The right to make, use and sell an invented article existed
without, and before, the passage of the patent law; the act secured
to the inventor the exclusive right to make, use and vend the thing
patented.
While the patent law should be fairly and liberally construed to
effect the purpose of Congress to encourage useful invention, the
rights and privileges which it bestows should not be extended by
judicial construction beyond what Congress intended.
In framing the patent act and defining the rights and privileges
of patentees thereunder, Congress did not use technical or occult
phrases, but in simple terms gave the patentee the exclusive right
to make, use, and vend his invention for a definite term of
years.
A patentee may not by notice limit the price at which future
retail sales of the patented article may be made, such article
being in the hands of a retailer by purchase from a jobber who has
paid to the agent of the patentee the full price asked for the
article sold.
Henry v. Dick Co., 224 U. S.
1, distinguished.
The patent law differs from the copyright law in that it not
only confers the right to make and sell, but also the exclusive
right to use the subject matter of the patent.
Page 229 U. S. 2
The words "vend" and "vending," as used in § 4952, Rev.Stat., in
regard to the copyright protection accorded authors and as used in
§ 4884, Rev.Stat., in regard to the protection accorded inventors
for their patented articles, are substantially the same, and the
protection intended to be secured to authors and inventors is
substantially identical.
While
Bobbs-Merrll Co. v. Straus, 210 U.
S. 339, recognized that there are differences between
the copyright statute and the patent statute, and disclaimed then
deciding the effect of the word "vending" as used in the latter,
this Court now decides that the terms used in regard to the
protection accorded by both statutes in regard to the exclusive
right to sell are, to all intents, the same.
The right given by the patent law to the inventor to use his
invention should be protected by all means properly within the
scope of the statute, and the patentee may transfer a patented
article with a qualified title as to its use.
Henry v. Dick
Co., 224 U. S. 1.
Where the transfer of the patented article is full and complete,
an attempt to reserve the right to fix the price at which it shall
be resold by the vendee is futile under the statute. It is not a
license for qualified use, but an attempt to unduly extend the
right to vend.
Henry v. Dick Co., 224 U. S.
1, distinguished.
While the patent law creates to a certain extent a monopoly by
the inventor in the patented article, a patentee who has parted
with the article patented by passing title to a purchaser has
placed the article beyond the limits of the monopoly secured by the
act.
Adams v.
Burke, 17 Wall. 453.
The facts, which involve the construction of § 4884, Rev.Stat.,
and the extent of the rights thereunder of patentees to control the
price at which the patented article shall be sold by their vendees,
are stated in the opinion.
Page 229 U. S. 8
MR. JUSTICE DAY delivered the opinion of the Court.
This case is on a certificate from the Court of Appeals of the
District of Columbia. The facts stated in the certificate are:
"Bauer & Cie., of Berlin, Germany, copartners, being the
assignees of letters patent of the United States, dated April 5,
1898, No. 601,995, covering a certain water soluble albumenoid
known as 'Sanatogen,' and the process of manufacturing the same,
about July, 1907, entered into an agreement with F. W. Hehmeyer,
doing business in the City of New York, under the tradename of the
Bauer Chemical Company, whereby Hehmeyer became and has since been
the sole agent and licensee for the sale of said product in the
United States, the agreement contemplating that Hehmeyer should
have power to fix the price of sale to wholesalers or distributors
and to retailers, and to the public. The agreement further
contemplated that said product should be furnished Hehmeyer at
manufacturing cost, the net profits obtained by him to be shared
equally by the parties to the agreement. Since April, 1910, this
product has been uniformly sold and supplied to the trade and to
the public by the appellants and their licensees in sealed packages
bearing the name 'Sanatogen,' the words 'Patented in U.S.A. No.
601,995,' and the following:"
"
Notice to the Retailer"
"This size package of Sanatogen is licensed by us for sale and
use at a price not less than one dollar ($1.00). Any sale in
violation of this condition, or use when so sold, will constitute
an infringement of our patent No. 601,995, under which Sanatogen is
manufactured, and all persons so selling or using packages or
contents will be liable to injunction and damages."
" A purchase is an acceptance of this condition. All
Page 229 U. S. 9
rights revert to the undersigned in the event of violation."
" THE BAUER CHEMICAL CO."
"The appellee is the proprietor of a retail drug store at 904 F
Street, N.W., in this city. He purchased of the Bauer Chemical
Company for his retail trade original packages of said Sanatogen
bearing the aforesaid notice. These packages he sold at retail at
less than $1 and, persisting in such sales, appellants, in March,
1911, severed relations with him. Thereupon appellee, without the
license or consent of the appellants, purchased from jobbers within
the District of Columbia, said jobbers having purchased from
appellants, original packages of said product, bearing the
aforesaid notice, sold said packages at retail at less than the
price fixed in said notice, and avers that he will continue such
sales."
The question propounded is:
"Did the Acts of the appellee in retailing at less than the
price fixed in said notice original packages of 'Sanatogen'
purchased of jobbers, as aforesaid, constitute infringement of
appellants' patent?"
The protection given to inventors and authors in the United
States originated in the Constitution, § 8 of Article I of which
authorizes the Congress
"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."
This protection, so far as inventors are concerned, has been
conferred by an act of Congress passed April 10, 1790, and
subsequent acts and amendments. The Act of 1790, 1 Stat. 109, c. 7,
granted "the sole and exclusive right and liberty of making,
constructing, using, and vending to others to be used, the said
invention or discovery." In 1793, 1 Stat. 318, c. 11, the word
"full" was substituted for the word "sole," and in 1836, 5 Stat.
117, § 5,
Page 229 U. S. 10
c. 357, the word "constructing" was omitted. This legislation
culminated in § 4884 of the Revised Statutes, the part with which
we are dealing being practically identical with the Act of 1870, 16
Stat.198, § 22, c. 230. It provides that every patent shall
contain
"a grant to the patentee, his heirs and assigns, for the term of
seventeen years, of the exclusive right to make, use, and vend the
invention or discovery."
The right to make, use, and sell an invented article is not
derived from the patent law. This right existed before and without
the passage of the law, and was always the right of an inventor.
The act secured to the inventor the
exclusive right to
make, use, and vend the thing patented, and consequently to prevent
others from exercising like privileges without the consent of the
patentee.
Bloomer v.
McQuewan, 14 How. 539,
55 U. S. 549;
Continental Paper Bag Co. v. Eastern Paper Bag Co.,
210 U. S. 405,
210 U. S. 425.
It was passed for the purpose of encouraging useful invention and
promoting new and useful improvements by the protection and
stimulation thereby given to inventive genius, and was intended to
secure to the public, after the lapse of the exclusive privileges
granted, the benefit of such inventions and improvements. With
these beneficent purposes in view, the Act of Congress should be
fairly or even liberally construed; yet, while this principle is
generally recognized, care should be taken not to extend by
judicial construction the rights and privileges which it was the
purpose of Congress to bestow.
In framing the act and defining the extent of the rights and
privileges secured to a patentee, Congress did not use technical or
occult phrases, but in simple terms gave an inventor the exclusive
right to make, use, and vend his invention for a definite term of
years. The right to make can scarcely be made plainer by
definition, and embraces the construction of the thing invented.
The right to use is a comprehensive term, and embraces within its
meaning
Page 229 U. S. 11
the right to put into service any given invention. And Congress
did not stop with the express grant of the rights to make and to
use. Recognizing that many inventions would be valuable to the
inventor because of sales of the patented machine or device to
others, it granted also the exclusive right to vend the invention
covered by the letters patent. To vend is also a term readily
understood, and of no doubtful import. Its use in the statute
secured to the inventor the exclusive right to transfer the title
for a consideration to others. In the exclusive rights to make,
use, and vend, fairly construed, with a view to making the purpose
of Congress effectual, reside the extent of the patent monopoly
under the statutes of the United States.
Bloomer v.
McQuewan, 14 How. 549. We need not now stop to
consider the rights to sell and convey, and to license others to
sell or use inventions, which rights have been the subject of
consideration in the numerous reported cases to be found in the
books. We are here concerned with the construction of the statute
in the aspect and under the facts now presented.
The case presented pertains to goods purchased by jobbers within
the District of Columbia, and sold to the appellee at prices not
stated, and resold by him at retail at less than price of one
dollar fixed in the notice. The question therefore now before this
Court for judicial determination, is: may a patentee, by notice,
limit the price at which future retail sales of the patented
article may be made, such article being in the hands of a retailer
by purchase from a jobber who has paid to the agent of the patentee
the full price asked for the article sold?
The object of the notice is said to be to effectually maintain
prices and to prevent ruinous competition by the cutting of prices
in sales of the patented article. That such purpose could not be
accomplished by agreements concerning articles not protected by the
patent monopoly was settled by this Court in the case of
Dr. Miles
Medical
Page 229 U. S. 12
Co. v. John D. Park & Sons Co., 220 U.
S. 373, in which it was held that an attempt to thus fix
the price of an article of general use would be against public
policy, and void. It was doubtless within the power of Congress to
confer such right of restriction upon a patentee. Has it done so?
The question has not been determined in any previous case in this
Court, so far as we are aware. It was dealt with under the
copyright statute, however, in the case of
Bobbs-Merrill Co. v.
Straus, 210 U. S. 339. In
that case, it was undertaken to limit the price of copyrighted
books for sale at retail by a notice on each book, fixing the price
at one dollar and stating that no dealer was licensed to sell it
for less, and that a sale at a less price would be treated as an
infringement of the copyright. It was there held that the statute,
in securing to the holder of the copyright the sole right to vend
copies of the book, conferred a privilege which, when the book was
sold, was exercised by the holder, and that the right secured by
the statute was thereby exhausted. The court also held that it was
not the purpose of the law to grant the further right to qualify
the title of future purchasers by means of the printed notice
affixed to the book, and that to give such right would extend the
statute beyond its fair meaning and secure privileges not intended
to be covered by the Act of Congress. In that case, it was
recognized that there are differences between the copyright statute
and the patent statute, and the purpose to decide the question now
before us was expressly disclaimed.
Section 4952, Revised Statutes, a part of the copyright act,
secures to an author, inventor, designer, or proprietor of books,
maps, charts, or dramatic or musical compositions the sole liberty
of printing, reprinting, publishing, completing, copying,
executing, finishing, and vending them. While that statute differs
from the patent statute in terms and in the subject matter intended
to be protected, it is apparent that, in the respect involved in
the present
Page 229 U. S. 13
inquiry, there is a strong similarity between and identity of
purpose in the two statutes. In the case of patents, the exclusive
right to vend the invention or discovery is added to the like right
to make and use the subject matter of the grant, and, in the case
of copyrights, the sole right of multiplying and reproducing books
and other compositions is coupled with the similar right of
"vending the same." So far as the use of the terms "vend" and
"vending" is concerned, the protection intended to be secured is
substantially identical. The sale of a patented article is not
essentially different from the sale of a book. In each case, to
vend is to part with the thing for a consideration. It is insisted
that the purpose to be subserved by notices such as are now under
consideration -- keeping up prices and preventing competition -- is
more essential to the protection of patented inventions than of
copyrighted articles, and it is said that the copyrighted article
may be and usually is sold for a lump consideration by the author
or composer, and that he has no interest in the subsequent sales of
the work, while patented inventions require large outlays to create
and maintain a market. To some extent, this contention may be based
upon fact; nevertheless, it is well known that, in many instances,
the compensation an author receives is the royalties upon sales of
his book or a percentage of profits, which makes it desirable that
he shall have the protection of devices intended to keep up the
market and prevent the cutting of prices. But these considerations
could have had little weight in framing the acts. In providing for
grants of exclusive rights and privileges to inventors and authors,
we think Congress had no intention to use the term "vend" in one
sense in the patent act and "vending" in another in the copyright
law. Protection in the exclusive right to sell is aimed at in both
instances, and the terms used in the statutes are to all intents
the same.
It is apparent that the principal difference in the
enactments
Page 229 U. S. 14
lies in the presence of the word "use" in the patent statute and
its absence in the copyright law. An inventor has not only the
exclusive right to make and vend his invention or discovery, but he
has the like right to use it, and when a case comes fairly within
the grant of the right to use, that use should be protected by all
means properly within the scope of the statute. In
Bement v.
National Harrow Co., 186 U. S. 70, the
owner of a patent granted a license to the defendant to manufacture
and sell harrows embodied in the invention covered by the patent.
The license provided for the payment to the licensor by the
licensee of a royalty of one dollar for each harrow or frame sold,
and stipulated that the licensee was not to sell to any person for
a less price than that named, and that the license was subject to
change from time to time. The case was one arising upon license
agreements, originating in a state court, and did not involve the
construction of the patent act in the circumstances now
disclosed.
Chief reliance, however, of the plaintiff in this case, is upon
the recent decision of this Court in
Henry v. Dick Co.,
224 U. S. 1. An
examination of the opinion in that case shows that the restriction
was sustained because of the right to use the machine granted in
the patent statute, distinguishing in that respect the patent from
the copyright act. In that case, a patented mimeograph had been
sold which bore an inscription in the form of a notice that the
machine was sold with the license restriction that it might only be
used with stencil, ink, and other supplies made by the A. B. Dick
Company, the owners of the patent. The alleged infringer sold to
the purchaser of the mimeograph a can of ink suitable for use with
machine, with full knowledge of the restriction, and with the
expectation that the ink sold would be used in connection with the
machine. It is expressly stated in the opinion that the machine was
sold at cost or less, and that the patentee depended upon the
profit realized from the sale
Page 229 U. S. 15
of the nonpatented articles to be used with the machine for the
profit which he expected to realize from his invention (224 U.S.
224 U. S. 26).
After commenting upon the copyright statutes and the resemblance
between the author's right to vend copies of his work and the
patentee's right to vend the patented thing, it was said (p.
224 U. S.
46):
"To the inventor, by § 4884, Revised Statutes, there is granted
'the exclusive right to make,
use and vend the invention
or discovery.' This grant, as defined in
Bloomer v.
McQuewan, 14 How. 539,
55 U. S.
549, 'consists altogether in the right to exclude
everyone from making,
using, or vending the thing
patented.' Thus, there are several substantive rights, and each is
the subject of subdivision, so that one person may be permitted to
make, but neither to sell nor use, the patented thing. To another
may be conveyed the right to sell, but within a limited area, or
for a particular use, while to another the patentee may grant only
the right to make and use, or to use only for specific purposes.
Adams v.
Burke, 17 Wall. 453;
Mitchell v.
Hawley, 16 Wall. 544;
Providence Rubber Co. v.
Goodyear, 9 Wall. 788,
76 U. S.
799."
(Italics in the original opinion.)
That case was distinguished from
Bobbs-Merrill Co. v.
Straus, supra, construing the copyright act, because of the
difference in the terms of the copyright and patent statutes, the
patent act conferring not only the right to make and sell, but the
exclusive right to use the subject matter of the patent. It was
under the right to use that the license notice in question was
sustained, and it is obvious that the notice in that case dealt
with the use of the machine, and limited it to use only with the
paper, ink, and supplies of the manufacture of the patentee. While
the title was transferred, it was a qualified title, giving a right
to use the machine only with certain specified supplies. It was
said in the
Dick case that
"there is no collision whatever between the decision in the
Bobbs-Merrill case and the present opinion. Each rests
upon a
Page 229 U. S. 16
construction of the applicable statute and the special facts of
the cases."
It is contended in argument that the notice in this case deals
with the use of the invention, because the notice states that the
package is licensed "for sale and use at a price not less than one
dollar," that a purchase is an acceptance of the conditions, and
that all rights revert to the patentee in event of violation of the
restriction. But, in view of the facts certified in this case as to
what took place concerning the article in question, it is a
perversion of terms to call the transaction in any sense a license
to use the invention. The jobber from whom the appellee purchased
had previously bought, at a price which must be deemed to have been
satisfactory, the packages of Sanatogen afterwards sold to the
appellee. The patentee had no interest in the proceeds of the
subsequent sales, no right to any royalty thereon, or to
participation in the profits thereof. The packages were sold with
as full and complete title as any article could have when sold in
the open market, excepting only the attempt to limit the sale or
use when sold for not less than one dollar. In other words, the
title transferred was full and complete, with an attempt to reserve
the right to fix the price at which subsequent sales could be made.
There is no showing of a qualified sale for less than value for
limited use with other articles only, as was shown in the
Dick case. There was no transfer of a limited right to use
this invention, and to call the sale a license to use is a mere
play upon words.
The real question is whether, in the exclusive right secured by
statute to "vend" a patented article, there is included the right,
by notice, to dictate the price at which subsequent sales of the
article may be made. The patentee relies solely upon the notice
quoted to control future prices in the resale by a purchaser of an
article said to be of great utility and highly desirable for
general use.
Page 229 U. S. 17
The appellee and the jobbers from whom he purchased were neither
the agents nor the licensees of the patentee. They had the title
to, and the right to sell, the article purchased, without
accounting for the proceeds to the patentee and without making any
further payment than had already been made in the purchase from the
agent of the patentee. Upon such facts as are now presented, we
think the right to vend secured in the patent statute is not
distinguishable from the right of vending given in the copyright
act. In both instances, it was the intention of Congress to secure
an exclusive right to sell, and there is no grant of a privilege to
keep up prices and prevent competition by notices restricting the
price at which the article may be resold. The right to vend
conferred by the patent law has been exercised, and the added
restriction is beyond the protection and purpose of the act. This
being so, the case is brought within that line of cases in which
this Court, from the beginning, has held that a patentee who has
parted with a patented machine by passing title to a purchaser has
placed the article beyond the limits of the monopoly secured by the
patent act.
In
Adams v.
Burke, 17 Wall. 453, Mr. Justice Miller, delivering
the opinion of the Court, pertinently said (p.
84 U. S.
455):
"The vast pecuniary results involved in such cases, as well as
the public interest, admonish us to proceed with care, and to
decide in each case no more than what is directly in issue. . .
."
"The true ground on which these decisions rest is that the sale
by a person who has the full right to make, sell, and use such a
machine carries with it the right to the use of that machine to the
full extent to which it can be used in point of time."
"The right to manufacture, the right to sell, and the right to
use, are each substantive rights, and may be granted or conferred
separately by the patentee. "
Page 229 U. S. 18
"But, in the essential nature of things, when the patentee, or
the person having his rights, sells a machine or instrument whose
sole value is in its use, he receives the consideration for its use
and he parts with the right to restrict that use. The article, in
the language of the court, passes without the limit of the
monopoly. That is to say, the patentee or his assignee having in
the Act of sale received all the royalty or consideration which he
claims for the use of his invention in that particular machine or
instrument, it is open to the use of the purchaser without further
restriction on account of the monopoly of the patentees."
Bloomer v. McQuewan, supra; Goodyear v. Beverly Rubber
Co., 1 Cliff. 348, 354;
Chaffee v. Boston Belting
Co., 22 How. 217,
63 U. S. 223;
Keeler v. Standard Folding Bed Co., 157 U.
S. 659.
Holding these views, the question propounded by the Court of
Appeals will be answered in the negative, and
It is so ordered.
Dissenting: MR. JUSTICE McKENNA, MR. JUSTICE HOLMES, MR. JUSTICE
LURTON, and MR. JUSTICE VAN DEVANTER.