Alexis E. Ushakoff and Stanley A. Baron v. The United States

This case was referred pursuant tn Rule 45 to Donald E. Lane, a trial commissioner of this court, with directions, to make findings of fact and recommenda *670 tions for conclusions of law. The commissioner has done so in a report filed December 6, 1962. Briefs were filed by the parties, exceptions to the commissioner’s findings of fact and recommended conclusion of law were filed by the defendant, and the case was submitted to the court on oral argument of counsel. Since the court is in agreement with the findings and recommendation of the trial commissioner, as hereinafter set forth, it hereby adopts the same as the basis for its judgment in this case. The court, therefore, concludes as a matter of law that patent No. 2,455,835 is valid; that the plaintiffs are the lawful owners of said patent; that the invention covered by said patent was used by defendant without authorization of the patent owners, and that plaintiffs are entitled to recover reasonable and entire compensation for such unauthorized use within six years prior to the filing of the petition, and judgment is entered to that effect. The extent of liability will be determined in further proceedings pursuant to Rule 38(e).

OPINION OF COMMISSIONER

This is a patent suit under the provisions of Title 28 U.S.C. § 1498, in which plaintiffs seek to recover reasonable and entire compensation for the unlicensed use of a patented invention. Plaintiffs are the record owners of United States Letters Patent No. 2,455,835 naming Alexis E. Ushakoff as inventor. This patent was issued to plaintiffs on December 7, 1948, and will be hereafter identified as the patent. Plaintiffs contend that the claims of the patent have been infringed by the defendant’s use of inflatable solar stills. Defendant contends that the patent is invalid and that it has not been infringed, since defendant asserts that it has a license to use the invention. The parties agreed to a separation of issues for trial and that the issues of infringement and validity would be determined first, and that the accounting issue would be determined at a later date.

The Ushakoff patent relates to a solar still which utilizes the sun’s energy to convert salt water to drinking water. The solar still, which is designed for emergency use on life rafts, is inflatable so that it will occupy a minimum of space when not in use. The operation of the solar still is based on the principle that when salt water is evaporated, the salt remains as a deposit and the vapor is free of salt. The sun’s energy is used to evaporate the salt water and the vapor is then condensed and removed from the solar still. This condensed vapor is free of salt and is safe for drinking.

The need for a means of providing drinking water on the open seas became apparent early in World War II when reports of the agonies faced by men cast adrift at sea were made known. During 1942 plaintiff Alexis E. Ushakoff, hereafter referred to as Ushakoff, became aware of the problem and began experiments to investigate the possibility of using solar distillation of sea water to provide drinking water. A short time later Ushakoff entered the employ of Higgins Industries as Director of Research and was charged with the responsibilities of developing a research department and working on projects then being developed at Higgins Industries. In negotiating his employment, Ushakoff informed Andrew J. Higgins, the head of Higgins Industries and hereafter referred to as Higgins, that he was working on several projects of his own, including specifically the solar still, and that as one condition of his employment it must be agreed that he would receive some share of the profits on these inventions. The condition was apparently accepted. The employment agreement was never reduced to a written contract.

After his employment by Higgins Industries, Ushakoff continued the development of the solar still along with his regular duties and he utilized Higgins Industries personnel and equipment. As the development of the solar still progressed, numerous experimental models *671 were constructed and tested. Frequently the models were submitted to the Air Corps, which was actively attempting to find an effective solar still. The Air Corps ran various tests and experiments on the solar stills in an attempt to determine if they were effective, and then reported the deficiencies to Ushakoff at Higgins Industries. As the development of Ushakoff’s solar still proved more promising, the Air Corps encouraged Higgins Industries to continue working on it and entered a purchase order in September, 1944, for 15 solar stills to enable Higgins Industries to obtain a priority for the purchase of plastic film which was in short supply and was slowing down the development. After the priority was received, development proceeded at a much faster rate. While the contract called for 15 solar stills, some 36 were actually sent. These solar stills were delivered a few at a time, and, as the Air Corps comments were received, the solar stills were modified so that actually very few of the solar stills sent to the Air Corps under the contract were identical to any of the others. Even the last of the solar stills which were delivered to the Air Corps on February 5, 1945, incorporated improvements over those delivered in the preceding shipment. All of the solar stills delivered to the Air Corps up to February 5, 1945 were for tests and experiments of various sorts.

Early in 1945 Ushakoff further pressed Higgins for a written contract covering their agreement with respect to the inventions. A draft agreement was prepared by Ushakoff which Higgins refused to accept. Later, Higgins presented Ushakoff with a memorandum agreement which Ushakoff refused. Both proposed agreements called for the payment of royalties to Ushakoff, and neither of them called for an assignment of Usha-koff’s patent rights to Higgins Industries. The relationship between Ushakoff and Higgins deteriorated rapidly and finally Ushakoff’s employment was terminated on April 3, 1945.

Shortly thereafter both Ushakoff and Higgins filed patent applications on an early version of the solar still, and the Patent Office declared an interference between the two applications. During the interference proceedings Higgins abandoned the invention, and subsequently a patent covering this early version was issued to plaintiffs. Also, during the period immediately following the termination of his employment Ushakoff made several trips to Wright Field to help the Air Corps write procurement specifications on the solar stills and to attempt to get the contract for a company which he was setting up. However, a production contract was awarded shortly thereafter to Higgins Industries for 172,-678 distillation kits. This contract was canceled by the Air Corps shortly after the end of the war, before Higgins Industries was able to make delivery.

The application for the patent here in suit was filed on February 4, 1946, and Ushakoff assigned 35 percent to plaintiff Stanley A. Baron for the benefit of Frederick A. Middleton, John J. Finnorn, and said Stanley A. Baron. Finnorn subsequently assigned his interest to Middleton and Baron.

The parties have stipulated that the defendant has procured at least one solar still, of the construction illustrated and described in the patent here in suit, within the period of 6 years prior to the filing of the plaintiffs’ petition.

The defendant alleges that the sale and delivery of solar stills to the Air Corps by Higgins Industries pursuant to the purchase order of September, 1944, constitutes a statutory bar to the grant of a valid patent under the provisions of Title 35 U.S.C. § 192(b), since at least some of the solar stills were delivered by January 18, 1945, which was more than 1 year prior to the filing date of the application for the patent in suit, February 4, 1946. It is not believed that this defense has been successfully made out. A use or sale for experimental purposes is an exception to the statutory *672 bar incurred by the use or sale of an invention prior to 1 year before the filing of a patent application. The purpose of the 1-year statutory bar is to prevent an inventor from obtaining profits on his invention for a number of years and then at a later date obtaining a patent. On the other hand, the law has recognized the necessity of allowing an inventor to freely experiment with his invention and permits such experimental use which is reasonably necessary to the perfection of the invention. Elizabeth v. Pavement Co., 97 U.S. 126, 24 L.Ed. 1000 (1878). This exception has been recognized even in cases where the experimental use has resulted in incidental profit to the invent- or. As stated in Smith & Griggs Mfg. Co. v. Sprague, 123 U.S. 249, 256, 8 S.Ct. 122, 125-126, 31 L.Ed. 141 (1887):

“A use by the inventor, for the purpose of testing the machine, in order by experiment to devise additional means for perfecting the success of its operation, is admissible; and where, as incident to such use, the product of its operation is disposed of by sale, such profit from its use does not change its character; but where the use is mainly for the purposes of trade and profit, and the experiment is merely incidental to that, the principal and not the incident must give character to the use. The thing implied as excepted out of the prohibition of the statute is a use which may be properly characterized as substantially for purposes of experiment.”

It is clear from the evidence that all the parties to the purchase order of ■September, 1944, considered that it was entered to aid in the development of the solar stills and that the Air Corps’ only intention was to obtain the solar stills for experimental purposes. There was no pretense that they were ready for actual use as lifesaving equipment; in fact, changes were continually being made in the solar stills to overcome defects reported by the Air Corps. Further evidence of the experimental purpose of the sales made under the purchase order is found in the continuing tests and experiments conducted by the Air Corps on the solar stills as they were received, in the fact that while the purchase order called for 15 solar stills, 36 were actually sent, and in the fact that the sales price of the solar stills was calculated to cover only labor costs and a small fraction of the cost of material. Thus, it is evident that the sale and use of the solar stills were motivated by experimental needs, and any profit was merely incidental to the overriding experimental purpose of the purchase order.

The defendant also alleges that it received a license from Higgins Industries to use the invention as part of the production contract of June 21, 1945, calling for 172,678 solar stills. A necessary presupposition to this allegation is that Higgins Industries had the right to grant such a license. There is no evidence of any assignment by Ushakoff to Higgins Industries of the patent rights to the invention, nor is there any evidence that Ushakoff agreed to make such an assignment of the invention. If Higgins Industries has any rights in the patent they must have arisen from the circumstances of Ushakoff’s employment. The courts have, in certain circumstances, recognized the right of an employer to an assignment of his employee’s invention even in the absence of an agreement to that effect in the employment contract. These circumstances require, however, that the employee be hired to secure certain defined results. Marshall v. Colgate-Palmolive-Peet Co., 175 F.2d 215 (3rd Cir. 1949). As explained by Mr. Justice Roberts:

“One employed to malee an invention, who succeeds, during his term of service, in accomplishing that task, is bound to assign to his employer any patent obtained. The reason is that he has only produced that which he was employed to invent. His invention is the precise subject of the contract of employ- *673 merit.” United States v. Dubilier Condenser Corp., 289 U.S. 178, 187, 53 S.Ct. 554, 557, 77 L.Ed. 1114 (1933).

Such circumstances have not been proved in the instant case. Ushakoff was employed as Director of Research by Higgins Industries, and at the time of his employment he made it known that he was working on several projects of his own and wanted to retain an interest in any profits obtained therefrom. Ushakoff’s job involved the normal duties of a Director of Research as well as working on projects then being developed at Higgins Industries. The solar still project was initiated by Ushakoff on his own, and it wasrnot until after Ushakoff’s initial work that Higgins Industries became actively interested in it. Ushakoff was not employed for the purpose of inventing a solar still, and hence the circumstances of the instant case do not warrant a finding that Ushakoff was obliged to assign the invention to Higgins Industries. The circumstances of the instant case would appear to more correctly fall within the equitable “shop rights” doctrine which gives the employer the right to practice the invention because the employee developed the invention during the hours of employment and has used the employer’s materials and equipment. However, it is unnecessary to decide here if Higgins Industries has acquired such a shop right, since this right does not carry with it the right to grant licenses. Therefore, defendant cannot rely for defense on any license or sublicense from Higgins Industries.

Finally the defendant alleges that it has an implied license from Ushakoff to use the invention as a result of Ushakoff’s conduct in relation to the Air Corps. Defendant claims that Ushakoff did not give notice to the Air Corps that he was anything other than an agent for Higgins Industries nor that he claimed or intended to claim that he was the owner of the invention. It is not believed that this ground of defense is sustained by the evidence. When Ushakoff was in the employ of Higgins Industries it was natural that he should consider that his compensation for the invention would come from Higgins Industries, which would be manufacturing the stills for the Air Corps. Thus, it cannot be expected that Ushakoff would demand that the Air Corps take notice of his ownership of the invention during the period while he was employed by Higgins Industries. Further, there is no evidence that Ushakoff’s conduct was other than would be expected of a person in his position nor that Ushakoff verbally or through silence attempted to give the impression that he would not claim his rights in his invention. In addition, the evidence shows that on May 31,1945, shortly after he left the employ of Higgins Industries, Ushakoff wrote the Air Corps in an attempt to establish and register his ownership of the invention, and that on January 11, 1949, Ushakoff, through his attorneys, notified the Air Corps that it was infringing his patent. The May 31, 1945 letter was received and replied to by the Air Corps prior to June 21, 1945, the date of the formal production contract for the 172,678 solar stills, and both the May 31, 1945 letter and the January 11, 1949 letter were received considerably more than 6 years prior to the filing of this suit. The evidence shows that Usha-koff did not entrap the defendant into the infringement herein charged.

Summarizing, the patent here in suit, No. 2,455,835, is found to be valid; plaintiffs are found to be the rightful owners of the patent; Ushakoff’s conduct is found not to have been such as would give the defendant an implied license to use the invention, and defendant’s purchase of the solar still made in accordance with the patent is found to be an unlicensed use of plaintiffs’ invention.

FINDINGS OF FACT

1. This is a patent suit under Title 28 U.S.C. § 1498, for reasonable and en *674 tire compensation for the unlicensed use by the defendant of plaintiffs’ patented invention. United States Letters Patent No. 2,455,835, entitled “Inflatable Solar Still,” issued December 7, 1948, to plaintiff Alexis E. Ushakoff, of Beverly, Massachusetts, and 35 percent to plaintiff Stanley A. Baron, of New Orleans, Louisiana, for the benefit of Frederick A. Middleton, John J. Finnorn, and said Stanley A. Baron, on an application for patent filed February 4,1946, by plaintiff Alexis E. Ushakoff.

2. The parties agreed at pretrial to a separation of issues for trial, and that the issues of validity and infringement of the patent by the defendant be first determined upon full proofs, findings of fact, and argument of counsel. The parties further agreed that the accounting issue, including evidence as to the number of articles procured and/or the value of the patented invention, or the extent of the liability, if any, of the defendant and the amount of reasonable and entire compensation, if any, due to plaintiffs on account thereof, would be deferred until after the entry of the order of the court on the issues of validity and/or infringement.

3. Prior to the issuance of the patent, Alexis E. Ushakoff assigned 35 percent of his entire right, title, and interest in the patent to plaintiff Stanley A. Baron for the benefit of Frederick A. Middleton, John J. Finnorn, and said Stanley A. Baron. Finnorn subsequently assigned all of his interest in and to said patent to Baron and Middleton.

4. The patent, No. 2,455,835, which is the subject of this litigation, relates to an inflatable solar still for converting salt water to drinking water through the utilization of the sun’s radiant energy. Briefly, the solar still is comprised of an outer transparent non-absorbent shell having a small bag mounted therein. Salt water is dripped through an opening in the outer transparent shell onto the surface of the bag, and the radiant energy of the sun which passes through the transparent shell evaporates the salt water, leaving the salt in the form of a deposit on the surface of the bag. The water vapor rises until it comes into contact with the inner surface of the transparent shell where the vapor condenses to water. This water, which is now free of salt, runs down the inner surface to the bottom of the transparent shell, where it is collected and removed.

5. The patent contains several illustrative drawings. Figs. 1, 2 and 4 are most representative of the type of solar still here in suit and are reproduced on page 675 of this report. The specification of the patent describes the solar still illustrated in Figs. 1, 2, and 4 in part as set forth on pages 675, 676.

“PATENT SPECIFICATION

“This spherical hollow body 10 carries between its upper and lower ends, a flange 11 to which is attached at one end a tow line 12, also attached to the water navigating conveyance. Designed to be encased by this hollow body 10, as by means of a cover, is another hollow body, preferably shaped like a bag with its throat portion inverted, which body, in one highly convenient form, is polyhedral in contour so as to be provided with downwardly converging sides 18 and 19, joined to upwardly convergent sides 16, 17, joined to oppositely including sides 14 and 15 converging upwardly at the top of the bag. This polyhedral configuration of the bag is maintained when it is fully distended, as shown in Figure 1, as it is designed to be collapsible, being made of a porous, heat absorbing, light weight flexible material, dark or black in color. The throat portion of the bag is designated 20, and has its perimetral edge secured as at 21 to the intermediate part of a funnel-shaped flexible body or member 27 which has both its larger and narrow parts secured as at 28 to the lower end of the hollow

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