Hartell v. Tilghman

• Decision Date: 01 October 1878
• Citation: 25 L.Ed. 357,99 U.S. 547
• Parties: HARTELL v. TILGHMAN
• Court: U.S. Supreme Court

99 U.S. 547

25 L.Ed. 357

HARTELL v. TILGHMAN.

October Term, 1878

APPEAL from the Circuit Court of the United States for the Eastern District of Pennsylvania.

The facts are stated in the opinion of the court.

Mr. William Henry Rawle and Mr. M. D. Connolly for the appellants.

The court below had no jurisdiction. The parties were all citizens of the same State. The suit was founded upon a contract between them, and did not arise under a statute of the United States. Wilson v. Sandford, 10 How. 99; Hartshorn v. Day, 19 id. 211; Slemmer's Appeal, 58 Pa. St. 164; Blanchard v. Sprague, 1 Cliff. 288; Goodyear v. Day, 1 Blatchf. 565; Merserole v. Union Paper Collar Co., 6 id. 356; Goodyear v. Union India-rubber Co., 4 id. 63; Burr v. Gregory, 2 Paine, 426; Hill v. Whitcomb, 1 Holmes, 317; Pulte v. Derby, 5 McLean, 328; Curtis, Patents, sect. 496.

When the defendant's original use of a machine or a process for which letters-patent have been granted to another is unlawful, he is prima facie an infringer, and the Federal jurisdiction attaches to prevent a violation of a right secured by the laws of the United States. But where such use is lawful, he is prima facie not an infringer, and that jurisdiction does not attach. The rights involved rest solely upon contract, and it is only when a breach of it is shown that the continued exercise of them can be enjoined.

Mr. George Harding, contra.

The bill is founded on letters-patent. The relief sought is an injunction, a discovery, and an account, and not the rescission, the enforcement, or the construction of a contract of license: The court below therefore had jurisdiction. Brooks v. Stolley, 3 McLean, 523; Woodworth v. Weed, 1 Blatchf. 165; Wilson v. Sherman, id. 538; Woodworth v. Cook, 2 id. 160; Wilson v. Sanford, 10 How. 99; Pulte v. Derby, 5 McLean, 336; Day v. Hartshorn, 3 Fish. 32; Goodyear v. Congress Rubber Company, 3 Blatchf. 453; Judson v. Union Rubber Company, 4 id. 66; Bloomer v. Gilpin, 4 Fish. 54; Blanchard v. Sprague, 1 Cliff. 288; Merserole v. Union Paper Collar Co., 3 Fish. 483; Littlefield v. Perry, 21 Wall. 205; Magic Ruffle Company v. Elm City Company, 13 Blatchf. 157.

MR. JUSTICE MILLER delivered the opinion of the court.

This is an appeal from a decree of the Circuit Court of the Eastern District of Pennsylvania, in which Tilghman, the appellee, describes himself in his bill as a citizen of that State, and the defendants as citizens of the same State. It thus appears affirmatively that, if the court had jurisdiction of the case, it was for some other reason than the citizenship of the parties; and it is argued by appellants that there is no such other ground for the jurisdiction.

The counsel for appellee, however, insists that it is 'a case arising under the patent laws of the United States,' and therefore cognizable in the circuit courts of the United States, on account of the subject-matter of the suit.

Subdivision 9 of section 629 of the Revised Statutes, which section is devoted to a definition of the powers of that court, gives it original jurisdiction 'of all suits at law or in equity arising under the patent or copyright laws of the United States.'

This section of the revision is founded on section 55 of the act of July 8, 1870, which declares that all actions, suits, controversies, and cases arising under the patent laws of the United States 'shall be originally cognizable, as well at law as in equity, in the circuit courts of the United States;' and that those courts shall have power to grant injunctions according to the course and principles of courts of equity, to prevent the violation of any right secured by patent, on such terms as the court may deem reasonable; and on a decree for infringement complainant shall be entitled, in addition to profits, to the damages he has sustained thereby. The language of the act of 1836 is substantially the same, except as to the damages to be recovered. We are, therefore, to decide whether this suit is one arising under the patent laws of the United States, within the meaning of the clause we have cited.

If a man owning a tract of land, his title to which is a patent from the United States, should sell or lease that land, and a controversy should arise between him and his vendee or lessee as to their rights in the premises, it could not be said that any suit brought by the vendor to assert his rights was a suit arising under the land laws of the United States; and this would be beyond question if the defendant, admitting the title of plaintiff to the land, should make no other defence than such as was founded in rights derived from plaintiff by contract. That is the case before us, with the variance that plaintiff's title is to a patent for an invention instead of a patent for land.

His bill begins by a statement that he is the original inventor and patentee of a process for cutting and engraving stone, glass, metal, and other hard substances. It is the one known as the sand-blast process.

He then sets out what we understand to be a contract with defendants for the use by the latter of his invention. He declares that defendants paid him a considerable sum for the machines necessary in the use of the invention, and also paid him the royalty which he asked, for several months, for the use of the process, which he claims to be the thing secured to him by patent. He alleges that after this defendants refused to do certain other things which he charges to have been a part of the contract, and thereupon he forbade them further to use his patent process, and now charges them as infringers.

The defendants admit the validity of plaintiff's patent. They admit the use of it and their liability to him for its use under the contract. They set out in a plea the contract as they understand it, and the tender of all that is due to plaintiff under it, and their readiness to perform it.

What is there here arising under the patent laws of the United States? What controversy that requires for its decision a reference to those laws or a construction of them? There is no denial of the force or validity of plaintiff's patent, nor of his right to the monopoly which it gives him, except as he has parted with that right by contract.

The complainant's view of the case is that there was a verbal agreement that he should prepare and put up in defendants' workshop ready for use such parts of the machinery as were of special use in his invention, for which defendants were to pay him at all events. That after this was done defendants should take a license for the use of his invention; that this license was to be the same in its terms as that given to all other persons who used the process, and among these were the right on the part of the patentee to visit the works of the defendants at all times, as well as to inspect their books, with a view to ascertain the amount of work done on which royalty was due. Also, that once every year the complainant had a right to fix the tariff of rates to be paid by defendants, by increasing it if he so determined, with no other limitation than that the increase of rates should apply equally to all licensees of the patent.

It is established by evidence of which there is no contradiction that complainant did furnish and put in place the machines, for which defendants paid him $649. That complainant also furnished a schedule of the rates of royalty to be paid on the different kinds of work to which the patented process was to apply, and that defendants made monthly returns and monthly payments according to this schedule, which were received by plaintiff without objection. That besides the machinery purchased of plaintiff, the defendants had expended about $3,000 in erecting a blower for the use of the sand-blast of complainant's process.

At this stage of the affair complainant tendered to defendants two blank forms of license to be signed by both parties, containing the two conditions we have mentioned. After some fruitless negotiations, defendants refused to sign these papers, and complainant thereupon, as we have said, forbade them to use the process, and on their disregard of this admonition brought his bill in chancery for an injunction, and for an account of profits and additional damages.

The argument of counsel is that defendants, having refused to sign the papers tendered them, are without license or other authority to use his invention, and are naked infringers of his rights under the acts of Congress.

The defendants say that they never agreed to accept a license with the conditions we have mentioned in them; that they never agreed to permit complainant's agents to inspect all the processes of their own works, some of which were valuable secrets, nor, after they had expended thousands of dollars in preparations for the use of his process, to place themselves under his arbitrary control as to the prices they should pay for the use of his invention. And they say that when the machines were in full operation and paid for, and the schedule of rates had been furnished by complainant and accepted by them, the contract was complete, and needed no such written agreement as the one tendered them for signature.

Such were the pleadings and the principal conceded facts on which the court was called to act, and we pause here to consider the question of jurisdiction on the case thus stated.

Burr v. Gregory (2 Paine, 426), one of the earliest cases on this subject, was a bill to procure a decree that the assignment of a patent by Burnap to Gregory was to the extent of three-fifteenths for the benefit of complainant, Burr, and to have a conveyance executed accordingly. Mr. Justice Thompson said that if the validity of the patent or of the assignment could be drawn in question, the Circuit Court might have jurisdiction. But as it was a matter which grew out of the contract, and there was no averment of citizenship, the amount prayed for, growing out of the profits, did not vary the...