94;Qt
J'EDEBAL REPORTER,
vah ,61.
UNION iMVITot! & SIGNAL CO. v. JOHNSON RAILROAD SIGNAL CO. ,j"', I
1 : ... ,',
.
(QircUtt'Court of Appeals, Third Circuit.
May'24, 1894.)
No. 18. :.. AUTHclRITY 011' AGENT TO SELL PATENT-INTERPRETATION OF POWER OF ATTORNEY.
A power of attorney which, In consideration of a prescribed royalty, appoints the donee sole agent In the United States the purpose of working and developing the business of said patents," with power to "negotiate the S8leot the said patents upon terms to be agreed upon;' does not give the agent, PQWeJr to grant an exclusive llcense, which WOUld. transfer subinterestJn the patent; but it does authorize him to grant nonexclUSIve licenses to manufacture and Iilell. A contt8.ct which purports to convey, for a prescribed royalty, the sole an:(l e:X.1Clusive right and license to mltke, use, and sell In the United States the Improvements covered by a patent JrOf the full term thereof, is in substance a if not an. l1£t1,tal sale. 59 Fed. 20, a1Il.rmed. . CONTRACT.
2.
8. UNAUTHORIZED SALE BY AGENT-RATIFICATION.
The sale, by an agent who had .authority to grant nonexclusive licenses oniy, of an exclusive license transferring in substance the entire patent, may be held good as a nonexclusive llcense, when the licensees have been misled b;V the ambiguous language used by the principal in On ;the ,agent. and especially when the principal has long recognized i them as in so doing, he was unaware that their license he. e4clusive.
4.
POWER OFAT'fORNEY-CONTj;\ACT IN ATTORNEY'S NA1tlE-VALIDITY.
It seems that when a contract which may be made, by parol is put in writing, merely for convenience and certainty of proof, as in the case of a nonexclusive.'li(!ense,to make and sell under a patent, the fact that the ,writing purports to be made under a power of attorney, but is executed by the attorney in his own name, will not render the contract void.
Appeal from t;he Circuit Court of the United States for the Western District of Pennsylvania. This was a billby the ,Johnson Railroad Signal Company against the Union Switch & Signal Company, for 'infringement of letters patent No. 241,246, issued to Frederick Cheeswright, for "improvements in railroad signal apparatus." Cheeswright, by a pOwer or attorney, which is set out in the opinion, constituted one Yeomans his attorney in fact in the matter of the patent, and deferidant claims under a conveyance by· Yeomans, dated March 21, 1882. Plahitiff claims title to the same patent under a power of attorneyfromCheeswright to Henry Bezer, dated October 31, 1889, and an assignment of the patent ,from the latter. The case was' heard ill the circuit court on a motion for leave to file a cross bill;aIid!fdr:an order for substituted service (43 J)'ed. 331). Afterwards, a motion by the cross complaiJiant for an order for an injunction was denied (51 Fed. 85). A decree was finally rendered for complainant (59 Fed. 20). Defendant appealed. George H. Christy and So Schoyer, Jr., for appellants. George W. Miller and Wm. R. Blair, for appellees. Before DALLAS, Circuit Judge, and BUTLER and GREEN, District Judges.
UNION SWITCH &: SIGNAL CO. ll. JOHNSON RAILROAD SIGNAL CO.
941
BUTLER, DistrictJudge. The plaintiffs filed a bill against the defendants for infringement of the Sykes patent for "improvement in electric railroad signal apparatus," granted to Frederick OheesWright (assignee of the inventor, Sykes), numbered 221,246, dated May 10, 1881. The defendants answered denying the right set up and, under a claim of title and charge of infringement by the plaintiffs, filed a cross bill. Issues were duly formed and proofs taken; and after hearing a decree was entered in the plaintiffs' favor-for an injunction, and an account of profits since October 31, 1889. From this decree the defendants appealed, and filed the following specification of errors: "(1) That the court erred in finding that the original complainant, the Johnson Railroad Signal Company, had a good title to, or was the lawful owner of the patent for infringement of which the suit was brought, and as such could maintain an action against this appellant for the infringement thereof. "(2) That the court erred in not finding that this appellant, the Union Switch & Signal Company, was the lawful owner of" or had a good title to the exclusive right under the patent for an alleged infringement of which the suit was brought. "(3) That the court erred in finding that the assent of Frederick ChOO8wright was essential as a condition precedent to the validity of the right and title claimed by this appellant. "(4) '.rhat the court erred in finding that the proofs failed to show that 'Cheeswright assented to, or ratified the instrument of March 21, 1882, under which this appellant claims the exclusive right under the patent sued on, or that he acquiesced therein after knowledge. "(5) That the court erred in not finding that the proofs show that Cheeswright had knowledge of the said instrument of March 21, 1882, and that he acquiesced therein after knowledge. "(6) The court further erred in finding that the grant of exclusive license from D. M. Yeomans to this appellant, by instrument dated March 21, 1882, was a sale of the patent. "(7) The court erred in failing to hold that a of an exclusive right under a patent was a proper and lawful method of working and developing the business of the patent in question. "(8) The court erred in construing the instrument of September 10, 1881, executed under the hand and seal of Cheeswright to D. M. Yeomans, and in pursuance of which, the sald Yeomans, by the said instrument of March 21, 1882, conveyed to the appellant an exclnsive right to the use of the patents therein described, to be a power of attoruey merely, and that the samE' created an agency personal to the said Yeomans alone, and not to his assigns, and, therefore, not transferable. "(9) The court erred in not holding that the instrument of September 10, IS81, was a valid vesting in Yeomans of the rights and interests therein described, for the purposes in said instrument mentioned, and that said rights and interest so vested were irrevocable. "(10) The court erred In finding or 1'101ding that the right or license under the patent in suit, granted to this appellant by the Yeomans' instrument of March 21, 1882, was revoked or terminated under the authority purported . to be granted to one Bezel' by Frederick Cheeswright. "(11) The court erred in holding that the instrument executed by Yeomans on March 21, 1882, was not binding upon Frederick Cheeswright. "(12) The court further erred in not holding that the attempted revocation by Cheeswright, by the instrument dated October 31, 1889, of Cheeswright to Henry Bezel', was ineffective, as against the appellant. "{lS) The court erred in not finding that the alleged revocation by Cheeswright, by the .instrument dated October 31, 1889, or by his alleged agent, Bezel', was ineffective as against this appellant prior to notice ofrevocatioll -duly given to this appellant.
942
'I'EDERAL BEPORTER,
vol. 61.
"(14) The court further erred in not holdIng that by the instrument of September 10, 1881,the saId Yeomans acquIred an Interest which was irrevocable by the saidCheeswr1ght. "(15) The co:urt erred in ftnding that. this appellant had done any act in infringemElotof the patent sued 00· ."(16) TbElWurt erred In Dot finding and holding that the Johnson RaIlroad Signal COnlpanr.had Intiinged the letters patent In suit, and violated the exclusIve tights vested. In this appellant, as set forth in the cross bill. "(17) 'l'he court erred in allowing an accounting of all sums of money due from this. under the Instrument In writing between defendant and D. 1\:1:. Yeomans, dated Mar<lh 21, 1882, and unpaid on October 31, 1889, "(18) The court erred In failing to find the original complainant was estopped by the acts of certain of its officers from bringing the original action against this appellant, or from asking for an injunction or an accounting or other rellef therein. "(19) The court erred in allowing complainant costs under the original bill. "(20) The court erred in falling to sustain the cross bill, and in not grantIng to this appellant the relief therein prayed or grantable thereunder, with costs. "(21) The court erred In failing to dismiss the original bill for want of jurtsdiction in equIty."
It is unnecessary to consi4er these assignments separately. Collectively, they present the following questions: First Have the plaintiffs title? If they have, then, Second. Have the defendants rights under it? Other subordinate questions raised will be considered in answering these. As respects the first, we agree With the circuit court; the plaintiffs have title, and no mOre need be said on the subject at present. .question we are unable to agree with As .respects the that COlIrt. We believe the defendants acquired rights under the patent, through their contract. with Yeomans, which still exist. To determine what the rights are requires a construction of Cheeswright's contract with Yeomans, which is as follows: "To All to Whom These Presents shall Come: "I, Frederick Cheeswright, of 81. Dunstan's Buildings, St. Dunstan's Hill, in the cIty of London, notary public, proprietor and assignee of 'Sykes' Patent Lock and Block-Signals for Railways,' under and by virtue of patent for the United States of America, dated the 26th April, 1881, and numbered 240,622, and patent also for the United States of America, dated the 10th May, 1881, and numbered 241,246, ·do hereby for myself, my heirs, executors, administrator!; and assigns,. appoint D. M. Yeomans, esquire, of Lexham Gardens, South Kensington, London, gentleman, my sole agent for the United States of America, for the purpose of working and developing the business of the said patent In those parts, for and in consideration of a payment to be well and truly made by the said D. M. Yeomans to me, the said Frederick Cheeswrlght, my heirs, executors, administrators and assigns, as royalty, of four pounds per lever, British money, for every lever fitted upon any railway in the United States to which 'Sykes' System of Signaling' may be attached or connected, with power for. the said D. M. Yeomans to negotiate the sale of the said patents, upon terms to be agreed upon. "In witness whereof I have hereunto set my hand and seal. this 10th day of September,one thousand eif(ht hundred and eighty-one. Frederick Cheeswright." "lSeal.]
. Tliislanguage, as the circuit court justly says, "is somewhat indefinite; and involved the exercise by Yeomans of a reasonable degree of discretion." The instrument is not a simple power of attorney; it has many of the characteristics of an exclusive license. ,Yeomans is to "work and develop the business of the patent
UNION SWITCH &; SIGNAL CO. !1. JOHNSON RAILROAD SIGNAL CO.
943
:944
I'EDEBAL UPORTER,
authority Is attributable to Cheeswrlght's indefinite and anibiguOUB language; and as before remarked, the error, with the license so construed, can do him and his assignees no harm; while to the defendants, who were thus misled into the expenditure of money and the preparation for an extensive business, it may result in serious loss, and certainly would if we adopted the plaintiffs' views. Furthermore Cheeswright was cognizant for years, that they had acquired rights under tbe patent-at least that they were manufacturing and selling, presumably under license, and not only did not object, but recognized their rights, and claimed to be paid the royalties thus earned. It is true he was unaware (so far as appears) that the license was exclusive in terms; but that is unimportant here. The justice of this view is, to a limited extent, conceded; and the decree, in consequence, relieves the defendants from liability for infringement prior to the revocation of Yeomans' authority. But why should the effect of the license be so limited-why should the annul it? It was granted while the authority was in full force. The defendants were not agents or attorneys of Yeomans, and liable to be affected by his. dismissal. They are purchasers of a license. without limitation as to time, and irrevocable. As well might it be said that railroad companies purchasing signals and rights to· use them would lose the fruits of their purchases by the subsequent annulment of Yeomans' authority. Granting that Yeomans' authority might be revoked (and we believe it might under the doctrine of Willcox & Gibbs S. M.Co. v. Ewing, 141 U. S. 627 [12 Sup. Ct. 94]), all acts previously done in pursuance of it remain in force. It is urged that Yeomans' contract with the plaintiffs is fatally defective because the paper witnessing it is not in Cheeswright's name. The paper recites the power of attorney and is made in pursuance of it. The objection is purely technical, without color even of substance. Rarely has this doctrine been applied in modern times to a case where the instrument bore evidence that it was executed in pursuance of the power, without the court feeling' called upon to excuse itself for doing so. Still if the defendants' right grew out of the paper alone, -that is if the license could only be created by writing,-the defective execution (if it is defective) would present difficulty. The right does not, however, grow out of the paper, but out of the contract, of which the paper is evidence simply. The law does not require such a paper to create or support a license; Walk. Pat. (2d Ed.) § 303; 3 Rob. Pat. §§806, 809; Buss v. Putney, 38 N. H. 44; Potter v. Holland.,. 4 Blatchf. 206 [Fed. Cas. No. 11,329]; Baldwin v. Sibley, 1 Cliff. 150 [Fed. Cas. No. 805]; Jones v. Berger, 58 Fed. 1006. Where. a paper is used it is simply for convenience and certainty of proof.. The authorities cited by the plaintiffs, relate to the .defective e:;ecution of papers for the transfer of land, patents, etc., where the writing is essential to the transfer. No case is cited in which the technical rule there stated has been applied to any other paper. We need not determine, however, whether this distinction is well foundeqor not; for if the paper in question was necessary to support the license, and its execution is defective, the defect haa
SHOEMAKER V. MERROW.
945
been cured by Cheeswright's conduct. He recognized and acted upon the license. His correspondence and testimony-saying nothing of Yeomans' testimony-show this very plainly. He was unaware of the terms in which it was expressed, and the claim set up under it, but it may be assumed that he was aware the terms were not more favorable to himself than the construction we have placed upon those used; for as we have seen the license when thus construed is consistent with the power granted to Yeomans, and is the most available means of doing what he desired to accomplish,-in other words it is such a license as he authorized, and knew was most likely to be granted. Until Yeomans' authority was revoked and the defendants had knowledge of it, their settlements with him were a discharge of liability. For any moneys which may have become due since, settlement must be made with the plaintiffs. How the account stands we are not called upon to determine. The parties disagree about it, and the question is one principally of figures. If there is anything due the courts of the state have jurisdiction and afford adequate remedy. The suit is not based on such a claim. The decree must therefore be disaffirmed and the bill dismissed with costs. The case is remanded to the circuit court to carry out this order. SHOEMAKER et al. v. MERROW. (Circuit Court of Appeals, Third Circuit. May 18, 1894.) No. 14.
t.
PATENTS,..... INFRINGEMENT SUIT-EFFECT OF ADMISSIONS IN INTERFERENCE PROCEEDINGS.
A party to an Interference proceeding practically withdrew from the
tion of priority, that no additional evidence should be received, and that the matter should be decided on this evidence alone, without argument. A patent having been issued to bis opponent, he accepted a license thereunder. Held, that the stipulation amounted to an admission of priority of invention, sufficient, as evidence in a subsequent suit for Infringement, to sbow prima facie that the successful party In the interference was the first inventor. S. SAME-WITHDRAWAL OF CLAIM-EsTOPPEL.
::tf::
One who retires from an interference proceeding, and withdraws his claim for the specific element forming the subject of the interference, Is thereafter precluded from claiming such element under bis patent. 59 Fed. 120, reversed. The Merrow patent No. 428,508, for a crocheting and overseamlng machine, construed, and held not infringed. 59 Fed. 120, reversed.
8.
SAME-LIMITATION OF CLAIMS-UROCllETING MACHINE.
Appeal from the Circuit Court of the United States for the Eastern District of Pennsylvania. This was a snit by Joseph M. Merrow against John Shoemaker and others for infringement of letters patent No. 428,508, issued to complainant May 20, 189U, for a "crocheting or overseaming machine." The circuit court rendered a decree dismissing some of the v.61F.no.9-60