DEEPSOUTH PACKING CO., INC. v. LAITRAM CORP.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
Argued April 11, 1972
Decided May 30, 1972
Petitioner is not foreclosed by 35 U.S.C. 271 (a), which proscribes the unauthorized making of any patented invention within the United States, from making the parts of shrimp deveining machines (for which respondent was adjudged to have valid combination patents) to sell to foreign buyers for assembly by the buyers for use abroad. The word "makes" as used in 271 (a) does not extend to the manufacture of the constituent parts of a combination machine, and the unassembled export of the elements of an invention does not infringe the patent. Radio Corp. of America v. Andrea, 79 F.2d 626. Pp. 519-532.
443 F.2d 936, reversed and remanded.
WHITE, J., delivered the opinion of the Court, in which DOUGLAS, BRENNAN, STEWART, and MARSHALL, JJ., joined. BLACKMUN, J., filed a dissenting opinion, in which BURGER, C. J., and POWELL and REHNQUIST, JJ., joined, post, p. 532.
Harold J. Birch argued the cause for petitioner. With him on the briefs were C. Emmett Pugh and William W. Beckett.
Guy W. Shoup argued the cause and filed a brief for respondent.
Edward S. Irons and Mary Helen Sears filed a brief as amici curiae urging reversal.
MR. JUSTICE WHITE delivered the opinion of the Court.
The United States District Court for the Eastern District of Louisiana has written:
A rudimentary understanding of the patents in dispute is a prerequisite to comprehending the legal issue presented. The District Court determined that the Laitram Corp. held two valid patents for machinery [406 U.S. 518, 520] used in the process of deveining shrimp. One, granted in 1954, 2 accorded Laitram rights over a "slitter" which exposed the veins of shrimp by using water pressure and gravity to force the shrimp down an inclined trough studded with razor blades. As the shrimp descend through the trough their backs are slit by the blades or other knife-like objects arranged in a zigzag pattern. The second patent, granted in 1958, covers a "tumbler," "a device to mechanically remove substantially all veins from shrimp whose backs have previously been slit," App. 127, by the machines described in the 1954 patent. This invention uses streams of water to carry slit shrimp into and then out of a revolving drum fabricated from commercial sheet metal. As shrimp pass through the drum the hooked "lips" of the punched metal, "projecting at an acute angle from the supporting member and having a smooth rounded free edge for engaging beneath the vein of a shrimp and for wedging the vein between the lip and the supporting member," App. 131, engage the veins and remove them.
Both the slitter and the tumbler are combination patents; that is.
The lower court's decision that Laitram held valid combination patents entitled the corporation to the privileges bestowed by 35 U.S.C. 154, the keystone provision of the patent code. "[F]or the term of seventeen years" from the date of the patent, Laitram had "the right to exclude others from making, using, or selling the invention throughout the United States . . . ." The 154 right in turn provides the basis for affording the patentee an injunction against direct, induced, and contributory infringement, 35 U.S.C. 283, or an award of damages when such infringement has already occurred, 35 U.S.C. 284. Infringement is defined by 35 U.S.C. 271 in terms that follow those of 154:
But Deepsouth argues that it is not liable for every type of past sale and that a portion of its future business is salvageable. Section 154 and related provisions obviously are intended to grant a patentee a monopoly only over the United States market; they are not intended to grant a patentee the bonus of a favored position as a flagship company free of American competition in international commerce. Deepsouth, itself barred from using its deveining machines, or from inducing others to use them "throughout the United States," barred also from making and selling the machines in the United States, seeks to make the parts of deveining machines, to sell them to foreign buyers, and to have the buyers assemble the parts and use the machines abroad. 5 Accordingly, [406 U.S. 518, 524] Deepsouth seeks judicial approval, expressed through a modification or interpretation of the injunction against it, for continuing its practice of shipping deveining equipment to foreign customers in three separate boxes, each containing only parts of the 1 3/4-ton machines, yet the whole assemblable in less than one hour. 6 The company contends that by this means both the "making" and the "use" of the machines occur abroad and Laitram's lawful monopoly over the making and use of the machines throughout the United States is not infringed.
Laitram counters that this course of conduct is based upon a hypertechnical reading of the patent code that, if tolerated, will deprive it of its right to the fruits of the inventive genius of its assignors. "The right to make can scarcely be made plainer by definition . . .," Bauer v. O'Donnell, 229 U.S. 1, 10 (1913). Deepsouth in all respects save final assembly of the parts "makes" the invention. It does so with the intent of having the foreign user effect the combination without Laitram's permission. Deepsouth sells these components as though they were the machines themselves; the act of assembly is regarded, indeed advertised, as of no importance.
The District Court, faced with this dispute, noted that three prior circuit courts had considered the meaning of "making" in this context and that all three had resolved the question favorably to Deepsouth's position. [406 U.S. 518, 525] See Hewitt-Robins, Inc. v. Link-Belt Co., 371 F.2d 225 (CA7 1966); Cold Metal Process Co. v. United Engineering & Foundry Co., 235 F.2d 224 (CA3 1956); and Radio Corp. of America v. Andrea, 79 F.2d 626 (CA2 1935). The District Court held that its injunction should not be read as prohibiting export of the elements of a combination patent even when those elements could and predictably would be combined to form the whole.
We disagree with the Court of Appeals for the Fifth Circuit. 7 Under the common law the inventor had no [406 U.S. 518, 526] right to exclude others from making and using his invention. If Laitram has a right to suppress Deepsouth's export trade it must be derived from its patent grant, and thus from the patent statute. 8 We find that 35 U.S.C. 271, the provision of the patent laws on which Laitram relies, does not support its claim.
Certainly if Deepsouth's conduct were intended to lead to use of patented deveiners inside the United States its production and sales activity would be subject to injunction as an induced or contributory infringement. But it is established that there can be no contributory infringement without the fact or intention of a direct infringement. "In a word, if there is no [direct] infringement of a patent there can be no contributory infringer." Mercoid Corp. v. Mid-Continent Co., 320 U.S. 661, 677 (1944) (Frankfurter, J., dissenting on other grounds). Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 341 -342 (1961), succinctly articulates the law:
Laitram does not suggest that Deepsouth "uses" the machines. Its argument that Deepsouth sells the machines - based primarily on Deepsouth's sales rhetoric and related indicia such as price 9 - cannot carry the day unless it can be shown that Deepsouth is selling the "patented invention." The sales question thus resolves itself into the question of manufacture: did Deepsouth "make" (and then sell) something cognizable under the patent law as the patented invention, or did it "make" (and then sell) something that fell short of infringement?
The Court of Appeals, believing that the word "makes" should be accorded "a construction in keeping with the ordinary meaning of that term," 443 F.2d, at 938, held against Deepsouth on the theory that "makes" "means what it ordinarily connotes - the substantial manufacture of the constituent parts of the machine." Id., at 939. Passing the question of whether this definition more closely corresponds to the ordinary meaning of the term than that offered by Judge Swan in Andrea 35 years earlier (something is made when it reaches the state of [406 U.S. 518, 528] final "operable" assembly), we find the Fifth Circuit's definition unacceptable because it collides head on with a line of decisions so firmly embedded in our patent law as to be unassailable absent a congressional recasting of the statute.
We cannot endorse the view that the "substantial manufacture of the constituent parts of [a] machine" constitutes direct infringement when we have so often held that a combination patent protects only against the operable assembly of the whole and not the manufacture of its parts. "For as we pointed out in Mercoid v. Mid-Continent Investment Co., [ 320 U.S. 661, 676 ] a patent on a combination is a patent on the assembled or functioning whole, not on the separate parts." Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 684 (1944). See also Leeds & Catlin Co. v. Victor Talking Machine Co., 213 U.S. 301 :
We reaffirm this conclusion today.
It is said that this conclusion is derived from too narrow and technical an interpretation of the statute, and that this Court should focus on the constitutional mandate
We cannot accept this argument. The direction of Art. I is that Congress shall have the power to promote the progress of science and the useful arts. When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only from Congress. We are here construing the provisions of a statute passed in 1952. The prevailing law in this and other courts as to what is necessary to show a patentable invention when a combination of old elements is claimed was clearly evident from the cases when the Act was passed; and at that time Andrea, representing a specific application of the law of infringement with respect to the export of elements of a combination patent, was 17 years old. When Congress drafted 271, it gave no indication that it desired to change either the law of combination patents as relevant here or the ruling of Andrea. 10 Nor has it on any more recent occasion indicated that it wanted the patent privilege to run farther than it was understood to run for 35 years prior to the action of the Court of Appeals for the Fifth Circuit.
Moreover, we must consider petitioner's claim in light of this Nation's historical antipathy to monopoly 11 and of repeated congressional efforts to preserve and foster competition. As this Court recently said without dissent:
In conclusion, we note that what is at stake here is the right of American companies to compete with an American patent holder in foreign markets. Our patent system makes no claim to extraterritorial effect; "these acts of Congress do not, and were not intended to, operate beyond the limits of the United States," Brown v. Duchesne, 19 How., at 195; and we correspondingly reject the claims of others to such control over our markets. Cf. Boesch v. Graff, 133 U.S. 697, 703 (1890). To the degree that the inventor needs protection in markets other than those of this country, the wording of 35 U.S.C. 154 and 271 reveals a congressional intent to have him seek it abroad through patents secured in countries where his goods are being used. Respondent holds foreign patents; it does not adequately explain why it does not avail itself of them. [406 U.S. 518, 532]
In sum: the case and statutory law resolves this case against the respondent. When so many courts have so often held what appears so evident - a combination patent can be infringed only by combination - we are not prepared to break the mold and begin anew. And were the matter not so resolved, we would still insist on a clear congressional indication of intent to extend the patent privilege before we could recognize the monopoly here claimed. Such an indication is lacking. Accordingly, the judgment of the Court of Appeals for the Fifth Circuit is reversed and the case is remanded for proceedings consistent with this opinion.
[ Footnote 2 ] This patent expired shortly before argument in this court and is therefore not relevant to Laitram's claim for injunctive relief. It is described, however, because Laitram claims damages for Deepsouth's asserted past exportation of the parts of this machine.
[ Footnote 3 ] The machines were developed by two brothers who are now president and vice-president of the Laitram Corp. The patents are in their names, but have been assigned to the corporation.
[ Footnote 4 ] The District Court wrote: "Defendant urges that the 1958. patent is invalid as aggregative, anticipated by the prior art, obvious, described in functional language, overbroad, and indefinite. While it is clear that the elements in [406 U.S. 518, 522] the . . . patent, especially the punch lip material, had been available for a considerable period of time, when combined they co-act in such a manner to perform a new function and produce new results." 301 F. Supp., at 1063.
[ Footnote 5 ] Deepsouth is entirely straightforward in indicating that its course of conduct is motivated by a desire to avoid patent infringement. Its president wrote a Brazilian customer: "We are handicapped by a decision against us in the United States. This was a very technical decision and we can manufacture the entire [406 U.S. 518, 524] machine without any complication in the United States, with the exception that there are two parts that must not be assembled in the United States, but assembled after the machine arrives in Brazil." Quoted in Laitram Corp. v. Deepsouth Packing Co., 443 F.2d 928, 938 (CA5 1971).
[ Footnote 6 ] As shipped, Deepsouth's tumbler contains a deveining belt different from Laitram's support member and lip. But the Laitram elements are included in a separate box and the Deepsouth tumbler is made to accommodate the Laitram elements. The record shows that many customers will use the machine with the Laitram parts.
[ Footnote 7 ] For simplicity's sake, we, like the lower courts, will discuss only Deepsouth's claim as to permissible future conduct. It is obvious, however, that what we say as to the scope of the injunction in Laitram's favor applies also to the calculation of damages that Laitram may recover.
[ Footnote 8 ] "But the right of property which a patentee has in his invention, and his right to its exclusive use, is derived altogether from these statutory provisions; and this court [has] always held that an inventor has no right of property in his invention, upon which he can maintain a suit, unless he obtains a patent for it, according to the acts of Congress; and that his rights are to be regulated and measured by these laws, and cannot go beyond them." Brown v. Duchesne, 19 How. 183, 195 (1857).
[ Footnote 9 ] Deepsouth sold the less than completely assembled machine for the same price as it had sold fully assembled machines. Its advertisements, correspondence, and invoices frequently referred to a "machine," rather than to a kit or unassembled parts. See Brief for Respondent 8-11.
[ Footnote 10 ] When 271 was drafted and submitted to the Senate in 1952, Senator Saltonstall asked: "Does the bill change the law in any way or only codify the present patent laws?" Senator McCarran, Chairman of the Judiciary Committee, responded: "It codifies the present patent laws." 98 Cong. Rec. 9323.
MR. JUSTICE BLACKMUN, with whom THE CHIEF JUSTICE, MR. JUSTICE POWELL, and MR. JUSTICE REHNQUIST join, dissenting.
Because our grant of certiorari was limited, 404 U.S. 1037 (1972), the customarily presented issues of patent validity and infringement are not before us in this case. I necessarily accept, therefore, the conclusion that the Laitram patents are valid and that the Deepsouth deveining machine, when manufactured and assembled in the United States, is an infringement. The Court so concedes. The Court, however, denies Laitram patent law protection against Deepsouth's manufacture and assembly when the mere assembly is effected abroad. It does so on the theory that there then is no "making" of the patented invention in the United States even though every part is made here and Deepsouth ships all the parts in response to an order from abroad.
With all respect, this seems to me to be too narrow a reading of 35 U.S.C. 154 and 271 (a). In addition, the result is unduly to reward the artful competitor [406 U.S. 518, 533] who uses another's invention in its entirety and who seeks to profit thereby. Deepsouth may be admissive and candid or, as the Court describes it, ante, at 523 n. 5, "straightforward," in its "sales rhetoric," ante, at 527, but for me that rhetoric reveals the very iniquitous and evasive nature of Deepsouth's operations. I do not see how one can escape the conclusion that the Deepsouth machine was made in the United States, within the meaning of the protective language of 154 and 271 (a). The situation, perhaps, would be different were parts, or even only one vital part, manufactured abroad. Here everything was accomplished in this country except putting the pieces together as directed (an operation that, as Deepsouth represented to its Brazilian prospect, would take "less than one hour"), all much as the fond father does with his little daughter's doll house on Christmas Eve. To say that such assembly, accomplished abroad, is not the prohibited combination and that it avoids the restrictions of our patent law, is a bit too much for me. The Court has opened the way to deny the holder of the United States combination patent the benefits of his invention with respect to sales to foreign purchasers.
I also suspect the Court substantially overstates when it describes Radio Corp. of America v. Andrea, 79 F.2d 626 (CA2 1935), as a "leading case," ante, at 529, and when it imputes to Congress, in drafting the 1952 statute, an awareness of Andrea's "prevailing law," ante, at 530. Andrea was seriously undermined only two years after its promulgation, when the Court of Appeals modified its decree on a second review. Radio Corp. of America v. Andrea, 90 F.2d 612 (CA2 1937). Its author, Judge Swan himself, dissenting in part from the 1937 decision, somewhat ruefully allowed that his court was overruling the earlier decision. Id., at 615. I therefore would follow the Fifth Circuit's opinion in the [406 U.S. 518, 534] present case, 443 F.2d 936 (1971), and would reject the reasoning in the older and weakened Andrea opinion and in the Third and Seventh Circuit opinions that merely follow it.
By a process of only the most rigid construction, the Court, by its decision today, fulfills what Judge Clark, in his able opinion for the Fifth Circuit, distressingly forecast: