#### THE ELECTRIC BOAT COMPANY v. THE UNITED STATES.1

[No. 32877.

Decided June 26, 1922.]

*On Plaintiff’s and Defendant’s Motions to Amend Findings.*

*Patent; shop license; construction.*— Where the United States enters into a contract with plaintifl! for a license to manufacture in its «shops and the shops of private parties a device, the patent for which is owned by plaintiff, such shop license should not be so liberally construed as to prevent the Government from showing the exact nature of the device it used and its difference from that covered by plaintiff’s claims.

*The Reporter’s*statement of the case:

*Mr. Dean S. Edmonds*for the plaintiff. Permie, Davis, *Marvin*<6 *Edmonds*were on the brief.

*Mr. J. Edgar*Bull, with whom was *Mr. Assistant Attorney General Robert II.*Lovett, for the defendant. *Messrs. Harry E.*Knight, *Frederick L. Emery*and *Lawrence G. Miller*were on the briefs.

The following are the facts of the case as found by the court:

I. The plaintiff is a corporation, organized and existing under the laws of the State of New Jersey.

II. On March 29, 1909, Gregory C. Davison, then an employee of the plaintiff, filed in the United States Patent Office an application, Serial No. 486455, for letters patent for certain improvements in apparatus for generating motive fluid for automobile torpedoes.

III. For a number of years immediately prior to January 1, 1908, the said Gregory C. Davison was an assistant inspector of ordnance in the United States Navy, in charge of torpedo experiments and development. On said date of January 1, 1908, some three months after his return from an extended European trip for torpedo investigation for the Government said Davison resigned from the United States service and entered the employ of the plaintiff, having charge of torpedo experimental and development work for the plaintiff. Throughout his work as such experimental *498officer for the Government, including his European trip, Davison kept private notes upon torpedo development, and when he left the Government service he retained such private notes in his possession.

IV. The general practice in the propulsion of automobile torpedoes has been to employ compressed air for the motive power, and this agency for propulsion has undergone an evolution through the following stages: First, the use of cold compressed air from a storage chamber located in the torpedo, and thence supplied through a reducing valve to the propelling engine; second, the use of the “ inside super-heater,” consisting of a burner, or heater, located in the compressed-air storage chamber, to heat the air therein during the run of the torpedo; third, the use of the “ outside super-heater,” consisting of a combustion chamber on the low-pressure side of the reducing valve in the conduit for carrying air from the storage chamber to the engine, and so arranged as to have liquid fuel admitted and burned within it to heat the air prior to its admission to the engiue; and in recent years a fourth stage, namely, the use of steam in combination with the comprssed air and gases of combustion as motive power, the steam being generated and combined with the air and the gases of combustion in a combustion chamber located on the low-pressure side of the reducing valve in the conduit for conveying the air from the storage chamber and arranged to have the air, fuel, and water supplied to it where the fuel and the oxygen in the air are ignited and burned and the water converted into steam by the hot products of the combustion.

The automobile torpedoes used by the United States Navy in 1907 and 1908 were of the type having the “ inside super-heater,” and attained a range of about 3,000 yards. In 1909 the Navy obtained torpedoes which were equipped with the “ outside superheater,” and attained a range of about 4,000 yards.

By the use in the United States Navy of steam as a part of the motive power, as above described, the range attained has been double that attained with the torpedoes equipped with either the “ inside superheater ” or the “outside super-heater.”

*499Y. One of the chief efforts of those interested in the manufacture and use of torpedoes had been the effort to increase the effective range of this instrument of warfare; and in March, 1908, the attention of the Bureau of Ordnance of the Navy Department was directed to an article in the Bevista Maratima Brazileira published in January, 1908, and constituting Exhibit C-14 to these findings of fact, which described the torpedo power plant of the Gesztesy patent constituting Exhibit C-13 to these findings, which power plant provided for the generation and use of steam in combination Avith compressed air and the gases of combustion for motNe power.

On March 26, 1908, this article was forwarded by the Bureau of Ordnance to the E. W. Bliss Company, a commercial firm then manufacturing torpedoes for the Navy, for the company’s attention. The Bliss Company on April 4, 1908, returned the article to the bureau with a statement that the company had for some time “ had plans on the same general principle as that shown ” in the article, and that Avhile it believed there were inherent difficulties against the operation of such a system, it intended at as early a date as possible to make certain tests of it.

On April 1Y, 1908, the Bureau of Ordnance requested the Bliss Company to inform it of the results of any experiments the company might make with a “ superheater of this type,” in response to which the company on June 9, 1908, replied that it had as yet. made no progress with such experiments, as its testing facilities were so fully occupied with torpedoes under way for the bureau that it could not then conduct any outside experiments, and that it Avould report to the bureau the results of any experiments it should make.

Beginning in November, 1909, experiments were carried on by the Bureau of Ordnance at the naval torpedo station at Newport for increasing the motive power and range of torpedoes by the use of steam generated by the injection of water into the combustion chamber, where the steam was combined with the compressed air and gases of combustion. In June, 1910, the ordnance engineer in charge of such experimentation officially reported that in view of the limit on the permissible heat on account of the melting or burn*500ing of the material, or a weakening of the structure of the mechanism, the only recourse for increasing the run of the torpedo (the air charge being fixed) was by adding to the volume of the air; that the problem therefore resolved itself “ into that of injecting or otherwise introducing some liquid (water obviously being most suitable) into the heater space, the liquid by its evaporation absorbing the excessive heat and adding its own volume to the volume of the air,” more fuel being burned “ to give a higher temperature to evaporate more water to add more volume;” and that the final limit to the possible gain in that direction is fixed by the amount of oxygen in the air-chamber charge which can be consumed in supporting combustion. In, his report the ordnance engineer stated:

“ The best method of introducing the water has yet to be ascertained, and when that is done, a further increase in the size of the heater will correspondingly increase its capacity. * * * In general the effort is being made to produce a torpedo better than the best for present needs, and as free as possible from structural hindrances to changes that will be necessary in case certain apparently possible improvements are made in the future. The present heater is capable of burning 66 per cent alcohol, and it burns 75 per cent alcohol with great steadiness and certainty. For the present and until there is produced a torpedo thoroughly reliable in the functioning of all those details which have nothing to do with the heater, it is proposed to use 75 per cent alcohol for fuel and no injection of water.”

And in a letter transmitting this report, there was included a statement as follows:

“As will be seen from the description, the basic principle of the new design is the attempt to increase the range of the torpedo by the introduction of some liquid, preferably water, into the superheater pot, the excess heat of the combustion of the alcohol or kerosene used as fuel being utilized to vaporize the liquid and increase the volume. Several methods of vaporizing the liquid have been experimented with, varying from spraying the liquid through minute orifices to a method employing the flash boiler principle, in which the liquid is progressively heated during its progress through a coil boiler until it emerges as steam. These experiments have been in progress since November 1, 1909, until the present time.”

*501Also in 1910, verbal information was received by the Bu-rean of Ordnance, from the Bliss Company with reference to experiments by the company along the same line; and in a letter of October 14, 1910, said company reported to the bureau as follows:

“As the bureau is probably aware, we have designed a neAv 21-inch torpedo on the general lines of the Mark YI, with a device added which enables us to inject water into the superheater, and materially increase the efficiency. While we have not yet carried our experiments in this direction to a finish, we have already obtained twenty million foot-lbs. of work out of the Mark III, 21-inch flask full of air, against about ten to eleven million which we develop with the standard Mark III torpedo. Of course, with a longer flask, as would be used in a torpedo 21 ft. long, the work done can be still further increased.”

YI. On July 26, 1910, Commander A. L. Norton, the Bureau of Ordnance officer in charge of torpedo work, visited the plaintiff company to confer with the said Gregory C. Davison on the subject of air compressors and gyroscopic control gear, and at that time learned from said Davison somewhat of the progress of: certain experimental work by him in developing torpedo motive power by the injection of water into the combustion chamber, but was not shown any of the component parts of the apparatus used. Commander hi orton at that time requested Davison to take up again the matter of the development of his steam generator, along with other matters of interest to the Bureau of Ordnance.

YII. Under date of August 8, 1910, plaintiff company wrote the Chief of the Bureau of Ordnance as follows:

“ Sir : Referring to the device which we have developed for increasing the range of automobile torpedoes, we beg to submit herewith a proposition whereby the bureau may acquire the rights to said apparatus :

“ 1. At the present writing no steps have been taken to exploit this apparatus abroad and no information has been given out concerning it. If the United States. Government desires to secure exclusive rights to the exclusion of all foreign governments we are prepared to enter into such an arrangement, the terms for which would be submitted upon request. Owing to the fact that the volume of foreign torpedo business is very greatly in excess of the United States business, the price for this exclusive right would have to be very much higher than the price for the United States rights. *502The price for such exclusive rights would have to be agreed upon in advance subject to the satisfactory demonstration of the apparatus, and the offer would be limited to a period of 60 days after the completion of a successful demonstration.

“ 2. Assuming that the United States rights only are to be acquired by the Government, we would propose that the acquirement of the rights and payment therefor be made contingent upon the successful demonstration of the guaranteed qualities of the torpedoes fitted with this apparatus. If this demonstration is made upon a converted torpedo, the same is to be loaned to us by the Navy Department, the conversion and tests to be carried out at our own expense, and in the event of a failure to demonstrate the guarantees the torpedo is to be restored to its original condition and returned to the Government without cost. In the event of a successful demonstration the Government will take over the converted torpedo at a price to be agreed upon in advance. The department’s option to take over the rights upon terms to be agreed upon in advance of the experiment or loan of torpedo will be limited to a period of three (B) months after the successful demonstration.

“ The terms which we are prepared *to*offer the department now are as follows:

“ Cash payment of $100,000.00 on closing the option, with the provision that the department shall pay the following royalties on each torpedo in which the apparatus is used in the future, viz:

*“ For*the first 100 torpedoes, $1,200.00 per torpedo.

“For the second 100 torpedoes, $950.00 per torpedo.

“ For the third 100 torpedoes, $750.00 per torpedo.

“For all subsequent torpedoes, $600.00 per torpedo.

“ In return for this cash payment and the above royalties we would grant to the department the right to manufacture the apparatus itself, as well as the right to fit it in torpedoes of any make. The license, however, would not include the right to grant sublicenses to other companies unless the Electric Boat Company should be unable or refuse to accept any orders offered by the department for the manufacture of the appliance or fitting it in torpedoes. Such orders shall allow a reasonable time for the work, and shall be on a basis of reasonable manufacturer’s profits plus the agreed royalty. The option and the license to contain a clause specifying that all information, plans, data are to be treated as confidential, and that the department is to take reasonable precautions to enforce this feature, it being expressly understood that no plans or other information shall be shown or given to any corporation, firm, or person engaged or interested in the *503manufacture or development of torpedoes or torpedo appliances.

“ The option is to contain a clause making the license agreement obligatory upon the department in case of a successful demonstration of the guarantees.

“All plans and detailed information with respect to the apparatus, together with the converted torpedo, are to be furnished to the department at the time the license agreement goes into effect, and the department is to be entitled to all improvements made during the life of the license.

“ It is proposed to make the license run fifteen (15) years.

“ The license to contain a provision that if in any one year the royalty fails to amount to the sum of $25,000, including the apparatus manufactured by the department and by the Electric Boat Company for the department, it shall be optional with the Electric Boat Company to cancel the license.”

VIII. On September 6, 1910, the Bureau of Ordnance, with a view to determining the merits of the different motive poAver systems for increasing the range and speed of torpedoes, addressed substantially similar letters to the Bliss Company and the plaintiff company, proposing to each company that it undertake on an experimental basis the construction of an 18-inch torpedo on a fixed-price basis for a specified minimum performance of a 4,000-yard run at a speed of 26 knots, with a bonus for excess performance, each company being informed that the torpedo constructed by it would be placed in competition with a torpedo to be submitted by another firm and with torpedoes being developed by the bureau itself. Following correspondence between the bureau and each of said companies relative to price, terms, and conditions, similar contracts were entered into between the bureau and said companies for the production by each company of both an 18-inch and a 21-inch torpedo, the contracts with the plaintiff company being dated January 17 and 23,1911; and those with the Bliss Company being dated February 16,1911.

The Bliss Company completed its 21-inch torpedo in August, 1911; and it was tested in the fall of that year and accepted and paid for by the Government on the basis of having attained a range of 10,000 yards at a speed of 26 knots. The 18-inch torpedo was completed by said company about May, 1912; its performance in the tests was far in ex*504cess of the minimum requirements of the contract, and it was accepted and paid for at the contract price.

On January 18, 1912, the Bureau of Ordnance was preparing a contract with the Bliss Compaq for the manufacture of 50 torpedoes having power plants like that of the 21-inch Bliss torpedo above referred to, and in the month of June, 1912, the Government let contracts to the Bliss Company for the manufacture of 290 torpedoes having similar power plants.

The plaintiff company completed its 18-inch torpedo about October, 1912, but it failed in the tests to meet the minimum requirement of the contract for a range of 4,000 yards, and was therefore not accepted by the Government. The 21-inch torpedo was never completed by the plaintiff company; and, finally, on June 16, 1914, the contracts for said torpedoes were, at said company’s request, canceled by the Government without penalty.

IX. On October 20, 1911, the Electric Boat Company wrote the Bureau of Ordnance a letter reading as follows:

“ 1. We beg to inform the bureau that we have developed a device which may be applied to any automobile torpedo now in service and which will more than double the range of such torpedo.

“2. We inclose herewith drawing No. C-10227, showing a general arrangement of this device applied to the Whitehead 5.2 m. x 45 cm. torpedo.

“ 3. In order to apply this system to existing torpedoes, it becomes necessary to increase the length of the torpedo about eight inches.

*“*4. If applied to the B. L. 5 m. x 45 cm., Mark III torpedo the length would not be increased to more than 5.2 meters.

“5. We have made a number of actual tests with this device and have obtained 150,000 foot-pounds of energy per pound of air. This compares with about 40,000 foot-pounds per pound of air in the B. L. 5 m. x 45 cm., Mark III, and 60,000 foot-pounds per pound of air in the Whitehead 5.2 m. x 45 cm. torpedo.

“ 6. If the bureau desires us to fit one of its existing torpedoes with this device, we shall undertake to do so after arranging with the bureau for a royalty to be paid on all torpedoes fitted with this device in the future.

“ 7. Our estimate of time required to modify an existing torpedo is five months, and cost, fifteen hundred dollars ($1,500.00).

*505“ 8. We would ask one thousand dollars ($1,000) royalty per torpedo for the first ten torpedoes, nine hundred dollars ($900) per torpedo for the second ten, and eight hundred dollars ($800) per torpedo for all torpedoes thereafter.”

At this time the Government' possessed a large number of Whitehead torpedoes of 4,000 yards, and under, range.

Said letter and drawing were transmitted by the bureau to Commander Williams, inspector of ordnance in charge of the torpedo station at Newport, who, under date of October 27, 1911, returned it to the bureau with an indorsement as follows:

“ Subject: Holland Torpedo Boat Co.: Bel. device which may

be applied to automobile torpedo to double the range.

“ 1. The blue print forwarded herewith gives no information as to the methods by which the range of the torpedo is to be doubled beyond stating that the device is a steam generator. it is presumable that the device consists of a super-heater into which is injected water. The E. W. Bliss Company, proceeding along the same lines, have already a torpedo in the water which indicates the possibility of doubling the range of the torpedoes now in the service. The torpedo station will in a very short time take up actual tank experiments with a new form of superheater which promises to double the range of the torpedo. The Schneider Company and the Whitehead Company are both experimenting with a superheater into which water is injected.

“ In view of the above it is considered wise to enter into an agreement with the Electric Boat Company by which the bureau agrees to pay the Electric Boat Company a royalty for the use of a device in torpedoes presumably similar to devices made by other companies, and to one which is in the course of development at the torpedo station, as by that action the bureau would, in the opinion of the torpedo station, possibly involve itself in dispute if not in litigation with the other companies, and would be estopped from further development of its own superheater.

3. A preferable procedure, the torpedo station believes, would be to place an order with the Electric Boat Company for a number of torpedoes, paying them the same price that the bureau pays the E. W. Bliss Company for torpedoes of equal capabilities, buying the torpedoes simply as commercial articles, and having no question of royalty or patent rights enter into the contract.

“4. As pertinent to this question it is suggested to the bureau that its files will probably be found to contain a description of a superheater into which water is injected, *506this description being given to the bureau in 1907 or 1908 by a foreign naval attache.”

The bureau, on November 2, 1911, returned the letter to Commander Williams with the following endorsement:

“Subject: Holland Torpedo Boat Co.: Eel. device which

may be applied to automobile torpedoes to double range.

“ 1. Eeturned for further comment.

“ 2. The proposition submitted by the Electric Boat Company in the attached letter, as understood by the bureau, is in effect as follows:

“ That they will take one of the present type of torpedoes, a Mark Y Whitehead, or a Mark III, IV, or VI Bliss-Leavitt torpedo, and by the installation of the Davison steam generator and the removal of superheater, practically double the range of the torpedo, provided the torpedo will stand a lengthening of eight inches.

“ 3. 'As the inspector of ordnance is no doubt aware, the bureau has contracts with the Electric Boat Company to furnish 2 5.2 m. x 45 cm. and a 21' x 21" torpedo of the Davison type, which torpedoes will be run some time this fall or early next spring.

“4. The attached correspondence is in reference to an entirely different proposition and yet connected with that proposition, inasmuch as the steam generating device will be incorporated in the Davison torpedoes, ana the bureau is given to understand that this generator is not in any sense a superheater, that it has been patented, and it is not to conflict with the present superheater rights.

“ 5. Comment is desired on the advisability of loaning the Electric Boat Company a torpedo of the Mark IY or Mark VI types in order that their device may be installed therein for test, since if it is possible to increase the range of the present four-thousand-yard torpedoes to eight thousand yards, a long-range torpedo could be obtained without much change in the installations for launching them overboard.

*“*6. Please return.”

Commander Williams, in turn, on November 4, 1911, returned the letter to the bureau with the following additional endorsement.

“ Subject: Holland Torpedo Boat Company: Eel. device which may be applied to automobile torpedoes to double range.

“ 1. Eeturned.

“ 2. The torpedo station is still of the opinion that it would be unwise to enter into any royalty agreement with the Electric Boat Company in regard to the steam generator *507device of a torpedo until the details of this device are thoroughly well known and it is clearly established that the device is different from other patented devices of the same nature, and the torpedo station’s previous comments were merely to recommend the nonacceptance of the Electric Boat Company’s proposition as submitted, without detailed description.

“ 3. The torpedo station can see no objection to loaning the Electric Boat Company a torpedo of the Mark IV or Mark VI type in order that this device may be installed therein for test, and recommends that a Mark VI torpedo be so loaned to be fitted and after being fitted that the torpedo be returned to the torpedo station to be tested there under the supervision of a representative of the Electric Boat Company.”

As early as September 24, 1911, the Government had, on the testing range at Sag Harbor, the Bliss 21-inch torpedo, referred to in finding VIII, which had made a run of over 9,500 yards.

X. On November 9, 1911, Admiral Twining, Chief of the Bureau of Ordnance, wrote the Electric Boat Company as follows:

“ 1. The bureau acknowledges the receipt of your letter of October 20, 1911, signed by your Mr. G. C. Davison, forwarding drawings C-10227, general arrangement of device for increasing range of Whitehead 5.2 m. x 45 cm. torpedoes.

“ 2. The bureau thanks you for having submitted this proposition to it for its consideration.

“3. The Bureau of Ordnance will be pleased to furnish you two 5.2 m. x 45 cm. mark V Whitehead torpedoes, and to make a contract for installing therein your device at a total cost of $1,500 each. These torpedoes to be ready for demonstration at the naval torpedo station under the supervision of a representative of the Electric Boat Company.

“4. Deferring to the matter of royalties, the bureau will have drawn up an agreement by which it will agree to pay a royalty of $1,000 per torpedo for the first ten (10) converted, nine hundred dollars ($900) per torpedo for the second ten (10) converted, and eight hundred dollars ($800) per torpedo for all torpedoes converted thereafter, with the distinct understanding, however, that no royalty is to be paid for the converting of the two torpedoes referred to above, the total cost of $1,500 each covering royalties and the cost of conversion, together with any other cost that may be incurred during the demonstration.

*508“ 5. In addition, the burean will require that the two converted Whitehead torpedoes, referred to above, in which you have installed your device, shall make an increased range of at least 50 per cent of their present ranges (a total of 6,000 yards) on their demonstration at the naval torpedo station, it being understood that the Electric Boat Company believes it is capable of increasing the range to 100 per cent of the present range (a total of 8,000 yards). This requirement of the bureau of 50 per cent increased range is the minimum that the bureau will consider as the increase for completion of contract for the conversion of the two torpedoes submitted for test and demonstration.

“ 6. If this arrangement be agreeable to the Electric Boat Company, please so inform the bureau, in order that a requisition may be prepared for the converting of two 5.2 m. x 45 cm. Whitehead Mark V torpedoes at a total cost of three thousand dollars ($3,000), and that an agreement may be drawn up for signature by the Navy Department and the Electric Boat Company in regard to the royalty to be paid for any torpedoes that may be converted hereafter, namely, at the rate of $1,000 per torpedo for the first ten torpedoes converted, $900 per torpedo for the second ten torpedoes converted, and $800 per toiq>edo for all torpedoes converted thereafter.

“ 7. An early reply will be appreciated.”

On December 6, 1911, the Electric Boat Company replied to this letter as follows :

“Referring to the bureau’s letter No. 656/79-80-81 (23712/2) of November 9, 1911, relative to the conversion of two Whitehead 5.2 m. x 45 cm. torpedoes by the introduction of our device for increasing the range :

“ 1. The terms mentioned in the bureau’s letter will be satisfactory to us.

“ 2. We are ready to begin work on the two torpedoes as soon as they are received.

“ 3. As regards paragraph 6 of the bureau’s letter, it is our understanding that the royalty will apply not only to torpedoes which may hereafter be converted but also to torpedoes which the Government may build at its own works and in which the device in question is to be used.”

• On December 13,1911, the Bureau of Ordnance wrote the Electric Boat Company as follows:

“ Referring to your letter of December 6, 1911, relative to the conversion of two (2) Whitehead 5.2 m. x 45 cm. torpedoes by the introduction of your device for increasing the range:

*509“ 1. You are informed that the bureau has this day made out a requisition for the conversion of two (2) 5.2 in. x 45 cm. Whitehead torpedoes by the Electric Boat Company at a total cost of fifteen hundred dollars ($1,500) each, including the necessary demonstration runs at the naval torpedo station.

“2. In connection therewith the bureau is forwarding a blank shop license, or agreement, and requests that you will fill in the name of your steam-generating device and the number of the letters patent in the appropriate blanks, in order that a complete agreement may be made up and forwarded for your signature.”

On December 16, 1911, the Electric Boat Company wrote the Chief of the Bureau of Ordnance as follows:

“ Subject: Increasing range of torpedoes.

“ Sir : We beg to acknowledge receipt of your No. 23712/3(0) of the 13th instant, forwarding draft of shop license agreement relative to our device for increasing the range of automobile torpedoes. The following is a list of the United States patents and applications whereby this device is protected:

“Application Serial No. 422,175, dated Mar., 9, 1908.

“ Application Serial No. 486,455, dated Mar. 29, 1909.

“ Application Serial No. 590,627, dated Nov. 10, 1910.

“U. S. Patent No. 980,243, dated Jan. 3, 1911.

“ You will note that three of these applications have not yet been issued. A number of claims, however, have already been allowed under each of these applications, and delay in issuing the patents is due to argument now pending in relation to certain claims which have been rejected. The protection afforded, however, is the same as if the patents have been issued.

“ We return herewith copy of draft of shop license.”

On January 8, 1912, the Chief of Bureau of Ordnance replied as follows:

“ 1. The bureau is forwarding herewith five copies of agreement between the Electric Boat Company and the United States for the use by the United States of the device known as ‘Steam Generator for Automobile Torpedoes.’

“2. Please have this agreement executed on the part of the Electric Boat Company by the proper responsible officials, and return the same to the bureau at your earliest convenience, in order that it may be executed by the proper officials of the Navy Department.

“ 3. When so executed, a copy will be returned to the Electric Boat Company.”

*510On January 12, 1912, the Electric Boat Company, in response, wrote the Bureau of Ordnance as follows:

“We inclose to you herewith five (5) copies of agreement between the Electric Boat Company and the United States for use of our device known as steam generator for automobile torpedoes which have been duly executed by this company.

“ Will you kindly have these agreements executed on behalf of the United States Goveimment, and return to us copy for our files at your convenience, and oblige.”

The said agreement was executed by the plaintiff company and the Acting Secretary of the Navy under date of April 2, 1912, and was as follows:

SHOP LICENSE.

“This agreement, made this 2d day of April, 1912, bj' and between the Electric Boat Company, a corporation organized under the laws of the State of New Jersey, party of the first part, and the United States, party of the second part, witnessed :

“ That, whereas the said party of the first part is the owner of the invention known as Steam Generator for Automobile Torpedoes, covered by application Serial No. 422,175, dated March 9, 1908; application Serial No. 486,455, dated March 29,1909; application Serial No. 590,627, dated November 10, 1910; U. S. Patent Serial No. 980,248, dated January 3,1911.

“And whereas the said party of the second part is desirous of securing certain manufacturing rights with respect to said invention:

“ Now, therefore, the said parties hereto have agreed and do hereby agree as follows:

“ 1. The said party of the first part hereby licenses and empowers the said party of the second part to manufacture for and on behalf of the said party of the second part, either in its own shops or by contract in private shops, and to use torpedoes equipped with Steam Generator for Automobile Torpedoes covered by application Serial No. 422,175, dated March 9, 1908; application Serial No. 486,455, dated March 29,1909; application Serial No. 590,627, dated November 10, 1910; U. S. Patent Serial No. 980,243, dated January 3,1911, and any improvements thereon now or hereafter owned or controlled by the party of the first part, subject to the conditions hereinafter named, to the end of the term for which letters patent for said invention and any improvement thereon have been or may be granted.

“ 2. The said party of the second part hereby agrees to- pay to the said party of the first part in consideration of the license hereby granted a royalty of one thousand dollars *511($1,000) for each of the first ten torpedoes equipped with the Steam Generator for Automobile Torpedoes covered by the application for letters patent and letters patent before mentioned manufactured by the party of the second part under this license; nine hundred dollars ($900) for each of the second ten torpedoes so equipped manufactured under this license by the said party of the second part; and eight hundred dollars ($800) for each additional torpedo so equipped manufactured under this license by the said party of the second part; no royalty to be paid or payable by the said party of the second part to the said party of the first part under this agreement until each such Steam Generator for Automobile Torpedoes shall have been tested and accepted by the said party of the second part.

“ 3. The said party of the first part will at its own expense defend the said party of the second part and hold it harmless against all and every demand or demands of any nature or kind heretofore made or that shall hereafter be made for or on account of the manufacture for its own use by the said party of the second part in its own shops or by contract in private shops or by reason of the adoption or use by said party of the second part of the device covered by the application for letters patent and letters patent hereinbefore mentioned — to wit, the Steam Generator for Automobile Torpedoes, or any improvements thereon now or hereafter owned or controlled by said party of the first part.

“4. The said party of the second part hereby agrees to make full and true returns to the said party of the first part, on the first day of January each year, of the number of Steam Generators and Automobile Torpedoes therewith manufactured under this license during the preceding year.

“ 5. No Member of or Delegate to Congress, officer of the Navy, nor any person holding any office or appointment under the Navy Department is or shall be admitted to any share or part of this contract or to any benefit to arise therefrom.

“6. Nothing in this license agreement shall be held or construed to interfere with or limit in any wise any present or future right of the party of the first part to manufacture or use the said Steam Generator for Automobile Torpedoes or any improvement or modification thereof and torpedoes equipped therewith for demonstration or other purposes whatsoever or to sell and dispose thereof.

“In witness whereof, the said parties hereto have hereunto set their hands and seals the day and year first above written.”

The patent and applications for patent referred to in said agreement were all upon inventions of the said Gregory C. Davison, by whom they had been assigned to the plaintiff.

*512Said patent and patent applications were not seen by the Bureau of Ordnance prior to the execution of said agreement of April 2, 1912.

XI. Pursuant to the plaintiff’s proposition of October 20, 1911, shown by Finding IX, for the equipment of an existing Government torpedo with the plaintiff company’s said device, plaintiff proceeded under contract with the Bureau of Ordnance to so equip two Whitehead Government torpedoes, and in November, 1912, sent them to the Government torpedo station, at Newport for their tests to determine whether they complied with the contract terms, the minimum range requirement of which was 6,000 yards, a 50 per cent increase of their original range. After a long period of experiments at the torpedo station, one of these torpedoes exceeded on one occasion the minimum run of 6,000 yards required for acceptance; and on October 6, 1913, the company’s bill for $3,000 for the conversion of said torpedoes was approved by the Bureau of Ordnance and was thereafter paid.

On September 27,1913, the naval torpedo board reported on these torpedoes as follows:

*“*In reference to paragraph 1 (f) of the precept, the board is of the opinion that — notwithstanding the fact that one Whitehead torpedo, fitted with the steam-generating device, did, on one occasion, make a run of 6,000 yards at 27 knots after a long period of experiments at the torpedo station— the reliability of this form of steam generator has not been established, and, due to the use of salt water, there are grave doubts as to the practicability of this device as at present fitted for service use. It is recommended that no steps betaken toward the conversion of service Whitehead torpedoes into steam torpedoes of this modification until further investigation by the torpedo station has removed these doubts.”

The form and character of the company’s said device with which these' two Whitehead torpedoes were equipped are shown by the drawing and description constituting Exhibit I of the appendix to these findings of fact, which appendix is by reference made a part of these findings of fact.

XII. On August 20,1912, there were granted to the plaintiff company as assignee of the said Gregory C. Davison, upon said Davison’s application, Serial No. 486,455, United *513States Letters Patent No. 1,036,080, which are set out as Exhibit II in the appendix to these findings.

The proceedings in the Patent Office upon said application prior to the granting of said letters patent are shown in the certified copy of file rvrapper and contents relating thereto, which copy accompanies and is by this reference thereto made a part of these findings, as Exhibit A.

XIII. Since the granting of said Letters Patent No. 1,036,080 to the plaintiff on August 20, 1912, the United States has purchased from other parties than the plaintiff, and has used automobile torpedoes equipped with mechanism for storing, producing, and transmitting motive power, constructed and operating as shown and described by the drawing and description of operation constituting Exhibit III of the appendix to these findings of fact.

The character and mode of operation of said mechanism is further shown by the blue prints of drawings and the model of reducing valve accompanying, and hereby made a part of these findings of fact as Exhibits B-l, B-2, B-3, and B-4, respectively.

Said mechanism, except for slight improvements and modifications, is a practical duplicate of that of the Bliss Company torpedo, built under the said contract of February 6, 1911, referred to in Finding VIII, and which was tested and accepted by the Government in the fall of 1911.

XIV. The following patents and publications show the development and state of the art to which plaintiff’s said patent No. 1,036,080 relates:

1. United States patent to Maxim. No. 641,787, of January 23, 1900.

2. United States patent to Leavitt, No. 693,871, of February 25, 1902.

3. United States patent to Leavitt, No. 693,872, of February 25, 1902.

4. British patent to Sodeau, No. 3,495, of August 12,1905.

5. British patent to De Ferranti, No. 9,496, of 1904, published August 17, 1905.

6. United States patent to De Ferranti, No. 925,889, of June 22, 1909; application filed April 17, 1905.

*5147. United States patent to Sodeau, No. 835,262, of November 6, 1906.

8. British patent to Sodeau, No. 15,997, of 1906; published July 17, 1907.

9. United States patent to Sodeau, No. 944,975, of December 28, 1909; application filed March 25, 1907.

10. British patent to Sodeau, No. 6,081, of 1907; published April 23, 1908.

11. United States patent to Sodeau, No. 964,574, of July 19, 1910; application filed January 27, 1908.

12. British patent to Gesztesy, No. 18,241, of 1908; published March 3, 1909.

13. French patent to Gesztesy, No. 393,324; published December 19, 1908.

14. Be vista Maritima Braziliera, published January, 1908.

15. United States patent to Davison, No. 1,036,082, of August 20, 1912; application filed March 19, 1908.

Copies of said patents and publication accompany, and are by this reference thereto made a part of, these findings of fact as Exhibits C-l, C-2, C-3, C-4, C-5, C-6, C-7, C-8, C-9, C — 10, O — ll, C-12, C-13, C-14, and C-15, respectively.

XY. The devices of the plaintiff’s said Letters Patent No. 1,036,080 which are claimed by the plaintiff to have been manufactured or used by the United States, and for the manufacture or use of which the plaintiff seeks a recovery in this cause, are the devices of claims 1, 5, and 13 of said letters patent.

It does not appear from the evidence that any of said devices or inventions have been manufactured or used by the United States.

1

**Appealed.

Per Curiam :

The defendant’s motion for a new trial was allowed and additional evidence has been adduced. The findings of fact have been amended in important particulars.

The action is upon an alleged express contract. The facts show the circumstances under which this contract was made, and, at most, it can be said to be a shop license covering the use of the particular device in torpedoes covered by Davison’s patents or applications. Other patents in use *515and the state of the art convince ns that other patentees than Davison, and the Government as well, were experimenting with torpedoes having steam generators at and before the time of the shop license contract. Not only were experiments being made bnt the Sodeau and other patents in evidence disclose a steam generator. The question resolves itself into whether the Government used the plaintiff’s device or something covered by one of the claims in its patents. We are of the opinion it did not. And if there be any doubt' on this issue the court is of opinion that the shop license should not be so liberally construed as to prevent the Government showing the exact nature of the device it used and its difference from that covered by the plaintiff’s claims.

The petition will be dismissed, and it is so ordered.