Nic Projector Corporation v. Movie-Jecktor Co.

• Decision Date: 29 August 1935
• Citation: 16 F. Supp. 605
• Parties: NIC PROJECTOR CORPORATION v. MOVIE-JECKTOR CO., Inc. (SCHNEIDER et al., Interveners). Application of LINDER.
• Court: U.S. District Court — Southern District of New York

16 F. Supp. 605

NIC PROJECTOR CORPORATION v. MOVIE-JECKTOR CO., Inc. (SCHNEIDER et al., Interveners) Application of LINDER.

District Court, S. D. New York.

August 29, 1935.

Leo J. Linder, of New York City (Leo Magill Goodman, of New York City, of counsel), for petitioner.

Harry Ernest Rubens and Samuel Ostrolenk, both of New York City, for intervening petitioners.

I. Maurice Wormser and John E. Leddy, both of New York City, for respondent.

PATTERSON, District Judge.

The proceeding is brought by an attorney, Leo J. Linder, to have an attorney's lien declared and enforced.

The plaintiff brought suit in this court against the Movie-Jecktor Company, charging infringement of patent and seeking the usual injunction against further infringement and accounting of profits on past infringement. Linder was the plaintiff's attorney. It was agreed in writing that for his services in the case Linder was to be paid "25% of whatsoever moneys are received by you (the plaintiff) from Movie-Jecktor Co. * * * by settlement or otherwise." The contract of retainer also dealt with Linder's compensation for services in a suit commenced in Connecticut against another supposed infringer and for services in suits to be brought later, but these matters are of no present importance.

The suit was settled before trial, while the case in Connecticut was in course of being tried. The settlement was evidenced by two papers, a stipulation entitled in the suit and a license agreement, signed simultaneously and referring each to the other. By the stipulation, dated May 15, 1935, and signed by the attorneys only, the defendant withdrew its answer and consented to a decree to the effect that the patent was valid, that it had been infringed, and that the plaintiff should have an injunction, the injunction, however, to be stayed during the life of the license agreement. The defendant also agreed in the stipulation to pay $25,000 as the profits derived from infringement to date and as liquidated damages — $7,500 down, $10,000 by January 31, 1936, and $7,500 by January 31, 1937. The plaintiff agreed to accept such sum as full payment of past profits of the defendant and also to credit the two later payments, $10,000 and $7,500, against the two minimum royalties of the same amounts agreed to be paid by the defendant under the license agreement. It was finally stipulated that on default in making the agreed payments the plaintiff might have judgment entered for any unpaid balance of the $25,000. A consent decree along the same lines was later entered.

By the contemporaneous license agreement, the plaintiff granted to the defendant a license to make and sell products under the patent for the life of the patent, the defendant to pay a specified royalty per article. The defendant agreed also to pay as minimum royalties $10,000 for 1935 and $7,500 for 1936, and the agreement ties up these two payments to the two payments of the same amounts as damages under the stipulation and provides that the payment of the minimum royalties by the licensee shall constitute the two later payments under the stipulation. There are the other provisions usually found in license agreements.

The plaintiff received from the defendant the first payment of $7,500 and paid to Linder $1,875 as his 25 per cent. of that amount. It later received $555 as current royalties under the license agreement, but rejected Linder's demand for 25 per cent. of this payment. It denied liability for any further amount. Linder takes the position that he is entitled to 25 per cent. of all payments to be made to the plaintiff under the stipulation and the license agreement.

An intervening petition was filed by Rubens and Ostrolenk. These attorneys were engaged by the plaintiff under written contract of retainer. They were to assist Linder in the preliminary work in the case brought in this court and also in all phases of the Connecticut case, and for such services they were to have a fixed fee (which has been paid) and 7½ per cent. of the amount received from Siemon, the defendant in the Connecticut case. If services in connection with the trial of this case should be required, compensation for such work was to be agreed on later. No such trial services here were ever performed, but for the preliminary work in this case and for their work in the Connecticut case these attorneys assert that they are entitled to 7½ per cent. of all payments to be made by the defendant in this case.

First, the rights of Linder. He was the plaintiff's attorney of record in the suit under which the present petition was brought. By the New York Judiciary Law, § 475, he has a lien on his client's cause of action and on the proceeds of it, to secure payment of his compensation, and the lien may be determined and enforced summarily in a proceeding ancillary to the main suit. The state statute creates an equitable right and remedy which may be enforced on the chancery side of the federal courts sitting in New...