Bettis v. Patterson

JAMISON, J., pro tem. — Plaintiff was the owner and patentee of a well-casing protector, and on December 2, 1927, he entered into a contract with defendants, Patterson and Ballagh, by the terms of which he granted to them the exclusive license to manufacture, use, and sell said patented article. Thereafter, in 1928, the said Patterson and Ballagh sold, assigned and transferred all their rights as licensees under said contract to defendant Patterson-Ball agh, a corporation. It was provided by said contract that defendants should report to plaintiff on the 25th day of each month for all casing protectors sold and delivered by them during the preceding month, and pay to plaintiff on the 25th of each month a royalty on all well-casing protectors sold and delivered by said licensees during the preceding month. Defendants failed to report on the 25th day of April, 1933, for the sales and deliveries of said well-casing protectors for the month of March, 1933, or to pay to plaintiff the said royalty due him for said sales and deliveries for that period.

By the terms of said contract, failure to make such report and payment thirty days after receipt of written notice of default terminated the said agreement. On April 28, 1933, plaintiff gave defendants written notice of default, and thereafter, on the 31st day of May (the thirty days having expired), he notified said defendants that said contract, by reason of said default, had terminated, and that they must-cease to operate under the said license, it being provided by said contract that time was the essence thereof.

Thereafter, defendants, continuing to manufacture and sell said well-casing protectors, and failing to report to plaintiff and account to him for his royalties, he commenced this action. Judgment was rendered for plaintiff annulling said agreement and enjoining said defendants from continuing to [286]operate thereunder. From this judgment defendants have appealed.

Appellants contend that other persons, firms and corporations have been engaged in the manufacture and sale of the well-easing protectors covered by the said patent, and by reason of said infringements appellants have suffered damage, and that by the terms of the contract it was the duty of the respondent to protect them from such infringements. That respondent conveyed to them a monopoly in the manufacture and sale of said well-casing protectors, and guaranteed that they should enjoy such monopoly during the life of the patent, and that having failed to do this, breached the contract and is liable to appellants for all damages thereby caused.