Respondent was the assignee of certain territorial rights in a
combination patent for a top structure for convertible automobiles.
The patent covered only the combination of several unpatented
components, and made no claim to invention based on the fabric used
in the top structure. Top structures using the patented combination
were included in 1952-1954 cars made by General Motors Corp.,
pursuant to a patent license, and by Ford Motor Co., which had no
license during that period. Respondent filed an infringement suit
against petitioners, who, without a license, made and sold
replacement fabrics to fit cars using the patented top structures.
The patent owner (respondent's assignor) notified petitioners on
January 2, 1954, that petitioners' sale of fabrics to fit Ford tops
would be contributory infringement. On July 21, 1955, Ford paid the
patent owner $73,000, and it was agreed that Ford, its dealers,
customers and users, were released from all claims of infringement
of the patent, other than with respect to "replacement top
fabrics." The patent owner reserved the right to license the
manufacture, use, and sale of such replacement fabrics under the
patent. Respondent's claim of contributory infringement was upheld
in the District Court and the Court of Appeals. That holding was
reversed here (
365 U. S. 365 U.S.
336) on the ground that the fabric replacement was permissible
"repair" and not infringing "reconstruction," so that there was no
direct infringement by the car owner to which petitioners could
contribute. On remand, the District Court dismissed the complaint
as to both General Motors and Ford cars . The Court of Appeals
reinstated the judgment for respondent with respect to Ford cars,
holding that, since Ford had not been licensed to produce the top
structures on those cars, petitioners' sale of replacement fabrics
for them constituted contributory infringement even though the
replacement was merely "repair." The Court of Appeals thus
concluded that its "previous decision in this case was not reversed
insofar as unlicensed Ford cars are concerned."
Held:
Page 377 U. S. 477
1. This Court's previous decision did not reverse the Court of
Appeals' holding as it applied to Ford cars. P.
377 U. S.
480.
2. Persons who purchased cars from Ford, which infringed the
patent by manufacturing and selling them with the top structures,
likewise infringed by using or repairing the top structures, and
the supplier of replacement fabrics for use in such infringing
repair was a contributory infringer under § 271(c) of the Patent
Code. Pp.
377 U. S.
482-488.
3. A majority of the Court is of the view that § 271(c) requires
knowledge by the alleged contributory infringer, not merely that
the component sold by him was especially designed for use in a
certain machine or combination, but also that the combination for
which the component was designed was both patented and infringing.
Pp.
377 U. S.
488-493.
(a) This knowledge requirement affords petitioners no defense
with respect to replacement fabric sales after January 2, 1954,
since they then had been notified of Ford's infringement. Pp.
377 U. S.
489-491.
(b) Petitioners are not liable for contributory infringement
with respect to sales before that date, absent a showing on remand
of their previous knowledge of Ford's infringement. P.
377 U. S.
491.
4. The patent owner's attempt, in the agreement with Ford, to
reserve the right to license future replacement sales was invalid,
since he cannot, in granting the right to use patented articles,
impose conditions as to unpatented replacement parts to be used
with those articles. After July 21, 1955, Ford car owners had
authority to use and repair the patented top structures; hence,
they were no longer direct infringers, and hence petitioners, as
sellers of replacement fabrics for such use and repair, were not
contributory infringers.
Aro Mfg. Co. v. Convertible Top
Replacement Co., 365 U. S. 336,
followed. Pp.
377 U. S.
496-500.
5. The agreement with Ford did not eliminate petitioners'
liability for sales prior to July 21, 1955, for, although a
contributory infringer is a species of joint tortfeasor, the common
law rule by which a release of one joint tortfeasor necessarily
released another is not applied to contributory infringement. Pp.
377 U. S.
500-502.
6. For the guidance of the District Court, four Justices express
the following views to the effect that the agreement of July 21,
1955, limits the damages that respondent may recover for the
pre-agreement infringement:
Page 377 U. S. 478
(a) In contributory infringement cases, as in other instances of
joint tortfeasors' liability, payment by one joint tortfeasor
diminishes the amount that may be recovered from another. P.
377 U. S.
503.
(b) Under 35 U.S.C. § 284, only damages, or loss to the patent
owner, are recoverable for infringement, and not the infringer's
profits. Pp.
377 U. S.
503-507.
(c) Respondent's damages should not be measured by a royalty on
petitioners' sales of replacement fabrics, since respondent could
never have licensed those sales, which involved unpatented
materials to be used in the mere repair of patented articles. Pp.
377 U. S.
507-509.
(d) If the payment by Ford to the patent owner was the
equivalent of the royalties the patent owner would have received by
licensing Ford in the first instance, petitioners would be liable
only for nominal damages. Pp.
377 U. S.
512-513.
312 F.2d 52 reversed in part, affirmed in part, and
remanded.
MR. JUSTICE BRENNAN delivered the opinion of the Court.
Respondent Convertible Top Replacement Co., Inc., (CTR) acquired
by assignment from the Automobile Body Research Corporation (AB)
all rights for the territory of Massachusetts in United States
Patent No. 2,569,724, known as the Mackie-Duluk patent. This is a
combination patent covering a top structure for automobile
"convertibles." Structures embodying the patented combination were
included as original equipment in 1952-1954 models of convertibles
manufactured by the General Motors Corporation and the Ford Motor
Company. They were included in the General Motors cars by authority
of a license granted to General Motors by AB; Ford, however, had no
license during the 1952-1954
Page 377 U. S. 479
period, and no authority whatever under the patent until July
21, 1955, when it entered into an agreement, discussed later, with
AB; Ford's manufacture and sale of the automobiles in question
therefore infringed the patent. Petitioner Aro Manufacturing Co.,
Inc. (Aro), which is not licensed under the patent, produces fabric
components designed as replacements for worn-out fabric portions of
convertible tops; unlike the other elements of the top structure,
which ordinarily are usable for the life of the car, the fabric
portion normally wears out and requires replacement after about
three years of use. Aro's fabrics are specially tailored for
installation in particular models of convertibles, and these have
included the 1952-1954 General Motors and Ford models equipped with
the Mackie-Duluk top structures.
CTR brought this action against Aro in 1956 to enjoin the
alleged infringement and contributory infringement, and to obtain
an accounting, with respect to replacement fabrics made and sold by
Aro for use in both the General Motors and the Ford cars embodying
the patented structures. The interlocutory judgment entered for CTR
by the District Court for the District of Massachusetts, 119
U.S.P.Q. 122, and affirmed by the Court of Appeals for the First
Circuit, 270 F.2d 200, was reversed here.
Aro Mfg. Co. v.
Convertible Top Replacement Co., 365 U.
S. 336 ("
Aro I"),
petition for rehearing or
alternative motion for amendment or clarification denied, 365
U.S. 890. Our decision dealt, however, only with the General
Motors, and not with the Ford, cars. Like the Court of Appeals, we
treated CTR's right to relief as depending wholly upon the question
whether replacement of the fabric portions of the convertible tops
constituted infringing "reconstruction" or permissible "repair" of
the patented combination. The lower courts had held it to
constitute "reconstruction," making the car owner for whom it was
performed a direct infringer and Aro, which made
Page 377 U. S. 480
and sold the replacement fabric, a contributory infringer; we
disagreed, and held that it was merely "repair." The
reconstruction-repair distinction is decisive, however, only when
the replacement is made in a structure whose original manufacture
and sale have been licensed by the patentee, as was true only of
the General Motors cars; when the structure is unlicensed, as was
true of the Ford cars, the traditional rule is that even repair
constitutes infringement. Thus, the District Court had based its
ruling for CTR with respect to the Ford cars on the alternative
ground that, even if replacement of the fabric portions constituted
merely repair, the car owners were still guilty of direct
infringement, and Aro of contributory infringement, as to these
unlicensed, and hence infringing, structures. 119 U.S.P.Q. 122,
124. This aspect of the case was not considered or decided by our
opinion in
Aro I.
On remand, however, another judge in the District Court read our
opinion as requiring the dismissal of CTR's complaint as to the
Ford as well as the General Motors cars, and entered judgment
accordingly. CTR appealed the dismissal insofar as it applied to
the Ford cars, and the Court of Appeals reinstated the judgment in
favor of CTR to the extent. 312 F.2d 52. In our view, the Court of
Appeals was correct in holding that its "previous decision in this
case was not reversed insofar as unlicensed Ford cars are
concerned." 312 F.2d at 57. [
Footnote 1]
Page 377 U. S. 481
However, we granted certiorari, 372 U.S. 958, to consider that
question, and to consider also the issue that had not been decided
in
Aro I: whether Aro is liable for contributory
infringement, under 35 U.S.C. § 271(c), with respect to its
manufacture and sale of replacement fabrics for the Ford cars.
[
Footnote 2]
Page 377 U. S. 482
I
[
Footnote 3]
CTR contends, and the Court of Appeals held, that, since Ford
infringed the patent by making and selling the top structures
without authority from the patentee, [
Footnote 4] persons who purchased the automobiles from
Ford likewise infringed by using and repairing the structures, and,
hence Aro, by supplying replacement fabrics specially designed to
be utilized in such infringing repair, was guilty of contributory
infringement under 35 U.S.C. § 271(c). In
Aro I, 365 U.S.
at
365 U. S.
341-342, the Court said:
"It is admitted that petitioners [Aro] know that the purchasers
intend to use the fabric for replacement purposes on automobile
convertible tops which are covered by the claims of respondent's
combination
Page 377 U. S. 483
patent, and such manufacture and sale with that knowledge might
well constitute contributory infringement under § 271(c) if, but
only if, such a replacement by the purchaser himself would, in
itself, constitute a direct infringement under § 271(a), for it is
settled that, if there is no direct infringement of a patent, there
can be no contributory infringement. . . . It is plain that §
271(c) -- a part of the Patent Code enacted in 1952 -- made no
change in the fundamental precept that there can be no contributory
infringement in the absence of a direct infringement. That section
defines contributory infringement in terms of direct infringement
-- namely, the sale of a component of a patented combination or
machine for use 'in an infringement of such patent.' And § 271(a)
of the new Patent Code, which defines 'infringement,' left intact
the entire body of case law on direct infringement. The
determinative question, therefore, comes down to whether the car
owner would infringe the combination patent by replacing the
worn-out fabric element of the patented convertible top on his car.
. . ."
Similarly here, to determine whether Aro committed contributory
infringement, we must first determine whether the car owners, by
replacing the worn-out fabric element of the patented top
structures, committed direct infringement. We think it clear, under
§ 271(a) of the Patent Code and the "entire body of case law on
direct infringement" which that section "left intact," that they
did.
Section 271(a) provides that "whoever without authority makes,
uses or sells any patented invention . . . infringes the patent."
It is not controverted -- nor could it be -- that Ford infringed by
making and selling cars embodying the patented top structures
without any authority from the patentee. If Ford had had such
authority, its purchasers would not have infringed
Page 377 U. S. 484
by using the automobiles, for it is fundamental that sale of a
patented article by the patentee or under his authority carries
with it an "implied license to use."
Adams v.
Burke, 17 Wall. 453,
84 U. S. 456;
United States v. Univis Lens Co., 316 U.
S. 241,
316 U. S. 249,
316 U. S.
250-251. But with Ford lacking authority to make and
sell, it could, by its sale of the cars, confer on the purchasers
no implied license to use, and their use of the patented structures
was thus "without authority," and infringing under § 271(a).
[
Footnote 5] Not only does that
provision explicitly regard an unauthorized user of a patented
invention as an infringer, but it has often and clearly been held
that unauthorized use, without more, constitutes infringement.
Birdsell v. Shaliol, 112 U. S. 485;
Union Tool Co. v. Wilson, 259 U.
S. 107,
259 U. S. 114;
see Sanitary Refrigerator Co. v. Winters, 280 U. S.
30,
280 U. S. 32-33;
General Talking Pictures Corp. v. Western Electric Co.,
305 U. S. 124,
305 U. S.
127.
If the owner's use infringed, so also did his repair of the top
structure, as by replacing the worn-out fabric component. Where use
infringes, repair does also, for it perpetuates the infringing
use.
"No doubt . . . a patented article may be repaired without
making the repairer an infringer, . . . but not where it is done
for one who is. It is only where the device in patented form has
come lawfully into the hands of the person for or by whom it is
repaired that this is the case. In other words, if one, without
right, constructs or disposes of an infringing machine, it affords
no protection to another to have merely repaired it; the repairer,
by supplying an essential part of the patented combination,
contributing by
Page 377 U. S. 485
so much to the perpetuation of the infringement."
Union Special Mach. Co. v. Maimin, 161 F. 748, 750
(C.C.E.D.Pa.1908),
aff'd, 165 F. 440 (C.A.3d Cir. 1908).
Accord, Remington Rand Business Serv., Inc. v. Acme Card System
Co., 71 F.2d 628, 630 (C.A.4th Cir. 1934),
cert.
denied, 293 U.S. 622; 2 Walker, Patents (Deller ed.1937) at
1487. Consequently, replacement of worn-out fabric components with
fabrics sold by Aro, held in
Aro I to constitute "repair,"
rather than "reconstruction," and thus to be permissible in the
case of licensed General Motors cars, was not permissible here in
the case of unlicensed Ford cars. Here, as was not the case in
Aro I, the direct infringement by the car owners that is
prerequisite to contributory infringement by Aro was unquestionably
established.
We turn next to the question whether Aro, as supplier of
replacement fabrics for use in the infringing repair by the Ford
car owners, was a contributory infringer under § 271(c) of the
Patent Code. That section provides:
"Whoever sells a component of a patented machine, manufacture,
combination or composition, or a material or apparatus for use in
practicing a patented process, constituting a material part of the
invention, knowing the same to be especially made or especially
adapted for use in an infringement of such patent, and not a staple
article or commodity of commerce suitable for substantial
noninfringing use, shall be liable as a contributory
infringer."
We think Aro was indeed liable under this provision.
Such a result would plainly have obtained under the contributory
infringement case law that § 271(c) was intended to codify.
[
Footnote 6] Indeed, most of
the law was established
Page 377 U. S. 486
in cases where, as here, suit was brought to hold liable for
contributory infringement a supplier of replacement parts specially
designed for use in the repair of infringing articles. In
Union
Tool Co. v. Wilson, supra, 259 U.S. at
259 U. S.
113-114, the Court held that, where use of the patented
machines themselves was not authorized,
"There was, consequently, no implied license to use the spare
parts in these machines. As such use, unless licensed, clearly
constituted an infringement, the sale of the spare parts to be so
used violated the injunction [enjoining infringement]."
As early as 1897, Circuit Judge Taft, as he then was, thought it
"well settled" that,
"where one makes and sells one element of a combination covered
by a patent with the intention and
Page 377 U. S. 487
for the purpose of bringing about its use in such a combination
he is guilty of contributory infringement and is equally liable to
the patentee with him who in fact organizes the complete
combination."
Thomson-Houston Elec. Co. v. Ohio Brass Co., 80 F. 712,
721 (C.A. 6th Cir. 1897). While conceding that, in the case of a
machine purchased from the patentee, one "may knowingly assist in
assembling, repairing, and renewing a patented combination by
furnishing some of the needed parts," Judge Taft added:
"but, when he does so, he must ascertain, if he would escape
liability for infringement, that the one buying and using them for
this purpose has a license, express or implied, to do so."
Id. at 723.
See also National Brake & Elec. Co.
v. Christensen, 38 F.2d 721, 723 (C.A.7th Cir. 1930),
cert. denied, 282 U.S. 864;
Reed Roller Bit Co. v.
Hughes Tool Co., 12 F.2d 207, 211 (C.A. 5th Cir. 1926);
Shickle, Harrison & Howard Iron Co. v. St. Louis
Car-Coupler Co., 77 F. 739, 743 (C.A.8th Cir. 1896),
cert.
denied, 166 U.S. 720. These cases are all authority for the
proposition that
"The right of one, other than the patentee, furnishing repair
parts of a patented combination, can be no greater than that of the
user, and he is bound to see that no other use of such parts is
made than that authorized by the user's license."
National Malleable Casting Co. v. American Steel
Foundries, 182 F. 626, 641 (C.C.D.N.J.1910).
In enacting § 271(c), Congress clearly succeeded in its
objective of codifying this case law. The language of the section
fits perfectly Aro's activity of selling
"a component of a patented . . . combination . . . ,
constituting a material part of the invention, . . . especially
made or especially adapted for use in an infringement of such
patent, and not a staple article or commodity of commerce suitable
for substantial noninfringing use."
Indeed, this is the almost unique case in which the component
was
Page 377 U. S. 488
hardly suitable for any noninfringing use. [
Footnote 7] On this basis, both the District Court
originally, 119 U.S.P.Q. at 124, and the Court of Appeals in the
instant case, 312 F.2d at 57, held that Aro was a contributory
infringer within the precise letter of § 271(c).
See also Aro
I, 365 U.S. at
365 U. S.
341.
However, the language of § 271(c) presents a question,
apparently not noticed by the parties or the courts below,
concerning the element of knowledge that must be brought home to
Aro before liability can be imposed. It is only sale of a component
of a patented combination "knowing the same to be especially made
or especially adapted for use in an infringement of such patent"
that is contributory infringement under the statute. Was Aro
"knowing" within the statutory meaning because -- as it admits, and
as the lower courts found -- it knew that its replacement fabrics
were especially designed for use in the 1952-1954 Ford convertible
tops, and were not suitable for other use? Or does the statute
require a further showing that Aro knew that the tops were
patented, and knew also that Ford was not licensed under the
patent, so that any fabric replacement by a Ford car owner
constituted infringement?
On this question, a majority of the Court is of the view that §
271(c) does require a showing that the alleged contributory
infringer knew that the combination for which his component was
especially designed was both patented and infringing. [
Footnote 8] With respect to many of
the
Page 377 U. S. 489
replacement fabric sales involved in this case, Aro clearly had
such knowledge. For, by letter dated January 2, 1954, AB informed
Aro that it held the Mackie-Duluk patent; that it had granted a
license under the patent to General Motors but to no one else; and
that
"It is obvious
Page 377 U. S. 490
from the foregoing and from an inspection of the convertible
automobile sold by the Ford Motor Company that anyone selling
ready-made replacement fabrics for these automobiles would be
guilty of contributory infringement of said patent."
Thus, the Court's interpretation of the knowledge requirement
affords Aro no defense with respect to replacement fabric sales
made after January 2, 1954. It would appear that the
overwhelming
Page 377 U. S. 491
majority of the sales were, in fact, made after that date, since
the oldest of the cars were 1952 models and since the average life
of a fabric top is said to be three years. With respect to any
sales that were made before that date, however, Aro cannot be held
liable in the absence of a showing that, at that time, it had
already acquired the requisite knowledge that the Ford car tops
were patented and infringing. When the case is remanded, a finding
of fact must be made on this question by the District Court, and,
unless Aro is found to have had such prior knowledge, the judgment
imposing liability must be vacated as to any sales made before
January 2, 1954. As to subsequent sales, however, we hold, in
agreement with the lower courts, that Aro is liable for
contributory infringement within the terms of § 271(c).
In seeking to avoid such liability, Aro relies on the
Mercoid cases.
Mercoid Corp. v. Mid-Continent
Investment Co., 320 U. S. 661;
Mercoid Corp. v. Minneapolis-Honeywell Regulator Co.,
320 U. S. 680.
Since those cases involved essentially an application of the
doctrine of patent misuse, which is not an issue in this case,
[
Footnote 9] they are not
Page 377 U. S. 492
squarely applicable to the contributory infringement question
here. On the other hand, they are hardly irrelevant. The Court in
Mercoid said, among other things, that the principle that
"he who sells an unpatented part of a combination patent for use in
the assembled machine may be guilty of contributory infringement"
could no longer prevail "against the defense that a combination
patent is being used to protect an unpatented part from
competition." 320 U.S. at
320 U. S. 668.
As the Court recognized, its definition of misuse was such as "to
limit substantially the doctrine of contributory infringement" and
to raise a question as to "what residuum may be left." 320 U.S. at
320 U. S. 669.
See Report of the Attorney General's National Committee to
Study the Antitrust Laws (1955) at 252. The answer to Aro's
argument is that Congress enacted § 271 for the express purpose of
reinstating the doctrine of contributory infringement as it had
been developed by decisions prior to
Mercoid, and of
overruling any blanket invalidation of the doctrine that could be
found in the
Mercoid opinions.
See, e.g., 35
U.S.C. §§ 271(c), (d); Hearings,
supra, n 6 at 159, 161-162; and the
Aro I
opinions of MR. JUSTICE BLACK, 365 U.S. at
365 U. S.
348-349 and nn. 3-4; MR. JUSTICE HARLAN,
id. at
365 U. S. 378,
n. 6; and MR. JUSTICE BRENNAN,
id. at
365 U. S.
365-367. Hence, where Aro's sale of replacement fabrics
for unlicensed Ford cars falls squarely within § 271(c), and where
Aro has not properly invoked the misuse doctrine as to any other
conduct by CTR or AB, Mercoid cannot successfully be employed to
shield Aro from liability for contributory infringement. [
Footnote 10]
Thus, we hold that, subject to the reservation expressed at pp.
377 U. S.
488-491,
supra, with respect to sales made
before January 2, 1954, and subject to the further reservations
Page 377 U. S. 493
set forth in succeeding Parts of this opinion, Aro's sales of
replacement fabrics for use in the Ford cars constituted
contributory infringement under § 271(c).
II
[
Footnote 11]
Although we thus agree with the Court of Appeals that Aro was
liable for contributory infringement with respect to the Ford cars,
we find merit in a defense asserted by Aro. In our view, this
defense negatives Aro's liability as to some of the replacement
fabrics in question, and, as to the others, reduces substantially
-- quite possibly to a mere nominal sum -- the amount of recovery
that CTR may be awarded. The defense is based on the agreement of
July 21, 1955, between Ford and AB.
See note 4 supra. This agreement
affected Aro's liability differently, we think, depending upon
whether the replacement fabric sales were made before or after the
agreement date. We shall first discuss its effect on liability for
the subsequent sales.
The agreement was made at a time when, as CTR states in its
brief, "Ford had already completed its manufacture of all the cars
here involved." Under it, Ford agreed to pay AB $73,000 for certain
rights under the patent, which were defined by paragraph 1 of the
agreement as follows:
"1. AB hereby releases Ford, its associated companies . . .
[and] its and their dealers, customers and users for its and their
products, of all claims that AB has or may have against it or them
for infringement of said patents arising out of the manufacture,
use or sale of devices disclosed therein and manufactured before
December 31, 1955, other than the 'replacement top fabrics'
licensed under paragraph 3. "
Page 377 U. S. 494
In paragraph 3, AB licensed Ford to make and sell "replacement
top fabrics" for the Mackie-Duluk top structures, receiving in
return a royalty -- separate from the $73,000 lump-sum payment --
of 5% of the net sales. And in paragraph 5, AB expressly reserved
the right
"to license under . . . said Mackie-Duluk patent . . . the
manufacture, use and sale of replacement top fabrics other than
those supplied to, made by or sold by Ford . . . to the extent that
AB is entitled to reserve such right under 35 United States Code, §
271 (1952)."
In a pretrial memorandum filed early in the lawsuit, the
District Court construed the agreement in the following manner,
which we think to be a correct interpretation of the parties'
intention:
(1) With respect to all patented top structures manufactured
before July 21, 1955, and all replacement fabrics installed before
that date, it was a "release" to the parties named -- that is, Ford
and its customers -- of the claims for infringement by manufacture,
sale, or use of the patented combination;
(2) With respect to any new structures manufactured between July
21 and December 31, 1955 (it appears that there were no such
structures), the agreement was a "future license" to Ford and its
customers to make, sell, and use the patented combination, but
"excepting replacements" unless these were provided by Ford under
the special license granted by paragraph 3;
(3) With respect to the post-July 21 status of structures
manufactured before July 21, the agreement was also a "future
license" to Ford and its customers of the rights to make, sell, and
use, but again, "excepting replacements" not provided by Ford;
and
(4) The agreement "demonstrated an intention not to release" or
license any persons other than Ford or its customers; in
particular, the parties did not intend
Page 377 U. S. 495
to release or license contributory infringers like Aro in
respect of replacement fabrics sold either before or after July
21.
Considering the legal effect of the agreement as so construed,
the District Court went on to rule that, if the fabric replacement
should be held to constitute repair, rather than reconstruction (as
this Court did subsequently hold in
Aro I), then:
(a) Aro
would be liable for contributory infringement
as to replacements made before July 21, 1955, since "I do not
construe the agreement to release contributory infringers for
rights of action already accrued;"
(b) however, despite the intention of the parties, Aro would not
be liable as to replacements made after July 21, 1955, since,
"If replacement is legitimate repair, no average owner can 'do
it yourself,' and he must be free to go to persons in the position
of defendants without apprehension on their part."
The distinction between pre-agreement and post-agreement sales
subsequently became irrelevant to the District Court's view of the
case, when it held after trial that replacement of the fabrics
constituted reconstruction, rather than repair; the Court's
interlocutory judgment for CTR thus held Aro liable with respect to
all the Ford cars in question. When this Court in
Aro I
reversed the ruling on the reconstruction-repair issue, the only
reference in the opinions to the Ford cars took the view that Aro
should be held liable only in respect of replacements made on those
cars "before July 21, 1955," 365 U.S. at
365 U. S. 368
(concurring opinion), and thus agreed with the distinction
originally drawn by the District Court. The present opinion of the
Court of Appeals, however, in reinstating the Ford car portion of
the interlocutory judgment for CTR without consideration of this
distinction, appears to have held Aro liable in respect of
replacement fabrics sold for the 1952-1954 Ford cars not only
before
Page 377 U. S. 496
July 21, 1955, but also after that date and -- so long as the
cars remain on the road -- up to the present and into the
future.
CTR's argument in support of this result emphasizes that the
agreement, in terms, ran in favor only of Ford and Ford's
customers, and not of third parties like Aro, and that it expressly
excepted "replacement top fabrics" from the scope of the rights it
granted. Reliance is also placed on testimony that the amount to be
paid by Ford under the agreement was set as low as $73,000 only
because of a clear understanding between the parties that such
payment would not affect AB's rights to recover from persons in the
position of Aro. [
Footnote
12] CTR thus argues:
"If the Ford agreement had never been made at all, it is clear
that it would have been proper to require that Aro pay royalties,
insofar as infringing Ford cars are concerned, even up to the
present time. This being the case, it is clear that it was proper
for the agreement to expressly recognize and to expressly exclude
Aro's liability from its terms. Since Ford refused to purchase any
rights for Aro, either before or after July 21, 1955, Aro is liable
for its Ford repair activities both before and after that
date."
Insofar as replacement fabrics sold "after that date" are
concerned, we do not agree. We think the agreement's attempt to
reserve rights in connection with future sales of replacement
fabrics was invalid. By the agreement,
Page 377 U. S. 497
AB authorized the Ford car owners, in return for a payment from
Ford, to use the patented top structures from and after July 21,
1955. Since they were authorized to use the structures, they were
authorized to repair them so as "to preserve [their] fitness for
use. . . ."
Aro I, 365 U.S. at
365 U. S. 345,
quoting
Leeds & Catlin Co. v. Victor Talking Machine
Co., 213 U. S. 325,
213 U. S. 336.
The contrary provisions in the agreement, purporting to restrict
the right of use and repair by prohibiting fabric replacement
unless done with fabrics purchased from Ford or some other
licensee, stand condemned by a long line of this Court's decisions
delimiting the scope of the patent grant. When the patentee has
sold the patented article or authorized its sale, and has thus
granted to the purchaser an "implied license to use," it is clear
that he cannot thereafter restrict that use; "so far as the use of
it was concerned, the patentee had received his consideration, and
it was no longer within the monopoly of the patent."
Adams v.
Burke, 17 Wall. 453,
84 U. S. 456.
In particular, he cannot impose conditions concerning the
unpatented supplies, ancillary materials, or components with which
the use is to be effected.
E.g., Carbice Corp. of America v.
American Patents Development Corp., 283 U. S.
27;
Mercoid Corp. v. Mid-Continent Investment
Co., 320 U. S. 661;
United States v. Loews, Inc., 371 U. S.
38,
371 U. S. 46. It
follows that here, where the patentee has, by the Ford agreement,
explicitly authorized the purchasers to use the articles, the
patentee cannot thereafter restrict that use by imposing a
condition that replacement parts may be purchased only from a
licensed supplier.
With the restriction thus eliminated from consideration, it is
clear that Aro cannot be liable for contributory infringement in
connection with sales of replacement fabrics made after July 21,
1955. After that date, the Ford car owners had authority from the
patentee -- indeed, had
Page 377 U. S. 498
a "license" [
Footnote 13]
-- fully to use and repair the patented structures. Hence, they did
not commit direct infringement under § 271(a) when they had the
fabrics replaced; hence, Aro, in selling replacement fabrics for
this purpose, did not commit contributory infringement under §
271(c). The case as to the post-agreement sales is thus squarely
ruled by
Aro I. It was held there, despite AB's attempt to
reserve the right to license sales of replacement fabrics, that
General Motors car owners, who were authorized to use the patented
structures by virtue of the license granted General Motors by AB,
performed nothing more than "permissible repair" when they replaced
the worn-out fabrics, and hence that there was no direct
infringement by the owners to which Aro, by selling the replacement
fabrics, could contribute. In other words, since fabric replacement
was "repair," rather than "reconstruction," it was merely an aspect
of the use of the patented article, and was thus beyond the
patentee's power to control after the use itself had been
authorized. So here, the Ford car owners were authorized to use the
patented structures after July 21, 1955, by virtue of the agreement
between AB and Ford. Hence, they were likewise entitled, despite
AB's attempt to reserve this right, to perform the "permissible
repair" of replacing the worn-out fabrics; hence, just as in
Aro I, the car owners, by replacing the fabrics, committed
no direct infringement to which Aro's sales could contribute.
"[I]f the purchaser and user could not be amerced as an
infringer certainly one
Page 377 U. S. 499
who sold to him . . . cannot be amerced for contributing to a
nonexistent infringement."
Aro I, 365 U.S. at
365 U. S.
341.
CTR would have it that this result is inconsistent with
Birdsell v. Shaliol, 112 U. S. 485, and
Union Tool Co. v. Wilson, 259 U.
S. 107. In our view, it is not.
Birdsell
allowed the patentee to hold one infringer liable for use of the
patented machines after obtaining a judgment against another
infringer for the manufacture and sale of the same machines;
Union Tool held infringement to exist where the defendant,
after being held liable for the manufacture and sale of certain
infringing machines, sold spare parts for use in the same machines.
Both cases turned upon the fact that the patentee had not collected
on the prior judgment, and thus had not received any compensation
for the infringing use -- or, indeed, any compensation at all.
[
Footnote 14] Here, in
contrast, the amount paid by Ford under the agreement was expressly
stated to include compensation for the use of the patented
structures by Ford's purchasers; moreover, the agreement covered
future use, and, in this respect, operated precisely like a
license, with the result that, after the agreement date, there was
simply no infringing use for which the patentee was entitled to
compensation.
See Birdsell v. Shaliol, supra, at
112 U. S. 487.
In sum, AB obtained its reward for the use of the patented
structures under the terms of the agreement with Ford; CTR cannot
obtain from Aro here another reward for the same use.
Page 377 U. S. 500
We therefore hold, in agreement with the District Court's
original view, that Aro is not liable for replacement fabric sales
[
Footnote 15] made after
July 21, 1955. Insofar as the judgment of the Court of Appeals
imposes liability for such sales, it is reversed. [
Footnote 16]
III
[
Footnote 17]
Turning to the question of replacement fabric sales made before
July 21, 1955, we agree with the District Court that the agreement
between AB and Ford did not negative Aro's liability for these
sales. With respect to the post-agreement sales, the agreement
necessarily absolved Aro of liability, its intention to the
contrary notwithstanding, because it had the effect of precluding
any direct infringement to which Aro could contribute. With respect
to the pre-agreement sales, however, Aro's contributory
infringement had already taken place at the time of the agreement.
Whatever the agreement's effect on the amount recoverable from Aro
-- a matter to be discussed in
377 U. S. in
the teeth of its contrary language and intention, to have erased
the extant infringement.
It is true that a contributory infringer is a species of joint
tortfeasor, who is held liable because he has contributed with
another to the causing of a single harm to the plaintiff.
See
Wallace v. Holmes, 29 Fed.Cas. 74, 80 (No. 17,100)
(C.C.D.Conn.1871);
Thomson-Houston Elec. Co. v. Ohio Brass Co.,
supra, 80 F. at 721; Rich,
Page 377 U. S. 501
21 Geo.Wash.L.Rev. 521, 525 (1953). It is also true that, under
the old common law rule, a release given to one joint tortfeasor
necessarily released another, even though it expressly stated that
it would have no such effect.
See Prosser, Torts (2d ed.
1955) at 243-244. Under this rule, Aro's argument on this point
would prevail, since the agreement did release Ford's purchasers
for their infringing use of the top structures before the agreement
date, and that was the use to which Aro contributed.
See Schiff
v. Hammond Clock Co., 69 F.2d 742, 746 (C.A.7th Cir.1934),
reversed for dismissal as moot, 293 U.S. 529. But the rule
is not applicable. Even in the area of nonpatent torts, it has been
repudiated by statute or decision in many if not most States,
see Prosser,
supra, at 245, and by the
overwhelming weight of scholarly authority.
E.g., American
Law Institute, Restatement of Torts (1939), § 885(1) and Comments
b-
d. And application of the rule to contributory
infringement has been rejected by this Court. In
Birdsell v.
Shaliol, supra, at
112 U. S. 489,
the Court applied to a patent case the proposition that,
"By our law, judgment against one joint trespasser, without full
satisfaction, is no bar to a suit against another for the same
trespass."
What is true of a judgment is true of a release.
See
Prosser,
supra, at 241-244. A release given a direct
infringer in respect of past infringement, which clearly intends to
save the releasor's rights against a past contributory infringer,
does not automatically surrender those rights. Thus, the District
Court was correct in denying that "defendants are entitled to the
fortuitous benefit of the old joint tortfeasor rule." The mere fact
that the agreement released Ford and Ford's customers for their
past infringement does not negate Aro's liability for its past
infringement. Hence, the judgment of the Court of Appeals, insofar
as it relates to Ford car replacement fabric sales made by Aro
before July 21, 1955 -- and subject to
Page 377 U. S. 502
the reservation set forth at pp.
377 U. S.
488-491, supra, with respect to sales made before
January 2, 1954 -- is affirmed; accordingly, the case is remanded
to the District Court for a determination of damages and for such
other proceedings as that court deems appropriate.
IV
[
Footnote 18]
The case must now be remanded for a determination of the damages
to be recovered from Aro in respect of the infringing pre-agreement
sales. It is true that the lower courts have not yet expressly
addressed themselves to the damages issue, and that the parties
have not argued it here. Nevertheless, it appears that all
concerned in this litigation have shared a specific assumption as
to the measure of damages that would be available to CTR if it
succeeded in establishing infringement. Because we sharply disagree
with that assumption, and because expression of our views may
obviate the need upon remand for lengthy proceedings before a
master in this already over-long litigation, we deem it in the
interest of efficient judicial administration to express those
views at this time. In brief, it is or opinion that the Ford
agreement, while it does not negate Aro's liability for the prior
sales as it does for the subsequent ones, does have the effect of
limiting the amount that CTR can recover for the pre-agreement
infringement, and probably of precluding recovery of anything more
than nominal damages.
If the sum paid by Ford for the release of it and its customers
constituted full satisfaction to AB for the infringing use of the
patented structures, we think it clear that CTR cannot now collect
further payment from Aro
Page 377 U. S. 503
for contributing to the same infringing use. The rule is
that
"Payments made by one tortfeasor on account of a harm for which
he and another are each liable, diminish the amount of the claim
against the other whether or not it was so agreed at the time of
payment and whether the payment was made before or after judgment.
. . ."
Restatement of Torts,
supra, § 885(3). It has been said
that "all courts are agreed" upon such a rule. Prosser,
supra, at 246. And its applicability to contributory
infringement cases has been clearly indicated by this Court.
Birdsell v. Shaliol, supra, at
112 U. S.
488-489;
see Hazeltine Corp. v. Atwater Kent Mfg.
Co., 34 F.2d 50, 52 (D.C.E.D.Pa.1929). Indeed, if "actual
damages" or "full compensation" paid by a maker and seller can have
the effect of releasing a user, as was indicated in
Birdsell, such a result should follow
a fortiori
where, as here, the damages paid were expressly stated to be
compensation for use of the device, and the person subsequently
sued is a contributory infringer liable merely for contributing to
the same infringing use. In such a case, full payment by or on
behalf of the direct infringer leaves nothing to be collected from
the contributory infringer. We therefore find it necessary to
consider whether the payment by Ford to AB constituted full payment
for the infringing use committed directly by Ford's purchasers and
contributorily by Aro.
This depends upon the measure and total amount of recovery to
which CTR and AB are entitled. In particular, if they are entitled
to recover a royalty from Aro on the infringing sales of
replacement fabrics, it is clear that no such recovery was included
in the payment from Ford, whose representatives
"weren't interested in buying any sort of a release or license
or anything else that
Page 377 U. S. 504
would help out these replacement top people."
See note 12
supra. CTR does contend, and all involved in this
litigation have apparently assumed, that a judgment holding Aro
liable for contributory infringement will result in recovery of
such a royalty on Aro's sales. [
Footnote 19] This is the assumption with which we
disagree. It is our view that, despite our affirmance of the
judgment against Aro as to sales made before the agreement date, no
such royalty will be available to CTR as part of its recovery. We
are, indeed, doubtful that CTR can properly be allowed recovery of
anything more than nominal damages from Aro.
The measure of recovery for patent infringement is governed by
35 U.S.C. § 284, which provides:
"Upon finding for the claimant, the court shall award the
claimant damages adequate to compensate for the infringement, but
in no event less than a reasonable royalty for the use made of the
invention by the infringer, together with interest and costs as
fixed by the court."
"When the damages are not found by a jury, the court shall
assess them. In either event, the court may increase the damages up
to three times the amount found or assessed."
It is presumably the language "in no event less than a
reasonable royalty" that has led to the assumption noted
Page 377 U. S. 505
above. But that assumption ignores the fact -- clear from the
language, the legislative history, and the prior law -- that the
statute allows the award of a reasonable royalty, or of any other
recovery, only if such amount constitutes "damages" for the
infringement. It also ignores the important distinction between
"damages" and "profits," and the relevance of this distinction to
the 1946 amendment of the statute.
"In patent nomenclature, what the infringer makes is 'profits,'
what the owner of the patent loses by such infringement is
'damages.'"
Duplate Corp. v. Triplex Safety Glass Co., 298 U.
S. 448,
298 U. S. 451.
Profits and damages have traditionally been all-inclusive as the
two basic elements of recovery. Prior to 1946, the statutory
precursor of the present § 284 allowed recovery of both amounts,
reading as follows:
"[U]pon a decree being rendered in any such case for an
infringement, the complainant shall be entitled to recover, in
addition to the profits to be accounted for by the defendant, the
damages the complainant has sustained thereby. . . ."
R.S. § 4921, as amended, 42 Stat. 392. By the 1946 amendment,
Act of August 1, 1946, c. 726, § 1, 60 Stat. 778, 35 U.S.C. (1946
ed.), §§ 67, 70, the statute was changed to approximately its
present form, whereby only "damages" are recoverable. [
Footnote 20] The purpose of the
change was precisely to eliminate the recovery of profits as such,
and allow recovery of damages only.
"The object of the bill is to make the basis of recovery in
patent infringement suits general damages, that is, any damages the
complainant can
Page 377 U. S. 506
prove, not less than a reasonable royalty, together with
interest from the time infringement occurred, rather than profits
and damages."
H.R.Rep.No.1587, 79th Cong., 2d Sess. (1946), to accompany H.R.
5311 at 1-2; S.Rep.No.1503, 79th Cong., 2d Sess. (1946), to
accompany H.R. 5311 at 2. [
Footnote 21] There can be no doubt that the amendment
succeeded in effectuating this purpose; it is clear that, under the
present statute, only damages are recoverable.
See, e.g.,
Ric-Wil Co. v. E. B. Kaiser Co., 179 F.2d 401, 407 (C.A. 7th
Cir. 1950),
cert. denied, 339 U.S. 958;
Livesay Window
Co. v. Livesay Industries, Inc., 251 F.2d 469, 471-472 (C.A.
5th Cir. 1958);
Laskowitz v. Marie Designer,
Inc., 119 F.
Supp. 541, 554-555 (D.C.S.D.Cal.1954); Cullen, 28
J.Pat.Off.Soc. 838 (1946); Wolff, 28 J.Pat.Off.Soc. 877 (1946).
The 1946 amendment is of crucial significance to the total
amount of CTR's recovery against Aro, and hence to the amount, if
any, that may still be recovered after receipt of the payment from
Ford. When recovery of the infringer's profits, as such, was
allowed, the rule was that "complainant's damages are no criterion
of defendant's profits;" it was "immaterial that the profits made
by the defendant would not have been made by the plaintiff." 3
Walker, Patents (Deller ed. 1937), § 845 at 2186. And, in cases of
joint infringement, this Court was said to have declared the
doctrine that, whereas,
"when the total damage sustained has been paid by one
tortfeasor, the damages cannot be duplicated through a recovery
against another,"
nevertheless,
"every infringer of a patent right may be made to give up
whatever profits he has derived from the infringement, and . . .
one infringer
Page 377 U. S. 507
is not relieved by payment by another infringer, but each is
accountable for the profits which he has received."
Hazeltine Corp. v. Atwater Kent Mfg. Co., supra, 34
F.2d 50, 52. Under such a rule, CTR might well argue that the
payment received from Ford could have no effect in preventing it
from recovering the profits made by Aro -- which might even exceed
the amount of a royalty on Aro's sales.
But the present statutory rule is that only "damages" may be
recovered. These have been defined by this Court as
"compensation for the pecuniary loss he [the patentee] has
suffered from the infringement, without regard to the question
whether the defendant has gained or lost by his unlawful acts."
Coupe v. Royer, 155 U. S. 565,
155 U. S. 582.
They have been said to constitute
"the difference between his pecuniary condition after the
infringement, and what his condition would have been if the
infringement had not occurred."
Yale Lock Mfg. Co. v. Sargent, 117 U.
S. 536,
117 U. S. 552.
The question to be asked in determining damages is
"how much had the Patent Holder and Licensee suffered by the
infringement. And that question [is] primarily: had the Infringer
not infringed, what would Patent Holder-Licensee have made?"
Livesay Window Co. v. Livesay Industries, Inc., supra,
251 F.2d at 471.
Thus, to determine the damages that may be recovered from Aro
here, we must ask how much CTR suffered by Aro's infringement --
how much it would have made if Aro had not infringed. Asking that
question, we may assume first that the agreement of July 21, 1955,
did not exist, and that AB had not collected a cent from Ford. Even
on that assumption, we would find it difficult to see why CTR's
damages should be measured by a royalty on Aro's sales. CTR and AB
were not deprived of such a royalty by Aro's infringement, for they
could not have licensed Aro's sales in any event; they
Page 377 U. S. 508
were denied the right to do so in
Aro I, and would
still be denied it even if they had received no royalties on the
patented combinations themselves. For the right could not be
granted without allowing the patentee to "derive its profit, not
from the invention on which the law gives it a monopoly, but from
the unpatented supplies with which it is used. . . ."
Motion
Picture Patents Co. v. Universal Film Mfg. Co., 243 U.
S. 502,
243 U. S. 517;
Mercoid Corp. v. Mid-Continent Investment Co., supra, at
320 U. S.
666-667. It would be absurd to say that what CTR could
not recover from Aro in
Aro I after it had licensed
General Motors it could recover here if it had stood by and let
Ford infringe -- as it apparently did,
see p.
377 U. S. 511,
infra -- and had then brought suit against Aro before
settling with Ford. The rules prohibiting extension of the patent
monopoly to unpatented elements are not so readily circumvented.
This does not mean, of course, that CTR would have no remedy for
Aro's contributory infringement. It could, in a proper case, obtain
an injunction; it could recover such damages as had actually been
suffered from the contributory infringement by virtue of the
prolongation of the use of the infringing automobiles; it could, in
a case of willful or bad-faith infringement, recover punitive or
"increased" damages under the statute's trebling provision; and it
could perhaps -- we express no view on the question -- recover from
Aro a royalty on Ford's sales of the patented top structures even
though such damages were primarily caused not by Aro's
infringement, but by Ford's, in a case where they could not be
recovered from Ford or Ford's customers. It is difficult to
conceive of any instance, however, in which actual damages could
properly be based on a royalty on sales of an unpatented article
used merely to repair the patented structure.
If CTR thus could not collect a royalty on Aro's sales in the
absence of any payment from Ford, it surely cannot
Page 377 U. S. 509
do so here after AB, in return for $73,000, has released Ford
and Ford's customers from liability for the direct infringement to
which Aro contributed. Are there, indeed, any actual damages that
CTR can recover from Aro after receiving $73,000 from Ford? The
answer depends on whether CTR and AB suffered any loss by Aro's
infringement -- which depends, in turn, on how much they would have
made if Aro had not infringed. But, in view of the merely
contributory nature of Aro's infringement, this leads, in turn, to
the question how much CTR and AB would have made if Ford had not
infringed, for, in that event -- as was held in
Aro I with
respect to the General Motors cars, and as we have held in
377 U. S.
supra, with respect to the post-agreement Ford car sales
-- Aro could not have contributorily infringed. If Ford had not
infringed, AB would have made a royalty on Ford's sales of the
patented top structures -- as it made such a royalty under its
license to General Motors in
Aro I. The amount that would
thus have been received must be compared, however, with the amount
that AB in fact received from Ford. We shall assume for the present
-- although CTR will have an opportunity to disprove the assumption
upon remand -- that the amount received by AB under the agreement
was the same amount it would have received had it licensed Ford in
the first place to produce the same number of convertible tops.
[
Footnote 22] On this
assumption, AB is just as well off now as it would have been if
Ford had never infringed the patent. And since, if Ford
Page 377 U. S. 510
had not infringed, Aro could not have contributorily infringed,
it follows that what CTR and AB would have made if Aro had not
infringed was precisely what they did make by virtue of the Ford
agreement. Their pecuniary position was not rendered one cent worse
by the total infringement to which Aro contributed, and hence they
are not entitled -- on the assumption stated above as to the
payment by Ford -- to anything more than nominal damages from
Aro.
To allow recovery of a royalty on Aro's sales after receipt of
the equivalent of a royalty on Ford's sales, or to allow any
recovery from Aro after receipt of full satisfaction from Ford,
would not only disregard the statutory provision for recovery of
"damages" only, but would be at war with virtually every policy
consideration in this area of the law. It would enable the patentee
to derive a profit not merely on unpatented,
rather than
patented, goods -- an achievement proscribed by the
Motion
Picture Patents and
Mercoid cases,
supra --
but on unpatented
and patented goods. In thus doubling the
number of rewards to which a patentee is entitled "under our patent
law as written,"
see MR. JUSTICE BLACK concurring in
Aro I, 365 U.S. at
365 U. S. 360,
it would seriously restrict the purchaser's long established right
to use and repair an article which he has legally purchased, and
for the use of which the patentee has been compensated.
See Adams v.
Burke, 17 Wall. 453. The patentee could achieve
this result, moreover, by the simple tactic of not licensing or
suing the manufacturer in the first place, but rather standing by
while the direct infringement occurs, thus allowing contributory
infringements to spring up around him, with the result of bringing
within the reach of his monopoly unpatented items that would never
have been there if the manufacturer had been licensed from the
start. And little is sacrificed, for it is almost always possible
to sue or settle with the manufacturer at a later date. This,
Page 377 U. S. 511
in fact, seems to have been the strategy that AB employed here.
It first sent Ford a notice of infringement -- according to the
deposition testimony of AB's own counsel -- in late 1953, "a day or
so after we got the patent." Yet it did nothing to stop Ford's
infringement, and did not settle with Ford until 18 months later,
by which time all the automobiles in question had been
manufactured. In view of the apparently deliberate delay and of the
unquestionably solvent status of the infringer, it indeed seems
unlikely that the amount paid for the release was less than would
have been paid under a license. In any event, the notion is
intolerable that, by such delay, CTR and AB could entitle
themselves to collect from Aro what they could not have collected
had Ford been licensed from the start as General Motors was.
To achieve such a result through use of the contributory
infringement doctrine would be especially ironic in view of the
purpose of that doctrine as set forth in case law and commentary
and as presented to the Congress in urging passage of § 271(c).
That purpose is essentially, as was stated in the earlier versions
of the bill that became § 271(c), "to provide for the protection of
patent rights where enforcement against direct infringers is
impracticable," H.R. 5988, 80th Cong., 2d Sess.; H.R. 3866, 81st
Cong., 1st Sess. At the hearings on § 271(c) itself, Mr. Rich,
see n 6,
supra, explained to the subcommittee that "There may be
twenty or thirty percent of all the patents that are granted that
cannot practically be enforced against direct infringer. . . ."
Hearings,
supra, n 6
at 160. [
Footnote 23] Such a
purpose might have been applicable here if CTR and AB had been
unable to enforce
Page 377 U. S. 512
the patent against Ford (a rather unlikely event), since it
would indeed have been impractical to sue every one of the car
owners. But where the patentee has, in fact, enforced the patent
against so solvent and accessible a direct infringer as Ford, it is
difficult to see why it should then be allowed to invoke the
contributory infringement doctrine -- designed for cases "where
enforcement against direct infringers is impracticable" -- so as to
enforce the patent a second time and obtain a reward that it could
not extract from a direct infringer alone. Whatever the result
might have been under the old "damages and profits" provision, no
such perversion of the congressional purpose is possible within the
rule allowing recovery of "damages" only.
Hence, we think that, after a patentee has collected from or on
behalf of a direct infringer damages sufficient to put him in the
position he would have occupied had there been no infringement, he
cannot thereafter collect actual damages from a person liable only
for contributing to the same infringement. This principle is but an
application of the rule that full satisfaction received from one
tortfeasor prevents further recovery against another. It is
consistent with the Court's opinion in
Birdsell v. Shaliol,
supra, at
112 U. S.
488-489.
See also George Haiss Mfg. Co. v. Link-Belt
Co., 63 F.2d 479, 481 (C.A.3d Cir. 1932);
Buerk v.
Imhaeuser, note 14
supra, 4 Fed.Cas. 597. And it is squarely in accord with a
recent decision of the Court of Appeals for the Second Circuit.
Farrand Optical Co., Inc. v. United States, 325 F.2d 328,
335 (C.A.2d Cir. 1963). Nor is there any authority, even in lower
courts, directly to the contrary. Of the many cases cited by CTR
for the correct proposition that use or repair of an infringing
structure constitutes infringement, relatively few deal at all with
the question of amount of recovery. Some of these, it is true, do
allow recovery on sales of infringing machines and a further
Page 377 U. S. 513
recovery on sales of spare parts for those machines. But they
are all distinguishable; either the parts themselves were patented,
[
Footnote 24] or the
infringing parts supplier had sold the machines as well, and thus
had arguably taken the sales of both machines and parts away from
the patentee, [
Footnote 25]
or the overlapping recovery allowed from the direct and
contributory infringers was one of profits, rather than damages.
[
Footnote 26]
In the
Farrand case,
supra, the payment by the
direct infringer was made under judicial decree, and there could
thus be no question but that it represented full compensation for
the infringing use. Where a private release of past infringement
which does not purport to release others is involved, the adequacy
of the compensation must always be a question of fact. Hence, here,
while it seems unlikely that Ford's payment under the agreement was
any less than would have been paid under a license -- that is,
anything less than full satisfaction to AB for the infringing use
committed directly by Ford's purchasers and contributorily by Aro
-- we think the case must nevertheless be remanded for findings on
the question. We would also allow the lower courts to consider
whether Aro's conduct has been such as to warrant an award of
punitive or increased damages, although we think that very
unlikely.
V
The result is that the judgment of the Court of Appeals is
reversed insofar as it holds Aro liable for contributory
infringement with respect to replacement fabric sales
Page 377 U. S. 514
made after July 21, 1955. The judgment is affirmed insofar as it
holds Aro liable with respect to sales made before that date, but
subject to the reservation based on the knowledge requirement with
respect to sales made before January 2, 1954. The case is remanded
to the District Court for further proceedings consistent with this
opinion.
It is so ordered.
[
Footnote 1]
The "repair versus reconstruction" issue had been the only issue
expressly considered or decided by the Court of Appeals on review
of the District Court's original interlocutory judgment,
see 270 F.2d at 202, and was thus the focal point of the
briefs and arguments here in
Aro I. See, e.g.,
Brief for the United States as
Amicus Curiae at 2-3 and n.
1;
but see Brief for the Respondent at 73-76. That the
Court considered no other issue, and thus dealt only with the
General Motors, and not with the Ford, cars, is evident from its
statement of the "determinative question" as being that of repair
versus reconstruction, 365 U.S. at
365 U. S. 342;
from its failure to consider the body of authority holding that
even repair of an infringing article constitutes infringement; and
from, among other such statements in its opinion,
see id.
at
365 U. S. 344,
365 U. S. 346,
its reliance on the proposition that "a license to use a patented
combination includes the right" to repair it,
id. at
365 U. S. 345
-- a proposition that, of course, was not applicable to the Ford
cars, whose owners had purchased the patented structures from an
unlicensed manufacturer, and thus had no "license to use" them. The
three other opinions in
Aro I were likewise directed
entirely to the issue of repair versus reconstruction, and gave no
attention to the different considerations that would come into play
in the absence of a license from the patentee to the automobile
manufacturer. The concurring opinion of MR. JUSTICE BLACK, for
example, relied on the proposition that "One royalty to one
patentee for one sale is enough under our patent law as written,"
365 U.S. at
365 U. S. 360,
which would seem inapplicable to the situation presented by the
Ford cars, where the patentee had not received any royalty on the
sale of the patented structures.
See also id. at
365 U. S. 354,
365 U. S. 356,
n. 9;
and see the dissenting opinion of MR. JUSTICE
HARLAN, 365 U.S. at
365 U. S. 369
365 U. S. 373.
The concurring opinion of MR. JUSTICE BRENNAN did refer to the
presence in the case of the unlicensed Ford cars; it stated, 365
U.S. at
365 U. S. 368,
that
"the judgment of the Court of Appeals must be reversed, except,
however, as to the relief granted respondent [CTR] in respect of
the replacements made on Ford cars. . . ."
That the author of that opinion did not understand the Court as
having ruled differently on the Ford car question, or as having
ruled on it at all, is shown by the fact that he concurred
generally in the result, rather than concurring in part and
dissenting in part. The Court said nothing to indicate disagreement
with this interpretation of its opinion and decision.
[
Footnote 2]
We also granted Aro's motion for leave to use the record that
was before us in
Aro I, 372 U.S. 958.
CTR has made a Motion to Settle the Record, asking us to declare
that certain items designated for printing by Aro do not comprise a
portion of the record before this Court. We postponed further
consideration of the motion until the hearing of the case on the
merits. 375 U.S. 804. The items in question, which were not
included in the record in
Aro I, consists of certain
requests for admissions and answers thereto, and of materials
involved in an accounting proceeding begun after the original
affirmance by the Court of Appeals but subsequently stayed and
never completed. A motion to strike the same materials from the
record was made by CTR in the course of the second appeal to the
Court of Appeals, and was denied by that court "without prejudice
to renewal in its brief at the oral argument, or upon taxation of
costs." CTR did not renew the motion upon brief or oral argument in
the Court of Appeals, but says that it still intends to do so upon
taxation of costs if costs should ever be taxed against it by the
Court of Appeals. Because of these events in the Court of Appeals,
the motion in this Court is also denied, without prejudice to its
renewal upon taxation of costs in the Court of Appeals.
[
Footnote 3]
This Part of the opinion -- with the exception of the point
discussed at p.
377 U. S. 488
and
note 8 infra --
expresses the views of JUSTICES HARLAN, BRENNAN, STEWART, WHITE,
and GOLDBERG.
[
Footnote 4]
The case will be considered in this Part of the opinion without
reference to the agreement made on July 21, 1955, between Ford and
AB, and thus on the assumption that Ford never obtained any
authority under the patent. The effect of that agreement will be
considered in succeeding Parts of the opinion.
[
Footnote 5]
We have no need to consider whether the car owners, if sued for
infringement by the patentee, would be entitled to indemnity from
Ford on a breach of warranty theory. In fact, they were not sued,
and were released from liability by the agreement between Ford and
AB.
See infra at
377 U. S.
493-495.
[
Footnote 6]
The section was designed to "codify in statutory form principles
of contributory infringement" which had been "part of our law for
about 80 years." H.R.Rep. No. 1923 on H.R. 7794, 82d Cong., 2d
Sess. at 9;
see also Congressman Rogers' statement,
Hearings before Subcommittee No. 3 of House Judiciary Committee on
H.R. 3760, 82d Cong., 1st Sess. at 159:
"Then, in effect, this recodification, particularly as to
section 231 (which became § 271 in the Patent Code of 1952), would
point out to the court at least that it was the sense of Congress
that we remove this question of confusion as to whether
contributory infringement existed at all, and state in positive law
that there is such a thing as contributory infringement, or at
least it be the sense of Congress, by the enactment of this law,
that if you have in the
Mercoid case (
320 U. S.
320 U.S. 661) done away with contributory infringement,
then we reinstate it as a matter of substantive law of the United
States, and that you shall hereafter, in a proper case, recognize
or hold liable one who has contributed to the infringement of a
patent."
"That is the substantive law that we would write if we adopted
this section 231 as it now exists. Is that not about right?"
Mr. Giles S. Rich, now judge of the Court of Customs and Patent
Appeals, then spokesman for proponents of § 271(c), answered that
the statement of the bill's purpose was "very excellent."
Ibid. See also 98 Cong.Rec. 9323, 82d Cong., 2d
Sess., July 4, 1952 (colloquy of Senators Saltonstall and
McCarran).
[
Footnote 7]
Aro's factory manager admitted that the fabric replacements in
question not only were specially designed for the Ford
convertibles, but would not, to his knowledge, fit the top
structures of any other cars.
[
Footnote 8]
This view is held by THE CHIEF JUSTICE and JUSTICES BLACK,
DOUGLAS, CLARK and WHITE.
See the opinion of MR. JUSTICE
BLACK,
post, pp.
377 U. S.
524-528, and of MR. JUSTICE WHITE,
post, p.
377 U. S.
514.
JUSTICES HARLAN, BRENNAN, STEWART and GOLDBERG dissent from this
interpretation of the statute. They are of the view that the
knowledge Congress meant to require was simply knowledge that the
component was especially designed for use in a combination, and was
not a staple article suitable for substantial other use, and not
knowledge that the combination was either patented or infringing.
Their reasons may be summarized as follows:
(1) No other result would have been consistent with the
congressional intention to codify the case law of contributory
infringement as it existed prior to this Court's decision in
Mercoid Corp. v. Mid-Continent Investment Co.,
320 U. S. 661 --
and to do this not only in general,
see note 6 supra, and p.
377 U. S. 492,
infra, but with specific reference to the knowledge
requirement.
See Hearings,
supra, note 6 at 159-160 163-165. Under that case
law, liability was established by a showing that the component was
suitable for no substantial use other than in the patented
combination, since it was
"the duty of the defendant to see to it that such combinations
which it is intentionally inducing and promoting shall be confined
to those which may be lawfully organized."
Thomson-Houston Elec. Co. v. Ohio Brass Co., supra, 80
F. at 720-723.
Accord, Mercoid Corp. v. Mid-Continent
Investment Co., supra, at
320 U. S. 664;
3 Walker, Patents (Deller ed. 1937) at 1764-1765, and cases cited.
See Freedman v. Friedman, 242 F.2d 364 (C.A.4th Cir.
1957).
(2) The House Committee's change in the language of the bill
concerning the knowledge requirement,
see the opinion of
MR. JUSTICE BLACK,
post, pp.
377 U. S.
524-528, was not intended to limit liability to cases
where the alleged contributory infringer had knowledge of the
patented or infringing nature of the combination; it was intended
merely to assure that the statute would be construed to require
knowledge that the article sold was a component of some combination
and was especially designed for use therein, rather than simply
knowledge that the article was being sold.
See, e.g., the
statement of Congressman Crumpacker, Hearings,
supra, at
175, objecting to the original language on the ground that "the way
it is phrased the word
knowingly' refers directly to the word
`sells.'" See also id. at 175-176. While the
representatives of a manufacturing concern and of the Justice
Department did urge the Committee to adopt the position which the
Court now holds it did adopt, none of the Congressmen said anything
to indicate agreement with these views or disagreement with the
contrary view expressed by the spokesman for the sponsors of the
bill. This view, as clearly stated on several occasions at the
Hearings, was that
"[Y]ou know that the component is going into that machine. You
don't have to know that it is patented. You don't have to know the
number of the patent, and you don't have to know that the machine
that it is going into constitutes an infringement."
Id. at 175;
see also id. at 160, 176.
(3) The suggestion that a person cannot be liable even for
direct infringement when he has no knowledge of the patent or the
infringement is clearly refuted by the words of § 271(a), which
provides that "whoever without authority makes, uses or sells any
patented invention . . . infringes the patent," with no mention of
any knowledge requirement. And the case law codified by § 271 has
long recognized the fundamental proposition that,
"To constitute an infringement of a patent, it is not necessary
that the infringer should have known of the existence of the patent
at the time he infringed it or, knowing of its existence, it is not
necessary that he should have known his doings to constitute an
infringement."
3 Walker, Patents (Deller ed. 1937), § 453.
See, e.g.,
United States v. Berdan Fire-arms Mfg. Co., 156 U.
S. 552,
156 U. S. 566;
Sontag Chain Stores Co. v. National Nut Co., 310 U.
S. 281,
310 U. S. 295;
Boyden v.
Burke, 14 How. 575,
55 U. S.
582.
(4) Section 284 of 35 U.S.C., quoted in the opinion of MR.
JUSTICE BLACK,
post, p.
377 U. S. 528,
n. 14, does not require a different conclusion. That section
prevents a patentee from recovering damages for infringement unless
he has marked the patented article with notice of the patent. Since
a patentee may hardly be expected to make the article when it has
not been manufactured or sold by him, but rather by an infringer,
the section has been held not to apply to such a situation.
Wine Ry. Appliance Co. v. Enterprise Ry. Equip. Co.,
297 U. S. 387.
That, of course, is the situation here with respect to the Ford
cars.
[
Footnote 9]
Aro does contend here that recovery by CTR is precluded by
misuse of the patent, and also that such misuse entitles Aro to an
award of treble damages for violation of the antitrust laws.
Although the point was arguably raised by Aro's original answer and
counterclaim, and was decided against Aro in the original opinion
of the District Court, 119 U.S.P.Q. at 122, n. 1, it was
substantially abandoned on the first appeal, and hence was not
ruled on in the first opinion of the Court of Appeals. Accordingly,
this Court's opinion in
Aro I stated that patent misuse
"is not an issue in this case." 365 U.S. at
365 U. S. 344,
n. 10;
see also the dissenting opinion of MR. JUSTICE
HARLAN, 365 U.S. at
365 U. S.
376-377 and n. 5. On remand, after the District Court
had dismissed without prejudice the counterclaim alleging misuse,
the Court of Appeals held that neither the defense based on misuse
nor the counterclaim was in the case, the defense having been
"clearly abandoned" and the counterclaim never having been
adequately pleaded. 312 F.2d at 58. We do not find error in this
ruling, and thus have no occasion to consider Aro's allegations of
patent misuse.
[
Footnote 10]
We have no doubt that § 271(c), as so construed and applied,
within the limitations set forth in the succeeding portions of this
opinion, is constitutional.
[
Footnote 11]
This Part of the opinion expresses the views of JUSTICE BRENNAN,
STEWART, WHITE, and GOLDBERG. MR. JUSTICE HARLAN concurs in the
result.
[
Footnote 12]
Counsel for AB testified on deposition as follows:
"I . . . definitely told them that there were these other
replacement top manufacturers, and that, if we were left in a
position to collect royalty from them, that obviously we could give
Ford a lower rate, and that is what Ford said they wanted, that
they weren't interested in buying any sort of a release or license
or anything else that would help out these replacement top people.
. . ."
[
Footnote 13]
The District Court termed the agreement a "future license" in
this respect, and AB's counsel on more than one occasion referred
to it as a "release or license." It is difficult to see why it
should not be considered a license insofar as it related to future
activity,
see De Forest Radio Tel. & Tel. Co. v. United
States, 273 U. S. 236,
273 U. S. 241,
although, of course, its proper label is less important than its
clear effect of authorizing Ford's purchasers to make full use of
the patented structures.
[
Footnote 14]
In
Birdsell, the Court relied on the fact that only
nominal damages had been awarded in the prior suit. 112 U.S. at
112 U. S. 489.
In
Union Tool, the Court's statement that the patentee had
not "received any compensation whatever for the infringement by use
of these machines," 259 U.S. at
259 U. S. 113,
was apparently based on the fact that the damages and profits
awarded by the prior judgment had not yet been calculated or paid.
See Brief for Respondent at 37, and the opinion of the
Court of Appeals, 265 F. 669, 673 (C.A. 9th Cir. 1920).
Compare
Buerk v. Imhaeuser, 4 Fed.Cas. 597 (No. 2,108)
(C.C.S.D.N.Y.1876), 4 Fed.Cas. 594 (No. 2,107)
(C.C.S.D.N.Y.1876).
[
Footnote 15]
The date of the sale by Aro, rather than the date of the
installation in the car by the purchaser from Aro, should control,
since it is the act of sale that is made contributory infringement
by § 271(c).
[
Footnote 16]
Since Aro's infringement thus terminated in 1955, it would seem
that the perpetual injunction included in the interlocutory
judgment would no longer be a proper element of relief.
[
Footnote 17]
This Part of the opinion, like Part I, expresses the views of
JUSTICES HARLAN, BRENNAN, STEWART, WHITE and GOLDBERG.
[
Footnote 18]
This Part of the opinion expresses the views of JUSTICE BRENNAN,
STEWART, WHITE, and GOLDBERG. MR. JUSTICE HARLAN considers that the
matters here dealt with are not ripe for decision and should be
left for determination in the future course of this litigation.
[
Footnote 19]
AB's counsel asserted on deposition: "I believe we would have
the right to arrive at royalty and otherwise consider as patented
the replacement top. . . ." When asked by the District Court at a
hearing concerning a judgment bond how much he expected to recover,
CTR's counsel replied: "I suppose a reasonable royalty would be 5
per cent." Considerable evidence was introduced before the Master
as to Aro's income from infringing sales and as to royalty rates
fixed in licenses granted by CTR or AB to other replacement fabric
suppliers.
See also the statement of AB's counsel quoted
in
note 12 supra,
and the statement in CTR's brief quoted
supra at
377 U. S.
496.
[
Footnote 20]
In the 1952 codification, §§ 67 and 70 of the 1946 Code were
consolidated in the present § 284. The stated purpose was merely
"reorganization in language to clarify the statement of the
statutes." H.R.Rep. No. 1923, 82d Cong., 2d Sess. at 10, 29.
[
Footnote 21]
See also Hearing before the House Committee on Patents,
79th Cong., 2d Sess., on H.R. 5231 (subsequently amended,
reintroduced, and reported as H.R. 5311), Jan. 29, 1946,
e.g., pp. 2-3.
[
Footnote 22]
No answer was given by AB's counsel to the question how the
$73,000 figure had been arrived at, except to say that it would
have been larger if it had been intended to release contributory
infringers as well. But the fact that paragraph 3 of the agreement
provides for a 5% royalty on replacement tops, as the General
Motors license agreement also apparently did, suggests that the
effective royalty received from Ford for the right to make and sell
the patented top structures was the same as that received from
General Motors.
[
Footnote 23]
See also Thomson-Houston Elec. Co. v. Ohio Brass Co.,
supra, 80 F. 712, 721; Rep.Atty.Gen.Nat.Comm. to Study the
Antitrust laws,
supra, at 252; Rich, 21 Geo.Wash.L.Rev.
521, 542 (1953); Eastman, 48 Mich.L.Rev. 183, 187 (1949); Note, 66
Yale L.J. 132 (1956).
[
Footnote 24]
Reed Roller Bit Co. v. Hughes Tool Co., 12 F.2d 207,
209, 210 (C.A.5th Cir. 1926).
[
Footnote 25]
National Brake & Elec. Co. v. Christensen, 38 F.2d
721 (C.A.7th Cir. 1930);
Graham v. Mason, 10 Fed.Cas. 930
(No. 5,672) (C.C.D.Mass.1872).
[
Footnote 26]
E.g., Conmar Products Corp. v. Tibony, 63 F. Supp.
372, 374 (D.C.E.D.N.Y.1945).
MR. JUSTICE WHITE, concurring.
I agree with my Brother BLACK that the plain language and
legislative history of § 271(c) require the alleged contributory
infringer to have knowledge of the infringing nature of the
combination to which he is contributing a part. Otherwise, I share
MR. JUSTICE BRENNAN's view of this case.
Section 271(a) imposes no comparable requirement of knowledge in
the case of the direct infringer who makes or uses the patented
combination, and § 287 does not say that one who makes or uses
without knowledge is not infringing. It specifies that the
"infringer" is not liable for damages until notice of the
"infringement." In any event, § 287, as my Brother BRENNAN says, is
not applicable here under
Wine Ry. Appliance Co. v. Enterprise
Ry. Equipment Co., 297 U. S. 387,
because the patentee has not manufactured the article and has had
no opportunity to mark it in accordance with § 287.
Here, the patentee gave notice to Aro, and I think it is liable
on Ford tops sold by it after that date, but not before, unless it
had knowledge from other sources. After the notice date, the
knowledge requirement of § 271(c) was satisfied, and the use of
Ford cars by the owners thereof was direct infringement providing
the necessary predicate for contributory infringement under §
271(c).
Page 377 U. S. 515
MR. JUSTICE BLACK, with whom THE CHIEF JUSTICE, MR. JUSTICE
DOUGLAS and MR. JUSTICE CLARK, join, dissenting.
For a number of reasons, I would reverse the judgment and
reinstate the order of dismissal of the District Court.
I
With regret, I find it necessary to disagree with the inferences
the Court draws from the past history of this case. Respondent
Convertible held exclusive rights for Massachusetts in a
combination patent on a convertible automobile top, the combination
consisting of wood or metal supports, a fabric cover, and a
mechanism to seal the fabric against the side of the automobile in
order to keep out weather. None of the elements of the combination
was patented or patentable. During the years in question, General
Motors Corporation and the Ford Motor Company manufactured
automobiles with tops like those described in the patent. General
Motors had a license from Convertible authorizing it to do so. Ford
did not. Petitioner Aro manufactured and sold fabric replacement
covers which were purchased by owners of both General Motors and
Ford cars when the covers originally installed on the cars wore
out. Convertible settled a claim it made against Ford for direct
infringement, and did not sue Ford dealers or Ford car owners. It
maintained also that the individual General Motors and Ford car
owners who replaced their worn-out covers with Aro replacement
covers, by doing so, directly infringed the combination patent.
Convertible did not sue the individual car owners who patched or
replaced the worn-out fabric, but it did bring this suit against
Aro, charging that Aro, by selling the replacement fabric, thereby
helped the individual car owners infringe, and so became liable as
a contributory
Page 377 U. S. 516
infringer under 35 U.S.C. § 271(c). [
Footnote 2/1] The District Court held that the patent
was valid, and that Aro had been guilty of contributory
infringement; it enjoined Aro from further alleged infringements,
and ordered an accounting to determine the damages due Convertible
from Aro's sales of replacement fabrics to owners both of General
Motors and of Ford cars. 119 U.S.P.Q. 122. The Court of Appeals
affirmed the judgment, 270 F.2d 200, and we granted certiorari to
review it. We reversed the judgment.
Aro Mfg. Co. v.
Convertible Top Replacement Co., 365 U.
S. 336. We denied a petition for rehearing or
alternative motion for amendment or clarification in which
Convertible argued that our reversal applied only to replacements
of General Motors, and not Ford, cars. 365 U.S. 890.
When the District Court received the mandate of this Court, it
entered judgment dismissing the complaint on the ground that this
Court's decision and mandate had reversed the prior judgment in its
entirety. But Convertible appealed the dismissal to the Court of
Appeals. That court said:
"The puzzling question is whether the Supreme Court, in
reversing this court, intended to reverse
in toto, or only
to reverse insofar as replacement tops for General Motors cars were
concerned."
312 F.2d 52, 56 (C.A.1st Cir.). Thereupon, the Court of Appeals,
reversing the District Court's action taken in obedience to this
Court's mandate,
Page 377 U. S. 517
held that this Court, when it said "Reversed" at the end of its
opinion, had meant to reverse not the entire judgment, but only
that part of the judgment enjoining Aro from selling replacement
fabrics for General Motors cars, which were made under licenses,
and ordering an accounting for such sales in the past; the Court of
Appeals said that this Court had, in effect, affirmed the earlier
judgment insofar as that judgment concerned replacements for Ford
fabrics. This Court today, in affirming the Court of Appeals'
judgment, says:
"Our decision dealt, however, only with the General Motors, and
not with the Ford, cars."
Ante, p.
377 U. S. 479.
The Court's statement of what we did is, I think, completely
refuted by the record in this case.
The opinion of the Court was delivered by MR. JUSTICE WHITTAKER.
That opinion was joined by THE CHIEF JUSTICE, MR. JUSTICE BLACK,
MR. JUSTICE DOUGLAS, and MR. JUSTICE CLARK. The grounds for the
Court's opinion, as I shall point out, applied alike to the repair
of Ford cars which had originally been sold by the manufacturer
without a license from Convertible and to General Motors cars that
had been sold with such a license. MR. JUSTICE BRENNAN, however,
dissented from the grounds of the Court's opinion, although he
concurred in the judgment of reversal "except, however, as to the
relief granted respondent in respect of the replacements made on
Ford cars before July 21, 1955." 365 U.S. at
365 U. S. 368.
MR. JUSTICE HARLAN, joined by Justices Frankfurter and STEWART,
dissented from the Court's opinion and from its judgment in its
entirety. 365 U.S. at
365 U. S. 369.
His grounds for dissenting from the Court's opinion were
substantially the same as those of MR. JUSTICE BRENNAN. [
Footnote 2/2]
Page 377 U. S. 518
The difference between MR. JUSTICE HARLAN's dissent and MR.
JUSTICE BRENNAN's opinion concurring in the Court's judgment
"except . . . as to the relief granted . . . in respect of the
replacements made on Ford cars" was a very minor one: both agreed,
contrary to what the Court decided, that a person could be held
liable for contributory infringement of a combination patent, even
though he furnished a replacement for only a part of the
combination, if the part replaced was important enough for the
substitution to amount to "reconstruction," rather than merely
"repair," of the device; MR. JUSTICE BRENNAN, however, believed
that the question whether there had been a "reconstruction" was for
this Court to decide as a matter of law, and that there had not
been a "reconstruction" here, while MR. JUSTICE HARLAN said that
the trial court's findings that there had been a "reconstruction"
were decisive.
The difference in the approach of JUSTICES HARLAN and BRENNAN
from that of Mr. Justice Whittaker, writing for the Court, is
responsible, as I read the record, for the fact that, while the
Court reversed the former judgment in its entirety, MR. JUSTICE
BRENNAN was willing to reverse it only as to replacement fabrics
sold for General Motors cars. MR. JUSTICE BRENNAN believed that,
since the licensed General Motors cars, as built, did not directly
infringe the patent, and Aro contributed to what did not amount to
a "reconstruction" of them, Aro, as to them, was not a contributory
infringer; the Ford cars, however, were built by the manufacturer
without a license from Convertible, so Ford and the purchasers who
used its cars were allegedly direct infringers, and, since Aro
helped Ford owners continue to use infringing tops, it was a
contributory infringer even though the replacement covers did not
"reconstruct" the tops. The Court, however, in Mr. Justice
Whittaker's opinion, rejected completely the notion that there
could ever be, within the meaning of
Page 377 U. S. 519
§ 271(c), any contributory infringement -- whether based on a
finding of "reconstruction" or on some other theory -- in a case
like this one, where the patent was merely a combination patent and
the party which was sued for infringement had sold replacements for
only a part of the combination. The Court's opinion relied on the
fact that the fabric Aro used was not itself patented, that
Convertible had made no claim to invention based on the fabric or
its shape, pattern or design, and that a combination patent gave
its owner a monopoly on nothing but the combination as a whole,
since, Mr. Justice Whittaker said,
"if anything is settled in the patent law, it is that the
combination patent covers only the totality of the elements in the
claim, and that no element, separately viewed, is within the
grant."
365 U.S. at
365 U. S. 344.
The effect of the Court's holding was that, since the top fabric
was not itself patented, Convertible could not extend its monopoly
privileges regarding the combination as a whole to the unpatented
fabric cover part of the top. Obviously, this holding of the Court,
and the reasons Mr. Justice Whittaker gave for it, did not depend
on whether the fabric was used on a Ford or on a General Motors
car.
Mr. Justice Whittaker and the four members of the Court who
joined him were, of course, familiar with the alleged distinction
which Convertible tried to draw between its rights with reference
to the General Motors licensed cars, on the one hand, and the Ford
unlicensed cars, on the other. The district judge, in his opinion,
drew the distinction, [
Footnote
2/3] Convertible's brief in this Court drew the distinction,
[
Footnote 2/4] and MR. JUSTICE
BRENNAN drew the
Page 377 U. S. 520
distinction in his opinion by concurring in the Court's judgment
with respect to replacement fabrics for General Motors cars, but
dissenting with respect to those for Ford cars. It is apparent,
therefore, that, to the majority who joined in Mr. Justice
Whittaker's opinion, the asserted distinction was simply
irrelevant, since Convertible, as the holder of a combination
patent, could under no circumstances prevent others from making and
supplying unpatented and unpatentable replacement parts for any
element of the combination. The Court's opinion by Mr. Justice
Whittaker made it crystal clear that the Court was holding that,
with respect to combination patents like the one here,
"No element, not itself separately patented, that constitutes
one of the elements of a combination patent is entitled to patent
monopoly, however essential it may be to the patented combination
and no matter how costly or difficult replacement may be."
365 U.S. at
365 U. S.
345.
Finally, the Court did not conclude its opinion with the words
"reversed in part and affirmed in part," as it would have done if,
like MR. JUSTICE BRENNAN, it had accepted Convertible's asserted
distinction. The order in the opinion by Mr. Justice Whittaker was
simply, "
Reversed," which meant "
Reversed," not
"
Reversed in part and affirmed in part."
If all this could have left any doubt that the Court reversed
the judgment of the Court of Appeals in its entirety, rather than
in part only, that doubt would certainly have been removed by the
action taken on Convertible's petition for rehearing or alternative
motion for amendment or clarification of the Court's judgment. This
motion specifically pointed out the alleged distinction between
Convertible's rights with respect to Aro's replacement
Page 377 U. S. 521
fabrics for the two kinds of cars. The Court denied the motion
and the petition for rehearing, 365 U.S. 890, and, in so doing,
rejected precisely the same argument [
Footnote 2/5] which today's Court is now accepting.
Since the motion and petition for rehearing were rejected, five
Justices must have found Convertible's arguments without merit. At
that time, April 17, 1961, Mr. Justice Whittaker was still a member
of the Court. It can be assumed that there were four votes for
rehearing -- those of MR. JUSTICE BRENNAN, who had not joined the
Court's judgment with reference to the fabric replacements for Ford
cars, and of MR. JUSTICE HARLAN, Mr Justice Frankfurter, and MR.
JUSTICE STEWART, who had dissented from the Court's opinion in its
entirety. Four votes could not grant the motion or the petition for
rehearing, but five votes -- those of MR. JUSTICE HARLAN, MR.
JUSTICE BRENNAN, MR. JUSTICE STEWART, MR. JUSTICE WHITE, and MR.
JUSTICE GOLDBERG -- now reverse the earlier rulings of this Court.
This is, of course, permissible, but there is no reason why today's
action in departing from the prior holding should also be pointed
to as, in the words the Court of Appeals used to describe our
previous opinion, a "puzzling question."
Compare 79 U.
S. 12 Wall. 457, overruling
Hepburn v.
Griswold, 8 Wall. 603. As to the merits of today's
departure from our prior holding, I think that the old majority was
right, and the new majority is wrong, for all of the reasons set
out in Mr. Justice Whittaker's opinion for the Court and in my
concurring opinion, 365 U.S. at
365 U. S.
346.
Page 377 U. S. 522
II
The Court now holds that, although the fabric used on these car
tops was unpatented and clearly unpatentable, the combination
patentee nevertheless is free to expand its monopoly beyond the
patent's boundaries through preventing the sales of that single
element, the unpatented fabric. The new majority relies largely on
35 U.S.C. § 271(c), as did MR. JUSTICE HARLAN, Mr. Justice
Frankfurter, MR. JUSTICE STEWART and MR. JUSTICE BRENNAN the first
time this case was here. As I said, I am satisfied with the answers
given to the new majority's interpretation of § 271(c) by what was
said in Mr. Justice Whittaker's opinion for the Court and in my
concurrence. But since the new majority is now giving Convertible a
legal monopoly over the unpatented fabric cover, I find it
necessary to reach the constitutional question urged by Aro.
Article I, § 8 of the Constitution gives Congress the power
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."
The granting of patent monopolies under this constitutional
authority represents a very minor exception to the Nation's
traditional policy of a competitive business economy, such as is
safeguarded by the antitrust laws. When articles are not
patentable, and therefore are in the public domain, as these fabric
covers were, to grant them a legally protected monopoly offends the
constitutional plan of a competitive economy free from patent
monopolies except where there are patentable "Discoveries." And the
grant of a patent monopoly to the fabrics can no more be justified
constitutionally by calling their sale by competitors "contributory
infringement" than by giving it an other label.
Cf. Compco
Corp. v. Day-Brite Lighting, Inc., 376 U.
S. 234;
Sears, Roebuck & Co. v. Stiffel
Co., 376 U. S. 225.
Page 377 U. S. 523
III
The Court holds, quite properly I think, that a patentee can get
only one recovery for one infringement, no matter how many
different persons take part in the infringement. In this case Ford,
allegedly a direct infringer of the Convertible patent, made a
settlement with Convertible for all past infringements in making
its cars and obtained a license to use the patent in the future.
The Court holds that, while there can be only one recovery for the
alleged infringement which Ford turned loose on the trade,
Convertible should nevertheless have an opportunity to try to
prove, if it can, that it settled with Ford for less than the full
amount of its damages. This, I think, brings about an unjust result
which the patent law does not compel. Here Ford, the principal
infringer, obtained a complete release from all damages for its
infringement, and I would hold that innocent purchasers of Ford
cars containing the infringing devices are entitled to be released
just as Ford has been. There is considerable merit and fairness in
the idea that completely releasing from liability one of several
persons, all of whom are obligated to another, releases them all.
This is particularly so in the area of patent law, where the
doctrine of contributory infringement is rested on the belief that
a direct infringer may sometimes be collection-proof, and that, in
such a situation, the patentee should be given a chance to collect
its damages from a more solvent company which knowingly aided the
infringement. The original infringement, if there was infringement
here, [
Footnote 2/6] was Ford's.
Fairness would require that, if recovery can be had from the chief
wrongdoer, here, Ford, the first obligation of the injured person
is to try to hold Ford completely
Page 377 U. S. 524
responsible. This should be particularly true in instances like
this, where one company infringes a patent and sells goods which
enter into the channels of trade throughout the Nation, thereby
subjecting an untold number of innocent dealers, future purchasers,
and even repairmen to damages. The statutory right to sue for
infringement -- involving treble damages, punitive damages,
attorney's fees, etc. -- should not be construed in a way that
permits unnecessary harassment of people who have bought their
goods in the open market place. I can think of nothing much more
unfair than to visit the infringement sins of a large manufacturer
upon the thousands of ultimate purchasers who buy or use its
goods.
IV
For the foregoing reasons, I believe that Aro should not be held
liable for any damages at all, and that the District Court should
be ordered to dismiss the case. A majority of the Court, however,
remands the case for determination of whether and to what extent
Aro is liable for damages. Whether Aro is liable for any damages at
all depends on whether it and the persons to whose infringement Aro
is alleged to have contributed can be held liable for damages even
though they may have had no knowledge that a patent covered the top
or that their conduct infringed or helped to infringe that patent.
I would hold that, unless there was such knowledge, there can be no
infringement or contributory infringement.
Section 271(c), the section dealing with contributory infringers
(which Aro is alleged to be), provides that whoever sells a
component of a patented combination
"constituting a material part of the invention, knowing the same
to be especially made or especially adapted for use in an
infringement of such patent . . . shall be liable as
Page 377 U. S. 525
a contributory infringer. [
Footnote
2/7]"
Usually the word "knowing" means "knowing," and I am unwilling
to say that, in § 271(c), it means "unknowing." This statute, to
me, means rather plainly that, in order to violate it, one who
sells an article must know that the article is to be used "in an
infringement of such patent," and that it is "especially made or
especially adapted" for that purpose. Furthermore, the legislative
history of the statute confirms this interpretation.
As originally drafted § 271(c) provided:
"Whoever
knowingly sells a component of a patented . .
. combination . . . , especially made or especially adapted for use
in an infringement of such patent . . . shall be liable as a
contributory infringer. [
Footnote
2/8]"
Several times, the House Committee considering the bill was told
that, because of the position of the word "knowingly" in the
section, it was not clear exactly how much a person had to be shown
to have known before he could be held liable as a contributory
infringer. [
Footnote 2/9] Some
witnesses expressed fear that the section might be construed to
mean that a person could be held liable for selling an article even
though he did not know that it was adapted for use in a patented
device and that it would be used in an infringement. [
Footnote 2/10] On the other hand,
advocates of a
Page 377 U. S. 526
broad liability for contributory infringement said that there
should be required only knowledge that an article was to be used in
a particular device -- that a person would be liable as a
contributory infringer even if he did not know of the existence of
any patent and of any likely infringement. [
Footnote 2/11] After hearing both sides, the House
Committee changed the language of the bill to read, as § 271(c) now
provides:
"Whoever sells a component of a patented . . . combination . . .
,
knowing the same to be especially
Page 377 U. S. 527
made or especially adapted for use in an infringement of such
patent . . . shall be liable as a contributory infringer. [
Footnote 2/12]"
Both the House and Senate reports explained that
"This latter paragraph is much more restricted than many
proponents of contributory infringement believe should be the case.
The sale of a component of a patented machine, etc., must
constitute a material part of the invention and must be known to be
especially made or especially adapted for use in the infringement
before there can be contributory infringement. . . . [
Footnote 2/13]"
The House Committee thus attempted to make clear that innocent
persons, who acted without any knowledge that the goods they sold
were adapted for use in the infringement of a patent which they
knew about, could not be held liable as contributory infringers. It
is hard to believe that Congress intended to hold persons liable
for acts which they had no reason to suspect were unlawful, and, as
I have pointed out, the legislative history shows Congress did not.
Therefore I am wholly unwilling to construe the section as meaning
that one who sells an unpatented and unpatentable piece of fabric
to be used to repair an automobile top can be held liable for
treble damages as a contributory infringer even though he had
absolutely no knowledge that there was a patent on the top and that
the top had been sold without a license, and could not, because of
this lack of knowledge, have sold the top "knowing the same to be
especially made or especially adapted for use in the infringement
of such patent."
Furthermore, to justify its result, the Court today, in defining
"contributory infringement," expands the coverage
Page 377 U. S. 528
of § 271(a), which deals with "direct infringement," so as to
make every consumer or repairman who innocently buys or repairs an
unmarked article which infringes a patent liable for damages as a
direct infringer. In order for there to be contributory
infringement, the Court admits, there must be a direct infringement
which the alleged contributory infringer has aided. Here, Ford was
a direct infringer, but Aro sold nothing to Ford. And so, in order
to find a direct infringer who used Aro fabrics, and thereby
justify its result, the Court says that any individual who buys a
product such as an automobile from an infringing manufacturer and
devotes it to his personal use is, without more, liable as a direct
infringer of the patent under § 271(a) -- even though he did not
know that the manufacturer of the product had infringed some
patent, indeed, even though he perhaps did not know what a patent
is.
The Court's interpretation of § 271(a) concerning the lack of
necessity for knowledge before a person can be mulcted in damages
for direct infringement is strangely inconsistent with another
provision of the patent code, 35 U.S.C. § 287, [
Footnote 2/14] which states in unequivocal, easily
understood language that
"no damages shall be recovered by the patentee in any action for
infringement, except
Page 377 U. S. 529
on proof that the infringer was notified of the infringement and
continued to infringe thereafter."
Yet the Court here is holding, with no support in any judicial
precedent, [
Footnote 2/15] and
certainly none in common sense or justice, that innocent consumers
of patented products and those who equally innocently do no more
than repair worn-out parts can be subjected to punitive or treble
damages even though they neither knew nor suspected that any patent
forbade them to buy, use or repair those products. It would be one
thing to require those who sell new inventions for profit to check
the records of the Patent Office. It is quite another to hold, as
the Court now does, that every housewife, plumber, and auto
repairman must do so.
The tremendous burden that the Court's construction of the
patent laws will put on innocent
bona fide dealers in or
purchasers of unpatented products (if Congress does not change the
Court's ruling) cannot be accurately predicted. The number of
patented appliances of various kinds in automobiles is certainly
not small. Just a few of those that have appeared in litigation in
the courts are
Page 377 U. S. 530
windshield sun visors, wheel attachments, drive-shaft bushing
assemblies, automobile heaters and windshield defrosters, steering
stabilizers, shock absorbers, pistons, steering gear checks,
steering wheels, radiator shields, clutch release thrust bearings,
mountings for rear-view mirrors, vacuum-operated gear-shift
mechanisms, spark plug and coil connectors, wire springs for
upholstered seat structures, steering gear idler arms, windshield
wiper blade assemblies, and others. [
Footnote 2/16] After the Court's opinion in this case,
it will certainly behoove purchasers of new or second-hand cars and
repair shops which mend those cars to hire experts, if they can
find them, in order to try to ascertain whether or not any car
which they have bought (maybe on credit from a second-hand dealer)
or are asked to repair is a booby trap waiting to subject them to
suits for infringement by reason of some one of the car's patented
appliances, the name or existence of which the owner of the car may
not even suspect. And automobiles are, of course, not the only
equipment in which ordinary purchasers use patented devices.
Purchasers of homes equipped with modern appliances, as well as
millions of buyers of consumer goods in general, may soon be made
unhappily aware of the broad scope of patent monopolies as
interpreted by this Court. Entrepreneurs in the new corporate
business of suing for infringements (Aro claimed that Convertible
was such a corporation, set up with no other function) may soon
become as common as patents themselves.
Neither the language nor the purpose of the patent laws requires
that they be construed to bring about such threats on so wide a
scale to the free functioning of our business economy and to
purchasers of patented appliances who are wholly innocent of any
intention to infringe patents. I do not believe that, in construing
the patent
Page 377 U. S. 531
laws we should attribute to Congress the purpose of bringing
about such unreasonable, absurd, and wholly unjust results.
Cf.
United States v. American Trucking Assns., Inc., 310 U.
S. 534,
310 U. S.
542-544;
Church of the Holy Trinity v. United
States, 143 U. S. 457,
143 U. S. 459.
I cannot believe that Congress intended to subject to damages
thousands of ultimate consumers who do not know and have no reason
to suspect that lawsuits are lurking in every patented contrivance
concealed somewhere within the hidden recesses of their
automobiles.
I would reverse the judgment of the Court of Appeals and send
the case back to the District Court with instructions to dismiss
it.
[
Footnote 2/1]
"Whoever sells a component of a patented machine, manufacture,
combination or composition, or a material or apparatus for use in
practicing a patented process, constituting a material part of the
invention, knowing the same to be especially made or especially
adapted for use in an infringement of such patent, and not a staple
article or commodity of commerce suitable for substantial
noninfringing use, shall be liable as a contributory
infringer."
66 Stat. 811, 35 U.S.C. § 271(c).
[
Footnote 2/2]
MR. JUSTICE BRENNAN's opinion said:
"My Brother HARLAN's dissent cogently states the reasons why I
also think that is too narrow a standard of what constitutes
impermissible 'reconstruction.'"
365 U.S. at
365 U. S.
362.
[
Footnote 2/3]
119 U.S.P.Q. at 124.
[
Footnote 2/4]
One of Convertible's argument headings read, "The Proposed Rules
of Law Propounded By Aro and the Government Cannot, Under the Facts
of This Case, Extend to Ford Cars." Brief for Respondent,
Aro
Mfg. Co. v. Convertible Top Replacement Co., No. 21, 1960
Term, p. 73. The argument extended over the next several pages.
Id., pp. 73-76.
[
Footnote 2/5]
Respondent's Petition for a Limited Rehearing or, in the
Alternative, Motion for Amendment or Clarification of the Court's
Opinion,
Aro Mfg. Co. v. Convertible Top Replacement Co.,
No. 21, 1960 Term, pp. 1-13. That the replacements for Ford cars
should be treated differently from those for General Motors cars
was the only argument made in the petition and motion.
[
Footnote 2/6]
For discussion of the doubtful validity of this combination
patent,
see my concurring opinion in the former decision
of this case, 365 U.S. at
365 U. S.
350-352.
[
Footnote 2/7]
(Emphasis supplied.)
[
Footnote 2/8]
§ 231(c), H.R. 3760, 82d Cong., 1st Sess. (Emphasis
supplied.)
[
Footnote 2/9]
See e.g., Hearings before Subcommittee No. 3, Committee
on the Judiciary, on H.R. 3760, 82d Cong., 1st Sess., Ser. No. 9,
p. 215.
[
Footnote 2/10]
The chief engineer and chairman of the board of a company which
manufactures instruments to customers' specifications
testified:
"We make a large number of devices and people come to us in the
industry from distant points. . . . When you realize that there are
some 600,000 patents and millions of claims involved under the
present status of the bill, . . . and we become liable as
contributory infringers, you can see it would be impossible for us
to know in all cases whether we infringed or not. . . ."
"'Knowingly sells' will thus become highly controversial, and it
will be construed by various patent lawyers to meet their
particular situation."
Id. at 141-142. When a witness from the Antitrust
Division of the Justice Department raised the same objection, the
following exchange took place:
"[Congressman] BRYSON. It seems to me that, if he sells it at
all, he knows he sells it."
"Mr. FUGATE [of the Justice Department]. He knows he sells it;
but, as in this case that I mentioned, the cutter of the metal
plate according to a special pattern didn't know that it was to be
used in an infringing manner, that it was to be used in a patented
combination."
"[Congressman] ROGERS. Inasmuch as you recognize that the law
still gives a cause of action against the contributor who helps
infringe, would there be any objection on the part of the Justice
Department to clarify that law in definite words, so that there
would not be the confusion that the gentlemen have testified
to?"
Id. at 164-165.
[
Footnote 2/11]
Mr. Giles S. Rich of the National Council of Patent Law
Associations stated:
"'[K]nowingly sells a component of a patented machine' means to
us that you know that the component is going into that machine. You
don't have to know that it is patented. You don't have to know the
number of the patent, and you don't have to know that the machine
that it is going into constitutes an infringement. You just know
its ultimate destination."
Id. at 175.
[
Footnote 2/12]
(Emphasis supplied.)
[
Footnote 2/13]
H.R.Rep. No. 1923, 82d Cong., 2d Sess., p. 9; S.Rep. No. 1979,
82d Cong., 2d Sess., p. 8.
[
Footnote 2/14]
"Patentees, and persons making or selling any patented article
for or under them, may give notice to the public that the same is
patented either by fixing thereon the word 'patent' or the
abbreviation 'pat.', together with the number of the patent, or
when, from the character of the article, this can not be done, by
fixing to it, or to the package wherein one or more of them is
contained, a label containing a like notice. In the event of
failure so to mark, no damages shall be recovered by the patentee
in any action for infringement, except on proof that the infringer
was notified of the infringement and continued to infringe
thereafter, in which event damages may be recovered only for
infringement occurring after such notice. Filing of an action for
infringement shall constitute such notice."
66 Stat. 813, 35 U.S.C. § 287.
[
Footnote 2/15]
The cases which the Court cites as contrary to this view neither
considered nor decided the issue whether innocent persons entirely
unaware that their conduct would either infringe or contribute to
the infringement of a patent can be held liable as direct or
contributory infringers.
Wine Ry. Appliance Co. v. Enterprise
Ry. Equipment Co., 297 U. S. 387,
held that a primary infringer, like Ford here, which ordered
manufactured for itself and which sold for profit a patented door
latch could not escape liability for infringement simply because a
statutory notice of the patent was not marked on the infringing
latches. The Court pointed out that the patentee had never had an
opportunity to attach a notice, because the infringer was producing
the latches without the patentee's knowledge. The situation in the
case before us, involving an asserted liability of consumers of
unmarked goods, rather than a seller of those goods for profit,
does not even remotely resemble that in
Wine. In none of
the other cases relied on was § 287 interpreted or even considered
by the Court.
[
Footnote 2/16]
See 35 U.S.C.A. § 271, n. 139.