Pitcairn v. United States

Kasiiiwa, Judge,

concurring in part and dissenting in part:

I concur with the views expressed in the majority opinion regarding: I. Similarity, III. Contribution, IV. Spare Parts, V. Delay Compensation and VI. Experimental Use. But with relation to the portion of the opinion entitled II. Royalty *208Compensation, I concur in part and dissent in part a® ¡hereinafter shown.

The majority found, relative to II. Royalty Compensation, that:

* * * Effective as of January 1, 1947, Autogiro entered into an agreement with United Aircraft Corporation for a royalty of $500 an aircraft for 1946-1948, with the $500 ceiling to change to 2% of the airframe price on and after January 1, 1949. After this United agreement was executed, the plaintiff proposed similar licenses to other major manufacturers of helicopters, in effect announcing its post-war rate to be 2%. * * * [Footnote omitted.] [At page 183.]

It is on these offers by plaintiff, made in 1947-1948, to other manufacturers of aircraft, mainly PiasecM, McDonnell and Bell, of licenses similar to that of United Aircraft Corporation’s (United) license agreement effective January 1,1947, •that the majority decided on the post-war rate of 2%. A careful reading of the majority opinion shows that the opinion is not clear as to whether it meant that the 2% rate was only a maximum rate or whether the 2% rate was a flat rate with no downward, lower rate permitted. As to these offers, the majority states:

All this means that the post-1946 United agreement at 2% as well as the post-1946 offers made by Autogiro at that same level — .plaintiff’s own position deliberately taken in 1947 and 1948 — have a prima facie title to acceptance as the reasonable royalty for 191¡6-196Jj,. * * * [Emphasis supplied.] [At page 186.]

The phrase liprima facie title to acceptance” is ambiguous. The ambiguity is made more apparent when one reads the majority’s footnote 16. It reads as follows:

*209The record in this case shows that United’s $500 ceiling per aircraft at that time amounted to a .66% rate.1 A rate of .66% is only one-third of the 2% rate. Since the majority allows this lower rate of .66% for the 1947-1948 period, a careful reader of the opinion may conclude that the phrase “prima facie title of acceptance” is interpreted to mean that the 2% rate is only a maximum rate and so lower rates are permitted. But in the same paragraph to which footnote 16 aforequoted belongs, the majority again makes a broad, strong statement:

* * * The question remains whether the royalty should be set at a still lower figure, as defendant requests. This is not a simple skein to unravel, but our conclusion is that the #% rate should he accepted for all infringements. The main reason is that, quite unlike the 2% figure, there is no indication from'Autogiro that any lesser royalty was ever satisfactory, acceptable, or offered generally. [Emphasis supplied.] [At page 186.]

So one can only conclude that there is an inconsistency at this very important point of the majority opinion. This inconsistency caused the majority a problem in setting its post-1949 rate. The 1949 fully paid-up license to United was less than 2%. The majority answered defendant’s argument for a lower than 2% rate for the post-1949 rate as follows:

* * * The patentee’s situation was unusual in that the Government was the dominant consumer of the articles embodying the patents, and this put the plaintiff to a disadvantage since it was very unlikely that an injunction could he obtained against United (or other in-*210frmgers). We therefore discount, in the absence of any expression of contentment, Autogiro’s granting to United, at the latter’s strong insistence, of a paid-up license in 1949. No offers to other companies, stemming from this paid-up license, were made by plaintiff. The theoretical constructions of defendant’s expert — who reached a figure which was only a fraction of 2% — were based in largest part on the paid-up license; the expert did not consider plaintiff's hobbled position in trying to determine what the '■'■parties might well home agreed upon” (Saulnier v. United States, supra, 161 Ct. Cl. at 227 (1963)) if Autogiro had been relatively free of this one-sided litigation pressure. * * * [Emphasis supplied. Footnotes omitted.] [At pp. 186-87.]

Since the majority first refers to dominant Government consumption, injunctions and one-sided litigation pressure, the majority was referring to Governmental actions under 35 U.S.C. §§ 89-96, popularly known as the Royalty Adjustment Act of 1942.2 It is interesting to note that in 1948 this *211court decided that said sections 89-96 do not apply where there is “no license agreement with anyone for the payment of a royalty * * Fulmer v. United States, 111 Ct. Cl. 591, 593, 77 F. Supp. 927, 928 (1948). We have quoted section 89 fully in the margin to show that the mechanics of the Act call for royalties to be paid periodically. Where the royalty is paid in a lump sum, there is no royalty payment which the agency head may act upon to permit section 89 to operate. United’s 1947 license expired as of the end of 1948 and since its post-1949 license was a fully paid-up license upon execution, no royalties were payable under any agreement. This court in Fulmer v. United States, supra, held:

Plaintiff has no cause of action under the terms of Eoyalty Adjustment Act of October 31, 1942 (35 U.S.C.A. 89-96), Ivor B. Yassin v. United States, 110 Ct. Cl. 211. Plaintiff had no license agreement with anyone for the payment of a royalty for the use of his alleged invention in connection with the manufacture of articles for the United States, and there could not, therefore, be an order by the head of a department or agency upon *212which that act conditions the right to sue. An allegation that defendant used plaintiff’s unpatented device is not, therefore, sufficient to bring plaintiff’s case within the terms of that Act. [Emphasis supplied.] [Ill Ct. Cl. at 598,77F. Supp. at 928.]

See, also, Yassin v. United States, 110 Ct. Cl. 211, 228, 76 F. Supp. 509, 519 (1948). The exact date of the Fulmer decision was June 1, 1948, and Yassi/n was decided March 1, 1948. It is clear that plaintiff in 1949 drafted its fully paid-up license to United under the Fulmer holding of this court to free itself of any possible litigation under said 85 U.S.C. §§89-96. So plaintiff was not under the “one-sided litigation pressure” referred to by the majority. The 1949 paid-up license from plaintiff to United provided as total consideration the sum of $325,000. Even if plaintiff had raised the amount from $325,000 to $5 million and United agreed to such raise, since it was a paid-up license it was not subject to the Eoyalty Adjustment Act. I shall hereafter again refer to the 1949 fully paid-up license under the damage computation aspects of this dissent.

■So if the majority meant that the 2% rate was a flat rate “for all infringements” and that for the post-1949 years it was a flat.2% rate with no lower rate permitted, I disagree. I agree with the defendant that the 1947-1948 offers only set a “maaaimmru ceiling of and that a lower percentage rate figure was permissible. I take this position not only on my foregoing Fulmer rebuttal but on grounds more fundamental and basic which I shall next discuss.

The United license by plaintiff contained in addition to the 2% rate clause and others the following most-favored licensee clause:

Section 11. If, under similar circumstances and otherwise on substantially the same terms and conditions as this Agreement, a license shall hereafter be granted by Autogiro for the manufacture of man-carrying aircraft with sustaining rotors under all or substantially all the Patents of Autogiro at a royalty rate or rates lower than the corresponding rate or rates hereinabove provided, Autogiro will promptly notify Licensee of the grant of such license and Licensee shall be entitled to the benefit *213of such lower rate or rates for its operations herev/nder subsequent to such grcmt, * * * . [Referred to as the most-fmored licensee clause.[Emphasis supplied.]

The record shows that the only three other substantial manufacturers in the United States then in the field competing with United were Piasecki, McDonnell and Bell. The package license written outlines and/or drafts containing the 2% rate offer separately sent in 1947 and 1948 to Piasecki, McDonnell and Bell contained the identical above-mentioned most-favored licensee clause. The early Kellett license also contained the same clause. The 1943 and 1944 Firestone licenses extensively discussed in the trial judge’s opinion in this case contained the same most-favored licensee clause. It is axiomatic that competitors must be dealt with fairly and equally and in all of its licenses and proposals plaintiff recognized this basic principle by using and making it known that it offered in its future licenses the most-favored licensee clause. Plaintiff well knew that Piasecki, McDonnell and Bell were competing with United in the helicopter market and that Piasecki, McDonnell and Bell would not agree to a license without the protection of the most-favored licensee clause. Plain elementary economics of marketing and the very evidence in this case prohibit any other assumption.

Defendant has taken a license by eminent domain in any applicable patent or patents from plaintiff by reason of the unauthorized making or use of the patented invention (s) in each aircraft at the time of Governmental acceptance or use of that aircraft. Calhoun v. United States, 197 Ct. Cl. 41, 453 F. 2d 1385 (1972); Regent Jack Mfg. Co. v. United States, 167 Ct. Cl. 815, 337 F. 2d 649 (1964). This license, under 28 U.S.C. § 1498, should be the equivalent of what the parties “might well have agreed upon,” Saulnier v. United States, 161 Ct. Cl. 223, 227, 314 F. 2d 950, 952 (1963), or “[w]hat would the parties have taken and paid if the matter had come to an express agreement?” Olsson v. United States, 87 Ct. Cl. 642, 659, 25 F. Supp. 495, 499 (1938), quoting from Wood v. United States, 36 Ct. Cl. 418, 426 (1901). In order to make such a determination, the court should “place [itself] in the position occupied by the contracting parties * * *214Berdan Fire-Arms Mfg. Co. v. United States, 26 Ct. Cl. 48, 80 (1890) (implied contract case cited with, approval in Olsson, 87 Ct. Cl. at 659-660, 25 F. Supp. at 499). In the past when the court has done this, it has considered as one of the most important factors or “bargaining points” the general licensing practice in the particular industry and, more precisely, the patent holder’s other arrangements with parties in a similar bargaining position as the litigants. Richmond Screw Anchor Co. v. United States, 67 Ct. Cl. 63, 72 (1929); Breese Burners, Inc. v. United States, 140 Ct. Cl. 9, 17-18 (1957). In the case before us plaintiff, by its own documents accompanying the 1947-1948 offers, included the most-favored licensee clause. Defendant relies not only on custom or practice in the industry but on the documents in evidence showing that plaintiff offered each competing manufacturer the most-favored licensee clause. A stronger case could not have been shown by defendant.

The majority held with relation to the 2% offer that it was the market rate because “the significant fact is that plaintiff made the offer and made it widely.” The most-favored licensee clause accompanied each of the 2% rate offers so if the offers of the 2% rate were “offered generally,” the accompanying most-favored licensee clause was also “offered generally,” sufficient to tie the two together. They together established a lower rate than the 2% rate if plaintiff offered a preferred rate to one of the manufacturers. The result was that although the 2% rate offer was made, plaintiff also offered a lesser rate to all substantial manufacturers where the facts showed that any one of the manufacturers was offered a preferred rate by plaintiff. The majority felt and stated that the lower than 2% rate problem is “not a simple skein to unravel” because it did not take the most-favored licensee clause into consideration. I believe that if the majority had considered the most-favored licensee clause and had made it a part of the 2% offer, the unraveling would have been easy and without difficulty.

The evidence is undisputed that United was offered preferred rates by plaintiff. Autogiro in 1947-1948 allowed United a preferred $500 per aircraft advantage. We have heretofore discussed this 1947-1948 preference so I will not dwell on it again except to state that even without consider*215ing and taking into account the most-favored licensee clause, the majority felt that the $500 advantage (.66% rate) given by plaintiff to United must also be given defendant on the total damage question posed by this phase of the litigation. The majority must have felt the unfairness resulting from a refusal to allow the .66% rate because it was plaintiff which granted this lower .66% rate and plaintiff must suffer the consequences of its offering such a low rate.

Plaintiff also entered into a written agreement in 1949 with United for a lesser rate than the 2% rate. The majority found:

* * * In 1949, after some months of negotiation triggered by United’s disinclination to let the 2% rate go into effect, plaintiff granted United a paid-up license at considerably less than 2% per aircraft. * * * [At page 183.]

The paid-up license transaction, in 191$ was initiated in 191$ with an offer by plaintiff to United to sell its entire patent holdings for $750$00. This is an established fact in this case. I do ¡not take this self-valuation by plaintiff of the total worth of its patents lightly just because it was only 'an offer. The offer finally ended by plaintiff granting a paid-up license in 1949 to United for $325,000. I consider the $750,000 offer highly prejudicial to plaintiff because of its connection to the $325,000 transaction. A detailed analysis of the evidence relating to the transaction which started with the $750,000 proposal by plaintiff shows that in a July, 1948, letter, United had expressed its firm conviction that a total of $325,000 in royalties was the most that United and its licensee Nash, considered as a single licensee, should be expected to pay for a paid-up license under plaintiff’s patents and that plaintiff should look to other licensees or its own manufacture for any additional value ascribed to the patents. United and its licensee Nash paid total royalties of $136,477.98 for helicopter sales to the defendant under the wartime 1943 and 1944 package licenses. United also paid royalties for aircraft delivered by the end of 1948 under its 1947 package agreement of $67,783.28, of which $46,283.28 were royalties on sales to the Government. Accordingly, plaintiff effectively accepted United’s position in principle, for United paid the balance of *216the total sum of $325,000, or $120,738.74, in January, 1949, rather than spread it out over the three years 1949 to 1951, for a fully paid-up package license under all of plaintiff’s 224 utility (including all 11 in suit) and three design patents then issued and under 52 pending applications. The arithmetic is exact and is as follows:

We quote the above arithmetic to show that the sale price of $325,000 was not a figure picked out of the clear sky. The $204,261.26 was ’based on past royalties paid under prior licenses of United. This prevents any argument by plaintiff of guessing on the part of defendant because the arithmetic is exact. The paid-up license cost United $120,738.74. These breakdowns of figures are from plaintiff’s own documents produced for the record in this case. It is important to observe the above arithmetic because, as it is hereafter shown, the defendant’s expert found this analysis to be material in his opinion testimony in support of his views as to what the damages to plaintiff should be.

The majority, after unanimously rejecting the trial judge’s single-taking theory, has in effect agreed with defendant that the 2% rate in the 1947 license to United and in plaintiff’s offers to others in 1947-1948 is where this court should start. The majority in effect held that the material time frame was 1947-1948, when the offers were made. I agree with the majority.

The question now is what is the percentage below the 2% rate? When plaintiff’s offers to all manufacturers are considered in the above time reference, one important factor, fundamental in market evaluation, looms above all the others. After United, the leader in the helicopter industry, had received its 1949 paid-up license, no other manufacturer could pay substantially more and expect to compete in either *217the Government or commercial market place. Those postwar arrangements, when properly compared and analyzed in light of the most-favored licensee clause, must operate under said clause to place a ceiling lower than the 2% rate on plaintiff’s recovery. To view the case otherwise is simply to ignore the market value which plaintiff itself placed on a license under its patents.

When considering the merits of a proposed compensation scheme, it is often the practice to compare the recovery under that scheme to extrapolations from other agreements or transactions. Such comparisons give the court a guide to the comparative fairness of the scheme. Saulnier v. United States, 161 Ct. Cl. at 226-227, 314 F. 2d at 951-952.

In the period from 1947 to 1948, on an aircraft which cost basically $75,000, United was paying a running royalty of $500 per aircraft. Clearly, United felt that continuation of such a running royalty beyond 1949 was excessive. However, even if a similar running royalty was applied to the aircraft in this accounting, plaintiff’s recovery would be far below the $24 million awarded by the trial judge or even the $12.8 million plaintiff would receive under its self-imposed 2% ceiling.

The average cost of the over 2,200 aircraft in this accounting is $287,273. Applying to each of these aircraft a running royalty of basically the same level as under the 1947 United agreement, i.e., ($287,273 -*-$75,000) X$500=$l,915, the plaintiff would receive a basic royalty compensation of $4,264,705. Clearly, this is more than United was willing to pay and, thus, is more than its competitors could reasonably afford to pay. However, this figure does demonstrate the unreasonableness of the $12.8 million figure under the flat 2% rate ceiling.

Eelative to the use of expert testimony, Congress, under sections dealing with patent litigation in 35 U.S.C. § 284 (1952), specifically provided as follows:

The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.

And it is not only by statute but the Court as shown in Sinclair Refining Co. v. Jenkins Petroleum Process Co., 289 U.S. *218689 (1933), lias encouraged reliance on expert testimony. In patent litigation with, relation to the use of expert testimony to aid the Court in assessment of damages, the Court in Sinclair Refining Co., supra at 697-698, stated that even in cases where there are no actual sales, expert testimony may be allowed:

* * * A patent is a thing unique. There can be no contemporaneous sales to express the market value of an invention that derives from its novelty its patentable quality. Cf. United States v. Swift & Co., 270 U.S. 124; Todd v. Gamble, 148 N.Y. 382; 42 N.E. 982. But the absence of market value does not mean that the offender shall go quit of liability altogether. The law will make the best appraisal that it can, summoning to its service whatever aids it can command. United States v. Swift & Co., supra; U.S. Frumentum Co. v. Lauhoff, 216 Fed. 610; Industrial & General Trust, Ltd. v. Tod, 180 N.Y. 215, 232; 73 N.E. 7; Sedgwick, Damages, 9th ed., vol. 1, pp. 491, 504. At times the only evidence available may be that supplied by testimony of experts as to the state of the art, the character of the improvement, and the probable increase of efficiency or saving of expense. Dowagiac Mfg. Co. v. Minnesota Moline Plow Co., 235 U.S. 641, 648, 649; Suffolk Co. v. Hayden, 3 Wall. 315, 320; U.S. Frumentum Co. v. Lauhoff, supra. * * *

Fortunately, in this case there was an admitted, fully paid-up sale of patent rights by plaintiff to United. The use of the expert by defendant herein was not to establish the sale. His testimony was an analysis of the admitted sale by plaintiff. This is a much stronger case for expert testimony than in Sinclair Refining Go. and the evidence in this case is on much firmer ground than what this court had to rely on in Saulnier v. United States, supra. In ascertaining damages resulting from defendant’s use of aircraft canopy assembly patents owned by plaintiff, this court said in Saulnier:

Of course, the best guide for the determination of just compensation are the royalties agreed upon between the patentee and licensees in arm-length transactions. Unfortunately, there are no commercial licensees in this case, but the settlement between plaintiff and the British Government does establish a guide. This was negotiated after the war was over. Great Britain was a government foreign to plaintiff, who was a Frenchman. Negotiations lasted over a period of 18 months. A price was agreed *219upon of $14 per plane for from 26,000 to 27,000 planes, a total consideration of 99,090 British pounds. At the then rate of exchange, this amounts to $376,542. [161 Ct. Cl. at 226,314 F. 2d at 952.]

In other words, the use of expert witnesses is encouraged in this field and much discretion is allowed the courts in the use of these experts. In this case we had the benefit of a true expert witness, Mr, Glassman (defendant’s chief witness), and the 1949 fully paid-up license.

With relation to expert testimony introduced by the parties in this case, it appears that the plaintiff submitted expert testimony to prove its claim for damages under its single-taking theory. The evidence plaintiff produced was relevant under the Firestone Tire and Rubber Company license. The facts and theory involved in plaintiff’s approach did not fit into or answer defendant’s entirely separate and different approach. Defendant brought forward Mr. Glassman as its expert witness to offer expert testimony in support of its computation of plaintiff’s damages based on facts surrounding the United licenses of 1947 and 1949. It happens that as the case now turns out, we have uniformly rejected plaintiff’s single-taking approach and plaintiff is without evidence to rebut Mr. Glassman’s opinion evidence. Plaintiff in its brief before this court, answering Mr. Glassman’s expert testimony, does not point to any expert testimony produced by plaintiff to refute Mr. Glassman’s expert testimony. Mr. Glassman’s opinion testimony remains uncontroverted. It cannot be refuted because it is plain arithmetic based on figures in the record.

Mr. Glassman has the following qualifications. He possesses both a law degree and an engineering degree. He worked in the Patent Office for about four years, mostly as a Patent Examiner, and thereafter was employed by the Department of the Army in the Office of the Chief 'Signal Officer and later, after an Army reorganization, in the Army Materiel Command, performing patent work for the Army from 1945 for about 27 or so years. During the time when he was working in the Office of the Chief Signal Officer and, for part of the time, in the Army Materiel Command in connection with investigation of infringement claims and offers of licenses, he *220personally negotiated on behalf of the Government some 15 to 20 license agreements or settlements of infringement claims. He also reviewed about 1,000 proposed license 'agreements between United States companies and foreign companies pertaining to the export of data relating to munitions of war under State Department Export Control Regulations, which often involved the transfer of patent or data rights. Mr. Glassman also had responsibility for determining or investigating the propriety of royalty charges to Army contracts involving companies, including those in the aircraft industry such as Lockheed, Boeing-Vertol, and Hughes. He has previously given testimony in four other patent accounting cases to determine reasonable royalty rates in the Court of Claims. I am impressed by his qualifications. These qualifications are substantial when compared to the qualifications of plaintiff’s witnesses. Plaintiff’s chief expert witness, H. F. Gregory, testified regarding damages on a patent-to-patent basis. It is clearly not relevant under the present status of the case. It is interesting to note that be didn’t know what a “file wrapper” was. He had no prior experience in patent procurement.

Mr. Glassman used the methodology and calculations shown in the margin.3 Clearly, Mr. Glassman’s analysis was soundly based. Plaintiff is certainly due no compensation more than 0.1299% of the trial judge’s prices for the 2,227 aircraft involved in this accounting of $639,243,969, or the sum of $830,377.92, paid up as of January 1, 1949.4 I am of the view that there should be entry of judgment in favor of plaintiff and against defendant of $830,500 together with *221$1,326,723.75 as interest, computed as of January 1, 1949 to the end of 1976, under the rates mentioned in IV. Delay Compensation of the majority opinion. The total judgment in my view in favor of plaintiff and against defendant should be $2,167,223.75. There is no necessity of delaying this case any further.

For the period before 1949, the 1947 United agreement provided that the royalty on any one aircraft should not exceed $500, and also that from 1947 onward the minimum royalty per year should be $10,000. We consider these provisions of that agreement to be applicable to this case, though the only one that is likely to be operative is the $500 ceiling for aircraft used by or manufactured for the defendant prior to January 1, 1949. After January 1, 1949, the 2% rate applies. [Emphasis supplied.] [At page 187.]

The 1947 United license agreement provided as follows:

“In respect of royalties accrued under the foregoing provisions of this Section within the three calendar years ending December 31, 1948, the royalty on any one aircraft shall not exceed Five Hundred Dollars ($500.). As to any such aircraft, if the royalty so paid by Licensee equals $500., there need be no determination (for the purposes of this Section) as to which Patents of Autogiro are employed therein. For the calendar year 1946, the royalty as calculated under the foregoing provisions of this Section, on any aircraft made by Licensee and sold and delivered to and accepted by the Government in 1946 shall in no event exceed the royalty which would have been payable thereon had such aircraft been made, sold, delivered and accepted under the License Agreement between the parties dated as of the 24th day of March 1944.” * * * [Emphasis supplied.] [At 10, section 5.]

By reason of the last sentence, some aircraft license payments only amounted to $445.82 per aircraft (1946 for Navy aircraft). But the $500 figure was the predominant measure used. The 2% rate provided in an earlier-paragraph of the agreement was not used at all.

The .68% rate is computed by using a fraction, $500 over $75,212. The average cost per helicopter in 1948 was $75,212. It is interesting to note that the wartime rate was .85%.

35 U.S.C. § 89 reads as follows:

Ҥ 89. Adjustment of royalty rates; notice, remedies against licensee
“To aid in the successful prosecution of the War, whenever an invention, whether patented or unpatented, shall be manufactured, used, sold, or otherwise disposed of for the united States, with license from the owner thereof or anyone having the right to grant licenses thereunder, and such license includes provisions for the payment of royalties the rates or amounts of which are believed to be unreasonable or excessive by the head of the department or agency of the Government which has ordered such manufacture, use, sale, or other disposition, the head of the department or agency of the Government concerned shall give written notice of such fact to the licensor and to the licensee. Within a reasonable time after the effective date of said notice, in no event less than ten days, the head of the department or agency of the Government concerned, shall by order fix and specify such rates or amounts of royalties, if any, as he shall determine are fair and just, taking into account the conditions of wartime production, and shall authorize the payment thereof by the licensee to the licensor on account of such manufacture, use, sale, or other disposition: Provided, however, That the licensee or licensor, if he so requests within ten days from and after the effective date of said notice, may within thirty days from the date of such request present in writing or in person any facts or circumstances which may, in his opinion, have a bearing upon the rates or amounts of royalties, if any, to be determined, fixed and specified as aforesaid, and any order fixing and specifying the rates and amounts of royalties shall be issued within a reasonable time after such presentation. Such licensee shall not after the effective date of said notice pay to the licensor, nor charge directly or indirectly to the United States a royalty, if any, in excess of that specified in said order on account of such manufacture, use, sale, or other disposition. The licensor shall not have any remedy by way of suit, set-off, or other legal action against the licensee for the payment of any additional royalty remaining unpaid, or damages for breach of contract or otherwise, but such licensor’s sole and exclusive remedy, except as to the recovery of royalties fixed in said order, shall be as provided in section 90 of *211this title. Written notice as provided herein shall be mailed to the last known address of the licensor and licensee and shall be effective upon receipt or five days after the mailing thereof, whichever date is the earlier. Oct. 31, 1942, c. 634, § 1, 56 Stat. 1013.”

Section 90 mentioned above provides for suit by any licensor aggrieved by an order issued under section 89 in this court.

The majority in footnote 13 states:

“We refer to the fact that a patentee cannot obtain an injunction against a government-supplier or government-contractor and is confined, for his exclusive remedy, to a suit for ‘reasonable and entire compensation’ (i.e. monetary compensation) against the united States under 28 U.S.C. § 1498. These suits generally take a long time to come to their conclusion and the patentee, even if he prevails, normally obtains no compensation until the litigation is at an end. (The reference is not to the Royalty Adjustment Act, see note 12, supra.)’’

The majority’s emphasis is that “a patentee cannot obtain an injunction against a government-supplier or government contractor and is confined * * * to a suit * * * under 28 U.S.C. § 1498.” The facts are undisputed that during pre-1949 and post-1949 periods substantial non-governmental commercial sales were made by United. Commercial sales are clearly not covered by 28 U.S.C. 5 1498. Systron-Donner Corp. v. Palomar Scientific Corp., 289 F. Supp. 148 (1965). Bystron-Donner was very similar to the present case in that both governmental and commercial sales were Involved. The court held that 28 U.S.C. § 1498 had no application in a suit in a federal district court for patent Infringement seeking the usual injunctive relief based on commercial sales only. So under the facts of this case, 28 U.S.C. § 1498 did not actually have the restrictions preventing an injunctive suit as the majority feared. If the plaintiff was interested in an early decision regarding validity of plaintiff’s patents by way of an injunctive suit, plaintiff could have immediately started an injunctive suit for patent infringement in a federal district court based on these commercial sales.

Mr. Glassman stated that royalty compensation In this case rests on:

(1) extrapolations from the 1947 and 1949 license agreements with united and royalty payments made thereunder,

(2) United’s sales of helicopters actually delivered In the period from the first unauthorized use for which compensation Is sought In this case (December 27,1946) to December 31,1948, and

(3) projected sales which plaintiff might reasonably anticipate for United from January 1, 1949, to the end of the accounting period in this case (May 27, 1964).

The 1947 license Is the running royalty type, while the 1949 license, is the paid-up type. Consequently, certain assumptions have to be attributed to plaintiff in negotiating the 1949 agreement in order to make extrapolations from both agreements. Mr. Glassman’s approach was to take the facts known to the plaintiff In late 1948 and early 1949, including the two United agree-*221menta, and what the plaintiff might reasonably anticipate for helicopter orders for United after 1948 and arrive at a royalty rate that would be applicable to the accused helicopters purchased by the defendant in the period December 27, 1946, to May 27, 1964. So what are the facts that were known by the plaintiff during this period ?

A. The Facts

1. In mid-October, 1948, the plaintiff’s president knew that:

(a) united had received during fiscal year 1948 orders from the defendant for 85 helicopters at a total price of $6,393,000, an average of $75,212 per helicopter.

(b) United had received from July 1, 1948, to October 13, 1948, a period of .285 years, orders from the defendant for 37 helicopters for an unknown price.

(c) Accordingly, the plaintiff knew that 122 helicopters had been ordered by the defendant in the two periods (1.285 years).

2. The plaintiff’s president knew in January, 1949, that during calendar year 1947, United had sold 22 helicopters to the commercial market for approximately $1,510,000 and during calendar year 1948 had sold 16 helicopters to that market for approximately $1,120,000, an average of 19 helicopters per year.

3. The plaintiff’s president also knew In January, 1949, that:

(a) For the calendar years 1947 and 1948, United had paid the plaintiff a total of $63,500 in royalties under the January 1, 1947, license on 127 helicopters delivered during that period. No royalties were paid for the period December 27-31,1946.

(b) United had stated in a letter dated July 27, 1948, to plaintiff that modifications would have to be made In the January 1, 1947, license If it were to continue.

(c) On January 7, 1949, United and the plaintiff entered Into a paid-up license, effective January 1, 1949, covering commercial and military helicopters for the sum of $120,738.74.

B. Assumptions of Witness

1. Since the known average cost per helicopter of 85 defendant helicopters referred to in A.l.(a) above was $75,212, he assumed that the cost figure would remain constant throughout the accounting period and that the number of helicopters procured by the defendant each year from United would remain constant (122 helicopters per 1.285 years, or approximately 95 helicopters per year). (In calculating an effective royalty rate, the assumption that the cost per helicopter remained constant works to the advantage of the plaintiff where the cost per helicopter actually rose In future years. This Is due to the fact that the higher the projected procurement in C.3 below, the larger the denominator In C.7 and, accordingly, the smaller the royalty rate.) Over the entire accounting period of almost 17.5 years, the defendant actually procured 2,227 helicopters from contractors other than United, an average of 127 per year.

2. Since United sold 22 helicopters to the commercial market in 1947 and 16 in 1948, for an average of 19 per year, he assumed that United would sell 19 helicopters per year to the commercial market during the remainder of the *222accounting period (January 1, 1949-May 27, 1964) and that the unit price would remain the same as the unit price to the defendant, l.e., $75,212.

C. The Calculations of Witness

1. The periods referred to In A.l. (a) and (b) above, during which the defendant ordered 122 (85+37) helicopters from United, total 1.285 years.

2. The accounting period in this case Is 17.5 years and extends from December 27, 1946, to May 27, 1964. This period includes 15.403 years that fall within the January 1,1949, paid-up license with united.

3. Projected Sales by United to Defendant and Commercial Markets — January 1,1949-May 27,1964.

(a) Defendant

(1) (average number per year from A.l. (c)) X (number of years) = (total number of helicopters from January 1, 1949, to May 27, 1964) ; (122+1.285) X 15.403=1,462.

(2) (total number In period) X (assumed price per helicopter) = (dollar sales) ; 1,462X$75,212=$109,960,000 (rounded off to the nearest $10,000).

(b) Commercial

(1) (average number per year from A.2) X (number of years) = (total number of helicopters from January 1, 1949, to May 27, 1964) ; 19X15.403=293.

(2) (total number in period) X (assumed price per helicopter) = (dollar sales) ; 293X$75,212=$22,040,000 (rounded oft to nearest $10,000).

(c) Total, (a)+(b) =$132,000,000

4. Actual Sales by United In the Period December 27, 1946, to December 81, 1948

(a) Defendant

(1946 — December 27-31 only) 0+(1947) $1,884,677+(1948) $5,287,175= $7,171,852.

(b) Commercial

(1946 — December 27-31 only) 0+(1947) $1,510,000+(1948) $1,120,000= $2,630,000.

5. Total United Sales (actual and projected) — December 27,1946, to May 27, 1964

Prom 3(c)_$132,000,000

From 4(a)_ 7,171,852

From 4(b)_ 2,630,000

$141, 801, 852

6.Total Royalties Paid by United to Plaintiff

1946 (December 27-31, 1946)_ 0. 00

1947 and 1948_ $63, 500. 00

January 1, 1949, to May 27, 1964_ 120, 738. 74

$184, 238. 74

7.Royalty Rate

(Total Royalties) (Total Sales) Xl00% = (Effective Royalty Rate)

184,238.74 141,801,852 .1299%

This figure is obtained by multiplying $639,243,969 by .1299%, -which is $830,377.92. I recommend an even number of $830,500. The $639,243,969 was the trial judge’s total for the 2,227 aircraft involved in this accounting.