Mid-West Conveyor Co. v. Jervis B. Webb Co.

877 F. Supp. 552, 1995 U.S. Dist. LEXIS 2568, 1995 WL 89206
CourtDistrict Court, D. Kansas
DecidedFebruary 3, 1995
DocketCiv. A. No. 93-2539-EEO
StatusPublished
Cited by1 cases

This text of 877 F. Supp. 552 (Mid-West Conveyor Co. v. Jervis B. Webb Co.) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mid-West Conveyor Co. v. Jervis B. Webb Co., 877 F. Supp. 552, 1995 U.S. Dist. LEXIS 2568, 1995 WL 89206 (D. Kan. 1995).

Opinion

MEMORANDUM AND ORDER

EARL E. O’CONNOR, Senior District Judge.

This declaratory judgment action was tried to the court on December 12, 1994. Plaintiff Mid-West Conveyor Company, Inc., (“Mid-West”) seeks a declaration that a license agreement entered into between Mid-West and defendant Jervis B. Webb Company (“Webb”) grants Mid-West and its affiliate, Dearborn Fabricating & Engineering Company, a non-exclusive, worldwide license to manufacture, use and sell, or have manufactured for use and sale, conveyor systems incorporating inventions disclosed and claimed in Webb’s United States Patent No. 4,616,570. Webb maintains that the license is not worldwide in scope, but is limited to the United States.

After reviewing all the evidence and the arguments of counsel, the court makes the following findings of fact and conclusions of law as required by Federal Rule of Civil Procedure 52(a).

Findings of Fact

1. Mid-West is a Delaware corporation with its principal place of business in Kansas. Mid-West and Dearborn Fabricating & Engineering Company are wholly-owned subsidiaries of Tomkins Industries. Webb is a Michigan corporation with its principal place of business in Michigan.

2. Mid-West and Webb are competitors who are both engaged in the manufacture and sale of unit-handling conveyor systems for numerous industries, including the automotive industry.

3. Webb is the owner of United States Patent No. 4,616,570 (the “’570 patent”). The subject matter disclosed and claimed in the ’570 patent is a transfer mechanism for power and free conveyor systems, and is sometimes referred to as the “wide-dog” transfer. The transfer mechanism is used to transfer objects, such as automobile bodies, from one conveyor to another in conveyor systems.

4. In addition to the ’570 patent, Webb owns several corresponding foreign patents for the wide-dog technology disclosed and claimed in the ’570 patent, including patents in Canada and France.

5. In 1988, Mid-West and Webb’s Canadian subsidiary competed with each other for a contract to supply conveyor systems to General Motors at its plant in Ste. Therese, Quebec, Canada. Mid-West was awarded the contract in the summer of 1988.

6. In late 1988, Michael McClellan, the president of Mid-West Conveyor, contacted Jervis H. Webb, the president of Webb. McClellan told Mr. Webb that Mid-West had been awarded the contract for the General Motors plant in Ste. Therese, Canada, and that Mid-West desired to use the wide-dog transfer technology on that job. Mid-West was aware at this time that Webb owned U.S. and Canadian patents on the wide-dog technology. Mid-West requested a license to utilize the wide-dog technology on the Ste. Therese project, and on future projects. Mr. Webb informed McClellan that David Webb Clark, the vice-president of engineering, was the person within the Webb organization responsible for licensing and patents, and that McClellan should direct his inquiries to Clark.

7. During the negotiation process, McClellan expressed to Clark an interest in obtaining a license agreement that would apply not only to the Canadian project, but would extend to future jobs. In a letter to Clark, dated December 19, 1988, McClellan stated:

Our thought is that the license would initially cover 89 transfers at the General Motors facility in Ste. Therese and that it could be extended to other projects on the same basis. (Emphasis added.)

[554]*5548. In a January 25, 1989, letter to Clark, McClellan repeated Mid-West’s position that the license would encompass the Ste. Therese project, and all future projects:

We have reviewed your letter and would like to offer this counter proposal of $1,200 for each transfer and $100 per carrier or 2Wo of the total sell price, whichever is lower. This would provide a fee of $194,-400 for the St. Therese project and would be applicable to all future projects. (Emphasis added.)

9. In response to this letter, Clark sent McClellan draft copies of a license agreement accompanied by a cover letter dated January 27, 1989. The cover letter stated:

Enclosed are two copies of a license agreement incorporating terms as outlined in your letter to me dated January 25, 1989 with the exception that we have deleted the royalty payment based on a percentage of sell price. (Emphasis added.)

At the time McClellan received the letter and draft license proposal, he believed the license agreement was for all future projects of Mid-West, without territorial limitation. McClellan testified this belief derived from Clark’s express statement in the January 27 letter that the license incorporated the terms of McClellan’s January 25, 1989, letter, which included the language that the agreement would apply to the Ste. Therese project and “would be applicable to all future projects.”

10. Mid-West added Dearborn Fabricating and Engineering Company to the draft license agreement as a licensee along with Mid-West, and forwarded signed copies of the revised draft agreement to Webb on February 9, 1989.

11. Except for the addition of Dearborn as a licensee, the final version of the license agreement is identical to the original draft license, which was prepared in its entirety by Webb.

12. On February 17,1989, Clark forwarded fully executed copies of the license agreement to McClellan. The fully executed license agreement was identical to that enclosed with McClellan’s letter of February 9, 1989. The license agreement was signed by Clark, as secretary of Webb, by McClellan as president of Mid-West, and by J. Wes Paisley as president of Dearborn.

13. Paragraph two of the license agreement contains a grant clause, which reads, in pertinent part:

License grant. WEBB hereby grants to MID-WEST, and MID-WEST hereby accepts, a non-exclusive, non-transferrable license to manufacture, use and sell, or have manufactured for use and sale by MIDWEST, power and free conveyor systems incorporating any invention disclosed and claimed in the Licensed Patent, and such conveyor system being hereinafter referred to as a Licensed System.

14. The grant clause does not include any recitation that the license right granted is limited to the United States. Nor does the license agreement include a definition of any territory limiting the geographical scope of the license.

15. The license agreement also contained a choice-of-law clause. Paragraph nine of the agreement stated as follows:

Applicable law. This Agreement shall be deemed a contract made under the laws of the State of Michigan, and shall be construed and interpreted in accordance therewith.

16. Clark had both the apparent and actual authority to negotiate and sign the license agreement on behalf of Webb. During the entire negotiation process, Clark never suggested to McClellan that Clark’s authority to grant foreign licenses was circumscribed in any way. Specifically, Clark never told McClellan that Webb or Webb International had other license agreements in place, including counterpart foreign patents to the ’570 patent, and Webb’s Canadian patent.

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Related

Mid-West Conveyor Co. v. Jervis B. Webb Co.
92 F.3d 992 (Tenth Circuit, 1996)

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Bluebook (online)
877 F. Supp. 552, 1995 U.S. Dist. LEXIS 2568, 1995 WL 89206, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mid-west-conveyor-co-v-jervis-b-webb-co-ksd-1995.