(Circuit Court, D. jlfassac!wsclts.
PATENTS FOR INVEJliTIONS-LICENSE.
It is no defense to a suit against a licensee of a patented machine that the licensor has sold or leased similar machines to other persons for a less price, when there was no stipulation in the license that he would not do 80.
In Equity. Bill by Gordon McKay, trustee, to recover license fees for use of a. patented machine from Frank W. Smith and others. J. J. M,yer8, for complainant. P. E. 'Pucker and a. A. Taber, for defendants.
COLT, J. The complainant in this suit seeks to recover of the defendants certain license fees for the use ·of a machine known as the "l\lcKay Sewing-Machine." The machine is for uniting the soles of boots and shoes to their vamps or uppers, and embodies in its construction several patents. The lease bears date January 23,1878, and it terminated September 6, 1887, or at the expiration of the youngest patent used in· the machine. McKay v. ivIace, 23 Fed. Rep. 76. The plaintiff association issued many licenses of the same :kind as that taken by the defendants. Upon the taking out of a license a certain sum of money was paid, either by way of expenses for putting up the machine, or on account of its cost. By the terms of the license the licensee was to pay the sum of 10 cents for each and every pair of shoes made by aid of the machine, or, instead thereof, he might purchase and affix a certain stamp to each pair of shoes. The present machine was originally licensed by the plaintiff to Prichard, Smith &: Co. In January, 1878, a new firm was formed, comprising the present defendants, and subsequently the original lease was surrendered to the plaintiff, and a new one issued to the new firm. For this license, and some other machinery, the defendants paid $425 to the old firm. Several defenses were set up in the answer, but at the present hearing the main ground relied upol) is the evicti.on of the defendants by the acts of the plaintiff. The principal act complained of as constituting an eviction is as follows: In the spring of 1881, for certain reasons which it is unnecessary to enter into, the McKay association, represented by the plaintiff, determined after August 14th of that year, to exact no more royalties for their machines, but to sell them to their licensees, or to strangers, for a gross sum of $350 for a new and $250 for an old machine, which were about the same amounts the original lessees paid for the expenses incidental to setting up their machines. This was called a commutation of royalties. This course of action was determined upon after consultation between the plaintiff association and many of the leading manufacturers who had licenses, and the proposition has been accepted by most of the licensees. It is contended by the defendants that
this action on the part of the McKay association put strangers ona more advantageous footing than themselves with. respect to the patents covered by their license, because strangers could buy a machine upon the payment of the same sum which they originally paid, and use it with" out the payment of any royalty. The broad ground is taken that a licensor, independent of any express covenants in the license, has no right to do any act which will impair the licensee's enjoyment of the monopoly granted by the license; that the licensee has a vested interest in the monopoly which the licensor is bound to respect, and, it may be, to defend, and that if the licensor does any act whereby the monopoly is injuriously affected, such as granting other licenses for a less royalty, the licensee is relieved from the further payment of license fees under his license. I do not understand that the doctrine of eviction, as between licensor and licensee, has ever been pressed so far as this, and I find no case which supports the position of the defendants. It. has been held that where a patent has been repealed, or where a licensee is enjoined from acting under a license at the suit of the owner of a senior patent, there is an eviction. Walk. Pat. § 307; Marston v. Swelt, 66 .N. Y. 206,82 N. Y. 526; Iron Works v. Newhall, 34 Conn. 67. It was admitted by counsel for the plaintiff in Lawes v. Pnl'ser, 6 El. & Bl. 930, 932, that, if everyone had publicly used the patented invention, that might amount to an eviction, and 'Valker, in the section cited, says that an eviction will probably be held to occur wherever the patentee is defied by unlicensed persons so extensively and so successfully as to deprive the licensees of the benefit of his share in the exclusive right which it was supposed to secure. Whether the general public use of a patented invention, in the absence of any covenant in the lease that the licensor will prosecute infringers, amounts to an eviction, has not been, so far as I have bee,n able to examine the cases, judicially determined; and, upon the facts before me in this case, it is not neces"ary to decide this question. The rule, however, is now well established that the mere invalidity of the patent is not a sufficient defense to the payment of royalties under a license, because the licensee may 'still continue to 'enjoy all the benefits of a valid Patent. Bird8all v. Perego, 5 Blatchf. 251; 1'vlw'sh v. Dodge, 4 Hun, 278; Bartlett v. Holbrook, 1 Gray, 114; v. Swett, 66 N. Y. 206, 82 N. Y. 526. In White v. Lee, 14 Fed. Rep. 789, the defendant sought to resist an action for license fees on the ground that the patent was void. In his opinion in that case Judge LOWELL carefully reviews the authorities. His conclusion is that the mere invalidity of the patent is nota sufficient defense, but "that something corresponding to evictio!! must be proved if a licensee would defend against an action for royalties." In other words, it is not enough for a licensee to prove that the patentisvoid, but he must also show that he has been deprived of the benefits secured to him under ,his license. It would seem, t4erefore, from t4e cases, that eviction may be shown, where the has been repealed, or where the has been enjoined from acting· under the license at the suit of the owner of a senior patent, 01
where he can show. t'hathe has been deprived of the benefits of his license under a patent which is void. In these instances it may be said that the subject-matter of the contract has been in substance destroyed, and therefore the payment ofroyalties should cease. A license is the grant of a right to manufacture, use, or sell the thing patented, but, outside of the terms of the contract, I do not see that there is any implied covenant that the licensor will protect the licensee in the full enjoyment of the monopoly. If a licensee, as in this case, enters into an agreement to pay royalties fOf the use of a patented machine, and attaches no such conditions to the contract as that the licensor will not licensE' to others for a less royalty, or that the licensor will prosecute infringers, it is difficult to discover upon "'hat principle the licensor is bound by any such conditions. There is no implied covenant in a license that the licensor will protect the licensee against competition. In the present case more than 1,000 licenses have been isstl\3d to use the McKay machine. By so doing'the licensor creates competition. But it is not contended that this relieves the licensee from the payment of royalties; and with equal reason I think that a licensor may license others to use a patented machine at a less price, in the abseJ;lce',of any expresfjagreement in the license, the same as a landlord may 'lease one store in a block for a less rental than another. It is a question of contract. Admitting that there is an analogy between the case of landlord and tenant and that of licensor and licensee under a patent, I do not see how that helps the defendants upon the facts before me in this suit. What was granted to the defendants was not the protection of the mOll0poly covered by the license, but the right to lise a machine which embodies certain patents. If they were deprived of the use of the machine by the act of the licensor, they might set up eviction, but they cannot continue to use the machine and tefuse to pay the royalty due under their' contract. :When we begin to import irpplied covenants into a license the problem meets us of where weare to begin to end;;, Upon the theory of the defendants in this case, it WQuld seem that any act or omission on the part of a licerisorwhiQh impairs the .benEJfit to be derived from the use of the patentscontai'ned in the license aniounts to an eviction, and relieves the licensee from further payment of royalties, and at the same time allows him to go on the patents. Such a doctrine as this, it seems to rtle,is manifestly unsourid; and would lead to much confusion ii'I this ihrportimtbrahch of the pateht la.w. The rule of caveat emptor should be invoked' here as els,ewhere; ,and ,'if the licensee. peets protection, the tei'ms rind, the degrtie of s11ch should forin part of his con tract. It i'squiteOOIIi'lllOnilllicenses to proVide that thelicensor shall not grant 'fature licenses for a less royalty:withOlit allowihg prior licensees the ben'Mit of any s.u6hreduction. ' In the present case, there being no express stipulatiOldn the Jicense that the complainant should not lease or sell the machine to others price', I think the defendants should accotUIt forthe amount of unpaid royalties due under lic,ense upoil'theshoes manufactured by them ,on the McKay machirle.. Decree for'conlplaillant. '
· 1'HE AUGUS'rUiE KOBBE.
THE AUGUSTINE KQBBE. REVERE COPPER CO.
et ai. v.
THE Al:GUSTINE KOBBE.
Wi'l'Cfit Court, S. D. Alabama;
June 24, 1889.)
After return from a foreign voyage. a coasting trip for repairs and to earn freight on the way tathe port of loading for abroad again is to be considered a voyage, when the contemplated foreign voy·age is broken up by seizure of the vessel; and creditors on this domestic trip will be paid in full, although no funds will remain to satisfy those of the late foreign voyage.
EVIDENCE-PAROL TO VARY WRiTING.
In a suit in admiralty by prior creditors to enforce their claims against a vessel. evidence is admissible of an agreement between master and charterer, not incorporated in the charter-party, to payoff prior liens.
Under the circumstances of this case, one chartering a vessel with knowledge of existing liens must, when the voyage is broken up, have his damage by breach of charter subordinated to the earlier claims; but he will be allowed moneys advanced for the necessities of the vessel, and will be paid pari paS8U with these liens.
SAME-PAYMENTS FOR SUPPLIES.
Payment at the request of the master, just before her seizure, of a ship's draft for necessary supplies, furnished on an earlier foreign voyage, imports a maritime lien that will be satisfied out of the proceeds of her sale.
Supplies delivered in New York to an agent of the ship in a ship-yard at Jersey City give a general maritime lien.
When a ship purports to hail from a foreign port, and the carpenter is not informed to the contrary, repairs. exclusively on her credit, import a general maritime lien, and the owner is estopped from setting up that she is a domestic vessel.
In Admiralty. On appeal from district court. 37 Fed. Rep. 696, 702. The Kobbe, after a voyage from Portland, Me., to South America, and return to Providence, R. 1., was repaired at Jersey City for another South American voyage, and started for Pensacola to receive her outward cargo, calling at Mobile to deliver a Mobile cargo taken on at New York. While there, the master abandoned his proposed voyage to South America for one on more advantageous terms to Great Britain, for the firm of Martin, Taylor & Co., of Mobile, whereupon sundry creditors seized the vessel, had her sold under order of the district court, and established their claims by suit in that court. The opinion of TOULMIX, district j Ildge, in the court below, as well as a full statement of the facts, will be found reported in the two cases of The Kabbe, 37 Fed. Rep. 696, 702. The only new facts elicited in the circuit court were that the copper purchased for the vessel from the Revere Company was delivered to the .ship's agent in New York, and was there punched for her use before being sent over to Jersey City to be put on her; and that the New Jersey carp\Jnters, Gokey & Son, knew nothing of the ownership of the vessel except ,that a maritime register gave her as owned in New Eng-