Court Opinion

ID: 8820219
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:31:09.407313+00
Date Added: 2024-06-11T17:04:36.505988
License: Public Domain

HOUGH, Circuit Judge
(after stating the facts as above). The declaration of law made below rests on a finding of' fact as to which we are constrained to differ. The lower court held (263 Fed. 101) that the 1913 contract between Stonemetz and plaintiff had terminated by abandonment .before defendant’s contract with Stonemetz of May 12, 1915. There is no direct evidence of this, except the statement of Stonemetz. He has been rightly declared by the trial court a man unworthy of belief, and what he said about that contract is no more credible than any of his other statements. Abandonment implies mutual consent; of such mutuality there is no proof at all, and it may be added that the burden of proof in respect of any change of earlier relations between plaintiff and Stonemetz is on the defendant, and it assuredly has not been borne.
[1] The 1913 contract evidences a lawful relation between plaintiff and the inventor; such presumption as exists is in- favor of its continuance until it is affirmatively shown to have terminated. We do not discover inconsistencies between the 1913 contract and the letter of September, 1915, evidencing or proving that the earlier agreement had come to an end. On the other hand, it is plain that, if that earlier contract had wholly ceased to exist, plaintiff was in the fall of 1915 vigorously proceeding to perfect Stonemetz’s device without any explicit license from the inventor. We therefore conclude in point of fact that the license agreement of 1913 survived, and that the machines now in plaintiff’s possession were made on the faith thereof, or in reliance thereupon.
It may be said that the 1913 contract does not in terms grant a license ; it merely agrees to give one. The result is the same. American, etc., Co. v. Van Nortwick, 52 Fed. 752, 3 C. C. A. 274. Equity *245will consider the license as given by the same reasoning as that which held the equitable title to have passed when the intent was to transfer a plurality of patents and one was inadvertently omitted from the writing. Newton v. Buck, 77 Fed. 614, 23 C. C. A. 355.
If in 1913 the specification for Stonemetz’s patent had been drawn, and certainly if there had been then a pending application therefor, the patentee’s license, even by word of mouth (St. Louis, etc., Co. v. Sanitary, etc., Co., 178 Fed. 926, 103 C. C. A. 565), would have prevailed over a subsequent written and recorded assignment of the entire invention (Jones v. Berger (C. C.) 58 Fed. 1006, citing cases). The familiar basis of the rule is that one devising “a new and useful improvement [is] vested by law with an inchoate right to its exclusive use which he may perfect and make absolute by proceeding in a manner which the law requires.” Gayler v. Wilder, 10 How. 477, 13 L. Ed. 504.
[2] It is true that in some ways the rule seems anomalous; but it has passed into one of property clearly understood, and should not be interfered with, except, after due consideration, by statute. The present is an instance of how a dishonest inventor can work injury to several innocent parties; but, when defendant took its assignment, it had long passed into the text-hooks that such an assignee acquired title subject to prior licenses of which the assignee must inform himself as best he can, and at his own risk. Rob. Pat. § 817; Walker (5th Ed.) §§ 303, 304.
[3] The difference between this case and any previous litigation brought to our attention is that, when Slonemetz gave this license, there was no specification or other written description of his invention in existence. But there was a concrete embodiment of what he had invented in the shape of the Palmyra machine. The reason for the mention of specification or description in previous cases is obviously that, if a man assumes to license or otherwise deal as owner with anything, there must be a thing in existence capable of being dealt with. The specification of a patent is commonly treated as a reduction’to practice, but it is assuredly no more such reduction than is the building of a machine of which the specification is a description. We think that Stonemetz’s “inchoate right” was as fully expressed by his machine as by any specification, and that he was therefore, in December, 1913, in a position to grant a license.
That he did grant a license, only, results from the fact that he did not in terms or in substance assume to grant all the rights to make, to use, and to sell; anything less than this is a license. But, further, the 1913 agreement specifically contained in another clause an agreement to assign if and when plaintiff desired to “buy” Stonemetz’s patent rights. Any contract must be construed, if possible, so as to give force to all its clauses, and the “buying” or conveyance clause of the 1913 contract means nothing, if the license clause be expanded into a conveyance.
[4] For these reasons we hold that plaintiff was well licensed to make and to sell the machines now in his possession. By such license it acquired, as has been well said, the right not to be sued. Heaton, etc., *246Co. v. Eureka Co., 77 Fed. 290, 25 C. C. A. 267, 35 L. R. A. 728. But plaintiff has gone out of business; it has ceased its corporate activities, except for the purposes of liquidation, and is in the process of arriving at a legal death. Under such circumstances its license expired with the cessation of its corporate activity. Haffcke v. Clark, 50 Fed. 531, 1 C. C. A. 570, citing cases. The result is that in our opinion plaintiff has the right to sell the machines it had on hand when it ceased business, or to perfect the sale which was stopped by defendant’s notice of infringement.
The decree appealed from is reversed, with half costs, and the cause remanded for further proceedings not inconsistent with this opinion.