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Cases citing this case: Supreme Court
Cases citing this case: Circuit Courts

U.S. Supreme Court


113 U.S. 59

HOLLISTER, Collector of Internal Revenue,

January 5, 1885

[113 U.S. 59, 60]   Asst. Atty. Gen. Maury, for appellant.

S. W. Kellogg and John S. Beach, for appellees.


This is a bill in equity to enjoin the alleged infringement of letters patent No. 93,391, issued to Edward A. Locke for certain improvements in identifying revenue marks or labels, dated August 3, 1869, the appellees being assignees of the patentee, [113 U.S. 59, 61]   and the appellant, the collector of internal revenue for the Second collection district of Connecticut.

The specification and claims, with the accompanying drawings, are as follows:

The following is a copy of the face of the tax-paid internal revenue stamp used by the appellant, and claimed to be an infringement of the patent: [113 U.S. 59, 65]  

As described by the complainant's witnesses, this stamp 'is composed of a single thickness of paper, on the face of which the number and registering marks are conveniently placed. On the back of this stamp is a piece of paper somewhat wider [113 U.S. 59, 66]   than the surface, on which the number and registering marks are printed. The two edges of this back-piece are caused to adhere to the back of the stamp, one above and the other below that portion of the surface which indicates the number, contents, etc. The back of the stamp, between the two edges of this strip or back-piece, is free and loose. The bject of this is that when the back of the stamp is coated with adhesive material and attached to the barrel, that portion of the surface of the stamp which is covered by the strip or back-piece will not adhere to the barrel; hence, after the stamp is secured to the barrel, that portion of the stamp on which are the registering marks may be removed, and preserve the marks and figures thereon, the removal of that part defacing the stamp as well as preserving the record, and this can be done because that portion of the stamp which is removed is prevented from adhering to the barrel. To remove this portion it is only necessary to separate that portion from the body at its two edges.' This is marked in the record as 'Complainant's Exhibit Hollister Revenue Stamp.' The present controversy relates to the first claim of the Locke patent, in respect to which alone the decree appealed from established an infringement. It is as follows: 'A stamp, the body of which is made of paper or other material, and having a removable slip of metal or other material, displaying thereon a serial number or other specific identifying mark corresponding with a similar mark upon the stub, and so attached that the removal of such slip must mutilate or destroy the stamp.' One of the defenses relied on by the appellant is thus stated in the answer, and, in matter of fact, is by stipulation admitted to be true: 'First. That any and all acts complained of in said bill by the said petitioner, as done by the respondent, were done and performed by him in the discharge of his duties as collector of internal revenue for the United States for a designated collection district of the state of Connecticut, and by direction of the commissioner of internal revenue, an officer of the treasury department of the United States; that any revenue stamps by [113 U.S. 59, 67]   him used have been furnished by the bureau of internal revenue, of which said commissioner is the official head, for use in the discharge of said duties as collector, and the same have been used solely as a means of collecting the taxes due to the United States, which said taxes have been imposed by the laws of the United States, and the manner of said collection, as followed by said collector, regulated and authorized by such laws; that said respondent has acted as such collector by virtue of legal appointments thereto by the president of the United States, duly confirmed by the senate of the United States, for and during all the times mentioned in said bill of complaint.'

It was authoritatively declared in James v. Campbell, 104 U.S. 356 , that the right of the patentee, under letters patent for an invention granted by the United States, was exclusive of the government of the United States as well as of all others, and stood on the footing of all other property, the right to which was secured, as against the government, by the constitutional guaranty which prohibits the taking of private property for public use without compensation; but doubts were expressed whether a suit could be sustained, such as the present, against public officers, or whether a suit upon an implied promise of indemnity might not be prosecuted against the United States by name in the court of claims. If the right of the patentee was acknowledged, and without his consent an officer of the government, acting under legislative authority, made use of the invention in the discharge of his official duties, it would seem to be a clear case of the exercise of the right of eminent domain, upon which the law would imply a promise of compensation, an action on which would lie within the jurisdiction of the court of claims, such as was entertained and sanctioned in the case of U. S. v. Great Falls Manuf'g Co., ante, 306, decided at the present term. And it may be that, even if the exclusive right of the patentee were contested, such an action might be brought in that court involving all questions relating to the validity of the patent; but as we have concluded to dispose of the present ap eal upon other grounds, it becomes unnecessary to decide the question arising upon this defense. It is referred to only for the purpose of excluding any infer- [113 U.S. 59, 68]   ence that might be drawn from our passing it over without notice.

The course of business in the collection of the revenue upon distilled spirits, so far as the use of these stamps is involved, is explained by Mr. Chapman, a witness for the defendant below, who had been chief of the stamp division in the internal revenue office. He says:

The employment of the paper backing in the stamp used by the appellant, whereby the part to be cut out is prevented from adhering to the head of the barrel, and the arrangement of a part of the stamp so as to indentify the package with that described in the stub, the removal of which destroys the stamp so that it cannot be used again, constitutes the alleged infringement of the first claim of the Locke patent, which covers every stamp within that description.

The counsel for the appellee describes 'the Locke stamp as a combination of three parts: (1) a part which is designed to become a stub when the stamp proper is separated therefrom, and displays a serial number ; (2) a constituent part of the stamp proper which is designed for permanent attachment to the barrel; (3) a constituent part of the stamp proper displaying the same identifying serial number as the stub, which part, after the stamp proper has been affixed to the barrel, bears such relation to the permanent part that it can be so removed therefrom as to retain its own integrity, but mutilates and thereby cancels the stamp by its removal.' In this combination it will not be questioned that the first and second elements were well known, and that the third, so far as its contents are identical with those on the stub, is not new. The question turns on that feature of the third element where, by a removable part of the stamp proper, the contents of which indentify the stamp with the stub after the stamp has been attached, can be so removed as to retain its own integrity, but mutilates and thereby cancels the stamp by its removal. This is what we ascertain to be the precise idea embodied in [113 U.S. 59, 71]   the invention described and claimed in the patent, and which, although we find to be new in the sense that it had not been anticipated by any previous invention, of which it could therefore be declared to be an infringement, yet is not such an improvement as is entitled to be regarded in the sense of the patent laws as an invention.

In reaching this conclusion, we have allowed its due weight to the presumption in favor of the validity of the patent arising from the action of the patent-office in granting it; and we have not been unmindful of the fact, abundantly proven, and indeed not denied, that the adoption of the present tax-paid stamp, in lieu of that previously in use by the internal revenue bureau, has proven its superior utility in the prevention of frauds upon the revenue. The testimony on that point of the commissioner of internal revenue from his official reports is quite conclusive. In his report for 1875, he mentions the adoption of 'new regulations in regard to the use of tax-paid stamps, by which a portion of the stamp is cut out at the time of dumping and returned with the gauger's report,' and says: 'This effectually destroys the stamp and prevents its reuse, while, at the same time, a sufficient mount of the engraving is shown upon the slip to determine whether the stamp is genuine;' and, in 1876, that official reported that 'the plan of requiring the return of a portion of the tax- paid stamps, whenever a package to which it is attached is dumped for rectification, has been found to be such a valuable prevention of fraud that it has been extended to include all stamps for rectified spirits and wholesale liquor dealers' stamps. These three varieties of stamps for distilled spirits are now prepared at a trifling additional cost, with a paper back affixed to each in such a way that the portion of the stamp containing all the important data can be cut therefrom and filed with the commissioner or collector, thus furnishing conclusive evidence of the destruction of the stamp, (rendering its reuse impossible,) and furnishing also evidence as to the contents of the package bearing the stamp. It is believed that this system affords the government a very effectual protection against the perpetration of frauds [113 U.S. 59, 72]   in connection with the collection of the tax on distilled spirits.'

Such an increased utility, beyond what had been attained by devices previously in use, in cases of doubt, is usually regarded as determining the question of invention. But in the present case we are not able to give it such effect. No change, it will be observed, was made in the character of the stamp, so far as the relation between the stamp proper and the stub is concerned, nor in the identifying marks which constituted the written and printed matter upon both; and the expedient of using a paper backing which prevented the adhesion to the package of the part intended to be detached and removed, it is manifest would be adopted by any skilled person having that end in view. The idea of detaching that portion of the stamp, with the double effect of destroying the stamp by mutilation and preserving the evidence of the identity of the package on which it had been first placed in use, which is all that remains to constitute the invention, seems to us not to spring from that intuitive faculty of the mind put forth in the search for new results or new methods, creating what had not before existed, or bringing to light what lay hidden from vision; but, on the other hand, to be the 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. Cutting out a portion of the stamp, as a means of defacing and mutilating it so as to prevent a second use, was matter of common knowledge and practice before the date of this patent; and cutting out a particular portion on which the identifying marks had been previously written or printed was simply cutting a stub from the stamp instead of cutting the stamp from the stub, as before. So that when the frequency and magnitude of the frauds upon the revenue, committed by the removal of tax-paid stamps from packages on which they had been originally placed by the officer to others surreptitiously substituted for them, or by emptying the packages of their original contents and fraudulently refilling them with spirits on which no tax* [113 U.S. 59, 73]   had been paid, attracted the general attention of the revenue department, the answer to the problem of prevention was found by immediate inference from the existing regulations, in the adoption of the expedient now in question. As soon as the mischief became apparent, and the remedy was seriously and systematically studied by those competent to deal with the subject, the present regulation 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 had been designed, by the application of his common knowledge and experience perceives the reason of the failure and supplies what is obviously wanting. It is but the display of the expected skill of the calling, and invo ves 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; and is in no sense the creative work of that inventive faculty which it is the purpose of the constitution and the patent laws to encourage and reward. On this ground the decree of the circuit court is reversed, and the cause remanded, with directions to enter a decree dismissing the bill; and it is so ordered.


[ Footnote 1 ] S. C. 4 Fed. Rep. 83.

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