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GILBERT H. MONTAGUE

Was born in Springfield, Mass., May 27, 1880, and graduated from Harvard 1901. After admission to the Bar he became legal secretary to Justice Blanchard of the Supreme Court of New York. Special Deputy Attorney for Prosecution of Election frauds. Author of "The Rise and Progress of the Standard Oil," and "Trusts of Today."

"Did the acts of the Henry firm constitute contributory infringement of the Dick Company's patents?"

The Supreme Court decided that these acts constituted contributory infringement.

Under Article I, Section 8, Subdivision 8 of the Federal Constitution, Congress has power "to promote the progress of science and useful arts by securing, for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries."

Accordingly, Section 4884 of the Revised Statutes has been enacted, providing that a patent owner shall have "the exclusive right to make, use and vend the invention or discovery." This "exclusive right" is in effect three "exclusive rights," i. e., the "exclusive right" to make, the "exclusive right" to use and the "exclusive right" to sell the patented article.

The patent owner may, according as he sees fit, dispose of one, or more, or any part of these component "exclusive rights." Thus, when he elects to manufacture the patented article himself, he reserves to himself the "exclusive right" to make, and disposes simply of all or part of the "exclusive rights" to use and to sell the patented article. Again, if he elects not to sell the patented article, but simply to lease it on a royalty basis, he reserves to himself the "exclusive rights" to make and to sell, and disposes simply of the right of use. Similarly, if he elects to dispose of only part of the "exclusive right" to use the patented article, he may reserve to himself the "exclusive rights" to make and to sell the patented article, and part of the "exclusive right" of use, and may dispose of simply a portion of his "exclusive right" of use, by granting merely a limited right of use,-simply, for instance, the right to use the patented article only under such conditions and only with such supplies as the patent owner shall prescribe.

Like the owner of unimproved real estate, the patent owner may decline to use his invention, or to allow others to use it. Like a real estate owner who prefers to continue as owner, the patent owner may reserve to himself the right of ownership and sale, and, by lease or otherwise, simply dispose of part of the right to use the property. Like every real estate owner who is a landlord, the patent owner may require that his property be used only under certain specified conditions, and for certain specified purposes, and with certain specified accessories.

The rights of the patent owner are neither greater nor more unusual than the familiar rights of the real estate owners or other property owners. Indeed, the patent owner's rights are

vastly curtailed, as contrasted with the rights of other property owners, in that the owners of every other form of property may exercise the rights above described for so long a period as they and their successors may desire, while the patent owner may exercise none of his rights beyond the duration of his patent, and at the expiration of the statutory period of seventeen years must relinquish to the public all of his rights.

The patentee may sell or dispose of the patented article on condition that the purchaser use only such accessories as are made by the patentee, provided that at the time the patentee sells the patented article to the purchaser "the purchaser must have notice that he buys with only a qualified right of use."

The public is free to take or refuse the patented article on the terms imposed. If the terms are too onerous, the public loses nothing, for it may decline to buy or use the patented article; and when the patent expires the public will be free to use the invention without compensation or restriction.

In affirming these propositions, the Supreme Court stated plain, common business sense, and also long settled principles of law, in reliance upon which enormous business interests have been established.

Chief Justice White in his dissenting opinion declares that the Dick decision tends "to extend the patent so as to cause it to embrace things which it does not include," and permits the patent owner "to extend his patent rights so as to bring within the claim of his patent interests which are not embraced therein, thus virtually legislating by causing the patent laws to cover subjects to which without the exercise of the right of contract they could not reach." The Supreme Court, in the majority opinion, completely answers Chief Justice White's contention. The Court says:

"Anyone will be as free to make, sell and use like articles as they would be without this restriction, save in one particular-namely, they may not be sold to a user of one of the patentee's machines with intent that they shall be used in violation of the license. To that extent competition in the sale of such articles, for use with the machine, will be affected; for sale to such users for infringing purposes will constitute contributory infringement. But the same consequence results from the sale of any article to one who purposes to associate it with other articles to infringe a patent, when such purpose is known to the seller. . If a patentee says, 'I may suppress my patent if I will. I may make and have made devices under my patent, but I will neither sell nor permit anyone to use the patented things,' he is within his right and none can complain. if he says, 'I will sell with the right to use only with other things proper for using with the machines, and I will sell at the actual cost

But

of the machines to me, provided you will agree to use only such articles as are made by me in connection therewith,' if he chooses to take his profit in this way, instead of taking it by a higher price for the machine, has he exceeded his exclusive right to make, sell and use his patented machines? The market for the sale of such articles to the users of his machine, which, by such a condition, he takes to himself, was a market which he alone created by the making and selling of a new invention. Had he kept his invention to himself, no ink could have been sold by others for use upon machines embodying that invention. By selling it subject to the restriction he took nothing from others and in no wise restricted their legitimate market."

The all-important circumstance which Chief Justice White overlooks is that no license restriction is enforceable, under the law as laid down by the Supreme Court, unless the restriction is "brought home to the person acquiring the article," at the time the article is acquired. To make a license restriction enforceable, "the purchaser must have notice that he buys with only a qualified right of use." The notion, engendered by Chief Justice White's dissenting opinion, that Henry would have been held as an infringer if Miss Skou, or any other user of the Dick mimeograph, had bought Henry's ink at a corner drug store, has absolutely no foundation in fact. The infringement in the Dick case, the Supreme Court expressly held, consisted in the fact that Henry, knowing of the license restriction, and with the expectation and intention that his ink would be used for the purpose of violating this license restriction, incited Miss Skou, intentionally and deliberately, to violate the license restriction-to which Miss Skou, as Henry well knew, had expressly assented when she acquired the mimeograph—and supplied Miss Skou with the means of accomplishing this wrongful act. Indeed, the court below expressly found that Henry deliberately and knowingly instigated Miss Skou to this wrongful act, and even instructed her that if she would pour Henry's ink into Dick's can and throw away Henry's can, she would not be caught violating the license restriction.

The bogey of "monopoly" in non-patented articles has many times been dispelled by the courts.

In 1896, in a decision of the Circuit Court of Appeals for the 6th Circuit, in which Judge Lurton, now associate Justice of the Supreme Court, who wrote for the Supreme Court the majority opinion in the Dick case, and Judge Taft, now President of the United States, both participated and concurred, the bugbear of monopoly in respect to non-patented supplies required by license restrictions, like those above described, was effectually exploded. The Court showed that this so-called monopoly, far

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