Cortelyou v. Charles Eneu Johnson & Co.

Background

A patent owner who controls the rights to a copy machine called the rotary Neostyle sued a company that makes and sells ink. The Neostyle machines were sold with a printed license on the baseboard saying the machine could be used only with stencil paper, ink, and supplies made by the Neostyle Company. The patent owner said the ink maker sold ink to Neostyle buyers and so caused those buyers to break their license, amounting to indirect patent infringement. A lower court ordered an injunction and accounting, but the appeals court reversed and told the lower court to dismiss, and the case reached this Court.

Reasoning

The key question was whether the ink maker could be held responsible for inducing a breach or indirectly infringing the patent without clear evidence it knew about the license. The Court agreed with the appeals court that the evidence did not show such notice. The ink maker filled a few orders but did not solicit sales for use with the Neostyle, was never formally told by the patent owner, and top officers lacked knowledge. A salesman’s reassurance to a buyer did not bind the company. Because notice was lacking, the Court did not need to settle broader rules about liability for common commercial items.

Real world impact

This decision means patent owners must show that a supplier knew about specific license limits before holding that supplier liable for inducing breaches. Makers of everyday supplies like ink get some protection when they sell ordinary goods without knowledge of special restrictions. The Court left open wider questions about whether staple commercial items can ever trigger indirect liability, so future disputes may still clarify those limits.