license, nor an expired license under which the defendant no longer claims, works such an estoppel. A licensee stamping articles answering to the description given in the patent with the name and date of the patent thereby admits that they were made under the protection of his license, and as to these is estopped from disputing the validity of the patent or his own obligations to the licensor.6 § 821. Express License: Consideration Therefor: Royalties. The consideration for the license, moving from the licensee to the licensor, may be money or any other object or obligation, as the parties may agree. Where the consideration is in money, it may be payable in a gross sum either in advance or at any other specified time, or it may be payable in periodical instalments, or in amounts determined by the extent to mitting the validity of the patent, and binding him to defend it, is estopped to deny the patent and must pay royalties while he uses the invention, see Washburn & Moen Mfg. Co. v. Cincinnati Barbed Wire Fence Co. (1884), 22 Fed. Rep. 712. That an agreement not to set up the invalidity of the patent as a defence, except under special circumstances, will be enforced, see Ball v. Murry (1848), 10 Pa. St. 111. That a covenant by the licensee as to the mode of using the invention does not estop him to deny the validity of the patent when sued thereon, see Bliss v. Negus (1811), 8 Mass. 46. That an agreement not to deny the validity of the patent will prevail, whatever the invalidity may consist in, see Heilner v. Battin (1856), 27 Pa. St. 517. That taking a license for a definite period does not operate as an admission of validity after that period, nor work an estoppel, see Rich v. Atwater (1844), 16 Conn. 409. That a licensee is not estopped in equity from denying the validity of the - 39 VOL. II. patent on an infringement suit, unless the license expressly estops him, see National Mfg. Co. v. Meyers (1881), 7 Fed. Rep. 355. 5 That an offer to take a license does not estop the offerer from denying the validity of the patent, see Evans v. Eaton (1816), Peters, C. C. 322; 1 Robb, 68. That an expired license is no bar to the denial of the validity of the patent, see Blatherwick v. Carey (1881), 10 Bissell, 494; 9 Fed. Rep. 202. That one who was formerly a licensee and also claimed to own the patent is now estopped to deny its validity, see Burr v. Kimbark (1886), 28 Fed. Rep. 574; 37 O. G. 1480. 6 That when licensees stamp articles with the name and date of the patent they admit that the articles were made under the patent, see Jones v. Vankirk (1865), 2 Fisher, 586. For a review of the cases concerning estoppel of licensee, see Morse Arms Mfg. Co. v. U. S. (1880), 16 Ct. of Cl. 296; and §§ 1250-1252, and notes, post. which the licensee has practised the invention.1 When the license is paid for by a gross sum in advance, it is not revocable by the licensor unless expressly so provided; but if by periodical license-fees or royalties, the question of its revocability is not affected by their payment.2 A licensee remains liable for his license-fees or royalties until evicted by the licensor, although it is the duty of the licensor, unless otherwise agreed, to demand them and not wait for the licensee to pay them. A failure to make the stipulated payments § 821. 1 That a licensee acting with in his license is liable only for the royalty agreed on, see Kelly v. Porter (1883), 17 Fed. Rep. 519; 8 Sawyer, 482. That a licensee is liable for royalties while he takes the benefit of any of the patents covered by his license, see Pope Mfg. Co. v. Owsley (1886), 27 Fed. Rep. 100; 37 O. G. 781. That on a license to practise the invention, as distinguished from selling, the royalty is not collectible if the patent is worthless, see Jenkins v. Abbotts (1874), 54 N. H. 447. That a licensee is liable for royalties on a patent apparently valid, until the patent is rescinded, or revoked, or notice is given to the licensor that no more royalties will be paid, see Marston v. Swett (1880), 82 N. Y. 526. That after a patent has been annulled and priority awarded to another, no more royalties can be recovered, see Marston v. Swett (1880), 82 N. Y. 526. That an agreement to pay a certain royalty on every article made on the patented machine, is not an agreement to run the machine to its utmost capacity, see Newell v. Wheeler (1867), 36 N. Y. 244. That an agreement in a license to pay a certain royalty for each of a certain number of devices is not an agree ment to make and pay for the whole number, see Babcock v. Northern Pac. R. Co. (1886), 26 Fed. Rep. 756; 36 O. G. 942. That an agreement to pay royalties to a certain amount within a specified time, and the other accruing royalties within a year, obliges the licensee to pay the amount absolutely, and whatever other royalties may accrue within the year, see Babcock v. Northern Pac. R. Co. (1886), 26 Fed. Rep. 756; 36 O. G. 942. That where royalties are made payable quarterly on the first days of January, April, July, and October, and the license is dated and executed January 7th, the first royalty becomes payable April 1st, see Dare v. Boylston (1880), 6 Fed. Rep. 493; 18 Blatch. 548; 19 O. G. 725. That a right to royalties is property, and is insurable like other property, and its owner has an insurable interest in the factory where the articles are made, see National Filtering Oil Co. v. Citizens Insurance Co. (1885), 34 Hun, 556. 2 That a license fully paid for in advance, and not upon condition, is irrevocable, see Wood v. Wells, Crittenden & Co. (1873), 6 Fisher, 382. 8 That royalties must be paid unless there has been an eviction, see McKay v. Jackman (1883), 17 Fed. Rep. 641; White v. Lee (1882), 14 Fed. Rep. 789; 23 O. G. 1621. That it is the duty of a licensor to demand the license fee if he has no other agreement, and not wait for the renders the licensee liable to an action at law to recover them, and to a proceeding in equity for the rescission of the license, but does not authorize the licensor to treat the license as already forfeited, and prosecute the licensee for an infringement.1 §822. Express License: How Forfeited. It was formerly held that any breach of condition by the licensee, even the non-payment of royalties or license-fees, forfeited his license and made him an infringer of the patent.1 This doctrine is in harmony with the nature of a license, which is not merely the conveyance to the licensee of an interest in the invention, but also an agreement not to exercise against him the prohibitory powers created by the patent, provided he fulfils the obligations which he has assumed. His failure to fulfil these obligations ought, therefore, to remove the restraint imposed upon the licensor by the agreement and enable him at once to enforce his monopoly against the offending licensee. Two practical difficulties, however, attend the application of this doctrine: one, that it permits the licensor to inflict the extreme penalty, of his own motion, for every trifling violation of his contract by the licensee; the other, that in suits for infringement, when a license is set up as a defence and its forfeiture alleged, a multiplicity of issues may arise, not involving the actual merits of the cause and preventing ultimate justice to the parties. To avoid the first of these difficulties, the doctrine has been modified by the courts so far as to require an ex licensee to pay it, see Dare v. Boylston (1880), 6 Fed. Rep. 493; 18 Blatch. 548; 19 O. G. 725. 4 See § 822 and notes, post. That an agreement by parol with a licensee that if he becomes satisfied that the patent is void he need pay no royalties is no defence to a suit for license fees, under a written license, see Evory v. Candee (1879), 17 Blatch. 200; 4 Bann. & A. 545. That where the defendant claims under a license and sustains his claim, a decree may be made against him for overdue license fees, see McKay v. Jackman (1882), 20 Blatch. 466; 22 O. G. 85; 12 Fed. Rep. 615. § 822. 1 That a license paid for by notes, and forfeitable for non-payment, is forfeited by the failure to pay the first note, see Woodworth v. Weed (1846), 1 Blatch. 165. That a conditional license is avoidable at the option of the licensor for breach of condition, see Woodworth v. Cook (1850), 2 Blatch. 151. press stipulation to that effect in the license in order for a mere breach of condition to work a forfeiture. To overcome the second, later decisions hold that licenses containing express stipulations for their forfeiture are not ipso facto forfeited upon condition broken, but remain operative and pleadable until rescinded by a court of equity. The reme 2 That a breach of the covenant in a license does not work a forfeiture per se, unless it is so expressly agreed, see Consolidated Middlings Purifier Co. v. Wolf (1886), 37 O. G. 567; 28 Fed. Rep. 814; White v. Lee (1880), 5 Bann. & A. 572; 3 Fed. Rep. 222. That a license to make and sell, not limited on its face, cannot be terminated by the licensee, without the consent of the licensor, see Starling v. St. Paul Plow Works (1887), 29 Fed. Rep. 790. That a license may be conditioned to become void if the patent is infringed, see Wood v. Wells, Crittenden, & Co. (1873), 6 Fisher, 382. For the construction of a special contract as to revocation of license, see Weed v. Draper (1870), 104 Mass. 28; Weed v. Draper (1868), 99 Mass. 53. That an agreement in a license that the license may be declared forfeited if the licensee fails to pay the royalties is valid and enforceable, see Hammacher v. Wilson (1886), 26 Fed. Rep. 239; 36 O. G. 233. How. 99; Hartshorn v. Day, 19 How. 211; Goodyear v. Union R. Co., 4 Blatchf. 63; Blanchard v. Sprague, 1 Cliff. 288; Merserole v. Union Paper Collar Co. 6 Blatchf. 356-7." 5 Bann. & A. 572 (574). That a license "conditioned to be void," etc., may be annulled in equity, see Adams v. Meyrose (1881), 7 Fed. Rep. 208; 2 McCrary, 360. That a contract to give an exclusive right to sell on payment of royalties is not revocable on failure to pay, without a proceeding in equity, see Burdell v. Denig (1865), 2 Fisher, 588. That a license is not avoided by the failure of the licensee to comply with its terms, even though it contains an express condition to that effect, and the licensee cannot be treated in equity as an infringer, though the license so declares, until the license has been judicially annulled, see Adams v. Meyrose (1881); 2 McCrary, 360; 7 Fed. Rep. 208; Hartell v. Tilghman (1878), 99 U. S. 547. That written notice of his default must be served on the licensee in order to terminate his license, when the license so provides, see White v. Lee (1880), 3 Fed. Rep. 222; 5 Bann. & A. 572. That a notice that the license "will be revoked" is not a notice of revocation, see Pope Mfg. Co. v. Owsley (1886), 27 Fed. Rep. 100; 37 O. G. 781. 8 In White v. Lee (1880), 3 Fed. Rep. 222, Lowell, J.: (224) “No court of equity will say that a plaintiff, even if he have an election to put an end to a contract in a certain way, shall assume it to be ended without following that method, and proceed accordingly. This contract still exists until one party or the other, or both, bring it to an end. It cannot be treated as ended, as a legal consequence of a failure to pay the royalties. To this effect are the authorities, even before the late and controlling case of Hartwell v. Tilghman, 99 U. S. 547. See Wilson v. Sanford, 10 That the contract is not dissolved ipso facto when the licensor forbids the licensee to further use the invention, see Union Mfg. Co. v. Lounsbury (1864), 42 Barb. 125. dies now open to the licensor against a licensee who still claims under the license, but fails to perform his obligations, are a suit upon the contract for the damages sustained, or a bill in equity for the rescission of the license, followed by a suit for the infringement of the patent. In determining the questions presented by a bill in equity for the rescission of a license, the court is guided by the ordinary principles which govern its decisions in other cases. Thus where the breach complained of is the non-payment of money at the time fixed in the license, the license will not be rescinded if payment has been subsequently tendered or complete justice can be done by a judgment for the amount already due. 4 That where the licensee exceeds his rights he breaks his contract and infringes the patent both, see Pope Mfg. Co. v. Owsley (1886), 27 Fed. Rep. 100; 37 O. G. 781; Magic Ruffle Co. v. Elm City Co. (1875), 8 O. G. 773; 13 Blatch. 151; 2 Bann. & A. 152. That when a license has been terminated by due notice the licensee becomes an infringer as to all subsequent acts, see Hammacher v. Wilson (1886), 26 Fed. Rep. 239; 36 O. G. 233. ♪ In White v. Lee (1880), 5 Bann. & A. 572, Lowell, J.: (573) "The theory of the bill is that any failure by the licensee to pay the royalties, or to render an account, avoids the license immediately at the election of the licensor. A license is often compared to a lease of land, and many decisions follow this analogy. Now, so far is equity from decreeing the forfeiture of a lease for a breach of covenant, that it often interferes to prevent a forfeiture which would exist at law. I know of no case in which a mere failure to pay money, or keep some engagement of that nature, has been held a good cause for asking a court of equity either to declare a forfeiture, or to proceed as if one had been incurred. In some few patent cases, beginning with Brooks v. Stolley, 3 McLean, 523, it has been held that a patentee enjoyed the unusual privilege of treating a breach of covenant as if it, of itself, worked a forfeiture. No doubt the parties may agree that such an effect shall follow; and this will account for some of the decisions. The others of this sort are overruled by Hartell v. Tilghman, 99 U. S. 547." 3 Fed. Rep. 222 (223). That failure to pay royalties at the date agreed upon is not ipso facto a forfeiture of the license, even though the license so provides, see Dare v. Boylston (1880), 6 Fed. Rep. 493; 18 Blatch. 548; 19 O. G. 725. That a licensor who fails in his duties will not be aided by equity against his licensee, see Foster v. Goldschmidt (1884), 22 Blatch. 287; 21 Fed. Rep. 70; 28 O. G. 915. That a provision for avoiding a li cense for non-payment of royalties is only a means of securing payment and is cured by tender after pay-day, see Dare v. Boylston (1880), 18 Blatch. 548; 6 Fed. Rep. 493; 19 O. G. 725. That where an exclusive licensee fails to pay as he agrees and the patentee thereupon grants an exclusive license to another, who has notice of the prior license, the first licensee may at any time tender what is due and assert his |