Geni-Chlor International, Inc., a Corporation v. Multisonics Development Corp., a Corporation

Appellant Multisonics Development Corporation (Multisonics) agreed to sell to appellee Geni-Chlor International, Inc. (Geni-Chlor) a patent for a “Swimming Pool Water Conditioner,” along with “related inventions and know-how applicable to swimming pool use and pertaining to hypochlorite generating processes and apparatus.” A detailed written contract was prepared and executed by the parties on March 9, 1973. The contract provided for a purchase price of $201,000, payable with regular installments. Multisonics retained title to the patent as security until the full purchase price was paid, but granted Geni-Chlor an exclusive license to utilize the patent and related know-how in the interim. The contract also required that all disputes, except for those concerning the validity of the patent, be arbitrated. Geni-Chlor agreed to Multisonics’ express disclaimer of warranty of the patent’s validity.

Geni-Chlor failed to pay the January 1974 installment. Multisonics gave notice of default and submitted the matter to arbitration. The parties and the arbitrator agreed that the validity of the patent could not be determined by the proceedings. Geni-Chlor did not then try to obtain a…