The Tremolo Patent Tremaine v. Hitchcock Co Hitchcock Co v. Tremaine

• Decision Date: 01 October 1874
• Citation: 23 L.Ed. 97,90 U.S. 518,23 Wall. 518
• Parties: THE TREMOLO PATENT. TREMAINE v. HITCHCOCK & CO. HITCHCOCK & CO. v. TREMAINE
• Court: U.S. Supreme Court

90 U.S. 518

23 L.Ed. 97

23 Wall. 518

THE TREMOLO PATENT.

TREMAINE

v. HITCHCOCK & CO.

HITCHCOCK & CO.

v. TREMAINE.

October Term, 1874

ON cross appeals from the Circuit Court for the Southern District of New York.

Hitchcock & Co., owners by assignment of a patent to one Carpenter, which had been twice reissued to themselves, filed a bill in the court below against Tremaine and others, vendors of organs generally and other musical instruments, to enjoin their sale of what was known as a 'tremolo attachment,' an appendage sometimes made to organs; the purpose of which is to make a tremolo or vibratory note, preserving at the same time, as far as possible, its smoothness, fulness, and power.

This tremolo attachment was no necessary part of an organ; but, as its name declared, an attachment;' an optional device, used or not used at pleasure.

The defendants, who, as already said, were venders of organs generally, and who bought different sorts of organs from the different makers of them, had and sold organs with the attachment (buying them from persons not licensed), and organs without the attachment. For those containing the attachment they paid an additional price, and they sold them also for more than those which did not have the attachment.

The defendants answered the bill, and the case having been heard, and they decreed guilty of infringement, it was referred to a master to take an account of profits, the order of reference directing——

'That the permit the defendants to prove the general expenses of their business incurred alike to effect the sale of all goods (i. e., not specifically incurred in reference to any particular class or kind), said general expenses to be apportioned by the master, and a part of the same, bearing the same proportion to the whole that the gross sum received from sales of the infringement bears to the gross sum received by the defendants from all sales in their said business, to be added to the expense of the infringing tremolos, and allowed to the defendants.'

In taking this account, the master did accordingly allow the defendants to prove the general expenses of their business incurred in effecting the sales of all musical instruments, and deduct a ratable proportion from the profits made by the sale tremolo attachments. To explain, he reported thus:- '1st. That the gross sum received by the defendants from all sales in their said business, during the period specified, was $91,165.32.

'2d. That the gross sum received by the defendants from sales of the infringement was $3913.96.

'3d. That the general expenses of their business incurred alike to effect the sales of all goods was $16,868.93.

'4th. That the proportion of such general expenses applicable to the tremolo, pursuant to said order, is $729.22.

'5th. That if said proportionable part of the expenses be added to the expense of the tremolo, or deducted from the profits previously reported, to wit, $1238.48, the profit derived by the defendants from the infringing tremolo will amount to the sum of $509.26.'

No detailed statement of general expenses was offered before the master on the part of the defendants, nor did they prove specific items of general expense, except the items of rent, salaries, freight, and cartage, advertising, insurance, gas, and fuel. They made a general statement, however, and introduced their books in cross-examination. Both parties submitted analysis of these books. The master adopted the figures of the defendants' analysis except, where he considered them at variance with the previous sworn testimony, and he allowed as general expenses certain sums and items, including:

Stationery and printing,... $1405 28

Telegraphing,................. 47 78

Office furniture and fixtures,. 239 35

Expressage,................... 28 12

Labor,........................ 79 30

And disallowed eight various large items.

The complainants excepted:

1st. To the deduction from the profits made on the sale of the tremolo attachments of a ratable proportion of the general expenses of the defendants' business.

2d. To the way in which the master ascertained the general expenses.

The court, however, confirmed the master's report, and a decree was entered accordingly.

Soon after this was done, it was discovered that the case had been tried on issues not made in the pleadings; that the complainants in taking their proofs had put in evidence a reissue different from and later than the one which they had set out in their bill as the ground for their complaint, and that the bill had never in any way been amended.

As to this new matter now brought up after decree made, the case was thus:

The bill set forth that a patent for the 'attachment' had been granted on the 27th day of June, 1865, to one Carpenter; that subsequently he assigned the letters- atent to the complainants; that on the 18th day of May, 1869, they surrendered the patent, and obtained a reissue to themselves (No. 3444), and that the defendants had been guilty of infringing their rights under the patent.

To the complaint thus exhibited the defendants answered, admitting the grant of the letters to Carpenter, but denying all knowledge as to the truth of the allegations that Carpenter had at any time assigned his interest to the complainants, or to any one or more of them; and, therefore, denying that the complainants had any interest in the said letters-patent or to the 'reissues' of the same as set forth in the bill of complaint. The answer further averred that Carpenter was not the original inventor of the tremolo attachment, but that it was known and was in use before his alleged invention was made. It denied that the defendants had infringed upon the rights and privileges granted by the patent dated June 27th, 1865, 'or by ANY of the reissues of the same.'

To this answer a general replication was put in and the parties went to trial, when the complainants gave in evidence, without objection, reissued letters-patent No. 3665, dated October 5th, 1869, which had been granted on the surrender of the first reissue No. 3444. This second reissue was not set out in the bill, but it was obvious enough that both parties supposed it was, through all the progress of the trial. As already said, the answer denied infringement, not of the single reissue mentioned in the bill, but of any of the resissues. No other reissue than No. 3665 was put in evidence. The decretal order to account mentioned it in terms. The evidence taken by the master under the order of reference related only to attachments sold by the defendants after the second reissue was granted. In the exceptions taken by them to the master's report no intimation was made that the rights of the complainants under the reissue No. 3665 were not on trial, and not even when the final decree was made was it suggested that the parties had been trying the case on an issue not made by the pleadings.

After the final decree had been made, the complainants applied to have the bill of complaint amended by inserting in it a declaration on the reissued letters-patent which were decreed to be valid, and the court below made an order containing a recitation of alleged facts to authorize the order amending the bill as prayed for.

There was no allegation that the bill of complaint ever contained the allegation as to reissue No. 3665, prior to the judgment. The motion and the order were not made 'to conform the bill to the proofs.'

Both parties appealed; the complainants because of the confirmation of the report in the face of their two exceptions to it; the defendants because of the amendment allowed in the bill after a final decree made.

Mr. F. H. Betts, for the complainants below:

1. No part of the general expenses are justly allowable to the defendants.

The method of computation of profits was erroneous. It forgot that the patent is not for the tremolo itself, but for the combination of the organ and tremolo.

If an extra price is received for the combination, without any additional expense being incurred, the whole of that extra price is obtained by the addition of the combination.

It does not avail the defendants to charge a portion of their general expenses against the tremolo, one member of the combination, for in so doing they take off the exact amount from the other member, the organ. The profit on the whole combination is still equal to the exact amount by which the extra price received by reason of the making of the addition exceeds the amount received for the organ alone. This, for example, is expressed in figures thus:

Cost of organ, $100; received for organ, $200. Cost of tremolo, $12.50; received for tremolo, $25. Amount of general expenses apportioned to each organ, $50; no additional amount incurred by reason of tremolo.

If all, $50 i charged against organ alone. Profit on tremolo alone is $12.50. If $45 is charged on organ and $5 on tremolo, we still have $12.50 as the profit received for the combination; i. e., $7.50 on tremolo itself and $5 on organ, by reason of adding tremolo.

The same result follows from any apportionment.

Any other rule than this would enable an infringer to add patented devices to his instrument, charge extra prices for them, and thereby increase his profit on his instruments by the exact amount of the proportion of his general expenses that his sales of the infringing device bear to his general business. In other words, the more he infringes the more of the general expenses he diverts from the main instrument, and thereby the more profits he makes without being accountable for it.

The true rule is, if the infringing devices are an integral part of the whole instrument, without which it is incapable of use, and for which a single charge is made, then in determining profits on a part of the organization general expenses are to be apportioned according to cost, or by some other equitable rule.

But when the infringing device is an optional one, used or not, at...