Leeds Catlin Company v. Victor Talking Machine Company (213 U.S. 325)/Opinion of the Court

This writ was issued to bring up for review the judgment of the circuit court, affirmed by the circuit court of appeals, adjudging petitioner guilty of contempt of court for violating the injunction which has just been considered in No. 80 [213 U.S. 301, 53 L. ed. , 29 Sup. Ct. Rep. 495], and to pay a fine of $1,000, one half to the United States and one half to complainants in the suit, respondents here.

The injunction, as we said in the opinion in No. 80, enjoined petitioner, the Leeds & Catlin Company, from manufacturing, using, or selling the method expressed in claim 5 of letters patent No. 534,543 to Emil Berliner, dated February 19, 1895, or the apparatus covered by claim 35.

On the 15th of November, 1906, respondent Victor Talking Machine Company filed a petition in the circuit court, charging petitioner with a violation of such injunction. A rule was issued against the Leeds & Catlin Company to show cause why an attachment should not issue against it for contempt of court for violating the injunction, which came on to be heard upon supporting and opposing affidavits and the answer of the Leeds & Catlin Company.

A judgment was entered adjudging the Leeds & Catlin Company guilty of contempt, which was affirmed by the circuit court of appeals. 150 Fed. 147, 83 C.C.A. 170, 154 Fed. 58.

The answer of petitioner referred to the record in No. 80, and in this court it is stipulated that the record shall be used as part of the record in the pending cases, and certain of the defenses there made are repeated here. For instance, it is contended, and the record in No. 80 is adduced to support the contention, that (1) the patent in suit having expired before the suit was begun, the circuit court was without jurisdiction to entertain the suit; (2) claims in suit being for the functions of a machine are void. And it is further contended that "hence the judgment finding defendant [petitioner] in contempt (a) was void because beyond the jurisdiction of the court; and (b) should be set aside because, the claims being void, the injunction was improperly granted." These contentions are disposed of by the opinion in No. 80, and we may confine our discussions to the other defenses made in the contempt proceedings.

The facts are practically undisputed, and a detail of them is unnecessary. It is enough to say that petitioner is a manufacturer of disc records, such as are described in No. 80. That is, a record upon which is inscribed a lateral undulating groove of even depth, which, when the disc is revolved, compels the reproducing stylus to be vibrated and propelled across its face.

It will be observed how important the record is to the invention embodied in the claims. It is the undulations in the side walls of the spiral groove which vibrate the stylus back and froth, transmitting the recorded sound waves to the diaphragm, at the same time propelling the stylus as it engaged with the record. It a comparison may be made between the importance of the elements, as high a degree (if not a higher degree) must be awarded to the disc with its lateral undulations as to the stylus. It is the disc that serves to distinguish the invention,-to mark the advance upon the prior art. "As to the reproducing stylus," as is said by respondent, "it is only necessary that it should be shaped for engagement with the record, and so positioned and supported as to be free to be vibrated and propelled by the record."

The lower courts found that most of the sales (we quote from the opinion of the circuit court of appeals) of the records by petitioner "were knowingly made . . . to enable the owners of Victor talking machines to reproduce such musical pieces as they wished by the combination of the Leeds & Catlin record with said machines; that the Leeds & Catlin Company made no effort to restrict the use to which their records might be put until after motion to punish for contempt had been made;  that the only effort at such restriction ever made was to insert upon the face of the record a notice to the effect that such record was intended and sold for use with the 'feed-device machine;  that the records sold by plaintiff in error [petitioner] were far more frequently bought to increase the repertoire of the purchaser's Victor machine than to replace wornout or broken records." The "feed-device machine" referred to by the court was a talking machine bought by petitioner after, as petitioner avers, the circuit court of appeals affirmed the injunction, and in connection with which it sold, as it also avers, and used, its sound records. The court assumed for the purpose of the cause, that the feed-device machine might be regarded as not infringing any of the rights of the Victor Company under the Berliner patent. The court further found that it was established by the evidence that the discs were equally suitable for that machine as for the machine of the Victor Company, but that it "was not, at or before the time of beginning this proceeding, a practically or commercially known reproducer of musical or spoken sound, whereas the Victor machine, embodying the claims of the Berliner patent here under consideration, was at such times widely known and generally used, and that the plaintiff in error [petitioner] knew, and sold its records with the knowledge that, if its output was to be used at all by the public, it would be used with the Victor machine, and in the combination protected by the claims of the Berliner patent, above referred to." And the court concluded that upon these facts it was clear that petitioner had "made and sold a single element of the claims of the Berliner patent, with the intent that it should be united to the other element and complete the combination; and this is infringement (Heaton-Peninsular Button-Fastner Co. v. Eureka Specialty Co. 35 L.R.A. 728, 25 C.C.A. 267, 47 U.S.App. 146, 77 Fed. 297);  adopted by this court (Cortelyou v. Lowe, 49 C.C.A. 671, 111 Fed. 1005)."

Petitioner contests the conclusion and opposes it by the principle which, it is contended, is established by cases in this court, as well as at circuit, that "the person who has purchased a patented combination from the patentee has the right to replace an unpatented element of the combination, and for such purpose to purchase such element from another than the patentee or his licensee." To bring this principle in clear relief it is said that "the majority of the circuit court of appeals has held that such replacement of a single unpatented element of the combination is reconstruction, and not within the rights of the purchaser of the patented combination from the patentee." And, to complete its argument, petitioner added that where an inventor so arranges the parts of his patented combination that it cannot satisfactorily, successfully, or usefully be continued in use without successive replacements of one of its elements, "the replacement of such element, if unpatented, by the purchaser of the combination from the patentee, is in accordance with the intention of the patentee, and not a reconstruction of the patented combination, but an act within the rights of the purchaser." For these principles Morgan Envelope Co. v. Albany Perforated Wrapping Paper Co. 152U.S. 425, 38 L. ed. 500, 14 Sup.Ct.Rep. 627; Wilson v. Simpson, 9 How. 109, 13 L. ed. 66; Goodyear Shoe Machinery Co. v. Jackson, 55 L.R.A. 692, 50 C.C.A. 159, 112 Fed. 146, are adduced.

The question in the case, therefore, is single and direct, and its discussion may be brought to a narrow compass. Its solution depends upon the application of some rudimentary principles of patent law.

A combination is a composition of elements, some of which may be old and others new, or all old or all new. It is, however, the combination that is the invention, and is as much a unit in contemplation of law as a single or noncomposite instrument. Whoever uses it without permission is an infringer of it. It may be well here to get rid of a misleading consideration. It can make no difference as to the infringement or noninfringement of a combination that one of its elements or all of its elements are unpatented. For instance, in the case at bar the issue between the parties would be exactly the same, even if the record disc were a patented article which petitioner had a license to use or to which respondent had no rights independent of his right to its use in the combination. In other words, the fact that the disc sold by petitioner is unpatented does not affect the question involved except to give an appearance of a limitation of the rights of an owner of a Victor machine other than those which attach to him as a purchaser. The question is, What is the relation of the purchaser to the Victor Company? What rights does he derive from it? To use the machine, of course, but it is the concession of the argument of petitioner that he may not reconstruct it. Has he a license to repair deterioration, and when does repair become reconstruction? It would seem that, on principle, when deterioration of an element has reached the point of unfitness, there is a destruction of the combination, and a renewal of the element is a reconstruction of the combination. And it would also seem on principle that there could be no license implied from difference in the durability of the elements or periodicity in their use. This, however, is asserted; and we come to the consideration of the cases upon which the assertion is based, and how far it has application under the facts of this record.

Great stress is put upon Morgan Envelope Co. v. Albany Perforated WRapping Paper Co. supra. That case was a bill in equity for the infringement of three letters patent,-one for a "package of toilet paper," known as an "oval roll" or "oval king" package; one for a "toilet paper fixture," and one for an "apparatus for holding toilet paper." The first patent was declared invalid for want of novelty. Of the other two it was said that they were practically the same, and were for a "combination of the paper roll described in the former patent, with a mechanism for the delivery of the paper to the user in an economical manner." It was conceded that the mechanism of the patents involved patentable novelty, but it was contended that, it being constructed for the purpose of delivering paper to users inconvenient length, such a roll was not a proper part of the combination, and that, conceding it was a part of the combination, there was no infringement. The first contention, the court said, raised the question whether, when a machine is designed to manufacture, distribute, or serve out to users a certain article, the article so dealt with can be said to be a part of the combination of which the machine itself is another part. In commenting on the question the court expressed the view that, if the contention could be sustained, "it would seem to follow that the log which is sawn in the mill, the wheat which is ground by the rollers, the pin which is produced by the patented machine, the paper which is folded and delivered by the printing press," might be claimed as an element of a combination. The court, however, refrained from expressing an opinion upon the point, because it conceived that the facts of the case failed to sustain the charge of infringement. And this on the ground that the defendants in the suit had neither made, sold, nor used the patented mechanism, except as they purchased it from the patentee, and the only acts proven against them were that they sold rolls of paper of their own manufacture with fixtures manufactured and sold by the plaintiff, the fixtures having been obtained by defendants from the original purchasers of the patented combination; and also of selling oval rolls of paper of their own manufacture to persons who had previously purchased fixture and paper from the plaintiff, with the knowledge and information that the paper so sold was to be used in connection with plaintiff's fixtures. The court stated the question to be whether, considering the combination of the oval roll with the fixture to be a valid combination, the sale of one element of such (italic ours) a combination with the intention that it should be used with the other elements was an infringement. The answer was in the negative. The court, however, stated, that there were cases to the effect that the sale of one element of a combination with intention that it should be used with another was an infringement, but decided that they had no application to one where the element made by the alleged infringer was "an article of manufacture, perishable in its nature which it is the object of the mechanism to deliver, and must be renewed periodically whenever the device is put to use." The case, therefore, is not a precedent for the decision of that at bar. Not one of the determining factors there stated exist in the case at bar. if the operative relation of the paper roll to the mechanism was as illustrated (and the court left no doubt that it was), that is, of the log to the saw in the mill, wheat to the rollers which grind it, pins which are produced by a patent machine,-in other words, in no more operative relation than a machine and its product are,-the invalidity of the combination was hardly questionable. And, besides, it was made a determining circumstance that the paper perished by its use, and a periodical renewal was indicated to be a renewal "whenever the device was put to use." The case has no principle or reasoning applicable to the case at bar. The combination in the case at bar is valid, as we have unhesitatingly declared. The function it performs is the result of the joint action of the disc and the stylus. The disc is not a mere concomitant to the stylus; it coacts with the stylus to produce the result. Indeed, as we have seen, it is the distinction of the invention, constituting, by its laterally undulating line of even depth and the effect thereof, the advance upon the prior art. To confound its active co-operation with the mere passivity of the paper in the mechanism described in the Morgan Envelope Company is not only to confound essential distinctions made by the patent laws, but essential distinctions between entirely different things. Besides, the lower courts found that the discs were not perishable. As said by the court of appeals, by Judge Hough: "Disc records are fragile, i.e., brittle and easily broken;  but they are not perishable, i.e., subject to decay by their inherent qualities, or consumed by few uses or a single use.  Neither are they temporary, i.e., not intended to endure;  on the contrary, we find them capable of remaining useful for an indefinite period, and believe that they usually last as long as does the vogue of the sounds they record."

Can petitioner find justification under the right of repair and replacement as described in Wilson v. Simpson, 9 How. 109, 13 L. ed. 66, and Chaffee v. Boston Belting Co. 22 How. 217, 16 L. ed. 240? The court of appeals, in passing on these cases, considered that there was no essential difference between the meaning of the words "repair and replacement." That they both meant restoration was recognized in Wilson v. Simpson, supra, where it is said that the language of the court in Wilson v. Rousseau, 4 How. 709, 11 L. ed. 1169, did not permit the assignee of a patent to make other machines or reconstruct them in gross upon the frame of machines which the assignee had in use, "but it does comprehend and permit the resupply of the effective ultimate tool of the invention, which is liable to be often worn out or to become inoperative for its intended effect, which the inventor contemplated would have to be frequently replaced anew, during the time that the machine as a whole might last." But there is no pretense in the case at bar of mending broken or worn-out records, or of repairing or replacing "the operative ultimate tool of the invention" which has deteriorated by use. The sales of petitioner, as found by the courts below, and as established by the evidence, were not to furnish new records identical with those originally offered by the Victor Company, but, to use the language of Judge Lacombe in the circuit court, "more frequently in order to increase the repertory of tunes than as substituted for worn-out records."

The right of substitution or "resupply" of an element depends upon the same test. The license granted to a purchaser of a patented combination is to preserve its fitness for use so far as it may be affected by wear or breakage. Beyond this there is no license.

It is further contended by petitioner that the disc records, being unpatented articles of commerce, which could be used upon the mechanical feed-device machine or exported to foreign countries, or concededly for repair of machines sold by respondent, petitioner could legally sell the same. A detailed comment on this contention or of the cases cited to support it we need not make. The facts of the case exclude petitioner from the situation which is the foundation of the contention. The injunction did not forbid the use of the records, except in violation of claims 5 and 35 of respondent's patent. The judgment for contempt was based upon the facts which we have detailed, and they show a sale of the records for use in the Victor machine,-"an entirely voluntary and intentional" (to use the language of Judge Lacombe) contributory infringement.

We have seen that the circuit court of appeals assumed, for the purposes of this cause, that the feed-device machine was not an infringement of the machine of the patent. We may assume the same, and we are relieved from reviewing the very long and complex affidavits submitted by the petitioner to explain the same, petitioner's relation to it, or its position in the art of sound reproduction. Petitioner was found guilty of selling records which constituted an element in the combination of the patent in suit, and for that petitioner was punished. Upon whatever questions or contentions may arise from the use of the feed-device machine we reserve opinion.

We have not reviewed or commented on the other cases cited respectively by petitioner and respondents in support of their contentions, deeming those we have considered and the principles we have announced sufficient for our decision.

Judgment affirmed.