Thomson Spot Welder Co. v. Oldberg Mfg. Co.

• Decision Date: 04 January 1932
• Docket Number: No. 16.,16.
• Citation: 240 N.W. 93,256 Mich. 447
• Parties: THOMSON SPOT WELDER CO. v. OLDBERG MFG. CO.
• Court: Michigan Supreme Court

256 Mich. 447

240 N.W. 93

THOMSON SPOT WELDER CO.

v.OLDBERG MFG. CO.

No. 16.

Supreme Court of Michigan.

Jan. 4, 1932.

Appeal from Circuit Court, Wayne County; Frederick S. Lamb, Judge.

Action by the Thomson Spot Welder Company against the Oldberg Manufacturing Company. From a judgment for plaintiff, defendant appeals, and plaintiff cross-appeals.

Affirmed in part, and reversed and remanded in part.

Argued before the Entire Bench.Edmund M. Sloman, of Detroit (Arthur H. Ratner, of Detroit, of counsel), for appellant.

Stevenson, Butzel, Eaman & Long, of Detroit (Leo W. Kuhn, of Detroit, of counsel), for appellee.

FEAD, J.

This is an action to recover royalties for the use of patented machines, accruing after a former judgment, affirmed by this court in 234 Mich. 317, 207 N. W. 828.

The contract was made in 1917. The patent had been declared valid by the United States Circuit Court of Appeals, First Circuit, in 1915. Thomson Electric Welding Co. v. Barney & Berry, 227 F. 428. It was held invalid by the United States District Court, Eastern District of Michigan, October 5, 1920, 268 F. 836, affirmed by the Circuit Court of Appeals, Sixth Circuit, June 28, 1922, 281 F. 680, and by the Supreme Court of the United States, June 2, 1924, in the suit of Thomson Spot Welder Co. v. Ford Motor Co., 265 U. S. 445, 44 S. Ct. 533, 68 L. Ed. 1098. The Supreme Court took jurisdiction because of the conflict between the Circuit Courts of Appeal, and its opinion was substantially a review of both decisions. In the present suit, royalties are claimed to the time of decision of the Circuit Court of Appeals, Sixth Circuit.

Plaintiff relied on the former judgment of this court as res adjudicata of all defenses. The contention is plainly untenable as to defendant's claim of eviction by judgment of court. The former case involved royalties accruing before the decision of the District Court. The effect of its decree therefore on subsequent royalties was not in issue.

When a licensee is actually evicted from his contract use of a patent by decision of court of its invalidity, the contract falls as to liability for further royalties, through failure of consideration. But there must be something corresponding to actual eviction. McKay v. Smith (C. C.) 39 F. 556;Victory Bottle Cd from his contract use of a patent by decision of court of its i; b/arber Asphalt Pay. Co. v. Headley Good Roads Co. (D. C.) 284 F. 177;Marston v. Swett, 66 N. Y. 206, 23 Am. Rep. 43;Id., 82 N. Y. 526.

In Ross v. Fuller & Warren Co. (C. C.) 105 F. 510, relied on by defendant, there was no conflict of judicial decision; the contract was for exclusive use within stated territory, and it was held that the practical result of the decision of the circuit court, later affirmed by the Circuit Court of Appeals, was to destroy the exclusive right and constitute an eviction.

At bar, the contract was for use, not exclusive use, and was not restricted territorially. The decision of the District Court ipso facto destroyed nothing of such right of use. Because of the conflict of judicial decrees, a hazard of use without license remained which furnished a continuing consideration for the contract, at least until the conflict had been resolved by the court of last resort.

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