Bettis Rubber Co. v. Kleaver

California Court of Appeal Jun 19, 1951 No. Civ. 18060Published

Before: Vallee

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Holding. The court held that a patent license agreement does not require the payment of royalties after the expiration of the licensed patents absent clear language to the contrary. The court further determined that the contract's provisions regarding the use of moulds did not extend the obligation to pay royalties beyond the life of the patents.

Issues

Whether a licensee is required to pay royalties on patented devices after the expiration of the underlying patents.
Whether the contract's mould-use provision created an obligation to pay royalties on expired patents.
Whether the parties' conduct in continuing royalty payments after patent expiration constituted a binding practical construction of the contract.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“The law presumes that royalties are not to be paid after the expiration of a patent, but the parties may contract to the contrary.”

“There is no language in this contract from which an intention may be inferred that royalties were to be paid on licensed patents after the expiration thereof.”

“It is manifest that royalties were to be paid only during the life of a patent and not thereafter.”

VALLÉE, J.

Appeal by defendant from a judgment declaring that plaintiff is not required to pay royalties on patented devices after the expiration of the patents.

On January 15, 1940, plaintiff’s predecessor in interest, called licensee, and defendant, called licensor, entered into a contract in writing whereby licensor granted to licensee the sole and exclusive license “to manufacture, use and sell in the United States of America and all foreign countries, the invention or inventions disclosed in those certain Letters Patent Nos. 1,573,031, 1,863,740, 2,045,629, 2,163,932, 2,166,116, 2,166,937, together with any and all improvements thereon or thereto, present or future, together with the right to grant and revoke sublicenses of all rights herein granted and conveyed, for the full term of said patent and any continuation or extension thereof.” Licensee agreed to pay licensor specified royalties on each well casing protector sold by licensee and accepted and paid for by purchasers. The licensee was given the right to relinquish all rights granted to it upon a 30-day written notice.

The contract contained this provision: “The Licensee shall have the right to use all moulds for the production of said protectors now in its possession, the property of the Licensor, which moulds are acknowledged to be in a good condition of repair at the date hereof to be used without cost except for necessary repairs thereto which shall be at the expense of the Licensee, all such moulds upon the termination of this license agreement for any cause shall be returned in as good a condition of repair as when received to Licensor at the sole expense of Licensee. ’ ’

The rights of the licensee under the contract were duly assigned to plaintiff.

[824]

Patent 1,573,031 was declared invalid in

Oliver-Sherwood Co.

Patterson-Ballagh Corp., 9

Cir., 95 F.2d 70, decided in 1938 prior to the making of the contract. The president of plaintiff corporation knew of that decision at the time it “came down.” Patent 1,573,031 expired on February 16, 1943. Patent 1,863,740 expired on June 21, 1949, after the commencement of this action.

Bettis Rubber Co. v. Kleaver

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