CITE:  243 U.S. 871
CMON:  April 1917
PLAIN: Motion Picture Patents Company
DEFND: Universal Film Manufacturing Company, et al.
COURT: United States Supreme Court
DATE:  April 9, 1917


ON WRIT of Certiorari to the United States Circuit Court of Appeals for
the Second Circuit to review a decree which affirmed a decree of the
District Court for the Southern District of New York, dismissing the bill
in a suit to enjoin the violation of an alleged license restriction on
the use of a patented machine. Affirmed.

See same case below, 148 C.C.A. 660, 235 Fed. 398.

The owner of a patent may not, under U.S. Rev. Stat. 4884 (Comp. Stat.
1913, 9428), giving him the exclusive right to use the invention, restrict
its use by a purchaser, by a notice attached to the machine embodying the
patent, to specific materials necessary to its operation, but which are
no part of the patented machine, and are not themselves patented, nor
can he, by such notice, make the use of the machine subject to further
conditions as to use or royalties that may be imposed thereafter in his
direction. [For other cases, see Patents, XIII. F, in Digest Sup. Ct. 1908.]

  Patent on motion picture projector cannot be used to restrict which
  motion pictures are shown on projector.



The facts are stated in the opinion.

Mr. Melville Church argued the cause and filed a brief for petitioner:

A patent owner may, on the sale of a specimen of the patented invention,
impose lawful restrictions as to time, place, method, or conditions of
its use, so as to render an unauthorized use of infringement.

Henry v. A.B. Dick co. 224 U.S. 1 56 L. ed. 645, 32 Sup. Ct. Rep. 364,
Ann. Cas. 1913D, 880.

Whatever is notice enough to excite attention and put the part on his
guard and call for inquiry is notice of everything to which such inquiry
might have led. When a person has sufficient information to lead him
to a fact, he shall be deemed conversant with it.
Wood v. Carpenter, 101 U.S. 135, 141, 25 L. ed. 807, 809; Shauer v.
Alterton, 151 U.S. 607, 622, 38 L. ed. 286, 291, 14 Sup. Ct. Rep. 442.

Whether the restriction as to use with certain films is decreed to be
lawful or unlawful, it cannot affect the lawfulness of the restriction
that the use must be upon terms to be fixed by the licensor, which the
respondent company has admittedly violated, and under which it is liabile,
if notice has been properly brought home to it.
Oregon Steam Nav. Co. v. Winsor, 20 Wall. 64, 72, 22 L. ed. 315, 319;
United States Consol Seeded Raisin Co. v. Griffin & S. Co. 61 CCA 334,
126 Fed 364.

This court has upheld a license restriction based upon a continuing
royalty for use.
St. Paul Plow Works v. Starling, 140 US 184, 35 L. ed. 404,
11 Sup. Ct. Rep. 803.

The rights conferred by a patent, i.e., the exclusive right to make, the
exclusive right to sell, and the exclusive right to use, constitute an
example of incorporeal personal property; while a machine embodying a
patented invention is an example of corporeal personal property.
De La Vergne Refrigerating Mach. Co. v. Featherstone, 147 US 209, 222,
37 L. ed. 138, 143, 13 Sup. Ct. Rep. 283.

A patent owner is not required to make, use, or sell any specimens of 
the patented invention; nor can he be compelled to license others to do so.
Continental Paper Bag Co. v. Eastern Paper Bag Co. 210 US 405, 425, 429,
52 L. ed. 1122, 1130, 1132, 28 Sup. Ct. Rep. 748.

The following cases illustrated instances of the grant by a patent owner
of limited rights that have been upheld by the courts:

The right to manufacture the patented article by the employment of
six persons and no more. Brooks v. Byam, 2 Robb, Pat Cas. 161,
Fed Cas. No. 1,948.

The right to use six machines within a certain county, and to dispose of
the product in such county, and nowhere else. Woodworth v. Cook,
1 Fisher, Pat. Cas. 423, Fed. Cas. No. 18,011.

The right to use the patented structure but once. American Cotton-Tie
Supply Co. v. Bullard, 4 Bann. & Ard. 520, Fed. Cas. No. 294.

The right to manufacture goods of a particular variety under the
patentee's process. Goodyear v. Congress Rubber Co. 3 Blatchf. 449,
Fed. Cas. No. 5,565.

The right to manufacture articles of certain given dimensions only.
Pope Mfg. Co. v. Owsley, 27 Fed. 100.

The right to manufacture, but not to sell.
American Graphophone Co. v. Walcutt, 87 Fed. 556.

The right to restrict the use, manufacture, or sale to a certain territory.
Chambers v. Smith, 5 Fisher, Pat. Cas. 12, Fed. Cas No. 2, No. 2,582;
Wicke v. Kleinknecht, 1 Bann. & Ard. 608. Fed. Cas. No. 17,608; Hawley
v. Mitchell, 4 Fisher, Pat. Cas. 388, Fed. Cas. No. 6,250; Rice v. Boss,
46 Fed. 195; International Pavement Co. v. Richardson, 75 Fed. 590;
Philadelphia Creamery Supply Co. v. Davis & r. Bldg. & Mfg. Co. 77 Fed. 879;
Wilson v. Sherman, 1 Fisher, Pat. Cas. 361, Fed. Cas. No. 17,833.

The right to restrict use so as to be binding even upon a purchaser of
a machine under a rent distress. British Mutoscope & Biograph Co. v. Homer
[1901] 1 Ch. 671, 17 times L.R. 213, 70 L. J. Ch. N.S. 279, 49 Week. Rep.
277, 84 L.T.N.S. 26, 18 Rep. Pat. Cas. 177.

The right to restrict the price at which the patented article should be sold.
Edison Phonograph Co. v. Kaufmann, 105 Fed. 960; Edison Phonograph Co. v.
Pike, 116 Fed. 863; National Phonograph Co. v. Schlegel, 117 Fed. 624;
New Jersey Patent Co. v. Schaefer, 144 Fed. 437, 159 Fed. 171; Indiana Mfg.
Co. v. J.I. Case Threshing Mach. Co. 83 CCA 343, 154 Fed. 365; Rubber Tire
Wheel Co. v. Milwaukee Rubber Works Co. 83 CCA 336, 154 Fed. 358; Goshen
Rubber Works v. Single Tube Automobile & Bicycle Tire Co. 92 CCA 183, 
166 Fed. 431; Edison v. Ira M. Smith Mercantile Co. 188 Fed. 925;
Automatic Pencil Sharpener Co. v. Goldsmith Bros. 190 Fed. 205;
Winchester Repeating Arms Co. v. Buengar, 199 Fed. 786; E. Bement & Sons
v. National Harrow Co. 186 US 70, 46 L. ed. 1058, 22 Sup. Ct. Rep. 747; 
Virtue v. Creamery Package Mfg. Co. 227 US 8, 57 L. ed. 393, 33 Sup. Ct.
Rep. 202; Winchester Repeating Arms Co. v. Olmsted, 121 CCA 615, 203 Fed.
493; American Graphophone Co. v. Boston Store, 225 Fed. 785; Victor
Talking Mach. Co. v. The Fair, 61 CCA 58, 123 Fed. 424; The Fair v.
Dover Mfg. Co. 92 CCA 43, 166 Fed. 117.

The right to restrict the use of patented machines to supplies or
materials furnished by the patent owner.
Heaton-Peninsular Button-Fastener Co. v. Eureka Specialty Co. 35 LRA 728,
25 CCA 267, 33 US App. 692, 77 Fed. 288; Tubular Rivet & Stud Co. v.
O'Brien, 93 Fed. 200; Rupp & W. Co. v. Elliott, 65 CCA 544, 131 Fed. 730;
Brodrick Copygraph Co. v. Mayhew, 131 Fed. 92; A.B. Dick Co. v. Henry,
149 Fed. 424, 224, US 1, 56 L. ed. 645, 32 Sup. Ct. Rep. 364, Ann Cas. 
1913D, 880; A.B. Dick Co. v. Milwaukee Office Specialty Co. 168 Fed. 930;
Crown Cork & Seal Co. v. Standard Brewery, 174 Fed. 252; Crown Cork &
Seal Co. v. Brooklyn Bottle Stopper Co. 119 CCA 20, 200 Fed. 592;
Incandescent Gaslight Co. v. Cantelo, 12 Rep. Pat. Cas. 262; Incandescent
Gaslight Co. v. Brogden, 16 Rep. Pat. Cas. 179.

All of the respondents are responsible as joint tort-feasors and are also
separately liable. Lovejoy v. Murray, 3 Wall. 1-11, 18 L. ed. 129-132;
Walker, Patents, 4th ed. 406, p. 343.

Mr. Oscar W. Jeffrey argued the cause, and, with Messrs. Edmund Wetmore
and John B. Stanchfield, filed a brief for respondents:

The Prague Amusement Company stands in the same position as any purchaser
of a patented article, who, when he purchases it either direct from the
manufacture or from the manufacturer's vendee or licensee, has the implied
right to sue it. Bloomer v. McQuewan, 14 Ho. 539, 14 L. ed 532; Hen v. A.B.
Dick Co. 224 US 19, 56 L.ed. 652, 32 Sup.Ct. Rep. 364, Ann. Cas. 1913D, 880.

There is and can be no doubt as to the validity of an implied license.
It is as potent as an express license.
Blanchard v. Sprague, 1 Cliff, 288, Fed. Cas No. 1,516; Keyes v.
Eureka Consol. Min. Co. 158 US 153, 39 L. ed. 930, 15 Sup. Ct. Rep. 772.

There was a sale of the alleged infringing machine by the licensee which
enabled subsequent holders thereof to use it free of all restrictions
and conditions.
Bauer v. O'Donnell, 229 US 1, 57 L. ed. 1041, 50 LRA(NS) 1185, 33 Sup. Ct.
Rep. 616, Ann. Cas. 1915A, 150; Adams v. Burke, 17 Wall. 453, 21 L. ed.
700; United States v. Keystone Watch Co. 218 Fed. 514.

The attempted restriction to film licensed under reissued patent No. 12,192
is an attempt to continue the monopoly of an expired patent, and is
therefore contrary to public policy and void.
Bauer v. O'Donnell, 229 US 10, 57 L. ed. 1041, 50 LRA(NS) 1185, 33 Sup. Ct.
Rep. 616, Ann. Cas. 1915A, 150; Standard Sanitary Mfg. Co. v. United
States, 226 US 49, 57 L. ed. 117, 33 Sup. Ct. Rep. 9; Dr. Miles Medical
Co. v. John D. Park & Sons Co. 220 US 373, 406, 55 L. ed. 502, 518, 31 Sup.
Ct. Rep. 376; Straus v. American Publishers' Asso. 231 US 222, 234, 58 L. ed. 
192, 199, LRA 1915A, 1099, 34 Sup. Ct. Rep. 84, Ann. Cas. 1915A, 369; United
States v. Kellogg Toasted Corn Flake Co. 222 Fed. 725, Ann. Cas. 1916A, 78.

The first principle of the cases which have recognized the right of the
owner of a patent to enforce restrictions on the use of the patented
article in the hands of his licensee is that those conditions shall be
clearly and unmistakably made known to the purchaser at the time he 
acquires the patented article; and in the absence of such notice the
condition cannot be enforced.
Cortelyou v. Charles Eneu Johnson & Co 207 US 196, 52 L. ed. 167, 28 Sup.
Ct. Rep. 105; Lovell-McConnell Mfg. Co. v. Waite Auto Supply Co. 198 Fed.
133; Henry v. A.B. Dick Co. 224 US 42, 56 L. ed. 661, 32 Sup. Ct. Rep.
364, Ann. Cas. 1913D, 880; McGruther v. Pitcher [1904] 2 Ch. 306, 3 BRC 292,
20 Times LR 652, 73 LJ Ch NS 653, 53 Week Rep. 138, 91 LTNS 

The Prague Amusement Company has not bound to inquire whether terms had been 
fixed by the Motion Picture Patents Company for the use of the machine.
Texas & PR Co. v. Reiss, 183 US 626, 46 L. ed. 358, 22 Sup. Ct. Rep. 252;
Carpentier v. Thurston, 30 Cal. 123; People's Bank v. Etting, 41 Phila.
Leg. Int. 5; Chitty, Contr. 16th ed. P. 767; 4 Enc. PI. & Pr. 653; Vyse v.
Wakefield, 6 Mee. & W. 453, 151 Eng. Reprint, 485, 8 Dowl. PC 377, 4 Jur. 509.

The existence of the Latham patent did not release the petitioner from the
duty of giving adequate notice of any terms it might fix.
Cortelyou v. Charles Eneu Johnson & Co. 207 US 196, 52 L. ed. 167,
28 Sup. Ct. Rep. 105; Henry v. A.B. Dick Co. 224 US 42, 56 L. ed. 661,
32 Sup. Ct. Rep. 364, Ann. Cas. 1913D, 880; Washing Mach. Co. v. Earle,
3 Wall. Jr. 320, Fed. Cas. No. 17,219.

In this suit relief is sought against three defendant corporations as join
infringers of claim number 7 of United States letters patent No. 707,934,
granted to Woodville Latham, assignor, on August 26, 1902, for improvements
in projecting-kinetoscopes. It is sufficient description of the patent
to say that it covers a part of the mechanism used in motion picture
exhibiting machines for feeding a film through the machine with a regular,
uniform, and accurate movement, and so as not to expose the file to
excessive strain or wear.

The defendants, in a joint answer, do not dispute the title [506] of
the plaintiff to the patent, but they deny the validity of it, deny
infringement, and claim an implied license to use the patented machine.

Evidence which is undisputed shows that the plaintiff, On June 20, 1912,
in a paper styled "License Agreement," granted to the Precision Machine
Company a right and license to manufacture and sell machines embodying
the inventions described and claimed in the patent in suit, and in other
patents, throughout the United States, its territories and possessions.
This agreement contains a covenant on the part of the grantee that every
machine sold by it, except those for export, shall be sold "under the
restriction and condition that such exhibiting or projecting machine shall
be used solely for exhibiting or projecting motion pictures containing the 
inventions of reissued letters patent No. 12,192, leased by a licensee of
the licensor while it owns said patents and upon other terms to be fixed
by the licensor and complied with by the user while the said machine is
in use and while the licensor owns said patents (which other terms shall
only be the payment of a royalty or rental to the licensor while in use)."

The grantee further covenants and agrees that to each machine sold by it,
except for export, it will attach a plate showing plainly not only the
dates of the letters patent under which the machine is "licensed", but
also the following words and figures:

                      Serial No. ________.
                      Patented                    No.

The sale and purchase of this machine gives only the right to use it
solely with moving pictures containing the invention of reissued patent
No. 12,192, leased by a licensee of the Motion Picture Patents Company,
the owner of the above patents, and reissued patent, while it owns said
patents, and upon other terms to be fixed by the Motion Picture Patents
Company and complied with by the user while it is in use and while the
Motion Picture [507] Patents Company owns said patents. The removal or
defacement of this plate terminates the right to use this machine.

The agreement further provides that the grantee shall not sell any machine
at less than the plaintiff's list price, except to jobbers and others for
purposes of resale, and that it will require such jobbers and others to
sell at not less than plaintiff's list price. The price fixed in the license 
contract for sale of machines after May 1st, 1909, is not less than $150
for each machine, and the licensee agrees to pay a royalty of $5 on some
machines and a percentage of the selling price on others.

It is admitted that the machine, the use of which is charged to be an
infringement of the patent in suit, was manufactured by the Precision
Machine Company, and was sold and delivered under its "License Agreement"
to the Seventy-second Street Amusement Company, then operating a playhouse
on Seventy-second street, in New York, and that when sold it was fully 
paid for and had attached to it a plate with the inscription which we
have quoted as required by the agreement.

Reissued patent 12,192 referred to in the notice attached to the machine,
expired on August 31, 1914. The defendant Prague Amusement Company, on
November 2, 1914, leased the Seventy-second street playhouse from the
Seventy-second Street Amusement Company, and acquired the alleged
infringing machine as a part of the equipment of the leased playhouse. 
Subsequent to the expiration of reissued patent 12,192, the defendant
Universal Film Manufacturing Company made two films or reels, which,
between March 4th and 17th, 1915, were sold to the defendant the
Universal Film Exchange, and on March 17, 1915, were supplied to the 
defendant Prague Amusement Company for use on the machine, acquired as
we have stated, and were used upon it at the Seventy-second Street
playhouse on March 18th, 1915.

[508] On January 18, 1915, the plaintiff sent a letter to the
Seventy-second Street Amusement Company, notifying it in general terms
that it was using without a license a machine embodying the invention
of patent No. 707,934 and warning it that such use constituted an 
infringement of the patent, and on the same day the plaintiff
addressed a letter to the defendant Universal Film Exchange, notifying
it that it also was infringing the same patents by supplying films for
use upon the machine of the Seventy-second street playhouse and
elsewhere. The bill in this case was filed on March 18, 1915.

The district court held that the limitation on the use of the machine
attempted to be made by the notice attached to it after it had been sold
and paid for, was invalid, and that the Seventy-second Street Amusement
Company, the purchaser, and its lessee, the Prague Amusement Company,
had an implied license to use the machine as it had been used, and it
dismissed the bill without passing on the question raised in the pleadings
as to the validity of the patent. The circuit court of appeals affirmed
the district court (148 CCA 660, 235 Fed. 398), and the case is here for
review on certiorari.

It was admitted at the bar that 40,000 of the plaintiff's machines are
now in use in this country, and that the mechanism covered by the patent
in suit is the only one with which motion pictures can be used successfully.

This state of facts presents two questions for decision:

First. May a patentee or his assignee license another to manufacture and
sell a patented machine, and by a mere notice attached to it limit its
use by the purchaser or by the purchaser's lessee, to films which are no
part of the patented machine, and which are not patented?

Second. May the assignee of a patent, which has licensed another to make
and sell the machine covered by it, by a mere notice attached to such
machine, limit the [509] use of it by the purchaser or by the purchaser's
lessee to terms not stated in the notice, but which are to be fixed, after
sale, by such assignee, in its discretion?

It is obvious that in this case we have presented anew the inquiry, which
is arising with increasing frequency in recent years, as to the extent
to which a patentee or his assignee is authorized by our patent laws to
prescribe by notice attached to a patented machine the conditions of its
use and the supplies which must be used in the operation of it, under pain
of infringement of the patent.

The statues relating to patents do not provide for any such notice and it
can derive no aid from them. Rev. Stat. 4900, Comp. Stat. 1913, 9446,
requiring that patented articles shall be marked with the word "Patented",
affects only the damages recoverable for infringement (Dunlap v. Schofiedl,
152 US 244, 38 L. ed. 426, 14 Sup. Ct. Rep. 576); and Rev. Stat. 4901,
Comp. Stat. 1913, 9447, protects by its penalties the inventor, but
neither one contemplates the use of such a "License Notice" as we have
here, and whatever validity it has must be derived from the general, and
not from the patent, law.

The extent to which the use of the patented machine may validly be
restricted to specific supplies or otherwise by special contract between
the owner of a patent and the purchaser or licensee is a question outside
the patent law, and with it we are not here concerned. Keeler v. Standard
Folding Bed Co. 157 US 659, 39 L. ed. 848, 15 Sup. Ct. Rep. 738.

The inquiry presented by this record, as we have stated it, is important
and fundamental, and it requires that we shall determine the meaning of
Congress when, in Rev. Stat 4884, Comp. Stat. 1913, 9428, it provided that
"every patent shall contain . a grant to the patentee, his heirs or
assigns, for the term of seventeen years, of the exclusive right to
make, use, and vend the invention or discovery throughout the United
States, and the territories thereof." We are concerned only with the
right to "use", authorized to be granted by this statute, for it is under 
warrant of this [510] right only that the plaintiff can and does claim
validity for its warning notice.

The words used in the statute are few, simple, and familiar, they have
not been changed substantially since they were first used in the Act of
1790 (1 Stat. At L. chap. 7, p. 109), Bauer v. O'Donnell, 229 US 1, 9, 57
L. ed. 1041, 1043, 50 LRA (NS) 1185, 33 Sup. Ct. Rep. 616, Ann. Cas.
1915A, 150, and their meaning would seem not to be doubtful if we can
avoid reading into them that which they really do not contain.

In interpreting this language of the statute it will be of service to keep
in mind three rules long established by this court, applicable to the
patent law and to the construction of patents, viz.:

1st. The scope of every patent is limited to the invention described in
the claims contained in it, ready in the light of the specification.
These so mark where the progress claimed by the patent begins and where
it ends that they have been aptly likened to the description in a deed, 
which sets the bounds to the grant which it contains. It is to the claims
of every patent, therefore, that we must turn when we are seeking to
determine what the invention is, the exclusive use of which is given to
the inventor by the grant provided for by the statute, -- "He can claims
nothing beyond them." Keystone Bridge Co. v. Phoenix Iron Co. 95 US 274,
24 L. ed. 344; Lehigh Valley R. co. v. Mellon, 104 US 112, 118, 26 L. ed.
639, 641; Yale Lock Mfg. Co. v. Greenleaf, 117 US 554, 559, 29 L. ed. 952,
953, 6 Sup. Ct. Rep. 846; McClain v. Ortmayer, 141 US 419, 424, 35 L. ed.
800, 802, 12 Sup. Ct. Rep. 76.

2d. It has long been settled that the patentee receives nothing from the
law which he did not have before, and that the only effect of his patent
is to restrain others from manufacturing, suing, or selling that which he
has invented. The patent law simply protects him in the monopoly of that
which he has invented and has described in the claims of his patent.
United States v. American Bell Teleph. Co. 167 US 224, 239, 42 L. ed. 144,
154, 17 Sup. Ct. Rep. 809; Continental Paper Bay Co. v. Eastern Paper
Bag Co. 210 US 405, 424, 52 L. ed. 1122, 1130, 28 Sup. Ct. Rep. 748;
Bauer v. O'Donnell, 229 US 1, 10, 57, L. ed. 1041, 1043, 50 LRA (NS) 1185, 
33 Sup. Ct. Rep. 616, Ann. Cas. 1915A, 150.

3d. Since Pennock v. Dialogue, 2 Pet. 1, 7 L. ed. 327, was decided in
1829, [511] this court has consistently held that the primary purpose of
our patent laws is not the creation of private fortunes for the owners of
patents, but is "to promote the progress of science and the useful arts"
(Constitution, art. 1, Sect. 8), -- an object and purpose authoritatively
expressed by Mr. Justice Story, in that decision, saying:

    "While one great object [of our patent laws] was, by holding out a
    reasonable reward to inventors and giving them an exclusive right to
    their inventions for a limited period, to stimulate the efforts of
    genius, the main object was 'to promote the progress of science and
    useful arts.'"

Thirty years later this court, returning to the subject, in Kendall v.
Winsor, 21 How. 322, 16 L. ed. 165, again pointedly and significantly says:

    "It is undeniably true, that the limited and temporary monopoly
    granted to inventors was never designed for their exclusive profit
    or advantage; the benefit to the public or community at large was
    another and doubtless the primary object in granting and securing
    the monopoly."

This court has never modified this statement of the relative importance
of the public and private interests involved in every grant of a patent,
even while declaring that, in the construction of patents and the patent
laws, inventors shall be fairly, even liberally, treated. Grant v. Raymond, 
6 Pet. 218, 241, 8 L. ed. 376, 384; Winans v. Denmead, 15 How. 330,
14 L. ed. 717; Walker, Patents, Sect. 185.

These rules of law make it very clear that the scope of the grant which
may be made to an inventor in a patent, pursuant to the statute, must be
limited to the invention described in the claims of his patent (104 US 188,
supra); and to determine what grant may lawfully be so made we must hold
fast to the language of the act of Congress providing for it, which is
found in two section of the Revised Statutes. Section 4886 (Comp. Stat.
1913, 9430) provides that "any person who has invented or discovered any
new and useful art, machine, [512] manufacture or composition of matter,
or any new and useful improvement thereof, . may . obtain a patent 
therefor;" and 4884 (Comp. Stat. 1913, 9428), provides that such patent
when obtained "shall contain . a grant to the patentee, his heirs or
assigns . of the exclusive right to . use . the invention or discovery."

Thus, the inventor may apply for, and, if he meets the required conditions,
may obtain, a patent for the new and useful invention which he has
discovered, which patent shall contain a grant of the right to the
exclusive use of his discovery.

Plainly, this language of the statute and the established rules to which
we have referred restrict the patent granted on a machine, such as we have
in this case, to the mechanism described in the patent as necessary to
produce the described results. It is not concerned with and has nothing
to do with the materials with which or on which the machine operates. The
grant is of the exclusive right to use the machine, which the law gives
to the inventor, and the right to use it exclusively with prescribed
materials to which such a license notice as we have here seeks to restrict
it. The restrictions of the law relate to the useful and novel features
of the machine where are described in the claims of the patent; they
have nothing to do with the materials used in the operation of the
machine; while the notice restrictions have nothing to do with the
invention which is patented but relate wholly to the materials to be
used with it. Both in form and in substance the notice attempts a
restriction upon the use of the supplies only, and it cannot, with any
regard to propriety [513] in the use of language, be termed a restriction
upon the use of the machine itself.

Whatever the right of the owner may be to control by restriction the
materials to be used in operating the machine, it must be a right derived
through the general law from the ownership of the property in the machine,
and it cannot be derived from or protected by the patent law, which allows
a grant only of the right to an exclusive use of the new and useful
discovery which has been made, -- this and nothing more.

This construction gives to the inventor the exclusive use of just what
his inventive genius has discovered. It is all that the statute provides
shall be given to him and it is all that he should receive, for it is
the fair as well as the statutory measure of his reward for his
contribution to the public stock of knowledge. If his discovery is an
important one, his reward under such a construction of the law will be
large, as experience has abundantly provided; and if it be unimportant,
he should not be permitted by legal devices to impose an unjust charge
upon the public in return for the use of it. For more than a century
this plain meaning of the statute was accepted as its technical meaning,
and that it afforded ample incentive to exertion by inventive genius is
provided by the fact that, under it, the greatest inventions of our
time, teeming with inventions, were made. It would serve not good purpose
to amplify by argument or illustration this plain meaning of the statute.
It is so plaint that to argue it would obscure it.

It was not until the time came in which the full possibilities seem first
to have been appreciated of uniting, in one, many branches of business
through corporate organization, and of gathering great profits in small
payments, which are not realized or resented, from many, rather than
smaller or even equal profits in larger payments, which are felt and 
may be refused, from a few, that it came to be thought that the
"right to use . the invention" [514] of a patent gave to the patentee
or assigns the right to restrict the use of it to materials or supplies
not described in the patent, and not by its terms made a part of the
thing patented.

The construction of the patent law which justifies as valid the
restriction of patented machines, by notice, to use with unpatented
supplies necessary in the operation of them, but which are no part of
them, is believed to have originated in Heaton-Peninsular Button-Fastener 
Co. v. Eureka Specialty Co. 35 LRA 728, 25 CCA 267, 47 US App. 146,
77 Fed. 288 (which has come to be widely referred to as the Button-Fastener
Case), decided by the Circuit Court of Appeals of the Sixth Circuit in
1896.  In this case the court, recognizing the pioneer character of the 
decision it was rendering, speaks of the "novel restrictions" which it
is considering, and says that it is called upon "to mark another boundary
line around the patentee's monopoly which will debar him from engrossing
the market for an article not the subject of a patent," which it declined 
to do.

This decision proceeds upon the argument that, since the patentee may
withhold his patent altogether from public use, he must logically and
necessarily be permitted to impose any conditions which he chooses upon
any use which he may allow of it. The defect in this thinking springs
from the substituting of inference and argument for the language of the
statute, and from the failure to distinguish between the rights which
are given to the inventor by the patent law and which he may assert
against all the world through an infringement proceeding, and rights which 
he may create for himself by private contract, which, however, are
subject to the rules of general, as distinguished from those of the
patent, law.  While it is true that under the statutes as they were 
(and now are) a patentee might withhold his patented machine from public
use, yet if he consented to use it himself or through others, such use
immediately fell within the terms of the [515] statute, and, as we have
seen, he is thereby restricted to the use of the invention as it is 
described in the claims of his patent, and not as it may be expanded
by limitations as to materials and supplies necessary to the operation
of it, imposed by mere notice to the public.

The high standing of the court rendering this decision and the obvious
possibilities for gain in the method which it approved led to an
immediate and widespread adoption of the system, in which these
restrictions expanded into more and more comprehensive forms until at 
length the case at bar is reached, with a machine sold and paid for,
yet claimed still to be subject not only to restriction as to supplies
to be used, but also subject to any restrictions or conditions as to
use or royalty which the company which authorized its sale may see fit,
after the sale, from time to time to impose. The perfect instrument of
favoritism and oppression which such a system of doing business, if
valid, would put into the control of the owner of such a patent, should
make courts astute, if need be, to defeat its operation. If these
restrictions were sustained, plainly the plaintiff might, for its own
profit or that of its favorites, but the obviously simple expedient of 
varying its royalty charge, ruin anyone unfortunate enough to be
dependent upon its confessedly important improvements for the doing
of business.

Through the twenty years since the decision in the Button-Fastener Case
was announced there have not been wanting courts and judges who have
dissented from its conclusions, as is sufficiently shown in the division
of this court when the question involved first came before it in 
Henry v. A.B. Dick Co. 224 US 1, 56 L. ed. 645, 32 Sup. Ct. Rep. 364,
and in the disposition shown not to extend the doctrine in Bauer v.
O'Donnell, 229 US 1, 57 L. ed. 1041, 50 LRA (NS) 1185, 33 Sup. Ct. Rep.
616, Ann. Cas. 1915A, 150.

The exclusive right to "vend" a patented article is derived from the same
clause of the section of the statute which gives the exclusive right
to "use" such an article, [516] and following the decision of the
Button-Fastener Case, it was widely contended as obviously sound, that
the right existed in the owner of a patent to fix a price at which the
patented article might be sold and resold under penalty of patent
infringement. But this court, when the question came before it in Bauer
v. O'Donnell, supra, rejecting plausible argument, and adhering to the
language of the statute from which all patent right is derived, refused
to given such a construction to the act of Congress, and decided that
the owner of a patent is not authorized by either the letter or the 
purpose of the law to fix, by notice, the price at which a patented
article must be sold after the first sale of it, declaring that the
right to vend is exhausted by a single, unconditional sale, the article 
sold being thereby carried outside the monopoly of the patent law and
rendered free of every restriction which the vendor may attempt to put
upon it. The patent law furnishes no warrant for such a practice, and
the cost, inconvenience, and annoyance to the public which the opposite 
conclusion would occasion forbid it.

It is argued as a merit of this system of sale under a [517] license
notice that the public benefited by the sale of the machine at what
is practically its cost, and by the fact that the owner of the patent
makes its entire profit from the sale of the supplies with which it is
operated. This fact, if it be a fact, instead of commending, is the
clearest possible condemnation of, the practice adopted, for it proves
that, under color of its patent, the owner intends to and does derive its 
profit, not from the invention on which the law gives it a monopoly, but
from the unpatented supplies with which it is used, and which are wholly
without scope of the patent monopoly, thus in effect extending the power
to the owner of the patent to fix the price on the patented machine.

We are confirmed in the conclusion which we are announcing by the fact
that since the decision of Henry v. A.B. Dick Co, supra, the Congress 
of the United States, the source of all rights under patents, as if in
response to this decision, has enacted a law making it unlawful for any
person engaged in interstate commerce "to lease or make a sale or
contract for sale of goods, .machinery, supplies or other commodities,
whether patented or unpatented, for use, consumption or resale . or fix
a price charged therefor, . on the condition, agreement or understanding
that the lessee or purchaser thereof shall not use . the goods . machinery, 
supplies or other competitors of the lessor or seller, where the effect
of such lease, sale or contract for sale, or such condition, agreement
or understanding may be to substantially lessen competition or tend to
create a monopoly in any line of commerce." (38 Stat. At L. 730, chap. 323.)

Both questions as stated must be answered in the negative, and the decree
of the Circuit Court of Appeals is affirmed.

Mr. Justice McReynolds concurs in the result.


Mr. Justice Holmes, dissenting:

I suppose that a patentee has no less property in his patented machine
than any other owner, and that, in addition keeping the machine to
himself, the patent gives him the further right to forbid the rest of
the world from making others like it. In short, for whatever motive, he
may keep his device wholly out of use. Continental Paper Bag Co. v.
Eastern Paper Bag Co. 210 US 405, 422, 52 L. ed. 1122, 1129, 28 Sup.
Ct. Rep. 748.  So much being undisputed, I cannot understand why he may
not keep it out of use unless the licensee, or, for the matter of that,
the buyer, will use some unpatented thing in connection with it.
Generally speaking, the measure of a condition is the consequence of
a breach, and if that consequence is one that the owner may impose
unconditionally, he may impose it conditionally upon a certain event.
Ashley v. Ryan, 153 US 436, 443, 38 L. ed. 773, 777, 4 Inters. Com. Rep.
664, 14 Sup. Ct. Rep. 865; Ohio ex rel. Lloyd v. Dollison, 194 US 445,
449, 48 L. ed. 1062, 1066, 24 Sup. Ct.  Rep. 703. Non debet cui plus
licet, quod minus est non licere. D. 50, 17, 21.

[520] No doubt this principle might be limited to or excluded in cases
where the condition tends to bring about a state of things that there
is a predominant public interest to prevent. But there is no predominant
public interest to prevent a patented teapot or film feeder from being kept 
from the public, because, as I have said, the patentee may keep them tied
up at will while his patent lasts. Neither is there any such interest to
prevent the purchase of the tea or films that is made the condition of
the use of the machine. The supposed contravention of public interest 
sometimes is stated as an attempt to extend the patent law to unpatented
articles, which of course it is not, and more accurately as a possible
domination to be established by such means. But the domination is one only
to the extent of the desire for the teapot or file feeder, and if the 
owner prefers to keep the pot or the feeder unless you will buy his tea
or films, I cannot see, in allowing him the right to do so, anything more
than an ordinary incident of ownership, or, at most, a consequence of
the Paper Bag Case, on which, as it seems to me, this case ought to turn.
See Grant v. Raymond, 6 Pet. 218, 242. 8 L. ed. 376, 384.

Not only do I believe that the rule that I advocate is right under the
Paper Bag Case, but I think that it has become a rule of property that 
law and justice require to be retained. For fifteen years, at least
since E. Bement & Sons v. National Harrow Co. 186 US 70, 88-93,
46 L. ed. 1058, 1067-1070, 22 Sup. Ct. Rep. 747, if not considerably
earlier, the public has been encouraged by this court to believe that
the law is as it was laid down in Heaton-Peninsular Button-Fastener Co. 
v. Eureka Specialty Co. 35 LRA 728, 25 CCA 267, 47 US App. 146,
77 Fed. 288, and numerous other decisions of the lower courts. I believe
that many and important transactions have taken place on the faith of
those decisions, and that for that reason as well as for the first that
I have given, the rule last announced in Henry v. A.B. Dick Co. 224 US 1,
56 L. ed. 645, 32 Sup. Ct. Rep. 364, should be maintained.

I will add, for its bearing upon Straus v. Victor Talking [521] Mach.
Co. 243 US 490, ante, 866, 37 Sup. Ct. Rep. 412, that a conditional sale
retaining the title until a future event after delivery has been decided
to be lawful again and again by this court. Bailey v. Baker Ice Mach. 
Co 239 US 268, 272, 60 L. ed. 275, 285, 36 Sup. Ct. Rep. 50. I confine
myself to expressing my views upon the general and important questions
upon which I have the misfortune to differ from the majority of the court
I leave on one side the question of the effect of the Clayton Act, as the 
court has done, and also what I might think if the Paper Bag Case were
not upheld, or if the question were upon the effect of a combination
of patents such as to be contrary to the policy that I am bound to
accept from the Congress of the United States.

Mr. Justice McKenna and Mr. Justice Van Devanter concur in this dissent.