ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF MINNESOTA.
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
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
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
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 ...