Henry v. A. B. Dick Co.

1912-03-11

Headline: Patent owner may sell a machine limited to use only with its supplies, and the Court allows suing outside sellers who knowingly provide alternatives, expanding patent enforcement over downstream users and suppliers.

Holding: The Court held that selling a patented machine with a visible restriction that it be used only with the patent owner's supplies makes using other supplies an infringement, and sellers who knowingly supply alternatives can be liable for contributory infringement.

Real World Impact:

Lets patent owners enforce post-sale limits on how buyers use machines.
Makes suppliers liable if they knowingly sell goods for forbidden uses.
Shifts license disputes into federal patent enforcement actions.

Topics: patent licensing, product-use restrictions, supplier liability, federal patent enforcement

Summary

Background

An Illinois company that owned patents on a stencil-duplicating machine sold one machine to a New York buyer with a metal tag saying it could be used only with the seller’s stencil paper, ink, and supplies. A New York ink dealer sold a can of ink to that buyer; the ink was not covered by the machine’s patent. The lower court asked this Court to answer whether selling the ink under those facts was contributory infringement (that is, knowingly helping someone else infringe the patent).

Reasoning

The Court said the key question is whether the patent owner kept, as part of the patent privilege, the right to control unpermitted uses of the machine. The majority held that a sale can transfer ownership of the machine while reserving the patent owner’s exclusive right to any use not allowed by the posted restriction. If a buyer uses other supplies in violation of that restriction, that use can be an infringement, and a seller who knowingly supplies materials for that forbidden use can be liable for contributory infringement (helping another person infringe).

Real world impact

The decision confirms that patent owners can attach visible, limiting licenses to sold machines and treat unauthorized uses as patent violations. Sellers who know of such a restriction and expect their product will be used to violate it can be sued under patent law. The Circuit Court had granted an injunction and an accounting in this case.

Dissents or concurrances

Three Justices dissented, warning this rule greatly enlarges federal patent power, lets patent owners extend control over unpatented supplies by contract, and shifts many disputes from state courts into federal patent litigation.