Packet Company v. Sickles (86 U.S. 611)/Opinion of the Court

The ruling of the court below, in striking out the two pleas of the statute of limitations, is the ground of the first exception and of one of the assignment of errors.

The rule of that court is not made a part of the bill of exceptions. What purports to be a rule on the general subject of notice to plead is put at the bottom of the page in a note, a mode of making up records on writs of error which is quite novel. What these rules are cannot be judicially noticed by this court, and we are much embarrassed as to the effect of the reference to those rules in the bill of exceptions. The right to plead the statute of limitations, like any other defence, does not depend on the pleasure or discretion of the court. And if the action of the court was rested solely on that ground we should have no hesitation in reversing it. But there are other considerations to be weighed. The right of a court to prescribe rules to regulate the time and manner of filing pleas is beyond question, if they are reasonable, and such rules are indispensable to the dispatch of business and the orderly administration of justice.

When in a bill of exceptions the court places its action on such rules, with the construction of which, and the course of practice under them, it must be familiar, it would seem that the party assigning error on such rulings should be bound to exhibit in his bill of exceptions so much of the rule or rules as affects the question. No little weight is added to these views by the fact that the defendants did not file their pleas until three years after the filing of the amended declaration, to which they were answers, and until the day before the case was tried by the jury. In addition to this, while it may be true that the amended declaration, as a general rule, is to be taken as the commencement of the suit, in reference to the defence of the statute, it may be doubted whether in this particular case, where, after years of fierce litigation, only a common count is added, which is intended to cover the same subject-matter, justice will be promoted by allowing this plea, which can only be valid by reason of the time elapsed pending the litigation. On the whole we do not think, as the case appears before us, that the exception is well taken.

The case went to trial on the plea of non-assumpsit to the amended declaration. Evidence was admitted, to which defendants excepted, proving the special contract, the value of the saving in fuel made by the use of the patented improvement, and the length of time it was in use by defendants. Evidence was also given by defendants that the plaintiffs had sold a great many licenses for the use of the patent on steamboats, that the patent fees were numerous, and ranged from $250 to $1500 for the use of the patent during its existence, and that though they had produced evidence of all the sales made of licenses for the use of the patent on steamboats during its existence, the fee in no case exceeded the latter sum. Notwithstanding this testimony, which seems to have been uncontradicted, the verdict of the jury and the judgment of the court was for $11,333, with interest from the date of the commencement of the suit.

The defendants in various forms prayed the court to instruct the jury that the measure of damages was the established rate for the license to use their invention, as ascertained by the sales made by plaintiffs of such license to others. If this was the true rule of estimating the damage the bill of exceptions shows that a sufficient number of such licenses, and the prices at which they were granted, were in evidence to enable the jury to apply the principle to the case before them.

And we are of opinion that this was the sound rule, and that in refusing the prayers for instruction based on it, as well as in admitting evidence of the saving of fuel and its value as affecting the amount of the verdict, the court below was in error. And the same error is to be found in the charge of the court to the jury on that subject.

In the case of Seymour v. McCormick, this court, on full consideration, and without dissent, laid down the proposition that in suits at law for infringement of patents, where the sale of licenses by the patentee had been sufficient to establish a price for such licenses, that price should be taken as the measure of his damages against the infringer. The rule thus declared has remained the established criterion of damages in cases to which it was applicable ever since.

'In cases where there is no established patent or license fee in the case,' says the court in the Suffolk Company v. Hayden, 'or even an approximation to it, general evidence must necessarily be resorted to.'

In the case of Seymour v. McCormick, a charge very similar to the one given in the present case was held erroneous and the principles we have stated established.

The rule in suits in equity, of ascertaining by a reference to a master the profits which the defendant has made by the use of the plaintiff's invention, stands on a different principle. It is that of converting the infringer into a trustee for the patentee as regards the profits thus made; and the adjustment of these profits is subject to all the equitable considerations which are necessary to do complete justice between the parties, many of which would be inappropriate in a trial by jury. With these corrective powers in the hands of the chancellor, the rule of assuming profits as the groundwork for estimating the compensation due from the infringer to the patentee has produced results calculated to suggest distrust of its universal application even in courts of equity.

Certainly any unnecessary relaxation of the rule we have laid down in cases at law, where the patentee has been in the habit of selling his invention or license to use it, so that a fair deduction can be made as to the value which he and those using it have established for it, does not commend itself to our judgment, nor is it encouraged by our experience.

If such be the proper rule in case of the infringer who uses the invention without license and against the consent of the owner, it should not be harsher against the party who uses it with consent of the owner, express or implied, but without any agreement as to the rate of compensation. In such case nothing can be more reasonable than that the price fixed by the patentee for the use of his invention, in his dealings with others, and submitted to by them before using it, should govern.

The case was tried in the court below upon an entirely different theory, against the steady remonstrance and exceptions of the defendants.

With the special contract eliminated from the case, it seems to us to be a very simple one. The defendants have used, or are charged with using, the invention of plaintiffs, with their consent, until the expiration of the patent. If this is proven to the satisfaction of the jury, the plaintiffs have furnished the rule which must measure their compensation, in the prices at which they have sold the same privilege to others, and they must be bound by it.