Carbice Corp. v. American Patents Development Corp.

Last updated

Carbice Corp. v. American Patents Development Corp.
Seal of the United States Supreme Court.svg
Argued January 16  January 19, 1931
Decided March 9, 1931
Full case nameCarbice Corp. v. American Patents Development Corp.
Citations283 U.S. 27 ( more )
51 S. Ct. 334; 75 L. Ed. 819; 1931 U.S. LEXIS 123; 8 U.S.P.Q. 211
Case history
PriorAm. Patents Dev. Corp. v. Carbice Corp. of Am., 25 F.2d 730 (E.D.N.Y. 1928); reversed, 38 F.2d 62 (2d Cir. 1930); cert. granted, 281 U.S. 711(1930).
SubsequentRehearing granted, 283 U.S. 794(1931); order entered, 283 U.S. 420 (1931).
Holding
A patentee may not create conditional licenses holding that unpatented materials used in connection with the invention shall be purchased only from the licensor. The limited monopoly to make, use, and vend an article may not be expanded by limitations as to materials and supplies necessary to the operation of it.
Court membership
Chief Justice
Charles E. Hughes
Associate Justices
Oliver W. Holmes Jr.  · Willis Van Devanter
James C. McReynolds  · Louis Brandeis
George Sutherland  · Pierce Butler
Harlan F. Stone  · Owen Roberts
Case opinion
MajorityBrandeis, joined by unanimous

Carbice Corp. v. American Patents Development Corp., 283 U.S. 27 (1931), is a decision of the United States Supreme Court extending the patent misuse doctrine against tie-ins to cases in which patents were used to tie the purchase of unpatented elements of patented combinations. [1] The Court had previously held that it was unlawful to require the purchase of supplies as a condition of a patent license, where the supplies were not claimed as part of the patented combination. [2]

Contents

Background

Cross-sectional drawings of inner and outer containers of device of U.S. Pat. No. 1,595,426 Patent drawing of shipping container involved in Carbice case.jpg
Cross-sectional drawings of inner and outer containers of device of U.S. Pat. No. 1,595,426

American Patents Development Corp. (APDC) held a patent for a dry ice [3] transport enclosure (shipping container), in which a smaller container of dry ice was surrounded by a freezable material (such as ice cream) being refrigerated; this arrangement was contrary to the usual packaging practice of surrounding the material being refrigerated with regular ice. [4] The patent was not on dry ice itself, which was well known as a refrigerant, nor on the container itself, but on the combination of the container and dry ice and the freezable material. A typical claim of the patent provided:

6. A transportation package consisting of a protective casing of insulating material having packed therein a quantity of frozen carbon dioxide in an insulating container and a quantity of freezable product in freezing proximity to said frozen carbon dioxide and the gas evaporated therefrom, arranged so that said frozen carbon dioxide is less accessible for exterior heat than said freezable products.

APDC licensed the patent exclusively to Dry Ice Corp. (DIC). DIC made and sold only dry ice. It designated other firms to make and sell the patented transportation devices (see diagram of box within a box). Each invoice for the dry ice that DIC sold had this notice:

The merchandise herein described is shipped upon the following condition: That DryIce shall not be used except in DryIce cabinets or other containers or apparatus provided or approved by the DryIce Corporation of America, and the DryIce Cabinets or other containers or apparatus provided or approved by the DryIce Corporation of America shall be refrigerated or used only with DryIce.

Carbice manufactured and sold dry ice to a Mr. Marchiony (and other persons) who combined the dry ice with containers he originally bought from a supplier approved by DIC, but then he reused the containers without the consent of DIC. [5] APDC then sued Carbice, but that court dismissed the suit on the grounds that no infringement occurred because the dry ice was a perishable supply used in practicing the patent. [6]

APDC appealed to the Second Circuit, which reversed the judgment of the district court. The Second Circuit said that the doctrine of the Motion Picture Patents case did not apply, because the tied product (the dry ice) was a claimed element of the patented combination. That made the case different from prior tie-in cases in which the tied product was an unpatented supply (such as ink or film) used together with the patented device. The Second Circuit said:

It is only unpatented materials which form no part of the patented machine which the Supreme Court held the purchaser of the machine may use at will. The solid carbon dioxide forms the most vital part of plaintiffs' patented package. Marchiony might legally use defendant's carbice in any way not covered by the patent in suit, but he could not manufacture the patented package without the plaintiffs' consent, a consent which they withheld, unless the vital ingredient of its manufacture was purchased from them. To extend the doctrine of the Motion Picture Case as defendant contends would completely destroy the monopoly of plaintiffs' patent. [7]

Carbice then appealed to the Supreme Court.

Ruling of Supreme Court

Justice Brandeis Brandeisl.jpg
Justice Brandeis

Justice Brandeis wrote for a unanimous Court, reversing the Second Circuit and reinstating the judgment of the district court. After explaining the factual setting, the Court said: "Whether the transportation package described is a patentable invention we need not determine. For even if it is, no relief can be granted."

The Court cited Motion Picture Patents Co. v. Universal Film Mfg. Co. [2] for the proposition that a patentee "may not exact as the condition of a license that unpatented materials used in connection with the invention shall be purchased only from the licensor, and if it does so, relief against one who supplies such unpatented materials will be denied. The limited monopoly to make, use, and vend an article may not be 'expanded by limitations as to materials and supplies necessary to the operation of it.' " [8] The Court added, "The relief here sought is indistinguishable from that denied in the Motion Picture Case."

The Court rejected the patentee's attempt to distinguish Motion Picture Patents on the theory that the dry ice was a claimed element of the patented combination while earlier tie-in cases involved supplies that were not part of the patented invention. That was "without legal significance," because:

The Dry Ice Corporation has no right to be free from competition in the sale of solid carbon dioxide. Control over the supply of such unpatented material is beyond the scope of the patentee's monopoly, and this limitation, inherent in the patent grant, is not dependent upon the peculiar function or character of the unpatented material or on the way in which it is used. [9]

Further developments

Dry Ice Corporation (DIC) remained defiant despite the ruling of the Supreme Court. and it inaugurated "a campaign of intimidation against customers of the Carbice Corporation." [10] DIC released

to the public press a statement that the validity of the patent as sustained by the Court of Appeals had not been disturbed; that the true patent monopoly had in no way been limited by this Court; that we had indicated that the proper way to enforce the patent monopoly is by directly suing those who use solid carbon dioxide in the patent combination without a license; and that the Dry Ice Corporation would immediately bring such a suit. [10]

The Supreme Court ordered a re-argument and rehearing, limited to the question of the validity of the patent. [11]

U.S. Patent No. 1,595,426, claims a refrigerating transportation package, consisting of an outer, insulating container, with the food substance to be refrigerated (e.g., ice cream) so packed therein as to surround a quantity of solid carbon dioxide in its separate insulating container, and thus to act, with the evolved gaseous dioxide, as a protection for the solid dioxide against exterior heat, the gas also serving to displace air from the food and refrigerate it. The alleged invention is thus "for the locational arrangement of materials within a container." [12] The Court said that it did not need to determine whether "a locational arrangement within a structure can ever be patented," because this patent "lacks patentable invention and novelty":

Each of the elements—refrigerant, material to be refrigerated, and container—performs its function in a known way. Long prior to the date of the claimed invention, it was known that solid carbon dioxide, which has a temperature of 110 degrees below zero, is a refrigerant; that, when it "melts," it passes directly into a dry gas heavier than air, of like low temperature, which may serve as a refrigerant until its temperature rises to that of the outside air. It was known also that a frozen article—be it ice cream or solid carbon dioxide—will remain frozen longer if insulated, and that paper is an insulator. It was not invention to conclude that a cake of the solid dioxide wrapped in paper would remain solid longer if also surrounded by ice cream than if placed in more immediate proximity to the walls of the container, and thus to the outer air, or to conclude that the gas, being heavier than air, would, as generated, drive the air out of the container, and thus serve as an additional insulator. Moreover, the structural device of surrounding the refrigerant by the article to be refrigerated had been shown in the Mosler and Ladewig refrigerating butter-box . . . and in Rumpel's portable lunch box. [13]

The invalidation of the patent thus terminated the "campaign of intimidation against customers" by threats of patent infringement suits.

Commentary

Patent lawyers have been critical of the Carbice decision. For example, George Sirilla called it a pioneer example of the "Supreme Court's conspicuous anti-patent bent." [14]

Related Research Articles

<span class="mw-page-title-main">Refrigeration</span> Process of moving heat from one location to another in controlled conditions

Refrigeration is any of various types of cooling of a space, substance, or system to lower and/or maintain its temperature below the ambient one. Refrigeration is an artificial, or human-made, cooling method.

<span class="mw-page-title-main">Dry ice</span> Solid carbon dioxide

Dry ice colloquially means the solid form of carbon dioxide. It is commonly used for temporary refrigeration as CO2 does not have a liquid state at normal atmospheric pressure and sublimes directly from the solid state to the gas state. It is used primarily as a cooling agent, but is also used in fog machines at theatres for dramatic effects. Its advantages include lower temperature than that of water ice and not leaving any residue (other than incidental frost from moisture in the atmosphere). It is useful for preserving frozen foods (such as ice cream) where mechanical cooling is unavailable.

<span class="mw-page-title-main">Refrigerator car</span> Railroad car designed to carry perishable freight at specific temperatures

A refrigerator car is a refrigerated boxcar (U.S.), a piece of railroad rolling stock designed to carry perishable freight at specific temperatures. Refrigerator cars differ from simple insulated boxcars and ventilated boxcars, neither of which are fitted with cooling apparatus. Reefers can be ice-cooled, come equipped with any one of a variety of mechanical refrigeration systems, or use carbon dioxide or liquid nitrogen as a cooling agent. Milk cars may or may not include a cooling system, but are equipped with high-speed trucks and other modifications that allow them to travel with passenger trains.

In United States patent law, patent misuse is a patent holder's use of a patent to restrain trade beyond enforcing the exclusive rights that a lawfully obtained patent provides. If a court finds that a patent holder committed patent misuse, the court may rule that the patent holder has lost the right to enforce the patent. Patent misuse that restrains economic competition substantially can also violate United States antitrust law.

<span class="mw-page-title-main">Ice pack</span> Filled bag designed to be frozen

An ice pack or gel pack is a portable bag filled with water, refrigerant gel, or liquid, meant to provide cooling. They can be divided into the reusable type, which works as a thermal mass and requires freezing, or the instant type, which cools itself down using chemicals but can only be used once. The instant type is generally limited to medical use as a cold compress to alleviate the pain of minor injuries, while the reusable type is both used as a cold compress and to keep food cool in portable coolers or in insulated shipping containers to keep products cool during transport.

<span class="mw-page-title-main">Icemaker</span> Consumer device for making ice, found inside a freezer

An icemaker, ice generator, or ice machine may refer to either a consumer device for making ice, found inside a home freezer; a stand-alone appliance for making ice, or an industrial machine for making ice on a large scale. The term "ice machine" usually refers to the stand-alone appliance.

<span class="mw-page-title-main">Refrigerated container</span>

A refrigerated container or reefer is an intermodal container used in intermodal freight transport that is capable of refrigeration for the transportation of temperature-sensitive, perishable cargo such as fruits, vegetables, meat, fish, seafood, and other similar items.

Insulated shipping containers are a type of packaging used to ship temperature sensitive products such as foods, pharmaceuticals, organs, blood, biologic materials, vaccines and chemicals. They are used as part of a cold chain to help maintain product freshness and efficacy. The term can also refer to insulated intermodal containers or insulated swap bodies.

<i>Aro Manufacturing Co. v. Convertible Top Replacement Co.</i> 1961 United States Supreme Court case

Aro Manufacturing Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961), is a United States Supreme Court case in which the Court redefined the U.S. patent law doctrine of repair and reconstruction. The decision is sometimes referred to as Aro I because several years later the Supreme Court readdressed the same issues in a second case in 1964 involving the same parties—Aro II.

United States v. General Electric Co., 272 U.S. 476 (1926), is a decision of the United States Supreme Court holding that a patentee who has granted a single license to a competitor to manufacture the patented product may lawfully fix the price at which the licensee may sell the product.

A post-sale restraint, also termed a post-sale restriction, as those terms are used in United States patent law and antitrust law, is a limitation that operates after a sale of goods to a purchaser has occurred and purports to restrain, restrict, or limit the scope of the buyer's freedom to utilize, resell, or otherwise dispose of or take action regarding the sold goods. Such restraints have also been termed "equitable servitudes on chattels".

<span class="mw-page-title-main">Patent infringement in Canadian law</span>

Once an invention is patented in Canada, exclusive rights are granted to the patent holder as defined by s.42 of the Patent Act. Any interference with the patent holder's "full enjoyment of the monopoly granted by the patent" is considered a patent infringement. Making, constructing, using, or selling a patented invention without the patent holder's permission can constitute infringement. Possession of a patented object, use of a patented object in a process, and inducement or procurement of an infringement may also, in some cases, count as infringement.

Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488 (1942), is a patent misuse decision of the United States Supreme Court. It was the first case in which the Court expressly labeled as "misuse" the Motion Picture Patent/Carbice tie-in defense to a charge of patent infringement and created the present blanket remedy in infringement cases of unenforceability of the misused patent. The decision re-emphasized that misuse can be found without finding an antitrust violation.

Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917), is United States Supreme Court decision that is notable as an early example of the patent misuse doctrine. It held that, because a patent grant is limited to the invention described in the claims of the patent, the patent law does not empower the patent owner, by notices attached to the patented article, to extend the scope of the patent monopoly by restricting the use of the patented article to materials necessary for their operation but forming no part of the patented invention, or to place downstream restrictions on the articles making them subject to conditions as to use. The decision overruled The Button-Fastener Case, and Henry v. A.B. Dick Co., which had held such restrictive notices effective and enforceable.

Henry v. A.B. Dick Co., 224 U.S. 1 (1912), was a 1912 decision of the United States Supreme Court that upheld patent licensing restrictions such as tie-ins on the basis of the so-called inherency doctrine—the theory that it was the inherent right of a patent owner, because he could lawfully refuse to license his patent at all, to exercise the "lesser" right to license it on any terms and conditions he chose. In 1917, the Supreme Court overruled the A.B. Dick case in Motion Picture Patents Co. v. Universal Film Mfg. Co.,

<i>Button-Fastener case</i>

The Button-Fastener Case, Heaton-Peninsular Button-Fastener Co. v. Eureka Specialty Co., also known as the Peninsular Button-Fastener Case, was for a time a highly influential decision of the United States Court of Appeals for the Sixth Circuit. Many courts of appeals, and the United States Supreme Court in the A.B. Dick case adopted its "inherency doctrine"—"the argument that, since the patentee may withhold his patent altogether from public use, he must logically and necessarily be permitted to impose any conditions which he chooses upon any use which he may allow of it." In 1917, however, the Supreme Court expressly overruled the Button-Fastener Case and the A.B. Dick case, in the Motion Picture Patents case.

Leitch Manufacturing Co. v. Barber Co., 302 U.S. 458 (1938), is a 1938 decision of the United States Supreme Court extending the tie-in patent misuse doctrine to cases in which the patentee does not use an explicit tie-in license but instead relies on grants of implied licenses to only those who buy a necessary supply from it.

B.B. Chemical Co. v. Ellis, 314 U.S. 495 (1942), is a United States Supreme Court decision involving the patent misuse doctrine and the extent of remedies a court should award after finding a misuse that the patentee alleges it has now discontinued. The Court ruled that to be able to enforce the patent against infringement the patentee must show that it has fully abandoned its unlawful practice and that the consequences of that practice have been fully dissipated. This was a companion case to Morton Salt Co. v. G.S. Suppiger Co. decided on the same day.

The Mercoid casesMercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661 (1944), and Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680 (1944)—are 1944 patent tie-in misuse and antitrust decisions of the United States Supreme Court. These companion cases are said to have reached the "high-water mark of the patent misuse doctrine." The Court substantially limited the contributory infringement doctrine by holding unlawful tie-ins of "non-staple" unpatented articles that were specially adapted only for use in practicing a patent, and the Court observed: "The result of this decision, together with those which have preceded it, is to limit substantially the doctrine of contributory infringement. What residuum may be left we need not stop to consider." The Court also suggested that an attempt to extend the reach of a patent beyond its claims could or would violate the antitrust laws: "The legality of any attempt to bring unpatented goods within the protection of the patent is measured by the antitrust laws, not by the patent law."

Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176 (1980), is a 1980 5–4 decision of the United States Supreme Court limiting the patent misuse doctrine and explaining the scope of the 1952 amendment of the patent laws that resurrected the contributory infringement doctrine in the wake of the Mercoid cases. The Mercoid cases and a few predecessor cases had denied relief against patent infringement to patentees who were deriving revenue from the sale of unpatented products used as supplies for patented combinations or as components of patented combinations, even when the unpatented products were specially adapted for use with the patented combinations and even when they lacked any utility other than that use. The patentees used contributory infringement suits or threats of such suits to enforce their business model, which the Mercoid cases outlawed.

References

The citations in this article are written in Bluebook style. Please see the talk page for more information.

  1. Carbice Corp. v. Am. Patents Dev. Corp., 283 U.S. 27 (1931).
  2. 1 2 Motion Picture Patents Co. v. Universal Film Mfg. Co. , 243 U.S. 502 (1917).
  3. Dry ice is solid, frozen carbon dioxide (CO2). Its temperature is –110 °F (78 °C) or below. It does not liquefy under atmospheric pressure at temperatures above –110 °F but turns directly into gaseous CO2
  4. U.S. Pat. No. 1,595,426
  5. See Am. Patents Dev. Corp. v. Carbice Corp. of Am., 25F.2d730 , 732( E.D.N.Y. 1928).
  6. 25 F.2d at 733.
  7. Am. Patents Dev. Corp. v. Carbice Corp. of Am., 38F.2d62 , 85-86( 2d Cir. 1930).
  8. 283 U.S. at 31.
  9. 283 U.S. at 33.
  10. 1 2 Carbice Corp. v. Am. Patents Dev. Corp., 283 U.S. 420, 421 (1931).
  11. Carbice Corp. v. Am. Patents Dev. Corp., 283 U.S. 794(1931).
  12. 283 U.S. at 321.
  13. 283 U.S. at 421-22.
  14. George M. Sirilla, 35 U.S.C. § 103: From Hotchkiss To Hand To Rich, The Obvious Patent Law Hall-Of-Famers, 32 J. Marshall L. Rev. 437, 475 (1999)