Funk Bros. Seed Co. v. Kalo Inoculant Co.

U.S. Supreme Court Funk Brothers Seed Co. v. Kalo
Inoculant Co., 333
U.S. 127 (1948) Funk Brothers Seed Co. v. Kalo
Inoculant Co. No. 280 Argued January 13,
1948 Decided February 16,
1948 333
U.S. 127 CERTIORARI TO THE CIRCUIT COURT OF
APPEALS FOR THE SEVENTH CIRCUIT Syllabus 1. Certain product claims of Bond Patent No. 2,200,532, on
certain mixed cultures of root-nodule bacteria capable of
inoculating the seeds of leguminous plants belonging to several
cross-inoculation groups, held invalid for want of
invention. Pp. 333 U. S.
128 -132.

															2. Discovery of the fact that certain strains of each species of
these bacteria can be mixed without harmful effect on the
properties of either is not patentable, since it is no more than
the discovery of a phenomenon of nature. P. 333 U. S.
131 .

															3. The application of this newly discovered natural principle to
the problem of packaging inoculants was not invention or discovery
within the meaning of the patent laws. Pp. 333 U. S.
131 -132.

															161 F.2d 981, reversed.

															In a patent infringement suit, the District Court held certain
product claims invalid for want of invention. The Circuit Court of
Appeals reversed. 161 F.2d 981. This Court granted certiorari. 332
U.S. 755. Reversed, 132. Page 333 U. S. 128 MR. JUSTICE DOUGLAS delivered the opinion of the Court.

															This is a patent infringement suit brought by respondent. The
charge of infringement is limited to certain product claims
[ Footnote 1 ] of Patent No.
2,200,532 issued to Bond on May 14, 1940. Petitioner filed a
counterclaim asking for a declaratory judgment that the entire
patent be adjudged invalid. [ Footnote 2 ] The District Court held the product claims
invalid for want of invention, and dismissed the complaint. It also
dismissed the counterclaim. Both parties appealed. The Circuit
Court of Appeals reversed, holding that the product claims were
valid and infringed and that the counterclaim should not have been
dismissed. 161 F.2d 981. The question of validity is the only
question presented by this petition for certiorari.

															Through some mysterious process, leguminous plants are able to
take nitrogen from the air and fix it in the plant for conversion
to organic nitrogenous compounds. The ability of these plants to
fix nitrogen from the air depends on the presence of bacteria of
the genus Rhizobium Page 333 U. S. 129 which infect the roots of the plant and form nodules on them.
These root nodule bacteria of the genus Rhizobium fall into at
least six species. No one species will infect the roots of all
species of leguminous plants. But each will infect well defined
groups of those plants. [ Footnote
3 ] Each species of root nodule bacteria is made up of distinct
strains which vary in efficiency. Methods of selecting the strong
strains and of producing a bacterial culture from them have long
been known. The bacteria produced by the laboratory methods of
culture are placed in a powder or liquid base and packaged for sale
to and use by agriculturists in the inoculation of the seeds of
leguminous plants. This also has long been well known.

															It was the general practice, prior to the Bond patent, to
manufacture and sell inoculants containing only one species of root
nodule bacteria. The inoculant could therefore be used successfully
only in plants of the particular cross-inoculation group
corresponding to this species. Thus, if a farmer had crops of
clover, alfalfa, and soybeans, he would have to use three separate
inoculants. [ Footnote 4 ] There
had been a few mixed cultures for field legumes. But they had
proved generally unsatisfactory because the different species of
the Rhizobia bacteria produced an inhibitory effect on each other
when mixed in a common base, with the result that their
efficiency Page 333 U. S. 130 was reduced. Hence, it has been assumed that the different
species were mutually inhibitive. Bond discovered that there are
strains of each species of root nodule bacteria which do not exert
a mutually inhibitive effect on each other. He also ascertained
that those mutually noninhibitive strains can, by certain methods
of selection and testing, be isolated and used in mixed cultures.
Thus, he provided a mixed culture of Rhizobia capable of
inoculating the seeds of plants belonging to several
cross-inoculation groups. It is the product claims which disclose
that mixed culture that the Circuit Court of Appeals had held
valid.

															We do not have presented the question whether the methods of
selecting and testing the noninhibitive strains are patentable. We
have here only product claims. Bond does not create state of
inhibition or of noninhibition in the bacteria. Their qualities are
the work of nature. Those qualities are, of course, not patentable.
For patents cannot issue for the discovery of the phenomena of
nature. See Le Roy v.
Tatham , 14 How. 156, 55 U. S. 175 .
The qualities of these bacteria, like the heat of the sun,
electricity, or the qualities of metals, are part of the storehouse
of knowledge of all men. They are manifestations of laws of nature,
free to all men and reserved exclusively to none. He who discovers
a hitherto unknown phenomenon of nature has no claim to a monopoly
of it which the law recognizes. If there is to be invention from
such a discovery, it must come from the application of the law of
nature to a new and useful end. See Telephone Cases, 126 U. S. 1 , 126 U. S.
532 -533; De Forest Radio Co. v. General Electric
Co., 283 U. S. 664 , 283 U. S.
684 -685; Mackay Radio & Tel. Co. v. Radio
Corp., 306 U. S. 86 , 306 U. S. 94 ; Cameron Septic Tank Co. v. Saratoga Springs, 159 F. 453,
462, 463. The Circuit Court of Appeals thought that Bond did much
more than discover a law of nature, since he made an new and
different composition of noninhibitive Page 333 U. S. 131 strains which contributed utility and economy to the manufacture
and distribution of commercial inoculants. But we think that that
aggregation of species fell short of invention within the meaning
of the patent statutes.

															Discovery of the fact that certain strains of each species of
these bacteria can be mixed without harmful effect to the
properties of either is a discovery of their qualities of
noninhibition. It is no more than the discovery of some of the
handiwork of nature, and hence is not patentable. The aggregation
of select strains of the several species into one product is an
application of that newly discovered natural principle. But however
ingenious the discovery of that natural principle may have been,
the application of it is hardly more than an advance in the
packaging of the inoculants. Each of the species of root nodule
bacteria contained in the package infects the same group of
leguminous plants which it always infected. No species acquires a
different use. The combination of species produces no new bacteria,
no change in the six species of bacteria, and no enlargement of the
range of their utility. Each species has the same effect it always
had. The bacteria perform in their natural way. Their use in
combination does not improve in any way their natural functioning.
They serve the ends nature originally provided, and act quite
independently of any effort of the patentee.

															There is, of course, an advantage in the combination. The farmer
need not buy six different packages for six different crops. He can
buy one package and use it for any or all of his crops of
leguminous plants. And, as respondent says, the packages of mixed
inoculants also hold advantages for the dealers and manufacturers
by reducing inventory problems and the like. But a product must be
more than new and useful to be patented; it must also satisfy the
requirements of invention or discovery. Page 333 U. S. 132 Cuno Engineering Corp. v. Automatic Devices Corp., 314 U. S. 84 , 314 U. S. 90 -91,
and cases cited; 35 U.S.C. § 31. R.S. 4886. The application of this
newly discovered natural principle to the problem of packaging of
inoculants may well have been an important commercial advance. But
once nature's secret of the noninhibitive quality of certain
strains of the species of Rhizobium was discovered, the state of
the art made the production of a mixed inoculant a simple step.
Even though it may have been the product of skill, it certainly was
not the product of invention. There is no way in which we could
call it such unless we borrowed invention from the discovery of the
natural principle itself. That is to say, there is no invention
here unless the discovery that certain strains of the several
species of these bacteria are noninhibitive, and may thus be safely
mixed, is invention. But we cannot so hold without allowing a
patent to issue on one of the ancient secrets of nature now
disclosed. All that remains, therefore, are advantages of the mixed
inoculants themselves. They are not enough.

															Since we conclude that the product claims do not disclose an
invention or discovery within the meaning of the patent statutes,
we do not consider whether the other statutory requirements
contained in 35 U.S.C. § 31, R.S. § 4886, are satisfied. Reversed. [ Footnote 1 ]

															The product claims in suit are 1, 3, 4, 5, 6, 7, 8, 13, and 14.
Claim 4 is illustrative of the invention which is challenged. It
reads as follows:

															"An inoculant for leguminous plants comprising a plurality of
selected mutually noninhibitive strains of different species of
bacteria of the genus Rhizobium, said strains being unaffected by
each other in respect to their ability to fix nitrogen in the
leguminous plant for which they are specific."

															[ Footnote 2 ]

															The patent also contains process claims.

															[ Footnote 3 ]

															The six well recognized species of bacteria and the
corresponding groups (cross-inculation groups) of leguminous plants
are:

															Rhizobium trifolii Red clover, crimson clover,

															mammoth clover, alsike clover

															Rhizobium meliloti Alfalfa, white or yellow sweet

															clover

															Rhizobium phaseoli Garden beans

															Rhizobium leguminosarum Garden peas and vetch

															Rhizobium lupini Lupines

															Rhizobium japonicum Soybeans

															[ Footnote 4 ] See note 3 supra. MR. JUSTICE FRANKFURTER, concurring.

															My understanding of Bond's contribution is that, prior to his
attempts, packages of mixed cultures of inoculants presumably
applicable to two or more different kinds of legumes had from time
to time been prepared, but had met with indifferent success. The
reasons for failure were not understood, but the authorities had
concluded that, in general, pure culture inoculants were alone
reliable because mixtures were ineffective due to the mutual
inhibition Page 333 U. S. 133 of the combined strains of bacteria. Bond concluded that there
might be special strains which lacked this mutual inhibition, or
were at all events mutually compatible. Using techniques that had
previously been developed to test efficiency in promoting introgen
fixation of various bacterial strains, Bond tested such efficiency
of various mixtures of strains. He confirmed his notion that some
strains were mutually compatible by finding that mixtures of these
compatible strains gave good nitrogen fixation in two or more
different kinds of legumes, while other mixtures of certain other
strains proved mutually incompatible.

															If this is a correct analysis of Bond's endeavors, two different
claims of originality are involved: (1) the idea that there are
compatible strains, and (2) the experimental demonstration that
there were in fact some compatible strains. Insofar as the court
below concluded that the packaging of a particular mixture of
compatible strains is an invention, and, as such, patentable, I
agree, provided not only that a new and useful property results
from their combination, but also that the particular strains are
identifiable and adequately identified. I do not find that Bond's
combination of strains satisfies these requirements. The strains by
which Bond secured compatibility are not identified, and are
identifiable only by their compatibility.

															Unless I misconceive the record, Bond makes no claim that Funk
Brothers used the same combination of strains that he had found
mutually compatible. He appears to claim that, since he was the
originator of the idea that there might be mutually compatible
strains and had practically demonstrated that some such strains
exist, everyone else is forbidden to use a combination of strains,
whether they are or are not identical with the combinations that
Bond selected and packaged together. It was this claim that, as I
understand it, the District Court Page 333 U. S. 134 found not to be patentable, but which, if valid, had been
infringed.

															The Circuit Court of Appeals defined the claims to

															"cover a composite culture in which are included a plurality of
species of bacteria belonging to the general Rhizobium genus,
carried in a conventional base."

															161 F.2d 981, 983. But the phrase "the claims cover a composite
culture" might mean "a particular composite culture" or "any
composite culture." The Circuit Court of Appeals seems to me to
have proceeded on the assumption that only "a particular composite
culture" was devised and patented by Bond, and then applies it to
"any composite culture" arrived at by deletion of mutually
inhibiting strains, but strains which may be quite different from
Bond's composite culture.

															The consequences of such a conclusion call for its rejection.
Its acceptance would require, for instance, in the field of alloys,
that if one discovered a particular mixture of metals which, when
alloyed, had some particular desirable properties, he could patent
not merely this particular mixture, but the idea of alloying metals
for this purpose, and thus exclude everyone else from contriving
some other combination of metals which, when alloyed, had the same
desirable properties. In patenting an alloy, I assume that both the
qualities of the product and its specific composition would need to
be specified. The strains that Bond put together in the product
which he patented can be specified only by the properties of the
mixture. The District Court, while praising Bond's achievement,
found want of patentability. The Circuit Court of Appeals reversed
the judgment of the District Court by use of an undistributed
middle -- that the claims cover a "composite culture" -- in the
syllogism whereby they found patentability.

															It only confuses the issue, however, to introduce such terms as
"the work of nature" and the "laws of nature." Page 333 U. S. 135 For these are vague and malleable terms infected with too much
ambiguity and equivocation. Everything that happens may be deemed
"the work of nature," and any patentable composite exemplifies in
its properties "the laws of nature." Arguments drawn from such
terms for ascertaining patentability could fairly be employed to
challenge almost every patent. On the other hand, the suggestion
that, "if there is to be invention from such a discovery, it must
come from the application of the law of nature to a new and useful
end" may readily validate Bond's claim. Nor can it be contended
that there was no invention because the composite has no new
properties other than its ingredients in isolation. Bond's mixture
does, in fact, have the new property of multi-service
applicability. Multi-purpose tools, multi-valent vaccines, vitamin
complex composites are examples of complexes whose sole new
property is the conjunction of the properties of their components.
Surely the Court does not mean unwittingly to pass on the
patentability of such products by formulating criteria by which
future issues of patentability may be prejudged. In finding Bond's
patent invalid, I have tried to avoid a formulation which, while it
would in fact justify bond's patent, would lay the basis for
denying patentability to a large area within existing patent
legislation.

															MR. JUSTICE BURTON, with whom MR. JUSTICE JACKSON concurs,
dissenting.

															On the grounds stated by the Circuit Court of Appeals, the
judgment should be affirmed.

															When the patentee discovered the existence of certain strains of
bacteria which, when combined with certain other strains of
bacteria, would infect two or more leguminous plants without loss
of their respective nitrogen-fixing efficiencies, and utilized this
discovery by segregating some of these mutually noninhibitive
strains and Page 333 U. S. 136 combining such strains into composite inoculants, we agree with
MR. JUSTICE FRANKFURTER that the combinations so produced satisfied
the statutory requirements of invention or discovery. [ Footnote 2/1 ] These products were a prompt
and substantial commercial success, filling a long sought and
important agricultural need.

															However, we do not agree that the patent issued for such
products is invalid for want of a clear, concise description of how
the combinations were made and used. The statutory requirement is
that the inventor or discoverer --

															"shall file in the Patent Office a written description of the
same, and of the manner and process of making, constructing,
compounding, and using it, in such full, clear, concise, and exact
terms as to enable any person skilled in the art or science to
which it appertains, or with which it is most nearly connected, to
make, construct, compound, and use the same, and, in case of a
machine, he shall explain the principle thereof, and the best mode
in which he has contemplated applying that principle, so as to
distinguish it from other inventions, and he shall particularly
point out and distinctly claim the part, improvement, or
combination which he claims as his invention or discovery. . . . No
plant patent shall be declared invalid on the ground of
noncompliance with this section if the description is made as
complete as is reasonably possible. [ Footnote 2/2 ]"

															The completeness and character of the description must vary with
the subject to be described. Machines lend themselves readily to
descriptions in terms of mechanical Page 333 U. S. 137 principles and physical characteristics. On the other hand, it
may be that a combination of strains of bacterial species, which
strains are distinguished from one another and recognized in
practice solely by their observed effects, can be definable
reasonably only in terms of those effects. In the present case, the
patentee has defined the combinations in terms of their mutually
inhibiting and noninhibiting effects upon their respective
abilities to take free nitrogen from the air and place it in the
soil. These combinations were discovered by observation of these
effects -- they are in practice identified by these effects for the
commercial uses for which they are made. It is these effects that
differentiate them from the other bacteria heretofore generally
identified only as common members of the same species, and not
commercially valuable for use with leguminous plants of more than
one of the groups named in the opinion of the Court. The
identification of the strains stated in the patent is that which
the patentee used in making the novel combinations of them that
have been shown to be highly useful. There appears to be no
question but that the petitioners are now able to identify and use
the strains in the manner described in the patent. The record thus
indicates that the description is sufficiently full, clear,
concise, and exact to enable persons skilled in the art or science
to which this discovery appertains or with which it is most nearly
connected to make, construct, compound, and use the same. There is
no suggestion as to how it would be reasonably possible to describe
the patented product more completely. The patent covers all
composite cultures of bacterial strains of the species described
which do not inhibit each other's ability to fix nitrogen.
Bacteriologists skilled in the applicable art will not have
difficulty in selecting the noninhibitive strains by employing such
standard and recognized laboratory tests as are described in the
application for this patent. Page 333 U. S. 138 The statute itself shows that Congress has recognized the
inherent difficulty presented. While this patent may not be
technically a "plant patent" in the precise sense in which that
term is used in this Section, the references in the Section to the
differences in descriptions expected in mechanical patents and
plant patents obviously support the position here taken. An
inventor should not be denied a patent upon an otherwise patentable
discovery merely because the nature of the discovery defies
description in conventional terms. Terms ordinarily unsuitable to
describe and distinguish products that are capable of description
and distinction by their appearance may be the most appropriate in
which to describe and distinguish other products that are not
reasonably possible of identification by their appearance, but
which are easily identified by their effects when being sought for
or described by those skilled in the art.

															[ Footnote 2/1 ]

															R.S. § 4886, as amended, 46 Stat. 376, 53 Stat. 1212, 35 U.S.C.
§ 31.

															[ Footnote 2/2 ]

															R.S. § 4888, as amended, 38 Stat. 958, 959, 46 Stat. 376, 35
U.S.C. § 33.

Summary:
Here is a summary of the Supreme Court case Funk Brothers Seed Co. v. Kalo Inoculant Co.:

The Supreme Court ruled that certain product claims of a patent related to mixed cultures of root-nodule bacteria for leguminous plants were invalid due to a lack of invention. The discovery of the fact that certain strains of bacteria could be mixed without negative effects was deemed a natural phenomenon and not patentable. The application of this knowledge to inoculant packaging was also not considered inventive. The Court emphasized the importance of clear and concise descriptions in patents, especially when dealing with unique or hard-to-identify subjects. However, the specific product claims in this case were not inventive enough to warrant patent protection.


U.S. Supreme Court Graver Tank & Mfg. Co. v. Linde
Air Products Co., 339
U.S. 605 (1950) Graver Tank & Mfg. Co. v. Linde
Air Products Co. No. 2 Argued March 30, 1950 Decided May 29, 1950 339
U.S. 605 ON REHEARING Syllabus 1. This Court affirms the finding of the two courts below that,
under the doctrine of equivalents, certain flux claims of Jones
patent No. 2,043,960, for an electric welding process and for
fluxes, or compositions, to be used therewith were infringed. Pp. 339 U. S.
606 -612.

															2. The essence of the doctrine of equivalents is that one may
not practice a fraud on a patent. P. 339 U. S.
608 .

															3. The doctrine of equivalents is founded on the theory that, if
two devices do the same work in substantially the same way and
accomplish substantially the same result, they are the same, even
though they differ in name, form or shape. Pp. 339 U. S.
608 -609.

															4. In determining equivalents, consideration must be given to
the purpose for which an ingredient is used in a patent, the
qualities it has when combined with other ingredients, the
functions which it is intended to perform, and whether persons
reasonably skilled in the art would have known of the
interchangeability of an ingredient not contained in the patent
with one that was. P. 339 U. S.
609 .

															5. A finding of equivalence is a determination of fact to be
made by the trial court, and the trial court's decision should not
be disturbed unless clearly erroneous. Pp. 339 U. S.
609 -610.

															6. On the record in this case, involving a claim of a
combination of alkaline earth metal silicate and calcium fluoride,
the trial court was justified in finding that the substitution in
the accused composition of manganese silicate (which is not an
alkaline earth metal Page 339 U. S. 606 silicate) for magnesium silicate (which is an alkaline earth
metal silicate), where the two compositions were substantially
identical in operation and result, was so insubstantial, in view of
the technology and the prior art, that the patent was infringed
under the doctrine of equivalents. Pp. 339 U. S.
610 -612.

															The history of the case is summarized in the first paragraph of
the opinion. On the aspect of the case involved in the rehearing,
the prior decision of this Court is adhered to, p. 339 U. S.
612 .

															MR. JUSTICE JACKSON delivered the opinion of the Court.

															Linde Air Products Co., owner of the Jones patent for an
electric welding process and for fluxes to be used therewith,
brought an action for infringement against Lincoln and the two
Graver companies. The trial court held four flux claims valid and
infringed and certain other flux claims and all process claims
invalid. 86 F. Supp.
191 . The Court of Appeals affirmed findings of validity and
infringement as to the four flux claims, but reversed the trial
court and held valid the process claims and the remaining contested
flux claims. 167 F.2d 531. We granted certiorari, 335 U.S. 810, and
reversed the judgment of the Court of Appeals insofar as it
reversed that of the trial court, and reinstated the District Court
decree. 336 U. S. 271 .
Rehearing was granted, limited to the question of infringement of
the four valid flux claims and to the applicability of the doctrine
of equivalents to findings of fact in this case. Page 339 U. S. 607 At the outset it should be noted that the single issue before us
is whether the trial court's holding that the four flux claims have
been infringed will be sustained. Any issue as to the validity of
these claims was unanimously determined by the previous decision in
this Court, and attack on their validity cannot be renewed now by
reason of limitation on grant of rehearing. The disclosure, the
claims, and the prior art have been adequately described in our
former opinion and in the opinions of the courts below.

															In determining whether an accused device or composition
infringes a valid patent, resort must be had in the first instance
to the words of the claim. If accused matter falls clearly within
the claim, infringement is made out, and that is the end of it.

															But courts have also recognized that to permit imitation of a
patented invention which does not copy every literal detail would
be to convert the protection of the patent grant into a hollow and
useless thing. Such a limitation would leave room for -- indeed,
encourage -- the unscrupulous copyist to make unimportant and
insubstantial changes and substitutions in the patent which, though
adding nothing, would be enough to take the copied matter outside
the claim, and hence outside the reach of law. One who seeks to
pirate an invention, like one who seeks to pirate a copyrighted
book or play, may be expected to introduce minor variations to
conceal and shelter the piracy. Outright and forthright duplication
is a dull and very rare type of infringement. To prohibit no other
would place the inventor at the mercy of verbalism, and would be
subordinating substance to form. It would deprive him of the
benefit of his invention, and would foster concealment, rather than
disclosure, of inventions, which is one of the primary purposes of
the patent system. Page 339 U. S. 608 The doctrine of equivalents evolved in response to this
experience. The essence of the doctrine is that one may not
practice a fraud on a patent. Originating almost a century ago in
the case of Winans v.
Denmead , 15 How. 330, it has been consistently
applied by this Court and the lower federal courts, and continues
today ready and available for utilization when the proper
circumstances for its application arise. "To temper unsparing logic
and prevent an infringer from stealing the benefit of the
invention," [ Footnote 1 ] a
patentee may invoke this doctrine to proceed against the producer
of a device "if it performs substantially the same function in
substantially the same way to obtain the same result." Sanitary
Refrigerator Co. v. Winters, 280 U. S. 30 , 280 U. S. 42 .
The theory on which it is founded is that,

															"if two devices do the same work in substantially the same way,
and accomplish substantially the same result, they are the same,
even though they differ in name, form or shape." Union Paper-Bag Machine Co. v. Murphy, 97 U. S.
120 , 97 U. S. 125 .
The doctrine operates not only in favor of the patentee of a
pioneer or primary invention, but also for the patentee of a
secondary invention consisting of a combination of old ingredients
which produce new and useful results, Imhaeuser v. Buerk, 101 U. S. 647 , 101 U. S. 655 ,
although the area of equivalence may vary under the circumstances. See Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U. S. 405 , 210 U. S.
414 -415, and cases cited; Seymour v.
Osborne , 11 Wall. 516, 78 U. S. 556 ; Gould v. Rees , 15 Wall. 187, 82 U. S. 192 .
The wholesome realism of this doctrine is not always applied in
favor of a patentee, but is sometimes used against him. Thus, where
a device is so far changed in principle from a patented article
that it performs the same or a similar function in a substantially
different way, but nevertheless falls within the Page 339 U. S. 609 literal words of the claim, the doctrine of equivalents may be
used to restrict the claim and defeat the patentee's action for
infringement. Westinghouse v. Boyden Power Brake Co., 170 U. S. 537 , 170 U. S. 568 .
In its early development, the doctrine was usually applied in cases
involving devices where there was equivalence in mechanical
components. Subsequently, however, the same principles were also
applied to compositions, where there was equivalence between
chemical ingredients. Today the doctrine is applied to mechanical
or chemical equivalents in compositions or devices. See discussions and cases collected in 3 Walker on Patents (Deller's
ed.1937) §§ 489-492; Ellis, Patent Claims (1949) §§ 59-60.

															What constitutes equivalency must be determined against the
context of the patent, the prior art, and the particular
circumstances of the case. Equivalence, in the patent law, is not
the prisoner of a formula, and is not an absolute to be considered
in a vacuum. It does not require complete identity for every
purpose and in every respect. In determining equivalents, things
equal to the same thing may not be equal to each other, and, by the
same token, things for most purposes different may sometimes be
equivalents. Consideration must be given to the purpose for which
an ingredient is used in a patent, the qualities it has when
combined with the other ingredients, and the function which it is
intended to perform. An important factor is whether persons
reasonably skilled in the art would have known of the
interchangeability of an ingredient not contained in the patent
with one that was.

															A finding of equivalence is a determination of fact. Proof can
be made in any form: through testimony of experts or others versed
in the technology; by documents, including texts and treatises;
and, of course, by the disclosures of the prior art. Like any other
issue of fact, final determination requires a balancing of
credibility, Page 339 U. S. 610 persuasiveness, and weight of evidence. It is to be decided by
the trial court, and that court's decision, under general
principles of appellate review, should not be disturbed unless
clearly erroneous. Particularly is this so in a field where so much
depends upon familiarity with specific scientific problems and
principles not usually contained in the general storehouse of
knowledge and experience.

															In the case before us, we have two electric welding compositions
or fluxes: the patented composition, Unionmelt Grade 20, and the
accused composition, Lincolnweld 660. The patent under which
Unionmelt is made claims essentially a combination of alkaline
earth metal silicate and calcium fluoride; Unionmelt actually
contains, however, silicates of calcium and magnesium, two alkaline
earth metal silicates. Lincolnweld's composition is similar to
Unionmelt's, except that it substitutes silicates of calcium and
manganese -- the latter not an alkaline earth metal -- for
silicates of calcium and magnesium. In all other respects, the two
compositions are alike. The mechanical methods in which these
compositions are employed are similar. They are identical in
operation, and produce the same kind and quality of weld.

															The question which thus emerges is whether the substitution of
the manganese, which is not an alkaline earth metal, for the
magnesium, which is, under the circumstances of this case, and in
view of the technology and the prior art, is a change of such
substance as to make the doctrine of equivalents inapplicable; or,
conversely, whether, under the circumstances, the change was so
insubstantial that the trial court's invocation of the doctrine of
equivalents was justified.

															Without attempting to be all-inclusive, we note the following
evidence in the record: chemists familiar with the two fluxes
testified that manganese and magnesium were similar in many of
their reactions (R. 287, 669). There is testimony by a metallurgist
that alkaline earth Page 339 U. S. 611 metals are often found in manganese ores in their natural state,
and that they serve the same purpose in the fluxes (R. 831-832),
and a chemist testified that, "in the sense of the patent,"
manganese could be included as an alkaline earth metal (R. 297).
Much of this testimony was corroborated by reference to recognized
texts on inorganic chemistry (R. 332). Particularly important, in
addition, were the disclosures of the prior art, also contained in
the record. The Miller patent, No. 1,754,566, which preceded the
patent in suit, taught the use of manganese silicate in welding
fluxes (R. 969, 971). Manganese was similarly disclosed in the
Armor patent, No. 1,467,825, which also described a welding
composition (R. 1346). And the record contains no evidence of any
kind to show that Lincolnweld was developed as the result of
independent research or experiments.

															It is not for this Court to even essay an independent evaluation
of this evidence. This is the function of the trial court. And, as
we have heretofore observed,

															"To no type of case is this . . . more appropriately applicable
than to the one before us, where the evidence is largely the
testimony of experts as to which a trial court may be enlightened
by scientific demonstrations. This trial occupied some three weeks,
during which, as the record shows, the trial judge visited
laboratories with counsel and experts to observe actual
demonstrations of welding as taught by the patent and of the
welding accused of infringing it, and of various stages of the
prior art. He viewed motion pictures of various welding operations
and tests, and heard many experts and other witnesses." 336 U. S. 336 U.S.
271, 336 U. S.
274 -275.

															The trial judge found on the evidence before him that the
Lincolnweld flux and the composition of the patent in suit are
substantially identical in operation and in result. He found also
that Lincolnweld is in all respects equivalent to Unionmelt for
welding purposes. And he concluded that,

															"for all practical purposes, manganese silicate Page 339 U. S. 612 can be efficiently and effectively substituted for calcium and
magnesium silicates as the major constituent of the welding
composition."

															These conclusions are adequately supported by the record;
certainly they are not clearly erroneous. [ Footnote 2 ]

															It is difficult to conceive of a case more appropriate for
application of the doctrine of equivalents. The disclosures of the
prior art made clear that manganese silicate was a useful
ingredient in welding compositions. Specialists familiar with the
problems of welding compositions understood that manganese was
equivalent to, and could be substituted for, magnesium in the
composition of the patented flux ,and their observations were
confirmed by the literature of chemistry. Without some explanation
or indication that Lincolnweld was developed by independent
research, the trial court could properly infer that the accused
flux is the result of imitation, rather than experimentation or
invention. Though infringement was not literal, the changes which
avoid literal infringement are colorable only. We conclude that the
trial court's judgment of infringement respecting the four flux
claims was proper, and we adhere to our prior decision on this
aspect of the case. Affirmed. MR. JUSTICE MINTON took no part in the consideration or decision
of this case.

															[ Footnote 1 ]

															L. Hand in Royal Typewriter Co. v. Remington Rand, 168
F.2d 691, 692.

															[ Footnote 2 ]

															Rule 52(a), Federal Rules of Civil Procedure provides in
part:

															"Findings of fact shall not be set aside unless clearly
erroneous, and due regard shall be given to the opportunity of the
trial court to judge of the credibility of the witnesses."

															MR. JUSTICE BLACK, with whom MR. JUSTICE DOUGLAS concurs,
dissenting.

															I heartily agree with the Court that "fraud" is bad, "piracy" is
evil, and "stealing" is reprehensible. But, in Page 339 U. S. 613 this case, where petitioners are not charged with any such
malevolence, these lofty principles do not justify the Court's
sterilization of Acts of Congress and prior decisions, none of
which is even mentioned in today's opinion.

															The only patent claims involved here describe respondent's
product as a flux "containing a major proportion of alkaline earth
metal silicate." The trial court found that petitioners used a flux
"composed principally of manganese silicate." Finding also that
"manganese is not an alkaline earth metal," the trial court
admitted that petitioners' flux did not "literally infringe"
respondent's patent. Nevertheless it invoked the judicial "doctrine
of equivalents" to broaden the claim for "alkaline earth metals" so
as to embrace "manganese." On the ground that "the fact that
manganese is a proper substitute . . . is fully disclosed in the
specification" of respondent's patent, it concluded that

															"no determination need be made whether it is a known chemical
fact outside the teachings of the patent that manganese is an
equivalent. . . ."

															Since today's affirmance unquestioningly follows the findings of
the trial court, this Court necessarily relies on what the
specifications revealed. [ Footnote
2/1 ] In so doing, it violates a direct mandate of Congress
without even discussing that mandate.

															R.S. § 4888, as amended, 35 U.S.C. § 33, provides that an
applicant

															"shall particularly point out and distinctly claim the part,
improvement, or combination which he claims as his invention or
discovery."

															We have held in this very case that this statute precludes
invoking the specifications to alter a claim free from ambiguous
language, since "it is the claim which measures the grant Page 339 U. S. 614 to the patentee." [ Footnote 2/2 ] Graver Mfg. Co. v. Linde Co., 336 U.
S. 271 , 336 U. S. 277 .
What is not specifically claimed is dedicated to the public. See, e.g., Miller v. Brass Co., 104 U.
S. 350 , 104 U. S. 352 .
For the function of claims under R.S. § 4888, as we have frequently
reiterated, is to exclude from the patent monopoly field all that
is not specifically claimed, whatever may appear in the
specifications. See, e.g., Marconi Wireless Co. v. United
States, 320 U. S. 1 , 320 U. S. 23 , and
cases there cited. Today, the Court tacitly rejects those cases. It
departs from the underlying principle which, as the Court pointed
out in White v. Dunbar, 119 U. S. 47 , 119 U. S. 51 ,
forbids treating a patent claim

															"like a nose of wax, which may be turned and twisted in any
direction, by merely referring to the specification, so as to make
it include something more than, or something different from, what
its words express. . . . The claim is a statutory requirement,
prescribed for the very purpose of making the patentee define
precisely what his invention is, and it is unjust to the public, as
well as an evasion of the law, to construe it in a manner different
from the plain import of its terms."

															Giving this patentee the benefit of a grant that it did not
precisely claim is no less "unjust to the public" and no less an
evasion of R.S. § 4888 merely because done in the name of the
"doctrine of equivalents."

															In seeking to justify its emasculation of R.S. § 4888 by
parading potential hardships which literal enforcement might
conceivably impose on patentees who had for some reason failed to
claim complete protection for their discoveries, the Court fails
even to mention the program for alleviation of such hardships which
Congress itself Page 339 U. S. 615 has provided. 35 U.S.C. § 64, authorizes reissue of patents
where a patent is "wholly or partly inoperative" due to certain
errors arising from "inadvertence, accident, or mistake" of the
patentee. And while the section does not expressly permit a
patentee to expand his claim, this Court has reluctantly
interpreted it to justify doing so. Miller v. Brass Co., 104 U. S. 350 , 104 U. S.
353 -354. That interpretation, however, was accompanied
by a warning that "Reissues for the enlargement of claims should be
the exception and not the rule." 104 U.S. at 104 U. S. 355 .
And Congress was careful to hedge the privilege of reissue by
exacting conditions. It also entrusted the Patent Office, not the
courts, with initial authority to determine whether expansion of a
claim was justified, [ Footnote 2/3 ]
and barred suits for retroactive infringement based on such
expansion. Like the Court's opinion, this congressional plan
adequately protects patentees from "fraud," "piracy," and
"stealing." Unlike the Court's opinion, it also protects
businessmen from retroactive infringement suits and judicial
expansion of a monopoly sphere beyond that which a patent expressly
authorizes. The plan is just, fair, and reasonable. In effect, it
is nullified by this decision undercutting what Page 339 U. S. 616 the Court has heretofore recognized as wise safeguards. See
Milcor Steel Co. v. Fuller Co., 316 U.
S. 143 , 316 U. S. 148 .
One need not be a prophet to suggest that today's rhapsody on the
virtue of the "doctrine of equivalents" will, in direct
contravention of the Miller case, supra, make enlargement
of patent claims the "rule," rather than the "exception."

															Whatever the merits of the "doctrine of equivalents" where
differences between the claims of a patent and the allegedly
infringing product are de minimis, colorable only, and
without substance, that doctrine should have no application to the
facts of this case. For the differences between respondent's
welding substance and petitioner's claimed flux were not nearly so
slight. The claims relied upon here did not involve any mechanical
structure or process where invention lay in the construction or
method, rather than in the materials used. Rather, they were based
wholly on using particular materials for a particular purpose.
Respondent's assignors experimented with several metallic
silicates, including that of manganese. According to the
specifications (if these are to be considered), they concluded
that, while several were "more or less efficacious in our process,
we prefer to use silicates of the alkaline earth metals." Several
of their claims which this Court found too broad to be valid
encompassed manganese silicate; the only claims found valid did
not. Yet today the Court disregards that crucial deficiency,
holding those claims infringed by a composition of which 88.49% by
weight is manganese silicate.

															In view of the intense study and experimentation of respondent's
assignors with manganese silicate, it would be frivolous to contend
that failure specifically to include that substance in a precise
claim was unintentional. Nor does respondent attempt to give that
or any other explanation for its omission. But the similar use of
manganese in prior expired patents, referred to in the Court's
opinion, raises far more than a suspicion that its elimination Page 339 U. S. 617 from the valid claims stemmed from fear that its inclusion by
name might result in denial or subsequent invalidation of
respondent's patent.

															Under these circumstances, I think petitioner had a right to act
on the belief that this Court would follow the plain mandates of
Congress that a patent's precise claims mark its monopoly
boundaries, and that expansion of those claims to include manganese
could be obtained only in a statutory reissue proceeding. The
Court's ruling today sets the stage for more patent "fraud" and
"piracy" against business than could be expected from faithful
observance of the congressionally enacted plan to protect business
against judicial expansion of precise patent claims. Hereafter, a
manufacturer cannot rely on what the language of a patent claims.
He must be able, at the peril of heavy infringement damages, to
forecast how far a court relatively unversed in a particular
technological field will expand the claim's language after
considering the testimony of technical experts in that field. To
burden business enterprise on the assumption that men possess such
a prescience bodes ill for the kind of competitive economy that is
our professed goal.

															The way specific problems are approached naturally has much to
do with the decisions reached. A host of prior cases, to some of
which I have referred, have treated the 17-year monopoly authorized
by valid patents as a narrow exception to our competitive
enterprise system. For that reason, they have emphasized the
importance of leaving businessmen free to utilize all knowledge not
preempted by the precise language of a patent claim. E.g.,
Sontag Stores Co. v. Nut Co., 310 U.
S. 281 , and cases there cited. In the Sontag case, Mr. Justice McReynolds, speaking for a unanimous Court, said
in part:

															"In the case under consideration, the patentee might have
included in the application for the original patent claims broad
enough to embrace petitioner's accused machine, but did not. Page 339 U. S. 618 This 'gave the public to understand' that whatever was not
claimed 'did not come within his patent and might rightfully be
made by anyone.'"

															310 U.S. at 310 U. S.
293 .

															The Court's contrary approach today causes it to retreat from
this sound principle. The damages retroactively assessed against
petitioner for what was authorized until today are but the initial
installment on the cost of that retreat.

															[ Footnote 2/1 ]

															For this reason, the tidbits of evidence painstakingly selected
from the record by this Court have no significance, since the trial
court avowedly did not look beyond the specifications
themselves.

															[ Footnote 2/2 ]

															This Court's approval of the trial judge's resort to
specifications is ironic as well as unfortunate. In its original
opinion, this Court rejected respondent's contention that the very
language invoked here to support infringement should be applied to
validate a claim otherwise too board to be upheld. 336 U.
S. 271 , 336 U. S.
277 .

															[ Footnote 2/3 ]

															"This provision was inserted in the law for the purpose of
relieving the courts from the duty of ascertaining the exact
invention of the patentee by inference and conjecture, derived from
a laborious examination of previous inventions, and a comparison
thereof with that claimed by him. This duty is now cast upon the
Patent Office. There, his claim is, or is supposed to be, examined,
scrutinized, limited, and made to conform to what he is entitled
to. If the office refuses to allow him all that he asks, he has an
appeal. But the courts have no right to enlarge a patent beyond the
scope of its claim as allowed by the Patent Office, or the
appellate tribunal to which contested applications are referred.
When the terms of a claim in a patent are clear and distinct (as
they always should be), the patentee, in a suit brought upon the
patent, is bound by it. Merrill v. Yeomans, 94 U. S.
568 ." Keystone Bridge Co. v. Phoenix Iron Co., 95 U. S.
274 , 95 U. S.
278 .

															MR. JUSTICE DOUGLAS, dissenting.

															The Court applies the doctrine of equivalents in a way which
subverts the constitutional and statutory scheme for the grant and
use of patents.

															The claims of the patent are limited to a flux "containing a
major proportion of alkaline earth metal silicate." Manganese
silicate, the flux which is held to infringe, is not an alkaline
earth metal silicate. It was disclosed in the application and then
excluded from the claims. It therefore became public property. See Mahn v. Harwood, 112 U. S. 354 , 112 U. S. 361 .
It was, to be sure, mentioned in the specifications. But the
measure of the grant is to be found in the claims, not in the
specifications. Milcor Steel Co. v. Fuller Co., 316 U. S. 143 , 316 U. S.
145 -146. The specifications can be used to limit, but
never to expand, the claim. See McClain v. Ortmayer, 141 U. S. 419 , 141 U. S.
424 .

															The Court now allows the doctrine of equivalents to erase those
time-honored rules. Moreover, a doctrine which is said to protect
against practicing "a fraud on a patent" is used to extend a patent
to a composition which could not be patented. For manganese
silicate had been covered by prior patents, now expired. Thus, we
end with a strange anomaly: a monopoly is obtained on an unpatented
and unpatentable article.

Summary: The U.S. Supreme Court affirmed the ruling that Linde Air Products Co.'s Jones patent for an electric welding process and fluxes was infringed upon by Graver Tank & Mfg. Co. The Court applied the doctrine of equivalents, which states that if two devices perform the same function in substantially the same way to achieve the same result, they are considered the same, even with differences in form or shape. The Court found that Graver Tank's substitution of manganese silicate for magnesium silicate in their welding flux was insubstantial and did not differentiate their product from the patented invention. This decision upheld the lower courts' findings of validity and infringement of the flux claims in the Jones patent.


U.S. Supreme Court United States v. General Electric Co., 272
U.S. 476 (1926) United States v. General Electric
Company No. 113 Argued October 13,
1926 Decided November 23,
1926 272
U.S. 476 APPEAL FROM THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF
OHIO Syllabus 1. Through a system of contracts between a company which owned
the patents for electric lamps with tungsten filaments and
manufactured most of those sold and a large number of wholesale and
retail dealers in electrical supplies, the dealers were appointed
agents of the company to sell, on commission, the lamps, which were
to be consigned to them by the company, transportation prepaid; the
sales were to be at prices fixed by the company, the dealers to pay
all expenses except the original transportation and to account to
the company periodically for the amount, less commission, of all
sales, cash or credit, and all the stock entrusted to the dealers
was to remain the property of the company until sold, and to be
accounted for by the dealers. Page 272 U. S. 477 Held, that the dealers were genuine agents, not
purchasers in disguise, and that the plan was not a device to fix
prices after sale and to restrain trade and exercise monopoly in
the lamps in violation of the Anti-Trust Act. P. 272 U. S.
484 .

															2. The circumstance that the agents were in their regular
business merchants, and, under a prior arrangement, had bought the
lamps and sold them as their own did not prevent this change in
their relation to the company. P. 272 U. S.
484 .

															3. Nor did the size and comprehensiveness of the scheme bring it
within the Anti-Trust Law. P. 272 U. S.
485 .

															4. As a patentee has a statutory monopoly of the right to make,
use, and sell the patented article, the comprehensiveness of his
control of the business of selling is not necessarily an evidence
of illegality in method. P. 272 U. S.
485 .

															5. As long as a patentee makes no effort to fasten upon
ownership of the articles he sells control of the prices at which
his purchaser shall sell, it makes no difference how widespread his
monopoly. P. 272 U. S.
485 .

															6. The owner of articles, patented or otherwise, is not
violating the common law or the Anti-Trust law by seeking to
dispose of his articles directly to the consumer and fixing the
price by which his agents transfer the title from him directly to
such consumer. P. 272 U. S.
488 .

															7. A patentee, in licensing another person to make, use, and
vend, may lawfully impose the condition that sales by the licensee
shall be at prices fixed by the licensor and subject to change at
his discretion. P. 272 U. S.
488 . 15 F.2d 715 affirmed.

															Appeal from a decree of the district court dismissing, for want
of equity, a bill brought by the United States to enjoin the
General Electric Company, Westinghouse Electric and Manufacturing
Company, and Westinghouse Lamp Company, appellees herein, from
prosecuting a plan for the distribution and sale of patented
electric lamps, which was alleged to be a restraint and monopoly of
interstate commerce. Page 272 U. S. 478 MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.

															This is a bill in equity, brought by the United States in the
District Court for the Northern District of Ohio to enjoin the
General Electric Company, the Westinghouse Electric &
Manufacturing Company, and the Westinghouse Lamp Company from
further violation of the Anti-Trust Act of July 2, 1890. 26 Stat.
209, c. 647. The bill made two charges, one that the General
Electric Company, in its business of making and selling
incandescent electric lights, had devised and was carrying out a
plan for their distribution throughout out the United States by a
number of so-called agents, exceeding 21,000, to restrain
interstate trade in such lamps and to exercise a monopoly of the
sale thereof, and, second, that it was achieving the same illegal
purpose through a contract of license with the defendants, the
Westinghouse Electric & Manufacturing Company and the
Westinghouse house Lamp Company. As the Westinghouse Lamp Company
is a corporation all of whose stock is owned by the Westinghouse
Electric & Manufacturing Company, and is but its selling agent,
we may treat the two as one, and reference hereafter will be only
to the defendants the General Electric Page 272 U. S. 479 Company, which we shall call the Electric Company, and the
Westinghouse Company.

															The government alleged that the system of distribution adopted
was merely a device to enable the Electric Company to fix the
resale prices of lamps in the hands of purchasers, that the
so-called agents were in fact wholesale and retail merchants, and
the lamps passed through the ordinary channels of commerce in the
ordinary way, and that the restraint was the same and just as
unlawful as if the so-called agents were avowed purchasers handling
the lamps under resale price agreements. The Electric Company
answered that its distributors were bona fide agents, that
it had the legal right to market its lamps and pass them directly
to the consumer by such agents, and at prices and by a system
prescribed by it and agreed upon between it and its agents, there
being no limitation sought as to resale prices upon those who
purchased from such agents.

															The second question in the case involves the validity of a
license granted March 1, 1912, by the Electric Company to the
Westinghouse Company to make, use, and sell lamps under the patents
owned by the former. It was charged that the license in effect
provided that the Westinghouse Company would follow prices and
terms of sale from time to time fixed by the Electric Company and
observed by it, and that the Westinghouse Company would, with
regard to lamps manufactured by it under the license, adopt and
maintain the same conditions of sale as observed by the Electric
Company in the distribution of lamps manufactured by it.

															The district court, upon a full hearing, dismissed the bill for
want of equity, and this is an appeal under § 2 of the Act of
February 11, 1903, known as the Expediting Act. 32 Stat. 823, c.
544, § 2.

															There had been a prior litigation between the United States and
the three defendants and 32 other corporations, Page 272 U. S. 480 in which the government sued to dissolve an illegal combination
in restraint of interstate commerce in electric lamps, in violation
of the Anti-Trust Act, and to enjoin its further violation. A
consent decree was entered in that cause by which the combination
was dissolved, the subsidiary corporations surrendered their
charters, and their properties were taken over by the General
Electric Company. The defendants were all enjoined from fixing
resale prices for purchasers, except that the owner of the patents
were permitted to fix the prices at which a licensee should sell
lamps manufactured by it under the patent. After the decree was
entered, a new sales plan, which was the one here complained of,
was submitted to the Attorney General. The Attorney General
declined to express an opinion as to its legality. The plan was
adopted, and has been in operation since 1912.

															The government insists that these circumstances tend to support
the government's view that the new plan was a mere evasion of the
restrictions of the decree, and was intended to carry out the same
evil result that had been condemned in the prior litigation. There
is really no conflict of testimony in the sense of a variation as
to the facts, but only a difference as to the inference to be drawn
therefrom. The evidence is all included in a stipulation as to
certain facts as to what certain witnesses for the defendants would
testify and as to the written contracts of license and agency made
by the General Electric Company and the Westinghouse Company.

															The General Electric Company is the owner of three patents --
one of 1912 to Just & Hanaman, the basic patent for the use of
tungsten filaments in the manufacture of electric lamps; the
Coolidge patent of 1913, covering a process of manufacturing
tungsten filaments by which their tensile strength and endurance is
greatly increased; and, third, the Langmuir patent of 1916, which
is for the use of gas in the bulb by which the intensity of the Page 272 U. S. 481 light is substantially heightened. These three patents cover
completely the making of the modern electric lights with the
tungsten filaments, and secure to the General Electric Company the
monopoly of their making, using, and vending.

															The total business in electric lights for the year 1921 was
$68,300,000, and the relative percentages of business done by the
companies were: General Electric, 69 percent; Westinghouse, 16
percent; other licensees, 8 percent, and manufacturers not
licensed, 7 percent. The plan of distribution by the Electric
Company divides the trade into three classes. The first class is
that of sales to large consumers readily reached by the General
Electric Company, negotiated by its own salaried employees, and the
deliveries made from its own factories and warehouses. The second
class is of sales to large consumers under contracts with the
General Electric Company, negotiated by agents, the deliveries
being made from stock in the custody of the agents, and the third
is of the sales to general consumers by agents under similar
contracts. The agents under the second class are called B agents,
and the agents under the third class are called A agents. Each B
agent is appointed by the General Electric Company by the execution
and delivery of a contract for the appointment, which lasts a year
from a stated date, unless sooner terminated. It provides that the
company is to maintain on consignment in the custody of the agent a
stock of lamps, the sizes, types, classes, and quantity of which
and the length of time which they are to remain in stock to be
determined by the company. The lamps consigned to the agents are to
be kept in their respective places of business, where they may be
readily inspected and identified by the company. The consigned
stock, or any part of it, is to be returned to the company as it
may direct. The agent is to keep account books and records giving
the complete information as to his dealings for the inspection Page 272 U. S. 482 of the company. All of the lamps in such consigned stock are to
be and remain the property of the company until the lamps are sold,
and the proceeds of all lamps are to be held in trust for the
benefit and for the account of the company until fully accounted
for. The B agent is authorized to deal with the lamps on
consignment with him in three ways -- first, to distribute the
lamps to the company's A agents as authorized by the company;
second, to sell lamps from the stock to any consumer to the extent
of his requirements for immediate delivery at prices specified by
the company; third, to deliver lamps from the stock to any
purchaser under written contract with the company to whom the B
agent may be authorized by the company to deliver lamps at the
prices and on the terms stated in the contract. The B agent has no
authority to dispose of any of the lamps except as above provided,
and is not to control or attempt to control prices at which any
purchaser shall sell any of such lamps. The agent is to pay all
expenses in the storage, cartage, transportation, handling, sale,
and distribution of lamps, and all expenses incident thereto and to
the accounting therefor, and to the collection of accounts created.
This transportation does not include the freight for the lamps in
the consignment from the company to the agent. The agent guarantees
the return to the company of all unsold lamps in the custody of the
agent within a certain time after the termination of his agency.
The agent is to pay over to the company not later than the 15th of
each month an amount equal to the total sales value, less the
agent's compensation, of all of the company's lamps sold by him --
that is, first, of the collections that have been made; second, of
those customers' accounts which are past due. This is to comply
with the guaranty of the agent of due and prompt payment for all
lamps sold by him from his stock. Third, the agent is to pay to the
company the value of all of the company's Page 272 U. S. 483 lamps lost or missing from or damaged in the stock in his
custody.

															There is a basic rate of commission payable to the agent, and
there are certain special supplemental and additional compensations
for prompt and efficient service. If the agent becomes insolvent,
or fails to make reports and remittances, or fails in any of his
obligations, the appointment may be terminated, and, when
terminated, either at the end of the year or otherwise, the
consigned lamps remaining unsold are to be delivered to the
manufacturer. It appears in the evidence that, since 1915, although
there is no specific agreement to this effect, the company has
assumed all risk of fire, flood, obsolescence, and price decline,
and carries whatever insurance is carried on the stocks of lamps in
the hands of its agents and pays whatever taxes are assessed. This
is relevant as a circumstances to confirm the view that the
so-called relation of agent to the company is the real one. There
are 400 of the B agents, the large distributors. They recommend to
the company efficient and reliable distributors in the localities
with which they are respectively familiar, to act as A agents, whom
the company appoints. There are 21,000 or more of the A agents.
They are usually retail electrical supply dealers in smaller
places. The only sales which the A agent is authorized to make are
to consumers for immediate delivery and to purchasers under written
contract with the manufacturer, just as in the case of the B
agents. The plan was, of course, devised for the purpose of
enabling the company to deal directly with consumers and
purchasers, and doubtless was intended to avoid selling the lamps
owned by the company to jobbers or dealers, and prevent sale by
these middlemen to consumers at different and competing prices. The
question is whether, in view of the arrangements made by the
company with those who ordinarily and usually would be merchants
buying from the manufacturer and selling to the public, such
persons Page 272 U. S. 484 are to be treated as agents or as owners of the lamps consigned
to them under such contracts. If they are to be regarded really as
purchasers, then the restriction as to the prices at which the
sales are to be made is a restraint of trade and a violation of the
Anti-Trust Law.

															We find nothing in the form of the contracts and the practice
under them which makes the so-called B and A agents anything more
than genuine agents of the company, or the delivery of the stock to
each agent anything more than a consignment to the agent for his
custody and sale as such. He is not obliged to pay over money for
the stock held by him until it is sold. As he guarantees the
account when made, he must turn over what should have been paid
whether he gets it or not. This term occurs in a frequent form of
pure agency known as sale by del credere commission. There
is no conflict in the agent's obligation to account for all lamps
lost, missing, or damaged in the stock. It is only a reasonable
provision to secure his careful handling of the goods intrusted to
him. We find nothing in his agreement to pay the expense of
storage, cartage, transportation (except the freight on the
original consignment), handling and the sale and distribution of
the lamps, inconsistent with his relation as agent. The expense of
this is, of course, covered in the amount of his fixed commission.
The agent has no power to deal with the lamps in any way
inconsistent with the retained ownership of the lamps by the
company. When they are delivered by him to the purchasers, the
title passes directly from the company to those purchasers. There
is no evidence that any purchaser from the company or any of its
agents is put under any obligation to sell at any price, or to deal
with the lamps purchased except as an independent owner. The
circumstance that the agents were, in their regular business,
wholesale or retail merchants, and, under a prior arrangement, had
bought the lamps and sold them as Page 272 U. S. 485 their owners, did not prevent a change in their relation to the
company. We find no reason in this record to hold that the change
in this case was not in good faith and actually maintained.

															But it is said that the system of distribution is so complicated
and involves such a very large number of agents, distributed
throughout the entire country, that the very size and
comprehensiveness of the scheme brings it within the Anti-Trust
Law. We do not question that, in a suit under the Anti-Trust Act,
the circumstance that the combination effected secures domination
of so large a part of the business affected as to control prices is
usually most important in proof of a monopoly violating the Act.
But, under the patent law, the patentee is given by statute a
monopoly of making, using, and selling the patented article. The
extent of his monopoly in the articles sold and in the territory of
the United States where sold is not limited in the grant of his
patent, and the comprehensiveness of his control of the business in
the sale of the patented article is not necessarily an indication
of illegality of his method. As long as he makes no effort to
fasten upon ownership of the articles, he sells control of the
prices at which his purchaser shall sell, it makes no difference
how widespread his monopoly. It is only when he adopts a
combination with others by which he steps out of the scope of his
patent rights and seeks to control and restrain those to whom he
has sold his patented articles in their subsequent disposition of
what is theirs that he comes within the operation of the Anti-Trust
Act. The validity of the Electric Company's scheme of distribution
of its electric lamps turns, therefore, on the question whether the
sales are by the company through its agents to the consumer, or are
in fact by the company to the so-called agents at the time of
consignment. The distinction in law and fact between an agency and
a sale is clear. For the reasons already stated, we find no Page 272 U. S. 486 ground for inference that the contracts made between the company
and its agents are, or were intended to be, other than what their
language makes them.

															The government relies in its contention for a different
conclusion on the case of Dr. Miles Medical Co. v. John D. Park
& Sons Co., 220 U. S. 373 .
That case was a bill in equity brought by the Miles Medical Company
to enjoin Park & Sons Company from continuing an alleged
conspiracy with a number of wholesale and retail dealers in
proprietary medicines, to induce the persons who had entered into
certain agency contracts, to the number of 21,000 through the
country, to break their contracts of agency with the Medical
Company, to the great injury of that company. The agency concerned
the sale of proprietary medicines prepared by secret methods and
formulas and identified by distinctive packages and trademarks. The
company had an extensive trade throughout the United States and
certain foreign countries. It had been its practice to sell its
medicines to jobbers and wholesale druggists, who in turn sold to
retail druggists for sale to the customer. It had fixed not only
the price of its own sales to jobbers and wholesale dealers, but
also the prices of jobbers and small dealers. The defendants had
inaugurated a cut-rate or cut-price system which had caused great
damage to the complainants' business, injuriously affected its
reputation, and depleted the sales of its remedies. The bill was
demurred to on the ground that the methods set forth in the bill,
by which attempt was made to control the sales of prices to
consumers, was illegal both at common law and under the Anti-Trust
Act, and deprived the bill of any equity. This was the issue
considered by the Court.

															The plan of distribution of the Miles Medical Company resembled
in many details the plan of distribution in the present case,
except that the subject matter there was medicine by a secret
formula, and not a patented article. Page 272 U. S. 487 But there were certain vital differences. These led the circuit
court of appeals (164 F. 803) to declare that the language of the
so-called contracts of agency were false in their purport, and were
merely used to conceal what were really sales to the so-called
agents. This conclusion was sustained by certain allegations in the
bill inconsistent with the contracts of agency, to the effect that
the Medical Company did sell to these so-called agents the medical
packages consigned. This Court, however, without reference to these
telltale allegations of the bill, found in the contracts themselves
and their operation plain provision for purchases by the so-called
agents which necessarily made the contracts as to an indefinite
amount of the consignments to them contracts of sale, rather than
of agency. The Court therefore held that the showing made was of an
attempt by the Miles Medical Company, through its plan of
distribution, to hold its purchasers after the purchase at full
price to an obligation to maintain prices on a resale by them. This
is the whole effect of the Miles Medical case. That such
it was is made plain in the case of Boston Store v. American
Graphophone Co., 246 U. S. 8 , 246 U. S. 21 , in
which then Chief Justice White reviewed the various cases on this
general subject and spoke of the Miles Medical case as
follows:

															"In Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S.
373 , it was decided that, under the general law, the
owner of movables (in that case, proprietary medicines compounded
by a secret formula) could not sell the movables and lawfully by
contract fix a price at which the product should afterwards be
sold, because to do so would be, at one and the same time, to sell
and retain, to part with and yet to hold, to project the will of
the seller so as to cause it to control the movable parted with
when it was not subject to his will because owned by another, and
thus to make the will of the seller unwarrantedly take the place of
the law of the land as to such movables. Page 272 U. S. 488 It was decided that the power to make the limitation as to price
for the future could not be exerted consistently with the
prohibitions against restraint of trade and monopoly contained in
the Anti-Trust Law."

															Nor does the case of Standard Sanitary Manufacturing Co. v.
United States, 226 U. S. 20 ,
sustain the contention of the government on the first question.
There, a number of manufacturers, one of whom owned a patent for
enameled iron ware for plumbing fixtures, made a combination to
accept licenses to make the patented commodities and to sell them
in interstate trade to jobbers and to refuse to sell to jobbers who
would not agree to maintain fixed prices in sales to plumbers. This
was an attempt, just like that in the Miles Medical Co. case, to control the trade in the articles sold and fasten upon
purchasers who had bought at full price and were complete owners an
obligation to maintain resale prices.

															We are of opinion therefore that there is nothing as a matter of
principle or in the authorities which requires us to hold that
genuine contracts of agency like those before us, however
comprehensive as a mass or whole in their effect, are violations of
the Anti-Trust Act. The owner of an article, patented or otherwise,
is not violating the common law or the Anti-Trust Act by seeking to
dispose of his articles directly to the consumer and fixing the
price by which his agents transfer the title from him directly to
such consumer. The first charge in the bill cannot be
sustained. Second. Had the Electric Company as the owner of the
patents, entirely controlling the manufacture, use, and sale of the
tungsten incandescent lamps, in its license to the Westinghouse
Company, the right to impose the condition that its sales should be
at prices fixed by the licensor and subject to change according to
its discretion? The contention is also made that the license
required the Westinghouse Company not only to conform in the
matter Page 272 U. S. 489 of the prices at which it might vend the patented articles, but
also to follow the same plan as that which we have already
explained the Electric Company adopted in its distribution. It does
not appear that this provision was express in the license, because
no such plan was set out therein, but even if the construction
urged by the government is correct, we think the result must be the
same.

															The owner of a patent may assign it to another and convey (1)
the exclusive right to make, use, and vend the invention throughout
the United States; or (2) an undivided part or share of that
exclusive right; or (3) the exclusive right under the patent within
and through a specific part of the United States. But any
assignment or transfer short of one of these is a license giving
the licensee no title in the patent and no right to sue at law in
his own name for an infringement. Waterman v. Mackenzie, 138 U. S. 252 , 138 U. S. 255 ; Gayler v.
Wilder , 10 How. 477, 51 U. S.
494 -495; Moore v.
Marsh , 7 Wall. 515, and Crown Co. v. Nye Tool
Works, 261 U. S. 24 , 30
[argument of counsel -- omitted]. Conveying less than title to the
patent or part of it, the patentee may grant a license to make,
use, and vend articles under the specifications of his patent for
any royalty, or upon any condition the performance of which is
reasonably within the reward which the patentee by the grant of the
patent is entitled to secure. It is well settled, as already said,
that, where a patentee makes the patented article and sells it, he
can exercise no future control over what the purchaser may wish to
do with the article after his purchase. It has passed beyond the
scope of the patentee's rights. Adams v.
Burks , 17 Wall. 453; Bloomer v.
McQuewan , 14 How. 539; Mitchell
v. Hawley , 16 Wall. 544; Hobbie v.
Jennison, 149 U. S. 355 ; Keeler v. Standard Folding Bed Co., 157 U.
S. 659 . But the question is a different one which arises
when we consider what a patentee who grants a license to one to
make and vend the patented article may do in limiting the licensee
in the Page 272 U. S. 490 exercise of the right to sell. The patentee may make and grant a
license to another to make and use the patented articles, but
withhold his right to sell them. The licensee in such a case
acquires an interest in the articles made. He owns the material of
them, and may use them. But if he sells them, he infringes the
right of the patentee, and may be held for damages and enjoined. If
the patentee goes further and licenses the selling of the articles,
may he limit the selling by limiting the method of sale and the
price? We think he may do so provided the conditions of sale are
normally and reasonably adapted to secure pecuniary reward for the
patentee's monopoly. One of the valuable elements of the exclusive
right of a patentee is to acquire profit by the price at which the
article is sold. The higher the price, the greater the profit,
unless it is prohibitory. When the patentee licenses another to
make and vend and retains the right to continue to make and vend on
his own account, the price at which his licensee will sell will
necessarily affect the price at which he can sell his own patented
goods. It would seem entirely reasonable that he should say to the
licensee, "Yes, you may make and sell articles under my patent, but
not so as to destroy the profit that I wish to obtain by making
them and selling them myself." He does not thereby sell outright to
the licensee the articles the latter may make and sell, or vest
absolute ownership in them. He restricts the property and interest
the licensee has in the goods he makes and proposes to sell.

															This question was considered by this Court in the case of Bement v. National Harrow Co., 186 U. S.
70 . A combination of manufacturers owning a patent to
make float spring tool harrows licensed others to make and sell the
products under the patent on condition that they would not, during
the continuance of the license, sell the products at a less price
or on more favorable terms of payment and delivery to purchasers
than were set forth Page 272 U. S. 491 in a schedule made part of the license. That was held to be a
valid use of the patent rights of the owners of the patent. It was
objected that this made for a monopoly. The Court, speaking by Mr.
Justice Peckham, said (p. 186 U. S.
91 ):

															"The very object of these laws is monopoly, and the rule is,
with few exceptions, that any conditions which are not in their
very nature illegal with regard to this kind of property, imposed
by the patentee and agreed to by the licensee for the right to
manufacture or use or sell the article, will be upheld by the
courts. The fact that the conditions in the contracts keep up the
monopoly or fix prices does not render them illegal."

															Speaking of the contract, he said (p. 186 U. S.
93 ):

															"The provision in regard to the price at which the licensee
would sell the article manufactured under the license was also an
appropriate 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 providing 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 sell the article
patented upon the condition that the assignee shall charge a
certain amount for such article."

															The question which the Court had before it in that case came to
it on a writ of error to the Court of Appeals of New York, and
raised the federal issue whether a contract of license of this
kind, having a wide operation in the sales of the harrows, was
invalid because a violation of the Anti-Trust law. This Court held
that it was not.

															It is argued, however, that Bement v. National Harrow
Co. has been in effect overruled. The claim is based on the
fact that one of the cases cited by Mr. Justice Peckham in that
case was Heaton-Peninsular Button-Fastener Co. v. Eureka
Specialty Co., 77 F. Page 272 U. S. 492 288. This was a decision by the Circuit Court of Appeals of the
Sixth Circuit, the opinion being written by Circuit Judge Lurton,
afterwards a Justice of this Court. The question there considered
was whether the owner of a patent for a machine for fastening
buttons to shoes with metallic fasteners might sell such machines
subject to the condition that they should be used only with
fasteners manufactured by the seller, the patented machine to
revert on the breach of the condition. The purchaser of the machine
was held to be a licensee, and the use by him of the unpatented
fasteners contrary to the condition to be a breach of contract of
the license, and an infringement of the patent monopoly.

															A similar case came before this Court and is reported in Henry v. Dick Co., 224 U. S. 1 , the
opinion in which was also delivered by Mr. Justice Lurton. In that
case, a complainant sold his patented machine embodying his
invention. It was called the "rotary mimeograph." The claims of the
patent did not embrace ink or other materials used in working it.
Upon the machine, however, was inscribed a notice, styled a license
restriction, reciting that the machine might be used only with the
stencil paper, ink, and other supplies made by the A. B. Dick
Company. The Henry Company, dealers in ink, sold to the purchaser,
for use in working her machine, ink not made by the Dick Company.
This Court held by a majority that the use of such ink by the
purchaser was a prohibited use, and rendered her liable to an
action under the patent law for infringement, and that the seller
of the ink was liable as a contributory infringer.

															The case was overruled by this Court in Motion Picture
Patents Co. v. Universal Film Co., 243 U.
S. 502 . The patent in that case covered 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 so as not to expose Page 272 U. S. 493 the film to excessive strain or wear. The license agreement
contained a covenant on the part of the licensee that every machine
sold by it should be sold under the restriction and condition that
such exhibiting or projecting machines should be used solely for
exhibiting or projecting motion pictures of the Motion Picture
Patents Company. The overruling of the Dick case was based
on the ground that the grant of the patent was of the exclusive
right to use the mechanism and produce the result with any
appropriate material, and that the materials or pictures upon which
the machine was operated were no part of the patented machine or of
the combination which produced the patented result.

															The overruling of the Dick case and the disapproval of
the Button-Fastener case by the Motion Picture
Film case did not carry with it the overruling of Bement
v. Harrow Co. The Button-Fastener case was cited in
the case of Bement v. Harrow Co. to sustain the decision
there by what was an a fortiori argument. The ruling in
the former case was much broader than was needed for the decision
in the latter. The price at which a patented article sells is
certainly a circumstance having a more direct relation and is more
germane to the rights of the patentee than the unpatented material
with which the patented article may be used. Indeed, as already
said, price-fixing is usually the essence of that which secures
proper reward to the patentee.

															Nor do we think that the decisions of this Court holding
restrictions as to price of patented articles invalid apply to a
contract of license like the one in this case. Those cases are: Boston Store v. American Graphophone Co., 246 U. S.
8 ; Straus v. Victor Talking Machine Co., 243 U. S. 490 ; Bauer v. O'Donnell, 229 U. S. 1 ; Standard Sanitary Manufacturing Co. v. United States, 226 U. S. 20 ; Bobbs-Merrill Co. v. Straus, 210 U.
S. 339 . These cases really are only instances of Page 272 U. S. 494 the application of the principle of Adams v.
Burks , 17 Wall. 453, 84 U. S. 456 ,
already referred, to that a patentee may not attach to the article
made by him or with his consent a condition running with the
article in the hands of purchasers limiting the price at which one
who becomes its owner for full consideration shall part with it.
They do not consider or condemn a restriction put by a patentee
upon his licensee as to the prices at which the latter shall sell
articles which he makes, and only can make legally, under the
license. The authority of Bement v. Harrow Co. has not
been shaken by the cases we have reviewed.

															For the reasons given, we sustain the validity of the license
granted by the Electric Company to the Westinghouse Company. The
decree of the district court dismissing the bill is Affirmed.

Summary: The United States Supreme Court upheld the system of contracts between a patent-owning company and its dealers, finding that the dealers were genuine agents and not purchasers in disguise. The Court also affirmed that a patentee can control the sale of their patented articles, including setting prices, without violating the Anti-Trust Law. This decision affirmed the lower court's dismissal of the bill brought by the United States against the General Electric Company and other companies.