A.B. Dick Co. v. Henry

• Citation: 149 F. 424
• Parties: A. B. DICK CO. v. HENRY et al.
• Decision Date: 11 January 1907
• Court: U.S. District Court — Southern District of New York

149 F. 424

A. B. DICK CO. v. HENRY et al.

United States Circuit Court, S.D. New York.

January 11, 1907

Samuel Owen Edmonds (Edmund Wetmore, of counsel), for complainant.

A. Bell Malcomson, for defendants.

RAY District Judge.

The patents in suit cover the stencil-duplicating machine known as the 'Rotary Mimeograph.' In using this duplicating machine it is necessary to use ink of a peculiar make and composition if good results are to be obtained and the machine made a success. This patented machine was placed on the market in August, 1904. As to this ink the president of the complainant company says:

'The ink used on this type of machine is the result of long and protracted experiments of color-makers and experts employed for this purpose, repeated tests under varying conditions so as to adapt the ink to various climates and so as to have it work in harmony with the stencil-paper without injury. What I mean by this is, that some years ago I discovered an ink being sold for stencil use which contained a large proportion of benzine, and as benzine will dissolve the wax on the stencil-sheets it was ill adapted for the purpose and soon destroyed the stencil and rendered it useless. We made hundreds of experiments changing the formula each time, and finally rested with an ink which is thoroughly well adapted for the purpose intended. I found in practice that each type of duplicating machine requires an ink having peculiar characteristics in order to get the best result from the machine, and it was an ink of this character which we finally developed and put on the market for use on the rotary mimeograph.' All the machines sold have been parted with under a license restriction plainly and distinctly lettered on a metallic plate and affixed in plain view on each machine. This license agreement reads as follows:

'Edison Rotary Mimeograph No. 75.

'License restriction.

'This machine is sold by the A. B. Dick Co. with the License Restriction that it may be used only with the Stencil Paper, Ink, and other Supplies.

'Made by A. B. Dick Company, Chicago, U.S.A.'

This notice was also reproduced on the feed board of the machine, so that all purchasers and users of the machine who can read are charged with notice of the restriction. Each machine has another plate giving the dates of complainant's patents. It is alleged, and not denied, and the evidence shows that defendants had actual notice of this license agreement and restriction. The evidence establishes that the complainants sell the machines at a loss, less than the actual cost of making, relying on sales of supplies therefor for a profit. The complainants have sold about 11,000 of these machines under this license restriction. The complainants sell their ink intended for this machine and other supplies at a reasonable price. As to these sales the evidence of complainant says:

'This plan enables us to furnish the purchaser exclusively with the supplies to be used on the machine, thus preventing trouble and annoyance on his part, as with the supplies furnished by the Dick Company he can invariably secure the best results, not only because of their special adaptability but also because of their uniformity. Besides this, they get the benefit of all of our experiments and experiences in the use of the machine, including information as to special uses to which the machine may be put but which might not be apparent at first sight (C. Rec. p. 80). After the possible customer has been satisfied that the machine is well adapted for his purposes, and after he has made an investigation as to the cost of the machine and the cost of the supplies and he is satisfied with same, the sale is made (C. Rec. p. 77, fol. 308).'

In fact there is nothing unreasonable or extortionate in these license agreements and restrictions; the purchasers or licensees of these patented machines can take them, subject to the license restriction, or let them alone. They are not a prime necessary of life required to maintain existence nor are the supplies. They are a convenient and useful thing, and a labor saving machine. It is a special ink made specially for use on these machines. This ink is neither a staple article of commerce nor a public commodity required in the ordinary affairs of life. The same is true of defendants' ink. The evidence shows, and I find, that defendants' ink is a special ink, designed for use on this machine, and a similar one known as the 'Rotary Neostyle,' a patented machine sold under and with a like restriction.

The alleged contributory infringement complained of consists in the facts: (1) That one Christina B. Skou was licensee of complainant, she having purchased one of these machines with full knowledge of the restriction; (2) she used same, except in the one instance complained of, within the license agreement using thereon and therewith supplies obtained from complainants; (3) the complainants had reason to suspect and did suspect that defendants were furnishing and selling their ink made for use on such machines to various of the licensees of complainants for the purpose of having such licensees use same on such machines bearing the license restriction and license agreement in violation thereof, defendants, as stated, having full knowledge thereof; (4) the complainants thereupon requested Miss Skou to afford defendants an opportunity to sell her ink of defendants' make for use on such machine; and this she did; (5) being given the opportunity by Miss Skou the defendants did sell to her such ink for such purpose requesting her at the same time to put same into one of complainant's cans and throw his away. The complainants did not instruct Miss Skou to lead defendants into selling her ink of their make, or to induce them so to do, but simply to afford them an opportunity. On this subject the evidence is:

'Re-d. Q. 311. Your testimony concerning what I wished you to do with regard to these defendants Henry has been so much garbled by defendants' counsel that I will ask you to state if you were instructed to lead Henry into purchasing these supplies? A. No, sir; not at all. Re-d. Q. 312. Were you instructed by me to procure him to sell you any supplies? A. No, not at all; no. Re-d. Q. 313. Were you instructed by me to do anything more than to afford him an opportunity to sell you his supplies for use on the rotary mimeograph if he chose? (Objection.) A. That is all.'

The transaction between Miss Skou and Henry was as follows:

'He came in and brought with him a tube of black ink I ordered; the pound of purple ink for the rotary mimeograph, and also a part of his box machine, the lineograph, and he showed me what he thought was superior in that machine to the A. B. Dick Company's box mimeograph. After explaining to me about the box machine, he noticed that I had the rotary mimeograph in the office, and he went over and examined it. Miss Bennem was working at it at the time, turning out duplicate copies from it, and he looked it over and noticed the restrictions on the machine itself, and also the restriction on the feed-board about the purchasing of the materials, and then he said he would rather not sell the purple ink for the rotary mimeograph, but he went on to say, 'I will sell it to you, but pour it into the A. B. Dick Company's can; throw my can away, because the A. B. Dick Company has given me quite some trouble in selling these supplies.' Then I took up that purple ink he had in his hand at the time, and looked at the can and there was a notice on that, 'Not sold for Licensed Machines.' I showed this to Mr. Henry, and called his attention to it-- no; I again asked him, 'Can I use this ink on my rotary mimeograph?' and he looked at it, and said, 'Why, that's nothing; my lawyer told me to put that on.' He left the purple ink for the rotary mimeograph and I paid him for that, and I also paid him for the tube of black ink for the box machine.'

As this is corroborated, I find the facts as stated, notwithstanding the denial. That defendants sold their ink of a peculiar make for use on such machines, for the purpose of enabling and inducing a licensee of complainants to violate the license restriction agreement by using such ink on this licensed machine in place and stead of the ink sold by complainants and intended for use on the licensed machine, and which the licensee had agreed to use on the machine to the exclusion of all other inks, is established by the evidence and cannot be doubted.

Are defendants guilty of contributory infringement? This is a patent not a trade-mark case. The machine was sold under the recited license agreement and restriction as to which there is no doubt, and of such license defendants, as to the particular machine, had full notice at the time the sale of ink was made. The defendants intended to induce and procure a violation thereof, and sold this ink to Miss Skou for that purpose and in order to obtain a market for and use of their ink in place of complainant's ink. It is clearly established that the complainants having a patented duplicating machine which they are introducing into the trade and selling, and which to produce a good result and prove a success must be used with ink of a peculiar make, have sold their machines under this license restriction only. The complainants seek to introduce and build up a market for their machines, and of course desire to have them successful. They manufacture special ink to be used thereon which if used produces good work or results. The complainants look to their sales of ink for profit. They have parted with their machines, and permitted others to have and use them only on condition this special ink shall be used therewith. The defendants have knowingly and willfully made and sold an ink for...