Court Opinion

ID: 3499734
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:06:55.95564+00
Date Added: 2024-06-11T14:05:17.718863
License: Public Domain

The wording of the contract and the subsequent conduct of the parties show clearly that no royalties of any kind were due plaintiff at the time of the cancellation or thereafter. The terms were formulated by plaintiff and by defendant corporation, acting through its treasurer, who died prior to the hearing of the case. The crude manner in which the agreement was drawn is largely responsible for the difficulties in the present case.
The term of employment specified in the contract was only one year, during which time it was subject to cancellation upon 30 days' notice. It provided for a salary of $300 per month throughout that *Page 59 
year. Paragraph 5 enabled defendant to retain the exclusive right to manufacture and sell devices patented by plaintiff even though it should choose to dispense with his services, but in the latter event defendant was obliged to pay plaintiff a minimum royalty of $300 per month for two years, $4,000 the third year, and $5,000 each year thereafter during such time as it made use of plaintiff's patents.
Plaintiff remained with defendant from November 21, 1923, until June 6, 1931, a period of over seven and one-half years, during which time he accepted payment of $300 per month, apparently working under the same terms as those which existed during the first year of employment. Except for a statement made by him on re-cross examination, at the end of his testimony and after very lengthy examination and cross-examination, there is nothing in his testimony to indicate that any dissatisfaction was shown by him while accepting the amount paid him nor that any demand for more was made at any time during the entire period of over seven and one-half years. His duties remained substantially the same throughout this entire time. He was working in defendant's factory on a carburetor and heat control. One of defendant's engineers, Charles Kirby, was also experimenting with a similar device and filed an application for letters patent on October 5, 1927. Plaintiff filed his application on October 17, 1927, amending clauses 7 and 13 in the application respectively in 1929, and again in 1931, after he had severed his relationship with defendant. These two clauses of the patent application were deemed by plaintiff's expert witness, Otto Berry, to be of the greatest importance. The patent was issued to plaintiff on November 10, 1931, several months after defendant *Page 60 
had ceased selling any carburetors containing the device covered by plaintiff's patent.
Plaintiff suggests two possible theories or measures of recovery. He asserts a right existed to collect minimum royalties under paragraph 5, hereinbefore mentioned, until such time as the total royalties exceeded the minimum guaranteed. Paragraph 5, however, seems to have been drafted only to cover a situation that would arise if defendant discharged plaintiff but desired to retain the exclusive rights to manufacture and sale of the devices patented by him. Plaintiff further claims that he was entitled to two per cent. gross royalties on all the carburetor and heat control units sold by defendant as soon as the royalties exceeded the stated minimum, despite the fact that the patent did not issue until the sale of these units had ceased. In the event that recovery of gross royalties is denied, he advances another alternative. He asserts that there still remains a right to the minimum royalties stipulated by paragraph 5 for the entire period of his employment with the exception of the first year. This is a payment in addition to the salary he has already received.
It is elementary that an inventor has no monopoly on his invention prior to the issuance of a patent. Until then, anyone may use it with impunity. Kirk v. United States, 163 U.S. 49
(16 Sup. Ct. 911); Marsh v. Nichols, Shepard  Co.,128 U.S. 605 (9 Sup. Ct. 168). The inventor is entitled to a monopoly on his patent device for a term of 17 years. It is a well-known fact that an application frequently remains in the patent office for a very long period before a patent is granted. This interval is not a part of the 17 years during which the patentee enjoys the exclusive control of his device. Until the *Page 61 
patent is issued, royalties can be recovered only by virtue of an express contract. The trial judge recognized this limitation, but held that, notwithstanding the fact that plaintiff was not entitled to any royalties until the patent had been issued, the contract gave him retroactive rights to such royalties upon the issuance of the particular patent here involved. In other words, as soon as the patent was issued, there arose a right to collect royalties on all sales made during the interim between the filing of the application and the grant. The contract does not provide for any such payments.
The fact that the testimony is almost negligible that plaintiff made any claim to royalties of any kind during the time that defendant was using the device is almost conclusive that the parties considered plaintiff's original contract of employment as one that continued from year to year and that neither believed that plaintiff was entitled to any royalties for sales made prior to the issuance of the patent. Examination of the contract further confirms this conclusion.
It will be noted that paragraphs 1, 2, 3, 4, 7, 8, and 10 of the contract, all refer to patents and in no manner to unpatented inventions. We call particular attention to paragraph 10, which states:
"It is understood that royalties hereunder are to be based upon described patents already issued to party of the first part and aforesaid patent applications after same have issued."
Had plaintiff believed himself entitled to minimum royalties after the first year, or to gross royalties after they exceeded the guaranteed minimum, it seems incredible that he would have remained silent until the bringing of this suit. *Page 62 
There is considerable dispute as to whether plaintiff or defendant's employee, Kirby, invented the by-pass. I see no reason to dispute the conclusion of the trial judge that the by-pass was plaintiff's invention.
For the reasons hereinbefore stated, plaintiff was not entitled to royalties of any kind from defendant. The bill of complaint should be dismissed, with costs to defendant, and without prejudice to plaintiff's right to recover the very small amount he claims was wrongfully deducted from his salary for insurance premiums.
CLARK, POTTER, and NORTH, JJ., concurred with BUTZEL, J.