Opinion ID: 1968591
Heading Depth: 1
Heading Rank: 5

Heading: Value of the right to royalties $500,000.

Text: Plaintiff contends that Leighton has no valid claim to the patents, or to royalties thereon. He says the patents belong to Pressed Metals. Therefore, he says, the sum of $500,000 paid by Richmond for the patents rightly belongs to Pressed Metals, and the value of the patents so determined should be added to the balance sheet. This contention, as we understand plaintiff's brief, is bottomed upon a claim that Leighton, as an officer and director of Pressed Metals, was employed to make and develop inventions in Pressed Metals' time and with Pressed Metals' money, and that therefore the royalty agreements are unconscionable and in equity the patents and all rights therein belonged to Pressed Metals. The answer to this contention is clear. As the Vice Chancellor said, the title to these patents, as between Leighton and Pressed Metals, cannot be adjudicated in a suit to which Leighton is not a party. The most that plaintiff can make of this contention is that the corporation, through a minority stockholder, has a disputed claim to the patents. It does not even positively appear that the claim has been asserted in a suit filed for the purpose. Assuming that such a suit is pending, what was its value at the time of the sale? As to this, the plaintiff adduced no evidence. Plaintiff's contention comes to this: that the court on the basis of a legal principle that may or may not be applicable to the facts when proved, should take his claim at its face value. Such a contention is obviously untenable. Compare Schiff v. RKO Pictures Corp., supra, in which evidence of the value of an undetermined lawsuit was presented to the Chancellor, on the basis of which he determined the valuation to be placed upon the litigation as an asset of the corporation. But this is not all. On behalf of the defendant the evidence tended to show that for more than twenty years the royalty agreements were recognized as valid and enforceable by Leighton and by the corporation. In 1939 the stockholders were specifically notified of the terms of the agreements. Thereafter the amounts of the royalty payments were included in the annual reports of Pressed Metals to the Securities and Exchange Commission. The sale of the patents to Richmond was disclosed in the proxy statement sent in connection with the stockholders meeting of August 16, 1955. On the evidence, the Vice Chancellor made a specific finding that the patent license arrangement was accepted by Leighton and the corporate directors as a method of compensating Mr. Leighton for his enormous contribution to the business. Upon this finding, which we accept, the Vice Chancellor was quite right in refusing to attribute any ascertainable value to the claim to the patents.