Martin Co. v. United States

169 F. Supp. 524, 144 Ct. Cl. 714, 120 U.S.P.Q. (BNA) 109, 1959 U.S. Ct. Cl. LEXIS 53
CourtUnited States Court of Claims
DecidedJanuary 14, 1959
DocketNo. 540-56
StatusPublished
Cited by3 cases

This text of 169 F. Supp. 524 (Martin Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Martin Co. v. United States, 169 F. Supp. 524, 144 Ct. Cl. 714, 120 U.S.P.Q. (BNA) 109, 1959 U.S. Ct. Cl. LEXIS 53 (cc 1959).

Opinion

MaddbN, Judge,

delivered the opinion of the court:

The plaintiff sues the United States pursuant to the provisions of 28 U. S. C. 1498 for just compensation for the acquisition and use by the United States of aircraft fuel cells and tanks upon which, the plaintiff claims, it has patents. The Government, in its answer, alleges that the plaintiff’s patents had been anticipated by 57 American patents, six foreign patents, and five publications. The answer asserts numerous other reasons why the patents are invalid. As originally filed, the answer asserted that the plaintiff had given the Government a license to use the patents. That assertion was later eliminated by amendment of the answer.

The Government also filed a contingent claim against three rubber companies which had manufactured fuel cells and tanks for it, claiming that these companies had agreed to indemnify the Government against any liability for the use of the patents, and asking that if any judgment should be obtained by the plaintiff against the Government, a judgment of like amount should be given the Government against the rubber companies.

[716]*716The rubber companies made a motion to dismiss'the Government’s contingent claim against them, asserting that the Government, by certain dealings with the plaintiff, had so prejudiced and impaired the Government’s capacity to defend against the plaintiff’s suit, that the rubber companies had been released from their liability as sureties or indemnitors.

The court granted the motion of the rubber companies and dismissed the Government’s contingent claim against them. The Martin Company v. United States, 143 C. Cls. 551. Thereupon the Government filed the instant motion for summary judgment dismissing the plaintiff’s petition. It says that, because it has lost its right to indemnity against the rubber companies as a result .of our decision of July 16,1958, the plaintiff has lost the right to obtain a judgment against it, regardless of what might otherwise be the merits of the plantiff’s suit. The solution of the questiton depends upon the proper interpretation of Article XIV of a contract dated October 1, 1954, between the Government and the plaintiff. Article XIV provides:

MaetiN agrees that if it obtains any judgment against The GOVERNMENT for compensation for the use of any of the inventions of any of the aforesaid patents, then to the extent, if any, that there existed no indemnity and/or hold harmless commitment by another, either on September 30,1954, or subsequently, which extended to The Government (either directly or through a prime con- . tractor with The Government or otherwise) in respect of such a liability as that represented by such judgment, Martin will not seek payment thereof.

The Government says that “there existed no indemnity * * * either on September 30, 1954, or subsequently * * *” to-wit, on July 16, 1958, after our decision that the rubber companies had been released from their contracts of indemnity. Ergo, says the Government, the plaintiff has agreed that if it should get a judgment, it would “not seek payment thereof.” If the plaintiff would not seek payment of a judgment if it got one, it is obvious that the energies of the court and the parties should not be used up in a trial which would involve, among other things, 57 alleged anticipatory American patents, six foreign patents and five prior publications.

[717]*717The Government says that the meaning of the language of Article XIY is perfectly plain, hence it needs no interpretation. The plaintiff does not say that the language perfectly plainly means the opposite of what the Government says it means. The plaintiff says that, in its contest, and placed in the setting of the negotiations leading up to the choice of the language, it does not have the meaning which the Government would attribute to it.

Our question is whether “no indemnity on September 30, 1954 or subsequently” meant, to the parties, “an absence of indemnity both on September 30, 1954, and subsequently.” The significance of the September 30 date was that the agreement, of which Article XIV was the final paragraph, was dated October 1, 1954. It was a long and complicated agreement, attempting to settle once and for all numerous mutual claims of the plaintiff and the Government. The Government had been paying royalties to the United States Eubber Company and the Manufacturers Aircraft Association which held licenses from the plaintiff to use its patents. The Government had given statutory notices that it intended to proceed under the Eoyalty Adjustment Act to have those royalties adjusted. It had also been procuring materials from the non-licensed rubber companies which were formerly involved in this suit as third party defendants, and the plaintiff was demanding compensation on that account. The October 1, 1954 agreement took into account these circumstances and events, called for the withdrawal by the Government of its Eoyalty Adjustment Act notices, gave a license to the United States for procurement ordered after September 1, 1955, and provided formulas for payment of compensation for procurement obtained before that date.

The question of what should be done about past procurement from unlicensed manufacturers was considered at length in the negotiations leading up to the written agreement. Fortunately those negotiations were largely in the form of letters, and are available to us. The parties knew that unlicensed manufacturers had been required by the Government to agree to indemnify the Government against liability to owners of patents covering the procured material. They knew that such a manufacturer would probably have [718]*718added something to the price of the product to cover its possible liability on its indemnity agreement. The Government desired, in its agreement with the plaintiff, to protect itself against having to pay twice for the use of the patent. There was much written discussion of that problem.

Although the comprehensive agreement between the Government and the plaintiff was dated October 1,1954, it was in fact negotiated in 1955 and dated back to October 1,1954. In the negotiations, Martin had proposed that Article IY of the agreement should provide that the Government acknowledged the validity of the Martin patents, and that it had no license to use those patents. The Martin proposal also suggested an Article XIV in the exact form in which it appeared in the final agreement.

The Government rejected the Martin proposals for the reason that “these articles do not provide adequate protection against double payment by the Government”. The Government representative wrote to Martin:

The proposed articles, however, would permit Martin to collect from the Government if an indemnity existed on 30 September 1954, despite the fact that the indemnity might not be enforceable at the time of judgment, and even though the Government has already paid an additional charge for such indemnity.

He further wrote:

It is reasonable to believe that a court might hold that the patent indemnity articles are nullified by reason of the Government’s settlement of the claim [i. e. Martin’s claim] without the consent of the contractors and by reason of the Government’s waiver of defenses in Article IY.

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Related

Sylvania Electric Products, Inc. v. United States
458 F.2d 994 (Court of Claims, 1972)
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427 F.2d 740 (Court of Claims, 1970)
Martin-Marietta Corporation v. The United States
373 F.2d 972 (Court of Claims, 1967)

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Bluebook (online)
169 F. Supp. 524, 144 Ct. Cl. 714, 120 U.S.P.Q. (BNA) 109, 1959 U.S. Ct. Cl. LEXIS 53, Counsel Stack Legal Research, https://law.counselstack.com/opinion/martin-co-v-united-states-cc-1959.