Splitdorf Electrical Co. v. Webster Electric Co.

283 F. 83, 1921 U.S. App. LEXIS 2496
CourtCourt of Appeals for the Seventh Circuit
DecidedFebruary 5, 1921
DocketNo. 2769
StatusPublished
Cited by10 cases

This text of 283 F. 83 (Splitdorf Electrical Co. v. Webster Electric Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Splitdorf Electrical Co. v. Webster Electric Co., 283 F. 83, 1921 U.S. App. LEXIS 2496 (7th Cir. 1921).

Opinions

EVAN A. EVANS, Circuit Judge.

The present appeal involves three patents, the determination of two of which, Nos. 1,101,956 and reissue No. 13,878, turns upon a certain agreement made between the patentees, Henry and Emil Podlesak, and appellee. The assignable rights of the patentees in these two patents were, prior toi the commencement of this suit, assigned to appellant.

The Podlesaks entered into two license agreements with appellee on the same date, February 5, 1914. These' contracts were subsequent to [84]*84other contracts made between the same parties and out of which difficulties had arisen. One of these simultaneously executed agreements deals with six patents, two of which are the ones above enumerated, and in which alone we are' concerned. The other agreement was an exclusive license contract affecting other patents, none of which are before us. The latter contract, therefore, is of importance only as it may bear on the construction of the one under consideration. The so-called “license agreement (shop right)” is in part set forth at the bottom of this opinion for reference sake.1 The difference between counsel is [85]*85limited to the assignable rights of the Podlesaks. The trial judge accepted the urge of appellee, and found from the entire agreement a-n intention to deny to the patentees any assignable reserved right to make and sell the patented articles.

Prior to entering into this agreement, patentees had the unlimited [86]*86right to malee and sell their patented articles, and this right was of course assignáble in whole or in part. They likewise had the right to exclude all others from making or selling the articles. To what extent were these rights restricted, if at all, by this agreement? The precise language of the contract is significant. After first reciting that appel-lee “is desirous of securing a shop right and license to manufacure, use and sell the invention,” it provided by its only granting clause “that patentees do hereby grant unto the party of the second part a shop right and license to manufacture, use, and sell the inventions * * * set forth and claimed in said patents.” The patentees further agreed, and this is significant, because it is this agreement that appellee relies upon in support of its contention, that they, “will not * * * give or grant shop rights to others to make, use, or sell hereinsaid inventions.” Patentees immediately thereafter provided as follows: “Expressly reserving, however, the right to themselves to make, use, and sell the here-insaid inventions.” After numerous other provisions, “it is agreed that this agreement shall extend to and be binding upon the heirs, assigns, and legal representatives of the party of the first part, and the successors and assigns of the party of the second part.”

We have, then, a contract, the legal effect and the express provisions of which provide for patentees’ right to manufacture and sell, and further that such rights as patentees reserved are expressly made assignable. It would therefore seem to follow inevitábly that appellant, by its purchase of patentees’ rights, acquired the right to make and sell the patented articles. But appellee stresses the provision (paragraph No. 8) as well as the provision found in paragraph No. 3, contending that covenant 8 negatives any intention to reserve any assignable right to make and sell the patented articles.

[1] We are, however, unable to draw any deductions from paragraph 8 favorable or unfavorable to appellee. This provision added nothing to the rights of either party. It was surplusage; for certainly new or added agreements might be made respecting shop rights or other licenses, provided the parties agreed to them in writing. As to covenant No. 3, we see nothing absolutely inconsistent between it and the assign-ability clause of the agreement, while there is a fatal inconsistency between such assignability clause and appellee’s position. For assignment by patentees of all their rights, including the right to make and sell, is not necessarily inconsistent with the assignor’s agreement not to execute a shop right to others. The court’s duty, if possible, is to reconcile the two provisions and give effect to both. At least, in any doubtful case, the express provision authorizing assignment must control over a negative agreement which at best only inferentially questions patentees’ right to assign their right to make and manufacture.

But further reasons for such conclusion appear. Why did the parties make two agreements, instead of one? If the parties intended to give an exclusive license as to some patents, and to reserve, as to others, merely the right to make and manufacture the article, it could have been easily so provided and in a single agreement. Why did the parties so carefully throughout the agreement refer to appellee’s grant as a “shop right”? If appellee’s position be tenable, it secured more than a shop [87]*87right; it secured an exclusive license, excepting only that patentees reserved the mere personal nonassignable right to make the article. Further queries are suggested. If appellee’s position is tenable, would the reserved right to make and sell die with the parties ? Could the parties exercise the right as copartners, or as a corporation wherein they were the sole stockholders ? If one wished to exercise the right, and the other did not, were their hands tied?

While we are satisfied that an examination of the contract as heretofore pointed out leads but to one conclusion, these queries are suggested merely to offer additional reasons for concluding that the parties intended to reserve an assignable right to make and sell the patented article. Again, by paragraph 3, patentees at most merely agreed not to execute to others, shop rights. The words “to others” indicate that the parties were contracting with respect to individuals or corporations other than the parties to the contract. In assigning their rights to appellant, patentees were not executing shop rights.

Much stress has been laid on the asserted “equities of the case.” We are, however, unable to recognize their pertinency. The contract between appellee and patentees was voluntarily executed. It fixed the rights of both parties. Any enhancement in the value of the patent was unquestionably mutually advantageous. Whether patentees were guilty of ingratitude to their former employers in selling the reserved rights in the patent to a business competitor of such employer is beside the question. That certain rights were reserved by patentees is conceded. That such reserved rights as were assignable were sold to appellant is also conceded. As between appellant and appellee, then, the issue is solely and simply a question of the extent of the assignable rights so reserved.

[2] The Kane Patent. Numerous defenses to the suit on the Kane patent, No. 1,280,105, are presented. Estoppel, invalidity (based on several grounds), and noninfringement are all set forth and elaborated and ably argued by both counsel. Whether the specifications as originally drawn are sufficient to support claims 7 and 8, inserted some eight years after the application was filed, is a question which we find it unnecessary to determine. likewise, we are not called upon to disturb the finding of the'District Court in favor of Kane and against the Milton patent on the issue of priority.

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Bluebook (online)
283 F. 83, 1921 U.S. App. LEXIS 2496, Counsel Stack Legal Research, https://law.counselstack.com/opinion/splitdorf-electrical-co-v-webster-electric-co-ca7-1921.