AM ENDE V. SEABURY
(otrCW£t Court, S. D. New York. August 5, 1890.)
PATEN'TS FOR INVENTIONS-DAMAGES FOR INFRINGEMENT.
One wbo manufactures and sells a patented article is not relieved from the liability to account to the patentee therefor by the fact that he might have .sold the ingredients of which the article is composed at the same or even a larger profit.
In accounting for the profits made by a corporation in the manufacture and sale of a patented article no allowance should be made for the se'l.'Vices of the president of the corporation where it is not shown that he received a salary. .
SAME-Loss OF PROFITS.
Where the reduction in the price of a patented article by an infringer compels the patentee to reduce his price als6, the loss caused by such enforced reduction is a proper item of damages ina suit for infringement.
In estimating the profits of a business, interest on the capital invested should not be considered. .
InEquity'., ,Bill for infringement and accounting. . master's report. Antonio Knauth, for complainant. N. T.· M. /rlel1:i88, for defendant.
On exceptions to
WALLACE, None of the exceptions filed by the defendant to tbe master's report are well taken. 1. The corporation defendant manufactured and sold the borated cotton of the complainant's patent, and it was properly beld liable for the profits derived from the manufacture and sale of that article, notwithstanding itniigbt have made and sold the cotton, boracic acid, and glycerine, which am the ingredients of borated cotton, if it had chosen to do so, and at the, same or even a larger profit. Instead of selling these ingredients,;however, the defendant preferred to convert them into the new chemical composition invented by the complainant, and whatever profit it derivedacqrued by reason of appropriating the patented invention. 2. The maSter properly refused to allow the defendant, as an element of the "factory cost" of the borated cotton, interest on the capital of the corporation.invested in its business. As the supremfl court say in disallowing a similar item in Rubber Co. v. Goodyear,9 Wall. 804,in ascertain'ingproflts: ,liThe calculation is to be made as a manufacturer calculates the profits of his business." In calculating profits, manufacturers customarily treat as items of expense interest paid out on money borrowed for the use of the business. as well as rent paid for the use of property in the business; but it is not customary to charge against profit interest upon the capital embarked by the owners in the enterprise, or rent for the use 01 property o"'ned by them. There is nothing inconsistent with this conclu-· sian in the opinion in Manufacturing Co. v. Cowing, 105 U. S. 257, because, for all that appears, in that case the "use of tools, machinery, and power," for which it was said an allowance should be made to the defendant, may have been a hired use.
WEBSTER LOOM CO.
a.The master properly disallowed of $15,000 per annum for salary of the president of the defendant as an element of cost, because it was not shown that the president was a salaried officer. The defendant introduced evijience to show what compensation would be reasonable for such services as were performed by the president of the defendant, but for all that appears he was serving without compensation. If he' had been paid any salary the fact could and would have been shown. 4. The master properly found that the percentage for selling expenses which should he. added to the factory cost of all the goods sold by the defendant, exclusive of the goods known as "Benson's Plasters," was 29 per cent. The fair interpretation of the very confusing statement of the cashier of the defendant is that instead of 50 per cent. the amount to be added was 76,837/132,473 of 50 per cent. 5. The testimony showed that the defendant was the only competitor of the complainant in the' market in seiling the borated cotton of the patent l , and :that in consequence of the reduction of price made by the defendant the complainant was compelled to reduce his price in order to retain his customers. The loss entailed upon him by reason of this enforced reduction of price was a proper item of damages, and was properly allowed by the master.
(Circuit 00'UJrl" S. D. New York. September I, 1890.)
Where the infringers of a patented loom for weaving carpets COUld, aCCOl'dlng to tbe patentee's own evidence, have attained the same results it, instead of using the infringing looms, they had used twice that number of non-infringing looms, the patentee's measure of damages is the dUl'erence between the cost of weaving the carpets .on the non-infringing looms and the cost of weaving them on the infringing looms, and not the ttbt profits which the infringers received per yard on the increased amount of qarpets manufactured by means of the infringing looms. Disa,pproving, Webster v. Oarpet 00., 2 Ban. & A., 67. . '
'SAME-ACTION FOR INFRINGEMENT-MASTER'S REPORT.
INVENTIONs-bnrinNGEMENT-MEASCRE OJ!' DAMAGES.
Where the master, to whom was referred the ascertainment of the damages sustained by complainant in consequence of defendants' infringement of its patented loom. has not. specifically found as to the alleged superiority of a non-infringing loom over the one infringed, the court will not assume that he intended to so' find from indefinite answers to defendants' requests on that subject, but will recommit the case to him, so that 'he may clearly state his own conclusions from the evidence. Where defendants introduced evidence of the alleged superiority of the noninfringing loom at the close of a long hearing before the master, complainant, who was then unable to obtain rebutting evidence, and who did not then have a full opportunity to present that branch of its case, will be permitted to do so on the recom· mitment of the case to the master, though complainant does not unquestionably bring itself within the rules which ordinarily govern the reopening of a hearing to admit testimony.
In Eqnity.Onexceptions to master's report. see 39 Fed. Rep·., 4:62. v no.1 0-43
For former report,