Defendant is a former employee of plaintiff.*fn1 During his employment he signed a document pursuant to which he agreed to assign to Ingersoll-Rand (hereinafter sometimes referred to as I-R) any devices invented or conceived by him under certain circumstances and during certain specified time periods. The major issues in this case are: (1) whether, under the terms of the agreement, defendant is required to assign to plaintiff a friction stabilizer which defendant invented; (2) if plaintiff is entitled to the invention under its agreement with defendant, whether the agreement is enforceable under the facts and circumstances of this case.
One of the dangers of underground mining is the potential collapse of the mine's rock roof. Various methods and devices have been utilized to stabilize mine roofs. One of the devices is
manufactured by I-R under an agreement with its inventor, Dr. James Scott. Plaintiff's device is a steel tube fabricated and sold in lengths of four feet and five feet. Its diameter is approximately one and one-half inches. The tube is split longitudinally for its entire length. In effect, the circle which forms the cylinder is not closed, therefore, looking at the end of the tube, an observer does not see the letter O, he sees the letter C.
Plaintiff's device is called a friction stabilizer. To stabilize a roof using plaintiff's device the mine operator drills a hole in the roof. The drill hole is a few inches deeper than the stabilizer is long, but the diameter of the hole is smaller than the diameter of the friction stabilizer. The stabilizer is driven into the hole for its entire length. The differential between the hole diameter and the diameter of the stabilizer causes the stabilizer to deform similar to the deformation (compression) of a spring under pressure. When it has been driven completely into the hole the force required to deform it provides a friction grip which tends to prevent the rock strata from separating. In effect, the tube frictionally engages the rock. Apparently the stabilizers are installed in a pattern in the mine roof. The distances between the stabilizers and the characteristics of the pattern are neither known to the court nor important to this litigation.
Dr. James Scott conceived the idea for the stabilizer. Working with Dr. Scott plaintiff began a development program in 1973. The first patent issued to Dr. Scott in December 1975, and was assigned to I-R. Plaintiff began marketing the device in February 1977 under an agreement with Dr. Scott. From 1973 through 1976 plaintiff expended $518,379 on its development program. An additional $844,306 was expended for research and development in 1977 and 1978. These amounts include an allocation of research and development overhead, and the 1977 and 1978 amounts include efforts to develop tooling related to the stabilizer, e.g., drilling equipment.
The stabilizer has been a successful product. Millions of units have been sold. Sales targets for the years 1983 through 1987 average 3 million units a year at approximately $3 a unit. Friction stabilizers compete with other methods of roof stabilization such as mechanical anchor bolts and resin grouted bolts. Currently friction stabilizers are not purchased for use in coal mines because existing drilling equipment in coal mines cannot be used to install friction stabilizers.
Defendant is a middle-aged engineer who has had a varied employment history. In 1972 he was employed by an I-R subsidiary, the Miller's Falls Tool Company. He was terminated in 1974, but sought employment with other units of I-R. In October 1974 he was hired by Ingersoll-Rand Research. His title was program manager. As a condition of his employment, defendant was required to execute the agreement in question titled agreement relating to proprietary matter. From 1974 to March 1978 defendant clearly was involved in a research capacity, although he was not formally involved in or assigned to research or development relevant to the friction stabilizer.
However, Dr. McGahan, the Director of Research, encouraged the research staff to be creative, to discuss ideas for projects or potential projects beyond those to which they had been assigned. These ideas were to be submitted on disclosure forms. Defendant submitted 13 disclosures through 1975. Five of his proposals were for devices to support or stabilize mine roofs. Although four of them were not friction stabilizers, the disclosure dated September 30, 1975 specifically used the phrase, split set, which is the registered trade name of plaintiff's friction stabilizer. In his disclosure defendant stated: "A potential useful feature to [ sic ] the I.R. split set roof bolting technique is that it is hollow. Once installed its holding characteristics can be improved by the following." Defendant then suggested the use of a resin mix or grouting material to be forced into the tube to surround the split set.
In March 1978 defendant was named manager of manufacturing of the friction stabilizer. I-R does not fabricate the stabilizer in any of its plants. Rather it contracts with others to manufacture the product in conformity with I-R's specifications. As manager of manufacturing it was defendant's responsibility to administer the manufacturing program. It was his job to see that the stabilizers were produced in the required quantity and to the required quality. Defendant was I-R's liaison with the fabricators and worked with them in all relevant areas including manufacturing process, product specification, material and quality testing and assurance.
On June 22, 1979 I-R terminated defendant's employment because of a conflict between defendant and his superior, John Irwin. After his termination defendant sought employment with other I-R divisions but none was offered. In February 1980 he became employed by Architectural Research, a firm which manufactured panels for building exteriors, in a position which lasted until July 1980.
Shortly after termination by plaintiff, he conceived an idea for a friction stabilizer with a configuration different from plaintiff's stabilizer. Defendant's device differed from plaintiff's device in two respects: (1) it's circumference was closed rather than split; (2) it's shape was elliptical not round.
Defendant admits to conceiving the invention in August 1979 less than two months after I-R terminated his employment. A patent application was filed on his behalf in March 1980, nine months after termination. An additional patent application was filed in March 1981 and U.S. patents were issued to defendant on February 23, 1982 and March 30, 1982. Patents from other countries were also issued to defendant. The market place has begun to accept defendant's product and his device appears to be a competitive threat to plaintiff's device. I find as a fact that defendant's device sells at a lower price than plaintiff's device. Other than the price advantage, there is inadequate evidence from which the court could draw conclusions as to the
relative effectiveness of the competing devices. That is, the court does not know whether defendant's device is as effective, more effective or less effective than plaintiff's device or whether the only advantage to defendant's device is its price.
The agreement, executed on October 1, 1974, establishes three sets of circumstances which require an employee, or former employee, to assign an invention to I-R:
1. To assign, and I hereby do assign, to the COMPANY, its successors and assigns, my entire right, title and interest in and to all inventions, copyrights and/or designs I have made or may hereafter make, conceive, develop or perfect, either solely or jointly with others either,
(a) during the period of such employment, if such inventions, copyrights and/or designs are related, directly or indirectly, to the business of, or to the research or ...