Waterman v. Mackenzie

Decision Date02 February 1891
Citation138 U.S. 252,34 L.Ed. 923,11 S.Ct. 334
PartiesWATERMAN v. MACKENZIE et al
CourtU.S. Supreme Court

This was a bill in equity, filed April 24, 1886, against James A. Mackenzie and Samuel R. Murphy, by Lewis E. Waterman, claiming to be the sole and exclusive owner of a patent granted to him by the United States on Febrary 12, 1884, for an improvement in fountain pens, and of the invention thereby secured; alleging an infringement thereof by the defendants, and praying for an injunction, a discovery, an account of profits, and damages. The defendants filed a plea, which alleged that the plaintiff, at the time of filing the bill, was not possessed, either of the patent or of an exclusive right under it to the whole or any specified part of the United States; for that certain assignments in writing under seal of the patent and invention from the plaintiff to Sarah E. Waterman, his wife, from her to the firm of Asa L. Shipman's Sons, and from that firm to Asa L. Shipman, were made by the parties thereto, and were recorded in the patent-office, at the dates stated below, and that Shipman continued to be possessed of the patent and invention until and including the time of the filing of the bill. The plaintiff filed a general replication. At the hearing on the issue thus joined, the following instruments, executed in New York by and between citizens of that state, were duly proved: (1) An assignment, made February 13, 1884, and recorded March 27, 1884, from Lewis E. Waterman, the plaintiff, to Sarah E Waterman, his wife, of the whole patent and invention. (2) A 'license agreement,' made between Mr. and Mrs. Waterman on November 20, 1884, and never recorded, by which she granted to him 'the sole and exclusive right and license to manufacture and sell fountain pen-holders, containing the said patented improvement throughout the United States,' and he agreed to pay her 'the sum of twenty-five cents as a license fee upon every fountain pen-holder so manufactured by him.' (3) An assignment, made November 25, 1884, and recorded November 29, 1884, from Mrs. Waterman to the firm of Asa L. Shipman's Sons, of the whole patent and invention, expressed to be made in consideration of the payment of the sum of $6,500, and containing this provision: 'The consideration of this assignment is that, whereas the said Lewis E. Waterman and the said Sarah E. Waterman have on this 25th day of November, 1884, made a joint note of hand for the sum of $6,500, payable to the said Asa L. Shipman's Sons three years from this date, with interest at six per cent.; now, if the said Lewis E. Waterman and myself, or either of us, shall well and truly pay the said note, according to its tenor, then this assignment and transfer shall be null and void, otherwise to be and remain in full force and effect.' It also contained covenants of full right to assign, and against all incumbrances, 'except a license to the said Lewis E. Waterman to manufacture and sell pens' under the patent, being the license above mentioned. (4) An assignment, made November 25, 1884, in consideration of the payment of the sum of $6,500, and recorded November 29, 1884, from the firm of Asa L. Shipman's Sons to Asa L. Shipman, of all the right and title acquired by the assignment made to them by Mrs. Waterman, as well as the promissory note thereby secured.

(5) An assignment, made April 16, 1886, and recorded April 22, 1886, from Mrs. Waterman to the plaintiff of all her right, title, and interest in the patent and invention, and all her claims or causes of action for the infringement of the patent, and rights to damages or profits by reason thereof. The circuit court allowed the plea, for reasons stated in its opinion, as follows: 'The transfer to Asa L. Shipman is in language so emphatic and exact that there is little opportunity for misapprehension. It matters not what the instrument is called. It matters not that it may be defeated by the payment of $6,500 on November 25, 1887. The fact remains that by virtue of this assignment or mortgage the title to the patent was on April 24, 1886, when this action was commenced, outstanding in Asa L. Shipman. If it was not absolute, it was a present, existing title, defeasible upon a condition subsequent. On April 16th, therefore, when Sarah E. Waterman assigned all her right, title, and interest to the complainant, she had nothing to assgn which could at all change the legal status of the parties. She could not vest a clear title to the patent in the complainant, for the obvious reason that she had previously disposed of it, and did not own it. The agreement of November 20, 1884, being a license and nothing more, does not enable the complainant to maintain this action without joining the holder of the legal title. The suggestion that, irrespectively of the Shipman assignment, the complainant is enti tled to prosecute for infringements alleged to have occurred between February 12 and November 25, 1884, is equally unavailing; for, assuming such a right of action to exist, it could only be maintained on the law and not on the equity side of the court. The plea is allowed. The complainant may amend, upon payment of costs, within ten days.' 29 Fed. Rep. 316.

The plaintiff not having filed an amended bill within the 10 days, a final decree was entered dismissing his bill, with costs, and he appealed to this court.

Walter S. Logan, for appellant.

Mr. Justice GRAY, after stating the facts as above, delivered the opinion of the court.

Every patent issued under the laws of the United States for an invention or discovery contains 'a grant to the patentee, his heirs and assigns, for the term of seventeen years, of the exclusive right to make, use, and vend the invention or discovery throughout the United States and the territories thereof.' Rev. St. § 4884. The monopoly thus granted is one entire thing, and cannot be divided into parts, except as authorized by those laws. The patentee or his assigns may, by instrument in writing, assign, grant, and convey, either (1) the whole patent, comprising the exclusive right to make, use, and vend the invention throughout the United States; or (2) an undivided part or share of that exclusive right; or (3) the exclusive right under the patent within and throughout a specified part of the United States. Id. § 4898. A transfer of either of these three kinds of interests is an assignment, properly speaking, and vests in the assignee a title in so much of the patent itself, with a right to sue infringers. In the second case, jointly with the assignor. In the first and third cases, in the name of the assignee alone. Any assignment or transfer, short of one of these, is a mere license, giving the licensee no title in the patent, and no right to sue at law in his own name for an infringement. Id. § 4919; Gayler v. Wilder, 10 How. 477, 494, 495; Moore v. Marsh, 7 Wall. 515. In equity, as at law, when the transfer amounts to a license only, the title remains in the owner of the patent; and suit must be brought in his name, and never in the name of the licensee alone unless that is necessary to prevent an absolute failure of justice, as where the patentee is the infringer, and cannot sue himself. Any rights of the licensee must be enforced through or in the name of the owner of the patent, and perhaps, if necessary to protect the rights of all parties, joining the licensee with him as a plaintiff. Rev. St. § 4921; Littlefield v. Perry, 21 Wall. 205, 223; Paper Bag Cases, 105 U. S. 766, 771; Birdsell v. Shaliol, 112 U. S. 485-487, 5 Sup. Ct. Rep. 244; and see Renard v. Levinstein, 2 Hem. & M. 628. WHETHER A TRANSFER OF A PARTICULAR RIGHT OR interest under a patent is an assignment or a license does not depend upon the name by which it calls itself, but upon the legal effect of its provisions. For instance, a grant of an exclusive right to make, use, and vend two patented machines within a certain district is an assignment, and gives the grantee the right to sue in his own name for an infringement within the district, because the right, although limited to making, using, and vending two machines, excludes all other persons, even the patentee, from making, using, or vending like machines within the district. Wilson v. Rousseau, 4 How. 646, 686. On the other hand, the grant of an exclusive right under the patent within a certain district, which does not include the right to make, and the right to use, and the right to sell, is not a grant of a title in the whole patent-right within the district, and is therefore only a license. Such, for instance, is a grant of 'the full and exclusive right to make and vend' within a certain district, reserving to the grantor the right to make within the district, to be sold outside of it. Gayler v. Wilder, above cited. So is a grant of 'the exclusive right to make and use,' but not to sell, patented machines within a certain district. Mitchell v. Hawley, 16 Wall. 544. So is an instrument granting 'the sole right and privilege of manufacturing and selling' patented articles, and not expressly authorizing their use, because, though this might carry by implication the right to use articles made under the patent by the licensee, it certainly would not authorize him to use such articles made by others. Hayward v. Andrews, 106 U. S. 672, 1 Sup. Ct. Rep. 544. See, also, Oliver v. Chemical Works, 109 U. S. 75, 3 Sup. Ct. Rep. 61. An assignment of the entire patent, or of an undivided part thereof, or of the exclusive right under the patent for a limited territory, may be either absolute or by way of mortgage, and liable to be defeated by non-performance of a condition subsequent, as clearly appears in the provision of the statute, that 'an assignment, grant, or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration without notice, unless it is recorded in the patent-office within three months from the date thereof.' Rev. St. § 4898.

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