Sontag Chain Stores Co Limited v. National Nut Co of California

• Decision Date: 20 May 1940
• Docket Number: No. 671,671
• Parties: SONTAG CHAIN STORES CO., LIMITED, v. NATIONAL NUT CO. OF CALIFORNIA
• Court: U.S. Supreme Court

310 U.S. 281

60 S.Ct. 961

84 L.Ed. 1204

SONTAG CHAIN STORES CO., LIMITED,

v NATIONAL NUT CO. OF CALIFORNIA.

No. 671.

Argued April 24, 1940.

Decided May 20, 1940.

Mr. Guy A. Gladson, of Chicago, Ill., for petitioner.

Mr. Hugh N. Orr, of San Francisco, Cal., for respondent.

Mr. Justice McREYNOLDS delivered the opinion of the Court.

The Circuit Court of Appeals declared respondent's reissue patent No. 20,024, for a nut treating apparatus, valid and infringed by petitioner's use of the accused machine, and rejected the defense of intervening rights. The record requires us to consider what effect an enlarged inclusive reissue claim has upon the use of a machine manufactured and operated after grant of the original patent without infringing it, but which does come within the enlargement.

Kohler's patent—No. 1,958,409—with four narrow claims, issued May 15, 1934.

Petitioner procured and began to use the machine here accused about April 1, 1935. It first obtained actual knowledge of the original patent October 8, 1935 when notice of infringement was received. Nothing shows earlier knowledge by the manufacturer who began to make and sell like machines not later than August 1934.

By suit filed in the District Court, October 19, 1935, respondent charged petitioner with infringing the original patent, and asked appropriate relief. Infringement was denied by answer, November 22, 1935.

January 15, 1936 respondent applied for and on June 30, 1936 obtained a reissue patent—No. 20,024—with seventeen claims. The first four were identical with the original ones; thirteen of broader scope cover petitioner's machine. Respondent was moved to obtain the reissue by petitioner's use of the accused machine.

January 26, 1937 respondent began another proceeding charging infringement of the enlarged claims. Petitioner's answer relied upon intervening rights acquired through public use without violating the original patent; also, invalidity of the reissue because of laches. The two suits were consolidated; claims 1 to 4 were not relied on. A single decree went for petitioner. Both bills were dismissed.

Infringement of respondent's design patent No. 89,347 February 28, 1933—was alleged, but both courts declared it not infringed. No point in respect of it is before us.

The District Court held 'That with respect to Kohler Reissue Letters Patent No. 20,024 in suit, this defendant and those in privity with it, including the manufacturer of the machine in question, acquired intervening rights which in equity plaintiff may not now disturb.' The Circuit Court of Appeals reversed and directed a remand. 9 Cir., 107 F.2d 318.

The cause is here by certiorari. Petitioner asserts the reissue patent is void because of laches; also that by reason of acquired intervening rights, use of the accused machine may continue.

The provision concerning reissues in the present Patent Act, Section 4916 Revised Statutes, as amended by Act May 24, 1928, c. 730, 45 Stat. 732, U.S.C.A. Title 35, sec. 64, is copied in the margin.¹ It derives through the Acts July 3 1832, c. 162, sec. 3, 4 Stat. 559; July 4, 1836, c. 357, sec. 13, 5 Stat. 117, 122; March 3, 1837, c. 45, sec. 5, 5 Stat. 191, 192; July 8, 1870, c. 230, sec. 53, 16 Stat. 198, 205.

The reissue provision, Act 1832, was supplanted without change presently important by the corresponding one in the 1836 Act. This was substantially reenacted in 1870. Modifications by the 1928 Act are not important here. Stimpson v. West Chester Railroad Co., 1846, 4 How. 380, 402, 11 L.Ed. 1020; Parker & Whipple Co. v. Yale Clock Co., 1887, 123 U.S. 87, 96, 8 S.Ct. 38, 43, 31 L.Ed. 100; Walker on Patents, Deller's Edition (1937), Vol. 2, p. 1342. Robinson on Patents (1890) Vol. 2, sec. 653 et seq.

These provisions have often been before the courts and there are sharply differing views concerning them. Some of the pertinent cases are noted below. ²

The Circuit Court of Appeals after holding the enlarged reissue claims valid and infringed further declared 'In the instant case there was admittedly no knowledge of or reliance on the scope of plaintiff's patent, and no facts creating an estoppel. Furthermore, defendant has not shown a two-years user of the infringing patent. The defense of intervening rights is denied.'

For present purposes we assume, without deciding, correctness of the conclusion that the reissue patent was valid and infringed, and upon that assumption, we come to consider the effect of the enlarged claims upon petitioner's machine, lawfully manufactured and operated prior to their inception. There is nothing to show dishonesty, bad faith, or deceptive intention upon petitioner's part.

Counsel for respondent insist the denial of intervening rights finds adequate support in Stimpson v. West Chester Railroad Co., supra; Battin v. Taggert, supra; White v. Dunbar, supra; Topliff v. Topliff, supra; Abercrombie & Fitch Co. v. Baldwin, supra. The first two are in point; but when considered in connection with later opinions are not decisive of the present issue. The other cases relied upon are not especially helpful.

The Patent Act of 1832 was a response to Grant et al. v. Raymond, Feb. 23, 1832, 6 Pet. 218, 242, 243, 244, 8 L.Ed. 376. The opinion there (Chief Justice Marshall) affirmed the power of the Secretary to grant an application dated April 20, 1825 for reissue of a patent dated August 11, 1821 although not expressly authorized so to do, upon the ground that this was necessary in order to effect the purposes of the Patent Act by securing to inventors full benefit of their discoveries through 'faithful execution of the solemn promise made by the United States.' The court said—

'An objection much relied on is, that after the invention has been brought into general use, those skilled in the art or science with which it is connected, perceiving the variance between the specification and the machine, and availing themselves of it, may have constructed, sold and used the machine without infringing the legal rights of the patentee, or incurring the penalties of the law. The new patent would retroact on them, and expose them to penalties to which they were not liable when the act was committed.'

'This objection is more formidable in appearance than in reality. It is not probable that the defect in the specification can be so apparent as to be perceived by any but those who examine it for the purpose of pirating the invention. They are not entitled to much favor. But the answer to the objection is that this defense is not made in this case; and the opinion of the Circuit Court does not go so far as to say that such a defense would not be successful. That question is not before the court, and is not involved in the opinion we are considering. The defense when true in fact may be sufficient in law, notwithstanding the validity of the new patent.'

Under the two year rule of Miller v. Bridgeport Brass Co., 1881, supra, note 2, a reissue patent granted in circumstances like those disclosed by the report of Grant's case, now would be declared invalid.

Stimpson v. West Chester Railroad Co., 1846, supra, note 2, involved infringement of a reissue, granted in 1835, of an original patent dated in 1831. The trial judge charged the jury 'It clearly appears that the defendants constructed their railroad with the plaintiff's curves in 1834, one year or more before the plaintiff's application for his renewed patent; consequently, they may continue its use without liability to the plaintiff.' (4 How. 402, 11 L.Ed. 1020.)

This was declared in conflict with the reissue provision Act of 1832 and the corresponding one in the 1836 Act. The two are declared substantially alike. The Court said 'It is plain that no prior use of the defective patent can authorize the use of the invention after the emanation of the renewed patent under the above section. To give to the patentee the fruits of his invention was the object of the provision; and this object would be defeated, if a right could be founded on a use subsequent to the original patent and prior to the renewed one. * * * Now any person using an invention protected by a renewed patent subsequently to the date of this act is guilty of an infringement, however long he may have used the same after the date of the defective and surrendered patent.'

Battin v. Taggert, 1854, supra, note 2, reaffirmed Stimpson v. West Chester R. Co., and disapproved the following instruction to the jury 'That a description, by the applicant, for a patent of a machine, or a part of a machine, in his specification, unaccompanied by notice that he has rights in it as inventor, or that he desires to secure title to it as a patentee, is a dedication of it to the public. * * * That such a dedication cannot be revoked, after the machine has passed into public use, either by surrender and reissue, or otherwise.' (17 How. 83, 15 L.Ed. 37.)

The Court said 'Whether the defect be in the specifications or in the claim, under the 13th section (Act 1836) above cited, the patentee may surrender his patent, and, by an amended specification or claim, cure the defect. The reissued patent must be for the same invention, substantially, though it be described in terms more precise and accurate than in the first patent. Under such circumstances, a new and different invention cannot be claimed. But where the specification or claim is made so vaguely as to be inoperative and invalid, yet an amendment may give to it validity, and protect the rights of the patentee against all subsequent infringements.

'So strongly was this remedy of the patentee recommended, by a sense of justice and of policy, that this court, in the case of Grant v. Raymond, 6 Pet. 218 (8 L.Ed. 376), sustained a reissued and corrected patent, before any legislative provision was made on the subject. * * *

'How much stronger is a case under the statute, which secures the rights of the patentee by a surrender, and declares the effect of the...