
    THOMSON v. CITIZENS’ NAT. BANK OF FARGO. CITIZENS’ NAT. BANK OF FARGO v. THOMSON.
    (Circuit Court of Appeals, Eighth Circuit.
    November 14, 1892.)
    Nos. 156, 167.
    L Patents fob Inventions — Patentability—N ovelty.
    Letters patent No. 385,648, July 3,1888, and reissued letters patent No. 10,977, December 25, 1888, issued to Walter Thomson for an improvement in the manufacture of bank account books, whereby the short leaves are creased or perforated for folding in such a manner as to transfer the column of balances on the right-hand page to the succeeding left-hand page, are valid, as even skilled bookkeepers had not previously discovered it, although the device is so simple and obvious, as well as useful, that it would seem that it should have been always known and used. Hollister v. Manu- , fadturing Co., 5 Sup. Ct. Rep. 717,113 U. S. 59, 72, distinguished.
    2. Same — Scope of Patent Laws.
    A new and useful improvement in the manufacture of bank account books is embraced within the terms of the patent laws.
    3. Same — License—Nontbansfesable.
    A copartnership conducting a bank was permitted to use an improvement in bank account books for seven months before application for a patent was filed, which was done December 31, 1886. The firm was dissolved January 1,1887, and succeeded by a corporation which used the old account book, and perhaps other similar books, with the patentee’s consent, during 1887. In 18S8, 1889, and 1890 it paid a royalty for all such books used, though purchased in part from unlicensed makers. Thereafter it used the books, but paid no royalty. Held, that the implied license to the co-partnership under Rev. St. § 4899, was incapable of assignment or transfer, and that the corporation infringed.
    Appeals from the Circuit Court of the United States for the District of North Dakota.
    In Equity. Bill by Walter Thomson against the Citizens’ National Bank of Fargo, N. D., for infringement of letters patent. The eir-. cuit court held the patent valid, but dismissed the bill. Complainant appeals, his cause being numbered 15G. Defendant also appeals, Ms cause being numbered 167.
    Reversed, and decree directed for complainant.
    Statement by SANBORN, Circuit Judge:
    These are cross appeals from a decree dismissing a bill in equity brought by the patentee in original letters patent No. 385,648, dated July 3, 1888, and reissued letters patent No. 10,977, dated December 25, 1S88, for an bnprovement in the manufacture of bank account books, against the Citizens’ National Bank of Fargo for infringement. The patented improvement consisted in constructing each of the short leaves of bank account books, by so ruling.and perforating or creasing them, that the margins thereof could be conveniently folded back upon themselves, and made thus to disclose a column for the entry of balances of account on the pages preceding those to which these columns belonged, so that when the leaves were unfolded the columns thus disclosed would appear on the pages succeeding those upon which they appeared when the'leaves were folded.
    The state - of the art prior to this invention was such that bank account books had long been manufactured with long and short leaves. On the margin of each long leaf, on the left-hand page of the open account book, were usually written the names of those having accounts with the bank. The remainder of this page and the right-hand page were generally divided by perpendicular lines into six spaces, to accommodate the business of the six days of a week, and each of these spaces was again divided by" like lines into three columns, for the entry, opposite their names, of the cheeks, deposits, and balances of the customers, respectively. One or mon of the leaves succeeding each long leaf was so far shortened that when turned to the left its margin would hill upon the line on the long leaf that separa led the space where the names were written from the columns for the accounts. This shortening of these leaves obviated the necessity of rewriting the names upon the short leaves as they were turned, but, when the right-hand pa go had been filled, it was necessary to rewrite upon The next page the last column, which contained Hie balances .of the accounts, as a basis for their cent;nuance, and to accomplish this the bookkeeper must continually turn the lea i as he proceeded, or must copy off the entire column upon a. separate piece of paper, and then recopy it upon the succeeding page. To obviate the necessity of thus rewriting this column of balances, and to transfer it without copying from the margin of the right-hand page of the book to the margin of i he succeeding left-hand page, was the object of complainant’s invention. Tnis he accomplished by so ruling and then creasing or perforating each of the short leaves in a line parallel to its margin, and at such a distancíe therefrom, that by folding it upon itself it disclosed upon the right-hand page of the ojien book and in the proper location of the last column of balances thereon, the first column on the succeeding left-hand page, which was ruled for the column of balances. When any leaf was thus folded back, and this column filled, the simjilo turning and unfolding of the leaf transferred this column of balances to the succeeding page. After describe ing in his specifications the usual c instruction of bank account books, his improvement in their manufacture, and its advantage, with propia1 references to figures attached illustrating it, the patentee claimed:
    “(1) The bank account book, A, having a suitable number of full leaves, 0, and alternate series of short leaves, B, each of said short leaves having margin, b, creased or perforated at b' substantially as and for the jiurposos set forth.
    “(2) The bank account book herein described, composed of alternate long and series of short leaves, the several long leaves prepared to receive the depositors’ names on the left-hand side, and both also prepared to receive the accounts for several successivi days, the right-hand end of each of said short leaves having a margin adapted by folding to receive the last day's balance, so that when the leaf is tru ned, and said margin straightened out, said balance forms the beginning of tin next day's account on the next page:”
    The application for the original J liters patent was filed December 31, 1880. The defendant was organized as t national bank January 1, 1887. It succeeded to the business, books, and bookkeeper of the Bank of Fargo, which was a copartnership. Complainant ordered the first book containing his improvement in April, and received it in May, 1886, and the bookkeeper of the Bank of Fsirgo, who got his fin-1 idea of this improvement from complainant, commenced June 2, Í8S0, to transfer his balances on the account book he was using, without rewriting, by fi Jding the short leaves of his account book to the right, and continued to use dfis book in that way, with the knowledge of, and without objection from, complainant, during that year and the next, until the book was filled. The coi uplainant arranged with certain manufacturers to make and sell bank accoi mt books containing his invention in 1887, and the defendant bought its account books for 1888 and 1889 of these manufacturers. Defendant ordered from unlicensed manufacturers in 1889, and used in 1800, account books containing this invention, and paid the complainant a, royalty thereon. Defendant ordered from unlicensed manufacturers in 1890, and used in 1891, account: books containing this invention, and for this infringement this suit was brought.
    The circuit court held the putem valid, and this holding the defendant assigned as error. That court held that, “within two years prior to the application for the patent by Walter Thomson, the Bank of Fargo, the predecessor of the defendant, made and used a bank account book with the knowledge and consent of Thomson, the said patentee, embodying substantially the same devices embraced in and jirotected by said reissued letters patent bio. 10,997, and the defendant, as successor of 1 he said Bank of Fargo, has a right to make and use, and to continue to make and use, the thing invented, the right to ■which is secured in said patent, without liability therefor,” and on that ground dismissed the bill, and this holding is assigned as error by the complainant.
    
      C. E. Joslin, for Walter Thomson.
    Seth Newman, for Citizens’ Nat. Banlc.
    Before CALDWELL and SANBORN, Circuit Judges, and SHU-RAS, District Judge.
   SANBORN, Circuit Judge,

(after stating the facts.) Letters patent grant a public franchise, giving to the inventor some compensation for the exercise of his inventive genius in the discovery of, and his labor and ingenuity in reducing to practice and describing, novel and useful inventions, by which the public may attain beneficial' results with less expenditure of time and labor. From every patented invention of value the compensation derived by the inventor is small in proportion to the benefit conferred upon the public. The invent- or’s reward is limited to a few years, at most, while the benefit to the public continues forever. No patented invention can, in the nature of things, be valuable to its owner unless it is of greater value to the public even during the term of his franchise, since the latter will not purchase the right to vend or use it unless it is moré profitable to do so than to do without it. Letters patent issued under our constitution and laws thus offer the necessary pecuniary inducement to those gifted with inventive genius, without which they would not be able to bestow the thought, time, and toil required to find, perfect by experiment, reduce to practice, and give to the public many of those useful inventions which have enabled us to excel in the manufacture and use of machinery, and in progress in all the useful arts, that promote the efficiency and comfort of our citizens. The time, thought, labor, and expense that produce a valuable invention are the inventor’s, the completed invention which is them product is his, and when, in consideration of his describing it, and making it useful to the public forever, he is granted the exclusive right to use and vend it for a limited time, this franchise should not be regarded as a monopoly conferred on him at the expense and to the prejudice of the public, but as a just and fair consideration, granted for valuable services rendered, which both equitably and legally entitle him to the same protection for this property that the owner of any other species of property enjoys.

The defendant, after recognizing and paying for the use of complainant’s invention for three years, infringed it in 1891, and seeks to justify its course on the ground that the patent is void for want of novelty, and that its predecessor in 1886 used the invention without objection from the complainant.

The letters patent were prima facie evidence of the novelty of the invention, and no evidence was produced that it had ever been known, described, or practiced before complainant discovered it. A glance at the patent and the invention itself, and'the fact that defendant used and paid a royalty for the use of it for three years, and now infringes, sufficiently establish its utility.

The mere fact that the patented invention is but a combination of old ingredients or materials is not a tenable objection to the patent, since it is a general rule that a patentable invention may consist entirely in a new combi na lion or arrangement of old or well-known ingredients or elements, provided a new and usefnl result is therebv attained. Seymour v. Osborne, 11 Wall. 516, 542, 548; Rees v. Gould, 15 Wall. 187, 189.

That after the discovery and practice of the invention it seems so simple and obvious that tbe wonder is that it had not been always known and used is not always conclusive evidence that it has not. sufficient novelty to be patentable, especially where the desirability of the useful result attained must have been long obvious to ail persons skilled in tbe art or manufacture to w'bich it pertains, but no one discovered or practiced it before the patentee. In The Barbed Wire Patent, 148 U. S. 275, 281, 283, 12 Sup. Ct. Rep. 443, the Glidden patent for the coiled barb in combination with the twisted wire, by which the barb is clamped and held firmly in position, was sustained, although strands of wire twisted together had long been used for fencing, and the older patent of Kelly described a wire fence composed of twisied wires and a two-prong diamond-shaped barb, with a central perforation, by which it was strung upon one of the wires, and afterwards fastened in place by the blow of a hammer. From this invention of Kelly to the coiled barb and twisted wire of Glidden, clamping tbe barb rigidly in place, is a slight advance, and it now seems obi lous that the twisted strands would hold the barb coiled upon one of them rigidly in place; but no one seems to have perceived this iact, and put the twisted wires and coiled barb to this beneficial use, until Glidden conceived the idea, and thus utilized it, and the supreme court sustained his patent with the remark:

“It may be strange that, considering the important results obtained by Kelley in his patent, it did not occur to him to substitute a coiled wire in place of the diamond-shaped prong, but it evidently did not; and to the man 1o whom it did ought not to be denied the quality of inventor.”

In Magovan v. Packing Co., 141. U. S. 332, 341, 343, 12 Sup. Ct. Rep. 71, the Gateiey patent for “improvements in vulcanized India rubber packing” consisted simply in combining and uniting by vulcanization packing described in the prior patent of McBurney, which consisted of alternate layers of canvas and India rubber, and an elastic packing of pure gum, so ilia t the gland of the stuffing box would force the packing with such tightness against the piston rod that a tight joint would result. The difficulty experienced with the Mc-Burney packing had been that, as it was worn away by the pisten rod, it did not have sufficient elasticity to keep the joint at the piston rod tight at all times. It may seem now that any mechanic skilled in the ail, who observed the difficulty, must, by the exercise of his skill and reasoning powers, have arrived at the now obvious remedy; but no one seems to have done so before Gateiey. His discovery was therefore held to be novel and patentable.

Defendant’s counsel relies chiefly upon tbe decision in Hollister v. Manufacturing Co., 113 U. S. 59, 72, 5 Sup. Ct. Rep. 717, to sustain Ms contention that tbe complainant’s improvement does not constitute an invention, but is “tbe suggestion of that common experience, which arose spontaneously, and by a necessity of human reasoning, in the minds of those who had become acquainted with the circumstances with which they had to deal.” But the- reasoning of Mr. Justice Mathews in that case is inapplicable to the invention now before us. It rests upon the fact that as soon as the evil which the patented improvement he was speaking of remedied, became known, and the result attained by it became desirable, the improvement was immediately suggested. Thus, further on in the opinion, he said:

“As soon as the mischief became apparent, and the remedy was seriously studied by those competent to deal with the subject, the present regulation, which embodied the improvement, was promptly suggested and adopted; just as a skilled mechanic, witnessing the performance of a machine, inadequate, by reason of some defect, to accomplish the object for which it has been designed, by the application of his common knowledge and experience perceives the reason of the failure, and supplies what is obviously wanted. It té but the display of the expected skill of tbe calling, and involves only the exercise of the ordinary faculties of reasoning upon the materials supplied by a special knowledge, and the facility of manipulation which results from its habitual and intelligent practice.”

But the evil which, tbe complainant’s invention remedied bad been apparent for years. Tbe useful result bis invention attained must bare been sought by generations of skilled bookkeepers, and their common knowledge and experience had never suggested this improvement. It had been apparent to all men manipulating tbe account books of banks ever since such, books existed that it was desirable to make tbe last balance column of figures on tbe margin of tbe right-band page of the open book tbe first column on tbe succeeding page, and thus to obviate tbe necessity of copying and recopying it whenever two pages were filled, and it became necessary to turn tbe leaf; but skilled bookkeepers, supplied with tbe special knowledge of their calling, “and the facility of manipulation which results from its habitual and intelligent practice,” bad gone on, from generation to generation, copying off this last column, turning tbe leaf, and then reeopying it on tbe succeeding page, and no one of them, during all tbe time since such account books have been in use, by any display of tbe expected skill of bis calling, or by the exercise of Ms faculties of reasoning, bad ever arrived at the conclusion that complainant’s improvement would accomplish its beneficial result until he discovered and made known Ms invention. Tbe probative force of tMs fact, added to tbe presumption arising from the letters patent, satisfies us of tbe novelty and patentability of this invention. If tbe display of tbe expected skill of tbe calling or tbe exercise of tbe ordinary faculties of reasoning bad been sufficient to discover and put in practice this improvement, some bookkeeper would have displayed that skill or exercised those faculties, and thus obtained this result long ago. These were not sufficient. It required something more to attain this result; it required tbe exercise of “that intuitive faculty of tbe mind, put forth in tbe search for new results or new methods, which creates what bad not before existed, or brings to light what lies Mdden.” This faculty tbe complainant exercised, and the result is tliis invention, — an invention, it is true, that now seems so sbnple that we marvel that it did not before occur to every bookkeeper, but one that clearly did not, and that is of such obvious utility that complainant is equita bly, as well as legally, entitled to the full protection of his franchise. Loom Co. v. Higgins, 105 U. S. 580, 591; Consolidated Safety Valve Co. v. Crosby Steam Gauge & Valve Co., 113 U. S. 157, 179, 5 Sup. Ct. Rep. 513; Magowan v. Packing Co., supra; The Barbed Wire Patent, supra.

The technical claim of the defendant that this invention is not patentable because it is not embraced within the terms of the patent laws is without merit. The staiute provides that “any person who has invented and discovered any new and useful art, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor,” when his invention or discovery is made under the circumstances proved in this case. Section 4886, Bev. St. It is not perceived why one who invents a new and useful improvement in the manufacture of bank account books is not equally entitled to a patent with one who invents an improvement in the manufacture of barbed wire for fencing, of packing for the stuffing boxes of pistons, of safety valves for engines, of looms for weaving cloth, or of any other article upon improvements in the .manufacture of which the supre me court has sustained patents.

A single question remains: Do the facts that the copartnership styled the Bank of Fargo was permitted to use the patented invention for seven months before the, application for a patent was filed, and that the defendant subsequently succeeded to their business and property, confer upon it an implied license to make and use new account books, embodying the patented invention? The application for this patent was filed December 31, 1886. The Ba.uk of Fargo first applied the invention to their account book June 2, 1886, and used it thereafter with complainant’s consent until the firm was dissolved, January 1, 1887. The defendant corporation was organized and commenced business on that da.y. It succeeded to the business, account hooks, and assignable assets of the Bank of Fargo, and this old account hook and perhaps others embodying the invention were used by the defendant; with complainant’s consent until January 1, 1888. In 1888,1889, and 1899 it used the invention in Its account books, and paid complainant; royalty therefor. The defendant claimed, and the court below held, that under (his state of facts the defendant held an implied license to make and use account hooks embodying this invention without liability to complainant under section 4899 of the Bevised Statutes, which provides that “every person wrho purchases of the inventor or discoverer, or with his knowledge and consent constructs, any new ty invented or discovered machine, or other patentable articles, prior .o the application by the inventor or discoverer for a patent, or who sells or uses one so constructed, shall have the right to use, and vend to others to he used, the specific thing so made or purchased without liability therefor.” This claim was unfounded, and the court below erred in sustaining it. The defendant did not purchase, construct, or use any article embodying the complainant’s invention before he filed his application for a patent* since it did not come into existence until after that filing. "Whatever license it had it derived from the dissolved copartnership by purchase or assignment; but the only right the partnership had was the statutory privilege of using, and vending to others to be used, the specific patentable thing they had made with complainant’s consent. This was not a grant of any - portion of the franchise; it vested no title or interest in any part of the patent in the copartnership ; it did not grant an exclusive right in the whole or in any specific part of the territory of the United States; it did not give an exclusive right or privilege in anything; it was a mere naked license, personal to the copartnership, and incapable of assignment or transfer. The members of the copartnership could convey, and the succeeding corporation could take, nothing under it by purchase, assignment, or succession, unless it might be the right to use the old account book until it was filled, and that was accomplished early in the year 1887 without objection from any one. Thus, in Hapgood v. Hewitt, 119 U. S. 226-234, 7 Sup. Ct. Rep. 193, where an employe of a Missouri corporation engaged in the manufacture of sulky plows invented certain improvements thereon, which the corporation, with his consent and assistance, embodied in the plows it manufactured and sold before he filed any application for a patent thereon, and that corporation was subsequently succeeded by an Illinois corporation, composed of the same stockholders, to which all the business and property of the former corporation were assigned and transferred, it was held that whatever license the former corporation derived from these facts was confined to it, and could not be transferred to its successor. Again, in Locke v. Bodley Co., 35 Fed. 289-294, an employe of a copartnership invented, perfected, and assisted his employers in manufacturing and reducing to practice an improvement in stop valves before he filed his application for the patent, which, he subsequently obtained thereon. One of the partners died, and a corporation, In which the surviving partners owned all the stock, except 80 shares reserved for its employes, succeeded to the business and property of the firm, and to it the surviving partners assigned all the firm assets; but in a suit against-the corporation for infringement these facts were held to confer upon it no right to use the patented improvement. To the same effect are Nail Factory v. Corning, 14 How. 193-216; Oliver v. Chemical Works, 109 U. S. 75-82, 3 Sup. Ct. Rep. 61. The result is that the implied license conferred upon any person who purchases of the inventor or discoverer, or with his knowledge or consent constructs, any newly invented or discovered machines or patentable articles prior to his application for a patent therefor, and within two years thereof, to use, or to vend to others to be used, the specific thing so made or purchased without liability therefor by section 4899 of the Revised Statutes, is a mere personal license, and is incapable of assignment or transfer. The defendant, therefore, was not protected by the implied license to the copartnership that preceded it in business, and the decree below is reversed, with costs, with instructions to enter a decree in favor of the complainant for a perpetual injunction, damages, and costs.  