AMERICAN MACHINE & METALS, INC. V. DE BOTHEZAT IMPELLER CO.
166 F.2d 535 (2nd Cir. 1948)
NATURE OF THE CASE: This was a dispute over a contract and a declaration of rights.
FACTS: In 1934, P and D agreed to a contract for D to convey patent rights and equipment
for making fans to P and P agreed to pay D a license fee of not less than $5,000 annually
based on the net sales of the products. So long as the contract continued, the fees were to
be paid on net sales regardless of whether P's products were covered by the patents or even
if they had expired. The contract would be terminated on six months notice by either party.
In the event of termination, the patents were to be transferred back to D and P would no
longer use the name 'De Bothezat.' By 1946, P did not need the patents any longer. P then
wanted to terminate the contract and still manufacture fans and ventilating equipment. D
lead P to believe that upon termination, D would sue P if he does not cease the manufacture
and sale of fans and ventilating equipment. P then sued for a declaration of rights under
the contract. The district judge found that no controversy existed as P had not yet given
notice of termination and dismissed the complaint. P appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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