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August 14, 1989

HASBRO, INC., et al., Defendants

The opinion of the court was delivered by: WOLIN

 Plaintiffs In-Tech Marketing Incorporated ("In-Tech"), Global Guaranty Distribution, S.A. ("Global"), Raphael J. Van Der Cleyen and Wilfried F. Ribbens initiated this patent suit seeking the right to the exclusive use of U.S. Patent No. 3,716,229 for a toy originally known as the "Springbal," marketed in Europe as the "Lolobal," and sold by Hasbro, Inc. in the United States as "Pogobal." Plaintiffs also assert other patent-related claims and a claim for tortious interference with contract. Defendants Hasbro, Inc. and Milton Bradley Company (collectively "Hasbro"), joined by defendants Alvin Bojar and Alvin Bojar & Co., have filed this motion for summary judgment in opposition to plaintiffs' claim, and in favor of defendant Hasbro's counterclaim for patent infringement. The Court will grant defendants' motion for summary judgment as to plaintiffs' claims, but will deny the motion as to Hasbro's counterclaim.


 Two plaintiffs, Van Der Cleyen and Ribbens, invented the recreational toy at issue, for which they obtained a Belgium patent in May, 1969. On October 27, 1969, the inventors entered into a licensing agreement with Les Usines Fabelty, S.A. ("Fabelty") that gave Fabelty the right to exploit the patent. On February 21, 1970, the previous contract was amended so as to sell outright to Fabelty ownership of all patents obtained in countries outside of the common market, Austria, and Switzerland, in exchange for royalties of one franc per piece sold, up to a limit of one million pieces. In March 1970, Fabelty applied for a U.S. patent in the name of the inventors. The inventors then executed an assignment of the application, together with all rights in the invention, to Fabelty.

 Fabelty subsequently became insolvent and went into liquidation on November 30, 1972 without ever exploiting the U.S. patent, which was not issued to Fabelty until February 13, 1973. Nominal defendant Simone Tyriard was appointed as liquidator. In 1977, Fabelty was formally liquidated under Belgium law, without any reference made to the U.S. patent. Defendant Hasbro now contends that after that liquidation ownership rights in the patent reverted to the Fabelty shareholders. Plaintiffs, on the other hand, argue that under Belgian law ownership rights reverted back to the inventors.

 In 1985, after all relevant European patents had expired, the toy became immensely popular throughout Europe. One of the companies selling the toy in Europe was Mandelsonderneming Elson, B.V. ("Elson"), a Netherlands corporation whose principal is defendant van den Elshout. In May 1985, Elson executed a distribution agreement with Global providing that Global would distribute Lolobals on an exclusive basis throughout the United States and Canada. In the summer of 1985, Global apparently discovered that the Lolobal toy was covered by an unexpired American patent that had been issued to Fabelty.

 Global then claims to have confronted Elson about who owned the toy's U.S. patent rights. On May 6, 1985, in order to clear up matters, Elson, Global, and the inventors entered into what was called a patent assignment agreement. This agreement provided that: (1) the inventors (Van Der Cleyen and Ribbens) would assign all their rights, including any patent rights in the United States, to Global in exchange for two Dutch Guilders; (2) the inventors would request Mr. Olivier, Fabelty's former principal and the individual with whom the inventors had dealt, to release the patent rights granted Fabelty to Elson, N.V., a Curacao-based company to be established by Elshout; (3) Global and Elson would cross-assign/license the rights so obtained. In essence, Elson was to arrange for the transfer of the toy's patent rights to Global.

 Global never received the toy's U.S. patent rights. In November, 1985, a dispute arose between Global and Elson with respect to royalty payments due under a May 21, 1985 Distribution Agreement for Lolobals supplied by Elson to Global for export to Canada. A lawsuit in the Netherlands ensued, in which Elson sought a declaration that the Elson-Global contractual relationship was dissolved. On October 7, 1988, the Dutch Court declared: "The contractual relationship between plaintiff and defendant, referred to in this opinion, [is] dissolved," as of November 20, 1985. In that opinion, the Dutch Court made repeated reference to the May 6, 1985 patent assignment agreement involving Elson and Global.

 In the meantime, the quest continued to secure the toy's U.S. patent rights. On November 30, 1985, Simone Tyriard, believing that she retained power to act for Fabelty as its liquidator, purported to transfer the patent rights to Elson, B.V., which subsequently purported to grant an exclusive license for the patent rights to Teejay America, a company controlled by defendant Alvin Bojar. In May, 1986, Hasbro then apparently began dealing with Bojar to acquire rights to produce the Lolobal, and began marketing the toy in November, 1986, under the name "Pogobal." In November, 1986, plaintiffs commenced the present lawsuit.

 Finally, in February, 1987, Hasbro claims to have conclusively obtained the toy's patent rights when all of Fabelty's former shareholders or their heirs agreed to give Simone Tyriard power of attorney to assign the patent rights to Hasbro. Besides contending that the patent rights had reverted to the inventors, plaintiffs also dispute whether all of Fabelty's shareholders gave Tyriard a power of attorney.


 A. Ownership of the Toy's U.S. Patent Riqhts

 The parties involved in this case have tried to secure the Lolobal's U.S. patent rights in a variety of ways. The toy's inventors have been approached, the Fabelty Company's bearer shares have been bought up years after the company was liquidated, and the company's liquidator has been asked to play a part in various attempts to gain control of the patent. The Court finds, however, that it was not until Fabelty's liquidator, Simone Tyriard, received powers of attorney from all of Fabelty's former shareholders or their heirs to assign the toy's U.S. patent rights to Hasbro did the matter of ownership become settled. The Court makes this finding based upon an examination of relatively straightforward precepts of Belgium corporate law, and consideration of certain affidavits and other evidence submitted by the parties.

 There is no dispute that the U.S. patent on the Lolobal was issued to Fabelty on February 13, 1973, even though the company had gone into liquidation on November 30, 1972. Fabelty had acquired the patent rights through a valid assignment by the toy's inventors. Plaintiffs now contend that the assignment was automatically rescinded once Fabelty went into liquidation because Fabelty no longer sold any Lolobals and thus did not pay the inventors any royalties, in contrast to the inventor's reasonable expectations.

 Plaintiffs' automatic rescission argument is apparently based on Article 1183 of the Belgian Civil Code, which provides:

Art. 1183 - A resolutory condition is one which, when it is fulfilled, works the revocation of the obligation and returns matters to the same state as ...

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