San Manuel Copper Corp. v. Redmond

• Decision Date: 12 September 1968
• Docket Number: CA-CIV,No. 1,1
• Citation: 445 P.2d 162,8 Ariz.App. 214
• Parties: , 160 U.S.P.Q. 360 SAN MANUEL COPPER CORPORATION, a Delaware Corporation, and Magma Copper Company, a Maine Corporation, Appellants, v. Eugene R. REDMOND, Appellee. 661.
• Court: Arizona Court of Appeals

Page 162

445 P.2d 162

8 Ariz.App. 214, 160 U.S.P.Q. 360

SAN MANUEL COPPER CORPORATION, a Delaware Corporation, and Magma Copper Company, a Maine Corporation, Appellants, v. Eugene R. REDMOND, Appellee.

No. 1 CA-CIV 661.

Court of Appeals of Arizona.

Sept. 12, 1968.

Rehearing Denied Oct. 9, 1968.

Review Denied Nov. 19, 1968.

Twitty, Sievwright & Mills, by George Reeves, Phoenix, Evans, Kitchel & Jenckes, by Joseph S. Jenckes, Jr., Phoenix, for appellants.

Drummond & Cahill, by William H. Drummond, Phoenix, Evans & Kunz, by Donald R. Kunz, Phoenix, for appellee.

CAMERON, Chief Judge.

This is a suit for unjust enrichment by reason of prepatent use by defendants-appellants, San Manuel Copper Corporation and its successor in interest Magma Copper Company. From a jury verdict and judgment in the amount of $400,000 in favor of the plaintiff, Redmond, the defendants bring this appeal.

Defendants list some 22 'questions presented for reivew'. However, a reading of the briefs and transcript indicates that we are called upon to determine the following 5 questions:

1. Whether the complaint states a claim upon which relief can be granted.

2. Whether the action was barred by the statute of limitations.

3. Whether a judgment in a prior action in the federal court on the patent rights is binding upon the defendants in a suit for unjust enrichment (collateral estoppel).

4. Whether the admissible evidence justifies the verdict.

5. Whether the admissible evidence justifies the amount of the damages.

Plaintiff, Eugene Redmond, went to work for San Manuel as a converter shift foreman when the smelting plant opened in 1956. Prior to his employment at San Manuel, plaintiff was employed in a similar position at the Kennecott Mine in Hurley, New Mexico. While at Hurley plaintiff devised a new process, the 'Redmond Process', which he contends resulted in a great savings in the smelting of copper ore.

Appellants in their opening brief explain the extractive metallurgy of copper as follows:

'Copper ore containing less than one percent copper in copper-iron-sulfides is crushed and ground. By a process known as flotation, the copper-iron-minerals are separated from the waste to form a concentrate containing approximately 30 percent copper. The concentrate is charged into a stationary reveratory furnace,

where it is flame melted. The copper-iron-sulfide material, called matte, containing about 33 percent copper, sinks to the bottom of the molten pool, while the lighter slag rises to the top and is skimmed off. The matte is tapped out of the reverberatory furnace into a ladle and transferred by overhead crane to a converter.

'A converter is a rotating horizontal cylindrical furnance * * * which derives its heat from the air oxidation of the sulfide and iron of the matter. In the converter, the operation is performed in two periods, known as the 'slagging period' and the 'finish period'. In the slagging period, silica flux is added and air is blown through the molten matte forming sulfur dioxide which passes off as a gas. The iron is oxicized and, together with the silica flux, forms a slag, which is skimmed off. At the end of the slagging period, most of the iron has been oxidized, leaving molten copper sulfide, or 'white metal'. Any one of several 'processes' may be used in the finish period to reduce the white metal to metallic copper. * * * When the copper has reached the desired stage, it is poured into a ladle and transferred by overhead crane to an anode furnace. In the anode furnace, the copper is further oxidized and refined by 'piping', an operation which consists of blowing air into the molten copper through lengths of 3/4-in. iron pipe or 'lances'. Then it is 'poled' to reduce the oxygen content, an operation which formerly entailed the use of green logs of 'poles', and later has been accomplished by the use of reformed natural gas. The copper is then cast into anodes, which are loaded on railway cars and shipped to the electroytic refinery for further processing. The purpose of the anode furnace processing is to produce smooth, nonblistery anodes of uniform dimensions suitable for handling and electroytic refining.'

The Redmond Process was one of the 'several processes' referred to by appellants that could be used in the finish period. The process consisted of adding silica flux in the finish period and is more fully described in the case of Brian Jackson Associates, Inc. v. San Manuel Copper Corp., D.C., 256 F.Supp. 793 (1966). This federal case involved litigation over the same matter for patent infringement for the period after the patent was issued and was affirmed in San Manuel Copper Corporation v. Brian Jackson Associates, Inc., 384 F.2d 487, 9th Circuit (1967). See also Brian Jackson Associates, Inc. v. Kennecott Copper Corp., D.C., 260 F.Supp. 679 (1962).

After plaintiff commenced work at the San Manuel Mine, he experimented with his process several times. He also instructed one of the employee under his control in the use of his process. That employee terminated his employment at San Manuel in May of 1957.

In June of 1957 plaintiff pursuant to instructions from his patent attorneys met with Frank Buchella, the General Manager of the San Manuel Copper Corporation, and presented a paper which described his process. The advice plaintiff had received from his patent attorneys urged him to negotiate a sale of his invention while the application for the patent was still pending. In the conference with Buchella, no arrangements as to compensation were made. Instead Buchella said he did not understand the process but that he would send the paper describing the process to Bob Wilson, the smelter superintendent, and Luther Redmond, the smelter general foreman (and plaintiff's brother). Buchella indicated it would be up to those people to decide. In the meantime, plaintiff was authorized to proceed with using his process and to teach the other converter foremen in the use of the process. Prior to that time two other processes had been used at the San Manuel Plant, the overblowing process and the blister process. Within a year the Redmond process was being used exclusively.

There never were any netotiations for compensation to plaintiff for the use of the process. The only subsequent conversations testified to were plaintiff's with Bob Wilson, the smelter superintendent, first in September or October of 1957 and again in December of 1958. In the December conversation of 1958 Wilson told plaintiff to get his patent first then they would discuss compensation. The patent issued on 21 July 1959. Plaintiff was never compensated for his process and his employment was later terminated. Subsequently, plaintiff brought this suit for unjust enrichment for the period between June 1957 and October 1958. In October of 1958 plaintiff assigned all his rights to his process to Brian Jackson Associates, Inc., and the use after October 1958 is the subject of the federal court action reported in 259 F.Supp. 793, op. cit.

SUFFICIENCY OF THE COMPALINT

Plaintiff's amended and supplemental complaint alleged that after plaintiff was employed at defendants' smelter he 'introduced to said smelter' a new and useful process which he had previously discovered and referred to as the 'redmond Process'. The complaint further alleges that defendants permitted the use and accepted the benefits and enrichment thereof and the defendants were thereby unjustly enriched. It is the contention of the defendants that this does not state a claim upon which relief can be granted, and that defendants' motion to dismiss should not have been denied in the absence of an allegation of some fact,

'such as fraud, mistake or breach of confidential relationship--disclosing that the alleged enrichment is unjust or that a promise to pay may be implied under the theory of quasi contract.'

Defendants further contend that the State of Arizona could not grant such relief as it 'encroaches upon the plenary power of Congress to grant monopolies to inventors pursuant to Article I, Section 8 of the United States Constitution.'

It has generally been held that an inventor of a new, useful, and unique process may use for the unauthorized use of said invention:

'An inventor has a natural right, recognized by the common law, separate from, and independent of, any constitutional or statutory provision, or any patent grant, to make, use, and sell his invention or discovery.' 69 C.J.S. Patents § 2, page 162.

In enforcing his common law rights the inventor is not restricted to use of the federal courts for a determination of these rights and damages accruing therefrom. Bandag, Incorporated v. Morenings, 259 Iowa 998, 146 N.W.2d 916 (1966). One of the leading cases on this subject states:

'The doctrine of unjust enrichment or recovery in quasi-contract obviously does not deal with situations in which the party to be charged has by word or deed legally consented to assume a duty toward the party seeking to charge him. Instead, it applies to situations where as a matter of fact there is no legal contract, but where the person sought to be charged is in possession of money or property which in good conscience and justice he should not retain, but should deliver to another. (citations omitted) * * * The doctrine is applicable to a situation where, as here, the product of an inventor's brain is knowingly received and used by another to his own great benefit without compensating the inventor.' Matarese v. Moore-McCormack Lines, 2 Cir., 158 F.2d 631, 634, 170 A.L.R. 440 (1946).

Reading the amended and supplemental complaint in its entirety we believe that the complaint gives the defendant ample notice of the nature and basis of the claim, and that if true the plaintiff would be entitled to relief:

'The court should not grant a motion to dismiss unless it appears certain that the plaintiff would be entitled to no relief under any state of facts which is susceptible of proof under the...