An oral agreement for the sale and assignment of the right to
obtain a patent for an invention is not within the statute of
frauds, nor within section 4898 of the Revised Statutes, requiring
assignments of patents to be in writing, and may be specifically
enforced in equity, upon sufficient proof thereof.
A manufacturing corporation which has employed a skilled workman
for a stated compensation to take charge of its works and to devote
his time and services to devising and making improvements in
articles there manufactured is not entitled to a conveyance of
patents obtained for inventions made by him while so employed, in
the absence of express agreement to that effect.
Specific performance will not be decreed in equity without clear
and satisfactory proof of the contract set forth in the bill.
Where, at the hearing in equity upon a plea and a general
implication, the plea, as pleaded, is not supported by the
testimony, it must be overruled, and the defendant ordered to
answer the bill.
These were two bills in equity, heard together in the circuit
court and argued together in this Court.
On March 31, 1886, Allen C. Dalzell, a citizen of the State of
New York, and the Fahys Watch Case Company, a New York corporation,
filed a bill in equity against the Dueber Watch Case Manufacturing
Company, a corporation of Ohio, for the infringement of two patents
for improvements in apparatus for making cores for watch cases,
granted to Dalzell, October 27, 1885, for the term of which he had,
on January 21, 1886, granted a license, exclusive for three years,
to the Fahys Company.
To that bill the Dueber Company, on June 4, 1886, filed the
following plea:
"That prior to the grant of the said
Page 149 U. S. 316
letters patent upon which the bill of complaint is based, and
prior to the application therefor, and prior to any alleged
invention by said Dalzell of any part, feature, or combination
described, shown, or claimed in either of said letters patent, the
said defendant being then engaged in the manufacture of watch cases
in the City of Newport, in the State of Kentucky, and the said
Dalzell having been in its employ as a toolmaker for a year
preceding, it, said defendant at the request of said Dalzell,
reemployed said Dalzell at increased wages, to aid in experimenting
upon inventions upon machinery and tools to be used in the
manufacture of various portions of watch cases; that said Dalzell
did then and there agree with said defendant, in consideration of
said increased salary as aforesaid to be paid to him, and which was
paid to him by this defendant, to dedicate his best efforts, skill,
and inventive talent and genius towards the perfecting and
improvement of watch case machinery and such other devices as this
defendant should direct and order and in experimenting under the
direction of this defendant for this purpose, and further agreed
that any inventions or improvements made or contributed to by him
(said Dalzell) should be patented at the expense of this defendant,
and for its benefit exclusively, and that said Dalzell should
execute proper deeds of assignment at the expense of this
defendant, to be lodged with the applications for all such patents
in the United States Patent Office, and said patents were to be
granted and issued directly to this defendant; that in pursuance of
said agreement, said Dalzell entered upon said employment, and
while thus employed at the factory of this defendant, and while
using its tools and materials and receiving such increased wages
from it, as aforesaid, the said alleged inventions were made; that
said patents were applied for, with the permission of this
defendant, by the said Dalzell, and that all fees and expenses of
every kind, necessary or useful for obtaining said patents,
including as well patent office fees as fees paid the solicitor
employed to attend to the work incident to the procuring of said
patents and drawing said assignments to this defendant, were paid
by this defendant, and that, notwithstanding the foregoing, said
Dalzell did
Page 149 U. S. 317
not sign the said deeds, although he had promised so to do, but
fraudulently and secretly procured the said patents to be granted
to himself, of all of which this defendant avers the complainant
the Fahys Watch Case Company had notice at and prior to the alleged
making of the license by said Dalzell to it, more particularly
referred to in the bill of complaint, and defendant avers that, by
reason of the premises, the title in equity to said patents is in
this defendant."
The plea, as required by Equity Rule 31 of this Court, was upon
a certificate of counsel that in his opinion it was well founded in
point of law, and was supported by the affidavit of John C. Dueber
that he was the President of the Dueber Company, that the plea was
not interposed for delay, and that it was true in point of
fact.
After a general replication had been filed and some proofs taken
in that case, including depositions of Dueber and of Dalzell, the
Dueber Company, on January 17, 1887, filed a bill in equity against
Dalzell and the Fahys Company for the specific performance of an
oral contract of Dalzell to assign to the Dueber Company the rights
to obtain patents for his inventions, and for an injunction against
Dalzell and the Fahys Company, and for further relief.
This bill contained the following allegations:
"That heretofore, to-wit, prior to November 1, 1884, the said
defendant Dalzell was in the employment of your orator, making and
devising tools to be used in the construction of watch cases. That
on or about said last-mentioned date, at the request of said
Dalzell, his wages were raised in consideration of a promise then
made by said Dalzell to your orator that in the future his services
would be of great value in the devising and perfecting of such
tools. That in pursuance of said promise and contract, the said
Dalzell continued in the employ of your orator, and wholly at its
expense, to devise and construct various tools to be used in your
orator's watch case factory in the manufacture of various parts of
watch cases. That said Dalzell was so employed for a great length
of time, to-wit, a whole year, a large part of which time he was
assisted by various workmen employed and paid by your orator to
assist
Page 149 U. S. 318
him (the said Dalzell) in constructing such tools and in the
experiments incident thereto."
"That subsequently thereto, and when said tools were completed,
said Dalzell requested your orator to apply for letters patent for
the various inventions embodied in all of said tools for the use
and benefit of your orator, representing to your orator that he
(said Dalzell) had made valuable discoveries and inventions while
engaged in designing and constructing said tools, and further
representing that if your orator did not secure the exclusive right
to said inventions by letters patent, in all probability some of
the workmen employed at your orator's factory, who were familiar
with the said inventions and the construction of said tools, might
go to some other and rival watch case company and explain to it the
construction of such tools, and make similar tools for such other
company, in which case your orator would be without remedy."
"That said Dalzell then and there, and as a further inducement
to your orator to have letters patent applied for for said
inventions, voluntarily offered to your orator that if your orator
should permit him (Dalzell) to apply for letters patent, and your
orator pay all the expenses incident to obtaining such letters
patent, such letters patent might be taken for the benefit of your
orator, and that he (Dalzell) would not ask or require any further
or other consideration for said inventions and such letters patent
as might be granted thereon, which proposition was then and there
accepted by your orator, and it was then fully agreed between said
parties that said Dalzell should immediately proceed, through a
solicitor of his own selection, to procure said patents for and in
the name of your orator, and that your orator should pay all bills
that might be presented by said Dalzell or such solicitor as might
be selected to attend to the business of procuring said
patents."
This bill further alleged that Dalzell did, in pursuance of that
agreement, select a solicitor and apply for the two patents
mentioned in the bill for an infringement, and three other patents;
that when some of the patents had "passed for issue," the solicitor
employed by Dalzell sent blank assignments thereof to the Dueber
Company with a request that
Page 149 U. S. 319
Dalzell sign them, and thus transfer the legal title in the
inventions to the Dueber Company and enable the patents to be
granted directly to it; that it exhibited these assignments to
Dalzell and requested him to sign them; that Dalzell replied that
he would postpone signing them until all the patents had "passed
for issue," and would then sign all together, to all which the
Dueber Company assented; that the Dueber Company paid all the fees
and expenses necessary or useful in obtaining the patents, but that
Dalzell fraudulently procured the patents to be granted to himself,
and refused to assign them to the Dueber Company, and, as that
company was informed and believed, conveyed, with the intention of
defrauding it, certain interests in and licenses under the patents
to the Fahys Company, with knowledge of the facts, and that Dalzell
and the Fahys Company confederated and conspired to cheat and
defraud the Dueber Company out of the patents, and, in pursuance of
their conspiracy, filed their bill aforesaid against the Dueber
Company.
Annexed to this bill was an affidavit of Dueber that he had he
had read it and knew the contents thereof, and that the same was
true of his own knowledge, except as to the matters therein stated
on information and belief, and that as to those matters he believed
it to be true.
To this bill answers were filed by Dalzell and the Fahys Company
denying the material allegations, and a general replication was
filed to these answers.
By stipulation of the parties, the evidence taken in each case
was used in both. After a hearing on pleadings and proofs, the
circuit court dismissed the bill of Dalzell and the Fahys Company
and entered a decree against them, as prayed for, upon the bill of
the Dueber Company, 38 F. 597. Dalzell and the Fahys Company
appealed from each decree.
Page 149 U. S. 320
MR. JUSTICE GRAY, after stating the substance of the pleadings
and decrees, delivered the opinion of the Court.
The more important of these cases, and the first to be
considered, is the bill in equity of the Dueber Watch Case
Manufacturing Company to compel specific performance by Dalzell of
an oral agreement, alleged to have been made by him while in its
employment, to assign to it the right to obtain patents for his
inventions in tools for making parts of watch cases.
An oral agreement for the sale and assignment of the right to
obtain a patent for an invention is not within the statute of
frauds, nor within section 4898 of the Revised Statutes, requiring
assignments of patents to be in writing, and may be specifically
enforced in equity upon sufficient proof thereof.
Somerby v.
Buntin, 118 Mass. 279;
Gould v. Banks, 8 Wend. 562;
Burr v. De La Vergne, 102 N.Y. 415;
Blakeney v.
Goode, 30 Ohio St. 350.
But a manufacturing corporation which has employed a skilled
workman for a stated compensation to take charge of its works and
to devote his time and services to devising and making improvements
in articles there manufactured is not entitled to a conveyance of
patents obtained for inventions made by him while so employed, in
the absence of express agreement to that effect.
Hapgood v.
Hewitt, 119 U. S. 226.
Upon the question whether such a contract was ever made by
Dalzell as is alleged in the bill of the Dueber Company, the
testimony of Dalzell and of Dueber, the president and principal
stockholder of the Dueber Company, is in irreconcilable
conflict.
Dalzell was a skilled workman in the manufacture of various
parts of which cases, and was employed by the Dueber Company, first
for eight months as electroplater and gilder and then for a year in
its tool factory at wages of $25 a week, from February, 1883, until
November, 1884, and thenceforth at wages of $30 a week until
January 19, 1886, when he left their employment, and immediately
entered the employment of the Fahys Company and executed to that
company a license to use his patents.
Page 149 U. S. 321
The matters principally relied on by the Dueber Company as
proving the contract sought to be enforced are a conversation
between Dalzell and Dueber at the time of raising his wages in
November, 1884, another conversation between them in the spring of
1885, and oral promises, said to have been made by Dalzell in the
summer of 1885, to assign to the Dueber Company his rights to
obtain patents. It will be convenient to consider these matters
successively.
The bill alleges that Dalzell's wages were raised in November,
1884 at his request, "and in consideration of a promise then made
by said Dalzell to" the Dueber Company "that in the future his
services would be of great value in the devising and perfecting of
such tools," and that "in pursuance of said promise and contract"
Dalzell continued in the company's employ at its expense, and with
the assistance of its workmen, to devise and construct such
tools.
Dueber's whole testimony on this point appears in the following
question and answer:
"Question. Please state the circumstances which induced your
company to increase Mr. Dalzell's wages at the time they were
increased."
"Answer. Mr. Dalzell came to me in the office, and he says,"
"Mr. Dueber, a year is now up since I worked for you in this
factory. I suppose you are satisfied with the improvements I have
made, and I have come to have my wages raised, and I will show you
that if you raise my wages, the improvements I will make this year
will justify you in doing so."
"I asked him what wages he wanted. He said, 'Thirty dollars per
week,' and he was paid that until the time he left. When that year
was up, nothing was said about wages."
This testimony tends to show no more than that Dalzell expressed
a confident belief that if his wages should be raised, the
improvements which he would make during the coming year would
justify the increase. It has no tendency to prove any such promise
or contract as alleged in the bill, or any other promise or
contract on Dalzell's part. So far, therefore, no contract is
proved, even if full credit is given to Dueber's testimony.
As to what took place in the spring of 1885, the bill
alleges
Page 149 U. S. 322
that subsequently to the aforesaid interview, "and when said
tools were completed," Dalzell requested the company to apply, for
its own use and benefit, for patents for inventions which he
represented that he had made "while engaged in designing and
constructing said tools," and which, he suggested, might, if not
secured by letters patent, be made known and explained by some of
the workmen then employed there to rival companies, and, as a
further inducement to the company to have such patents applied for,
voluntarily offered, if the company would permit him to do so and
would pay all expenses of obtaining patents, to apply therefor for
the benefit of the company, and "not ask or require any further or
other consideration for said inventions and such letters patent as
might be granted therein," and that this proposition was "then and
there accepted by" the company, and "it was then fully agreed
between said parties" that Dalzell should immediately proceed,
through a solicitor of his own selection, to procure the patents in
the name of the company, and the company should pay the necessary
expenses.
Upon this point, Dueber's testimony was as follows:
"Question. Who first suggested the idea of patenting these
devices, and when?"
"Answer. Mr. Dalzell, in the spring of 1885."
"Q. Please state all that took place at that time."
"A. Mr. Dalzell came to me, and said:"
"Mr. Dueber, we have got a very good thing here. Let us patent
this for the benefit of the concern. We have some men here who may
run away and carry those ideas with them."
"I objected at first. Finally he says: 'If you will pay for
getting them out, I don't want anything for them.' I then said:
'Let us go over to Mr. Layman tomorrow, and attend to it.' He said
he knew a more competent lawyer than that, that he would send
for."
Dueber also testified that when Dalzell first suggested taking
out letters patent, Dueber told him that he did not think the
improvements of sufficient value to justify taking out patents and
paying for them, and that "about all" that Dalzell replied was: "We
have a good many men here who may carry off these ideas into other
shops, and I want to retain them for this concern."
All this testimony of Dueber was given in September, 1886,
Page 149 U. S. 323
before the filing of the bill for specific performance. Being
recalled after this bill had been filed, he testified on
cross-examination that he now considered the inventions covered by
the patents sued on as valuable because the company had spent a
great deal of money on them, and he declined or evaded giving any
other reason.
Bearing in mind that there was no proof whatever of any previous
agreement between the parties on the subject, the contract, as
alleged in the bill and testified to by Dueber, by which Dalzell is
said to have voluntarily offered, with no other motive than to
prevent workmen from injuring the Dueber Company by communicating
the inventions to rival companies, and for no other consideration
than the payment by the Dueber Company of the expenses of obtaining
patents, and without himself receiving any consideration, benefit,
or reward, and without the company's even binding itself, for any
fixed time, to pay him the increased wages or to keep him in its
service, is of itself highly improbable, and it may well be doubted
whether, if such a contract were satisfactorily proved to have been
made, a court of equity would not consider it too unconscionable a
one, between employer and employed, to be specifically enforced in
favor of the former against the latter.
Cathcart
v. Robinson, 5 Pet. 264,
30 U. S. 276;
Mississippi & Missouri Railroad v. Cromwell,
91 U. S. 643;
Pope Mfg. Co. v. Gormully, 144 U.
S. 224.
Moreover, Dueber throughout manifests extreme readiness to
testify in favor of the theory which he is called to support, and
much unwillingness to disclose or to remember any inconsistent or
qualifying circumstances. The record shows that he has at different
times made oath to four different versions of the contract:
1st. On March 16, 1886, when the Dueber Company filed a petition
in the Superior Court of Cincinnati against Dalzell to compel him
to assign his patents to it, Dueber made oath to the truth of the
statements in the petition, one of which was
"that at the time of the making of application for said patents,
it was agreed, for a valuable consideration before that time paid
that said patents and inventions were the property
Page 149 U. S. 324
of this plaintiff, and should be transferred to it immediately
upon the issue thereof, and prior to the grant of the patents."
2d. On June 4, 1886, he made oath that the plea was true in
point of fact, which stated that the whole contract, both for an
increase of Dalzell's wages and for his assignment to the Dueber
Company of his rights to patents for his inventions, was made
"prior to any alleged invention by said Dalzell," and in
consideration of an increase of wages to be thereafter paid.
3d. In September, 1886, he testified that the increase of wages
was made upon the mere statement of Dalzell that he would show that
the improvements he would make during the coming year would justify
the increase, and that the subsequent contract to assign the patent
rights was after the inventions had been made.
4th. On January 17, 1887, he made oath to the truth, of his own
knowledge, of this bill, which alleged that Dalzell's wages were
raised "in consideration of a promise" by Dalzell "that in the
future his services would be of great value in the devising and
perfecting of such tools," and also alleged that the agreement to
assign the patent rights was made after the inventions.
Dalzell, being called as a witness in his own behalf, directly
contradicted Dueber in every material particular, and testified
that the real transaction was that after his inventions had been
made and shown to Dueber, the latter was so pleased with them that
he, of his own accord, raised Dalzell's wages and offered to
furnish the money to enable him to take out patents. There is much
evidence in the record which tends to contradict Dalzell in matters
aside from the interviews between him and Dueber and to impeach
Dalzell's credibility as a witness, but impeaching Dalzell does not
prove that Dueber's testimony can be relied on.
What took place, or is said to have taken place, after these
interviews may be more briefly treated.
Whitney, the solicitor employed at Dalzell's suggestion, applied
for and obtained the patents in Dalzell's name, and was paid his
fees and the expenses of applying for the patents
Page 149 U. S. 325
by the Dueber Company with Dalzell's knowledge. In the summer of
1885, before the patents were issued, he sent blank assignments
thereof to the Dueber Company to be signed by Dalzell, which Moore,
the general manager of the company, as well as Dueber, in the
absence of each other, asked Dalzell to sign.
Upon what Dalzell then said, as upon nearly every material point
in the case, the testimony is conflicting. Dueber and Moore
testified, in accordance with the allegations in the bill, that
Dalzell replied that he would not sign any of them until all the
patents had "passed for issue," and would then sign all together.
But the manner in which they testified to this does not carry much
weight, and Dalzell testified that he positively refused to assign
the patents until some arrangement for compensating him had been
agreed upon.
Parts of a correspondence of Whitney with Dueber and with
Dalzell, during the summer of 1885, were put in evidence, which
indicate that Whitney, while advising Dalzell as to his interests,
sought to ingratiate himself with the Dueber Company. But they
contain nothing to show any admission by Dalzell that he had agreed
or intended to assign the patent rights to the Dueber Company
without first obtaining some arrangement whereby he might be
compensated for his inventions.
The circuit court, in its opinion, after alluding to various
matters tending to throw discredit on the testimony of each of the
principal witnesses, said: "The case is one on which different
minds may well reach a contrary opinion of the merits." 38 F. 599.
We concur in that view, and it affords of itself a strong reason
why the specific performance prayed for should not be decreed.
From the time of Lord Hardwicke, it has been the established
rule that a court of chancery will not decree specific performance
unless the agreement is "certain, fair, and just in all its parts."
Buxton v. Lister, 3 Atk. 383, 385;
Underwood v.
Hitchcox, 1 Ves.Sr. 279;
Franks v. Martin, 1 Eden
309, 323, and the rule has been repeatedly affirmed and acted on by
this Court. In
Colson v. Thompson, Mr. Justice
Washington,
Page 149 U. S. 326
speaking for the Court, said:
"The contract which is sought to be specifically executed ought
not only to be proved, but the terms of it should be so precise as
that neither party could reasonably misunderstand them. If the
contract be vague or uncertain, or the evidence to establish it be
insufficient, a court of equity will not exercise its extraordinary
jurisdiction to enforce it, but will leave the party to his legal
remedy."
15 U. S. 2 Wheat.
336,
15 U. S. 341.
So this Court has said that chancery will not decree specific
performance "if it be doubtful whether an agreement has been
concluded, or is a mere negotiation," nor "unless the proof is
clear and satisfactory both as to the existence of the agreement
and as to its terms."
Carr v.
Duvall, 14 Pet. 79,
39 U. S. 83;
Nickerson v. Nickerson, 127 U. S. 668,
127 U. S. 676;
Hennessey v. Woolworth, 128 U. S. 438,
128 U. S.
442.
For these reasons, we are of opinion that the contract set forth
in the bill for specific performance has not been so clearly and
satisfactorily proved as to justify a decree for specific
performance of that contract, and that the decree for the plaintiff
on the bill of the Dueber Company must therefore be reversed and
the bill dismissed.
The decree sustaining the plea to the bill against the Dueber
Company for an infringement and ordering that bill to be dismissed
is yet more clearly erroneous, for none of the evidence introduced
by either party tended to prove such a contract as was set up in
that plea. The only issue upon the plea and replication was as to
the sufficiency of the testimony to support the plea as pleaded,
and as the plea was not supported by the testimony, it should be
overruled and the defendant ordered to answer the bill.
Stead v.
Course, 4 Cranch 403,
8 U. S. 413;
Farley v. Kittson, 120 U. S. 303,
120 U. S. 315,
120 U. S. 318;
Equity Rule 34.
It is proper to add that the question whether the Dueber
Company, by virtue of the relations and transactions between it and
Dalzell, had the right, as by an implied license, to use Dalzell's
patents in its establishment is not presented by either of these
records, but may be raised in the further proceedings upon the bill
against the Dueber Company for an infringement.
Page 149 U. S. 327
Decrees reversed and cases remanded to the circuit court
with directions to dismiss the bill for specific performance and to
overrule the plea to the other bill and order the defendant to
answer it.
MR. JUSTICE BREWER dissented.
