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Jones v. Ulrich





Appeal by plaintiff from the Circuit Court of Shelby county; the Hon. WARD P. HOLT, Judge, presiding. Heard in this court at the October term, 1950. Reversed and remanded. Opinion filed November 2, 1950. Released for publication November 28, 1950.


Plaintiff appellant Jones filed a suit in equity in the circuit court of Shelby county against defendant appellee Ulrich. This appeal ensued when the trial court granted defendant's motion to dismiss plaintiff's amended complaint and entered final judgment for the defendant.

As amended, plaintiff's complaint alleged that both the plaintiff and defendant were residents of Shelby county; that Ulrich, the defendant, had for several years owned and operated a welding shop in the City of Shelbyville in Shelby county, which he still owns and operates; and that the business of the defendant during that period has been a general repair service on all types of machinery and the conducting of general welding operations. Paragraphs 3, 4, 5 and 6 of the complaint are as follows:

"3. That prior to July 25, 1948, plaintiff invented a spreader attachment to be used in the spreading of pulverulent material, such as phosphate;

"4. That on or about July 25, 1948, plaintiff made a confidential disclosure of the details of his phosphate spreader attachment to defendant and thereupon employed defendant to construct a phosphate spreader attachment embodying plaintiff's ideas;

"5. That on July 26, 1948, pursuant to the understanding reached with defendant, plaintiff spent the entire day at defendant's shop directing and supervising defendant and certain of his employees in the construction of a phosphate spreader attachment embodying plaintiff's ideas;

"6. That on July 27, 1948, the device built on the 26th was mounted to plaintiff's truck bed by defendant at plaintiff's request, whereupon plaintiff paid defendant in full for his services, including materials used in constructing plaintiff's spreader;"

The complaint then continues with an allegation that on various occasions after July 27, 1948, plaintiff, pursuant to an oral understanding with defendant, licensed the defendant to manufacture and sell phosphate spreader attachments embodying the ideas of the plaintiff's spreader; that in order to publicize his phosphate spreader attachment, plaintiff caused to be printed a quantity of circulars, one of which was attached to the complaint as plaintiff's Exhibit B, which circulars were delivered by the plaintiff to the defendant for distribution to the trade and prospective purchasers of the spreader, pursuant to the oral understanding or license which plaintiff had with defendant. It is further alleged in the complaint that the defendant agreed to pay the plaintiff a royalty on spreaders manufactured and sold, and that the defendant further agreed to place the notation "Patent Pending" and "Jones Spreader" on each and every spreader manufactured and sold.

On May 4, 1949, the complaint alleges, plaintiff submitted a written license agreement which embodied the various oral understandings between the parties, which was attached to the complaint as plaintiff's Exhibit A.

The substance of Exhibit A was that defendant was granted a non-exclusive, non-transferable right to make and sell spreader attachments embodying plaintiff's invention, and there were agreements concerning royalties and accounting therefor, and the defendant further acknowledged that the plaintiff was the true and sole inventor of the device.

The complaint continues, alleging that the defendant refused to execute the above-written license agreement, and that on May 4, 1949, the plaintiff agreed to extend the terms of the oral license for thirty days.

On or about June 10, 1949, the complaint alleges, in response to numerous requests of the plaintiff for an accounting the defendant advised the plaintiff that the plaintiff owed the defendant $41.24, which represented the difference between amounts due the defendant for work on the plaintiff's behalf less the credits due the plaintiff for royalties on spreaders which had been manufactured and sold by the defendant through June 8, 1949, and that the said sum of $41.24 was paid to the defendant by the plaintiff on June 10, 1949.

The complaint alleges that the defendant refuses to render an itemized accounting for the period prior to June 8, 1949; and that since that date plaintiff has repeatedly advised the defendant that the oral license between the parties has been terminated; but that the defendant, in complete disregard for the rights of the plaintiff, has been and still is manufacturing and selling spreaders embodying the teachings imparted to him by the plaintiff, and that the defendant refuses to account to the plaintiff for spreaders manufactured and sold to the date of the complaint (September 26, 1949) and that after the plaintiff had entered into an agreement with a third party, by which the third party was granted sole and exclusive rights in and to plaintiff's phosphate spreader attachment, on or about the 26th day of July 1949, that the defendant, through an attorney, advised the third party that it should not enter into an agreement with plaintiff inasmuch as the defendant was the true inventor of the spreader attachment rather than the plaintiff. The complaint concludes by alleging that the defendant in further violation of his rights and obligations to the plaintiff, has continued the manufacture and sale of the spreader embodying the plaintiff's teachings, has issued circulars describing a phosphate spreader named "Eezee Way" which is a substantial duplicate of the plaintiff's device, and that the acts of the defendant if permitted to continue will cause irreparable damage to the plaintiff and will result in unjust enrichment of defendant at the expense of the plaintiff; and that the defendant has filed in his own name as sole inventor a patent application in the United States Patent Office directed to the subject matter of the plaintiff's spreader attachment.

Plaintiff prayed for an injunction restraining the defendant Ulrich and his agents, et al., from making, selling or using any machine or device made in accordance with or embodying the teachings of plaintiff's spreader; that the court order the defendant to deliver up for destruction all circulars advertising defendant's spreader and enjoin the defendant and his agents from purchasing or distributing any other circulars similar to the one in question; that the court declare the defendant a trustee ex maleficio of the present pending patent application for the benefit of the plaintiff and that the court order the defendant to assign the said application to the plaintiff; that the plaintiff be reimbursed for all expenses of this action including costs and attorneys' fees; and that the court award any and other further relief as might be deemed equitable.

The defendant filed a motion to dismiss the complaint or strike parts thereof and an alternative motion that the complaint be made more definite and certain.

The substance of the motion to dismiss was: (1) that it appeared from the face of the complaint that the court had no jurisdiction of the subject matter of this action in that State courts have no jurisdiction to determine who is the true inventor entitled to patent rights nor to enforce the (patent) laws enacted by the Congress of the United States; (2) that it appeared from the face of the complaint that the plaintiff failed to allege the existence of any trade secret or secret process known only to the plaintiff communicated to the defendant in the course of confidential employment; (3) that there is no allegation that the defendant contracted not to use any trade secret or secret process of which he was confidentially informed by plaintiff, both the latter two allegations, the motion stated, being an essential element in the cause of action; (4) ...

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