Paper Stock Disinfecting Co. v. Boston Disinfecting Co. , 147 Mass. 318 ( 1888 )

W. Allen, J.

The license was by deed poll to “ John W. Holmes, his heirs, executors, administrators, and assigns,” in consideration of the one dollar in hand paid, “ and of a royalty of one dollar per ton ” on all rags disinfected by the use of the invention, “ to be hereafter and during the full term of said letters patent . . . well and truly paid to it by said John W. Holmes, his heirs and executors, administrators, and assigns.” There was added a condition in the form of a covenant by Holmes, his representatives or assigns, that, if they did not account for or pay the royalty, the license should be of no force or effect, and might be revoked. Holmes subsequently by deed poll assigned the license to the defendant, “ subject, however, to the limitations, conditions," stipulations, covenants, and agreements therein contained.” The action is brought to recover royalties which have become due from the use of the patent by the defendant.

The first objection is, that there is no agreement or promise to pay the royalties; that the plaintiff’s only remedy to enforce their payment is to revoke the license for breach of the condition. The license was expressed to be given in consideration of payments to be made by Holmes, and its acceptance by him raised an implied promise by him to pay the consideration. Pike v. Brown, 7 Cush. 133. Locke v. Homer, 131 Mass. 93, and cases cited. The other objection is, that there is no privity of contract between the plaintiff and the defendant. We think this objection cannot be sustained.

The plaintiff had the exclusive right to permit the use of the invention by others. It might permit the use by Holmes personally, or by him and such persons as he should designate. The license was to him and to any person whom he might substitute for himself as assignee. An. assignee of Holmes would use the invention by permission of the plaintiff, and under its license. Bower v. Hodges, 13 C. B. 765. The assigns of Holmes are designated as licensees, and are named as parties who are to pay the consideration and perform the condition. The obvious meaning of the instrument is, that the consideration shall be paid, and the conditions performed, by the party who shall use the invention under the license by the original licensee when it is used by him, and by the assignee, the substituted licensee, when he becomes a party. It provides for licensing assignees, in consideration of a royalty to be paid by them to the licensor, as truly as it licensed Holmes in consideration of a royalty to be paid by him, and a promise by the assignee to the licensor to pay the consideration is implied from the acceptance of the license by the assignee, as a promise by the original licensee is implied from the acceptance by him.

The question does not arise whether the assignee would have been bound by the covenants of the licensee if he had executed the instrument of license with covenants. No question in regard to maintaining an action upon a promise made to a third person is involved. The proposition that a person receiving property from an owner who holds it subject to a condition to pay money to a third person comes under obligation to the third person to pay the money to him, does not fully express the liability of the defendant. The case may be stated thus. An owner of a patented invention licenses A. to use the invention in consideration of a royalty to be paid to the licensor, and on condition that the license may be revoked if the royalty shall not be paid, and authorizes A. to assign the license in consideration of the payment of the royalty by the assignee to the licensor. A. assigns the license to B. subject to all the conditions and agreements therein contained, and B. uses the invention under the license. By accepting the assignment, B. must be held to have accepted the license, and promised the licensor to pay the royalty to him. Groodyear v. Congress Rubber Co. 3 Blatchf. 449. See Fetch v. Taylor, 13 Pick. 133; Maine v. Cumston, 98 Mass. 317; Swasey v. Little, 7 Pick. 296; Brewer v. Dyer, 7 Cush. 337; Exchange Bank v. Rice, 107 Mass. 37, 42; Barney v. Newcomb, 9 Cush. 46; Lowry v. Adams, 22 Vt. 160.

Exceptions overruled.