Court Opinion

ID: 3504911
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:14:58.439918+00
Date Added: 2024-06-11T13:40:04.235393
License: Public Domain

On plaintiff's petition the case has been reargued on its merits. We adhere to the original opinion except for the modification hereinafter made. We find no escape from denying plaintiff the main relief it seeks, a decree of specific performance. There is no occasion therefore to pursue that phase of the case farther.
In addition, as well argued for defendant, the case has been tried on the merits and findings made to the effect that the refusal of defendant Waters-Genter Company to approve the proposed licensing contract with the Fitzgerald Company was justified. That finding we cannot disturb. In view of our conclusion on the other and main branch of the case, it is hardly necessary to review evidence to justify that conclusion. The fact remains therefore that the agreement, *Page 612 
so far as it may be considered a contract, came to all end by its own terms March 1, 1928.
We adhere to our former decision that we cannot, for the reasons there stated, award plaintiff the affirmative relief of a decree of specific performance. However our rehearing and reconsideration of the whole case has convinced us that, in order to dispose of the whole controversy in this action and to avoid so far as we may the possibility of further litigation, we should go somewhat farther in our decision than we did at first.
2. For almost a year the parties occupied the positions and bore the relationships and consequent obligations set up by their agreement. Thereby they created a status the plain duties and obligations of which, so long as it existed, they cannot now escape. To the extent that they performed their compact during the period when by their own acts it was the fundamental and self-imposed law of their relation, the parties must obey it. There is no reason why to that extent their obligations and duties should not be ascertained and, so far as judicial intervention is enforced in this action. There is no reason for relegating them to another, and the reargument has convinced us that the concluding paragraph of our former opinion was inadequate to that end.
Subdivision VIII of the patent pooling agreement provided that "in the event that no licensing agreement * * * has been entered into by Johnson prior to the first day of March, 1928, then this agreement shall be cancelled and the parties shall, as nearly as possible, restore each other to their status prior to the execution of this agreement." The district Court should retain jurisdiction of the action to enforce that stipulation, if the parties, guided by their counsel, cannot themselves make satisfactory application of it.
The agreement further provided in subdivision X, under the head of "Contingent Provisions," as follows:
"In the event that * * * any * * * person engaged in the business of manufacturing and/or selling household electrical appliances, * * * shall directly or indirectly * * * acquire *Page 613 
a majority of the common and/or preferred stock of either the Waters-Genter Company [defendant] or the Dial Company [plaintiff] or shall become financially interested in or enter into any arrangement with the Waters-Genter Company or the Dial Company the result of which arrangement is that any * * * persons shall receive either directly or indirectly the greater proportion of the amount saved through such right as either the Waters-Genter Company or the Dial Company may have to manufacture automatic electric bread toasters under the Rogers and/or Strite patents and any improvements thereon without payment of royalty thereon, or in the further event that (b) either * * * company shall manufacture such toasters under the Rogers and/or Strite patents and shall sell said toasters to or through any of such * * * persons without payment of royalties thereon by said * * * persons under the terms of said patent pooling agreement, or in the further event that (c) any such toasters so manufactured by either the Waters-Genter Company or the Dial Company are sold to others than the ultimate users or bona fide jobbers, wholesalers or retailers, then in any of such events the Waters-Genter Company or the Dial Company, whichever shall be embraced within the terms of any of the aforesaid contingencies, shall pay into said royalty account for each toaster which, except for this paragraph, would be manufactured or sold free of royalty under the Rogers and/or Strite patents or any improvements thereon, a royalty equal to the average royalty per toaster payable under the licensing agreements made under the provisions of paragraph IV hereof."
In an earlier paragraph provision had been made for the setting up of a royalty account into which the anticipated royalties were to go pending division. Plaintiff was to have 43 per cent and defendant 57 per cent of the moneys as distributed from that account. No licensing agreement having been made, it has become impossible to apply the concluding mandate of subdivision X, above quoted, that the payments thereby provided for should be of a royalty "equal to the average royalty per toaster payable under the licensing *Page 614 
agreements" which it was anticipated would be made. But that, in our judgment, does not relieve defendant from the obligation to account for its handling and use of both patents during the period the agreement was in force.
Nothing in the foregoing shall be considered as a final construction by us of subdivision X of the agreement, which we have quoted at length. We do not have the benefit of findings sufficient to enable us to apply its somewhat involved provisions to the facts to which it is claimed to be applicable. Neither have we had the aid of argument of counsel directed to the precise issue of the proper construction of subdivision X in its application to the facts, whatever they may be.
The point is that, all other issues aside, one Max McGraw, alleged to be a person "engaged in the business of manufacturing and/or selling household electrical appliances" of the kind aimed at by the subdivision X, took over the control of defendant by stock ownership soon after the agreement of March 19, 1927, was entered into, and by reason of that and the subsequent conduct of defendant's business in relation to the involved patents, subdivision X is claimed to have become applicable on behalf of plaintiff. The issues so raised we do not decide. We consider it the better course to remand the case with directions to the trial court to retain jurisdiction and by the framing of appropriate issues and such evidence, if any, as may be needed or properly offered to decide by appropriate findings of fact and conclusions of law the issue as to what, if any, relief plaintiff is entitled under subdivisions VIII and X of the determinative agreement.
3. The conclusions so reached would not be permissible were the patent pooling agreement open to condemnation as an unlawful attempt to restrain trade under either federal or state law. That point we have considered, and hold that the agreement cannot be so condemned. The only price-fixing agreement it contains is a stipulation that neither party would sell any toaster manufactured tinder the pooled patents "at a price or on terms less than the lowest price stated in the price maintenance clause of any" licensing *Page 615 
agreement made under it "or on more favorable terms to the customer than those authorized or stated in said licensing agreements." By that stipulation the parties simply bound themselves to protect their licensees against a species of competition by themselves which the licensees would have rather plain reason for regarding as unfair. Inasmuch as the agreement involved patents and the rights of the patentees, we are required by plain policy to follow the holdings of the Supreme Court of the United States. That tribunal refuses to condemn as an unlawful restraint of trade agreements concerning patents having more of the elements of trade restraint and monopoly than the one now before us. Bement v. National Harrow Co.186 U.S. 70, 22 S.Ct. 747, 46 L. ed. 1058; U.S. v. General Elec. Co. 272 U.S. 476, 47 S.Ct. 192, 71 L. ed. 362.
The case will be remanded for further proceedings not inconsistent with this opinion.
So ordered.