Bill by the Regan Vapor-Engine Company against the Pacific Gas Engine Company and others for infringement of a patent.

Messrs. Langhorne & Miller for the complainant.

Mr. John L. Boone for the defendants.

HAWLEY, J.:

From the master's report it appears that on the 16th day of June, 1885, Letters Patent No. 320,285 for a gas-engine were issued to Daniel S. Regan; that on the 29th day of December, 1885, another patent on gas-engines, No. 333,336, was issued to Regan and John H. Eichler jointly; that on the 14th day of May, 1886, Regan and Eichler assigned to W. T. Garrett all their right, title, and interest in said patents in the States of California, Oregon, and Nevada, and in the Territories of Utah, Washington, Montana, Idaho, Arizona, and New Mexico; that this assignment (Exhibit D) was duly recorded in the United States Patent Office on March 10, 1888; that on the same day Regan assigned to Garrett the same territory in a pending application all his right, title, and interest in and to said invention for new and useful improvements in gas-engines and the Letters Patent therefor when granted; that this assignment (Exhibit E) was executed and delivered to Garrett, but was not recorded; that on the 15th of May, 1886, an agreement (Exhibit F) was made, executed, and delivered by and between the said Regan and W. T. Garrett, which, after reciting the territory in which each is the owner, respectively, of inventions appertaining to improvements in gas-engines, reads as follows:

And whereas it is probable that one or the other or both of said parties may hereafter make other and further inventions and improvements in gas-engines and in the mechanism by which they are operated; and whereas the said parties desire to have all the benefits of all such inventions and improvements, each within his own territory, as herein before described and specified: Now, therefore, in consideration of the premises and the mutual covenants and agreements herein made, we, the said William T. Garrett and Daniel S. Regan, do hereby license and grant and convey each to the other, within and throughout all the States and Territories owned by each, respectively, all such inventions and improvements, whether patented or not, which may be hereafter made by either of us-that is to say, that I, said Daniel S. Regan, do hereby license and convey to William T. Garrett the full and exclusive right to manufacture, use, and sell within and throughout the States of California, Oregon, Nevada, and Colorado, and the Territories of Utah, Washington, Montana, Idaho, Arizona, and New Mexico, all inventions and improvements, whether patented or not, which I may hereafter make in gas-engines or in the processes or mechanism by which they are operated.

Then follows a like covenant from Garrett to Regan; that this agreement was never recorded; that the said Garrett on the 21st of Decem. ber, 1889, sold and transferred all his right, title, and interest in and to the assignments and agreement above specified to M. M. Barrett, and the said Barrett, on the 2d of May, 1890, transferred his interests therein to the respondent; that on the 9th of August, 1889, Regan procured another patent on gas-engines, No. 408,356, and assigned a half

interest therein to one Sanford S. Bennett; that this assignment was duly recorded in the Patent Office; that thereafter, on the 22d day of October, 1889, Regan and Bennett sold their right, title, and interest in said patent for the United States to complainant; that, it subsequently appearing that this patent was defective, the complainant surrendered it, and, under the laws of the United States, obtained a reissue, No. 11,068, dated April 1, 1890, in its own name. This suit is based on that reissued patent, and is for an infringement thereof. Respondents filed a plea in abatement to the suit, claiming that by virtue of the several assignments above mentioned they are the owners and holders of the title to the reissued patent in the States and Territories named on the Pacific coast. This plea was referred to the master, and the case now comes before the court upon the exceptions of respondents to the master's report, finding that the plea is bad.

Some preliminary objections were urged by complainant to a consideration of this case upon the ground that the exceptions taken by the respondents were insufficient to affect the master's report. It is enough to say upon this point that I consider the exceptions sufficient in this respect.

The conclusions upon which the report of the master is found may be briefly summarized as follows: (1) That Exhibit D is the only one of the documents offered by respondents which "has any relevancy to the issue submitted by the plea;" (2) that an invention not in existence, "but which may hereafter be devised-a mere possibility-having no tangibility or substance whatever, * * cannot be the subject of a conveyance;" (3) that if the agreement (Exhibit F) is in effect an agreement to convey it was not made after the patent was issued, or after the invention was made, and hence the respondent has no equity as against the complainant, who is "an innocent purchaser for value;" (4) that it appears from the instrument itself "that nothing more than a license was given or intended, that the words of conveyance used are 'license, grant, and convey,' and the right assigned is 'the full and exclusive right to manufacture, use, and sell' within the specified territory;" that "these rights not being conveyed to Garrett and his assigns, and the right to license others to make and use not being specified or conveyed, the instrument can at best be regarded as nothing more than the grant of personal power to the licensee, which is not transferable by him to another." It is undoubtedly true that the assignment (Exhibit D) constitutes the basis upon which the entire transaction between the parties was founded; but it does not necessarily follow that it is the only document which has any relevancy to the issue submitted by the plea. The documents relate to each other and refer to one general transaction. In Exhibit D reference is made to the privilege secured by the Letters Patent "and the assignments thereof and contracts concerning the same." What contracts? There were no contracts between the parties, as shown by the testimony, except as set forth in

Exhibit F. A contract of some kind was within contemplation of the parties at the time of the execution of Exhibits D and E. The mere fact that Exhibit F was not executed until the next day does not of itself establish the fact that it was a separate and independent transaction. The fact of the assignments of the previous patents is recited in this agreement as a part of the consideration for its execution. It is apparent that the parties at the time had the entire transaction under consideration. The recitals in the respective instruments are of such a character as to authorize the court to treat the documents as having reference to one transaction, and they should be construed together. Exhibit F is not only a license, but an assignment, of the inventions or improvements of the invention that might thereafter be made and patents obtained therefor. This is the conclusion reached by Mr. Justice Sawyer in the case of Regan Vapor-Engine Co. v. Pacific Gas Engine Co., (recently decided upon demurrer.)* It was said in Littlefield v. Perry (7 O. G., 964; 21 Wall., 226) that

an assignment of an imperfect invention, with all improvements upon it the inventor may make, is equivalent in equity to an assignment of the perfected results.

In construing the effect of the assignment in that case, which was in several respects similar to this, the Court said:

If the assignment, in precisely its present form, had been executed after the last reissue was granted, we think it would hardly be claimed that the legal title to all the present outstanding patents did not pass with it. What such an assignment could do in respect to legal titles this has done in respect to such as are equitable. The contest is now between an assignor in equity and his assignee. A court of equity will, in such a case, give the same effect to an equitable title that it would to one that was legal.

Although Exhibit F was not recorded, yet the reference made to "contracts concerning the same" in Exhibit D would seem to be sufficient to put any subsequent purchaser upon inquiry. But, in any event, the Regan Vapor-Engine Company does not own the patent for the whole of the United States. The prior assignment for the Pacific coast States and Territories to the Pacific Gas Engine Company conveyed an equitable interest in the patent. The subsequent assignment by Regan only conveyed "his right, title, and interest" in the patent, and his only interest was in and for the States and Territories not included in his first assignment. The principles announced in Turnbull v. Weir Plow Co. (7 O. G., 173; 6 Biss., 225) are, in my judgment, applicable to the facts of this case. The Court, in discussing the validity of the respective assignments in that case, said:

The true construction of such an assignment is that where there is a residuary interest left in the assignor under the patent within the territory mentioned it must be construed as only conveying that residuary interest. I mean, of course, where he has previously parted with some interest under the patent in a portion of the territory. For example, in this case the patentee has conveyed all his interest in the patent in Henderson and Warren counties in 1860, but he had left and had a right to convey all his remaining interest in the State of Illinois; and when he stated

*No opinion filed.

that he conveyed all the interest which he had under the patent in the State of Illinois, and that the assignment was to vest in the assignee all his right under the patent in the State of Illinois, as fully and entirely as the same would have been held and enjoyed by him if the assignment had not been made, we must construe it as not indicating on his part an intention to convey what he had previously conveyed to other parties. Where there has been a conveyance of property, which is unrecorded, and a conveyance afterward of the grantor's rights and title in the same property, which is recorded, if there is anything upon which the second conveyance can operate, it does not cut off the prior deed.

*

The same views were again declared in the same case in C. D., 1883, 121; 9 Biss., 334; 14 Fed. Rep., 108, where the Court said:

Where there was a residuary interest left in the assignor under a patent within the territory mentioned, the word "all the right, title, and interest" of the patentee, in the conveying clause of an assignment, are to be construed as conveying only such residuary interest, though the prior deed of assignment by which the patentee had alienated a part of his original interest in the territory had not been recorded when the later assignment was made.

For the reasons stated the exceptions to the master's report will be sustained.

[U. S. Circuit Court-District of Massachusetts.]

NATHAN MANUFACTURING COMPANY ET AL. v. CRAIG ET AL.

Decided September 13, 1889.

57 O. G. 1887.

1. PATENT-INFRINGEMENT-DEFECTIVE COMPLAINT-Demurrer.

In an action for infringement of Letters Patent a complaint which did not allege that the invention was not in public use or on sale for more than two years prior to the application for patent, Held bad on demurrer.

2. SAME-OWNERSHIP OF INTERFERING PATENTS-PRIORITY OF INVENTION-SECTION 4918, REVISED STATUTES.

Complaint did not aver defendants to be the owners of the alleged interfering patent. Held bad on special demurrer, because the only point in issue in a suit brought, as this is, under section 4918 of the Revised Statutes is the question of priority of invention between the owners of interfering patents.

Mr. Thomas W. Clarke for the complainants.

Messrs. Livermore, Fish & Richardson for the defendants.

BILL by Nathan Manufacturing Company and others against Warren H. Craig and others for an infringement of a patent.

STATEMENT OF THE CASE.

Defendants filed the following demurrer:

These defendants, by protestation, not confessing all or any of the matters and things in the complainants' amended bill of complaint contained to be true in such manner and form as the same is therein set forth and alleged, do demur to said bill, and for causes of demurrer show that the complainants have not, in and by their

said bill, made or stated such a case as entitles them in a court of equity to any discovery from these defendants, or either of them, or to any relief from them, or either of them, as to the matters contained in the said bill or any of such matters. That it does not appear by the said bill that the letters therein alleged to have been issued to Kaczander and Ruddy and to Kaczander, respectively, of which patents the complainant Ricks is alleged now to be the owner, are Letters Patent of the United States. Neither does it appear that the above-named Letters Patent were issued in the name of the United States of America, nor that they were issued under the seal of the Patent Office, nor that they were signed by the Secretary of the Interior and countersigned by the Commissioner of Patents, nor that they were delivered to the patentee. That, furthermore, it does not appear by said bill for what term the Letters Patent above mentioned were issued, nor does it appear that either of said Letters Patent 'granted to the patentee the exclusive right to make, use, and vend the invention covered thereby throughout the United States and Territories thereof. And, furthermore, that it does not appear by said bill that the improvements in lubricators, alleged therein to have been the subjects of the two patents above mentioned, were not known and used in this country, and not patented or described in any printed publication in this or any foreign country, before the alleged invention thereof by Kaczander and Ruddy and Kaczander, respectively; and that it does not appear that said alleged inventions were not in public use or on sale more than two years prior to the respective applications of Kaczander and Ruddy and Kaczander aforesaid for Letters Patent. And, further, that it appears by said bill and by the printed matter filed therewith that the invention described and shown in the patent issued to Warren H. Craig, No. 398,583, is not the same as the invention shown in either the Kaczander and Ruddy or Kaczander Letters Patent, nor any part thereof, but that, on the contrary, it appears that the said Letters Patent are not interfering patents, as alleged, and the complainants are not entitled to any remedy in equity, as granted by section 4918 of the Revised Statutes of the United States, upon the ground that the complainants' patents and defendants' patent are interfering patents. And, furthermore, that it does not appear by said bill that the defendants Craig and Robinson are the owners of the alleged interfering patent, as required by the statute aforesaid. And, furthermore, that it is not alleged by the said bill that the invention described in the aforesaid Craig patent is shown and described in the said Kaczander and Ruddy patent, No. 337,500. And, furthermore, the defendants aforesaid demur to the said bill because it appears by the said bill that the same is exhibited against the defendants thereto for distinct matters and causes, and that so much of the bill as complains of two circulars, thereto annexed, as wholly irrelevant and immaterial and has no relation to the aforesaid Kaczander and Ruddy and Kaczander patents, with which the Craig patent is alleged to interfere. And, further, that it does not appear by said bill that the issuing and distribution of said circulars by defendants was in any way wrongful, or entitles the complainants to any remedy in equity. And, further, the defendants demur to so much of said bill as alleges that the invention described in the Craig Letters Patent was made and sold by the complainants before the issue of the said Letters Patent, and to so much of said bill as alleges the prior knowledge, use, or manufacture of the invention set forth in the said Craig patent by various persons in Chicago, Detroit, and elsewhere, especially that part of said bill beginning with the words "and that long before" on page 3, line 27, down to the words "or under its authority," page 4, line 8, as wholly impertinent, irrelevant, and immaterial. And the defendants further demur to so much of said bill as avers that said invention shown in said Craig Letters Patent is of very slight importance, as being wholly immaterial and irrelevant. Wherefore, and for divers other good causes of demurrer, appearing in the said bill, the defendants do demur thereto, and humbly demand the judgment of this court whether they shall be compelled to make any further or other answer to the said bill, and pray to be hence dismissed, with their costs and charges in this behalf most wrongfully sustained.