Aro Manufacturing Co. v. Convertible Top Replacement Co.

1964-06-08

Headline: Court finds maker of replacement fabrics liable for contributory patent infringement for unlicensed Ford convertibles before July 21, 1955, but blocks liability after Ford's 1955 release and license.

Holding: The Court holds that Aro is liable for contributory infringement under §271(c) for replacement fabrics sold for unlicensed Ford convertibles before July 21, 1955 (and after January 2, 1954 notice), but not for post-agreement sales.

Real World Impact:

Aftermarket parts sellers face liability if they knew of the patent and unlicensed use.
Sales after a manufacturer's license or release remove contributory infringement risk.
Damages may be limited where patentee already recovered from the manufacturer.

Topics: patent infringement, contributory infringement, aftermarket auto parts, repair vs reconstruction

Summary

Background

Convertible Top Replacement Co. (CTR) owned rights in a combination patent covering convertible-top structures. General Motors used the structure under a license; Ford did not and thus initially infringed. Aro Manufacturing sold specially tailored replacement fabric tops that wear out after about three years. CTR sued Aro in 1956 for contributory infringement based on Aro’s sales for both General Motors and Ford cars. The Supreme Court previously held replacement on licensed General Motors cars was permissible repair, not reconstruction; this opinion addresses unlicensed Ford cars and related liability and damages.

Reasoning

The Court explained that buyers of cars made and sold without patentee authority had no implied license, so their use and the repair of the patented combination were unauthorized and therefore direct infringement. The Court held that Aro’s sale of fabrics met the textual elements of 35 U.S.C. §271(c): the fabrics were a material component, specially adapted for the patented tops, and not suitable for substantial noninfringing use. The majority also interpreted §271(c) to require that a contributory seller know that the component was for a patented and infringing combination; AB’s January 2, 1954 letter warning Aro put Aro on notice for subsequent sales. Separately, the Court ruled that Ford’s July 21, 1955 agreement and payment licensed use and repair going forward, so Aro is not liable for post‑agreement sales.

Real world impact

The Court affirmed Aro’s contributory liability for sales made before July 21, 1955 (subject to proof about knowledge before January 2, 1954) and reversed liability for sales after that date. The case is remanded to determine damages. The majority signaled damages may be nominal if Ford’s payment fully compensated the patentee, and asked the lower court to find whether the payment equaled full satisfaction and whether Aro had prior knowledge.

Dissents or concurrances

Justice White joined the majority on the knowledge point. A dissent argued the knowledge standard should be narrower, raised constitutional and fairness concerns about exposing innocent buyers and repairers to liability, and would have dismissed the case.