Neenan v. Otis Elevator Co.

COXE, Circuit Judge.

The facts are so fully set out in the opinions delivered by the J udge of the Circuit Court and filed, respectively, June 2, 1910, May 22, 1911, and June 2, 1911, that it will not be necessary to restate them in detail.

[1] The dilemma in which the defendant is placed by the proofs is this: The Neenan patents are either for valuable inventions or they are not. If worthless, the defendant will not he injured, but on the contrary will be benefited, by re-assigning them on receiving the amount it has paid. If, on the other hand, the patents cover valuable inventions, the inventor is entitled to have them exploited during the lives of the patents. The gains, profits and advantages which may accrue from the patents the complainant is entitled to receive, either under the contract or as owner. It seems evident that no substantial gains will accrue to him under the contract. The defendant has had the right to install elevators embodying the patented inventions since May 24, 1904, nearly five years prior to the filing of the bill and has not installed a single one or earned a dollar for the *420 complainant under the contract. The intention of the parties, at least the intention of Neenan'was to exploit the inventions as soon as possible. It was the duty of the defendant to test the apparatus with reasonable diligence and if' the tests were satisfactory to install it within such reasonable time as was convenient. It did test the apparatus and formd it satisfactory, but has wholfy neglected to put it into practical use. Its conduct in this regard seems to indicate a purpose not to use the patented improvements but to prevent rivals in business from acquiring them. Manifestly, the defendant does not intend to push the introduction of the inventions in an enthusiastic and energetic manner such as the complainant has a right to expect. The eighth clause of the contract gives the defendant a right to cancel it at any time. The tenth clause must have a reasonable construction; otherwise the complainant is left at the mercy of the defendant and the contract is wholly unilateral. After the successful tests of the apparatus were made the defendant had such further reasonable time as was convenient in which to begin practical work. The tests were made in February and March, 1906, and the bill was filed February 5, 1909. There were then three years of idleness when no efforts were made to put the invention into practice, although several opportunities offered themselves. After the interlocutory hearing additional testimony was taken with the permission of the court and with the apparent consent of the defendant, to show further defaults continuing from April 11, 1909, up to August 1, 1910, a year and a half of this period being subsequent to the filing of the bill. Recent litigation has impressed upon the courts the difficulty of formulating in advance a rule by which to determine what is or is not reasonable, but, in a given case, we can say that we think the delay shown is unreasonable to such an extent as to justify the injured party in terminating an agreement. In the present case it is unnecessary to point out within exact limits what would have been a proper period in which to test and install the apparatus, but we are clearly of the opinion that the delay and supineness of the defendant, as shown by the testimony, justify the complainant in putting an end to the contract. It is not too much to say that the defendant, after it proved the invention to be a valuable one, wholly neglected to put it into practical use. This was not what the contract contemplated and was contrary to its spirit and letter as well.

[2] The complainant has no adequate remedy at law. No rational rule of damages can be formulated upon the facts as shown; any verdict rendered would have nothing but speculation and guesswork to support it. In such cases the right of the injured party to rescind is well recognized.

The complainant complains because the court did not require the defendant to pay interest upon the sum of $3,000 per annum which the defendant was required to pay. The complainant has not appealed or filed an assignment of errors, but, assuming that the question is before us we are not at all persuaded that there was error in the ruling of the court in this respect.

The decree is affirmed with costs.