United States v. Berdan Fire-Arms Manufacturing Co.

156 U.S. 552 (1895)

UNITED STATES
v.
BERDAN FIRE-ARMS MANUFACTURING COMPANY.
BERDAN FIRE-ARMS MANUFACTURING COMPANY
v.
UNITED STATES.

Nos. 128, 135.

Supreme Court of United States.

Argued January 7, 8, 1895. Decided March 4, 1895. APPEALS FROM THE COURT OF CLAIMS.

Mr. Assistant Attorney General Conrad, for the United States.

Mr. George S. Boutwell and Mr. Joseph H. Choate for the Berdan Co.

MR. JUSTICE BREWER, after stating the case, delivered the opinion of the court.

Three questions are presented: First, did the court err in denying relief to the petitioner on the first cause of action; second, was the petitioner entitled to recover from the United States on the second cause of action; and, third, if so, was there any mistake in the amount awarded?

With respect to the first little need be said. The ninth finding is express, that the government never bought any guns from petitioner, (for the word "defendants" is obviously a clerical error,) and has never manufactured a gun after the model recommended by the Hancock board. It, therefore, never received any tangible property from the petitioner, nor ever trespassed upon any intangible right created by the patent. Beyond this it also appears that the patent was only for a combination, no single element of which was new; that it was intended for and was successful when used with rim-fire cartridges, and was not successful when used with centre-fire cartridges; that the government uses only the latter cartridges; that in order to adapt his patent to these cartridges the inventor added a new element for which neither singly nor in combination did he take out any patent. If, therefore, the government had used model No. 4, which was presented to the Hancock board, it would not have infringed any patent right. For where several elements, no one of which is novel, are united in a combination which is the subject of a patent, and these several elements are thereafter united with another element into a new combination, and this new combination performs a work which the patented combination could not, there is no infringement. Even if there were findings sufficient to show that the government had in any manner infringed upon this patent, there is nothing disclosing a contract, express or implied, and a mere infringement, which is only a tort, creates no cause of action cognizable in the Court of Claims. Gibbons v. United States, 8 Wall. 269; Morgan v. United States, 14 Wall. 531; Hill v. United States, 149 U.S. 593; Schillinger v. United States, 155 U.S. 163.

With regard to the second question: It appears that Berdan invented the extractor-ejector; that he received a patent therefor and assigned such patent to the petitioner. It also appears that the government has made use of this invention, or at least one differing from it only in the substitution of a spiral for a flat spring. These springs "perform the same office and attain the same result in the same way," and the use of the one for the other is a "matter of choice, and is in no way material to the result." Upon these facts alone, thus briefly stated, the defendant, were it a private person, would be liable to an action of infringement. Nor would it be a defence to the action that such person had, subsequent to Berdan's invention, and without knowledge thereof, devised the contrivance which he was using. He would be in the attitude of a subsequent inventor, and the prior inventor is the one who, under the statutes, is entitled to the monopoly. Rev. Stat. §§ 4884-4886. "For any one invention but one valid patent can exist; and of several distinct inventors of the same invention one only is entitled to receive a grant of the exclusive right. This one is the original and first inventor." 1 Robinson on Patents, sec. 58. That the peculiar contrivance used by the government was devised by Adams, one of its employés, and that it differs from the Berdan invention in the use of a spiral instead of a flat spring, in no manner diminish the patent rights of Berdan or his assignee, the petitioner, or change the fact that the use made by the government of the extractor-ejector was an infringement upon such rights.

But as heretofore stated, something more than a mere infringement, which is a tort and not within the jurisdiction of the Court of Claims, is necessary to enable the petitioner to maintain this action. Some contractual liability must be shown. In United States v. Palmer, 128 U.S. 262, 269, it appeared that the petitioner was the inventor of certain improvements in infantry equipments; that he presented such improvements to a board of officers appointed by order of the Secretary of War to meet, consider, and report upon the subject of a proper equipment for infantry soldiers; that such board recommended the use of his improvements; and that the improvements were adopted by the Secretary of War as part of the equipment of the infantry soldiers of the United States army. Upon these facts the court found that there was an implied contract, Mr. Justice Bradley, speaking for the court, saying: "No tort was committed or claimed to have been committed. The government used the claimant's improvements with his consent; and, certainly, with the expectation on his part of receiving a reasonable compensation for the license. This is not a claim for an infringement, but a claim of compensation for an authorized use, two things totally distinct in the law, as distinct as trespass on lands is from use and occupation under a lease... . We think that an implied contract for compensation fairly arose under the license to use, and the actual use, little or much, that ensued thereon. The objection, therefore, that this is an action for a tort falls to the ground."

In the case at bar, according to the nineteenth finding, "Berdan, as an officer of plaintiffs herein, assignees of his inventions during the period covered by this action, was in constant communication with the ordnance officers, requesting the use of his devices by the government; they knew him as an inventor, and knew his inventions as soon as they were patented;" and, by the twenty-third, "plaintiffs have desired the government should use their patented devices, and have also desired and requested compensation for such use." So far, then, as the petitioner is concerned, the use of this invention was with its consent, in accordance with its wish, and with the thought of compensation therefor.

While the findings are not so specific and emphatic as to the assent of the government to the terms of any contract, yet we think they are sufficient. There was certainly no denial of the patentee's rights to the invention; no assertion on the part of the government that the patent was wrongfully issued; no claim of a right to use the invention regardless of the patent; no disregard of all claims of the patentee, and no use, in spite of protest or remonstrance. Negatively, at least the findings are clear. The government used the invention with the consent and express permission of the owner, and it did not, while so using it, repudiate the title of such owner.

The nineteenth finding, besides showing knowledge on the part of the officers of the government of Berdan's invention, states, in a general way, that "the attitude of the War Department towards inventors in ordnance has been one of neutrality; it has neither denied nor admitted the legal rights, if any there were, of inventors; in an endeavor to perfect the government arm that department has taken advantage of all knowledge within its reach and of all inventions; it does not deny the claims of inventors, but has proceeded upon the policy that executive officers should not decide upon such claims against the government or upon conflicting claims, but that the claim should be presented without prejudice before some other tribunal than an executive department."

The twenty-third finding discloses that while Berdan's application for patent No. 88,436 was pending the Chief of Ordnance of the Army said, in substance, that if any of the features of that patent should be used by the defendant in the manufacture of the Springfield gun, the officers expected to recommend the payment for their use when the claims had gone through the proper channels and were settled; that the inventor wrote to the Chief of Ordnance asking the assistance of the War Department in securing speedy action on the pending application in the Patent Office, which letter was transmitted by the Secretary of War to the Secretary of the Interior, stating that "the early consideration of the aforesaid claims is regarded as being desirable."

By the same finding it also appears that this patent was exhibited in 1873, in competition with other guns, to a board of officers called the Terry board, detailed to inspect guns; that in the report of this board the device is fully described; that General Benét became Chief of Ordnance in June, 1874; "that he understood the Springfield device for extracting and ejecting the shell, as described in the `Terry' report, as `seemingly identical, certainly the mechanical equivalent' of Berdan's device for the same subject, covered by patent 88,436;" and also understood "that a use of an invention protected by a patent is the use of private property that must be paid for, and, therefore, an implied contract that has a place in court, and that if the validity of the patent is sustained, and its use by the government is proved to the satisfaction of the court, the inventor must be paid;" and "`with this understanding,' continued the manufacture of the Springfield gun, containing the disputed ejector and extractor device, after adjournment of the `Terry board,' with the expectation that if the court sustained a claim by Berdan against the government upon his patent No. 88,436, then the government must pay him for the use of the invention."

The import of these findings is this: That the officers of the government, charged specially with the duty of superintending the manufacture of muskets, regarded Berdan as the inventor of this extractor-ejector; that the difference between the spiral and flat spring was an immaterial difference; that, therefore, they were using in the Springfield musket Berdan's invention; that they used it with his permission as well as that of his assignee, the petitioner, and that they used it with the understanding that the government would pay for such use as for other private property which it might take, and this, although they did not believe themselves to have the authority to agree upon the price.

These facts bring the case clearly within United States v. Palmer, supra, and show that the judgment of the Court of Claims was not founded upon a tort resulting from a mere infringement, but upon a contract to which both parties assented. That no price was agreed upon, or that the officers of the government were not authorized to agree upon a price, is immaterial. No price was fixed in United States v. Palmer, supra, or in United States v. Russell, 13 Wall. 623. The question is whether there was a contract for the use, and not whether all the conditions of the use were provided for in such contract. This is the ordinary rule in respect to the purchase of property or labor.

With regard to the third question, we are of opinion that the Court of Claims ruled correctly that the statute of limitations was a bar to any recovery for the use of the patented invention prior to six years before the action was commenced.

The Berdan device has been used by the government since January, 1869, and the petition in this case was filed July 26, 1887. Between January, 1869, and July 26, 1881, there were manufactured 224,952 muskets containing this device. Between July 26, 1881, and the expiration of the patent the number of muskets so manufactured was 159,940. The Court of Claims found that five per cent upon the lowest cost of manufacturing the musket during the period covered by this action was a fair and reasonable royalty.

One contention of the petitioner is that the contract, to be implied from the facts in this case, was entered into at the commencement of the use by the government of this patented device, and was a single contract in respect to the entire manufacture, under which no cause of action accrued to the petitioner until it was fully completed, and that therefore the statute of limitations began to run only from such time. The foundation of this claim lies in the fact that the blank form of proposal prepared by the Hancock board contained "the cardinal feature that the price should be fixed on a sliding scale — the more used the less rate;" and that the proposition made by the petitioner was in exact response thereto, and named the prices graduated by the number of arms that should be manufactured, to wit, "two dollars per arm for the privilege of manufacturing 50,000; one and three-quarters dollars for the privilege of manufacturing 100,000," and so on; and that all the offers made at the time were on some sliding scale of compensation.

It is further insisted that no other mode of determining the compensation was ever agreed upon between the parties; that the whole history of the transactions between them indicate that that must have been the mode contemplated by each; that in the nature of things, and in accordance with the ordinary rules which control matters of this kind, the price should vary with the number or quantity, and that until the government had ceased using the device, or at least until the patent had expired, there could be no satisfactory determination of what was a reasonable price for its use.

It is a sufficient reply that the proceedings before the Hancock board were abortive and resulted in nothing. The proposition made by the petitioner was never accepted, and the government never bought any gun from it or manufactured any like that recommended by the Hancock board. The proposition contemplated no rights other than the petitioner then had. It did not in terms, or by implication, extend to patents that it might thereafter acquire, and cannot be construed as underlying any action by the government commenced three years thereafter with reference to a different subject-matter. Because the petitioner, in 1866, offered the government certain patent rights at specified prices, it does not follow that those prices were to control in respect to other patent rights not then in existence, and which were subsequently tendered by it. If the prices are not to control, there is no reason for insisting that the other terms of the original proposition entered into the later transaction. When the negotiations of 1866 failed they failed for all purposes, and in the absence of some specific evidence indicating an intent to carry forward the terms of the proposition then made into the new arrangement of 1869, the conditions of this new contract must be determined by the circumstances which attended it.

But further, the negotiations of the Hancock board contemplated intermediate payments. In the blank form of proposal issued by the board was this provision: "Each payment, as above specified, to be made for not less than five thousand arms," and the same language was inserted in the offer made by the petitioner. Evidently the parties intended that any contract which might be entered into should provide for payments from time to time, such payments to be for not less than five thousand arms, and not for a single payment when the government had finished the use, or the patent had expired. And, of course, the moment any payment should become due, that moment, as to it, the statute of limitations would begin to run. Whatever, however, may have been the thought of the parties in respect to the contract then proposed, the actual use by the government of the device covered by patent No. 88,436 was, so far as appears from any of the findings, upon no understanding that the prices named in 1866 for the device then tendered were to control, or that any sliding scale existed by which the price should be reduced as the number increased, or that the manufacture was to continue for any specified time, or that any particular number of muskets containing the device were to be manufactured. It was the use of the device in each single musket, with no other agreement or understanding than that a reasonable price should be paid therefor. It was like the ordinary purchase of a series of articles: no time for payment being named, payment is due for each article as it is delivered.

The case of Steam Packet Co. v. Sickles, 10 How. 419, 441, is not in point, for in that case the contract specifically provided that the machine should be used by the defendants during the continuance of the patent, and that after paying for its construction, the savings caused thereby in the consumption of fuel should be divided between the defendants and plaintiffs, one-quarter to defendants and three-quarters to plaintiffs. It was in view of this feature of the contract that the court said: "The agreement on the part of the plaintiffs is, that the defendants shall use their machine for a certain time, in consideration of which defendants are to pay a certain sum of money. It is true that the exact sum is not stated; but the mode of rendering it certain is fully set forth. It is one entire contract, which cannot be divided into a thousand, as the plaintiffs imagine." But here there is no pretence that the government agreed to use in all its muskets this device; or to continue the use of the device in any that it should manufacture during the life of the patent. There was no obligation on the part of the government as to time or number.

It is further contended that the royalty fixed by the Court of Claims is less than it should have been. In support of this contention reference is made to finding number twenty-two, which contains these statements:

"The cost of manufacturing the extractor-ejector now in use (since 1868) is $1.25 per gun less than the cost of manufacturing the Allin device. Several witnesses of high military position, experts in the practical use of arms of this description, and familiar with the cost of manufacture, have testified to the great value of the extractor-ejector device, claimed to be covered (and understood by them to be covered) by patent No. 88,436, and they are of the opinion that a reasonable royalty for the use of this device would be the saving in cost over the Allin device plus a sum varying somewhat with each witness, but of which the average is $1.41 2/3 per musket, thus giving as royalty the sum of $2.66 2/3 per musket. It does not appear upon what facts these witnesses based their opinions, or that they were cognizant of facts in relation to sales or licenses of this or other similar inventions upon which to found their opinions."

In this finding the court also states that it "finds the ultimate fact that five per cent upon the lowest cost of manufacturing the musket during the period covered by this action" was a fair and reasonable royalty. It gives the cost of manufacturing during the various years, and, in addition to the matters just quoted, the amount paid in other cases for the use of other devices in fire-arms. It also gives a table of the rates offered by the fifty-six different patentees of fire-arms to the Hancock board. Now, it may be that the finding as to the reasonable royalty is something in the nature of an arbitrary determination, and it is true that the court refers to the various matters above indicated as furnishing the basis upon which it reaches this conclusion, yet the question of a reasonable royalty is a question of fact to be determined by the Court of Claims, and its determination, as expressed in its findings, is conclusive upon us, unless from other findings it is apparent that there was error. We are not satisfied that there was any such error. The question is, what, under the circumstances, was a reasonable price to be paid by the government? It does not appear that there was any customary royalty, or that anybody, other than the government, has used this device. It is fair also to bear in mind that the particular structure which the government used was devised by one of its own employés, and while the difference between it and the Berdan device is slight, and Berdan was the prior inventor, yet it is not unreasonable to take into consideration this slight difference between the two structures, and that the government constantly held to the specific device invented by its own employé. The question is not whether, from the other facts stated in the findings, we should have reached the same conclusion as the Court of Claims, but whether, from such other facts, we can see that that court erred. We are not prepared so to hold.

These are the only questions presented in this record, and, finding no error in them, the judgment of the Court of Claims is

Affirmed.

MR. JUSTICE WHITE took no part in the decision of these cases.