decided: May 11, 1891.
ST. PAUL PLOW WORKS
ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF MINNESOTA.
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MR. JUSTICE BLATCHFORD, after stating the case, delivered the opinion of the court.
The defendant contends (1) that the contract of December 17, 1877, did not bind the plaintiff to grant to the defendant the privilege of manufacturing or selling any number of Starling sulky plows, or of manufacturing or selling them for any length of time, and did not bind the defendant to manufacture or sell any number of them, or to manufacture or sell them for any length of time, and therefore ceased to be operative as to all plows made or sold after either party indicated to the other its unwillingness to act longer under the contract, and that, therefore, no damages could be recovered from either party for failing on the one hand to permit the manufacture and sale, or, on the other hand, to manufacture and sell; (2) that the contract was a mere naked permit or license which granted no exclusive privilege to the defendant to make and sell the Starling sulky plow, but left to the plaintiff the right to give the same permit to every one else in the specified territory, and in no way bound the defendant not to make and sell as many sulky plows as it chose of other designs or under other patents, and was, therefore, revocable by the plaintiff and capable of being renounced by the defendant at any time, and that the plaintiff could not recover upon the contract for the 1310 plows which were not Starling plows, but were so different that they contained at most but one of the three claims of the plaintiff's patent; (3) that the contract, if not
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revoked or renounced, only permitted the defendant to make and sell the Starling sulky plow, that the making and sale of the Berthiaume and Harris plows was not covered by the contract and not a breach of it, and that the defendant was liable for infringement in making and selling other plows if it infringed the plaintiff's patent, and could defend against a suit for infringement on the same ground that any stranger could, and the plaintiff could not recover any royalty under the contract, in respect of such other plows.
It is urged by the defendant in regard to the contract (1) that it does not admit or recite the validity of the plaintiff's patent, but only allows the defendant to make and sell a particular plow under it; (2) that it gives to the defendant that privilege for no stated time and for no stated number of plows, and was, therefore, revocable at any time; (3) that it gives to the defendant no exclusive privilege to make and sell the Starling plow, but leaves the plaintiff the right to give the same privilege to every one else in the territory; (4) that it in no way binds the defendant not to make and sell as many plows of other designs or under other patents as it chooses; (5) that it does not bind the defendant to make or sell any number of Starling plows, or to make or sell them for any length of time; (6) that it is restricted to the Starling sulky plow, and does not authorize the defendant to make or sell any other plow under the patent, nor bind it to pay license fees for the sale of any other plow, but as to all other plows except the Starling sulky plow leaves defendant free to make and sell, subject only to its liability as an infringer in the same way as if there were no contract.
The defendant contends that there is an essential distinction between; the contract in the present case and a contract which grants the exclusive right under a patent to make and sell the patented article in a certain territory, or the exclusive right in respect of a certain number of patented machines; that, in the latter case, the contract exists for the life of the patent, while in the present case it does not; and that in the present case the licensee could renounce all right under the license, while in the other case he could not. This ground is maintained
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upon the view that, where the patentee grants an exclusive right, he deprives himself of the privilege of granting any right to others in the given territory; and that, therefore, the exclusive licensee will not be permitted, after he has thus deprived the licensor of his privilege of licensing others, to renounce the license and thus damage the licensor, while that reason does not exist under a contract or license like that in the present case.
But we think that this attempted distinction is fanciful and not sound. Irrespectively of the point that it might well be urged that the plaintiff, in granting to the defendant "the right to make and sell the Starling sulky plow under patent No. 154,293," did not grant simply a right, but granted the right, that is, all the right which the plaintiff had, under the patent, to make and sell the plow in the specified territory, we are of opinion that the Circuit Court was correct in holding that the defendant could not terminate, without the consent of the plaintiff, the rights conferred by the license, and that, as there was no limitation on its face, the license continued until the expiration of the patent. The contract has no provision for its termination or its renunciation. The grant is of the right to make and sell the Starling sulky plow under the patent, that is, under the patent so long as it is a patent, for the whole term of its duration. For plows made and sold under the patent, and in accordance with any of its claims, the defendant, at all times during the existence of the patent, could set up the contract as a defence against a claim for infringement, and limit its liability for plows made and sold in accordance with any one or more of the claims of the patent, to the royalty fixed by the terms of the contract. In consideration of the grant, the defendant bound itself to make the plows in a good and workmanlike manner, and to advertise and sell them in the usual manner and at the price specified, as limited, and to render accounts and pay royalties as agreed.
The Circuit Court finds that the Starling plow "is of utility and an operative machine, although it might work better in some soils than in others." It, therefore, finds against the defendant as to the ground set up in the notice which the
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defendant gave, that the construction of the plow under the patent was unsatisfactory. The fact that the defendant continued, after the alleged renunciation, to make and sell the plow with features embodying the first claim of the patent, and that the plow so made was successful and salable, indicates that the notice was a mere pretence, and that the defendant continued to act under the license, or else that the allegation that the construction of the plow was unsatisfactory was founded upon something in the workmanship, and not in the inherent character of the patented improvement.
We are of opinion that the license, in the absence of a stipulation providing for its revocation, was not revocable by the defendant, except by mutual consent or by the fault of the other party. If the plaintiff, after receiving the notice, had sued the defendant for infringement, he would have been properly regarded as acquiescing in the renunciation; but, instead of that, he elected to regard the license as still in force, and brought an action to recover the royalties provided for by it, which he was entitled to do. Marsh v. Harris Mfg. Co., 63 Wisconsin, 276; Patterson's Appeal, 99 Penn. St. 521; Union Mfg. Co. v. Lounsbury, 41 N.Y. 363.
The defendant could not coerce the plaintiff into putting an end to the contract, by the means it adopted. It must bring a suit to set aside the contract before it can be allowed to say that, in regard to what it afterwards does, it does not act under the contract, provided the machines it makes embody a claim of the patent. Notwithstanding the defendant gave notice that it renounced the license, yet it did not in fact renounce it, for it continued to make plows embodying one of the claims of the patent. The Circuit Court found that the first claim of the plaintiff's patent was infringed in the 1310 plows, and that the changes made in those plows were mechanical changes and equivalents only, which would not defeat the right of the plaintiff to an action for breach of contract.
We cannot review the finding of the Circuit Court that none of the earlier patents put in evidence by the defendant anticipated the plaintiff's invention. Although the defendant excepted to this finding as a conclusion of law, yet it was really
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a conclusion of fact on the evidence which the Circuit Court had before it.Witnesses were summoned on both sides as to what the earlier patents showed; and we cannot consider the evidence, as if this were a suit in equity.
After the defendant had introduced the alleged anticipating patents, and examined three expert witnesses in regard to them, the plaintiff rebutted such evidence by two expert witnesses. The defendant then offered further evidence to show why its contention as to the question of novelty was correct, but the court refused to permit this to be done, stating that it had heard sufficient testimony to enable it to understand the operation of the different devices, to which ruling the defendant excepted. This is assigned for error. But we are of opinion that it was a matter within the discretion of the Circuit Court. The defendant had had an opportunity of taking the testimony in question when it examined its three expert witnesses.
After the plaintiff had introduced evidence tending to show that his plow, properly made, was practical and successful, and the defendant had introduced evidence for the purpose of showing that the plaintiff's plow, well constructed, was unsalable, while the Berthiaume and Harris plows made by it were salable, the court refused to permit the defendant to show by one Carter, a practical dealer in plows, that he sold a plow substantially the same as the Berthiaume plow for $45, in competition with a plow substantially the same as the plaintiff's plow at $25, and was able to sell the former without difficulty, while the latter had no sale. The evidence was excluded as immaterial and the defendant excepted. The court found as a fact that the so-called Berthiaume plow was substantially the plaintiff's plow. The offer of evidence amounted merely to showing that one person could sell a plow for $45, while another person could not sell substantially the same plow for $25. This was certainly immaterial on any issue in the case. Moreover, both parties had gone through their testimony, and the plaintiff had given evidence in rebuttal, and it was after that that this offer was made. It was discretionary with the court whether to admit the evidence or not, as the defendant had before had an opportunity to give it.
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The plaintiff, in rebuttal of the defendant's principal evidence, offered proof tending to show that he first constructed a plow containing the elements of the first claim of his patent, before the date of the earliest patent introduced by the defendant on the question of novelty. The defendant objected to this evidence as immaterial, and that it was a part of the plaintiff's case in chief; but the court overruled the objection, and the defendant excepted. After the defendant had introduced in evidence the earlier patents, it was proper for the plaintiff to show that, prior to the date of any of them, he had reduced the invention covered by his first claim to practice, in a working form. Elizabeth v. Pavement Company, 97 U.S. 126, 130; Loom Company v. Higgins, 105 U.S. 580, 592. Proof of the date of the plaintiff's invention was strictly a matter of rebuttal, after the defendant had put in the patents which were prior in date to the plaintiff's patent. The defendant might afterwards have offered evidence on the same point.
The defendant, in its principal testimony, offered to show by a witness that the lever device shown in the plaintiff's patent, and substantially the same as that shown in his model, was used on two sulky plows prior to 1872. The plaintiff objected to the evidence as incompetent and immaterial, and because the fact had not been set up in the answer; the objections were sustained, and the defendant excepted. We think the evidence was immaterial.There was no offer to prove that the lever device was so combined that the combination operated in the same way, for the same purposes, as in the first claim of the plaintiff's patent.
These are all the matters alleged on the part of the defendant which we think it important to notice.
We find no error in the record, and the judgment is
MR. JUSTICE BRADLEY did not sit in this case or take any part in its decision.
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