FEDERAL BEl'ORTER.
In Equity. Offield If Towle, for complainant. Gridley tX Fletcher, for defendants. BLODGETT, J. This suit is brought to restrain the alleged infringement of patent No. 86,277, granted January 26, 1869, to Frank Brewster. for "an improvement in railroad ticket cases," and patent No. 145,388, granted December 9, 1873, to Leonard J. Blades, for "an improvement in ticket cases," and for an accounting. The Brewster patent is for a case containing any desired number of ticket drawers, or pigeon-holes, for holding the tickets for the reo quisite number of stations; these drawers being so constructed that each is complete in itself, and easily taken from or replaced in the case. The rear ends of these drawers are raised so as to incline the drawer towards the front of the case, and the tickets are placed in the drawer, either upon the end or edge, so as to present the face of the ticket to the front of the case. In the front end of the side pieces of these drawers are narrow strips of metal, or other suitable material, against which the ends or edges of the tickets rest, so as to keep them in place, and at the same time allow the face of the front ticket to be plainly seen from the front of the case. The upper ends of these strips are also bent over on the upper edge of the drawer, and a small slot cut in the angle only wide enough to allow the withdrawal of a single ticket at one time; and this withdrawal must be by pushing the ticket upwards instead of downwards. Behind the tickets is a follower, arranged with a rod and spring, so as to keep the tickets in the drawer pressed firmly against the front strips. The object in setting these drawers at an incline is stated to be to give room for the drawing of the tickets over the tops of the drawers. The patentee disclaims the older devices "for the prevention of the withdrawal of more than one ticket at once. where the tickets nresent an end-edge front, and are withdrawn from the bottom." The patent contains but one claim, which is : "The combination of the drawer, c, having upon its front edges the metallic strips,j, slotted as described; the rod, i, having attached thereto a follower for pressing forward the tickets, and the springs, j, j, all constructed and arranged and operating substantially as set forth." As to the Blades patent, it is stated in the 'specifications that the invention is for an in the class of railway ticket holders in which the slides or drawers are provided with spring-guided followers for pressing the tickets forward into position to be seized and drawn out. He says: "I employ a follower actuated by gravity, thereby economiZing space, and securing other advantages, and so construct and arrange the slides and their containing case that the tickets may be drawn downwards, and then out of the slide compartments, and the slides themselves also drawn forward and suspended in a vertical position for refilling with tickets, as will be hereafter more fully described."
·
BLADES '11. RAND, M'NAU,Y & CO.
95
The description of his device shows an outer case, constructed with upright sides, upon the inside of which uprights he cuts grooves inclining upward from the front towards the rear. He then forms the drawers or slides, the bottoms of which extend laterally, forming flanges which fit into these grooves. There may be any number of these drawers, and each drawer is divided by vertical partitions into as many compartments as may be wanted. The tickets are to be placed on edge or end in the drawers, so as to present a front face, and small stops of wood or metal are fixed to the partitions to prevent the tickets from sliding out of the front ends of the slides or drawers; but each compartment is left sufficiently open to show the face of the ticket, and a slot is left between these stops and the bottom of the drawer large enough for a single ticket to be withdrawn at a time, and the tickets are drawn downwards instead of upwards, as in the Brewster case. The pitch or inclination of the drawers is such as to incline the bundle of tickets by its own gravity down against the front ends of the drawer, and a metal follower is placed behind the tickets, which, by its weight, keeps the tickets upright, and presses them firmly against the front strip of the drawers. The drawers are kept in the groove by resting against a stud driven in the front part of the groove, and a lug or hook is placed at the rear end of the drawers; and, for the purpose of replacing the tickets, the forward ends of the drawers are lifted over the stuc1, and the drawers slid downwards until the lug at the rear end catches on the studs in the front end of the groove, when the drawer will be suspended nearly vertically, and in a convenient position fox refilling them with tickets. The claims of this patent arethe partitions, d, so as to leave a space, g, at the bottom. and the gravitatinl{ followerblocks,f, all combined as shown and described. (2) The combination of the ticket-holding slide, c, having lugs or projections, k, at the rear side, with the case a, having grooves, a, and studs, i, combined as shown and described, whereby the slides may be drawn forward and suspended vertically, to be filled as specified. " "(I) A series of ticket-holding slides. c, arranged in inclined ways in a case, a, and having strips, e, applied vertically. or nearly so, to the front edge of
The defendants make and sell a case in which ticket-holding drawers are set into a case inclined so that the rear end is much higher than the front, and so arranged as to show the face of the tickets, and with a follower, actuated b.y its own gravity, behind the tickets, for the purpose of keeping the tickets upright, and pressing them to the front; the front having narrow vertical strips which prevent the tickets from falling, or passing out through the front end of the drawers, and with a slot formed by these front strips and the bottom for withdrawing a single ticket at one time by a downward motion. The defenses are (1) that the patents are void for want of patentable novelty; (2) if not void for want of novelty, they are limited by the state of the art to the special devices shown, and, when so limited. defendants do not infringe.
98
J'EDERAL REPORTER.
Before discussing these questions raised by the defense, I will say that I do not see how these patents can support or supplement each other. They are each for combinations, and the question is whether the defendants use the combination shown in each, and not whether parts of each combination oan be found in each patent. The proof also shows that the Brewster case, as described in his patent, has never gone into publio use. The large space required for its separate drawers, the provisions for the withdrawal of the tickets by an upward instead of a downward movement,. and the defects in the practical working of the follower and spring for pressing the tickets to the front, form, when all taken together, such objections to its use as have prevented its acceptance and adoption as a practical ticket case. The evidence shows that in May, 1854, the executors of Thomas Edmondson obtained a patent for a railway ticket case in which the tickets were placed in nearly vertical tubes, the rear ends of which were raised so as to incline the tickets, as they lay flat in the tube, somewhat towards the front of the case; and while these pigeon. holes, or "tubes," as they are called in the patent, have an opening in the front, I do not think it can be fairly said that it was a part of the design of t):1e structure to show the face of the ticket through this opening, and the tickets were withdrawn from the bottoms of the tubes by pulling them forward. The proof shows that this case went into extensive nse in this country, and has so nearly filled the public want that, although the Blades case and the de· fendants' case are deemed 'substantial improvements, especially where business calls for a rapid sale Qj. tickets, it still holds its place as a useful device. Following the Edmondson patent, came, in February, 1856, the Apperly patent, and in May, 1856, the Conkling patent, and in January, 1862, the Duffield patent; all of which showed drawers or tubes for holding the tickets flatwise, and withdrawing them singly from the bottom. Each of these also showed a device by means of a weight or spring to press the tickets firmly against the bottom, so as to insure their ready withdrawal; and the Duffield patent shows the drawers inclined towards the front, but no device for showing the face of the ticket and withdrawing it from the front instead of the bottom is shown in the proofs until the Brewster patent. The proof Bhows that in the application for his patent Brewster claimed "(1) a ticket case having movable apartments or drawers, c, with springs, j," etc. "(2) I claim a ticket case which presents the ticket front face, in combination with a spring or device for forcing said tickets forward, as shown," etc. "(3) I claim the inclined apartments, as shown. (4) I claim the slot, g, in the upper part of and at the angle of the strip, f, through which to draw the tickets upwards," etc. The application with these claims was rejected, and Brewster then amended his application, and accepted the single claim which ap-
BLADES t1. RAND, M'NALLY & CO.
97
pears in the patent. This claim is for the ccmstrllction of the drawer, c, having upon its front edges the metallic strips, j, slotted as described, the rod, i having attached thereto a follower for pressing forward the tickets, and the springs, j, j; all constructed, arranged, and operating, et.c. It seems to me that this patentee having, in the first instance, made broad claims, which were rejected, and then accepted a mere claim for a combination of parts shown, must be limited to the specific device. The proof shows that his first application was rejected on a reference to a rejected application shown in the files of the patent-office, which practice of the office was soon afterwards overruled by the supreme court; but this applicant acquiesced, and took a limited claim, and must now be confined to the claim he accepted. This combination includes the rod, i, havinH attached thereto a follower, and the springs,j,j, and this seems to me to limit him to a spring follower, and he cannot cover in this claim a follower operating by its own gravity, although he says "other styles of springs" may be used, and "the same results may be accomplished with a weight and roller," because he had claimed in his first application, broadly, "a spring or device for forcing said tickets forward, as and for the purpose specified," and then abandoned that broad claim, and taken one which confines him to the specific arrangement shown; and having also made broad claims for showing the front face of the tickets, and for the inclined apartments, and those claims having been denied, he has, by accepting the restricted claim, abandoned the extension of his claim by construction so as to cover what was in terms refused him, and his action in this matter is part of the law of the patent, and controls the assignee as well as the original patentee. As was said by the supreme court, speaking by Mr. Justice BRADLEY, in Keystone Bridge Co. v. Phcenix Iron Co., 95 U. S. 274: J
"Here, again, the patentees clearly confine themselves to wide and thin bars. They claim the use in truss bridges of such bars when the ends are upset and widened in the manner described. It is plain, therefore, that the defendant company, which does not make said bars at all, but round or cylindrical bars, does not infringe this claim of the patent. When a claim is 80 explicit, the courts cannot enlarge or alter it. '" '" '" When the terms of a claim in a patent are clear and distinct, (as they always should be,) the patentee in a suit brought upon the patent is bound by it. * * '" As patents are procured ex parte, the public is not bound by them, but the patentees are; and the latter cannot show that their invention is broader than the terms of their claim; or, if broader. they must be held to have surrendered the surplus to the public."
of the drawer, c, of the Brewster patent, they are not used in combi-
If the defendants' inclined tubes and drawers are the equivalent.
nation with a follower rod and spring, such as Brewster limits himself to; nor are they used in connection with metallic strips, f, slotted as described in Brewster's patent. Without further discussion, then, I feel compelled to find that the defendants do not infringe the Brewv.27F.no.1-7
FEDERAL REPORTER.
ster patent. While defendants' case is organized like Brewster's, so as to show the front face of the ticket, and with a device for pressing the ticket forward, still the limitations of Brewster's patent require the use of the entire combination which he covel's by his claims, and, as the defendants do not use the entire combination, I feel com· pelled, under the proofs, and the law applicable thereto, to find that defendants do not infringe the Brewster patent. The proof shows that Blades, in the application for his patent, 'Jlaimed "(1) a ticket holder, c, having an inclined bottom and front 3trip, e, combined with the forwardly inclined loose sliding block,/, and for the purpose described; (2) one or more ticket holding and distributing drawers, sliding obliquely in the case, a, as and for the purpose set forth." The patent with these claims was rejected, the examiner reporting, "All the patentable features in this case are shown in the patent of Frank Brewster." The application was thereupon amended by erasing the second claim; and an argument was filed, insisting that the inclined block, pressing by its gravity upon the tickets so as to hold them together, is not the equivalent of the follower rod and spring used for the same purpose by Brewster; and that, as Brewster's patent was for his specific means, Blades was entitled to a patent for his means for pressing the ticket in front. Thereupon the examiner reported as follows: "A follower in a ticket case, connected by a spring, is considered an equivalent to a follower connected by gravity, and no patentable difference is perceived;" and thereupon Blades amended his application by erasing the first claims applied for and taking the two claims now shown in the patent. The second claim of this Blades patent is for a combination of the ticket-holding slides, c, having lugs or projections, k, at the rear side, with the case, a, having the groove, a, and studs, i, combined as shown and described, whereby the slides may be drawn forward and suspended vertically, to be filled as specified. As the defendant's ticket case shows no lugs like the lugs, k, upon the Blades drawer at the rear, and no grooves in the sides of the case, and no studs, and no arrangement of parts whereby the slides may be drawn forward and suspended vertically, I am very clear that this claim is not infringed by the defendants' case. It will be noticed that in his first application Blades claimed a ticket holder having an inclined bottore and front strips combined with his gravity follower or pressure. HiE patent with this claim was rejected, and he finally took as the firs\ claim of his patent "a series of ticket-holding slides, c, arranged in inclined ways in the case, a, and having strips, c, applied vertically, or nearly so, to the front edge of the partition, and the gravity follower." In view of what was done in the patent-office, I have no doubt but Blades must be limited to his ticket-holding slides, moving in the "Jroove, a, upon the flanges, c, and held in place by the stud, i. In "lther words, the patent-office allowed him a patent upon just what
BLADES'll. RAND, y'NALLY & CO.
99
those terms. It is clear from Blades' specifications that he consid. ered the "lug, k, and the stud, i, each operating in connection with the groove, a, permitting the suspension of the drawers in a vertical position to be refilled with tickets," as an important feature of his device, for he not only covers it specifically by the second claim of his patent, but he says in his specifications that he so constructs and arranges the slides, and their containing case, that the slides them. selves may be drawn forward and suspended in a vertical position for refilling with tickets, and by the terms of the first claim the slides must move in the groove, a. Taking, then, his action in connection with the patent.office, and the obvious double purpose of his grooves and flanges as indicated by the two claims which he took, there can be no doubt that he must be confined to a case with grooves in which the drawers provided with flanges slide, and with such an arrangement of parts as that the drawers may be suspended vertically upon the front of the case. The defendants' device, as already described, consists of a series of tubes arranged and inclined side by side in tiers, with a gravity follower, and each tube or slide may be removed by itself. There is no groove, a, and there are no flanges to the drawers or tubes. There are no studs to hold the drawers in place, and no lugs at the rear of the drawers by which they can be vertically suspended. In fact, the defendants' tubes are suspended, rather than slid, into the defendants' case, being held in the rear by a hook, and their forward ends resting upon a cross-piece, so 'as to hold them at an acute angle in the case. The difference between the cases is not wide, but it must be remembered that this field had been quite fully passed over and occupied by other inventors before Blades entered it. In fact, there seems to me to have been very little room for the exercise of inventive talent after the production of the Edmondson case in the modifi. cation of an Edmondson case into a Blades case, although considerable time elapsed before the Blades case was brought out. The Edmondson tubes or drawers were fixed and stationary in the The bottoms of his tubes were inclined towards the front, and the tickets were to be withdrawn from the bottom through a slot. About all that Brewster or Blades did was to modify the Edmondson case by setting the tubes at a more acute angle, so that the face of the tickets could be read from the front of the case, and apply force, either by a spring or weight, to press the tickets to the front, and make a slight change in the slot, through which the tickets should be withdrawn by a downward movement. The Brewster case seems to have been an ordinary case, with pigeon-holes so arranged that each of the drawers which he describes can be passed into one of the pigeon-holes, and there held in an inclined position. The fronts of the drawers, from the fact that they were so held, formed a series of steps upon the front of the case; so that when Blades came in with
his claim described, and no more, and he accepted his patent upon
100
done had been anticipated by Brewster; that is, Brewster had shown an inclined slide, holding a front-face ticket in a slot, by which the ticket could be withdrawn, and a spring to press the ticket to the front; and he was also told that there was no patentable difference between using the weight and a spring for the purpose of pressing the ticket to the front. Apperly, Conkling, and Duffield had already shown weights or springs for the purpose of pressing the tickets to the front, from which they would be delivered, and this was the object, and the sole object, of the spring in Brewster's and the weight in Blades'. It therefore seems to me no hardsh ip to hold Blades, and those operating under his patent, to the specific devices covered by it, which was all the patent-office evidently intended to allow him; and, confining him to his device, the defendants evidently do not infringe. The bill is therefore dismissed for want of equity.
his device Cor a patent, the patent-office told him that all he had.
POPE MANUF'G OWSLEY
Co. v.
OWSLEY.
(Bill.)1
v.
POPE MANUF'G
Co. '(Cross-bill.)
(Oircuit Oourt, N. D. illinois. 1886.) 1. PATENTS FOR INVENTIONS-EQUITY JURISDICTION-LICENSE-DISCOVERY.
Equity has jurisdiction to compel a discovery of the number of patented articles made under a license, where the licensee neglects or refuses to make monthly reports as he has covenanted to do; and a covenant to make monthly reports is, in fact, a covenant for a monthly discovery of the work done under the license. Where a license does not purport to give an unlimited right to the use of the patent, but restricts the right to machines of certain descriptions, when licensee makes machines not in conformity to his license, but within the patent, he not only violates his express covenant not to do so, but violates the patents. A license provided that licensor might terminate it by notice in writing. He sent a postal card to licensees, reading: "Your royalty return for February has not come to hand. Failure to forward same within five days from March 10th subjects your license to revokement." Held, that this paper fell far short of a notice in writing of a revocation or termination of the license. Licensees under patents covenanted that they would not dispute or contest the validity of the same, or of complainant's title thereto.· Held, that as long as the licenses remain in force defendants are estopped by the terms of their agreements, from denying the validity of the patents in question.
2.
SAME-RESTRICTED LICENSE-INFRINGEMENT.
8.
SAME-REVOCATION OF LICENSE.
4.
SAME-WHEN LICENSEE ESTOPPED TO DISPUTE VALIDITY OF PATENT.
6.
SAME-THREATS OF SUIT-EFFECT ON LICENSE TAKEN IN CONSEQUENCE.
The mere fact that the owner of a patent alleges an infringement, and threatens suit unless a settlement is made with him, be held to make such settlement void for fraud or intimidation. by Charles O. Linthicum, Esq., of the Chicago bar.
1 Reported
POPE MANUF'G CO. tI. OWSLEY·
101
.. B.unI. The fact that defendants feared the result upon theIr busIness of a mIt for infringement of patents, and therefore settled and took a license, is no support to a charge of fraud in the procurement of the license. '7 SAME-LICENSE UNDER EXPIRED PATENT.
Where a license was granted covering a large number oflatents, including one which had already expired, but which licensor owne and licensee had infringed, and there was no proof that it was included by the licensor in bad faith, held, not enough to taint the transaction as fraudulent.
So
SAME.
The date or duration of a patent is a matter of public record of which a licensee is as much bound to take notice as the licensor.
SAME-EFFECT OF DECISION ADVERSE TO PATENT.
A license under patents is not affected by the fact that in a suit between other parties the patents have been adjudged void, where the licensee has agreed not to contest their validity. Where licensee under a patent agrees not to contest its validity, nor lice-nsor's title, he cannot urge want of patentability, nor any question save that whether his devices are covered by it.
1 J. SAME-EsTOPPEL.
11.
la.
Where the alternative to settle a claim for infringement or litigate is fairly tendered to a party, and he chooses to settle, he cannot afterwards retreat from the settlement merely because some other party has successfully contested the validity of the patents. Where a license included a large number of patents, and provided that licensees should pay a stipulated royalty on all machines made by them" embodying in their construction or mode of operation the inventions and improvements shown and. described in each. all, or either of said letters patent, " held, that so long as licensees used either of the patents they were liable to pay the royalty named in the license.
SAME-CONSTRUCTION OF INSTRUMENT.
In Equity. Ooburl1 It Thacher, for complainant. West It Bond, for defe'ndants. BLODGETT, J. The original bill in this case alleged that on the I:lixth day of October, 1879, complainant entered into an agreement in writing with the defendants, then doing business under the firm name of the St. Nicholas Toy Company, which agreement is annexed to the bill, and made a part thereof, as Exhibit B; in which agreement it is recited that complainant "owns and controls certain letters patent of the United States for the inventions therein set forth and described, enumerating eleven patents, and that defendants "are desirous of securing license and authority to work under said patents, and make and sell the inventions therein described." Wherefore it is agreed:
"(1) The complainant licenses defendants, subject to conditions in said agreement contained, to make, use, and sell, to the full end of the term for which each of said letters patent were granted, wooden bicycles whose wheels do not exceed fifty inches, made principally of wood, embodying in their construction or mode of operation the inventions or improvements shown or described in each, all, or either of said letters patent. "(2) The defendants agree to make full and true returns in writing to complainant, on or before the tenth day of each calendar month in each year, of all bicycles containing said improvements so manufactured by them duro
102
l"EDEHAL REPOltTEH.
ing the month preceding, and the name or names of any or all purchasers of the same, and to pay the royalty or license fee accruing thereon, on or before the said tenth of each of said months; and to keep full, true, and correct books of account, open at all reasonable times to the inspection of the complainant, in which shall be entered and set down all velocipedes made and sold by them; and to mark each machine sold' Patentedj' and to pay complainant as license fee or royalty upon each and every bicycle whose wheels do not exceed 42 inches in diameter, $1, and upon each one whose wheels exceed 42 inches, and do not exceed 50 inches, $2, so manufactured and sold by the defendant, containing the improvements set forth and described in said letters patent, or either of them."
Defendants also agreed that they would not make or sell any bicycles other than those having wooden wheels, and not of greater diameter than 50 inches; "nor in any manner, directly or indirectly, violate or infringe upon said letters patent, or either of them; nor dispute or contest the validity of the same, or of complainant's title thereto," and in case the defendants should violate any of the provisions contained in the said agreement on their part, the plaintiff might terminate said license by notifying the defendants in writing that their said license had been revoked. The bill then avers similar agreements or licenses made between the same parties, one bearing date July 16, 1881, two dated November 1, 1881, and one dated February 3, 1882, and enumerating different patents as owned by the complainant, and licensing the defendants to make bicycles and velocipedes of different sizes and construction, and baby carriages, with wire wheels and rubber tires; all of which licenses contain substantially the same provisions as to payment of royalties or license fees called for by each of them, the making of monthly reports, the keeping of books, the agreement of defendants Dot to contest or dispute the validity of the letters patent enumerated in the licenses, and the provision for the termination of licenses by the complainant in case of default by defendants, such as are contained in Exhibit B; copies of all these licenses being attached as exhibits to the bill, and made a part thereof; Exhibit B enumerating 11 patents; Exhibit C, 14 patents; Exhibit D, 13 patents; Exhibit E, 11 patents; and Exhibit G, 12 patents,-as owned and controlled by complainant, describing such patents by their official numbers, dates, and the names of the persons to whom they were respectively granted, and describing some of them as reissues. The bill then charges that defendants, acting under the said licenses, made monthly reports and paid royalties as called for by the respective instruments, up to the first of March, 1883, when they refused to pay any more royalties, refused to make any more reports, and although there is no specific or direct allegation that defendants still continued to manufacture articles on which they should report and pay royalties as provided by said licenses or agreements, yet it is indirectly so stated. It is also stated in the bill that the defendants are making and selling velocipedes and bicycleE4 of different sizes and construction than were allowed by their license,
POPE l,u.NUF'G CO. f1. OWSLEY.
103
in violation of their covenants contained in said license or agreement that they will not make any other bicycles or velocipedes or wheels than such as are described and authorized by the licenses. The prayer of the bill is for a discovery of the number of bicycles and wheels for baby carriages made by defendants in accordance with and under the provisions of the several licenses mentioned since they have failed to make their monthly reports, as called for by said agreements; that they be decreed to make reports in writing, and to pay the license fees found due; and also for an injunction restraining the defendants from selling any velocipedes, bicycles, or wheels specified in the several licenses without affixing or stamping thereon the word "Patented;" and also that the defendants be enjoined and restrained from making or selling bicycles or other machines described in the said licenses of different construction from those which they are allowed to make and sell by virtue of their several licenses. Defendants, by their answer, admit the making of the agreements, and the making of reports and payment of royalties np to and including the month of February, 1883, and their refusal to make snch reports and pay royalties since that time. They allege, by way of defense, that the several licenses were obtained from them by fraud; that several of the patents mentioned in the licenses were null and void at the time said licenses were granted; that the machines manufactured and sold by the defendants are not covered by any of the said patents, and do not infringe the same; and that the complainant has declared the licenses forfeited; whereby the defendants claim to be released from all obligation assumed by them in said agreements or licenses. Defendants have also filed a cross-bill, in which they seek to have the agreements or licenses in question set aside on the ground that they were obtained by fraud, the fraud' charged mainly· consisting in the fact that one of the patents enumerated in the licenses had expired at the time the licenses were taken. and others were very nearly expired, but by stating the date of the reissue, instead of the date of the original patent, defendants were induced to believe that the said patents had a much longer time to l'un than they in fact had; that several of the reissued patents were void by reason of enlarged claims; and that defendants were intimidated by threats of law-suits and injunctions into taking said licenses, and making the agreements therein contained; also that the machines made by the defendants do not infringe the claims of either of said patents, when said patents are properly understood and construed by the state of the art; and, further, that two of said patents have been declared void by a court of competent jurisdiction since said agreements were made, The prayer of the cross-bill is that the agreements be set aside, and the defendants released from all obligation to observe the same, and for an injunction restraining the defendants in the crossbill from asserting said patents as against the complainants in tho cross-bill.
FEDERAL nEPORTER.
The original bill alleged the making of another agreement described as "Exhibit A," and another is described as "Exhibit I;" but as the proof shows that defendants were released from the payment of royalty under Exhibit A at the time the same was made; and its only purpose seems to have been for the settlement of past claims; and that Exhibit I contained a clause allowing the defendants to revoke or cancel the same, of which they availed themselves soon after this bill was filed,-it is not deemed necessary to consider them further. Soon after the filing of the original bill, on motion of complainant, an injunction was ordered unless the defendants should file a bond in the penal sum of $12,000, conditioned for the payment of royalties, with interest and such damages as the court should find on the hearing had accrued up to the d.ate of the order; and also that the defendants should report to the complainant each month after the date of the order the number and kind of machines made by th",m under the several licenses held by the defendants from the complainant, and pay into court, or to complainant, the royalties accruing after the date of such order. Defendants filed the bond called for by this order, and have reported from month to month in pursuance thereof, and no exception has been taken to the correctness of these reports. The first, and, substantially, the only, question raised by the defendants in the original bill is that the complainant has a complete remedy at law, and therefore a court of equity has no jurisdiction. Upon this point I think the case made by the bill showing an agreement by which the defendants were to report monthly the number of machines made under their licenses, and a covenant not to make machines, except of a certain description, and not to dispute the validity of the patents mentioned in the licenr;es, and that the defendants had violated their agreements in all these particulars, makes a clear case for the interposition of a court of equity. The covenant to make monthly reports is, in fact, a covenant for a monthly discovery by defendants of the work done by them under the complainant's patents. The licenses do not, any of them, purport to give the defendants an unlimited use of any of the patents, but only a restricted righ t to make machines of certain sizes and descriptions; so that when defendants made machines not in conformity to the licenses, they violated, not only their express covenant not to do so, but also the complainant's patents, or some of them, covering such machines. As to the allegation in the answers that the licenses had been forfeited by the complainant before the commencement of these suits, and the defendants are thereby relieved from the obligation resting upon them therefor, it is sufficient to say that by the terms of the licenses complainant was empowered to terminate them by "notifying defendants in writing that their said licenses had been revoked." The proof in the case fails to show that any such notice was ever giyen by the complainants. The only element oE proof bearing upon
POPE MANUl!"G CO. V. OWSLEY.
10l>
this question is a postal card written by one of the officers of complainant to defendants, dated March 13, 1883, reading as follows: Failure "Your royalty return for February has not come to to forward same within five days from March 10th subjects your license to revokement." This paper fa.lls far short of a notice in writing of a revocation or termination of the licenses, and was evidently written for the purpose of cautioning defendants in regard to the danger they incurred by neglecting to make their monthly reports. I think there can be no doubt that if complainant had instituted any judicial proceeding upon the ground that it had revoked this license, and defendants had resisted such claim, any court would have held that the notice in question was not a notice of revokement. This feature of the defense, therefore, I think wholly fails for want of proof. By the terms of their agreements defehdants are estopped, as it seems to me, from denying the validity of the letters patents in question, and cannot be heard to say that the patents were void its long as these licenses remain in force. . This brings me to the consideration of the allegation contained in the cross-bill, as to the procurement by the complainant of these licenses by fraud. 'I.'he proof as to these allegations of fraud is, in substance, that the complainant, about June, 1879, sent to defendants a printed circular stating that it was the owner of certain patents, giving a list of them, and describing them by the official numbers, dates, and names of the patentees, and stating that"The complainants had been advised by eminent counsel that said patents cover broadly the application of a foot-crank to the front axle of a bicycle or velocipede. and the application of such a foot-crank for the entire propulsion of the front axle of a bicycle or velocipede having only one front wheel and handlp to guide the same. We hereby give notice that we shall proceed against any and all parties who infringe either of said letters patent, or who, without authority or license from us, make, use, or sell any velocipedes or bicycles constructed substantially like either of the improvements set forth and described in said letters patent; that suits have already been brought in the several circuit courts of the United States against infringers; and, in each case, the said patents have been sustained. and the infringing parties have recognized the validity of said patents, and. in some cases, have taken out licenses and paid royalty, and, in others, have stopped the manufacture of the same."
On July 28, 1879, complainant wrote defendants a letter as follows: "We desire to call your attention to the fact that you are infringing our letters patent as per inclosed printed circular. We do not suppose that you intended to willfully disregard our rights, but, rather, from want of knowledge that we had a valid claim. Should you desire to continue to work under our patents. we think we can agree upon a satisfactory settlement for past damages, and grant you a license for future nse."
On September 8, 1879, complainant's attorneys wrote defendants as follows: "We are instructed by our clients, the Pope Manufacturing Company, to inform you that unless immediate settlement is made for the infringement of velocipede patents owned by them suit will be commenced against )'ou. The
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inclosed lists will inform you of the patents referred to. We are authorized to make settlement with you, and give you a license, if you desire to do so, without litigation, on terms 'which you can learn by calling at our office. Unless settlement is made within ten days from the date hereof we shall proceed to commence suit against you for infringement at once. We think, however, the terms we are authorized to propose to you are such you will have no hesitation in settling."
'fhe proof shows that the of patents included in both these letters was the same as that in the June circular. On October 6, 1879, the "License BOO was taken by defendants, and a full settlement made of the matters called for by the license, Exhibit A. It is now urged that as reissued patent No. 3,319 had expired on August 12, 1879, and because several of the other patents had been reissued with extended claims, and under the recent rulings of the supreme court might have been successfully resisted, therefore the whole transaction is fraudulent and void, not only as to the agreement of October 6, 1879, but those subsequentl,}' made in July, 1881, November, 1881, and February, 1882. There is no pretense or proof that the complainant did not own these patents at the time the circular of June, 1879, was sent out. The patents themselves were a matter of public record of which the defendants, as well as the entire public, were bound to take notice. The circular gave the defendants full and explicit information as to the claims of the complainant to those patents, and they had from June to October in which to investigate and determine for themselves as to the alleged infringement and the validity of the several patents. The mere fact that the owner of a patent alleges an infringement, and threatens suit unless a settlement is made with him, cannot be held to make such settlement void for fraud or intimidation. These parties stood in no relation of confidence which entitled the defendants to accept the statement of complainant upon the mixed questions of law and fact in regard to the validity and scope of its patents. The parties were dealing at arms-length. 'fhe defendants were given their choice between accepting the terms offered by the complainant and a lawsmt. They had time enough allowed them for investigation and reflection. The fact that they feared the result of litigation upon their business, and therefore settled, is no support of the charge of fraud. Any infringer could escape his settlements and liability for a patent if such a defense were admissible. Tbere is no proof whatever that the complainant, or its officers, acted in bad faith. The mere fact that the Smith patent, No. 3,319, had actually expired when the settlement was effected, although it was in force when negotiations commenced, does not, as it seems to me, taint the transaction as fraudulent. In the first place, if it was a valid patent, and the defendants had used it, they were liablo to damages up to August 12, 1879, when it expired. In the second place, the patent was in force when the circular was sent out, and as the proof shows the complainant bad previously issued quite a number of licenses to others, undoubtedly the
POPE MANUF'G CO. t1. OWSLEY.
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blank agreement was prepared while the patent was in force, and by mere inadvertence this patent was not crossed off the list when the license was issued. And, finally the date or the duration of this patent was a matter of public record, which the defendants were a8 much bound to know as the complainant or its officers. No attempt at concealment seems to have been made which can be claimed to be a fraud. It is further urged that this "dead patent," as it is called, was the principal and broad patent controlling the use of important elements in the construction of velocipedes, and that the opinion of "eminent counsel" referred to in the circular was based on this patent alone. While there is no proof in the record as to which of the 13 patents iescribed in this circular was considered by the counsel who gave the opinion referred to, it is a sufficient answer to this suggestion that the patent undoubtedly was in force and properly considered when the opinion was given; and if it had expired before the defendants closed their treaty with the complainant, the defendants were as much bound to know it as the complainant. If the complainant had demanded instant settlement without time to examine or take the advice of counsel as to the scope or validity of the patents in question, or the opinion of experts as to the fact of infringement, there would be much more moral force in this line of argument; but the matter was not pressed with any undue or unconscionable haste. The time, from June to October, which was allowed to defendants to examine the entire field seems to me to have been liberal and sufficient. It is further urged that two of the reissued patents were held void by the learned circuit court judge of the Sixth Circuit, (Pope Manu!!! Co. v. Marqua, 15 Fed. Rep. 400;) but this decision was rendered more than a year after the last license now in question was made, and after the supreme court of the United States had, in Miller v. Bridgeport Brass Co., 104 U. S. 850, taken a radical departure from the rule formerly held by that court as to the validity of the reissue. At the time the first license was taken, the general rule followed by the courts, and acted upon by the public, in reference to reissued patents, was that a reissue taken at any time for expanded and enlarged claims was valid if the foundation of such claims could be found in the specifications, or even the specifications aided by the drawings; and, with the law thus expounded, it would certainly 'be harsh to charge the holder of a reissued patent with fraud for asserting its validity, and claiming damages for its infringement. The Bridgeport Bras. Co. Case had been decided by the supreme coud when the later licenses were taken, and the defendants had as many facilities as the complainant for determining whether this patent came within the rule declared in that case. It is urged, however, that the decision of the circuit court of the Southern district of Ohio that these two patents are void, amounts to an eviction, and, as I understand the argument of the learned coun-
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selfor defendants, invalidates all the agreements for licenses in which ,this patent was included with the others. I cannot agree with the learned counsel as to this conclusion. In the first place, that adjudication is binding only on the parties to that suit, and does not affect the relation between the parties to this contract; and, secondly, the licenses in question included a large number of patents, and provided that defendants should pay a stipulated royalty on all machines made by them "embodying in their construction or mode of operation the and improvements shown and described in each, all, or either of said 'letters patent.''' My construction of this clause of the agreement is that so long as the defendants used all or either of these patents, while the patents remained.in force, they were liable to pay royalty according to their contract; but when the expired by lapse of time, so that the machines described in one or more of the licenses could not be made without embodying the construction or mode of operation shown in any of the patents covered by the licenses, the obligation to pay royalty under such licenses ceased, on the, well-acQepted principle that the license terminates with the patent. But thel;le patents are not, in my opinion, "dead," as between these parties, merely because the judge in another circuit has held them void in some suit before him between different parties. By taking the licenses, these defendants waived and abandoned their right to contest the validity of these patents, or any of them, and agreed to , pay the stipulated license fees; and merely because some one else has successfully contested the validity of one or more of these patents the defendants are not relieved from their obligations. The alternative to settle or litigate seems to have been fairly tendered them, and they chose to settle, and cannot now retreat from the settlement they made. Much time was devoted by the learned counsel for defendants in his brief and argument to the discussion of the effect of the prior art in limiting the scope of the claims of these patents, and even urging a want of patentability in the devices covered by some of them for want of novelty. These questions, it seems to me, are all foreclosed. By the defendants taking the licenses they admit the validity of the pat. ents, and the only question left open for them is whether the machines made by them arA within the terms of the claims in the pat. ents. They have waived all questions of limiting or escaping the claims by the priQr art by their agreement embodied in the license; but if they have not made this waiver by their license, they have done so by their reports made in pursuance of the second clause of the licenses, as this clause required them to report monthly "all macbines containing said improvements," and by making such reports they have admitted that the machines herein mentioned contain said improvements. Without further discussion of the testimony of the defendants in snpport of iheir answer and cross-bill, I will say that I do not think
POPE MANUF'G CO. 11. OWSLEY.
lQ9
the ground taken by the defendants for annulling these licenses is supported by the proof, or sanctioned by the rules governing the relations of the parties; nor do I think that the proof shows that the complainant has ever canceled, or intended to cancel or terminate, these licenses, nor the provisions which they respectively contain. Upon the question whether the defendants have manufactured machines prohibited by their agreement, for which the complainant should have damages awarded, the proof is not satisfactory as the record now stands, and a reference may, therefore, be had to ascertain what machines the defendants have so made in violation of their the complainant's patagreements, and which are now ents yet in force, or which were yet in force after the making of said agreements, and before the patents expired, if they have expired. I am not advised as to whether the defendants have paid complainant the amounts shown and called for ip their monthly reports made under the order of court entered January 21, 1884, or whether they have paid the amounts so reported into court or not.
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CHASE and others v. TUTTLE and others.1 (Circuit Oourt, N. D. N/!/UJ York. April 5, 1886.) 1, PATENTS FOR INVENTIONS -INJUNCTION MENT. CIRCULARS CHARGING INFRmGBI
An injunction to restrain defendants' use of circulars charging infringe ment of their patent by complainant, and threatening the trade with infringement suits, refused, where the question of infringement had never been decided, and where it was not shown that the statements of the defendants were false or fraudulent.
9.
SAME-JURISDICTION.
The court had grave doubts whether it had Jurisdiction for the purpose of granting an injunction to restrain the use of CIrculars charging infringement of patents. Although an opinion stated in a circular may be erroneous, 'an injunction will not be issued to restrain the use of such a circular, where it is not shown that the statements contained in it are false or fraudulent.
4. SAME-SUGGESTION AS TO CIRCULARS.
The court suggested that it would perhaps save misunderstanding if the defendants in the future should attach to their circulars a cut of the harrow covered by their patent, in order that persons charged with infringement might act lDtelligently.
The defendants in this case had brought suit against the complainants under the Garver patent for spring-tooth harrows, and alleged that the complainants' "Clipper" spring harrow was an infringement. After that suit was commenced defendants issued circulars notifying the trade that such suit had been brought, and warning all dealers that if the case was decided in their favor they would hold all in· fringers liable to the full extent of the law. Complainants thereupon filed this bill, and asked an injunction to prevent the continued issue of circulars by defendants, which circulars complainants alleged to be false, as they contended that their "Clipper" harrow did not infringe the Garver patent. One defense made against the motion for an injunction was that a court of equity had no power to issue an injunction to prevent the continued use of circulars alleged to be So slander upon complainants' title to make their harrow. John R. Bennett, Fred. G. Fincke, and N. H. Stewart, for the motion. Charles H. Duell, opposed. COXE, J. The question whether or not the harrow manufactured by the oomplainants, and known as the "Clipper" spring harrow, is an infringement of the Garver patent, has never been judicially decided. The complainants contend that it does not infringe; the defendants are equally persistent in their assertion that it does. Neither have been slow in expressing their opinions, or parsimonious in the use of notices aud circulars setting forth in plain and vigorous I
Reported by Charles C, Linthicum, Esq., of the Chicago bar.