ADKINS v. LEAR INCORPORATED

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District Court of Appeal, Second District, Division 2, California.

John S. ADKINS, Plaintiff, Appellant and Cross–Respondent, v. LEAR, INCORPORATED, Defendant, Respondent and Cross–Appellant.

Civ. 28624, Civ. 29770, Civ. 33052, Civ. 33089.

Decided: August 08, 1966

Rosenfeld, Meyer & Susman and Peter R. Cohen, Beverly Hills, for appellant. Christie, Parker & Hale, C. Russell Hale, Edwin L. Hartz and Kenneth C. Newell, Pasadena, for respondent.

This is an action for damages for breach of an agreement dated September 15, 1955, hereafter referred to as the license agreement, and for unjust enrichment (first cause of action) and, in the alternative for breach of an implied contract, misappropriation and unjust enrichment (second cause of action).

Plaintiff Adkins, under the license agreement, granted an exclusive license to defendant Lear, Incorporated, herein referred to as Lear, to manufacture and sell “products and parts and components thereof (including gyros, gyro systems, gyro apparatus and gyro mechanisms) covered by or containing one or more of all the inventions and any patents issued or hereafter issued thereon,” under the claims of Adkins' then pending application for a patent, upon payment of agreed royalties.   It was understood by the parties that the word “claims” as used in the license agreement shall man the claims of the then pending application for a patent “which have been or will be patentable by Adkins.”   The agreed royalties were to be paid only “[w]hile one or more of the licenses granted under this Agreement is in effect.”1

The case was tried to a jury on the first cause of action on Adkins' claim for damages with respect to five models of gyroscopes manufactured by Lear.   As to one model, No. 2156, the court directed a verdict for Adkins.   On the other four models, Nos. 2151, 2152, 2153 and 2171, here collectively referred to as the “steel” gyros, the jury returned a verdict in favor of Adkins.   Judgment on the verdict on the first cause of action was entered on May 4, 1964.   On July 2, 1964, the court (1) denied Lear's motion for judgment n.o.v. on model 2156;  (2) granted the motion as to the other four models;  and (3) granted Lear's motion for a new trial in the alternative as to all models.   Judgment n.o.v. was entered accordingly on July 15, 1964.

Civ. No. 28624 includes (1) Adkins' appeal from the judgment n.o.v. for Lear on the “steel” gyros and from the order granting Lear's motion for a new trial;  (2) Lear's appeal from the judgment on the directed verdict as to model 2156 and from the denial of its motion for judgment n.o.v. on that model;  and (3) Lear's appeal from the whole of the judgment entered May 4, 1964.

The judgment was amended December 30, 1964, dismissing Adkins' second cause of action pursuant to the mandate of this court in Civ. No. 28603.

Civ. No. 30089 includes Lear's renewed appeal as to items (2) and (3) in Civ. No. 28624 (renoticed as a matter of precaution), and its appeal from the amendment of December 30, except as to the dismissal of the second cause of action.

Civ. No. 30052 is Adkins' appeal from the dismissal of his second cause of action by the judgment as amended December 30, 1964.

Civ. No. 29770 is Adkins' appeal from an order apportioning the cost of an independent audit during discovery proceedings.

Factual Background

Adkins is a mechanical engineer.   Lear is a manufacturer of aircraft flight instruments, including gyroscopes, gyro systems, gyro apparatus and gyro mechanisms, with a research and development facility in Santa Monica, California, and a development and production facility in Grand Rapids, Michigan.

Adkins joined Lear in Santa Monica as an inventor in January 1952, following the execution of an agreement in December 1951 in which Adkins agreed in substance to disclose and license to Lear all ideas, discoveries and inventions relating to gyroscopes, hereafter referred to as gyros, in return for a “mutually satisfactory royalty.”   Upon his employment Adkins went to work in Santa Monica developing gyros with higher precision than those then being manufactured by Lear which could be produced at a lower cost.

We are concerned here with the manufacture of gyroscopes as used in aircraft to tell the pilot the direction and attitude of the aircraft.   Simply stated, the gyro maintains its fixed position in space and the movements of the aircraft around it are measured electronically and recorded on gauges.   In all gyros in issue here there is a part called a rotor, driven electrically at high speed.   The rotor is mounted in a “gimbal ring”, sometimes called the innner gimbal ring or inner axis, which in turn is mounted on the outer gimbal ring or axis, the whole structure being mounted in a frame fixed to the aircraft.   Each gimbal ring, when fully assembled, has two short axle ends 180° apart, called trunions, which lie on a common axis.   Each trunion is inserted into a bearing element which is fixed in the gimbal assembled around it.   Each bearing element consists of an inner and an outer race or ring and a plurality of balls between the two races.   The most important factor in achieving gyro accuracy is accurate alignment of the pair of ball bearing elements on the opposite ends of the gimbals with each other.   The faces of the bearing elements must be parallel with each other and the center must be coaxial with each other in order to avoid friction and consequent drift of the gyro rotor from its stable position in space.   Gyros which indicate the direction of the aircraft are known as directional gyros, while those which indicate its pitch and roll are known as vertical gyros.

In the summer of 1952, after experimenting with and rejecting the use of self-aligning ball bearing elements or cups, Adkins conceived his invention of a means of holding a pair of bearing elements in pre-aligned coaxial and parallel relationship to each other and cementing them in place in oversize holes in the gimbal, and immediately communicated his invention to Lear.   By September 1952 Adkins had completed two experimental models for vertical gyros with cemented in bearing elements.   At this time Lear was engaged in producing vertical gyros for the Air Force in a competition with other manufacturers.   It was accordingly decided that Adkins would work on directional gyros and Lear, at Grand Rapids, would begin experimental work on improving its vertical gyros.   Both, of course, were working on the production at low cost gyros having a high precision which would be more difficult for Lear's competition to obtain.   Thereafter Adkins adapted his invention to the Navy requirements for a directional gyro system known as the MA–1 Compass System.   The gyro in this system was designated as model 2156.

In its experiments at Grand Rapids, Lear first used a flanged cylindrical bearing element fitting into a cylindrical hole in the gimbal and a flat metal washer with two knife-like projections placed over the cylindrical portions of the bearing cup, referred to at the trial as a “tippy washer,” which permitted the bearing element when inserted in the receiving hole to rock on the washer in two different places.   This was referred to at the trial as a self-aligning “knife edge” type of construction.   In the fall of 1953, Lear abandoned this type of construction in its models 2151 and 2152 and decided to adopt the construction used by Adkins in model 2156.   The first such use of this method was in October 1953.   The evidence shows that some time later the same method of construction was used by Lear in the construction of models 2151 and 2171.   The only difference between model 2156 as developed by Adkins and the other models as developed by Lear in Michigan was in the shapes of the bearing elements and receiving holes and in the size of the flange used in the bearing elements in model 2171.

As originally filed in February 1954, Adkins' application for a patent, described as Exhibit “B” in the agreement, and so far as material here, included the following claims:  “7. A method of aligning bearings supporting a relatively movable element * * *;  8. A method of aligning bearings in coaxial relationship and parallel planes for supporting a rotatable element in mounting, * * *;  9. An alignable bearing structure for supporting an element movable with respect to another element, * * *.”  Examination of the file wrapper shows that these claims were rejected by the Patent Office September 18, 1954, “as being substantially fully met by the patent to Carlson.”   On March 7, 1955, Adkins cancelled claims 7 and 8, amended claim 9 in one particular, and submitted new claims 18 and 19 with reference to the “method of bearing alignment.”   This was the status of the application when the license agreement was executed.

It should be said here that, as a part of the consideration for the licenses granted to it, Lear reimbursed Adkins for patent costs already incurred by him and agreed to pay all costs for preparation and prosecution of all applications for patents on inventions set forth and disclosed in Exhibit “B”, provided Adkins secured Lear's prior written approval therefor.   Adkins agreed to prosecute his applications and to “submit all such applications to Lear for approval prior to the filing thereof.”   It was further agreed that “Adkins shall immediately upon receipt by him, furnish to Lear a copy of each action taken by the U.S. Patent Office with respect to such applications and to consult with Lear before taking any action with respect thereto, and also to notify Lear when a patent or patents have issued.”

On March 21, 1957, the Patent Office notified Adkins that “Claims 9, 18, and 19 are rejected as being obviously fully met by the patent to Grenat.”   Thus it appears that all Adkins' claims had been rejected by the Patent Office when Lear wrote Adkins on September 10, 1957, that his application, Exhibit “B”, “does not disclose any inventions utilized in any Lear equipment except the MA–1 system and certain components thereof [model 2156].   Specifically, we do not believe that any models of the so-called ‘Steel Gyro’ come within the scope of Exhibit ‘B’.   We have made a search of the U.S. Patent Office files and believe that the method of bearing alignment heretofore and currently used in assembling the Lear ‘Steel’ gyroscopes is not patentable.”

In response to the Patent Office action of March 21, 1957, Adkins again amended his application of September 27, 1957, further amending claims 9, 18 and 19, and adding new claims 20 and 21, each on an “alignable bearing construction.”   A supplemental amendment, dated December 31, 1957, adding new claims 22 through 26, each on “an alignable bearing construction”, was filed with the Patent Office January 13, 1958, shortly after Adkins terminated his employment with Lear.   On January 20, 1958, the Patent Office rejected amended claims 9, 18 and 19 “as being fully met by Grenat,” and rejected the new claims 20 through 26 “as being fully met by the patent to Sperry.”

On December 22, 1958, Adkins filed a further amendment to claim 9 and submitted new claims 27 and 28 in place of claims 18 and 19, and added certain new material to the specifications.   On March 4, 1959, Adkins cancelled his claims 9, 27 and 28 and substituted new claims 29 through 41, claims 29 through 36 being on “an apparatus for supporting bearings in aligned relationship.”   The application as thus amended was pending when Lear wrote Adkins on April 8, 1959, that it was “exercising its rights and options to terminate the agreement and the licenses therein granted.”   On July 21, 1959, the new claims 29 through 36 were allowed and renumbered by the Patent Office as claims 9 through 16, and a patent on those claims was issued January 5, 1960.

Adkins' complaint was filed in January 1960 shortly after the issuance of the patent.   After extensive discovery and pretrial proceedings the case went to trial in 1964 on the first cause of action only.

Appeals Relating to the Judgment N.O.V.

Adkins sought to recover damages for breach of the license agreement and for unjust enrichment after the purported termination of the agreement by Lear in April 1959, based primarily on claims 9, 13, 14 and 16 of his patent.

During the trial the court denied Lear's motion for a directed verdict, which was made on some twelve grounds, each of which was to the effect that all of Adkins' alleged causes of action “are void and unenforceable” for the reasons stated in the notice of motion.   At the conclusion of a lengthy trial, the court on its own motion directed a verdict in favor of Adkins on the 2156 gyro as a part of MA–1 compass system, and it was stipulated that on that model Adkins was entitled to recover, $16,351.93 for the period from January 1, 1955 to May 31, 1963.   The case then went to the jury on instructions to determine whether the patent was invalid in respect to the four “steel” gyros, whether the patent “covers and is infringed” by one or more of those gyros, and whether the license agreement had been breached by Lear and the damages suffered by Adkins.   The jury returned a verdict for Adkins and judgment was entered on May 4, 1964, for $904,474.49, which was the full amount of his claim with interest.

Lear moved for a judgment n.o.v. “upon the grounds stated in defendant's motion for a directed verdict and that there is no sufficient evidence substantially to support a verdict in favor of plaintiff.”   The court denied the motion as to model 2156, with this comment:  “The court directed a verdict for plaintiff for $16,351.93 as royalty under the license agreement for the use of plaintiff's bearing structure as described in patent No. 2–919–586.   Defendant's liability for this amount rested upon its status as a licensee.   Under the established rule it was estopped to deny the validity of its licensor's patent.”   The court granted the motion as to the “steel” gyros, holding as to these models that “the rule of estoppel does not apply,” that the patent is invalid, and that “since, as a matter of law, neither of defendant's devices could be the subject of a valid patent to anyone, it follows that plaintiff cannot claim them as equivalents under or as infringing his patent (even if valid).”   Judgment was entered accordingly on July 15, 1964, and both Adkins and Lear appealed.

 The overall question to be decided on the appeals from the judgment n. o. v. is whether the evidence was sufficient to support the verdict in favor of Adkins.   A motion for a judgment n.o.v. may be granted by the trial court “only where, disregarding conflicting evidence on behalf of the defendants and giving to plaintiff's evidence all the value to which it is legally entitled, therein indulging in every legitimate inference which may be drawn from that evidence, the result is a determination that there is no evidence of sufficient substantiality to support a verdict in favor of the plaintiff.”  (Reynolds v. Willson (1958), 51 Cal.2d 94, 99, 331 P.2d 48, 51.)   On a motion for a judgment notwithstanding the verdict in favor of defendants the trial court “is not permitted to weigh the evidence, and on an appeal from the judgment entered on the granting of such a motion, the appellate court must read the record in the light most advantageous to the plaintiff, resolve all conflicts in his favor, and give him the benefit of all reasonable inferences in support of the judgment.”  (Quintal v. Laurel Grove Hospital, 62 Cal.2d 154, 159, 41 Cal.Rptr. 577, 580, 397 P.2d 161, 164.)

The Scope of the Bargain

 The verdict of the jury was necessarily based on the implied finding that the license as granted to Lear extended to the patent issued to Adkins in January 1960, and that the gyros manufactured by Lear were covered by that patent.   A proper construction of the license agreement leads us to the conclusion that there is no substantial evidence to sustain this implied finding.

The parties are agreed that Adkins' right to recover under his first cause of action is based upon the license agreement.   Adkins contends that under that agreement he is entitled to the payment of royalties for the use of his invention as defined in the claims of his application for a patent and in the claims of the patent itself.   Lear contends that it did not get what it bargained for under the license agreement, in that the invention as there defined was not patentable, and that after the termination of the license agreement in April 1959 it was a stranger to the patent as issued several months later.   It was stipulated at the trial that Lear continued to make all five gyros after it had terminated payment on all except model 2156 in September 1957 and after it terminated the license agreement in April 1958.   There is no suggestion that the license agreement is ambiguous.

 The construction of the license agreement is governed by state law.   As the court said in Farmland Irrigation Co. v. Dopplmaier, 48 Cal.2d 208, 308 P.2d 732, 66 A.L.R. 590:  “It has been established by a long line of cases moreover, that an action to set aside, specifically enforce, or recover royalties on a patent license contract is not an action arising under the patent laws of the United States for the purpose of determining the exclusive jurisdiction of the federal courts.  [Citations.]  State courts have jurisdiction over such actions, and in the absence of diversity of citizenship it is exclusive of the federal courts.”  (P. 217, 308 P.2d p. 737.)  “The plaintiff's cause of action arose under and was governed by the general common law of contracts.  * * *  [T]he law governing the elements of the plaintiff's cause of action is state law—state law acting of its own force and not merely by incorporation into federal law.”  (P. 218, 308 P.2d p. 738.)  (To the same effect see Lear Siegler, Inc. v. Adkins, 9 Cir., 300 F.2d 595, affirming an order staying proceedings in the U.S. District Court relating to the agreement and patent involved here.)

In our opinion the proper construction of the license agreement supports Lear's contentions.   The license agreement before us was negotiated after Adkins had disclosed his invention to Lear as required by the agreement of December 29, 1951, and by its express terms cancelled and superseded that agreement.   In the license agreement Adkins represented and warranted that “to the best of his knowledge and belief he is the owner of the inventions covering the substantial claims as disclosed or intended to be disclosed in the Application for U.S. Patent on gyroscopes attached hereto and hereafter referred to as Exhibit ‘B’ and incorporated herein as a part hereof, which application was filed February 15, 1954, and is presently pending in the United States Patent Office and that there are no licenses or agreements outstanding which prevent him from granting unto Lear an exclusive license respecting said inventions and products embodying said inventions, in accordance with the provisions hereof, * * *.”  “[I]n consideration of the foregoing and $500.00 in hand paid, * * * and of the covenants and conditions hereinafter contained,” Adkins granted to Lear “(2) an exclusive license under all the claims of Exhibit ‘B’ * * *;  it is understood, however, that whenever the word ‘claims' is used in this paragraph it shall mean the claims in the respective Exhibits which have been patented or will be patentable by Adkins.”   Exhibit “B” is “deemed to refer to and include” Adkins' application for a patent filed February 15, 1954, “and all patents issuing thereon to Adkins with respect to the inventions disclosed or intended to be disclosed therein.”   An invention as used in the agreement is defined in 1(d) as:  “The term ‘said inventions' as used in this Agreement shall include * * * (2) all claims and inventions disclosed or intended to be disclosed in said Exhibit ‘B’ * * * but only to the extent that such claims or inventions mentioned in said Exhibits are patented or patentable by Adkins.”

Paragraph 3(a) of the agreement relating to royalties provides that while the license is in effect, “Lear agrees to pay Adkins with respect to products incorporating said inventions [see definitions above] * * * royalties of 1 1/414% based on net sales prices * * * received by Lear for said products, it being understood that said rate shall be paid only on products incorporating one or more or all of said inventions.”  (Emphasis added.)   Under paragraph 3(g) “[u]nless this Agreement is sooner terminated as herein provided,” Adkins was entitled to receive certain minimum royalties on account of “products manufactured and sold by Lear,” provided the license as to Exhibit “B” “in force and effect, * * * (b) embodying the inventions disclosed or intended to be disclosed in Exhibit ‘B’,” as a credit in reduction of the royalty payments due Adkins under paragraph 3 for each year.

We think it is evident from the provisions of the license agreement that what Lear was interested in and willing to pay for was the right to use Adkins' invention, that is, the right to use what was new and constituted progress over apparatus already known to the trade which were patentable by Adkins.   It seems highly improbable that Lear would agree to pay royalties indefinitely on parts long known, and which until the time of the license it could have manufactured and sold royalty free.   The provisions defining sums received from license sales provide in effect that a royalty would be due on sums received on sales of products incorporating Adkins' inventions to the extent only that the claims of his then pending application were patentable.   The agreement to continue the payment of royalties is tied directly to the test of patentability of the claims of his then pending application.  (Cf. Farmland Irrigation Co. v. Dopplmaier, 48 Cal.2d 208, 224–225, 308 P.2d 732, 66 A.L.R.2d 590;  and of Eastman Oil Etc. Corp. v. Lane–Wells Co., 21 Cal.2d 872, 136 P.2d 564, holding that “[t]he term royalty ordinarily envisages a duty to make and a corresponding right to receive payments proportionate to the use of patented methods on machines.”)

 The question here is whether Adkins' inventions as described in the claims of his application were patentable.   By repeatedly expressing this requirement in the license agreement, the parties intended that unless the invention was patentable under the laws of the United States, Lear would be under no continuing legal obligation to Adkins.   Thus we are required to focus our attention “on the patentability of inventions under the standard of Art. I, § 8, ch. 8, of the Constitution and under the conditions prescribed by the laws of the United States,” (Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545,) rather than on the “validity” of the patent per se.

It is beside the point that when the license agreement was executed, the parties agreed that “the MA–1 compass Lear Model No. 5005 [incorporating gyro model 2156], the Directional Steel Gyro Lear Model No. 2152, and the Vertical Steel Gyro Lear Model No. 2153, are the only products manufactured by Lear under the licenses herein granted, which contain any of the inventions or claims described and covered by the respective Exhibits of this Agreement,” and it is equally beside the point that the invention was later incorporated in Lear's models Nos. 2151 and 2157.   At the most, Adkins had but one “invention” which he first disclosed to Lear in July 1952, and on which he later applied for a patent.   Adkins' right under the license agreement to the continued payment of royalties was expressly conditioned upon the patentability of that invention and the claims of his application for a patent.   If that invention as so claimed was not patentable, either as incorporated in model 2156 as developed by Adkins in Santa Monica or in the “steel” gyros in which it was used by Lear in Grand Rapids, Lear's continuing obligation to pay royalties thereon would come to an end.

 The provisions of the license agreement just referred to must be read “in the light of the subject matter of the contract and the apparent intention of the parties.”  (Eastman Oil Etc. Corp. v. Lane–Wells Co., 21 Cal.2d 872, 873, 136 P.2d 564, 565.)   Since the patentability of the invention could only be determined in the first instance by the Patent Office and ultimately by the courts (Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545), neither the license agreement that certain products manufactured by Lear in September 1955 incorporated Adkins' inventions or claims described and covered by Exhibit “B”, nor Lear's letter of September 1957 can be considered as an admission by Lear that Adkins' invention was patentable.

 As we have seen, the license agreement here was entered into consideration of the patentability of Adkins' “invention” and the claims described in Exhibit “B”.   In September 1957 Lear concluded that Adkins' patent application did not disclose any inventions utilized by any Lear equipment, and that the method of bearing alignment used by Lear in assembling the “steel” gyros is not patentable.   This conclusion was obviously based on the Patent Office action of March 1957 rejecting Adkins' claims as they stood at the time the license agreement was executed, and fairly anticipated the Patent Office action of January 20, 1958, rejecting the claims as amended by Adkins in March 1957 and on January 13, 1958.   The action of the Patent Office in March 1957 and in January 1958 rejecting all claims then pending constituted “final adverse action by the Patent Office.”   Adkins recognized the finality of this action in March 1959 when he cancelled all his previous claims and submitted the new claims on which the patent was finally issued.   The issuance of the patent in January 1960 did not revive the claims which had been rejected.  “It is well established that the claims of a patent must be read and interpreted in the light of claims which had been rejected.  * * *   Claims which have been allowed cannot by construction, be read to cover what has thus be eliminated from the patent.  Schriber–Schroth Co. v. Cleveland Trust Co., supra, [311 U.S. 211, 61 S.Ct. 235, 85 L.Ed. 132], (rehearing denied 312 U.S. 654, 61 S.Ct. 235, 85 L.Ed. 132).”  (Oregon Saw Chain Corp. v. McCulloch Motors Corp., 9 Cir., 323 F.2d 758, 768.)   Furthermore, as the court said in Oregon Saw Chain, the patentee “cannot regain ‘by recourse to the doctrine of equivalents' that which he, by strict construction of the claim, has disclaimed.   The doctrine of equivalents ‘at most operates, by liberal construction, to secure to the inventor the full benefits, not disclaimed, of the claims allowed’.  Exhibit Supply Co. v. Ace [Patents] Corp., 1942, 315 U.S. 126 at 136–137, 62 S.Ct. 513, at 518, 86 L.Ed. 736.   (Emphasis added.)”

 Here, in contrast with Del Riccio v. Photochart, 124 Cal.App.2d 301, 309–312, 268 P.2d 814, the patentability of Adkins' invention was the major, material consideration for the license agreement.   When the Patent Office determined that that invention was not patentable “the heart of the contract at bar” failed, and upon giving notice to Adkins of its termination in April 1959, Lear was relieved of its obligations to Adkins under the license agreement after such Patent Office action.

Estoppel to Attack

Validity of Patent

Adkins urgently contends that in this action Lear is estopped to attack the validity of his patent.   He relies on the rule as stated in Automatic Radio Mfg. Co. v. Hazeltine Research, 339 U.S. 827, 70 S.Ct. 894, 94 L.Ed. 1312, that “the licensee under a patent license agreement may not challenge the validity of the licensed patent in a suit for royalties due under the contract.”   He also relies on Bowers Mfg. Co. v. All–Steel Equipment, Inc., 9 Cir., 275 F.2d 809, and Del Riccio v. Photochart, 124 Cal.App.2d 301, 312, 268 P.2d 814, in which this rule was followed.   This has always been the rule in California.  (Martin v. Pinney, 163 Cal. 652, 654, 126 P. 481.)

We have concluded that there is no basis on which Adkins can invoke the doctrine of estoppel for the reason that the validity of the patent issued to Adkins in January 1960 is not in issue here.

 Adkins' contention is necessarily based on the assumption that a patent was issued on the claims of the application described in the license agreement, and that the five gyros involved here were covered by his patent, and on his contention that the license agreement was not validly terminated by Lear.   Adkins' assumption that the patent was issued on the claims of his application described in the license agreement is not warranted by the record.   As we have seen, the claims of the application as they stood in September 1955 and as amended in March 1957 were all rejected by the Patent Office, and that the patent issued to Adkins in January 1960 was based entirely on the new claims filed by him in July 1959.   So far as the rejected claims are concerned, the case thus comes within the rule that when an invention is not patentable, the patent laws preclude an invention from involving the doctrine of estoppel as a means of continuing, as against his license, the benefit of a non-existent monopoly, just as they preclude the licensee from estopping himself “from enjoying rights which it is the policy of the patent laws to free from all restrictions.”  (Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249, 257, 66 S.Ct. 101, 105, 90 L.Ed. 47, 52.)   None of the cases relied on by Adkins is in point here for the reason that each of them involved a licensed patent.

Lear concedes that it would be estopped to contest the validity of any patent issued to Adkins on the claims of his application described in the license agreement so long as it continued to operate under that agreement.   It contends, however, not only that no such patent was issued, but further that this estoppel no longer existed after it terminated the agreement in April 1959.   It relies on the rule stated in Stimpson Computing Scale Co. v. W.F. Stimpson Co., 7 Cir., 104 F. 893;  The Armstrong Co. v. Shell Oil of California, 98 Cal.App. 769, 779, 277 P. 887, and several other cases that after the termination of a license the parties are freed from the estoppel resting upon them, and that thereafter the licensee, in an action for royalties under the license agreement, may attack the validity of a patent issued to the former licensor to the same extent as a stranger might.

 The exception relied on by Lear is clearly applicable here.   As the court said in Armstrong (p. 779, 277 P. p. 891):  “A licensee is estopped to show the invalidity of licensed patents as a defense to an action for royalties only so long as the relation of licensor and licensee continues and the licensee uses and enjoys the benefit and protection of the patents covered by the agreement.  * * *   A licensee, if the patents are in fact invalid, may, without waiting to be evicted, renounce and abandon the license, and after giving notice thereof to the licensor, may defend against an action to enforce the license or to recover royalties subsequently accruing, with the same freedom as may a stranger to the patent, and the licensor is remitted to his infringement suit.”

On April 8, 1959, Lear gave written notice to Adkins that it thereby “exercises its rights and options to terminate the agreement and the licenses thereunder,” referring particularly to paragraphs 2(a) and 6 of the agreement.   Lear thus placed itself in the position of a stranger both to the then pending patent application as well and to the patent which was issued some nine months later on the new claims which were not made by Adkins until July 1959.

Adkins' contention that the license agreement was not effectively terminated by Lear's letter of April 8, 1959, is equally without merit.   Under paragraph 2 of the agreement, Lear had “the right on ninety days' prior written notice to Adkins, to terminate any one or more of the [three] licenses herein granted,” including the license under Exhibit “B”.   It is provided in paragraph 6, that “in the event the Patent Office refuses to issue a patent on the substantial claims of the application attached as Exhibit ‘B’, * * * then * * * Lear at its option shall have the right forthwith to terminate the specific license so affected or to terminate this entire Agreement and no further royalties shall thereupon be payable under the license so terminated or under this Agreement if Lear shall have elected to terminate this Agreement in its entirety.”

 It is apparent from the facts shown in the Patent Office file wrapper delineated above that as of April 8, 1959, the Patent Office had refused to issue a patent on any of the substantial claims of Adkins' application then pending and had, in fact, refused to issue a patent on any of those claims.   Lear was thus well within its rights on that date in terminating both the license and the agreement in its entirety.   The case is thus distinguishable from Bowers Mfg. Co. v. All–Steel Equipment, Inc., 9 Cir., 275 F.2d 809, which involved a licensed patent.   There the licensee was held to its agreement because neither of the events set forth in the agreement permitting cancellation had occurred.   When Lear terminated the license and the license agreement by its letter of April 8, 1959, the license with respect to Exhibit “B” was non-exclusive by virtue of the provisions of paragraph 11 of the license agreement, Adkins having terminated his employment by Lear in January 1958.

 The controlling issue here is whether Adkins obtained a patent on the relevant claims of his application which was the subject matter of the license agreement.   The record shows that the Patent Office expressly refused to issue a patent on any of those claims even after they had been amended.   The patent issued to Adkins in January 1960 based on his new claims filed after the termination o f the license agreement was not a part of the subject matter of the license granted by that agreement.   Consequently the validity of that patent is not in issue in this action to recover royalties payable as provided in the license agreement.   It is thus unnecessary to consider whether the five gyros involved here are covered by the claims of that patent.   On that issue Adkins is relegated to an action for infringement.

Unjust Enrichment

Adkins further contends that even though the license and the agreement were terminated by Lear's letter of April 8, 1959, Lear was still liable to him on the theory of an implied contract if it continued to manufacture the four “steel” gyros.   This contention is based on Seagren v. Smith, 63 Cal.App.3d 733, 147 P.2d 682.   There the licensee held a license to manufacture certain pumps invented by the licensor on which he had already received a patent, and no question of infringement or of the patentability of the invention was involved.   After the licensee cancelled the agreement the licensor continued to manufacture the same pumps it was theretofore manufacturing under the agreement.   The court held that s to the pumps manufactured after the cancellation of the agreement, the licensee was liable to the licensor “upon the theory of implied contract based upon the well-recognized and settled principle that a person shall not be permitted to enrich himself unjustly at the expense of another.   17 C.J.S. Contracts, § 6, pp. 332–323.   Clearly, the trial court had jurisdiction of that portion of appellant's cause of action which arose after the cancellation of the agreement, upon the theory of implied contract.”

 In our opinion, Seagren v. Smith is readily distinguishable from the case before us.   Here, as we have seen, the license agreement was terminated because the Patent Office had refused to issue patent on any of the substantial claims of the application.   This being so, Lear could not thereafter be held liable to Adkins on the theory of unjust enrichment because it continued to use Adkins' unpatentable invention.  (Cf. The Armstrong Company v. Shell Company of California, 98 Cal.App. 769, 277 P. 887.)   We agree with Lear that when an article is unpatentable and therefore in the public domain, it may be made and sold by whomever chooses to do so, and that as a general rule the inventor cannot recover damages under state law because this would interfere with federal policy as found in the Constitution, Art. 1, sec. 8, cl. 8, and the implementing federal statutes.  (Sears Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661;  Compco Corp. v. Day–Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669;  Cable Vision, Inc. v. KUTV, Inc., 9 Cir., 335 F.2d 348,351.)   While Adkins may be entitled to protection of the invention for which he obtained his patent in an action for infringement, he is not entitled in this action to collect royalties for the use of the invention referred to in the license agreement after a patent on that invention under the claims of his application had been denied by the Patent Office.  Marvin v. Mills Alloys, Inc., 31 Cal.App.2d 549, 88 P.2d 230;  see also The Armstrong Company v. Shell Company of California, 98 Cal.App. 769, 779, 277 P. 887.)

It appears to us that the case here is to be determined by the rule stated in Eclipse Bicycle Co. v. Farrow, 199 U.S. 581, 26 S.ct. 150, 50 L.Ed. 317, and Saco–Lowell Shops v. Reynolds, 4 Cir., 141 F.2d 587.

The facts in Eclipse Bicycle Co. v. Farrow are strikingly similar to those before us.   In that case a bill had been brought upon an agreement to recover royalties.   The agreement, so far as pertinent here, recited that Farrow had invented certain improvements pertaining to the mechanism for coasting and braking bicycles, for which he had applied for patents, and that Eclipse Bicycle Co. desired to acquire Farrow's rights “to said inventions as described in the above identified applications, and any letters patent that may be issued thereon,” and that Farrow thereby conveyed to the company all his right, title and interest in “the inventions in bicycles, as fully described and claimed in the applications above referred to,” and in letters patent that may be issued thereon.   The company agreed to pay royalties “on all the devices made or sold embodying the inventions referred to” and to that end to make returns of the number of devices sold.   Finally it was covenanted that in case Farrow “for any reason fails to procure letters patent of the United States for the improvements above referred to, the [company] shall be relieved from the payment of all royalties from and after the date of final adverse action of the Patent Office on the application or applications for patents for said improvements.”   The bill alleged that soon after the agreement was made, one Morrow, defendant's general manager, applied for a patent on a device in effect the same as Farrow's that Morrow assigned a half interest therein to the company's president, and that the company began to manufacture and sell the Morrow device.   A supplemental bill alleged that upon the sale of Farrow's interest, the company, which had power to do so, failed to prosecute Farrow's applications.   As a consequence one of Farrow's applications was abandoned and the other was permitted by the company to lapse.   The answer as summarized by the Court admitted the contract, but denied the plaintiff's case, charged him with fraud, and set up that Farrow's invention had been anticipated by another patent, “and that it was impossible to obtain a patent for it, and that, therefore, the defendant was not bound by the contract further.”

The Supreme Court held that Farrow could recover on his contract.   The real questions in the case, said the Court (199 U.S. at 586–587, 26 S.Ct. at 152), are whether the devices involved “fall within the scope of the contract, and these questions depend more upon a careful construction of that instrument than upon nice discriminations between the patents that were or might have been issued.   If either of the contrivances used embodies the invention described in Farrow's applications, then the defendant is bound to account for it by the express terms of its covenant, unless the contract is at an end.”

After noting that some of Farrow's claims had been allowed “and there was no such final adverse action of the Patent Office upon either application as a whole as to exonerate the defendant by the terms of the agreement which we have recited,” the Court continued (199 U.S. at pp. 587–588, 26 S.Ct. at 152):  “We come back to the construction of the contract.   The royalty is to be paid on the ‘invention above referred to.’   The use of the word ‘invention’ does not open the state of the prior art and allow the defendant to meet the plaintiff's claim by proving that he had invented nothing new.   The royalty is to be paid on the invention described in the specified applications—that is to say, on the contrivances there described—unless and until there is final adverse action by the Patent Office.   That is the measure of the defendant's self-protection.   It could not have asked or been allowed more.  * * *   It had all Farrow's interests in its hands, and it took the risk of their worth, except as against what the Patent Office might do.   It should be repeated that, so far as the company made any device embodying Farrow's invention, by the fair construction of its express covenant it was bound to account, whether the manufacture was ostensibly Farrow's or not, and he was not left merely to an action for such damages as he could prove.”

Saco–Lowell Shops v. Reynolds, 141 F.2d 587, was also an appeal from a decree in a suit to recover royalties under a contract.   The contract there licensed the manufacture of “an improved process of cotton roving frame,” on which Reynolds as inventor had obtained patents.   One question before the court was “whether certain model J roving frames manufactured by defendant are subject to royalties under the licensing contract”.

After holding that these frames were properly held by the trial court “to be covered by the patent and hence subject to the payment of royalties under the contract,” the court said (141 F.2d at 196):  “The liability of the defendant for royalties, however, is to be determined by the terms of the contract, not by technical considerations of patent law.   If the J frames which defendant is manufacturing substantially embody the Reynolds invention, defendant is liable for royalties irrespective of the validity of the claims, so long as they have not been held to be invalid, and irrespective of whether or not certain features of the invention may be found in the prior art.   Controlling in this aspect of the case is the decision in Eclipse Bicycle Co. v. Farrow, 199 U.S. 581, 586–588, 26 S.Ct. 150, 152, 50 L.Ed. 317”.

The further comments of the court in Saco–Lowell Shops with reference to the confidential relationship between the parties are also pertinent here.   “The liability of defendant here is not to be determined as upon a charge of patent infringement nor even as in the case of an ordinary licensee under contract for the payment of royalties, for the reason that the J frames upon which royalties are claimed embody not only the fundamental ideas embodied in the Reynolds invention but also a specific application of those ideas evolved by Reynolds himself and communicated to defendant because of the confidential relationship into which the parties had entered for the development of the invention.   In other words, defendant is not an independent manufacturer, nor is it a mere licensee manufacturing a machine obtained from an independent source.   It is a licensee who was working with Reynolds in the joint enterprise of developing his machine for the market, and who brought out a machine based upon his ideas which he conceived and which he communicated in aid of the joint enterprise.   There can be no question but that defendant is liable for royalties on the machines embodying Reynolds' idea so communicated, quite irrespective of patent coverage or the terms of the license contract.   That there was a confidential relationship existing between defendant and Reynolds when they agreed to work together for the development and marketing of his invention is so clear as not to admit of argument.   Cf. Baker Oil Tools v. Burch, 10 Cir., 71 F.2d 31, 37.”

As to the measure of damages to be awarded in such cases the court said in Saco–Lowell Shops, 141 F.2d at 598, that the measure of recovery is the royalty provided in the license agreement.

The law of this state as to the liability of the licensee in such a case is to the same effect.   In Davis v. Kittle Mfg. Co., 134 Cal.App. 254, at p. 262, 25 P.2d 253, at p. 257 the court said:  “Appellant next contends that ‘plaintiff cannot collect royalties on future inventions until he secures a patent on his future inventions.’   The rule appears to be otherwise.  ‘The license may be given before issuance of patent.  * * *’   48 C.J., p. 264.   ‘The inventor of an unpatented device may make a valid contract for its manufacture, use, or sale.   It is no objection to the validity of such a contract that any person may manufacture it until a patent is issued.  * * *   If, therefore, the defendant contracted to pay a royalty before patent was issued, the plaintiff is entitled to recover.’  Hamilton v. Park & McKay Co., 112 Mich. 138, 70 N.W. 436, 437, citing numerous authorities.   This contention is without merit.”

 To sum the matter up, it appears to us that when the Patent Office refused to issue a patent “on the substantial claims of the application” there was an end to Lear's obligation under the license agreement, and that Lear was then well within its rights in terminating both the license and the agreement in its entirely in April 1959.   The patent which was finally issued to Adkins in January 1960 was not a patent on the claims of Adkins' application as it stood when the license agreement was executed, or on the claims made by Adkins in September 1957, or on those made in December 1958 which were cancelled by Adkins in March 1959.   Consequently the patent was not within the scope of the license and the question of its validity was not before the trial court.   As the case stands, however, the termination of the license and the the agreement did not relieve Lear of its entire obligation to Adkins.

 Under the law as we find it, Lear is still liable to Adkins for royalties due under the license agreement from January 1, 1955, until it came to an end on April 8, 1959.   This is in accord with paragraph 3(c) of the license agreement providing that Lear would account to Adkins quarterly on “the net sales prices received on all sales by it of products subject to royalty under the licenses herein granted which are then in effect during each quarter-annual period beginning January 1, 1955.”

In view of our conclusions as to the law which must control our decision, it would serve no useful purpose to consider the numerous other points raised and extensively argued by both Adkins and Lear on their respective appeals relating to the judgment n.o.v.

By its verdict the jury awarded damages in the full amount claimed by Adkins for the period from January 1, 1955 to May 31, 1963.   Under the rules discussed above, Adkins was entitled to royalties due to him under the license agreement on all five gyro models for the period during which that agreement was in force, that is, from January 1, 1955 to April 8, 1959, when the license agreement was terminated.   There is no evidence sufficiently substantial to sustain the verdict for royalties for the period after April 8, 1959.   It follows that in directing a verdict for Adkins as to gyro model 2156 for royalties for the longer period and in denying Lear's motion for judgment n.o.v. with respect thereto, the trial court was in error.   Similarly, the court was in error in granting Lear's motion for judgment n.o.v. with respect to the four “steel” gyros, thereby denying all relief to Adkins with respect thereto.   Accordingly the judgment n.o.v. must be reversed.

Appeal from Order Granting A New Trial in the Alternative

Concurrent with its determination of Lear's motion for judgment n.o.v., the trial court granted Lear's motion for a new trial on each of four grounds assigned therefor, including “insufficiency of the evidence to justify the verdict, or that it is against law.”   In its ruling on this motion the court found “specifically that the evidence was insufficient to justify the verdict and that the verdict is against law, and grants a new trial on each of said grounds” and filed its written order accordingly, pursuant to Code Civ.Proc., § 657.

 Adkins' first point on appeal from this order is that the trial court erred in holding that the damages awarded by the jury were not the result of passion or prejudice.   We find no error in this determination.  “To say that a verdict has been influenced by passion and prejudice is but another way of saying that the verdict exceeds any amount justified by the evidence.”   (Zibbell v. Southern Pacific Co., 160 Cal. 237, 254, 116 P. 513, 520;  Koyer v. McComber, 12 Cal.2d 175, 182, 82 P.2d 941.)   Similarly “[i]n passing upon a motion for a new trial based upon the insufficiency of the evidence, it is the exclusive province of the trial court to judge the credibility of the witnesses, determine the probative force of testimony, and weigh the evidence.  [citations]  * * *.  It is only where it can be said as a matter of law that there is no substantial evidence to support a contrary judgment that an appellate court will reverse the order of the trial court.”   (Brooks v. Metropolitan Life Ins. Co., 27 Cal.2d 305, 307, 163 P.2d 689, 691.)

The parties are agreed that to the extent Lear is liable to Adkins under the license agreement, the award of damages must be based on paragraph 3 of the agreement.   That paragraph provided that royalties would be computed on the net sales prices of Lear's products incorporating one or more of Adkins' inventions, including the price charged for “gyro assemblies” and “gyro systems” as those terms are defined in the agreement.   Competent evidence was introduced by Adkins as to the amount of royalties claimed by Adkins under these provisions for the period from January 1, 1955 to May 31, 1963, as claimed by Adkins.   It is significant that the computations of Adkins' accountant were based on Lear's answers to certain interrogatories in which Lear grouped its sales of gyros and of its gyro systems and gyro assemblies, sometimes referred to in the evidence and in the court's instructions as embracing gyro system signals and gyro assembly signals, and that these interrogatories in turn are based on Lear's responses to certain requests for admissions.   As to model 2156 the parties stipulated with reference to the amount which would be due for the same period.

 As we have pointed out above, the damages awarded by the jury were excessive in that they were not limited to the period from January 1, 1955 to April 8, 1959 when the license agreement was in force.   For this reason, if for none other, the trial court was correct in granting the motion for a new trial on the ground that the “damages appearing to have been given under the influence of passion or prejudice” were excessive, and that “the evidence was insufficient to justify the verdict and that the verdict is against law.”

Lear's contention that the damages were excessive is based wholly on the testimony of its employee, Vernon Burns.   This contention is without merit.   Burns' testimony as to what should be included in computing net sales was based on his interpretation of the agreement.   In Ellsworth v. Palmtag, 168 Cal. 360, 363, 143 P. 602, 604, it was held that where “questions relating to the contract were framed so that answers would reflect defendant's interpretation of the agreement, rather than the terms thereof,” plaintiff's objections should have been sustained.   When this part of Burns' testimony is disregarded, the remainder is consistent with the evidence produced by Adkins.

On its motion for a new trial Lear claimed that the court erred in giving certain instructions and in refusing to give certain other instructions;  that it erred in refusing to submit well over a hundred special interrogatories to the jury;  and that it erred in its rulings with respect to Adkins' use of a certain exhibit to illustrate his testimony and in failing to properly instruct the jury with respect thereto.   All these matters related primarily to the question of the validity of the patent and its coverage of Adkins' invention.   In view of our conclusion that the patent as issued was not within the scope of the agreement, and that the validity of the patent was not properly in issue before the trial court, there is no need to extend this opinion with a discussion of these matters.

 There was no error in the court's refusal to admit in evidence the three agreements executed by Adkins on September 15, 1955, concurrently with the execution of the license agreement, copies of which were attached to Lear's answer.   One of these agreements contained a release “to this date” of all claims by Adkins under his agreement of December 1951 including claims arising out of his employment.   The documents were offered as being relevant and material to the issue of liability apart from the license agreement and after termination of that agreement.   As we have pointed out, Lear is not liable to Adkins apart from the agreement or for any period of time after its termination.

In our opinion the order granting the new trial must be affirmed and the case remanded for a new trial solely on the issue of the royalties to which Adkins may be entitled for the period from January 1, 1955 to April 8, 1959 under the provisions of the license agreement.

Lear's Cross–Appeal from the Judgment

By reason of our conclusions with respect to the necessity for a new trial on the issue of damages only, the issues raised by Lear's appeal from the judgment have become moot, and the appeal should be dismissed.

Appeals re Dismissal of Second Cause of Action

Adkins' second cause of action, in which he repleads the principal allegations of his first cause of action, is for damages for misappropriation of his “idea and invention for precise alignment of gyroscope gimbal bearings utilizing cemented bearing-receiving elements” which he disclosed to Lear in 1952, and for breach of an implied contract and for unjust enrichment.   In his trial brief and during the trial he waived all claims under the second cause of action “except for the invention which is the subject matter of Patent 2,919,586, or for the ideas, or discoveries thereof.”   During the trial Adkins conceded that his second cause of action had been pleaded in the alternative to the first.   Accordingly, without requiring him to make an election, the second cause of action was held in abeyance until it could be determined whether “for some reason the contract fails to cover the invention which Mr. Adkins disclosed to Lear.”   Still later, although no formal ruling appears in the record, the court effectuated a dismissal of the second cause of action insofar as it had not been waived, by refusing to admit evidence in support of the unwaived allegations.

After the judgment n.o.v. had been entered the trial court denied Adkins' request to amend the judgment “to indicate that the second cause of action was dismissed by the court,” stating in the minute order:  “Examination of the record reveals that the plaintiff duly waived in open court under the second cause of action:  1. Any and all claims for any ideas, discoveries, or inventions not covered by patent 2,919,586.   2. Any claim for punitive damages.   Plaintiff recognized categorically that he was proceeding on one cause of action—an express contract and not an implied contract.”   In order that it could be determined on appeal from the judgment whether, as a matter of law, Adkins had waived the entire second cause of action, this court, on Adkins' petition for a writ of mandate in Civil No. 28603, held that “the judgment should be amended to show a disposition of the second cause of action.”   As issued, the writ ordered the trial court to enter an amendment to the judgment in the following terms:  “At the outset of the trial, plaintiff John S. Adkins waived all ideas, discoveries and inventions under the second cause of action except for the idea, discovery and invention which is the subject matter of U.S. Patent No. 2,919,586.   The Court then required plaintiff to elect between the first and second cause of action, and when plaintiff refused to do so, the Court then dismissed the second cause of action, which after the plaintiff's waiver, remained for the idea, discovery and invention which is the subject matter of U.S. Patent No. 2,919,586, and the same is hereby dismissed.”   The trial court complied with this mandate on December 30, 1964.

It is Adkins' position on this appeal that, unless the judgment n.o.v. and the order granting a new trial are reversed (in which event he will have recovered on his primary cause of action), the judgment of dismissal must be reversed and remanded for trial on his second cause of action.

 The amendment to the judgment of December 30, 1964, was not erroneous.   Adkins' waivers effectively limited his second cause of action to a claim for damages for unjust enrichment by reason of Lear's alleged misappropriation of “the invention which is the subject matter of Patent 2,919,586, or for the ideas, or discoveries thereof.”   With respect to that invention Adkins' rights are measured exclusively by the patent and by the federal patent laws.   To permit Adkins to claim protection of that invention under the common law or any law of this state would be to “give protection of a kind that clashes with the objectives of the federal patent laws.”  (Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 85 S.Ct. 784, 11 L.Ed.2d 661;  Compco Corp. v. Day–Brite Lighting Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669.)   It should also be noted that when, as here, a plaintiff relies upon a valid express contract his recovery must rest upon and be measured by its terms, and cannot recover upon the theory of an implied contract.   (Thacker v. American Foundry, 78 Cal.App.2d 76, 177 P.2d 322;  Lemoge Electric v. County of San Mateo, 46 Cal.2d 659, 297 P.2d 638.)

 That part of the judgment as amended December 30, 1964, dismissing Adkins' second cause of action must be affirmed.

Adkins' Appeal from Order Apportioning Costs

Adkins has appealed from an order made January 24, 1964, apportioning the costs of an audit of Lear's books (Civ. No. 29770).

The audit involved here was ordered by the court as an aid to Adkins' discovery proceedings designed to ascertain the number of sales of gyros, gyro assemblies and gyro systems manufactured and sold by Lear from January 1, 1955, to the date of Lear's answers to Adkins' interrogatories and the net sales price received by Lear.   Lear's first answers to the interrogatories were filed in July 1963.   The record reflects extended proceedings before the court, initiated in the main by Adkins, to compel Lear to furnish further information.   These proceedings terminated in an order on September 20, 1963, for the audit which was modified after further proceedings on October 18.   Under this order the court reserved the power to apportion the costs of the audit.   After the audit was completed and further answers to Adkins' interrogatories had been filed the auditors submitted their bill for $17,880.   After further hearings the court on January 24, 1964, made the order appealed from, ordering Adkins to pay 45% of the cost of the audit, and Lear to pay 55%.

On appeal Adkins claims that in apportioning these costs the trial court “abused its discretion, requiring a total reversal of its order.”   Lear says in reply that there was no abuse of discretion and that, in any event, the order is not appealable.

 “The better view is that an order made for the purposes of furthering discovery proceedings, or granting sanctions for refusal to make discovery, is not appealable (Huenergardt v. Huenergardt, 218 Cal.App.2d 455, 32 Cal.Rptr. 714;  Farnham v. Superior Court, 188 al.App.2d 451, 455, 10 Cal.Rptr. 615).”  (Lund v. Superior Court, 61 Cal.2d 698, 709, 39 Cal.Rptr. 891, 898, 394 P.2d 707, 714.)

 The appeal from the order apportioning costs of the audit must be dismissed.

In Civ. No. 28624, the judgment non obstante veredicto entered July 15, 1964, is reversed.   That part of the minute order of July 2, 1964, granting defendants' motion for judgment n.o.v. with respect to the four “steel” gyros is not appealable, and the appeal therefrom is dismissed.   The order of July 2, 1964, denying defendant's motion for judgment n.o.v. with respect to the model 2156 gyro is reversed.   The order of July 2, 1964, granting defendant's motion for a new trial is affirmed.   The appeal from the judgment entered May 4, 1964m is dismissed.

In Civ. Nos. 30052 and 30089, the judgment as amended December 30, 1964, dismissing plaintiff's second cause of action is affirmed.

In Civ. No. 29770, the appeal from order of January 24, 1964, apportioning the costs of an audit is dismissed.

The case is remanded to the trial court for a new trial solely on the issue of the damages to which plaintiff is entitled under the license agreement for the period from January 1, 1955 to April 8, 1959.

In Civ. No. 28624, Adkins shall recover all his costs on his appeal from the judgment notwithstanding the verdict and on Lear's appeals from the order denying in part its motion for a judgment notwithstanding the verdict and from the whole of the judgment entered May 4, 1964.

In Civ. No. 30052, Lear shall recover its costs on appeal.

In Civ. No. 30089, Adkins shall recover his costs on appeal.

In Civ. Nos. 29770 and 30052 Lear shall recover its costs on appeal.

FOOTNOTES

FOOTNOTE.  

1.   Adkins in fact granted Lear three licenses in identical terms under the claims of a certain patent referred to as “Exhibit ‘A’ ”, and under the claims of certain patent applications referred to as “Exhibit ‘B’ ” and “Exhibit ‘C’ ”.   The only license involved here is that under the claims of “Exhibit ‘B’ ”, being the application for letters patent filed by Adkins on February 15, 1954, “and all patent issued or issuing thereon to Adkins with respect to the inventions disclosed or intended to be disclosed therein.”

McCOY, Justice.* FN* Sitting pro tempore under assignment by the Chairman of the Judicial Council.

ROTH, P.J., and HERNDON, J., concur.