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the Adams and Westlake Manufacturing Company, and the Adams and Westlake Company," relied on as effecting an extension of the contracts, is as follows:
"I beg to add to my recent letter to you this formal notice that my clients elect to extend for the period of five years from December 31, 1891, their contracts with you, dated February 2, 1886, of which notice kindly acknowledge receipt."
So far as appears from the papers before me, the defendant took no notice of this letter, and it has not been claimed that he ever, by any instrument in writing, agreed to an extension of these contracts. In my opinion, the notice above quoted from the letter of J. H. Raymond did not effect an extension of the agreements, for two reasons: First, because it was a notice from two corporations that those two corpo rations “elect to extend their contracts with you, dated February 2, 1886," when the defendant had no contract with one of these corporations. Furthermore, the notice was that these two corporations elect to extend their contracts for one year longer than was provided in the contract between the complainant and the defendant. By the contracts an option was given to the complainant to extend the time of the contract for five years from January 1, 1891. The notice sent says that the two corporations mentioned in it elect to extend their contract for five years from December 31, 1891; that is, for one year longer than the complainant's contract stated. It is said that this was an oversight on the part of the writer. If such be the fact, nevertheless, the only notice the defendant ever received related to an extension for five years from December 31, 1891, which he had never agreed to give. In my opinion, such a notice did not effect an extension of the contracts. The injunction asked for must therefore be denied upon the further ground that the contracts which form the foundation of the complainant's bill have expired.
EDISON ELECTRIC LIGHT CO. et al. v. SAWYER
MAN ELECTRIC CO. (Circuit Court of Appeals, Second Circuit. December 15, 1892.) 1. PATENTS FOR INVENTIONS-SUIT FOR INFRINGEMENT-LACHES.
The owner of letters patent No. 223,898, issued January 27, 1880, to Thomas A. Edison for an incandescent electric light, having seasonably brought suit in 1885 against the United States Electric Lighting Company for infringement, no other company engaged in manufacturing infringing lamps can complain that the owner of the patent was guilty of laches in not bringing suit against them for infringement prior to the decision of that case in the circuit court, (October 4, 1892,) for all persons interested in having the patent defeated must have been familiar with the litigation, and with the fact that it was very expensive and arduous, and they entered upon their business with an understanding of its risks, and of the consequences wbich would befall them as infringers if the patent should be
sustained. 2. SAME.
There are much stronger equities, howerer, in favor of users who, prior to the decision in the circuit court, and at a time when judicial decisions in foreign countries interpreting the patent were in conflict, purchased from the infringers electric lighting plants which require the lamps of the patent for their operation, and who are now willing to accept their lamps
from the owner of the patent on reasonable terms; and on application to
the court these equities will be enforced. 3. SAME.
is to users, however, who acquired their plants subsequent to the decision of the circuit court sustaining the patent, they must be held to have proceeded with full knowledge of the invalidity of the patent, and must
suffer the consequences of infringement. 4 SAME-INJUNCTION PENDENTE LITE-UNLAWFUL COMBINATIONS.
A person owning a patent which has been sustained by an adjudication of the circuit court cannot be deprived of his right to an injunction pendente lite in a subsequent action against substantially the same parties for a further infringement, on the ground that he has entered into a combination with others owning similar patents for the purpose of securing an en
tire monopoly of the business in the United States. 5. SAME--ESTOPPEL.
In May, 1885, complainant, the Edison Company, owning letters patent No. 223,898, issued January 27, 1880, to Thomas A. Edison for an incandescent electric lamp, commenced a suit for infringement against the Consolidated Company, which was manufacturing electric lamps under the Sawyer-Man patents. About the same time, the Thomson-Houston Company was engaged in manufacturing electrical apparatus, and as the result of negotiations between it and the Consolidated Company the defendant, the Sawyer-Man Company, was organized to manufacture under the SawyerMan patents, the Consolidated Company executing a license to it. The majority of defendant's stock was owned by the Thomson-Houston Company, which thereafter sold the same to the Consolidated Company, in consideration of a large amount of the latter's stock and bonds. Subsequently the Thomson-Houston Company sold such stock and bonds to the Westinghouse Company, and at the same time, by an agreement between the Thomson-Houston Company and the Consolidated Company, the fulfillment of which on the latter's part was guarantied by the Westinghouse Company, the Thomson-Houston Company was licensed to make incandescent lamps for export and for use with apparatus of its own manufacture in this country, and the Westinghouse Company was prohibited from selling incandescent lamps for use with the Thomson-Houston Company's generating apparatus. The agreement recognized the fact that during its continuance the Thomson-Houston Company could make and sell lamps not covered by the Sawyer-Man patents, and in that event the Consolidated Company was to be released from its obligation not to sell lamps for use with the Thomson-Houston Company's apparatus. In the mean time, and while the suit between the Edison Company and the Con. solidated Company was still pending, the Edison Company and the Thomson-Houston Company had united, so that substantially the whole lampmaking business was done by the three companies. Held, that the fact that the Edison Company entered into this combination did not operate as an estoppel, because of the dealings between the Thomson-Houston Company and the Westinghouse interests. Appeal from the Circuit Court of the United States for the Southern District of New York.
In Equity. Bill by the Edison Electric Light Company and the Edison General Electric Company against the Sawyer-Man Electric Company for infringement of a patent. A pro forma decree, awarding a preliminary injunction, was entered below, and the defendant company appeals. Decree modified.
Kerr & Curtis, (Edmund Wetmore, Elihu Root, and Leonard E. Curtis, of counsel,) for appellant.
Dyer & Seely, (Clarence A. Seward, Grosvenor P. Lowrey, and Richard N. Dyer, of counsel,) for appellees. Before WALLACE, LACOMBE, and SHIPMAN, Circuit Judges.
PER CURIAM. This is an appeal from an order of the circuit court granting an injunction pendente lite restraining the defendant from making, using, or vending the incandescent electric lamps of the patent granted to Thomas A. Edison, January 27, 1880, No. 223,898, of which the complainants are the owners. The order was granted pro forma, in the view that a final disposition of the questions in. volved might be promptly made by the decision of this court. The validity of the patent, and the infringement of its second claim by such lamps as the defendant makes, were adjudged by the circuit court for the southern district of New York, July 14, 1891, in a decree at final hearing. That suit was brought against the United States Electric Lighting Company, and was defended by the Westinghouse Electric Company, a corporation which since October 10, 1888, has been the owner of the business carried on in the name of the present defendant. The business of the defendant consists exclusively in the manufacture of the infringing lamps. The decree of the circuit court adjudging the validity of the second claim of the patent, and its infringement by lamps such as are made by the defendant, was upon an appeal affirmed by this court October 4, 1892. See 52 Fed. Rep. 300. That decree, among other things, awarded the complainants a perpetual injunction. The present suit was brought subsequently to that affirmance.
It is apparent that the order for the present injunction is, in effect, one to extend the terms of an injunction already granted in a suit determined by the court of last resort between the same parties, or their privies, so as to include a new infringement. For an understanding of the grounds upon which the defendant contends the injunction ought not to have been granted, the following narrative is necessary: For several years subsequent to 1880, the Edison Company and the United States Electric Lighting Company were the only manufacturers of incandescent lighting apparatus in this country doing any considerable business. The United States Electric Lighting Company began manufacturing incandescent lighting apparatus, including the lamps which have been held to be an infringement of the Edison patent, in the summer of 1880, and continued in such business until a recent period. In May, 1885, a suit was brought against it upon the present patent. Another corporation, the Consolidated Electric Lighting Company, was organized in September, 1882, and began the manufacture of incandescent lighting apparatus. This company was the owner of and operated under what are known as the “Sawyer-Man Patents” for electric lighting apparatus; and under these patents it assumed that it had the exclusive right to make and sell the lamp claimed in the patent in suit. In May, 1885, suit was brought against it by the Edison Electric Light Company upon the patent in suit, and about the same time it brought suit against the Edison Company for infringement of its own patent. In 1883 a corporation known as the "Thomson-Houston Company" began the manufacture and sale of electric apparatus for lighting and power. As the result of negotiations between the Consolidated Electric Lighting Company and the Thomson-Houston Company, the Sawyer. Man Company, the present defendant, was organized in September,
1886. Nine tenths of its stock was owned by the Thomson-Houston Company. It received from the Consolidated Company a license to manufacture lamps under the Sawyer-Man patents, and thereupon began the business of manufacturing the infringing lamp, and has continued in this business to the present time. In August, 1887, all the stock of the defendant, including that owned by the Thomson-Houston Company, was sold to the Consolidated Company for $120,000 in bonds, and the same amount at par of its stock. In December, 1888, the Thomson-Houston Company sold its stock in the Consolidated Company to the Westinghouse Electric Company. At the same time, by an agreement between the Consolidated Company and the Thomson-Houston Company, the fulfillment of which on the part of the Consolidated Company was guarantied by the Westinghouse Company, the Thomson-Houston Company was licensed under the patents of the Consolidated Company to make incandescent lamps for export and use with generating apparatus of its own manufacture in this country; and the Westinghouse Company was prohibited from selling incandescent lamps for use with the Thomson-Houston generating apparatus for a period which might, at the option of the Thomson-Houston Company, extend to 1902. This agreement recognized the fact that the Thomson-Houston Company could, during the continuance of the agreement, make and sell lamps not covered by the Consolidated Company's patent; and, in the event of such manufacture and sale, the latter company was released from its obligation not to sell lamps for use in connection with the Thomson-Houston generating apparatus. Pending the suit against the United States Electric Lighting Company, the Westinghouse Company succeeded to the business of the United States Company, the Consolidated Company, and the defendant; and since September, 1888, the defendant has been the manufacturer of lamps for the Westinghouse system. Each of the various companies engaged in the manufacture and sale of electric lighting apparatus has, as a rule, manufactured all the different pieces of apparatus which are necessary for making up a complete "plant,” the different parts being constructed with reference to use with each other, and not so as to be adapted for use in the systems of apparatus made by other manufacturers. For the purpose of public lighting from central stations, local companies, known as “illuminating companies," have been organized in various cities and towns, which have purchased plants from one or the other of the manufacturing companies, and the central stations of such illuminating companies have, as a rule, been equipped wholly with the electrical apparatus made by some one manufacturing company. In many cities and towns there are competing illuminating companies using the system of different manufacturers, some being equipped with the Edison system, some with the Westinghouse system, and some with the Thomson-Houston system. The United States Company has installed about 1,050 plants, with a lamp capacity of about 350,000 lamps. About 300 of these plants were installed before the suit upon the patent was brought against it. The Consolidated Company also installed a large number of plants. After the Westinghouse Company succeeded to the business of the
United States Company and the Consolidated Company, it also installed a large number of plants. It is said that the aggregate lamp capacity of the incandescent lighting plants installed with generating apparatus supplied by the Westinghouse Company at the present time represents a capital of about $25,000,000, and a lamp capacity of over 1,300,000 lamps. The lamps themselves represent but a small part of the cost of the plants, the greater part being represented by the electric apparatus supplied by the Westinghouse Company and its predecessors; but the lamps are essential for the continued operation of the plants. Unless the lamps can be replaced as they are worn out, and can be procured when needed, these plants will be crippled, and the greater part of the investment in them will be lost. The central station plants supply lights to consumers as gas companies supply gas; and, if their operation should be stopped, great inconvenience to the public would ensue. The various companies give employment to a large number of men who might be thrown out of employment if the lamps could not be obtained. In 1889 the Edison General Electric Company was organized for the purpose of combining the Edison Electric Light Company with various other corporations engaged in the manufacture and sale of electric apparatus, the organization of the subordinate corporations being retained. Prior to April, 1892, the Thomson-Houston Company had acquired the stocks of various other companies engaged in the business of manufacturing and selling electrical apparatus, and these companies were carrying on the business in combination with the Thomson-Houston Company and under its control. In April, 1892, these two combinations, the Edison General Electric Company and the Thomson-Houston Company, included substantially all the companies which had heretofore been competing in this kind of business, excepting the Westinghouse Company; and in that month the General Electric Company was organized for the purpose of combining these two combinations in one which should include all the concerns in this country, except the Westinghouse Company, which formerly were competing in the business of making and selling electric light and power apparatus, but the separate organization of the constituent companies was still retained.
The defendant insists that the preliminary injunction should not have been granted because, (1) owing to the laches of the owners of the patent in asserting their claims and enforcing them, a large capital has been invested in the manufacture and sale, not only of the lamps, but also in electric lighting apparatus, which will be greatly depreciated in value unless the lamps can be used with it, and that an injunction will cripple and perhaps ruin the local illuminating companies who have invested in the plants of the Westinghouse Companies if they are prevented from using the lamp of the patent, and thereby subject to great inconvenience those whom these plants furnish with light, and displace a large number of persons who are employed in operating the plants; (2) because the complainants and the other corporations with whom the complainants are associated, the competitors of the Westinghouse Company in the business of making and supplying electric power and lighting, have entered into