Court Opinion

ID: 6555102
Source: CourtListenerOpinion
Date Created: 2022-07-20 18:56:59.13869+00
Date Added: 2024-06-11T15:56:16.906751
License: Public Domain

Lore, C. J.,
charging the jury.
Upon the agreement J. Frank Curry, the plaintiff, brought this suit against the Charles Warner Co., the defendant, being an action of covenant to recover damages for what he alleges to be a *108failure on the part of the defendant to perform the covenants contained in said agreement.
The plaintiff in his declaration claims:
1. One equal tenth part of all net royalties received by defendant for or on account of the said patented invention.
2. One equal tenth part of the net proceeds of any and all sales, assignments and grants, made by the defendant of said patented invention in whole or in part.
3. One equal tenth part of all profits derived by said defendant from the use or employment by it, of the said patented invention.
As there was no evidence of the receipt of any royalties by the defendant, the plaintiff has abandoned this first part of his claim. You have, therefore, nothing to do with the subject of royalties. This leaves for your consideration the two remaining portions of plaintiff’s claim, viz.: The equal tenth part of the net
proceeds of sales, assignments and grants of the said patented invention and a tenth part of the profits arising from the use of the patented invention by the defendant.
The parties to this suit have defined their respective rights and duties in the formal sealed instrument above set forth, and both are bound by the terms and meaning thereof. Therefore in determining what their respective rights and duties are, we are to be governed by that instrument.
In respect to the sales of the patent, the defendant expressly .agrees, in case of sale by it, of the whole or any part of the said patented invention, forthwith to pay to the said plaintiff, one equal tenth part of the net proceeds of any and all such sales, and that the intent of the agreement was that the plaintiff should have the beneficial enjoyment of one equal tenth part of the net proceeds of the sale, assignment or grant of the whole or any part or parts •of said patented invention.
*109Therefore the plaintiff would be entitled to the one tenth part of whatever net proceeds accrued to the said Charles Warner Company, from the grant of the license to the Quaker City Mortar Company, of Philadelphia, to use said invention, and also for the assignment of the patented invention to the Warner Process Mortar Company, of West Virginia.
The plaintiff claims that the net proceeds in the first case was five hundred dollars, and in the second place twenty-two thousand shares of stock of the Warner Process Mortar Company. The defendant, on the other hand, admitting the sales, claims that it received nothing for the first, and that for the second, the net proceeds received for the said assignment, was eleven thousand shares of stock of the said Warner Process Mortar Company, and that eleven hundred of said shares, being the one tenth part thereof, were by it duly tendered to the plaintiff and by him refused.
By the terms of said agreement, the defendant covenanted in case of the sale of said patented invention, forthwith to pay said plaintiff, the one equal tenth part of the net proceeds of said sale.
It is admitted by the defendant, that it received the eleven thousand shares of stock on the twentieth day of July, 1892; at which time Curry became entitled to receive his eleven hundred shares, under the defendant’s express agreement to pay forthwith to him his one tenth part; and it was the duty of the defendant to make such payment or delivery forthwith, and without any demand on the part of the plaintiff. A tender therefore of the said eleven hundred shares on the twenty-fourth day of October, 1893, one year and four months after the date of the receipt of said net proceeds, even if such tender was in all other respects legal, would not be a compliance with the express terms of the contract to pay forthwith. We therefore say to you that there was in this case no such tender as to interfere with the plaintiff’s right to recover on that ground.
On this branch of the subject therefore, the plaintiff would be entitled to recover, the value of the eleven hundred shares of stock, measured by the value on the twentieth day of July, 1892, with *110interest from that date. If the stock at the time had no value, then the plaintiff can recover nothing, as in reaching a verdict in this case in the assessment of damages, you must measure the value in money. Such value is to be determined by you from the evidence in this case.
We now turn to the plaintiffs claim for profits for the use of said invention.
The contract provides that he shall have the beneficial enjoyment of an equal tenth part of all profits, which shall be derived by the said, defendant from the use or employment of the said patented invention.
The plaintiff claims that the defendant used the said invention in manufacturing mortar in this city, where they operated a large plant for that purpose, from March 29th, 1892, to February 4th, 1894, the period covered by this suit, and before and after that time. That the saving in material and in the cost of labor by this process was very large, whereby great profit accrued to the defendant, claimed in the declaration to be $30,000.00, and that he is entitled to the one tenth part thereof.
The defendant admits the use of the invention, but contends, on the other hand that there has been no profit whatever, that the costly plant necessary for, and the expenses incident to the making of mortar by this process, made the business a losing rather than a profitable one.
You will observe that the plaintiff covenants for the one equal tenth part of all profits which, shall be derived by the defendant from the use or employment of the invention; that is, the tenth part of the profits the defendant actually made in the business.
What are the profits, and by what rule are they to be ascertained in contracts of this character ? Upon the solution of this question this branch of the case depends.
The word profits is one in common use, unambiguous and primarily means, acquisition beyond expenditure, or the excess of sale or value received over costs. Has it any other or peculiar meaning *111in this contract? If not, the word is to be construed in its plain, ordinary and familiar sense.
It is conceded that the business in which the defendant used this invention, in fact, was that of manufacturing and selling mortar at their wharves in this city.
That in this business the plaintiff himself was superintendent for several months in the year 1892 and also in 1893. That as an employe of the Charles Warner Company he was familiar with and took part in the business as then and there conducted.
It is further conceded, that this process or invention covered the entire manufacture of the mortar, and that the mortar was the product of this process alone, and of no other, or combination of any other process. That it was not an improvement on, an addition to, or part of any other machine or process used in or about the manufacture of that mortar. That it was in fact an original and exclusive process for mortar making.
Under this condition of facts, we are asked by the plaintiff to instruct you, that profits are to be measured' by the advantages gained by the defendant in excess of what it would have obtained, by using other means for making mortar already open to the public, and able to produce the same result; and that the parties in the above recited agreement have agreed that that is to be the measure of profits.
.We do not think that the agreement fixes any such measure. It does not say so in terms, or by necessary implication, and as affecting his interest, the words are to be construed most strongly against the plaintiff covenantor. Such interpretation would be contrary to the ordinary acceptance of the word profits, and may not be adopted, unless such meaning is manifest from the language of the agreement.
The true rule, even in cases of infringment of patent, where there is and can be no agreement, is that laid down by Professor William C. Robinson of Yale University, in his admirable work on patents; Vol. 3, Sec. 1862, page 347, note, who says :
“ Where the invention is an original invention, or an improve*112ment used independently and as an original, the plaintiff is entitled to profits for its use by the defendant as he has used it, without -regard to anything else he might have used lawfully or unlawfully in the promotion of his business.”
The invention used in this case comes within the rule above laid down, as an original invention. It was used by The Charles Warner Company as such and independently of any other in that business. The invention covers the whole of the business. In that business sand, lime, hair and labor were used, and although there might have been a saving in these or any of them, yet as machinery, buildings, capital, clerical labor, porterage and other expenses were necessary in using said invention, the use of these or any of them may be set off against such saving in estimating profits • and as the mortar was made for sale, and there could be no ascertainment of profits until the sale or disposition thereof, the costs of such sale and the losses therein should also be included in such estimate.
The rule applicable to this case therefore would seem to be, that you are to take the total sales of mortar, from these deduct all legitimate costs and charges of the manufacture and sale, and the difference thus ascertained would be the profits or loss. For the plaintiff in ascertaining profits may not take such items of the business as may show gain and reject such as show loss, but must take the entire business where the use of the patent covers the entire business, as in this case. This is the ordinary acceptance of the word profits used in the agreement. It is based on reason and supported by authority. Freeman vs. Freeman, 142, Mass. 98; Troy Iron and Nail Factory vs. Corning, 6 Blatchf. 328; Hitchcock vs. Tremain, 9 id. 325.
The cases cited by the plaintiff in favor of his contention, do not in our judgment apply to this case. They are not suits upon a contract, but relate to the measure of damages in cases of infringement of patent rights. They are mainly cases where the invention used is only a part of the machinery or process used in manufacturing and does not cover or relate to the entire business. In such *113case the defendant rightfully should pay for the use of the patent whether the general business of which it was only an incident or part was profitable or not.
We have given this part of the subject much consideration, because it is a case of first impression in this Court and we were anxious to reach the true rule of construction. We believe the one above laid down by us to be the true rule.
In conclusion, gentlemen, if you believe that the Charles Warner Company received anything of value, by way of net proceeds of sales or assignment of said patented invention, or any profits derived from the use or employment of the said patent, then Curry is entitled to the one tenth part thereof, and your verdict should be for the plaintiff for such tenth-part with interest from the time that he was entitled to receive the same.
If, on the other hand, you should consider that there are no such net proceeds from sales or assignment of the patent or no such profits from the use of the patent, your verdict should be for the defendant, and your conclusion must be based on the preponderance of evidence in the case.
In reaching your conclusions, you may not consider whether the business was managed wisely or unwisely; neither are you to consider what ought to have been made or what might have been made, but only what actually was made; nor are you to go outside of or consider any matter, not within the scope of that agreement. All the parties to the agreement are manifestly intelligent business men. They have made their contract, and by that they must abide, and you are to be governed by it in making up your verdict.
Jury Disagreed„