Scientific American, v 45 (ns) no 2, p 16, 9 July 1881
State Laws Affecting Patents
Can the State legislatures exercise any control over dealings under patent rights? This question is one of increasing importance, and presents many aspects: one of which -- the power of a State to tax goods manufactured under a patent -- is instructively discussed in a very recent Supreme Court decision. Other aspects of the question are not unfamiliar. Every reader knows that the general subject of granting and enforcing patent rights is under the exclusive control of Congress, and that the States cannot directly interfere with a privilege which Congress has granted. But how far does this prohibition extend? Very clearly, just as a State can not issue a patent, so it has no authority to decide whether one is valid or to punish infringements. On the other hand, the great mass of ordinary contracts may come under State authority, notwithstanding they spring in some way from a patent right; thus State courts may decide the meaning of an assignment, or entertain a suit for damages for breach of a contract about a patent.
As the States need to be constantly on the watch for new subjects of taxation from which they may derive revenue for their increasing expenses, and the development of invention under the patent laws is steadily embracing more and more of the lucrative manufacturing business of the country, a claim to impose taxes on patent rights and dealings under them has been very natural. The general result of the discussion has been that the patent right itself, being a privilege directly granted by Congress, although a species of property, cannot be taxed by a state; for if these rights might be taxed at all, they might be taxed so heavily as practically to crush them. No authority can be conceded to the States which might result in enabling a legislature to destroy a privilege which Congress has been authorized to grant. Thus, also, a state cannot, by taxes, hinder the sale of a patent right or the exercise, under it, of the privilege of manufacturing. The combination of different materials to produce a new result or an old result better or more rapidly, which constitutes the invention, cannot be forbidden by the State; and if it cannot be forbidden, it cannot be taxed; for to tax is to forbid unless the tax shall be paid. But somewhere here the restriction upon the taxing power ceases. The right conferred by the patent laws upon an inventor to exercise or sell to another the invention he has made does not extend to the manufactured article; it does not take the tangible property in which the invention or discovery may be embodied out of the operation of the general tax or license laws of the State.
The case above mentioned, by which the authority of the State to tax the manufactured article has been established, arose in Virginia, under a law of the legislature, which made it a criminal offense to sell anywhere in Virginia things manufactured outside the State, without obtaining a license fee, for which a tax must be paid. Such laws have often been passed in late years, and have borne somewhat heavily upon all kinds of sales, such as are usually made by agents, drummers, and traveling salesmen sent throughout the comparatively new regions of the country to represent the large manufacturing establishments in the older parts. They have been enacted chiefly in the West and South, and are there, no doubt, considered a healthful encouragement of domestic manufactures and trade; while the view at the East and in the Federal courts has been that they involve an objectionable interference with the uniformity and freedom of commerce. In Virginia, a traveling agent for the "Singer sewing machines," representing the Singer Manufacturing Company in New York, continued his sales without complying with the law. He was prosecuted and fined $50. He contested this fine in the State court; one of the arguments urged in his behalf being that the State could not impose any burden upon the sale of a machine patented under the laws of Congress. The Virginia court decided against him, and the Supreme Court has now pronounced the decision correct, saying that the grant of letters patent for the invention of the sewing machine does not prevent a law imposing a license fee for making sales of particular machines made under it. It is, however, noteworthy that the Supreme Court pronounced the Virginia law invalid for another reason, viz., for "taxing the machines merely because made in another State." [fn. The decision of the Virginia Court of Appeals is published as Webber's case, 33 Gratt 898; and that of the Supreme Court as Webber vs. Virginia, 12 Cent. L. J. 488]
The States have sometimes seen reason to legislate for the protection of their people against noxious or dangerous articles, and the question has arisen whether a right granted by Congress for manufacture or sale exempts the article from such laws. The course of decision has been that it does not. A patent right for making dynamite powder does not prevent any State from prescribing regulations for manufacture, storage, and sale, such as will protect the community from explosions. So, a patent right for the manufacture of a poison does not impair the right of the State legislature to control the sale and use of the article. The ownership of an invention secured to the inventor by his patent cannot be impaired by local legislation; but he must be contented to enjoy it in subordination to the general authority of the State over all actual property within her limits. A similar question has arisen in States which forbid or seek to hinder the sale of intoxicating beverages, where liquor dealers have claimed that the internal revenue licenses granted under the laws of Congress gave them a right to sell which the local law could not gainsay. But such claims have been repudiated in the courts. Neither the patent laws nor internal revenue laws were intended to displace what is called the "police power" of any State; by which term is meant that general authority, necessarily vested in every government, of providing for the health, good order, peace, and general welfare of the community.
A distinct decision upon this branch of the subject was rendered about two years ago relative to the "Aurora oil." This oil was manufactured under a patent right. There was, however, a law of the State (Kentucky) which required all coal oils and like burning fluids to be inspected before sale; and punishing the offering for sale of any which the inspector condemned as below the standard for safety. A dealer who sold a parcel of the Aurora oil which had been condemned claimed that he had a right under his patent to sell the oil in any part of the United States, and that no State could forbid him. But the Supreme Court pronounced this claim inadmissible, saying that the patentee's right in the manufactured article must be enjoyed subject to the complete and salutary power, with which the States have never parted, of so defining and regulating the sale and use of property as to afford protection to the common people. The ownership of the manufactured article is altogether distinct from the right to the invention or discovery; the invention is protected by national authority against all interference; but the use of the tangible property which is manufactured by means of the invention is not taken out of State control by the patent right.
In so far as the decisions treat a patent right as superior to State laws, they evidently throw upon Congress the duty and responsibility of passing all laws which the interests of the general public demand. And it is scarcely to be denied that the subject has not received proper attention. There is one class of frauds from which farmers and dwellers in rural districts, especially foreigners not well acquainted with out language and business customs, have suffered extensively. It has been common for agents to travel through small towns and villages, offering to sell county rights, or to appoint local agents, for some new and patented invention. There are various forms in which such business is done; sometimes the traveling salesman offers to furnish the manufactured article in quantities for sale; sometimes he offers a license to manufacture within a limited territory; sometimes an agency to sell rights. But his negotiation always tends toward obtaining a negotiable note, or something which he can turn into a note, from one of the "solid men" of the place. Indeed there are several instances on record in which a person who could not read has been led to sign a note by assurances that it was only a paper appointing him agent; or in which one who could read has been enticed to sign a paper printed as an ordinary contract, but capable of being changed into a negotiable note by cutting off one end of it. If the note were held when it fell due, and sued by the agent himself, the honest villager who made it would have some chance of obtaining justice; for if he could prove the fraud he would be released. But the agent never keeps the note. When it falls due, the maker finds that the agent has almost immediately got the note discounted and went on his way to parts unknown. The note is owned by "an endorser for value and without notice." Now a familiar rule of law forbids the maker of a note to make defenses which would be perfectly good against the payee, when the note is presented by one who bought it innocently before it was due. Thus the swindle is completed.
Congress has taken no pains to suppress these fraudulent dealings; yet when some of the States have endeavored to protect their citizens against these traveling patent salesmen, the objection has been made that their laws are unconstitutional; that the manner of selling a patent right is wholly within the care of Congress. This is probably true; but forms a reason why Congress should pass a proper law.
[the following two articles are given in narrow, parallel columns.]
The Patent Laws
We are asked by a Pawnee City, Neb., correspondent if we are not mistaken when we say that the owner of a patent can collect a royalty of an innocent purchaser. Certainly not; that is one great defect in our patent laws, and one which calls most loudly for a remedy. A farmer goes to the village or city, and among the score or hundreds of stores he sees hundreds or thousands of manufactured articles, and it is utterly impossible for him to know whether they are patented or not, unless they are marked, and it is perfectly unreasonable for him to know. Amidst this ocean of implements and tools he sees something that he needs, and innocently purchases it, paying for it all that it is worth, and probably all the patentee would ask for it, if it were purchased of him; but the article being unmarked, he is not informed that it is patented, and if it were marked, the patent mark might be forged. He takes home his purchase, and after awhile the patentee discovers the article in his possession, and compels him to pay a royalty. The principle has been carried out in connection with the drive well swindle. Nobody supposed that there was any patent upon drive wells, but one turned up at last, and the man who had a drive well upon his premises was called upon for a royalty.
There is no shadow of justice in such a law. Nobody has a right to ask of the law immunity from all liability of loss, and in the vast majority of cases the seller of a patented article is sufficiently responsible to save the patentee harmless. As the law now stands, it is dangerous for a farmer to purchase anything unless he knows all about the patent, when it was granted, who owns it at the present time, and by what authority the seller presumes to sell it. All this is unreasonable, and every unprejudiced person in all the world must unite in that conclusion. The courts are open for a patentee to obtain an injunction against parties wrongfully selling his patent, and furnish him all the means of protection which the owners of other property have. Let him, therefore, resort to those means, and keep his hands off the farmer, whom the patent man seems to especially select for the purposes of oppression.
-- The Western Rural
The Laws of Property
We are asked by an Erehwon correspondent if we are not mistaken when we say that the owner of a horse or farm can retake his property from an innocent purchaser (the seller having no legal right to sell), or compel the buyer to pay a second time.
Certainly we are not mistaken. That is one great defect of our property laws which thieves and swindlers complain of most loudly.
A city mechanic wants to live in the country, and out of the scores and hundreds of houses and farms and animals there, the history of which he cannot be expected to know, he selects something which he wants, and pays a fair price for it to the man who offers it for sale. When he takes possession the real owner turns up and dispossesses him, or makes him pay a second time. In this way hundreds of innocent mechanics have been swindled in the purchase of farms, and horses and cattle and such things.
There is no shadow of justice in such a law. Nobody has the right to ask of the law immunity from all liability to loss, and in the vast majority of cases, the farmer whose property has been sold without his consent should find the seller sufficiently responsible to save himself from loss. It is cruel in him to dispossess the innocent mechanic, who has already paid a fair price for what he has bought.
As the law now stands, it is dangerous for a mechanic to purchase a horse unless he knows all about the owner of it, by what authority the seller offers it for sale, and has a lawyer make a search of the title deeds and all that.
All this is unreasonable, as every unprejudiced land sharp and horse thief will agree. The courts are open for a farmer to obtain an injunction against parties wrongfully selling his horse or his house or his farm; and he has in that all the protection he can reasonably ask for. Let him therefore resort to those means and keep his hands off the innocent mechanic, whom land-sharps and horse thieves would be glad to prey upon if they found him foolish enough to "go it blind" in his purchases.
-- Scientific American
Recent Changes at the Patent Office
Mr. Robert Mason, of Tennessee, promoted to be principal examiner; Marcellus Gardner, New York, John W. Babson, Maine, and Schuyler Duryee, New York, to be chief of divisions; Samuel B. Roane, New York, Reuben S. Parks, Ohio, and Louis W. Sinsabaugh, Ohio, from second assistant examiners to clerkships of class four. To be second assistant examiners -- David Purman, Wisconsin; Marshall R. Cushman, Massachusetts; Edward M. Bentley, Connecticut; Albert C. Fowler, District of Columbia: and William Auginbuagh, Ohio. To be third assistant examiner -- John W. Clements, District of Columbia; James B. Littlewood, Illinois; Rufus A. Morrison, Robert G. Read, and Walter F. Rogers, Pennsylvania.
The Question of Patents
We understand that the Medical Society of the State of New York has appointed a committee to inquire into the matter of what changes, if any, are advisable in the code of ethics. From the make-up of the committee we do not doubt that its report will be founded upon sterling work, undertaken with the sole purpose of advancing the real interests of the profession, which, indeed, should be the only object of a code of ethics, if we must have one. Should this anticipation prove true, the society may fairly be looked to to endorse the committee's recommendations, and, broached under such auspices, they may stand a chance of sober consideration by the American Medical Association. The committee is not likely to recommend radical changes unless it is made plain to them that such changes are approved of by a considerable portion of the profession. We trust, therefore, that those who have given thought to these matters may bring their views and conclusions to the committee's knowledge, either by publishing them or by direct correspondence with the committee.
For our part, we would urge upon the committee that it would be an act of propriety, as well as a matter of simple justice, to secure the abrogation of that portion of the code that proclaims it "derogatory to the professional character ... for a physician to hold a patent for any surgical instrument or medicine."
We do not propose to argue at length as to the propriety or impropriety of a physician's holding such a patent, for we think that the statement which we have quoted from the code would not have commended itself to physicians in general, nor have been suffered to remain so long a part of the code, had it not been bolstered up by being incorporated into the same sentence that declare it also derogatory "to dispense a secret nostrum." Whether this grouping of the two acts for common denunciation was an ingenious device on the part of those who abhorred the idea of a physician's holding a patent and who chose this way to spread their abhorrence, we are unable to say; but it is certain that the idea of dispensing secret nostrums is revolting to high-minded men, and, when they find this practice classed in the same category with the possession of a patent, it is no wonder that, without giving the matter much thought, they gradually come to look upon the latter as a heinous offense.
Very little reflection is needed, however, to show how diverse the two are, and how monstrous it is to class them together. The code has no denunciation for the holder of a copyright; and yet there is no essential difference between a copyright and a patent. A copyright covers a publication, and every one recognizes that about this there can be no secrecy; hence to couple the holding of a copyright with the dispensing of a secret nostrum would carry its own refutation. But a patent also is a publication -- nothing of secret composition or of secret mechanism can be patented. Analogy shows us, then, that there is nothing in the nature of things to justify the assertion that it is derogatory to professional character for a physician to hold a patent. As a matter of fact, we find that some physicians do hold patents, and that they are not looked upon by their professional brethren as having debased themselves by so doing. We understand that Paquelin's cautery is patented. Whether the patent is held by the inventor or by the maker matters little, for, if now held by any other person than M. Paquelin, it must have been held by him originally. Who has whispered that M. Paquelin has degraded himself? Is an act right in France, but wrong in America? What, then, shall be said of Dr. Dawson, who patented a cautery batter of his invention? We have not heard that he has lost caste, and, for our part, we admire the independence he showed in acquiring and holding the patent right as much as we admire the ingenuity displayed in the construction of the battery.
By declining to throw obloquy upon these gentlemen the profession has shown that it does not regard the possession of a patent as derogatory. That declaration in the code that so set it down is, therefore, a dead letter and ought to be expunged.
-- N.Y. Medical Journal
Promotions in the Patent Office
The following changes were made in the staff of the Patent Office, July 1, 1881.
Marcellus Gardner, of New York; John W. Babson, of Maine; and Schuyler Duryee: from fourth class clerkships to be chiefs of division -- salary $2,000.
Samuel B. Roane, of New York; Reuben S. Parks, of Ohio; and Louis W. Sinsabaugh, of Ohio; from second assistant examiner, to be first assistant examiner -- salary $1,800.
David G. Purman, of Wisconsin; Marshall B. Cushman, of Massachusetts; Edward M. Bentley, of Connecticut; and Albert G. Fowler, of District of Columbia; from third assistant examiner to be second assistant examiner -- salary $1,600.
William L. Augenbaugh, of Ohio, from first class clerk to be second assistant examiner -- salary $1,600.
The following have been promoted or newly appointed to the office of third assistant examiner -- salary $1,400: John W. Clements, District of Columbia, from second class clerk; James B. Littlewood, of Illinois, from first class clerk; Rufus A. Morrison, of Pennsylvania, from copyist; Robert G. Read, of Pennsylvania, and Walter F. Rogers, of Pennsylvania, new appointments, George R. Byington, of Cincinnati, promoted from first to second class clerk -- salary $1,400.
The following have been promoted to first class clerkships -- salary $1,200: William Hendlay, District of Columbia; Frederick W. Crocker, New York; St. Clair F. Sutherland, Mississippi; Frank P. McLean, New Hampshire; Thomas Hoge, Pennsylvania; Mrs. Frank R. Lybrand, Ohio; Daniel Clarke, Maryland.
Frederick R. Gantt, from draughtsman, at $1,000, to skilled draughtsman -- salary $1,200.
The following rise from copyist, at $900, to first class -- salary $1,200; Henry E. Baker, of Mississippi; Julian C. Dowell, North Carolina; Milnor R. Sullivan, Ohio; Frank M. Ward, District Columbia; Thompson J. Hudson, Ohio; George R. Evans, District Columbia. To a salary of $1,000, the following: Gormond Crandall, New York; William B. Atkinson, District Columbia; William A. Redmond, District Columbia; James M. Pollard, Louisiana; Thomas H. Mitchell, Tennessee; Archibald McNaught, Wisconsin; Mrs. Mabel Hatch, New Hampshire; William H. Chapman, Ohio; Thomas R. Stuart, California; to draughtsman.
Resignation of the Commissioner of Patents
In the resignation of the Commissioner of Patents, Mr. Edgar M. Marble, the service loses an officer that can ill be spared.
Under his administration the business of the office has been conducted with commendable promptness and impartiality, and much has been done to increase the efficiency of the service and its value to inventors and patentees.
It is a pity that the government will not deal more liberally, not to say justly, with the Patent Office, and through it with inventors and the public at large. While the office is much more than self-sustaining, indeed it is annually turning over a large sum to the treasury, it cannot for any length of time command, for it is not allowed to adequately pay for, the service of men who, like Mr. Marble, have exhibited unusual executive ability.
As a consequence the office now loses a chief whose temper and capacity and exceptional knowledge of patent law, not less than his hearty sympathy with the spirit and purpose of the patent system, have proved him to be the proper man for the place.
It is not easy to find men so well fitted for the severe, complicated, and, at the same time, delicate duties of the Commissionership of Patents. For such service, more especially in an office with large surplus revenue, the government ought to be willing to pay as liberally as business corporations can, and give as ample a guarantee of permanence in the employment. We understand that Mr. Marble has accepted more lucrative employment as Land Commissioner for the Northern Pacific Railroad Company.