This case is on a certificate from the Court of Appeals of the District of Columbia. The facts stated in the certificate are:
"Bauer & Cie, of Berlin, Germany, copartners, being the assignees of letters patent of the United States, dated April 5, 1898, No. 601,995, covering a certain water soluble albumenoid known as `Sanatogen' and the process of manufacturing the same, about July, 1907, entered into an agreement with F.W. Hehmeyer, doing business in the City of New York under the trade name of The Bauer Chemical Company, whereby Hehmeyer became and has since been the sole agent and licensee for the sale of said product in the United States, the agreement contemplating that Hehmeyer should have power to fix the price of sale to wholesalers or distributors and to retailers, and to the public. The agreement further contemplated that said product should be furnished Hehmeyer at manufacturing cost, the net profits obtained by him to be shared equally by the parties to the agreement. Since April, 1910, this product has been uniformly sold and supplied to the trade and to the public by the appellants and their licensees in sealed packages bearing the name `Sanatogen,' the words `Patented in U.S.A., No. 601,995,' and the following:
"`Notice to the Retailer.
"`This size package of Sanatogen is licensed by us for sale and use at a price not less than one dollar ($1.00). Any sale in violation of this condition, or use when so sold, will constitute an infringement of our patent No. 601,995, under which Sanatogen is manufactured, and all persons so selling or using packages or contents will be liable to injunction and damages.
"`A purchase is an acceptance of this condition. All
"The appellee is the proprietor of a retail drug-store at 904 F Street, N.W., in this city. He purchased of the Bauer Chemical Company for his retail trade original packages of said Sanatogen bearing the aforesaid notice. These packages he sold at retail at less than one dollar and, persisting in such sales, appellants in March, 1911, severed relations with him. Thereupon appellee, without the license or consent of the appellants, purchased from jobbers within the District of Columbia, said jobbers having purchased from appellants, original packages of said product bearing the aforesaid notice, sold said packages at retail at less than the price fixed in said notice, and avers that he will continue such sales."
The question propounded is: "Did the acts of the appellee, in retailing at less than the price fixed in said notice, original packages of `Sanatogen' purchased of jobbers as aforesaid, constitute infringement of appellants' patent?"
The protection given to inventors and authors in the United States originated in the Constitution, § 8 of Art. I of which authorizes the Congress "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." This protection, so far as inventors are concerned, has been conferred by an act of Congress passed April 10, 1790, and subsequent acts and amendments. The act of 1790, 1 Stat. 109, c. 7, granted "the sole and exclusive right and liberty of making, constructing, using and vending to others to be used, the said invention or discovery." In 1793 (Feb. 21, 1793, 1 Stat. 318, c. 11) the word "full" was substituted for the word "sole," and in 1836 (July 4, 1836, 5 Stat. 117, § 5,
The right to make, use and sell an invented article is not derived from the patent law. This right existed before and without the passage of the law and was always the right of an inventor. The act secured to the inventor the exclusive right to make, use and vend the thing patented, and consequently to prevent others from exercising like privileges without the consent of the patentee. Bloomer v. McQuewan, 14 How. 539, 549; Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, 425. It was passed for the purpose of encouraging useful invention and promoting new and useful improvements by the protection and stimulation thereby given to inventive genius, and was intended to secure to the public, after the lapse of the exclusive privileges granted, the benefit of such inventions and improvements. With these beneficent purposes in view the act of Congress should be fairly or even liberally construed; yet, while this principle is generally recognized, care should be taken not to extend by judicial construction the rights and privileges which it was the purpose of Congress to bestow.
In framing the act and defining the extent of the rights and privileges secured to a patentee Congress did not use technical or occult phrases, but in simple terms gave an inventor the exclusive right to make, use and vend his invention for a definite term of years. The right to make can scarcely be made plainer by definition, and embraces the construction of the thing invented. The right to use is a comprehensive term and embraces within its meaning
The case presented pertains to goods purchased by jobbers within the District of Columbia and sold to the appellee at prices not stated, and resold by him at retail at less than the price of one dollar fixed in the notice. The question therefore now before this court for judicial determination is: May a patentee by notice limit the price at which future retail sales of the patented article may be made, such article being in the hands of a retailer by purchase from a jobber who has paid to the agent of the patentee the full price asked for the article sold?
The object of the notice is said to be to effectually maintain prices and to prevent ruinous competition by the cutting of prices in sales of the patented article. That such purpose could not be accomplished by agreements concerning articles not protected by the patent monopoly was settled by this court in the case of Dr. Miles Medical
Section 4952, Revised Statutes, a part of the copyright act, secures to an author, inventor, designer or proprietor of books, maps, charts or dramatic or musical compositions the sole liberty of printing, reprinting, publishing, completing, copying, executing, finishing and vending them. While that statute differs from the patent statute in terms and in the subject-matter intended to be protected, it is apparent that in the respect involved in the present
It is apparent that the principal difference in the enactments
Chief reliance, however, of the plaintiff in this case is upon the recent decision of this court in Henry v. Dick Co., 224 U.S. 1. An examination of the opinion in that case shows that the restriction was sustained because of the right to use the machine granted in the patent statute, distinguishing in that respect the patent from the copyright act. In that case a patented mimeograph had been sold which bore an inscription in the form of a notice that the machine was sold with the license restriction that it might only be used with stencil, ink and other supplies made by the A.B. Dick Company, the owners of the patent. The alleged infringer sold to the purchaser of the mimeograph a can of ink suitable for use with the machine with full knowledge of the restriction and with the expectation that the ink sold would be used in connection with the machine. It is expressly stated in the opinion that the machine was sold at cost or less and that the patentee depended upon the profit realized from the sale
"To the inventor, by § 4884, Revised Statutes, there is granted `the exclusive right to make, use and vend the invention or discovery.' This grant, as defined in Bloomer v. McQuewan, 14 How. 539, 549, `consists altogether in the right to exclude every one from making, using or vending the thing patented.' Thus, there are several substantive rights, and each is the subject of subdivision, so that one person may be permitted to make, but neither to sell nor use the patented thing. To another may be conveyed the right to sell, but within a limited area, or for a particular use, while to another the patentee may grant only the right to make and use, or to use only for specific purposes. Adams v. Burke, 17 Wall. 453; Mitchell v. Hawley, 16 Wall. 544; Rubber Co. v. Goodyear, 9 Wall. 788, 799." (Italics in the original opinion.)
That case was distinguished from Bobbs-Merrill v. Straus, supra, construing the copyright act, because of the difference in the terms of the copyright and patent statutes, the patent act conferring not only the right to make and sell, but the exclusive right to use the subject-matter of the patent. It was under the right to use that the license notice in question was sustained, and it is obvious that the notice in that case dealt with the use of the machine and limited it to use only with the paper, ink and supplies of the manufacture of the patentee. While the title was transferred, it was a qualified title, giving a right to use the machine only with certain specified supplies. It was said in the Dick Case (p. 47) that "there is no collision whatever between the decision in the Bobbs-Merrill Case and the present opinion. Each rests upon a
It is contended in argument that the notice in this case deals with the use of the invention, because the notice states that the package is licensed "for sale and use at a price not less than one dollar," that a purchase is an acceptance of the conditions, and that all rights revert to the patentee in event of violation of the restriction. But in view of the facts certified in this case, as to what took place concerning the article in question, it is a perversion of terms to call the transaction in any sense a license to use the invention. The jobber from whom the appellee purchased had previously bought, at a price which must be deemed to have been satisfactory, the packages of Sanatogen afterwards sold to the appellee. The patentee had no interest in the proceeds of the subsequent sales, no right to any royalty thereon or to participation in the profits thereof. The packages were sold with as full and complete title as any article could have when sold in the open market, excepting only the attempt to limit the sale or use when sold for not less than one dollar. In other words, the title transferred was full and complete with an attempt to reserve the right to fix the price at which subsequent sales could be made. There is no showing of a qualified sale for less than value for limited use with other articles only, as was shown in the Dick Case. There was no transfer of a limited right to use this invention, and to call the sale a license to use is a mere play upon words.
The real question is whether in the exclusive right secured by statute to "vend" a patented article there is included the right, by notice, to dictate the price at which subsequent sales of the article may be made. The patentee relies solely upon the notice quoted to control future prices in the resale by a purchaser of an article said to be of great utility and highly desirable for general use.
In Adams v. Burke, 17 Wall. 453, Mr. Justice Miller, delivering the opinion of the court, pertinently said (p. 455):
"The vast pecuniary results involved in such cases, as well as the public interest, admonish us to proceed with care, and to decide in each case no more than what is directly in issue. . . .
"The true ground on which these decisions rest is that the sale by a person who has the full right to make, sell, and use such a machine carries with it the right to the use of that machine to the full extent to which it can be used in point of time.
"The right to manufacture, the right to sell, and the right to use are each substantive rights, and may be granted or conferred separately by the patentee.
Bloomer v. McQuewan, supra; Goodyear v. Beverly Rubber Co., 1 Cliff. 348, 354, 10 Fed. Cases, 638; Chaffee v. Boston Belting Co., 22 How. 217, 223; Keeler v. Standard Folding Bed Co., 157 U.S. 659.
Holding these views, the question propounded by the Court of Appeals will be answered in the negative, and
It is so ordered.
Dissenting: MR. JUSTICE McKENNA, MR. JUSTICE HOLMES, MR. JUSTICE LURTON and MR. JUSTICE VAN DEVANTER.