Court Opinion

ID: 9641971
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:44:40.800796+00
Date Added: 2024-06-11T18:10:41.338909
License: Public Domain

L. HAND, Circuit Judge
(dissenting in part).
I concur in the disposition of this case, except that I think that the plaintiff’s recovery should be limited to a reasonable royalty after September 18, 1920. The act of 1910 did not indeed give a “license” to the United States to exploit any patent which it found necessary for the public service (Cramp & Sons Ship & Engine Bldg. Co. v. International Curtis Marine Turbine Co., 246 U. S. 28, 38 S. Ct. 271, 62 L. Ed. 560), but it made lawful all acts of its officers, and as to these, left .the patentee with no more than a “reasonable compensation.” This was valid as a partial seiztire by right of eminent domain. Crozier v. Krupp, 224 U. S. 290, 32 S. Ct. 488, 56 L. Ed. 771. However, it did not protect contractors with the United States (Cramp & Sons Ship & Engine Bldg. Co. v. International Curtis Marine Turbine Co., 246 U. S. 28, 38 S. Ct. 271, 62 L. Ed. 560), and the result was, either that the United States must itself manufacture all patented apparatus, or undertake to save harmless those who contracted with it, not only from damages, but from suits for profits.
The act of. 1918 was passed to meet this situation; it provided that when a patented article was “used or manufactured by or for the United States,” the patentee’s remedy should be by suit in the Court of Claims for “his reasonable and entire compensation.” Nobody disputes that this was to be his only remedy; the only question is what is his “entire compensation.” Does that include more than his damages, which in the case at bar are “entirely” covered by a reasonable royalty? Or does it include the contractor’s profits to which he would have been entitled but for the statute?
When a patentee recovers an infringer’s profits, it is not at all as “compensation”; obviously it has nothing to do with making him whole for his loss. The infringer is treated as a constructive trustee of his gains, like one who has procured property by fraud or the like. Westinghouse v. Wagner, 225 U. S. 604, 618-622, 32 S. Ct. 691, 56 L. Ed. 1222, 41 L. R. A. (N. S.) 653. The remedy presupposes that the defendant’s act is a wrong, since there is otherwise no basis in equity for so treating him. But the act of 1918 has made lawful the contractor’s act, and, if valid, cut from under the patentee the only ground of the remedy. It could not have done this constitutionally without giving him full compensation for the property *197seized, but that it has done, because, by now making the compensation “entire,” the pat-entee can recover from the United States not only for his loss caused by its own user hut for that caused by the contractor’s manufacture. As this was adequate, the pat-entee had no cause of complaint for the seizure. Crozier v. Krupp.
As to patents granted after 1918, I can see no conceivable basis for imposing upon the United States any further liability; to do so would in effect establish an anomaly in the law of eminent domain. The United States might certainly seize the whole patent on such terms, and, hero at any rate, the greater includes the less. Patents granted before 1918 are no different, and their inclusion throws no doubt upon the constitutionality of the act. We are not dealing with a cause of suit which arose before the act was passed; arguendo I may agree that this was “property,” which could not be taken. But earlier patents the United States might seize in their entirety, as well as those granted later, and upon the same terms; these too it might exploit in part, if it might seize them in whole.
Finally, we cannot construe the statute in one sense as to patents granted before 1918 and in another as to those granted later, and by hypothesis in every case to got its work done the United States must still pay not merely the patentee’s damages, but the contractor’s profits. Yet that was in substance exactly its position between 1910 and 1918. It could get nothing done by its contractors unless it indemnified them against suits for profits, either expressly, or because they loaded the contract price against such possibilities. The statute, so construed, has effected nothing but a change of procedure, which can hardly have been its purpose.
The plaintiff’s only support is certain language used by the Chief Justice in Richmond Screw Anchor Co. v. U. S., 275 U. S. 331, 48 S. Ct. 194, 72 L. Ed. 303, in a wholly different connection, and in deciding quite another question. We have often been admonished that we should not wreneh the language of an opinion out of its setting, and apply it in vacuo. This seems to me preeminently an occasion to remember the caution; I cannot see the least reason to assume that tile court in that case meant to provide for situations like the present, and it does not therefore seem necessary to make nice distinctions in the language used. For these reasons I believe that Judge Hazel was right in confining the recovery to a reasonable royalty.