Electric Boat Co. v. United States, 263 U.S. 621 (1924)

U.S. Supreme Court

Electric Boat Co. v. United States, 263 U.S. 621 (1924) Electric Boat Company v. United States

No. 159

Argued January 11, 14, 1924

Decided January 28, 1924

263 U.S. 621

APPEAL FROM THE COURT OF CLAIMS

Syllabus

Where the United States, without disclosure to it of the scope of an application for patent, obtained by a contract with the applicant a license at certain rates, to manufacture and use the devices covered by the application, and was later sued by the licensor for its use of a device procured from another, which the licensor claimed came within his application and subsequent patent, held: (a) that the government was not estopped from showing, by attendant facts and circumstances, that the contract was not intended by the parties to apply to the device so used, and (b) that a judgment of the Court of Claims, so limiting the contract, upon facts found, was not erroneous as a matter of law. P. 263 U. S. 627.

57 Ct.Clms. 497 affirmed.

Page 263 U. S. 622

Appeal from a judgment of the Court of Claims rejecting the appellant's claim, upon the facts found from the evidence.

Page 263 U. S. 626

MR. JUSTICE HOLMES delivered the opinion of the Court.

This is a suit upon a contract made between the claimant and the United States on April 2, 1912. The contract

Page 263 U. S. 627

headed "Shop License," recites that the claimant is "owner of the invention known as Steam Generator for Automobile Torpedoes covered by applications" of which it is necessary to mention only one, dated March 29, 1909; licenses the United States to manufacture and use torpedoes equipped with Steam Generators covered by the application to the end of the term for which patent may be granted, and binds the United States to pay at certain rates for such torpedoes. The claimant alleged that the United States had used the devices covered by claims 1, 5 and 13 of letters patent issued upon the above application on August 20, 1912. The Court of Claims found that those devices had not been used by the United States, but that the mechanism actually used by it was practically identical with that of a rival, the E. W. Bliss Company, that had been successfully tested in the fall of 1911, before the date of the above contract and before the plaintiff had attempted but failed to satisfy the same tests.

When this contract was made, the United States had not seen the applications, which were the claimant's secret. Both parties knew that the government was dealing also with a rival concern, and the United States, at least, and probably the claimant, knew that the rival had satisfied the government's tests, which the claimant had not then done. It could not be believed that the contract meant a blind acceptance of liability for whatever might be in an undisclosed document. It did not; what it aimed at was a specific device which it was given to understand had been invented. We do not argue this at length, because the proposition is accepted by the claimant --

"the purpose of the license agreement was to secure to appellee the right to use the steam generator devised by Davison regardless of any question as to the validity of patents he might obtain or as to the scope of their claims."

The dealings began with proposals for applying a system to existing torpedoes that would double their range, illustrated by a

Page 263 U. S. 628

drawing showing the general arrangement of the device, identifying it but not disclosing it in detail. They ended in the contract, which went further, but undoubtedly had reference to a system the general nature of which was understood.

We must take it on this record that, at the time, certain elements in the construction of self-moving torpedoes were well known. The front end contained the explosive. Behind that was a chamber of compressed air that was transmitted to an engine moving the propeller through a pipe with a valve that reduced the pressure of the condensed air to the desired point and kept it constant. The moving force was enhanced by heating the air after it left the valve. This was done by passing it through a combustion chamber into which was forced alcohol or other fuel. The fuel was in a third chamber, and was carried to the place of combustion by the condensed air through a second pipe from beyond the reducing valve. It was ignited when the shell was launched. More was needed to carry the torpedo the distance required to make it usable in modern warfare. It was understood that the result could be accomplished and danger to the contrivance from excessive heat avoided by the introduction of water into the combustion chamber, where it would become steam. The Bliss Company had given this knowledge a practical form, and there is no warrant in the record as it comes to us for suggesting that the claimant had anything to do with the Bliss Company's success, or that the government had any reason for thinking that it had. In deciding what the government reasonably supposed that it was buying, these facts are important, and what may have been contained in the undisclosed application is of little or no weight. Whatever may have been the rights of the claimant as against the Bliss Company, the government was entitled to assume that they did not extend to the above elements, separately or combined.

Page 263 U. S. 629

Manifestly, on these facts, the government is not estopped to show that its contract applied only within narrow limits. If the facts were as it has a right to suppose them to be, the contract necessarily was so limited. The government thought that it might be that the claimant had found a more perfect way to do what was wanted and what the Bliss Company already had done, but, on the record before us, it would be monstrous to suppose that it was undertaking to pay the claimant for the Bliss Company product. The claimant was thought by the government to have failed in its undertaking, and therefore its device was laid aside. That device had certain peculiarities not repeated by the Bliss Company's, but the claimant relies and has to reply here upon the broad contention that the introduction of water to the combustion chamber in an effective way belongs to it, which seems unlikely in view of the previous British patent to Sodeau, in 1907, and others, and which it seems to us clearly might have been found, as by implication it was found, by the Court of Claims not to have been the assumption or the meaning of the contract. So far as appears, the use of water by the Bliss Company owed nothing to Davison, the claimant's assignor, but very closely embodied the suggestions of Sodeau and other predecessors in the field. We cannot say as matter of law that the Court of Claims was wrong.

Decree affirmed.