Levine v. Massey

The plaintiffs, Robert A. Levine and Stephen C. Wardlaw, both medical doctors, and the named defendant, James Y. Massey III (defendant), the owner and operator of a medical laboratory, collaborated to invent a device utilizing a capillary tube and an interior float that, upon centrifugation, separated a blood sample placed in the tube into constituent parts in discernible measurable layers (capillary tube-float device). This unique device was of substantial value to the medical profession because it permitted quick blood analysis. In 1976, Levine, Wardlaw and Massey jointly applied for and subsequently obtained a United States patent on the device. Thereafter, three additional patents were issued jointly to the inventors, all relating to the separation of blood by centrifugation into constituent parts by use of a capillary tube and float.

Wardlaw, alone, also invented what the parties have described as a “manual reader,” an instrument used for viewing and measuring the thickness of each separated layer of blood constituents in the capillary tube-float device. A separate patent application for the manual reader was filed in 1977 and a patent was issued to Wardlaw in 1979, individually, as the inventor of that device. Wardlaw assigned equal shares in the manual reader patent to Levine and Massey. It is undisputed that Wardlaw had conceived of and worked on the manual reader prior to the time that the capillary tube-float device for separating blood into its constituent parts was patented or licensed.

On April 1, 1977, Levine, Wardlaw and Massey entered into a licensing agreement with the defendant Becton, Dickinson and Company (Becton, Dickinson), a manufacturer and distributor of medical equipment, which is not a party to this appeal. In exchange for royalties, this agreement gave Becton, Dickinson the exclusive right to manufacture, use and sell, worldwide, the capillary tube-float device and any related technology or improvements to that device invented by any of the licensors. The parties conceded, and it is obvious from the Becton, Dickinson agreement, that the manual reader, invented solely by Wardlaw but jointly owned by Wardlaw, Levine and Massey, was part of the technology related to the capillary tube-float device originally licensed to Becton, Dickinson.

As a method of payment of royalties, the agreement between Levine, Wardlaw and Massey and Becton, Dickinson provided: “A check for one third of the royalty or other payment due licensors shall be made payable to each licensor and sent to the addresses set out herein in the introductory paragraph. The licensors agree that this method of payment shall discharge licensee’s obligation to each of the licensor’s with respect to such payment.” In the years since the agreément was executed, Becton, Dickinson has paid substantial royalties to each of the three licensors in this fashion.

On April 1, 1977, the same day that Levine, Ward-law and Massey entered into the agreement with Becton, Dickinson, they executed a separate agreement defining their obligations to each other in relation to their invention and the licensing agreement with Becton, Dickinson. The purpose of the agreement, in part, was to distinguish between such future improvements on the basic invention or new inventions in which the parties would share equally, and those that would remain solely the property of the individual inventor.

At some time in 1982, the defendant ceased working with the plaintiffs. Thereafter, Wardlaw invented and subsequently obtained patents in 1985 and 1987 for an instrument called the “auto reader.” The auto reader was described in Wardlaw’s patent applications as relating to “an improved method and apparatus for measuring substantially accurate blood constituent counts in a centrifuged sample of anticoagulated whole blood.” Wardlaw assigned a joint interest in the auto reader invention to Levine, with whom he was still affiliated.

Pursuant to its April 1,1977 agreement with the parties, Becton, Dickinson acquired the rights to, and has manufactured, sold and distributed, the auto reader device. Pursuant to the terms of its April 1,1977 agreement with the parties, it also has paid one third of the royalties due on its sales of the auto reader, as well as royalties due on the capillary tube-float device and the manual reader, to Levine, Wardlaw and Massey each. A controversy arose, however, as to whether Massey was entitled to royalties from sales of the auto reader. The royalties paid by Becton, Dickinson to each party attributable to the auto reader are in excess of $500,000.

After unsuccessful attempts to resolve the issue of entitlement to the royalties from the auto reader, the plaintiffs commenced this action against the defendant. In their complaint, the plaintiffs alleged that royalties from the auto reader did not fall within the royalty sharing agreement among themselves and Massey, and that the auto reader’s claims were not dominated by any claims of the capillary tube-float device. They claimed, therefore, that Massey was not entitled to receive any royalties from the auto reader. In their prayer for relief, the plaintiffs claimed an accounting from Massey for any royalties received, damages, interest and costs, as well as an order determining the allocation of future royalty payments between the parties. The defendant denied the plaintiffs’ allegations.

The defendant argued in the trial court that because the manual reader was contemplated by Wardlaw prior to 1977, and had been invented by him at the time of the agreement with Becton, Dickinson in 1977, and was actually a part of the technology that was originally licensed to Becton, Dickinson, it was a part of the basic invention referred to in the April 1, 1977 agreement among the parties. The defendant argued, moreover, that the claims of the manual reader patent dominated those of the auto reader patent and that he, therefore, was entitled, pursuant to the agreement of the parties, to royalties from the auto reader.

The trial court found that the manual reader was part of the basic invention as contemplated by the agreement among the plaintiffs and the defendant. The court then determined that the auto reader was an improvement on the manual reader and that its patent claims were dominated by those of the manual reader. It concluded that, pursuant to the April 1, 1977 agreement among the parties, the defendant was entitled to one third of the royalties from sales of the auto reader for the life of the manual reader patent. Additionally, the trial court found that since there appeared to be no disagreement between the parties concerning the amount of royalties that had been paid, what they had been paid for, and to whom, there was no need for an accounting.

The plaintiffs appealed, and the defendant cross appealed, from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c). We reverse the judgment of the trial court.

We agree with the trial court that the principal issue raised by this appeal is one of contract law and not one of patent law. It is not necessary, therefore, for us to determine whether the patent claims of the manual reader dominate those of the auto reader. We conclude, rather, that the manual reader was not a part of the basic invention that was the subject of the April 1,1977 agreement among the parties. Therefore, improvements to the manual reader, in the form of the auto reader, were not “vested in the parties in equal undivided shares or interest” as provided by their agreement.

Although ordinarily the question of contract interpretation, being a question of the parties’ intent, is a question of fact; Gurliacci v. Mayer, 218 Conn. 531, 567, 590 A.2d 914 (1991); Finley v. Aetna Life & Casualty Co., 202 Conn. 190, 199, 520 A.2d 208 (1987); “[wjhere there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law. Thompson & Peck, Inc. v. Harbor Marine Contracting Corp., 203 Conn. 123, 131, 523 A.2d 1266 (1987).” (Internal quotation marks omitted.) Mulligan v. Rioux, 229 Conn. 716, 740, 643 A.2d 1226 (1994). We regard this case to present such definitive contract language.

It is the general rule that a contract is to be interpreted according to the intent expressed in its language and not by an intent the court may believe existed in the minds of the parties. Id.; Barnard v. Barnard, 214 Conn. 99, 110, 570 A.2d 690 (1990); Powel v. Burke, 178 Conn. 384, 387, 423 A.2d 97 (1979). When the intention conveyed by the terms of an agreement is “clear and unambiguous, there is no room for construction.” Gino’s Pizza of East Hartford, Inc. v. Kaplan, 193 Conn. 135, 138, 475 A.2d 305 (1984). “[A] court cannot import into [an] agreement a different provision nor can the construction of the agreement be changed to vary the express limitations of its terms.” Hatcho Corp. v. Della Pietra, 195 Conn. 18, 21, 485 A.2d 1285 (1985); see also Bank of Boston Connecticut v. Schlesinger, 220 Conn. 152, 159, 595 A.2d 872 (1991) (“ ‘[i]t is not within the power of courts to create new and different agreements’ ”); Jay Realty, Inc. v. Ahearn Development Corp., 189 Conn. 52, 55, 453 A.2d 771 (1983) (same); Cirrito v. Turner Construction Co., 189 Conn. 701, 706-707, 458 A.2d 678 (1983) (“[i]n interpreting a contract courts cannot add new or different terms”); Powel v. Burke, supra, 388.

“The court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity. Downs v. National Casualty Co., 146 Conn. 490, 494, 152 A.2d 316 [1959]. The circumstances surrounding the making of the contract, the purposes which the parties sought to accomplish and their motives cannot prove an intent contrary to the plain meaning of the language used. Connecticut Co. v. Division 425, 147 Conn. 608, 616-17, 164 A.2d 413 [1960] .... It is axiomatic that a party is entitled to rely upon its written contract as the final integration of its rights and duties.” (Citations omitted.) Zullo v. Smith, 179 Conn. 596, 601, 427 A.2d 409 (1980); see Sturman v. Socha, 191 Conn. 1, 12, 463 A.2d 527 (1983). “Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party’s subjective perception of the terms.” Reese v. First Connecticut Small Business Investment Co., 182 Conn. 326, 327, 438 A.2d 99 (1980).

The plaintiffs make no claim that, under the licensing agreement with Becton, Dickinson, the defendant is not entitled to one third of the royalties due from Becton, Dickinson that are related to the capillary tube-float device or the manual reader. They do claim, however, that pursuant to the April 1, 1977 agreement among the parties, the defendant was not, and is not, entitled to any royalties attributable to the auto reader. We agree.

In their April 1, 1977 agreement, the plaintiffs and the defendant acknowledged that they “have jointly invented a method and apparatus for the measurement of blood counts and other similar tests for which they have made applications for United States Letters Patent, Serial No. 673,058, filed April 2, 1976, and indicated as being allowable on December 17, 1976, and desire to define their rights and interests in said invention and in any Letters Patent which they or any of them may obtain relating to the invention . . . .” (Emphasis added.)

The agreement also stated that: the parties shall endeavor, through their attorney, to obtain “Letters Patent of the United States for said invention”; costs “in connection with the development of the invention” be shared; any “payments derived by the parties from the invention or Letters Patent shall be divided equally among them”; “[njone of the parties shall sell, assign or mortgage his share or interest in the invention . . . or grant any license thereunder without the previous written consent of the others”; and if any party “shall make or acquire any improvement or apply for or obtain any patent for any improvement upon said invention, he shall forthwith disclose the same to the others . . . to the end that the same shall be vested in the parties in equal undivided shares or interest . . . .” (Emphasis added.)

It is clear, from the opening substantive paragraph of the April 1, 1977 agreement among the parties, as well as the entire text of the agreement, that the only “invention”—whether termed “the invention,” “said invention” or “the basic invention”—covered by this agreement was the capillary tube-float device, and not the manual reader. The only invention mentioned in the April 1, 1977 agreement among the parties is the invention described as having been “jointly invented,” which was identified by its patent application serial number of 673,058, and the application as having been filed on April 2, 1976. The only invention to which those particulars apply is the jointly invented capillary tube-float device. The manual reader upon which the defendant grounds his claim for auto reader royalties was not “jointly invented,” but, rather, was invented by Ward-law alone. Moreover, its patent application bears a different number and filing date than that filed for the capillary tube-float device.

The agreement further provided that “improvements made by and Letters Patent issuing therefrom which relate to the use of capillary tubes, but which are not dominated by any claims contained in any of the patent applications or Letters Patent of the basic invention, shall not be subject to equal shares among the parties. Any such improvements and Letters Patent not dominated by the claims of the basic invention shall remain the property of the inventor. In the event that such improvements of Letters Patent, because of the language of the aforesaid license agreement with Becton, Dickinson, become subject to its royalty provisions, then any such royalties paid by Becton, Dickinson to parties other than the inventor shall be paid over by such parties to the inventor. The calculations for such payment will be made to the end that the inventor shall be made whole as though he had licensed his improvement or Letters Patent individually to Becton, Dickinson and Company.” (Emphasis added.)

This paragraph of the April 1, 1977 agreement among the parties made their intentions clear: any future inventions that are related to the use of capillary tubes, but which are not dominated by the claims contained in the patents for the capillary tube-float device, remain the sole property of the inventor of that invention; and, the terms of the payment of royalties contained in the licensing agreement with Becton, Dickinson notwithstanding, the royalties for that invention—in this case, the auto reader—must be paid over to the inventor-in this case, Wardlaw, and, by virtue of their separate arrangement, Levine—just as though the inventor had licensed his invention individually to Becton, Dickinson.

In other words, as applied to the facts of this case, Wardlaw and Levine, and not Massey, would be entitled to the royalties on the auto reader unless the claims of the capillary tube-float device—not the claims of the manual reader, as suggested by the defendant— dominate the claims of the auto reader. Furthermore, as the plaintiffs correctly point out, the only evidence in this case in this regard was that the claims of the capillary tube-float device did not dominate the claims of the auto reader, and there was no contrary evidence. Therefore, under the clear language of the agreement as applied to the facts of this case, the royalties generated by the auto reader belong to the plaintiffs, and the defendant has no right to them.

Consequently, we conclude that the April 1, 1977 agreement among the parties was unambiguous. It describes with exactness the invention, the improvements to which the parties had a duty to disclose and which improvements would be jointly owned. That invention was the capillary tube-float device. The fact that there is a reference in the parties’ agreement to the “basic invention” without describing or referring to any invention other than the capillary tube-float device, while describing that device in detail, does not render the agreement ambiguous. “[W]ords do not become ambiguous simply because lawyers or laymen contend for different meanings.” (Internal quotation marks omitted.) Water & Way Properties v. Colt’s Mfg. Co., 230 Conn. 660, 668, 646 A.2d 143 (1994); Downs v. National Casualty Co., supra, 146 Conn. 494-95. The agreement does not even mention the manual reader, let alone describe it with any degree of particularity. If we were to interpret the agreement to include the manual reader so as to require joint ownership of improvements dominated by patent claims to that device, we would be rewriting the agreement of the parties. That we cannot do. Bank of Boston Connecticut v. Schlesinger, supra, 220 Conn. 159; Collins v. Sears, Roebuck & Co., 164 Conn. 369, 374, 321 A.2d 444 (1973).

Because the April 1, 1977 agreement of the parties specifically included only the jointly invented capillary tube-float device, the trial court improperly found that the manual reader was part of the basic invention encompassed by the agreement of the parties. Therefore, the trial court improperly concluded that the defendant was entitled to royalties from the auto reader.

The judgment is reversed, and the case is remanded with direction to render judgment for the plaintiffs on the first count of the complaint, and for appropriate orders on the plaintiffs’ specific prayers for relief.

In this opinion Borden, Norcott and Palmer, Js., concurred.

“Domination” refers to “that phenomenon, which grows out of the fact that patents have claims, whereunder one patent has a broad or ‘generic’ claim which ‘reads on’ an invention defined by a narrower or more specific claim in another patent, the former ‘dominating’ the latter because the more narrowly claimed invention cannot be practiced without infringing the broader claim. ... In possibly simpler terms, one patent dominates another if a claim of the first patent reads on a device built or process practiced according to the second patent disclosure.” In re Kaplan, 789 F.2d 1574, 1577 (Fed. Cir. 1986).

The plaintiffs’ complaint also contained an interpleader count requesting that Becton, Dickinson be required to make any royalty payments to the court. The trial court denied the interpleader, and the plaintiffs have not appealed from that denial.

The defendant also filed three special defenses and a three count counterclaim in answer to the plaintiffs’ complaint. The counterclaim was subsequently withdrawn. The special defenses were found to be without merit by the trial court.

Responding to the defendant’s motion, the trial court rendered an articulation of its original judgment. The articulation, however, is self-contradictory. Therefore, we assume that the court’s original memorandum of decision expresses the reasoning for the trial court’s judgment. In addition, the articulation is not directly relevant to our determination of the plaintiffs’ claims.

On his cross appeal, the defendant raised the issue of whether the trial court properly found that the defendant was entitled to royalties from sales of the auto reader only for the life of the manual reader patent. Because we reverse the judgment of the trial court, we need not address this issue.

See footnote 1.

The dissent cites Sims v. Honda Motor Co., 225 Conn. 401, 623 A.2d 995 (1993), for the proposition that this court has rejected the “four comers” doctrine of contract interpretation. Sims, however, was a narrow exception to the general rule of contract construction. “We recognize that our conclusion is a departure from the general rule of contract construction that unambiguous contract provisions are to be given their plain meaning without reference to evidence outside the four corners of the agreement. . . . Rigid application of that general rule would, however, frustrate the purposes of [General Statutes] § 52-572e, which counsels against uncritical enforcement of boilerplate general release language and, therefore, justifies treating such language differently from how we treat other contractual provisions. Accordingly, we hold that, in light of the purposes of § 52-572e, general releases like that executed by Sims are not subject to that traditional rule of contract construction.” (Citations omitted.) Id., 415. Because the present case does not frustrate the purpose of a remedial statute, we see no justification for treating it differently than other contractual provisions with definitive language.

“WHEREAS, the parties have jointly invented a method and apparatus for the measurement of blood counts and other similar tests for which they have made applications for United States Letters Patent, Serial No. 673,058, filed April 2, 1976, and indicated as being allowable on December 17, 1976, and desire to define their rights and interests in said invention and in any Letters Patent which they or any of them may obtain relating to the invention . . . .”

In purporting to determine the intent of the parties in light of the surrounding circumstances, the dissent ignores the very language employed by the parties to express their intent—the words of the contract. Not only would the dissent’s interpretation alter the meaning of some of the contract phrases (e.g., “jointly invented” apparently would mean “invented by Wardlaw and then assigned to Levine and Massey”), but the very purpose for entering into the agreement would be abrogated. The purpose of the agreement obviously was to ensure that if one of the parties invented a device “which relate[s] to the use of capillary tubes” (emphasis added), he would not be obligated to share the proceeds reaped from that device unless the claims contained in its patent were dominated by the claims contained in the patent of the capillary tube-float device. The auto reader patent was not dominated by the claims contained in the capillary tube-float device. In an attempt to ascertain the intent of the parties, the dissent concludes that the parties’ intent was to enter into a meaningless agreement.