were had in the Superior Court. The judge ordered that a decree be entered in conformity with the third and fourth prayers of the bill, which in substance sought to require the defendants to assign the patent to the plaintiff and to enjoin them from manufacturing, selling, leasing or using edge setting machines embodying the patented invention, and in accordance with the fifth prayer, which sought to enjoin them from using "any invention, device, improvement, machine or attachment for setting the edges or breasts of heels for shoes." The judge then reported the correctness of his action in ordering the decree.

The plaintiff's wood heel edge setting machine was invented by one Howard in 1929, who assigned the patent to the plaintiff, which was organized to develop the patent. The plaintiff made a five year contract with the Pope Machinery Corporation (hereinafter called Pope) by which the latter built the machines, put them out on leases, supplied parts and serviced the machines, and received a rental or royalty, a portion of which it paid over to the plaintiff. Difficulties had arisen between the plaintiff and the Pope concern, and it seemed likely in the summer of 1933 that the contract with Pope would not be renewed upon its expiration in January, 1934. The plaintiff anticipated that Pope would not turn over the plans, drawings and parts, and that, if the plaintiff decided not to renew the Pope contract but to manufacture its own machines, it would be necessary to make drawings of the separate parts of the machine, make patterns for the drawings, make or have the parts made and assemble the machines. This could be done only by studying the existing machines and the Howard patent.

Lawson had been employed prior to 1927 as a draftsman in an experimental machine shop maintained by the A. E. Little Company, and had worked on the Howard machine and had made some drawings for the patent application. He left the employ of the A. E. Little Company in 1927, and became an employee of the United Shoe Machinery Corporation as an inventor. His employment there terminated in September, 1932. He then worked on inventions for one Matson until Matson went out of business in July, 1933. Sometime thereafter, in 1933, Lawson became an employee of the plaintiff. Little, who owned all the stock of the plaintiff, testified that after a series of conversations with Lawson beginning in August or September, 1933, he hired Lawson on December 26, 1933; that Pope would not return the plaintiff's drawings; that he told Lawson that he needed a man to make complete drawings of the machine, and all its parts; that he wanted that done first "and then -- as a draftsman-inventor, and if we decide to install a shop of our own, supervise the work of making the parts, and we shall expect -- I want you to be able to carry out any -- willing to carry out any suggestions I make for other things, and we want an understanding that all inventions or all ideas talked over" become the property of the plaintiff. He told Lawson that his duties would be those of a designer, inventor, supervisor, and that he was to carry out Little's suggestions as far as he could. Lawson said that he understood exactly what Little wanted and that he was "willing to come under those arrangements." He entered the employment of the plaintiff. Lawson studied the plaintiff's machines which were in use in the wood heel factories, made drawings of the parts, had the parts made and assembled the machines. The plaintiff began to service the machines in these factories. Lawson then spent most of his time making drawings and experimenting on improvements on the plaintiff's machine and on improvements on machinery unrelated to wood heels. Little and Liberty, an employee of the plaintiff, would tell Lawson what the trade required and ask him to develop something to take care of that requirement. Lawson in the course of his experimental work made three inventions upon which he secured patents and assigned them to the plaintiff. One was a patent for a heel attaching machine, the second a patent for an edge setting iron which was an improvement on the plaintiff's edge setting machine, and the third an edge setting machine. Applications for two other patents were assigned to the plaintiff but no patents were issued.

The manufacture leasing and...