Bonsack Mach. Co. v. Smith

• Decision Date: 28 September 1895
• Citation: 70 F. 383
• Parties: BONSACK MACH. CO. et al. v. SMITH et al.
• Court: U.S. District Court — Western District of North Carolina

70 F. 383

BONSACK MACH. CO. et al. v. SMITH et al.

United States Circuit Court, W.D. North Carolina.

September 28, 1895

Duncan & Page, A. H. Burroughs, and W. W. Fuller, for complainants.

Glenn &amp Manly and W. D. Baldwin, for defendants.

SIMONTON Circuit Judge.

The complainant the Bonsack Machine Company is the owner, as patentee and assignee, of patents alleged to have been infringed by the Briggs patent, used and operated by these defendants, the Winston Cigarette Machine Company, J. A Vance, Brown Bros. Company, and the Liberty Tobacco Works and also by J. A. Leach & Co. The American Tobacco Company is the licensee of the Bonsack Company, enjoying the exclusive use of its patents. The present suit is brought as a test case, involving and controlling all the others, which are either pending or threatened. It involves with them precisely the same issue, the infringement of the patents of complainants; and it presents an issue in which they have no concern,-- that of res judicata as to the validity of the patents set up by complainants. This last issue will be separately considered hereafter. The present suit is an ordinary bill in equity, brought for the infringement of several United States patents relating to machinery for the manufacture of cigarettes. The complainants, in their bill set up five patents, and allege that defendants have infringed them: (1) The Emery patent, No. 216,164, granted to Charles G. Emery, upon the joint application of himself and W. H. Emery, dated 3d June, 1879, known in this case as the 'Emery Belt Patent.' (2) The Emery patent, No. 231,779, granted to the same parties, 31st August, 1890, known in this case as the 'Emery Two Belt Patent.' (3) The Bonsack patent, No. 238,640, granted to James A. Bonsack, 8th March, 1881, known in this case as the 'Bonsack Patent.' (4) The Bonsack patent, No. 247,795, granted to James A. Bonsack, October 4, 1881, known as the 'Second Bonsack Patent.' (5) The Emery patent, No. 260,959, granted to Charles G. Emery, on the joint application of W. H. Emery and himself, dated 11th July, 1882. Complainants took no testimony in regard to the alleged infringement of this last-mentioned patent, No. 260,959, and at the hearing withdrew from the case as well the patent known as the 'Emery Two Belt Patent,' No. 231,779, resting their case upon the other three patents above mentioned. The assignments in evidence show that the Bonsack Machine Company owned all these patents, and the record discloses the fact that the American Tobacco Company as its licensee. The infringement charged is the use by defendants of two cigarette machines made substantially in accordance with letters patent granted to W. C. Briggs, 2d January, 1894,-- No. 512,151. The answer admits the use of this Briggs machine, made substantially in accordance with letters patent No. 512,151, as alleged in the bill, but denies any infringement. It charges that the patents of the Bonsack machines have expired by operation of law. It denies the equity of complainants, in that the Bonsack Machine Company has ceased to manufacture, sell, let, or hire any machines except for or to the American Tobacco Company, to whom it has granted an exclusive license; in that the complainants have conspired to maintain a close monopoly in the manufacture of cigarettes, and in accordance with this policy have organized a trust, syndicate, or close corporation to prevent rival manufacturers from making cigarettes, as one means to which end James Bonsack or the Bonsack Company have brought many frivolous and vexatious suits against their rivals, and compromising or buying them off, and keeping many suits open and undetermined,-- all these with the object of deterring or defeating competition; that, fully to carry out this purpose, the Bonsack Company, in their contract with its co-complainant, not only gives them exclusive use of its machinery at a large royalty ($250,000 per annum), but also, by inserting a provision that the contract can be rescinded by the licensee whenever 100,000,000 of cigarettes are manufactured in any one year in the United States by competing companies, it has bound itself to use every effort to defeat competition with its co-complainant; that by these and other unlawful means the complainants have absorbed a great number of factories, consumers of leaf tobacco, have reduced the number of buyers on the market for this product, and control and fix its price; that a court of equity should not and will not aid complainants in the prosecution of these unlawful designs. The answer denies the right of complainants in any event to damages, for the reason that no notice was given to defendants of the existence of the complainants' patents, or of the infringement charged, and because of the failure of complainants to give notice on their machines of the number and dates of the patents.

The charge that the complainants are without equity, going, as it does, to the jurisdiction of the court, will be first discussed. He who seeks equity must do equity. Whose cometh into a court of conscience must come with clean hands. We look to the pleadings and facts of the case before us. The issues are these: Do the complainants hold letters patent of the United States giving them the exclusive right to make, vend, and use certain patentable devices? Have the defendants infringed the rights thus granted? If, in procuring these exclusive rights, or if in their exercise, the complainants have been guilty of fraudulent or improper conduct towards these defendants, the fundamental principles relied on would debar them of any relief in this court. But if, in the absence of these, it is sought to deprive them of their remedy for the infringement of their rights because of their motives in obtaining them, or of their motives in asserting them, such motives are not the subject of judicial inquiry. Strait v. National Harrow Co., 51 F. 819. 'The rule that one coming into equity must come with clean hands is confined to the conduct of the party in the matter before the court, and not to matters aliunde. Courts of equity, as well as courts of law, will not refuse redress to the suitor because his conduct in other matters not then before the court may not be blameless. It is enough if the suitor shows that he has acted justly, fairly, and legally in the subject-matter of the suit. ' Beach, Eq. Jur. Sec. 16, and cases cited. The iniquity must have been done to the defendant himself, and must have ben done in regard to the matter in litigation. 1 Pom.Eq.Jur. 434. To the same effect, Ansley v. Wilson, 50 Ga. 418. Nor can it debar the complainants of their right to come into this court because they are engaged in securing a monopoly. The suit is for the vindication and protection of rights claimed under patent. Patent rights are essentially monopolistic. Not only is the monopoly given to the patentee by the sovereign power, but the courts furnish every facility for enforcing it. During the enjoyment of his monopoly he is in absolute control of it. A patent right is essentially monopolistic. To contracts granting the exclusive right to use or vend patented articles the general rule (forbidding contracts in restraint of trade) does not apply, however extensive, as to territory, in their scope, and however unlimited as to time. If the patent be a valuable one, self-interest may be relied upon as a motive strong enough to induce the owner to take himself, or to permit others to take, some steps towards introducing his invention into use. How far it will go depends upon the owner. His right to decide this question is not in the least circumscribed by the interests of the public in obtaining such machinery or invention, or any right to its use. He may keep such right himself, or may make the machinery or manufacture the patented article alone. He may allow them the exclusive right, and may retain none for himself. He can clothe them with all his rights. This all follows from and is founded upon the absolute and exclusive right which the owner of the patent has in the article patented. Having such right, he must plainly be permitted to sell to another the right itself, or to agree with him that he will permit none other than such person to use it. That person need not agree to make the patented article or to sell it. It is a question solely for the parties interested. This right is necessary, in order that the owner of the patent shall have the largest measure of protection under it. Considerations which might obtain if the agreement were in regard to other articles cannot be of any weight in the decision of a question arising upon an agreement as to patented articles. Good v. Daland, 121 N.Y. 1, 24 N.E. 15; Bowling v. Taylor, 40 F. 404; Registering Co. v. Sampson, L.R. 19 Eq. 462; Machine Co. v. Morse, 103 Mass. 73; Fowle v. Park, 131 U.S. 88, 9 Sup.Ct. 658; Hulse v. Machine Co., 25 U.S.App. 239, 13 C.C.A. 180, 65 F. 864.

As a corollary from this it is clear that the patentee can secure and protect his monopoly in any lawful way, but suit against infringers, by purchase of conflicting devices, by compromise or arrangements with competitors when infringement may be doubtful. As he may share or sell his monopoly with another so he may purchase the whole or part of another's monopoly to support his own. It is charged that the Bonsack Company has contracted with the American Tobacco Company, the other complainant, to secure it in the monopoly of cigarette manufacture; that to this end it has brought suits against every competitor, many of which are frivolous and vexatious, some of which have been compromised, and some are still open on the dockets of courts in other jurisdictions than this. It is as impossible as it would be improper to bring these new...