Ball v. Coker

• Decision Date: 24 February 1909
• Parties: BALL v. COKER et al.
• Court: U.S. Court of Appeals — Fourth Circuit

168 F. 304

BALL v. COKER et al.

United States Circuit Court, D. South Carolina.

February 24, 1909

Legare Holman & Baker, for complainant.

Miller Whaley & Bissell, for defendants.

BRAWLEY District Judge.

The plaintiff above named filed his amended bill in this court March 30, 1908, alleging, among other things, that he had been appointed by the court of common pleas for the county of Charleston, S.C., receiver of letters patent No. 807,990 issued to W. T. Ball, George S. Legare, Thomas R. Harney Hampton K. Lea, and Charles Miner, which patent was for a process called the 'double-hulling process,' for hulling cotton seed of various sizes without disintegrating the meats, and charged that the defendants had for more than two years last past employed, practiced, and used the said double-hulling process, and prayed for a decree for infringement, and for an accounting of the profits, for damages, and so forth. The answer of the defendants, among other defenses, required proof that the plaintiff had qualified as such receiver, and alleged that he is not the owner of said letters patent, and is not entitled to file said bill of complaint, or to bring suit upon said patent as such receiver. It appears that letters patent No. 807,990 were granted December 19, 1905, to William T. Ball, Hampton K. Lea, George S. Legare, Thomas R. Harney, and Charles Miner; that on May 31, 1905, the parties above named entered into an agreement in writing referring to the application for letters patent then pending, and agreed that each should have an equal interest in and to said invention, and that no assignment, grant, license, conveyance, permit, or any right whatsoever under said invention should be made without the written consent of all the parties thereto, and that, in the event of any disagreement as to the propriety of any sale, assignment, grant, or conveyance, any matters of dispute should be submitted to arbitration, and so forth. It further appears that disagreements did arise, and that in October, 1907, a complaint was filed in the court of common pleas for the county of Charleston, state of South Carolina, in which W. T. Ball and George S. Legare were plaintiffs, and Hampton K. Lea, Thomas R. Harney, and Charles Miner were defendants. The complaint, among other things, charged that, for certain personal and selfish motives on the part of the defendants, Thomas R. Harney and Charles Miner, they have failed and refused to co-operate with the other owners of said patent in the use, management, and control thereof. The complaint prayed that a receiver be appointed pending the litigation to take charge of, control, and manage the patent mentioned, and that the same be sold under an order and decree of that court. An order was entered in that cause by the presiding judge of the court November 19, 1907, reciting, among other things, that Charles Miner, one of the defendants, resided in the state of North Carolina, and Thomas R. Harney, one of the defendants, resided in the District of Columbia, and that upon the commencement of the action an order of publication was obtained, and that said defendants had been personally served with the summons and complaint, and on motion of the plaintiffs' attorneys it was ordered that William T. Ball 'be and he is hereby appointed receiver of said letters patent, and he is authorized, required and commanded to take charge of, manage and control the same, as fully and effectually as the owners thereof could do in such behalf'; and it was further ordered that 'any revenue received by receiver from said patent be deposited in some reputable bank, and the funds held subject to the further order of the court.'

The bill in this case was filed by the receiver pursuant to his appointment, and the question for decision is whether a suit can be maintained in the name of the receiver.

Section 4919 (U.S. Comp. St. 1901, p. 3394) of the Revised Statutes provides:

'Damages for the infringement of any patent may be recovered by action on the case in the name of the party interested, either as patentee, assignee or grantee.'

Section 4898 (U.S. Comp. St. 1901, p. 3387) of the Revised Statutes provides that:

'Every patent or any interest therein should be assignable in law by an instrument in writing, and the patentee or his assigns or legal representatives may in like manner grant and convey an exclusive right under his patent to the whole or any specified part of the United States.'

The statute further provides for the recording of any assignment, grant, or conveyance in the Patent Office.

That the receiver, the plaintiff in this case, is not the patentee, assignee, or grantee is plain, and by the terms of the statute damages for the infringement, it is claimed, can only be brought in the name of such party. Without going at great length into the learning as to the nature of the property rights in patents, it may be said that such rights are wholly the creation of the statutes of the United States. In Stevens v. Gladding et al., 17 How. 451, 15 L.Ed. 155, Mr. Justice Curtis says:

'There would certainly be great difficulty in assenting to the proposition that patent and copyrights held under the laws of the United States are subject to seizure and sale on execution. Not to repeat what is said on this subject in Stephens v. Cady, 14 How. 531, 14 L.Ed. 528, it may be added that these incorporeal rights do not exist in any particular state or district. They are coextensive with the United States. There is nothing in any act of Congress, or in the nature of the rights themselves, which give them locality anywhere, so as to subject them to the process of courts having jurisdiction limited by the lines of states and districts.'

The case referred to in 14 How. 531, 14 L.Ed. 528, is Stephens v. Cady, a case of copyright, where Justice Nelson, who , says:

'But the incorporeal right secured by the statute to the author to multiply copies of the map by the use of the plate, being intangible and resting altogether in grant, is not the subject of seizure or sale by means of this process, certainly not at common law. No doubt the property may be reached by a creditors' bill, and be applied to the payment of the debts of the author, the same as stock of the debtor is reached and applied, the court compelling the transfer and sale of the stock for the benefit of the creditors; but in case of such remedy we suppose it would be necessary for the court to compel a transfer to the purchaser in conformity with the requirements of the copyright act in order to invest him with a complete title to the property. * * * An assignment, therefore, that would vest the assignee with the property of the copyright, according to the act of Congress, must be in writing and signed in the presence of two witnesses, and it may, I think, well be doubted whether a transfer, even by a sale under a decree of a court of chancery, would pass the title so as to protect the purchaser unless by a conveyance in conformity with this requirement.'

2 Robinson on Patents, Sec. 766, states the law as follows:

'That rule that an assignment can be made only by the actual owner of the patented invention admits of no exception in the interest of creditors. Valuable as his property therein may be, it cannot be subjected to the payment of his debts by any of the ordinary methods of involuntary alienation. This is not due to any peculiar sanctity which the law attaches to this class of property, but to the fact that the statutes which create the monopoly provide no other mode of transferring it than through the voluntary act of its real owner. The ownership of the patented invention cannot be seized and sold on execution by a sheriff like a personal chattel, nor, like other incorporeal rights, does it vest in a receiver or trustee in insolvency by virtue of the judicial decree of the court by which these various officials are appointed. Thus neither a bankrupt court nor a court of equity, nor any person acting under their authority, can affect the ownership of a patented invention without the actual or presumed co-operation of the individual in whom such ownership is vested by the issue of the patent or by assignment from the patentee. Either of these courts may have the power to compel the owner to transfer the ownership by an assignment to the receiver or trustee, and a court of equity on his refusal may treat the equitable rights as vested in the creditors and appoint a trustee for the owner to convey the legal title in his name and behalf to the officer in charge of his bankrupt estate, but the title in all such cases is still derived from him on whom it was originally conferred. That Congress has the power at any time to meet this difficulty by creating methods of involuntary alienation, there can be no doubt, but, in the absence of such statutes and judicial orders, the patented invention remains entirely and exclusively under the control of its owner, and may be retained or conveyed by him at his pleasure, without reference to any existing condition of insolvency.'

And a note to this section, on page 524, is as follows:

'That the patent privilege does not rest in a receiver merely by virtue of his appointment, see Dick v. Struthers (C.C.) 25 F. 103.'

That was a suit for infringement, and Acheson, Judge, says:

'By the law of...