(260 U. S. 667) FOLEY v. UNITED STATES. (Argued Jan. 12, 1923. Decided Jan. 29, 1923.) No. 203. 1. United States 95-Agreement to use patents held conditioned on satisfactory experiments. A written agreement by the Bureau of Ordnance of the Navy Department to test a patented apparatus, and, if it works satisfactorily to the bureau, to pay the inventor a royalty for powder dried by the apparatus, whether it be construed as creating a contract or as giving merely an option to the Bureau, was clearly conditioned on the apparatus satisfactorily meeting the test. 2. United States 97-Inventor's silence held consent to the termination of use of patents. Even if an agreement for the testing and use by the United States of a patented invention could be terminated only with the consent of the inventor, his silence for more than 10 years after receiving notice that the test was unsatisfactory was tantamount to acquiescence. 3. United States 97-Government held not to have used patented invention, if patents were valid. Where the essential difference between the patented process and method of drying powder and the previously existing method consisted in the use of a vaporous or vapor-laden atmosphere, the government cannot be charged with use of the invention, where the only vapor in the atmosphere employed during its process was that which resulted from the drying of the powder, since the patents, to have validity, must be construed as requiring vapor in addition to that. Appeal from the Court of Claims. Claim by Olga Gathmann Foley, as administratrix of the estate of Louis Gathmann, deceased, against the United States. From a judgment of the Court of Claims, disallowing the claim (56 Ct. Cl. 303), claimant appeals. Affirmed. *668 *Messrs. Charles J. Pence, of Fredericksburg, Va., and L. T. Michener, of Washington, D. C., for appellant. Mr. Melville D. Church, of Washington, D. C., for the United States. a view to the application for patents, methods of drying the materials of the powder, and in consequence of conversations with the Chief of the Bureau of Ordnance of the Navy Department, he made to the bureau the following proposition: "1839 Vernon Ave., N. W., "Washington, D. C., March 24, 1903. "Sir: The undersigned has made an invention, 'method of drying materials,' for which patent has been filed Feb. 9, 1903, Series No. 142653. "Now, in consideration of the Navy Department building an apparatus for testing this method, without expense to me, I hereby give the Navy Department the option of using my method of drying materials, if they find it to their advantage, by paying to me, my heirs, *669 or my legal representatives, $0.01 (one cent) for each pound of material dried by my method. "Very respectfully, Louis Gathmann. "Admiral O'Neil, "Chief of Bureau of Ordnance." He delivered with the proposition a plan or drawing for an experimental apparatus. To the proposition the Chief of the Bureau of Ordnance replied as follows: "Address Bureau of Ordnance, Navy Department, and refer to No. 3585. "Washington, D. C., March 26, 1903. March 24th, 1903, offering the Navy Depart"Sir: Referring to your communication of ment the option of using your method of drying materials, on payment of one cent per pound on materials so dried: "The Bureau has to inform you that it accepts your proposition, and has ordered one experimental apparatus for drying smokeless powder, constructed in accordance with plan submitted by you. This apparatus will be tested without expense to you, and, if it works satisfactorily to the Bureau, the Bureau agrees to pay you, your heirs or legal representatives, one cent for each pound of smokeless powder dried by the method covered by your application or applications filed or to be filed with the U. S. Patent Office, provided a patent or patents is or are issued to you therefor. "Respectfully, Chas. O'Neil, "Chief of Bureau of Ordnance. "Mr. Louis Gathmann, "1839 Vernon Avenue, Washington, D. C." 670 *At the time of the conversation of GathMr. Justice McKENNA delivered the opin- mann with the Chief of Ordnance, and his ion of the Court. Appeal from judgment of the Court of Claims dismissing petition of appellant in which she prayed judgment against the United States for the sum of $236,750. proposition and the reply to it, he, Gathmann, contemplated applying for patents for his methods, and on February 9, 1903, and subsequent dates, made applications for patents and patents were issued to him for his A summary of the allegations of the peti- methods, and at various times from April, tion is as follows: 1909, to April, 1915, the government made use of the processes and methods covered by the patents in the manufacture of smokeless powder to the amount of 23,675,061 pounds Gathmann had under consideration, with thereof and became indebted to the estate For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes The government was engaged in the manufacture of smokeless powder at its station at Indian Head, Md. (43 Sup.Ct.) of Gathmann in the sum of the petition, to, ernment and its manufacture of the powder wit, $236,750. to save them for reuse. A general traverse was filed to the claim. Upon the issues thus formed and upon con sidering the evidence taken, the Court of Claims made findings of fact, and from them deduced, as conclusion of law, that appellant was not entitled to recovery and dismissed her petition. The court decided that the proposition made by Gathmann's communication and the reply thereto presented an option only, and not a contract, and that it was terminated by the Bureau by a letter addressed to Gathmann, October 14, 1904, which was as follows: "Referring to your apparatus for drying powder, installed at the naval proving ground for trial: The Bureau forwards herewith a copy of the report made by the inspector of ordnance in charge of that station for your information. After carefully considering this report the Bureau is of opinion that this apparatus has failed to demonstrate anything that would warrant further experiment with it, and the Bureau has instructed the inspector of ordnance in charge of the naval proving ground that, when the drier can hold no more samples the whole amount be put in the dry house until dried to the proper volatiles." The court decided, besides, that the government had not used Gathmann's methods. *671 Appellant attacks both *rulings, but concentrates her attention upon the first. The existence of the second, she assumes, is demonstrated by the physical laws of nature, of which the court will take judicial notice. The specifications of error against the first ruling are as follows: "(1) The letters made an express contract of license for the full term of the patents; (2) the license could not be renounced or ended in any manner except by mutual consent or the fault of Mr. Gathmann; (3) he had the right after the receipt of the letter of October 14, 1904, to regard the license still in force and to sue for the unpaid royalties, the government having used the inventions thereafter; (4) what was said prior to the letters of March 26 and 28, 1903, should not be considered; (5) the Court of Claims should not have considered the development and state of the art prior to the issuance of the patents; (6) the licensee is estopped from denying the validity of the patents." As early as 1900 the government had used, along with other methods of drying, what was known as the closed-circuit method of drying and solvent recovery. In this method there is, generally speaking, a heating chamber, a powder chamber, and a condensing ⚫672 chamber, with the *necessary connecting pipes or conduits and means for effecting circulation of the air in the circuit, as by fan or by gravity. In operation the warm air from the heating chamber passes on to the powder chamber, where it absorbs solvent from the "green" powder, then passes on to the condensing chamber, where the solvent carried by it is condensed to liquid form, the air then passing on to the heating chamber again for reheating and repetition of the cycle. When the powder is newly made, or "green," the solvent is given off rapidly; but as the percentage of the solvent in the mass is reduced, it volatilizes less rapidly and comes off less freely. When the solvent is reduced to about 10 per cent., this closed-circuit process is discontinued and the drying of the powder is completed in the ordinary drying houses. The plans of the apparatus used by the government in 1900 were secured from the California Powder Works, of California, by whom the apparatus was understood to have originated. It illustrates "the closedcircuit method." Louis Gathmann was an inventor and was interested in improving the method of expediting the manufacture of smokeless powder and had discussed the question with Admiral O'Neil. The government at times had two systems; one for merely drying by hot air, and the other for both drying and recovery of the solvent. Gathmann claimed a method that would do both in a very much shorter time and proposed that a test be made. The letters we have quoted grew out of the conferences between Gathmann and Admiral O'Neil, and Gathmann's representation furnished the chief inducement to the Admiral to enter into the agreement shown by the letters: Pursuant to the agreement or option shown by the letters, the United States under the To estimate these contentions, the findings direction and supervision of Gathmann, at of the court must be considered. A summary of them, stated narratively, is as follows: The material of smokeless powder in its first stages is in a plastic condition, containing about 40 per cent. of moisture due to the presence of ether and alcohol, called the "solvent." To make the powder ready for use, the solvent must be reduced to between 4 per cent. and 7 per cent. according to caliber. The process requires several months' time. The elements of the solvent were expensive, and it became an object to the gov43 SUP.CT.-16 *673 its own expense, constructed and *exhaustively tested at its Indian Head (Maryland) powder plant the experimental apparatus and method so proposed by Gathmann. The ap paratus and method were substantially the same as those shown and described in Gathmann's letters patent. The tests began in October, 1903, and continued until October, 1904, during which time reports of the results obtained by the tests, comparative and otherwise, were periodically made by the officer making the tests, com In other words, the vapor from the moisture of the materials was added to "by admitting vapor as steam." parison being made with results obtained the drying chamber nearly to the end of the from concurrent operations under the regular operation of drying. * government method. In making the tests, the instructions and wishes of Gathmann were complied with, except that he desired a continuous and unbroken operation, though he had acceded at first to the closing down of the operation of the government plant on Sundays. His desire was not acceded to. In the tests the time required for drying the powder was not reduced, nor did it appear that the former methods used and results obtained by the government in drying and solvent recovery were otherwise improved upon, nor did Gathmann's apparatus work satisfactorily to the Bureau of Ordnance, and at the close of the tests, Gathmann was so notified by a letter from the Acting Chief of Ordnance. No change was made in the government's solvent recovery and drying processes as a result of the test of Gathmann's method. On June 28, 1904, a patent, No. 763,387, in pursuance to his application of February 9, 1903, was issued to Gathmann. On the same day there was granted to Gathmann and his assignees of a fourth interest therein, United States patent No. 763,388. These patents and the applications upon which they were granted were the applications and patents in contemplation by Gathmann, and Admiral O'Neil in their respective letters of March 24 and 26, 1903. [1] Considering the methods, their illustrations, and the letters exchanged by Gathmann to the Bureau of Ordnance, the conclusion of the Court of Claims was that a contract was not created. "At most," the conclusion was, "a mere option was granted by Gathmann to the government to use his method if found suitable after mak*ing a test of certain apparatus furnished by him, which he continued to improve or change." And again: *675 "There was never any agreement between the parties to use Gathmann's method, and all we have is, as has been stated, an option granted, declined and terminated." This conclusion appellant resists, and insists here, as she insisted in the Court of Claims, that a contract was created with its comprehensive and determining effect, it having continued, is the contention, after the date of the letters. That a contract existed or continued we cannot concede to appellant. But whether option or contract, we think it was terminated. There was an election given to the government to be exercised by it according to the judgment of its officers of a test of the "experimental apparatus" submitted by Gathmann. The test was made, *Beginning in 1907 the Navy Department at judgment was exercised and its effect notivarious times in the manufacture of smoke-fied to Gathmann in the letter of October less powder used drying and solvent recovery apparatuses and methods. *674 They are illustrated by figures attached to the findings. From August 1, 1910, to 1916, an apparatus known as the box-type method was used, in which "the circulation is gravity circulation, induced wholly by the heating and the cooling of the air in the different parts of the circuit." It is not necessary to reproduce the illustrations, and the processes need but little explanation. They are all of the closed-circuit method of drying and solvent recovery. All have a heating chamber, a powder chamber, and a condensing chamber, with connecting pipes or conduits and means of effecting circulation of air in the circuit, as by fan or by gravity. It is not necessary to compare their mechanisms. We think that the apparatus received by the Bureau from the California Powder Works did not differ in essential structure from them and, of course, it differed from that of Gathmann's apparatus. And differed from them necessarily, otherwise Gathmann would have had no purpose in submitting a proposition to the Bureau. The difference was in the method-amount of vapor, means "provided," to quote the patent, "to produce a vapor-laden atmosphere in the drying chamber" and "so as to maintain," and to quote the patent further, "a substantially vapor-saturated atmosphere in 14, 1904. Gathmann's letter gave "the option of using" his "method of drying materials, if they [Navy Department] find it to their advantage, by paying to" him, his heirs or legal representatives "$0.01 (one cent) for each pound of material dried by" his "method." Clearly, therefore, there was a conditional proposal, and an acceptance upon the condiwork "satisfactorily to the Bureau." It did tion that the apparatus, after test, should not so work, and the Bureau so declared to Gathmann. [2] It is true that there was no response by Gathmann to the letter of the Bureau. His silence, however, was tantamount to acquiescence. It does not appear when that silence was broken. The original petition was filed in this case April 17, 1915; that is, more than ten years after the Bureau's action in declining the proposal. We think that he could not keep the government in obligation, uncertainty and restraint all that time, or even until April, 1909, the first date *676 alleged of the use by the government of his apparatus. He, therefore, must be considered as having accepted the decision of the Bureau and the termination of the relation created by the letters whether it was obligation or option, "right" or "privilege." Responding, therefore, to the contention of appellant that a contract (license, to use ap (43 Sup.Ct.) 2. Carriers pellant's word) can "not be renounced or, the federal Agent to be brought within the ended in any manner except by mutual con- periods of limitation then prescribed by state sent or the fault of Gathmann," we think or federal statutes, but not later than two there was such consent-that which must be years from the date of passage of the act, considered as tantamount to consent. was intended to limit, not to extend, rights [3] We do not think it is necessary to retracts limiting the period within which an ac of action, and does not invalidate existing conview the claims of the patents and wherein tion must be brought which were valid when either of them is an advance upon the uses they were made. and knowledge of the world, and, necessarily, including the methods of the government. The Court of Claims has done this, and, we think, so satisfactorily, that we content our selves by referring to its opinion. We need only to say that Gathmann emphasized the distinction of his patents from all that preceded them as using a “vaporous or vapor laden atmosphere," and that such necessarily existed or will occur in the methods used by the government. It is counsel's contention that it is "inevitable that vaporous and vapor-laden atmosphere would be created the instant the heated air came in contact with the green powder, and would continue vaporous and vapor-laden until all of the alcohol and ether were extracted from the powder or the powder be removed from the drier." And of this, it is asserted, this court takes judicial notice as "the law of physics," and the further assertion is that: "Of course this contact of the heated air with the alcohol and ether caused the air to become vapor laden whether the defendant wished it or not." The assertions prove too much. They leave the patents without basis, and the distinction they express and dwell on as merely verbal. If the asserted result was inevitable in the method of the patents, it was inevita*677 ble in the method *in use prior to the patents, and, we repeat, the patents are left without justification. The conclusion, therefore, must be that if the methods of the patents are different from the prior art by reason of the "initial vapor-laden atmosphere by admitting vapor as steam" the government does not use it; if that be not its distinction, and the methods of the prior art inevitably have it, the patents are no advance upon that art and are invalid. Judgment affirmed. (260 U. S. 682) LEIGH ELLIS & CO. v. DAVIS, Agent, etc. (Argued Jan. 18, 19, 1923. Decided Jan. 29, 1923.) No. 246. 1. Carriers 160 Statutory provision for 160-Contract limiting time to sue to two years is reasonable. actions for loss or damage to be brought with- 160-Statutes of state held not to affect contract provision of interstate bill of lading limiting actions. The statutes of the state where the goods were shipped and the suit was brought do not affect the contract provision of an interstate bill of lading limiting time to sue. 4. Carriers 166-Reasonableness of provision limiting time to sue is question of law. The reasonableness of the limitation of time to sue specified in the bill of lading is a question of law. 5. Carriers 160-Claim for short weight is "loss," within provision limiting time to sue. A claim by the purchaser of goods in shipment against the carrier for a shortage in the weight of the goods below that stated in the bill of lading is a "claim for loss," within the proIvision of the bill of lading requiring suits for loss, damage, or debt to be brought within two years and one day. [Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Loss.] In Error to the United States Circuit Court of Appeals for the Fifth Circuit. Action by Leigh Ellis and another, doing business under the firm name of Leigh Ellis & Co., against James C. Davis, as Agent, under Transportation Act 1920, c. 91, § 206. Judgment for defendant, after demurrer to the petition was sustained (274 Fed. 443), was affirmed by the Circuit Court of Appeals (276 Fed. 400), and plaintiffs bring error. Affirmed. ⚫683 *Mr. Edgar Watkins, of Atlanta, Ga., for plaintiffs in error. *687 *Mr. W. T. Colquitt, of Atlanta, Ga., for defendant in error. Mr. Justice HOLMES delivered the opinion of the Court. This is a suit upon two bills of lading for failure to deliver the full amount of cotton covered by them. The plaintiffs allege that they purchased the bills at a rate determined by the number of pounds specified in the bills but that on delivery it turned out that the weight of 100 bales covered by one of the For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes ⚫688 bills was 15,312 pounds short, and that of 200 bales covered by the other was 11,527 pounds short. The 200 bales were delivered to the carrier on March 25, 1918, and the 100 on March 26, 1918, when the railroads were under federal control. A claim for this loss was made to the Atlanta, Birmingham & Atlantic Railroad, the road over which the cotton was sent, on April 25, 1918, and denied by the road on July 28, 1918. This suit was begun on January 29, 1921, more than two years and a day after the short delivery. The bills of lading which were in the same general form provided that: "Suits for loss, damage or delay shall be instituted only within two years and one day after delivery of the property, or in case of failure to make delivery, then within two years and one day after a reasonable time for delivery has elapsed." the States where the goods were shipped and the suit was brought do not affect the contract, and the reasonableness of the limitation is a matter of law; Missouri, Kansas & Texas Ry. Co. v. Harriman, 227 U. S. 657, 672, 33 Sup. Ct. 397, 57 L. Ed. 690, so that the bringing of a previous suit, alleged in the declaration, does not save the case. Riddlesbarger v. Hartford Insurance Co., 7 Wall. 386, 19 L. Ed. 257. [5] The only other argument that seems to us to need notice is that the claim is not within the words of the limitation. But it is of the kind that the clause "suits for loss, damage or delay" manifestly intended to limit and we see no reason why it should not be included under the head of loss. Judgment affirmed. (260 U. S. 689) A. BOURJOIS & CO., Inc., v. KATZEL. They also stated the weight "subject to correction." The District Court after careful consideration dismissed the petition upon demurrer, on the ground that the suit was too (Argued Jan. 18, 1923. Decided Jan. 29, 1923.) late under the quoted words of the contract, and also on the merits. 274 Fed. 443. The No. 190. Circuit Court of Appeals affirmed the judg-1. Trade-marks and trade-names and unfair ment, adopting the opinion below as to the time within which the suit must be brought. 276 Fed. 400. [1-4] We find it unnecessary to consider other defences besides the contract limitation, as we agree with the Courts below that that disposes of the case. The main objection urged is that the contract is overridden by section 206(a) of the Transportation Act Feb. 28, 1920, c. 91, 41 Stat. 456, 461, giving actions in cases like this against an agent designated by the President, and providing that they may be brought within the periods of limitation now prescribed by State or Federal statutes, but not later than two years from the date of the passage of the Act. The contention is supported with some ingenuity but we think it enough to observe that the general purpose was to limit not to extend *689 rights of action and that we cannot suppose that it was intended to invalidate existing contracts good when made. New York Central R. R. Co. v. Lazarus (C. C. A.) 278 Fed. 900; William F. Mosser Co. v. Payne, Director General (W. Va.) 114 S. E. 365; Northern Milling Co. v. Davis, Agent (Wis.) 190 N. W. 351. In our opinion this contract was good when made. The time allowed was reasonable. Missouri, Kansas & Texas Ry. Co. v. Harriman, 227 U. S. 657, 672, 33 Sup. Ct. 397, 57 L. Ed. 690; Texas & Pacific Ry. Co. v. Leatherwood, 250 U. S. 478, 481, 39 Sup. Ct. 517, 63 L. Ed. 1096. We agree with the District Court that Decker & Sons v. Director General, 55 I. C. C. 453, should not be understood or allowed to contravene our conclusion, upon the facts here. The statutes of competition 542, New, vol. 16A Key-No. Series-Foreign manufacturer cannot compete with assignee of trade-mark. A foreign manufacturer, who has sold his business in this country, with his good will and trade-marks, cannot come to this country and use his old trade-marks in competition with plaintiff, in view of the terms of Trade-Mark Act Feb. 20, 1905, § 10 (Comp. St. § 9495), authorizing assignments. 2. Trade-marks and trade-names and unfair competition 542, New, vol. 16A Key-No. Series-Buyer of foreign goods takes subject to seller's inability to resell in this country. The buyer of foreign goods from a manufacturer, who had sold his business and trademarks in this country, acquires the goods subject to the restriction on resale by the buyer, and cannot resell the goods in the original boxes bearing the trade-marks in competition with the assignee of the trade-marks in this country. 3. Trade-marks and trade-names and unfair competition 53-Monopoly should be protected with care. Though the monopoly of a trade-mark is not so extensive as that of a patent, it is as complete so far as it goes, and since it deals with a delicate matter that may be of great value, but is easily destroyed, it should be protected with corresponding care. 4. Trade-marks and trade-names and unfair competition 542, New, vol. 16A Key-No. Series-Trade-mark bought from foreign manufacturer indicates goods come from assignee. The use by a domestic corporation of a trade-mark bought from a foreign manufacturer indicates in law that the goods come from the domestic buyer of the mark, although not made by it, and stakes the reputation of the domestic buyer on the character of the goods. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |