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RUDE v. WESTCOTT.

decided: March 18, 1889.

RUDE
v.
WESTCOTT.



APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF INDIANA.

Author: Field

[ 130 U.S. Page 162]

 MR. JUSTICE FIELD having stated the facts of the case, delivered the opinion of the court.

The defendants below, appellants here, seek a reversal of the decree of the Circuit Court upon several grounds, and, among others, these: 1st, that the complainants have not established a title in themselves to the patents; and 2d, that they have not proved any damages for the infringement of the claims of the patentee.

The first of these grounds rests upon the supposed effect of the assignment executed by the patentee to the complainants on the 6th of October, 1874. The instrument in its words of transfer is amply full and expressive to convey to them his entire interest in and title to not only the patents then issued, but also any renewals or extensions thereof. His language is:

"I, the said Hiram Moore, do hereby assign, sell and set over unto the said Charles W. West and John M. Westcott the entire right, title and interest in and to the letters patent aforesaid, and in and to the invention and improvements represented, shown, or described therein, including any renewal, reissue, or extension thereof, the same to be held and enjoyed by the said West and Westcott, and their legal representatives, as fully and entirely as the same would have been held and enjoyed by me had this assignment and sale not been made, to the full end of any term or terms for which the letters patent aforesaid, or either of them, have been, or hereafter may be, granted, reissued, renewed, or extended."

Nothing could add to the force of this language. The concluding provision, that the net profits arising from sales, royalties,

[ 130 U.S. Page 163]

     or settlements, or other source, are to be divided between the parties to the assignment so as to give the patentee one fourth thereof, does not, in any respect, modify or limit the absolute transfer of title. It is a provision by which the consideration for the transfer is to be paid to the grantor out of the net profits made; it reserves to him no control over the patents or their use or disposal, or any power to interfere with the management of the business growing out of their ownership. The clause appointing the assignees attorneys of the grantor, with authority to use his name whenever they deem proper in such management, does not restrict in any way the power of the assignees after the transfer of the property. It was inserted, perhaps, from over-caution, but it was unnecessary. The assignees were under no obligation to consult him in the management of the property. Their own interests were a sufficient guarantee of a judicious exercise of their power of disposition.

The assignment of Westcott to Kinsey and Morris does speak of an interest possessed by him in the patents, but it explains what that interest is, viz., one half part of the net profits from the patents, arising from sales, royalties, or settlements, or other source, and it refers to the original assignment of the patentee to West and Westcott.

It follows that the contention of the defendants, that the complainants have not established their title to the patents, is not sustained. The complainants do not hold the property as trustees for the benefit of the patentee; they are only trustees for him of one fourth of the profits which may be received by them. Tilghman v. Proctor, 125 U.S. 136, 143.

The second ground of the appellants is, we think, well taken. The master reported in his first report that the complainants waived all claim for profits arising from the manufacture, use and sale of the patented machines, and relied upon the proofs as establishing such a fixed royalth or license fee as would furnish a criterion by which to estimate complainants' damages; and proceeding upon that view, he found from two instances, and perhaps a third instance, in which a specified sum had been paid for the use of the machines, or for the privilege

[ 130 U.S. Page 164]

     of making and selling them, that the complainants had suffered damages on each one-horse machine used by the defendants of one dollar, and on each two-house machine used by them of two dollars. One of the instances relied upon was that of the Wayne Agricultural Company, which had paid the sums named for the use of the machines for four years. It is not clear when the payment was made, but it would seem that it was made in part under a threat of suit, and in part as the result of an arbitration after litigation on the subject had been commenced, and to avoid future litigation. It is clear that a payment of any sum in settlement of a claim for an alleged infringement cannot be taken as a standard to measure the value of the improvements patented, in determining the damages sustained by the owners of the patent in other cases of infringement. Many considerations other than the value of the improvements patented may induce the payment in such cases. The avoidance of the risk and expense of litigation will always be a potential motive for a settlement. The second instance relied upon is that of a corporation by the name of P.P. Mast & Co., which had obtained a license to manufacture grain-drills and seeders at Springfield, Ohio, and to sell the same within the United States, upon an agreement to pay one dollar for every one-horse drill or seeder and two dollars for every two-house drill, provided that if the fee were paid upon the days designated for semi-annual returns, or within ten days thereafter, a reduction of fifty per cent should be made from the fee. The corporation soon afterwards changed its feeding device, and thus did not infringe, and it settled for a portion of the fees; but it does not appear what they were. It is plain, without regard to the settlement had, that an agreement of this kind, where ...


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