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Andreaggi v. Relis

Decided: March 13, 1979.

JOSEPH R. ANDREAGGI ET AL., PLAINTIFFS,
v.
MATTHEW J. RELIS, DEFENDANT



Dwyer, J.s.c.

Dwyer

Plaintiffs commenced this action to compel defendant Matthew J. Relis to assign his interests in certain patents. Relis asserts, among a myriad of defenses, that as a coinventor he has rights in alleged further developments reflected in the patent application and patents which were made solely by plaintiffs after Relis and plaintiffs were discharged by a common employer and plaintiffs acquired the employer's rights to the inventions. Since the alleged further developments were made after termination of employment and solely by plaintiffs, Relis alleges that he is under no duty to assign his interests in those alleged further developments because he has those rights individually and common employer never had any rights in them. Neither counsel nor the court has found any decision on the question. Plaintiffs deny that they made any further developments after the assignment and the sale of the equipment embodying the inventions to plaintiffs by Curtiss-Wright, the common employer; hence they assert that they have a right obtained from Curtiss-Wright to have Relis assign his interests in the patents which have issued.

While all three were employed by Curtiss-Wright the company undertook to develop a device that would simultaneously generate a document that could be read by the human eye and a machine. The initial focus was to develop a way-bill that could accompany goods in transit. The personnel handling the goods could read the document. For control and accounting purposes, a machine could read the document electronically and generate additional copies.

The concept to accomplish this result was to utilize a typewriter which was linked to an encoding device. The stock for the document was to be paper which had a magnetic backing. The operator would type the document on the front. Simultaneously the keys of the typewriter would trigger the encoding device that would record the same information on the magnetic field on the reverse side, as well as a code of instructions to the machine that was to read the document. The recording device was a

head containing windings of wire which generated an electric field. To correct for errors, provision was made to erase the bits encoded on the magnetic coating without destroying or distorting the other bits so encoded, and inserting new bits when the new typed character was inserted to replace the erased visible typed character. The machine or device embodying the concept was constructed at Curtiss-Wright. For reasons hereinafter discussed, Curtiss-Wright terminated the project and transferred its rights to Joseph Andreaggi. In return for monies advanced by Robert J. Graf, Andreaggi assigned part of his rights to Graf.

Andreaggi, Graf and Relis signed application Serial No. 250,872 for letters patent for a visual and magnetic recording system in April 1972 as coinventors. It was filed on May 15, 1972 with the United States Patent and Trademark Office. At the time that plaintiffs requested Relis to sign the application their attorney also advised Relis that they would subsequently request an assignment of his interests in the patent. During 1973 certain amendments were made to the application and four divisional patents were issued on December 28, 1973. On July 9, 1974 Patent No. 3,823,405 issued on the basic application.

During 1973 and up to July 9, 1974, plaintiffs and their attorney requested Relis to assign his rights to plaintiffs.

On May 23, 1975 plaintiffs' attorney tendered a written assignment of Relis' rights in the patent to Relis for signature. This has not been executed.

The court notes that similar problems exist with the divisional patents. The court concludes that resolution of the questions concerning the basic patent will govern the issues on the other patents.

In this action plaintiffs, in addition to seeking an order compelling Relis to assign his rights, seek money damages sustained by his refusal to cooperate in connection with certain foreign patents, and money damages suffered because of his persistent refusal to assign the rights under the patents involved

in this litigation with the consequence of substantial cost of this litigation and inability to market or sell licenses under the patent. Plaintiffs further seek to restrain Relis from disclosing the nonpublic portions of the contents of the invention disclosures obtained by plaintiffs from Curtiss-Wright. They base their action on the rights acquired from Curtiss-Wright and protection of their proprietary rights in such material.

In addition to the defense based upon the alleged further developments, Relis asserts that he is under no duty to convey any rights because: (i) he was not employed to invent, (ii) Curtiss-Wright fired him before it asked him for an assignment and (iii) Curtiss-Wright could not assign any rights under a contract for personal services. He also asserts that the action is barred by the statute of limitations and by laches.

The court will consider the following matters in the order stated.

1. What was the relationship between Relis and Curtiss-Wright?

2. What had been accomplished on the project at Curtiss-Wright?

3. What was the effect of the contract of employment, Relis' separate assignments to Curtiss-Wright and Curtiss-Wright's assignment to plaintiffs?

4. What duties, if any, did Relis owe to plaintiffs and Curtiss-Wright thereafter?

5. Is the action barred by limitations or laches?

6. Relief.

The court will set forth its findings of facts under the separate headings rather than state them separately.

1.

Relis has a B.S. degree in electrical engineering from C.C.N.Y. and a M.S. degree in electrical communications from M.I.T. He worked at the U.S. Navy's Naval Ordinance Laboratory and at another major electronics corporation as an assistant development engineer. At the suggestion of a friend, he applied to Curtiss-Wright to be hired as the assistant manager of the Digital Computer Department.

He testified that he read and understood D-2, Agreement For Services, before he signed it on December 15, 1958. On January 21, 1959 he signed another copy of the form of agreement for the purpose of adding additional patents which he had obtained prior to starting work at Curtiss-Wright. He claimed a total of seven prior patents on these two forms.

He stated that his duties as assistant manager were to perform assignments given him by the manager of the department, supervise engineers, investigate problem areas and suggest solutions, and do design work where additional work was needed.

On December 16, 1959 he was promoted to Manager, Digital Computer Department.

D-2 is a standard form of agreement. At the top of the form appears the following:

CURTISS-WRIGHT CORPORATION ELECTRONICS DIVISION AGREEMENT FOR SERVICES

IN CONSIDERATION of my employment by the CURTISS-WRIGHT CORPORATION, ELECTRONICS DIVISION (hereinafter termed the "Corporation"), upon the terms and conditions of this agreement, I, Matthew Relis of Bayside, N.Y. agree with the Corporation as follows:

2. Without charge, to communicate promptly to the Corporation and, upon request, to assign to it all of my right, title and interest in and to any and all inventions which I may make, or with respect to which I may be a joint inventor, while in the employ of the Corporation, which relate to or are useful or may be useful in connection with business of the character carried on or contemplated by Curtiss-Wright Corporation, its subsidiaries or affiliates and all my right, title and interest in and to any and all domestic and foreign applications for patents covering said inventions, any and all patents granted for said inventions and any and all reissues and extensions of the said patents; and to do any and all acts and to execute and deliver such instruments as may be deemed by the Corporation necessary or proper to vest all of my right, title and interest in and to said inventions, applications and patents in the Corporation and to effect the obtaining of said patents,

reissues and/or extensions thereof. All necessary and proper expenses in connection with the foregoing shall be borne by the Corporation.

3. (e) I will regard and preserve as confidential all information pertaining to the Corporation's business that may be obtained by me from specifications, drawings, blueprints, reproductions and other source of any sort as a result of such employment and I will not without written authority from the Corporation so to do, disclose to others during my employment or thereafter, such or any other confidential information obtained by me while in the employ of the Corporation.

In 1961, as a result of discussions with Pennsylvania Railroad personnel, Curtiss-Wright undertook development work to see if it could devise a system to simultaneously generate a document that could be read by the human eye and by a machine and that would be sturdy enough to be handled by railroad personnel. Relis, Graf and Andreaggi were assigned to the project. It was called Magdop. Financing for the project was terminated in September 1963, but work continued until 1964 because of the enthusiasm of the three for the project.

The 16 invention disclosures filed with the Patent Department at Curtiss-Wright show that Relis participated actively in the inventive process. He explained his personal possession of the original of certain of the invention disclosures, without permission, on the grounds that he had a right to know what he had invented. He also retained certain engineering notebooks with notes concerning the work on Magdop, without authority. An attorney from Curtiss-Wright identified the documents at trial as having been corporate property which should have been delivered to plaintiffs.

The evidence establishes that all three were full-time employees. Curtiss-Wright spent over $200,000 on the project under budget controls. From the testimony of the witnesses the court finds that more was spent because the parties picked up tools and parts from other departments which had little use for them

or which other departments wanted to be helpful to the project. These donations were the property of Curtiss-Wright.

The evidence does not establish that during the period that Magdop was pursued Relis ever worked on the project, its ideas, or the equipment embodying the ideas, except as a full-time employee of Curtiss-Wright.

Unlike the fact patterns in International Pulverizing Corp. v. Kidwell , 7 N.J. Super. 345 (Ch.Div.1950); Marcalus Mfg. Co. v. Sullivan , 142 N.J. Eq. 434 (Ch.1948); Connelly Mfg. Co. v. Wattles , 49 N.J. Eq. 92 (Ch.1891), the terms of the employment are not oral but written. At the time of hiring, Relis claimed seven patents to his credit. The area in which he was to work was developmental and experimental.

The court finds that Relis was not hired to be the superintendent of the works, as the court found on the disputed record before it in Connelly Mfg. Co., supra , but was hired to do some administrative work and to help out in the inventive process. The court does not find Relis credible that he did not do inventive work or was not expected to do it. It is inconsistent with the memoranda and invention disclosures which he wrote in many cases and signed either individually or with one or both of the plaintiffs. It is also inconsistent with his taking original copies of some of the invention disclosures so that he would know what he invented. If he believed that he had no duty to turn over inventions made at Curtiss-Wright, why did he file invention disclosures for four years on the Magdop project instead of taking all of them home?

As stated in International Pulverizing Corp., supra , by Judge Jayne:

Where a person expressly or impliedly contracts to devote his mental faculties and exercise his inventive ability for the benefit of his employer, the inventions conceived by him in the course of his employment and as a consequence of its pursuit belong in equity to the employer. [7 N.J. Super. at 347]

The present New Jersey Supreme Court approved this view in Misani v. Ortho Pharmaceutical Corp. , 44 N.J. 552, appeal dism., 382 U.S. 203, 86 S. Ct. 398, 15 L. Ed. 2d 270 (1965).

Counsel for Relis urges that the agreement was never effective because no person signed it on behalf of Curtiss-Wright. The form contains no provision for such a signature. Curtiss-Wright is identified in the form. It employed Relis for seven years. The court finds that Curtiss-Wright accepted and performed under the contract. Relis has not argued that the statute of frauds requires a signature. In Marcalus Mfg. Co. and International Pulverizing Corp. , both supra , the courts granted injunctive relief compelling assignments of patents under oral contracts; hence, if Relis was hired under an oral contract, the court could grant relief.

Relis urges that the terms must be construed against plaintiffs because their assignor drew the form of agreement and because it is one of adhesion. He argues that certain phrases, "upon request" and "while in the employ" in paragraph 2, supra , must be read to mean that any request for assignment had to come while he was in the employ of Curtiss-Wright.

The construction of the terms of a written instrument which are not in dispute is a question of law. There is no dispute as to the terms. The court concludes that the term "while in the employ of the Corporation" defines the inventions which are intended to be conveyed and does not limit the time period in which an assignment must be requested or forever lost.

Victor D. Behn, who has been a corporate patent attorney for Curtiss-Wright for 15 years and a patent attorney since 1942, testified that normally at the time a patent application is filed an assignment of the patent rights is also filed. The face of the application will then show the name of the assignee.

He further testified that it is not unusual not to file an assignment of a patent until the patent is issued, in an attempt

to conceal the interest of a corporate employer in an invention from its competitors.

He also testified that there is no procedure to check all invention disclosures and obtain an assignment of an employee's interest in them before he or she is terminated. He has requested assignment of patent rights after employees have left the employer's employment.

The court concludes that a construction of the contract language that the employer had to request an assignment of a coinventor's right to patents before the employee left its employ would be impractical. A review of the cases as well as the testimony in this case show that there is mobility between employers by those working on inventions. On the facts in this case, which include other litigation between Andreaggi and Curtiss-Wright and the work of the patent attorneys to perfect the patent application, six years elapsed between the assignment from Curtiss-Wright and the filing of the application. In other situations other employees might have to do further work before the concept was sufficiently developed that a patent application could be filed. The court concludes that the request under paragraph 2 did not have to be made during the period of employment.

The court finds that the work on the Magdop was related to the business of Curtiss-Wright or contemplated by it. The project on Magdop was to develop a new product to be sold by Curtiss-Wright or a subsidiary. The court concludes that such work is the ordinary work of a business engaged in research and development for new products and is covered by paragraph 2.

Finally, Relis urges that the words "any and all inventions which I may make . . . while in the employ of the Corporation" have to be interpreted to mean that the invention has to be complete, perfected and reduced to practice in the form of a working model before he is under a duty to make any assignment.

No useful purpose will be served by citing all the cases and statutory provisions of the patent law relied upon by counsel for

defendant in support of this argument. Many of these deal with different problems pertaining to priority.

The purpose of this contract was to settle a problem between an employer and an employee and not to settle claims of priority between inventors.

In United States v. Dubilier Condenser Corp. , 289 U.S. 178, 53 S. Ct. 554, 77 L. Ed. 1114, 85 A.L.R. 1488 (1933), the Supreme Court, in delimiting the shop right rule and an employee's right to patents made while working for another, described the act of invention as follows:

The reluctance of courts to imply or infer an agreement by the employee to assign his patent is due to a recognition of the peculiar nature of the act of invention, which consists neither in finding out the laws of nature, nor in fruitful research as to the operation of natural laws, but in discovering how those laws may be utilized or applied for some beneficial purpose, by a process, a device or a machine. It is the result of an inventive act, the birth of an idea and its reduction to practice; the product of original thought; a concept demonstrated to be true by practical application or embodiment in tangible form. [Citations omitted]

Though the mental concept is embodied or realized in a mechanism or a physical or chemical aggregate, the embodiment is not the invention and is not the subject of a patent. The distinction between the idea and its application in practice is the basis of the rule that employment merely to design or to construct or to devise methods of manufacture is not the same as employment to invent. Recognition of the nature of the act of invention also defines the limits of the so-called shop right, which shortly stated, is that, where a servant, during his hours of employment, working with his master's materials and appliances, conceives and perfects an invention for which he obtains a patent, he must accord his master a non exclusive right to practice the invention. [Citations omitted]. This is an application of equitable principles. Since the servant uses his master's time, facilities, and materials to attain a concrete result, the latter is in equity entitled to use that which embodies his own property and to duplicate it as often as he may find occasion to employ similar appliances in his business. But the employer in such a case has no equity to demand a conveyance of the invention, which is the original conception of the employee alone, in which the employer had no part. This remains the property of him who conceived it, together with the right conferred by the patent, to exclude all others than the

employer from the accruing benefits. [ Id. at 188-89, 53 S. Ct. at 557-58, 77 L. Ed. at 1119, emphasis supplied]

In Kinkade v. New York Shipbuilding Corp. , 21 N.J. 362 (1956), our Supreme Court applied that holding to determine that an employee of defendant who conceived a new means of installing bunks on a troop transport had no cause of action against the employer which utilized the means without additional compensation to the employee.

The United States Supreme Court, in sustaining the validity of the patents granted to Alexander Graham Bell in the Telephone Cases , 126 U.S. 1, 8 S. Ct. 778, 31 L. Ed. 863 (1887) said:

[I]t is insisted that the claim cannot be sustained, because when the patent was issued, Bell had not in fact completed his discovery. While it is conceded that he was acting on the right principle and had adopted the true theory, it is claimed that the discovery lacked that practical development which was necessary to make it patentable.

It is quite true that when Bell applied for his patent he had never actually transmitted telegraphically spoken words so that they could be distinctly heard and understood at the receiving end of his line, but in his specification he did describe accurately and with admirable clearness his process, -- that is to say, the exact electrical condition that must be created to accomplish his purpose, -- and he also described, with sufficient precision to enable one of ordinary skill in such matters to make it, a form of apparatus which, if used in the way pointed out, would produce the required effect, receive the words, and carry them to and deliver them at the appointed place. The particular instrument which he had and which he used in his experiments did not, under the circumstances in which it was tried, reproduce the words spoken, so that they could be clearly understood, but the proof is abundant and of the most convincing character, that other instruments, carefully constructed and made exactly in accordance with the specification, without any additions whatever, have operated and will operate successfully. A good mechanic of proper skill in matters of the kind can take the patent and, by following the specification strictly, can, without more, construct an apparatus which, when used in the way pointed out, will do all that it is claimed the method or process will do . . .

The law does not require that a discoverer or inventor, in order to get a patent for a process, must have succeeded in bringing his art to the highest degree of perfection. It is enough if he describes his method with sufficient clearness and

precision to enable those skilled in the matter to understand what the process is, and if he points out some practicable way of putting it into operation. This Bell did. . . . [ Id. at 535-36, 8 S. Ct. at 782-783, 31 L. Ed. at 989-90]

Relis urges that under the decision in Jamesbury Corp. v. Worcester Valve Co. , 318 F. Supp. 1 (D.Mass.1970), aff'd, 443 F.2d 205 (1 Cir. 1971), the words he emphasizes, particularly "make," must be interpreted to mean that the invention must be perfected or at least reduced to workable form before he is under any duty to assign his rights to the patent, because it is only at that point Curtiss-Wright acquired any rights.

Jamesbury Corp., as the assignee of Howard Freeman and an alleged coinventor of a patent issued on July 19, 1960 for a double-seated ball valve based on a patent application filed after May 1954, sued Worcester Valve Co. for infringement. E.W. Bliss Co. intervened, claiming ownership of the subject patent on the grounds that Freeman had worked for a predecessor company designing valves under a written contract of employment and had invented the double-seated valve while so employed; hence, Bliss was equitably entitled to the patent. The court found that the alleged coinventor was not an inventor.

The trial court found that Freeman had worked for the predecessor from 1940 to January 25, 1954 as head of research and development. He had obtained 19 patents and assigned them to the predecessor. It further found that the predecessor was interested in the double-seated valve. It also found that Freeman had mentally conceived the idea which was the basis for the patent while employed by the predecessor, but made no drawing, sketch or model thereof.

In the fall of 1953 Freeman conceived the idea of forming his own company to develop, manufacture and sell the double-seated valve. He discussed the matter with friends, who went out to raise funds for the venture.

The District Court summarized the contract as follows:

In the latter part of January 1954 Freeman, by design, precipitated his voluntary departure from Rockwood. He immediately got the new corporation underway but refrained from drawing any sketches or writing a statement of how the valve worked until February 1, 1954.

On February 1, 1954 he began the sketches. On February 23 he gave a written statement to his patent attorneys of how the new valve worked. It was the basis for the patent application.

A different result in this case might be reached if broader language had been employed in the contract, whose words are to be contrasted with those involved in New Jersey Zinc Co. v. Singmaster , 2 Cir., 1934, 71 F.2d 277, 278, where the employment contract covered "all patentable ideas and devices originating with,

or developed by, an employee" (emphasis added) and in Winston Research Corp. v. Minn. M. & Mfg. Co. , 9 Cir., 1965, 350 F.2d 134, 145, where the contract required employees to assign "inventions conceived during employment" (emphasis added). The contract between the parties in this case most closely resembles that in Goodyear Tire & Rubber Co. of Akron, Ohio v. Miller , 9 Cir., 1927, 22 F.2d 353, in which the court stated, at 355, "If, therefore when he first thought of inventing a device, he preferred to withdraw from the obligation of ...


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