Pipkin v. FMC Corporation

• Decision Date: 26 May 1970
• Docket Number: No. 28009.,28009.
• Citation: 427 F.2d 353
• Parties: W. A. PIPKIN, W. O. Kinnebrew, Arthur S. Gibbons and The Exchange National Bank of Tampa, a national banking corporation, Plaintiffs-Appellants, v. FMC CORPORATION, a Delaware Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

427 F.2d 353 (1970)

W. A. PIPKIN, W. O. Kinnebrew, Arthur S. Gibbons and The Exchange National Bank of Tampa, a national banking corporation, Plaintiffs-Appellants, v.FMC CORPORATION, a Delaware Corporation, Defendant-Appellee.

No. 28009.

United States Court of Appeals, Fifth Circuit.

May 26, 1970.

Louis F. Tidwell, Wm. Earle Tucker, Tampa, Fla., for plaintiffs-appellants.

Harry Kemker, Marvin E. Barkin, Tampa, Fla., Joe E. Edwards, Houston, Tex., for defendant-appellee.

Before PHILLIPS,^*BELL and SIMPSON, Circuit Judges.

ORIE L. PHILLIPS, Circuit Judge.

Pipkin, Kinnebrew, Gibbons, and The Exchange National Bank of Tampa¹ brought this action against FMC Corporation,² a Delaware corporation, to recover royalties alleged to have accrued and become due to them under a License Agreement theretofore entered into by Pipkin and FMC.

From a summary judgment in favor of FMC, the plaintiffs have appealed.

From extensive discovery proceedings had and depositions taken, the following facts appeared without substantial dispute.

The License Agreement was entered into on May 15, 1946, between Pipkin, as Licensor, and FMC, as Licensee.It recited:

"* * * Licensor represents that he has invented certain new and useful improvements in the art of extracting juice and peel oil from citrus fruit, for which he has filed the following applications for U. S. Letters Patent, and that he is the sole and exclusive owner of the inventions disclosed in said applications:

Serial
                 No.              Filing Date
                543394            July  3, 1944  Citrus Peel Oil Extraction
                543395            July  3, 1944  Citrus Fruit Juice Extraction
                544424            July 11, 1944  Method of and Apparatus for Extracting
                                                 Juice and Peel Oil from
                                                 whole Citrus Fruit
                544425            July 11, 1944  Peel Oil and Juice Extraction by
                                                 Fluid Pressure; * * *"
                

On such applications patents issued, as follows:

Filing Issuance Expiration
                Patent No. Date Date Date
                Pipkin No. 2,420,678      7/ 3/44      5/20/47      5/20/64
                Pipkin No. 2,540,345      7/ 3/44      2/ 6/51      2/ 6/68
                Pipkin No. 2,420,679      7/11/44      5/20/47      5/20/64
                Pipkin No. 2,420,680      7/11/44      5/20/47      5/20/64
                

The License Agreement provided:

"* * * Licensor has granted and conveyed, and by these presents does hereby grant and convey, unto Licensee, its successors and assigns, the exclusive right, license and privilege tomanufacture, use, lease and sell machines embodying or employing the inventions disclosed in the aforesaid patent applications, throughout the United States and all foreign countries to the end of the term of the last to be issued U. S. Letters Patent issued on said applications or any of them, including any substitutes, divisions, continuations or re-issues thereof, unless this agreement is sooner terminated as hereinafter provided."(Italics ours.)

Such agreement further provided:

"It is understood and agreed that if Licensee shall take out or acquire additional patents on the principle of compressing whole citrus fruit by uniform pressure and uniform support for the purpose of extracting citrus juice or citrus peel oil and other byproducts, said patents shall be subject to payments of royalty by Licensee, as set forth in this agreement, as long as said agreement remains in effect."

Such agreement further provided:

"* * * that if Licensor shall hereafter make or acquire any improvements upon said inventions, the terms of this agreement shall, at Licensee\'s option, be extended to include and apply to such improvements, it being understood and agreed that in such event, the royalties hereinafter specified to be paid to Licensor on machines manufactured and sold hereunder embodying said inventions, shall not be increased because of the embodiment or employment of any such improvements therein in addition to said inventions."

The License Agreement, under the heading "Royalty," provided:

"(a)Amount.Licensee shall pay to Licensor during the term hereof, on each machine manufactured, used, leased or sold by Licensee which embodies or employs the inventions comprehended by this agreement, a royalty equal to two and one half percent (2½ %) of the net selling price received from purchasers of said machines or if the Licensee leases said machines two and one half percent (2½ %) of the rentals collected by Licensee from lessees of said machines, * * *."(Italics ours.)

The License Agreement, under the heading "Termination for Inadequate Patent Protection," provided:

"* * * that in the event Licensor is unable to obtain United States Letters Patent on said inventions, or in the event any such Letters Patent do not adequately protect Licensee to its full and complete satisfaction in the exclusive right to manufacture, use, lease and sell machines embodying or employing said inventions, then, and in either such event, Licensee shall have the right and option to terminate this agreement, * * *."

The License Agreement further provided, under the heading "Abatement of Royalty," in the event a court of competent jurisdiction shall finally adjudge

"* * * that the manufacture, use, lease or sale of a particular device or structure comprehended by this agreement cannot be enjoined under the Letters Patent * * * Licensee shall thereafter be permitted to make, use, lease and sell the same device or structure as held by the court to be free of the monopoly of said Letters Patent, without the payment of any royalty or License fee whatsoever."

Finally, the License Agreement provided, under the heading "Termination for Patent Invalidity," that

"* * * if at any time any of the Letters Patent comprehended by this agreement, * * * or any claim or claims thereof, shall be declared invalid by a court of competent jurisdiction, * * * then and in that event Licensee shall be released from its obligation to pay royalties under this agreement in so far, but only in so far, as respects the particular claim or claims declared to be invalid. * * *."

On July 13, 1946, Pipkin sold and assigned to Kinnebrew and Gibbons part of his interest in such patent applications and in such License Agreement.On July 16, 1946, the individual plaintiffs assigned to The Exchange National Bank all their right, title and interest in the proceeds to be derived by them from such License Agreement.

Pipkin and Henry L. Smith made a joint invention which related to an improved mechanism for rapidly feeding whole citrus fruit into an automatic whole citrus fruit juice and peel oil extractor.Smith assigned his entire interest in such invention to FMC.Application for such patent was filed on February 1, 1947.The patent issued on December 23, 1952, as No. 2,622,733.Its expiration date was December 23, 1969.FMC exercised its option, referred to above, to have "the terms of this agreement * * * extended to include and apply to such" patent.

It clearly appears that after May 20, 1964, FMC used or employed in any way only the inventions embodied in the claims of expired...