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Pure Oil Co. v. Hyman

January 29, 1938


Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; John P. Barnes, Judge.

Author: Sparks

Before SPARKS and TREANOR, Circuit Judges, and LINDLEY, District Judge.

SPARKS, Circuit Judge.

Appellant instituted this action to compel appellees to convey to it title to United States patents Nos. 1,919,722 and 1,919,723, and to enjoin appellees from infringing appellant's rights thereunder. In the alternative, appellant sought to compel appellees to grant it a license under the patents. After a hearing, the court dismissed the bill of complaint for lack of equity. The errors relied upon arise from an adverse ruling on the question whether appellee Hyman made or conceived the inventions herein involved during his employment by appellant, and also from an adverse ruling on the matter of laches.

The District Court found the facts specially and rendered its conclusions of law. In substance they are as follows: Hyman, an expert chemist, was employed by appellant on or about June 1, 1928, and signed the following agreement:

"The undersigned employee of The Pure Oil Company, for and in consideration of such employment, hereby agrees with The * * * Company that * * * (it) shall have, and the undersigned does hereby grant unto (it) * * * exclusive rights to any and all inventions relating to prospecting for and discovery, production, transportation, manufacturing and refining petroleum oils and gases and their products, and methods and means of treating or refining the same, which may be conceived or developed by * * * (him) during (his) employment * * * by The * * * Company, and * * * (he) hereby further agrees, that in the event any such invention shall be or become the subject of patent application which shall be filed and prosecuted under the direction and at the expense of The * * * Company, to assign all rights to and in such invention and the application for patent therefor to The Pure Coil Company, or to any other assignee specifically designated by it."

While in this employment, Hyman worked at the control laboratory of appellant in Chicago until about the middle of September, 1930, when he was sent to appellant's refinery in West Virginia, where he remained until October 30, 1930. While in appellant's employ Hyman did work assigned to him from time to time by appellant, kept detailed records of his work, and made complete reports thereon to appellant. Everything learned or discovered by him while in this employment was disclosed by him to appellant, in laboratory notebooks kept, and written reports made by him, promptly at the time the work was done. He did not withhold or conceal from appellant any inventions or discoveries which he made while in its employ.

Before he went to West Virginia, Hyman had never done any work on hydrocarbon polymers, and knew nothing about them except the fact that there was such a thing. He was therefore instructed by appellant to work on finding hydrocarbon polymers which would be satisfactory for use as a core oil and which might be substituted for linseed oil in such use. A core oil is an oil used by foundries in making cores used in castings, the oil being mixed with sand to form a binder for the sand. Hyman was discharged by appellant on October 31, 1930 (because he declined to return to West Virginia, and preferred to work in appellant's control laboratory at Chicago). At the time of the termination of his employment by appellant, Hyman had no knowledge of any use for hydrocarbon polymers other than as a core oil.

While in appellant's employ Hyman was never assigned to, nor did he do any work with respect to, mixing hydrocarbon polymers with paint or varnish adjuvants, or producing light-colored or transparent hydrocarbon polymers, and during such employment he was never told, and did not know that polymers might be mixed with paint or varnish adjuvants to produce a coating of impregnate, or that light or palecolored or transparent polymers might be produced. The idea of mixing polymers with paint or varnish adjutants, and that of producing light-colored or transparent polymers, were both conceived by Hyman for the first time subsequent to the termination of his employment by appellant.

On November 7, 1930, Hyman filed application for United States letters patent, Serial No. 494,204. He abandoned it in favor of his application subsequently filed on April 27, 1933, which was a continuation in part of his previous application. The latter application eventuated in patent No. 1,919,723, issued to appellee, Velsicol Corporation, as assignee of Hyman, on July 25, 1933. This patent, in general, covers coatings and impregnates containing paint and varnish adjuvants and hydrocarbon polymers of mineral origin, resulting from the polymerization of unrefined vapor phase cracked gasoline, and having certain minimum requirements of iodine number and drying time. Hydrocarbon polymers, as such, are not claimed in the patent.

On November 13, 1930, Hyman filed an application for United States patent, which eventuated in patent No. 1,919,722, issued July 25, 1933, to Velsicol Corporation as his assignee. The patent covers a process of producing a polymerized unsaturated transparent compound, possessing certain drying characteristics. The patent likewise covers the product. Both patents were conceived and developed after, and not before, the termination of Hyman's employment by appellant.

The Velsicol Corporation was organized in January, 1931, for the purpose of promoting and developing the inventions covered by the patents here involved, and the sale of products manufactured thereunder. It has continuously engaged in that business, and has expended large sums of money in its development, in the purchase of equipment, plant erection, and the installation of machinery and equipment for the manufacture of the products. At all times since the organization of the corporation, Hyman has been vice-president, a director, and a stockholder, devoting his entire working time thereto. Of all these activities of appellees, the appellant has had knowledge since about the time of their inception. Substantial portions of such expenditures were made after appellant had full knowledge of the issuance of the patents, and after the institution of the interference proceedings hereinafter mentioned, and prior to the commencement of this action on May 9, 1935.

Shortly after termination of his employment by appellant, Hyman advised it that he was doing experimental work on hydrocarbon polymers and their utilization, and obtained from appellant a small quantity of polymers for such purpose. Shortly thereafter appellees commenced the purchase of polymers from appellant and from time to time thereafter purchased them from appellant with greatly increasing frequency and in greatly increasing amounts, during which times appellant had knowledge that such polymers were being used by appellees in mixtures in the production of paints, varnishes, coatings and impregnants.

As early as August, 1933, appellees furnished appellant copies of the patents herein involved, whereupon appellant stated that it was not interested therein, and expressed the opinion that the patents were of no value. Later in 1933, appellant and appellees entered into negotiations with a view to licensing appellant to use the inventions, and the purchase by Velsicol Corporation from appellant of hydrocarbon polymers. ...

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