Whitson v. Columbia Phonograph Co. , 18 App. D.C. 565 ( 1901 )

Mr. Justice Morris

delivered the opinion of the Court:

Section 4898 of the Revised Statutes of the United States being section 86 of the Patent Act of July 8, 1870, provides that “ every patent or any interest therein shall be assignable in law by an instrument in writing; and the patentee or his assigns or legal representatives may in like manner grant and convey an exclusive right under his patent to the whole or any specified part of the United States.” And it adds: “An assignment, grant, or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the patent office within three months after the date thereof.”

Under this provision of the statute, the North American Phonograph Company, which at the time had full and complete control over the Edison Phonograph patents, gave to the appellee, the Columbia Phonograph Company, for a term of years which has not yet expired, the exclusive right to deal in phonographs and phonograph supplies in this District, as well.as in the States of Maryland and Delaware; and, if its contract in the premises for that purpose be not in itself invalid, there is no good reason shown why it should not be regarded as yet in. force and effect. It can make no difference in this regard that the North American Phonograph Company became insolvent, and is extinct or moribund, or has passed into innocuous desuetude, and that its assets have gone into other hands. Nor is it of any consequence whether the National Phonograph Company is,-or is not, to be regarded as the successor in law, if such it can be, of the North American Phonograph Company. Any person, natural or artificial, into whose hands, after the execution of the contract between the North American Company and the Columbia Company, the control of the Edison patents came, with knowledge or notice, actual or constructive, of the existence of such contract and of the rights of the Columbia, must be assumed to have taken subject to such rights, and to be disqualified from infringing in any manner the exclusive license given to the Columbia Company. If this were not so, it is very plain that rights granted under a patent might he destroyed with impunity against the will of the owner of the right hy the mere transfer of the patent.

This proposition does not seem to be seriously, if at all, controverted on behalf of the appellants. The burden of their argument appears to be, either that the bill of complaint is defective in its allegations, or that the contract between the North American Phonograph Company and the Columbia Phonograph Company is invalid in itself as seeking to impress upon a chattel or personal property a qualified ownership inconsistent with the freedom of transfer and the rights of possession. But we fail to see the force of this proposition. The bill of complaint, it is true, might have been more definite and specific. This, if need be; can easily be cured by amendment. And with reference to the objection that the contract between the North American Company and the Columbia Company involves a violation of public policy in seeking to restrain the freedom of sale and transfer of a patented article, we fail to see why the renting of a phonograph may not be as proper in contemplation of law as the renting of a piano or of any other article of furniture.

The contract between the North American Company and the Columbia Company may be defective and insufficient; but it would scarcely be proper so to hold at this hearing, when the real parties in interest might not be bound by the decision, and the cause has not been fully developed by testimony.

The suggestion that the appellee does not itself perform the contract in question, and sells only graphophones, and not phonographs, thereby discriminating against the latter, is, of course, no answer to an application for an injunction pendente lite. The suggestion, if well founded, may well be availed of in a cross-bill, or other proceeding, either to enforce or to vacate the contract.

As the case now stands, we see no reason to disturb the discretionary power exercised by the equity court in awarding an injunction pendente lite and thereby maintaining the existing status of things. And in the absence of answer on the part of the defendants, and in the absence also of testimony which might materially enlighten the case, we do not deem it expedient to go at all into its merits. It is sufficient for us now to say that, in our opinion, the appellant, as complainant in the court below, has stated a cause which entitles it to a temporary injunction; and that, therefore, there was no error in the action of the court which awarded such injunction.

The order allowing the injunction pendente lite will he affirmed, with costsj and the cause will be remanded for further proceedings therein according to law. And it is so ordered.