secured on the outer rim, the body-hoop being secured on the inner. It is true that the method by which the guards and the rings are fastened together differs from notching, and that the frame-ring is not buckled to the hoop, but in considering the first claim these differences are not material. It is also true that the frame-ring is secured to the top of the hoop, and not at a point intermediate of the top and the bottom; but this again is not important in view of the broad language of the claim. It is important, however, to observe that the precise combination described by the appellee is presented by this old lantern—a horizontal frame-ring, secured to the upright guards, with a body-hoop secured upon the ring. If Porter No. 2 were a new construction, we think it would be impossible to deny that the first claim of the patent was infringed thereby; and upon familiar principles therefore it must be held that the claim has been anticipated by the same device.

This being so, the validity of the second claim need not be decided. Assuming it to be good for the particular construction therein described, we are of opinion that the appellants do not infringe. It is true that they use a flat metal horizontal frame-ring notched upon and secured to upright guards, but the body-hoop is not bent or buckled on the ring, but is held in place by a device so different as not to be the equivalent of buckling. It is thus described in the brief of appellants' counsel:

"In appellants' lantern the body-hoop frame-ring is provided with a number of lugs at spaced distances around the periphery, and such lugs are, in turn, provided with open slots. The lower ends of the upright guards are provided with projecting ‘tongues,' and are slotted near their inner margins above such tongues. On assembling the parts, the tongues on the lower ends of the guards enter the slots formed on the lugs of the ring and passing through openings formed in the body-hoop, are then bent upwardly-or clinched-against the inner face of the body-hoop, an upturned collar formed on the inner margin of the ring serving as an abutment."

The frame-ring rests in a groove in the hoop, but it is not buckled, or even tightly secured by the groove; for when the tongues are removed the ring can be readily rotated in the groove, which is evidently intended only to prevent the ring from moving upward or downward, and not to hold it rigidly in place. As one element of the appellee's combination has thus been replaced by a device that is materially different, the appellants' lantern does not infringe: Walker, Pat. (4th Ed.) § 349, and cases cited.

The decree must be reversed, with costs, and the case remanded, with instructions to dismiss the bill.

KAHN et al. v. STARRELS.

(Circuit Court of Appeals, Third Circuit. March 27, 1905.)

PATENTS-SUIT FOR INFRINGEMENT-Costs.

The provisions of Rev. St. §§ 973, 4922 [U. S. Comp. St. 1901, pp. 703, 3396], that when judgment or decree is rendered for the plaintiff or complainant in any suit at law or in equity for infringement of part of a patent, etc., no costs shall be recovered unless the proper disclaimer was

entered in the Patent Office before the suit was brought, applies only to costs in the trial court, and not to costs on appeal, the allowance or refusal of which is to be determined by the appellate court in view of the special circumstances of the case. Where the court below denied all relief and dismissed the bill, which action was reversed on appeal as to certain claims of the patent, complainant will be awarded costs in the appellate court.

Appeal from the Circuit Court of the United States for the Eastern District of Pennsylvania.

Sur Motion of Appellee as to Costs.

For opinion below, see 131 Fed. 464.
Jos. C. Fraley, for appellants.

L. L. Smith, for appellee.

Before ACHESON, DALLAS, and GRAY, Circuit Judges.

PER CURIAM. The court below dismissed the bill, and the complainants appealed to this court. We have held that two of the claims of the patent in suit are valid, and were infringed by the defendant (appellee), and accordingly we have reversed the decree below, and will remand the case to the court below, with directions to enter a decree in favor of the complainants in accordance with our opinion. It now appears that the appellants have filed a disclaimer as to the third claim of the patent, which we held to be invalid, and the present motion is based upon the contention of the appellee that under the statutory provision contained in sections 973, 4917, and 4922 of the Revised Statutes [U. S. Comp. St. 1901, pp. 703, 3393, 3396] no costs, either in the court below or in this court, are recoverable by the appellants, because the disclaimer was not entered in the Patent Office before the suit was brought. Undoubtedly the statutory provision applies to costs in the court below, but no case has been brought to our attention in which it was directly held that the statutory provision applies to costs on appeal. The provision that "when judgment or decree is rendered for the plaintiff or complainant in any suit at law or in equity for the infringement of a part of a patent," etc., no costs shall be recovered unless the proper disclaimer has been entered before the suit was brought, applies, we think, only to the costs in the original suit in which the judgment or decree is rendered, and does not apply to appeal costs. The allowance or refusal of appeal costs is to be determined by the appellate court in view of the special circumstances. In the present case the court below denied all relief to the complainants, and dismissed their bill. Our decree rectifies the error of the court in dismissing the bill, and remands the cause, with instructions to enter a decree in favor of the complainants, which should have been rendered. We think, then, that the appellants are rightfully entitled to costs in this court upon the appeal, but not to costs below, and it is so ordered.

WESTON ELECTRICAL INSTRUMENT CO. v. EMPIRE ELECTRICAL INSTRUMENT CO. et al.

(Circuit Court of Appeals, Second Circuit. March 8, 1905.)

1. PATENTS-RENEWAL APPLICATION IN CASE OF FAILURE TO PAY FEES-TIME FOR FILING.

Under Rev. St. § 4897 [U. S. Comp. St. 1901, p. 3386], the Commissioner of Patents is without authority of law to issue a patent on an application filed more than two years after the allowance of a patent for the same invention on a prior application by the same party, which has been forfeited for nonpayment of fees.

2. SAME-SUIT FOR INFRINGEMENT-DEFENSES.

In a suit for infringement of a patent the want of legal authority in the Commissioner of Patents to issue the same may be pleaded as a defense.

3. SAME-VALIDITY-ELECTRICAL CONDUCTOR.

The Weston reissue patent, No. 10,945 (original No. 381,305), for an electrical conductor, is void because the original was granted on an application filed more than two years after the allowance of a patent on a prior application, which was not issued because of the nonpayment of fees. Appeal from the Circuit Court of the United States for the Southern District of New York.

For opinion below, see 131 Fed. 90.

Richard Eyre and W. H. Kenyon, for appellant.

Philip Mauro, for appellees.

Before LACOMBE, TOWNSEND, and COXE, Circuit Judges.

PER CURIAM. We concur in so much of the opinion of the court below as holds that:

"If more than one application could be made, the final application must be made within two years after the allowance of the original application, the term 'the original application,' as used in this section, meaning the first application."

There is no ambiguity in the language of the statute as to the limitation of time within which the later application must be made. The provisions for withholding the patent upon the nonpayment of the final fee within six months, and for relief from the effect of such provision, are imperative. The construction contended for by the appellant would permit an indefinite prolongation of a monopoly by means of unlimited forfeitures and renewals, and would nullify the policy of the law, which requires diligence in the prosecution of applications for and issuance of patents. The patent in suit, therefore, was granted by the Commissioner of Patents under a mistake as to the law, but without authority of law, because upon an invalid application. This defense may be raised in an action for infringement. "Where it is evident that the commissioner, under a misconception of the law, has exceeded his authority in granting or reissuing a patent, there is no sound principle to prevent a party sued for its infringement from availing himself of the illegality, independently of any statutory permission so to do." Mahn v. Harwood, 112 U. S. 354, 358, 6 Sup. Ct. 451, 28 L. Ed. 665; PlaningMachine Company v. Keith, 101 U. S. 479, 25 L. Ed. 939.

The decree is affirmed, with costs.

NEW YORK PHONOGRAPH CO. v. EDISON et al.

(Circuit Court, S. D. New York, January 5, 1905. On Rehearing, April 20,

1905.)

1. PATENTS-LICENSES TO SELL AND USE-TRANSFER OF PATENT-DEFECT. Where a corporation owning patents, subject to licenses granted to sell and use, became insolvent, and its assets were purchased at a receiver's sale by E., who had full knowledge of the rights of the licensee, and he thereafter organized another corporation, to which he conveyed the assets of the former company so purchased, excepting the rights of the insolvent under the licenses, which he transferred to a trusted employé, the succeeding corporation, taking with full knowledge of the licenses, was bound thereby.

2. SAME-INVASION OF LICENSE-EQUITABLE RELIEF.

Where complainant acquired the exclusive right to use, exhibit, and sell phonographs and graphophones, under a license from a corporation owning patents thereon, and such rights were wrongfully invaded by a subsequent corporation, which succeeded to the rights of the licensor with knowledge of the licensee, complainant was entitled to recover against the latter in equity for breach of covenant.

3. SAME-LACHES.

Where complainant, a licensee of the exclusive right to use and sell patented phonographs and graphophones in a certain district, brought suit against defendant, a corporation which succeeded to the rights of the licensor, for breach of covenant in the license within five years after defendant's incorporation, and within less than three years after the termination of fruitless negotiations to settle, and there was no evidence that complainant had acquiesced in defendant's intrusion into such field, complainant was not barred by laches.

4. SAME-BREACH OF COVENANT-FORFEITURE.

A breach of covenant contained in an exclusive license to use and sell patented phonographs and graphophones in a specified territory did not work a forfeiture of the license per se, no condition to that effect being inserted in the license.

5. SAME-ABANDONMENT-INSOLVENCY.

Where an exclusive license, within specified territory, to use and sell patented phonographs and graphophones, authorized the licensor, on written notice, to immediately terminate all the rights granted, on the licensee's failure to perform certain conditions, and in the event of the licensee becoming bankrupt or insolvent, the licensee's insolvency did not operate as an abandonment of its contract rights, in the absence of notice, it being willing and capable of fulfilling its contract obligations notwithstanding such insolvency.

6. SAME-EXTENSION.

Certain licenses for the exclusive use and sale of patented phonographs and graphophones in a limited territory provided that the licenses should be extended on performance of a covenant that the licensee, at or before the expiration of the original term, would increase its capital stock to a specified amount and deposit the same with a trust company for delivery to the licensor or a trustee, and on notice of such deposit the licensor would forthwith deposit with the trust company, for delivery, extension licenses specified. Extension licenses were duly executed and delivered to the trust company thereunder, and stock deposits made and accepted by the trust company, but after the delivery of the stock and extension licenses to the latter it was directed not to deliver the stock certificates pending settlement of certain claims of the licensee against the stock. Held, that the extension licenses were effective on the deposit of the stock with the trust company, the subsequent notice not to deliver the stock being ineffective.

On Rehearing.

7. PATENTS-LICENSES-EXTENSION OF TERM.

An extension of the term of a patent does not inure to the transferee of a license, in the absence of language expressing such intention. 8. SAME-LICENSES SUBSEQUENT EXTENSION.

Where an assignment of certain patents contained agreements whereby all inventions or improvements on the patented article made by the patentee within 15 years should be assigned, and improvements were made and patented in several years subsequent to the execution of a license to use and sell, providing for a second extension for such further time as the "assignee was authorized to extend such license," subject to the covenants and agreements of the original contract, the licensee was not entitled to a second extension in perpetuity, but only until the expiration of the last improvement patents.

9. SAME-OPTION TO RENEW-CONSTRUCTION.

Where an exclusive license to use and sell patented phonographs and graphophones provided for a second extension for such further time, "at the option" of the licensee, as the licensor may be authorized to extend the license, and it appeared that the agreement was regarded by both parties to contemplate continuous business relations between them, the option was, in effect, but a reservation of the right to the licensee to discontinue existing relations, and its exercise was not, therefore, a condition precedent to the licensee's right to a renewal.

10. SAME-NOTICE-WAIVER.

A license to use patented phonographs and graphophones provided for a renewal until March 26, 1903, and for a second renewal after such date for "such further time, at the option" of the licensee, as the licensor was authorized to extend the license. Prior to the date specified the licensor had invaded the licensee's territory and refused to recognize the latter's exclusive rights granted, and had obstructed the licensee's efforts to obtain supplies, and a suit had been brought by the licensee to compel recognition of its rights. Held, that such acts on the part of the licensor constituted a waiver of the obligation of the licensee, if any, to give notice of its election to exercise its option to take a renewal of the license. Elisha K. Camp (Louis Hicks and John C. Tomlinson, of counsel), for complainant.

Robinson, Biddle & Ward (C. L. Buckingham, C. M. Hough, Frank L. Dyer, and William Pelzer, of counsel), for defendants.

HAZEL, District Judge. This action is brought to restrain the defendants, Thomas A. Edison, the Edison Phonograph Company, the Edison Phonograph Works, and the National Phonograph Company from selling, leasing, or disposing of phonographs and supplies therefor within the state of New York, and for damages and an accounting. The basis for the action is the alleged infringement of a license or contract made between complainant's predecessors and the North American Phonograph Company (hereafter referred to as the American Company), which the bill charges granted the sole and exclusive rights to use, exhibit, and let phonographs, and to sell and dispose of appliances therefor, in the state of New York. The legal rights of licensees under substantially similar contracts have been several times before the courts of the United States on demurrer and motions for preliminary injunctions. New England Phono. Co. v. Edison et al. (C. C.) 110 Fed. 26; New York Phono. Co. v. National Phono. Co. (C. C.) 112 Fed. 822; New York Phono.