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ness of such fee and to make it a proper measure of the damages recoverable for a subsequent infringement by a stranger to such licenses; but it can be accepted only as fixing the market value of the use of the machine from and after the time when the first agreement was made, and any recovery for infringement prior to that time must be based on other
evidence. 2. SAME-INTEREST.
Damages for infringement of a patent can be considered as liquidated, where an established license fee renders such damages easily determinable, but an infringer is liable for interest on such damages only from the date when he incurred the obligation to pay damages, and not from the date when the license fee became payable.
[Ed. Note.--For cases in point, see Cent. Dig. vol. 38, Patents, $ 581.] In Equity. Suit for infringement of a patent. On exceptions to report of special master.
Man & Protheroe (James G. K. Lee, of counsel), Sols., for complainant.
Mastick & Jones (Chas. S. Jones, of counsel), Sols., for defendants.
CHATFIELD, District Judge. The complainant is the owner of a patent which, after considerable litigation, was upheld by a decree of this court (Diamond Stone Sawing Machine Co. v. Brown et al. [C. C.] 130 Fed. 896), and the matter of damages for infringement referred to a special master. The special master has reported that, upon November 1, 1901, the complainant established a license fee, amounting to $360 per year for each machine, payable quarterly, the first quarter becoming due for the first payment under this license upon the 10th of December, 1901, and that this license fee should be taken as the basis of estimating the damage to the complainant by the infringement by the defendants of the complainant's patent. The master reports that no evidence has been offered of any profits accruing to or received by the defendants from the use of the said patent, and that the defendants herein abandoned the use of the infringing mechanism upon the 27th day of January, 1902. The master has therefore found the total amount of damages to the complainant, for the use of two machines from November 1, 1901, to January 27, 1902, at the rate of $360 per year for each machine, to be the sum of $180, upon which amount he allows interest from December 10, 1901, to the date of the report.
The complainant has excepted to the master's finding upon the ground that, the license fee of $360 per year being found by the master as a proper measure of damages, such damages should have been computed for the entire period during which the defendant infringed, or from a date six years prior to the beginning of the action. The defendants have excepted to the master's report upon the ground that the license fee of $360 was, as a matter of fact, the basis of settlement for infringement by other parties, and that such a settlement is not admissible in evidence, either as a license fee for future use alone or as any measure of damages for infringements by a party other than the one agreeing upon the amount specified as a basis of settlement.
The testimony shows that on behalf of 12 licensees a license rate of $300 per year was offered to the complainant on or about the 10th of October, 1901, and that after consideration and negotiations the amount of $360 per annum, payable quarterly, was fixed upon as a license fee. It further appears in the testimony that the questions of infringement and of license were kept entirely apart during the negotiations, and the master has found as a question of fact that the payment of $360 was fixed upon as a license rate, and not as a basis of settlement for prior infringements.
The case of Westcott v. Rude (C. C.) 19 Fed. 832, upon appeal Rude v. Westcott, 130 U. S. 152, 9 Sup. Ct. 463, 32 L. Ed. 888, settles beyond argument the doctrine that a so-called license fee or royalty, agreed upon as a basis of settlement for past infringement, cannot be used as an estimate of damage in a suit against other infringing parties. The opinion in the Supreme Court also holds that a license (page 165 of 130 U. S., and page 468 of 9 Sup. Ct. [32 L. Ed. 888]) "must be common—that is, of frequent occurrence—to establish such a market price for the article that it may be assumed to express, with reference to all similar articles, their salable value at the place designated. In order that a royalty may be accepted as a measure of damages against an infringer, who is a stranger to the license establishing it, it must be paid or secured before the infringement complained of, it must be paid by such a number of persons as to indicate a general acquiescence in its reasonableness by those who have occasion to use the invention, and it must be uniform at the places where the licenses are issued.” Upon the finding of the master, which seems to be supported by the evidence, that the royalty received by the complainant was a license, and not a settlement for prior infringements, the conditions laid down in Rude v. Westcott by the Supreme Court seem to be fulfilled, and the amount of this royalty is, therefore, not only competent as a measure of damages against the defendants herein (who are strangers to the license creating this royalty), but also its exaction from the various parties desiring to use the complainant's patents, subsequent to the date of fixing the amount of royalty, establishes such a uniform custom as to justify the finding of the master that this royalty can be taken as a measure of damages in this action.
As to the period for which damages should be allowed, the report of the master is apparently correct. No evidence is offered to show what the value of the license (what might be called the market price of such a license) would have been prior to the fixing of the royalty upon the 1st of November, 1901; and, while it may be inferred that the rate agreed upon was as reasonable for one period as another, nevertheless, in the absence of testimony, the market value of a privilege can be estimated only from the price which is charged, and without additional proof can apply only to the period for which it is charged. Thus the master has no evidence on which to base any finding as to the market value of
a license by the complainant before the 1st day of November, 1901. The testimony and the licenses themselves which have been introduced in evidence show that the various licenses were not executed and delivered upon the first day of the period for which damages have been allowed, viz., November 1, 1901; but the negotiations leading up to the fixing of the price of a license, and a determination of what that price should be, preceded the date of the first license, which was November 1, 1901, and therefore the master's finding that the license fee was established upon that date seems to the court to be correct.
The master reports that the license fee became liquidated damages, on which interest is allowable, as soon as the license fee was established, and that such interest should run from December 10, 1901, the date at which the first quarterly payment of the license fee on licenses issued prior to that date was made payable. The court cannot see how damages in an action of this nature can be considered liquidated, except upon the theory that, a market price or license value having been established, interest should be allowed upon that market price from the time when this value becomes fixed and easily determinable. It having been decided that the value of this license is $360 a year, and that upon the 27th day of January, 1902, the defendants had incurred an obligation to pay damages according to this market value, amounting to $180, it seems that the complainant should be entitled to interest only from that date, and to this extent the report of the master will be modified.
Except as indicated, the exceptions of both complainant and defendants to the master's report will be overruled, and the complainant may have a decree for the sum of $180, with interest from January 27, 1902.
SOUTHERN RY. CO. v. MCNEILL et al.
(Circuit Court, E. D. North Carolina. August 25, 1907.)
1. CARRIERS—REGULATION OF RATES-STATUTES—IMPLIED REPEAL.
Laws N. C. 1907, p. 252, c. 217, regulating passenger and freight rates within the state, contains no provision repealing laws in existence at the time so far as the freight rates are concerned and with reference to passenger rates, but only contains section 6, which repeals Revisal 1905, § 2618, requiring all railroad companies to furnish first and second class passenger accommodations. Held, that all laws in existence at the time of the passage of the act of 1907, and not inconsistent therewith, were still in force, under the rule that a statute will not be construed as impliedly repealing a prior one on the same subject, unless there is an irreconcilable repugnancy, or the new law is intended to supersede the
prior one and comprise in itself a complete system of legislation, 2. SAME.
Revisal N. C. 1905, $ 2567, subsec. 9, conferring on railroad companies the right to make passenger rates within a maximum of five cents a mile, repealed by implication section 1099, subd. 1, which imposed on the
North Carolina Railroad Commission the duty of making passenger rates. 3. SAME.
Revisal N. C. 1905, $ 2567, subsec. 9, giving railroads the right to make passenger rates within a limit of five cents a mile, was repealed by Laws 1907, p. 675, c. 469, § 7, extending and enlarging the powers of the Cor
poration Commission. 4. CARRIERS-STATUTORY REGULATION.
Laws N. C. 1907, p. 252, c. 217, to prevent unjust discrimination in freight and passenger rates, and to fix the maximum charges therefor, and Act March 11, 1907, to extend and enlarge the power of the Corporation Commission, are not self-executing.
5. STATUTES-CONSTRUCTION-REPEALED ACTS.
It is proper to consider a repealed statute in arriving at a particular construction of existing acts.
[Ed. Note.—For cases in point, see Cent. Dig. vol. 44, Statutes, $8 299,
302-306.] 6. CARRIERS-REGULATION-RATES—INJUNCTION-PARTIES.
The North Carolina Railroad Commission being required by Revisal 1905, $ 1106, to make railroad rates subject only to the limitation contained in Laws N. C. 1907, p. 252, c. 217, the members of such commission were proper parties to a suit to restrain enforcement of such chapter
because of unconstitutionality. 7. COURTS-FEDERAL COURTS-JURISDICTION-ACTION AGAINST STATE - AC
TIONS AGAINST STATE OFFICERS.
The North Carolina Corporation Commission and the Attorney Gen-eral being specially charged by Revisal N. C. 1905, $$ 1066, 1113, 5380, and Laws 1907, p. 251, c. 217, § 2, with the enforcement of such chapter, a suit against the Attorney General and the members of the commission to restrain the enforcement of the chapter, and other similar laws, because of alleged unconstitutionality, was not a suit against the state within Const. U. S. Amend. 11, providing that the judicial power of the United States shall not extend to any suit against one of the United States by citizens of another state, or by citizens or subjects of a foreign state.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 13, Courts, $$
840, 84412.] 8. ATTORNEY GENERAL-DUTIES—CARRIERS-STATUTORY REGULATION.
Revisal N. C. 1905, § 1113, provides that the Corporation Commission, whenever in its judgment any corporation has violated a law, shall first give notice of such violation to the offending corporation, and, in the event of a failure of the corporation to comply with the law, shall forthwith present the facts to the Attorney General, who shall take such proceedings thereon as he may deem expedient. Held, that such provision is mandatory, and imposes a duty on the Attorney General when called on to prosecute any suit or action which may be deemed neces
sary to secure the enforcement of the railroad rate laws of the state. 9. WORDS AND PHRASES—“SPECIALLY CHARGED.”
The words, “specially charged,” when used in connection with a state officer's duty to enforce a statute, are not limited to a case where the officer is expressly commanded by the statute to bring suits for penalties or prosecute offenses under the act, but include every case where the officer is charged by his general duties as a law officer of the state to enforce
the statute. 10. WITNESSES-CREDIBILITY-MATTERS OF OPINION.
Where a prior affidavit of a witness contained facts based only on an estimate, not intended to be treated as matters of fact, such affidavit, though containing statements inconsistent with the witness' subsequent
testimony, did not affect his credibility. 11. CONSTITUTIONAL LAW-UNCONSTITUTIONAL STATUTE-POWER OF FEDERAL
The federal courts have power to declare an act of the state or federal
Legislature invalid when shown to be repugnant to the Constitution, 12. CARRIERS-RATES-REGULATION-INJUNCTION.
Revisal N. C. 1905, $ 1082, providing that no judge shall grant an injunction restraining order or other process staying or affecting during the pendency of any appeal, the enforcement of any determination of the Corporation Commission fixing rates or fares without requiring as a condition precedent the execution of certain bonds, etc., indicates that the Legislature intended not to interfere with the remedy by injunction in cases where it appeared that the rates fixed were confiscatory, etc.
While a railroad is not entitled to earn a profit on every mile of its road nor on every article carried by it, it is nevertheless entitled to earn a
reasonable profit on its entire intrastate business. 14. SAJE-RAILROADS-MAXIMUM RATE LAW – PRELIMINARY
PRELIMINARY INJUNCTION CONTINUANCE--IRREPARABLE INJURY-MULTIPLICITY OF SUITS.
In a suit to restrain enforcement of Laws N. C. 1907, p. 252, c. 217 et seq., fixing maximum passenger rates, and providing for the establishment of freight rates for railroads within the state by the North Carolina Railroad Commission, on the ground that the rates fixed and provided for were unreasonably low and confiscatory, and that the act was unconstitutional as depriving complainant of its property without due process of law, a prima facie case was made by undisputed evidence, on the hearing of a motion to continue a temporary injunction restraining enforcement of the act pending the hearing on the merits, that the act provided for the establishment of rates which were confiscatory and would not render complainant a reasonable return on its investment, and that, if complainant failed to comply with the act pending the suit, it would be subjected to innumerable suits for heavy penalties. Held that the court was authorized to continue the injunction to preserve the status quo
and prevent irreparable injury, and to avoid a multiplicity of suits. In Equity
Alfred P. Thom, Walker D. Hines, W. B. Rodman and Alex. P. Humphrey, for complainant.
Jas. E. Shepherd, Fred A. Woodward, Victor S. Bryant and Walter E. Daniels, for defendants.
PRITCHARD, Circuit Judge. The bill alleges that the complainant is a corporation originally created under the laws of Virginia. Under its charter, and under authority from other states, it is authorized to own, lease, control, and operate railroads not only in Virginia, but in other states of the Union; that under this power it has acquired and is operating a continuous line of railroad over 6,000 iniles in length, extending through the states of Virginia, North Carolina, South Carolina, Georgia, Alabama, Mississippi, and Tennessee, and by trackage rights this system is connected with another system owned by complainant and lying in the state of Kentucky, Indiana, and Illinois. The complainant as a common carrier of freight and passengers is and has been since its organization engaged in both intra and interstate commerce over its line of road. The defendants admit the authority of the complainant to own and operate roads in North Carolina, but deny that the state of North Carolina has surrendered or given up its right to supervise, regulate, and control the complainant's line of railroad in North Carolina, and specially claims that the state has the power to fix and prescribe rates, both freight and passenger, and has the power to make rules and regulations governing the amount of freight, the furnishing of cars, and the power to prescribe penalties for any violation thereof, controlled only by the fourteenth amendment of the Constitution of the United States.
The General Assembly of North Carolina at its session of 1907 passed two laws regulating rates, the subject-matter of this controversy: (1) The passenger rate act (Pub. Laws 1907, p. 250, c. 216), which provides (section 1) for maximum passenger rate of 214 cents per mile,