Dalzell v. Dueber Watch-Case Manufacturing Company

Statement by Mr. Justice GRAY:

These were two bills in equity, heard together in the circuit court, and argued together in this court.

On March 31, 1886, Allen C. Dalzell, a citizen of the state of New York, and the Fahys Watch-Case Company, a New York corporation, filed a bill in equity against the Dueber Watch-Case Manufacturing Company, a corporation of Ohio, for the infringement of two patents for improvements in apparatus for making cores for watch cases, granted to Dalzell, October 27, 1885, for the term of which he had, on January 21, 1886, granted a license, exclusive for three years, to the Fahys Company.

To that bill the Deuber Company, on June 4, 1886, filed the following plea: 'That prior to the grant of the said letters patent upon which the bill of complaint is based, and prior to the application therefor, and prior to any alleged invention by said Dalzell of any part, feature, or combination described, shown, or claimed in either of said letters patent, the said defendant being then engaged in the manufacture of watch cases in the city of Newport, in the state of Kentucky, and the said Dalzell having been in its employ as a tool maker for a year preceding, it, said defendant, at the request of said Dalzell, re-employed said Dalzell, at increased wages, to aid in experimenting upon inventions upon machinery and tools to be used in the manufacture of various portions of watch cases; that said Dalzell did then and there agree with said defendant, in consideration of said increased salary as aforesaid to be paid to him, and which was paid to him by this defendant, to dedicate his best efforts, skill, and inventive talent and genius towards the perfecting and improvement of watch-case machinery and such other devices as this defendant should direct and order, and in experimenting under the direction of this defendant for this purpose, and further agreed that any inventions or improvements made or contributed to by him (said Dalzell) should be patented at the expense of this defendant, and for its benefit exclusively, and that said Dalzell should execute proper deeds of assignment, at the expense of this defendant, to be lodged with the applications for all such patents in the United States patent office, and said patents were to be granted and issued directly to this defendant; that, in pursuance of said agreement, said Dalzell entered upon said employment, and while thus employed at the factory of this defendant, and while using its tools and materials, and receiving such increased wages from it, as aforesaid, the said alleged inventions were made; that said patents were applied for, with the permission of this defendant, by the said Dalzell; and that all fees and expenses of every kind, necessary or useful for obtaining said patents, including as well patent-office fees as fees paid the solicitor employed to attend to the work incident to the procuring of said patents and drawing said assignments to this defendant, were paid by this defendant; and that, notwithstanding the foregoing, said Dalzell did not sign the said deeds, although he had promised so to do, but fraudulently and secretly procured the said patents to be granted to himself, of all of which this defendant avers the complainant the Fahys Watch-Case Company had notice at and prior to the alleged making of the license by said Dalzell to it, more particularly referred to in the bill of complaint; and defendant avers that, by reason of the premises, the title in equity to said patents is in this defendant.'

The plea, as required by equity rule 31 of this court, was upon a certificate of counsel that in his opinion it was well founded in point of law, and was supported by the affidavit of John C. Dueber that he was the president of the Dueber Company, that the plea was not interposed for delay, and that it was true in point of fact.

After a general replication had been filed and some proofs taken in that case, including depositions of Dueber and of Dalzell, the Dueber Company, on January 17, 1887, filed a bill in equity against Dalzell and the Fahys Company for the specific performance of an oral contract of Dalzell to assign to the Dueber Company the rights to obtain patents for his inventions, and for an injunction against Dalzell and the Fahys Company, and for further relief.

This bill contained the following allegations:

'That heretofore, to wit, prior to November 1, 1884, the said defendant Dalzell was in the employment of your orator, making and devising tools to be used in the construction of watch cases. That on or about said last-mentioned date, at the request of said Dalzell, his wages were raised, in consideration of a promise then made by said Dalzell to your orator that in the future his services would be of great value in the devising and perfecting of such tools. That, in pursuance of said promise and contract, the said Dalzell continued in the employ of your orator, and wholly at its expense, to devise and construct various tools to be used in your orator's watch-case factory in the manufacture of various parts of watch cases, That said Dalzell was so employed for a great length of time, to wit, a whole year, a large part of which time he was assisted by various workmen employed and paid by your orator to assist him (the said Dalzell) in constructing such tools and in the experiments incident thereto.'

'That subsequently thereto, and when said tools were completed, said Dalzell requested your orator to apply for letters patent for the various inventions embodied in all of said tools, for the use and benefit of your orator, representing to your orator that he (said Dalzell) had made valuable discoveries and inventions while engaged in designing and constructing said tools; and further representing that, if your orator did not secure the exclusive right to said inventions by letters patent, in all probability some of the workmen employed at your orator's factory, who were familiar with the said inventions and the construction of said tools, might go to some other and rival watch-case company, and explain to it the construction of such tools, and make similar tools for such other company, in which case your orator would be without remedy.'

'That said Dalzell then and there, and as a further inducement to your orator to have letters patent applied for for said inventions, volutarily offered to your orator that, if your orator should permit him (Dalzell) to apply for letters patent, and your orator pay all the expenses incident to obtaining such letters patent, such letters patent might be taken for the benefit of your orator, and that he (Dalzell) would not ask or require any further or other consideration for said inventions and such letters patent as might be granted thereon, which proposition was then and there accepted by your orator, and it was then fully agreed between said parties that said Dalzell should immediately proceed, through a solicitor of his own selection, to procure said patents for and in the name of your orator, and that your orator should pay all bills that might be presented by said Dalzell, or such solicitor as might be selected to attend to the business of procuring said patents.'

This bill further alleged that Dalzell did, in pursuance of that agreement, select a solicitor, and apply for the two patents mentioned in the bill for an infringement, and three other patents; that, when some of the patents had 'passed for issue,' the solicitor employed by Dalzell sent blank assignments thereof to the Dueber Company, with a request that Dalzell sign them, and thus transfer the legal title in the inventions to the Dueber Company, and enable the patents to be granted directly to it; that it exhibited these assignments to Dalzell, and requested him to sign them; that Dalzell replied that he would postpone signing them until all the patents had 'passed for issue,' and would then sign all together, to all which the Dueber Company assented; that the Dueber Company paid all the fees and expenses necessary or useful in obtaining the patents, but that Dalzell fraudulently procured the patents to be granted to himself, and refused to assign them to the Dueber Company, and, as that company was informed and believed, conveyed, with the intention of defrauding it, certain interests in and licenses under the patents to the Fahys Company, with knowledge of the facts; and that Dalzell and the Fahys Company confederated and conspired to cheat and defraud the Dueber Company out of the patents, and, in pursuance of their conspiracy, filed their bill aforesaid against the Dueber Company.

Annexed to this bill was an affidavit of Dueber that he had he had read it and knew the contents thereof, and that the same was true of his own knowledge, except as to the matters therein stated on information and belief, and that as to those matters he believed it to be true.

To this bill answers were filed by Dalzell and the Fahys Company, denying the material allegations, and a general replication was filed to these answers.

By stipulation of the parties, the evidence taken in each case was used in both. After a hearing on pleadings and proofs, the circuit court dismissed the bill of Dalzell and the Fahys Company, and entered a decree against them, as prayed for, upon the bill of the Dueber Company, 38 Fed. Rep. 597. Dalzell and the Fahys Company appealed from each decree.

Mr. Justice Brewer, dissenting.

Edmund Wetmore and J. E. Bowman, for appellants.

James Moore, for appellee.

Mr. Justice GRAY, after stating the substance of the pleadings and decrees, delivered the opinion of the court.