UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

National Pasteurized

Eggs, LLC

v. Civil No. 07-103-JL

L. John Davidson

SUMMARY ORDER

Following a non-jury trial, this court issued lengthy and

detailed findings of fact, rulings of law, and an order for

judgment in favor of plaintiff National Pasteurized Eggs, LLC

(“NPE”) on its claim that it--rather than defendant L. John

Davidson--owns United States Patent 6,692,784 (the “Jumbo”),

covering a process for pasteurizing chicken eggs in their shells. 

Nat’l Pasteurized Eggs, LLC v. Davidson, 2011 DNH 208. NPE

traced its ownership to an agreement (the “GSM”) between Davidson

and a now-defunct company he founded, Pasteurized Eggs

Corporation (“PEC”), the assets of which NPE purchased after PEC

declared bankruptcy.

The GSM provides, in essence, that PEC owned inventiveness

developed prior to January 1, 2001, while Davidson owned

inventiveness--so long as it “result[ed] in protection from new

patents or patent applications providing broader or improved

protection”--developed on or after that date. Id. at 14. 

Accordingly, whether the inventiveness claimed in the Jumbo was

developed before or after January 1, 2001 was the principal

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factual issue at trial. Based on the evidence it received on

this point, the court found that the inventiveness had in fact

been developed prior to January 1, 2001, id. at 26, and, after

rejecting Davidson’s arguments as to the enforceability and

interpretation of the GSM, ruled that NPE owned the Jumbo. 

Since the judgment issued, Davidson has filed a motion to

alter it, under Rule 59(e) of the Federal Rules of Civil

Procedure, so that it awards ownership of the patent to him

instead. The motion is denied. Generally, “Rule 59(e) motions

are granted only when the movant shows a manifest error of law or

newly discovered evidence.” Kansky v. Coca-Cola Bottling Co. of

New Eng., 492 F.3d 54, 60 (1st Cir. 2007). Davidson’s motion, on

its face, makes no attempt to demonstrate either. Instead, he

argues that this court erred in finding that (1) certain

inventiveness embodied in the Jumbo was developed prior to

January 1, 2001, (2) the GSM was an enforceable agreement, and

(3) the GSM’s conditions precedent to his assignment of the

intellectual property were satisfied. None of these conclusions

was an error, let alone a manifest one.

First, Davidson challenges this court’s finding that one

aspect of the Jumbo, pasteurizing the eggs by passing them

through zones of three different temperatures in a single tank of

heated water, had been developed prior to January 1, 2001. Nat’l

Pasteurized Eggs, 2011 DNH 208, 8-9. In making this finding,

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this court relied on a memorandum that Davidson had written to

PEC’s patent counsel on November 14, 2000, i.e., before January

1, 2001. Id. at 46. The memorandum stated that “testing has

been performed successfully” on essentially the same threetemperature process claimed in the Jumbo. Id.

Davidson does not question that the memorandum adequately

supports the court’s finding that the three-temperature process

was developed prior to January 1, 2001. Instead, he complains

that the court’s reliance on the memorandum was “not warranted”

in light of conflicting evidence, viz., the testimony of Davidson

and another witness involved in developing the process, Myron

“Mike” Wagner. As the court observed, Davidson testified that 1

the memorandum reflected results that he had “anticipated” but

had yet to actually occur, while Wagner testified that the

discovery of the three-temperature process happened in 2001

because, he recalled, the discovery post-dated two other events

Davidson also relies on statements from two other 1

witnesses: trial testimony by Mike Myshrall (who worked with

Wagner in developing the pasteurization process) and a

contemporary memorandum by Dan Best (who was a member of PEC’s

board of directors during some of the relevant events). Neither

is inconsistent with the court’s finding. Myshrall did not

testify as to when the three-temperature process was developed,

and none of his testimony as to when other events occurred

undermines the court’s conclusion on that point. Best’s

memorandum simply told Davidson, in October 2001, that “the

further multiple temperature work that you proposed doing is very

important to get underway” (emphasis added). It does not follow

from this that the three-temperature process claimed in the Jumbo

had not already been developed by then.

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that happened that year. 

2 Id. at 8 & n.4. The court

specifically explained, however, that it chose to credit

Davidson’s contemporaneous memorandum rather than trial testimony

by him expressing “newfound modesty as to the status of his

inventions” or by Wagner, “who came across as an entirely

forthcoming witness at trial, but was attempting to remember

events that happened 10 years or so ago.” Id. at 9.

Faced with conflicting evidence on an important factual

issue, then, the court simply chose to rely on Davidson’s

contemporaneous statement rather than trial testimony about

events from roughly a decade earlier. While Davidson

In his 2 Rule 59(e) motion, Davidson also points to a trial

exhibit, which was entitled “Cheat Sheet for Procedure Changes”

and was essentially Wagner’s contemporaneous log of his work on

the pasteurization process at PEC’s South Carolina facility. 

Davidson argues that this document “demonstrates that the testing

for the two temperature process in South Carolina did not begin

until” November 14, 2000--the same day that Davidson sent his

memorandum stating that the three-temperature process had been

successfully tested. The court specifically recognized, however,

that the three-temperature process could not have been tested in

South Carolina (before or after to January 1, 2001) because “the

heat exchangers at the South Carolina facility were not powerful

enough to accomplish that.” Nat’l Pasteurized Eggs, 2011 DNH

208, at 7. Instead, the court found that the testing of the

three-temperature process first occurred at a facility in New

Hampshire where PEC, beginning in late 2000, had started

manufacturing a new pasteurization machine to be used at a

different plant. Id. Davidson does not question this finding. 

So the “cheat sheet,” which described PEC’s work in South

Carolina, not in New Hampshire, does not undermine the court’s

finding that the three-temperature process was successfully

tested before January 1, 2001.

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understandably disagrees with this decision, it was no manifest

error. Indeed, 

“[w]here there are two permissible views of the evidence, the

factfinder’s choice between those competing views cannot be

clearly erroneous.” Monahan v. Romney, 625 F.3d 42, 46 (1st Cir.

2010) (quotation marks omitted).

Davidson also argues at length that the claims of the Jumbo

“should have an effective filing date” of the final patent

application because the claims in the Jumbo as ultimately issued

were not “disclosed” in the provisional applications and were

“therefore developed after January 2001.” This conclusion simply

does not follow from its premise. As NPE points out, the

relevant sections of the GSM did not assign inventiveness to PEC

or Davidson depending on when it was “disclosed,” but on when it

was “developed.” So Davidson’s claim that the inventiveness in

the Jumbo was not disclosed, in publicly filed patent

applications, until August 2001 at the earliest (even if

accurate) is perfectly consistent with the court’s finding that

the inventiveness was developed prior to January 1, 2001. That

finding was not error.

Second, Davidson argues that the court was “simply mistaken”

to rule that the GSM was an enforceable agreement, rather than an

unenforceable “agreement to agree,” as he had claimed at trial. 

This argument is deliciously ironic, in light of the fact that

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Davidson has repeatedly stated in court filings--including his

own counterclaim in this action--that the GSM “contained all the

essential terms of the parties’ agreements and was effective and

enforceable as the agreement by its express terms.” Nat’l

Pasteurized Eggs, 2011 DNH 208, 29-30. In any event, as the

court observed, “‘[a] written memorandum is sufficient to

establish a contract if it demonstrates that the parties have

manifested their intent to be bound to the essential terms of a

more detailed forthcoming agreement,’” id. at 28 (quoting Lower

Vill. Hydroelec. Assocs., L.P. v. City of Claremont, 147 N.H. 73,

75 (2001)), and the parties did so here in the GSM itself, which 

specifically states that it “will be binding until such time as

further Settlement Documents are prepared and accepted,” id.

Davidson does not quibble with the court’s finding that this

provision manifested the requisite intent to be bound. Instead,

he argues that this court’s reliance on Lower Village

Hydroelectric was “misplaced” because, there, the “further

negotiations related only to minor details and were not essential

to contract formation. In this case, the details to be worked

out were significant in nature, including the scope of the

intellectual property” to be assigned. But the GSM does address

this issue: as the court observed, “the GSM assigns ownership

depending on whether patents were issued or applied for, or

‘Inventiveness’ was ‘developed,’ prior to January 1, 2001, and

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sets forth detailed provisions for PEC to license any

intellectual property assigned to Davidson.” Nat’l Pasteurized

Eggs, 2011 DNH 208, 27-28.

Davidson does not quibble with this observation either. 

Instead, he points to what he calls “an abundance of evidence

that the parties continued to negotiate the scope and terms of”

the GSM’s assignment provisions. The court disagrees with this

characterization of the record but, even taking it at face value,

the fact remains that the parties specifically stated in the GSM

that it was to be binding until further documents were drafted.

That, again, manifested the requisite “intent to be bound by the

essential terms of an agreement even though details remain to be

worked out,” and those essential terms were sufficiently spelled

out in the GSM, as the court concluded. Id. at 27-29. This

conclusion was not error, manifest or otherwise.

Third, Davidson argues that the court “ignore[d] the impact

of specific conditions precedent” to his performance of the

assignment under the GSM. In fact, even though Davidson never

characterized any provisions of the GSM as “conditions precedent”

in any of his arguments before, during, or after the trial, the

court so construed his contention that he “was under no

obligation to transfer intellectual property to PEC” because it

had failed to honor certain payment obligations imposed by the

GSM. Id. at 30. But the court ruled that, even though two of

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these obligations amounted to conditions precedent, one had been

satisfied and performance of the other--which called for Davidson

to receive reimbursement for certain expenses at “the closing of

the agreement”--had never become due because the “closing” never

occurred. Id. at 31-32. Davidson essentially acknowledged as

much in his trial testimony. Id. at 32.

Davidson now argues that this reading of the GSM “strains

the bounds of reasonableness” insofar as it allows PEC “to

sidestep” its obligation to pay Davidson “[s]imply because a

settlement”--by which he presumably means the closing on the

settlement--“was not achieved before PEC sought bankruptcy

protection.” This is nothing more than a reformulation of 3

Davidson’s complaint that it is unfair to hold him to his promise

to assign intellectual property to PEC since it dishonored its

promises to make various payments to him. As this court has

already explained, Davidson “exposed himself to this risk by

signing the GSM,” which “assigns the specified intellectual

property without conditioning the assignment on . . . [PEC’s]

compliance with any of its obligations to him (save those

It is not necessary, but it is worthwhile, to note that the 3

effective date of the GSM was September 20, 2001, but PEC did not

file for bankruptcy protection until more than a year later, on

October 5, 2002. So Davidson’s suggestion that it was PEC’s

bankruptcy filing that prevented it from closing on the GSM is

inaccurate. If anything, it was Davidson’s efforts to

renegotiate the essential terms of the GSM after signing it that

delayed the closing. Nat’l Pasteurized Eggs, 2011 DNH 208, 17.

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expressly made conditions precedent . . .).” Id. at 37-38. 

Again, while one of those conditions precedent obligated PEC to

reimburse Davidson for certain expenses, that reimbursement, by

the express terms of the GSM, did not become due until the

closing on the parties’ agreement--and that never happened. 

PEC’s “failure” to tender that reimbursement, then, had no effect

on Davidson’s assignment of the intellectual property which, in

contrast, occurred upon execution of the GSM. Id. at 37. This

conclusion was not error either.

Because Davidson has failed to show any manifest error in

the court’s findings and rulings supporting its judgment in NPE’s

favor, his motion to amend that judgment (document no. 159) is

DENIED.

SO ORDERED.

____________________________

Joseph N. Laplante

United States District Judge

Dated: March 2, 2012

cc: Peter G. Callaghan, Esq.

Adam Taylor Rick, Esq.

David H. Bownes, Esq.

Paul C. Bordeau, Esq.

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