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E. BEMENT & SONS v. NATIONAL H. CO. 186 U. S. 70-95

186 U. S. 70-95, 46 L. Ed. 1058, 22 Sup. Ct. 747, E. BEMENT & SONS v. NATIONAL HARROW CO.

Supreme Court on writ of error from State court is concluded by findings of fact made in suit in equity as well as in action at law.

Approved in Kaufman v. Treadway, 195 U. S. 273, 49 L. Ed. 192, 25 Sup. Ct. 33, questions of fact determined by verdict of jury in State court not open to review in United States Supreme Court; Jenkins v. Neff, 186 U. S. 235, 46 L. Ed. 1142, 22 Sup. Ct. 907, holding finding of fact by State court is conclusive upon Supreme Court; Thayer v. Spratt, 189 U. S. 353, 47 L. Ed. 849, 23 Sup. Ct. 579, holding upon writ of error to State court, Supreme Court cannot review decision on ground that it is against evidence; Chicago etc. Ry. Co. v. Swanger, 157 Fed. 789, and St. Louis etc. R. Co. v. Hadley, 168 Fed. 340, both holding decision of State court reviewable only on writ of error.

Questions considered by Federal Supreme Court in reviewing judgments of State courts. Note, 63 L. R. A. 578.

One sued on contract may set up in defense that it is in violation of act of Congress,

Approved in Continental Wall Paper Co. v. Louis Voight & Sons Co., 212 U. S. 265, 53 L. Ed. 506, 29 Sup. Ct. 280, applying rule in holding void contract in regard to combination of wall paper manufacturers; Waters v. Pearson, 39 App. D. C. 17, married woman may defend action for rent reserved in lease under seal on ground that she contracted as surety in violation of statute.

Distinguished in Larabee Flour Mills Co. v. Missouri Pac. Ry. Co., 85 Kan. 225, 116 Pac. 905, holding fact that plaintiff, seeking damages for wrongful suspension of transfer, was member of unlawful combination did not prevent recovery where service suspended was not necessary part of such combination.

Patent laws are designed to promote progress of useful arts. Approved in National Phonograph Co. v. Schlegel, 128 Fed. 735, 64 C. C. A. 594, upholding contract requiring vendee of patent not to sell below agreed price nor to sell to anyone who would not agree to maintain price; General Electric Co. v. Wise, 119 Fed. 924, holding if patent is valid, owner thereof has right to injunction to protect exclusive enjoyment.

Patentee has exclusive right to use patent; he may reserve it for himself, or suppress it, or permit others to use it.

Approved in Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U. S. 425, 52 L. Ed. 1131, 28 Sup. Ct. 748, holding injunction against infringement of patent could not be denied on ground of owner's nonuser; Brennan & Co. v. Dowagiac Mfg. Co., 162 Fed. 478, 89 C. C. A. 392, holding infringer chargeable with profits made on sales, regardless of whether plaintiff would have made them; Fuller v. Berger, 120 Fed. 277, 65 L. R. A. 381, 56 C. C. A. 588, holding nonuse of patent is no defense

in equity for infringement; Swindell v. Youngstown Sheet & Tube Co., 230 Fed. 442, arguendo.

Sherman Anti-trust Act does not apply to restrictions on sale of patent

rights.

Approved in National Phonograph Co. v. Schlegel, 128 Fed. 735, 64 C. C. A. 594, upholding contract requiring vendee of patent not to sell below agreed price nor to sell to anyone who would not agree to maintain price.

The object of the patent laws is monopoly, and conditions not in nature illegal, imposed by patentee and agreed to by licensee to make, use or sell the article will be upheld. A license agreement for the manufacture and sale of a patented harrow considered and held valid, and not in violation of anti-trust laws.

Approved in Standard Sanitary Mfg. Co. v. United States, 226 U. S. 40, 57 L. Ed. 114, 33 Sup. Ct. 9, holding trade agreement to use patent which controlled output and price of all goods made by users of patent was illegal; Henry v. A. B. Dick Co., 224 U. S. 15, 27, 28, 29, 30, 41, Ann. Cas. 1913D, 880, 56 L. Ed. 651, 655, 656, 657, 663, 32 Sup. Ct. 364, license restriction on sale of patented article that it be used only in connection with certain unpatented articles made by vendor held valid, and breach thereof constituted infringement; Standard Oil Co. v. United States, 221 U. S. 66, 94, Ann. Cas. 1912D, 734, 34 L. R. A. (N. S.) 834, 55 L. Ed. 647, 658, 31 Sup. Ct. 502, upholding decree dissolving Standard Oil Corporation as monopoly; Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 400, 401, 55 L. Ed. 516, 31 Sup. Ct. 376, holding agreements between dealers having purpose of fixing price of medical preparations and destroying competition was void; Cincinnati etc. Packet Co. v. Bay, 200 U. S. 185, 50 L. Ed. 433, 26 Sup. Ct. 208, upholding contract of sale requiring temporary withdrawal of seller; Board of Trade v. Christie Grain etc. Co., 198 U. S. 252, 49 L. Ed. 1040, 25 Sup. Ct. 637, contracts with telephone companies so far as they limit communication of what need not be communicated to anyone, attempt no monopoly; United States v. Motion Picture Patents Co., 225 Fed. 805, 806, holding combination of motion-picture producers and importers, owning various patents used in trade, restricting sale of films to members was invalid under Anti-trust Act; American Graphophone Co. v. Boston Store of Chicago, 225 Fed. 786, 787, 789, holding patentee, on sale of patented article, could by contract require his immediate vendee to observe price restrictions on resale; Ford Motor Co. v. Union Motor Sales Co., 225 Fed. 374, 379, contract held to be one of sale and not of right to sell, and on full payment machine proved beyond power to fix selling price thereafter; Patterson v. United States, 222 Fed. 646, 138 C. C. A. 123, holding patentee had right of making, using and selling patented article and right to exclude others therefrom; United States v. Keystone Watch Case Co., 218 Fed. 514, agreement with jobbers purchasing patented watches as to resale

1103 E. BEMENT & SONS v. NATIONAL H. CO. 186 U. S. 70-95

price upheld, but attempt to fix price for retailer by notice on box is ineffectual; Robert H. Ingersoll & Bro. v. McColl, 204 Fed. 148, 149, restrictions on price of patented watches by notice on box are void; United States v. New Departure Mfg. Co., 204 Fed. 113, upholding indictment under Anti-trust Act charging that feigned licenses were issued by owner of basic patent to defendants for purpose of effectuating plan; Winchester Repeating Arms Co. v. Olmsted, 203 Fed. 495, 121 C. C. A. 615, holding where patented guns were sold under contract for resale at fixed price, dealer with knowledge of such fact selling same, at lower price is chargeable with infringement; In re Kay-Tee Film Exch., 193 Fed. 145, 146, holding maker of moving-picture films under patent, on leasing films. to exchange retained title, and could recover films leased more than four months before bankruptcy of lessee; Darius Cole Transp. Co. v. White Star Line, 186 Fed. 65, 68, 108 C. C. A. 165, sale of business and goodwill with agreement not to compete with purchaser held not within Antitrust Act; Dittgen v. Racine Paper Goods, 181 Fed. 392, holding maker of patented gas tank could, by notice thereon, limit right to refill same to authorized persons; Crown Cork etc. Co. v. Brooklyn Bottle Stopper Co., 172 Fed. 230, and Crown Cork etc. Co. v. Standard Brewery, 174 Fed. 258, both upholding contract of owner of patent with buyer of patented machine that it be used only in connection with articles made by owner; National Fireproofing Co. v. Mason Builders' Assn., 169 Fed. 263, 26 L. R. A. (N. S.) 148, 94 C. C. A. 535, holding agreement, invalid as creating monopoly in restraint of trade, did not give right of action to third persons for injury sustained, or afford ground for enjoining threatened injury; Blount Mfg. Co. v. Yale & Towne Mfg. Co., 166 Fed. 556, 557, 559, holding contract of makers of door checks to limit trade of each to article of his own invention, made to destroy competition, with provision for pooling profits, was in violation of Anti-trust Act; Rubber Tire Wheel Co. v. Milwaukee R. W. Co., 154 Fed. 361, 362, 83 C. C. A. 336, holding requirement by patentee that licensee join with other licensees in pool to control prices of output was not in violation of Antitrust Act; John D. Park & Sons Co. v. Hartman, 153 Fed. 27, 34, 36, 12 L. R. A. (N. S.) 135, 82 C. C. A. 158, holding contracts between maker of medicine by secret formula and dealers therein to maintain retail price, was illegal; Cilley v. United States Shoe Mach. Co., 152 Fed. 729, complaint under Anti-trust Act alleging monopoly by contracts relating to patents for shoe-making machinery held insufficient; Dr. Miles Medical Co. v. Jaynes Drug Co., 149 Fed. 842, upholding contracts to control sale of article manufactured under secret formula; A. B. Dick Co. v. Henry, 149 Fed. 427, 428, one who induces licensee of patented article to violate license restriction is contributory infringer; Robert H. Ingersoll & Bro. v. Snellenberg, 147 Fed. 524, upholding right of patentee to control future sale of patented article; United States Fastener Co. v. Meyers, 145 Fed. 537, fact that article patented has never been manufactured or sold does not justify infringement; Hartman v. John D. Park & Sons Co., 145 Fed.

366, 371, right of patentee to control future trade by contract not derived from statute, but exists by common law; New Jersey Patent Co. v. Schaefer, 144 Fed. 438, violation of provision concerning sale at minimum price, with knowledge of restriction, is infringement; Hadley-Dean Plate Glass Co. v. Highland Glass Co., 143 Fed. 244, 74 C. C. A. 462, contract for sale of glass by combination formed to restrain interstate commerce not invalidated by Anti-trust Act, contract being collateral to combination arrangement; Rubber Tire Wheel Co. v. Milwaukee Rubber Works Co., 142 Fed. 536, 537, determining conditions that attach to patent monopoly; Dr. Miles Medical Co. v. Platt, 142 Fed. 609, 610, in action to prevent infringement, that complainant has entered into unlawful combination to control his patent is immaterial; Hoe v. Miehle Printing etc. Co., 141 Fed. 115, fact that no machine has ever been shown to work successfully under patent does not prevent owner from restraining infringement; Bobbs-Merrill Co. v. Straus, 139 Fed. 190, 192, 193, combination of owners of copyrights to restrain trade and commerce in books, violates Anti-trust Act; Bobbs-Merrill Co. v. Straus, 139 Fed. 170, 179, 180, printed notice placed in copyrighted book by publishers fixing price does not constitute license agreement; Cortelyou v. Chas. Eneu Johnson & Co., 138 Fed. 114, 115, upholding right of patentee to enjoin violation of restrictive agreement as to use of license; Rupp & Wittgenfeld Co. v. Elliott, 131 Fed. 731, 65 C. C. A. 544, owner of patent to fasten buttons on shoes may restrict use of invention to purchasers of wire from him; National Phonograph Co. v. Schlegel, 128 Fed. 735, 64 C. C. A. 594, sustaining contract requiring vendee of patent not to sell below certain price nor to others who would not agree to do likewise; United States Consol. etc. Raisin Co. v: Griffin etc. Co., 126 Fed. 368, 369, 61 C. C. A. 334, upholding contracts by which number of similar patents were conveyed by owner to same person to keep up patent monopoly; Victor Talking Mach. Co. v. The Fair, 123 Fed. 426, 61 C. C. A. 58, holding owner of patent has right to regulate sale price of article and those knowingly violating same are infringers; General Electric Co. v. Wise, 119 Fed. 924, holding violation of Sherman anti-trust law by owner of patent does not justify infringement of patent; Edison Phonograph Co. v. Pike, 116 Fed. 865, 867, sustaining restriction in license that vendee should not sell below certain price nor sell to one who would, violation to forfeit license; Grogan v. Chaffee, 156 Cal. 614, 105 Pac. 747, contract between retailers and manufacturer by secret process to maintain retail price is not void as in restraint of trade; In re Opinion of the Justices, 193 Mass. 611, 613, 616, 81 N. E. 145, 146, 148, holding State had power to prohibit licensees and owners of patents from leasing patented machines, by contract prohibiting lessee from obtaining from others similar machines for same purpose during existence of lease; State v. Creamery Package Mfg. Co., 110 Minn. 436, 136 Am. St. Rep. 514, 126 N. W. 130, quaere, whether patentee has right to extend monopoly of patent by combining with other patentees in violation of statute designed to prevent combinations in

1105 E. BEMENT & SONS v. NATIONAL H. CO. 186 U. S. 70-95

restraint of trade; State v. Duluth Board of Trade, 107 Minn. 534, 23 L. R. A. (N. S.) 1260, 121 N. W. 406, holding rule of Duluth board of trade fixing commissions for trading in grain did not violate State antitrust law; Butterick Pub. Co. v. Rose, 141 Wis. 38, 124 N. W. 649, contract by which agent agrees not to sell any other than patented patterns during life of contract is not in restraint of trade; Clark Co. v. Rice, 127 Wis. 460, 106 N. W. 235, promissory note given on sale of patent right not subject to local restrictions; dissenting opinion in Continental Paper Bag Co. v. Eastern Paper Bag Co., 150 Fed. 744, 747, 80 C. C. A. 407, majority holding that nonuse does not preclude owner from right to protection from infringement; dissenting opinion in Cortelyou v. Chas. Eneu Johnson & Co., 145 Fed. 937, 76 C. C. A. 455, majority holding doctrine of contributory infringement must be confined to articles inducing infringement; State v. Coyle, 7 Okl. Cr. 86, 122 Pac. 259, arguendo.

Distinguished in Bauer v. O'Donnell, 229 U. S. 14, Ann. Cas. 1915A, 150, 50 L. R. A. (N. S.) 1185, 57 L. Ed. 1045, 33 Sup. Ct. 616, holding where transfer of patented article was complete, attempt to reserve right to fix selling price was futile; Bobbs-Merrill Co. v. Straus, 210 U. S. 343, 52 L. Ed. 1090, 28 Sup. Ct. 722, holding notice in copyrighted book that sale at other than specified price will be treated as infringement was ineffectual against one not bound by contract; Cortelyou v. Charles Eneu Johnson & Co., 207 U. S. 199, 52 L. Ed. 168, 28 Sup. Ct. 105, holding aefendant selling ink to vendee of patented printing machine, sold under restriction that it should be used only with ink made by patentee, was not chargeable with contributory infringement, in absence of notice of restriction, if such was valid; Free Sewing Mach. Co. v. Bry-Block Mercantile Co., 204 Fed. 635, holding patentee selling and receiving payment could not fix reselling price by notice on patented article; United States v. Kellogg Toasted Corn Flake Co., 222 Fed. 728, 729, 730, Ann. Cas. 1916A, 78, holding manufacturer could not, under Anti-trust Act, in making absolute sale of its product to jobber, though in patented cartons, control price on sale by jobber, or retailer; United States v. United Shoe Mach. Co., 222 Fed. 354, 356, holding owner and maker of patents for substantially all shoe machinery who leased same to manufacturers for long term was not "combination in restraint of trade"; Waltham Watch Co. v. Keene, 202 Fed. 237, 238, holding maker of patented article selling and receiving full price could not attach to sale contract, condition fixing resale price, so as to make purchaser at lower price an infringer; Fonotipid Limited v. Bradley, 171 Fed. 959, holding agreement of competing manufacturers to maintain prices was not within prohibition of Anti-trust law; Indiana Mfg. Co. v. J. I. Case Threshing Mach. Co., 148 Fed. 23, 25, 28, combination of manufacturers to restrain competition in manufacture and sale of their products not entitled to beneficent rule of patent law; A. B. Dick Co. v. Roper, 126 Fed. 967, holding sale of supplies for use on patented machine bearing label stating sale under license XVIII-70

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