Case ID: ad_128/html/0458-01.html
Source: Caselaw Access Project
Author: {"author": "Scott, J. :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William H. Boyer, Respondent, v. Metropolitan Sewing Machine Company, Appellant.
    First Department,
    November 6, 1908.
    Patent — assignment of invention —■ contract construed — when payment of royalty not dependent on issue of patent.
    A contract whereby the defendant agreed with an inventor in consideration of an assignment of his invention to pay the cost of procuring letters patent, to make the device and market it within six months and pay royalties upon all sold, should be construed to mean not that the payment of royalty was to begin only when a patent was obtained or to be contingent on the issue thereof, but that payment was to begin six months after the assignment of the invention, whether patented or not. This, even though the agreement also provided that the royalty should be paid for a period covered by the life of the original letters patent granted, especially where there has been a practical construction, by payment of royalties while a patent was pending.
    Appeal by the defendant, the Metropolitan Sewing Machine Company, from a judgment of tiie Supreme Court in favor of. the plaintiff, entered in the office of the clerk of the county of Mew York on the 3d day of March, 1908, upon, the decision of the court, rendered after a trial at the Mew York Special Term, directing the reassignment of certain patents and an accounting by the defendant.
    
      Louis Marshall,, for the appellant.
    
      Benjamin N. Cardozo, for the respondent.
   Scott, J. :

Plaintiff’s assignor, one Berger, invented an improved sewing machine attachment and on November 8, 1902, made an agreement with the Manhattan Machine Supply Company, the predecessor in interest of the present defendant. By that agreement Berger sold to the machine supply company, for the sum of $300, his invention, and agreed to assign any improvements therein that he might thereafter invent. . The Manhattan Machine Supply Company, on its part, agreed to paythe costs of procuring letters patent for said inventions and further agreed, to use due diligence in preparing to produce the device, and specifically agreed to have it ready for market within six months after the assignment of the invention. It farther agreed to use its best efforts to increase the sale of the device. It was further stipulated that the Manhattan Machine Supply Company would pay to said Bérger a royalty of ten dollars upon every device which they would sell, either attached to a sewing machine or unattached; that such royalties should be payable' in January and July in each year, accompanied by a sworn statement of all such sales made during each preceding period of six months. It was also agreed that the agreement should be binding upon each of the parties thereto, his or its successors, assigns or legal representatives, and that, if the machine supply company should fail to perform the contract on its part, or should fail to manufacture the device and to supply the demand therefor, it or its successors or assigns would reassign the letters patent, to said Berger.

The machine supply company and its successors in interest proceeded to manufacture and sell the patented device, accounting to Berger regularly and paying him royalties at the rate specified in the contract, down to January 1, 1905. In the meantime the machine supply company applied for letters patent upon the said invention, and the application is still pending because the patent office is unwilling to issue so broad a patent as the defendant desires, and the latter refuses to accept the limited patent which is offered. Since January 1, 1905, the defendant has refused to pay any further royalties, although it continues to ■ manufacture and sell the device invented by Berger. It justifies its refusal upon the following clause in the contract: “ It is also understood and agreed that the royalty provisions of this agreement shall be for a period covered by the life of the original Letters Patent granted on the aforesaid invention, unless sooner terminated by mutual consent.” The contention in this regard is that since the life of the patent does not begin until the patent itself is issued, no royalties can become payable until that time. This construction is, as it seems to us, forbidden by the terms of the contract itself, as well as by the practical construction put upon it by the parties down to January 1,1905.

The assignment was of an invention not of a patent, and it was left with the machine supply company and its successors in interest to apply for, and if possible obtain the patent. » The manufacture and sale.of- the device upon which the royalties depended wa,s not made contingent upon the issue of a patent, but was to begin within six months from the assignment of the invention, whether a patent had then been obtained or not, and in fact such manufacture and sale did begin and has gone on without a patent. The clause above quoted, construed in the light of the surrounding circumstances and of the other provisions of the contract, clearly was intended to limit thé time beyond which royalties were not to be paid, and not the time when the payment of such royalties should begin, and this was the practical construction given to the contract' by the parties, which of itself carries great weight. The construction contended for by the appellant would lead to the inequitable result that the defendant would continue to be the. owner of Berger’s invention ; would be able .to go on manufacturing and selling the device without paying any royalties therefor, and by refusing to accept such a patent as could be obtained, might continue this state of affairs indefinitely. Such a result cannot be tolerated if the contract is open, as we think it is, to a more equitable and reasonable construction. The judgment below, which directs a reassignment of the invention and an accounting for the royalties earned, but not paid, is right and must be affirmed, with costs.

Patterson, P. J., McLaughlin, Clarke and Houghton, JJ., concurred.

Judgment affirmed, with costs.