Company v. Isidor Straus

• Decision Date: 01 June 1908
• Docket Number: BOBBS-MERRILL,No. 176,176
• Parties: COMPANY, Appt., v. ISIDOR STRAUS and Nathan Straus, Copartners, Doing Business under the Firm Name and Style of R. H. Macy & Company
• Court: U.S. Supreme Court

210 U.S. 339

28 S.Ct. 722

52 L.Ed. 1086

BOBBS-MERRILL COMPANY, Appt.,

v ISIDOR STRAUS and Nathan Straus, Copartners, Doing Business under the Firm Name and Style of R. H. Macy & Company.

No. 176.

Argued March 12, 13, 1908.

Decided June 1, 1908.

Messrs. W. H. H. Miller, C. C. Shirley, and Samuel D. Miller for appellant.

Messrs. John G. Carlisle and Edmond E. Wise for appellees.

Mr. Stephen H. Olin on behalf of Charles Scribner's Sons.

[Argument of Counsel from page 340 intentionally omitted] Mr. Justice Day delivered the opinion of the court:

The complainant in the circuit court, appellant here, the Bobbs-Merrill Company, brought suit against the respondents, appellees here, Isidor Straus and Nathan Straus, partners as R. H. Macy & Company, in the circuit court of the United States for the southern district of New York, to restrain the sale of a copyrighted novel, entitled 'The Castaway,' at retail at less than $1 for each copy. The ciruit court dismissed the bill on final hearing. 139 Fed. 155. The decree of the circuit court was affirmed on appeal by the circuit court of appeals, 77 C. C. A. 607, 147 Fed. 15.

The appellant is the owner of the copyright upon 'The Castaway,' obtained on the 18th day of May, 1904, in conformity to the copyright statutes of the United States. Printed immediately below the copyright notice, on the page in the book following the title page, is inserted the following notice:

The price of this book at retail is $1 net. No dealer is licensed to sell it at a less price, and a sale at a less price will be treated as an infringement of the copyright.

The Bobbs-Merrill Company.

Macy & Company, before the commencement of the action, purchased copies of the book for the purpose of selling the same at retail. Ninety per cent of such copies were purchased by them at wholesale at a price below the retail price by about 40 per cent, and 10 per cent of the books purchased by them were purchased at retail, and the full price paid therefor.

It is stipulated in the record:

Defendants, at the time of their purehase of copies of the book, knew that it was a copyrighted book, and were familiar with the terms of the notice printed in each copy thereof, as above set forth, and knew that this notice was printed in every copy of the book purchased by them.

The wholesale dealers, from whom defendants purchased copies of the book, obtained the same either directly from the complainant or from other wholesale dealers at a discount from the net retail price, and, at the time of their purchase, knew that the book was a copyrighted book, and were familiar with the terms of the notice printed in each copy thereof, as described above, and such knowledge was in all wholesale dealers through whom the books passed from the complainants to defendants. But the wholesale dealers were under no agreement or obligation to enforce the observance of the terms of the notice by retail dealers, or to restrict their sales to retail dealers who would agree to observe the terms stated in the notice.

The defendants have sold copies of the book at retail at the uniform price of 89 cents a copy, and are still selling, exposing for sale, and offering copies of the book at retail at the price of 89 cents per copy, without the consent of the complainant.

Much of the argument on behalf of the appellant is based upon the alleged analogy between the statutes of the United States securing patent rights to inventors, and the copyright acts, securing rights and privileges to authors and others. And this analogy, it is contended, is so complete that decisions under the patent statutes in respect to the rights claimed in this suit under the copyright act are necessarily controlling.

In the main brief submitted by the learned counsel for the appellant it is said:

'All of the argument has been upon the assumption that the very numerous decisions of the circuit courts and circuit courts of appeals, such as the Heaton-Peninsular Button-Fastener Co. v. Eureka Specialty Co. 35 L.R.A. 728, 25 C. C. A. 267, 47 U. S. App. 146, 77 Fed. 288, the Victor Talking Mach. Co. v. The Fair, 61 C. C. A. 58, 123 Fed. 424, and others along the same line, as well as the Cotton Tie Case in this court, upholding this restriction, with reference to sales of patented articles, express the law; and we have been especially confident that such must be the case, for the reason that this court, in E. Bement & Sons v. National Harrow Co. 186 U. S. page 70, 46 L. ed. 1058, 22 Sup. Ct. Rep. 747, has given its sanction to the broad doctrines laid down in the Heaton-Peninsular Case, supra.

The present case involves rights under the copyright act. The facts disclose a sale of a book at wholesale by the owners of the copyright, at a satisfactory price, and this without agreement between the parties to such sale obligating the purchaser to control future sales, and where the alleged right springs from the protection of the copyright law alone. It is contended that this power to control further sales is given by statute to the owner of such a copyright in conferring the sole right to 'vend' a copyrighted book.

A case such as the present one, concerning inventions protected by letters patent of the United States, has not been decided in this court, so far as we are able to discover. In the so-called 'Cotton Tie Case' (American Cotton Tie Co. v. Simmons, 106 U. S. 89, 27 L. ed. 79, 1 Sup. Ct. Rep. 52), the complainant company owned patents for improvements in metallic cotton-bale ties, and these cotton-bale ties were manufactured by the patentee, and stamped in the buckles were the words: 'Licensed to use once only.' After the bands had been severed at the cotton mill, the respondent bought them and the buckles as scrap iron, rolled and straightened the pieces of the bands, and riveted their ends together. He then cut them into proper lengths and sold them, with the buckles, to be used as ties.

The report of this case in the circuit court for the district of Rhode Island is found in 3 Bann. & Ard. 320, Fed. Cas. No. 293. The report shows that Judge Shepley dismissed the bill on the ground that the attempted restriction to a single use by the words stamped on the buckle was not one which the patentee was entitled to impose, as the sale of the patented article, as an ordinary article of commerce, had taken it outside of the limits of the patent monopoly, and that the purchaser took unrestricted title to the buckle, without any reservation in the vendor. This court reversed that decision, holding that the reconstructed ties were not a repair of the old article, but a recreation of the subject of the patent, and, therefore, an infringement. Mr. Justice Blatchford, in delivering the opinion of the court, said:

'Whatever right the defendants could acquire to the use of the old buckle, they acquired no right to combine it with a substantially new band, to make a cotton-bale tie. They so combined it when they combined it with a band made of the pieces of the old band in the way described. What the defendants did in piecing together the pieces of the old band was not a repair of the band or the tie, in any proper sense. The band was voluntarily severed by the consumer at the cotton mill, because the tie had performed its function of confining the bale of cotton in its transit from the plantation or the press to the mill. Its capacity for use as a tie was voluntarily destroyed. As it left the bale it could not be used again as a tie. As a tie the defendants reconstructed it, although they used the old buckle without repairing that.'

That the case was not decided as one of restricted license, because of the words stamped on the buckle, is shown by the language of Mr. Justice Blatchford, in concluding his opinion:

'We do not decide that they are liable as infringers of either of the three patents, merely because they have sold the buckle considered apart from the band or from the entire structure as a tie.'

We cannot agree that any different view of the Cotton Tie Case was indicated in the comments of the learned justice, speaking for this court, in Morgan Envelope Co. v. Albany Perforated Wrapping Paper Co. 152 U. S. 425, 433, 38 L. ed. 500, 503, 14 Sup. Ct. Rep. 627. What was there said in connection with the quotation from the opinion of Mr. Justice Blatchford in the Cotton Tie Case enforces the view that the case was one of infringement because of the reconstruction of the patented device.

In E. Bement & Sons v. National Harrow Co. supra, the suit was between the owners of the letters patent as licensor and licensees, seeking to enforce a contract as to the price and terms on which the patented article might be dealt with by the licensee. The case did not involve facts such as in the case now before us, and concerned a contract of license sued upon in the state court, and, of course, does not dispose of the questions to be decided in this case.

The question was supposed to be involved in the recent case of Cortelyou v. Johnson, 207 U. S. 196, ante, 105, 28 Sup. Ct. Rep. 105, where a patented machine, known as the Neostyle, was sold with a license, printed on the baseboard of the machine, limiting the use thereof to certain paper, ink, and other supplies, made by the Neostyle company. While the question as to the validity of such license restriction was fully and ably argued by counsel, the case went off upon the finding that notice of the license restriction was not brought home to the defendant company.

If we were to follow the course taken in the argument, and discuss the rights of a patentee, under letters patent, and then, by analogy, apply the conclusions to copyrights, we might greatly embarrass the consideration of a case under letters patent, when one of that character shall be presented to this court.

We may say in passing, disclaiming any intention to indicate our views as to what would be the rights of parties in circumstances similar to the...