Opinion — Richmond Screw Anchor Co. v. United States

SUPREME COURT OF THE UNITED STATES.

No. 99.—-Ocrorer Term, 1927.

Richmond Screw Anchor Company,

Inc., Petitioner, lon Writ of Certiorari to

vs. f the Court of Claims.

The United States.

(January 3, 1925.)

Mr. Chief Justice Tart delivered the opinion of the Court.

This is a suit by the Anchor Company brought under the Act

of June 25, 1910 (c¢, 423, 36 Stat. 851), as amended July 1, 1918

(e. 114, 40 Stat. 704, 705), to recover for the infringement of

Letters Patent No. 1,225,120 for a cargo beam, granted May 29,

1917, to Melchior Lenke, and assigned by Lenke to Thomas E.

Chappell, and, by Chappell, to the Anchor Company

The Court of Claims first decided that the plaintiff was entitled

to recover from the United States. Thereafter the court made a

second decision on December 7, 1925, in which it found as an ad.

ditional fact that through the contractors who manufactured for

the United States, the United States had installed, on or before

January 1, 1919, 810 cargo beams covered by the Lenke patent, and

that it did not thereafter install any more; that the use of the Lenke

cargo beams by the United States resulted in a saving in the ex.

pense of installation of cargo beams used by it amounting in the

ease of each beam to 2.000 pounds of metal, with a value of 614

cents per pound; that the single advantage which the United

States gained by the use of the beams was the saving in cost of the

same and the convenience resulting from their novelty

Upon the additional findings of fact, the Government contended

that the former Judgment should be set aside, and a new one en

tered dismissing the plaintiff's petition, for the reason that the

assignment of the claims for infringement to the plaintiff was

void and of no effect under section 3477 of the Revised Statutes

2 Richmond Screw Anchor Co., Inc. vs. United States

The Court of Claims on the second hearing yielded to this conten.

tion and dismissed the petition,

A cargo beam is a beam employed in combination with other

elements to carry the weight of cargo to be removed from the hold

of vessels alongside a pier or wharf and deposited on the pier or

im the warehouses fronting on the same. Such beams are old

and have been used for years The method eXisting prior ta this

invention Was the use of two channel beams, spaced several inches

apart, firmly riveted together at the top and bottom by means of

angle irons or plates, and rigadiv affixed at either end to two up

rights extending upward through the roof of the warehouse in

brackets designed for the purpose. The record showed that a

beam adaptable for the purpose weighed 3.500 pounds and must

posseas the full strength of witl stating the }’ tll of cargo weights

frem beth a vertical and diagonal angle

Lenke conceived the idea of substituting for the fixed beam a

angle I beam of about 1.500 pounds in weight. At each end ef

the I beam he attache! laterally a strong bar by means of rivets

amd angie irons provuding holes near its upper end, through which

holes he intratuce!d pivots, thereby enabling the cargo beam to

swing into any angle from which the load was applied. Lenke

fastened U bolts into the center or neutral none of the beam to re

ceive the hoisting tackle The real worth of the invention av if

the lightness of the cargo beam he used because the operator could

present if so as to make the strain on the beam to be vert “al even

when force was applied from an angle

The patent was a combination patent, and in view of the priot

art was limited to the exact terms of the claims which made i

quite narrow as its course through the Patent Office clearly demon.

strated

t ts argued. on behalf of the United States, that Lenke's inven.

fen was unpatentable beeause it emlexfied nothing more than 4

natural and normal madification of existing ideas. Such meolifes

tome and their advantage were all very clear after the fact. but

the old beame had been in use for a number of years and a heavy

weight of metal had been used when, by Lenke's device. it was

cut down twothinis Lenke's cargo beam almost universally super.

wded the old one The United States neal it and it was installed

in mearly every pier in the country. No one else had foreseen its

mivantage Lenke offered it as a solution of the problem at 4

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Richmond Screw Anchor Co., Inc. vs. United States 3

minimum cost with a maximum efficiency. The United States con-

ceded in the Court of Claims that Lenke’s patent was novel in the

sense that there was nothing in the prior art exactly like it, and

that it was useful. While thus, in a way, he improved an existing

idea, he developed a new idea. The question of its patentability

was worked out in the Court of Claims and all the judges concur-

red in upholding its validity and did not change their conclusion

in the second judgment. We see no reason for differing from that

conclusion.

The Court of Claims based its second judgment against the

plaintiff on the strength of section 3477 of the United States Re-

vised Statutes, as construed by this Court in Brothers v. United

States, 250 U.S. 88,89. The section reads as follows:

“All transfers and assignments made of any claim upon the

United States, or of any part or share thereof, or interest therein,

whether absolute or conditional, and whatever may be the consid-

eration therefor, and all powers of attorney, orders, or other author-

ites for receiving payment of any such claim, or of any part or

share thereof, shall be absolutely null and void, unless they are

freely made and executed in the presence of at least two attesting

witnesses, after the allowance of such a claim, the ascertainment

of the amount due, and the issuing of a warrant for the payment

thereof, Such transfers, assignments, and powers of attorney,

must recite the warrant for payment, and must be acknowledged by

the person making them. before an officer having authority to take

acknowledgments of deed, and shall be certified by the officer; and

it must appear by the certificate that the officer, at the time of the

acknowledgment, read and fully explained the transfer, assign-

ment, or warrant of attorney to the person acknowledging the

samme

In the Brothers case, Mr Justice Pitney said the claim of

Brothers for compensation for a patent he had secured by assign-

ment could not apply to an ‘‘unliquidated claim against the Gov-

ernment arising prior to the time he became the owner of the

patent. Rev. Stats. § 3477"

Counsel for the petitioner here insist that this statement was

not necessary to the decwion because the conclusion in that case

was clearly made to depend on the non-infringement of the patent

and that the reference to section 3477 could only be regarded as

obiter dictum It does not make a reason given for a conclusion in a

case obster dictum because it is only one of two reasons for the same

conclusion. It is true that in this case the other reason was more

4 Richmond Screw Anchor Co., Inc. va. United States

dwelt upon and perhaps it was more fully argued and considered

than section 3477, but we can not hold that the use of the section

in the opinion is not to be regarded as authority except by directly

reversing the decision in that case on that point, which we do

not wish to do.

An elaborate argument has been made to show that the section

should not apply to the assignment of claums for infringements

of a patent, for the reason that a claim for infringements is not

a common law chose in action but grows out of rights created by

the statutes covering patents, the provisions for their assignment

and for suits by the assignee are to be found in sections 4595, 4919

4921 and other related sections. Crown Die & Tool Co vi Nye

Tool & Machene Works, 261 US 24, 42. 24. But there is no con.

flict between the patent sections and section S477. The latter see.

tien was passed to protect the Government and prevent frauds

upon the Treasury Western Pacihe RoR Co vo United States,

268 US. 271, 275; Seaboard Aw Line Ry vo United States, 2%

U.S. 655. 657; Goodman vy Niebleck, 102 US. 556, 559. 5600 And

it would seem that the danger of explo:ting and harrassing the

Government with the use of assignments of elauns for patent ip

fringement was within the general purpose of that section

We come then to the question whether section S477 and the

Brothers case apply to the ease before as. and that requires an

interpretation of the amending Act of 1918 and ita operation upon

the rights of the assignee and owner of the patent and its claims

for infringement. Exceptions to the general language of section

3477 have been reeeg~nizet by tho Court because mot wothin the

evil at which the statute aime! Seahoord Ave Lane Ry vw Uasted

States, supra; Western Pacic ROR Co v Usted States, supra:

Goodman v Niblack, expra: Pree v Forrest, TA US 420 401

423, Perryton v¥ Daves 285 Ped 741 742 We think that the

situation created by the provinons of the amending act of 1918

is euch that sectoom 3477 does net apply te all of the assiendd

elaime of the petitioners for infringement under that Act The

Act of June 25. 1910 (¢ 423. 36 Stat 851). provided that when

ever an invention deseribed in and covered by a patent of the

United States should hereafter be nex? bw the Unite? States

without license of the owner thereof or lawful right to use the

same such owner might recover reasonable compensation for such

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Richmond Screw Anchor Co., Inc. vs. United States 5

use by suit in the Court of Claims, The Act contained a number

of provisos, only one of which iy important here, namely, that

in any such suit the United States might avail itself of any and all

defenses, general or special, which might be pleaded by a defendant

in an action for an infringement, as set forth in Title 60 of the

Revised Statutes or otherwise.

This Court held March 4, 1918, in Cramp & Sons v. International

Curtis Marine Turbine Company, 246 U.S. 28, 42, 45, that the

Act of 1910 did not effect a license to the United States or the con-

tractor, making the patented device, to make or use the invention,

and that the contractor could be sued for an injunction and for

infringement in spite of the operation of that Act.

On April 20, 1918, the Acting Secretary of the Navy wrote a

letter to the Chairman of the Committee on Naval Affairs of the

Senate, in which he said, referring to the Cramp case, that the

Department was

“confronted with a difficult situation as the result of a recent de-

cision by the Supreme Court affecting the government's rights as

to the manufacture and use of patented inventions, and it seems

necessary that amendment be made of the Act of June 25, 1910

_ the decision is, in effect, so far as it is of importance here,

that a contractor for the manufacture of a patented article for the

government os net exempt, unlew he is only a centributory in-

fringer, from injunction and other interference through litigation

by the patentee

“A prior deemsion of the Supreme Court, that im the case of

Cromer « Krupp, had been interpreted as having the opposite

meaning, and the department was able up toe the time of the later

decision, on March 4th last, to proceed satisfactorily with the pro-

euring of such patented articles as it needed, leaving the matter

of compensation te patentees for adjustment by direct agreement,

or, if necessary, by resort to the Court of Claums under the above

mentioned act of 19100) Now, however, manufacturers are exposed

to expensive litigation, involving the possibilities of prohibitive

injunction payment of royalties, rendering of accounts, and pay-

ment of punitive damages, and they are reluctant to take contracts

that may bring such severe consequences The situation promised

serious disadvantage to the public interests, and in order that vital

activities of this department may not be restricted unduly at this

time, and alse with a wiew of enabling dissatisfied patentees to ob-

tain just and adequate compensation in all cases conformably to

the declared purpose of said act, I have the honor to request that

the act be amended by the insertion of a proper provision therefor

in the pending naval appropriation bill”’,

a

6 Richmond Screw Anchor Co., Inc. vs. United States

In response to this communication, the Act of 1915 amending

the Act of 1910 was adopted. (See Wood v. Atlantic Gulf & Pa

cife Co., 296 Fed. 718, 720, 721, and Congressional Record, 65th

Congreas, Second Session, Proceedings of June 15, 1915, p. 7961).

The amendment (c. 114, 40 Stat. 704, 705) reads as follows;

“That whenever an invention described in and covered by 6

ey of the United States shall hereafter be used or manufactured

y or for the United States without license of the owner thereof or

lawful right to use or manufacture the same, such owner's remedy

shall be by suit against the United States in the Court of Claims

for the recovery of his reasonable and entire compensation for such

use and manufacture’’

This is followed by the same provisos as in the Act of 1910 which

need not be repeated here

The purpose of the amendment was to relieve the contractor en-

tirely from lability of every kind for the infringement of patents

in manufacturing anything for the Government and to limit the |

owner of the patent and bis awigns and all claiming through or

under him to suit against the United States in the Court of Claims

for the recovery of his reasonable and entire compensation for

such use and manufacture, The word “‘entire’’ emphasizes the

exclusive and comprehensive character of the remedy provided As

the Solicitor General says in his brief with respect to the Act, it

is more than a waiver of immunity and effects an assumption of

habilty by the Government

Under the Act of 1910, the remedy of the owner of a patent

where the Unite! States had used the invention without his heense

or lawful right to use it, was to sue for reasonable compensation

in the Court of Claims, and that remedy was open to Lenke for

the cargo beams covered by his patent installed and used by the

United States before July 1, 1915

The evidence does not show at what time during the vear 1918

the beams were instalin! The first finding is that Lenke wrote to

an officer in the Quartermaster's Department on duty at the Army

supply base at Brooklyn on December 31, 1918. complaining that

the Lenke cargo beam was being used by the Government at that

supply base without permixsion from the patentee, but nothing hap-

pened bat a fruitless correspondence

The findings of the Court of Claims show that, on January 1,

1919, $10 of the beams had been installed at the instance of the Gov-

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Richmond Serew Anchor Co., Inc. vs. United States 7

ernment, but how many were installed after July 1, 1918, when

the law in question was passed, has not been found by the Court

of Claims.

On September 29, 1920, the Lenke patent was assigned by Lenke

to one Thomas E. Chappell, who in turn on March 7, 1921, assigned

it to the plaintu? company, in accordance with the statute, and the

assignment in each case covered all rights of action for past in-

fringements of the patent and all rights to recoveries by suit for

damages, profits and rovalties for infringements of every kind

whatsoever,

t is settled that, but for the Act of 1918, the two assignments

vesting title in the Anchor Company would enable it to recover

from the contractor for all his infringements (Crown Die & Tool

Co. v. Nue Tool & Machine Works, supra; Gordon V. Anthony, 16

Blatehf. 234, Fed. Cas. No. 5,605: Waterman v. Mackenzie, 138

US. 252, 256, 261, Gaylor vo Wilder, 10 How. 477, 494; Robinson

on Patents, vol 3, see. 937, p. 122). If now section 3477 applies and

these assignments are rendered void, the effect of the Act of 1918

is to take away from the assignee and present owner not only the

cause of action against the Government, but also to deprive it of

the cause of action which had existed in its favor, at the passage of

the Act, against the infringing contractor for injury by his in-

fringement. The intention and purpose of Congress in the Act of

M18 was to stimulate contractors to furnish what was needed for

the War, without fear of becoming lable themselves for infringe-

ments to inventors or the owners or assignees of patents, The letter

of the Assistant Secretary of the Navy, upon which the Act of 1918

was passed, leaves no doubt that this was the occasion for it. To

accomplish this governmental purpose, Congress exercised the

power to take away the right of the owner of the patent to recover

from the contractor for infringements. This is not a case of a mere

declared immunity of the Government from liability for its own

torts. It is an attempt to take away from a private citizen his

lawful claim for damage to his property by another private person

which but for this Act he would have against the private wrong-

doer This result, if 3477 Rev. Stat. applies and avoids the as-

Signment, would seem to raise a serious question as to the consti-

tutionality of the Aet of 1918 under the Fifth Amendment to the

Federal Constitution. We must presume that Congress in the

5 Rwhmond Screw Anchor Co. Inc. va. Umted States

passage of the Act of 1915 intended to secure to the owner of the

patent the exact equivalent of what it was taking away from him.

It was taking away his assignable claims against the contractor

for the latter's infringement of his patent. The assignability

such claims Was an wmportant element in their value and a matter

to be taken into account in providing for their Just equivalent

If section S477 appled, such equivalence was impossibl

it is our duty in the interpretation of Federal statutes to reach

a conciusson which will avon’ serious doubt of their const tution.

ality Phe s Vv Unmeted States, 274 UL S Moreover, we

shoul seek t arr’ it om our dealing with the Act of 1915 and

Revised Statutes 3477 the very important Congressional purpose

of the former. as already explained. in the promotion of the War

ve intent It «= our duts to give effect to that

specal intent although it be mot in harmony with a broad purpess

este! in a general statute avoniing asignment of claims

man

against the Government enactel some eighty years ago. Jp

re Rowse, Hazard & ¢ 91 Fed 96, 100, 101, Townsend ¥,

Lettie, O98 US SO S12, Washington vo Miller, 205 US. 422, 428

This « in aceord with general rules of interpretation, as shown ip

these autheritrees, and reconciles the sectoon 3477 Revised Statute

and the Act of 1918. if we } |. as we do, that section 3477 dow

net apply to the asugnment of a sim against the United States

which « created by the Act of 1915 in so far as the Act deprives

the owner of the patent of a remedy against the infringing private

contractor for infmmeerment.« ¢ reof and makes the (Ciovernment

ndemnitor for its manufacturer or contractor in his infringe

mrt.

Sock a cor "on requires us to reverse the case and remand it te

the { re ‘ (leums for al themal firwtings ¢ show ? * many of

the patent~! hears @ere o wile ? ntractor ar fore shed to

fhe I nite States after the nasa f the Act of Julw 1. 1918 and

whet «= ha ~ a Tee a’ r ' therefor

The questior {f the amount of or the rule for measuring the fe

. - “=. ‘ : “4 t. boop? rave * * fue € irther argument and

rater » » the ¢ 7? f @leaimes heraue f ¢ novel and

niy partial « : f eertios 47> He Stat