
    KATHERINE SINCLAIRE LEWIS, ADMINISTRATRIX OF THE ESTATE OF JOSEPH W. LEWIS, JR. (DECEASED) v. THE UNITED STATES
    [No. 457-59.
    Decided November 18, 1964]
    
      
      Keith Misegades for plaintiff.
    
      G. M. Paddock, with whom was Assistant Attorney General John W. Douglas, for defendant.
    Before Cowen, Chief Judge, Laramore, Davis andi Collins, Judges, and Whitaker, Senior Judge.
   Per Curiam :

This case was referred to Donald E. Lane, a. trial commissioner of this court who, under the order of reference, submitted his findings of fact and recommended, conclusion of law in a report filed on August 16,1963. Exceptions to the commissioner’s report were filed by plaintiff,, briefs were filed by the parties and the case was submitted fir the court on oral argument of counsel. Since the court is in. agreement with the opinion and recommendation of the commissioner, with one addition set forth as footnote 1 it hereby adopts the same, as modified, as the basis for its judgment, in this case as hereinafter set forth. Therefore, the court, concludes that the “Patent Pelease and License Contract” is. valid and subsisting, and judgment is entered to that effect.. Plaintiff’s petition is dismissed.

OPINION OF COMMISSIONER

This is a patent suit under the provisions of 28 U.S.C. § 1498 for the recovery of reasonable and entire compensation for unauthorized use of a patented invention. United States Letters Patent No. 2,420,486 issued to the petitioner, Joseph W. Lewis, Jr., in 1947 and disclosed trouser pockets having ventilation apertures formed either by eyelets or by using mesh materials. The case is now before the court on the sole issue as to whether a “Patent Pelease and License Contract” executed in 1949 by the patentee and accepted by the defendant is valid and subsisting. The petitioner contends that the license contract was canceled in 1958. The defendant contends that the license contract is still in force and hence that there has been no unauthorized use of the invention. The license contract and portions of relevant correspondence are reproduced in the accompanying findings.

The “Patent Release and License Contract” specifically grants to the defendant an irrevocable, non-exclusive, nontransferable and royalty-free license under Patent No. 2,420,486, and states that the license shall remain m full force and effect for the full term of the patent (all emphasis added). The license contract, executed in 1949, recites that it is authorized by Section 3 of the Act of October 31, 1942 (Public No. 768, 77th Congress, 35 U.S.C. 89-96). Said act is generally known as the Royalty Adjustment Act and was extended from time to time to expire July 1, 1953. (56 Stat. 1013, 66 Stat. 54, 96, 137, 296, 330, and 67 Stat. 18.)

The Royalty Adjustment Act provided for adjusting royalties for the use of inventions for the benefit of the United States in aid of the prosecution of the war, and for other purposes. Section 3 of the Act authorizes the head of any department or agency to enter into an agreement with the owner of an invention in full settlement and compromise of any claim against the United States accruing to the owner -or licensor under the provisions of the Act or any other law, and for compensation based upon future manufacture, use, •or sale. The irrevocable royalty-free license agreement executed by the patentee and accepted by the defendant provides in effect that compensation for use of the patent in future manufacture for tlie defendant would be zero. Such royalty-free license agreements were authorized by Section 3 of the Act. The irrevocable license reciting that the license shall remain in full force and effect until the expiration of the patent in 1964 did not terminate on July 1,1953, the expiration date of the Koyalty Adjustment Act, even though the license contract recited that it was authorized by Section 3 of said Act.

Petitioner’s attempt in 1954 to cancel the irrevocable royalty-free license contract invoked the Act of August 16,1950 (Public No. 694, 81st Congress, 64 Stat. 448). This Act provided for the cancellation of certain licenses granted to the defendant by private holders of patents and rights thereunder, and stated that the head of any department or agency is authorized, upon the application of the grantor of such a license, to enter into such supplemental contract for the cancellation of the license contract as the head of the department or agency shall deem to be warranted by equities existing by reason of changes in circumstances. In the present case, the Assistant Secretary of the Army (Logistics) replied to petitioner’s request for cancellation or modification by a letter stating that the license contract was not considered to be within the purview of the Act of August 16,1950, and that even if it was, no equities existing by reason of changes in circumstances had been established to warrant cancellation of the contract. The refusal to cancel the license contract is not believed to have been an abuse of discretion. Petitioner’s attempt to cancel the license contract again in 1958 was also ineffective.

The license contract recites that in consideration of the grant by other patent owners of like releases and licenses to the Government, the contractor grants an irrevocable, nonexclusive, non-transferable and royalty-free license under his patent. There is no allegation that the license contract was obtained by duress. The recited consideration plus the fact that the licensor retained the right to license manufacturers for civilian use of his invention does not warrant a conclusion that the contract was invalid for lack of adequate consideration. It is clear that by executing the irrevocable royalty-free license the petitioner expected that defendant would promptly adopt, use, and publicize his invention, and thereby encourage the clothing manufacturers to seek a license from the petitioner to use the invention in civilian clothing. The fact that 5 years elapsed between the date of the license contract and the date of defendant’s first military specification approving nylon netting for pocket material is not a failure of consideration adequate to support cancellation of the irrevocable license contract. In 1958, petitioner’s attempts to interest possible licensees pointed out that the Army and Air Force adoption of ventilating pockets after years of testing contributed to the validity of his patent. The “Patent Kelease and License Contract” may be considered as a gift. The essentials of a gift are donative intent, delivery, and acceptance. These elements are present. Gifts are as valid as transfers for valuable consideration.

Petitioner contends that he has been damaged by defendant’s failure to specify in defendant’s military specifications that shorts manufactured thereunder with ventilating pockets must carry a patent notice, i.e., a marking or label that the article was made pursuant to a license under Patent No. 2,420,486. The marking statute in effect in 1949 provided that it shall he the duty of all patentees and their assigns and legal representatives, and of all persons making or vending any patented article for or under them, to give sufficient notice to the public that the same is patented, either by fixing thereon or to the package the word “patent” together with the number of the patent (Eev. Stat. § 4900, February 7, 1927, 44 Stat. 1058). Said statute provided that in any suit for patent infringement by the party failing so to mark, no damages shall be recovered except for continued infringement after actual notice of infringement. Said marking statute was revised in 1952 to provide that patentees and persons making and selling any patented articles may gwe notice to the public that the same is patented (35 U.S.C. § 287, July 19, 1952, 66 Stat. 813). The first military specification for shorts with nylon netting pockets was issued by defendant December 19, 1955, and contained no requirements with respect to any patent marking. An acknowledgment of the petitioner’s request for such a reference is noted in defendant’s letter of August 22,1949, reproduced in finding 5. The fact that the request was apparently overlooked when defendant issued the first military specification over 6 years later is not sufficient ground to invalidate the irrevocable license contract.

Summarizing, it appears that the 1949 irrevocable license contract did not terminate in 1953 on expiration of the Royalty Adjustment Act, was not canceled by petitioner’s requests in 1954 and 1958, was not invalidated for lack of adequate consideration, and was not invalidated by defendant’s failure to include a patent notice requirement in the military specifications issued in 1955 and subsequently.

It is recommended that the court conclude as a matter of law that the “Patent Pelease and License Contract” dated August 12, 1949, is a valid and subsisting license, and that the petition should be dismissed.

EINDINGS OE EAOT

1. This is a patent suit filed under 28 U.S.C. § 1498 for the recovery of reasonable and entire compensation for alleged unlicensed use of an invention relating to garments described and claimed in United States Letters Patent No. 2,420,486 issued on May 13,1947, to Joseph W. Lewis, Jr. At the time of filing the petition, Mr. Lewis was a resident of New York City and a citizen of the United States. Until the time of his death on May 14,1962, Mr. Lewis was the sole owner of said letters patent. On December 17, 1962, Katherine Sinclair Lewis was granted letters of administration upon the estate of said Joseph W. Lewis, Jr., by the Surrogate’s Court, County of Atlantic, State of New Jersey, and on February 15, 1963, was substituted as party plaintiff in this suit.

2. The patent discloses trousers having pockets made with ventilation apertures provided by eyelets or by mesh material. These apertures, communicating with the usual access openings of the pockets, are intended to provide air circulation over the legs of the wearer and to induce evaporation of perspiration.

3. On August 29, 1962, counsel stipulated that the issue as to whether the “Patent Release and License Contract” executed August 12, 1949, by Mr. Lewis, is valid and subsisting, be initially separated, tried and decided, leaving other issues for later trial and decision should said initial issue be decided in the negative. Plaintiff contends that release and license was canceled by letter dated October 30, 1958, and defendant denies that the letter was effective for canceling the license.

4. The release and license contract reads as follows:

DEPARTMENT OP THE ARMY
PATENT RELEASE AND LICENSE CONTRACT
This contract, made this 12th day of August, 1949, by Joseph W. Lewis, Jr., of Kew Gardens Hills, Long Island, New York, (hereinafter called Contractor) in favor of the United States of America (hereinafter called the Government), as Promisee, witnesseth that:
Whereas, to aid the national defense and promote the common welfare, numerous patent owners have, upon request of the Government, granted and are continuing to grant releases and royalty-free licenses to the Government to practice the inventions secured by their patents and applications for patents,
Whereas the Government has utilized many such inventions for the purposes aforesaid and is desirous of obtaining further releases and royalty-free licenses, including this release and license, and
Whereas this contract is authorized by Section 3 of the Act of October 31,1942 (Public No. 768, 77th Congress, 35 U.S.C. 89-96);
Now, therefore, in consideration of the premises and of the grant by other patent owners of like releases and licenses to the Government, Contractor has agreed as follows:
Article 1. License.
(a) Contractor agrees to and does hereby grant and convey to the Government an irrevocable, non-exclusive, non-transferable and royalty-free license under the following patent to practice and cause to be practiced for the Government any and all of the inventions thereof in the manufacture, use and disposition of any article or material, and in the use of any method, in accordance with law:
Inventor Patent No. Issue date
Joseph W. Lewis, Jr_ 2,420,486 May IS, 1947
together with corresponding foreign patents and applications for patent, insofar as Contractor has the right to grant licenses thereunder.
(b) Nothing contained herein shall limit any rights which the Government may have obtained by virtue of prior contracts or by operation of law, or otherwise.
Article 2. Term:
The license hereby granted shall remain in full force and effect for the full term of the patent referred to above, including reissues and extensions of the same.
Article B. Releases of Past Infringement.
Contractor agrees to and does hereby release each and every claim and demand which Contractor now has or may hereafter have against the Government, its officers, agents, servants and employees for infringement by or for the Government, occurring prior to the date of this contract, of (1) the patent specifically identified in this contract, and (2) any other patent or application for patent now owned or hereafter acquired by Contractor, insofar as and to the extent only that such other patent or application for patent covers the manufacture, use or disposition of Ventilated Garments, by reason of the manufacture, use, sale or other disposition of any article or material, or the use of any process covered by said patents or applications for patent, occurring prior to the date of this contract, and by reason of the use, sale or other disposition thereafter of any article or material manufactured or contracted for prior to the date of this contract.
Article 4. Heirs and Assigns.
This contract shall be binding upon Contractor, his heirs and assigns.
In witness whereof, Contractor has executed this contract as of the day and year first above written.
By: Joseph W. Lewis, Jr.,
Joseph W. Lewis, Jr., lift-32 72nd Avenue, Kero Gardens Kills, Long Island, New York.
Two witnesses:
E. E. WeNTWorth, Jr.,
£75 Engle Si., Englewood, N.J.
Dwight N. Streeter,
£19 Seventh Ave., New Tork 11, N.Y.

5. Tbe release and license contract was accepted by defendant by a letter dated August 22,1949, from Office of tbe General Counsel, Patents Branch, Quartermaster General, addressed to Mr. Lewis, which reads as follows:

Ee: License Under Pat. No. 2,420,486
Dear Mr. Lewis :
This office wishes to thank you for your grant to the Government of a royalty-free license under subject patent.
In accordance with your oral request, the appropriate procurement personnel has been asked to include a reference to the patent and license in any military specifications which may be prepared by this office.

6. During the period preceding the drawing up and execution of the patent release and license contract, Mr. Lewis made it clear to defendant’s representatives that he expected to gain an advantage in dealing with manufacturers of garments for civilian use by showing that his patented garment had been found acceptable for military use. The release and license contract reproduced in finding 4 was drafted by the defendant’s agents. Mr. Lewis persistently sought testing, approval, and adoption of the ventilated pocket construction by the Army.

7. On July 12, 1954, Mr. Lewis applied by letter for cancellation of his royalty-free license pursuant to Public Law 694, approved August 16,1950, 64 Stat. 448. On August 24, 1954, Mr. Lewis was advised by letter from Office of General Counsel, Department of the Army, that his application for cancellation would be held in abeyance pending the outcome of tests being conducted by the Quartermaster Corps on a ventilating pocket. On January 11, 1955, Mr. Lewis was advised by a further letter that the tests of mesh pockets were inconclusive and would be resumed in the spring. On May 11, 1955, Mr. Lewis was advised by a further letter that higher authority had postponed a final decision on the application for cancellation pending the outcome of further tests.

8. On September 26, 1955, Mr. Lewis wrote to tlie Office of General Counsel, Department of the Army, as follows:

*****
I want to make my royalty position very clear. I want the armed services to have this pocket whether the existing non-royalty license is cancelled, renegotiated or not. Under the terms of the existing non-royalty license yon may proceed to equip as many trousers as you please with mesh pockets. However are there not some ethical factors to be considered? Should not an inventor be rewarded for his contribution? It would appear to be the democratic way.
*****

9. On November 30,1955, Mr. Lewis was advised by letter from the Assistant Secretary of the Army (Logistics) as follows:

Deference is made to your letter dated 12 July 1954 addressed to Mr. T. W. Williams of the Office of the Quartermaster General, in which you request cancellation or modification under the Act of 16 August 1950,. 64 Stat. 448, of a patent license agreement executed 12-‘ August 1949. By this agreement, you granted the United States a royalty-free license under U.S. Patent No. 2,420,486 for the life of the patent.
Inasmuch as an investigation of the matter reveals that this license was not executed during World War II and was not limited in terms to the “duration of the war” (Senate Deport No. 1189, 81st Congress), I am of the view that the agreement is not within the purview of the Act of 16 August 1950. Even if the agreement were considered to be within the purview of the Act, however, no “equities existing by reason of changes in circumstances occurring since the granting” of the license have been established which would warrant cancellation.
Accordingly, I must decline termination or modification of the agreement on behalf of the Government.

10. In August 1958, Mr. Lewis supplied defendant’s representative with a copy of a letter he had sent to a shirt company regarding sale of shorts with mesh pockets to Post Exchanges. In the letter, Mr. Lewis said that he had granted to U.S. Government a license to manufacture or have manufactured trousers, shorts, etc., containing his patented mesh pocket construction, U.S. Patent 2,420,486. In September 1958, Mr. Lewis supplied defendant’s representative with a copy of an advertising sheet mentioning adoption of nylon mesh air flow pockets by the TJ.S. Army and Air Force after 9 years’ testing. Mr. Lewis had been shown a sample of shorts with ventilating pockets by defendant’s representative.

11. On October 30, 1958, Mr. Lewis wrote to the Department of the Army as follows:

ífí >J* ífc ifc ‡
Please be advised that the license granted to the Government above identified, termination of which was refused by the Government on November 30, 1955, is hereby cancelled by me.
*****

12. On November 3,1958, Mr. Lewis was advised by letter from the Office of General Counsel, Department of the Army, as follows:

Your letter of October 30, 1958, has been carefully considered in connection with the license agreement of August 12, 1949 under your Patent No. 2,420,486.
The agreement grants the Government an irrevocable license under the patent for the life of the patent. The agreement specifies that the contract is binding upon you.
Under the circumstances, your letter of October 30, 1958, can not be considered as a cancellation of the agreement.
This letter is being sent directly to you rather than to your attorney because no negotiations with him are justified by the circumstances.

13. On August 26, 1959, Mr. Lewis wrote to General H. Parks, Army and Navy Export Service, concerning the sale of garments having his patented pocket construction, and advised that his license with the Government permitted the Government to have garments with mesh pockets made by any manufacturer, and that he would be pleased to license the Post Exchange to do likewise, including the right to sell. On September 1, 1959, Mr. Lewis wrote a letter to the Office of General Counsel, Department of the Army, in which he requested a ruling on whether his license agreement with the Government grants the same privileges to what is generally known as the Post Exchange. A reply dated September 19, 1959, from the Patents Division, Department of the Army, indicated that there were no known court decisions on the question raised and that it would be inappropriate to express an opinion.

14. The following military specifications, entitled “Shorts, Men’s, Cotton,” were issued by defendant:

mil — s—14212 December 19, 1955
mil — s—14212a
mil — s—14212B (qmc), March 31,1958
mil — s—14212c, October 19,1959.

The first two of these military specifications recite that the pockets may be “cloth, nylon, netting,” or may be “cloth, cotton, drill.” The third specification recites that the material for pockets “shall be cloth, nylon, netting.” The fourth specification recites that the material for pocketing “shall be cloth, cotton, silesia.” None of these military specifications refers to the “Patent Pelease and License Contract.” The specifications do not require that shorts manufactured thereunder bear any patent license notice or patent marking. As noted in defendant’s letter of acceptance quoted in finding 5, such a reference was requested. The use of a patent notice was not required by the terms of the “Patent Pelease and License Contract” set forth in finding 4. Over 6 years elapsed between the request for inclusion of a patent notice and the issuance of the first military specification authorizing pockets made from netting.

CONCLUSION OF LAW

Upon the foregoing findings of fact, which are made part of the judgment herein, the court concludes as a matter of law that the “Patent Pelease and License Contract” is valid and subsisting, and judgment is entered to that effect, and therefore plaintiff’s petition is dismissed. 
      
       unlike Sections 1 and 2 of the Royalty Adjustment Act, Section 3 of that Act, under -which the license contract was made in 1949, was not scheduled to expire six months after “termination” of the “present war” (World War II) ; the vitality of Section 3 had no terminal date and that provision was plainly in effect in 1949 at the time of the license contract. See 56 Stat. 1014. In any event, the continued existence of the entire Royalty Adjustment Act up to July 1953 was established and confirmed by the Emergency Powers Interim Continuation Act of April 14, 1952, 66 Stat. 54, 57, and its amending statutes, 66 Stat. 137, 296, 330, and 67 Stat. 18. Accordingly, the license agreement in this case was fully authorized by statute at the time it was made. [Footnote by the court.]
     