ajnrnfll Earn grljnnl IQihtarij 
 
Cornell University Library 
 KF3113.G54 
 
 Restraints of trade in patented articies 
 
 3 1924 019 217 052 
 
Cornell University 
 Library 
 
 The original of this book is in 
 the Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924019217052 
 
RESTRAINTS OF TRADE IN 
 
 PATENTED ARTICLES 
 
 BY 
 
 FRANK Y. GLADNEY 
 
 of the St. LdWT Bar. 
 
 "THE FRANCHISE WHICH THE PATENT GRANTS, CONSISTS ALTO- 
 GETHER IN THE RIGHT TO EXCLUDE EVERY ONE FROM MAKING, 
 USING OR VENDING, THE THING PATENTED, WITHOUT THE PERMIS- 
 SION OF THE PATENTEE. THIS IS ALL HE OBTAINS BY THE PATENT." 
 —CHIEF JUSTICE TANEY I'ti BLOOMER vs. McQUEWAN (1852) 14 HOW.539. 
 
 "THE TRUTH IS THAT LETTERS PATENT DO NOT GIVE THE 
 PATENTEE ANY RIGHT TO USE THE INVENTION— THEY DO NOT CON- 
 FER UPON HIM A RIGHT TO MANUFACTURE ACCORDING TO HIS 
 INVENTION. THAT IS A RIGHT WHICH HE WOULD HAVE EQUALLY 
 EFFECTUALLY IF THERE WERE NO LETTERS PATENT AT ALL. WHAT 
 THE LETTERS PATENT CONFER IS A RIGHT TO EXCLUDE OTHERS 
 FROM MANUFACTURING IN A PARTICULAR WAY AND USING A PAR- 
 TICULAR INVENTION."— LORD HERSCHELL'FO THE HOUSE OF LORDS 
 IN STEERS vs. ROGERS (1893) A. C. 232. 
 
 ST. LOUIS 
 MAZDA PITBLISHING CO. 
 
 IQIO 
 
'B'7^35^ 
 
 Copyright, 1910, 
 
 By 
 
 FRANK Y. GLADNBY. 
 
 THROOP lilNOTYBE COMPOSITION CO., 
 Bast St. Louis, III., 
 
EXPLANATORY HEAD NOTE. 
 
 These pages comprise a discussion of contracts in restraint of 
 trade in patented articles. The writing is not intended to be consid- 
 ered as a text book or digest of the law. The scope of the effort is far 
 narrower than that. From beginning to end it consists of an expanded 
 comment on two sentences of an opinion of Chief Justice Taney in 
 Bloomer vs. McQuewan: 
 
 "The franchise which the patent grants, consists altogether 
 in the right to exclude every one from making, using, or vending 
 the thing patented without the permission of the patentee. This 
 is all that he obtains by the patent." 
 
 The first 99 pages constitute a sort of organon by which three 
 groups of cases are sought to be examined and tested. These three 
 groups are prefigured respectively by Heaton-Peninsular Button Fas- 
 tener Go. vs. Eureka Specialty Co., Victor Talking Machine Co. vs. 
 The Fair, and Rubber Tire Wheel Co. vs. Milwaukee Rubber Tire 
 Works. Unless the reader is interested in matters cognate to one or 
 all of these cases, the volume for him has not any significance. 
 
 Because of the narrow range and articulated character of the dis- 
 cussion, it has not been deemed advisable to break the pages up into 
 insulated paragraphs, set off by catch phrases. The table of citations 
 and the index may somewhat compensate this omitted feature. 
 
 No doubt the volume contains mistakes, typographical and other- 
 wise. In so far as these are known to me, I have labored to eliminate 
 them. It seems not worth while to go further and perfunctorily to 
 hazard an apology in anticipation of the assured discoveries of others. 
 Any designation of errors, of whatever kind, will be appreciated. 
 
 St. Louis, September, 1910. FRANK Y. GLADNEY. 
 
TABLE OP CONTENTS. 
 
 I. 
 
 An Analysis of the Eights of the Owner of a Patent 1 
 
 II 
 
 Restrictions on Purchaser's Use of Patented Articles 100 
 
 III. 
 
 Restrictions on Right of Resale of Patented Articles 174 
 
 IV. 
 Summary of Two Groups of Cases Preceding 268 
 
 V. 
 Combinations in Restraint of Trade in Patented Articles 285 
 
 VI. 
 Conclusioii 385 
 
TABLE OF CASES. 
 
 Adams vs. Burke (1873) 17 Wall. 453 
 
 90, 91, 103. 105, 192, 212, 274, 282-3, 379, 394 
 
 .Addyston Pipe and Steel Co. vs. United States (1899) 175 U. S. 
 
 211 .299. 331, 34], 397, 398 
 
 Ager vs. Murray (1881) 105 U. S. 126 ' 28. 243 
 
 Alabastvne Co. vs. Payne (1886) 27 Fed. 559 134-135 
 
 Allen vs. Riley (1906) 203 U. S. 349 40" 
 
 American Banana Co. vs. United Fruit Co. (1908) 213 U. S. 356 362 
 American Cotton Tie Co. vs. McCready (1879) Fed. Cas. No. 
 
 295 138-139 
 
 -American Soda Fountain Co. vs. Green (1895) 69 Fed. 833 302 
 
 Andrews vs. Hovey (1888) 124 U. S. 694 4 
 
 Angle vs. Chicago, St. P. Ry. Co. (1893) 151 U. S. 1 238 
 
 Anonymous (1845) Fed. Cas. No. 477 53 
 
 Ashcroft vs. Walworth (1872) Holmes 152 31 
 
 Aspinwall vs. Gill (1887) 32 Fed. 697 57 
 
 B. 
 
 Ball vs. Coker (1909) 168 Fed. 304 30-31 
 
 Bank vs. Ritchie (1834) 8 Peters at 144 203 
 
 Barton vs. White (1887) 144 Mass. 281 31 
 
 Belknap vs. SehUd (1895) 161 U. S. at 24 284 
 
 Bement vs. National Harrow Co. (1902) 186 U. S. 70 
 
 5, 191, 237-238, 258, 307, 313, 368, 371, 372-4 
 
 Birdsell vs. Shaliol (1884) 112 U. S. 485 52, 220 
 
 Birks vs. Trippett, 1 Wm. Saunders at 33 233 
 
 Blanchard vs. Eldridge (1849) Fed. Cas. No, 1510 60 
 
 Bloomer vs. McQuewan (1852) 14 How. 539 
 
 10, 18-19, 24, 82-85, 105, 120, 123, 191, 211, 244, 274, 279- 
 
 283, 378, 380, 384 
 
 Bloomer vs. Millinger (1863) 1 Wall. 340 25, 86-89. 105, 192, 298 
 
 Blount Mifg. Co. vs. Tale-Towne Mfg. Co. (1909) 166 Fed. 555 
 
 12, 365-78 
 
 Bobbs-Merrill Co. vs. Straus (1905) 139 Fed. 115 240, 248-253 
 
 Bobbs-Merrill Co. vs. Straus (1906) 147 Fed. 15 240, 253-256 
 
 Bobbs-Merrill Co. vs. Straus (1908) 210 U. S. 339. .240, 256-268, 380-1 
 
11. 
 
 Boesch vs. Graff (1889) 133 U. S. 697 183, 185 
 
 Boyd vs. Cherry (1883) 50 Fed. 279 137-138 
 
 Boyd vs. MfeAlpin (1844) 3 McLean 427 51 
 
 Brewing Ass'n. vs. Houck (1894 Tex.) 27 S. W. 692 335 
 
 Brodenck Copygraph Co. vs. Mayhew (1904) 131 Fed. 92. .159-161, 379 
 
 Broderiek Copygraph Co. vs. Eoper (1903) 124 Fed. 1019 2, 159 
 
 In re Brosnahan (1881) 18 Fed. 62 11, 35-37, 209, 243, 287, 391 
 
 Brown vs. District (1844) 3 McKay 502 51 
 
 Burr vs. Duryee (1863) 1 Wall. 531 133 
 
 C. 
 
 Carver vs. Peck (1881) 131 Mass. 291 28 
 
 Celluloid Mfg. Co. vs. American Zylonite Co. (1887) 30 Fed. 437. .135-7 
 
 Celluloid Mfg. Co. vs. Goodyear (1876) Fed. Cas. No. 2543 11 
 
 Chaffee vs. Boston Belting Co. (1859) 22 How. 217 85-86, 105 
 
 Chapin vs. Rosenthal (1874) 1 Weekly Notes Cas. (Pa.) 106.. 25 
 Charles River Bridge Co. vs. Warren Bridge (1837) 11 Peters at 
 
 639 115-116 
 
 Chisholm vs. Georgia (1793) 2 Ball, at 454 268 
 
 Cincinnati Packet Co. vs. Bay (1905) 200 U. S. at 185 372 
 
 Columbia Wire Co. vs. Freeman (1895) 71 Fed. 302 302, 303-5 
 
 Com. vs. Cent. D. and P. Telephone Co. (1891) 145 Pa. St. 121. .21, 232 
 
 Com. vs. Ed. El. L. Co. (1891) 145 Pa. St. 131 21 
 
 Com. vs. Ed. El. L. Co. (1893) 157 Pa. St. 529 21 
 
 Com. vs. Petty (1895) 96 Ky. 452 20 
 
 Com. vs. Philadelphia Co. (1893) 157 Pa. St. 527 21 
 
 Com. vs. Philadelphia Co. (1891) 145 Pa. St. 142 21 
 
 Com vs. Westinghouse Co. (1892) 151 Pa. St. 265 21 
 
 Com. vs. Westinghouse Co. (1892) 151 Pa. St. 20 21 
 
 Continental Bag Co. vs. Eastern Paper Bag (1908) 210 U. S. 405 
 
 10. 117-118. 120, 265-7. 382 
 
 Continental Wall Paper Co. vs. Voight (1909) 212 TJ. S. 227 397 
 
 Coming vs. Burden (1853) 15 How. 252 133 
 
 Cortelyou vs. Carter's Ink Co. (1902) 118 Fed. 1022 2, 159 
 
 Cortelyou vs. Lowe (1901) 111 Fed. 1005 2, 158-159 253 257 
 
 Cortelyou vs. Lowe (1902) 144 Fed. 1021.- \ . .2. 159 
 
 Cortelyou vs. Johnson (1905) 138 Fed. 110 2. 162-169 
 
 Cortelyou vs. Johnson fl906) 145 Fed. 932 2, 169-174 394 
 
 Cortelyou vs. Johnson (1907) 207 U. S. 196 ".2. 5. 234-24(!> 
 
 Cotton Tie Co. vs. Simmons (1882) 106 TT. S. 89 113-114. 258. '>'^(\-^ 
 
 Crane vs. Price Websters Patent Cases 413 88-89 
 
 Cummings vs. Union Blue Stone Co. (1897) 44 N. Y. Supo. 787 331 
 
Daimler Mfg. Co. vs. Conklin (1909) 170 Fed. 70 185 
 
 Dale Tile Mfg. Co. vs. Hyatt (1887) 125 U. S. 46 43-44 
 
 Dark vs. Woodhouse (1879) 40 Mich. 399 28 
 
 DeWitt Wire Cloth Co. vs. New Jersey Wire Cloth Co. (1891) 
 
 14 N. Y. Supp. 277 331 
 
 Diekerson vs. Matheson (1893) 57 Fed. 524 182-1S5 
 
 Dickerson vs. Tinling (1897) 84 Fed. 192. ;• 182-185 
 
 Distilling Co. vs. People (1895) 156 111. 458 335 
 
 Dorsey vs. Packard (1851) 12 How. at 136 239 
 
 Draper vs. Hudson (1873) Fed. Cas. No. 4069 51 
 
 Durana vs. Schulze (1891) 60 Fed. 392 52 
 
 E. 
 
 Edison El. L. Co. vs. Goelet (1894) 65 Fed. 612, 613 188-190 
 
 Edison El. L. Co. vs. Peninsular L. etc. Co. (19011 101 Fed. 831. . 147 
 
 Edison El. L. Co. vs. Sawyer-Man Co. (18921 52 Fed. 592 303 
 
 Edison Phonograph Co. vs. Kauffman (1901) 105 Fed. 960 
 
 3, 180-186. 257 
 
 Edison Phonograph Co. vs. Pike (1902) 116 Fed. 863. .3. 186-194. 257 
 
 Emory vs. Ohio Candle Co. (1890) 47 Ohio St. 320 
 
 Excelsior Wooden Pine Co. vs. Bridge Co. ('1902) 185 U. S. 282 
 
 . - 50, 203, 382 
 
 F. 
 
 Featherston vs. Cycle Co. nS921 52 Fed. 113 188 
 
 Felix vs. Scharnweber (1887) 125 U. S. 54 44 
 
 Perns vs. Batchelor (1895) 70 Fed. 714 52 
 
 Fowle vs. Park (1888) 131 U. S. 8S 221 
 
 G. 
 
 Gaines vs. Buford (1833) 1 Dana (Ky.) 481 116-117 
 
 Garst vs. Harris (1900) 177 Mass. 72 221 
 
 Garst vs. Lyon (1901) 179 Mass. 588 221-222 
 
 Gayler vs. Wilder (1850) 10 How. 477 31, 49, 56, 60-63. 75 
 
 General Electric Co. vs. Wise (1903) 119 Fed. 922 303 
 
 Gibbons vs. Ogden (1824) 9 Wheat. 1 384, 390. 40 i 
 
 Globe Newspaper Co. vs. Walker (1907) 210 IT. S. 356 247 
 
IV. 
 
 Good vs. Daland (1890) 121 N. Y. 1 333 
 
 Ooodyear vs. Cent. E. R. Co. (1853) Fed. Cas. No. 5563 ol 
 
 Goodvear Shoe Machine Co. vs. Jackson (1901) 112 Fed. 146. . 16* 
 ■Goodyear Tire Co. vs. Rubber Tire Wheel Co. (1902) 116 Fed. 
 
 363 317,340 
 
 Grenada Lumber Co. vs. Mississippi (1910) 30 Sup. Ch. Rep. 535 12,7 
 
 H. 
 
 Harrison vs. Maynard (1894) 61 Fed. 689 ,. . . ■ 193 
 
 Hartell vs. Tilghman (1878) 99 U. S. 547 202, 381 
 
 Hawk vs. Swett (1875) 4 Hun. (N. T.) 150 11 
 
 Heaton-Peninsular Button Fastener Co. vs. Eureka Specialty Co. 
 
 (1896) 77 Fed. 288 2, 100-144, 203, 254, 257, 296, 375, 392-3 
 
 Henry Bill Pub. Co. vs. Smythe (1886) 27 Fed. 914 28 
 
 Hobbie vs. Jennison (1893) 149 U. S. 355 92-94, 275-6 
 
 Holly vs. Vergennes Machine Co. (1880) 4 Fed. 74. 129-131 
 
 I. 
 
 Indiana Mfg. Co. vs. Case Threshing Machine Co. (1907) 154 
 
 Fed. 365 348, 363-5, 369 
 
 IngersoU & Bro. vs. Snellenberg (1906) 147 Fed. 522 3, 225-229 
 
 J. 
 
 Jewett vs. Atwood Suspender Co. (1900) 100 Fed. 647 12, 30 
 
 Jordan vs. Overseers of Dayton (1829) 4 Ohio 294 290 
 
 K. 
 
 Keach, Petitioner (1884) 14 R. I. 571 31 
 
 Keeler vs. Folding Bed Co. (1895) 157 U. S. 659. 
 
 94-96, 106, 192, 253, 254, 274, 277, 283, 380, 394 
 
 Keplinger vs. De Young (1825) 10 Wheat. 358 51 
 
 Kessler vs. Eldred (1906) 206 U. S. 285 
 
 L. 
 
 Leeds and Catlin vs. Victor Talking Machine Co. (1908) 213 
 
 U. S. 325 1*3 
 
 Littlefield vs. Perry (1874) 21 Wall. a05 51, 201 
 
M. 
 
 Marsh vs. Nichols (1890) 140 U. S. 344 45, 202 
 
 Martin vs. B. and 0. Eailroad Co. (1894) 151 U. S. at 678 329f 
 
 Mayhew vs. Broderick Copygraph Co. (1905) 137 Fed. 596 2 
 
 McCuUoch vs. Virginia (1898) 172 U. S. at 115 346- 
 
 McKay vs. Jackman (1882) 12 Fed. 625 51 
 
 Merrill vs. Yeoman (1876) 94 U. S. 568 51, 133 
 
 Millar vs. Taylor (1769) 4 Burr 2303 33, 243, 245, 262, 271 
 
 Mitchell vs. Hawley (1873) 16 Wall. 544 
 
 89-90, 103-104, 105, 253, 276-9, 379' 
 
 Montague vs. Lowry (1904) 193 U. S. 38 39T 
 
 Moore vs. Marsh (1868) 7 WaU. 515 56, 63 
 
 Morgan Envelope Co. vs. Albany Wrapper Co. (1893) 152 U. S. 
 
 425 94, 114, 139-142, 259 
 
 Munn vs. Hlinois (1877) 94 U. S. 113 39 
 
 N. 
 
 National Cotton Oil Co. vs. Texas (1904) 197 U. S. 115 127 
 
 National Harrow Co. vs. Bement (1897) 21 A. D. (N. T.) 290. . . 307 
 
 National Harrow Co. vs. Bement (1900) 163 (N. Y.) 70 307 
 
 National Harrow Co. vs. Hench (1896) 76 Fed. 667 306 
 
 National Harrow Co. vs. Hench (1897) 83 Fed. 36 306, 30T 
 
 National Harrow Co. vs. Hench (897) 84 Fed. 226 306 
 
 National Harrow Co. vs. Hench (1897) 85 Fed. 991 306 
 
 National Harrow Co. vs. Quick (1895) 67 Fed. 130 306 
 
 National Phonograph Co. vs. Lambert Co. (1903) 125 Fed. 388. . 52 
 National Phonograph Co. vs. Sehleael (1904) 128 Fed. 733 
 
 3, 65, 214-225, 257 
 
 National Phonograph Co. vs. Sehlegel (1904) 117 Fed. 624 5 
 
 New Jersey Patent Co. vs. Schaeffer (1907^ 159 Fed. 171, S. C. 
 
 144Fed. 437 3, 229-234 
 
 Northern Securities Co. vs. United States (1904) 193 U. S. 197. . 
 
 210, 296, 301, 345, 383, 397, 399, 401, 405 
 
 0. 
 
 . Opinion of Judses Mass. Supreme Court (1907^ 193 Mass.^bUS.^^^ ^^^ 
 Owings vs'. Hull '(1835)' 9 Pe'ters at 625 32f^ 
 
Palmer vs. State (1883) 39 Oh. St. 236 37-38 
 
 Paper Bag Cases (1881) 105 U. S. 766 220 
 
 Park vs. Hartman (1907) 153 Fed. 24 118-126 
 
 Patterson vs. Com. (1875) 11 Bush (Ky.) 311 32-33, 41 
 
 Patterson vs. Kentucky (1878) 97 U. S. 501 10, 
 
 28, 32-34, 122, 145, 209, 343, 262, 287, 292, 331, 379, 383, 384, 391 
 
 People ex rel. vs. Assessors (1898) 156 N. Y. 417 21 
 
 People vs. Johnson (1699) 153 N. T. 70 21 
 
 People vs. Russell (1883) 49 Mch. 617 38. 98, 290, 384 
 
 Peterson vs. Sheriff (1896) 115 Cal. 211 28 
 
 R. 
 
 Rivet Case (see Tubular Rivet and Stud Co. vs. O'Brien). 
 Rubber Tire Wheel Co. vs. Milwaukee Rubber Tire Works 
 
 (1907) 154 Fed. 358 12, 315-365, 393 
 
 Rupp et al. vs. Elliott (1904) 131 Fed. 730 2, 144-158. 297 
 
 Bx parte Robinson (1870) 2 Bissell 309 21 
 
 Saxe vs. Hammond (1871) Fed. Cas. No. 17,100 128-129 
 
 Scribner vs. Straus (1908) 210 U. S. 352 265 
 
 In re Sheffield (1894) 64 Fed. 833 iq 
 
 Smiley vs. Kansas (1904) 196 U. S. 447 127 
 
 Smith vs. McClelland (1875) 11 Bush (Ky.) 523. .. . ' 45-46 
 
 State vs. Butler (1879) 3 Lea (17 Tenn.) 222 21 
 
 Stephens vs. Cady (1852) 14 How. 528 25-27, 262 
 
 Stevens vs. Gladding (1855) 17 How. 447 27-28 122' 242 
 
 St. Paul Plow Works vs. Starling (1888) 127 U. S. 378. '. . 72-73 
 
 Strait vs. National Harrow Co. (1891) 18 N. Y. Sup 224 '" 306 
 Strait vs. National Harrow Co. (1892) 51 Fed. 819. " " ^Qo 
 
 Straus vs. Am. Pub. Assn. (1904) 177 N. Y 473 300 
 
 Straus vs. Am. Pub. Assn. (1908) 127 A. D. (N. Y V935 i;oo 
 
 Straus vs. Am, Pub. Assn. (1908) 86 N. B. (NY.) 525 . . . . 300 
 
 T. 
 
 Thomas vs. Sorrel! 3 Vaughn 351 ^ 108-109 
 
 Threshing Machine Case, see Indiana Mfg. Co. vs. 'Case Thresh- 
 ing Co. 
 
Vll. 
 
 Tod vs. Wick (18S1) 36 Oh. St. 384 12 
 
 Travers vs. Beyer (1886) 26 Fed. 450 131-132 
 
 Tubular Rivet & Stud Co. vs. O'Brien (1898) 93 Fed. 200.... 
 
 2, 144-158, 297 
 
 Tyler vs. Tuel (1810) 6 Craneh 324 56, 58 
 
 U. 
 
 United States vs. American Bell Telephone Co. (1896) 167 U. S. 
 
 224 ■ 10, 79, 244-245, 389 
 
 United States vs. De Witt (1869) 9 Wall. 41 16, 295 
 
 United States vs. Lee (1882) 106 U. S. 196. 405 
 
 United States' Consolidated Seeded Raisin Co. vs. GrifiSn (1903) 
 
 126 Fed. 364 " 313-15 
 
 Vanini vs. Paine (1833) 1 Harrington (Del.) 65 41-42, 45 
 
 Victor Talking Machine Co. vs. The Fair (1903) 123 Fed. 424 
 
 • 3, 12, 194-214, 257, 318 
 
 Vulcan Powder Co. vs. Powder Co. (1892) 96 Cal. 510 314 
 
 W. 
 
 Wade vs. Lawler (1896) 165 U. S. 624 45 
 
 Wade vs. Metcalf (1889) 129 U. S. 202 52 
 
 Waterman vs. McKenzie (1890) 138 U. S. 252 65, 220, 252 
 
 Waters Pierce Oil Co. vs. Texas (1908) 212 U. S. 86 127 
 
 Webber vs. Virginia (1880) 103 U. S. 344 
 
 19, 34-35, 41, 98, 209, 292-3, 305. 331 383, 384 
 
 "VV ebber vs. Virginia (1880) 33 Gratt. 898 35 
 
 Welsbach Light Co. vs. Union Inc. Light Co. (1900) 101 Fed. 
 
 131 62 
 
 White vs. Rankin (1891) 144 U. S. 628 202-203 
 
 White-Smith Pub. Co. vs. Apollo Co. (1907) 209 U. S. at 19 269 
 
 Wiggin vs. Shoe Co. (1894) 161 Mass. 597 190 
 
 Wilder vs. Kent (1883) 15 Fed. 217 23-24 
 
 Willis vs. MeCuUan (1886) 29 Fed. 641 132-134 
 
 Wilson vs. Sanford (1850) 10 How. 99 4, 70-72, 112, 200, 381 
 
 Woods vs. Carl (1906) 203 U. S. 358 40 
 
AN ANALYSIS OF THE RIGHTS OF THE OWNER OF A 
 
 PATENT. 
 
 In attempting to formulate a consistent statement of the law re- 
 garding the nature of the patent grant and the rights of the owner 
 of a patent, there is a glaring and violent conflict between the de- 
 cisions of the Supreme Court and those of the lower Federal Courts. 
 Upon careful consideration, the conflict is seen to be the result 
 of an erroneous .apprehension by the lower courts of the import of 
 the decisions of the Supreme Court interpreting and construing the pat. 
 ent law. In the search for authority on this point a group of cases de- 
 cided by the lower Federal Courts is a continual stumbling block. 
 They are a complete puzzle. Nothing like them occurs in the reports. 
 , In general, these cases have to do with restrictions imposed in 
 connection with the sale of patented articles, either as to the use to 
 which the thing sold maybe put, or the price at which it may be re- 
 sold. The import of these decisions may be fairly comprised in two 
 propositions. 1st. If the patentee sells a patented machine or device 
 accompanied by a notice restricting the right of the purchaser to use 
 the machine or device, any use in excess of that indicated by the notice 
 will constitute the purchaser an infringer of the patent. 2nd. If the 
 patentee sells the article, and, in the sale, exacts a stipulation that the 
 article shall not be sold below a certain price, one who subsequently sella 
 or purchases it below this price is an infringer of the patent. This 
 theory was first expounded in connection with restrictions imposed 
 on the use of an article or machine by the purchaser and owner 
 thereof "When once exploited, accepted and established bv 
 
RIGHTS OF A PATENT OWNER. 
 
 an easy transition and valid analogy (supposing the theory sound) 
 it was applied to uphold restrictions in connection with the resale of 
 patented articles. 
 
 We will arrange these cases in two groups: one group com- 
 prising the cases dealing with restrictions on the use, and the other 
 group pertaining to restrictions as to the resale of articles. 
 
 Within each group the cases are arranged in the chronological 
 order of the decisions. 
 
 GROUP I. 
 
 Decisions on the validity of restrictions as to the use of a machine 
 or article sold. 
 
 Heaton-Peninsular Button Fastener Co. vs. Eureka Specialty Co. 
 
 (1896 C. C. A. 6th Cir. )77 Fed. 288, reversing 65 Fed 619. 
 Cortelyou vs. Lowe (1901 C. C. A. 2nd Cir.) iii Fed. 1005. 
 Cortelyou ys. Lowe (1902 C. C. N. Y.) 114 Fed. 1021. 
 Cortelyou vs. Carter's Ink Co. (1902 C. C. N. Y.) 118 Fed. 1022. 
 Broderick Copygraph Co .vs. Roper (1903 C. C. R. I.) 124 Fed. 
 
 1019. 
 Mayhew vs. Broderick Copygraph (1905 C. C. A. 7th Cir.) 137 
 
 Fed. 596; 131 Fed. 93. 
 Cortelyou vs. Johnson (1905 C. C. N. Y.) 138 Fed. no. 
 Cortelyou vs. Johnson (1906 C. C. A. 2nd Cir.) 145 Fed. 932. 
 Cortelyou vs. Johnson (1907) 207 U. S. 196. 
 
 Similar to the cases in the above group but distinguishable on a 
 ground hereafter to be pointed out are the cases of 
 
 Tubular Rivet and Stud Co. vs. O'Brien (1898 C. C. Mass.) 93 
 
 Fed. 200. 
 Eupp et al. vs. Elliott (1904 C. C. A. 6th Cir.) 131 Fed. 730. 
 
INTRODUCTORY. 
 
 GROUP II. 
 
 Decisions on the validity of restrictions imposed by a patentee- 
 vendor as to the resale of the article. 
 
 Edison Phonograph Co. vs. Kauffman (1901 C. C. Pa.) 105 Fed. 
 960. 
 
 Edison Phonograph Co. vs. Pike (1902 C. C. Mass.) 116 Fed. 
 863. 
 
 Victor Talking Machine Co. vs. The Fair (1903 C. C. A. 7th Cir.) 
 
 123 Fed. 424. 
 National Phonograph Co. vs. Schlegel (1904 C. C. A. 8th Cir.) 
 
 128 Fed. 733. 
 
 Reversing 117 Fed. 624. 
 Ingersoll vs. Snellenberg (1906 C. C. Pa.) 147 Fed. 522. 
 New Jersey Patent Co. vs. Schaeffer (1907 C. C. Pa.) 159 Fed. 
 
 171. 
 S. C. 144 Fed. 437. 
 
 The foregoing groups doubtless do not comprise all the decisions 
 of the character. But at any rate, the decisions noted fully expound 
 the doctrine under consideration and we will deal with them as typical, 
 even if not all inclusive. 
 
 We have found these decisions puzzling in the extreme. We 
 have read every case and text writer cited to support the reasoning 
 of the court in the respective opinions reported. Still the theory 
 imderlying the cases does not appear to be a component part, a logi- 
 cal extension or necessary development of any accepted proposition 
 in our jurisprudence. 
 
 We then attacked the problem from an entirely different view- 
 point. We set about to read closely and examine thoroughly every 
 decision of the Supreme Court, from its organization down to- the 
 
RIGHTS OF A PATENT OWNER. 
 
 present time, dealing with the nature of the patent franchise and 
 expounding the rights and powers of a patentee. This is not a 
 gigantic task as. one can lay entirely to one side, all decisions having 
 to do only with the technical matter of infringement, with equivalents, 
 improvements, primary and secondary patents and such like. But 
 there are a score of decisions that get away from all this 
 and are confined solely to an analysis of the franchise vested in the 
 patentee by the government. and of the rights accruing to the patentee 
 from that grant. This is certainly the proper source to gain author- 
 itative information regarding this perplexing problem. Indeed, it is 
 the only source from which one may obtain such authoritative in- 
 formation. For as early as 1850, in the case of Wilson vs. Sanford 
 ID Howard 99, in speaking of the statute conferring the right of ap- 
 peal to the Supreme Court in patent" cases regardless of the amount 
 involved, Chief Justice Taney said, "The peculiar privilege given to 
 this class of cases was intended to secure uniformity of decision in 
 the construction of the Act of Congress in relation to Patents.' 
 
 Moreover the Court has gone further and given every one dis- 
 tinctly to understand that it is the only final arbiter of any question 
 pertaining to the patent laws. 
 
 In the case of Andrews vs. Hovey (1888) 124 U. S. 694, Mr. 
 Justice Blatchford proclaimed the attitude of the court in this posi- 
 tive language : 
 
 "A question arising in regard to the construction of a statute 
 of the United States concerning patents for inventions cannot be 
 regarded as judicially settled when it has not been judicially settled 
 by the highest judicial authority which can pass upon the question. 
 This court has always had jurisdiction to review suits on patents 
 to a specified extent withqut regard to the sum or value in dispute. 
 No question regarding patents in any such case, reviewable by this 
 court, can be regarded as finally settled, so as to establish the law for 
 like cases, until it has been determined by this court." 
 
INTRODTJCTORT. 
 
 "So as to establish the law for like cases." It is indeed remark- 
 able that the Supreme Court has been given no opportunity to pass 
 upon the merits of any one of the decisions, above collated. Of all 
 these decisions the case of Cortelyou vs. Johnson alone found its 
 way to the Supreme Court (207 U. S. 196). 
 
 But the merits of the case were entirely untouched. Not only 
 that. The court was exceedingly careful to point out that its de- 
 cision did not hinge on anything at all except the question of notice, 
 which was entirely a side issue. The deliberate caution and studied 
 reserve of the opinion in this case is palpable in every sentence. The 
 court below had expressed itself throughout in the phraseology and 
 nomenclature of the patent law. We read there of "licensor" and 
 "licensee", of "license restrictions", of "contributory infringement". 
 The lower court used the language common to patent rights all 
 through the opinion. The Supreme Court gets entirely away 
 from his, and, even in stating that it is not going to go into the 
 merits of the case and giving reasons why it is not, uses the- language 
 applicable to common law contracts only. Here is what is said: 
 
 "While in E. Bement and Sons vs. National Harrow Go. 186 
 U. S. 70, this court held in respect to patent rights (black ours) : ob- 
 serve not patented "articles") that, with few exceptions, any condi- 
 tions which are not in their very nature illegal with regard to this 
 kind of property (viz. patent rights) imposed by the patentee and 
 agreed to by the licensee for the right to manufacture or use, or sell 
 the article (note the distinction between the "right" and the "ar- 
 ticle") will be upheld by the courts, it is unnecessary to consider 
 how far a stipulation in a contract (not a license) between the owner 
 of a patent right (not article) and the purchaser from him of a ma- 
 chine manufactured under that right, that it should be used only 
 in a certain way will sustain an action in favor of the vendor against 
 the purchaser in case of a breach of that stipulation." Not a word 
 is said about "infringement" or "contributory infringement", about 
 
RIGHTS OF A PATENT OWNER. 
 
 "licenses" and "restrictions in licenses". Instead, the Court speaks 
 of the "owner of a patent right" and the user of the machine is called 
 a "purchaser" not a "licensee". We read of "a stipulation in a 
 contract," but the Court carefully avoids the term "license." This 
 emphatic reservation and eloquent silence is profoundly suggestive. 
 It points to what has been said heretofore by the Court and what 
 may be said hereafter 
 
 It provokes an inquiry as to whether the Court has not already, 
 in effect, decided the point which here was expressly reserved and 
 declared not to be in contest before the Court. Moreover, what is 
 the significance of the fact that the Supreme Court states the issue 
 understood to have been fought out below in language so radically 
 different as to indicate that the litigants had missed the real ground 
 of dispute? 
 
 The Court comes very near to saying that the essential question 
 below was not as to the infringement of a patent but as to inducing 
 a breach .of an ordinary contract. 
 
 It was this deliberate restatement of this case followed by a 
 complete declination to consider the merits even after put in a new 
 light, that suggested to the writer the imperative necessity of going 
 back to the beginning and tracing step by step the development of 
 the law regarding the nature of the patent franchise as declared by 
 the Supreme Court. The process is indeed laborious but it is lumini- 
 ferous. One comes thoroughly to understand exactly what the 
 patent franchise carries with it and precisely what the owner of that 
 franchise can do and cannot do. It would require a volume to 
 digest all the cases bearing upon the matter. That is wholly un- 
 necessary. We need to understand clearly only a very few funda- 
 mental principles. 
 
 In going forward into a statement of these results we ask that 
 the reader shall entirely put out of mind the decisions heretofore 
 enumerated. Let us get away from them, so as not to be influenced 
 
INTRODUCTORY. 
 
 by them in any manner. Let us devote attention exclusively to the 
 decisions of the Supreme Court, and study those decisions for the 
 time being purely as an academic exercise of the mind rather than to 
 uphold or overthrow any prepossession. It is only by assuming a 
 disinterested attitude of this kind that we can firmly grasp the prin- 
 ciples that must control. One always works at a great disadvantage 
 and incurs the hazard of merely confirming his erroneous preposses- 
 sions when an attempt is made to find some ready made sup- 
 port for a contention intensely desired to be sustained, rather than 
 to explore and set forth the fundamentals of the law absolutely, re- 
 gardless of whether or not certain acts are to be condemned as un- 
 lawful or held valid. For the present, then, we have no concrete 
 case in mind, no decision to criticize, and no act to adjudge legal or 
 illegal. Instead we have the colorless abstract queries: What does 
 the patent grant consist of? What are the rights of the patentee? 
 What is the nature of a license contract? By what law is the 
 patentee governed? Is he a law unto himself or is he subject to 
 the same law as other persons? 
 
 When he sells his patented article is the transaction governed 
 by the same law that controls a butcher selling meat, or is it some 
 other and different law, of which the ordinary vendor knows not? 
 We shall have occasion before we are done to look closely at the 
 Bement case. But we ask that that, too, be suspended out of view 
 for the time being and that we rivet attention solely upon this dis- 
 interested investigation. 
 
 To facilitate a thorough and orderly examination of the matter 
 we have printed a chart or abstract entitled, "An Analysis 
 of the Rights of the Owner of a Patent." This is an ab- 
 stract of the entire exposition. The authorities and comment thereon 
 are to be found under the separate and isolated tables or headings 
 numbered on the main chart and following consecutively the same. 
 In adopting this method we are enabled to compress much into a 
 
RIGHTS OP A PATENT OWNER. 
 
 small space; to keep constantly before the mind a clear statement 
 of the very question that all the time is being considered. 
 
 Throughout this exposition,, although we shall 'consider de- 
 cisions arising under the tax laws, general assignment statutes, police 
 powers of the states and such like, it must be borne in mind that all 
 this is gone through for the sole purpose of illustrating and explain- 
 ing the nature and scope of the patent franchise. We have exercised 
 no nicety to determine whether or not a given decision is sound in 
 point of interpreting the law of taxation, of executions, of assign- 
 ments and so on. The decisions are viewed in one aspect only and 
 that has to do with the meaning and essence of the patent right. 
 This preliminary caution is thrown out to guard against a scattering 
 or diffusion of attention to irrelevant matters. From first to last it is 
 imperatively desirabk to rfocus deliberation upon one point and 
 one only, viz, what are the rights of the owner of a patent? 
 
 A GENERAL CONSIDERATION OP THE NATURE AND SCOPE 
 OF THE RIGHTS OF THE OWNER OF A PATENT. 
 
 Before going into the details of this analysis it is distinctly worth 
 while to take a broad and general view of the question and to study 
 closely the language of the statutes and the Supreme Court. 
 
 The nature and scope of the rights of the owner of a patent 
 are matters that have been confused and misconceived by the text 
 writers and lower courts until at the present time it requires the 
 most careful study of the decisions of the Supreme Court to under- 
 stand the matters clearly and luminously. But these decisions when 
 so studied make the whole problem easy of solution. In these de- 
 cisions we do not encounter that vagueness of thought and looseness 
 of expression that has given rise to so much confusion and miscon- 
 ception. Misunderstanding the nature of the patent grant has led 
 to most serious and grave mistakes on the part of the lower courts. 
 
GENERAL CONSIDERATION. 
 
 These will be remarked on hereafter. Let us first glance at the 
 language of the various statutes of the United States defining the 
 patent grant. 
 
 The language of the constitution is familiar. Congress is given 
 power "To promote the progress of science and the useful arts, 
 by securing for limited times to authors and inventors the exclusive 
 tight to their respective writings and discoveries.'' 
 
 The language of the various statutes follows : 
 
 Act of 1790. 
 
 "The sole and exclusive right and liberty of making, construct- 
 ing, using and vending to others to be used, the said invention or dis- 
 covery." Act of 1793, substitutes for the word "sole" the word "full", 
 otherwise the language of the act of 1790 is preserved. Act of 1836. 
 ■"The full and exclusive right and liberty of making, using, and vend- 
 ing to others to be used, the said invention or discovery." Act of 
 1870. (R. S. see 4884.) 
 
 The change in phraseology here' is significant. 
 
 "The exclusive right to make, use and vend the said invention 
 or discovery throughout the United States." 
 
 It is obvious that the words "sole" and "full" as used in the 
 earlier Acts were meaningless. The Constitution said nothing about 
 a "sole" or "full" right. "Exclusive" is the adjective used. Congress 
 never has undertaken to grant to inventors the right to make, use 
 and sell their inventions. This right they already had, even before 
 the adoption of the Constitution and the enactment of Patent Laws 
 pursuant thereto. The only room for the exercise of the power of 
 Congress is in making the right "exclusive" in the inventor. Unless 
 we read the clause in the Constitution and the language quoted 
 above with a decisive emphasis upon the adjective "exclusive" we 
 miss the vital meaning of the patent grant. The Supreme Court has 
 repeatedly emphasized this essential characteristic of the patent fran- 
 chise. Thus. 
 
10 RIGHTS OF A PATENT OWNER. 
 
 Bloomer vs. McQuewan (1853) 14 How. 539. Chief Justice 
 Taney: "The franchise which the patent grants consists altogether 
 in the right to exclude everyone from making, using or vending the 
 thing patented without the permission of the patentee. This is all 
 that he obtains by the patent." 
 
 Patterson vs. Kentucky (1878) 97 U..S. 501. Mr. Justice Harlan: 
 "The sole operation of the statute (patent law) is to enable him to 
 prevent others from using the products of his own labor except with 
 his consent. But his own right of using is not enlarged or affected. 
 The right of property in the physical substance, which is the. fruit 
 of the discovery, is altogether distinct from the right in the discovery 
 • itself, just as the property in the instruments or plates by which 
 copies of a map are multiplied is distinct from the copyright of the 
 map itself." 
 
 United States vs. American Bell Telephone Co. (1896). 167 U. 
 
 S. 224. Mr. Justice Brewer; 
 "It (the patent) conveyed to Berliner (the patentee) so far as 
 
 respects rights in the instrument itself, nothing that he did not have 
 theretofore. The only effect of it was to restrain others from manu- 
 facturing and using that which he had invented. The patentee, so 
 far as his personal use is concerned, received nothing which he did 
 not have without the patent. The purpose of the patent is to protect 
 him in his monopoly, not to give him a use, which save for the 
 patent, he did not have before, but only to separate to him an ex- 
 clusive use." 
 
 Continental Paper Bag Co. vs. Eastern Paper Bag Co. (1908) 
 210 U. S. at 424. Mr. Justice McKenna: 
 
 "Those cases (referring to the decisions cited above and others) 
 declare that he (the patentee) received nothing from the grant 
 that he did not have before, and that the only effect of the patent 
 is to restrain others from manufacturing and using what he has in- 
 vented." 
 
GENERAL CONSIDERATION. 11 
 
 When we consider that the Supreme Court has been propound- 
 ing this analysis of the patent right for almost a century and appar- 
 ently without making itself understood, a new significance attaches 
 " to these words following the passage just quoted : "We cite them 
 (viz the decisions) because there is something more than the repeti- 
 tion of the same thought in so doing"! 
 
 The lower courts and text writers have many times repeated 
 the substance of the propositions embodied in the passages already 
 set out above, but judging by the results arrived at, they have fre- 
 quently failed to apprehend the meaning of what, in form, was as- 
 sented to. 
 
 "We will quote a number of these authorities. 
 
 In re Brosnahan, Jr. (1883) 18 Fed. 63. 
 
 Mr. Justice Miller on Circuit: "It is to be observed that 
 no constitutional or statutory provision of the United Stales whs 
 or ever has been necessary to the right of any person to make an 
 invention, discovery or machine, or to use it when made or to sell it 
 to some one else. Such right has always existed and would exist 
 now, if all patent laws were repealed. It is a right which would be 
 called a natural right, and which so far as it may be regulated by 
 law belongs to ordinary municipal legislation ; and it is unaffected 
 by anything in the Constitution or patent laws of the United States.'' 
 
 Hawk vs. Swett (1875) 4 Hun. (N. Y.) 150 the Supreme Court 
 of New York: "In order that we should not be misled by any false 
 analogy, it should be noticed that letters patent for an invention 
 confer nothing except a right to bring actions, and thereby to pre- 
 vent persons from doing what they might otherwise lawfully do." 
 
 Celluloid Mfg. Co. vs. Goodyear (1876) Fed. Cas. 2543. Hunt, 
 J. "The plaintiff alleges itself to be the owner of a useful invention. 
 By the general law of the land, state as well as national, it has the 
 right to sell that improvement to all who think it of sufficient value 
 to induce them to purchase it, subject only to restraint from some 
 
12 RIGHTS OF A PATENT OWNKR. 
 
 party having a conflicting patent. So far as its own use o» manu- 
 facture is concerned, it needs no act of Congress to enable it to 
 make, use and vend the article, and it obtains no such right from 
 Congress. The benefit of the patent law is that the plaintiff may- 
 prevent others from making, using or vending its invention; to 
 itself, to its own right to make, use or vend, no right or authority is 
 -added by those statutes." 
 
 Tod vs. Wick (1881) 36 Ohio St. 384. The Supreme Court of 
 -Ohio: "From these cases (citing oeveral) it would seem clearly ,to 
 iollow, that the only right which the patentee acquired by his let- 
 ters patent, which he did not possess before they were granted is 
 the right to exclude others from a common use and enjoyment of 
 the thing patented without his cortsent." 
 
 Jewett vs. Atwood Suspender Co. (C C. 1900) 100 Fed. 647. "A 
 ;patent does not confer even a right to use the invention. The in- 
 "ventor had the right before. It is- merely an incorporeal right to 
 -exclude others from using the invention throughout the United 
 States." 
 
 Victor Talking Machine Co. vs. The Fair (1903, C. C. A. 7th 
 'Cir.) 123 Fed. 426. "All that the government can and does grant 
 'him (the patentee) is the right to exclude others from practicing his 
 invention." 
 
 Rubber Tire Wheel Co. vs. Milwaukee Rubber Co. (1907 C. C. 
 A. 7th Cir.) 154 Fed. at 363. "The only grant to the patentee was 
 Ihe right to exclude others." 
 
 Blount Mfg. Co. vs. Yale & Towne Mfg. Co. (C. C. 1909) 166 
 Fed. at 558. "By the terms of the patent he (the patentee) has the 
 exclusive right to make, use and vend. The right to make, use and 
 vend he has without the grant of letters patent. When we say that 
 a patent grants an exclusive right; we do not mean that the right 
 to make, use and vend is granted, but only that the patentee's ex- 
 isting right is made exclusive by the grant." 
 
GENERAL CONSIDERATION. 13r- 
 
 Very few of the text writers even stop to attempt an analysis, 
 of the patent right, but there are a few definitions to be found. 
 
 Coryton (1855) on Patents [* 41]. "The right created by the 
 grant is that of the exclusive enjoyment of a trade, secured by the in- 
 direct operation of letters patent restraining all others from doing 
 what, but for such restriction, they would be entitled to do equally/ 
 with the patentee." 
 
 Hall: on Patent Estate (1888) p. 33. "A patent would seem to- 
 be a claim in law to a qualified debarment, in fact, of making, using: 
 and vending an invention; or in other words, an exclusion, in law, 
 of making, using and vending the invention described in the patent,, 
 for time and territory expressed; the sole difference between the- 
 rights of the inventor, respectively prior and subsequent to his- 
 patent, residing in the adjective, exclusive, in qualification of his 
 right. The office of the patent, would therefore appear to rest in the- 
 exclusion it effects, as regards making, using and vending the in- 
 vention." 
 
 Walker on Patents (4th Ed. 1904) Sec. 155. "The reason why 
 a state may regulate the sale of a patented thing, and may not regu- 
 late the sale of the patent covering that thing, is explainable as fol- 
 lows. A patentee has two kinds of rights in his invention. He has 
 a right to make, use and sell specimens of the invented thing; and 
 he has a right to prevent all other persons from doing either of these- 
 acts. The first of these rights is wholly independent of the patent 
 laws; while the second exists by virtue of those laws alone." 
 
 It would require at least ten times the space already used to- 
 point out the instances in which the nature of patent rights as above 
 defined has been overlooked. Time and time again we find the courts 
 repeating the proposition that the sole right granted by the patent is 
 to exclude others and straightway setting up a result that contradicts, 
 and nullifies the proposition assented to at the outset. We will ob- 
 
14 RIGHTS OF A PATENT OWNER. 
 
 serve instances of this as we advance in other branches of the law 
 where this nature of the patent right is recognized and enforced. 
 
 It has been constantly assumed and asserted hundreds of times 
 by the lower federal courts, by the state courts, and by text writ-, 
 ers that the government by awarding a patent thereby grants to the 
 patentee an affirmative right to make, use and sell his invention. 
 That is to say the patent is regarded as conferring upon, and creat- 
 ing in, the patentee, this right. It would not occur to anyone to 
 spend time in refuting such a monstrous argument if it were not 
 so frequently asserted and enforced with such unexpected and un- 
 justifiable results. 
 
 Within the last score of years this erroneous proconception of the 
 patent right has given rise to a capital affliction of judge-made law. 
 The false initial proposition is this: the patentee by the patent law 
 is invested with the exclusive right to make, use, and sell the thing 
 described in his patent. When this is once asserted and accepted as 
 sound, these conclusions necessarily are derivable; the patentee in 
 making, using, or selling what he has invented, exercises a right con- 
 ferred upon him by the government in granting the patent; in doing 
 any or all of these things, he is acting under the protection of the 
 patent laws, and is subject to no limitations except those imposed by 
 the patent laws. Then the thesis is expounded with the result that the 
 law of contracts, of sales, of trade restrictions, applicable universally 
 to transactions involving personal property, are invalidated, explained 
 away or excepted, in legal acts relating to patented articles. 
 
 The patentee may sell a specimen of his patented article, receive 
 and accept the full purchase price demanded by him, and yet treat 
 the purchaser as a "licensee" and not as an owner of what he has 
 paid for. By accompanying the article sold with a written or printed 
 notice, the patentee can qualify the title of the purchaser in that ar- 
 ticle; and if the purchaser uses his own property in a manner that 
 conflicts with the terms of the notice, he thereby infringes upon the 
 
GENERAL CONSIDERATION. 15 
 
 right of the patentee to exclude others from making, using, and sell- 
 ing the thing without the patentee's consent. 
 
 Finally, all legislation prohibiting contracts in restraint of trade 
 is held not to be applicable to transactions involving patented articles. 
 This, we say, is the astonishing result that has actually sprung from 
 the mistaken conception of the patent right. But this cannot possibly 
 stand, and for two conclusive reasons : First, the Federal government 
 cannot create such a right in a patentee ; it has not within its power 
 of disposition the right to make, use, and sell an artielc.whether newly 
 invented or not. 
 
 The right of every man to make, use and sell what he has in- 
 vented is primordial. It is as Mr. Justice Miller said a "natural 
 right." It antedates institutions and constitutions. The right to 
 life, liberty and the gains of one's own industry is not and cannot 
 be created or conferred by any government. The chief end and 
 aim of every government is to protect the right. But every modern 
 institution of government has for its bed rock and undermost sub- 
 strate the concession and assumption that this right exists. Constitu- 
 tional government seeks to preserve this right, anarchy would de- 
 stroy it, but neither has ever been thought to have anything to do 
 with creating it. Magna Charta and every Bill of rights that has ever 
 been drawn up assert the right of every man to the gains of his in- 
 dustry and exact protection for the right, but those instruments do 
 not purport to have anything to do with creating or conferring the 
 right. 
 
 The government of the United States is one of delegated pow- 
 ers, and the constitution guarantees the right from invasion by 
 either national or state authority, but no one has ever supposed that 
 the congress has the power to create or confer the right, to enjoy the 
 fruit of one's labors. The states have far greater powers than the 
 national government but the utmost they can do is to protect and 
 
16 RIGHTS OF A PATENT OWNER. 
 
 restrict the right which existed prior to. and independently of state 
 constitutions. 
 
 In his Constitutional Limitations (6th Ed.), Judge Cooky says 
 p. 68, "In considering state constitutions we must not commit the 
 mistake of supposing that, because individual rights are guarded and 
 protected by them they must also be considered as owing their 
 origin to them. These instruments measure the powers of the 
 rulers, but they do not measure the powers of the governed." The 
 right to make, use and sell on the part of the inventor is a "power 
 of the governed." A state, in the interest of the public welfare, may 
 restrict or even suppress this right under what is known as the police 
 powers. But the national government cannot even do this, for it has 
 no police powers, as the Supreme Court has said with much iteration. 
 See United States vs. De Witt (1869) 9 Wall. 41. 
 
 Thus the right to make, use and sell does not come from the 
 Federal government, is not within its power either to confer or to 
 deny. 
 
 It existed time out of mind before the formation and adoption 
 of the constitution and will be asserted, exercised and defended 
 long after that precious document has ceased to symbolize the re- 
 stricted powers of the government over the governed. The pat- 
 ent franchise is not related in any manner to this elemental right; 
 this assertion of all that makes life worth living, the struggle to 
 obtain recognition for which comprises the history of institutions 
 and is marked with the blood and tears of mankind. How ut- 
 terly untenable and idle is the opposite contention that the federal 
 government by the patent grants the right to make, use and sell! 
 The power to grant, by a necessary limitation of thought, implies 
 the power to deny. Then if the government can and does grant the 
 right .to make, use and sell, it can and may deny the right, condition 
 or destroy, it. By denying an application for a patent it denies the 
 
GENERAL CONSIDERATION- 17 
 
 right, to make, use and sell ! By repealing the patent law it can 
 take away the right to make, use and sell, from every inventor ! 
 
 We feel tempted to apologize for setting forth a statement of 
 such elementary law which comes within the range of every law 
 student in the first six months of his course, , which is contained in 
 Blackstone, in Kent, in Austin, in Holland and every other writer on 
 the alphabet of the law. But there seems to be urgent occasion for 
 this sort of reminder as we shall see in what follows. While 
 throughout tms writing we have referred to the right to make, use 
 and sell, as a "common law right," we mean by this only that the 
 right is protected, and its enjoyment measured, by the common law. 
 We do not mean in any instance that the right is derived from the 
 common law. This must be borne in mind as otherwise one might 
 infer that the right is derived from some definite source just as is 
 the patent right. The phrase "common law right" has been employed 
 as a convenience in preference to the more objectionable (because 
 ambiguous) term "natural right." We cannot lay our finger on the 
 source of the right to make, use and sell, whereas the right to ex- 
 clude originates in and ends with, the wording of the Act of Con- 
 gress; apart from that act the patent right has no existence what- 
 ever. 
 
18 RIGHTS OF A PATENT OWNER. 
 
 TABLE I. 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct Rights: 
 
 I. Common Law Right: To make, use and sell. 
 II. Patent Law Right: To exclude others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 By 
 The State Revenue Laws. 
 I. State can tax the property in tangible articles embodymg 
 the invention. 
 
 II. State cannot tax the intangible, incorporeal right inherent 
 in the patent grant (viz. the right to exclude others.) 
 
 I. 
 There is little authority as to the right of the states to tax pat- 
 ented articles. 
 
 It has seldom or never been seriously questioned. Common 
 knowledge teaches us that such property is listed on every tax roll 
 in the United States. 
 
 Automobiles, typewriters, sewing machines, watches, farm im- 
 plements, engines, railroad equipment, all embodying patented in- 
 ventions constitute a most important item of taxable property in 
 every state in the Union, and the right to tax such propert.y is be- 
 yond question. 
 
 In Bloomer vs. McQuewan (1852) 14 How. at 549, Chief Jus- 
 tice Taney said : "When the (patented) machine passes to the 
 
SCOPE OF RIGHTS. 
 
 COMMON LAW RIGHT. PAT«NT LAW RIGHT. 
 
 
 ^.1 
 
 Eh 
 
 Iz; 
 
 k^ O 
 
 H 
 
 ^s 
 
 < 
 
 PL4 
 
 as 
 
 2 S 
 
 2« 
 
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 ^H 
 
 O CQ 
 
 og 
 
 ""^ 
 
 P<3 0! 
 
 .5? 
 
 « 02 
 
 tf 
 
 ^<! 
 
 
 Op3 
 
 
 pqo 
 
 
 Sg 
 
 
 feE-" 
 
 
 
 
 
 sg 
 
 
 aw 
 
 
 HEh 
 
 $ 
 
 HM 
 
 
 h» 
 
 ^-2 
 
 5^ 
 
 |,^ 
 
 
 «5 
 
 03 
 
 ^ 
 
 S 
 
 
 «< 
 
 
 
 P4 w 
 
 
 \ S 
 
 To make or not to 
 make; or to permit 
 others to make. 
 
 To use or not to use; 
 or to permit others 
 to use, 
 
 To sell or not to sell; 
 or to permit others 
 to sell. 
 
 The thing 
 invented. 
 
 Right to, exclude every 
 one from making. 
 
 Right to exclude every- 
 one from using. 
 
 Right to exclude every 
 one from selling. 
 
 H 
 X 
 CD 
 
 E 
 i 
 
 H 
 UJ 
 
 I 
 I- 
 
 The thing 
 invented with- 
 out the paten- 
 tee's consent. 
 
 +-* .-4 
 
 So 
 
 SB 
 m a 
 
 «5 
 
 •" <s> . 
 
 °-^ & 
 
 O 
 
 SI 
 
 O t3 
 
 ^ ■ 
 
 'o A 
 u o 
 o u . 
 i«l tJ to 
 
 o ja 
 *H ".$? 
 °^- 
 
 <u "^ ? 
 
 S <" "" 
 
 FOR AUTHORI- 
 TIES SEE 
 TABLES. 
 
 BY REVENUE LAWS: 
 
 Can tax articles embodying Cannot tax right to ex- 
 patented inventions. elude. 
 
 BY LAW OF ^^CV-'^Z^ri^^oly^rlt:^''^-'''' '^'' ''^ ^^""^ ''^ 
 
 ed inventions. 
 
 TION: 
 
 exclude. 
 
 RY A^t^TPNMFNT-:? FOR General assignment for the 
 
 ^^xT^i!?^ 7^^ , D^T? benefit of creditors trans- Does not transfer right to 
 
 ITOR^ f^*"^ articles embodying exclude. 
 
 iiUKb. patented inventions. 
 
 BY POLICE POWER OF ^^fi 3^!^t^H t? w^if^i= Cannot, suppress right to 
 THE STATES: unpSed articret " «^'=^"'^^- 
 
 No original jurisdiction 
 BY JURISDICTION OF over questions pertain- Exclusive jurisdiction over 
 THE FEDERAL ingto patented articles questions concerning 
 COURTS. or contracts concerning right to exclude, 
 
 same. 
 
 SUITS FOR INFRINGE- 
 MENT: 
 
 ASSIGNMENT 
 WHOLE RIGHT: 
 
 O F 
 
 ASSIGNMENT O F 
 UNDIVIDED INTER- 
 EST: 
 
 Regulated exclusively by 
 the Patent Law. 
 
 Regulated exclusively by 
 the Patent Law. 
 
 Regulated exclusively by 
 the Patent La*. 
 
 ASSIGNMENT 
 WHOLE RIGHT 
 TERRITORY: 
 
 LICENSE TO USB: 
 
 O P Regulated exclusively by 
 
 FOR - the Patent Law. 
 
 Rights of the parties de- Until License is legally 
 termined exclusively by withdrawn right to ex- 
 the Common Law. elude is suspended. 
 
 Rights of the parties de- Until License is legally 
 LICENSE TO MAKE AND termined exclusively by withdrawn right to ex- 
 USE: the Common Law. elude is suspended. 
 
 Rights of the parties de- Until License is legally 
 LICENSE TO MAKE termined exclusively by withdrawn right to ex- 
 USE AND SELL: 
 
 the Common Law. 
 
 elude is suspended. 
 
 The manufacture and sale 
 MAKING AND SELLING Rights of the vendor and of the thing invented 
 OR AUTHORIZING purchaser are controlled 
 ANOTHER 10 MAKE exclusively by the Com- 
 AND SELL: mon Law. 
 
 irrevocably waives the 
 right to exclude pur- 
 chasers from using the 
 specimen sold. 
 
 I. 
 II. 
 
 III. 
 
 IV. 
 
 VI. 
 
 VII. 
 
 VIII. 
 
 IX. 
 
 XI. 
 
 XII. 
 
 XIII 
 
TAXATION AND THE PATENT RIGHT. 19 
 
 hands of the purchaser, it is no longer within the limits of the 
 monopoly. 
 
 The implement, or machine becomes his private individual 
 property, not protected by the laws of the United States, but by the 
 laws of the state in which it is situated. Like other individual prop- 
 erty, it is then subject to state taxation and from the great num- 
 ber of patented articles now in use, they no doubt, in some of the 
 states, form no inconsiderable portion of its taxable property." 
 
 In Webber vs. Virginia (1880) 103 U. S. 344, Mr. Justice 
 Field said: "The right conferred by the patent laws of the United 
 States to inventors to sell their inventions and discoveries does not 
 take the tangible property in which the invention or discovery may 
 be exhibited or carried into effect from the operation of the tax and 
 license laws of the state." Again: "It is only the right to the in- 
 vention or discovery, the incorporeal right, which the state can- 
 not interfere with." 
 
 II. 
 
 The authorities to the point that a state cannot tax the incor- 
 poreal, patent right, — the right too exclude are too numerous for 
 quotation. 
 
 We will select a few of the decisions which discuss the point 
 in a manner that throws light on the distinction we are seeking to 
 point out. A very clear and forceful case is 
 
 In re Sheffield (1894 C. C. Ky.) 64 Fed. 833. 
 
 A Kentucky statute provided that "all itinerant persons vend- 
 ing lighting rods, patent rights or territory for the sale, use or 
 manufacture of patent rights shall be deemed peddlers." 
 
 Another provision was "vendors of patent rights or territory 
 for the sale of patent rights or patent articles shall pay double" the 
 amount of the ordinary license fee. Observe the legislature entire- 
 
20 RIGHTS OF A PATENT OWNER. 
 
 ly overlooked the distinction between a "patent right" and "patent 
 articles" although the Supreme Court of that state in the case of 
 Patterson vs. Commonwealth (1875) 11 Bush (Ky.) 311 had 
 pointed out the distinction with more than ordinary lucidity. 
 "There is a manifest distinction between the right of property in 
 the patent, which carries with it the power on the part of the pa- 
 tentee to assign it, and the right to sell the property resulting from 
 the invention or patent," said the Court. 
 
 Moreover the statute quoted above is a meaningless Jumble of 
 words. How can there be a "manufacture of patent rights?" Evi- 
 dently the counsel for the petitioner had not read the decisions of 
 the Supreme Court in vain. For his client had obtained a license 
 to sell the patented article but declined to take out a license to sell 
 the patent right. This state of the facts presented the naked ques- 
 tion as to the right of a state to tax the disposition or sale of the 
 patent franchise. The court held that the Legislature of Kentucky 
 had not the power to tax the right to exclude. The court clearly 
 distinguishes between the right to exclude and the right to sell a 
 chattel or an article embodying the invention. 
 
 The .opinion is highly instructive; after discussing and conced- 
 ing the right of the state to tax patented articles the court sums 
 up, p 836. "But the patent right itself, i. e., the right to exclude- 
 all others from the manufacture, use or sale of the invention or 
 discovery, which is a grant by the United States cannot be taxed 
 by a state." 
 
 This same statute, a year later was declared invalid by the Su- 
 preme Court of Kentucky in 
 
 Commonwealth vs. Petty (1895) 96 Ky. 453. Said the court: 
 "A patent right is not a tangible property. It is an incorporeal 
 right. The patent secures to the patentee the exclusive right in the 
 discovery." After commenting on the cases the court continues. 
 
 "While the states have jurisdiction to legislate on the matter 
 
TAXATION AND irfB PATENT RIGHT. 21 
 
 of the use or sale of the article which is brought into existence by 
 virtue of the application of the patented process, it is an invasion 
 of national authority for the legislature of a state to make a law 
 which requires the patentee or his vendee to first procure and pay 
 for a license to sell his right in his discovery — ^hisi, intangible right, 
 or the territory in which such right is granted. In so far as the 
 statute attempts this it is in conflict with the law of Congress." 
 
 To the same effect read. 
 
 Ex parte Robinson (1870) 2 Bissell 309. 
 
 State vs. Butler (1879) 3 Lea. (71 Tenn.) 222. 
 
 People ex rel vs. Assessors (1898) 156 N. Y. 417. 
 
 People vs. Johnson (1899) 159 N. Y. 70 (copyright). 
 
 There are many cases involving this question in 'Pennsylvania. 
 The decisions in these cases apparently announce the correct re- 
 sult, but in every instance the writer of the opinion exhibits a con- 
 fused conception of the nature of the patent franchise. 
 
 The opinions throughout betray the fact that the court does 
 not clearly and precisely apprehend the wide difference between the 
 incorporeal, intangible right to exclude others which is the thing 
 granted by Congress, and the tangible property in machines or ar- 
 ticles embodying the invention. The decisions are too numerous 
 for isolated comment. 
 
 The citations are as follows: 
 
 Com. vs. Telephone Co. (1891) 145 Pa. St. 121. 
 
 Com. vs. Ed. El. L. Go. (1891) 145 Pa. St. 131. 
 
 Com. vs. Philadelphia Co. (1891) 145 Pa. St. 142. 
 
 Com. vs. Westinghouse Co. (1892) 151 Pa. St. 265. 
 
 Com. vs. Westinghouse Co. (1892) 151 Pa. St. 276. ; 
 
 Com. vs. Philadelphia Co. (1893) 157 Pa. St. 527. 
 
 Com. vs. Ed. El. L. Co. (1893) 157 Pa. St. 529. 
 
22 RIGHTS OF A PATENT OWNER. 
 
 TABLE II. 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has two Distinct and Separate Rights: 
 
 I. Common Law Right, to make, use and sell. 
 II. Patent Law Right, to exclude others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 
 By 
 
 Common Law as to Executions. 
 
 I. 
 
 Articles, devices or machines embodying inventions protected 
 
 by patents are subject to sale under' execution, the same as any 
 
 other personal property. 
 
 II. 
 The incorporeal right, being the right to exclude others, which 
 is the essence of the patent franchise cannot be sold under execu- 
 tion at common law. 
 
 There is little authority as to the right to levy upon and sell 
 under execution, patiented articles. The point is not. contestable. 
 The thing is done every day, and the right cannot be questioned. 
 
 Typewriters, automobiles, sewing machines, piajnolas, farm- 
 ing implements, aU embodying divers patented inventions, are levied 
 upon and sold every day in all the states and this too without a 
 
EXECUTIONS AND THE PATENT RIGHT. 23 
 
 questioning of the right. However the point has been contested 
 occasionally but unavailingly. 
 
 Thus in 
 
 Wilder vs. Kent (1883) 15 Fed. -317. 
 
 The plaintiff, a patentee, had in his possession and owned a 
 machine which he had made embodying and externalizing his 
 patented invention. 
 
 The machine was sold by the sheriff under execution issued 
 on a judgment against the plaintiff and the defendant purchased 
 the. same at the execution sale. Thereupon the plaintiff sued the 
 defendant for infringement of his patent. This suit was brought 
 in the year of our Lord 1883, so it is painfully obvious thatl all of 
 the gigantic labors of the great men on the bench of the Supreme 
 Court extending over a period of 40 years, in the attempt to ex- 
 pound the nature of the patent franchise were completely without 
 effect on the ingenious counsel for the complainant. 
 
 The court held the defendant was not liable for infringement 
 because of his use of the machine. 
 
 Said the court: 
 
 "The purchaser of a machine from the patentee acquires no 
 right in the patent itself, and needs none to enable him to enjoy 
 his acquisition x x. It is very true that the patent right itself, being 
 incorporeal and resting exclusively upon statutory grant cannot be 
 levied upon at law. But a patenteed machine is susceptible of man- 
 ual seizure, and the unrestricted sale thereof does not involve the 
 transfer of any interest in the patent." But the gratuitous qual- 
 ifications and cautious hesitation of the court evince the fact that 
 this result was reached with great effort and with a dim appre- 
 hension of the compelling principles underlying the case. 
 
 The court says: "By implication he (the purchaser) is invested 
 with a license to use that particular machine, and, in the absence 
 of express stipulation to the contrary, such license passes with the 
 
24 RIGHTS OF A PATENT OWNER. 
 
 tnachine to successive owners as an incident of proprietorship." 
 
 This mischievous fiction is eternally cropping out. Consistency 
 in this class of cases ought to be prized as a jewel whenever found. 
 The court had just said: "The purchaser of a machine from the. 
 patentee acquires no rights in the patent itself, and needs none to 
 enable him to enjoy his acquisition." Well, then, why not draw 
 the inescapable corrolary from this proposition and say in us- 
 ing the' machine so purchased he does not invade any right granted 
 to the patentee? Instead the court talks about an implied license. 
 But there is no license whatever, either express or implied. A 
 license is a permission given to the licensee to use or enjoy some- 
 thing that belongs to the licensor. Without the license the licensee 
 cannot' use the thing because it is not his. 
 
 But a supposed implied license from a vendor to a vendee 
 authorizing the latter to use what he has bought and paid for is an 
 unspeakable monstrosity. 
 
 Suppose one buys a peck of potatoes from the grocery man, is 
 it necessary metaphysically to posit an implied license to justify 
 the purchaser's act in eating the potatoes or planting them in his 
 garden? We shall have to contend with this sort of slovenly 
 thought and cloudy perception throughout this exposition. At the 
 proper place, however, it will vanish into thin air. 
 
 In the first place the court had no jurisdiction of this case, for 
 no patent right was involved. After committing the capital blun- 
 der of assuming jurisdiction where there was none, the court 
 might have disposed of the whole matter in less than ten lines 
 Irom the great case of 
 
 Bloomer vs. McQuewan, cited supra. 
 
 There the Chief Justice said : "The purchaser of the (patented) 
 implement or machine, in using it exercises no rights created by the 
 Act of Congress, nor does he derive title to it by virture of the 
 franchise or exclusive privilege granted to the patentee." 
 
EXECUTIONS AND THE PATENT RIGHT. 25 
 
 And this proposition was not novel or questionable; in Bloomer 
 vs. Millinger (1863) 1 Wall, 340, after repeating it the Supreme 
 Court give this additional twist to the persistency of counsel : "Con- 
 sidering that the question has been several times decided by this 
 court, we do not think it necessary to pursue the investigation." 
 
 To the same effect as the case of 
 
 Wilder vs. Kent, see 
 
 Chapin vs. Rosenthal (1874) 1 Weekly Notes Cas. (Pa.) 106. 
 
 II. 
 
 The authorities to the effect that a patent right or coyright 
 is not subject to seizure and sale under execution at law are copious 
 and unvarying. We will consider a few of them. 
 
 In Stephens vs. Cady (1853) 14 How 538, the plaintiff was the 
 owner of a copyright for a map of Rhode Island. A judgment was 
 recovered against him in the state court in Massachusetts, upon 
 which an execution was issued and the copper plate engraving of 
 the map was seized and sold and bought by the defendant. 
 
 Thereupon the defendant set about using the plate to produce 
 copies of the map and the plaintiff brought suit for infringement 
 of the copyright. Here then the court recognized the novel ques- 
 tion "whether or not the property acquired by the defendant in the 
 copperplate, at the sheriff's sale, carried with as an incident the 
 right to print and publish the map engraved upon its face." 
 
 The opinion was written by Mr. Justice Nelson who dissented 
 in the case of Bloomer vs. McQuewan (reported in same volume 
 and the second case succeeding the one under consideration). 
 
 In this case he constantly confuses the right to publish, which 
 is derived from the common law and the right to exclude others 
 from pubUshing which is derived from the patent law. But the 
 
26 RIGHTS OF A PATENT OWNER. 
 
 confusion here did not affect the proper disposition of the case. ' 
 
 Thus, "We are satisfied that the property acquired by the sale 
 in the engraved plate, and the copy right of the map secured to 
 the author under the Act of Congress are altogether different and 
 independent of each other, and have no necessary connection. The 
 <:opyright is an exclusive right to the multiplication of the copies, 
 disconnected from the plate or any other physical substance." The 
 last sentence is not accurate. The copyright, is not an exclusive 
 right, but is only a right to exclude. 
 
 The distinction may be characterized as subtle, nevertheless 
 it is profound and far reaching, 
 
 "The engraved plate and the press are the mechanical instru- 
 ments, or means by which the copies are multiplied. And to say 
 that the right to print and publish the copies, adheres to and passes 
 with the means by which they are produced, would be saying in 
 effect, that the exclusive right to make any given work of art 
 necessarily belonged to the person who happened to become the 
 owner of the tools with which it was made: and, yet we suppose 
 that the statement of any such pretension is so extravagant as to re- 
 quire no argument to refute it." Again, the confusion reappears,, 
 in what follows. "The copperplate engraving, like any other 
 tangible personal property is the subject of seizure and sale on exe- 
 cution, and the title passes to the purchaser, the same as if made 
 at a private sale. But the incorporeal right, secured by statute to 
 the author, to multiply copies of the map, by the use of the plate, 
 being intangible and resting altogether in grant, is not the subject 
 of seizure or sale by means of this process, — certainly not at com- 
 mon law." 
 
 The trouble with this sentence is that it is not the fact that the 
 statute did secure to the author the right to multiply copies of the 
 map by the use of the plate or by any other method. That was a 
 
EXECUTIONS AND THE PATENT RIGHT. 27 
 
 right which the author had independent of the copyright statute,, 
 anterior to the enactment and which would not be affected in the 
 slightest by the repeal of that statute. . 
 
 Authors multiplied copies of their books for hundreds of years 
 before any copyright law was dreamed of. The statute gives the 
 author the right to exclude others and this is all that it gives him.. 
 In this case the ownership of the copperplate had not the 
 slightest thing to do with the copyright. It was a mere accident 
 that the plate contained an impression of the map. 
 
 The defendant might as well have contended that by purchasing. 
 a saw and hammer from a patentee he thereby would obtain the. ' 
 right to make a specimen of the patentee's invention. The impor- 
 tant thing to note is that the plate was not the subject of the 
 copyright. It was the map that was copyrighted. The defendant 
 might have made or purchased a dozen of the plates but neither 
 he or anyone else could print the maps without the plaintiff's con-'- 
 sent, because the copyright gave the plaintiff the right (not to mul- 
 tiply copies but) to exclude others from making copies. 
 
 There can be no doubt of the soundness of the court's conclu- 
 sion that there cannot be a levy upon the incorporeal right granted, 
 by the copyright statute. However it is to be regretted that the 
 court did not clearly propound the principle underlying. 
 
 The facts in the case of Stephens vs. Cady were again before 
 the court two years later in the case of 
 
 Stevens vs. Gladding (1854) 17 How 477. Here the matter was. 
 reargued and the prior decision reaffirmed in an opinion by Mr. 
 Justice Curtis. This opinion is luminous, and leaves nothing to- 
 be added. The court points out with studied precision and delib- 
 erate nicety the distinction between the copyright and the plate 
 sold. We will quote only a few sentences from the opinion. "Upon 
 the question of the annexation of the copyright to the plate, it isr 
 to be observed first, tha:t there is no necessary connection between. 
 
28 RIGHTS OF A PATENT OWNER. 
 
 them. They are distinct subjects of property, each capable of ex- 
 isting and being owned and transferred, independent of the other. 
 It was lawful for any one to make, own and sell this copper plate." 
 (note that). Again, "The right in question (i. e. copyright) is not 
 parcel of the plate levied on, nor a right merely appendant or ap-( 
 purtenant thereto; but a distinct and independent property, sub- 
 sisting in grant from the government of the United States, not an- 
 nexed to any other thing, either by the act of its owner or by opera-^ 
 tion of law." 
 
 It is difficult to imagine how the court could have made a clear- 
 ■er exposition of the matter than this. 
 
 The sole right granted by the copyright statute was the right 
 to exclude others from publishing and selling the map. This ex- 
 clusory right the plaintiff still had in its entirety. The defendant 
 bad no part of it. The plaintiff could exclude every one from pub- 
 lishing or selling the map, and of course he could exclude the de-' 
 fendant. There cannot be any doubt about this meaning of the 
 decision. 
 
 The Supreme Court has cited it to this proposition. See Pat^ 
 terson vs. Kentucky (1878) 97 U. S. 501. 
 
 One has only to turn to; the citations in Rose's notes to see to 
 what miraculous uses this decision has been put. For instance in 
 
 Dark vs. Woodhouse (1879) 40 Mich. 399, the court held that 
 there could be no levy of an execution upon a set of manuscript 
 abstract book citing Stevens vs. Cady as authority! Publishing 
 Co. vs Smythe (1886) 27 Fed. 914 is perhaps the worst confusion 
 of the principle underlying this case that can be found. 
 
 For other decisions holding the patent or copyright franchise 
 is not subject to execution and sale at common law see 
 
 Ager vs. Murray (1881) 105 U. S. 136. 
 
 Carver vs. Peck (1881) 131 Mass 291. 
 
 Peterson vs. Sheriff (1896) 115 Cal. 211. , , 
 
GENERAL ASSIGNMENT AND THE PATENT RIGHT. a* 
 
 TABLE III. 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct and Separate Rights: 
 
 I. Common Law Right, to make, use and sell. 
 II. Patent Law Right, to exclude others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 
 By 
 
 Law of General Assignments for Benefit of Creditors. 
 
 I. 
 A general assignment for the benefit of creditors, under state 
 laws, transfers to the assignee patented as well as unpatented ar- 
 ticles. 
 
 II. 
 Such general assignment does not transfer the patent right. 
 
 I. 
 A general assignment for the benefit of creditors transfers pat- 
 ented articles or machines. We have found no decision on the 
 point, for it is too obvious to have been contested. But we see the 
 thing done every day. If a hardware dealer makes such an 
 assignment no one would think of questioning the title of the as- 
 signee to the patented machines, tools; the lawn mowers, drills, fire- 
 less cookers, safety razors, and other patented articles. Likewise 
 if an automobile company should make an assignment there can 
 be no doubt that the engines, motors, tires, speedometers, the steer- 
 ing apparatus — all of which is patented — would pass to the assignee. 
 Any day one can read in the papers legal advertisements by which 
 assignees offer to sell at public auction all manner of patented ar- 
 ticles. 
 
"30 RIGHTS OF A PATENT OWNER. 
 
 II. 
 
 On the other hand such general assignment does not reach the 
 incorporeal, intangible right to exclude others, which is the alpha 
 and omega of the patent franchise. Thus in the case of 
 
 Jewett vs. Atwood Suspender Co. (1900) 100 Fed. 647. 
 
 The plaintiff was an assignee for the benefit of creditors under 
 a statute of Vermont which declared such assignee vested with all 
 the property of the debtor, "real and personal, which he could have 
 lawfully sold, assigned or conveyed, or which might be taken on 
 •execution." 
 
 The assignor was the owner of a patent and the plaintiff, as 
 assignee, instituted an action against the defendant for infringe- 
 ment. The court held the action could not be maintained as the 
 plaintiff had no title to the patent. 
 
 Said the court: "A patent does not confer even the right to use 
 the invention. The inventor had that right before. It is merely 
 an incorporeal right to exclude others from using the invention, con- 
 ferred by the government upon compliance with certain require- 
 ments, and is transferable according to the laws of its creation 
 which the state statutes cannot affect. This is a personal right. 
 Patents can be reached under the bankruptcy law, because they are 
 wholly subject to the laws of the United States. 
 
 They cannot be reached otherwise for debts except by proceed- 
 ings which compel a personal assignment. 
 
 So the plaintiff does not appear to have had any patent to be 
 infringed." 
 
 In the case of 
 
 Ball vs. Coker (1909 C. C. S. C.) 168 Fed. 304. 
 
 A court of common pleas of South Carolina appointed the 
 plaintiff receiver of a patented process for hulling cotton with 
 express authority "to take charge of, manage and control the same, 
 
POLICE POWER AND THE PATENT RIGHT. 31 
 
 as fully and_ effectually as the owners thereof could do in such be- 
 half." Thereupon the plaintiff as such receiver instituted a suit for 
 infringement of the patent. 
 
 The answer of the defendants alleged that the plaintiff was not 
 the owner of the patent and was not entitled to bring the bill for 
 infringement. 
 
 The court sustained the contention of the defendants and dis- 
 missed the bill. The opinion is thorough going, discussing all the 
 authorities. It is too long for quotations. The following quota- 
 tion from Gayler vs. Wilder 10 How. 478, gives the gist of the 
 court's reasoning. "The (patent) monopoly did not exist "at com- 
 mon law, and the rights, therefore, which maj' be exercised under 
 it cannot be regulated by the rules of common law. It is created 
 by the act of Congress, and no rights can be acquired in it unless 
 authorized by the statute in the manner the statute prescribes." 
 
 To same effect see : 
 
 Ashcroft vs. Walworth (1872) Holmes 152; 
 Keach, Petitioner (1884) 14 R. I. 571; 
 Barton vs. White (1887) 144 Mass. 281. 
 
 TABLE IV. 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct Rights: 
 
 I. Common Law Right, to make, use and sell. 
 II. Patent Law Right, to exclude others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 
 By 
 
 The Police (or reserved) Powers of the States. 
 
32 RIGHTS OF A PATENT OWNER. 
 
 I. 
 
 The state can suppress the sale or use of an article, deleterious to 
 the general welfare, provided only there is no discrimination 
 against the sale or use of the article because of the fact that it em- 
 bodies a patented invention. 
 
 II. 
 
 The state cannot suppress or condition the right to exclude 
 others. 
 
 I. 
 
 On these points the authorities are numerous and those in the 
 state courts are conflicting because of the failure (of both legis- 
 latures and courts) to distinguish between the patent right and a 
 patented article. 
 
 However decisions of the Supreme Court clearly demark the 
 two property rights. 
 
 The most instructive case is 
 
 Patterson vs. Commonwealth (1875) 11 Bush (Ky.) 311, S. C. 
 (1878) 97 U. S. 501. 
 
 In this case the defendant owned a patent on an illuminating 
 oil. A statute of Kentucky regulating the inspection and sale of 
 oil, made it a misdemeanor for any one to sell or offer for sale an 
 oil that would ignite below 130 degrees Fahrenheit. The defen- 
 dant's patented oil had the characteristic of igniting below that tem- 
 perature and in consequence of his offering it for sale he was in-^ 
 dieted, convicted and fined. He appealed to the Court of Appeals of 
 Kentucky and the conviction was upheld by that court. 
 
 The court made a truly lucid exposition of the law. This 
 language is employed : 
 
 "There is a manifest distinction between the right of property 
 in the patent which carries with it the power on the part of thq 
 patentee to assign it and the right to sell the property, 
 resulting from the invention or patent. A state has no power 
 
POLICE POWER AND THE PATENT RIGHT. 33 
 
 to say through its legislature that the patentee shall not sell 
 his patent, or that its use shall be common to all of its citizens; for 
 this would be in direct conflict with the law of Congress. The dis- 
 covery or invention is made property by reason of the patent, and 
 this right oi property the patentee can dispose of under the law 
 of Congress, and no state legislation can deprive him of this right; 
 but when the fruits of the invention or the article made by reason 
 of the application of the principle discovered is attempted to be sold 
 or used within the jurisdiction of a state, it is subject to its laws, 
 like other property; and such has been the uniform decision of all 
 the courts, state and federal, upon this question." 
 
 The defendant obtained a reinfoircement of counsel and took 
 the cause on a writ of error to the Supreme Court. 
 
 There Mr. Justice Harlan delivered the unanimous opinion of 
 the court which was in part as follows : 
 
 "The right of property in the physical substance, which is the 
 fruit of the discovery,, is altogether distinct from the right in the 
 discovery itself. Just as the property in the instruments or plate 
 by which copies of a map are multiplied is distinct from the copy-' 
 right of the map itself. The right to sell the (defendant's) Aurora 
 oil was not derived from the patent; that right existed before the 
 patent and, unless prohibited by valid local laws, could have been 
 exercised without the grant of letters patent, (black type ours,). 
 The right which the patent primarily secures is the exclusive right 
 in the discovery, which is an incorporeal right, or, in the language 
 of Lord Mansfield, in Millar vs. Taylor 4 Burr 2303, a property in 
 a notion which has no corporeal tangible substance. The enjoy- 
 ment of that incorporeal right may be secured and protected by na- 
 tional authority against all hostile state legislation; but the tangible 
 property which comes into existence by the application of the dis- 
 covery is not beyond the control as to its use of state legislation, 
 simply because the inventor acquires a monopoly in the discovery." 
 
Si RIGHTS OP A PATENT OWNER. 
 
 The court then quotes with approval the following language 
 from a decision of the Supreme Court of Ohio. 
 
 'Although the inventor had at all times the right to enjoy the 
 Iruits of his own ingenuity, in every lawful form of which its use 
 Avas susceptible, yet, before the enactment of the statute, he had 
 not the power of preventing others from participating in that en- 
 joyment to the same extent with himself; so that, however the 
 world might derive benefit from his labors, no profit ensued to him- 
 self. 
 
 The ingenious man was, therefore, led either to abandon pur- 
 suits of this nature, or to conceal his results from the world. The 
 end of the statute was, to encourage useful inventions and to hold 
 forth, as inducements to the invention, the exclusive use of his in- 
 vention. 
 
 The sole operation of the statute is to enable him to prevent 
 iQthers from using the products of his labors except with his consent. 
 But his own right of using is not affected or enlarged." (black type 
 ours). 
 
 The case of 
 
 Webber vs. Virginia (1880) 103 U. S. 344 is highly instructive. 
 "The legislature of Virginia had enacted a statute providing that 
 any person selling or offering for sale the manufactured articles or 
 anachines of other states or territories, unless he be the owner 
 thereof or take orders therefor on commission should be deemed an 
 agent and further made it a penal offense to act as such agent with- 
 out first obtaining a license for that purpose. 
 
 The defendant was convicted for selling without a license a 
 Sifiger sewing machine which was manufactured out of the state and 
 protected by letters patent. 
 
 The only defense seriously pressed was that the defendant was 
 acting as an agent for the Singer Manufacturing Company which 
 
POLICE POWER AND THE PATENT RIGHT. 35 
 
 held a patent, "authorizing it to manufacture and sell them (the 
 machines) anywhere in the United States." 
 
 It is indeed remarkable that the defendant should have rested 
 his cause on this ground in the teeth of the decision in the case of 
 Patterson vs. Kentucky supra. The Supreme Court declared the 
 statute invalid because it imposed a restraint on interstate com- 
 merce. But this point was taken by the court of its own motion. In 
 the report of the case below (33 Grattan 898), this defense was 
 mooted but not urged as decisive. 
 
 As to the defense resting on the patent grant, the court said: 
 
 "The legislation respecting the articles which a state may adopt 
 after the patents have expired, it may equally adopt during their 
 continuance. 
 
 It is only the right to the invention or discovery, the incor- 
 poreal right which the state cannot interfere with. 
 
 Congress never intended that the patent laws should displace 
 the police powers of the states, meaning by that term those powers 
 by which the health, good order, peace and general welfare of the 
 community are promoted. The patent for a dynamite powder does 
 not prevent the state from prescribing the conditions of its manu- 
 facture, storage and sale, so as to protect the community from the 
 danger of explosion. A patent for the manufacture and sale of a 
 deadly poison does not lessen the right of the state to control its 
 handling and use." Of course the argument of the defendant that 
 the state could not tax the machine because it was patented, if up- 
 held, would inexorably lead to the conclusion that the state cannot 
 tax any patented article. 
 
 The case of 
 
 In re Brosnahan (1883) 18 Fed. 63, deserves conspicuous notice 
 as a decision of Mr. Justice Miller after his elevation to th« Su- 
 preme Court. 
 
36 RIGHTS OF A PATENT OWNER. 
 
 The petitioner was convicted of selling oleomargarine in vio- 
 lation of a penal statute of Missouri. He was sentenced to jail and 
 sued out a writ of habeas corpus on the ground that the statute 
 under which he was indicted was unconstitutional. The invalidily 
 of the statute was posited on the fact that' the petitioner was the 
 owner of a patent protecting the thing ofiEered for sale. The court 
 made short work of this contention. 
 
 "The validity of the patent is not disputed. Has the prisoner, 
 then a right to sell the article thus patented, natwithstanding the 
 statute of Missouri which forbids such sale? It is to be observed 
 that no constitutional or statutory provision of the United States 
 was, or ever has been, necessary to the right of any person to make 
 an invention, discovery or machine, or to use it when made or to 
 sell it to some one else. Such a right has always existed, and would 
 exist now if all patent laws were- repealed. It is a right which may 
 be called a natural right, and which so far as it may be regulated by 
 law, belongs to ordinary municipal legislation; and it is unaffected 
 by anything in the constitution or patent laws of the United States. 
 
 The sole object and purpose of the laws which constitute the 
 patent and copyright system is to give to the author and the in- 
 ventor a monopoly of what he has written or discovered, that no 
 one else shall make or use or sell his writings or his invention with- 
 out his permission ; and is granted to him as the exclusive right ; not 
 the abstract right, but the right in him to the exclusion of every 
 body else. For illustration, an author who had written or printed 
 a book always had the right to do so, and to make and sell as many 
 copies as he pleased; and he can do this though he takes out no 
 copyright for his work. But if he wishes to have the benefit of the 
 exclusive right to do this, he can get it by securing a copyright. All 
 that he obtains, then, by his copyright, all that he asks for or nee(te 
 and all it was designed to confer on him is to make the right which 
 he had already in common with everybody else, an exclusive right 
 
POLICE POWER AND THE PATENT RIGHT. 37 
 
 in him — a monopoly in which no one can share without his per- 
 mission. 
 
 But let us suppose that the book which he has thus copyrig-hted 
 is an obscene and immoral book, which by the law of the state in 
 which it is published, may be seized and destroyed and for that 
 reason ; does this statute, which forbids anyone else but him to print 
 or publish it, authorize him to do so? Can he violate the law be- 
 cause no one else can do it? Does the copyright confer on him a 
 monopoly of vice and an immunity from crime? Suppose a discov- 
 ery of a cheap mode of producing intoxicating liquor, in regard to 
 which the inventor obtains a patent for the product; does this au- 
 thorize him to defy the entire system of state legislation for the sup- 
 pression of the use of such drinks? The answer is that the pur- 
 poses of the patent law and of the constitutional provision are an- 
 swered when the patentee is protected against competition in the 
 use of his invention by others; and when the law prevents others 
 from infringing on his exclusive right to make, use or sell its ob- 
 ject is accomplished, (black type ours). This proposition is fully 
 supported by the Supreme Court in the case of Patterson vs. Ken- 
 tucky." 
 
 The case of 
 
 Palmer vs. The State (1883) 39 Oh, St. 336 also involved the 
 validity of a statute regulating the sale of patented oleomargarine. The 
 court held the statute a valid exercise of the police powers of the 
 state. In the course of the opinion the court said: 
 
 "The patent laws of the United States give to inventors the 
 exclusive right to their inventions, but do not give to them the right 
 to disregard laws enacted to promote the welfare of the whole peo- 
 ple. The state cannot discriminate against patented articles by im- 
 posing upon their sale conditions and restrictions not placed upon 
 the sale of other similar articles ; but the sale of all articles like those 
 now under consideration, whether patented or not, may be re- 
 
38 RIGHTS OF A PATENT OWNER. 
 
 stricted, regulated or forbidden, whenever the public good requires 
 such restriction, regulation and prohibition." 
 
 In the case of People vs. Russell (1883) 49 Mich. 617, the de^ 
 fendant was prosecuted for peddling a clothes wringer from door 
 to door without having first obtained a peddler's license as required 
 by a town ordinance. It is not surprising to learn, after what has 
 gone before, that the defense interposed was that the clothes wring- 
 er was patented. The opinion was written by Judge Cooley who 
 did not have to strain his clear vision to penetrate the sophistry here 
 paraded, 
 
 "The ordinance in question does not assume to interfere with 
 or in any way to abridge, the exclusive rights which the patentee 
 may lay claim to under his patent. The ordinance is a police regu- 
 lation, made under the general police authority of the State, and tak- 
 ing no notice of this or any other patent, or of the way in which any 
 salable commodity may have come into existence. It is one of the 
 customary regulations of a business. 
 
 The acts of Congress assume the existence of State regulations 
 and in many respects would prove inoperative and confusing if it 
 were otherwise. The patent laws are as forcible for illustration as 
 any other: They give exclusive rights, but they do not determine 
 personal capacity to contract, or prescribe the requisite for sales of 
 patented articles, or impose the customary restrictions which are 
 supposed to be important to the protection of public morals. AH 
 these matters are left to the State law. A patentee must observe 
 the Sunday law as much as any other vendor; he must put his con- 
 tracts in writing under the same circumstances which require writ- 
 ings of others, and he must obey all other regulations of police 
 which are made for general observance." (black type ours). 
 
 Kindred to the above cases are two other groups of decisions 
 which might be employed further to elucidate the distinction be- 
 tween the patent right and a chattel embodying the patented inven- 
 
POLICE POWER AND THE PATENT RIGHT. 39i 
 
 tion. One group of these cases deal with the right of a 
 state to regulate the charges for the use of a patented 
 appliance, such as a telephone, when put to a public use- 
 and the other group deals with the transfer of patent rights 
 and the validity of promissory notes given in payment therefor. 
 Both group of cases are confused and unsatisfactory in the reason- 
 ing advanced to justify the result set up. Thus in the rate fixing 
 cases the process of reaching the conclusion is this: when the pat- 
 entee dedicates his appliance to a public use he must submit to the 
 power of the state to control and regulate the exercise of a public 
 franchise. 
 
 This form of statement is misleading and fallacious. It implies 
 that it is only because the patentee has put his appliance to a pub- 
 lic use that he is subject to be controlled as to the rates charged, and 
 that so long as he does not do so he is not amenable to the state 
 laws but may do with his patented article as he pleases. But this 
 is not true. 
 
 We have just seen that the state may make any regulation as 
 to the sale or use of patented articles that it can make in the case 
 of unpatented articles. In the railway rate cases what would be 
 thought of a lawyer who would contend that the State had no power 
 to fix rates because the equipment comprised patented air brakes, 
 patented smoke arresters, patented block signals and such like? 
 Does anyone imagine that when the Interstate Commerce Commis- 
 sion shall attempt to established a rate for a common carrier that 
 it is thereby invading a right of the patentees of the hundreds of 
 improved appliances used on the road? 
 
 In every rate fixing case only two questions are presented. 1st. 
 Has the state any power whatever to regulate rates? This ques- 
 tion puzzles no one who has ever read the case of Munn vs. Illi- 
 nois. 2nd. Is the statute a reasonable regulation? Does it al- 
 low a fair remuneration for the service rendered ? Whether, or not 
 
40 RIGHTS OP A PATENT OWNER. 
 
 the instrumentalities employed embody patented inventions is an 
 utterly irrelevant circumstance. 
 
 The group of cases dealing with promissory notes given in pay- 
 ment of the purchase price of a patent right or of a patented article, 
 is even more ■tmsatisfactory, for neither the state courts nor the 
 legislatures observe the distinction between the patent franchise and 
 a specimen of merchandise embodying the patented invention. The 
 two are placed in the same category and attempted to be subjected 
 to the same control. One phase of the question has been settled for 
 the present at least by the Supreme Court in the cases of 
 
 Allen vs. Riley (1906) 203 U. S. 347, and 
 
 Woods vs. Carl (1906) 303 U. S. 358. 
 
 These decisions are binding as authorities but the reasoning of 
 the court does not appear to be compelling. 
 
 Already too much space has been given to this topic, though it 
 is important. From the foregoing these deductions would seem to 
 follow: A state in the exercise of its police powers can entirely sup- 
 press the use or sale of an article whether patented or not: can com- 
 pel the vendor of an article to take out a license whether he be a 
 patentee or not: can regulate the charges for the use of an appliance 
 devoted to a public use, whether the appliance is patented or unpat- 
 ented: as Mr. Justice Field puts the matter: "The legislation re- 
 specting the articles which a state may adopt after the patents have 
 «xpired, it may equally adopt during their continuance." 
 
 Indeed, then let us put this problem, The anti-trust acts of the 
 various states are all adopted in the exercise of the reserved or po- 
 iiee powers: These statutes all declare contracts, agreements, in re- 
 straint of trade to be not only illegal and void but criminal. Is it 
 possible to escape the unbending logic of the Supreme Court and 
 "hold that these anti-trust acts do not apply to restraints of trade in 
 patented articles? We simply moot the question and pass on. It 
 is distinctly worth while to reflect on it. 
 
POLICE POWER AND THE PATENT RIGHT. 41 
 
 II. 
 
 The states have no power to limit or suppress the incorporeal 
 intangible right to exclude others which is the sole benefit of the 
 patent grant. Authority on this point is quite meager for the thing 
 has seldom been attempted. 
 
 In Patterson vs. Commonwealth cited supra the court of ap- 
 peals of Kentucky said, "The discovery or invention is made prop- 
 erty by reason of the patent and this right of property the patentee 
 can dispose of under the law of Congress and no state legislation 
 can deprive him of this right." 
 
 In the same case on appeal to the Supreme Court Mr. Justice 
 Harlan said: 
 
 "The enjoyment of the incorporeal right may be secured and 
 protected by national authority against all hostile state legislation." 
 
 In Webber vs. Virginia, Mr. Justice Field said : "It is only the 
 right to the invention or discovery, the incorporeal right which the 
 state cannot interfere with." 
 
 Of course the most frequent exercise of the right to exclude is 
 in bringing infringement suits. This is a right created and con- 
 trolled by the Federal Government. There are many cases in which 
 state courts have been called upon to pass upon questions of in- 
 fringement but almost invariably they have declined. One excep- 
 tion has been noted and it is too remarkable to pass unnoticed. It 
 is a truly wonderful manifestation of the police power. The case is 
 
 Vanini vs. Paine (1833) 1 Harrington (Del.) 65. Plaintiffs 
 were assignees for the State of Delaware of a patent on a device for 
 drawing lottery tickets. They brought suit in the state courts to 
 enjoin the defendants from using a device alleged to infringe that 
 described in the letters patent. 
 
 There was in Delaware a statute forbidding lotteries. The 
 court after referring to this statute said, "It cannot therefore, be 
 
42 RIGHTS OF A PATENT OWNER. 
 
 admitted that the plaintiffs have a right to use an invention for 
 drawing lotteries in this state merely because they have a patent for 
 it under the United States. A person might with as much propriety 
 claim a right to commit murder with an instrument because he held 
 a patent for it as a new and useful invention." 
 
 This is quite a forceful illustration but it is not in point. The 
 plaintiffs were not seeking to use any invention; they were seeking 
 to exclude the defendants, which they had an irrefragable right to do^ 
 any state statute to the contrary. The court not only missed the 
 only point in the case but committed the unpardonable blunder of 
 adjudicating upon the rights of the parties when it had no jurisdic- 
 tion whatever. 
 
 The court said "the question of jurisdiction has been elaborately 
 argued" but the court deemed "it unnecessary to express an opinion" 
 on the point! The court had no jurisdiction, declined to discuss the 
 question. Then assumed jurisdiction and denied the plaintiff's right 
 of recovery in violation of the express letter of the supreme law of 
 the land! 
 
 TABLE V. 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct and Separate Rights. 
 
 I. Common Law Right, To Make, Use and Sell. 
 II. Patent Law Right, To exclude others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 By 
 Jurisdiction of the Courts. 
 I. 
 The Federal courts have no jurisdiction (apart from that based 
 on diversity of citizenship and the amount in dispute) of a case in- 
 volving the common law rights of the owner of a patent. 
 
JURISDICTION OP THE PATENT RIGHT. 45 
 
 II. 
 The Federal courts have exclusive jurisdiction over a case in- 
 volving the right of the owner of a patent to exclude others, and this 
 is true regardless of the amount involved or the citizenship of the 
 parties to the suit. 
 
 I. 
 We desire carefully to guard against a discussion of the dif- 
 ficult question of jurisdiction. A brief consideration of a few of the 
 cases will suiBce. 
 
 The decisions are numerous and of the utmost perplexity. 
 However the difficulty is altogether in the application of the rule 
 and not in formulating a correct statement of the principle under- 
 lying. The sole purpose of touching upon the vexed question here 
 is further to elucidate the distinction between the two rights en- 
 joyed by the owner of a patent. We shall stick closely to the de- 
 cisions of the Supreme Court, for nothing but confusion would re- 
 sult from attending to cases in the subordinate courts and proposi- 
 tions of the text writers. 
 
 Dale Tile Mfg. Co. vs. Hyatt (1887) 135 U. S. 46. The plam- 
 tiflf was the owner of a patent for an improvement in illuminated 
 basements and basement extensions. 
 
 She entered into an agreement with the defendant whereby the 
 latter was licensed to make and sell the invention during the full 
 term, of the patent and any extension thereof in certain states and 
 districts : and the plaintiff agreed not to manufacture herself or to li- 
 cense others to manufacture within the same the territory. 
 The defendant acknowledged the validity of the letters patent; 
 promised to pay a royalty of 70 cents for each square foot of surface, 
 provided, however, that "until a court shall have given a decree sus- 
 taining the validity of the above named patents," the royalty should 
 be only 30 cents, in lieu of 70 cents, and that "if at any time an 
 adverse decision shall be rendered against the validity of the patent 
 
44 RIGHTS OF A PATENT OWNER. 
 
 which shall not be appealed from in three months" the royalties 
 should cease. The pliaintiff sued the defendant in the state court 
 ior royalties and among the defenses set up was that the court had 
 no jurisdiction to try the case. This defense was denied in the 
 state court and the defendant sued out a writ to the Supreme Court. 
 Let it be observed that here was no assignment of the patent fran- 
 chise or of any part of it. The defendant owned no fraction of the 
 right to exclude: it could exclude the plaintiff by her own agree- 
 ment. But the incorporeal benefit granted by the. Federal Gov- 
 ernment was wholly with the plaintiff. 
 
 The defendant acknowledged the validity of the letters patent; 
 of course it would not have gone through the mockery of acknowl- 
 edging the validity of its own patents. 
 
 Mr. Justice Gray said: "The defendant contended that this 
 was a case arising under the patent laws, of which the courts of 
 the United States have exclusive jurisdiction. But it is clearly 
 established by a series of decisions of this court that an action upon 
 such an agreement as that here sued on is not a case arising under 
 the patent law." Then follows a summary of many prior de- 
 cisions of the court holding- that suits on contracts pertaining to 
 patented inventions are not cognizable by the Federal Courts on 
 the ground that the patent laws are in contest. 
 
 In the case just following the preceding, 
 
 Felix vs. Scharnweber (1887) 125 U. S. 54, Mr. Justice Gray said : 
 "The action was brought upon a contract in writing between the 
 parties, being the joint owners of a patent for an improved rope 
 reel, by which it was agreed that the defendant should have the ex- 
 clusive control of the manufacture and sale of the reel, paying to 
 the plaintiff a certain royalty on each reel sold. 
 
 This was not a case arising under the patent laws within the 
 exclusive jurisdiction of the federal courts." 
 
JURISDICTION OF THE PATENT RIGHT. 45 
 
 Similar rulings are to be found in Marsh vs. Nichols (1890> 
 140 U. S. 344, Wade vs. Lawler (1896) 165 U. S. 634. 
 
 II. 
 
 The exclusive jurisdiction of the Federal Courts over causes- 
 involving rights incident to the exclusory franchise is so positively- 
 conferred by statute and so well known in practice that it seems- 
 superfluous to attempt to further emphasize the fact by citing au- 
 thorities. We have already noted the isolated and glaring excep- 
 tion erected in the case of Vanini vs. Paine (1833) cited supra, fromi 
 the Supreme Court of Delaware. 
 
 One case alone will be sufficient here. 
 
 Smith vs. McClelland (1875) 11 Bush (Ky) 533. This case is- 
 interesting in that it was decided by the Court of Appeals of Ken-i 
 tucky on November 6th, 1875, whereas the same court had on Sep- 
 tember 33, 1875 decided the great case of Patterson vs. Common- 
 wealth, reported in the same volume as the case now under con- 
 sideration, at page 311. 
 
 We have already seen that in the Patterson case the Coui't- 
 clearly analyzed -the rights of the owner of a patent, and asserted 
 the power of the state over his common law. right. And this de- 
 cision was adopted and approved by the Supreme Court. Now the 
 Court of Appeals two months later must deal with the other distinct 
 and separate right of the owner of a patent. 
 
 The facts: McClelland was the owner of two patents, one for 
 an improved material for dental plates, and the other on a process 
 for preparing compounds containing collodion. McClelland as- 
 signed to Smith an undivided one-half interest in the patents. Later 
 differences having arisen. Smith surrendered back all interests in the 
 patents to McClelland and the latter returned the purchase money 
 except $400 for which he gave Smith his note. 
 
46 RIGHTS OF A PATENT OWNER. 
 
 This note was not paid at maturity and Smith sued thereon. 
 McClelland pleaded as a set off a claim for damages against Smith 
 in that the latter, after retransferring the interest in the patents, had 
 made and sold the inventions in infringement of the patents. The 
 lower court solemnly entertained this defense and allowed the set 
 off. After having afforded cogent proof in the case of Patterson 
 vs. Commonwealth of the possession of a clear head on the sub- 
 ject of patent rights, it is not to be expected that the Kentucky 
 Court of Appeals should go wrong here. Indeed the court does not 
 disappoint our expectations. 
 
 Said Chief Justice Peters : "The acts of Congress have vested the 
 federal courts with exclusive cognizances of all infringements of 
 patent rights. 
 
 If the right to legislate on the subject has been reserved to the 
 states Kentucky has not exercised that right, and if the patent rights 
 of appellant have been violated or infringed (and the injury com- 
 plained of is an infringement of the rights secured to him by his 
 patents) his remedy must be in the tribunals provided by the acts 
 of Congress, as the courts of this state have no jurisdiction of the 
 subject matter. 
 
 Wherefore the judgment of the vice chancellor is reversed and 
 the cause is remanded with directions to dismiss the set off relied 
 upon in the answer." 
 
 TABLE VI. 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct and Separate Rights. 
 
 I Common Law Right to make, use and sell. 
 II Patent L?iw Right, to exclude others from making, using 
 and selling. ^ 
 
PATENT RIGHT— SUIT FOR INFRINGE3MENT. 47 
 
 The Two Rights Distinguished 
 
 By 
 
 The Mode of Exercising and the Law ControUing the Two Rights. 
 
 I. The Patent Right, 
 
 a. Suits for Infringement. 
 
 The owner of a patent can exercise his patent right in four dif- 
 ferent ways. 
 
 1st. In excluding all persons whatsoever from making, using or 
 ■selling his invention without his consent, by infringement suits. 
 
 3nd. By an assignment of his whole right in the patent to an- 
 other. Then the assignee has the entire right to exclude. 
 
 3rd. By an assignment of an undivided part of his incorporeal 
 right to another. Then he and the assignee both possess the right 
 to exclude. 
 
 4th. By an assignment of the right to exclude for a speciiied 
 part or district of the United States. Then the assignee has the en- 
 tire right to exclude within the territory specified. 
 
 Within that territory the assignee can exclude the assignor, al- 
 though the latter still possesses the exclusory right for the remain- 
 ing territory of the United States. By the first form of assignment 
 the assignee acquires the entire "monopoly," that is to say the entire 
 right to exclude : by the second he acquires an undivided portion of 
 the entire monopoly: and by the third he acquires the entire mono- 
 poly within and for a specified territory. 
 
 The right of the owner of a patent to exercise his franchise in 
 the four respects named is expressly conferred by the Federal stat- 
 utes. (R. S. sees. 4919, 4898). Not one of these rights existed at 
 common law; all are granted by the National Government. 
 
 But the fact desired here to be emphasized is that the foregoin- 
 fourfold enumeration is complete and exhaustive. 
 
 Aside from the right to exclude and the exercise of that right 
 in the four ways pointed out above not one other thing can the own- 
 
48 RIGHTS OF A PATENT OWNER. 
 
 er of a patent do by virtue of the grant from the government. 
 
 There can be no equivocation or dispute as to this. We have al- 
 ready seen that it is not, and never was, in the power of Congress- 
 to grant the right to make, use and sell. Moreover, the Supreme 
 Court has repeatedly said that the grant consists altogether in the 
 right to exclude. The Statutes create the right, and at the same 
 time define the manner in which it may be exercised. 
 
 Those statutes, provide for infringement suits and for the three 
 forms , of assignment above noted and in conferring these rights,, 
 the force of the enactment is completely spent; the power is en- 
 tirely exhausted, the effect is wholly comprehended. This may seem 
 a trite comment on the patent law, but it seems trite only because 
 long familiarity has deadened us to the significance of the limited 
 scope of that law. 
 
 The Statute says nothing, either expressly or by the m'ost re- 
 condite implication, about the inventor's own right to make, use or 
 sell : nor does it say anything about his right not to do any or all of 
 these things. 
 
 This is not all, it says nothing about his right to permit others to 
 make, or use, or selh'Or about his right and power to contract. The 
 right to contract, to use or not use, to make or not make, to sell or 
 not sell, or to permit another to do any one or all of these things 
 is an inalienable, primordial, blood right, entirely beyond the reach 
 of Congress either to grant or to. deny. ■ A farmer, owns a pond con- 
 taining many fish ; without the aid of any constitution, statute or or- 
 dinance, and in spite of them all (subject only to certain restrictions 
 imposed out of regard to the public welfare) he has a right to fish 
 in that pond or not; to permit others to do so or not, or to exclude 
 others from doing so, all just as he sees fit. Now he can exclude 
 others from fishing because he owns the pond, the contiguous soil 
 and the fish, completely, and exclusively. No one can put a line in 
 that pond without invading his right. He can exclude others be- 
 
PATENT RIGHT— SUIT FOR INFRINGEMENT. 49 
 
 cause he has complete dominion over the physical thing. The 
 inventor has the same right to make, use and sell his invention before 
 he applies for a patent that the farmer has to fish in his pond, to eat 
 the fish and sell them. The inventor however, has not an enforce- 
 able right to exclude other persons from making, using and selling 
 his invention. We employ the qualifying adjective "enforceable" 
 advisedly, for in Gayler vs. Wilder (1850) 10 Hovsr, 477 Chief Justice 
 Taney said: "The discoverer of a new and useful improvement is 
 vested by law with an inchoate right to its exclusive use, which he 
 may perfect and make absolute by proceeding in the manner which 
 the law requires." The only right that accrues to the inventor when 
 he qualifies and becomes a patentee is this bare, intangible, incor- 
 poreal right to exclude others for 17 years. 
 
 Th**. patentee with his patent and farmer with his pond each 
 have the right to exclude others — the one from appropriating his 
 fish the other from appropriating his invention. But the analogy is 
 far from complete and is very apt to be misleading. The source of 
 the farmer's right, is, what for want of a better term, we must call a 
 law of nature: the right existed long before the constitution and 
 will be enjoyed by his heirs long after the constitution is done for. 
 The patentee's right has its source in less than four lines of a statute 
 book and. we know just exactly when and where he gets the right. 
 Moreover his right is only for a brief time while the farmer's is for 
 all time. 
 
 We have said that the farmer can exclude because he has com- 
 plete dominion over the physical thing. The inventor can exclude, 
 but not fpr the same reason or in virtue of the same fact. For he 
 has no dominion over the subject of his exclusory right. An inven- 
 tion is an idea externalized : discovery and the act of inventing, is a 
 surge forward of the mind, a leap of the imagination. But ideas, 
 thoughts and imagination are not subjects of physical dominion. 
 "Iliey cannot be seized by a constable, inventoried by an assesssor 
 
50 RIGHTS OF A PATENT OWNER. 
 
 nor confiscated by a government. They are every where and no- 
 where. An inventor has no power to prevent another from thinking 
 his thought but only from externalizing it so as to imitate, duplicate 
 and recreate the invention. The patent franchise gives the inventor 
 the right to exclude every one from thinking his thought and 
 externalizing it so as to make, use or sell the thing invented. The 
 government, then, by the patent invests the inventor with an exclusory 
 dominion over a mental concept, a viewless abstraction. 
 
 This is the peculiar nature of the patent right, and it should 
 never be lost sight of for a moment. It is an exceedingly narrow 
 right but within its scope the most absolute known to civilized in- 
 stitutions. We have seen that it escapes the heavy hand of taxation, 
 it eludes the sheriff's grasp; the drag net of a general assignment 
 does not contain it. The police powers of the state cannot reach it 
 and the sovereign government itself bends to the excluding power. 
 
 This brings us to what is the central thought here, namely in- 
 fringement consists altogether in thinking the thought of the inven- 
 tor and externalizing this thought in making, using or selling the 
 thing conceived by the inventor's mind and wrought out by his hand, 
 without the inventor's permission. 
 
 The patent law is not a code of ethics nor does it deal with things 
 metaphysical. The patentee cannot control the thoughts and imag- 
 ination of other persons: he cannot exclude them from thinking 
 what he has already thought, but he can exclude them from exter- 
 nalizing his thought, and embodying it forth so as to make, use or 
 sell the physical symbol of his mental efforts. 
 
 In every infringement suit the first fact put in issue is title to the 
 patent. Thus in Excelsior Wooden Pipe Co. vs. Pacific Bridge Co. 
 (1902) 185 U. S. at 205 the Supreme Court said, "The title to the 
 patent is put in issue in every suit for infringement." It is for. this 
 reason that an assignee under a general assignment and a receiver 
 appointed by a state court, cannot sue for the infringement of a pat- 
 
PATENT RIGHT— SUIT FOR INFRINGEMENT. 51 
 
 ent belonging to the insolvent. Neither has title to the patent as we 
 have seen already under topic III. It is for the same reason that a 
 licensee cannot sue. He has not the right to exclude. An exception 
 in favor of the licensee is allowed where the owner of the patent is 
 invading the right of the licensee under his contract. But this is 
 recognized as an inversion of the natural order of things. Littlefield 
 vs. Perry (1874) 21 Wall. 205. Aside from the validity of the pat- 
 ent, then, the plaintiff must show title in himself. We will find this 
 fundamental principle confused and overlooked. 
 
 The defendant to be guilty of infringement must have made, 
 used, or sold the invention without the patentee's consent or permis- 
 sion. This appears simple and plain but it is more difficult than at 
 first glance it appears. Of the three terms — "making," "using," and 
 "selling" — "using" is obviously, the most comprehensive. For while 
 a machine, an article, product or device can be made, used and sold, 
 a process can be used only : it can neither be made or sold. And the 
 only manner in which a patent for a process can be infringed is by 
 using it. Neither the sale nor the use of the product can constitute 
 infringement of a patent for the process employed in making the pro- 
 duct. Likewise a patent for a machine is not infringed by the sale or 
 use of the product of the machine. 
 
 This is incontestably settled. See the following eases : 
 
 Keplinger vs. DeYoung (1825) 10 Wheat U. S. 358. 
 
 Boyd vs. McAlpin (1844) 3 McLean, 427. 
 
 Anoymous (1845) 1 Fed. Cases, 477. 
 
 Goodyear vs. Cent. R. R. Co. (1853) Fed. Cases No. 5563. 
 
 Draper vs. Hudson (1873) 7 Fed. Cases, No. 4069 (p. 1059). 
 
 Merrill vs. Yeomans (1877) 94 U. S. 568. 
 
 McKay vs. Jackman (1882) 12 Fed. Rep., 625. 
 
 Brown vs. District of Columbia (1844) 14 D. C. Rep., (3 
 McKay) 502. 
 
^2 RIGHTS OF A PATENT OWNER. 
 
 Durand vs. Schulze (1891) 61 Fed. Eep., 819. S. C. 60 Fed. 
 Rep., 392. 
 
 Ferris vs. Batchelor (1895) 70 Fed. Rep. 714. 
 
 Welshach Light Co. vs. Union Incandescent Light Co. (1900). 
 101 Fed. 131. 
 
 JsTational Phonograph Co. vs. Lambert Co. (1903) 125 Fed. 388, 
 (disposed of on other grounds on appeal 142 Fed. 164) . 
 
 IVith the above reservation anyone who, without the consent of 
 the patent owner, makes, uses or sells the thing invented is an 
 infringer. Now the gist of infringement consists in doing one or 
 piore of these acts without the consent of the owner of the patent. 
 
 The consent of the inventor-patentee may be given under the 
 provisions of Sec. 4899, as explained in Wade vs. Metcalf (1889) 139 
 U. S. 202. We are not concerned here with this form of consent or 
 permission. We may eliminate the act of "making" as it is the "us- 
 ing" and "selling" alone that concerns us here. A license to use or 
 -sell is a contract by which the patentee gives his permission to use 
 •or sell. 
 
 We come now to the final point. If the patent owner himself 
 makes the article and sells the same, the purchaser acquires a com- 
 plete and unqualified right to use the article as long as it lasts. 
 
 Here the patentee exercised his natural right in making the ar- 
 ticle and in selling it. The purchaser acquired no right under the 
 rpatent and incurs no liability for infringement. "In the case, of a 
 license or a sale by the patentee, the rights of the licensee or the 
 vendee arise out of the contract with him. In the case of infrinc?e- 
 ment the liability of infringers arises out of their own wrongful in- 
 vasion of his rights." Birdsell vs. Shaliol (1884) 112 U. S. 485. This 
 point will be elaborately presented hereafter. It is thrust forward 
 mow orily to indicate in what infringement consists. 
 
 Bringing an infringement suit is one of the four methods in 
 which the patentee may exercise his exclusory franchise. Both the 
 
PATENT RIGHT— ASSIGNMENT OF WHOLE RIGHT. 53: 
 
 right and the remedy are given exclusively by the federal statute. No 
 state has. any power over the right or the remedy. On the other 
 hand the patentee in exercising the right does not exercise any right 
 recognized, protected or guaranteed by the common law. The right 
 he exercises is peculiar to him, owes its origin entirely to the na- 
 tional government, is regulated, limited and caused to expire by the 
 rule of law of that government. 
 
 TABLE VII. 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has two Distinct and Separate Rights. 
 
 I. Common Law Right, to make, use and sell. 
 II Patent Law Right, to exclude, others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 By 
 The Mode of Exercising and the Law Controlling the Two Rights. 
 I The Patent Right. 
 
 b. Assignment of the Whole Right. 
 The first patent statute enacted, that of 1790, did not contain any 
 provisions regarding assignments. The patent grant run to the pat- 
 entee and his assigns but there was no express provision for a transfer 
 of the franchise by assignment. 
 
 Sec. 4 of the act of 1793 contained this: "It shall be lawful for 
 any inventor, his executor or administrator, to assign the title and 
 interest in said invention, at any time, and the assignee having re 
 corded the said assignment in the office of the Secretary of state, 
 shall thereafter stand in the place of the original inventor, both as to 
 right and responsibility, and so to the assignees of assigns to any gc 
 
 gree." 
 
 The right intended to be conferred by this section has been pre- 
 served and protected by all later patent acts. But the language ot 
 
54 RIGHTS OF A PATENT OWNER. 
 
 the above quoted section is striking and peculiar. The inventor 
 is given a right "to assign the title and interest in said invention." 
 Taken literally this section would be meaningless. For- the inven- 
 tor has a right to assign his invention without any act of Congress 
 and despite any power of Congress. His title and right are complete 
 whether he ever applies to the government for an exclusory franchise 
 or not. It is only when the inventor becomes a patentee and is 
 awarded the new right to exclude that he is possessed of a right to 
 assign which some act of Congress is necessary. Now this slip in 
 legislation is clearly recognized in the subsequent Acts of Congress. 
 
 The next general 'enactment was that of 1836. Here the langu- 
 age is completely changed. Sec. 11 contains this, "That every pat- 
 ent shall be assignable in law, either as to the whole interest or any 
 undivided part thereof by an instrument in writing:" 
 
 Here the subject of the transfer is recognized to be the right 
 to exclude. 
 
 The final act and the one in force today was passed in 1870. Sec. 
 36 (now R. S. 4898) is still clearer: "Every patent or any interest 
 therein shall be, assignable in law, by an instrument in writing," etc. 
 
 We have noted these enactment solely for the purpose of further 
 bringing to light the distinction between he two rights which is tlie 
 burden of this exposition. 
 
 Here then we have provision for the second of the four wa^- 
 in which the patentee may exercise his patent franchise. It is not 
 at all necessary to dwell on this right further than to note that the 
 right to assign the franchise is derived solely from the Act of Con- 
 gress. 
 
 That authority created the franchise and also provided for its 
 enjoyment. But we must never lose sight of the fact that the trans- 
 fer is of that only which congress has created, the right to exclude. 
 
 Before the assignment, the assignee might have made, used and 
 sold the invention in virtue of the natural right of every man to labor 
 
PATENT RIGHT— ASSIGNMENT OF UNDIVIDED INTEREST. 55 
 
 and enjoy the results of his labors, except for the excluding power of 
 the assignor. When the assignment takes place, the assignee has 
 the excluding power. The excluder and excluded are one and the as 
 signee's right to make, use and sell is then no longer under a ban. 
 But the assignor does not transfer the right to make, use and sell. 
 
 The manner and method of the assignment is provided for by 
 the patent law. No state can control it, hedge it about with limita- 
 tions or condition it. 
 
 When the patent owner assigns the whole interest the as- 
 signee gets the right to exclude every one throughout the entire 
 United States, for the full term of the patent. He can exclude the as- 
 signor and the government itself. But the assignment does not 
 transfer any right protected or exercisable at common law. 
 
 TABLE VIII, 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct and Separate Rights. 
 
 I Common Law Right: To make, use and sell. 
 II Patent Law Right: To exclude others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 
 By 
 
 The Mode of Exercising and the Law Controlling the Two Rights. 
 
 I. The Patent Right. 
 
 c. An assignment of an undivided interest in the Whole 
 
 Eight. 
 
 Here we have the third form in which the patentee may exer- 
 cise his exclusory right. We have already noted the fact that the 
 first act of Congress (1790) made no provision whatever for assign- 
 ments. 
 
56 RIGHTS OF A PATENT OWNER. 
 
 The Act of 1793, gave the "inventor the right to assign the title 
 and interest in the said invention." We have previously com- 
 mented on this clause. But here is no right to assign an undivided 
 interest in the franchise. 
 And in the case of 
 
 Tyler vs. Tuel (1810) 6 Cranch 324, the Supreme Court heH that 
 an assignee of a part of a patent right could not maintain an action 
 for infringement. 
 
 This necessarily followed from the terms of the statute : no pro- 
 vision was made for such a splitting up of the right to exclude. But 
 on tlie other hand this indicated the imperfection of the statute. 
 
 For if the assignee of an undivided interest could not sue, then 
 an inevitable corollary would be that the patentee — assignor, owiir- 
 ing only an undivided interest could not sue. By an assignment of an 
 undivided portion of the franchise the whole became worthless and 
 unenforceable. 
 
 The Act of 1836, (sec. 11) obviated this defect, in enacting that 
 "every patent shall be assignable in law, either as to the whole in- 
 terest or any undivided part thereof." (black ours)i We shall see 
 later that the remaining portion of this section confused matters 
 worse than ever, but for the present we are attending to one feature 
 only. 
 
 The Act of 1870 (R. S. 4 898) puts the right clearer still. "Every 
 patent or any interest therein (viz. in the right to exclude) shall be 
 assignable in law, by an instrument in writing. 
 
 By this form of assignment the assignor and assignee each have 
 an undivided interest in right to exclude. 
 
 But "the monopoly ( right to exclude) granted to the patentee is 
 for one eptire thing." Gayler vs. Wilder (1850) 10 How. 477. And 
 "where the assignment is of an undivided part of the patent, the ac- 
 tion for infringement should be brought in the joint names of the pat- 
 entee and assignee, as representing the entire interest." Moore vs. 
 
PATENT RIGHT— ASSIGNMENT OP WHOLE FOR TERRITOR-y. 57 
 
 Marsh (1868) 7 WaU. 515. And see AspinwaU vs. Gill, 32 Fed. 697 j 
 S. C. 140 U. S. 669. 
 
 TABLE IX. 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct and Separate Rights. 
 
 I Common Law Right, To make, use and sell. 
 II. Patent Law Right, to exclude others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 
 By 
 
 The Mode of Exercising and the Law Controlling the Two Rights. 
 
 I. The Patent Right. 
 
 d. An Assignment of the Whole Right for a Specified Part 
 of the United States. 
 
 This is the third form of assignment and the fourth and last way 
 in which the owner of a patent can make use of and enjoy his exclu- 
 sory franchise. Much circumspection and close study is required at 
 this point. Here confusion is rife. It is only in the decisions of the 
 Supreme Court that we will find either precision of thought or con- 
 sistency of statement as to when we are dealing with this form of trans- 
 fer and when not. We will first take the statutes. There are 
 four acts dealing generally with the subject of patents, though there 
 are many amendments as to minor points but these are not relevant 
 here. . The four acts are of the years 1790, 1793, 1836 and 1870. 
 
 We have already adverted to the fact that the act of 1790 made no 
 provision for any form of assignment whatever. The act of 1793, 
 contained a vague clause authorizing the inventor to assign title and 
 interest in his invention. The insufficiency of this was exposed in 
 
58 RIGHTS OF A PATENT OWNER. 
 
 the case of Tyler vs. Tuel cited in the last topic. The act of 1836 un- 
 ■doubtedly was intended to obviate the defect of the prior acts and also 
 to fully define and establish the rights of the patentee in dealing with 
 his franchise. The first clause of sec. 11 of the act of 1836, undoubt- 
 edly remedied the shortcoming of the prior law pointed in the case of 
 Tyler vs. Tuel. The first clause reads "That every patent shall be 
 assignable in law, either as to the whole interest, or any undivided 
 part ther.eof, by an instrument in writing:" 
 
 If the statute had stopped here its meaning would have been per- 
 fectly clear and not open to ambiguity or misunderstanding. We 
 would then have two forms of assignment provided for : One of the 
 whole interest and another of any undivided part thereof. And if the 
 Congress had omitted the word "undivided" then the statute would 
 have read, "Every patent shall be assignable either as to the whole 
 interest or any part thereof." This would have embraced every form 
 of assignment in simple and few words. But whoever drew the act 
 misconceived the nature of the franchise, and also misconceived the 
 power of the Congress to legislate on the matter. For the next clause 
 of the statute reads as follows : "which assignment, and cdso every 
 grant and conveyance of the exclusive right, under any patent, to 
 make and use, and to grant to others to make and use the thing patent- 
 ed within and throughout any specified part or portion of the United 
 States, shall be recorded in the Patent Office," etc. It is very evi- 
 ■dent that this last clause was supposed to be co-ordinate with the 
 £rst one. That is to say the enactment was supposed to describe 
 three forms of transfer of the patent franchise; Ist, of the whole in- 
 terest, 3nd of any undivided interest, 3rd of an exclusive right under 
 any patent to make and use and to grant to others to make and use 
 the thing patented, throughout a given territory. Considered as a 
 transfer of an interest in a patent, as a part of the franchise, this sec- 
 ond clause is meaningless. For the clause omits the term "sell." How- 
 ever exclusive the grantee's right to make and use might be, he was 
 
PATENT RIGHT— ASSIGNMENT OF WHOLE FOR TERRITORY. 59 
 
 given no right to exclude others from selHng. If others sold the 
 thing within the district the grantee's right under the express wording 
 of the statute would be uninvaded and he would have no right or 
 power to exclude. 
 
 The patent right consists altogether in the right to exclude every- 
 one from making, using and selling. This right is one entire thing, 
 incorporeal and intangible. The second form -of assignment — of any 
 undivided interest therein is consistent with the nature of the right. 
 But the second clause of this section attempts to provide for a sub- 
 division of the franchise that is contradictory of the terms of the 
 grant. If a patentee could "grant" or "assign'' to A an exclusive 
 right to make, to B an exclusive right to use, and to C an exclusive 
 to sell, for the State of New York, within that territory we would have 
 the franchise cut into three parts, subdivided in respect to the kind 
 of enjoyment conferred. 
 
 Now let us suppose X makes a specimen of the patented inven- 
 tion, uses it for a time and then sells it. He has been guilty of mak- 
 ing, using and selling the patented article, without the consent of the 
 patentee. As we have seen in every infringement suit title to the pat- 
 ent is put in issue, so here the first question is, who will sue X for 
 infringement? Not the patentee, for to give effect to the language of 
 the statute, we must regard him as having parted with his monopoly 
 for New York. He is excluded from making, using or selling in the 
 state by the "grant." Then A, B, and C, among themselves own the 
 monopoly and it is subdivided. A sues X for infringement in making 
 the article, and gets a judgment for three fold damages. However 
 he can not have an injunction against X's act in using or selling the 
 article. Now B sues X for using and gets a judgment for threefold 
 •damages but cannot enjoin X from making and selling. Then C sues 
 X for selling ajid gets a judgment for threefold damages, but he can- 
 not enjoin the making and using. Suppose X havmg been mulcted in 
 nine fold damages is in a repentant state of mind, and desires to ob- 
 
60 RIGHTS OF A PATENT OWNER. 
 
 tain a license. He gets a license from A to make and for that pays a 
 royalty, but that does not enable him to use or sell. He gets a separ- 
 ate license from B to use and for that pays a second royalty, still he 
 cannot sell without becoming liable as an infringer. So he then gets 
 another separate license from C to sell and for this pays a third royalty. 
 But in the case supposed the title to the patent is still in the patentee, 
 A, B, and C, have it not, neither separately nor among themselves 
 jointly. 
 
 In the case of Blanchafd vs. Eldridge (1849) Fed. Cas. 1510, Cir- 
 CTiit Judge Grier said: "This statute (1836) renders the monopoly 
 capable of subdivision in the category of its locality, but in no other 
 way. The patentee is not allowed to carve out his monopoly, which 
 is an unity, into a hundred or more, all acting in the same place, and 
 liable to come into conflict." This passage admirably sets forth the 
 inconvenience of the enactment, but.it does not explain why effect 
 cannot be given to the solemn words of Congress. 
 
 The real trouble with the statute is that it is drawn on the false 
 supposition that congress can grant the right to make and use, and, 
 therefore, that the patentee can be empowered to assign the exclusive 
 right to make and use. But both suppositions are false. Congress 
 cannot grant the right to make and use and cannot give the patentee 
 the power to assign the right to make and use. If those who drew 
 this act had had in mind that the power of Congress was completely 
 exhausted in granting the right to exclude others, this clause never 
 would have been so worded. The right to permit others to make and 
 use the invention is a right of the inventor which Congress cannot 
 confer or deny. We have dwelt on this' point at great length be- 
 cause it is one that is confused throughout the reports and text writ- 
 ers. We can easily demonstrate this. In the case of 
 Gayler vs. Wilder (1850) 10 How 477. 
 The "grant" was like this: To one Herring the exclusive right to 
 make and vend a patented safe in the City, County and State of New 
 
PATENT RIGHT— ASSIGNMENT OF WHOLE FOR TERRITORY. 61 
 
 York ; and Herring agreed to pay to the "assignor" a cent a pound for 
 every pound the safe might weigh as royalty. At the same time the 
 assignment reserved to Wilder the right to make the safe within the 
 State, provided not within 50. miles of New York City and to sell them 
 in the State of New York paying to Herring a cent a pound for each 
 safe so sold within the State. The point at issue was whether or not 
 Wilder the patent owner could maintain suit for infringement in New 
 York. Both sides conceded that this hinged on whether or not Wild- 
 er had parted with his franchise for the State of New York or any 
 part of that State. The cause was argued by able counsel. Listen to 
 the argument of Daniel Webster for Wilder: "Wilder has clearly 
 the right to maintain an action, for the reason that he has not parted 
 with all his interest. He still has an interest to. the value of one cent 
 per pound," (black ours). 
 
 In other words if a man has sold a horse arid taken a promissory 
 note in payment he still has an interest in the horse ! 
 
 Now hear the opposing counsel who is contending that Wilder 
 has parted with his right to exclude : "It is said that the invention 
 would be assignable, independent of the patent law. It is submitted 
 that this is not correct. Except by the statute, the inventor has no 
 right of property in his invention. (This is bad enough, but worse is 
 yet to come). The statute was intended to confer that very right"! 
 Let us suppose A, has discovered a process for making a serum that 
 is an unfailing cure for tuberculosis. It has been proven to be a 
 genuinely infallible remedy ; how it is made is a secret known only to 
 A. He has cured himself of the disease and is selling the serum at 
 $1000 an ounce. Would any one contend that A has no right of 
 property in his discovery, except by the patent statute? But this is 
 the argument of counsel. He continues : 
 
 "It is said that the plaintiff has reserved one cent per pound, and 
 can therefore maintain this action. It will be seen however that this 
 part of the agreement is a penalty"! (black ours). Here then both 
 
62 RIGHTS OF A PATENT OWNER. 
 
 counsel have cast the issue on the royalty of one cent per pound, an 
 utterly colorless fact. It is perfectly clear that Wilder had not part- 
 ed with the franchise to exclude others. He had expressly reserved 
 the right to manufacture the safes anywhere within the state more 
 than 50 miles from New York City and to sell them everywhere in the 
 State. Besides not a word was said about the right to exclude others- 
 from using. No wonder that Chief Justice Taney said : "The agree- 
 ment is singularly confused and complicated." 
 
 Then the Chief Justice unravels the tangled skein as follows : 
 "The monopoly granted to the patentee is for one entire thing; 
 it is the exclusive right of making, using and vending to others to be 
 used the improvement he has invented and for which the patent is 
 granted. (Later we will find the Chief Justice entirely avoiding the 
 insidious ambiguity in the phrase "exclusive right" and employing 
 instead of these words the unmistakable, unequivocable and exact 
 formula: "the right to exclude"). 
 
 "The monopoly did not exist at common law, and the rights, 
 therefore, which may be exercised under it cannot be regulated by 
 the rules of the common law. It is created by the Act of Congress; 
 and no rights can be acquired in it unless authorized by statute, and 
 in the manner the statute prescribes. The patentee may assign his 
 exclusive right ( — right to exclude) within and throughout any speci- 
 fied part of the United States and upon such an assignment the as- 
 signee may sue in his own name for an infringement of his rights. But 
 in order to enable him to sue, the assignment must undoubtedly con- 
 vey to him the entire and unqualified monopoly which the patentee 
 held in the territory specified— excluding the patentee himself as well 
 as others (black ours). And any assignment short of this is a mere 
 license. For it was obviously not the intention of the legislature to 
 permit several monopolies to be made out of one and divided among 
 different persons within the same limits. Such h division would in- 
 evitably lead to fraudulent imposition upon persons who desired to 
 purchase the use of the improvement, and would subject a party who. 
 
PATENT RIGHT— ASSIGNMENT OF WHOLE FOR TERRITORY. 63 
 
 under a mistake as to his rights, used the invention without authority 
 to be harassed by a multiplicity of suits instead of one and to succes- 
 sive recoveries of damages by different persons holding different por- 
 tions of the patent right in the same place. Unquestionably, a con- 
 tract for the purchase of any portion of the patent right may be good 
 as between the parties as a license, and enforced as such in the courts 
 of justice. (This sentence is not entirely accurate). But the legal 
 right in the monopoly remains in the patentee and he alone can main- 
 tain an action against a third party who commits an infringement upon 
 it." This is unquestionably sound but it ignores the very words of 
 the act of 1836. 
 
 Under sec. li of the act of 1836, any person "interested, whether 
 as patentees, assignees, or as grantees of the exclusive right," etc., are 
 given a right to sue for damages for infringement. This again is a 
 confusion of the obvious difference between an owner of the fran- 
 chise and a licensee. But. the Court in the case of 
 
 Moore vs. Marsh (1868) 7 Wall 515. 
 ignored this defect in the statute. "Grants, as well as assignments, 
 must be in writing and they must convey the exclusive right under 
 the patent, to make and use and vend to others to be used, (note all 
 three rights) the thing patented within and throughout some- 
 specified district or portion of the United States, and such right must 
 be exclusive of the patentee, as well as of all others except the grantee." 
 
 Now the Act of 1870 (R. S. 4898) partially does away with the 
 great confusion in the act of 1836, but not entirely so. It reads, 
 "Every patent or any interest therein shall be assignable in law, by 
 an instrument in writing; and the patentee or his assigns or legal rep- 
 resentatives may, in like manner grant and convey an exclusive right 
 under his patent to the whole or any specified part of the United: 
 States." 
 
 Here is the same defect in a more subtle form. The word "un- 
 divided", as qualifying interest in the first clause, is dropped. But 
 why preserve a distinction in words between an "assignment" and a. 
 
€4 RIGHTS OF A PATENT OWNER. 
 
 "grant" when there is none in fact? Each is an interest in the right 
 to exclude; the assignee has an undivided interest in the entire right; 
 the grantee has the entire right for a specified territory. Both must 
 be recorded, both are purely statutory rights ; whole chapters in text 
 books are filled with meaningless refinements upon the distinction 
 between an assignment and a grant, when there is no basis fo!r the 
 distinction whatever. 
 
 If the statute had read:"Every patent, or any interest therein, 
 or the entire interest therein for any specified territory of the United 
 States, shall be assignable," etc., no one could mistake its meaning. 
 
 As it is, there is not a single text writer that makes clear the dif- 
 ference between a transfer of a portion of the franchise and a mere li- 
 cense. 
 
 Take these instances from Curtis on Patents (4th Ed.) sec. 311. 
 ^'Thus when a patentee sells to another a patented machine made by 
 himself, or permits another to make the machine, without making 
 the permission exclusive as to any particular territory, the party thus 
 authorized becomes a licensee, and does not acquire the rights and po- 
 sition of an assignee." This is bad grammar, bad logic and bad law. 
 The last clause, "the party thus authorized" has no relevancy what- 
 ever to the instance "when a patentee sells." Moreover a purchaser 
 of a machine from the patentee owns it and he needs no authority to 
 •do as he pleases with his own. He is not in the same category with 
 one who is permitted to make the machine. The latter is a mere li- 
 censee. Finally if the permission to make is exclusive, still the mak- 
 er is a mere licensee. 
 
 Again the author says: "We come now to that other class of 
 contracts made by patentees, which, not being assignments, confer 
 upon another the right to exercise in some way the privileges se- 
 cured by the patent — contracts which are popularly as well as tech- 
 nically known as licenses." 
 
 Again the whole sentence is wrong. The only privilege secured 
 by a patent is the right to exclude : This is the precise thing that a 
 
PATENT RIGHT— ASSIGNMENT OF WHOLE FOR TERRITORY. 65 
 
 license does not in any manner embrace. A licenrjc is a mere immun- 
 ity from suit, nothing more whatever. Sec. 313, 'A license, being an 
 authority to exercise some of the privileges secured by the patent but 
 which still leaves an interest in the monopoly in the patentee, the 
 first question that arises is whether it is assignable"? Indeed but a 
 previous question is, what happened to the author after he wrote Sec. 
 311 and before he begun 313, for in 311 he wrote: "A license is a 
 grant or permission to practice the invention or to use the thing pat- 
 ented, which leaves the interest of the patentlee just as extensive as 
 it was before" (black ours). 
 
 Again and finally sec. 316, "A license to use a patent privilege" ! 
 
 But all the text writers, without exception and the digests con- 
 tain this same sort of thing. 
 
 Finally in 1908 the Circuit Court of appeals for the 8th Circuit 
 gravely held that one who had the exclusive right to sell (but had 
 no right to make or use) could maintain an infringement suit! 
 National Phonograph Co. vs. Schlegel (1904) 138 Fed. 733. 
 
 In the case of Waterman vs. Mackenzie (1890j 138 U. S., 353, Mr, 
 Justice Gray reiterated the law on this point in a truly luminous man- 
 ner. 
 
 "Whether a transfer of a particular right or interest under a pat- 
 ent 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. The 
 grant of an exclusive right under a 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." 
 
 This concludes the third form of assignment and the fourth and 
 last way in which the patentee can enjoy his franchise. Congress 
 gives him these four benefits and these only. We now pass over to 
 his right to make, use and sell and .to his right to permit others to do 
 these things. In passing over we leave the patent law and enter the 
 domain of the common law. 
 
66 RIGHTS OF A PATENT OWNER. 
 
 TABLE X, 
 
 Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct and Separate Rights. 
 
 I. Common Law Right, To Make, Use and Sell. 
 
 II. Patent Law Right, To Exclude others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 
 By 
 
 The Mode of Exercising and The Law Controlling the Two Rights. 
 
 11. Common Law Right, 
 a. License to Use. 
 
 It is at this point that the utmost confusion arises. Under this 
 and the three following heads it is wholly impossible' to reconcile the 
 decisions. They not only vary in statement and reasoning but are 
 completely contradictory. Long and patient study of these deci- 
 sions drives one back to that primal law of all thought that is knocked 
 into the head of every college boy! "Nothing can both be and not 
 be." We will start here with the simplest propositions as we have 
 done under the other headings. Already we have insisted with 
 much elaboration on the assertion that the only right granted by the 
 patent is the right to exclude. This must be finally accepted if we are 
 to attribute to the courts any seriousness of thought whatever and 
 iF»we are not to infer that they do but play with words to make fools 
 of us. We have pointed out that this right to exclude is created by 
 the Patent Law that that is all that is conferred by that Law : that 
 this right is measured as to exercise by the Patent Law and that apart 
 
COMMON LAW RIGHT— LICENSE TO USE. 67 
 
 from the patent law it has no existence whatever. Finally we have 
 analyzed the only four ways in which it is possible for the owner of a 
 patent to enjoy the right to exclude. Now we pass over to the other 
 right which the Owner of a Patent has. This is the right to make, 
 use and sell and to permit others to make, use and sell. 
 This is a right protected entirely by the common law and 
 with it the Patent Law is not concerned in the remotest manner. 
 It is one thing to assent to this formally and quite another fully to 
 apprehend the meaning of it and appreciate the inevitable conse- 
 quences that flow from it. Let us at this point reinvest ourselves 
 with the certainty that the right to make, use and sell and the right to 
 permit others to do so, is a right that has always existed independent-- 
 ly of the patent law, to which nothing is added and from which noth- 
 ing is taken, by the patent law. We go back to the beginning. No 
 government, at least in the United States, can grant the right, to make 
 use and sejl. The government has it in its power to grant and deny 
 only those things over which the people have given it such power. 
 No citizen can coin the money of the United States for the reason 
 that the people have granted to the government that right and with 
 the power to deny it to every citizen. But the rights of the govern^ 
 ment like this are very few, and we can place our finger directly on 
 the source of the power and tell when and how the people surrend- 
 ered it. But men have always had the right to make, use and sell, 
 and the National government has no control over it whatever. Take 
 one of the revolutionary forefathers who was familiar with the steps 
 leading up to the adoption of the Constitution. Suppose it had been 
 suggested to him that the National government by the Constitution 
 was to be given the power to grant or deny (for the power to grant 
 always and necessarily implies the power to deny) to him the right to 
 make, use and sell an ax, a musket, a broom or a pair of shoes. Noth- 
 ing would have surprised him more or more thoroughly aroused his 
 resentment and fierce opposition. This fundamental right to make, 
 
68 RIGHTS OF A PATENT OWNER. 
 
 use and sell has never been surrendered in whole or in part to the 
 government. On the contrary the government is most solemnly 
 pledged to guarantee and protect it. 
 
 When we deal with the right of the owner of a patent to use his 
 invention we are dealing with a right that is far older, far more dur- 
 able, far more precious than any thing contained in the patent law. 
 The right to let some one else use the thing invented is of the same 
 nature. It is only another aspect of the right to use for oneself. 
 
 I have a right to use the pen with which these words are writ- 
 ten. The National government did not grant me that right and since 
 the pen is mine it cannot deny me that right. If I should apply for 
 a patent on this pen, the government, cannot, either by granting or 
 refusing the application, enlarge or diminish or in any manner affect 
 ray right to use the pen. Likewise if some one wishes to hire the 
 use of the pen, I have a right to rent the same to him and this, too, 
 entirely independently of the Constitution or any law of Congress. 
 
 This brings us to a consideration of "a license to use." Now a li- 
 cense is a mere permission: it is not anything more. We are not 
 here dealing with the difficult conception of a license "coupled with 
 an interest." A license in and of itself, as the etymology of the word 
 indicates is a mere letting, suffering or permitting. Over two cen- 
 turies ago Sir John Vaughan said: "A license passeth no interest, 
 nor alters, or transfers property in anything, but only makes an ac- 
 tion lawful which without it had been unlawful," (quoted in Holland 
 on jurisprudence, .10th Ed. p. 321). Note those words "passeth no 
 interest, nor alters or transfers property in any thing." A license is 
 a permission to do an act. A man obtains a license to dig a ditch 
 in the street or to conduct a barber shop. The license grants him 
 no interest or property to the street or the shop. It only makes law- 
 ful an act which without the license had been unlawful. When the 
 license expires, is revoked or legally forfeited, then, the doing of the 
 act is a violation of the law. All this is aggravatingly trite to every 
 
COMMON LAW RIGHT— LICENSE TO USB. 69 
 
 lawyer, but when we come to deal with licenses in connection with 
 patents men seem to forget it and to throw away their power of rea- 
 soning, submitting themselves to some vague notion about the mys- 
 tery of a patent. For example, we read in all the text books and in 
 hundreds of the cases about a "license of a patent right" or of a "li- 
 cense to use a patent right" or, again, of a "license to exercise some 
 privilege under a patent." All these exemplify an abuse of language ; 
 they are phrases of words that do not correspond to any reality. 
 There can be no such thing as a "license- of a patent right" ; the patent 
 right is the right to exclude, and the owner of the right to exclude 
 cannot permit another to exclude. A licensee can exclude no one. 
 If I get a license to fish in a pond, my license does not enable me to 
 exclude others from fishing there. So of the phrase "license to use a 
 patent right." The last form of statement; "a license to exercise 
 some privilege under a patent" is constantly occurring, but it has no 
 meaning. The only privilege that can "exist under a patent" is the 
 right to exclude, and this cannot be the subject of a license. It is 
 property and may be transferred by an assignment but "a license pas- 
 seth no interest, nor alters, or transfers property in any thing." 
 
 A license to use means just what the words indicate, — a permis- 
 sion to use some tangible, objective thing. 
 
 Already we have adverted to the fact that the term "use" is 
 broader than the terms "make" and "sell" as applied to the subject of 
 a patent right. For devices, articles and machines may be made, used 
 and sold but a process or method can be used only. It cannot be 
 made or sold. If A, who owns a patent on a process for bolting 
 flour issues a license to B, it can only for one thing, to use the process, 
 to practice it, to go through the form of action described in the pat- 
 ent. A, himself cannot "make" the process, nor "sell" it, neither 
 
 can B. 
 
 Take a patented machine, A gives B a license to use the machine. 
 Now A's right to use the machine is not a patent right ; A's right to 
 
7't) RIGHTS OF A PATENT OWNER. 
 
 license B to use the machine is not a patent right. When B uses the 
 machine he does not "use a patent right" nor "exercise any privilege 
 under a patent." He simply uses the machine, that is all. He has 
 not the right to make it ; he cannot sell it. He does not own it. He 
 can use it and only for the period and within the limitations ex- 
 pressed or implied in the permission. When, for any reason or in 
 any manner, the permission is legally withdrawn or at an end, any 
 further use on the part of B, is unlawful. A, owns the machine ; it is 
 his, and by virtue of the patent he has the right to exclude B, and all 
 other persons from its use. When the permission is out of the way A, 
 can exercise his right to exclude but not till then. One leading case 
 will make all of the foregoing clear in point of authority of the Su- 
 preme Court. 
 
 Wilson vs. Sanford (1850) 10 How. 99. 
 
 In this case the plaintiff was the owner of the patent for the en- 
 tire United States (except Vermont), protecting the Woodworth 
 planing machine. Now the plaintiff licensed the defendants to use 
 one of the machines. It is not stated how long the license was to 
 run, but presumably it was to run so long as the machine lasted. The 
 plaintiff did not sell the machine, he did not license the defendants 
 to make the machine or to sell it. The defendants by the license got 
 solely the right to use the machine, and it was not an exclusive use 
 but a use in common with any pther person to whom the plaintiff 
 might subsequently extend a similar privilege. The defendants were 
 in precisely the position of one who hires a horse from a liveryman. 
 The defendants were to pay $1400, for the right to use the machine: 
 that is to say $250, in cash and the remainder in five installments, 
 four of which were for $350 each and one for $150. 
 
 Promissory notes were given to secure the payment of the in- 
 stallments. These notes were fearfully and wonderfully drawn. The 
 counsel who conceived and wrote them had read the decisions of the 
 
COMMON LAW RIGHT— LICENSE TO USE. 71 
 
 Supreme Court relating to patents in vain, if he had read them at all. 
 All the notes contained this provision : 
 
 "And if the said notes, or either of them be not punctually paid 
 upon the maturity thereof, then all and singular the rights hereby 
 granted are to revert to the said Wilson (the plaintiff) who shall be 
 reinvested in the same manner as if this license had not been made." 
 (Black ours). 
 
 Suppose A, should let the use of a horse to B for 30 days in con- 
 sideration of B's paying $30; B pays $15 cash and gives his note for 
 $15 payable fifteen days after date. What would be thought of this 
 provision in such note : "If the said note be not paid punctually upon 
 the maturity A shall be reinvested in the same manner as if the horse 
 had not been hired"? Re-invested with what? Title to the horse? 
 That has not been parted with. Whoever drew the notes in the case 
 under consideration manifestly thought that the plaintifif was parting 
 with some part of his patent right, to re-invest which he was seeking 
 to provide. But the patent law gave the patent owner no right to 
 use the machine and no right to permit another for hire to use it. 
 These were common law rights. In his bill the plaintifif prayed for 
 an injunction and for a "re-investiture of title." Now there being less 
 than $2,000 involved the issue was whether or not the Federal Court 
 had jurisdiction of the case as one arising under the patent laws. 
 Chief Justice Taney, in less than 30 lines put the matter in a light 
 which ought to have made it plain for all time. He said 1. c. 101-103. 
 
 "Now the dispute in this case does not arise under any act of 
 Congress ; nor does the decision depend upon the construction of any 
 law in relation to patents. It arises out of a contract stated in the 
 bill ; and there is no act of Congress providing for or regulating con- 
 tracts of this kind. The rights of the parties depend altogether upon 
 common law and equity principles. The object of the bill is to have 
 this contract set aside and declared to be forfeited; and the prayer is 
 "that appellant's re-investiture of title to the license granted to the 
 
RIGHTS OF A PATENT OWNER. 
 
 appellees, by reason of the forfeiture of the contract, may be sanc- 
 tioned by the court," and for an injunction. But the injunction he 
 asks for is to be the consequence of the decree of the court sanction- 
 ing the forfeiture. (Observe that the Chief Justice says nothing 
 about the "re-investiture"). He alleges no ground for the forfeiture 
 unless the contract is set aside. And if the case made in the bill was 
 a fit one for relief in equity, it is very clear that whether the contract 
 ought to be declared forfeited or not, in a court of chancery, depended 
 altogether upon the rules and principles of equity and in no degree 
 whatever upon any act of Congress — concerning patent rights. An<J' 
 whenever a contract is made in relation to them which is not provided 
 for and regulated by Congress, the parties if any dispute arises the 
 parties stand upon the same ground as other litigants as to the right 
 of appeal." 
 
 This decision has repeatedly been affirmed by the Supreme 
 Court as can be noted by a glance at any citator. It is today the su- 
 preme law of the land. Its meaning is so free from ambiguity that 
 we could not believe its import capable of misconstruction if it were 
 not that proof of such misconstruction is abundant. 
 
 Thus in 4 Rose's Notes on United States Reports 900, the deci- 
 sion is digested thus: "Patents — Federal Courts. BILL TO SET 
 ASIDE ASSIGNMENT OF A PATENT does not come within the 
 class of patent cases in which appeal is allowed," etc., (caps ours). 
 The Chief Justice did not use the word "assignment" once and he 
 certainly made every effort to show that no phase of the patent law 
 was involved. 
 
 In the official head note to the case it is written "A bill to set 
 aside an assignment on the ground that the assignee had not com- 
 plied with the contract," etc. 
 
 Rose in the same learned note above referred to writes further: 
 •'Distinguished in Plow Works vs. Starling 127 U. S. 378, holding 
 Circuit Court, has cognizance of action by patentee for breach of 
 
COMMON LAW RIGHT— LICENSE TO USB. 73 
 
 ■agreement by licensee." The latter case stands for no such proposi- 
 tion. It was there held that where "the questions whether the patent 
 was valid and whether it had been infringed, were put in issue and 
 •decided by the Circuit Court" the Supreme "Court had jurisdiction on 
 appeal. We have pointed out these misconstructions of a simple 
 case to demonstrate what appears throughout. That neither text 
 writers nor the lower courts distinguish between an exercise of the 
 natural right protected by the common law and an exercise of the 
 patent franchise created and controlled by Federal statutes, although 
 the two things are as far removed as the East is from the West. 
 
 The Supreme Court has repeatedly declared that the patent law 
 has nothing to do with a license that the latter are common law 
 contracts. The logic of this statement is inescapable. If a license is 
 a common law contract, it is to be dealt with as any other contract. 
 
 If in the case just considered the notes had provided for usurious 
 interest the licensor would have suffered the penalty, notwithstand- 
 ing the notes were given for a "patent right." Let us now pass over 
 to a broader form of license. 
 
74 RIGHTS OP A PATENT OWNER. 
 
 TABLE XI. 
 
 i An Analysis of the Rights of the Owner of a Patent. 
 
 Has Two Distinct Rights. 
 
 I Common Law Right, To make, use and sell. 
 II Patent Law Right, To exclude others, from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 
 By 
 
 Mode of Exercising and the Law Controlling the Two Rights. 
 
 II Common Law Right. 
 
 b. License to make and use. 
 
 We shall not loiter long on this topic. It is not a frequent form 
 of license but at the same time, not at all remarkable. We se- 
 lect this topic to call attention to still another phase of the distinc- 
 tion between right granted by the patent and that protected by the 
 common law. The lower courts never tire of quoting the Supreme 
 Court to the eifect that the right to make, use and sell is a separable 
 right and that these three can be split apart and granted in isolation. 
 
 This proposition is cited as if the power of the patentee to split 
 apart these three things came from the patent law. 
 
 But it does not come from that law. Independent of the patent 
 law a man has a separate and distinct right to make, use and sell 
 a thing of his own. 
 
 He can split these rights apart and exercise them isolatedly, if 
 he desires. He can permit A to make, B to use, and C to sell. But 
 this is not a patent right. 
 
COMMON LAW RIGHT— LICENSE TO MAKE AND USE. 75 
 
 On the contrary we have seen in Gayler vs. Wilder that the 
 , owner of a patent cannot split the right to exclude into three parts, 
 and convey the right to exclude from using to one, the right to ex- 
 clude from making to another, and the right to exclude from selling 
 to still another. The courts confuse an "exclusive right" with a 
 "right to exclude." 
 
 A deceptive ambiguity is contained in the phrase an "exclusive 
 right" when applied to a license. If A, gives B an "exclusive license" 
 to use a patented machine that means this only: A has extended to 
 B a permission to use the machine and at the same has agreed 
 not to extend a like permission to others. The transaction results 
 in the permission of a use plus an agreement not to permit others to do 
 likewise. In such case B is said to have the right to the "exclusive 
 use" of the machine. But we should never forget B's right is a 
 mere permission and that the exclusive feature is only a quantifica- 
 tion of this permission. 
 
 B has no part of the right to exclude. If others start in to use 
 the machine he cannot exclude them, for he has no title to the patent 
 and cannot maintain an infringement suit. 
 
 Yet there are any number of instances where instrumnts by which 
 the owner of a patent has extended an "exclusive right to make 
 and sell, and the parties have caused the same to be recorded in the 
 patent office as though it were an assignment of the patent franchise ! 
 All this cloudiness of perception follows upon a failure to guard 
 against confusing an "exclusive right" and a "right to exclude." 
 
 The "exclusive" character of B's right in the foregoing hypo- 
 thetical case is derived entirely from the contract with A. The 
 "right to exclude" is derived solely from the Act of Congress. It 
 cannot be delegated or hired: it may be sold and transferred to an- 
 other. 
 
76 RIGHTS OF A PATENT OWNER. 
 
 TABLE XII. 
 
 An Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct Rights. 
 
 I Common Law Right, To make, use and sell. 
 II Patent Law Right, To exclude others from making, using 
 and selling. 
 
 The Two Rights Distinguished 
 
 By 
 
 Mode of Exercising and the Law Controlling the Two Rig'hts. 
 
 II Common Law Right. 
 
 c. License to make, use and sell. 
 
 "We have here the most complete form of license — a permis- 
 sion to make, use and sell. In the ease of a process the per- 
 mission would be to use only: in case of a machine it is fre- 
 quently to make use, but not to sell. In the ease of an article 
 Tvhich is sold for consumption and which perishes in the use 
 the license ordinarily permits the making, using and selling. 
 But merely because we have here combined all three of the 
 common law rights of the patent owner— to make, use and sell,— we 
 must not jump to the conclusion that we are dealing with the pat- 
 ent franchise. This is an exercise of the common law right just as 
 are the other forms of license. The contract providing for the H- 
 cense is a common law contract, protected, guaranteed and subject 
 to be restricted by the common law. 
 
 But this is constantly overlooked. For example the latest Di- 
 gest of the Supreme Court, published by the Lawyers Co-operative 
 
COMMON LAW RIGHT— TO MAKE, USB AND SELL. 7T 
 
 Publishing Company, Vol. IV, p. 4277 contains this analysis of the 
 digest : 
 
 "XIII Transfer of Rights: License. 
 
 a. In General. 
 
 b. Assignment. 
 
 c. Mortgage. 
 
 d. License," etc. 
 
 Here the compiler has placed licenses in the same category with 
 assignments and mortgages, and he characterizes a license as a form 
 of transfer of rights. But a license transfers nothing. It "passetb 
 no property or interest in any thing." And this is true even though 
 the license be to make, use, and sell. 
 
 Sometimes we have this perplexing state of facts. The owner 
 of a patent extciids to another an exclusive license to make, use 
 and sell throughout the United States for the full term of the pat- 
 ent. Many times this is mistaken for a transfer of the patent right.. 
 But it is nothing of the kind. It is a mere license. Suppose in such 
 case the patent should be revoked for fraud in its procurement., 
 Clearly the loss would fall on the licensor and not on tjhe licensee. 
 The latter could go on making, using and selling without any hin- 
 drance from the licensor. 
 
 Suppose again that the license makes no provision for an ex- 
 tension and that before the expiration of the original term an ex- 
 tension is granted by the Patent Office. This inures entirely to 
 the benefit of the Licensor who' owns the patent. 
 
 A license, then, of whatever form is a mere permission. It is 
 a common law contract: an exercise of a right protected by the 
 common law and has nothing whatever to do with the patent law. 
 Time and again we are told with an air of apodictic certainty that 
 the patentee has a right not to grant a license and having that, 
 right he can state the terms of the license and make them as he 
 chooses. Nothing could be more fallacious or misleading. The pat- 
 
V8 RIGHTS OF A PATENT OWNER. 
 
 €ntee as patentee has no right to license any one to do anything. 
 The right to license another is not derived from the patent law. 
 We apologize for reiterating this so much. But the only way to 
 combat the repetition of an error .is to repeat the assertion of what 
 is true. We have already seen that the states can regulate the sale 
 of a patented article or entirely suppress its use. Surely then gov-* 
 ernment has some power over a license contract. 
 
 Suppose in the Patterson case that the defendant had been a 
 licensee for the sale of the oil in Kentucky. How long would the 
 Supreme Court have listened to this argument: "The oil is patented: 
 the defendant is a licensee from the patent owner: the latter has a 
 right to license or not license as he sees fit: he can refuse to grant 
 a license and if he inclines to grant one he can state the terms of 
 the license: here the patentee has licensed the defendant to sell the 
 oil in the State of Kentucky. The right to do this is granted by the 
 patent laws and the State of Kentucky cannot abridge it." But the 
 Supreme Court has had to listen to arguments equally as absurd. 
 And this view of the law is acquiesced in today by lawyers general- 
 ly and courts throughout the United States. Some of these days 
 the attorneys general of the various states will awaken to the fact 
 that combinations of capital are playing havoc with the anti-trust 
 laws of their respective states and covering up the deal by much 
 palaver about "patent rights." 
 
 We pass now to the conclusion -of the whole matter. All that 
 has gone before is preliminary to make straight the path. There is 
 so much prepossession against what is to be asserted in the next 
 topic that we need to fortify our premises in strongest manner pos- 
 sible so as to compel assent to the conclusion. 
 
 All that has gone before has been wrought out painfully with 
 much elaboration to make clear beyond the power of mis- 
 understanding that the sole right embraced by the- patent franchise 
 is the right to exclude. The patent right is like Mephistopholes : it 
 
COMMON LAW RIGHT— MAKING AND SELLING. 79 
 
 is the spirit that denies. It negates, and that is all that it does. It 
 never made anything or used any thing or sold anything. The right 
 to exclude in and of itself has never contributed anything to progress 
 or the useful arts. Patentees are proverbially poor and die poor. 
 They have the right to exclude but riches flow from the other right, 
 the "natural right," to make, use and sell. There negation is wholly 
 profitless, as Faust learned after he bit the dust. We must not miss 
 the point that the sole value of the right to exclude consists in this: 
 it renders valuable the right to make use and sell, because others 
 have to obtain the right from the inventor. As the Supreme Court 
 said in the Bell Telephone case "it separates to the patentee an ex- 
 clusive use." But apart from the natural right to make, use and sell 
 ajid except as an adjunct to that right, the patent franchise is utterly 
 useless and worthless. Take Patterson and the Aurora oil. What 
 was his right to exclude worth in the State of Kentucky after the leg- 
 islature had passed a statute which condemned the making, using and 
 selling of the oil? What was Brosnahan's right to exclude others 
 from the oleomargarine business in Missouri worth, after the legisla- 
 ture had excluded him therefrom? 
 
 TABLE XIII. 
 
 An Analysis of the Rights of the Owner of a Patent. 
 Has Two Distinct Rights. 
 
 I Common Law Right, To make, use and sell. 
 II Patent Law Right, To exclude others from making, using 
 
 and selling. 
 
 The Two Rights Distinguished 
 
 By 
 
 Mode of Exercising and the Law Controlling the Two Rights. 
 
80 RIGHTS OF A PATENT OWNER. 
 
 II Common Law Right. 
 
 d. Making and Selling or Authorizing another to make and 
 sell. 
 
 Now here we are at the last stage of our journey. The value 
 of all that we have done heretofore depends solely upon what assis- 
 tance it will afford us at this point. Having wrought at the thing 
 with such persistent elaboration and varied repetition, we should now 
 have some enauring, positive, obstinate ideas on this topic. We can- 
 not idle or play with propositions of law. 
 
 We cannot be indifferent towards them. We must either ac- 
 cept and be guided by them or refute and ignore them. 
 
 Well then, the Supreme Court has said that the franchise which 
 the patent grants consists altogether in the right to exclude others. 
 This is all he (the patentee) obtains by the patent. 
 
 Conversely it has said the right to sell the thing invented is not 
 derived from the patent law ; that that right existed before the patent, 
 and could have been exercised without the grant of letters patent. 
 The Supreme Court and the other courts (the latter often without 
 clearly understanding how or why) have exemplified and enforced 
 this distinction in many other branches of the law. 
 
 The states tax the natural right but cannot tax the patent right; 
 a general assignment reaches the natural right but does not touch 
 the patent right; a creditor armed with a judgment and accompanied 
 by a constable can seize upon and sell the embodiment of the natural 
 right but cannot lay hands upon the patent right ; the states in the ex- 
 ercise of the right to protect their citizens, to conserve their welfare 
 and guard their safety can regulate, the sale or use or entirely sup- 
 press the sale or use of the tangible realization of the natural right 
 but with this great and all but omnipotent power they cannot in any 
 manner affect the patent right. All this means something. It has a 
 significance. Lines projected that far can be extended still farther. 
 Let us see. 
 
COMMON LAW RIGHT— MAKING AND SELLING. 81 
 
 To be^in with it would be startling to be asked to concede that 
 the Congress had the power to grant to any one the right to sell the 
 product of his own labors. The congress has no such power. Bar- 
 tering, trading and selling is as old as human society. Man might 
 almost be called a trading animal. Undoubtedly the most funda^ 
 mental right of man is the right to live, which implies a right to have 
 food and clothing. The right next in order most highly prized is 
 the right to enjoy something more than a bare existence, to have 
 something, to use something, to sell something. Aye, to sell some- 
 thing. That right was a matter of ancient history when Tyre and 
 Sidon were in the glory of their youth. When men start in to dele- 
 gate certain rights to a government and reserve important rights to 
 themselves, they never delegate power over this right to sell. That is 
 kept back and over it our national government has no control. 
 
 When the patentee makes and sells an article embodying the 
 patented invention or authorizes another to do so he does not exer- 
 cise any right under the patent law. The purchaser does not acquire 
 any right under the patent law. Without any patent the inventor 
 could have made and sold it and the purchaser could have bought. 
 The thing transferred is the result of the inventor's skill and labor. 
 It is just as useful to the purchaser, will last just as long and serve 
 him equally well whether patented or unpatented. The inventor has 
 sold the creation of his labor and skill and the purchaser has bought 
 it. It belonged to inventor but now he has received the compensa- 
 tion for his skill and so much of his labor as is embodied in that 
 specimen and it is no longer his but purchaser's. 
 
 An old proverb says it is. useless to cling to the money and at th€ 
 same time hanker for the wares. We may convert this and say of 
 the inventor patentee, it is useless to cling to the patented article and 
 hanker for the money. When the latter comes the former goes. The 
 vendor and purchaser of a patented article do not have to consult 
 the p^ent law to determine their respective rights in the transaction 
 
ii RIGHTS OF A PATENT OWNER. 
 
 they are about to close. This i.'! not all. It is useless and foolish for 
 them to consult the patent law. That law has no more to do with the 
 contemplated transaction than the law regulating the currency, post 
 roads or bankruptcy. Let us now turn to the Supreme Court and 
 see if this conclusion is not inexorable. 
 
 "We begin again with the great land-mark of juristic thinking on 
 the nature of the patent franchise. 
 
 Bloomer vs. McQuewan (1852) 14 How. 539. 
 
 The Patent Act of 1836 was very imperfectly drawn. Amorig its 
 many ambiguities was this : In provided for an extension of the' pat- 
 ent franchise for an additional period of time and preserved the rights 
 of "assignees and grantees of the right to use the thing patented to 
 the extent of their respective interests therein." No one knows what 
 Congress meant by those words. What is meant by the words "as- 
 signees and grantees of the right to use"? Does this mean licensees, 
 assignees of the patent monopoly, or purchasers of specimens of the 
 thing invented? For many years various constructions had 
 been placed on this clause. In the case before us the de- 
 fendant had purchased and paid for a patented planing machine. He 
 bought it from the owner of the patent during the original term. 
 These facts are not plainly stated in the report but they appear upon 
 close reading of it and from subsequent interpretations of the decision. 
 The plaintiff was the owner of the patent for the extended term. He 
 sued the defendant for using the machine during the extended term 
 in infringement of his rights. The question was squarely presented 
 as to whether or not a purchaser of a machine from the owner of the 
 patent for the original term could continue the use of the same dur- 
 ing the extended term. And in determining this point Chief Justice 
 Taney made use of those wdrds which every lawyer having any thing 
 to do with patents should iake for a "sign upon his hand and for front- 
 
COMMON LAW RIGHT— MAKING AND SELLING. 83 
 
 lets between his eyes and nail them to the lintels of his office door so 
 long as he toils in this vak of tears : 
 
 "The franchise which the patent grants consists altogether 
 in the right to exclude everyone from making, using or vending the 
 thing patented, without thie permission of the patentee. This is all 
 that 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 which the patent confers, (the court 
 has in mind an assignment but failed to describe it). He obtains a 
 share in the monopoly, and that monopoly is derived from, and ex- 
 ercised under the protection of the United States. And the interest 
 he acquires, necessarily terminates at the time limited for its continu- 
 ance by the law which created it. The patentee cannot sell it for a 
 longer time. And the purchaser buys with reference to that period; 
 the time for which the exclusive privilege is to endure being one of 
 the chief elements of its value. He therefore has no just claim to 
 share in a further monopoly subsequently acquired by the patentee. 
 He does not purchase or pay for it." 
 
 Now observe the contrast when the Chief Justice sets out in the 
 next paragraph. 
 
 "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 cteated by the Act of Congress, nor 
 does he derive title to it by virtue of the franchise or exclusive priv- 
 ilege granted to the patentee. The inventor might lawfully sell it to 
 him whether he had a patent or not, if no other patentee stood in the 
 "way. And when the machine passes to the hands of the purchaser 
 it is no longer within the limits of the monopoly. It passes outside 
 of it, and is no longer under the protection of the Act of Congress. 
 And if his right to the implement or machine is infringed, he must 
 seek redress in the courts of the state, according to the laws of the 
 State, and not in the courts of the United States, nor under the laws 
 
S4 RIGHTS OF A BATBNT OWNER. 
 
 of Congress granting the patent. The implement or machine be- 
 comes his private, individual property, not protected by the la^ws of 
 the exclusion of others from' its use. For example, in the various 
 the United States, but by t-he laws of- the. Stale in which it is situated. 
 Contracts, in relation to it are regulated by the laws of the State and 
 are subject to state jjurisdiction. 
 
 Like other individual property, it is then subject to state taxa- 
 tion ; and firom. the great number of patented, articles no.w in use, they 
 no doubt, in some of the states,, form no inconsiderable, portion, of. its 
 taxable property." 
 
 The Chief Justice knew he was struggling against obstinate pre- 
 possessions, so he continues the contrast. 
 
 "Moreover, the value of the implement or machine in the hands 
 of the purchaser for use, does not in any degree depend on the time 
 for which the exclusive privilege is granted to the patentee; nor upon 
 patented articles used in agriculture, in milling, in manufactures of 
 dififerent kinds, in steam engines, or for household or other purposes, 
 the value to the purchaser is not enhanced by the continuance of the 
 •monopoly. He does not look to the duration of the exclusive priv- 
 ilege, but to the usefulness of the thing he buys and the advantages 
 he will derive from its use. He buys the article for the purpose of 
 using it as long as it is fit for the use and found to be profitable." 
 
 After com,menting on the Act of 1836 and explaining the pro-- 
 vision above quoted. Chief Justice Taney reminds us that Congress 
 has no power to confer on a patentee any such right as the plaintiff 
 here averted. 
 
 "Congress undoubtedly have power to promote the progress of 
 science and the: useful arts, by securing for limited times, to authors 
 and' inventors^ fhe exclusive right to their respective writings dis- 
 €av.erifis. ' 
 
 BfUt it dmss not folltaw that: Congress may, trom: time to? time as 
 ©Sten as they? think: pirop;er, authorize an inventor to recaitl rights 
 
COMMON LAW RIGHT— MAKING AND SELLING. 85 
 
 which he had granted to others ; or reinvest in him rights of property 
 whrch he had before conveyed for a valuable and fair consideration." 
 
 What more could' be asked than this? The justices who dis- 
 sented misconceived the nature of the patent franchise and the rights 
 of a purchaser of a patented machine. One or two sentences will 
 demonstrate this: 
 
 "The extension (to the purchaser of a machine) of the right to 
 use, while the extendeid patent continues, does a wrong to the patentee, 
 by taking his property and giving it to the licensee. The franchise 
 is property, and it can no more be transferred to another, without com- 
 pensation or contract, than any other property." This betrays the 
 misconception in every clause. The purchaser is not a licensee; he 
 gets no part of the franchise. Tie simply buys a machine and then it 
 is hie. 
 
 The next case in order was. 
 
 Chaffee vs. Boston Belting Co. (1859) 22 How. 217. 
 
 It is not worth while setting forth the facts here as the court only 
 stated the principle in question to show that facts did not come within 
 it. Mr. Justice Clifford said: 
 
 "Tt has repeatedly been held by this Court, that a party who had 
 purchased a patented machine, and was using it during the original 
 term for which the patent was granted, might continue to use the ma- 
 chine during the extended term. 
 
 That rule rests upon the doctrine, that the purchaser in using the 
 machine, under such circumstances, exercises no rights created by 
 the Act of Congress, nor does he derive title to it by virtue of the 
 franchise or the exclusive privilege granted to the patentee." (Ob- 
 serve that this necessarily implies that the vendor in such case does 
 not transfer title by virtue of the franchise.) The court continues: 
 "When the patented machine rightfully passes to the hands of the 
 
86 RIGHTS OP A PATENT OWNER. 
 
 purchaser from the patentee, or from any other person by him au- 
 thorized to convey it, the machine is no longer within the limits of 
 the monopoly. According to the decision of this court it then passes 
 outside of the monopoly, and is no longer under the peculiar protec- 
 tion granted to patent rights. By a valid sale and purchase, the pat- 
 ented machine becomes the private individual property of the pur- 
 chaser, and is no longer protected by the laws of the United States, 
 but by the laws of the State in which it is situated." 
 Next we come to the case of 
 
 Bloomer vs. Mllinger (1863) 1 Wall. 340. 
 
 Here again we have .the patent on Woodworth's planing machine. 
 The same as was the subject of contest in the case of Bloomer vs. 
 McQuewan. 
 
 There was granted two extensions of that patent, and this was 
 a suit for infringement in using one of the machines during the term 
 of the second extension. Here again the defendant owned the ma- 
 chine and had acquired title during the original term of the patent. 
 Counsel for the complainant had the temerity to ask the court to 
 overrule the case of Bloomer vs. McQuewan. Evidently he thought 
 there was some hope of a reversal of that decision in the fact that 
 there two of the judges, Mr. Justice McLean and Mr. Justice Nelson 
 dissented. But he overlooked the more significant fact that nine 
 years later the court was unanimous in the strong and clear opinion 
 in the case of Chaffee vs. Belting Co., just cited. Here again the 
 unanimous opinion of the Court was delivered by Mr. Justice Clif- 
 ford. He reiterates much of what was said in the earlier case but 
 the language is varied so as to throw new light on the problem that 
 counsel had failed to solve. We cannot forbear quotation. Listen. 
 
 "Patentees acquire the exclusive right to make and use and vend 
 to others to be used, their patented inventions for the period of time 
 
COMMON LAW RIGHT— MAKING AND SELLING. 87 
 
 specified in the patent, (the language of this clause— "exclusive 
 right," — is unfortunate) but when they have made and vended to 
 others to be used one or more of the things patented, to that extent 
 they have parted with their exclusive right ( — right to exclude) 
 They are entitled to but one royalty for a patented machine, and, 
 consequently, when a patentee has himself constructed the patented 
 machine and sold it, or authorized another to construct and sell it, or 
 to construct and use it and operate it, and the consideration has been 
 paid to him for the right, he has then to that extent parted with his 
 monopoly, and ceased to have any interest whatever in the machine 
 sold or authorized to be constructed and operated. Where such cir- 
 cumstances appear, the owner of the machine, whether he built it or 
 purchased it, if he has also acquired the right to use and operate it 
 during the lifetime of the patent, may continue to use it until it is 
 worn out, in spite of any and every extension subsequently obtained 
 by the patentee or assigns." It has repeatedly been held by 
 this court that a party who had purchased and was using a 
 patented machine during the original term for which the pat- 
 €nt was granted, had a right to continue to use the same during 
 the -extension. Founded as that rule is upon the distinction, 
 between the grant of the right to make and vend the ma- 
 chine, and the grant of the right to use it, the justice of the case will 
 always be obvious, if that distinction is kept in view and the rule itself 
 is properly applied." He then repeats the substance of the earlier 
 decisions and continues: "Such, certainly, were the views of this 
 court in Bloomer vs. McQuewan where the whole subject was very 
 fully considered. Attention is drawn to the fact that there was con- 
 siderable diversity of opinion among the judges in disposing of that 
 case, (so much for the forlorn hope of counsel) but the circumstance 
 is entitled to no weight in this case, because the court has since 
 unanimously affirmed the same rule. Chafifee vs. Boston Belting Co. In 
 the case last mentioned the court say, that when the patented machine 
 
8S RIGHTS OF A PATENT OWNER. 
 
 rightfully passes from the patentee to the purchaser, or from any 
 other person by him authorized to convey it, the machine is no longer 
 within the limits of the monopoly. By a valid sale and purchase the 
 patented machine becomes the private individual property of the pur- 
 -chaser, and is no longer specially protected by the laws of the' Utiited 
 States, but by the law of the State in which it is situated. Hence it 
 is obvious, say the court, that if a person legally acquires a title to that 
 which is the subject of letters patent, he may continue to use it until 
 it is worn out, or he may repair it or improve upon it as he pleases, 
 in the same manner as if dealing with property of any other kind." 
 Citing, Crane vs. Price ; Webster's Patent cases 413 not p. 
 
 The counsel for the plaintift apparently thought the Court had 
 lightly disposed of the case of Bloomer vs. McQu«wan. The Court 
 returns this warm compliment : "Considering that the question has 
 been several times decided by this court, we do not think it necessary 
 to pursue the investigation." 
 
 We have been careful to look up the note to Crane vs. Price cited 
 by the Court. The volume containing the annotation was published 
 in 1844, twenty years prior to the decision here. There could be 
 no reason for citing the note of a commentator unless it contained an 
 approved expression of some principle. The note is indeed worth 
 quotation since it has been so cited. 
 
 "Suppose a particular article, starch for instance, to be the subject 
 of letters patent, and that all the starch in the country was patent 
 starch ; there are attached to the making and selling of that article 
 certain exclusive privileges, but the individual who has purchased it 
 of the patentee has a right to sell it again, and to use at his will and 
 pleasure; the exclusive privileges are, in respect of that particular 
 portion of the article so sold, at an end, and do not pursue it through 
 any subsequent stage of its use and existence, otherwise every pur- 
 chaser of starch would be obliged, according to the terms of the let- 
 ters patent, to have a license in writing, under the hand and seal of 
 
COMMON LAW RIGHT— MAKING AND SELLING. 89' 
 
 the patentee ; the absurdity of whieh is manifest. Hence it is obvious, 
 that if a person legally acquires, by license or purchase, a title to that 
 which is the subject of letters patent he may use it, or intprove upon 
 it in whatever manner he pleases: in the same manner as if dealing 
 with property of any other kind." 
 The case of 
 
 Mitchell vs. Hawley (1873) 16 Wall. 544. 
 
 indicates how careful the Supreme Court had been in formulating this 
 rule. Each time the court has said "when the machine rightfully 
 passes from the patentee," etc. 
 
 Here the machines did not "rightfully" pass as they were sold by 
 a licensee to make and aellj but whose license expressly inhibited him 
 from selling any machine for use beyond the original term of the 
 patent. The owner of the extension successfully maintained a suit 
 for infringement for using the machine during the extended term. The 
 defendant purchased from a licensee to sell and was bound to know 
 the extent of the permission .extended in the license. 
 
 Again Mr. Justice Clifford delivered the unanimous opinion of 
 the court. He goes over the same ground traversed in the previous 
 decisions. Again he points the distinction between an assignee of a 
 portion of the franchise and a purchaser of a specimen of the invention 
 and comes to the same inevitable conclusion. "The purchaser of the 
 implement or machine for the purpose of using it in the ordinary pur- 
 suits of life stands on different grounds, as he does not acquire any 
 right to construct another machine either for his own use or to be 
 vended to another for any purpose. Complete title to the implement 
 or machine purchased becomes vested in the vendee by the sale and 
 purchase, but he acquires no portion of the franchise, as the machine. 
 
so RIGHTS OF A PATENT OWNER. 
 
 when it rightfully passes from the patentee to the purchaser, ceases 
 to be within the limits of the monopoly. 
 
 In the paragraph following the Court say "Sales by the patentee 
 may be made with or without conditions," we shall find the meaning 
 of this explained later. 
 
 In this case the machine did not "cease to be within the limits of 
 the monopoly" because it was sold by one who had no part of the 
 monopoly but who was a mere licensee with a restricted power to sell. 
 But we must remember that there is the widest possible difference 
 between a sale by one having only a restricted right to sell and a sale 
 by the patentee with a restriction or condition. Nothing could be 
 further apart than these two. In the former case the restriction is on 
 the vendor and qualifies the property rights conveyed; in the latter 
 <3ase the restriction is imposed by the vendor on the purchaser. The 
 first restriction affects tlie property conveyed; the second is a mere 
 ■contract. The next case is the converse of the one just considered. 
 Here the article was sold by an owner of the entire patent right for a 
 particular district, 
 
 Adams vs. Burke (1873) 17 Wall. 453. 
 
 This is a very great case and should be studied most carefully. The 
 plaintiff owned a patent on a coffin plate. He assigned the whole 
 right to L. and S. for a district comprised by a circle whose radius is 
 ten miles having the city of Boston for its center, outside of that dis- 
 trict the plaintiff still owned the right to exclude. The defendant 
 went within this circle and bought a quantity oi the patented lids, 
 took them outside of the district and used them. Thereupon the 
 plaintiff sued him for infringement. The argument of the counsel for 
 defendant was directly to the point. We cannot quote it all but only 
 a few sentences. 
 
 "When the patented article has been lawfully made, added to 
 
COMMON LAW RIGHT— MAKING AND SELLING. 91 
 
 the chattels in existence, and sold by the patentee, or by an assignee 
 of the right to make and sell, there has been no infringement of the 
 tnonopoly, and all the rights secured by the patent have been exer- 
 cised. ' The purchaser's right to use is a common law right, unpro- 
 tected by and independent of the patent. In using he exercises no 
 right created by the Act of Congress. No further right as to that 
 particular article is secured to anyone by the patent." 
 
 The opinion of the Court was written by Mr. Justice Miller, who 
 on Circuit wrote the powerful opinion in the ease of In. re Bros- 
 nahan, considered heretofore. 
 
 He said in part, "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." 
 After stating the principle of the earlier cases, he continues: "The 
 true ground on which these decisions rest is, that a 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. (Now listen). 
 But, in the essential nature of things, when the patentee, or the per- 
 son having his rights, sells a machine or instrument whose sole value 
 is in its use, he receives the consideration for its use and he parts with 
 the right to restrict that use. The article, in the language of the court 
 passes without the limit of the monopoly. That is to say, the pat- 
 entee or his assignee having in the act of sale received all the royalty 
 or consideration which he claims for the use of his invention in that 
 particular, machine or instrument, it is open to the use of the purchaser 
 without further restriction on account of the monopoly of the pat- 
 entees." 
 
92 RIGHTS OF A PATENT OWNER. 
 
 Tie next case involving tliis important point is Hobbie vs. Jerati- 
 Bon (1893) 149 U. S. 355. The facts here were very similar to the facts 
 in Adams vs. Biorke. The defendant was an assignee for the State of 
 Michigan of a patent on a wooden .pipe. The plaintiff owned the 
 patent for the State of Conneeticnt. A contractor at Hartford, Con- 
 necticut, knowing these facts, bought a quantity of the pipe in Michi- 
 gan from the defendant, shipped it to Hartford and there used it. The 
 plaintiff sued the defendant for infringement in Celling the pipe in 
 Michigan for use in Connecticut, where the plaintiff owned the mon- 
 opoly. It was sought to distinguish the case from Adams vs. Burke on 
 the ground that here both defendant and the vendee knew that the pipe 
 was sold for use outside of the State of Michigan, but the Court refused 
 to put any such limitation upon its prior decision. The opinion orf the 
 Court was delivered by Mr. Justice Blatchford and th«re was no dis- 
 sent. The Court said : 
 
 "The Circuit Court further said that there was no evidence in 
 Adams vs. Burke that the sale was made under the belief on the part 
 of the seller that the article was to be used within his territory, and 
 that the case was authority for the broad proposition, that the sale of 
 the patented article by an assignee within his territory, carries the 
 right to use it everywhere, notwithstanding the knowledge of both 
 parties that a use outside of the territory is intended. We understand 
 that to be the true interpretation of the decision in Adams vs. Burke. 
 It is said in the opinion in that case, that when the patentee, or the 
 person having his rights, sells a machine or instrument whose sole 
 value is in its use, he receives the consideration for its use and parts 
 with the right to restrict that use; that the patentee, or his assignee, 
 having in the act of sale received all the royalty or consideration which 
 he claims for the use of his invention in that particular machine or 
 instrument, it is open to the use of the purchaser without further re- 
 striction on account of the monopoly of the patentee; that, although 
 the right of the assignees of the coffin-lid patent to manufacture, to sell. 
 
COMMON LAW RIGHT— MAKmO AND SELLING. 93 
 
 and to use the coffin-lids was limited to the circle of ten miles around 
 Boston, a purchaser from them of a single coffin acquired the right to 
 ■use that coffin for the purpose for which all coffijns are used; that, so 
 far as the use of it was concerned, the patentee had received his con- 
 sideration and it was no longer within the monopoly of the patent. ' ' 
 
 In the concluding paragraph, the Court threw out a suggestion 
 which apparently was intended, to indicate to counsel the manner in 
 ■which the rights of the parties could be limited in accord'anee with the 
 argument of the counsel, but not under the patent law. The Court 
 said : 
 
 "It IS easy for a patentee to protect himself and his assignees, 
 when he conveys exclusive rights under the patent for a particular ter- 
 ritory. He can take care to bind every licensee or assignee if he gives 
 him the right to sell articles made under the patent, by imposing con- 
 ditions which will prevent any other licensee or assignee from being 
 interfered with. There is no condition or restriction in the present 
 case in the title of the defendant. He was the assignee and the owner 
 of the patent for the State of Michigan. ' ' 
 
 It is to be observed that this last paragraph has to do entirely 
 with a common law contract. In other words, the Court says that the 
 patentee, by extending a license in the form of a common law contract 
 and imposing a condition as a term of the license, can restrict the 
 power of the licensee to sell for use beyond his territory. But, since 
 the defendant in this case was not a licensee but an owner of the patent 
 for the State of Michigan, he had aU the power in that State over the 
 monopoly that a patentee could have anywhere. Time and again the 
 lower courts have attempted to restrict this case by interpreting it to 
 mean that a patentee, by making and selling a specimen of his inven- 
 tion cannot, restrict the use as to place. This di^inetion proceeds on 
 the same ground that a amilar distinction with, reference to the case 
 of Bloomer vs. M^,Quewan was taken in. the minority ofinionin the case 
 of Adams vs. Burke. But. neither case can be limited, in sufihi manner. 
 
94 RIGHTS OF A PATENT OWNER. 
 
 The effect of the two decisions is to declare it impossible for a vendor 
 ctf a patented article, under the patent law, to restrict the use of the 
 article which he has made and sold, in any manner whatever. The 
 lower courts have been reluctant to give in to this view because of the 
 erroneous notion that in some way or somehow, which is not explained, 
 the exclusory franchise of the patent accompanies every article sold 
 by the patentee. We have long since learned that this is whoUy un- 
 tenable. But we will go forward and further demonstrate it by the 
 decisions of the Supreme Court. 
 
 In the case of Morgan Envelope Company vs. Albany "Wrapper 
 Company, (1893) 152 U. S. 425, the plaintiff brought an infringement 
 suit against the defendant on the following state of facts : The plain- 
 tiff owned a patent on a metal fixture which was intended to deliver 
 perforated strips of paper for toilet use in hotels and houses. The 
 patent was on the combination of the paper roll with the mechanism 
 for its delivery. The plaintiff made it a business practice to sell the 
 ntechanism only to persons who would buy from it the paper. The de- 
 fendant bought a quantity of the fixtures from persons who had pur- 
 chased them from the plaintiff and resold such fixtures and at the 
 same time sold paper for use in the fixtures. One charge of infringe- 
 ment was that the defendant had sold the fixtures without the consent 
 of the plaintiff. With reference to this phase of the case, the Court 
 said : "So far as fixtures sold by defendants, which have been origin- 
 ally manufactured and sold by the patentee to other parties, are con- 
 cerned, it is evident that, by such original sale by the patentee, they 
 passed out of the limits of the monopoly, and might be used or sold by 
 anyone who had purchased them from the original vendees. The pat- 
 entee having once received his royalty upon such device, he cannot 
 treat the subsequent seller or user as an infringer. ' ' The Court then 
 cites with approval and quotes from the cases heretofore discussed. 
 
 Finally, in the case of Keeler vs. The Folding Bed Company (1895) 
 ■157 U. S. 659, the Court went over the whole question again with great 
 
COMMON LAW RIGHTV- MAKING AND SELLING. 95 
 
 thoroughness and settled the law in accordance with the view for 
 which we have been insisting throughout this essay. The facts were- 
 very simple. Plaintiff was the assignee for the State of MCassachusetts 
 of a patent for an improvement ia folding bedsteads. The Welch 
 Folding Bed Company owned the patent right for the State of Michi- 
 gan, and the defendants who conducted a business in Massachiisetts,. 
 purchased a carload of the beds from the Welch Company in Michi- 
 gan, for the purpose of sale in Massachusetts, and afterwards sold them 
 in Massachusetts. The lower Court gave judgment against the defend- 
 ant for infringement and awarded an injunction. The opinion of the 
 Court was written by Mr. Justice Shiras. We hesitate to quote from 
 the opiaion for not a sentence of it can well be spared. The Court 
 discusses all of the cases which we have hitherto considered and others 
 even. It re-aflBrms the doctrine announced in Bloomer vs. McQuewan 
 in Adams vs. Burke, in Hobbie vs. Jennison, and insists that these- 
 cases cannot be restricted or distinguished away. We will quote two- 
 paragraphs from this opinion ; they are as f oUows : 
 
 "Where the patentee has not parted, by assignment, with any of 
 his original rights, but chooses himself to make and vend a patented 
 article of manufacture, it is obvious that a purchaser can use the 
 article in any part of the United States, and unless restrained by con- 
 tract with the patentee, can sell and dispose of the same. It has passed! 
 outside of the monopoly, and is no longer under the peculiar protec- 
 tion granted to patented rights." Then after discussing all of the 
 cases, the Court concludes: "Upon the doctrines of these cases we 
 think it follows that one who buys patented articles of manufacture 
 from one authorized to sell them becomes possessed of an absolute 
 property in such articles, unrestricted in time or place. " The conclud- 
 ing sentences deserve the closest attention : " Whetheir a patentee may 
 protect himself and his assignees by special contract brought home to 
 -the purchasers, is not a question before us, and upon which we express 
 no opinion. It is, however, obvious that such a question would arise as 
 
36 RIGHTS OF A PATENT OWNER. 
 
 a question of contract, and not as one under tbe inherent meaning and 
 effect of the patent laws. The conclusion reached does not deprive a 
 patentee of his just rights, bec&use no article can be unfettered from 
 Va.e claim of his monopoly without paying its tribute. The inconven- 
 ience and annoyance to the public that an opposite conclusion would 
 occasion, are too obvious to require illustration. These views render 
 it uimeeessary to consider other features of the case." CBlack ours.) 
 This ought to make it clear to any one who appreciates plain lan- 
 guage that the only way in which a patentee can impose a restriction 
 of any kind or character in connection with a patented aarticle which 
 he has made and sold, is by means of a common law contract. His power 
 under the patent law cannot be used for any such purpose. The only 
 possible control that he can maintain over the article is a control aris- 
 ing from a contract and is precisely similar to the control which the 
 "vendor of a horse would have over a horse that he had sold under a 
 contract that the horse cotild be driven only four days in the week. 
 If the purchaser of the horse should drive it seven days in the week, 
 he would break his contract and lay himself liable to a suit and dam- 
 ages therefor, but he would still own and have title to the horse. This 
 is the exact situation of the patentee. He, like anyone eke, can im- 
 pose a restriction when he sells an article, device, or machine, that he 
 has manufactured, but the restriction is a restriction that arises from 
 a contract. Its force, effect, and validity is to be determined by com- 
 mon law principles applicable to common law contracts. All of this 
 necessarily and inevitably follows from the doctrine running through 
 •all the cases that we have discussed to the effect that the sole right 
 granted in the patent is the right to exclude, and when the patentee 
 makes and sell's a patented article, he exercises no right created by the 
 paten4; law, confers on the purchaser no right created or protected by 
 liat law, and cannot, in virtue of that law, impose any restaiction 
 on the purchaser whatever. We must choose between the doctrine aa- 
 aouneed in these cases and that promulgated ia the eases coUatad in 
 
COMMON LAW RIGHT— MAKING AND SELLING. 97 
 
 the first pages of this volume. It is not possible to reconcile the de- 
 cisions of the Supreme Court, which we have just finished discussing, 
 with the decisions referred to. They are completely and totally con- 
 tradictory and we are compelled to accept one ruling and reject the 
 other. 
 
 The use to which we wish to put the foregoing exposition and 
 analysis is to obtain a positive and unwavering answer to one broad 
 and general question and three narrow and specific ones. 
 
 The broad general question is this: In what respect, if any, do 
 the rights and powers of a patentee in selling a patented article, differ 
 from those of any ather vendor, selling an unpatented article ? 
 
 The three concrete specific questions are these: (1) What are 
 the rights and powers of the patentee to impose restrictions as to the 
 use of a patented article which he has sold to another? (2) What are 
 the rights and powers of the patentee to impose restrictions as to the 
 resale price of a patented article which he has sold and for which 
 he has received the purchase price? (3) Does the Antitrust Legis- 
 lation of the Federal Government and of the States apply to contracts 
 in restraint of trade in patented articles? 
 
 No one of those four questions seems at all puzzling if the fore- 
 going analysis is sound. 
 
 Those questions would not present any difficulty whatever, but 
 for a wholly variant doctrine hereafter to be contended with. As to 
 the broad question, it is obvious that a patentee in every respect and 
 without exception has no more, no greater and no different rights than 
 any other vendor of an unpatented article. He does not get the right 
 to sell from the patent law. He had that right in full before applica- 
 tion for the patent and will have it undiminished after the patent ex- 
 pires. 
 
 The patent excludes others from selling imitations of the article, 
 but that does not enlarge or in any manner effect the patentee's right 
 
98 RIGHTS OF A PATENT OWNER. 
 
 to sell; when he goes about selling his patented device he does not 
 avail himself of any right granted by the patent and is subject to all 
 the limitations that are imposed on any vendor. "We have seen in Pat- 
 terson vs. Kentucky that the patentee's right to sell his patented oil 
 was entirely suppressed ; though this did not affect his patent right to 
 exclude others. In People vs. RusseU, 49 Mich. 617 Judge Cooley said : 
 "The patent laws do not determine personal capacity to contract, or 
 prescribe the requisite for sales of patented articles- or impose the cus- 
 tomary restrictions which are supposed to be important to the pro- 
 tection of public morals. A patentee must observe the Sunday law as 
 much as any other vendor : he must put his contracts in writing under 
 the same circumstances which require writings of others, and he must 
 obey aU other regulatons which are made for general observance." 
 
 In Webber vs. Virginia Mr. Jiistice Field said: "The legislation 
 respecting the articles which a state may adopt after the patents have 
 expired it may equally adopt during their continuance." 
 
 From aU this it abundantly appears that the patentee is on a dead 
 equality with any oth(^r vendor of an unpatented article. He does 
 not have to sell at all : neither does the owner of an unpatented article. 
 He can state on what terms he will sell ; so can the owner of an unpat- 
 ented article. He can sell for cash or on credit ; absolutely or condi- 
 tionally ; so likewise can any other vendor. Bach has the same power, 
 each exercises the same right, each is limited and restricted by the 
 same law. All this seems painfully trite, but the inevitable conse- 
 quences of this premise are stoutly denied by many courts in the 
 United States. The same courts that declare contracts dn restraint of 
 trade in unpatented articles void as criminal, declare contracts em- 
 -,J»racing the most vicious restraints of trade in patented articles not 
 onbz. not void, but perfectly valid and beyond the reach of any stat- 
 ute or arm of public policy. 
 
 "We might cut the whole matter short and say in the language of 
 
COMMON LAW RIGHT— MAKING AND SELLING. 99 
 
 the text writers "that such decisions are opposed to the greater weight 
 of authority. ' ' But that specious excuse for indolence satisfies no one. 
 
 If the decisions are not supported by the law of the land, as de- 
 clared by the highest source of authority they do not embody the law 
 but only an erroneous speculation about what the Court thinks the 
 law is. A decision which is opposed to the greater weight of ultimate 
 authority is not an exposition of the law, though it may be promul- 
 gated and enforced by the terrorizing power of the Court, but the 
 day will come when it will be only so much waste paper and useless 
 mongering of words. We are deeply persuaded that the decisions we 
 are now going to discuss not only are illogical, inconsistent, and within 
 their own boundaries contradictory, but are flatly opposed to' the law 
 as declared by the Supreme Court for sixty years. They are not only 
 opposed to "the greater weight of authority," but are opposed to all 
 real authority, shock the innate sense of justice and outrage common 
 sense, apart from any knowledge of the law. Of course when we use 
 such language as that we thereby place ourselves under a duty to pre- 
 sent a biU of particulars. 
 
 Every assertion of a proposition arouses a tendency to uphold the 
 opposite. And one can only gain assent by going into details ajad forc- 
 ing the dispute back to fundamentals where the disputants agree be- 
 cause both disputants are caught in the tightened grip of the same 
 necessary truth. That is what we shall attempt here by a minute ex- 
 amination of all the decisions which we have put under a sweeping 
 ban. 
 
 It requires much labor, much space and much time. One must 
 r-ot be surprised in observing that the space devoted to the discussion 
 of these cases bulks larger than that necessary for the preceding analy- 
 sis. It always requires much more time to analyze, dissect and explain 
 away an erroneous proposition than it does to assert and prove a cor- 
 rect one. That is the essential nature of error: it only confuses and 
 does not advance us. When we have finished with these cases, it will 
 
100 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 be very apparent that in a sense the work has been wholly useless. 
 We are back again at the starting point. 
 
 This brings us to a consideration of the eases involving the first 
 specific question proposed above. 
 
 Decisions as to the Right of a Patentee to Impose Restrictions as- 
 to the Use of a Patented Article or Device Which He has Sold. 
 
 The first ease here, and the most powerful one, we shall have to- 
 deal with is 
 
 Heaton-Peninsular Button Fastener Co. vs. Eureka Specialty 
 Co. (1896) 77 Fed. 288, 
 decided by the Court of Appeals for the Sixth Circuit. This is the 
 first decision of the character announcing a straage doetrine that is 
 now familiar to most lawyers. As an authority it has had great influ- 
 ence with the lower courts. For this reason and for the fact of its 
 being promulgated by high authority, it deserves and shall receive 
 the most thorough-going attention. The opinion is powerfully and 
 lucidly written. Macaulay himself never wrote in a more luminous 
 and flowing style. But, for all this, the opinion from the opening sen- 
 tence to the final conclusion is one huge, monstrous and towering error. 
 "We have weighed these words. And we assert unflinchingly that con- 
 sistency compels every one to choose once and for all between the de- 
 cision in this case and the decisions of the Supreme Court. It is not 
 possible by any casuistry or dialectical ingenuity to reconcile this de- 
 cision with those of the highest tribunal in the nation, much less sup-, 
 port it by those decisions. This is as certainly demonstrable as any 
 propositioii in geometry. It is not necessary to resort to any recon- 
 dite prepossessions of the law involved, but only to attend to the plain 
 language of the Supreme Court. 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CD. 
 THE FACTS AND ISSUES. 
 
 We will abridge the Court's statement of the facts and issues. 
 ^'This is an appeal from the decree of the Circuit Court for the "West- 
 ern District of Michigan sustaining a demurrer filed by the defendants, 
 and dismissing the bill of complaint. The averments of the bill are 
 substantially these : The complainant, a corporation, is by assignment 
 the sole owner of several patents for inventions relating to the art 
 of fastening buttons to shoes with mettalic fasteners. The validity of 
 these patents is not involved. The objects of these patents was to 
 produce a machine wherein the buttons and staples should be auto- 
 matically presented to a guide or carrier having a combined driver or 
 former co-operating therewith; the driver causing the insertion of the 
 staple through the leather, or other material of the shoe, shaping and 
 forming the head of the staple, the legs of the staple being clinched 
 upon a suitable anvil. The principal and earlier of these patents — 
 No. 293,234 — describes the invention as intended to produce a setting 
 device 
 
 'which can be used conveniently for setting and clinching an 
 ordinary metallic staple (black ours) , and have two prongs of 
 the staple, if desired, in a line at right angles with the strain 
 on the buttons. ' 
 The mechanism by which such results are reached includes a staple 
 chute or raceway, into which wire staples of suitable size are fed and 
 automatically conveyed, set and clinched. The size of the staples to 
 be used in the machine depends upon, the size of the chute or raceway, 
 and this depends upon the judgment of the manufacturer of the ma- 
 chines. No staple can be used in the machine which is not adapted in 
 size to this raceway, and a variation of a very slight character between 
 the staple and the diameter of the raceway will prevent the operative- 
 ness of the machine. The bill alleges that neither the complainant nor 
 its predecessors in title have ever sold any right to manufacture ma- 
 
102 RESTRICTIONS ON PURCHASER'S USE OP PATENTED ARTICLE. 
 
 chines, but have reserved to themselves the monopoly of the manu- 
 facture and sale. 
 
 It also alleges that no machines have ever been sold except upon 
 condition, and that there is attached to each machine a conspicuQUS 
 metal plate, on which is plainly expressed a restriction upon the use 
 of the machine, to the effect that the machine was sold and purchased 
 "to use only with fasteners" made by the complainant or predecesr 
 sors in title to the patents embodied in the machine, and that title 
 should revert at once upon any violation of this restriction. Every 
 user of the machine is alleged to have had full notice of this restric- 
 tion upon the use of the machines, and to buy and use the machines 
 subject to this restriction upon their use. These machines have been 
 placed in the hands of shoe dealers to the number of 49,000, at the 
 actual cost of the machines to the makers, they expecting a profit on 
 their monopoly alone from the sale of fasteners or staples to those 
 having the machines. Complainant then alleges that the defendants, 
 with full knowledge of this method of putting complainant's monopoly 
 in general use, are making and selling staples adapted only to use 
 with these machines, and they are guilty of infriugement, by reason 
 of the fact that the staples so made and sold by them are adapted only 
 to use in these machines, and are made and sold with intent that they 
 shall be used in violation of the restriction placed by complainant upon 
 the use of machines made and sold by it. It is not charged that the 
 defendants either make, sell or use said machines, but that they are 
 guilty of contributory infringement, by inducing others to use the ma- 
 chine in excess of the license, and by furnishing them with the meana 
 for such infringement, with the express intent that the staples so sold 
 and bought shall be so used." 
 
HEATON-BUTTON, ETC., CO. VS. EUHEKA SPECIALTY CO. 103 
 
 THE OPINION. 
 
 The opinion was written by Lurton, Circuit Judge. The two open- 
 ing sentences are of great importance. 
 
 "Staples in size and form adapted to use in such machines are 
 unpatented articles, and not even an element in a combination claim. 
 They are therefore no more within the direct monopoly of the patents 
 than are the buttons to be afSxed by means of the staples, or the shoe 
 to which both are attached." 
 
 The Court then quotes the notice which was inscribed on a 
 metal plate attached to each machine, as foUows : 
 
 "Condition of Sale." 
 
 "This machine is sold and purchased to use only with fasteners 
 made by the Peninsular Novelty Company, to whom the title to said 
 machine immediately reverts upon violation of this contract of sale." 
 
 From here on we shall study the opinion with the utmost care. 
 
 "Undoubtedly the general rule is that if a patentee make a struc- 
 ture embodying his invention, and unconditionally make a sale of it, 
 the buyer acquires the right to use the machine without restrictions, 
 and Ivhen such machine is lawfully made and unconditionally sold, no 
 restriction will be implied in favor of the patentee. By such uncondi- 
 tional sale the machine passes without the limits of the monopoly. ' ' 
 
 For this proposition the Court cites : 
 Adams vs. Burke, 17 Wall 453. 
 Mitchell vs. Hawley, .16 Wall 544. 
 
 The Court says: "By such unconditional sale the machine passes 
 without the limits of the monopoly," impliedly asserting that if the 
 machine is "conditionally" sold it does not pass without the limits of 
 the monopoly. But neither of the cases cited support the proposition. 
 In Mitchell vs Hawley, the sale was not made by the owner of the 
 
104 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 patent, but by a licensee whose license expressly forbade him to "in 
 any way or form to dispose of or sell or grant any license to use, the 
 said machine beyond the third day of May,1867." Of course the ven- 
 dor could only sell in virtue of that license ; he could sell no more than 
 his license permitted and the purchaser could get no more than he 
 could transfer. 
 
 Now all that the Supreme Court decided in that case was that a 
 purchaser from the licensee to sell did not acquire a right to use the 
 machine beyond the third day of May, 1867. Why? Because he pur- 
 chased from one who had only a limited power to seU, who did not 
 own the right to exclude. Since the purchaser was buying from a 
 licensee to sell, he was bound to know terms of the license and neces- 
 sarily, he could gain no greater right than the licensee could sell. The 
 licensee, by the unmistakable limitation of his permission, could not 
 sell a machine to be used beyond May, 1867. 
 
 The machine here did not rightfully pass from the patentee, at 
 all : it passed from a mere licensee under a license limiting the extent 
 of the right to the use which he could grant. 
 
 But in this very decision the Court was most careful to point out 
 the distinction between a licensee and an assignee on the one hand, and 
 a purchaser of a specimen of the invention from the patentee or a li- 
 censee with an unrestricted power to sell. 
 
 In Adams vs. Burke (1873) 17 Wall 453, Mr. Justice Miller 
 (who wrote the powerful opinion in the ease of In re Brosnahan supra, 
 p. 11) dealt with the rule and the exception now being considered 
 He said: "In the essential nature of things, when the patentee, or the 
 person having his rights (viz to exclude others from making, using 
 and selling) sells a machine or instrument whose sole value is in its 
 use, he receives the consideration for its use and he parts with the 
 Tight to restrict that use. The article, in the language of the (this) 
 Court, passes without the limit of the monopoly (right to exclude). 
 That is to say, the patentee or his assignee having in the act of sale re- 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 105 
 
 •ceived all the royalty or consideration which he claims for the use of 
 iis invention in that particular machine or instrument, it is open to 
 the use of the purchaser without further restriction on account of the 
 jnonopoly (right to exclude) of the patentees." Notice those last 
 words : " on account of the monopoly of the patentees ' '. 
 
 In other words, the sale and transfer of the physical thing and re- 
 •ceiving the purchase price therefor is what operates to take the instru- 
 ment out of the monopoly. When the patentee has received the pur- 
 -ehase price, then no further restriction can be imposed "on account 
 •of the monopoly of the patentee". Observe that the Court does not 
 say that the vendor in such case is powerless to impose any further re- 
 striction in the exercise of some other right. But it does say that the 
 patentee's power to impose restrictions "on account of the monopoly 
 ■of the patentee" is ended when he sells the instrument. Of course, 
 the patentee, like any other vendor, can sell an article, a machine or 
 3, horse, and by a common law contract with the vendee restrict the 
 right of the latter to use the thing sold. But in either ease, whether 
 the vendor is selling a patented or an unpatented article, the restric- 
 tion is a common law contract and has nothing whatever to do with 
 the patent law. Why does Mr. Justice Miller begin the above quoted 
 statement with "in the essential nature of things". Because the Court 
 had said, in Bloomer vs. McQuewan: "In using it (the machine pur- 
 chased from the patentee), he (the purchaser) 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." This 
 statement is repeated in Chaffee vs. Boston Belting Co., in Bloomer vs. 
 Millinger, in Mitchell vs. Hawley, and in all later' cases. And, of 
 course, if the purchaser by using the instrument does not exercise a) 
 patent right and does not derive title by virtue of the patent franchise, 
 it follows as a necessary and unescapable corrollary that the patentee 
 does not transfer title by virtue of the patent franchise. The deriva- 
 tion of title, the transfer of title fl"d the holding of title by the pur- 
 
106 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 chaser is not in any way connected with or dependent on the patent 
 And since the right of the purchaser to use the thing purchased is noft 
 derived from the patent franchise, a restriction on the right to use is 
 not imposed in the exercise of the patent right. 
 
 The condition imposed originates from the same source as the title. 
 The condition is imposed by the vendor as a burden on the title. 
 
 The title is derived from the "natural right" of the patentee to 
 sell the results of his labor: the restriction is derived from the "natural 
 right" of the patentee to say on what terms he will sell the results of 
 his labor. Just as the owner of a horse can sell the horse on condi- 
 tion that the purchaser buy from the vehdor all feed for the horse. 
 But in the sale by the patentee, when the restriction is broken, it is 
 only the "natural right" or common law right of the patentee that is 
 invaded. There has been a breach of a common law contract, and that 
 is all. The vendor parted with no right under the patent, the pur^ 
 chaser got no such right and when the purchaser breaks the terms of 
 the contract by which he pui'chased he does not thereby invade any 
 right of the vendor under the patent law. 
 
 This is not a matter of conjecture. In the case of Keeler vs. Fold- 
 ing Bed Co. (1894) 157 U. S. 655, the Court said: "One who buys 
 patented articles of manufacture from one authorized to sell them 
 becomes possessed of an absolute property in such articles, unrestricted 
 in time or place. Whether a patentee may protect himself and his 
 assignees by special contracts brought home to the purchasers is not 
 a question before us, and upon which we express no opinion. It is, 
 however, obvious that such a question would arise as a question of con- 
 tract, and not as one under the inherent meaning and effect of the pat- 
 ent laws. The conclusion reached does not deprive a patentee of his 
 just rights, because no article can be unfettered from the claim of his 
 monopoly without paying its tribute." This opinion was published in 
 1694. The Court seemed to have had a prophetic insight into what 
 was coming two years later, for it adds warningly: "The inconven- 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. lOT 
 
 ience and annoyance to the public that an opposite conclusion would 
 occasion are too obvious to require illustration." A vivid and terrible 
 illustration has been offered us frequently since 1894. 
 
 In addition to this there is a latent ambiguity in the terms "uncon- 
 ditionally" and "conditionally sold" as applied to personal property, 
 A conditional sale or sale upon condition means that the ownership 
 of the chattel does not pass until the purchaser has paid the purchase 
 money. But if the price is agreed upon and paid over and the transfer 
 is made, the purchaser gets all the property in that specific thing that 
 the seller had. The title passes and the purchaser becomes the owner. 
 The purchaser may at the same time enter into a contract that he will 
 use the thing bought only in a certain way, but that does not make 
 the sale "conditional". 
 
 But we must get back to the text and see to what use this per- 
 verted notion of the patent law will lead to. The next sentence ■ is : 
 "The buyer of the machine undoubtedly obtains the title to the ma- 
 terials embodying the invention subject to a reverter in case of viola- 
 tion of the conditions of the sale." But the plaintiff here did not claim 
 there had been a reverter of title; he did not even sue the holder of 
 the title to have a condition of reverter enforced. 
 
 If there had been an adjudication of a forfeiture of the title, then- 
 the plaintiff could have maintained a replevin suit for possession of 
 the machine and that would have ended the matter. But the plaintiff 
 left the title undisturbed in the purchaser and sued a total stranger tO' 
 the title. The confusion here evinced now approaches a climax. "But 
 as to the right to use the invention, he is obviously a mere licensee, 
 having no interest in the monopoly granted by the letters patent. "^ 
 No more remarkable words were ever written in law book than those. 
 
 The purchaser of a patented machine, who has paid for it, wha 
 owns it, pays taxes "on it, keeps it insured, in whose hands it is sub- 
 ject to be levied on and sold under execution by a judgment creditor, 
 at whose death it passes to the administrator: — such a purchaser as 
 
108 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 to the use of the machine is a mere licensee ! And why is this ? The 
 answer appears to be, "having no interest in the monopoly granted by 
 the letters patent." Certainly the purchaser of the machine has no 
 interest in the right to exclude granted by the letters patent. He 
 cares nothiag about an interest in the patent; he does not want to 
 exclude others. He wants a machine to use, that is all. When the pur- 
 chaser buys a machine he not only gets no interest in the patent, but 
 in owning and using the machine he enjoys no right created or pro- 
 tected by the patent laws. We have quoted the Supreme Court on 
 this so many times, that it is becoming stale. Because the purchaser 
 has no interest in the patent it does not follow that he is a licensee. 
 Having no interest in the patent, is a characterization that applies to 
 a licensee to use and also to a purchaser of the patented machine from 
 the patentee. But this negative characterization throws no' light 
 whatever on the origin or extent of the right to use in the respective 
 instances. We might as well argue that the animate object on the 
 front porch is obviously a man, "having only two legs," but it may be 
 instead a bird, for it, too, has only two legs. The licensee to use and 
 the purchaser of the patented machine, each has a right to use the 
 thing possessed, but the right to use in the two instances is as distinct 
 in nature and scope as can possibly be imagined. 
 
 The licensee to use derives his right from a mere permission of the 
 patentee to use something that belongs to the patentee. The purchas- 
 ■er's right to use is an incident to the ownership of personal property. 
 He can use the machine because it is his, just as a boy can use a 
 pocket-knife that he has bought. Ownership of personal property 
 means nothing but title and the right to use it. Here the paten- 
 tee transferred the title and ownership to the purchaser, and the lat- 
 ter got such title and ownership with an incident, namely the right to 
 -use. This is the very point the Supreme Court has been laboring so 
 Tiard to point out in all the cases where there has beep an extension of 
 the patent and an attempt has been made to sue a purchaser of a ma- 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. lO* 
 
 chine from the owner of the patent for the original term, as an in- 
 fringer, for using the machine during the extension. 
 
 The purchaser is not in any manner affected by such extension,, 
 whereas the licensee 's right to use is ended with the original term and 
 cannot be exercised during th^ extension unless the license providea 
 for the extension. The error still persists. "A license operates only 
 as a waiver of the monopoly (right to exclude) as to the licensee." 
 True, "It has been said that the sole matter conveyed in a license is. 
 a right not to be sued." This is correctly said. "A licensee is one- 
 who is not the owner of an interest in the patent, but, who has, by eon- 
 tract, acquired a right to make or use or sell machines «mbodying. 
 the invention." 
 
 Right again, but the converse of this namely that one who has ac- 
 quired a right to use a machine is a licensee, is not by any means 
 necessarily true. A purchaser has acquired a right to use the machine, 
 but he is not a licensee. His right is to use his own machine which he- 
 has bought and paid for. "All alienations of a mere right to use the- 
 invention operate only as licenses." This is inexorably true. But by 
 the same token all alienations of a chattel, a sewing machine or a but- 
 ton fastener, operate as sales of personal property and the alienee as 
 an incident of ownership of personal property has the right to use and. 
 enjoy it. 
 
 Here we reach the climax of this utterly untenable process of rea- 
 soning. "It must follow, therefore (i. e. since the purchaser is a mere 
 licensee to use), that the purchaser of one of complainant's machines 
 subject to a restricted use takes the structure with a license to use the 
 invention only with staples made by the patentee." So it appears very 
 fully that the whole strength and weakness of this opinion hinges upon 
 attributing to a licensee to use, and a vendee of the machine under a.. 
 restrictive contract as to its use, the same rights and liabilities. 
 
 Again we will try to make the obvious difference so obvious that 
 not even a plain man can easily forget it. In the case of Thomas vs.. 
 
110 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 Sorrell, 3 Vaughan 351, counsel argued for several days concerning 
 the nature of a license and in delivering the opinion of the Court of 
 Common Pleas, Chief Justice Vaughan said: "A dispensation or 
 license properly passeth no interest, nor alters or transfers property 
 in anything, but only makes an action lawful, which without it had 
 been unlawful. As a license to go beyond the seas, to hunt in a man's 
 park, to come into his house, are only actions, which without license, 
 had been unlawful." 
 
 This definition cannot be improved upon and we quote it because 
 the Courts have lost the power to write such English. By the funda- 
 mental mental law of contradiction a thing cannot both be and not be. 
 
 If a license passeth no interest, nor alters or transfers property in 
 any thing, it cannot be the same as a sale which alters and passes all 
 the interest and transfers all the property in the thing sold. If a 
 licensee to use has no interest or property in the thing used, he cannot 
 be in the same position as a purchaser who has all the interest and 
 all the property in the thing purchased. But this is not all ; a license 
 to use a machine and a sale of the machine as legal acts are mutually 
 contradictory and destructive of each other. A man cannot license 
 the use of a machine, and as an incident of the license sell the machine 
 to the licensee. Conversely he cannot sell the machine and as an 
 incident license the use thereof. 
 
 A license means that the licensor has reserved all interest and 
 property in the machine and has only limitedly liberated the use. He 
 may hedge about the permission to use with various conditions and in 
 such case we speak of the restrictive terms of the license. But a sale 
 of the machine transfers all the interest and property in the machine 
 to the purchaser and as an incident of ownership in personal prop- 
 erty the owner has an inalienable right unrestrictedly to use that ma- 
 chine. To speak of a vendor granting to a vendee a license to use 
 what the latter has bought, paid for and owns is to go to the extreme 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. Ill 
 
 l)OTindary of absurdity and there abandon common sense for a mean- 
 ingless jargon of contradictory words. 
 
 This wonderful metal plate attached to the Heaton machine, which 
 has caused such havoc in the law when reduced to its lowest terms, 
 means this : ' ' This machine is sold under a common law contract of 
 sale whereby the purchaser agrees not to use the machine except in 
 «onjunction with unpatented staples purchased from the vendor, and 
 upon breach of this contract, title to the machine shall immediately 
 revert to the vendor." When the purchaser used staples obtained 
 from another than the vendor he broke a common law contract, but 
 that was all. 
 
 He did not exceed a "license" to use, because there was no 
 '' license". The purchaser contracted not to use his own property in 
 a certain way, now he has used it in a different way, in so doing he has 
 violated his contract, but he has not invaded any right granted by the 
 patent law. Of course, if the vendor wants to stop the vendee from 
 using the machine, the only way to do it is to enforce the condition of 
 reverter and then replevin the machine. For, after title has in fact 
 reverted to the vendor the vendee no longer owns the machine and the 
 seller is entitled to recover possession. But until the reverter has 
 been enforced, the owner of the machine of course can use it even 
 though in so doing he violates his contract (not exceeds or abuses a 
 "license"). The case of the licensee to use is entirely distinct and' dif- 
 ferent. 
 
 When he (a licensee) exceeds or abuses his license and the pat- 
 - entee legally withdraws the permission he has given, then, the further 
 use of the machine is an infringement because the consent of the pat- 
 entee has been withdrawn. But mark well that the licensee does not 
 own the miacbine ; nor any interest in it ; the property and interest be- 
 longs to the patentee. When the patentee's consent to use his (the 
 patentee's) machine is legally withdrawn, then the licensee is no longer 
 a licensee; he is using the thing invented without the consent of the 
 
112 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 patentee and that is infringement within the very letter of the stat- 
 ute. Observe that we have said all along that the license must be- 
 "legally" withdrawn. The patentee cannot convert a licensee into- 
 an infringer by hurling epithets. This was attempted in the case of 
 Wilson vs. Sanford, but failed. In the case of the purchaser there is- 
 no "license" to be forfeited or withdrawn. 
 
 The patentee by the sale of the machine, as was said in Adams 
 vs. Burke, "receives the consideration for its use and 'parts with the 
 right to restrict that use." The Court says this is "in the essential 
 nature of things." It is quite true that as a part of the contract of 
 sale the patentee may exact of the purchaser an agreement that the 
 latter wiU only use the machine in a certain way. But this is not a 
 "license" and is the antithesis of a license. A license always creates, 
 a new right in the licensee and cuts down the right of the licensor. But 
 the restriction in the Heaton case not only did not create a new right 
 in the purchaser, but took away the right to an unrestricted use which 
 transfer of title gave him. 
 
 At the middle of page 291, the Court says: "The license defines- 
 the boundaries of a lawful use, and estops the licensor from the as- 
 sertion of his monopoly contrary to its terms. ' ' 
 
 That is undoubtedly a correct statement, but apply it to the facts 
 of his case and the havoc of confusing a license to use with a sale of 
 the machine becomes glaring. A license, then, ' ' defines the boundaries- 
 of a lawful use and estops the licensor from the assertion of his monop- 
 oly contrary to its terms." All right. Suppose the vendor had re- 
 moved the plate on the machines involved in this case. Then, there 
 would have been no definition of a lawful use, and no terms to con- 
 tradict which, the patentee would be estopped. The purchaser pays 
 for the machine, gets a bill of sale for it, sets it up in his shop. No 
 license has been granted, no lawful use has been defined, no estoppel 
 has been placed on the patentee. The next day the purchaser starts 
 to use his machine and at once the vendor sues him for infringement I 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 113 
 
 We cannot hark back in such case to the fiction of an implied 
 license. We might as well speak of an implied license in favor of 
 the purchaser of a cigar that he may smoke the same. All the cases 
 cited by the Court on this point are cases of genuine licenses and not 
 of sales of the thing invented. 
 
 These cases require no further consideration. But before we quit 
 this feature of the case we must note the use made of the decision in 
 the famous cotton tie case (1882) 106 U. S. 89, The Court here cites 
 that decision as authority for the proposition that the jobbers buying 
 and seU-ing the Heaton machine have notice of the restriction expressed 
 by the language on the metal plate and are bound thereby. There the 
 cotton bale ties were sold, each bearing the words, stamped in the 
 metal: "Licensed to use only once." No case in all the books has 
 been more consistently misunderstood and misconstrued than this. 
 
 The words "licensed to use only once" inscribed upon the tie had 
 not the slightest thing in the world to do with the rights of the parties 
 in the suit. The defendants were held liable as infringers in that 
 case not because they violated a "license to use only once," but be- 
 cause they reconstructed and remade the invention after it had been 
 destroyed. The Supreme Court was exceedingly careful on this point. 
 At pp. 93-94 the Court said: "Whatever right the defendants could 
 acquire to the use of the old buckle, they acquired no right to com- 
 bine it with a substantially new band, to make a cotton bale tie. 
 What the defendants did in piecing together the pieces of the old band 
 was not a repair of the band or tie, in any proper sense. The band 
 was voluntarily , severed by the consumer at the cotton mill because 
 the tie had performed its function of confining the bale of cotton in 
 its transit from the plantation or the press to the mill. Its capacity 
 for use a.s a tie was voluntarily destroyed. As it left the bale it could 
 not be used again as a tie. As a tie the defendants reconstructed it, 
 although they used the old buckle without repairing that." (Black 
 throughout ours.) Here in seven sentences, the Court seven times re- 
 
114 RESTRICTIONS ON PURCHASER'S USE OP PATENTED ARTICLE. 
 
 iterates the assertion that the defendant's liability as infringers was 
 posited on the fact that they made the invention without the paten- 
 tee's consent. The Court returns to the matter again on p. 95, and, 
 apparently to further guard against a misunderstanding as to the 
 scope of the decision says: "Because the defendants prepare (black 
 ours) and sell the arrow tie, composed of the buckle or link and band, 
 intending to have it used to bale cotton and to produce the results 
 set forth in the patents, they infringe those patents (citing. two de- 
 cisions where the defendants made the thing invented). We do not 
 decide that they are liable as infringers of the patents merely be- 
 cause they have sold the buckle considered apart from the band or 
 from the entire structure as a tie." In other words, so long as the 
 defendants did not reconstruct the tie, or make the thing invented 
 (which was a combination) they could use the buckle a thousand 
 times. 
 
 This view of the decision has been graphically re-asserted by the 
 Supreme Court. Thus in the Morgan Envelope Co. case 152 U. S. at 
 434, Mr. Justice Brown, in commenting on the cotton tie ease, said: 
 "It is evident that the use of the tie was intended to be as complete 
 a destruction of it as would be the explosion of a patented torpedo. In 
 either case, the repair of the band or the filliag of the shell would be 
 a practical reconstruction of the device." Indeed to use either the 
 tie or the torpedo more than once was as physically impossible as eat- 
 ing an apple twice. And in the Cotton Tie case, the patentee by in- 
 scribing the words "Licensed to use pnly once" on his tie, played the 
 part of one who would label a bottle of mineral water (patented), 
 "Licensed to be drunk only once". 
 
 But in the Heaton case and many of the decisions following it, the 
 cotton tie case is cited as authority for the proposition that a patentee 
 can sell his patented article and at the same time restrict its use by a 
 "license". What is the use for the Supreme Court to bend such hagd 
 labors on precision and accuracy? * 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. US. 
 
 RIGHT OF NON USE. 
 
 "We have not by any means attended to all the phases of the opin- 
 ion confusing a license to use, with a sale of the machine, but we must 
 pass to other aspects of the opinion. The next in order is the glow- 
 ing passage on p. 294-295 concerning the right of non use. The para- 
 graph beginning "If he (the patentee) see fit, he may reserve to him-< 
 self the exclusive use of his invention or discovery. If he will neither 
 use his device or permit others to do so, he has but suppressed his 
 own" — is too familiar to call for quotation. We would not stop to 
 examine it but for the fact that the paragraph has been widely quoted 
 as though it set forth a peculiar characteristic of property in patented 
 articles. The Supreme Court has quoted the passage, but as we shall 
 show, with a knowing eye as to its real significance. If the paragraph 
 has any valid meaning, it is that, in respect to the characteristics men- 
 tioned, patented articles differ from other property. If all the asser- 
 tions apply with equal force to all sorts of personal property then we 
 have a facile truism universally valid, erected into an emphatic excep- 
 tion. It is iheaningless to affirm with unusual emphasis the existence 
 of one quality in patented personal property unless we are prepared 
 to deny the same quality to other personal property. Truth is force- 
 ful by contrast and relativity. The assertion that all horses have 
 four feet is an incontestable common place, because a horse is never 
 thought of without positing the existence of four feet. But to say 
 that a patentee may use or not use his device as he sees fit is not to 
 assert anything peculiar to the rights of a patentee. The owner of a 
 horse may use the horse or not as he sees fit. So likewise of the owner 
 of land, ships, money, merchandise or any sort of private property. 
 
 Self-interest of the owner is the only security that the public has 
 retained that any kind of private property wiU be put to use. 
 
 This is very ancient law. Thus in the great case of Charles River 
 Bridge vs. Warren Bridge (1837) 11 Peters at 639, Mr. Justice Story 
 
ai6 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 said: "As long ago as in the case in th« year book, 22 Hen. VI 14, 
 the difference was pointed out in argument, between such grants as 
 involve public duties and public matters for the eomman benefit 
 ^f the people, and such as are for the mere private benefit, invoiviag 
 -no such consideration. 
 
 If a bank, or insurance company is established in any town, by 
 :.any act of incorporation; no one ever imagined that the eoi?poration 
 ■was bound to do business, to employ its eapftal, to manufaetute goo^«, 
 to make insurance. The privilege is a mere private corporate privil- 
 ege, for the benefit of the stockholders, to be used or not at their own 
 pleasure; to operate when they please and to stop when they plejfse. 
 Did any man ever imagine that he had a right to harve a note 
 discounted by a bank, or a policy underwritten by an insurance com- 
 pany? Such grants are always privati juris. No indictment lies for 
 jion user." (Black in the text.) 
 
 In his Constitutional Limitations (6th Ed.) p. 549, Judge Cooley 
 'says: "The right of every man to do what he will with his own, not 
 interferiiig with the reciprocal rights of others, is accepted among the 
 fundamentals of our law. The instances of attempts to interfere with 
 it have not been numerous since the early Colonial days. ' ' Indeed we 
 have searched in vain for a single inatanee in addition to the one re- 
 ferred to in the text, but that authority is altogether worthy of note. 
 The legislature of Kentucky enacted a statute requiring the owners 
 •of swamp lands to make certain improvements within a stated time, 
 -on penalty of forfeiture of title for failure to do so. This statute was 
 brought before the Court of Appeals in the case of Gaines vs. Buford 
 (1833) 1 Dana (Ky. Appeals) 481 at p. 489, Underwood, J., said: "I 
 am unwilling, however, to concede, that the Legislature can, under 
 the pretext of promoting the interest of the state, control and direct 
 the citizen in the use he shall make of his private property. I sub- 
 scribe to the maxim sic utere tuo, ut aliennm non laedas; and I admit 
 the power to punish for an injury done to individuals or the public. 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. IIT 
 
 But I deny that the legislature can constitutionally prescribe, under- 
 color of preventing public or private mischief, the quantity of labor- 
 the citizen shall perform on his farm, the kinds of improvement he 
 shall make, and the time within which they must be constructed. The 
 toleration of such power on the part of the government would be con* 
 ceding to it the right of controlling every man and directing wnat 
 road he shall travel in the 'pursuit of happiness.' Thus the freedom, 
 tof the citizen would be lost in the despotic will of the government 
 and under the semblance of liberty, we should have the essence of" 
 tyranny." 
 
 Again, p. 491: "If the power to forfeit lands for non-improvement 
 exists, it would only require an act prescribing irksome or impossible 
 conditions, to strip the citizen of all his property. In regard to the 
 power, there is no difference between real and personal estate. In the 
 nature of things, there is as much propriety, it seems to me, in for- 
 feiting a horse to a government, because his proprietor does not curry^ 
 and rub him well, or break him to labor gently in the gear, as there 
 is in forfeiting land because the owner does not choose to clear and 
 cultivate a part and deaden the trees growing on another part. 
 
 "Such interferences on the part of the government with the pri- 
 vate affairs of individuals would ever be a source of discontent, if 
 they were expressly tolerated by the constitution. 
 
 "The members of the convention, anxious to place the enjoyment 
 of life, liberty and property upon secure foundations, cannot well be 
 imagined to have left all property subject to the absolute and arbitrarjr 
 control of the legislature." 
 
 The Supreme Court in the Paper Bag Patent Case (1907) 210 U. S. 
 at 425 quoted the paragraph, but not in the loose sense it is usually 
 employed. For at page 429 the Court said: "As to the suggestion 
 that competitors were excluded from the use of the new patent, we 
 answer that such exclusion may be said to have been of the very es- 
 sence of the right conferred by the patent, as it is the privilege of any 
 
118 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 owner of property to use or not use it without question of motive." 
 {Black ours.) 
 
 Finally Judge Lurton in the case of Park vs. Hartman, cited 
 infra, in commenting on the rights of an owner of a secret formula 
 for compounding a proprietary medicine said (l.c.33) : "To say that 
 the owner of this secret need not make the medicine, nor sell it when 
 made unless it suits his convenience, is true. But the same thing may 
 be sd.id of the man who grows potatoes. He need not grow them and 
 need not sell them when grown." (Black ours.) 
 
 In the same connection he quotes, apparently with approval, from 
 the opinion of the trial court the following language: "It is true 
 that the manufacturer and owner of the articles made under the secret 
 process may refrain from making them and selling them to uurehaseri* 
 and thus putting them on the market. Equally so the manufacturer 
 and owner of any other articles may refrain from so doing. So, also, 
 the owner of articles that he has not made, but purchased or obtained 
 otherwise from the manutacturer may refrain from selling them to 
 purchasers and thus putting them on the market." 
 
 All this has nothing whatever to do with suppTessing property, or 
 the use of it, in keeping with a contract and pursuant to a combination 
 or conspiracy in restraint of trade. That sort of thing iu connection 
 with patented property is dealt with in masterly fashion in the case of 
 Blount Mfg. Co. vs. Tale and Towne Mfg. Co. (1909) 166. Fed. 555. 
 
 In this Heaton case we have never been able to see the relevancy 
 •of the passage in question. There was nothing like non use involved. 
 On the contrary, the owner of the patent had made and sold 49,000 of 
 the machines and was putting the device to the most extensive use 
 possible. 
 
 - The Heaton case compared with John D. Park and Sons vs. Hart- 
 man (1907 C. C. A. 6th Cir.) 153 Fed. 24. This Hartman case was de- 
 cided by the Court that disposed of the Heaton case, and the opinions 
 in both cases were prepared by Judge Lurton. It is both interestmg 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 119 
 
 and instructive to compare the course of reasoning i}i these two deci- 
 sions. Hartman was the owner of a secret formula for compounding 
 a "patent medicine" which was widely sold under the trade name of 
 "Peruna.-' No patent, trademark, or copyright was involved. Hart- 
 man was the sole maker and vendor of "Peruna" by virtue of the fact 
 that he alone knew the secret of its preparation. He had built up a 
 system of contracts pursuant to the terms of which the stuff was sold 
 to wholesale druggists. The contracts provided that the wholesaler 
 should not sell to any retailer except under an agreement 
 binding the latter to maintain a uniform arbitrary j'esale price estab- 
 lished by Hartman. The latter had drawn up a list of retailers, part- 
 ing them off as sheep and goats, according to whether they maintained 
 or cut prices. The defendants, Park and Sons, were clearly goats ac- 
 cording to Hartman 's classification, as they were "demoralizing" 
 price cutters. Hartman sued Park and Sons, by bill in equity, to en- 
 join price-cutting and for damages. The bill failed and woefully so. 
 Hartman and his counsel will long remember what is written in 153 
 Federal Eeporter, pp. 25-46. 
 
 Let us carefully compare these two cases. In both instances the 
 vendor of personal property, chattels, asserted the right to sell the 
 same and at the same time control the future enjoyment of the prop- 
 erty in the hands of the purchaser. The method adopted was sub- 
 stantially the same. Hartman employed a system of express con- 
 tracts, knowledge of which he charged to the defendant. 
 
 In the Heaton case the vendor made use of a notice attached to 
 the machine, knowledge of which was shown to exist in the defend- 
 ant. Hartman relied on a breach of an express contract, the duty 
 to observe which he devolved by implication from the law protecting 
 his trade secret. In the Heaton case the vendor relied on a contract 
 implied in fact from circumstances, the duty to observe which was 
 posited on the patent laws. Hartman made out a much stronger case 
 from the viewpoint of contract law than was proven in the Heaton 
 
120 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 case. The only difEerenee between the cases is this: Hartman's ar- 
 tide was not patented and the restriction sought to be imposed affect- 
 ed the resale of the article; the Heaton machine was patented and 
 the restraint imposed pertained to the purchaser's right to iise the 
 machine. Of course no importance can be attached to the fact that 
 in one case the restraint affected the purchaser's right to sell and in 
 the other, "his right to use. The essential feature in each instance is 
 that the vendor attempted, by contract, to restrict the rights of the 
 vendee in personal property which the latter had bought and paid for. 
 In the Hartman ease the contracts were denounced as being restraints 
 of trade; in the Heaton case, the contracts, although reticulated into 
 a vast system, radiating in every direction to the owners of 49,000 of 
 the machines, were upheld. This wide difference in result, as the 
 opinion of the court incontestably indicates, is explicable solely on the 
 ground that the Heaton maehiae was patented and the "Peruna" was 
 not. But the powerful reasoning in the Hartman case completely de- 
 molishes the spurious doctrine ia the Heaton case. That this is true is 
 easily demonstrated. 
 
 The w'hole fallacy underlying the Heaton case is expressed in one 
 sentence of the opinion in the Hartman ease: "The patent grants an 
 exclusive right to use, to make and to sell." That is not true, never 
 has been true and never can be true until our whole system of laws 
 is changed and until the decisions of the Supreme Court beginning 
 with Bloomer vs. McQuewan in 1852, arid running in an unbroken 
 succession through Continental Paper Bag Co. vs. Eastern Paper Bag 
 Co. in 1908, are abrogated. 
 
 In the Heaton case the vendor derived his right to make, use and 
 sell irom the same source that Hartman derived the same rights with 
 respect to "Peruna." In both instances the rights are what Mr. Jiis- 
 tice Miller called "natura.1 rights", protected only by the common law. 
 The vendor of the Heaton machine got no right whatever to make, use 
 or sell the same from the patent grant. His right to sell and state 
 
HEATON-BTJTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 121 
 
 the terms of sale did not differ in any respect from the same right 
 in Hartman. By the patent grant the plaintiff in the Heaton case had 
 the right to exclude others from using the machine. Hartman had 
 identically the same right and advantage derived from a different 
 source. No one else could make and sell "Peruna" because no one 
 else knew the secret of its preparation. And Hartman 's right to his 
 secret, to this power of excluding others, was a property right, recog- 
 nized as such by the court. No power in the land could compel him to 
 render his secret available to others. Moreover, the Court pointed out 
 that Hartman could invoke the might of a court of equity to restrain 
 any one from publishing the secret in breach of confidence. Thus Hart- 
 man's secret formula was efficient to exclude and could be availed of 
 by others only as the result of independent discovery. But in neither 
 case was the right to exclude others, the subject of contest. Hartman 
 was exercising his natural right in making and selling "Peruna"; the 
 patent owner was exercising his natural right in making and selling 
 49,000 machines. IVTaking and selling machines is not excluding 
 others from making, using and selling them. Selling them to others 
 for use, is the very opposite ; it is permitting others to use their prop- 
 erty after they have purchased it. 
 
 This is clearly brought out in the Hartman case. At page 32, 
 Judge Lurton said: "We have here to deal, not with contracts which 
 relate to the secret formula itself, or the right to use the trade name 
 or dress,' but with the preparation when made by the owners of the 
 process. The preparation, when ready for market, and the formula, 
 are two separate and distinct things and may have distinct owner- 
 ships. Contracts in respect of a restricted use of the formula are not 
 within the rule against restraint because of the character of the prop- 
 erty right in such secret. But this is not the case with contracts which 
 affect only traffic in the manufactured product of the secret formula. 
 Freedom of traffic in that is consistent with its value and does not in- 
 volve exposure of the formula. ' ' 
 
122 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 Exactly so. And every proposition there laid down applies 
 •with equal force to the Heaton case. There the Court had not 
 to deal with contracts relating to the patent right, the right to ex- 
 ■clude, but with the machines when made by the owner of the patent. 
 The machine (like the preparation) when ready for the market, and 
 the patent right to exclude {like the formula), are two separate and 
 distinct things and may have distinct ownerships. Contracts in re- 
 spect of a restricted use of the right to exclude (if such a thing be 
 conceivable), are not within the rule against restraint because of the. 
 character of the property right in such right to exclude, but this is not 
 the case with contracts which effect only traffic in the manufactured 
 article. Freedom of traffic in that, is consistent with the value of 
 the right to exclude and does not involve any curtailment of that right. 
 
 This language of the Court as applied to the distinction between 
 the property right in the secret formula and in the manufactured 
 medicine, has been paralleled time and again by the Supreme Court 
 in dealing with the patent right and patented articles. Thus in Pat- 
 terson vs. Kentucky, the Court said: "The right of property in the 
 physical substance, which is the fruit of the discovery, is altogether 
 distinct from the right in the discovery itself. Just as the property 
 in the instruments or plate bj which copies of a map are multiplied, 
 is distinct from the copyright of the map itself." In the same caso 
 the Kentucky Court of Appeals had said: "There is a manifest dis- 
 tinction between the right of property in the patent which carries 
 with it the power of the patentee to assign it and the right to sell 
 the property resulting from the invention or patent." In Stevens 
 vs. Gladding, (1854.) 17 How. 477, the Court said of the copyright: 
 ■"The right in question is not parcel of the plate levied on, nor a right 
 merely appendant or appurtenant thereto ; but a distinct and inde- 
 pendent property, subsisting in grant from the government of th« 
 United States, not annexed to any other thing, either by the act of 
 the owner or by operation of law." Still earlier in Bloomer vs. Mo- 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 123 
 
 'Quewan, Chief Justice Taney used simliar language in reference to 
 "the purchaser of a patented machine: "In using it, he exercises no 
 xights created by the Act of Congress, nor does he derive title to it 
 ~by virtue of the franchise or exclusive privilege granted by thf 
 -patent." Thus it is obvious that the Supreme Court has always 
 Tecognized the fact that a patented article is entirely distinct from 
 the incorporeal patent right to exclude others. This is true of the 
 -copyright and the printed subject matter of the right. It is also true 
 of the secret formula and the nostrum prepared therefrom, as the 
 •Court pointed out in the Hartman case. 
 
 The right of contract, of sale, in Hartman, was precisely the same 
 in the vendor of the Heaton machine. The respective rights had the 
 same origin, are protected by the same law and subject to the same 
 limitations. The vendor of the Heaton machine was not vested by- 
 the patent laws with any right to sell and to contract in that regard, 
 and as Mr. Justice Miller said, would have had the right if all patent 
 laws had been repealed. Had Hartman obtained a patent on his 
 secret formula, still his right to sell the medicine and contract with 
 reference to such sale would have remained just what the Court found 
 it to be. 
 
 The trial court firmly grasped and lucidly expressed, the exact 
 identity in the right of contract and of sale in the patent owner and 
 in Hartman. The Court said: (145 Fed., at 372) "Then, as to the 
 Tight to put in force such a system of contracts in relation to things 
 patented or copyrighted with such effect as it has, that does not grow 
 out of the exclusive right which the statutes confer, and the owner 
 of the patent or copyright does not have such right by virtue at all 
 of said statutes. The right to sell the things patented or copyrighted, 
 the right to license others to sell them, and the right to enter into 
 ■contract with the vendee and subvendee that they shall not exceed the 
 license, are solely creatures of the common law and they arise there- 
 from alone." That. is established beyond dispute. The trial court 
 
124 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 logically conceded to Hartman tlie same common law right whiek the 
 vendor of the Heaton niachine had. And the Court wisely conclwied 
 that if these common law rights could be put to such striking use in- 
 the circumstances of the Heaton case, there could be mo valid reasoui 
 for denying the sanie privilege tx) Hartman. who had occupied and 
 addressed the Court from, the same vantage ground. But the Court 
 of Appeals turned right about and completely upset the rules of law 
 announced in the Heaton case, although the issues in both cases w<6r-e- 
 entirely of common law cognizance and were completely assimilated 
 as the Trial Court convincingly indicated. Let us compare th« two' 
 opinions of the Court of Appeals on points common to both cases and 
 in respect to comi^on l^-w principles. These shall be (1) the righit 
 of non use, (2) the effect of a sale of a chattel, (3) and contract 
 implied from a noticR. 
 
 HEATON CASE. HARTMAN CASE. 
 
 "If he (the patentee) see fit, he may "To say that the owner of this 
 
 reserve to himself the exclusive use secret need not make the medicine^ 
 
 of his invention or discovery. If he nor sell it when made, unless It suits 
 
 will neither use his device nor permit his convenience is true. But the same 
 
 others to use_ he has but suppressed thing may be said of the man who 
 
 his own. * *■* His title is exclusive grows potatoes. He need not grow 
 
 and so clearly within the constitu- them and need not sell them when 
 
 tional provisions in respect of private grown." 
 property that he is neither bound to 
 use his discovery himself nor permit 
 others to use it." 
 
 Why is it that the right of non use is so strongly emphasized as 
 being of decisive importance in one instance and in the other is de- 
 graded by an invidious assimilation to the commonplace prerogative 
 of a potato raiser? 
 
 Now observe the vast difference between the effect of an ordinary 
 sale when it involves a patented machine in one instance, and in the 
 other a proprietary raedicin-e, although the patent laws have no more- 
 to do with sales of chattels than do the laws of Solon or Ijycurgus- 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY* CO. 125 
 
 HEATON CASE. HARTMAN CASE. 
 
 "The buyer of the machine undoubt- " Tale' is a word of precise legal 
 
 ■edly obtains the titl^ to the materials import, and every wholesaler who or- 
 
 embodying the invention (we suppose ders goods under one of complainant's 
 
 tbite means the machine) subject to a uniform contracts, becomes a buyer, 
 
 reverter in ca^e of violation of the obtains the title and may convey the 
 
 conditions of sale. But as to the right title to another. The transactions de- 
 
 t.o use the indention (machine?) he is scribed in the bill plainly constituto 
 
 oBviously a merely licensee, having no sales of complainafit's medicines and 
 
 interest in the monopoly by th'e letters the general title passes to every pur- 
 
 ■patent." chaser and. sub-purchaser." 
 
 How can this difference be justified'/ What did the purchaser of 
 lli« Heatan machine get? Were his worldly goods increased or not 
 when possession of the "materials embodying the invention" was de- 
 livered to him consequent to his payment of the purchase price? 
 What is meant by "his right to use the invention?" The Court saysi 
 he got the title to the machine, but as to the "invention" was a mere 
 licensee. And this seems to be because tne purchaser got "no inter- 
 est in the monopoly granted by the letters patent." But let us look 
 at Park and Sons. Undoubtedly they obtained title to the nostrum 
 embodying the secret formula. Then why not "subject to a reverter 
 in case of violation of the conditions of sale ? ' ' They obtained no in- 
 terest in the monopoly of the secret formula. Then why was not their 
 right to resell obviously that of licensees ? If in the instance of Hart- 
 man's medicine "the general title passes to every purchaser and sub- 
 purchaser," why is not the same true of the Heat on machine? "Sale" 
 is a word of precise legal import, whether used in reference to a put 
 ented article or a bushel of potatoes. 
 
 In the Hartman case, the Court said: "The right of alienation 
 is one of the essential incidents of a right of general property in 
 movables." Is not the right of use in the same category? The man- 
 ner in which the Court deals with the question of contract implied 
 from notice is most puzzling of all. This is what is said in the two 
 opinions : 
 
126 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 HEATON CASE. HARTMAN CASE. 
 
 That the complainant sells the ma- That Park and Sons Company knew 
 chine through .iobbers, and not direct- comDlainant's plans of business. anA 
 ly to those who buy for use. Is imniH- that in selling to them, every such 
 terial. under the facts stated on the vendor thereby breached his agree- 
 face of the bill. The jobber buys ment, is also charged, and for the pur- 
 and sells subiect to the restriction, pose of the demurrer, admitted. What, 
 and both have notice of the condi- is the result? Did the defendants by 
 tional character of the sale and of so Durchasing, with knowledge of tho 
 the restriction on the use. restrictions imposed upon sales there- 
 
 by enter Into contractual relations- 
 with complainant? Manifestly not. 
 Did they obtain the absolute title, not- 
 withstanding their knowledge that tho 
 sale was in breach of restrictions im- 
 posed upon the seller? Undoubtedly. 
 The restrictions imposed by complain- 
 ant upon sales and resales, if valid at 
 all, are only so because they con- 
 stitute personal contracts upon which 
 an action will lie only against the con- 
 tracting party. 
 
 But this IS not all. The Court in the Hartman case went furtner 
 and said: "It is also a general rule of the common law that a con- 
 tract restricting the use (black ours) or controlling subsales cannot 
 be annexed to a chattel so as to follow the article and obligate the 
 subpurchaser by operation of notice." It seems almost a waste of 
 time to criticize the decision in the Heaton case when the Court that 
 promulgated the opinion has so successfully accomplished the demo- 
 lition of the doctrine there announced. It is clear from contrasting 
 the opinions in the two cases that in the Heaton ease the Court started 
 in with the initial false postulate that the patent grants the right to 
 make, use and sell. When this fallacy was once gratuitously accepted 
 the law of sales, of contracts, and the anti-trust Act were all twisted 
 and wrenched about to fit in with the erroneous preconception. 
 
 The opinion in the Heaton case contains one far-reaching conces- 
 sion. The Court said, page 293: "Neither the patentee nor the 
 machine involving his invention, nor a licensee for use, can be ex- 
 empted from the liabilities and regulations which in the public inter- 
 est, attach to all persons and property under the general law of the 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 127 
 
 land. Neither is the right to make and sell or use a patented inven- 
 tion or process free from restraints imposed by the police powers o£ 
 the States." (black ours.) 
 
 Well, the anti-trust Acts of the various states notoriously are' 
 "restraints imposed by the police powers." They are regulations "im 
 the public interest" which "attach to all persons and property under- 
 the general law of the land." That no longer can be doubted. 
 
 Smiley vs. Kansas (1904) 196 U. S. 447; 
 
 National Cotton Oil Co. vs. Texas (1904) 197, U. S. lib; 
 
 Waters-Pierce Oil Co. vs. Texas (1908) 212 U. S. 86; 
 
 Grenada Lumber Co. vs. Mississippi (1910) 30 Sup. Ct. KeD» 
 i)3i). 
 
 CONTRIBUTORY INFRINGEMENT. 
 
 Finally we come to the question of contributory infringement. As; 
 to this, the Court said: "The principle governing intringement of" 
 combination patents by furnishing a necessary element in the combina- 
 tion is applicable to the case at bar. To make or sell a single element" 
 may be quite an innocent act, for a combination is not infringed except 
 by uniting all of the necessary elements. But to make or sell a single 
 element with the intent that it shall be united to the other elements 
 and so complete the combination is infringement." Now the Court 
 said in the opening sentence of the opinion, that the staples were "not 
 even an element in a combination claim". "They are, therefore, no- 
 more vsdthin the direct monopoly of the patent than are the buttons 
 to be affixed by means of the staples, or the shoes to which both are- 
 to be attached. ' ' 
 
 Then in the name of reason and common sense, why apply to the 
 case a principle that is only applicable where the defendant has made- 
 or sold an element with the intent that it shall be united to the other 
 elements, and so complete the combination? Here what the defendants. 
 
128 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 iTiade and sold was no element of the invention as the Court asserted 
 in the first two sentences., The patented mechanism was complete 
 without the staples. In the language of the opinion, staples had no 
 more to do with the patented machine than the buttons or shoes, in 
 part completed by using the machine. 
 
 Nine decisions are cited to support the contention, every one of 
 which is directly opposed to it, and taken together they- entirely wipe 
 out tfie reasoning here indulged. "We will consider these cases. 
 
 Saxe vs. Hammond (1871), Fed. Cas. No. 17,100. In this case, 
 the patent was for a combination consisting of an oil burner and a 
 :glass chimney, comprising together a kerosene lamp. The d^endants 
 made and sold the burner alone, and did not make or sell the chimney. 
 
 The defendants were sued for infringing the patent and they con- 
 tended they were not liable as they made and sold only burners, but 
 not chimneys. The Court answered this with the passage quoted in 
 this case. "Different parties may all infringe by respectively making 
 or selling each of them, one of the elements of a patented combina- 
 tion, provided those separate elements are made for the purpose 
 and with the intent of their being combined by a party having no 
 right to combine them." (Black ours.) 
 
 The Court then quotes the vital part of the opinion, but only to 
 misapply it. 
 
 ' ' If, in actual concert with a third party, with a view to the actual 
 production of the patented improvement in lamps (black ours), and 
 the sale and use thereof, they (the defendants) consented to manufac- 
 ture the burner, and such other party to make the chimney, 
 and in such concert, they actually make and sell the burner, and 
 the chimittey (black ours) ; each utterly useless without the other,, and 
 each intended to be used, and actually sold to be used, with the other, 
 it cannot be doubtful that they must be deemed to be joint infringers 
 •of complainants ' patent. In such ease, all are tort feasors engaged in 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 129 
 
 a common purpose to infringe the patent, and actually, by their con- 
 certed action, producing that result." 
 
 Now the Court held in this case that the chimney was, an element 
 and that the patent was for a combination of the burner and chimney ; 
 when the defendants made and sold the burners and the purchasers 
 supplied the chimneys, the two acting concertedly and co-operating, 
 made, and sold the thing invented: they re-created the invention, re- 
 thought the inventor's thought and externalized it in tangible form, 
 without his consent. But in the Heaton case, the staples were not an 
 element of any combination. We suppose if the Court had sat in 
 judgment in this case of Saxe vs. Hammond it would have held guilty 
 of contributory infringement all who supplied oil or wicks to bum in 
 the lamp, matches to light the burner, cloths to clean the chimney, and 
 even the Almighty who supplied the oxygen for combustion. 
 
 For all of these are absolutely essential to the use of the lamp 
 and all are as directly related to the use of the lamps as the staples 
 to the use of the machine. 
 
 The next case cited is: Holly vs. Vergennes Machine Co. (1880), 
 4 Fed. 1880. 
 
 Here the patent was for a system or apparatus for supplying 
 water to cities. The object of the invention was to equalize the presi 
 sure of the water throughout the mains and to counteract the effect 
 of suddenly starting and stopping the flow of water on the pipes and 
 pumping machinery. 
 
 Under the old system, the sudden drawing off of water from all 
 parts of the system caused the pumps to work violently and a great 
 momentum of flow from the reservoir. When the drawing off was 
 suddenly stopped the resistance to the continued working of the 
 pumps and the momentum of pressure resulted in injury to the ma- 
 chinery or the bursting of the pipes. Now the plaintiff owned a 
 patent on an entire system of apparatus to obviate this danger. The 
 invention comprised pumps and valves as distinct elements in a com- 
 
1.30 RESTRICTIONS ON PURCHASER'S USB OF PATENTED ARTICLE. 
 
 pleted whole. The defendants made and sold pumps identical as to 
 function with that of the plaintiff, and the purchaser used the same to 
 construct a system of water works substantially similar to that of the 
 plaintiff. The Court said (p. 82) : "The effect of the whole (viz, the 
 -acts of defendants and of third parties) is that they (the defendants) 
 participated and concurred in putting in the whole (i. e. invention) by 
 •furnishing the pumps for that purpose, and this is sufficient to make 
 tthem liable as infringers." Here again the defendants co-operated 
 Avith others to make the very thing described in the letters patent. The 
 defendants made and sold the pumps which constituted an integral 
 part, an indispensable element of the invention ; one of the very things 
 that the inventor's mind discovered and embodied forth. But in the 
 Heaton case the staples were no part of the invention. 
 
 In this case, the patented system of pumps, valves and mains was 
 not of even imaginary value or use apart from water. Suppose the 
 patentee had sold the entire apparatus to the town of Hoboken, and 
 on every part of the machine had attached a metal plate, conspicuous 
 and glaring, bearing these words, inscribed in raised letters, so that 
 they might be read even by the blind : 
 
 "Condition of Sale." 
 
 "This apparatus is sold and purchased for use only with water 
 supplied by the patentee to whom the title to said apparatus imme- 
 diately reverts upon violation of this contract of sale. ' ' 
 
 The Almighty sends rain on the just and the unjust alike. Would 
 the Court of Appeals for the Sixth Circuit hold that in using in the 
 •apparatus the rain and the latter rain Hoboken, was a principal in- 
 fringer and the Almighty in sending the rain on Hoboken a contribu- 
 tory infringer? 
 
 Yet this is the logic of the Heaton case. The water had just as 
 much and no more, to do with the patented water works system as 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 131 
 
 the staples had to do with the patented machine. Neither constituted 
 an element in the respective inventions. Each was indefinitely older 
 than the respective inventions. For in the statement of the facts in 
 the Heaton case, the Court said : ' ' The principal and earlier of these 
 patents describes the invention as intended to produce a setting device 
 which can be used conveniently for setting and clinching an ordinary 
 (black ours) metallic staple." 
 
 The next ease cited by the Court is Travers vs. Beyer (1886) 26 
 Fed. 450. 
 
 The claim of the patent here alleged to have been infringed was 
 as follows: "The combination of a hammock A. having suspension 
 lopes, f. f., with detachable distending blocks g. g., which are notched 
 at their lower edge to space said ropes f. f. substantially as specified." 
 It WAS alleged and proved that the defendants made and sold the 
 "detachable notched distending blocks" without the consent of the 
 plaintiff, the owner of the patent. The Court said : "The detachable 
 notched distending blocks are the essence of the invention. The 
 blocks are of no practical utility or value except for the special pur- 
 pose of the patentee. The defendants do not make or sell hammocks, 
 but they are manufacturers of the blocks described in the specification, 
 and sell them to dealers in hammocks, who sell them with or without 
 the hammocks, at the option of the purchasers. 
 
 "They thereby concert with those to whom they sell the blocks to 
 invade the complainant's rights. They are intentional promoters of 
 the ultimate act of infringement." (Black ours.) 
 
 Here, once more, the defendants made and sold the very essence 
 of the invention. They re-created, externalized and sold the very 
 thing that the inventor's imagination conceived and that his hands 
 physically embodied as an original idea. 
 
 But in the Heaton case the staples were not only not the essence 
 of the invention, but were not even remotely related to the invention. 
 
132 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 They had no more to do with the patented machine than screws 
 have to do with a patented screwdriver. 
 
 Suppose the patentee had sold this hammock with this conditioni 
 attached: "This hammock is sold and purchased to use only to- 
 swing a baby furnished by the patentee, to whom the title to said ham- 
 mock immediately reverts upon violation of this contract of sale." A 
 proud father purchases one of these hammocks, suspends it at eaclt 
 end and places therein his darling son, Priam, whose white head shines- 
 like a star, and swings said Priam in the hammock. Would the Court 
 of Appeals hold that the father was an infringer of the patent? Yet 
 the boy swung bears the same relation to the hammock that the staples- 
 do to the Heaton machine. The latter was made to be used "conven- 
 iently for setting and clinching an ordinary metallic staple." The 
 hammock was designed to swing an ordinary hard-headed person. 
 The Heaton machine would not accommodate itself to all sizes of 
 staples, neither would the patented hammock contain all sizes of per- 
 sons; i. e., one of the judges who concurred in the decision in the 
 Heaton case. 
 
 But neither in one case or the other did this circumstance have 
 anything to do with the rights of the owners of the respective patents. 
 
 The next case cited is Willis vs. McCullan (1886), 29 Fed. 641. 
 There is no statement of facts here sufficient to enable us to ascertain 
 precisely the issue involved. The opening sentence gives the only hint 
 as to the facts: "The respondent had a license to use the patented 
 process, and also a license to sell the materials for the process to other 
 licensees." The charge against the defendant was that he sold th& 
 materials to others than licensees, for use in the process. The Court 
 said: "By these sales thus made the respondent became a party t» 
 their use (viz the use of the materials in practicing the patented pro- 
 cess). 
 
 Now the soundness of the decision depends entirely upon whether 
 or not the "materials" were patented. 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 133 
 
 If not, then the defendant needed no license to justify his selling 
 them to anyone and everyone, as he saw fit. 
 
 A process cannot be "made" or "sold"; it can only be "used". 
 A patent for a process cannot be infringed except by "using" it; by 
 going through the form of action described in the patent. And neither 
 the vendor of unpatented materials used by the purchaser to infringe 
 A process, nor the purchaser of an unpatented product made by an in- 
 fringing process, is liable as an infringer of the patent. 
 
 A vendor in such case is not liable because he no more partici- 
 pates in the use of the process than the landlord who rents a factory 
 premises to the infringer, or the man who supplies him wi,th coal. 
 
 The purchaser is not liable, for he has no more to do with using 
 the process than has the vendor of the materials. 
 
 The point has been directly adjudicated time and again. See 
 Merrill vs. Yeomans (1876), 94 U. S. 568. 
 
 But, assuming in the case under consideration that the "mater- 
 ials", too, were patented, then the defendant in making and selling 
 them to others without warrant, thereby enabled others to "use" the 
 patented processes. The defendant, co-operating with others, went 
 through the very form of action described in the patent and this is pre- 
 cisely to infringe a process patent. 
 
 But this decision affords no imaginary support for the opinion in 
 the Heaton case. It has been settled ever since the case of Coming 
 -vs. Burden (1853), 15 How. 252, that "a man cannot have a patent 
 for the function or abstract effect of a machine, but only for the ma- 
 chine which produces it." In Burr vs. Duryee (1863), 1 "Wall 531 at 
 570, the Court said: "It requires no great ingenuity to mystify a 
 -subject by the use of abstract terms of indefinite or equivocal mean- 
 ing. Because the law requires a patentee to explain the mode of 
 ■operation of his peculiar machine, which distinguishes it from others, 
 it does not authorize a patent for a mode of operation as exhibited in 
 a, machine." 
 
134 RESTRICTIONS ON PURCHASER'S USB OF PATENTED ARTICLE. 
 
 In the Heaton case this "mystifying ingenuity" was employed 
 with the result that the plaintiff was given a patent on the "function 
 or abstract effect of the machine. ' ' The only thing the defendant did 
 was to supply an ordinary unpatented chattel which was used to 
 enable the purchaser to enjoy "the function or abstract effect of th« 
 machine," which is not patentable. 
 
 Anyone who supplies oil to lubricate, a cloth to clean, power to 
 run, or a building to protect, the mechanism, was on an exact parity 
 with the defendants with respect to infringement. 
 
 Such persons like the defendants contributed to facilitate the 
 "function or abstract effect of the machine". 
 
 This is all that was done in either case. If the defendants were 
 guilty of contributory infringement, so would be the persons men- 
 tioned. If the latter could not be held liable for infringement, neither 
 can the defendants in the Heaton ease, for the Court said the staples 
 had no more to do with the patented machine than the "buttons to 
 be afiSxed by means of the staples, on the shoes to which both are to 
 be attached". Why did not the Court include the man who supplied 
 the buttons and him who supplied the leather in the category of con- 
 tributory infringers? 
 
 The next case cited is: Alabastine Co. vs. Payne (1886), 27 Fed. 
 559. The patent here was for an improvement in calcimine. The 
 claim was for a compound; consisting of pulverized calcined gypsum 
 and white glue, the latter being dissolved in hot water, and when 
 cold, stirred into the gypsum with sufficient cold water to bring the 
 mixture to proper consistency to be applied with a brush." Of course, 
 the patentee made the compound in accordance with this method and 
 sold it to the public. Now the defendant made and sold a dry mix- 
 ture composed of pulverized calcined gypsum and glue put up in pack- 
 ages with printed directions for reducmg the dry mixture to a liquid 
 in accordance with the formula of the patent. It was unavoidably 
 held that the defendant was a contributory infringer. 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 135 
 
 The defendant performed every act necessary to make the thing 
 invented, except the addition of water, and he directed thu purchaser 
 to do this. When the purchaser followed the directions, he, in eon- 
 junction with the defendant, created and made the identical thing inr 
 vented and patented. But this decision has no relevancy whatever 
 to the Heaton case. 
 
 In the latter case the defendant did not co-operate with the pur- 
 chaser to make the machine. He sold materials for use in a machine 
 which the purchaser had bought and paid for and owned. 
 
 Suppose again, in the Alabastine case, the patentee had sold a 
 gallon of the mixture accompanied by this notice : ' ' This calcimine is 
 sold and purchased to use only on a wall 12 by 8 feet in dimensions, 
 title to said calcimine immediately reverts to the patentee upon viola- 
 tion of this contract of sale." A carpenter is employed by the pur- 
 chaser to build a wall 16 by 10 feet in dimensions. The carpenter 
 knows the calcimine is to be used on the wall; he reads the "license". 
 After finishing the wall he stands by and consents, abets and aids in 
 the spreading on of the calcimine. 
 
 Is the carpenter guilty of contributory infringement? He had 
 guilty knowledge; he knew of the wicked intent of the purchaser to 
 violate the "license" and he furnished the means by which it was 
 done. 
 
 If the Heaton case was correctly decided, the carpenter in the 
 case supposed would be guilty of contributory infringement. If he 
 would not be, then neither was the defendant in the Heaton case. 
 
 We come next to Celluloid Mfg. Co. vs. American Zylonite Co. 
 (1887), 30 Fed. 437. 
 
 In this case, the patent was on an improved collar, made in part 
 of celluloid; more accurately speaking it was the fabric made of cel- 
 luloid. The single claim was as follows : 
 
 "A fabric for collars and cuffs, or other similar articles, having 
 
13G RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 outer sheets or layers of celluloid, and an interlining of textile or 
 fibrous material, substantially as and for the purpose specified." 
 The alleged infringement was accomplished by three parties, who, for 
 the sake of convenience we shall designate as A, B (the defendant) 
 and C. It was done in this manner. A fabric, consisting of two 
 sheets of cloth or muslin, with a paper interlining, was made by A. 
 B (the defendant) then took the fabric from A and placed on one 
 side of it, a thin sheet of zylonite (i. e. Celluloid), and returned the 
 fabric thus compounded to A. A in turn cut o£E the top edge of the 
 cloth and folded the top edge of the celluloid back on itself, so that 
 there was a surface of celluloid upon both sides at all the edges of 
 the collar except at the neck band. The body of the inside of the col- 
 lar was not covered with celluloid, but the parts which demanded 
 strength, neatness and finish and which are most liable to become 
 soiled had a double sheet of celluloid, which enclosed an interlining of 
 textile material. The other party, C, took the collars so made and 
 sold them. The defendant put up many ingenious defenses, but the 
 Court struck at the heart of the matter when it said ' ' C receives from 
 the manufacturers and sells collars which contain so much of the new 
 fabric as is needed to make a collar. So much as is unnecessary had 
 not been used. It (the defendant) has a double sheet (of celluloid) 
 where such a sheet is indispensable, and thereby has taken the kernel 
 ■of the invention to its own use, and has become to the extent to which 
 it emplbys the improvement, an infringer. It is apparent that B (the 
 ■defendant) made the compound sheet for A, with knowledge of the 
 method in which it was to be used by that company in the manufac- 
 ture of collars." Here then A and B co-operated, acted concertedly 
 to a definitely conceived, common result — to take "the kernel of the 
 invention" to their own use. But in the Heaton case, the defendant 
 did not, either alone, or in conjunction with the purchaser "take the 
 kernel of the invention ' or even a shred of the outermost husk, to his 
 ■own use. 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 137 
 
 The defendant there had nothing whatever to do with the in- 
 vention. 
 
 If in this Celluloid Collar Case the Court had held that the mer- 
 chant who supplied collar buttons or shirts to use with the collars, 
 was a contributory infringer then, the decision would have been rele- 
 vant to the proposition announced in the Heaton case. But as it 
 «tands, the Court might just as well have cited the Squib case or the 
 Dartmouth College case. 
 
 This is getting wearisome, but we have three more decisions to 
 ■come. The next is: Boyd vs. Cherry (1883), 50 Fed. 279. In this 
 case there was a conflict between two patents, both on milk cans. The 
 earlier patent belonged to the plaintiff and the later to the defendant. 
 In both patents, the thing contemplated was a can sealed water tight 
 and submerged in cold water to drive out the heat and facilitate the 
 separation of the cream. The plaintiff characterized' his patent as for 
 a, process to be carried out by the use of the can. The defendant 
 claimed a patented can to be used in doing what the plaintiff claimed 
 as his "process". The parties were disputing over words, not things. 
 The Court held that the defendant's can was substantially the same 
 as the plaintiff's. The defendant sold his can with directions, which, 
 in effect, told the purchaser to do just those things described in the 
 plaintiff's patent for a process. But the Court refused to be deceived 
 by mere words and insisted on dealing with things instead. The Court 
 said: "When it is added (to what already has been said) that they 
 (the cans sold by the defendant) are generally if not always accom- 
 panied by directions to purchasers as to the mode of using them, 
 which directions require the adoption and use of the Cooley (plain- 
 tiff's) process (black ours), it becomes very clear that the fact of in- 
 fringement is established." 
 
 Here the defendant sold a duplicate of the appliance discovered 
 by the plaintiff and taught purchasers how to use the mechanism in- 
 vented so as to infringe the "process" patented. 
 
138 RESTRICTIONS ON PURCHASER'S USB OF PATENTED ARTICI^. 
 
 This is just like the Alabastine case above. But it would indeed 
 require a "mystifying ingenuity" to imagine a bearing of this de- 
 cision on the Heaton ease. 
 
 The last decision of the lower courts relied on, is the case of 
 American Cotton Tie and Supply Co. vs. McCready (1679) Fed. Cas. 
 295. This case was one phase of the famous controversy over the pat- 
 ented cotton bale tie. Here the defendant was a common carrier, and 
 the charge against it was that it was knowingly transporting infring- 
 ing ties for sale in the Southern states and refused to disclose the 
 name of the shippers. The plaintiff swore that the ties infringed its 
 patent ; the defendant denied any knowledge on the point, but admit- 
 ted its refusal to disclose the name of the shippers. Here then the 
 making and selling of the ties was established conclusively by the only 
 proof on the point, and the plaintiff was powerless to prevent the in- 
 fringement because the identity of maker, vendor and vendee was 
 concealed. Conceding the infringement, the defendant's refusal to 
 disclose the names of the shippers was construed by the Court to be a 
 participation in an infringement of the patent for the defendant was 
 the agent of the purchasers of the infringing ties. 
 
 It is exceedingly difficult to work out a duty on the part of the 
 defendant to disclose to the plaintiff the names of shippers by its con- 
 veyances. 
 
 But accepting the view of the Court, the decision does not touch 
 the Heaton case. There the plaintiff had made and sold the device for 
 use in the only way it could be used, to clinch ordinary metal staples. 
 The defendant had nothing to do with making or selling the machine. 
 It supplied the "ordinary metallic staples" for use in the machine, 
 just as a hardware dealer supplies ordinary metallic screws to be 
 driven by a patented screwdriver. 
 
 To distort this case into an authority for the Heaton case, we 
 would have to re-shape the facts thus: The plaintiff made and sold 
 a package of the patented ties accompanied by this notice : ' ' These 
 
HEATON-BXJTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 139' 
 
 ties are sold and purchased for use only in case they are transported 
 to the cotton states on pack mules; the title to these ties reverts tO' 
 the patentee immediately upon violation of this contract of sale. ' ' The 
 purchaser, we will suppose, gets anxious to deliver the ties in shorter 
 time than by the method prescribed in the "license" and ships the 
 same by the defendant's line of steam ships. In such case, would 
 the Court hold the defendant guilty of contributory infringement? 
 
 We come finally to the great case of Morgan Envelope vs. Albany 
 Perforated Wrapping Paper Co. (1894) 152 U. S. 425. This is the 
 last case cited; by the Court and is discussed at length. The Court 
 had gained considerable momentum in error by the mistaken applica- 
 tion of the nine decisions already commented on, but with all this, 
 how the Court found it possible to drive through or around the case 
 now to be dealt with, we have never been able to understand, though 
 we have read both decisions scores of times. 
 
 The facts in the envelope case were these: The plaintiff owned 
 two patents ; both were for a combination of a roll of toilet paper with 
 a mechanism for the delivery of the paper., A prior patent on the 
 paper roll alone was declared . void for want of novelty. The Court 
 held that the patent on the mechanism was valid, but declined to de- 
 cide whether or not the claim for the combination of the roll with 
 the fixture was a valid claim for a combination. The Court said that 
 conceding the combination valid, the defendant had not infringed,, 
 hence it was unnecessary to decide whether or not the claim for com- 
 bination was well taken. 
 
 The plaintiff had made it a practice to seU the fixtures only to such 
 parties as dealt in and used its paper. "The fixtures were also sold 
 to hotels and other public buildings, with the understanding that their 
 paper would be subsequently purchased of the plaintiff company. It 
 appears to have been its invariable rule to refuse to sell fixtures ex- 
 cept to persons also ordering paper." (Compate this with the Heaton 
 case.) 
 
140 RESTRICTIONS ON PURCHASER'S USE OP PATENTED ARTICLE. 
 
 Now the defendant purchased a quantity of these fixtures from 
 persons who had bought them of the plaintiff and sold the same again, 
 and at the same time supplied the vendees with paper to be used in 
 the fixtures. The plaintiff charged that these acts constituted in- 
 Jringement. 
 
 The cause was argued on two days and the opinion was unanimous 
 •on the part of all the members of the court who heard the argument. 
 .It does not betray any lack of care in preparation. 
 
 Mr. Justice Brown, in writing the opinion, proceeds to divide the 
 •question disputed into parts and to discuss them separately. That 
 way is the way to clearness and precision. 
 
 He first dealt with the question of infringement on the part of the 
 •defendant in selling the fixtures he had purchased from the plaintiff's 
 vendees. We have already devoted an abundance of time and space 
 "to this, so we pass it up with the quotation of one sentence: "The 
 patentee having once received his royalty upon such device, he can- 
 not treat the subsequent seller or user as an infringer." 
 
 Now he passes to the other question and says: "The real ques- 
 tion in this case is, whether, conceding (observe, not deciding), the 
 •combination of the oval roll with the fixture to be a valid combina- 
 tion, the sale of one element of such combination, with the intent that 
 it shall be used with the other element is an infringement. "We are 
 •of the opinion that it is not." In other words, the statement is thus:. 
 If we should decide that the claim for combination is invalid it would 
 :necessarily follow that the sale of the paper would not constitute in- 
 fringement as the paper roll would constitute no part of the inven- 
 tion. But, for argument's sake, we will make the case stronger and 
 concede the claim for combination valid, and even then there would 
 ■be no infringement. Now in dealing with the decision the Court in 
 the Heaton case inverts the argument employed by the Supreme Court. 
 It says: "It is true that Mr. Justice Brown, in discussing the ques- 
 tion involved in that case assumes that a combination of the machine 
 
HBATON-BUTTON. ETC., CO. VS. EUREKA SPECIALTY CO. UZ. 
 
 for delivering the paper with the paper to be delivered was valid.. 
 But before he finishes the argument, he shows that the assumption 
 leads to an absurdity." Indeed, he did show that the case when, 
 strengthened by the concession led to an absurdity. But without the 
 assumption the absurdity would have been infinitely ■vyorse than the 
 Court made it out. The assumption was in favor of the plaintiff's, 
 contention and even then that contention was seen to be absurd. 
 Without the assumption the Court would have held it unthinkable. 
 
 The Court in the Heaton ease says again : ' ' The illustration of the 
 result of such a combination shows that what the (Supreme) Court 
 was deciding was that a combination of the machine with an unpat- 
 entable paper or material to be operated upon by the machine was an 
 impossibility." The Court might have decided that, but it found it 
 vinnecessary and declined to do so. What it did decide was that- 
 conceding that the plaintiff had a patent on the combination, it was im- 
 possible to hold the defendant liable as an infringer for selling the 
 rolls of toilet paper. 
 
 The following passage in the opinion is levelled as squarely at the 
 mistaken theory in the Heaton case as if it had been prepared by the 
 Supreme Court to dispose of the issue there joined: "There are 
 doubtless many cases to the effect that the manufacture and sale of" 
 a single element of a combination, with intent that it shall be united 
 to the other elements, and so complete the combination is an infringe- 
 ment. But we think these cases have no application to one where 
 the element made by the alleged infringer is an article of manufac- 
 ture perishable in its nature (staples) which it is the object of the 
 mechanism to deliver (staples) and which must be renewed periodic- 
 ally whenever the device (Heaton machine) is put to use. Of course, 
 if the product itself is the subject of a valid patent (the staples were 
 not) it would be an infringement of that patent to purchase such prod- 
 uct from another than the patentee; but, if the product be unpat- 
 entable, it is giving to the patentee of the machine the benefit of a 
 
142 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 patent upon the product (staples) by requiring such product 
 to be bought of him.. To repeat an illustration already put: 
 If a log (staple) were an element of a patentable mechanism for saw- 
 ing such log (machine for fastening such staple) it would, upon the 
 construction claimed by the plaintiff, require the purchaser of the saw- 
 ing (fastening) device to buy his logs (staples) of the patentee of the 
 mechanism, or subject himself to a charge of infringement. This ex- 
 hibits not only the impossibility of this construction of the patent, but 
 the difficulty of treating the paper as an element of the combination 
 at all." (Black ours.) It is utterly and wholly impossible to dis- 
 tinguish the two cases: The toilet fixture was useless and worthless 
 without the paper. The Heaton machine was useless and worthless 
 without the staples. The fixture was made solely to deliver the paper ; 
 the machine was made solely to fasten staples. The paper was perish- 
 able and could be used but once, so were the staples. The paper had 
 to be renewed each time the fixture was vised ;. the staples likewise had 
 to be renewed each time the fastener was used. The Supreme Court 
 said, even considering the paper was part of a patented combination, 
 yet, supplying it was not infringement. The Court of Appeals said 
 that although the staples had no more to do with the patented machine 
 than the buttons on the shoes, yet, that the defendant in supplying 
 them, invaded the patent right of the plaintiff and was a contributory 
 infringer ! 
 
 But it is not necessary to discuss further the rule of contributory 
 infringement in the Heaton case. That doctrine has no basis in rea- 
 son or in law. Infringement always consists in making, using or sell- 
 ing the thing invented without the patentee's consent. Here the own- 
 er of the patent made the machine and sold it; the only value of the 
 machine consists in the right to use it. That was just the thing the 
 purchaser paid for. No machine was ever made or purchased except 
 for use. If the vendor did not sell the right to use the machine, he 
 sold nothing at all. It is perfectly clear that by the sale the machine 
 
HEATON-BUTTON, ETC., CO. VS. EUREKA SPECIALTY CO. 143 
 
 passed out of the limits of the right to exclude and became the abso- 
 lute property of the purchaser. 
 
 The vendor irrevocably consented to its use until worn 
 out. The "condition" or "license" if we can imagine the purchaser 
 bound by it, was simply a common law contract in restraint of trade, 
 violating statutes of the State of Michigan or the Federal Antitrust 
 Act, or both. 
 
 The rule of contributory infringement announced in this case 
 has been consciously ignored by the Supreme Court. In the ease of 
 Leeds and Catlin vs. Victor Talking Machine Co. (1908), 213 U. S. 325, 
 the Court of Appeals' had dealt with a case of real contributory in- 
 fringement; in holding that the defendant was guilty^ the 
 Court of Appeals said: "Upon these facts it is clear that 
 the Leeds and Catlin Company have made and sold a single element of 
 the claims of the Berlin patent, with the intent that it should be united 
 to the other element and complete the combination; and this is in- 
 fringement." (Black ours.) Citing as authority the Heaton case! 
 But that was the precise thing the defendant in the Heaton case had 
 not done, as stated by the Court in the first two sentences of the opin- 
 ion. This was the only authority .relied on by the Court of Appeals. 
 Now the Supreme Court quotes the above passage (213 U. S. 332,) but 
 is careful to put it in quotation marks. It then decides the issue of 
 infringement by considering and applying prior decisions of its own, 
 but does not once mention the Heaton case, or the rule there an- 
 no'" need. 
 
 The Heaton case is wholly unsupported by authority and 
 is opposed to every notion of infringement to be found in the Supreme 
 Court reports. We must pass on to consider other cases, in the course 
 of which we will take up questions here passed over. The question of 
 jurisdiction, of the effect of the notice to constitute a contract, of the 
 defendant's "guilty" knowledge, of the fact that the staples were 
 "peculiarly adapted" to the "infringing use", none of these has been 
 
144 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 overlooked and all will be discussed. Viewed in any aspect and from 
 all different aspects, the case is wholly unsupportable. This will more- 
 fuUy appear in what follows. 
 
 The two cases now to be considered are : 
 
 Tubular Rivet & Stud Co. vs. O'Briem (1898), 93 Fed. 200, and 
 Rupp vs. Elliott (1904), 131 Fed. 730, 
 
 We will refer to these two decisions as the "rivet case" and th& 
 "Rupp case". This for brevity and convenience. These two de- 
 cisions are aside from the main question we are considering. What we- 
 are trying to elucidate is the right of the owner of a patent to control 
 the use of an article embodying the invention which has been sold by 
 the patentee, and paid for by the purchaser. In the two cases now 
 to be considered there was no sale of the machine, no transfer of title^ 
 the entire interest and property in the machine remained in the pat- 
 entee-vendor. The lessee did not own the machine any more than a 
 man who has rented a horse or an automobile for use for a day, own» 
 the horse or automobile. But, strange as it may seem, neither opinion 
 even refers to this fact as operative in any manner. Both opinions 
 treat the lessee just as the opinion in the Heaton ease treated the 
 purchaser. We have nominated this confusion of a licensee to use 
 with a purchaser of the thing used, as the master fallacy, the tow- 
 ering error, the gigantic blunder of the Heaton case. 
 
 If upon full consideration, one confesses to an inability to appre- 
 ciate the difference, as to their respective rights, between a licensee 
 to use a machine and a purchaser of the machine, we have nothing 
 further to say on the point. It ought not to require much comprehen- 
 sion to perceive the difference between the right of one who owns a 
 house and one who rents the same house. Any tenant will explain the 
 difference. A man of a very vivid imagination who hires an auto- 
 mobile from a garage may experience moments during an all night's 
 ride in which he feels as if he owped the automobile. But in the 
 cold grey dawn of the morning after, before the police magistrate and 
 
RIVET CO. VS. O'BRIEN; RUPP VS. ELLIOTT. 145 
 
 in the presence of the outraged owner of a smashed vehicle, he does 
 not doubt that the machine was, and the wreck is, the property of 
 another. We shall not dwell further on the distinction and difference 
 between a licensee and an owner. In our own mind, there never has 
 been and never will be any doubt. If this is regarded as impertinent, 
 we add that doubt on the point or confusion of the respective rights 
 of a purchaser and a licensee cannot be attributed to anything that 
 the Supreme Court has said. 
 
 In the Rupp case the Bement case is made to do valiant service 
 on a false errand. There the Court said: "The general rule is ab- 
 solute freedom in the use or sale of rights (black ours) under the pat- 
 ent laws of the United States." For sixty years the Supreme Court 
 has bejen trying to force an acceptance of the obvious fact that the 
 sole right under the patent laws is the right to exclude. 
 
 The- Supreme Court has never said and unless stricken with loco- 
 motor ataxia, never will say "the general rule is absolute freedom in 
 the sale or use of patented machines or patented articles". On the 
 contrary, it has repeatedly declared that there is no connection what- 
 ever between the incorporeal, intangible right to exclude and the cor- 
 poreal, tangible merchandise, physically symbolizing the genius of the 
 inventor. In Patterson vs. Kentucky, the Court held that the State 
 of Kentucky had the power to entirely interdict the sale or use of 
 the patented oil. In "Webber vs. Virginia, the Court planted itself 
 on the proposition that: "The legislation respecting the (patented) 
 articles which a state may adopt after the patents have expired, it 
 may equally adopt during their continuance." 
 
 Then, lest the unwary might be misled, the Court adds the com- 
 plementary: "It is only the right to the invention or discovery, the 
 incorporeal right, which the State cannot interfere with." He that 
 has a heart to understand, let him understand. We pass over this 
 point, and it is only taken here to prevent a misconception of the Be- 
 ment case. Let that case rest until it is up for consideration on its 
 
146 RESTRICTIONS ON PURCHASER'S USE OP PATENTED ARTICLE. 
 
 merits. Then we will see what the Court there said. 
 
 In the Eupp case the Court emphasized throughout the opinion, 
 by the use of glaring italics, the allegation of the bill of complaint, 
 that the wire sold by the defendant to the lessees of the machines 
 ' ' has been and is put up on spools or coils of the exact form, size and 
 shape suitable for use upon the (leased machine) and suitable for no 
 other use". Of course, this allegation was false. It was just as false 
 as a similar allegation with reference to the rolls of toilet paper would 
 Jiave been in the Morgan Envelope case. The wire was of "a certain 
 size, and a certain temper or color, and coiled or put up in packages 
 so shaped as to be received into the appropriate part of the ma- 
 chine". Suppose the patentee of the machine had presented a claim 
 in the exact words just quoted and asked for a patent on the wire so 
 put up. He would have had his trouble for his pains. No patent 
 would be granted for the reason that such copper wire is old, very 
 old and likewise the spools or package. This wire could have been 
 used and was suited^to be used in a hundred different ways. It is 
 the same case as the patented hammer and the nails, or screwdriver 
 and screws. When we say that the wire is no part of the invention, 
 no element in a combination, that is the end of the matter. What a 
 time the Courts have in explaining and trying to uphold this theory! 
 
 In the Rivet case, there was no allegation that the studs sold by 
 the defendant were adapted solely to use in complainant's machines. 
 Now certainly the counsel for the defendant was justified in attempt- 
 ing to get from under the Heaton case because of the peculiar stress 
 put on that point in that ease. However, the Court said "but in the 
 Heaton ease, the Court laid little stress upon that statement, and based 
 its decision mainly upon the allegation which is found in both bills, 
 that the respondent induced the users of the complainant's machines 
 to infringe the complainant's patent". But the reason it was held 
 there was such inducement, was because the staples sold were "pe- 
 culiarly adapted" to the infringing use. 
 
RIVET CO. VS. O'BRIEN; RUPP VS. ELLIOTT. 147 
 
 For in the ease of Edison Electric Light Co. vs. Penin- 
 sular Light, Power and Heat Co. (1900), 101 Fed. 831, the 
 Court of Appeals for the Sixth Circuit, Judge Lurton him- 
 self writing the opinion, held that one who supplied electric 
 current to a customer using an infringing apparatus was not a con- 
 tributory infringer. And it is there said (1. c. 833) : "In the case of 
 (Heaton) the fasteners made and sold were not oaily peculiarly adapt- 
 ed to the infringing use, but they were made and sold with the de- 
 finite intent that they should be so used." Now these three decisions 
 complete the circle. In the Heaton case the Court did make the fact 
 that the staples were peculiarly adapted to use in the machine, a turn- 
 ing point in the contest. In the Rivet case the Court held that the fact 
 that the rivets were of a common size and standard make, made no 
 difference. 
 
 In the Light Co. ease, the Court defeated the charge of contribu- 
 tory infringement because the thing furnished — electric current — ■ 
 was not peculiarly adapted to the infringing use. Of course, the de- 
 fendant in this last case knew what- use was being made of the cur- 
 rent and hence the element of "guilty" knowledge is ignored. If 
 this is not playing with a baseless distinction we know not what to 
 call it. In the Heaton ease (to compare the three decisions again) 
 two factors controlled, co-ordinately, the peculiar adaptability of the 
 article, and guilty intent. In the Rivet case the guilty intent alone 
 controlled. In the Light Co. case the guilty intent alone was thought 
 to be present and it was ignored. 
 
 In the Light Co. case the electric current was just as peculiarly 
 adapted to use with the infringing apparatus as were the staples to 
 the Heaton machine. The staples had to be of a certain shape and 
 dimension, so the current had to be of a certain voltage and applied 
 to the mechanism in form of direct or alternating power, depending 
 upon which form the mechanism was designed to utilize. 
 
 Staples varying in size or shape were not "peculiarly" adapted 
 
3.48 RESTRICTIONS ON PURCHASER'S USB OF PATENTED ARTICLE. 
 
 to use in the machine ; so a voltage too high or too low, or a current 
 not meeting the requirements of the mechanism, as to its direct or 
 alternating form, was not "peculiarly" adapted to use in the appara- 
 tus, to which the defendant supplied it. 
 
 In the instance of the staples we test the adaptability by a dimen- 
 ;sional standard; in the case of the current by a kinetical standard. 
 The attribute of peculiar adaptability for use cannot be affirmed in 
 one instance and denied in the other. 
 
 But all this contention about "peculiar adaptability" for use, is 
 labor wasted. The notion is a mere bugaboo. The peculiar adapta- 
 bility to USB' it not in the thing, but in the mind of man. The attempt 
 to make it the turning point of a decision is as useless as speculation 
 about "reasonable" and "unreasonable" restraints of trade in con- 
 nection with the Antitrust Act. The Supreme Court has always re- 
 fused to embark in metap|hysical hair-splitting to determine whether 
 ■or not a given restraint is reasonable or unreasonable. And pray when 
 is a thing ' 'peculiarly adapted ' ' for use ? 
 
 Let us take corn. Com may be ground for bread, planted to in- 
 crease the quantity, fed to animals to be converted into fat, distilled 
 in the form of alcohol. Now is corn peculiarly adapted to one, some, 
 or all of these uses? Suppose M. obtains a patent on a grinder, 
 JSf. on a planter, R. on a feeding trough, and S. on a distilling appar- 
 atus. Each sells or leases his separate device subject to the terms, 
 of a "license" which permits the purchaser to use the same only 
 in conjunction with corn supplied by the patentee. The com is 
 "peculiarly adapted" for use in each patented device. If we submit 
 to the logic of these decisions, how is it possible to escape the conclu- 
 sion that one who supplies corn to any one of the "licensees" in viola- 
 tion of the terms of the "license" is a "contributory infringer"? If 
 this is thought fantastical, let us take the actual decisions and vary 
 Ttliem slightly. 
 
 In the Heaton case, suppose the staples sold by the defendant had 
 
RIVET CO. VS. O'BRIEN; RUPP VS. ELLIOTT. 1*^* 
 
 varied somewhat in size, being considerably longer or shorter and of 
 smaller cross section, and had worked poorly and imperfectly in the- 
 machine, about one-half failing to be clinched. What would the 
 Court have done in such case ? Would the Court have held the defen- 
 dant guilty of supplying staples "peculiarly adapted" to use in the 
 machine? Suppose in the Rupp case that the wire had been made of 
 wrought steel instead of copper, had been of smaller diameter and un- 
 wound from a flat coil instead of a spool. Would the Court have 
 held that such wire was "peculiarly adapted" to the use instanced? 
 Or suppose the galvanized wire had been cut into lengths and deliv- 
 ered to the crimping mechanism by the hand of a person? What 
 then? 
 
 The reason why one who furnishes an unpatented element with 
 knowledge that it is to be used to constitute a part of a patented com- 
 bination, is held to be an infringer when the element has been so used 
 in fact, is that he has co-operated in making the thing invented. The 
 element furnished is not only "peculiarly adapted" to the use, which 
 is a colorless fact, but the use to which it is put is" peculiar" in this,, 
 that it was a use discovered by the inventor and its novelty has been 
 certified by the Patent Office. One has no right to take pieces of 
 iron and wood that are "peculiarly adapted" to a hundred different 
 uses and of them construct a patented device. That is not because 
 the materials are not adapted, but because the use is forbidden. 
 
 It is not possible to be delivered from the body of this monster 
 except by entirely cutting it away. It was not necessary to do so in 
 the Heaton case because the entire absence of any basis for sustaining 
 a charge of infringement was superlatively palpable from the circum- 
 stance that the user of the machine owned it. And "in the essential 
 nature of things" (as IVCr. Justice Miller said in Adams vs. Burke) the 
 patentee in the exercise of the patent monopoly could no longer re- 
 strict the use of what belonged to the purchaser. But here the ques- 
 tion of infringement or not, is more evasive and subtle, by reason of 
 
150 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 the fact that the patentee still owns the machine used. We apologize • 
 for tarrying so long before getting at the heari of the difficulty, but 
 there was much underbrush to be cut away before the exact configura- 
 tion of the ground could be clearly seen. Now we are ready to grap- 
 ple with the Rivet and Rupp cases and we think the doctrine of these 
 two cases is such stuff as dreams are made of. 
 
 These two decisions are alike in the circumstance of guilty intent: 
 they are unlike in circumstance of "peculiar adaptability" for use. 
 After what has been said about the last factor, we shall bid a definite 
 and final good bye as to it. We have left, then, only this narrow 
 question: A patentee leases a patented machine; a condition of the 
 lease is that the lessee shall use the machine in conjunction with ma- 
 terials purchased of the patentee-vendor. The lessee purchases the 
 materials from another and operates the machine in conjunction with 
 such materials. Has he infringed the patent? 
 
 We have deliberately left out the qualification "peculiarly 
 adapted to use," for it was left out of Rivet case and we have seen 
 its utter uselessness. But the precise question has not yet been stated. 
 It is : Is the person who furnishes materials for use in such case,, 
 knowing ihat in using them, the lessee will violate a term of his 
 lease, a contributory infringer ? At this stage the question is scarcely 
 worth answering. We shall answer it for the pure delight of doing 
 so, but not under the delusion that we shall impart any knowledge of 
 the law in the process. Unfortunately the precise terms of the "li- 
 censes" are not stated in either of these cases. But we presume it 
 safe to rely on the language of the Court. In the Rivet case (p. 200) 
 we read: "These machines it (complainant) does not sell, but licenses 
 their use by a lease which provides that the licensees shall use in the 
 machines only those studs which are manufactured by the complain- 
 ant." In the Rupp case (p. 730) : These machines are never sold, but 
 "placed in the hands of users under a license to use only in connec- 
 tion with staple wire purchased from the patentee ' '. 
 
RIVET CO. VS. O'BRIEN; RTJPP VS. ELLIOTT. 151 
 
 Now the whole trouble inheres in the phrases "use in the ma- 
 chine" and "use in connection with staple wire". Using studs in the 
 riveting machine is not using the invention in the meaning of the pat- 
 ent law. So of using staple wire in the Rupp machine. No one has 
 to obtain permission from a patentee to use studs or staple wire. They 
 are public property ; if one desires to use them he has only to go into 
 the market, buy and use. That is all. But it is said the patentee- 
 lessor leased the machine "on condition" that it should only be used 
 "in connection with" studs or staple wire purchased of the lessor. Cer- 
 tainly that is the condition. But it seems not to be well understood 
 how totally disconnected that condition is from an infringement of the 
 patent. The gleam of light in the Heaton case illuminates the dark- 
 ness here. There the Court said: "They (the staples) are no more 
 within the direct (black ours) monopoly of the patents than are the 
 buttons to be affixed by means of the staples or the shoes to which 
 both are to be attached." The word "direct" in this sentence is mean- 
 ingless, and misleading. It implies that while there was no "direct" 
 connection there was an "indirect" connection. But this was not 
 true. Suppose the 'license" or lease in this case had provided "This 
 machine is licensed for use only in connection with power generated 
 by a gasoline engine." A. comes into the lessee's establishment and 
 reads the condition on the machine and straightway induces the lessee 
 to do away with the gasoline engine and install A's windmill. Is A. 
 guilty of contributory infringement? Power of some kind is just as 
 essential to the use of the machine as studs or staple wire. Both fac- 
 tors are absolutely essential; neither can possibly be dispensed with. 
 If the staple wire and studs are used "in" or "in connection with" the 
 machine so is the power. Not one button can be fastened or one 
 stud riveted without both. And it is just as foolish to dispute as to 
 which has the more to do with the use of the machine as it is to argue 
 about which of two scissor blades has the more to do with cutting a 
 
152 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 piece of cloth, or which of the two elements, water and air, has the 
 more to do with the growth of a plant. 
 
 Then if the studs and windmill can be brought directly or indi- 
 rectly, within the monopoly of the patent, how can it be don«? We 
 answer that it cannot be done at all, by any stretch of our patent 
 law. The patentee did not invent either the studs or the windmill and 
 he cannot exclude anyone from using either. In these two cases the 
 leases extended to the lessees the permission to use the patented ma- 
 chine and connected the use of the machines with the use of studs and 
 staple wire purchased only of the respective lessors. All things can 
 be connected by contract. 
 
 I can license my patented fountain pen for use only "in" or "in 
 connection with" the licensee's right hand, but that does not bring 
 his right hand either "directly" or "indirectly" within the monopoly 
 of the patent, any Court to the contrary notwithstanding. There is 
 no such thing conceivable as a contributory infringer without there 
 being another, whom we may call a principal infringer. 
 
 Now in all these cases, the defendants were -charged as contrib- 
 utory itif ringers, so we turn- for last glance at the lessees as direct or 
 principal infringers. The only way it is possible for a licensee or 
 lessee to become an infringer is for him to cease to be a licensee or 
 lessee. One cannot be both at the same time. A licensee is one who 
 uses with the consent of the licensor; an infringer is one who uses 
 without that consent. The licensee either has, or has not, that consent. 
 There is no such thing as a cross between an infringer and a licensee. 
 Such a hybrid is recognized by the lower federal courts, but the 
 pedigree is not vouched for by the Supreme Tribunal of the nation. 
 It does not believe in juristic cross polenization. If the licensee can 
 and does legally and validly withdraw his consent and permission, im- 
 mediately the (he who was a) licensee by a further use, becomes an 
 infringer. 
 
 Or if the licensee repudiates the licensee, totally disregards the 
 
RIVET CO. VS. O'BRIEN; RUPP VS. ELLIOTT. 153: 
 
 permission, thereby he becomes an infringer. But the important thing 
 to remember is that the licensor has given his consent by a contract, 
 and the fact that he is a patentee does not give him any more power 
 to rescind a contract than any other person. A contract cannot be 
 rescinded by one party. There may be a forfeiture clause or a con- 
 dition, breach of which, goes to the essence of the contract and wipes 
 it out. But whether the forfeiture is enforceable or the condition goes 
 to the essence of the agreement, are matters which the licensor cannot 
 decide for himself. A Court must decide for him. It is sometimes ex- 
 ceedingly difficult to tell whether or not breach of a condition does 
 away with a contract. But whether it does or not is a question of law 
 tor a Court to decide. 
 
 A licensor then cannot convert a licensee into an infringer by hurl- 
 ing epithets, as we have already said. Perhaps one could find a hun- 
 dred decisions in the lower courts to the effect that breach of a license 
 agreement is per se infringement. But we have not found any such de- 
 cision in the Supreme Court Reports,though we have found an unbroken 
 line to the effect that if a licensor sues a licensee for breach of a 
 term of a license the suit is one for breach of contract and not for an 
 infringement of a patent, and of such suit the Federal Courts have no 
 jurisdiction apart from diversity of citizenship and the requisite amount 
 involved. Sometimes a licensor treats the license as annulled by the 
 licensee's acts and sues the latter for infringement. In such case the 
 Court will determine whether or not the license has been forfeited, and 
 after it has determined that, then, it will determine whether the de- 
 fendant is to be treated as a licensee and liable for breach of contract 
 or as an infringer and liable for invading the patentee's rights under' 
 his patent. But the two things are quite distinct. "We will discuss- 
 the authorities involved later. 
 
 Let us suppose, then, that in the Rupp and Rivet cases the patent 
 owner goes into court and has the license contract annulled or that 
 he and the licensee mutually cancel it. 
 
154 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 Then, the permission or license is withdrawn, done away with, 
 gono. There is no licensee or lessee. If the person who was such uses 
 the machine once, with any staple wire or any stud whatever, he is 
 ?.n infringer of the patent. And it makes no difference who supplies 
 J)im with staples, or studs, or power. He lacks the consent of the 
 patentee to use the machine. It is thus seen that furnishing of studs, 
 ■staple wire, electric current or what not, has no more to do with in- 
 fringing the patent than supplying the licensee with oxygen to 
 breathe. 
 
 In the Rivet case, the Court made everything turn on the intent 
 and purpose of the defendant. Indeed, no other course was open. It 
 v/as shown that the studs were not "peculiarly adapted" or fitted 
 for use in the machine. That guilty knowledge of the defendant was 
 his sole contribution to the infringement of complainant's patent, but 
 that was enough to satisfy the Court. This blots out the distinction 
 between a thought and an act, and renders a murderous thought a 
 •capital offense as well as the act of murder. The man who looks 
 through the interstices of the cashier's iron cage and secretly plans or 
 meditates seizing a roll of bills is a felon. This was taught a long 
 time agOj but we are not accustomed to have it propounded by courts 
 •of law. 
 
 The reason why the courts in all these cases felt that knowledge 
 ■on the part of the defendant was an indispensable precedent to liabil- 
 ity, is that in no other way was it possible to build up a thteory of 
 "wrong doing on the part of the defendant. And what was it of which 
 the defendant had this wicked knowledge? Not the patented ma- 
 chine : the metal plate was not a magnifying glass through which alone 
 the defendant could see the machine. It was the metal plate; the 
 gilt inscription a knowledge of which undid the defendants. 
 
 This means, of course, that it was the defendant's knowledge of 
 a Contract between the plaintiff and the licensee that rendered him 
 guilty of contributory infringement. The actions were, all of them, for 
 
RIVET CO. VS. O'BRIEN; RUPP VS. ELLIOTT. 155 
 
 7 ' * '■ 
 
 a breach of contract and the Court had no jurisdiction in any single 
 instance. Each time the plaintiff alleges the contract; each time he 
 alleges the defendant's knowledge of the contract and purpose to in- 
 duce its violation, though this is called ' ' infringement ' '. 
 
 There was not tlie semblance ot contributory infringement m 
 •either the Eupp or Kivet case. There was no complaint as to making 
 or selling. In each instance the owner of the patent had made the 
 device and there was no sale. In order for the use of the machine 
 so made to constitute infringement, such use must have been unauth- 
 orized and without the consent of the patent owner. The latter had 
 leased the machines ; placed them in possession of the lessees and en- 
 couraged the use of them and obtained a profit thereby. . It is quite 
 true that the leases provided that the machines could only be used 
 in connection with materials supplied by the lessors and that that term 
 was broken. However, it by no means follows that by such 
 breach the lessee instanter became an infringer. So long as the rela- 
 tion of lessor and lessee continued, the latter could not possibly be 
 regarded, as an infringer. A lessee has the consent of the patent 
 owner. An infringer has it not. One and the same person cannot be 
 both at the same time. Neither can one and the same act be a licensed 
 act and an infringing act. Were the users of these machines lessees 
 or infringers? Under many states of fact that might be dificult of 
 determination. Whether or not a breach of a condition or term of 
 a contract operates completely to annul and forfeit all rights of the 
 offending party, is often a very difficult question to decide. We need 
 not struggle with the difficulty here because the complainants sued 
 in affirmance of the contracts. They made no effort to have the 
 leases rescinded. They alleged the existence of the leases, asserted 
 their validity and prayed the court to perpetuate them. Their long- 
 ing desires were that the lessees should continue to be lessees; that 
 they might continue to use the machines during the existence of the 
 patent. But at the" same time these ambitious lessors 'were bent to 
 
156 RESTRICTIONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 having the defendants treated as contributoiy infringers. However, 
 on the showing made by the bills of complaint, there was no infringing^ 
 use to which the defendants contributed. Notwithstanding the lessees- 
 had violated their leases, the lessors did not repudiate the letting 
 but stood by it. So long as this was the state of affairs, there was 
 no infringement to which the defendants could rightly be charged as 
 contributors. The case against the defendants must necessarily ' 
 stand or fall with the case against the lessees. The defendants were 
 not charged with infringement, apart from concert of action with 
 the licensees. They could not be regarded as infringers unless the 
 lessees also were infringers. The startling thing about the two de- 
 cisions is that the lessees are treated as lessees and so regarded in the 
 pleading, although the defendants who did nothing more than lend a 
 hand to the lessees are mulcted in damages as ' ' contributory infring- 
 ers." This makes a part greater than the whole. The licensees are not 
 infringers, but the defendants who furnish them with supplies are^ 
 "contributory infringers." This is just as if A should bring an 
 action against B as a joint tort feasor with C, and in his pleading- 
 entirely exonerate C, and thereupon the Court should give judgement 
 against B as a joint wrong doer. The only colorable cause of action 
 which these plaintiffs had was one for damages for inducing a breach 
 of contract. This is what the Supreme Court mooted in the case of 
 Cortelyou vs. Johnson. Such a cause of action would not involve 
 the patent law and of it the Federal Court would have no jurisdiction 
 apart from a diversity of citizenship and the requisite a.mount in- 
 volved. However, it is easy to see why the complainant.^ did not 
 wish to bring such an action in the State Courts and it is not difficult 
 to appreciate the hazard of such attempt. 
 
 Why did it happen in every one of these cases that the suit was 
 brought against a third party, a contributory infringer 1 Why not go 
 after the purchaser or lessee as a principal infringer ? What is the use 
 to be so zealous in prosecuting an accessory, without in any manner 
 
THE NEOSTYLB CASES. 157 
 
 molesting the chief offenders? Why is it that the Court invariably 
 excoriates the defendant for his malicious motives and wicked pur- 
 poses but has not a word to say about the criminal licensee who is reap- 
 ing the full fruit of the unauthorized use? If the defendant was a 
 bad citizen, the licensee ought to have been deported with a convict 
 gang. 
 
 The reason for all this is plain. Suppose in the Heaton case, the 
 suit had been brought against the purchaser, the bill of complaint 
 would have run something like this : 
 
 "Your orator complains and says that it is the owner 
 of letters patent on a machine for fastening buttons. That 
 your orator made divers of said machines and duly adver- 
 tised the same for sale and that defendant knowing all 
 the facts, unlawfully, maliciously and wickedly purchased one 
 of said mlachines and paid the full purchase price for the 
 same, and took from your orator a bill of sale receipted in full, a copy 
 of which is hereto annexed and marked exhibit "A". The original, 
 as your orator verily believes is now wholly within the possession of. 
 the afore characterized defendant. 
 
 II. 
 
 Tour orator further complains that said defendant, after having 
 purchased said inachine and paid for it, unlawfully as aforesaid, set 
 the same up in his place of business, and there maliciously, unlawful- 
 ly, and with guilty intent used the same. 
 
 Tour orator further and finally avers that though said defendant 
 did buy and pay for said machine and even now, as your orator 
 avers on suspicion, information and belief, holds your orator's receipt 
 in full for the purchase price, and that though said defendant owned 
 said machine and entire interest therein, yet the said defendant (par- 
 ticular reference being made to his character as hereinbefore averred 
 
158 RESTRICTIONS ON PURCHASER'S USE OP PATENTED ARTICLE. 
 
 to) did use his said machine, and in so doing did infringe your orator's 
 patent rights under the Constitution, all of which was against the 
 peace and dignity of the nation and occasioned the highest indignation 
 of your orator." 
 
 If these eases' had been brought in the State Court, which alone 
 had jurisdiction, the farce of the whole proceeding would have been 
 unavoidably palpable. It would then have been plain that the re- 
 spective complainants who had patent monopolies on their machines 
 were attempting to acquire, by contract, an unlawful monopoly in 
 common staple articles of trade. One who has a patent on a railway 
 block signal with equal reason claims the right to furnish all the roll- 
 ing stock "used in connection" therewith. Mr. Justice Brown in the 
 Morgan Envelope case put more absurd consequences to the rule than 
 this. Yet in all three of these cases, the courts issued injunctions 
 against the defendants where there was no infringement whatever and 
 deprived them of a right to conduct a lawful business. Protection to 
 civil rights and property rights is the only excuse for the existence of 
 any government. But in these cases the courts bound the person of 
 the defendants in the iron grip of a writ running in personam and at 
 the same time took away their rights to pursue a perfectly legitimate 
 trade. And in granting the injunctions they gave the complainants a 
 monopoly in an unpatented article, built up by 'a system of contracts, 
 in clear violation of the law of every state in the Union. Yet this is 
 "encouraging progress in science and the useful arts'"! It is forcing 
 something else, too, which will manifest itself some of these days and 
 then the conservators of the peace will be as powerless as grass- 
 hoppers in the van of an army. 
 
 Cortelypu vs. Lowe (1901 C. C. A. 2d Cir.) Ill Fed. 1005. 
 
 No facts are stated, but the defendant here was led like an ox 
 to the slaughter. The memorandum states: "The case upon which 
 the order was granted is in its facts practically identical with the one 
 which was before the Circuit Court of Appeals of the Sixth Circuit 
 
THE NBOSTYLE CASES. IS* 
 
 (in the Heaton ease). We fully agree with the opinion of the Court 
 in that case and think the case should control the case at bar. The 
 order is affirmed with Costs". Injustice, as well as justice, costs 
 these days. 
 
 Cortelyou vs. Lowe (0. C. S. D. N. Y. 1902) 114 Fed. 1021. 
 Again no facts, no opinion and no reasons. "This demurrer to 
 the bill cannot be sustained without disregarding the decision of Judge 
 Thomas granting a preliminary injunction thereon and that of the Cir- 
 cuit Court of Appeals affirming the same. Ill Fed. 1005. ' ' 
 
 Cortelyou vs. Carter's Ink Co. (C. 0. S. D. N. Y. 1902) 118 
 Fed. 1022. 
 "Complainant may take a restraining order in the general form of 
 the injunction in the Lowe case. " It is so easy. 
 
 Brodrick Copygraph vs. Eoper (C. C. R. I. 1903) 124 Fed. 
 1019. 
 We are still dealing with fine print memorandums. "I am of 
 the opinion that the complainant is entitled to a preliminary injunc- 
 -tion upon the authority of the following cases:" Heaton ease, Cor- 
 telyou vs. Lowe, Tubular River and Stud case, and then this "See 
 also" Victor Talking Machine Co. ease, and the Bement case. But we 
 insist that the decisions of the Supreme Court shall not be insinuated 
 into upholding the doctrine here enforced by even a "see also". 
 
 In the Bement case there was no infringement or contributory in- 
 fringement. 
 
 Brodrick Copygraph Co. vs. May hew (C. C. Wis. 1904) 131 
 Fed. 92. 
 We have dealt with four decisions now in which the courts have 
 abdicated their power of reasoning in deference to the opinion in the 
 Heaton case. Fortunately in this instance the defendants' rights are 
 not disposed of in the oblivion of fine print with ditto marks for an 
 opinion. Here we have a few facts stated, and they appear to be 
 these: The bill is founded on letters patent for a machine known as 
 
160 RESTRICTIONS ON PURCHASER'S USE OP PATENTED ARTICLE. 
 
 a "Eotary Neostyle". "We quote: "These machines are sold with 
 the restriction that they are licensed to be used only with stencil pa- 
 per and ink (botB" of which are patented) made by the Neostyle Com- 
 pany and the defendant is charged as a contributory infringer, with 
 making a Rotary Neosjyle Ink specially designed for use with such 
 machines, and so sold to purchasers thus licensed to be so used in 
 derogation of the rights reserved to the patentees." The Court then 
 cites the Victor Talking Machine case as controlling and the Lowe 
 cases. "We will deal with the Talking Machine case later. Thus far 
 we have no ground for the decision whatever. But now comes the 
 juristic philosophy "Not only are these rulings (cases just mentioned) 
 controlling and well supported by the cases there cited (they all rest 
 on the Heaton case), but I am satisfied that the doctrine for which 
 the defendant contends is inconsistent with the unlimited right of 
 monopoly intended by the patent law." Now what is this "unlimited 
 
 .right of monopoly"? It would be interesting to know because "unlim- 
 ited" is certainly a superlative term. The beginning and end of the 
 Court 's argument is contained in the two concluding sentences : "It 
 
 . rests with the patentee to determine the method for its (i. e. unlim- 
 ited right of monopoly) exercise and he is at liberty to fix any price 
 for the machine, and reserve as well any benefit in its use. The sales 
 in question are not unrestricted, but are plainly limited or conditional 
 in use, and if the allegations of the bill are sustained by proof, the 
 complainant is entitled to the relief sought. ' ' 
 
 "What can this mean? The "unlimited right of monopoly" is a 
 concatenation of sounds which can only indicate the right to exclude 
 others, and has nothing whatever to do with "liberty to fix any price 
 for the machine". Again a purchaser, an owner of the chattel, is 
 treated as a mere "licensee". A man who owns a horse has no greater 
 rights in the horse than one who has rented one from a livery bam. 
 "He is at liberty to fix any price for-the machine and reserve as 
 
 -well any benefit in its use. ' ' Indeed, let us test this. Suppose a patent 
 
THE NBOSTYLE CASES. 161 
 
 on a piano. The owner of the patent manufactures one of the pat- 
 ented pianos and sells it to a customer for $1,000 cash. A bill of sale 
 is given and payment is receipted in full. 
 
 In the front of this instrument, just above the music rest, in plain 
 view of the performer, is that inevitable metal plate, the sheet anchor 
 of a patentee-vendor. This plate has inscribed on it in raised letters 
 of lucent gilt these words: "This piano is sold and purchased with 
 the restriction that the purchaser is licensed to play on it the tune of 
 Yankee Doodle, and none other whatever, and on breach of the license 
 title reverts to the patentee-vendor.'' The purchaser's attention is 
 called to this plate before he pays the money. Nevertheless he takes 
 the piano and the first thing he does in his home after the instrument 
 is delivered is to seat himself squarely in front of the staring metal 
 plate and lustily pound out the melody of "Dixie". 
 
 We do not understand how a court that assents to the doctrine 
 of the Heaton and Neostyle cases, without contradicting itself, could 
 escape holding the purchaser of the piano in the case supposed, an in- 
 fringer of the patent. The purchaser under -the rule announced in 
 those cases is a mere "licensee" as to the use of the piano. 
 
 In the Brodrick case the defendant sold to the purchaser a com- 
 mon article — ^ink. The Court informs us, parenthetically, that the 
 plaintiff had a patent on "stencil paper and ink," but there was no 
 charge that those patents were infringed. We will not discuss tne 
 point of contributory infringement, as it is precisely the same as in 
 the Heaton case. 
 
 The decision in this case was on appeal affirmed by the Court of 
 Appeals for the Seventh Circuit (137 Fed. 596) in a Per Curiam mem- 
 orandum, without the citation of an authority. 
 
 Cortelyou vs. Johnson (S. D. N. Y. 1904) 138 Fed. 110. 
 
 This is the sixth case we have noted following the lead of the 
 Heaton case, and the first the opinion in which sets out at length the 
 
^62 RBSTRICITONS ON PURCHASER'S USE OF PATENTED ARTICLE 
 
 reasoning to support the decree of the Court. This action on the 
 part of the Court is gratifying, for it is at least a mournful consola- 
 tion to know by what means and for what cause one was vanquished. 
 
 The Court here seals the doom of the defendant in thirteen closely 
 printed pages, so that the defendant did not have to guess at what 
 moved the Court to decide against him. 
 
 We cannot examine all parts of the opinion : it is too long for that 
 purpose, and it was wiped out by the Appellate Court at any rate. 
 Then, too, there are long extracts from the Heaton case. These we 
 will pass over. For the rest we shall follow the arguments seriatim 
 as presented. 
 
 THE FACTS. 
 
 I 
 
 The plaintiff was the owner of letters patent No. 584,787 coveriag 
 the machine known as the "rotary neostyle". The plaintiff sold the 
 patented "neostyle" having attached to the baseboard thereof, in a 
 «onspicious manner, a white celluloid plate ou which was, aud is, in- 
 scribed in black letters the following: 
 
 "License Agreement." 
 
 "This machine is sold by the Neostyle Co. and purchased by the 
 owner, with the express understanding that it is licensed to be used 
 only with stencil paper and ink (both of which are patented) made 
 by the Neostyle Company." The defendant was sued as a contribu- 
 tory infringer of the patent for that he sold paper and ink to the pur- 
 chaser for use in conjunction with the patented appliance. Now to 
 begin with we will once and for all put entirely out of the case the fact 
 that the complainant's paper and ink were patented. No one was 
 -charged with infringing these patents. The plaintiff was not fussing 
 because some one had used his patented paper and ink; his grievance 
 
THE NEOSTYLB CASES. 163 
 
 was that his ink and paper had not been used. It is only another 
 step, however, for some Court to hold that some defendant is liable 
 as a contributory infringer because he has not sold and supplied the 
 patented article of the complainant. Then the patent monopoly will 
 indeed be complete. 
 
 The first three pages of the opinion. 111, 112, 113, are devoted to 
 an exposition which may be summed up as follows : The complainant 
 had learned from experience that selling the machine without restric- 
 tions had resulted in dissatisfaction on the part of purchasers because 
 of the fact that they had used all sorts of ink on the machines and 
 thereby gotten poor service from the machines. The machines were 
 in a bad way. They were about to come into disrepute and fall into 
 disuse because the purchasers did not have sense enough to appreciate 
 the superior quality of the ink and paper that the vendor of the ma- 
 chine was anxious to sell. Thereupon the patentee conceived a most 
 ingenious scheme. It was deemed unwise to increase the price df the 
 machine. The plan was then formed of selling the machine imder a 
 "license restriction". Now observe the next: "The machine was im- 
 proved, and placed in the hands of users at the price of $50.00, the 
 same before charged "! (Black ours). 
 
 Of course the counsel who drew up this notice had before him 
 the opinion in the Heaton case. But what are we to say about the 
 impudence of counsel's argument that the "license" was to be jus- 
 tified because the purchasers of the machine were using with them 
 inferior ink? The counsel who made this argument ought to have 
 been hobbled by the Court and put in the court-yard to eat grass for 
 three days. 
 
 Let us apply this argument: The Singer Sewing Machine Com- 
 pany suddenly discovers that its machines are losing caste because the 
 housewives use rotten thread. Hence the Singer Company, to save its 
 dear reputation, will sell the machines at the same old price, but will 
 "license" them only for use with thread purchased from the Singer 
 
164 RESTRICITONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 Company. Now its reputation is saved and incidentally it has a mon- 
 opoly of the thread supply. 
 
 The Harvester Trust suddenly discovers that its automatic bind- 
 ers are coming into disrepute, all because the farmers use poor twine. 
 Its attorney, a "corporation lawyer," or it may be he is a "constitu- 
 tional lawyer," reads up the Heaton case, and under his high-priced 
 counsel the Harvester Trust seUs the machine at the same price, but 
 under a "license" t&at takes over the twine business. 
 
 Still the Singer machine does not give entire satisfaction. The 
 directors and expert mechanics ponder the problem and their hearts, 
 are burdened with the loud complaints of. the housewives. 
 
 Much hard study and close examination reveal the fact that the 
 housewives had no lubricating oil handy and used sorghum instead. 
 There's the whole trouble. Now the "license" is broadened, and the 
 machines, though sold at the same price, can only be used with thread 
 and oil purchased of the Singer Company. A woman who lubricates 
 with sorghum now becomes an "infringer". Here is one put over on 
 the ' ' Constitutional lawyer ' ' for the Harvester Trust. He learns of the 
 instance and goes to his client and says in a loud harsh voice: "I 
 knew those farmers were not using our machine properly. I know 
 what the trouble is now. Why did not you teU me they were using 
 tar instead of our fine lubricating oil? I have changed this license so 
 that the farmers will either use our oil, or I will prosecute them for in- 
 fringement. Here is my bill for $10,000. Let me have the money. 
 
 Of course, the Neostyle machine may become rusty and be ruined 
 for use; it may be clogged with dust. The office boy may run out of 
 ink and use poke berry juice to get off a baseball score card for Sat-' 
 urday afternoon, and thereby put the machine in bad shape. But 
 what has all this to do with "infringement?" Gillett ought to sell 
 his safety razor under a "license" not only restricting the right to 
 resell the same at not less than $5.00, but forbidding the use of the 
 razor except in conjunction with shaving soap purchased of Gillett. 
 
THE NEOSTYLE CASES. 165 
 
 No doubt many a man has become disgusted with one of these razors, 
 without knowing that the real cause was the bad soap used. Gillett 
 ought to awake to this fact and take over the shaving soap business. 
 
 The "constitutional lawyer" who advanced this argument in this 
 case capitalized sophistry at the highest figure and should have been 
 well paid for it, and doubtless was; a sleight of hand performance 
 always comes high. 
 
 The Court next starts in at the bottom of page 113 to define the 
 right of the owner of a patent. "We start here with the proposition 
 that the complainants have a valid patent and so far as this case is 
 concerned, the exclusive right thereto, and to the invention covered 
 thereby, to keep, lock up, hide, use, or sell." Already things look 
 in a bad way. To know just how one can have an "exclusive right" 
 to a "patent" requires much pondering. We suppose what is meant 
 is that complainants have an "exclusive right" to a valid "exclu- 
 sive right", for, that is all there is to a patent. Aiid what is it that 
 the complainant may keep, lock up, hide, use, or sell? Is it the thing 
 invented, or the patent right? It is fairly difficult to see how one 
 could "lock up" or "hide" the latter; it is an incorporeal, intangible 
 thing. "They (the complainants) may use it themselves and refuse 
 the privilege to any one else." The "it" still squints. But in the 
 next we" learn its antecedent. "It is theirs (comiplainant's), like the 
 dollar of the one who has earned it, and they have the exclusive right 
 to it; the right of the owner of the dollar, to throw it in the ocean 
 or to bury it in the earth; the right to put it at interest or to let it 
 lie idle and wholly unproductive. ' ' 
 
 Now we have it, of course the Court has been referring to the 
 Neostyle, a chattel, and not to the patent right. For Lord Mansfield 
 said the latter is "property in a notion" (supra p. 32), and of course 
 the Court does not mean that even a patentee can bury a thought or 
 drown an idea, like a cat. 
 
 The above sentence is illuminating. Metaphors and similes do not 
 
166 RESTRICITONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 advance an argument or strengthen it, but they vividly illustrate what 
 is in the mind of the arguer. Indeed we agree that the Neostyle is 
 just like the dollar of one who has earned it ; but when we say this we 
 stick to it. "When I transfer my dollar to another, it is his and not 
 mine ; then he can bury it or throw it into the ocean ; he can put it at 
 interest or let it lie idle and wholly unproductive, and I cannot restrain 
 him from so doing by any sort of "license". This is what the simile 
 of the dollar leads to. 
 
 We skip page 114, remarking only that in the Bement case there 
 was no sale whatever of a chattel by the patentee. On page 115 the 
 Bement case is again made to support the proposition that a purchaser 
 of a patented machine is a "licensee," but the Supreme Court has not 
 said that and never will say it. "It seems to this Court that this doc- 
 trine (viz, that the purchaser is a "licensee") is too firmly settled to 
 be seriously questioned." The only new light thrown on this doctrine 
 is citation of the Tubular Rivet and Stud case, which we have already 
 reviewed. 
 
 The Court preserves perfectly intact the false identity between a 
 purchaser of a patented appliance and a licensee to use such appliance 
 belonging to the patent owner. At the middle of page 118, the Court 
 begins to draw in its lines to hold the defendant as a contributory in- 
 fringer. "The purchaser of personal property with cer+ain exceptions 
 takes it subject to all defects plainly observable." This label was 
 plainly observable, therefore, the purchaser took the machine subject 
 to this "defect". That is certainly a new name for a "license". But 
 the nomenclature of the law increases and becomes more varied and 
 beautiful as time goes on. 
 
 Then in leading up to the matter of contributory infringement it is 
 said "There was no fraud or deceit". This, too, is novel. "We never 
 read before that it was possible for an issue of contributory infringe- 
 ment to hinge on "fraud or deceit". "A patent may be infringed 
 in either of three ways : by the unlawful making or by the unlawful 
 
THE NBOSTYLE CASES. 167 
 
 selling, or by the unlawful using of a patented invention. This is 
 elementary." At the same time we must remember that the word 
 "unlawful" here is a mere question begging epithet. The making, 
 using, or selling is unlawful, only if without the consent of the pat- 
 entee. For the above sentence the Court cited the case of Goodyear 
 Shoe Machine Co. vs. Jackson (1901) 112 Fed. 146, decided Court of 
 ^Appeals, First Circuit. That was indeed a case of alleged contribu- 
 tory infringement, and the Court dealt with the question in masterly 
 fashion. The following passage from the opinion in that case goes 
 through the loose fallacy of this Cortelyou case like a bolt of lightning 
 through a cloud. "In approaching the question of infringement by 
 the purchaser of a patented machine, it is important to bear in mind 
 what the patentee sold and the purchaser bought. (This is getting 
 down to bed rock.) The patentee has parted with his machine and 
 the monopoly that goes with it, and the purchaser has bought the ma- 
 chine with the right to use the patented invention until the machine 
 is worn out and destroyed. * * * "When the patented machine has 
 passed outside the monopoly by a sale and purchase, the patentee has 
 no right to impose any restrictions on its use for his own benefit. He 
 cannot forbid the further use of the machine because it is out of re- 
 pair in consequence of the wearing out or breaking of some of its 
 parts. 
 
 The purchased machine has become the individual property of the 
 purchaser, and it is like any other piece of property which he owns. 
 (That's the point.) He may sell it, or he may use it so long as its use- 
 fulness lasts, and then throw it away or dispose of it for junk. He is 
 only prohibited from constructing a substantially new machine. He 
 cannot, under the pretext of .repairs, build another machine." That is 
 the doctrine of contributory infringement stated with unsurpassed 
 accuracy, and that statement is founded on unassailable authority. 
 
 Now the Court in the Cortelyou case quotes from the Goodyear 
 case the syllabus to this effect: "The essence of contributory in- 
 
168 RESTRICITONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 fringement of a patent lies in concerting or planning with others in 
 an unlawful invasion of the patentee's right which is usually done by 
 making or selling a part of the patented invention with the intent and 
 purpose of aiding - (black ours) another in its use." 
 
 But here the ink and paper constitute no part of the invention. 
 The patent was not for a combination. The ink and paper had no 
 more to do with the Neostyle than powder has to do with a patented, 
 fire arm; or human eyesight with a patented microscope. 
 
 The Court then says, "See also Thompson-Houston Electric Co 
 vs. Ry. 72 Fed. 1016," but that was a case of a patent for a combina. 
 tion. 
 
 At page 122, the Court says: "It would appear from the evidence 
 that the defendant is not only guilty of contributory infringement, but 
 of unfair competition in trade"! No doubt the defendant had been 
 guilty of wife beating or poker playing if the Court had but investi- 
 gated his past sufficiently thorough. Next the Court quotes the "li- 
 cense notice" which accompanied the plaintiff's ink (not the Neo- 
 style). This is thrown in as a makeweight against the defendant. 
 
 At the bottom of page 122, the Court says : ' ' The defendant has 
 the right to make ink and to sell ink, and to make and sell the same 
 kind of ink it sold or caused to be sold to the licensee or licensees of 
 the complainants, but it has no right (now listen) directly or indirect- 
 ly to dispose of the same with intent or purpose that it shall reach 
 the hands of the users of rotary Neostyles." Th« Court here takes 
 the golden axiom of the philosophy of the spirit of man, "As a man 
 thinketh in his heart so is he, ' ' converts it into a principle of law thus : 
 ■"As a defendant thinketh in his heart so shall he be punished or not 
 by this Court." Let us suppose two boys enter the defendant's store; 
 both want ink. The defendant still has the fear of the Court's wrath 
 before his mind 's eye. He asks both boys for what purpose they want 
 the ink. The first wants the ink to use on a Neostyle, but lies and 
 says he wants it to copy the phrases from his copy book, one of which 
 
THE NEOSTYLB CASES. 169 
 
 is "The way of the transgressor is hard". The other boy is a joker 
 and does not care whether he gets the ink or not for his employer. 
 The ink he is after is not for use on the Neostyle, but he says: "We 
 want it for one of them Brodrick machines. ' ' The defendant sells the 
 fcst boy openly, but in the case of the second boy he conceals the ink 
 in a plain wrapper and tells the boy not to explain where the ink came 
 from. The ink parted with by the first sale is used on the Neostyle, 
 but the defendant is not guilty of infringement because he did not 
 intend or purpose that it should be so used : the ink sold in the second 
 instance is not used on the Neostyle, but the defendant is liable as a 
 contributory infringer because he sold it with the intent and purpose 
 that it should be so used. The power of the Federal Court is a mat- 
 ter that hinges on the secret thoughts of the defendant. And the 
 question of jurisdiction becomes one of occult science. Goethe says: 
 ^ ' Out of error nothing is evolved, it only involves us. ' ' 
 
 This decision is perfectly brutal. The purchaser of the machine 
 was not an infringer; he was using his own machine that he had 
 l)ought and paid for. The defendant was not a contributory infringer 
 by every test ever laid down by the Supreme Court. The purchaser 
 -was not even guilty of a breach of contract. There was no contract ; 
 the plaintiff never agreed to supply any ink or paper. The Court had 
 no jurisdiction to try the ease. The Court allowed the plaintiff to 
 sell his machine for $50.00, which was the price before the license 
 scheme was put in vogue, and then play the glutton by monopolizing 
 the trade in ink and paper. All this was done under the guise of 
 
 the patent! 
 
 Tbis case was appealed to the Court of Appeals and is reported in 
 
 145 Fed. 933. 
 
 Here the Court of Appeals was confronted with an odd dilemma. 
 It had previously affirmed the doctrine of the Heaton case in the 
 memorandum in one of the Lowe cases, 111 Fed. 1005. 
 
 And even more, the Court says: "The opinion of Judge Lurton 
 
170 RBSTRICITONS ON PURCHASER'S USB OF PATENTED ARTICLE. 
 
 in the Peninsular case covers the entire field of controversy and pre- 
 sents the arguments and all the arguments, in support of the complain- 
 ants' contention. It is a clear, comprehensive and convincing exposi- 
 tion of the law as applicable to the facts as stated in the bill and ad- 
 mitted by the demurrer." 
 
 Nevertheless the Court glances mournfully over the high bulwark 
 of precedent and utters a confession of unconvinced reason, "even 
 though as an original question we might have reached a different con- 
 clusion." 
 
 The majority of the Court undoubtedly felt that the Heaton 
 case was wrong in principle even though "correct on the facts". The 
 Court then "distinguishes" the present case on the ground of want of 
 notice on the part of the defendant. 
 
 The Court seems to draw a distinction between the two cases on 
 the further ground that in the Heaton ease the staples were especial- 
 ly adapted in size to be used in the machine, while in the case at bar 
 the ink was manufactured without being designed for use on the Neo- 
 style. But the distinction is a fiction. The Court says, page 935: 
 "When confined to articles, whether covered by patent or not, which 
 are made for the express purpose of inducing infringement and are 
 not intended for any legitimate use, the doctrine of contributory in- 
 fringement is logical, just and salutary. ' ' It would be difficult to find 
 a sentence more crowded with ambiguities and latent fallacies than 
 that one. "When confined to articles whether covered by patent or 
 not." What does the Court mean by "covered by patent"? Does 
 it mean that the article is itself patented or is an unpatented part of 
 a patented combination? There is much difference between the two. 
 When we define contributory infringement as furnishing an article 
 for the express purpose of inducing contributory infringement, we 
 have only said it is what it is. Again, whether or not the article is 
 intended* for a legitimate use, is of course, dependent upon whether 
 (T not it is intended to induce infringement. 
 
THE NBOSTYLE CASES. 171 
 
 It is difficult to call such a doctrine "logical, just and salutary" 
 because we do not know what it is. 
 
 The Heaton case cannot be distinguished on the ground that there 
 the staples were made and designed to fit the machine. We might as 
 well say that if a purchaser was "licensed" to use a patented hammer 
 in conjunction with nails to be furnished by the patentee, that one 
 who furnished him nails to be driven with the hammer would be a 
 contributory infringer, but one who furnished carpet tacks for the 
 same purpose would not be. 
 
 In the Morgan Envelope case the rolls of toilet paper undoubtedly 
 w.fre made to fit the fixture alleged to have been misused. In the 
 Heaton case nothing whatever depends on the size and shape of tha 
 staples. The patentee did not claim any patent on the staples: he did 
 not any more assert them to be novel than does a patentee of a screw- 
 driver assert that screws are novel. He made the machine with a 
 capacity for a staple of a certain size and shape, and »io doubt this 
 was done so that it would not be so easy for the purchaser of the 
 machine to supply himself with staples elsewhere than from the pat- 
 entee. But the fact remains that the staples had no more to do with 
 the patented mechanism, as the Court there truly said, than the but- 
 tons on the shoes. The patentee was no more entitled to a monopoly 
 on the staples than on the buttons on shoes, or we may add, the gro- 
 ceries which the purchaser of the machine consumed on his table. 
 
 If the reader is inclined to think that the cases we have heretofore 
 supposed, to illustrate the inconvenience of this doctrine,- are extrava- 
 gant, let him examine the hypothetical cases stated by the Court on 
 page 935. 
 
 Take this : (If the doctrine be pushed to its logical extent). "No 
 one may safely sell coffee to the consumer but the patentee of his cof- 
 fee mill, no one can furnish him flour but the patentee of his baking 
 pans and he may yet be compelled to buy milk from the patentee of 
 his milk can and soap from the patentee of his bath tub. It is mani- 
 
172 RESTRICITONS ON PURCHASER'S USE OF PATENTED ARTICLE. 
 
 fest that the doctrine can be expanded ad infinitum." Indeed, we 
 have so contended from the start. 
 
 The dissenting opinion here at least has the merit of being con- 
 sistent. The member of the Court who wrote it believes in thinking 
 ■one's thoughts to the bitter end. That is the way to find out whether 
 or not one is going in the right direction. If we are in doubt whether 
 ■or not one line is parallel with another, all we have to do is to project 
 both far enough ; if they are not parallel, they will cross. 
 
 We are tired of pointing out misapplications of the Bement case, 
 fio we pass over that feature. 
 
 The dissenting opinion then quotes the master fallacy of the 
 Heaton ease. "As to the right to use the invention, he, the purchaser, 
 is obviously a licensee, having no interest in the monopoly created by 
 the letters patent." That is the rock on which the courts split every 
 time. 
 
 It is then said that we should not make the law swerve because of 
 considerations of supposed inconvenience. This is sound. The argu- 
 ment of inconvenience does not establish anything. It merely illus- 
 trates and emphasizes wnat is susceptible of being demonstrated ou 
 principle. 
 
 The doctrine of so-called contributory infringement announced 
 in these cases is not unsound because it leads to inconvenience. It 
 leads to inconvenience because it is unsound. The test to be applied 
 to every case is this : Has the defendant alone or in conjunction with 
 others used the patented invention without the patentee's consent? 
 
 The patentee here had sold this specimen of his invention and he 
 liad no more right to control or circumscribe its use than he had a 
 right to give orders to defendant's office boy, so far as the patent law 
 is concerned. In the concluding page of the opinion we are challenged 
 to accept the view that the patentee of a gun should be gfven a monop- 
 oly on the powder used in it and that a patentee of a " delicate mech- 
 anism'.' (An adding machine, for example) should have a monopoly 
 
THE NEOSTYLE CASES. 173 
 
 on the oil used therewith. One last sentence must not pass. ' ' Or sup- 
 pose, as in the case at bar (black ours), the patentee, having created 
 an invention which is of great benefit to the public, finds that his. 
 chief profit may be derived from selling the patented article at a 
 nominal figure to the public, on condition that the public shall use 
 certain unpatented materials in connection with it." But that is not 
 the case at bar. The complainant did not sell his patented article at 
 a nominal figure ; he sold the Neostyle for $50.00. And what is more 
 important, that is all he asked for it before he attempted to monopolize 
 the supply of paper and ink. 
 
 This has nothing to do with the merits of the case, but we are re- 
 luctant to see a complainant, possessed of monumental greed, and 
 having no cause of action whatever, consoled with false commiseration 
 when he has been turned out of court. 
 
 This case was taken on a writ of certiorori to the Supreme Court 
 and is there reported in Vol. 207 of the Supreme Court reports, ani 
 will be considered later. 
 
174 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 II. 
 
 HESTRIOTIONS ON THE RIGHT OF A PURCHASER OP A PAT- 
 ENTED ARTICLE TO RESELL THE SAME. 
 
 We now take up the decisions dealing with the right of a patent 
 owner to restrict the price at which a purchaser from him of a speci- 
 men of the patented article shall resell the same. These decisions, in 
 point of time, follow the cases we have just considered and the most of 
 them are referable to the decision in the Heaton case. This will 
 clearly appear as we advance. We shall proceed slowly. It may ap- 
 pear foolish to the reader that we should spend so much time in the 
 detailed examination of these cases. It might be thought that we 
 ought to compress a statement of the law within ten pages. Indeed 
 such a thing would not be difiScult, at all. But it would be worthless. 
 
 The strength of an analysis, the compelling force of a conclusion, 
 depends altogether upon thoroughly clarifying all the intermediate 
 steps by which the final result is reached. A mere abstracted, abbre- 
 viated discussion always invites the easy conjecture that certain un- 
 mentioned "important facts" have been overlooked. Deductions from 
 
PROBLEM OP RESALE CASES STATED. 175 
 
 general propositions by the use of abstract terms may satisfy mathe- 
 maticians, but it is dangerous in legal expositions. It is so. easy to 
 deny the application of a general proposition to a given case by fall- 
 ing back on the "particular facts" there involved. The "particular 
 facts of the case" has always constituted a hook on which lawyers 
 hang any makeshift for conclusive, self satisfying reasoning. When 
 once a bubble is discovered at the center of a decision, immediately 
 the unpleasant task of confessing and undoing the mistake is evaded 
 by suspending the thing out of view on that much used hook. What 
 we have in mind is to attend to the "particular facts" of each case. It 
 may be that decisions devoid of differentiating particular facts have 
 been impaled on this hook. An examination of each case in detail 
 requires time and effort, but it seems distinctly worth while. Sustained 
 attention is not possible unless the view point is shifted continuallj' 
 and new aspects are brought to light. The concrete facts of each 
 case hold attention and facilitate a prolonged examination of each 
 step in the process of reasoning. 
 
 What we have to deal with here is best indicated by a supposi- 
 tious ease 
 
 Let us suppose that some one has invented a phonoscope or an 
 audiograph. These have not yet been put on the market, reader. But 
 they will be invented and of course patented. A phonoscope is an 
 instrument by which one can see the human voice. With it an abso- 
 lutely deaf man can see a melody or a lawyer's voice. The audio- 
 graph is an instrument by means of which one can hear a printed page. 
 When it is perfected and applied to the reports of the Supreme Court, 
 there are going to be many ear drums ruptured by the terrible noise. 
 
176 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 We do not- know just who will invent these instruments, but we- 
 do know that the inventions, and all of them will be Claimed by cer- 
 tain citizens of New York and New Jersey. That phase of the pro- 
 phesy is certain of fulfillment. 
 
 Then we will take one of these instruments — the audiograpli. The- 
 Audiograph Company of America owns the patent and has manufac- 
 tured several thousand of the instruments. Now the Patent Owner 
 has the right to exclude every one from making, using and selling this- 
 audiograph without his consent. 
 
 In the cases already dealt with, it was the using that constituted 
 the problem, because it was only by controlling the use that the patent 
 owner was enabled to dispose of a lot of scrap iron or junk in the 
 shape of wire, studs, staples, or common paper and ink. But here 
 nothing is needed but the human ear to use the instrument and it 
 would require a longer opinion than the one in Heaton case to per- 
 suade a man with ears that his ears were part of a patented combina- 
 tion and that by using them in excess of the "terms of a license" 
 said ears had been put to an infringing "use" and he, the bearer of 
 those ears, had become a contributory infringer. No court has yet en- 
 joined hearing with one's ears, though the thing is susceptible of jus- 
 tification, provided we do not cavil at the source of the authority. 
 There is a very ancient injunction to the opposite that is very com- 
 monly disobeyed; which reads: "He that hath ears to hear let him. 
 hear." 
 
 So in this instance the Audiograph Company of America turns 
 away from the field of use and considers what is left. The field of 
 "making" likewise appears barren: no one else wants to cultivate it. 
 Selling alone remains. The instruments cannot be sold until they are 
 made. So it makes several thousand, as we have above supposed. 
 The problem now is to "monopolize," the sale of the instruments. No 
 profit can be seen in an attempt to monopolize the "use" as was done 
 in the earlier cases. The Company, of course, can exclude everyone 
 
PROBLEM OP RESALE CASES STATED. 177 
 
 entirely from making, using or selling the things, but it knows that not 
 a dollar was ever made in such a manner by any patent owner. 
 
 The precise question is how to make the things and sell them and 
 at the same time not sell them. That is, sell them and yet be able 
 to say that they have not been sold. The thing is difficult, but has 
 been done as we shall see. This is the method of procedure. The 
 American Company draws up two forms of agreements: one a form 
 of Jobbers Agreement and the other a form of Dealers' Agreement. 
 The price of the Audiograph to the Consumer is $50.00; its cost of 
 manufacture is $4.00. The price to the Jobber is $25.00, to the Dealer 
 it is $35.00. The Jobber's Agreement contains this clause: "The re- 
 tail price of the Audiograph is $50.00 ; the purchaser herein (Jobber) 
 is "licensed" to sell the same to Dealers only at $35.00 and then only 
 pursuant to the terms of a Dealer's Contract whereby the latter is 
 "licensed" to sell it at retail only at $50.00. Then it is stated in 
 addition that the Audiograph is patented and that any jobber or 
 dealer selling the same at less than the "licensed resale" price is an 
 infringer of the American Company's patent. But this is not all. On 
 a conspicuous part of the instrument, is securely fastened this skull 
 and bones: 
 
 "Notice." 
 
 "This Audiograph is patented and is licensed for sale at retail 
 only at the price of $50.00 ; any one purchasing or selling the same at 
 a less price will be prosecuted for infringement to the full extent of 
 the law. 
 
 (Signed) Audiograph Company of America, 
 
 Hoboken, N. J." 
 
 Now let us take one Audiograph and follow it from the American 
 Company to a parlor in a Chicago flat. The American Company 
 executes an Agreement with a Jobber in Chicago, and sells to him 
 
178 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 oue of the Audiogi-aphs at $25.00. Of course the Jobbet is "licensed" 
 16 sell the same to the Dealer at not less than $35.00. The Jobber tries 
 long and hard to sell the instrument, but Dealers in looking through 
 liis stock, say they do not want to buy an experiment. Says the Deal- 
 er, "What is an Audiograph anyhow?" The Jobber looks in amaze- 
 ment and replies, "What? Don't you know what this is. I will show 
 you." He gets a copy of the "First Battle," opens it out atthe proper 
 page, adjusts the instrument to the book and the Dealer's ears, and 
 the latter is all but paralyzed in hearing a voice that roars like the 
 winds in a cave. He recognizes the voice of the Great Commoner, 
 thundering about the thorny crown and the golden cross. The Dealer 
 is determined to have the instrument, but he conceals his interest and 
 insists that the price is too high. The Jobber shows him the License 
 (.\intract. Finally they agree to the price of $30.00 ; both agree to say 
 nothing about the cut. The Dealer promises faithfully to sell at not 
 leps than ifSO.OO and signs the License agreement to that effect. The 
 Dealer keeps the instrument until he has heard all the great books^ 
 Socrates talking with the hemlock cup in his uplifted hand, Napoleon's 
 voice reverberating from the base of the Pyramids, Garrison standing 
 in the streets of Boston, covered with dust and blood, surrounded by 
 ruffians and uttering words that through this instrument blister the 
 very tympanum of the ear. 
 
 He knows that all he has to do is to get this instrument going 
 and his fortune is made in Dealer's profits. This is the only one he 
 has. But he decides to sell it at the price 'of $40.00 in order to in- 
 troduce it into the parlor of a Chicago flat. ; 
 
 He says to the purchaser.- "What do you and I care about that 
 'r tice'? I have bought this thing and paid for it and own it. You 
 pay me $40.00 for it and it's yours, just like a horse trade." The cus- 
 tomei pays the money and carries his instrument to the parlor flat 
 and being of a different turn of mind he uses the instrument to "hear" 
 Mark Twain laugh and Lincoln tell a story. 
 
PROBLEM OP RESALE CASES STATED. 179 
 
 Oil ! Mr. Jobber, Dealer, and Consumer, you know not what you 
 have done ! You have invaded the "patent monopoly" of the (Ameri- 
 can) Audiograph Company. 
 
 That Company hears of what a terrible thing has been done. Its 
 directors hold an indignation meeting. The president weeps to think 
 its "Constitutional" rights should be so flagrantly outraged. The 
 directors determine to spare no expense or effort to pxmish the offend- 
 ers. The amount involved is small, but a great principle, underlying 
 the patent monopoly is at stake. No ordinary lawyer can properly han- 
 dle such a case. 
 
 The directors look over the names of those on the legal 
 staff, but none is "peculiarly adapted" to the use here 
 contemplated. They go outside and hire a "Constitutional 
 lawyer." We must not use phrases or definitions of doubtful 
 meaning and it seems worth while to remark that a "Con- 
 stitutional lawyer" is a rare individual. He is a peculiar 
 product of the American soil. He is an extraordinary man. There are 
 but few of them in this country. The peculiar characteristics are fine 
 apparel, a gruff voice, a face hard as the point of a drill bit and as 
 devoid of a smile as the cofEn plate in Adams vs. Burke. One thing 
 farther, he is nearly always an "ex" something; an "ex "-Judge, 
 "ex "-Attorney General, or it may be an " ex "-Alderman. We have 
 never heard of one converted from an "ex "-convict, though there may 
 be instances. Well, he is retained for $50,000. The reason for hold- 
 ing indispensable in such a ease the services of a "Constitutional 
 lawyer' ' is that, by the client, he is considered more powerful than the 
 Court, and he tacitly entertains the same view. 
 
 This great Iiawyer sues the Jobber for "infringement" and gets 
 threefold damages, or $15.00 and costs; he then sues the Dealer and 
 gets threefold damages, or $30.00 and costs. His client is tickled. 
 Bnt the "Constitutional lawyer" is not done. 
 
 He goes further and sues the wicked occupant of that Chicago 
 
180 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 flat, for he, too, is an "infringer". Did he not buy at less than the 
 "license" price? He, too, is stuck for threefold damages, or $30.00. 
 and costs and the "infringing" property is taken from him. The. 
 Court savagely denounces all three defendants for violating the patent 
 rights of the American Company, asserting at the same time that a 
 rigid protection of patent rights is absolutely essential to the stability 
 and progress of the industries of the nation. Selah. The "Constitu- 
 tional lawyer" mops the sweat from his brow, lights a big very blaek' 
 cigar and silently retires to the gloomy recesses of his great office,, 
 like a huge spider in the dark center of its web. The directors meet, 
 and all agree that a high priced " Constitiitional lawyer" always pays. 
 They take an inventory of damages collected : $15.00 from the Jobber, 
 $30.00 from the Dealer, and $30.00 from the man in the flat. In the 
 first instance, the American Company sold the entire property in the 
 instrument for $25.00, but "reserved an ungranted portion of its mon- 
 opoly of sale" through the medium of the "license agreement" and by 
 means of this, properly interpreted to the Court, by the "Constitu- 
 tional lawyer," in the light of the patent law, the Company now has 
 obtained $75.00 additional or all told $100.00 for the instrument! Oh!: 
 reader marvel not nor laugh at this as an exaggeration. We will 
 show you that this thing has been done many times. 
 
 We will take up first the case of Edison Phonograph Co. vs. Kauf- 
 man (C. C. W. D. Pa. 1901) 105 Fed. 960. 
 
 By very close reading of the opinion here we learn in one sentence 
 of nine words in next to the last line that the defendants were sued as 
 infringers. Prom no other part of the opinion does this conclusion ap- 
 pear warrantable. The facts are simple. The complainant owned > 
 a patent on a phonograph. It sold these patented instruments only 
 under their "Jobber's Agreement" (we follow the lead of the Court i 
 in suspending the appellation of this remarkable instrument between 
 inverted commas). The defendants were presented with this "Agree- 
 ment", and their signature to it required as a condition concurrent to 
 
EDISON PHONOGRAPH CO. VS. KAUFMAN. 1**1 
 
 the sale of the instruments, but they declined to sign because they 
 .would not "be bound by any trade restrictions"!! Then the defen- 
 dants made use of one, Woods, for a very essential service, so they 
 thought. Woods was a go-between, a sort of commercial match maker 
 for the complainant and defendant. He got himself and everybody 
 else into trouble, as go-betweens usually do. Woods undertook to get 
 Bome of the instruments from the complainant and deliver them to the 
 defendants without the interposition of that "Jobber's Agreement", 
 But he pleaded for delay. The president of the complainant was then 
 in Europe (no doubt in company with a "Constitutional lawyer"). 
 Matters would have to rest until he returned. For as Woods truly 
 said : ' ' There was no use for him to talk to anybody else ; that when 
 one wants on the inside one must go to the head man" (black ours). 
 AU our experience confirms the fact that the last pair of semicolons 
 here, stake off the expression of a truth of the greatest value in life. 
 Never stop with the office boy. He is fully as dangerous as the "head 
 man", but has nothing to give you. Always bring out the "head 
 man" if you have to yell "Fire" or shatter a plate glass window to 
 do so. Woods later saw the "head man", got the phonographs and 
 delivered them to the defendant without the execution of a "Jobber's 
 Agreement". Now Woods acted on the right principle, but he was 
 mistaken as to who was the "head man". In attempting to go around 
 a "Jobber's Agreement" like the. one here, one must not ignore the 
 "Constitutional lawyer". It is worse than taking the office boy's 
 rigarettes. 
 
 The defendants bought the phonographs and apparently paid for 
 the same. They were about to sell the same when the complainant 
 sued them for infringement. The opinion is short ; our comment will 
 be shorter still 
 
 Says the Court: "I cannot doubt (black ours) that the complain- 
 ants have the right to sell their patented phonographs with the re- 
 strictions and upon the conditions contained in their 'Jobber's agree- 
 
182 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 ment' and that Dealers buying the patented instruments from the Job- 
 bers with notice of those restrictions and conditions are bound 
 thereby. ' ' 
 
 Dickerson vs. Matheson, 57 Fed. 524. 
 Same vs. Tinling, 84 Fed. 192, 195. 
 
 This is the only proposition of law stated in the opinion. In next 
 to the last line the Court says : "The defendants, I think (black ours) 
 must be treated as infringers". The Court started in with "I can- 
 not doubt" and ended up with "I think", though it might as well 
 have concluded with a "dream". 
 
 There are many thinks yet to come on that decision. We cannot 
 discuss this opinion. There is nothing to discuss. If the Court had 
 entered up a decree adjudging Woods of unsound mind or divorcing 
 one of the defendants from his wife we could not be more completely 
 inystified. We will have to wait until we reach a decision that eon- 
 tains some intelligible proposition of law before we can discuss any 
 principle. We cannot stab water, fight the air or wrestle with a 
 spook. There must be something for us to get a grip on, something to 
 accept or reject, afiSrm or deny. 
 
 The Court cites two cases involving the same state of facts. The 
 point involved in each case is painfully obvious. We will drop the 
 long German names and call the owner of the patent A. A. owned a 
 patent on a chemical, preparation. . He owned the patent under the 
 laws of Germany, for that country, and also owned a patent on the 
 same article under the laws of the United States. Now A made and 
 sold, or authorized the making and selling of, the article in Germany 
 and also in the United States. On the article made in Germany. there 
 was placed a label forbidding its importation into and sale in the 
 United States. A quantity of the preparation was made in Germany 
 and sold there, but bearing the restrictive placard against importa- 
 tion to the United States. Thereafter the patent owner , assigned the 
 letters patent for the United States to the complainant together with 
 
EDISON PHONOGRAPH CO. VS. KAUFMAN. 183 
 
 the "right to sue for past infringement". Meanwhile the defendants, 
 in violation of the placard restriction, had imported some of the stuff 
 to the United States and here were selling it. They were sued for 
 infringement and set up as a defense that they bought the stuff in 
 Europe where it had been made and sold under the authority of A, 
 who owned the patent monopoly for Germany and for the United 
 States also, and since it was sold to them by authority of the person 
 who then owned the patent for the United States, they were free to 
 use it here without incurring the hazard of infringement. And 
 (heaven save the mark) they cited Adams vs. Burke and similar cases 
 to sustain the contention ! ! In the case reported in 57 Federal, the 
 Court decided the issue correctly without a struggle by referring to 
 Boeseh vs. Graff, 133 U. S. 697. In the ease reported in 84 Federal 
 also, the Court referred to the same authority and reached the same 
 result, but in doing so threw out some remarks under "conceding — 
 but not deciding", which caused the Court in this Phonograph case 
 to stumble. The two cases cited are very simple. If the same per- 
 son owns a patent right under the laws of Germany and also a patent 
 right on the same article imder the laws of the United States he has 
 two separate rights, just as distinct as if the two rights pertained to 
 different articles and were vested in two different persons. The laws 
 of Germany have no force in the United States and vice versa. And 
 it is a maxim as old as the law that when two rights meet in the same 
 person it is the same as if they were in different persons. Every ex- 
 ecutor, trustee, and agent, in fact the whole law of representation ex- 
 emplifies, this fundamental postulate of jurisprudence. The Latin of it 
 is : Cum duo jura concurrent in una persona aequum est ac si essent in 
 duobus. The ' ' Constitutional Lawyer ' ' will relish that. That right for 
 Germany consists in the right to exclude everyone from making, using 
 and selling in Germany. The patent right for the United States con- 
 sists in the right to exclude every one from making, using and selling 
 in the United. States, ^hen the patentee made and sold the patented 
 
184 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 article in Germany he exercised no right under his patent right there, 
 bjut he passed the article out of the limit of the right to exclude under 
 his German patent. When he made and sold the article in Germany he 
 did so pursuant to a right protected by the general law of that Em- 
 pire, but he did not confer on the purchaser any right protected by 
 the laws of the United States. When the purchaser brought the article 
 to the American port, the moment it touched the land he had invaded 
 the exclusory right under the patent granted by the United States. 
 The defendant in relying on Adams vs. Burke showed that he regarded 
 the states of the American Union foreign countries in the same sense 
 that England is foreign to Germany. However, the important point 
 to note is that the restrictive placard 'had nothing whatever to do 
 with the matter. The man who wrote that restriction knew just as 
 much and no more about the patent law than he who wrote the inscrip- 
 tion for the Cotton Tie "Licensed for use once only". This explains 
 the fallacy of the citation of the Court, "84 Fed. 192, 195". There 
 the Court said: "There can be no doubt that a patentee has the same 
 right and power to sell the patented article upon conditions or with 
 restrictions that he has to sell it at all." But the important thing is 
 omitted ; the patent gives him no right to sell at all, much less to sell 
 ■with restrictions. "Bayer & Co. (the patentee) had the right to sell 
 its phenacetine in Germany without restrictions. (But this was not 
 a right under the patent.) It had an equal right to subject to the lim- 
 itations that it should. not be sold or used in any way that would cur- 
 tail or affect the exclusive right which that corporation held under this 
 patent to make, use and vend (black ours) the phenacetine in the 
 United States. " There 's the whole fallacy. The patentee has not "an 
 exclusive right to make, use and sell" under his patent. He has only 
 the right to exclude others from doing those things. The Supreme 
 <]!ourt has long ago clinched that. The statement quoted implies, and 
 asserts by implication, that if the patentee had not imposed the "re- 
 striction" the defendants would not have been infringers, but that 
 
EDISON PHONOGRAPH CO. VS. KAUFMAN. 185 
 
 is not true. They were infringers independently of the foolish re- 
 striction because they sold the phenaeetine in the United S+ates with- 
 out the consent of Bayer & Co. in their right or capacity as owners of 
 the United States patent. 
 
 Had Bayer & Co. in the United States made and sold the article 
 to the defendants by that act, the article would have passed out of the 
 monopoly granted by the patent laws of the United States. Had Bayer 
 & Co. sold the article in Germany to the defendant and at the same 
 time entered into a contract with the defendants giving the latter the 
 right to sell in the United States, that contract would have consti- 
 tuted an estoppel personal to Bayer & Co. and prevented them from 
 suing for infringement. But it would not have affected the rights of 
 a subsequent assignee of the United States patent without notice of 
 the contract and with a right to sue for past infringement. In such 
 case Bayer & Co., before the assignment, could not sue because of a 
 personal estoppel, but that would not avail against a subsequent as- 
 signee without notice. If Bayer & Co. had made and sold the article 
 in the United States they could not have sued the defendants for in- 
 fringement, but for an entirely different reason, as we have pointed 
 out. All the confusion arose from the fact that the two distinct and 
 separate rights were owned by one and the same person. Yet we can- 
 not suppose that the Court would have any difficulty in grasping the 
 fact that a governor of a state in his right as an executive can pardon 
 a convicted criminal, but in his right as an individual, can do no such 
 thing. Yet it is the same individual who for the time being unites in 
 himself both rights, or capacities. We have dwelt on this ease at 
 length because it is continually bobbing up in the decisions hereafter 
 to be considered and we aesire to have done with it. We have asserted 
 nothing novel in explaining the decision. It is all contained in Boesch 
 vs. Graff, 133 U. S., and rather dubiously expounded in Daimler Mfg. 
 Co. vs. Gonklin (1909) 170 Fed. 70, but there the Court misconstrues 
 Adams vs. Burke and similar cases. 
 
186 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 In this Phonograph case, the Court seized upon a "conceding — ^but 
 not deciding" dictum which was completely and totally erroneous, and 
 applied it to outrage the rights of the defendants. 
 
 A "dictum" is a terrible thing. It does no good whatever in th& 
 opinion which contains it and no harm, but it may be seized upon later 
 and turned to a destructive use. 
 
 In this Phonograph case the defendants had bought the instru- 
 ments and paid for them. The complainant got the full purchase price 
 which it asked for the same and no doubt deposited the money in the 
 bank. And by the law of the land as announced for the last sixty 
 years, the defendants owned the phonographs absolutely and unquali- 
 fiedly to do with as they pleased. 
 
 They could have given them away or smashed them up with a 
 hammer, and it would have been none of complainant's business. We 
 "cannot doubt" that this was their unquestioned right. We do not 
 "think", but know they were not infringers. The Court had no juris- 
 diction of the ease and should have dismissed the bill at complainant's 
 costs. 
 
 Edison Phonograph Co. vs. Pike (1902 C. C. Mass.), 116 Fed. 
 863, 
 
 is the next case in order. And, reader, if you will turn back and 
 read the Audiograph case, which we tried out in the forum of the imag- 
 ination, you will here recognize its deadly parallel. Here again the 
 facts are very simple. The complainant owned two patents pertaining 
 to' improvements in phonographs and records for the same. The East- 
 ern Talking Machine Co. entered into a "Jobber's Agreement" which 
 forbade it to sell the patented phonographs below certain scheduled 
 prices. This "Agreement" contained the following additional clauses: 
 "(5) Jobbers must not sell or supply, either directly or indi- 
 
EDISON PHONOGRAPH CO. VS. PIKE. 18T 
 
 reetly, Edison phonographs or parts thereof, records or blanks to any 
 dealer who will not sign the agreement governing and controlling the 
 sale of the same, nor to dealers who are on our suspended list"! 
 
 "(11) All Edison phonographs, records, and blanks are covered 
 by United States patents, and are sold under the condition that the 
 license to use and vend them implied from such sale is dependent on 
 the observance by the vendor of all the foregoing conditions. Upon 
 the breach of any of said conditions the license to use or vend said 
 phonographs, records and blanks immediately ceases, and any vendor 
 or user thereafter becomes an infringer of said patents and he may 
 be proceeded against by suit for injunction or damages or both." 
 
 But this is hot all. The phonographs purchased by the Eastern 
 Talking Machine Co. of complainant were contained in boxes. Bach 
 box was marked as follows: "Notice to dealers: This record is sold 
 subject to restrictions as to persons and the prices at which it may be 
 sold. Any violation of such restrictions makes (listen) the seller or 
 user an infringer of the Edison patents!" The wretched defendant 
 "knew of the said agreement, and the restriction contained therein,, 
 and having such knowledge, and without signing the agreement, 
 bought from the Eastern Talking Machine Co. phonographs and re- 
 cords and sold the same." Moreover, "the defendant has in his pos- 
 session phonographs and records purchased (note that) not only from 
 the Eastern Talking Machine Co., but from other vendees of complain- 
 ant bound by similar agreements (andthis without petitioner 's(?) hav- 
 ing signed the required agreement), which last mentioned phonographs- 
 and records the petitioner (we suppose by "petitioner" is meant the 
 defendant) is using, vending and threatening to vend. Wherefore the 
 defendant is guilty of infringement of the patents in question." And 
 the Court so held. 
 
 This is where the "Constitutional lawyer" got in his work. 
 
 We know from reading history that Sir Matthew Hale solemnly 
 tried and convicted and condemned to suffer certain persons lor 
 
188 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 • that they were "witches". We are accustomed to regard this conduct 
 •of Sir Matthew with horror and to commiserate him and tender to 
 his memory a tribute of mild and urbane pity for his awful mistake. 
 This is well, but no one who accepts the doctrine of the case now un- 
 der consideration ought ever to cast a stone at Sir Matthew sentencing 
 ■a witch. Sir Matthew did but give a lurid interpretation 
 to a mistaken statute. Here the Court ■ unreservedly confiscated the 
 property of the defendant in the teeth of overwhelming authority to 
 the contrary. In the witch case, the statute is the occasion of regret ; 
 in the phonograph case, the occasion is the Court's construction. 
 
 In the opinion here to be dealt with there is much authority which 
 we have already considered and some that we shall look into hereafter. 
 We lay entirely to one si'de the long quotation from the Heaton case. 
 The two Diekerson cases, the KaufEman and Cortelyou cases we have 
 Already dwelt on. The Bement ease is yet to come, but we are not 
 bound by what is said of it in this opinion. 
 
 This leaves three decisions to be summarily disposed of prelim- 
 inary to getting at the merits of this case. These three decisions are : 
 
 Featherston vs. Cycle Co. (1892) 52 Fed. 113, where the defendant 
 was sued for infringement for making a tire like the one described in 
 complainant's patent. The last two sentences of the opinion read: 
 "Infringement has not been seriously and cannot be successfully, 
 denied (and now follows the reason). Plaintiff's and defendant's 
 tires, when completed, are substantially the same. " That is easy. The 
 defendant, without the patentee's consent had made the patented tire. 
 What would the Court have said if the plaintiff had alleged that he 
 himself made the tire and sold it to the defendant and then had the 
 purchase money in his pocket, but that the defendant was an infringer 
 because he was using or about to sell the tire so bought and paid for? 
 
 Edison Electric Light Co. vs. Goelet (1894), 65 Fed. 612, 613 (two 
 cases), is a powerful counterblast to the point for which it was cited. 
 In the first of the two cases the defendant was sued for handling in- 
 
EDISON PHONOGRAPH CO. VS. PIKE. 189 
 
 fringing lamps. The point being that the person who made the lamps^ 
 made them in infringement of the patent. Such lamps never were, 
 within the "monopoly," but were conceived and created in violation, 
 of the patentee 's right to exclude. Of course no one could use or sell 
 such lamps without being an infringer. In the second case the Court, 
 dealt with lamps made and sold "by the owner of the patent, but ac- 
 companied by divers "license restrictions as to the use". The Court,., 
 with great reluctance, but none the less positively, followed the great, 
 cases of Adams vs. iBurke and Hobbie vs. Jeunison. "The Supreme 
 Court has so held and there is nothing for this Court to do but con- 
 form to such decision." 
 
 The very highest quality of the human mind is that which re-- 
 cognizes what is really over and above us and tixes our gaze stead-- 
 fastly on that. 
 
 The Court concludes: "The patentee's remedy is against those-, 
 who, after binding themselves to his restrictions, have violated their- 
 agreements. He may protect himself either by selling his lamps only 
 to persons on whose honesty and responsibility he can rely or by re-, 
 quiring from them sufficient security that they will respond for any- 
 damages he m.ay sustain by their failure to keep faith with him". 
 That is a harsh alternative, but in no other way in heaven or on the 
 earth can the patentee "protect himself" in such ease. Now sup- 
 pose the complainant here had taken one of its most brilliant lamps, 
 and, like the ancient philosopher, looked for one of the class of men 
 mentioned in the first supposition. It cannot find one and is driven to - 
 the second method. The stipulation is made and broken. It has sold 
 the lamps and got the money for them, now they belong to the pur- 
 chaser! Suppose he gives them away, or breaks them up, or sends- 
 them up in a balloon or sells them for ten per cent of what he paid 
 for them. What imaginable damages has the conaplainant suffered ? If ^ 
 it attempted to try out such a case in court, we can see how somebody 
 would have a good chance to be fined or sent to jail for violating^ the • 
 
190 RESTKICTION ON RESALE OP PATENTED ARTICLES, 
 
 state anti-trust act. But that is the only "damage" or danger we can 
 see in or about such a case. The Court concludes: "The purchaser 
 of lamps once sold by the patentee or by the person whom he author- 
 ized to make and sell them, cannot, under the decisions supra, be 
 charged with knowledge of the restrictions upon resale, which are mat- 
 ter of agreement between the patentee or the licensed manufacturer 
 and the first purchaser". Even so, and if he could be successfully so 
 charged it would be with knowledge of an " agreement, ' ' which agree- 
 ment violated the law of every state in the Union and the Federal anti- 
 trust act as well. The Court said, finally: "Motion to punish for con- 
 tempt is denied" and it should have added, "all papers in this case 
 will be sent to the Grand Jury for their especial attentit/n''. 
 
 The last of the three cases cited is "Wiggin vs. Shoe Co. (1894), 161 
 Mass. 597. It is not worth while even mentioning this case, as it was 
 a suit for a breach of contract, in the state court. Anyone who cares 
 to read the opinion will ascertain that the Supreme Court of Massa- 
 chusetts understands exactly what the case of Hobbie vs. Jennison 
 means. We should say that it is a dangerous thing in the class of 
 cases now being considered to refer to the Massachusetts Supreme 
 Court decisions. We are apt to be reminded of the fact that that state 
 sent to the bench, Shaw, Story, and Gray, and if we should set about 
 reading the opinions of the latter two of these three giants on patent 
 rights, these cases would look rather, strange. Moreover, in the year 
 of our Lord, 1907, the Supreme Court of Massachusetts, in response to 
 an inquiry of the legislature, had some strange things to say about pat- 
 ent rights and patented articles (193 Mass. 608). At page 611, the 
 Court said this: "We find nothing in (the Heaton case) which 
 seems to us at variance with our opinion. That case simply decides 
 that a stipulation like those considered may by contract be made in- 
 cident to a sale of the patented machine. In the absence of prohibit- 
 ing legislation, we do not doubt this. (Massachusetts in 1907 had no 
 anti-trust act.) What the effect of such a statute would be was not 
 
EDISON PHONOGRAPH CO. VS. PIKE. 191 
 
 considered in that case. (All the same, the State of Michigan had a 
 statute, Acts 1889, page 331, then in force, providing, among other 
 things, that "all contracts, agreements, understandings and combina- 
 tions", the purpose or object or intent of which shall be to enhance, 
 control or regulate the market price of any article or commodity or in 
 any manner to prevent or restrict free competition in the production 
 or sale of any article shall be utterly illegal and void and every such 
 contract shall constitute a criminal conspiracy' ' ! And, on conviction, 
 the offenders shall be punished by imprisonment in the state prison 
 for not more than one year" !) 
 
 The passage continues: "Nor was that case decided upon any 
 distinction between a patented and an unpatented article. The dis- 
 cussion (decision?) rested upon the general right of the owner of any 
 property to dispose of it as he sees fit. The decision would have been 
 the same if the article had not been patented. The same may be said 
 of Bement vs. National Harrow Co., 186 U. S. 70." That paragraph is 
 an imperishable and indestructible contribution of the Supreme Court 
 of Massachusetts to the juristic literature of the nation. Any one who 
 takes from or adds to, that, is bungler. 
 
 Now we come back for just a few minutes to this Pike case. All 
 of the opinion is rid of except page 864 and four lines on page 865. 
 The opening sentence of the opinion is alarming. "The extent to 
 which restrictions can be placed by a patentee upon the use of patented 
 goods sold by him is not clearly settled ' ' ! We cannot so agree, but 
 point blank to the opposite quote the words of Chief Justice Taney, 
 uttered just fifty years earlier: "The (patented) implement or ma- 
 chine (purchased from the patentee) becomes his (purchaser's) pri- 
 vate, individual property, not protected by the laws of the United 
 States, but by the laws of the state in which it is situated. 
 
 (Now listen.) "Contracts in relation to it are regulated by the 
 laws of the State and are subject to state jurisdiction." (Bloomer 
 vs. McQuewan.) This principle has been so often declared by the 
 
192 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 Supreme Court that we cannot understand how it can be regarded 
 as unsettled. 
 
 As early as 1863 the Supreme Court said in Bloomer vs. Millinger; 
 "Considering that the question has been several times decided by this 
 Court, we do not think it necessary to pursue the investigation." We 
 have this repeated over and over again. The language of the Supreme 
 Court becomes more intense and positive with every repetition. If we 
 could only apply the Audiograph to Adams vs. Burke we could hear 
 the teeth of Mr. Justice Miller fairly grind, as, after congregating all 
 the earlier decisions into one mighty summary, he pounds the desk 
 with this: "But, in the essential nature of things, when the patentee, 
 or the person having bis rights, sells a machine or instrument whose 
 sole value is in its use, he receives the consideration for its use and he 
 parts with the right to restrict that use." 
 
 Then, "in the essential nature of things," when the patentee sells 
 the article, he parts with the right to restrict that use" (of the thing 
 sold). "That is to say (the Court further explains), it is open to the 
 use of the purchaser without further restriction on account of the 
 monopoly of the patentpp " 
 
 Now, twenty-one years later, the Supreme Court in the Folding 
 Bed case (157 U. S. 659), in speaking of the right of a patentee to 
 control the use of a patented article after it had been sold by the pat- 
 entee or an assignee, said: "It is, however, obvious (not questionable 
 or doubtful) that such a question would arise as a question of contract, 
 and not as one under the inherent meaning and effect of the patent 
 laws." The Court in this Pike case says, "If the last sentence (the 
 one just quoted) means that the special contracts alluded to can be 
 enforced only like any other contract, the dictum disposes of the case 
 at bar." Well that is just exactly what it means. Here the Court 
 stood at the parting of the ways. There are times in our thinking 
 as in our lives, when if we deflect even imperceptibly from the straight 
 path and persist in the changed eourse, the consequence is precisely 
 
EDISON PHONOGRAPH CO. VS. PIKE. 19S 
 
 analogous to projecting two lines, thought to be, but, in fact, not quite 
 parallel, to infinity — they cross each other and the parallel is de- 
 stroyed. Before following the deflected path, the Court took a glance 
 backwards to the starting point. "See Harrison vs. Maynard, 61 Fed. 
 689." Yes, see it. For it is well worth whole hours or days of see- 
 ing. There the Court was dealing with the right of the owner of a 
 copyright to restrict the alienation of a copy of the book which he had 
 sold. Page 691, "The right to restrain the sale of a particular copy 
 of the book by virtue of the copyright statutes has gone when the 
 owner of 4he copyright and of that copy has parted with all his title 
 to it, and has conferred an absolute title to the copy upon a purchaser, 
 although with an agreement for a restricted use (black ours). The 
 exclusive right to vend the particular copy no longer remains in the 
 owner of the copyright by the copyright statutes. The new purchaser 
 cannot reprint the copy. He cannot print or publish a new edition of 
 the book; but' the copy having been absolutely sold to him, the or- 
 dinary incidents of ownership in personal property, among which is 
 the right of alienation, attach to it. If he has agreed that he will 
 not sell it for certain purposes or to certain persons, and violates his 
 agreement and sells to an innocent purchaser, he can be punished for 
 a violation of his agreement; but neither is guilty, under the copyright 
 statutes, of an infringement." (black ours.) 
 
 That is as clear cut as the acanthus leaves on a Greek temple, and 
 equally beyond the reach of criticism. And there is no use to take to 
 cover by asserting the wide difference between the patent right and 
 the copyright franchise. "We will nail this up to dry later, but we 
 now interpose the suggestion that the noble faculty of the human mind 
 by which differences are recognized as differences, is worthless unless 
 we make use of it likewise to recognize as similar things that are 
 similar. The copyright franchise and the patent franchise are abso- 
 lutely identical in this: that the copyright franchise consists alto- 
 gether in the right to exclude everyone from multiplying and vend- 
 
194 RESTRICTION ON RESAL.E OF PATENTED ARTICLES. 
 
 ing copies of the thing copyrighted without the consent of the owner 
 •of the copyright; and the patent franchise consists altogether in the 
 'right to exclude every one from making, using and vending the 
 'thing invented without the patentee's consent. Point out a thousand 
 'dijBierences, if you will, but, in the name of common sense, please do 
 not overlook the vital fact that' when we get to the root of the matter 
 'each consists altogether in the right to exclude. We will later show 
 'that in this fundamental aspect, the Supreme Court has always joined 
 the two rights together and what that vast repository of wisdom has 
 joined together, let no man put asunder. 
 
 We have done with this case and place it behind us. The Court 
 had no jurisdiction to try the case. The defendant was not an in- 
 fringer. He was using and selling his own property. He had not 
 even violated an agreement. The defendant's right to use and sell 
 these phonographs was an inalienable right, a blood right,, a right 
 that has been fought for and won with pikes and muskets, a right the 
 fierce assertion of which caused King John to tremble, a right which 
 if denied generally to men, as it was to the defendant in this particu- 
 lar instance, would cause a greater insurrection than ever yet con- 
 tused the affairs of men. 
 
 But the Court denied the defendant the right to what was his, de- 
 nied him the right to the gains of his own industry, nay, denied to 
 him a legitimate pursuit of happiness. And enforced this denial with 
 an injunction, the most terrible instrument of the law, after the dead- 
 fall of the gallows. 
 
 Oh! reader, whoever you may be, you will see our Audiograph 
 case more completely translated into terms of every-day life than this. 
 "Watch the next case. 
 
 Victor Talking Machine Co. vs. The Fair (1903 C. C. A. 7th 
 Cir.) 123 Fed. Rep. 424. 
 
VICTOR TALKING MACHINE. CO. VS. THE FAIR. 195 
 
 This is a case of the utmost importance. It is much the :piost in- 
 fluential decision of the character after the Heaton case. We: ai;e:g0' 
 iag completely to surround it and then advance on all sides until 
 we stand right at its center. No proposition asserted in tbis opinion 
 shall escape the measuring rod (as best we know how to apply; it,) 
 of the Supreme Court. This case originated in the Circuit Cou^'t qI 
 the Northern District of Illinois. 
 
 We are getting close to that Chicago flat. 
 
 THE FACTS. 
 
 The Victor Talking Machine Company owned patent No. 534,543, 
 pertaining to a graphophone. It made a quantity of these instruments 
 so indigenous to Chicago and sold them. Each instrument tore on 
 it these words: 
 
 "Notice." 
 
 "This machine, which is registered on our book No , 
 
 is licensed by us for sale and use only when sold to the public at a price 
 
 not less than $ No license is granted to use this machine 
 
 when sold at a less price. Any sale or use of this machine when sold 
 in violation of this condition will be considered as an infringement 
 of our United States patent (black ours) under which this machine 
 and records used in connection therewith are constructed, and all parr 
 ties so selling or using this machine contrary to the terms of this li- 
 cense will be treated as infringers of said patents, and will render 
 themselves liable to suit and damages. 
 
 "This license is good only so long as this label and the above- 
 noted registered number remain upon the machine, and the erasures 
 or removal of this label will be construed as a violation of the 
 license. 
 
196 , RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 A purchase is an acceptance of these conditions. All rights re- 
 vert to the undersigned in the event of any violation. 
 
 Victor Talking Machine Co." 
 Now this wise complainant filled in the blanks on each notice 
 with the appropriate number and the price of $25.00. It then sold 
 them to a jobber, subject to all the restrictions set forth in the notice, 
 which restrictions the jobber agreed to, at the time of the purchase. 
 The defendant, a large department store in Chicago, with full knowl- 
 edge of the restrictions under which the jobber took the machine, pur- 
 hased and acquired possession of them from such jobber with labels 
 conspicuously attached thereto, and advertised them for sale at $18.00 
 each; "and sold some and insisted upon its right to sell others at the' 
 cut price." 
 
 The complainant, of course, sued for infringement at once. 
 We desire to call attention to one eye opener in connection with 
 this amazing notice. It informs us that an erasure or removal of the 
 label will be construed as a violation of the license. That means that 
 if the owner's small boy took a penknife and removed the label, the 
 owner, wha had paid the full Trust price for it, would be an infringer! 
 We dare not stop to comment on this notice; it would require forty 
 pages. 
 
 The defendant demurred cio the ground that it had the right to 
 sell the machines at any price it chose, and the plaintiff's cause of 
 action, if any, was for a breach of contract. We undertake here and 
 now to sustain botli of those defenses and further to show the com- 
 plainant had no cause of action whatever. 
 
 The Court divided its discussion into two parts, one pertaining 
 to the question of jurisdiction, and one to the merits of the case. We 
 will follow the same course. 
 
 So far as we can now recall this is the first case of this character 
 in which the jurisdiction of the Court has been questioned. We have, 
 therefore, had no occasion to consider it with thoroughness. 
 
VICTOR TALKING MACHINE CO. VS. THE FAIR. 197 
 
 The question of jurisdiction is always the greatest that can ever 
 be discussed by any court. Jurisdiction is the power of the Court to 
 decide the contest. Justice is said to be the greatest Interest in the 
 earth. Jurisdiction is the measure of the power to deal out justice. 
 When a litigant questions the jurisdiction of the Court, he asks the 
 Court to sit in judgment and mark the boundaries to its own powers. 
 An appeal is made to sovereignty to limit itself. Many times the ap- 
 peal fails. 
 
 Here the Court says: The test is: "If the plaintiff is seeking a 
 judgment for debt or damages, or a decree for cancellation or specific 
 performance on account of the defendant's breach of his covenant, 
 the cause of action arises out of the contract, and though the deter- 
 mination of the issue of breach or no breach may involve the inter- 
 pretation of the patent and of the prior art, the insistence of the de- 
 fendant that his device according to the true construction oi the patent 
 and of the prior art, is not within the patent right granted him in the 
 contract, cannot change the nature of the action. On the other hand, 
 if the plaintiff is seeking a judgment for damages, or a decree for an 
 injunction and an accounting, on account of the defendant's unauthor- 
 ized use of the patent right in making or using or selling the device 
 without license, the cause of action arises out of the patent laws ; and 
 though the determination of the issue of infringement or no infringe- 
 ment may involve the interpretation of the contract, the insistence that 
 his act was within his rights under the contract, if properly construed, 
 cannot change the nature of the action." 
 
 These two long sentences may be summed up in one very short 
 one : If the plaintiff is suing for breach of contract, the Federal Court 
 has no original jurisdiction; if he is suing for infringement, it has. 
 But this does not tend in the least to determine the matter 
 
 The question still isf : What is the nature of the suit ? It makes no 
 difference by what name the plaintiff calls the action. It depends en- 
 tirely upon the facts which the Court has to weigh in order to deter- 
 
198 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 mine whether or not. the plaintiff's right has been invaded. If the 
 Court has to examine the specification of a patent and also examine a 
 machine, device or process alleged to have been made, used or sold 
 without the patentee's consent, and determine whether or not the thing 
 handled by the defendant corresponds substantially with the speci- 
 fication of a patent then the suit is one for infringement. But if no 
 question is raised about the fact that the thing in controversy is that 
 described by the patent and was made by the patentee and the only 
 fact in dispute be whether or not the plaintiff has consented to what 
 the defendant has done, then the suit is for a breach of contract. Here 
 there was no dispute as to the validity of the patent ; the plaintiff had 
 made the machine in accordance with the description in its patent, 
 and there could be no dispute that the graphophone was identically 
 the one patented. The sole issue was whether or not the plaintiff had 
 given its consent to the sale of the graphophones by the defendant. 
 Consent ^s always a matter of contract. 
 
 What a strange spectacle the plaintiff presented! It set out a 
 contract in its bill; set out all the terms of the contract, the facts 
 showing that such contract was in force between it and the defen- 
 dant (this corresponds to class of allegations described in the first 
 sentence quoted above from the opinion). Then it asked for an in- 
 junction (which is a part of a suit characterized by the second sen- 
 tence"). 
 
 In other words, the plaintiff throughout the ch.arging part of its 
 bill treats the defendant as a contractee, a licensee ; in the prayer for 
 relief it treats the defendant as an infringer. The plaintiff sued on 
 one cause of action and prayed for relief on an entirely different one. 
 
 The Court says at the top of page 426: "In the present case, it 
 is hardly conceivable that the question of jurisdiction would have been 
 broached, if appellants had confined themselves to drafting and filing 
 a straight bill for infringement (black type ours). But again, the de^ 
 fense, whether put in by the defendant, or by the plaintiff, cannot 
 
VICTOR TALKING MACHINE CO. VS. THE FAIR. 19» 
 
 change the nature of the action." But no defense was put in by.' 
 the defendant; it demurred to the bill. What defense was put in by: 
 the plaintiff? Does the Court mean that the contract was a defense 
 and if this had been left out we would have had a "straight bill fop 
 infringement"? Let us try it. We strike out the jobber's agreement, 
 the "Notice" and all knowledge of it by defendant. Now what is. 
 left? These allegations: The plaintiff owns a patent covering a. 
 graphophone: it made a quantity of these patented instruments, soldi 
 them and got the purchase money: subsequently the defendant 
 bought them from the owner and paid for them : Now it owns them, 
 and is advertising them for sale. Wherefore plaintiff prays for a ' ' pre- 
 liminary and a perpetual injunction and an accounting of profits and. 
 damages"! This would have been a "straight bill for infringement" 
 in this case and if it had been so drawn, the complainant's counsel 
 would have been sent "straight" out of court. Yet this is all thera 
 is to the case and all that can be made out of it. 
 
 But we are not going into the merits for a moment: we are going: 
 to stick at this dry question of jurisdiction. Let us try to imagine 
 that there was a "license" of some kind in this case and that some- 
 how the defendant was a "licensee" that had violated its "license". 
 
 The plaintiff had to stick to the Jobber's Agreement, and "No- 
 tice" in this ease to get any standing in court at all. So it repeats and 
 reiterates that the defendant had "full knowledge of the restrictions, 
 under which the jobber took the machines" and "acquired possession, 
 of them with the labels conspicuously attached thereto". All these 
 allegations are nonsensical except for the purpose of showing a con- 
 tract in effect between plaintiff and defendant. 
 
 But a defendant cannot be both a "licensee" and an infringer. 
 No such thing is possible. If he has the plaintiff's consent, he is a 
 "Licensee"; if he has it not, he is an infringer. If the plaintiff has 
 licensed the defendant, whether or not the plaintiff can sue for in- 
 fringement, depends upon whether or not he is justified in entirely re- 
 
200 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 pudiating the license contract and holding it for naught. It is for 
 the Court to decide when he tries it ; if the defendant pleads a license 
 as a justification, the Court will determine whether or not the de- 
 fendant's breach went to the essence of the contract and wiped out 
 the consent. If yes, there is no consent or license ; if no, there is a con- 
 sent which has been violated and for which the plaintiflE may have 
 damages, but which consent he cannot withdraw. It is a hazardous 
 thing for a licensor to jump to the conclusion that he can sue his 
 licensee in a "straight bill for infringement,". It depends entirely on 
 whether or not he is entitled under the circumstances to treat as com- 
 pletely rescinded a contract to which the defendant is a party. 
 Courts are constantly saying that any use in excess of a license con- 
 stitutes infringement, but the Supreme Court cannot be charged with 
 responsibility for such language. According to its doctrine, so long 
 as there is a license, a consent, there is no infringement. When the 
 license or consent is validly and legally withdrawn, any making, using 
 or selling is infringement. 
 
 There are six cases that cover this whole question in masterly 
 fashion. They progressively develop the entire doctrine. These are : 
 
 [1) Wilson vs. Sanford (1850), 10 How. 99. 
 
 (2) , Littlefield vs. Perry (1874). ''I Wall. 205. 
 
 (3) Kartell vs. Tilghman (1878), 99 U. S. 517. 
 
 (4) Marsh vs. Nichols (1890), 140 U. S. 344. 
 
 (5) White vs. Eankin (1891), 144 U. S. 628. 
 
 (6) Excelsior Pipe Co. vs. Bridge Co. (1901), 185 U. S. 282. 
 
 Wilson vs. Sanford, we have already discussed and quoted elab- 
 orately, see supra page 69 et. seq. In that case, the plaintiff attempted 
 precisely what was successfully accomplished in the case now under 
 discussion. If we follow the Court here and treat the defendant as a 
 party to a "license contract" (and in no other way is the language of 
 the opinion intelligible), it is wholly impossible to distinguish the 
 
VICTOR TALKING MACHINE CO. VS. THE FAIR. 201 
 
 two cases. In both cases a contract is pleaded as the basis of the 
 action : in both cases, the right alleged to have been invaded is a cov- 
 enant ; in both cases the relief prayed for included an injunction. In 
 the earlier case, Chief Justice Taney said the plaintiff "alleges no 
 ground for an injunction unless the contract is set aside". Precisely. 
 The plaintiff had given his consent ; had made the defendant a licensee 
 by a common law contract. He cannot now treat the defendant as an 
 infringer until the "contract is set aside". Whether or not the con- 
 tract has been forfeited and should be set aside is not even remotely 
 dependent on the patent law. 
 
 In deciding that question, the validity of the patent, the novelty 
 of the invention and such matters are irrelevant. The sole question 
 is, has the defendant lived up to his contract? If the defendant has 
 completely repudiated the contract and the plaintiff has joined him in 
 this repudiation, the contract is gone. However, if the defendant 
 has merely broken one of the terms of the contract, the plaintiff is en- 
 titled only to damages for that breach. But all such questions are 
 matters of general contract law, of which the state court alone has 
 jurisdiction. 
 
 Now Littlefield vs. Perry is, at first reading, exceedingly perplex- 
 ing, but upon further study and with a little looking before and after 
 it becomes surprisingly simple. There the patent owner had extended 
 an exclusive license to the licensee and then violated it. The licensee 
 brought a suit for infringement, and the jurisdiction was affirmed. 
 This seems to overthrow the rule running through all the cases; that 
 a licensee cannot maintain a suit for infringement, because he has 
 not title to the patent. But here jurisdiction is assumed out of pure 
 necessity. Said Chief Justice Waite (1. c. 223) "A mere licensee can- 
 not sue strangers. Here, however, the patentee is the infringer, and 
 as he cannot sue himself, the licensee is powerless, so far as the courts 
 of the United States are concerned, unless he can sue in his own name" 
 (black ours). There is the reason for the exception, and Littlefield vs. 
 
202 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 Perry is not in any manner relevant to Victor Talking Machine vs. 
 Fair. 
 
 Kartell vs. Tilgham simply re-affirms Wilson vs. Sanford. Marsh, 
 vs. Nichols is to the same effect. 
 
 White vs. Eankin is also puzzling at first, but easy when closely 
 attended to. The plaintiff filed a "straight bill for infringement". 
 The defendant pleaded a license in his answer, and the plaintiff came 
 back with a replication. The parties then stipulated that the de- 
 fendant had made and sold articles embodying the patented inven- 
 tion. Thereupon the Circuit Court dismissed the bill for want of juris- 
 diction. The Supreme Court declared this to be an error. It said, 
 1. c. 635: 
 
 "The Circuit Court did not decide the case upon the facts con- 
 tained in the stipulation, nor did it adjudicate upon the legal effect of 
 those facts. It did not hold that those facts were facts in the cas& 
 and then dismiss the bill because the existence of those facts as facts 
 removed the case from the cognizance of the Court. (Black ours: 
 there's the test.) It appears to have dismissed the bill on the simple 
 ground that the defendants set up a contract of license from White. "^ 
 Then the paragraph concludes with this: "All of the parties to the 
 suit were citizens of California, and if jurisdiction did not exist under 
 the patent laws, it did not exist at all. ' ' And whether it existed under 
 the patent laws depends upon adjudicating upon the facts set up by 
 the answer and denied by the replication. 
 
 If upon hearing the evidence, the Court should decide that there 
 was then in effect a license from White to Rankin, then jurisdiction 
 by the Federal Court "did not exist at all", for "all the parties to 
 the suit were citizens of California." 
 
 Near the bottom of page 636, the Court said: "All these matters 
 and questions should have been adjudicated by the Circuit Court be- 
 fore it could find grounds to determine whether or not it should dis- 
 miss the bill." (Black ours.) 
 
VICTOR TALKINa MACHINE CO. VS. THE FAIR. 20? 
 
 But the Circuit Court did not follow this plan. It denied its 
 own jurisdiction simply because the defendant said it had none. 
 
 Jurisdiction never depends upon what is alleged unless it be also 
 proven. The last sentence of testimony in a case may show the court 
 has no jurisdiction. Suppose at the end of a ten days' trial in a 
 civil case, the last question put to the defendant on cross examination 
 by a smart lawyer for the plaintiff is this: "Now face the Court and 
 tell his Honor how old you are." The defendant, in utter helpless- 
 ness, turns and says : "Twenty, last March." It is all over. The only 
 thing left is for the clerk to make out a bill of costs and hand it to 
 learned counsel for the plaintiff. See the stinging remarks of Chief 
 Justice Marshall (1834), 8 Peters at 144. 
 
 The case of: Excelsior Pipe Co. vs. Bridge Co. is a powerful re- 
 statement of the entire rule and we cite it only to quote one sentence.. 
 It is the last in the opinion: "We regard this question as conclusively 
 settled in Littlefield vs. Perry and "White vs. Rankin, and have no- 
 disposition to disturb it." That time the Court struck twelve, reader. 
 
 Tested by these decisions, the Court had no jurisdiction to enter 
 up any decree in this Victor Talking Machine Case. Moreover the 
 courts had no jurisdiction ui the Heaton case or any of the Neostyle 
 cases. There was no jurisdiction in any of the graphophone cases, 
 which we have already considered or that we shall hereafter cohsider. 
 In the Heaton case, the Court said, "the remedy of the complainant 
 may be (black ours) a double one." But we know of no instance 
 where the Supreme Court has decided the question of jurisdiction by 
 hazarding a conjecture or positing a surmise. It invariably goes to 
 roekbottom whenever that question is raised. And it does not wield 
 its great power unless its right to do so is utterly beyond question. 
 
204 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 n 
 
 We come now to the merits of this case. The Conrt starts off 
 •on firm ground: "With6ut applying to the patent office one may 
 make, use and sell the device that embodies his invention. That is his 
 natural right." We would prefer to substitute for the phrase "that 
 embodies his invention" the words "that is described in the letters 
 patent". We shall see that there is much grievous ambiguity in the 
 Tvord "invention". Assuming the substitution made, the sentence 
 then would be amon^ those things that abide. Watch the word "in- 
 vention". "All that the government can and does grant him is the 
 right to exclude others from practicing his invention without con- 
 -sent." There is much subtle ambiguity in the use of the phrase "prac- 
 ticing his invention".' Obviously what the Court means is "making, 
 using and selling the device described in the letters patent". Let us 
 substitute equals for equals and then we have: "All the government 
 can and does grant him is the right to exclude others from making, 
 Tising and selling the device described by the letters patent without 
 iis consent." 
 
 The Court then says: "Within his domain he is Czar." But re- 
 member the Court has already marked out the boundaries of the 
 domain. All that it is, is the right to exclude others. We go on. 
 "The people must take the invention on the terms he dictates or let 
 it alone for seventeen years." What does "invention" mean here? 
 It makes aU the difference in the world whether the Court means "the 
 right to exclude others" or "the device embodying his invention". 
 We will try substituting both of these. "The people must take the 
 (right to exclude others — invention) on the terms he dictates or let it 
 alone for seventeen years." And when the seventeen years are up, 
 the people and no one else can take it, on the patentee's terms or 
 anyone else 's terms, for it vanishes into thin air and disappears utterly 
 like a disimprisoned spirit. At the end of that period the sceptre of 
 
VICTOR TALKING MACHINE CO. VS. THE FAIR. 205 
 
 the Czar crumbles into dust and is blown away into utter non exis- 
 tence. His domain can no longer be found ; it has gone the way that 
 no fowl knoweth and that the vulture's eye hath not seen. It is to 
 be found neither in the sea nor on the earth, and the places that knew 
 it shall know it no more forever. That is what happens to that right 
 at the end of seventeen years. 
 
 But now let us try the other meaning of "invention" in this sen- 
 tence, and see how it works. "The people must take it (the device 
 embodying the invention — invention) on the terms he dictates or let 
 it alone for seventeen years." Aye, and for seven times seventeen 
 years. Not when the seventeen years are up nor any multiple thereof 
 can the people take that device except on the terms dictated by the 
 owner unless in the meantime th? black pall of socialism is draped from 
 the Golden Gates to- Buzzard's Bay and from the Great Lakes to Mex- 
 ico. For the right to that device is not granted by the Patent Lajv. 
 It is as the Court said "a natural right". If a man has made and owns 
 a graphophone or purchased a horse and has it in his stable, his right 
 to that graphophone or that horse is not a patent right, granted by 
 the Federal government and perishing of inherent weakness in seven- 
 teen years. 
 
 Oh, no J it is " a natural right, ' ' older than the Constitution, more 
 vital than the Eepublic itself. We have called it a battle field right, 
 for it has its origin away back there in the boom of cannons and 
 the clash of sabres. Some times when this right— the right to enjoy 
 the fruit of one's own industry, has been denied to men generally, the 
 wild grass has been torn up to the horizon and whole nations turned 
 into a trampled corn field and a bloody street. But, mark you, when 
 the man who owns the graphophone and the horse sells both to another 
 man, there are then two blood rights. The man who buys, parts 
 with a blood right in the purchase money and then he gets a blood 
 right in the graphophone and the horse. And a court, acting within 
 the law, has no more right to take away the right of the purchaser in 
 
"206 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 the graphophone and the horse at the instance of the seller than it 
 has the right to take away the right of the seller in the purchase mon- 
 ey, at the instance of the buyer. A sale is an exchange of blood rights. 
 This is warm, reader, but everything is hot when you get at its center. 
 
 Next the Court says: "Cries of restraint of trade and impair- 
 ment of the freedom of sales are unavailing, because for the promo- 
 tion of the useful arts the Constitution and statutes authorize this 
 very monopoly." To us those are strange looking words. Let us try 
 them out. We will start with the last word, "monopoly". What is 
 the monopoly of a patent? Why, it is the right to exclude, that is 
 all. The patent monopoly consists altogether in the right to exclude 
 others. Fifty-eight years ^go. Chief Justice Taney fashioned that out 
 of the heart of the law, and the Supreme Court has been remaking 
 and restating it ever since. A right to exclude is not trade, restrain- 
 ing a right to exclude is not restraining trade. The patentee, in the 
 exercise of his right to exclude cannot either trade or restrain trade. 
 An exercise of the right to exclude has never made anything, used 
 anything or sold anything. The patent monopoly consists altogether 
 in the right to exclude. And if a patentee simply exercises his right 
 to exclude and does nothing more and has no other means of subsis- 
 tence, he will starve and if his successor in interest is in the same sit- 
 uation and imitates the wisdom of his departed predecessor he also 
 will soon be gathered to his fathers. The right to exclude is as bar- 
 ren as the wild fig tree that casts its untimely fruit. 
 
 The right to exclude only keeps others from making the thing 
 described in the letters patent without the patentee's consent, and from 
 selling or using such thing made by a third party, without the pat- 
 entee's consent. But -when the patentee himself or someone else by 
 his authority has made the thing described in the patent, it constitutes 
 a visible, tangible thing, that can be traded. Cries with reference to 
 restraints of trade have nothing to do with the intangible, incorporeal 
 right to exclude. Nobody cares anything about the trade in that. 
 
VICTOR TALKING MACHINE CO. VS. THE FAIR. 207 
 
 We must revise this sentence then, so that it will read as fol- 
 iows: "Cries of restraint of trade (in the right to exclude) and im- 
 pairment of the freedom of sales (of the right to exclude) are unavail- 
 ing because for the promotion of the useful arts, the Constitution and 
 the statutes authorize this very (right to exclude) monopoly." So 
 stated, the sentence is correct. 
 
 We are still in the outer periphery of this opinion and we must 
 .advance inward. When we get our breath and start again, we en- 
 -counter this: 
 
 "By its terms, the grant covers three separate fields." That looks 
 tad. The grant by its terms consists altogether in the right to ex- 
 •clude others from making, using and vending, but where does the 
 "field" come in? Suppose A goes to the patentee and says: "Czar, 
 let me make a graphophone, " and the patentee, answering harshly, 
 •says, "No, I exclude you." What "field", even in a figurative sense 
 lias A been excluded from ? We go to the next; ' ' The patentee maj' 
 .agree with one that he will not exclude him from making, with an- 
 other from using, and with yet another from selling devices that ex- 
 emplify the principles of his invention." Indeed he may. But he 
 gets no such right from the patent. The patent grant says nothing 
 about not excluding, nothing about an agreement not to exclude. The 
 light not to exclude or m other words the right to let in or, stated 
 still more intelligibly, the right to permit another to enjoy the results 
 ■of one's own industry is that natural, or primordial right, with which 
 the patent law has nothing to do. Suppose X discovers a secret pro- 
 cess for making diamonds out of carbon. It is known only to him. He 
 does not have to go to the patent office to get the right not to exclude 
 ■others or the right to agree not to exclude others from using the pro- 
 cess after he has disclosed it to them. Moreover, he can license them to 
 use under proper contracts and his discovery will be just as valuable 
 to him and as useful to the licensees as if he had taken out the patent. 
 Chancellor Kent, in defining the different kinds of personal property, 
 
208 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 says: "Another instance of property acquired by one's own act and 
 power is that of mechanical inventions, consisting of useful machines 
 or discoveries, produced by the joint result of intellectual and man- 
 ual labor." Now all that the patent does is to prevent others during 
 seventeen years from stealing or appropriating the results of this in- 
 tellectual labor without the patentee's consent. 
 
 But we must go on. "Within the field of making (which is an 
 exercise of the natural right), it has never been doubted, so far as 
 we are aware that he may subdivide as he pleases and offer to sell or 
 lease in the most fanciful parcels on the hardest terms; that whether 
 purchasers and tenants come or not is purely his own concern: and if 
 purchasers do come, the courts will enforce the terms of the sale or 
 lease." 
 
 The "field of making" is an exercise of the natural right. Of 
 course he may offer to sell or lease in the most fanciful paxcels on the 
 harshest terms, but what of it? A livery man may offer to rent a 
 Shetland pony at $10.00 an hour, or sell it for not less than $10,000, 
 and whether purchasers and tenants come is purely his own concern, 
 but neither instance has anything to do with the patent right. "And 
 if purchasers do come, the courts will enforce the terms of the sale 
 or lease." But some of these days, they are going to quit doing it 
 as they have in the past. For the sale or the lease is an ordinary, 
 common law transaction. And if a man should lease a house to an- 
 other on condition that that other perjure himself before the Court, 
 that term' the Court would not enforce. 
 
 The opinion becomes more interesting: "And how could it be 
 otherwise? Owning the whole, he owns every part. The field being 
 his property, and there being no law for seizing it and adjudging his 
 damages, he cannot be compelled to part with his own except on in- 
 ducements to his liking. " It is very obvious that during all this time 
 the Court has been thinking of the device that embodies the "inven- 
 tion" and using strong language applicaWe only to the incorporeal 
 
VICTOR TALKING MACHINE CO. VS. THE FAIR. 209 
 
 right to exclude. This simile of the "field" running all through has 
 to do only with the physical device. But this will not stand ; in Pat- 
 terson vs. Koutucky, the legislature of Kentucky sunk all the "fields" 
 — making, using and selling — of the Aurora oil lower than the bed 
 of the Ohio river. In the case of In re Brosnahan, Judge Miller upheld 
 the legislature of Missouri in destroying all three "fields" in the pat- 
 ented oleo-margiarine. And in Webber vs. Virginia, Mr. Justice Field 
 said that the legislation which the state may adopt after the pat6nts 
 have expired, it may equally adopt during their continuance. We 
 cannot agree with this statement, "he cannot be compelled to part 
 with his own, except on inducements to his liking." Patterson, who 
 lost his Aurora oil in Kentucky and Brosnahan remanded to jail, 
 know better. "The same conditions must prevail within the field of 
 use, for how can it be distinguished?" The same conditions do 
 prevail. 
 
 The Court then cites the Heaton case as a case "we thoroughly 
 approve". We have nothing to say as to that. Then follows Cortel- 
 you vs. Lowe, we pass that also, but not the citation of the Bement case 
 to this: "The field of sale is as much within the monopoly as the 
 others, and so it has been decided. ' ' But not by the Supreme Court. 
 
 When that great tribunal declares it to be the supreme law ol 
 the land that the owner of a patented phonograph can sell the same. 
 pnt the whole of the agreed purchase money in his pocket and the 
 next day sue the owner for using it, get a judgment in damages 
 against him for purchasing it and an injunction against his use or sale 
 of it, we shall not be surprised to learn that Hamilton has whirled 
 over in his bloody shroud and that the Washington Monument has 
 leaped into the Potomac. We believe that the Supreme Court will 
 stick to the "essential nature of things". 
 
 We learn now what was the doctrine of the earlier phonograph de- 
 cisions. "The holdings were that a patentee may reserve to him-self 
 as an ungranted part of his monopoly of sale, the right to fix and con- 
 
210 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 trol the prices at which jobbers and dealers may sell the patented 
 article to the public, and that whoever without permission enters the 
 reserved portion is an infringer." 
 
 We are glad to learn that those cases held just that. Blaise 
 Pascal, who had one of the most penetrative minds that ever inhabited 
 the skull box of man, advised one dealing with a difficult problem ta 
 split it into as many parts as possible and consider each part separ- 
 ately. We think that is the part of wisdom. We are here interested 
 in the sale of a patented graphophone, and have concerning it quite a 
 lengthy sentence. Let us cut off a part of this sentence, drag the 
 fragment to a quiet, isolated spot and think on it earnestly to the ex- 
 clusion of all else. Let us consider this segment: "A patentee may 
 reserve to himself as an ungranted part of his monopoly of sale." 
 
 On the page preceding, the Court had said that all the govern- 
 ment can and does grant is the right to exclude others and that with- 
 out applying to the Patent Office, one may sell his graphophone. We 
 may remark here that consequences are unpitying. 
 
 Where, then, does the patentee get his monopoly of sale? He 
 gets no .right to sell at all from the patent office: the Court is com- 
 mitted to that. 
 
 In the great Northern Securities ease, a case which all the mem- 
 bers of the Supreme Court searched to the very marrow, Mr. Justice 
 Holmes (1. c. 193 U. S. 403) said: "Much trouble is made by sub- 
 stituting other phrases assumed to be equivalent which then are rea- 
 soned from as if they were in the act. ' ' That is the danger of substi- 
 tuting in connection with a patent, the word "monopoly" for the 
 phrase "right to exclude". If a patentee in selling his patented 
 graphophone reserves an ungranted part of his monopoly of sale, then 
 it must follow that he parts with and grants a part of the monopoly 
 when he sells. That is what must be meant by the words "reserve" 
 and "ungranted". When we speak of a part being "reserved" and 
 "ungranted", because of the inherent relative character of those 
 
VICTOR TALKING MACHINE CO. VS. THE FAIR. 211 
 
 terms, we must mean that another part is not reserved, but granted 
 away. Then the purchaser has a part of the monopoly. If the pat- 
 entee-vendor is a Czar, we suppose the purchaser is a little czar; be- 
 longing to the same order of royal blood as the patentee, but on a 
 lower rung of the ladder of aristocracy. But when does this Czar 
 pollen rub off? Do subsequent purchasers get an unreserved and 
 granted portion of this monopoly and all say to the patentee, like the 
 mutual greeting of the Homeric heroes in hades: "Hail, chief, we 
 have become like unto thee"? The above segment is enough. Away 
 back in 1852, in Bloomer vs. McQuewan, Chief Justice Taney 
 said: "The purchaser of the (patented) machine (from the 
 patentee) ia using it exercises no right created by the Act of Con- 
 gress, nor does he derive title to it by virtue of the franchise or ex- 
 clusive privilege granted to the patentee." That is enough. The pur- 
 chaser gets no part of the Czar's power and when he uses or sells the 
 graphophone, he uses and sells his own property and does not ejnter 
 anyone's reserved portion. He is no infringer. 
 
 But we must hurry to the conclusion of this long examination. 
 The Court now puts into the mouth of the complainant a speech, 
 which the latter is supposed to have addressed to the jobber. '''We are 
 unwilling to part with the whole of our monopoly (right to exclude). 
 There are no terms on which we will give you an unrestricted right to 
 deal in our machines. (Now remember the complainant is about to 
 sell the machines, and when he does the machines belong to the job- 
 ber). However, if you choose to pay our price (think of it!) for a lim- 
 ited right, we will place our machines in your hands to be sold by you, 
 or by dealers under you, to the public at not less than $25.00 each." 
 We do not care if the complainant said even so, his acts belied his 
 words. He sold the machines and got for them every penny of the 
 purchase money, otherwise he would not have sold them. A sale of 
 a chattel, of personal property, and the payment of the agreed pur- 
 chase price, transfers the thing sold to the purchaser. It is his. The 
 
212 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 Bale may be conditional. That is to say; that the title shall not pass 
 until the purchase price is paid. But when the parties agree on the 
 price, and the vendor accepts it and delivers the thing, that thing be- 
 longs absolutely and unqualifiedly to the purchaser. Title and pos- 
 session is the beginning and end of personal property. Here the ven- 
 dor tt'ansferred the property or interest in the graphophones and de- 
 livered possession of them. He received therefor from the jobber all 
 the compensation he asked for the instruments and it is idle to talk 
 about his having some further interest in them. And how is it possi- 
 ble to speak of infringement in such a case? The jobber nor the de- 
 fendants made the graphophones : the patentee made them. If he did not 
 want them used or sold he could easily have prevented this by keep- 
 ing them. What did he mean by selling them to a jobber if he did 
 not consent to their being sold again and used by the purchaser? Own- 
 ership of property without the right to use and sel] it is a deception 
 and a snare. 
 
 But the matter is quite free from difSfculty. "We need only one 
 sentence from Adams vs. Burke. "In the essential nature of things, 
 when the patentee, or the person having his rights, sells a machine or 
 instrument whose sole value is in its use, he parts with the right to re- 
 strict that use." What the complainant did here was to impose a re- 
 straint on the sale and use of ordinary personal property that be- 
 longed not to Mm but to others, who had bought it from him, and paid 
 him the full purchase price therefor. There is no magic about a pat- 
 ented article. It is a common chattel. 
 
 The patentee in selling it can impose no more restrictions on the use 
 of or resale of it, than he could the day before the patent was granted 
 or the day after it expires. This is because the patent consists alto- 
 gether in the right to exclude The patent is an intangible right : it 
 does not go along with every patent article, breathing from the pores 
 thereof and shouting, "hands off". 
 
 The attempt juridically to endow a patented article with some 
 
VICTOR TALKING MACHINE CO. VS. THE FAIR. '-^13 
 
 inherent vigour that per se limits the purchaser's right in the article is 
 a mere tour de force. It is as incomprehensible as the blind man's de- 
 scription of the color of scarlet which he declared to be like the 
 sound of a trumpet. 
 
 The Court here stuck the defendant as an infringer because it 
 had knowledge of a contract. But infringement, never by any pos- 
 sibility, can depend upon knowledge of any contract. It consists in 
 making the thing invented without the patentee's consent or in using 
 or selling the thing invented after it has been made by some one else 
 without the patentee's consent. 
 
 Here the Court follows the lead of the Heaton case and treats a 
 purchaser and owner of property as a " licensee ' ' to use ! Before long 
 that famous "license notice" will be hung up among other legal curios. 
 
 "It is axiomatic in all departments of the law that unless the 
 quality of innocence intervenes, the title of the purchaser is no better 
 than his seller's." 
 
 That would be relevant if we were dealing with a sale by a thief 
 or a felon. But the jobber bought and paid for the machines and 
 owned them. Had he died, they would have gone to his personal repre- 
 sentative. If he had made an assignment for the benefit of creditors 
 the assignee would have taken title and owned the instruments. If he 
 had gone into bankruptcy and the trustee had sold these machines 
 for about $6.00, we suppose that the Court would have mulcted the 
 trustee and every purchaser in damages for "the trespass in enter- 
 ing a reserved portion of the monopoly"! And we suppose, finally, 
 if some wretched scrub woman, with her imagination filled with the 
 wonder of this screeching device had saved pennies in an iron box 
 until she had sweated out $24.99 and picked up one of the things on 
 bargain day with the last penny, that the Court would have invaded 
 her squalid hovel, had the marshal haul her into the court-room by 
 the scruff of the neck and would then have addressed to her these 
 dulcet words: "Madam, you are an infringer: you have invaded the 
 
214 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 reserved portion of the patentee's monopoly. He is a Czar and you 
 are a serf. If you had given one penny more for the machine, it 
 would have been yours ; but as matters stand, it will have to be de- 
 livered up and destroyed as infringing property. Let it be so 
 ordered. ' ' 
 
 This decision far outstrips the Heaton and Neostyle cases. Those 
 decisions only restrained the "contributory infringer" from furnishing 
 ink, paper and staples to the "licensee". But here the Court con- 
 fiscated the property which the defendant had bought and paid for. 
 
 When he parted with his money, he parted with an inalienable 
 blood right, when he got the machines he got the same sort of right, 
 but the Court took it from him. In Bloomer vs. McQuewan, Chief 
 Justice Taney said that under the Constitution, Congress had no power 
 to enable a patentee to recall rights that he had parted with. But now 
 a Avay around this has been discovered. 
 
 Let us ask in conclusion what possible or imaginable harm could 
 the patentee have suffered here, whatever the jobber had done with 
 the graphophones ? Suppose he cut the price, it made more sales. 
 Suppose he gave away a gross, he would buy more for his customers. 
 In any event, the patentee gets just what he demands for the grapho- 
 phone when he sells it. The result of the decision of the Court is to 
 ■outrage the anti-trust laws of the sovereign State of Illinois. 
 
 Now, reader, the Audiograph case is a reality and not a creation 
 of the fancy. 
 
 National Phonograph Co. vs. Schlegel (1904 C. C. A. 8th Cir.) 
 128 Fed. 733. Eeversing 117 Fed. 624. 
 
 This case almost makes us weep aloud. After reading it over 
 many times, we feel like shrieking with anguish. It was decided by 
 the Court of Appeals for the 8th Circuit. That is getting close to 
 home. Indeed, it embraces home. 
 
NATIONAL PHONOGRAPH CO. VS. SCHL.EGEL. 215 
 
 After reading this decision, we foreswore purchasing any patented 
 Appliance whatever. 
 
 Instead of using a patented lawn mower made by a Czar, we use 
 a common grass-hook hammered out by an honest blacksmith. This 
 is not patented and no doubt an instrument very similar was used by 
 Nebuchednezzar some thousands of years ago when that eccentric 
 j)rophet got to his knees on the hills of Babylon and gathered his 
 breakfast from the blanket of the dead. Why do we not use a patented 
 lawn-mower? Because if we should, this would be the danger. Some 
 night, after an awful day 's labor, in an effort to understand the law, 
 when we have dropped into an old worn chair and reached for a copy 
 of a very old book, and in it are reading these words which an an- 
 cient judge spake of himself: "I was eyes to the blind and feet was I 
 to the lame : The cause that I knew not I searched out and I caused 
 the widow's heart to sing for joy. I brake the jaws of the wicked 
 and plucked the spoil from his teeth and my judgment clothed me 
 as a robe and as a diadem," — ^we have just read that passage and 
 closed our eyes, and there we can see the smashed jaws and the spoil, 
 ransomed from gnashing teeth. The cause has been searched out. But 
 that is not the focal point of meditative vision. It is the judge. His 
 countenance, terrible as an army with banners and majestic as the 
 tomb of a dead King. And we are pondering with inexpressible de- 
 light his implacable and righteous judgment, symbolized in the robe 
 and the diadem, when there comes an awful knock at the door. We 
 hurry down because we know that that knock is as of one having 
 authority. We open the door and there stands the United States Mar- 
 shal. This officer, reader, is more terrible than a messenger from 
 ■Caesar's tent, for the Court that sends him wields greater power than 
 Julius Caesar ever dreamed of. 
 
 The predicament is disclosed at once. The lawn-mower was pat- 
 ented: the "Licensed resale price" was $7.50. The one purchased was 
 -sold for $6.49, for that it was shopworn and rusty, but the Czar is 
 
216 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 obdurate : he cares not for shop wear, rust or bargain day. We hurry 
 out in the back yard to examine the precious thing and on it is pasted 
 the fatal "license notice". The user is an "infringer". Some days 
 later we appear in court. The cause is heard and the Czar takes 
 judgment for three times the damages, which means, we suppose, 
 three times the difference between the "licensed price" of $7.50 and 
 the "infringing price" of $6.49, and costs. But this is not all; the 
 Czar had sold the lawn-mower for $3.00 and has spent the blood money 
 of the purchaser. Now the thing has become "infringing" property 
 and must be delivered up and, we suppose, destroyed, unless the Czar 
 slips it out the back door, paints it up and sells it again with a fresh 
 license label. As for us, the mower has cost $9.52, with the costs 
 added, and yet we have no mower. Nevertheless, the judgment must 
 be true and righteous altogether. 
 
 We make a hasty levy on the young lawyers in the court room, 
 collect the amount of the "damages" and costs, and after handing the 
 same to the affable and commiserating clerk, we depart from the court 
 room. As we leave, we glance back, the robe has now become a black 
 rag and the diadem has gone forever. 
 
 The night of that day, after studying what the law is not, in order 
 to recoup the "damages" and costs, we read again, for reading is a 
 necessity of life. But we read not in the same book as before. In 
 order to still the violent tumult within, we read history, for Lord 
 Bacon says that makes men wise. With a strange delight, we turn to 
 the pages that depict John Hampden in jail and old Sam Adams rag- 
 ing in the streets of Boston, seeking a King to devour. We put aside 
 the book aga,in and this time gaze on the wall where hangs the an- 
 cestral rifle, and underneath, suspended by a thong, is the powder 
 horn and on it carved by a rude hand the figures "1839". Thank 
 heaven, the rifle is not patented ! We have a ' ' license ' ' to use it, but 
 not from any czar. We have a "license to use" that rifle in virtue of 
 a glorious prerogative, vested in a sire and handed down to the son. 
 
NATIONAL PHONOGRAPH CO. VS. SCHLEGEL. 217 
 
 And the second amendment to the Constitution does not create, but 
 guarantees the right, for it says, "the right of the people to keep and 
 bear arms shall not be infringed." Don't be misled by the word "in- 
 fringed"; it does not mean that all arms are patented. 
 
 Reader, if you should be so fortunate as to be on the top of the 
 last mountain in the deluge and should there decide to exalt your 
 final agony by contemplating the imperishable mementos of the law, 
 among the other sacred things that wiU. stud your fading ultimate 
 horizon will b§ John Hampden, Sam Adams, a long rifle and that frag- 
 ment of the constitution. They constitute a part of "the essential 
 nature of things." 
 
 This decision is of great importance. It is law for the Eighth Cir- 
 cuit and that Circuit embraces within the bounds of its jurisdiction an 
 empire. 
 
 Enough soldiers could be mustered out of its boundaries to outdo 
 Wellington at Waterloo and from it enough food stuffs could be gath- 
 ered to convert the problem in India from one of famine to one of 
 goxit. And the law of this decision is law for all that territory. A 
 cowboy using a patented lariat in Wyoming, a farmer driving a pat- 
 ented reaper in North Dakota, a woman that taketh hold with her 
 hands and is hanging out her washed scarlet in a Kansas back yard 
 by the use of a patented clothes pin, and even a little lad spinning a 
 patented top on the streets of Denver,all may be violating the law of 
 this case because they did not pay the "licensed price" for the pat- 
 ented thing used. They may not know it, but when the judges get in 
 earnest they say that ignorance of the law excuses no one. And Judge 
 Pilate said: "What I have written, I have written." 
 
 If we violate the law as pronounced by the Court in this de- 
 cision, we shall never plead ignorance of the opinion as an excuse, but 
 we certainly would ask for leave to reargue the point, and not quit 
 the case as did counsel for the defendant. 
 
 But let us get at it. The facts as to the "licensee agreement" are 
 
218 RESTRICTIOllj ON RESALE OF PATENTED ARTICLES. 
 
 identical with those in the Victor Talking Machine case. We shall 
 not repeat them. Notice this, however. Here the defendant was a 
 party to the agreement; he signed it with his own hand. Again in 
 this instance, the complainant was an "exclusive licensee for the sale" 
 of the patented phonographs. Drive a stake right there and put a 
 red flag on it, because we must not lose that place. The defendant, 
 then, signed the agreement, purchased the graphophones, paid for 
 them and was about selling at a cut price, when the complainant with 
 its "Constitutional lawyer" rushed into Court and. sued him. 
 
 THE OPINION. 
 
 The Court starts off with the statement that "this is not a suit 
 to enjoin the infringement of a patent". Let us ask then, in the name 
 ■of Daniel "Webster and Eufus Choate, what the suit is "for"? In this 
 Tcry first paragraph the Court quotes from Revised Statutes, sec. 4884. 
 If there is anything in that section about anything but patent rights, 
 we have never been able to find it. 
 
 Then the Court cites all the eases we have been dealing with, 
 ■every one of which was for "infringement". On page 736, the Court 
 says "any sale by defendants outside of the terms of their under li- 
 cense or contract was an invasion of complainant's lawful monopoly. " 
 What is this but invading the domain of the Czar? We think that 
 we must call such a culprit an "infringer" because he has no other 
 name to go by. Yes, this, like the other cases, was a suit for "infringe- 
 ment". The complainant did not call it that, npr file "a straight bill 
 for infringement, ' ' as was advised in the Victor Talking Machine case, 
 for he knew better than to attempt either. He was not anxious about 
 the name by which the cause of action was labelled. What he wanted 
 -to do was to have the Court sanction a rule of conduct that would 
 effect the rights of every man, woman and child in the empire of the 
 
NATIONAL PHONOGRAPH CO. VS. SCHLEGEL. 219 
 
 Eighth Circuit and he got what he wanted. We must believe that 
 he was a "Constitutional lawyer". 
 
 The lower Court at first got the impression that this suit was col- 
 lusive, but later was converted by counsel to the opposite opinion. Be- 
 lief and conviction on any point is an unconditioned prerogative of the 
 individual. We cannot believe that the suit was not collusive, and it 
 would require the unanimous and positive word of a cloud of witnesses, 
 all of the stripe of Cato, the Younger, to change our belief. Why was 
 "the defendant so anxious to have the decree entered against him? If 
 "the complainant had a valid cause of action, why waive all the "dam- 
 ages", and shoulder the burden of the costs? What was there to 
 fight over when the defendant had conceded everything? We are 
 deeply persuaded that the lower court spoke the words of truth and 
 insight when it said: "As an injunction is not required to coerce, the 
 defendants in this case, they, in effect, having agreed to comply with 
 complainant 's demands, for what can the writ be used? Undoubtedly 
 to intimidate or terrorize others engaged in the like business. It will 
 be used to hold up others that this Court has recognized the val- 
 idity of the contract. The decree of this Court will be used for adver- 
 tising literature." (Black ours.) 
 
 We have no authority for even suggesting that the judge who 
 "wrote those words considers himself a prophet. But we think subse- 
 quent developments afford abundant proof that in the above passage 
 lie used the divining stick of Jeremiah. His prophesy , is become 
 history. 
 
 We have said that this suit must be considered as one for in- 
 fringement. There is an allegation of a diversity of citizenship; but 
 there is no allegation that we can find in either report that the requi- 
 site amount of $2,000 was involved so as to confer jurisdiction. 
 
 It was only in virtue of the fact that the patent law was thought 
 to be involved that the Court could have been persuaded to read 
 through the bill of complaint. But the Court had no jurisdiction, for 
 
220 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 there was no infringement. We have already discussed this phase of 
 jurisdiction in connection with the other cases and will not repeat what 
 was there said. 
 
 But for an entirely different and additional reason there was not 
 the shade of a shadow of jurisdiction here. In both reports, it is em- 
 phatically stated that complainant was an "exclusive licensee for the 
 sale" of the phonograph. 
 
 "When we stated this fact earlier, we asked a stake be driven there. 
 We come back to tha^; stake now. All licensees are alike whether 
 they look alike or not. Not one can bring a suit for infringement 
 except where the patent owner is defendant. We do not know how 
 many times the Supreme Court has ruled so, but three instances will 
 be enough. 
 
 Paper Bag Cases (1881), 105 U. S. 766. 
 Birdsell vs. Shalliol (1884) 112 U. S. 485. 
 Waterman vs. Mackenzie (1890), 138 U. S. 252. 
 
 And these rulings are all based upon the fact that a licensee has no 
 part of the right to exclude; he has not title to the patent which is 
 put in issue in every infringement suit. It would be absurd to allow 
 a licensee to maintain a suit for infringement for it would be no bar 
 to a subsequent suit by the owner of the patent. In the case under 
 consideration, the patentee could not have sued for "infringement," 
 for he was not a party to the "licensee agreement" and that "licensee 
 agreement" was the umbilical cord of complainant's cause of action. 
 This fact alone shows indubitably that even if the Court was bent 
 on considering a purchaser and owner of property a mere "licensee," 
 yet complainant had no standing in court. This is why complainant's 
 counsel did not call the suit one for "infringement". That word 
 would have ended the game. 
 
NATIONAL PHONOGRAPH CO. VS. SCHLEGEL. 221 
 
 We shall not discuss the authorities cited by the Court and here- 
 tofore considered. 
 
 The Bement case is again quoted, but we looked at that in con- 
 nection with the Victor Talking Machine case. In addition, Fowle vs. 
 Park, 131 U. S. 88, is referred to, but it must be thrown out at two 
 exits. It had to do with a "patent" medicine, a secret process, of 
 which the Patent Office had never heard and again it was decided in 
 1888, two years prior to the enactment of the antitrust act of Con- 
 gress. Garst vs. Harris (1900) 177 Mass. 72, is also relied on; it was 
 also a case regarding a '/proprietary medicine". We have already 
 remarked that it is dangerous to go to the Supreme Court of Massa- 
 chusetts for authority in this class of cases. 
 
 In Garst vs. Harris, the plaiatiff sold the defendant a quantity 
 of proprietary medicine under an agreement that the defendant should 
 not retail it below a stipulated price. The defendant violated the 
 covenant and the plaintiff sued him for damages and recovered. The 
 Court said the contract vPas not void as in restraint of trade. Massa- 
 chusetts has since made known its public policy in such matters. That 
 is one phase of Garst vs. Harris. But in Garst vs. Lyon (1901) 179 
 Mass. 588 this same Julius Garst went back to the Supreme Court to 
 obtain a different sort of relief. His "phenyo Coffein" was made from 
 a sectet formula. He sold it under a trade mark registered in the 
 patent office of the United States, and in the office of the Secretory of 
 the Commonwealth of Massachusetts. This certainly was a deliberate 
 attempt on the part of Garst to so change his form and being that 
 every man who came in contact with him would say: "Here is a 
 czar." Having done thus Garst sold some of his stuff bearing the 
 trade mark so registered, and the defendant bought some of it from 
 some "licensee" and was selling it at a cut price. 
 
 The plaintiff charged that the defendant had "fraudulently" 
 bought it, and he prayed for an injunction to restrain a sale of it. 
 Of course it was only by making use of the epithet "fraudulently" 
 
222 RESTRICTION ON RESALE OP PATENTED ARTICLE. 
 
 that the plaintiff could get up enough steam to start. There is no rea- 
 son why he. should not have gone into the Federal court after having: 
 substituted for the word "fraudulently" the phrase "in infringement 
 of your orator's trade mark". In the year 1901, he would have found 
 very strong analagous authorities. But the Court said it could not 
 attach any importance to the ugly adverb. The defendant had bought, 
 and paid for the medicine, and it was his. Said the Court: "The 
 plaintiff has contracts from his vendees in regard to which they will 
 sell if they sell at all. If they sell in violation of their contracts with 
 the plaintiff he has a remedy against them to recover damages (cit- 
 ing the earlier case of Julius)-. This right is founded on the personal 
 contract alone, and it can be enforced only against the contracting 
 party. To say that this contract is attached to the property and fol- 
 lows it through successive sales which severally pass title is a very 
 different proposition. "We know of no authority nor of any souni 
 principle which will justify us in so holding. ' ' 
 
 Then the Court made this remark: "The plaititiff's trade mark, 
 does not give him the rights of a patentee in property manufactured 
 under a patent." But that is not saying that Ihe plaintiff would have 
 prevailed had the article sold been patented. The plaintiff had cited 
 to the Court the two Dickerson cases that we have already struggled 
 with and the Court took this, way of not entangling itself in these 
 cases. 
 
 Besides it is unfair to seize upon a mere aside remark as the gist 
 of a decision. It is like holding a stop watch on a thoroughbred after' 
 the animal has broken the world's record and is slowing down. It is 
 not often that the Supreme Court of Massachusetts gets far away from 
 the ' ' essential nature of things. ' ' 
 
 "We must now finish up with this opinion. "We pass over what is 
 said on page 735, in view of the authorities relied on. On page 736 
 we have this: "The condition against sales to retail dealers who do- 
 not sign a similar agreement governing sa.les by them was imposed by 
 
NATIONAL PHONOGRAPH CO. VS. SCHLBGEL. 223" 
 
 complainant who was a mere licensee in the legitimate exercise of its 
 property right, in the monopoly (right to exclude) and for the pur- 
 pose of rendering it (right to exclude) valuable." 
 
 Then this is the state of affairs : In order to render valuable the- 
 right of the patentee to exclude others from making, using and sell- 
 ing without his consent, we must enable him also to exclude others 
 from using and selling what he has made and sold to them and for- 
 whieh they have paid him the full purchase price — ^the price named by 
 him as the maximum compensation for his labor and skill, the full, 
 royalty he demands for his property in a notion. ' ' Any sale by defen- 
 dants outside of the terms of their under license or contract was an 
 invasion of complainant's lawful monopoly" (right to exclude). We 
 quote this sentence only to mark the growth of language. Here we 
 have an "underlieense". Of course there must be then an "under- 
 lieensee". May all the saints help and watch over him. 
 
 In this case, we have a repetition of what is now familiar. A pur- 
 chaser of property, one who owns it and every part of it is a "licen- 
 see" or it may be only an "under licensee". He is an infringer. The 
 Court issued the terrible writ of injunction against the man for at- 
 tempting to sell his own property. We have already said that an in- 
 junction is the next thing to a sentence to be hanged. In one aspect 
 it might be worse. For if courts are going to persist in denying to a . 
 man the right to his own property, which he has bought with his 
 hard earned money and paid for and if the victim repeats the awful 
 offense of using and selling his own property, sending him to jail 
 for contempt for so doing; if they are going to keep him in jail until 
 he promises not again to use and sell his own property, then we say 
 hanging is preferable to being enjoined. 
 
 We conclude with a few sentences of the lower court. "In the 
 month of May last (the opinion is dated October 6th) I filed an opin- 
 ion herein, but subsequently granted a rehearing. I have given the 
 case on rehearing full consideration, having considered not only all. 
 
224 RESTRICTION ON RESALE OF PATENTED ARTICLE. 
 
 eases cited by counsel, but having given the question an independent 
 consideration, and for the second time present my views." Then on 
 627 the Court says: "Now, what has the patentee? The answer is 
 -the exclusive right to make, the exclusive right to sell the article cov- 
 ered by the patent." Hardly. The patentee, as patentee has only 
 the right to exclude. Notwithstanding this slip, the Court breaks 
 away from mere words and deals with things. Next we read: "No 
 one, as presented by the bill in this case, is seeking to interfere with 
 complainant in the making or using, and all that is complained of is 
 that complainant's exclusive right to sell is being interfered with. 
 When, and by whom? There is not the pretense in the bill that by 
 any act of the defendants are the nuttiber of sales lessened, or that 
 the price which complainant fixes is in any way cut down (black ours) . 
 All the phonographs covered by the Edison patents that the public 
 wants must come from and do come from complainant's warehouse. 
 (Now listen) and come from there at complainant's prices (black 
 ours) . But because defendants, in selling them as leaders, or for some 
 other reason, sell them at a less price than does complainant sell them 
 for, is the only reason for an injunction." There's the rub. 
 
 The Court gets warmer still. It quotes an antiquated assertion 
 of Mr. Justice Swayne's to this effect: "Patentees as a class are 
 public benefactors, and their rights should be protected. But the 
 public has rights also. The rights of both should be upheld and en- 
 forced by an equally firm hand, whenever they come under .iudicial 
 ■decision. ' ' What can that mean 1 
 
 Then we have for once a correct statement of the Cotton Tie 
 case, and this ground swell in conclusion: "I find no authority, and 
 none has been cited by counsel, that, in my judgment sustains com- 
 plainant's contention; and, aside from the phases of the patent law 
 that have been argued, in my judgment, the contract in suit cannot 
 be the basis of an action at either law or in equity, and it likewise is 
 my judgment that the contract cannot be upheld, even though the 
 
INGERSOLL VS. SNELLENBERG. 225 
 
 articles of merchandise are covered by patents. The writ of Injunc- 
 tion will be denied and the bill dismissed." We know not how the 
 Court spent the time from "May last" to October 6, but we have 
 ample proof that it gave this case "an independent consideration." 
 
 The counsel for the defendant seems not to have entered an ap- 
 pearance in the appellate court. We do not wonder; after giving 
 all possible assistance to the plaintiff below, even then, the case was 
 lost. .He may well have concluded that there was no use for him to 
 appear on the appeal. 
 
 The contract cannot be upheld, patented articles or unpatented 
 articles. It violated the antitrust act of Iowa as clearly as any con- 
 tract could possibly do. 
 
 Reader, our audiograph case is now the law of the land from 
 the Rockies to the Mississippi and from North Dakota to Arkansas 
 What the Court has written, it has written. 
 
 Robert H. Ingersoll & Sro. vs. Snellenberg (1S06 E. D. Fa.) 
 147 Fed. 522. 
 
 This is a most interesting ease. It all turns about that dollar 
 watch, known to every boy. This is getting close to the ordinary citi- 
 zen. Only shoe men want a button fastening machine, the number 
 who are interested in Neostyles or riveting contrivances is small, graph- 
 ophones are "peculiarly adapted" to use only in Chicago flats, but not 
 so with a dollar watch. A dollar watch is in the same category with 
 pocket knives, fishing tackle and air guns. The Court is apt to find 
 its own household entangled by "infringing uses" when we get to 
 that. 
 
 More interesting still, in this case the dollar watch was advertised 
 tor 79 cents. At that price it is within easy reaching distance of all. 
 But then if one parts with the 79 cents only to become an "in- 
 fringer," it is better to spend the money for something more tnan 
 seventeen years old. 
 
226 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 THE FACTS 
 
 The facts here are very simple as in all these cases. The Water- 
 bury Clock Company owned the patent and made the watches ; it gave 
 Robert H. IngersoU & Bro. an exclusive license to sell the watches, and 
 itself did not sell them. IngersoU Bros, undoubtedly took counsel 
 from a thoughtful source. For they pasted on each box containing 
 a watch sold by them to the retail trade this notice : 
 
 "Yankee Watch. Nickel. Notice." 
 
 As manufacturers of the Yankee Watch under various United 
 States patents (there were just two) and trade marks owned and eon- 
 trolled exclusively by us (listen), which according to recent court de- 
 cisions establish our right and privilege to fix the retail price (black 
 ours) we do hereby fix such price at one dollar ($1.00) and we sell this 
 watch only on condition that the retail dealer will not sell it for less 
 than one dollar ($1.00). 
 
 The retail dealer acknowledges that the receipt and acceptance of 
 this watch shall be an assent to the above terms and an agreement 
 directly with the manufacturers to sell subject to the above fixed 
 price. ' ' 
 
 "Robert H. IngersoU & Bro., Manufacturers." 
 
 It is obvious at the outset that the firm of Robert H. IngersoU and 
 Bro., Manufacturers, do not always mark with requisite precision, 
 where the realm of fact leaves off and that of imagination begins. It 
 is asserted at least three times in that "Notice" that they manufac- 
 tured the watches; that was not the fact. It is asserted once that 
 they owned the patents ; that was not the fact. The Waterbury Clock 
 
INGERSOLL VS. SNELJ:.BNBERa. 227 
 
 Company owned the two patents and manufactured the watches. It 
 was the czar. 
 
 The defendants who owned a department store in Philadeiphia, 
 bought a quantity of the watches accompanied by the aforesaid 
 "Notice" and against the peace and dignity of all czars advertised the 
 same for sale at 79 cents. Why not? 
 
 No doubt they had advertised literally thousands of patented ar- 
 ticles at "cut prices" before, and sold the same and bought more and 
 sold those likewise. They owned the watches, just as The Fair owned 
 the graphophones, and the exception to the rule, that one can not 
 sell what one owns, had not become sufficiently known to the adver- 
 tising manager in Philadelphia. 
 
 IngersoU & Bro. and the Waterbury Clock Co., as complainants, 
 sued the department store proprietors for "infringement". It was 
 necessary for the Clock Company to be in court in order that the title 
 to the patents might be in issue. In the Eighth Circuit that seems 
 not to be the law. The Court held the defendants were not liable as 
 inMngers, because IngersoU and Bro. had no right or power to impose 
 the restriction. And this was put on the ground that they were only 
 licensees, and a licensee cannot impose such restrictions, but only the 
 patentee. Indeed, the Court intimates that the patentee might have 
 authorized the restriction and then the licensee could have imposed 
 the same validly. 
 
 This decision is directly counter to National Phonograph Co. vs. 
 Schlegel on that point, but that is far from stating that the decision 
 is defensible. 
 
 The result reached was correct, but the reasons assigned therefor 
 are a part of what has gone before. One sentence is enough to show 
 this. "The decisions that support the right of a patentee to impose re- 
 strictions upon the future sale or use of the patented article are based 
 upon his ownership of a monopoly and his consequent right to declare 
 
228 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 upon what terms he will admit the public to share in such ownership, 
 or to profit by the use of the article. ' ' 
 
 "We have here a new statement of what these decisions mean- 
 Let us look at it closer. May be we will find out after a while. We 
 are going to substitute for the word "monopoly" the phrase "right 
 to exclude others" and see how it works. 
 
 These decisions, then are based upon the patentee's "ownership 
 of a (right to exclude others) and his consequent right to declare upon 
 what terms he will admit the public to share in such ownership (of 
 the right to exclude others), or to profit by the use of the- article." 
 That is how it works. The Court follows the above sentence with this: 
 "This principle is now thoroughly established." Then with the other 
 decisions is collated the Bement case, but we are going to quit separat- 
 ing that case from the decisions of the lower courts until we come to 
 consider the decision apart. 
 
 We hope this principle is not thoroughly established. It is true 
 the lines have gone out through nearly all the land, but may be they 
 will be drawn in some day. At any rate there is going to be a change 
 in the affairs of men when the "principle is once thoroughly estab- 
 lished." 
 
 See what a narrow escape there was here. The Waterbury Clock 
 Company did not paste the notice on the box, nor authorize it done. 
 Had it done so; the watches would have cost the department store 
 just the same; it would have sold them to the same customers. The 
 people's money would have paid tribute to the same patentee. The 
 watches belonged to the defendants in the same right that the coun- 
 ters and shelving, the ginghams and domestics and the thousands of 
 other articles in the store belonged to them. They had paid for the 
 watches, and may be were paying interest on the money invested in 
 them. Certainly they were paying taxes, insurance premiums, and 
 clerk hire in order to own and sell the watches. These patentees seem 
 to have an inverted ambition; instead of desiring to get rid of their 
 
NEW JERSEY PATENT CO. VS. SCHAEFER. 229 
 
 product, they want to prevent its being sold. "We had always supposed 
 that the only reason on earth for manufacturing articles in large num- 
 bers was to sell them at a profit. Here the manufacturer's profit on 
 the watches had already been realized, and whether the watches were 
 sold at 79 cents or one dollar, could not affect his profits in the slight- 
 est. If the department store had undertaken to give one to every boy 
 in Philadelphia, how would that have injured the complainant? The 
 boys thereby would have acquired the "watch habit", broke or lost 
 a large number and come back to purchase others. From what book 
 has this czar learned his industrial science ? 
 
 The boys in Philadelphia had a narrow escape indeed. Had the 
 name on that box been that of the Clock Company, every boy that 
 could read, purchasing one of those watches at 79 cents would have 
 been an "infringer" and subject to suit therefor. For in the Victor 
 
 r, 
 
 Talking Machine case, we are told that "unless the quality of inno- 
 cence intervenes the title of the purchaser is no better than that of 
 the seller." What a time the Marshal would have had to bring in 
 that flock of "infringers"! And they would not be joint, but separ- 
 ate "infringers", each demanding a separate trial. "When the Court 
 got through with that case, in its mind at least, "the principle would 
 be thoroughly established". 
 
 Eeader, this is not the essential nature of things; it is only the 
 superficial aspect of words. 
 
 New Jersey Patent Co. vs. Schaefer (0. C. E. D. Pa. 1907) 144 
 Fed. 437; S. C. (Final Hearing), 159 Fed. 171. 
 
 Here we come back to the phonograph again. "We much prefer 
 the dollar watch, sold at 79 cents, but in the order that is marked out 
 for us, it is now our duty to consider an "infringing" sale of a phono- 
 graph record at less than the "licensed" price of 35 cents. "We are 
 confident that the "Constitutional lawyer" put one over on the Court 
 
230 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 in this instance. Watch the facts. There were two complainants. 
 The New Jersey Patent Company owned the patents. The National 
 Phonograph Company was an exclusive licensee to manufacture, use 
 and sell throughout the United States. Both were New Jersey Cor- 
 porations. It is usually so. Some of these days New Jersey is going 
 to get a patent on a corporation and then the other states in that busi- 
 ness will be only "licensees". Here the "Notice" and "Jobber's" and 
 "Retailer's" agreement are in the usual form, just as we found them 
 in the Victor Talking Machine case. 
 
 But here's the trouble. The National Phonograph Company, the 
 licensee, sold the records; it executed the agreements and affixed the 
 notices. We are fresh from the consideration of a case by this Court, 
 where it was held that a licensee could not do that sort of thing. Now 
 we swing back to the rule announced in the 8th Circuit. It is true 
 the New Jersey Patent Company is stalked in here as owner of the 
 Patent, but it had no more to do with selling the records and signing 
 up the agreements pertaining thereto than the wooden Indian stand- 
 ing in front of a cigar store. The licensees made the contracts, sold 
 the records and were back of the notices. The defendant was held 
 to be an "infringer" because he had broken a contract executed by 
 the licensee only, not by the owner of the patent. The owner of the 
 patent could not maintain the suit, because it was not a party to 
 the contract. The licensee could not maintain an infringement suit 
 unless we are to ignore all rules as to jurisdiction. It is just as if we 
 should say that one infant without the appointment of a next friend 
 cannot maintain a suit, but two acting jointly can. That is the first 
 novel point in this case. The Court had no jurisdiction whatever. 
 The defendant had bought the records and paid for them and owned 
 them and had an inalienable right to do with them as he pleased. 
 
 There are two opinions ; the one reported in 144 Fed. 437, contains 
 nothing we can get a grip on. A few sentences from the later opin- 
 ion in 159 Fed. will suffice. Near the bottom of page 173, the Court 
 
NEW JERSEY PATENT CO. VS. SCHAEFBR. 231 
 
 says : ' ' The patentee has an exclusive monopoly of the right to manu- 
 facture, use and sell the patented article." We deny it. The expres- 
 sion "exclusive monopoly" is entirely unthinkable. It corresponds to 
 nothing conceivable by the mind of man. "Monopoly" means nothing 
 but a sole or exclusive right. How can a man have an exclusively ex- 
 clusive right? This is like attempting to add to the roundness of a 
 circle. The patentee as patentee has no right to manufacture, use or 
 sell. The man who got the patent had those rights before he applied 
 for his patent and will have those rights seventy years after the patent 
 hns expired. 
 
 The patent grants only the right to exclude others from making, 
 using and selling. That is all it grants. If in the above sentence we 
 substitute for the word "monopoly" the legitmate phrase "right to 
 exclude others" that sentence becomes meaningless. "These 
 substantive rights to manufacture, use and sell may be granted to- 
 gether or separately and subject to such restrictions in each case as 
 the patentee may see fit to impose." That's true; but the patent law 
 has no more to do with these substantive rights than the law of the 
 Medes and Persians. They are "natural rights". They change not 
 by granting or denying of a patent. But the insubstantive, incor- 
 poreal right granted by the patent, to exclude others, cannot be split . 
 into three parts and separately assigned. "We pointed that out in con- 
 nection with Gayler vs. Wilder sometime ago. 
 
 Finally the Court says: "He (the patentee) may limit the mini- 
 mum price at which his licensee may sell at retail to the public, and a 
 violation of the license by the latter is an infringement. ' ' In the first 
 place the patentee here had not made any attempt whatever to limit 
 anything; he had given the National Phonograph Company an exclu- 
 sive license, to make, use and sell. In the second place, the defendant 
 was not a "licensee" but a purchaser and owner of the records. In 
 the third place, a patentee has no more right to limit the minimum 
 
232 HESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 price at which a purchaser from him of an article shall sell the same, 
 than a farmer who sells his grain to a commission merchant has a 
 right to limit the minimum price at which the latter will resell the 
 grain to a miller. The two rights are precisely co-extensive and abso- 
 lutely identical. In the fourth place, a violator of the "license" 
 which we call an ordinary contract in restraint of trade is not an "in- 
 fringer" under the patent law, although he and the patentee are both 
 "infringers" under the antitrust act. Pennsylvania has no antitrust 
 statute, but the Supreme Court of that state knows what a contract in 
 restraint of trade is. It also knows that patented articles are just 
 like any other articles, although its exposition of why that is so is sub- 
 ject to emendation. 
 
 See the great case of Commonwealth vs. Central D. and P. Tele- 
 phone Co. (1891), 145 Pa. St. 121. 
 
 In that case the Court dealt thus with the "Constitutional law- 
 yer " : " The trouble with this rule is that it overlooks the distinction 
 between the incorporeal right secured by letters patent, and the tan- 
 gible commodity or finished product which is its fruit. This finished 
 product, or fruit of the right secured by letters patent, is merchan- 
 dise, whether it takes the form of a patent reaper, a power printing 
 press, a fountain pen, a pencil sharpener, or an instrument called a 
 telephone. (Now we get it straight) If the manufacturer sells his 
 product, the right to use it is an implied term of the contract of sale. 
 If he leases it, the same is true, whether he sells or leases, he deals not 
 in a patent right, but in manufactured goods. The buyer or lessee gets 
 no right under the letters patent, except that which follows as a neces- 
 sary incident from his purchase or hiring, viz; the right to use the ar- 
 ticle bought or hired without other liability than that which his con- 
 tract provides for" (black type ours). 
 
 That is a pure diamond ; it will not perish. The judgment of the 
 judge who wrote those words indeed clothed him as a robe and a 
 diadem, and long may he be so clothed. That sort of performance 
 
NEW JERSEY PATENT CO. VS. SCHAEFER. 233 
 
 cannot be had for gold and the price of it is far beyond rubies. It 
 requires concentrated, persistent logical thinking, the value of which 
 is wholly inestimable in the coin of the realm. If the defendant in 
 this graphophone case by some paradoxical sort of procedure, only 
 could have sued out a writ of error to the Supreme Court of Penn- 
 sylvania ! 
 
 But to wind up this opinion. The Court generated some heat be- 
 cause of the fact that the defendant did not stick to the truth. We 
 Jiave already seen in what low estimation IngersoU & Bro. held that 
 rare quality. There, however, the Court passed over it. We are glad 
 the Court here pointed out to the defendant the error of his way 
 in departing from the truth, but in the particular instance we have it 
 not in us to cast at the defendant a stone. The defendant was in a 
 desperate plight. He was trying to keep and save what he had bought 
 and owned. The Court was bent on cornering him and taking it 
 from him and did even so. In this tough struggle what wonder is it 
 that the defendant strayed from the truth? It was not the truth, but 
 iis property that was the subject of the defendant's anxiety. The im- 
 portant truth, namely, that the defendant had bought the records and 
 paid for them, apparently was not disguised or glossed over with 
 fancy. After that decision and opinion the defendant might well have 
 said with Pilate : "What is truth?" 
 
 This is the last of the decisions of the character that we have 
 noted. The lower court in the Schlegel case and the upper court in 
 ihe case of Cortelyou vs. Johnson, balked at the monstrous result 
 sought to be attained, but for the rest the Courts, both trial and appel- 
 late, went the whole way with much snap and vim. In an old English 
 case, Birks vs. Trippett, 1 Wm. Saunders at 33, the Court said to 
 counsel: "What makes you labor so? The Court is of your opinion 
 and the matter is clear." We may say of all these cases, ex- 
 cept the two mentioned, that there was no occasion for coun- 
 sel for plaintiffs to labour. The Court was with them. In all 
 
234 RKSTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 these cases, reader, an inalienable right of the defendant wa& 
 sacrificed because of the supposed compulsion in the mistaken proposi- 
 tion that the patent grants to the patentee an exclusive right to make,, 
 use and sell his patented article. 
 
 Cortelyou vs. Johnson (1907), 207 U. S. 196, 
 
 We have already discussed this case as reported in the lower 
 courts (see supra p. 161). Of all the cases we have considered in thfr 
 preceding groups this one alone, so far as we have been able to search,, 
 found its way to the Supreme Court. It was taken there on a writ 
 of certiorari by the plaintiff who lost out below. We are truly thank- 
 ful it got there. Our deep regret is that the Heaton case was not taken, 
 there, but then it was not. We are out of the woods now, and back 
 in the same clear country where we journeyed with Bloomer vs. Mc- 
 Quewan, Adams vs. Burke and Keeler vs. Folding Bed Co. The opin- 
 ion in this case is ominous by reason of what is said, the manner in 
 which it is said and by what is not said. It contains no more than is^ 
 barely necessary to dispose of the issue. That's the customary method 
 of the Supreme Court. In Adams vs. Burke, Mr. Justice Miller said: 
 "The vast pecuniary results involved in such cases, as well as the pub- 
 lic interest, admonish us to proceed with care and to decide in each 
 ease no more than what is directly in issue." We will find that ruler 
 lived up to rigidly in this opinion. 
 
 The plaintiff had sued the defendant as a contributory "infring- 
 er" for selling ink to a purchaser of a patented neostyle in violation 
 of the terms of the "license" by which the purchaser was authorized 
 to use his neostyle. The upper court divided on the question: Two 
 members appear to have taken the view that the doctrine of the 
 Heaton ease was not applicable for the reason that the article fur- 
 nished was not "peculiarly" adapted to the infringing use; the other 
 member of the court took the opposite view, but all agreed that there 
 
CORTELYOU VS. JOHNSON IN THE SUPREME COURT. 235 
 
 was not sufficient proof that the defendant knew of the license. This 
 resulted in a decree for the defendant. Now if what we have al- 
 ready written thus fai^ is anything like sound, we would naturally ex- 
 pect the Supreme Court to decide that the defendant was not liable, 
 and that is exactly what it held. But in order to do that, it was not 
 necessary to do anything more than deal with the point as to no- 
 tice, provided the Court agreed with the majority of the judges below. 
 The Supreme Court did agree on that point. So all we have decided 
 in the case is that the proof did not sufficiently show that the de- 
 fendant had knowledge of the "infringing" use to which the ink was 
 put. But when we properly understood the opinion it is positively 
 luminous. 
 
 It is always helpful in attempting to understand the Court, first 
 to see what counsel argued before the Court. Fortunately the report 
 contains a summary of counsel 's brief for the plaintiff. In it we find 
 this : ' ' The question of notice to the defendant sifts down, in the last 
 analysis to the inquiry as to whether or not, under the proofs before 
 the Court, the defendant sold the ink with guilty intent, i. e., with 
 the intent that it be unlawfully used upon the licensed machines in 
 question. (Now listen.) Under such circumstances defendant^ need 
 not be shown to have made such a sale. The intent to do so is what 
 governs." Just thiak of that ! 
 
 A man has ink in his store. If he intends to sell it !'> one who 
 has purchased a neostyle from plaintiff under a "license," such inten- 
 tion per se and alone makes him an "infringer". That is the "Con- 
 stitutional lawyer," but he is out of his proper sphere now. Among 
 the authorities cited to sustain that remarkable proposition, the learned 
 counsel cited three cases with which. we are now on most intimate- 
 terms, namely: 
 
 Heaton Case, 
 
 Eupp vs. Elliot, and 
 
 The Rivet Case. 
 
Tie RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 The extract does not indicate that the Bement ease was cited, but 
 then the Heaton case was, and counsel no doubt, thought by citing 
 the latter he involved the rule in the former and that the Supreme 
 dourt would have a care to correctly apply its own decisions. It al- 
 ways takes such care and exemplified it here.It is exceedingly dif- 
 £cult to abridge the opinion in any particular. However, remembei*- 
 ing the issues contested below and the brief of counsel which we have 
 just noted, the following sentences from the statement of fact in the 
 opinion are highly interesting. 
 
 "This is a suit to restrain an alleged infringement of a patent 
 for the stencil duplicating machine known as the rotary neostyle. 
 There is no claim of any infringement by using or selling the patented 
 machine, but of an indirect infringement in the foUowiag manner," 
 (here follows a statement of facts in regard to the notice). 
 
 Then the Court states the ruling of the courts below, following 
 "those courts in using the language applicable to infringement cases. 
 The statement of facts concludes with this: "The majority (i. e., of 
 the judges of the court of appeals) were of the opinion that the doc- 
 trine of contributory infringement, which they conceded to exist, 
 should not be extended beyond those articles which are either parts 
 of a patented combination or device, or which are produced for the 
 sole purpose of being so used (Heaton case) and should not be ap- 
 plied to the staple articles of commerce. In that view of the case, 
 "the article supplied, being ink, a thing of common use, its sale to a pur- 
 chaser of the Neostyle machine would be no infringement." 
 
 Let us pause now for just a moment before we go into the law 
 of the case. The court of appeals had divided articles into three 
 ■classes 
 
 1. Articles — parts of a patented combination or device. 
 
 2. Articles — which are produced for the sole purpose of being so 
 Tised (i. e. in or with a patented device). 
 
 3. Articles — staple articles of commerce. 
 
CORTELYOU VS. JOHNSON IN THE SUPREME COURT. 237 
 
 The court of appeals held that one who furnished the first or sec- 
 ond class of articles was a contributory infringer, but not so one who 
 furnished a "staple article of commerce". 
 
 It is obvious that the second classification based on the fact that, 
 the articles were produced for the sole purpose of being used in or in 
 connection with a patented device, is no classification at all. 
 
 How can we know that such article has not a hundred other uses? 
 In the Heaton case, the patent described the staple as an "ordinary 
 staple ' '. The peculiar size and shape of staple may have been in use 
 in other machines, unpatented. Men may have been clinching them by 
 hand or with a hammer and iron. The sole and only test is this: 
 Does the article, whether patented or unpatented, when furnished and 
 used, together with other elements, constitute the novel thing dis- 
 covered by the inventor and claimed in his patent? If so, the man 
 who used the combination so put together is an infringer, regardless 
 of his knowledge or ignorance of the patent. One who furnished the 
 element with the knowledge (not that the purchaser in purchasing it 
 violated a contract, but) that it was intended to be used to constitute 
 an element, a part in a patented combination, is a contributory in- 
 fringer. This, for the reason that he has consciously co-operated and 
 taken part in making or in making and using, the thing discovered 
 by the inventor and patented. It is not difficult to fancy that a sar- 
 donic grin spread over the face of the justice writing that opinion as 
 he set forth the views of the court below. 
 
 Counsel has brought a case of "contributory infringement," he 
 has argued at length the effect of at least three of the cases we have 
 considered. The Supreme Court has found it necessary to consider 
 only the point as to notice, but before it gets to that it restates the case 
 tried out below and throws out "some strange hints on the essential 
 nature of things. 
 
 "While in Bement vs. National Harrow Company, this court held, 
 
23S RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 in respect to patent rights (black ours) that with few exceptions, 
 'Any conditions which are not in their very nature illegal 
 with regard to this kind of property (viz. patent rights) im- 
 posed by the patentee and agreed to by the licensee for the 
 right to manufacture or use or sell the article, will be upheld 
 by the courts, ' 
 it is unnecessary to consider (now comes Johnson vs. Cortelyou) how 
 far a stipulation in a contract between the owner of a patent right 
 {black ours) and the purchaser (not a licensee) from him of a machine 
 manufactured under that right, that it should be used only in a cer- 
 tain way, will sustain an action in favor of the vendor against the pur- 
 chaser in case of a breach of that stipulation." ( Where is the con- 
 tributory infringement there?) 
 
 Next, the so-called contract itself is given a terrible under-hand 
 thrust. The opinion continues: 
 "So, although 
 
 'if one maliciously interferes in a contract between two par- 
 ties, and induces one of them to break that contract to the in- 
 jury of the other, the party injured can maintain an action 
 against the wrongdoer: Angle vs. Chicago, St. Paul Railway, 
 151U. S. 1, 13,' 
 it is also unnecessary to determine whether this states the full measure 
 of liability resting upon a party interfering and inducing the breaking 
 of a contract (and it is unnecessary to so determine), for we concur in 
 the view, that there is no sufficient evidence of notice." 
 
 It is not within the scope of our duty to attempt to state whether 
 or not the passage quoted states the "full measure of such liability," 
 but it may be stated with the utmost confidence that unless there is a 
 valid and binding contract, there is nothing on which to predicate 
 malicious interference by a third party; there is no bond, breach of 
 Tvrhich, the third party may induce. Interference means that a third 
 
CORTELYOU VS. JOHNSON IN THE SUPREME COURT, 239 
 
 party comes between two others who are together. Breach implies 
 -something to break. 
 
 But in the Neostyle cases, in the Rivet case, in the Eupp case and 
 in the Heaton case, there was 'no contract. The plaintiffs in all those 
 ■cases did not undertake to supply the thing which the courts permit- 
 ted them to monopolize. In the Heaton case, the patentee did not 
 ■agree to supply a single staple at any price. In the Neostyle cases, the 
 patentee did not undertake to supply a sheet of paper or an ounce 
 of ink. In the Eupp and Rivet cases there was no agreement to 
 supply staple wire and rivets. In all of these cases, if the plaintiff 
 had declined to furnish the article in question, or had gone into bank- 
 ruptcy, or quit the business entirely, the respective defendants could 
 not have maintained any sort of action against the respective plain- 
 tiffs. The plaintiffs had not agreed to furnish the thing used and of 
 course would not be liable for failure to do so. A contract is not 
 binding on either party unless it binds both; it must be mutually 
 obligatory, or it is a rope of sand. This is very ancient law. Some 
 time ago, in Dorsey vs. Packard (1851), 12 How. 126 at 136, the Court 
 «aid: "There is no allegation in the bill or proof that any clause was 
 tjmitted from this instrument, either through mistake or inadvertence. 
 It is signed by both parties in the presence of attesting witnesses; 
 and it is expressed in clear and precise terms. But there is one char- 
 acteristic necessary to give it validity as a binding contract in which 
 it is entirely deficient. It wants mutuality. It imposes no obliga- 
 tion on Dorsey whatever. He is not bound either to render services or 
 to pay money. ' ' therefore, the contract was held to be a nude pact. 
 
 In none of the cases we have considered was Dorsey bound. 
 
 The foregoing extract constituted the only proposition of law 
 hinted at by the Supreme Court. It does not mention the Heaton case 
 or any similar. It does mention the Bement case, but only to rescue 
 at from bad company. The Court states the case at bar, as though it 
 
240 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 involved an alleged breach of an ordinary contract, and then excludes- 
 tne surmise that there could be anything to it in that aspect. 
 
 Then in conclusion the Court take this parting glance at " con- 
 tributory infringement", purchasers "licensed to use" and other sucli 
 matters discussed by counsel: "After reviewing all the minor (black 
 ours) considerations we see no sufficient reason for disagreeing with 
 the opinion of the Circuit Court of appeals in respect to the matter of 
 notice (black ours) and its decree is affirmed." 
 
 The "Constitutional lawyer" missed the point that time. We- 
 will show that he missed it again in the next case to be considered. 
 
 Bobbs-Merrill Co. vs. Straus (1908), 210 U. S. 33y- 
 
 S. C. (C. C. N. Y. 1905), 139 Fed. 155. 
 
 S. C. (C. C. A. 2nd Cir. 1906), 147 Fed. 155. 
 
 Header, this is the point where the light breaks. We have strug- 
 gled through darkness during the last several score of pages. It has- 
 been a tough wrestling. Every time that battlefield right, the right 
 of every man to his own property was put down, except in the 
 isolated instance of Johnson vs. Cortelyou, and there until the case gets- 
 in the Supreme Court, we feel as if the defendant was saved by a pure- 
 accident. 
 
 The Court of Appeals saved him, but only because of their find- 
 ing that the defendant did not know that the Neostyle owned by the 
 man to whom he sold his ink had attached to it a small plate indicat- 
 ing that the patentee desired also a monopoly of the supply of ink as 
 well as the supply of patented Neostyles. Two of the judges went fur- 
 ther, though hesitatingly, and expressed their unwillingness to deny 
 to the defendant the right to sell his ink, because they said the doc- 
 trine of the Heaton case should not be applied where the article was 
 a staple of commerce like ink. But it implies that if the machine or de- 
 vice owned by the purchaser has on it an inscribed plate or a notice- 
 
BOBBS-MERRILL CO. VS. STRAUS. 241 
 
 or printed label, one had better be careful how he supplies to that 
 owner such extraordinary articles as staple wire, staples, rivets and 
 sach like. "We repeat that Johnson had not much margin to go on 
 until the last heat was run before the Supreme Court. There he could 
 safely have assumed the heaviest handicap of "guilty knowledge" of 
 that skull and bones notice and then won out hands down. The 
 court below had no jurisdiction to try the defendant for his "guilty 
 knowledge" and, had the Court of Appeals given judgment against 
 the defendant, the Supreme Court of necessity would have reversed 
 the decree because of the lack of jurisdiction. Jurisdiction is power 
 to decide the controversy and where that power is lacking, there is no 
 nse to empty the dust box of vituperation on the head of the de- 
 fendant. 
 
 In the law of the land, it was written that the Circuit Court had 
 not the power to bind the defendant in judgment for the deed he had 
 done. 
 
 But now we go back to the old path where all is straight and clear. 
 "We go back'to Bloomer vs. McQuewan, to Adams vs. Burke ; to Hobble 
 -vs. Jennison and Keeler vs. The Folding Bed. Co. We go back not to at- 
 tend to facts similar to the facts there involved, but to consider the 
 principle underlying. This case of Bobbs-Merrill Co. vs. Straus had 
 to do with the copyright franchise, but, for reasons soon to be as- 
 serted, it is entirely apposite here. It is not meet to go into the com- 
 plicated facts there put in contest until we have indicated the neces- 
 aty for so doing. 
 
 Already we have instanced the practice of the courts in stating 
 that there are essential differences between the copyright franchise 
 and the patent right. No straining is required to gain assent to that. 
 But, back of all differences, there is a vital likeness, even an identity. 
 No ingenuity is needed to note minor differences, such as that books 
 and writings are the subjects of one grant and processes, machines and 
 devices are the subjects of the other; Many divergences are palpable 
 
242 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 in the respective statutes defining the rights and guarding against 
 their invasion. But back of all these differences, there is an elemental 
 similarity. Both are grants from the national government ; both are 
 franchises for limited periods only; both enhance temporarily the value 
 of a right, in the respective beneficiaries, that antedates the grants and 
 that exists in its original integrity after the grants have expired by 
 limitation. Both grants are property, consisting of incorporeal rights. 
 
 When we disregard all superfluous differences and reduce the 
 grants to their lowest terms, they are both fo\md to comprise only the 
 right to exclude others. 
 
 TJie patent franchise is summed up in the right to exclude others 
 from making, using and vending the thing patented. The copyright 
 franchise is summed up in the right to exclude others from multiply- 
 ing and vending the subject of the copyright. The right of the in- 
 ventor to make, use and sell the thing invented is not in any manner 
 affected by his securing a patent. The right of an author to .multiply 
 and vend copies of his writings remains the same before, during the 
 existence of the copyright, and after it has expired. This essential 
 predominant and identical characteristic of the two grants as an ex- 
 clusory franchise runs through all the decisions of the Supreme Court, 
 where the nature of either right is discussed. 
 
 Thus in Stevens vs. Gladding (1854:), 17 How. 447, the issue was 
 whether or not one who purchases at a sale under execution a copper 
 plate engraving containing the impress of a copyrighted map could 
 use the same and print and vend copies of the map without the con- 
 sent of the owner of the copyright. 
 
 The C!ourt held that the copyright did not pass by a sale of the 
 plate, and in discussing the nature of the copyright franchise as an 
 incorporeal right, the Court put the two rights in the same category. 
 Mr. Justice Curtis said: "There certainly would be great difSculty 
 in assenting to the proposition that patent (black ours) and copy- 
 rights held under the laws of the United States, are subject to seizure 
 
BOBBS-MERRILL CO. VS. STRAUS. 243 
 
 and sale on execution." Again — "these incorporeal rights do not exist 
 in any particular state or district; they are co-extensive with the 
 United States." Later in the opinion it is said: "And upon this 
 question of the annexation of the copyright to the plate it is to be ob- 
 served, first, that there is no necessary connection between them. They 
 are distinct subjects of property, each capable of existing, and being 
 owned and transferred, independent of the others." 
 
 In Ayer vs. Murray (1881), 105 U. S. 126, Mr. Justice Gray con- 
 sidered the point as to whether or not a patent right was subject 
 to seizure and sale on execution, and in declaring it was not, linked 
 the patent and copyright together, throughout the discussion. In stat- 
 ing the difficulty of allowing that the patent right could be so dealt 
 with, he quotes from Stevens vs. Gladding and uses the instance of the 
 copyright for illustration. 
 
 In Patterson vs. Kentucky (1878), 97 U. S. 501, Mr. Justice Har- 
 lan, speaking for the Court, defined the nature of the patent right. He 
 said in part: "The right of property in the physical substance is al- 
 together distinct from the right in the discovery itself. Just as the 
 property in the instruments or plate by which copies of a map are mul- 
 tiplied is distinct from the copyright of the map itself. (Citing Stev- 
 ens vs. Gladding, supra.) The right to sell the (patented) Aurora 
 oil was not derived from letters patent, but it existed and could have 
 been exercised before they were issued, unless it was prohibited by 
 valid local legislation. All which they primarily secure, is the exclu- 
 sive right in the discovery. That is an incorporeal right, or, in the lan- 
 guage of Lord Mansfield, in Miller vs. Taylor (4 Burr 2303) 'a prop- 
 erty in a notion having no corporeal, tangible substance. ' ' ' Now Mil- 
 ler vs. Taylor was notoriously a case pertaining to the copyright. 
 
 Finally, Mr. Justice Miller, in the case of In re Brosnahan (1881), 
 18 Fed. 62, in an opinion delivered on Circuit, made extensive use of 
 the privilege exercisable under the copyright franchise . to de- 
 fine the nature of the patent right. He summed up: "The sole ob- 
 
244 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 jeet and purpose of the laws wliiGh constitute the patent and the copy- 
 right system is to give to the author and the inventor a monopoly of 
 what he has written or discovered, that no one else shall make or 
 use or sell his writings or his invention without his permission ; and is 
 granted to him as 'the exclusive right ; not the abstract right, but the 
 right in him to the exclusion of everybody else. For illustration : An 
 author who had written or printed a book always had a right to do 
 so, and to make and sell as many copies as he pleased; and he can do 
 this though he takes out no copyright for his work. But, if he wishes 
 to have the benefit of the exclusive right to do this, he can get it 
 by securing a copyright. 
 
 All that he obtains, then, by his copyright, all that he asks for or 
 jieeds, and all it was designed to confer on him is to make the right 
 which he had already in common with everybody else, an exclusive 
 right in him — a monopoly in which no one else can share without his 
 permission. ' ' 
 
 Now he is dealing with the rights of a patentee here and concludes 
 the argument by citing as authority Patterson vs. Kentucky, in the 
 decision of which he participated and concurred. 
 
 This language which Mr. Justice Miller uses to. define the nature 
 of a copyright in a case involving the patenJ right only, is but an 
 expanded counterpart of Chief Justice Taney's analysis of the patent 
 right in the earlier case of Bloomer vs. McQuewan (1852), 14 How. 
 439. There the Chief Justice said : "The franchise which the patent 
 grants consists altogether in the right to exclude everyone from mak- 
 ing, using or vending the thing patented, without the permission of 
 ijhe patentee. This is all that he obtains by the patent." 
 
 In United States vs. American Bell Telephone Co. (1896), 167 U. S. 
 224^ Mr. Justice Brewer, having in mind the effect of the patent grant 
 on the inventor, uses language in substance identical with that which 
 we have just quoted from In re Brosnahan, concerning the resultant to 
 an author from the copyright. He said: "The only effect of it (the 
 
BOBBS-MERRILL CO. VS. STRAUS. 245 
 
 patent) was to restrain others from manufacturing and using that 
 which he (patentee) had invented. The patentee, so far as his per- 
 sonal use is concerned, received nothing which he did not have without 
 the patent. The purpose of the patent is to protect him in his monop- 
 oly, not to give him a use, which, save for the patent, he did not have 
 before, but only to separate to him an exclusive use." 
 
 Other similar passages are within easy reach, but enough has 
 been said. It is not necessary to pile up mountains of judicial learn- 
 ing to implant conviction of the soundness of such an obvious truism. 
 Our reason, however, for fortifying ourselves on this plain proposi- 
 tion by going to the undisputed source of authority appears in the 
 sequel. The two rights, then, in the final analysis and considered as 
 grants are identical in the character of the benefit conferred by the 
 sovereign. 
 
 The right to exclude is an ineffaceable mark, common to these 
 two franchises, and not found in any other franchise whatever. Bach 
 signifies the right to exclude; taken in the composite, both signify 
 nothing else. Searching for a rod that divines both, we find only this 
 right to exclude. In United States vs. American Bell Telephone Co., 
 167 U. S., the Court compared the patent for an invention with the 
 patent for land, and the wide difference is sensed by cursory inspec- 
 tion. In the case of a patent for land the government barters away 
 a thing of value which it owned. The patentee of the land 
 grant, gets title to the land and the right to exclude others, 
 but his right to exclude is a necessary concomitant to unrestricted 
 ownership and complete physical dominion of the subject matter. But 
 in the ease of the inventor or author the government has nothing to 
 barter away. The invention or the writing has been created and 
 brought forth by the applicant for the grant. In the forceful lan- 
 guage of Mr. Justice Willes in the case of Miller vs. Taylor (1769), 4 
 Burrow 2303 at 2338, it is "the fruit of his own cares and sweat". The 
 most that the- sovereign can and does do is to certify to the origin of 
 
246 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 the thing in said "cares and sweat" of the grantee, and then issue 
 a seventeen year prohibition against all false claimants who would ap- 
 propriate the results of the beneficiary's labor without his consent, and 
 if the certification for any reason turns out to have been a mistake, 
 the prohibition fails. 
 
 The grantee has the right to exclude, but not in virtue of the same 
 power that enables the land patentee to exclude. For the property 
 precious in the eyes of the inventor or author is as Lord Mansfield puts 
 it: "a notion, incorporeal and intangible". It is not subject to gross 
 dominion ; and on it hands may not be laid. It is a thought, an idea, 
 an excursus of the imagination. And the patent grant, like the copy- 
 right, gives the grantee dominion over "the fruit of his own sweat 
 and pains" by projecting a sweeping mandate into the realm of meta- 
 physics. 
 
 Infringement is grand larceny of a concept. An infringement 
 suit, whether of a patent or copy right imposes on a court the neces- 
 sity of weighing thoughts alleged to be equivalent, and in dispos- 
 ing of the issue the court, like the candle of the Almighty, searches 
 the innermost parts of man. A suitor who comes with a charge of in- 
 fringement, bears with him altogether the most mysterious and elusive 
 complaint that ever was lodged in the bosom of a court. He asks the 
 Court to put in captivity the mind of the defendant in so far as that 
 mind co-operates with the defendant's hands to create or handle the 
 tangible symbol of the suitor's thought. Infringement — a breaking 
 the close of the plaintiff's intellectual premises. It is indeed burglary 
 of the palace of creative thought. That is the unrivable core of in- 
 fringement. When unquestionably established, infringement ought to 
 be punished by the death penalty. For in what other manner can so- 
 ciety avenge itself for the theft of the noblest attribute of genius? 
 Oh, reader, ponder infringement, but do not infringe. 
 
 An attempt has been made very recently to put a badge on the 
 copyright, serving to distinguish it from the patent grant in the very 
 
BOBBS-MBRRILL CO. VS. STRAUS. 247 
 
 quality here asserted to be common to both. It was conceived that 
 at the common law, independent of the statute, an author had a 
 right to exclude others from multiplying and vending copies without 
 his consent. Much learning was brought to bear on the point and the 
 argument was fretted with resourceful ingenuity But the Supreme 
 Court declared that not to be the law of the land : that for the right 
 to exclude, the author must have a single eye to the statute The prop- 
 osition seems to be necessarily acceptable, see Globe Newspaper Co. 
 vs. Walker (1907), 210 U. S. 356. 
 
 This extended digression appeared necessary to enable us prop- 
 erly to understand and fittingly to use, the decision unaer specific con- 
 templation. The height we are trying to scale is this : what right and 
 power, if any, has a patentee, as patentee, under the patent laws, to 
 control the use or alienation of a patented article that he has made 
 and sold? In a general way we have asserted many times that there 
 is no such right or power, but we cannot point to a decision of the Su- 
 preme Court where the matter has been dealt with in the concrete 
 form that we encounter in the decisions of the lower courts . 
 
 The lawyers always want a decision on "all fours" with the case 
 at bar. Sometimes the "all fours" are there, but the loci of the sup- 
 port are unusual and unexpected; we look casually and see them not. 
 This gives rise to the impression that the case is held up by props not 
 adapted to the desired use. Knowing when the "all fours" are there, 
 and where they are, and pointing them out to the Court, is at once 
 the superlative duty and the grand prerogative of counsel. When his 
 vision fails him at that task the client is on a precipice. 
 
 Now we consider that as to the issue here in dispute we have a 
 <;ase on "all fours". It is one involving the copyright, but that cannot 
 minimize its compelling force; we have already had that out. The 
 copyright and the patent right consists in the right to exclude; a de- 
 cision that expounds the right of the owner of a copyright to con- 
 trol the use and future disposition of specimen copies that he h&s sold 
 
248 RESTRICTION ON RESALE OP PATENTED ARTICLiBS. 
 
 must apply to the instance of a patentee selling a patented article. To 
 hesitate as to that, we must discard the faculty of reasoning by anal- 
 ogy as useless and pernicious, and charge the Supreme Court with 
 adorning an idle counsel with pompous and hollow nomenclature. We 
 have no thought of doing either. The case is in point to our way of 
 thinking: it is on "all fours" with the patentee and his patented ar- 
 ticle; we propose to use the irrefragable props to plant firmly under 
 the thesis here erected. We invite attention now to the truly great 
 case of Bobbs-Merrill Co. vs. Straus. • 
 
 This case originated in a suit instituted in the Circuit Court for the 
 Southern District of New York. It was there tried out and lost to the 
 plaintiff. An appeal was taken to the court of appeals for the sec- 
 ond circuit, and again the plaintiff lost. But the plaintiff was obstin- 
 ate and stiff in error; it was determined to be convicted of a false 
 notion of the law by the highest tribunal in the land. 
 
 Verily it has its reward and we hope it is therewith content, for 
 the Supreme Court of the United States, unanimously, and as far as 
 we can discern without any effort beyond that incident to writing out 
 a few trite propositions of law, decided against it. Thrice successively 
 defeated the plaintiff's fitful fever ought to be over. 
 
 We will consider the report of these three decisions seriatim. This 
 order makes 139 Fed. 155 the first for attention. A brief statement 
 of the facts in the first instance will suffice for all three reviews. The 
 facts amounted to this : 
 
 Bobbs-Merrill Co., published a novel entitled "The Castaway" 
 which embodied the "cares and sweat" of one Hallie Erminie Rives. 
 We do not know either, the book or Hallie. The Court says nothing 
 of the latter and omits to quote from the former. 
 
 At any rate Bobbs-Merrill Co. took the requisite steps to secure a 
 right of copy in Hallie 's said book and secured it, because the Court 
 found the book was copyrighted. Before starting out to vend copies 
 
BOBBS-MERRILL CO. VS. STRAUS. 249 
 
 of the book Bobbs-Merrill Co. took counsel with its corporate self or 
 some one else and conceived and drew out this notice: 
 
 "The price of this book at retail is one dollar net. No 
 dealer is licensed to sell it at a less price, and a sale at a 
 less price will be treated as an infringement of the copy- 
 right. The Bobbs-MCerriU Co." 
 Each and every copy of "The Castaway," printed, published or 
 issued by complainant contained, at the time of such publication and 
 issue, printed upon the page of the book, immediately following the 
 title page, and just below the statutory claim of copyright, the above 
 notice. It was there in plain view of every person into whose hands, 
 should come this visible symbol of the thought of Hallie Erminie Rives. 
 Bobbs-Merrill Co. sold a large number of copies of said book, each 
 containing as a part of its interesting contents, the aforesaid notice 
 printed how and where, indicated. Tie facts reported clearly war- 
 rant the assumption that Bobbs-Merrill Co. when it sold the copies sold 
 them at the price acceptable to it and received the full sum it chose 
 to exact as compensation for the same, and made its own proper use 
 of the purchase money. There was no contract running between 
 Bobbs-Merrill Co. and the vendees of said copies, other than one to be 
 implied from the sale and delivery of the copies bearing the notice and 
 the receipt of the purchase money. The defendant conducted a de- 
 partment store (much like The Fair at Chicago) and purchased many 
 copies of the book at about 60c each. But it was not able to gSt an 
 adequate supply at this choice figure, so it purchased a small quantity 
 at the full retail price, thus averaging the load. Now the defendant, 
 invested with sufficient intelligence to possess and conduct a great 
 trading mart, knew of the existence of this notice in each and every 
 purchase, and be 'it understood that the defendant's knowledge was 
 not conjectural nor forcedly assumed by the Court, delivering itself 
 over to the fiction of constructive notice. The Court did not charge 
 the defendant with notice; it charged itself, and was as positive in 
 
•250 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 the concession of this knowledge, and with far more justification, as 
 Macbeth when he said, "If I stand here I saw it". 
 
 The defendant knew the whole course of the plaintiff's dealings 
 with this "Castaway", comprehended the purpose of the notice and 
 dared the consequences of its violation. "We dwell on this positive 
 element in the case because we do not purpose to leave room for ingen- 
 uity to attenuate the force of the final decision by declaring there was 
 no sufficint proof of notice as in the case of Johnson vs. Cortelyou. 
 
 Having so possessed itself of the copies the defendant then and 
 there advertised the same for sale to all who cared to purchase at 89 
 ■cents the copy. 
 
 Certainly Judge Baker, who wrote the opinion in the case of Vic- 
 tor Talking Machine Co. vs. The Pair, would say that here the ' ' qual- 
 ity of innocence did not intervene". 
 
 The Bobbs-Merrill Co. thereupon sued the defendant for infringe- 
 ment of its right of copy in said "Castaway" book. This was the 
 issue. In addition to this, the report of Circuit Court decision has 
 m.uch to do with other facts not now pertinent. The defendant al- 
 leged the plaintiff was a member of the book trust, that the combina- 
 tion was illegal and many other similar averments were lodged, all 
 of which may have been true. These matters are of great importance 
 •considered apart, and in the proper place they will be, but for the 
 present we desire entirely to ignore them. Neither the court of ap- 
 peals nor the Supreme Court dealt with them, but disposed of the case 
 solely on the issue of infringement or no infringement. 
 
 It is to be noted that the case cannot be distinguished on the facts 
 from Johnson vs. Cortelyou, except in two particulars. This case is 
 •one of copyright; that one pf patent right. In that case there was 
 no sufSlcient proof of notice; in this there was indisputable proof of 
 notice. That case was lost apparently because there was not suf- 
 rficient proof of notice, but not in fact so lost. This case was lost in 
 spite of the fullest proof of notice. 
 
BOBBS-MERRILL CO. VS. STRAUS. 251 
 
 The same judge tried both eases at Circuit, wrote an elaborate 
 -opinion in each case and came to conclusions in the one case destruc- 
 tive of the result arrived at in the other. 
 
 In the second case he acted the part of Hamlet : he struck 
 through the arras and killed the wax Polonius, he had known so well, 
 without knowing what he had done, and when the curtain is pulled 
 -aside, as it will be, so that he may see the result of his unpremedi- 
 tated slaughter, we have no doubt he will exclaim and rejoice as did 
 JIamlet. 
 
 Of all the deadly contradictions that we have ever read in a law 
 book, that contained in 139 Federal Reporter from the bottom of page 
 178 to the middle of page 182, is the most astounding, and it was 
 drawn apparently without any consciousness that there was any con- 
 tradiction whatever. 
 
 At the bottom of page 178, we read this : 
 
 "Is such notice (as was contained in the copies of the "Cast- 
 .away") in such books sufficiently explicit in its terms to constitute a 
 license agreement or contract, or any restriction or a modification 
 of the absolute title thereto in the defendant ? It does not purport to 
 reserve to the complainant any interest in the book, or any right to 
 control it, or the action of the owner in his use and disposition of it 
 except by possible inference." (Black ours.) Now near the bottom of 
 page 181, after quoting the statute as to infringements of copyrights, 
 the Court continues: 
 
 "From this it would appear that an infringement by the sale of 
 a copyrighted book consists in selling or exposing for sale (of) a copy 
 of such book that has been unlawfully printed or imported. 
 
 "If this be the law, it is not an infringement of a copyright to 
 sell or expose for sale a copy or copies of said book, when the same was 
 lawfully printed or lawfully imported. The result would be that it 
 is not an infringement of the copyright of a book to sell a copy or 
 copies thereof lawfully printed, as in this case, in violation of a mere 
 
252 RESTklCTION ON RESALE OF PATENTED ARTICLES. 
 
 condition imposed upon a dealer by the publisher, by which said dealer 
 agrees not to sell below a certain price ; the title to the book having been. 
 vested in such dealer by the publisher thereof or even in cases where 
 the title had not passed to the dealer. If the publisher of the book, 
 being the proprietor of the copyright, parts with the title of such 
 booli, eithur a copy or a single number, and received his pay therefor, 
 he has voluntarily parted with alj. control over that or those particu- 
 lar books. The owner of those books is neither a licenstee nor an 
 agent. He has the absolute property therein and the absolute owner- 
 ship of an article of personal property carries with it the right to 
 give away or sell for such consideration as the owner sees fit to impose, 
 prescribe or demand so long as he violates no law." (Black ours.) 
 
 After quoting a text writer, the Court goes on p. 182 : ^ 
 
 "We find no suggestion that it is an infringement of the copyright 
 of a book for the owner of the book to sell copies at a price which 
 violates a valid contract between the publisher of the book and the 
 dealer, and which was made ' at the time such dealer became the 
 owner. ' ' ' 
 
 At the end of the first full paragraph, on page 184, the Court 
 states: "A person cannot be both licensee and absolute owner." 
 
 Every proposition in the foregoing extracts, without any excep- 
 tion, applies with equal force to the sale of a patented article by a pat- 
 entee. If we substitute for "owner of the copyright," the phrase 
 "owner of the patent right" and for "book", "patented article", the 
 assertions are equally sound. Not a one can be disputed. The Court 
 cites its own decision in the Neostyle case as an authority and then 
 turns right about and wipes that decision out. It cites the Heaton 
 case, the phonograph and graphophone decisions, only to contradict 
 and relute every proposition of law asserted in those decisions. And 
 yet all these decisions are relied on as authorities ! 
 
 In the Neostyle case, a purchaser who paid the full purchase price 
 
BOBBS-MBRRILL CO. VS. STRAUS. 253 
 
 ■of $50 for a patented device is a mere licensee. In this case: "A 
 person cannot be both licensee and absolute owner." And the Neo- 
 •style case is an authority for the book case ! 
 
 This object is jet black: that one is perfectly white, therefore, 
 they are of one and the same color. 
 
 The Court, not content with this absolutely fatal contradiction, 
 pushes inconsistency to an exalted state by discussing and quoting 
 from Keeler vs. Folding Bed Co. and Mitchell vs. Hawley. Finally, on 
 page 188, the Court completes the circle, not only in argument, but 
 in express language : "The purchaser of an article made under a pat- 
 ient right, may not duplicate it, but he may use the article purchased 
 and sell the same as his own in any way or for any price he sees fit" 
 (black ours). Once more, and finally, "The owner of an article made 
 under a patent right or of a book printed under a copyright is in no 
 .sense a licensee of the patentee or of the owner of the copyright. With 
 reference to personal property license implies and carries the power 
 to do some act upon or in reference to, or to do something with, the 
 property of another." (Black ours.) 
 
 Language fails us here. How these passages could occur in the 
 same opinion as the quotations from and citations of the Heaton case, 
 the phonograph cases and all similar ones, we shall never be able to 
 understand. We attempt no explanation whatever. 
 
 147 Fed. 15. 
 
 The court of appeals deals with the case in an entirely different 
 manner, but does not itself escape falling into glaring inconsistences. 
 'The opinion is compact and loaded with authorities. Little time and 
 space is required to get over it. 
 
 It is to be remembered that this court of appeals in the case of 
 Cortelyou vs. Lowe, 111 Fed. 1005, swallowed the doctrine of the Hea- 
 ton case at one fell gulp. It said, "We entirely agree with the opin- 
 
254 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 ion in that case, and think the decision should control the case at. 
 bar." In the Heaton case the proposition is this: "The buyer of the- 
 (patented machine) undoubtedly obtains title to the materials embody- 
 ing the invention subject to a reverter in case of a violation of the 
 conditions of the sale. But, as to the right to use the invention, it. 
 is obviously a mere licensee. ' ' 
 
 This is the resplendent and glossy tinsel this Court branded as. 
 real, although it squirmed and twisted away from it in Johnson vs. 
 Cortelyou. Now let us see where it is going to stand here. At p. 22 
 we come to this : "If the statutory owner desires after publication! 
 to control the lawfully published copies, such control can only be se- 
 cured by means of positive contract or conditions, so accepted by the 
 party to be charged or so brought to his knowledge that it would be 
 inequitable to permit him to violate them. But while his right might 
 be protected at law or enforced by a court of equity, it is not a stat- 
 utory right, but a common law right attached generally to the owner- 
 ship of all species of property" (black ours). Citing Keeler vs. Fold-^ 
 ing Bed Co. (patented article) ! 
 
 Now the rules announced respectively in the Heaton case and 
 Keeler vs. Folding Bed Co. are mutually repellant and completely con- 
 tradictory. The Heaton case is not mentioned once, nor that of Cor- 
 telyou vs. Lowe, although the Heaton case was sufficient authority to- 
 justify the judicial confiscation of Lowe's property. It is evident 
 that all the cases heretofore discussed were placed before the Court 
 in argument. This is necessarily inferable because the circuit court 
 had discussed these cases and counsel confidently inserts them in his 
 brief filed in the Supreme Court. 
 
 "We think the explanation is to be found in the fact that the 
 Court's innate and rugged sense of justice had induced it entirely to 
 repudiate the preposterous and brutal doctrine of those cases, but the- 
 
BOBBS-MERRILL CO. VS. STRAUS. 255 
 
 Court had not clearly worked out and precisely apprehended the fal- 
 lacy underlying. 
 
 This seems inferable from such language as this: "It is un- 
 necessary to express any opinion as to the scope of such attempted re- 
 strictions in the case of patented articles. (Now listen.) It may b& 
 said generally, however, that there is such a distinction between rights, 
 of copyright and patent rights that the decision of cases under one 
 class would not necessarily be controlling in the other class." Well,, 
 now we will listen for an exposition of the distinction with all our 
 ears. "The protection afforded by the patent law is broader in the 
 case of patents than in that of copyrights. " In what respect? "By a 
 grant of copyright the owner of the work acquires the exclusive right 
 of multiplication of copies; by the grant of a patent the patentee ac- 
 quires the exclusive right to make and use the thing patented. ' ' 
 
 Both statements are wrong and the Court had quoted Mr. Justice 
 Miller's language from the ease of In re Broshahan, which does away 
 with both assertions. 
 
 "The patent law protects the production and use of the creative 
 conception (black ours) reduced to practical shape in various forms: 
 the copyright law protects the publication of copies in the form or 
 substance of the particular creative conception (black ours) in which 
 it has been expressed by the author. ' ' 
 
 What is meant by "protects", "creative conception" and "the 
 substance of the particular creative conception"? 
 
 How can a "conception" be "reduced"? From what and to what? 
 The whole riddle is pushed aside thus : ' ' But in view of the conflict- 
 ing opinions of various judges as to the scope of the restrictions im- 
 posed by patentees upon the use of patented articles, we express, no 
 opinion upon this question." All the same the Court handled two 
 terrible opinions on "this question" when it touched upon Keeler vs. 
 Folding Bed Co. and In re Brosnahan. 
 
 Why not avoid all this confusion, avoid this excruciating incon- 
 
256 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 sisteney and obvious contradiction by following the Supreme Court? 
 That Court has made it plain to all who will attentively read its de- 
 cisions that the patent right and copyright consists altogether in a 
 bare naked right to exclude. It seems absurd to imagine that Con- 
 gress has power to grant the right to make and publish a book or 
 jnake and sell an article. Those are rights of the individual which 
 the government guarantees and protects but does not create. Those 
 rights are parts and parcels of the right of every man to enj^oy 
 "the fruit of his own cares and sweat". 
 
 In the two decisions here noticed the rights of the defendant in 
 his own property was not denied, but conserved and saved to him. We 
 are unable to understand how any other result can be justified by any 
 process of reasoning but the opposite result was declared and en- 
 forced in nearly all the other cases. Now we come to the last phase 
 of this case and to the authoritative exposition of the law, and the re- 
 sult announced here could not have been otherwise had the trans- 
 action involved the sale of patented articles instead of copyrighted 
 books. The owner of a copyright has the right to exclude others from 
 vending copies without his consent. The owner of a patent has the 
 right to exclude others from vending the patented article without his 
 consent. The extent of the right is the same in both cases. At the 
 jpoint where the copyright statute fails the owner of the copyright 
 to control a copy of the book, at the same point the patent law fails 
 the patentee to control the patented article. 
 
 < 
 210 U. S. 339. 
 
 ■ Manifestly the counsel for plaintiff had not lost faith in the au- 
 thorities that he had relied on with such confidence and sad disap- 
 pointment below : he brings all to the Supreme Court. The briefs of 
 both parties are summarized in the report and are interesting, par- 
 ticularly that for the plaintiff. The plaintiff relied on the patent cases 
 
BOBBS-MERRILL CO. VS. STRAUS. 257 
 
 throughout and, strange to say, the defendant impliedly conceded the 
 validity of those cases and sought to distinguish them from the case 
 involving the right of copy. 
 
 "We will copy extracts from the plaintiff's brief, for it contains 
 some deadly implications. 
 
 "Appellant claims the right to control the price under the pro- 
 vision of the statute which gives the owner of the copyright the "sole" 
 right of vending is in strict analogy to the right of the owner of a 
 patent to control the price of the patented article under the statutory 
 use of the same word. (Black ours.) The analogy is complete be- 
 tween the case at bar and those numerous patent cases wherein the 
 courts have upheld the right of patentees to impose restrictions upon 
 the sale of the patented article or its produets(!!) and to exercise a 
 certain control over the thing sold after the completion of the sale." 
 
 There can be no doubt about the existence of the analogy as-- 
 serted. 
 
 It is interesting to note the list of authorities cited for that propo- 
 sition and also to note how much those authorities have to do with the 
 disposition of the case. The authorities cited are: 
 "Phonograph Co. vs. Kaufmann 
 Edison Phonograph Co. vs. Pike 
 National Phonograph Co. vs. Schlegel 
 Heaton case 
 Cortelyou vs. Lowe 
 
 Victor Talking Machine Co. vs. The Fair." 
 Then this follows: "Numerous other cases might be cited. See 
 also Dickerson vs. Tinling, 84 Fed. 192 
 
 Dickerson vs. Matheson. 57 Fed. 524." 
 
 The learned counsel evidently appreciated that he had not cited to 
 
 the foregoing proposition any decision of the Supreme Court, so he 
 
 framed up another proposition in support of which he felt confident of 
 
 his right to invoke prior rulings of the Court. This meaningless gen- 
 
258 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 ■erality is asserted. "The power of the owner of the patent to limit 
 .price (of what?) has been expressly decided by this Court." Now ob- 
 serve the strange conglomerate of citation. 
 
 "Bement vs. National Harrow Co. 
 
 National Phonograph Co. vs. Pike 
 See also: , 
 
 Cortelyou vs. Johnson 
 
 Dick Co. vs. Roper, 126 Fed. 966 
 
 Brodrick Copygraph Co. vs. Roper 
 
 Cotton Tie Co. vs Simmons 
 
 Morgan Envelope Co. vs. Paper Co." 
 We will see that the Supreme Court always takes notice when its 
 own decisions are cited and relied on, and has a care that they shall 
 not be misapplied. It does not, however, assume the burden and in- 
 vidious task of pointing out errors in the decisions of lower courts ; 
 that would be endless. But it does stand guard above its own. "We 
 ■shall see that the Court clearly indicates the only use to which, the 
 three decisions of its own cited can be put. 
 
 The defendant cites only cases dealing with the copyright, and 
 •as to the patent cases pleads this confession and avoidance: 
 
 "Owing to differences, both in the theory (black ours) and the 
 letter (blapk ours) of the patent and copyright statutes, the patent 
 •cases relied upon by complainant are inapplicable to the question of 
 copyright here presented." What is meant by differences in "The 
 theory and letter" of the statutes. Are not these vague subterfuges 
 Jor indolent thinking? 
 
 We know what the "letter" of both statutes is. That of both 
 statutes can be read in five minutes. Now what is the "theory" of 
 the statutes and in what respect does the "theory" of one statute dif- 
 fer from the "theory" of the other? The power of Congress to enact 
 hoth. statutes is conferred in the same article, section and clause of the 
 -constitution. ' ' To promote the progress of science and the useful arts, 
 
BOBBS-MBRRILL CO. VS. STRAUS. 259 
 
 by securing for limited terms to authors and inventors the exclusive 
 right to their respective writings and discoveries." Here congress 
 is given the power to pass both statutes for the accomplishment of 
 the same identical object, "to promote progress in science and the 
 useful arts." Both statutes are to confer an exclusive right for lim- 
 ited terms. One statute concerns authors and protects writings; the 
 other concerns inventors and protects inventions. Authors and in- 
 ventors are alike men : Science and the useful arts embrace both writ- 
 ings and inventions. Where, then, is the difference in "theory"? 
 Surely we are not to posit a difference in "theory" on the fact that 
 the term of the copyright is larger than that of the patent; nor can 
 any difference be grounded on the fact that the copyright employs the 
 language, "multiply and vend", while the patent act instead contains 
 these words, "make, use and sell". Miiltiplying copies is certainly 
 not distinguishable from "making" copies. The term "use" has no 
 place in the copyright statute. How could one use a book or writing 
 without availing himself of a copy ? On the other hand the term fits 
 a patent for a process, and no other does, for obviously a process can- 
 not be made or sold. 
 
 We conclude that there is no ground whatever for predicating a 
 difference "in theory" between the patent and copyright statutes. 
 
 The opinion in this case was written by Mr. Justice Day, and he 
 goes over the case with the greatest ease and no apparent effort; af- 
 ter stating the facts, he says, p. 342 : 
 
 "Much of the argument on behalf of the appellant is based upon 
 the alleged analogy between the statutes of the United States secur- 
 ing patent rights to inventors and the copyright act securing rights and 
 privileges to authors and others, and this analogy, it is contended, 
 is so complete that decisions under the patent statutes in re- 
 spect to the rights claimed in this suit under the copyright act are 
 necessarily controlling." "In the main brief submitted by the learned 
 counsel for the appellant it is said : 
 
260 RESTRICTION ON RESALE OF PATENTED ARTICiLBS. 
 
 'All of the argument has been upon the assumption that 
 the very numerous decisions of the Circuit Courts and Circuit 
 Courts of Appeals, such as the Heaton case, the Victor Talk- 
 ing Machine case, and others along the same line, as well as 
 the Cotton Tie case in this court, upholding this restriction, 
 with reference to sales of patented Articles, express the law ; 
 and we have been especially confident that such must be the 
 case, for the reason that this court (in the Bement case) has 
 given its sanction to the broad doctrines laid down in' (the 
 Heaton case). 
 That is what the Court says learned counsel had asserted, and that pas- 
 sage the Court in its own way attends to during what follows. The 
 opinion continues: 
 
 "The present case involves rights under the copyright act. The 
 facts disclose a sale of books at wholesale by the owners of the copy^ 
 right, at a satisfactory price, and this without agreement between the 
 parties to such sale obligating the purchaser to control future sales, 
 and where the alleged right springs from the protection of the copy- 
 right alone. It is contended that this power to control further sales 
 is given by statute to the owner of the copyright in conferring the 
 sole right to 'vend' a copyrighted book." In those last two sen- 
 tences the Court accurately defines the precise question involved in 
 the case. 
 
 The Court then sets in first of all to defend its own decisions and 
 prevent a misconstruction of them. "A case such as the present one 
 concerning inventions, protected by letters patent of the United States, 
 has not been decided in this Court, so far as we are able to discover.'* 
 So much as a general repudiation of counsel's construction of the 
 Court's decisions. But then follows a specific restatement of the 
 plain meaning of all three decisions cited. Again it is explained that 
 the license inscription: "Licensed to use once only" had nothing to 
 do with the result in the Cotton Tie case. Again it is pointed out that 
 
BOBBS-MERRILL CO. VS. STRAUS. 261 
 
 the comment in the Morgan Envelope case "enforces the view that" 
 the Cotton Tie case "was one of infringement because of reconstruc- 
 tion of the patented device." This ought to be understood, in time, 
 with such emphatic explanations repeated. 
 
 Next the Bement case is put out and counsel is reminded that that 
 case was a suit in State court on a common law contract. How can it 
 be on "all fours" with a suit for inftingement in the Federal Court? 
 Finally, the Court touches upon its own very recent decision in the 
 case of Cortelyou vs. Johnson: "while the question as to the validity 
 of such license restriction was fully and ably argued b> uounsel, the 
 case went off upon the finding that notice of the license restriction 
 was not brought home to the defendant company." But it is not ir- 
 relevant to recall that in concluding the opinion in the case of Cortel- 
 you vs. Johnson, the Court referred to the validity of such "license re- 
 striction" and which was "fully and ably argued" as, "minor consid- 
 erations. ' ' 
 
 The opinion proceeds: "If we were to follow the course taken 
 in the argument, and discuss the rights of a patentee, under letters 
 patent, and then by analogy, apply the conclusions to copyrights we 
 might greatly embarrass the consideration of a case under letters pat- 
 ent, when one of that character shall be presented to this Court." 
 Exactly so, let each case stand on its particular statute. The czars are 
 not in court and there is no occasion to pass upon their rights in their 
 absence. It is said that art consists in concealing the art. We are 
 inclined to think that the aphorism is exemplified in the next sentence 
 of the Court. 
 
 "We may say in passing, disclaiming any intention to indicate 
 our views as to what would be the rights of parties in circumstances 
 similar to the present case under the patent laws, that there are dif- 
 ferences between the patent and copyright statutes in the extent of the 
 protection granted by them" (black ours). Counsel for the plaintiff 
 had asserted that there was a valid analogy between the statutes 
 
262 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 in respect to the control vested in the grantee over the tangible ar- 
 ticle. The Court does not even inferentially deny that. Counsel for 
 defendant had asserted a difference in the ' ' extent of the protection 
 granted". That is another sort of difference altogether. 
 
 The Court gets rid of several preliminary matters before coming 
 Unally to the merits. It reviews the copyright legislation and anal- 
 yzes the nature of the right of copy. In the course of this discus- 
 sion, we find this, p. 347 : ' ' While the nature of the property and the 
 protection intended to be given to the inventor (black ours) or author 
 as the reward of his genius or intellect in the production of his book 
 or work of art (black ours) is to be considered in construing the act 
 of Congress, it is evident that to secure the author the right to mul- 
 tiply copies of his work may be said to have been the main purpose 
 of the copyright statutes." 
 
 Here the Court links the copy and patent right in the same sen- 
 tence and as authority for the proposition asserted quotes from Steph- 
 ens vs. Cady and Millar vs. Taylor. This was the precise reasoning 
 and the very authorities employed by the Court in the great case of 
 Patterson vs. Kentucky in expounding the nature of the patent grant. 
 
 At the bottom of page 349 the Court finally takes up the merits 
 of the case and disposes of it without an effort. When one strives 
 he errs. There was no striving here. 
 
 "What does the statute mean in granting the sole right of vend- 
 ing the same (i. e. copy) ? Was it intended to create a right which 
 would permit the holder of the copyright to fasten by notice in a book 
 or upon one of the articles mentioned within the statutes, a restric- 
 tion upon the subsequent alienation of the subject matter of copyright 
 after the owner had parted with the title to one who had acquired 
 full dominion over it and had given a satisfactory price for it?" If 
 one will mentally substitute for "copyright" and "book" the terms 
 "patent right" and "patented article" in that sentence and those that 
 
BOBBS-MBRRILL CO. VS. STRAUS. 2.6S 
 
 follow no further doubt can be entertained upon the question we have> 
 so long debated. 
 
 "It is not denied that one who has sold a copyrighted article^ 
 without restriction, has parted with all right to control the sale of it. 
 The purchaser of a book, once sold by authority of the owner of the- 
 copy right may sell it again, although he could not publish a new edi- 
 tion of it. ' ' 
 
 Continuing, "The precise question, therefore, in this case is, doea. 
 the sole right to vend secure to the owner of the copyright, the rights 
 after a sale of the book to a purchaser, to restrict further sales of the- 
 book at retail, to the right to sell it at a certain price per copy, be- 
 cause of a notice in the book that a sale at a different price will b& 
 treated as an infringement, which notice has b6en brought home to. 
 one undertaking to sell for less than the named sum ? ' ' 
 
 It is to be observed that this is entirely analogous to the ques- 
 tion presented in the Heaton case, in the Neostyle ease, in the Victor- 
 Talking Machine case and in most of the phonograph cases. 
 
 "We do not think that the statute can be given such a construc- 
 tion, and it is to be remembered that this is purely a question of stat- 
 utory construction. There is no claim in this case of contract limita- 
 tion nor license agreement controlling subsequent sales of the book. 
 
 "In our view the copyright statutes, while protecting the owner- 
 of the copyright in his right to multiply and sell his production, do- 
 not create the right to impose, by notice, such as disclosed in this, 
 case, a limitation as to the price at which the book shall be sold at 
 retail by future purchasers, with whom there is no privity of contract. 
 This conclusion is reached in view of the language-of the statute, read in 
 the light of its main purpose to secure the right of multiplying copies, 
 of the work, a right which is the special creation of the statute. True, 
 the statute also secures, to make this right of publication effectual, the 
 sole right to vend copies of the book, the production of the author's 
 thought and conception (now listen i. The owner of the cop37right in 
 
•264 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 this case did sell copies of the book in quantities and at a price satis- 
 factory to it. It has exercised the right to vend (black ours). What 
 +he complainant contends for embraces not only the right to sell the 
 copies, but to qualify the title (black ours) of a future purchaser by 
 the reservation of the right to have the remedies of the statute against 
 an infringer because of the printed notice of its purpose so to do, un- 
 less the purchaser sells at a price fixed in the notice. To add to the 
 right of exclusive sale the authority to control all future retail sales, 
 by a notice that such sales must be made at a fixed sum would give a 
 right not included in the terms of the statute, and, in our view (no- 
 tice the repetition of "our view") extend its operation by construc- 
 tion, beyond its meaning, when interpreted with a view to ascertain- 
 ing the legislative intent in its enactment." 
 
 It was fortunate indeed for the plaintiff that the defendant had 
 not signed an agreement to maintain prices. The concluding lines of 
 the Court's opinion indicate clearly that in its view there was no oc- 
 casion to "examine into the validity of the publisher's agreements, al- 
 leged to be in violation of the acts to restrain combinations creating a 
 monopoly or directly tending to the restraint of trade." The valid- 
 ity of the contract was not in contest. Plaintiff was not seeking for 
 any relief under it, and defendant did not claim that it had been in- 
 jured bj"^ the combination. 
 
 Here at last we have the solution of the whole foolish question 
 without any straining whatever on the part of the Supreme Court. 
 Not one of the cases so confidently relied on by Counsel is even so 
 much as cited by the Court, except its own decisions and these are 
 ireferred to only to repudiate the erroneous interpretation placed upon 
 them by counsel. The difference in "theory" asserted by counsel for 
 the defendant to exist between the copyright and patent statutes does 
 not Beem to impress the Court, as it is passed over in silence. 
 
 This case was the second time that all of these deeisoins have been 
 held up before the Supreme Court in elaborate arguments. They were 
 
BOBBS-MERRILL CO. VS. STRAUS. 2C5 
 
 confidently relied on in the case of Cortelyou vs. Johnson, where the 
 Court labelled them ' ' minor considerations ' ' and hurled them out over 
 the transom. They were brought back in this case and the Court 
 passes them by in dumb silence. 
 
 In the case just succeeding, Seribner vs. Straus, the Court pre- 
 serves the same grim reticence, adding quietly that the court below 
 had no jurisdiction to try out the issue as to the agreement and 
 breach thereof. But this is not the end. In this same volume, 210 
 U. S. 405, Paper Bag Patent ease, learned counsel again carries all 
 these decisions back and in one huge conglomerate mass hurls them 
 in the face of the Court. All these decisions are by the Court crowded 
 in fine print and placed at the bottom of the page, 425. The Court 
 says nothing of them. But how the Court does clear the air with 
 respect to the nature of the patent right ! On page 423 we read this : 
 
 "It may be well, however, before considering what remedies a 
 patentee is entitled to, to consider what rights are conferred upon 
 him. The source of the rights is, of course, the law, and we are ad- 
 monished at the outset that we must look for ^he policy of statute, 
 not in matters outside of it — not to circumstances of expediency and 
 to supposed purposes not expressed by words. (In the patent law 
 nothing is said about contracts, licenses or conditional sales.) The 
 (patent) law is the execution of a policy having its first expression in 
 the constitution, and it may be supposed that all was deemed neces- 
 sary to accomplished and safeguard, it must have been studied and 
 provided for. (Now watch.) 
 
 It is worthy of note that all that has been deemed necessary for 
 that purpose, through the experience of years, has been to provide 
 for an exclusive right to inventors to make, use and vend their in- 
 ventions." That is indeed worthy of note. 
 
266 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 On page 424 the Court advances: "It (patent right) has, how- 
 ever, received explanation in a number of cases which bring out clear- 
 ly the services rendered by an inventor to the arts and sciences and 
 to the public. Those cases declare that he (patentee) receives nothing 
 from the law that he did not have before, and that the only effect of 
 the patent is to restrain others from manufacturing and using that 
 which he has invented" (black ours). Then the Court quotes from 
 some of its earlier deeisons and cites many others and in so doing,, 
 hands out this: "We cite them because there is something more 
 than the repetition of the same thought by so doing. ' ' "We should cer- 
 tainly think so, if the argument of counsel in all these cases was not 
 before us. 
 
 At the bottom of page 425, the Court quotes the famous paragraph 
 from the Heaton ease as to the right of non use, but at page 429 the 
 Court accurately defines what is meant. It says: "As to the sugges- 
 tion that competitors were excluded from the use of the new patent, 
 we answer that such exclusion may be said to have been the very es- 
 sence of the right conferred by the patent, as it is the privilege of any 
 owner of property to use or not to use it, without question of mo- 
 tive" (black ours). 
 
 The Court makes no distinction between patented and unpatented 
 property, and it says nothing about the right of the owner of prop- 
 erty to contract or agree not to use it, or to suppress the use of it 
 pursuant to a scheme or combination to restrain trade. That's a dif- 
 ferent question. 
 
 The plaintiff here escaped by a hair's breadth. The Court said 
 th^re was no question of "a diminished supply or of increase of 
 price". It was shown that "the expense would have been consider- 
 able ' ' to use the new machine. Those were the considerations that 
 saved the plaintiff. 
 
 This caution is dropped in the last lines: "Whether, however, a 
 case cannot arise where, regarding the situation of the parties in view 
 
BOBBS-MERRILL CO. VS. STRAUS. 267' 
 
 of the public interest a court of equity might be justified in with- 
 holding relief by injunction, we do not decide." 
 
 Even then, Mr. Justice Harlan, who wrote the opinion in Patter- 
 son AS Kentucky, dissented. 
 
 The case of Bobbs-Merrill Co. vs. Straus is the supreme law of the 
 land. It puts an end to all the decisions we have been struggling 
 with It does away with the vicious rule that a vendor can sell per- 
 sonal property, use the purchase money and at the same time stop the- 
 purchaser from using or selling what he has bought. 
 
 The Supreme Court has never thought of promulgating such a re- 
 volutionary and confiscatory doctrine. It disposed of the Bobbs-Mer- 
 riLl case in the way it did because no other disposition was possible 
 or even conceivable. Let us try to imagine that the Court took the 
 other view and upheld the plaintiff's cohtentior ; then the defendant 
 was an infringer because it bought a book for a) out 60 cents, paid for 
 it and sold it at 89 cents. The principle is then established that ii 
 a purchaser of a copyright book or patented article does anything^ 
 with the thing purchased contrary to the wishes of the vendor, a& 
 expressed in a printed notice, accompanying the thing sold, he is an 
 infringer. Under such law the vendor can build up any sort of mon- 
 opoly on earth. He can compel the purchaser to have a special dis- 
 play of the book every day; to sell not less than ten nor more than 
 one hundred copies a day ; to sell only to customers who will read the 
 book entirely through, however stupid, and only read it once, however 
 absorbing, and if the purchaser violates any of these "restrictions" he 
 becomes thereby an infringer of the copyright ! 
 
 "What sort of presumption ever made it possible for counsel to 
 ai-gue such a point before the Supreme Court? Did he think those 
 great men had forgotten all previous decisions of the Court or was he 
 himself oblivous of them? Did he suppose that Mr. Justice Harlan 
 and the other members of the Court had forgotten what the former 
 had written in Patterson vs. Kentucky, or that any member of the 
 
■268 RESTRICTION ON RESALE OP PATENTED ARTICLES. 
 
 court was oblivious to what had been decided in the scores of other 
 cases, such as Bloomer vs. McQuewan, that we have discussed? It 
 would seem that one obvious preparation for an argument in the Su- 
 preme Court would be to read the decisions of that court on the mat- 
 ters relevant to the issue. 
 
 Eeader, the "Constitutional lawyer" is out of Lis sphere iu 
 the Supreme Court. He has not time to read its decisions. He is liv- 
 ing for the mighty things he has accomplished in the past. 
 
 Here were a large numiber of cases on "all fours" with the case 
 ■at bar, but the "all fours" did not reach to the ground, and, of 
 course would support nothing, much less a decision of the Supreme 
 Court which instantly becomes the law of the land, affecting the 
 fights of every man, woman and child in the nation. 
 
 The blood right, that battlefield trophy is safe. The Supreme 
 Court always guards that. 
 
 Jn the early case of Chisholm vs. Georgia, (1793), 2 Dall.. at 
 454. Mr. Justice Wilson said: "In an instrument well drawn, as in 
 a poem well composed, silence is sometimes most expressive." 
 
 The reader should bear this in mind in taking up Cortelyou vs. 
 Johnson, and Bobbs-Merrill Co. vs. Straus. To thoroughly appreciate 
 these decisions one must have an ear for grace notes, a tact for omis- 
 sions, an understanding that can complete the circle from the arc 
 given. 
 
 SUMMARY OP THE TWO GROUPS OP CASES PRECEDING. 
 
 If we stop for a short time to consider what we have accomplished 
 in this long drawn out analysis of these eases, we see at once it is 
 nothing. We have not learned any law but merely unlearned some- 
 thing that was not law. But as we have said that is the peculiar na- 
 ture of all error. By discovering the mistake and avoiding it, we do 
 not progress, we simply revert to the beginning point and start over. 
 
SUMMARY OF THE TWO GROUPS OP CASES. 2C9> 
 
 Our consideration of these decisions we have intimated might be com- 
 pared to the mounds and trenches constructed by an enemy in talking- 
 a city; when the capture has been effected, the improvised aids be- 
 come useless and worthless. We can almost apply the simile literally, 
 for the decisions for some time, like the mounds and trenches, will con- 
 stitute obstructions and pitfalls, to the injury of persons not inter- 
 ested or involved in the contest, on account of which tlie same wer& 
 brought into existence. 
 
 We think it distinctly worth while to summarize a view of these 
 decisions. These eases clearly stand for this proposition : A patentee 
 may sell a patented article and accompa,ny the sale by a license which 
 restricts the use of the article or restricts the right of the purchaser 
 to sell the same, and any violation of the restriction constitutes the pur- 
 chaser, his vendee, or one assisting the purchaser to use the article 
 in excess of the license, an infringer. 
 
 There are at least three fata,l errors in this proposition, all of 
 which grow out of an erroneous conception of the nature of the patr 
 ent right. 
 
 The specific fallacies are these : 
 
 1. A misconception of infringement. 
 
 2. An erroneous conception of the nature of a sale of personal 
 
 property. 
 
 3. Failure to distinguish between a license and a sale. 
 We shall discuss each briefly. 
 
 1. Infringement — Infringement means just what it says, a break- 
 ing in upon some right or privilege of another. 
 
 It is a trespass, but in case of a patent it is a very peculiar form' 
 of trespass or breaking in. The right trespassed upon is an incor- 
 poreal right. The trespass may be committed 3000 miles away from the- 
 owner of the right (see the fine paragraph of Mr. Justice Holmes, 209' 
 U. S- at 19) and the trespasser may know nothing of the existence of 
 the right. 
 
-■270 RESTRICTION ON RESALE OF PATENTED ARTICLES. 
 
 Suppose A has a patent on a Neostyle. How can B infringe that 
 patent? The most obvious way is to make one like it. That is a 
 breaking in upon, a cutting down of A's right to exclude every one 
 from making the device. B sells the infringing appliance to C, a deal- 
 er, and he in turn sells it to D, a consumer. B has gone further now 
 and infringed A's right to exclude every one from selling the device. 
 C has also infringed A's right to exclude every one from selling: 
 D by using the instrument has infringed A's right to exclude from the 
 use; A has the right to exclude from the making, using or selling of 
 the machine, and this right has been trespassed upon by B, C and D. 
 
 But suppose A himself makes a Neostyle ; that machine is total- 
 ly disconnected from and has nothing to do with, his right to exclude. 
 iWith respect to the making of the machine, he has two rights: to 
 make it plus the right to exclude others from making it. The latter 
 part of the sum is all he gets from the patent law. He has made it 
 and his patent right has not been infringed. He may use the machine 
 himself, his right to do so is not a part of his patent franchise. Sup- 
 pose he decides to sell it. When he sells it he exercises not his patent 
 right, but his "natural right". 
 
 The purchaser, by purchasing it does not infringe upon A's right 
 to sell. He does not decrease, cut down or diminish A's right of sell- 
 ing, but the very opposite. He recognizes the patentee's exclusive 
 right and buys from him,, thus contributing to the "monopoly". When 
 the purchaser buys what does he get? This brings us to the nature of 
 a sale. 
 
 2. Sale of Personal Property. — ^In his invaluable book on the 
 Common Law (Lecture XI) published 30 years ago, Mr. Justice 
 Holmes has pointed out that a sale was originally a form of succession 
 inter vivos. 
 
 The buyer succeeded to the estate or personal status of the seller 
 with reference to the thing transferred; the buyer stands in the shoes 
 -of the seller, he gets no more than the seller had to transfer, but he 
 
SUMMARY OP THE TWO GROUPS OF CASES. 271 
 
 gets all he had: he succeeds him. That is everywhere the law to- 
 day. A warranty transfers nothing, it is simply a contract by which 
 the seller agrees to respond in damages in case it turns out that he 
 had less, or something different than he represented, to transfer. In 
 the case above supposed, when A sells the patented Neostyle, the pur- 
 chaser gets A's entire interest in that machine. A parts with no part 
 of his right to exclude; that is an incorporeal right. But as to that 
 particitlar device the purchaser succeeds A; stands in his shoes and 
 has every right that the patentee had in that specific? article. All that 
 the purchaser wants is that particular chattel, and that is all that the 
 patentee sells him. Now the device is worthless except for one pur- 
 pose, and that is to use it. The purchaser may want to sell, and there- 
 by gain a profit in transferring the use of it to some one else. But 
 the ultimate destiny of the machine is use by some one. Property is 
 worthless aside from the right to use and enjoy it. In the great case 
 of Miller vs. Taylor (1769) 4 Burrows 2303, one of the judges said: 
 "Property without the use is an empty sound." Had the patentee 
 kept the Neostyle and not used it, it would have been to him "an 
 empty sound". "When the patentee sells the machine, the purchaser 
 owns it in the same right that the vendor owned it. The right to use 
 it, or sell it to another for use, is the very essence of the property right 
 in the device. Apart 'from the right to use, or sell to some one else 
 for use, the Neostyle is worthless. In using it the purchaser does not 
 infringe upon the right of the patentee to exclude from the use, since 
 the only worth of the machine consists in its use, by selling it the 
 patentee consents to its being used. The sale can mean nothing else. 
 The patentee knows that the only right in the device that he or any 
 one else cares for is to use it; that is the purpose for which he in- 
 vented and perfected it. He could have had no other object in view 
 than the use, when he made the particular specimen supposed. The 
 invention and that individual embodiment of it is "the fruit of his 
 cares and sweat"; on the other hand the purchase money is the fruit 
 
272 RESTRICTIONS ON RESALE OF PATENTED ARTICLES. 
 
 of the purchaser's "cares and sweat". When the device is exchanged, 
 for the piirchase money, each party succeeds to all the rights which, 
 the other had in the thing transferred. 
 
 The purchaser had the same arbitrary right not to part with hiff. 
 money that the patentee had in the Neostyle. But when he transfers, 
 the money to the patentee, he intends and consents that the latter- 
 shall use the money as he sees fit, and the purchaser has all the rights 
 in the machine that the vendor has in the money. This enables us to 
 understand what is meant by a formula tha;t runs all through the 
 opinions of the Supreme Court. It occurs first in Bloomer vs. Mc- 
 Quewan, and is repeated with great frequency thereafter. It is this:; 
 "When the machine passes to the hands of the purchaser, it is no 
 longer within the limits of the monopoly. It passes outside of it, and. 
 is no longer under the protection of the Act of Congress." Here are 
 two phrases that obviously are exact equivalents, namely, "within the- 
 limits of the monopoly" and "under the protection of the Act of Con- 
 gress ' '. Both mean the right to exclude. But it is well to remember 
 that when we employ such phrases, "passes outside of" and "is under - 
 the protection of," we are usin? figurative language applied to a pure- 
 abstraction. The "limits" and the "protection" are in-dsible, intan- 
 gible, incorporeal. The article cannot be caused to pass without the 
 "limits" and from under the "protection" by any physical transposi- 
 tion. It may be a thousand miles from the patentee and stiU within 
 the "limits" and under the "protection". It is the approbation, the 
 wiU, the consent of the patentee that operates to pass the article out- 
 side the "limits" and from under the "protection". The patent grant 
 places the thing for seventeen years within "limits", circumscribed 
 by his consent, and under a "protection" measured by his will. If 
 he does not pass it ' ' without the limits ' ' or from under the protection, . 
 nothing and no one else can, for he has the right to exclude. Now 
 why does a sale, in and of itself, pass the article without the "limits"' 
 and from under the "protection"? 
 
SUMMARY OF THE TWO GROUPS OF CASES. 273 
 
 Mr. Justice Miller explains this with unexampled precision and 
 clearness in Adams vs. Burke: "In the essential nature of things 
 when the patentee, or a person having his rights, sells a machine or 
 instrument whose sole value is in its use, he receives the consideration 
 for its use and parts with the right to restrict that use. The article 
 in the language of the Court passes without the limits of the monopoly. 
 That is to say, the patentee or his assignee having in the act of sale 
 received all the royalty or consideration which he claims for the use 
 of his invention (black ours) in that particular machine or instrument 
 it is open to the use of the purchaser without further restriction on 
 account of the monopoly of the patentee" (black ours). 
 
 That passage is informed with meaning. Why does the patentee 
 part with the right to restrict the use ? Because the right to use the 
 machine is the very thing parted with by the sale. 
 
 The machine is utility embodied and externalized in a particular 
 form. That is all it is. The purchaser could easily get elsewhere the 
 same materials in diflEerent form and compositon and at a much smaller 
 price. He wants that particular object because of its special utility, 
 owing to its unique formation. When the patentee sells it he annuls, 
 waives and foregoes, his right to exclude from the use of that speci- 
 men. The consideration is paid only for the right to use ; that is all 
 there was to sell. To say that a patentee can sell a patented article, 
 and at the same time in virtue of his right to exclude, restrict the 
 right to use, is on a par with saying that a baker can sell a loaf of 
 bread, and at the same time restrict the right of the purchaser to eat 
 it. It is to say that the patentee can sell his right to exclude in ex- 
 change for the purchase money, and yet still have that right. Such 
 sale is a contradiction in terms. The vendor cannot part with, and 
 at the same time withhold, the sole subject matter of the sale. And if 
 he imposes conditions and restrictions, these do not qualify the title 
 or ownership of the chattel. We must sharply demark a sale with 
 conditions or restrictions from a conditional sale. The two things are 
 
274 RESTRICTIONS ON RESALE OF PATENTED ARTICLES. 
 
 quite different. A conditional sale is a transaction whereby the right 
 to enjoy and use the chattel, the ownership, does, not pass from, but 
 remains in the vendor, until a condition is complied with, namely pay- 
 ment of the purchase money. The vendor does not consent to the 
 transfer of ownership until that contingency is made certain. But a 
 sale accompanied by a restriction upon the right to use the thing sold 
 is wholly unlike a conditional sale. It is a completed sale at the 
 time of the transaction. The title and ownership is exchanged for the 
 purchase money. The ownership of the purchaser is not inchoate, or 
 contingent upon the performance of some condition. The restriction 
 is the subject matter of a consent of the parties quite apart from the 
 sale and transfer of the chattel. In such case we have two legal acts; 
 a transfer of the right to use and an agreement to use only in a cer- 
 tain way. The sale, in and of itself, operates to give the purchaser a 
 right of unrestricted use and unlimited disposition: he stands in the 
 shoes of the seller. 
 
 The restriction, then, is a concession exacted by the vendor and 
 yielded by the vendee. It does not pass anything to the vendor, it 
 only cuts down the rights of the vendee. It is thus the exact antithe- 
 sis of a license. Th6 latter takes from the rights of the licensor and 
 enlarges the rights of the licensee. The licensee gains a new right 
 where he had none before; the licensor suspends his right to exelutlP' 
 in the particular instance. If the restriction, in the case of the sale, 
 is done away with, the vendee has only the rights vested in him by 
 the sale, the ownership of the chattel. If the license is done away 
 with, the licensee has nothing whatever and the licensor resumes aU 
 the rights he ever had before the license was granted. The restric- 
 tion is a matter of contract totally dissevered from the transfer of 
 property. This is why Mr. Justice Miller says that "the particular 
 machine or instrument is open to the use of the purchaser without fur- 
 ther restriction on account of the monopoly" (black ours). This is 
 why Chief Justice Taney says, "Contracts in relation to it (a patented 
 
SUMMARY OF THE TWO GROUPS OF CASES. 275. 
 
 machine sold by the patentee) are regulated by the laws of the State^ 
 and are subject to state jurisdiction." 
 
 This renders perfectly clear the meaning of the Supreme Court, 
 in Keeler vs. Folding Bed Co. (157 U. S. 659), when it states: "One 
 who buys patented articles of manufacture from one authorized to sell 
 them becomes possessed of an absolute property in such articles, unre- 
 stricted in time or place. Whether a patentee may protect himself 
 and his assignees by special contracts brought home to the purchaser 
 is not a question before us, and upon which we express no opinion. 
 
 It is, however, obvious that such a question would arise as a ques- 
 tion of contract, and not as one under the inherent meaning and 
 effect of the patent laws." (Black ours.) 
 
 It is conceived that the dissenting opinion in the cases of Adams vs. 
 Burke, and Keeler vs. Folding Bed Co., and the various attempts to 
 limit the plain language of those decisoins to the particular facts there 
 in dispute, are all founded on a misunderstanding of the patent right. 
 For example, Mr. Justice Brown lodged a strong dissent in Keeler vs. 
 Folding Bed Co. As circuit judge, he tried the earlier case of Hobble 
 vs. Jennison, reported in 40 Fed. Rep. 887. Throughout that opinion 
 it is clear that the Court is entirely dissatisfied with the reasoning of 
 Adams vs. Burke, and yields only because of the force of the decision 
 as a compelling authority. 
 
 His subsequent dissent in Keeler vs. Folding Bed is foreshadowed 
 in this passage: "Were this an original proposition, we should be 
 strongly inclined to hold that the vendor of a patented article, who 
 seUs the same for the purpose 'of or knowing that it will be resold or 
 used in territory belonging to another is equally amenable to suit as 
 if the sale were made in such other territory. The patent laws give 
 to the patentee the exclusive right to use, as well as to manufacture 
 and sell, within the territory properly belonging to him, but it is diffi- 
 cult to see how this right can be properly protected, if the assignee of 
 other territory, who may perhaps possess greater facilities, superior 
 
276 RESTRICTIONS ON RESALE OF PATENTED ARTICLES. 
 
 •energy or a larger amount of capital than himself, may flood his ter- 
 ritory with the patented article, by means of the easy device of selling 
 ■and passing property within the territory owned by himself. ' ' 
 
 It is clear that such contention is founded on an erroneous concep- 
 tion of the nature of the patent right, and the effect of an assignment 
 ©f the right for a particular district. The second sentence above is 
 misleading: The patent laws do not give the patentee an exclusive 
 right, but rather a' right to exclude. An assignment of the right for a 
 territory gives the assignee the whole right for that locality. It is a 
 complete and thorough-going subdivision in the category of locality. In 
 that locality, the assignee has all the rights which the patentee former- 
 ly had; and the latter has none. In his territory, the assignee can 
 maintain suits for infringement, grant licenses or further assign the 
 right; and when he makes and sells an article in his territory that 
 sale operates to pass the article without the limits of the monopoly, 
 and from under the protection of the patent law, just as completely 
 as a sale by the patentee in the territory by him reserved. There is 
 no escape from this conclusion. At all times the article is altogether 
 distinct from the incorporeal right. When the owner of the right to 
 exclude consents that the article shall pass without the limits, it 
 passes and becomes the absolute property of the purchaser. The as- 
 signee acting within his district, has all the power to consent that the 
 patentee has anywhere. The only limitation upon the right of a ter- 
 ■ritorial assignee is as to the territory within which he may exercise 
 it; but acting within that territory, he has all the liberating power 
 that the original patentee ever had. When he gives his consent and 
 Jthe article passes, no part or parcel of the patent right is .granted. Of 
 course, territorial assignees are competitors as among themselves and 
 with the patentee. But this is so because of the fact that in making 
 .and selling, they do not exercise any right granted by the patent. 
 
 The view set forth in the minority opinions would lead to this: 
 'That a patentee could subdivide his right into as many parts as there 
 
SUMMARY OF THE TWO GROUPS OF CASES. 27"? 
 
 are states in the union, each assignee possessing the right for one 
 state, and having no power to confer on a purchaser the right to use 
 the thing sold beyond the borders of the state. If the patent was on 
 a locomotive, purchased by a large railroad having a system of track* 
 in a dozen states, the use of the locomotive in every state other than 
 in the one where it was purchased would constitute a separate and dis^ 
 tinct infringement, and subject the owner to suits for damages and 
 an injunction in all those states. 
 
 The law is that when the article is once passed beyond the limits 
 of the right to exclude by one who has that power, if only within a 
 township, that article has become unfettered from the patent monop- 
 oly and is the absolute property of the purchaser. 
 
 The opinion in Keeler vs. Folding Bed Co. concludes thus : ' ' The 
 conclusion reached does not deprive a patentee of his just rights, be- 
 cause no article can be unfettered from the claim of his monopoly 
 without paying its tribute. The inconvenience and annoyance to the 
 public that an opposite conclusion would occasion are too obvious ta 
 require illustration." 
 
 In the dissenting opinion in Keeler vs. Folding Bed there seems 
 to be a complete identification of an assignee with a licensee so far 
 as respects the patent right. Thus it is said: "Under this rule a 
 patentee may assign (black ours) his right to make and sell the pat- 
 ented article in every state in the union, except his own; may there- 
 establish a manufactory, and may, by his superior facilities, etc., un- 
 dersell his own licensees" (black ours). 
 
 Of course an assignment of the right to make and sell, without 
 including the right to use, is not an assignment of any part of the 
 patent right. See Waterman vs. IVTcKenzie (1890), 138 U. S. 252. 
 
 But again there is a wide difference between an assignee proper 
 and a licensee. The latter has no part of the monopoly, while the 
 former owns the whole of it for a locality. The inconvenience, if any. 
 
278 RESTRICTIONS ON RESALE OP PATENTED ARTICLES. 
 
 inherent in the circumstances supposed, certainly cannot be obviated 
 by the patent law. It can only be done by contract. 
 
 Moreover, the dissenting opinion in Keeler vs. Folding Bed 
 Co. states the import of the decisions in the two earlier cases of 
 Bloomer vs. McQuewan and Mitchell vs. Hawley in a way 
 that appears confusing. Of Mitchell vs. Hawley it is said 
 <157 U. S. at 669) : "In this case the purchaser from the 
 original grantee (black ours) of the term was held affected with knowl- 
 edge of the terms of the grant from the patentee, which expressly 
 took from the assignee (black ours) the right to sell or grant any li- 
 cense to use the machines b&yond (black in the text) the expiration 
 of the original term. Thia case seems to be a limitation upon the gen- 
 eral doctrine of the prior cases, that, by a purchase of the patentee, 
 the patented article is thereby taken- out of the monopoly. So far as 
 the case is pertinent at all to the instant case (i. e. Keeler vs. Bed Co.) 
 it favors the positon taken by the court below." 
 
 We find it beyond us to read such a construction into the de- 
 cision in Mitchell vs. Hawley. There, the vendor was not an assignee 
 -of the whole monopoly for a limited territory; he owned no part of 
 the right to exclude, much less the entire right for a defined locality. 
 Not having the right to exclude his consent could by no possibility 
 pass the thing sold beyond the limits of the monopoly. He was a 
 mere licensee, acting within the authority conferred upon him by a 
 permission of the patent owner. Obviously he could not confer upon 
 the purchaser a right to a more extensive use than the permission 
 ■authorized. The paifesage quoted confuses an assignee and a grantee 
 with a licensee. We have commented on this same confusion in the 
 statutes. The transferee of the entire right or an undivided interest 
 in the entire right is nominated an ' ' assignee ' ', whereas the transferee 
 of the entire right for a locality is designated a "grantee". We have 
 never been able to understand why a subdivision of the same right, 
 but in a different category, should necessitate a confusing substitu- 
 
SUMMARY OF THE TWO GROUPS OF CASES. 279 
 
 tion of the language of grants for that of assignments, but it so 
 stands and' the gratuitoiis transition has entailed much wasted effort. 
 
 The case of Bloomer vs. McQuewan is subjected to this interpreta- 
 tion (157 U. S. at 688) : "The question in that case, however, con- 
 cerned only the rights of an assignee of a patent (black ours) which 
 had been extended, and the point decided was that the assignee 
 (black ours) was entitled to continue to use the patent (black ours) 
 during the extended term. In this connection there can be no ques- 
 tion of the propriety of the language quoted (i. e. when the patented 
 machine passes to the hands of the purchaser it is no longer within 
 the limits of the monopoly). It would indeed be a strange principle 
 to hold, that a party who had bought a patented article during the 
 original term of the patent, should be obliged to pay an additional roy- 
 alty for its use, if the term were extended. ' ' 
 
 This passage is even more perplexing. In the first place in 
 Bloomer vs. McQuewan, the defendant was not an "assignee" of the pat- 
 ent. He did not assert a claim to any part of the right to exclude. 
 Moreover, what conception of things can be thought into the phrase 
 "to use the patent during the extended term"? How can one ever be 
 said to "use a patent", a right to exclude, unless by employing those 
 words we mean bringing an infringement suit and thus excluding 
 others ? 
 
 We have given much anxious thought to Bloomer vs. McQuewan. 
 The case is exceedingly diflScult to understand because the opinion 
 embodies, in many portions, the misleading phraseology of the Act of 
 1836. The defendant is several times called an "assignee", but when 
 >we shift our thoughts from the words and get down to the things 
 dealt with there is no difSteulty. In that case the owner of the patent 
 for the original term sold to the defendants "the right to construct 
 and use" and vend to others the right to construct and use a Wood- 
 worth's planing machine "within the limits of the city of Pittsburg 
 and Allegheny County." Subsequently the Congress by special en- 
 
280 RESTRICTIONS ON RESALE OF PATENTED ARTICLES. 
 
 actment, granted an extension of th.e patent. The plaintiff became 
 the owner of the patent for the extended term, and, as such, sued the 
 defendants for infringement on the ground that their use of the ma- 
 chine was an invasion of his right to exclude for the term as ex- 
 tended. The only point of difi&culty is to determine what the defen- 
 dant got when the owner of the patent sold him "the right to con- 
 struct and use the machine and to vend to others such right "within 
 the limits of the City of Pittsburg and Allegheny County". Neither 
 party to the transaction expressed any contemplation of an extension 
 of the patent. Both negotiated on the assumption that the expiration 
 of the original term would end the patent owner's right to exclude. 
 As they then viewed it, the utmost that the vendor could sell was the 
 right to use the machine for the original term; after that any one 
 would be free to make and use the machine. This must have been the 
 common view point, for neither could haveforeseen that the Congress 
 by special grant would extend the patent and no such contingency was 
 provided for in the sale contract. The defendants bought the right to 
 make and use the machine, and they bought the full measure of this 
 right as respects the duration. They owned the materials and fur-, 
 nished the labor to construct the machine. When they thus made 
 the machine, their rights with respect to it clearly were these: To 
 use their materials wrought into the formation of the invention for 
 the fuU period of the original term of the patent and to sell the right 
 to such use to others ; the right to so make and so use and sell, the 
 patent owner had sold them. Beyond that term he could not have sold 
 them the right. That would be like a lessee for twenty years selling 
 a terid. for 25 years. "The patent right gives no title in the -thing 
 made in violation of the patent" (Belknap vs. Child, 161 U. S. at 24), 
 much less title to the thing made pursuant to a right purchased from 
 the patent owner. So that the defendants owned the title to the physi- 
 cal embodiment of the invention and as respects the duration of the 
 right to use and sell, the patent owner had given the full measure of 
 
SUMMARY OF THE TWO GROUPS OF CASES. 281'- 
 
 the consent at his disposal. In point of the duration of the right to 
 exclude, the owner of the patent withheld nothing and imposed no 
 qualification. The defendants, at the expiration of the term would go 
 on using the machine which they owned, the right to use being open 
 to all persons. 
 
 In other words, the owner of the patent by selling the right to 
 make the machine, and use it for the full term of the patent or to 
 sell it to others for such use, passed the machine without the limits- 
 of the monopoly. The transaction was no different froip what it 
 would have been if the owner of the patent himself had made the ma- 
 chine and sold it to the defendants to use for the full term of the 
 patent or to sell to others for such use. That is the utmost that any 
 patentee can ever sell, namely the right to use the thing sold for the 
 term of the patent and to confer that right on others. Now the Court 
 held that a subsequent extension of the patent could not operate to 
 destroy the defendant's right to continue using the machine. Said 
 the Chief Justice : ' ' The Fifth Amendment of the Constitution of the 
 United States declares that no person shall be deprived of life, lib- 
 erty or property without due process of law. The right to con- 
 struct and use these planing machines, had been purchased and paid 
 for without any limitation as to the time for which they were to be 
 used (black ours). They were the property of the respondents. Their 
 only value consists in their use, and a special act of Congress, pass- 
 ed afterwards, depriving the appellants (respondents?) of the right to- 
 use them, certainly could not be regarded as due process of law. Con- 
 gress undoubtedly have power to promote the progress of science and 
 the useful arts, by securing for limited times to authors and inventors 
 the exclusive right to their respective writings and discoveries. But it 
 does not follow that Congress may from time to time, as often as 
 they may think proper, authorize an inventor to recall rights which 
 he had granted to others, or reinvest in him rights of property which 
 he had before conveyed for a valuable and fair consideration" In 
 
282 RESTRICTIONS ON RESALE OF PATENTED ARTICLES. 
 
 other words the defendants owned the machines; not only the physi- 
 cal substances of which they were made, but the right to nse them 
 •during the term of the patent from the patent owner ; the right to use 
 them after that term was a "natural" right which the patentee 
 ■could not grant- 
 But what about the qualification "within" the limits of the 
 "City of Pittsburg and Allegheny County"? There was no attempt to 
 use the machine elsewhere, and consequently no contest as to the mean- 
 ing and effect of this limitation. But it is clear that this limitation was 
 merely contractual and had no binding effect except as a contract be- 
 tween vendor and vendee. If the defendants had used the machines 
 elsewhere they could not have invaded the patent right : By the sale of 
 machine the patent owner passed that particular physical embodiment 
 of the invention beyond the limits of the monopoly. He fully consented 
 to its use and sale, not only within the territorial limits specified but 
 throughout the United States. The restriction imposed was a mere 
 contractual limitation upon the purchaser's right of complete dom- 
 inion to use any where and every where. It was a restriction exactly 
 on par with those in all the cases we have been discussing. 
 
 Had the defendants used the machines elsewhere, their only liabil- 
 ity, if any, would have been for breach of contract. For the Court 
 said: "Contracts in relation to it (i. e. patented machine purchased 
 from the owner of the patent) are regulated by the laws of the state 
 ^nd are subject to state jurisdiction." 
 
 It thus appears that Bloomer vs. McQuewan is not only not in 
 ■conflict with Adams vs. Burke, but both decisions announce precisely 
 the same principle: "In the essential nature of things when the 
 patentee, or the person having his rights, sells a machine or instru- 
 ment whose sole value is in its use, he receive? the consideration for 
 its use and he parts with the right to restrict that use. The article 
 in the language of the Court, passes without the limits of the monop- 
 ■oly. That is to say, the patentee or his assignee having in the act 
 
SUMMARY OP THE TWO GROUPS OF CASES. 2S3 
 
 of sale received all the royalty or consideration whicli he claims for 
 the use of the invention in that particular machine, it is open to the 
 use of the purchaser without further restriction on account of the 
 monopoly of the patentee." 
 
 It is receiving the consideration which the patentee claims for 
 the use of his invention in the particular specimen and parting with 
 title to that specimen that causes the patented article to pass without 
 the limits of the monopoly. That is the physical manifestation of 
 the patentee's consent to the use. He transfers the object and at 
 the same time consents to its use, and thereafter the physical thing 
 and the use of it are liberated from the monopoly. 
 
 Bloomer vs. McQuewan denied the right of the patentee to limit 
 the use of a patented device which he had sold, in the category of 
 time. Adams vs. Burke denied the right to limit the use in such 
 case in the category of place; but the principle underlying each case 
 is the same and applies with equal force to the facts involved in the 
 other. The opinion in the one case applies to the facts in the other. 
 Both announce a rule that a sale by a patentee, places the purchaser, 
 writh respect to the thing sold, in the shoes of the vendor. If the pa- 
 tentee could have used the article unrestricted in time or place so 
 also can his successor to that article, the purchaser. This follows 
 from the initial postulate that the article is entirely distinct from the 
 incorporeal right to exclude. 
 
 Bloomer vs. McQuewan, Adams vs. Burke, and Keeler vs. Folding 
 Bed Co. are profound expositions of an exceedingly elusive principle. 
 They are closed to a haMy glance' or a cursory perusal. Nothing 
 short of uninterm'itted and persistent attention will ever bring the 
 average reader to a correct apprehension of their vast import. 
 
 Third : A License ; A sale of personal property passes all the in- 
 terest or property iu the thing sold to the purchaser, iwhereals a 
 license does not pass any. The license is a mere permission. 
 
 If a patentee delivers possession of his patented machine to an- 
 
284 RESTRICTIONS ON RESALE" OF PATENTED ARTICLES. 
 
 other and licenses the other to use it, the latter is a licensee, but 
 obviously does not own the machine. Likewise if the patentee 
 licenses another to make a specimlen of the machine, and to use it for 
 one year's time, at the expiration of the year the licensee's right to 
 use the machine terminates, although he may own the materials of 
 which it is made. "Title to the thing manufactured does not give 
 the right to use the patented invention" Belknap vs. Schild, 161 U. S. 
 at 24. But in either case supposed, the right of the licensee to use 
 springs from a mere permission of the patentee. The latter has not irre- 
 vocably parted with the right to use that machine. In the first instance 
 the machine has not passed without the limits of the monopoly; and 
 in the second, the patentee consented to the making of the machine 
 only on condition that it could be used for a limited period. 
 At the expiration of that period the machine is within the limits of the 
 right to exclude and under the protection of the patent law. 
 
 The cases included in the two groups we have discussed confuse 
 the right to exclude with an exclusive right: they overlook the 
 effect of a sale of a patented article to release it from the monopoly 
 of the patent, and finally they concede no greater rights to a pur- 
 chaser from the patentee and owner of property than is allowed to 
 a mere licensee who enjoys the thing used by virtue of a mere permis- 
 sion of the licensee. 
 
 Finally the cases announce an unthinkable notion of infringe- 
 ment, which invariably and necessarily involves, a making, using or 
 selling without the consent of the patentee. When the patentee has 
 himself made and sold the article he has irrevocably consented to the 
 frep use and sale of that article by the purchaser. The purchaser in 
 using the article or selling it, may do so under circumstances that 
 violate his contractual obligation to his vendor, but he does not 
 infringe upon the right of the patentee to exclude. Moreover, the 
 validity of the contract violated depends not upon the patent law, 
 but upon the law of contracts and the public policy of the government. 
 
GENERAL CONSIDERATIONS AS TO TRADE COMBINATIONS. 285 
 
 Whether the contract restricting the use or sale of the article 
 is valid must be determined by the general principles of law and 
 statutes applicable to all contracts in restraint of trade. That brings 
 us to the next and final topic of this writing. 
 
 COMBINATIONS IN RESTRAINT OF TRADE IN PATENTED 
 
 ARTICLES. 
 
 Text writers generally, and without exception so far as we haVe 
 discovered, announce the proposition with unimportant qualifications, 
 that the law inhibiting contracts in restraint of trade does not apply 
 to contracts pertaining to trade in patented articles. Startling as 
 is this proposition, we have a greater extreme vouched for in the as- 
 sertion that patented articles are not articles of commerce or trade 
 at all. This last statement is little short of amazing. It is not 
 worth while to quote passages from the books as we shall come upon 
 the expressions first hand in the eases to be considered. 
 
 In a general way the argument is much like this: The statutes 
 and principles of public policy condemning restraints of trade are 
 levelled at illegal monopolies. Under the patent law a patentee has 
 a legalized monopoly in his patented articles. Therefore, it cannot 
 be that the statutes forbidding restraints of trade apply to trade 
 in patented articles. It requires no ingenuity to show that such an 
 argument comes to nothing. The word "monopoly" as used in legis- 
 lation inhibiting restraints of trade is not only not synonymous with 
 the same word used in connection with the patent right but is totally 
 foreign to it. The "monopoly" of a patent is not of things or pos- 
 sessions: it is of a pure abstraction, a notion, an incorporeal creation 
 of the mind. The "monopoly" to which public policy is opposed 
 is of goods, tangibles, corporeal objects, subject to manual dominion. 
 The patent monopoly is entirely comprehended within the naked right 
 to exclude. 
 
286 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 The difference is obvious. Suppose A. has on his land a mineral 
 spring sending forth a water possessing medicinal qualities unlike any 
 other water in the world. And suppose the water has certain proper- 
 ties that create for. it the strongest demand, causing it to sell at 
 a fabulous price. A, has in such case a genuine, thorough going monop- 
 oly. He has the sole right of selling because he owns and has 
 dominion over the one subject matter of all the sales. For the same 
 reason he can exclude all other persons from selling. But suppose 
 some one, a hundred miles away, sinks a well and intercepts the 
 supply at A's spring and it ceases to be. A. has now lost his monopoly 
 and another instead has it. 
 
 Now suppose A invents a process by which chemicals are com- 
 pounded and dissolved resulting in a water unlike anything hitherto 
 known and far more preciouSj He obtains a patent on his process and 
 product. Then other persons may possess all the materials necessary 
 to make the identical liquid; they may possess these in much greater 
 abundance than the inventor and in conjunction Avlth facilities for 
 manufacture that make the production of the liquid far easier at their 
 hands than by the inventor. Nevertheless they cannot make, use or 
 sell the mixture without the inventor's consent. 
 
 Suppose again tjiat X invents a corliss engine and gets a patent 
 on the same, but has no means or facilities for manufacturing or 
 multiplying specimens. His patent monopoly is complete but to him, 
 in hSs condition, it is profitless because what men want to buy, sell 
 and use is the engine, not the notion of it. 
 
 Suppose finally that a vast aggregation of capital is employed to 
 buy up all the timber and lumber of the nation and succeeds in so 
 doing. Here is a monopoly in virtue of complete physical dominion 
 over the thing dealt in. There is no abstract right to exclude others. 
 But others are excluded from dealing in lumber for the reason that 
 the source of supply is completely vested in an ownership in which 
 they cannot participate. 
 
GENERAL CONSIDERATIONS AS TO TRADE COMBINATIONS. 28T 
 
 A natural monopoly or an industrial monopoly consists in a more 
 or less complete possession of the actual, physical objects dealt in. 
 The patent monopoly consists only in the right to prohibit others 
 from possessing, using and selling the thing patented without the- 
 patentee 's consent. 
 
 It is entirely negative. It does not imply the existence of an 
 available supply of the tangible objects. The thing described in the 
 patent may be undesirable or unmarketable, but this does 
 not impair the patent monopoly. And when the patented 
 article is made and available for sale in great quantities, 
 it is not in any manner related to the right to exclude. 
 When the article is sold and used there is no sale or use 
 of the incorporeal right. A restraint of trade in a notion, an in- 
 corporeal, intangible right is utterly inconceivable. A corporeal ob- 
 ject is the only possible subject matter of trade and commerce. Tirade 
 and commerce in this has not the remotest bearing on the incorporeal 
 right ; likewise of a restraint of trade in the same. Finally,forbidding- 
 restraints of trade in the tangible objects does not in any manner 
 abridge, affect or 'infringe upon the incorporeal right. When the 
 State of Kentucky completely suppressed all trade in the patented 
 Aurora oil of Patterson it did not take fromi or cut down the patentee 's. 
 right to exclude. In that commonwealth he still had an irrefragable 
 right to bring infringement suits and exclude every one from making, 
 using or selling the oil itself. In the instance of In re Brosnahan, the 
 State of Missouri entirely interdicted trade in the patent protected 
 oleomargarine, but this did not touch the patentee's right to exclude 
 others from making, using or selling the thing invented. Though 
 every state in the Union had passed similar statutes and enforced the 
 same, the negative power !in the patentee to prohibit others from 
 engaging in the business of supplying and using the patented article,, 
 would have remained unimpaired for the full term of the patent. 
 These cases drive home the true conception of the nature of the 
 
-288 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 patent franchise. They vividly bring out the elemental fact; the 
 right to make, use, and sell does not come from and is not in any 
 manner related to, the patent law. That right is a "natural" right, 
 antedating governmental institutions and laws, protected by the 
 latter but also limited and qualified by the latter. 
 
 These cases cannot be brushed aside with the suggestion that the 
 articles, trade in which was suppressed, were inherently harmful and 
 the traffic therein necessarily inimical to the welfare of the citizens. 
 That was undoubtedly the conception underlying the statutes con- 
 strued in the two cases mentioned. But we entirely mistake the 
 power of a state to control its internal affairs when we limit it to 
 regulating or suppressing the sale of things conceived to be essential- 
 ly harmful in the only use to which they can be put. Fire arms are 
 indispensable in the day of the nation's agony in war; arsenals are 
 crowded with them, the Constitutfion guarantees to every citizen the 
 right to own and possess them, and yet it is everywhere a crime for 
 a private citizen to carry a loaded 'fire arm concealed on his person. 
 Bread is not only not harmful in its use, but is the very symbol ol 
 the corporeal things necessary to be available in order to maintain and 
 prolong existence. It is from of old called the staff of life. A con- 
 tract, combination or conspiracy to decrease the supply, or increase 
 the price of bread is a crime of the deepest dye. It arouses all the 
 latent resentment of society and men's hearts grow hot in contempla- 
 tion of the enormity of the offense. 
 
 The fact is that, with isolated exceptions, the law deals not with 
 things, but with persons. The force of it is directed to controlling 
 tfie acts of men: it is not exerted on inanimate objects. Ciimes and 
 wrongs are attributes of the existence of members of society. What 
 is deemed harmful in law is the tendency, the quality, of an act of 
 men, not a quality or property of an inanimate object. The unlaw- 
 fulness of a contract in restraint of trade is predicated on the impli- 
 ■ cation that the subject matter of the restrained traffic is useful and 
 
GENERAL CONSIDERATIONS AS TO TRADE COMBINATIONS. 289 
 
 desirable. The gist of the wrong is in interposing an artificial, astric- 
 tive barrier between the source of supply and the ultimate destiny of 
 the thing demanded. What is vaguely called the police power of the 
 State is not exhausted in regulating the handling of those things, the, 
 ordinary use of which usually results in harm. 
 
 The "police power" in its casual acceptation is a misnomer: 
 "Every right acknowledged to the individual by the state may be 
 abused by him to the detriment of the State. The State must there- 
 fore confer upon the government the power to watch for and prevent 
 (black in the text) such abuse. This (black ours) is the police power.. 
 Its realm is, therefore, the counterpart of the realm of individual lib-- 
 erty. It is the guard which the state sets upon the abuse of individ- 
 ual liberty. It does not prescribe the method according to which that 
 liberty may be enjoyed, but it fixes the point past which it may not 
 be pursued, and contains summary governmental authority for pre- 
 vsgnting its abuse." Burgess: Political Science and Constitutional 
 Law, Vol. I, page 216. This is the true conception of the police pow-. 
 er. The individual may abuse his right to bear arms by carrying 
 them concealed upon his person; then, the abuse of his liberty 
 becomes a crime ; he may abuse his right to make and sell carbolic acid 
 by making and selling the same to unwitting infants ; then his selling 
 becomes a crime. He may abuse his right to make and sell bread,, 
 and to contract to sell the same, by entering into a contract, com- 
 bination or conspiracy to fix the price, decrease the amount, or cheapen 
 the quality of the bread, then the contract, combination or conspiracy 
 becomes a crime. The state, with rare exceptions, such as the inflam- 
 mable oil and the artificial butter, acknowledges the pre-existing right of 
 every patentee to make, use and sell and contract for the sale of the 
 tangible embodiment of his mental labors, but when the patentee en- 
 ters into a contract, combination or conspiracy to limit the output,, 
 fix the price or in any manner restrain trade in his patented article, 
 <vhich has been made by him or some one under his authority. 
 
E90 TRADE COMBINATIONS IN PATENTED ARTICL,ES. 
 
 such contract, combination or conspiracy is an abuse of the patentee's 
 acknowledged right as surely detrimental to the state as any contract 
 in restraint of trade and as inevitably within the enumeration of 
 crimes in every instance of anti-trust legislation as is a similar con- 
 tract with ' reference to bread or meat. There can be no consistent 
 withholding of assent to this proposition. A fire arm may be pat- 
 ented, but it is a crime to carry one concealed on the person. An 
 automobile may be patented, but one may not be driven without a 
 license, and the attempt to do so is a misdemeanor. A medicine may 
 be patented, but an attempt by the patentee to administer it without 
 the license requisite may send him to .iail (see 4 Ohio 294). A clothes 
 wringer may be patented, but when the patentee, even, sets about sell- 
 ing it as an itinerant peddler without first complying with a town or- 
 dinance, he violates the law (See Peopl-e vs. Russell, 49 Mich. 617), 
 and is liable to punishment the same as a vendor of an unpatented 
 article. All these are instances of the exercise by the state of its 
 power to protect the mjembers of society from an abuse of his acknowl- 
 iedged rights by the individual. 
 
 It is an entire inisconception of the rights of the individual, of 
 the power of the state over the individual, and of the nature of the 
 patent franchise to suppose that the state has any less control over 
 trade in patented articles than in unpatented articles. Try to imagine 
 the utterly unacceptable consequences to which we are inevitably 
 driven by the opposite theory. Suppose A invents an exceedingly use- 
 ful implement for farming purposes and there is very great demand 
 for it. He manufactures the same and has on hand a large quan- 
 tity of them for sale. He has not applied for a patent and need not do 
 so for two years (R. S. 4886). 
 
 The article is unpatented and we will suppose A enters into var- 
 ious contracts and combinations that concededly restrict trade in the 
 implement, both within the scope of the Federal anti-trust act and 
 the acts of many of the states. These contracts are all operative for 
 
GENERAL CONSIDERATIONS AS TQ TRADE COMBINATIONS. 291 
 
 two years. Then by hypothesis A has been guilty of a crime under 
 both national and state law. Now he applies for and obtains a patent 
 and at the same time renews his former contracts and participates in 
 the same combinations, operative to the same ends. Can it be ser- 
 iously asked that we accept the conclusion that what, in the first in- 
 stance, was a series of crimes has now become innocent and harmless 
 acts because A has the right to exclude others from selling the imple- 
 ment without' his consent? Is the right to exclude others from sell- 
 ing an excuse for contracting and combining with others to abuse his 
 own and their right of selling? Can there be any answer but an un- 
 hesitating negative to the stinging questions propounded by Mr. Jus- 
 tice Miller in the case of In re Brosnahan in reference to the copy- 
 right, but equally applicable to the patent right ? ' ' Can he (owner of 
 the copyright) violate the law because no one else can ? Does the copy- 
 right confer on him a monopoly of vice and an immunity from 
 crime"? 
 
 Let us carry the supposition a step in advance. Imagine that after 
 the patent has been secured and the patentee has renewed all his 
 former connections, then, there is a contest over the validity of the 
 patent and it is declared absolutely void for want of novelty by the 
 Supreme Court of the United States: that neither adds to or takes 
 trom, the right and power of the patentee to make, use and sell his im- 
 plement, it only releases the inhibited spontaneity of others to do the 
 same thing. Does the determination that the imiplement had been 
 made and in use more than two years prior to the application for a 
 patent, convert a series of innocent acts into misdemeanors and fel- 
 onies? Or suppose such contracts and combinations are entered into 
 mx months before the date of the expiration of the patent and are to 
 run for one year. Then the day after the patent expires dealers scat- 
 tered throughout the nation, who, the day before were parties to a per- 
 fectly legitirnate business, have become infamous law breakers and vile 
 conspirators although conducting their business in precisely the same 
 
292 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 manner as they did the day previously. Thus whether or not men 
 have committed a crime under the laws of any one of a half hundred 
 of States is dependent upon the records of the Patent Office at Wash- 
 ington. 
 
 If those records are in proper form and contain truthful state- 
 ments, then all members of the combination are innocent. But if the 
 patent was obtained by fraud, if the certification of the existence of 
 novelty in the iavention was untrue in point of fact, or if for any 
 reason there is not a valid patent on the implement, then the mem- 
 bers of the combine are guilty of crimes. Thus the determination of 
 the guilt of men hinges upon the validity of a patent, and whether or 
 not all the participants in the combination have acted in a manne* 
 detrimental to society depends upon who was the first to conceive of 
 the implement as vouched for by the Patent Office. And yet, under any 
 and all of these circumstances, without exception, the manufaotuuer's 
 own right to make, use and sell the implement has remained exactly 
 the same. Procuring a patent did not enlarge, the invalidation of 
 the patent, in whatever manner, did not diminish 'it. That right ex- 
 isted before the patent was obtained, it remains unimpaired after the 
 patent right is gone, and during the existence of the patent it was 
 not enlarged. It *is not within the duty of patient analysis to cata- 
 logue all of the grotesque absurdities that are consequent upon the 
 assertion that the state has no power to prohibit a contract in restraint 
 of trade in patented articles. 
 
 We discard words and deal with things. In Patterson vs. Ken- 
 tucky Mr. Justice Harlan said : ' ' The right of property in the physical 
 substance, which is the fruit of the discovery is altogether distinct 
 from the right in the discovery itself. The right to sell the (pat- 
 ented) Aurora oil was not derived from the patent : that right existed 
 before the patent, and unless prohibited by valid local laws could 
 have been exercised without the grant of letters patent." 
 
 In Webber vs. Virginia, Mr. Justice Field said: "The legislation 
 
GENERAL CONSIDERATIONS AS TO TRADE COMBINATIONS. 293 
 
 respecting the (patented) articles which a state may adopt after the 
 patents have expired, it may equally adopt during their continuance. 
 It is only the right to the invention or discovery, the incorporeal right, 
 which the state cannot interfere with. Congress never intended that 
 the patent laws should displace the police powers of the states, mean- 
 ing by that term those powers by which the health, good order, peace 
 and general welfare of the community are promoted." 
 
 Those two quotations announce the principles that control. The 
 fact that an article is patented is utterly irrelevant to the inquiry as 
 to whether or not a given contract restrains trade in that article. The 
 whole argument that state legislation as to restraints of trade has no 
 application to a contract pertaining to patented articles, is grounded 
 upon the false assertion that the patent invests the inventor with the 
 right to make and sell and to contract in that regard. Until that fal- 
 lacy is thought away, the erroneous conclusion will persist 
 
 It is equally clear that a contract restraining trade among the 
 states in a patented article is a violation of the Federal anti-trust act. 
 Many authorities posit some sort of conflict or interference between 
 the anti-trust act and the patent law and then resolve the conflict by 
 asserting that the latter statute is the more fundamental and at the 
 point of interference overrides the former. In dealing with a contract 
 on its face, clearly in restraint of interstate commerce in a patented 
 article the difSeulty of upholding the contract, is, in this view, obviated 
 ly working out an exception to the anti-trust act in the case of pat- 
 ented articles. But this cannot be done by any possibility. There 
 is no imaginable conflict or interference between the two statutes. The 
 patent law has nothing to do Avith trade or commerce: no casuistry 
 can read into it any provision as to trade and commerce or as to 
 agreements, contract, and combinations 'in restraint of trade and com- 
 merce. It is not a criminal statute and has nothing to do with the 
 punishment of crime. 
 
 On the other hand the anti-trust act has nothing whatever to do 
 
294 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 with the creation of incorporeal franchises: property in notions and 
 thoughts, that esJists for seventeen years and then passes utterly away. 
 It does not involve the right of any person to make, use or sell any- 
 thing whatever. A man may engage in interstate trade and com- 
 merce or not, just as he sees fit without consulting that law. The 
 whole policy and all the provisions of the statute are exhausted in de- 
 claring all agreements, contracts, and combinations iu restraint of in- 
 terstate trade and commerce and attempts to monopolize that trade, 
 null and void as contracts and criminal as the acts of persons. How 
 is it possible for a patentee as patentee in the exercise of his patent 
 right to restrain trade? He has the sole right to make and sell the 
 article, but that is not a patent right. 
 
 Kestraining infringers from making and selling the article does 
 not by any stretch of inference imply a contract, agreement or com- 
 bination in restraint of interstate commerce. Excluding others in not 
 entering into a contract of any kind. Assigning the patent right ia 
 not restraining interstate trade, by a contract or otherwise. We have 
 seen that the only manner in which the patent owner can exercise his 
 patent right is in excluding others through the medium of infringe- 
 ment suits, and in assigning his right in the three ways provided for 
 by statute. 
 
 No exercise of the right in any one or all four of these ways can 
 possibly be construed as a contract in restraint of trade. No subject 
 matter of iaterstate commerce or trade can be brought into existence 
 by any exercise of the patent right. Nor is it possible to suppress the 
 patent right in a way indirectly to restrain trade. For the right is 
 entirely negative and if the patentee should agree not to exclude per- 
 sons that would tend to encourage and iaerease trade. 
 
 The surmise that the Federal anti-trust act does not apply to con- 
 tracts in restraint of trade in patented articles is just as untenable 
 and leads to results just as absurd as the analogous contention with 
 
GENERAL CONSIDERATIONS AS TO TRADE COMBINATIONS. 295 
 
 reference to state legislation. It is not necessary to repeat the argu- 
 ment in detail to suggest its applicability. 
 
 We must, however, keep constantly in mind that the Federal anti- 
 trust act was enacted pursuant to the power of congress to control 
 interstate commerce, whereas the state statutes originate in the power 
 of the respective states to control their entire internal affairs. 
 
 The National government, having no police powers, may regulate 
 intercourse or traffic among and between the states, but cannot legis- 
 late in reference to such commerce under the guise of protecting the 
 morals, health or welfare of citizens within the states. United States 
 vs. DeWitt (1869), 9 Wall 41. 
 
 One and the same contract or combination may restrain interstate 
 commerce and also commerce within a given state. In such case the 
 arrangement violates both state and national statutes. 
 
 Whether a given contract in restraint of trade violates one law 
 or the other is not dependent upon the character of the restraint or 
 the precise manner of its imposition, but upon whether the trade re- 
 strained is interstate or trade internal to an isolated state. 
 
 It becomes important then to consider with some nicety the char- 
 acter of a contract which comes within the legislative inhibition of 
 restraints on trade. This question is the same whether we have in 
 mind interstate trade or trade in a single state. It is sometimes sa'id 
 that a contract in restraint of trade is one that is opposed to publie 
 policy and then this is turned about to the assertion that public pol- 
 icy is opposed to restraints of trade. This is using undefined terms to 
 formulate a meaningless proposition. Neither statement throws any 
 light on what is meant by either term. We have to push the matter 
 further back than this. We turn to the great case of Northern Secur- 
 ities Co. vs. United States (1903), 193 U. S. 197. This cause was elab- 
 orately argued by the ablest lawyers in the nation. The question as 
 to restraints of trade was probed to the very bottom by all members 
 of the court and the three op^inions handed down comprise a vast re- 
 
296 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 pository of learning on the subject. No one needs any other source 
 from which to gain clear, exact ideas as to what is meant by a con- 
 tract or combination in restraint of trade. A very short considera- 
 tion of some of the propositions there asserted will serve our purpose. 
 
 We deliberately select the dissenting opinion of Mr. Justice 
 Holmes, for he laid down an exceedingly concise a^d exact definition 
 of such contracts which was apparently narrower than that which met 
 the approval of the majority. And if a contract comes within the 
 narrower classification, necessarily it Will be comprised within the 
 broader. At 193 U. S. 404, Mr. Justice Holmes said: "Contracts in 
 restraint of trade are dealt with and defined by the common law. They 
 are contracts with a stranger to the contractor's business (although in 
 some cases carrying on a similar one) which w'holly or partially re- 
 strict the freedom of the contractor m carrying on that business as 
 otherwise hie would" (black ours). 
 
 In order to indicate clearly that he meant exactly what he had 
 •written down, ten lines later he reiterates : ' ' Contracts in restraint of 
 trade, I repeat, were contracts with strangers to the contractor's busi- 
 ness and the trade restrained was the contractor's own." 
 
 He further says: "The objection of the common law (not of the 
 anti-trust act) to them (such contracts) was primarily on the con- 
 tractor's own account." In those three propositions we have a per- 
 fectly clear, tang'ible, and precise delineation of a contract in restraint 
 ■of trade. Suppose we apply that definition to the eases we have al- 
 i-eady discussed. 
 
 Take for example the Heaton case. There the owner of the patent 
 sold the machine to the shoe manufacturer and received the purchase 
 price. He was not in the shoe business nor interested in the shoe busi- 
 ness of the purchaser. The latter owned the machine and bore all 
 the burden of ownership, such as interest, taxes, insurance and repairs. 
 The vendor was a total stranger to that business, yet under the court's 
 decision, the -purchaser was bound by a contract which completely did 
 
GENERAL CONSIDERATIONS AS TO TRADE COMBINATIONS. 297 
 
 away with his freedom in the business and trade of buying staples. 
 He could buy staples from no one else at any price and no one else 
 could seU them to him. Nay, he could not have initiated the business 
 of making even his own staples. And there was no sort of considera- 
 tion for this alleged covenant that destroyed the purchaser's freedom. 
 The vendor could have raised the pi'ice of the staples, made them of 
 poorer quality and even decreased the supply and still the purchaser 
 had no freedom in the matter of availing himself of the staples neces- 
 sary for his use. 
 
 This is delivering control of the contractor's business into the 
 hands of a stranger with a vengeance. The same is true of the Neo- 
 style cases, which are precisely analagous. 
 
 In the Eupp and Rivet cases, the same result was reached. The 
 staple wire and rivets were common articles of trade and comtmerce. 
 Anyone has a right to manufacture and sell or to purchase the same. 
 The plaintiffs leased their patented machines to the users and exacted 
 a stipulation that the lessees should confine their purchases of the un- 
 patented article exclusively to the lessors. The lessors were strangers 
 to the business of the lessees. The latter paid a rental for the use of 
 the patented machine, but not for the privilege of purchasing staple 
 wire and rivets from the lessors: these could have been purchased 
 elsewhere. Moreover we cannot find in either case any suggestion 
 that the lessors had agreed to supply the articles, monopolized, at any 
 price. The lessees were by the Court compelled to purchase common un- 
 patented staple articles, like nails or screws, exclusively from the 
 lessors at whatever arbitrary pi'ice the latter should dictate. They 
 Tiiight raise the price, cut down the portion allowed to the lessees, or 
 furnish articles made of cheap or shoddy material, and yet the lessees 
 were helpless. Without any consideration whatever, the freedom of 
 ihe lessees to buy these articles wherever they saw fit and on the most 
 favorable terms they could negotiate, was gratiously construed away 
 by the Court. We know of no more terrifying illustratton of the 
 
298 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 maxim that the power to construe is the power to destroy, than that 
 afforded by these decisions. 
 
 When we come to the graphophone and phonograph cases, the re- 
 straint of trade is even more glaring and exaggerated. The owners of 
 the patent in every instance had sold the instruments and transferred 
 the perfect title to the purchasers. In Bloomer vs. Mollinger (1863), 
 1 WaU 340, the Court said: "They (the patentees) are entitled to but 
 one royalty for a patented machine (black ours), consequently, when 
 a patentee has himself constructed the patented machine and sold it, 
 or authorized another to construct and sell it, he has then to that ex- 
 tent parted with his monopoly, and ceased to have any interest in the 
 machine sold" (black ours). 
 
 This principle is repeated over and over again by the Supreme 
 Court. It precisely fits the phonograph and graphophone cases. There 
 the patentees had received the full royalty from the jobbers and had 
 ceased to have any interest in the instruments sold. In the Victor 
 Talking Machine case if The Fair had taken every instrument in its 
 possession and sunk it to the bottom of Lake Michigan, no right or 
 interest of the plaintiff would have been even infinitessimally affected. 
 The plaintiffs in all those cases were strangers to the jobber's business, 
 outside of it and totally disconnected from it. The same is true 
 of the dealer. Both jobber and dealer, in virtue of an inalienable 
 right guaranteed by the Constitution and laws to every man to sell his 
 ovrai property Without external restraints, had the right to sell the in- 
 struments at such prices and to such persons as they saw fit or to give 
 them away or hurl them into a junk pile. Under the ruling of the 
 courts, the vendors Were not only permitted to completely suppress all 
 freedom of the jobber to trade in his own property, but the dealer be- 
 tween whom and the vendor there was no privity of contract, was 
 crushed in the vise of the same despotism. If a jobber or dealer had 
 found himself in the midst of a panic, overstocked w'ith these instru- 
 ments, and had been closed in on by the kind hearted banker: if in 
 
GENERAL CONSIDERATIONS AS TO TRADE COMBINATIONS. 299' 
 
 that hour of sudden terror and perspiring anguish, searching for bal- 
 last to dump overboard in order to save himself from bankruptcy, 
 he had seized upon these instruments and sold them at a sacrifice, the 
 fourts would have mulcted him in damages for doing so. If the in- 
 struments had become shop worn, broken or abused, if they had be- 
 come unmarketable in virtue of improved devices superseding them,, 
 still they could not have been sold at less than the "licensed" price 
 without the seller subjecting himself to the abounding wrath of a Fed- 
 eral Court. And there was no qualification or limitation put upon the 
 "license condition." It was not limited as to time; a sale of the ma- 
 chine at a cut price ten years after the date of the contract, would 
 have been "infringement." Had the jobber died, gone into bank- 
 ruptcy, or had a great conflagration destroyed the entire city except. 
 a few blocks including the jobber's place of business, still a sale at. 
 a cut price consequent to any of these disasters would have sent the 
 seller to jail for contempt. Yet there was no consideration for this- 
 monstrous covenant. The patentee received the full compensation for 
 his articles. Not one thing did he do or agree to do, suffer or agree, 
 to suffer, in consideration of this suicidal pledge given by the pur- 
 chaser. 
 
 No case can be found involving any more perfect and. 
 absolute restra/int of trade than these cases. These contracts a& 
 means of restraining trade were far more vicious than any that have 
 ever been denounced by the Supreme Court under the Anti-trust Act. 
 
 The Addyston Pipe Co. case is tame in comparison. There the 
 restraint only affected the freedom of the members of the combina- 
 tion in the first instance to sell the pipe. There was no attempt on 
 the part of the seller to prevent the purchaser from dealing with the 
 pipe exactly as he' saw fit. 
 
 It is very clear that the contracts involved in all the cases we 
 have discussed dealing with the right to restrict the use or resale 
 of an article violated the statutes prohibiting restraints of trade. 
 
300 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 These were common law contracts, the remedy, if any, to enforce 
 which, was limited by state laws as interpreted by the State Courts. 
 The Heaton case arose in Michigan. If the plaintiff had brought suit 
 in Ihe State Court its own pleadings would have constituted as com- 
 plete confession of a crime as any penitent horse thief ever made. 
 
 Most of the Neostyle cases arose in New York. In 1899 the legis- 
 lature of that State passed an Act (laws 1899, Chap. 690) which pro- 
 vided among other things, the following: "Every contract agree- 
 ment, arrangement (black ours) or combination whereby competition 
 in this State in the supply or price of any article or commodity of 
 common use (ink and paper) is or may be restrained or prevented 
 or whereby the free pursuit in this state of any lawful business, 
 trade or occupation is or may be restricted or prevented is hereby 
 declared illegal and void "and every person who shall enter into any 
 such contract" is guilty of a misdemeanor (black ours) and on con- 
 viction thereof, shall if a natural person, be punished by a fine not 
 exceeding five thousand dollars or by imprisonment for not longer 
 than one year, or by both such fine and imprisonment; and if a cor- 
 poration, by a fine of not exceeding five thousand dollars" (black 
 ours). By every valid method of reasoning that is law that should have 
 been meted out in the Neostyle cases. That was the statute the Court 
 of Appeals of New York applied to the Book trust in its attempt to 
 monopolize the sale of uncopyrighted books (see 177 N. Y. 473) but 
 the Court of Appeals committed the great blunder of supposing that 
 a combination to restrain trade in copyrighted books did not come 
 w'ithin the plain meaning of the statute. But the decision of the Su- 
 preme Court in the case of Bobbs-Merrill Co. vs. Straus shows that 
 this was wrong and at least some of the New York judges now recog- 
 nize the error (see 127 App., Div. N. Y. 935 and 86 N. B. 525). 
 
 The graphophone cases involving contracts enforceable only un- 
 der the laws of the_ States of Iowa and Illinois undoubtedly called for 
 an application of the Anti-trust Acts of those States. And within 
 
GENERAL CONSIDERATIONS AS TO TRADE COMBINATIONS. 3UI 
 
 those statutes the contracts were criminal and the parties thereto sub- 
 ject to punishment by fine and imprisonment or both. 
 
 We go back now to the Northern Securities Case. After defin- 
 ing contracts in restraint of trade Mr. Justice Holmes proceeds (193. 
 U. S. 404:), "Combinations or conspiracies in restraint of ttade, were 
 combinations to keep strangers to the agreement out of the business, 
 (black ours). The objection to them was not an objection to their- 
 effect upon the parties making the contract, the members of the com- 
 bination or firm, but an objection to their intended effect upon 
 strangers to the firm and their supposed consequent effect upon the 
 public at large. In other words they were regarded as contrary to 
 public policy because they monopolized some portion of the trade or 
 commerce of the realm." Here then, is a clear and precise defini- 
 tion of a combination or conspiracy as distinguished from a contract,, 
 in restraint of trade. 
 
 It is illegal because of its effect on persons out of the combina- 
 tion who are prevented from engaging in the business, and because 
 of its effect on the public in raising prices, decreasing the supply or 
 deteriorating quality or all three. And it must be constantly borne 
 in mind that the final and vital objection to a combination or con- 
 spiracy is the power incident to combined and confederated action. 
 In this Northern Securities Case at page 340 the Court said: "In 
 all such combinations where the purpose is injurious or unlawful, 
 the gist of the offense is the conspiracy; men can often do by the 
 combination of many what severally no one could accomplish, and 
 even what when done by one would be innocent. There is a potency 
 in numbers when combined (black in the text) which the law cannot 
 overlook, where injury is the consequence." 
 
 We will now take up the cases dealing with combinations and 
 conspiracies in restraint of trade in patented articles. But before 
 discussing the cases which involve the precise question we are study- 
 ing it is worth while to glance at those cases where infringement , 
 
302 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 suits have been brought and the defendant has set up as a defense 
 that the plaintiff was a party to a combination in restraint of trade. 
 This defense has always failed and must of necessity fail, but the 
 remarkable part of it is that other courts have set up the rulings 
 in these cases as authority for the proposition that there can be no 
 ■combination in restraint of trade in patented articles and that the 
 state Anti-trust Acts do not apply to such combinations. But there 
 is not the remotest connection between the two propositions. Main- 
 taining a suit for inf r'ingement has" no relevancy whatever to a con- 
 tract or combination of any kind. 
 
 Thus in Strait vs. National Harrow Co. (1892) 51 Fed. 819., the 
 plaintiff brought suit to obtain an injunction to restrain the defend- 
 ant from instituting an action against the plaintiff for infringement 
 on the ground that the defendant had entered into a combination ia 
 restraint of trade! That bill of complaint ought to be inserted 
 in the ofSCe boy's note book. The plaintiff sought to exclude the de- 
 fendant from excluding the plaintiff. In other words the purpose 
 was to unpatent the patentee. The Court said: "In a suit brought 
 for the infringement of a patent by the owner any such inquiry (as 
 to patentee's being a party to an unlawful combination) at the be- 
 hest of the infringer would be as impertinent as one in respect to the 
 moral character or antecedents of the plaintiff in an ordinary suit 
 for trespass upon his property. Even a gambler, or the keeper of 
 a brothel, cannot be deprived of his property because he is an abnox- 
 ious person or a criminal." 
 
 That is the true ground on which all cases of the character are 
 ■decided. The following belong to the same class. 
 
 Edison Elec. Light Co. vs. Sawyer-Mann Co. (1892 C. C. A. 
 
 2d Cir), 52 Fed. 592; 
 American Soda Fountain Co. vs. Green (1895) 69 Fed. 333- 
 Columbia "Wire Co. vs. Freeman "Wire Co. (C C Mo 1895) 
 71 Fed. 302; 
 
GENERAL CONSIDERATIONS AS TO TRADE COMBINATIONS. 303 
 
 General Electric Co. vs. Wise (C. C. N. Y. 1903) 119 Fed, 
 922; 
 
 In all these cases the defendants sought to answer the charge of 
 infringement by asserting that the plaintiffs were violating the 
 Anti-trust Act. It would have been just as relevant to allege that 
 the plaintiffs had not paid taxes assessed against their property or 
 that they were using the mails as a part of a scheme to defraud. 
 
 But what is to be thought of this passage in the opinion in the 
 Columbia Wire Co. Case: "In consideration that the patentee will 
 .give his invention (black ours) to the public with full drawings and 
 specifications so as to enable the public freely to use it at the expira- 
 tion of 17 years, a grant is made to him of an exclusive right to the 
 monopoly (black ours) of the patented article or device during that 
 term. The rights so acquired by the patentee under a grant from 
 the United States are entirely inconsistent with the patentee's being 
 made subject to the Anti-trust laws of the several States. Under this 
 grant he has been given, and for the consideration already alluded to he 
 is entitled to maiatain, a monopoly in the disposition and use of the 
 patented article or device." 
 
 This passage is entirely aside from the question before the Court. 
 The suit was one for infringmement and the defendant's plea that 
 the plaintiff was an unlawful combination did not invite the above 
 propositions which are cited in other cases as authority for the as- 
 sertion that the State Anti-trust Laws do not apply to combinations 
 in restraint of trade in patented articles, It is for this reason that 
 we have marked the paragraph for examination. What is meant 
 by the word "invention" in the first sentence? The patentee never 
 does give to the public the manufacturd tangible article. "Inven- 
 tion" is put in as something additional to the drawings and specifi- 
 cations and yet we know that the latter is all that the patentee ever 
 does give to the public. The drawings and specifications do not 
 enable the public freely to use anything but the drawings and speci- 
 
304 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 fications. A book d'eseriteng a horse does not enable the reader 
 to possess himself of the horse. 
 
 Then we have "a grant is made to him of an exclusive right to- 
 the monapoly of the patented article." What can be an exclusive 
 right to a monopoly? The Supreme Court has been saying for 60- 
 years that the sole right granted by the patent is the right to ex- 
 clude. How can there be an exclusive right to the right to exclude? 
 That appears like adding to white, whiteness. Then we have thia- 
 jump from that sentence. "The rights (viz; right to exclude) so 
 acquired by the patentee under a grant from the United States are 
 entirely inconsistent with the patentee's being made subject to the- 
 provisions of the Anti-trust Laws of the various States." Now why 
 is this? The answer appears to be "the (patentee) has been given 
 a monopoly (right to exclude) in the disposition or use of the- 
 patented article." 
 
 But we entirely deny the conclusion. The patentee has th& 
 right to exclude others from making, using or selling the device 
 without his consent. That is all he gets by the grant. His own 
 right to make, use or sell is not in any manner affected. Chief 
 Justice Taney in 1852 announced this as the law and the Supreme- 
 Court has been reiterating it ever since, even as late as 1908 (210- 
 U. S. at 424). Now suppose the patentee is himself manufacturing a 
 patented wire fence and selling the same and he enters into a con- 
 tract with a rival concern whereby he agrees to cut down his out 
 put by half or establish a imiform fixed price the same as his rival, 
 can there be any possible doubt that that would be a violation of the 
 state Anti-trust Act? The patent laws do not purport to give a 
 patentee any immunity from/ criminal statutes. They make no pro- 
 vision as to his right or power to contract, much less confer on him 
 some mysterious privilege, in the exercise of which, he can invade 
 the laws of a state. The right acquired by the patentee from the 
 United States is not affected by the Anti-trust Laws of the several 
 
NATIONAL. HARROW CO. 305 
 
 States. Those laws do not forbid the patentee to bring infringement 
 suits or to assign his patent. They only forbid him from enter'ing 
 into contracts or combinations whereby trade in his patented article 
 is restrained. That the Anti-trust Acts do validly provide this we 
 have no doubt. "The legislation respecting the article which the 
 State may adopt after the patents have expired it may equally adopt 
 during their continuance. It is only the r'ight to the invention or 
 discovery, the incorporeal right which the state cannot interfern 
 with," Webber vs. Virginia. 
 
 It is next in order to consider the various phases of the litiga- 
 tion in connection with the combination known as the National 
 Harrow Co. 
 
 There are at least nine reported decisions involving this combi- 
 nation and two altogether distinct features of the law are dealt with 
 in these cases. But subsequent use to which the decisions have been 
 put does not indicate that the marked cleavage between the two 
 groups of decisions, has been heeded. A brief statement of the facts 
 will suffice for noticing all the cases. The National Harrow Co. was 
 organized as a holding corporation. Practically all concerns in the 
 United States engaged in the business of manufacturing and selling 
 harrows were interested in the corporation. That is to say, each 
 of such concerns assigned to the holding company all patents which 
 it owned on harrows and took back from the National Company an 
 exclusive license to manufacture just the harrows covered by the 
 patents assigned and no others. The licenses were all similar, and estab- 
 lished the price at which harrows were to be sold. A royalty was to 
 be paid on each harrow sold. The result of the combination was 
 that the National Company owned about 85 patents covering practi- 
 cally the entire business in improved harrows and each licensee con- 
 ducted the same business after, as before, the assignment of its 
 patents, except that a uniform schedule of prices was to be observed. 
 Now this phase of the National Harrow Company was before the 
 
306 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 courts for consideration at least five times and every time was de- 
 clared to be an illegal combination in restraint of trade. 
 Those decisions are: 
 
 Strait vs. National Harrow Co. (1891) 18 N. T. Sup. 224; 
 
 National Harrow Co. vs. Quick (1895 C. C. Ind.) 67 Fed. 130; 
 
 National Harrow Co. vs. Hench (1896 C. C. Pa.) 76 Fed. 667; 
 
 National Harrow Co. vs. Hench (1897 C. C. A. 3d. Cir.) 83 
 Fed. 36; 
 
 National Harrow vs. Hench (1897 C. C. N. Y.) 84 Fed. 226. 
 
 National Harrow Co. vs. Hench (1897 C. C. A. 3d. Cir.) 85 
 Fed. 991. 
 In all five of the foregoing cases the Courts declared the combi- 
 nation known as the National Harrow Companv t.A bo j»t. illegal re- 
 straint of trade. The license contracts werp Ji°Jd unenforceable and, 
 too, the licensees were held entitled to rescind them and free them- 
 selves from liability for royalties. 
 
 One of the decisions — National Harrow Co. vs. Quick — ^seeraa 
 questionable on principle. There the complainant instituted a suit 
 for infringement against one who was not, and never had been, a 
 licensee. The court denied the relief on two grounds: 1st. That 
 the complainant was an illegal combination and 2d, that the harrow 
 sold by the defendant was not an infringing device. As to the first 
 ground the court said: "It seems to me that the Court cannot sus- 
 tain the present bill without giving aid to the unlawful combinatioB 
 or trust represented by the complainant." However, we cannot es- 
 cape the conclusion that this was a fact irrelevant to the right of 
 the complainant to prevent infringements of its patented device. 
 The right to exclude others, granted to the patentee by the govern- 
 ment, is not conditioned upon compliance with all laws declaring the 
 public policy of the nation. 
 
 We regret that in none of these eases Tvas there any attempt 
 to analyze the nature of the patent grant for the purpose of demon- 
 
NATIONAL HARROW CO. 307 
 
 strating that combinations in restraint of trade in patented articles 
 violate the law to precisely the same extent as a similar combina- 
 tion dealing in an unpatented article. 
 
 Thus in 83 Fed. 36, the Court of Appeals for the 3d Circuit said : 
 "The fact that the property involved is covered by letters patent is 
 urged as a justification; but we do not see how any importance can 
 be attributed to this fact." Again, "Such combinations are con- 
 spiracies against the public interests and abuses of patent privileges. 
 The object of these privileges is to promote the public benefit, as well 
 as to reward inventors." In addition to this it might have been 
 pointed out that the patentee is not enabled to make and sell the 
 patented article in virtue of the patent grant; that a license is a 
 common law contract and its legality or illegality must be deter- 
 mined by the same tests that are applied to other ordinary contracts. 
 
 Now the other phase of litigation involving the National Harrow 
 Co. is altogether distinct and different from the foregoing. As to 
 this phase we have three reported decisions dealing with the same 
 state of facts. 
 
 These are: 
 
 National Harrow Co. vs. Bement & Sons (1897) 21 App. Div. 
 
 (N. Y.) 290; 
 National Harrow Co. vs. Bement & Sons (1900) 163 N. T. 70; 
 National Harrow Co. vs. Bement & Sons (1902) 186 U. S. 70. 
 
 The National Harrow Co. here involved is not the same corpora- 
 tion as that considered in the other cases. It bears the same name 
 and style, but is quite distinct, being organized imder the laws of 
 a different State. And it is only necessary to devote a little space to 
 the report of the Supreme Court's decison to show that there was 
 no combination involved in the case at all. The suit was originally 
 instituted in the State Court in New York. No phase of the patent 
 law was involved. Bement and Sons, according to the finding of the 
 
308 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 referee, had sold outright certain patents to the National Harrow Co. 
 and received a satisfactory compensation therefor. 
 
 Bement and Sons then obtained an exclusive license to manu- 
 facture the harrows described in the patents assigned and at the 
 same time agreed to manufacture no other type of harrow. The 
 license was to be operative for the full term of the patents; it pro- 
 vided for a royalty and liquidated damages in case of breach. There 
 was attached to the license a schedule of prices to be maintained by 
 the licensor, but we should never forget a fact that is not mentioned 
 once in all the citations and applications of this decis'ion. It is this: 
 the National Harrow Co., the licensor, Eeserved the right to decrease 
 the selling price and to make the terms of payment and delivery 
 more favorable to the purchasers. (See 186 U. S. at 72 paragraph 4). 
 In this license the owner of the patent had complete control over the 
 price at w'hich the harrows were to be sold and was not restrained 
 by contract in its: freedom to establish prices on its patented articles. 
 The referee not only did not find that there was a combination of the 
 various harrow manufacturers, but he distinctly found that the con- 
 tracts in suit were not part of a scheme and combination to restrain 
 trade. The suit was brought to recover royalties and damages and to 
 restrain future violations of the contract. 
 
 In the course of the opinion, Mr. Justice Peckham at least eight 
 times specifically asserts that there was no proof before the court of 
 tthe existence of a combination among the manufacturers of harrows. 
 
 These assertions are as follows: 
 
 1. "The only Federal question raised in the record is as 
 to the validity of contracts A. and B., with regard to the act 
 of congress on the subject of trusts. If facts not found by the 
 referee are necessary for the purpose of connecting those con- 
 tracts with others not foimd in such report, we cannot supply 
 the omission to find those facts, (black ours) ' '. 
 
 2. "The referee made no finding of any fact connecting the 
 
NATIONAL, HARROW CO. 3,0i> 
 
 contracts A. and B. with prior contracts of a like nature including 
 other parties, as alleged in the answer of the Defendant". 
 
 3. "The omission of the referee to find from the evidence 
 (black ours), that the contracts A. and B. were a combination 
 of former contracts held to have been void, and that there were 
 in fact other manufacturers of harrows who had entered into the 
 same kind of contracts with plaintiff as those denominated A. 
 and B., and that there was a general combination among the 
 dealers in patented harrows (black ours) to regulate the sale 
 and price of said harrows, furnishes no ground for this court to 
 assume such facts." (black ours). 
 
 4. "The contracts A. and B. are to be judged by their own 
 contents alone and construed accordingly." 
 
 5. "When he (the referee) speaks of all the contracts in 
 evidence the referee plainly means all the contracts in evidence 
 between the parties .to this action, for it was of such contracts 
 only that he had been speaking. There were, in fact, other 
 contracts than those designated A. and B. between those parties, 
 and such other contracts had been put in evidence, and previously 
 referred to by the referee. He, therefore, must have included 
 what is termed the escrow agreement in his finding, that all 
 agreements made by the defendant with the plaintiff were valid. 
 That agreement is set forth in the margin." 
 
 6. "There is no finding by the referee that this agreement 
 was ever signed by anyone other than the parties to this action, 
 or that any other person received the licenses from and made 
 contracts with, the plaintiff, similar to the ones entered into be- 
 tween these parties." 
 
 7. "In the absence of any finding as to the escrow agree- 
 ment having been signed by others, it must be regarded as un- 
 important, (black ours) and we are brought back to the ques- 
 tion whether these contracts, A. and B. irrespective of any con- 
 
310 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 tracts not found by the referee as in any way connected with, 
 or forming a part thereof, (black ours) are void as a violation 
 of the Act of Congress." 
 
 After pointedly stating at least seven times, as just indicated, that 
 the Court was not dealing with facts involving a combination, the 
 Court returns to the matter at the conclusion of the opinion and 
 again emphasizes the absence of any proof as to combination. 
 
 8. "It must, however, be conceded that the escrow agree- 
 ment above set forth, looks to the signing, by the parties men- 
 tioned therein, of contracts similar to those between the par- 
 ties to this suit, designated A. and B. and containing like con- 
 ditions relating to the patents respectively, owned by such par- 
 ties. 
 
 But there is no finding by the referee that such contracts 
 were in fact entered into by those other parties nor that they 
 constituted a combination of most if not all of the persons or 
 corporations engaged in the business concerning which the 
 agreements between the parties to this suit were made. If such 
 similar agreements had been made, and if, when executed, they 
 would have formed an illegal combination within the Act of Con- 
 gress, we cannot presume for the purpose of reversing this judg- 
 ment, in the absence of any finding to that effect, that they were 
 made and become effective as an illegal combination. As be- 
 tween these parties, we hold that the agreemnts A. and B. actually 
 entered into were not a violation of the Act. We are not called 
 upon to express an opinion on a state of facts not found." (black 
 ours). 
 
 We have never read an opinion in any case where the Court ex- 
 ercised more vigilant and persistent care to define the exact scope 
 of the decision than is here illustrated. The court through all vary- 
 ing forms reiterates the entire absence of any proof of a combina- 
 
NATIONAL HARROW CO. 311 
 
 tion and concludes with two terse sentences, defining both affirma- 
 tively and negatively, the limitations of the decision. 
 
 What the case involves is this: One licensor and a single li- 
 censee; an exclusive license for the full term of the patents; a fixed 
 royalty.. The price at which the article was to be sold was entirely 
 dependent upon the dictate of the owner of the patent. The licensee 
 agreed to sell at the price fixed in the license, but the licensor had 
 the right to change prices by lowering them. It is thus seen that 
 the only restraint, if such it can be called, imposed upon the licen- 
 sor was an inhibition against his raising prices. Aside from this the 
 owner of the patent was free to make prices such as he saw fit 
 whereas, the licensee had no power or voice in the matter what- 
 ever. The owner of the patent at all times was free to meet the 
 changing conditions of supply and demand. Its royalty was a fixed 
 amount on each harrow sold and was not computed as a percentage 
 of the total value of the harrows sold. So that the owner of the 
 patent was free to make its own price on the patented article to be 
 sold, and so far as the facts in contest indicated, it had every mo- 
 tive for making the price such as to bring about the largest number 
 of sales. The license was exclusive and the owner of the patent had 
 certainly a right to grant an exclusive license. There was no stifling 
 of competition, for the sole maker and vendor of the harrows was 
 the licensee. Whether the price agreed upon was exorbitantly high 
 or was reasonable ; what was the reasonable value of the harrows ; 
 ■what other similar implements were on the market, — does not appear 
 in the record. Looked at from every view point there was no element 
 of combination in the ease and no restraint of trade within the mean- 
 ing of any decision of the Supreme Court. Apparently the defend- 
 ant made the mistake of supposing that ugly allegations of the exis- 
 tence of a combination unsupported by any proof would constitute 
 a defense. But it has long been settled that allegations without 
 
312 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 proofs carry a suitor no nearer the goal than proofs without allega- 
 tion. Either without the other is useless. 
 
 When the Bement case is properly understood, as to the facts 
 involved the decision presents no difficulty whatever. The gist is 
 in these sentences: "The general rule is absolute freedom in the use 
 or sale of rights (black ours) under the patent laws of the United 
 States. The very object of these laws is monopoly, and the rule is, 
 with few exceptions, that any conditions which are not in their very 
 nature illegal with regard to this kind of property (that is patent 
 rights, not chattels) imposed by the patentee and agreed to by tba 
 licensee (black ours) for the right to manufacture, use or sell the 
 article, wiU be upheld by the courts. The fact that the conditions 
 in the contracts keep up the monopoly or fix prices does not render 
 them illegal." Again the Court says the Anti-trust Statute "clearly 
 does not refer to that kind of restraint of interstate commerce which 
 may arise from reasonable and legal conditions imposed upon the 
 assignee or licensee of a patent by the owner therteof (black ours), 
 restricting the terms upon which the article may be used and the 
 price to be demanded therefor." 
 
 But this case has nothing in common with such decisions as the 
 Heaton, Neostyle and graphophone cases. Here the condition was 
 imposed by the patentee upon a licensee to make and sell the article. 
 Until the licensee sold the harrows they were within the limits of 
 the monopoly. The licensee in selling the harrows made no attempt 
 to restrict the right of the purchasers to use or resell the implements. 
 It did not place a brass plate on each harrow, reading, "Licensed 
 for use only in connection with other implements supplied exclusively 
 by the vendor" or "This harrow is sold under a license which re- 
 stricts the right of the purchaser to resell the same to the price 
 named and any one selling or purchasing the harrow at a less price 
 is an infringer of the patent." There is nothing akin to that in the 
 
SEEDED RAISIN CO. VS. GRIFFIN. 31S 
 
 case. The Bement case, by no distorting sophistry, can be made to 
 support the two groups of cases previously discussed. 
 
 All the cases we have met with thus far where the courts found 
 a combination in restraint of trade in patented articles resulted in 
 the decision of the courts that the combination was illegal. 
 
 We now come to an unexpected and unforeseen result to the 
 opposite in me case of, 
 
 United States Consolidated Seeded Raisin Co. vs. Griffin & 
 Skelly Co. (1903 C. C. A. 9th Cir.), 126 Fed. 364. 
 
 It is not worth while to state the facts in any detail here or to 
 examine at length the reasoning of the Court to sustain its judgment. 
 It is sufficient to say that no clearer case of a combination can be 
 found. Eight concerns were interested. The plaintiff was a mere 
 dummy, and to it, the other concerns assigned the patents respec- 
 tively owned by them. Then licenses were issued to each assignor. 
 The licenses were not exclusive, but mere permissions to use the ma- 
 chines and processes. Notwithstanding this, the licensor agreed not 
 to license other parties without the consent of four of the licensees. 
 This is a clear restraint on the owner of the patents. A eommitttee 
 of four was appointed to determine to whom licenses should be 
 issued. This was another restraint on the owner of the patents. 
 
 Aside from this the assignment of the patejits and instituting the 
 license system was a palpable ruse to combine competing businesses 
 under a single control. The licensees agreed not to use any other ma- 
 chines during the life of the contract than those furnished by the 
 licensor. 
 
 As to this combination the Court said: "We think the principles an- 
 nounced in that case (Bement Case) must control our decision of the 
 question here presented." Then we look with both eyes to find what 
 possible construction is to be put upon the Bement Case. And here it 
 
'314 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 is: "That such a contract (black ours) is not void as against public 
 policy, in that it tends to create a monopoly has been decided by the Su- 
 preme Court in the (Bement Case.) In that case (black ours) a con- 
 tract had been entered into between the National Harrow Company 
 and various other corporations and firms engaged in manufacturing 
 float spring tooth harrows, their frames and attachments, under vari- 
 ous patents, 85 in number, which were assigned to the National Har- 
 low Company. That corporation then entered into contracts with the 
 other parties to the agreem.ent and gave to each a license very similar 
 to the license in question in the present suit" (black ours). 
 
 The court'posits the assertion that the combination was not illegal 
 entirely on the above interpretation of the Bement case. It may seem 
 strange that the Court should construe the Bement case as authority 
 for a proposition that the Supreme Court stated specifically at least 
 eight times was not involved, but let us judge not. If there is any simi- 
 larity at all between the Bement case and the one now under notice 
 other than that each had to do with a license agreement we have never 
 been able to discover it. 
 
 We do not deem it necessary to attempt to make clearer the fact that 
 "the Bement case affords no warrant whatever for this decision, and 
 since the Court grounded its judgment on a totally mistaken supposi- 
 tion of the Bement case there is nothing at all to uphold the decision. 
 The Court overrides the California Anti-trust Law by flourishing the 
 Ijaseless dicta from Columbia Wire Co. case but we have already dealt 
 with that. The Supreme Court of California has applied the very 
 same law to declare illegal a combination under patents. See Vulcan 
 Powder Co. vs. Powder Co. (1892) 96 Cal. 510. And we must remem- 
 ber that this was a common law contract, the validity of which depend- 
 ed entirely upon state laws. The Court had no jurisdiction' apart from 
 the fact that there was a diversity of citizenship and more than 
 $2,000.00 in amount involved. We cannot believe that the Seeded 
 Haisin Case adds much color or reason to the false notion that a con- 
 
RUBBER TIRE COMBINATION. 315 
 
 tract in restraint of trade in patented articles does not come within 
 the Anti-trust Acts. Thus far, we have dealt with about six cases in- 
 volving combinations to restrain trade in patented articles. In all of 
 them, except ihe mistaken judgment just noted, the combination was 
 -declared illegal. 
 
 We come now to a case where a combination of the character was 
 upheld and by the most remarkable process of reasoning anywhere to 
 be found in the books. It is the ease of 
 
 Rubber Tire Wheel Co. vs. Milwaukee Rubber Tire Works 
 (1907 C. 0. A. 7th Cir.), 154 Fed. 358. 
 
 This is a case of great importance because it is the only stronghold 
 of those who cling to the notion that the Anti-trust legislation is not 
 applicable to a combination in the restraint of trade in patented arti- 
 cles. We shall study the opinion with ail the insight, prdcision and 
 thoroughness at our command. If the decision is a sound one it is ex- 
 ceedingly valuable to know it. Whether or not it is sound must be de- 
 termined by the holdings of the Supreme Court of the United States. 
 
 Before going into the case we must take notice that here the point of 
 view is shifted from what it was in the two groups of cases involving 
 restrictions on the Use and Eesale of Articles which the patentee has 
 sold. There the restraint was imposed on the purchaser and inhibited 
 ills freedom in the use and sale of his property. We saw that the effect 
 of the court's action in upholding the restriction was to confiscate the 
 purchaser's property in the resale cases ; and in the cases of use, it was 
 to drive supposed "contributory infringers" out of a lawful business 
 and give the patentee a monopoly in an unpatented article after he 
 hiad sold his patented article and received the purchase money. 
 
 But here the locus of the restraint is different: it is not imposed on 
 the purchaser in the first instance though the burden of it falls on him 
 ultimately. In every case of a combination or contract in restraint of 
 trade the purchaser, the ultimate consumer, pays the full cost of the 
 restriction. That is what men combine and conspire for, to oppress 
 and rob the public. It is never for any other purpose. The real object 
 
316 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 is to deprive the purchaser of a free and open market and compel him 
 to pay for the article more than he would have to pay if the law was 
 observed and the market left open. 
 
 In the class of cases typified by the one now to be discussed the point 
 at which the restraint is applied is oh the parties who sell the article 
 to the purchaser. The restraint is capitalized in the price at which the 
 combination sells to the public. The restraint here is imposed upon 
 the paientee by the other members of the combination and on each 
 member of the combination by the united influence of all others, so 
 that there is no freedom whatever on the part of any member. 
 
 Two other observations need to be made before we take up a con- 
 sideration of the facts involved. First: The suit was on a contract to 
 recover royalties : the Federal Court had jurisdiction only in virtue of 
 the fact that there was a diversity of citizenship and more than 
 $2000.00 involved. It was not an infringement suit, therefore, the va- 
 lidity or invalidity of the contract is to be determined by the general 
 laws applicable to Wisconsin contracts including the Anti-trust Act 
 of the State and the Federal Anti-trust Act. Second: The court ex- 
 pressly declares that the case is not within the principles of the Be- 
 ment case. "We cannot dispose of the question on the authority of Be- 
 ment vs. National Harrow Co. for according to our reading the ques- 
 tion was expressly excepted from the decision; and so, aided by the 
 declaration of general principles in that and other cases, we must form- 
 ulate our own answer." This is gratifying. We have the Bement case 
 eliminated and the court is going to formulate its own answer. There 
 is no use to have a power to reason without using it. And the privi- 
 lege of reasoning is entirely ignoble unless one dares to think his 
 thoughts to the bitter end and then convert them into rules of conduct. 
 To think is difficult, to act without thinking is easy, to act consistently 
 in precise conformity to accurate, consistent thought is very rare. We 
 shall see that the court had an opinion of its own and put that opinion 
 
 * 
 
 into effect, and in studying the opinion we are brought to face an un- 
 expected result, an unforeseen possibility of the patent law. 
 
RUBBER TIRE COMBINATION. 317 
 
 THE FACTS. 
 
 The facts are not difficult to understand, but a careful statement of 
 them is advisable. As before stated, the suit was grounded on a license 
 ■contract and the object of it was to obtain a judgment for royalties un- 
 der the contract. The patent pertained to an automobile tire, and the 
 license contract was entered into consequent upon the following hap- 
 penings : 
 
 The complainant was the owner of patent No. 554,675. Prior to the 
 decision in this case the patent had had an eventful court history. It 
 had been sustained as valid and infringed in a number of Circuits, but 
 by the Court of Appeals for the 6th Circuit it had been declared void 
 for want of novelty (116 Fed. 363) and the Supreme Court of the 
 United States had denied a writ to review this decision (206 U. S. 285) . 
 The patent has since been involved in infringement suits but at this 
 point we are concerned only with the legal status of the patent at the 
 date of this decision. After the decision of the Circuit Court of Ap- 
 peals for the 6th Circuit the "manufacturers of tires disregarded the 
 patent, paid no royalties and cut the prices of the respective qualities 
 to 50 and 40 cents a pound." That was very bad. Notwithstanding 
 this condition of affairs "all of the parties to the contracts in suit en- 
 tered into the arrangement in good faith, believing that the patent was 
 valid and that the adverse decision was erroneous." What is to- be 
 thought of a set of men who "in good faith" believe a patent to be valid 
 when the highest court in a circuit has declared the patent absolutely 
 void? 
 
 However, in this lamentable st^te of affairs "all of the manufactur- 
 ers that had been infringing, except two sm'all concerns, came into the 
 pool. ' ' That was a consummation devoutly to be wished. The defend- 
 ant went into the "pool," which had these characteristics. Plaintiff 
 licensed 18 concerns of which defendant was one, to make, use and sell 
 the tires under the patent for one year; each licensee's share of the 
 trade was fixed at a certain proportion of the whole, defendant's at 2 
 
318 TRADE COMBINATIONS IN, PATENTED ARTICLES. 
 
 per cent ; two qualities of tires were to be made ; the minimum selling, 
 price of the first quality was established at 65 cents per pound, of the 
 second quality at 55 cents per pound. 
 
 Each concern agreed to pay plaintiff monthly 4 per cent of its sales,, 
 and if in any month its sales proved to be larger than its proportion- 
 ate share of the total sales for that month, to pay plaintiff an additional 
 "royalty" of 20 per cent of the amount over its quota; plaintiff agreed 
 to employ a commission of five persons to supervise the transactions of 
 all the parties (now listen : remember we are dealing with the Czar) , 
 and "to turn over to the commission all royalties in excess of two 
 per cent. ' ' We must stop now and carefully examine the operative ef- 
 fect of this "pool." It is full worthy of the closest scrutiny, for nothing 
 like it was ever known in a law book before, and we hope will never 
 be there seen again. We have already noted the fact that the compet- 
 itive prices of the tires were 50 and 40 cents a pound ; it is so stated by 
 the Court. The "pool" prices for the corresponding qualities are 65 and 
 55 cents per pound, the gross advance in each price being 15 cents per 
 pound. To study the effect of this wonderful transformation in the 
 business of supplying rubber tires we will consider the changed status 
 of the first quality tire. It is entirely fair to the "pool" to thus proceed 
 as the per centage of increase is smaller than in the case of the cheaper 
 quality, though the unit increase per pound is the same. Let us sup- 
 pose a sale by a member of the "pool" of 10,000 pounds of the first 
 quality at 65 cents per pound. In this sale we want to consider the in- 
 terest of four parties. 1st. The owner of the patent. . 2nd. The licensee 
 manufacturer, who was an "infringer." 3rd. The "pool"; and 4th, 
 The public, impersonated in the purchaser. In these "pool" cases the 
 interest of the people are always put last though the money of the peo- 
 ple is kept always in the front. 
 
 1st. Then the owner of the patent. Ten thousand pounds are sold 
 for $6500.00, of this sum the patent owner gets 2 per cent or $130. To' 
 start with this result is amazing. By hypothesis he is a Czar and has a 
 complete monopoly. This court said in the Victor Talking Machine 
 
RUBBER TIRE COMBINATION. 319> 
 
 Case (123 Fed. at 426) "that whether purchasers come or not is pureljr 
 his own concern, and if purchasers do come, the courts will enforce the 
 terms of the sale." Again "the field of using is as much within the 
 monopoly as" the field of making and selling. Let us apply that logic 
 here. The competitive price of this 10,000 pounds was $5000.00. 
 Surely it is safe to assume that that was not below cost, as we read 
 nothing of bankruptcies among those who sold it at that sum. Suppose 
 then that $5,000.00 represents the cost of the 10,000 pounds though we 
 have to stretch credulity to the cracking point to make such supposi- 
 tion. The Czar has increased this to $6500.00 which leaves $1500.00 
 clear profit, over and above all expenses. What idiotic prepossession in- 
 duced the Czar to accept $130.00 in royalties in lieu of this $1500.00 
 in profits from sales? How long could the ordinary business man es- 
 cape having a guardian appointed if his friends knew that every week 
 and month he was deliberately sacrificing an assured profit of $1500.00- 
 for a "royalty" of $130.00? How long would the stockholders of a cor- 
 poration hesitate to demand the expulsion of a board of directors who 
 would accept a "royalty" of $130.00, when by the Patent Laws of the 
 United States, the corporation was entitled to earn and could have 
 earned $1500.00 instead? 
 
 There is no use to say the patent owner was not equipped to manu- 
 facture the tires. It could readily have hired them made. There is no 
 use to mumble about the owner of the patent having no facilities for 
 selling. One who has produced "a new integer in the useful arts" 
 greatly in demand, does not experience difficulty in selling it. This, 
 then, is the first amazing and shocking result of this "pool." The Czar 
 who can exclude all persons whatsoever, even to the Federal govern- 
 ment, drops a profit of $1500.00 to pick up a royalty of $130.00. What 
 must we think of the stockholders of that corporation? 
 
 2nd. We must consider the licensees, who formerly were "infring- 
 ers." A bona fide license granted in good faith under a valid patent 
 must of necessity imply a financial benefit to the licensor and a tax 
 or burden upon the licensee. The licensor parts with a right which he= 
 
320 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 might withhold; the licensee gains a permission that he could not 
 force and assumes a burden in the royalty. 
 
 While doing the licensed act is profitable to the licensee nevertheless 
 lie could not have done the act at all without the license and the sale 
 of the privilege must result in a profit to the licensor, or he would not 
 .sell it. Likewise the paying the royalty must gain the licensee a new 
 right or he would not pay it. "We have already seen that the licensor 
 here gained nothing by the licenses ; on the contrary for every $130.00 
 received in royalties, it sacrificed an assured profit of $1500.00 in sales. 
 We turn now to see what burden the license cast upon the "infringing" 
 manufacturer when he entered the pale of the "pool." The price at 
 which he formerly sold the 10,000 pounds was $5,000.00; under the 
 "pool" regime he gets $6500.00 for the same subject matter. This rep- 
 resents a gross increase in his profit of $1500.00. Out of this $1500.00, 
 he pays a total royalty of 4 per cent or $260.00 ; which is divided be- 
 tween the "pool" and the patentee, one-half going to each. By taking 
 out a "license" and selling 10,000 pounds of tires at the "pool" price, 
 the manufacturer makes a clear net profit of $1240.00 in excess of the 
 profit he madie on the sale of the identical goods prior to the license. 
 Did anyone ever before hear of such a beneficent Czar? His charity is 
 not only very costly to himself but is vastly profitable to the licensee. 
 
 Here the licensor not only did not charge any royalty at all but hired 
 the licensee to operate under the license for he enabled the licensee to 
 make a profit of $1240.00 in addition to what was made without it. If 
 licensor and" licensee had each spoken their respective attitudes the re- 
 sult would have found some such expression as this : Licensor: "I have 
 a valid patent on the rubber tires, can exclude every one from selling 
 the same and I can realize a profit of $1500.00 on every 10,000 pounds 
 sold. But if you, Mr. Licensee, will come into my 'pool' I will allow 
 you to make $1240.00 on every 10,000 pounds sold and all you need to 
 do is divide $260.00 between me and my 'pool.' " 
 
 Licensee : "I do not believe that you have a valid patent and I care 
 nothing about a permission from you to manufacture and sell tires.' 
 
RUBBER TIRE COMBINATION. 321 
 
 But if you and your 'pool' will enable me to make on every 10,000 
 pounds sold an additional profit of $1240.00 without any cost to me, 
 and the courts can be persuaded that this is legal because pulled off 
 under much talk about 'patent monopolies,' I am not such a fool as 
 to decline the offer ; for I am in the business to get the people's money." 
 
 This, then, is the second amazing result that comes out of the re- 
 markable circumstances here given. The licensee is given a bonus of 
 $1240.00 on every 10,000 pounds just for the privilege accorded to the 
 patent owner of calling him a "licensee." 
 
 3rd. The "pool." We come now to a more interesting phase of the 
 matter than we have yet noted. The "pool" is not the owner of any in- 
 terest in the patent. It is neither a licensor or a licensee. It is labelled 
 here "a commission of five persons" employed by the owner of the 
 patent. The name by which it goes is of no importance ; what we want 
 to deal with is the thingj not its cognomen. This commission could not 
 grant a license and did not manufacture any tires. Let us see what 
 was its mysterious function. 
 
 The book says that each hcensee paid to the licensor a royalty of four 
 per cent and in addition 20 per cent of the amount of its business in ex- 
 cess of its determined quota of the total business. Further, the licensor 
 turned over to the commission "all royalties in excess of two per cent." 
 That means that the owner of the patent turned over to the "pool" one- 
 half of the royalties, and all of the twenty per cent paid in by the 
 licensees who exceeded their respective quota. We think it distinctly 
 worth while to see how this would work in a concrete instance. Suppose 
 the business for a given month totalled $100,000.00. This ig a mere 
 bagatelle in comparison with the amount in fact involved, but it will 
 serve -ior illustration. 
 
 Suppose of this total business, licensee, A, did $5,000.00. Then 
 all other licensees combined did a business of $95,000.00. A's per cent- 
 age was 5/100 and that of the remaining licensees, in the aggregate, 
 95/100. Now the month following the total business is $105,000.00, 
 of which A does $10,000.00 and the other pool members $95,000.00 as 
 
3:12 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 for the preceding month. Something must be done in such case. A is 
 .growing too fast. He was entitled to do 5/100 of a total of $105,000.00, 
 or $5250.00 ; instead he has pushed up to $10,000.00 or exceeded his 
 quota by $4750.00. The other members of the "pool," by the law of 
 fixed quotas, were entitled to do an aggregate business of 95/100 of 
 ^105,000.00 or $99,750, instead they have fallen short $4750.00. Here 
 the "pool" steps in, takes twenty per cent of the $4750.00, which rep- 
 xesents the sum in excess by A's quotEf,, said twenty per cent, ainount- 
 ing to $950.00, and distributes the same among the other "pool" mem- 
 bers; thereby making good to- them twenty per cent of their loss, due 
 to indolence and inertia. Eemember that no part of this $950.00 goes 
 to the owner of the patent. It is not a tax imposed by him to limit the 
 licensee's business. 
 
 This is not a case where each licensee was limited to making a cer- 
 tain number of tires. The patentee got nothing out of the- twenty per 
 cent at all. On the other hand A had to pay the full royalty of four 
 per cent on his total sales of $10,000.00 and in addition had to give 
 approximately ten per cent of the total sales to the other "pool" mem- 
 bers simply because he was industrious and energetic and they were 
 ^oing on in the same old rut. The patentee gains nothing by the trans- 
 action; and at first glance the "pool" seems not to profit by it. But 
 when we look closer we see that the first impression is wrong. One may 
 always carry in one's mind the irrebutable presumption that the ma- 
 nipulators of a "pool" do not do anything whatever without being paid 
 v.'ell. We look at the book again and it says : from the moneys so put 
 
 into their hands (i. e., by the patentee, turning over all "royalties" in 
 «xeess of two per cent.) the commission after deducting their expenses 
 
 and compensation for services in supervising and auditing, (black 
 
 ours) were to" distribute monthly to any lazy licensee 20 per cent of 
 
 the cost to him of his indolence. "Expenses and compensation for their 
 
 services." There's the rub. Lobster salad, champagne, black cigars, 
 
 automobiles and little flunkies running everywhere, these are some of 
 
 the items of expenses of "pool" managers. These are necessary to put 
 
RUBBER TIRE COMBINATION. 323 
 
 up a front and keep a bluff going. And ' ' compensation for their ser- 
 vices in supervising and auditing." What this really means is watching 
 the licensees to see that they do not "cut prices." This is weighty tjusi- 
 ness. The licensees have been induced to sign a contract under which 
 every sale is a crime and it requires vigilance to make 18 licensees con- 
 stant in crime. If one obeys the law and sells at his own price, a com- 
 petitive price, he must be punished. It is just like 12 jurors who have 
 secretly agreed to return a verdict in keeping with a compact of bribery, 
 and one breaks over and is about to follow the court's instruction to 
 render a verdict according to the law and the evidence. The man who 
 can bring such a juror back and make him keep the corrupt bargain 
 he has made, is, in this age of shame and lawlessness, well paid always. 
 He ought to be, for he is playing dangerously near the portals of the 
 penitentiary in performing the services. Hazardous employments al- 
 ways come high. It was for similar services that the "commission" 
 here was to be paid, including expenses, out of the funds turned over 
 by the owner of the patent. In the transaction supposed, A has fared 
 thus on his sales amounting to $10,000 ; he has paid $200.00" to the 
 patentee as a royalty; $200.00 to .the '.'pool" in royalties, and ,$950.00 
 t<j the "pool" as a tax on his industry and as a tribute to the criminality 
 of the. commission. Not a thing does A gain by paying the $1150.00 
 to the "pool," except that it is a step on his part in violating the law 
 and a link in the chain that keeps the other licensees violating the law. 
 Of course, the patentee gains nothing whatever by this payment. But 
 the "pool" has something more to do than transfer the 20 per cent 
 from the industrious to the shiftless members of the combine. It is to 
 accumulate $50,000.00; to distribute any sums in excess monthly 
 among the concerns licensed. Then the "pool" has power upon the 
 written consent of a majority of the parties at interest (including one 
 patentee and 18 licensees) to purchase tires from any or all of the par- 
 ties hereto at the prices named in the license and to dispose of such 
 tires to the trade at such prices as said commission shall deem to the 
 interest of all the parties hereto" (black ours.) 
 
324 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 Now we appreciate the real purpose of the $50,000, and the use to > 
 which it is to be put by the' "pool". Mr. Justice Holmes in the North- 
 ern Securities case, said that a combination or conspii?acy in restraint 
 of trade is a conspiracy to keep strangers out of the business. That 
 is exactly the purpose for which this "commission" accumulated the 
 §5.0y000. Sell the tires to the trade at such prices as said commission 
 shall deem to theanterest of the combine. In'other words, if a new con- 
 cern starts in the business, go to its customers and give away the tires 
 if necessary or sell them at such price as will destroy the customof the 
 new concern and "keep strangers out of the business." UndoubtecUy 
 the "commission", with this barrel, should have been successful for the 
 opinion says "all of the manufacturers that had been infringers, exe^ 
 two small conceras (black ours) came into the "pool." No doubt the 
 "pool" has long since put them out of business or brought them within 
 the fold. Here then we have a "commission" with $50,000 accumulated 
 for the sole purpose of destroying other persons who attempt to start 
 up in a legitimate business. This fund was accumulated from the 
 licensees, not from the patentee, though it went through his hands. 
 This then is the third amazing result of the combination dealt with. 
 But the most impgrtant interest has yet to be considered. 
 
 4th. The. Public. We mus.t now take a look at the interests of the 
 people and see, how they fare in this mix-up.. The people, the con- 
 sumers,, the ultimate purchasers, and users of these tires, must be given 
 some.after-thjought at least. Without them the patentee's patent would 
 be worthlepa;- the "pool" could not exist. Without the ignorance and 
 credulity of the public, the "commission" would be given employment 
 of far more certain duration and tenure, accompanied by a gratuitous 
 supply of food and clothing, according to a welLknown practice. More- 
 over the "pool" always has a care that no other "pool" shiall be formed 
 to do unto- it even as it does unto the people. For example, if the work- 
 ing-men form a "pool" of their own to increase cost of their labor to 
 the "pool," the latter straightway rushes into a court of equity crying 
 "combination" and "conspiracy," and gets an injunction against the 
 
RUBBER TIRE COMBINATION. 325 
 
 labor "pool." And if it runs into another "pool" in the business of sup- 
 plying raw materials needed in Manufacturing, it smiles a knowing 
 smik and says, "Don't try to work my own game on me. You can go 
 on fooling. the people and taxing their stupidity. We are doing the 
 same thing. But you must cut the 'pool' price to us and we will do the 
 same to you. This is a case where we must hang together or hang sepa- 
 rately. Highwaymen never attempt to hold up one another ; but many 
 times they share the spoils of their separate robberies." And it is doije 
 even so. There is this bond of sympathy and apostate honor between 
 all "pools." Well, let us take the interests of the public in hand now 
 and see how thoroughly the fleece is shorn off. We will make a rough 
 estimate of what the public would purchase from the "pool" in the 
 course of a year's time. No statistics are given in the opinion but by a 
 little thought we can get at the matter pretty accurately. 
 
 The report states that the defendant's quota of the business was 2 per 
 cent. There was a claim for royalties for several months (the contract 
 only run for one year) amounting to $4,000. From this we can easily 
 form an accurate estimate of the business done during the period by the 
 combination. The defendant owed $4,000.00 in royalties which 
 amounted to 4 per cent of its sales. The total amount of its sales for 
 the period obviously may be arrived at by taking one-fourth of $4,000 
 for one per cent, and multiplying this sum by 100. When this is done, 
 we have $100,000, 4 per cent of which is $4,000, the amount of royalty 
 sued for. But by the authentic report, the defendant's quota was just 
 2 per cent of the total, so that we must multiply the 2 per cent repre- 
 sented in the $100,000 by 50, in order to arrive at the grand total — 
 100 per cent — $5,000,000 — the business done during the period by the 
 combination. Thus by following the method of the scientist who, pos- 
 sessed of only the maxillary bone, reconstructs the entire skeleton of a 
 mastodon, we have all the huge proportions of the business accurately 
 delineated before the mind's eye. There is no guess work or specula- 
 tion about it. Granted, the defendant's royalties of 4 per cent aggre- 
 ^ted $4,000, the sum total of the combine's sales for the period, must 
 
326 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 have been $5,000,000, or the multiplication table is no longer reliable. 
 We will suppose these sales were'^all of first quality at 65 per cent per 
 pound. This is the part of fairness to the combination as the percentage 
 of increase in the price was slightly less in case of the high priced tire 
 than in that of the second quality. This supposition seems reasonable, 
 too. For most people who own automobiles thus far, are themselves in 
 some sort of a "pool" and thereby take occasion to buy the high priced 
 article, if for no other reason than to have the reputation of being 
 "swell" and advertising the fact that the possessor, too, understands how 
 to take the money from the people. Now the advance in the sale price 
 of the first quality was from 50 to 65 cents per pound or exactly 30 per 
 cent. Here, then, is where the dear people come out. Before the forma- 
 tion of the "pool" in connection with the unassailable "license 'system," 
 the people, the automobile riders, could have purchased the same quan- 
 tity of the identical tires at 50. cents per pound, or a total cost of 
 $3,500,000 whereas under the regime of the "pool" manipulated by the 
 "commission," they pay $5,000,000 for the same thing. By the court's 
 own statement the manufacturers were selling the same "infringing" 
 tire at 50 cents per pound prior to the "pool," so that the utmost aggre- 
 gate they would have gotten for the quantity mentioned would have 
 been $3,500,000, whereas . they in fact obtained $5,000,000, or 
 $1,500,000 in excess of the former price. Now let us do a little "audit- 
 ing and supervising" here, of transactions between the "pool" and the 
 people and then go over the "pool's" books apart. 
 
 First let us see what effect the "pool" had on the pocket-books of 
 the people. 
 
 People's Investment in rubber tires $5,000,000 
 
 Competitive sale price of tires $3,500,000 
 
 "Pool" price of same tires 5,000,000 
 
 Cost to the people of the "license system and "su- 
 pervision, auditing," "expenses and services" 
 of "commission" $1,500,000 
 
RUBBER TIRE COMBINATION. 327 
 
 That is the balance sheet of the people in account with the "pool.'* 
 But we are strong on details and we desire now to go over and "audit 
 and supervise" the accounts of the "pool." The balance sheet here, in- 
 dicating the profits and losses is very remarkable. Here it is : 
 
 'Tool's" sales to the people for the period $5,000,000 
 
 To 2 per cent net royalty to the Czar. $ 100,000 
 
 To 2 per cent royalty to "commission" for ex- 
 penses, services and anti-competition fund. . . . 100,000 
 
 To competitive sale price of tires 3,500,000 
 
 To licensees' swollen profits in excess of compe- 
 titive prices, under the "pool" system 1,300,000 ' 
 
 $5,000,000 
 That is the ledger account, of the "pool" and the people and of the 
 "pool" in account with itself. 
 
 Now, reader, you are prepared for a few ideas about these "pools" and 
 business generally. Business has many diversified aspects but the one 
 phase which always is to be found in all of its changed forms is other 
 people's money. That is invariably the case. A "pool" is a device where- 
 by all the concerns in one line of business make a concerted assault on 
 the people. They are like a string of highwaymen who waylay every 
 road, so that the people cannot escape, for there is no road uninfested. 
 A "commission" keeps tab on all the "pool" members, whistles to en- 
 able them to keep up their courage and punishes any one who falters 
 in the desperate work. 
 
 A patent is the latest devised means of proving an alibi when the 
 people complain of being robbed. Thus far it has served its purpose. 
 When the sort of thing described in this case can be done right under 
 our eyes and be stamped with approval by the courts right before our 
 eyes, we ought not to wonder that some men can afford to build libra- 
 ries, endow hospitals, foundling asylums and colleges, ride in yachts and 
 play golf to drive away the time. But we do wonder and shall continue 
 to wonder why the courts should continue to punish petty thefts. It 
 
S:i8 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 may seem strange that a man who steals $10, it may be, to dull the 
 edge of a gnawing hunger or fence his limbs from the cold, should be 
 sent to jail as a thief, while a set of men who steal $1,500,000 should be 
 commended for contributing to the progress of science and the useful 
 arts, but let us judge not, that we be not judged. We have not yet ex- 
 amined the attempted legal justification for this, but shall do so pres- 
 ently. We may say, however, that if such a result can be justified un- 
 der the supreme law of the land, it would be worth walking bare-footed 
 from the Gulf of Mexico to the St. Lawrence River to learn how. Thus 
 far no case has foreshadowed that such a thing was coming. Let us see 
 then what is to be said as to thfe law of this "pool," "license system" and 
 "commission" : 
 
 THE OPINION. 
 
 « 
 
 The defendant pleaded the Federal Anti-trust Act, the Anti-trust 
 Act of Wisconsin, which prohibits Wisconsin corporations (of which 
 defendant was one) from entering into any arrangement or contract 
 intended to restrain competition in the supply or price of any com- 
 modity constituting a subject of commerce within the State. 
 
 The defendant further pleaded that the patent was invalid,, known 
 by the parties to be invalid and that the license system was fraudulently 
 devised to enable the parties to evade the law's against combinations in 
 restraint of trade. 
 
 At 154 Fed. 361, the court goes into the merits of the case. "The 
 Wisconsin (anti-trust) statute is eliminated not only because it is not 
 involved in any assignment of errors," What a strange start this is. 
 The Wisconsin statute was pleaded in the answer as a defense to an ac- 
 tion on a Wisconsin contract. The Court below held the contract in- 
 valid and gave judgment for the defendant. It was the plaintiff that 
 appealed from that decree. There was no occasion for the defendant to 
 bring up any assignment of errors. Now, because the defendant did 
 not assign as an error, the publication of a public statute, contravened 
 
RUBBER TIRE COMBINATION. 329 
 
 by the contract sued on, the Court will "eliminate" the statute. Sup- 
 pose a criminal is convicted of murder and appeals. In the assignment 
 of errors he omits all reference to the statute punishing murder with 
 death. Would the Appellate Court "eliminate" that statute on mur- 
 der? The Federal Courts are bound to take notice of State statutes, ex- 
 actly the same as they do of National laws. As early as 1835, in the 
 case of Owings vs. Hull, 9 Peters 607, at 625, Mr. Justice Story said : 
 "The Circuit Courts of the United States are created by Congress, not 
 for the purpose of administering the local law of a single State alone, 
 but to administer the laws of all the States in the Union, in cases to 
 which they respectively apply. The judicial power conferred on. the 
 general government by the Constitution, extends to many cases arising 
 imder the laws of the different States. And this Court is called upon in 
 the exercise of its appellate jurisdiction, constantly to take notice of and 
 administer the jurisprudence of all the States. The jurisprudence is, 
 then, in no just sense, a foreign jurisprudence, to be proved in the 
 courts of the United States, by the ordinary modes of proof by which 
 the laws of a foreign country are to be established : but it is to be judi- 
 cially taken notice of, in the same manner as the laws of the United 
 States are taken notice of by these Ootirts." (black ours). This has al- 
 T\'ays been the law and is the law today. See Martin vs. B. and 0. Rail- 
 road Co. (1894) 151 U. S. 673 at 678. 
 
 The Wisconsin Act, then, cannot be eliminated ' ' on that ground. We 
 turn to the other reason, "but also because a State cannot subtract 
 from the right conferred upon a patentee (black ours) and his assigns 
 by the Federal laws." For this proposition we are cited to the Columbia 
 Wire Co. Case, and The Seeded Raisin Co. Case. We have already seen 
 that the statement in the former case was not only unfounded, but was 
 a mere aside remark, not within the issues. This was taken up and 
 made controlling in the Seeded Raisin Case and now we have the two 
 ■decisions yoked as authorities. Fortunately each time the rule is an- 
 nounced, we have a varying statement of it and thus it can be exam- 
 
330 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 ined from all view points. Here we have a new formulation of it. "A 
 State cannot subtract from the right conferred upon a patentee * * * 
 by the Federal laws." We will stick to the Court's simile, dangerous as 
 figures of speech always are in argument. Before we can determine 
 whether a given subtraction can be made, we must ascertain the minu- 
 end and the subtrahend, and if it turns out that the two sums are in dif- 
 ferent categories, the operation becomes impossible and no result is 
 derivable. We cannot subtract ten horses from twelve stars. In the 
 problem given the minuend — the right conferred upon the patentee — 
 is the right to exclude others. We concede without a struggle that the 
 State of Wisconsin cannot subtract from that right. It cannot impose 
 conditions on the right of the patentee to bring suits for infringement, 
 or to assign his patent. And we stoutly deny the legislature of that 
 State has attempted such a thing' in the Anti-trust Act. The statute 
 does not attempt to punish a patentee for keeping his device to himself 
 and excluding others from its sale or use. On the other hand, the 
 patentee and all other persons have a right to enter into contracts, to 
 enjoy and dispose of the fruits of their own labors, and to employ con- 
 tracts as a means of doing this. This is a fundamental right of every 
 citizen, not derived from any law. State or National. It is the same for 
 the patentee as for any one else. This general right to contract is the 
 minuend in our calculation. .From this, the State of Wisconsin can 
 subtract the right to enter into contracts and combinations intended to 
 restrain competition in the supply or frice of any commodity constitut- 
 ing a subject of commerce within the State. And when that juristic 
 subtraction is carefully' made, the remainder is momentous ; it is a 
 crime. We think the computation made in this case is erroneous be- 
 cause the minuend was not properly understood, and the result conse- 
 quently is altogether unaccountable. 
 
 We proceed, and have this further observation on the power of a 
 State over trade in patented articles : "For the protection of the phys- 
 ical or moral health of its citizens, a State may restrain the use of 'the 
 
RUBBER TIRE COMBINATION. 331 
 
 corporeal thing or article brought into existence by the application of 
 the patented discovery, (citing Patterson vs. Kentucky) but such a 
 lajring on of hands does not touch the monopoly of the federal grant, 
 (black ours) . Nothing in this record questions the innocence of rubber 
 tires." But the power of a State is not limited to the protection of the 
 physical or moral health of its citizens. In what manner is the ' ' physical 
 and moral health" of citizens threatened or imperilled by cast-iron pipe 
 (175 U. S. 211), blue stone (44 N. Y. Supp. 787), wire cloth (14 N. Y. 
 Supp. 277), candles (47 Ohio St. 320), or cotton bags (14 La. Ann. 
 168) ? Are not all these equally as "innocent" as rubber tires? And 
 yet contracts in restraint of trade, in all of them, have been declared 
 illegal and void, and these decisions are recognized as enunciating the 
 public policy of the Nation. We quite agree that "such a laying on of 
 hands does not touch the monopoly of the federal grant," 
 which consists altogether in the incorporeal right to exclude others, 
 wliich is beyond the laying on of any legislative hand, but such a lay- 
 ing on of hands, does touch, or ought to be made to touch, contracts, 
 conspiracies, and combinations in restraint of trade in articles of trade 
 and merchandise. These are no part of the "monopoly of the Federal 
 grant." We hear the voice in Webber vs. Virginia, crying out like a 
 prophet in the wilderness: "The Legislation respecting the articles 
 which a State may adopt after the patents have expired, it may equally 
 adopt during their continuance. It is only the right to the invention or 
 discovery, the incorporeal right which the State cannot interfere 
 with." 
 
 Now we pass over to consider the Federal Anti-trust Act. The State 
 statute was eliminated for that it was not involved in any assignment 
 of errors and also because a State cannot subtract from the monopoly 
 of the federal grant. The federal statute also is to be "eliminated," but 
 for a different reason. The National law is "eliminated" after this ex- 
 tensive fashion: "Under its constitutional right to legislate for the 
 promotion of the useful Arts, Congress, passed the patent statutes. The- 
 
332 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 public policy thereby declared, is this : Inventive minds may fail to 
 produce many useful things that they would produce if stimulated by 
 the promise of a substantial reward ; what is produced, is the property 
 ■of the inventor; he and his heirs and assigns may hold it as a secret 
 till the end of time; the public w:ould be largely benefited by obtain- 
 ing conveyances of these new properties (black ours) ; so the people, 
 through their representatives, say to the inventor: "Deed us your prop- 
 erty, possession to be jdelded at the end of 17 years, and in the mean- 
 time we will protect you absolutely in the right to exclude every one 
 from making, using, or vendmg, the thing patented, without your per- 
 mission." (black ours.) How can it enter into the heart of man to con- 
 ceive a meaning in those sentences? The only "conveyance" made by 
 the patentee is of a piece of paper. The property consists in a colloca- 
 tion of words comprising a description. If I deliver to another, a 
 highly embellished and accurate description, in writing, of an air-ship, 
 I hardly render it possible for the donee to sail away in the air-ship de- 
 scribed. All the inventor "conveys," is a specification, and it may be, a 
 ■drawing. "Deed us your property," and he does deed a written descrip- 
 tion, "possession to be yielded at the end of 17 years," but possession of 
 the only thing deeded, is yielded in the very act of deeding. "And in 
 -the meantime (i. e., after the property has been deeded to the people), 
 we will protect you absolutely in the right to exclude from making, 
 using, or vending the thing patented, without your permission." We 
 have here to contemplate, two things : one is a mere description, an ex- 
 pression in words of the inventor's thoughts; the other is a physical 
 ■object symbolizing those thoughts. The written description is deeded to 
 the people and possession is given at once. The physical object is never 
 deeded to the people except in return for theii* good money, and posses- 
 sion is not given on any other condition before, during, or after the 17 
 years. What the people, in substance, say, it; this : Give us a full and 
 ■accurate description of some useful thing concerning which you can 
 truthfully swear that it originated in your own ' ' cares and sweat ' ' and 
 
RUBBER TIRE COMBINATION. 333 
 
 we will see to it that for 17 years no one else shall be permitted to 
 make, use, or sell that thing without your ccinsent, but we cannot and 
 do not, enlarge or restrict your own right to deal with what you have: 
 made. You, yourself, will have all the privileges and be subjected to 
 all the limitations that pertains to any other person in dealing with 
 his own. 
 
 For the above passage, the Court cites a number of authorities, none 
 of which requires any notice except the case of Good vs. Daland, 121 
 N. Y. 1. 
 
 If the reader is curious and desires to account for some of the strange- 
 seeming expressions in the opinion in the Bement case, let him con- 
 sider carefully the case of Good- vs. Daland and follow Mr. Justice 
 Peckham from that opinion to the Bement (lase. During the interim, 
 we cannot find that the writer of the two opinions wrote anything else- 
 on the nature of the patent grant. 
 
 We think the Anti-trust Act of Congress is not yet -eliminated, but. 
 the effort to accomplish that result is not yet ended. We go on with 
 the struggle: "Congress put no limitations excepting time, upon the 
 monopoly (right- to exclude). Courts can create-none without legislat- 
 ing." That is true, but it is also true that by legislating, the Courts are^ 
 adding to the "monopoly" many things, that Congress never dreamed 
 of in connection with the patent laws. "The monopoly (right to ex- 
 clude) is of the invem,tio»j the mental concept as distinguished from 
 the materials that are brought to give it a body. Use of the materials, 
 as noted-above, may be enjoined as injurious to the public; but that, 
 does not invade the monopoly. Use of the invention cannot be h&d ex- 
 cept on the inventor's terms." Now let us get our bearings again. The 
 monopoly -has for its subject matter, the invention, which is a mental 
 concept. That's the first proposition. The next is that restraint upon 
 the use of the physical thing that gives body to the mental concept, 
 does not invade the monopoly which embraces only the mental con- 
 cept. Down to the last one of the sentences quoted we have the three ; 
 
334 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 ■terms, monopoly, mental concept, and invention, used synonymously; 
 €ach as the equivalent of the other two and all three designating an in- 
 visible, intangible, intellectual process. In the last sentence quoted, 
 the word "invention" is switched over to designate a physical, dimen- 
 sional, gross object. "Use of the invention (mental concept) cannot be 
 had except on the inventor's terms." We have here, then, the same 
 ■double use of the word "invention" as in the Victor Talking Machine 
 Case. Of course when one makes use of the same word to denote two 
 things entirely distinct, contradiction, in the literal sense, is inevitable. 
 The fact is that the word "invention" is an exceedingly deceptive one. 
 It may easily have four separate counterparts in our thinking ; it may 
 refer to an activity, either mental or physical, or a product either men- 
 tal or physical. The poet "invents" a poem. The poem is his inven- 
 tion. A genius "invents" a telegraph. The telegraph is then the "in- 
 vention" of the genius. But after all it is the thing and not words that 
 is important. We proceed: "Without paying or doing whatever he 
 (the inventor) exacts, no one can be exempted from his right to ex- 
 clude." But from what, "the mental concept" or "the materials brought 
 together to give it a body?" "Whatever the terms, Courts will enforce 
 them, provided only that the licensee is not thereby required to vio- 
 late some law outside of the patent law, like the doing of murder or 
 arson." Now we know that the Court has been using the word "inven- 
 tion" latterly, as a name for the "physical materials," because a license 
 ■of a mental concept or of a right to exclude is altogether inconceivable. 
 The problem is now stated: "Does the requirement that the licensee 
 join other licensees in a 'combination' or 'pool' to control the prices 
 and output of an innocuous (black ours)^ patented article, violate the 
 ■Sherman law?" Consistency required the Court to interpolate the term 
 "innocuous" into the problem, for the reason that it had just "elimi- 
 nated", the Wisconsin Statute because the article was innocent. If the 
 article had been dangerous, like nitro-glycerine or arsenic, the Court's 
 logic would have conducted to the result that the combination was sup- 
 
RUBBER TIRE COMBINATION. 33t; 
 
 pressable under the State law. Since the article is not noxious, the 
 State has no power to prohibit restraints of trade in it. Now we swing 
 to the opposite boundary and inquire whether or not the Federal Act 
 applies to a restraint by contract in the trade in an "innocuous" patent- 
 ed article,the suppressed correlative being,that such Act does not forbid 
 the restraint if the article is harmful to the morals and physical health 
 of the citizen. But neither State or National statute predicates any- 
 thing whatever on the character of the article, as harmful or innocent. 
 Congress has no power to legislate in the domain of police protection to 
 the citizens of the States. On the other hand the State Anti-trust Acts 
 do not classify articles or commodities as innocent or harmful, forbid- 
 ding restraints of trade in the latter and winking at the same in the 
 former. Many persons would aver that beer (27 S. W. Texas 692) and 
 whiskey (156 111. 448) are far from innocent, but State statutes have 
 been successfully invoked to destroy restraints of trade in both. In Pat- 
 terson vs. Kentucky, the patented oil was suppressed as dangerous but 
 not under any Anti-trust Act. It was suppressed under a statute an- 
 nouncing the public policy of the commonwealth to protect its citi- 
 zens from the particular danger inherent in the inflammable nature of 
 the oil. The Anti-trust Acts are intended to protect citizens from the 
 danger of the vicious tendency of men to contract, combine, and con- 
 spire to limit and restrict trade in any and all articles, regardless of the 
 supposed innocent or harmful character of the articles in themselves. 
 
 We go now to learn how this "innocuous" patented article is to fare 
 under the Sherman Act. "Congress, having created the patent law, had 
 the right to repeal or modify it, in whole or in part, directly or by 
 necessary implication. The Sherman law contains no reference to 
 the patent law. Each was passed under a separate and distinct consti- 
 tutional grant of power; each was passed professedly to advantage the 
 public " Let us stop a moment and see whither we are tendmg. Thus 
 far we have repeated for us in various forms, the assertion that the 
 two statutes are quite distinct, each dealing with its own isolated sub- 
 
336 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 ject matter. One is to encourage progress, science, and the useful arts; 
 the other to .punish crimes committed in connection with interstate- 
 commerce. This is our premises. The interrupted sentence continues : 
 "the necessary implication is not that one iota was taken away from, 
 the patent law" (by the Anti-trust Act) . So we might say with equal 
 force that not one iota is taken away from the currency law by the 
 Bankruptcy Act, but that does not define the scope and operation- of 
 either of those laws. Now attend to the amazing conclusion that flow* 
 from this long contrast based on negatives; "the necessary implication, 
 is that patented articles, unless or until they are released by the owner 
 of the patent from the dominion of his monopoly, are not articles of 
 trade or commerce among the several States. ' ' (blaok ours) .That i& . 
 the necessary implication from the conceded fact that the patent law 
 and the Anti-trust Act were passed under separate and distinct grants 
 of power and each contains nO' reference to the other. A parallel argu- ■ 
 ment is this: a bankrupt is not guilty of perjury in making a false 
 oath in a bankruptcy proceeding because the currency law prohibits a 
 private citizen from coining the money of the-reakn. 
 
 If patented articles are not articles- of trade or commerce among the 
 several States, then, obviously the whole discussion past, as well as that 
 yet to follow, is interdicted as an idle and foolish waste. of time. A pat- 
 ented article is certainly an article, even though it be patented. If that 
 article is sold in one State and shipped into another, why is not that 
 an articleof trade or commerce among the several States? But then we 
 have the mystifying qualification,, "unless or until they are released 
 by the owner of the patent from the dominion of his monopoly." That , 
 looks queer. Let us experiment with it ; try it out. That is the only 
 way to determine whether it is words or things we are handling. 
 
 Suppose X, an inventor in Massachusetts, has a patent on an adding 
 machine ; he has made 5000 of them and they are still within the "do- 
 minion of his monopoly." He determines to load them on a freight 
 train and take them to the far West for sale. He is destined for, and 
 arrives in, a State considerably westward to the Mississippi River. 
 
RUBBER TIRE COMBINATION. 337 
 
 There are odd statutes on the books of this State; one provides that 
 mo hotel keeper shall furnish for guests, bed sheets less than nine feet 
 in length. X, the patentee, does not object to that. Perhaps he is grate- 
 fal for it. But there is another statute (let us suppose) adopted late in 
 the session of 1907, which provides that any non-resident patentee 
 coming within the State and possessed of patented articles not yet re- 
 leased from the ' ' dominion of his monopoly, ' ' shall pay a tax equal to 
 10 per cent of the value of these articles. The collector reads the law and 
 demands the tax. The patentee rushes into a Federal Court crying out 
 about his constitutional rights and a restraint upon interstate com- 
 merce. But the State's attorney-general is lean and hungry-looking. 
 His light burns late at night and he has read the latest decision. He 
 informs the Court that the legislature has acted within its prerogative. 
 The Court looks puzzled but is determined not to be trapped by this 
 «tate official who toils at the law when others dream dreams aad see 
 visions. The attorney-general then says: "The latest statement of the 
 Jaw is that 'patented articles, unless or until they are released by the 
 owner of the patent from the dominion of his monopoly, are not arti- 
 cles of trade or commerce among the several States.' " He starts to lay 
 down the volume and show that the adding machines are still unre- 
 leased, but the Court quickly interrupts with "Hand me that book." 
 We can easily imagine that shortly after the passage is perused, some- 
 thing breaks loose in that Court room. But it is useless to idle thus. 
 In Webber vs. Virginia, the Supreme Court held that a patented sew- 
 ing machine was an article of interstate commerce and that the State of 
 Virginia could not tax interstate trade in it. In the Bement Case the 
 CJburt held that the patented harrows were articles of interstate com- 
 merce and trade. It is clear, beyond questioning, that any article or 
 thing whatsoever, patented or unpatented, that is sold and transported 
 from one State into another, is an article of interstate trade or com- 
 
33S TRADE' COMBINATIONS IN PATENTED ARTICLES. 
 
 merce. The obvious meaning of plain words precludes any other no- 
 tion. 
 
 "We switch from this argument to an entirely different one. No de- 
 cisive conclusion is drawn from the premises that patented articles are 
 not articles of trade among the States. We are still in search, of a prin- 
 ciple of cancellation by which this troublesome anti-trust act may bo 
 eliminated. A different theory is now advanced. 
 
 "The evils to be remedied by the Sherman law, are well understood. 
 Articles in which the people are entitled to freedom of trade, were be- 
 ing taken as the subjects of monopoly; instrumentalities between 
 which the people are entitled to free competition, were being combined. 
 The means of effecting, and the form of combination, are immaterial; 
 the result is the criterion. The true test of violation of the Sherman 
 law is whether the people are injured, whether they are deprived of 
 something to which they have a right." 
 
 We have an entirely new argument to deal with, and yet no decisive 
 result is in sight. The argument here, is this : The Sherman law only 
 forbids restraints of trade in articles with respect to which the peopl© 
 are entitled to freedom of trade or free competition. The people are 
 not entitled to freedom of trade or free competition in patented arti- 
 cles. Therefore, the Sherman law does not apply to restraints of trade 
 by contracts in patented articles. This, too, is a rope of sand. The 
 patent law says nothing expressly or impliedly about freedom of trade 
 and competition. It says that the patentee shall have the right to ex- 
 clude others from selling. That does not mean that he may exclude 
 himself by a contract or combination. On the other hand, the anti- 
 trust act deals with persons, not abstractions. It makes it a crime for 
 the persons engaged in interstate trade to restrict theiir freedom to trade 
 by contracts, combinations and conspiracies. "Free competition" and 
 "freedom of trade" are mere abstractions that we apply to describe the 
 results of men being free to trade and free to compete in the trade. No 
 legislature or Court can create either trade or competition, much iess 
 
RUBBER TIRE COMBINATION. 33ft 
 
 free trade and free competition. Men always have and always will 
 trade, and their trade will he free and competitive if only they are 
 forbidden to contract, combine and conspire to eliminate the natural 
 spontaneity and competitive feature. This is the sole fuhction of the 
 Anti-trust Act ; it is entirely negative. It says to every embryo trader : 
 "You may engage in interstate trade or not, just as you please. It 
 makes no difference in the policy of this statute whether you trade or 
 not, so long as you are free in the matter. But you are forbidden to 
 enter into any contract, combination, or conspiracy, the effect of which 
 is to restrain trade or commerce among the States." Now the patentee 
 has the sole right of trading in his article. He personifies the freedom 
 of trade in his patented article. If he enters into a contract, combina*- 
 tion, or conspiracy, whereby his freedom to trade in that article is re- 
 stricted, that is the most palpable, the most emphatic violation of the 
 statute conceivable. The freedom of the only person who has any free- 
 dom of trade in the article, is gone. The restriction is thoroughgoing 
 and not partial. The patent law made the freedom of all other persons 
 to trade in that article contingent upon the consent of the patentee. 
 Now he has gone and pledged his sole and upvexed freedom to a com- 
 bination or a band of conspirators. That is the awfulness of a restraint 
 of trade imposed upon a patentee by coutract or combination. Sup- 
 pose a man has invented an entirely new typewriter and patented it. 
 He has manufactured several thousand, and is selling them through- 
 out the nation very cheaply. The concerns engaged in manufactur- 
 ing and selling the old and costlier machines, foresee disaster in their 
 inability to market their manufactured product and in the loss inci- 
 dent to investments in equipment soon to become worthless. They go 
 to the inventor of the new machine and persuade him to enter into a 
 contract whereby for a consideration of $1000 a month, he agrees not 
 to sell any more of his machines for 5 years. Can sophistry or in- 
 genuity devise an argument to show that that would not constitute a 
 violation of the anti-trust act? And yet the case in hand is just as em- 
 
•■340 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 phatically a violation of the same law. But we do not want to inter- 
 rupt following this argument to the end. 
 
 Next we have this : "Grant (the patentee) produced a new integer in 
 the useful arts." The Court of Appeals for the Second Circuit is called 
 upon to vouch for that. But the Court of Appeals for the 6th Circuit 
 liad held just as positively that Grant had produced nothing of the 
 Idnd; 'that the patent was void for anticipation (116 Fed. 363) and 
 the Supreme Court had refused to review the finding. How about that? 
 ]?ut we waive this for the moment in order to follow closely the steps. 
 of the argument. This brings us to the top of page 863. Here we 
 start off again. We take the liberty of accompanying the ill-defined 
 term ' ' monopoly ' ' with a pair of parentheses enclosing the words ' ' right 
 to exclude." We have this: "The only grant to the patentee was the 
 right to exclude others, to have and hold for himself and his assigns a 
 monopoly (=right to exclude others) not a right limited or conditioned' 
 according to the sentiment of judges, but an absolute monopoly (bright 
 to exclude others) constitutionally conferred by the sovereign law- 
 makers. Over and above an absolute monopoly (==right to exclude 
 others) , how can there be a further and an unlawful monopoly (^right 
 to exclude others) in the same thing?" That is like attempting to lift 
 one's self off the ground by pulling on one's boot-straps. It's very well 
 "to call the patent a monopoly, but in that event we are inexorably com- 
 pelled to inform the term "monopoly" with this precise, limited mean- 
 ing, — the right to exclude others. It's an incorporeal, abstract, nega- 
 tive, inhibitory power. Its exercise results only in paralysis of the 
 trade of others, in the subject matter of the exclusion. That's its only 
 possible use to the possessor. The exercise of that right never resulted 
 in the making, using, or selling of anything whatever. It precludes 
 and interdicts the natural inclination of others but leaves the scope 
 of the patentee's '■""" '■^o-ht and power to make and sell, exactly as it 
 -was prior to the patent, and as it will be after the patent has expired. 
 "We shall see that this is overlooked in the sentences that now succeed. 
 
RUBBER TIRE COMBINATION. 341 
 
 "If the plaintiff were the sole maker of Grant tires, how could plain- 
 tiff's control of prices and output injure the people, deprive them of 
 something to which they have a right?" It could not injure the peo- 
 ple at all. If the plaintiff were the sole maker of the tires, he could put. 
 his own prices on them, $5.00 per pound if he saw fit, and it would be 
 nobody's business. It's the sovereign right of every sovereign citizen to 
 put his own estimate on the value of what is his, and, as was said in 
 the Victor Talking Machine Case, whether purchasers or tenants come, 
 or not, is a matter of his concern alone. But the patent law does not 
 confer this right and the Anti-trust Act does not abridge it in any man- 
 ner whatever. This is a right older than both of those statutes and is 
 not affected by either. "Is a greater (why the comparative?) injury or 
 deprivation inflicted, 'if plaintiff authorizes a combination or pool to do 
 what plaintiff can do directly?" (black ours). No injury at all is pre- 
 dicable under the first supposition. Under the hypothesis (now 
 posit«d) the injury is as certain as anything in law. The patent law 
 does not say that the patentee may authorize a pool or combination to 
 do anything; it does not even confer on him the right to contract in 
 any regard. On the other hand the Anti-trust Acts says that any per- 
 son who shall enter into any contract, combination, or conspiracy in 
 restraint of trade, is guilty of a crime. When the plaintiff authorizes- 
 a pool or combination to control prices at which he will sell his tires,. 
 he thereby enters into a combination to restrain trade. His freedomr 
 to trade in his patented article has been bartered away to strangers to 
 the business. Who ever supposed progress in science and the useful arts 
 could be encouraged by placing a pool or combination in control? A 
 pool or combination never invented anything but a scheme and make- 
 shift to evade the law, deceive the Courts and extort money from the 
 public. Take the Addyston Pipe Case and apply the question there. 
 Each member had the unqualified right to determine at what price he, 
 acting independently, should sell his own pipe. "Is a greater injury 
 inflicted if one pipe manufacturer authorizes a pool or combination to 
 
342 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 do what the same manufacturer can do directly?" The Supreme Court 
 has already answered the question. But when more closely inspected, 
 the interrogation is meaningless, "if plaintiff authorizes a pool or com- 
 bination to do what plaintiff can do directly." (Black ours.) The 
 contrast between the plaintiff fixing its own prices and authorizing a 
 pool or combination to fix prices, is not a contrast hinging on a differ- 
 ent form of exercising the same right and expressed in the terms "di- 
 rectly" and "indirectly." The contrast is between a lawful act and a 
 crime. When the plaintiff fixes his. own prices, he is doing a lawful 
 act, whether the thing priced is patented or unpatented; when a pool 
 or combination fixes prices, a crime is committed, whether the article 
 is patented or unpatented. The very existence of the pool or com- 
 bination to fix prices and thereby restrain trade, is criminal. Whoever 
 joins the pool or combination, enmeshes himself in the criminal law. 
 There is no agency in crime; a man cannot "authorize" a pool or com- 
 bination, to do an act which, if done by him, would be lawful. -We 
 might as well attempt to conceive of "authorizing" another to steal 
 or murder. Following upon this question we are told: "To say yes 
 means that substance is disregarded, that mere words confer upon the 
 people some sort of a right or interest counter to the monopoly (right 
 to exclude), when by the terms of the bargain the people agreed to 
 claim none until Grant's deed to them shall have matured." We 
 cannot so agree. The people are perfectly willing for Grant to ex- 
 clude to his heart's content; they have never yet said, however, that 
 he can take a right which he has in exclusion by virtue of their desire 
 to encourage him and turn it over to a pool or combination to gouge 
 the pockets of the public. The people have not said this and never will 
 say it. In the next paragraph the Court says: "But worthless patents 
 and other suppositions cases are not on reView." However, we have 
 just been wrestling toughly with three formulated by the Court. 
 At the bottom of page 363, we go forward. "None of the provi- 
 
RUBBER TIRE COMBINATION. 343 
 
 sions of the contract, in our judgment, touched any matter outside of 
 the monopoly (right to exclude) imder the patent." "We are deeply 
 persuaded that all of them except the 2 per cent net royalty, which was 
 a mere pretext, "touched" nothing but what was outside of the right 
 to exclude. "The control of prices and output, for reasons already 
 stated (black ours) did not deprive the public of any right." This is 
 certainly a remarkable result to be justified on the ground of the "rea- 
 sons already stated." Let us rub our wearied eyes and glance back at 
 all the "reasons already stated" and see how this height of assured con- 
 fidence is attained. The control of prices and output did not deprive 
 the public of any right, because : 
 
 1st. The Wisconsin anti-trust act is "eliminated" because (a) it is 
 not included in the assignment of errors; (b) a State cannot subtract 
 from the incorporeal right to exclude others; (c) rubber tires are in- 
 nocuous to the physical and moral health of the citizens. 
 
 2nd. The Federal anti-trust act does not apply because (a) the 
 patented tires are innocuous patented articles; (b) patented articles 
 nnless and until released from the dominion of the patent, are not 
 articles of trade or commerce at all; (c) the people are not entitled 
 to freedom of trade in patented articles ; (d) the patentee had the right 
 to exclude others, not a right limited or conditioned according to the 
 sesitiment of the judges, but an absolute right to exclude, and over and 
 above an absolute right to exclude there can be no further and unlaw- 
 ful right to exclude in the same thing; '(e) if a man can lawfully con- 
 trol the sale of his own goods, he can authorize a pool or combination 
 to do the same thing. 
 
 These are the "reasons already stated" and for these "reasons" the 
 control of prices and output, "did not deprive the public of any right." 
 Those reasons we must leave to justify what they will. 
 
 "Both before and after the period covered by the contract, the mar- 
 ket was demoralized, and the owner of the patent was getting nothing 
 except by the slow and expensive process of litigation; but the pub- 
 
344 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 lie was not entitled to profit by competition among infringera: 
 "What bearing has that on the legality of the scheme? How 
 was the "market demoralized?" By men making their tires and 
 felling them. "The owner of the patent was getting nothing except by 
 the slow and expensive process of litigation." What other method has 
 the patent law provided? Is it possible to read into the statute some 
 quick and cheap method whereby the patentee may "get" something? 
 "The public was not entitled to profit by competition among infring- 
 ers." But how can we speak of them as "infringers?" One Court of 
 Appeals had finally determined, not only that the tire made by the 
 defendant in that suit did not infringe the plaintiff's patent, but that 
 said patent was void and of no effect whatever; that it could not be in- 
 fringed for there was nothing to infringe. The Supreme- Court had 
 declined to review this adjudication. How can it be said that there 
 could be an infringement of such alleged patent? But plaintiff's con- 
 duct completely belied the notion that it regarded any of the combine 
 members as infringers. The plaintiff with its eyes wide open accepted 
 as its full compensation for its patent, 8 per cent of the swollen profits 
 that the "infringers" made in addition to the price at which the tires 
 previously had been sold. Because it had a "valid patent," it deliber- 
 ately threw away 92 per cent of its potential profits. Because there 
 was a "valid patent," the "infringers" consented to bend the pregnant 
 hinges of their stiff knees to the Czar, and contribute 8 per cent of an 
 extortionate grab from the public, but only on condition that they be 
 allowed to pocket the remaining 92 per cent without molestation on ac- 
 count of the anti-trust laws. No one can point out another in- 
 stance of such consummate magnanimity on the part of any owner of a 
 valid and valuable patent. Did Westinghouse follow such a course 
 with his air-brake? Did Morse exemplify such idiocy with his tele-' 
 graph? Did Bell exhibit such slobbering business charity with his 
 telephone? "The internal agreements relating to royalties, proportion- 
 ing the business, ' supervision and penalties, did not affect or concern 
 
RUBBER TIRE COMBINATION. 345' 
 
 the public at all." That depends entirely upon whether or not the 
 entire scheme of which the matters mentioned, were component parts, 
 was legal or illegal. If, as we contend, that scheme constituted a crime 
 in that it was a violation ofs the anti-trust act, then the public was 
 deeply and vitally concerned. When we arrive at the point that the 
 public is denied the right of being concerned in the enforcement of 
 the criminal laws, it is time for the public to retire into unobtrusive 
 oblivion and leave the "pools" and combines unvexed to divide the. 
 spoils. 
 
 "Equally innocuous in our view, was the matter stated in the fifth 
 conclusion of law" (by the lower Court). That conclusion was this: 
 "That the contracts authorized the creation of a fund for crushing 
 competition in inter-state commerce throughout the whole country,, 
 not only in Grant tires but in all other rubber tires." This is facilely 
 disposed of thus : "First, the public was not injured, because the find- 
 ing of fact is that the provision was never acted upon in any way." But 
 this is a totally irrelevant circumstance. The single question i& 
 w^hether or not the combination had it in its -power to injure the pub- 
 lic. To what extent it has exercised that power, or whether it has 
 exercised it at all, is quite beside the mark. The Supreme Court has 
 expressed this view of the law with emphatic earnestness. In the 
 Northern Securities Case (19.3 U. S. at 340) the Court quoted from 
 the Supreme Court of Ohio, this view and accentuated its approval of . 
 the language quoted by couching it in glaring italics. The language 
 is: "Courts will not stop to inquire as to the degree of injury inflicted 
 upon the public; it is enough to know that the inevitable tendency of 
 such contracts is injurious to the public." 
 
 But, again, "Second, if a defense had been predicated on the pres- 
 ence of that provision in the contract, it would have been unavailing, 
 because that provision' is separable from the royalty and other valid 
 parts of the contract. ' ' (black ours) . But is it ? The rule is : " When- 
 ever the unlawful part of the contract can be separated from the rest. 
 
346 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 it will be rejected and the remainder established. McCulloch vs. 
 Virginia (1898) 172 TJ. S. at 115. Now how is it possible 
 to separate the stipulation providing for the bludgeon fund from 
 the remainder of the contract? The fund was accumulated from royal- 
 ties; it was placed entirely in the keeping of the commission. The 
 patentee had no power of supervision, no right under the contract to 
 purchase tires and give the same away. The licensees consented to pay 
 the money from which the fund was derived, in contemplation of the 
 distinct use to which the payment was to be applied. Do away with 
 that fund. Then the patentee is not entitled to receive it. The licensees 
 are under no obligation to pay it, and the commission is out of a job, 
 •except to "supervise and audit," and a bookkeeper hired at $75.00 per 
 month could do that. The fund and its designed use was the very 
 kernel and essence, the innermost strength of the entire scheme. De- 
 stroy that, and the whole structure falls to the ground. 
 
 Still other grounds are laid to support this clever crime. "And, third, 
 the owner of the patent had the right, either alone or through licensees, 
 to accumulate funds with which to push the Grant tire on the mar- 
 ket, and in so doing to undersell the makers of other tires and the in- 
 fringing makers of Grant tires." We have become so familiar with 
 amazing statements in this opinion, that the repetition of them ceases 
 to be impressive.- By long association, we suppose that a circus man 
 becomes accustomed to handling a boa constrictor without unusual 
 emotions. Let us paraphrase this sentence and apply it in a well-known 
 instance : 
 
 "The Blank Oil Company had the right, either alone or through 
 ^secret rebates from all the railroads, to accumulate funds with which 
 to push its oil on the market and in so doing to undersell the vendors 
 of other oil." That is what it comes to. To "undersell the infringing 
 makers of Grant tires." Has it come to that? Here is the owner of a 
 "valid patent," an absolute monopoly, that cannot be subtracted from 
 by the States, that is enforceable against the sovereign will of the Na- 
 
RUBBER TIRE COMBINATION 347 
 
 tional government. The law provides that such patent owner shall 
 recover threefold the damages suffered by infringement, and an in- 
 junction can be obtained at midnight while the infringers sleep. By 
 the use of that sacred writ, the patentee can send the infringers to jail 
 amid the lamentations and tears of their dear ones. Is the price of jus- 
 tice so dear, or withholding infringement suits so sweet, that the pat- 
 entee is reduced to the miserable expedient of underselling the brazen 
 pilferers of the products of his genius? Let us suppose that a man has 
 written a great book like "King Lear." It is inestimably precious in 
 the eyes of all serious minded readers. The author gets a copyright 
 and begins to multiply and vend copies. At the same time, the copy is 
 pirated by two dozen publishers, and the market flooded with cheap 
 editions. What would be thought of the author if he should go to his 
 authorized publisher and say: "We have left, only one expedient; the 
 slow and expensive process of litigation is out of the question ; we must 
 accumulate a fund to enable us to undersell the pirates. They are sell- 
 ing the book very cheaply. It may be that we will have to give away 
 copies, but that is our only hope to defeat infringers of the copyright." 
 That is exactly parallel with the Court's justification of the scheme here 
 involved. 
 
 "It is not for the defendant's sake that Courts listen to the defense 
 that he ought not to pay because his promise was under an arrange- 
 ment to injure the public." That is quite true. But how about the 
 public's "sake"? When is that to get a hearing? 
 
 "The public is not injured by an arrangement to compete with ad- 
 versaries for the public 's patronage. ' ' We agree, but what is to be said 
 ■of an "arrangement" the sole purpose and result of which was to wipe 
 out all competition for the public's patronage as between the 18 parties 
 to the "arrangement," force the said patronage to bear an additional 
 burden of 30 per cent and then illegally to destroy all competitive ad- 
 versaries for that patronage, outside of the ."arrangement"? Let us 
 summarize the justification of this fund and its purpose. 
 
348 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 1st. The provision was not acted upon. 
 
 2nd. The provision was separable from other valid parts of the 
 contract. 
 
 3rd. The provision was legal and valid. 
 
 4th. The Court for a defendant's sake will not enforce a statute 
 adopted 'for the public's sake. 
 
 5th. The public is not injured by an "arrangement" which de- 
 stroys all competition between all but two small manufacturers of an 
 impertant commodity and provides for the destruction of those two. 
 In the Threshing Machine Case just following the one under discus- 
 sion, (154 Fed. at 371) this Court characterizing an argument of coun- 
 sel said: "Naught plus naught; the sum of two naughts is a sub- 
 stantive quantity." It is only by adopting that method of computa- 
 tion that we can ever obtain a substantive result from an aggregation 
 of the reasons just summarized. 
 
 CONCURRING OPINION. 
 
 We will glance briefly at the concurring opinion. The member 
 of the Court that stood sponsor for this opinion, was unwilling to go the 
 length of conceding that "patented articles are never under any cir- 
 cumstances, articles of trade or commerce among the several States, 
 within the meaning of the Sherman Act." This refusal was made on 
 the ground that it was not thought that that "premise is essential to 
 the conclusion arrived at." We think the point is well taken. Any- 
 one of the dozen premises posited by the majority opinion was all that 
 was "essential to the conclusion arrived at" without hazarding so many 
 of no greater strength or weakness. For example, this would have 
 been sufficient: "A State cannot subtract from the right conferred 
 upon a patentee and his assigns by the federal laws." Why "not say: 
 This is a contract controlled by the laws of Wisconsin, assert the last 
 quoted proposition, and add, "judgment for the plaintiff"? There is 
 no use to pile up sound reasons for a judgment; one is enough, and to 
 
RUBBER TIRE COMBINATION. 349 
 
 assert more than one is to increase the hazard incident to an after in- 
 «pection of one's logic. 
 
 With the reservation noted, the concurring opinion expands. "The 
 patentee, in this case, in good faith, believed the patent valid, as did 
 also the parties entering into the contracts." We have already seen 
 how naive and trusting was that faith, and though small as a grain 
 of mustard seed, it enabled the faithful to move mountains. An old 
 saw has it that none are so blind as those who do not wish to see. The 
 members of this combine found it exceedingly profitable not to see' any 
 bad faith in the "arrangement." 
 
 "Whatever, therefore, their effect may have actually been, the con- 
 tracts were not intended to affect prices, except as the parties believed 
 they had the right, because of the patent, to fix and maintain prices." 
 But what conceivable force and effect can be given to the belief of the 
 parties as to their rights to restrain trade? The Anti-trust Act does not 
 «ay that only those contracts which the parties believe are in restraint 
 of trade are criminal. The statute says nothing about anyone's belief 
 or good faith. It does not deal with faith but with works. In the 
 majority opinion here it is said: "The means of effecting and the form 
 of the combination are immaterial; the result is the criterion" (black 
 
 ours) . Now we have a new criterion set up. The combination is legal, 
 provided only the parties have faith and believe it is legal. So it seems 
 that the Courts in the realm of jurisprudence hold out a more palpa- 
 ble and luscious reward to faith than religion offers to aealous adher- 
 ents to the creed. Good faith and belief, however preposterous and con- 
 tradictory of conduct, are not to the Court's thinking what the Good 
 Book calls them, wells without water, and clouds without rain, but are 
 a I purse full to bursting and a defense to crime. 
 
 "Now were the patentee the manufacturer, he would unquestionably 
 have had the right to fix and maintain his own prices." However, not 
 in virtue of the patent law or because he was a patentee, but merely 
 because he had manufactured the goods; owned them and of course 
 
350 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 would have the right to say at what price he would sell them. This, 
 right over his own property every man has, from a peddler of shoe- 
 strings to a dealer in gold mines, but the patent law has nothing to do- 
 with that. Such right is what, in the Victor Talking Machine Case, 
 was called "a natural right." The sentence goes on, "and were the- 
 other parties to the contract manufacturers for the patentee, at a given 
 figure for such manufacture, the patentee's right to fix and maintain, 
 the selling price would still remain; nor could this be questioned 
 were he to make the manufacturei^s his selling agents." But under 
 both suppositions the tires would belong to the patentee in exactly the 
 same sense that potatoes belong to a farmer where the latter has grown 
 the potatoes on his land and hired one set of men to dig them and an- 
 other to peddle them to the consumer on a commission or for a wage. 
 After entertaining these three perfectly innocent and trite suppositions, 
 we are invited to accept this: "How, then, does the contract under 
 review, make a case in which the patentee, through his manufacturer, 
 is not entitled to fix and maintain prices — ^how is the arrangement, 
 in effect, different in any way of restraining trade or competition, 
 from the arrangement just supposed, in which the patentee unques- 
 tionably has that right?" Let us back off and take a look at this. Let 
 us first inquire, Is it not singular that both the majority and minority 
 opinion "here dispose of the merits of an issue involving literally mil- 
 lions of dollars in the form of interrogations supposedly admitting of 
 but one answer? In the first opinion, at the top of page 363, the 
 entire puzzle is gotten rid of by three rhetorical questions. Here in 
 the concurring opinion the same method is employed without the cita^ 
 tion of a single authority. The matter is sufficiently difficult, it would 
 seem, without the confusion ef questions, one following another. Every 
 case propounds a problem to the Court and what we naturally expect to 
 find in the opinion is a solution ; something positive, apodictically cer- 
 tain. Instead, we have a problem made even more problematical. Af. 
 ter this breathing spell, we go back to this last question and see what 
 
RUBBER TIRE COMBINATION. 35t 
 
 is the answer to it. The "contract under review" does not make a case 
 in which the patentee through his (the patentee's) manufacturer is, 
 entitled to fix and maintain prices. The licensees were not the paten- 
 tee's manufacturer; the tires when made by them were not the prop- 
 erty of the patentee. The licensees bought the material, hired the 
 labor, employed their own facilities in making the tires, and when 
 the tires were made, they (the licensees) owned them. When the 
 licensees sold the tires, they sold their own property, not that of the 
 patentee. When they fixed the prices, they dealt with their own prop- 
 erty, not with that of the patentee. See Belknap vs. Schild (1895) 
 161 U. S. at 23 and 24. That is the answer to the first part of the 
 question propounded. As to the second part: The "arrangement" in 
 effect was different in the way of restraining trade and competition 
 from the arrangement "just supposed" in this. In the arrangement, 
 "just supposed," the tires under all three hypotheses were the sole 
 property of the patentee; he was the only proprietor of the business.. 
 There was no contract whatever with a stranger to the business and 
 no semblance of a combination or conspiracy in restraint of trade. The 
 "arrangement" in the "contract under review" embraced a combina- 
 tion by which the patentee surrendered all power under his patent to 
 a pool; no licensee could sell his own goods at his own price. More- 
 over no licensee and the patentee could alter or vary prices. The 
 freedom of all nineteen parties to the contract was completely de- 
 stroyed and no one could do anything without the consent of the 
 pool. Observe that the patentee and nine separate and distinct licen- 
 sees conducting businesses entirely isolated and apart, by mutual 
 consent, could not have changed the prices or terms at which such 
 nine licensees were to sell tires of their own manufacture. 
 " The whole power under the "arrangement" was vested in mere 
 numbers A majority in number completely overrode the minority, 
 and vet there was no basis for this surrender of individual freedom. 
 Each licensee had assumed a separate and distinct obligation to the. 
 
:352 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 patentee; each' obtained a permission available for his individual en- 
 joyment. Each licensee must pay his royalty regardless of what all 
 the others did. Having fulfilled his obligations to the patentee, each 
 licensee had a right to enjoy the non-exclusive permission granted 
 to him by the patentee regardless of the desert and disposition of all 
 other licensees. Each licensee conducted his affairs singly and sep- 
 arately, bore the burdens and enjoyed the benefits of his enterprise' 
 without sharing either, with any other licensee. The patentee and 
 any one licensee by mutual consent might have cancelled the con- 
 tract as between them without affecting the rights of any other licen- 
 see. Thus it is clear that each licensee was a stranger to the business 
 of every other licensee, although engaged in the same line of business. 
 But the entire control of the aggregate business of all parties was 
 vested in the "pool." The "pool" was a connecting ligature by which 
 iiU the licenses were as effectively bound together and the individual 
 freedom of each obliterated, as the Siamese twins. The "pool" was 
 not legitimately engaged in any phase of the business; it was neither 
 licensor nor licensee; it owned no patent and paid no royalty; yet its 
 restraining power gripped the freedom of every licei^see into, forced 
 servility. It had the power to make and unmake any licensee. Sup- 
 pose an "infringing manufacturer" has sprung up in a territory, the 
 trade in which was principally supplied by licensee X; this "infring- 
 ing manufacturer" is cutting prices to all of X's customers. Suppose 
 further that X has become obnoxious to the "pool" and the "pool" is 
 anxious to be rid of him. By occupying a purely negative attitude, 
 by refusing to allow X to cut prices and decliriing to purchase tires 
 and undersell the "infringing manufacturers," the "pool" could shortly 
 eliminate X. Thus the "pool" could play favorites; could despotically 
 control the fortunes of any licensee of a minority of them. It is in 
 this manner that the interrogation propounded in the minority opin- 
 ion is easily answered. 
 
 This opinion continues : "True, in the case under review, the manu- 
 
RUBBER TIRE COMBINATION. 353 
 
 facturersj as to the public, are not competitors; (now listen) but 
 neither would they be in the cases supposed." But for entirely differ- 
 ent reasons. In "the cases supposed" there was only one vendor, one 
 proprietor, a single, indivisible interest. One concern cannot compete 
 with itself. In "the cases supposed" there was no semblance of re- 
 straint. How can a man, acting alone, restrain himself by contract?, 
 In the case "under review," cogapetition between eighteen separate and 
 independent concerns was wiped out by a combination or pool; 
 
 The sentence continues: "In both cases the public suffering noth- 
 ing except what the patentee had the right to exact." Again we must 
 dissent. In "the case supposed," the public "suffered" the exercise 
 of the right of every man to freely demand what price he will for his 
 goods; in "the case under review," the public "suffered" the commis- 
 sion of a crime. We advance to, "for so long, at least, as the patentee 
 is not exactiag, as the value of hjs' invention (let us ask what is meant 
 by 'invention' here; the incorporeal right or the rubber tire?) an 
 unreasonable sum, (and his action in that respect is not here ques- 
 tioned) it is within his own right to say whether the price exacted 
 (for what?) should be retained by himself or shall be distributed 
 among the people, manufacturing for him" (black ours.) 
 
 It always ma,y be observed that difficulties multiply as we under- 
 take the rounding oiit ^od final completion of any task. Right here, 
 in next to the last sentence of this concurring opinion, the whole in- 
 volved and intricate difficulty of this case is again thrust before us. 
 We are compelled briefly to restate and resolve the problem running 
 all through. Let us unfold these phrases and inspect them isolatedly. 
 "So Ipng, at least, as the patentee is not exacting) as the value of his 
 invention, an unreasonable sum, it is within his own right," 
 etc. What is meant here by "the value of his invention"? If 
 one has a rubber tire and owns it, he may demand his price for it, 
 $2.00 or $5.00 per pound. No co^irt and no government can possibly 
 compel him to sell it for less. Likewise, if one has a valid patent 
 
S54 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 •on a tire, he has an inalienable, an irrefragable right, to exact any 
 sum whatever as a royalty for the consent granted to another to make 
 and sell a tire which, within the meaning of the patent law, is a du- 
 plicate. Instead of 2 per cent., he may charge 100 per cent. The 
 patentee has two entirely distinct and separate subject matters, alto- 
 'gether within his disposition. In the instance we have before us, the 
 ttwo subject matters are a rubber tire of a given construction and 
 "weight, and an incorporeal right to exclude others from enjoying" a 
 replica of that tire, in making, using, or selling it. Let us suppose 
 now that the patentee here contemplated, has a number of the tires 
 manufactured and on hand ready to sell. Two men, conveniently 
 designated as A. and B., come before him. A. wants to purchase 100 
 of the tires ma-nufactured and then ready for sale. B. wants the 
 privilege himself of making 100 similar tires out of materials and 
 with labor to be supplied by him, B. The patentee* can refuse to sell 
 to A. or if he consents to part with the tires to A. he can exact as a 
 compensation for his consent, any sum of money, whatever; whether 
 it is reasonable or unreasonable. Likewise, he can refuse to permit B. 
 to make 100 of the tires, or if he consents, he may exact as a royalty, 
 ^ny sum whatever, reasonable or unreasonable. He may consent or 
 not, just as he pleases, in either case. His determination in either 
 <;ase is absolutely within his power. His right to grant' or withhold his 
 ■consent in either or both instances, cannot be made to hinge on any 
 ■"at least," pointing to the reasonable or unreasonable character of his 
 demand. But let us observe with all concentrated speculation that 
 in neither case is the patentee parting with or withholding his "in- 
 vention," if by that word we mean the subject of his patent grant. 
 The incorporeal, intangible property in a notion he does not sell in 
 cither case. What A. wants is so many pounds of rubber and other 
 jnaterials belonging to the patentee and wrought into a particular com- 
 position and form. What B. wants is the permission to take his own 
 materials and employ his own hands to bring his own raw substances 
 
RUBBER TIRE COMBINATION. 355 
 
 into the particular formation and likeness. The patentee did not 
 "think out" the rubber, cloth, metal, and other materials; he thought 
 out only a hitherto unknown combination, juxtaposition, or special- 
 ized assemblage of them. B. desires to obtain no more than the per- 
 mission to follow that unique pattern in imparting to his raw materials 
 a new and demanded utility. 
 
 Suppose the patentee grants the wish of both A. and B. A. gets 
 100 physical things fashioned into a form, in accordance with the 
 patentee's ideas. For this, he pays the purchase money, which is a 
 compensation for two factors. 1st, so many pounds of rubber and 
 other materials ; 2nd, the idea, pattern, or conception of the inventor 
 embodied and externalized 100 times. Then A. owns absolutely those 
 100 tires, and it is not possible to separate the value of the tires from 
 the value of the pattern externalized in them. No mutuality of con- 
 sent between the patented and A. could by any possibility result in 
 a partial rescission of the sale whereby the patentee could take back 
 his incorporeal factor and leave the physical objects with A. One 
 might as well attempt to separate the convex from the concave of an 
 arc. A. in virtue of his purchase, owns the 100 tires; they are his 
 and the patentee has no interest in them. When the patentee parted 
 with them, he accepted the purchase money and precluded a con- 
 tinuance of his interest in those specimens of materials, each unit 
 physically symbolizing his thought. On the other hand, B. desires to 
 be possessed of the same things A. acquired by his purchase. But B. 
 has it in mind to arrive at the same acquisition by a different method. 
 He has already or can easily obtain, all the materials, applicances, 
 and facilities for supplying himself with the identical tires. Not one 
 tangible, visible, dimensional thing does he need from the patentee 
 to put himself in possession of what A. obtained by his purchase. 
 But he must obtain from the patentee a permission to think the 
 latter's thought, to inform his materials with the pattern plan, and 
 scheme of the inventor. By reading over the patent specifications, he 
 
356 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 can learn exactly how this is to be done. But without the let or per- 
 mission of the patentee, his hand is stayed, his spontaneous tendency 
 to create the physical likeness of the imaged object that his mind has 
 perceived and pronounced good, is inhibited and bottled up. When 
 the patentee grants the permission, there is no transfer of anything 
 whatever to B. The latter has no more and no different possessions 
 after the letting, than before. His inhibited tendency to fashion 
 certain given materials into a highly specialized combination, is lim- 
 itedly released. That is all. B. makes the tires. What is due to 
 the patentee? B. does not owe him for the materials, the time, and 
 labor; or the factory cost of making them; all these B. supplied to 
 himself and derived them not from the patentee. All that B. owes 
 to the patentee is a compensation for the permission to externalize 
 and embody the inventor's mental image. This compensation is 
 called a royalty and well may it be so called, for it is the tribute which 
 mean men render to genius. The idea, the plan, the schematized 
 abstraction, the hitherto unrealized form of combining materials, — 
 that is the fruit of the inventor's own "cares and sweat". It is a 
 fruit that does not materialize by reason of the "cares and sweat" of 
 ordinary mortals. It is, by the inventor, spun out of the inner texture 
 of his mental web, like the mansion of the spider drawn out from the 
 vital center of the builder. 
 
 The patentee may exact what royalty he will, reasonable or unrea- 
 sonable, but when the royalty is paid, the tires belong as absolutely 
 and completely to B as do those which A, within our supposition, has 
 purchased. The property in the notion, or incorporeal idea, is not re- 
 lated to property in the rubber tires. In the two instances supposed, the 
 patentee obviously cannot dictate the price at which A will sell the 
 tires which he (A) has bought and paid for. It is equally certain that 
 the patentee has no more right or power as patentee to say at what 
 price B will sell his (B's) tires. The patentee never had any interest 
 m the materials composing B's tires and he has been paid a royalty for 
 
RUBBER TIRE COMBINATION. 357 
 
 the privilege of utilizing his mental concept in 100 concrete embodi- 
 ments. He is entitled to but one royalty for each separate symbol of 
 his thought, and he has that. After he has received that, his reward as 
 patentee cannot be enlarged or cut down by any disposition made of 
 the physical objects. 
 
 Let us now get back to our text. The patentee in this case exacted a 
 most niggardly sum, 2 per cent, for the privilege of externalizing the 
 inventor's thought. That was for the obvious reason that he had learned 
 that the alleged inventor had not invented anything. Indeed, "his 
 action in that respect is not here questioned," to use the language of 
 the Court. But there was an entirely different exaction in this case; 
 that with respect to the selling price of the rubber tires, which were 
 manufactured and owned by the respective licensees. That was most 
 earnestly questioned. With reference to that the answer says (cf. 1. c. 
 360) "by reason thereof (viz., the license agreement) the price of the 
 articles of commerce mentioned in plaintiff's complaint, was raised 
 beyond the former price thereof and beyond the natural and legitimate 
 price thereof" (black ours). That is how that was questioned. 
 
 The sentence over which we have been so long hovering, ends thus 
 (so long as the patentee is not exacting an unreasonable sum for his 
 invention) : "It is within his own right to say whether the price 
 exacted should be retained by himself or shall be distributed among 
 the people manufacturing for him" (italics ours). But the licensees 
 -did not "manufacture for him" ; they manufactured for themselves. 
 They owned the tires they manufactured, just as they owned the ma- 
 terials out of which they were made. "The price exacted," — ^but for 
 what? If by this is meant. the royalty exacted, of course, the state- 
 ment is correct. For the patentee might have distributed that among 
 the Hottentots, and it would have been no one else's business. But 
 the price exacted for the tires was the concern only of the licensee. 
 That price was theirs, and constituted no part of the patentee's assets. 
 Whether the royalty as such, was "reasonable or unreasonable" was of 
 
358 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 no moment whatever. But the exaction of the "pool" as to the selling 
 price whether "reasonable or unreasonable" was illegal ; It was criminaL 
 Finally, we have the last word on the subject. "The contracts, 
 therefore, in the case before us, having been made in good faith, and 
 not as a mere subterfuge, I can see in them nothing that the Sherman 
 Act was intended to prevent." It is to be observed, without effort, 
 that this last sentence is disparate from the preceding argument. It 
 is not a connecting link or culminating step in a progressive conten- 
 tion. It is complete in itself. We have it asserted that the contracts 
 did not violate the anti-trust Act because they were "made in good 
 faith and not as a mere subterfuge." Frankness, guilelessness, naive 
 straightforwardness, with whatever grievous consequences its njanifesta- 
 tion is attended, is a defense to' crime. But we know it 
 is not even a defense to a civil liability. If a man takes 
 my watch in "good faith and not as a mere subterfuge," 
 he is nevertheless liable in damages for conversion. We do not read 
 anything about bad faith and subterfuges in the great cases before 
 the Supreme Court where contracts have been declared illegal as in 
 restraint of trade. It may be that the industrious counsel who repre- 
 sented the defendants in all those cases, were essentially remiss in 
 their duty in not pointing out the evidence of good faith and the 
 absence of all indications of subterfuge and legal ambuscades. How- 
 ever, if this surmise is well founded, the Anti-trust Act should be 
 legislatively interpolated so as to strike at only those contracts, com- 
 binations, and conspiracies in restraint of trade entered into in bad 
 faith or as crafty subterfuge. If that ever should be done, we may 
 expect a more abundant proof of "good faith" than any one has yet 
 dreamed of. And when this novel justification has been put in, it may 
 be the Courts will say to the big, lubberly, innocent seeming ones: 
 "Go your way; your faith has made you whole." ' When that day 
 comes, there will be joy for a little while among the few, and then 
 terror everywhere. For we believe that men are going to continue 
 
RUBBER TIRE COMBINATION. 359, 
 
 to feel the strength and weakness of the law in their works and not ia 
 their faith. 
 
 Let us summarize the reasoning of this concurring opinion in the 
 form of short propositions. 
 
 First. Patented articles under some circumstances may be articles 
 of commerce or trade among the several States. 
 
 Second. But if we concede that the articles here involved are such, 
 the contracts do not illegally restrain trade for the following reasons: 
 
 a. They were entered into in good faith. 
 
 b. The patentee could maintain prices on tires of his own 
 
 manufacture. 1 
 
 c. The patentee could maintain prices on tires which he has 
 
 hired others to manufacture for him. 
 
 d. The patentee could maintain prices on his own tires sold 
 
 through his agents. 
 
 e. The case under review does not differ from that suggested 
 
 in b, c, and d. 
 
 f. So long as the patentee does not exact an unreasonable 
 
 royalty, he can "pool" the business of his licensees. 
 
 g. This all follows because the contracts were made in good 
 
 faith and not as a subterfuge. 
 At the outset, we stated that if the result set up in this case can 
 be justified by accepted principles of law, it would be worth the extreme 
 of human exertion to learn how. We have studied this opinion long 
 and intently but cannot see the glim.mer of the road to such justifica- 
 tion. According to the deepest incursion we have been able to make, 
 the decision cannot be supported or explained in the terms of the law 
 of the land. There is no sound proposition or principle underlying 
 it. The only support for it that we can discover by the most earnest 
 speculation, is that which rests upon a mistaken conception of the- 
 patent grant and a misconstruction of the anti-trust legislation. 
 The lower Court held the system of contracts invalid, among other 
 
360 TRADE COMBINATIONS IN PATENTEb ARTICLES. 
 
 reasons, for that they operated to restrain trade in the territory com- 
 prised by the Sixth Circuit. Whatever view any one may take of 
 the patent law and a patentee's rights over his patented article, that 
 point was undoubtedly well taken. In the Sixth Circuit the patent 
 was a dead and gone thing. The Court of Appeals had so declared it 
 and the Supreme Court had refused to modify or review its declara^ 
 tion. The decision of the Court of Appeals struck and thrust through 
 the heart of the patent; it did not stop with deciding that the defend- 
 an in that case had not infringed. The Court went to the extreme 
 boundary of the defense and wiped the patent out; repudiated the 
 claim of novelty, denied that ^the inventor had discovered anything, 
 and concluded that all his "cares and sweat" had only resulted in 
 something that was old. In the opinion, here considered, the deci- 
 sion of the Court of Appeals for the Sixth Circuit, is referred to as 
 "an erroneous degree." Maybe it was. Nevertheless, it was law for 
 the Sixth Circuit, and the proposition for which 1;hat decision stood, 
 was this: patent No. 554,675 to grant for an improvenient in rubber 
 tired wheels, is void. It is impossible to believe that that Court of 
 Appeals would have vibrated back and forth, holding the patent valid 
 as against one defendant and void as against another. The defendant 
 in the case tried out was held not to be an infringer because there 
 was nothing to infringe. There was no right on which to predicate 
 a trespass in the Sixth Circuit. So that if we accept all of the scat- 
 tering philosophy of this opinion, still we have no support whatever 
 for the combination so far as it was operative in the territory of the 
 Sixth Circuit. If we say that the Anti-trust Acts of the States do not 
 subtract from the patent grant, yet in the Sixth Circuit there was no 
 patent right. If we say that patented articles are not articles of trade 
 and commerce within the terms of the Federal Anti-trust Act, yet, in 
 the Sixth Circuit these tires were not and could not be patented 
 articles. If we say that the people are not entitled to freedom of 
 trade in patented articles, that does not help us in this Circuit., Nor 
 
RUBBER TIRE COMBINATION. 361 
 
 can we talk about goad faith in the validity of the patent in so far as 
 trade in the tires was carried on in that Circuit. Faith is of things 
 not seen, but the patent had been completely and utterly destroyed 
 in the Sixth Circuit. No man who could read plain English, could 
 lionestly aver a faith in the validity of the patent in those States. We 
 do not think the faith of this combination in the validity of the patent 
 was half so large as a grain of mustard seed. 
 
 But see what happened. In the short space of time covered by the 
 period for which a royalty was claimed, the "pool" extorted from the 
 people the sum of $1,500,000 in excess of the competitive price. We 
 cannot hesitate or doubt as to the vital concern of the people in this 
 •combination and the emphatic approval stamped upon it by the Court. 
 By the deliberate, unequivocal figures embodied in the opinion, the 
 people were taxed $1,500,000 through the existence and operation 
 of this "pool." That fact cannot be glossed over or explained away. 
 It stands incontestably. To the extent of the sum named, the people, 
 literally and not figuratively, were held up. There was no alternative. 
 They had to pay that blood money or do without the goods. The 
 ■excessive sum extorted by the "pool" from the people, is so large as 
 almost to stagger an ordinary mortal, unfamiliar with extending 
 ciphers after the dollar sign, as "pool" members are. This sum of 
 §1,500,000 would pay the salary of all the judges of the Supreme Court 
 for 15 years; it would pay the salary of the President for 20 years, or 
 the salary of three judges of the Court of Appeals for 70 years. All 
 these sums are sweated out of the people by taxation and they com- 
 plain not, for the officers of the government are the servants of the 
 people and the laborer is worthy of his hire. But there is no excuse 
 or justification for this enforced contribution to the "pool." It can- 
 not be upheld by any law ; it cannot be excused by exigencies of busi- 
 ness; it cannot be palliated or solved by any economic theory. The 
 decision runs counter to the decisions of the Supreme Court; it flouts 
 the statutes and public policy of the Nation ; it tenders an inexplicable 
 
362 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 affront to common sense in treating seriously the pompous assevera- 
 tions of "good faith" on the part of the members of the "pool." It 
 is fortunate indeed, for the tranquility and peace of the Nation, that 
 the people are blind to much that goes on ; it is well that they are not 
 sensitive to a blow at their welfare delivered obliquely, instead of 
 directly and in the open. Otherwise, insurrections, clamorous gather- 
 ings like the Boston tea-party, the haggard and ominous countenances 
 of seething crowds would be familiar without reading history or 
 fiction. In the case of American Banana Co. vs. United Fruit Co. 
 (1908), 213 U. S. at 356, Mr. Justice Holmes said: "Law is a state- 
 ment of the circumstances in which the public force will be brought 
 to bear upon .men through the Courts." So it is. But suppose the 
 Courts turn aside at an ambiguity like the term "monopoly," explain 
 away the real circumstances indicated by the words "right to exclude 
 others" and attenuate the public force until it falls as harmless upon 
 men engaged in crime as shadows upon the water. What then ? Sup- 
 pose that the public force is turned awry and thick-skinned citizens, 
 conspirators against the welfare of the people, by sophistry and skilfull 
 word jugglery are enabled to shove by justice. What becomes of the 
 equilibrium on which the republic rests — love of liberty and rever- 
 ence for law? How long and to what extent the Courts will be instru- 
 ments by which the public force will be brought to bear upon men, 
 is a matter for curious speculation. But one may safely forecast that 
 !,he public force is an abiding factor of civilization, growing more 
 irresistible all the time. The people are not only the source of the 
 force, but in the final analysis, determine under what circumstances 
 it shall be brought to bear. If the Courts nullify the force by stating 
 away the circumstances for its application, the people will never abne- 
 gate the force. Instead, they will themselves wield the force with- 
 out tempering its ferocity through the conserving deliberation of the 
 Courts. History bears witness to this familiar instance of power 
 resumed by the ultimate sovereigns. When such a period is ushered 
 
THRESHING MACHINE COMBINATION. 363 
 
 in, the money grubbers and commercial pirates, the industrial boll 
 weevils, are swept away like gnats in a tornado. They do not bother 
 about labored ingenuity in the Courts to justify holding on to millions 
 wrung illegally from the hard-wrought accumulations of the inglorious 
 and unprivileged multitude. It is well for them if they are permitted 
 to enjoy a bowl of soup and a trencher of bread at the rear veranda 
 of a day servant's cottage. The woe is on him by whom the offense- 
 comes. 
 
 Oh, reader, the final word in this rubber tire case you will find in 
 210 U. S. at 439. There this is written: 
 
 "Milwaukee Rubber Tire Works Company, Petitioner, vs. Rubber 
 Tire Wheel Co., on Writ of Certiorari to the United States Circuit 
 Court of Appeals for the Seventh Circuit. 
 
 June 1, 1908. Dismissed, per stipulation" (italic ours). 
 
 That is what happened to that case. The pool "dismissed, per 
 stipulation." That was a wise pool, a wise stipulation, and a wise 
 dismissal. The pool had no thought of pleading its miraculous justi- 
 fication by faith before the all-seeing eyes of that great tribunal. The 
 pool knew, and its counsel knew, that there was no more chance of 
 convincing the Supreme Court of the legality of its system of con- 
 tracts, of its sandbagging commission, of its valiant good faith, than 
 there is of driving a forty-horse power automobile through a finger 
 ring. It will not be surprising if the Courts of other Circuits assume 
 the same attitude towards this decision that the Court rendering it did 
 towards the decision of the Court of Appeals for the Sixth Circuit 
 adjudicating the tire patent void. In good faith, they will regard the 
 decision erroneous. 
 
 Indiana Mfg. Co. vs. Case Threshing Machine Co. (1907 C. C. 
 A., Seventh Circuit), 154 Fed. 365. 
 
 This is a companion case to the rubber tire case just discussed, and 
 because of the extended space devoted to that decision, it seems inap- 
 propriate to dwell at any length on this. The two decisions were 
 
"364 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 promulgated on the same day. In fact, the decision in the rubber 
 tire case is the principal authority relied on here. The question in- 
 volved was whether or not an illegal combination was built up by all 
 the makers of threshing machinery becoming licensees of the owner 
 oi a patent on a stacker, the terms of the license fixing a uniform 
 sale price of $250.00 for each stacker sold by a licensee. The Court 
 justified the scheme in this way: "The public could not force it (the 
 licensor) to license another device. Have not the people been given 
 something beyond their power to demand, in a policy that permits 
 a customer to get a stacker as a part of the separator of his choice, not 
 merely in connection with a favored separator?" Such an argument 
 if heeded, will sustain any -combination that ever was schemed out. 
 Take the Addyston pipe case. The public could not force a single 
 member of the combine to make or sell a single foot of pipe. Let 
 us ask there : Have not the people been given something beyond their 
 power to demand, in a policy that permits a customer to get a quan- 
 tity of the pipe even though at a trust price? Back in the rubber 
 tire case, the Court' said : "The means of effecting and the form of 
 the combination are immaterial; the result is the criterion." Here 
 the Court parries the charge of combination with this: "This (th^ 
 combination) resulted, without any concert of action on the part of 
 the licensees, solely from a policy pursued by appellant through a 
 course of years." What difference does that make if "the criterion 
 is the result?" Another charge was founded on the number of . 
 I)atents merged in a single ownership. The Court disposes of this by 
 positing a hypothetical case of two "competing patents" owned by one 
 person and then follows this comment: 
 
 "The public has no right in either invention; therefore the public 
 has the right to have them both in the market competing for buyers 
 Naught plus naught; the sum of two naughts is a substantive quantity." 
 Let us test this facile computation. There are two bakeries in a 
 town and only two; they constitute the sole source of the bread supply. 
 
BLOUNT MFG. CO. VS. YALB-TOWNE MPG. CO. 3G5 
 
 The "public has no right in either"; it cannot force either to seU 
 bread, much less both. Suppose the two proprietors enter into an 
 agreement to raise the price of bread to 10 cents a loaf. Naught plus 
 naught; the sum of the two naughts is a crime. That is not the 
 Threshing Machine case, but it is a fair test of the strength of the 
 argument expounded. It is not necessary to dwell on this opinion at, 
 length. It is of a part with the Rubber Tire case, and went the same 
 road. It, too, was taken to the Supreme Court and, too, was "dis- 
 missed without costs to either party per stipulation" (207 U. S-. at, 
 603). The pool when dragged to the front door of the Supreme 
 Court, always escapes dissolution and the hot branding iron of cout 
 demnation in some way and as a last resort "per stipulation." .But, 
 Avhat would happen if the government itself should start out after- 
 the pool. What recourse then could be had ' ' per stipulation ' ' ? 
 
 Blount Mfg. Co. vs. Yale Towne Mfg. Co. (1909 C. C. Mass.),, 
 166 Fed. 555. 
 
 In conclusion we come now to deal with a truly magnanimous, 
 opinion. The case entitled as above is vastly important. No decision 
 that we have anywhere chanced upon, evinces more care and precision 
 than the one here to be considered. The argument exhibits the sure 
 and easy progress of complete mastery. It is unfolded without dog' 
 matism and convinces without triumph. When the premises are fairly 
 laid out we feel instantly the tightened grip of the conclusion. The 
 preliminary propositions force the conclusion announced with all the 
 inexorable certainty of an euclidean demonstration. The understands 
 ing is captivated and bound by the irrefragable ligatures of ultimate 
 thinking. Indeterminfite prepossessions, obstinate prejudices and 
 vmdefined vagaries are squeezed out like liquid from a pulpy mas?, 
 under hydraulic pressure. 
 
366 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 THE FACTS. 
 
 Properly to understand, the searching analysis we must possess 
 ourselves of a lively apprehension of the facts. The statement of facts 
 though luminous as far as it goes, is slight and elliptical. It requires 
 some pondering to give weight to the circumstances stated only by 
 inference. It appears that the suit touched the affairs of four con- 
 cerns, but we need attend to only three, as the participation of the 
 fourth is not dwelt on with any decisive result. The three concerns 
 on whose business we desire to focus attention, were engaged in manu- 
 facturing and selling "liquid door checks." 
 
 The thr^e concerns at interest here we shall designate abbreviatedly 
 as The Blount Co., The Yale Co., and the Corbin Co. All owned 
 patents on door locks and manufactured and sold said locks so pat- 
 ented. They underwent the ordeal of business pursuant to a three- 
 cornered agreement. The Blount Co. sued the Yale Co. under the 
 terms of the tripartite arrangement which affected those two. But the 
 ■Court found it necessary to pull in the line that fastened the Corbin 
 €o. When this was done, it was found that the contractural lines 
 radiated from each, concern to the other two. All three were bottled 
 up in the same liquid container and pressure exerted on or by, any 
 one, was transmitted equally to the other two. The three concerns 
 were organs of one body ; the individual business identity of each was 
 lost in the tesselated uniformity of a combine or pool. The three 
 concerns, each a stranger to the business of the other two, struck a 
 triangular truce in the bitter war of competition, engraved upon 
 their respective shields the catching industrial insignia, "In unity there 
 is strength," and thereafter went forth to conquer the elusive patron- 
 age oi the public, not singly and isolatedly, but in bands like grass- 
 hoppers or ants, guarding all exits of supply and answering every 
 inquiring demand with the chorded harmony of three separate voices 
 blended into one. In such circumstances one hears the full choir 
 
BLOUNT MFG. CO. VS. YALE-TO'WNE MFG. CO. 367 
 
 of the pool. It is pleasant to those who sing but woe to the dancers. 
 
 The Blount Company had a contract with the Yale Co. ; this is 
 called exhibit A. The Blount Co. had also a contract with the Corbin 
 ■Co. called exhibit B. Thus the Blount Co. stood at the apex of the 
 isosceles arrangement, while the Yale and Corbin concerns were sta- 
 tioned at the disparate bases. Here we have the affairs of commerce 
 sublimated to the clarified beauty of geometry. The Yale Co. as an 
 "associate" signed exhibit B Thus the two contracts read as one 
 instrument brought all three concerns into juristic contiguity. The 
 rights and interests of the parties were interlocked this way: The 
 profits under exhibit A were arrived at by striking the difference 
 between "contract cost" and the selling price of the locks. Appar- 
 ently this sum was distributable in equal parts to the Blount and Yale 
 concerns. But in making such distribution, an accounting was first 
 to be had under exhibit B between Blount and Corbin. Then the 
 sum derived under the terms of exhibit A, was to be "increased or 
 diminished by one-half of the net amount received in settlements" 
 under exhibit B. It is not entirely clear to our understanding just 
 how the second sum could be added to the first so as to "diminish" 
 the first, unless, indeed, the contingency of a minus quantity was 
 contemplated. At any rate, the plan comprehended "the maintain- 
 ing of prices, the pooling of profits, the elimination of competition and 
 the restraint of improvements." Prices were to be determined from 
 time to time by agreement between the three concerns. This was the 
 course deliberately marked out although each concern owned patents 
 protecting the subject matter of their respective industrial efforts. 
 
 The Blount Co. sued the Yale Co. for an accounting under the 
 arrangement just delineated. The Yale Co. admitted the existence 
 of the triangular compact and asked the Court to measure the same 
 by the law of the land. It demurred to the petitioner. The Court, 
 meted out the law and removed the enclosing boundaries of the agree- 
 ments. 
 
368 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 THE OPINION. 
 
 Extended comment on the language of this opinion would be a 
 tantalizing excrescence. The thing is clear beyond the occasion of 
 extended elucidation. 
 
 We start: "If relating to ordinary articles of trade or commerce, it 
 seems reasonably clear that these contracts would be in violation of 
 'The Sherman Anti-trust Act' and therefore unenforceable. The com- 
 plainant contends that the demurrer should be overruled, because- 
 such contracts are le^al and valid when the subject matter of the- 
 contract comprises solely articles, the manufacture and sale of which 
 are protected by patents." 
 
 We have the issue clearly defined in that statement. The Court. 
 restates the issue again : "The prinqipal question is whether the fa;ct- 
 that the articles to which the agreements relate, embodying patented 
 inventions is sufficient to make the Sherman Act inapplicable." It 
 is open to the observation of any careful reader thaj. the Court does 
 not once stray away from that inquiry. Unavailable props are at 
 once discarded. "This question was not passed upon by the Supreme- 
 Caurt in the (Bemeat Case) . That decision related to restraints and 
 conditions ioiposed in connection virith the grant of patent rights" 
 (black ours). The Court next brushes aside the Rubber Tire and 
 Threshing Machine cases with this, — "the decisions are not directly 
 in point." At any rate those decisions do not "point" in the direction 
 traveled by the Court here. On the contrary the sponsor for this 
 opinion turned about face and marched point blank opposite. We- 
 gladly follow. "It seems self-evident that a contract which is only 
 co-extensive with the monopoly conferred by letters patent, and which 
 creates no additional restraint of trade or monopoly, does not conflict 
 with the Sherman Act." We cannot conceive of a more accurate' 
 abstract of the actual decision in the Bement case than that. 
 
 "The monopoly granted by letters patent is of a particular inven- 
 
BLOUNT MFG. CO. VS. YALB-TOWNB MFG. CO. 369 
 
 tion. (Think of tlje Threshing Machine case!) Devices thus pro- 
 tected by patents are as a matter of fact in commercial competition 
 ■with both patented and unpatented devices. A contract whereby the 
 manufacturers of two independent patented inventions agree not to 
 compete in the same commercial field, deprives the public of the 
 benefits of competition and creates a restraint of trade which results, 
 not from the granting of letters patent, but from agreement. While 
 the monopoly of the patented articles is not increased, the monopoly 
 of the commercial field is increased by the 'unified tactics' as to prices." 
 That paragraph is within the firm grasp of an unmystified appre- 
 hension. Later in the opinion the Court writes of "independent 
 patents," but we are not treated to the unthinkable monstrosity of 
 "competitive patents." "What possible determitiate meaning can be 
 attached to this last phrase? How can we go about conceiving of 
 "competitive patents" or "competition" between different patents? Let 
 us take the patents protecting respectively the monotype an^ linotype' 
 printing presses. Those are instanced in the Threshing Machine Case. 
 One patentee has a right to exclude others from making, using, or 
 selling the monotype machine. The other patentee has the right 
 similarly to exclude from the linotype device. But this does not im- 
 plicate any possible competition between the two respective rights to 
 exclude, and those two rights to exclude comprsie the whole of the two 
 patents. "Competition" is not apposite to abstract, incorporeal, rights. 
 We cannot predicate the juridicial meaning of competition with ref- 
 erence to incorporeal rights. Juristically speaking, competitors are 
 always persons; competition is between the tangible instrumentalities 
 of trade conducted by persons. As the Court says: "Devices (black 
 ours) thus protected by patents, are as a matter of fact in commercial 
 competition with both patented and unpatented devices." This is 
 inevitably so. Webster defines competition as "The efforts of two or 
 more parties, acting independently, to secure the custom of a third 
 party by the offer of the most favorable terms." The essence of the 
 
370 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 phenomenon is the struggle for the custom or patronage. The strug- 
 gle is not confined to contestants offering identical objects, or even 
 objects regarded as commercial or industrial equivalents, capable of 
 being substituted one for the other. The acme of competition may 
 be evinced between the proprietor of a popcorn cart and an itinerant 
 balloon vendor, for the patronage of a small boy who has only one 
 hot dime. The thing sought is thfi patronage always. The stragglers 
 limited sum, he has long been accustomed to look before and after. 
 The problem is to economize in the expenditure for his household 
 cooking. He has already a sturdy coal range but desires to progress 
 for the prize are many. The factors on which the contest hinges are 
 all of the seductive attributes of the thing dangled before the eyes of 
 the dispenser of the patronage, together with the alluring glamour 
 with which the vendor succeeds in investing the object offered for 
 sale. Suppose a man whose means are such that in laying out his 
 beyond the use of that. He may go down town, after reading the 
 alluring advertisements in the magazines, and post himself as to the 
 advisability of buying a gas range, an electric stove, a steam heated 
 device or a tireless cooker, and yet end up by purchasing a year's 
 .supply of coal for the old stove. Now the vendors of all these distinct 
 contrivances are in competition as among themselves and with the 
 coal dealer for the contents of the anxious man's purse. Each holds 
 out all the known inducements to compel a severance between the 
 man and his money. All of the devices mentioned may be patented 
 but that does not lessen the intensity of the strife. 
 
 Webster illustrates the above stated definition with this excerpt: 
 "When competition does not act at all, there is complete monopoly." 
 That is the sort of thing with which Court is here dealing. 
 
 The Court next cites and quotes from the decisions dealing with 
 the National Harrow Combination. These decisions are ignored in 
 the Rubber Tire, Threshing Machine and Seeded Raisin cases. 
 
 "While the contracts provide that the parties are licensed to use 
 
BLOUNT MFG. CO. VS. YALE-TOWNE MFG. GO. 371 
 
 patented inventions of the other, this does not alter the fact that by 
 the terms of the contract each party ia restrained in the exercise of 
 its rights, and in the sale of articles made solely under its own pat^ 
 ents" (black ours). 
 
 There's the rub. That is the hand of the stranger in the con- 
 tractor's business. That is what Mr. Justice Holmes in the Northern 
 Securities Case, nominated a contract in restraint of trade. "If as a 
 result of mutual licenses, there is put upon the market an article 
 embodying the inventions of both patentees, so as the effect of the 
 exchange of licenses a new article of commerce is developed, it is 
 doubtful if the public is thereby unlawfully deprived of any of its 
 rights or expectations of free competition. (That is a twister.) Where, 
 however, each patentee continues to make his own goods under his 
 own patents, and seeks to enhance his profits by an agreement with 
 competitors, who make either patented or unpatented articles (the cir- 
 cumstances now in hand) , then it seems to follow that the agreement 
 of each to restrain his own trade cannot be regarded merely as an 
 incident to the assignment of patent rights. The patentee then re^ 
 strains his own trade, not for the purpose of enhancing the value of 
 the license which he grants (Bement Case), but for the purpose of 
 enhancing the value of his trade by removing competition." That is 
 the precise purpose and result of all such agreements. What conceiv- 
 able reason has one patentee for agreeing to maintain an arbitrarily 
 fixed price on his patented article unless it be the consideration tendered 
 to induce another person (it may be a patentee) to agree similarly t* 
 restrain himself in disposing of his- goods? If there can be no com- 
 petition in the trade in patented articles, what possible motive had 
 these parties for entering into this arrangement? If a patented article, 
 in virtue of the fact that it is patented, is thereby energized with an 
 irresistible selling potency, so that competition is ineffective to lessen 
 ' its chances of extracting the consumers' money, why should the own- 
 
372 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 €rs of distinct patents bind themselves together and each forbid the 
 other to be free in seeking that money? 
 
 The opinion continues. "A sale or license, with a covenant not to 
 compete, made as an ordinary incident to enhance the value of the 
 thing conveyed, is not within the Sherman law." Now that is the 
 exact point to the Bement Case. There the patentee granted an ex- 
 clusive license for the full term of the patent. In other words, the 
 license contract operated to place the business of manufacturing the 
 kind of harrows described in the patent entirely in the hands of the 
 licensee. The exclusive feature of the license, that is to say the 
 stipulation on the part of the patent owner not to engage in the busi- 
 ness, was easily validated as a concomitant to enhance the value of the 
 license granted. The decision has been cited to the exact point by the 
 Supreme Court. Thus in Cincinnati Packet Co. vs. Bay (1905), 200 
 U. S. at 185, Mr. Justice Holmes, expressing the view of the full Court, 
 said: "Whatever differences of opinion there may have been with re- 
 gard to the scope of il"^ (Anti-trust Act) there has been no intimation 
 frorn anyone, we believe, that such a contract, made as part of the sale 
 of a business, and not as a device to control commerce, would fall 
 within the Act. On the contrary, it has been suggested repeatedly 
 tliat such a contract is not within the letter or spirit of the statute 
 {citing prior decisions and then continuing with this), and it was so 
 decided in the case of a patent" (black ours; citing the Bement Case). 
 The maintenance of price feature in the Bement Case is a stumbling 
 block. That stipulation, considered in the light of the precise facts 
 presented to the Supreme Court, is absolutely meaningless. "What con- 
 ceivable harm could result to the Ucensor in such case from the action 
 of the licensee in cutting prices? The licensor had stipulated for a 
 royalty of so much on each harrow sold. His profits were fixed at a 
 certain sum, regardless of the amount at which the implements were 
 sold. We repeat that so long as one sticks in the circumstances actually 
 proven to exist in that case, the selling price clause of the contract is 
 
BLOUNT MFG. CO. VS. YALE-f OWNE MFG. CO. 373 
 
 inexplicably foolish. But when we glance outside of the record and 
 at the circumstances heatedly averred, but not proven by the licensee, 
 the thing is sensible and clear. The license in contest undoubtedly 
 was designed with the consciousness that it would be one of many 
 similar licenses pertaining to other harrows, patents for, which were 
 owned by the licensor. The licensor foresaw competition between 
 a multiude of licensees operating under separate contracts and selling 
 competitive equivalent implements. The stipulation as to the selling 
 price was a reservation by the licensor in all the contracts and was 
 intended to enable him to control, restrain and repress competition 
 between all the disparate licensees. And the scheme was admirably 
 adapted to vest this power in the licensor to the fullest extent. For 
 the licensor was left free to lower the price. Now the trouble with the 
 wretched case is that the defendant failed to prove the existence of the 
 scheme. The combination was alleged to exist, but there was no 
 proof of it. The answer averred much ugly stuff of a multitude of 
 licensees, of similar contracts, of uniform prices, of competition wiped 
 out, but the proof failed as to all this. The actual record on which 
 the defendant asked judgment was like the play of Hamlet with the 
 principal character left out. A qonspiracy was asserted but only one 
 party to the alleged conspiracy was shown to exist. There could be 
 no conspiracy or combination between a single licensor and one licensee. 
 The appearance of restraint, afSrmable of the exclusive feature of the 
 license, was no restraint at all, as it was an incident to the sale of a 
 business. The maintenance of a fixed price was harmless for two 
 reasons. First, it left the owner of the patent at liberty to lower 
 prices whenever the conditions of the business made it advisable. Sec- 
 ondly, the licensee's agreement to maintain prices was not articulated 
 in any scheme or combination to affect, generally, prices in such im- 
 plements. The covenant was not given in consideration of an anal- 
 oo-ous stipulation on the part of other manufacturers similarly to im- 
 pede the distribution of their products. On the contrary, the agree- 
 
374 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 merit to maintain the schedule of prices was insulated, ran only to the 
 licensor in his capacity as owner of those patents under which defend-, 
 ant was licensed and bore no reference to other similar undertakings. 
 The counsel for the defendant apparently expected the Court to 
 fill up the gaps in his proof by conjecture and surmise, stimulated into 
 activity hy heated allegations in the answer, unpropped by any proof. 
 The Court declined to embark on any speculation; held itself bound 
 by the record, and that the record did not warrant the finding of any 
 combination. This wide gaping discrepancy between the pleadings 
 and the evidence easily accounts for the studious and almost redundant 
 expressions in the opinion, to the import that the Court cannot assume 
 the existence of a combination where the trier of the facts had delib- 
 erately afi.a'Tted there was none. But we can discover no warrant for 
 siting the Bement Case as authority for the proposition that a patentee, 
 as patentee, and by virtue of some vigour peculiarily invested in him 
 by the patent law, can stipulate the price at which a licensee shall sell 
 the patented article. We think that the Supreme Court of Massachu- 
 setts uttered sound doctrine when it stated (193 Mass. at 611) that "The 
 ■decision (in the Bement Case) would have been the same if the article 
 had not been patented." To put the case in this light, suppose A has 
 a factory completely equipped for making ax handles. B has no such 
 factory. A hires the use of the factory to B for five years, the terms 
 being that A shall not, durins,- the period, engage in the business; that 
 B shall pay a rental for the use of the equipment and shall maintain 
 a fixed schedule of prices, subject to A's rights to lower the same. "We 
 know of no process of reasoning whereby such contract can be brought 
 -P'ithin the category of agreements illegal because in restraint of trade. 
 Yet to our discernment that is a fair abstracted statement of the Bement 
 Case. 
 
 The opinion digressed from, continues: 
 
 "By the terms of the present contracts, each party limits its trade 
 in goods made under its patents." 
 
 After a glance at the Rubber Tire Case, we have this: 
 
BLOUNT MFG. CO. VS. YALB-TOWNE MFG. CO. 375 
 
 "The question whether agreements concerning patented articles are 
 within the Sherman Anti-trust Act, must be determined by a consid- 
 eration of the nature of the rights conferred by the grant of a patent" 
 
 (black ours). 
 Now we have that consideration stated with unmistakable directness. 
 
 "While it is the ordinary privilege of the owner of patent rights to 
 use or not to use them without question of motive, the grant of letters 
 patent confers upon the patentee no right not to use his own invention, 
 or to make an agreement in restraint of trade in that article, save in 
 connection with an assignment of the rights conferred by letters pat- 
 ent. The proposition than an agreement not to manufacture, or an 
 agreement to restrain trade, is within some rights of nonuse conferred 
 upon a patentee, seems unsound, if we consider the nature of the grant 
 of letters patent. The right of the patentee or the assignee to with- 
 hold the invention, is quite apart from any grant contained in the let- 
 ters patent. The privilege of restraining others is granted to the own- 
 ers of letters patent. He is given no right or privilege! to restrain him- 
 self. By the terms;, of the patent he has the exclusive right to make, 
 use and vend. The right to make, use and vend he has without the 
 grant of letters patent. When we say that a patent grants an 'ex- 
 clusive right' we do not mean that the right to make, use and vend is 
 granted, but only that the patentee's existing right is made exclusive 
 by the grant." (black throughout paragraph ours). 
 
 There we have meaningless common places, reiterated as a matter 
 of rote, enlivened, energized and truly expounded. That is the mark 
 of penetrative insight. That "consideration" is buttressed by two Su- 
 preme Court decisions. Then we have the same proposition stated dif- 
 ferently, further clarifying the matter. Incidentally we get a new 
 light on the frequently quoted paragraph as to the right of nonuse in 
 
 the Heaton Case. 
 
 "The right of a patentee to suppress his own, rests upon ordinary 
 considerations of property right (black ours) . The public has no right 
 
376 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 to compel the use of patented devices or unpatented devices, when 
 that is inconsistent with fundamental rules of property. When a pat- 
 entee agrees, however, to restrain his own trade in the article of his 
 own invention, not as an incident to the granting "of rights, but for 
 the purpose of enhancing his price by the removal of competition, he 
 is then quite outside the sphere of any right granted him by the govern- 
 ment. He may engage in interstate trade or not as he pleases; but 
 being engaged in that trade, he is subject to all restrictions upon inter- 
 state traders" (black ours). Observe that by the use of the term 
 "traders" the Court recognizes the fact that the objective point of the 
 Anti-trust Act is persons and not abstractions. 
 
 Near the bottom of page 559, we came upon this : "It must be recog- 
 nized that an inventor stands in a special relation to the product of 
 his faculties. When he has secured his patent, he may derive profit 
 from an agreement (black ours) not to use it." The second of these 
 two sentences appears to us to squint. It is the only sentence in the 
 opinion which is even slightly ambiguous. What is meant by "an 
 agreement not to use" the invention? Are we to understand by this 
 an agreement not to use as an incident ^f a sale of that privilege to 
 another? If so, the Court has already dealt with that right in admirable 
 fashion. The words of the sentence seem open to the unstrained con- 
 struction that a patentee may derive a profit from an agreement not 
 to use his invention, entered into designedly to suppress the patented 
 article as a factor in commerce. But then this construction is repelled 
 by a strong passage on the page following : 
 
 "Grauting that nonuse of an invention is fully within the right of 
 an owner of a patent, it does not follow that he may by agreement bind 
 himself to nonuse, save in connection with an assignment of his letters 
 patent. Ownership of a patent involves no obligation to use, nor does 
 ownership of other property. Nonuse ordinarily violates no law; but 
 contracting with another, putting it in the power of another to com- 
 
BLOUNT MFG. CO. V,S. YALE-TOWNE MPG. CO. 377 
 
 pel one not to use, is a contract in restraint of trade, designed for the 
 purpose of suppressing competition" (black ours). 
 
 Two more extracts must suffice though the entire opinion is worthy of 
 the intense study fabled to have been devoted to Thucidides by Demos- 
 thenes. "If there is secured to the patentee all profits legitimately 
 arising from the manufa.cture, use, and sale of his invention, that is 
 all that is within the terms of the grant. (That is a correct definition 
 of the rights of the owner of a patent in the category of the natural 
 right and in an affirmative aspect, complementary to the negative right 
 to exclude others.) To prohibit contracts (black ours) for the suppres- 
 sion or restraint of his own trade by the application of the Sherman 
 Anti-trust Act is not inconsistent with his right to manufacture, use 
 and vend. That the Sherman Act interferes with some supposed right 
 granted by the patent, to suppress an invention, is an unsound proposi- 
 tion, for the reason that letters patent grant no such rights (black 
 ours), either in terms or by reasonable implication." 
 
 Again. "The profit which arises from suppressing an invention, 
 from nonuse, flows from commercial tactics and not from the use of 
 the invention. The public interest which forbids contracts in restraint 
 of trade, arises from no right in the public to create trade by compul- 
 sion, but only from the expectation of the ordinary course of conduct, 
 and the harmful results of interference with it by monopolistic schemes. 
 (Those sentences contain a profound implication which searches be- 
 yond the facts in contest.) The inventor who has not patented his 
 invention cannot make an agreement m restraint of interstate trade 
 without violating the Sherman Act, even though he is in fact an 
 inventor. The rules of public policy, expressed in the Sherman Act, 
 apply to him, and I do not think are affected by his taking out a patent, 
 except in the single particular of an assignment or license. The Sher- 
 man Act is not inconsistent with any rights acquired by the patentee 
 when it prevents agreements in restraint of trade which are not designed 
 to make valuable the right to use. There is no inconsistency between 
 
"378 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 the grant of an exclusive and assignable right to make, use and vend, 
 and the prohibition of an agreement restraining or suppressing the 
 sale of the article in interstate comnnerce, because any profit from^ 
 such an agreement does not arise from the value of making, using 
 and vending. There is no inconsistency between the proposition that 
 an inventor may withhold his invention from use as he sees fit, and 
 the proposition that he may not make an agreement whereby, for the 
 advantage of a competitor, trade in his patented article is restrained 
 or suppressed" (black ours). 
 
 Such an argument must prevail by the irresistible force of demon- 
 stration. Granted, that all the inventor obtains by the patent franchise 
 is the right to exclude and that the Anti-trust Act inhibits every trader 
 who does an interstate business from entering into a contract whereby 
 his trade in his goods is restrained, the conclusion that a contract of 
 the patentee restraining his trade violates the act, is relentless, com- 
 pelling, inexorable. 
 
 Let us now attempt an abstract of the various arguments ad- 
 '^aneed to support the decisions that we have discussed and then in 
 conclusion turn the whole matter about for a view in a different as- 
 pect. In summarizing the arguments we place in contrast the views of 
 the Supreme Court. The various legal propositions advanced to jus^ 
 tify the paradoxical rule may be brought under the following heads : 
 
 1. The patent franchise grants to the patentee the exclusive 
 right to make, to use, and to sell. This is assumed as the law in all 
 the cases ; in a number of them it is exnresslv so declared- 
 
 The Supreme Court: 
 
 1852. Bloomer vs. McQuewan: "The franchise which the 
 
 patent grants consists altogether in the right to exclude everv 
 
 one from making, using or vending the thing patented, without 
 
 the permission of the patentee. This is all he obtains by the 
 
 patent. ' ' 
 
BLOUNT MFG. CO. VS. YALE-TOWNE MPG. CO. 379 
 
 1878. Patterson vs. Kentucky: "The right to sell the (pat- 
 ented) Aurora oil was not derived from the pat(!nt; that right 
 existed before the patent and could have been exercised withoiit 
 the grant of letters patent." 
 
 2. The purchasers of a patented device accompanied by a notice 
 (or sold under a contract) restricting the purchaser's right to sell or 
 Tise the thing purchased, is, as to such right to use or sell, a mere 
 licensee, and any use or sale in violation of the contract is an iu- 
 fringement of the patent. This view is expressed in all the cases. 
 "Sometimes such sales are called "conditional" or "restrictive;" at 
 other times it is said the vendor sells only a part of his monopoly and 
 reserves to himself as an ungranted portion of his monopoly the right 
 to "ontrol the future use or sale. The climax is reached in Brodriek 
 Copygraph vs. Mayhew (1904), 131 Fed. 92: "He (the pateutee) 
 is at liberty to fix any price for the machine and as well reserve anv 
 benefit in its use. ' ' 
 
 The Supreme Court: 
 
 1873. Mtchell vs. Hawley: "Complete title to the imple- 
 ment or machine purchased becomes vested in the vendee by the 
 sale and purchase, but he (the purchaser) acquires no portion 
 of the franchise, as the machine, when it rightfully passes from 
 the patentee to the purchaser ceases to be within the limits of 
 the monopoly." 
 
 1873. Adams vs. Burke: "In the essential nature of things, 
 wh«n, the patentee, or the person having his rights, sells a ma- 
 chine or instrument whose sole value is in its use, he receives 
 the consideration for its use and he parts with the right to re- 
 strict that use. The article, in the language of the court, passes 
 without the limit of the monopoly. That is to say, the patentee 
 or his assignee having in the act of sale received all the royalty 
 or consideration which he claims for the use of his invention 
 
380 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 in that particular machine or instrument, it is open to the use 
 of the purchaser without further restriction on account of the 
 monopoly of the patentees." 
 
 '1894. Keeler vs. Folding Bed Co: "As between the owner 
 of a pn,tent on the one side, and a purchaser of an article made 
 under the patent on the other, the payment of a royalty .once, 
 or, (N. B.) what is the same thing, the purchase of the article 
 from one authorized by the patentee to sell it, emancipates such 
 article from any further subjection to the patent throughout the 
 entire life of the patent. It follows that one who buys patented 
 articles of manufacture from one authorized to sell them becomes 
 possessed of an absolute property in such articles, unrestricted 
 in tiine or place; whether a patentee may protect himself and 
 his assignee by special contracts brought home to the purchaser 
 is not a question before us, and upon which we express no opin- 
 ion. It is, however, obvious, that such a question would arise as 
 a question of contract and not as one under the inherent meaning 
 and effect of the patent laws." 
 
 1852. Bloomer vs. McQuewan: "And when the (patented) 
 machine passes to the hands of the purchaser, it is no longer with- 
 in the limits of the monopoly. It passes outside of it, and is no 
 longer under the protection of the Act of Congress. And, if his 
 right to the implement or machine is infringed, he must seek 
 redress in the Courts of the State, according to the laws of the 
 state, and not in the Courts of the United States, nor under the 
 law of Congress granting the patent. The implement or machine 
 becomes his private, individual property, not protected by the 
 laws of the United States, but by the laws of the state in which 
 it is situated. Contracts in relation to it are regulated by the 
 laws of the state, and are subject to state jurisdiction." 
 
 1908. Bobbs-Merrill Co. vs. Straus. " The owner of the copy- 
 right in this case did sell copies of the book in quantities and 
 
BLOUNT MFG. CO. VS. YALB-TOWNE MFG. CO. 3S1 
 
 at a price satisfactory to it. It has exercised the right to vend, 
 what the complainant contends for embraces not only the right 
 to sell the copies but to qualify the title of a future purchaser by 
 the reservation of the right to have the remedies of the statute 
 against an infringer because of ]the printed notice of its purpose 
 to do so, unless the purchaser sells at a price lixed in the notice. 
 To add to the right of exclusive sale the authority to control ail 
 future retail sales, by a notice that such sales must be made at a 
 fixed sum would give a right not included in the terms of the 
 statute. ' ' 
 
 '6. Violation of a license contract, is per se an infringement. 
 This position is expressed or assumed in all the eases. It is empha- 
 sized in the Rupp and Rivet cases. 
 The Supreme Couri;: 
 
 1850. Wilson vs. Sanford (In a suit involving breach of a 
 license contract): "The dispute in this case does not arise un- 
 der any Act of Congress, nor does the decision depend upon the 
 cbnstruction of any law in relation to patents. It arises out of 
 the contract stated in the billj and there is no act of Congress 
 providing for or regulating contracts of this kind. The rights 
 of the parties depend altogether upon common law and equity 
 principles. If the case made by the bill was a fit one for relief 
 in equity, it is very clear that whether the contract ought to he 
 declared forfeited or not, in a court of chancery, depended alto- 
 gelher upon the rules and principles of equity, and in no degree 
 whatever upon any act of Congress concerning patent rights.." 
 
 1878. Hartell vs. Tilghman: "If it (license contract) is to 
 be rescinded it can be done only by mutual agreement, or by the 
 decree of a court of justice. If either party disregards it, it can 
 be specifically enforced against him or damages can be recovered 
 for its violation. But, until so rescinded or set aside, it is a sub- 
 sisting agreement, which, whatever it is, or may be shown to be, 
 
382 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 must govern the rights of these parties. Such a case is not cog- 
 nizable in a court of the United States, by reason of its subject 
 matter. ' ' 
 
 1902. Excelsior Wooden Pipe Co. vs. Pacific Bridge Co : "It 
 may be freely conceded that if the licensee had failed to observe- 
 any one of the three conditions of the license, the licensor would 
 have been obliged to resort to the state courts, either to recovej- 
 the royalty or to procure a revocation of the license." 
 When the legality of a license contract under letters patent is- 
 attacked on'the ground that its terms violate the law against restraints, 
 of trade by contract, several positions are assumed to escape the force 
 of the objection. 
 
 4. It is said the patentee does not have to sell Ms patented pro- 
 duct or license any one else to do so. Therefore, if he elects to- 
 do that which is not compellable he can state the terms on which his 
 consent can be had. This view was glaringly voiced in the Heaton, 
 Rubber Tire and Threshing Machine eases. The premised assertion as- 
 to the right of non activity in so far as it differentiates this right in 
 the patentee from the same right in the owners of other private proji- 
 erty is the expression of an unreality. The same may be said of the 
 man who grows potatoes. (Park vs. Hartman.) 
 
 "It is the privilege of any owner of property to use or not 
 use it without question of motive." (1908. Paper Bag Patent 
 Case.) 
 
 The assertion when predicated of all owners of private property 
 is a meaningless platitude 
 
 Prom the conceded existence of the right of non use m tiie owners- 
 of all private property, nothing can be concluded as to the right to. 
 enter into a contract in restraint of trade in chatttels. 
 
 The law does not have as one of its objects compelling private 
 industrial activity; nor does it punish voluntary, non contractuaJ 
 quiescence. The sluggard is left to his deserts ; he has his reward 
 
BLOUNT MFG. CO. VS. YALB-TOWNE MFG. CO. 383 
 
 - 5. The Federal Anti-trust Act is brushed aside with various con- 
 flicting suggestions. 
 
 (a). The patented articles are not articles of interstate commerce.. 
 Neafly 30 years earlier this was anticipated and 'invalidated by 
 Webber vs. Virginia. 
 
 (b). The patent law overrides the Anti-trust Act; the sufficient, 
 answer to which is that they are not in conflict at any point. 
 
 The patent law creates iu the patentee the naked right to exclude ;; 
 the Anti-trust Act forbids all contracts, in restraint of interstate trade.. 
 The two laws might be represented by two circles whose cireumfer-. 
 ences do not touch. 
 
 Th3 Supreme Court: 
 
 1878. Patterson vs. Kentucky: "The I'ight of property in. 
 
 the physical substance is altogether distinct from the right in tlio 
 
 discovery itself. The right to sell the (patented) Aurora oil was 
 
 not derived from the patent." 
 
 1903. Northern Securities Case: "Congress has the power- 
 
 to establish rules by which interstate and international commerce 
 
 shall be governed, and, by the Anti-trust Act has prescribed the 
 
 rule of free, competition among tnose engaged in such eommer(>.(i. 
 
 6. The State Anti-trust Acts are avoided under various inneier- 
 minate reasons, expressed in inconclusive phraseology. 
 
 (a). The State Anti-trust Act cannot subtract from the rurht. 
 conferred upon the patentee by Congress. This is true, but the State 
 Anti-trust Acts do not have such purpose or effect. They have to do 
 with contracts pertaining to tangible, visible objects; not with incor- 
 poreal franchises. 
 
 (b). The right acquired by the patentee from the government Is 
 inconsistent with the patentee's being made subject to the provisions 
 of the Anti-trust Acts of the various states. The unexpressed assump- 
 tion here is that the government grants to the patentee the right to 
 make use and sell. The assumption and the predicate thereon are 
 
^84 TRADE COMBINATIONS IN PATENTED ARTICLES. 
 
 wholly unsupported. The Anti-trust Acts of the states are ail enacted 
 in the exercise of the reserved or police powers. 
 
 People vs. Russell (1883), 49 Mich., 617, Judge Cooley: "The 
 patent laws do dot determine personal capacity to contract or prescribe 
 the requisite for sales of patented articles, or impose the customary 
 restrictions which are supposed to be important to the protection of 
 public morals. A patentee must obey all other regulations of policf 
 which are made for general observance." 
 Tha Supreme Court: 
 
 1852. Bloomer vs. MeQuewan: "Contracts in relation to 
 it (patented article) are regulated by the laws of the state." 
 
 1878. Patterson vs. Kentucky: "The right of property in 
 the physical substance which is the fruit of the discovery is alto- 
 gether from the right in the discovery itself." 
 
 1880. "Webber vs. Virginia: "The legislation respecting the 
 articles which the state may adopt after the patents have expired, 
 it may equally adopt during their continuance. It is only the 
 right to the invention or discovery, the incorporeal right, which 
 the state cannot interfere with. Congress never intended that the 
 patent laws should displace the police powers of the states, mean- 
 ing by that term those powers by which the health, good order, 
 peace and general welfare of the community are promoted. 
 Whatever rights are secured to inventors must be enjoyed in sub- 
 ordination to this general authority of the state over all propert.v 
 within its limits." 
 
 It is a grievous mistake to suppose that the police power of thp 
 -state over the sales of personal property is limited to suppressing traf- 
 fic in noxious goods. In Gibbons vs. Ogden, Chief Justice Marshall 
 said : 
 
 "Of course, there is no limit to the power to be derived from 
 the purpose for which it is exercised. If exercised for one purpose, 
 it may be also for another. No one can inquire into the mo- 
 
CONCLUSION. 385 
 
 tives whieh influence sovereign authority. It is e;:oi:^gh that such- 
 power manifests its will." 
 
 CONCLUSION. 
 
 If we glance bapk at the lojig elE^boration which we have just in- 
 flicted on the reader, certain reflections are forced upon us in the mass. 
 In every contention or argument, there is an ultimate fact as to whichi 
 the disguta,nts are agreed: The argument that grows up is a clash 
 of contradictory opinions or mutually destructive assertions about ;tl:^e 
 fact conceded by bot^ sides. Always there must be this common start- 
 ing point, otherwise no dispute can be initiated, much less pressed, out 
 into detailed argument. 
 
 This common grouncl may be a fact, the existence of whichi,, is 
 established by proof unquestioned by either side. Or it may be/ a,n 
 ass^rtiou whicji is assented to by all parties. In the discussion juj^t, 
 terminated- thi? rallying point for all the divergent views takes , this, lat^ 
 ter, form, of ap assertion whieh is assented to by those who dedue© 
 the vajiant conclusio;us. The assertion which gains tj^e assput of 3,11 
 courts and test writers is this: The p^tpnt right consists. £blto.getter 
 in the right to exclude every one from' making, usiug or, selljug the 
 thwg inviented without the patentee's consent. The Suprejn,?, Court, 
 as. we have shown, ha§ striven for decades to thump this i4ea, into th^ 
 heaids of those who peruse its. decisions. But more than this, the prop,- 
 ositipn is, in form, assented to by all the lower courts whenever they 
 come in the v(?ay of defining the patent right. We have noted this re- 
 peatedly, but even though the assertipn in question is expressed and 
 formally assented to, we find it nuUifieid in the application and denied 
 in the result. 
 
 This is poigna,ntly to be regretted, for it seems to be a denial of, 
 a refusal to accept, a, consequence that is unequivocally bargained for 
 in the universally approved definition of the patent right. If there 
 is anything in the world by which men ought to consent to be bound. 
 
■386 CONCLUSION. 
 
 it is the limitations which they deliberately impose upon themselves in 
 ■argumentation or exposition. Unless they will consent to the compul- 
 sion of their own admissions, such a thing as a conclusion is out of 
 ■the question. 
 
 When it is said that the patent franchise consists altogether in the 
 Tight to exclude, the consequence, that the patentee as patentee, has no 
 power to sell or restrain the sale of his patented article seems to us 
 ■wholly irresistible. It presses in on us with all the persistency of 
 Water straining against a dam. It is no more to be escaped than the 
 result of 20 when we have multiplied 10 by 2. It is not a conjectured 
 conclusion, dubiously verifiable by experience. It is simply a different 
 form of asserting the same proposition. 
 
 It may be that we can get the notion here sought to be enforced 
 clearer by one further brief effort. In Holmes on The Common Law, 
 page 214, we have this: "A legal right is nothing but a permission to 
 exercise certain natural powers and upon certain conditions to obtain 
 protection, restitution, or compensation by the aid of the public force. 
 -Just so far as the aid of the public force is given to a man, he has a 
 legal right, and this right is. the same whether his claim is founded in 
 righteousness or iniquity." 
 
 Those thoughtful words are not found in a discussion of the nature 
 -of the patent grant, but they throw light thereon obliquely. "Just 
 so far as the aid of the public force is given to a man be has a legal 
 right." How far is the aid of the public force given to a patentee by 
 the patent law? Just so far as to enable him to exclude others from 
 noting in the way of making, using and selling the thing he has in- 
 ~\'ented without his consent. But not a whit further, according to the 
 -solemn and deliberate reiteration of the Supreme Court. 
 
 Look again. On page 220 of the volume just quoted, we have this 
 further illumination : "Again, a large part of the advantages enjoyed 
 ~by one who has a right are not created by the law. The law does not 
 •enable me to use or abuse this book which lies before me. That is a 
 
CONCLUSION. 387 
 
 physical power which I have without the aid of the law (black ours) . 
 "W}iat the law does is simply to prevent other men to a greater or less 
 extent from interfering with my use or abuse." That passage also 
 hits the patentee: a large part (we might say the larger part) of the 
 rights enjoyed by him are not created by the patent law. The patent 
 law does not enable him to use or abuse the invented thing before him, 
 -^the fruit of his "cares and sweat". This is a physical power which 
 he has without the aid of the patent law. 
 
 What the patent law does is simply to prevent other men for 
 J7 years from interfering with his use or abuse, which they do when 
 they themselves make a specimen of the thing invented without hia 
 consent, or use such specimen so made without his consent or seU 
 such specimen so made without his consent. 
 
 But the patentee's own right to make, use and sell is not an ad- 
 vantage created by the patent law. That right of the patentee (in 
 the language above quoted) is "nothing but a permission to exercise 
 certain natural powers, and upon certain conditipns to obtain protec- 
 tion, restitution, or compensation by the aid of the public force". 
 Thus one who occupies the status of a pa,tentee has two separate and 
 distinct claims upon the aid bestowed in the public force. One is to 
 protect him; in the exercise of "certain natural powers", viz: making, 
 using and selling. The other is to protect him in the exercise of a 
 certain artificial, made power, generated in him by the national gov- 
 ernment, viz: to exclude others. The patentee, as patentee, has a 
 claim on the aid of the public force only in this second function. All 
 men have the first claim, though it is not infrequently denied to them. 
 The aid of the public force, given through the instrumentality of the 
 patent law is not scattered or diffused : it is bent and confined to one 
 narrow specific object, namely to exclude, inhibit and interdict the 
 activity of others. When the patentee's own right to make, use and. 
 Bell is imperilled, he does not, and cannot, invoke the aid of the pub- 
 lic force through the medium of the patent law. He employs a dif- 
 
388 CONCLUSION. 
 
 ferent incantation and evokes a far broader, more durable and more 
 terrific force. He calls down upon the head of his antagonist that 
 great force that is designed to protect every man in the enjoyment of 
 the fruit of his own cares and sweat. Thus it is manifest that when 
 we define the patent right as an "exclusive right to make, use and 
 sell," we misdescribe the thing. We speak as if the patentee may lay 
 claim upon the public force through the promise of it in the patent 
 law to enable him to make, use and sell. But that is not true. And 
 it is well for the patentee that it is not true. For if that were the 
 case, when the patent shotdd expire, the aid of the public force would 
 be denied him as a protection in his right to make, use and sell. 
 
 When we employ the above quoted phrase, we misconceive the 
 bent of the public force as directed through the patent law. We con- 
 fuse and obliterate the distinction between the patentee's two claims 
 for aid in that force. The stereotype phrase would lead to the con- 
 clusion that the patent grant created the right and then quantified 
 it in the degree signified by the term exclusive. This is not the case. 
 The patent grant does not create the right at all. The right is a mere 
 permission to exercise certain natural powers : the source of this per- 
 mission is hidden away back in the unlifting mists of civilization. The 
 patent grant does create a right, but it is something else. It does 
 create in the patentee the power to exclude others, but that is all that 
 it creates, despite mountainous implications to the opposite. The pat- 
 entee, in virtue of his being the beneficiary of two separately derived 
 advantages, may be said to have the "exclusive right to make, use 
 and sell". But it is of vast importance not to lose sight for one mo- 
 ment of the fact, that the fructifying advantage enjoyaoie by him 
 comes not from the patent law, and the exclusive feature of his right 
 is a mere correlative to the interdicted claims of others. His right 
 is exclusive as a consequence of the negation of their rights. 
 The exclusive feature of his right is, in the first instance, a 
 
CONCLUSION. 389 
 
 mark, not of his strength, but of their weakness. The patent 
 law, as said in the United States vs. American Bell Telephone Company, 
 does not give him a use, which save for the patent he did not have 
 before, but only separates to him an exclusive use. And this is done 
 by recognizing the use to which he had entitled himself before he ap- 
 plied for the patent and parting it off to be enjoyed by him alone, 
 while at the same time it is denied to others who have not his con- 
 sent. Thus we come around to a repetition of what so often we ha,ve 
 said: the p'atent right is purely negative. 
 
 The patentee 's advantage through it is confined exclusively to his 
 power to frustrate and inhibit the spontaneous activity of others : he 
 is enabled to hold in check their tendency to make, use and sell with- 
 out first obtaining his consent. 
 
 Furthermore, in the cases, a nuniiber of phrases are thrown loosely 
 about with the effect of confusing the subject. The word "monopoly" 
 as applied to the patent franchise is misleading unless consciously af- 
 fixed to a single aspect, in the right to exclude. To call 
 the patentee a "czar" is to employ a figurative epithet that 
 implicates many false notions. A czar, whose powers are ex- 
 hausted in negation, all of whose edicts are comprised in a stilted re- 
 dundancy of "thou shalt not" is wanting in the essential attribute of 
 imperative power. The patentee is a man of authority only in the 
 sense that he can say to one "go not" and he goeth not, but he can 
 not say " go " and thereby impel the going. 
 
 What meaning can be thought into such expressions as ''fruit of 
 the patent," "product of the patent," and "made under a patent," 
 or "made in the exercis© of a patent right?" The only "fruit" or 
 "product" of a right to exclude, is exclusion. No other thing can 
 possibly be derived from it. An article cannot be made "under a 
 ipatent," if by such indeterminate verbiage is meant that the patent 
 grant enabled the patentee to make it or even protected him in so 
 doing. To say that an article was made, or used or sold by the pat- 
 
390 CONCLtrSION. 
 
 entee "jn the exercise of a patent right" is a gratuitous ocetiltatioii; 
 the phrase is devoid of meaning. It might be asserted accurately that 
 " under a patent" or "in the exercise of a patent right," others than 
 the patentee are forbidden to make the article. In so far as the 
 phrases in the connection implicate an aid or protection to the paten- 
 tee, they are purely negative and indicate nothing further than the 
 restraint imposed on others. Finally, the vs^ords "patented article" 
 are apt to have a false counterpart in our thinking. From the man- 
 ner m which these two words are bandied about, one might readily 
 infer that a patent owner who has made and has in his possession a 
 specimen patented article, with reference to that chattel, is vested 
 with rights unique m cuaracter, fundamentally dii?erent from his 
 rights in his other personal property; that the law of contracts and 
 of sates, applicable to him and his property in that article is sui gen- 
 eris; that the sale of a horse is one thing and that of a patented d<v 
 vice is quite another; that a contract with reference to a oaten ted 
 article is in complete contrast with a contract pertaining to an un- 
 patented chattel. According to this view, a breach of contract of the 
 former kind is an infringement of a patent ; while a broken contract 
 of the latter kind gives rise to a claim in damages and nothing more. 
 But again this view is wholly unfounded. A patented article when 
 brought into existence by or under authority of the patentee, is an 
 ordinary chattel, governed as to the disposition of it through the me- 
 dium of a contract or sale bv the same law that prevails iu referenci» 
 to other chattels. *• 
 
 These terms and epithets and many other like expressions do not 
 envisage the patent right. They are glinted out in sporadic attempts 
 to express an erroneous preconception of the thing struggled with. 
 They are inadequate forms of expression and should be discarded in 
 the interest of precision and distinctness. 
 
 In Gibbons vs. Ogden, Mr. Justice Johnson said: "One-half the 
 doubts in life arise from defects of language." 
 
CONCLUSION. 391 
 
 One further aspect deserves notice. "A legal right is nothing 
 but a permission to exercise certain natural powers." Of course, thet 
 right is the correlative of a duty. The duty is an obverse, a counter- 
 part of the right. One virho claims the benefit of the right must of 
 necessity concede and submit to the burden of the duty. The right 
 demarks the benefits accruing to the possessor and, the burdens im- 
 posed on others. The duty, on the other hand, delineates the claims 
 of others and the burden impressed on the asserter of the right. The 
 aid of the public force, when invoked to protect the right, at the same 
 time presses home the burdeni of the duty. 
 
 A patentee can invoke the aid of the public force, given through 
 the patent law, to exclude others, but in so doing he is hedged about 
 with limitations. The aid is pledged for a limited period only : it 
 can be had only through certain tribunals. If one poses as a pat- 
 entee, when in fact he is none, and labels a thing patented when it ia 
 not,, he may become a victim of the public force, instead of its bene- 
 ficiary. 
 
 "When the patentee sets about making and selling his patented 
 article, or licensing another so to do, as we have already seen, he does 
 not and cannot, claim the protecting aid of the public force pledged 
 through the medium of the patent law. He is then acting in a right 
 that is protected and limited by the public force brought to bear un- 
 der the circumstances defined by other branches of the law, older,, 
 more fundamiental than the patent law. 
 
 In the sphere of this right, the aid promised is qualified. and con- 
 ditioned by many inescapable burdens. If the patented article, a 
 right to make, use and sell which is claimed, is in contemplation of 
 law deemed harmful in the use for which it was designed the aid of 
 the public force to protect the right of making and selling may be 
 denied the patentee. This happened in the cases of Patterson vs. Ken- 
 tucky and In re Brosnahan. In these instances the authoritative ex- 
 pounders of the circumstances under which the aid of the public force 
 
292 CbNCLtf^I(5N. 
 
 is given or withheld conceived it necessary, completely to subvert the 
 right to make and sell on the part of the paterttee, m order that the 
 -claim of the people to the aid as a protection against a harmful thing, 
 might be recogiiized and enforced. Now the aid of the public force 
 to put down and annul all contracts in restraint of trade is solemnly 
 and un'mistakeably pledged to the people in the anti-trust legislation. 
 These compact-s, agreements and conspiracies are recognized in legisla- 
 tion to be as dangerous to the welfare of the people as arson, larceny 
 <or homicide. They are placed in the same category of dreaded acts 
 and catalogued as crimes. A crime is a blow at the welfare of the 
 community. It is a stab at the heart of institutional stability. That 
 is true, whether the crime consists in killing a member of society, or 
 in knotting the arteries of commerce with ligatures that impede and 
 interrupt the freedom of trade. When a patentee enters into a con- 
 tract, agreement, or conspiracy the effect of which is to restrain trade 
 in his patented article he no longer is in a position to invoke the aid 
 ■of the public force. On the contrary he has erected a lightning rod 
 ■calculated to attract and" brinsr down upon himself the consuming 
 -fire; the destructive might of that fOfce. 
 
 Kevei-ting now to the starting point of this summary, the three 
 ■groups of cases discussed in the preceeding pages evince a misdirec- 
 tion of the public force. 
 
 All of the opinions assent to the proposition that the patent fran- 
 chise is completely bound up and comprised in the right to exclude 
 •others. -In the Heaton case this is expressly conceded. In that case 
 the owner of the patent had made the machines and sold them. No 
 one had interfered with him in the enjoyment of that right. He'had 
 "Claimed and received the aid of the public force, pledged through the 
 patent law, in full, heaped and rounded measure. The purchaser had 
 paid for the machines and owned them. He had a right to use them. 
 He was entitled to the full bent of the public force to protect him in 
 that right. The defendant was likewise entitled to the advantages 
 
CONCLUSION. 393 
 
 accruing to him in the exercise of his physical power in ttiaking and 
 selling unpatented staples. This Was a sovereign right; the legisla- 
 "ture of Michigan had veheinently denoimced any attempt by contract 
 or combination to repress this right as a crime deserving the punish- 
 ment meted out to barn burnei-s and burglars. The decision had the 
 •effect of wt-fenching the public force out of its declared function, of 
 giving the patentee an aid he was in no wise entitled to; concom- 
 mitantly, the decision had the effect of denying to the purchaser and 
 the defendant an aid which to them, was guarianteed by a law more 
 Jundamental that that by which the Court was created. 
 
 The characterization applies to the Neostyle, graphophone and 
 phonograph cases. The distortion of the aid of the public force ex- 
 hibited in the Rubber Tire case is even more flagrant. 
 
 In the instance of the rubber tire patent one Court of Appeals 
 had finally repudiated the claim of the patentee to the aid of the pub- 
 lic force through the patent law. The patentee overtly abandoned liis 
 ■claim through that medium ; he gave up infringement suits, artificially 
 characterizing them as "slow and expensive." Nevertheless, the 
 patentee succeeded in parrying the fell thrust of the public force di- 
 rected against combinations and conspiracies in restraint of trade by 
 a hollow incantation concerning the protection granted by the patent 
 law which he had in fact found inoperative to the end proposed. The 
 aid of the public force which was dedicated to the people, by a strange 
 transmutation, was converted into a defensive bulwark for the com- 
 bine and its straw man, the patentee. We have a strange feeling, as 
 if the armoury of the people had been ransacked at night while the 
 sentinel was off guard and one of the most effective weapons delivered 
 over to an insidious enemy. 
 
 Finally, if it be objected that what has gone before is wire drawn, 
 fabricated ingeniously and expounded with abstract over nicety, we 
 may fall back on a curt and blunt view ; a sort of coarse rule of thumb. 
 We turn again to Holmes on The Common Law. On the very first 
 
394 CONCLUSION. 
 
 page we chance upcfti this : ' ' The substance of the law at any given 
 time pretty nearly corresponds, so far as it then goes, with what is 
 then understood to be convenient." Let us, then, regard these cases 
 from the short view of convenience. We get an abrupt shock direct 
 from the Supreme Court. In Keeler vs. Folding Bed Co. (157 U. S. 
 at 667) that Court, in denying the rule enforced by the decisions which 
 we have pertinaciously criticized, used this language: "The incon- 
 venience and annoyance to the public that an opposite conclusion 
 would occasion are too obvious to require illustration." It seems 
 perfunctory to attempt an illustration of that which the brooding care 
 of the Supreme Court has marked off as clear beyond the need of 
 illustration. But if we ruminate the rule slightly the inconveniences 
 of it accumulate in multitudes like drops of summer rain. In the case 
 of Cortelyou vs. Johnson the Court of Appeals set forth some of them. 
 Enforce the rule generally, and the entire public will soon be inex- 
 tricably entangled in the meshes of infringement charges. A woman 
 purchasing a patented egg beater for 9 cents may be an infringer 
 because she did not pay the "licensed price" of 10 cents. Consider 
 the Coffin plate in Adams vs. Burke. Suppose it sold with this metal 
 plate inscription: "This lid is sold subject to condition that it can 
 be used only in conjunction with a mortuary receptacle supplied by 
 the patentee-vendor." The distracted relatives unwittingly violate 
 the "license" and make use of a stranger's enclosure. Will the Court 
 send its ubiquitous marshal prowling into the church yard to finger 
 the resting places of the wearied sleepers in search of infringing 
 property? Under this rule, the most implacably righteous citizen in 
 the nation may involve himself in a hundred charges of infringement 
 every year merely because he does not notice and heed the fine print 
 warnings posted promiscuously about on the chattels which he buys 
 and pays for. 
 
 Glancing further at this view of the matter we find this preten- 
 tious postulate of hard common sense "Law should follow business." 
 
CONCLUSION. 395 
 
 Bigelow : The Law of Bills, Notes and Cheques (2d Ed.) 7. We reverent- 
 ly venture the .assertion that not one member of the judiciary who wrote 
 the opinions heretofore dwelt on at length would himself sponta- 
 neously submit to the business regulation justified by these decisions. 
 The proposition that one who goes into a department store and pur- 
 chases and pays for an article which the proprietor owned, is an in- 
 fringer, because he did not pay the price which the manufacturer said 
 must be demanded for it, contradicts and overrides every conscious 
 and every unconscious prepossession concerning business affairs. 
 
 Aside from any law relevant to the transaction, the notion is re- 
 volting. We instinctively recoil from it. We feel that the thing is 
 beyond justification or intelligible explanation. Almost weekly the 
 average citizen is purchasing various articles, patented and unpatented. 
 He certainly does not distinguish the character or extent of his owner- 
 ship in the two classes by reference to the accident of their being 
 patented or unpatented. If we should confront one who had just 
 purchased a pound of butter and also a patented door lock with the 
 double pronged afiirmation, that as to the butter he was absolute 
 owner, but as to his right to use the lock he was "obviously a mere 
 licensee" we might expect to titilate his sense of humor or arouse 'hi& 
 resentment, but we certainly could not reasonably hope to engage 
 him in serious debate. Waiving any question as to the title of the 
 vendor, the purchaser knows that the' butter and lock are his, to dO' 
 with as he pleases. He would risk his business fortune on the cer- 
 titude of that conviction. For when one buys a chattel from t]ie 
 owner he has, holds, owns, enjoys that thing. This is law, business 
 -.practice, morals and the rules of physical force fused into one and 
 the same indisputable theorem of society. No one can discover a 
 warrant for doubting it at this late day. No amount of argument 
 can upset even a mean man in that conviction. 
 
 For this bearing there are some ancient land marks. Their origi- 
 nal finger pointings are still encrusted in stiff Latin. It may be that 
 
S96 CONCLUSION. 
 
 this is an instinctive attempt on the part of society to preserve its 
 juridicial postulates against the thoughtless effacemeiits of undue famil- 
 iarity with maxims couched in the vernacular. For, after all, common 
 places are gr^at truths which from long being lodged in the flimsy 
 texture of men 's thoughts have lost the attribute of weight and ceased 
 to arouse. We have these venerable stops interpreted by the lexico- 
 graphers. 
 
 Pretium in loco rei succedit, the price takes the place of the thing. 
 Nemo praedo est qui ppetiuin numeravit, he is no robber who has 
 counted out the price. Imaginaria venditio non est pretio accidente, 
 it is not an imaginary sale at which the price is paid. No one knows 
 how far back we should have to go to find a man whose memory run 
 ■contrary to those truths. 
 
 It seems worth while to throw out one more anchor to secure us 
 in this mooring. We are unable to go further in the argument from 
 an analytical view point. Of late we have been tugging at the mat- 
 ter from the standing ground of convenience. This is always, to a 
 ■degree, a treacherous procedure. 
 
 For the argument from inconvenience, frequently is bottomed 
 upon an uncleared prepossession, an obstinate prejudice rooted in 
 the conglomerate mass of individual experiences and past adumbera- 
 tions of thought. But all of us live on the past and by the past are 
 saved or destroyed. Nothing is more natural or praiseworthy than 
 an attempt to conserve what is past, to give a rational explanation 
 for it, to justify it in the light of subsequently derived reflections, 
 and to force the past into unbroken continuity with the present and 
 effective use in the future. 
 
 If the view combatted in these pages is to guide us in the future, 
 what are we to think of the decisions already promulgated by Su- 
 preme Court in interpreting, upholding and enforcing the Anti-trust 
 Act 1 It seems to us that by a slight alteration of the facts, in a mere 
 ■accidental aspect, that all those decisions can be turned into a sound- 
 
CONCLUSION. 39r 
 
 ing brass and a clanging cymbal. Let us regard them for a moment. 
 Those decisions may be roughly parted off into two groups. One 
 group has to do with contracts in restraint of trade, effective as be- 
 tween the manufacturers and vendors of chattels. Typical here are 
 Addyston Pipe & Steel Co., Montague vs. Lowry, 193, U. S. 38, and 
 the very recent case of Continental "Wall Paper Co. vs. Voight, 212 
 U. S. 227. The other group 'comprises the carrier cases, and is rep- 
 resented by the Northern Securities decision. But we must keep in 
 mind that any such classification is a conscious, artifice. 
 
 All of these decisions are reducible to a common fin,ality. "Con- 
 gress has the power to establish rules by which interstate and inter- 
 national commerce shall be governed, and,, by the Anti-trust Act. has; 
 prescribed the rule of free competition among those engaged in such 
 commerce." A23.in '"the natural effect of competition is to increase 
 commerce, and an agreement whose direct effect is to prevent this, 
 merce." (1,93 U. S. at 331.) That, according to the Supreme' 
 Court, is the philosophy underlying the Anti-trust Act- It is true 
 that the Act says nothing about competition, or fr^e competition and 
 it says nothing about forcing into existence, by proffered, subsidy or 
 threatened penalty, either, competition or free, coiijpetition. Never- 
 theless,, competition, and free competition undoubtedly wag the indus- 
 trial phenomenon prospectiyely contemplated and pronounced desir- 
 able by the people through Con.gress. Th^t- fact presses in on us at. 
 all angles. The m.ethpd adopted, to realize- the. desired condition was 
 to forbid and remove all obstAcles designed to swerve the irresistible 
 momentum . of trade out of the line of least resistance. Trade and 
 commierce are wholly irrepressible; the attempt to completely sup- 
 press either would be as hopeless as trying to dip the ocean dry with 
 a gourd. By a necessary law of men associated in geographical con- 
 tiguity and struggling to- appease an insatiable desire for patronage 
 from a patronage that is at all times limited, competitipn is wholly 
 inevitable, unless it be repressed by compacts that bottle up the spon.- 
 
•398 CONCLUSION. 
 
 taneous teadencies of the traders. The Anti-trust Act as expounded 
 by the Court, hits at every restraint on the freedom of interstate 
 traders regardless of the locus of the pressure. Whether the ligature 
 that fetters this buoyant propensity to trade binds the vendor or the 
 distributor of the subject matter, makes no difference. Either cir- 
 cumstance frustrates the accomplishment of the law. The people 
 are bent on having interstate traders and their trade as free as the 
 unlashed, speeding winds. 
 
 Now take this, "the Anti-trust Act has prescribed the rule of 
 :free competition among those engaged in such (i. e. interstate) 
 commerce." 
 
 Suppose in the Addystoh Pipe Co. case the fact had been that 
 the defendants were selling a pipe that embodied a patented im- 
 provement of some kind. It is easily conceivable that the pipe might 
 ihave contained a uniting device, a lip or joint that was patented; 
 it might have been coated with a patented non-corrosive or tempered, 
 to resisting toughness by the amalgamation of a patented metallic 
 compound. In spite of all this, the defendants would have been inter- 
 state traders; the subject matter of their trade would have been an 
 article of interstate commerce. The combination shown to exist un- 
 avoidably would have been characterized as a restraint of that trade. 
 Can any one imagine that the Supreme Court would have held the 
 combination without the pale of the law because it involved a patent- 
 ed article? Look at Montague vs. Lowry. Suppose the tiles, man- 
 -tels, and grates had all embodied patented improvements. Such a 
 state of facts is readily imaginable. Patented designs may have or- 
 nated the mantels. The tiles might have been cut in an unique form 
 so as to be secured by interlocking after a patented fashion. But it 
 is impossible to believe the Supreme Court would have reached a 
 different result had such facts formed a part of the proof. 
 
 Then we come to the Northern Securities case. In that great 
 ■case the Court tore away the manacles that fettered the freedom of 
 
CONCLUSION. 399 
 
 three carriers to distribute goods. There was no question of rate- 
 fixing in the case. The Federal government has no power to deal 
 with a state corporation for a mere abuser of franchise. That gov- 
 ernment has no power under the Anti-trust Act to segregate occupa- 
 tions into public and private pursuits. There the Court declared the 
 industrial entanglement illegal because its operative effect was to re- 
 strain interstate traders. The fact that the defendants were the 
 beneficairies of state franchises, implicating public duties, was not 
 of even slight (much less essential) importance. The defendants 
 were engaged in interstate commerce ; they were bound to each other 
 in such a manner that the Court regarded their individual freedom 
 to trade as bartered away by a compact. This was sufficient. There 
 can be no doubt whatever, that the complicated industrial machinery 
 of the three railroads embraced literally hundreds of patented im- 
 provements. The railroads doubtless owned many of the patents 
 and enjoyed many other improvements protected by patents through 
 license arrangements. Now, who would not smile at the presumption 
 that would have attempted to stay the terrific sweep of that opinion 
 by an eleventh hour suggestion that the Court was dealing with 
 patented devices, with "instrumentalities of commerce" among which 
 the people were not entitled to free competition? Yet that was the 
 fact; the Court did in fact lay down the law governing trade and 
 competition in the use of patented appliances. 
 
 We may go further and press out to an extreme of ab- 
 surdity. Patented processes and patented machinery are very 
 extensively employed in all our great industries. Sewing ma- 
 chines and flour mills are patented. The patentee of the machine 
 or the mill has the right to use or license his apparatus or 
 not, jast as he sees M. If he does license the use of it, 
 he can state the terms of the license and the courts will en- 
 force the terms of the contract. That is what we are told. Very 
 well. The clothing manufacturers and the flour millers get together, 
 
400 CONCLUSION. 
 
 as did the i]i9.kers of rubber ti,res. They discover an easy way around 
 the whole vexatious Anti-trust program. The respective patentees- 
 are persuaded to issue a "licence" for a nominal royalty, and, bring: 
 all the manufacturers into a pool, at the same time; el^vatiijg the 
 yrice of clothing and bread 100 per cent, and mg,king a dead unifor- 
 mity of price for all thei traders. Let. us not hear it- muttered that 
 bread and clothing are not patented. That is. beside the question. 
 The producing means. are: the patenteeris a Czar, and he can dictate 
 the terms upon which their use may be enjoyed- This whole con- 
 tention a,bouJ; cpotracts, in restraiinj/ of trade in patented artjfiles not 
 being prohibited by the Anti-tru§t A:ct is a griatxiitous misconjception 
 ot both the patent law and the Anti-trust legislation. 
 
 The patent laws and the anti-trust acts, are not in conflict : They 
 do not clash or interfere in their operation.. The Federal Act is a 
 regulatioiL of interstate commerce. The state acts are regulations of 
 the trade and commerce internal to the respective states. These stat- 
 utes are criminal laws forbidding and punishing attempts by contract 
 or combination to restrain trade or commerce. The, patent laws have 
 nothing whatever to do with trade ox commerce. They have nothing 
 to do with sales of chattels or with contracts in that regard. Those 
 laws do not import any regulation of trade or commerce. They do 
 not so much as empower or authorize the inventor to engage in trade 
 or commerce; nor even protect him in so doing. They leave the 
 inventor, trade and commerce as they were. Those laws grant to the 
 inventor an incorporeal franchise empowering him to exclude others. 
 That is all the patent laws accomplish. The right to exclude is no- 
 part of trade or commerce ; it is not a tangible commodity ; it cannot 
 be traded in, handled or consumed. Exercising the right to exclude 
 is not engaging in trade or commerce. 
 
 An incorporeal franchise cannot be the subject matter of trade 
 and commerce. This right is the sole resultant of the patent laws. 
 On the other hand the physical, material subject matter of the patent 
 
CONCLUSION. 401 
 
 is entirely distinct from the incorporeal right to exclude. The property 
 in the right is one thing; the property in the tangible, manufac- 
 tured article is another thing. A policeman is vested with the 
 power to keep trsepassers off the court yard grass, but his 
 official power to exclude is not to be confused with the grass 
 and flowers. No more is the incorporeal right to exclude to 
 be confused with a patented article. Patented articles form a 
 large part of all trade and commerce. The patentee's right to 
 make, use and sell them is not derived from the patent law. His 
 right to contract with reference to them is not derived from or sanc- 
 tioned by the patent law. If he is making, using and selling the pat- 
 ented article within a given state, he is subject to the law of that state 
 applicable to all property within its borders. This is exactly what 
 was said by the Supreme Court in Webber vs. Virginia: "Whatever 
 rights are secured to inventors must be enjoyed in subord,ination to 
 this general authority of the state over all property within its 
 limits." 
 
 If the patent owner engages in interstate commerce, the only pro- 
 tection he can claim is that applicable to all persons similarly en- 
 gaged. The anti-trust act denies to him the right to enter into a con- 
 tract or combination that will operate to restrain trade in his pat- 
 ented article. And this is not a denial of any right or privilege sanc- 
 tioned in the remotest degree by any patent statute. The patent 
 statute has no more to do with contracts, combinations, trade and 
 commerce than the anti-trust act has to do with the creation ^nd 
 assignment of incorporeal franchises. 
 
 Trading is a sovereign right of sovereign citizens. When an in- 
 dividual contracts to restrain his trade, he thereby denudes himself 
 of an attribute of industrial freedom. He lowers himself to the con- 
 dition of an industrial serf, subject to the beck and call of strangers 
 to his affairs. When a corporation enters into such a compact, it has 
 shown itself unworthy of further protection. The Supreme Court 
 
■402 CONCLUSION. 
 
 '«lialki?ig.esf'aU ■ men toi the noblesti eonceptioniof; the exalted; privilege 
 of -eiigaging in iut&rfetate commerce. It isa *rulyyj£inglyr.preragative. 
 I'The products of men's cares and sweat can be.hurled across an J3m- 
 ijpire #ith almost the rapidity oftsbadows .on;tlie water, without:let 
 •or hindrance from any State. : The J facilities for transportation have 
 -tali»eady.*been worked up to almost idiabolicali perfection. Strawber- 
 .ries may be relished at breakfast which 'the- evening before were 
 picked from a divines-soil five hundred miles away. >Maine and Tesas. 
 Oregon and Florida may exchange products with all the ease of boys 
 seated on the front steps swapping knives. Wonders more paralyz- 
 ing are in sight. Men now' living' may yet contemplate the actuality 
 of great white albatross of' commerce' swooping across the continent: 
 taking the' wings of the morning in the' Bast and with the -setting' of 
 the sun, lowering' their burdens in the citron groves of California. 
 Then, indeed, the heavens will be filled with shouting and the horizon 
 darkened with the troops of sailing argosies. Tennyson's dream will 
 yet turn reality, though the reality, as is always the case, will be 
 stranger than the dream. If, and when, that day comes,' the Supreme 
 'Court will turn to the Anti-trust Act and Gibbons vs. Ogdeii,'and de- 
 clare that the aerial inter-ocean and iQter-state commerce, too, shall 
 ■be free from contractual restraints. Gibbons vs. Ogden is as surely 
 -impregnated with the force of imaginative insight as Hamlet or Faust. 
 That great decision as well as the whole overpowering magnitude of 
 inter-state commerce cannot be fully apprehended unl(;ss the inquirer's' 
 ''reach exceeds his grasp." It is one of the fundamental tenets of 
 a masterful people that trade and traders shall be free. The real 
 sovereigns of this great nation are unalterable in that conviction. 
 
 But we must end the whole matter. In the Northern Securities 
 case, Mr. Justice Holmes in speaking of the Anti-trust Act, said: 
 "The statute of which we have to find the meaning, is a criminal sta- 
 tute. The two sections on which the government relies, both make 
 certain acts crimes. That, is' their immediate purpose and that is 
 
CONCLUSION. 403 
 
 what they- say. It is vain to insist that- this is not a criminal proceed- 
 ing. " Those lapidary sentences are terrible ;' but they ■ express i the 
 ira'h. Men who enter into oontraets, combinations, and conspir- 
 acies in restraint of trade, are thumbing! the touch- h(>le of a cannon, 
 whether they know it or not. For 'the present, i. business men g«ner- 
 ally, many of whom wotild shudder at the thought of stealing a roll 
 of bills or burning an enemy's house, yet regard such combinations 
 formed by them as mere conventional crimes. 'They even regard their 
 acts in forming them as clever, smart, and more than respectable. 
 The lower Courts at times seem fascinated by the ' very Jn9,gnitude 
 and far-reaching effect of the broken law ; they almost explain away 
 the viciousness of the crime by dressing up the respectability of the 
 wrong-doers. Somehow, we are reluctant to divest these combina- 
 tions and conspiracies of the protective coloration of business exigency 
 and invest them, with the harrowing aspect of thorough going crimes. 
 The atmosphere that shimmers about such acts does not seem to affect 
 our sensibility like that which we appreciate when we reflect on theft 
 or fractricide. It is so natural when we come to deal with fair named, 
 high stationed, "influential" law violators, to condemn in terms of 
 slack censure that all but condone the offense. But when we come 
 to mete out the deserts of some inglorious criminal, some unobtrusive 
 short changer heaved up out of oblivion by the merciless hand of the 
 law, the air quivers with severe speech and acrimonious denuncia- 
 tion. The vocabulary of acerb invective is plundered for blistering 
 epithets with which to seal the doom of a detested criminal. We 
 marvel not at this ; but we do marvel at the unbalanced emphasis, at 
 the disproportionate resentment evoked by .proof of the respective 
 crimes. Both are heinous, but a conspiracy or combination in re- 
 straint of trade strikes us as being informed with more horror. It 
 bulks larger to an eye fixed upon the welfare of persons in the mass. 
 Theft, arson, kidnapping, or homicide, injure directly only the pre- 
 meditated victims, though an individual criminal act impunished. 
 
404 CONCLUSION. 
 
 threatens the welfare of hundreds. But the injury inflicted by a com- 
 bination or conspiracy in restraint of trade directly, of its own opera- 
 tion, unjustly deprives thousands of their property. It is not what 
 the conspiracy connotes or implies, but what is actually signified or 
 denoted by it, that is terrorizing. 
 
 The lawyers who defend the actions brought to enforce the Anti- 
 trust Act, hazard some an\azing defenses. At times they concede the 
 violation of the law for the sake of argument, and then offer as a de- 
 fense the exigencies of trade, the "convenience of business," the ap- 
 palling confusion incident to an enforcement of the act. "Why not 
 analogously justify embezzlement on the ground of the defendant's 
 urgent need of the money? Why not explain away the wrong of 
 counterfeiting by eloquent dissertations on the inadequacy of the 
 circulating medium? Why not glorify perjury by delineating the 
 indicted man's irrepressible tendency to give rein to a flighty imagi- 
 nation? Again, these lawyers always confront the courts with one 
 of two sophistries; they say the time is out of joint. Either the 
 people are too much aroused about conibinations and it is danger- 
 ous to take the cue of enforcement from their excited passion ; or on 
 the other hand the people are apathetic and indifferent. The statute 
 no longer expresses the keynote of public sentiment and the courts 
 should emasculate its literal severity in the interest of "businss con- 
 venience." Such a thing might come about, for the power to con- 
 strue carries with it always the power to destroy. But there is great 
 cause for profound thanks in the intrepid attitude of the Supreme 
 Court. It has given abundant proof that it will not temporize the 
 cleaving power of the act to accommodate "special interests" or to 
 fend the remorseless consequences of criminal conduct. 
 
 The people know the inestimable importance of the law. It can- 
 not be repealed or attenuated into ineffectiveness by insidious amend- 
 ments. It is there to stay. Some of these days the public minded- 
 ness of the people's prosecutors will be aroused to a vivid apprehen- 
 
CONCLUSION. 405 
 
 sion of the vital import of this legislation, both national and state. 
 The mighty nation, awakened to its untried strength, will rise to the 
 full stature of its indomitable will, and snap all the cords that fetter 
 its trade like a giant leashed in horse hairs or spider ropes. 
 
 Maeaulay reminds us of a narrative in Oriental folk lore. The 
 spirit of liberty had been taken captive and imprisoned. She begged 
 for liberty and offered her captors all sorts of rewards if they would 
 but free her. Furthermore, she promised not to avenge the insult 
 she had suffered. But all her entreaties fell on deaf ears. The 
 captors only accentuated her galling servitude by derisive flings 
 and insolent jeers. Finally, having satiated the brutal appetite for 
 unmitigated torture, the arrogant tantalizers, in a thoughtless moment, 
 released the outraged spirit, whereupon she pounced upon them, aston- 
 ished and amazed, and tore them limb from limb. 
 
 One extreme always is followed by another. The rebound is in- 
 evitable. It may be that combinations and conspiracies in restraint 
 of trade have not grown sufficiently portentous to initiate the crash- 
 ing reaction. But it cannot require much further development to 
 reach the point of exasperating recoil. We think the long receding tide 
 has even now set in on an incoming inundation. 
 
 Tt is conceivable that the day may soon come when the people's 
 prosecutors will regard combinations and conspiracies in restraint of 
 trade m the same light as they now regard counterfeiting, mail rob- 
 beries, or kidnaijpini». 
 
 When that day of the people 's wrath does come, splutternig about 
 "constitutional rights" and liberty to contract, sophistical temporiz- 
 ing about the sacredness of property and the importance of "busi- 
 ness" will be unavailing. These will but exasperate the avengers and 
 add to the confusion like "rockets hurled into a midnight storm." 
 
 The Supreme Court of the nation, that ultimate conservator of 
 our safety, the noblest governmental institution on the planet, which 
 we pray will ever stand, but which, if it ever should go down with all 
 
CONCLUSION. 
 
 else, will fall like tW last sentinel on the battlefield, like the last oak 
 in the tornado,— it has more than once announced the only rule that 
 points to security or appeals to patriotism. In United States vs. Lee 
 (1862), 106 U. S. 196, these mordant apothegms come hot and quick: 
 "Under our system (of government) the people are the sovereign. No 
 man in this country is so high that he is above the law. No officer of 
 the law may set that law at defiance with impunity. It is the only 
 supreme power in our system of government." This was reinvigor- 
 ated in the Northern Securities case (193 U. S. at 350) : "So long 
 as Congress keeps within the limits of its authority as defined by the 
 Constitution, infringing no rights recognized or secured by that in- 
 strument, its regulation of interstate and international commerce, 
 whether founded in wisdom or not, must be submitted to by all. 
 
 Harm, and only harm, can come from the failure of the courxs 
 to recognize this fundamental principle of constitutional construction 
 To depart from it because of the circumstances of special cases, or 
 because the rule in its operation, may possibly affect the interests of 
 business, is to endanger the safety and integrity of our institutions and 
 make the constitution mean not what it says; but what interested par- 
 ties wish it to mean at a particular time and under particular circum- 
 stances. The supremacy of the law is the foundation rock on which 
 our institutions rest" (black ours). That is the rainbow in the sky; 
 when that ceases to reappear, then government of the people, by the • 
 people, and for the people, will indeed perish from the earth. 
 
 THE END. 
 
INDEX. 
 
 Act of 1790, 9. 53, 57; of 1793, 9, 53, 
 57; of 1836, 9, 54. 58, 63, 82; of 1870, 
 9, 47, 54, 63. 278. 
 
 Anti-Trust Act, Federal, applies to con- 
 tracts restraining trade In patented 
 articles, 293-5; not inconsistent with 
 patent laws. 331-9, 377-8; contrasted 
 with patent law, 400-1 ; scope and 
 purpose of, 397; a criminal statute, 
 402-3. 
 
 Anti-trust Acts, State, are exercises of 
 police powers, 40, 126-7; apply to 
 contracts restraining trade In pat- 
 ented articles, 289-293; not incon- 
 sistent with patent right, 304-5, 330. 
 
 Article, patented, property is distinct 
 from patent right. 10. 32-3; patenf 
 
 • owner's right to make, use and sell 
 not a patent right, 11-12; sale of. 
 not regulated hy patent - laws, 38 : 
 purchaser's title to. not derived un- 
 der patent law, 83, 85; in using It, 
 owner does not enjoy patent right, 
 !<?: 85: State can tax. 18-19: can be 
 sold under execution at common 
 law. 22-5: pass to assignee under 
 general assignment for benefit of 
 of predit'irs, 29-31; making, using or 
 selling of may be regulated under 
 police powers as in case of unpat- 
 ented articles, 31-40, 126-7; contracts 
 In relation to, regulated bv State 
 laws, 84; State courts ha-ve jurisdic- 
 tion of contracts relating relating 
 to, 43-4; are part of inter-State com- 
 merce, 35, 336-7. 
 
 Assignee and grantee, statuiory eon- 
 fusion as to, 278-9; within district. 
 
 has all rights of patent owner, 27C; 
 sale of article by, liberates from con- 
 trol under patent. 91. 92; distin- 
 guished from licensee, 277-8 
 
 Assignment, three forms provided for, 
 47; of whole right, 53-5; of an un- 
 divided interest In whole right, 55-6 r 
 of whole right for territory, 57-65; 
 must be of right to exclude, other- 
 wise it is a license, 62; compared 
 with grant, 63-4; contrasted with ex- 
 clusive icense, 77. 
 
 Bankruptcy, effect of on patent right* 
 30. 
 
 C. 
 
 Combinations in restraint of trade de- 
 fined, 301; power of numbers in,. 
 301; membership in as affecting, 
 right to sue for infringement, 302,. 
 306; power to suppress competition 
 as a test of, 345; in trade of patent- 
 ed articles, 285 et seq; good faith; 
 parties a^ justification of, 349-358. 
 
 Competition defined, 369-370; between- 
 patented and unpatented articles;. 
 369. 
 
 "Competitive patents," 369. 
 
 Conditional sale, 107, 273-4; contrast- 
 ed with sale, accompanied by re- 
 strictions, 274. 
 
Congress, power to grant patent and 
 copy right, 9; no power to grant pat- 
 entee right to make, use, and sell, 
 900; no act of, to regulate license 
 contracts, 71; no power to re-invest 
 patentee with property rights sold 
 by him, 84-5. 
 
 Consent of patentee, given under sta- 
 tute, 52; distinguishes licensee from 
 infringer, 152; sale of article as 
 consent to its use, 272. 
 
 Constitution, gives Congress power to 
 grant copy and patent rights, 9; 
 State, protects, but does not create 
 individual rights, 16. 
 
 Contract, re'ating to patented articles 
 does not involve patent law, 44; 
 regulated by State laws, 84, and 
 subject to State jurisdiction, 84; lia- 
 bility for maliciously inducing 
 breach of, 238; must be mutually 
 obligating, 239; by notice or label, 
 113, 125-6; restricting use of pat- 
 ented article does not involve patent 
 right, 95-6; in restraint of trade de- 
 fined, 296: Heaton case as, 297; 
 Rupp and Rivet cases as, 297; Vic- 
 tor Talking Machine case as, 298; 
 Neostyle cases as, 300; good faith 
 of parties as justification of, 349, 
 358; of patentee to restrain trade in 
 patented article, 339, 368, et seq. 
 
 Contributory infringement, 127-142; 
 consists in co-operating to make, 
 use, or sell thing patented without 
 patent owner's consent, 128, 130, 
 131, 134-5, 167-8; sale of element in 
 combination as 141, 149; guilty in- 
 tent as an element of, 147-9, 154, 
 168-9; adaptability to use of thing 
 furnished as test of, 147-9, 154, 170; 
 knowledge of contract as element 
 
 in, 154-5; is participation in joint 
 wrong doing, 156; fraud or deceit 
 not an element in, 166. 
 
 Copy right, laws do not confer right 
 to multiply and vend copies, 36; 
 do not displace police powers, 37; 
 compared with patent law, alleged 
 difference in "theory," 258-9; simila- 
 rities, 193-4, 241-5, 255, 262; owner 
 of, cannot impose restrictions on re- 
 sale of copy righted book, 193, 264; 
 except by common law contract, 
 254; property is distinct from prop- 
 erty in instruments by which copies 
 are multiplied, 10, 26; not subject 
 to taxation, 21; cannot be sold un- 
 der execution, 27. 
 
 "Covered by patent," meaning of, 170. 
 
 E. 
 
 Effect of machine cannot be patented, 
 133. 
 
 Exclude, right to, patent consists alto- 
 gether in, 10-12; exists solely by 
 virtue of patent grant, 13; did not 
 exist at common law, 31, 62; is in- 
 corporeal, 33,- over it State has no 
 control, 33; is property, may he 
 transferred by a'-signment, but not 
 subject of license, 65, 69; common 
 to patent and copy right, 193-4; can 
 be no restraint of trade in, 206, 
 400-1; does not authorize patentee 
 to exclude himself by contract, 338; 
 not to be confused with exclusive 
 right, 75. 
 
 Exclusive license, not an assignment, 
 77; exclusive right meaning of in 
 patent law, 9, 12, 13; not same as 
 right to exclude, 75, 388. 
 
3iXecution, at common law may be 
 levied on patented article, but not 
 on patent right, 22-8. 
 
 Extension of patent, effect of on as- 
 signee or licensee, 83; on purchaser 
 of specimen patented article, 83, 85, 
 87. 
 
 Pederal courts, have no original juris- 
 diction over contracts relating to 
 patented articles, 43-4, 200-3; excep- 
 tion where licensor is offending, 
 201; have exclusive jurisdiction to 
 enforce right to exclude, 45-6. 
 
 T'ederal government, one of delegated 
 powers, 15 ; has no police power, 16 ; 
 cannot confer right to enjoy fruit of 
 one's industry, 15. 
 
 ■"Free competition," 338. 
 
 "Freedom of trade," 338. 
 
 ^'Fruit of patent," 389. 
 
 "Full right," 9. 
 
 Function of machine not patentable, 
 133. 
 
 G. 
 
 Importation of foreign made article 
 as infringement of domestic patent, 
 182-5. 
 
 Infringement, action for one mode of 
 exercising patent right, 47; consists 
 in making, using or selling thing 
 patented with patent owner's con- 
 sent, 50, 113-4; of domestic patent 
 by importation of foreign made ar- 
 ticle, 182-5; can be none by licensee 
 until license set aside, 71-2; use any- 
 where of article purchased from dis- 
 trict assignee is not, 90-1; use of ar- 
 ticle purchased from patent owner 
 is not, 94; repair of broken device 
 is not, 167; misconception of, 269-70; 
 action for, assignee under state in- 
 solvency laws cannot maintain, 30; 
 licensee cannot sue for, 51. 63, 22ff, 
 puts title to patent in issue, 50; 
 right to sue for as affected by parti- 
 cipation in unlawful combination, 
 302, 306. 
 
 Inter State Commerce, tax by State 
 on patented articles is invalid, 35; 
 patented articles as part of, 337. 
 
 "Invention," ambiguous use of, 204-5, 
 208, 303, 304. 
 
 Inventor gets no right to make, use, 
 and sell from patent grant, 12, 14; 
 at common law has an inchoate 
 right to exclude, 49. 
 
 Ctood faith of parties as justification 
 of combination in restraint of trade, 
 349, 358. 
 
 Grant, defined, 58; must be of right 
 to exclude, otherwise a license, 63, 
 65; compared with assignment, 63-4; 
 confusion of with license, 278-9. 
 
 J. 
 
 Jurisdiction, Federal courts, have no 
 exclusive jurisdiction over contracts- 
 relating to patented articles, 43-4; 
 have exclusive jurisdiction to en- 
 force right to exclude, 45-6; State 
 
courts have jurisdiction of contracts 
 involving riglit to make, use, and 
 sell patented article, 43-4; Federal 
 courts have no exclusive jurisdiction 
 of action for breach of license con- 
 tract, 200-3; except where licensor 
 is the offender, 201. 
 
 Law, defined, 362; based on what, for 
 time being, considered convenient, 
 394; and business, 394-5. 
 
 Legal right defined, 386. 
 
 License, defined, 5, 2, 68, 110; is com- 
 mon law contract, 71 ; is a mere per- 
 mission to do an act, 68; can be 
 none of a "patent right," 68; oper- 
 ates as waiver of right to exclude, 
 109, 112; anything short of convey- 
 ance of right to exclude is, 62, 65; 
 anthithesis of sale with restrictions 
 on right to use, 112 ; contrasted with 
 a sale, 283-4; license contract can- 
 not be rescinded by one party, 153. 
 
 Licensee, has no interest in patent 
 right, 108; rights of, and of pur- 
 chases of specimen article compared, 
 108-110, 144-5; sale of article by, 
 rights conveyed, 89-90; distinguish- 
 ed from assignee, 277-8; cannot sue 
 for infringement, 63. 220; cannot be 
 an infringer, 152, 199. 
 
 M. 
 
 9, 11-12, 13^,16;- derived. from gen- 
 eral law, 11; paterft does not confer, 
 14. 
 
 "Making, using and selling," scope of 
 terms, 51. 
 
 Mode of operation of machine not pat- 
 entable, 133. 
 
 "Monopoly," meaning as applied to 
 patent right, 206, 210, 228, 231, 285, 
 333, 340, 389; patent monopoly con- 
 trasted with industrial monopoly, 
 286; with naturel monopoly, 286-7; 
 nature of patent monopoly, 287. 
 
 "Natural right," to make, use, and sell, 
 is, 11. 
 
 Non-use, right of, 115-118, 266, 375, 
 124; not peculiar to patent owner, 
 115; a right common to owners of 
 all private property, 116-7; govern- 
 ment has no power to compel use 
 of private property, 117; voluntary 
 non-use not to be confused with con- 
 tract not to use, 118, 375, 376. 
 
 Note, given in payment of purchase 
 price of patent or patented article. 
 40. 
 
 Owner of property can not be licen- 
 see, 252, 253. 
 
 Machine, patent for, not infringed by 
 sale of product, 51. 
 
 "Made under a patent," 389. 
 
 Make, inventor's right to, existed prior 
 to and. independent of patent law. 
 
 P. 
 
 Patentee (whether patentee or as- 
 signee) has two separately derived, 
 rights, 13; right to make, use and 
 sell, exists independent of patent 
 laws, 11-12, 387; patent confers. only 
 
right to exclude, 10; two rights dis- 
 tinguished by revenue laws, 18-21; 
 by common law as to executions, 
 22-84; by law as to general assign- 
 ment for benefit of creditors, 29-31; 
 by operation of police powers, 31-40; 
 by jurisdiction of courts, 42-46; pat- 
 entee vending patented article sub- 
 ject to State license laws, 38; must 
 obey all laws applicable to sales 
 of all personal property, 38; can 
 exercise patent right in four differ- 
 ent ways, 47; in selling patented ar- 
 ticle subject to same law as vendor 
 of unpatented property, 98; under 
 patent law cannot restrict use of ar- 
 ticle sold, 91. 
 
 Patent laws, sole effect to enable pat- 
 entee to exclude others, 10, 12, 13; 
 do not enlarge patentee's own rights, 
 10; confer on patentee nothing but 
 right to bring actions, 11; do not 
 enable patentee to make, use and 
 sell, 12; only vest him with incor- 
 poreal right to exclude, 12, 48; do 
 not displace police powers of States, 
 35, 37; do not determine personal 
 capac'ty to contract or prescribe 
 
 ' rule for sale of patented articles, 
 38; not involved in suit on contract 
 relating to patented article. 44: pro- 
 vide for exercise of patent right in 
 four different ways, 47: do not pro- 
 vide for or regulate license con- 
 tracts, 71; and copy right law al- 
 leged difference between, 258-9. 261; 
 similarities, 262 ; do not give immun- 
 ity from criminal statutes, 37. 304; 
 and Federal Anti-trust Act, not in 
 conflict, 331-9. or inconsistent. 377-8; 
 contrasted, 400-1. 
 Patent right, consists altogether in 
 right to exclude others, 10; did not 
 
 exist at common law, 31-34; prop- 
 erty in altogether distinct from 
 physical subject matter of patent, 
 10, 122, 32; is an incorporeal prop- 
 erty, 20, 165; State cannot tax, 19- 
 21; cannot be sold under execution, 
 25-28; does not pass to assignee un- 
 der State insolvency laws, 30-1; 
 State cannot regulate disposition of, 
 33, 35, 41; is for one entire thing, 
 62- can be subdivided as to local- 
 ity, but not otherwise, 62; must be 
 exercised subject to police powers 
 of state, 126-7; and copy right com- 
 pared, 241-5, 255; gives no title in 
 thing made in violation of right, 280. 
 
 Police powers, in exercise of State 
 may suppress or regulate, making, 
 using or selling of patented article, 
 32-40; not displaced or superseded 
 by patent law, 35, 37; or by copy 
 right statutes, 37; State Anti-trust 
 Acts are exercises of, 126-7; not 
 limited to suppressing traffic in nox- 
 ious articles, 288, 331; scope of, 289; 
 operates equally on patented and 
 unpatented articles, 290. 
 
 Privilege secured by patent is only 
 right to exclude, 64, 69. 
 
 "Process," cannot be made or sold, 
 can only be used, 133; patent for, 
 can be infringed only by using it, 
 51; sale or use of product is not, 
 51. ' 
 
 "Product of patent," 389. 
 
 Property in patent right distinct from 
 property in patented article, 10, 122. 
 
 Purchaser of patented article acquires 
 no interest in patent right, 23, 108;' 
 
in using it he exercises no ri^lit 
 created by patent, 24, 83; does not 
 derive title from patent grant, 24, 
 83, 85; not affected by extension of 
 patent, 83; from territorial assignee 
 can use article anywhere, 91, 92, 95; 
 of patented article from one author- 
 ized to sell becomes possessed of 
 an absolute property, 95; rights of 
 and of licensee to use contrasted, 
 108-110, 144-5; of patented article 
 from patent owner may use it with- 
 out restriction until worn out, 167; 
 may repair broken parts, 167; can- 
 not construct substantially new de- 
 vice, 167; of copy righted book from 
 owner of copy right has absolute 
 property in books, 252. 
 
 R. 
 
 Repair of broken patented device law- 
 fully owned Is not Infringement, 
 167. 
 
 Restraint of trade, contract in defined, 
 296; combination or conspiracy in 
 defined, 301; not predicable of pat- 
 ent right to exclude, 287; can only 
 be of tangible objects, 287. 
 
 Restrictions on use of article, power 
 to Impose no part of patent right, 
 212; right to impose parted with by 
 sale of article, 91, 92. 
 
 Royalty, patentee entitled to but one 
 on each article, 87, 94; purchase 
 price is, 91, 94. 
 
 S. 
 
 Sale, nature of, 395-6; effect on rights 
 of parties with respect to subject 
 
 matter, 270, 274; of patented article 
 by patentee liberates article from 
 patent monopoly, 83, 85-6, 87; by 
 licensee rights conveyed by, 89-90; 
 by assignee within his district car- 
 ries right to use article everywhere, 
 91-2; of patented article and of pro- 
 prietary medicine compared, 125 et 
 seq; and license contrasted, 283-4. 
 
 Secret formula, right of property in, 
 121; property in, distinct from prop- 
 erty in preparation made according 
 to, 121; contracts respecting pre- 
 paration do not involve trade secret, 
 121; such contracts may unlawfully 
 restrain trade, 121. 
 
 Sell, right of inventor to, existed prior 
 to and independent of patent laws, 
 9, 15, 204, 205; patent law does not 
 confer right, 12, 14. 
 
 State, may adopt same laws with re- 
 spect to patented as unpatented ar- 
 ticles, 35, 37; laws judicially noticed 
 and enforced by Federal courts, 329. 
 
 Taxation, state can tax property in 
 patented articles. 18-9; cannot tax 
 property in patent right, 19-21. 
 
 Title, to patent, does not pass by as- 
 signment under state insolvency 
 laws, 30; put in issue in infringe- 
 ment suit, 50. 
 
 Trade in patented articles may be 
 regulated by State, 35, 37; regula- 
 tion of does not affect patent right, 
 287 ; patentee's right to not enlarged 
 or affected by patent, 292. 
 
u. 
 
 Use, right of inventor to, existed prior 
 to and independent of patent laws, 
 9, 11-12, 15, 16; patentee's own right 
 to use not affected or enlarged -by 
 patent, 10; derived from general 
 law, 11; patent laws do not confer 
 it, 12, 14; right of patent owner to 
 restrict parted with by sale, 91, 92; 
 right to, of licensee and of pur- 
 
 chaser contrasted, 109; restriction 
 on cannot be annexed to a chattel 
 by notice, 126; right to essence of 
 personal property, 271, 283. 
 
 "Use a patent," meaning of, 279. 
 
 Value of personal property in right to 
 use it, 273, 281. 
 
KF 3113 CJ5^ 
 
 Author 
 
 Gladney, Frariklin Yoting 
 
 Title 
 
 estraints of trade m 
 patented articles 
 
 Vol. 
 
 Copy 
 
 Date 
 
 Borrower's Name 
 
'-•L m mtttrntiim^wm