Court Opinion

ID: 6237059
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:35:02.656011+00
Date Added: 2024-06-11T08:57:46.455748
License: Public Domain

Mr. Justice Sterrett
delivered the opinion of the court, March 6th 1882.
The rights and liabilities of the parties to tliis contention must be measured and determined by their agreement of November 1877; considered in connection with what subsequently occurred in relation to the subject matter thereof.
By the terms of that agreement the appellant, as assignee of certain letters patent issued by the United States to Charles T. Palmer in October 1872, granted to the Novelty Paper Box Company, the appellee, the sole and exclusive right and license to make, use and sell all the devices for the manufacture of paper-or pasteboard boxes, covered by said patent, and to make and sell such boxes. He also granted to said company full and irrevocable power and authority to license any other parties to use the said devices and to make and sell such boxes, with the right to charge and receive, to its own use, such royalties as the sub-licensees might agree to pay; and also, in his name, but at its expense, to prosecute all parties infringing said patent, and recover, for its sole use and benefit, all damages or penalties that might be awarded against them by courts of justice or otherwise. In consideration of the license and powers thus *524granted,, the appellee agreed to give appellant one hundred shares of its capital stock and pay him a royalty of fifty^ cents per thousand for all the paper boxes sold and delivered by it during each month, until the expiration of the patent: “ provided however, that should, in the course of litigation, an injunction by the United States courts be refused against any party or parties infringing the said Palmer patent, thereby declaring the same untenable or invalid, then and from such period all royalties accruing and payable to the said party of the first part shall cease.”
The agreement also contains a stipulation that it shall terminate in the event of the company failing to comply with the conditions thereof; and, in that case, the license and powers granted shall revert to • appellant. This provision was evidently intended for the benefit of appellant, and not for the purpose of enabling the appellee at his own option to terminate the contract by simply refusing to comply with its terms.
It is very evident from the provisions of the agreement, that' the parties thereto did not regard the validity of the patent as entirely free from doubt: and that, in consequence of its doubtful validity, or for other reasons, the devices claimed by the patentee were being used by others without license. From testimony which fully warranted his conclusions, the learned Master found, substantially, that for some time prior to the date of the contract the company appellee was engaged in making paper boxes on the principle covered by the Palmer patent; that, with the view of avoiding the possible consequences of an injunction for infringement, and at the same time of placing itself in a better position to control the trade, by restraining others from making boxes of like form and character as those made under the Palmer patent, the company commenced negotiations with appellant which resulted in the contract hereinbefore referred to, and that in so doing the company assumed all the risk of the validity of the patent.
This fully accords with the letter as well as the spirit of the agreement. The company acquired the license, and undertook to prosecute infringers, at its own expense and for its own benefit, and in consideration of the advantages thus secured to itself, it agreed to pay appellant the stipulated royalty until the expiration of the patent, with the proviso that if, in the course of the contemplated proceedings against those who were using the patent without license, the proper court refused an injunction on grounds involving the invalidity of the patent, then and in that event the payment of royalty should cease.
The only construction of which the contract is fairly susceptible is that the stipulated royalty was to be paid monthly until the expiration of the patent, unless its validity was sooner *525impeached by a refusal of the proper court to restrain those who were supposed to be infringing it. Having enjoyed the advantages thus contracted for, the appellee is bound to pay tlie consideration therefor. Tlie authorities cited and relied on by the learned counsel for the appellee are not applicable to the facts of this case. Upon the facts found by the learned Master the decree recommended by him should have been adopted.
Decree reversed, and it is now adjudged and decreed that the appellee pay to appellant the sum of four thousand one hundred and seven dollars and seventy-nine cents, with interest from May 1st 1880: that the cross-bill be dismissed, and that the appellee pay the costs, in-including the costs of this appeal.