While a state may not pass any law prohibiting the sale of
patents for inventions or nullifying the laws of Congress
regulating their transfer, it has the power, until Congress
legislates on the subject, to make such reasonable regulations in
regard to the transfer of patent rights as will protect its
citizens from fraud, and a requirement in the laws of Kansas that,
before sale or barter of patent rights, an authenticated copy of
the letters patent and the authority of the vendor to sell the
right patented hall be filed in the office of the clerk of the
county within which the rights are sold is not an unreasonable
regulation.
71 Kan. 378 affirmed.
Frances J. Riley, the defendant in error, who was plaintiff
below, recovered a judgment against plaintiffs in error, defendants
below, for $1,250, in the District Court of Brown County, in the
State of Kansas, which judgment was affirmed by the supreme court
of the state, and the defendants below have brought the case here
by writ of error.
The suit was commenced by the filing of a petition by defendant
in error, plaintiff below, in a District Court of Kansas, March 17,
1902, to recover the value of certain lands alleged to have been
transferred by the plaintiff to the defendant Erasmus W. Allen, in
part payment for the transfer to plaintiff of rights for the State
of Kentucky under a patent dated January 30, 1901, for a washing
machine. The right to recover is based upon the failure of the
defendants to comply with the Kansas statute, which failure
defendants do not
Page 203 U. S. 348
deny, but they insist that the statute is void as being in
violation of the Constitution of the United States and the act of
Congress referred to in the opinion. The Kansas statute is chapter
182 of the Laws of 1889. A copy of the act is set out in the
margin.
*
Page 203 U. S. 351
MR. JUSTICE PECKHAM, after making the foregoing statement,
delivered the opinion of the Court.
The sole question for our determination in this case is
concerning
Page 203 U. S. 352
the constitutionality of the Kansas act. The opinion of the
Supreme Court of the State of Kansas is reported in 71 Kan.
378.
The judgment herein is founded upon
Mason v. McLeod, 57
Kan. 105, which case has been followed by that of
Pinney v.
First National Bank of Concordia, 68 Kan. 223.
The defendants insist that the act in question violates Article
I, § 8, of the Constitution of the United States, and the federal
statute passed in pursuance thereof, being Rev.Stat. § 4898, 3
Comp.Stat. p. 3387. The Constitution grants to Congress the
right
"to promote the progress of science and useful arts by securing,
for limited times, to authors and inventors, the exclusive right to
their respective writings and discoveries,"
and § 4898 of the Revised Statutes provides that every patent or
interest therein shall be assignable in law by an instrument in
writing, which assignment is made void against any subsequent
purchaser or mortgagee, for a valuable consideration, without
notice, unless it is recorded in the Patent Office within three
months from the date thereof.
It is asserted by the plaintiffs in error that the subject of
the sale or assignment of the whole or any part of an interest in a
patent is derived from the laws of Congress passed with reference
to the constitutional provision quoted above, and that any
regulations whatever, by any state authority, in regard to such
assignment or sale, and making provision in respect to them, are
illegal.
The Supreme Court of Kansas has maintained and upheld the Kansas
act on the ground that the statute is simply a reasonable and
proper exercise of the police power of the state in regard to the
subject of the act.
Mason v. McLeod, supra. That court was
of opinion that the provisions of the Kansas statute did not trench
upon the federal power, nor interfere with the rights secured to
patentees by federal law. The opinion does not assert that a state
statute can interfere with the right of a patentee to sell or
assign his patent, nor that it can take away any essential feature
of his exclusive right, but,
Page 203 U. S. 353
as is stated, the provisions in the act have no such purpose or
effect; that
"they are in the nature of police regulations designed for the
protection of the people against imposition and fraud. There is
great opportunity for imposition and fraud in the transfer of
intangible property, such as exists in a patent right, and many
states have prescribed regulations for the transfer of such
property differing essentially from those which control the
transfer of other property."
Many authorities are cited, and the opinion then continues:
"The doctrine of these cases is that the patent laws do not
prevent the state from enacting police regulations for the
protection and security of its citizens, and that regulations like
ours, which are mainly designed to protect the people from
imposition by those who have actually no authority to sell patent
rights or own patent rights to sell, should be upheld. We think the
statute is valid."
In Indiana, a statute which is like that in Kansas has been
upheld by the Supreme Court of that state.
Brechbill v.
Randall, 102 Ind. 528. That case has, since that time, been
followed in Indiana.
New v. Walker, 108 Ind. 365. In Ohio,
a statute somewhat similar to the one in question has been upheld.
Tod v. Wick Bros. & Co., 36 Ohio St. 370. And the same
result has been reached in Pennsylvania.
Haskell v. Jones,
86 Pa. 173. In
Herdic v. Roessler, 109 N.Y. 127, the
validity of the same kind of a statute has been upheld.
See
also Wyatt v. Wallace, 67 Ark. 575;
State v. Cook,
107 Tenn. 499. The statutes in the different states are not all
precisely like the Kansas law, but they make provisions in regard
to the sale or assignment of rights under a patent, and sometimes
in regard to notes given for their purchase, which cannot be upheld
under the contention of plaintiffs in error herein, that all such
provisions are in violation of, or inconsistent with, the laws of
Congress on the subject. The courts of some other states, having
like questions before them, have held their statutes void.
Hollida v. Hunt, 70 Ill. 109;
Cranson v. Smith,
37 Mich. 309;
Wilch v. Phelps, 14
Page 203 U. S. 354
Neb. 134;
State v. Lockwood, 43 Wis. 405, and some
others.
The Circuit Court of Appeals of the Eighth Circuit, in
Ozan
Lumber Co. v. Union County National Bank, 145 F. 344, has held
a statute of Arkansas upon this same subject void because of its
discrimination between articles of property of the same class or
character, based only on the fact that the property discriminated
against was protected by a patent granted by the United States. In
the opinion in the case, authorities upon the subject are cited and
commented upon. Among the cases cited are
Patterson v.
Kentucky, 97 U. S. 501, and
Webber v. Virginia, 103 U. S. 344.
In
Patterson v. Kentucky, supra, the owner of a patent
right for an improved burning oil was convicted of the violation of
a Kentucky statute by the sale of the oil covered by the patent.
The owner claimed the right to sell such oil notwithstanding the
statute, which provided a standard below which oil was regarded as
dangerous for illuminating purposes, and the sale of which was
prohibited. It was admitted the patented oil did not come up to the
state standard. This Court held the conviction was right, and that
the owner of the patent was not protected, by reason of his
ownership, from liability under the state statute. That statute was
held to be one passed in the legitimate exercise of the powers of
the state over its purely domestic affairs, and it was said that it
did not violate either the Constitution or laws of the United
States, as, when property protected by patent once comes into
existence, its use is subject to the control of the several states
to the same extent as any other species of property.
Webber v. Virginia, supra, relates also to tangible
property covered by a patent, and it was held that the patent did
not exclude from the operation of the taxing or licensing law of
the state the tangible property manufactured under a patent. It was
said in that case that
"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
Page 203 U. S. 355
order, peace, and general welfare of the community are promoted.
Whatever rights are secured to the inventors must be enjoyed in
subordination to this general authority of the state over all
property within its limits."
While these two cases do not cover the one now before us,
because they refer to tangible property which has been manufactured
and come into existence under a patent, and the case before us
relates to provisions which are to accompany an assignment of
intangible rights, growing out of a patent, yet the general power
of the states to legislate in order to protect their citizens in
their lives and property from fraud and deceit is recognized not as
being without limit, of course, but as being properly exercised in
the cases named.
We think the state has the power (certainly until Congress
legislates upon the subject) with regard to the provision which
shall accompany the sale or assignment of rights arising under a
patent, to make reasonable regulations concerning the subject,
calculated to protect its citizens from fraud. And we think
Congress has not so legislated by the provisions regarding an
assignment contained in the act referred to.
In some of the cases holding such statutes void, it is said that
it is unfortunately true that many frauds are committed under color
of patent rights, and that the patent laws are not so framed as to
secure the public from being cheated by worthless inventions; but,
notwithstanding that, they hold statutes of the nature of the one
under consideration to be void as trenching upon the rights of the
owner of a patent secured by the Constitution and laws of the
United States.
To uphold this kind of a statute is by no means to authorize any
state to impose terms which, possibly, in the language of Mr.
Justice Davis in
Ex Parte Robinson, 2 Biss. 309, Fed.Cas.
No. 11,932,
"would result in a prohibition of the sale of this species of
property within its borders, and in this way nullify the laws of
Congress which regulate its transfer, and destroy the power
conferred upon Congress by the Constitution."
Such a statute would not be a reasonable exercise of the powers
of the state.
Page 203 U. S. 356
In Michigan, the court, speaking through Mr. Justice Campbell,
while holding the act under review in that case upon the subject
invalid,
Cranson v. Smith, 37 Mich. 309, said:
"While we cannot but recognize the magnitude of an evil which
has brought patents into popular discredit, and has provoked
legislation in several states similar to that of Michigan, we
cannot, on the other hand, fail to see in these laws a plain and
clear purpose to check the evil by hindering parties owning patents
from dealing with them as they may deal with their other
possessions."
If there is a special evil, unusually frequent and easily
perpetrated when parties are dealing in the sale of rights existing
or claimed to exist under a patent, we do not see why a state may
not, in the
bona fide exercise of its powers, enact some
special statutory provision which may tend to arrest such evil, and
may omit to enact the same provision concerning the disposal of
other property. There is no discrimination which can be properly so
called against property in patent rights, exercised in such
legislation. It is simply an attempt to protect the citizen against
frauds and impositions which can be more readily perpetrated in
such cases than in cases of the sale or assignment of ordinary
property.
The act must be a reasonable, and fair exercise of the power of
the state for the purpose of checking a well known evil, and to
prevent, so far as possible, fraud and imposition in regard to the
sales of rights under patents. Possibly Congress might enact a
statute which would take away from the states any power to
legislate upon the subject, but it has not as yet done so. It has
simply provided that every patent or interest therein shall be
assignable in writing, leaving to the various states the power to
provide for the safeguarding of the interests of those dealing with
the assumed owner of a patent or his assignee. To deal with that
subject has been the purpose of the acts passed by the various
states, among them that of the State of Kansas, and we think that
it was within the powers of the state to enact such statute. The
expense of
Page 203 U. S. 357
filing copies of the patent and the making of affidavits in the
various counties of the state in which the owner of the rights
desired to deal with them is not so great, in our judgment, as to
be regarded as oppressive or unreasonable, and we fail to find any
other part of the act which may be so regarded. Some fair latitude
must be allowed the states in the exercise of their powers on this
subject. It will not do to tie them up so carefully that they
cannot move, unless the idea is that the states have positively no
power whatever on the subject. This we do not believe -- at any
rate, in the absence of congressional legislation. The mere
provision in the federal statute for an assignment and its record
as against subsequent purchasers, etc., is not such legislation as
takes away the rights of the states to legislate on the subject
themselves in a manner neither inconsistent with nor opposed to the
federal statute. We think the judgment is right, and it is
Affirmed.
* Chapter 182, Laws of 1889 (paragraphs 4356, 4357, and 4358,
General Statutes of Kansas, 1901), reads as follows:
"SEC. 1. It shall be unlawful for any person to sell or barter,
or offer to sell or barter, any patent right, or any right which
such person shall allege to be a patent right, in any county within
this state without first filing with the clerk of the district
court of such county copies of the letters patent, duly
authenticated, and at the same time swearing or affirming to an
affidavit before such clerk that such letters patent are genuine,
and have not been revoked or annulled, and that he has full
authority to sell or barter the right so patented, which affidavit
shall also set forth his name, age, occupation, and residence, and,
if an agent, the name, occupation, and residence of his principal.
A copy of this affidavit shall be filed in the office of said
clerk, and said clerk shall give a copy of said affidavit to the
applicant, who shall exhibit the same to any person on demand."
"SEC. 2. Any person who may take any obligation in writing for
which any patent right, or right claimed by him or her to be a
patent right, shall form a whole or any part of the consideration,
shall, before it is signed by the maker or makers, insert in the
body of said written obligation, above the signature of said maker
or makers, in legible writing or print, the words, 'Given for a
patent right.'"
"SEC. 3. Any person who shall sell or barter, or offer to sell
or barter, within this state, or shall take any obligation or
promise in writing for a patent right, or for what he may call a
patent right, without complying with the requirements of this act,
or shall refuse to exhibit the certificate when demanded, shall be
deemed guilty of a misdemeanor, and on conviction thereof before
any court of competent jurisdiction shall be fined in any sum not
exceeding $1,000, or be imprisoned in the jail of the proper county
not more than six months at the discretion of the court or jury
trying the same, and shall be liable to the injured in a civil
action for any damages sustained."
MR. JUSTICE WHITE, with whom concurs MR. JUSTICE DAY,
dissenting:
My brother Day and myself dissent. The reasons, however, which
impel him are broader than those influencing me. In general terms,
the Kansas statute which the court now upholds compels one selling
a patent right in any County of the State of Kansas to file with
the clerk of such county an authenticated copy of the patent,
together with an affidavit as to the genuineness of the patent, and
as to other matters. The statute, moreover, exacts that, where a
note is given for the purchase price of a patent right, there shall
be inserted in the note a statement that it is given for a patent
right, presumably to deprive the note of the attributes of
commercial paper. We both think that the requirements as to
recording the patent and affidavit are void because repugnant to
the power delegated to Congress by the Constitution on the subject
of patents, and because in conflict with the legislation of
Congress on the
Page 203 U. S. 358
same subject. And, for like reasons, my brother Day is also of
the opinion that the provision is void which exacts an insertion in
a note given for the sale of a patent right of the fact that it was
given for such sale. This latter provision, in my opinion, the
state had the power to make as a reasonable police regulation, not
repugnant to the authority as to patents delegated to Congress by
the Constitution, or the legislation which Congress has enacted in
furtherance thereof.