Motion Picture Patents Company v. Universal Film Manufacturing Company

• Decision Date: 09 April 1917
• Docket Number: No. 715,715
• Parties: MOTION PICTURE PATENTS COMPANY, Petitioner, v. UNIVERSAL FILM MANUFACTURING COMPANY et al
• Court: U.S. Supreme Court

243 U.S. 502

37 S.Ct. 416

61 L.Ed. 871

MOTION PICTURE PATENTS COMPANY, Petitioner,

v UNIVERSAL FILM MANUFACTURING COMPANY et al.

No. 715.

Argued January 12 and 15, 1917.

Decided April 9, 1917.

Mr. Melville Church for petitioner.

[Argument of Counsel from pages 502-504 intentionally omitted] Messrs. Oscar W. Jeffery, Edmund Wetmore, and John B. Stanchfield for respondents.

Mr. Justice Clarke delivered the opinion of the court:

In this suit relief is sought against three defendant corporations as joint infringers of claim number 7 of United States letters patent No. 707,934, granted to Woodville Latham, assignor, on August 26, 1902, for improvements in projecting-kinetoscopes. It is sufficient description of the patent to say that it covers a part of the mechanism used in motion picture exhibiting machines for feeding a film through the machine with a regular, uniform, and accurate movement, and so as not to expose the film to excessive strain or wear.

The defendants, in a joint answer, do not dispute the title of the plaintiff to the patent, but they deny the validity of it, deny infringement, and claim an implied license to use the patented machine.

Evidence which is undisputed shows that the plaintiff, on June 20, 1912, in a paper styled 'License Agreement,' granted to the Precision Machine Company a right and license to manufacture and sell machines embodying the inventions described and claimed in the patent in suit, and in other patents, throughout the United States, its territories and possessions. This agreement contains a covenant on the part of the grantee that every machine sold by it, except those for export, shall be sold 'under the restriction and condition that such exhibiting or projecting machine shall be used solely for exhibiting or projecting motion pictures containing the inventions of reissued letters patent No. 12,192, leased by a licensee of the licensor while it owns said patents and upon other terms to be fixed by the licensor and complied with by the user while the said machine is in use and while the licensor owns said patents (which other terms shall only be the payment of a royalty or rental to the licensor while in use).'

The grantee further covenants and agrees that to each machine sold by it, except for export, it will attach a plate showing plainly not only the dates of the letters patent under which the machine is 'licensed,' but also the following words and figures:

Serial No. ___.

Patented No. ___

The sale and purchase of this machine gives only the right to use it solely with moving pictures containing the invention of reissued patent No. 12,192, leased by a licensee of the Motion Picture Patents Company, the owner of the above patents and reissued patent, while it owns said patents, and upon other terms to be fixed by the Motion Picture Patents Company and complied with by the user while it is in use and while the Motion Picture Patents Company owns said patents. The removal or defacement of this plate terminates the right to use this machine.

The agreement further provides that the grantee shall not sell any machine at less than the plaintiff's list price, except to jobbers and others for purposes of resale, and that it will require such jobbers and others to sell at not less than plaintiff's list price. The price fixed in the license contract for sale of machines after May 1st, 1909, is not less than $150 for each machine, and the licensee agrees to pay a royalty of $5 on some machines and a percentage of the selling price on others.

It is admitted that the machine, the use of which is charged to be an infringement of the patent in suit, was manufactured by the Precision Machine Company, and was sold and delivered under its 'License Agreement' to the Seventy-second Street Amusement Company, then operating a playhouse on Seventy-second street, in New York, and that when sold it was fully paid for and had attached to it a plate with the inscription which we have quoted as required by the agreement.

Reissued patent 12,192, referred to in the notice attached to the machine, expired on August 31, 1914. The defendant Prague Amusement Company, on November 2, 1914, leased the Seventy-second street playhouse from the Seventy-second Street Amusement Company, and acquired the alleged infringing machine as a part of the equipment of the leased playhouse. Subsequent to the expiration of reissued patent 12,192, the defendant Universal Film Manufacturing Company made two films or reels, which, between March 4th and 17th, 1915, were sold to the defendant the Universal Film Exchange, and on March 17, 1915, were supplied to the defendant Prague Amusement Company for use on the machine, acquired as we have stated, and were used upon it at the Seventy-second Street playhouse on March 18th, 1915.

On January 18, 1915, the plaintiff sent a letter to the Seventy-second Street Amusement Company, notifying it in general terms that it was using without a license a machine embodying the invention of patent No. 707,934 and warning it that such use constituted an infringement of the patent, and on the same day the plaintiff addressed a letter to the defendant Universal Film Exchange, notifying it that it also was infringing the same patents by supplying films for use upon the machine of the Seventy-second street playhouse and elsewhere. The bill in this case was filed on March 18, 1915.

The district court held that the limitation on the use of the machine attempted to be made by the notice attached to it after it had been sold and paid for, was invalid, and that the Seventy-second Street Amusement Company, the purchaser, and its lessee, the Prague Amusement Company, had an implied license to use the machine as it had been used, and it dismissed the bill without passing on the question raised in the pleadings as to the validity of the patent. The circuit court of appeals affirmed the district court (148 C. C. A. 660, 235 Fed. 398), and the case is here for review on certiorari.

It was admitted at the bar that 40,000 of the plaintiff's machines are now in use in this country, and that the mechanism covered by the patent in suit is the only one with which motion picture films can be used successfully.

This state of facts presents two questions for decision:

First: May a patentee or his assignee license another to manufacture and sell a patented machine, and by a mere notice attached to it limit its use by the purchaser or by the purchaser's lessee, to films which are no part of the patented machine, and which are not patented?

Second. May the assignee of a patent, which has licensed another to make and sell the machine covered by it, by a mere notice attached to such machine, limit the use of it by the purchaser or by the purchaser's lessee to terms not stated in the notice, but which are to be fixed, after sale, by such assignee, in its discretion?

It is obvious that in this case we have presented anew the inquiry, which is arising with increasing frequency in recent years, as to the extent to which a patentee or his assignee is authorized by our patent laws to prescribe by notice attached to a patented machine the conditions of its use and the supplies which must be used in the operation of it, under pain of infringement of the patent.

The statutes relating to patents do not provide for any such notice and it can derive no aid from them. Rev. Stat. § 4900, Comp. Stat. 1913, § 9446, requiring that patented articles shall be marked with the word 'Patented,' affects only the damages recoverable for infringement (Dunlap v. Schofield, 152 U. S. 244, 38 L. ed. 426, 14 Sup. Ct. Rep. 576); and Rev. Stat. § 4901, Comp. Stat. 1913, § 9447, protects by its penalties the inventor, but neither one contemplates the use of such a 'License Notice' as we have here, and whatever validity it has must be derived from the general, and not from the patent, law.

The extent to which the use of the patented machine may validly be restricted to specific supplies or otherwise by special contract between the owner of a patent and the purchaser or licensee is a question outside the patent law, and with it we are not here concerned. Keeler v. Standard Folding Bed Co. 157 U. S. 659, 39 L. ed. 848, 15 Sup. Ct. Rep. 738.

The inquiry presented by this record, as we have stated it, is important and fundamental, and it requires that we shall determine the meaning of Congress when, in Rev. Stat. § 4884, Comp. Stat. 1913, § 9428, it provided that 'every patent shall contain . . . a grant to the patentee, his heirs or assigns, for the term of seventeen years, of the exclusive right to make, use, and vend the invention or discovery throughout the United States, and the territories thereof.' We are concerned only with the right to 'use,' authorized to be granted by this statute, for it is under warrant of this right only that the plaintiff can and does claim validity for its warning notice.

The words used in the statute are few, simple, and familiar, they have not been changed substantially since they were first used in the act of 1790 (1 Stat. at L. chap. 7, p. 109), Bauer v. O'Donnell, 229 U. S. 1, 9, 57 L. ed. 1041, 1043, 50 L.R.A.(N.S.) 1185, 33 Sup. Ct. Rep. 616, Ann. Cas. 1915A, 150, and their meaning would seem not to be doubtful if we can avoid reading into them that which they really do not contain.

In interpreting this language of the statute it will be of service to keep in mind three rules long established by this court, applicable to the patent law and to the construction of patents, viz.:

1st. The scope of every patent is limited to the invention described in the claims contained in it, read in the light of the specification. These so mark where the progress claimed by the patent begins and where it ends that they have been aptly likened to the description in a deed, which sets the bounds to the grant which it contains. It is to the claims of every patent, therefore, that we must turn when we...