Case: RUSSELL AND LIVERMORE v. THE UNITED STATES
Abbreviation: Russell & Livermore v. United States
Decision Date: 1900-02-26
Docket Number: No. 20883
Citation: 35 Ct. Cl. 154
Volume: 35
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: RUSSELL AND LIVERMORE v. THE UNITED STATES.
Judges: 
Pages: 154–164

Head Matter:
RUSSELL AND LIVERMORE v. THE UNITED STATES.
[No. 20883.
Decided February 26, 1900.]
On the defenda/nti Demurrer.
The question presented by the demurrer is whether the facts pleaded show an implied contract for the use of the claimants’ alleged patented invention for a military rifle.
I. Where claimants seek to recover a royalty for the use of a patented device they must show a contract, express or implied. In such cases the court, without investigating the validity of the patent, will look to the petition for allegations showing facts which constitute a contract.
II. Where on a claim for royalty it appears that the Government at no time recognized a right in the patentees or acknowledged a responsibility, it must be held that no contract exists.
The Reporters’ statement of the case:
The grounds of the demurrer appear sufficiently in the opinion of the court.
Mr. Charles C. Binney (with whom was Mr. Assistant Attorney-General Praclt) for the demurrer:
The claimants seek a recovery in spite of the fact that they allege a deliberate infringement, on the theory that the bond of the Brag-Jorgensen Company, to indemnify the United States “for all liability on account of patent rights granted by the United States which may affect the right to manufacture granted by said contract,” is a bond executed for the benefit of the owners of such patent rights. This theory is utterly untenable, because the infringement is no less an infringement, a tort, because of the existence of the bond. It can not be supposed for a moment that if the United States could be sued for a tort the bond could be regarded as having been made for the claimants’ benefit, and the.mere fact that Congress has never provided a remedy for infringements by the United States can not change the operation of the plain language of the bond.
The only breach of contract which the petition alleges concerns the covenant by the Krag-Jorgensen Company that every portion of its firearm not covered by its patents is “open to public use.” This covenant, the petition alleges, was false, and hence broken as soon as made; but even if this be so, it was made to the United States, who alone can sue upon it, or upon the bond given as a security for breaches of the covenant.
If such a bond as that of the Krag-Jorgensen Company had been made between individuals, it could not possibly be regarded as made for the benefit of any party whose patents might be infringed. Parties injured by such infringement would sue the infringing party in tort, whether he were protected by such a bond or not, and certainly the existence of such a bond would not entitle them to sue in contract. The case is not altered by the mere fact that the party charged with the infringement and to whom the bond is given is the United States, who can not be sued in tort. If the United States infringes a patent, such infringement is just as much a tort as in the case of an individual, and the fact that the United States can not be sued in tort gives the injured party no more right to sue in contract than he would have in the case of an individual infringer.
It is true that by the terms of the bond the Krag-Jorgensen Company is liable to the United States for the consequences of all infringements of patents in the manufacture of the Krag-Jorgensen firearm, but the bond does not make the companj'' liable to the party whose patent may be infringed, and hence the United States alone can sue on the bond, while, on the other hand, the possession of the bond on the part of the United States can not of itself render the United States liable to an action of contract by a third party, it not having contracted to do anything whatever for the benefit of third parties in consequence of its receipt of the bond.
If it be asked why the contract called for such a bond if it can not be made use of by parties in the claimants’ position, the answer is, first, that when the • contract was made it was not absolutely certain that the United States could not be sued for the infringement of a patent, the decision of the Supreme Court in SehilUnger v. United States (155 U. S., 163) not having yet been rendered; and, secondly, that the guaranty is not necessarily limited to cases of infringement. The contract is a guaranty that no part of the rifle, whether covered by the Krag-Jorgensen patents or not, is covered by any other patents; and hence if the United States did not refuse to recognize the validity of other patents claimed to cover portions of the rifle, but so acted that a contract to pay a reasonable royalty could be implied, then if damages were recovered in a suit on.such implied contract on the ground that the patent to which it related was valid and covered some portion of the rifle, that would bring the case within the guaranty.
It is familiar doctrine that one who is not a party to a contract can not sue thereon unless it contains a promise made expressly for his benefit. The mere fact that performance of the contract may incidentally benefit him is not enough. {Simson v. Brown, 68 N. Y., 355, 361; Vroomany. Tv/rner, 69 N. Y., 280, 283; New England, eto., Oo. v. Roohport Or(mite Go., 149 Mass., 381; National Banhy. Ur and Lodge, 98 U. S., 123; Constable v. NaUonal S. S. Oo., 154 U. S., 51, 73.) Hence even if the United States had promised to hold the $25,000 to pay damages recovered in suits against it, and still held that fund, its possession would not give any right of action to third parties.
In tbe present ease, however, the petition does not even set up any promise by the United States whatever, in connection either with the bond or with the temporary retention of $25,000 “in lieu of the bond.” It avers infringement, possession of a bond, and prior possession of a fund; and nothing’ more.
Mr. Jemes U. Hayden, opposed. Mr. J. K. Me Gammon was on the brief:
In the case of Butler v. United, States (23 C. Cls. R., 335), it appeared that Butler offered the use of his patented invention to the Government. The War Department did not procure a license from or hold any communication with him. The Government manufactured and used devices embodying the invention. The court gave judgment for the claimant in a sum which it fixed upon as reasonable compensation for the use of the invention.
Here, then, a contract was implied from nothing more than a tender of property by a citizen to the United States, and a neutral absorption and beneficial use of the property by the United States. In the case at bar the petition alleges more than this. It alleges a tender of their patented invention by the claimants to the Government; notice by the claimants that the device adopted by the Government contained their invention, and an express promise by the Government that the claimants’ rights in the premises should be protected, either by right of action against the United States in this court or by indemnity to be taken by the United States from the Iirag-Jorgensen Gevarkompagni.
Again, in the case of Berda/n Fvre Arms Manufactxiring Go. v. United, States (26 C. Cls. R., 48; 156 U. S. 552), this court and the Supreme Court of the United States found the usage of the Bureau of Ordnance.
It appeared that this custom was followed. Berdan presented his device to a board of army officers and urged its adoption. The officers of the Ordnance Department were acquainted with Berdan’s inventions and knew that he had patented them. The parties were in constant communication, and Berdan gave notice that he should expect compensation for the use of his inventions. General Benet, who became Chief of Ordnance some time after the manufacture of the Government’s device began, believed that it was identical with or the mechanical equivalent of that patented by Ber-dan. He proceeded with the manufacture, believing that, if his opinion of the device were coi-rect, “the Government would pay for the use of the invention through the instrumentality of the courts.”
In the case at bar we find a very similar situation. The same usage- was followed by the Bureau of Ordnance. In the same way the question of patentability and right to compensation was left to be determined by this court. In the same way the facts disclose a contract between the parties.
There are other pertinent and valuable authorities among the opinions of this court and the Supreme Court. We cite them without discussion because their substance is so well known. United States v. Burns, 12 Wallace, 246; Carnmeyer v. Newton, 94 U. S., 225; United States v. Palmer, 128 U. S., 262.
The most thorough and scientific consideration of the liability of the Government to compensate patentees for the use of their inventions is contained in the opinion of this court in the case of McKeeoer v. United States (14 C. Cls. R., 396), which was affirmed by the Supreme Court (18 C. Cls. R., 757).
Certainty the petition in the case at bar recites facts from which a contractual status may be implied quite as clearly as from those found in McKeever v. United States. The correspondence of the parties differs only in this — that McKeever did not actually claim compensation, but merely said that he was interested in the matter, and the Chief of Ordnance did not promise him compensation, while Russell, in behalf of Livermore and himself, did claim compensation, and the Bureau of Ordnance did promise that it should be provided for.
In the case of Forehand v. United States, 23 C. Cls. R., 477; Fletcher v. United States, 11 C. Cls. R., 748; Schiüún-gerv. United States, 24 C. Cls. R., 278 and 155 II. S., 163; and others where the petitions were dismissed for want of jurisdiction in the court, it appeared either that there had been a mere naked use by the Government of an invention, without presentation by the owner, and without recognition by the United States, conditional or unconditional, or else ■that there had been an outright infringement, accompanied by a denial of the use.
Neither this nor any other court has ever been granted jurisdiction to hear or enter judgment upon claims for trespass committed by the United States or its agents. On this point the statutes are clear and the authorities are uniform. The infringement of a patent is a form of trespass. It must be presumed that the Bureau of Ordnance knew the law, and was guided by the law, in its transactions with the Krag-Jorgensen Gevarkompagni. Therefore it must be presumed that the Bureau knew that the United States could not be sued for the infringement of any patent involved in the manufacture of the rifles in question, and knew that no judgment could be obtained against the United States in such suits. The position taken by the defense that the law on the subject was uncertain until the decision of the case of ScMlMnger v. United States is untenable. A decision can not change a written law, and the court derives.its jurisdiction from acts of Congress.
It can not be supposed that the Bureau imposed witless or frivolous conditions upon the Krag-Jorgensen Gevarkom-pagni, or ignorantly and witlessly incorporated f xivolous conditions in the contract of June 7, 1893. ’ If possible, the provisions of that contract must be given a rational interpretation and one calculated to produce a legally bonding result.
We have seen that the Krag-Jorgensen Gevarkompagni warranted that its patents “fully cover all the mechanism of said magazine firearm not open to public use;” and that it agreed, “before any royalties were paid by the United States,” to “ furnish a good and sufficient bond * * * to protect and defend the United States against all suits and claims by any and all persons for infringement of their inventions, in the manufacture of those arms, and to pay all judgments that may be obtained against the United States for the same.”
We have seen that prior to the conclusion of the negotiations between the Government and the company the claimants gave notice that their patent covered part of the mechanism of. the proposed army rifle, and the United States assured the claimants of protection. We have seen that after the contract was made, and for a period of three years, the United States withheld large sums of money as indemnity, and then accepted a bond in lieu of that sum.
In the absence of an agreement to pay the claimants such sum, if any, as might become justly due them for the use of their invention, the United States, having immunity from suits for infringement and judgments therein, would have needed no indemnity and no protection. In that case, would it not be fair to assume that both were procured for the benefit of the claimants, whom the United States knew to be in need of them, and whom it had promised to protect'.'
As intended beneficiaries, under the contract, and in the taking of indemnity, the claimants can sue on this contract and recover their damage. (Hendrick v. Lindsay, 93 U. S., 143; Lawrence v. Fox, 20 N. Y., 268.)
The fact that the contract and bond were so framed that the United States alone could sue the Krag-Jorgensen Gevar-kompagni upon them shows the intendment of the contract to be that the beneficiaries might recover their damage from the United States, which in turn would recoup from the Krag-Jdrgensen Gevarkompagni through the indemnity taken.

Opinion:
Davis, J.,
delivered the opinion of the court:
The question presented by the demurrer is whether the facts pleaded show an implied-contract between these parties for the use by the defendants of plaintiffs'' alleged patented invention for a military rifle.
After allegations as to the issue of patent, not at this mo- . ment important, plaintiffs state, in substance, that to an army board organized to select a magazine rifle they submitted one invented by them; this also to another army board and to other army officers. The second board named in the petition recommended the adoption by defendants of the Krag-Jorgensen device, herein termed the "army rifle;" this about September 15, 1892. Some two months later one of the plaintiffs wrote the Chief of Ordnance of the Army stating (we quote from the/ petition) "that the inventions described in and protected by the said Letters Patent No. 230,823 were embraced, embodied, and included in the said army rifle," and requested the "Chief of Ordnance to make provision for the payment of compensation to these claimants by the United States for the use of said patent in the proposed manufacture of the said 'army rifles.'"
To this was replied by defendants .that their business with the Krag-Jorgensen Company had not been completed; that this company might agree to indemnify defendants herein for loss incurred by the use of the army rifles, "and thereby the claimants would be provided with a remedy to be obtained from the said Krag-Jorgensen Gevserkompagni, or the Government might proceed to manufacture the said ' army rifles ' without such an arrangement, in which case the claimants could obtain their remedy by suit against the United States in the Court of Claims after the manufacture had progressed."
December 9, 1892, plaintiffs wrote the Chief of Ordnance that they could recover nothing from the Krag-Jorgensens, a foreign corporation, and again asked compensation. To this the Chief of Ordnance answered, suggesting an application to the Patent Office. This application was made with a claim that the army rifle contained plaintiffs' devices. The Commissioner of Patents "declined to exercise any jurisdiction over the said claim." Later (July 7, 1893) the Ordnance Department informed plaintiffs (after advising a statement of their case in writing) that an agreement had been made with the Krag-Jorgensen Company "whereby [we still quote the petition] the latter was required to indemnify the United States against all damages for infringements of patent rights which might arise in the manufacture of the said army rifle."
An answer (November 22, 1893) was sent to this communication, stating plaintiffs' position, following which (December 1, 1893) the Ordnance Department cited to plaintiffs this said clause in the Krag-Jorgensen agreement (Exhibit E to petition):
"The said party of the first part [the Krag-Jorgensen Company] shall indemnify the United States and all persons acting under them for all liability on account of any patent rights granted by the United States which may affect the right to manufacture herein contracted for." The Ordnance Bureau added that these plaintiffs' claim could not be determined by that Bureau.
The petition further states that General Flagler (Chief of Ordnance) contracted with the Krag-Jorgensens for "an unlimited number of the said army rifle," they [Krag-Jorgen- sen] claiming their invention to be sufficiently protected by patent.
The penalty of the Krag-Jorgensen's bond to defendants was to be "to protect and defend the United States against all suits and claims by any and all persons for its infringement of their inventions in the manufacture of the said army rifle, and to pay all judgments that might be obtained against the United States for the same."
The petition further alleges defendants' use of Krag-Jor-gensen rifles, the payment to that company of roj^alties, and then comes therein this statement: " But the Krag-Jorgensen Company then failed to furnish a bond to indemnify the United States as in the said contract provided, and the United States, for its indemnity and in lieu of such bond, did from time to time, prior to June 16, 1896, with the consent of the Krag-Jorgensen Company, withhold sums payable on account of the said royalties," which amounted to a certain sum.
Finally plaintiffs, in substance, allege that certain army rifles manufactured and used by defendants included their inventions (patent 230823) — inventions not protected by the Krag-Jorgensen patent.
Such is the abstract of the petition through which plaintiffs seek to recover from defendants a royalty for use of a patented device. This recovery they can not have unless they show a contract, express or implied, between the parties to this action. Therefore, without inquiring as to the validity of the plaintiffs' patent, we look to the petition alone [the hearing is on demurrer] to see what allegations therein appear showing such "a meeting of the minds" upon this matter as may make a contract. We find therein pleaded a submission of plaintiffs' device to defendants' army board, and the adoption by defendants of another device; then a demand made by plaintiffs upon defendants for compensation, urging that their "inventions" (theretofore patented) were in the new army rifle. Defendants, however, declined all responsibility in the matter, and referred plaintiffs to the Krag-Jorgensens for remedy, or to this court, saying that their (defendants') "business with the Krag-Jorgensen Company had not been completed."
Later, in response to plaintiffs' statement that they could recover nothing from the Krag-Jorgensens, the Chief of Ordnance advised an application to the Patent Office, and again later they were informed of the Krag-Jorgensen bond "to indemnify the United States against all damages for infringement of patent rights which might arise in the manufacture of the said army rifle."
There is nothing in these facts to show that the defendants through their officers entered into or intended to enter into any contract with plaintiff's. The first answer plaintiffs received from the Department of War (Exhibit B) stated that "business arrangements with the Krag-Jorgensen Company for the manufacture of this arm have not yet been completed. * # * That company may agree to indemnify the United States on account of any patent rights granted by the United States which may affect the manufacture of the guns, in which case your recourse would be to communicate directly with the company.
"On the other hand, should the Government proceed to manufacture the arms without such arrangement, your course will be to bring a suit against the Government in the Court of Claims after manufacture has progressed."
The Patent Office denied jurisdiction. The Ordnance Office said they could not determine the case.
In Schillinger's case (24 C. Cls. R., 278) this court held, after a review of the authorities: "A careful examination of these cases shows that a contract to pay is implied whenever the Government, acting through a competent agent, takes or uses individual property, acknowledging explicitly or tacitly that the property is individual property." (Affirmed by the Supreme Court, 155 U. S. R., 163. See also Berdans case, 25 C. Cls. R., 355; 26 ib., 48; 30 ib., 491, and cases cited. Affirmed by the Supreme Court, 156 U. S. R., 552.)
In brief, it appears from the petition that the Chief of Ordnance informed plaintiffs that the Krag-Jorgensen Company, with whom he had not finished his negotiation, might agree to indemnify them "for losses incurred in the use of the army rifle, whereby plaintiffs would have a remedy against that company, or the Government might proceed.to manufacture ' the said army rifle,' without an agreement of indemnity for infringement from the Krag-J órgensens, when plaintiffs would find a remedy in this court. " Later, another letter to plaintiffs threw all responsibility on the Krag-Jorgensen Company.
Some effort is made to establish a right in plaintiffs through the Krag-Jorgensen bond to the Government. This bond was given to defendants to indemnify them in case of successful action for infringement arising from use of the Krag-JOrgen-sen device. There are no rights whatever secured to plaintiffs by this bond. They are not privy to it.
Upon the whole case it appears that the Government at no moment recognized any rights in plaintiffs against it, or any responsibility upon its part to them. Quite the contrary. Defendants took an indemnity bond from the Krag-Jorgensens and threw all responsibility for conflicting claims upon them. The case falls within the principle of that of Schillinger. No contract is developed by the allegations of the petition. It is therefore ordered dismissed.