Birdsell v. Shaliol

• Decision Date: 08 December 1884
• Citation: 28 L.Ed. 768,112 U.S. 485,5 S.Ct. 244
• Parties: BIRDSELL and another v. SHALIOL and another
• Court: U.S. Supreme Court

112 U.S. 485

5 S.Ct. 244

28 L.Ed. 768

BIRDSELL and another v. SHALIOL and another.

December 8, 1884.

W. W. Leggett, for appellants.

No brief for appellees.

GRAY, J.

This was a bill in equity for an injunction and damages for the infringement of a patent for an improvement in machines for threshing and hulling clover-seed. The answer set up a former decree as an estoppel. The case was heard in the circuit court upon a statement of facts agreed by the parties, by which it appeared to be as follows: Birdsell was the inventor and patentee of the improvement, and granted to the Birdsell Manufacturing Company, a corporation of which he was the president and active manager, and owner of a large part of the stock, an exclusive oral license to make, vend, and use his invention, but did not give it authority to license others to make, vend, and use. The corporation paid him no royalty, but set apart a sinking fund to defray the expense of defending the patent in the courts. A former suit in equity was brought by Birdsell against the Ashland Machine Company for an infringement of his patent by making and selling large unmbers of machines. The Birdsell Manufacturing Company was not made a party to that suit, but participated in instituting it and carrying it on till its close. In that suit a perpetual injunction was decreed, and the case was referred to a master, before whom damages sustained by the Birdsell Manufacturing Company were proved and claimed, and who reported that the defendant had made no profits for which it should account, and that, if any damages had been sustained, they had been sustained by the Birdsell Manufacturing Company, a stranger to the suit, and that Birdsell, the plaintiff was entitled to recover only one dollar, as nominal damages. The Ashland Machine Company afterwards, pending that suit, became insolvent; and a decree was rendered in Birdsell's favor according to the master's report, for nominal damages and for costs, which were paid by that company. The present suit was brought by Birdsell and the Birdsell Manufacturing Company against Gerhart Shaliol and John Feikert, who had used one of the machines manufactured by the Ashland Machine Company, and embraced in the master's report in the suit against that company. The circuit court held that in the former suit the Birdsell Manufacturing Company, although not named as a party plainfiff in the bill, was in reality a co-plaintiff with Birdsell, and that, by the final decree in that suit, and the recovery and payment of nominal damages, Birdsell and the Birdsell Manufacturing Company were estopped to maintain the present bill; and therefore dismissed the bill, with costs. The plaintiffs appealed to this court.

The plaintiffs in the present suit—Birdsell, the patentee, in whom is the legal title, and the Birdsell Manufacturing Company, his licensee, in whom is the beneficial interest—make three objections to the decree set up by way of estoppel: (1) That the Birdsell Manufacturing Company was not a party; (2) that the present defendants were not parties; (3) that only nominal damages were recovered and paid.

1. A licensee of a patent cannot bring a suit in his own name, at law or in equity, for its infringement by a stranger; an action at law for the benefit of the licensee must be brought in the name of the patentee alone; a suit in equity may be brought by the partentee and the licensee together. Gayler v. Wilder, 10 How. 477, 495; Littlefield v. Perry, 21 Wall. 205, 223; Paper Bag Cases, 105 U. S. 766, 771. In a suit in equity brought by the patentee alone, if the defendant seasonably objected to the non-joinder of the licensee, the court might, as Judge LOWELL did in Hammond v. Hunt, 4 Ban. & A. 111, order him to be joined. But when a suit in equity has been brought and prosecuted, in the name of the patentee alone, with the licensee's consent and concurrence, to final judgment, from which, if for too small a sum, an appeal might have been taken in the name of the patentee, we should hesitate to say that the licensee, merely because he was not a formal plaintiff in that suit, could bring a new suit to recover damages against the same defendant for the same infringement.

2. It is a more serious question whether a decree in favor of the patentee, upon a bill in equity against one person for making and selling a patented machine, is a bar to a subsequent suit by the patentee against another person for afterwards using the same machine within the term of the patent. A license from the patentee to make, use, and sell machines gives the licensee the right to do so, within the scope of the license, throughout the term of the patent; and has the same effect upon machines sold by the licensee under authority of his license, that a sale by the patentee has upon machines sold by himself, of wholly releasing them from the...