Long v. Rockwood
Decision Date | 14 May 1928 |
Docket Number | Nos. 201,202,s. 201 |
Citation | 277 U.S. 142,72 L.Ed. 824,48 S.Ct. 463 |
Parties | LONG, Commissioner of Corporations and Taxation of Massachusetts, v. ROCKWOOD (two cases) |
Court | U.S. Supreme Court |
Mr. F. Delano Putnam, of Boston, Mass., for petitioner.
[Argument of Counsel from pages 142-144 intentionally omitted] Messrs. Merrill S. June and Thomas H. Gage, both of Worcester, Mass., for respondent.
These causes present the question whether the state of Massachusetts may tax, as income, royalties received by one of her citizens for the use of patents issued to him by the United States. The Supreme Judicial Court of that state held such an imposition would amount to a tax upon the patent right itself, and was prohibited by the Federal Constitution. 257 Mass. 572, 154 N. E. 182. We agree with that conclusion.
The Constitution (article 1, § 8) empowers Congress 'to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. * * *' The first Congress provided for issuance, in the name of the United States, of letters patent granting 'for any term not exceeding fourteen years, the sole and exclusive right and liberty of making, constructing, using and vending to others to be used, the said invention or discovery. * * *' Act April 10, 1790, § 1, c. 7, 1 Stat. 110.
Chapter 230, Act July 8, 1870, 16 Stat. 201 (Rev. Stat. § 4884; section 40, Title 35, U. S. Code (35 USCA § 43; Comp. St. § 9428)):
* * *'
Chief Justice Marshall, speaking for the court in Grant v. Raymond, 6 Pet. 220, 241, 242 (8 L. Ed. 376), stated the general purpose for which patents issue—
* * *'
Kendall v. Winsor, 21 How. 322, 327, 328 (16 L. Ed. 165):
'It is undeniably true, that the limited and temporary monopoly granted to inventors was never designed for their exclusive profit or advantage; the benefit to the public or community at large was another and doubtless the primary object in granting and securing that monopoly.'
Bloomer v. McQuewan, 14 How. 539, 549 (14 L. Ed. 532):
See, also, Paper Bag Patent Case, 210 U. S. 405, 423, 28 S. Ct. 748, 52 L. Ed. 1122; Bauer v. O'Donnell, 229 U. S. 1, 11, 33, S. Ct. 616, 57 L. Ed. 1041, 50 L. R. A. (N. S.) 1185, Ann. Cas. 1915A, 150.
The power to exclude others, granted by the United States to the patentee, subserves a definite public purpose-to promote the progress of science and useful arts. The patent is the instrument by which that end is to be accomplished. It affords protection during the specified period in consideration of benefits conferred by the inventor. And the settled doctrine is that such instrumentalities may not be taxed by the states.
In California v. Pacific Railroad Co., 127 U. S. 1, 8 S. Ct. 1073, 32 L. Ed. 150, the state sought to sustain a tax laid upon a franchise granted by the United States; but its power therein was denied. Through Mr. Justice Bradley this court said:
'Recollecting the fundamental principle that the Constitution, laws and treaties of the United States are the supreme law of the land, it seems to us almost absurd to contend that a power given to a person or corporation by the United States may be subjected to taxation by a state.'
The same general doctrine was approved by McCullouch v. Maryland, 4 Wheat. 316, 4 L. Ed. 579; Home Savings Bank v. Des Moines, 205 U. S. 503, 27 S. Ct. 571, 51 L. Ed. 901; Farmers, etc., Bank v. Min- nesota, 232 U. S. 516, 34 S. Ct. 354, 58 L. Ed. 706; Choctaw & Gulf R. Co. v. Harrison, 235 U. S. 292, 35 S. Ct. 27, 59 L. Ed. 234; Indian Terr., etc., Oil Co. v. Oklahoma, 240 U. S. 522, 36 S. Ct. 453, 60 L. Ed. 779; Smith v. Kansas City Title & Trust Co., 255 U. S. 180, 41 S. Ct. 243, 65 L. Ed. 577; Gillespie v. Oklahoma, 257 U. S. 501, 42 S. Ct. 171, 66 L. Ed. 338; Clallam County v. United States, 263 U. S. 341, 44 S. Ct. 121, 68 L. Ed. 328; First National Bank v. Anderson, 269 U. S. 341, 46 S. Ct. 135, 70 L. Ed. 295; Jaybird Mining Co. v. Weir, 271 U. S. 609, 46 S. Ct. 592, 70 L. Ed. 1112; Northwestern Mutual Life Ins. Co. v. Wisconsin (November 21, 1927) 275 U. S. 136, 48 S. Ct. 55, 72 L. Ed. 202.
The courts of last resort in Pennsylvania and New York have held that a state may not tax patents granted by the United States. Commonwealth v. Westinghouse Elec. Mfg. Co., 151 Pa. 265, 24 A. 1107, 1113; People, etc., v. Assessors, 156 N. Y. 417, 51 N. E. 269, 42 L. R. A. 290. And no opinion to the contrary has been cited.
As United States patents grant only the right to exclude, our conclusion is not in conflict with those cases which sustain the power of the states to exercise control over articles manufactured by patentees, to regulate the assignment of patent rights, and to prevent fraud in connection therewith. Patterson v. Kentucky, 97 U. S. 501, 24 L. Ed. 1115; Webber v. Virginia, 103 U. S. 344, 26 L. Ed. 565; Allen v. Riley, 203 U. S. 347, 27 S. Ct. 95, 51 L. Ed. 216, 8 Ann. Cas. 137; John Woods & Sons Co. v. Carl, 203 U. S. 358, 27 S. Ct. 99, 51 L. Ed. 219; Ozan Lumber Co. v. Union County National Bank, 207 U. S. 251, 28 S. Ct. 89, 52 L. Ed. 195.
The challenged judgments are affirmed.
These are complaints brought by the respondent against the commissioner of corporations and taxation of Massachusetts, for the abatement of income taxes for the years 1921 and 1922. The question raised, as stated by the Supreme Judicial Court of the state, is whether the commonwealth has the right to tax the income received from royalties for the use of patents issued by the United States. That court held that the commonwealth had no such right under the Constitution of the United States and the commissioner obtained a writ of certiorari from this court.
The reasoning of the court is simple. If the state 'cannot tax the patent, it cannot tax the royalties received from its use.' The postulate is founded on the casual intimation of Chief Justice Marshall in McCulloch v. Maryland, 4 Wheat. 316, 432, 4 L. Ed. 579, and is said to have been conceded below by the commissioner. It hardly is conceded here, and whether it...
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