Mr. Justice Miller
delivered the opinion of the court.
The plaintiffs in error were plaintiffs in the Circuit Court in an action for an infringement of the patent of A. B. Wilson, for a feeding device in sewing-machines. They recovered a judgment for one hundred and twenty-five dollars, but insist that they were entitled to a much larger judgment, of which they were deprived by the rulings of the court in the progress of the trial.
The objections to these rulings will be considered by us under three heads, to which all the assignments of error relate.
1. As to the measure of damages.
Evidence was given tending to prove that plaintiffs had advertised to sell their machines, and had actually sold a shop-right to use one of them for twelve dollars and fifty cents, and had given a verbal license to another person to use an old machine in his house for five dollars, but afterwards refused to sell or license for Franklin County, and told defendants they desired to retain the use of the machine as a close monopoly. Evidence had also been given as to profits made by defendants. On this testimony.they asked the court to instruct the jury that “ this testimony was not sufficient to change the rule of damages from the profits which plaintiffs would have made if they had not been embarrassed by the interference of the defendants, to a mere license-price, because they do not establish a customary charge for the right to use the invention in Franklin County,” which the court refused.
There are two sufficient objections to this prayer: —
First,
In cases where profits are the proper measure, it is the profits which the
infringer
makes, or ought to make, which
govern, and not the profits which
plaintiff
can show that
Tie
might have made.
Second, Profits are not the primary or true criterion of damages for infringement in an action at law. That rule applies eminently and mainly to cases in equity, and is based upon the idea that the infringer shall be converted into a trustee, as to those profits, for the owner of the patent which he infringes, — a principle which it is very difficult to apply in a trial before a jury, but quite appropriate on a reference to a master, who can examine defendant’s books and papers, and examine him on oath, as well as all his clerks and employes.
On the other hand, we have repeatedly held that sales of licenses of machines, or of a royalty established, constitute the primary and true criterion of damages in the action at law.
No doubt, in the absence of satisfactory evidence of either class in the forum to which it is most appropriate, the other may be resorted to as one of the elements on which the damages or the compensation may be ascertained; but it cannot be admitted, as the prayer which was refused implies, that in an action at law the profits which the other party might have made is the primary or controlling measure of damages.
Packet Company
v. Sickles, 19 Wall. 617.
2. A paper was introduced in evidence by defendants, signed Sarah Burdell, authorizing H. Crary, for the full term of four years, to sell, use, and grant to others the right to use, in said county of Franklin, A. B. Wilson’s sewing-machines. It was agreed that the paper should have the same effect as if signed by William Burdell and the other plaintiffs in whom the title was when it was executed. It is too long a paper to insert here, but will be given
verbatim
by the reporter ;
and its true construction is the foundation of the alleged error of the court in admitting it, and also in admitting a receipt given to the defendants by said Crary for the use of four of the machines for which they were sued.
It is claimed that the instrument is but a power of attorney revocable at the pleasure of the maker, and that it was so revoked before the receipt given in evidence was executed by Crary.
But we are of a different opinion. We think the instru
ment is a contract. That Crary acquired rights under it for four years, which, whether he may have so acted or not as to enable plaintiffs to have it rescinded or set aside in a suit in chancery, could not be revoked at their mere volition; and that these rights were such that his receipt for the use of the four machines mentioned in it was a valid acquittance of any claim for the same thing by plaintiffs in this suit.
It is said that the court erred in admitting the receipt in bar of the action, because it was executed after the suit was brought, and could not be so used without a special plea setting it up.
The fallacy of this argument consists in assuming that it was introduced as a bar to the action. It was only used to reduce the amount of the recovery, and not as a complete bar; and as it excluded from the computation of damages only four machines out of a larger number, it was admissible under the general issue, or any other form of plea which left the amount of the recovery in dispute.
We see no error in this branch of the case.
3. The defendants introduced also the following paper, and ' gave evidence of an assignment by Lowe to Singer & Co., and of a license from Singer & Co. to defendants: —
“ In consideration of the sum of eighty dollars, to me paid by J. Payne Lowe, the receipt whereof is acknowledged, I do hereby assign, transfer, and set over unto the said Lowe, his representatives and assigns, the exclusive right
to
use, and sell to others to be used, in the county of Franklin, in the State of Ohio, Singer’s patent sewing-machines, as mentioned in the patent granted to Isaac M. Singer, dated Aug. 12,1851, together with the right to have the said machines delivered to be used, or sold to be used, in the said county of Franklin, in the State of Ohio.
“ And I hereby covenant that I have good right to make the assignment aforesaid.
“ In witness whereof I have hereunto set my hand and seal, this fourth day of February, a.d. 1857.
“Wm. Btjrdell. [seal.]”
Evidence was also given tending to show that the machines called Singer machines, used by the defendants, were made as Singer machines had always been made.
And after all the testimony was closed, the plaintiff asked
the court to instruct th.e jury that the license of Burdell to J. Payne Lowe, of the 4th of February, 1857, did not authorize him, and those deriving rights under that license, to use, in the machine known and called Singer machine, in said county of Franklin, the feeding device patented to A. B. Wilson, which the court refused to give; but did charge the jury that the said license authorized the said Lowe, and all claiming title from him, to use in Franklin County the Singer machine, with a feeding device operating upon the principle and plan of that patented to Wilson : to which refusal of the court to charge as asked, and to the said charge as given, the plaintiffs then and there excepted.
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Mr. Justice Miller
delivered the opinion of the court.
The plaintiffs in error were plaintiffs in the Circuit Court in an action for an infringement of the patent of A. B. Wilson, for a feeding device in sewing-machines. They recovered a judgment for one hundred and twenty-five dollars, but insist that they were entitled to a much larger judgment, of which they were deprived by the rulings of the court in the progress of the trial.
The objections to these rulings will be considered by us under three heads, to which all the assignments of error relate.
1. As to the measure of damages.
Evidence was given tending to prove that plaintiffs had advertised to sell their machines, and had actually sold a shop-right to use one of them for twelve dollars and fifty cents, and had given a verbal license to another person to use an old machine in his house for five dollars, but afterwards refused to sell or license for Franklin County, and told defendants they desired to retain the use of the machine as a close monopoly. Evidence had also been given as to profits made by defendants. On this testimony.they asked the court to instruct the jury that “ this testimony was not sufficient to change the rule of damages from the profits which plaintiffs would have made if they had not been embarrassed by the interference of the defendants, to a mere license-price, because they do not establish a customary charge for the right to use the invention in Franklin County,” which the court refused.
There are two sufficient objections to this prayer: —
First,
In cases where profits are the proper measure, it is the profits which the
infringer
makes, or ought to make, which
govern, and not the profits which
plaintiff
can show that
Tie
might have made.
Second, Profits are not the primary or true criterion of damages for infringement in an action at law. That rule applies eminently and mainly to cases in equity, and is based upon the idea that the infringer shall be converted into a trustee, as to those profits, for the owner of the patent which he infringes, — a principle which it is very difficult to apply in a trial before a jury, but quite appropriate on a reference to a master, who can examine defendant’s books and papers, and examine him on oath, as well as all his clerks and employes.
On the other hand, we have repeatedly held that sales of licenses of machines, or of a royalty established, constitute the primary and true criterion of damages in the action at law.
No doubt, in the absence of satisfactory evidence of either class in the forum to which it is most appropriate, the other may be resorted to as one of the elements on which the damages or the compensation may be ascertained; but it cannot be admitted, as the prayer which was refused implies, that in an action at law the profits which the other party might have made is the primary or controlling measure of damages.
Packet Company
v. Sickles, 19 Wall. 617.
2. A paper was introduced in evidence by defendants, signed Sarah Burdell, authorizing H. Crary, for the full term of four years, to sell, use, and grant to others the right to use, in said county of Franklin, A. B. Wilson’s sewing-machines. It was agreed that the paper should have the same effect as if signed by William Burdell and the other plaintiffs in whom the title was when it was executed. It is too long a paper to insert here, but will be given
verbatim
by the reporter ;
and its true construction is the foundation of the alleged error of the court in admitting it, and also in admitting a receipt given to the defendants by said Crary for the use of four of the machines for which they were sued.
It is claimed that the instrument is but a power of attorney revocable at the pleasure of the maker, and that it was so revoked before the receipt given in evidence was executed by Crary.
But we are of a different opinion. We think the instru
ment is a contract. That Crary acquired rights under it for four years, which, whether he may have so acted or not as to enable plaintiffs to have it rescinded or set aside in a suit in chancery, could not be revoked at their mere volition; and that these rights were such that his receipt for the use of the four machines mentioned in it was a valid acquittance of any claim for the same thing by plaintiffs in this suit.
It is said that the court erred in admitting the receipt in bar of the action, because it was executed after the suit was brought, and could not be so used without a special plea setting it up.
The fallacy of this argument consists in assuming that it was introduced as a bar to the action. It was only used to reduce the amount of the recovery, and not as a complete bar; and as it excluded from the computation of damages only four machines out of a larger number, it was admissible under the general issue, or any other form of plea which left the amount of the recovery in dispute.
We see no error in this branch of the case.
3. The defendants introduced also the following paper, and ' gave evidence of an assignment by Lowe to Singer & Co., and of a license from Singer & Co. to defendants: —
“ In consideration of the sum of eighty dollars, to me paid by J. Payne Lowe, the receipt whereof is acknowledged, I do hereby assign, transfer, and set over unto the said Lowe, his representatives and assigns, the exclusive right
to
use, and sell to others to be used, in the county of Franklin, in the State of Ohio, Singer’s patent sewing-machines, as mentioned in the patent granted to Isaac M. Singer, dated Aug. 12,1851, together with the right to have the said machines delivered to be used, or sold to be used, in the said county of Franklin, in the State of Ohio.
“ And I hereby covenant that I have good right to make the assignment aforesaid.
“ In witness whereof I have hereunto set my hand and seal, this fourth day of February, a.d. 1857.
“Wm. Btjrdell. [seal.]”
Evidence was also given tending to show that the machines called Singer machines, used by the defendants, were made as Singer machines had always been made.
And after all the testimony was closed, the plaintiff asked
the court to instruct th.e jury that the license of Burdell to J. Payne Lowe, of the 4th of February, 1857, did not authorize him, and those deriving rights under that license, to use, in the machine known and called Singer machine, in said county of Franklin, the feeding device patented to A. B. Wilson, which the court refused to give; but did charge the jury that the said license authorized the said Lowe, and all claiming title from him, to use in Franklin County the Singer machine, with a feeding device operating upon the principle and plan of that patented to Wilson : to which refusal of the court to charge as asked, and to the said charge as given, the plaintiffs then and there excepted.
In defence of this ruling, it is said that Burdell never had any interest in the Singer patent; that the instrument called the Singer machine, which was in use when Burdell made the above assignment to Lowe, was a Singer machine with the Wilson feeding device; and that, as Burdell did own the patent for this device, what he intended to assign was the right to use the Singer machine
with that
device. It is certainly true, that, in construing a written instrument, it is necessary and admissible to-look to. all the surrounding circumstances of the transaction which are necessary to discover its meaning. And it may be admitted, that, if the facts above stated were conceded to be true, it would follow that the reasonable construction of the contract would be such as the court held it to be. The refusal of the court to give the instruction asked by counsel for plaintiffs was, therefore, justifiable.
But these facts were not conceded by plaintiffs. Nor does the bill of exceptions say that they were proved. It says nothing at all about Burdell’s interest or want of interest in the Singer patent; and in regard to use of the Wilson feeding device in the Singer machine, it says no more than that there was evidence
tending
to prove that it had always been so used in all these machines.
If these things were not proved, then there was no ground for the construction-of the contract given by the court; and whether they were proved or not, was a matter for the jury and not for the court to decide. The jury may not have believed the witnesses; or, if believed, may not have found that their
testimony established what the bill of exceptions declares it tended to prove. The court, therefore, in telling the jury peremptorily, on this testimony, that the license to Lowe did authorize him to use the Singer machine with a feeding device operating upon the principle and plan of that patented by Wilson, took away from the jury the right to weigh that testimony. If the judge had said, that,
if they believed these facts to be
established, then the license to Lowe authorized the use of the Wilson device in the Singer machine, we would affirm the judgment; but because he, in this respect, assumed a function which belonged to the jury, and for that reason alone, the
Judgment must be reversed and a new trial awarded.