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    OVERLAND MOTOR CO. v. PACKARD MOTOR CAR CO., 274 U.S. 417 (1927)

    U.S. Supreme Court

    OVERLAND MOTOR CO. v. PACKARD MOTOR CAR CO., 274 U.S. 417 (1927)

    274 U.S. 417

    OVERLAND MOTOR CO.
    v.
    PACKARD MOTOR CAR CO. et al.
    No. 285.

    Argued April 21, 1927.
    Decided May 31, 1927.

    [274 U.S. 417, 418]   Mr. Melville Church, of Washington, D. C., for Overland Motor co.

    Messrs. Frank Parker Davis, of Chicago, Ill., and Reeve Lewis, of Washington, D. C., for Packard Motor Car Co. and another.

    Mr. Chief Justice TAFT delivered the opinion of the Court.

    This case cames from the Circuit Court of Appeals of the Seventh Circuit upon a certificate of two questions for our consideration and answer. Section 239 of the Judicial Code, as amended by Act Jan. 13, 1925, c. 229, 43 Stat. 938 (Comp. St. 1216). The suit is one in which the Packard Motor Car Company and the Wire Wheel Corporation seek to enjoin an alleged infringement by the Overland Motor Company of the Cowles patent, No. 1,103,567, issued to Cowles on July 14, 1914, and owned by them. On August 25, 1899, Cowles filed an application which was duly granted July 13, 1900. His application disclosed the matter in suit. The Patent Office, however, required a division of claims, and he canceled all claims, [274 U.S. 417, 419]   as well as the description and drawing in the specification that supported such claims bearing upon the subject matter of the present controversy. In that case the patent as granted covered merely the remaining claims. September 6, 1901, he filed another application, not a divisional application, disclosing and claiming, among other things, the subject- matter in suit. This was pending in the Patent Office until January 21, 1913, when a patent issued for it. Certain claims made by him were repeatedly rejected by the Patent Office. Cowles complied with the requirements of section 4894, Revised Statutes (Comp. St. 9438), requiring an applicant to reply to the action of the Patent Office within a year, but on seven different occasions he delayed more than 11 months before filing his response to the Patent Office ruling. On May 20, 1911, the Patent Office finally rejected the only claim remaining in the application which was directed to the subject-matter in issue, holding that it was unpatentable on certain references. On May 17, 1912, Cowles canceled this finally rejected claim from his application, stating his intention to file a divisional application covering the subject-matter of this claim. No such divisional application had ever been directed or suggested by the Patent Office. A patent was then (January 21, 1913) issued on other claims, without any claim to the subject-matter in issue. On August 6, 1912, Cowles filed an application for a patent which he stated was a division of the application filed September 6, 1901, and which disclosed and sought the claims in issue. The patent in suit was then issued on this application on July 14, 1914. During its pendency in the Patent Office, Cowles complied with the requirements of section 4894, Revised Statutes, although on one occasion he delayed over 11 months before responding to the Patent Office action. During the period from 1905 to 1912 trade journals of the United States and Great Britain published articles disclosing the subject-matter in issue, and certain [274 U.S. 417, 420]   British patents were granted, on subjects relating to such subject-matter. The publications and patents represented independent work in Great Britain, and, as a result thereof, there was actual use of the subject-matter in suits abroad during the pendency of the original and divisional applications above referred to. No product embodying the subject-matter of the claims in suit appeared upon the market in the United States prior to the issuing of the patent in suit. Upon these facts, the first question certified is as follows:

    Did the applicant, in canceling the claim which was finally rejected on May 20, 1911, abandon such claim or estop himself from thereafter seeking it through a new application?

    We do not find in the statement of facts any circumstances which can be held to be an abandonment by Cowles of his claim for which he subsequently secured this patent. On May 20, 1911, the claim was rejected on account of its nonpatentability in view of certain references. On May 17, 1912, he canceled the claim, stating at the time that it was his intention to file a divisional application covering this subject-matter. After he had done this, on August 6th, less than 4 months after the cancellation, he filed the claim as a divisional application under the earlier case, and this new application, with the renewed claim, went to patent on July 14, 1914. We cannot see why he was estopped by his failure to appeal from the final rejection. It is quite true that after such rejection the Commissioner of Patents might have refused to consider his divisional application as he made it without suggestion or consent by the Patent Office. In a qualified and limited sense a claim rejected as this was constitutes res judicata in favor of the Government and against the applicant. This is fully explained by Judge Morris in Re Barratt's Appeal, 14 App. D. C. 255, in speaking of a case presenting a similar question:

    [274 U.S. 417, 421]   'While the rules that govern the finality and conclusiveness of adjudications at the common law do not apply, in the strict sense, to administrative or quasi judicial action in the Executive Department of government, yet in administrative action, as well as in judicial proceeding, it is both expendient and necessary that there should be an end of controversy. Sometimes, the element of finality in inherent in the nature of the action taken, as, for example, when letters patent have been granted, they may not be recalled, and the rights of the parties holding them again investigated. Where rights have become vested as the result of legitimate executive action, such action is necessarily final, and it is not competent thereafter for executive action to divest them, either by way of a review of the proceedings or by any new proceedings instituted with that view. Especially is this principle applicable to the proceedings of the Patent Office, which are so nearly akin to judicial proceedings as to be most appropriately designated as quasi judicial.'

    Following, then, the analogy, he finds that such a case as this may constitute res judicata in a sense, but he qualifies the statement in this important way:

    This qualification is approved in the cases of In re Fay, 15 App. D. C. 517, In re Edison, 30 App. D. C. 321, 323, and in Gold v. Gold, 34 App. D. C. 229.

    As the Patent Office, by granting the patent, must be held to have waived any objection to the applications [274 U.S. 417, 422]   on the ground that the claim allowed had been rejected before by that Office, there is no reason why the appellees below should not be allowed to avail themselves of the waiver. The answer the first question in the negative.

    Second. The second question was as follows:

    In the absence of any other excuse for lapse of time between patent applications and responses thereto than that the applicant was exercising a statutory right (R. S. 4894, as amended, setting limit of one year for response), may the bill of complaint be dismissed for want of equity because of long pendency in the Patent Office?

    We think that under the decision of this Court in United States v. American Bell Telephone Co., 167 U.S. 224 , 17 S. Ct. 809, and Chapman v. Wintroath, 252 U.S. 126 , 40 S. Ct. 234, this question must also be answered in the negative.

    By section 12 of the act of 1861 (12 Stat. 246), it was required that all applications for patent should be completed and prepared for examination within 2 years after the filing of the petition, and in default thereof, were to be regarded as abandoned by the parties thereto, unless shown to the satisfaction of the Commissioner of Patents that such delay was unavoidable. There was no provision limiting the time of the prosecution of the application in this section. By act of 1870 (16 Stat. 198), it was provided, in section 32, that all applications for patent should be completed and prepared for examination within two years after the filing of the petition, and in default thereof, or upon failure of the applicant to prosecute the same within 2 years after any action therein, of which notice shall have been given to the applicant, they should be regarded as abandoned by the parties thereto, unless shown to the satisfaction of the Commissioner that such delay was unavoidable. This provision of the act of 1870 was carried into the Revised Statutes as section 4894, and so the statute stood until 1897 when by 29 Stat. 693, section 4894 was amended as follows:

    [274 U.S. 417, 423]   'All applications for patents shall be completed and prepared for examination within one year after the filing of the application, and in default thereof, or upon failure of the applicant to prosecute the same within one year after any action therein, of which notice shall have been given to the applicant, they shall be regarded as abandoned by the parties thereto, unless it be shown to the satisfaction of the Commissioner of Patents that such delay was unavoidable.'

    Counsel for the alleged infringer says that, even with the time limit for action on the part of the applicant thus reduced to one year, it becomes easily possible for an applicant, after an action by the Patent Office upon his application, to delay for the full period of a year his response to such action, and however promptly the Patent Office may again act, he can delay another full year before replying to it, and thus by waiting a year after each official action (1) keep his application pending so as to enable him to withhold, indefinitely, his invention from the public, (2) add claims to his application covering the independent intervening developments of others, and (3) postpone the time when the public may enjoy the free use of the invention-all contrary to sound public policy.

    The answer to this argument is that the matter is entirely within the control of Congress, and in order to avoid and evil suggested, Congress may reduce the time within which one who is seeking an adjustment with the Patent Office in order to obtain a patent shall act upon receipt of notice of a decision of the Patent Office in the course of the application through that office. Congress, as we have seen by the history of the statute, reduced this time from an indefinite period in 1861 to two years in 1870, and to one year in 1897, and, as provided in the last Congress, to six months. Public Act No. 690, 69th Congress, approved March 2, 1927 ( 44 Stat. 1335). [274 U.S. 417, 424]   During the pendency of the application in this case, the period allowed was one year. We do not know on what principle we could apply the equitable doctrine of abandonment be laches in a case where the measure of reasonable promptness is fixed by statute, and no other ground appears by reason of which laches could be imputed to the applicant.

    In United States v. American Bell Telephone Co., 167 U.S. 224 , 17 S. Ct. 809, the government brought a proceeding in equity to cancel a patent on the ground that it had been fraudulently secured, and part of the fraud of the patentee was that he had unreasonably delayed the obtaining of the patent by collusion with officials of the department through their nonaction and thus postponed the period during which the monopoly of the patent was to continue. The court found no evidence of any collusion or fraud by the officials of the department or undue or improper influence exerted or attempted to be exerted upon them. It said that Congress had established a department with officials selected by the government, to whom all applications for patents must be made, had prescribed the terms and conditions of such applications and entrusted the entire management of affairs of the department to those officials, that when an applicant for a patent complied with the terms and conditions prescribed and filed his application with the officers of the department, he must abide their action and could not be held to suffer or lose rights by reason of any delay on the part of those officials. The court said:

    The case of Chapman v. Wintroath, 252 U.S. 126 , 40 S. Ct. 234, was an attempt in an interference suit to defeat a patent granted to the Chapmans on a divisional application for an improvement in deep well pumps in which the claims were the same as the claims of a patent to Wintroath, the divisional application having been made 20 months later than the date of the issue of the patent to Wintroath. It was conceded that the claims had been disclosed in the Chapman patent which had been applied for in 1909, but which had met unusual difficulties in the Patent Office, and though regularly prosecuted, as required by law and the rules of the Office, was still pending without having been passed to patent in 1915, when the controversy arose. It was admitted that the inven- [274 U.S. 417, 426]   tion was clearly disclosed in the parent application of the Chapmans, but it was contended that their divisional application claiming the discovery should be denied, because of their delay of nearly 20 months in filing it after the publication of Wintroath's patent, when they had by law only one year. It was held by the Court of Appeals of the District (Wintroath v. Chapman, 47 App. D. C. 428) that the delay of more than a year constituted equitable laches and estopped the Chapmans from making its divisional claim. That holding had rested on a previous decision by the Court of Appeals in Rowntree v. Sloan, 45 App. D. C. 207. This court held that under section 4886 of the Revised Statutes, as amended March 3, 1897 (Comp. St. 9430), 2 years was granted in such a case before the right to file a divisional application had been lost. The court based its decision that the statutory period could not be reduced by equitable considerations or those of public policy on the language which we have just quoted from Mr. Justice Brewer in his opinion in the Telephone Case. The same doctrine is to be found in Crown Cork & Seal Co. v. Aluminum Co. (C. C. A.) 108 F. 845, and Columbia Motor Car Co. v. Duerr & Co. (C. C. A.) 184 F. 893.

    The case of Woodbridge v. United States, 263 U.S. 50 , 44 S. Ct. 45, is cited by counsel for the defendant to sustain their view that this is a case in which the doctrine of laches and abandonment may be enforced. The Woodbridge Case was an exceptional one. Woodbridge had deliberately delayed the issue of the patent which he could have had for the asking for 9 years. He had directed the Patent Office to keep the papers upon which such issue might have been granted in the secret archives of the Patent Office, there to remain for one year a privilege which was given him under the law as it then existed. He failed after the one year to apply for the patent for the reason, because as he avowed in subsequent application, he wished there [274 U.S. 417, 427]   by to postpone the period of its monopoly until a national emergency might arise in which his invention, which was for rifling cannon, should be more in demand than it then was. He was denied a patent for failure to comply with the statute. Subsequently he secured special legislation imposing the condition that he should be granted the patent, provided the court should first be satisfied that he had not forfeited or abandoned his right to a patent by publication, delay, laches or otherwise. This court held that the delay of 9 years for the avowed purpose of postponing the period of the monopoly was laches and a breach of the condition upon which he might avail himself of the special congressional privilege aranted him. Such a case has certainly no application here. The answer to the question should be in the negative.

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