Case Name: Nils Nilsson, Respondent, v. Hugh De Haven, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1900-02
Citations: 47 A.D. 537
Docket Number: 
Parties: Nils Nilsson, Respondent, v. Hugh De Haven, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 47
Pages: 537–543

Head Matter:
Nils Nilsson, Respondent, v. Hugh De Haven, Appellant.
TTnpatented invention — a good consideration for a contract for its manufacture — the contract survives the issue of' the patent — that the patent is invalid is no defense to the party using the invention — complaint amended on appeal.
An inventor, before obtaining a patent on his invention, has a property right therein, which furnishes a sufficient consideration' to sustain a promise by a manufacturer to pay a certain price for the privilege of manufacturing and selling the unpatented invention.
It seems, that the privilege thus obtained survives the granting of a patent on the invention.
Where the person obtaining the privilege has derived the benefits accruing from the manufacture and sale of the invention, he cannot urge the invalidity of the patent obtained by the inventor as a defense to an action brought against him by the latter to recover compensation for the privilege conferred upon him.
On an appeal from a judgment supported by the evidence the Appellate Division may, for the purpose of sustaining the judgment, deem the complaint amended so as to conform to the terms of the contract upon which the action was brought.
Appeal by the defendant, Hugh De Haven, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 30th day of March, 1899, upon the verdict of a jury, .and also from an order entered in said clerk’s office on the 31st day of March, 1899, denying the defendant’s motion for a new trial made upon the minutes.
Joseph A. Burr, for the appellant.
Frederic A. Ward, for the respondent.

Opinion:
Hatch, J.:
' The theory of the complaint in this action is. for the recovery of the reasonable value of the Use and. right to manufacture a certain box fastener, the invention of the plaintiff, under an express contract to. pay therefor. From the averments of the complaint, it might be gathered that the contract authorized the use and manufacture of the article by the'defendant, which, at the time of the making of the contract, was protected by letters patent. The proof given upon the trial, however, established that at the time when the agreement was made the invention was unprotected by letters patent, nor had any application been made therefor. The complaint and the recovery thereunder are to be supported, if at all, upon the agreement to make compensation for the manufacture and Use of an unprotected invention. Whether the complaint be ambiguous- or not, it is clear that if the evidence given upon the trial authorized a recovery, it may now be deemed amended to conform to the terms of the contract for the.pnrpose of sustaining the judgment. (Harris v. Tumbridge 83 N. Y. 921)
W e come, therefore, to a consideration of the main question in the case. The contract was oral; and the evidence, in establishment of the same, for all practical purposes, was undisputed. In brief, it appears that the plaintiff had invented the box fastener and exhibited tó the defendant a model of the same. The defendant, was favorably impressed with it, and requested permission from the plaintiff, to immediately begin the manufacture of the fasteners and place the same upon the market. The plaintiff hesitated, about making such arrangement until he had obtained a patent, when he thought it would be worth more money; but finally the parties agreed that the article should be manufactured and sold, the plaintiff to pay a fair and reasonable price for the right of manufacture and sale, and continue so to pay for the invention and patent so long ás he should make use' of the same. Under this arrangement •dies were made, machines constructed, the fastener manufactured, and in considerable quantities placed upon the market and sold. Subsequently letters patent were issued to the plaintiff thereon. It is claimed by the defendant that this agreement created no liability. In the language of his counsel he says : "A mere invention unprotected by any patent is not a property right in the inventor, so that the privilege to use such invention affords a consideration for a promise to pay for such use." The authorities cited in support of this claim were all cases to recover damages for the infringement of a patent or of a copyright, and in substance they hold that an inventor has 'no exclusive right of use of his invention •prior to the issuance of letters patent. If the inventor takes out no patent, so as to entitle him to a monopoly of the use of the invention, no' limitation of the right to use such invention by any other person- or persons will be created ; and until the invention ripens into letters patent, no monopoly of use is possessed by the inventor. The exclusive use is secured by the patent. Wheaton v. Peters (8 Pet. 591); Gayler v. Wilder (10 How. [U. S.] 477, 504), and other cases, are illustrations of this rule. It is also a well-established rule that if the inventor places his invention upon the market for the general use of the public, without any limitation of right of use and without any attempt to secure to himself any •exclusive rights therein, such acts may be regarded as a voluntary devotion of the use of the invention for the benefit of the public; and under such circumstances the agreement to pay for the right •of use would lack a consideration for its support, and the voluntary devotion of it to the public use would defeat the issuance of a patent thereon. (Shaw v. Cooper, 7 Pet. 292; Gill v. United States, 160 U. S. 426.)
These cases, however, as well as all others upon the subject, recognize that the right in the invention may be preserved where the inventor insists upon such right, either by making reservation to himself of -a profit for the right to make use of it, or where he objects to its use, and any facts exist from which it may be fairly found that the inventor did not intend to devote his invention to the benefit of the public, but sought to reserve a beneficial interest therein and had subsequently taken the. steps necessary to perfect the same by the issuance of a patent, and that the persons making use. of the same, against the inventor's proteét, will acquire no rights-therein as against him, nor will the use made of the invention by any persons or parties defeat the inchoate right of the inventor in and to his invention. While it is true that a patent becomes essential to create a monopoly and- secure the exclusive use, and the saméis absolutely essential in order to assert a legal right to the article,, yet it by no means follows that the inventor has not a property right in his invention which may be -the subject of sale or the basis of an agreement for; its use and manufacture. That such right is an inchoate right is recognized in McClurg v. Kingsland (1 How. [U. S.] 202); and that it may be made the subject of sale or of an agreement for use, is the clear import of the decisions in Dalzell v. Dueber Manufacturing Co. (149 U. S. 315) and Railroad Company v. Trimble (10 Wall. 367). A promise to pay for the usé of an invention prior to the issuance of a patent. therefor has been sustained- as made upon a' good consideration in the law of this State. (Jones v. Reynolds, 120 N. Y. 213; Tabor v. Hoffman, 118 id. 30; Palmer v. De Witt, 47 id. 532.) Such is the rule in Massachusetts. (Burton v. Burton Stock Car Co., 171 Mass. 437.)-In the latter case it is said a license to use " may be inferred -from circumstances; and an implied promise to pay reasonable compensation therefor may also be inferred." The court '.supports this-statement by reference to Solomons v. United States (137 U. S. 342).
The distinction between an action to recover damages for the' infringement of a patent and 'an action to recover compensation for use, either-of a patent or of an invention,, is clear and plain. The-first seeks to recover damages for an. act in the nature of a tort; the second'to recover compensation for use under a contract. In United States v. Palmer (128 U. S. 262) Mr; Justice Bradley clearly states-the distinction in these words : " The government used the claimant's improvements with his consent; and, certainly, with the expec- . tation on his part of receiving a reasonable compensation for the license. This- is not a claim for .an infringement,, but á claim of compensation for an authorized use — two things totally distinct in the law, as distinct-as trespass onlands is from use- and occupation'under a lease. - We think that an implied contract for compensation fairly arose under the license to Use; and the actual use, little.. or much, that ensued thereon." Whilo it is true that a patent had issued in that case, yet such fact can make no difference in principle, for, if the invention may be the subject of a contract for its use and manufacture, then the obligations that arise therefrom are not other or different, and the same rule is applicable in both cases. The distinction which does exist between the two cases rests in. the fact that the manufacture and use of the invention under a contract therefor may not be made the basis of an action to recover damages for an infringement of a patent subsequently issued. Indeed, the party contracting for the right to use the invention for compensation thereby acquires a license to use the same, which is a continuing license, even after the patent is issued, and it is doubtful whether the right thus acquired to use may be revoked by the patentee so long as compliance is made in accordance with the contract. (Solomons v. United States, supra; Gill v. United States, 160 U. S. 426.)
It seems clear, therefore, that plaintiff's invention constituted the same a property right which was the subject of an agreement for manufacture and use, and furnished a good consideration to support a promise to make compensation therefor.
So far as the measure of damage is concerned, it is more than, doubtful if any question is raised. The motion for a nonsuit was general, and was based upon the ground that the contract was illegal; and the motion to dismiss was a renewal upon this ground and the further ground that the plaintiff had not pToved a cause óf action. If we are correct in our view of the law upon the main question, the plaintiff was at least entitled to recover nominal damages, and it would have been error to have dismissed the complaint. .(Mallory v. Tioga Railroad Co., 3 Keyes, 354; Van Rensselaer v. Jewett, 2 N. Y. 135.) The exception which was taken is unavailing for the review of such question. If the defendant desired a specific ruling thereon it was his duty to call the matter to the attention of the court; otherwise it may not be made available upon appeal. (Van Aernam v. Bleistein, 102 N. Y. 355; Adams v. Greenwich Insurance Co.,70 id. 166.) If it were otherwise, however, the case would not lack authority in support of the rule of damages which was adopted. It is evident that there cannot be one rule of damages applicable to all cases of this character, and such fact .is recognized in Seymour v. McCormick (16 How. 480). It is-not at all necessary that we should analyze and review the anthori-' ties cited by the learned counsel for the appellant. The following authorities abundantly establish the' rule adopted by the learned trial court. (The Suffolk Company v. Hayden, 3 Wall. 315; Hunt Bros. Fruit Packing Co. v. Cassiday, 64 Fed. Rep. 585; Walker Patents, § 563 ; Wakeman v. Wheeler & Wilson Mfg. Co., 101 N. Y. 205; Dickinson v. Hart, 142 id. 183; Brooklyn El. R. R. Co. v. B., B. & W. E. R. R. Co., 23 App. Div. p.)
No question of the invalidity of .the patent, was properly before the court. (Hyatt v. Ingalls, 124 N. Y. 93; Saltus v. B. Co., 133 id. 499.) The same rule is recognized in Manston v. Swett (82 N. Y. 526), where it was said by Judge Finch : ft Where the patent is. apparently valid and in force, the party using it, receiving the benefit of its supposed validity, is liable for royalties agreed to be paid, and cannot set up as a defense the actual invalidity of the patent. The reasons for the rule are that the party has got what he bargained for; that he cannot be allowed at the same time to affirm, and disaffirm the patent, and that he cannot in this way force the patentee into a defense of his right and compel him to try it in a collateral action." These views are precisely applicable to the present case, for here the defendant contracted to use and manufacture be was permitted and assisted so to do by the plaintiff, at his earnest solicitation. He has derived the benefits which accrue from the manufacture and sale óf the,article, and he cannot, now be heard in repudiation of his agreement. (Genl. Electric Co. v. Hassau Electric Co., 36 App. Div. 540.)
No error was committed by the court in its charge to the .jury. The court fairly submitted all of the testimony which had been adduced, from which the jury might be able to arrive at the value of the manufacture and use of the article, and directed them to make such allowances as the. evidence, or their general knowledge established were proper sums to be deducted for the expenses of manufacture and sale. It was within the power of the defendant to have made clear the exteilt of the manufacture, the sales of the article, and the costs and expenses of the same. He had opportunity .so to do, as he was called as a witness, and he cannot be heard to complain that the evidence which entitled the plaintiff to recover was in some respects meagre and unsatisfactory. It was within his power to lay the whole matter fully and completely before the jury, and it was not, therefore, error of the court to call attention to such fact. (Nat. Car-Brake Shoe Co. v, Terre Haute Car & Manufacturing Co., 19 Fed. Rep. 514.)
This case was fairly tried and submitted to the jury, and upon all the testimony we think they were authorized to award the sum at which they arrived.
The judgment should, therefore, be affirme'd.
All concurred, except Hirschberg, J., taking no part.
Judgment and order affirmed, with costs.