Source: https://supreme.justia.com/cases/federal/us/246/28/
Timestamp: 2019-04-19 10:27:46+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 246 › Cramp & Sons Co. v. Curtis Turbine Co.
Cramp & Sons Ship & Engine Building Company v.
The Act of June 25, 1910, c. 423, 36 Stat. 851, providing, in part, that, when patented inventions are used by the United States without license from the owner or lawful right, the owner may recover reasonable compensation for such use in the Court of Claims, is not to be construed as automatically conferring a general license on the government to use such inventions and as thereby authorizing their use at the will of private parties in the manufacture of things to be furnished under contracts between them and the United States.
Where, therefore, a company entered into a contract with the United States to build certain vessels which was based on specifications, submitted or approved by the Navy Department, covering in detail the structure, engines, etc., but which contract expressly provided for protecting the government against any claims which might arise from the infringement by the contractor of the rights of any patentee, and, in constructing the vessels, installed therein certain patented engines without the consent of the patent owners, held that the Act of June 25, 1910, supra, did not operate to relieve the contractor from liability to account for the damages and profits arising from the infringement.
The purpose of the statute is to give further security to the rights of patentees by permitting suit and recovery of compensation in the Court of Claims in those cases where their inventions are availed of for the benefit of the United States by officials of the government, in dealing with subjects within the scope of their authority, but under circumstances not justifying the implication of contract with the patentees. Aside from exceptional cases where the authority of the United States to take under eminent domain may be said to be exerted in reliance upon this provision for compensation, the act contemplates the possibility of official error or mistake in the invasion of such rights; it does not contemplate the deliberate and wrongful appropriation of such constitutionally protected property by official authority, much less does it intend that mere contractors with the government may make such appropriations without compensation, in the work under their contracts, upon the assumption that the United States ultimately will be liable under the statute for the rights so elected to be taken.
Crozier v. Krupp, 224 U. S. 290, explained and distinguished.
The history of this suit, from its commencement up to the development of the controversy now before us, will be shown by an examination of the decided cases referred to in the margin. [Footnote 1] We shall therefore not recur to that which has gone before, but confine our statement to the things essential to an understanding of the phase of the issue which we must now decide.
against any claims which might arise from the infringement by the contractor of the rights of any patentee, if any such rights there were.
"the United States, by act of eminent domain, acquired a license to use the invention of all existing patents, and therefore the transactions under the contracts for torpedo boat destroyers Nos. 47, 48, 49 and 50, being merely the building of devices for a licensee under the patent in suit, were licensed transactions, and consequently are not within the scope of this accounting."
the district court, where his ruling was held to be wrong on its merits, and reversed. On a rehearing, the court sustained the view which it had previously taken of the subject by a reference to a decision of the Circuit Court of Appeals for the Second Circuit. Marconi Wireless Telegraph Co. v. Simon, 227 F. 906; 231 F. 1021; 232 F. 166. Application was then made to the circuit court of appeals by certiorari to review this ruling and by mandamus to compel the master to proceed with the hearing in accordance with the claims of the Turbine Companies. Finding that the ruling in the Marconi case was pending in this Court for review, the court of appeals postponed deciding the issue of statutory construction to await the decision of this Court, but directed the accounting to proceed as to both classes of contracts in such a manner as to enable the authoritative ruling on the statute, when made by this Court, to be applied without confusion or delay. 238 F. 564. The writ of certiorari on which the case is now before us was then allowed, and this and the Marconi case referred to by the court below were argued and submitted upon the same day.
by the act. (House Report No. 1288, 61st Congress, 2d sess.). The conflict between the purpose thus intended and the construction now claimed for the act is evident unless it can be said that to confer by anticipation upon the United States by a law universally and automatically operating a license to use every patent right is a means of giving effect to a provision of a statute avowedly intended for the further securing and protecting of such patent rights.
to the act by the argument. And this is made clearer by considering that the statute itself, in directing the proceedings which must be resorted to in order to accomplish its avowed purpose, exacts the judicial ascertainment of conditions which would be wholly negligible and irrelevant upon the assumption that the statute intended to provide in favor of the United States the general license right which the argument attributes to it. This conclusion cannot be escaped when it is considered that, if the license which it is insisted the act in advance created obtained in favor of the United States, the inquiry into the question of infringement by the United States for which the statute provides would be wholly superfluous, and indeed inconsistent with the assumption of the existence of the supposed license.
But let us in addition pass these latter considerations and come not only to demonstrate the error of the construction asserted, but to make manifest the true meaning of the statute from a two-fold point of view -- that is, first, from an analysis of the context of the statute as elucidated by the indisputable principles which, at the time of the adoption of the act, governed the subjects with which it dealt, and second, from the consideration of the context and the effect upon it of the ruling in Crozier v. Krupp, 224 U. S. 290.
by the United States were property, and protected by the guarantees of the Constitution, and not subject, therefore, to be appropriated, even for public use without adequate compensation.
(b) That, although the United States was not subject to be sued, and therefore could not be impleaded because of an alleged wrongful taking of such rights by one of its officers, nevertheless a person attempting to take such property in disregard of the constitutional guarantees was subject, as a wrongdoer, to be controlled to the extent necessary to prevent the violation of the Constitution. But it was equally well settled as to patent rights, as was the case with all others, that the right to proceed against an individual, even although an officer, to prevent a violation of the Constitution did not include the right to disregard the Constitution by awarding relief which could not rightfully be granted without impleading the United States, or, what is equivalent thereto, without interfering with the property of the United States possessed or used for the purpose of its governmental functions.
(c) That, despite the want of authority to implead the United States, yet where an officer of the United States, within the scope of an official authority vested in him to deal with a particular subject, having knowledge of existing patent rights and of their validity, appropriated them for the benefit of the United States by the consent of the owner, express or implied, upon the conception that compensation would be thereafter provided, the owner of the patent right taken under such circumstances might, under the statute law of the United States permitting suits against the United States on contracts express or implied, recover by way of implied contract the compensation which might be rightly exacted because of such taking.
the benefit of the United States without the conditions stated justifying the implication of a contract, however serious might be the infringement or grave to the holder of the rights the consequences of such infringement, the only redress of the owner was against the officer, since no ground for implying a contract and securing compensation from the United States obtained.
"that, whenever an invention described in and covered by a patent of the United States shall hereafter be used by the United States without license of the owner thereof or lawful right to use the same, such owner may recover reasonable compensation for such use by suit in the Court of Claims"
upon official action and the discharge of official duty. The making of a contract with the United States and the resulting obligation to perform duties in favor of the United States by necessary implication impose the responsibility of performance in accordance with the law of the land -- that is, without disregarding the rights or appropriating the property of others. A contractor with the United States therefore is, in the very nature of things, bound to discharge the obligation of his contract without violating the rights of others, and, merely because he contracts with the United States, is not vested with the power to take the property of others upon the assumption that, as a result of the contract with the United States, he enjoys the right to exercise public and governmental powers possessed by the United States.
Nor is there any foundation for the assumption that the ruling in Crozier v. Krupp, 224 U. S. 290, is in conflict with these self-evident propositions, and by necessary implication sanctions the theory of universal license in favor of the United States as to all patent rights and the asserted resulting authority in contractors with the United States for the purpose of the execution of their contracts to disregard and appropriate all such rights.
property or duties, it yet considered that there was jurisdiction to restrain the individual, although an officer, from continuing to take property without compensation in violation of the Constitution. A certiorari was granted. It was stipulated in the cause that the structures complained of had been made in all the arsenals of the United States by Crozier, the Chief of Ordinance, and by the United States, and that the United States had asserted the right, and proposed to continue, to make the guns and gun carriages in the future for its governmental purposes, and denied the violation of any patent right. It was also stipulated that the Chief of Ordinance had made no profits, and that all claims were waived except the claim of right to a permanent injunction at the termination of the suit to prevent the use of the appliances in the future. And that was the solitary issue which here arose for decision.
It was held that, in view of the admission as to the nature and character of the acts done by the United States, and further in view of the power of the United States to take under eminent domain the patent rights asserted, the provisions of the statute affording a right of action and compensation were adequate to justify the exercise of such power. In accordance with this ruling, it was decided that there was no right to an injunction against the Chief of Ordinance as an individual, and the parties, if their rights had been infringed, were relegated to the compensation provided under the Act of 1910. In reaching this conclusion, the statute was critically considered, principally for the purpose of determining whether the right to recover compensation which the act afforded was adequate to fulfill the requirements of compensation for rights taken as protected by the Constitution. It is true, in the analysis which was made of the statute for this purpose, it was said that the consummated result of the Act of 1910 in any particular case was to confer upon the United States a license to use the patent right (p. 224 U. S. 305).
But the use of the word "license" affords no room for holding that it was decided that the statute provided for the appropriation, by anticipation and automatically, of a license to the United States to use the rights of all patentees as to every patent. And clearer yet is it that the use of the word "license" affords no ground for the proposition that the statute invested every person contracting with the United States for the furnishing of material or supplies or for doing works of construction with public powers, and transferred to them the assumed license to violate patent rights to the end that they might be relieved of the obligations of their contracts, and entail upon the United States unenumerated and undetermined responsibility upon the assumption that the United States would be ultimately liable for the patent rights which the contractors might elect to take. Through abundance of precaution, however, we say that, if any support for such contentions be susceptible of being deduced from the use of the word "license" in the passage referred to, then the word must be, and it is, limited, as pointed out by the context of the opinion and by what we have said in this case, to the nature and character of use which was contemplated by the statute and which is consonant with the execution of its limited though beneficent purpose and not destructive of the same.
The order of the circuit court of appeals to the extent that it directed the accounting to be made on the basis therein stated is affirmed and the decree of the district court is reversed and the case is remanded to the district court for further proceedings in conformity with this opinion.
International Curtis Marine Turbine Co. v. Wm. Cramp & Sons Co., 176 F. 925; In re Grove, 180 F. 62; Curtis Turbine Co. v. Wm. Cramp & Sons Co., 202 F. 932; Wm. Cramp & Sons Co. v. Curtis Turbine Co., 228 U. S. 645; Curtis Turbine Co. v. Wm Cramp & Sons Co., 211 F. 124; Wm. Cramp & Sons Co. v. Curtis Turbine Co., 234 U.S. 755.
"Patents. The party of the first part, in consideration of the premises, hereby covenants and agrees to hold and save the United States harmless from and against all and every demand or demands of any nature or kind for or on account of the adoption of any plan, model design, or suggestion, or for or on account of the use of any patented invention, article, or appliance that has been or may be adopted or used in or about the construction of said vessel, or any part thereof, under this contract, and to protect and discharge the government from all liability on account thereof, or on account of the use thereof, by proper releases from patentees, and by bond if required, or otherwise, and to the satisfaction of the Secretary of the Navy."
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, that, whenever an invention described in and covered by a patent of the United States shall hereafter be used by the United States without license of the owner thereof or lawful right to use the same, such owner may recover reasonable compensation for such use by suit in the Court of Claims: Provided, however, that said Court of Claims shall not entertain a suit or reward (sic) compensation under the provisions of this act where the claim for compensation is based on the use by the United States of any article heretofore owned, leased, used by, or in the possession of the United States: Provided further, that, in any such suit, the United States may avail itself of any and all defenses, general or special, which might be pleaded by a defendant in an action for infringement, as set forth in title sixty of the Revised Statutes, or otherwise: And provided further, that the benefits of this Act shall not inure to any patentee who, when he makes such claim, is in the employment or service of the government of the United States, or the assignee of any such patentee; nor shall this Act apply to any device discovered or invented by such employee during the time of his employment or service."
United States v. Palmer, 128 U. S. 262; Schillinger v. United States, 155 U. S. 163; United States v. Berdan Firearms Mfg. Co., 156 U. S. 552; Belknap v. Schild, 161 U. S. 10; Russell v. United States, 182 U. S. 516; International Postal Supply Co. v. Bruce, 194 U. S. 601; Harley v. United States, 198 U. S. 229.

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