(Oircuit Oourt. S. D. N(J1J) York.
The extent of an implied license to make and sell patented articles is to be construed according to the presumed intent of the parties, as inferred from the circumstances. 2. RIGHT TO SELL-INJUNCTION. A tlrm having been largely engaged during several years in manufacturing and selling stoves upon designs patented by one of the partners, and accounts them having been repeatedly settled embracing, such sales, and the protltl\ thereon, as firm business, keld, withQut regard to the que&tion whether the patent wall equitably the exclusive property of the patentee, (1) that' a ll¢en811 by the patentee to the firm to make the stoves and, to sell those manwas c?ufactured was implied; (2) that such license, by necessary: extllnsivewith the business of the flrm,and continued untIl the copartnershIp affairs :w:ere wound ,up by any'lawful agencies for that purpose; (3) that, cons,equllJ),t1yl.thecopartner of the patentee had the same authqrity after dissolution as QeIore to sell for thebeneflt of the firm the stoves manufactured for SIlle before dissolution; and (4)'that a'receiver of ,the partnership effects, appointed by,a state court" in a, suit brought for winding up the affairs of the 'PMtnershIp, had a similar authority to sell the stoves remaIning on hand, both as'the representative of the parties, and as a lawful for closing up the partnership business, and was by necessary implicatIon included in the im'plied license; an application for an injunction to restrain hj.m from selling ' , wasthel;llfore refused.,
, I · , . ' ,
,E.N. 1}ico/BOn, Jr., for complfUnant. (J/p,rence H, Frost and Geo. F., Betts, for defendant.
In a suit brougpt in the state court for winding up the copartnership of of which the' complainant was a member, the, in February last was appointed receiver of the partnership ,effects. Am(;mg the assets that came intp his hands are stoves of various patterns; manufactured in the ordinary course of the firm bU$lesli!under issued, during the Gontinuance of the partnership, ,to the plaintiff individually; and also pattern!!, moulds, and dies useqin th.e manufacture. The copartnership, with some changes in itS meIlfPers,;,hlld existed for many years, and a large quantity of stoves under the peen manufactured and sold by the firm in th,e COllrse oUts. business, for the',benefit of the firm; and its accountS had been at yarions, times adjusted'andsettled between the copartijers, including' the,.m!tDufacture and ,sale of similar stoves. The have come into; the pands qf the receiver were manufact. ured ,during the copartnership; 'and are those only which remained undispose<J, t,he dissolution, ?fthe firm. The plaintiff seeks to enjoin ,fr<;>m. and the dies, patterns, etc., upon the ground that the' plamtIff IS the sole owner of the patents under which the stoves ,were made; and, license might be implied in faver of the firm, or of the copartner, Lent, to make and sell the stoves during the continuance of the firm, such license was a purely
MOr.;!i'RoSS V. MABIE.'
personalonej that the license to make and to sell are distinct, substantive rights, and that any implied license either to make or to sell was determined instantly upon the dissolution of thefirmj and that the receiver, therefore, acquired no authority to sell, and cannot do so without infringement of the complainant's patent-rights. It is not disputed by the plaintiff that a license to the firm of Montross & Lent is to be legally inferred from the circumstances, "to manufacture the patented articles, and to sell such of them as were sold during the existence of the firm." The facts and the circumstances, includ. ing the conduct and acts of both parties during a long series of years, are such as to leave no question of a license to that extent. SeeHapgood v. Hewitt, 119 U. S. 226, 232,7 Sup. Ct. Rep. 193j Wade v. Metcalf, 16 Fed. Rep. 132; American Tube-works v. Bridgewater Iron Co., 26 Fed. Rep. 334; Herman v. Herman, 29 Fed. Rep. 92. In Adama v. Burke, 17 Wall. 453, 456, Mr. Justice MIl,LER says: "The right to sell and the right to use are each substantive rights, and' may be granted or conferred separately by the patentee. But in the essential nature of things. when the patentee, or the person having his rights. sells a machine or instrument whose sole value is in its use, he receives. the consideration for its use, and he parts with the right to restrict that use." 7" All the stoves manufactured this firm were made for the purpose of sale, and not for me by the firm. The same facts, therefore, that warrant and necessitate in this case the inference of a license to manufacture, necessarily include the right to sell as well as to make, as that was the only purpose and interest Qf the firm in their manufacture. Following the language of Mr. Justice MILLER above quoted, the sole value of the license and of the stoves to the firm in this Ca.<le was the right to sell them. The license implied here was undoubtedly a license to make and to sell. I see no just reason for holding the license to sell, implied under such circumstances, to be ended at the moment of the dissolution of the firm. The language of the circuit judge in Hapgood v. Hewitt, supra, artd approved by the supreme court, that "the right, being a mere personal one, was not transferable, and was extinguished by the dissolution of the corporation," must be interpreted in reference to the facts of that case, which had ·reference only to new goods, made by an independent corporation after the dissolution of the former corporation. The implied license that is inferred from the acts and dealings of the parties is in the nature of an estoppel to pre\Tent what would otherwise be a gross injustice, if not fraud. Every reason that exists for inferring a license to sell before dissolution the stoves that were ma.de by the firm for the purpose of sale, applies equally in favor of a license to sell after dissolution such stoves as then remained unsold, for the purpose of winding up the concern. As respects the right of the copartner Lent, I know of no principle of law that would make his right to 'sell after dissolution any less than before. A partnership, and the rights of partners, are not ended by dissolution. A dissolution, as Kent observes, (8Kent,Comm. *63,) is "in some respects prospective only;" While
neitber party CllO bind the other by new contracts, both have the same right as before to aell the partnership effects for the purposes of settlement and distribution. "A dissolution," says DENIO, J., in Robbins v. Fullrrr, 24 N. Y. 570, "though it annulled the powers of the respective partners for many purposes, * * * did not put an end to their authority to administer the assets in accordance with the rights and interests of the parties interested in them, and with the intention of the partnership enterprise. For this purpose the partnership is considered as continuing." For that purpose, say the court in Murmy v. Mumford, 6. Cow. 441, "the partnership may be said still to continue, with all the· incidents belonging to tha t relation." It is evident, therefore, that Lent, as one of the partners, had an equal right with the complainant to sell the stoves on hand after the dissolution as much as before. ..That right still exists in him, .except in so far as it is, abridged by the appointp}ent of the defendant as receiver in the ac.tion pending qetween the in the state court. The receiver in sueha case is,bu.tthe arm of. the court to carry out and perform what the court adjudges ought to be performed as between the parties to the one of the parties has a legal right t08e11 the patented article, or have it sold for the firm's benefit, the court, having risdiction olthe parties and of the subject-matter, must have the power, through iUlreceiver, to do what either of the parties have the right to have done. In substance and in effect, the sale in such a case is through an agency and an authority invoked by a party who has a right to sell, . and who asks the aid of the court for. that purpose. The general rule that a mere naked.license is not transferable Seems to me to have no application to such a. case; because the receiver sells for the benefit of the licensees themselv.es,not for the use and beilefit of others. These stoves, to the value of about $16.000, are lawfully in the receiver's hands, to be sold for the benefit of the firm, who were licensed to sell them, and whose right to sell them, or to have them sold, exists still, notwithstanding the dissolution. If they cannot be sold by the receiver, they cannot be sold by any. one; since his authority, for the time being, standll in lieu of that of the parties themselves. It would be an opprobrium upon the law, and a gross incongruity, to holdtJaat the court could not effect; through its receiver, upon a disagreement of the parties, a sale that either of the parties is authorized to make; or that the complainant, from mere obstinacy or caprice, might legally insist that the firm property that he had licensed to be made and sold for the firm's benefit should be broken up into oltl iron, instead of being devoted to the uses of the firm; and it would be a strange. perversion of equity to sustain . such a purpose byinjunction. Again, there is no reason for treating the implied license in this case a. mere personal privilege, to be exercised by the· partners in person alqne. The extent of 8 license is such as the contract of the parties makes it. Blac1c v. Hubbard, 3 Ban. & A. 39; Lightner v. Boston &: A. R. 00., 1 Low. 338. If made to the licensee "and assigns," it is transferable without limit. The license may, indeed, be made expressly
MONTROSS 'I.l. MABIE.
to an individual, to be used by himself alone, and not through agents or employes. The extent of the license is a question of construction, and, as in the case of other contracts expressed or implied, is to be termined in accordance with the intention of the parties. A license to a man engaged in business to make and sell a patented article in his business generally, unless there were something else to restrict it, would manifestly be co-extensive with his business, and would continue till his busineSS was wound up. The licensee in such a case is not restricted to manufacturing with his own hands, or selling by bis own personal efforts only. He may employ as many hands and as many salesmen and agents as his business will admit. So long as the articles are made and are sold in his business, and for his nse and benefit, the sale would be within the license, though effected by the hands of hundreds of different agents and employes. The license necessarily implied from the circumstances in this case is .a license to'manufacture during the continuance of the firm, and to sell Ali the manUfactured articles for the benefit of the firm until it is wotindup, :after dissolution as much as before,and· by any agency that rilaybelegaHy invoked in order to wind up the business. Thelicense mUst be oonstruedas so intended; because any other construction would be unreasonable and ruillous.A sale by a receiver of the stoves lawfully manufactured for the purposes of sale during the continuance of the partnership is by necessary implication a part of th,e license, to the firl)l to manufacture and sell; because the receivership is a lawful agency. for the sale of the firm assets for the benefit of the firm, as much so as that of a salesrnan appointed by the parties themselves to effect the same ject, either during the partnership, or after its dissolution. Substantially the same question is presented upon the insolvency or death of one who had been licensed by the patentee to make and sell the patented article, as respects the right of the executor, administrator, ·or assignee in insolvency, as the case may be, to sell the goods remaining on b,and at the time of the licensee's death or insolvency. If the license was not to assigns, it is settled that no new goods could be made under the license by the assignee or personal representatives of the licensee, though the term of the license had not expired. Oliver v. Rumford Ohem. Works, 109 U. S. 75, 83, 3 Sup. Ct. Rep. 61; Curranv. Craig, 22 Fed. Rep. 101. But though this situation, as respects goods on hand, must have arisen often, no case has been cited, nor have I found :any, in which it haa been denied, or any doubt intimated, that t!le ago. signee or executor might lawfully sell the patented articles that ha.d been lawfully made for sale under the license. This is no slight negative evidence of the practical interpretation, at least, of the intent of such a license. Were the rule of law otherwise, since death may happen at any moment, no one could venture to do business under. such a license 1 except at the peril, in case of death, of the loss, it might be, of all his capital. If the license were in writing, a provision might doubtless be inserted proViding for the winding up of the business by personal representatives, or an assignee, though no general transfer "to assigo,S"
was intended. Such a special provision, however, would hardly be expected; and in my judgment it is. not necessary, because fairly contained by necessary implication in the license to make and sell. As respects the construction of the extent of the license in particular cases, see ing v. Turner, 8 Blatchf. 321; LlghJJner v. B08Um t!c A. R; 00.,1 Low. 338.. A further ground for holding that the complainant's license extended to a sale after dissolution is found in the articles ofcopartnership, which contain a provision that either partner upon dissolution may acquire the firm property upon an offer and acceptance of some sum to be named. This necessarily implies that any such stoves remaining on hand at the time of dissolution are a sUbject of sale to or by either partner alike, and hence it imports a license to Lent to acquire the property individually, for the purposes of general sale, and is therefore practically equivalent to a license to Lent or his assigns. Wade v. Metcalf, 16 Fed. Rep. 130. This part of the 1Il0tion must therefore be As reSpects the patterns, etc., inasmuch as these would be of no use, or of trifling value, except for the further manufacture of stoves, the right to sell them, with the right to manufacture stoves, would depend upon the equitable right of Mr. Lent to a partnership in the complainant's patents. But as I am not ablest present to examine that bmnch of the motion, and there is urgent need for an immediate decision as respects the stoves, I decide only to relieve the defendant from the stipulation made by him in tbis cause on the fourth of 'March, 1887, so far as respects the stoves, and to continue the stipulation in full force and effect for 30 days from this date, as respects the other articles except stoves; . and that the motion as respects the patterns, etc., retain its place on the motion calendar for further hearing.
RAILWAY ' , :REGISTER MANUF'G ,
Av. R. Co.
(Otrcuit Court, 8. D. NMi' York.
PATBNTll I'OB Itn'BNTIONS-RBGISTBB I'OB CAB FABEB-INFRINGBHBNT·
.A. patent, No. 260,526, dated July 4, 1882. to John B. Benton for aD Improvement in car-fare registers, and1l0nslsting of a.combination which includes.a tell-tale hand to indicatl) any failure to reset the trip-hand of the register at zero at the commencement of a trip, is not infringed by a device Incapable of being fixed at the point where registration is begun away from the proper place, so as to Indicate that fact, or act as a tell-tale at all.
Ed'liJard N. DiaerBcm, Jr., for plaintiff. John F. DiJkm and John Dane, .Jr., for defendltnt.
WUEEI&R, J. A permanentinjunctionhas been gmnted In thisC8l18e against further infringement of the plaintiff's .patent No. 260,526, dated luly 4, 1882, and granted to John B. Benton. for an improvement in
In Equity· .