Bauer Cie v. James Donnell

• Decision Date: 26 May 1913
• Docket Number: No. 951,951
• Citation: 57 L.Ed. 1041,33 S.Ct. 616,229 U.S. 1
• Parties: BAUER & CIE. and the Bauer Chemical Company, v. JAMES O'DONNELL
• Court: U.S. Supreme Court

229 U.S. 1

33 S.Ct. 616

57 L.Ed. 1041

BAUER & CIE. and the Bauer Chemical Company,

v JAMES O'DONNELL.

No. 951.

Argued April 10, 1913.

Decided May 26, 1913.

Messrs. Edwin J. Prindle and Arthur Wright for Bauer & Cie.

[Argument of Counsel from pages 2-7 intentionally omitted] Messrs. Daniel W. Baker and Frank J. Hogan for O'Donnell.

Mr. Horace Pettit for the Victor Talking Machine Company.

Mr. Nathan Matthews for the Waltham Watch Company.

Messrs. Frederick P. Fish and Thomas W. Pelham for the Gilette Safety Razor Company.

Mr. Justice Day delivered the opinion of the court:

This case is on a certificate from the court of appeals of the District of Columbia. The facts stated in the certificate are:

'Bauer & Cie., of Berlin, Germany, copartners, being the assignees of letters patent of the United States, dated April 5, 1898, No. 601,995, covering a certain water soluble albumenoid known as 'Sanatogen,' and the process of manufacturing the same, about July, 1907, entered into an agreement with F. W. Hehmeyer, doing business in the city of New York, under the trade name of the Bauer Chemical Company, whereby Hehmeyer became and has since been the sole agent and licensee for the sale of said product in the United States, the agreement contemplating that Hehmeyer should have power to fix the price of sale to wholesalers or distributors and to retailers, and to the public. The agreement further contemplated that said product should be furnished Hehmeyer at manufacturing cost, the net profits obtained by him to be shared equally by the parties to the agreement. Since April, 1910, this product has been uniformly sold and supplied to the trade and to the public by the appellants and their licensees in sealed packages bearing the name 'Sanatogen,' the words 'Patented in U. S. A., No. 601,995,' and the following:

'Notice to the Retailer.

'This size package of Sanatogen is licensed by us for sale and use at a price not less than one dollar ($1). Any sale in violation of this condition, or use when so sold, will constitute an infringement of our patent No. 601,995, under which Sanatogen is manufactured, and all persons so selling or using packages or contents will be liable to injunction and damages.

'A purchase is an acceptance of this condition. All rights revert to the undersigned in the event of violation.

The Bauer Chemical Co.

'The appellee is the proprietor of a retail drug store at 904 F Street, N. W., in this city. He purchased of the Bauer Chemical Company for his retail trade original packages of said Sanatogen bearing the aforesaid notice. These packages he sold at retail at less than $1 and, persisting in such sales, appellants, in March, 1911, severed relations with him. Thereupon appellee, without the license or consent of the appellants, purchased from jobbers within the District of Columbia, said jobbers having purchased from appellants, original packages of said product, bearing the aforesaid notice, sold said packages at retail at less than the price fixed in said notice, and avers that he will continue such sales.'

The question propounded is: 'Did the acts of the appellee, in retailing at less than the price fixed in said notice, original packages of 'Sanatogen,' purchased of jobbers, as aforesaid, constitute infringement of appellants' patent?'

The protection given to inventors and authors in the United States originated in the Constitution, § 8 of article I. of which authorizes the 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.' This protection, so far as inventors are concerned, has been conferred by an act of Congress passed April 10, 1790, and subsequent acts and amendments. The act of 1790 (1 Stat. at L. 109, chap. 7), granted 'the sole and exclusive right and liberty of making, constructing, using, and vending to others to be used, the said invention or discovery.' In 1793 (1 Stat. at L. 318, chap. 11), the word 'full' was substituted for the word 'sole,' and in 1836 (5 Stat. at L. 117, § 5 chap. 357), the word 'constructing' was omitted. This legislation culminated in § 4884 of the Revised Statutes, the part with which we are dealing being practically identical with the act of 1870 (16 Stat. at L. 198, § 22, chap. 230, U. S. Comp. Stat. 1901, p. 3381). It provides that every patent shall contain 'a grant to the patentee, his heirs and assigns, for the term of seventeen years, of the exclusive right to make, use, and vend the invention or discovery.'

The right to make, use, and sell an invented article is not derived from the patent law. This right existed before and without the passage of the law, and was always the right of an inventor. The act secured to the inventor the exclusive right to make, use, and vend the thing patented, and consequently to prevent others from exercising like privileges without the consent of the patentee. Bloomer v. McQuewan, 14 How. 539, 549, 14 L. ed. 532, 537; Continental Paper Bag Co. v. Eastern Paper Bag Co. 210 U. S. 405, 425, 52 L. ed. 1122, 1130, 28 Sup. Ct. Rep. 748. It was passed for the purpose of encouraging useful invention and promoting new and useful improvements by the protection and stimulation thereby given to inventive genius, and was intended to secure to the public, after the lapse of the exclusive privileges granted, the benefit of such inventions and improvements. With these beneficent purposes in view the act of Congress should be fairly or even liberally construed; yet, while this principle is generally recognized, care should be taken not to extend by judicial construction the rights and privileges which it was the purpose of Congress to bestow.

In framing the act and defining the extent of the rights and privileges secured to a patentee, Congress did not use technical or occult phrases, but in simple terms gave an inventor the exclusive right to make, use, and vend his invention for a definite term of years. The right to make can scarcely be made plainer by definition, and embraces the construction of the thing invented. The right to use is a comprehensive term and embraces within its meaning the right to put into service any given invention. And Congress did not stop with the express grant of the rights to make and to use. Recognizing that many inventions would be valuable to the inventor because of sales of the patented machine or device to others, it granted also the exclusive right to vend the invention covered by the letters patent. To vend is also a term readily understood and of no doubtful import. Its use in the statute secured to the inventor the exclusive right to transfer the title for a consideration to others. In the exclusive rights to make, use, and vend, fairly construed, with a view to making the purpose of Congress effectual, reside the extent of the patent monopoly under the statutes of the United States. Bloomer v. McQuewan, 14 How. 549, 14 L. ed. 537. We need not now stop to consider the rights to sell and convey, and to license others to sell or use inventions, which rights have been the subject of consideration in the numerous reported cases to be found in the books. We are here concerned with the construction of the statute in the aspect and under the facts now presented.

The case presented pertains to goods purchased by jobbers within the District of Columbia, and sold to the appellee at prices not stated, and resold by him at retail at less than price of $1 fixed in the notice. The question, therefore, now before this court for judicial determination, is: May a patentee by notice limit the price at which future retail sales of the patented article may be made, such article being in the hands of a retailer by purchase from a jobber who has paid to the agent of the patentee the full price asked for the article sold?

The object of the notice is said to be to effectually maintain prices and to prevent ruinous competition by the cutting of prices in sales of the patented article. That such purpose could not be accomplished by agreements concerning articles not protected by the patent monopoly was settled by this court in the case of Dr. Miles Medical Co. v. John D. Park & Sons Co. 220 U. S. 373, 55 L. ed. 502, 31 Sup. Ct. Rep. 376, in which it was held that an attempt to thus fix the price of an article of general use would be against public policy and void. It was doubtless within the power of Congress to confer such right of restriction upon a patentee. Has it done so? The question has not been determined in any previous case in this court, so far as we are aware. It was dealt with under the copyright statute, however, in the case of Bobbs-Merrill Co. v. Straus, 210 U. S. 339, 52 L. ed. 1086, 28 Sup. Ct. Rep. 722. In that case it was undertaken to limit the price of copyrighted books for sale at retail by a notice on each book, fixing the price at $1 and stating that no dealer was licensed to sell it for less, and that a sale at a less price would be treated as an infringement of the copyright. It was there held that the statute, in securing to the holder of the copyright the sole right to vend copies of the book, conferred a privilege which, when the book was sold, was exercised by the holder, and that the right secured by the statute was thereby exhausted. The court also held that it was not the purpose of the law to grant the further right to qualify the title of future purchasers by means of the printed notice affixed to the book, and that to give such right would extend the statute beyond its fair meaning, and secure privileges not intended to be covered by the act of Congress. In that case it was recognized that there are differences between the copyright statute and the patent statute, and the purpose to decide the question now before us was expressly disclaimed.

Section 4952, Revised Statutes (U. S. Comp. Stat. 1901, p. 3406), a part of the copyright...