Wood v. William B. Bliss Co.
| Decision Date | 29 December 1939 |
| Citation | 44 U.S.P.Q. 140,304 Mass. 630,24 N.E.2d 657 |
| Parties | ELIAS H. WOOD, executor, v. WILLIAM B. BLISS CO. INC. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
November 14, 1939.
Present: FIELD, C.
J., DONAHUE LUMMUS, DOLAN, & RONAN, JJ.
Contract Modification, Consideration, Performance and breach, For license under patent.
A modification of an agreement giving a license under a patent, providing that if the licensor failed within thirty days to secure license agreements with alleged infringers competing with the licensee, he would not seek further royalties provided in the original agreement, was supported by the consideration upon which the original agreement was made where it appeared that the original agreement required the licensor upon demand of the licensee promptly to prosecute infringers of the patent that such infringements had occurred, that the licensee had demanded prosecutions but there had been none, and that the modification followed; the rights of the parties thereafter were to be determined in accordance with the modification.
BILL IN EQUITY, filed in the Superior Court on November 26, 1938. A final decree dismissing the bill was entered after a hearing by Baker, J. The plaintiff appealed.
H. E. Cole, for the plaintiff. E. Burke, for the defendant.
The plaintiff's testator, Joseph Wood (herein referred to as Wood), the holder of a patent for snipping and attaching bindings to tops of shoes, granted a non-exclusive license on January 23, 1928, to a firm known as Wm. B. Bliss Jr. & Co. to manufacture, use and sell the patented article in consideration of the payment of royalties. The rights of the licensee with the consent of all parties were taken over by the defendant corporation upon its organization in July, 1928, and the corporation has since continued as if it were the original licensee. The license agreement obligated Wood, upon the demand of the licensee, promptly to bring suit against anyone infringing the patent and to prosecute diligently such suit to final judgment; and if the patent should be held to be invalid or any claim thereunder was held to be so limited by a court of last resort or by a lower court from whose decision no appeal was seasonably taken that the license would not thereafter afford substantial protection against competition in the manufacture and use of the binding, then no further royalties were to be paid by the licensee unless or until such adverse decision was reversed. The defendant paid the royalties until July 1, 1937. The defendant had learned in July, 1936, that a competitor was infringing the patent, and it so advised Wood. Complaints of the infringement of the patent were frequently made by the defendant to Wood, who promised to bring suits against the alleged infringers but never did. In August, 1937, the parties agreed upon a reduction in the rate of the royalty because the defendant had sustained a loss on account of this competition. Royalties were paid at this reduced rate until November 30, 1937, but none has since been paid. On October 30, 1937, the plaintiff, as attorney in fact for Wood, signed and delivered to the defendant an agreement "that in the event that I fail to produce within thirty days licenses from the present users of snipped or perforated binding . . . I will hereafter demand no royalty fees from Bliss and will permit them to snip binding without expense." The licenses referred to in this agreement were never secured. Wood died May 24, 1938. The bill, which was brought for an accounting and specific performance of the agreement of January 23, 1928, was dismissed, and the plaintiff's appeal brings the case here.
The evidence is not reported but the judge made full findings of fact. In addition to those already summarized he found that the failure of the plaintiff and Wood to bring suit against infringers "over an extensive period of time justified the defendant's refusal to pay royalties and excused it from performance," and that the agreement of October 30, 1937, was binding and relieved the defendant from further payment of royalties. If the decree is supported by the facts reported and is within the scope of the pleadings, it must be affirmed, otherwise it should be reversed. Brodrick v. O'Connor, 271 Mass. 240 . Knapp v. Meehan, 287 Mass. 573 .
The agreement of January 23, 1928, did not bar Wood from granting other licenses for the manufacture, use and sale of the patented article, and the parties agreed that, if other licenses were granted upon more favorable conditions than the defendant's license, then the defendant was entitled to have its license so modified as to include such conditions. That provision was for the benefit of the licensee and its purpose was to permit the licensee to compete upon an equal basis, in so far as the terms of its license were concerned with all other licensees. Raytheon Manuf. Co. v. Radio Corp. of America, 286 Mass. 84 ....
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