592
REPORTER.
sued, and the preparation and sealing of the patent consumes from 10 to 20 days., 'Notice is gi.ven, so that anyone interested may lodge a cai'eat against the grant of the patent. An appeal lies from the decision of the law officers to the lord chancellor. The law officers may decline to seal the patent, as ll1,:lY the lord chancellor on appeal. Section 4887, Rev. St. U. S., provides that "every patent granted for an invention which has been previously patented in a foreign country shall be so limited as to expire at the same time with the foreign patent." When Le patent in suit in this cause was issued, the application for the English patent, and the previsional specification, had been on file five Burhe'-t waf? not then a..patentee. He waS only an appli0ant for a patent, without any of the rights of a patentee. Sixty-one days intervened before the sealing of his patent. That was his grant, and until then he not only had no grant, but could not be certain that the law officers would not refuse to make one. The antedating of that grant had the effect, by imparting to it, under the provision, of the English statute, the sa.'ne validity as if sealed on the day it bore date, to make liable as an infi.:inger anyone who after tha.t date manufactured, used, or sold the invention, and to limit the duratiQn of the grant to the period of 14 yearsdrom that date. Nevertheless, patentee's exclusive right first came into existence when his patent was sealed, which was subsequent to the issuing of the pater.t tQcomplainant's assignor, on which this suit is founded. And upon the Ejealing of his patent, and until the filing'of hiscoIhplete specification, which was upon the 21st.of October, 1873, his rights were 'uoh so vested that he could assert them in any court. The reiat:onback of the English patent by reason of its date, and by virtue of the EngHshstatute, does not sustain the defendant's contention that the invent:on had been previously patented in England. Emerson v. hippert, 31 Fed. Rep. 911. The plea is overruled·
TOBEY
Co. v.
.'
COLBY
et aZ.
(Circuit Oourt, N. D. l:linoia. February 20,1888.) ,1. PATENTS FOR INVENTIONS-INJUNCTION-GRANTING ON QUIRING
FINAL
HEARING-Ri:-
In a suit to restrain defendants from infringing plaintiff's patent. an injunction wa\lissued on notice to defendants, after a full healing on the q llestion on conditiOIJ that plaintiff !tIe a bond to indemnify defendants for ally damages they migbt sustain. On final bearing tbe bill was dis.missed for want of equity. HeW. tbatplaiJitiff was liable on tbe bond. IN VALUE OF ARTICLE.
·2.
SAME-;--MJi;J\SURE OF
; .:PJ!l'intl.lf o1Jt!l'ined an i,njunctioD against res.training from . makIng or selling a fOldlDg-be.d, on the that It mfrmged p.lamtlff'S patent.: 'Onfinal 'bearing the bill was dismissed for w.ant of equity, and defendy.nts·fileda suggestion of damages. .It appearedtbat witbin a year after the/ ·Injunction issued tlj.e demand for that class of beds fell off 80 much that it . was unprofitable to manufacture them; tbat when suit was begun one of the -defendants had'ollhand for sale 10 beds, and hl\d some money in ad-
TOBEY FURNITURE CO. V. COLBY.
593
vertising. Held. that he should be allowed as damages a depreciation of onehalf the cost price of the beds. interest on what he had paid for them, and his , advertising expenses. 8. SAME.
The other defendant. who was the manufacturer. had a lot of beds on band when tbe suit was instituted, and had made preparations to manufacture them on an extensive scale. Held, that he should be allowed as damages the difference between the present value and cost of making them. and the damage sustained from stoppage of business; but that he should not be allowed the profits he might have made if he had sold the beds, nor for storage. nor for mterest on loss in value on the cost of the beds.
In Equity. On suggestion of damages for improperly obtaining injunction. Coburn, Oc 1;hacher, for complainant. Banmng Oc Banning, for defendant Meissner. Hutchi'{l8Of/: Oc Pa,rtridge, for defendants J. A. Colby & Co. BLODGETT,J. An injunction was granted in this case on the application of the complainant, restraining the defendant from making and selling folding-.bedscontaining the devices. covered by the patent granted May 28, 1878,,00 H. P. Blackmore and C. S. Green, assignees of Hand andCaulier, fo.r an "improvement in wardrobe bedsteads." The writ was granted after notice to the defendants, and a full hearing upon the question of infringement, but on the terms that complainant file a bond in the penal sum of $2,500, conditioned for the payment of such damages as defendants, or any ofthem, should sustain by reason of the wrong.. ful issue of the writ; and such bond was duly filed. The case proceeded to .final hearing on the iesues made and proofs taken, and was dismissed for want of equity, on the ground that the bedsteads made by the defendants did. not the patent in question. On the dismissal, the defendants John A. Colby and Henry C. Colby, comprising the firm of J. A. Colby & Co., and the defendant Robert C. Meissner, each filed suggestions of damages sustained by them respectively by reason·of the wrongful issue of the the defendant Meissner being the manufacturer of the bedstead in question, and the defendants J. A. Colby & Co. being furniture dealers in the city of Chicago, and having a contract with Meissner for the exclusive sale of such bedsteads for the term pf one year. A reference was made to one of the masters of this court, to take proofs and report to the court the amount of dallUlges which the ,respective defendants were entitle,d to recover from the complainant on the bond in this case. The mastl'lr has taken proofs and reported, awarding to J. A. Colby & Co. the sum of $700 for their damages, and to Meissner the sum of $1,800 for his damages in the premises; and to this report the complainant has excepted on fleveral grounds, but which may be stated in two propositions: (1) That this injunction, having been awarded after a hearing on the facts upon the judicial finding of the court that the deftmdants infringed the complainant's patent, no damages caJ;l be awarded for this errOneO\lS finding of the .court. That the damages awarded each of the defenda.nts are excessive. v.35F.no.8-38
594:
FEDERAL REPORTER.
; TheV0'Yer of courts of equity, on application for a preliminary inhond to indemnify junction pendente lite to require from the the defendant sought to be enjoined, as a condition on which such injunction is granted, is too :well established to be subject to question at this day. 2 Daniell, ell.Pr. 1666; 2 High, Inj. § 946; Walk. Pat. § Brannan, 4 Fish.. Pat. Cas. 198; Fruit-Jar Co. v. Whitney, 1 688; Ban. & A. 361. Probably the better authority is that, if a preliminary the requirement injunction is granted after· notice and hearing, of a bond, the defendant is remediless, except in cases where the defendant is able to show that had no probable cause for the writ, and obtained it by irnposition upon the court. Gorton v. Braum, 27 Ill. 489; Sturgia v. Knapp, 33 Vt. 486; Cox v. Taylor, 10 B. Mon. 17. But where the court grants ,an injunction on condition that a bond be filed to indemnify the defendant for damages he ni.ay sustain by it, the exacting of such bond is iii effect a fhiding by the court that complainant's right to an injunction is so far doubtful or uncertain as to make it equitable to require a bond; and the complainant ands'ureties, by giving the bond, must be held to have accepted the terms on which the injunction was allowed, and cannot insist that the bond is inoperative to indemnify the defendant to the extent of the actual damages sustained; the elements of such damages and the amount thereof remaining to be determined by the court in asu'pplementary proceeding like this,or in a suit at law upon the bond itself. This brings me to the:consideration of the question as to whether the damages awarded by the master are excessive. The proof shows that, within less than Ii: year after the issue of this injunction, the complainant found that,;the manufiwture of this class of folding-beds, or wardrobe bedsooads,was unprofitable, and abandoned their manufacture for that reason; the fact being, as it seems from the testimony, that the public taste had changed in regard to this class of furniture; and also that there were defects in the special structure of such bedsteads that made them unacceptable trial to the public; and the questioll in this case is, how much,' if any, daltlag;es did the defendants sustain by reason of being restrained from making and selling this special form of folding-beds during the· time this injunction remained in force? It also appears from the evidence that at· the time the injunction was issued and served Meissner had made 55 bedsteads. which were adapted to use with the device covered by the complainant's patent, and that he had tuade a contract with the defendants· J. A. Colby & Co., by which he was to furnish them with the bedsteads at a fixed scale of prices, according to the style and finish; and the Colbys were to have the exclusive right to sell them for one year. He had delivered to tbe Colbys 10 of these bedsteads, for which they were to pay him $820, and they had paid him $500 to apply on the beds so delivered. Colby & Co. sold none of the beds, and, so far as the proof shows, they all stilll'emain on their hands. Neither has Colby paid· to Meissner the $320 remainingd'ne on the 10 beds delivered. The master allowed theColbys as damages the $500 they had paid Meissner on account of the 10 beds bought,and interest at 6 per
'roBEY.
co.
V. COLBY.
595
cent.,. amqupting to the. sum of $96, and $104 for making a totl;tl 9f $7'00·, " ' " " " " . ." " I gather from the .master's report that the allowance of $5QOto the Colbys wa$ made upon the assumption that the 10 beds they received from Meissper were totally worthless; and hence that the Colbys had lost the $500 which they had paid for them. I do not think the testimony justifies this conclusion; but, on the contrary, the proof. whf;n talren together, I think, shows that all these Meissner beds are still available furniture, with some slight changes in the or modes of operating them, so as to make them acceptable to the public. It is true that folding-beds of the pattern in question are not as popular as they were at the time this invention was made, but they are still a standard article of furniture; and these Meissner beds, with some slight alterations in the mode of operating them, a marketable valulf. It is difficult to determine from "the proofs in the case just what tbat marketable value is, although it is undoubtedly considerably less than it was. at the time this injunction granted; that is to say, the fancy, or craze, if I may call it so, for thil'l kind of furniture has subsided, and the beds are now to be sold upon their to meet such demand as tbere is in the market for them. ',l'hes"e beds were sold to the Colbys 01) an average at a trifle over $82 each, and I think from the proof tbat lsball be entirely safe, Colbys, if I allow them a deduction of oneand do no ipjustice to half of the cost price for the depreciation in the'selling price of the beds, and the for storing and alterations in order to puttliem upon the market, which,in round numbers, I make $410. This sum, it seems to me from ,the proof, will make tbe Uolbys entirely whole for the damages they bave sustained. " The master reported that :l\Ieissller's damages by reason of the issue of the injunctiqn amounted to $3,000, made up of items as follows: Loss of profits on contract with Colby, - $1,150 LollS on manufacturing the beds on hand" 1,050 Damage from stopping of business two months, " - " 3uO Storllge of 44.!Jeds from January, 1l:!83, to November, 1885. 300 Interest on $1,050 loss value on cost price of beds, at 6 per cent., 200 $3,000 But, inasmuch as the bond was only for the penal sum of $2,500, he found that aftElr paying the Colbys the 8700 there was only $1,800 left from the proceeds of the bond to be awarded to Meissner, and hence reported that be was entitled to be awarded the sum oUl,800. As I have already said,Meissner had made in all 55 beds. He had sold 10 to the Colbys, had given 1 away, and had 44 still left on hand, partly TIle item of $1,150 for loss of profit on the contract with Colby, which I assume means that if Colby had taken these 44 beds Meissner would have made $1 profit, is, as it seems to me, a wholly speculative loss.. It does not follow that the Colbys would have sold even the 10 beds which they had already taken from Meissner, because,as the proof shows, tbe demand was then rapidly declining, and dealers were
a96
FEDERAl. :REPORTER. '
obliged to make large concessions in prices in order to make sales at all; and I think the fair presumptiqn from the proof is that the Colbys would have found it difficult to work offthe 10 beds at any such profit as would have eneouraged or justified them in taking any more from Meissner at any such price as would havea,fforded Meissner the large profit which he claims to have lost. In the light of the testimony in the case, it seems to meso entirely uncertain whether the defendant Meissner would ever have realized this $1,150 if not interfered with by the injunction, that it certainly comes within the domain of purely speculative profit, and hence should be disallowed. Meissner was left with the 44 beds on hand, and the master finds by the proof that his loss on those beds-that is, fro111 depreciation in value below what it would c03t to manufacture them - was, $1,050. This finding, I think, is justified by the proof. The proof certainly shows ,that Meissner cannot now sell those beds in the market ata price which would make him good for the cost of their manufacture, and' probably the master has fixed by the proof about the teet amount,or as near as anyone can approximate to it, as to what would be Meissner's loss from depreciation. The proof also shows that as to 250f these 44 beds, held-over by Meissner, he might have'put them upon the market, and sold them without interfering with the claims' of the complainant's patent, although undoubtedly it was his purpose at the time he made them to put into them the devices which the complainant alleged would interfere with the patent. Very slight changes in the structure and operating parts of these beds would have enabled Meissner to have put them upon the market and sold them, if sales could have been made, without interfering with any of the claims of the complainant's patent; and hence I think Meissner is less entitled to the broad and quitableconsideration of the court than he would have been if he had done what a prudent business man under the circumstances should have <lone to have avoided loss. The master also allowed Meissner the sum of $300 for damage on the stoppage of his business. It appears from the proof that Meissner had made extensive preparations for the manufacture of tl;1ese beds, in order to fulfill his contract with Colby,and in anticipation that there would be a very large demand for them. But ,while, I am satisfied from the proof that he would have been disappointed in anything like the large demand that he expected, at the same tim,.e I have no doubt that Meissner's business was to a considerable' ranged at this particular time, and that the complainant should make some reparation for such derangement. I ani not 'prepared to say' that the master has,under the circumstances, made the' estimate too and shall, therefore, leave that item of the master's finding to . . Stand; The other items of storage, and interest on the loss in value; I'do riot think should be allowed. 'l'his gives to Meissner thesumof$l ,050 depreciation in 'Value, and $300 for the derangement of his business,l:nak'ing$l,350. 'l'he report of the master is, therefore, so modified as to award to the defendants .J. A. Colby & Co. $700, and to thl'l defendant 'Meissner the SUm of ',I .' \
GRAHAM 11. PLANO MANUF'G CO.
597
GRAHAM 'lI. PLANO MANUF'Q
Co.
«(Jircuit Court, N. D. Illinois. June 7, 1888.) PATENTS FOR mVENTloNS-,.DAMAGES FOR INFRINGEMENT-RoYALTy-INTERE8T.
An allowance by a circuit court of three dollars per machine as damages for an infringement. not made on the basis of a customary charge, is not such an establishment of a fixed royalty as will· entitle the owner of the patent, in a subsequent suit for another infringement, in which he recovered damages at the same rate. to interest on such damages from the date of infringement, especially where, in another suit, a larger rate was contended for by him.
In Equity. On bill for injunction. For report of the decision in this case holding that defendant infringed complainant's patent, see 33 Fed. Rep. 917. Banning « Banning, for complainant. Cblntrn Jc Thacher, for defendant. BLODGETT, J.. On final hearing the court found that defendant infringed the complainant's patent as charged, and entered an interlocu-· tory decree referring the case to a master to take and report proofs as to the complainant's damages. The parties now come into court and late that the defendant has manufactured, between the first of the year 1882 and the 11th of February, 1885, at which last date the patent expired, 4,624 machines containing the devices which the court,on final hearing, held to infringe the complainant's patent; and have also stipulated that the complainant is entitled to recover at the rate of three dollars for each machine so manufactured, and that a final decree may be entered fixing complainant's damages on the basis of this agreement, unless the shall be of opinion that complainant is entitled to recover interest upon the damages so incurred; and, in case' the court shall so find, the decree is to be entered for the amount agreed upon, with interest added; that the defendant is not to be considered as consenting to such allowance of interest or to the decree; the stipulation, as I understand the. parties, being made solely tp save the delay and expense of a reference.. It is the part of the complainant that he should be allowed interest at the rate of 6 per cent. per annum from the end of each year for the infringements of that year, on the ground that in the case ,of Graham v. ¥anufactU1'ing Cb., 24 Fed. Rep. 642, which was a suitinvolving infringement of the same patent, decided in 1880, (11 Fed. Rep. 138,) the United States court for the Eastern district of Wisconsin fixed the damageS at the rate of three dollars per machine, and tl:lereforethat, at the time defendant's infringements began, the for the use of the patent had been fixed at three dollars per macbine. I do with the complainant's counsel upon thi!! question. The proof shows that after the decision in Graoom v. Mail/lijacttiririy Co., the .case of <hiiiutm v; McCormick 1 came up for final· disposition on the ques-
IPetition for rehearing; unreported.'· :See 11 Fed;
868.::",; .:,,:. :.,
