Owens Generator Co. v. HJ Heinz Company
| Decision Date | 07 April 1961 |
| Docket Number | Civ. No. 36558. |
| Citation | 214 F. Supp. 864 |
| Parties | OWENS GENERATOR CO., Inc., et al., Plaintiffs, v. H. J. HEINZ COMPANY et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Carl Hoppe and James F. Mitchell, of Hoppe & Mitchell, San Francisco, Cal., for plaintiffs.
Morris Lowenthal, of Lowenthal & Lowenthal, San Francisco, Cal., for defendant Charles H. Owens and in pro. per.
Moses Lasky, of Brobeck, Phleger & Harrison, San Francisco, Cal., for defendant H. J. Heinz Co.
Defendant H. J. Heinz Company, on June 13, 1960, filed its motion for summary judgment pursuant to F.R.Civ.P. 56(b). Oral argument on the motion was heard September 23, 1960, and memorandum in support and opposition were filed by the parties subsequently.
From a perusal of the pleadings, affidavits, depositions, answers to interrogatories, admissions, exhibits and the memoranda of counsel, it appears that the case is based upon a theory of constructive trust. It is plaintiff's claim that the Owens Generator Co., (hereinafter referred to as Generator Co.), owned certain assets, particularly two patents, and an injunction. The first patent, No. 2,089,412, was for a vinegar generator. It was obtained in the name of defendant Charles H. Owens, (hereinafter referred to as "Owens"), on August 10, 1937. The second patent, covering improvements to the generator, No. 2,236,153, was issued in Owens' name on March 25, 1941. The injunction was issued in 1954 and is noted, infra.
On March 10, 1938, the plaintiffs Tobin and Witmer and defendant Owens formed the Generator Company and contemporaneously with its formation defendant Owens executed an instrument in regard to the first patent, among other provisions thereof being the following:
"* * * the sole and exclusive right, privilege, and license within the United States to manufacture, sell, install and operate vinegar generators containing the said patented improvement, and any and all improvements thereon, for so long as said Generator Company shall continue in business, or to the end of the term for which the said letters patent, or any extensions thereof, were granted, whichever event shall first occur * * *."
Subsequently, Owens developed the second patent.
During the latter part of 1938 and the early part of 1939, the H. J. Heinz Company became interested in purchasing a vinegar generator from the Generator Co. A purchase was negotiated in 1939. In 1941, Heinz obtained from defendant Owens a written license to build other generators under the first Owens' patent. In 1943 suit was brought by defendant Owens and the Generator Co., to rescind and cancel the license of 1941. The action was instituted in the Superior Court of Alameda County (Civil No. 175935) and resulted in a judgment in their favor against defendant Heinz.
On September 8, 1949, Owens, with defendant Morris Lowenthal as his attorney, instituted civil contempt proceedings against Heinz in the Alameda Superior Court changing Heinz with violating an injunction issued in 1944 in the action by Owens and the Generator Co., against Heinz, which precluded Heinz from building any generators under the 1941 license. The Court therein found that Heinz had violated the injunction and issued an interlocutory order granting damages to Owens and ordering Heinz to destroy the generators built in violation of the injunction. Subsequently, the California Supreme Court annulled the contempt order insofar as it awarded damages but sustained it as to destruction of the generators. H. J. Heinz Co. v. Superior Court, 42 Cal.2d 164, 266 P.2d 5 (1954).
Heinz then obtained a stay pending filing of petition for certiorari from Justice Douglas of the United States Supreme Court. Before filing the petition, the matter was settled.
On May 15, 1954, Owens assigned his entire interest in the first and second patents to Heinz and released Heinz from claims of violation of the injunction and from the effects of the contempt order.
The assignment recited that Owens "`* * * by these presents does sell, assign, transfer and set over unto said H. J. Heinz Company, its successors and assigns, the entire right, title and interest in and to' the first and second patents * * *"
In settlement, Heinz paid to Owens $250,000.
On May 17, 1954, Owens and Heinz, in the California Superior Court action, brought a series of motions and obtained an order dissolving the 1944 injunction. .
Plaintiffs now seek to impose a constructive trust on "profits" held by Heinz derived from the May, 1954 transaction. (Plaintiff's op. brief, pg. 39). It is plaintiff's contention that Heinz acted with full knowledge of the Generator Co.'s interest in the patents and of a breach of fiduciary relationship between defendant Owens and the Generator Co.
The only interest the Generator Co. ever had in the first patent is evidenced by the agreement from which the quotation above is taken. Plaintiff contends that the construction and operative effect of the above provision and the occurrence of the event which it contemplates are fact issues which cannot be determined on this motion. However, there appears nowhere in the material before the Court any genuine material issue of fact in regard to the agreement in dispute. Whether it is termed a "grant" a "license" or an "assignment" does not change the legal effect of its provisions, and it is clearly within the province of the Court to determine the legal effect in a motion under F.R.Civ.P. 56(b). The contract here is unambiguous, and in construing the provision no issue of material fact appears to bear on the resolvement. Simpson Bros. v. District of Columbia, 85 U.S.App.D.C. 275, 179 F.2d 430 (1949) cert. den. 338 U.S. 911, 70 S.Ct. 350, 94 L.Ed. 561 (1950).
We only decide on this motion the effect of the provision of the agreement as to Heinz.
In this posture, it is clear that the construction of the agreement is a question of law. Fox v. Johnson and Wimsatt, 75 U.S.App.D.C. 211, 127 F.2d 729, 736 (1942).
Whether defendant Owens had waived rights under the agreement or otherwise acted to change the application of the provisions as to him does not concern the Court here. If the agreement is construed as a license to the Generator Co., it is well settled that it would terminate when the Generator Co., ceased to exist legally. A patent licensing contract is personal to the licensee and terminates with the life of the licensee. Thus when the corporation ceased to exist, so did the license. Haffcke v. Clark, 50 F. 531, 536 (C.C.A.4, 1892); Kenyon v. Automatic Instrument Co., 63 F.Supp. 591 (D.C.Mich.1945).
Construing the agreement as an assignment of the legal ownership of the patent, the words of the assignment control: "For so long as said (Generator Co.) shall continue in business." The agreement, as it stands written, ceased automatically by operation of law when the events upon which it is conditioned came to pass. Pierpont Boiler Co. v. Penn. Iron & Coal Co., 75 F. 289 (N.D. Ohio E.D.1896).
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Mabbett v. Tandy Corp.
...to the district court with instructions to dismiss the complaint without prejudice. 1 Cf. Owens Generator Co. v. H.J. Heinz Co., 214 F.Supp. 864, 866, 136 USPQ 406, 408 (N.D.Cal.1961) (assignment to corporation "for so long as [the assignee corporation] shall continue in business" terminate......