Boesch v. Graff

delivered the. opinion of the court.

Albert Graff and J. F. Donnell filed their bill in the Circuit Court of the United States- for the Northern District of California against Emile Boesch and Martin Bauer, to recover for infringement of -letters patent No. 289,571, for an improvement in lamp burners,, granted on December '4, 1883, to Carl Schwintzer and Wilhelm. Graff of. Berlin, Germany, assignors of one-half to J. F. Donnell & Co., of New York,’all rights being averred to be now vested in the complainants. Claim 1 alleged to have been infringed reads as follows:

“ In a lamp burner of the class described, the combination; with the guide tubés, of a ring-shaped cap provided with openings for the wicks, said cap. being applied to the upper ends of' the -guide tubes, so as to close the intermediate spaces between the same, substantially as set forth.”

Appellants urge three grounds for reversal:

. First. -That a title to the patent sufficient to maintain a suit for infringement was not at the date of filing the bill vested in the complainants.

Second. That Boesch and Bauer, could not be held for infringement, because they purchased the burners in Germany from a person having the right to sell them there, though not' a licensee under the German patents.

-Third. That the damages awarded were excessive.

These propositions are presented by some of the errors assigned, and are the only errors alleged which require attention, that which questions the infringement not being argued by counsel, and that which goes upon the refusal of the Circuit Court to grant a rehearing not being open to consideration here. Buffington v. Harvey, 95 U. S. 99 , 100; Steines v. Franklin County, 14 Wall. 15 , 22; Railway Company v. Heck, 102 U. S. 120 ; Kennon v. Gilmer, 131 U. S. 22 , 24.

The assignment by Schwintzer to Albert Graff was dated the 22d day of April, 1885, was absolute in form and transferred title to six twenty-fourths of the patent for the expressed consideration .of “the sum of one hundred dollars and for other valuable considerations;” but a contract between Schwintzer

“S. 1. Mr. Albert Graff binds himself to pay to Mr. Carl Schwintzer, instead of the, in the patent letter mentioned, one hundred dollars for the first year, the sum of two hundred and fifty marks, payable on the 1st February, 1886, and each following year on the same date the sum five hundred marks (not less) till the amount of four thousand marks are paid in all.-

S. 2. Should Mr. Albert Graff, of San Francisco, not be able to sell more than one thousand burners, called Diamond or Mitrailleuse burners, No. 10,621, manufactured by Mess. Schwintzer & Graff, of Berlin, he reserves to himself to make up a new agreement with Mr. Carl Schwintzer.

“ S. 3. Should not Mr. Albert Graff, San Francisco, against all expectations, stick to the agreements mentioned in S. 1 and 2, all titles of the patent letter ceded to him by Carl Schwintzer shall him return.

“ S. A Mr. Carl Schwintzer, partner of the firm Schwintzer & Graff, engages to 'deliver to Mr. Albert Graff the said burners at the same price as before, if the market price of the metal does not exceed — make 150% kos., and promise likewise to effect any order promptly, if in his power.”

Albert Graff testified in respect to the words, “ instead of the, in the patent letter mentioned, one hundred dollars for the first year,” etc., that they meant that, instead of the one hundred dollars mentioned in the assignment, he was to pay. two hundred and fifty marks the first year, and that the contract was made one day later than the assignment. Counsel contends that the two documents must be construed together, and amount simply to an executory contract to assign when Graff shall have paid the sum of 4000 marks; that, therefore, Graff could at most only be regarded as a licensee of the interest under the patent, until such time as his contract should be executed according to its terms; and that the legal right as to six twenty-fourths of the patent remained in Schwintzer, who was therefore a necessary party. It is evident that the agreement was not drawn by parties well versed in English,

Letters patent had been granted to the original patentees . for the invention by the government of Germany in. 1879 and 1880. A portion of the burners in question were purchased in Germany from one Hecht, who had the right to make and sell them there. By section 5 of the imperial patent law of Germany, of May 25, 1877,it was provided that, “the patent.does not affect persons who, at the time of the patentee’s application, have already commenced to make use of the invention in the country, or made the preparations requisite for such use.” 12 Off. Gaz. 183. Hecht had made preparations to manufacture the burners prior to the application for the German patent. The official report of a prosecution against Hecht in the first criminal division of the Boyal District Court, No. 1, at Berlin, in its session of March 1, 1882, for an infringement of the patent law, was put in evidence, wherefrom it appeared that he was found not guilty, and judgment for costs given in his favor, upon the ground “that the defendant has already prior to November 14, 1879 — that is to say, at the time of the application by the patentees for.and within the State — made use of the invention in question, especially, however, had made the necessary preparations for its use. § 5, eodern. Thus ■

It appears that appellants received two invoices from Germany, the burners in one of which Avere not purchased from Hecht, but in the vieAV tvhich we take of the case, that circumstance becomes immaterial. The exact question presented is whether a dealer residing in the United States can purchase in another country articles patented there, from a person authorized to sell them, and import them to and sell them in the United States, Avithout the license or consent of the OAvners of the United States patent.

In Wilson v. Rousseau, 4 How. 646 , it Avas decided that a party who had purchased and was using the WoodAVorth planing machine during the original term for which the patent Avas granted, had a right to continue the use during an extension granted under the act of Congress of 1836; and Mr. Chief Justice Taney, in Bloomer v. McQuewan, 14 How. 539 , 549, says in reference to it, that “ the distinction is there taken between the grant of the right to make and vend the machine and the grant of the right to use it.” And he continues: “ The distinction is a plain one. The franchise Avhich the patent grants consists altogether in the right to exclude every one from making, using or vending the .thing patented Avithout the permission of the patentee. This is all he obtains by the patent. And when he sells the exclusive privilege of making or vending it for use in a particular place, the purchaser buys a portion of the franchise Avhich the patent confers. He obtains a share in the monopoly, and that monopoly is derived from, and exercised under, the protection of the United States. And the interest he acquires necessarily terminates at the time limited for its continuance by the law which created it. . . . But the purchaser of the implement or machine for the purpose of using it in the ordinary pursuits of life Stands on different ground. In using it he exercises no rights created by the act of. Congress, nor does he derive title to it by virtue of the franchise or exclusive privilege granted to the patentee. The inventor might lawfully sell it to him, Avhether he had a patent or not, if no other patentee stood in his, way. And when

In Adams v. Burke, 17 Wall. 453 , it was held that “ where a -patentee has assigned his right to manufacture, sell and use within a limited district an instrument, machine or other manufactured product, a purchaser of such instrument or -machine, when rightfully bought -within the prescribed limits, acquires by such purchase the right to use it anywhere, without reference to other assignments of territorial rights by the same patentee; ” and that “ the right to the use of (such machines or instruments stands on a different ground from the right to make and sell' them, and inheres in the nature of.- a contract of purchase, which carries -no implied limitation to the right-of-use within a given- locality.” Mr.-Justice Bradley, with whom concurred Mr. Justice Swayne and Mr.- Justice Strong,, dissented, holding that the assignee’s interest “ was limited in locality, both as to manufacture and use.” ' The right which Hecht had to make -and sell the burners in Germany was allowed him under the laws of that .country, and purchasers from -him could not be thereby authorized to sell the articles in.the United .States in .defiance of the rights of patentees, under a United States ' patent. •' A prior' foreign' patent operates under our law to limit the duration of the subsequent patent here, but that is all. The sale of articles in' the United States under, a United States patent cannot be controlled by foreign laws. This disposes of the second error relied on.

This brings us to the consideration of the damages reported by the master, which report was. confirmed by the court;. ar.\d we are met on the threshold by the objection that the exceptions taken in the Circuit Court "Were not sufficiently specific to entitle appellants to raise the questions here upon which they submit argument.

These exceptions are' as follows: .

“ First exception. For that the said master has in and by his said report certified on page six thereof that ‘ the cap was

“Second exception. For that the said master hath certified ‘ that the amount of damages which the complainant has suffered and sustained from and by reason of said infringement .is'two thousand nine hundred and seventy dollars and fifty cents; ’ whereas he should have reported nominal damages.

“ In all which particulars the report of the said master is, as, the said respondent is advised, erroneous, and the said respondent appeals therefrom to the judgment of this honorable court.”

It is "conceded that these exceptions raise two points, namely, that the infringement was not wilful, and that the •reduction of prices was not caused solely by it. And this, as' it seems to, us, is quite sufficient to permit the real question

“After the reduction in his prices, complainant sold, at wholesale, one thousand three hundred and twelve ten-wick burners, at a price twenty-five cents less on each than his original price; four hundred and fifty twelve-wick burners, at fifty -cents less; five hundred and ninety-two sixteen-wick burners, at seventy-five cents less; and seven hundred and sixteen twenty-wick burners, at seventy-five cents less; a total difference between the original and the reduced prices of one thousand five hundred and thirty-five dollars and- fifty cents.

“ In addition, he sold at retail, on an average, five burners on each of the five hundred and seventy-four business days between the time when his prices were first reduced and-October 31st, 1887; the number of burners thus sold being two thousand eight hundred and seventy, which were sold at a minimum reduction of fifty cents each under original priees — a total difference between the original and the new prices of fourteen hundred and thirty-five dollars; which sum, added to the said sum of one thousand five hundred and thirty-five dollars and fifty cents, gives an aggregate amount of two'thousand nine hundred and seventy dollars and fifty cents.”

The report of a master is merely advisory to the court,' which " it may accept and act upon in whole or in part, according -to "its own judgment as to the weight of the evidence. . Kimberly v. Arms, 129 U. S. 512 , 523. Yet, in dealing with exceptions to such reports, “the conclusions of the-master, depending upon the weighing of conflicting testimony, have every reasonable presumption in their favor, and are not to be set aside or , modified unless there clearly appears to have been error , or mistake on his part.” Tilghman v. Proctor, 125 U. S. 136 , 149. "We.think there, was error here .within that rule.

Where the patentee grantéd no licenses, and had no established license fee, but supplied the demand -himself, and was able to do so5 an .enforced reduction of price is a proper item of damages, if proven by satisfactory evidence. Yale Lock

The master reported “that the --number of lamp burners proven to have been sold by respondents, containing the invention claimed in and by the first claim of complainants’ letters patent, is fourteen, provided that only the capped burners sold contain said invention, and that the number is one hundred and fourteen, if the-half-capped burners so sold are .to be held to contain said invention.”

. -The evidence established that the first invoice of lamp burners contained fifty 20wick burners with caps, of which re-' spondents sold four; arid fifty 12-wick burners with half caps, of which respondents sold twelve; and fifty 16-wick burners . with half caps, of which respondents .sold forty-four; and that respondents.'altered the forty-six remaining 20-wick burners by changing their caps to .half' caps, and sold forty-four. This makes the one hundred with half caps, referred to-by the master.' ■ Of the second invoice, the respondents sold four 20-wick capped burners and six 16-wick capped burners, making, with four 20-inch burners with caps sold out of the first invoice, the fourteen capped wick burners reported as thus disposed of. The original bill in this case was filed September 17, 1886. It ; had been preceded by another suit, which had been dismissed. The goods in the- second invoice, it- is testified, had been ordered before this suit was commenced, but the invoice is dated ' October 16, 1886. This invoice contained one hundred 20 and one-hundred 16-wick burners with caps, of which- respondents sold four 20-wick and six 16-wick burners unchanged as before

The evidence tends to establish a profit of $1.85 on the 20-wick burners; $1.50 on the 16-wick; arid 75 cents on the 12-wick. This would show a profit of $23.80 on the fourteen capped burners, being eight 20-wick and six 16-wick burners; and a profit of $156.40 on . the one hundred half capped burners, being fortyrfóur 20-wick, forty-four 16-wick and twelve 12-wick burners. Respondents had been advised, by their • counsel that the burners with half caps were not an infringement. The cap was the invention iri question. The claim infringed, as already seen, was a combination, with the, guide tubes, of a ring-shaped cap provided with openings for the wicks, said cap being applied to the upper ends of the guide' tuíus, so as to dose the intermediate spaces between the same. The half cap admitted the air directly to each wick, and in that respect differed from the claim of the patent. It is argued, however, with iquch force on behalf of. the appellees, that the difference was á difference in degree and not in kind, as the air reached the wick when the full cap was used, and the functions of the latter as a, strengthen-' ing band, a protector of the tops of the tubes, and in other particulars, were performed by the half cap; and this pbsition is not resisted by counsel for appellants. But assuming that the sale of one hundred burners with half caps was an. infringement, we are not prepared to concede that the sale of ■ one hundred and fourteen burners under the circumstances detailed could have had the effect in compelling a reduction of price which has been ascribed to it;

It is remarked by the master that “ it is a fact of common knowledge that there is to b¿ found on sale in the market a • great variety of lamp burners, among which, as shown by the evidence, have been for many years burners of the same general class, as complainants’.” This being so, and Boesch & Bauer being dealers in burners generally, it is not to be presumed that Graff reduced his prices, for nineteen months,

Graff’s burner was a “mitrailleuse” burner, and called “ Diamond ” as the Miller burner was. Boesch testified that there was no difference between the selling price of the Hecht, the Miller, and the Boesch burners; that there was no demand in their trade for a mitrailleuse burner with a cap; and that in his judgment the Boesch burner was better than the Hecht. This evidence may properly be considered in connection with the • fact that but one hundred and four-. teen were sold.

We cannot concur with the conclusion that the result of the sales of the one hundred and fourteen burners was to keep Graff’s prices for his particular burner down from March 1, 1886, to October 31, 1887. If Boesch and Bauer had a burner which satisfied the public just as well as Graff’s, and which they could sell cheaper, Graff cannot complain of the consequences. If Graff’s burner was so much better than

In the state of the case disclosed by this record, the complainants must be content with the protection of an injunction and a recovery of the profits realized from the infringing sales.

The decree is reversed and the cause remanded for further proceedings in conformity with this opinion.