Kenyon v. Automatic Instrument Co.

89 F. Supp. 602, 85 U.S.P.Q. (BNA) 8, 1950 U.S. Dist. LEXIS 4024
District Court, W.D. Michigan·Decided March 3, 1950·No. Civ. A. No. 509·Published·Cited by 4 cases

Opinion

STARR, District Judge.

Plaintiff brings this action to recover from defendant, a Michigan corporation, royalties alleged to be due under the following contract between her deceased husband, Bertram C. Kenyon, and the Automatic Musical Instrument Company, a Delaware corporation:1

“This agreement made and entered into the 7th day of December, 1925, by and between Automatic Musical Instrument Company, a corporation organized, authorized and doing business under and by virtue of the laws of the State of Delaware as party of the first part and Bertram C. Kenyon of the city of Grand Rapids, Michigan, as party of the second part, witnesseth:
“First, Said first party hereby agrees to employ said second party for a period starting on the day hereof and extending to and including the 15th day of July, 1926, for the purpose of perfecting, manufacturing, and aiding in the construction and manufacture of a certain multiple record phonograph, or talking machine, and agrees to pay him for such services the sum of $1,890, in equal weekly installments of $60 each, with the understanding that at the expiration of this contract at the option of said first party, the said employment may be extended for further periods.
“Second, Said second party hereby accepts the foregoing employment upon the terms specified 'herein and agrees to give [604]*604all of his time and his best efforts to making his said employment mutually beneficial, and said second party further agrees that he will at all times heed and obey and follow the orders and instructions of the officers of the said first party, and of their factory executives, and will to the fullest extent of his ability, cooperate with them for the purposes for which he is employed.
“Third, Said second party represents that he is the inventor of the said multiple disc phonograph above 'referred to and represents that he will attempt, or the said first party may in his name attempt to cover the mechanism and operation and the functioning of said phonograph as herein-before noted, by proper letters patent to be issued as soon as may be by the United States of America. In the event that said patents are obtained by either said first or second party the title thereto and all interest therein shall be the property of and belong to said first party and the said second party does hereby give and grant, sell and assign unto said first party the exclusive right to make, manufacture, market, vend and operate the said phonograph, under his present rights and under future letters patent, according to the terms hereof, in any manner which it may desire to do, and covenants to and with the said first party that performing its obligations under this contract it shall have, hold, and enjoy all the rights, benefits, titles and returns of and from said invention, and that he will when so requested by said first party, duly and properly sign, seal, execute and' deliver unto said first party proper assignments and any rights which may hereafter accrue under and by virtue of said invention.
“Fourth, In consideration of the foregoing assignments and licenses, the said first party agrees that for each of said machines manufactured by it, it will on or before the tenth day of the month succeeding the completion of such machine, pay to the order of the said second party, in good and lawful money of the United States of America, the sum of Five Dollars. The terms, agreements and covenants in this contract contained are made contingent upon the assurance of the said second party that his invention and the applications for patents thereon may not be attacked before any court, commission, department, or bureau for infringement of other patents, and should such difficulties or litigation arise, then the terms of this contract shall' be, from that moment, null and void, unless the said second party shall be vindicated in such action.
'“Fifth, The terms upon which the license to manufacture and the assignment of prospective patents upon the said phonograph are given shall be and remain in force during the life and continuance of any or all patents issued upon the said mechanism to said second party, his heirs, or assigns.
“In witness whereof said first party has caused these presents to be signed by its duly authorized officers and its corporate seal to be affixed; and said second party ■has hereunto set his hand and seal at the city of Grand Rapids, Michigan, the day and year first above mentioned.
“Automatic Musical Instrument Co.
“By W. loor, Pres.
“S. D. Thompson, Secy. .
“Bertram C. Kenyon
“In the presence of:
“W. W. Boa
“Erwin M. Treusch.”
“Memorandum
“As an addendum to the contract dated December 7, 1925, to which this memorandum is attached, it is understood and agreed that the said first party will manufacture as many of said multiple record phonographs as is consistent with their business policies and, subject to their complete satisfaction and proper performance of the said phonographs when completed, the said first party undertakes and agrees to pay to said second party the minimum sum of $1,000 per year, for five years, from and after the commencement of manufacture of said phonograph, on the basis- mentioned in said paragraph fourth, which guarantee, when, if and as paid, shall apply on the basis of five dollars, per machine as therein mentioned.
[605]*605“This memorandum has been initialed by the parties of the contract to which it is attached at the time of execution of same.
“Dated Dec. 7, 1925. W. I. S.D.T. B.C.K.”

This contract provided that it was to continue in force during the life of all patents issued to Kenyon on the phonograph mechanism therein referred to, and that the Delaware corporation would pay him a royalty of $5 “for each of said machines” it manufactured. The contract contemplated the obtaining of a patent on the phonograph mechanism, and on July 15, 1927, Kenyon, Wilmur W. Boa, and Clifford If. Green filed application for such patent. On September 27, 1932, Letters Patent No. 1,879,693 for an “automatic sound reproducing instrument” (herein referred to as the Kenyon patent) was issued to the Delaware corporation as assignee of Kenyon, Boa, and Green.2 The parties continued under the contract until February, 1931, and during that time the corporation manufactured machines referred to as models P, Z, J, and K, which were within the claims of the Kenyon patent application, and paid him royalties of about $48,000. On February 10, 1931, this court, in proceedings by a general creditor, appointed a receiver for the Delaware corporation, and in February, 1933, the assets of that company, including the Kenyon patent, were sold and assigned to the Automatic Musical Instrument Company, a newly organized Michigan corporation and predecessor of the defendant.3

The manufacture of models P, Z, J, and K was discontinued at the time of the receivership in 1931, and the tools and dies used in their manufacture were later scrapped.

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Kenyon v. Automatic Instrument Co., 89 F. Supp. 602, 85 U.S.P.Q. (BNA) 8, 1950 U.S. Dist. LEXIS 4024 (W.D. Mich. 1950).

89 F. Supp. 602 (Kenyon v. Automatic Instrument Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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