257 Pa. 196 | Pa. | 1917
Opinion bx
The form of the bill filed by complainants in this case indicates that they sought to restrain the infringement of certain letters patent, of the United States, granted to Oswald Haensel for an improvement in apparatus for feeding horse 'hair from a bundle to a wrapping device. If that were in fact the issue involved, we would'be without'jurisdiction to determine it, as the infringement of a patent is a question exclusively for consideration by the Federal Courts. The real controversy here turned, however, upon the force of a contract entered into concern
It appears that on February 21, 1913, Haensel & Company, the plaintiffs, entered into a written contract with the defendant, Edgar B. Moore, “acting for himself and his undisclosed associates,” whereby they granted to the said defendant, in consideration of his agreement to pay certain royalties, the sole and exclusive right to manufacture and use “an apparatus for feeding horse hair from a bundle to a wrapping device,” which was protected by letters patent of the United States owned by plaintiffs. Provision was made for the cancellation or surrender of the license under certain circumstances, with a stipulation that, in the event of cancellation or surrender, “the licensee will not thereafter, either directly or indirectly, engage in the business’ of manufacturing or selling the same or any competing material in the United States.” This statement is not clear. The license was for the use of a machine, and the language would naturally imply an engagement not to manufacture or sell any such machines, but. it is conceded that what was intended was an engagement not to manufacture or sell horse hair yarn or thread similar to the product of the machine, or which would compete therewith. As thus understood, we have th'en a contract for a license to manufacture and use a machine, with a provision that, in case of surrender of the license, the licensee shall be prohibited from making or selling, not the machines which were protected by the patent, but any horse hair yarn which would compete with the product of the machine. The court below held that complainants were entitled to the relief they sought. Exceptions were dismissed, and a final decree entered, by which the defendants were enjoined “until the 7th day of March, A. D. 1928 [the expiration of the patent] from making or selling, directly or indirectly, endless horse hair yarn or cloth made therefrom, similar to that under the patent
In the case at bar the complainants do not expressly aver a breach of the covenant contained in the seventh paragraph of the contract, in Avhich the licensee agrees that in the eAent of the surrender of the license, he will not “engage in the business of selling the same or any competing material in the United States.” The only sentence in the bill that can be construed to refer to that covenant, is the averment that “respondents are continuing to take orders for and are manufacturing and have delivered large quantities of cloth containing said hair yarn of the exact appearance as that made and sold heretofore by respondents under your orator’s patent.” Yet the court below, Avithout reference to the prayers of the bill, that infringement of plaintiffs’ patent be restrained, and for an account and award of damages for such infringement, has considered the bill as if it had been filed to enforce the contract not to manufacture and
The restriction here is also unreasonable in that it is unlimited as to time. The court below endeavored to overcome this fault by enjoining defendants only during the balance of the term of plaintiffs’ patent. But here again we must repeat that the patent, which was for a machine, did not apply to the subject-matter of the restriction, which was the manufacture and sale of hair yarn. The only thing to which plaintiffs had a right to protection, was the subject-matter of their patent, and when the restriction went beyond that, and attempted to restrain defendants from engaging in the manufacture and sale of hair cloth, a business which had been previously open to them in common with the general public, the restraint was unreasonable. In Oregon Steam Nav. Co. v. Winsor, 87 U. S. 64, Mr. Justice Bradley said: “It is a well-settled rule of law that an agreement in general restraint of trade is illegal and void; but an agreement which operates, merely in partial restraint of trade is good, provided it be not unreasonable and there be a consideration to support it. In order that it may not be unreasonable, the restraint imposed must not be larger than is required for the necessary protection of the party with whom the contract is made. A contract, even on good consideration, not to use a trade anywhere in England, is held void in that country, as being too gen
In Union Strawboard Company v. Bonfield, 193 Ill. 420, the contract was in connection with the sale of a business, and a reasonable restriction was justified, but it was there said: “The courts will not enforce any contract which excludes a party generally from following any lawful trade or business beneficial to the community and to him.”
In Lanzit v. J. W. Sefton Mfg. Co., 184 Ill. 326, which also involved the sale of a business, it was held that a contract in restraint of trade throughout the United States was unreasonable and void, and also that it could not be divided so as to apply to a single state only, as such a contract would also be void.
In the case at bar, the contract in restraint of trade being unlimited as to time, and as to space extending over the entire country, must be regarded as extending the restraint further than is necessary for the reasonable protection of the covenantee. Reference to the nature and subject-matter of the restriction makes its unreasonableness more clearly apparent. As we have already indicated, payment of the royalty was full compensation for the use of the patent, and as the plaintiffs contributed nothing but the patent, there was no consideration whatever to support that portion of the agreement which bound the licensee after the surrender of the license, to refrain from the manufacture, by methods which did not infringe plaintiffs’ patent, of an article of commerce in common use. Such'a restriction upon the rights of the licensee was, in its very nature, unreasonable and void.
.Nor is there any merit in the suggestion that plaintiff's were entitled to relief in order to protect trade secrets. The contract had no relation in any way to trade secrets.
Holding, as we do, that the contract in question is an illegal restraint of trade, and cannot be enforced in a court of equity, the question whether the relief sought should be confined to the single defendant, Edgar B. Moore, need not be considered.
Of the forty-four assignments of error, all except the last one, are to the dismissal of various exceptions filed by defendants to the findings of fact and conclusions of law, of the trial judge. Without disposing specifically of these assignments, it is sufficient to say that the forty-fourth, which is to the final decree, is sustained, and the decree of the court below is reversed, at the cost of the appellees.