Sidney Henry v. Dick Company

Citation32 S.Ct. 364,56 L.Ed. 645,224 U.S. 1
Decision Date11 March 1912
Docket NumberNo. 20,20
PartiesSIDNEY HENRY et al. v. A. B. DICK COMPANY
CourtUnited States Supreme Court

[Syllabus from pages 1-3 intentionally omitted] Messrs. Arthur v. Briesen and Antonio Knauth for Henry et al.

[Argument of Counsel from pages 3-7 intentionally omitted] Messrs. Frederick P. Fish and Samuel Owen Edmonds for the A. B. Dick company.

[Argument of Counsel from pages 7-11 intentionally omitted] Mr. Justice Lurton delivered the opinion of the court:

This cause comes to this court upon a certificate under the 6th section of the court of appeals act of March 3, 1891. [26 Stat. at L. 828, chap. 517, U. S. Comp. Stat. 1901, p. 550.]

The facts and the questions certified, omitting the terms of the injunction awarded by the circuit court, are these:

'This action was brought by the complainant, an Illinois corporation, for the infringement of two letters patent, owned by the complainant, covering a stencil-duplicating machine known as the 'Rotary Mimeograph.' The defendants are doing business as copartners in the city of New York. The complainants sold to one Christina B. Skou, of New York, a Rotary Mimeograph embodying the invention described and claimed in said patents under license which was attached to said machine, as follows:

'License Restriction.

'This machine is sold by the A. B. Dick Company with the license restriction that it may be used only with the stencil paper, ink, and other supplies made by A. B. Dick Company, Chicago, U. S. A.

'The defendant Sidney Henry sold to Miss Skou a can of ink suitable for use upon said mimeograph, with knowledge of the said license agreement, and with the expectation that it would be used in connection with said mimeograph. The ink sold to Miss Skou was not covered by the claims of said patent.'

'Question Certified.

'Upon the facts above set forth the question concerning which this court desires the instruction of the Supreme Court is:

'Did the acts of the defendants constitute contributory infringement of the complainant's patents?'

There could have been no contributory infringement by the defendants unless the use of Miss Skou's machine with ink not made by the complainants would have been a direct infringement. It is not denied that she accepted the machine with notice of the conditions under which the patentee consented to its use. Nor is it denied that thereby she agreed not to use the machine otherwise. What defendants say is that this agreement was collateral, and that its validity depended upon principles of general law, and that if valid the only remedy is such as is afforded by general principles of law. Therefore, they say that the suit is not one arising under the patent law, and one not cognizable in a Federal court, unless diversity of citizenship exists.

But before coming to the question whether this is a suit of which the circuit court had jurisdiction as a suit arising under the patent law, it may be well to notice an argument against jurisdiction, based upon the suggestion that if a breach of such a license restriction will support a suit for infringement, direful results will follow. Chief among the results suggested are, an encroachment upon the authority of the state courts and an extension of the jurisdiction of the Federal courts. And to swell the grievance it is said that if it be held that a breach of such a restriction will support a suit for infringement, parties will be deprived of the right to have the validity and import of the license restriction determined by the general law and be compelled to have their rights determined by the patent law.

We are unable to assent to these suggestions. We do not prescribe the jurisdiction of courts, Federal or state, but only give effect to it as fixed by law. If a bill asserts a right under the patent law to sell a patented machine subject to restrictions as to its use, and alleges a use in violation of the restrictions as an infringement of the patent, it presents a question of the extent of the patentee's privilege, which, if determined one way, brings the prohibited use within the provisions of the patent law, or, if determined the other way, brings into operation only principles of general law. Obviously, a suit for infringement, which must turn upon the scope of the monopoly or privilege secured to a patentee, presents a case arising under the patent law. The jurisdiction of the circuit court over such cases has, for more than a century, been exclusive, by the express terms of the statute, although, for the most part, its jurisdiction over other kinds of suits arising under the Constitution and laws of the United States is only concurrent with that of the state courts.

The suggestion, therefore, that we should refrain from ruling that a patentee may sell a patented machine subject to restrictions as to its use, and may predicate infringement upon a use in violation of the Federal lest such a ruling may draw to the Federal courts cases which otherwise would not come to them, cannot be sustained without placing our decision upon considerations which are quite apart from the law. This, of course, we may not do. In determining questions of jurisdiction, this court has never shirked the responsibility of maintaining the lines of separation defined in the Constitution and the laws made in pursuance thereof, but, on the contrary, has been ever watchful to maintain those lines as obligatory alike upon all courts and all suitors.

We come, then, to the question whether a suit for infringement is here presented.

That the license agreement constitutes a contract not to use the machine in a prohibited manner is plain. That defendants might be sued upon the broken contract, or for its enforcement, or for the forfeiture of the license, is likewise plain. But if, by the use of the machine in a prohibited way, Miss Skou infringed the patent, then she is also liable to an action under the patent law for infringement. Now that is primarily what the bill alleged, and this suit is one brought to restrain the defendants as aiders and abettors to her proposed infringing use.

That the patentee may waive the tort and sue upon the broken contract, or in assumpsit, is elementary. 3 Robinson, Patents, §§ 1225, 1250, and notes; Steam Stone Cutter Co. v. Sheldon, 21 Blatchf. 260, 15 Fed. 608; Pope Mfg. Co. v. Owsley, 27 Fed. 100; Button-Fastener Case, 35 L.R.A. 728, 25 C. C. A. 267, 47 U. S. App. 146, 77 Fed. 288, 291; Wilson v. Sandford, 10 How. 99, 13 L. ed. 344. But if the patentee elect to waive the tort, and sue upon the covenants, or for a breach of contract, the suit would not be one dependant upon or arising out of the patent law, and a Federal court would have no jurisdiction unless diversity of citizenship existed. 3 Robinson, Patents, § 1250; Magic Ruffle Co. v. Elm City Co. 13 Blatchf. 151, Fed. Cas. No. 8,949; Good-year v. Union India Rubber Co. 4 Blatchf. 63, Fed. Cas. No. 5,586; Goodyear v. Congress Rubber Co. 3 Blatchf. 449, Fed. Cas. No. 5,565. This would be so although the damages for a breach would be measured by the loss resulting from the infringement. Magic Ruffle Co. v. Elm City Co. 13 Blatchf. 151, Fed. Cas. No. 8,949. After such a recovery in assumpsit, no further camages for the infringement can be claimed. Steam Stone Cutter Co. v. Sheldon, 21 Blatchf. 260, 15 Fed. 608.

The remedy which the complainant seeks may often determine whether the suit is one arising under the patent law, and cognizable only in a court of the United States, or one upon a contract between the patentee and his assigns or licensees, and therefore cognizable in a state court, unless there be diversity of citizenship. Thus, a bill to enforce a contract concerning the title to a patent, or an interest therein, or to declare a forfeiture of an assignment of an interest in a patent, or even a license to make, sell, or use the patented thing, or an action to recover damages for a breach of a contract relating to a patent of a license thereunder, would not because of the character of remedy or relief sought, be a suit cognizable in a United States court, although the facts stated might have justified a suit for infringement in a United States court, if the complainant had elected that remedy. To sustain the contention that a breach of the implied agreement not to use the machine in question except in a particular way might have supported a suit to forfeit the license, or an action for damages upon the broken contract, counsel have cited and commented at great length upon the cases of Wilson v. Sandford, 10 How. 99, 13 L. ed. 344; Dale Tile Mfg. Co. v. Hyatt, 125 U. S. 46, 31 L. ed. 683, 8 Sup. Ct. Rep. 756; Albright v. Teas, 106 U. S. 613, 27 L. ed. 295, 1 Sup. Ct. Rep. 550; Hartell v. Tilghman, 99 U. S. 547, 25 L. ed. 357; Pratt v. Paris Gaslight & Coke Co. 168 U. S. 255, 42 L. ed. 458, 18 Sup. Ct. Rep. 62; Keeler v. Standard Folding Bed Co. 157 U. S. 659, 39 L. ed. 848, 15 Sup. Ct. Rep. 738; and E. Bement & Sons v. National Harrow Co. 186 U. S. 70, 46 L. ed. 1058, 22 Sup. Ct. Rep. 747; but an examination of these cases will disclose that while in some of them a suit for infringement might have been brought, the complainants had in fact brought suits to set aside or enforce contracts relating to patents, or licenses under patents. They were therefore not 'patent cases,' but cases determinable upon principles of general law. In Excelsior Wooden Pipe Co. v. Pacific Bridge Co. 185 U. S. 282, 46 L. ed. 910, 22 Sup. Ct. Rep. 681, Mr. Justice Brown reviews the cases and shows so plainly why they were not patent cases that we shall only refer to that opinion.

To support their contention that the only remedy for a violation of the license under which Miss Skou acquired her machine is one in the state courts, counsel quote a paragraph from the same opinion in these words: 'Now, it may be freely conceded that if the licensee had failed to observe any one of the three...

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