Wilbur-Ellis Company v. Kuther

PETITIONER:Wilbur-Ellis Company
RESPONDENT:Kuther
LOCATION:United States District Court for the Eastern District of Louisiana

DOCKET NO.: 109
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 377 US 422 (1964)
ARGUED: Feb 20, 1964
DECIDED: Jun 08, 1964

Facts of the case

Question

Audio Transcription for Oral Argument – February 20, 1964 in Wilbur-Ellis Company v. Kuther

Earl Warren:

Number 109, Wilbur-Ellis Company et al., Petitioners, versus Max K. Kuther.

Mr. Neal.

Frank A. Neal:

Yes, Mr. Chief Justice and Your Honors, may the Court please.

This is a patent case and the issue presented to the Court involves a question of whether or not the acts complained about amounted to impermissible reconstruction.

The patent in suit is one for a fish-packing machine.

There are five claims to the patent.

The mode of operation of the machine might be of interest to the Court.

I don’t know how familiar the Court is with the record.

In any event, fish are fed in by a plurality of conveyors and, eventually, are deposited in open-top arcuate pockets.

After the deposit of the fish in the pockets and arcuate-top open-bottom compressor comes down to compress the bundle of fish into a charge which would fit a cylindrical can.

Byron R. White:

What kind of a top did you say?

I didn’t hear.

Frank A. Neal:

Pardon me.

It’s shaped like this, Your Honor.

The fish are in here and this comes down and presses the fish.

When that is done, a plunger comes along and ejects the fish into the can.

It’s a fairly high-speed machine.

Now —

Potter Stewart:

For a fish like sardines.

Frank A. Neal:

Yes, sir.

Yes sir.

They were primarily designed for the packing of sardines.

William J. Brennan, Jr.:

It would be in the patents.

Frank A. Neal:

No, it isn’t.

William J. Brennan, Jr.:

It’s been litigated?

Frank A. Neal:

It has been litigated and it been — has been held to be valid.

Now, there are four accused machines which were acquired by the petitioner, Wilbur-Ellis, by way of a purchase.

In other words, the machines were the subject of an outright and unconditional sale stemming from the respondent.

These machines, at least three of the four, were in a fairly sad condition due to corrosion and so forth.

And, the — each of those three machines were purchased at a cost of $1,250 a piece.

William J. Brennan, Jr.:

Were they purchased directly from the respondent?

Frank A. Neal:

No, they weren’t.

They were purchased from the Hovden Packing Company, who was the — which was the owner of the machines.

They were — they were used in quite —

Frank A. Neal:

That’s right.

Quite —

Frank A. Neal:

That’s right.

— much as badly as —

Frank A. Neal:

The packing plant went out of business about 1952 and it remained — the machinery and the rest of the contents of the plant remained there inactive and exposed to salt, sea air, and that type of thing.

As a consequence, the machines were corroded.

In any event, the petitioner Wilbur-Ellis acquired these machines at $1,250 a piece and then went to the other petitioner, Mr. Leuschner, and asked him to recondition these machines, in this sense, to put them in operating condition and also to do that which was necessary to adapt them to feel what is know in the trade as “5-ounce cans,” as distinguished from “1-pound tall cans.”

“5-ounce cans” are considerably smaller.

There was a fourth machine.

The genesis of the fourth machine is a little shady in the light of the record here.

Opposing counsel and I know where it came from.

We know that it cost maybe a couple hundred dollars more for Wilber-Ellis to acquire.

We know that it was in somewhat better condition than the three which had been standing down around Moss Landing, South of Monterey.

In any event, Mr. Leuschner took the machines apart, sand-blasted them —

William O. Douglas:

Just one thing.

Frank A. Neal:

Yes, sir?

William O. Douglas:

(Inaudible)

Frank A. Neal:

Well, Mr. Leuschner?

William O. Douglas:

Yes.

Frank A. Neal:

No, he didn’t, Mr. Justice Douglas.

William O. Douglas:

He might be (Inaudible)

Frank A. Neal:

He bought them from the owner, a packing company by the name of Hovden Packing Company.

William O. Douglas:

(Inaudible)

Frank A. Neal:

Yes, but they were the outright owner.

The packing company owned the machines outright.

William O. Douglas:

Outright?

Frank A. Neal:

That is right.

William O. Douglas:

The royalty remains.

Frank A. Neal:

They had — they — that is right.

Mr. Kuther, the respondent and the patentee received a royalty of $1,500 for each one of those machines which normally —

William O. Douglas:

It was an outright deal.

Frank A. Neal:

It was, Your Honor.

William O. Douglas:

(Inaudible)

Frank A. Neal:

No, no, no.

Those machines sold in the price range of $8,000 to $10,000 and Mr. Kuther received a royalty of $1,500 each time such a machine was sold.

William J. Brennan, Jr.:

Are there any restrictions on the right to purchase or sale of those machines?

Frank A. Neal:

No.

Potter Stewart:

Mr. Kuther received the royalty from whom, the manufacturer of the machine?

Frank A. Neal:

The party who sold the machines.

Potter Stewart:

Not from the —

Frank A. Neal:

Yes.

Potter Stewart:

— not from the —

Frank A. Neal:

Mr. Kuther —

Potter Stewart:

Not directly from the purchaser.

Frank A. Neal:

No, it isn’t in the record, but Mr. Kuther actually was an employee of the Hovden Company and so, the machines were built at the expense of the Hovden Company and when the Hovden Company sold the machine —

Potter Stewart:

It paid him $1,500.

Frank A. Neal:

And $1,500 went to Mr. Kuther.

Potter Stewart:

And that was just one flat —

Frank A. Neal:

That is right.

Potter Stewart:

— payment and that was the answer for each machine.

Arthur J. Goldberg:

Did Mr. Kuther have a (Inaudible) to buy up canning machines?

Frank A. Neal:

No, sir.

Arthur J. Goldberg:

(Inaudible) of the canning machines.

Frank A. Neal:

No, sir — no, sir.

Arthur J. Goldberg:

(Inaudible)

Frank A. Neal:

Yes.

Frank A. Neal:

The record doesn’t reflect that but, Mr. Justice Goldberg, the trade does pack 5-ounce cans.

Arthur J. Goldberg:

(Inaudible)

Frank A. Neal:

They use the very same machines.

Arthur J. Goldberg:

The same machines?

Frank A. Neal:

That is right.

And there, again, they have been converted from the 1-pound-tall can size to the 5-ounce can size.

Arthur J. Goldberg:

(Inaudible)

Frank A. Neal:

No.

For the most part, there were some charges and, again, this holds the record, but there were charges of infringement and those charged with infringement, which included such large companies as Star-Kist Tuna, did pay for the right to convert.

Byron R. White:

I’m not talking against the — as the manufacturer is making a patented machine and selling it to the public makes two sizes of it — two sizes of it.

And, it sells one size to one customer who promptly converts it to the other size.

It’s your position that there’s no infringement then?

Frank A. Neal:

Well, it depends on what is required to convert it to the other size.

Now, here, in order to convert the original machines, after they had been cleaned up to the 5-ounce can handling size, it was necessary to either resize or relocated six parts.

The Court of Appeals for the Ninth Circuit characterized the total number of parts as being in the order of 35.

This would cover essential parts, and I use the word “essential” in the sense that the parts which are essential are recited in the claims.

They are elements of the claims.

35, undoubtedly, includes both essential and non-essential parts but the 35 parts were in the machines which embodied the patented entity.

Now, the Court might be interested in the extent to which each of the five claims of the patent was affected by the changes of the six parts.

Now, for example, claim one was directed or is directed to the combination of nine elements.

When I say elements, I should explain it further in this sense.

It calls for means for delivering produce to the receivers.

Now, the means may embrace a number of elements.

It calls for a plurality of radially disposed arms, so that were — when we’re talking about nine elements, we’re really talking about nine classes of elements here.

And, out of those nine classes of elements called for in claim one, six out of nine were either resized or relocated in order to adapt these machines to handle the smaller cans.

Claim two calls for the combination of some-seven groups of elements and, in order to modify the machines to handle the smaller cans, three out of those seven groups of elements were modified.

Claim three calls for a combination of four groups of elements.

It is interesting, I believe, to advise the Court that no one of the four elements of claim three was affected by these resizing or relocation.

Claim four calls for a combination of seven groups of elements, three of which were modified as to size or location.

Claim five calls for five groups of elements, three out of the five having been either resized or relocated.

Frank A. Neal:

Now, as I represent it to the Court and as the record and the findings will bear out, the four machines in question were sold outright and unconditionally.

Hence, they had become fully released from the patent monopoly.

This Court has held that many times in connection with cases of this general type and cases which are fairly closely related, among such cases, the earlier — among such earlier cases of this type decided by this Court was the case of Chappie versus Boston Building wherein, and I’ll just quote briefly from the Court’s opinion, “by a valid sale and purchase, the patented machine becomes the private individual property of the purchaser and is no longer protected by the laws of United States but by the laws of the state in which it is situated.

Hence, it is obvious that if a person legally acquires a title to that which is the subject of letters patent, he may continue to use it until it is worn out or he may repair it or improve upon it as he pleases in the same manner as if dealing with property of any other kind.”

In other words, having been fully released from the patent monopoly, the machines in question took upon the full and complete nature of general personal property.

As an owner of general personal property, I may destroy it.

I may do anything I wish with it.

Here, the machines were not destroyed.

Instead, they were cleaned up to put them into operative use and less than the entire patented entity was modified.

To me, the courts below took the wrong bend in the road at this juncture and when the District Court said that it is the right of the patentee to either put the invention of his patent into use or not to put it into use, and this is clear.

This has been decided by this Court in the Paper Bag case.

But — pardon me?

Arthur J. Goldberg:

Bag?

Frank A. Neal:

In the Paper Bag case, Your Honor.

But, then, the Court goes on and says this, “since he has the right to keep it entirely out of use, he has the right perforce to put it into use but to attach any condition that he wishes to it, to the use of it.”

Now, this was the rationale of the District Court and it was precisely that rationale which this Court rebutted in the case of Motion Picture Patent versus Universal.

Arthur J. Goldberg:

(Inaudible)

Frank A. Neal:

Well, in a sense.

I’ll explain that in this fashion.

That it is now the position of the respondent that an implied condition is put on the use, in that, the machine was only made to handle 1-pound cans.

Arthur J. Goldberg:

(Inaudible)

Frank A. Neal:

No, outside of that, nothing.

Arthur J. Goldberg:

(Inaudible)

Frank A. Neal:

Nothing, no sir.

Arthur J. Goldberg:

(Inaudible)

Frank A. Neal:

No, that is right, Mr. Justice Goldberg.

Now, in the Motion Picture case, their movie projectors were sold outright in the sense that the seller obtained the full consideration for the equipment but he put a notice on the equipment saying “limited to the use with film to the — to use with films covered by another patent owned by the seller of the equipment.”

And, just like the District Court here, the Court there — I think both courts there, both the district and the court of — the Appellate Court held that that was already — it could attach such a condition to the use of that equipment.

However, the Court said this, and they had reference to the decision by the court immediately below which had approved that type of an arrangement, “This decision proceeds upon the argument that, since the patentee may withhold his patent all together from public use, he must logically and necessarily be permitted to impose any conditions which he chooses upon any use which he may allow of it.”

The defect in this thinking springs from the substituting of inference and argument for the language of the statute and from failure to distinguish between the rights which are given to the inventor by the patent law and which he may assert against all the world through an infringement proceeding and rights which he may create for himself by private contract which, however, are subject to the rules of general as distinguished from those of the patent law.

Frank A. Neal:

While it is true that under the statute, it says they were and now are, a patentee might withhold his patented machine from public use.

Yet, if he consented to use it himself or through others, such use immediately fell within the terms of the statute and, as we have seen, he is thereby restricted to the use of the invention as it is described in the claims of his patent and not as it may be expanded by limitations as to materials and supplies necessary to the operation of it imposed by mere notice to the public.

And, I might carry the Motion Picture case one point further in this sense, that it perhaps is even closer to the case at bar than the Aro case because, while respondent here is really complaining about a making in the sent — in the sense of a reconstruction, at bottom, what he is really complaining about is a conversion of the machine to a new use, which new use was never made in the machine by the petitioners.

In that sense, named — in talking about 1-pound cans, and so forth, as compared to 5-ounce cans, this case is not unlike, in too great a sense, the motion picture case because they are now talking about the materials that go through or which are processed by the machines covered by the patent.

(Inaudible)

Frank A. Neal:

Well, it might be of interest to the Court also to — I don’t think I mentioned this, but to give the Court some idea as to what was involved in getting these machines into condition to put them to use with 5-ounce cans.

There was the initial purchase price of $1,250 per machine.

Then, Mr. Leuschner charged $1,600 and that’s broken down in this manner.

$1,350 of which was to clean the machines up, $250 of which was to affect these matters of resizing or relocation and, now, the respondent has his hand in petitioner’s pocket to the tune of $1,500 per machine as a second royalty.

Now, the Circuit Court didn’t expressly follow the rationale of the District Court which I have just spoken of.

However, it referred to the District Court’s decision as a well-reasoned one and the Circuit Court fell in with the First Co — Circuit and the Eighth Circuit where you — where the courts were faced with the matter of resizing or relocating or enhancing capacity of patented machinery.

In the George Close versus Ideal Machinery Company case, which is a First Circuit case, you had a candy-wrapping machine adapted as it was made and sold to wrap — to cut and wrap caramels of a specific size.

The owner of the machine changed the machine by re-spacing the cutting knives and whatever else was involved so that it would produce a slightly larger caramel.

And, of course, he was charged with infringement, suit ensued, both courts held that that type of thing amounted to an infringement by way of reconstruction.

But, there, the First Circuit, they said the test was this.

The test was whether the identity of the machine had been changed and they — the court equated change in identity with change in capacity.

Whereas, in reality, when we’re talking about what is covered by a patent, identity has reference to the patent claims.

The court made no reference — no controlling reference to the claims in that case, neither did it do so, that is the Eighth Circuit Court, in a fairly parallel case entitled “Miller Hatcheries versus Buckeye.”

There, you had a matter of enhancing the capacity of an egg incubator by adding things and relocating elements and that type of thing.

So, our position here is this that neither court below has properly applied the criteria which call for application here.

And, in failing to do so, both courts below have violated the constitutional standard as to the — as to protection of the rights of inventors and, of course, the implementing statutes.

Now —

Arthur J. Goldberg:

Mr. Neal, do you (Inaudible), as it doesn’t add to your machine, when you filed an application for a patent and your opponents did not accept or you could not get it and it’s covered by the statute —

Frank A. Neal:

Yes.

Arthur J. Goldberg:

As we do here.

Frank A. Neal:

Yes, it is.

We would — would have been unable to get a patent because–

Arthur J. Goldberg:

And, I take it, that nobody else would get a patent in this position to apply it on the machine.

Frank A. Neal:

That is correct.

Arthur J. Goldberg:

In other words, the mark of the argument here, that being so, is that they do have royalty implied by these machines.

Arthur J. Goldberg:

Is that correct, one for the original machine and one for the debt?

Frank A. Neal:

In this instance, yes, because there’s been no past history of anybody else who is on the market with a 5-ounce machine to serve the capacity or to do the work that this particular machine did.

Earl Warren:

The original — what if the original parts had gotten the 5-ounce can machine for $1,500 royalty?

Frank A. Neal:

I don’t know.

The record is silent on that.

Nobody made any such request that I know of.

In actuality —

Earl Warren:

I thought you said you did have the machine with 5-ounce —

Frank A. Neal:

No, these very same machines which were originally made for the 1-pound tall cans, Mr. Chief Justice, were in the hands of two — of sardine packers up and down the west coast.

Now, I wouldn’t be here today had not the sardines disappeared from the Monterey area.

That’s what caused the canneries to close down in Cannery Row.

And, the available machine — the available sardines, excuse me, became a little smaller so they wa — required smaller containers to pack them in and so, after this episode of the closing down of the Hovden Packing Plant, some of the packing plants in Los Angeles area, Del Monte area, remained in operation but they, too, required that their machines be adapted to fill a 5-ounce can.

Now, they went to Mr. Kuther, the respondent here, and paid him money to receive permission to do that.

Now, when I say though that both of the courts below have violated the constitutional provisions and the implementing statute, this is what I mean.

Article I, Section 8, of the constitution gives the sole power to Congress to protect, for a limited time, the rights of inventors to their respective discoveries.

And, under that constitutional provision, there has been a whole succession of patent Acts commencing in 1790.

The key ones were 1790, 1836, and 1870, and the latest in 1952.

Now, the statute, 35 — Title 35, United States Code, Section 154 defines what the grant of a patent means and it means that the patentee is given the right to exclude others from making, using, or selling his invention.

Section 271 (a) refers to infringement and says “he who, without authority, makes or uses or sells an invention shall be liable for infringement.”

So, that we have this.

There are three ways in which a patent can be infringed – making, using, or selling.

Now, Section 112 requires the applicant for a patent to particularly point out and distinctly claim his patent.

That’s the patent claims.

It’s like a real estate deed in effect.

So that, when all those are taken together, and it’s always the claim which is looked to, to see whether there has been a making, or using, or selling.

Now, so that you cannot have a making by way of reconstruction unless you have the entire patented entity or the entire combination remade.

That I think is the full sense of Mr. Justice Black’s concurring opinion in the recent Aro case.

He — Mr. Justice Black did advert to this marginal type of thing where, perhaps all else except a bolt and a nut might be changed.

But he said “Let us leave that to the time when we reach a situation like that,” but that is not this.

As I have pointed out to the Court, in respect of each of the five claims of the patent in suit, at least two to three essential elements of the combination were left unmodified and, hence, unmade by the activities of the petitioners.

Frank A. Neal:

And, we say that this cannot amount to reconstruction or infringement by way of reconstruction.

That to reach such a conclusion is to accord or confer patent monopoly on something which was not the discovery of Mr. Kuther.

He didn’t discover the sub-combination, namely, the six out of the nine elements which were modified with respect to claim one.

If he had discovered it, he should’ve claimed it, but he didn’t.

So, to say that claim one or any one of the other five claims ha — we’re infringed by the modifying activities of the petitioners is to confer patent monopoly where it is not deserving to be conferred.

Potter Stewart:

Well, I thought, in answer to Mr. Goldberg’s question, you had conceded that the– that a 5-ounce machine would be covered by Mr. Kuther’s patent, wouldn’t it?

Frank A. Neal:

Yes.

A machine–

Potter Stewart:

And that it, therefore, was embraced in his discovery.

Frank A. Neal:

Oh, yes.

Yes Your Honor.

Yes, that is true.

These claims refer to packing machines completely independent of the size or capacity of the cans which go through them.

The cans are not an element of any one of the claims.

The claims are referred to by way of background or environmental description.

So that, both before and afterwards, the 1-pound packing machine and the 5-ounce packing machine were embraced by the language of the claims but, as I pointed out earlier, by virtue of the outright and unconditional sale, the machine, in the 1-pound sense at least, had been fully and for all time released from the patent monopoly.

Now, the question is did the machine get back into the patent monopoly so as to require a further royalty, and that only raises this question as to whether there was a remaking in the sense of substantially the entire patented entity.

This, we submit, did not occur.

I’d like to reserve a few minutes for possible rebuttal.

Earl Warren:

You may, Mr. Neal.

Mr. Moore.

Frank A. Neal:

Thank you.

Carlisle M. Moore:

Mr. Chief Justice and may it please the Court.

The knob of our case is that the petitioners here have made additional unauthorized exploitation of respondent’s patent without any obligation to respondent for this increased exploitation.

The facts of this case are quite simple and authority had been stated in some detail.

As far as the patent is concerned, I again want to emphasize that it does cover a 1-pound machine or a one — or a 5-ounce machine or any other sized can machine that acts in the way described in the patent.

It’s the same as in the Aro case wherein the claims weren’t limited to Chevrolet’s or to Ford cars or any other specific cars.

Hugo L. Black:

You’re both in agreement.

Carlisle M. Moore:

We’re in agreement on that.

Now, what happened here originally was that respondent or rather respondent’s licensee, I — if I may, I will refer to them both as respondent because they’re essentially the same person.

Carlisle M. Moore:

They made four 1-poundmachines.

That’s all these machines could do, was pack 1-pound cans.

They’re in no way adjustable.

It could pack no other sized can.

These machines were bought.

The purchase price for the machines of course would include two elements.

They would include the sale of the physical machine and then they would include the royalty for the use of these machines to practice respondent’s invention.

Now, the patent rights which passed by the sale of a machine are well defined by this Court.

First of all, a sale of a patented machine does not convey all the rights of a patentee that he has.

The rights are specific to the particular machine that is sold.

The buyer of the machine gets the right to use that machine to practice the invention for as long as the machine is operable.

If the machine needs repair, the owner may repair it.

That’s clear from the Aro case.

However, if the machine is destroyed, again as from the Aro case, the license which ran with the machine comes to an end.

The purchase of a machine does not give the purchaser the right to make a second machine.That, I believe, too, is clear from the Aro case.

Now, what do the petitioners do here?

In relations with the obligations or limitations is the purchasers distinguished from a licensee of a patented article relieved from by the — by the purchase.

Carlisle M. Moore:

Well, that depends upon the scope of the license.

A common license under a patent, for example, gives the licensee the right to make machines covered by the patent.

Normally, he can make as many as he wants to, paying the patentee a royalty for each machine.

There are no licenses or anything here, except the implied license.

Carlisle M. Moore:

The only license here is the implied license by the sale of a specific machine.

Now, what does that implied license cover?

Carlisle M. Moore:

That implied license grants to the owner of the machine the right to use that machine for the original purpose for which it was bought, free of the — of any further claim —

Or a–

Carlisle M. Moore:

— of a patentee.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

The log in, of course with any implied license, you have to look at the circumstances of the case.

If a machine is capable of only one use as built, well then it seems to me clear that the implied license is that the person has the right to use that machine as built.

Potter Stewart:

This appellant.

Carlisle M. Moore:

He also has the right, so that it can continue to operate in the manner as built.

Hugo L. Black:

Well, he could put some additions to the (Inaudible)

Carlisle M. Moore:

No, the Chaffee case has language in it that states that the owner of a machine can improve the machines.

Now, I take it that that language means that the owner of a machine can, for example, makes structural changes to make the machine stronger so that it will operate in a more effective way.

But, however, I believe that that should be limited to maintaining the machine for the original purpose for which it was bought.

That’s all that was bargained for by the original buyer and by the original seller.

As for example —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

No, Your Honor.

We are not contending in any way that the petitioners here should’ve thrown away the 1-pound machines.

They had the perfect right under the facts of this case to buy those machines, restore them to their original use, and continue to use them, that, they had full right to do.

However, when they changed these machines, they changed it to obtain an increased economic value of the patent.

There is no other reason for them to spend money to convert a machine that they had bought to another use, unless that additional use is going to be more valuable to them.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

No, it is our contention that he has the right — again, this is in absence of any other agreement between the parties.

This is simply where a person buys a patented machine and nothing more is said.

We say that that person has the right to continue to use this machine for the purpose for which he bought it.

That’s why he bought it, was to use it in the condition that it existed when built and when sold.

Now, later on, if he decides that he can make more money from this machine, from the invention by changing the machine, then he’s getting something.

He’s getting an additional use of the invention which was never bargained for in the beginning.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well, in that case —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

— in that case, I would say that you would violate the patent.

Now —

Hugo L. Black:

In other words, I think they own the coffee pot.

Carlisle M. Moore:

You own the coffee pot for its original purpose.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Yes, I believe that’s the rationale of the Wilson versus Simpson cases cited as one of the leading authorities in the Aro case.

Now, as far as you’re changing it to make a quart of coffee, well, then you are using a machine which you didn’t buy originally —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well, the inventive flash of genius of course occurred when the — the one-pint coffee maker first became available to you.

Without the inventor’s flash of genius, that coffee pot never would have existed.

Now, by buying that one-pint coffeemaker, you obtained the right to practice the invention to the extent that you bought.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Yes.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

You would be — you would be using the same machine then without any modification whatsoever.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well, in that sense, you again would be using a machine which had not been purchased from the patentee to which that license did not extend.

Now, you’re imposing a situation in which you might say the damages are almost de minimis.

Now, we aren’t — we aren’t saying you would have to buy a brand-new coffeepot for either those half-pint size or for the one-quart size.

We aren’t insisting that —

Hugo L. Black:

What was that?

Carlisle M. Moore:

All we are asking for in this case, and it would apply to you as well, is that the user of this converted machine compensate the patentee for the additional value of the invention which was not originally given to him in the original purchase.

As for example, again, in your coffeepot situation, although it’s hard to imagine the exact situation, but supposed that, originally, you could’ve bought an adjustable coffeepot which would make either one pint or one quart.

I’ve never seen such a machine but I suppose one could be built.

In such a case, that machine would have double the versatility of the original machine and the inventor would’ve been entitled to a greater royalty because of the increased versatility of the invention which he is granting to the purchaser to use.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

If you took the adjustable part out and — and made coffee, there, you’ll have a situation in which the machine that you bought would have the same use as the original machine.

And, to that extent, I imagine that there would not be any infringement.

What you’re saying is just as this coffeepot less than full, he fills it half-full but he can’t produce the size of the pot.

Carlisle M. Moore:

In essence, yes.

And, of course, I think, as a practical matter, that’s what will happened but, returning to the —

William O. Douglas:

If you were — if you were granting complaint on this machine for the use of the smaller can, would those claims read on these claims that cover this present patent?

Carlisle M. Moore:

Well, yes, Your Honor.

Actually, the–

William O. Douglas:

Because, the reason I ask is I’m a little confused because he took out six elements, didn’t he, out of the 35?

Carlisle M. Moore:

In some instances, he replaced some.

In another instances, he refurbished them.

In some instances, parts did not require changing to convert the machine to the new use.

William O. Douglas:

Yes, but there were six that were removed or —

Carlisle M. Moore:

Well, they were — six were changed.

The facts are that some were removed and junked because they were no further used and were replaced with new elements.

Others were removed and sandblasted, had the rest in corrosion taken off and then put back into the machine.

William O. Douglas:

Yes, but those six were the — a substitute of a different kind of a mechanism for the — mechanism was in the larger machine, wasn’t it?

Were they not?

Carlisle M. Moore:

Well, I’m not quite sure I understand your question.

The machine — the 5-ounce machine which was original — which was finally arrived at, operated in the same —

I understand.

William O. Douglas:

Same way as the original machine.

Carlisle M. Moore:

Some of the parts of the 5-ounce machine were the same as in the 1-pound machine.

William O. Douglas:

Well, most of them were inside.

Carlisle M. Moore:

Most of them were, because —

William O. Douglas:

Because I don’t — six were different.

Carlisle M. Moore:

Yes, as far as numbers, I believe that the exact number of elements which were changed is relatively important.

The question is have all the elements been changed that were necessary to convert it to the new use.

In one machine, it may take 60% of the elements.

Another machine, it may take 90% of the elements.

Each machine is going to present a different factual situation.

But, the question, as I see it, is whether the 5-ounce machine is the same machine as the original 1-pound machine.

Now, the District Court —

Potter Stewart:

There doesn’t seem to be much disagreement between you on the law or, as I understand your argument, where you disagree is whether as — where this was reconstruction or repairing.

Carlisle M. Moore:

Well, that is correct.

As far as the —

Potter Stewart:

The District Court found, as a fact, that it was — was reconstruction and not repair.

Carlisle M. Moore:

That is correct, Your Honor.

And, the Court of Appeals came to the same conclusion —

Potter Stewart:

Well now, the dissenting judge in the Court of Appeals says that it was his understanding that the Court of Appeals didn’t really direct itself to that question.

Carlisle M. Moore:

Well, I — of course, I read the dissenting opinion and, frankly, I disagree with it because I think that the —

Potter Stewart:

Well, I know you disagree with the conclusion but —

Carlisle M. Moore:

That the majority did direct themselves to that question.

The dissenting judge in the Court of Appeals also said that the District Court had not come to any determination as to whether a new machine had been created and, in that, I believe it was in error because, in the record at page 24 which is the decision by the District Court, the judge says, “However, as previously noted, defendants do not rest satisfied with the restoration of the machine to its original condition.

They proceeded to change its elements, not to restore the additional, but to build another machine designed to fill cans of a different size than the cans for which the original was manufactured and sold.”

Now, I think clearly that the District Court directed itself to the question of whether a new machine had been made.

Potter Stewart:

I thought so, too, and I wondered what you thought the Judge Merrill had in mind when he made that statement.

Carlisle M. Moore:

Well, I think Judge Merrill was concerned because he didn’t believe that the patentee had been hurt because that’s the specific question which he put to me and, apparently, I did not answer to his satisfaction.

Arthur J. Goldberg:

Mr. Moore, is there a case that believe that this was not been after (Inaudible) and, for instance, the machine, other than that, had some mirror, too.

Beyond that machine, there were variations, which you have here.

Carlisle M. Moore:

Yes.

Arthur J. Goldberg:

(Inaudible)

Carlisle M. Moore:

That is correct, Your Honor.

Arthur J. Goldberg:

And so, I refuse to produce a similar machine (Inaudible)

Carlisle M. Moore:

That is our position, Your Honor.

And, again, I think that the question to really —

William O. Douglas:

I think Judge Merrill (Inaudible)

Carlisle M. Moore:

Yes, and I — it is my feeling that that is an unimportant limitation to put on this.

I might note that this Court, in discussing the Cotton-Tie case, referred to the fact that the Cotton-Tie, as originally sold, was marked licensed for use once only and that —

William J. Brennan, Jr.:

Of course it wasn’t (Inaudible)

Carlisle M. Moore:

Well, it was used only once and then voluntarily destroyed and then recreated.

And, to digress for a moment, that is what we contend has happened here, too, is that the petitioners here bought these four 1-pound machines as junk.

They destroyed their utility as 1-pound machines in making the new machine.

But, anyway, to get back to the– this license, the thought of having to restrict the purchaser as to what he can do with the machine, I might make an analogy between a landowner.

Suppose that a landowner has two adjacent parcels of land that he owns and he sells one of these parcels without any reference to the other parcel.

Now, no one would contend that the buyer, through failure to mention this other parcel, would then own both parcels.

Now, the parallel here is that the patentee originally has the right to exclude anyone from using a 1-pound machine and he has the right to exclude someone from using a 5-ounce machine.

Now, if he sells a 1-pound machine having no other use than to pack 1-pound cans, without any mention of a 5-ounce machine, I don’t see that the purchaser of the 1-pound machine gets anymore rights than to use the machine which he bought.

If he wanted those additional rights of the patentee, then he should’ve asked the patentee for those rights, bargain with the patentee for those rights, and pay the patentee a royalty for these increased rights which he wanted.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well, that to me is a situation wherein, if anyone sells any article which — and he has additional rights, that would require him to say that “well, you buy this article but you can’t have this right that I own, you can’t have this right that I own, and so forth,” enumerating all the additional rights that he has.

But, what do the parties bargained for originally?

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

No, the — what he bought was a machine to pack 1-pound cans.

Hugo L. Black:

He bought it.

He could make a (Inaudible)

Carlisle M. Moore:

Well, I drive that from the language of the Wilson case, for example, which —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well, in the Wilson case, it states that replacement of that worn-out essential part is permissible restoration of the machine to the original use for which it was bought, and —

Hugo L. Black:

Are you talking about — you’re not talking about (Inaudible)

Carlisle M. Moore:

That’s correct.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well, if you don’t have restoration and you have reconstruction which is, to me, impermissible, just as in this Court’s statement concerning the Cotton-Tie.

Hugo L. Black:

You mean he doesn’t have the right to repair?

Carlisle M. Moore:

No, I didn’t say that, Your Honor.

He has full right to repair the machine to enable him to use it for the original purpose for which it was bought.

Arthur J. Goldberg:

(Inaudible)

Carlisle M. Moore:

Well, that —

Arthur J. Goldberg:

The purpose of the patent (Inaudible) but the way of packing sardines in the way they’re patented, as you claim.

Carlisle M. Moore:

That is correct, Your Honor.

Arthur J. Goldberg:

Now, your (Inaudible) is to claim canning sardines and that’s all you’ve got in the scope.

(Inaudible)

Carlisle M. Moore:

No, you — if I understand —

Arthur J. Goldberg:

Just to compare that adaptation enacted.

Carlisle M. Moore:

Well, now, that’s — if that is an adaptation of the machine to the particular plant so that it can perform the specific function for which it was bought, then that’s perfectly permissible.

Arthur J. Goldberg:

(Inaudible)

Carlisle M. Moore:

Well —

Arthur J. Goldberg:

It seems to me that your conception itself and how (Inaudible)

Carlisle M. Moore:

Well, that is —

Arthur J. Goldberg:

This isn’t different from 5-pound (Inaudible)

Carlisle M. Moore:

No, that would entirely be the particular facts of this case.

Arthur J. Goldberg:

These are the facts?

Carlisle M. Moore:

Yes, Your Honor.

Now, our — our position, again, is that there is a distinction between buying a general license under a patent and buying a license in — as implied from the sale of a particular machine.

Potter Stewart:

Mr. Moore, when these machines were purchased, at least three of them, they were in very bad shape.

They were inoperable, as I understand it.

Carlisle M. Moore:

That is correct, Your Honor.

Potter Stewart:

What if — instead of — and they would’ve — they have to be rebuilt and parts replaced in order to be put in working operation at all.

What if they had been — if those — what was necessary to do had been done to restore them to operating as a 1-pound packing machines.

Would you have the same claims?

Would have this — would you also have a case?

Carlisle M. Moore:

No, Your Honor.

As a matter of fact, there was — we argued that for the District Court and —

Potter Stewart:

You did argue that?

Carlisle M. Moore:

And, the District Court said that that would be permissible restoration under the Doctrine of the Aro case.

Potter Stewart:

And —

Carlisle M. Moore:

However —

Potter Stewart:

Because it seems to me that, logically, your argument here would embrace the hypothetical case.

Carlisle M. Moore:

No, our argument —

Potter Stewart:

Both are covered, both the 5-ounce and the 1-pound packing machines are covered by the basic patent.

You —

Carlisle M. Moore:

That is —

Potter Stewart:

You and your opponent agree on that.

Carlisle M. Moore:

That is correct, Your Honor.

Potter Stewart:

And, the same amount of work, as I understand it, substantially the same amount and character and quality of work would’ve had to be done on these machines in order to restore them to 1-pound packing machine, as was in fact done to re — to convert them to 5-ounce packing machines.

Isn’t that right, because of their very bad condition at the time they were purchased?

Carlisle M. Moore:

Well, Your Honor, the facts of the case are — is that additional money was spent to change the machines from the 1-pound size to the 5-ounce size.

And, to get back to what I consider the basis —

Potter Stewart:

In other words, maybe even less replacement would’ve been — was done and would’ve had to be done to restore them to 1-pound packing machines, wasn’t that right?

Potter Stewart:

Because the plungers were so corroded and rusted that they — this way, they were made smaller and could be used for 5-ounce packing machines.

But, to restore them to 1-pound packing machines, they would have had to be discarded and completely replaced.

Carlisle M. Moore:

Well, that is correct, Your Honor.

Potter Stewart:

Isn’t that correct?

Carlisle M. Moore:

The only — the only way in which they could use —

Potter Stewart:

They used —

Carlisle M. Moore:

— the original plungers was to use them in the converted machines.

Potter Stewart:

And so, they did use and could use the original plungers here but, to restore them to 1-pound packing — to a 1-pound machine, then they would have had to be completely replaced, isn’t that right?

Carlisle M. Moore:

That would be correct, Your Honor.

Potter Stewart:

So, maybe more work would have had to be done to restore them to 1-pound packing machines.

Carlisle M. Moore:

Perhaps —

Potter Stewart:

I just think your argument would embrace — would necessarily embrace that.

Carlisle M. Moore:

I don’t think that —

Potter Stewart:

If you assume that both kinds are fully covered by the patent claims, as both you and your opponent agree.

Carlisle M. Moore:

Well, the question though, in my mind, is whether the present converted machine is the same machine as was originally purchased.

Potter Stewart:

It’s probably the same question, assuming the manufacturer’s assumption is right, that is — that, at least, as much labor and replacement and repair and reconstruction would have had to take — taken place to restore them to the — to their original —

Carlisle M. Moore:

Well —

Potter Stewart:

— of function.

Carlisle M. Moore:

Your Honor, the exact proportion of money to repair it to a 1-pound or to clean it up and then change it to a 5-ounce I do not feel is — would be determinative here.

I think that the question really is that, in this case, the purchaser to these machines, the petitioners, who were not the original purchasers, they bought them as junks so that they could salvage what parts they could get to make 5-ounce machines which were more valuable.

Otherwise, it wouldn’t have gone to the work of changing them.

William J. Brennan, Jr.:

(Inaudible)you had a patent that entitled you to cover both 1-pound machines and lesser sized machines.

Carlisle M. Moore:

And larger —

William J. Brennan, Jr.:

Any count.

Carlisle M. Moore:

Yes, Your Honor.

William J. Brennan, Jr.:

You had a perfect right to keep that machine off the market if you want to do entirely.

Carlisle M. Moore:

That is correct, Your Honor.

William J. Brennan, Jr.:

You chose to build it as a 1-pound machine and thereby, in effect, exclude from the market a lesser machine.

Carlisle M. Moore:

That is our argument.

William J. Brennan, Jr.:

What you’re arguing is, as I get it, that when the purchaser wanted your machines, builds and puts in working condition the 1-pound machine, he is, in effect, preparing it to put it into condition but when he’s doing the same amount of work to do — to build a new kind of a machine, he’s reconstructing the machine.

William J. Brennan, Jr.:

Isn’t that what you’re arguing?

Carlisle M. Moore:

He’s reconstructing it if there is a different machine —

William J. Brennan, Jr.:

And the same amount of work is involved with the operation.

Carlisle M. Moore:

Well, there could instances in which that would be true.

William J. Brennan, Jr.:

Well, I’m just taking what my brother Stewart suggested to you.

Carlisle M. Moore:

Well, I mean, I —

William J. Brennan, Jr.:

Is that your argument?

Carlisle M. Moore:

I can assume that there are cases in which that is true and I could assume that, actually, there would be cases in which you — it would be cheaper to clean it up and reconvert it than to restore it to the original position.

But, again, my argument is that the converted machines, the 5-ounce machines, have a particular value of the patent.

They will enable the user to exploit the patent in a way which was never contemplated by the original purchaser of the machine or by the seller of the original machine.

It’s for this additional exploitation that we feel that we’re entitled to a royalty.

Now, as Mr. Justice Black stated in his opinion in the Aro case, one sale– one royalty for one sale of machine is enough, but we don’t think that that is quite applicable here.

There was a royalty paid for the 1-pound machine.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Pardon?

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

But it could work —

Hugo L. Black:

Just as long as you do it (Inaudible)

Carlisle M. Moore:

It could work on 1-pound machines.

It could work on 1-pound cans.

The court below specifically stated that they could’ve restored it to its use as a 1-pound machine and continued to use it.

Hugo L. Black:

Well, can you say (Inaudible)

Carlisle M. Moore:

Then?

Hugo L. Black:

Yes.

Carlisle M. Moore:

No, Your Honor.

Hugo L. Black:

Do you mean he violated the patent?

He wouldn’t violate the patent if suppose he used the 1-pound (Inaudible)

Carlisle M. Moore:

Now, —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Yes, Your Honor.

Carlisle M. Moore:

We say that he violates the patent because he is practicing the invention in an unauthorized way which was never given to him.

It’s for that unauthorized use of the invention on these new machines that we feel that he’s —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

That’s all the machine could do.

It was totally un — it was not adjustable.

Hugo L. Black:

Supposing he packed oysters.

Carlisle M. Moore:

Well, if he had packed oysters, if he could’ve packed oysters, that would’ve been alright.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well, the invention is a particular machine which has its utmost utility in packing sardines.

It could pack oysters if a person wanted to use it in packing oysters without modification of the machine.

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well, then I would say that, again, there would be a new machine for a new use.

Hugo L. Black:

Making a new machine (Inaudible)

Carlisle M. Moore:

A second creation of the — of the invention.

Now, it may not be a completely new machine, in that there many parts of the old machine used in the new machine, but it’s a second creation of the — of the invention.

As for example, in the Cotton-Tie case, the reconstituted ties were made up of scrap of the original ties and of the original buckles.

Hugo L. Black:

But what (Inaudible)

Carlisle M. Moore:

Yes, but they took —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

But they took the same — they took the same metal that had been used in the —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Well, if it —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Yes, but it —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

And that is our contention, Your Honor.

Our contention, again, is that there has been a second creation of the patented entity in a situation very similar to Cotton-Tie.

Hugo L. Black:

He just couldn’t say (Inaudible)

Carlisle M. Moore:

Well, of course if that had been done, there’d be no question, but what —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

Not as I read the Cotton-Tie case, Your Honor.

As I read the Cotton-Tie case, they took the severed bands which had been voluntarily severed out at the — wherever they took these bales.

Hugo L. Black:

Did what with them?

Carlisle M. Moore:

The severed ties were sold for scrap and the infringer bought these ties, rooted them back together, the severed ends, attached the original buckle to it and sold for use again as — for baling cotton, unless my memory fails me as to the facts of that case.

Byron R. White:

What record did you read the (Inaudible)

Carlisle M. Moore:

Well, Your Honor, the amount of royalty in this case which was voted by the District Court has never been a sale as to its amount or as to the fairness of the award.

The contention of petitioner has simply been that they owe nothing.

Byron R. White:

How much was it?

Carlisle M. Moore:

$1,500 per machine.

Byron R. White:

(Inaudible)

Carlisle M. Moore:

That was the royalty which had been awarded on or which had been paid on the original machine, yes.

In this particular case, the District Court felt that that was a reasonable royalty under the facts of this case.

As I say, the amount has never been a question as to its fairness here.

Hugo L. Black:

Well, what (Inaudible) the payment was for damage?

Carlisle M. Moore:

Well, the —

Hugo L. Black:

(Inaudible)

Carlisle M. Moore:

No, no, we don’t — we don’t claim profits at all.

We — all we ask for and all that we received were reasonable royalties which, in this case, was held to be $1,500 per machine.

Earl Warren:

The same as there was a new machine?

Carlisle M. Moore:

It was the same as if it had been a new machine.

Of course, again, our contention is that this machine for a new purpose is a new machine.

The amount of royalty, however, in situations such like this, should really perhaps be based upon the additional economic advantage to the person who converts this purpose of the machine.

That’s why they convert the machines because they’re worth more but, in this case, they’re unwilling to share the end piece profits with the — with the patentee.

Byron R. White:

I think that you — I think that you don’t see the difference between the machine patentee’s right to not being the manufacturer’s right seen as a different (Inaudible)

Carlisle M. Moore:

No.

In either case, I believe that the patentee should have that right.

Of course, it would be based upon different —

Byron R. White:

The entire case is to keep it (Inaudible)

Carlisle M. Moore:

Yes, but he hasn’t — he hasn’t acquired a 5-ounce machine.

He hasn’t acquired a machine with the capabilities of a 5-ounce machine from the patentee.

Byron R. White:

But that’s the big issue that led on for using the idea in the (Inaudible) machine.

It’s the combination is your patent that you have now.

Carlisle M. Moore:

Well, that’s true but, again, it’s a question —

Byron R. White:

(Inaudible) to get the issue on.

He is buying and he has the right to use in this machine the unique idea of the combination.

Carlisle M. Moore:

Yes, as is capable by that machine.

Byron R. White:

As it’s capable.

Is he using any more than what he paid for in exchange for a (Inaudible) packaging?

Is he using any more than he paid for?

Carlisle M. Moore:

Yes, he is —

Byron R. White:

(Inaudible)

Carlisle M. Moore:

Well, yes, but, Mr. Justice White, I think the question here is, what type of a license, what type of patent rights does a person get by the purchase of a machine?

Again, a purchaser of a machine does not acquire general rights under the patent.

Byron R. White:

If you’d like to go do that.

Carlisle M. Moore:

Well, I realize that but that’s a — and I believe that is supported by the Univis case cited in our brief that, once he goes beyond that limited license, and it is a limited license, then he becomes an infringer.

Byron R. White:

Is that’s true if he gets a license?

Carlisle M. Moore:

Well, of course, that is a question to be decided by this Court.

And unless there are any further questions, we rest.

Earl Warren:

Mr. Neal.

Frank A. Neal:

I merely have a couple of observations to make, Mr. Chief Justice.

There are two anomalies as I see it, here in the situation as supported or contended for by Mr. Moore and, in the position we find ourselves in, in the light of the decisions of the two courts below.

The first one, of course, is the one that Mr. Justice White just had reference to, that when one buys something that’s covered by a patent and he acquires it by way of outright sale.

There is no longer a tether between the patentee and the item which now belongs, 100% in all of its aspects, to the purchaser.

He, therefore, is entitled to derive as much use out of that as it is possible to obtain.

The second anomaly is this, that in holding that it was — would not have been infringement for us to have replaced the six units with units precisely the same in size as the original ones but, on the other hand, it was infringement for us to resize those six units or relocate them, that patent monopoly was conferred on an aggregation of those six elements but only when they’re used not in conjunction with the 1-pound can.

On the Cotton-Tie case, there again, I think the court in Aro observed, and properly so, that it was the strap that was patented and not the combination of the strap and the belt, and I think that pretty well covers it.

I thank the Court.