BRUSH ELECTRIC CO.
v.
CAtIFORNIA ELECTRIC LIGHT CO.
945
Again,' the board seems to have the understanding that a term used unless some one in the tariff act is not susceptible of a trade or more articles are bought and sold specifically by thllt name. In that, ngairi,ltbink they are in error. I think the contrary is very plainly shown in the case of Pickhardt v. Merritt, 132 U. S. 252,10 Sup. Ct. Rep. 80, which I referred to before. An a,rticle may be bought and sold by the specific name which indicates that precise article, and still a group' of' such articles may be known to trade and commerce by a commercial term, which includes them in a special group, and which still pever appears on the face of an invoice or bill of the goods when the artiCles are described, because they are always described by the same specific, name which refers to the particular article. Inasmuch as it is apparent, to my mind at least, that the conclusion which the board reached in this case was influenced by these views, which seem to me not iIi accordance with those heretofore expressed and laid down by the supreme c6urt, I shan set their decision aside, and direct that the article be classified as manufactures of wool, etc., under section 392.
BRUSH ELECTRIC Co. fJ. CALIFORNIA ELECTRIC liGHT CO.
et ale
;<ptreuit Court of AppeaLs, Ninth No. 54. L'
Oircuit.
Ootober 6, 1892.}
PATENTS FOR INVENTIONS-LICENSE-RIGHTS OF LICENSEE.
A grant by the owner of 'a'patent of an exclusive lioense to sell the patented article in a specified territory oarries with it an implied authority to join the owner, even' against his Will, as a party plaintiff, ill suits against infringers. Brush.Swan lliWctrte Ltght 00. v. Thompson-Houston ELectric Co., 48 Fed. Rep. 224, approved. 49 Fed. Rep. 73, affirmed. ',A lioensee cannot divide up his license and assign to third parties all his rights in certain portions of his territory, unless a. manifest intent to confer such appears in the contract of license; and such intent cannot be inferred merely from the g'l'B!lt to him and his "assigns. " .
2.
SAME-'-AsSIGNMENT OF LICENSE.
8.
SAME;
An attempted assignment by a liceusee, without authority, of all his rights in part of his territory, causes no forfeiture of the rights which he acquired by his license, and, as it passes nothing to his assignee, he may still sue for an infringement committed in the assigned territory, aud may join his licensor as a party com· plainant therein. The right to so join the licensor is not affected by the fact that the licensee has alsO as a party plaintiff a corporation which is merely its agent, and which is therefore not a necessary party. A patent may be assigned before it is aotually issued, and where the grants to a third person an exclusive right to sell the patented article in a specrfied territory,and. after obtaining the patent, treats such grantee as having a valid license. ,and allows it to acquire an extensive business, he is estopped to deny the validity Of the license. A grant by tbe owner of a patent of an exclusive right to sell the patented article within a specified territory excludes the grantor from such and COil'
4. SAME;
IS.
SAME....:.Es:roPPEL.
6.
SAME":::'N A:rURE OF LICENSEE'S RIGH:rS.
v.52F.nO.1l-60
946'
.()'!
FEDERAL REPORTER,
voL 52.
fers UP,Ol1 th,e,:sran,te,e arlgh,t WhiOh, he, Elll:el'Oi,1Ml,. for his own bene1lt. he is no.t the agllnt of the owner, an agenoy whioh D;Iay be revoked at anytime. ' " . " ,," , " T. Su.JEvmB1(OB-oPINl'ONs6v Wrntli:l!8Bl!l " ", i, '" tiM oftioerso( ,a lioeJl,seeporporation betWe,en it and tlut,UQElnsoreo:rPOratj,on oothoompanies 1I1l0u1d aotivelyprosecute infringers in the-licensee'. t.errltory, Were-iDsuftioient toshbw lift. agl'eemerit by the all.Ow,the UP DaIlle in,lluits by wassuoh an "Ilogree!tl8nt abo"",, by the afIldavit of a fo#!ersuperinteiident' of the'11oen80r that , 'ft-· ·'undliratbOd by the ofticersof that oo'lnpany'lihat it would support the licensee ',111 to defe!lt for in both Oa$ell:;the 4tlidavits stated merely,and D9t,thlilfaotsOlJ 'fllioh they were
for Northern , :'. '' " :, ,,J;B-,JEqllii ty.",' .suit ,.by, th,e ,the, California Compltuy, and Jose Improvemel1tOQmp,any infringe,In the,circuit court the' Brush C()J:l!pany filed a from the which was ..Rep. 73,) and thereupon it took an appeal from the order ofdemaI.A motion was made to dismiss the appeal on the Kround that the order was not a final, appealable decree. This motion was also denied. 51 Fed. Rep. 557. The hearing is now upon the merits of the appeal. Affirmed.
.Appef\l frpm the OircuitCourt ofthe United
H .. f ,fora t. . ,, ' " There is no implied authority in any license contract under the patent laws velltillg, absolutely in the Hcenseethe to lise the of the name of thlfowller of the patent to restrain infringements i'o' a territory covered by the license. " nie monopoly granted to the created by act of congress. It differs in its nature from all 1ll0nopoHes, and no rights acqnired ill by in. nlanuer To enableaU)1 one.to.sue in. hiBown name fl>r an iofringement, of patent rights, which is'confe.rred by the he statute !UI10tt whicH con.sists in theextJl'usive right, or an undivided interest in the exclusive right. to the entire United States, or to a specified portiqnthereof",$o, manufacture,. use. and vend, and to authorize others use. and ·vend, the'patented invention. AllY right shortof'thltfisa mere license. The legal title to tl:le lI1onopoly remains in the patentee, and he alone cun maintain an action to restrain &:n infringement . upon his ,pl\tent rights. .., " . In equity, as at law, the:title remaimlin ,the owner of the patent. Any l'Ightsofthe'licElnsee must be enforcedtbrough or in the name of the owner of 'the pateJ1t; perhaps, If neceBsary to protect the rights of aU parties, joining the licensee With him as a plaintiff. Gayler v. Wilder, 10 How. 477; Waterman U:. S. 252, 1l,Sup. Ct. Rep. 334; Paper Bag Oases, 105U. S.761;'Birdsell v.iShalioZ, 112 U. 8.485, 5 Sup. Ot. Rep. 244; Olio '/,er v. Ohemical Works, 109 U. S. 82,3 Sup. Ot; Rep. 61; Littlefieldv. Perry, 21 Wall, 20&; 'J.ogart, v. 25 Fed. ,Rep. 485; Oottle". Kl·ementz. Id. CZ61nent,¥anuf'gOo.'''V; Upson & Hart OQ., 40 t'ed.Rpp. 473: (}amewell F'ire .dlar:m:Tel. Co.v.,Oity of Brooklyn, 14 Fed. Rep. 255. WherEdnepatentee is the infringer. t'he licensee may sue him in equity, and enjoin in such action Lhe infringement. Littlefield V. Pel'rJj, supra. 223, at,tewpted here by the CalifornJa and San .Jose Companies is not merelyt.o'ulI8 the 'name of tbe patentee"or owner ofthet;>atent, a8 was done
BRUSH ELECTRlc
CALH'ORNIA ELECTRIC LIGHT CO.
947
at'common law by the assrgneeof a chose inaction.' There the whole caush of action Cl.rbeneficial interest was in the llssig!1ee, the 88s1gIiorboiding only the naked legal title, having nothi ng at stake but costs, and the use of his name as the pl!aintiff being a Mere formality. Here the licensee's right fonus but an insignificant fractional portion of the .patentee's estate, to wit, to use and sell within a restricted area; the Brush Company still having the right to manufacture everywhere, and to sell and use everywhere; except in the reo stricted te.rritory covered by the license, if suah it be, to'the California Electric LightColDpany. Hence all action by, the Brush Company, or in the name of tbeBrush Company. puts into controversy its own interest, its own right, its monopoly privileges, in and to which, confessedly, the licensee has no right, claim" or title, .A cour.t j)fequity cannot compel a party ,to sland against his will as a coplaintiilin'an'actionwhere his own interests and rights are involved, because another claims it to ,be for that other's interest that be shaH do so. No authoritycan be found' for such 8 proceeding. The bill filed in this case involves in the adjndicationprayed for the whole interest of the Brush Company in the patent' in question,.including the exclusive right of that company,"to make" within the tel:ritory, in which the San Jose Company claims a license to use and sell, .A judg,ment for the defendant upon this bill would bar any further proceedings ,by the Brush Company for the protection of its interests under the letters patent in question. , Under the in Littlefield V. Perry, 21 Wall, 223. the head of equity juriaprudence to which the question relates is that of trustee and cestui qulJ trust. W:here a trustee is a necessary ,party to an action, he must either ap. pear or be brought in by process. If he refuses to bring an :action upon the request of the beneficiary, the latter may sue.!n his ·stead. making the trustee party defendant. It would be very unnecessary to make him a party defendant, and bring him,inby process, if, by merely naming him as plaintiff,the court is with jurisdictjon to bind him by a decree. 'The settled practice of chancery is against thrusting a party into.an action as plaintiff against his will. Perry, Trusts, § 886; 2 Lewin, Trusts, § 853; 1 Daniell, Ch. PI'. IS3, note; j}forgan.Y.Railway Co., 15 Fed. Rep. 56, 57. EtvidlJ Lube, Eq. (2d Amer.li:d.) 189; Rob. Pat. § 1099. '£he owner of the patent right, having a substantial interest in the subjectmatter Of this Bult, distinct from the interest of hi8 licensee, cannot be sub,jected to the jurisdiction of this court in respect of that interest, at the mere . will of sUQlllicensee, and without his own voluntary appearance, or some processof thecourtdul)' served on him, requiring his appearance, however advantageous lotbe special interest of such licensee it may.be that such jurisdiction. Elhon;ld be taken. The soli<;Hors of the California, Electric Light Company and of the San Jose rJigllt & POWer Company, by johling the Brush Company as a party complainant to this bill, and by assuming to sign the bill as solicitors also of the Brush Company·. cqnclusively commit the Brush Company to every averment of the bill, and conclusiYely authorize this court to adjudicate accordingly. To say that such al,ltllority to the solicitors of the California Company is to be implied from the nature of the transaction between the parties is only to beg tbe question. An inquil'y into the nature of the transaction requires a construction of the, cOQ,tract, a determination of its obligation. express or implied. absolute or coIHlitional, and then, if the authority is proved, an enforcement of the contrac,t;but tbis is an adjudication of the rights of the parties to the contract. and a complete exercise of the jurisdiction of the court over the Brush Oorupany. Clearly, such jurisdiction cannot be exercised, unless the ,];lrush been in SPme way subjected to the power of the court. The question, PQiDesW this: Can the Brush.Company be subjected to
l)48
nDERAL REPORTER,
vol. 52.
tbe!judicral power of this 'court' :as 'a "party eomplainant 'becausE!"' the solieQfthMllalifornia Oompany and the Ban'Jose Company chooses to insert its 'name in the bill assuch\?artyi' ' Were tbeBrush Company named a defendant in the case, the court could notacquirejurisdiiction Over it witbout voluntary appearance or compulsory ,mucbles$ does the mere naming of the Brush Company as a co-complainant confer sucb jurisdiction. "Process Is the test Of'jurisdlction. Case v. Humphl'e1/, 6 Conn. 139; Cole 8tl'Ds" Min. Co. v. Virgin'ia&. (fold NUl Water Co.; 1 Sawy. 470. Even had the Brush Company expressly covenanted that it would join the California Company and the Jose Company as a co.complainant, and had thereafter refused, while it might be liable upon its covenant, the covenant IN,ould not'relleve this court from issuing its process if it desired to sUbject the Brusb Company to its jurisdiction against its consent. We know of no authority,contrary to this contention. No authority, express or implied,absolute oreonditional, has been shown from the Brush, Company to the San authoriZing, empower!ng,or directing it to join the Brush Compaqy,with,it as a co-complainant in this action. There has been no un· deriakinglion the part of'the Brush OOtllpauy show'n to allow eithel' the Californ,ia:Odmpany or the SaD' Jose Company to use its:naine in any way in any infringement suitS,. and the. solicitor's 'liuthol'ity eveil to make a party plaintiff p1'oforma must be special. 1 Daniell, Oh. Pro 309. No authority,contrary to,ijtiscotitentioJi can be :shown. hall no implied power to and cannot compel the owner of the patenll tio join with h,iill'. in'a suit in eqUity for an infl'i,ngement ,of the pat. nor can,the licensee, without the consent of the owner,',use hisname'insuch suit, even where tbe:owner' bas covenanted to bring or to join in bringing suit. "If he refuses,. the remedy is, We Rllbmit, by action againl5thim in the proper 'forum, either to compel specific performance, 01'to obtain.a decree permitting, the lise of his name, or by action at laW to recover damages for the breachot of,be covenant. Co"enantsi by the patentee licensor to protect the licensee against infringe. ments, tOtllll.intain actions in support of the patent right, to defend all at· tacks made by competing, senior, or other patents, are of frequent occurrence In written licenses. Where such covenant, clause, or stipulation is omitted from the license by the parties, it cannot be supplied by the court; the license itself being the measure of the licensee's rights. McKay v. Smith, 29 Fed. Hep. 295; Emerson v. Hubbard. 34 Fed. Rep. 327;, Ingalls v. Tice, 14 Fed. Hep. 297; N a· tional Rubber au. Rnbbet· ShOe Co., 41 Fed. Rep. 50. Even in a written license, where there is a covenant' to slle infringers, the ownerofltlhepatent is not bound to protect the licensee against those who claim under:adverse patents,' l,ior does he warrant against them: Jaakso'fl, v. Allen, 120 Mass. 77. 'fhe rule which gives'tile patentee; by virtueot' his ownership of tbe patent, control over alllitig'd.tion wherein his patent, monopoly, rights. and franchise are involved or marbe jeopardiz.ed; isa rule Intended for his protection. Any rule short of this would place him entirely at the mereyof careless or disbonest licensees, of collusivelittgation, of jU'd'gmentsagainst him, 811fferedby default, or it may be by fraUd. Such power in the licensee would be simply 'ruinous to the 'owner of the patent. This is well indicllted'in Bt·ush·;:swan ElectricZ,fJght Go. v. Thomson-Hollston Elentric Go.· 48 Fed. l'tep.224. ' In the cou'ttbelow, and in the written brief filed by,the learned solicitors oithe Califo1',nla: Company. it was admitted that there is no implied covenant . that the IicensQr will protect the liceusee against infringers by instituting
BRUSH ELECTRlC
CO.
V. CALIFORNIA"' ELECTRIC I,IGHT CO.
949
suits; but it was insisted that there was an implied covenant giving the licensee the right to use the name of the licensor in bringing suit. on the ground that the licensee cannot protect himself in any other way. T.he answer. however, to this, is that, if the licensor is not hound to protect bis licensee. the lattlo'r cannot compel him indirectly to do so by usipg his name without his consent; and it were idle to concede. as the California Company does, that the Brush Company controls the litigation of its patent. (for it is admitted that it need not protect the licensee against infringers by instituting suits to that end unless it s.ees fit to do so.) if. onthe other hand. the control of such lItigation is nevertheless vested in the licensee. and which control it virtually would have and exercise under this implied power here claimed. to use the licensor's name in infringement suits without its consent. Furthermore, we have shown that, if the licensee desires protection. he can stipulate for it. The owner of the patent is then to determine upon what, terms it shall be grantl'd. The exclusive licen!lee, under the authorities, is but at best a mere licensee,which simply means that he is Hcensed to do cer· tain acts, which, if done by a. stranger. would constitute the latter a trespasser. Heap v. Ha1·tley, 42 Ch. Div. 461, (1889.) But there is a wide dif· ference between the privilege of trespassing on the patent, and the righ'tto controUitigationof the patent right, to the monopoly In and to which the licensee has no claim or title. Under the decision in Littlejield v. Perry, as cit.ed above, the relation of the owner of the patent to·his licensee is held to be that, of trustee and ceatui que trust, and under the well-established doctrine of equity Jurisprudence with reference to trusts, where the trustee refuses to institute a suit for the benefit of his. and the latter claims the right to have such litigation begun. the cestui que trust can himself bring the sUit)n his own name, alleging the reason why, and making the trustee a defendant. In this way the rights of the (lestui que trllst are as effectually protected as though the trustee were party plaintiff; and. the federal courts have held that in such a case the question of jurisdiotion. as affected byresi. dence, will be determined by looking to the relations of the parties in controversy, without regard to their positions on the record. Hence a trustee, made defendant merely beoause he declines to sue. will be treated as plaintiff in settling the question of jurisdiction. Railroad 00. v. Ketchum, 101 U. S. 289. But this practice.rests upon the power of the court to deal with those who are brought within its jUrisdiction. If a trustee thus named is a necessary party, and is out of the jurisdiction, and is not before the court by appearance or process, the case cannot proceed. M01'gan v. Railway 00., 15 Fed. Rep. 55. It would be a very unnecessary trouble to make a party defendant, and bring him in by process, if by merely naming him as a plaintiff the COUl't is invested with jurisdiction over him. and power to bind him by its decree. There is no practice in chancery of bringing a trustee in as plaintiff against. his will. This has been attempted here by the California Company and by the San Jose Company, and that extraordinary power invoked and claimed by those two companies over the Brush Company, who is, if a trustee of a licensee, not merely such. but has rights of·its own, outside of, separate, and distinct from, its licensee. and amounting to the ownership of the entire legal title to the franchise, the whole of which is imperiled by a litigation over which it not only has no control. but in respect of which it has not even been consulted. much less has it consented to bringor join in bringing. ThiB is an attempt to deprive the patentee of his property without due process of law, and is a violation of the constitution of the United States. There is no warrant in the decisions of any court for the exercise of such .an extraordinary jurisdiction involved ill this attempt of the California Com.
, , ftDERAII RBPOR'llER' , ' 'Vol.'5
,
fI
pariy and 'of U\e'SB'ft':'o'se CIl9lbpllfiytoMmpitl the 'Brush CompanY, to stand as complainant 'it;BIJtviU,' where its: oWn: rig-bts are volved,andin which'rights, admittedly;ibhe-'9tbel' twocomplainarlt8have no interest. ",The power! gr"nted by thestattite tottle circuitcolirts'isto try patent of cQurts of, et}uity, and all of that JUl1lsdlctlon undoubtedly apply. The''Caile of MQrgani'v'Railway Co., 15 Fed. Rep. 55, lays down the broad principle that,' when aCllsti(}l'quetrust'ccmies into court with the allegation thathis'trustee has wrcJngflilHy refusedrtij'sue, there is art issue 'between him andtbe'ttiist6e which the court'can settle'only by having jurisdiction of the trustee.' The same prin'lliplemnst apply whether the trustee be named plaintiff0rdefendant. To nlUnehim plaintiffwitlilout his consent can give the court no more jurisdiction to settle this question than to name him defendant witlr0'nt'l!Iervlci'J or appearance. Hence, even conceding 'the California CompanY"a'f!'ll1theSan Jose 'Company to bet/he licensees of the Brush Company. the1bliV81b'o1mpliedvestedright undel'l !lily license to control the litigation of tb&l'Atient-rlght in the ,manner here;atliempted,by using the name of the BrusbCompanyas a oofj1aintfff with thflmin this action. ' ' Onl1be argument of ·motion intheeburtbelow, the counsel for the Californla'Oompany relied upon'thlj'lfp!loWing cales: Wilson' 1If.: Ohickerin.'l, 14 Fish. Pat. Cas; 96'j,Walk. Pat. par. 400;8:Rbb. Pat. par. 938; Brush-Swan Electric Light Co. v. 7'homRep. 224. " :',' Wilson'v.,'Ghickef'inrj/ M!Fed. Rep. 917. This w8ssnaction' by licensee against"infringer of patetlt for pianofGrte pedll.ll'l. There WaS :a demurrer for lonjoinder· of aM the ,delliul'ter was sustained. Complainant claililed: flo', beanassignee'llf an exclusiV'e' r.ight to manufacture and sell. The' L()WELL )saya.: "He has not then' a statutory right to and Ico'n!llderthat the gen$'lil !fules ofeqlIity pleading would make thepatt>tltee, a' properplU'ty to the 'caulle." Furtlieron the court says that the plltentee ls not i i&'neClil8sary party, his :teasonI1for;th'is opinion being thatitlle ficensee'lsthe oldy pal.'ty entitled to damages., I !.Vilis, therefore, may have' bean ll:tI &lItion :at Ia'w for damages,andthediscussiO'tlbyJudge LOWELL of any not necessairUy ,i nvol v-ed in that his opin ion on' snch slttijectis"toJ1O' weig,ht'a8:authority.Whatcleal'ly in.Judge LowELL'S mind in to the right of licensee to sue was that, in case the patenteecouqd :nut"be brOlighCli'lntti C0Ul't. the case mlghtptoceed with'Out him between 'the libensee and 'tl)e'lnfringer. His opinion all to the right of the licensee to use th&patientee's name In an, action :{eobiter diotum, and a matter ,of'cotljecture., "Perhaps he may ',' says the judge.' 'This decision was 'made nine years. ago, rule had been so drmly flxed that the patentee is a necessal'yparty. In view of the decision in v. Mackenzie. Judge LOWELL would hardly suggest now that a sO!tClould btibtollght by the licensee alone against a stranger. ;Pat; Cas. It does nOlrappeiir distinctly from therllport of this CBse whether the suit was originally brought by the patentee or l1otr1in!1ilt f mayhave beenllobronght., , , 3;Rb1J!l.lPat; par. 938. In this 'j>aragraph there is a statement to the effect of the implied:agl'eement'betweetl the licensor and licensee thattll6'fOcmer will prote'llHhe latter of his rights. by instituting:tlb'enecessaryprooeedings,but the lieetJsee's to Slit', if the owner of;t'J.ie mtmOfllyrefuses, Is by the same paragraph, and intbe same sentence. lhuited40[actlonsatlaw for damages.,' Wilsonv. C/dakering,sttpl'a, is furthermore the only authority cited by Hobinson. By referl'nce to Walk. Pat. pnr.4tlO; it will be observed that no anthority,bE'yondth6"ipse dixit of the authol'"sustains the proposition he'tbevll}'aYll down. "
BRUSH ELECTRic CO.
CALIFORNIA ELECTRIC LIGHT CO.
951
The' principal reliance. however, of counsel on the other side. and of the circuit judge, is the case of Brush-Swan<Electrio Light Co. v. ThomsonHouston Electric Co., 48 Fed. Rep. 225. That was an action to restrain an infringement. The bill alleges that the Brush-Swa,n Company is vested with the exclusive license and agency throughout a specified territory to sell the patented improvement of the Brush Company·. Tbese two companies are the complainants. The Thompson-Houston Company is the defendant, and the bill charges the defendant with an infringement of the Brush patent within the territory named in the contract of license. The Brush Company, otherwise called the Cleveland Company, neither autborized, knew of,. nor cansentedto the filing of this bill by the Bmsh-Swan CotDpany, and tDovedto strike out its name asa party complainant therein. The motion was resisted by the BrUSh-Swan Company, Which claimed, as licensee of the Brush Com· pany, a vested, absolute, implied right to use the name of its licensor as a complainant in this action, by virtue of the license contract. 'fhe circuit court (SHIPMAN, J.) says at the very outset that the facts in this case ,are:," peculiar. " He finds the contracts betweep the BrUSh-Swan and Brush Companies to be, in their important features. contracts of agency between a manufacturer and' a person who, under certain limitations. is to have certain exclusive rigbts in the specified territory. Theyestalllish also, in the opinion of the COl1rt, "probably a contract of license under, the patent laws." 'fhe Brush Company,. the court finds, has sold out control of its stock to de. fendant,the Thompsoo-Houston Company. the admitted wrongdoer in the action. "The Thompson-Houstoll Company. it thus appears, \Jwns and is in controloftheCleveland CODlpany." . The moment that fact was found against the defendant. did not the motion of the Brush Company to dismiss become, virtually, the motion of the Thomp. son-Houston Company? 'Eor, if the latter owned and controlled the Cleveland (Brush) Company, the Cleveland Company's motion, ipsofaf)to. became the motion of the T.-H. Co. This inference becomes an irresistible, necessary conclusion later on, as we will see from the opinion. The Brush-Swan Company, in opposing the motion, contended broadly for an absolute right as licenseefof a specified territory, under aU circumstances, to use the licensor's name,--a claim precisely similar to that made by the learned counsel for the California Electric Company. The court, however, declares this question-this proposition-need not be decided. It is not involved in the controversy. Page 225. But, while avoiding the question, the court ,is at great pains to p;ive its opinion against tho proposition of counsel. To infer such an absolute, implied power, uncontrolled-uncontrollable-from a bare lictlnse agreement, is a power. The licensee could compel the owner to enter into an exp,'nsive and even perilous litigation. or control the owner in a way which might be injurious to him, by compelling him to submit questions to the adjudication of a court which the best interests of the owner of the patent might l'ather prompt him to avoid or postpone. "There is danger," says the court, "in sucha power." But, continues Judge SHIPMAN, (the substance only of the decision is here .given,) the moving party here, the Brush Company, is in pari deliatu with the defendant, for it is controlled b)" it, and practically stands before this -court as"much the admitted infringer as the T.-H. Co.,over whom this court has jurisdiction; and i:t has been reached with process through its controlling ·owner and defendant,-the Thompson-Houston Company. The Cleveland Company is "really a codefendant. in view of the T.-H. Co's. con trolli I)g ownership of its stock." True, it has not come in voluntarily as a plaintiff, nOr has it been reached by process as a codefendant in this action, being a resi·dent uf OhlOibut this court can exercise. jurisdiction over it. notwitustand-
952
FEDERAL
52.
lng. 'and for thJsreason (that it the legal. substantiJal, virtufll iden'tity of the Brush' the T;·H. (lo.) they are alter et idem. Here is the 'keynote of the court'sdeeision. Jurisdiction has been conover Cleveland Company through the T."H. Co.; and the former's motion to be dismissed is not denied on the ground that the lice tJ see hils' a l'e&ted. absolute right to 'the use of the licensor's name in this litigation to prevent infringements. but because the Thompson-Houston Com'pany. the defendant. owns and con'trols the Brush Company, the nominal coplaintift'. 'Inform there is no difficulty in the licensor, though thus considered aS8 for its.'own ,Infringement. for the Brush Company and the' T.-H.Co. are :legal entities. In substance. there is ]t<)objectionto treating them in eqllityas identical,and the court will admihi,gterequity against the nominal 'plairltiff, through ,the owner. the defendant; The two are really one, and jurisdiction over one will extend to both. : ; Such istbis COhnectlcut case. One proposition. however,;whlch the court lays do\\fn. is wIJolly without authority, nor does the court'give any authority for it,' 8I1d-l't is certainly against the settled law. There is not even a prima facle.fight:in the licensee to use the1!liceusor's:'name to restrain infringeI assert without qualification. I defy opposing counsel to pro. ditee a adjudicated case establishing such a principle. But inasmuch as the<?ourt is at pains not to place its decision upon this ground. but upon the toot the moving party is' really the' codefendallti infringing licensor. W'isunn:eeessary to furtherdiscusstbat tiictufn heretosbow that had the court' found the T.-H. Company to be all infringing strangel'j........like the defendant improvement company,-insteadof virtually an infringing licensor, identifiedinlntel'est witlIand controlling the moving patty, the quesUon of ptfmafltlJie right of the Brllsh-Swan Company to drag the Brush Com. pany into tb"atlitJgation. })yusing its name., asattempte<tby .the California and San Jose C6mpatJies. mu'st have been decided by JUdge SHIPMAN ad versely to the content16fi' of the California Company here. and on the authority of the very case Cited in that opinion, Waterman v. Mackenzie, 138 U. S. 252. 11 Sup. Ct. Rep: 334, which says: "That a'lly rights of the licensee must be enforced through or in the name of the ownel"'f:)fthe patent, and perhaps. if n'ecessary to protect the riihts ot all parties. the licensee with him as a plaintiff."
Edward P·.O:>le. filed a separate brief for. a forappelleel!.
. .M. M. E8iee atiu
:r. H. Miller, (Estee,JilitzgemldJ.(14i1ler. on the brief,) . , '
·
thl'oughoutthe' Pacific coast. Record 77. This 'constitutes it a licensee. ,Waterman v. Mackenzie, 13!:1U. S. 255. U Sup. Ct. Rep. 31$4·. The Brush COmpany the legal title to the patent. It is also conceded by all that such a lioensee cannotsne alone for lin infringement. but must join the owner of thelcgal title asa co.confplainant. The law on this SUbject is that. in case of infringement within the territory of a licensee. an at law must be brought in the name of the licensOl' for the benefit of the licensee, :and not otherWise. whHe asuft in eq uity may be the names of the 'licensor and licensee jointly. Says :Mr. Justice GRAY in Bi1'dsetl v. Shaliol, 112 U. S. 485. 58up. Ct. Rep. 244: "Alic6nsee ofa patent cannot bring a suit in, his own name. at law or in eqUity, for its inftingE'ment by a stranger. An action at law for thebeliefit of the licensee must be brought in the Ilame of the alone. A suit in equity may be brought by the patentee and
It is conceded that the California Electric l,ight Company' is but a licensee. It is given "the exclusive right to use and sdl. but, not to manufacture."
BltUSH ELECTRIC CO. V. CALIFORNIA ELECTRIC LIGHT 00.
953
licensee Waterman v. Mackenzie, 138 U. S. 255. 11 Sup. Ct. Rep. 334; Gtllller v.Wilder. 10 How. 477; Littlefield v. Perry, 21 Wall. 205; Paper Bag Cas8S, 105 U; S. 766. Such being the law; it follows that, if a licensor refuses to join in a suit for infringement, and the licensee bas no authority to use his name without bis consent.. then the ,licensee is without a remedy for a grievous wrong. Here, if the '!Dotion of the Bntsh Company prevails, and it be dismissed from the suit, then the entire suit 'will 'fall, because it cannot be maintained without the presence of the Brush Company; and the California Electric Light Company wilI be at themefcy of infringers, without remooy against them for invasions of its rigbts., In such case there would be a wr.ong without a remedy, a thing which equity never tolerates. ·Therefore we contend that such is not the law, and we state as our first proposition: There Is an agreement implied by law, in case of such a license as the one disclosed here, that'the licensor will join with the licensee in suits against infringers; and if he refUses, or is inaccessible, the licensee has a right to use bis name without his consent upon indemnifying him against damage. If sucb be the la W, then we had a perfect right to use the name of the Brush Company in this cascas a co.complainant, even agaiust its consent. That such is the law is settled both by reason and authority. In Walker on Patents, (pages 311, 312, 400,) it is said: "Licensees under patents cannot bring. actions for their infringement. Where a person has recejved an exclusive license to use or sell. ... ... ... all actions at law ... * ... must be brought in the namE' of the owner of the patent right, but generally for the use of the licensee; and all actions in equity must be brought by the owner and the exclusive licensee, SUing together as joint complainants. Actions at law, brought in the name of the owner ofa patent right, but actually begun by an exclu2ive licensee, may he maintained by the latter even against the will of the nominal plaintiff, and, where an exclusive licensee brings an action inequity in the name of himself and the owner of the patent right, that action may be. maintained without the co-operation, aud even against the objectiun, of the latter." And so likewise Mr. Robinson, in his work on Patents, says. (volume 3, p. 125, § 938:) . "It is a part of the implied agreement between a licensor and licensee that the former will protect the latter against those wrongful invasions of his rights by instituting such proceedings as may become necessary for that purpose; and, if the legal ownel' of the monopoly refuses to perform this duty, or is inaccessible, the licensee may sue at law for damages in his name. A suit thus brought is under the control of the licensee, and, though the nOminal plaintiff may claim indemnity against the costs and expenses of the suit, he eannot discontinue it or settle with the Infringcor in derogation of the rights of the real party in Interest." In Goodyear v. Bishop, 2 Fish. Pat. Cas. 96, an exclusive licensee brought an action in the name of the licensor to recover damages for infringement. The defendant, upon the consent of the nominal plaintiff. moved to dismiss the action. This was,in effect, a motion by the nominai plaintiff himself to ,dismiss, and is therefore parallel to the motion made in this case by the Brush Company. But Judge NELSON denied the motion, thereby holding directly that the licensee conld use the name of the licensor even against his consent. . The same doctrine had previously been announced in Goodyear v. McBurnp.y, 3 Blatchf. 32. In Wilson v. Chickering, 14 Fed. Rep. 918. a licensee had brought suit in equity in his own name alone. 'rhe defendant demurred for wan t of proper parties. The court said: "I do .not, however, intend to be understood that the plaintiff will be without remedy if he cannot lind the patentee, or if the latter is hostile. The
I'EDERAr. REPORTER, -:vol.
st4\tute does not abridge Qie'P6wer of'l3\lOOl1rtof equity, to do justice to the parl.iesbefore itif otbers' who cannot are nptabsollJtely DllCessary parties. as in this case the patentee is not. .At law the plaintiff 'Coul<t use the lWaiDe'·ofthe patentee in an action. and ,perhaps, bemaybave i tha,tl'ight in equit,r ulldersomecil'cumstances. The ,biU,gives DO explanl\tiqno,f his abbQtit was said in argument that he ,is both out of the juri!JdMion, and b\)stile. If so. no doubtltbere are methods to a court "pfequity by which tbesultimay proCe8d rfor the beDe/HI olthe'only person ,who is entitled
,.
I
!Accordingly the demul'IIer was sustained.' with leave to file an amended bill. The trend Q'f the' decision is apparent. In our judgment. it means that the licensee had: aright to· join the llcensot. even without his But to place the matter:beyond albdoubb.!lofar as the authority of another case is concetned; we'1'llfer the courtto:the case of Brush-S'wan Electric Co. Co·· 48 Fed,,'Rep. 224. i There' ,an exclusive ;lillenseeof certain: terl'ttory 'Onder this same Brush patent had, htconnection with Brush Company, brought a',sl1it in equity for Infringement. The Brush Company, for ,the same purpose of swindling its licensee agin the base at bar. llt>peared:by special counsel. made the same Ulo.tion that is made here,oWto be dismissed from the suit on the ground ,that it had been brought without its consent. The learned Judge SnIPMAN. in rendering the opinion, after a<htertlng to the fact that the Thompson-Houston Companyacqtlired control ol'the< Brosh Company. (wbich he styles the Cleveland Company.) said;' among ()ther,thlngs: . " "Iuthiscaseitis true that the Cleveland Company is called upon to attack the:acts of itscootl'olling oMler. and in a certain sense to sue for its own iufrIngement. ,'Yet the two corporations ate separate legal entities. One can sue the other; :and it is not necessary for the licensee to sue alone, in order to prevertt an absolute failure of justice. When the owner, is not the in'fringer, and therefore cannot be made a defendant, if the· licensee is to have an opportunity to assert hisalleKed rights. he, is at a great disad vantage. un'less he has the power of a suit in eqUity in the narneof the owner, though against his will. In my opinion, he has, prima facie. such an implied power. Whether a court of equity would permit a wanton or unjust or inequitable use of the name of the owner of the patent by the licensee of the 'bare right to sell within a limited territory isa question which does not apparently arise. and upon' which I express no opinion. The motion is denied. It We submit that this decision disposes of the case at bar. Opposing coun:sel professes to find· certain, dissimilarities between the two cases. Upon ex'811llnaliion, it will be,fOl:md that they are puerile. They are dissimilarities as 'to certain details ofta.ct which in no way affect the legal questions involved. , In this conneotion it maybe asked why, we did not make the Brush Company a party defendant. Undouutedly it is a general rule that. where one whO should be joined as a plaiiltiffrefuses to join. he· may be made a defend,ant on that ground. the bill alleging that he is made defendant because be re>fuses tojoin8splaintiff. 1ff it were possible to pursue that ,course here, we 'wbuldbe onlytoq glad to' do so; 'but the Brush Compaayis an Ohio corporaand undel' tbe:act of:congress of March 3. 1887, it cannot be sued in this 'distl'ict. It canI;Jesued oUlyin the district of which it isa.ninhabitant. and that district is in' Ohio. Consequently it would be a vain and idle thing to ;make ita defendant; because,of'inability to procure legal service of process. "Wilson v. Telegraph 00'.· ,84 Repl5fH; Denton v. International Vo .· 36 ,Fed. Rep. 3. The Brush,OOmpany is "inaccessible" in the character of a defendant; and, in order to avert a failure of-justice, eqUity will infer and. presume a permissiontous6 tile name of that com.pany as a complainant; otherwi,se,there would' beawtobg .withouta remedy· , i!
.
BRUSH ELECTRleCQ. V,. CALIFOl/lJ:'lI4: .ELECTRIC I,IGHT CO.
955
HenryP:Bowie, for .appellant, in reply. Counsel for appellees :say: "It is also conceded by all that such a licensee cannot sue alone, but must join the owner of the legal title as a co-com· plainant." Counsel err. We concede nothing of the ij.ind in the sense claimed. The Brush Company's position on this proposition is that a mere licensee can neither sue alone nor otherwise to restrain' :an infringement by a stranger. The legal owner of the patent alone has that right and resp<msibility. and in equity he can join the licensee with him if necessary. Watennan v. Mac-, kenzie. Three decisions of the circuit courts .and two te:lCt writers are cited by appeHeesto sustain their contention tbatthe license.e can nse the name of the owner of the patent in infringement suits. In appellant's brief these citations nf.e.lIhown to be without authority, unsound, anij unsupported. The decisions are not by courts of last resort. They have no. more weight as au· thorityinthis court than any decision of a nisi prius court would have in a , court of appeals. If a licensee cannot sue at law or in equity in his oWn name, it is becaUSe he does not own or control the legal title. and only the owner of the legal title can sue. But, if the owner of the legal title is under the dominion of the licensee with reference to such snits, the rule is an empty one, for all the licensee need do to evade it is to use the owner's name as plaintiff in the suit, as attempted here. The theory of opposing counsel seems to be that because the patentee has the right to sue, and can join the licensee with him as a coplainliff in equity, therefore the licensee has the right to sue in equity, and join the patentee with him as a coplaintiff. Butthe rigtJtof the patentee to sue is statutory, and depends upon his ownership of the legal title to the monopoly. Upon what foundation this unwarranted pretension of the licensee rests, appellees have failed to show. The books are full of instances where the licensee has braved the rule, and sued in his own name, bu..t always to his complete confusion and disaster. In every instance he has been turned out of court. The federal courts have always sustained demurrers to complaints brought by licensees where the licensOl', owner of the patent, has not joined in bringing the action. But this is the first case on record where the licensee has gone a step further, and not only sued in his own name as licensee, but also in the owner's name, without the latter's authority, consent, or knowledge; so that this court is brought face to face with the proposition: Who controls the right to litigate the patent,-the owner orthe licensee? The authorities all say "the owner," whether he be patentee, assignee, or grantee. The California Company says, "the licensee." So that the incident controls the principle. The case at bar shows the danger of. such a proposition. The California Company alleges its coplaintiff. the light and power company, to, be a licensee of the Brush Company, and the Br!1sh Company is made, by this use of its name, to thus affirm what has no foundation in fact. Why imply an authority to sue in the patentee's name from a disability in the licensee to sue in his own name? 'fhe reason of the disability is that he neither owns nor controls the legal title; and yet that very disability is claimed to vest in him a greater control over the legal title than the owner himself is conceded, for under such implied power the licensee can force the owner to litigate the "Validity of the legal title for the benefit of the licensee, against both the will. judgment, and discretion of the owner of the monopoly. Nay, more than that; the licensee here actually excludes the owner from all control ofthe.litigation of his own property. Aye, even more; he commits the owner of the patent, in this very litigation, conducted in its (the patentee's)
956
I'EDERALREPORTER,
name, to allegations its. property rights and patent interests, and makes it declare, under the sanction of Mr. Roe's oath, aud in the form of a biHof complaint filed in the action, that it has licensed the San·Jose Company to'usethe invention in the territory where the infringement is laid, and that the same unlimited control over the patent and its fate has been conferred u{lQn this unknown, self-styled "licensee" of the Brush Compliny, as is claimed by the California Company. The learned counsel for the California Company have failed to produce a singlelldjudicatedcase; either in the circUit cOurt or in the slipreme court of the United States,w hleb lays down t:he proposition for wllich they contend, and by which they must stand or fall. No case can be found in the whole realm of jl1risprudencetouchingpatent law!1tbich that a licensee has the implied;absolUte,indefeasibI6\ -Vested powerto control the litigation of the patright·. In the only case which even approaches the sl1bject-Brnsh-Swan Electric Light OQ. V. 'Thotn.,on-Hou.yton Electric 00.,48 Fed. Rep. 224JUClge'Sim'MAN distinctly declines to lay down such a proposition. The Interest conveyed to a licensee simply operates to prevent the prohibitory powers being exercised by the owner against the licensee, and that is the sole relation to the patent of the interest transferred. Rob. Pat. § 754. Couneel 'fecognize the 'propriety of the rule compelling them to make the BrlishCOmp-any a defendant, and frankly say they would be "only too glad to do so" if lithe Brush Company were an inhabitant of this district, but that they ea ri not reach the company with process, as it is an inhabitant of Ohio. what We hav:ealwaysclaimed, that counsel hav,eno right to aetas the solicitors of the Brnsh'Company iii this action. It further admits that they hlWemade that company aplairttlff lJecallsethey could not get jnrisdiCtliun overltin,tliis district, if made a defendant. And this "inaccessibil. ity!' of 'Ute; BrUSh COmpany in this district is urged· by counsel as a reason <If·congress reqnil'ing corporations to beSlled. at their domiciles should be evaded, and that this court should assume a jurisdiction over the forcecl'pl-aintiff,becausethe California is unWilling to go to Ohio·, aud there '8ue '111 the proper forum, if it really thinks itself wronged.' . ..... .' . Coilnsel admitith'at this suit cannot be Iilaintained without the presence of the Bru'sW{Jomplmy.. Has that presenc(1 been secured, and jurisdiction ob. tainetloLtllts ' :necessary party, by merely naming it as a plaintiff,-against its will andll.uthori'ty,.......antlwill this court thereupon proceed to adjUdicate its rigllts> inits1absence,a:hd without appearance or process, because, forsooth,the: appellees gladly would\ but cannot, reach it by process if they made the Brush COmpany a .This is little less than legal heterodoxy. COunseL claim: that, if ,the Brush Company be dismissed, there will be II wrong Rui'ferea by the ,aIlrlellees Wit:lOUt a remedy afforded. But we think that, instead6fa. wrObgwith6uta remedy, the case. is one where a right is asserted without warrant,of.}aw, andlm.atternpt mada thrQugh such unwarranted assertionltoobtaindominion and oontrol over the property of another, -by mere force of assertion,-without submitting the claim to the adjudic.ltiqn ofa court having jurisdiction over the person against whom the claim is made. As well assel't title to realty on the strength of an alleged covenant to convey. Thi's 'is not a fail u1'1' of justice; it is a failure to Sill' in the right forum. Nor is it n wrong without a remedy, but an alleged wrong which, when properlypresented in a court which' hilS jurisdil'tion of the defendant Brush Company, will be lldjudicated. Whether or not'. the California Company has th& rights!t now asserts against the Brush Company, and seeks to secure withOllt trial or jlldgment, but by force alone of its own writ of execution, will then be determined·.
V.
CALIFuRNIAELECTRIC LIGHT
957
There are several other extravagant positions advanced by counsel for appellees. but. in view of a recent decision of the supreme court of the United States. made since this appeal taken, we think the whole controversy is closed, and disposed ()f iufavor of the Brush Electric Company. The case is entitled Pope ManU/'g 00. v. GormuZly & Jeffery Manuf'g Vo., 144 U. S. 248, 12 Sup. Ct. Rep. 641. The question involved was whether a patentee could split up his patent Into as many41ff'erent parts as there are claims, and vest the legal title to those claims in as many different persons, so as to enable them to sue for an infringement? Upon the authority of Gayler v. WUder, 10 How. 477, and Waterman v. Mackenzie, 188 U. S. 252,11 Sup. Ct. Rep. 884. the court. in affirmance of those leading authorities. holds the interest conveyed or assigned was that of a. mere license. The court says that, while the question involved in Gayler v. Wilder was different from the one involved in this case, "the trend of ,the .entire opinion is to the effect that the monopoly granted by law to the patentee is for one entire thing, and that, in order to el\able the assignee to sue, the assignment must convey to him the entire and unqualified monopoly which the patentee held in the territory specified. and that aay assignment short of that is a mere license." The court then cites with approval the remarks of Chief Justice TANEY in Gayler v. Wilder, that the "legal tight in the monopoly remains In the patentee. and he alone can tain aqaction against a third party who commits an infringement upon it." Before- McKENNA and GILBERT, Circuit Judges, and KNOWLES, District Judge. I!
" KNowJ.;tilS, District Judge. In this case the California Electric Light Company,. which will be hereafter designated as ,the" California ComJose Light & Power Company, which will be hereafter Jose Company," desiring to bring an action against the Company of Jose, which will be hereafter called, tlW "Electric Improvement Company," for an infringement of letters No. 219,208, for an improvement in electric arc lamps, grantell. ,tpone Charles F. Brush, joined with them as a coplaintiff the Brush Company, which will hereafter be called the "Brush Company." The Brush Company is the owner of said, patent by virtue of an from said Charles F. Brush. The Brush Company granted one William Kerr an exclusive license to use and seU, but not to manufacture, any and all inventions and devices under any and all patents owned or controlled by it, or which it might become possessed of, pertaining to dynamo electric machines, lights, lamps, carbons, and similar apparatus, for the full end of the term of such patents, and all extensions and,reissues thereof, in the states of California, Oregon, Nevada, and territory, now state, of Washington. William Kerr, with the written consent of the Brush Company, assigned this license to the California Company. This contract was made with the said Brush Company when it was designated as the "Telegraph Supply Company." By an act of the legislature of Ohio. under whose statutes this corporation was created,the Telegraph Supply Company had its name chalJged to that of th,e"Brush Electric Company." On the 27th day of March, 1882, the CaliforniaCompany granted to a corporation known as the San Jose Brush, Eleptric Light Company an exclusive license to use, rent, and sell
., . q
the ,said lam pdescribedirt said letters 'paten t the ilj LIght&'. :rower, GQrp..PlI-Qy" WaS, sah] S!in J veyed to it the license granted to it. After the said suit was instituted, the BrusH Companycamemfu,the cirouit court for the' northern district of California,"where earnewaspeMtng; and to dis,; .the cqueerned,':im thegl,',ouud thilths name without and or right. The California is all to the right oftheCalifornia,(Jotnpany to use the Brush Company's name in 'instituting:withinth'lHtate of California a suit for the infringement ofsaid letfersliatent; This elise was this eourtona motion to dis,n;llsS tMq,pP'Elal 6ft}1eBrush Company,pending iIi this court, on the order circuitc:ourt overruling tqe motion of the Brush Compally,todismifflJithecau,se to it was not a. finaljndgment. Upon considering the'question then' presented, we held that the order ovel'rtllingsaidn1dtion wa8a final judgment upon an iruportantcollateral Il1litter, and appealable: ' "51 Fed. Rep; 557. What was ita finaljudgment upon? It was a final judgment upon the point as ,to ,the right of the California Company in such an action to join as a coplaiutiff with it the Brush Company. There was some point made in the argument as to the manner in which 'thiel question should be determined, arid it was intimated that theCaliforhia Company should institute suit against the Brush Conlpany in Ohio; under whose laws it was created, to determine the same. The Brush Company saW fit,however, to coilie into the circuit court of California, a'ppeal to its jurisdiction, and' ask ,'to have it determined by it. It did so, and determined adversely to the Brush Company, and we' are hereealled upon to review that judgment·. Upon the hellring ofthe'inotion to distniss, numeroUs affidavits were introduced upon the point that the BrtishCompany had given the California tOl1se its name in all suits within California, Nevada, Oregon; and W'llshiJJgton for an infringement of said patent. In these it appearS that in one suit it had given such permis.; sion, namely,against the Electric Impro\7ement Company of San Francisco, and also that this cOlnpany owned 3',750 out of the 5;000 shares of' capital stock of said· 'Electric Improvement C6mpany. From this fa:ct the California Company' contends that the Electric Improvement Company is but the agent or creature'of the San Francisco Company, mmie in suing one and that a permission to use the Brush inclUdedthebt'her. While the facts are sufficient to warrant the suspicion that the formet is but the agent of the latter, t do not think the evidence presented warrllote the court in finding as a fact that such is the case. 'l'here is a statement in the affidavit of Roe' to the effect that it Was understood between the Brush, Company and the Califl)rnia Com,; pany that all infringers on the Pacifi'c cMst should be actively and earnestly prosecuted by both the Brush Company and the California pany, and that they shOUld join in all suoh aotions. This was corrobo-
to otl{ern'6r 'use' ahd Nd,'
i
BRUSH ELECTRt<i CO. fl. CALIFORNIA ELECTRIC LIGHT CO.
959
ra-tell by. the affidavits of 'Kerr and Cornwall. The affidavit of N. S. Possons, who was for some years superintendentof the Brush Company, is to the effect thaHhere was an underStanding between the officers of the Brush Company that it would sustain and support the· California CompalilY in all legal or other efforts, made in court, or out of it, to defeat infrinKing on machinery which said California Company was using' 'or contract made by it with said Brush Company. The facts out of which any understanding arose with the CaliforniaCompany and the .Brush Company should·have been stated. Whether or not there auch an understanding was the very point ilt issue, and it was. for-the court, .under tbe.evidence, to determine whether such an .understandinghadbeen reached, and not for the witness. A witness c$,nnot testify to a conclusion of law. Whart. Ev. 507. As a rule, witI:\esses must state facts, and .not draw conclusions from the evidence, Or give opinions. Id. 510, and note. The question did not require the opinion·ofan expert. Hence the witness had no right to state the oonclusionsbe reached from the evidence. The evidence of Possons does not go to· the point of any agreement between these companies. 'The officll:\'$ of the Brush Company may have agreed among themselves to the effect stated, but this would not prove any a.greement between the said two companies. After reviewing the evidence, we cannot find that there was any expr¢ss agreement entered into between the California Company and the Brush Company to the effect that the former might use. the name of the latter in suits for infringements of said letters patent, instituted within the states named in the license to it. The den of proof was upon the California Company to establish this fact. Was there any implied agreement to that effeot arising out of the contract of license between the two companies, and the relations thereby created between them? As I have stated, the grant was of the exclusive right to use and sell within the states named. This, under the authorities, was perhaps nothing more or less than a license. Walk. Pat. § 296; Hamilton v. Kingllbury, 17 Blatchf.264-270; Waterm.an v. Mackenzie, 138 U. S..252, 11 Sup. Ct.· Rep. 334. There is no foundation for the claim of appellant that the contract between eaid companies amounted only to the constituting of the California Company the agent for the selling of .the Brush Company's uevices and machines, which agency might be revoked or mouified by the Brush Company, its principal, at any time. The affidavits of Potter, Leggett, and Stockley, as to the intent of the contract with Kerr, and hence with the California Company, made August .2, 1879, are subject to the same criticismp.assed above upon the affidavit of Roe. It was not for them, but the court, to say what was the intent of the parties to that contract. This .the court should determine from the language thereof, if possible. The exclusive rjght granted to a person other than the patentee to use and sell a patented device within a named district of country excludes the owner of the letters patent from selling the same or using the same in that region. A licensee does not use or sell in the name of the owner of the patent, but in his own name, and for his own benefit. Having
960 all a.xclusivelicensetO ·selli no one bas a right to use ol"sell'in thartpuntry of sucb 'a ;, ," It wflithris be seen 'that the licensee in this reoeived· tantrig&ts;by virtue (lfits ;grl1nt. If it canttot use the its licenSor"in: flO aotion to proteotits rights against an patented device or improvement it has the exclusive rigJ.qJt·totise :and we\have a case of a impbrtant righunvith flO legal power't6'protectthem; for a licensee: cannot sueirl,his' oWll naIneifor an infi'ingemetltof the patentiooncerning whioh,he has a liOOllSb. 'Gdyler \l'.Wil4er, 10 How. 477jWaterman v. Mackenzie, 188 U.$.:252" 1'1 Sup. Ct. Rep. 884. "When ai person grants anything to another he :irnpliedly grantlflhim the Illeans of enjoying it."2 Washb. 'neal Prop. B02. The sam of: personal property located upon the land of the \l'Emd6ri:rnpliedly grant8:to the vendee the right to enter upon the land in order that he may possession of and remove this propertypurchllSed. Rogers v. Cox, 96 Ind. 157. These rules of law were established by courts to the end that justice should be subserved. The assignment of a chost! in action at common law was considered to be in the nature of a 'deClaration of trust"tbeassignor holding the legal title for the benefit of the assignee. 2 BL Comm. 442. IuLittlefield v. Perry, 21 Wall. 205"'-223, the supreme court held that 8 patentee retained the legal title in trust for his licensee; . The right of an assignee of a chose in action to sue the debtor grew-outol,an express or implied contract to that effect. At' common law theaseignment of a chose in action was accompanied by an agreementthll.t the assignee should haive the right to sue, in the name of the assignor, the debtor. Bl. Comm. 442. It is well known that it was not usual to reduce this agreement to writing, and that, it was an implied,rather than express, agreement, as a rule. An impliedagreernent orcontract.is "such as reason and justice dictate, and which, therefore, the lawptesumes that every man undertakes to perform." Id. 44S. We findthaf in certain cases the licensee makes with the licensor an express contract to the effect that 'he may use the name of the licerisor in suits for an infringement of a patent concerning whioh he has a license, in order that his rights may be protected. In one 'of the briefs ofappeDant this agreement is spokeaofasone of frequent occurrence. This matter of using the name oitha owner of a patent by the licensee is a right, then, resting in contract. IIi speaking of the power of a licensee to seek redress for a wrong' inflicted upon him by the infringement· of the patent concerning which he ,has a license, the language of the courts generally is that he cannot' sue, in his own name, an infringer. This would imply that he might sue in the name of the legal owner of the patent for that purpose. This is about the same language as was used at common law in regard to an assignee of a chose in action. He could not sue the debtor in his own· name, but he could use the name of the assignor in bringing an action against the debtor without the assignor's consent. Welch v. Mandeville, 1 Wheat. 233. In the case of Littlefield v. Perry, supra, the supreme court did not hesitate to maintain an action in the name of the licensee for an infringement of a patent, where
BRUSH
11. CALIFORNIA ELECTRIC LIGHT CO.
961
the patentee was the infringer. In the case of Waterman v. Mackenzie, 188 U. S. 252, 11 Sup. Ct. Rep. 334, the supreme court held that a licensee tnight sue 11'1 his own name when it was necessary to prevent an abiiolute failure of justice. This is the effect, I take it, of the language oithe court,there used. . These cases show how far courts have been willing to go in this matter to subselve the ends of justice. The Brush Company, being an Ohio corporation, can be sued only in that state,and hence could not be made a party defendant in this suit. Unless the Califomia Comp:my can use the name of the Brush Company herein, it has no means of protecting its rights; I think the same reasons that induced courts to hold that a grant gives the· right to enjoy the thing granted, that implies a license to enter upon the .lands of another to remove personal property thereon which the landowner has sold, and that implies a contract on the part of the assignor of a chose in action· that the assignee may use his name in a suit therEion, should induce courts to:bold, in a case like the one at bar, that there is an implied contract on the part of the owner of a patent, conveying an exclusive license, that- the licensee should have the right to use bis name in order that he may protect his rights. The appellant urges that the same rule should not apply in this case as in a chose in action, because the assignee of such an obligation receives the whole beneficial interest in the same. I cannot see, however, why the rights of an exclusive licensee, having as extensive interests as those of the California Company, should not be protected in law, as well as the assignee of a chose in action, and why the law would not imply the right to use the name of the grantor or assignor in one case as well as the other. The same considerations that induced courts to hold that such a contract was implied in one would apply to the other. In some cases it is held that in a suit in equity against an infringer an exclusive licensee and the patentee must both be made parties. Hamrrumd v. Hunt,4 Ban. & A. 111; Huber v. Sanitary Depot, 34 Fed. Rep. 752. If the right did not· rest in contract to make the patentee a party plaintiff in such a suit, a licensee such as the Califocnia Company would be powerless, because the Brush Company could not, as I have stated, be made a party defendant, being without the jurisdiction of the conti. Reason and justice would dictate that, under such circumstances, the law shonld imply or presume such a contract between the parties. As far as I have been able to ascertain, it has been always held, whenever the question has been presented, that an exclusive licensee has the right to use the name of the owner of the legal title to the patent in suits to protect his rights. In the case of Goodyear v. Bishop, 4 Blatchf. 438, NELSON, J., held that, where a suit was brought at law against an infringer in the name of the owner of a legal title to the patent, for the benefit of the licensee, a motion, made with the consent of the owner of the patent, to dismiss the action, could not be sustained, Rnd the same was overruled. Appellant affirms that in this case there was an express contract that" the licensee might use the name of the owner of the patent. This is not the language of the contract referred v.52F.no.ll.:....·61
962'
that tt 'was that the ,owner was to, sueinfringel'$, not, tilllt,theilicenseemighllJuse his name. ,If such waS the latlguage of the would showr however,that this, right: walJ'.the subject of, whereili1rrlatter is the subjeot of,c0ntract" there mayariae from circumstances an implied contract, which binding as an ': In'tb9; case ,0fBr'UBh'-Swan Electric Light 00. v. ThomFed. Rep. 224, it was held by Judge SHIP-' MAN: that ,a licensee; wheneV'ernecessary to assert his 'rights, has prima, jnci6 u'implied i,powerto use the,,'name of the owner, of a plltentin whiphlbe, has: a...Iicerise in ,any: a,ction against an infringer (or thatpQr-, '!'1t:lis contended because rthe ,,court. found, il) that case that the CotppanY.had.i a ,qontrollingamount ,of the, capital soockl0UHeBrl18h Electric CompaonYi that thereforeAhis latter company was aputy to SHIPMAN in etfectsQ held. I a mistake" :Whilethe learned judge sll;Js that really the Brds!ll,; )ompany:.,wast Ii :codefendantlWith, ,the Thomson.H<lUston COllI dlXiDot:suppose be really meant this asa matter of for fSaysinthenext sentence. ," But, being a resident of!\Dhiofl itscanhbtbe eerl:'6d with, ptOOOSSl as a codefendant in .thi$ BU it." Whiltilhe;did'-mealli, I!1J.ppr.eheM; was that the Brush Company was in suklhFa-eomditioiI tlia.tpiLsetvice colJlldbemade upon it, that company would,'be,a,codefendanb'L Thecaseehould be considered, howe,ver,in view.·0ftbe issuelJresetited. .company brought aniMtiomagmnllt, th,e,ffihoIDlIlon-Houston Electric Company:,foran mentrbf1tOe'verypatenfupresehtedinithis,case", In this 'action it joined: with ,it the Brush Company as acoplaintiff, without its consent. The Brtli'lh .:Gompaay;' 88 in,this casei :ca.me :intooou!'t, ,and moved to strike outitll'lname Ks,a partW"/complainant,.beoausetllHubill bad been filed witho'ut:-itSl,cOllSel'itor authority., 'li'lp.s Ulotionthe court denied. : This motioll',\wasnot Brush Company! was already a ,dethe,(jase, ];lui, because ,Company had, under the power to' use against its will the Brush C6mpany'lI'name,in,sucb a suit against Com;pany;, It would not'be :av:erysatisfactoryreason to assign for refusing to' strike. out ,the, ,Brush, Cmnpany'E1' niune. as a ,plaihtifl' that it was a 00· defendant withl'1lh-erTpomson'.,Houston OompanyiiJll,'jthe same caseal. r.eadYi mid, [roo, not, und:e:tStand the learned judge to; so decide. The ease is one, lin this The Brush Company would .undoubtedly: bue the righUo, be protected from anyoosts. that might be adjudged:agiti'tult it, .orcincurred in themanagemeat of the suit inquea. ti(m. '\ The,C()urti 'upon.'proper motioli,.'would without doubt compel c.r;'JJhe ,usual" practice. is in . such ..cases 'to require a auffi. dent, hondd.£. ',Undersuch conditiQusthere WOllld be ,an impliedcontraot otiithe fpart pf,the BrushCompatl'Y to permit the use of its name Company in the suit athar. It iscontel!ltled by the, ,BrushCompf\uy that, it not in fact owning the title to the und it not having been obtained at the time the Brush Company,,'und.er;the name of the'Telegraph Supply CGmpany, made
BRUSH ELECTRIc,.,
'V.CAI.tFORNIA 'ELECTRIC LIGHT CO.
9'63
withWilWnu ' Kerr, of the Ctiliforilia Company. therefor.e nothing in fact passed by tbM contract;i'that it Ilhollid betreated as a;' sale of personal prepertythat was not in existence. EM· an assignment of a;'pb.tent is good if made before the patent is actually obtained. Gayler V. 'Wilder, 'to How. 477. The same dbctHne'is affirroed'ih'LittllJfield v, Perry, supra· . In this case, although' fhe patent had not been obtained at'the time orihe granting of the license, it afterwards obtained, and'the Brush Company became the owner thereof. The California Company! has been, with the knowledge of the Brush Company, conducting an extensive business peftaining to the patent rutmed, relying upon its license to use and sell the same; According to the affidavit of Roe, the 'California Company has expended in the electric light business in the City of San Francisco, $892,531.31. It has purchased from the Brush Company electrical apparatus for which it has It has and is conducting an extensive paid said company business in such apparatus within the states named in its contract of license, and has sold to very many other companies such apparatus. The two companies have acted and conducted business since the Brush Company became the owner of the patent named, up to the present time, lipon the theory and basis that the license granted was valid. This is emphasized in the letters of the Brush Company to the California Company in regard to the suit against the Electrir. Improvement COmpany of San Francisco. The Brush Company, in writing to the California Company about the same, calls it "your suit," namely, the California Company's .suit. The California Company is required to pay the expenses of the attorneys the Brush COmpany sends to try the same. Many things more might be stated as to what these letters disclose upon this point. There can be no doubt but that the Brush Company considered and treated the California COmpany as its exclusive licensee to use and vend said patented device. In the terms of the grant of license it was contemplated that the license should extend to any patents which the Brush Company should thereafter acquire pertaining to dynamo electric machines. lamps, carbons, and similar apparatus. Under such ci\'cumstances, the Brush Company should be estopped to deny the validity o£the license granted the California. COmpany on the ground that it did not own said patent. or that it had no existence at the time the grant of license was made, or on the ground that it had no authority at that date to grant the license. To hold otherwise would work a most extensive fraud upon the California Company. The sale of a patent right contains an implied warranty as to title, and an afteracquired title obtained by the vendor inures to the vendee. Faulks v. Karnp, 3 Fed. Rep. 898; Curran v. Burdsall, 20 Fed. Rep. 835. In the case of Gottfried v. Miller. 104 U. S. 520, the supreme court applied this doctrine to a case where the purchaser of a machine had only a license to use it. The same rule that applies to estoppel" where a vendor of a title in fee to land subsequently acquires the full title, which he did not possess at the time of sale, applies to cases of the sale of patents, according to said case. The rule in such cases would fully cover the
964; of
.vol,. 52.
:maintain the title of the Oalifornia Company by way ' . Smith v. Sheeley, 12 Wall. 858. . The BlUSP Company claims the California Company has assigned in the city of .San Jose and town of Santa. all ita rights in the Clar3i.:totbe San Jose COplpany, and that, as this action is for an inon the said patent in those places, the California Company has.ino illterest ill t}:lis suitj .hence it has no right to use the name of the Brush (ilqmpany therein. Again, the Brush Company urges that the CaliforniaOompany had no:right to divide.its license into ;parts, and sign a part to the said San JOB,EI Company. These two positions are inI think the laHer,ppsition is the correct one. Unless there is a manifest intent in thewntract of license ,that the licensee is to have to divide into parts, and assign such parts in the s6veralty,110.lluch right exists. Walk. Pat. §.810. As a general rule, it may be s,aidtpat a license,is not divisible.. This contract should be referenQt) ,to this charactElristic of this class of rights. Consi<,lering this, and I,thinkthe term "assigns," as used in the license under co.n!3ideration in thi9caae, must be .construed as the right to assign;the, license as aQe,mtlrety, and not in parts. This question was o,{BrookB v. Byam, 2 Story, 525. and there it was held' that tbe word" assiglls') ill, a license must be so cOQstr\led where it didll()f! ,clearly appear tlpaHpere was an iJ,ltention manifested. in the contractoOiQense tQ establish ll;different The assignment to the San J ose,Omnpany.- then, w3'SVF#hout authority, and the rights. 9f the Caliill San Jose,and Santa Clara still it. The fac.ttpatit hll,s ulldertaken, make an assignment which it ,had no authorHy to make not ,work any forfeiture of its rights.. There is no in Qf .license ,that. any such action ;sha11. work a forfeiture of therf.glJ.ts gralltad by it. Under such circumstances, there is no forfeiture. Wa,lk. ·. § 308; Purriji,erOo. v. Wolf, 28, Fed. Rep. 814. claim by the California Company that the San Jose an h!ils created" or caused to be created, with a view of the business of the .sale.of the lamps named in the Plltent. Ifso,.I do pot see that it is a n,ecessary party to this action. While it maybe true that. the San Jose Company is not a proper party I .do see how this fact the California to this actiOI\, COtnPllonyfrolllexercising its right to join with it tbeBrush Company. For assigned we hold that .the judgment of the court below was correct, and should be affirmed, and it is so ordered.
BRUSH ELECTRIO CO. V. ELECTRIO IKP. CO.
965
BRUSH ELECTRIO
Co. et 01. ".
ELECTRIO
IMP. Co. S. 18W.)
(Circuit Ccmn, N. D. CaZVomia. October
No.I0,7M. 1. PJ.TBNTS WOR INVENTIONS-PIONEER INVENTO_ELECTRIO LllIPL
Letters patent No. 219,208, issued September 2, 1879, to Charles 11'. Brueh, for aD eleCtric lamp having two or more pairs of carbons, in combination with mechanism constructed to separate the pairs dissimultaneously or successively, thus producing a steady light for a long period of time, cover a pioneer invention, and are entitled to a liberal construction. The invention was not a mere improvement or modification of the single-C/'tbon lamp preViously invented by Brush, nor was there anything to limit the. scope thereof in the prior state of the art, either or as shown in the patent to M. Day, Jr., the French patent to Denayrouse, or the patented Jablochkofl candle. Brush Electric Co. v. Ft. Wayne Elect1"ic Liuht Co., 40 Fed. Rep. 833, and llnI.8h Eleetnic Co. v. Western Electric Light & Power Co., 48 Fed. Rep. 586, followed.
i.
SAME-LIMITATION 01' CLAIMS-PRIOR ART.
II SAME-FuNOTIONAL CLAIMS.
The fact that the claims purport to cover broadly all forms ()f mechanism conItructed to separate the two or more sets Of carbons dissimultaneously or successively does not render tbe patent void as being for a function or reSUlt, since particularmeans are described in the specifications and referred to in the claims; and the patent covers sucb means or their substantial equivalents. Brush 'Electric v. Ft. Wayne Electric Light Co., 40 Fed. Rep. 838, .and Brush Electric Co. v. Westem Electric Light & Power Co., 43 Fed. Rep. 586, followed. O'Reilly v. Morse, 15 How. 62, distinguished. ' '.
co.
.,. SAME-ABANDONMENT.
No limitation was placed the Brush patent by the fact thatbis claims, as first presented, were rejected as functional, and tbat the language was twice sligbtly changed, for the file wrapper shows that there was thees· sentialfeatures of the claims, 'and that the pateilt office, after a 'contest, finally yielded to the patentee's views. .' '.
'
5.
SAME..,..INPIUNGEMENT.
The Brush patent is infringed by ,the lamp made nnder letters patent. No. 480,722, issued .tune 24, 1890, to James J. Wood, in which tpe pairs of carbons are separated disstmultaneouslyor successively, notwithstanding the fact that this reslilt is accomplished In the Brush lamp by a clutching device, operated directly by the elec trical current, while in the Wood lamp it is produced by the interposition of clock mechanism, which is brought into actlon and controlled by the current..
In Equity. Suit by the Califomia Electric CompaIlY (licensee of the Brush Electric Company) and others against the Electric Improvement Company, the Brush Electric Company being joined as a plaintiff. A preliminary injunction was granted. 45 Fed. Rep. 241. Decree for complainants. M. M. Est6e, J. H. M'Uler, and L. L. Leggett, for complainants. W. F. Herrin and R. S. Taylm, for respondent. HAWLEY, District Judge. This is 8 suit in equity for the infringement of letters patent No. 219,208,granted to Charles F. Brush, September 2, 1879', for an improvembnt in electric arc }amps. The Brush Electric Company is the owner of the legal title of said -patent, and the