Moss Rosenberg Verft v. General Dynamics Corp.

467 F. Supp. 467, 1979 U.S. Dist. LEXIS 13651
CourtDistrict Court, D. Massachusetts
DecidedMarch 20, 1979
DocketCiv. A. No. 76-3025-C
StatusPublished
Cited by1 cases

This text of 467 F. Supp. 467 (Moss Rosenberg Verft v. General Dynamics Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Moss Rosenberg Verft v. General Dynamics Corp., 467 F. Supp. 467, 1979 U.S. Dist. LEXIS 13651 (D. Mass. 1979).

Opinion

OPINION

CAFFREY, Chief Judge.

This is a civil action which came on for a nonjury trial. After trial, I find and rule as follows:

On April 14,1971 the Norwegian business concern of Moss-Rosenberg Yerft, A/S (hereinafter Moss) and General Dynamics Corporation (hereinafter General Dynamics), a Delaware Corporation which owns and operates a shipyard in Quincy, Massachusetts, entered into a licensing contract. Under the terms of the agreement, Moss granted to General Dynamics an exclusive, but conditional, license to use Moss’ design and other information under Moss’ control “to make, have made, sell, lease, and use” liquified natural gas (LNG) tankers with a cargo capacity of 130,000 m3 or less. The agreement also gave a non-exclusive license to General Dynamics to make and sell tankers with a cargo capacity greater than 130,-000 m3. The design in question was a spherical cargo tank system developed by Moss which General Dynamics was then eager to build and market.

Almost five years later in 1976, Moss and Avondale Shipyards, Inc. (hereinafter Avondale), a Louisiana corporation, agreed to a contract under the terms of which Avondale was to become a non-exclusive licensee of the Moss design. Under the 1976 agreement Moss granted Avondale a license to use Moss’ design in constructing [469]*469vessels with a cargo capacity of more than 130,000 m3. On its face, therefore, the contract does not conflict with any of the exclusivity rights claimed by General Dynamics under its 1971 contract.

In March 1976, before the agreement between Moss and Avondale was executed, General Dynamics informed Moss of its opposition to the awarding of that contract. General Dynamics claimed that under the terms of the 1971 contract all improvements made by General Dynamics on the Moss design were the property of General Dynamics and that since such improvements were no longer severable from the Moss design, the grant of any additional license by Moss would result in a release of General Dynamics’ proprietary information. General Dynamics informed Moss that it would hold Moss strictly accountable for any damages it suffered as a result of such a release.

Moss filed this case primarily in the form of an action for declaratory judgment in the United States District Court for the District of Columbia on June 4, 1976. In response to the complaint, General Dynamics raised a number of defenses and also filed several counterclaims. The case was transferred to this Court from the District of Columbia on August 13, 1976, on the basis of General Dynamics’ motion under 28 U.S.C.A. § 1404(a).

Moss and Avondale proceeded to execute their contract and Avondale is now contemplating the construction of an LNG tank-ship with a diameter of 121 feet 28/4 inches. General Dynamics maintains that such a tankship will have a cargo capacity of less than 130,000 m3 and therefore its construction will violate the exclusivity provision of the 1971 contract. Consequently, in its first counterclaim General Dynamics seeks to enjoin Moss and Avondale from proceeding with their licensing agreement.

Over a two-year period, extensive discovery and numerous pretrial motions, the necessity of much of which appears highly dubious, have resulted in a voluminous file. During the trial, on motion of the plaintiff, the Court dismissed the complaint for declaratory judgment without prejudice. Thus, after weeding through this paper jungle, the only issues remaining for the court’s determination are those raised by General Dynamics’ first counterclaim, namely: (1) whether the exclusivity provision of the 1971 contract is still in effect; and, if so, (2) whether the proposed Avon-dale vessel violates that provision.

Moss correctly points out that the exclusivity arrangement was conditional and contends that it was, in fact, terminated in 1972, before Moss entered into its contract with Avondale. It further maintains that even if the court should rule that the exclusivity provision is still operative, that the cargo capacity of the proposed Avondale vessel does not violate the exclusivity provision. In so arguing Moss contends that cargo capacity is computed by determining 100% of the interior volume at cargo temperature.

General Dynamics denies that the exclusivity of its license has been terminated and maintains that the proposed Avondale vessel is in violation of the 1971 contract between Moss and General Dynamics. In support of its argument, General Dynamics defines cargo capacity as the maximum volume to which a cargo tank may be loaded. Under the theory set forth by General Dynamics, allowance for ullage or vapor must be made in determining the cargo capacity of a vessel.

Turning first to a consideration of General Dynamics’ claim of exclusivity, an examination of the 1971 contract establishes that initially, as to all tankships with a cargo capacity of 130,000 m3 or less, the license was indeed intended by the parties to be exclusive. However, I rule that the continued existence of that exclusivity was rendered conditional by a limiting provision in the contract which provided:

The exclusivity granted herein for Tank-ships having a cargo capacity of 130,000 m3 or less shall continue for the life of this agreement and any extensions hereof, provided:
(a) Dynamics shall have entered into a contract or contracts for the construction of three or more Tankships on or before 31 December 1971, or
[470]*470(b) Moss is satisfied that Dynamics is aggressively and successfully pursuing the LNG tankship market and continues to possess the capacity to satisfy a substantial portion for the market.

The contract also set forth the procedure by which Moss could terminate the conditional exclusivity

If subsequent to 31 December 1971, Moss should determine for good and sufficient reason that Dynamics is not actively and successfully pursuing the market for Moss’ LNG tankships, or that Dynamics does not have the capacity or capability of satisfying a substantial part of such market, Moss may, after consultation with Dynamics, enter into license agreements with other U.S. shipyards for Tankships of 130,000 m3 or less. Moss shall not, however, enter into such other license agreements without giving Dynamics a reasonable opportunity to refute such determination.

I find that as of December 31, 1971 General Dynamics had still not entered a single contract for the construction of an LNG tankship, and, indeed, in 1972 it was considering the possibility of closing its Quincy shipyard. I also find that Moss was not satisfied with General Dynamics’ pursuit of the LNG tankship market and in a telex dated March 15, 1972 it conveyed that dissatisfaction to General Dynamics. The telex expressed Moss’ doubt that General Dynamics was pursuing the market in an aggressive or successful manner or that General Dynamics had the capacity to satisfy a substantial portion of that market and indicated its intention of licensing other U.S. shipyards.

General Dynamics responded in a telex dated March 21, 1972. It informed Moss that it would vigorously oppose any attempt by Moss to license other U.S. shipyards.

On October 19, 1972 Moss, notified General Dynamics that after full discussion between the parties Moss had concluded that its design should be made available to other interested shipyards.

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467 F. Supp. 467, 1979 U.S. Dist. LEXIS 13651, Counsel Stack Legal Research, https://law.counselstack.com/opinion/moss-rosenberg-verft-v-general-dynamics-corp-mad-1979.