WEBSTER LOOM CO.

(1.

HIGGINS.

673

a.The master properly disallowed of $15,000 per annum for salary of the president of the defendant as an element of cost, because it was not shown that the president was a salaried officer. The defendant introduced evijience to show what compensation would be reasonable for such services as were performed by the president of the defendant, but for all that appears he was serving without compensation. If he' had been paid any salary the fact could and would have been shown. 4. The master properly found that the percentage for selling expenses which should he. added to the factory cost of all the goods sold by the defendant, exclusive of the goods known as "Benson's Plasters," was 29 per cent. The fair interpretation of the very confusing statement of the cashier of the defendant is that instead of 50 per cent. the amount to be added was 76,837/132,473 of 50 per cent. 5. The testimony showed that the defendant was the only competitor of the complainant in the' market in seiling the borated cotton of the patent l , and :that in consequence of the reduction of price made by the defendant the complainant was compelled to reduce his price in order to retain his customers. The loss entailed upon him by reason of this enforced reduction of price was a proper item of damages, and was properly allowed by the master.

WEBSTER LoOM

Co. v.

HIGGINS

et al.

(Circuit 00'UJrl" S. D. New York. September I, 1890.)

1.

9.

Where the infringers of a patented loom for weaving carpets COUld, aCCOl'dlng to tbe patentee's own evidence, have attained the same results it, instead of using the infringing looms, they had used twice that number of non-infringing looms, the patentee's measure of damages is the dUl'erence between the cost of weaving the carpets .on the non-infringing looms and the cost of weaving them on the infringing looms, and not the ttbt profits which the infringers received per yard on the increased amount of qarpets manufactured by means of the infringing looms. Disa,pproving, Webster v. Oarpet 00., 2 Ban. & A., 67. . '
'SAME-ACTION FOR INFRINGEMENT-MASTER'S REPORT.

INVENTIONs-bnrinNGEMENT-MEASCRE OJ!' DAMAGES.

Where the master, to whom was referred the ascertainment of the damages sustained by complainant in consequence of defendants' infringement of its patented loom. has not. specifically found as to the alleged superiority of a non-infringing loom over the one infringed, the court will not assume that he intended to so' find from indefinite answers to defendants' requests on that subject, but will recommit the case to him, so that 'he may clearly state his own conclusions from the evidence. Where defendants introduced evidence of the alleged superiority of the noninfringing loom at the close of a long hearing before the master, complainant, who was then unable to obtain rebutting evidence, and who did not then have a full opportunity to present that branch of its case, will be permitted to do so on the recom· mitment of the case to the master, though complainant does not unquestionably bring itself within the rules which ordinarily govern the reopening of a hearing to admit testimony.

S.

SAME-NEWLy-DISOOVEREDEvIDENOE.

In Eqnity.Onexceptions to master's report. see 39 Fed. Rep·., 4:62. v no.1 0-43

For former report,

F.El>GML REPORTER, "VOl.

48.,)

and Edward Stephens, for .complainant.,,'n 'il .,', '. . 'Li,fJi:ng8tim:Gij'ord and, Walter «.;,Griffin, for defendants. Berote SHIPMAN and WALLACE, 'JJ:; ,
I ., ,

WAI:.tAbE, J. I haV6,eat.witbJuq,ge SHIPMAN' upoDthe reargument of the exceptions.to the mail,(er's'report ,in order that. a 'ruling. of mine, made"qpon thEl'applicationoftlle-:defendants forinstruc.tions to the master,might be' reconsidered;' and, other questions ""hieh have been rearguedwiU be disposed of by Judge SHIPMAN without my' participation. At! the threshold of. the accounting. the' defendants applied: for instruotions! t<Mhe mas,ter, if;allowed. preclude' the complainant', from investigating the cost. of carpet'l!Ultterial to the dafendantsat any: stage.ofmll.nq,facture before-,it was 'ready for the lqom.These instructions :,(lould not have belm.:-given lWithout disregarding the decision of > Judge NIXON: ill H'ebsterv. C'd71get,Oo.,"2 Ban. & A.,,67'. ' He had de-cided of the [arthe net profits 'reak ized upon the number made by the use of the inventio,n .ipex.cess,ofthe quantity;,thatcol1Idlhave been made 'by using non-, infringing looms. That decision was accepted al3 the r,e-., covE;ry upon the application for instructions, without any independent oonsideration of the nature ofthe patent or the character of the infringement. Notwithstanding theexc-ellent authority of the opinion of Judge NIXON in support of the ruling, I am satisfied that my ruling was radically erroneous. . ," , orr , ' ; ' .... >. 'I" The invention which the defenanilts have appropriated is specified in the fifth c1aiDJ-,of tpe pateIlt) and is, for a,n in the wiremotion devices' of looms for 'weaving pile fabrics'. The improvement !pore rapidly,. and thereby the weaverca:D., enables the 100ttl to make 'tD'?re,Yfli'ds of carpet in the. same petiodof' time than he could 100m without it.. ':l,:lle. .defendants were lPaDufacturers of carpets on a largescale, having the requisite capital and general facili.ties on an They bought. the mate;riaI, ohiefly: wool, ·of whinhcarpetingm ID,ade, in the raw state, and, after subjecting it in the various. departments of their factory to' the operationS. ofwashing, sorting,combing,carding, spinning; dyeingtetc., in order to the the pro,duption ofcarpets 'r0ye it upon looms, some ,of whichoonWned the patented invention. When wasin tpat comlition a mar· ketable commodity, and presumably could hl;lve been sold. in the mar· {lr?fit 'above cost, whkll.',Would.have the .8. for of thelrcaplt8l;and for theIr experl. in and treating; it. During the period opentopuhlic use, having devices for effecting the result accomplished by the patented devioes, and by which the same result of increased rapidity in weaving was actuallyaocpmplished' :with l!! greater, or .less ;;degree .ofsqocess.· .(The ..defendants employed many non-infringing looms in their together ilVith: 61-;
(,n .. (), , :' '

infriilginglobms.. They wove' 8,277 ;012'yards ofcarpetirigon the'in"fringing looms, which quantity, according to the theqry of the complaia-ant, was 4,145;872 yards more than they could have 'woven on the same number of non-infringing 'looms. Consequently appea.rs, in: the aspect of the proofs most favorable to the complainant, that the defendants {lould have ,made all the carpeting they did make if, instead of using the 61 infringing looms, they had used twice 'that number of non-infringing 10oms,Uponsucb a state' of facts it the defend!for any part' of'theirprl>fitupon the material ants are not when it was ready for the'loom, included in its market value lit that time, or for any part of the .seller's profit the increased production. ,In settling :ltn account between a pa tentee and ian infringer, the Habi!ityofthe profits is measured by the advantage which he hB.$ gained by the 'use of the patented invention. It is often to ascertain with even :approKhnitte accuracy what the this advantage is in a the rule eetablishedby the adjudications, which imposes' upon the patentee the burden of and separating this value' from the profits which the' infringer might have made without approprilitingtbe invention, but did not make, nor attempt to make; frequently strips the patent of all value. Nevertheless the rule obtains, and must be applied as best it may be to cases l'S they reported cases. arise by the light of the illustrations afforded Theadjlldications declare: that the advantage gained by the infringer who makes and vends a patented article is measured by the value which the invention contributee to the market value oftne article; and he is held accountable to that extent, unless his net profit in making and selling thearticl't'l is less than the value of the invention. If the invention invests the article with its whole value as a marketablecommodiiy, his entire gains are attributed to the invention. If it contributes only a sub-sidiary value, this value, segregated from the independent marketvalue of the article, is the advantage for which he is accountable; and it is incumbent upon the patentee to show affirmatively what this advantage is worth by reliable evidence,' however difficult it may be to do so. In Elizabeth v. Pavement Co., 97 U. S. 126, the patented article was a wood pavemerit, and didnot differ from other wood pavements, open to public use, eX(lept in the mode of arranging and cOInbiriing the materials of which it was composed; butthe infringer was held liable for the whole difference between the cost of materials and labor and the price received for the pavement when laid.- upon the theory that the whole value of the pavement was contributed by the invention. The cou-rt said: "The parts were so correlated to each other, from bottom to top. that it required them all, put tORetherashe put them. to make-the complete whole, and produce tbe llesi1'edresult. 'Ie 'Ie 'Ie Thus coiilbined and arranged, they like a. new .chemical It was tMs thing,.and ,another, that t.qe P69ple wanted and , other hand, in Dobso'n v. Carpet Co., 114 U. S.439, 5 Sup. Ct. Rep. 946\ ,the, patent was for a design for and the cotlrt be,low had allowed as profits the difference between the cost to the infringer

FEDERAl. REPORTER,

vol. 43.

andtbe$elling price... But the court considered it a matter of ,knowledge that, as between carpets of different designs, one another not, the one with the patented design might or ,mightnotpommand in the market a higher price than the other, and reversed the decree below; applying the doctrine t4at the entire profit from thl1ll1anufacture and sales of n,patented article is not chargeable to the infringer "unless by reliable evidence that its entire value asa marketabJl'l article is properly and legally atiri,butable to the patf!Jature."The helclinthat case that the.owner of the patent cou1<f not, recover anything as infringer's the value of the. advantage attrilmt,able exclusively to the design was not shown. In the m9rerecent cl:tseof CalJ,aghan v. 1:2,8"0. S. 617,666,9 ,Sup,. 177, the infringer of a copyright had published and.sold )>ooks hi 'fMch copyrighted matter. WaS incorporated with matter which he, had a.rigQ,t touse,.and,the court held that, the lawful matter in the infringing book being useless witho'qt the unlawful. and it being impossible to sepllrate the profit on the Jatter from that on the former, and the sold as a whole, the defendant was responsible for the conand liable for.. the entire. profit. In the recent case of Am Ende v. Seabury"ante, 672, (decided in this court,) the infringing corporation waS,held,Jiable to. the owner of a patent for'a chemical preparation (bqratedcotton) to the extent of the whole profit made on the sale . It was iusiste(i that the ingredients of the compound of could bave been, sold at a profit"aQd that it was incumbent upon the patentee to. prQye, whatp!,\rt of the whole profit arOSe exclusively from as cotton; hut the court held that, the defendant having. c<N1:v!"rteq.Hwm into thl;l new chemical composition, and having whatever"profit llccrued was attributable to the patsold ented inventiqn;. , so often fouJ;ld in ascertaining the value of the adan infringer: when the infringemellt is the selling of a selp.oJl1 occurs :ill ,cases where the infringement consists pab;mtedprocesa or ,machine by which a thing old in itself in may be e,eonomically than it could be wij;hout employing the inventiop.. In these cases the advantage atiributll.ble to the inve.nis the gain in econp'my of manufacture; and it matters not whether the general of wanufacturjng and selling the product has proved profitable to the;infringer or, not,. he is responsible to the patentee to the extent that he has ,saved himself, from los::! by using. the patented invention. Mowry v.,Whitney. 14:;Wal,l. 620; Cawood Patent,. 94 U. S. 710; .plack v. U. S. 123,4 Sup. Ot. Rep. Thomson v. W008.tcr,114 U.$. 104;,5 Sup, Ct. ,E,ep.788; Oonover v.Jfers, 11 Blatchf. 197 ,affirmed,il.25'U.S. 144, note, 8 Sup. Ct. Rep. 898, note; Tilghman iv. Proctor,'l25U. S. 136,8 Sup. tiRep. 894," Insuchinftingements it is immaterial what profits theinftinger has made in his business, or from his manner of 'Conducting, it; but the expense ,of using the process or ma<;hine over, that. o! using Qne open· to the· pubHe is to be ascertained J>r;1he manner in whlcbheha.stCQoductedhis business, and not by the

WEBSTER, LoOM CO.

v.

HIGGINS.

677

manner in which he might have conducted it. The advantage derived by the farmer who has raised a crop of grain and threshed it with a patented machine which threshed more in a given time than any othermachine could have threshed is not, according to the rule of the adjudged cases, the profit made on the sale of the excess, including the contribution made by the use of his land, and by his labor in plowing, planting, reaping, and harvesting; no more is it, in the present case, the prof.. its made by the defendants upon the manufacture and sale of their increased production of carpets. ' Assuming that the defendants were by the use of the patented motion. enabled to weave more yards of carpet than they could under similar conditions and circumstances with non-infringing looms, the inquiry in the case is how much more it would have cost them to employ enough non-infringing looms to do the work done by the patented looms. It is not necessary to consider at this time what factors enter into thiS inquiry. It suffices for present purposes to indicate what is the ultimate inquiry to be solved upon the accounting.
SHIPMAN, J. There are two motions in regard to the above-entitled Clluse. They were made in consequence of the opinion of the court, which recommitted the report to the master. 39 Fed. Rep. 462. One is by the plaintiff', that it may be permitted to present to the master new evidence in regard to the Johnson 100m. The second is by the defend ant, asking for a reargument of the question arising upon the excep'" tions to the master's report. So much of the defendant's motion as relates to the exception to the master's conclusion in regard to the rule for the computation of profits in case an advantage was found by the use of the patented device described in the fifth claim of the patent was heard before JUdge W ALI,ACE and myself. J udge WALLACE'S opinion, inwhicli leoncur, is to the effect that the rule which the master adopted was the proper one, and consequently the exceptions which. relate to that part of the report are overruled, and his conclusion that there was a failure to establish a legal basis for the computation of profits is sustained. ' The question then arises as to the propriety of recommitting the port, either for the purpose of taking additional evidence in regard to the Johnson loom or for new findings of fact. The master said in his report:

"In view of the expense in time and money already consumed in this case, I deem it proper to report further respecting the factor of superiority, [of complainant's invention,] so that in caSIl the conclusions of law may be over. ruled on exceptions, the necessity of sending the case back for further report may possibly be avoided."

This course was eminently proper.. The accounting before him.cOtnmenced in the latter part of 1882 or in 1883. The defendants' testi" mony in regard to the Johnson motion was taken in May, 1881, a'ld their testtmony was closed July 21, 1887. The master's draft report was dated July 27, 1888.. The hearing was a long and very expensive QUe, tl1e testimony is' voluminous, and the questions of fact require

mt;lop. :Shlqy.!; . The, ,Qase will pl'obably go, to court,and, if tJiei .0fl&W in regard to the: rule for computation of profits !\nould not be st;lstainlld, it WOll Id; be-: ;verydasirable to 'have the findings of of this court upon. the volume oLtestimony in such .QOridition,that the supremecour.t Can, also review thelq'liestions of fact, if pr.acticab:le,.bring this expeIJsive litigation to,8.:close. To this eng it itpportant,thaUhe recoIU:J:riitted for the pur,Pose ,specified In 'n1,y , ., The next question is in regard to the admission,of.newtestimony by tllecomplainant.in ,respect to device. The. defendants' testimony, to this loom wasJaken near the close of the exhaustive master. ·,The"complainant's counsel.wel'e not at the to find, ,rebutting testimony, for the reason stated also, in my opinion; did not give the importan9El which it subsequently It is now ablete> find and to produce testimony not bri,ng itself, without queswhich it deems important. tion, within the rules which ordinarily govern the reopening of a hearipg Wadmit ,p6wrly-discovered,' e.v.idence, ,the complainant has not yet presentell that.part of its case, and 'pas not had a full opportunity to do i\o,i and it:WQul<:i pe, in my opiniOlll"ihequitableto say that it never shall p11es(jnt it..: motion of theplaintifi' is granted. . The: reipaining question ariseS upon. ,the application of the defendants r8\l.rgq.r.neQtof. the to the master's report, in order to show that. th.e facts in. regard to the Johnson motion, which the court c;lC!3ir,es to fQund,were found by,the master. adrattreport !lad !;leen :submitted,and exceptions thereto had been filed, which were .Qvetruled, the master signed and filed the draft as his . final.eport. He alSf:) says in bis I:eport: ;,;" .reqlleSls, somewhat voluminous, to fhid· facts' and conclusions upon mattt'rs npt included in, having been presented, such reare with. ml :action indicated :'. The 6,led 92 upon matters of fact, and 14 requests to of law.·: To the requests :npon matters of master appended the find,". or III 'do not so find," or "Subst811tilllly correct.". These findings were treated by the parties as, and I have assumed them to be, addenda to the master's report. but lhave not attributed to contained therein' the same impprtaQce whichunquestionablybe 16111gs to the main report.' The ninth request is to find that the folloWing number of yards of carpet were 'Woven at defehdatJts' mill during'the'years 1874 to the , average amount woven per loom per day being statoo' as reduced pro t'qtato the number of wirestdthe inch of carpettoati arithmetically equivalent Dumber' of yards 'ofJ'uin&.'Wire carpet, the yards so reduced beiI)gtermed H 9-wire level; *, *>, 1'1' on 54 Gilbert & 'raft looms, includingtbeSterling loom, andthireeiSllrnple looms, Nos. 54, 55, and 56, with, the Dl1vis and Duckworth .wire 'motion devices, * * * average: per day 53.37 yards." The 'master 'says: II I so find." Similar