Hartman v. John D. Park & Sons Co.

• Decision Date: 14 February 1906
• Docket Number: 2,440.
• Citation: 145 F. 358
• Parties: HARTMAN v. JOHN D. PARK & SONS CO.
• Court: U.S. District Court — Eastern District of Kentucky

145 F. 358

HARTMAN v. JOHN D. PARK & SONS CO.

No. 2,440.

United States Circuit Court, E.D. Kentucky.

February 14, 1906

F. W Hinkle, F. F. Reed and E. S. Rogers, for plaintiff.

W. J Shroder, Alton B. Parker, Morris & Fay, for defendant.

COCHRAN District Judge.

This case is before me on demurrer to the bill for want of equity. The bill alleges in substance that complainant is the manufacturer and seller amongst other medicines of one known as 'Peruna'; that the formula by which it is made was discovered by him, and is known only to him and his trusted employes; that he puts it up in bottles, each of which is inclosed in a loose white wrapper bearing the words 'Peruna the Great Tonic' and has pasted on it a label giving its history, the theory upon which it is based, the ailments for which it is recommended, and the directions for taking it, and is serially numbered, the number being stamped both on the wrapper and label in several places; that he sells the medicine to wholesale druggists only, who in turn sell to retail druggists, who in turn sell to consumers; that the wholesalers to whom he sells contract with him not to resell except to retailers designated by him and at certain prices, and the retailers whom he designates contract with him not to resell to consumers except at certain prices; that his prices to the wholesalers are uniform and so are the prices fixed by him of wholesalers to retailers and of retailers to consumers; that he alone advertises the medicine and creates the demand for it; that with each package of medicine is furnished a card containing the serial numbers of the bottles therein and the wholesalers are required to note thereon the retailers to whom same is sold, and to return it to complainant; that the defendant, a Kentucky corporation is a wholesale druggist; that it obtains said medicine from complainant's wholesalers and retailers by false and fraudulent representations, surreptitious, and dishonest methods and persuading them to break their contracts with him, and sells same to retailers operating 'cut rate drug stores' at less than the wholesale prices fixed by him who in turn sell to consumers at less than the retail prices so fixed; that before the medicine is so sold to consumers the wrappers are removed and the labels are defaced so as to obliterate the serial numbers stamped thereon and the information thereby given; and that defendant gives out and announces that he will continue so to obtain said medicine and so dispose of it. The relief sought is an injunction against his so doing.

The defendant's contention is that complainant has no right to sell his medicine outright to the wholesalers, and at the same time retain a control over the subsequent trade therein as to the retailers to whom and prices at which the wholesalers may resell and as to the prices at which the retailers may resell to the consumers, and that, hence, the system of contracts by which he is attempting to retain such control is unlawful. It concedes that if this contention is not correct the complainant is entitled to the relief he seeks. The demurrer, therefore, presents for determination the single question as to whether this contention is correct. Its counsel advance two arguments in support thereof. The first one presupposes that the owner of a patent or copyright has the right to sell the things patented or copyrighted outright, and, at the same time by such system of contracts, retain such control over the subsequent trade therein. It is that such owner has such right by virtue alone of the federal statutes as to patents and copyrights, and that as there is no statute giving any rights to the owner of a secret process he does not have such right. The argument has some plausibility and has bothered me somewhat--less, however, in concluding that it is not sound than in demonstrating that it is not in a lucid and convincing way, which I have aimed to do. In order to determine its validity it should be ascertained first what rights the owner of a patent or copyright has by virtue alone of the statutes as to patents and copyrights. They in express terms confer the exclusive right to make, use, and sell the things patented or copyrighted. Unquestionably the owner of a patent or copyright has this right by virtue alone of said statutes. It arises solely therefrom. If it were not for them he would not have the right. No other person has any such right in relation to any other articles. Complainant's counsel hesitate to concede this, if they do not actually dispute it. They contend, in effect, that an inventor or author who has not obtained a patent or copyright has, before publication, such right in relation to articles embodying his invention or authorship and that the owner of a secret process who may be an inventor and entitled to a patent, and who is in exactly the same position as an inventor or author who has not obtained a patent or copyright before publication has such right in relation to articles embodying his secret process. As to the former they say that he has precisely the same rights which an inventor or author who has obtained a patent has. To make sure of this I quote from their brief. They say:

'It is therefore proposed-- to show that in case of inventors and authors--precisely the same exclusive monopolistic and all controlling property rights in inventions and literary products subsisted at common law before publication as are given by statute after publication. The right given by the federal copyright statute is the exclusive right to print, publish and sell the production. The right given by the patent statutes is the exclusive right to make, use and vend the invention. At common law and by natural right the author of a book or the discoverer of an improvement in machinery, art or manufacture has precisely the same rights before publication.'

Again they say:

'The common-law right and the statutory right are identical in their natures.'

As against these views many expressions from learned judges can be quoted. As for instance, in the case of Wheaton v. Peters, 8 Pet.(U.S.) 591, 8 L.Ed. 1055, Mr. Justice McLean, in referring to the federal statutes as to copyrights, said:

'Congress then by this act instead of sanctioning an existing right as contended for created it.' And in the case of Gayler v. Wilder, 10 How.(U.S.) 477, 13 L.Ed. 504, Mr. Chief Justice Taney said:

'The inventor of a new and useful improvement certainly has no exclusive right to it until he obtains a patent. This right is created by the patent.'

And again in the case of In re Brosnahan (C.C.) 18 F. 62, Mr. Justice Miller said:

'The sole object and purpose of the laws which constitute the patent and copyright systems is to give to the author and inventor a monopoly of what he has written or discovered, so that no one else shall make or use or sell his writings or his invention without his permission; and what is granted to him is the exclusive right; not the abstract right but the right in him exclusive of everybody else.'

Concerning these expressions complainant's counsel say:

'All that is meant or intended to be meant, when various courts have have said that copyright and patent laws create new rights, must be simply that these statutes have continued and extended the old rights after publication or disclosure.'

In this line they frequently speak of the rights of an inventor or author who has obtained a patent or copyright as being an extension, protraction, continuance, or prolongation of the rights he had in the absence of publication before he obtained his patent or copyright. Counsel for defendant though taking issue here with complainant's counsel, at times use language implying what they contend. They speak of an inventor or author losing his exclusive right by publication and of his preserving it by obtaining a patent or copyright. I cannot concur in this contention. An inventor or author who has not obtained a patent or copyright does not have before publication the exclusive right to make, use, and sell articles embodying his invention or authorship. Nor does the owner of a secret process have exclusive right to make, use, and sell articles embodying his secret process. The statutes as to patents and copyrights in conferring upon an inventor or author the exclusive right to make, use, and sell articles embodying his invention or authorship create in him a new right, and do not extend, protract, continue, or prolong a previously existing right. An inventor or author who has not obtained a patent or copyright, has, before publication, a valuable right of another kind. He has the right to keep the knowledge of what he has invented or composed to himself. No one can lawfully obtain it from him without his consent. So, likewise, the owner of a secret process has the right to maintain the secrecy of his process. Both such an inventor or author and such owner have a right to sell their knowledge and their right to keep it a secret to another and vest him with the same rights in regard thereto as he has. They have the right to impart the knowledge to others with restrictions as to the use they shall make of it, and to have them make no greater use of it. Such knowledge as well as the articles embodying it is property, and entitled to the protection of the courts. From a commercial standpoint, the owner of a secret process may be in as good a position, if not better, than an inventor or author who has obtained a patent or copyright. But the exclusive right to make, use, and sell articles embodying his invention or authorship which such an inventor or author has is not the same as the right to secrecy which the owner of a secret process or an inventor or author who has not obtained a patent or...