Rubsam v. Harley C. Loney Co.

117 F. Supp. 164, 99 U.S.P.Q. (BNA) 276, 1953 U.S. Dist. LEXIS 4245
CourtDistrict Court, E.D. Michigan
DecidedOctober 28, 1953
DocketCiv. A. No. 8136
StatusPublished
Cited by1 cases

This text of 117 F. Supp. 164 (Rubsam v. Harley C. Loney Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rubsam v. Harley C. Loney Co., 117 F. Supp. 164, 99 U.S.P.Q. (BNA) 276, 1953 U.S. Dist. LEXIS 4245 (E.D. Mich. 1953).

Opinion

THORNTON, District Judge.

This is a contract action based upon certain patent license agreements granting exclusive rights to the plaintiff upon certain patents relating to balancing weights for vehicle wheels, principally automobiles, in the so-called original production field, that is, by motor car manufacturers, as distinct from the “service field”. Plaintiff seeks injunctive relief against the invasion of his exclusive license by defendant, an accounting for unpaid royalties, and assessment of costs. Questions of validity, invalidity or infringement of patents are not involved. Jurisdiction is grounded upon diversity of citizenship and the amount in controversy, plaintiff being a citizen of the state of California, and defendant being a corporation organized under the laws of the state of Michigan, and the amount in controversy being in excess of $3,000.

The defendant, in filing its answer to the complaint herein, interposed two separate and distinct claims against the plaintiff as counterclaims. The first was for a declaratory judgment as to the scope and validity of patents, and the second was a libel claim.

The plaintiff and counter-defendant moved to. dismiss both counterclaims. The motion to dismiss the counterclaim for declaratory judgment as to the scope and validity of the patents was denied, and the motion to dismiss the counterclaim for libel-was granted by the.Court. D. C., 86 F.Supp. 350.

[166]*166A separate trial was ordered of the issues involved in the declaratory judgment counterclaim.

The claim of the plaintiff for an accounting for unpaid royalties embraces the manufacture and sale by defendant under a back license in the production field of spring-clip type balancing weights for automobile wheels under any and all so-called Hume patents and/or any other patents that may be owned or acquired by the Loney Company under said license agreements claimed to have been entered into by the parties; also the manufacture and sale by defendant of patented devices under Rubsam’s patents, under an express license in the production field and under an implied license in the service field.

Weights sold in the “production” field are sold to automobile manufacturers for application to wheels at the assembly line in the automobile manufacturing plant. Weights sold in the “service” field are sold to wholesalers who re-sell to retailers who balance wheels at the retail level. This last group includes operators of tire stores, garages and others servicing the automobile owner.

Hume filed his patent application in December of 1932 showing two forms of a wheel balancing weight, which application matured several years later into the “basic” Hume Patent No. 2,036,757. Shortly thereafter Hume signed a license agreement with the Chrysler Corporation whereby Chrysler was granted a royalty-paying license, the granting clause of this license reading as follows:

“1. Hume hereby gives and grants unto Chrysler a non-exclusive license to make, or have made for it, use and sell wheel balancing devices for use on vehicles of Chrysler’s manufacture and for its service requirements as covered by said patent application or such patents as may be issued covering the invention therein set forth, as well as any improvements in said invention which may be now or hereafter owned or controlled by Hume.”

In accordance with the foregoing arrangement, and for a period of about two and one-half years, the Loney Company sold its set-screw weight, one of the forms shown in the original Hume application, to Chrysler for use in Chrysler production.

Shortly thereafter Hume licensed the Nash Motor Company. That license was not confined to either the production or service field, and permitted Nash to manufacture weights and/or to purchase weights made by others, without restriction, and Nash purchased Loney setscrew type weight.

Some time after Hume had filed his basic application, Virgil L. DuSang of Kokomo, Indiana, filed his application for a cast-on spring-clip type wheel balance weight. The Hume and DuSang applications were thrown into interference, and on December 12, 1934, Hume and DuSang settled their patent interference by granting cross-licenses under their patents, and by having DuSang concede priority on the counts of the interference.

The rights which Hume conveyed to DuSang, with respect to the cast-on weight were set out in paragraph 3 of the Hume-DuSang license (Defendant’s Exhibit 1) which reads as follows:

“3. First party hereby grants to second party, his heirs and assigns, subject to the provisions herein set out, an exclusive license throughout the United States without restriction as to original equipment, or jobbing or direct to user sales, for the life of the patent and/or patents that may issue to first party on his aforesaid application Ser. No. 645,504 and/or any other application or applications pertinent thereto, to make, use and sell that specific form of the invention, as shown in Figs. 1 and 2 of the drawing in second party’s application Ser. No. 718,915, namely, a weight having a spring clip attachment portion carrying a weighted body cast upon one portion thereof, and second party shall pay to first party a royalty of one (lji) [167]*167cent for each and every weight of this form sold.”

By the foregoing, Hume licensed Du-Sang exclusively to manufacture a spring clip cast-on weight for either production or service at a set royalty, and by granting this exclusive license for the cast-on weight, Hume deeded away from his own control any right to make or sell the cast-on type of weight. In addition, Hume also licensed DuSang in any other patents that might issue to him from any application or applications pertinent thereto.

In exchange for this grant, DuSang granted Hume a non-exclusive license in the cast-on weight field, including the specific form shown in Figs. 1 and 2 of DuSang’s patent application, as follows:

“4. Second party hereby grants to first party, his heirs and assigns, a non-exclusive license throughout the United States without restriction as to the original equipment, jobbing and/or direct to user sales, for the life of the patent and/or patents that may issue to second party on his aforesaid application Ser. No. 718,915, to make, use and sell that specific form of the invention as shown in Figs. 1 and 2 of second party’s said application, and first party shall pay to second party a royalty of one and one-half cent for each and every weight of this form sold.”

By the foregoing Hume was licensed to operate in the cast-on weight field if he should choose to pay the 1]6‡ royalty, and DuSang and Hume denied either party the right to sublicense in the following language:

“5. Neither first party nor second party shall have the right to sub-license under any of the aforesaid licenses granted one to the other, but nothing herein shall be construed as preventing either first or second parties from selling their respective patents and transferring their respective licenses therewith.”

The net effect of paragraphs 3, 4 and 5 was Hume’s granting the exclusive rights to the cast-on spring-clip weight to DuSang. Even though, by paragraph 4, Hume obtained a nonexclusive license from DuSang, paragraph 5 prevented his sublicensing to any party who might subsequently obtain rights under the Hume patent, unless the patents were sold outright.

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Related

Charles F. Rubsam v. Harley C. Loney Company
217 F.2d 353 (Sixth Circuit, 1954)

Cite This Page — Counsel Stack

Bluebook (online)
117 F. Supp. 164, 99 U.S.P.Q. (BNA) 276, 1953 U.S. Dist. LEXIS 4245, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rubsam-v-harley-c-loney-co-mied-1953.