of the invention, so long as the identity of the machine is preserved,
was made of one who bought unconditionally, that Is, subject to no
specified limitation upon his right of use. The question of the effect
of limitations upon the right of use arose, however, in Mitchell v.
Hawley, and there we find the distinction was deemed material and
the effect declared.

In that case one Taylor was the patentee, imder a grant for a term
of fourteen years, for a machine for felting hats. By what Mr.
Justice Clifford calls "a conveyance or license, subject to certain
restrictions or limitations," one Bayley was given the —

exclusive right to make and use, and to license to others the right to use the
said machines in the States of Massachusetts and New Hampshire, * • ^
during the remainder of the original term of said Letters Patent,

subject to a stipulation that —

the license shall not in any way or form dispose of, or sell, or grant any license
to use the said machines beyond the expiration of the original term.



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DECISIONS OP UNITED STATES 00T7BTS IN PATENT CASES. 583

There was also a provision that if the term of the patent should
be extended Bayley should have the right to control the same in those
two States, upon paying a reasonable compensation, etc

Bayley, as such licensee, made and sold four machines to the appel-
lant Mitchell, with the right to use them for felting hats in the town
of Haverhill, Mass., "under Taylor's patent bearing date May 3,
1864." Before the patent expired it was extended for the further
term of seven years, the benefits of which extension for the said two
States were assigned to the appellee Hawley. Hawley then filed his
bill to restrain Mitchell from using the four identical machines
which had been sold to him by Bayley. From a decree restraining
their further use Mitchell appealed. Mr. Justice Clifford, before
stating the facts upon which the judgment must rest as to the right
of Mitchell as the purchaser of the machines to continue their use
after the expiration of the original term of Taylor's patent, and after
directing attention to what he termed —

the weU-founded distinction betw^i the grant of the right to make and vend
the patented machine and the grant of the right to use it,

which, he says —

was first satisfactorUy pointed out by the late Chief Justice Taney, with his
accustomed clearness and precision,

says:

Purchasers of the exclusive privilege of making or vending the patented
machine hold the whole or a iwrtion of the franchise which the patent secures,
depending upon the nature of the conveyance, and of course the interest which
the purchaser acquires terminates at the time limited for its continuance by
the law which created the franchise, unless it be expressly stipulated to the
contrary. But the purchaser of the implement or machine for the purpose of
using it in the ordinary pursuits of life stands on different grounds, as he does
not acquire any right to construct another machine either for his own use or
to be vended to another for any purpose. Complete title to the Implement or
machine purchased becomes vested in the vendee by the sale and purchase,
but he acquires no portion of the franchise, as the machine, when it rightfully
passes from the patentee to the purchaser, ceases to be within the limits of
the monopoly.

In the succeeding paragraph he, in effect, limits what was above
said to unconditional sales of such patented machines by adding this :

Patented implements or machines sold to be used in the ordinary pursuits
of life become the private individual property of the purchasers, and are no
longer specifically protected by the pat^it laws of the State where the imple-
ments or machines are owned and used. Sales of the kind may be made by the
patentee with or without conditions, as in other cases, but where the sale is
absolute, and without any conditions, the rule is well settled that the purchaser
may continue to use the implement or machine purchased until it is worn out,
or he may repair it or improve upon it as he pleases, in same manner as if
dealing with property of any other kind.

54282"— 13 40



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584 DECISIONS OF UNITED STATES COUBTS IN PATENT CASES.

The force and bearing of this opinion cannot be escaped by sug-
gesting that the court was referring to mere common-law contractual
conditions, for the suit was to restrain infringement by the use of
four machines which had been gold, not leased.

That the bill was one alleging and seeking to enjoin further use
as an infringement of the patent is shown by the statement that
'"they," referring to the purchaser Mitchell and those associated with
him —

appeared to tbe suit and filed an answer setting np as a defense to the charge
of infringement that they are by law authofifled to continue the use of the four
machines just the same under the extended Letters Patent as they had the
right to do under the original patent, when the purchase was made by those
under whom they claim, which is the only question in the case.

The question argued, as shown by the brief, as set out in the report,
was there, as here, that by a sale of the machines —

they were taken out of the reach of the patent law altogether, and that as long
as the machines themselves lasted, the owner could use them.

For the patentee it was urged that —

the right to make and use and to license others to use was expressly limited
by apt words, showing clearly an intent that it should not survive the original
term of the pat^it.

This latter was the argument which prevailed. Mr. Justice Clif-
ford, after referring to the principle of law that one cannot convey a
better title or right than he has, said, touching the restriction im-
posed by Bayley on the machines sold by him to Mitchell :

The form of the license which he gave to the purchaser shows conclusively
that he understood that he was not empowered to give a license which should
extend beyond that limitation.

Later, referring to this sale with license to use, the learned Justice
says :

The terms of the license which the seller gave to the purchasers were suffi-
cient to put them upon inquiry, and it is quite obvious that the means of
knowledge were at hand, and that if they had made the least inquiry they
would have ascertained that their grantor could not give them any title to
use the machine beyond the period of fourteen years from the date of the
original Letters Patent, as he was only a licensee and never had any power to
sell a machine so as to withdraw it indefinitely from the operation of the pro-
tection secured by the patent

The distinction between the sale of a machine free from specific
restrictions upon the right of use and a sale subject to such limita-
tions becomes the more evident, in view of the fact that but for the
license to use only for the remainder of the original patent term the
purchaser would have acquired the right to continue the use during
an extended term of the same patent. This was the express holding
in the two prior cases of Wilson v. Rosseau (4 How., 646) and



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DECISIONS OF UNITED STATES COURTS IN PATENT CASES. 585

Bloomer v. McQuewan^ (14 How., 639,) where the unlimited right
of use by an unconditional purchaser was laid down in the strongest
terms, and which cases are now relied upon by counsel in this case as
equally applicable to^a sale subject to a restricted use.

It is obvious that if Taylor, the patentee, could authorize Bayley to
make and sell the patented machines, subject to the restriction that
he should not sell for use beyond the terms of the original patent,
and that a purchaser of the machines so made and sold by Bayley,
with notice, would infringe the extended patent by a use after the
original term has expired, it is because the exclusive right of the
patentee embraces the right to make and sell patented machines sub-
ject to restrictions upon the right of use, which, if not observed, will
support an acticm for infringement

An absolute and unconditional sale operates to pass the patented
thing outside the boundaries of the patent, because such a sale im-
plies that the patentee consents that the purchaser may use the ma-
chine so long as its identity is preserved. This implication arises,
first, because a sale without reservation, of a machine whose value
consists in its use, for a consideration, carries with it the presumption
that the right to use the particular machine is to pass with it. The
rule and its reason is thus stated in Robinson on Patents^ (sec. 824:)

The sale must furthermore be unconditional. Not only may the patentee im-
pose conditions limiting the use of the patented article, upon his grantees and
express licensees, but any person having the right to sell may at the time of
sale restrict the use of his vendee within iE^)e€ific boundaries of time or place
or method, and these will then become the measure of the implied license arising
from the sale.

The argument for the defendants ignores the distinction between
the property right in the materials composing a patented machine,
and the right to use for the purpose and in the manner pointed out by
the patent. The latter may be and often is the greater element of
value, and the buyer may desire it only to apply to some or all of the
uses included in the invention. But the two things are separable
rights. If sold imreservedly the right to the entire use of the inven-
tion passes, because that is the implied intent; but this right to use
is nothing more nor less than an unrestricted license presumed from
an unconditional sale. A license is not an assignment of any interest
in the patent. It is a mere permission granted by the patentee. It
may be a license to make, sell, and use, or it may be limited to any one
of these separable rights. If it be a license to use, it operates only
as a right to use without being liable as an infringer. If a licensee
be sued, he can escape liability to the patentee for the use of his
invention by showing that the use is within his license. But if his
use be one prohibited by the license, the latter is of no avail as a
defense. As a license passes no interest in the monopoly, it has been



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586 DECISIONS OP UNITED STATES COURTS IN PATENT CASES.

described as a mere waiver of the right to sue by the patentee. (Rob.
on Pats., sees. 806, 808.)

We repeat The prope ty right to a patented machine may pass
to a purchaser with no right of use, or with only the right to use in
a specified way, or at a specified place, or for a specified purpose.
The unlimited right of exclusive use which is possessed by and guar-
anteed to the patentee will be granted if the sale be unconditional.
But if the right of use be confined by specific restriction, the use not
permitted is necessarily reserved to the patentee. If that reserved
control of use of the machine be violated, the patent is thereby in-
vaded. This right to sever ownership and use is deducible from the
nature of a patent monopoly and is recognized in the cases.

In Saioin v. Guild (1 Gall., 485) Mr. Justice Story, as far back
as 1813, recognized the distinction by holding that a sale of patented
machines under an execution against the patentee did not render the
sheriff liable under a statute which made any person liable who
should sell a patented device without consent of the patentee, because
the sheriff had merely sold the materials and had not undertaken
to pass any right of use. But in Wilder v. Kent (C. D., 1883, 188;
23 O. G., 831; 15 Fed. Rep., 217) it was held that under such an
execution sale there passed whatever right of use the ddbtor had if the
sale was unconditional.

Judge Lowell, in Porter Needle Co. v. National Needle Co.^ (17
Fed. Rep., 536,) after saying that an absolute and unqualified sale
of a patented machine carried with it the right of use, said :

But the mere value of a patented machine is often, as is proved to be in this
case, insignificant in comparison with the value of its use; and the courts
have permitted a severance of ownersliip and right of use, if the pateutee has
chosen to dissever them and if his intent is not doubtful.

It is plain from the power of the patentee to subdivide his ex-
clusive right of use that when he makes and sells a patented device
that the extent of the license to use which is carried by the sale must
depend upon whether any restriction was placed upon the use and
brought home to the person acquiring the article.

That here the patentee did not intend to sell the machine made by
it subject to an unrestricted use is of course undeniable from the
words upon the machine, viz :

LICENSE BESTBICTIOll.

This machine is sold by the A. B. Dick Co., with the license restriction that
It may be used only with the stencil, paper, ink and other supplies made by
A. B. Dick O).

The meaning and purpose of this restriction was that while the
property in the machine was to pass to the purchaser, the right to
use the invention was restricted to use with other articles required



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DECISIONS OF UNITED STATES COUBTS IN PATENT CASES. 587

in its practical operation, supplied by the patentee. It was stated at
the bar, and appears fully in the opinion of Judge Ray, (149 Fed.
Rep., 424,) who decided the case in the circuit court, that the patentee
sold its machines at cost, or less, and depended upon the profit
realized from the sale of other non-patented articles adapted to be
used with the machine, and that it had put out many thousands of
such machines under the same license restriction. Such a sale, while
transferring the property right in the machine, carries with it only
the right to use it for practicing the invention according to the terms
of the license. To no other or greater extent does the patentee con-
sent to the use of the machine. When the purchaser is sued for in-
fringement by using the device, he may defend by pleading, not the
general and unlimited license which is carried by an unconditional
sale, but the limited license indicated by the metal tablet annexed
to the machine. If the use is not one permitted, it is plainly an in-
fringing use.

If, then, we assume that the violation of restrictions upon the use
of a machine made and sold by the patentee may be treated as in-
fringment, we come to the question of the kind of limitation which
may be lawfully imposed upon a purchaser.

To begin with, the purchaser must have notice that he buys with
only a qualified right of use. He has a right to assume, in the absence
of knowledge, that the seller passes an unconditional title to the
machine, with no limitations upon the use. Where, then, is the line
between a lawful and an imlawful qualification upon the use? This
is a question of statutory construction. But with what eye shall we
read a meaning into it? It is a statute creating and protecting a
monopoly. It is a true monopoly, one having its origin in the ulti-
mate authority, the Constitution. Shall we deal with the statute
creating and guaranteeing the exclusive right which is granted to
the inventor with the narrow scrutiny proper when a statutory right
is asserted to uphold a claim which is lacking in those moral elements
which appeal to the normal man? Or shall we approach it as ai
monopoly granted to subserve a broad public policy, by which large
ends are to be attained, and, therefore, to be construed so as to give
effect to a wise and beneficial purpose ? That we must neither trans-
cend the statute, nor cut down its clear meaning, is plain. In Bement
V. NaHonM Harrow Co. (C. D., 1902, 666; 101 O. G., 887; 186 U. S.,
70) this Court quoted with approval the language of Chief Justice
Marshall in Grant v. RaymoncL, (6 Peters, 218.) Concerning the
favorable view which the law takes as to the protection extended to
the exclusive right, the Court, through Chief Justice Marshall, said :

It is the reward stipulated for tlie adVantages derived by the pubUc for the
exertions of the individual, and is intenhed as a stimulus to those exertions.
The laws which are passed to give effect to this purpose ought, we think, to be



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688 DECISIONS OF UNITED STATES COtJBTS IK PATENT CASES.

construed in the spirit in which they have been made; and to execute the con-
tract fairly on the part of the United States, where the full benefit has been
actually received; if this can be done without transcending the intention of the
statute, or countenancing acts which are fraudulent or may prove mischievous.
The public yields nothing which it has not agreed to yield; It receives ail which
it has contracted to receive. The full benefit of the discovery, after its enjoy-
ment by the discoverer for fourteen years, is preserved; and for his exclusive
anjoymeni of it during that time the public faith is pledged.

If the patent be for a machine, the monopoly extends to the right
of making, selling, and using, and these are separable and substantial
rights. In Bloomer v. McQuewan (14 How., 639) it is said that the
grant is of —

the right to exclude every one from making, using, or vending the thing without
the permission of the owner.

In Bement v. National Harrow Co. (C. D., 1902, 666; 101 O. G.,
887 ; 186 U. S., 70) there was involved the legality of certain contracts
between patentees of and dealers in patented harrows. The purpose
and effect of the combination and of the contracts between the parties
was to fix and keep up the prices at which licensees might sell the
patented harrows. It was claimed that the combination and contracts
were obnoxious to the Sherman Act ; but, upon the other side, it was
said that as the contracts concerned only the sale of patented articles
that that act did not apply. The character of the monopoly granted
under the patent act was therefore involved. Touching the right of
the patentee to exclude all others from the use of his invention, the
Court quoted with approval what was said in the Button Fastener
Cases, (C. D., 1897, 216; 78 O. G., 171; 77 Fed. Rep., 288,) as follows:

If he sees fit, he may reserve to himself the exclusive use of his invention or
discovery. If he will neither use his device nor permit others to use it, he has
hut suppressed his own. That the grant is made upon the reasonable expecta-
tion that he wiU either put his invention to practical use or permit others to
avail themselves of it upon reasonable terms is doubtless true. This expectation
is based alone upon the supposition that the patentee's interest wUl induce him
to use or let others use his invention. The public has retained no other secnrity
to enforce such expectations. A suppression can endure but for the life of the
patent, and the disclosure he has made will enable all to enjoy the fruit of his
genius. His title is exclusive and so clearly within the constitutional provisions
in respect of private property that he is neither bound to use his discovery him-
self nor permit others to use it

In the Paper Bag Cases (C. D., 1908, 594; 136 O. G., 1297; 210
U. S., 405) this right to exclude others from all use of the invention
was held to be so comprehensive that a patentee was allowed to
restrain, by injunction, one who was infringing his patent, although
he had, during a long term of years, neither used his invention him-
self, nor allowed others to use it.



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DB0I8I0KS OP UNITED STATES COUBTS IN PATENT CASES. 689

That there are limitations upon the right of vending and usipg a
patented machine may be conceded. Thus, if the thing patented
belong to a class of things which on account of their inherent danger
to the public safety or health cannot be sold or used because prohibited
by an exertion of the police power of a State, they will not be immune
to such a law because patented. Upon this ground a patent for " an
improved buming-oil," was held not to take the article without the
operation of a State statute forbidding the sale of oil which was
unsafe for illuminating purposes. {Patterson v. Kentucky^ 97 U. S.,
501.) And so in the Bement case, the Court said of this exclusive
grant of privilege :

It is true that in certain circumstances tbe sale of articles manufactured
under Letters Patent may be prevented wh^ tlie use of such article may be
subject, within the several States, to the control which they may respectively
impose in the legitimate exercise of their powers over their purely domestic
affairs, whether of internal commerce or of police regulation.

In that case the question was not one of infringement, but one
arising in a suit to enforce certain contracts directly restraining com-
merce in patented articles which were claimed to violate the Sherman
law, although the agreements covered only patented articles. The
Court, after referring to the exceptions to the patentee's monopoly
resulting from conflict with the police power of the State, said :

Notwithstanding these exceptions, the general rule is absolute freedom in the
use or sale of rights under the patent laws of the United States. The very
object of these laws is monopoly, and the rule is, with few exceptions, that Hny
conditions which are not in their very nature illegal with regard to this kind
of property, imposed by the patentee ahd agreed to by the licensee for the right
to manufacture or use or sell the article, will be upheld by the courta The fact
that the conditions in the contracts keep up the monopoly or fix prices does not
raider them iUegal.

Now, if this was a suit to recover damages upon the contract not to
use the machine except in connection with other articles proper in
its use made by the patentee, the only possible defense would be that
the agreement was one contrary to public policy in that it affected
fredom in the sale of such articles to the user of such machines. But
that was the nature of the defense made to the suit to enforce the
agreements under consideration in the Bement case. The Court in
that case found that the contracts did include interstate commerce
within their provisions and restrained interstate trade, but with
reference to the Sherman Act said :

But that statute clearly does not refer to that kind of a restraint of inter-
state commerce which may arise from reasonable and legal conditions imposed
upon the assignee or licensee of a patent by the owner thereof, restricting the
terms upon which the article may be used and the price to be demanded there-
for. Such a construction of the act, we have no doubt, was never contemplated
by its framers.



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590 DECISIONS OF UNITED STATES COURTS IN PATENT CASES.

As to whether the restrictions upon sales imposed by the agree-
ments were '^ legal and reasonable conditions," the Court said :

The provision In regard to the price at which the licensor would aeU the
article manufactured under the license was also an apprc^riate and reasonable
condition. It tended to keep up the price of the Implements manufactured and
sold, but that was only recognizing the nature of the property dealt in, and pro-
viding for its value so far as possible. This the parties were legally entitled to
do. The owner of a patented article can, of course, charge such price as he may
choose, and the owner of a patent may assign it or sell the right to manufacture
and seU the article patented upon the condition that the assignee shaU chaige a
certain amount for such article

If the stipulation in an agreement between patentees and dealers
in patented articles, which, among other things, fixed a price below
which the patented articles should not be sold, would be a reasonable
and valid condition, it must follow that any other reasonable stipu-
lation, not inherently violative of some substantive law, imposed by
a patentee as part of a sale of a patented machine, would be equally
valid and enforceable. It must also follow, that if the stipulation be
one which qualifies the right of use in a machine sold subject thereto,
so that a breach would give rise to a right of action upon the con-
tract, it would be at the same time an act of infringement, giving to
the patentee his choice of remedies.

But it has been very earnestly said that a condition restricting the
buyer to use it only in connection with ink made by the patentee is
one of a character which gives to a patentee the power to extend his
monopoly so as to cause it to embrace any subject, not within the
patent, which he chooses to require that the invention shall be used
in connection with. Of course the argument does not mean tiiat the