No. 102.

266 U.S. 342 (1924)


Supreme Court of United States.

Decided December 8, 1924.

Attorney(s) appearing for the Case

Mr. John C. Kerr and Mr. Drury W. Cooper for petitioner.

Mr. Frederic D. McKenney and Mr. John H. Lee, with whom Mr. Wm. H. Dyrenforth was on the brief, for respondent.

MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.

The important question in this case is the operation of the principle of estoppel on the character of defense to which the assignor of a patented invention is limited in a suit for infringement by the assignee. We may first usefully consider the rule that should obtain where the assignment is made after the issue of the patent, and then the difference in the rule, if any, where the assignment was made before the granting of the patent.

Congress under its power to secure for limited times to inventors the exclusive right to their discoveries, has enacted laws conferring such an exclusive right by patent after an application with specification of the invention and claims therefor and a favorable decision by the Commissioner of Patents. The patent of the exclusive right against the public carries with it a presumption of its validity. Agawam Co. v. Jordan, 7 Wall. 583; Blanchard v. Putnam, 8 Wall. 420; Miller v. Eagle Mfg. Co., 151 U.S. 186; Boyd v. Janesville Hay Tool Co., 158 U.S. 260. It is not conclusive but the presumption gives the grant substance and value. By § 4898, Rev. Stats., every such patent or any interest therein shall be assignable in law by an instrument in writing, and the patentee or his assigns or legal representatives may, in like manner, grant and convey an exclusive right under his patent to the whole or any specified part of the United States. The section further provides 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. While a seal is not required to make an assignment legal, Gottfried v. Miller, 104 U.S. 521, there seems to be no reason why the principles of estoppel by deed should not apply to assignment of a patent right in accordance with the statute. Its purpose is to furnish written and recorded evidence of title and to protect the purchaser of the title as recorded for value without notice. It was manifestly intended by Congress to surround the conveyance of patent property with safeguards resembling those usually attaching to that of land. This Court has recognized the analogy between estates in land by estoppel and the right to enjoy a patent right in the use of an article conveyed by one without authority but who acquires it by subsequent conveyance. Gottfried v. Miller, 104 U.S. 521; Littlefield v. Perry, 21 Wall. 205.

There are no cases in this Court in which the application of the principle of estoppel as by deed to the conveyance or assignment of patent property has been fully considered. But there are many in the reports of the Circuit and District Court decisions and in those of the Circuit Court of Appeals. They began as early as 1880 in Faulks v. Kamp, 3 Fed. 898, and were followed by a myriad. The rule supported by them is that an assignor of a patent right is estopped to attack the utility, novelty or validity of a patented invention which he has assigned or granted as against any one claiming the right under his assignment or grant. As to the rest of the world, the patent may have no efficacy and create no right of monopoly; but the assignor can not be heard to question the right of his assignee to exclude him from its use. Curran v. Burdsall, 20 Fed. 835; Ball & Socket Fastener Co. v. Ball Glove Fastening Co., 58 Fed. 818; Woodward v. Boston Lasting Machine Co., 60 Fed. 283, 284; Babcock v. Clarkson, 63 Fed. 607; Noonan v. Chester Park Athletic Co., 99 Fed. 90, 91. There are later cases in nearly all the Circuit Courts of Appeal to the same point. In view of the usual finality of patent decisions in the Circuit Courts of Appeal, this Court will not now lightly disturb a rule well settled by forty-five years of judicial consideration and conclusion in those courts.

The analogy between estoppel in conveyances of land and estoppel in assignments of a patent right is clear. If one lawfully conveys to another a patented right to exclude the public from the making, using and vending of an invention, fair dealing should prevent him from derogating from the title he has assigned, just as it estops a grantor of a deed of land from impeaching the effect of his solemn act as against his grantee. The grantor purports to convey the right to exclude others, in the one instance, from a defined tract of land, and in the other, from a described and limited field of the useful arts. The difference between the two cases is only the practical one of fixing exactly what is the subject matter conveyed. A tract of land is easily determined by survey. Not so the scope of a patent right for an invention.

As between the owner of a patent and the public, the scope of the right of exclusion granted is to be determined in the light of the state of the art at the time of the invention. Can the state of the art be shown in a suit by the assignee of a patent against the assignor for infringement to narrow or qualify the construction of the claims and relieve the assignor from the charge? The Circuit Court of Appeals for the Seventh Circuit in Siemens-Halske Electric Co. v. Duncan Electric Co., 142 Fed. 157, seems to exclude any consideration of evidence of this kind for such a purpose. The same view is indicated in subsequent decisions of that court. Chicago & Alton Ry. Co. v. Pressed Steel Car Co., 243 Fed. 883, 887; Foltz Smokeless Furnace Co. v. Eureka Smokeless Furnace Co., 256 Fed. 847. We think, however, that the better rule, in view of the peculiar character of patent property, is that the state of the art may be considered. Otherwise the most satisfactory means of measuring the extent of the grant the Government intended and which the assignor assigned would be denied to the court in reaching a just conclusion. Of course, the state of the art can not be used to destroy the patent and defeat the grant, because the assignor is estopped to do this. But the state of the art may be used to construe and narrow the claims of the patent, conceding their validity. The distinction may be a nice one but seems to be workable. Such evidence might not be permissible in a case in which the assignor made specific representations as to the scope of the claims and their construction, inconsistent with the state of the art, on the faith of which the assignee purchased; but that would be a special instance of estoppel by conduct. We are dealing only with the estoppel of an assignment based on the specifications and claims without special matter in pais.

Mr. Justice Lurton, when Circuit Judge, speaking for the Circuit Court of Appeals of the Sixth Circuit, in Noonan v. Chester Park Athletic Co., 99 Fed. 90, 91, used this language:

"It seems to be well settled that the assignor of a patent is estopped from saying his patent is void for want of novelty or utility, or because anticipated by prior inventions. But this estoppel, for manifest reasons, does not prevent him from denying infringment. To determine such an issue, it is admissible to show the state of the art involved, that the court may see what the thing was which was assigned, and thus determine the primary or secondary character of the patent assigned, and the extent to which the doctrine of equivalents may be invoked against an infringer. The court will not assume against an assignor, and in favor of his assignee, anything more than that the invention presented a sufficient degree of utility and novelty to justify the issuance of the patent assigned, and will apply to the patent the same rule of construction, with this limitation, which would be applicable between the patentee and a stranger."

And he cites the following cases as sustaining this view:

Circuit Court of Appeals, First Circuit. Ball & Socket Fastener Co. v. Ball Glove Fastening Co., 58 Fed. 818; Babcock v. Clarkson, 63 Fed. 607; Martin Hill Cash-Carrier Co. v. Martin, 67 Fed. 786, 787. Since the Noonan Case, the view thus announced has been approved in the Circuit Court of Appeals of the Second Circuit in Standard Plunger Elevator Co. v. Stokes, 212 Fed. 941, 943; of the Third Circuit in Roessing-Ernst Co. v. Coal & Coke By-Products Co., 219 Fed. 898, 899; Piano Motors Corporation v. Motor Player Corporation, 282 Fed. 435, 437; of the Fourth Circuit in Leader Plow Co. v. Bridgewater Plow Co., 237 Fed. 376, 377; of the Sixth Circuit in Smith v. Ridgely, 103 Fed. 875; Babcock & Wilcox Co. v. Toledo Boiler Works Co., 170 Fed. 81, 85; United States Frumentum Co. v. Lauhoff, 216 Fed. 610; Schiebel Toy & Novelty Co. v. Clark, 217 Fed. 760, 763; of the Eighth Circuit in Moon-Hopkins Co. v. Dalton Co., 236 Fed. 936, 937; and of the Ninth Circuit in Leather Grille & Drapery Co. v. Christopherson, 182 Fed. 817.

We have been speaking of the application of estoppel in the assignment of patents after they have been granted and their specifications and claims have been fixed. The case before us, however, concerns assignment of an invention and an inchoate right to a patent therefor before the granting of it which, after the assignment at the instance of the assignee, ripened into a patent. Section 4895 of the Revised Statutes authorizes the granting of a patent to the assignee of the inventor. The assignment must be first entered of record in the Patent Office, and in all such cases the application must be made and the specification sworn to by the inventor. It is apparent that the scope of the right conveyed in such an assignment is much less certainly defined than that of a granted patent, and the question of the extent of the estoppel against the assignor of such an inchoate right is more difficult to determine than in the case of a patent assigned after its granting. When the assignment is made before patent, the claims are subject to change by curtailment or enlargement by the Patent Office with the acquiescence or at the instance of the assignee, and the extent of the claims to be allowed may ultimately include more than the assignor intended to claim. This difference might justify the view that the range of relevant and competent evidence in fixing the limits of the subsequent estoppel should be more liberal than in the case of an assignment of a granted patent. How this may be, we do not find it necessary to decide. We can well be clear, however, that if it is proper to limit the estoppel available for an assignee after patent as against his assignor by reference to the state of the art, a fortiori is such reference relevant where the estoppel is sought by the assignee before patent. In the light of this conclusion, we must now turn to the facts to which it should be applied.

The art which O'Conor entered was that of a composition of materials for insulating purposes, of leaves of fibrous material like paper superposed one on another and united by an adhesive binder coating the leaves, subjected to heat and pressure and hardened into a compact mass and rendered capable of high resistance to the electric current. In the specification of his patent he disclosed his idea of the defect of the then art, which he proposed to remedy by his process, as follows:

"Heretofore insulation material such as cardboard, composed of layers of paper glued together, has proved more or less unsatisfactory because of various defects, such as absorption of moisture from the atmosphere, inability to resist heat and chemical action, and lack of physical strength. Insulating material . . . must be free from these defects, and, in addition, must possess high dielectric strength."

He proposed to achieve his purpose by use of paper or cardboard, which was old for such purpose, by a binder of bakelite or phenol and formaldehyde, also well known for such use, by hydraulic pressure of 800 lbs. and steam heat, followed by cooling and then by baking in an oven at high heat and low pressure. There was indeed nothing new in O'Conor's invention but the two-step of pressure and heat, cooling and baking. If this two-step process was new, and the estoppel requires us to hold as against O'Conor that it was, his assignee had a right to claim the application of it as new, not only to flat articles of composition but also to non-planiform articles as in the 11th and 12th claims; for though O'Conor had not made such a claim, his original specification foreshadowed it as reasonable. In view of the art, however, it is very clear that the 11th and 12th claims must be read to include as an essential element of the combination therein claimed, the two-step process. Without this, there was nothing new in them in the field to which they applied.

The 11th and 12th claims were made by the company as assignee after O'Conor had left the company's employ and were not allowed until four years after O'Conor had participated in the making of the composition herein complained of, and for three years thereafter the company made no objection to his continuing the manufacture. But it is said, the assignee was entitled on O'Conor's original specifications to base claims which did not contain as an element the two-step process, because the 6th of his original claims was even broader than the 11th and 12th claims as subsequently made and allowed. It was as follows: "The process of manufacturing insulating material which consists in superposing layers of coated paper and applying heat and pressure thereto." This was promptly rejected by the Patent Office as it must have been in the then state of the art. It was so absurdly broad and all-inclusive as almost to indicate that it was made to be rejected. O'Conor's signature to such a claim under the circumstances of course does not estop him when in fact it was not allowed; and certainly should not be used to bolster up a broad construction of the 11th and 12th claims when, as we have said, the state of the art must limit them.

We are clear then that the estoppel of the 11th and 12th claims against O'Conor does not extend to a single step process such as he has participated in as partner, stockholder or officer; and if it does not affect him, a fortiori does it not affect the respondent company.

This result makes it unnecessary for us to consider the objections that the Formica Company is not affected by an estoppel which would operate against O'Conor, or that the alleged nominal character of the consideration moving to O'Conor can not support an estoppel.

Decree affirmed.


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