American Machine & Metals, Inc. v. De Bothezat Impeller Co.
case brief summary
166 F.2d 535 (1948)
CASE FACTS
Plaintiff manufacturer and defendant patent owner entered into a contract under which defendant conveyed to plaintiff patents and equipment for the making of fans and other products and plaintiff agreed to pay defendant license fees based on the net sales of the products. Plaintiff filed an action seeking a declaration of the rights of the parties in order to avoid the possible accrual of avoidable damages if plaintiff exercised its right to terminate the contract and continue to sell the fans and equipment. Plaintiff then appealed the dismissal of its action. In concluding that no controversy existed, the district court noted that plaintiff had not yet given notice of termination and perhaps would never do so.
DISCUSSION
CONCLUSION
The court reversed the judgment of dismissal of plaintiff manufacturer's action requesting a declaratory judgment regarding the right of plaintiff to continue to manufacture and sell fans and other noninfringing products after termination of an agreement with defendant patent owner, because there was an actual controversy over contingent rights, thus, a declaratory judgment could be granted.
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166 F.2d 535 (1948)
CASE SYNOPSIS
Plaintiff manufacturer appealed from
the judgment of dismissal of plaintiff's action requesting a
declaratory judgment regarding the right of plaintiff to continue to
manufacture and sell fans and other noninfringing products after
termination of an agreement with defendant patent owner without the
payment of further sums to defendant.CASE FACTS
Plaintiff manufacturer and defendant patent owner entered into a contract under which defendant conveyed to plaintiff patents and equipment for the making of fans and other products and plaintiff agreed to pay defendant license fees based on the net sales of the products. Plaintiff filed an action seeking a declaration of the rights of the parties in order to avoid the possible accrual of avoidable damages if plaintiff exercised its right to terminate the contract and continue to sell the fans and equipment. Plaintiff then appealed the dismissal of its action. In concluding that no controversy existed, the district court noted that plaintiff had not yet given notice of termination and perhaps would never do so.
DISCUSSION
- The court reversed the dismissal and held that where there was an actual controversy over contingent rights, a declaratory judgment could be granted.
- Once the notice of termination was given, it was beyond recall.
- The dispute between the parties concerned the right of plaintiff to continue business if that contingency happened.
- After bringing the contingency to pass, it would have been too late to avoid an action for damages if plaintiff continued the business.
CONCLUSION
The court reversed the judgment of dismissal of plaintiff manufacturer's action requesting a declaratory judgment regarding the right of plaintiff to continue to manufacture and sell fans and other noninfringing products after termination of an agreement with defendant patent owner, because there was an actual controversy over contingent rights, thus, a declaratory judgment could be granted.
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