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Paley v. Du Pont Rayon Co.

June 23, 1934

PALEY
v.
DU PONT RAYON CO.



Appeal from the District Court of the United States, Northern District of Illinois, Eastern Divisison; Walter C. Lindley, Judge.

Author: Evans

Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.

EVANS, Circuit Judge.

Appellant, a patent solicitor and draftsman by profession, entered the employ of appellee's predecessor, October 1, 1924, and voluntarily terminated such employment, March 31, 1926. The employment contract was in writing; the provisions thereof are set forth below.*fn* During the period of his employment he made two discoveries, on both of which he applied for and secured a patent. The first patent he assigned to his employer. The second patent was issued October 21, 1930, upon application filed December 17, 1926. This patent was the subject matter of the instant suit which terminated in a decree directing the assignment of said patent to appellee.

The patent in issue covers a method of and apparatus for treating artificial fibers. It relates "more specifically to a process of and an apparatus adapted for treating cakes of artifical fibers such as rayon, artificial wood, etc., with fluids and liquids such as water, air, and or desulphuring, bleaching and dyeing solutions."

The court found, upon evidence which amply supported the finding, that during appellant's employment he conceived of and reduced to practice the invention covered by this patent; that on December 17, 1926, he filed his application for a patent; the patent was issued to him October 21, 1930; that he did not secure the consent, oral or written, of his employer to file said application and his action in so doing was without the knowledge of his employer.

Appellant relied on three defenses: (a) appellee cannot claim the patent by reason of the nature of appellant's employment contract, which should not be enforced in the instant case bacause unduly harsh and inequitable and because mutuality thereunder is lacking. (b) Appellee waived its right to the patent by rejecting it and is now estopped to claim it. (c) Appellee was guilty of fraud in that it concealed the true conditions of its bonus plan, which was a material inducement for entering into the employment contract.

(a) It is immaterial in the case before us whether appellant's right to the assignment of the patent is traceable to a contract or to the nature of appellant's employment. Approached from either starting point, we arrive at the same conclusion.

Appellant's original answer was by him prepared and filed without the assistance of counsel. In the first amended answer it is stated that appellee's predecessor was desirous of securing the services of appellant "as an engineer in its experimental department for the purpose of studying and solving problems relating to the manufacture and production of rayon, and also for the purpose of discovering, improving, and perfecting new inventions * * *." In the second amended answer there were omitted the words set forth in italics. The omission is rather significant. The court was under all the circumstances justified in finding what appellant formerly admitted to be the fact, viz., that the nature of his employment was such as to entitle appellee to the patents obtained upon discoveries by him made without any employment contract expressly providing for the assignment of patentable discoveries.

However, the contract which the parties signed, in view of the court's finding as to the date of appellant's discovery, covers the precise question we are now considering. It provided for the assignment of patents obtained upon discoveries made by appellant during the period he was employed by appellee. Such a contract is netiher harsh, nor inequitable, nor unconscionable. Courts have uniformly held it to be the proper basis of a decree of specific performance such as was entered in this suit. Magnetic Manufacturing Company v. Dings Magnetic Separator Co. (C.C.A.) 16 F.2d 739; Standard Parts Company v. Peck, 264 U.S. 52, 44 S. Ct. 239, 68 L. Ed. 560, 32 A.L.R. 1033.

(b) Appellant's argument on waiver and estoppel is predicated on an erroneous fact assumption. He assumes that Evans, another of appellee's employees and appellant's superior, did in fact reject the discovery for which appellant subsequently obtained a patent and that in so doing Evans was authorized by appellee to pass upon and accept or reject patentable discoveries.

We fail to find anything in the record which would have justified the court in finding that Evans was the authorized representative of appellee to accept or reject patentable discoveries made by other employees. This is likewise the conclusion which Judge Lindley reached. In his memorandum disposing of the case [D.C.] 4 F. Supp. 290, 293) he said:

"The court fails to find in the conduct of Evans, a subordiant officer with no final auuthority to pass upon the policy of the company with regard to inventions, anything which would create an estoppel ...


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