Chapter 3

UCLA (1957-1974), My Chamber-Type Freeze-Dryer and the VirTis Affair

Overview
My introduction by Mr. Wechsler of Palo Lab. Supplies to the two owners of the VirTis Co., Inc., was followed by their (the president and vice president, referred to hereafter simply as VirTis) visit to see my freeze-drying unit in operation at Rockefeller in Dec., 1955. VirTis was amazed, if not shocked, to see tiny samples of 5 cc or less remaining frozen while being sublimated under external heat lamp exposure in comparatively bulky vials or tubes. Exposure to rays from a heat lamp (also my innovation) greatly increases the sublimations rate. Of course, one look was enough to convince any knowledgeable person of the device's utility, and the great possibilities opened for preparing small quantities of biomedicinals, etc., directly in the glass containers that were to hold the finished products for shipping, storage, and use.

VirTis enthusiastically endorsed the apparatus, being eager to undertake its manufacture and sale. I proposed several easily achieved improvements that should be incorporated into commercial units. All, except for using an electronic vacuum gage, were eventually incorporated into VirTis freeze-dryers. Understandably, VirTis was desirous of getting a product employing the new techniques on the market as soon as possible. We parted in high spirits of excitement, enthusiasm, and cordiality. Unfortunately, all was downhill from then on.

VirTis plunged immediately into the manufacture of a first commercial model. Their production prototype was almost a duplicate of my expeditiously, jury-rigged unit. They drew up a tentative agreement which I sent to my brother Dick, a lawyer, for his input. Palo's first ad for the "VirTis-Kavanau CRYOVAP" appeared in Science in 1956 (Feb. 17); and the first unit was sold ($645) shortly thereafter. The only advantageous features added to my basic unit were to enclose the pump, condenser, and an added stainless steel secondary condenser in a mobile cabinet.

I received Dick's first proposed contract shortly thereafter, and returned it with VirTis' suggestions. The amended Agreement was received in April, 1956. Dick cautioned me not to overwhelm VirTis with his detailed restrictive conditions. When I visited VirTis in late April and got to the part about affixing the corporate seal, VirTis 'hit the ceiling.' Did they even have a seal? On this occasion I believe VirTis (specifically, the President) decided to place a restrictive interpretation on our contract, and not to proceed with other inventions I had proposed. In this connection, the freeze-dryer line, alone, was a potential gold mine. From then on our dealings deteriorated.

On May 8, 1956, I wrote Dick that it was clear VirTis was planning new lines of freeze-dryers for which they did not plan to give me credit. I suggested coming to some mutually agreeable monetary settlement with them and terminating our relationship, to which he agreed: Later in May I received a letter from VirTis suggesting that perhaps, it would be better if I found another organization to work with on my other novel laboratory instruments.

A CRYOVAP agreement was not entered into until August, 1956. In April, 1957, I had visited the original Yonkers shop facility for the last time. Not long after that I phoned VirTis about seeing an ad for their new freeze-dryer, named Roto-Freeze, uncredited to me. I was assured that I "had nothing to be concerned about." In May I wrote to VirTis complaining about its actions, and stating that any equitable settlement offer would be acceptable to me. I received no reply. At that time, I informed VirTis of my move to Los Angeles and UCLA.

VirTis advertised yet another model in Science, the Freeze-Mobile, including "stainless steel" fabrication throughout, The ad also announced to customers, "Thank you....you forced us to move," to Gardiner, NY. Marketed units with metal chambers and hinged, see-through ports, called SUBLIMATORS did not come to my attention until 1961. They possessed automatically refrigerated, uniformly heated shelves, the last to be implemented of my original suggestions.

My next solicitation to VirTis, dated Dec. 23, 1957, again received no reply. Could anyone have anticipated that this standoff would drag on for another 17 years? Subsequent visits to VirTis in 1958 and 1960 produced no resolution. In Feb., 1960, I wrote to VirTis pointing out the various instances in which I felt they had violated our Agreement. I also requested that I be paid a retroactive 5% royalty on the various models marketed by them and incorporating the CRYOVAPORATOR principles. Alternatively, I again suggested the payment of a lump-sum in a simple amicable settlement.

Nothing having come of any of my overtures, I executed a document in July, 1960, assigning to Nils Jernberg all my rights in the Agreement with VirTis, and giving him full power to collect proceeds in legal proceedings. My attorneys, Gilbert and Bush, served the necessary papers. VirTis hired a patent attorney, I. Walton Bader. A very notable event was that in 1963 VirTis was acquired by Cenco Instruments, Inc., of Chicago, Illinois.

To make the beginnings of a very long story shorter, a trial at a special term, Part I of the Supreme Court of the State of New York, held in the county of Albany, without jury, of Jernberg's suit against VirTis, began in April, 1965 and lasted 3 days. VirTis engaged in every conceivable maneuver, seeking to blunt our suit. Their expert witnesses, however, were thwarted at every turn.

In Dec., 1965, Sidney Bush appeared at Judge Pennock's chambers with VirTis representatives. The judge, a justice of the Supreme Court of the County of Ulster, insisted that they obtain complete authority to dispose of all claims. Bush (as described to me) suggested $275,000 for full and final settlement, which the judge felt was high. He then admitted, off the record, that he felt $100,000 would have been adequate. The judge eventually issued a broad injunction restraining VirTis from transferring any and all real property, but permitting them to conduct all normal business operations, and asked the parties to review their thinking.

In Dec., 1965, Justice Pennock issued his lengthy Decision and Interlocutory Judgement. He determined that I was entitled to an accounting by VirTis pertaining to all the items set forth in my proposed findings, etc., etc. If the accounting was not a satisfactory remedy, the court reserved the right to award money damages. In Dec., 1965, Justice Pennock issued his lengthy Decision and Interlocutory Judgement. He determined that I was entitled to an accounting by VirTis pertaining to all the items set forth in my proposed findings, etc., etc. His Decision was immediately appealed by VirTis' lawyers.

The accounting from the books of VirTis and associated corporations occupied 55 days at a cost to us of $6,000. In April, 1966, Bush wrote to my brother regarding VirTis' appeal, concluding with, "I suspect the principal grounds of the appeal will have to be in the fact that William Boss, former justice of the Supreme Court, will be appearing before his former colleagues. I prefer thinking that Boss' mere presence will not persuade a court to reverse a basically sound decision [unfortunately, it did, in its entirety - JLK].

The appeal was scheduled for September, 1966. Unfortunately, on July 24, 1966, Sidney Bush had a fatal automobile accident. Joseph J. Einhorn, of New York City took over my suit with the same contingency arrangement. In the VirTis appeal. Bader, Jr. (Bader's nephew) welcomed a discussion of settlement. He claimed that a 5% royalty would yield a maximum exposure of about $75,000. Einhorn concluded that Bader, Jr. was willing to settle for between $25,000 and $100,000. The appeal was set for the end of the October Term.

Concerning its result, our ten years of honest effort and Judge Pennock's careful observations at trial, and analysis of evidence, all came to naught. Eight more years of litigation lay ahead when VirTis' appeal was granted by the Court. With our loss of the Appeal, Einhorn brought on board Copal Mintz, well versed in the ins and outs of Appellate Court rulings. The next step was to bring action in the Court of Appeals, then proceed to a new trial. A SUMMONS to both VirTis and Cenco, in July, 1968, designated New York County as the Place of Trial by the New York State Supreme Court.

Although much legal maneuvering continued over the next 5 years, quite unexpected developments brought the case to an abrupt end. In Nov., 1973, Einhorn, announced developments, as follows:

The President of VirTis has terminated his connection with Cenco and is being sued by Cenco for appropriating an idea and turning it over to his son who formed a separate company to exploit it.

Of course, once the President of VirTis violated his contract with Cenco, their defense against my legal action in the scheduled trial evaporated. Sometime between Dec., 1973 and April, 1974, I was informed by phone that Cenco had settled for $75,000. Thus ended this sordid affair, which I would very much have preferred to avoid. The beneficial legacy remains in the form of chamber-type freeze-dryers in perhaps thousands of laboratories throughout the world. They have uses in many fields, of which the biomedical is of the greatest benefit (vaccines, sera and antisera, growth hormone, etc.)
Overview

Beginnings of the Affair
Not having the facilities for constructing freeze-dryers of my design, Mr. Wechsler of Palo Laboratory Supplies introduced me to the owners (president and vice-president) of the VirTis Corp., a manufacturer of strictly manifold, nipple-type units. In these units comparatively large flasks containing shell-frozen material to be dried were attached to nipples protruding from manifolds of various shapes and sizes (see Figs. 3-2 & 3-4). Founded in 1953, VirTis was the primary source of these units, being marketed through several scientific laboratory supply houses, including Palo, Machlett and Son, Will Corp., and Standard Scientific Supply Co.

In future treatments, I usually will refer to the president and vice-president of the VirTis Co. simply as "VirTis." My future contacts with the president involved lengthy litigation, beginning in 1960 and lasting 14 years. This is covered in some detail, as it is of more than usual interest. It suggests that if you throw enough money at the legal system to hire lawyers with acquaintances, or former colleagues, in high places, in a low profile case, you may be able to delay justice indefinitely. This appears to have been VirTis' strategy.

I invited VirTis and Mr. Wechsler to see my chamber-type freeze-dryer in operation at the Rockefeller Institute in Oct., 1955, on a day when a run was in progress. The apparatus was operated in a 'cold room,' the same premises in which I carried out all operations on the extracted, frozen solution-suspensions from embryos in various stages of development. This was to minimize or avoid autolytic artifacts, in which enzymes in the material being analyzed might decompose components thereof.

Upon seeing the unit in operation, VirTis was amazed, if not shocked, to see tiny samples of 5 cc or less remain frozen (as they lost heat of evaporation) while being sublimated in comparatively bulky vials or tubes. This occurred even under exposure of the samples to an infrared lamp, employed to accelerate the sublimation process. VirTis was amazed because workers in the field believed that small frozen samples in comparatively bulky vials or bottles placed in a vacuum would melt and froth if not refrigerated. The fact that sublimation, alone, would keep them frozen was not widely appreciated.

At that time, to the best of my knowledge, the state of the art in research laboratories and drug manufacturers was first to shell freeze, say 50 to 150 or more cc of material to be dried. This was accomplished in large flasks held almost horizontally and rotated while immersed in liquid air or a dry ice mix, whereupon the contained liquid material became (shell) frozen on the inner surface of the flask. The flasks then were attached to the freeze-dryer manifold's nipples for sublimation.

During the process, water from the ambient air froze on the outer surface of the flasks, unnecessarily slowing the sublimation process. As far as I know, no one considered speeding up the process by irradiating the flasks' exteriors. Alternatively, very large quantities of frozen material were dried by sublimation from trays in large vacuum chambers, and subsequently apportioned into serum bottles or the like.

Of course, one look at my ongoing freeze-drying process was enough to convince a knowledgeable person of its utility, and the great possibilities opened for preparing units of biomedical materials directly in the glass containers that were to hold the finished products. VirTis enthusiastically endorsed the apparatus, being eager to undertake its manufacture and sale. I did not feel that the device was patentable, as none of its features was novel.

At that time, among other things, I proposed that eventually their manufactured freeze-dryer should be mechanically refrigerated, as opposed to using dry ice or liquid air; should have a metal chamber with a hinged, see-through front port, rather than being contained within a glass bell jar; should have provisions for uniformly heating shelved samples internally (instead of using an external heat lamp); and should have an electronic vacuum gauge (mine was of glass and fully exposed). All these suggestions, except with regard to the electronic vacuum gage, were eventually incorporated into VirTis freeze-dryers.

VirTis' production prototype
Understandably, VirTis was desirous of establishing priority, by getting any product employing the new techniques on the market as soon as possible. We parted after that first visit in high spirits of excitement, enthusiasm, and cordiality. Unfortunately, all was downhill from then on. At any rate, VirTis plunged immediately into the manufacture of the first commercial model. When Mr. Wechsler and I visited their storefront shop in Yonkers, New York a few weeks later, we found that the VirTis plan for the production prototype was to be almost a duplicate of my jury-rigged unit. Exceptions were the addition of a secondary stainless steel trap with an inner condenser, and the housing of the vacuum pump and condensers in a mobile cabinet (Fig. 3-1).

After seeing VirTis' planned manufacturing prototype, I wrote to them on Dec. 9, renewing the above suggestions for improving it, including:

I have made a few calculations and find that by increasing the aperture to the condenser from 1-1/2 to 2 inches you will more than double its rate of removal of water vapor. At the same time, shortening the distance to the condenser from about 10 cm to about 6 cm will also more than double the rate of water removal. Together these modifications will result in over 5 times the rate of sublimation of water (as a rough calculation).

Also included were suggestions for ad copy, etc. VirTis drew up a tentative agreement as follows, dated 12/16/55:

This will confirm our recent conversation concerning royalties to be paid to you on the Kavanau freeze-dryer, the titration assembly, and any other apparatus that you may invent and turn over to us for manufacture and sales, which will, in the case of the freeze-dryer be called hereafter the VirTis-Kavanau CRYOVAP.

The VirTis company, Inc., agrees to pay to Dr. J. L. Kavanau a royalty payment of 5% on all his inventions that we manufacture and sell. The 5% will be based on the net sale of the instruments. Royalties will be paid every three months or sooner.

A time limit clause should be made regarding all instruments developed but it is difficult at this time to evaluate this. Any suggestions that your brother may have will be welcomed. It is our suggestion that your brother draw up a formal contract which we should be happy to sign. At least, at this time, this letter will act as a temporary contract.

Enclosed you will find the copy on the CRYOVAP. We should appreciate any deletions, additions, or advice on the same.

With best wishes, we are, very truly yours, VirTis.

I sent this proposal off to Dick, for his input. I next visited VirTis in Jan., 1956 to see one of their actual production units. At this time I noticed that they also were working on a metal chamber with a front, latched, vacuum sealed see-through port, as I had recommended earlier. On Feb. 17, only 4 months after first seeing my experimental unit, Palo's first ad for the "VirTis-Kavanau CRYOVAP" appeared on a full-page in Science (1956;123:249), and the first unit was sold shortly thereafter (Fig. 3-1). As mentioned above, the only advantageous features they had added to my basic unit was enclosing the pump, glass condenser, and an added stainless steel secondary condenser in a mobile cabinet. Their advertisement featured the large capacity and flexibility of the unit, as follows:

With the three shelves furnished, the tray support will handle 132 ten ml serum bottles or 45 fifty ml serum bottles, or 27 one-hundred ml serum bottles. With additional shelves 264 ten ml serum bottles or any variations thereof can be dried. Beakers, Petri dishes, centrifuge tubes, test tubes or any suitable container can be used with this unit, eliminating the need for transfers before or after freeze-drying....The large diameter aperture at the base of the drying chamber (1-1/2"), design of the large-throat trap, and the proper application of freeze-drying principles that have been used in the engineering of this instrument make it the finest and most efficient unit of its kind.

Just six months later (ample turnaround time for the production of a commercial copy) another laboratory supplier, Cenco, advertised their Pump Plate in Science (1956;124:344). It was just a copy of the CRYOVAP without the mobile cabinet, vacuum gage or heat lamp. It sold for $155 as compared to $645 for the CRYOVAP. The Pump Plate's proposed uses were vacuum evaporation and sputtering of metals. The same ad appeared again exactly one month later. These events had a very significant, then-unrealized portent. In 1963 Cenco purchased VirTis. Had it not been for that, more than then the eventual 14 years of legal jousting between my and VirTis' lawyers might have ensued (see below).

The agreement is signed

I also received Dick's first proposed contract the month after the first CRYOVAP was sold.. I returned it to him with VirTis' suggestions. The amended Agreement was received from Dick in a letter dated April 20, 1956. Dick's letter begins:

I know that you may feel that this is a simple matter, and requested that I draw a simple Agreement; but let me assure you it is practically impossible to do so. I have endeavored to keep the language in as simple terms as possible, and have included the provisions which I think are necessary for protection of yourself and VirTis. [Dick suggested that if there were to be any changes or questions, the Agreement could be modified, but he typed it in finished form, in case it should turn out to be satisfactory. JLK] We will be happy to work anything out that they want.

In the event that this Agreement is signed in its present form, fill in the number of units in Paragraph 8, and then have each of the parties who sign the Agreement, yourself and the President and Secretary of VirTis, initial next to the figures to show their acquiescence.

Further, if VirTis executes the Agreement, have the corporate seal affixed to page 5, opposite the Secretary's signature.

Also, it is suggested, after the Agreement is executed, you request a certified copy of the Resolution of the Board of Directors authorizing the President and Secretary to enter into this Agreement with you....

Of course, Dick cautioned me not to overwhelm them with these requests. Maybe I should have just ignored most of his legal precautions. He didn't realize that I was dealing with a 2-man corporation, in a small storefront with a backroom shop, working in shirtsleeves. Also, I don't think VirTis had much experience dealing with lawyers and legalese. I visited them next in late April, but when I got to the part about affixing the corporate seal, VirTis 'hit the ceiling.' Did VirTis even have a seal? On this occasion I believe VirTis (specifically, the President) decided to place a different interpretation on the terms of our eventual contract and not to engage in any further project with me. In this connection, the freeze-dryer line, alone, was a potential gold mine. From then on our dealings deteriorated.

On May 8, 1956, I wrote Dick that it was clear VirTis was planning new lines of freeze-dryers based on improvements in the CRYOVAP design, for which they were not planning to give me credit, and I suggested that perhaps I should just come to some mutual agreement with them on a reasonable monetary settlement, and terminate our relationship. Dick replied on May 10 as follows:

With reference to VirTis, I looked over the contract and your letter, and they appear to be OK, and I can see nothing wrong with your trying to amicably adjust the matter, in fact, I think it is a good idea. As far as your rights under the contract, I am not so sure that you don't have a cause of action against them, if only that in every contract there is an implied condition of good faith, and that they use all reasonable efforts to accomplish the ends contemplated. By taking the ideas from your product and incorporating them in the rest of the line, they have placed themselves in the position of leaving themselves open to a claim of bad faith, etc., since the contract certainly gives them no right to do this, and although anyone else could do it, since the ideas are not patentable, it might be a breach of a fiduciary relationship existing between you and them since you disclosed these ideas to them. However, I still feel that if you can adjust this matter amicably, it would be best.

I am returning herewith the copy of the letter you are sending to VirTis, and the copy of the Agreement. I am also enclosing the papers re Application for trademark. I have executed both copies of the Application, but am not sure whether you want me to send it in duplicate.

On May 17, 1956, I received a letter from VirTis, as follows:

....We have been extremely busy of late in the development of some of our own equipment and find that it is next to impossible to take on any other items for development and sales. Therefore, we shall not be able to do anything with the titration assembly or the distilled water clamp for a long time [later named the "Finger-Tip Fluid Dispenser"]. We suggest that, perhaps, it would be better if you found an organization who might be able to work more quickly on these two items.

I replied on May 19, mentioning that a new copy of the Agreement would be forthcoming in a few weeks. Two additional visits to VirTis followed in June and July to discuss the Agreement and the CRYOVAP design. Finally on August 24, I returned their copy of the agreement.

THE AGREEMENT

This agreement, entered into in duplicate, this 24th day of August, 1956, by and between The VirTis Company, Inc., a corporation, hereinafter referred to as VIRTIS, and Dr, J. Lee Kavanau, hereinafter referred to as "KAVANAU."

WITNESSETH

In consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, receipt of which is hereby acknowledged by each of the parties,
IT IS AGREED by and between the parties, as follows:
THAT, WHEREAS KAVANAU has originated and/or modified and/or developed and/or improved useful articles hereinafter enumerated and/or KAVANAU has imparted to VIRTIS ideas enabling them to do so;
AND WHEREAS VIRTIS knows the merits of said articles and/or ideas and has the necessary facilities for manufacturing and marketing the same and desires to add same to its line of merchandise,
IT IS THEREFORE AGREED AS FOLLOWS:
ONE: Articles heretofore referred to are:
VirTis-Kavanau CRYOVAPORATOR
Kavanau Dual-Condenser, with self-sealing runoff aperture in the inner condenser
TWO: VIRTIS agrees to manufacture and market said articles referred to in paragraph ONE hereof.
THREE: VIRTIS agrees to pay KAVANAU, or his successors or assigns, a royalty on each and every VirTis-Kavanau CRYOVAPORATOR or Dual Condenser sold under that name, said royalty to be in an amount equal to 5% of the net bona fide selling price on sales made, either at wholesale or retail, as the case may be.
FOUR: Said royalty to be paid quarterly, or oftener, but only after receipt by VIRTIS from the purchasing parties, and within thirty (30) days after the end of each March, June, September, and December for the term herein specified.
FIVE: VIRTIS agrees to render statements, duly verified by its proper officer at the time of each payment to KAVANAU. Said statement shall show all articles above enumerated which VIRTIS has sold within the period which the statement covers.
SIX: If VIRTIS shall discontinue the manufacture of the Articles covered by the agreement for any period of 12 months or more, or if VIRTIS shall become bankrupt or insolvent, in that event Kavanau shall be at liberty, by notice in writing given to VIRTIS, or left at the usual or last place of business, to terminate this agreement as to the article so discontinued.
SEVEN: This agreement shall be binding upon the parties hereto, their legal representative, successors and assigns.
EIGHT: Royalties shall be paid to KAVANAU for a period of ten (10) years from and after the date of the first sale of each article enumerated in Paragraph ONE hereof.
NINE: Articles manufactured by VIRTIS under this agreement shall be, at Kavanau's option, named after Kavanau. However, at the option of VIRTIS, the name "VIRTIS" shall precede the name "KAVANAU".
TEN: Royalty payments due hereunder shall be in the amounts, and as provided, regardless of any number of improvements or modifications in the instruments marketed under the name VirTis-Kavanau CRYOVAPORATOR or Dual Condenser.
ELEVEN: This agreement is complete in itself and cannot be modified orally but may be modified only by an agreement, in writing, signed by both of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have hereunder set their names and seals the day and year in this agreement first above written.

With the CRYOVAP (also called the CRYOVAPORATOR) on the market, advertised in Science, and being sold, modest royalties were being generated. On about Nov. 1, 1956, VirTis incorporated a new company, called Repp Industries. On Jan. 9, 1957, I wrote VirTis about an overpayment it had made, and requested a copy of its new catalogue.

To my knowledge, the first product developed by VirTis, based on CRYOVAP principles and marketed after the CRYOVAP was advertised in the Jan, 25, 1957 issue of Science (Fig. 3-2). It was a table-top unit called the DUO-DRYER possessing both nipple ports and a stainless steel chamber accommodating a stand with 4 tiers for vials, priced at $325. In the 15 Feb. issue of Science there appeared an ad for the VirTis Centri-Freeze (Fig. 3-3), priced at $3,600. This was essentially a CRYOVAP with added mechanical refrigeration, a rotating stand to prevent frothing on freezing samples in the vacuum in individual vials, and allow for uniform heating by the infrared lamp, a plastic rather than glass chamber, but still without an enclosing metal chamber with hinged, see-through port. Both of these units appeared without my knowledge at the time, Centrifuging and freezing the samples within the chamber without frothing were VirTis' innovations.

In April, I visited the Yonkers shop facility for the last time. Not long after that I phoned VirTis about seeing an ad for their new freeze-dryer, named Roto-freeze, with no credit to me. I was assured again that I had "nothing to be concerned about."

VirTis openly reneges on the agreement; will not negotiate or settle

On May 8, 1957, I wrote to VirTis complaining of its actions, as follows:

I have noted that, although you have incorporated numerous improvements into new freeze-dryers, you have apparently failed to upgrade the CRYOVAPORATOR as frequently promised. I have also noted that you have incorporated the CRYOVAPORATOR principles into several new instruments and also into your old instruments without any credit of any kind to me.
In view of your manner of handling these matters, insofar as proper recognition and recompensement to me are concerned -- the new methods I have brought to you have completely revamped your line of freeze-drying equipment and your approach to same - I would like to suggest the outright payment to me of a reasonable sum of money in return for which I would relinquish all claims I might have to future royalties or to any other further compensations for the new ideas I brought you.
I am not unable to see your points of view in regard to our relationship and I believe you must also agree with me that the compensation I have thus far received--amounting to only half the cost of a single CRYOVAPORATOR [$645]--does not fairly reflect the value of the new ideas I have given you.
Any equitable offer by VirTis will be acceptable to me and will terminate our relationship with no ill will held on my part. Sincerely,

I received no reply to my suggestion from VirTis. At this time, I departed for UCLA and informed VirTis of my move and new address (probably an influential reason why Virtis was not of a mind to come to a settlement). I note here, however, that Virtis incorporated yet a 3rd company, Cryotec, in August, 1957, to produce freeze-dryers. They advertised yet another model in Science in the Oct. 25 issue, the Freeze-Mobile (Fig. 3-4) but with no price given. This unit included "stainless steel fabrication throughout - including the vacuum drum and vacuum ports, Freon-22 cooled condenser, and reinforced mobile cart. The ad also announced "Thank you....you forced us to move," to Gardiner, NY. Units with metal chambers and hinged, see-through ports, called SUBLIMATORS (Fig. 3-5) did not come to my attention until another full-page ad appeared much later (July 21, 1961) in Science. It also had automatically refrigerated and uniformly heated shelves, the last to be implemented of my original suggestions. Apparently custom made, prices were not quoted.

Of course, in the intervening years VirTis was able to bring competent engineers on board to accomplish the design improvements. My next letter to VirTis is dated Dec. 23, 1957, with the same observations and repetition of the settlement proposal; again, it received no reply. Could anyone have anticipated that this affair would drag on for another 17 years, even outlasting the life of the lawyer (Mr. Sidney Bush, esq.) who first represented me?

On March 15, 1958, I wrote to VirTis with the information that I had not received statements or payments, nor a reply to my several previous letters, and mentioning a planned trip to New York. This finally elicited the following reply.

Dear Lee, I asked out Mr. Hurst to bring your payments up to date and to include a yearly statement. Somehow these payments got out of kilter but I'm certain this will not occur in the future. We will be delighted to see you any time you are in New York. Sincerely yours, The VirTis Co., Inc.

My subsequent visit to VirTis in 1958, and again in 1960 to their new plant, produced no further resolution of the impass. On Feb. 16, 1960, I wrote again to VirTis summarizing the circumstances, including their unfulfilled promises, and again suggesting an amicable cash settlement or payment of 5% royalties on all instruments sold by them that incorporated CRYOVAPORATOR principles.

Litigation against VirTis commences

Nothing having come of any of my overtures, either written or in person, I executed a document on July 27, 1960, wherein:

I hereby sell, assign, transfer, and set over to Nils Jernberg....his executors, administrators and assigns all my rights, title and interest in and to an Agreement with the VirTis Co., Inc., made August 24, 1956 and hereby give to the said Nils Jernberg full power and authority for his own use and at his own cost, to ask, demand, collect, receive, compound and give aquittance for the same or any part thereof, and in my name or otherwise to prosecute or withdraw any suits or proceedings at law or in equity therefor.

The next event of note concerned executing an agreement between me and Jernberg to initiate legal action against VirTis to collect Royalties due, but that were not forthcoming under my Agreement with VirTis, as follows.

Agreement made this 29 day of March, 1961 between J. Lee Kavanau, hereinafter called Kavanau, and Nils Jernberg, hereinafter called Jernberg.
Whereas Kavanau has made an agreement with The VirTis Company, Inc., dated August 24, 1956, for the manufacture and marketing of certain equipment described in said agreement, and
Whereas on or about July 27, 1960, Kavanau executed an assignment of his rights and interest in and to said agreement,
Now, therefore, in consideration of these covenants and other good and valuable considerations, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:
1-Jernberg shall, as owner of said claim, institute such action of proceeding as is reasonably necessary to effectuate collection of sums due under said agreement dated August 24, 1956 and to ensure the continued enforcement thereof:
2-That for such purpose Jernberg shall engage attorneys satisfactory to Kavanau:
3-That the parties shall co-operate with one another in any way necessary to effectuate collection of said claim:
4-That after deducting all reasonable and necessary expenses incurred by him in connection with the prosecution of said claim, the said Jernberg shall remit to Kavanau all sums received by him on account thereof.
5-That Kavanau will indemnify Jernberg for all expenses and liabilities incurred by him in connection with the collection of said claim.
In Witness Whereof, the parties hereto have signed their hands and seals the day and year first above written.

I made a trip to New York in 1961, and with the assistance of my uncle, Ira Kavanau, located in New York City, I obtained the services of Gilbert and Bush, Attorneys, who served VirTis with the following

Summons
SUPREME COURT

Count of Queens
Nils Jernberg

Plaintiff,

against

The VirTis Company, Inc.,

Defendant

Plaintiff resides in Queens County.

To the above named defendant:
You are hereby summoned to answer the complaint in this action, and to serve a copy of your answer, or, if the complaint is not served with this summons, to serve a notice of appearance, on the Plaintiff's Attorneys within 20 days after the service of this summons, exclusive of the day of service; and in case of your failure to appear or answer, judgement will be taken against you by default, for the relief demanded in the complaint.
Dated July 22, 1961

GILBERT &BUSH
Attorneys for the Plaintiff
30 East 42nd Street
New York 17, N. Y.

VirTis acquired the services of one I. Walton Bader, a patent attorney who, years later, attained considerable notoriety in legal actions having to do with representing the Florida Pension Fund in 1991 against The Drexel Burnham Lambert Group, Inc., and the State Board of Administration of Florida in 1995 against Philip Morris, charging that the company hid information about nicotine's addictiveness. Bader also had the distinction of bringing the largest lawsuit for damages, for the U. S. District Court of New York City, against General Motors and others, for $675,000,000,000,000 on April 14, 1971, for polluting all 50 states. The amount at the time was equivalent to 10 times the US national wealth.

The following year, 1962, I made yet another trip to New York for a Deposition from VirTis, while the VirTis attorney, I. Walton Bader, visited Los Angles to obtain a Deposition from me at the Law Offices of my brother, Dick, on Dec. 27.

Other legal proceedings continued in following years, including the answer to our Complaint, our amended complaint, their answer to our amended complaint, followed by claims and counterclaims and other legalese.

Notable was the fact that on June 5, 1963, the VirTis Company was acquired by Cenco Instruments, inc., of Chicago, Illinois. By a great coincidence, my former 'boss,' predoctoral student, Robert Picard, under O. S. Duffendack at U. of Michigan in the early 1940's, had become the research director at Cenco. I contacted Picard to make him aware of my involvement in legal proceedings against VirTis, but nothing came of it.

The three-day trial begins in Albany, New York
To make the beginnings (it is only the beginnings!) of a very long story short, the trial, without jury (of Jernberg's suit against VirTis) began on April 1, 1965, in Albany, New York (county of Ulster), and lasted 3 days. Mr. Bader and Mr. Corwin were attorneys for VirTis [Mr. Corwin was a former Asst. District Attorney for Ulster County. JLK]. VirTis engaged in every conceivable maneuver to try to blunt our suit. Their expert witnesses, however, were thwarted at every turn. One, in particular, who was aware that the process of freeze-drying removes water, leaving solutes behind, was unaware that I had just written a book, "Water and Solute-Water Interactions," at that time the only book in the English language on the physical chemistry of water which, of course, greatly impressed the judge. When the court stenographer asked how to spell desiccate, VirTis answered "dessicate," which I corrected. Very shortly thereafter the judge took a 5-minute recess during which I believe he checked the spelling, himself. That, also, may have impressed him.

VirTis made potential 'spectator' witnesses, who might have been favorable to us, disappear. At one point, the VirTis witness (VirTis' president), the chief defendant party in the entire affair, even asked permission to whisper something into Justice J. Pennock's ear, that is, to give him a private communication, without the knowledge of Plaintiff or Plaintiff's counsel, Mr. Sidney Bush. Of course, I was present throughout the trial as the chief witness for the Plaintiff.

On June 18, 1965, Sidney Bush informed me that Judge Pennock had given the parties to the suit the right to submit briefs by July 10, 1965. Bush also informed me that Nils had let him know that VirTis had been in contact with parties at Rockefeller, and apparently suggested to them that if they could gain the rights to my freeze-drying equipment, VirTis would be willing to pay Rockefeller the "sum of approximately $25,000 for its rights.

On Dec. 21, 1965, Sidney Bush informed me as follows.

This will summarize what occurred yesterday in Albany. I appeared at Judge Pennock's chambers and requested that he sign the proposed interlocutory judgement...

VirTis representatives also appeared, as did one Robert Case, an attorney from Chicago, Illinois, who is also the Secretary of Cenco Instruments Corp. Neither Walton Bader nor David Corwin appeared, and it seemed quite clear to me from the comments heard that Walton Bader would have nothing further to do with the matter. It had finally become evident even to his own client that he was not the best possible attorney to use. Case insisted that Cenco held a number of opinion letters from Bader, indicating that the case was a trivial one without any merit, and of no special significance. The last such letter was written by Bader subsequent to trial.

The judge insisted that we each obtain complete authority to attempt to dispose of all claims right then and there and he insisted that I make a demand which resulted in my conversation with you.

After we spoke I made a demand for $275,000 for full and final settlement of your claims. The judge indicated he felt this was quite high. I pointed out to him that the sale of your products by VirTis certainly exceeded $400,000 annually for at least 8 years past and 2 in the future. 5% royalty on this amount will exceed $200,000. Interest on this amount will easily bring it to $275,000. I tried impressing upon the judge that you are not trying to be unreasonable or avaricious. I strongly urged that he permit the accounting to proceed and it would show that you were entitled to far more than this. In this perspective it would become obvious that your demand was most modest and reasonable.

Case was horrified and ultimately admitted that Cenco never would have purchased VirTis had they understood the ramifications of your claim. I told him that this was a very peculiar explanation in view of his admission that Cenco was aware of the existence of your claim. The fact that they chose not to question it too seriously or examine it too thoroughly was their own fault after they had been forewarned.

Judge Pennock then admitted, off the record, that he did not think that his determination would result in an award of such magnitude. He had felt that the sum of $100,000 would more than amply soothe an aggrieved inventor.

Case was more or less speechless, as I indicated, but finally did mumble an offer of $10,000 which clearly was not intended to be meaningful or serious; I told him that the judge made it quite clear that he considered it the same way. The judge then asked Case to leave the room and we had a lengthy private conversation. He pointed out to me that he was retaining full jurisdiction in this matter and that he had some flexibility in his choice of enforcement or remedies or in modifying his decision. In short he was urging moderation. I impressed upon him that the $100,000 was a trifle compared to the admitted amounts that VirTis had derived by way of sale of stock, salaries, dividends, etc., over the years.

He made clear that he was going to modify his decision immediately in one way at least. The decision includes a broad injunction restraining VirTis from transferring any and all real property. This will be modified to permit them to conduct all normal business operations. He also wants you to review your thinking and he wants Cenco to start thinking differently about this matter, and he is going to change the dates for the accounting. The accounting will probably not start to be held before February 1 [1966]. This will give Cenco and VirTis the opportunity to get their books ready for your examination, but at the same time it will give the parties 5 weeks to negotiate, and he expects that there will be serious negotiations during this period.

Case has professed ignorance of much of the litigation and he is about to immerse himself in the file to get familiar with it.

I thought you might be interested in knowing that I had been told by Case that Cenco's director of research and development, Dr. Picard, who died about 2 years ago, was the man they entrusted with the supervision of VirTis' handling of your claim.

As soon as anything else develops I shall advise you further.

P.S. I am not satisfied that Mr. Case......I feel sure that he knew that you knew Dr. Picard, and I suspect that he had a full memorandum of your communication with Picard. I suspect he would not have attempted to place upon Picard the responsibility of this action were he alive.

The following day, Dec. 22, 1965, Justice Pennock issued his Decision and Interlocutory Judgement, as follows, where I omit repetitious material, citing of precedents and sources, and insignificant detail. In the remainder of this chapter, to minimize confusion, I use my name (Kavanau) in place of Jernberg, as plaintiff, and the name "VirTis" in place of defendant.

Judge Pennock's findings and Interlocutory Judgement

Decision of Pennock, J., SUPREME COURT, County of Ulster, Equity Term, March 1965, Justice John H. Pennock presiding.

Appearances: Gilbert and Bush Esqs., Attorneys for Plaintiff; I. Walton Bader, Attorney for Defendant.

I summarize here the essence of Judge Pennock' decision of March, 1965, and include some pertinent comments. First he summarizes the basis for my action for breach of contract against Virtis, and breaks it down into three 'causes.' The first cause was for an accounting of all monies received by VirTis in sales of freeze-dryers and associated equipment based on my ideas conveyed to them. The second cause was for an order directing an accounting of VirTis and Repp Industries, and enjoining them from continuing to manufacture and distribute the equipment, and further for an order enjoining them from disclosing to others information concerning the equipment, except under the name of VirTis-Kavanau CRYOVAPORATOR. The third cause was for a judgement against VirTis for a sum owed Kavanau as a result of this accounting, with interest, together with costs and disbursements of the action. To summarize briefly, the complaint alleges a breach of contract by VirTis and/or its assignees or successors.

VirTis claims that Kavanau devised and disclosed nothing to them in delivering his ideas on the freeze-drying equipment. In effect they claimed that the consideration for which they bargained, that is, Kavanau's knowledge of freeze-drying, was already a matter of public domain and available to them from other sources. The proof and testimony, however, were to the contrary. Some of Kavanau's ideas were available to VirTis from other sources upon diligent search but that was not the controlling factor on the issue before the court. The issue before the court was the contract between the parties. There was a mutual consideration and a mutual promise.

According to the judge's findings, Kavanau was a recognized scientist in the field of freeze-drying, and his name and knowledge were of scientific value, particularly as, at the time of negotiations and execution of the contract with VirTis, Kavanau was employed as a researcher at the Rockefeller Institute. At that time, Judge Pennock asserted, VirTis was an insignificant player in the freeze-drying business. Recognizing Kavanau's abilities and technical knowledge, and his development of a chamber-type freeze-drying unit, capable of ready manufacture and profitable marketability, they entered into the contract with Kavanau. In effect VirTis bargained for the right to use the subject matters of his ideas and apply them to the manufacture of all their freeze-drying equipment. In essence, Kavanau employed VirTis to help him profit from his novel ideas, VirTis was to have the exclusive right to place Kavanau's name on its equipment. In return Kavanau was to receive royalties on the sales for a 10 year period.

At this point, I correct and elaborate on the Judge Pennock's findings. VirTis, in fact, was the dominant player in the field of freeze-drying equipment (manifolds with nipples are seen in Figs. 3-2 &3-4) for research, but was a non-entity in the field of industrial freeze-drying. Almost all the large scientific equipment companies marketed VirTis' products.

Before the contract was signed, my name and affiliation were of no value. In fact, my affiliation with Rockefeller was not even mentioned in the CRYOVAPORATOR ad in Science. Only after the ad in Science appeared, and disclosed the feasibility of drying multiple, individual small samples in vials, test tubes, and serum bottles placed on stands in chambers, could any value have been attached to my name. But that was beside the point. The determining factor was the above-mentioned disclosure of the feasibility of freeze-drying many individual small samples in chambers.

That was the valuable information that I conveyed to VirTis, and whose rapid exploitation eventually propelled them to the forefront of freeze-drying in research laboratories and gave them a major position in industrial production, the latter mostly biomedical and drug preparation and 'packaging' (not 'tray-drying' on the scale of large batches, as in preparing frozen-dried foods, including coffee).

Continuing with Judge Pennock's findings; in general both VirTis and Kavanau first determined the value of his invention, and then VirTis, "in order to prevent a competitive article from being put on the market" entered into the agreement with Kavanau whereby he was to receive a royalty of 5% of the gross sales. That agreement is not unlike employer-employee agreements except that Kavanau was to remain an independent researcher and advisor. Kavanau performed on his part, but Virtis breached the contract by applying his ideas to other equipment and manufactured it under other names and by other corporations.

VirTis claims it did not bind itself to anything other than the payment of royalties on the VirTis-Kavanau CRYOVAPORATOR. Under these circumstances VirTis' argument becomes quite academic because, of course, it would be unreasonable and inequitable to hold that the VirTis might terminate its contract and then continue to manufacture the freeze-drying units without payment of the royalties it had agreed to pay.

VirTis claims that the contract does not bind them to payment of the royalty on any other equipment that includes some of Kavanau's principles. It is true that VirTis did not promise in so many words that they would use reasonable effort to place Kavanau's ideas into other equipment and market his equipment for sale. The court is of the opinion however that such promise is fairly to be implied from the contract.....

The implication of VirTis' promise to apply Kavanau's ideas to freeze-drying equipment finds much support. Kavanau gave an exclusive privilege for the use of his name and his ideas in VirTis' equipment, and the acceptance of this exclusive right was an assumption of VirTis' duties....Many other terms of the agreement point the same way. The agreement at its outset recites, "That whereas Kavanau has originated and/or modified and/or developed and/or improved useful articles hereinafter enumerated and/or Kavanau has imparted to VirTis ideas enabling them to do so." The implication was that VirTis' business organization would be used for the purpose for which it was adapted.

Yet VirTis helped itself to all of Kavanau's ideas which it had bargained for under the contract, and now takes the position that it does not have to make payment of royalties for these ideas it has usurped and used in other equipment. It is obvious, however, that it was the intent of the parties that the equipment be developed and perfected as time went on, with the improvements and ideas coming from Kavanau and VirTis' technicians. An effort on VirTis' part was implied by the contract; otherwise Kavanau would receive no compensation at all. Without an implied promise, the contract could not have had the business efficiency that both parties must have intended it to have.

The court finds that VirTis was under a duty to try to market the designs and ideas of Kavanau and to account to him for profits. The evidence as adduced on the trial is replete with testimony that the ideas of the original Kavanau Freeze-Dryer were incorporated in other equipment manufactured by VirTis. Their exhibit "N" in evidence (Fig. 3-1) leaves this court no other conclusion. In that exhibit which advertises the VirTis-Kavanau CRYOVAPORATOR it reads as follows:

Developed by Dr. J. Lee Kavanau this complete and compact mobile Freeze-Drying unit performs many functions never before found in a single Freeze-Drying apparatus.

This, within itself, is VirTis' strong admission that the freeze-drying unit developed by Kavanau contained many ideas that resulted in great advancement in the field and profits for them.

VirTis purports to defend Kavanau's claims in the same manner as in a defense of a patent action of claim [not surprisingly, as VirTis' counsel, Bader, was a patent attorney. JLK]. It specifically points out the criteria that made up the novel idea of Kavanau which, at the time of the agreement, was common knowledge and a matter of public domain. This is not the test to be utilized here. There is no question that Kavanau's ideas, in part, may have existed elsewhere, and documented proof of such was offered. However his conception of a unit apparatus which was both capable of manufacture and marketing was new to VirTis. Otherwise why would they agree to pay a royalty - obviously, the only reason VirTis promised to pay royalties was for the purpose of applying Kavanau's ideas to instruments for the freeze-drying industry, which was then about to be launched with great momentum in this country. Kavanau had the ideas and the knowledge which VirTis wanted to incorporate into their freeze-drying venture, which propelled them to great success and profits. Scientific knowledge, advice, and ideas are a fluid field, incapable of measurement except when applied to scientific management for the purpose of applying them to instruments or equipment that can be manufactured and marketed. The contract called for a duration of 10 years, during which the original chamber type freeze-drying unit developed by Kavanau would be improved by VirTis; at least this was implied, otherwise the unit would have become obsolete at its inception. The improvements were contemplated by the parties and the record substantiates this. What VirTis did was to make improvements and rename the machine to avoid payment of royalties. The mere erasure of Kavanau's name from the machine, as contended by the defendant, would not eliminate their obligation to pay royalties.

It seems to this court that the contract must be interpreted in view of the conditions existing at the time the arrangements were entered into, and if the continuance of these conditions is necessary to the proper performance of the contract, it is implied that neither party is voluntarily to change these conditions to the detriment of the other. The contract did not prohibit an assignment, and it could reasonably be contemplated by the parties that VirTis might, for business reasons, merge with another corporation as a parent or subsidiary. In this instance, as a subsidiary, in that another corporation purchased all VirTis' stock from its principal stockholders. In the present action Kavanau can only look to VirTis for relief. Corporations and persons not parties to the action are not bound by the judgement. It appears from the record that all of the corporations, VirTis, Repp Industries, Inc., Cryotec Manufacturing Corporation and Cenco Instruments" were dealing with each other with full knowledge of the contract with which this action is based.

The record specifically bears this out at page 600 where a stockholder and president of the defendant corporation testifies

....in our contract with Cenco Instruments is the statement that there is a lawsuit that exists with Dr. Kavanau. We have made a full disclosure of this to Cenco Instruments. It exists in our contract....We are proceeding with this lawsuit as an everyday affair of the VirTis Company, even though it is owned by Cenco Instruments.

All of the parties should have been joined but this does not prohibit the rendering of an effective judgement by the court. Therefore, this being a court of equity, the determination shall dispose of the controversy as between the parties to the instant cause of action and shall be interlocutory in nature.

It is further determined that Kavanau is entitled to an accounting of VirTis pertaining to the manufacture and sale of all the items as set forth and found by the court in item 11 of Kavanau's proposed findings. That VirTis shall also produce all of the accounts of Repp Industries pertaining to these items. That the corporations not named as parties, Repp Industries, Inc., Cryotec Manufacturing Corp. were bound by the contract, being subsidiaries of VirTis, however any accounting by them must be performed through VirTis, as to accounting of the manufacture, distribution and sales of the items set forth in finding 11.

Pending this accounting, the court in the interest of justice and equity further directs that VirTis make a full accounting to Kavanau as set forth in the interlocutory decision within sixty days of entry of a judgement [this was said to have required 55 days] and order for an accounting. That this determination is interlocutory only, as the contract is to run several more years. Upon completion of the accounting, the court, if it is not a satisfactory remedy for the plaintiff, reserves to itself the right to award the plaintiff money damages based upon the value of the corporate assets at the time of the transfer of the corporate stock. And it further determines that in the interim Kavanau is not precluded from proceeding against unnamed corporations or persons that are necessary for an effective remedy.

The court determines that based upon the findings of fact and law contained within this decision, and the findings of fact submitted by the parties, and marked found and not found by the court, Kavanau is awarded judgement for an order directing VirTis to account for all sums received by it, its agents, servants, employees and officers and subsidiaries in respect to the items listed in finding 11.

The request for injunctive relief, as to the manufacturing and marketing of the equipment incorporating the ideas, devices, and articles perfected and developed by Dr, J. Lee Kavanau.....is denied, because Kavanau will not be irreparably harmed and, in fact, may be awarded compensatory money damages for deletion of the name "Kavanau," as the court has reserved to itself the right to award money damages upon completion of the account for the equipment sold and the value of the considerations at the time of the transfer of the corporation stock to Cenco.

The court in the interim determines that Kavanau is entitled to an injunction prohibiting VirTis from conveying, transferring or assigning any of its assets and personnel, and any and all realty rights, interests or accounts during the pendency of the accounting and rendering of final judgement by the court.

Kavanau is entitled to an accounting on the basis that VirTis has become a subsidiary to a parent corporation with which Kavanau has no legal relationship. Thus VirTis has assumed the prerogative to assign the contract to a stranger corporation. This court then has determined that the accounting is for the purpose of setting guidelines for the court to arrive at the amount of damages to which Kavanau is entitled. If the accounting fails to fulfill the requirement for this court to assess damages, then the court shall look to the entire record to award a sum of money damages. The accounting shall be taken before this court as heretofore determined within sixty days of the entry of this interlocutory judgement.

The findings as prepared by Kavanau and VirTis,, and marked as found and refused by the court are a part of this determination.

Costs are to abide the event of a final judgement.

Kavanau to submit order and interlocutory judgement in accordance with this determination.

Interlocutory Judgement

At a special term, Part I of the Supreme Court of the State of New York, held in the county of Albany, for the county of Ulster, at Albany, New York, on the 22nd day of December, 1965.
Present:
Hon. John H. Pennock, Justice
The issues in the above-entitled action having duly come on for trial before Mr. Justice John H. Pennock, without a jury, at a Special Term, Part I, of this court held at Albany County Courthouse, located at Albany, New York, on April 1, 2, 3, 1965, and the plaintiff, Dr. J. Lee Kavanau, having appeared by his attorney, Sidney Bush, and the defendant, VirTis, having appeared by its attorney, I. Walton Bader, Esq., and David W. Corwin, Esq., and the issues having been duly heard, and the Court after due deliberation having made and filed its decision, on the 27th day of November, 1965, by which it directed the entry of an interlocutory judgement in favor of Kavanau and against VirTis.
Now, on motion of Sidney Bush, attorney for Kavanau, it is
Ordered, adjudged and decreed, that Kavanau is entitled to an accounting by VirTis as to the manufacture, distribution and sales of all of the following items made by VirTis:
There follows a detail listing of items; and it is further
Ordered, Adjudged and decreed, that the said defendant, The VirTis Company, Inc., make such full and complete account to the plaintiff within sixty (60) days from the entry of this interlocutory judgement and order, and it is further
Ordered......that such accounting commence to be held before this Court, and the office of the Clerk of this Court, at the County Courthouse, Kingston, New York, on the 3rd day of January, 1966, at 10:00 a.m. until 5:00 p.m. of that day, and daily thereafter at said place each day to occur at said times until the same is completed within the said sixty (60) day period mentioned above; and it is further
Ordered.....the defendant, VirTis, produce at such times and make available for inspection by Kavanau, his attorney, accountant or other representative, all books records, documents and papers concerning any and all manufacture, distribution and sales of the aforementioned freeze-drying equipment, including but not limited to sales records, ledgers, cash books, bank statements and accounts, federal and New York State corporate, franchise, sales and other tax returns or copies thereof; and it is further
Ordered......that this Court reserves to itself the right to require said accounting to be held before a Referee to be designated by the Court, such right to be exercised upon the written request of either party; and it is further
Ordered.....that Kavanau is entitled to recover from VirTis, a judgement for five (5%) per cent of all sums received by VirTis, its agents, servants, employees and officers and Repp and Cryovac with respect to such of the items of equipment referred to heretofore; and it is further
Ordered.....that pending the said accounting and rendering of a final judgement by this Court, VirTis is hereby enjoined and restrained from conveying, transferring or assigning any of its assets and personality and any and all realty, rights, interest or accounts; and it is further
Ordered.....that this court reserves to itself the right to award Kavanau money damages based upon the value of the corporate assets at the time of the transfer of the corporate stock by its primary stockholders who were also officers of this corporation, and money damages for the deletion of the name "Kavanau"; and it is further
Ordered.....that in the interim Kavanau is not precluded from proceeding against unnamed corporations or persons necessary for an effective remedy; and it is further
Ordered.....that Kavanau is hereby entitled to recover of VirTis interest on the aforesaid accounts so found due to him from the each of said amounts should have been paid and his costs, to be taxed upon the entry of final judgement herein; and it is further
Ordered.....that Kavanau may move for such further order or final judgement when he becomes entitled thereto in furtherance of and in accordance with the aforesaid decision of this Court.
Enter,
s/ John H. Pennock, J. S. C.

VirTis appeals Judge Pennock's Judgement

Based upon this comprehensive Interlocutory Judgement, the reader may judge for himself Judge Pennock's conviction, from observing the Court's, witnesses' demeanors, believability, etc., during the trial, that VirTis was indisputably at fault in the matter of royalties owed to Kavanau.

At any rate, Bader lost no time in filing a Notice of Appeal on December 28, 1965, as follows (continuing to reword legal documents in the interests of simplicity).

Sir:
Please Take Notice that VirTis hereby appeals to the Appellate Division of the Supreme Court, Third Judicial Department, from an interlocutory judgement, and each and every part thereof, rendered by Honorable John H. Pennock, one of the justices of the Supreme Court of the County of Ulster, on December 22, 1965 and entered in the Office of the County Clerk of Ulster County on December 24, 1965.
This appeal is taken pursuant to 5515 CPLR and VirTis further appeals on both the law and the facts.
Yours, etc.
December 28, 1965
I. Walton Bader
Attorney for VirTis

In 1966, my brother Dick made two trips to New York to consult with Bush. No detail of these meetings exists. In fact, I am not in possession of all the correspondence between Bush and my brother. Both passed on long before I had any thought of writing an autobiography. The accounting from the books of VirTis, Repp, Cryovac, etc., proceeded as directed by Judge Pennock. It occupied the better part of 55 days, at a cost to us of $6,000. On April 22, 1966, Bush wrote to my brother as follows regarding VirTis' appeal:

I have been reading and rereading the papers on appeal in the VirTis matter.

I cannot help coming to the point of view that the use of William Boss in this matter [the appeal] was poorly done. The major mistake made here was in hiring Corwin, a one-time Asst. D.A. in Albany, but in not using him, and in letting Bader try the case. In a sense VirTis is repeating the same strategy and the same mistake. William Boss is a former judge, who presumably is on good terms with the members of the Appellate Division who will review this case.

Instead of Boss trying some interesting, new or useful approach, he seems to be using Bader's thoughts. I might say that I feel Bader probably did the brief, or a preliminary draft of it, and that Boss merely reworded it, at most. The arguments advanced are the two weak arguments previously advanced, considered and rejected, that (1) it was the dual condenser that was the desired part of the equipment purchased and when the dual condenser "failed" the consideration for the agreement failed and obligation on the part of VirTis ended, and (2) that in any event VirTis had a right to remove Lee's name from the equipment and thereafter not be obliged to pay royalties.

These arguments were effectively disposed of, and I suspect will be considered similarly by the Appellate Division. I suspect the principal grounds of the appeal will have to be in the fact that William Boss, former justice of the Supreme Court, will be appearing before his one-time colleagues arguing. I prefer thinking that Boss' mere presence will not persuade a court to reverse a basically sound decision [unfortunately, it did in entirety. JLK].

When you have had a chance to look over the record, and these comments I have forwarded, I would appreciate knowing your views, at least in a general sense.

Sidney Bush dies in an auto accident; Joseph J. Einhorn takes over

According to the best information I have, the appeal was scheduled for sometime in September, 1966. Unfortunately, on Sunday, July 24, 1966, Sidney Bush, apparently driving home from his office, fell asleep at the wheel and had a fatal crash. Through means which I do not recall, Joseph J. Einhorn, Counselor at law, of 21 E. 40th Street, New York 10016, NY, was employed to continue my suit on the same basis as Sidney, namely, on a contingency arrangement.

First exposure and settlement talks

The following is Einhorn's letter to my bother Dick, of Sept. 30, 1966, concerning the status of the VirTis appeal.

Bader, Jr. [Bader had been joined in his law practice by his nephew, Moto (or Benedict) Bader] called me last Monday but it was not until last Wednesday that we were able to contact each other. My general impression is that Bader, Jr. welcomes a discussion of settlement. He told me that Sidney Bush had originally requested about $15,000 in settlement of this case but that he now realizes that he will have to pay substantially more. He stated that he is ready to submit certified proof that the total gross sales of all the companies do not exceed $4,800,000 through the end of fiscal 1965. If the contract is in fact limited to the 10 year term specified therein, the total for that period would be not more than $3,800,000. Consequently he claims that if the 5% royalty were applied to every sale made by the companies, the maximum recovery would be $190,000 with interest.

He further claims that the sales of all the machines named in the Findings and Judgements would produce royalties of not more than $15,000. Also he contends that a mere glance at the catalogue would show that a tremendous proportion of the sales of the companies cover equipment not in the freeze-drying field. He contends that if the Judgement were to apply to every type of freeze-drying equipment sold by the companies, the maximum exposure for the defendant from royalties would be about $75,000. He indicates that this litigation has and will cost VirTis about $25,000, in fees and expenses.

From all the foregoing I have gathered that Bader is willing to discuss settlement in an area between about $25,000 and $100,000. He is ready to arrange a conference of all the attorneys prior to the argument of the appeal. If you feel it is of interest to you to enter into discussions within the area specified, please let me know what arrangements you can make for attendance at such discussions.

I have received confirmation from the Clerk of the Appellate Division, Third Department of the filing of the stipulation substituting me as attorney for the plaintiff and have been advised that the appeal will be scheduled for the October Term. I have spoken to the Clerk of the Appellate Division and have been advised that the case will be called for argument as the last case of the October Term, on Oct. 24, 1966 at 10:00 a.m. The case will definitely be argued at the October Term. The Clerk stated that he was requested to put the case on as the last case "because there is some possibility of settlement." This statement was apparently made by Bader or one of his associates and I interpret it as an indication of some eagerness on their part to negotiate a settlement.

I await your further instructions.

Appellate Division of Supreme Court reverses Judge Pennock's Judgement
Of the arguments presented on appeal or any other information pertaining thereto, I know nothing, as I did not seek to obtain Dick's records after his death in 1993. One of Dick's trips to New York in 1966 may have been in connection with the appeal. At any event, our ten years of honest effort and Judge Pennock's careful observations at trial, and analysis of evidence, all came to naught, and 8 more years of litigation lay ahead when the following memorandum was issued by the Appellate Court.

Supreme Court-Appellate Division
Third Judicial Department

January 15, 1967
Dr. J. Lee KAVANAU, Respondent,
vs.
VIRTIS, Appellant

MEMORANDUM BY THE COURT.
Appeal from an interlocutory judgement that VirTis account to Kavanau for royalties under the contract in issue.
No reason appears for resorting to inference or extrinsic proof to ascertain the supposed intent, asserted by Kavanau, of the relatively simple and unambiguous contract prepared by Kavanau's lawyer. It is clear that all royalties due according to the express terms of the contract have been paid. The question of damages for a possible breach of the agreement in some other particular is not before us in this action brought for an accounting.
Judgement reversed, on the law and the facts, and complaint dismissed, without costs.

Einhorn brings Copal Mintz on board; well versed in Appellate Court rulings

From this point on, to the final resolution of the VirTis affair my file is incomplete, as the matter was essentially in the hands of the lawyers, and there was lesser need for input from me. However, I do have sufficient material to outline the events. With loss of the Appeal, Einhorn deemed it essential to bring on board another attorney, Copal Mintz, well versed in the ins and outs of Appellate Court rulings. The next step, apparently, was to bring action in the Court of Appeals, after which we were to proceed to a new trial, as will become clear in following.

My next document in this matter is my response, dated Oct. 13, 1967, to a letter from Copal Mintz in which he sought my comments on VirTis' Brief in response to an action instigated by us, and it ran to at least 44 pages. Mintz asked me to comment in detail on VirTis' technical responses to the claims in our action. My next document is a letter from Einhorn, dated Jan. 4, 1968, as follows.

Re: Kavanau vs. VirTis,
I have your letter of Dec. 29, 1967 together with your check in the sum of $510.20 covering the balance of disbursements advanced in this matter as itemized in my letter of Dec. 18, 1967. I thank you very much for your compliments in regard to the Brief but in all honesty the credit is due to my colleague Copal Mintz who, if he will not object to the change in his sex, is the mother of the Brief while I acted in the capacity of midwife.
We are still awaiting word as to the date of the argument and I will, of course, notify you and Dick as soon as that information is received.

VirTis and Cenco summoned to answer complaint

Clearly Mintz had drawn up a Brief in response to VirTis' Brief and had sent me a copy of it, and arguments were pending. The next document I have is a SUMMONS to both VirTis and Cenco, dated July 8, 1968, in which I designate New York County as the Place of Trial by the Supreme Court of the State of New York. The introduction to the SUMMONS reads as follows.

To the above-named defendants:
YOU ARE HEREBY SUMMONED to answer the complaint in this action, and to serve a copy of your answer and notice of appearance on Kavanau's attorney within twenty days after service of the summons. In case of your failure to appear, or answer, judgement will be taken against you by default for the relief demanded in the complaint.
Dated, New York, July 8, 1968.
Joseph J. Einhorn
Attorney for Plaintiff

As to the contents of the SUMMONS itself, there is nothing new or enlightening in it except that "Upon information and belief VirTis and its affiliates aforesaid have realized and received in and by the manufacture and marketing herein above alleged an aggregate of approximately $25,000,000 or more." and

The fair and reasonable value of the ideas and information which Kavanau imparted to VirTis as alleged....and of the benefits and advantage which the defendant derived therefrom, as aforesaid, was, upon information and belief, $1,250,000, no part of which has been paid to the plaintiff except the sum of $1,207.45.

I am unaware of where Einhorn obtained these figures, but the essence of the SUMMONS is that he is seeking to take the defendants to trial to recover a reimbursement to me of 5% of a claimed $30,000,000 gross sales. The eventual disposition of the action with which this SUMMONS is concerned is unknown to me, except, of course, that it was unsuccessful. The next dated document in my possession is a letter from Copal Mintz to Joseph Einhorn, dated July 31, 1968, regarding possible disbursements, excerpted as follows.

Re: Kavanau vs. VirTis et al.
This is in reply to your letter of July 29, 1968 in regard to a fee arrangement in the above case. As I told you over the telephone, my views are the following....
....As far as you and I are concerned, there should be a retainer agreement with us exclusively for our compensation, explicitly net to us. Since, as I assume, compensation has to be purely contingent, I suggest that the percentage should be not less than 33-1/3 percent.

It is clear from this correspondence that legal action was still underway and that there were expectations of recovery. For the next 2-1/2 years however, my document file is empty. My next document is another letter to Copal Mintz, dated Jan. 9, 1971, who was evidently preparing a reply to another of VirTis' Briefs, in which I answered his questions on many technical and temporal matters. My file is silent again for almost 2 years, when a letter dated Nov. 9, 1973 was received from Einhorn, announcing totally unexpected developments, as follows.

VirTis' president reneges on Cenco contract; Cenco sues him; VirTis Affair unravels

Re: Kavanau vs. VirTis
I report to you on the recent developments in this case.
Wapner is no longer in the case as attorney for VirTis. Apparently he terminated his association with Walsh, Case, and Cole, Esqs. [attorneys for Cenco]. He has been replaced by Leon Lindenhurst of the same firm. The change is for the better as Lindenhurst is much easier to deal with.
An Officer of VirTis [none other than the President, himself - JLK] has terminated his connection with Cenco and is being sued by Cenco for appropriating an idea and turning it over to his son who formed a separate company to exploit it. I expect to get details of this action when I examine the papers in the Federal Court this coming week. [Of course, once the President of VirTis violated his contract with Cenco, Cenco's defense against my legal action in the presumptive coming trial evaporated, since the only effective witness in opposition thereto was the president, himself, now exposed to be, at best, untrustworthy. JLK]
Cenco has filed a third party action against VirTis' president demanding judgement over and against him in any amount that you recover in your action, predicated on the Indemnity Agreement the president allegedly executed when he sold out to Cenco. Cenco has now moved to delay the trial of your case and to have both cases tried at the same time. We have opposed this motion and are awaiting Justice Amsterdam's decision.
On our part, we have moved to dismiss Cenco's action against VirTis' president without prejudice to an independent action. That motion will be heard Nov. 14, 1973.
A conference following the Court session of Nov. 8 was held at Mr. Mintz's office by Lindenhurst, Kidd, and Rinaldi representing Cenco and Mintz and myself representing you.
Settlement of your case was explored. We adhered to our demand of $250,000. Cenco's attorneys have indicated that they are ready to pay $26,000 on their part plus whatever amount the president of VirTis will pay on his account.
In view of the entry of new counsel in this case, we have indicated that we will grant a short adjournment beyond Nov. 25th (the date now set for trial) to allow new counsel to familiarize himself with the case. However, the date of trial will be fixed by Justice Amsterdam. In any event there is no need for you to make active preparations to be in New York on the 25th of Nov.
I seem to recall that a copy of the entire transcript of your examination before trial was sent to you. We require this for active trial preparation and would appreciate your mailing same to me as soon as possible.

Einhorn's memorandum in refutation of VirTis' arguments and Motion prior to trial

The next document in my file is KAVANAU'S MEMORANDUM IN OPPOSITION TO VIRTIS, ET AL.'S MOTION FOR SUMMARY JUDGEMENT to be acted upon by the Supreme Court of the State of New York, County of New York. In this, J. Lee Kavanau is Plaintiff against VirTis, et al., Defendants, with the VirTis Company et al., as Third Party Plaintiffs against the president of VirTis.

This is the key document remaining in my possession that clarifies the actions taken and being taken and the bases for them. It also reveals that our case in the interim also had been heard by a Court of Appeals beyond the hearing, already treated, before the Appellate Division.

For a factual response to VirTis' motion, more than five years after the commencement of this action and more than four years after the joinder of issue, the Court is respectfully referred to the opposing affidavit. This memorandum is submitted in refutation of the VirTis' legal arguments. [Inasmuch as the memorandum repeats circumstances and arguments already known to the reader in detail, its contents are omitted. JLK]
Respectfully submitted,
Joseph J. Einhorn
Attorney of Plaintiff
Copal Mintz, Of Counsel
December 21, 1973

With their defense unraveling, Cenco proposes a settlement

I have one last pertinent document, below, as to the final outcome of our actions. Sometime between the above date and the date of Einhorn's letter below, April 24, 1974, I was informed by phone that Cenco had decided to settle for $75,000, After the deduction of expenses (roughly $10,000), the attorneys received 40%. For Cenco to put the expense in the best possible light for stockholders, it was to appear on the books as the purchase price for Nils' and my patent on the UNIVERSAL PLATE, which still had a few years of life.

Letter from Einhorn, April 24, 1974, Re: Kavanau v. VirTis

I enclose herewith the original and two copies of the General Release which is to be delivered to the attorneys for VirTis on the closing of the settlement herein now scheduled for May 2, 1974.
Please execute all copies of the enclosed release by signing your full name "J. Lee Kavanau" at the point indicated by your initials and by having a Notary Public take your acknowledgement and affix his stamp at the point indicated by the initial "N.P", on all copies. Please note that in addition to the Notarial signature there is required what is commonly described as a "flag" which is a certificate from the County Clerk of Los Angeles County attesting to the authority of the Notary who takes your acknowledgement. This flag is to be affixed to the three copies of the release.
At the time of this dictation I have not as yet received the Assignment or license in regard to Patent #2,996,288. If received in time when this letter goes out it will be enclosed with separate instructions for your execution.
I trust that you will be able to attend to the execution of the enclosed release in time for their return to me by April 30th. Since the check in payment of the settlement will be made to our joint order, as is customary, I think you should give some thought to the prospect of coming to New York [which proved to be unnecessary] to arrange for deposit of the check and for remittance to you of the proceeds.

Thus ended this sordid affair with VirTis, which I would very much preferred to have avoided. The beneficial legacy, however, remains in the form of chamber-type freeze-dryers, with uses in many fields, of which the biomedical is the most importance (vaccines, sera and antisera, growth hormone, etc.) Many of these doubtless bear the name of VirTis or an affiliate, existing in perhaps thousands of laboratories throughout the world.

I should mention that Mr. Marty Parkinson, Vice President of the VirTis Corporation did not approve of the President's bad-faith actions. For whatever reasons, he was powerless to counteract them. In fact, after friendly greetings between us on the first morning of the trial, Marty 'disappeared.' Although Mr. Bush might have called him as a witness, the truth prevailed at the trial, in any event.

On the Matter of the Law

From my layman's point of view at that time, as an observation on the matter of the law, as it pertains to this case, both our legal suit against VirTis and my agreement with them apparently were poorly drawn. An unbiased person, such as Judge Pennock, drew reasonable inferences from the contract and the trial proceedings, and found entirely in our favor. But the judges of the Appellate Court may have been biased by the fact that their former colleague, a retired justice of the same court, was arguing the case before them. They based their following decision on the strict interpretation of the provisions of the contract:

No reason appears for resorting to inference or extrinsic proof to ascertain the supposed intent, asserted by Kavanau, of the relatively simple and unambiguous contract prepared by Kavanau's lawyer. It is clear that all royalties due according to the express terms of the contract have been paid. The question of damages for a possible breach of the agreement in some other particular is not before us in this action brought for an accounting.
Judgement reversed, on the law and the facts, and complaint dismissed, without costs.

It appeared that we should not have been suing for royalties but for "quantum meruit," that is, "as much as he (I) deserved." That is what the justices apparently are referring to in their penultimate sentence. In their strict interpretation the royalties had, indeed, been paid as called for by the contract. Our second trial would have been for quantum meruit. In one sense, the Appellate Court could be said to have favored us by indicating, in their decision, what our next step should be (the question of damages for a possible breach of the agreement in some other particular), and in not granting VirTis legal expenses.

As a check on my interpretation, I recently asked the opinion of another lawyer. His more informed interpretations follow, and suggest that, strictly with regard to royalty payments, VirTis might have prevailed, eventually, in any event.

Your "impressions" of what happened are just that: i.e. "your own impressions." They are written by a layman for other laymen to read. If they were written by a lawyer for other lawyers, there would be a lot of different opinions. Since none of the opiners were there to know the actual facts, but you, it makes no difference.
But for your own edification: (1). if there were any actual bias by the Appellate Court members, they should have recused themselves, or your lawyers should have made a motion for their recusal. That's the only part of the case that I would question now; (2) it is the duty of the Appellate Court to rule on the law and not on emotions. The trial judge was probably trying to "do the right thing," but that's not how the system goes.
When there is an appeal, the higher court looks over everything, but the facts as found by the lower court. They can't change a "finding of fact," but they do change errors of law. Of course their opinion is based on the strict interpretation of the contract. That is why lawyers take so much time in writing the sentences. If your lawyer [my brother, Richard, who was not a royalty contract specialist] had written your contract correctly, you would have won. The Appellate Court found that the "royalties had been paid according to the strict interpretation of the contract." The amount paid might not have been fair, or equitable, or to your liking, but, it had been paid.
You are mistaken in believing that the Appellate Court was suggesting that a second suit for Quantum Meruit was the way to proceed, or that it was the way to proceed originally. It would have been a loser! "QM" is a remedy that is only applicable to a contract that does not specifically provide how the compensation is to be computed, i.e. I'll mow your lawn on Saturday and you'll pay me on Sunday (that is a good contract, but it omits the compensation).
Consequently a suit for QM would be the remedy if the parties couldn't agree, after the fact, on the compensation. None of this applies to your case, because there was a specific method and it was used by VirTis. That's what the Appellate Court held, i.e. that is their ruling! And, of course, they used a strict interpretation of the language of the contract,--that's what "contracts are all about to begin with." If there was no ambiguity in the language, they can't make up ambiguity, just because they are sympathetic toward you (Obviously the lower court did this--but he was overruled.)