State ex rel. Postal Telegraph Cable Co. v. Delaware & A. Tel. & Tel. Co.

• Decision Date: 01 July 1891
• Citation: 47 F. 633
• Parties: STATE ex. rel. POSTAL TELEGRAPH CABLE CO. v. DELAWARE & A. TELEGRAPH & TELEPHONE CO.
• Court: U.S. District Court — District of Delaware

47 F. 633

STATE ex. rel. POSTAL TELEGRAPH CABLE CO. v. DELAWARE & A. TELEGRAPH & TELEPHONE CO.

United States Circuit Court, D. Delaware.

July, 1891

George H. Bates and R. S. Guernsey, for relator.

Edward G. Bradford and Charles L. Buckingham, for respondent.

WALES J.

This is an application for a writ of mandamus to compel the respondent to place a telephone transmitter and receiver in the office of the relator on the same terms as are given to other subscribers. The relator's petition was originally filed in the superior court of the state of Delaware, for New Castle county, and has been brought here by an order of removal made by that court, at the instance of the respondent, on the ground that the question for decision being how far a patentee is entitled to control the use of his patent, was one which should be determined under the constitution and laws of the United States. Water Co. v Keyes, 96 U.S. 199; Carson v. Dunham, 121 U.S 421, 7 S.Ct. 1030. Each of these parties is a corporation created by the laws of the state of New York, is transacting its business and has its principal offices in the city of Wilmington and district of Delaware. The relator is operating a telegraph line through this district, which is part of a large system connecting the business centers of the several states, and also by ocean cable with the principal cities of Europe. The respondent is maintaining the only telephone exchange in the city of Wilmington which is connected with telephones in the offices, places of business, and residences of its subscribers. The demand of the relator to be furnished with a telephone was refused, except on condition that the instrument should not be used as an adjunct to the telegraph business in the receiving and transmitting of telegraphic messages, although the respondent has furnished telephonic facilities to the Western Union Telegraph Company, which is a rival of, and a competitor with, the relator in the same city, without any such condition. In justification of its refusal to comply with the relator's demand, the respondent, in its answer, sets out at length certain facts which, so far as they show the nature and character of the defense, may be stated in a very few words. On the 10th of November, 1879, the Western Union Telegraph Company and the National Bell Telephone Company, having been up to that time the owners of rival telephone patents, and engaged in litigation concerning them, compromised their differences by a contract by virtue of which the National Bell Telephone Company became the owner of all the telephone patents which had been in dispute, and the ownership of which now constitutes the telephone monopoly. One of the conditions of the compromise was that the Western Union Telegraph Company should have a sole and exclusive license for the term of 17 years to sue the telephone in the receiving and transmitting of telegraphic messages. These patents have since been assigned to the American Bell Telephone Company, but the exclusive privilege conferred on the Western Union Telegraph Company by the contract of November 10th has been continued in every subsequent contract between the owners of the telephone patents and their licensees. The respondent is a mere licensee and is forbidden, by the terms of its license, to supply a telephone instrument to any telegraph company, to be used for telegraphic purposes, without the consent of its licensor, and it has furnished the Western Union Telegraph Company with a telephone under a general order from the owners of the telephone patents.

The patent laws secure to a patentee very valuable rights as a reward for his invention, and also as an incentive to others to exercise their inventive faculties. He may dispose of his patented property or discovery in several different ways, and for distinct purposes and uses, and the law of congress will protect him in the enjoyment of his rights, and save him from competition, during the life of his patent. At the same time, while he is thus favored, neither he nor his patented product is exempted from the liabilities and regulations which attach to all other persons and property under the general law of the land. An illustration of this qualified right of a patentee may be found in Patterson v. Kentucky, 97 U.S. 501. In that case the appellant had been convicted in a state court of selling an improved burning oil, of which he was the inventor, and which had been condemned by the state inspector as unsafe, but which the appellant claimed he had the right to sell by virtue of letters patent issued to him by the United States. The supreme court, speaking through Mr. Justice HARLAN, said:

'The right which the patentee or his assignee possesses in the property created by the application of a patented discovery must be enjoyed subject to the complete and salutary power, with which the states have never parted, of so defining and regulating the sale and use of property within their respective limits as to afford protection to the many against the injurious conduct of the few.'

The same doctrine was held in Jordan v. Overseers, 4 Ohio, 295, where the court said:

'A patentee has the power to manage his property, or give direction to his labors, at his pleasure; subject only to the paramount claims of society, which require that his enjoyment may be modified by the exigencies of the community to which he belongs, and regulated by laws which render it subservient to the general welfare.'

In each of these cases the patentee had attempted to sell his patented articles without regard to the provisions of the state statutes. It was decided that he could not do so, for the reason that, while a state law could not interfere with the tight of a patentee in the possession of his monopoly, it could control and regulate the application and use that might be made of the monopoly, and that in his management he was subject to the same responsibilities which are imposed on the owners of other kinds of property. In Vannini v. Paine, 1 Har. (Del.) 65, the facts were these: Yates and McIntyre were the assignees of Vanini, the inventor and patentee of a mode of drawing lotteries on the commutation and permutation principle, and were engaged in the business of drawing lotteries in Delaware. The defendants, who were also lottery brokers, had issued a scheme for drawing a lottery on the plan of Vanini's patent. The complainants filed a bill for injunction, partly on the ground that the defendants were infringing the patent rights of Vanini. The chancellor had dismissed the bill for other reasons, and the court of errors and appeals of Delaware, in affirming the decree, incidentally referred to the claim made under the patent, and said:

'At the time Yates and McIntyre made contracts for the lottery privileges set forth in their bill, we had in force an act of assembly prohibiting lotteries, the preamble of which declares that they are pernicious, and destructive to frugality and industry, and introductive of idleness and immorality, and against the common good and general welfare. It cannot, therefore, be admitted that the plaintiffs have a right to use an invention for drawing lotteries in this state merely because they have a patent for it under the United States. A person might, with as much propriety, claim a right to commit murder with an instrument because he had a patent for it as a new and useful invention.'

The conclusion drawn from an examination of these cases is that the patent laws give to the patentee a monopoly in his invention, and afford him protection in its proper and legitimate employment; but that they do not authorize him to employ it for a purpose or in a manner that may be forbidden to all other persons in the use of their unpatented property or discoveries. Since the above decisions were made, the telephone patents have come into general use, and the telephone, as an instrument for the rapid transmission and reception of messages has been adopted by all classes of persons, in almost every department of business, public and private, and is now, within the scope of its power, as essential to the convenience and welfare of the public as are the railroad and the telegraph. The beginning, progress, and completion of business transactions, involving large interests, depend upon the certainty of telephonic communication, which has been accessible to the public for such a length of time that any course of action by the owners of the telephone patents which might prevent or limit the general use of the telephone would produce the most serious consequences. Up to the present time, the telephonic system has been, and continues to be, open to all persons and corporations excepting telegraph companies, and the question now before the court is, has the respondent a right to exclude the latter; and the solution of this question depends upon another one,-- whether the telephone company has intentionally or unintentionally, assumed the character, functions, and duties of a common carrier, and thus made itself subject to the same principles and rules of law applicable to all other common carriers, the chief one of which is that they must serve the public impartially, and without unjust discrimination, to the utmost of their ability. That such duty is incumbent on every common carrier is elementary law, and will be admitted without discussion. It had its...