States of cases of copyright. It was under that provision of the act of 1819 that the case of Stevens v. Gladding (17 Howard, 447) arose and was decided. That was a bill for an injunction to restrain the violation of a copyright, and prayed for the recovery of the penalties given by the seventh section of the act of February 3, 1831, and for general relief. Mr. Justice Curtis, delivering the opinion of the court, said:

There is nothing in this act of 1819 which extends the equity powers of the courts to the adjudication of forfeitures, it being manifestly intended that the jurisdiction therein conferred should be the usual and known jurisdiction exercised by courts of equity for the protection of analogous rights. The prayer of this bill for the penalties must therefore be rejected. The remaining question is whether there ought to be a decree for an account of the profits. The complainant has not prayed for such an account, nor have the defendants stated one in their answer; but the bill does pray for general relief. The right to an account of profits is incident to the right to an injunction in copy and patent right cases. citing Colburn v. Simms. 2 Hare, 554; 3 Dan. Ch. Pr., 1797. And this court has held in Watts v. Waddle (6 Pet., 389) that where the bill states a case proper for an account, one may be ordered under the prayer for general relief.

The seventeenth section of the act of 1836 differs from the act of 1819 in one other particular only. It makes the jurisdiction in patent causes of the courts of the United States exclusive.

It was under the act of 1836 that the question arose for the first time in Livingston v. Woodworth (15 Howard, 546) as to the rule for computing the profits of an infringer upon a decree for such an account. The bill was for an injunction and account. The validity of the patent and the fact of infringement were both admitted by the defendant, who consented to a decree requiring him to account for and pay over the gains and profits made by him during the infringement, in accordance with the prayer of the bill. The decree confirmed the report of the master, who awarded, not actual gains and profits, but such as he estimated the defendant might have made by due diligence. It was argued in support of the claim that where the court has jurisdiction to give the principal relief sought it will make a complete decree and give compensation for the past injury, as in bills for specific performance and injunction bills for waste, and that it was a correct rule to hold the party accountable as an involuntary trustee for what the patentee might have realized by the same exercise of the right, as a court of equity sometimes forces the character of a trustee upon an intruder or wrong-doer, or one in possession under color of right, or who takes rents or profits belonging to another, or might have taken them, as in cases of mortgagees; but it was admitted that the case was of first impression. The decree upon this point was reversed. The court said, page 559:

We are aware of no rule which converts a court of equity into an instrument for the punishment of simple torts. If the appellees, the plaintiff's below, had sustained an injury to their legal rights the courts of law were open to them for redress, and in these courts they might, according to a practice which, however doubtful in point of essential right, is now too inveterate to be called in question, have claimed not compensation merely, but vengeance, for such injury as they could show they had sustained; but before a tribuna! which refuses to listen even to any, save those whose

acts and motives are perfectly fair and liberal, they cannot be permitted to contravene the highest and most benignant principle of the being and constitution of that tribunal. There they will be allowed to claim that which, er æquo et bono, is theirs, and nothing beyond this.

The account was therefore restricted to the actual gains and profits of the appellants during the time their machine was in operation.

This rule in relation to the profits recoverable in such suits was followed in Dean v. Mason (20 Howard, 198), which was a case of a bill for an injunction and account, in which a decree pro confesso had been taken. The final decree was entered, on the report of the master, for the estimated amount of profits which the defendant with reasonable diligence might have realized, not what in fact he did realize. This was held to be erroneous. The court said:

The rule in such a case is the amount of profits received by the unlawful use of the machines, as this in general is the damage done to the owner of the patent. It takes away the motive of the infringer of the patented rights by requiring him to pay the profits of his labor to the owner of the patent. Generally this is sufficient to protect the rights of the owner; but where the wrong has been done under aggravated circumstances the court has the power under the statute to punish it adequately by an increase of the damages.

The important case of Seymour v. McCormick (16 Howard, 418) was decided in 1853. This was an action at law. The court below instructed the jury that the actual damages to which the plaintiff was entitled for an infringement of a patent for an improvement in a machine might be determined by ascertaining the profits which in judgment of law he would have made, provided the defendants had not interfered with his rights, and that the same rule applied whether the patent covered an entire machine or merely an improvement on a machine. This instruction this court held to be erroneous, and reversed the judgment on that account. Mr. Justice Grier, in delivering the opinion of the court, referred to the rule of damages prescribed by the acts of Congress previously in force, stating that "experience had shown the very great injustice of a horizontal rule equally affecting all cases without regard to their peculiar merits," and that it was to obviate this that the patent act of 1836 confined the jury to the assessment of actual damages, leaving it to the discretion of the court to inflict punitive damages to the extent of trebling the verdict. He then pointed out that "it must be apparent to the most superficial observer of the immense variety of patents issued every day that there cannot, in the nature of things, be any one rule of damages which will equally apply to all cases. The mode of ascertaining actual damages must necessarily depend on the peculiar nature of the monopoly granted;" that a man who invents or discovers a new composition of matter or an entire new machine may find his profit to consist in a close monopoly, the patentee being himself able to supply the whole demand at his own price, in which cases "the profit of the infringer may be the only criterion of the actual damage of the patentee;" that "one who invents some improvement in the

machinery of a mill could not claim that the profits of the whole mill should be the measure of damages for the use of his improvement, and where the profit of the patentee consists neither in the exclusive use of the thing invented or discovered, nor in the monopoly of making it for others to use, it is evident that this rule could not apply. The case of Stimpson's patent for a turn-out in a railroad may be cited as an example. It was the interest of the patentee that all railroads should use his invention, provided they paid him the price of his license. He could not make his profit by selling it as a complete and separate machine. An infringer of such a patent could not be liable to damages to the amount of the profits of his railroad, nor could the actual damages of the patentee be measured by any known ratio of the profits of the road. It is only where, from the peculiar circumstances of the case, no other rule can be found that the defendant's profits become the criterion of the plaintiff's loss. Actual damages must be actually proved, and cannot be assumed as a legal inference from any facts which amount not to actual proof of the fact." Accordingly, it was held in New York v. Ransom (23 Howard, 487), where the rule in Seymour v. McCormick, supra, was expressly approved, that in an action at law, if the plaintiff rested his case after proof of infringement merely, he was entitled only to nominal damages. It was also applied in Jones v. Morehead (1 Wall., 155), which was a bill in equity for an injunction and an account, where a decree for a large sum as profits had been rendered against the defendant upon an entire machine, in respect to which it appeared as matter of fact that the defendants had not infringed the patent sued on, but had admitted to the contrary in the answer. The court construed this admission by applying it to the smallest number of patented articles and to the use of any part of the patent found to be valid, and, reversing the decree, ordered one to be entered for a "nominal sum of one dollar for profits."

In the case of the Rubber Company v. Goodyear (9 Wall., 788), which was a bill for an injunction and account, a decree for a large sum was rendered in favor of the complainants, which was affirmed on appeal. "The rule," said Mr. Justice Swayne, delivering the opinion of the court, "is founded in reason and justice. It compensates one party and punishes the other. It makes the wrong-doer liable for actual, not possible, gains. The controlling consideration is that he shall not profit by his wrong. A more favorable rule would offer a premium to dishonesty and invite to aggression. The jurisdiction of equity is adequate to give the proper remedy, whatever phase the case may assume, and the severity of the decree may be increased or mitigated according to the complexion of the conduct of the offender."

The case of Mowry v. Whitney (14 Wall., 620) was also a bill in equity for an injunction and account. A decree was rendered in favor of the complainant for all the profits on the manufactured article, instead of

upon the patented process of manufacture, with interest added. On appeal this court reversed the decree on that point, saying:

The question to be determined in this case is, what advantage did the defendant derive from using the complainants' invention over what he had in using other processes then open to the public and adequate to enable him to obtain an equally beneficial result? The fruits of that advantage are his profits. That advantage

is the measure of profits.

On the question of interest Mr. Justice Strong, speaking for the court, said:

We add only that, in our opinion, the defendant should not have been charged with interest before the final decree. The profits which are recoverable against an infringer of a patent are in fact a compensation for the injury the patentee has sustained from the invasion of his right. They are the measure of his damages. Though called profits, they are really damages, and unliquidated until the decree is made. Interest is not generally allowable upon unliquidated damages. We will not say that in no possible case can interest be allowed. It is enough that the case in hand does not justify such an allowance.

In the case of Packet Company v. Sickles (19 Wall., 611), which was an action at law, the rule established in Seymour v. McCormick, supra, was reiterated, as "the established criterion of damages in cases to which it was applicable." " "In cases where there is no established patent or license fee in the case, or even an approximation to it, general evidence must necessarily be resorted to," as was said by the court in the case of Suffolk Company v. Hayden (3 Wall., 315). "And what evidence," said Mr. Justice Nelson, in that case, page 320, "could be more appropriate and pertinent than that of the utility and advantage of the invention over the old modes or devices that had been used for working out similar results? With a knowledge of these benefits to the persons who have used the invention and the extent of the use by the infringer a jury will be in possession of material and controlling facts that may enable them, in the exercise of a sound judgment, to ascertain the damages, or, in other words, the loss to the patentee or owner by the piracy, instead of the purchase of the use, of the invention." He added that "a recovery does not vest the infringer with the right to continue the use, as the consequences of it may be an injunction restraining the defeudant from the further use of it."

In Packet Company v. Sickles, supra, Mr. Justice Miller said:

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.

The doctrine of this case was reiterated in Burdell v. Denig (92 U. S., 716), where Mr. Justice Miller, again delivering the opinion of the court, said:

Profits are not the primary or true criterion of damages for infringement in an action at law. That rule applies universally and mainly to cases in equity, and is based on the idea that the infringer shall be converted into a trustee as to those profits for the owner of the patent which he infringes, a principle which it is very difficult to apply in a trial before a jury, but quite appropriate on a reference to a master, who can examine defendant's books and papers, and examine him on oath, as well as all his clerks and employés. On the other hand, we have repeatedly held that sales of licenses of machines, or of a royalty established, constitute the primary and true criterion of damages in the action at law. No doubt, in the absence of satisfactory evidence of either class in the forum to which it is most appropriate, the other may be resorted to as one of the elements on which the damages or the compensation may be ascertained.

The case of Littlefield v. Perry (21 Wall., 205) was one where the patentee, by force of an agreement, held the legal title to the patent in trust for the complainant, in violation of which he was making use of his legal rights. It was held upon a bill filed for an injunction and account that it was a case under the patent laws, and the defendant was required to account for the profits he had made according to the rule in Mowry v. Whitney, supra. The Chief Justice said (page 230): Profits actually realized are usually, in a case like this, the measure of unliquidated damages. Circumstances may, however, arise which would justify the addition of interest in order to give complete indemnity for losses sustained by willful infringements.

On July 8, 1870, Congress passed the act to revise, consolidate, and amend the statutes relating to patents and copyrights (16 Stat. L., 198). The fifty-ninth section renewed the provision previously in force that damages for infringement might be recovered by action on the case, and that whenever in any such action a verdict shall be rendered for the plaintiff the court may enter judgment therein for any sum above the amount found by the verdict as the actual damages sustained, according to the circumstances of the case, not exceeding three times the amount of the verdict. The fifty-fifth section is as follows:

That all actions, suits, controversies, and cases arising under the patent laws of the United States shall be originally cognizable as well in equity as at law by the circuit courts of the United States, or any district court having the power and jurisdiction of a circuit court, or by the supreme court of the District of Columbia, or of any Territory; and the court shall have power upon bill in equity filed by any party aggrieved to grant injunctions according to the course and principles of courts of equity, to prevent the violation of any right secured by patent on such terms as the court may deem reasonable; and upon a decree being rendered in any such case for an infringement the complainant shall be entitled to recover, in addition to the profits to be accounted for by the defendant, the damages the complainant has sustained thereby, and the court shall assess the same or cause the same to be assessed under its direction, and the court shall have the same powers to increase the same, in its discretion, that are given by this act to increase the damages found by verdicts in actions upon the case; but all actions shall be brought during the term for which the letters patent shall be granted or extended. or within six years after the expiration thereof.