Stimpson Computing Scale Co. v. W. F. Stimpson Co. , 44 C.C.A. 241 ( 1900 )

SEVEREYS, Circuit Judge,

having made the foregoing statement of the facts, delivered the opinion of the court.

The first question to which our attention should be directed is that relating to the construction of the contract and license formerly held by the appellant from Stimpson, and more particularly to the interpretation and effect to be given to the danse which declared that the party of the second part (the appellant) should “have the right to determine this contract, and their obligation thereunder, by giving six months’ notice in writing to said first party [Stimpson] of their intention to discontinue the manufacture and sale of such scales under this contract.” An ingenious and labored effort is made in the brief for the appellees in support of the proposition that this provision, is to be construed as meaning that the contract could only be determined by the appellant in case it should conclude to abandon the business of making and selling computing scales like these, and hence, if it should give notice of its election to abandon the contract, it was bound to discontinue the business. But we do not so interpret this stipulation. We think it gave the licensee the right to determine the contract by giving the prescribed notice of its intention not to proceed further under the contract after the time stated in the notice should expire. The manufacture and sale of such scales “under this contract” would then cease. Effect must be given to all tbe language of a contract where possible, and we see no difficulty in applying this rale of construction here. There was nothing in the contract which imposed a further disability upon either party after it should have been brought to an end by the exercise of a right reserved therein. After the termination of a license, the parties are freed from any-estoppel resting upon them while in their former relation. The licensee may dispute the title or right of the former licensor to the same extent as a stranger might. The estoppel is raised for the protection of the interest which the assignor or licensor professed to convey, and has no further office. Manufacturing Co. v. Robbins, 75 Fed. 17, 21 C. C. A. 198; Noonan v. Athletic Club Co., 99 Fed. 90, 39 C. C. A. 426; Smith v. Ridgely, 103 Fed. 875.

Much space has been given in the appellees’ brief and pains in the argument to the discussion of the alleged bad faith and disingenuous-conduct of the appellant in breaking off tbe contract; but we are unable to see to what end. The right to- abandon the contract and surrender the license, if it existed, was not affected by the motives with which it was exercised. It was a right resting wholly in contract, and the question of good faith is quite irrelevant to the deduction of the legal consequences flowing from the act of the party in determining his course. Besides all this, the surrender was accepted and the license transferred to other parties. It is no purpose of the present suit to set aside or declare null the abandonment.

There is nothing in the record to justify the conclusion that the appellant promised Stimpson’s new company that it would discontinue 'the manufacture of the scales which it has since been making. Whether it had the right to continue such manufacture is the principal question presently to be considered.

This brings us to the ultimate question just indicated, which is, what were the relative rights of the parties to the use of the trade names, “The Stimpson Computing Scale,” and “The Stimpson Grocer’s Computing Scale,” put upon their products? It appears that the name of Stimpson was embodied in the appellant’s corporate name at his instance, and there is therefore some reason to- doubt whether he could require that its use in that connection should be discontinued. It is not necessary, however, for us to determine that question. But the use of his name as a label for the scales, or in any such way as to denote that they were manufactured under his patent, involves another question. No doubt one may give to another such right to the use' of his own name as to preclude him from using it himself, when the consequence would be to appropriate the good will acquired by the other party by the use of it, and the continued use is necessary to the preservation of the benefit of the good will thus acquired.

But we do not think this rule is applicable here. During the time when the appellant and Stimpson were doing business under the license it was known that the business was liable to come to an end at any time by the act of the licensee, and it must have been understood that upon the termination of it -Stimpson might employ his patent either by his own use or by granting a license to use it, and it was not reasonable to expect that he or those using the license would be debarred from using Stimpson’s name to characterize their product as made under his patent. If this were so, there must be a corresponding obligation on the part of the other party to the contract to refrain, after .the termination of its license, from longer using the name of Stimpson upon its goods in such a way as to lead the public to understand that they were made under his patent. These consequences must have been anticipated. The appellant knew that it could only use Stimpson’s name to distinguish its goods and support the good will of its trade, so long as they continued to operate under his patent. The validity of the patent is not in issue here. But the parties made their contract and prosecuted it upon the assumption of its validity, and their stipulations should be construed as made upon that assumption.

It follows that the appellants have not the right to use Stimpson’s name in describing their scales, whether by label or otherwise, in such a way as to denote that (hey still manufacture them under the specifications of his patent. l?y the use of the name “The Stimpson Computing Beale/'- or “The Stimpson Grocer’s Computing Scale,” the public would in all probability understand they were made in accordance with the mode of construction familiar to them from the use of scales made under his patent. He and his licensee are entitled to be protected against this invasion of their right. Whether his patent be good or bad, no one has the right to claim the privilege of making and selling his goods as though made under it, and thereby depriving the owner of such credit as belongs to it, and inducing the public to suppose that the seller has title to the invention supposed to be embodied in the subject of the sale. The phraseology of the order appealed from indicates that the circuit court proceeded upon the ground that the appellant was bound to discontinue the manufacture of such scales as it made under its contract with Blimp-son in consequence of the stipulation that the licensee might surrender the license when it should determine that it would not go on with the contract, — a construction with which we do not agree. Counsel for the appellees disclaims the purpose of obtaining an adjudication respecting the validity of the patent, and it is therefore improper that an injunction should go to restrain the infringement of the patent. That being out of the case, we can find no ground on which to restrain the manufacture and sale by the appellants of the articles mentioned. It may expose the appellant to a suit for infringement, hut that, as we have said, is foreign to the purpose of the present suit. Aside from the patent, there is nothing to prevent the appellant from selling the same kind of goods as it sold during the term of the contract. We therefore think that part of the order is erroneous, and should be reversed.

The other part of the order is to enjoin the use of the names “Stimp-son,” “Stimpson ‘Computing Scale,” and “Stimpson Grocer’s Computing Scale” in such a way as to indicate that the scales made by the appellant were made under said “license contract and patent.” This does not conform to the views we have expressed; for we do not think the appellant is estopped to deny, having regard to future manufacture, that the scales then made were, in law and fact, subject to the patent. This part of the order should be modified so as to restrain the use of the names mentioned in such a way as to indicate that the scales made and sold by the appellant were made under the Stimpson patent, or in substantial accordance with the form thereof. As thus modified, this part of the order will be affirmed. It is ordered accordingly.