Court Opinion

ID: 4499370
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:16:25.524701+00
Date Added: 2024-06-11T08:00:25.634101
License: Public Domain

*285OPINION.
Teussell :
Prior to the assignment of the patent to the petitioner, Truitt secured three appraisals of the value thereof. In August, 1918, John Johnson Haines valued the patent at $25,000. Plaines is vice president and secretary of the Haines Company, which has been engaged in the business of ventilating contractor for twenty years. Haines has been connected with the company for twenty years, and in his business as a contractor he has come in contact with various patented articles used in ventilating. While he has never appraised patented articles, his experience in buying and selling such articles as are used in his business has familiarized him with the values of such patents. In placing the value of $25,000 on the patent in question, he took into consideration the business which the petitioner was doing; the demand and cost of the one other gravity-operated louvre which had been on the market for several years, and the demand which would be made for the petitioner’s automatic louvre; the fact that this attachment would materially increase the sales in fans, for he knew through experience that purchasers would rather buy the fan and attachment as a unit from one concern; and also the economic life of the patent, that is, about how long a time would elapse before a new and better shutter device would supersede it. After the petitioner began producing the louvre the Haines Company purchased articles from it for use in contracting work, and 90 per cent of the fans purchased were equipped with the patented louvre.
In August, 1918, Charles Edward Murray valued the patent at $15,000. Murray has been connected with the Mellish-IIayward Co. for thirty years, and is engaged in closing contracts, estimating, superintending and looking after finances for the company, which is a contractor for heating and ventilating. Murray is experienced in the matter of patented articles used in connection with ventilating and has assisted in valuing such articles as they effected increases in sales and profits. Murray was familiar with the gravity-operated louvre and the louvre covered by the patent here in question, and the value which he placed upon the latter was the amount his company would have paid for the patent had the company had the opportunity to purchase it. Murray estimated that the profits on the patented louvre would amount to $2,500 or $3,000 a year, and this was based on the fact that the article was satisfactory mechanically, that it was not a new proposition which would have to be introduced because there had been a similar article on the market for several years which was quite successful, that a louvre was necessary in proper ventilating, and, also, he foresaw a great demand for this patented louvre. Murray valued the patent at $15,000, independent and irrespective of the petitioner and its business.
*286In August, 1918, Fred B. Gillespie valued the louvre patent at $20,000. Gillespie is president of the Gillespie-Dwyer Co., contractor for heating and ventilating systems. Gillespie has been engaged in this line of business since 1914 and has been in constant contact with the various devices and equipment used in the business of ventilating and heating and also with improvements on such devices. He was familiar with the patented louvre and knew that it was mechanically superior to any louvre or shutter already on the market, being more substantially constructed and requiring less power to operate it. The valuation of $20,000 was based on Gillespie’s experience with ventilating devices and the values of the same; the fact that his concern had experienced difficulty in selling fans without shutters or louvres; that it had been at times embarrassing to purchase fans from one concern and louvres from another; that there was a great demand for shutters or louvres; that in 1918 his concern was interested in trying to produce a shutter or louvre of its own, and, further, that the sale of the fan and louvre as a unit by one concern would greatly increase sales. Gillespie had never valued patents before but based his appraisal on his own knowledge of the ventilating and heating business and the values of the various devices used.
Edward T. Blaker, sales engineer for the Bishop & Babcock Sales Co., is a bachelor of mechanical engineering and for seven years has been engaged as sales engineer, his duties being to investigate new devices and patented articles to determine their mechanical utility and sales value. Blaker first became acquainted with the louvre covered by the patent here in question in the latter part of 1918 in a competitive manner. He was selling a louvre manufactured by another concern. It was a part of Blaker’s duties to make a special examination for his company of the mechanical and sales features of this patented louvre. This patented louvre is the same article today as it was in 1918, when it was first put on the market. In the latter part of 1925, or early in 1926, Blaker suggested to his company that they negotiate with the petitioner corporation in regard to their handling the fan and louvre because of its mechanical differences and advantages over the type thej? used and its benefit to the sales organization. This suggestion was based upon Blaker’s investigation of the patented louvre’s mechanical operations and without reference to sales made by the petitioner corporation. Blaker’s appraisal of the patent here in question was $20,000, which amount he would have paid for the patent in 1918 as well as in 1925.
At the time the louvre patent was assigned to the petitioner, its owners and the petitioner placed a value upon it in the amount of *287$12,500. Four competent witnesses have testified that in their opinion this patent, at the time acquired by the petitioner, had a value ranging from $15,000 to $25,000.
It may also be observed from the figures of annual sales made by the petitioner that the sales of fans increased from an average of $75,055 for the two years 1918 and 1919 to an average of $138,000 per year for the four years 1920 to 1923, inclusive; and that the total sales made by the petitioner increased from an average of $64,747 for the three years 1916 to 1918, inclusive, to an average of $189,059 for the five years 1919 to 1923, inclusive. It thus seems that there can be no doubt that when the petitioner acquired this patent it acquired a valuable asset which contributed in a considerable degree to the volume of the petitioner’s business, and we are therefore of the opinion, and find, that at the time acquired this patent had a cash value of $12,500, and that for the years here in question the petitioner is entitled to a deduction based upon the pro rata exhaustion of $12,500 over the period of the life of the patent.
Judgment will be entered on 15 days' notice, xmder Rule 50.