Case ID: us-ct-cl_22/html/0335-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per CURIAM:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

A. S. SOLOMONS v. THE UNITED STATES.
    [No. 10697.
    Decided June 2, 1887.]
    
      On the Proofs.
    
    The Chief of the Bureau of Engraving and Printing is officially assigned, to the duty of devising an internal-revenue tax stamp. He produces a stamp previously devised by himself while chief, and perfected with the means and appliances of the Bureau. He states to the Commissioner of Internal Eevenue that for these reasons he shall charge nothing for the invention. Subsequently he resigns his office and takes out a patent. It is assigned to the claimant in consideration of an antecedent indebtedness. He sends a letter to the Commissioner of Internal Eevenue relating to compensation. The Commissioner makes no reply, and the Government continues to use the stamp.
    I.Where an officer is properly assigned to the task of devising an instrument, implement, or subject of manufacture for the public service, the Government bearing the expenses incidental to the invention, the officer continuing to receive his salary, a presumption of implied contract does not arise, and no action to recover a royalty can be maintained.
    II.The fact that the invention was made by the officer before he was assigned to the task of devising one does not take the case out of the foregoing principle, if the cost of perfecting it was borne by the Government, the work being done in the Bureau of which he was chief, and by workmen under his control.
    III.Where an officer is assigned to the duty of selecting a thing for public use he owes the utmost good faith to the Government, which is en- . titled to his unbiased judgment.
    IY. An officer occupying a position of public trust is, in the matter of the selection of a thing to be used in the public service, a guardian of the public welfare. It would be contrary to public policy and to the principle which governs the transactions of guardian and ward, or of trustee and cestui que trust, to allow him to take advantage of the trust. In such cases the law does not imply a contract.
    Y. The Internal Revenue Act, 20th July, 1868 (15 Stat. L., 125), did not extend to the invention of the stamp subsequently adopted by the Commissioner of Internal Eevenue, nor preclude the inventor from selling the patented device to other persons.
    VI. Though the Government may not obtain a monopoly of an invention made by one of its officers in its service, nor a right to share in the profits, or exclude other persons from the use of it, nevertheless it may acquire the right to manufacture and use without liability to the inventor.
    
      VII. Where an assignee takes an assignment of a patent while the invention is in the open use of the Government under an act of Congress, he is chargeable with notice of the facts relating to its public user; and if his x>roperty therein was acquired for a nominal consideration, and in exchange for an unliquidated antecedent indebtedness ho can assert no higher right or equity than that of his assignor.
    
      The Reporters> statement of the case:
    This case was first tried at the December term, 1885, and is-reported in 21 C. Ols. B., 479. Subsequently a. motion for a new trial was made by the claimant, which was in fact in the nature of a rehearing. Upon this rehearing the evidence taken in the case of Metcher v. The United States (11 O. Ols. B., 749) was introduced by stipulation. This new evidence materially modified the facts previously found in two particulars : 1st, it appeared that the device had been invented before the Chief of the Bureau of Engraving and Printing had been called in to-cón sulfation with the Commissioner of Internal Bevenue and the subcommittee of the House of Bepresentatives; 2d, it appeared from the testimony of Commissioner Bollins, taken in the Fletchre case more than twelve years ago, and while the matter was comparatively fresh in his recollection, that the Chief of the Bureau stated to him before the adoption of the stamp that the design was his own, but that he should not charge the Government anything for the use of it as he was employed on a salary and had used the machinery and property of the Government in perfecting it. Accordingly the previous findings and opinion were set aside and the following were filed in their stead :
    “ I. In the latter part of 1867 or early part of 3868, while the-subject of revising the methods of collecting internal revenue was being considered by the Committee of Ways and Means-of the House of Bepresentatives, a subcommittee was given special charge of the tax bn whisky and distilled spirits. A room was assigned by the Secretary of the Treasury, in the Treasury building, to this subcommittee, which immediately proceeded to-hold official consultations with the Secretary of the Treasury and the Commissioner and Deputy Commissioner of Internal Bevenue. Into these consultations Spencer M. Clark, the Chief of the Bureau of Engraving and Printing, was called officially, and to him was assigned the duty of devising a stamp, and it was early determined and understood by all, including Mr.. Clark, that the scheme would proceed upon the assumption that the best stamp which he could devise would be adopted ¿ind make a part of the revised scheme. In these consultations it was mutually understood that Mr. Clark was acting in his official capacity as Chief of the Bureau of Engraving and Printing, and it was not understood or intimated that the stamp which he was to devise would be patented or become his personal property. ■ (
    “ II. In the course of the consultations referred to in the first finding, Mr. Clark laid before the Commissioner and subcommittee a self-canceling revenue stamp as being, in his opinion, a very desirable stamp for the prevention of fraud. This stamp was satisfactory to the Committee of Ways and Means and to the Commissioner of Internal Bevenue. It was of the same design and construction as the stamp subsequently adopted by the Commissioner and manufactured and used by the Government as hereinafter set forth, and was the same device as that set forth and described in the specifications of Clark’s patent annexed to and forming part of the petition.
    “III. No bargain, agreement, contract, or understanding was ever entered into or reached between the officers of the Government and Mr. Clark concerning the right of the Government to use the invention, or concerning the remuneration, if any, which should be paid for it. Neither did Mr. Clark give notice or intimate that he intended to protect the same by letters patent, or that he would expect to be paid a royalty if the Government should manufacture and use stamps of his invention. Before the final adoption of the stamp by the Commissioner of Internal Bevenue, he stated to him that the design was his own, but that he would make no charge to the Government therefor, as he was employed on a salary by the Government and had used the machinery and other property of the Government in the perfection of the stamp. No express license to use the invention was ever given by Mr. Clark to the Government; nor any notice prohibiting its use, or intimating that he would demand a royalty.
    “IV. Immediately after the enactment of the Act 20th July, 1868 (15 Stat. L. 125), and before Mr. Clark had filed an application for a patent, the Commissioner of Internal Bevenue adopted the stamp as the one to be used in the collection of the tax on whisky and distilled spirits. It was adopted by the Commissioner on the recommendation of Mr. Clark. The Commissioner’s selection referred to the completed and perfected stamp which had been devised by Clark and engraved and made in the Bureau of Engraving and Printing, and approved by the Committee of Ways and Means, as set forth in the second finding. The Government then proceeded to manufacture at the Bureau of Engraving and Printing large quantities of these stamps. The first so manufactured were delivered to the Commissioner of Internal Bevenue on the 25th August, 1868; and tlie 2d November following was fixed by the Secretary of the Treasury as the day for commencing the use thereof. Their manufacture and use were continued untjl some time in the year 1872, the last issue to the collection districts being on February 15,1872.
    “ Y. Mr. Clark continued to hold the office and receive the salary of Chief of the Bureau of Engraving and Printing after the manufacture of stamps therein had begun, and until the 17th November, 1868. On the 6th December, 1869, he assigned his iuvention to the claimant by the instrument in writing annexed to and forming part of these findings, the consideration therefor being an antecedent indebtedness due and owing from Clark to the claimant. On the 21st December, 1869, the patent of that date, which is annexed to the petition, was issued; and on the 27th December, 1869, the claimant addressed to the Commissioner of Internal Revenue the communication of that date (inclosing a copy of the patent), which is hereunto annexed. No other notice or notification relating to these stamps was ever given by the claimant to the defendants, their officers or agents.
    “ YI. Under the new system of internal revenue taxation established by the act 20th July, 1868, a greatly augmented amount was collected as the tax on whisky and distilled spirits; and of the new system thereby established the stamp devised by Mr. Clark was an important element; but the changes effected by that statute were so radical that it is impossible to determine what proportion of the increased revenue was attributable to the stamp of Mr. Clark. The device has no general or market value, and has never been used by any person or corporation other than the Government, The royalty charged by patentees for other devices of a detective character, such as the bell-punch, the passenger-fare enumerator, and the gas meter, has been shown; but in these cases the instrument or device has been manufactured and furnished by the patentee. Subsequent to the 21st June, 1869, when the claimant’s patent was antedated, there was collected by means of his patented stamp $70,302,654; and the court finds that one-twentieth of 1 per cent, of the amount so collected, to wit, the sum of $35,151.33, would be a reasonable royalty for the use of the device if the claimant be entitled- to recover therefor.”
    “Appendix to Findings.
    “Documents referred to in the foregoing findings as a part thereof:
    “ To all whom it may concern:
    
    “Be it known that, for and in consideration of the sum of ten dollars to me paid by Adolphus S. Solomons, of Washington City, in the District of Columbia, the receipt whereof is hereby ■acknowledged, I do hereby sell and assign to said Adolphus S. Solomons all my right, title, and interest in and to a certain invention in self-canceling revenue and postal stamps, as fully set forth and described in the specification which I have prepared and filed preparatory to obtaining letters patent therefor.
    “And I do hereby authorize and request the Commissioner of Patents to issue the said letters patent to the said Adolphus S. Solomons as my assignee, for the sole use and behoof of the said Adolphus S. Solomons and his legal representatives.
    “ Witness my hand this sixth day of December, A. D. 1869.
    • “S. M. Clark.
    “ In the presence of “David A. Burr.”
    “ Washington, December 27,1869. “Hon. Columbus Delano,
    “ Commissioner of Internal Revenue:
    
    “ Dear Sir : I have the honor to inform you that I am the owner of letters patent No. 98031, which you will see by reference to the inclosed copy covers the stamps now used by your Department on whisky barrels.
    “ It is of course my interest, as well as my desire, to make an arrangement for a proper compensation for the use of this patent by your Department, and I should be pleased to have an interview with you for that purpose at your earliest convenience.
    “ Very respectfully, yours,
    “A. S. Solomons.”
    
      Mr. Benjamin F. Butter and Mr. C. F. Mcmjer for the claimant:
    The object of this suit is to recover from the United States the value of its use of a patented invention.
    The invention was in use by the Government at the time the patent was granted, but claimant asks compensation only for the use of the invention subsequent to the date of the patent, because he had no right to its exclusive use before the grant of the patent. (Gayler v. Wilder, 10 Howard, p. 493).
    The claimant does not seek compensation for the use of any article manufactured by the Government previous to the date of the application for a patent which contained his invention and which was so manufactured by consent of the inventor. (Sec. 7, Act of 1839 (5 U. S. S., p. 353). Rev. St. U. S., § 4899. Kendall v. Winsor, 21 How., 322.)
    But the law (supra) limits the right of the Government to the use of such articles as it had manufactured up to the date of the application for a patent. (Briclcill v. The Mayor, &c., 18 Blatch., 273; Wade v. Metcalf and others, 16 F. It., 130.
    Therefore if the Government had a parol license from the inventor before the issue of the patent, the effect of this license was fixed aud determined by the act of 1839 [supra). Under this statute (whose provisions have been urged upon the attention of the court), the license was not operative until the grant of the patent, because any one had the right to use the invention before patent granted, and when the patent had been granted the license was only effective to the extent of giving to the Governmentthe rightto use such articles as it had manufactured at the date of the application.
    Therefore when the inventor assigned his invention and the right to a patent therefor to the claimant, the assignment being duly recorded as required by law; when the patent was duly issued to claimant and the claimant notified the Government of its issuance to him and of his expectation to be compensated for its use by the Government, there was created an implied contract that the Government would compensate claim ant for the use of his patented invention. James v. Gamp - hell, 104 U. S., p. 356; United States v. McKeever; McKeever v. U. S. (14 O. Cls. B., 396, affirmed without an opinion). Clark gave a valuable consideation — a pre-existing debt — for the interest he acquired in the invention and the patent.
    No actual consideration moved from the Government to the inventor for the use by the former of the latter’s invention. He was given no increase of salary. If he employed any of his office working-hours or any Government implements or machinery to perfect his invention this was of no advantage to him, because the invention was adapted to be used, and was used, only by the Government. It is absurd to argue that if A employs B to perform a service for him, which can be of value only to him, that B is sufficiently compensated by being permitted to do the work.
    It will not do to argue that because the Government was using the invention at the time claimant bought it, that this was sufficient notice to claimant that the Government would claim the right to use the invention without comi>ensafcion to him, after the grant of the patent, because before such grant the entire world was free to use the invention if they could buy, beg, or steal knowledge of it.
    
      It is not pretended that the claimant had knowledge of any agreement or understanding between the inventor and the Government. If any existed it was notin writing, and of course was not recorded in the Patent Office. It is obnoxious to the statute of frauds, because it certainly was not to be completed within a year if it covered the entire term of the patent to be ■obtained. (Chitty on Contracts, vol. 1, p. 99.) Further, by operation of law, it was absolutely revoked by the assignment to claimant. (Washburn on Beal Property, vol. 1, p. 542, 3d ■edition, and the cases there cited).
    
      Mr. Assistant Attorney-General Soward for the defendants:
    Under the facts, the defendants do not claim there was such a statutory public use as rendered the patent invalid. But they do claim that they have brought themselves within the correct rule as to the implied and actual license to use this stamp whenever and as long as they wished.
    It is not necessary to advert to the doctrine of or analogies to the law of real estate. The courts have placed the right upon a broader and securer foundation. (MeGlurg v. Eingland 1 How., 202. See also Egbert v. Lippman, 104 U. S. B., 336; Worley v. Tobacco Go., id., 334; Manning v. Gape Ann Go., 108 U. S. B., 466.)
    And so in the last case of a long series, Sapgood v. Seioitt (119 U. S. B., 227.)
    Now, although the direct question of license was not raised in that case it was because, upon the authority of preceding cases, the license was admitted.
    The contention of the United States here is that Clark in every act of commission and omission, from 1867, when this matter was first considered in reference to the passage of an internal-revenue act, till the time of the assignment to Solomons and the obtaining the patent, secured to the defendant the right to use this stamp.
    The assignment of this patent to Solomons worked no revocation of the license. It is not permitted to an inventor under such circumstances to alter the contractual relations between himself and the employer. (MeGlurg v. Kingsland, supra; Sapgood v. Sewitt, supra.)
   Per CURIAM:

The counsel for the respective parties having entered into a stipulation that the evidence in the case of Addison C. Fletcher v. The United States (11 C. Cls. R., 749) may be referred to and examined in this case, and the court having considered the same in arriving at its present decision, it is ordered that the-judgment entered and the findings of fact filed on the former hearing of the case, June 7, 1880, be set aside, together with the conclusions of law and opinion then filed, and that those now filed be substituted in their stead.

■ Upon the facts now found the court is of the opinion that where an officer of the Government is properly assigned to the task of devising, preparing, or making an instrument, implement, or other subject of manufacture for the public service, and he does so, the Government bearing the expense of the experiments incidental to the invention, and the cost of completing, perfecting, and testing the device, the officer receiving his salary for his services, a presumption of implied contract does not arise, and no action to recover a royalty for the use of the invention can be maintained.

The court is also of the opinion that the fact in this case that the invention of the stamp was made before the officer was assigned to the duty of devising one, does not take the case out of the foregoing principle, inasmuch as he, at the time of making the invention, was an officer of the Government, and the cost of testing, completing, and perfecting his device was borne by the Government, the work being done in theBureau of which he was chief, and by Government workmen under his control.

The court is also of the opinion that where an officer of the Government is assigned to the duty of selecting a thing for public use which will be or may be adopted upon his recommendation he owes to the Government the utmost good faith, and the Government is entitled to his unbiased judgment. In this case the device was adopted by the Commissioner of Internal Bevenue upon the recommendation of the officer who was its inventor. That officer was then occupying a position of public-trust, and was in the matter of the selection of this stamp a guardian of the public welfare. It would not have been impossible or improper for some higher officer of the Government, such as the Secretary of the Treasury, acting on his own judgment or by the advice of disinterested experts, to have bought an invention made by another public officer; but it would be contrary to public policy and to the principle which governs the transactions of guardian and ward, or of trustee and cestui que trust, to allow an officer to take advantage of the trust confided to him. In such cases the law does not imply a contract.

The court is also of the opinion that the Act 20th July, 1868 (15 Stat. L., 125), did not extend to the invention covered by the claimant’s patent, nor preclude him from selling the patented device to other persons; and that the .stamp of which the statute prohibited the use was the stamp engraved, printed, and purporting to be a revenue stamp issued by the authority of the Government.

Finally the court is of the opinion that while the Government did not obtain a specific interest in the patent, nor a monopoly of the invention, nor a right to share in the profits thereof, nor to exclude other persons from the use of it, nevertheless it acquired the right to manufacture and use the stamp in its revenue service without liability to the inventor; and that the assignee, the claimant, having taken the assignment while the invention was in the open and notorious use of the Government under an act of Congress, was chargeable with notice of the facts relating to its public user, and having acquired his property therein for a nominal consideration and in exchange for an unliquidated, antecedent indebtedness can assert no higher right or equity than that of his assignor.

The judgment of the court is that the petition be dismissed.