Sinclair

Defendant Aquarius Electronics, Inc. (“Aquarius”) appeals from a judgment obligating it to make payments to plaintiff under a royalty agreement.

In November 1969 Frank Bakerich (“Bakerich”), the majority shareholder of Aquarius, approached plaintiff at his home in Little River, California. Bakerich had heard that plaintiff, an electronics researcher and consultant, was working with brain waves and was interested in the commercial exploitation of his experiment. Plaintiff demonstrated the workability of the idea on a large device which converted brain waves into audible form. Bakerich, who listened to his own brain waves on this device, was impressed and was most anxious to implement plaintiff’s idea of creating and putting into commercial production miniaturized battery-operated devices which would convert brain waves into audible form.

In addition to the foregoing, the parties also discussed other matters during the preliminary negotiations. Thus, Bakerich advised Mr. Sinclair that Aquarius had only $5,000 capital for the contemplated production. In countering plaintiff’s suggestion to form a partnership or to pay him in cash for the idea, Bakerich recommended that the…