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stranger, the seller may have little or no remedy for his loss of expected profits. Such contingencies should be provided for by appropriate covenants of warranty, or by conditions of defeasance whereby the seller may re-vest title in himself, or by other provisions.
Litigation has also arisen over sales of patents and agreements of the vendees to use the patented devices, when such devices have afterwards been found to be impractical, or worthless. There are opinions holding that the vendee may show the worthlessness of the invention as a defense to an action for the purchase price (11), but the further question arises whether worthlessness means lack of utility in the patentable sense; or whether it has a broader meaning, so that a device which is useful in the patentable sense may be shown to be worthless in the popular sense. In Massachusetts it has been held (12), that the first definition is correct, as where a jury was told that an improved animal-power churn device was useful if capable of any beneficial use, notwithstanding its use for churning or operating a sewing machine or pump might not be profitable to the person applying it to such use, and notwithstanding the mechanical results of the use might be inadequate to the cost of its use and the cost of the machine. Such contingencies as this should also be provided for.
Provision should also be made in behalf of the pur
(11) Article by Mr. Charles P. Abbey, of the Chicago Bar, read before the Patent Law Association of Chicago, January 30, 1908. From this article also, the suggestions contained in this subsection are in large part taken.
(12) Nash v. Lull, 102 Mass. 60.
chaser for securing to him appropriate rights in future improvements of the patented device, as it frequently happens that the inventor will continue his endeavors in the same field, and will obtain other patents on subsequent improvements of the patented device which will deprive the original device of much of its commercial value. It is customary to draw contracts of assignment to cover the patent assigned, and also the inventor's rights in future improvements of the patented device.
Conditions in contracts of license restricting the selling price of the patented articles, and otherwise placing restrictions upon subsequent dealings in them, are valid, and are not forbidden by the Sherman anti-trust act, nor by any other legislation against monopolies. In a recent case (13), it was said: “The general rule is absolute freedom in the use or sale of rights under the patent laws of the United States. The object of these laws is monopoly, and the rule is, with a few exceptions, that any conditions which are not in their very nature illegal with regard to this kind of property, imposed by the patentee and agreed to by the licensee for the right to manufacture or use or sell the article, will be upheld by the courts. The fact that the conditions in the contracts keep up the monopoly or fix prices does not render them illegal.”
Other questions arising out of such contracts will be considered in the chapter of this article relating to Infringements, $ 56, below.
(13) Bement v. National Harrow Co., 186 U. S. 70; reaffirmed in Cortelyou v. Johnson & Co., 207 U. S. 196.
§ 46. State statutes, relating to assignments of patents. In many states statutes are in force imposing restrictions and conditions upon the sale of patents within their territory. In Kansas, Arkansas, Indiana, North Dakota, Ohio, and several other states (14), statutes have been passed, generally providing that notes given in payment of patent rights should be plainly marked "Given for a patent right”; and should, if transferred, be subject to all defenses which could be urged against the promisee. Other provisions require the taking out of licenses in the various counties, and the payment of license fees before sales can be made in such counties; and make violations of the statutes punishable by fine and imprisonment. Several of these statutes were held unconstitutional by the highest courts of the states, and by the Federal courts sitting in the states which passed them, but recently the provisions of two of these statutes with regard to the marking of promissory notes, and the admission of defenses against a holder in due course, were held valid by the Supreme Court of the United States (15).
It is therefore necessary also, when making sales of patents or otherwise dealing in them, to consider the provisions of any state statute concerning the subject matter, which may be in force in the jurisdiction where the transaction takes place.
(14) A number of these statutes are collected and commented on in an interesting article by Mr. Albert H. Adams, of the Chicago Bar, read before the Patent Law Association of Chicago, June 14, 1907.
(15) Allen v. Riley, 203 U. S. 347; Woods v. Carl, 203 U. S. 358; Ozan Lumber Co. v. Union Co. Nat. Båk, 207 U. 9. 195.
§ 47. Regulation of dealings in patented articles. In addition to the statutes mentioned in the subsection pre ceding this, statutes, ordinances, and other laws in force in all the states, regulating the buying, selling and dealing in, and handling, storing and transporting of all kinds of property in general, frequently operate upon patented articles and devices, and in so far as they impose the same restrictions upon the exercise of acts of ownership in all kinds of property in the same class, whether patented or unpatented, they are held valid, generally as police regulations. Such a case was presented in Patterson v. Kentucky (16), where the patentee of an illuminating oil claimed the right to sell his oil in the state, notwithstanding a statute which prohibited the sale of all inflammable oils below a certain fire test. The statute was upheld, and a conviction for its violation sustained, the Supreme Court stating the rule, upon which the statutes noted in this subsection are distinguished from those noted in the preceding one, in these words: “We are of opinion that the right conferred upon the patentee and his assigns to use and vend the corporeal thing or article, brought into existence by the application of the patented discovery, must be exercised in subordination to the police regulations which the state established by the statute of 1874. It is not to be supposed that Congress intended to authorize or regulate the sale, within a state, of tangible personal property which that state declares to be unfit and unsafe for use, and by statute has prohibited from being sold or offered for sale within her limits.
(16) 97 U. S. 501,
The right of property in the physical substance, which is the fruit of the discovery, is altogether distinct from the right in the discovery itself, just as the property in the instruments or plate by which copies of a map are multiplied is distinct from the copyright of the map itself.
The end of the statute (the Patent Act) was to encourage useful inventions, and to hold forth, as inducements to the inventor, the exclusive use of his inventions for a limited period. The sole operation of the statute is to enable him to prevent others from using the products of his labors except with his consent. But his own right of using is not enlarged or affected.”