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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 305 The defendants rest their right to the use of the name in question upon the allegation that they have a license under the letters patent to make and sell the patented article, and that the right to make the article involves the right to use the name adopted by the patentee. The plaintiffs insist that no effective license was ever granted to the defendants, who in reply say that they claim to have acted under a valid license, and that the assertion of this claim divests the state courts of jurisdiction. We think, however, that an issue as to the existence of a license is an issue as to the existence of a certain kind of contract, and involves simply a question of title to property, which does not fall within the jurisdiction of the federal courts, when all the parties are citizens of the same state. The United States government, by virtue of its laws and the procedure of its patent office, created a certain exclusive privilege, popularly known as a patent right, and granted it to Lewis E. Waterman. That exclusive privilege is property, not visibly existent, but actually existing, and the official evidence thereof appears in letters patent issued by the Federal Government to said Waterman as patentee. That property, like other property, is capable of transfer by assignment. The statute which created it expressly gave it the quality of assignability, either as a whole "or any interest therein." (U.S.R.S. § 4898.)
The assignment of a certain interest has become known as a license, which is a transfer pro tanto of the property represented by the letters patent. An action, therefore, to determine whether a license has been given, is an action to determine the title to property, and while it involves the existence of a contract relating to a patent right, simply as property, it does not arise "under the patent laws of the United States," as interpreted by its courts. (Hartell v. Tilghman,99 U.S. 547; Albright v. Teas, 106 id. 613; Dale Tile Mfg.Co. v. Hyatt, 125 id. 46; Ingalls v. Tice, 14 Fed. Rep. 352; McCarty Hall Trading Co. v. Glaenzer, 30 id. 387;Merserole v. Union Paper Collar Co., 6 Blatch. 356.)
The same rule has been repeatedly recognized by this court, *Page 308 which has held it applicable even when the action involved the validity of a patent. (Hyatt v. Ingalls, 124 N.Y. 93;Middlebrook v. Broadbent, 47 id. 443; Continental StoreService Co. v. Clark, 100 id. 365; Marston v. Swett, 82 id. 526.)
An infringement, as applied to patents, is a violation of the exclusive right conferred upon the patentee. An adjudication that a certain act is an infringement necessarily requires the construction of the right and, by comparison of principles or processes, a determination as to its nature and extent. An action to prevent an alleged infringer from using the right, as patented, involves the existence or preservation of the monopoly granted by the patent and necessarily arises under the patent laws. Jurisdiction of such actions has been conferred upon the federal courts, and it is held to be exclusive. (St. Paul PloughWorks v. Starling, 127 U.S. 376; Hyatt v. Ingalls, supra;Hat Sweat Mfg. Co. v. Reinoehl, 102 N.Y. 167; Smith v.Standard Laundry Machinery Co., 19 Fed. Rep. 825.) Clearly no question as to infringement arises in this case, because both parties recognize the existence, validity and use of the patents, but differ as to the ownership of certain rights thereunder, which will now be considered.
The instrument relied upon by the defendants as a license is dated December 12, 1887, and purports to be a grant to them from their assignee, under a writing of an earlier date, of "the sole and exclusive right and license to manufacture, use and sell the several inventions described in said two letters patent throughout the United States." The power to make this grant depended upon the assignment from Sarah E. Waterman to the defendants dated November 25, 1884, which was in the nature of a mortgage, and was to be "null and void" upon payment of the note that it was given to secure. (U.S.R.S. § 4898; Waterman v.Mackenzie, 138 U.S. 252.) That assignment, however, was made subject in express terms to the license agreement dated November 20, 1884, from Sarah E. to Lewis E. Waterman, whereby she granted to him "the sole and exclusive right and license to *Page 309 manufacture and sell fountain penholders containing the said patented improvement throughout the United States." While these instruments were in force, it is clear that the only person who had a right to make or sell articles protected by the patents was Lewis E. Waterman, as his grant was prior in date and exclusive in scope. The defendants acquired by the original grant to them of November 25, 1884, simply the right to returns and royalties, with the remedy for default in making either, as provided in the instrument dated November 20, 1884, and they acquired no greater right from their assignee on December 12, 1887. The grant to the defendants of the right to make and sell in certain territory, subject to the grant to Lewis E. Waterman of a prior and exclusive right to make and sell throughout the same territory, conferred upon them no right either to make or sell, as their grantor could not transfer to them what had been previously transferred, with their knowledge, to another. Even if the grant to the defendants, although not operative as a license, transferred to them such rights as their grantor possessed at the time, which it did not purport to do, still the defendants would be without the protection afforded by a license, because the trial judge did not find and there is no evidence authorizing him to find, an effective revocation of the exclusive license to Lewis E. Waterman. The evidence relied on to establish such a manufacturing of penholders as to require the making of returns and the payment of royalties, consisted of testimony showing that Mr. Waterman put unpatented pens into patented penholders, that he had made and had on hand before the note became due, and prior to that time it is not seriously claimed that there was any obligation to make returns. This was not a manufacturing of penholders, but simply an adjustment to suit the tastes of customers, as no particular kind of pen was to be used with the penholder. If one buys a penholder and pen, he can change the pen without the imputation of manufacturing. The specifications of each patent refer to "the ordinary writing pen" and contemplate its use with the article invented. Mr. Waterman "manufactured" no fountain pens, within the *Page 310 proper meaning of that word as used in his license, prior to February 1, 1888, and after that date his returns were regularly made and before any payments became due, the loan was paid and there was no further obligation to make either returns, or payments to the defendants, or their assignor. The attempts to revoke the license, therefore, were without effect. This conclusion makes it unnecessary to consider the effect of receiving payment in full of the loan upon licenses, or rights previously granted under the mortgage assignment. (West v.Crary, 47 N.Y. 423; Waterman v. MacKenzie, supra.)
Mr. Waterman's exclusive license was therefore in full force when the defendants made the fountain pens in question and stamped them with the name "Waterman's Ideal Fountain Pen." The existence of the letters patent furnished them no protection in thus using the name, because, as already appears, they had no right to manufacture or sell the patented article. The relief that the plaintiffs may be entitled to in the proper forum, on account of the making of fountain pens by the defendants, is not involved in this action, which relates not to the use of the invention but to the use of the name.
If our reasoning thus far is sound, but little difficulty remains in the way of pronouncing judgment in this appeal. With the patents eliminated from the case, as immaterial facts, it stands on the theory of the complaint, which makes no allusion to them. Thus we have a case where, in the language of this court inSelchow v. Baker (93 N.Y. 59, 69), "a manufacturer has invented a new name, consisting * * * of a word * * * in common use, which he has applied for the first time to his own manufacture, or to an article manufactured for him, to distinguish it from those manufactured and sold by others, and the name thus adopted is not generic or descriptive of the article, its qualities, ingredients or characteristics, but is arbitrary or fanciful and is not used merely to denote grade or quality."
While the word "fountain," as applied to pens of a certain kind is a common appellative, the word "ideal," as applied to fountain pens, is non-descriptive, arbitrary and fanciful and *Page 311 has no natural nor necessary application to a pen. It serves to indicate that the article sold by Waterman was of his own manufacture. The right to so use it was in the nature of property and had become valuable. The use of it by the defendants tended to deceive purchasers by inducing them to believe that the pens sold by them were made by one who had established the reputation of his wares by the superiority of his workmanship and the excellence of his materials. The result, being injurious to the public as well as to the plaintiffs, authorized a court of equity to interpose its preventive remedy for the protection of both the private right and the public interest by restraining the defendants from passing off wares of their own manufacture as those made by another. The ground of interference by the court is the false representation by the defendants through their acts in stamping the pens made by them with a word that has obtained currency as indicating pens made by Waterman. Even if, in so doing, they did not intend to defraud, as the necessary tendency of their acts was to deceive the public, the court was authorized to interfere. (Newman v. Alvord, 51 N.Y. 189; Canal Co. v.Clark, 13 Wall. 311; Singer Mfg. Co. v. Wilson, 24 Week. Rep. 1023; Sykes v. Sykes, 3 B. Cr. 541; Millington v.Fox, 3 My. Cr. 338; Celluloid Mfg. Co. v. Cellonite Mfg.Co., 32 Fed. Rep. 94; Singer Mfg. Co. v. Larsen, 8 Biss. 151.)
In the case last cited, a patentee had established the name of the "Singer Sewing Machine." It was held that, although, after the expiration of the patent, the defendant could make that machine and call it by that name, still he could not "do any act, the necessary effect of which would be to intimate, or to make anyone believe that the machine which he constructs and sells, is manufactured by the plaintiff."
The function of a trade-mark is to point out the maker of the article to which it is attached. It individualizes the particular make of one who adopted the name for that purpose and with that effect. The defendants claim that the use by them of the name in question did not point out the maker, but the inventor, but we think it indicated both. "Waterman's Fountain *Page 312 Pen," with the date of the patent following, pointed out the inventor, while the insertion of the word "Ideal," together with the use made of it, pointed out the maker. The learned trial court found that Waterman, for a long time prior to the commencement of this action "had been the manufacturer and vendor of an article known as a fountain pen, which he had for many years * * * offered for sale, and sold, stamped and labeled with his own proper device and trade-mark, adopted by the plaintiff for that purpose in the year 1884, as follows: `Waterman's Ideal Fountain Pen.'" Also that "it is known as such article to the public and to the buyers and consumers thereof" by that name "and by the plaintiff's own proper device and trade-mark aforesaid." As the name was also used to indicate the patented article, it performed the double function of identifying not only fountain pens as made by Mr. Waterman, but also as patented by him. Can this fact take anything from his rights, or add anything to those of the defendants? Cannot a patentee adopt the same name to designate his workmanship, as well as his invention? Assuming that, upon the expiration of the patent, anyone may use the name, until that time arrives why should the inventor be deprived of a right, which without question would be his if he had not taken out a patent for his invention?
We think that the word "Ideal," as applied by Mr. Waterman to fountain pens of his own manufacture, comes within the comprehensive definition of a trade-mark as given in Selchow v.Baker (supra), and that the plaintiffs, as the owners of the name, are entitled to the protection which the law affords to owners of trade-marks, notwithstanding the fact that the name is also used to designate the invention. Upon the facts found, the plaintiffs were entitled to an injunction restraining the defendants from using the word "Ideal" as applied to fountain pens.
The judgment should, therefore, be reversed and a new trial granted, with costs to abide the final award of costs.
All concur, except BRADLEY, J., not voting.
Judgment reversed. *Page 313