(if established) may not close a court of equity to them, still, under ihe defendant's sworn allegations and the affidavits adduced in support of them, I think a preliminary injunction, at any rate, should be withheld, upon the terms, however, hereinafter stated. And I am the more inclined to this course because of the fact, clearly shown, that the complainants have, to a very large degree,-whether with or without their fault it is not necessary now to determine,-lost control of the -market by reason of I?xtensive sales of unlicensed wire by numerous infringing parties. A preliminary injunction here would not restore to the complainants the control of the market, and, it seems to me, the injury thereby occasioned the defendant would be much greater than any benefit likely to accrue therefrom to the complainants. If the case is pressed with the diligence the rules of the court admit of, a final hearing cannot be delayed many months. But the defendant must, henceforth, file in court the sworn monthly reports to which the complainants are entitled under the provisions of the con· tracts, and must give security, to be approved of by the court, for the payment of all royalties hereafter accruing under the licenses, and damages from future transactions, which may be herein adjudged by this court to the complainants. Such security is fixed at $20,000 for the present, with leave to the complainants hereinafter to move for its increase.
MOEN MANUF'G Co. 'V. CINCINNATI BARBED-WIBJll FENCE Co.
('h'rcuit Oourt, 8. D. Ohio.
November 8, 18E4.)
SAME-FRAUD ON LICENSEE-INJUNCTJON.
As the owner of the patent in this case has been guilty of fraud in concealing its arranp;ement with another licensee, from defendant, and allowing other parties to enter the market anr! reduce the profits of defenrlllnt, and at the same time exacting from him full royalties, hiS application for a preliminary injunction should be refused.
Coburn d; Thatcher and W. C. Goudy, for complainant. James Moore, for respondent. SACiE, J., (orally.) The complainant moves for a preliminary in-
junction against the defendant, complainant's licensee under a license dated February 1, 1881, for the use of certain patented improvements in barbed-wire fences and in fenee-wire barbing-machines. The defendant is authorized by its license to ma.nufacture at one factory in
WASHBURN & MOEN MANUF'G CO. V. CINCI:NNATI B. W. FENCE CO.
the city of Cincinnati, (using not more than 12 machines,) 1,200 tons per annum of barbed fence wire, of the style represented by Exhibit A, attached to license, and this wire it may sell anywhere within the limits of the United States and territories. The license contains an acknowledgment of the novelty and validity of each and all the pat. ents, and binds the licensee not to deny or defend against the same. The licensee is bound also to make a monthly report of sales, and to pay royalty on the same at the rate of three-fourths of one cent per pound, also, not to sell below schedule prices fixed by the licensor, nor on more favorable terms of payment or delivery than those fixed by the licensor: The schedule and the terms of payment and of delivery, it is stipulated in the license, shall be fixed by the licensor, who also shall be bound by the same in all its sales within the United States and territories. The licensor reserves the right to change the schedule, and the terms upon notice as provided in the license. The licensor reserves the right to cancel the license upon 30 days' notice, in the event of the failure of the licensee to comply with its terms. Subject to this right of cancellation, the license was to continue in force for the term of 17 years, from the twenty-seventh of Februal'J, 1877. There is also a provision that the royalties to be paid shall be reduced from time to time to the lowest rates granted by the licensor to persons other than the licensee. Affidavits produced upon the hearing of tho motion are to the effect that prior to the execution of this license, in suits brought by the licensor, in the circuit court of the United States at Chicago, decrees had been rendered sustaining the validity of certain of the patents named in the license granted to defendant. One of the defendants in those cases was one Haish, and it appears from the affidavits that after decree and after the granting of the license to the defendant herein a settlement was made by complainant with him, whereby he was induced to forego an appeal, of which he had giveIJ. notice, to the supreme court of the United States, upon consideration that the complainant should purchase certain barbed fence-wire patents which he held, and that he, Haish, should have a license under the patents named in the defendant's license upon special terms. Among thesp terms was a stipulation that he should have the right to manufacturp 10,000 tons of barbed-wire fencing in one year, without the payment of any royalty upon 4,000 tons, and as to the residue upon a graduated scale of royalties, lower than those stipulated for in the license granted to the defendant in this case. The arrangement with Haish was concealed by complainant from the defendant and did not come to the defendant's knowledge until May, 1883, although the settlement with Haish was made July.26, 1881, and all this time full royalties were exacted by complainant from defendant. It appears also from the affidavits that the complainant had secretlyand at divers times and places, including Cincinnati, undersold its own Bchedule prices. Defendant complains also, and introduces
affidavits in support of its complaint, that complainant has failed to prosecute infringers of the patents named in the defendant's liceme, and that by reason of such failure, and of aaid settlement with Hais)), whereby he was enabled to break, and did break, the market of said barbed wire, and by reason of complainant's own underselling, as aforesaid, the market became and continued to be affected to such a,n extent that in the fall of 1883 complainant withdrew the scale of prices, with the intimation to the defendant that it must take care of itself; and the market has been in gl'eat part supplied by unrestrained infringers, at reduced prices, so that it has been impossible for defendant to continue the manufa.cture and sale, and pay the royalties demanded. Wherefore, defendant has refused and will refuse to pay royalties,"claiming that he has been evicted, and by cross-bill defendant prays for cancellation of the license granted to it by complainant. It was insisted on the hearing of the motion, that the stipulation in the license in reference to fixing a schedule of prices and terms of payment and of delivery are void as being in restraint of trade and contrary to public policy. Without stopping to inquire whether the rules upon this point applicable in ordinary cases, have ever been extended to a business protected by a patent, and leaving thatquestion for determination hereafter, it is sufficient to say that for the purposes of this motion the stipUlation will be regarded as valid. It is not necessary now to pass upon the question whether the acts of trespassers can be relied upon to sustain the defendant's claim that it has been evicted, or whether they furnish any reason why the defendant should be permitted to step out from under its license into the ranks of the trespassers. It has been so repeatedly decided that it is no longer open to doubt, that a licensee holding under a license containing acknowledgments and stipulations such as are contained in the license accepted by the defendant, is estopped from denying the validity of the patents, and it is about as well settled that so long as he continues to manufacture and sell, during the life of the license, he must pay royalties. I find that the defendant's complaints are well founded, that it was a fraud on the part of the complainant against the defendant to conceal the settlement with Haish, and exact royalties at rates to which complainant was bound to know it was not entitled, andit was a fraud also against the defendant for the complainant to secretly undersell, as it did, its own schedule rates. I find also that the complainant, in great measure, at least, by its own fault, has lost control of the market; that infringers are abroad everywhere unchecked, and unrestricted, putting their manufactures upon sale at prices compelling ",harp competition and small-margin of profit; and that the complaintLUt does not, in the light of all these facts, present itself under circumstances entitling it to favorable consideration in a court of equity. The object of an injunction is to prevent irreparable injury; but how is this complainant to be benefited by enjoining this defendant from
exceeding the limit, as the affidavits show it is doing, when the defendant must pay royalty on the excess, and leaving the market to be supplied by infringers who pay no royalties, and who are at large everywhere, and without restraint or attempted restraint? It is clear to me that the complainant is in a position for which it may properly charge the responsibility upon itself, and where it can suffer no damage by having this injullction refused. At all events, its application for a preliminary injunction does not commend itself to my approval, and the motion is therefore overruled.
OF NORTH AMERIOA v. LIVERPOOL STEAM CO.1
CO. V. SAME.1
(Circuit Oourt, E. D. New York. July 31,1884.)
STRANDING OF VESSEL-JURISDICTION-COMMON CARRIER-ExEMPTION IN BILL OF LADING FROM LIABILITY FOR NEGLIGENCE.
(See head-note in same case in the district court, 17 FED. REP. 377.)
SAME-NEGLIGENCE IN NAVIGATION-BuRDEN OF PROOF-SUBROGATION INSURERS.
(See 17 FED. REP. 377.)
SAME-NEGLIGENCE IN NAVIGA.TION-ERROR OF JUDGMENT.
of the South Stack light; and that, though failure to take such bearings might not, alone, be enough to convict him of negligence. still, the recollection of that fact, coupled with the recollection of the fact that he first saw the South Stack light in so unexpected a direction, and believed he passed it at so unusual a distance, together with the failure to see the Skerries light on losing the South Stack light, and the hearing the North Stack gun abaft his starboard beam-, stamp his action after hearing the gun as negligence and not error of judgment.
Ii. SAME-BILL OF LADING-BENEFIT OF INSURANCE. The provision in the through bills of lading that" the carrier so liable shall have the benefit of any insurance that may have been effected upon or on account of said goods," applied only to the transportation to New York and not to the ocean transit. 6. SAME-ACT OF 1851-REPEAL OF PROVISO. The proviso in section 1 of the act of 1851, (9 St. at Large, 635,) that nothing in that act contained should prevent parties from making such contract as they pleased, extending or limiting the liability of ship-owners for negligence of their employes, is repealed by force of section 5596 of the Revised Statutes.
E. % S., was bound not to ignore the fact that he had taken no cross-bearings
Held, that the master, in determining on the course to run on changing from
The three cases named above were tried and argued together. In the first case (Insurance Co. of North America v. Liverpool tX Great
Reported by R. D. & Wyllys Benedict, of the New York bar.