A license to make and use a patented article does not depend on
formal language, and, as a defense to a subsequent suit for
infringement, a license may be inferred from the patent owner's
words and acts indicative of his consent, with a reservation of his
right to compensation. P.
273 U. S.
241.
60 Ct.Cls. 1034 affirmed.
Page 273 U. S. 237
Appeal from a judgment of the Court of Claims dismissing the
petition in a suit to recover damages for alleged unlawful use of
patented articles by the United States.
MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.
This is an appeal from a judgment of the Court of Claims
dismissing the petition of the appellant on the 4th of May, 1925.
This was before the effective date of the Act of February 13, 1925,
c. 229. 43 Stat. 936, by which direct appeals under §§ 242 and 243
of the Judicial Code from the Court of Claims were repealed, and
the review by certiorari was substituted.
The De Forest Radio Telephone & Telegraph Company filed its
petition in the Court of Claims against the United States, seeking
to recover for an alleged unlawful use by the government of certain
patented vacuum tubes or audions used in radio communication. The
suit was brought under the Act of June 25, 1910, c. 423, 36 Stat.
851, as amended by the Act of July 1, 1918, c. 114, 40 Stat. 704,
705, that, whenever an invention described that, whenever an
invention described in and covered by a patent of the United States
should thereafter be used by the government without license of the
owner or lawful right to use it, the owner could recover reasonable
compensation for the use in the Court of Claims, provided that the
United States could avail itself of all defenses, general or
special, which might be pleaded by any other defendant charged with
infringement. The amending Act of 1918 enlarged the scope of the
Act by providing that the recovery by the
Page 273 U. S. 238
owner should include compensation for patented inventions used
or made by or for the United States.
The petition showed that the two patents involved in the suit
were granted to De Forest, and by him were duly assigned to the
appellant, the company bearing him name; that that company executed
and delivered to the Western Electric Company a written instrument
conveying certain rights in the patents, which were subsequently
conveyed to the American Telephone & Telegraph Company. This
contract was set out in the petition. In consideration of $1 and
other good and valuable considerations, it granted a license to
make, use, install, operate, and lease, and to sell or otherwise
dispose of to others for sale, installation, and operation,
apparatus, and systems embodying or made or operating in accordance
with the invention. It purported to give this license for the full
terms of the patents and for all transferable rights of the De
Forest Company in the inventions except such as were expressly
reserved by that company. The reservations included nonassignable
rights for the purpose of making the articles in question for, and
selling them to, the United States government for its use. The
instrument further provided that the Western Company and the De
Forest Company might respectively institute and conduct suits
against others for any of the patents within the fields in which
each respectively possessed rights, but that all such suits should
be conducted at the expense of the party bringing them, that party
to retain any judgment recovered in any such suits.
Paragraph 12 of the instrument provided that the Western Company
might transfer to others, in whole or in part, the rights granted
by the instrument, and might assign rights thereunder or grant
licenses to various persons, firms, or corporations for the several
uses to which the inventions were applicable. The petition
further
Page 273 U. S. 239
alleges that the United States, being engaged in war, informed
the American Telephone & Telegraph Company that it desired to
have large numbers of the audions made promptly for it by the
General Electric Company and others; that the American Telephone
& Telegraph Company replied by writing to the Chief Signal
Officer of the Army that it would not do anything to interfere with
the immediate manufacture of the audions, provided it were
understood and agreed that the Telephone & Telegraph
Company
"waived none of its claims under any patents or patent rights
owned by it on account of said manufacture, and that all claims
under patent rights and all patent questions be reserved and later
investigated, adjusted, and settled by the United States."
The plan was accepted by the United States, and the orders for
said audions were thereafter given by the United States to said
General Electric Company and said Moorhead Laboratories. Inc., who
made them and delivered them to the government, which used
them.
The petition further alleged that, for the purpose of assisting
the United States to obtain said audions promptly pursuant to the
orders given, the American Telephone & Telegraph Company
furnished information, drawings, and blueprints to the General
Electric Company, and permitted representatives and experts of the
United States and of said General Electric Company to witness and
study the manufacture of said audions by the Telephone &
Telegraph Company, all to the end that the audions might be the
more promptly made and delivered to the United States for use in
the war in which it was then engaged.
After the filing of the petition in the suit, it was amended by
an averment that, after the audions were made and used by the
United States, negotiations were carried on between it and the
American Telephone Company, and that the latter company executed a
release to
Page 273 U. S. 240
the United States and all manufacturers acting under its orders
of all claims for compensation for the making and use of the
audions, and that the release included
"all claims which had arisen or might thereafter arise for
royalties, damages, profits, or compensation for infringement of
any or all letters patent owned or controlled by the Telephone
& Telegraph Company, whether expressly recited therein or not,
for the manufacture or use prior thereto, and for use by the United
States occurring thereafter."
The petition was demurred to, the demurrer was sustained, and
the petition dismissed. It is conceded by the parties that, on the
face of the petition, with the contracts which were made exhibits,
the De Forest Company and the American Telephone & Telegraph
Company had each the right to license to the United States the
making and use of these audions, and that, if either did so license
them, it would be a complete defense to a claim for damages for the
tort of infringement by the other.
The sole question, therefore, which the Court of Claims
considered and decided against the appellant was whether, on the
facts recited in the petition, the American Telephone &
Telegraph Company had in fact given a license to the United States
to have made and use these audions covered by the patents. In other
words, was the claim which the American Telephone & Telegraph
Company had against the United States, for the manufacture and use
of the audions based on a contract, or was it based on a tort? If
it were the former, it was a full defense to any claim by the De
Forest Company. If it were the latter, the De Forest Company was
entitled to recover under the Act of 1918.
The appellant says that the necessary effect of the allegations
of his petition is that the Telephone Company said to the United
States, in answer to the United States' notice that it wished to
make and use the audions, "You
Page 273 U. S. 241
will be infringing my rights; I shall not stop you, but I notify
you that I shall hold you for such infringement;" and therefore
that the subsequent acts of the United States and its manufacturers
were torts. We think a different construction should be given the
allegations. The agreement by the Telephone Company that it would
not do anything to interfere with the immediate making of the
audions for the United States, interpreted in the light of its
subsequent action in assisting the United States to a prompt making
of the audions for its use, in furnishing the needed information
and drawings and blueprints for such manufacture, and in giving to
the experts of the United States and its manufacturers the
opportunity to witness and study the manufacture of audions by the
Telephone Company, to the end that the audions might be more
promptly manufactured and delivered to the United States for use in
the war, made such conduct clearly a consent to their manufacture
and use, and a license, and this without any regard to the effect
of the subsequent release by the Telephone & Telegraph Company
of compensation for such manufacture and use.
No formal granting of a license is necessary in order to give it
effect. Any language used by the owner of the patent or any conduct
on his part exhibited to another, from which that other may
properly infer that the owner consents to his use of the patent in
making or using it, or selling it, upon which the other acts,
constitutes a license, and a defense to an action for a tort.
Whether this constitutes a gratuitous license or one for a
reasonable compensation must, of course, depend upon the
circumstances; but the relation between the parties thereafter in
respect of any suit brought must be held to be contractual, and not
an unlawful invasion of the rights of the owner. Concede that, if
the owner had said, "If you go on and infringe my patent, I shall
not attempt to enjoin you, but I shall subsequently sue you for
infringement," the tort would not be waived;
Page 273 U. S. 242
that is not this case. Here, the circumstances show clearly that
what the company was doing was not only fully consenting to the
making and using by the United States of the patent, but was aiding
such making and using, and in doing so was licensing it, only
postponing to subsequent settlement what reasonable compensation,
if any, it might claim for its license. The case of
Henry v.
Dick Co., 224 U. S. 1, in its
main point, was overruled in
Motion Picture Patents Co. v.
Universal Film Co., 243 U. S. 502, but
that does not shake the authority of the language of the Court in
the following passage (p.
224 U. S.
24):
"If a licensee be sued, he can escape liability to the patentee
for the use of his invention by showing that the use is within his
license; but, if his use be one prohibited by the license, the
latter is of no avail as a defense. As a license passes no interest
in the monopoly, it has been described as a mere waiver of the
right to sue by the patentee"
-- citing Robinson on Patents, §§ 806 and 808.
In this case, the language used certainly indicated the purpose
of the Telephone Company not to seek an injunction against
infringement and not to sue for damages therefor, but only to sue
or seek for an amicable settlement by payment of just compensation.
Such action by the Telephone Company was a license, and constituted
a complete defense against a suit for infringement by the De Forest
Company.
Judgment affirmed.