burse the two steel companies for the royalties which they claim to have paid the Harvey Company, and will confine this opinion to the single question whether you have the right to withhold the approval of the vouchers, which are submitted in connection with their respective claims, pending the decision of the Court of Claims in the case of the Harvey Company v. United States.

It appears from the papers submitted to me that, on April 12, 1893, the United States made a contract with the Harvey Company, by virtue of which the Navy Department acquired the right to use the inventions described in the Harvey patents in the treatment of armor plates to be used in the construction of vessels then authorized, or which might thereafter be authorized by Congress. By this agreement the United States agreed to pay the Harvey Company a royalty at the rate of one-half of 1 cent a pound upon all finished plates.

On November 23, 1894, the Chief of the Bureau of Ordinance recommended that, "No further royalties be paid for the use of the Harvey process upon armor for vessels that may hereafter be authorized by Congress." In making this recommendation he stated that the claims upon which the Harvey process were founded, and which distinguished it from others employed for many years in the cementation of steel, were two, which he particularizes, and that neither was, as a matter of fact, used by the Government in the manufacture of armor for naval vessels.

On September 27, 1895, the Chief of the Bureau again made his recommendation to discontinue the payment of the royalties, on the additional ground that the process covered by the Harvey patent was known over thirty years before such patent was obtained, and such patent was, therefore, invalid.

On November 6, 1895, the then Secretary of the Navy, referring to the suit then pending between the Bethlehem Company and the Harvey Company to recover royalties for the alleged use of the Harvey process, decided that the Department should await the decision of the court before paying further royalties. Since this decision I understand that your Department has declined to pay these royal

ties on two grounds, first, that the process used by the Government, or its contractors, in the manufacture of armor plate was not covered by the Harvey patents in any essential feature of the process; and secondly, that the Harvey patents were invalid for want of novelty.

It further appears that on March 24, 1897, an agreement was executed between the Harvey Company and the Carnegie Company, whereby the Harvey Company granted to the Carnegie Company a license under its patent "to practice the process in the manufacture of armor plates, and to manufacture the product described and claimed in said letters patent during the full term of said patent."

This contract, after providing for the payment of certain royalties, provides, inter alia, as follows:

"Provided always, that the said licensee shall not be liable to pay to the said Harvey Steel Company any royalty in respect to armor plates made and sold, or which may hereafter be made and sold by the licensee to any Government to which the said Harvey Steel Company may have granted or may hereafter grant a license to use the said Harvey process, and which the said Government has a right to make under its license. But in case any such Government shall hereafter refuse to pay to the said Harvey Steel Company, or its assigns, the royalty or consideration for such license, for any reason, except as specified therein, and in case due notice of such refusal shall thereupon be given, in writing, to the said The Carnegie Steel Company, Limited, then and in that event the licensee herein shall not thereafter make any new contract with such Government to manufacture any armor plates of the kind covered by this agreement for such Government, without either the written consent of the licensor, or itself paying the rate of royalty stipulated in said Government license, on the plates manufactured under said new contract.

"In case the Carnegie Steel Company, Limited, should itself pay the royalty stipulated to be paid by the Government of the United States, then, and in that event, the said the Carnegie Steel Company, Limited, shall be subrogated to the rights of the Harvey Steel Company for the amount of such royalties, so paid to the Harvey Steel Company, who

shall thereupon, on the written request and at the expense of the Carnegie Steel Company, Limited, commence and prosecute with due diligence a suit against the United States Government to recover the royalty due under the said Government license on any armor made for it by the Carnegie Steel Company, Limited, which the said the Carnegie Steel Company, Limited, may have paid, and, in case of recovery thereof, shall pay over to the said the Carnegie Steel Company, Limited, the amount of such recovery, less any expense of said suit then unpaid."

It is provided, moreover:

"If a dispute shall arise between the parties hereto upon the question whether or not any process or manufacture, or any armor plates, are or are not covered by the claims of said patent, or either of them, or whether royalty shall be paid by the licensee upon plates so made, then and in that event, if and so long as the licensee shall contend that any process of manufacture or any armor plates are not covered by either of the claims of said patent, or are not such that royalty should be paid thereunder therefor, this license shall not involve any obligation on the part of the licensor, to prosecute any suit under said patent No. 460262, as against any manufacture or armor plates, so being made by unlicensed parties, and the licensee shall thereafter, as to such methods of manufacture, or armor plates, not to be entitled to any right, to the exclusion of others, under section twelfth hereof, but it shall retain all such exclusive rights as to all methods of manufacture and armor plates which it shall admit in writing to be covered by either of the claims of said patent, or which it shall continue to pay for hereunder.

"Eighth. The said licensee hereby covenants and agrees that during the continuance of this license, or if this license shall be revoked in accordance with the terms of the fifteenth clause hereof, it will respect the said letters patent, and will not itself infringe or contest, nor assist any person in infringing or contesting the validity thereof, and will not contest any extension, renewal, or reissue of said patent No. 460262 on any ground which might at the present time be set up against said letters patent."

It is further provided as follows:

"Seventeenth. The said licensee hereby agrees to submit to a final decree sustaining the validity of said letters patent No. 460262 in a suit to be commenced by filing a bill in the United States circuit court for the eastern or western district of Pennsylvania; and to an injunction therein against any use of the invention recited in said letters patent No. 460262, except under license from the owner of said patent.'

In accordance with the last-quoted clause of the agreement, a suit was brought in the circuit court of the United States for the third circuit, and the western district of Pennsylvania, against the Carnegie Company, and by the consent of the Carnegie Company the court entered a decree on October 5, 1897, which sustained the validity of the letters patent, and granted an injunction enjoining the defendant from using the process claimed in the first claim of said letters patent No. 460262, or making or vending to others any amor plates embodying the invention of the second claim of said letters patent No. 460262, as heretofore done by it, except under license from the owner of the patent, or from otherwise infringing either of said claims of said letters patent in any way whatsoever."

This decree further recites that the defendant had "settled with the complainant for any and all past infringement and costs, and taken a license under said letters patent."

Under these circumstances the Carnegie Company, being referred to as the party of the first part, and the United States referred to as the party of the second part, executed the contract of June 3, 1898, for the manufacture of armor plate for the battle ships Illinois and Wisconsin. Said contract contained the following clause:

"Fifth. The party of the first part, in consideration of the premises, hereby covenants, and agrees to hold and save the United States harmless from and against all and every demand or demands of any nature or kind for or on account of the adoption of any plan, model, design, or suggestion, or for or on account of the use of any patented invention or article which has been or may be adopted or used in or about the manufacture or production of said armor plates and appurtenances, or any part thereof, under this contract, and to

protect and discharge the Government from all liability on account thereof, or on account of the use thereof, by proper releases from patentees, or otherwise, and to the satisfaction of the Secretary of the Navy: Provided, That if the party of the first part is required to pay royalty for the use of the face-hardening process as applied to armor under this contract the party of the second part will reimburse the party of the first part the amounts so paid, provided that such royalty does not exceed one-half of one cent a pound of facehardened armor delivered to the party of the second part under this contract.”

Subsequently, the Harvey Company brought suit on June 23, 1898, against the United States in the Court of Claims, No. 21110, alleging a breach of the contract of April 12, 1893, and claiming a sum equal to the amount of royalty at the contract price, which suit is still pending and undetermined.

Under the contract of June 3, 1898, armor plate was manufactured by the Carnegie Company and hardened by some process, the exact nature of which is not disclosed in your communication. I assume it is the process theretofore used on the other armor plate, to which reference has been made, and as to which the Government contended that it did not utilize any distinctive or essential feature of the Harvey patent. The Harvey Company, however, claimed that it was hardened by the Harvey process, and accordingly, on February 7, 1899, presented to the Carnegie Company a bill for $8,024.45 for royalties claimed to be due upon said armor plates, and this bill was paid by the Carnegie Company on April 12, 1899, and you are now asked to approve a voucher for the reimbursement of the Carnegie Company, and you request my opinion as to your right to withhold your approval of such voucher.

The Government contends that the process employed in hardening these armor plates is not covered by the Harvey patents; and in the second place, that the patents are invalid. If the only question were as to the validity of the patents, it could be urged with some force that by the license of March 24, 1897, the Carnegie Company is estopped from disputing the validity of the Harvey patents, and is, therefore, "required" to pay these royalties.