[quote=Canazes9]The core of the issue is that Jamison received a patent for something that should never have been granted and many of the old school wildcatters feel is swarmy to even apply for. Jamison certainly isn't the first to get away with gaming the patent process, happens on a daily basis in my industry.
David
No, the core is that Winchester/Olin breached an expressed/implied contract.
Why didn't Jamison sue Remington, Ruger, Lazzeroni for producing nearly identical designs? Arguably they are as close to his original concept as the WSM's. Clearly they were/are an attempt to cash in on the same concept.
David
Because they did not breach an expressed/implied contract with Jamison.
Jamison didn't sue for breach of contract, he sued for patent infringement. If he had won a case for breach of contract no other manufacturers would have to pay royalties for the wsm's ....
Winchester is a bungling, dieing company that handled the whole affair with Jamison as effectively as they have their other business practices. If Jamison thought he could have won against the others he would have gone after them also.
David
Are you reading a different case? This case includes Ruger, Winchester, Browning, and Olin.
Plaintiff first contacted Sturm, Ruger & Company, Inc. ("Ruger"), a firearms manufacturer, about commercial development of the short, magnum cartridge and rifle concept in late 1995 or early 1996. Ruger expressed interest, and indicated that it would make the rifles if plaintiff could interest Olin in manufacturing the ammunition. The three parties met together at the industry "Shot Show" in January 1997. At the meeting, plaintiff agreed to send Olin ballistics data on his short, fat cartridge for Olin's evaluation of the project.
....
Three Olin representatives subsequently met with plaintiff at his shop in April, 1997, and executed a document presented to them by plaintiff entitled "Acknowledgment of Confidentiality."
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Quasi-Contract Claim Against All Defendants
In his Complaint, plaintiff alleges that he conferred a benefit on defendants by "bringing the substantially developed short, fat cartridge and mating rifle concept" to Olin, and by "providing his knowledge, skills, and services, including substantial time and expense" to Olin, Olin thereafter shared that information with Browning, and the disclosure and use of that information "formed the basis of" the "Winchester/Browning joint development project."
II. Third Claim for Relief: Breach of Express Contract Against Olin
Plaintiff's breach of express contract claim alleges the breach of several separate contracts. Plaintiff asserts the parties entered into an oral contract on February 22, 1999 during the telephone conversation between Vilhauer and Corzine which allegedly "prohibited [Olin] from selling JRW-type cartridges unless and until a written license agreement was executed by Jamison." Complaint at � 41. Alternatively, the parties entered into a written contract in the later exchange of letters. Second, plaintiff alleges that Olin disclosed or used information in violation of the express confidentiality agreement. A. Express Contract to Refrain from Selling JRW-Type Cartridge
As for the written exchange of correspondence, after hanging up with Corzine, Vilhauer faxed the following letter to Corzine's office:
This will confirm our telephone conference this morning.
I just received the fax you sent Mr. Alan Corzine this afternoon and am replying on his behalf. As you are obviously aware, he and a representative from Ruger are conducting a hunt that was supposed to be co-hosted by your client, Mr. Rick Jamison. However, due to Mr. Jamison's "11th hour" withdrawal from activities, Mr. Corzine is now at the hunt, unreachable and undoubtedly with no idea that you have faxed him anything. I have no idea whether your letter correctly confirms your phone conference with him, but at a minimum note that any commitments Mr. Corzine made in this regard were without the benefit of my counsel given the unfortunate position into which Mr. Jamison forced him.
Regardless, in reply to your fax, I will confirm that Mr. Corzine will publicly announce the new cartridge at or after the hunt, with the understanding that no sales of such cartridge will be made until Mr. Jamison and Winchester come to a written understanding of each other's rights.
Wagner Dec., Ex. 72.
Where evidence of an alleged contract is contained in letters or other writings, the court must construe them and see if they constitute a contract. Wagner v. Ranier Manufacturing Co., 230 Or. 531, 537, 371 P.2d 74 (1962). The acceptance must be "positive, unconditional, unequivocal and unambiguous, and must not change, add to, or qualify the terms of the offer." Id. at 538. The objective manifestation of acceptance to the offeror forms a contract. Gordon v. Curtis Bros. A.D. Moodie House-Moving Co., 119 Or. 55, 62-63, 248 P. 158 (1926) (en banc).
...Olin admits there was interest in a "JRW family" of cartridges. Indeed, plaintiff points to a letter written by Zimmerman when plaintiff questioned Olin's sale of the WSM as being in violation of the February 22, 1999 agreement.
?
A: No. Like I — I understood it as a letter saying that it was okay for us to go forward, and that we would negotiate an agreement.
Q: Okay for you to go forward, if based — if certain conditions were satisfied, correct; which were very explicit in this letter?
A: Yes.
Q: And did — is it your understanding that Olin-Winchester agreed to the conditions of this letter?
A: Yes.
[Judge]I deny Olin's motion for summary judgment.
3. Lack of consideration for the Express Contract
Plaintiff suffered a detriment and Olin obtained a benefit; as one of the developers of the JRW cartridge, plaintiff could have insisted that the hunt be cancelled, but he did not. According to plaintiff, Olin recognized at the time that either party had the right to cancel the hunt and insist on a license or similar agreement in order for the hunt to proceed. Recognizing that Olin needed to resolve the dispute before making any announcement, Corzine contacted plaintiff's lawyer in an attempt to reach an agreement.
Again, plaintiff has not moved for summary judgment on this issue. Accordingly, I must only determine whether there are any issues of fact precluding summary judgment. I find that if any contract was formed, there are material issues of fact as to whether valid consideration supported such a contract. Contrary to Olin's statement of the law, consideration may be based on the promisee's forbearance of some legal right to which he or she would have otherwise been entitled to exercise, not just forbearance from filing a law suit. Shelley v. Portland Tug & Barge Co., 158 Or. 377, 388, 76 P.2d 477 (1938); McPhail v. Milwaukie Lumber Co., 165 Or. App. 596, 601, 999 P.2d 1144 (2000). In his letter to plaintiff dated February 18, 1999, Corzine appeared to tie some agreement on royalties to the introduction of the JRW cartridge when he said, "we will be forced to terminate the immediate cartridge introduction and all subsequent JRW cartridge developments." Wagner Dec., Ex. 26. In this case, plaintiff may have suffered a detriment by forbearing his legal right to object to the hunt, and by allowing it to proceed without an agreement in place to protect him.
B. Express Confidentiality Agreement
As for the "Acknowledgment of Confidentiality" signed in April 1997, plaintiff claims the 62-page packet of confidential ballistics data was confidential, and that Olin breached its contractual duty of confidentiality under the Acknowledgment, with respect to the ballistics data, when it began developing plaintiff's concept with Browning.
Plaintiff has produced no evidence that Olin disclosed or used the non-public portions of the ballistics testing. I grant Olin's motion for summary judgment with respect to plaintiff's claim for express breach of contract based on the confidentiality agreement.
III. Fourth Claim for Relief: Breach of Implied Contract Against Olin
Plaintiff argues the existence of two implied in fact contracts. He alleges that Olin had an implied in fact contractual obligation to refrain from selling cartridges embodying plaintiff's concept without paying compensation to plaintiff, and an implied in fact obligation to maintain confidentiality with respect to JRW project information.
A contract may be express or implied. An implied in fact contract has the same legal effect as an express contract. Staley v. Taylor, 165 Or. App. 256, 262, 994 P.2d 1220 (2000). Unlike an express contract, in an implied in fact contract, the parties' agreement is inferred, in whole or in part, from their conduct. Id. "[A]n implied contract can arise only where the natural and just interpretation of the [acts of the] parties warrants such a conclusion." Id. at 262 n. 6, citing Owen v. Bradley, 231 Or. 94, 103, 371 P.2d 966 (1962). A party may manifest its assent to an implied in fact contract over time through its course of conduct. Montez v. Roloff Farms, Inc., 175 Or. App. 532, 536-37, 28 P.3d 1255 (2001).
A. Implied in Fact Contract to Refrain from Selling JRW-Type Cartridge
The sum of plaintiff's evidence is as follows. At the first meeting, plaintiff informed Olin that he expected compensation in the event Olin moved forward with commercialization. He subsequently informed Olin in writing on several occasions of his expectation for remuneration. A May 7, 1997 memo states that Olin's lawyers will "do a draft agreement with Jam[i]son" and that "whether or not we have a signed agreement will be part of the `go-no-go' decision on the Jam[i]son round." Wagner Dec., Ex. 96. Plaintiff asserts that Olin for the first time rejected his request for royalties in October 1998,*fn2 by sending him a request for a royalty-free license, and by stating Olin was "not prepared to go forward with the commercialization of the JRW cartridge concept" and would "terminate [the] development of the JRW Cartridge" unless plaintiff signed an agreement granting Olin a royalty-free license by November 6, 1998." Wagner Dec., Ex. 54. Plaintiff responded that he was not "willing to give away the rights to what [he thought was] a revolutionary cartridge concept — for nothing." Wagner Dec., Ex. 55. Olin sent a similar request for a royalty-free license to plaintiff in a letter dated February 18, 1999, set forth above. The telephone conference and exchange of letters between Olin and Vilhauer, also set forth above, confirmed plaintiff's refusal to grant a royalty-free license. Yet Olin proceeded with the introduction of the JRW cartridge at the hunt. After that introduction, the parties were never able to come to an agreement on the terms of plaintiff's compensation. Plaintiff asserts that the parties' course of conduct demonstrates that Olin understood it had an obligation to refrain from commercializing plaintiff's concept without compensating him.
Plaintiff relies on Kamin v. Kuhnau, 232 Or. 139, 148, 153, 374 P.2d 912 (1962), in which plaintiff hired defendant to implement improvements plaintiff had developed for garbage trucks. Defendant began manufacturing and selling trucks with similar improved features. Plaintiff sued, and the court recognized that "
a manufacturer who has been employed to develop an inventor's ideas is not entitled to appropriate those ideas to his own use." Kamin, 232 Or. at 152.
Similarly, in Jaqua v. Nike, Inc., 125 Or. App. 294, 865 P.2d 442 (1993), plaintiff, as a clerk for defendant, disclosed a new type of shoe to defendant's vice president. The vice president encouraged plaintiff, even though plaintiff said he expected to be paid if defendant used his idea. After working on the shoe for two years, plaintiff terminated his employment with defendant. Defendant began marketing the shoe. The court found plaintiff's complaint alleged the existence of an implied in fact contract based on the "natural and just interpretation of the acts of the parties." Id. at 297. Olin argues it is undisputed that negotiations were unsuccessful and the parties were unable to reach an agreement on plaintiff's compensation. Olin contends plaintiff cannot create an agreement through implication when the parties very specifically did not reach an agreement. Plaintiff requested compensation, but plaintiff never asserts that Olin agreed. Olin consistently rejected the idea.
Olin distinguishes Kamin and Jacqua. Kamin was not an implied in fact contract case; the court evaluated whether there had been a wrongful misappropriation of plaintiff's concept. Secondly, it was undisputed in that case that the parties had an agreement. Likewise, the Jacqua decision gave no indication that the parties before it had failed to reach an agreement. Furthermore, Jacqua was faced with a statute of limitations question. The sole issue was whether the complaint sounded in tort or contract to determine whether it was correctly dismissed.
Despite Olin's heroic efforts to limit Jacqua's applicability to the case at bar, it is apparent from this case that Oregon courts recognize that when a party accepts and uses another party's ideas, knowing that payment is expected, an implied in fact contract may exist. Jaqua, 125 Or. App. at 297 ("We conclude that defendant's conduct in using plaintiff's idea gives rise to an inference that it agreed to compensate him").
Accordingly, I review the conduct of the parties to determine whether an agreement may be inferred. Viewing the facts in the light most favorable to plaintiff, until September 1998, there is no evidence in the record of Olin's refusal to consider paying plaintiff a license fee or royalty.*fn3 Furthermore, plaintiff has provided undisputed evidence of his extensive work on the 300 JRW during 1997 and 1998. Likewise, viewing the evidence in the light most favorable to plaintiff, the telephone colloquy and exchange of letters between Vilhauer and Corzine in February 1999 indicate a recognition on the part of Olin that plaintiff expected compensation for his contributions, and Olin's conduct in continuing to accept plaintiff's services belies its repeated threats to cancel the project.
It remains unclear whether the parties intended to enter into a licensing agreement but could not agree upon a royalty, or whether there were disputes, at least on the part of Olin which it communicated to plaintiff, about the desirability of a license agreement in the first place. I am also curious about how much plaintiff contributed to the project after he received the September 1998 letter in which Olin shared its "firm position . . . to offer no royalty payments." Wagner Dec. to Plaintiff's Opposition to Browning Motion, Ex. 10. If plaintiff continued to provide his services in the face of Olin's refusal to enter into a licensing agreement, the parties can hardly be said to have come to a meeting of the minds. Furthermore, questions remain as to whether any implied in fact contract covered JRW-type cartridges. On the other hand, if both parties continued negotiations, but were unable to agree on a royalty, and Olin used plaintiff's ideas anyway, Olin may well have breached an implied in fact contract. Accordingly, I deny Olin's motion for summary judgment on this claim as there are remaining material issues of fact.
B. Implied in Fact Confidentiality Agreement
With respect to the implied in fact confidentiality agreement, Olin argues that no implied in fact agreement can contravene the terms of an express contract. Uptown Heights Assoc. Limited Partnership v. Seafirst Corp., 320 Or. 638, 652, 891 P.2d 639 (1995) (en banc). Plaintiff and Olin expressly agreed upon the scope of Olin's confidentiality obligations in the Acknowledgment of Confidentiality completed by Olin employees.
Plaintiff responds that the parties owed each other the duty of confidentiality with respect to "jointly developed JRW project information" and that Olin breached that duty when it "used JRW project information in the development of the WSM." Plaintiff's Opposition to Defendant Olin's Motion for Summary Judgment on Counts 3 Through 8, at 47, citing Montez, 175 Or. App. at 536-37; Kamin, 232 Or. at 148, 152 (disclosure of confidential information which created a commercial advantage was "sufficient to raise the implied agreement not to appropriate it"). Plaintiff asserts this implied in fact contract was separate from the express agreement in that it covered different confidential information. Plaintiff offers no specifics about what he considers to be "jointly developed JRW project information."
Plaintiff asks me to extend Kamin to apply to circumstances in which information jointly developed gives rise to an implied in fact contract not to disclose that confidential information. I decline to do so. Plaintiff offers no authority, and I can find none, providing that information developed in a joint project warrants the same protection as information conveyed to another under the implied condition that it remain confidential. Accordingly, I grant Olin's motion for summary judgment on this portion of plaintiff's claim for breach of implied in fact contract.
IV. Sixth Claim for Relief: Breach of Implied Covenant of Good Faith and Fair Dealing Against Olin
Plaintiff alleges in his Complaint a claim for breach of the implied covenant of good faith and fair dealing in both the express and implied in fact contracts analyzed above. Olin argues the claim should be dismissed because there is no contract. Even if there were a contract, Olin argues plaintiff has not met its burden of demonstrating the demands of any implied covenant accompanying the contract.
In every contract there is an implied duty of good faith and fair dealing that "is to be applied in a manner that will effectuate the [objectively] reasonable contractual expectation of the parties." Uptown Heights, 320 Or. at 645 (citation omitted).
If an express or implied contract exists, there is implied in that contract a duty of good faith and fair dealing. Accordingly, I deny Olin's motion for summary judgment.
V. Summary
Due to remaining material issues of fact, Olin's Motion for Summary Judgment is denied with respect to its breach of any oral or written express contract, its breach of any implied in fact contract to refrain from selling JRW-type cartridges, and its violation of any implied duty of good faith and fair dealing. Both the Browning defendants' and Olin's Motions for Summary Judgment are denied on the quasi-contract claim with respect to materials, equipment and facilities, but are granted with respect to any services for which plaintiff claims restitution. Finally, Olin's Motion for Summary Judgment is granted with respect to plaintiff's claim for breach of the express confidentiality agreement and breach of the implied in fact confidentiality agreement. CONCLUSION
Browning Defendants' Motion for Partial Summary Judgment on Quasi-Contract Claim (#295) is granted in part and denied in part. Olin's Motion for Summary Judgment on Counts 3 Through 8 (#328) is granted in part and denied in part. In addition, I allow plaintiff to voluntarily dismiss without prejudice Counts 7 and 8 of plaintiff's Consolidated Second Amended Complaint (#418).
IT IS SO ORDERED.
