CAlty, et' al. v.' LoVELL MANUF'G CO., Limited.
«(Jir'cuit(Jouri. lv. D. PenmyZvania. January 26, 1889.)
PATENTS FOR INVENTIONS-INFRINGEMENT-DAMAGES-LICENSE FEE.
Two licenses for the future use of a patented process at a specified rate per ponnd of springs shown to !lave bel:l.n regularly paid by the licensees, although one of said licenses was granted only a few days before the bill in this case was filed, and the other was granted during its pendency. and in each instance there was also the payment of a gross sum for past infringement, held to be admissible in this snit l1s evkfence tending to show an established license fee; and sufficient, in connection with evidence of a previous settlement between the patentell apd histirmat the s4me, ratll for the permitted use of said process, and other evidence of the reasonableness of said rate, to charge the defendant with on that basis.
" InEquity.· for infringement of patent. bee 31 Fed. Rep. 344. On exceptions to master's report. Witter &- Kenyon, for complainants. John K. Ha,Uock and W. Bnkewell &- Sons, for respondent. Before McKENNAN and ACHESON, JJ. PER CURIAM. The ma.ster, being of opinion that the license for the future Use of the pa tented· process at· the rote of two <lents per pound' of springs, granted 10,&. H. Wolff & Co., Limited, on March 2, 1885, and the like license, at the same rate, granted to Gibson, Parish & Co., on November14, 1885, were inadmissible as evidence, refused to hold the defendants liable for damages :upon the basis of au established license fee. And as he has found that there is no satisfactory evidence disclos-;. ing what part, if any, of the defendants' profits was due to the use of , the patented process, or to show that the plaintiffs had sustained a loss of trade, or any other special damage, the up-shot of the matter is that, if the master's report stands, the plaintiff's will receive nothing but nominal damages for the defendants' ipJringement. Is this ajust conclusion to, this litigation? The only reason assi/1:ned by: the learned master for hisrejeetion oftha licenses as,jtemsofproof is that llthey were practically settlements of pending litigations between the complainants and said licenses." and in ,the case of the Wolff license) were uroade aftertbe commencement and during the pendnncy" of this suit. But to determine properly the question of the admissibility of these licenses as evidence, and the effect to be given to them, it is, we think. necessary, not ouly to consider more closely than the master seems to have done the licenses themselves, and the circumstances under which they were executed, but also to take a somewhat broader view of the case as a whole than his report presents. And reversing the above order of procedure, we first remark that this record throughout exhibits proof of the real merit of the Cary invention, and it is clearly shown that the patented process had great money value. For example, in each of the fou,r proved instances in which there were settlements for past infringements, substantial damages therefor were paid to the plaintiffs.
.Again,' it' appea.rs. that the West, Bradley & Cary Manufacturing Company-ofwhich the plaintiff Cary was a.member-manufactured springs under It verbal license from him, and that that company, besides distouching the patcharging large liabilities connected with the ent, in a settlement made with Cary in April, 1876, allowed him for the ufje of the patent the sum of $14,000, which Mr. Cary testifies was arrived at by computing two cents a pound on all springs they had treated by the patented process. Furthermore, it is shown that from June, 1881, to the latter part of 1883, the defendants made large purchases from the plaintiffs ofsprings tempered bytbe patented proce8S, and there is.e\11· dence that the plaintiff's profits upon those springs, due to said process, considerably exceeded two cents per pound. Weare, then, of opinion that, liBide from the two particular instances of. license in question,. the proofs tend strongly to the conclusion that a royalty of two cents per pound was a reasonable and jast rate during the period of the defendants' . infringement. , Now, the defendants.began their infringing manufacture in March, 1884, and they pursued it until March 28, 1885, when they,were·restrained by preliminary injQ.l1ctiol1. But the court, by an order made ·in February,1886, having suspended the injunction upon the defendants giving security to pay to the plaintiffs such amount as might be adjudged to them on springs thereafter manufactured by the defendants, the latter resumed,. their· infringing operations, and continued the. same until the final injunction was granted in July, 1887. As we the license to R. H. Wolff & Co., Limited, was executed on March 2, 1885, which was 12 days before the bill in this case was filed.· Gih.$on, Parish & Co. ;were licensed while the preliminary injunction was in force, and about four months before the second period of the defendants' infringement began. Both those licenses, it will be perceiyed, were in full operation when the defendants elected to resume their infringing manufacture, and they took the risk of being compelled to pay .()n the basis of the rate of license thus established. We have carefully .examined the provisions of those and all the evidence on the subject, and we are unable to discover anything which casts the slightest doubt on the good faith of either transactitm. They seem to have been fair business arrangements, voluntarily entered into by the respectiveparties. R.H. Wolff & Co., Limited, had never. been sued at all. crrhat compariy had infringed to a very limited extent, and at the time it was licensed paid'8500 therefor; but it 'was not bound to tak.e a license for the future. Gibson, Parish & Co., indeed, had belm sued and setiled for past infriiJ'gement by paying $1,000; but they were under no sort of coercion to take a future license. Both those licensees regularly paid the stipulated royalty of two cents a pound on the springs manufactured by them under the patent from the dates of their respective licenses down to the expiration of the patent in June, 1888. Why, then, ·are those licenses not competent evidence as bearing upon the fair market value of a privilege which an infringer has wrongfully undertaken to -exercise? We have critically examined the decisions referred to by the
master, and the other cases cited by the defendants' counsel, but cannot concur in the view that they warrant the exclusion of said licenses from Clonsideration. We think that this case, in its facts, is plainly distinguishable from all the cases relied on to sustain the ruling of the learned master, and we are constrained to hold that he was in error in deciding that said licenses were inadmissible "as 'evidence showing or tending to show an established royalty for the use of the Cary patent." But it is contended that the license granted by the plaintiffs to the Domestic Spring Bed Company, on March 19, 1886, for the sum of $2,500, to cover past infringement and future use, shows that there was, in fact, no uniform or established licenSe fee. But the right thereby 'granted to that company was exclusively a shop-right to temper by the patented process only such springs as the company had used or might ·thereafter use in their own beds. That company was not making springs , for the market, and hence the case was exceptional, and materially different from the cases of R. H. Wolff & Co., Limited, Gibson, Parish & ·Co., and the defendants. In addition to the instances of license ,at · the royalty of two cents per pound, we have the settlement already discussed between. the patentee and the West, Bradley & Cary Manufactur· lng Company at the same rate, and also the other recited corroborative 'evidence as to the reasonableness of that rate; .and, taking the proofs altogether, we are of opinion that the defendants are justly answerable to the plaintiffs in damages upon that basis. In Clark v. Wooster, 119 U. 8.326, 7 Sup. Ct. Rep. 219, which like the present case was a suit in equity, the court, speaking of an established licerisefee and the sufficiencyof the proof thereof, said: "It is a generall'ule in patent causes that established license fees are the best measure of damages that can be 'used. * * * The complainant proved several instancl's of licenses given by him to large machine companies. the fees on which were regularly paid, and correspondt'd with the rate allowed by the master. ,We think that the defendants have no occasion to complain of the amount awarded." How many instances of license were there shown does not appear, but we think the language of the court/ully justities the conclusion we have , reached he.re upon the prOOfs before us. The plaintiffs ,ask the court, under the statutory authority, to increase ,'1he but. this we dec:line to do. The master reports that · the defendants have manufactured by the patented process 437,267 pounds ofaprings, which, at two cents per pound, amount to $8,745.34; ,and for this sumthe.plaintiffsare entitled to a decree. Let a decree be ,drawn in favor of the. . . plaintiffs in accordance with the foregoing .opinion. . ,
NAT. BANK tl. MERCHANTS' BANK.
FIRST NAT. BANK V. MERCHANTS' BANK
(O£rcu£t Court, N. D. Georgia. June 16,1888.)
REMOVAL OFCA'USES-CITIZENSHIP-NON-RESIDENTS OF DIFFERENT STATES.
Where. in a cause removed from a state court to the circuit court of. the United States for the Northern district of Georgia. it appears that the com· plainant is a citizen of the state of Alabama. and the real defendant having an interest in the controversy is a citizen of the state of Ohio. removal having been made by the citizen of Ohio. on motion to remand upon the ground that the citizenship of the parties was not such as to give the circuit court jurisdiction. held. that the cause was removable.
If. it is irregular to tile an affidavit and bond for removal the day before tak· ing a formal order making movant a party and removing the cause. such ir· regularity is cured by an order the next day making him a party and reciting the fact as to the tiling of the bond and removal of the cause.
Hoke &: Burton Smith" for the motion. HopMTl8 &: Glen, and Julius L. Brown, contra.
NEWMAN, J. This is a motion to remand, and, in order that the question presented may be understood, a brief statement of the case is regarded as necessary.. On the 13th day of July, 1887, the First National Bank of Sheffield filed itB bill in equity in the superior court of Fulton county, Ga., against the Merchants' Bank of Atlanta, on the folhwingstatement offacts: On the 14th and 15th days of June, 1887, complainant. had on deposit $8,000 with the defendant. Prior to that time complainant had been dealing with the Fidelity National Bank of Cincinnati, Ohio, forwarding checks to said bank, and said bank depositing in place of said checks currency to the credit of complainant in New York. Prior to said time the Fidelity National Bank bad been perfectly solvent, and was a bank which did an immense business, and complainant had dealt with it quite a length of time. Just before or about the 14th day of June, 1887, said bank, tbrough its officers, had squandered its money in sudden wild speculations in wheat and "futures" of different characters, and it had become totally insolvent; yet it continued to deal with complainant withoutgiving complainant any notice of its changed condition, and fraudulently concealed such changed condition from complainant with full knowledge of1lhe fact that complainant was not informed of said changed condition. By reason of said fraud the said Fidelity National Bank induced complainant on the 14th and 15th days of June, 1887, to send it two ch,ecks for $4,000 each on the Merchants' Bank of Atlanta. The Fidelity National Bank received the said checks two or three days later, and fraudulently sent the same to the Merchants' Bank of Atlanta, without forwarding the currency to New York, to be deposited to the credit of complainant, and said checks reached Atlanta on or about'20th day of June, but the Merchants' Bank has never paid out said $8,000 to the said Fidelity National Bank, and still has the same. ,