Venner v. Pittsburgh Plate Glass Co. , 192 Wis. 606 ( 1927 )

Eschweiler, J.

Appellant contends that competing paint and varnish companies were underselling with a similar product its product manufactured under the Venner formula and patent, and that plaintiff, having failed, after due notice, to protect defendant from such competition, had forfeited all right to further royalties by reason of what it claims is the proper construction to be given to certain provisions of the contract.

Particular errors are assigned to rulings refusing to permit defendant to show that up to November, 1921, the time of the interview with plaintiff, there had already been expended by it and its predecessor some $180,000 in advertising, and some $85,000 of further expense incident to placing special salesmen in the field to dispose of this particular product; in refusing an offer to show the extent of its business in regard to this product; refusal to permit the showing, by witnesses called for that purpose, the substantial percéntages of decline in defendant’s sales districts covering a large portion of the United States; also refusing to receive evidence that such competing articles were identical in composition and result with the article manufactured by defendant under the Venner patent. If the trial court was correct in the construction given this contract, then these particular rulings were proper and need no further consideration.

The following provisions of the contract, the construction of which determines the respective contentions of the parties, for convenience of reference are here set forth as “A” and “B”:

A. “Said party of the first part hereby further agrees that in case he receives the patent for either of said articles that he will defend the title thereto and will protect and save harmless, at his cost and expense, said party of the second part from and against any and all claims or legal proceedings brought against said party of the second part on the basis of infringement of patent rights

B. “It is hereby agreed by and between the parties hereto, that in case the said party of the first part shall fail to receive a patent for the said liquid filler and primer, and provided that during the life of this instrument other persons or corporations shall succeed in manufacturing an article in competition with the said liquid filler and primer, then and in that event it is agreed that the question as to the relative merits of the said liquid filler and primer and the said article then upon the market in competition therewith shall be submitted to a board of arbitrators, one to be chosen by each of the parties hereto, they to choose a third, which said arbitrators shall render a report in writing to the parties hereto in relation to the respective merits of the said article and the article competing therewith.

“It is further agreed that in case the said arbitrators should report that the said competing article is equal in all material respects to the said liquid filler and primer, then and in that event the said party of the second part shall thereafter be excused from and shall not be required to pay to the said party of the first part any royalty upon any sale of the said liquid filler and primer; provided, however, that in that event the said party of the first part shall thereafter have the right to manufacture and sell said liquid filler and primer.”

No claim was made below or is made here by defendant that any situation was presented between itself and its competitors whereby any issue could be raised or presented between them involving the validity of or possible infringement upon the Venner patent, or that such others were manufacturing their competing products under claim of patent rights.

The substance of appellant’s contention is that, construing the above quoted paragraphs “A” .and “B” together and with the rejected offers of proof above recited, there was a breach under the contract of 1907 of a positive duty resting upon plaintiff to protect and save harmless the defendant from such competition, and that the oral evidénce suggested was proper at least, if not necessary, in order to reach a correct construction of the contract relationship between the parties.

In our opinion the contract, and especially the provisions “A” and “B” above quoted, is and are clear,' definite, unambiguous, and not needing or permitting of oral evidence in arriving at a proper construction.

The contract shows on its face that at the time of its execution Venner had devised a method or formula for the manufacture of a valuable article and that no patent had yet been issued. In consideration of that situation the contract was evidently carefully drafted to provide for the two possible contingencies then confronting the parties, namely: first, that letters patent of the United States might be issued whereby security and safeguards would be given to the manufacture of this article under such patent; this contingency is clearly, covered by the above paragraph “A,” which is entire and complete. The provisions made in paragraph “B” are just as clearly made to be exclusive and complete for the second contingency which would exist or arise in case no patent were granted and defendant then continued to manufacture pursuant to the secret formula and methods communicated to it by Venner and without, of course, any protection by virtue of letters patent, and other products then came into competition; it being further manifest by this paragraph “B” that in such contingency of no protection by letters patent that the obligation to pay further royalty should terminate as soon as it was demonstrated, through the method of arbitration there provided for, that the value to defendant of such secret formula had vanished by reason of other manufacturers being able to accomplish the same result.

Paragraphs “A” and “B” clearly show that they were independent provisions and when one became applicable the other did not. The patent being granted, paragraph “A” alone was in force and effect, and paragraph “B” for all practical purposes dropped out of consideration.

Under paragraph “A” Venner was bound to defend defendant’s title to the patent, and, if necessary, protect and save harmless defendant by reason of any claim or legal proceedings brought against it upon the basis of an alleged infringement of patent rights. To that extent and no further was Venner obliged to go.'

The defendant has not shown or offered to show any situation under which a liability can be said to arise under this provision “A” of the contract, and it and its predecessor, having accepted, recognized, and acted under the supposed value and protection by letters patent,, has therefore failed to show any defense to the plaintiff’s claim for royalty upon the quantity of the article actually manufactured and sold by defendant during the life of the contract and the period included in the agreed computation upon the trial.

By the Court. — Judgment affirmed.